SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1997 Commission file number 0-9484
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(Exact name of registrant as specified in its charter)
Illinois 36-2875190
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312/915-1987
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
<PAGE>
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . . . 11
PART II OTHER INFORMATION
Item 5. Other Information. . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 13
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
ASSETS
------
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
-------------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . $ 4,344,909 4,245,747
Interest, rents and other receivables . . . . . . . . . . . . . . . 118,060 177,103
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 33,575 34,840
------------ -----------
Total current assets. . . . . . . . . . . . . . . . . . . . . 4,496,544 4,457,690
------------ -----------
Investment property held for sale or disposition. . . . . . . . . . . 18,011,122 17,829,426
------------ -----------
Total investment property . . . . . . . . . . . . . . . . . . 18,011,122 17,829,426
Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1,653,816 1,698,705
Venture partner's deficit in venture. . . . . . . . . . . . . . . . . 33,410,251 33,479,266
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . 146,097 146,097
------------ -----------
$ 57,717,830 57,611,184
============ ===========
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS)
-----------------------------------------------------
MARCH 31, DECEMBER 31,
1997 1996
-------------- ------------
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . $ 82,298,021 82,298,021
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . 659,608 546,678
Unearned rents. . . . . . . . . . . . . . . . . . . . . . . . . . . 122,058 122,058
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . 483,244 483,244
------------ -----------
Total current liabilities . . . . . . . . . . . . . . . . . . 83,562,931 83,450,001
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . 541,634 553,634
------------ -----------
Commitments and contingencies
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 84,104,565 84,003,635
Partners' capital accounts (deficits):
General partners:
Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . (2,241,183) (2,241,412)
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (897,441) (897,441)
------------ -----------
(3,137,624) (3,137,853)
------------ -----------
Limited partners (55,005 interests):
Capital contributions, net of offering costs. . . . . . . . . . . 49,689,766 49,689,766
Cumulative net earnings (losses). . . . . . . . . . . . . . . . . 9,316,094 9,310,607
Cumulative cash distributions . . . . . . . . . . . . . . . . . . (82,254,971) (82,254,971)
------------ -----------
(23,249,111) (23,254,598)
------------ -----------
Total partners' capital accounts (deficits) . . . . . . . . . (26,386,735) (26,392,451)
------------ -----------
$ 57,717,830 57,611,184
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Income:
Rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,969,128 3,958,182
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,437 51,585
----------- ----------
4,018,565 4,009,767
----------- ----------
Expenses:
Mortgage and other interest . . . . . . . . . . . . . . . . . . . . . . . 2,174,596 2,044,023
Property operating expenses . . . . . . . . . . . . . . . . . . . . . . . 1,584,103 1,628,995
Professional services . . . . . . . . . . . . . . . . . . . . . . . . . . 59,533 52,716
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . . 92,730 150,508
General and administrative. . . . . . . . . . . . . . . . . . . . . . . . 32,872 69,400
----------- ----------
3,943,834 3,945,642
----------- ----------
Operating earnings (loss) . . . . . . . . . . . . . . . . . . . . 74,731 64,125
Venture partner's share of
venture's operations. . . . . . . . . . . . . . . . . . . . . . . . . . . (69,015) (78,201)
----------- ----------
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 5,716 (14,076)
=========== ==========
Net earnings (loss) per
limited partnership interest. . . . . . . . . . . . . . . . . . $ .10 (.24)
=========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<CAPTION>
1997 1996
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,716 (14,076)
Items not requiring (providing) cash or cash equivalents:
Amortization of deferred expenses . . . . . . . . . . . . . . . . . . . 92,730 150,508
Venture partner's share of venture's operations . . . . . . . . . . . . 69,015 78,201
Changes in:
Interest, rents and other receivables . . . . . . . . . . . . . . . . . 59,043 (83,494)
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,265 3,401
Accrued rents receivable. . . . . . . . . . . . . . . . . . . . . . . . -- (8,597)
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,930 (26,800)
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 40,073
Tenant security deposits. . . . . . . . . . . . . . . . . . . . . . . . (12,000) 101,573
------------ -----------
Net cash provided by (used in) operating activities . . . . . . 328,699 240,789
------------ -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term investments. . . . . . -- (2,714,965)
Additions to investment property. . . . . . . . . . . . . . . . . . . . . (181,696) (5,715)
Payment of deferred expenses. . . . . . . . . . . . . . . . . . . . . . . (47,841) (75,851)
------------ -----------
Net cash provided by (used in) investing activities . . . . . . (229,537) (2,796,531)
------------ -----------
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1997 1996
------------ -----------
Cash flows from financing activities:
Principal payments on long-term debt. . . . . . . . . . . . . . . . . . . -- (144,574)
------------ -----------
Net cash provided by (used in) financing activities . . . . . . -- (144,574)
------------ -----------
Net increase (decrease) in cash and cash equivalents. . . . . . 99,162 (2,700,316)
Cash and cash equivalents, beginning of year. . . . . . . . . . 4,245,747 4,313,536
------------ -----------
Cash and cash equivalents, end of period. . . . . . . . . . . . $ 4,344,909 1,613,220
============ ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest . . . . . . . . . . . . . . . . $ 2,174,596 2,003,950
============ ===========
Non-cash investing and financing activities . . . . . . . . . . . . . . . $ -- --
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
GENERAL
Readers of this quarterly report should refer to the Partnership's
audited financial statements for the year ended December 31, 1996 which are
included in the Partnership's 1996 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such
audited financial statements have been omitted from this report.
The preparation of financial statements in accordance with GAAP
requires the Partnership to make estimates and assumptions that affect the
reported or disclosed amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Partnership adopted Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121") as required in the first
quarter of 1996. The Partnership's policy is to consider a property to be
held for sale or disposition when the Partnership has committed to a plan
to sell such property and active marketing activity has commenced or is
expected to commence in the near term. In accordance with SFAS 121, any
properties identified as "held for sale or disposition" are no longer
depreciated. As of January 1, 1996, the Partnership has committed to a
plan to sell the Cedars-Sinai Medical Office Complex investment property.
Accordingly, this property has been classified at January 1, 1996 as held
for sale or disposition in the accompanying consolidated financial
statements. The results of operations, net of venture partners' share, for
such property was $69,015 and $78,201, respectively, for the three months
ended March 31, 1997 and 1996.
TRANSACTIONS WITH AFFILIATES
There were no fees, commissions and other expenses required to be paid
by the Partnership to the General Partners and their affiliates as of March
31, 1997 and for the three months ended March 31, 1997 and 1996.
CEDARS-SINAI MEDICAL OFFICE COMPLEX
In December 1995, the venture obtained a non-binding letter of intent
to sell the Cedars-Sinai office building to an unaffiliated prospective
buyer. The agreement was subject to certain conditions including the
waiver by the Partnership's unaffiliated venture partner of its right of
first opportunity to acquire the Partnership's interest in the Cedars-Sinai
office building (per the venture agreement of Wright-Carlyle Partners
("Wright-Carlyle")). In January, 1996, the Partnership gave notice to its
venture partner of the letter of intent with the unaffiliated third party.
That notice triggered a 30-day election period whereby the venture partner
had the right to exercise or waive its right of first opportunity.
Pursuant to the venture agreement, if the venture partner elects to
exercise its right of first opportunity, the venture partner would then
have 120 days after making such election to close such sale. The purchase
price of the Partnership's interest would be such as would produce for the
<PAGE>
Partnership the same consideration as the sale to the unaffiliated third
party. If the venture partner fails to close such a sale in the 120 days,
the right of first opportunity will be permanently lost. In February, 1996
the venture partner gave notice to the Partnership by which it purported to
exercise its right of first opportunity subject to certain terms and
conditions. The Partnership believes that the venture partner does not
have the right to attach any conditions to the exercise of such right. The
Partnership continues to engage in a dispute with the venture partner
regarding this issue and continues to consider its alternatives, including
legal recourse. During the foregoing dispute, the unaffiliated third party
determined that it was no longer interested in purchasing the property.
The Partnership had therefore expanded the marketing effort to other
prospective purchasers.
In November 1996, the joint venture obtained a non-binding letter of
intent to sell the property to a different unaffiliated third party.
Though the Partnership gave notice to its venture partner relative to its
right of first opportunity at that time, the subsequent nature of the
negotiations with the prospective third-party buyer and the ongoing
disputes with the venture partner concerning the mechanics of giving such
notice led the Partnership to determine that it would give a further 30-day
election period to the venture partner. The Partnership delivered such
notice on March 20, 1997, after entering into a binding purchase agreement
(subject only to the venture partner's right of first opportunity) with
such third party. In April 1997, the venture partner informed the
Partnership that it was exercising its right of first opportunity to
purchase the Partnership's interest in the venture. Subsequently, on May
7, 1997, the Partnership and the venture partner executed a Purchase and
Sale Agreement. The Partnership will receive the same proceeds as it would
have if the property had been sold to the unaffiliated third party, and
expects to close such sale in the second quarter of 1997. A sale of the
Partnership's Interest in the venture for the proposed terms would result
in a gain for financial reporting and Federal income tax purposes.
In January 1996, the venture obtained a short-term extension of the
mortgage loan's maturity, originally scheduled to mature on January 14,
1996, to September 30, 1996. The interest rate of the extended loan was
adjusted from 9.11% to 10% per annum and the monthly payments of
approximately $725,000 were based on a 360 month amortization with the
remaining principal balance due at maturity. Subsequently, the venture
reached an agreement to further extend the loan to September 1997, with
monthly payments of interest only of approximately $725,000 at an interest
rate of 10.569% per annum. Under the terms of the loan extension
agreement, the venture is required to submit a list of all operating and
capital expenditures to the Lender for approval. Any operating expenses,
lease commissions, tenant improvements and other leasing costs on the
submitted list will be deemed approved upon the Lender's receipt of the
list. Certain capital expenditures over $100,000 require the lender's
written approval. Under the loan extension agreement the venture is also
required to remit any net operating income (as defined) on a quarterly
basis which would be applied against the outstanding principal balance of
the loan. As of March 31, 1997, no such amounts have been remitted to the
Lender. Additionally, Wright-Carlyle and the lender entered into an option
agreement providing the venture the option to purchase the lender's
ownership interest in the land underlying the development, subject to
certain conditions. The option agreement expires in October 1997. This
option will be retained by the venture upon the expected sale of the
Partnership's Interest in the venture, as discussed above.
If the venture is unable to complete the sale of the property as
expected, and cannot obtain further extensions of the mortgage loan, the
lender could realize upon its security and take title to the property.
This would result in the Partnership no longer having an ownership interest
in such property and result in a gain for financial reporting and Federal
income tax purposes to the Partnership with no corresponding distributable
proceeds. Upon sale or disposition of the property, the Partnership
expects to proceed to terminate its affairs.
<PAGE>
The East and West Towers of the Cedars-Sinai Medical Office Complex in
Los Angeles, California are 96% and 93% occupied, respectively. In 1997
and 1998, expiration of tenant leases for the entire property will be
approximately 15% and 18% for each year, respectively. There can be no
assurance that the expiring tenant space will be renewed. In addition, due
to the competitive office market in which the property is located, it is
possible that significant costs will be required to re-lease such space.
