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): September 11, 1996
JMB INCOME PROPERTIES, LTD. - XII
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(Exact name of registrant as specified in its charter)
Illinois 0-16108 36-3337796
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(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
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(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
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FIRST FINANCIAL OFFICE BUILDING
ENCINO, CALIFORNIA
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. JMB Income Properties,
Ltd. - XII (the "Partnership"), through JMB/First Financial Associates
("Associates"), a joint venture with JMB Income Properties, Ltd. - XIII (a
partnership sponsored by the Managing General Partner of the Partnership),
has an interest in JMB Encino Partnership, L.P. ("Encino"), with an
unaffiliated venture partner ("Encino Venture Partner"). On September 11,
1996, Encino sold the land and related improvements known as First
Financial Office Building (the "Property") located in Encino, California.
The purchaser, Cornerstone Suburban Office, L.P. ("Purchaser"), is not
affiliated with the Partnership or its General Partners and the sale price
was determined by arm's-length negotiations. The Property is an
approximately 216,000 square foot office building and, as of the date of
the sale, was approximately 87% occupied.
The sale price of the Property was $37,900,000 (before selling costs and
prorations). The Purchaser assumed the approximate $24,705,000 mortgage
and paid the balance of the sale price in cash at closing. The Encino
Amended and Restated Partnership Agreement provides that the net proceeds
from sale or refinancing of the Property will be distributed as follows:
first, the $4,000,000 promissory note from Encino to Associates will be
repaid: second, to Associates up to and including Associates' contributed
capital plus a return thereon: third, a $400,000 preference to the Encino
Venture Partner: fourth, any remaining proceeds split equally. Accordingly,
Associates received the approximately $12,200,000 of net sale proceeds from
Encino, of which $4,000,000 represented full repayment of the promissory
note from Encino to Associates. The Associates' Joint Venture Agreement
provides that the net proceeds from sale will be distributed based upon an
allocation of 62.5% to the Partnership and 37.5% to JMB Income Properties,
Ltd. - XIII and therefore the Partnership's share of the net sale and
promissory note proceeds received by Associates is approximately $5,125,000
and $2,500,000, respectively.
The Partnership Agreement provides that the General Partners shall receive
as a distribution from the sale of a real property by the Partnership
amounts equal to the cumulative deferrals of any portion of their 10%
operating cash distribution plus 2-1/2% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, the Limited Partners shall receive 100% of such net sale proceeds
until the Limited Partners (i) have received cumulative cash distributions
from the Partnership's operations which, when combined with sale or
refinancing proceeds previously distributed, equal a 6% annual return on
the Limited Partners' average capital investment for each year (their
initial capital investment as reduced by sale or refinancing proceeds
previously distributed) commencing with the second fiscal quarter of 1986,
(ii) have received cash distributions of sale or refinancing proceeds in an
amount equal to the Limited Partners' aggregate initial capital investment
in the Partnership and (iii) have received cash distributions of sale and
refinancing proceeds and of the Partnership's operations, in an amount
equal to the Limited Partners' initial capital investment in the
Partnership plus a 10% annual return on the Limited Partners' average
capital investment. As these thresholds for distributions to the Limited
Partners have not yet been satisfied, no portion of the proceeds of this
sale will be distributed to the General Partners at this time.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information - Narrative.
As a result of the sale of the Property, beyond September 11, 1996,
there will be no further rental income, interest income, mortgage and other
interest, depreciation, property operating expenses, amortization of
deferred expenses or venture partners' share of venture operations recorded
for Encino in the consolidated financial statements of the Partnership,
which for the Partnership's most recent fiscal year (the year ended
December 31, 1995) were approximately $6,197,000, $49,000, $2,756,000,
$1,236,000, $1,938,000, $162,000 and $41,000, respectively. Rental income,
interest income, mortgage and other interest, depreciation, property
operating expenses, amortization of deferred expenses and venture partners'
share of venture operations for Encino were approximately $2,707,000,
$17,000, $1,355,000, $310,000, $1,216,000, $26,000 and $38,000,
respectively, for the six months ended June 30, 1996. Also, as a result of
the sale of the Property, there are no further assets and liabilities
related to Encino, which at June 30, 1996 consisted of cash and other
current assets of approximately $1,627,000; land, building and improvements
(net of accumulated depreciation) of approximately $33,128,000; deferred
expenses of approximately $596,000; current liabilities of $24,936,000 and
other liabilities of approximately $256,000. The Partnership expects to
recognize a gain on the sale of the property of approximately $2,000,000 in
1996 for financial reporting purposes and a nominal gain in 1996 for
Federal income tax purposes.
(c) Exhibits
10.1 Purchase Agreement between JMB Encino Partnership, L.P.
and Massachusetts Mutual Life Insurance Company, dated August 9, 1996
(subsequently assigned to Cornerstone Suburban Office, L.P., its
affiliate).
10.2 First Amendment to Purchase Agreement between JMB Encino
Partnership, L.P. and Massachusetts Mutual Life Insurance Company, dated
August 22, 1996 (subsequently assigned to Cornerstone Suburban Office,
L.P., its affiliate).
10.3 Second Amendment to Purchase Agreement between JMB Encino
Partnership, L.P. and Massachusetts Mutual Life Insurance Company, dated
September 6, 1996 (subsequently assigned to Cornerstone Suburban Office,
L.P., its affiliate).
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 thereunto duly authorized.
JMB Income Properties, LTD. - XII
By: JMB Realty Corporation
Managing General Partner
By: GAILEN J. HULL
Gailen J. Hull
Senior Vice President
Dated: September 26, 1996
EXHIBIT 10.1
PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
(First Financial Plaza; Encino, California)
THIS AGREEMENT is made and entered into as of the 9th day of August,
1996, by and between JMB ENCINO PARTNERSHIP, L.P., a California limited
partnership (hereinafter called "SELLER"), and MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, a Massachusetts corporation (hereinafter called
"BUYER").
R E C I T A L S
A. Seller is the owner of that certain real property located in
the City of Encino, County of Los Angeles, State of California, consisting
primarily of an office building commonly known as "First Financial Plaza".
B. Buyer desires to purchase such premises on the terms and
conditions hereinafter documented.
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the land (the "LAND") described in Exhibit "A"
attached hereto and made a part hereof, together with all right, title and
interest of Seller in and to all improvements, structures, supplies and
fixtures located upon the Land, all right, title and interest of Seller in
and to any items of personal property (including, without limitation, all
equipment, appliances, tools, machinery, supplies, building materials,
appliances, fittings, gas and oil burners, automatic stokers, lighting
fixtures, doors, cabinets, partitions, mantles, elevators, electric motors,
pumps, screens, flag poles, waste disposal or storage equipment,
sprinklers, plumbing, heating, air conditioning, electrical, ventilating,
lighting, incinerating, vacuum cleaning, refrigerating and cooling systems,
each with any of its respective furnaces, boilers, engines, motors,
dynamos, radiators, pipe, wiring and other apparatus, vaults, safes, fire
prevention and extinguishing equipment, carpets, floor covering, kitchen
appliances and antennae) owned by Seller (and not by tenants) located upon
or about the Land and used in the operation of the subject premises
(provided, however, the personal property shall not include any computer
equipment, computer programs or related software) (collectively, the
"PERSONAL PROPERTY"), all preliminary, final and proposed building plans
and specifications [including "as-built" drawings] respecting the
improvements, structural reviews, architectural drawings and engineering,
soils, seismic, geologic and architectural reports, studies and
certificates owned by Seller and prepared by third parties pertaining to
the Land or the improvements thereon (collectively, "RECORDS AND PLANS"),
all right, title and interest of Seller in and to the name "First Financial
Plaza", and, to the extent assignable, all right, title and interest of
Seller in and to all building permits, certificates of occupancy, business
licenses, other licenses, permits, certificates and authority required in
connection with the construction, use or occupancy of the Property, leases,
contract rights, agreements, tenant lists, advertising material and
telephone exchange numbers (hereinafter, collectively, the "PROPERTY"), all
upon the terms, covenants and conditions hereinafter set forth.
Notwithstanding the foregoing or anything else to the contrary contained in
this Agreement, Seller reserves any and all right, title and interest of
Seller in, and Seller shall not convey or assign to Buyer any right, title
or interest of Seller to, any and all promissory notes or other evidences
of indebtedness (collectively, the "TENANT LOANS") owed to Seller by the
following tenants: Fred Sands Realty; Benson, Minkow & Shapiro; and Block,
Klein & Co.
2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for
the Property shall be the sum of Thirty-Seven Million Nine Hundred Thousand
and NO/100 Dollars ($37,900,000).
3. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to
Seller by Buyer as follows:
A. ESCROW DEPOSIT. Within three (3) business days after execution
of this Agreement, Buyer shall (subject to prior termination of this
Agreement in accordance with Paragraph 4B below or any other applicable
provisions hereof), deliver a deposit of $300,000 (which deposit, together
with all interest thereon earned while such deposit is held by "Escrow
Holder", as hereinafter defined, is herein called the "ESCROW DEPOSIT") to
Chicago Title Insurance Company, at its offices at Chicago Title Insurance
Company, 700 South Flower Street, Suite 900, Los Angeles, California
90071, Attention: Ms. Sharon Kling (which company, in its capacity as
escrow holder hereunder, is called "ESCROW HOLDER"). The Escrow Deposit
shall be held by Escrow Holder as a deposit against the Purchase Price in
accordance with the terms and provisions of this Agreement. At all times
that the Escrow Deposit is being held by the Escrow Holder, the Escrow
Deposit shall be invested by Escrow Holder in the following investments
("APPROVED INVESTMENTS"): (i) United States Treasury obligations, (ii)
United States Treasury-backed repurchase agreements issued by a major money
center banking institution reasonably acceptable to Buyer, or (iii) such
other manner as may be reasonably agreed to by Seller and Buyer. The
Escrow Deposit shall be disposed of by Escrow Holder only as provided in
this Agreement.
B. ASSUMPTION OF FINANCING. A portion of the Purchase Price shall
be payable by Buyer assuming the obligations of Seller under the "Loan
Documents" (as hereinafter defined), such portion of the Purchase Price so
payable being an amount equal to the outstanding principal balance of the
loan (the "LOAN") evidenced, secured or governed by the Loan Documents as
of the "Close of Escrow", as hereinafter defined (such amount being herein
called the "OUTSTANDING LOAN AMOUNT"). The Outstanding Loan Amount as of
the Close of Escrow is anticipated to be approximately $24,704,555.28
(following application of the installments due July 15, 1996 and August 15,
1996).
C. CLOSING PAYMENT. The balance of the Purchase Price (i.e.,
$37,900,000 minus the Outstanding Loan Amount), as adjusted by the
application of the Escrow Deposit and by the prorations and credits
specified herein, shall be paid in cash on the "Close of Escrow", as
hereinafter defined (the amount to be paid under this subparagraph C being
herein called the "CLOSING PAYMENT").
4. CONDITIONS PRECEDENT
A. TITLE MATTERS.
(1) TITLE REPORT. Seller has prior to the date hereof caused to be
delivered to Buyer a copy of a preliminary title report and copies of all
recorded documents referred to in such preliminary title report
(collectively, the "PRELIMINARY TITLE REPORT"), covering the Property from
Chicago Title Insurance Company (which company, in its capacity as title
insurer hereunder, is herein called the "TITLE COMPANY"). In addition,
Seller has prior to the date hereof caused to be delivered to Buyer a copy
of an updated ALTA survey of the Property, which survey is certified to
Buyer and Title Company ("SURVEY"). Buyer has heretofore approved all
exceptions and matters set forth in Schedule B, Section II of that certain
title commitment dated August 6, 1996 (the "TITLE COMMITMENT") from the
Title Company, including all matters therein relating to the Survey
(collectively, the "PERMITTED EXCEPTIONS"). Seller shall use best efforts
to satisfy the requirements set forth in Schedule B, Section I of the
Commitment, on or before the Closing Date. Approval by Buyer of any
additional exceptions to title or survey matters disclosed after the date
of execution of this Agreement shall be a condition precedent to Buyer's
obligation to purchase the Property. Unless Buyer gives written notice
that it disapproves any such additional exceptions to title or survey
matters, stating the exceptions so disapproved, on or before the sooner to
occur of 10 days after receipt of written notice thereof or the Close of
Escrow, Buyer shall be deemed to have approved said exceptions or survey
matters. If, for any reason, on or before the Close of Escrow Seller does
not cause such additional exceptions to title or survey matters which Buyer
disapproves (to the extent Buyer is permitted hereunder to so disapprove)
to be removed at no cost or expense to Buyer (Seller having the right but
not the obligation to do so), the obligation of Seller to sell, and Buyer
to buy, the Property as herein provided shall terminate (and Seller and
Buyer shall have no further obligations in connection herewith). Buyer
shall have the option to waive the condition precedent set forth in this
Paragraph 4A(1) by notice to Seller. In the event of such waiver, such
condition shall be deemed satisfied.
(2) EXCEPTIONS TO TITLE. Buyer shall be obligated to accept title
to the Property, subject only to the following exceptions to title:
(a) Real estate taxes and assessments not yet due and payable;
(b) The printed exceptions which appear in an ALTA (Form B 1970)
extended coverage owner's title insurance policy issued by Title Company;
(c) The Loan Documents (subject to Paragraph 4D below);
(d) The Permitted Exceptions.
Conclusive evidence of the availability of such title shall be the
willingness of Title Company to issue to Buyer on the Close of Escrow, an
ALTA (Form B 1970) extended coverage owner's title insurance policy
together with such CLTA endorsements as Title Company shall have committed
to issue in the Title Commitment to Buyer at Closing ("OWNER'S POLICY"), in
the face amount of the Purchase Price, which policy shall show (i) title to
the Property to be vested of record in Buyer, and (ii) the above exceptions
to be the only exceptions to title. Buyer shall have the right to require
the Title Company to obtain coinsurance or facultative reinsurance
(together with agreements in a form and content reasonably satisfactory to
Buyer providing Buyer with the right of "direct access" against the
reinsurer) with respect to the Title Policy in such amount and with such
title companies as Buyer determines in Buyer's reasonable discretion.
