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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 8-K
Pursuant to Section 12 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event report) January 30, 1997
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PACIFIC GATEWAY PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW YORK 1-8692 04-2816560
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
ONE RINCON CENTER, 101 SPEAR STREET, SUITE 215, SAN FRANCISCO, CA 94105
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are code (415)543-8600
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address and former fiscal year,
if changed since last report)
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 2. ACQUISITION OF ASSETS
PROPERTY ACQUISITIONS. On January 17, 1997, Pacific Gateway Properties
("Registrant") acquired two properties (the "Acquired Properties") for an
aggregate purchase price of $20,750,000. As of January 17, 1997, the
Registrant's portfolio consisted of eight properties. Unless otherwise
indicated, the equity required to purchase the Acquired Properties was obtained
from the Registrant's sale of an Arizona hotel in December 1996. Neither the
Registrant, any subsidiary of the Registrant nor any director or officer of the
Registrant was affiliated with or had a relationship with the respective sellers
of the Acquired Properties described below.
PAULSEN OFFICE PARK ("POP"). On January 17, 1997, Pacific Gateway Properties
Hotels, Inc., a wholly owned subsidiary of the Registrant, completed the
purchase of POP which is a multi-tenant, six building campus style office park
located at 4000-4050 Moorpark Avenue, San Jose, California for $17,500,000 or
$106.06 per square foot. POP's six buildings contain approximately 165,000
square feet and are situated on 7.7 acres. The Registrant purchased POP from
Peter Paulsen. In connection with this acquisition the Registrant assumed
approximately $10,200,000 in debt from Sun Life Assurance Company of Canada
(U.S.) which is amortized over 20 years at a fixed annual interest rate of
9.125%, and matures on June 30, 2005. The debt continues to be assumable and is
subject to a prepayment penalty if paid off prior to maturity.
GABRIELSEN BUILDING ("GABRIELSEN"). On January 17, 1997, Pacific Gateway
Properties Hotels, Inc., a wholly owned subsidiary of the Registrant,
completed the purchase of Gabrielsen which is a multi-tenant, 23,000 square
foot six story steel frame office building located at 930 Montgomery Street,
San Francisco, California for $3,250,000 or $141.30 per square foot. The
Registrant purchased Gabrielsen from Donlon H. Gabrielsen and Agnes H.
Gabrielsen. In connection with this acquisition the Registrant obtained new
debt of $2,112,500 from Redwood Bank which is amortized over 25 years at a
floating annual interest rate of 3% over the one year treasury bond rate,
adjustable every six months and matures on February 1, 2002. This debt can
be prepaid at any time without a penalty.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS
Because it would be impractical to provide audited income statements of the
operations of POP in conformance with Regulation S-X, Rule 3-14 at the time of
this report, historical financial information concerning POP and pro forma
financial statements of the Registrant reflecting the Acquired Properties'
transactions will be provided within 60 days from the due date of this report
under cover of Form 8.
EXHIBITS
1.1 Press Release Dated January 21, 1997
1.2 Purchase and Sale Agreement of the Registrant as Buyer, and Peter
Paulsen as Seller, dated December 16, 1996.
1.3 Amendment to the Purchase and Sale Agreement of the Registrant as
Buyer, and Peter Paulsen as Seller, dated January 15, 1997.
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1.4 Purchase and Sale Agreement of the Registrant as Buyer, and Donlon H.
Gabrielsen and Agnes H. Gabrielsen as Sellers, dated December 18,
1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned there unto duly authorized.
Dated: January 30, 1997
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PACIFIC GATEWAY PROPERTIES, INC.
(Registrant)
Raymond V. Marino
-----------------------------------
Raymond V. Marino
President and Chief Executive Officer
Felecia Vernon-Chancey
-----------------------------------
Felecia Vernon-Chancey
Vice President and Controller
(Principal Financial and Accounting Officer)
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Exhibit 1.1
NEWS RELEASE
FOR RELEASE: January 21, 1997
PACIFIC GATEWAY PROPERTIES
COMPLETES $20,750,000 IN ACQUISITIONS
AND A $9,450,00 REFINANCING
SAN FRANCISCO, CALIFORNIA ...Pacific Gateway Properties, Inc., (PGP-AMEX)
announced today that it has purchased two new properties to conclude a tax
deferred exchange of properties in connection with the previously reported
December 1996 sale of its Arizona hotel property. One of the new properties is
a six building, 165,000 square foot campus style office park on a 7.7 acre
parcel in San Jose, California purchased for $17,500,000 or $106.06 per square
foot including the assumption of a $10, 200,000 mortgage loan. The second
property is a 23,000 square foot six story office building in San Francisco,
California for which PGP paid $3,250,000 or $141.30 per square foot, $2,112,500
of which was financed by a new mortgage loan.
PGP also announced that on December 31, 1996 it refinanced its South Bay Office
Tower in San Jose, California replacing $6,370,000 of 12% fixed rate debt with a
new $9,450,000 ten year 8.65% fixed rate loan. Excess loan proceeds after
repayment of the existing loan and other required payments amounted to
approximately $2,200,000 which PGP may use for its general business purposes.
PGP is a publicly traded real estate investment and management company
headquartered in San Francisco, California. PGP primarily focuses on investing
in downtown and suburban office properties with current investments in Florida,
Massachusetts, Arizona and the San Francisco Bay Area.
FOR MORE INFORMATION CONTACT: RAYMOND MARINO, PRESIDENT AND CEO
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Exhibit 1.2
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
By and Among
Peter Paulsen,
as Seller
PACIFIC GATEWAY PROPERTIES, INC.,
a New York corporation,
as Buyer
and
Chicago Title Company,
as Escrow Holder
December 16, 1996
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LIST OF SCHEDULES vi
TABLE OF DEFINED TERMS vii
ARTICLE I PROPERTY 1
1.1. Land 1
1.2. Appurtenances 1
1.3. Improvements 2
1.4. Personal Property 2
1.5. Intangible Property 2
1.6. Leases 2
ARTICLE II PURCHASE PRICE 3
2.1. Purchase Price 3
2.2. Deposits 3
2.3. Payment of Purchase Price 3
ARTICLE III TITLE TO PROPERTY 4
3.1. Title 4
3.2. Bill of Sale, Etc. 4
ARTICLE IV BUYER'S INVESTIGATIONS 5
4.1. Delivery of Documents by Seller 5
4.2. Review of Title 5
4.3. Service and Other Contracts 6
4.4. Governmental Permits, Approvals and Regulations 6
4.5. Review Period 6
4.6. Right of Entry 7
4.7. Objections to Survey, Title Report, Property, Leases, or
Other Matters 7
4.8. Cooperation 8
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ARTICLE V CONDITIONS PRECEDENT TO CLOSING 8
5.1. Title Matters 8
5.2. Delivery of Documents 8
5.3. Representations and Warranties 8
5.4. Approval of Update Certificate 8
5.5. Non-Foreign Status of Seller 8
5.6 Hart-Scott-Rodino Act 9
5.7. Board Approval 9
5.8. Impairment of Property 9
5.9. Sun Life Assumption 9
5.10. Pacific Crest Assumption 9
5.11. Litigation 9
5.12 Termination of Employees 9
5.13. Contract Termination 10
5.14. Seller's Performance 10
B. Seller's Conditions to Closing 10
5.15. Delivery of Documents and Purchase Price 10
5.16. The HSR Act 10
ARTICLE VI ESCROW; CLOSING, RECORDING AND TERMINATION 10
6.1. Escrow; Deposit with Escrow Holder and Escrow Instructions 10
6.2. Closing 11
6.3. Delivery by Seller 11
6.4. Delivery by Buyer 14
6.5. Other Instruments 14
6.6. Prorations 14
6.7. Costs and Expenses 16
6.8. Closing and Recordation 16
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6.9. Termination of Agreement 17
6.10. Release of Deposits 17
611. Limitation on Seller's Remedies 18
ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER 18
7.1. Condition of Property 18
7.2. Use and Operation 19
7.3. Land-Use Regulation 19
7.4. Utilities 19
7.5. Use Permits and Other Approvals 19
7.6. Authority of Seller/Interest of Seller in the Property 19
7.7. Use of Property 20
7.8. Hazardous Substances and Asbestos/Indemnification 20
7.9. Parking 21
7.10. Reports, Contracts and Other Documents 21
7.11. Leases 21
7.12. Service Contracts and Other Agreements 21
7.13. Agreements Affecting the Property 22
7.14. Matters in Respect of Appurtenances; Title 22
7.15. Litigation 22
7.16. Other Contracts to Convey Property 22
7.17. Property Tax Assessment 22
7.18. Assessment Liens 23
7.19. Full Disclosure 23
7.20. Non-Foreign Status 23
7.21. Condemnation 23
7.22. Agreements Related to Use of 4100 Building 23
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF BUYER 23
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8.1. Representations and Warranties of Buyer 23
8.2. No Additional Warranties 24
ARTICLE IX DELIVERY OF PROPERTY 24
9.1. Possession 24
9.2. Loss, Destruction and Condemnation 24
ARTICLE X MAINTENANCE AND OPERATION OF THE PROPERTY 26
10.1. Maintenance 26
10.2. Leases and Other Agreements 26
10.3. Encumbrances 26
10.4. Consents and Notices 26
ARTICLE XI MISCELLANEOUS 27
11.1. Notices 27
11.2. Brokers and Finders 28
11.3. Successors and Assigns 28
11.4. Amendments 28
11.5. Continuation and Survival of Indemnities, Representations,
Warranties and Post-Closing Obligations 29
11.6. Interpretation 29
11.7. Governing Law 29
11.8. Merger of Prior Agreements 29
11.9. Attorneys' Fees 29
11.10. Notice of Termination 30
11.11. Specific Performance/Damages 30
11.12. Relationship 30
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11.13. Authority 30
11.14. Counterparts 30
11.15. Time of the Essence 30
11.16. Tax Deferred Exchange 31
11.17. Confidentiality/Publicity 31
11.18. Prohibition Against Consideration of Other Purchase
Proposals 31
11.19. Assignment by Buyer 31
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LIST OF SCHEDULES
A: Description of the Land
B: Form of Deed
C: Form of Bill of Sale
D: Form of Assignment of Intangible Property and
Warranties
E: Form of Assignment of Leases
F: Service Contracts and Other Agreements
G: Approved Contracts
H: Permits, Approvals and Regulations
I: Form of Non-Foreign Certificate
J: Form of Update Certificate
K. Notice to Space Tenants
L: Form of Vendor Estoppel
M; Form of Notice to Vendors
N: Notices to Vendors of Approved Conracts
O: Leases
P: Rent Roll and List of Security Deposits
Q: Form of Tenant Estoppel
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TABLE OF DEFINED TERMS
Defined Term Section
- ------------ Where Defined
-------------
Agreement Introductory Paragraph
Approved Contracts Section 4.3
Appurtenances Section 1.2
Assignee Section 11.4
Assignment of Intangible Property and Warranties Section 1.5
Assignment of Leases Section 1.6
Bill of Sale Section 1.4
Buyer Introductory Paragraph
CC&R's Section 7.7
CEQA Section 7.2
Closing Section 6.2
Closing Date Section 6.2
Code Section 5.5
Contracts Section 4.3
Deed Section 1.1
Deposits Section 2.2.
Escrow Section 6.1
Escrow Holder Introductory Paragraph
Governmental or Regulatory Authority Section 7.2
Hazardous Substances Section 7.8
HSR Act Section 5.6
Improvements Section 1.3
Intangible Property Section 1.5
Land Section 1.1
Laws Section 6.2
Leases Section 7.2
Non-Foreign Certificate Section 5.5
Official Records Section 2.3
Permitted Exceptions Section 4.7
Personal Property Section 1.4
Property Section 1.6
Purchase Price Section 2.1
Real Property Section 1.6
Review Period Section 4.5
Seller Introductory Paragraph
Space Tenants Section 6.3
Survey Section 4.2
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Title Company Section 3.1
Title Policy Section 3.1
Title Report Section 4.2
Update Certificate Section 5.3
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PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement")
is made and entered into as of December 16, 1996, by and among PETER PAULSEN, an
individual ("Seller"), PACIFIC GATEWAY PROPERTIES, INC., a New York corporation
("Buyer"), and CHICAGO TITLE COMPANY ("Escrow Holder") (provided that if no
Escrow Holder is named herein, the Escrow Holder shall be such reputable escrow
and/or title company as Buyer may select at any time up to thirty (30) days in
advance of the Closing Date), with reference to the following facts:
A. Seller is the owner of the Land and Improvements, as hereinafter
defined.
B. Buyer desires to purchase from Seller and Seller desires to sell
to Buyer the Land as improved with the Improvements, all on the terms and
conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual
agreements herein set forth, and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer, and where
appropriate Escrow Holder, agree as follows:
ARTICLE I
PROPERTY
Seller hereby agrees to sell and convey to Buyer, and Buyer hereby
agrees to purchase from Seller, subject to the terms and conditions set forth
herein, the following:
1.1. LAND. That certain real property (the "Land") described in
SCHEDULE A hereto, all of which shall be conveyed to Buyer pursuant to grant
deed in the form of SCHEDULE B hereto (the "Deed");
1.2. APPURTENANCES. All rights, privileges and easements appurtenant
to and for the benefit of the Land, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances on and under the Land, as well as all
development rights, air rights, water, water rights and water stock relating to
the Land and any other easements, rights-of-way or appurtenances owned by Seller
and used in connection with the beneficial operation, use and enjoyment of the
Land, the Improvements, as hereinafter defined, the Intangible Property, as
hereinafter defined, or any other appurtenance, together with all rights of
Seller in and to streets, sidewalks, alleys, driveways, parking areas and areas
adjacent thereto or used in connection therewith, and all rights of Seller in
any land lying in the bed of any existing or proposed street adjacent to the
Land (all of which are collectively referred to as the "Appurtenances").
1.3. IMPROVEMENTS. All improvements and fixtures located or to be
located on the Land, including, without limitation, all buildings and structures
presently located on the Land thereon on the Closing Date, all apparatus,
equipment and appliances presently located on the Land and used in connection
with the operation or occupancy thereof, such as heating and air conditioning
systems and facilities used to provide any utility services, parking services,
refrigeration, ventilation, garbage disposal, recreation or other services
thereto, and all landscaping and leasehold improvements of tenants, if any,
which remain a part of the Property (all of
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which are collectively referred to as the "Improvements");
1.4. PERSONAL PROPERTY. All tangible personal property owned by
Seller located or to be located on, or situated or to be situated in and used in
connection with, the Land and/or the Improvements ("Personal Property"), and all
of which Personal Property shall be transferred and assigned to Buyer pursuant
to an instrument in the form of SCHEDULE C hereto (the "Bill of Sale");
1.5. INTANGIBLE PROPERTY. All of the interest of Seller in (i) any
intangible personal property which relates to and is reasonably required for the
operation and functioning of the Land, Improvements or Personal Property
generally, and (ii) any and all warranties guarantees, permits, contracts and
other rights owned by Seller relating to the ownership, operation or functioning
of all or any part of the Property, as defined below (including without
limitation all third party guarantees and warranties, express or implied, in
connection with the construction of the Improvements) (all of which are
collectively referred to as the "Intangible Property"), and all of which shall
be assigned to Buyer pursuant to one or more (as determined by Buyer)
assignments in the form of SCHEDULE D hereto (the "Assignment of Intangible
Property and Warranties ").
1.6. LEASES. All interest of Seller, as landlord, in and to all
leases affecting any portion of the Land, Improvements or Personal Property as
of the Closing Date (the "Leases") which shall be assigned to Buyer pursuant to
an instrument or instruments (as determined by Buyer) in the form of SCHEDULE E
hereto (the "Assignment of Leases").
All of the items described in Sections 1.1, 1.2, 1.3, 1.4, 1.5, and
1.6 above are hereinafter sometimes collectively referred to as the "Property."
The items described in Sections 1.1, 1.2, and 1.3 above are hereinafter
sometimes referred to collectively as the "Real Property."
ARTICLE II
PURCHASE PRICE
2.1. PURCHASE PRICE. The purchase price for the Property shall be
equal to Seventeen Million Seven Hundred Thousand Dollars ($17,700,000) (the
"Purchase Price"), which Purchase Price is subject to adjustment as provided in
Section 6.6, 9.2 and elsewhere herein. The Purchase Price may be adjusted,
subject to mutual agreement of Buyer and Seller, for items arising from Buyer's
investigation of the Property including, but not limited to, capital
expenditures, deferred maintenance, and code compliance. The Purchase Price
shall be allocated between Real Property and Personal Property as Buyer shall
reasonably determine.
2.2. DEPOSITS. Seller acknowledges that Buyer has deposited the sum
of ONE HUNDRED THOUSAND DOLLARS ($100,000) (the "Initial Deposit") with the
Title Company pursuant to a non-binding letter of intent dated October 15, 1996
between Buyer and Seller. Upon the execution of this Agreement, Buyer shall
deposit the further sum of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) (the
"Additional Deposit") with the Title Company. The Initial Deposit and the
Additional Deposit are referred to collectively herein as the "Deposits". The
Title Company shall invest the Deposits in one or more interest bearing accounts
designated by Buyer and all interest earned thereon shall accrue to and become a
part of the Deposits and be paid to the party entitled to the Deposits as
provided in Section 6.10 below.
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2.3. PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price
into Escrow (defined below) at the Closing by wire transfer of immediately
available funds in accordance with wiring instructions to be provided by Escrow
Holder; provided, however, that Buyer shall deduct from the funds to be wired
pursuant to this Section 2.3 an amount equal to the sum of (a) the Deposits held
pursuant to Section 2.2 above plus (b) the total amount of indebtedness then
owed to Sun Life Assurance Company of Canada (U.S.) ("Sun Life") and secured by
the deed of trust on a portion of the Property (the "Sun Life Debt") plus (c)
the total amount of indebtedness then owed to Pacific Crest Investment and Loan
("Pacific Crest") and secured by a deed of trust on a portion of the Property
(the "Pacific Crest Debt") . At the Closing and as condition precedent thereto,
Buyer shall assume the Sun Life Debt subject to the terms of the existing
agreements between Seller and Sun Life with respect to the Sun Life Debt and
Buyer shall be responsible for payment of any assumption fee not to exceed one
percent (1%) of the then outstanding principal balance of the Sun Life Debt
incurred in connection with such assumption. At the Closing and as a condition
precedent thereto, Buyer shall assume the Pacific Crest Debt, subject to the
terms of the existing agreements between Seller and Pacific Crest with respect
to the Pacific Crest Debt. Seller agrees to use its best efforts to cooperate
with Buyer in obtaining the consent of Pacific Crest to Buyer's assumption of
the Pacific Crest Debt.
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ARTICLE III
TITLE TO PROPERTY
3.1. TITLE. At the Closing, Seller shall convey to Buyer marketable
and insurable fee simple title to the Property pursuant to the Deed. In
furtherance thereof, Seller shall cause Chicago Title Insurance Company or such
other title insurance company as may be selected by Buyer (the "Title Company")
to issue an ALTA Owner's Policy of Title Insurance (Form B, Rev. 10/17/70) (the
"Title Policy") in the full amount of the Purchase Price, insuring fee simple
title to the Real Property in Buyer, subject only to (i) the lien of real
property taxes for the then applicable fiscal year, to the extent not yet due
and payable, (ii) the lien of supplemental taxes imposed by reason of transfer
on or after the Closing, and (iii) the Permitted Exceptions (as defined in
Section 4.7 below), provided that indemnification of the Title Company to allow
it to insure over any otherwise unpermitted exception to title shall not be
allowed except with the prior written consent of Buyer (which shall be in
Buyer's sole and absolute discretion) after full disclosure to Buyer of the
nature and substance of such exception and indemnity. The Title Policy shall
(i) provide full coverage against mechanics' and materialmen's liens arising out
of the construction, repair or alteration of any of the Improvements or any
tenant improvements, (ii) be in form and substance satisfactory to Buyer in its
sole and absolute discretion, and (iii) contain such other endorsements as Buyer
may require. Furthermore, the Title Company shall obtain, if requested by
Buyer, co-insurance and/or reinsurance agreements as Buyer may request, which
reinsurance agreements shall be in ALTA Facultative Reinsurance Agreement Form
(rev. 1987), and shall include direct access agreements, in such amounts and in
such form as shall otherwise be satisfactory to Buyer.
