SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 27, 1997
DEAN WITTER REALTY INCOME PARTNERSHIP II, L.P.
(Exact name of registrant as specified in its charter)
Delaware 0-18150 13-3244091
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
Two World Trade Center, New York, New York 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 392-1054
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
Pursuant to an agreement dated as of December 19, 1996, the
Partnership entered into an agreement with Office Opportunity Fund III,
L.P., an unaffiliated party, to sell the land and building which comprise
the United Services Life property for a negotiated sale price of
$33,750,000.
The closing of the sale took place on February 27, 1997. The purchase
price was paid in cash at closing.
<PAGE>
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
(1) Pro Forma Balance Sheet as of October 31, 1996.
(2) Pro Forma Statement of Operations for the year ended October 31,
1996.
(c) Exhibits
(1) Purchase and Sale Agreement, dated as of December 19, 1996
between Dean Witter Realty Income Partnership II, L.P. as Seller
and Office Opportunity Fund III, L.P. as Purchaser.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEAN WITTER REALTY INCOME PARTNERSHIP II, L.P.
By: Dean Witter Realty Income Properties II, Inc.
Managing General Partner
By: /s/E. Davisson Hardman, Jr,
E. Davisson Hardman, Jr.
President
Date: March 10, 1997
<PAGE>
Dean Witter Realty Income Partnership II, L.P.
Pro Forma Consolidated Balance Sheet
As of October 31, 1996
The following unaudited pro forma balance sheet has been presented as if the
United Services Life property was sold as of October 31, 1996. The pro forma
adjustments reflect a) the cash proceeds from the sale, b) the elimination of
the net carrying value of the property from real estate held for sale, and c)
the elimination of other assets and liabilities relating to the property sold.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
ASSETS
Real estate $ 66,981,760 - $ 66,981,760
Real estate held for sale 22,417,670 $ (22,417,670) -
Investment in joint venture 2,694,918 - 2,694,918
Cash and cash equivalents 3,193,852 32,337,936 35,531,788
Other assets 5,030,856 (819,439) 4,211,417
$ 100,319,056 $ 9,100,827 $ 109,419,883
LIABILITIES AND PARTNERS' CAPTIAL
Accounts payable and other
liabilities $ 1,313,864 $ (130,715) $ 1,183,149
Minority interests in
joint ventures 8,423,845 - 8,423,845
9,737,709 (130,715) 9,606,994
Partners' captial 90,581,347 9,231,542 99,812,889
$ 100,319,056 $ 9,100,827 $ 109,419,883
</TABLE>
<PAGE>
Dean Witter Realty Income Partnership II, L.P.
Pro Forma Consolidated Statement of Income
For the year ended October 31, 1996
The following unaudited pro forma consolidated statement of operations has
been presented as if the United Services Life property was sold as of
the beginning of fiscal year 1996. The pro forma adjustments reflect
the elimination of rental and other revenues, property operating expenses
and depreciation expense relating to the property sold. The pro forma
adjustments do not reflect the Partnership's nonrecurring gain on the sale of
the property.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
<S> <C> <C> <C>
Revenues:
Rental $ 16,206,557 $ (4,168,164) $ 12,038,393
Equity in earnings of
joint venture 250,109 - 250,109
Interest and other 957,941 (35,139) 922,802
17,414,607 (4,203,303) 13,211,304
Expenses:
Property operating 6,459,867 (1,306,405) 5,153,462
Depreciation 5,011,419 (1,456,598) 3,554,821
Amortization 537,220 (180,494) 356,726
General and administrative 759,445 - 759,445
Loss on impairment of
real estate 11,870,000 - 11,870,000
24,637,951 (2,943,497) 21,694,454
Loss before minority interest (7,223,344) (1,259,806) (8,483,150)
Minority interest 589,362 - 589,362
Net loss $ (7,812,706) $ (1,259,806) $ (9,072,512)
Net loss per
Unit of Limited
Partnership interest $ (39.72) $ 6.41 $ (46.13)
/TABLE
<PAGE>
Exhibit Index for Dean Witter Realty Income Partnership II, L.P.
Exhibit Description Sequential
No Page No
(2) Purchase and Sale Agreement
dated as of December 19, 1996
between Dean Witter Realty Income
Partnership II, L.P. as Seller and
Office Opportunity Fund III, L.P. as
Purchaser.
PURCHASE AND SALE AGREEMENT
DATED as of December 19, 1996
between
DEAN WITTER REALTY INCOME PARTNERSHIP II, L.P.,
as Seller
and
OFFICE OPPORTUNITY FUND III, L.P.
as Purchaser
<PAGE>
LIST OF SCHEDULES
1 Description of the Land and Air Space Easement
2 Excluded Property
3 List of Contracts
4 List of Additional Insureds
5 Permitted Encumbrances
6.Allocation of Closing Costs
7.Leases
8.Actions
9 Environmental Disclosure
10Intangible Property
11Rent Roll
12Security Deposits
13Outstanding Lease Obligations
LIST OF EXHIBITS
A Deed
B Lease Assignment
C Contract and License Assignment
D Intangible Property Assignment
E Bill of Sale
F Notice to Tenants
G Tenant Estoppel Certificate (Purchaser Form)
G-1 Tenant Estoppel Certificate (Standard Form)
H Seller's FIRPTA Affidavit
I Escrow Agreement
J Letter from Purchaser's Representatives as to Property
Information
K 1099 Designation Agreement
<PAGE>
TABLE OF DEFINED TERMS
The following capitalized terms are defined in the respective
Section of the Agreement identified below and are used in this
Agreement as so defined:
"A & A Agreements" - as such term is defined in Section 9(d)
hereof.
"Additional Rents" - as such term is defined in Section 3.2.2
hereof.
"Adjustment Date" - as such term is defined in Section 3 hereof.
"Agreement" - as such term is defined in the opening paragraph
hereof.
"Applicable Environmental Law" - as such term is defined in
Section 6(f) hereof.
"Bill of Sale" - as such term is defined in Section 9(f) hereof.
"Broker" - as such term is defined in Section 12 hereof.
"Buildings" - as such term is defined in Section 1 hereof.
"Clearing House Bank" - as such term is defined in Section 2(a)
hereof.
"Closing" - as such term is defined in Section 1.2 hereof.
"Closing Date" - as such term is defined in Section 1.2 hereof.
"Contract and License Assignment" - as such term is defined in
Section 9(c) hereof.
"Contracts" - as such term is defined in Section 9(c) hereof.
"Deed" - as such term is defined in Section 9(a) hereof.
"Deposit" - as such term is defined in Section 16 hereof.
"Due Diligence Period" - as such term is defined in Section 4
hereof.
"Earnest Money Deposit" - as such term is defined in Section 2(a)
hereof.
"Escrow Agent" - as such term is defined in Section 2(a) hereof.
"Escrow Agreement" - as such term is defined in Section 16 hereof.
"Hazardous Substances" - as such term is defined in Section 6(f)
hereof.
"Intangible Property Assignment" - as such term is defined in
Section 9(d) hereof.
"Investigations" - as such term is defined in Section 4.1 hereof.
"Land" - as such term is defined in Section 1 hereof.
"Laws" - as such term is defined in Section 6(c) hereof.
"Lease Assignment" - as such term is defined in Section 9(b)
hereof.
"Leases" - as such term is defined in Section 6(d) hereof.
"Licenses" - as such term is defined in Section 9(c) hereof.
"Liens" - as such term is defined in Section 5.1 hereof.
"New Lease" - as such term is defined in Section 11.1.1 hereof.
"New Lease Expenses" - as such term is defined in Section 11.1.1
hereof.
"Permitted Encumbrances" - as such term is defined in Section 5
hereof.
"Personal Property" - as such term is defined in Section 1 hereof.
"Property" - as such term is defined in Section 1 hereof.
"Property Information" - as such term is defined in Section 18.3
hereof.
"Purchase Price" - as such term is defined in Section 2 hereof.
"Purchaser" - as such term is defined in the opening paragraph
hereof.
"Purchaser's Documents" - as such term is defined in Section 7(b)
hereof.
"Purchaser's Representatives" - as such term is defined in Section
18.3 hereof.
"Purchaser's Termination Notice" - as such term is defined in
Section 4.2 hereof.
"Rent Commencement Date" - as such term is defined in Section
11.1.2 hereof.
"Rents" - as such term is defined in Section 3(a) hereof.
"Seller" - as such term is defined in the opening paragraph
hereof.
"Seller's Affiliates" - as such term is defined in Section 23
hereof.
"Seller's Documents" - as such term is defined in Section 6(b)
hereof.
"Survey" - as such term is defined in Section 5 hereof.
"Surviving Obligations" - as such term is defined in Section 14.1
hereof.
"Title Commitment" - as such term is defined in Section 5 hereof.
"Title Company" - as such term is defined in Section 5 hereof.
"Transfer Tax Payments" - as such term is defined in Section 5.6
hereof.
"Transfer Tax Return" - as such term is defined in Section 5.6
hereof.
"Unacceptable Encumbrances" - as such term is defined in Section
5.1 hereof.
<PAGE>
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of the
19th day of December, 1996, by and between DEAN WITTER REALTY
INCOME PARTNERSHIP II, L.P., a Delaware limited partnership having
an office c/o Dean Witter Realty Inc., Two World Trade Center,
64th Floor, New York, New York 10048, (the "Seller"), and OFFICE
OPPORTUNITY FUND III, L.P., a California limited partnership,
having an office c/o William Wilson & Associates, 2929 Campus
Drive, Suite 450, San Mateo, California 94403 (the "Purchaser").
W I T N E S S E T H
WHEREAS, the Seller is the owner of the real property known and
numbered as 110 110th Avenue, N.E., Bellevue, Washington, consisting
of one seven-story office building containing a five-floor parking
garage and commonly referred to as the "United Services Life
Building" and/or "110 Atrium Place";
WHEREAS, the Seller and the Purchaser have entered into negotiations
wherein the Purchaser expressed its intent to purchase the Property
(as defined herein) from the Seller and the Seller expressed its
intent to sell the Property to the Purchaser; and
WHEREAS, the Seller and the Purchaser now desire to enter into an
agreement whereby, subject to the terms and conditions contained
herein, the Seller shall sell the Property to the Purchaser and the
Purchaser shall purchase the Property from the Seller.
