SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) September 24, 1999
-------------------
PaineWebber Equity Partners One Limited Partnership
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(Exact name of registrant as specified in its charter)
Virginia 0-14857 04-2866287
- --------------------------------------------------------------------------------
(State or other jurisdiction) (Commission (IRS Employer
of incorporation File Number) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
(Former name or address, if changed since last report)
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
ITEM 2 - Disposition of Assets
Warner/Redhill Business Center - Tustin, California
Disposition Date - September 24, 1999
On September 24, 1999, Warner/Redhill Associates, a joint venture in which
Paine Webber Equity Partners One Limited Partnership ("the Partnership") has an
interest, sold the property known as the Warner/Redhill Business Center located
in Tustin, California, to an unrelated third party for $10.9 million. The
Partnership received net proceeds of approximately $3,452,000 after deducting a
purchase price credit to the buyer of $75,000, closing costs of approximately
$194,000, net closing proration adjustments of approximately $75,000, the
repayment of the existing mortgage note of approximately $4,969,000, accrued
interest of approximately $10,000 and a payment to the lender of approximately
$2,125,000 as its share of the sale proceeds. As previously reported, the lender
received a 40% participation in the residual value of this property as part of a
loan workout dated August 15, 1993, as described below. The Partnership plans to
make a special distribution to the Limited Partners of $39.00 per original
$1,000 investment, or $3,900,000, to unitholders of record on the September 24,
1999 sale date. Of the $39.00 total, $34.52 results from the sale of
Warner/Redhill and $4.48 is from Partnership reserves which exceed expected
future requirements.
As previously reported, because of the strong rental market in Orange
County, California, the Partnership believed it was the opportune time to sell
Warner/Redhill Business Center. As part of a plan to market the property for
sale, the Partnership selected a national real estate firm that is a leading
seller of this property type. Preliminary sales materials were prepared and
initial marketing efforts were undertaken in March 1999. A marketing package was
then finalized and comprehensive sale efforts began in early April 1999. Seven
offers were received, all of which were in excess of the property's 1998
year-end estimated value. To reduce the prospective buyer's due diligence work
and the time required to complete it, updated operating reports as well as
environmental information on the property were provided to the top prospective
buyers, who were asked to submit best and final offers. After completing an
evaluation of these offers and the relative strength of the prospective
purchasers, the Partnership selected an offer. The Partnership then negotiated a
purchase and sale agreement which was signed on June 24, 1999. The prospective
buyer completed its due diligence review work on July 23, 1999 and made a
non-refundable deposit of $150,000.
While the Partnership's net sale proceeds of approximately $3,452,000 are
significantly below its original net investment in the property of $12,250,000,
they are higher than any amount that would have been available to distribute in
August 1993 when the original zero coupon mortgage loan secured by the property
matured. The partial return of capital can be attributed to the Partnership's
efforts in negotiating a loan extension and modification agreement with the
first mortgage lender in August 1994. Without this modification which included a
reduction in the annual interest rate from 9.36% to 2.875% and a ten-year
extension of the original August 15, 1993 maturity date of the mortgage loan, it
was highly likely that the property could have been lost to a foreclosure action
by the lender. Due to the deteriorating economic conditions of the early 1990's,
the value of the property in August 1993 and August 1994 was not sufficient to
refinance the loan. Limited sources for the financing of commercial office
buildings in general, as well as the stringent loan-to-value requirements for
such loans, prohibited refinancing the Warner/Redhill property by conventional
means. As an inducement for the lender to agree to such a modification, the
Partnership negotiated a participation interest contingency that would allow the
lender to share in a future sale or refinancing of the property. This agreement
allowed the new monthly principal and interest payments to the lender on the
$5,763,000 loan balance to be covered from operating cash flow of the property
from August 1993 through the September 1999 sale date. The loan extension also
allowed the Partnership to retain its ownership position in the property while
providing time for revenues and value to rise so that a sale which would provide
proceeds to the Partnership could eventually be completed.
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
As discussed further in the Partnership's most recent Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q, management has been focusing on
potential disposition strategies for the remaining investments in the
Partnership's portfolio. Subsequent to the sale of Warner/Redhill, the remaining
investments consist of joint venture interests in the 1881 Worcester Road Office
Building and the 625 North Michigan Office Building. The 1881 Worcester Road
property is under a contract for sale which is expected to close by October 31,
1999. In addition, the Partnership has recently selected a real estate brokerage
firm to market the 625 North Michigan property for sale. Materials for the
marketing packages have been finalized and initial sale efforts are currently
underway. While the Partnership hopes to have the 625 North Michigan property
under a contract for sale before December 31, 1999, it is unlikely that both a
sale of the property and a subsequent liquidation of the Partnership can be
completed by December 31, 1999. Nonetheless, management continues to actively
pursue this goal.
ITEM 7 - Financial Statements and Exhibits
(a) Financial Statements: None
(b) Exhibits:
(1) Joint Escrow Instructions and Purchase and Sale Agreement by and between
Warner/Redhill Associates and Touchstone Investments, Inc., dated June 24,
1999.
(2) Bill of Sale by Warner/Redhill Associates to AG/Touchstone Warner Redhill
L.L.C, dated September 24, 1999.
(3) Grant Deed from Warner/Redhill Associates to AG/Touchstone Warner Redhill
L.L.C., dated September 24, 1999.
(4) Assignment and Assumption of Contracts and Intangible by and between
Warner/Redhill Associates and AG/Touchstone Warner Redhill L.L.C., dated
September 24, 1999.
(5) Assignment and Assumption of Leases and Security Deposits by and between
Warner/Redhill Associates and AG/Touchstone Warner Redhill, L.L.C., dated
September
24, 1999.
(6) Closing Statement - AG/Touchstone Warner/Redhill, L.L.C. acquisition from
Warner/Redhill Associates, dated September 24, 1999.
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS ONE LIMITED PARTNERSHIP
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINEWEBBER EQUITY PARTNERS
ONE LIMITED PARTNERSHIP
-----------------------
(Registrant)
By: First Equity Partners, Inc.