Notwithstanding anything to the contrary contained in this Agreement,
Seller shall be obligated to remove (or cause the Title Company to
affirmatively insure over): (i) any liens or encumbrances intentionally
created by Seller, including without limitation, (x) any deeds of trust
covering the Property which secure any financing (other than the Loan)
obtained by Seller, (y) any mechanic's or materialmen's liens against the
Property as a result of work done by or on behalf of Seller, and (z) tax or
judgment liens against Seller, and (ii) all other liens of a monetary
nature against the Property and not otherwise provided for in this
Agreement (but Seller shall not be obligated hereby to expend more than
$25,000 in the aggregate in connection with this clause (ii)); provided
that, nothing contained in this Agreement shall require the release or
discharge of any lien relating to the Loan Documents, or any lien arising
from Buyer's inspections or examinations of the Property.
(3) OWNER'S POLICY. As a condition to Buyer's obligation to
purchase the Property hereunder, Title Company shall have irrevocably
committed on the Close of Escrow to issue to Buyer the Owner's Policy,
subject only to the exceptions approved or deemed approved by Buyer, and
containing the required CLTA endorsements, in accordance with Paragraph 4A
above.
B. DUE DILIGENCE REVIEWS. Buyer shall have until 5:00 p.m. Los
Angeles time on August 22, 1996 (the "DUE DILIGENCE PERIOD") within which
to perform and complete the "Remaining Environmental Analysis" (defined
below) respecting the Property; provided that, if the Remaining
Environmental Analysis shall not have been completed by "Buyer's Engineer"
or the "Laboratory" (as such terms are defined below) by expiration of the
Due Diligence Period as aforesaid, then the Due Diligence Period shall
automatically be extended (the "DUE DILIGENCE EXTENSION") to 5:00 p.m. Los
Angeles time on August 27, 1996 (the "EXTENDED DUE DILIGENCE PERIOD");
provided that, if the "Geologist" (as defined below) shall not have issued
to Buyer and to Seller a written determination of the Geologist's
conclusions as provided below by the expiration of the Extended Due
Diligence Period, then the Extended Due Diligence Period shall
automatically be further extended until 5:00 p.m. Los Angeles time on
September 3, 1996 (the "ADDITIONAL EXTENDED DUE DILIGENCE PERIOD").
Notwithstanding the foregoing, if the Remaining Environmental Analysis
shall not have been completed by Buyer's Engineer or the Laboratory by 5:00
p.m. on the last day of the Extended Due Diligence Period, or if the
Geologist shall not have issued to Buyer and to Seller a written
determination of the Geologist's conclusions as provided below by the
expiration of the Additional Extended Due Diligence Period, then Buyer
shall have the right to terminate this Agreement by written notice to
Seller given prior to expiration of the Extended Due Diligence Period or
the Additional Extended Due Diligence Period, as the case may be (upon
which notice this Agreement shall terminate, and Seller and Buyer shall
have no further obligations in connection herewith; provided that, if the
Remaining Environmental Analysis shall not have been completed by Buyer's
Engineer or the Laboratory by 5:00 p.m. on the last day of the Extended Due
Diligence Period, or the Geologist shall not have issued to Buyer and to
Seller a written determination of the Geologist's conclusions as provided
below by the expiration of the Additional Extended Due Diligence Period (if
any), and Buyer shall not theretofore have elected to terminate as provided
in this sentence, then Buyer shall be deemed to have waived the contingency
for the Remaining Environmental Analysis set forth in this Paragraph 4B,
and this Agreement shall continue in full force and effect. Other than the
Remaining Environmental Analysis, and except as otherwise expressly
provided in this Agreement, Buyer has heretofore completed and approved all
matters pertaining to its due diligence inspection, examination and review
of all aspects of the Property, including Buyer's review of all leases,
service contracts, the Loan Documents, title and survey matters, and all
physical, compliance matters and other conditions respecting the Property.
During the Due Diligence Period (as the same may be extended pursuant to
the terms hereof), Seller shall provide Buyer with reasonable access to the
Property upon reasonable advance notice solely for the purpose of
completing the Remaining Environmental Analysis. Buyer shall in good faith
pursue the Remaining Environmental Analysis, and shall conduct the same in
a manner so as to not cause damage, loss, cost or expense to Seller or the
Property (other than any below-grade damage to the Property inherent in and
necessary for the installation of the Well) and so as to not unreasonably
interfere with or disturb any tenant at the Property. In no event shall
Buyer after the date hereof make or do any review, inspection, testing or
analysis hereunder other than the Remaining Environmental Analysis and
except as otherwise expressly provided herein, and shall in all events
promptly return the Property to its prior condition and repair thereafter
following the Remaining Environmental Analysis (including closure and/or
removal of the Well in accordance with all applicable laws, rules and
regulations, if so requested by Seller), it being understood that the
foregoing shall not require Buyer to replace soil and water removed from
the Property in connection with the installation of the Well and sampling
in connection with the Remaining Environmental Analysis, except insofar as
such replacement is customarily done in connection with wells similar to
the Well. In addition to the foregoing, Buyer shall, at its sole cost and
expense, lawfully dispose of any waste materials (including, without
limitation, cuttings, purged-water and samples) generated in the course of
the Remaining Environmental Analysis. In connection with any such
disposal, Buyer shall be identified as the generator of said for all
purposes. Without limitation on the foregoing, in no event shall Buyer
contact any tenant of the Property without Seller's express written consent
nor shall Buyer contact any governmental authority having jurisdiction over
the Property without Seller's express written consent (which consent as to
governmental authorities shall not be unreasonably withheld). Seller shall
have the right, at its option, to cause a representative of Seller or an
engineer engaged by Seller ("SELLER'S ENGINEER") to be present during all
aspects of the Remaining Environmental Analysis. Buyer shall promptly
deliver to Seller true, accurate and complete copies of any written reports
relating to the Property prepared for or on behalf of Buyer by any third
party and, in the event of termination hereunder, shall return all
documents and other materials furnished by Seller hereunder. Without
limitation of the foregoing, Buyer shall instruct Buyer's Engineer to
deliver to Seller concurrently with delivery to Buyer thereof all data and
draft reports and conclusions of Buyer's Engineer and the Laboratory in
connection with the Remaining Environmental Analysis, and Seller shall be
given a reasonable opportunity to review and provide input with respect to
any written reports and recommendations generated by Buyer's Engineer prior
to the finalization thereof. Buyer shall keep all information or data
received or discovered in connection with any of the inspections, reviews
or examinations hereunder (including, without limitation, the Remaining
Environmental Analysis) strictly confidential in accordance with Paragraph
10.J below.
"REMAINING ENVIRONMENTAL ANALYSIS" means (i) the drilling of a single
ground water monitoring well (the "WELL") to be installed on the Property
along the Balboa Avenue property line proximate to the garage structure,
(ii) the sampling of soil cuttings collected during installation of the
Well, (iii) the monitoring of the groundwater from the Well, (iv)
laboratory analysis of the results thereof by the Laboratory, and (v) if
required in accordance with this Paragraph 4B, the review and analysis of
such results by the Geologist in connection with the Geologist's written
determination whether the presence (if any) of any "Relevant Substance"
(defined below) does or does not require remedial clean-up action (other
than monitoring and reporting) to bring the Property into compliance with
all applicable laws, rules and regulations with respect to such Relevant
Substance, all in accordance with the following:
(1) The Well shall not be more than fifty (50) feet in depth below
the surface of the Land, and shall in no event extend below the point at
which the drill reaches or achieves bedrock refusal as mutually determined
by both Buyer's Engineer and Seller's Engineer. The drilling rig to be
used in connection with the Well shall be no larger than a CME-75 or
equivalent rig. Buyer may not drill another monitoring well in another
location upon the first to occur of (a) the Well has reached fifty (50)
feet in depth below the surface of the Land, (b) the drill reaches or
achieves bedrock refusal as mutually determined by both Buyer's Engineer
and Seller's Engineer, or (c) the Well has reached groundwater, and no
further or other drilling shall be permitted thereafter. Notwithstanding
the foregoing, (x) in no event shall there be more than three (3) attempts
to drill the Well in separate locations (i.e., there shall be no more than
three (3) drilling holes); (y) all drilling attempts shall be grouped as
closely together as reasonably possible; and (z) all drilling shall be
completed on the same day that the initial drilling attempt is made;
(2) If despite the permitted drilling described above the Well does
not reach or yield ground water or otherwise permit the sampling of ground
water in accordance with this subparagraph D, then Buyer shall be permitted
to sample only the soil in connection with the Well, and shall rely solely
on the soil samples in connection with the Remaining Environmental
Analysis;
(3) Buyer, Buyer's environmental engineer ("BUYER'S ENGINEER"),
Seller's Engineer and Seller have agreed upon and approved that certain
written work plan proposal for the Remaining Environmental Analysis (the
"WORK PLAN"). A copy of the Work Plan is attached to this Agreement as
Exhibit "M" and is made a part hereof. Without limitation, the Work Plan
includes detailed descriptions of the methodology for testing, the method
reporting limits for the Laboratory for each analyte tested, and the exact
location and depth of the Well). Prior to installing the Well or
commencing any work on the Property in connection therewith, Buyer shall
cause Buyer's Environmental Engineer to (a) deliver to Seller a
confidentiality, access and indemnity agreement in form and substance
satisfactory to Seller; and (b) deliver to Seller and to Seller's Engineer
satisfactory evidence of utility clearance for the Well. Seller shall have
the right to cause Seller's Engineer to be present to observe installation
and closure of the Well, and the taking of any water and soil samples. All
of Buyer's Engineer's field activities and methodologies shall be to
Seller's Engineer's reasonable satisfaction. The testing laboratory that
will analyze soil and/or water samples in connection with the Remaining
Environmental Analysis shall be Columbia Analytical Services, Inc. (the
"LABORATORY"), located in Canoga Park, California. Buyer's Engineer and
the Laboratory shall be required to observe "quality assurance - quality
control" (QAQC) procedures and "chain of custody" protocol reasonably
satisfactory to Seller's Engineer. Without limitation of the foregoing,
Buyer shall cause the Laboratory to deliver to Seller's Engineer such back-
up documentation and evidence (for example, proof of proper instrument
calibration) as Seller's Engineer may reasonably request to authenticate
and confirm the accuracy of the results of any tests or analyses conducted
by the Laboratory; and
(4) The Laboratory shall analyze soil and/or water samples
exclusively for the following (and for no other) substances (the "RELEVANT
SUBSTANCES"): (i) total petroleum hydrocarbons as gasoline (TPH(g)); (ii)
benzene; (iii) toluene; (iv) ethylbenzene; (v) total xylenes; and (vi)
methyl tertiary butyl ether (MTBE). Buyer shall have no right under this
Paragraph 4 to analyze soil and/or water samples in connection with the
Well for, and shall have no right to terminate this Agreement by reason of
the presence in, under or on, or contamination of, the Property by, any
chemical, material, compound or substance other than those listed in items
(i) through (vi) above.
If, on or before the expiration of the Due Diligence Period (as the
same may be extended hereunder), (i) there is a "Remedial Finding" (as
defined below), and (ii) Buyer shall determine that it no longer intends to
purchase the Property based solely on the existence of the Remedial
Finding, then Buyer shall promptly notify Seller of such determination in
writing on or before the expiration of the Due Diligence Period, as the
same may be extended as provided herein (such notice being herein called
the "TERMINATION NOTICE"), whereupon this Agreement, and the obligations of
the parties hereunder, shall terminate. In the event that (a) Buyer shall
fail to have delivered the Termination Notice to Seller on or before the
expiration of the Due Diligence Period (as the same may be extended as
provided herein), (b) there is no Remedial Finding, or (c) the results of
the Laboratory's analysis of any soil and/or water samples in connection
with the Well are "non-detect" or otherwise fail to disclose the presence
of any Relevant Substance in the samples, then Buyer shall be deemed to
have agreed that all of the foregoing matters are acceptable to Buyer, that
Buyer approves the results of the Remaining Environmental Analysis, that
Buyer intends to proceed with the acquisition of the Property, thereafter
Buyer shall have no further right to terminate this Agreement pursuant to
this Paragraph 4B, and this Agreement shall continue in full force and
effect.
"REMEDIAL FINDING" means (1) a determination by the Laboratory, based
solely on its analysis of any soil and/or water samples in connection with
the Well, that one or more Relevant Substances is present therein (a
"RELEVANT SUBSTANCE PRESENCE"), and (2) if there is a Relevant Substance
Presence, any failure by Hygienetics Environmental Services, Inc. ("the
"GEOLOGIST") to issue to Buyer a written determination that the presence of
such Relevant Substance does not require remedial clean-up action (other
than monitoring and reporting) to bring the Property into compliance with
all applicable laws, rules and regulations with respect to such Relevant
Substance. The parties shall each pay one-half (1/2) of the cost and
expense of the Geologist.
C. RELEASE OF SELLER FROM LOAN DOCUMENTS. As a condition to
Seller's obligation to close the transactions contemplated hereby, Seller
shall have received on or before the Close of Escrow a release of Seller's
and any guarantor's obligations under the Loan Documents from the holder
thereof (the "LENDER"), which release shall be in form and substance
reasonably satisfactory to Seller.
D. BENEFICIARY STATEMENT. Buyer shall have received a
beneficiary statement ("BENEFICIARY STATEMENT"), duly executed by the
Lender, on or before August 19, 1996, consenting to the conveyance of the
Property by Seller to Buyer without exercising any right of acceleration,
or otherwise modifying the terms or provisions of the Loan Documents, and
further providing: (A) that the Lender is the holder of the Loan
Documents, a true, correct and complete copy of which Loan Documents shall
be attached to the Beneficiary Statement; (B) the outstanding principal
balance of the Loan and the date through which interest is paid; (C) the
interest rate, amortization schedule and any balloon payments; (D) whether
the holder has any right to purchase or acquire any ownership interest in
the Property or is entitled to any payment based upon revenues generated by
the Property; (E) that the Loan Documents are in full force and effect; (F)
that there are no overdue installments of interest or principal under the
Loan; (G) that, to Lender's actual knowledge, there exists no default under
the Loan Documents; and (H) Buyer's assumption of the Loan Documents shall
apply only to those obligations thereunder first arising and accruing on
and after the Close of Escrow. In the event that Buyer shall not have
received the Beneficiary Statement confirming the foregoing terms of the
Loan and the Loan Documents in form and substance reasonably satisfactory
to Buyer by 5:00 p.m. Los Angeles time on August 19, 1996, then Buyer shall
have the right to terminate this Agreement upon written notice to Seller
(such notice being herein called the "BENEFICIARY STATEMENT TERMINATION
NOTICE") given not later than 5:00 p.m. Los Angeles time on August 21,
1996, whereupon this Agreement, and the obligations of the parties
hereunder, shall terminate. In the event that Buyer shall have received
the Beneficiary Statement confirming the foregoing terms of the Loan and
the Loan Documents in form and substance reasonably satisfactory to Buyer,
or Buyer shall fail to have delivered the Beneficiary Statement Termination
Notice to Seller by 5:00 p.m. Los Angeles time on August 21, 1996, then
Buyer shall be deemed to have waived the contingency set forth in this
Paragraph 4D, and Buyer shall thereafter have no further right to terminate
this Agreement pursuant to this Paragraph 4D. Seller hereby authorizes
Buyer to contact Lender in connection with the assumption of the Loan
contemplated by this Agreement.