Such factors are expected to cause the property to operate at close to a
break-even level for such years. In anticipation of such future costs and
as is stipulated in the agreement with the lender discussed above, cash of
approximately $701,000 is being reserved by the Wright-Carlyle venture
rather than distributed to the Partnership or the venture partner.
ADJUSTMENTS
In the opinion of the Corporate General Partner, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation have been made to the accompanying figures as of March 31,
1997 and for the three months ended March 31, 1997 and 1996, assuming that
the Partnership continues as a going concern.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the notes to the accompanying financial
statements for additional information concerning the Partnership's
investment.
Due to the factors set forth above there is a substantial likelihood
that the Partnership will wind up its affairs in 1997. However, there can
be no assurance that this will occur.
During 1996 some of the Limited Partners in the Partnership received
from unaffiliated third parties unsolicited tender offers to purchase up to
4.7% of the Interests in the Partnership at amounts ranging from $50 to $70
per Interest. The Partnership recommended against acceptance of these
offers on the basis that, among other things, the offer price was
inadequate. Such offers have expired. It is possible that other offers
for Interests may be made by unaffiliated third parties in the future,
although there is no assurance that any other third party will commence an
offer for Interests, the terms of any such offer or whether any such offer,
if made, will be consummated, amended or withdrawn. The board of directors
of JMB Realty Corporation ("JMB") the corporate general partner of the
Partnership, has established a special committee (the "Special Committee")
consisting of certain directors of JMB to deal with all matters relating to
tender offers for Interests in the Partnership, including any and all
responses to such tender offers. The Special Committee has retained
independent counsel to advise it in connection with any potential tender
offers for Interests and has retained Lehman Brothers Inc. as financial
advisor to assist the Special Committee in evaluating and responding to any
additional potential tender offers for Interests.
In March 1997 some of the Limited Partners received an unsolicited
tender offer to purchase up to 2.3% of the Interests at $110 per interest.
The Special Committee advised the Limited Partners to accept this offer.
The offer expired March 11. As of the date of this report, the Partnership
is aware that 2.02% of the Interests have been purchased by such
unaffiliated third parties either pursuant to such tender offers or through
negotiated purchases.
After reviewing the remaining property and the marketplace in which it
operates, and in light of the facts discussed in the notes to the
accompanying financial statements, the General Partners of the Partnership
expect to be able to conduct an orderly liquidation of the remaining asset
as quickly as practicable. Therefore, the affairs of the Partnership are
expected to be wound up no later than the end of 1997, barring unforeseen
economic developments.
RESULTS OF OPERATIONS
The decrease in interest, rents and other receivables at March 31,
1997 as compared to December 31, 1996 is primarily due to the timing of
rental receipts of the Partnership's Cedars-Sinai investment property.
The increase in accounts payable at March 31, 1997 as compared to
December 31, 1996 is primarily due to the timing of payment of certain
expenses of the Partnership's investment property.
The increase in mortgage and other interest for the three months ended
March 31, 1997 as compared to the same period in 1996 is primarily due to
an increased interest rate on the short-term loan extension related to
Cedars Sinai.
The decrease in amortization of deferred expenses for the three months
ended March 31, 1997 as compared to the same period in 1996 is primarily
due to a portion of the deferred expenses being fully amortized in late
1996.
<PAGE>
<TABLE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
OCCUPANCY
The following is a listing of approximate occupancy levels by quarter for the Partnership's remaining
investment property:
<CAPTION>
1996 1997
------------------------------------- ------------------------------
At At At At At At At At
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cedars-Sinai Medical
Office Complex
Los Angeles, California
East Tower. . . . . . . . 95% 96% 96% 96% 96%
West Tower. . . . . . . . 91% 93% 92% 92% 93%
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3-A. The Prospectus of the Partnership dated August 17,
1979, as supplemented on October 17, 1979, December 10, 1979 December 28,
1979, January 28, 1980 and February 27, 1980, filed with the Commission
pursuant to Rules 424(b), is incorporated herein by reference. Certain
pages of the Prospectus are hereby incorporated herein by reference to
Exhibit 3-A of the Partnership's Report on Form 10-K (File No. 0-9484) for
December 31, 1992 dated March 19, 1993.
3-B. Amended and Restated Agreement of Limited Partnership
set forth as Exhibit A to the Prospectus, incorporated by reference to the
Partnership's Registration Statement on Form S-11 (File No. 2-63958) dated
August 17, 1979.
3-C. Acknowledgement of rights and duties of the General
Partners of the Partnership between ABPP Associates, L.P. (a Successor
Associated General Partner of the Partnership) and JMB Realty Corporation
as of December 31, 1995 is hereby incorporated by reference to the
Partnership's Report on Form 10-Q/A (File No. 0-9484) dated November 25,
1996.
4-A. Modification documents relating to the long-term
mortgage note secured by the Cedars-Sinai Medical Office Complex located in
Los Angeles, California are incorporated by reference to the Partnership's
Report on Form 8-K (File No. 0-9484) dated January 15, 1991.
4-B. Extension agreement relating to the long-term mortgage
note secured by the Cedars-Sinai Medical Office Complex located in Los
Angeles, California is hereby incorporated by reference to the
Partnership's Report on Form 10-K (File No. 0-9484) dated March 25, 1996.
4-C. Documents relating to the extension of the long-term
mortgage note secured by the Cedars-Sinai Medical Office Complex located in
Los Angeles, California are hereby incorporated by reference to the
Partnership's Report on Form 10-K (File No. 0-9484) dated March 21, 1997.
10-A. Acquisition documents relating to the purchase by the
Partnership of an interest in Cedars-Sinai Medical Office Complex located
in Los Angeles, California are incorporated herein by reference to the
Partnership's Registration Statement on Post-Effective Amendment No. 2 to
the Partnership's Prospectus on Form S-11 (File No. 2-63958) dated August
17, 1979.
10-B. Third Amendment to the ground lease between Prudential
Insurance Company of America and Wright-Carlyle Partners is hereby
incorporated by reference to the Partnership's Report on Form 10-K (File
No. 0-9484) dated March 21, 1997.
10-C. Option Agreement between Prudential Insurance Company
of America and Wright-Carlyle Partners is hereby incorporated by reference
to the Partnership's Report on Form 10-K (File No. 0-9484) dated March 21,
1997.
<PAGE>
10-D. Purchase agreement dated May 7, 1997 between Carlyle
Real Estate Limited Partnership - IX and Medical Office Buildings, Ltd.
related to the sale of the Partnership's interest in Wright-Carlyle
Partners is filed herewith.
27. Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - IX
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Date: May 9, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person in the capacity
and on the date indicated.
GAILEN J. HULL
Gailen J. Hull, Principal Accounting Officer
Date: May 9, 1997
EXHIBIT 10-D
- ------------
PURCHASE AGREEMENT
(MOBL/Carlyle Contract)
THIS PURCHASE AGREEMENT is made and entered into as of the 28th day
of April, 1997, by and between CARLYLE REAL ESTATE LIMITED PARTNERSHIP-IX,
an Illinois limited partnership ("SELLER"), and MEDICAL OFFICE BUILDINGS,
LTD., a Washington limited partnership ("BUYER").
R E C I T A L S
---------------
A. Seller and Buyer are the sole partners in WRIGHT-CARLYLE
PARTNERS, a California general partnership (the "OPERATING PARTNERSHIP"),
which is governed by that certain partnership agreement (the "OPERATING
PARTNERSHIP AGREEMENT") captioned "ARTICLES OF PARTNERSHIP OF WRIGHT-
CARLYLE PARTNERS", dated as of December 27, 1979, by and among Seller and
Buyer.
B. The primary asset of the Operating Partnership is a leasehold
estate (the "LEASEHOLD ESTATE") in a medical office complex (the
"PROPERTY") located on West Third Street in Los Angeles, California, and
commonly known as the "Cedars-Sinai Medical Office Complex".
C. On March 20, 1997, the Operating Partnership entered into a
contract (the "ARDEN SALE CONTRACT") with Arden Realty Limited Partnership,
a Maryland limited partnership ("ARDEN"), providing for a sale of the
Property, subject to Buyer's right of first opportunity under Section 6.2D
of the Operating Partnership Agreement. A copy of the Arden Sale Contract
is attached as Exhibit "A".
D. On April 21, 1997, Buyer exercised its right of first
opportunity under Section 6.2D of the Operating Partnership Agreement to
purchase Seller's partnership interest (the "SUBJECT PARTNERSHIP INTEREST")
in the Operating Partnership for a purchase price and terms that will
produce for Seller the same consideration at the same time or times as
Seller would have received if the Operating Partnership had been dissolved
and wound up following such sale and the proceeds of such sale and other
assets of the Operating Partnership distributed to the partners of the
Operating Partnership in accordance with the provisions of the Operating
Partnership Agreement.
E. Buyer and Seller desire to enter into this Agreement to confirm
the terms upon which the Subject Partnership Interest will be sold by
Seller to Buyer.
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE.
1.1 AGREEMENT. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the Subject Partnership Interest, on the terms and
conditions hereinafter set forth.
1.2 STRUCTURE OF TRANSACTION. Notwithstanding anything to the
contrary in this Agreement or any document executed in connection herewith,
the legal standard to be imposed in determining the liabilities, rights,
duties and obligations of the parties in connection with the purchase and
sale of the Subject Partnership Interest contemplated hereby relating to
disclosure, representations and warranties, or any other matter, shall be
no greater in this transaction than those standards that would have been
applicable if this transaction had been structured as a dissolution of the
Operating Partnership (under which all assets of the Operating Partnership
were distributed to its partners in kind) and a sale to Buyer of Seller's
interest in the assets of the Operating Partnership.
2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for
the Subject Partnership Interest shall be $106,000,000 less the sum of the
"Land Credit", "Prudential Leasehold Loan Credit", "Arden Cost Credit" and
"Brokerage Fee Credit", as further adjusted by the "Arden Proration
Adjustment", "Operating Cash Adjustment", and "Time Value Adjustment" (as
such quoted terms are defined below), it being the intention of the parties
that the Purchase Price have the same present value as of April 28, 1997 as
the net amount that Seller would have received from the sale of the
Leasehold Estate and the land underlying the Leasehold Estate to Arden (for
an all-cash $106,000,000 purchase price) under the Arden Sale Contract if
the Operating Partnership had been dissolved and wound up following such
sale and the proceeds of such sale and other assets of the Operating
Partnership distributed to the partners of the Operating Partnership in
accordance with the provisions of the Operating Partnership Agreement.
2.1 LAND CREDIT. As used herein, the "LAND CREDIT" means the
purchase price (without adjustment for prorations or costs but reduced by
the $25,000 option payment) under that certain option agreement ("LAND
OPTION AGREEMENT") captioned "OPTION AGREEMENT", dated as of October 1,
1996, between the Prudential Insurance Company of America, a New Jersey
corporation ("PRUDENTIAL"), and the Operating Partnership. For purposes of
this Agreement, the "Land Option Agreement" shall be deemed to include the
purchase and sale agreement, if any, executed and delivered pursuant
thereto. The Land Credit is $16,831,000, calculated as follows:
$16,856,000 less $25,000.