By: /s/ Walter V. Arnold
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Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: October 5, 1999
<PAGE>
JOINT ESCROW INSTRUCTIONS
AND
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
WARNER/REDHILL ASSOCIATES (SELLER)
AND
TOUCHSTONE INVESTMENTS, INC. (BUYER)
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS 1
ARTICLE 2 PURCHASE AND SALE 1
ARTICLE 3 PURCHASE PRICE, DEPOSIT AND ADJUSTMENTS 2
ARTICLE 4 PRECLOSING OPERATION 5
ARTICLE 5 ACCESS, INSPECTION AND DILIGENCE 6
ARTICLE 6 TITLE, SURVEY, CONDITIONS AND REPRESENTATIONS 9
ARTICLE 7 CLOSE OF ESCROW 12
ARTICLE 8 CASUALTY AND CONDEMNATION 15
ARTICLE 9 BROKERAGE COMMISSIONS 16
ARTICLE 10 DEFAULT, TERMINATION AND REMEDIES 16
ARTICLE 11 MISCELLANEOUS 17
ARTICLE 12 IRS FORM 1099-S DESIGNATION 22
SCHEDULE A Legal Description of the Real Property
SCHEDULE B Description of Personal Property and Intangible Property
SCHEDULE C Deposit Escrow Agreement
SCHEDULE D Rent Roll
SCHEDULE E 1099 Designation Agreement
SCHEDULE F Form of Tenant Estoppel Certificate
SCHEDULE G List of Escrow Provisions
SCHEDULE H Form of Grant Deed
SCHEDULE I Form of Bill of Sale
SCHEDULE J Form of Assignment and Assumption of Leases
SCHEDULE K Form of Assignment and Assumption of Contracts and Intangibles
SCHEDULE L Form of Certificate of Non-Foreign Status
<PAGE>
Purchase and Sale Agreement
This Purchase and Sale Agreement (this Agreement) is entered into as of
the 24th day of June, 1999 by and between Seller and Buyer, upon the following
terms and conditions:
ARTICLE 1
DEFINITIONS
References in this Agreement to the following terms shall have the
following meanings:
BUYER: Touchstone Investments, Inc., a California corporation
- ------
SELLER: Warner/Red Hill Associates, a California general partnership
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PROPERTY: The Real Property and Personal Property constituting Warner/
- -------- Red Hill Business Center, Tustin, California
REAL PROPERTY: The land and the buildings, structures, improvements and
- -------------- fixtures (collectively, the Improvements) now located thereon
and the rights appurtenant thereto, all as more particularly
described in Schedule A attached hereto
PERSONAL PROPERTY:The personal and intangible property, if any, described in
- ----------------- Schedule B attached hereto
PURCHASE PRICE: $10,900,000
- ---------------
TITLE COMPANY: LandAmerica Financial Group, Inc. (the Escrow Holder)
- -------------- One Washington Mall
Fifteenth Floor
Attention: Mr. David M. Walker
Boston, MA 02108
Phone: (617) 619-4807
Fax: (617) 619-4848
ARTICLE 2
PURCHASE AND SALE
2.1 In consideration of the undertakings and mutual covenants of the
parties set forth in this Agreement, and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Seller hereby agrees to sell and convey the Property to Buyer and
Buyer hereby agrees to buy and pay the Purchase Price for the Property on the
terms and conditions contained herein.
ARTICLE 3
PURCHASE PRICE, DEPOSIT AND ADJUSTMENTS
3.1 The Purchase Price shall be as specified in Article 1 above and shall
be paid on the Escrow Closing Date (as hereinafter defined) by wire transfer of
immediately available federal funds, subject to adjustment to reflect
application of the Escrowed Amount (as hereinafter defined) and such other
adjustments herein contained.
3.2 Upon the Opening of Escrow (as hereinafter defined), Buyer shall
deposit with the Escrow Holder the sum of One Hundred Thousand Dollars
($100,000) in immediately available funds to be held in an interest bearing
account (together with any earned interest, the Escrowed Amount) to secure
Buyer's obligations under this Agreement. Simultaneously with the delivery of
the Escrowed Amount to the Escrow Holder, Buyer shall deliver to Seller a One
Hundred Dollar ($100.00) inspection fee (the Inspection Fee) as independent
consideration which independent consideration is in addition to and independent
of any other consideration or payment provided for in this Agreement and shall
be retained by Seller in all instances, but shall be applied against the
Purchase Price if the Close of Escrow occurs. Upon the expiration of the
Diligence Date (as hereinafter defined), if the Buyer has not terminated the
Agreement in accordance with Section 5.3 below, the Buyer shall deposit with the
Escrow Holder the sum of Fifty Thousand Dollars ($50,000) in immediately
available funds to be held in an interest bearing account (the Additional
Deposit). All references in this Agreement to the Escrowed Amount shall be
considered to include the Additional Deposit and any interest earned thereon.
Promptly following the execution hereof Buyer shall deliver a completed and
executed W-9 form to the Escrow Holder.
3.3 Within two (2) business days following the execution of this
Agreement, the parties shall open escrow with Escrow Holder (the Opening of
Escrow). This Agreement, when deposited with Escrow Holder, shall constitute
Escrow Holders escrow instructions, together with the Deposit Escrow Agreement
attached hereto as Schedule C. The escrow instructions shall not modify or amend
the provisions of this Agreement unless otherwise expressly set forth therein.
3.4 All real estate taxes, assessments, special taxes, special assessments
and any other tax or assessment attributable to the Property through the Escrow
Closing Date shall be prorated and adjusted as of the Escrow Closing Date unless
such items are paid directly by all tenants occupying the Property (the Tenants)
(as to the applicable taxing authority, in which case no adjustment or proration
shall be made for the items paid directly by the Tenants. 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 Escrow Closing Date. If the tax
statements for the fiscal year during which the Escrow Closing Date occurs are
not finally determined, then the tax figures for the immediately prior fiscal
year shall be used for the purposes of prorating taxes on the Escrow Closing
Date, with a further adjustment to be made after the Escrow Closing Date as soon
as the tax figures are finalized. Any tax refunds or proceeds (including
interest thereon) (the Tax Recovery) on account of a favorable determination
resulting from a challenge, protest, appeal or similar proceeding relating to
taxes and assessments relating to the Property (a Tax Proceeding) (i) for all
tax periods occurring prior to the applicable tax period in which the Close of
Escrow occurs shall be retained by and paid exclusively to Seller and (ii) for
the applicable tax period in which the Close of Escrow occurs shall be prorated
as of the Escrow Closing Date after reimbursement to Seller and Buyer, as
applicable, for all fees, costs and expenses (including reasonable Attorneys'
and Consultant's fees) incurred by Seller or Buyer, as applicable, in connection
with such proceedings such that Seller shall retain and be paid that portion of
such tax refunds or proceeds as is applicable to the portion of the applicable
tax period prior to the Escrow Closing Date and Buyer shall retain and be paid
that portion of such tax refunds or proceeds as is applicable to the portion of
the applicable tax period from and after the Escrow Closing Date. Neither Seller
nor Buyer shall settle any tax protests or proceedings in which taxes for the
tax period for which the other party is responsible are being adjudicated
without the consent of such party, which consent shall not be unreasonably
withheld, conditioned or delayed. Buyer and Seller shall cooperate in pursuit of
any such proceedings and in responding to reasonable requests of the other for
information concerning the status of and otherwise relating to such proceedings;
provided, however, that neither party shall be obligated to incur any
out-of-pocket fees, costs or expenses in responding to the requests of the
other. In no event shall any such proceeding be commenced by Seller following
the Escrow Closing Date without Buyer's prior written consent; provided,
however, that Seller shall be entitled to continue its existing proceedings, if
any.
3.5 Prepaid or past due amounts under any Contracts (as hereinafter
defined) which are assigned to Buyer at Close of Escrow shall be prorated and
adjusted as of the Escrow Closing Date.