E. LENDER'S PRINCIPAL STATEMENT. Buyer shall have received
from Lender a statement of the principal balance of the Loan to be assumed
by Buyer (the "PRINCIPAL STATEMENT") on or before the date which is not
less than three (3) business days prior to the Close of Escrow.
F. TENANT ESTOPPELS. Buyer shall have received duly
executed tenant estoppel certificates dated not earlier than 60 calendar
days prior to the Close of Escrow, substantially in the form of Exhibit "C"
attached hereto, from (a) each tenant occupying 5,000 or more rentable
square feet at the Property, and (b) tenants occupying (in the aggregate)
at least 80% of the aggregate rentable square footage of the Property
covered by tenant leases in effect as of August 27, 1996 (inclusive of any
tenants described in clause (a) above) (collectively, the "REQUIRED TENANT
ESTOPPELS"). In the event that Buyer shall not have received the Required
Tenant Estoppels in substance reasonably satisfactory to Buyer confirming
in all material respects the matters set forth in the "Rent Roll" (as
defined below) and the other matters contained in the form of estoppel
certificate attached hereto as Exhibit "C" by 5:00 p.m. Los Angeles time on
August 27, 1996, then Buyer shall have the right to terminate this
Agreement upon written notice to Seller (such notice being herein called
the "TENANT ESTOPPEL TERMINATION NOTICE") given not later than 5:00 p.m.
Los Angeles time on August 28, 1996, whereupon this Agreement, and the
obligations of the parties hereunder, shall terminate. In the event that
Buyer shall have received the Required Tenant Estoppels in substance
reasonably satisfactory to Buyer confirming in all material respects the
matters set forth in the Rent Roll and the other matters contained in the
form of estoppel certificate attached hereto as Exhibit "C" or Buyer shall
fail to have delivered the Tenant Estoppel Termination Notice to Seller on
or before 5:00 p.m. Los Angeles time on August 28, 1996, then Buyer shall
be deemed to have waived the contingency set forth in this Paragraph 4F,
and Buyer shall thereafter have no further right to terminate this
Agreement pursuant to this Paragraph 4F. Seller's obligation to provide
tenant estoppels hereunder shall be limited to the use of reasonable
efforts to obtain the same, without the obligation to incur any cost or
expense in connection therewith. Notwithstanding the foregoing, if (a)
Buyer shall not have received a tenant estoppel certificate from any tenant
in substance reasonably satisfactory to Buyer confirming in all material
respects the matters set forth in the Rent Roll and the other matters
contained in the form of estoppel certificate attached hereto as Exhibit
"C" by 5:00 p.m. Los Angeles time on August 27, 1996, and (b) Buyer shall
not theretofore have delivered the Tenant Estoppel Termination Notice to
Seller, then Buyer shall have the right to deliver to Seller on or before
5:00 p.m. Los Angeles time on August 28, 1996, a list of the tenants that
have failed to return an executed tenant estoppel to Buyer (the "MISSING
ESTOPPEL LIST"). Within three (3) business days after Seller's receipt of
the Missing Estoppel List, Seller shall deliver to Buyer a certified list
of all lease documents, supplements, extensions, renewals and written
amendments governing the lease pertaining to each tenant listed in the
Missing Estoppel List ("SELLER'S ADDITIONAL LEASE LIST"). Buyer shall have
the right to terminate this Agreement upon written notice to Seller (the
"SECONDARY TENANT ESTOPPEL TERMINATION NOTICE") given not later than 5:00
p.m. Los Angeles time on the date that is two (2) business days after
Buyer's receipt of the Seller's Additional Lease List, whereupon this
Agreement, and the obligations of the parties hereunder, shall terminate.
In the event that Buyer shall fail to have delivered the Secondary Tenant
Estoppel Termination Notice to Seller on or before 5:00 p.m. Los Angeles
time on the date that is two (2) business days after Buyer's receipt of the
Seller's Additional Lease List, then Buyer shall be deemed to have waived
the contingency set forth in this Paragraph 4F.
G. PERFORMANCE BY SELLER. Seller shall have duly performed
each and every agreement to be performed by Seller hereunder. The
condition set forth in this Paragraph 4G is for Buyer's sole benefit.
H. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER.
Buyer shall have duly performed each and every agreement to be performed by
Buyer hereunder, and Buyer's representations, warranties and covenants set
forth in this Agreement shall be true and correct as of the Close of
Escrow. The condition set forth in this paragraph 4H is for Seller's sole
benefit.
I. CLOSING CERTIFICATES. Seller shall deliver to Buyer at
the Close of Escrow a certificate, dated as of the Close of Escrow, duly
executed by Seller (the "SELLER'S CLOSING CERTIFICATE"), attesting to the
continued truth and accuracy of Seller's representations and warranties
contained in Paragraph 7A(2) of this Agreement, or specifying any
exceptions or changes thereto (including, without limitation, to Seller's
knowledge, any material default by any tenant or by the landlord under any
tenant lease that remains uncured as of the date thereof). In the event
that the Seller's Closing Certificate shall disclose any changes in any
material adverse respect in the representations and warranties of Seller
contained in paragraph 7A(2), or the "Manager's Closing Certificate" (as
hereinafter defined) if delivered by Manager shall disclose any changes in
any material adverse respect in the representations and warranties of
Manager contained in the Manager's Certificate, which are not otherwise
permitted or contemplated by the terms of this Agreement (e.g., permitted
new leases approved by Buyer in accordance with Paragraph 7D(3)), then
Buyer shall have the right to terminate this Agreement by written notice to
Seller given on or before the Close of Escrow, whereupon this Agreement,
and the obligations of the parties hereunder, shall terminate. The
conditions set forth in this Paragraph 4I are for Buyer's sole benefit.
I. NO MATERIAL CHANGES. As of the Close of Escrow, there
shall have been no "material adverse change" (as defined below) in the use,
compliance with laws, occupancy or tenants of the Property, which changes
are not otherwise permitted or contemplated by the terms of this Agreement
(e.g., permitted new leases approved by Buyer in accordance with Paragraph
7D(3)). As used in this subparagraph 4I, "MATERIAL ADVERSE CHANGE" means
an adverse change that results in a cumulative diminution in present value
of the Property of at least $200,000 after taking into account all changes
affecting the present value of the Property.
J. DELIVERY OF LENDER'S DOCUMENTS. That Lender shall have
delivered into escrow required documentation to evidence the assignment and
assumption of the Loan Documents, and to release Seller and any guarantor
from the obligations under the Loan Documents, in order to effectuate the
release, assignment and assumption transactions respecting the Loan
Documents as contemplated in this Agreement.
5. ESCROW TRANSACTIONS. Upon execution of this Agreement, Seller
and Buyer shall deposit an executed copy of this Agreement (or a fully
executed copy in counterparts) with Escrow Holder. Escrow Holder shall
promptly execute this Agreement upon receipt of this Agreement and
thereupon escrow hereunder (the "ESCROW") shall be established (the
foregoing being herein called the "OPENING OF ESCROW"). This Agreement
shall serve as the instructions to Escrow Holder to consummate the purchase
and sale contemplated hereunder. Seller and Buyer agree to execute such
additional and supplementary escrow instructions as may be reasonably
appropriate to enable Escrow Holder to comply with the terms of this
Agreement. If there is any conflict between the provisions of this
Agreement and any such additional or supplementary escrow instructions,
however, the terms of this Agreement shall control. The transactions
contemplated herein shall be consummated through Escrow or, at Seller's
election, through a closing conference to be held on the Closing Date in
the offices of Seller's counsel. "CLOSE OF ESCROW" shall occur on the
Closing Date and shall mean the day the transfer documents required to be
recorded hereunder are in fact recorded in the Recorder's Office of the
County of Los Angeles. As used herein, "CLOSING DATE" means August 29,
1996, or such earlier date as may be agreed upon in writing by Buyer and
Seller; provided, however, that if the Due Diligence Period is extended to
the Extended Due Diligence Period as provided above, then the Closing Date
shall automatically be extended to September 4, 1996; and provided further,
that if Extended Due Diligence Period is further extended to the Additional
Extended Due Diligence Period, then the Closing Date shall automatically be
extended to September 9, 1996; and further provided, that, if any condition
specified in Paragraph 4A above is not satisfied on or before the Closing
Date, or if Buyer delivers to Seller the Missing Estoppel List, then Seller
may, at its sole election, extend the Closing Date once for up to 15 days
in order to attempt to cause such condition to be satisfied or to allow the
Seller's Additional Lease List to be delivered to Buyer, in accordance
with, and subject to the limitations of, this Agreement. If Seller so
elects to extend the Closing Date, such election shall be made by Seller
giving written notice thereof to Buyer on or before the then scheduled
Closing Date, which notice shall specify the extended date for closing (and
such date so specified shall thereupon become the Closing Date hereunder).
A. DELIVERIES TO ESCROW BY SELLER. Prior to the Close of Escrow,
Seller shall deliver or cause to be delivered to Escrow Holder the
following with respect to the Property:
(1) A duly executed and acknowledged grant deed ("DEED") in the
form of Exhibit "D" attached hereto and made a part hereof;
(2) Two counterparts of a duly executed and acknowledged bill of
sale, assignment and assumption agreement ("BILL OF SALE, ASSIGNMENT AND
ASSUMPTION AGREEMENT") in the form of Exhibit "E" attached hereto and made
a part hereof;
(3) A duly executed and acknowledged certificate (the
"CERTIFICATE") regarding the "non-foreign" status of Seller in the form of
Exhibit "F" attached hereto and made a part hereof;
(4) An original or copy of a notice to each tenant of the Property
dated as of the Close of Escrow duly executed by Seller, notifying each
tenant that (i) the Property has been sold to Buyer, (ii) all of Seller's
right, title and interest in and to the leases and security deposits
thereunder have been assigned to Buyer, and (iii) commencing as of the
Close of Escrow, all rent and other payments and any notices to the
landlord under the leases are to be paid and sent to Buyer (collectively,
the "NOTICES TO TENANTS");
(5) Appropriate documentation to evidence the assignment and
assumption of the Loan Documents as may be reasonably required in order to
effectuate the release, assignment and assumption transactions respecting
the Loan Documents as contemplated in this Agreement; and
(6) Evidence reasonably satisfactory to Buyer and Escrow Holder
respecting the due organization of Seller and the due authorization and
execution of this Agreement and the documents required to be delivered
hereunder; and
(7) Such additional documents as may be reasonably required by
Buyer and Escrow Holder in order to consummate the transactions hereunder
(provided the same do not materially increase the costs to, or liability or
obligations of, Seller in a manner not otherwise provided for herein).
B. DELIVERIES TO ESCROW BY BUYER. On or before the Close of
Escrow, Buyer shall deliver or cause to be delivered to Escrow Holder the
following:
(1) The Closing Payment, which amount shall be delivered to Escrow
Holder by wire transfer of immediately available federal funds in
accordance with separate wire instructions to be given by Escrow Holder
prior to the Close of Escrow;
(2) Two counterparts of a duly executed and acknowledged Bill of
Sale, Assignment and Assumption Agreement;
(3) Appropriate documentation to evidence the assignment and
assumption of the Loan Documents as may be reasonably required in order to
effectuate the release, assignment and assumption transactions respecting
the Loan Documents as contemplated in this Agreement;
(4) Evidence reasonably satisfactory to Seller and Escrow Holder
respecting the due organization of Buyer and the due authorization and
execution of this Agreement and the documents required to be delivered
hereunder; and
(5) Such additional documents as may be reasonably required by
Seller and Title Company in order to consummate the transactions hereunder
(provided the same do not materially increase the costs to, or liability or
obligations of, Buyer in a manner not otherwise provided for herein).
C. THE CLOSING. Escrow Holder shall close the Escrow on the
Closing Date by (i) causing the Deed to be recorded in the Recorder's
Office of the County of Los Angeles, (ii) delivering one fully-executed
Bill of Sale, Assignment and Assumption Agreement to Seller, and (iii)
delivering the Closing Payment and the Deposit to Seller and the other
funds and documents as provided in subparagraph F below, WHEN AND ONLY WHEN
each of the following conditions has been satisfied:
(1) All funds and documents described in subparagraphs A and B
above have been delivered to Escrow Holder;
(2) Title Company is prepared to deliver the Owner's Policy; and
(3) Title Company has received a written authorization notice from
each of Buyer and Seller (and each of Buyer and Seller shall be obligated
to deliver such authorization notice as soon as it is reasonably satisfied
that the other party has delivered the items required to be delivered by
such other party hereunder).
D. DISTRIBUTION OF FUNDS AND DOCUMENTS
(1) All funds received by Escrow Holder under this Paragraph 5
shall be, until Close of Escrow, kept on deposit and invested in Approved
Investments. Interest accruing to such account prior to the Close of
Escrow shall be for the account of Buyer; interest accruing on all sums due
Seller after the Close of Escrow shall be for the account of Seller. All
disbursements by Escrow Holder to Seller shall be made by federal wire
transfer in accordance with wiring instructions to be given by Seller prior
to the Close of Escrow.
(2) Upon Close of Escrow, Escrow Holder shall disburse the Closing
Payment and the Deposit to Seller.
(3) Escrow Holder shall cause the recorded Deed and an original
Bill of Sale, Assignment and Assumption Agreement to be delivered to Buyer.