2.2 PRUDENTIAL LEASEHOLD LOAN CREDIT. As used herein, the
"PRUDENTIAL LEASEHOLD LOAN CREDIT" means the amount which would have been
required to be paid to Prudential on the "ARDEN CLOSING DATE" (i.e., the
"Closing Date" under the Arden Sale Contract, which is stipulated to be
April 28, 1997) to fully satisfy the existing financing (the "PRUDENTIAL
LOAN") covering the Property in favor of Prudential, which is secured by
that certain deed of trust (as amended, the "PRUDENTIAL DEED OF TRUST")
captioned "DEED OF TRUST", dated as of January 15, 1991, by the Operating
Partnership, as trustor, in favor of Prudential, as beneficiary, as
recorded in the Official Records of Los Angeles County, California as
Instrument No. 91-63945 (assuming for purposes of this Section 2.2 that the
Prudential Loan matured on the Arden Closing Date and that the Land and
Leasehold Estate were sold on the Arden Closing Date to Arden under the
Arden Sale Contract). The Prudential Leasehold Loan Credit is $82,010,590,
which has been calculated as follows: $82,298,021 principal balance PLUS
$459,081 of accrued interest for the period from April 10, 1997 to
April 28, 1997, inclusive, LESS a $746,512 prepayment discount
(attributable to the period from October 1, 1996 to April 28, 1997,
inclusive).
2.3 ARDEN COST CREDIT. As used herein, the "ARDEN COST CREDIT"
means the following closing costs that would have actually been incurred by
the Operating Partnership and allocated to the Operating Partnership under
the Arden Sale Contract (the foregoing not being intended to include the
attorneys' fees of Buyer or any other costs not hereafter specified):
transfer taxes (i.e., $593,600), CLTA title insurance premium (excluding
the cost of the closing binder previously purchased), 50% of the cost of
Arden's environmental report (such 50% share not to exceed $5,000),
recording charges and 50% of the escrow fees.
2.4 BROKERAGE FEE CREDIT. As used herein, the "BROKERAGE FEE
CREDIT" means an amount equal to the brokerage fee payable to Richard
Ellis, LLC and Alexis A. Fafenrodt (collectively, the "BROKER") pursuant to
that certain agreement (the "BROKERAGE AGREEMENT") dated as of August 1,
1995 between the Operating Partnership and Richard Ellis, LLC by reason of
the closing of the transaction contemplated by this Agreement, as amended
by amendments dated July 31, 1996, and December 31, 1996. The Brokerage
Fee Credit is $402,000.
2.5 ARDEN PRORATION ADJUSTMENT. As used herein, the "ARDEN
PRORATION ADJUSTMENT" means an adjustment to the Purchase Price as follows:
the Purchase Price shall be increased by the net credit, if any, that would
have been made in favor of Arden on the Arden Closing Date under the
prorations under the Arden Sale Contract; and, if there would have been no
net credit in favor of Arden, but instead a net credit in favor of the
Operating Partnership, then the Purchase Price shall be increased by the
amount of such net credit. Any post-closing adjustment that would have
been payable to Arden shall be paid promptly out of the "Reserve" (as
hereinafter defined) or if there are not sufficient funds in the Reserve,
paid promptly in cash by Seller to Buyer; and any post-closing adjustment
that would have been payable to the Operating Partnership shall be paid
promptly in cash by Buyer to Seller. Notwithstanding the foregoing, in
determining the Arden Proration Adjustment, there shall be no credit given
to Arden (and consequently the Purchase Price shall not be reduced and,
notwithstanding the proration provisions in the Arden Sale Contract, shall
not reflect a proration credit to Arden) for security deposits (it being
understood that security deposits are already addressed in the Operating
Cash Adjustment).
2.6 OPERATING CASH ADJUSTMENT. As used herein, the "OPERATING CASH
ADJUSTMENT" means an adjustment to the Purchase Price as follows: the
Purchase Price shall be increased by the total amount of cash of the
Operating Partnership as of April 28, 1997, regardless of whether such cash
is held in a lock box account, a separate account or otherwise; provided,
however, that such amount shall be REDUCED by (1) the sum of (a) the
security deposits then held by the Operating Partnership pursuant to tenant
leases, and (b) the amount required to be held in the Reserve under Section
5.5, and INCREASED by (2) the sum of (a) the total amount of leasing
commissions, tenant improvements costs and other expenditures actually paid
by the Operating Partnership that would not have been the responsibility of
the Operating Partnership under the Arden Sale Contract and, for this
purpose, it shall be assumed that all leases entered into on or after March
20, 1997, and all costs associated therewith, were approved by Arden, and
(b) any delinquent charge, delinquent interest, attorneys' fees or other
amount expended by the Operating Partnership by reason of the late payment
of real estate taxes (it being understood that any reimbursement from Wells
Fargo, N.A. of amounts taken into account under this clause (b) shall
belong to Buyer).
2.7 TIME VALUE ADJUSTMENT. As used herein, the "TIME VALUE
ADJUSTMENT" means an adjustment to the Purchase Price as follows: the
Purchase Price shall be increased by the product of (1) 6%, (2) $6,500,000,
(3) 1/360, and (4) the number of days during the period from (and
including) April 28, 1997 to (but not including) the Closing Date.
2.8 CALCULATION. The calculation of the Purchase Price shall be
made on the basis of a written statement submitted by Buyer to Seller and
"Escrow Holder" (as hereinafter defined) seven days prior to the Closing
Date and shall be subject to the approval of Buyer and Seller (which
statement shall include a list of delinquent rental amounts as of April 28,
1997 and will indicate the extent to which such delinquent rental amounts
have been received). In the event any of the calculations under this
Section 2 prove to be incorrect for any reason or there would have been
post-closing adjustments under the Arden Sale Contract, then any party
shall be entitled to an adjustment to correct the same provided a written
request is given prior to December 1, 1997. Buyer shall inform Seller in
writing of the collection of any delinquent rentals or any errors or other
post-closing adjustments immediately after learning of the same (and this
obligation shall survive the closing).
3. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to
Seller by Buyer as follows:
3.1 ESCROW DEPOSIT. Within two business days after the execution
and delivery of this Agreement, Buyer shall wire transfer in immediately
available federal funds $1,500,000 (which, together with all interest
earned thereon, is herein called the "ESCROW DEPOSIT") to Chicago Title
Company/Escrow Division, at its offices at 700 South Flower Street, Ninth
Floor, Los Angeles, California, Attention: Ms. Rose Martinez, which
company, in its capacity as escrow holder hereunder, is called "ESCROW
HOLDER". Such amount shall be held by Escrow Holder as a deposit against
the Purchase Price in accordance with the terms and provisions of this
Agreement. At all times in which the Escrow Deposit is being held by the
Escrow Holder, the Escrow Deposit shall be invested by Escrow Holder in the
following investments ("APPROVED INVESTMENTS"): (i) United States Treasury
obligations, (ii) United States Treasury-backed repurchase agreements
issued by a major national money center banking institution reasonably
acceptable to the Company, or (iii) such other manner as may be reasonably
agreed to by Seller and Buyer. The Escrow Deposit shall be disposed of by
Escrow Holder only as provided in this Agreement.
3.2 CLOSING PAYMENT. The Purchase Price, as adjusted by the
application of the Escrow Deposit, shall be paid to Seller by wire transfer
of immediately available federal funds (through the escrow described in
Section 5) on the "Closing Date", as hereinafter defined. The aggregate
amount to be paid under this subsection 3.2 is herein referred to as the
"CLOSING PAYMENT".
4. CONDITIONS PRECEDENT. There are no conditions precedent to the
closing of this Agreement.
5. CLOSING PROCEDURE. Subject to the terms and conditions set
forth in this Agreement, the sale and purchase herein provided shall be
consummated (the "CLOSING") at a closing conference ("CLOSING CONFERENCE"),
which shall be held on the Closing Date at the offices of Dewey Ballantine,
333 South Hope Street, 30th Floor, Los Angeles, California 90071. As used
herein, "CLOSING DATE" means Friday, May 30, 1997, or such earlier date as
may be agreed upon by Seller and Buyer.
5.1. ESCROW. The Closing shall be accomplished through an escrow
with Escrow Holder. On or before 11:00 A.M. on the Closing Date, Buyer
shall deliver or cause to be delivered to the Title Company the Closing
Payment by wire transfer of immediately available federal funds. In
addition, on or before 11:00 A.M. on the Closing Date, Seller and Buyer
shall deliver to the Title Company the environmental indemnification
required to be delivered under the Land Option Agreement. Such delivery
shall be made pursuant to escrow instructions ("ESCROW INSTRUCTIONS") to be
executed among Buyer, Seller and Title Company in form reasonably
acceptable to such parties in order to effectuate the intent hereof. The
conditions to the closing of such escrow shall include the Title Company's
receipt of the Closing Payment, and a notice from each of Buyer and Seller
authorizing Title Company to close the transactions as contemplated herein
(each of Buyer and Seller being obligated to deliver such authorization
notice at the Closing Conference as soon as it is reasonably satisfied that
the other party is in a position to deliver the items to be delivered by
such other party under subsection 5.2 below).
5.2. DELIVERY TO THE PARTIES. Upon the satisfaction of the
conditions set forth in the Escrow Instructions, then (x) the Closing
Payment shall be paid to Seller in accordance with Section 3.2, and (y) at
the Closing Conference, the following items shall be delivered:
5.2.1 SELLER DELIVERIES. Seller shall deliver, or cause to be
delivered, to Buyer the following:
(a) An Assignment and Assumption Agreement ("ASSIGNMENT
AND ASSUMPTION AGREEMENT") duly executed by Seller in the form of Exhibit
"B";
(b) Evidence reasonably satisfactory to Buyer and Title
Company respecting the due organization of Seller and the due authorization
and execution by Seller of this Agreement and the documents required to be
delivered by it hereunder;
(c) A duly executed Release in the form of Exhibit "C";
and
(d) Such additional documents as may be reasonably
required by Buyer or Title Company in order to consummate the transactions
hereunder (provided the same do not materially increase the costs to, or
liability or obligations of, Seller in a manner not otherwise provided for
herein).
5.2.2 BUYER'S DELIVERIES. Buyer shall deliver, or cause to be
delivered to Seller the following:
(a) An Assignment and Assumption Agreement duly
executed by Buyer;
(b) Evidence reasonably satisfactory to Seller and
Title Company respecting the due organization of Buyer and the due
authorization and execution of this Agreement and the documents required to
be delivered by it hereunder;
(c) A Release, duly executed by the Operating
Partnership, Buyer and Wright Runstad and Associates Limited Partnership, a
Washington limited partnership ("MANAGER"), in the form of Exhibit "D"; and
(d) Such additional documents as may be reasonably
required by Seller or Title Company in or to consummate the transactions
hereunder (provided the same do not materially increase the costs to, or
liability or obligations of, Buyer in a manner not otherwise provided for
herein).