3.2. BILL OF SALE, ETC. At the Closing, Seller shall (i) transfer
title to the Personal Property to Buyer pursuant to the Bill of Sale,
(ii) transfer and assign to Buyer all of Seller's rights in and to the
Intangible Property pursuant to the Assignment(s) of Intangible Property and
Warranties, and (iii) transfer and assign to Buyer all of Seller's interest, as
landlord, in and to the Leases pursuant to the Assignment(s) of Leases; such
title, interest and rights to be free of any liens, encumbrances or interests of
third parties other than the Permitted Exceptions to the extent applicable to
the Personal Property, Intangible Property or Leases, respectively.
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ARTICLE IV
BUYER'S INVESTIGATIONS
4.1. DELIVERY OF DOCUMENTS BY SELLER. To the extent that Seller has
not done so prior to the execution of the Agreement, within three (3) business
days after the execution hereof, Seller shall deliver to Buyer true, correct and
complete copies of all maps, reports, documents, surveys, studies, agreements,
correspondence, or other materials pertaining to or concerning the Property in
Seller's possession or under its control, including but not limited to all:
environmental reports or assessments; hazardous materials, soils and/or ground
water studies and reports; geological and geo-technical studies; seismic
reports, tests; engineering studies; reports concerning the roof, membranes,
foundation, other structural components, or the HVAC, plumbing electrical or
other building systems; surveys; Leases and all information regarding the
financial condition of all tenants thereunder; contracts; plans; specifications,
drawings; documents pertaining to the operation, use, management, construction,
repair or maintenance of the Real Property or to taxes or assessments affecting
the Real Property and the Personal Property; government permits and approvals;
applications filed with governmental agencies or utility companies; and
correspondence with or reports or materials from governmental agencies or
utility companies.
4.2. REVIEW OF TITLE. In connection with Buyer's review of title,
survey and related matters, Seller shall deliver to Buyer (or, shall make
available to Buyer at Seller's office at a reasonable time) and Buyer shall be
entitled to review the following:
(a) a current extended coverage preliminary title report for the
Property issued by the Title Company (the "Title Report"), accompanied
by legible record copies of all of the underlying documents referred to
in Schedule B of the report;
(b) copies of all existing or proposed easements, covenants,
restrictions, agreements or other documents which affect the ownership
of or title to the Property and which are not disclosed by the Title
Report for the Property, if any (to be made available), including all
easements and other agreements related to the use of the 4100 Moorpark
Avenue Building;
(c) any existing ALTA land survey of the Property (the "Survey") ;
(d) Copies of subdivision maps and condominium plans, and the
conditions and requirements thereto (the conditions and requirements to
be made available);
(e) Copies of all permits and licenses relating to the Property (to
be made available);
(f) Copies of the real property and personal property tax bills for
the Property for the previous three (3) years; and
(g) Such other documents and matters relating to the Property as
Buyer may reasonably request during the Review Period (to be made
available);
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4.3. SERVICE AND OTHER CONTRACTS. Seller shall promptly deliver, and
Buyer shall review and approve in its sole and absolute discretion, a list of
and copies of all utility contracts, water and sewer service contracts, service
contracts, warranties, permits, soils reports, contracts for employees involved
in the operation of the Property (together with a summary of the benefits and
compensation payable to such employees) and other contracts or documents of any
nature relating to the Property or any portion thereof (the "Contracts"; those
Contracts which Buyer approves prior to the end of the Review Period (and prior
to the Closing Date in the case of contracts not entered into or delivered or
made available to the Buyer until after the expiration of the Review Period)
shall be referred to as the "Approved Contracts"). A list of all Contracts is
attached hereto as SCHEDULE F. A list of all Approved Contracts is attached
hereto as SCHEDULE G.
4.4. GOVERNMENTAL PERMITS, APPROVALS AND REGULATIONS. Seller shall
promptly deliver, and Buyer shall review and approve, a list of and copies of
all governmental permits and approvals with respect to the Property relating to
the construction, operation, use or occupancy of the Property or any portion
thereof, including without limitation, all certificates of occupancy,
certificates of compliance, and such other certificates as may be required or
customary in the jurisdiction where the Property is located, evidencing
compliance with all building permits, approval of use and occupancy of the
portions of the Improvements to be occupied or for which a certificate of
occupancy or certificate of compliance is required as of the Closing Date in
order to permit the Improvements to be legally occupied, and approval of
installations therein. A list of all government permits and approvals is
attached hereto as SCHEDULE H.
4.5. REVIEW PERIOD. Buyer shall have until December 24, 1996 (the
"Review Period") to complete its review of all materials provided by Seller to
Buyer pursuant to this Article IV and to undertake such studies, tests,
examinations, inspections, inquiries, and investigations of and concerning the
condition of the Real Property (including, without limitation, any and all of
the components and systems thereof) as Buyer may, in its sole and absolute
discretion, deem to be reasonable, prudent or desirable under the circumstances,
including without limitation, studies, tests, examinations, inspections,
inquiries and investigations of: the foundation, roof structure and membranes,
and all other components of the Improvements; HVAC and other building systems;
seismic safety; asphalt; landscaping, location and availability of utilities;
geological and seismic conditions and safety; hazardous materials, soils and/or
ground water conditions covering the disposal, escape, discharge, use or
treatment of Hazardous Substances (as defined below); building, zoning,
Americans with Disabilities Act and other code compliance; all Leases, Contracts
and other documents affecting the Property and the financial condition of all
tenants under the Leases.
4.6. RIGHT OF ENTRY. Seller grants to Buyer the right to enter upon
the Real Property, upon not less than twenty-four hours written notice to
Seller, for such purposes as may be necessary to the exercise or performance of
the rights of Buyer to inspect and investigate the Property pursuant to this
Agreement. Buyer shall exercise such right in a manner which will minimize
interference with the use and enjoyment of the Property by the existing tenants.
Buyer agrees to pay in full for all materials joined or affixed to the Property
in connection with any environmental, engineering, soil, feasibility or other
studies or activities that are procured or undertaken by Buyer prior to Closing
(herein, "Buyer's Work") and to pay in full all persons who perform labor on
the Property with respect to Buyer's Work and not to permit or suffer any
mechanic's or materialman's lien of any kind or nature to be enforced against
the Property for any of Buyer's Work. Buyer shall be responsible for the costs
and expenses of all reports commissioned by Buyer with respect to the Property.
In the
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event that this Agreement is terminated, Buyer shall, as soon as possible , and
at Buyer's sole cost and expense, restore the Property where Buyer or Buyer's
representatives, agents, contractors, servants, or licensees have performed any
Buyer's Work to substantially the same condition it was in but for such Buyer's
Work, failing in which Seller may perform the work of restoration and Buyer
shall reimburse Seller for the reasonable cost and expense thereof within ten
(10) business days after rendition of bills paid by Seller.
4.7 OBJECTIONS TO SURVEY, TITLE REPORT, PROPERTY, LEASES, OR OTHER
MATTERS. On or prior to the end of the Review Period, Buyer shall notify Seller
of any objections Buyer has to the sufficiency of any Survey or Title Report, to
the status of Seller's title, to any matter disclosed in any Survey or Title
Report, to the physical or financial state of the Property, to any Phase I
and/or Phase 2 environmental assessment, or other environmental report, to the
Leases, to the Contracts, to the Property, to any item delivered or not
delivered by Seller to Buyer, or to any other matter covered by this Article IV;
provided, however, that if Buyer has not received a particular Title Report,
survey or environmental report by the end of the Review Period, it shall have
until ten (10) days after its receipt of the missing item(s) to notify Seller of
its objections thereto. If Buyer objects as provided herein, Buyer shall have
the option, which must be exercised on or prior to the end of the Review Period
(a) to waive Buyer's objections and purchase the Property as otherwise
contemplated by this Agreement, or (b) terminate this Agreement. If Buyer shall
fail to give Seller notice of its objections, it shall be deemed to have had no
objections. All exceptions to title to, and or encumbrances against, the
Property shown on the Title Report or Survey but not objected to by Buyer shall
be deemed "Permitted Exceptions."
4.8 COOPERATION. Seller shall cooperate with Buyer in a good faith
attempt to make the deliveries and provide information within the time limits
provided for above. Without limiting the generality of the foregoing, Seller
shall provide to Buyer with such consent as Buyer may reasonably require so that
Buyer may independently confirm information provided to it by Seller with third
parties.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
A. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. Buyer's obligation
to proceed with the purchase of the Property is subject to fulfillment or waiver
by Buyer of the following conditions precedent:
5.1 TITLE MATTERS. Buyer shall have reviewed and approved the
condition of title to the Real Property, there shall be no exceptions to title
to the Property other than the Permitted Exceptions, and the Title Company shall
be prepared to issue the Title Policy.
5.2. DELIVERY OF DOCUMENTS. Seller shall have duly and timely
executed and/or delivered the Deed and all of the other documents and things to
be executed and/or delivered by Seller pursuant to this Agreement including,
without limitation, all of the documents and things specified in Section 6.3
below, and Seller shall have duly and timely performed its other obligations
hereunder.
5.3. REPRESENTATIONS AND WARRANTIES. All of Seller's representations
and warranties contained herein or made in writing by Seller shall have been
true and correct when made and shall, except as otherwise provided in the Update
Certificate (provided that Buyer shall be entitled to terminate this Agreement
and its obligations hereunder if the Update Certificate reveals any inaccuracies
in Seller's representations and warranties contained herein), be true and
correct as of the Closing Date, as though made at, and as of, the
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Closing Date, and all times in between such dates, and Seller shall have
strictly complied with all of Seller's covenants and agreements contained in or
made pursuant to this Agreement.
5.4. APPROVAL OF UPDATE CERTIFICATE. Seller shall have executed and
delivered to Buyer at the Closing the Update Certificate, which Update
Certificate shall indicate no changes or exceptions to Seller's representations
and warranties made as of the date hereof (except as otherwise indicated on the
Update Certificate) and be in form of SCHEDULE I attached hereto and in
substance acceptable to Buyer.
5.5. NON-FOREIGN STATUS OF SELLER. Seller shall executed and
delivered to Buyer, on the Closing Date, Seller's certificate in the form
attached hereto as SCHEDULE I (the "Non-Foreign Certificate") stating, under
penalty of perjury, that (a) Seller is not a "foreign person" for the purposes
of Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"),
and that withholding of tax will not be required thereunder, and (b) withholding
is not required under the provisions of any state laws in connection with the
contemplated transfer of the Property by Seller to Buyer.
5.6. HART-SCOTT-RODINO ACT.
(a) Buyer shall have obtained (i) evidence reasonably satisfactory to
Buyer that the notification and reporting requirements of the Hart-Scott-Rodino
Antitrust Improvement Act of 1976 (15 U.S.C. Section 18a) (the "HSR Act") do
not apply to the transaction contemplated hereby or (ii) in the event the
notification and reporting requirements of the HSR Act shall be applicable to
the contemplated transaction, evidence reasonably satisfactory to Buyer that all
applicable notification and reporting requirements of the HSR Act have been
timely and completely fulfilled. Seller and Buyer agree to cooperate in
effecting compliance with the HSR Act to the extent required under applicable
law, and, if notification or filings are required thereunder, to share equally
the filing fees, if any.
5.7 BOARD APPROVAL. This Agreement and the transactions contemplated
hereby shall have been approved by the Buyer's board of directors, which may be
granted or withheld in the Board's sole and absolute discretion.
5.8. IMPAIRMENT OF PROPERTY. No material adverse change shall have
occurred in the condition or ownership of the Property or any part thereof and,
as of the Closing, no part of the Property, or any interest of Seller therein,
shall be encumbered by any lien, pledge, security interest, financing or due and
unpaid charge, tax or other imposition (other than Permitted Exceptions and
items which will be removed on or prior to the Closing Date), or damaged and not
repaired to Buyer's satisfaction or taken in condemnation or other like
proceeding and no such proceeding is pending or threatened, except as otherwise
provided in Section 9.2 hereof.
5.9. SUN LIFE ASSUMPTION. Sun Life shall have consented to the
Buyer's assumption of the Sun Life Debt on the terms contained in the existing
agreements between Sun Life and Seller with respect to such debt.
5.10. PACIFIC CREST ASSUMPTION. Pacific Crest shall have consented to
the Buyer's assumption of the Pacific Crest Debt on the terms contained in the
existing agreements between Pacific Crest and Seller with respect to such debt.
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5.11. LITIGATION. There shall be no litigation or other judicial or
administrative proceeding pending as of the Closing Date which could, in Buyer
reasonable opinion, have a material adverse impact on the Property.
5.12 TERMINATION OF EMPLOYEES. Seller shall have terminated all
employees employed by Seller in connection with the operation of the Property in
compliance with applicable law and shall have paid in full all compensation and
benefits owed to such employees.
5.13 CONTRACT TERMINATION. Seller shall have terminated, on or before
the Closing Date, those Contracts, if any, which would be binding on Buyer
subsequent to the Closing and which Buyer has designated on or before the Review
Period to be terminated. Seller shall deliver to Buyer within fifteen days
after the execution hereof a list of all Contracts which would be binding on
Buyer subsequent to the Closing, together with a true, complete and correct copy
of such Contracts if not previously delivered to Buyer.
5.14 SELLER'S PERFORMANCE. Seller shall have performed, in all
material respects, each and every obligation contained in this Agreement to be
performed by Seller within the time periods applicable thereto.
The foregoing conditions contained in this Article V.A (except to the
extent otherwise provided in Article V.B hereof) are intended solely for the
benefit of, and may be waived by, Buyer.
B. SELLER'S CONDITIONS TO CLOSING.
The following conditions are conditions precedent to Seller's
obligation to sell the Property:
5.15. DELIVERY OF DOCUMENTS AND PURCHASE PRICE. Buyer's due and timely
execution and delivery of all documents and things to be executed and delivered
by Buyer (including, without limitation, the Purchase Price) pursuant to this
Agreement including, without limitation, all of the documents and things
specified in Section 6.4, below.
5.16. THE HSR ACT. Seller obtaining, prior to the expiration of the
Review Period, (i) evidence reasonably satisfactory to Seller that the
notification and reporting requirements of the HSR Act do not apply to the
transaction contemplated hereby or (ii) in the event the notification and
reporting requirements of the HSR Act shall be applicable to the contemplated
transaction, evidence reasonably satisfactory to Seller that all applicable
notification and reporting requirements of the HSR Act have been timely and
completely fulfilled. Seller and Buyer agree to cooperate in effecting
compliance with the HSR Act to the extent required under applicable law, and if
notification or filings are required thereunder, to share equally the filing
fees, if any.
The foregoing conditions contained in this Article V.B are intended solely
for the benefit of Seller (except to the extent otherwise provided in Article
V.A hereof).
ARTICLE VI
ESCROW; CLOSING, RECORDING AND TERMINATION
6.1. ESCROW; DEPOSIT WITH ESCROW HOLDER AND ESCROW INSTRUCTIONS. The
purchase and sale contemplated by this Agreement shall be consummated through an
escrow (the "Escrow") established with
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Chicago Title Insurance Company and its office located at 388 Market Street,
Suite 1300, San Francisco, California 94111, Attention: Leslie Hazelwood.
Promptly after execution of this Agreement. the parties hereto shall deliver one
(1) fully executed copy of this Agreement to the Escrow Holder and this
instrument shall serve as the escrow instructions to the Escrow Holder for
consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional and supplementary escrow instructions as may be
appropriate to enable the Escrow Holder to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control.
6.2. CLOSING.
(a) Escrow shall close (the "Closing") on January 7, 1997 (the
"Closing Date") or such other date as Buyer and Seller may mutually agree in
writing; provided, however, that without limiting Buyer's remedies under
Section 6.9(a) hereof, Buyer shall be entitled to terminate its obligations
hereunder if the Closing Date has not occurred by January 10, 1997, or if Seller
is otherwise in default of any of its obligations hereunder. Except as
otherwise expressly provided herein, such date may not be extended without the
written approval of both Seller and Buyer. The Closing and the Closing Date
shall not have occurred until the Purchase Price shall have been paid by Buyer
to Escrow Holder as provided herein. The "Closing" shall be deemed to have
occurred on the date that all of the events specified in Section 6.8 of this
Agreement shall have occurred.
(b) In the event the Closing does not occur on or before January
10, 1997, the Escrow Holder shall, unless it is notified by Buyer to the
contrary within five (5) days after such date, return to the depositor thereof
all items which may have been deposited with Escrow Holder hereunder. Any such
return shall not, however, relieve either party hereto of any liability it may
have for its wrongful failure to close. Buyer shall, within seven (7) days
after the termination of this Agreement in accordance with the terms hereof,
return to Seller all documents and materials delivered to Buyer hereunder by or
on behalf of Seller.
6.3. DELIVERY BY SELLER. At the Closing, Seller shall deposit with
the Escrow Holder, for the benefit of Buyer, or deliver directly to Buyer the
following:
(a) The Deed, duly executed and acknowledged by Seller, in
recordable form, and ready for recordation in the Official Records;
(b) The Bill of Sale duly executed by Seller;
(c) A certificate from the office of the secretary of state of
California, dated within thirty (30) days of the Closing Date,
indicating that, as of the date of such certificate, there are no
filings against Seller in said offices under the respective Commercial
Code of California which would be a lien on any of the Personal
Property (other than such filings, if any,(i) as are being released at
the time of the Closing or (ii) which have been approved in writing by
Buyer);
(d) Original counterparts of the Leases (and amendments thereto, if
any, and all
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records and correspondence relating thereto); estoppel certificates in
the form of EXHIBIT Q attached hereto from the Space Tenants (as
hereinafter defined) thereunder occupying at least 90% of the leased
space and including ten (10) tenants specifically identified by Buyer,
which estoppel certificates shall be dated not earlier than sixty (60)
days before the Closing Date, and shall certify to and for the benefit
of Buyer and its successors and assigns that the Leases are in full
force and effect, the counterparts of and amendments to the Leases
provided by the Seller to the Buyer are true, correct and complete
versions of those Leases, and certifying that Seller, as landlord, is
not in default thereunder; and a certified rent roll and listing of
security deposits for the Property, if any;
(e) The Assignment(s) of Leases covering all of the Leases on the
Property, duly executed by Seller;
(f) Originals or, if unavailable, certified copies of any
warranties and guaranties received by Seller and to be assigned to
Buyer, from any contractors, subcontractors, suppliers or materialmen
in connection with any construction, repairs or alterations of the
Improvements or any tenant improvements;
(g) The Assignment(s) of Intangible Property and Warranties, duly
executed by Seller and acknowledged, assigning all of Seller's interest
in the Intangible Property (except that the only Contracts that shall
be assigned are the Approved Contracts);
(h) To the extent available, originals or, if unavailable,
certified copies of all certificates of occupancy for the Improvements;
(i) To the extent the same are available to Seller, as-built plans
and specifications for the Improvements, showing the Improvements in
their state of Completion, certified by Seller and by the contractor to
be true, complete and correct copies thereof;
(j) Originals or, if unavailable, certified copies of all licenses
or permits held by Seller, and/or to be assigned to Buyer pursuant to
this Agreement, in connection with the use, operation or enjoyment of
the Property;
(k) Such resolutions, authorizations, or other documents or
agreements relating to Seller as shall be required by the Title Company
or by Buyer in connection with this transaction;
(l) A closing statement prepared by Escrow Holder in form and
content consistent with this Agreement and otherwise reasonably
satisfactory to Buyer and Seller;
(m) The Non-Foreign Certificate, duly executed by Seller;
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(n) A certificate in the form of EXHIBIT J attached hereto duly
executed by Seller and dated as of the Closing Date confirming the
truth, accuracy and completeness of each of the Seller's
representations and warranties set forth in Article VI below and noting
with specificity any changes or exceptions thereto based upon events or
circumstances intervening after the execution hereof (the "Update
Certificate");
(o) Notices to each of the tenants under the Leases (the "Space
Tenants") in the form of SCHEDULE K hereto; and
(p) Seller's closing certificate, certifying as to the satisfaction
of all of the conditions precedent to Seller's obligations hereunder
(except delivery of the Purchase Price), addressed to Buyer.