(4) Escrow Holder shall, immediately after the Close of Escrow,
cause copies of all other documents delivered hereunder to be delivered to
Seller by reputable overnight courier.
(5) Escrow Holder shall, immediately after Close of Escrow, cause
an original Owner's Policy, an original Certificate, an original Seller's
Closing Certificate, (if delivered by Manager) an original Manager's
Closing Certificate, and original Bill of Sale, Assignment and Assumption
Agreement and copies of all other documents delivered hereunder to be
delivered to Buyer by reputable overnight courier.
E. CLOSING COSTS. Seller shall pay (i) the costs of the Survey
and the recertification thereof to Buyer, (ii) the premium for the Owner's
Policy (but only to the extent attributable to standard CLTA coverage),
(iii) one-half of any city or county documentary transfer tax payable in
connection with the Deed, (iv) one-half of the escrow fee payable to Escrow
Holder in connection with the transactions contemplated hereby, and (v) all
costs and expenses of or related to Seller's Engineer. Buyer shall pay
(i) any premium for Owner's Policy in excess of those attributable to
standard CLTA coverage (including, without limitation, any additional
charge for an owner's title binder in lieu of a policy of title insurance,
if Buyer chooses in its sole and absolute discretion to obtain such title
binder), (ii) one-half of any city or county documentary transfer tax
payable in connection with the Deed, (iii) any fees, costs or expenses
payable to the existing lender under the Loan Documents (including, without
limitation, any attorneys' fees and costs) in connection with the
Beneficiary's Statement and Buyer's assumption of the indebtedness
evidenced and secured by the Loan Documents (including, without limitation,
an assumption fee of approximately $250,000), (iv) all charges for or in
connection with the recording and filing of any instrument or document
provided herein to be recorded or filed, and all costs and expenses of or
related to Buyer's due diligence reviews, inspections and examinations
(including costs and expenses of Buyer's Engineer and the Laboratory, and
all other costs associated with the Remaining Environmental Analysis), and
(v) one-half of the escrow fee payable to Escrow Holder in connection with
the transactions contemplated hereby. Seller and Buyer shall pay their
respective shares of prorations as hereinafter provided. Any other costs
and expenses relating to the transactions contemplated hereby shall be
apportioned in the manner customary in Los Angeles County, California.
F. PRORATIONS.
(1) ITEMS TO BE PRORATED. The following shall be prorated between
Seller and Buyer as of the Close of Escrow:
(a) All real estate taxes and assessments on the Property for the
current year. In no event shall Seller be charged with or be responsible
for any increase in the taxes on the Property resulting from the sale of
the Property or from any improvements made or leases entered into on or
after the Close of Escrow. In the event that any assessments on the
Property are payable in installments, then the installment for the current
period shall be prorated (with Buyer assuming the obligation to pay any
installments due after the Close of Escrow).
(b) All fixed and additional rentals under the tenant leases,
security deposits and other tenant charges. Seller shall deliver or
provide a credit in an amount equal to all prepaid rentals for periods
after the Close of Escrow and all security deposits (to the extent the
foregoing are held by Seller and are not applied or forfeited prior to the
Close of Escrow) to Buyer on the Close of Escrow. Rents which are
delinquent as of the Close of Escrow shall not be prorated on the Close of
Escrow. Buyer shall include such delinquencies in its normal billing and
shall diligently pursue the collection thereof in good faith after the
Close of Escrow (but Buyer shall not be required to litigate or declare a
default in any tenant lease). To the extent Buyer receives rents on or
after the Close of Escrow, such payments shall be applied first toward then
current rent owed to Buyer in connection with the applicable tenant lease
for which such payments are received, and any excess monies received shall
be applied toward the payment of any delinquent rents, with Seller's share
thereof being promptly delivered to Seller. Buyer may not waive any
delinquent rents nor modify a tenant lease so as to reduce or otherwise
affect amounts owed thereunder for any period in which Seller is entitled
to receive a share of charges or amounts without first obtaining Seller's
written consent. Seller hereby reserves the right to pursue any remedy
against any tenant owing delinquent rents and any other amounts to Seller.
Buyer shall reasonably cooperate with Seller in any collection efforts
hereunder (but shall not be required to litigate or declare a default in
any tenant lease). With respect to delinquent rents and any other amounts
or other rights of any kind respecting tenants who are no longer tenants of
the Property as of the Close of Escrow, Seller shall retain all rights
relating thereto. Following the Close of Escrow, Seller shall not attempt
to terminate any tenant lease or otherwise declare a default under any
tenant lease with respect to the Property by reason of any default by a
tenant in connection with the Tenant Loans. From the date hereof until the
Close of Escrow, Seller shall not apply any security deposit toward rental
or other obligations of the tenant under the following tenant leases (and
only such leases) by reason of any default under such leases: Fred Sands
Realty; Benson, Minkow & Shapiro; and Michael Freeman.
(c) All operating expenses.
(d) Interest under the Loan Documents.
(2) CALCULATION. The prorations and payments shall be made on the
basis of a written statement submitted to Buyer and Seller by Escrow Holder
prior to the Close of Escrow and approved by Buyer and Seller. In the
event any prorations or apportionments made under this subparagraph F shall
prove to be incorrect for any reason, then any party shall be entitled to a
prompt adjustment to correct the same (which adjustment shall be made in
any event within 15 days of submission of proof to the owing party
establishing the other party's right to an adjustment hereunder). Any item
which cannot be finally prorated because of the unavailability of
information shall be tentatively prorated on the basis of the best data
then available and reprorated promptly when the information is available
(but in any event within 15 days of submission of proof to the owing party
establishing the other party's right to an adjustment or reproration
hereunder). Without limitation of the foregoing, Buyer shall bill tenants
as appropriate for rental adjustments and reconciliations, if any, due to
the landlord under tenant leases respecting calendar year 1996 not later
than April 30, 1997, and shall concurrently provide Seller with a copy of
any such bills and Buyer's supporting documentation therefor.
(3) LEASING COMMISSIONS AND TENANT IMPROVEMENT ALLOWANCES.
(a) Notwithstanding the provisions of Paragraph 5F(1)(b) above,
Seller shall (subject to subsection (b) immediately below) be responsible
for the payment of any leasing commissions and the cost of any tenant
improvements (including, without limitation, cost of build-out or refitting
tenant spaces and allowances for tenant space improvements) with respect to
(i) tenant leases or renewals, options to extend, extensions or
modifications of existing tenant leases, exercised or entered into prior to
the date of this Agreement, and (ii) tenant leases or renewals, options to
extend, extensions or modifications of existing tenant leases, exercised or
entered into after the date of this Agreement but prior to the Close of
Escrow that are not entered into in accordance with Paragraph 7D(3) below
(provided that, nothing contained herein shall waive any right or remedy of
Buyer in connection with any breach by Seller of the provisions of
Paragraph 7D(3)). Buyer shall (subject to subsection (b) immediately
below) be responsible for (and shall not be entitled to a credit at Close
of Escrow by reason of) the payment of any leasing commissions and the cost
of any tenant improvements (including, without limitation, the cost of
build-out or refitting tenant spaces and allowances for tenant space
improvements) with respect to (i) tenant leases or renewals, options to
extend, extensions or modifications of existing tenant leases, exercised or
entered into after the Close of Escrow, and (ii) tenant leases, or
renewals, options to extend, extensions or modifications of existing tenant
leases, exercised or entered into after the date of this Agreement but
prior to the Close of Escrow that are entered into in accordance with
Paragraph 7D(3) below, regardless of when any such leasing commissions or
tenant improvement costs or allowances are payable or come due.
(b) Buyer shall be responsible for, and shall accept the tenant
leases and the Property subject to (and shall not be entitled to a credit
at the Close of Escrow by reason of), any free rent periods in connection
with (1) tenant leases, renewals, options, modifications and extensions
thereof exercised or entered into prior to the date of this Agreement
(subject to the provisions set forth below in subparagraph (c)), (2) tenant
leases, renewals, options, modifications and extensions thereof exercised
or entered into after the Close of Escrow, and (3) tenant leases, renewals,
options, modifications and extensions thereof exercised or entered into
after the date of this Agreement but prior to the Close of Escrow that are
entered into in accordance with Paragraph 7D(3) below.
(c) Notwithstanding subparagraphs (a) and (b) above, Seller shall
be responsible for payment of (1) any tenant improvement allowance listed
in Exhibit "L" attached hereto with respect to any tenant lease existing as
of the date of this Agreement that may arise by virtue of any tenant's
election under such existing tenant lease to convert an existing free rent
concession into an additional tenant improvement allowance for such tenant,
and (2) any free rent concession listed in Exhibit "L" attached hereto with
respect to any tenant lease existing as of the date of this Agreement that
may arise by virtue of any tenant's election under such existing tenant
lease to convert an existing tenant improvement allowance into an
additional free rent concession for such tenant. Buyer shall be
responsible for any other tenant improvement allowance with respect to any
tenant lease existing as of the date of this Agreement that may arise by
virtue of any tenant's election under such existing tenant lease to convert
an existing free rent concession into an additional tenant improvement
allowance for such tenant, and any other free rent concession with respect
to any tenant lease existing as of the date of this Agreement that may
arise by virtue of any tenant's election under such existing tenant lease
to convert an existing tenant improvement allowance into an additional free
rent concession for such tenant.
(d) Buyer shall be responsible for any items of an inducement
nature listed in Exhibit "K" attached hereto under existing tenant leases.
Seller shall pay to tenants at or before the Close of Escrow items of an
inducement nature other than those listed in Exhibit "K" attached hereto
under existing tenant leases (other than rent concessions [including,
without limitation, any base year concession, and below-market rent
concession], and tenant improvement allowances or concessions).
(e) Each party to this Agreement shall indemnify the other party
against and hold the other party harmless (using counsel reasonably
satisfactory to such other party) from any and all damages, liabilities,
costs, expenses and losses (including, but not limited to, attorneys' fees
and costs) arising out of any action for the collection of leasing
commissions, tenant improvements costs or allowances, or any other matters
that are such party's responsibility pursuant to subsections (a), (b), (c)
or (d) above.
G. DELIVERY OF POSSESSION. It shall be a condition to Buyer's
obligation to close the transaction contemplated hereby that Seller shall
have delivered or surrendered possession of the Property to Buyer at the
Close of Escrow (unless otherwise expressly provided herein), including,
without limitation, the following items, to the extent in the possession of
Seller or "Manager" (as defined below):
(1) TENANT LEASES. Originals of all of the tenant leases or, if an
original is unavailable, a copy thereof;
(2) SERVICE CONTRACTS. Originals of all service contracts or, if
an original is unavailable, a copy thereof;
(3) RECORDS AND PLANS. Originals of all operating statements and
financial books and records located at the Property or in the possession of
Manager in connection with the operation of the Property (including,
without limitation, all income and expense statements, year-end financial
and monthly operating statements), and the original Records and Plans or,
if an original is unavailable, a copy thereof;
(4) KEYS. Keys to all entrance doors to the improvements and keys
to all Personal Property located on the Property, which keys shall be
properly tagged for identification; and
(5) LICENSES AND PERMITS. Originals of all licenses and permits
or, to the extent an original of a license or permit is unavailable, a copy
thereof.
6. CONDEMNATION OR DESTRUCTION OF PROPERTY. In the event that,
after the date hereof but prior to the Close of Escrow, either any portion
of the Property is taken pursuant to eminent domain proceedings or any of
the improvements on the Property are damaged or destroyed by any casualty,
Seller shall have no obligation to repair or replace any such damage or
destruction. Seller shall, concurrently with the Close of Escrow, assign
to Buyer all claims of Seller respecting any condemnation or casualty
insurance coverage, as applicable, and all condemnation proceeds or
proceeds from any such casualty insurance received by Seller on account of
any casualty (the damage from which shall not have been repaired by Seller
prior to the Close of Escrow), as applicable; provided that, Seller shall
pay for any applicable deductible (other than any deductible in connection
with earthquake or seismic activity insurance) in connection with such
casualty insurance. Promptly following execution of this Agreement, Seller
shall cause Buyer to be named as an additional insured (pursuant to an
"ATIMA" endorsement) on each policy of casualty insurance maintained by
Seller with respect to the Property. In the event the condemnation award
or the cost of repair of damage to the Property on account of a casualty,
as applicable, shall exceed $100,000, Buyer may, at its option, terminate
this Agreement by notice to Seller, given on or before the Close of Escrow.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
(1) GENERAL DISCLAIMER. To induce Seller to enter into this
Agreement, Buyer acknowledges that: (a) except as set forth in this
Agreement and any other document executed and delivered in connection with
the Close of Escrow ("CLOSING DOCUMENTS"), no representation, warranty,
guarantee, promise, statement or estimate of any nature whatsoever upon
which Buyer is relying, whether written or oral, express or implied, in
fact or in law, has been made by Seller, any agent, employee, attorney-in-
fact or at law, or other person representing or purporting to represent
Seller or otherwise, including, without limitation, the Manager; (b) Buyer
will have the opportunity to examine, review and inspect all matters which
in Buyer's judgment bear upon the Property and its value and suitability
for Buyer's purposes; and (c) except as to matters specifically set forth
in this Agreement or in the other Closing Documents, Buyer will acquire the
Property solely on the basis of its own physical and financial
examinations, reviews and inspections and the title insurance protection
afforded by the Owner's Policy. Without limitation thereon, except as
specifically set forth otherwise in this Agreement or in the Closing
Documents, the sale of the Property hereunder is and will be made on an "AS
IS, WHERE IS, WITH ALL FAULTS" basis.
(2) LIMITED REPRESENTATIONS AND WARRANTIES OF SELLER. Subject to
the provisions of Paragraph 7A(1) above, Seller hereby represents and
warrants as follows:
(a) DUE AUTHORITY. This Agreement and all agreements, instruments
and documents herein provided to be executed or to be caused to be executed
by Seller are and on the Close of Escrow will be duly authorized, executed
and delivered by and are binding upon Seller. Seller is a limited
partnership, duly organized and validly existing under the laws of the
State of California, and is duly authorized and qualified to do all things
required of it under this Agreement. Seller has the capacity and authority
to enter into this Agreement and consummate the transactions herein
provided.