5.3 CLOSING COSTS. On the Closing Date, Buyer shall pay all
closing costs, including, transfer, sales and use taxes, if any, payable in
connection with the transfers under this Agreement, the escrow fees of
Escrow Holder hereunder, and the commission due Broker.
5.4 PRORATIONS. There will be no prorations under this Agreement
(although the Purchase Price will be increased or decreased by the Arden
Proration Credit as provided in Section 2.3).
5.5 RESERVE. At closing, Buyer shall cause $188,000 of Operating
Partnership cash to be held as a reserve (the "RESERVE") to pay the items
specified in Exhibit "E", but only to the extent the same would have been
payable had the closing under the Arden Sale Contract occurred on the Arden
Closing Date. The Reserve shall be maintained in an interest-bearing
account with Wells Fargo Bank, N.A. in the name of Seller and Buyer. All
interest earned on the Reserve shall be added to and become a part of the
Reserve. The Reserve may be utilized by either Buyer or Seller to pay
expenses of the Operating Partnership specified on Exhibit "E", but only
after the prior written consent of the other party has been obtained (which
consent shall not be withheld if the expenditure is a reasonable
expenditure of the Operating Partnership identified on Exhibit "E"). To
the extent any portion of the Reserve is not so expended by December 1,
1997, the balance thereof shall be immediately distributed to Seller.
6. REPRESENTATIONS AND WARRANTIES.
6.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
6.1.1 GENERAL DISCLAIMER. Except as specifically set forth in
subsection 6.1.2 below, the sale of the Subject Partnership Interest
hereunder is and will be made on an "as is" basis, without representations
and warranties of any kind or nature, express, implied or otherwise,
including any representation or warranty concerning the Operating
Partnership or its assets. Buyer acknowledges that it is a general partner
in the Operating Partnership, an affiliate of the manager of the Property
and is familiar with the Operating Partnership and its assets. Except as
to matters specifically set forth in subsection 6.1.2 below, Buyer will
proceed with the closing contemplated hereby solely on the basis of its own
physical, financial and other examinations, reviews and inspections.
6.1.2 LIMITED REPRESENTATIONS AND WARRANTIES OF SELLER.
Subject to the provisions of subsection 6.1.1 above, Seller hereby
represents and warrants to Buyer as follows:
(a) ORGANIZATION, ETC. Seller is a limited partnership
duly formed and validly existing under the laws of the State of
Illinois and has all requisite partnership power and partnership authority
to own and lease its properties and to carry on its business as presently
conducted.
(b) AUTHORIZATION. Seller has all requisite
partnership power and partnership authority to execute and deliver this
Agreement and the other agreements and instruments to be executed and
delivered by it hereunder and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by Seller of
this Agreement and such other agreements and instruments has been duly and
validly authorized by the partners of Seller, and no other partnership
action or authorization on behalf of Seller is required in connection
therewith.
(c) VALIDITY AND ENFORCEABILITY. This Agreement has
been duly authorized, executed and delivered by Seller and constitutes and
the other agreements and instruments to be executed and delivered hereunder
by Seller, when executed and delivered by Seller, will constitute, legal,
valid and binding obligations of Seller enforceable against Seller in
accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting the enforcement of creditors' rights generally or
by general equitable principles.
(d) NO CONFLICT. Neither the execution and delivery of
this Agreement by Seller nor the execution and delivery by Seller of the
other agreements and instruments to be executed and delivered by it
hereunder, nor the consummation of the transactions contemplated hereunder
or thereunder, will (i) conflict with or result in a breach or violation
of, or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon, any of the properties or assets of Seller
pursuant to the limited partnership agreement of Seller or any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which
Seller is a party or by which it is bound or to which any of its properties
or assets is subject or (ii) violate any law, statute, rule, regulation,
judgment or decree applicable to Seller. No third party consents (other
than from Prudential Insurance Company of America) are required by the
terms of any indenture, mortgage, lease, loan agreement or other agreement
or instrument to which Seller is a party or by which it is bound or to
which any of its properties or assets is subject for the execution and
delivery of this Agreement or any other agreement or instrument to be
executed and delivered by Seller hereunder or the consummation of the
transactions provided for herein or therein.
(e) NO GOVERNMENTAL CONSENT OR APPROVAL REQUIRED. No
consent, approval or authorization of, or declaration to or filing with,
any governmental or regulatory authority is required for the valid
execution and delivery by Seller of this Agreement or any other agreement
or instrument to be executed and delivered by Seller hereunder or the
consummation of the transactions provided for herein or therein.
(f) SUBJECT PARTNERSHIP INTEREST. Seller has not sold,
encumbered or otherwise transferred the Subject Partnership Interest except
for (i) the assignment and security interest provided for in Section 9.3 of
the Operating Partnership Agreement and (ii) the rights in favor of Buyer
created by this Agreement.
6.2 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to Seller as follows:
6.2.1 ORGANIZATION, ETC. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Washington and has all requisite partnership power and partnership
authority to own and lease its properties and to carry on its business as
presently conducted.
6.2.2 AUTHORIZATION. Buyer has all requisite partnership power
and partnership authority to execute and deliver this Agreement and the
other agreements and instruments to be executed and delivered by it
hereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance by Buyer of this
Agreement and such other agreements and instruments has been duly and
validly authorized by the partners of Buyer, and no other action or
authorization on behalf of Buyer is required in connection therewith.
6.2.3 VALIDITY AND ENFORCEABILITY. This Agreement has been
duly authorized, executed and delivered by Buyer and constitutes and the
other agreements and instruments to be executed and delivered hereunder by
Buyer, when executed and delivered by Buyer, will constitute, legal, valid
and binding obligations of Buyer enforceable against Buyer in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating
to or affecting the enforcement of creditors' rights generally or by
general equitable principles.
6.2.4 NO CONFLICT. Neither the execution and delivery of this
Agreement by Buyer nor the execution and delivery by Buyer of the other
agreements and instruments to be executed and delivered by it hereunder,
nor the consummation of the transactions contemplated hereunder or
thereunder, will (i) conflict with or result in a breach or violation of,
or constitute a default under, or result in the creation of any lien,
charge or encumbrance upon, any of the properties or assets of Buyer or the
Operating Partnership pursuant to the Operating Partnership Agreement or
the partnership agreement of Buyer or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which Buyer or the Operating
Partnership is a party or by which it is bound or to which any of its
properties or assets is subject or (ii) violate any law, statute, rule,
regulation, judgment or decree applicable to Buyer or the Operating
Partnership. No third party consents (other than from Prudential Insurance
Company of America) are required by the terms of any indenture, mortgage,
lease, loan agreement or other agreement or instrument to which Buyer or
the Operating Partnership is a party or by which any of them is bound or to
which any of their respective properties or assets is subject for the
execution and delivery of this Agreement or any other agreement or
instrument to be executed and delivered by Buyer hereunder or the
consummation of the transactions provided for herein or therein.
6.2.5 NO GOVERNMENTAL CONSENT OR APPROVAL REQUIRED. No
consent, approval or authorization of, or declaration to or filing with,
any governmental or regulatory authority is required for the valid
execution and delivery by Buyer of this Agreement or any other agreement or
instrument to be executed and delivered by Buyer hereunder or the
consummation of the transactions provided for herein or therein.
6.2.6 INVESTMENT INTENT, ETC. Buyer (i) is acquiring the
Subject Partnership Interest for its own account for investment, not as
nominee or agent, and not with a view to or for sale in connection with any
distribution of any part thereof and (ii) has no present intention of
selling, granting participations in, or otherwise distributing the same.
Buyer understands that the Subject Partnership Interest has not been
registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT") by reason of the reliance by Seller on exemptions from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof or under any "Blue Sky" law of any state by reason of the reliance
by Seller on exemptions thereunder, and that Seller's reliance is
predicated in part on Buyer's representations set forth herein. By reason
of its business and financial experience, Buyer has the capacity to protect
its own interests in connection with the transactions contemplated hereby
and is able to bear the economic risk thereof. Buyer understands that the
Subject Partnership Interest may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act and applicable
state "Blue Sky" laws or exemptions therefrom, and that in the absence of
an effective registration statement covering the same or available
exemptions from registration under the Securities Act, the Subject
Partnership Interest must be held indefinitely.
7. TAX ADVICE. Buyer has obtained or will obtain independent
advice on all tax matters and, without limitation on Section 8.1, shall
indemnify, defend and hold Seller free and harmless from any tax
consequences whatsoever as a result of the transaction contemplated by the
agreement (the "CONTRIBUTION AGREEMENT") Buyer has entered into with a new
investor ("NEW INVESTOR") on April 20, 1997 and further acknowledges that
Seller has not seen the Contribution Agreement and Seller has not made any
representations or warranties express or implied about any tax consequences
relating to such transaction or any of the transactions previously
considered by Buyer that involved Arden. Buyer further acknowledges that
the tax and accounting treatment of any transfer of the Property by Buyer
pursuant to the Contribution Agreement is the sole responsibility of Buyer
and that Seller is not obligated to take any action in connection therewith
or to take any action not permissible under applicable laws.
8. INDEMNIFICATION.
8.1 INDEMNIFICATION OF SELLER. If the Closing occurs, then Buyer
shall protect, defend, indemnify and hold Seller harmless from and
against any "Claim" (as hereinafter defined) in any way related to (a) the
Operating Partnership or its assets or the Operating Partnership Agreement,
arising or accruing on or after the Arden Closing Date (including, without
limitation, Claims related to obligations under contracts, leases and other
agreements entered into by the Operating Partnership prior to the Arden
Closing Date, to the extent such obligations relate to the period on or
after the Arden Closing Date, but excluding any Claims to the extent
arising from Seller's gross negligence or wilful misconduct during such
period); (b) the Contribution Agreement; and (c) any closing costs,
including transfer taxes, payable in connection with this Agreement or the
Contribution Agreement. "CLAIM" means any obligation, liability, claim
(including any claim for damage to property or injury to or death of any
persons), lien or encumbrance, loss, damage, cost or expense (including any
judgment, award, settlement, reasonable attorneys' fees and other costs and
expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim [including appellate proceedings],
and any collection costs or enforcement costs).
8.2 GENERAL PROVISIONS. The indemnification obligations under this
Agreement shall be subject to the following provisions:
8.2.1 PROCEDURE. The party seeking indemnification
("INDEMNITEE") shall notify the other party ("INDEMNITOR") of any Claim
against Indemnitee within fifteen (15) days after it has notice of such
Claim, but failure to notify Indemnitor shall in no case prejudice the
rights of Indemnitee under this Agreement unless Indemnitor shall be
prejudiced by such failure and then only to the extent of such prejudice.