(q) A estoppel certificate in the form of EXHIBIT L attached hereto
from parties to Approved Contracts certifying to and for the benefit of
Buyer and its successors and assigns that all amounts owed by Seller
thereunder have been paid in full and that there exist no disputes,
offsets, or counterclaims with respect thereto;
(r) Notices to each of the parties to the Approved Contracts in the
form of SCHEDULE M hereto; and
(s) All keys, properly tagged and identified for the Property.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
6.4. DELIVERY BY BUYER. At the Closing, Buyer shall execute and
deliver to Escrow Holder, for the benefit of Seller, or directly to Seller the
following:
(a) Assignment of Leases executed by Buyer;
(b) Assignment of Intangible Property and Warranties executed by
Buyer;
(c) Notices to the Space Tenants in the form of SCHEDULE K hereto;
(d) Buyer's closing certificate, certifying as to the satisfaction
of all of the conditions precedent to Buyer's obligations hereunder,
addressed to Seller. and
(e) Notices to each of the parties of the Approved Contracts in the
form of SCHEDULE M hereto.
After Escrow Holder's receipt of all of the items specified in Section 5.3
hereof, after the complete satisfaction of all of the conditions precedent to
Buyer's obligations hereunder, and after the expiration of the Review Period,
Buyer shall deliver the Purchase Price to Escrow Holder as provided in Section
2.3 above.
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6.5. OTHER INSTRUMENTS. Seller and Buyer shall each deposit such
other instruments as are reasonably required by Escrow Holder or otherwise
required to close the escrow and consummate the purchase of the Property in
accordance with the terms hereof.
6.6. PRORATIONS. At Closing, the parties shall prorate as of the
Closing Date, on the basis of a thirty-one-day (31-day) month, the following
with respect to the Property:
(a) TAXES. Real estate taxes, recurring assessments, personal
property taxes, and rent tax, if any, on all or any portion of the
Property, based on the regular and supplemental tax bills for the
calendar year in which the Closing occurs (or, if such tax bill has not
been issued as of the date of Closing the regular and supplemental tax
bill for the calendar year preceding that in which the Closing occurs).
If any supplemental real estate taxes are levied for any period
preceding the Closing, the parties will, immediately after the Closing
or the issuance of the supplemental real estate tax bill (whichever
last occurs), prorate between themselves, in cash, without interest and
to the date of the Closing Date, the supplemental real estate taxes
shown by such bill.
(b) UTILITIES. All utilities including gas, water, sewer,
electricity, telephone and other utilities supplied to the Property
shall be read as of the Closing Date. Seller shall pay, prior to the
Closing Date, all such amounts for which a bill has been received or
for which payment is otherwise due prior to the Closing Date, and Buyer
shall be credited, and Seller shall be debited, with an amount equal to
all utility charges for the period from the date such bills were issued
or such payments were due until the Closing Date.
(c) RENTS. Rents collected by Seller for the month in which the
Closing Date occurs shall be prorated so that Seller shall receive all
amounts due Seller applicable to time periods prior to the Closing Date
(excluding delinquencies), and Buyer shall receive all amounts
applicable to time periods after the Closing Date. With respect to any
Lease with delinquent rents as of the Closing Date, Buyer shall apply
rents under such Lease received after Closing first to current rents
due to Buyer, second to rents due to Seller as of the Closing Date but
uncollected prior to settlement, and third to payment of delinquent
rent due to Seller. Seller shall retain the right to commence legal
action against a tenant for any delinquent rent apportioned to the
Seller, at Seller's sole cost and expense, except Seller may not bring
unlawful detainer proceedings or similar actions to dispossess a tenant
without the consent of Buyer.
(d) SERVICE CONTRACTS. Amounts payable under Approved Contracts
shall be prorated on an accrual basis. Seller shall pay, prior to the
Closing Date, all such amounts for which a bill has been received or
for which payment is otherwise due prior to the Closing Date, and Buyer
shall be credited, and Seller shall be debited, with an amount equal to
all amounts accrued under the Approved Contracts from the
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date such bills were issued or such payments were due until the Closing
Date. Seller shall deliver to Escrow, for the benefit of Buyer,
evidence of the cancellation or termination of all Contracts other than
Approved Contracts, and Seller shall be responsible for all such
cancellation costs.
(e) SECURITY DEPOSITS. Buyer shall be credited and Seller shall be
debited with an amount equal to all Security Deposits, plus accrued
interest thereon, if any, paid to or on behalf of Seller that remain
refundable under the Leases as of the Closing Date in such amounts as
verified by the estoppel certificates of the Space Tenants and by
Seller's certified rent roll.
(f) OTHER ITEMS. All other proratable items including, without
limitation, licenses and permits being assumed by Buyer, property
owners association dues and expenses and other income from, and
expenses associated with, the Property shall be prorated between Buyer
and Seller as of the Closing. Notwithstanding anything to the contrary
in the foregoing or elsewhere herein, Seller shall pay for all
brokerage fees and commissions (including without limitation those to
Leasing Agent) incurred with respect to Leases executed prior to the
Closing Date.
(g) POST-CLOSING PRORATIONS. Any required post-Closing prorations
(e.g. supplemental taxes) shall be accomplished as soon as reasonably
practicable after the Closing Date.
(h) METHOD OF PRORATION. Buyer and Seller agree to prepare a
schedule of tentative apportionments prior to the Closing Date. Such
apportionments, if and to the extent known and agreed upon as of the
Closing Date, shall be paid by Buyer to Seller (if the prorations
result in a net credit to the Seller) or by Seller to Buyer (if the
prorations result in a net credit to the Buyer), by increasing or
reducing the cash to be paid by Buyer at the Closing. Any such
apportionments that cannot be determined as of the Closing Date shall
be paid by Buyer to Seller, or by Seller to Buyer, as the case may be,
in cash as soon as practicable following the Closing Date.
6.7. COSTS AND EXPENSES. Seller shall pay the cost of the premium for
the Title Policy to the extent that such premium does not exceed the premium for
a CLTA policy, all legal fees and costs incurred by Seller, the cost of any
recordation fees, all county transfer taxes and one-half of all City transfer
taxes applicable with respect to the sale of the Real Property, all sales tax,
if any, applicable with respect to the sale of the Personal Property and/or the
Intangible Property, the Escrow Holder's fees and charges, and other fees and
charges which are typically borne by sellers in Santa Clara County, California.
Buyer shall pay for its out-of-pocket expenses, all legal fees and costs
incurred by Buyer in connection herewith, one-half of all City transfer taxes,
an assumption fee not to exceed one percent (1%) of the then outstanding
principal balance of the Sun Life Debt incurred in connection with an assumption
of the Sun Life Debt, and other fees and charges which are typically borne by
buyers in Santa Clara County, California. If Buyer obtains an ALTA Title
Policy, Buyer shall pay the difference between the premium for a CLTA policy and
an ALTA policy.
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6.8. CLOSING AND RECORDATION. Provided that Escrow Holder has
received all of the items required to be delivered pursuant to this Article VI
(or a waiver from the party for whose benefit such item is being delivered) and
that it has not received prior written notice from Buyer that Buyer has elected
to terminate its rights and obligations hereunder pursuant to Article IV,
Article V and/or Section 6.9, and provided that Buyer has either received the
Title Policy or the irrevocable commitment of Title Company to provide it with
the Title Policy immediately after recordation of the Deed, Escrow Holder is
authorized and instructed (a) with respect to the Property, to cause the Title
Company to record the documents delivered to the Escrow Holder in accordance
with recording instructions set forth in a letter to be delivered to Escrow
Holder and Title Company by Buyer (or if no such letter is received prior to the
Closing, in accordance with customary practice), (b) to deliver those other
documents and instruments delivered into Escrow to the party for whose benefit
such documents or instruments were made and (c) to deliver the Purchase Price,
as adjusted pursuant to Section 6.6 hereof, upon receiving confirmation of
recording of the Deed.
6.9. TERMINATION OF AGREEMENT.
(a) FAILURE OF BUYER'S CONDITIONS. If any one or more of the
conditions to Buyer's obligations, as set forth in Article V.A, Section
6.3 or elsewhere in this Agreement, is not either fully performed,
satisfied or waived in writing (or deemed waived as provided herein) on
or before the Closing Date or such earlier date as provided elsewhere
herein, then Buyer may elect, by written notice as provided in Section
11.10 hereof, to terminate this Agreement, in which case neither party
shall have any further obligation to the other (except as set forth in
Sections 6.2(b), and 11.2 hereof). Nothing in this paragraph shall be
construed to limit any of Buyer's rights or remedies at law or equity
in the event of a default by Seller.
(b) FAILURE OF SELLER'S CONDITIONS. If any one or more of the
conditions to Seller's obligations, as set forth in Article V.B.,
Section 6.4 or elsewhere in this Agreement, is not either fully
performed, satisfied or waived in writing (or deemed waived as provided
herein) on or before the Closing Date or such earlier date as provided
elsewhere herein, then Seller may elect, by written notice as provided
in Section 11.10 hereof, to terminate this Agreement and neither party
shall have any further obligation to the other (except as set forth in
Sections 6.2(b) and 11.2 hereof).
6.10 RELEASE OF DEPOSITS. The Deposits (including all interest earned
thereon): (a) shall be released to Seller as part of the Purchase Price in
accordance with the provisions of Section 2.3 above, or (b) shall be released to
Seller as liquidated damages if this transaction is not consummated due to
default on part of the Buyer as provided in Section 6.11 below, or (c) shall be
returned to Buyer if this transaction is not consummated due to any reason other
than default on part of the Buyer.
6.11. LIMITATION ON SELLER'S REMEDIES. IF THIS TRANSACTION DOES NOT
CLOSE AS A CONSEQUENCE OF A DEFAULT BY BUYER IN THE PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER, SELLER SHALL RETAIN THE DEPOSITS (TOGETHER WITH ALL
INTEREST EARNED THEREON) AS LIQUIDATED DAMAGES. SELLER'S ACTUAL DAMAGES WOULD
BE DIFFICULT
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OR IMPOSSIBLE TO DETERMINE IF BUYER DEFAULTS, AND THE AMOUNT OF SUCH OF THE
DEPOSITS (TOGETHER WITH ALL INTEREST EARNED THEREON) ARE THE BEST ESTIMATE OF
THE AMOUNT OF DAMAGES SELLER WOULD SUFFER. THE PROVISIONS OF THIS PARAGRAPH
6.11 SHALL BE SELLER'S SOLE REMEDY IN THE EVENT OF A DEFAULT BY BUYER, IN LIEU
OF ALL OTHER REMEDIES SELLER MIGHT OTHERWISE HAVE HEREUNDER AT LAW OR IN EQUITY.
THE PARTIES WITNESS THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION AND
THIS LIMITATION OF REMEDIES PROVISION BY THEIR EXECUTION BELOW.
RVM PP
----------------- ------------------
Initials of Buyer Initials of Seller
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
As an inducement to Buyer to enter into this Agreement and the consummation
of the transaction contemplated hereby, except as disclosed in writing to Buyer
and attached to this Agreement, seller hereby makes the following
representations and warranties to Buyer, which representations and warranties
are true, correct and complete both as of the date hereof and again as of the
Closing Date, and as of all dates and times in between (except as specifically
provided to the contrary herein and in the Update Certificate) and agrees with
Buyer as follows:
7.1. CONDITION OF PROPERTY. To the best of Seller's knowledge, there
are no physical or mechanical defects in any of the Improvements on the
Property, and all such Improvements are in good operating condition and repair
and in compliance with all applicable governmental laws, ordinances, regulations
and requirements. Furthermore, without limiting the generality of the
foregoing, to the best of Seller's knowledge, the soil on the land is fully
capable of supporting the Improvements, without sinking, erosion or other
incident or adverse consequence; and the roof of the structures comprising the
Improvements is in good condition and free of leaks, and all gutters and leaders
installed are in good condition and operating properly.
7.2. USE AND OPERATION. To the best of Seller's knowledge, the use
and operation of the Property are fully entitled, without restriction or
conditions, and are in compliance with applicable codes, ordinances, rules,
laws, regulations and requirements, including without limitation those
applicable to subdivisions, construction of improvements, zoning, land use
(including without limitation the California Environmental Quality Act
("CEQA")), public safety, Hazardous Substances and the Americans with
Disabilities Act (collectively, "Laws") of any court, or any governmental agency
or authority, (collectively, "Governmental or Regulatory Authority"), and Seller
has received no notice of non-compliance with any Laws.
7.3. LAND-USE REGULATION. To the best of Seller's knowledge, there
are no zoning or other land-use regulation proceedings or any change or proposed
change in any applicable Laws, which could detrimentally
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affect the use or operation of the Property, and Seller has not received notice
of any special assessment proceedings affecting the Property.
7.4. UTILITIES. To the best of Seller's knowledge, all water, sewer,
gas, electric, telephone and drainage facilities and all other utilities
required by law or for the intended full use and operation of the Property are
installed to the property lines of the Property, are all connected and operating
pursuant to valid permits, are adequate to service the Property and to permit
full compliance with all Laws and the intended full usage of the Property, and
are connected to the Property by means of one or more public or private
easements extending from the Property to one or more public streets, public
rights-of-way or utility facilities.
7.5. USE PERMITS AND OTHER APPROVALS. To the best of Seller's
knowledge, Seller has obtained all licenses, permits, approvals, certificates of
occupancy, other certificates, easements and rights of way (and all such items
are currently in full force and effect) required from any Governmental or
Regulatory Authority having jurisdiction over the Property, including without
limitation any approvals necessary to fully comply with CEQA, or from private
parties for the full intended use and operation of the Property and to ensure
free and unimpeded vehicular and pedestrian ingress to and egress from the
Property as required to permit the full intended usage of the Property.
SCHEDULE H (which shall be supplemented as new such matters are obtained)
accurately sets forth all governmental and regulatory licenses, franchises and
permits respecting the Property.
7.6. AUTHORITY OF SELLER/INTEREST OF SELLER IN THE PROPERTY.
(i) Seller owns the Property as an individual, and the Property is Seller's sole
and separate property, and no person has any community property interest or
other property interest in the Property; (ii) this Agreement, the Deed, and all
other documents executed and delivered by Seller pursuant to this Agreement,
constitute legal, valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms, (iii) Seller has full power
and authority to carry on his business as presently conducted, and (iv) other
than with respect to the Sun Life Debt and the Pacific Crest Debt, neither the
execution, delivery and performance of this Agreement and all other documents
executed and delivered by Seller pursuant to this Agreement, nor the
consummation of the transactions contemplated hereby, violate or conflict with,
result in the breach or termination of or constitute default under any
provisions of any agreement, organizational or charter document, or judicial
order to which Seller is a party or to which Seller or the Property is subject.
7.7. USE OF PROPERTY. Seller knows of no facts nor has Seller failed
to disclose to Buyer any fact which would prevent Buyer from using and operating
the Property hereafter in the manner in which the Property is intended to be
operated. To the best of Seller's knowledge, there do not exist any violation
of any declaration of covenants, conditions and restrictions (the "CC&R's") with
respect to the Property, nor is there any existing state of facts or
circumstances or condition or event which could, with the giving of notice or
passage of time, or both, constitute such a violation. To the best of Seller's
knowledge, Seller is not in default in respect of any of its obligations
pertaining to the Property. The Property is not located in the 100-year flood
plain, and no fees, connection charges or assessments are due or pending for the
installation or operation of any drainage, water run off or dry well facilities
related thereto.
7.8. HAZARDOUS SUBSTANCES AND ASBESTOS/INDEMNIFICATION.
(a) To the best of Seller's knowledge, all operations or activities at, on,
in, under or about, or use or
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occupancy of, the Property, or any portion thereof, by any party, is, and at all
times has been, in all respects in compliance with all Laws governing or in any
way relating to toxic or hazardous substances, materials or wastes, including,
but not limited to, substances, materials or wastes regulated under any
applicable local, state or federal law (including without limitation petroleum
and petroleum products) ("Hazardous Substances"), and neither Seller nor, to the
best of Seller's knowledge, any prior or current owner or prior or current
tenant or occupant of the Property, or any portion thereof, engaged in or
permitted any dumping, discharge, disposal, spillage, use or leakage of
Hazardous Substances, at, on, in, under or about the Property, or any portion
thereof, except in accordance with applicable laws. To the best of Seller's
knowledge, there is not present at, on, in, under or about the Property, or any
portion thereof, any Hazardous Substances, underground storage tanks, asbestos,
or any structures, fixtures, equipment or other objects or materials containing
Hazardous Substances or asbestos, except in accordance with applicable laws.
(b) Seller shall indemnify, protect, defend with counsel acceptable to
Buyer, and hold Buyer fully harmless from any and all liabilities, damages,
claims, penalties, fines, settlements, causes of action, cost or expense,
including reasonable attorneys' fees, environmental consultant fees and
laboratory fees and costs and expenses of investigating and defending any claims
or proceedings, resulting from or attributable to (a) the breach of the warranty
contained in this Section 7.8; (b) the presence, disposal, release, or
threatened release of any Hazardous Substance that was on, from or affecting the
Property at any time prior to the Closing Date, including the soil, water,
vegetation, building, personal property, persons, animals, or otherwise; (c) any
personal injury (including wrongful death), or property damage (real or
personal) arising out of or relating to any hazardous substance present on the
Property at any time prior to the Closing Date; (d) any lawsuits or
administrative action brought or threatened, settlement breached or governmental
order relating to the presence of any Hazardous Substance on the Real Property
at any time prior to the Closing Date; or (e) any violation by Seller of laws
applicable to Hazardous Substance.
7.9. PARKING. To the best of Seller's knowledge, (i) The Property,
the Improvements and each portion thereof has sufficient and adequate on-site
parking facilities to comply with all Laws, and the requirements of all
agreements and restrictions affecting the Property (including without limitation
the Leases), and to allow the full use and operation of the Property for the
purposes for which the Property is intended to be used, and (ii) the Property,
the Improvements and each portion thereof have sufficient and adequate access
(in compliance with applicable Laws, zoning, land use or other legal or private
requirements or agreements) to the Property and to such parking facilities
across the Property or from or through one or more physically open and fully
dedicated public streets.
7.10. REPORTS, CONTRACTS AND OTHER DOCUMENTS. All contracts, or leases
or documents delivered or made available to Buyer pursuant to this Agreement or
in connection with the execution hereof are true, correct and complete copies,
and in full force and effect. All such contracts, leases and other documents
relating to or affecting the Property have been delivered or made available to
the Buyer pursuant to this Agreement to the extent required by this Agreement.
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7.11. LEASES.
(a) SCHEDULE N attached hereto is a true and complete list of
the Leases which affect the Property. (i) Except as otherwise specified in
Schedule J, the Leases are in full force and effect, and (ii) there is no
monetary default or other default by any party under any of the Leases (and
there exists no condition that with the passage of time or the giving of notice
or both would constitute such a default).