(b) ACCURACY OF MANAGER'S CERTIFICATE. Except as otherwise
disclosed to Buyer in writing prior to the date hereof, to Seller's
knowledge the statements contained in the "Manager's Certificate" (as
defined below) are true and correct as of the date made. For purposes of
this Agreement, "Seller's knowledge" or any similar phrase shall mean the
present actual knowledge of Andrea M. Backman, without the imputation of
the knowledge of any other person (including, without limitation, Manager),
and without any duty of inquiry or investigation. Andrea M. Backman is the
portfolio manager and individual at JMB Realty Corporation with primary
responsibility for administration and supervision of the Property, and has
been involved with administration of the Property since July of 1987.
"MANAGER'S CERTIFICATE" means that certain certificate, captioned
"MANAGER'S CERTIFICATE", dated as of July 26, 1996, executed by Financial
Management Group, Incorporated, a California corporation ("MANAGER"),
attached hereto as Exhibit "G". Seller shall have no liability or
responsibility for any statements made by Manager in the Manager's
Certificate or otherwise (other than Seller's representation and warranty
set forth in the first sentence of this Paragraph 7A(2)(b)), Buyer
acknowledging and agreeing that Manager has no authority to act on behalf
of or to bind Seller in connection with the transactions contemplated by
this Agreement.
(c) LIST OF LOAN DOCUMENTS. Exhibit "B" attached hereto and made a
part hereof contains a true, complete and accurate list of all of the
documents evidencing, securing or guaranteeing the Loan (the "LOAN
DOCUMENTS"). Seller has made available, or will make available for Buyer's
examination during the Due Diligence Period, true, correct and complete
copies of the Loan Documents. Seller shall be released from any liability
arising out of a breach of the representation and warranty contained in
this subparagraph (c) upon Buyer's receipt of Lender's written confirmation
of the foregoing representation.
(d) RENT ROLL. Exhibit "H" attached hereto and made a part hereof
(i) is a true, complete and accurate list of all tenants at the Property,
identifying such tenants by name and the respective space or suite number
of each such tenant, and (ii) in all material respects truly, accurately
and completely sets forth the current minimum monthly rent for each tenant,
the start and end dates with respect to each tenant lease, the rentable
square footage with respect to each such lease, and the security deposit
under each lease held by Seller as of the date hereof (the "RENT ROLL").
Seller shall be released from any liability under subparagraph 7A(d)(ii) as
to any tenant lease for which an estoppel certificate confirming such
representations is delivered.
(e) LITIGATION. Except as may be set forth in Exhibit "I" attached
hereto or as otherwise disclosed to Buyer in the Manager's Certificate, (i)
Seller has not received any written notice of any pending or threatened
claim, action, arbitration, litigation, suit, condemnation or other
proceeding against Seller or affecting the Property, at law or in equity,
or before or by any foreign, federal, state, municipal or other
governmental department, court, arbitration panel, commission, board,
bureau, agency or instrumentality, and (ii) Seller has not received any
written notice of any court order, judgment or court decree of any foreign,
federal, state or local court or governmental authority or agency or
arbitration panel which applies to Seller or which affects the Property.
(f) COMPLIANCE. Except as may be set forth in Exhibit "I" attached
hereto or as otherwise disclosed to Buyer in the Manager's Certificate,
Seller has not received any written notice from any governmental authority
having jurisdiction over the Property, or any insurance company, or any
tenant or other occupant of the Property, to the effect that the Property
is not in compliance with applicable laws and ordinances.
(g) SERVICE AGREEMENTS. Except as described in or as otherwise
disclosed to Buyer in the Manager's Certificate, Exhibit "J" attached
hereto and made a part hereof sets forth a list of all of the service
agreements and any other contracts and any modification thereof ("SERVICE
AGREEMENTS") (other than any tenant leases, permitted title exceptions or
agreements respecting payment of leasing commissions) relating to the
Property which will be in force on the Close of Escrow and binding on Buyer
or the Property. Except as described in or as otherwise disclosed to Buyer
in the Manager's Certificate or in Exhibit "J" attached hereto, Seller has
not received any written notice of any material default by any party to any
of the Service Agreements.
(h) ENVIRONMENTAL MATTERS. Except as (i) set forth in that certain
Limited Asbestos Survey Report, dated September 11, 1995 prepared by Fugro
West, Inc., with respect to the Property, (ii) set forth in that certain
Phase I Environmental Site Assessment dated June 19, 1996, prepared by
Lindmark Engineering, (iii) set forth in any environmental or engineering
reports or studies which may be delivered to or obtained by Buyer during
the Due Diligence Period, or (iv) otherwise disclosed to Buyer in the
Manager's Certificate, Seller has received no written notice of the
existence, deposit, storage, removal, burial or discharge of any "Hazardous
Material" (as defined below), other than motor oil and gasoline contained
in or discharged from the engines, exhaust systems, gas tanks or fuel
supply systems in vehicles not used primarily for the transport of motor
oil or gasoline, at, upon, under, within or adjacent to the Property, in an
amount which would, as of the date hereof, give rise to an "Environmental
Compliance Cost" (as defined below). The term "HAZARDOUS MATERIAL" shall
mean (i) asbestos, (ii) any chemicals, flammable substances or explosives,
any radioactive materials (including radon) or other materials or
substances which have, as of the date hereof, been determined to be
hazardous or toxic by any applicable federal, state or local government law
or by the U.S. Environmental Protection Agency, the U.S. Department of
Transportation, and/or any instrumentality now or hereafter authorized to
regulate materials and substances in the environment which has jurisdiction
over the Property ("ENVIRONMENTAL AGENCY"), and (iii) any oil, petroleum or
petroleum derived substance, any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude
oil; provided, however, that the term "Hazardous Material" shall not
include Hazardous Materials used in the ordinary course of the business of
a tenant at the Property under a written tenant lease (such as gasoline in
automobiles or the storage or warehousing of household or normal business
items, such as aerosol cans or other common products) and in compliance
with all applicable environmental laws or the regulations of any
Environmental Agency. The term "ENVIRONMENTAL COMPLIANCE COST" means any
reasonable out-of-pocket cost, fee or expense incurred directly to satisfy
any requirement imposed by an Environmental Agency or applicable federal,
state and local laws and regulations relating to any Hazardous Material.
Buyer shall (to the extent not previously delivered) deliver to Seller at
or prior to the Close of Escrow a list of any environmental or engineering
reports or studies which may be delivered to or obtained by Buyer during
the Due Diligence Period, and a statement of any other material adverse
environmental conditions discovered by Buyer prior to the Close of Escrow.
(i) PERMITS AND LICENSES. Except as may be set forth in Exhibit
"I" attached hereto or as otherwise disclosed to Buyer in the Manager's
Certificate, Seller has not received any written notice that the Property
lacks any building permits, certificates of occupancy, business licenses
and, without limitation, all other licenses, permits, certificates and
authority required in connection with the construction, use or occupancy of
the Property, and has not received any written notice that any space at the
Property has been leased in violation of any certificate of occupancy.
(j) AIR RIGHTS. Except as such matters may be described in any
preliminary title report, title commitment or owner's title policy with
respect to the Property delivered to Buyer prior to the Close of Escrow, or
except as may be set forth in any lease with respect to a portion of the
Property, Seller has not sold, transferred, conveyed, or entered into any
agreement regarding "air rights," "excess floor area ratio" or other
development rights or restrictions relating to the Property that will be
binding on Buyer after the Close of Escrow.
(k) PERSONAL PROPERTY. Except as described in any (i) lease of any
part of the Personal Property, which lease is delivered or made available
to Buyer during the Due Diligence Period, (ii) any instrument recorded or
filed in the Recorder's Office of the County of Los Angeles or the Office
of the Secretary of State for the State of California (including the
existing UCC-1 financing statement on file with respect to the Orix lease
of a security system at the Property), or (iii) as otherwise disclosed to
Buyer in the Manager's Certificate, the Personal Property is free of all
liens and encumbrances created by, through or under Seller that will be
binding upon Buyer or the Personal Property after the Close of Escrow.
(k) SELLER'S ADDITIONAL LEASE LIST. The information set forth in
the Seller's Additional Lease List, if any, will be true, accurate and
complete in all material respects as of the date thereof.
B. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby
represents and warrants to Seller that: (i) this Agreement and all
agreements, instruments and documents herein provided to be executed or to
be caused to be executed by Buyer are and on the Close of Escrow will be
duly authorized, executed and delivered by and are binding upon Buyer;
(ii) Buyer is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Massachusetts, and is duly
authorized and qualified to do all things required of it under this
Agreement; and (iii) Buyer has the capacity and authority to enter into
this Agreement and consummate the transactions herein provided.
C. SURVIVAL. Any cause of action of a party for a breach of the
foregoing representations and warranties (including, without limitation,
any claim by Buyer for indemnification under Paragraph 8B arising from a
breach of the foregoing representations and warranties) shall survive until
the date that is one (1) year after the Close of Escrow, at which time such
representations and warranties (and any cause of action resulting from a
breach thereof not then in litigation) shall terminate; provided that, such
one (1) year period shall automatically be extended as to any claim in
litigation as of the last day of such one (1) year period until such claim
is subject to full and final settlement, judgment or other resolution (the
foregoing one (1) year survival period, as the same may be extended as
provided above, is herein referred to as the "SURVIVAL PERIOD").
Notwithstanding the foregoing, if Buyer shall have actual knowledge as of
the Close of Escrow that any of the representations or warranties of Seller
contained herein are false or inaccurate, and Buyer nonetheless closes the
transactions hereunder and acquires the Property, then Seller shall have no
liability or obligation respecting such false or inaccurate representations
or warranties (and any cause of action resulting therefrom shall terminate
upon such closing hereunder).
D. INTERIM COVENANTS OF SELLER. Until the Close of Escrow or the
sooner termination of this Agreement:
(1) Seller shall maintain the Property in the same manner as prior
hereto pursuant to its normal course of business (such maintenance
obligations not to include extraordinary capital expenditures or
expenditures not incurred in such normal course of business), subject to
reasonable wear and tear and further subject to destruction by casualty or
other events beyond the control of Seller.
(2) Seller shall not modify or terminate any existing Service
Agreements, or enter into any new Service Agreement, without the prior
consent of Buyer, except those deemed reasonably necessary by Seller which
are cancelable on 30 days' notice and without payment of any fee by Buyer.
(3) Seller shall continue to offer the Property for lease in the
same manner as prior hereto pursuant to its normal course of business and
shall keep Buyer reasonably informed as to the status of leasing prior to
the Close of Escrow. Seller shall not enter into any new leases or
material modifications of existing leases, or terminate any existing lease
except upon a material default by the tenant thereunder, without the
consent of Buyer (which consent will not be unreasonably withheld or
materially delayed). In no event shall Seller have any obligation to enter
into any new lease or modify any existing lease unless Buyer shall agree to
pay or reimburse Seller on the Close of Escrow for all tenant improvement
costs and leasing commissions incurred by Seller under or in connection
therewith (Buyer's agreement to pay or reimburse for such amounts not to be
unreasonably withheld). In the event that Seller shall desire to enter
into any new lease or material modification of an existing lease, or
terminate any existing lease except upon a material default by the tenant
thereunder, Seller shall deliver written notice thereof to Buyer together
with a description of the material terms thereof (collectively, the "LEASE
NOTICE"). If Buyer shall fail to provide written notice of disapproval of
the transactions contemplated by the Lease Notice to Seller within three
(3) business days after Buyer's receipt of the Lease Notice, then Buyer
shall be conclusively deemed to have approved of the transactions
contemplated by the Lease Notice.
(4) During the period from the date of this Agreement through the
Close of Escrow, Seller shall not voluntarily transfer, divest itself of,
or otherwise materially impair, title to the Property or any part thereof,
except (a) in connection with a condemnation or eminent domain proceeding
described in Paragraph 6 hereof, or (b) as may be required by law,
ordinance, rule or regulation; provided that, nothing contained herein
shall prohibit or restrict Seller from using, transferring or disposing of
any Personal Property in the ordinary course of business (provided that, if
any such Personal Property is sold or transferred, the same shall be
replaced with Personal Property of similar quality and utility).
(5) Seller hereby agrees, through and including the Close of
Escrow, at Seller's sole cost and expense, to: (a) use reasonable efforts
to keep all existing insurance policies (other than any policies for
earthquake or seismic activity insurance) affecting the Property in full
force and effect (provided the same are available at commercially
reasonable rates); (b) deliver to Buyer promptly after preparation thereof
a copy of any operating statements respecting the Property that are
prepared after the date of this Agreement; and (c) keep Buyer timely
advised of any repair or improvement required to keep the Property in such
condition as aforesaid and which costs in excess of Twenty-Five Thousand
Dollars ($25,000).
(6) Seller shall use reasonable efforts (without the obligation to
incur any cost or expense) to cause Manager to deliver an updated Manager's
Certificate to Buyer at the Close of Escrow, which updated Manager's
Certificate is to be dated not more than three (3) business days prior to
the Close of Escrow (any such updated certificate of Manager being referred
to herein as the "MANAGER'S CLOSING CERTIFICATE").
8. INDEMNIFICATION.
A. BY BUYER. Buyer shall hold harmless, indemnify and defend
Seller from and against: (1) any and all third party "Claims" (as defined
below) for Buyer's torts or breaches of contract related to the Property
and occurring on or after the Close of Escrow; (2) any and all loss or
damage to persons or property or third party Claims in any way arising from
Buyer's inspections or examinations of the Property (including the
Remaining Environmental Analysis, other than any below-grade damage to the
Property inherent in and necessary for the installation of the Well) prior
to the Close of Escrow; (3) any and all Claims arising from a breach by
Buyer of any of its covenants under this Agreement first arising after the
Close of Escrow; (4) any Claim arising by reason of a breach of Buyer's
representations and warranties contained in Paragraph 7B; and (5) all costs
and expenses, including reasonable attorney's fees, incurred by Seller as a
result of the foregoing.
B. BY SELLER. Seller shall hold harmless, indemnify and defend
Buyer from and against: (1) any and all third party Claims for Seller's
torts or breaches of contract related to the Property and occurring prior
to the Close of Escrow; (2) any and all Claims arising from a breach by
Seller of any of its covenants under this Agreement first arising after the
Close of Escrow; (3) subject to Paragraphs 7C and 9 hereof, any Claim
arising by reason of a breach of Seller's representations and warranties
contained in Paragraph 7A(2); and (4) all costs and expenses, including
reasonable attorney's fees, incurred by the Buyer as a result of such
Claims. The foregoing indemnity shall not cover any matters relating to
title or marketability of title to the Land or the improvements thereon
(Buyer relying on the coverage provided by the Owner's Policy as to such
matters.)