3.6 Seller shall cause all meters for electricity, gas, water, sewer or
other utility usage at the Property to be read on the Escrow Closing Date, and
the Seller shall pay all charges for such utilities which have accrued on or
prior to the Escrow Closing Date; provided, however, that if and to the extent
such charges are paid directly by Tenants, no such reading or payment shall be
required. If the utility companies are unable or refuse to read meters for which
payment by the Seller is required, all charges for such utilities to the extent
unpaid shall be prorated and adjusted as of the Escrow Closing Date based on the
most recent bills therefor. Seller shall provide notice to the Buyer within five
(5) days of the Escrow Closing Date setting forth (i) whether utility meters
will be read as of the Escrow Closing Date and (ii) a copy of the most recent
bill for any utility charges which are to be prorated and adjusted as of the
Escrow Closing Date. If the meters cannot be read as of the Escrow Closing Date
and, therefore, the most recent bill is used to prorate and adjust as of the
Escrow Closing Date, then to the extent that the amount of such prior bill
proves to be more or less than the actual charges for the period in question, a
further adjustment shall be made after the Escrow Closing Date as soon as the
actual charges for such utilities are available.
3.7 Collected rents for the then current period; security deposits paid by
Tenants under the Leases which have not been previously applied by Seller and
are being held by Seller; prepaid rentals; collected or prepaid common area
maintenance charges; collected or prepaid promotional charges; collected or
prepaid service charges; collected or prepaid tax charges, and all other
collected or prepaid incidental expenses and charges paid by Tenants shall be
apportioned and full value shall be adjusted as of the Escrow Closing Date, and
the net amount thereof, if in favor of Seller, shall be credited to Seller at
Close of Escrow, or if in favor of Buyer, shall be credited to Buyer at Close of
Escrow. From and after Close of Escrow all security deposits credited to Buyer
shall thereafter be deemed transferred to Buyer and Buyer shall assume and be
solely responsible for the payments of security deposits (to the extent which
Buyer was credited therefor at Close of Escrow) to Tenants in accordance with
the Leases and applicable law. Seller shall be entitled to retain and/or receive
a credit for any utility deposits and any deposits for third parties under any
of the Contracts (as hereinafter defined).
3.7.1 All rentals and other Tenant charges payable in arrears and
uncollected and all other uncollected rents (including, but not limited
to, percentage rents, common area maintenance charges and real estate tax
charge annual adjustments thereto) for the current and prior rental
periods, less the reasonable expenses of collection thereof, shall be
apportioned (if and when collected by either party); provided, however,
that Buyer shall proceed in a commercially reasonable manner consistent
with Buyer's customary practice for Tenants owing past due rent to it to
collect such uncollected rents from existing Tenants listed on the Rent
Roll, as hereinafter defined; provided that Buyer shall not be obligated
to commence suit against any Tenant and Buyer shall first apply rents
subsequently received to rent due and owing for rental periods accruing
after the Escrow Closing Date. Buyer shall not settle or release (i)
Tenants from any obligations for such uncollected rents or (ii) rights
under any claims listed in Section 3.7.2 below, in each case, without
Seller's prior written approval. Buyer shall provide Seller with written
evidence of its collection efforts for a period of six (6) months from the
Escrow Closing Date, such evidence shall include, but not be limited to
providing copies of letters and invoices to Tenants, copies of reports
regarding follow-up efforts and cash receipts and aged delinquency
reports. Buyer shall provide such written evidence of its collection
efforts within fifteen (15) days of demand therefor provided that Seller
may request such evidence no more than on a quarterly basis. Seller shall
agree not to commence suit against Tenants listed on the Rent Roll for
obligations owed to it unless Buyer fails to fulfill its obligations under
this Section 3.7.1. Buyer shall be entitled to a credit for free rent
periods which occur after the Escrow Closing Date under leases listed on
the Rent Roll as of the date of this Agreement, provided that the free
rent periods were negotiated by Seller and not by Buyer.
3.7.2 Seller shall retain all rights to all refunds, receivables,
past due rent and claims, including, but not limited to, termination fees
or damages from all former Tenants or occupants of the Property which are
not listed on the Rent Roll, causes of action and rights of reimbursement
from third parties, bonds, accounts receivable and any other claims for
payments Seller may have to the extent arising or relating to the period
prior to the Close of Escrow.
3.7.3 In the event, on the Escrow Closing Date, the precise figures
necessary for any of the foregoing adjustments are not capable of
determination, then, at Buyer's option, those adjustments shall be made
either (i) on the basis of good faith estimates of Seller and Buyer using
currently available information, and final adjustments shall be made
promptly after precise figures are determined or available or (ii) when
all information for all final adjustments are determined or available.
3.8 At the Close of Escrow, Seller shall pay the amount due for (a) any
state or county transfer tax (or any tax substituted therefor, i.e. the
documentary transfer tax) imposed in connection with the consummation of the
transaction contemplated hereby (the Transfer Tax); (b) recording charges to
record any documents to clear title; (c) Seller's Attorneys' fees; and (d) all
leasing commissions due or to become due pursuant to any lease of any part of
the Property or any renewal or extension right thereof which accrue prior to the
Escrow Closing Date (those leasing commissions which accrue after the Escrow
Closing Date are the responsibility of Buyer); (e) half of all escrow fees.
3.9 At the Close of Escrow, Buyer shall pay for (a) any local tax or
mortgage tax other than the Transfer Tax; (b) recording charges to record the
grant deed; (c) survey charges; (d) any and all costs associated with obtaining
a preliminary Title Report, a title commitment and all title insurance premiums
and charges including but not limited to charges for any extended coverage or
title endorsements; (e) half of all escrow fees; and (f) Buyer's Attorneys' fees
and all costs related to the Buyer's due diligence.
3.10 All other closing costs shall be paid by Seller or Buyer in
accordance with the custom in the jurisdiction where the Property is located.
3.11 The provisions of this Article 3 shall survive the Close of Escrow.
ARTICLE 4
PRECLOSING OPERATION
4.1 A rent roll prepared and certified by Seller's property manager (the
Rent Roll) containing a list of all current occupants of the Property is
attached hereto as Schedule D. The leases listed on the Rent Roll, together with
leases entered into pursuant to this Article 4 are collectively referred to
herein as the Leases.
4.2 Seller shall not, after the date hereof; (i) enter into any new Leases
or materially amend or terminate any existing Leases, (ii) enter into or modify
any service contracts, operating agreements, or reciprocal easement agreements,
(iii) alter the zoning classification of the Property or (iv) materially alter
any Improvements, without the prior written consent of Buyer in any such
instance, which consent shall not be unreasonably withheld or delayed. If Buyer
does not notify Seller in writing of its denial of consent within five (5) days
after written request therefor from Seller, Buyer shall be deemed to have
consented to such requested action. In the event Buyer denies its consent, Buyer
shall specify its reasons for denial in its written notice thereof. In the event
Seller's requested action with respect to a Lease is consented to or deemed
consented to by Buyer, Seller shall pay for those tenant improvements and
leasing commissions as disclosed on Seller's request for consent which accrue
prior to the Escrow Closing Date and Buyer shall pay for those tenant
improvements and leasing commissions as disclosed on Seller's request for
consent which accrue on or after the Escrow Closing Date.
4.3 At all times prior to Close of Escrow, Seller shall continue (a) to
conduct business with respect to the Property in the same manner in which said
business has been heretofore conducted and (b) to insure the Property
substantially as currently insured.