NOW, THEREFORE, in consideration of ten ($10.00) dollars and the
mutual covenants and agreements hereinafter set forth, and intending
to be legally bound hereby, it is hereby agreed as follows:
1.Sale of the Property. The Seller agrees to sell and convey to
the Purchaser, and the Purchaser agrees to purchase from the Seller,
at the price and upon the terms and conditions set forth in this
Agreement, all that certain plot, piece and parcel of land described
as Parcel 1 in Schedule 1 hereto (the "Land") listed thereon,
together with (i) all buildings and other improvements situated on
the Land (collectively, the "Buildings"), (ii) all easements, rights
of way, licenses, reservations, privileges, appurtenances, and other
estates and rights of the Seller pertaining to the Land and the
Buildings, including the air space easement more particularly
described as Parcel 2 in Schedule 1 hereto, (iii) all right, title
and interest of the Seller in and to all fixtures, machinery,
equipment, supplies and other articles of personal property attached
or appurtenant to the Land or the Buildings, or used in connection
therewith (collectively, the "Personal Property"), (iv) all right,
title and interest of the Seller, if any, in and to the trade names
of the Buildings, (v) all right, title and interest in all
transferable or assignable certificates of occupancy, building or
equipment permits, consents, authorizations, variances, and any
other permits, certificates and approvals from any governmental or
quasi-governmental authority with respect to the Land or the
Building, (vi) all right, title and interest in all architectural,
mechanical, engineering, as-built and other plans, specifications
and drawings in the possession of the Seller, and (vii) all right,
title and interest in all transferable or assignable warranties and
guaranties relating to the operation, ownership or use of the
Property (the Land, together with all of the foregoing items listed
in clauses (i)-(vii) above being hereinafter sometimes referred to
as the "Property").
1.1. Excluded Property. Specifically excluded from
the Property and this sale are all items of personal property not
described in Section 1 (and all personal property of tenants
under the Leases) and the items described in Schedule 2 annexed
hereto and made a part hereof.
1.2. Closing Date. The delivery of the Deed and the
consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of the Escrow
Agent, 12505 Northeast Bellevue-Redmond Road, Suite 101,
Bellevue, Washington, at 10:00 A.M. Pacific Time on the date
which is fifteen days after the end of the Due Diligence Period
unless such day is not a day on which the records division of
King County, Washington is open for business, in which case, the
Closing shall take place on the next day on which such records
division is open (the "Closing Date"), or such earlier or later
date as the Seller and Purchaser may agree in writing.
2.Purchase Price. The purchase price to be paid by the Purchaser
to the Seller for the Property (the "Purchase Price") is THIRTY
THREE MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100 Dollars
($33,750,000.00) payable as follows:
(a) THREE HUNDRED THIRTY SEVEN THOUSAND FIVE HUNDRED AND
00/100 DOLLARS ($337,500) (the "Earnest Money Deposit") shall be
payable simultaneously with the execution and delivery of this
Agreement, by delivery to First American Title Insurance Company
(the "Escrow Agent") of a certified or bank check drawn on or by
a bank which is a member of the New York Clearing House
Association (a "Clearing House Bank") or by wire transfer of
immediately available funds to the Escrow Agent's account as set
forth in the Escrow Agreement. The Earnest Money Deposit shall
be held and disbursed by the Escrow Agent in accordance with the
terms of Section 16. At the Closing, the Deposit shall be
delivered to the Seller and such amount shall be credited against
the Purchase Price payable by the Purchaser pursuant to Section
2(b).
(b) The balance of the Purchase Price (i.e., the Purchase
Price minus the credit set forth in Section 2(a) above), plus or
minus the apportionments set forth in Section 3, shall be paid at
the Closing by bank wire transfer of immediately available funds
to the Seller's account or to the account or accounts of such
other party or parties as may be designated by the Seller on or
before the Closing Date.
3.Apportionments. The following shall be apportioned between the
Seller and the Purchaser at the Closing as of 11:59 p.m. of the day
preceding the Closing Date (the "Adjustment Date"):
(a) fixed or base rents ("Rents") which have been
prepaid, security deposits referred to in Section 9(e), Rents for
the month in which the Closing occurs and Additional Rents and
other amounts paid by tenants applicable to periods which expire
after the Closing Date, which have been received by Seller;
(b) real estate taxes, special assessments (but only any
installment relating to the period in which the Adjustment Date
occurs), water charges and sewer charges, if any, on the basis of
the fiscal years (or applicable billing period if other than a
fiscal year), respectively, for which same have been assessed;
(c) value of prepaid fuel belonging to the Seller stored
on the Property, at the Seller's cost, including any taxes, on
the basis of a statement from the Seller's suppliers;
(d) charges and payments under Contracts that are being
assigned to the Purchaser pursuant to the terms of this Agreement
and listed on Schedule 3 hereto or permitted renewals or
replacements thereof;
(e) any prepaid items, including, without limitation,
fees for licenses which are transferred to the Purchaser at the
Closing and annual permit and inspection fees;
(f) utilities, to the extent required by Section 3.4;
(g) deposits with telephone and other utility companies,
and any other persons or entities who supply goods or services in
connection with the Property if same are assigned to the
Purchaser at the Closing;
(h) personal property taxes, if any, on the basis of the
fiscal year for which assessed;
(i) all other revenues from the operation of the Property
other than Rents and Additional Rents (including, without
limitation, parking charges, and telephone booth and vending
machine revenues);
(j) New Lease Expenses as provided in Section 11.1.2; and
(k) such other items as are customarily apportioned
between sellers and purchasers of real properties of a type
similar to the Property and located in the State of Washington.
3.1. Taxes. If the amount of real estate taxes, special
assessments or other taxes for the Property for the fiscal year
during which Closing occurs is not finally determined at the
Adjustment Date, such taxes shall be apportioned on the basis of
the full amount of the assessment for such period (or the
assessment for the prior tax period if the assessment for the
current tax period is not then known) and the rate for the
immediately prior tax year, and shall be reapportioned as soon as
the new tax rate and valuation, if any, has been finally
determined. If any taxes which have been apportioned shall
subsequently be reduced by abatement, the amount of such
abatement, less the cost of obtaining the same and after
deduction of sums payable to tenants under Leases or expired or
terminated Leases, shall be equitably apportioned between the
parties hereto.
3.2. Rents.
3.2.1Arrearages. If on the Closing Date any tenant
is in arrears in the payment of Rent or has not paid the
Rent payable by it for the month in which the Closing
occurs (whether or not it is in arrears for such month on
the Closing Date), any Rents received by the Purchaser or
the Seller from such tenant after the Closing shall be
applied to amounts due and payable by such tenant during
the following periods in the following order of priority:
(i) first, to the month in which the Closing occurred,
(ii) second, to the month preceding the month in which the
Closing occurred, and (iii) third, to the months following
the month in which the Closing occurred. If Rents or any
portion thereof received by the Seller or the Purchaser
after the Closing are due and payable to the other party by
reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees and
costs and expenses expended in connection with the
collection thereof, shall be promptly paid to the other
party (to the extent not collected from or reimbursed by
tenants).
3.2.2. Additional Rents. If any tenants are
required to pay percentage rent, escalation charges for
real estate taxes, parking charges, operating expenses and
maintenance escalation charges, cost-of-living increases or
other charges of a similar nature ("Additional Rents") and
any Additional Rents are collected by the Purchaser from a
tenant after the Closing Date, then the Purchaser shall
promptly pay to the Seller out of the first such sums
received from such tenant the amount of all Additional
Rents which are due and payable by such tenant with respect
to any period prior to the Closing Date (whether or not
such Additional Rents first became due and payable on or
after the Closing Date), less a proportionate share of any
reasonable attorneys' fees and costs and expenses of
collection thereof (to the extent not collected from or
reimbursed by tenants).
3.2.3. Collection After the Closing. After the
Closing, the Seller shall continue to have the right, in
its own name, to demand payment of and to collect Rent and
Additional Rent arrearages owed to the Seller by any
tenant, which right shall include, without limitation, the
right to continue or commence legal actions or proceedings
against any tenant. The Purchaser agrees to cooperate with
the Seller in connection with all efforts by the Seller to
collect such Rents and Additional Rents and to take all
steps, whether before or after the Closing Date, as may be
reasonably necessary to carry out the intention of the
foregoing, including, without limitation, the delivery to
the Seller, upon demand, of any relevant books and records
(including any Rent or Additional Rent statements,
receipted bills and copies of tenant checks used in payment
of such Rent or Additional Rent), the execution of any and
all consents or other documents, and the undertaking of any
act reasonably necessary for the collection of such Rents
and Additional Rents by the Seller. If for any fiscal
period which includes the Adjustment Date tenants are
paying Additional Rent based upon estimates prepared by the
Seller, such Additional Rents shall be reapportioned when
the actual expenses for the fiscal period are known.
3.3. Water. If there is a water meter on the Property,
the Seller shall furnish a reading to a date not more than thirty
(30) days prior to the Closing Date, and the unfixed water and
sewer charges, if any, based thereon for the intervening time
shall be apportioned on the basis of such last reading.
3.4. Utilities. The Seller will attempt to obtain final
cut-off readings of fuel, telephone, electricity, and gas to be
made as of the Adjustment Date. The Seller shall pay the bills
based on such readings promptly after the same are rendered. If
arrangements cannot be made for any such cut-off reading, the
parties shall apportion the charges for such services on the
basis of the bill therefor for the most recent billing period
prior to the Adjustment Date, and when final bills are rendered
for the period which includes the Adjustment Date the Seller and
Purchaser shall promptly readjust the apportionments in
accordance with such final bills.
3.5. Post-Closing Adjustments. The items set forth in
this Section 3 shall be apportioned at the Closing by payment of
the net amount of such apportionments to the Seller in the manner
set forth herein for the payment of the Purchase Price if the net
apportionment is in favor of the Seller or by a credit against
the Purchase Price if the net apportionment is in favor of the
Purchaser. However, if any of the items subject to apportionment
under the foregoing provisions of this Section 3 cannot be
apportioned at the Closing because of the unavailability of the
information necessary to compute such apportionment, or if any
errors or omissions in computing apportionments at the Closing
are discovered subsequent to the Closing, then such item shall be
reapportioned and such errors and omissions corrected as soon as
practicable after the Closing Date and the proper party
reimbursed, which obligation shall survive the Closing for a
period of one year after the Closing Date. Notwithstanding any
of the foregoing provisions of this Section 3.5 to the contrary,
the Purchaser and the Seller agree that the one year limitation
set forth in this Section 3.5 shall not apply to the parties'
obligations under Sections 3.1 and 3.2 and that such obligations
shall survive the Closing forever.