C. GENERALLY. Each indemnification under this Agreement shall be
subject to the following provisions: The indemnitee shall notify
indemnitor of any such Claim against indemnitee within 30 days after it has
notice of such Claim, but failure to notify indemnitor shall in no case
prejudice the rights of indemnitee under this Agreement unless indemnitor
shall be prejudiced by such failure and then only to the extent of such
prejudice. Should indemnitor fail to discharge or undertake to defend
indemnitee against such liability within 10 days after the indemnitee gives
the indemnitor written notice of the same, then indemnitee may settle such
liability, and indemnitor's liability to indemnitee shall be conclusively
established by such settlement, the amount of such liability to include
both the settlement consideration and the reasonable costs and expenses,
including attorneys' fees, incurred by indemnitee in effecting such
settlement. The parties' respective indemnification obligations under this
Paragraph 8 shall survive the Closing or the earlier termination of this
Agreement.
D. DEFINITION. "CLAIM" or "CLAIMS" means any obligation,
liability, claim (including any claim for damage to property or injury to
or death of any persons), lien or encumbrance, loss, damage, cost or
expense.
9. DISPOSITION OF DEPOSIT.
A. IF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT SHALL
CLOSE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, THE DEPOSIT SHALL BE
APPLIED AS A CREDIT TOWARD THE PURCHASE PRICE.
B. IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED
(i) SOLELY BY REASON OF SELLER'S DEFAULT UNDER THIS AGREEMENT, OR (ii) THE
FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED IN PARAGRAPH 4 (OTHER
THAN PARAGRAPH 4H) HEREOF, OR (iii) THE TERMINATION OF THIS AGREEMENT
PURSUANT TO PARAGRAPH 6 HEREOF, THEN TITLE COMPANY SHALL IMMEDIATELY RETURN
TO BUYER THE DEPOSIT AND BUYER AND SELLER SHALL HAVE NO FURTHER OBLIGATIONS
HEREUNDER, AND SELLER SHALL BE FREE TO OFFER THE PROPERTY FOR SALE TO THIRD
PARTIES.
C. NOTWITHSTANDING THE FOREGOING, IF THE TRANSACTION SHALL
NOT BE CLOSED SOLELY BY REASON OF SELLER'S DEFAULT UNDER THIS AGREEMENT,
BUYER'S SOLE AND EXCLUSIVE REMEDY FOR ANY SUCH DEFAULT SHALL BE LIMITED TO
EITHER (A) TERMINATION OF THIS AGREEMENT, AND RETURN OF THE DEPOSIT, OR (B)
BRINGING A CAUSE OF ACTION AGAINST SELLER FOR SPECIFIC PERFORMANCE OF THIS
AGREEMENT, BUT NO OTHER ACTION FOR DAMAGES SHALL BE PERMITTED.
D. IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED
SOLELY BY REASON OF BUYER'S DEFAULT HEREUNDER, THEN SELLER SHALL BE
ENTITLED TO RECEIVE THE DEPOSIT AS FULL COMPENSATION AND LIQUIDATED DAMAGES
UNDER AND IN CONNECTION WITH THIS AGREEMENT, AND AS SELLER'S SOLE REMEDY BY
REASON OF THE FOREGOING. IN CONNECTION WITH THE FOREGOING, THE PARTIES
RECOGNIZE THAT SELLER WILL INCUR EXPENSES IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THAT THE PROPERTY MAY BE
REMOVED FROM THE MARKET; FURTHER, THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER CAUSED BY THE
BREACH BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OF THE CONSUMMATION OF
THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE AMOUNT OF
COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER'S BREACH OR
DEFAULT. BUYER'S INITIALS: ____________
SELLER'S INITIALS: ____________
10. MISCELLANEOUS.
A. BROKERS.
(1) Except as provided in subparagraph (2) below, Seller
represents and warrants to Buyer, and Buyer represents and warrants to
Seller, that no broker or finder has been engaged by it, respectively, in
connection with any of the transactions contemplated by this Agreement or
to its knowledge is in any way connected with any of such transactions. In
the event of a claim for broker's or finder's fee or commissions in
connection herewith, then Seller shall indemnify, protect, defend and hold
Buyer harmless from and against the same if it shall be based upon any
statement or agreement alleged to have been made by Seller, and Buyer shall
indemnify, protect, defend and hold Seller harmless from and against the
same if it shall be based upon any statement or agreement alleged to have
been made by Buyer. The parties' respective indemnification obligations
under this paragraph shall survive the closing of the transaction
contemplated hereunder or the earlier termination of this Agreement.
(2) Buyer has agreed to pay Financial Management Group,
Incorporated, and The Brookhurst Company (the "BROKERS") certain
compensation in connection with the transactions contemplated by this
Agreement as follows: if and only if the transaction contemplated hereby
shall close in accordance with the terms of this Agreement, Buyer shall pay
Brokers a commission subject to the terms and conditions of a separate
written agreement between Buyer and Brokers, and Buyer shall indemnify,
protect, defend and hold Seller harmless from the same. Brokers are acting
in a limited capacity with respect to the transactions contemplated by this
Agreement, and accordingly, Brokers shall not be deemed the agent of Buyer
in connection with the transactions contemplated by this Agreement. In no
event shall Brokers' knowledge be imputed to Buyer or its representatives,
employees, or agents.
B. LIMITATION OF LIABILITY.
(1) Notwithstanding anything to the contrary contained
herein, if the closing of the transactions hereunder shall have occurred
(and Buyer shall not have waived, relinquished or released any applicable
rights in further limitation), the aggregate liability of Seller arising
pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express or
implied) of Seller under this Agreement (or any document executed or
delivered in connection herewith) shall not exceed $750,000.
(2) No constituent partner in or agent of Seller, nor any
advisor, trustee, director, officer, employee, beneficiary, shareholder,
participant, representative or agent of any corporation or trust that is or
becomes a constituent partner in Seller (including, but not limited to, JMB
First Financial Associates, JMB Income Properties, Ltd.-XII, JMB Income
Properties, Ltd.-XIII, JMB Realty Corporation, and any individual named in
Paragraph 7A(2) hereof) shall have any personal liability, directly or
indirectly, under or in connection with this Agreement or any agreement
made or entered into under or pursuant to the provisions of this Agreement,
or any amendment or amendments to any of the foregoing made at any time or
times, heretofore or hereafter, and Buyer and its successors and assigns
and, without limitation, all other persons and entities, shall look solely
to Seller's assets for the payment of any claim or for any performance, and
Buyer, on behalf of itself and its successors and assigns, hereby waives
any and all such personal liability. Notwithstanding anything to the
contrary contained in this Agreement, neither the negative capital account
of any constituent partner in Seller (or in any other constituent partner
of Seller), nor any obligation of any constituent partner in Seller (or in
any other constituent partner of Seller) to restore a negative capital
account or to contribute capital to Seller (or to any other constituent
partner of Seller), shall at any time be deemed to be the property or an
asset of Seller or any such other constituent partner (and neither Buyer
nor any of its successors or assigns shall have any right to collect,
enforce or proceed against or with respect to any such negative capital
account of partner's obligation to restore or contribute).
(3) Notwithstanding clause (2) above, the limitation of
liability set forth in clause (2) above shall be inapplicable with respect
to JMB First Financial Associates, JMB Income Properties, Ltd.-XII, and JMB
Income Properties, Ltd.-XIII (and only with respect to such entities, but
NOT with respect to the general partners thereof or any other person or
entity) if and only if (x) Seller shall fail to maintain or reserve liquid
assets (i.e, cash, United States Treasury obligations, United States
Treasury-backed repurchase agreements issued by a major money center
banking institution reasonably acceptable to Seller, and similarly liquid
investments) ("LIQUID ASSETS") of not less than $750,000 during the
Survival Period, or (y) at any time after the Close of Escrow (whether
during or after the Survival Period) Buyer asserts a Claim against Seller
arising pursuant to the indemnifications, covenants or other obligations
(whether express or implied) of Seller under this Agreement (or any
document executed or delivered in connection herewith), excluding the
representations and warranties of Seller contained in this Agreement, and
Seller shall have failed at such time to maintain or reserve Liquid Assets
of not less than $750,000. Notwithstanding the foregoing, in no event
shall (i) the aggregate liability of JMB Income Properties, Ltd.-XII
arising pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express or
implied) of Seller under this Agreement (or any document executed or
delivered in connection herewith) exceed $468,750, or (ii) the aggregate
liability of JMB Income Properties, Ltd.-XIII arising pursuant to or in
connection with the representations, warranties, indemnifications,
covenants or other obligations (whether express or implied) of Seller under
this Agreement (or any document executed or delivered in connection
herewith) exceed $281,250. In the event that Seller shall at any time pay
any claim or liability in partial or complete satisfaction of Seller's
$750,000 aggregate liability, such payment shall be credited against the
recourse liability of JMB First Financial Associates, JMB Income
Properties, Ltd.-XII, and JMB Income Properties, Ltd.-XIII hereunder, and
the liability of such entities hereunder shall be reduced accordingly.
C. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties respecting the matters herein set forth and supersedes
all prior agreements between the parties hereto respecting such matters.
This Agreement may not be modified or amended except by written agreement
signed by both parties.
D. TIME OF THE ESSENCE. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
E. INTERPRETATION. Paragraph headings shall not be used in
construing this Agreement. Each party acknowledges that such party and its
counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed
and the usual rule of construction, to the effect that any ambiguities
herein should be resolved against the drafting party, shall not be employed
in the interpretation of this Agreement or any amendments, modifications or
exhibits hereto or thereto.
F. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of California.
G. SUCCESSORS AND ASSIGNS. Buyer may not assign or transfer its
rights or obligations under this Agreement without the prior written
consent of Seller (in which event such transferee shall assume in writing
all of the transferor's obligations hereunder, but such transferor shall
not be released from its obligations hereunder); provided, however, that
Buyer may (upon delivery to Seller of written certification to Seller by
each of the transferor and the proposed transferee to the effect that the
proposed transferee will, as of the date immediately following the proposed
transfer, have a net worth in excess of $10,000,000, but without Seller's
further consent), assign its entire interest in this Agreement (a) prior to
the Close of Escrow to a legal entity in which Buyer has not less than a
25% interest in capital and profits in such entity (for purposes of this
subparagraph G only, an "AFFILIATE"), in which case (i) Buyer shall not be
released from its obligations hereunder arising until the Close of Escrow,
(ii) Buyer shall upon the Close of Escrow be released from its obligations
hereunder arising or accruing before or after the Close of Escrow, and
(iii) such transferee shall assume in writing all of the transferor's
obligations hereunder, and (b) within one year after the Close of Escrow
upon transfer of Buyer's entire interest in the Property to an Affiliate
that is Buyer's immediate successor-in-interest with respect to the
Property, or to any subsequent Affiliate that is a subsequent successor-in-
interest with respect to the Property (whether or not the immediate
successor-in-interest with respect to the Property), in which case (i)
Buyer shall not be released from its obligations hereunder arising prior to
such transfer and assignment, (ii) Buyer shall upon such transfer and
assignment be released from its obligations hereunder arising or accruing
thereafter, (iii) each such transferee shall assume in writing all of the
transferor's obligations arising thereafter under this Agreement, and (iv)
each such transferee shall thereupon succeed to all rights, privileges and
benefits accruing to Buyer under this Agreement (including, without
limitation, all benefits and rights in connection with the enforcement of
the representations, warranties, indemnities and other covenants of Seller
hereunder). No consent given by Seller to any transfer or assignment of
Buyer's rights or obligations hereunder shall be construed as a consent to
any other transfer or assignment of Buyer's rights or obligations
hereunder. No transfer or assignment in violation of the provisions hereof
shall be valid or enforceable. Subject to the foregoing, this Agreement
and the terms and provisions hereof shall inure to the benefit of and be
binding upon and enforceable by the successors and assigns of the parties.
H. NOTICES. Any notice which a party is required or may desire to
give the other shall be in writing and shall be sent by personal delivery
or by mail (either [i] by United States registered or certified mail,
return receipt requested, postage prepaid, or [ii] by Federal Express or
similar generally recognized overnight carrier regularly providing proof of
delivery), addressed as follows (subject to the right of a party to
designate a different address for itself by notice similarly given):
TO BUYER:
Massachusetts Mutual Life Insurance Company
c/o Cornerstone Real Estate Advisers, Inc.
1901 Avenue of the Stars
Suite 555
Los Angeles, California 90067
Attention: Mr. James J. Gallagher, Jr.
Kelly Kinnon, Esq.
Facsimile: (310) 557-0470
WITH COPY TO:
Buchalter, Nemer, Fields & Younger
601 South Figueroa Street
Suite 2400
Los Angeles, California 90017
Attention: Bryan Mashian, Esq.
Facsimile: (213) 896-0400
TO SELLER:
JMB Encino Partnership, L.P.
900 North Michigan Avenue
19th Floor
Chicago, Illinois 60611
Attention: Ms. Andrea M. Backman
Facsimile: (312) 915-2502
WITH COPY TO:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML/JHI)
Facsimile: (310) 201-8922
Any notice so given by mail shall be deemed to have been given as of the
date of delivery (whether accepted or refused) established by U.S. Post
Office return receipt or the overnight carrier's proof of delivery, as the
case may be. Notices may also be given by facsimile transmission and shall
be deemed given upon the sender's facsimile confirmation of receipt of the
same by the party to which it is addressed, and shall be promptly followed
by a hard copy notice by mail as provided above. Any such notice not so
given shall be deemed given upon receipt of the same by the party to whom
the same is to be given.
I. LEGAL COSTS. The parties hereto agree that they shall pay
directly any and all legal costs which they have incurred on their own
behalf in the preparation of this Agreement, all deeds and other agreements
pertaining to this transaction and that such legal costs shall not be part
of the closing costs. In addition, if either Buyer or Seller brings any
suit or other proceeding with respect to the subject matter or the
enforcement or interpretation of this Agreement, the prevailing party (as
determined by the court, agency or other authority before which such suit
or proceeding is commenced), in addition to such other relief as may be
awarded, shall be entitled to recover reasonable attorneys' fees, expenses
and costs of investigation actually incurred. The foregoing includes, but
is not limited to, attorneys' fees, expenses and costs of investigation
(including, without limitation, those incurred in appellate proceedings),
costs incurred in establishing the right to indemnification, or in any
action or participation in, or in connection with, any case or proceeding
under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code
Sections 101 ET SEQ.), or any successor statutes.