4.4 Buyer shall, by written notice to Seller, on or before the Diligence
Date (as hereinafter defined), identify any Contracts (as defined in Section 5.2
below) which it elects to have assigned to it and therefore will assume. Buyer
shall be deemed to have elected not to assume any Contracts which are not
identified as to be assigned and assumed. Seller shall terminate any Contracts
at Close of Escrow which are not identified by Buyer as specified in this
section as to be assigned and assumed at Close of Escrow, provided that such
Contracts may be terminated without cost or liability to Seller.
4.5 Seller shall use commercially reasonable efforts to obtain tenant
estoppel certificates, from all Tenants currently occupying their space under
the Lease in substantially the form attached hereto as Schedule F. Seller shall
not be obligated to expend more than nominal funds in pursuit of such tenant
estoppel certificates.
ARTICLE 5
ACCESS, INSPECTION AND DILIGENCE
5.1 Seller agrees that Buyer and its authorized agents or representatives
shall be entitled to enter upon the Real Property and the Improvements during
normal business hours after one (1) day advance written notice to Seller (in
each case subject to the rights of Tenants under the Leases) to make such
reasonable investigations, studies, and tests as Buyer deems necessary or
advisable; provided, however, that Buyer shall not be permitted to conduct
physical testing or conduct interviews with Tenants without Seller's prior
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed. Seller shall use its commercially reasonable efforts to make its
personnel available for such inspections or interviews upon one (1) day prior
written notice. Seller's prior written approval for physical inspections may be
conditioned on receipt of a detailed description of the proposed physical
inspection, a list of the contractors who will be performing the physical
inspection, evidence of insurance satisfactory to Seller, and such other
information as Seller reasonably requires in connection with such proposed
inspection. Buyer may not interview Tenants unless a duly authorized
representative of Seller accompanies Buyer. Seller also agrees to make available
to Buyer during normal business hours upon advance written notice to Seller all
books, records, plans, building specifications, contracts, agreements or other
instruments or documents contained in Seller's files relating to the
construction, operation and maintenance of the Property and the files of the
current manager of the Property that relate to the Property. Seller hereby
agrees that Buyer may conduct a non-intrusive seismic study of the Property and
may obtain an independent non-intrusive roofing inspection of the Property.
5.2 Seller shall provide Buyer, promptly after Seller's execution of this
Agreement, with copies of all (i) Leases, (ii) all maintenance, service, supply,
equipment rental, management and leasing contracts affecting the Property
(collectively, the Contracts) which it has in its files and shall instruct its
property manager to make such Leases and Contracts available to Buyer for
inspection, and (iii) such other information and reports affecting the Property
to the extent in Seller's possession or control.
Buyer acknowledges and agrees that any and all information, documents,
surveys, studies and additional reports provided to Buyer are provided for
informational purposes only and do not constitute representations and warranties
of Seller of any kind.
5.3 Buyer shall promptly commence and actively pursue its due diligence on
the Property, including, but not limited to the following items:
(a) Review of title and survey matters;
(b) Review of Contracts and information materials;
(c) Obtain and review engineering reports on structural condition
of the mechanical systems;
(d) Obtain and review environmental reports on oil, hazardous
waste, and asbestos;
(e) Review of applicable zoning and other land use controls, and
other permits, licenses, permissions, approvals and consents;
(f) Conduct tenant interviews, subject to Section 5.1 above; and
(g) Review of all Leases affecting the Property.
Buyer shall complete its due diligence including, but not limited to the
foregoing, no later than thirty (30) days after the date of this Agreement (the
Diligence Date). In the event that Buyer's due diligence shall reveal any
matters which are not acceptable to Buyer in Buyer's sole and absolute
discretion for any reason or for no reason, Buyer may elect, by prior written
notice to Seller, received by Seller on or before 5:00 p.m. Eastern Standard
Time on the Diligence Date, not to proceed with this purchase, in which event
this Agreement shall terminate, the Escrowed Amount shall be returned to Buyer
and this Agreement shall be null and void without recourse to either party
hereto (except to the extent such recourse arises in connection with a provision
of this Agreement which is intended to survive termination); provided, however,
that the Inspection Fee shall remain the property of Seller. In the event Buyer
does not terminate this Agreement on or before the Diligence Date, the Escrowed
Amount shall become nonrefundable and Buyer shall deposit the Additional
Deposit, as defined in Section 3.2, with the Escrow Holder by 5:00 p.m. Eastern
Standard Time on the date which is two (2) business days after the Diligence
Date. In the event Buyer fails to make the Additional Deposit as required
hereunder, Buyer shall be deemed to have given notice of its election to
terminate this Agreement, the Deposit shall be returned to Seller as liquidated
damages and this Agreement shall terminate without further recourse to either
party hereto, other than those provisions intended to survive.
Buyer acknowledges that as of the Close of Escrow it will have had an
opportunity to conduct diligence on the Property and is acquiring the Property
in its current condition based on its diligence. Buyer further acknowledges that
neither Seller nor its employees, agents or representatives have made any
representation or warranty as to the condition of the Property or the presence
or absence of any hazardous materials on, in, under or within the Property or a
portion thereof which survive the Close of Escrow hereunder except as expressly
provided in this Agreement. BUYER ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS
TO BE CONVEYED BY SELLER TO BUYER AS IS, WITH ALL FAULTS, AND SUBSTANTIALLY IN
ITS CURRENT CONDITION. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
EXPRESSLY CONTAINED IN THIS AGREEMENT, NEITHER SELLER NOR ANY AGENT, EMPLOYEE OR
OTHER REPRESENTATIVE OF SELLER (OR PURPORTED AGENT, EMPLOYEE OR OTHER
REPRESENTATIVE OF SELLER) HAS MADE ANY GUARANTEE, REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED (AND SELLER SHALL NOT HAVE ANY LIABILITY WHATSOEVER) AS TO
THE VALUE, USES, HABITABILITY, CONDITION, DESIGN, OPERATION, FINANCIAL CONDITION
OR PROSPECTS, OR FITNESS FOR PURPOSE OR USE OF THE PROPERTY (OR ANY PART
THEREOF) OR THE INFORMATION MATERIALS NOT PREPARED BY SELLER, OR ANY OTHER
GUARANTEE, REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY PORTION OF THE PROPERTY (OR ANY PART THEREOF) OR THE INFORMATION
MATERIALS SUPPLIED TO BUYER. FURTHER, SELLER SHALL HAVE NO LIABILITY FOR ANY
LATENT, HIDDEN, OR PATENT DEFECT AS TO THE PROPERTY OR THE FAILURE OF THE
PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH ANY APPLICABLE LAWS AND
REGULATIONS. IN PARTICULAR, BUYER ACKNOWLEDGES AND AGREES THAT THE INFORMATION
MATERIALS PROVIDED UNDER THIS AGREEMENT (AND ANY OTHER INFORMATION BUYER MAY
HAVE OBTAINED REGARDING IN ANY WAY ANY OF THE PROPERTY, INCLUDING WITHOUT
LIMITATION, ITS OPERATIONS OR ITS FINANCIAL HISTORY OR PROSPECTS FROM SELLER OR
ITS AGENTS, EMPLOYEES OR OTHER REPRESENTATIVES BUT NOT INCLUDING INFORMATION
PREPARED BY SELLER) IS DELIVERED TO BUYER AS A COURTESY, WITHOUT REPRESENTATION
OR WARRANTY AS TO ITS ACCURACY OR COMPLETENESS (EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT), AND NOT AS AN INDUCEMENT TO ACQUIRE THE PROPERTY; THAT NOTHING
CONTAINED IN SUCH DELIVERIES SHALL CONSTITUTE OR BE DEEMED TO BE A GUARANTEE,
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IN ANY REGARD AS TO ANY OF THE
PROPERTY (EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT); AND THAT BUYER IS
RELYING ONLY UPON THE PROVISIONS OF THIS AGREEMENT AND ITS OWN INDEPENDENT
ASSESSMENT OF THE PROPERTY AND ITS PROSPECTS IN DETERMINING WHETHER TO ACQUIRE
THE PROPERTY. The provisions of this paragraph shall survive the Close of
Escrow.