Should Indemnitor fail to discharge or undertake to defend Indemnitee
against such liability (with counsel approved by Indemnitee), within ten
(10) days after Indemnitee gives Indemnitor written notice of the same,
then Indemnitee may settle such Claim, and Indemnitor's liability to
Indemnitee shall be conclusively established by such settlement, the amount
of such liability to include both the settlement consideration and the
reasonable costs and expenses, including attorneys' fees, incurred by
Indemnitee in effecting such settlement. Indemnitee shall have the right
to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of Indemnitee unless: (a) the
employment of such counsel shall have been authorized in writing by
Indemnitor in connection with the defense of such action, (b) Indemnitor
shall not have employed counsel to direct the defense of such action, or
(c) Indemnitee shall have reasonably concluded that there may be defenses
available to it which are different from or additional to those available
to Indemnitor (in which case Indemnitor shall not have the right to direct
the defense of such action or of Indemnitee), in any of which events such
fees and expenses shall be borne by Indemnitor.
8.2.2 BENEFICIARIES. The indemnification obligations under
this Agreement shall also extend to any present or future advisor, trustee,
director, officer, partner, member, employee, beneficiary, shareholder,
participant or agent of or in Indemnitee or any entity now or hereafter
having a direct or indirect ownership interest in Indemnitee.
8.2.3 SURVIVAL. The indemnification obligations under this
Agreement shall survive the closing of the transactions hereunder.
8.3 CROSS INDEMNIFICATION. Each party shall indemnify, defend and
hold harmless the other party and any affiliate of such other party, from
all Claims (including reasonable attorneys' fees) arising as a result of a
breach or default under or in connection with (a) the Contribution
Agreement (but only if (x) the same would also have been a default by the
Operating Partnership under the Arden Sale Contract had the Arden Sale
Contract not been terminated and (y) New Investor has commenced litigation
with respect to the same prior to December 1, 1997), or (b) the Land Option
Agreement (including any environmental indemnification delivered by the
Operating Partnership pursuant to the Land Option Agreement); but, in
either case, only to the extent caused by a "Unilateral Default"
(hereinafter defined) by the indemnifying party. As used herein, a
"UNILATERAL DEFAULT" by a party means a misrepresentation under or in
connection with (a) the Contribution Agreement (but only if the same would
also have been a misrepresentation by the Operating Partnership under the
Arden Sale Contract had the Arden Sale Contract not been terminated), or
(b) the Land Option Agreement (including any environmental indemnification
delivered by the Operating Partnership pursuant to the Land Option
Agreement); but, in either case, only if such misrepresentation is actually
known to be a misrepresentation by such party or any of its affiliates but
not by the other party or any of its affiliates. For purposes of the
preceding sentence, the Operating Partnership shall not be considered an
affiliate of either party to this Agreement.
9. DISPOSITION OF ESCROW DEPOSIT. IF THE TRANSACTION HEREIN
PROVIDED SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT UNDER THIS
AGREEMENT, AND BUYER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN
THE ESCROW DEPOSIT SHALL BE RETURNED TO BUYER, AND NO PARTY SHALL HAVE ANY
FURTHER OBLIGATION OR LIABILITY TO THE OTHER (EXCEPT AS PROVIDED IN
SECTIONS 10.1 AND 10.10); PROVIDED, HOWEVER, IF THE TRANSACTIONS HEREUNDER
SHALL FAIL TO CLOSE SOLELY BY REASON OF SELLER'S DEFAULT, AND BUYER SHALL
HAVE FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND SHALL BE READY, WILLING
AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO SPECIFICALLY ENFORCE
THIS AGREEMENT (BUT NO OTHER ACTION, FOR DAMAGES OR OTHERWISE, SHALL BE
PERMITTED). IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL NOT CLOSE
FOR ANY REASON OTHER THAN THE DEFAULT OF SELLER, THEN THE ESCROW DEPOSIT
SHALL BE DELIVERED TO SELLER AS LIQUIDATED DAMAGES UNDER AND IN CONNECTION
WITH THIS AGREEMENT. IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL
CLOSE, THE ESCROW DEPOSIT SHALL BE APPLIED AS A PARTIAL PAYMENT OF THE
PURCHASE PRICE. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE
THAT SELLER WILL INCUR EXPENSE IN CONNECTION WITH THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT AND THAT THE SUBJECT PARTNERSHIP INTEREST,
WILL BE REMOVED FROM THE MARKET; FURTHER, THAT IT IS EXTREMELY DIFFICULT
AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER CAUSED BY
THE BREACH BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OF THE
CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE
AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER'S BREACH
OR DEFAULT. IN THE EVENT THE SALE CONTEMPLATED HEREBY SHALL NOT BE
CONSUMMATED ON ACCOUNT OF BUYER'S DEFAULT, THEN THE RETENTION OF THE ESCROW
DEPOSIT SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT BY
REASON OF SUCH DEFAULT, SUBJECT TO THE PROVISIONS OF SUBSECTIONS 10.1
AND 10.10 AND SECTION 6.2D OF THE OPERATING PARTNERSHIP AGREEMENT (AS TO
WHICH BUYER SHALL HAVE NO FURTHER RIGHTS) AND THE PARTIES SHALL TAKE SUCH
ACTION AS MAY BE REQUIRED TO CAUSE THE ESCROW DEPOSIT TO BE DELIVERED TO
SELLER.
_____________________ ___________________
Buyer's Initials Seller's Initials
10. MISCELLANEOUS.
10.1 BROKERS.
10.1.1 GENERALLY. Except as provided in subsection 10.1.2
below: (1) Seller represents and warrants to Buyer, and Buyer represents
and warrants to Seller that no broker or finder has been engaged by it,
respectively, in connection with any of the transactions contemplated by
this Agreement or to its knowledge is in any way connected with any of such
transactions; and (2) in the event of a claim for broker's or finder's fee
or commissions in connection herewith, then Seller shall indemnify and
defend Buyer from the same if it shall be based upon any statement or
agreement alleged to have been made by Seller; and Buyer shall defend and
indemnify Seller from the same if it shall be based upon any statement or
agreement alleged to have been made by Buyer.
10.1.2 OPERATING PARTNERSHIP BROKER. The Operating
Partnership has engaged Broker. Buyer shall pay the brokerage fee due
Broker under the Brokerage Agreement and shall defend and indemnify Seller
from and against any Claims by, through or under Broker under the Brokerage
Agreement. However, the brokerage fee that Buyer is obligated to pay under
this Section 10.1.2 shall not exceed the Brokerage Fee Credit.
10.1.3 SURVIVAL. The indemnification obligations under
this Section 10.1 shall survive the closing of the transactions hereunder
or the earlier termination of this Agreement.
10.2 LIMITATION OF LIABILITY.
10.2.1 GENERALLY. Notwithstanding anything to the
contrary contained in this Agreement:
(a) If the closing of the transaction hereunder shall have
occurred, then (except to the extent Buyer shall have waived, relinquished
or released any applicable rights in further limitation), the aggregate
liability of Seller (and any direct or indirect partner in Seller) arising
pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express or
implied) of Seller under this Agreement (or any document executed or
delivered in connection herewith) shall not exceed $500,000 (plus up to
$50,000 in the aggregate for legal fees and costs to the extent payable
pursuant to Section 10.10 hereof), and then only to the extent of a
specific breach as to which Buyer has given Seller written notice on or
before December 1, 1997 and commenced suit within 10 days thereafter.
Except as provided in Section 10.2.2, no constituent member or partner in
or agent of Seller, nor any advisor, trustee, director, officer, employee,
beneficiary, shareholder, partner, member, participant, representative or
agent of any partnership, limited liability company, corporation or trust
that is or becomes a constituent member or partner in Seller shall have any
personal liability, directly or indirectly, under or in connection with
this Agreement or any agreement made or entered into under or pursuant to
the provisions of this Agreement, or any amendment or amendments to any of
the foregoing made at any time or times, heretofore or hereafter, and Buyer
and its successors and assigns and, without limitation, all other persons
and entities, shall look solely to Seller's assets for the payment of any
claim or for any performance, and Buyer, on behalf of itself and its
successors and assigns, hereby waives any and all such personal liability.
Neither the negative capital account of any constituent member or partner
in Seller (or in any other constituent member or partner of Seller), nor
any obligation of any constituent member or partner in Seller (or in any
other constituent member or partner of Seller) to restore a negative
capital account or to contribute capital to Seller (or to any other
constituent member or partner of Seller), shall at any time be deemed to be
the property or an asset of Seller or any such other constituent member or
partner (and neither Buyer nor any of its successors or assigns shall have
any right to collect, enforce or proceed against or with respect to any
such negative capital account of a member's or partner's obligation to
restore or contribute).
10.2.2 LIABILITY OF JMB REALTY CORPORATION. If during the
period from the Closing Date through December 1, 1997, a written demand for
indemnification under Section 8.3 has been made by Buyer by reason of a
claim made against Buyer by New Investor under the Contribution Agreement
for a matter that constitutes a Unilateral Default by Seller, then JMB
Realty Corporation shall be liable for any amounts finally determined to be
payable by Seller by reason of such demand up to the amount by which
$550,000 shall exceed the amount of cash reserves maintained by Seller
during such period (but in no event shall JMB Realty Corporation be liable
hereunder for more than $550,000 [less such reserves] in the aggregate).
10.3 MODIFICATION. This Agreement may not be modified or amended
except by written agreement signed by all parties.
10.4 MATTERS OF CONSTRUCTION.
10.4.1 INCORPORATION OF EXHIBITS. All exhibits attached
and referred to in this Agreement are hereby incorporated herein as fully
set forth in (and shall be deemed to be a part of) this Agreement.
10.4.2 ENTIRE AGREEMENT. This Agreement contains the
entire agreement between the parties respecting the matters herein set
forth and supersedes all prior agreements between the parties hereto
respecting such matters.
10.4.3 TIME OF THE ESSENCE. Subject to subsection 10.4.4
below, time is of the essence of this Agreement.
10.4.4 NON-BUSINESS DAYS. Whenever action must be taken
(including the giving of notice or the delivery of documents) under this
Agreement during a certain period of time (or by a particular date) that
ends (or occurs) on a non-business day, then such period (or date) shall be
extended until the immediately following business day. As used herein,
"BUSINESS DAY" means any day other than a Saturday, Sunday or federal or
California, Washington or Illinois state holiday.
10.4.5 SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall,
to any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each such term and
provision of this Agreement shall be valid and be enforced to the fullest
extent permitted by law.
10.4.6 INTERPRETATION. Words used in the singular shall
include the plural, and vice-versa, and any gender shall be deemed to
include the other. Whenever the words "including", "include" or "includes"
are used in this Agreement, they should be interpreted in a non-exclusive
manner. The captions and headings of the Sections of this Agreement are
for convenience of reference only, and shall not be deemed to define or
limit the provisions hereof. Except as otherwise indicated, all Exhibit
and Section references in this Agreement shall be deemed to refer to the
Exhibits and Sections in this Agreement. Each party acknowledges and
agrees that this Agreement (a) has been reviewed by it and its counsel;
(b) is the product of negotiations between the parties, and (c) shall not
be deemed prepared or drafted by any one party. In the event of any
dispute between the parties concerning this Agreement, the parties agree
that any ambiguity in the language of the Agreement is to not to be
resolved against Seller or Buyer, but shall be given a reasonable
interpretation in accordance with the plain meaning of the terms of this
Agreement and the intent of the parties as manifested hereby.