J CONFIDENTIALITY. Prior to the Close of Escrow, the terms of
the transfers contemplated in this Agreement, including, without
limitation, the Purchase Price and all other financial terms, shall remain
confidential and shall not be disclosed by either party hereto without the
written consent of the other except (1) to such party's directors,
officers, partners, employees, legal counsel, accountants, lenders,
investors, mortgage brokers, engineers, architects, financial advisors and
similar professionals and consultants to the extent such party deems it
necessary or appropriate in connection with the transaction contemplated
hereunder (and such party shall inform each of the foregoing parties of
such party's obligations under this Paragraph and shall secure the
agreement of such parties to be bound by the terms hereof), or (2) as
otherwise required by law or regulation, or (3) in connection with any
action brought to enforce or interpret the terms of this Agreement or to
seek a judicial determination of the rights and obligations of the parties
hereunder.
K. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when fully executed shall be an original, and
all of said counterparts taken together shall be deemed to constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
"SELLER"
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
"BUYER"
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts corporation
By: Cornerstone Real Estate Advisers, Inc., its agent
By:_______________________________
James J. Gallagher, Jr.
Vice President
ESCROW HOLDER'S ACKNOWLEDGEMENT
The undersigned hereby executes this Agreement to evidence its
agreement to act as Escrow Holder in accordance with the terms of this
Agreement.
Date: ___________________, 1996
CHICAGO TITLE INSURANCE COMPANY,
a Missouri corporation
By: ___________________________________
Name: _____________________________
Title: ____________________________
"Escrow Holder"
EXHIBIT LIST
"A" - Description of Land
"B" - Loan Documents
"C" - Form of Tenant Estoppel Certificate
"D" - Form of Deed
"E" - Bill of Sale, Assignment and Assumption Agreement
"F" - Certificate of Non-Foreign Status
"G" - Manager's Certificate
"H" - Rent Roll
"I" - Exceptions to Seller's Representations and
Warranties
"J" - List of Service Agreements
"K" - List of Additional Tenant Inducements
"L" - List of Convertible Tenant Concessions
"M" - Environmental Work Plan
EXHIBIT "A"
DESCRIPTION OF LAND
EXHIBIT "B"
LIST OF LOAN DOCUMENTS
1. Loan Commitment in the amount of $30,000,000 dated September
23, 1987, issued by the Prudential Insurance Company of
America.
2. Letter Agreement dated October 29, 1987, re Extension of Loan
Commitment
3. Promissory Note in the amount of $30,000,000, dated November 2,
1987, in favor of the Prudential Insurance Company of America
4. Deed of Trust, Security Agreement, Assignment of Leases and
Fixture Filing, dated November 2, 1987, in favor of the Prudential
Insurance Company of America, recorded as Document No. 87-1755004
5. Security Agreement, dated November 2, 1987, in favor of the
Prudential Insurance Company of America
6. Guaranty of Payment, dated October 29, 1987, by Encino Plaza,
in favor of the Prudential Insurance Company of America
7. UCC Financing Statement by JMB Encino Partnership, as debtor,
in favor of the Prudential Insurance Company of America
8. Owner's Affidavit dated November 2, 1987
9. Assignment of Lease dated November 2, 1987, in favor of the
Prudential Insurance Company of America
10. Certificate of Leases dated November 2, 1987, in favor of the
Prudential Insurance Company of America
11. Certification of Partners dated October 29, 1987, in favor of
the Prudential Insurance Company of America
12. Amended and Restated Promissory Note dated October 30, 1995
13. First Extension and Amendment to Loan Documents dated October
30, 1995
14. First Amendment to Deed of Trust dated October 30, 1995
15. Hazardous Substances Remediation and Indemnification Agreement
dated October 30, 1995
16. Assignment of Lessor's Interest in Leases dated October 30,
1995
17. Affirmation of Guaranty dated October 30, 1995
18. UCC-1 Financing Statement (California) dated October 30, 1995
19. UCC-1 Financing Statement (Illinois) dated October 30, 1995
EXHIBIT "C"
TENANT ESTOPPEL CERTIFICATE
ESTOPPEL CERTIFICATE
The undersigned, being the current lessee ("Lessee") under the
Standard [fill in title] Lease, dated _______, 199_, with JMB Encino
Partnership, L.P., a California limited partnership ("Lessor"), for 16830
Ventura Boulevard, Suite __, Encino, California ("Premises") hereby
certifies to Massachusetts Mutual Life Insurance Company, a Massachusetts
corporation ("Buyer"), Lessor and their respective successor and assigns,
as follows:
I. The lease has not been modified, changed, altered or
amended in any respect after its execution, except by the following
document(s): _________________
_________________________________________________________________
(collectively, "Lease"). The Lease constitutes the entire and only
agreement between Lessor and Lessee with respect to the Premises. Lessee
has not sublet, assigned, encumbered or otherwise transferred all or any
portion of Lessee's leasehold interest. Any exception to the foregoing is
set forth in Paragraph 6 below.
II. The Lease is in full force and effect and is a binding
obligation of Lessor and Lessee. The term of the Lease started on
_________, 199_, and expires on _____________, 199_. Lessee has no right
to renew or extend the term of the Lease, except for ___ (_) option(s) to
extend the term of the lease, each option for _____ (_) years. Lessee has
no right or option to cancel or terminate the Lease. Lessee has no
preferential right or option to purchase the Premises or the building of
which the Premises is a part. Any exception to the foregoing is set forth
in Paragraph 6 below.
III. The current [Base/Fixed/Minimum] Rent is $______ per
month, payable on the __ of each month, which has been paid through
__________, 199_. Lessee currently pays $___________ per month as Lessee's
Share of the estimate of [Operating Expenses/Common Area Expenses], payable
on the __ of each month, which has been paid through __________, 199_.
Lessee has paid no other rent in advance. Lessee is not entitled to any
free rent, partial rent, abatement of rent, rebate of rent, credit to rent
or any other type of rental concession. Lessee has no claim against Lessor
for any security deposit, except $_____________. Any exception to the
foregoing is set forth in Paragraph 6 below.
IV. The Premises consist of [approximately] ______
[rentable/usable] square feet. Lessor has completed all improvements and
other work required of Lessor under the Lease to Lessee's full
satisfaction, and in compliance with all the requirements of the Lease and
all applicable laws. All of Lessor's obligations under the Lease have been
performed to Lessee's full satisfaction and all of Lessor's representations
and warranties under the Lease have been fulfilled. Lessor has paid in
full to Lessee any construction, improvement, relocation or other
allowances or moneys due from Lessor. All duties of an inducement nature
required of Lessor under the Lease have been fulfilled. Any exception to
the foregoing is set forth in Paragraph 6 below.
V. There exists no breach or default, nor state of facts nor
condition which, with notice, the passage of time, or both, would result in
a breach or default on the part of either Lessee or Lessor. No claim,
controversy, dispute, quarrel or disagreement exists between Lessor and
Lessee. Lessee does not have any claims, counter-claims, defenses, offsets
or credits against Lessor or the rent due under the Lease. Any exception
to the foregoing is set forth in Paragraph 6 below.
VI. Exceptions to the foregoing:
________________________________________________________________________
________________________________________________________________________
____________________________________________________.
Lessee acknowledges that Buyer and Lessor are relying upon each
of the statements contained herein in connection with Buyer's purchase of
the Premises and but for such assurances Buyer would not purchase the
Premises. If any of the statements set forth herein conflicts with or are
inconsistent with any provision of the Lease, the statements contained
herein shall prevail.
Dated: _____________, 1996
"LESSEE"
________________________,
a _______________________
By: ______________________
Name Printed: ____________
Title:_____________________
EXHIBIT "D"
DEED
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO
(AND MAIL TAX STATEMENTS TO):
Cornerstone Real Estate Advisers, Inc.
1901 Avenue of the Stars
Suite 555
Los Angeles, California 90067
Attention: Kelly Kinnon, Esq.
_______________________________________________________
THIS SPACE ABOVE FOR RECORDER'S USE
GRANT DEED
FIRST FINANCIAL PLAZA
ENCINO, CALIFORNIA
THE UNDERSIGNED GRANTOR DECLARES:
Documentary Transfer Tax not shown pursuant
to Section 11932 of the Revenue and
Taxation Code and ________________________
__________________________, as needed
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, JMB ENCINO PARTNERSHIP, L.P., a California limited
partnership (hereinafter called "GRANTOR"), hereby GRANTS to and
_____________________ (hereinafter called "GRANTEE"), the real property
located in the County of Los Angeles, State of California, and more
particularly described in Exhibit "A" attached hereto and made a part
hereof, together with all improvements located thereon and all rights,
privileges, easements and appurtenances of Grantor appertaining thereto and
all right, title and interest of Grantor in, to and under adjoining
streets, rights of way and easements.
IN WITNESS WHEREOF, the undersigned hereby executes this instrument
as of the _____ day of August, 1996.
GRANTOR:
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
State of _______________________ )
County of ______________________ )
On _______________, 199___, before me, a notary public in and for
said State, personally appeared _____________________________, personally
known to me (or proved to me on the basis of satisfactory evidence) to be
the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature ________________________________________ (Seal)
Capacity of Signatory ____________________________
EXHIBIT "A"
DESCRIPTION OF LAND
Statement of tax due and request that tax declaration not be
made a part of the permanent record in the office of the County Recorder
pursuant to Section 11932 of Revenue and Taxation Code.
To: Registrar Recorder, County of Los Angeles
Request is hereby made in accordance with the provisions of
documentary transfer act that the amount of the tax due not be shown on the
original document which names JMB ENCINO PARTNERSHIP, L.P., a California
limited partnership, as grantor, and
________________________________________, as grantee, regarding the
property described in the accompanying document located in the City of Los
Angeles, State of California. The amount of the tax due on the
accompanying document is $____________ for the County of Los Angeles
documentary transfer tax, and $__________ for City of ___________ taxes,
computed on full value of property conveyed, less liens and encumbrances
remaining at time of sale.
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By _____________________
Vice President
After the permanent record is made,
this form will be affixed to the
conveying document and returned with it.
EXHIBIT "E"
BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT
(First Financial Plaza; Encino, California)
FOR VALUABLE CONSIDERATION, receipt and adequacy of which is hereby
acknowledged, the undersigned, JMB ENCINO PARTNERSHIP, L.P., a California
limited partnership ("ASSIGNOR"), hereby sells, transfers, assigns and
conveys to __________________________ ("ASSIGNEE"), the following:
1. All right, title and interest of Assignor in and to all
tangible personal property located on, and used in connection with the
management, maintenance or operation of that certain land and improvements
located in the County of Los Angeles, State of California, as more
particularly described in Exhibit "A" attached hereto and made a part
hereof ("REAL PROPERTY"), including, without limitation, all equipment,
appliances, tools, machinery, supplies, building materials, appliances,
fittings, gas and oil burners, automatic stokers, lighting fixtures, doors,
cabinets, partitions, mantles, elevators, electric motors, pumps, screens,
flag poles, waste disposal or storage equipment, sprinklers, plumbing,
heating, air conditioning, electrical, ventilating, lighting, incinerating,
vacuum cleaning, refrigerating and cooling systems, each with its
respective furnaces, boilers, engines, motors, dynamos, radiators, pipe,
wiring and other apparatus, vaults, safes, fire prevention and
extinguishing equipment, carpets, floor covering, kitchen appliances and
antennae) owned by Seller (and not by tenants) located upon or about the
Land and used in the operation of the Real Property and improvements
thereon (provided, however, the personal property shall not include any
computer equipment, computer programs or related software), and all
preliminary, final and proposed building plans and specifications
[including "as-built" drawings] respecting the improvements, structural
reviews, architectural drawings and engineering, soils, seismic, geologic
and architectural reports, studies and certificates owned by Seller and
prepared by third parties pertaining to the Real Property or the
improvements thereon, and all operating statements and financial books and
records located at the Real Property or in the possession or control of
Assignor's property manager (excluding the same to the extent located in
Chicago, Illinois) in connection with the operation of the Real Property
(including, without limitation, all income and expense statements, year-end
financial and monthly operating statements) (collectively, the "PERSONAL
PROPERTY"), but excluding tangible personal property owned by Seller's
property manager ("MANAGER") or the tenants of the Real Property under the
"Tenant Leases" (as defined below).
2. All right, title and interest of Assignor as lessor in and to
the leases and all other agreements ("TENANT LEASES") described in Exhibit
"B" attached hereto relating to the leasing, occupancy and use of space in
the Real Property and all of the rights, interests, benefits and privileges
of the lessor thereunder, and all prepaid rents and security and other
deposits held by Assignor under the Tenant Leases and not credited or
returned to tenants (which prepaid rents and security and other deposits
shall be assigned to Assignee pursuant to a credit against the purchase
price under the Purchase Agreement, as more particularly provided in the
Purchase Agreement), but subject to all terms, conditions, reservations and
limitations set forth in the Tenant Leases. Notwithstanding the foregoing
or anything else to the contrary contained in this Bill of Sale, Assignment
and Assumption, Seller hereby reserves any and all right, title and
interest of Seller in, and Seller shall not convey or assign to Buyer any
right, title or interest of Seller to, any and all promissory notes or
other evidences of indebtedness (collectively, the "TENANT LOANS") owed to
Seller by the following tenants at the Property: Fred Sands Realty;
Benson, Minkow & Shapiro; and Block, Klein & Co.
3. To the extent assignable without the consent of third parties,
all right, title and interest of Assignor in and to all intangible property
("INTANGIBLE PROPERTY") owned or held solely for use in connection with the
Real Property or the Personal Property or any business or businesses
conducted thereon or with the use thereof (other than those businesses
conducted by the tenants of the Real Property under the Tenant Leases),
including, but not limited to, leases (other than the Tenant Leases),
contract rights and agreements listed in Exhibit "C" attached hereto
("SERVICE AGREEMENTS"), building and trade names, trademarks and logos used
by Assignor in the operation and identification of the improvements and/or
the Real Property, the name "First Financial Plaza", business licenses,
warranties, utility contracts, rent lists, advertising materials, telephone
exchange numbers, plans and specifications, governmental approvals and
development rights, permits, certificates of occupancy, dedications,
subdivision maps and government entitlements issued, approved or granted
solely in connection with the Real Property or improvements thereon,
related solely to the Real Property or the Personal Property or any part
thereof.