(b) Except with respect to the Leases, no person, firm or entity
has any possessory interest in any portion of the Property or any other rights
with regard to the use of the Property or any rights to lease all or any part of
the Property, or any part thereof or otherwise obtain any interest therein.
There has been no assignment of any of the Leases existing with respect to the
Property, except for a collateral assignment as security for financing to be
satisfied at Closing.
(c) The rent roll and summary of security deposits for the
Property attached hereto as SCHEDULE O are true, correct and complete.
7.12. SERVICE CONTRACTS AND OTHER AGREEMENTS. Seller has not entered
into and there are no contracts or other agreements affecting the owner or
ownership of the Property, except as specifically set forth in attached
SCHEDULE F (which shall be supplemented as each new Contract or other agreement
is executed).
7.13. AGREEMENTS AFFECTING THE PROPERTY. There are no easements,
encumbrances or other agreements (whether or not of record) affecting title to,
or creating a lien or charge upon the Property except as shown in the Survey or
Title Report or as otherwise specifically set forth in attached SCHEDULE H.
7.14. MATTERS IN RESPECT OF APPURTENANCES; TITLE.
(a) There is no default by Seller under or in respect of any of
the Appurtenances, and no Appurtenances have been conveyed, transferred or
assigned to any third party except as shown in the Title Report.
(b) Seller is the sole owner of good, marketable and insurable
fee simple title to the Property, free and clear of all liens, security
interests, covenants, conditions, rights-of-way, easements and encumbrances of
any kind or character whatsoever, subject only to the matters shown on the Title
Policy.
7.15. LITIGATION. There is no action, suit or proceeding pending or,
to the best of Seller's knowledge, threatened against Seller, or any basis
therefor, that arises out of the ownership of the Property or that might
detrimentally affect the use and operation of the Property for its intended
purpose, or the value of the Property or adversely affect the ability of Seller
to perform its obligations under this Agreement. Without limiting the
generality of the foregoing, there is no action, suit or proceeding under the
Bankruptcy Code pending or, to the best of Seller's knowledge, threatened
against Seller or any entity in which Seller is a general partner or has a
contributing interest.
7.16. OTHER CONTRACTS TO CONVEY PROPERTY. Seller has not committed nor
obligated itself in any manner whatsoever to sell the Property, or any portion
thereof, to any party other than Buyer. Seller has not
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hypothecated or assigned any rents or income from the Property, or any portion
thereof, in any manner except pursuant to secured financing to be assumed at
Closing.
7.17. PROPERTY TAX ASSESSMENT.
(a) Notwithstanding any other provision of this Agreement to the
contrary, if Buyer shall become liable after the Closing for payment of any
property taxes assessed against the Property for any period of time prior to the
Closing, Seller shall immediately pay to Buyer on demand an amount equal to such
tax assessment.
(b) The Real Property is a separate tax lot or lots and is
assessed and taxed for real estate tax purposes separate and apart from any
other lands.
7.18. ASSESSMENT LIENS. Except for those matters specifically set
forth in the Title Report delivered or to be delivered to Buyer pursuant to
Section 4.2 above, there is no assessment of any kind or nature which
constitutes a lien on the Property, or any portion thereof, and no matters other
than Permitted Exceptions.
7.19. FULL DISCLOSURE. No representation and warranty made by Seller
in this Agreement contains any untrue statement of a material fact, or fails to
state a material fact necessary to make the statements contained herein, in
light of the circumstances which under which they were made, not misleading.
Seller knows of no fact or circumstance which materially adversely affects, or
can be expected to materially adversely affect, the condition, financial or
otherwise, of the Property or the Seller.
7.20. NON-FOREIGN STATUS. Seller is not a "foreign person" within the
meaning of Section 1445 ET SEQ. of the Code.
7.21 CONDEMNATION. Seller is not aware of any contemplated
condemnation proceeding or of any intention or plan by the City of San Jose or
County of Santa Clara to widen roads or sidewalks around the Property or
otherwise to alter, change, or affect the ingress and egress to and from the
Property.
7.22 AGREEMENTS RELATED TO USE OF 4100 BUILDING. All easements,
cross-easements and other agreements related to the use of the driveway located
at 4100 Moorpark Avenue are set forth on SCHEDULE F-1 hereto, true and correct
copies of which have been delivered to Buyer. All such agreements in full force
and affect and there are no in defaults thereunder and there is no event or
condition which, with the giving of notice or passage of time, or both, would
result in a default thereunder.
The representations and warranties set forth in this Article VI or in
any other instruments delivered pursuant to this Agreement (and the indemnities
set forth in Article XI hereof) shall survive the execution and delivery of this
Agreement (as set forth in Section 11.5 below), the waiver by Buyer of any of
the conditions set forth in Article V.A, the awareness by Buyer of the
inaccuracy of any representation or warranty, the delivery of the Deed and
transfer of title to the Property.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BUYER
8.1. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents
and warrants to Seller as follows: Buyer is a corporation duly organized under
the laws of the State of New York; except for the Buyer Approval, this Agreement
and all documents executed by Buyer which are to be delivered to Seller at the
Closing are and as of the Closing Date will be duly authorized, executed and
delivered by Buyer, and are and as of the Closing Date will be legal, valid and
binding obligations of Buyer, and do not and as of the Closing Date will not
violate any provisions of any agreement or judicial order to which Buyer is a
party or to which it is subject.
8.2. NO ADDITIONAL WARRANTIES. Buyer agrees that, except for those
representations and warranties specifically made by Seller in this Agreement, it
is purchasing the Property solely in reliance on its own investigation and that
no representations or warranties of any kind whatsoever, express or implied,
have been made by Seller or any of Seller's agents.
ARTICLE IX
DELIVERY OF PROPERTY
9.1. POSSESSION. Possession of the Property shall be delivered to
Buyer on the Closing Date subject only to the rights of Space Tenants pursuant
to the Leases. Without limiting any other provisions of this Agreement, Seller
shall afford authorized representatives of Buyer reasonable access to the
Property for the purposes of determining Seller's compliance herewith; however,
in no event shall such right give rise to any obligation of Buyer to determine
compliance or noncompliance.
9.2. LOSS, DESTRUCTION AND CONDEMNATION.
(a) DEFINITION OF MATERIAL DAMAGE. For the purposes of this
Section 9.2, damage to the Property is material if the actual cost of repairing
or replacing the damaged portions of the Improvements on the Property exceeds
$100,000, or if it would take more than forty-five (45) days to perform such
repair or replacement using reasonably diligent efforts.
(b) EFFECT OF NON-MATERIAL DAMAGE TO IMPROVEMENTS. If prior to
the Closing the Improvements on the Property are non-materially damaged by
casualty (i) this Agreement may not be terminated by reason of such casualty
(provided that this does not waive Buyer's other termination rights under this
Agreement) and (ii) Seller will, at Buyer's option, either (a) cause the damaged
portion of the Improvements to be repaired at Seller's sole cost and expense or
(b) reduce the Purchase Price by an amount equal to the actual, reasonable and
necessary cost of repairing or replacing the damaged portions of the
Improvements. Seller will notify Buyer within one (1) day of Seller's receipt
of knowledge of any casualty which occurs in between the date of this Agreement
and the Closing Date.
(c) EFFECT OF MATERIAL DAMAGE TO IMPROVEMENTS. If prior to the
Closing the Improvements are materially damaged by casualty, Seller shall notify
Buyer in writing of such casualty as soon as practicable. Within ten (10) days
after the occurrence of such casualty or receipt of applicable insurance
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proceeds whichever is later, Seller will commence restoration of the damaged
Improvements, and shall complete such restorations promptly thereafter, and the
Closing Date shall, if necessary be extended until such damaged improvements are
complete; provided, however, that no such restoration shall be required unless
the same is fully covered by a policy of insurance maintained by Seller and
provided, however, that such Improvements must be completed by no later than,
and the extended Closing Date may not be extended to a date later than, the
earlier to occur of (i) a date which reasonably allows the Completion of the
damaged Improvements, and (ii) February 24, 1997. If Seller does not commence
or complete such restoration within such time period, then Buyer may elect
within the next thirty (30) days pursuant to a writing delivered to Seller and
Escrow Holder to (i) continue this Agreement, in which case Seller shall assign
to Buyer at the Closing any insurance proceeds to which Seller is entitled with
respect to such damage and Buyer shall further be entitled to deduct from the
Purchase Price the amount of any deductible payable by Seller under the
applicable casualty insurance policy plus the amount of any shortfall after the
application of casualty insurance proceeds to the restoration of the Property
(including loss of rents and any other costs incurred in restoration of the
Property); or (ii) terminate this Agreement, in which case Buyer and Seller
shall have no further rights and obligations to the Seller under this Agreement.
In the event that Buyer elections option (i), Buyer shall instruct the Escrow
Holder to retain in the Escrow from the Purchase Price the amount of the
shortfall that Buyer reasonably estimates may result after the application of
casualty insurance proceeds to the restoration of the Property and the Escrow
Holder shall disburse to Buyer all amounts actually expended by Buyer in the
restoration of the Premises after the application of insurance proceeds upon
Buyer's submission of certified receipts and invoices for such amounts. Buyer's
failure to have elected any of these options within the time allotted therefor
shall be deemed to be an election of option (ii).
(d) DEFINITION OF MATERIAL TAKING. For the purposes of this
Section 9.2, a taking or threatened taking by eminent domain or similar
proceedings shall be deemed material if the value of that portion of the
Property to be so taken exceeds $100,000, or if Buyer determines that the
Property so affected is materially adversely affected by such taking or
threatened taking.
(e) EFFECT OF NON-MATERIAL TAKING. If prior to the Closing
there is a non-material taking or threatened taking of a portion of the Property
(i) this Agreement may not be terminated and (ii) Seller will assign to Buyer at
the Closing all of Seller's rights in and to any condemnation award with respect
to such non-material taking, and there will be no reduction in the Purchase
Price. Seller will deliver written notice to Escrow Holder and Buyer within one
(1) day after Seller receives notice of or otherwise becomes aware of any taking
or threatened taking affecting the Property.
(f) EFFECT OF MATERIAL TAKING. If prior to the Closing there is
a material taking or threatened material taking of a portion of the Property or
all of it, Seller shall notify Buyer in writing of such taking or threatened
taking, and within ten (10) days after Buyer's receipt of such notice, Seller
and Buyer shall endeavor to agree upon whether the Property shall be purchased
by Buyer, whether there shall be any reduction in the Purchase Price, and
whether there shall be any assignment of any condemnation award with respect to
such taking. If within such ten (10) day period Buyer and Seller have not
reached a mutually acceptable agreement as to those matters, Buyer within thirty
(30) days thereafter may elect in writing to (i) continue this Agreement subject
to the taking or threatened taking with an assignment of all of Seller's rights
to condemnation awards, severance damages, payments-in-lieu thereof or the like;
or (ii) terminate this Agreement, in which case
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Buyer and Seller shall have no further rights or obligations to one another
under this Agreement. Buyer's failure to have elected any of these options
within the time period allotted therefor shall be deemed to be an election of
option (ii).
ARTICLE X
MAINTENANCE AND OPERATION OF THE PROPERTY
10.1. MAINTENANCE. In addition to Seller's other obligations hereunder,
Seller shall, in between the date of this Agreement and the Closing Date, at
Seller's sole cost and expense, maintain the Property in good order, condition
and repair, reasonable wear and tear excepted, shall perform all work required
to be done by the landlord under the terms of any Lease affecting the Property,
pay all taxes, assessments, fines, penalties, charges and other operating
expenses, and shall make all repairs, maintenance and replacements of the
Improvements and any Personal Property and otherwise operate the Property in a
first class manner (and, where applicable, in the same manner as before the
making of this Agreement), the same as though Seller were retaining the
Property. Seller shall not make any alterations to the Property in excess of
$500 without first receiving Buyer's prior written consent thereof.
10.2. LEASES AND OTHER AGREEMENTS. Seller shall not, in between the
date of this Agreement and the Closing Date, enter into or terminate any Lease,
amendment of lease, contract or agreement pertaining to the Property or permit
any tenant of the Property to enter into or terminate any sublease, assignment
of lease, contract or agreement pertaining to the Property, or modify any lease,
contract or agreement pertaining to the Property or waive any rights of Seller
thereunder, without in each case obtaining Buyer's prior written consent
thereto, which may be granted or withheld in Buyer's sole and absolute
discretion. Buyer agrees that all commissions and costs of tenant improvements
incurred in connection with any lease entered into by Seller and approved by
Buyer pursuant to the previous sentence shall be amortized over the term of the
lease and pro-rated to Buyer and Seller at Closing.
10.3. ENCUMBRANCES. Seller shall not, in between the date of this
Agreement and the Closing Date, mortgage, encumber or suffer to be encumbered
all or any portion of the Property without the prior written consent of Buyer.
10.4. CONSENTS AND NOTICES. Seller and Buyer shall cooperate with each
other and exercise commercially reasonably efforts to obtain as of the Closing
Date, obtain all Consents from, and provide all Notices to, any third party and
any Governmental or Regulatory Authority which are required pursuant to any
Contract or any applicable Laws as a condition to or in connection with the
execution, delivery or performance of this Agreement, the Leases or other
documents and instruments contemplated thereby.
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ARTICLE XI
MISCELLANEOUS
11.1. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by United States
mail, registered or certified mail, postage prepaid, return receipt requested or
sent by Federal Express or similar nationally recognized overnight courier
service, and addressed as follows, and shall be deemed to have been given upon
the date of delivery (or refusal to accept delivery) at the address specified
below as indicated on the return receipt or air bill:
IF TO SELLER: Mr. Peter Paulsen
355 Harris Avenue
Suite 201
Bellingham, WA 98225
Fax No.: (360) 647-6943
with a copy to: Hoge Fenton Jones & Appel, Inc.
60 South Market Street
San Jose, CA 95113-2396
Attn: Stephen S. McCray
Fax No.: (408) 287-2583
IF TO BUYER: Pacific Gateway Properties, Inc.
One Rincon Center
101 Spear Street, Suite 215
San Francisco, CA 94105
Attn: Raymond V. Marino
Fax No.: (415) 777-3765
with a copy to: Gibson, Dunn & Crutcher
One Montgomery Street
Suite 2600
San Francisco, CA 94104
Attn: Fred L. Pillon, Esq.
Fax No.: (415) 786-5309
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IF TO ESCROW HOLDER
AND/OR TITLE COMPANY: Chicago Land Title Company
388 Market Street
Suite 1300
San Francisco, CA 94111
Attn: Leslie Hazelwood
Fax No.: (415) 788-0871
or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid.
11.2. BROKERS AND FINDERS. Buyer and Seller each hereby represents and
warrants that no broker was involved in this Agreement or the transactions
contemplated hereby, other than the Buyer's agreement with Colliers - J.R.
Parrish International pursuant to which Colliers - J.R. Parrish International is
entitled to a broker's fee not to exceed 1% of the Purchase Price (the "Broker's
Fee") upon closing. In the event of a claim for a broker's fee, finder's fee,
commission or other similar compensation in connection herewith other than as
set forth above, (i) Buyer, if such claim is based upon any agreement alleged to
have been made by Buyer, hereby agrees to reimburse Seller for any liability,
loss, cost, damage or expense (including reasonable attorneys' and paralegals'
fees and costs) which Seller may sustain or incur by reason of such claim and
(ii) Seller, if such claim is based upon any agreement alleged to have been made
by Seller, hereby agrees to reimburse Buyer for any liability, loss, cost,
damage or expense (including reasonable attorneys' and paralegals' fees and
costs) which Buyer may sustain or incur by reason of such claim. The provisions
of this Section 11.2 shall survive the Closing or earlier termination of this
Agreement.
11.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns, except that Seller's interest under this Agreement may not be
assigned, encumbered or otherwise transferred whether voluntarily,
involuntarily, by operation of law or otherwise, without the prior written
consent of the Buyer. Without limiting the generality of the foregoing, Buyer
may assign its rights and interests hereunder to any person or entity, including
without limitation any client of Buyer's real estate investment division and any
special account associated with Buyer.
11.4. AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by the party asserted to be bound thereby. If this
Agreement or any of Buyer's rights hereunder are assigned or otherwise made
available in whole or in part to a person or entity (an "Assignee") as permitted
by Section 11.3, Seller agrees to amend this Agreement to make such changes
hereto as may be requested by such Assignee in good faith, provided that such
changes shall not affect the Purchase Price or other economic aspects of the
transaction contemplated hereby.
11.5. CONTINUATION AND SURVIVAL OF INDEMNITIES, REPRESENTATIONS,
WARRANTIES AND POST-CLOSING OBLIGATIONS. All indemnities, representations and
warranties by, and all of the post-closing obligations, if any, of, the
respective parties contained herein or made in writing pursuant to this
Agreement or any other instrument delivered by Seller pursuant hereto are
intended to and shall remain true and correct and binding as of the time of
Closing and shall survive the execution and delivery of this Agreement, the
delivery of the Deed and transfer
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of title; provided that the representations and warranties shall terminate three
(3) years after Closing. All representations and warranties of Seller contained
in any certificate or other instrument delivered at any time by or on behalf of
Seller in connection with the transaction contemplated hereby shall constitute
representations and warranties hereunder.
11.6. INTERPRETATION. Whenever used herein, the term "including" shall
be deemed to be followed by the words "without limitation." Words used in the
singular number shall include the plural, and vice-versa, and any gender shall
be deemed to include each other gender. The captions and headings of the
Articles and Sections of this Agreement are for convenience of reference only,
and shall not be deemed to define or limit the provisions hereof.
11.7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
11.8. MERGER OF PRIOR AGREEMENTS. This Agreement (including the
exhibits hereto) constitutes the entire agreement between the parties with
respect to the purchase and sale of the Property specifically described herein
and supersedes all prior and contemporaneous (whether oral or written)
agreements and understandings between the parties hereto relating to the
specific subject matter hereof.
11.9. ATTORNEYS' FEES. In the event of any action or proceeding at law
or in equity between Buyer and Seller (including an action or proceeding between
Buyer and the trustee or debtor in possession while Seller is a debtor in a
proceeding under the Bankruptcy Code (Title 11 of the United States Code) or any
successor statute to such Code) to enforce or interpret any provision of this
Agreement or to protect or establish any right or remedy of either Buyer or
Seller hereunder, the unsuccessful party to such action or proceeding shall pay
to the prevailing party all costs and expenses, including, without limitation,
reasonable attorneys' and paralegals' fees and expenses (including without
limitation fees, costs and expenses of experts and consultants), incurred in
such action or proceeding and in any appeal in connection therewith by such
prevailing party, whether or not such action, proceeding or appeal is prosecuted
to judgment or other final determination, together with all costs of enforcement
and/or collection of any judgment or other relief. The term "prevailing party"
shall include, without limitation, a party who obtains legal counsel or brings
an action against the other by reason of the other's breach or default and
obtains substantially the relief sought, whether by compromise, settlement or
judgment. If such prevailing party shall recover judgment in any such action,
proceeding or appeal, such costs, expenses and attorneys' and paralegals' and
others' fees shall be included in and as a part of such judgment.
11.10. NOTICE OF TERMINATION. If either Buyer or Seller elects to
terminate this Agreement, it will submit to Escrow Holder and the other party
hereto a notice of termination in duplicate. If Escrow Holder receives a notice
of termination, it is instructed to mail and fax one copy to the other such
party within one (1) business day. If Escrow Holder has not received a written
objection from the other party within five (5) business days after mailing and
faxing the copy, Escrow Holder is to (i) comply with the instructions contained
in the notice of termination, (ii) pay cancellation charges out of any funds on
deposit in this Escrow, (iii) return the Deposit to Buyer, and (iv) cancel this
Agreement.