4.Due Diligence Period. Notwithstanding anything to the contrary
contained herein, the Purchaser shall have a thirty-one (31) day
period commencing on the date hereof (the "Due Diligence Period") to
examine title to the Property, to inspect the physical and financial
condition of the Property and to review the Property Information.
The Seller, at its option, shall have either provided the Purchaser
within five days of the date of this Agreement with, or otherwise
made available to the Purchaser at the Property or at Dean Witter
Realty Inc.'s New York office for Purchaser's review, copies of the
following documents and items to the extent in the Seller's
possession, if at all:
(a) Leases;
(b) Contracts;
(c) Licenses;
(d) Engineering and environmental reports, studies and analyses
relating to the Property;
(e) Architectural, mechanical, as-built and other plans,
specifications and drawings relating to the Property;
(f) Transferable and assignable roof and/or elevator warranties
relating to the Buildings;
(g) Notices from governmental agencies and authorities with
respect to the Property;
(h) Real and personal property tax bills and utility bills for
the last two years for the Property;
(i) The Title Commitment, title exception documents and Survey
described in Section 5 of this Agreement; and
(j) Historical operating reports for the Property for fiscal
years 1994, 1995 and 1996.
Neither the Purchaser nor the Purchaser's Representatives shall
contact any of the Seller's tenants, vendors, employees, consultants
or contractors prior to the Closing without obtaining the Seller's
prior written consent in each instance.
4.1. Access to the Property. During the Due Diligence
Period, the Purchaser and the Purchaser's Representatives shall
have the right to enter upon the Property for the sole purpose of
inspecting the Property and making surveys, soil borings,
engineering tests and other investigations, inspections and tests
(collectively, "Investigations"), provided (i) the Purchaser
shall give the Seller not less than one (1) business days' prior
written notice before each entry, (ii) the first such notice
shall include sufficient information to permit the Seller to
review the scope of the proposed Investigations, and (iii)
neither the Purchaser nor the Purchaser's Representatives shall
permit any borings, drillings or samplings to be done on the
Property without the Seller's prior written consent. Any entry
upon the Property and all Investigations shall be during the
Seller's normal business hours and at the sole risk and expense
of the Purchaser and the Purchaser's Representatives, and shall
not interfere with the activities on or about the Property of the
Seller, its tenants and their employees and invitees. The
Purchaser shall:
(a) promptly repair any damage to the Property
resulting from any such Investigations and replace, refill
and regrade any holes made in, or excavations of, any
portion of the Property used for such Investigations so
that the Property shall be in the same condition as that
which existed prior to such Investigations;
(b) fully comply with all Laws applicable to the
Investigations and all other activities undertaken in
connection therewith;
(c) permit the Seller to have a representative
present during all Investigations undertaken hereunder;
(d) take all actions and implement all protections
necessary to ensure that all actions taken in connection
with the Investigations, and the equipment, materials, and
substances generated, used or brought onto the Property
pose no threat to the safety or health of persons or the
environment, and cause no damage to the Property or other
property of the Seller or other persons;
(e) if requested by the Seller, furnish to the
Seller copies of all surveys, soil test results,
engineering, asbestos, environmental and other studies and
reports relating to the Investigations which the Purchaser
shall obtain with respect to the Property promptly after
the Purchaser's receipt of same, and the Seller shall
reimburse the Purchaser for the reasonable costs of any
such studies and reports which Seller has requested, except
those studies and reports which relate to any Purchaser's
Termination Notice shall be provided to Seller at no
expense in conjunction with the delivery of such
Purchaser's Termination Notice;
(f) maintain or cause to be maintained, at the
Purchaser's expense, a policy of comprehensive general
public liability insurance with a combined single limit of
not less than $1,000,000 per occurrence for bodily injury
and property damage, automobile liability coverage
including owned and hired vehicles with a combined single
limit of $1,000,000 per occurrence for bodily injury and
property damage, and an excess umbrella liability policy
for bodily injury and property damage in the minimum amount
of $3,000,000, insuring the Purchaser and the Seller and
certain of Seller's Affiliates listed on Schedule 4, as
additional insureds, against any injuries or damages to
persons or property that may result from or are related to
(i) the Purchaser's and/or the Purchaser's Representatives'
entry upon the Property, (ii) any Investigations or other
activities conducted thereon, and (iii) any and all other
activities undertaken by the Purchaser and/or the
Purchaser's Representatives in connection with the
Property, and deliver evidence of such insurance policy to
the Seller at the earlier of ten (10) days after the date
of this Agreement or the first entry on the Property; and
(g) not, at any time, contact or communicate with
any tenant of the Property for any reason whatsoever
without the prior written approval of the Seller, which
communications, whether by telephone, in writing or in
person, Seller or its designee shall have the right to be
present at or otherwise participate in.
The provisions of this Section 4.1 shall survive the
termination of this Agreement and the Closing.
4.2. Purchaser's Termination Notice. Subject to the
provisions of the last paragraph of this Section 4.2, the
Purchaser shall have the right to elect to terminate this
Agreement by giving written notice (the "Purchaser's Termination
Notice") of such election to the Seller at any time prior to the
expiration of the Due Diligence Period if the Purchaser shall
determine (in the exercise of its reasonable discretion) that any
of the following conditions to termination are met as of the date
of the Purchaser's Termination Notice, in which event the
provisions of Section 14.1 shall apply:
(a) The Purchaser shall have determined, based upon
a site assessment study conducted at Purchaser's sole
expense by a qualified engineering firm proposed by
Purchaser and approved by Seller that there is oil,
Hazardous Substances, hazardous materials, hazardous or
toxic waste, or friable and accessible asbestos-containing
materials present on the Property (or in the immediate
vicinity of the Property which, based upon a site
assessment study conducted by a qualified engineering firm,
have a substantial and foreseeable likelihood of migration
on to the Property within one year from the date hereof) in
an amount which would, in the opinion of the engineering
firm which conducted the site assessment study, require
remediation under Applicable Environmental Law.
(b) The Purchaser shall have determined, based upon a
final engineering study covering the soils of the Property and the
Buildings and any other existing structures on the Property, that
there are material defects or material items of deferred maintenance
in any roof, foundation, sprinkler systems, structural elements and
masonry walls of any of the Buildings or related life safety,
elevators, water proofing, plumbing, heating, ventilating and air-
conditioning, electrical, sanitation, water, or mechanical systems.
(c) The Purchaser shall have determined, based upon a
legal opinion from its local counsel, that the Buildings as presently
constructed and used violate in a material respect applicable
federal, state or local law or governmental regulation, or local
ordinance, order or regulation, including but not limited to laws,
regulations or ordinances relating to land use, zoning, building use
and occupancy, subdivision control, fire protection, the Americans
with Disabilities Act, public health and safety, wetlands protection
and protection of the environment.
(d) The Purchaser shall have determined that (i) the
Leases do not conform in all material respects to the information
contained in the rent roll attached hereto as Schedule 11 or (ii) the
income and expenses for the Property do not conform in all
material respects to the income and expense information contained
in the Confidential Offering Memorandum prepared by the Broker.
(e) The Purchaser shall have determined that the
Contracts are not in form and substance reasonably acceptable to
the Purchaser. If any Contracts are not reasonably acceptable to
the Purchaser, the Purchaser shall notify the Seller which Contracts
are not acceptable to the Purchaser and the reasons therefor. Any
so identified Contracts which Seller agrees to terminate or accept
financial responsibility for on the Closing Date shall not give rise
to a right of termination by Purchaser hereunder.
(f) The Seller shall have refused to permit the Purchaser
or the Purchaser's Representatives to perform any borings, drillings
or environmental sampling with respect to the Property during the
Due Diligence Period for which the Purchaser has reasonably made
request pursuant to Section 4.1.
(g) The Seller shall have unreasonably refused to permit
the Purchaser or the Purchaser's Representatives to contact or
communicate with any tenant of the Property occupying 3,500
square feet or more of net rentable space in the Building during the
Due Diligence Period.
If for any reason whatsoever the Seller shall not have received the
Purchaser's Termination Notice prior to the expiration of the Due
Diligence Period, the Purchaser shall be deemed to have irrevocably
waived the right of termination granted under this Section 4.2, and such
right of termination shall be of no further force or effect.
Purchaser's Termination Notice shall state with reasonable detail
the conditions precedent to the Purchaser's obligation to purchase the
Property which have not been satisfied and the Seller shall have the
option, exercisable by giving written notice of such exercise to the
Purchaser within seven (7) days of the Seller's receipt of the Purchaser's
Termination Notice, to elect to use reasonable efforts (the cost of which
shall not exceed $25,000 in the aggregate) to cause the satisfaction of any
such unsatisfied conditions precedent specified in Purchaser's Termination
Notice, in which event this Agreement shall not terminate as a result of
the Purchaser delivery of the Purchaser's Termination Notice.
4.3. Estoppel Certificates. Promptly after execution and delivery
of this Agreement, the Seller agrees to request an Estoppel Certificate from
each tenant under a Lease, but in no event shall it be deemed to be an
obligation of the Seller under this Agreement to obtain executed Estoppel
Certificates except that it shall be an obligation of the Seller to deliver
to the Purchaser on or before the Closing Date an Estoppel Certificate from
each tenant who leases space in excess of 10,000 square feet of net
rentable area in the Building plus sixty-seven percent (67%) of all other
tenants at the Building. The Estoppel Certificates shall be in the form
annexed hereto as Exhibit G and made a part hereof; provided, however,
if any tenant is required or permitted under its Lease to make different
statements in a certificate of such nature than are set forth in Exhibit G,
any unqualified Estoppel Certificate delivered by a tenant that contains
only the statements required under such tenant's Lease to be made by
such tenant in such a certificate or any unqualified Estoppel Certificate in
the form of Exhibit G-1 shall be deemed to satisfy the Seller's delivery
obligation under this Section 4.3 as to such tenant. If any tenant fails to
deliver an Estoppel Certificate in the form required by this Agreement,
Seller shall have the right to substitute in lieu thereof an estoppel
certificate substantially in such form executed by Seller and such estoppel
certificate shall be treated for all purposes as an Estoppel Certificate from
such failing tenant.
5. Title. The Seller shall convey and the Purchaser shall accept
title to the Property subject to those matters set forth on Schedule 5 hereto
(collectively the "Permitted Encumbrances"). Within five days of the date
hereof, the Seller shall deliver to the Purchaser, at the Seller's expense, a
commitment for an owner's fee title insurance policy with respect to the
Property (the "Title Commitment") from First American Title Insurance
Company (the "Title Company"), together with true and complete copies
of all instruments giving rise to any defects or exceptions to title to the
Property. The Seller has delivered to the Purchaser, at the Purchaser's
expense, an as-built survey ("Survey") of the Land and Buildings dated
November 7, 1996 prepared by Triad Associates in accordance with the
"Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys" jointly established and adopted by ALTA and ACSM in 1992.