5.4 Return of Documents. If this Agreement is terminated for any reason
whatsoever, Buyer shall promptly deliver to Seller all documents, plans,
surveys, contracts, Leases and the like delivered to Buyer or Buyer's agents,
representatives or designees by Seller or Seller's agents, representatives or
employees pursuant to this Agreement. The return of the Escrowed Amount to Buyer
under this Agreement shall be contingent upon Buyer's fulfillment of the
obligations under this Section 5.4.
5.5 Confidentiality. Each party hereto agrees to maintain in confidence,
and not to discuss with or to disclose to any person or entity who is not a
party to this Agreement, any material term of this Agreement or any aspect of
the transactions contemplated hereby, except as provided in this Section. Seller
may publicly disclose the existence of this Agreement provided that the identity
of Buyer is not disclosed. Each party hereto may discuss with and disclose to
its directors, officers and employees, accountants, attorneys, existing or
prospective lenders, investment bankers, underwriters, rating agencies,
partners, consultant's and other advisors to the extent such parties reasonably
need to know such information and are bound by a confidentiality obligation
identical in all material respects to the one created by this Section.
Additionally, each party may discuss and disclose such matters to the extent
necessary to comply with any requirements of the Securities and Exchange
Commission or in order to comply with any securities law or interpretation
thereof. This provision shall survive termination of this Agreement but shall
terminate upon Close of Escrow. Buyer and Seller do not contemplate issuing a
press release until after the Diligence Date. Any press release to be made
regarding any matter which is the subject of the confidentiality obligation
created in this Section shall be subject to the reasonable approval of Buyer and
Seller, respectively, both as to timing and content. Buyer agrees that neither
it nor any affiliate will acquire or enter into any agreement to acquire, either
directly or indirectly, any interest in Seller.
5.6 Indemnity. If any inspection or test disturbs any of the Property,
Buyer will restore the Property to substantially the same condition as existed
prior to any such inspection or test. Buyer shall keep the Property free and
clear of any liens and will indemnify, defend, and hold Seller harmless from all
losses, costs and damages including reasonable Attorneys' fees incurred by
Seller as a result of such entry or investigation by or on behalf of Buyer other
than loss, cost or damage which is discovered (and not caused) by such
investigation as a result of pre-existing conditions. This indemnity obligation
of Buyer shall survive the termination of this Agreement for any reason.
5.7 Buyer's Release of Seller. SELLER AND ITS PROPERTY MANAGER ARE HEREBY
RELEASED FROM ALL RESPONSIBILITY AND LIABILITY REGARDING THE CONDITION
(INCLUDING THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND SURFACE AND SUBSURFACE
WATERS, OF MATERIALS OR SUBSTANCES THAT HAVE BEEN OR MAY BE IN THE FUTURE
DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR SUBJECT TO REGULATION AND THAT
MAY NEED TO BE SPECIALLY TREATED, HANDLED AND/OR REMOVED FROM THE PROPERTY UNDER
CURRENT OR FUTURE FEDERAL, STATE AND LOCAL LAWS, REGULATIONS OR GUIDELINES),
VALUATION, SALABILITY OR UTILITY OF THE PROPERTY, OR ITS SUITABILITY FOR ANY
PURPOSE WHATSOEVER. BUYER ACKNOWLEDGES THAT ANY INFORMATION OF ANY TYPE WHICH
BUYER HAS RECEIVED OR MAY RECEIVE FROM SELLER, ITS PROPERTY MANAGER OR THEIR
RESPECTIVE AGENTS, INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL REPORTS AND
SURVEYS, IS FURNISHED ON THE EXPRESS CONDITION THAT BUYER SHALL MAKE AN
INDEPENDENT VERIFICATION OF THE ACCURACY OF SUCH INFORMATION, ALL SUCH
INFORMATION BEING FURNISHED WITHOUT ANY WARRANTY WHATSOEVER.
ARTICLE 6
TITLE, SURVEY, CONDITIONS AND REPRESENTATIONS
6.1 Promptly following the execution of this Agreement, Seller shall
provide Buyer with
(a) an ALTA as-built survey of the Real Property (the Survey);
(b) a commitment for a standard ALTA Owner's Policy of Title
Insurance showing Buyer as insured, fee simple title to the
Real Property as the insured estate and the Purchase Price as
the insurance coverage amount (the Title Commitment); and
(c) a Phase I Environmental Inspection Report (the Phase I).
If (i) any matter disclosed on the Survey; (ii) matters listed as
exceptions in the Title Commitment; or (iii) matters disclosed in the Phase I
report are not each satisfactory to Buyer, it shall, within ten (10) days
following receipt of the Title Commitment, provide Seller with written notice of
such objections and if Seller is unable or unwilling to cure such objections,
prior to the Diligence Date, Buyer may terminate this Agreement as provided in
Section 5.3 above or waive such objection and proceed to Close of Escrow. Seller
shall notify Buyer within ten (10) days following receipt of written notice of
Buyer's objections whether Seller is willing or able to cure any such
objections, provided that Seller shall not be obligated to cure any such
objections other than voluntary monetary encumbrances. To enable Seller to
convey, Seller may, at the Close of Escrow use the Purchase Price or any portion
thereof to clear title. Those exceptions or title deficiencies that appear on
the Title Commitment and are not objected to by Buyer shall be the Permitted
Encumbrances.
6.2 On the Escrow Closing Date, Seller shall convey by Grant Deed to
Buyer, title to all of the Real Property and the Improvements free and clear of
all liens, encumbrances, conditions, easements, assessments, restrictions and
other conditions, except for the following:
(a) The lien, if any, for real estate taxes not yet due and payable;
(b) All matters listed on the Title Commitment and as would be
disclosed on a current Survey and not objected to pursuant to
Section 6.1 above;
(c) All Leases disclosed to Buyer;
(d) All zoning, building and other laws applicable to the Property;
and
(e) All matters which arise after the effective date of the Title
Commitment which are agreed upon or consented to by Buyer in
writing.
6.3 At the Closing, Seller shall assign the Leases and Contracts which are
not to be terminated and intangible property, if any, to Buyer and Buyer shall
assume Seller's obligations thereunder from and after the Escrow Closing Date
and Seller shall convey the Personal Property to Buyer by quitclaim bill of
sale.