11.11. SPECIFIC PERFORMANCE/DAMAGES. The parties understand and agree
that the Property is unique and for that reason, among others, Buyer will be
irreparably damaged in the event that this Agreement is not
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specifically enforced. Accordingly, in the event of any breach or default in or
of this Agreement or any of the warranties, terms or provisions hereof by
Seller, Buyer shall have, in addition to a claim for damages for such breach or
default, and in addition and without prejudice to any right or remedy available
at law or in equity, the right to demand and have specific performance of this
Agreement. Seller further acknowledges that Buyer is purchasing the Property as
part of the second step of a Section 1031 exchange under the Code and that in
the event of any breach or default in this Agreement, Buyer shall have, in
addition to a claim for damages for such breach or default, a specific claim for
all damages suffered by Buyer as a result of its inability to complete the 1031
exchange, which damages shall specifically include any tax liability resulting
from the failure to complete the 1031 exchange.
11.12. RELATIONSHIP. It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any partnership, joint
venture, financing arrangement or other agreement between Buyer and Seller. No
term or provision of this Agreement is intended to be, or shall be, for the
benefit of any person, firm, organization or corporation not a party hereto, and
no such other person, firm, organization or corporation shall have any right or
cause of action hereunder.
11.13. AUTHORITY. Subject, in the case of Buyer, to obtaining the Buyer
Approvals, the individuals signing below represent and warrant that they have
the requisite authority to bind the entities on whose behalf they are signing.
11.14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
11.15. TIME OF THE ESSENCE. Time is of the essence in this Agreement
and with respect to all of its terms.
11.16. TAX DEFERRED EXCHANGE. The parties shall cooperate with one
another if either party elects to have the sale or acquisition of the Property
constitute part of a tax deferred exchange.
11.17 CONFIDENTIALITY/PUBLICITY. Seller and Buyer agree that they
shall maintain this Agreement and the transaction contemplated hereby in strict
confidence and that no release, notice, or disclosure concerning the existence
or terms of this Agreement will be issued, given, or otherwise disseminated
without the other party's approval, provided that Buyer may make any disclosures
and announcements as required by applicable law.
11.18. PROHIBITION AGAINST CONSIDERATION OF OTHER PURCHASE PROPOSALS.
Until and unless this Agreement has been terminated by Buyer pursuant to Section
5.9 hereto, Seller shall not directly or indirectly solicit or initiate any
discussions or negotiations with or provide any information to or otherwise
cooperate in any way with, or facilitate or encourage any effort or attempt to,
or enter any agreement or understanding with any person or group of persons
concerning any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of the Property in a single transaction or a series of related
transactions.
11.19. ASSIGNMENT BY BUYER. The rights of Buyer pursuant to this
Agreement may be assigned by Buyer without Seller's consent, provided, however,
that any such assignment shall not relieve Buyer of its duties and obligations
hereunder.
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IN WITNESS WHEREOF, Seller, Buyer, and Escrow Holder have executed
this Agreement as of the date first above written.
BUYER: PACIFIC GATEWAY PROPERTIES, INC.
By: ss/Raymond V. Marino
Its: President
SELLER: Peter Paulsen
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Exhibit 1.3
FIRST AMENDMENT TO PURCHASE AND
SALE AGREEMENT AND ESCROW INSTRUCTIONS
This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
(this "AMENDMENT") is made as of January 15, 1997 by and between PETER PAULSEN,
an individual ("SELLER") and PACIFIC GATEWAY PROPERTIES HOTELS, INC., a
California corporation ("BUYER").
RECITALS:
A. Seller, as seller, and Pacific Gateway Properties, Inc., a New York
corporation ("PGP"), as buyer, entered into that certain Purchase and Sale
Agreement and Escrow Instructions dated December 18, 1996 (the "AGREEMENT").
B. By way of Assignment dated January 15, 1997 (the "ASSIGNMENT"), PGP
assigned its interest as buyer under the Agreement to Buyer.
C. Seller and Buyer now desire to amend certain terms of the Agreement,
as more particularly set forth in this Amendment. All initially capitalized
terms used but not otherwise defined in this Amendment shall have the respective
meanings assigned to such terms in the Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
AGREEMENT:
1. PURCHASE PRICE. The Purchase Price referred to in Section 2.1 of the
Agreement is hereby deleted and the Purchase Price of Seventeen Million Five
Hundred Thousand and 00/100 Dollars ($17,500,000.00) is substituted therefor.
2. CLOSING DATE. The Closing Date refereed to in Section 6.2(a) of the
Agreement is hereby extended to January 14, 1997. The date "January 17, 1997"
is substituted for "January 10, 1997" wherever it appears in Section 6.2 or
elsewhere in the Agreement.
3. ASSIGNMENT OF AGREEMENT. Seller acknowledges that, pursuant to
Sections 11.3 and 11.19 of the Agreement, the rights of PGP under the Agreement
have been properly and validly assigned to Buyer under the Assignment.
4. MISCELLANEOUS. Except as expressly modified in this Amendement, all
terms and conditions of the Agreement are unmodified and in full force and
effect. The individuals signing below represent and warrant that they have the
requisite authority to bind those on whose behalf they are signing. This
Amendment may be executed in one or more counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, Seller and Buyer have executed this Amendment as of the
day and year first written above.
"SELLER":
Peter Paulsen
----- -------
Peter Paulsen
"BUYER":
PACIFIC GATEWAY PROPERTIES
HOTELS INC., A California Corporation
By: Raymond V. Marino
------- -- ------
Raymond V. Marino
Its: President
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Exhibit 1.4
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
By and Among
Donlon H. Gabrielsen and Agnes H. Gabrielsen,
as Sellers
PACIFIC GATEWAY PROPERTIES, INC.,
a New York corporation,
as Buyer
and
Chicago Title Company,
as Escrow Holder
December 18, 1996
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TABLE OF CONTENTS
LIST OF SCHEDULES vi
TABLE OF DEFINED TERMS vii
ARTICLE I PROPERTY 1
1.1. Land 1
1.2. Appurtenances 1
1.3. Improvements 2
1.4. Personal Property 2
1.5. Intangible Property 2
1.6. Leases 2
ARTICLE II PURCHASE PRICE 3
2.1. Purchase Price 3
2.2. Deposits 3
2.3. Payment of Purchase Price 3
ARTICLE III TITLE TO PROPERTY 3
3.1. Title 3
3.2. Bill of Sale, Etc. 4
ARTICLE IV BUYER'S INVESTIGATIONS 4
4.1. Delivery of Documents by Seller 4
4.2. Review of Title 5
4.3. Service and Other Contracts 5
4.4. Governmental Permits, Approvals and Regulations 6
4.5. Review Period 6
4.6. Right of Entry 6
4.7. Objections to Survey, Title Report, Property, Leases, or
Other Matters 7
4.8. Cooperation 7
ARTICLE V CONDITIONS PRECEDENT TO CLOSING 8
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5.1. Title Matters 8
5.2. Delivery of Documents 8
5.3. Representations and Warranties 8
5.4. Approval of Update Certificate 8
5.5. Non-Foreign Status of Seller 8
5.6. Use Certificate 9
5.7. Board Approval 9
5.8. Impairment of Property 9
5.9. Litigation 9
5.10. Termination of Employees 9
5.11. Contract Termination 9
B. Seller's Conditions to Closing 10
5.12. Delivery of Documents and Purchase Price 10
5.13. REPRESENTATIONS AND WARRANTIES 11
ARTICLE VI ESCROW; CLOSING, RECORDING AND TERMINATION 11
6.1. Escrow; Deposit with Escrow Holder and Escrow Instructions 11
6.2. Closing 11
6.3. Delivery by Seller 12
6.4. Delivery by Buyer 14
6.5. Other Instruments 15
6.6. Prorations 15
6.7. Costs and Expenses 18
6.8. Closing and Recordation 18
6.9. Termination of Agreement 19
6.10. Release of Deposits 19
6.11. Limitation on Seller's Remedies 19
ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER 20
7.1. Condition of Property 20
7.2. Use and Operation 20
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7.3. Land-Use Regulation 21
7.4. Utilities 21
7.5. Use Permits and Other Approvals 21
7.6. Authority of Seller/Interest of Seller in the Property 21
7.7. Use of Property 22
7.8. Hazardous Substances and Asbestos/Indemnification 22
7.9. Reports, Contracts and Other Documents 23
7.10. Leases 23
7.11. Service Contracts and Other Agreements 23
7.12. Agreements Affecting the Property 23
7.13. Matters in Respect of Appurtenances; Title 24
7.14. Litigation 24
7.15. Other Contracts to Convey Property 24
7.16. Property Tax Assessment 24
7.17. Assessment Liens 24
7.18. Full Disclosure 24
7.19. Non-Foreign Status 25
7.20. Condemnation 25
ARTICLE VIII REPRESENTATIONS AND WARRANTIES OF BUYER 26
8.1. Representations and Warranties of Buyer 26
ARTICLE IX DELIVERY OF PROPERTY 26
9.1. Possession 26
9.2. Loss, Destruction and Condemnation 26
ARTICLE X MAINTENANCE AND OPERATION OF THE PROPERTY 28
10.1. Maintenance 28
10.2. Leases and Other Agreements 29
10.3. Consents and Notices 29
ARTICLE XI MISCELLANEOUS 29
11.1. Notices 29
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11.2. Brokers and Finders 30
11.3. Successors and Assigns 30
11.4. Amendments 31
11.5. Continuation and Survival of Indemnities, Representations,
Warranties and Post-Closing Obligations 31
11.6. Interpretation 31
11.7. Governing Law 31
11.8. Merger of Prior Agreements 31
11.9. Attorneys' Fees 31
11.10. Notice of Termination 32
11.11. Specific Performance/Damages 32
11.12. Relationship 32
11.13. Authority 32
11.14. Counterparts 33
11.15. Time of the Essence 33
11.16. Tax Deferred Exchange 33
11.17. Confidentiality/Publicity 33
11.18. Prohibition Against Consideration of Other Purchase
Proposals 33
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LIST OF SCHEDULES
A: Description of the Land
B: Form of Deed
C: Form of Bill of Sale
D: Form of Assignment of Intangible Property and
Warranties
E: Form of Assignment of Leases
F: Service Contracts and Other Agreements
G: Approved Contracts
H: Permits, Approvals and Regulations
I: Form of Non-Foreign Certificate
J: Form of Update Certificate
K: Notice to Space Tenants
L: Form of Vendor Estoppel
M: Form of Notice to Vendors
N: Notices to Vendors of Approved Contracts
O: Leases
P: Rent Roll and List of Security Deposits
Q: Form of Vendor Estoppel
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TABLE OF DEFINED TERMS
----------------------
DEFINED TERM SECTION
- ------- ---- WHERE DEFINED
------ -------
Agreement Introductory Paragraph
Approved Contracts Section 4.3
Appurtenances Section 1.2
Assignee Section 11.4
Assignment of Intangible Property and Warranties Section 1.5
Assignment of Leases Section 1.6
Bill of Sale Section 1.4
Buyer Introductory Paragraph
CC&R's Section 7.7
CEQA Section 7.2
Closing Section 6.2
Closing Date Section 6.2
Code Section 5.5
Contracts Section 4.3
Deed Section 1.1
Deposits Section 2.2.
Escrow Section 6.1
Escrow Holder Introductory Paragraph
Governmental or Regulatory Authority Section 7.2
Hazardous Substances Section 7.8
HSR Act Section 5.6
Improvements Section 1.3
Intangible Property Section 1.5
Land Section 1.1
Laws Section 6.2
Leases Section 7.2
Non-Foreign Certificate Section 5.5
Official Records Section 2.3
Permitted Exceptions Section 4.7
Personal Property Section 1.4
Property Section 1.6
Purchase Price Section 2.1
Real Property Section 1.6
Review Period Section 4.5
Seller Introductory Paragraph
Space Tenants Section 6.3
Survey Section 4.2
Title Company Section 3.1
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Title Policy Section 3.1
Title Report Section 4.2
Update Certificate Section 5.3
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PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement")
is made and entered into as of December 18, 1996, by and among DONLON H.
GABRIELSEN AND AGNES H. GABRIELSEN, dba HART ESTATE ("Seller"), PACIFIC GATEWAY
PROPERTIES, INC., a New York corporation ("Buyer"), and CHICAGO TITLE COMPANY
("Escrow Holder") with reference to the following facts:
A. Seller is the owner of the Property, as hereinafter defined.
B. Buyer desires to purchase from Seller and Seller desires to sell
to Buyer the Property, all on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual
agreements herein set forth, Seller and Buyer, and where appropriate Escrow
Holder, agree as follows:
ARTICLE I
PROPERTY
Seller hereby agrees to sell and convey to Buyer, and Buyer hereby
agrees to purchase from Seller, subject to the terms and conditions set forth
herein, the following:
1.1. LAND. That certain real property (the "Land") described in
SCHEDULE A hereto, all of which shall be conveyed to Buyer pursuant to grant
deed in the form of SCHEDULE B hereto (the "Deed");
1.2. APPURTENANCES. All rights, privileges and easements appurtenant
to and for the benefit of the Land, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances on and under the Land, as well as all
development rights, air rights, water, water rights and water stock relating to
the Land and any other easements, rights-of-way or appurtenances owned by Seller
and used in connection with the beneficial operation, use and enjoyment of the
Land, the Improvements, as hereinafter defined, the Intangible Property, as
hereinafter defined, or any other appurtenance, together with all rights of
Seller in and to streets, sidewalks, alleys, driveways, parking areas and areas
adjacent thereto or used in connection therewith, and all rights of Seller in
any land lying in the bed of any existing or proposed street adjacent to the
Land (all of which are collectively referred to as the "Appurtenances").
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1.3. IMPROVEMENTS. All improvements and fixtures located on the Land,
including, without limitation, all buildings and structures currently located on
the Land or located thereon on the Closing Date, all apparatus, equipment and
appliances presently located on the Land and used in connection with the
operation or occupancy thereof, such as heating and air conditioning systems and
facilities used to provide any utility services, parking services,
refrigeration, ventilation, garbage disposal, recreation or other services
thereto, and all landscaping and leasehold improvements of tenants, if any,
which remain a part of the Property (all of which are collectively referred to
as the "Improvements");
1.4. PERSONAL PROPERTY. All tangible personal property currently
owned by Seller or owned by Seller on the Closing Date which is located or
situated in and used in connection with, the Land and/or the Improvements
("Personal Property"), and all of which Personal Property shall be transferred
and assigned to Buyer pursuant to an instrument in the form of SCHEDULE C hereto
(the "Bill of Sale");
1.5. INTANGIBLE PROPERTY. All of the interest of Seller in (i) any
intangible personal property (excluding cash, accounts receivable, subject to
the terms of Section 6.6.(c) below, and books and records of Seller) which
relates to and is reasonably required for the operation and functioning of the
Land, Improvements or Personal Property generally, and (ii) any and all
warranties guarantees, permits, contracts and other rights owned by Seller
relating to the ownership, operation or functioning of all or any part of the
Property, as defined below (including without limitation all third party
guarantees and warranties, express or implied, in connection with the
construction of the Improvements) (all of which are collectively referred to as
the "Intangible Property"), and all of which shall be assigned to Buyer pursuant
to the assignment in the form of SCHEDULE D hereto (the "Assignment of
Intangible Property and Warranties "), provided, however, that Seller shall
provide Buyer with copies of all books and records related to its operation of
the Property in the calendar year of 1996 and shall provide reasonable access to
Buyer to all books and records after the Close of Escrow.
1.6. LEASES. All interest of Seller, as landlord, in and to all
leases affecting any portion of the Land, Improvements or Personal Property as
of the Closing Date (the "Leases") which shall be assigned to Buyer pursuant to
an instrument in the form of SCHEDULE E hereto (the "Assignment of Leases").
All of the items described in Sections 1.1, 1.2, 1.3, 1.4, 1.5, and
1.6 above are hereinafter sometimes collectively referred to as the "Property."
The items described in Sections 1.1, 1.2, and 1.3 above are hereinafter
sometimes referred to collectively as the "Real Property."
ARTICLE II
PURCHASE PRICE
2.1. PURCHASE PRICE. The purchase price for the Property shall be
equal to Three Million Two Hundred Fifty Thousand Dollars ($3,250,000) (the
"Purchase Price"), which Purchase Price is subject to adjustment as provided in
Section 6.6 and 9.2. The Purchase Price shall be allocated to Real Property.
2.2. DEPOSITS. Seller acknowledges that Buyer has deposited the sum
of ONE HUNDRED THOUSAND DOLLARS ($100,000) (the "Initial Deposit") with the
Title
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Company pursuant to a non-binding letter of intent dated November 21, 1996
between Buyer and Seller. Upon the execution of this Agreement, Buyer shall
deposit the further sum of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000) (the
"Additional Deposit") with the Title Company. The Initial Deposit and the
Additional Deposit are referred to collectively herein as the "Deposits". The
Title Company shall invest the Deposits in one or more interest bearing accounts
designated by Buyer and all interest earned thereon shall accrue to and become a
part of the Deposits and be paid to the party entitled to the Deposits as
provided in Section 6.10 below.
2.3. PAYMENT OF PURCHASE PRICE. Buyer shall pay the Purchase Price
into Escrow (defined below) at the Closing by wire transfer of immediately
available funds in accordance with wiring instructions to be provided by Escrow
Holder; provided, however, that Buyer shall deduct from the funds to be wired
pursuant to this Section 2.3 an amount equal to the Deposits held pursuant to
Section 2.2 above.
ARTICLE III
TITLE TO PROPERTY
3.1. TITLE. At the Closing, Seller shall convey to Buyer marketable
and insurable fee simple title to the Property pursuant to the Deed. Buyer
shall cause Chicago Title Insurance Company or such other title insurance
company as may be selected by Buyer (the "Title Company") to issue an ALTA
Owner's Policy of Title Insurance (Form B, Rev. 10/17/70) (the "Title Policy")
in the full amount of the Purchase Price, insuring fee simple title to the Real
Property in Buyer, subject only to (i) the lien of real property taxes for the
then applicable fiscal year, to the extent not yet due and payable, (ii) the
lien of supplemental taxes imposed by reason of transfer on or after the
Closing, and (iii) the Permitted Exceptions (as defined in Section 4.7 below),
provided that indemnification of the Title Company to allow it to insure over
any otherwise unpermitted exception to title shall not be allowed except with
the prior written consent of Buyer (which shall be in Buyer's sole and absolute
discretion) after full disclosure to Buyer of the nature and substance of such
exception and indemnity. The Title Policy shall (i) provide full coverage
against mechanics' and materialmen's liens arising out of the construction,
repair or alteration of any of the Improvements or any tenant improvements, (ii)
be in form and substance satisfactory to Buyer in its sole and absolute
discretion, and (iii) contain such other endorsements as Buyer may require.
Furthermore, the Title Company shall obtain, if requested by Buyer, co-insurance
and/or reinsurance agreements as Buyer may request, which reinsurance agreements
shall be in ALTA Facultative Reinsurance Agreement Form (rev. 1987), and shall
include direct access agreements, in such amounts and in such form as shall
otherwise be satisfactory to Buyer.
3.2. BILL OF SALE, ETC. At the Closing, Seller shall (i) transfer
title to the Personal Property to Buyer pursuant to the Bill of Sale, (ii)
transfer and assign to Buyer all of Seller's rights in and to the Intangible
Property pursuant to the Assignment(s) of Intangible Property and Warranties,
and (iii) transfer and assign to Buyer all of Seller's interest, as landlord, in
and to the Leases pursuant to the Assignment(s) of Leases; such title, interest
and rights to be free of any liens, encumbrances or interests of third parties
other than the Permitted Exceptions to the extent applicable to the Personal
Property, Intangible Property or Leases, respectively.