5.1. Unacceptable Encumbrances. If the Title Commitment or
the Survey indicate the existence of any liens or encumbrances
(collectively, "Liens") or other defects or exceptions in or to title to the
Property other than the Permitted Encumbrances (collectively, the
"Unacceptable Encumbrances") subject to which the Purchaser is
unwilling to accept title and the Purchaser gives the Seller notice of the
same prior to the expiration of the Due Diligence Period, the Seller will
then covenant to undertake to eliminate the same (or to arrange for title
insurance insuring against enforcement of such Unacceptable
Encumbrances against, or collection of the same out of, the Property) in
a manner reasonably satisfactory to the Purchaser subject to Section 5.2.
The Purchaser hereby waives any right the Purchaser may have to advance
as objections to title or as grounds for the Purchaser's refusal to close
this transaction any Unacceptable Encumbrance which the Purchaser does not
notify the Seller prior to the expiration of the Due Diligence Period unless
(i) such Unacceptable Encumbrance was first raised by the Title Company
subsequent to the date of the Title Commitment or the Purchaser shall
otherwise first discover same or be advised of same subsequent to the date
of the Title Commitment or the Survey, respectively, and (ii) the Purchaser
shall notify the Seller of the same within five (5) days after the Purchaser
first becomes aware of such Unacceptable Encumbrance. The Seller, in
its sole discretion, may adjourn the Closing one or more times for up to
sixty (60) days in the aggregate in order to eliminate Unacceptable
Encumbrances.
5.2. Removal of Unacceptable Encumbrances. The Seller shall
not be obligated to bring any action or proceeding, to make any payments
or otherwise to incur any expense in order to eliminate Unacceptable
Encumbrances not waived by the Purchaser or to arrange for title
insurance insuring against enforcement of such Unacceptable
Encumbrances against, or collection of the same out of, the Property;
except that the Seller shall satisfy Unacceptable Encumbrances which are
(i) mortgages and past due real estate taxes and assessments secured by or
affecting the Property, and (ii) judgments against the Seller or other Liens
secured by or affecting the Property which judgments and other Liens can
be satisfied by payment of liquidated amounts not to exceed $50,000 in
the aggregate for all such judgments and other Liens. The Seller may
eliminate any such Unacceptable Encumbrance by the payment of
amounts necessary to cause the removal thereof of record, by bonding
over such Unacceptable Encumbrance in a manner reasonably satisfactory
to the Purchaser, or by arranging for title insurance reasonably satisfactory
to the Purchaser insuring against enforcement of such Unacceptable
Encumbrance against, or collection of the same out of, the Property.
5.3. Options Upon Failure to Remove Unacceptable Liens. If
the Seller is unable or is not otherwise obligated (pursuant to Section 5.2)
to eliminate all Unacceptable Encumbrances not waived by the Purchaser,
or to bond over in a manner reasonably satisfactory to the Purchaser any
Unacceptable Encumbrances not waived by the Purchaser, or to arrange
for title insurance reasonably acceptable to the Purchaser insuring against
enforcement of such Unacceptable Encumbrances against, or collection of
the same out of, the Property, and to convey title in accordance with the
terms of this Agreement on or before the Closing Date (whether or not the
Closing is adjourned as provided in Section 5.1), the Purchaser shall elect
on the Closing Date, as its sole remedy for such inability of the Seller,
either (i) to terminate this Agreement by notice given to the Seller pursuant
to Section 14.1, in which event the provisions of Section 14.1 shall apply,
or (ii) to accept title subject to such Unacceptable Encumbrances and
receive no credit against, or reduction of, the Purchase Price.
5.4. Use of Purchase Price. If on the Closing Date there may be
any Liens or other encumbrances which the Seller must pay or discharge
in order to convey to the Purchaser such title as is herein provided to be
conveyed, the Seller may use any portion of the Purchase Price to satisfy
the same, provided:
(a) the Seller shall deliver to the Purchaser or the Title
Company, at the Closing, instruments in recordable form and
sufficient to satisfy such Liens or other encumbrances of record
together with the cost of recording or filing said instruments; or
(b) the Seller, having made arrangements with the Title
Company, shall deposit with said company sufficient moneys
acceptable to said company to insure the obtaining and the
recording of such satisfactions.
5.5. Franchise Taxes. Any franchise or corporate tax open, levied or
imposed against the Seller or other owners in the chain of title that may be
a Lien on the Closing Date shall not be an objection to title if the Title
Company omits same from the title policy issued pursuant to the Title
Commitment or excepts same but insures the Purchaser against collection
thereof out of the Property.
5.6. Transfer Taxes; Title Insurance Premiums. At the Closing, the Seller
shall pay all transfer and state and local excise taxes (the "Transfer Tax
Payments") imposed pursuant to the Laws of the State of Washington or any
other governmental authority in respect of the transactions contemplated by
this Agreement by delivery to the Title Company of sufficient funds to pay
such taxes together with any return (the "Transfer Tax Return") required
thereby which shall be duly executed by the Seller and the Purchaser to the
extent required by applicable law. At the Closing, the premiums due the Title
Company to obtain title insurance policies in the form contemplated by the
Title Commitment (as the same may be amended pursuant to this Agreement),
the cost of obtaining the survey and other Closing-related expenses shall be
paid in the manner set forth on Schedule 6 hereto.
6.Representations and Warranties of the Seller. The Seller represents and
warrants to the Purchaser as follows:
(a) The Seller is a duly formed and validly existing limited
partnership organized under the laws of the State of Delaware and is
qualified under the laws of the State of Washington to conduct business
therein.
(b) The Seller has the full, legal right, power and authority to
execute and deliver this Agreement and all documents now or hereafter
to be executed by the Seller pursuant to this Agreement (collectively, the
"Seller's Documents"), to consummate the transaction contemplated
hereby, and to perform its obligations hereunder and under the Seller's
Documents, and when duly authorized, executed and delivered by the
Seller, are, or at the Closing will be, legal, valid and binding obligations
of the Seller.
(c) This Agreement and the Seller's Documents do not and will
not contravene any provision of the limited partnership agreement of the
Seller, any judgment, order, decree, writ or injunction issued against the
Seller, or, to the best of the Seller's knowledge, any provision of any laws
or governmental ordinances, rules, regulations, orders or requirements
(collectively, the "Laws") applicable to the Seller. The consummation of
the transactions contemplated hereby will not result in a breach or
constitute a default or event of default by the Seller under any agreement
to which the Seller or any of its assets are subject or bound and will not
result in a violation of any Laws applicable to the Seller.
(d) Schedule 7 annexed hereto and made a part hereof identifies
all leases, licenses or other occupancy agreements affecting any portion of
the Property (collectively, the "Leases") on the date hereof. The copies of
the Leases furnished by the Seller to the Purchaser are true and complete,
and include all amendments thereto. The Leases are in full force and
effect, without any material default by the Seller thereunder. Except as
listed on Schedule 7, the Seller has not given or received any written
notice of default which remains uncured or unsatisfied, with respect to any
of the Leases.
(e) To the best of the Seller's knowledge, there are no pending
actions, suits, proceedings or investigations to which the Seller is a party
before any court or other governmental authority with respect to the
Property owned by the Seller except as set forth on Schedule 8 hereto.
(f) Except as disclosed on Schedule 9 hereto, since the date the
Seller acquired legal and beneficial title to the Property (i) to the best of
the Seller's knowledge, there has been no release or discharge of any
Hazardous Substances on the Property in violation of Applicable
Environmental Law, the cost of correction or remediation of which would
have a material adverse effect upon the value of the Property and (ii) to
the best of the Seller's knowledge, neither Seller nor any third party has
received any written notice from any governmental authority having
jurisdiction over the Property of any violation of Applicable Environmental
Law with respect to the Property which requires corrective action, the cost
of which would have a material adverse effect upon the value of the
Property. Disclosure of any matter on Schedule 9 hereto shall not
constitute any admission by Seller that such matter was material or a
violation of Applicable Environmental Law. As used in this Agreement,
the term "Hazardous Substance" shall mean any substance, chemical or
waste that is currently listed as hazardous, toxic or dangerous under
Applicable Environmental Law and any asbestos, asbestos-containing
materials, petroleum or petroleum products as defined or regulated under
Applicable Environmental Law. As used in this Agreement, the term
"Applicable Environmental Law" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42
U.S.C. Sec. 9601 et seq.; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Sec. 6901, et seq.; the Water Pollution Control Act,
33 U.S.C. Sec. 1251 et seq.; the Clean Air Act, 42 U.S.C. Sec. 7401 et
seq.; the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et seq.; the
Washington Water Pollution Control Act, RCW Ch. 90.48; the Washington
Clean Air Act, RCW Ch. 70.94; the Washington Solid Waste Management-
Recovery and Recycling Act, RCW Ch. 70.95; the Washington Hazardous
Waste Management Act, RCW Ch. 70.105; the Washington Hazardous
Waste Fees Act, RCW Ch. 70.105A; the Washington Model Toxics Control
Act, RCW Ch. 70.105D; the Washington Nuclear Energy and Radiation
Act, RCW Ch. 70.98; the Washington Radioactive Waste Storage and
Transportation Act, RCW Ch. 70.99; and the City of Bellevue and King
County Fire, Life & Health Safety Codes and Ordinances; as the foregoing
have been amended from time to time to the date of this Agreement; and
any similar federal, state and local laws and ordinances and the
regulations of each implementing such statutes in effect on the date hereof
imposing liability or establishing standards of testing and conduct for
environmental protection.
(g) The rent roll attached hereto as Schedule 11 and the
schedule of outstanding Lease obligations attached hereto as Schedule 13
are true and complete in all material respects on the date hereof.
(h) No proceedings under any federal or state bankruptcy or
insolvency laws have been commenced by or against the Seller which
have not been terminated; no general assignment for the benefit of
creditors has made by the Seller; and no trustee or receiver of the Seller's
Property has been appointed.
(i) The Seller has not received any written notice regarding the
Property's failure to comply with or violation of any applicable law, rule,
regulation, ordinance or government directive from any administrative or
governmental authority which has not been disclosed in writing to the
Purchaser.
Wherever used in this Section 6, the phrase "to the best of the
Seller's knowledge" or similar phrase means and is limited to the actual
knowledge of Robert B. Austin.