10.4.7 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (WITHOUT REGARD TO CONFLICTS OF LAW).
10.4.8 THIRD PARTY BENEFICIARIES. Except as provided in
Sections 8.2.2 and 10.2, Seller and Buyer do not intend by any provision of
this Agreement to confer any right, remedy or benefit upon any third party,
and no third party shall be entitled to enforce or otherwise shall acquire
any right, remedy or benefit by reason of any provision of this Agreement.
10.5 EFFECTIVENESS OF AGREEMENT. In no event shall any draft of
this Agreement create any obligations or liabilities, it being intended
that only a fully executed and delivered copy of this Agreement will bind
the parties hereto after satisfaction of the conditions in Section 4
hereof.
10.6 POST-CLOSING ACCESS. For a period of five years subsequent to
the Tax Termination (as hereinafter defined), Seller and its respective
employees, agents and representatives shall be entitled to access during
normal business hours to all documents, books and records given to Buyer by
Seller upon reasonable prior notice to Buyer, and shall have the right to
make copies of such documents, books and records at such Seller's expense.
10.7 TAX MATTERS
10.7.1 PREPARATION OF TAX RETURNS. Seller shall cause to
be prepared the tax return of the Operating Partnership for the portion of
calendar year 1997 through the "TAX TERMINATION" (i.e., the termination of
the Operating Partnership under Section 708(b)(1)(B) of the Internal
Revenue Code resulting from the sale of the Subject Partnership Interest
contemplated by this Agreement). Such return is herein called the "FINAL
TAX RETURN" and shall be the final tax return of the Operating Partnership
(because the Operating Partnership will terminate and be dissolved by Buyer
on the Closing Date). The cost of preparing the Final Tax Return shall be
paid with the amounts reserved under Section 5.4 hereof.
10.7.2 DECISIONS AS TO PRE-CLOSING TAX RETURNS. Seller
shall continue to be the Tax Matters Partner with respect to Operating
Partnership tax matters for the Pre-Closing Tax Return tax year and any
prior year. Without limitation on the foregoing, Seller shall retain the
right to make all decisions as to accounting matters and tax elections
required or permitted to be made by Seller for the Pre-Closing Tax Return
tax year and any prior year.
10.7.3 COOPERATION. Buyer shall cause the Operating
Partnership (as constituted after the Closing) to cooperate fully and to
the extent reasonably requested by Seller (at Seller's expense) in
connection with the preparation of any Pre-Closing Tax Return and any
audit, litigation or other proceeding with respect to the Operating
Partnership (as constituted prior to the Closing). Such cooperation shall
include the retention and revision of Company records and other information
which is reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder.
10.8 SUCCESSORS AND ASSIGNS. Buyer may not assign or transfer its
rights or obligations under this Agreement without the prior written
consent of Seller (in which event such transferee shall assume in writing
all of the transferor's obligations hereunder, but such transferor shall
not be released from its obligations hereunder); provided, however, that,
upon delivery of an assumption agreement satisfactory to Seller, Seller
will not withhold its consent to the assignment by Buyer to a limited
partnership in which Buyer is the managing general partner and has not less
than a 51% interest in capital and profits in such limited partnership. No
consent given by Seller to any transfer or assignment of Buyer's rights or
obligations hereunder shall be construed as a consent to any other transfer
or assignment of Buyer's rights or obligations hereunder. No transfer or
assignment in violation of the provisions hereof shall be valid or
enforceable. Subject to the foregoing, this Agreement and the terms and
provisions hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
10.9 NOTICES. Any notice which a party is required or may desire to
give the other shall be in writing and shall be sent by personal delivery
or by mail (either [i] by United States registered or certified mail,
return receipt requested, postage prepaid, or [ii] by Federal Express or
similar generally recognized overnight carrier regularly providing proof of
delivery), addressed as follows (subject to the right of a party to
designate a different address for itself by notice similarly given):
TO BUYER:
Medical Office Buildings, Ltd.
c/o Wright Runstad & Co.
1191 Second Avenue, Suite 2000
Seattle, Washington 98101-2933
Attention: Mr. H. Jon Runstad
Telecopier: (206) 223-8791
Telephone: (206) 447-9000
With Copy To:
Dewey Ballantine
333 South Hope Street, 30th Floor
Los Angeles, California 90071
Attention: Alan Wayte, Esq.
Telecopier: (213) 625-0562
Telephone: (213) 626-3399
TO SELLER:
c/o JMB Realty Corporation
900 North Michigan Avenue
12th Floor
Chicago, Illinois 60611
Attention: Mr. Glenn E. Emig
Telecopier: (312) 975-2399
Telephone: (312) 975-2348
With Copy To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (SAC/GTB)
Telecopier: (310) 201-8922
Telephone: (310) 201-8900
TO ESCROW AGENT:
Chicago Title Company/Escrow Division
700 South Flower Street
Suite 900
Los Angeles, California 90017
Attention: Ms. Rose Martinez
Reference Escrow No.: 7151185B-X43
Telecopier: (213) 488-4384
Telephone: (213) 488-4353
Any notice so given by mail shall be deemed to have been given as of the
date of delivery (whether accepted or refused) established by U.S. Post
Office return receipt or the overnight carrier's proof of delivery, as the
case may be. Any such notice not so given shall be deemed given upon
receipt of the same by the party to whom the same is to be given.
10.10 LEGAL COSTS. The parties hereto agree that they shall pay
directly any and all legal costs which they have incurred on their own
behalf in the preparation of this Agreement, all other agreements
pertaining to this transaction and that such legal costs shall not be part
of the closing costs. In addition, if any party hereto brings any suit or
other proceeding with respect to the subject matter or the enforcement of
this Agreement, the prevailing party or parties (as determined by the
court, agency or other authority before which such suit or proceeding is
commenced), in addition to such other relief as may be awarded, shall be
entitled to recover reasonable attorneys' fees, expenses and costs of
investigation actually incurred from the non-prevailing party or parties.
The foregoing includes attorneys' fees, expenses and costs of investigation
(including those incurred in appellate proceedings), costs incurred in
establishing the right to indemnification, or in any action or
participation in, or in connection with, any case or proceeding under
Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code Sections
101 et seq.), or any successor statutes.
10.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same document.
10.12 ARBITRATION OF CERTAIN DISPUTES. ANY CONTROVERSY OR CLAIM
ARISING UNDER OR RELATING TO THE TERMS OF THIS AGREEMENT OR ANY OF THE
EXHIBITS ATTACHED TO IT, AND ANY PROCEEDINGS TO ENFORCE THIS AGREEMENT OR
RIGHTS UNDER THIS AGREEMENT AND ITS EXHIBITS OTHER THAN THE "EXCLUDED
MATTERS" (AS HEREINAFTER DEFINED) SHALL BE SETTLED BY ARBITRATION IN THE
CITY OF LOS ANGELES, IN ACCORDANCE WITH THE THEN EXISTING RULES ("RULES")
OF PRACTICES AND PROCEDURE OF THE JUDICIAL ARBITRATION & MEDIATION SERVICES
("JAMS"). EACH PARTY SHALL SELECT AN ARBITRATOR FROM THE APPROVED LIST
PROVIDED BY JAMS, SUCH SELECTION TO BE MADE BY NOTIFICATION TO THE OTHER
PARTY GIVEN IN WRITING WITHIN FIFTEEN (15) DAYS OF THE SUBMISSION OF THE
DISPUTE TO ARBITRATION HEREUNDER. FAILURE OF A PARTY TO GIVE NOTICE OF ITS
SELECTION SHALL CAUSE THE SINGLE ARBITRATOR SELECTED BY THE OTHER PARTY TO
BE THE SOLE ARBITRATOR IN CONNECTION WITH THE APPLICABLE DISPUTE HEREUNDER.
IF EACH PARTY DESIGNATES AN ARBITRATOR, THEN WITHIN FIFTEEN (15) DAYS AFTER
BOTH ARBITRATORS HAVE BEEN SO DESIGNATED, SUCH ARBITRATORS SHALL DESIGNATE
A THIRD ARBITRATOR FROM A JAMS-APPROVED LIST. THE DECISION OF A MAJORITY
OF THE ARBITRATORS HEREUNDER SHALL BE CONCLUSIVE. AS SOON AS PRACTICABLE
AFTER SELECTION OF THE ARBITRATOR(S), THE ARBITRATOR(S) SHALL DETERMINE A
REASONABLE ESTIMATE OF THE ANTICIPATED FEES AND COSTS OF THE ARBITRATOR(S),
AND SHALL RENDER A STATEMENT TO EACH PARTY SETTING FORTH SAID FEES AND
COSTS. THEREAFTER EACH PARTY SHALL, WITHIN TEN (10) DAYS OF RECEIPT OF
SAID STATEMENT, DEPOSIT ONE-HALF OF SAID SUM WITH THE ARBITRATOR(S) TO BE
APPLIED AGAINST SUCH FEES AND COSTS (SUBJECT TO THE PROVISIONS OF THIS
AGREEMENT). FAILURE OF ANY PARTY TO MAKE SUCH DEPOSIT SHALL RESULT IN A
FORFEITURE BY THE NON-DEPOSITING PARTY OF THE RIGHT TO PROSECUTE OR DEFEND
THE CLAIM WHICH IS THE SUBJECT OF THE ARBITRATION, BUT SHALL NOT OTHERWISE
SERVE TO ABATE, STAY OR SUSPEND THE ARBITRATION PROCEEDINGS. THE
ARBITRATOR(S) SHALL HAVE THE RIGHT TO DETERMINE THE SCOPE OF THEIR
JURISDICTION, THE EXTENT OF DISCOVERY AND TO GRANT EQUITABLE RELIEF,
INCLUDING, WITHOUT LIMITATION, THE RIGHT TO ORDER THE EXPUNGEMENT OF ANY
LIS PENDENS WHICH THE ARBITRATOR(S) DEEM IMPROPER. THE PREVAILING PARTY
SHALL BE ENTITLED TO REASONABLE ATTORNEYS' FEES AND OTHER REASONABLE COSTS
INCURRED IN CONNECTION WITH THE ARBITRATION OR ANY OTHER LITIGATION PLUS
INTEREST ON THE AMOUNT OF ANY AWARD. JUDGMENT UPON THE AWARD RENDERED BY
THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.
THIS PARAGRAPH MUST BE INITIALED BELOW IN ORDER FOR THIS PARAGRAPH OF THE
AGREEMENT TO BE BINDING.
NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS
PROVIDED BY CALIFORNIA LAW, AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT
POSSESS TO HAVE THE DISPUTE LITIGATION IN A COURT OR JURY TRIAL. BY
INITIALLING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO
DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE
"ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO
ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.
YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ
AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF
THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL
ARBITRATION.