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ARTICLE IV
BUYER'S INVESTIGATIONS
4.1. DELIVERY OF DOCUMENTS BY SELLER. To the extent that Seller has
not done so prior to the execution of the Agreement, within three (3) business
days after the execution hereof, Seller shall deliver to Buyer true, correct and
complete copies of all maps, reports, documents, surveys, studies, agreements,
correspondence, or other materials pertaining to or concerning the Property in
Seller's possession or under its control, including but not limited to all:
environmental reports or assessments; hazardous materials, soils and/or ground
water studies and reports; geological and geo-technical studies; seismic
reports, tests; engineering studies; reports concerning the roof, membranes,
foundation, other structural components, or the HVAC, plumbing electrical or
other building systems; surveys; Leases and all information regarding the
financial condition of all tenants thereunder; contracts; plans; specifications,
drawings; documents pertaining to the operation, use, management, construction,
repair or maintenance of the Real Property or to taxes or assessments affecting
the Real Property and the Personal Property; government permits and approvals;
applications filed with governmental agencies or utility companies; and
correspondence with or reports or materials from governmental agencies or
utility companies.
4.2. REVIEW OF TITLE. In connection with Buyer's review of title,
survey and related matters, Seller shall deliver to Buyer to the extent that
such items are in Seller's possession or under Seller's control (or, shall make
available to Buyer at Seller's office at a reasonable time) and Buyer shall be
entitled to review the following:
(a) a current extended coverage preliminary title report for the
Property issued by the Title Company (the "Title Report"), accompanied
by legible record copies of all of the underlying documents referred
to in Schedule B of the report;
(b) copies of all existing or proposed easements, covenants,
restrictions, agreements or other documents which affect the ownership
of or title to the Property and which are not disclosed by the Title
Report for the Property, if any (to be made available), including all
easements and other agreements related to the use of the 930
Montgomery Street Building;
(c) any existing ALTA land survey of the Property (the "Survey") ;
(d) Copies of subdivision maps and condominium plans, and the
conditions and requirements thereto (the conditions and requirements
to be made available);
(e) Copies of all permits and licenses relating to the Property
(to be made available);
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(f) Copies of the real property and personal property tax bills
for the Property for the previous three (3) years; and
(g) Such other documents and matters relating to the Property as
Buyer may reasonably request during the Review Period (to be made
available);
4.3. SERVICE AND OTHER CONTRACTS. Seller shall promptly deliver (to
the extent such items are in Seller's possession or under Seller's control), and
Buyer shall review and approve in its sole and absolute discretion, a list of
and copies of all utility contracts, water and sewer service contracts, service
contracts, warranties, permits, soils reports, contracts for employees involved
in the operation of the Property (together with a summary of the benefits and
compensation payable to such employees) and other contracts or documents of any
nature relating to the Property or any portion thereof (the "Contracts"; those
Contracts which Buyer approves prior to the end of the Review Period (and prior
to the Closing Date in the case of contracts not entered into or delivered or
made available to the Buyer until after the expiration of the Review Period)
shall be referred to as the "Approved Contracts"). A list of all Contracts is
attached hereto as SCHEDULE F. A list of all Approved Contracts is attached
hereto as SCHEDULE G.
4.4. GOVERNMENTAL PERMITS, APPROVALS AND REGULATIONS. Seller shall
promptly deliver to the extent such items are in Seller's possession or under
Seller's control, and Buyer shall review and approve, a list of and copies of
all governmental permits and approvals with respect to the Property relating to
the construction, operation, use or occupancy of the Property or any portion
thereof, including without limitation, all certificates of occupancy,
certificates of compliance, and such other certificates as may be required or
customary in the jurisdiction where the Property is located, evidencing
compliance with all building permits, approval of use and occupancy of the
portions of the Improvements to be occupied or for which a certificate of
occupancy or certificate of compliance is required as of the Closing Date in
order to permit the Improvements to be legally occupied, and approval of
installations therein. A list of all government permits and approvals is
attached hereto as SCHEDULE H.
4.5. REVIEW PERIOD. Buyer shall have until December 24, 1996 (the
"Review Period") to complete its review of all materials provided by Seller to
Buyer pursuant to this Article IV and to undertake such studies, tests,
examinations, inspections, inquiries, and investigations of and concerning the
condition of the Real Property (including, without limitation, any and all of
the components and systems thereof) as Buyer may, in its sole and absolute
discretion, deem to be reasonable, prudent or desirable under the circumstances,
including without limitation, studies, tests, examinations, inspections,
inquiries and investigations of: the foundation, roof structure and membranes,
and all other components of the Improvements; HVAC and other building systems;
seismic safety; asphalt; landscaping, location and availability of utilities;
geological and seismic conditions and safety; hazardous materials, soils and/or
ground water conditions covering the disposal, escape, discharge, use or
treatment of Hazardous Substances (as defined below); building, zoning,
Americans with Disabilities Act and other code compliance; all Leases, Contracts
and other documents affecting the Property and the financial condition of all
tenants under the Leases.
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4.6. RIGHT OF ENTRY. Seller grants to Buyer the right to enter upon
the Real Property, upon not less than twenty-four hours written notice to
Seller, for such purposes as may be necessary to the exercise or performance of
the rights of Buyer to inspect and investigate the Property pursuant to this
Agreement. Buyer shall exercise such right in accordance with the leases and
contracts on the Property and in a manner which will minimize interference with
the use and enjoyment of the Property by the existing tenants. Buyer agrees to
pay in full for all materials joined or affixed to the Property in connection
with any environmental, engineering, soil, feasibility or other studies or
activities that are procured or undertaken by Buyer prior to Closing (herein,
"Buyer's Work") and to pay in full all persons who perform labor on the
Property with respect to Buyer's Work and not to permit or suffer any mechanic's
or materialman's lien of any kind or nature to be enforced against the Property
for any of Buyer's Work. Buyer shall be responsible for the costs and expenses
of all reports commissioned by Buyer with respect to the Property. In the event
that this Agreement is terminated, Buyer shall, as soon as possible , and at
Buyer's sole cost and expense, restore the Property where Buyer or Buyer's
representatives, agents, contractors, servants, or licensees have performed any
Buyer's Work to substantially the same condition it was in but for such Buyer's
Work, failing in which Seller may perform the work of restoration and Buyer
shall reimburse Seller for the reasonable cost and expense thereof within ten
(10) business days after rendition of bills paid by Seller. Buyer shall
indemnify and defend Seller, and hold Seller harmless, from any claims, costs,
demands, causes of action, and suits directly arising from Buyer's studies,
tests, and inspections of the Property; provided, however, that Buyer shall not
be required to indemnify Seller for any diminution in the value of the Property,
or increased costs to Seller, to the extent that they are triggered by any
discovery or disclosure by Buyer or its consultants of any defects or hazardous
conditions on or about the Property.
4.7 OBJECTIONS TO SURVEY, TITLE REPORT, PROPERTY, LEASES, OR OTHER
MATTERS. On or prior to the end of the Review Period, Buyer shall notify Seller
of any objections Buyer has to the sufficiency of any Survey or Title Report, to
the status of Seller's title, to any matter disclosed in any Survey or Title
Report, to the physical or financial state of the Property, to any Phase I
and/or Phase 2 environmental assessment, or other environmental report, to the
Leases, to the Contracts, to the Property, to any item delivered or not
delivered by Seller to Buyer, or to any other matter covered by this Article IV;
provided, however, that if Buyer has not received a particular Title Report,
survey or environmental report by the end of the Review Period, it shall have
until ten (10) days after its receipt of the missing item(s) to notify Seller of
its objections thereto. If Buyer objects as provided herein, Buyer shall have
the option, which must be exercised on or prior to the end of the Review Period
(a) to waive Buyer's objections and purchase the Property as otherwise
contemplated by this Agreement, or (b) terminate this Agreement as provided in
Section 11.10 hereof. If Buyer shall fail to give Seller notice of its
objections, it shall be deemed to have had no objections. All exceptions to
title to, and or encumbrances against, the Property shown on the Title Report or
Survey but not objected to by Buyer shall be deemed "Permitted Exceptions."
4.8 COOPERATION. Seller shall cooperate with Buyer in a good faith
attempt to make the deliveries and provide information within the time limits
provided for above including, without limitation, information requested by
Buyer's lender. Without limiting the generality of the foregoing, Seller shall
provide to Buyer with such consent as
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Buyer may reasonably require so that Buyer may independently confirm information
provided to it by Seller with third parties.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
A. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. Buyer's obligation
to proceed with the purchase of the Property is subject to fulfillment or waiver
by Buyer of the following conditions precedent:
5.1 TITLE MATTERS. Buyer shall have reviewed and approved the
condition of title to the Real Property, there shall be no exceptions to title
to the Property other than the Permitted Exceptions, and the Title Company shall
be prepared to issue the Title Policy.
5.2. DELIVERY OF DOCUMENTS. Seller shall have duly and timely
performed all of its obligations and executed and/or delivered the Deed and all
of the other documents and things to be executed and/or delivered by Seller
pursuant to this Agreement including, without limitation, all of the documents
and things specified in Section 6.3 below.
5.3. REPRESENTATIONS AND WARRANTIES. All of Seller's representations
and warranties contained herein or made in writing by Seller shall have been
true and correct when made and shall, except as otherwise provided in the Update
Certificate (provided that Buyer shall be entitled to terminate this Agreement
and its obligations hereunder if the Update Certificate reveals any inaccuracies
in Seller's representations and warranties contained herein), be true and
correct as of the Closing Date, as though made at, and as of, the Closing Date,
and all times in between such dates, and Seller shall have strictly complied
with all of Seller's covenants and agreements contained in or made pursuant to
this Agreement.
5.4. APPROVAL OF UPDATE CERTIFICATE. Seller shall have executed and
delivered to Buyer at the Closing the Update Certificate, which Update
Certificate shall indicate no changes or exceptions to Seller's representations
and warranties made as of the date hereof (except as otherwise indicated on the
Update Certificate) and be in form of SCHEDULE I attached hereto and in
substance acceptable to Buyer.
5.5. NON-FOREIGN STATUS OF SELLER. Seller shall have executed and
delivered to Buyer, on the Closing Date, Seller's certificate in the form
attached hereto as SCHEDULE I (the "Non-Foreign Certificate") stating, under
penalty of perjury, that (a) Seller is not a "foreign person" for the purposes
of Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"),
and that withholding of tax will not be required thereunder, and (b) withholding
is not required under the provisions of any state laws in connection with the
contemplated transfer of the Property by Seller to Buyer.
5.6. USE CERTIFICATE. Buyer shall have obtained a certificate from
the Office of the Secretary of State of the State of California or from a
Uniform Commercial Code report or service as of a recent date before the Closing
Date indicating that there are no filings against any Personal Property of
Seller which shall be transferred to Buyer pursuant to this Agreement. Seller
may satisfy this condition by causing a termination of any such filings to be
filed in the Office of the Secretary of State prior to Closing.
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5.7. BOARD APPROVAL. This Agreement and the transactions contemplated
hereby shall have been approved by the Buyer's board of directors, which may be
granted or withheld in the Board's sole and absolute discretion on or before
December 24, 1996.
5.8. IMPAIRMENT OF PROPERTY. No material adverse change shall have
occurred in the condition or ownership of the Property or any part thereof and,
as of the Closing, no part of the Property, or any interest of Seller therein,
shall be encumbered by any lien, pledge, security interest, financing or due and
unpaid charge, tax or other imposition (other than Permitted Exceptions and
items which will be removed on or prior to the Closing Date), or damaged and not
repaired to Buyer's satisfaction or taken in condemnation or other like
proceeding and no such proceeding is pending or threatened, except as otherwise
provided in Section 9.2 hereof.
5.9. LITIGATION. There shall be no actions, suits, or proceedings,
pending or threatened against Seller, at law or in equity, in or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency, or instrumentality, which, in Buyer's reasonable opinion,
could have a material adverse impact on the Property.
5.10. TERMINATION OF EMPLOYEES. Seller shall have terminated all
employees employed by Seller in connection with the operation of the Property in
compliance with applicable law and shall have paid in full all compensation and
benefits owed to such employees.
5.11. CONTRACT TERMINATION. Seller shall have terminated, on or before
the Closing Date, those Contracts, if any, which would be binding on Buyer
subsequent to the Closing and which Buyer has designated on or before the Review
Period to be terminated. [Seller shall not terminate the National Guardian
Contract.] Seller shall deliver to Buyer within fifteen days after the
execution hereof a list of all Contracts which would be binding on Buyer
subsequent to the Closing, together with a true, complete and correct copy of
such Contracts if not previously delivered to Buyer.
The foregoing conditions contained in this Article V.A are intended solely
for the benefit of, and may be waived by, Buyer.
B. SELLER'S CONDITIONS TO CLOSING.
The following conditions are conditions precedent to Seller's
obligation to sell the Property:
5.12. DELIVERY OF DOCUMENTS AND PURCHASE PRICE. Buyer's due and timely
execution and delivery of all documents and things to be executed and delivered
by Buyer (including, without limitation, the Purchase Price) pursuant to this
Agreement including, without limitation, all of the documents and things
specified in Section 6.4, below.
5.13. REPRESENTATIONS AND WARRANTIES.
All of Buyer's representations and warranties contained herein or made in
writing by Buyer shall have been true and correct when made and shall, except as
otherwise provided in the Update Certificate (provided that Seller shall be
entitled to terminate this Agreement and
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its obligations hereunder if the Update Certificate reveals any inaccuracies in
Buyer's representations and warranties contained herein), be true and correct as
of the Closing Date, as though made at, and as of, the Closing Date, and all
times in between such dates, and Buyer shall have strictly complied with all of
Seller's covenants and agreements contained in or made pursuant to this
Agreement.
The foregoing conditions contained in this Article V.B are intended solely
for the benefit of Seller.
ARTICLE VI
ESCROW; CLOSING, RECORDING AND TERMINATION
6.1. ESCROW; DEPOSIT WITH ESCROW HOLDER AND ESCROW INSTRUCTIONS. The
purchase and sale contemplated by this Agreement shall be consummated through an
escrow (the "Escrow") established with Chicago Title Insurance Company and its
office located at 388 Market Street, Suite 1300, San Francisco, California
94111, Attention: Leslie Hazelwood. Promptly after execution of this
Agreement, the parties hereto shall deliver one (1) fully executed copy of this
Agreement to the Escrow Holder and this instrument shall serve as the escrow
instructions to the Escrow Holder for consummation of the purchase and sale
contemplated hereby. Seller and Buyer agree to execute such additional and
supplementary escrow instructions as may be appropriate to enable the Escrow
Holder to comply with the terms of this Agreement; provided, however, that in
the event of any conflict between the provisions of this Agreement and any
supplementary escrow instructions, the terms of this Agreement shall control
unless agreed to in writing by both Buyer and Seller.
6.2. CLOSING.
(a) Escrow shall close (the "Closing") on January 7, 1997 (the
"Closing Date") or such other date as Buyer and Seller may mutually agree in
writing. Except as otherwise expressly provided herein, such date may not be
extended without the written approval of both Seller and Buyer. The "Closing"
shall be deemed to have occurred on the date that all of the events specified in
Section 6.8 of this Agreement shall have occurred.
(b) In the event the Closing does not occur on or before January
7, 1997, the Escrow Holder shall, unless it is notified by Buyer to the contrary
within five (5) days after such date, return to the depositor thereof all items
which may have been deposited with Escrow Holder hereunder, provided that the
Escrow Holder shall release Deposits in accordance with Section 6.10 hereof.
Any such return shall not, however, relieve either party hereto of any liability
it may have for its wrongful failure to close, including, without limitation,
Buyer's obligations under Sections 4.5 and 4.6. Buyer shall, within seven (7)
days after the termination of this Agreement in accordance with the terms
hereof, return to Seller all documents and materials delivered to Buyer
hereunder by or on behalf of Seller.
6.3. DELIVERY BY SELLER. At the Closing, Seller shall deposit with
the Escrow Holder, for the benefit of Buyer, or deliver directly to Buyer the
following:
(a) The Deed, duly executed and acknowledged by Seller, in
recordable form, and ready for recordation in the Official Records;
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(b) The Bill of Sale duly executed by Seller;
(c) Original counterparts of the Leases (and amendments thereto,
if any, and all records and correspondence relating thereto); estoppel
certificates from the Space Tenants (as hereinafter defined)
thereunder dated not earlier than sixty (60) days before the Closing
Date, certifying to and for the benefit of Buyer and its successors
and assigns that the Leases are in full force and effect, the
counterparts of and amendments to the Leases provided by the Seller to
the Buyer are true, correct and complete versions of those Leases, and
certifying that Seller, as landlord, is not in default thereunder; and
a certified rent roll and listing of security deposits for the
Property, if any;
(d) The Assignment(s) of Leases covering all of the Leases on the
Property, duly executed by Seller;
(e) To the extent such items are in the possession or under the
control of Seller after Seller has used its best efforts to obtain
such items, originals or, if unavailable, certified copies of any
warranties and guaranties received by Seller and to be assigned to
Buyer, from any contractors, subcontractors, suppliers or materialmen
in connection with any construction, repairs or alterations of the
Improvements or any tenant improvements;
(f) The Assignment(s) of Intangible Property and Warranties, duly
executed by Seller, assigning all of Seller's interest in the
Intangible Property (except that the only Contracts that shall be
assigned are the Approved Contracts);
(g) To the extent such items are in the possession or under the
control of Seller after Seller has used its best efforts to obtain
such items, originals or, if unavailable, certified copies of all
certificates of occupancy for the Improvements;
(h) To the extent such items are in the possession or under the
control of Seller after Seller has used its best efforts to obtain
such items, , as-built plans and specifications for the Improvements,
showing the Improvements in their state of Completion, certified by
Seller to be true, complete and correct copies thereof;
(i) To the extent such items are in the possession or under the
control of Seller after Seller has
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used its best efforts to obtain such items, originals or, if
unavailable, certified copies of all licenses or permits held by
Seller, and/or to be assigned to Buyer pursuant to this Agreement, in
connection with the use, operation or enjoyment of the Property;
(j) Such resolutions, authorizations, or other documents or
existing agreements relating to Seller as shall be reasonably required
by the Title Company or by Buyer in connection with this transaction;
(k) A closing statement prepared by Escrow Holder in form and
content consistent with this Agreement and otherwise reasonably
satisfactory to Buyer and Seller;
(l) The Non-Foreign Certificate, duly executed by Seller;
(m) A certificate in the form of EXHIBIT J-1 attached hereto duly
executed by Seller and dated as of the Closing Date confirming the
truth, accuracy and completeness of each of the Seller's
representations and warranties set forth in Article VII below and
noting with specificity any changes or exceptions thereto based upon
events or circumstances intervening after the execution hereof (the
"Update Certificate");
(n) Notices to each of the tenants under the Leases (the "Space
Tenants") in the form of SCHEDULE K hereto; and
(o) Seller's closing certificate, certifying as to the
satisfaction of all of the conditions precedent to Seller's
obligations hereunder (except delivery of the Purchase Price),
addressed to Buyer.
(p) A estoppel certificate in the form of EXHIBIT L attached
hereto from parties to Approved Contracts certifying to and for the
benefit of Buyer and its successors and assigns that all amounts owed
by Seller thereunder have been paid in full and that there exist no
disputes, offsets, or counterclaims with respect thereto;
(q) Notices to each of the parties to the Approved Contracts in
the form of SCHEDULE M hereto;
(r) All keys, properly tagged and identified for the Property; and
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(s) A quitclaim deed duly executed and acknowledged by Eric H.