6.1. Survival of Representations. The representations and
warranties of the Seller set forth in this Section 6 (i) shall be true,
accurate and correct in all material respects upon the execution of this
Agreement and shall be deemed to be repeated on and as of the Closing Date
(except as they relate only to an earlier date), and (ii) shall remain
operative and shall survive the Closing and the execution and delivery of
the Deed for a period of one (1) year following the Closing Date and then
shall expire, and no action or claim based thereon shall be commenced
after such period.
6.2. Discovery of Untrue Representation. If at or prior to the
Closing, (i) the Purchaser shall become aware that any of the
representations or warranties made herein by the Seller is untrue,
inaccurate or incorrect in any material respect and shall give the Seller
notice thereof at or prior to the Closing, or (ii) the Seller shall notify
the Purchaser that a representation or warranty made herein by the Seller is
untrue, inaccurate or incorrect, then the Seller may, in its sole discretion,
elect by notice to the Purchaser to adjourn the Closing one or more times
for up to sixty (60) days in the aggregate in order to cure or correct such
untrue, inaccurate or incorrect representation or warranty. If any such
representation or warranty is not cured or corrected by the Seller on or
before the Closing Date (whether or not the Closing is adjourned as
provided above), then the Purchaser, as its sole remedy for such inability
of Seller, shall elect either (i) to waive such misrepresentations or
breaches of warranties and consummate the transactions contemplated hereby
without any reduction of or credit against the Purchase Price, or (ii) to
terminate this Agreement by notice given to Seller pursuant to the
provisions of Section 14.1. In the event the Closing occurs, the Purchaser
hereby expressly waives, relinquishes and releases any right or remedy
available to it at law, in equity or under this Agreement to make a claim
against the Seller for damages that the Purchaser may incur, or to rescind
this Agreement and the transactions contemplated hereby, as the result of
any of the Seller's representations or warranties being untrue, inaccurate
or incorrect if the Purchaser knew that such representation or warranty
was untrue, inaccurate or incorrect at the time of the Closing and the
Purchaser nevertheless closes title hereunder.
6.3. Limited Nature of Representations. The Purchaser
acknowledges that neither the Seller nor any of the Seller's Affiliates, nor
any of their agents or representatives, nor Broker has made any
representations or held out any inducements to the Purchaser other than
those specifically set forth in this Section 6 and Section 12. The Purchaser
acknowledges that the Seller, pursuant to the terms of this Agreement, has
afforded the Purchaser the opportunity for full and complete investigations,
examinations and inspections of the Property and all Property Information.
The Purchaser acknowledges and agrees that, except as otherwise
expressly provided in this Section 6 and Section 12, (i) the Property
Information delivered or made available to the Purchaser and the
Purchaser's Representatives by the Seller or the Seller's Affiliates, or any
of their agents or representatives may have been prepared by third parties
and may not be the work product of the Seller and/or any of the Seller's
Affiliates; (ii) neither the Seller nor any of the Seller's Affiliates has
made any independent investigation or verification of, or has any knowledge
of, the accuracy or completeness of, the Property Information; (iii) the
Purchaser is relying solely on its own investigations, examinations and
inspections of the Property and those of the Purchaser's Representatives
and is not relying in any way on the Property Information furnished by the
Seller or any of the Seller's Affiliates, or any of their agents or
representatives; and (iv) the Seller expressly disclaims any representations
or warranties with respect to the accuracy or completeness of the Property
Information, and the Purchaser releases the Seller and the Seller's
Affiliates, and their agents and representatives, from any and all liability
with respect thereto. The Purchaser or anyone claiming by, through or
under the Purchaser, hereby fully and irrevocably releases the Seller and
the Seller's Affiliates from any and all claims that it may now have or
hereafter acquire against any of the Seller or the Seller's Affiliates for
any cost, loss, liability, damage, expense, action or cause of action,
whether foreseen or unforeseen, arising from or related to the presence of
environmentally hazardous, toxic or dangerous substances, or any other
conditions (whether patent, latent or otherwise) affecting the Property,
except for claims against the Seller based upon any obligations and
liabilities of the Seller expressly provided in this Agreement.
The provisions of this Section 6 shall survive the Closing.
7.Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Seller as follows:
(a) The Purchaser is a duly formed and validly existing limited
partnership organized under the laws of the State of California, and is
qualified under the laws of the State of Washington to conduct business
therein on the date hereof.
(b) The Purchaser has the full, legal right, power, authority and
financial ability to execute and deliver this Agreement and all documents
now or hereafter to be executed by it pursuant to this Agreement
(collectively, the "Purchaser's Documents"), to consummate the
transactions contemplated hereby, and to perform its obligations hereunder
and under the Purchaser's Documents, and when duly authorized,
executed and delivered by the Purchaser, are, or at the Closing will be,
legal, valid and binding obligations of the Purchaser.
(c) This Agreement and the Purchaser's Documents do not and
will not contravene any provision of the partnership agreement of the
Purchaser, any judgment, order, decree, writ or injunction issued against
the Purchaser, or any provision of any Laws applicable to the Purchaser.
The consummation of the transactions contemplated hereby will not result
in a breach or constitute a default or event of default by the Purchaser
under any agreement to which the Purchaser or any of its assets are
subject or bound and will not result in a violation of any Laws applicable
to the Purchaser.
(d) There are no pending actions, suits, proceedings or
investigations to which the Purchaser is a party before any court or other
governmental authority which may have an adverse impact on the
transactions contemplated hereby.
(e) No proceedings under any federal or state bankruptcy or
insolvency laws have been commenced by or against the Purchaser which
have not been terminated; no general assignment for the benefit of
creditors has made by the Purchaser; and no trustee or receiver of the
Purchaser's property has been appointed.
The representations and warranties of the Purchaser set forth in this Section
7 and elsewhere in this Agreement shall be true, accurate and correct in all
material respects upon the execution of this Agreement, shall be deemed to
be repeated on and as of the Closing Date (except as they relate only to an
earlier date) and shall survive the Closing.
8. Conditions Precedent to Closing.
8.1. Conditions Precedent to the Purchaser's Obligations to
Perform. The Purchaser's obligation under this Agreement to purchase the
Property is subject to the fulfillment of each of the following conditions:
(i) the representations and warranties of the Seller contained herein shall
be materially true, accurate and complete as of the Closing Date except
to the extent they relate only to an earlier date; (ii) the Seller shall be
ready, willing and able to deliver title to the Property in accordance with
the terms and conditions of this Agreement; (iii) any conditions precedent
to the Purchaser's obligation to purchase the Property which is validly
listed in the Purchaser's Termination Notice as not being satisfied has been
satisfied; (iv) no Lease for space in excess of 7,500 square feet of net
rentable space which was in effect at the expiration of the Due Diligence
Period shall have terminated except any Lease which expires by its terms
on or before the Closing, nor shall any tenant under such Lease be more
than twenty days in default of paying any base or fixed rent due and
payable under such Lease as of the Closing; (v) the Title Company shall
be prepared to issue at Closing a final title policy with respect to the
Property in the form contemplated by the Title Commitment; and (vi) the
Seller shall have delivered all the documents and other items required
pursuant to Section 9, and shall have performed all other covenants,
undertakings and obligations, and complied with all conditions required
by this Agreement to be performed or complied with by the Seller at or
prior to the Closing.
8.2. Conditions Precedent to the Seller's Obligations to Perform.
The Seller's obligation under this Agreement to sell the Property to the
Purchaser is subject to the fulfillment of each of the following conditions:
(i) the representations and warranties of the Purchaser contained herein
shall be materially true, accurate and complete as of the Closing Date; (ii)
the Purchaser shall have delivered the funds required hereunder and all
the documents to be executed by the Purchaser set forth in Section 10 and
shall have performed all other covenants, undertakings and obligations,
and complied with all conditions required by this Agreement to be
performed or complied with by the Purchaser at or prior to the Closing;
and (iii) all consents and approvals of governmental authorities and parties
to agreements to which the Purchaser is a party or by which the
Purchaser's assets are bound that are required with respect to the
consummation of the transactions contemplated by this Agreement shall
have been obtained and copies thereof shall have been delivered to the
Seller at or prior to the Closing.
8.3. Remedies Upon Failure to Satisfy Conditions. In the event
that any condition contained in Sections 8.1 or 8.2 is not satisfied, the
party entitled to the satisfaction of such condition as a condition to its
obligation to close title thereunder shall have as its sole remedy hereunder
the right to elect to (i) waive such unsatisfied condition whereupon title
shall close as provided in this Agreement or (ii) proceed as provided in
Section 14 hereof.
9. Documents to be Delivered by the Seller at Closing. At the Closing, the
Seller shall execute, acknowledge and/or deliver, as applicable, the following
to the Purchaser or the Title Company:
(a) A bargain and sale deed or its equivalent (the "Deed")
conveying title to the Property in the form of Exhibit A annexed hereto
and made a part hereof.
(b) The Assignment and Assumption of Leases and Security
Deposits in the form of Exhibit B annexed hereto and made a part hereof
assigning without warranty or representation all of the Seller's right, title
and interest, if any, in and to the Leases in effect on the Closing Date, all
guarantees thereof and the security deposits thereunder in the Seller's
possession, if any (the "Lease Assignment").
(c) The Assignment and Assumption of Contracts and Licenses
in the form of Exhibit C annexed hereto and made a part hereof (the
"Contract and License Assignment") assigning without warranty or
representation all of the Seller's right, title and interest, if any,
in and to (i) all of the assignable licenses, permits, certificates,
approvals, authorizations and variances issued for or with respect to the
Property by any governmental authority (collectively, the "Licenses"), and
(ii) all assignable purchase orders, equipment leases, advertising
agreements, franchise agreements, license agreements, management agreements,
leasing and brokerage agreements and other service contracts relating to
the operation of the Property (collectively, the "Contracts") not terminated
by Seller pursuant to the terms of this Agreement.
(d) The Assignment and Assumption of Intangible Property in
the form of Exhibit D annexed hereto and made part hereof assigning
without warranty or representation all of the Seller's right, title and
interest, if any, in and to all intangible property owned by the Seller with
respect to the operation of the Property listed on Schedule 10 annexed
hereto and made a part hereof, including, without limitation, the trade
names "United Services Life Building" and "110 Atrium Place" (the
"Intangible Property Assignment") (the Lease Assignment, the Contract and
License Assignment and the Intangible Property Assignment are herein
referred to collectively as the "A & A Agreements").
(e) To the extent in the Seller's possession, executed
counterparts of all Leases and New Leases and any amendments,
guarantees and other documents relating thereto, together with a schedule
of all tenant security deposits thereunder in the form of Schedule 12
hereto and the accrued interest on such security deposits payable to
tenants which are in the possession of or received by the Seller.