6.4 Representations and Warranties
6.4.1 Seller hereby represents and warrants to Buyer as of the date
of this Agreement as follows:
(a) Organization and Power. Seller is a general partnership validly
existing under the laws of the State of California with all necessary
legal power to enter into and perform its obligations hereunder and under
any document or instrument required hereunder to be executed and delivered
on behalf of Seller;
(b) Authorization and Execution. The execution and delivery of this
Agreement and the consummation of the transaction contemplated hereby have
been duly authorized by all necessary parties and no other proceedings on
the part of Seller are necessary in order to permit it to consummate the
transaction contemplated hereby. This Agreement has been duly executed and
delivered by Seller and (assuming valid execution and delivery by Buyer)
is a legal, solid and binding obligation of Seller enforceable against it
in accordance with its terms;
(c) Governmental Notices. Seller has not received any written notice
from a government agency that the location, construction, occupancy,
operation, and use of the Property (including any improvements and
equipment forming any part thereof) violate any applicable law, statute,
ordinance, rule, regulation, order or determination of any governmental
authority or any board of fire underwriters (or similar body), or any
restrictive covenant or deed restriction or zoning ordinance or
classification affecting the Property, including, without limitation, all
applicable building codes, flood disaster laws, and health and
environmental laws and regulations (hereinafter sometime collectively
called Applicable Laws). Seller has not received any written notice from a
governmental agency that the Property and Seller are currently subject to
any existing pending or threatened investigation or inquiry by any
governmental authority or to any remedial obligations under any Applicable
Laws pertaining to health or the environment;
(d) Bankruptcy. There is no pending bankruptcy, insolvency or
similar state law proceeding pending against Seller or any partner of
Seller which would have an effect on Seller's ability to perform its
obligations hereunder.
(e) No Litigation. To the best of the Seller's actual knowledge
there are no actions, suits or proceedings (including arbitration
proceedings) pending or threatened against the Seller before or by any
federal, state, municipal or other court, governmental department,
commission, board, bureau, agency or instrumentality, wherein (either
individually or in the aggregate) an unfavorable decision, ruling or
finding would materially and adversely affect the delivery, validity or
enforceability of this Agreement or the consummation of the transactions
contemplated hereby or which could have a material and adverse effect on
the business, assets or financial condition of the Seller or its Partners.
6.4.2 The representations and warranties contained in Section 6.4.1
are hereby qualified to Seller's actual knowledge without further inquiry. Each
representation or warranty contained in Section 6.4.1 is subject to being
updated by Seller in writing on or before the Diligence Date and shall be deemed
to have been amended and updated by any information delivered to or made
available to Buyer and any other information obtained by Buyer in connection
with its diligence (including but not limited to tenant estoppel certificates).
For purposes of Section 6.4.1 actual knowledge of Seller without further inquiry
shall mean the actual awareness of Frank Huemmer provided that such individuals
have no obligation to make further inquiry of any persons other than reasonable
inquiry of its property manager. No representations or warranties made hereunder
shall survive Close of Escrow.
6.4.3 Buyer hereby represents and warrants to Seller as of the date
of this Agreement as follows:
(a) Organization and Power. Buyer is a corporation organized,
existing and in good standing under the laws of the State of California
and has the requisite power and authority to enter into and perform the
terms of this Agreement; and
(b) Authorization and Execution. The execution and delivery of this
Agreement and the consummation of the transaction contemplated hereby have
been duly authorized by all necessary parties and no other proceedings on
the part of Buyer are necessary in order to permit it to consummate the
transaction contemplated hereby. This Agreement has been duly executed and
delivered by Buyer and (assuming valid execution and delivery by Seller)
is a legal, valid and binding obligation of Buyer enforceable against it
in accordance with its terms.
6.5 The obligations of Buyer to consummate the transaction contemplated by
this Agreement are subject to (a) the representations and warranties made by
Seller in this Agreement being true and correct in all material respects on and
as of the Escrow Closing Date with the same force and effect as though such
representations and warranties had been made as of the Escrow Closing Date and
(b) receipt by Buyer of estoppel certificates in substantially the form attached
hereto as Schedule F or in the form or containing the information required under
the applicable leases, from the following tenants: Commonwealth Energy Corp.,
Ocean West Enterprises and Michael Brandman Associates, as well as from those
tenants listed on the Rent Roll which, together with the tenants named above,
represent at least ninety percent (90%) of the leased area of the Property (the
Required Level).
6.6 The obligations of Seller to consummate the transaction contemplated
by this Agreement are subject to the representations and warranties made by
Buyer in this Agreement being true and correct in all material respects on and
as of the Escrow Closing Date with the same force and effect as though such
representations and warranties had been made as of the Escrow Closing Date.
ARTICLE 7
CLOSE OF ESCROW
7.1 The consummation of the purchase and sale contemplated in this
Agreement (the Close of Escrow) shall occur in the offices of the Escrow Holder
at 8:00 am Pacific Time thirty (30) days after the expiration of the Diligence
Date, (the Escrow Closing Date), unless such day is not a day on which the
Orange County Recorders Office is open for business, in which case, the Close of
Escrow shall take place on the next day on which such registry is open. It is
agreed that time is of the essence in this Agreement. The Escrow Closing Date
may be extended or the place of the Close of Escrow may be changed by mutual
written agreement of Buyer and Seller. Buyer may elect to extend the Escrow
Closing Date for two successive fifteen (15) day periods by providing Seller
with prior written notice of its desire to extend the Escrow Closing Date by
5:00 p.m. Eastern Standard Time at least three (3) business days prior to the
Diligence Date or by three (3) business days prior to the end of the first
fifteen (15) day extension (the First Extension Date), as the case may be. As a
condition of obtaining such extensions, Buyer shall deposit with the Escrow
Holder One Hundred Thousand Dollars ($100,000) for each extension by 5:00 p.m.
Eastern Standard Time within two (2) business days after the Diligence Date or
the First Extension Date, as the case may be.
7.2 On or before the Escrow Closing Date Seller shall deliver or cause to
be delivered at its expense each of the following items to the Escrow Holder:
(a) A duly executed and acknowledged grant deed as provided for in
Section 6.2, in the form of SCHEDULE H attached hereto and incorporated
herein conveying the Real Property to the Buyer;
(b) Two duly executed quitclaim bills of sale conveying the Personal
Property to the Buyer in the form of SCHEDULE I attached hereto and
incorporated herein (the Bill of Sale);
(c) Two duly executed Assignment and Assumptions of Leases without
recourse in the form of SCHEDULE J attached hereto and incorporated herein
(the Assignment of Leases);
(d) Two duly executed Assignment and Assumptions of Contracts and
warranties, if any, without recourse in the form of SCHEDULE K attached
hereto and incorporated herein (the Assignment of Contracts);
(e) A certificate of non-foreign status from the Seller for both
federal and California tax law purposes, in the form of SCHEDULE L
attached hereto and incorporated herein (the Non-Foreign Affidavit);
(f) Three counterpart originals of the 1099 Designation Agreement in
the form of SCHEDULE E attached hereto and incorporated herein (the 1099
Designation Agreement);
(g) Two counterpart originals of the closing statement (may be
facsimiles) setting forth the Purchase Price, the closing adjustments and
the application of the Purchase Price as adjusted (the Closing Statement);
(h) Customary affidavits sufficient for the Title Company to delete
any exceptions for mechanics or materialmen's' liens from the Buyer's
title policy and such other affidavits relating to such title policy as
the Title Company may reasonably request;
(i) An updated Rent Roll certified by Seller or the property manager
as true and correct as of the Escrow Closing Date;
(j) Original executed Tenant Estoppel Certificates, as provided in
Section 6.5.