Gabrielsen and Teri T. Gabrielsen releasing and quitclaiming any and
all rights, title, and interest in the Property.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
6.4. DELIVERY BY BUYER. At the Closing, Buyer shall execute and deliver
to Escrow Holder, for the benefit of Seller, or directly to Seller the
following:
(a) The Purchase Price;
(b) Assignment of Leases executed by Buyer;
(c) Assignment of Intangible Property and Warranties executed by
Buyer;
(d) Notices to the Space Tenants in the form of SCHEDULE K hereto;
(e) Buyer's closing certificate, certifying as to the satisfaction
of all of the conditions precedent to Buyer's obligations hereunder,
addressed to Seller; and
(f) Notices to each of the parties of the Approved Contracts in
the form of SCHEDULE N hereto; and
(g) A Certificate in the form of Exhibit J-2 attached hereto duly
executed by Buyer and dated as of the Closing Date confirming the
truth, accuracy and completeness of each of the Buyer's
representations and warranties set forth in Article VIII below and
noting with specificity any changes or exceptions thereto based upon
events or circumstances intervening after the execution hereof
("Buyer's Update Certificate").
Seller may waive compliance on Buyer's part under any of the foregoing by
an instrument in writing.
After Escrow Holder's receipt of all of the items specified in Section 6.3
hereof, after the complete satisfaction of all of the conditions precedent to
Buyer's obligations hereunder, and after the expiration of the Review Period,
Buyer shall deliver the Purchase Price to Escrow Holder as provided in Section
2.3 above.
6.5. OTHER INSTRUMENTS. Seller and Buyer shall each deposit such other
instruments as are reasonably required by Escrow Holder or otherwise required to
close the escrow and consummate the purchase of the Property in accordance with
the terms hereof.
6.6. PRORATIONS. At Closing, the parties shall prorate as of the
Closing
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Date, on the basis of a thirty-one-day (31-day) month or 365-day year, as
appropriate, the following with respect to the Property:
(a) TAXES. Real estate taxes, recurring assessments, personal
property taxes, and rent tax, if any, on all or any portion of the
Property, based on the regular and supplemental tax bills for the
calendar year in which the Closing occurs (or, if such tax bill has
not been issued as of the date of Closing the regular and supplemental
tax bill for the calendar year preceding that in which the Closing
occurs). If any supplemental real estate taxes are levied for any
period preceding the Closing (excluding any reassessment of the
Property resulting from the sale hereunder), the parties will,
immediately after the Closing or the issuance of the supplemental real
estate tax bill (whichever last occurs), prorate between themselves,
in cash, without interest and to the date of the Closing Date, the
supplemental real estate taxes shown by such bill.
(b) UTILITIES. All utilities including gas, water, sewer,
electricity, telephone and other utilities supplied to the Property
shall be read as of the Closing Date. Seller shall be responsible for
payment of all amounts for utility charges which have accrued prior to
the Closing Date and Buyer shall be responsible for payment of all
amounts for utility charges which have accrued after the Closing Date.
Seller shall pay, prior to the Closing Date, all such amounts for
which a bill has been received prior to the Closing Date, and shall
pay all other amounts for which Seller is responsible promptly, upon
receipt of any bill.
(c) RENTS. Rents collected by Seller for the month in which the
Closing Date occurs shall be prorated so that Seller shall receive all
amounts due Seller applicable to time periods prior to the Closing
Date (excluding delinquencies), and Buyer shall receive all amounts
applicable to time periods after the Closing Date. With respect to
any Lease with delinquent rents as of the Closing Date, Buyer shall
apply rents under such Lease received after Closing first to current
rents due to Buyer, second to rents due to Seller as of the Closing
Date but uncollected prior to settlement, and third to payment of
delinquent rent due to Seller. Seller shall retain the right to
commence legal action against a tenant for any delinquent rent
apportioned to the Seller, at Seller's sole cost and expense, except
Seller may not bring unlawful detainer proceedings or similar actions
to dispossess a tenant without the consent of Buyer.
(d) SERVICE CONTRACTS. Amounts payable under Approved Contracts
shall be prorated on an accrual basis. Seller shall pay, prior to the
Closing Date, all such amounts for which a bill has been received or
for which payment is otherwise due prior to the Closing Date, and
Buyer shall pay all amounts for which a bill is received for
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amounts accrued on or after the Closing Date. Buyer shall be
credited, and Seller shall be debited, with an amount equal to all
amounts accrued under the Approved Contracts from the date such bills
were issued or such payments were due until the Closing Date. Seller
shall deliver to Escrow, for the benefit of Buyer, evidence of the
cancellation or termination of all Contracts other than Approved
Contracts, and Seller shall be responsible for all such cancellation
costs.
(e) SECURITY DEPOSITS. Buyer shall be credited and Seller shall
be debited with an amount equal to all Security Deposits, plus accrued
interest thereon, if any, paid to or on behalf of Seller that remain
refundable pursuant to the terms of the Leases as of the Closing Date.
In the event that there is any dispute between Seller and any Tenant
concerning the amount of any deposit which is not resolved to Buyer's
satisfaction, Buyer may terminate this Agreement and neither party
shall have any further obligation to the other (except as set forth in
Section 6.9 hereof).
(f) OTHER ITEMS. All other proratable items including, without
limitation, licenses and permits being assumed by Buyer, property
owners association dues and expenses and other income from, and
expenses associated with, the Property shall be prorated between Buyer
and Seller as of the Closing. Notwithstanding anything to the
contrary in the foregoing or elsewhere herein, Seller shall pay for
all brokerage fees and commissions (including without limitation those
to Leasing Agent) incurred with respect to Leases executed prior to
the Closing Date.
(g) POST-CLOSING PRORATIONS. Any required post-Closing prorations
(e.g. supplemental taxes) shall be accomplished as soon as reasonably
practicable after the Closing Date.
(h) METHOD OF PRORATION. Buyer and Seller agree to prepare a
schedule of tentative apportionments prior to the Closing Date. Such
apportionments, if and to the extent known and agreed upon as of the
Closing Date, shall be paid by Buyer to Seller (if the prorations
result in a net credit to the Seller) or by Seller to Buyer (if the
prorations result in a net credit to the Buyer), by increasing or
reducing the cash to be paid by Buyer at the Closing. Any such
apportionments that cannot be determined as of the Closing Date shall
be paid by Buyer to Seller, or by Seller to Buyer, as the case may be,
in cash as soon as practicable following the Closing Date.
6.7. COSTS AND EXPENSES. Seller shall pay all legal fees and costs
incurred by Seller, all city and county transfer taxes applicable with respect
to the sale of the Real Property, and other fees and charges which are typically
borne by sellers in San Francisco County, California. Buyer shall pay the full
cost of the premium for the Title Policy, the cost
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of any recordation fees, the Escrow Holder's fees and charges, all of its
out-of-pocket expenses, all legal fees and costs incurred by Buyer in connection
herewith, and other fees and charges which are typically borne by buyers in San
Francisco County, California.
6.8. CLOSING AND RECORDATION. Provided that Escrow Holder has received
all of the items required to be delivered pursuant to this Article VI (or a
waiver from the party for whose benefit such item is being delivered) and that
it has not received prior written notice from Buyer that Buyer has elected to
terminate its rights and obligations hereunder pursuant to Article IV, Article V
and/or Section 6.9, and provided that Buyer has either received the Title Policy
or the irrevocable commitment of Title Company to provide it with the Title
Policy immediately after recordation of the Deed, Escrow Holder is authorized
and instructed (a) with respect to the Property, to cause the Title Company to
record the documents delivered to the Escrow Holder in accordance with recording
instructions (as approved by Seller which approval shall not be unreasonably
withheld, delayed, or conditioned) set forth in a letter to be delivered to
Escrow Holder and Title Company by Buyer (or if no such letter is received prior
to the Closing, in accordance with customary practice), (b) to deliver those
other documents and instruments delivered into Escrow to the party for whose
benefit such documents or instruments were made and (c) to deliver the Purchase
Price, as adjusted pursuant to Section 6.6 hereof, upon receiving confirmation
of recording of the Deed.
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6.9. TERMINATION OF AGREEMENT.
(a) FAILURE OF BUYER'S CONDITIONS. If any one or more of the
conditions to Buyer's obligations, as set forth in Article V.A,
Section 6.3 or Section 4.7 in this Agreement, is not either fully
performed, satisfied or waived in writing (or deemed waived as
provided herein) on or before the Closing Date or such earlier date as
provided elsewhere herein, then Buyer may elect, by written notice as
provided in Section 11.10 hereof, to terminate this Agreement, in
which case neither party shall have any further obligation to the
other (except as set forth in Sections 6.2(b). Nothing in this
paragraph shall be construed to limit any of Buyer's rights or
remedies at law or equity in the event of a default by Seller.
(b) FAILURE OF SELLER'S CONDITIONS. If any one or more of the
conditions to Seller's obligations, as set forth in Article V.B.,
Section 6.4 or elsewhere in this Agreement, is not either fully
performed, satisfied or waived in writing (or deemed waived as
provided herein) on or before the Closing Date or such earlier date as
provided elsewhere herein, then Seller may elect, by written notice as
provided in Section 11.10 hereof, to terminate this Agreement and
neither party shall have any further obligation to the other (except
as set forth in Sections 6.2(b) and 6.11 hereof).
6.10 RELEASE OF DEPOSITS. The Deposits (including all interest
earned thereon): (a) shall be released to Seller as part of the
Purchase Price in accordance with the provisions of Section 2.3 above,
or (b) shall be released to Seller as liquidated damages if this
transaction is not consummated due to default on part of the Buyer as
provided in Section 6.11 below, or (c) shall be returned to Buyer if
this transaction is not consummated due to any reason other than
default on part of the Buyer.
6.11. LIMITATION ON SELLER'S REMEDIES. IF THIS TRANSACTION
DOES NOT CLOSE AS A CONSEQUENCE OF A DEFAULT BY BUYER IN THE
PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, SELLER SHALL RETAIN THE
DEPOSITS (TOGETHER WITH ALL INTEREST EARNED THEREON) AS LIQUIDATED
DAMAGES. SELLER'S ACTUAL DAMAGES WOULD BE DIFFICULT OR IMPOSSIBLE TO
DETERMINE IF BUYER DEFAULTS, AND THE AMOUNT OF SUCH OF THE DEPOSITS
(TOGETHER WITH ALL INTEREST EARNED THEREON) ARE THE BEST ESTIMATE OF
THE AMOUNT OF DAMAGES SELLER WOULD SUFFER. THE PROVISIONS OF THIS
PARAGRAPH 6.11 SHALL BE SELLER'S SOLE REMEDY IN THE EVENT OF A DEFAULT
BY BUYER, IN LIEU OF ALL OTHER REMEDIES SELLER MIGHT OTHERWISE HAVE
HEREUNDER AT LAW OR IN EQUITY. THE PARTIES WITNESS THEIR AGREEMENT TO
THIS LIQUIDATED DAMAGES PROVISION AND THIS LIMITATION OF REMEDIES
PROVISION BY THEIR EXECUTION BELOW.
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RVM PP
----------------- ------------------
Initials of Buyer Initials of Seller
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
As an inducement to Buyer to enter into this Agreement and the consummation of
the transaction contemplated hereby, Seller hereby makes the following
representations and warranties to Buyer, which representations and warranties
are true, correct and complete both as of the date hereof and again as of the
Closing Date, and as of all dates and times in between (except as specifically
provided to the contrary herein and in the Update Certificate) and agrees with
Buyer as follows:
7.1. CONDITION OF PROPERTY. Except as disclosed in SCHEDULE 7.1
hereto, to Seller's actual knowledge, there are no physical or mechanical
defects in any of the Improvements on the Property, and all such Improvements
are in good operating condition and repair and in compliance with all applicable
governmental laws, ordinances, regulations and requirements. Furthermore,
without limiting the generality of the foregoing, to Seller's actual knowledge,
the soil on the land is fully capable of supporting the Improvements, without
sinking, erosion or other incident or adverse consequence; and the roof of the
structures comprising the Improvements is in good condition and free of leaks,
and all gutters and leaders installed are in good condition and operating
properly.
7.2. USE AND OPERATION. Except as disclosed in SCHEDULE 7.2 HERETO,
To Seller's actual knowledge, the use and operation of the Property are fully
entitled for its current use, without restriction or conditions, and are in
compliance with applicable codes, ordinances, rules, laws, regulations and
requirements, including without limitation those applicable to subdivisions,
construction of improvements, zoning, land use (including without limitation the
California Environmental Quality Act ("CEQA")), public safety, Hazardous
Substances and the Americans with Disabilities Act to the extent required or
requested by the City and County of San Francisco (collectively, "Laws") of any
court, or any governmental agency or authority, (collectively, "Governmental or
Regulatory Authority"), and Seller has received no notice of non-compliance with
any Laws which have not been corrected.
7.3. LAND-USE REGULATION. To Seller's actual knowledge, there are no
zoning or other land-use regulation proceedings or any change or proposed change
in any applicable Laws, which could detrimentally affect the use or operation of
the Property, and Seller has not received notice of any special assessment
proceedings affecting the Property.
7.4. UTILITIES. To Seller's actual knowledge, all water, sewer, gas,
electric, telephone and drainage facilities and all other utilities required by
law or for the current full use and operation of the Property are installed to
the property lines of the Property, are all connected and operating pursuant to
valid permits, are adequate to service the Property and to permit full
compliance with all Laws and the current full usage of the Property, and are
connected to the Property by means of one or more public or private easements
extending from the Property to one or more public streets, public rights-of-way
or utility facilities.
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7.5. USE PERMITS AND OTHER APPROVALS. Except as disclosed in SCHEDULE
7.5 hereto, to of Seller's actual knowledge, Seller has obtained all licenses,
permits, approvals, certificates of occupancy, other certificates, easements and
rights of way (and all such items are currently in full force and effect)
required from any Governmental or Regulatory Authority having jurisdiction over
the Property, including without limitation any approvals necessary to fully
comply with CEQA, or from private parties for the full intended use and
operation of the Property and to ensure free and unimpeded pedestrian ingress to
and egress from the Property as required to permit the full intended usage of
the Property..
7.6. AUTHORITY OF SELLER/INTEREST OF SELLER IN THE PROPERTY. (i)
Seller owns the Property as individuals, and the Property is Seller's sole and
separate property, and no person other than Seller has any community property
interest or other property interest in the Property; (ii) this Agreement, the
Deed, and all other documents executed and delivered by Seller pursuant to this
Agreement, constitute legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms, (iii)
Seller has full power and authority to carry on his business as presently
conducted, and (iv) neither the execution, delivery and performance of this
Agreement and all other documents executed and delivered by Seller pursuant to
this Agreement, nor the consummation of the transactions contemplated hereby,
violate or conflict with, result in the breach or termination of or constitute
default under any provisions of any agreement, organizational or charter
document, or judicial order to which Seller is a party or to which Seller or the
Property is subject.
7.7. USE OF PROPERTY. Seller knows of no facts nor has Seller failed
to disclose to Buyer any fact which would prevent Buyer from using and operating
the Property hereafter in the manner in which the Property is intended to be
operated. To Seller's actual knowledge, there do not exist any violation of any
declaration of covenants, conditions and restrictions (the "CC&R's") with
respect to the Property, nor is there any existing state of facts or
circumstances or condition or event which could, with the giving of notice or
passage of time, or both, constitute such a violation. To Seller's actual
knowledge, Seller is not in default in respect of any of its obligations
pertaining to the Property. The Property is not located in the 100-year flood
plain, and no fees, connection charges, assessments or special assessments are
due or pending for the installation or operation of any drainage, water run off
or dry well facilities related thereto.
7.8. HAZARDOUS SUBSTANCES AND ASBESTOS/INDEMNIFICATION.
(a) To Seller's actual knowledge, all operations or activities at, on, in,
under or about, or use or occupancy of, the Property, or any portion thereof, by
any party, is, and at all times has been, in all respects in compliance with all
Laws governing or in any way relating to toxic or hazardous substances,
materials or wastes, including, but not limited to, substances, materials or
wastes regulated under any applicable local, state or federal law (including
without limitation petroleum and petroleum products) ("Hazardous Substances"),
and neither Seller nor, to Seller's actual knowledge, any prior or current owner
or prior or current tenant or occupant of the Property, or any portion thereof,
engaged in or permitted any dumping, discharge, disposal, spillage, use or
leakage of Hazardous Substances, at, on, in, under or about the Property, or any
portion thereof, except in accordance with applicable laws. To Seller's actual
knowledge, there is not present at, on, in, under or about the Property, or any
portion thereof, any Hazardous Substances, underground storage tanks, asbestos,
or any
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structures, fixtures, equipment or other objects or materials containing
Hazardous Substances or asbestos, except in accordance with applicable laws.
(b) Seller shall indemnify, protect, defend with counsel reasonably
acceptable to Buyer, and hold Buyer fully harmless from any and all liabilities,
damages, claims, penalties, fines, settlements, causes of action, cost or
expense, including reasonable attorneys' fees, environmental consultant fees and
laboratory fees and costs and expenses of investigating and defending any claims
or proceedings, resulting from or attributable to (a) the breach of the warranty
contained in this Section 7.8; (b) the presence, disposal, release, or
threatened release of any Hazardous Substance that was on, from or affecting the
Property during the Seller's ownership of the Property prior to the Closing
Date, including the soil, water, vegetation, building, personal property,
persons, animals, or otherwise; (c) any personal injury (including wrongful
death), or property damage (real or personal) arising out of or relating to any
hazardous substance present on the Property during the Seller's ownership of the
Property prior to the Closing Date; (d) any lawsuits or administrative action
brought or threatened, settlement breached or governmental order relating to the
presence of any Hazardous Substance on the Real Property during the Seller's
ownership of the Property prior to the Closing Date; or (e) any violation by
Seller of laws applicable to Hazardous Substance, provided that nothing in this
Section 7.8(b) shall obligate Seller to clean up any Hazardous Substance before
the Closing.
7.9. REPORTS, CONTRACTS AND OTHER DOCUMENTS. All contracts, or leases
or documents delivered or made available to Buyer pursuant to this Agreement or
in connection with the execution hereof are true, correct and complete copies,
and in full force and effect. All such contracts, leases and other documents
relating to or affecting the Property have been delivered or made available to
the Buyer pursuant to this Agreement to the extent required by this Agreement.
7.10. LEASES.
(a) SCHEDULE O attached hereto is a true and complete list of
the Leases which affect the Property. (i) Except as otherwise specified in
Schedule J, the Leases are in full force and effect, and (ii) there is no
monetary default or, to the best of Seller's knowledge, other default by any
party under any of the Leases (and there exists no condition that with the
passage of time or the giving of notice or both would constitute such a
default).
(b) Except with respect to the Leases, no person, firm or entity
has any possessory interest in any portion of the Property or any other rights
with regard to the use of the Property or any rights to lease all or any part of
the Property, or any part thereof or otherwise obtain any interest therein.
There has been no assignment of any of the Leases existing with respect to the
Property, except for a collateral assignment as security for financing to be
satisfied at Closing.
(c) The rent roll and summary of security deposits for the
Property attached hereto as SCHEDULE P are true, correct and complete.
7.11. SERVICE CONTRACTS AND OTHER AGREEMENTS. Seller has not entered
into and there are no contracts or other agreements affecting the owner or
ownership of the Property, except as specifically set forth in attached SCHEDULE
F (which shall be supplemented
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as each new Contract or other agreement is executed).
7.12. AGREEMENTS AFFECTING THE PROPERTY. To the Seller's actual
knowledge, there are no easements, encumbrances or other agreements (whether or
not of record) affecting title to, or creating a lien or charge upon the
Property except as shown in the Survey or Title Report or as otherwise
specifically set forth in attached SCHEDULE H.