(f) A bill of sale in the form of Exhibit E annexed hereto and
made a part hereof (the "Bill of Sale") conveying, transferring and selling
to the Purchaser without warranty or representation all right, title and
interest of the Seller in and to all Personal Property.
(g) Notices to the tenants of the Property in the form of Exhibit
F annexed hereto and made a part hereof advising the tenants of the sale
of the Property to the Purchaser and directing that rents and other
payments thereafter be sent to the Purchaser or as the Purchaser may
direct.
(h) A certificate of a general partner of the Seller that the Seller
has taken all necessary partnership action to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transaction contemplated hereby.
(i) Executed originals of all Estoppel Certificates required by
Section 4.3 and any other Estoppel Certificates, received by the Seller from
tenants prior to the Closing Date and not previously delivered to the
Purchaser.
(j) To the extent in the Seller's possession and not already
located at the Property, keys to all entrance doors to, and equipment and
utility rooms located in, the Property.
(k) To the extent in the Seller's possession and not already
located at the Property, all Licenses.
(l) To the extent in the Seller's possession, executed
counterparts of all Contracts and all warranties in connection therewith
which are in effect on the Closing Date and which are assigned by the
Seller.
(m) To the extent in the Seller's possession and not located at
the Building, plans and specifications of the Buildings.
(n) The Transfer Tax Returns, if any.
(o) A "FIRPTA" affidavit sworn to by the Seller in the form of
Exhibit H annexed hereto and made a part hereof. The Purchaser
acknowledges and agrees that upon the Seller's delivery of such affidavit,
the Purchaser shall not withhold any portion of the Purchase Price
pursuant to Section 1445 of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
(p) An updated rent roll in the form of the rent roll attached
hereto as Schedule 11, which shall be dated as of the Closing Date,
certified by the Seller as being true and complete.
(q) An updated schedule of outstanding Lease obligations of the
Seller under the Leases in the form of Schedule 13 attached hereto, which
shall be dated as of the Closing Date, certified by the Seller as being true
and accurate.
(r) An unqualified mechanics' lien affidavit and a parties-in-
possession affidavit disclosing only the tenants of the Property listed on
the updated rent roll described in Section 9(p), each certified to the Title
Company.
(s) All other documents the Seller is required to deliver pursuant
to the provisions of this Agreement.
10. Documents to be Delivered by the Purchaser at Closing. At the
Closing, the Purchaser shall execute, acknowledge and/or deliver, as
applicable, the following to the Seller:
(a) The cash portion of the Purchase Price payable at the
Closing pursuant to Section 2, subject to apportionments, credits and
adjustments as provided in this Agreement.
(b) The Bill of Sale.
(c) If the Purchaser is a corporation, (i) copies of the certificate
of incorporation and by-laws of the Purchaser and of the resolutions of the
board of directors of the Purchaser authorizing the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement certified as true and correct by the
Secretary or Assistant Secretary of the Purchaser; (ii) a good standing
certificate issued by the state of incorporation of the Purchaser, dated
within thirty (30) days of the Closing Date; (iii) a good standing
certificate issued by the State of Washington, dated within thirty (30)
days of the Closing Date; and (iv) an incumbency certificate executed by
the Secretary or Assistant Secretary of the Purchaser with respect to those
officers of the Purchaser executing any documents or instruments in
connection with the transactions contemplated herein.
(d) If the Purchaser is a partnership, (i) copies of the Purchaser's
partnership agreement and partnership certificate (if applicable), and if
required by law or its partnership agreement, copies of partnership
resolutions and/or consents of the partners authorizing the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement, all certified as true and
correct by the managing general partner of the Purchaser, or in the
absence thereof, then by all of the Purchaser's general partners, (ii) a
legal existence certificate issued by the state of incorporation of the
Purchaser, dated within thirty (30) days of the Closing Date; and (iii) a
qualification to do business certificate issued by the State of Washington,
dated within thirty (30) days of the Closing Date.
(e) If the Purchaser is a limited liability company, (i) copies of
the Purchaser's operating agreement and, if required by law or its
operating agreement, copies of resolutions of the manager authorizing the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement, all
certified as true and correct by the manager of the Purchaser; (ii) a good
standing certificate issued by the state of incorporation of the Purchaser,
dated within thirty (30) days of the Closing Date; and (iii) a qualification
to do business certificate issued by the State of Washington, dated within
thirty (30) days of the Closing Date.
(f) The A & A Agreements.
(g) The Transfer Tax Payments together with the Transfer Tax
Returns.
(h) All other documents the Purchaser is required to deliver
pursuant to the provisions of this Agreement.
11. Operation of the Property prior to the Closing Date. Between the
date hereof and the Closing Date, subject to this Section 11, the Seller shall
continue to operate and maintain the Property in a manner consistent with its
past practices and procedures, .
11.1. New Leases. After the date hereof, the Seller shall not
modify, extend or renew any Lease (other than as a result of any tenant's
exercise as of right of any modification, extension or renewal option
pursuant to the terms of its Lease in effect on the date hereof), or enter
into any proposed Lease of any portion of the Property without the
Purchaser's prior written consent in each instance, which consent shall be
given or denied, in Purchaser's sole discretion, within three (3) business
days after receipt by the Purchaser of the Seller's notice requesting the
Purchaser's consent to the proposed action relating to such existing or
proposed Lease. If the Purchaser fails to reply to the Seller's request for
consent in a notice given within such period or if the Purchaser expressly
denies its consent but fails to provide the Seller with the reasons for such
denial, the Purchaser's consent shall be deemed to have been granted.
The Seller shall have no obligation subsequent to the date hereof to
modify, extend, renew or cancel any Lease or enter into any proposed
Lease, except as may be otherwise required pursuant to the terms of any
Lease in effect on the date hereof. Notwithstanding anything to the
contrary in the foregoing, the Seller may enter into a Lease or extend,
modify or renew any Lease during the Due Diligence Period, but not
thereafter, without obtaining the consent of the Purchaser. In the event
the Seller so enters into or so extends, modifies or renews any Lease, the
Seller shall so notify the Purchaser, and the Purchaser shall have the right
to terminate this Agreement by providing written notice of such election
to the Seller within three (3) business days after receipt of the Seller's
notice that Seller has entered into or has extended, modified or renewed
such Lease, in which event this Agreement shall be terminated and neither
party shall have any further rights, obligations or liabilities hereunder,
except for the Surviving Obligations, and except that the Purchaser shall
be entitled to a return of the Deposit provided the Purchaser is not
otherwise in default hereunder. If the Purchaser does not elect to
terminate this Agreement within such three (3) business day period, the
new Lease or extension, modification or renewal of a Lease shall be
deemed accepted and approved by the Purchaser.
11.1.1. New Lease Expenses. If after the date of this
Agreement the Seller enters into any Leases, or if there is any
extension or renewal of any Leases, whether or not such Leases
provide for their extension or renewal, or any expansion or
modification of any Leases (each, a "New Lease"), the Seller shall
keep accurate records of all expenses (collectively, "New Lease
Expenses") incurred in connection with each New Lease, including,
without limitation, the following: (i) brokerage commissions and
fees relating to such leasing transaction, (ii) expenses incurred for
repairs, improvements, equipment, painting, decorating,
partitioning and other items to satisfy the tenant's requirements
with regard to such leasing transaction, (iii) reimbursements to the
tenant for the cost of any of the items described in the preceding
clause (ii), (iv) legal fees for services in connection with the
preparation of documents and other services rendered in
connection with the effectuation of the leasing transaction, (v) rent
concessions relating to the demised space provided the tenant has
the right to take possession of such demised space during the
period of such rent concessions, and (vi) expenses incurred for the
purpose of satisfying or terminating the obligations of a tenant
under a New Lease to the landlord under another lease (whether
or not such other lease covers space in the Property).
11.1.2. Allocation of New Lease Expenses. The New Lease
Expenses for each New Lease allocable to and payable by the
Purchaser by addition to the Purchase Price shall be determined by
multiplying the amount of such New Lease Expenses by a fraction,
the numerator of which shall be the number of months of the lease
term of the New Lease (or the number of months of the term of any
exercised extension period provided by any New Lease, as
applicable) remaining as of the Closing Date, and the denominator
of which shall be the total number of months of such lease term of
such New Lease (or exercised extension period, as applicable),
without provision for any optional extensions or renewals, and the
remaining balance of the New Lease Expenses for each New Lease
shall be allocable to and payable by the Seller. The provisions of
this Section 11.1.2 shall survive the Closing.
11.2. Termination of Existing Leases. Notwithstanding anything
to the contrary contained in this Agreement, the Seller reserves the right,
but is not obligated, to institute summary proceedings against any tenant
or terminate any Lease as a result of a default by the tenant thereunder
prior to the Closing Date. In the event the Seller institutes such summary
proceedings against a tenant or terminates any Lease, the Seller shall
promptly provide the Purchaser with notice thereof. The Seller makes no
representations and assumes no responsibility with respect to (i) the
continued occupancy of the Property or any part thereof by any tenant and
(ii) the fulfillment by any tenant of its obligations under any Lease.
Except as otherwise expressly provided in Section 8.1(iv), the removal of
a tenant whether by summary proceedings or otherwise prior to the Closing
Date shall not give rise to any claim on the part of the Purchaser. Further,
except as otherwise expressly provided in Section 8.1(iv), the Purchaser
agrees that it shall not be grounds for the Purchaser's refusal to close this
transaction that any tenant is a holdover tenant or in default under its
Lease pursuant to any economic or non-economic terms of its Lease on the
Closing Date and the Purchaser shall accept title subject to such holding
over or default without credit against, or reduction of, the Purchase Price.
11.3. Contracts. Except as hereinafter provided in this Section
11.3, the Seller may cancel, modify, extend, renew or permit the
expiration of Contracts or enter into any new Contract without the
Purchaser's prior consent. After the expiration of the Due Diligence
Period, the Seller shall not modify, extend, renew or cancel (except as a
result of a default by the other party thereunder or if Purchaser has given
notice pursuant to Section 4.2(e) that a Contract is unacceptable) any
Contracts, or enter into any new Contract without the Purchaser's prior
consent in each instance, which consent shall not be unreasonably
withheld or delayed, and if withheld, the Purchaser shall promptly give
the Seller a notice stating the reasons therefor. If the Purchaser fails to
reply within five (5) days to the Seller's request for consent in a notice
given pursuant to this Section 11.3 or if the Purchaser expressly denies its
consent but fails to provide the Seller with the reasons for such denial, the
Purchaser's consent shall be deemed to have been granted.