(k) All original Leases, Contracts, property management files and
Tenant correspondence, in each case if in Seller's possession;
(l) Keys to all locks which the property manager has in its
possession;
(m) Notice letters from Seller to Tenants of the sale of the
Property, the Assignment of the Leases, the notice of transfer of security
deposit, the transfer of claims made with regard to the security deposit
and the transferees name and address;
(n) All documents customarily and reasonably required by Title
Company confirming Seller's authority to sell the Property.
(o) Such other instruments as the Escrow Holder may reasonably
request to effectuate the transaction contemplated by this Agreement.
7.3 On or before the Escrow Closing Date Buyer shall deliver or cause to
be delivered at its expense each of the following to the Escrow Holder:
(a) The Purchase Price for the Property, as such Purchase Price may
have been further adjusted pursuant to the provisions of this Agreement
and credited for any portion of the Escrowed Amount paid to Seller, in the
manner provided for in Article 3;
(b) Two duly executed Assignment of Leases;
(c) Two duly executed Assignment of Contracts;
(d) Such evidence or documents as may reasonably be required by the
Escrow Holder or Seller evidencing the status and capacity of Buyer and
the Authority of the person or persons who are executing the various
documents on behalf of Buyer in connection with the purchase of the
Property;
(e) Such other instruments as the Escrow Holder may reasonably
request to effectuate the transaction contemplated by this Agreement;
(f) Three counterpart originals of the 1099 Designation Agreement;
and
(g) Two counterpart originals of the Closing Statement.
7.4 Upon the Close of Escrow, Escrow Holder shall promptly undertake the
following in the manner indicated:
(a) Cause the grant deed to be recorded in the Official Records of
Orange County.
(b) Disburse all funds deposited with Escrow Holder by Buyer towards
payment of the Purchase Price as provided for in the Closing Statement.
(c) Deliver a title insurance policy to Buyer, along with all
endorsements thereto requested by Buyer.
(d) Deliver one original executed Bill of Sale, Assignment of
Leases, Assignment of Contracts, 1099 Designation Agreement (after
executing the same) and Closing Statement to each of Buyer and Seller.
(e) Deliver the certificate of non-foreign status from the Seller,
the Tenant Estoppel Certificates, the Leases, the Tenant correspondence,
the keys, and the notice letters to the Buyer.
(f) Deliver to both Buyer and Seller copies of all other documents
delivered by either party or recorded pursuant to this Agreement.
ARTICLE 8
CASUALTY AND CONDEMNATION
8.1 If the Improvements are materially damaged by fire or any other
casualty and are not substantially restored to the condition immediately prior
to such casualty before the Closing Date, Buyer shall have the following
elections:
(a) to purchase the Property in its then condition and pay the
Purchase Price, in which event Seller shall pay over or assign to Buyer as
the case may be, on the Closing Date, all amounts recovered or recoverable
by Seller on account of any insurance as a result of such casualty plus
the amount of any applicable deductible, less any amounts reasonably
expended by Seller for partial restoration; or
(b) if any portion of the Improvements shall have been substantially
destroyed, to terminate this Agreement by giving notice of termination to
Seller on or before that date which is thirty (30) days after the
occurrence of the fire or other casualty or on the Closing Date, whichever
occurs first, in which event the Title Company shall return the Escrowed
Amount to Buyer, this Agreement shall terminate and neither Seller nor
Buyer shall have any recourse against the other (except to the extent such
recourse arises in connection with a provision of this Agreement which is
intended to survive termination). For purposes of this subparagraph (b),
substantially destroyed shall mean damage, in Seller's reasonable
judgment, greater than $250,000.
8.2 If any portion of or interest in the Property shall be taken or is in
the process of being taken by exercise of the power of eminent domain or if any
governmental authority notifies Seller prior to the Closing Date of its intent
to take or acquire any portion of or interest in the Property (each an Eminent
Domain Taking), Seller shall give notice promptly to Buyer of such event and
Buyer shall have the option to terminate this Agreement by providing notice to
Seller to such effect on or before the date which is ten (10) days from Seller's
notice to Buyer of such Eminent Domain Taking or on the Closing Date, whichever
occurs first, in which event the Title Company shall return the Escrowed Amount
to Buyer, this Agreement shall terminate, and neither Seller nor Buyer shall
have any recourse against the other. If Buyer does not timely notify Seller of
its election to terminate this Agreement, Buyer shall purchase the Property and
pay the Purchase Price, and Seller shall pay over or assign to Buyer on delivery
of the deed all awards recovered or recoverable by Seller on account of such
Eminent Domain Taking, less any amounts reasonably expended by Seller in
obtaining such award.
ARTICLE 9
BROKERAGE COMMISSIONS
Seller represents and warrants to Buyer that Seller has not used or
employed any broker or brokers in connection with the negotiation, execution or
consummation of the transaction contemplated by this Agreement other than
Cushman Investment Services, a division of Cushman Realty Corporation (Seller's
Agent). Seller will indemnify, defend and hold Buyer harmless from and against
any claims of Seller's Agent for any commission, finder's fee, or other
compensation in connection with the transactions contemplated by this Agreement.
Seller agrees to pay Seller's Agent its commission in accordance with a separate
agreement between Seller and Seller's Agent.
Buyer represents and warrants to Seller that Buyer has not used or
employed any broker or brokers in connection with the negotiation, execution or
consummation of the transaction contemplated by this Agreement.
Buyer and Seller each hereby agree to indemnify, defend and hold the other
harmless from and against any claims, losses, damages, costs, or expenses
(including, but not limited to, reasonable Attorneys' fees) of any kind or
character which arise as a result of breach of the foregoing representation and
warranty. This Section 9 shall survive the Closing or earlier termination of the
Agreement.
ARTICLE 10
DEFAULT, TERMINATION AND REMEDIES
10.1 In the event that Seller shall have failed in any material respect
adverse to Buyer on the Escrow Closing Date to have performed any of the
covenants and agreements contained in this Agreement which are to be performed
by Seller on or before the Escrow Closing Date, or if Seller defaults in its
obligation to close hereunder, Buyer shall have the following remedies, (i) the
right to take any and all legal actions necessary to compel Seller's specific
performance hereunder (it being acknowledged that damages at law would be an
inadequate remedy), and to consummate the transaction contemplated by this
Agreement in accordance with the provisions of this Agreement (such conveyance
shall be deemed to satisfy and waive any other remedy) or (ii) the right to
terminate this Agreement and receive the Escrowed Amount.