This Bill of Sale, Assignment and Assumption Agreement is given
pursuant to that certain agreement ("PURCHASE AGREEMENT") captioned
"PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS", dated as of August ___,
1996, between Assignor and Massachusetts Mutual Life Insurance Company,
providing for, among other things, the conveyance of the Personal Property,
the Tenant Leases, and the Intangible Property.
The covenants, agreements, representations, warranties, indemnities
and limitations provided in the Purchase Agreement with respect to the
property conveyed hereunder are hereby incorporated herein by this
reference as if herein set out in full and shall inure to the benefit of
and shall be binding upon Assignee and Assignor and their respective
successors and assigns.
As set forth in the provisions of the Purchase Agreement, which are
hereby incorporated by this reference as if herein set out in full, the
property conveyed hereunder is (except as expressly provided to the
contrary in the Purchase Agreement) conveyed by Assignor and accepted by
Assignee AS IS, WHERE IS, AND WITHOUT ANY WARRANTIES OF WHATSOEVER NATURE,
EXPRESS OR IMPLIED. IT IS THE INTENTION OF ASSIGNOR AND ASSIGNEE EXPRESSLY
TO NEGATE AND EXCLUDE ALL WARRANTIES WITH RESPECT TO THE PERSONAL PROPERTY,
INCLUDING WITHOUT LIMITATION, TO THE EXTENT APPLICABLE, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE,
WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY
DESCRIPTION OF THE PROPERTY CONVEYED HEREUNDER, OR BY ANY SAMPLE OR MODEL
THEREOF, AND ALL OTHER WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE
CALIFORNIA UNIFORM COMMERCIAL CODE, EXCEPT AS EXPRESSLY PROVIDED IN
PARAGRAPH 7A OF THE PURCHASE AGREEMENT.
This Bill of Sale, Assignment and Assumption Agreement is made
subject to the title exceptions approved or deemed approved by Assignee
pursuant to the Purchase Agreement.
As of the date above written, Assignee hereby accepts the foregoing
Bill of Sale, Assignment and Assumption Agreement and hereby agrees to
assume and discharge, in accordance with the terms thereof, all of the
burdens and obligations of Assignor relating to the Tenant Leases and
Intangible Property first arising and accruing on and after the effective
date of the foregoing Bill of Sale, Assignment and Assumption Agreement;
subject, however, to any provisions in the Tenant Leases which limit the
liability of the lessor thereunder.
Each party will, whenever and as often as it shall be requested so to
do by the other, cause to be executed, acknowledged or delivered any and
all such further instruments and documents as may be necessary or proper,
in the reasonable opinion of the requesting party, in order to carry out
the intent and purpose of this Bill of Sale, Assignment and Assumption.
This Bill of Sale, Assignment and Assumption Agreement may be
executed in one or more identical counterparts, each of which such
counterpart shall be deemed an original for all purposes and all such
counterparts collectively consisting of one such Bill of Sale, Assignment
and Assumption Agreement.
IN WITNESS WHEREOF, Assignor has executed this Bill of Sale,
Assignment and Assumption Agreement as of __________________, 199__.
DATED: As of ______________________, 1996.
ASSIGNOR:
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By: JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By_____________________
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By_____________________
Vice President
"ASSIGNEE"
_______________________________________
a _____________________________________
By: ___________________________________
Name: _________________________________
Title: ________________________________
EXHIBIT "A"
DESCRIPTION OF REAL PROPERTY
EXHIBIT "B"
LIST OF TENANT LEASES
EXHIBIT "C"
LIST OF SERVICE AGREEMENTS
EXHIBIT "F"
CERTIFICATE OF NON-FOREIGN STATUS
CERTIFICATE OF NON-FOREIGN STATUS
FIRST FINANCIAL PLAZA
ENCINO, CALIFORNIA
FEDERAL FIRPTA CERTIFICATE
Section 1445 of the Internal Revenue Code provides that a transferee
of a U.S. real property interest must withhold tax if the transferor is a
foreign person. To inform ___________________ ("BUYER"), that withholding
of tax is not required upon the disposition of a U.S. real property
interest by JMB ENCINO PARTNERSHIP, L.P., a California limited partnership
("SELLER"), the undersigned hereby swears, affirms and certifies the
following on behalf of Seller:
1. Seller is not a foreign corporation, foreign partnership,
foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations).
2. Seller's U.S. employer identification number is
__________________.
3. Seller's office address is:
JMB Encino Partnership, L.P.
900 North Michigan Avenue
19th Floor
Chicago, Illinois 60611
Attention: Ms. Andrea M. Backman
4. Seller understands that this certification may be disclosed to
the Internal Revenue Service by Buyer and that any false statement
contained herein could be punished by fine, imprisonment, or both.
STATE OF CALIFORNIA
CALIFORNIA RESIDENT/NON-RESIDENT AFFIDAVIT
In accordance with Sections 18805 and 26131 of the California Revenue
and Taxation Code, any seller who is not a California resident must
authorize the escrow holder to forward 31/3% of the sales price of the
California real property conveyed to the Franchise Tax Board unless the
sales price of the property is less than $100,000.00.
Seller hereby certifies that Seller is a "Partnership" as determined
in accordance with Subchapter K of Chapter 1 of Subtitle A of the Internal
Revenue Code, and Seller maintains a permanent place of business with a
California street address after the transfer.
Seller understands that this certificate may be disclosed to the
Franchise Tax Board of California by Buyer and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Executed as of the _____ day of ________________, 1996.
SELLER:
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By_____________________
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By_____________________
Vice President
EXHIBIT "G"
MANAGER'S CERTIFICATE
[SEE ATTACHMENT HERETO]
EXHIBIT "H"
RENT ROLL
[SEE ATTACHMENT HERETO]
EXHIBIT "I"
EXCEPTIONS TO SELLER'S REPRESENTATIONS AND WARRANTIES
NONE
EXHIBIT "J"
LIST OF SERVICE AGREEMENTS
VENDOR TERMINATION
ACCO 30 days written notice
Advance Building Maintenance 30 days written notice
Amtech Reliable Elevator Co. 30 days written notice
Ampco Parking 30 days written notice
Cummins Onan 30 days written notice
Gibraltar Protection, Inc. 30 days written notice
Oak Springs Nursery 30 days written notice
Orix USA Corp. $4,030.53/mo. - Paid in full as
of 6/25/97
Pacific Bell - Cable Riser Renewed annually @ $675.00/year
PageNet 30 days written notice
Pitney Bowes 17 month lease as of 12/8/95,
$141.94/quarter
Pedus Service - Concierge 30 days written notice either
party
Waste Management Co. 30 days written notice either
party
Kastle Systems 30 days written notice either
party
Minolta Leasing Services 48 month lease as of 4/1/93 -
$425.03/mo.
Pearl Textiles 30 days written notice
EXHIBIT "K"
ADDITIONAL TENANT INDUCEMENTS
OUTSTANDING FREE RENT:
DATE DUE
Suite 224 Young & CINRAM $ 2,110.00(1 mo.) Sept. 1, 1996
Suite 345 Appel & Steinman $18,198.75(1 mo.) Jan 1, 1997
Total $20,308.75
OUTSTANDING TENANT IMPROVEMENTS:
Suite 345 Appel & Steinman Carpet $17,500.00 Oct. 1, 1996
Suite 601 Merrill Lynch $5.00 per usf$50,475.00 May 28, 2001
-----------
Total $67,975.00
LEASING COMMISSIONS ON RENEWALS:
Suite 510 Ostrom Real Estate $ 1,000.00 March 15, 1998
Estimated 1% on 5 year option
EXHIBIT "L"
CONVERTIBLE TENANT CONCESSIONS
NONE
EXHIBIT "M"
ENVIRONMENTAL WORK PLAN
EXHIBIT 10.2
SECOND AMENDMENT TO
PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
THIS SECOND AMENDMENT TO PURCHASE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS ("AMENDMENT"), is made and entered into as of September 6,
1996, by and between JMB ENCINO PARTNERSHIP, L.P., a California limited
partnership (hereinafter called "SELLER"), and MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, a Massachusetts corporation (hereinafter called
"BUYER").
R E C I T A L S
---------------
A. Seller and Buyer entered into that certain agreement, captioned
"PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS", dated as of August 9,
1996, as amended by that certain First Amendment to Purchase Agreement and
Joint Escrow Instructions dated as of August 22, 1996 (the "AGREEMENT").
Unless otherwise defined herein, each capitalized term used herein shall
have the meaning ascribed thereto in the Agreement.
B. Buyer and Seller desire to amend the Agreement, on the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:
1. EXTENSION OF CLOSING DATE. The Closing Date is hereby extended
to September 11, 1996; provided that, in consideration of Seller's
agreement to so extend the Closing Date, the parties agree that the
Seller's Closing Certificate and the Manager's Closing Certificate shall be
dated as of September 5, 1996 and September 3, 1996, respectively, and
shall not require any further update.
2. RELEASE OF DEPOSIT; ADDITIONAL DEPOSIT. As additional
consideration of Seller's agreement to so extend the Closing Date as
provided above, Buyer shall deliver to Escrow Holder the additional sum of
$2,700,000 (the "Additional Deposit") on or before 12:00 noon on Monday,
September 9, 1996. The parties hereby authorize and direct Escrow Holder
to deliver the existing Escrow Deposit in the amount of $300,000 and the
Additional Deposit (upon Escrow Holder's receipt thereof) directly to
Seller not later than 2:00 p.m. Los Angeles time on September 9, 1996. The
Additional Deposit shall, upon delivery to Escrow Holder, become a part of
the Escrow Deposit and shall be disposed of in the manner provided in the
Agreement with respect to the Escrow Deposit. The parties shall execute
such further instructions as Escrow Holder may reasonably require to
authorize and instruct Escrow Holder to release the foregoing to Seller.
3. DEMAND NOTE. In order to ensure timely delivery of the
Additional Deposit as provided above, Buyer shall concurrently herewith
execute a Demand Note in the form of Exhibit "A" attached hereto in favor
of Seller. In the event that Buyer shall timely release the Escrow Deposit
and deliver the Additional Deposit as provided above, then Seller shall
cancel the Demand Note and return the same to Buyer, and the same shall be
of no further force and effect. In addition, upon the Close of Escrow in
accordance with the terms of the Agreement, Seller shall cancel the Demand
Note and return the same to Buyer.
4. PEPPERDINE PROFIT PARTICIPATION. Seller shall be responsible
after the Close of Escrow for the payment of any profit participation due
to the tenant under the Pepperdine tenant lease as the same shall exist as
of the Close of Escrow.
5. WAIVER OF CONTINGENCIES AND TERMINATIONS. Buyer hereby waives
any and all cancellation and termination rights and contingencies under the
Agreement, other than the conditions set forth in the following Paragraphs
of the Agreement: 4A(3) and 4E. Without limitation of the foregoing, in
the event that Buyer shall request that Lender consent prior to the Close
of Escrow to the assumption of the Loan by an assignee or transferee of
Buyer's interest in the Agreement, then Buyer shall be required to close
the transaction contemplated by the Agreement even in the absence of such
consent by Lender.
6. OTHER TERMS UNMODIFIED. Except as otherwise expressly set
forth herein, all terms and conditions of the Agreement are ratified, and
remain unchanged and in effect.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, provided each of the parties hereto executes at least one
counterpart; each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"SELLER"
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PARTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By
Vice President
"BUYER"
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts corporation
By: Cornerstone Real Estate Advisers, Inc., its agent
By: JAMES J. GALLAGHER, JR.
James J. Gallagher, Jr.
Vice President
EXHIBIT 10.3
FIRST AMENDMENT TO
PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS ("AMENDMENT"), is made and entered into as of August 22, 1996,
by and between JMB ENCINO PARTNERSHIP, L.P., a California limited
partnership (hereinafter called "SELLER"), and MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY, a Massachusetts corporation (hereinafter called
"BUYER").
R E C I T A L S
---------------
A. Seller and Buyer entered into that certain agreement, captioned
"PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS", dated as of August 9,
1996 (the "AGREEMENT"). Unless otherwise defined herein, each capitalized
term used herein shall have the meaning ascribed thereto in the Agreement.
B. Buyer and Seller desire to amend the Agreement, on the terms
and subject to the conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:
1. EXTENSION OF CLOSING DATE. The Due Diligence Period is
extended to the Extended Due Diligence Period, and the Closing Date is
hereby extended to September 5, 1996, subject to all other possible
extensions of the foregoing as set forth in the Agreement.
2. PARAGRAPH 4F. All references in Paragraph 4F of the Agreement
to "AUGUST 27, 1996" are hereby amended to refer to "SEPTEMBER 3, 1996",
and all references in Paragraph 4F of the Agreement to "AUGUST 28, 1996"
are hereby amended to refer to "SEPTEMBER 4, 1996".
3. OTHER TERMS UNMODIFIED. Except as otherwise expressly set
forth herein, all terms and conditions of the Agreement are ratified, and
remain unchanged and in effect.
4. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, provided each of the parties hereto executes at least one
counterpart; each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"SELLER"
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By:
Vice President
"BUYER"
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts corporation
By: Cornerstone Real Estate Advisers, Inc., its agent
By: JAMES J. GALLAGHER, JR.
Vice President
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
"SELLER"
JMB ENCINO PARTNERSHIP, L.P.,
a California limited partnership
By JMB FIRST FINANCIAL ASSOCIATIES,
an Illinois general partnership
General Partner
By JMB INCOME PROPERTIES, LTD.-XII,
an Illinois limited partnership,
General Partner
By JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By
Vice President
By JMB INCOME PROPERTIES, LTD.-XIII,
an Illinois limited partnership,
General Partner
By
Vice President
"BUYER"
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY,
a Massachusetts corporation
By: Cornerstone Real Estate Advisers, Inc., its agent
By:
James J. Gallagher, Jr.
Vice President