12. Broker. The Purchaser and the Seller represent and warrant to each
other that CB Commercial Real Estate Group, Inc. (the "Broker") is the sole
broker with whom they have dealt in connection with the Property and the
transactions described herein. The Seller shall be liable for, and shall
indemnify the Purchaser against, all brokerage commissions or other
compensation due to the Broker arising out of the transaction contemplated
in this Agreement, which compensation shall be paid subject and pursuant to
a separate agreement between the Seller and the Broker. Each party hereto
agrees to indemnify, defend and hold the other harmless from and against any
and all claims, causes of action, losses, costs, expenses, damages or
liabilities, including reasonable attorneys' fees and disbursements, which
the other may sustain, incur or be exposed to, by reason of any claim or claims
by any broker, finder or other person, except (in the case of the Purchaser as
indemnitor hereunder) the Broker, for fees, commissions or other
compensation arising out of the transactions contemplated in this Agreement
if such claim or claims are based in whole or in part on dealings or
agreements with the indemnifying party. The obligations and representations
and warranties contained in this Section 12 shall survive the termination of
this Agreement and the Closing.
13. Casualty; Condemnation.
13.1.Damage or Destruction. If a "material" part (as hereinafter
defined) of the Property is damaged or destroyed by fire or other casualty,
the Seller shall notify the Purchaser of such fact and the Purchaser shall
have the option to terminate this Agreement upon notice to the Seller
given not later than ten (10) days after receipt of the Seller's notice;
provided, however, that the Purchaser's election shall be ineffective if
within ten (10) days after the Seller's receipt of the Purchaser's election
notice, the Seller shall elect by notice to the Purchaser to repair such
damage or destruction to substantially the condition of the Property which
existed prior to the time of such damage or destruction and shall thereafter
complete such repair within 90 days after the then scheduled Closing Date
at the time of the Purchaser's election. If the Seller makes such election
to repair, the Seller shall have the right to adjourn the Closing Date one
or more times for up to 90 days in the aggregate in order to complete
such repairs and shall have the right to retain all insurance proceeds which
the Seller may be entitled to receive as a result of such damage or
destruction. If (i) the Purchaser does not elect to terminate this Agreement
as to the damaged Property, (ii) the Purchaser elects to terminate this
Agreement as to the damaged Property but such election is ineffective
because the Seller elects to repair such damage and completes such repair
within such 90-day period provided above, or (iii) there is damage to or
destruction of an "immaterial" part ("immaterial" is herein deemed to be
any damage or destruction which is not "material", as such term is
hereinafter defined) of the Property, the Purchaser shall close title as
provided in this Agreement and, at the Closing, the Seller shall, unless the
Seller has repaired such damage or destruction prior to the Closing, (x) pay
over to the Purchaser the proceeds of any insurance collected by the Seller
less the amount of all costs incurred by the Seller in connection with the
repair of such damage or destruction, and (y) assign and transfer to the
Purchaser all right, title and interest of the Seller in and to any
uncollected insurance proceeds which the Seller may be entitled to receive
from such damage or destruction. A "material" part of the Property shall
be deemed to have been damaged or destroyed if the cost of repair or
replacement shall be fifteen percent (15%) or more of the total replacement
cost of the Buildings as reasonably as estimated by the Seller.
13.2.Condemnation. If, prior to the Closing Date, all or any
"significant" portion (as hereinafter defined) of the Property is taken by
eminent domain or condemnation (or is the subject of a pending taking
which has not been consummated), the Seller shall notify the Purchaser
of such fact and the Purchaser shall have the option to terminate this
Agreement upon notice to the Seller given not later than ten (10) days
after receipt of the Seller's notice. If the Purchaser does not elect to
terminate this Agreement, or if an "insignificant" portion ("insignificant"
is herein deemed to be any taking which is not "significant", as such term
is herein defined) of the Property is taken by eminent domain or
condemnation, at the Closing the Seller shall assign and turnover, and the
Purchaser shall be entitled to receive and keep, all awards or other
proceeds for such taking by eminent domain or condemnation. A
"significant" portion of the Property means (i) any portion of the main
office building on the Land, (ii) a portion of the parking areas if the
taking thereof reduces the remaining available number of parking spaces below
the minimum legally required, or (iii) a legally required driveway on the
Land if such driveway is the predominant means of ingress thereto or
egress therefrom.
13.3.Termination. If the Purchaser effectively terminates this
Agreement pursuant to Section 13.1 or 13.2, this Agreement shall be
terminated and the rights of the parties shall be the same as if notice of
termination were given pursuant to Section 14.1.
14. Remedies.
14.1.Seller's Inability to Perform. If the Closing fails to occur by
reason of the Seller's inability to perform its obligations under this
Agreement which has not been waived pursuant to Section 8.4, then the
Purchaser, as its sole remedy for such inability of the Seller, may terminate
this Agreement by notice to the Seller. If the Purchaser elects to terminate
this Agreement, then this Agreement shall be terminated and neither party
shall have any further rights, obligations or liabilities hereunder, except
as otherwise expressly provided herein (collectively, the "Surviving
Obligations"), and except that the Purchaser shall be entitled to a return
of the Deposit provided the Purchaser is not otherwise in default
hereunder. Except as set forth in this Section 14.1, the Purchaser hereby
expressly waives, relinquishes and releases any other right or remedy
available to it at law, in equity or otherwise by reason of the Seller's
inability to perform its obligations hereunder. Notwithstanding anything
to the contrary herein, if the Seller's inability to perform its obligations
under this Agreement is a result of any action of, or failure to act by, the
Purchaser or any of the Purchaser's Representatives, the Purchaser shall
not be relieved of its obligations under this Agreement and Purchaser shall
not be entitled to any right or remedy provided in this Section 14.1 or
elsewhere in this Agreement.
14.2.Purchaser's Failure to Perform. If the Closing fails to occur
by reason of the Purchaser's unexcused failure or refusal to perform its
obligations hereunder, then the Seller may terminate this Agreement by
notice to the Purchaser. If the Seller elects to terminate this Agreement
due to such default, then this Agreement shall be terminated and the Seller
may retain the Deposit as liquidated damages for all loss, damage and
expenses suffered by the Seller due to such default by the Purchaser, it
being agreed that the Seller's damages are impossible to ascertain, and
neither party shall have any further rights, obligations or liabilities
hereunder, except for the Surviving Obligations. Nothing contained
herein shall limit or restrict the Seller's ability to pursue any rights or
remedies it may have against the Purchaser with respect to the Surviving
Obligations. Except as set forth in this Section 14.2 and the Surviving
Obligations, the Seller hereby expressly waives, relinquishes and releases
any other right or remedy available to them at law, in equity or otherwise
by reason of the Purchaser's default hereunder or the Purchaser's failure
or refusal to perform its obligations hereunder. Notwithstanding anything
to the contrary herein, if the Purchaser's default or the Purchaser's failure
or refusal to perform its obligations under this Agreement is a result of any
action of, or failure to act by, the Seller or any of the Seller's
Affiliates, the Seller shall not be relieved of its obligations under this
Agreement and the Seller shall not be entitled to any right or remedy
provided in this Section 14.2 or elsewhere in this Agreement.
14.3.Seller's Failure to Perform. If the Closing fails to occur by
reason of the Seller's failure or refusal to perform its obligations
hereunder which has not been waived by the Purchaser, then the Purchaser,
as its sole remedy hereunder, may (i) terminate this Agreement by notice to
the Seller or (ii) seek specific performance from the Seller. As a condition
precedent to the Purchaser exercising any right it may have to bring an
action for specific performance as the result of the Seller's failure or
refusal to perform their obligations hereunder, the Purchaser must commence
such an action within ninety (90) days after the occurrence of such default.
The Purchaser agrees that its failure to timely commence such an action
for specific performance within such ninety (90) day period shall be
deemed a waiver by it of its right to commence such an action.
Notwithstanding anything to the contrary herein, if the Seller's failure or
refusal to perform its obligations under this Agreement is a result of any
action of, or failure to act by, the Purchaser or any of the Purchaser's
Representatives, the Purchaser shall not be relieved of its obligations under
this Agreement and Purchaser shall not be entitled to any right or remedy
provided in this Section 14.3 or elsewhere in this Agreement.
15. Purchaser's Indemnity. The Purchaser hereby agrees to indemnify
the Seller and the Seller's Affiliates against, and to hold the Seller and the
Seller's Affiliates harmless from all claims, demands, causes of action,
losses, damages, liabilities, costs and expenses (including, without
limitation, attorneys' fees and disbursements) asserted against or incurred
by the Seller or any of the Seller's Affiliates in connection with or arising
out of any Investigation conducted by the Purchaser. The Purchaser's
obligations under this Section 15 shall survive the Closing.
16. Escrow. The Escrow Agent shall hold the Earnest Money Deposit
and all interest accrued thereon, if any (collectively, the "Deposit") in
escrow and shall dispose of the Deposit only in accordance with the provisions
of that certain Escrow Agreement of even date herewith by and among the
Escrow Agent, the Purchaser and the Seller relating to the Property (the
"Escrow Agreement") in the form of Exhibit I hereto. Simultaneously with
their execution and delivery of this Agreement, the Purchaser and the Seller
shall furnish the Escrow Agent with their true Federal Taxpayer Identification
Numbers so that the Escrow Agent may file appropriate income tax
information returns with respect to any interest in the Deposit. The party
entitled to the economic benefit of the Deposit representing interest earned
on the Earnest Money Deposit shall be the party responsible for the payment
of any tax due thereon.
The provisions of the Escrow Agreement shall survive the termination of this
Agreement and the Closing.
17. Notices.
All notices, elections, consents, approvals, demands, objections,
requests or other communications which the Seller or the Purchaser
may be required or desire to give pursuant to, under or by virtue of
this Agreement must be in writing and (i) delivered by hand to the
addresses set forth below, or (ii) (a) sent by express mail or courier
(for next business day delivery), or (b) sent by certified or registered
mail, return receipt requested with proper postage prepaid,
addressed as follows:
If to the Seller:
Dean Witter Realty Income Partnership II, L.P.
c/o Dean Witter Realty Inc.
Two World Trade Center
64th Floor
New York, NY 10048
Attention: E. Davisson Hardman, Jr.
with a copy to:
Vincent M. Sacchetti, Esq.