7.13. MATTERS IN RESPECT OF APPURTENANCES; TITLE.
(a) To the best of Seller's knowledge, there is no default by
Seller under or in respect of any of the Appurtenances, and no Appurtenances
have been conveyed, transferred or assigned to any third party except as shown
in the Title Report.
(b) Seller is the sole owner of good, marketable and insurable
fee simple title to the Property, free and clear of all liens, security
interests, covenants, conditions, rights-of-way, easements and encumbrances of
any kind or character whatsoever, subject only to the Permitted Exceptions.
7.14. LITIGATION. There is no action, suit or proceeding pending or,
to Seller's actual knowledge, threatened against Seller, or any basis therefor,
that arises out of the ownership of the Property or that might detrimentally
affect the use and operation of the Property for its intended purpose, or the
value of the Property or adversely affect the ability of Seller to perform its
obligations under this Agreement. Without limiting the generality of the
foregoing, there is no action, suit or proceeding under the Bankruptcy Code
pending or, to the best of Seller's knowledge, threatened against Seller or any
entity in which Seller is a general partner or has a contributing interest.
7.15. OTHER CONTRACTS TO CONVEY PROPERTY. Seller has not committed nor
obligated itself in any manner whatsoever to sell the Property, or any portion
thereof, to any party other than Buyer. Seller has not hypothecated or assigned
any rents or income from the Property, or any portion thereof in any manner
except pursuant to an existing secured financing.
7.16. PROPERTY TAX ASSESSMENT. The Real Property is a separate tax lot
or lots and is assessed and taxed for real estate tax purposes separate and
apart from any other lands.
7.17. ASSESSMENT LIENS. Except for those matters specifically set
forth in the Title Report delivered or to be delivered to Buyer pursuant to
Section 4.2 above, to Seller's actual knowledge, there is no assessment of any
kind or nature which constitutes a lien on the Property, or any portion thereof,
and no matters other than Permitted Exceptions.
7.18. FULL DISCLOSURE. No representation and warranty made by Seller
in this Agreement contains any untrue statement of a material fact, or fails to
state a material fact necessary to make the statements contained herein, in
light of the circumstances which under which they were made, not misleading. To
Seller's actual knowledge, there is no fact or circumstance which materially
adversely affects, or can be expected to materially adversely affect, the
condition, financial or otherwise, of the Property or the Seller.
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7.19. NON-FOREIGN STATUS. Seller is not a "foreign person" within the
meaning of Section 1445 ET SEQ. of the Code.
7.20 CONDEMNATION. Seller is not aware of any contemplated
condemnation proceeding or of any intention or plan by the City or County of San
Francisco to widen roads or sidewalks around the Property or otherwise to alter,
change, or affect the ingress and egress to and from the Property.
For the purposes of this Article VII, the term "actual knowledge"
shall mean such information as has actually been communicated to or learned by
Seller.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF BUYER
8.1. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents
and warrants to Seller as follows: Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York;
except for the Board Approval, this Agreement and all documents executed by
Buyer which are to be delivered to Seller at the Closing are and as of the
Closing Date will be duly authorized, executed and delivered by Buyer, and are
and as of the Closing Date will be legal, valid and binding obligations of
Buyer, and do not and as of the Closing Date will not violate any provisions of
any agreement or judicial order to which Buyer is a party or to which it is
subject.
Buyer represents that it has made independent investigations of the
Property to the extent deemed necessary by Buyer, including investigations of
matters related to title referred to in the preliminary title report, records
maintained by applicable city, state, federal and local governmental entities
exercising jurisdiction over the Property and other materials made available by
Seller to Buyer and that Buyer is not relying on any representations, warranties
or statements made by Seller other than those made in this Agreement, including
Seller's representation that it has delivered to Buyer all documents and
communicated to Buyer all information in its possession or under its control
regarding the Property.
ARTICLE IX
DELIVERY OF PROPERTY
9.1. POSSESSION. Possession of the Property shall be delivered to
Buyer on the Closing Date subject only to the rights of Space Tenants pursuant
to the Leases and Permitted Exceptions. Without limiting any other provisions
of this Agreement, Seller shall afford authorized representatives of Buyer
reasonable access to the Property for the purposes of determining Seller's
compliance herewith.
9.2. LOSS, DESTRUCTION AND CONDEMNATION.
(a) DEFINITION OF MATERIAL DAMAGE. For the purposes of this
Section 9.2, damage to the Property is material if the actual cost of repairing
or replacing the damaged portions of the Improvements on the Property exceeds
$100,000 for an uninsured casualty or $200,000 for an insured casualty.
(b) EFFECT OF NON-MATERIAL DAMAGE TO IMPROVEMENTS. If prior to
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the Closing the Improvements on the Property are non-materially damaged by
casualty, whether insured or uninsured, (i) this Agreement may not be terminated
by reason of such casualty (provided that this does not waive Buyer's other
termination rights under this Agreement) and (ii) Seller will to the extent
insurance proceeds are available(a) cause the damaged portion of the
Improvements to be repaired or (b) reduce the Purchase Price by an amount equal
to the actual, reasonable and necessary cost of repairing or replacing the
damaged portions of the Improvements, provided that Buyer will be responsible
for the first $100,000 of any uninsured casualty. Seller will notify Buyer
within one (1) day of Seller's receipt of knowledge of any casualty which occurs
in between the date of this Agreement and the Closing Date.
(c) EFFECT OF MATERIAL DAMAGE TO IMPROVEMENTS. If prior to the
Closing the Improvements are materially damaged by casualty, Seller shall notify
Buyer in writing of such casualty as soon as practicable. Within ten (10) days
after the occurrence of such casualty or receipt of applicable insurance
proceeds whichever is later, Seller will commence restoration of the damaged
Improvements, and shall complete such restorations promptly thereafter, and the
Closing Date shall, if necessary be extended until such damaged improvements are
complete; provided, however, that no such restoration shall be required unless
the same is fully covered by a policy of insurance maintained by Seller and
provided, however, that such Improvements must be complete by no later than, and
the extended Closing Date may not be extended to a date later than, the earlier
to occur of (i) a date which reasonably allows the Completion of the damaged
Improvements, and (ii) February 24, 1997. If Seller does not commence or
complete such restoration within such time period, then Buyer may elect within
the next thirty (30) days pursuant to a writing delivered to Seller and Escrow
Holder to (i) in the case of an insured casualty continue this Agreement, in
which case Seller shall assign to Buyer at the Closing any insurance proceeds to
which Seller is entitled with respect to such damage and Buyer shall further be
entitled to deduct from the Purchase Price the amount of any deductible payable
by Seller under the applicable casualty insurance policy; or (ii) in the case of
an uninsured casualty, continue this Agreement and Buyer shall pay the first
$100,000 of costs incurred to restore the Property and Seller shall pay the next
of such restoration costs; provided, however, that in the event that the
estimated restoration costs exceed $200,000 Buyer may continue this Agreement
and Buyer shall pay all restoration costs other than the $100,000 Seller is
obligated to pay as set forth above, provided further, however, that if Buyer is
unwilling to pay such restoration costs, this Agreement shall terminate; or
(iii) terminate this Agreement, in which case Buyer and Seller shall have no
further rights and obligations to the Seller under this Agreement except as
provided in Section 6.9. Buyer's failure to have elected any of these options
within the time allotted therefor shall be deemed to be an election of option
(iii).
(d) DEFINITION OF MATERIAL TAKING. For the purposes of this
Section 9.2, a taking or threatened taking by eminent domain or similar
proceedings shall be deemed material if the value of that portion of the
Property to be so taken exceeds $200,000, or if Buyer determines that the
Property so affected is materially adversely affected by such taking or
threatened taking.
(e) EFFECT OF NON-MATERIAL TAKING. If prior to the Closing
there is a non-material taking or threatened taking of a portion of the Property
(i) this Agreement may not be terminated and (ii) Seller will assign to Buyer at
the Closing all of Seller's rights in
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and to any condemnation award with respect to such non-material taking, and
there will be no reduction in the Purchase Price. Seller will deliver written
notice to Escrow Holder and Buyer within one (1) day after Seller receives
notice of or otherwise becomes aware of any taking or threatened taking
affecting the Property.
(f) EFFECT OF MATERIAL TAKING. If prior to the Closing there is
a material taking or threatened material taking of a portion of the Property or
all of it, Seller shall notify Buyer in writing of such taking or threatened
taking, and within ten (10) days after Buyer's receipt of such notice, Seller
and Buyer shall endeavor to agree upon whether the Property shall be purchased
by Buyer, whether there shall be any reduction in the Purchase Price, and
whether there shall be any assignment of any condemnation award with respect to
such taking. If within such ten (10) day period Buyer and Seller have not
reached a mutually acceptable agreement as to those matters, Buyer within thirty
(30) days thereafter may elect in writing to (i) continue this Agreement subject
to the taking or threatened taking with an assignment of all of Seller's rights
to condemnation awards, severance damages, payments-in-lieu thereof or the like;
or (ii) terminate this Agreement, in which case Buyer and Seller shall have no
further rights or obligations to one another under this Agreement except as set
forth in Section 6.9. Buyer's failure to have elected any of these options
within the time period allotted therefor shall be deemed to be an election of
option (ii).
ARTICLE X
MAINTENANCE AND OPERATION OF THE PROPERTY
10.1. MAINTENANCE. In addition to Seller's other obligations hereunder,
Seller shall, in between the date of this Agreement and the Closing Date, at
Seller's sole cost and expense, maintain the Property in good order, condition
and repair, reasonable wear and tear excepted, shall perform all work required
to be done by the landlord under the terms of any Lease affecting the Property,
pay all taxes, assessments, fines, penalties, charges and other operating
expenses, and shall make all repairs, maintenance and replacements (except to
the extent covered by casualty insurance) of the Improvements and any Personal
Property and otherwise operate the Property in a first class manner (and, where
applicable, in the same manner as before the making of this Agreement), the same
as though Seller were retaining the Property. Seller shall not make any
alterations to the Property in excess of $500 without first receiving Buyer's
prior written consent thereof.
10.2. LEASES AND OTHER AGREEMENTS. Seller shall not, in between the
date of this Agreement and the Closing Date, enter into or terminate any Lease,
amendment of lease, contract or agreement pertaining to the Property or permit
any tenant of the Property to enter into or terminate any sublease, assignment
of lease, contract or agreement pertaining to the Property, or modify any lease,
contract or agreement pertaining to the Property or waive any rights of Seller
thereunder, without in each case obtaining Buyer's prior written consent
thereto, which may be granted or withheld in Buyer's sole and absolute
discretion. In particular, Seller acknowledges that Buyer may wish to occupy
the Fourth Floor of the Property and Seller will not lease or enter into any
other agreement related to the Fourth Floor unless this Agreement is terminated.
Seller further agrees either to complete all unfinished tenant improvement
obligations prior to Closing or to credit the Purchase Price in an amount
sufficient to satisfy such obligations.
10.3. CONSENTS AND NOTICES. Seller and Buyer shall cooperate with each
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other and exercise commercially reasonably efforts to obtain as of the Closing
Date, obtain all Consents from, and provide all Notices to, any third party and
any Governmental or Regulatory Authority which are required pursuant to any
Contract or any applicable Laws as a condition to or in connection with the
execution, delivery or performance of this Agreement, the Leases or other
documents and instruments contemplated thereby.
ARTICLE XI
MISCELLANEOUS
11.1. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by United States
mail, registered or certified mail, postage prepaid, return receipt requested or
sent by Federal Express or similar nationally recognized overnight courier
service, and addressed as follows, and shall be deemed to have been given upon
the date of delivery (or refusal to accept delivery) at the address specified
below as indicated on the return receipt or air bill:
IF TO SELLER: Donlon H. Gabrielsen
Mrs. Agnes H. Gabrielsen
Gabrielsen & Company
1100 Larkspur Landing Circle
Suite 108
Larkspur, CA 94939
IF TO BUYER: Pacific Gateway Properties, Inc.
One Rincon Center
101 Spear Street, Suite 215
San Francisco, CA 94105
Attn: Raymond V. Marino
Fax No.: (415) 777-3765
with a copy to: Gibson, Dunn & Crutcher
One Montgomery Street
Suite 2600
San Francisco, CA 94104
Attn: Fred L. Pillon, Esq.
Fax No.: (415) 786-5309
IF TO ESCROW HOLDER
AND/OR TITLE COMPANY: Chicago Land Title Company
388 Market Street
Suite 1300
San Francisco, CA 94111
Attn: Leslie Hazelwood
Fax No.: (415) 788-0871
or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid.
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11.2. BROKERS AND FINDERS. Buyer and Seller each hereby represents and
warrants that no broker was involved in this Agreement or the transactions
contemplated hereby, other than the Seller's agreement with Gabrielsen & Company
and Andrew L. Bogardus of Damon Raike & Company ("Broker") pursuant to which
Broker is entitled to a broker's fee and the payment of which Seller is solely
responsible. In the event of a claim for a broker's fee, finder's fee,
commission or other similar compensation in connection herewith other than as
set forth above, (i) Buyer, if such claim is based upon any agreement alleged to
have been made by Buyer, hereby agrees to reimburse Seller for any liability,
loss, cost, damage or expense (including reasonable attorneys' and paralegals'
fees and costs) which Seller may sustain or incur by reason of such claim and
(ii) Seller, if such claim is based upon any agreement alleged to have been made
by Seller, hereby agrees to reimburse Buyer for any liability, loss, cost,
damage or expense (including reasonable attorneys' and paralegals' fees and
costs) which Buyer may sustain or incur by reason of such claim. The provisions
of this Section 11.2 shall survive the Closing.
11.3. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns, except that Buyer's interest under this Agreement may not be
assigned, encumbered or otherwise transferred whether voluntarily,
involuntarily, by operation of law or otherwise, without the prior written
consent of the Seller. Without limiting the generality of the foregoing, Buyer
may assign its rights and interests hereunder to a wholly-owned affiliate of
Buyer without Seller's consent, provided that such affiliate shall assume all of
the Buyer's rights and obligations hereunder.
11.4. AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by the party asserted to be bound thereby.
11.5. CONTINUATION AND SURVIVAL OF INDEMNITIES, REPRESENTATIONS,
WARRANTIES AND POST-CLOSING OBLIGATIONS. All indemnities, representations and
warranties by, and all of the post-closing obligations, if any, of, the
respective parties contained herein or made in writing pursuant to this
Agreement or any other instrument delivered by Seller or Buyer pursuant hereto
are intended to and shall remain true and correct and binding as of the time of
Closing and shall survive the execution and delivery of this Agreement, the
delivery of the Deed and transfer of title; provided that the representations
and warranties shall terminate six (6) months after Closing. All
representations and warranties of Seller or Buyer contained in any certificate
or other instrument delivered at the Closing or any time prior thereto by or on
behalf of Seller in connection with the transaction contemplated hereby shall
constitute representations and warranties hereunder.
11.6. INTERPRETATION. Whenever used herein, the term "including" shall
be deemed to be followed by the words "without limitation." Words used in the
singular number shall include the plural, and vice-versa, and any gender shall
be deemed to include each other gender. The captions and headings of the
Articles and Sections of this Agreement are for convenience of reference only,
and shall not be deemed to define or limit the provisions hereof.
11.7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
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11.8. MERGER OF PRIOR AGREEMENTS. This Agreement (including the
exhibits hereto) constitutes the entire agreement between the parties with
respect to the purchase and sale of the Property specifically described herein
and supersedes all prior and contemporaneous (whether oral or written)
agreements and understandings between the parties hereto relating to the
specific subject matter hereof.
11.9. ATTORNEYS' FEES. In the event of any action or proceeding at law
or in equity between Buyer and Seller (including an action or proceeding between
Buyer and the trustee or debtor in possession while Seller is a debtor in a
proceeding under the Bankruptcy Code (Title 11 of the United States Code) or any
successor statute to such Code) to enforce or interpret any provision of this
Agreement or to protect or establish any right or remedy of either Buyer or
Seller hereunder, the unsuccessful party to such action or proceeding shall pay
to the prevailing party all costs and expenses, including, without limitation,
reasonable attorneys' and paralegals' fees and expenses (including without
limitation fees, costs and expenses of experts and consultants), incurred in
such action or proceeding and in any appeal in connection therewith by such
prevailing party, whether or not such action, proceeding or appeal is prosecuted
to judgment or other final determination, together with all costs of enforcement
and/or collection of any judgment or other relief. The term "prevailing party"
shall include, without limitation, a party who obtains legal counsel or brings
an action against the other by reason of the other's breach or default and
obtains substantially the relief sought by judgment. If such prevailing party
shall recover judgment in any such action, proceeding or appeal, such costs,
expenses and attorneys' and paralegals' and others' fees shall be included in
and as a part of such judgment.
11.10. NOTICE OF TERMINATION. If either Buyer or Seller elects to
terminate this Agreement, it will submit to Escrow Holder and the other party
hereto a notice of termination in duplicate. If Escrow Holder receives a notice
of termination, it is instructed to mail and fax one copy to the other such
party within one (1) business day. If Escrow Holder has not received a written
objection from the other party within ten (10) business days after mailing and
faxing the copy, Escrow Holder is to (i) comply with the instructions contained
in the notice of termination in accordance with this Agreement, (ii) pay
cancellation charges out of any funds on deposit in this Escrow, (iii) return
the Deposit to Buyer, and (iv) cancel this Agreement.
11.11. SPECIFIC PERFORMANCE/DAMAGES. In addition and without prejudice
to any right or remedy available to Buyer in law or equity, the parties
understand and agree that the Property is unique and for that reason, among
others, Buyer will be irreparably damaged in the event that this Agreement is
not specifically enforced.
11.12. RELATIONSHIP. It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any partnership, joint
venture, financing arrangement or other agreement between Buyer and Seller. No
term or provision of this Agreement is intended to be, or shall be, for the
benefit of any person, firm, organization or corporation not a party hereto, and
no such other person, firm, organization or corporation shall have any right or
cause of action hereunder.
11.13. AUTHORITY. Subject, in the case of Buyer, to obtaining the Board
Approvals, the individuals signing below represent and warrant that they have
the requisite authority to
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bind the entities on whose behalf they are signing.
11.14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
11.15. TIME OF THE ESSENCE. Time is of the essence in this Agreement
and with respect to all of its terms.
11.16. TAX DEFERRED EXCHANGE. The parties shall cooperate with one
another if either party elects to have the sale or acquisition of the Property
constitute a tax deferred exchange, provided such exchange is at no additional
expense to the other party.
11.17 CONFIDENTIALITY/PUBLICITY. Seller and Buyer agree that they
shall maintain this Agreement and the transaction contemplated hereby in strict
confidence and that no release, notice, or disclosure concerning the existence
or terms of this Agreement will be issued, given, or otherwise disseminated
without the other party's approval, provided that Buyer or Seller may make any
disclosures and announcements as required by applicable law.
11.18. PROHIBITION AGAINST CONSIDERATION OF OTHER PURCHASE PROPOSALS.
Until and unless this Agreement has been terminated by Buyer pursuant to Section
6.9 hereto, Seller shall not directly or indirectly solicit or initiate any
discussions or negotiations with or provide any information to or otherwise
cooperate in any way with, or facilitate or encourage any effort or attempt to,
or enter any agreement or understanding with any person or group of persons
concerning any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of the Property in a single transaction or a series of related
transactions, except for a extension or refinancing of the existing loan.
IN WITNESS WHEREOF, Seller, Buyer, and Escrow Holder have executed
this Agreement as of the date first above written.
BUYER: PACIFIC GATEWAY PROPERTIES, INC.
By: ss/ Raymond V. Marino
---------------------
Its: President
SELLERS:
ss/ Donlon H. Gabrielsen
------------------------
DONLON H. GABRIELSEN
ss/Agnes H. Gabrielsen
----------------------
AGNES H. GABRIELSEN
1