___________________ _________________
Buyer's Initials Seller's Initials
As used herein, "EXCLUDED MATTERS" means any controversy, claim or
proceeding with respect to or otherwise related to a breach or default of
any representation or warranty contained in this Agreement or in the Arden
Sale Contract (which matters shall not be subject to the arbitration
provisions contained herein).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
SELLER:
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-IX,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By: ______________________________
Name: ______________________________
Title: ______________________________
BUYER:
MEDICAL OFFICE BUILDINGS, LTD.,
a Washington limited partnership
By: WRIGHT RUNSTAD ASSOCIATES LIMITED
PARTNERSHIP,
a Washington limited partnership,
General Partner
By: WRIGHT RUNSTAD & CO.,
a Washington corporation,
General Partner
By: ____________________
Name: ____________________
Title: ____________________
ACKNOWLEDGMENT BY JMB REALTY CORPORATION
----------------------------------------
JMB Realty Corporation is executing this Acknowledgement for the sole
purpose of confirming its agreement to the provisions of Section 10.2.2 of
this Agreement.
JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:______________________________
Name:____________________________
Title:___________________________
ESCROW HOLDER'S ACKNOWLEDGEMENT
-------------------------------
The undersigned hereby executes this Agreement to evidence its agreement to
act as Escrow Holder in accordance with the terms of this Agreement.
Date: ___________, 1997 CHICAGO TITLE COMPANY
By: ________________________
Name: ________________________
Title: ________________________
"Escrow Holder"
ASSIGNMENT AND ASSUMPTION
--------------------------
Medical Office Buildings, Ltd., a Washington limited partnership
("ASSIGNOR"), hereby assigns all of its right, title and interest in the
foregoing agreement (the "PURCHASE AGREEMENT") to MOBL Nominee, Inc., a
Washington corporation ("ASSIGNEE") that is wholly owned by Assignor.
Assignee hereby assumes all the obligations of "Buyer" under the Purchase
Agreement. However, this assignment and assumption shall not release
Assignor from its liability under the Purchase Agreement and, in order to
obtain the consent of the Seller under the Purchase Agreement, each of
Assignor and Assignee has agreed, and hereby agrees to be primarily,
jointly and severally, liable for the obligations and liabilities of
"Buyer" under the Purchase Agreement.
ASSIGNOR:
MEDICAL OFFICE BUILDINGS, LTD.,
a Washington limited partnership
By: WRIGHT RUNSTAD ASSOCIATES LIMITED
PARTNERSHIP,
a Washington limited partnership,
General Partner
By: WRIGHT RUNSTAD & CO.,
a Washington corporation,
General Partner
By: ___________________________
Name: ___________________________
Title: ___________________________
ASSIGNEE:
MOBL NOMINEE, INC.,
a Washington corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
CONSENT
-------
Carlyle Real Estate Limited Partnership-IX, an Illinois limited
partnership ("SELLER"), hereby consents to the foregoing assignment and
assumption.
CARLYLE:
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-IX,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By: ____________________________
Name: ____________________________
Title: ____________________________
INDEX OF DEFINED TERMS
----------------------
DEFINED TERM PAGE
"Approved Investments" . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Arden Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Arden Cost Credit". . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Arden Proration Adjustment" . . . . . . . . . . . . . . . . . . . . . . 3
"Arden Sale Contract". . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Arden". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assignment and Assumption Agreement". . . . . . . . . . . . . . . . . . 6
"Broker" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Brokerage Agreement". . . . . . . . . . . . . . . . . . . . . . . . . . 3
"Brokerage Fee Credit" . . . . . . . . . . . . . . . . . . . . . . . . . 3
"business day" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
"Buyer". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Claim". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
"Closing Conference" . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Closing Payment". . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Closing". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Contribution Agreement" . . . . . . . . . . . . . . . . . . . . . . . .10
"Escrow Deposit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Escrow Holder". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Escrow Instructions". . . . . . . . . . . . . . . . . . . . . . . . . . 5
"Excluded Matters" . . . . . . . . . . . . . . . . . . . . . . . . . . .20
"Final Tax Return" . . . . . . . . . . . . . . . . . . . . . . . . . . .16
"Indemnitee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
"Indemnitor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
"JAMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
"Land Credit". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Land Option Agreement". . . . . . . . . . . . . . . . . . . . . . . . . 2
"Leasehold Estate" . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Manager". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
"New Investor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
"Operating Cash Adjustment". . . . . . . . . . . . . . . . . . . . . . . 4
"Operating Partnership Agreement". . . . . . . . . . . . . . . . . . . . 1
"Operating Partnership". . . . . . . . . . . . . . . . . . . . . . . . . 1
"Property" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Prudential Deed of Trust" . . . . . . . . . . . . . . . . . . . . . . . 2
"Prudential Leasehold Loan Credit" . . . . . . . . . . . . . . . . . . . 2
"Prudential Loan". . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Prudential" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"Reserve". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
"RULES". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
"Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
"Seller" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"Subject Partnership Interest" . . . . . . . . . . . . . . . . . . . . . 1
"Tax Termination". . . . . . . . . . . . . . . . . . . . . . . . . . . .16
"Time Value Adjustment". . . . . . . . . . . . . . . . . . . . . . . . . 4
"Unilateral Default" . . . . . . . . . . . . . . . . . . . . . . . . . .12
EXHIBIT LIST
------------
"A" - Arden Sale Contract
"B" - Form of Assignment and Assumption Agreement
"C" - Form of Release to be executed by Seller
"D" - Form of Release to be executed by Operating Partnership,
Buyer, Assignee and Manager
"E" - Reserve Amounts
EXHIBIT "A"
-----------
ARDEN SALE CONTRACT
[ATTACHED]
EXHIBIT "B"
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[ASSIGNMENT AND ASSUMPTION AGREEMENT]
ASSIGNMENT OF PARTNERSHIP INTEREST AND ASSUMPTION
THIS ASSIGNMENT OF PARTNERSHIP INTEREST AND ASSUMPTION, dated as of
the ____ day of May, 1997, by and between CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-IX, an Illinois limited partnership ("ASSIGNOR"), and MOBL
NOMINEE, INC., a Washington corporation ("ASSIGNEE").
W I T N E S S E T H :
WHEREAS, Assignor and Medical Office Buildings, Ltd., a Washington
limited partnership ("MOBL"), the sole shareholder of Assignee, are
partners in that certain California general partnership known as "WRIGHT-
CARLYLE PARTNERS" (the "PARTNERSHIP"), which is currently governed by that
certain partnership agreement (the "PARTNERSHIP AGREEMENT") captioned
"ARTICLES OF PARTNERSHIP OF WRIGHT-CARLYLE PARTNERS", dated as of December
27, 1979, by and between Assignor and MOBL; and
WHEREAS, Assignor desires to assign to Assignee Assignor's entire
partnership interest in the Partnership (the "PARTNERSHIP INTEREST") and
Assignee desires to acquire the Partnership Interest.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Assignor hereby unconditionally assigns, sells, transfers,
conveys and sets over to Assignee all of Assignor's right, title and
interest in and to the Partnership Interest, including without limitation,
all of Assignor's interest in the capital and the profits and losses of the
Partnership and all rights to receive distributions of money, profits and
other assets from the Partnership. Except as specifically set forth in
subsection 6.1.2 of that certain purchase agreement (the "PURCHASE
AGREEMENT") captioned "PURCHASE AGREEMENT", dated as of April 28, 1997,
among Assignor and MOBL, the Partnership Interest is being assigned, sold,
transferred, conveyed and set over by Assignor to Assignee on an "AS IS"
basis without representations and warranties of any kind or nature,
express, implied or otherwise, including any representation or warranty
concerning the Partnership or its assets. Nothing in this Assignment of
Partnership Interest and Assumption shall limit Assignor's rights under the
Purchase Agreement.
2. Assignee hereby accepts the assignment of the Partnership
Interest and hereby expressly assumes all of Assignor's obligations to the
Partnership whether now existing or hereafter incurred, including, without
limitation, the obligation of Assignor to make capital contributions
pursuant to the provisions of the Partnership Agreement. Assignee hereby
represents for the benefit of Assignor and the Partnership that it is
acquiring the Partnership Interest for its own account for investment and
not with a view to the resale or distribution thereof and agrees that it
will not transfer, sell, or dispose of, or offer to transfer, sell, or
dispose of, all or any portion of the Partnership Interest, or solicit
offers to buy from or otherwise approach or negotiate in respect thereof
with any person or persons whomsoever, all or any portion of the
Partnership Interest in any manner which would violate or cause the
Partnership or its general partner to violate applicable Federal and state
securities laws.
3. Assignee hereby further represents that (A) it is familiar with
the business conducted and proposed to be conducted by the Partnership;
(B) it has been advised that its interest in the Partnership may not be
sold, transferred, or otherwise disposed of except as provided in the
Partnership Agreement; (C) it understands that the Partnership Interest has
not been registered under the Securities Act of 1933, as amended (the
"ACT"), or any state securities laws, in reliance on an exemption for
private sales and, therefore, the Partnership Interest cannot be resold
unless it is registered under the Act and applicable state securities laws
or unless an exemption from such registration is available; (D) it is a
"sophisticated investor" with substantial prior experience in high-risk
business investments and is aware of and familiar with the risks associated
with a private partnership and is an "accredited investor" as such term is
defined in Rule 501 of Regulation D, as enacted pursuant to Sections 3(b)
and 4(2) of the Act; (E) it is familiar with the type of investment which
the Partnership Interest constitutes and has reviewed the purchase of such
Interest with its tax and independent legal counsel and investment
representatives to the extent it deems necessary; and (F) it has sufficient
financial resources to meet its obligations under the Partnership
Agreement.
4. This Assignment of Partnership Interest and Assumption shall be
interpreted, construed and enforced in accordance with the laws of the
State of California.
5. This Assignment of Partnership Interest and Assumption shall be
binding upon and shall inure to the benefit of the respective parties
hereto and their respective legal representatives, successors and assigns.
6. This Assignment of Partnership Interest and Assumption may be
executed in counterparts, each of which shall constitute an original and
all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
of Partnership Interest and Assumption as of the day and year first above
written.