Bingham, Dana & Gould LLP
150 Federal Street
Boston, Massachusetts 02110
If to the Purchaser:
R. Matthew Moran
Office Opportunity Fund III, L.P.
c/o William Wilson & Associates
2929 Campus Drive, Suite 450
San Mateo, California 94403
with a copy to:
Farella Braun & Martel LLP
235 Montgomery Street, Suite 3000
San Francisco, California 94104
Attention: Larry R. Vollintine
The Seller or the Purchaser may designate another addressee or
change its address for notices and other communications hereunder
by a notice given to the other parties in the manner provided in this
Section 17. A notice or other communication sent in compliance
with the provisions of this Section 17 shall be deemed given and
received (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above (or to
such other address as such party has designated as provided
above), (ii) if sent by express mail or overnight courier, on the date
it is delivered to the other party, or (iii) if sent by registered or
certified mail, on the third business day following the day such
mailing is made.
18. Property Information and Confidentiality. The Purchaser
agrees that, prior to the Closing, all Property Information shall be kept
strictly confidential and shall not, without the prior consent of the Seller,
be disclosed by the Purchaser or the Purchaser's Representatives, in any
manner whatsoever, in whole or in part, and will not be used by the
Purchaser or the Purchaser's Representatives, directly or indirectly, for
any purpose other than evaluating the Property. Moreover, the Purchaser
agrees that, prior to the Closing, the Property Information will be
transmitted only to the Purchaser's Representatives (i) who need to know
the Property Information for the purpose of evaluating the Property, and
who are informed by the Purchaser of the confidential nature of the
Property Information, (ii) who agree to be bound by the terms of this
Section 18 and Section 6.3 and (iii) who have executed and delivered to
the Seller the letter regarding use of the Property Information in the form
of Exhibit J hereto. The provisions of this Section 18 shall in no event
apply to Property Information which is obtainable from a third party which
is not bound by a confidentiality agreement regarding the Property
Information or which is a matter of public record and shall not prevent the
Purchaser from complying with Laws, including, without limitation,
governmental regulatory, disclosure, tax and reporting requirements.
18.1.Press Releases. The Purchaser and Seller, for the
benefit of each other, hereby agree that between the date hereof and
the Closing Date, they will not release or cause or permit to be
released any press notices, publicity (oral or written) or advertising
promotion relating to, or otherwise announce or disclose or cause or
permit to be announced or disclosed, in any manner whatsoever, the
terms, conditions or substance of this Agreement or the transactions
contemplated herein, without first obtaining the written consent of the
other party hereto. It is understood that the foregoing shall not
preclude either party from discussing the substance or any relevant
details of the transactions contemplated in this Agreement with any of
its attorneys, accountants, professional consultants or potential
lenders, as the case may be, or prevent either party hereto from
complying with Laws, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements.
18.2.Return of Property Information. In the event this
Agreement is terminated, the Purchaser and the Purchaser's
Representatives shall promptly deliver to the Seller all originals and
copies of the Property Information in the possession of the Purchaser
and the Purchaser's Representatives. Notwithstanding anything
contained herein to the contrary, in no event shall the Purchaser be
entitled to receive a return of the Earnest Money Deposit or the
accrued interest thereon, if any, if and when otherwise entitled thereto
pursuant to this Agreement until such time as the Purchaser and the
Purchaser's Representatives shall have performed the obligations
contained in the preceding sentence.
18.3.Property Information Defined. As used in this
Agreement, the term "Property Information" shall mean (i) all
information and documents in any way relating to the Property, the
operation thereof or the sale thereof (including, without limitation,
Leases, Contracts and Licenses) furnished to, or otherwise made
available for review by, the Purchaser or its directors, officers,
employees, affiliates, partners, brokers, agents or other
representatives, including, without limitation, attorneys, accountants,
contractors, consultants, engineers and financial advisors (collectively,
the "Purchaser's Representatives"), by the Seller or any of the
Seller's Affiliates, or their agents or representatives, including, without
limitation, their contractors, engineers, attorneys, accountants,
consultants, brokers or advisors, and (ii) all analyses, compilations,
data, studies, reports or other information or documents prepared or
obtained by the Purchaser or the Purchaser's Representatives
containing or based, in whole or in part, on the information or
documents described in the preceding clause (i), or the Investigations,
or otherwise reflecting their review or investigation of the Property.
18.4.Remedies. In addition to any other remedies available
to the Seller, the Seller shall have the right to seek equitable relief,
including, without limitation, injunctive relief or specific performance,
against the Purchaser or the Purchaser's Representatives in order to
enforce the provisions of this Section 18 and 6.3.
The provisions of this Section 18 shall survive the termination of this
Agreement and the Closing.
19. Access to Records. For a period of three (3) years
subsequent to the Closing Date, the Seller, the Seller's Affiliates and their
employees, agents and representatives shall be entitled to access during
business hours to all documents, books and records given to the
Purchaser by the Seller at the Closing for tax and audit purposes,
regulatory compliance, and cooperation with governmental investigations
upon reasonable prior notice to the Purchaser, and shall have the right,
at their sole cost and expense, to make copies of such documents, books
and records.
20. Assignments. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and to their respective heirs,
executors, administrators, successors and permitted assigns. This
Agreement may not be assigned by the Purchaser without the prior written
consent of the Seller and any assignment or attempted assignment by the
Purchaser without such prior written consent shall constitute a default by
the Purchaser hereunder and shall be null and void; provided, however,
that the Purchaser may at the Closing assign this Agreement to a limited
partnership or limited liability company in which Office Opportunity Fund
III, L.P. or its general partner serves as the general partner or manager,
as applicable, but such assignment shall not release the Purchaser
named herein from its obligations under this Agreement, including the
obligation of the Purchaser named herein to join in as a party with the
Purchaser's permitted assignee and execute originals of Exhibits B, C
and D hereto.
21. Entire Agreement, Amendments. All prior statements,
understandings, representations and agreements between the parties, oral
or written, are superseded by and merged in this Agreement, which alone
fully and completely expresses the agreement between them in
connection with this transaction and which is entered into after full
investigation, neither party relying upon any statement, understanding,
representation or agreement made by the other not embodied in this
Agreement. This Agreement shall be given a fair and reasonable
construction in accordance with the intentions of the parties hereto, and
without regard to or aid of canons requiring construction against the Seller
or the party drafting this Agreement. This Agreement shall not be altered,
amended, changed, waived, terminated or otherwise modified in any
respect or particular, and no consent or approval required pursuant to this
Agreement shall be effective, unless the same shall be in writing and
signed by or on behalf of the party to be charged.
22. Merger. Except as otherwise expressly provided herein, the
Purchaser's acceptance of the Deed shall be deemed a discharge of all
of the obligations of the Seller hereunder and all of the Seller's
representations, warranties, covenants and agreements herein shall
merge in the documents and agreements executed at the Closing and
shall not survive the Closing.
23. Limited Recourse. The Purchaser agrees that it does not have
and will not have any claims or causes of action against any disclosed or
undisclosed officer, director, employee, trustee, shareholder, partner,
principal, parent, subsidiary or other affiliate of the Seller, including,
without limitation, Dean Witter Realty Inc. and the parent and affiliates of
Dean Witter Realty, Inc. (collectively, the "Seller's Affiliates"), arising
out of or in connection with this Agreement or the transactions contemplated
hereby. The Purchaser agrees to look solely to the Seller and the Seller's
assets directly attributable to the Building for the satisfaction of the
Seller's liability or obligation arising under this Agreement or the
transactions contemplated hereby, or for the performance of any of the
covenants, warranties or other agreements of the Seller contained herein,
and further agrees not to sue or otherwise seek to enforce any personal
obligation against any of the Seller's Affiliates with respect to any matters
arising out of or in connection with this Agreement or the transactions
contemplated hereby. The total liability of the Seller hereunder shall in no
event exceed $1,500,000.
24. Miscellaneous. Neither this Agreement nor any memorandum
thereof shall be recorded and any attempted recordation hereof shall be
void and shall constitute a default. This Agreement may be executed in
one or more counterparts, each of which so executed and delivered shall
be deemed an original, but all of which taken together shall constitute but
one and the same instrument. Each of the Exhibits and Schedules
referred to herein and attached hereto is incorporated herein by this
reference. The caption headings in this Agreement are for convenience
only and are not intended to be a part of this Agreement and shall not be
construed to modify, explain or alter any of the terms, covenants or
conditions herein contained. If any provision of this Agreement shall be
unenforceable or invalid, the same shall not affect the remaining
provisions of this Agreement and to this end the provisions of this
Agreement are intended to be and shall be severable. This Agreement
shall be interpreted and enforced in accordance with the laws of the State
of Washington without reference to principles of conflicts of laws.
25. Time of the Essence. Time is of the essence with respect to
this Agreement, including but not limited to the occurrence of the Closing
as of the originally scheduled date.
26. IRS Form 1099-S Designation. In order to comply with
information reporting requirements of Section 6045(e) of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations
thereunder, the parties agree (i) to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as Exhibit K at or
prior to the Closing to designate the Title Company as the party who shall
be responsible for reporting the contemplated sale of the Property to the
Internal Revenue Service (the "IRS") on IRS Form 1099-S; (ii) to provide
the Title Company with the information necessary to complete Form 1099-
S; (iii) that the Title Company shall not be liable for the actions taken
under this Section 26, or for the consequences of those actions, except
as they may be the result of gross negligence or willful misconduct on the
part of the Title Company; and (iv) that the Title Company shall be
indemnified by the parties for any costs or expenses incurred as a result
of the actions taken under this Section 26, except as they may be the
result of gross negligence or willful misconduct on the part of the Title
Company. The Title Company shall provide all parties to this transaction
with copies of the IRS Forms 1099-S filed with the IRS and with any other
documents used to complete IRS Form 1099-S.
27. Attorney's Fees. In any event that at any time Seller or
Purchaser shall institute any action or proceeding against the other
relating to this Agreement or any default hereunder, then and in that event
the prevailing party in such action or proceeding shall be entitled to
recover from the other party its reasonable attorneys' fees attributable to
such action which shall be deemed to have accrued on the
commencement of such action or proceeding and shall be payable
whether or not such action is prosecuted to judgment.
28. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.
SELLER:
DEAN WITTER REALTY INCOME
PARTNERSHIP II, L.P.
By: Dean Witter Realty Income
Properties II Inc.,
Managing General Partner
By:___________________________
Name: E. Davisson Hardman, Jr.
Title:President
PURCHASER:
OFFICE OPPORTUNITY FUND III, L.P.
By: Opportunity Capital Partners III, LLC
By:--------------------------
Name:------------------------
Title: Manager