ASSIGNOR:
CARLYLE REAL ESTATE LIMITED PARTNERSHIP-IX,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By: __________________________
Name: __________________________
Title: __________________________
ASSIGNEE:
MOBL NOMINEE, INC.,
a Washington corporation
By: ______________________________
Name: ______________________________
Title: ______________________________
EXHIBIT "C"
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[FORM OF RELEASE TO BE EXECUTED BY SELLER]
GENERAL RELEASE
1. RELEASE. For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, CARLYLE REAL ESTATE LIMITED
PARTNERSHIP-IX, an Illinois limited partnership ("SELLER"), for itself, its
successors and assigns and all persons claiming by, under or through it
(collectively, the "RELEASING PARTIES"), does hereby absolutely and
irrevocably waive, release, and forever discharge each of WRIGHT-CARLYLE
PARTNERS, a California general partnership (the "PARTNERSHIP"), MEDICAL
OFFICE BUILDINGS, LTD., a Washington limited partnership ("BUYER"), and
MOBL NOMINEE, INC., a Washington corporation ("ASSIGNEE") and their direct
and indirect partners, and their respective partners, trustees,
beneficiaries, officers, shareholders, directors, agents, servants,
contractors, employees, associated or affiliated corporations,
partnerships, and limited liability companies and predecessors-in-interest
(collectively the "RELEASED PARTIES") from any and all claims, rights,
demands, actions, suits, causes of actions, damages, counterclaims,
defenses, losses, costs, obligations, liabilities and expenses of every
kind or nature (collectively, "CLAIMS"), known or unknown, suspected or
unsuspected, fixed or contingent, foreseen or unforeseen, arising out of or
relating directly or indirectly to any circumstances or state of facts
pertaining to the Partnership or the partnership agreement (the
"PARTNERSHIP AGREEMENT") of the Partnership captioned "ARTICLES OF
PARTNERSHIP OF WRIGHT-CARLYLE PARTNERS", dated as of December 27, 1979, by
and between Seller and Buyer, or any nonperformance of any agreement or
obligation related thereto, or any statements, representations, acts or
omissions, intentional, willful, negligent or innocent, by any of the
Released Parties in any way connected with, relating to or affecting,
directly or indirectly, the Partnership or the Partnership Agreement;
provided, however, that the foregoing shall not constitute a release of (i)
any of the obligations of Buyer, its successors and assigns, or any other
Released Party under that certain purchase agreement captioned "PURCHASE
AGREEMENT", dated as of April 28, 1997, between Seller and Buyer or (ii)
any of the obligations of Buyer, its successors and assigns, or any of the
Released Parties under any agreement, instrument or other document executed
and delivered in connection therewith.
2. NON-RELIANCE. Seller hereby acknowledges that it has not
relied upon any representation of any kind made by the Partnership or
Buyer in making the foregoing release.
3. CIVIL CODE. Seller is aware of the provisions of Section 1542
of the California Civil Code, which Section reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
Seller hereby waives the provisions of said Section 1542 of the California
Civil Code (to the extent applicable) and the provisions of any similar
laws. Seller realizes and acknowledges that factual matters now unknown to
it may have given or hereafter give rise to Claims which are presently
unknown, unanticipated and unsuspected, and the release provided hereunder
has been negotiated and agreed upon in light of that realization.
4. NO TRANSFER OF CLAIMS. Seller represents and warrants that it
has not heretofore assigned, or transferred, or purported to assign or to
transfer, to any person or entity, any Claim released hereunder or any
portion thereof or interest therein, and each of the Releasing Parties
agrees to indemnify, defend and hold the Released Parties harmless from and
against any and all such Claims based on or arising out of any such
assignment or transfer or purported assignment or transfer.
5. ADVICE OF COUNSEL. Seller hereby agrees, represents and
warrants that it has had advice of counsel of its own choosing in
negotiations for and the preparation of this Release, including the
foregoing release, that it has read the provisions of this Release, and
that it is fully aware of its contents and legal effect.
6. DAMAGES AND ATTORNEYS' FEES. Each of the Releasing Parties
agrees that if it hereafter commences, joins in, or in any manner seeks,
relief through any suit arising out of, based upon, or relating to any of
the Claims or in any manner asserts against such Released Parties, or any
of them, any of the Claims, then the undersigned will pay to such Released
Parties, and each of them, in addition to any other damages caused to such
Released Parties thereby, all attorneys' fees incurred by such Released
Parties in defending or otherwise responding to said suit or claim.
Dated: May __, 1997 CARLYLE REAL ESTATE LIMITED PARTNERSHIP-IX,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By: ____________________
Name: ____________________
Title: ____________________
EXHIBIT "D"
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[FORM OF RELEASE TO BE EXECUTED BY OPERATING PARTNERSHIP, BUYER,
ASSIGNEE AND MANAGER]
GENERAL RELEASE
1. RELEASE. For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, each of WRIGHT-CARLYLE
PARTNERS, a California general partnership (the "PARTNERSHIP"), MEDICAL
OFFICE BUILDINGS, LTD., a Washington limited partnership ("BUYER"), MOBL
NOMINEE, INC., a Washington corporation ("ASSIGNEE") and WRIGHT RUNSTAD &
ASSOCIATES LIMITED PARTNERSHIP, a Washington limited partnership
("MANAGER"), for themselves, their respective successors and assigns and
all persons claiming by, under or through them (collectively, the
"RELEASING PARTIES"), does hereby absolutely and irrevocably waive,
release, and forever discharge CARLYLE REAL ESTATE LIMITED PARTNERSHIP-IX,
an Illinois limited partnership ("SELLER"), and its direct and indirect
partners, and their respective partners, trustees, beneficiaries, officers,
shareholders, directors, agents, servants, contractors, employees,
associated or affiliated corporations, partnerships, and limited liability
companies and predecessors-in-interest (collectively the "RELEASED
PARTIES") from any and all claims, rights, demands, actions, suits, causes
of actions, damages, counterclaims, defenses, losses, costs, obligations,
liabilities and expenses of every kind or nature (collectively, "CLAIMS"),
known or unknown, suspected or unsuspected, fixed or contingent, foreseen
or unforeseen, arising out of or relating directly or indirectly to any
circumstances or state of facts pertaining to the Partnership or the
partnership agreement (the "PARTNERSHIP AGREEMENT") of the Partnership
captioned "ARTICLES OF PARTNERSHIP OF WRIGHT-CARLYLE PARTNERS", dated as of
December 27, 1979, by and between Seller and Buyer, or any nonperformance
of any agreement or obligation related thereto (including, without
limitation, any management agreement between the Partnership and Manager),
or any statements, representations, acts or omissions, intentional,
willful, negligent or innocent, by any of the Released Parties in any way
connected with, relating to or affecting, directly or indirectly, the
Partnership or the Partnership Agreement; provided, however, that the
foregoing shall not constitute a release of (i) any of the obligations of
Seller or any other Released Party under that certain purchase agreement
captioned "PURCHASE AGREEMENT", dated as of April 28, 1997, between Seller
and Buyer or (ii) any of the obligations of any of the Released Parties
under any agreement, instrument or other document executed and delivered in
connection therewith.
2. NON-RELIANCE. Each of the Releasing Parties hereby
acknowledges that it has not relied upon any representation of any kind
made by Seller in making the foregoing release.
3. CIVIL CODE. Each of the Releasing Parties is aware of the
provisions of Section 1542 of the California Civil Code, which Section
reads as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his settlement
with the debtor."
Each of the Releasing Parties hereby waives the provisions of said Section
1542 of the California Civil Code (to the extent applicable) and the
provisions of any similar laws. Each of the Releasing Parties realizes and
acknowledges that factual matters now unknown to it may have given or
hereafter give rise to Claims which are presently unknown, unanticipated
and unsuspected, and the release provided hereunder has been negotiated and
agreed upon in light of that realization.
4. NO TRANSFER OF CLAIMS. Each of the Releasing Parties
represents and warrants that it has not heretofore assigned, or
transferred, or purported to assign or to transfer, to any person or
entity, any Claim released hereunder or any portion thereof or interest
therein, and each of the Releasing Parties agrees to indemnify, defend and
hold the Released Parties harmless from and against any and all such Claims
based on or arising out of any such assignment or transfer or purported
assignment or transfer.
5. ADVICE OF COUNSEL. Each of the Releasing Parties hereby
agrees, represents and warrants that it has had advice of counsel of its
own choosing in negotiations for and the preparation of this Release,
including the foregoing release, that it has read the provisions of this
Release, and that it is fully aware of its contents and legal effect.
6. DAMAGES AND ATTORNEYS' FEES. Each of the Releasing Parties
agrees that if it hereafter commences, joins in, or in any manner seeks,
relief through any suit arising out of, based upon, or relating to any of
the Claims or in any manner asserts against such Released Parties, or any
of them, any of the Claims, then the undersigned will pay to such Released
Parties, and each of them, in addition to any other damages caused to such
Released Parties thereby, all attorneys' fees incurred by such Released
Parties in defending or otherwise responding to said suit or claim.
DATED: May __, 1997 THE PARTNERSHIP:
WRIGHT-CARLYLE PARTNERS,
a California general partnership
By: MEDICAL OFFICE BUILDINGS, LTD.,
a Washington limited partnership
By: WRIGHT RUNSTAD ASSOCIATES LIMITED
PARTNERSHIP,
a Washington limited partnership,
General Partner
By: WRIGHT RUNSTAD & CO.,
a Washington corporation,
General Partner
By: ____________________
Name: ____________________
Title: ____________________
BUYER:
MEDICAL OFFICE BUILDINGS, LTD.,
a Washington limited partnership
By: WRIGHT RUNSTAD ASSOCIATES LIMITED
PARTNERSHIP,
a Washington limited partnership,
General Partner
By: WRIGHT RUNSTAD & CO.,
a Washington corporation,
General Partner
By: ____________________
Name: ____________________
Title: ____________________
ASSIGNEE:
MOBL NOMINEE, INC.,
a Washington corporation
By: ____________________
Name: ____________________
Title: ____________________
MANAGER:
WRIGHT RUNSTAD & ASSOCIATES LIMITED PARTNERSHIP,
a Washington limited partnership
By: WRIGHT RUNSTAD & CO.,
a Washington corporation,
General Partner
By: ____________________
Name: ____________________
Title: ____________________
EXHIBIT "E"
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RESERVE AMOUNTS
Severance reserve (1) $ 36,757.00
Tenant improvement and lease commission reserve (2) 121,513.00
General winding-up reserve (3) 29,730.00
-----------
Total Reserve $188,000.00
===========
(1) Seller shall not be responsible for (and no amount in the Reserve
shall be used to pay) severance payments other than those scheduled on the
attached "Severance Schedule" and then only if the employees listed thereon
are not employed at the Property as of July 27, 1997. Any other severance
obligations hall be the sole obligation of Buyer and Buyer shall protect,
defend, indemnity and hold Seller harmless from and against any Claims in
connection therewith.
(2) Seller shall not be responsible (and no amount in the Reserve shall
be used to pay) tenant improvement costs or leasing commissions other than
unpaid tenant improvement costs and lease commissions under leases entered
into prior to March 20, 1997 to the extent shown on the attached schedule.
Any other tenant improvement or leasing commission obligations shall be the
sole responsibility of Buyer and Buyer shall protect, defend, indemnify and
hold Seller harmless from and against any claims in connection therewith.
(3) Costs of dissolution of the Operating Partnership, including payment
for Final Tax Return under Section 10.7 and proration adjustments payable
by Seller.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
INCLUDED IN SUCH REPORT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,344,909
<SECURITIES> 0
<RECEIVABLES> 151,635
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,496,544
<PP&E> 18,011,122
<DEPRECIATION> 0
<TOTAL-ASSETS> 57,717,830
<CURRENT-LIABILITIES> 83,562,931
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (26,386,735)
<TOTAL-LIABILITY-AND-EQUITY>57,717,830
<SALES> 3,969,128
<TOTAL-REVENUES> 4,018,565
<CGS> 0
<TOTAL-COSTS> 1,676,833
<OTHER-EXPENSES> 92,405
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,174,596
<INCOME-PRETAX> 74,731
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,716
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,716
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