10.2 IN THE EVENT THAT BUYER SHALL HAVE FAILED IN ANY MATERIAL RESPECT
ADVERSE TO SELLER ON THE ESCROW CLOSING DATE TO HAVE PERFORMED ANY OF THE
COVENANTS AND AGREEMENTS CONTAINED IN THIS AGREEMENT WHICH ARE TO BE PERFORMED
BY BUYER ON OR BEFORE THE ESCROW CLOSING DATE, OR IF BUYER DEFAULTS IN ITS
OBLIGATION TO CLOSE HEREUNDER, SELLER SHALL BE ENTITLED TO RECEIVE THE ESCROWED
AMOUNT AS LIQUIDATED DAMAGES, IN LIEU OF ALL OTHER REMEDIES AVAILABLE TO SELLER
AT LAW OR IN EQUITY FOR SUCH DEFAULT, AND BUYER SHALL DIRECT THE TITLE COMPANY
TO RELEASE THE ESCROWED AMOUNT TO SELLER. SELLER AND BUYER AGREE THAT THE
DAMAGES RESULTING TO SELLER AS A RESULT OF SUCH DEFAULT BY BUYER AS OF THE DATE
OF THIS AGREEMENT ARE DIFFICULT OR IMPOSSIBLE TO ASCERTAIN AND THE LIQUIDATED
DAMAGES SET FORTH IN THE PRECEDING SENTENCE CONSTITUTE BUYER'S AND SELLER'S
REASONABLE ESTIMATE OF SUCH DAMAGES. BUYER AND SELLER ACKNOWLEDGE THAT THE
PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY
WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS
INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CODE
SECTIONS 1671, 1676 AND 1677.
SELLER'S INITIALS____________ BUYER'S INITIALS ________________
ARTICLE 11
MISCELLANEOUS
11.1 Without the prior written consent of Seller, Buyer shall not,
directly or indirectly, assign this Agreement or any of its rights hereunder.
Any attempted assignment in violation hereof shall, at the election of Seller in
its sole discretion, be of no force or effect and shall constitute a default by
Buyer. Notwithstanding the foregoing and so long as it will not affect the
timing of the Close of Escrow, Buyer may elect to have a nominee of either (i)
Angelo, Gordon & Co. (Angelo), or an affiliated entity controlled by or under
common control with Angelo or (ii) an affiliated entity controlled by or under
common control with Buyer or any of its principals, in either case, without
prior consent of Seller. Buyer shall give written notice of such nominee to
Seller, together with any reasonable evidence of affiliation requested by
Seller, a minimum of fifteen (15) days prior to the Escrow Closing Date. No
designation of a nominee to receive title shall release Buyer from its
obligations under this Agreement. Buyer may not sell, transfer, assign or
otherwise convey this Agreement or any of its rights hereunder without being
subject to its rights and obligations under this Agreement.
11.2 Except as otherwise specifically provided herein, any notice required
or permitted to be delivered under this Agreement shall be in writing and shall
be deemed given if (i) delivered by hand during regular business hours, (ii)
sent by United States Postal Service, registered or certified mail, postage
prepaid, return receipt requested, (iii) sent by a reputable overnight express
mail service that provides tracing and proof of receipt or refusal of items
mailed, or (iv) sent by telecopier or facsimile transmission with confirmation
copy by notice methods (i), (ii) or (iii) above addressed to Seller or Buyer, as
the case may be, at the address or addresses set forth below or such other
addresses as the parties may designate in a notice similarly sent. Any notice
given by a party to Title Company shall be simultaneously given to the other
party. Any notice given by a party to the other party relating to its
entitlement to the Escrowed Amount shall be simultaneously given to the Title
Company.
(1) If to Buyer:
Touchstone Investments, Inc.
18301 Von Karman Avenue, Suite 490
Irvine, CA 92612
Attention: Gregory A. Erickson
Telecopy: (949) 442-1925
with a copy to:
Touchstone Investments, Inc.
18301 Von Karman Avenue, Suite 490
Irvine, California 92612
Attention: John W. Fitzgibbon, Esq.
Telecopy: (949) 442-1925
(2) If to Seller:
Warner/Red Hill Associates
c/o PaineWebber Properties Incorporated
265 Franklin Street, 15th Floor
Boston, MA 02110
Attention: Mr. Frank Huemmer
Telecopy: (617) 345-4752
with a copy to:
Goodwin, Procter &Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Andrew C. Sucoff, Esq.
Telecopy: (617) 277-8591
(3) If to the Title Company:
National Title Officer
LandAmerica Financial Group, inc.
One Washington Mall
Fifteenth Floor
Boston, MA 02108
Attention: David M. Walker
Phone: (617) 619-4807
Fax: (617) 619-4848
11.3 Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words of a singular number shall be
held to include the plural and vice versa, unless the context requires
otherwise.
11.4 The captions used in connection with the Articles of this Agreement
are for convenience only and shall not be deemed to extend, limit or otherwise
define or construe the meaning of the language of this Agreement.
11.5 Nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereto and their respective successors
and assigns, any rights or remedies under or by reason of this Agreement.
11.6 This Agreement may be amended only by a written instrument executed
by Seller and Buyer (or Buyer's assignee or transferee).
11.7 This Agreement embodies the entire agreement between Seller and Buyer
with respect to the transaction contemplated in this Agreement, and there have
been and are no covenants, agreements, representations, warranties or
restrictions between Seller and Buyer with regard thereto other than those set
forth or provided for in this Agreement.
11.8 This Agreement shall be construed under and in accordance with the
procedural and substantive laws of the State of California.
11.9 This Agreement may be executed in two (2) or more counterparts, each
of which shall be an original but such counterparts together shall constitute
one and the same instrument notwithstanding that both Buyer and Seller are not
signatory to the same counterpart.
11.10 The Title Company has executed this Agreement only for the purpose
of agreeing to perform the duties assigned to it under this Agreement. Prior to
the Diligence Date, Title Company is hereby authorized and directed to release
the Escrowed Amount to Buyer promptly upon Buyer's written request, without
joinder by Seller and not withstanding any objection interposed by Seller. This
Agreement shall terminate upon any such request from Buyer pursuant to Section
5.3 above. From and after the Diligence Date, the Title Company shall, upon
receiving a copy of a notice given by a party in accordance with this Agreement
claiming entitlement to all or a portion of the Escrowed Amount, give a notice
to the other party that such claim of entitlement has been made. If the Escrowed
Amount is in the form of a letter of credit and the expiry thereof has not been
extended, Title Company shall cause the letter of credit to be drawn upon and
hold the proceeds as the Escrowed Amount. The Title Company shall not cause or
permit any portion of the Escrowed Amount to be disbursed until the expiration
of five (5) days of giving such notice whereupon, if the party to whom such
notice was given has not given the Title Company notice of its objection to a
disbursement in accordance with the claim of entitlement, the Title Company
shall cause a disbursement of the Escrowed Amount as requested. If such party
timely objects, however, the Title Company shall retain the Escrowed Amount and
not disburse any portion of the same unless directed by the mutual written
direction of the parties. The Title Company shall at all times disburse the
Escrowed Amount as required in a mutual written direction of the parties.
11.11 The Escrow Holder has executed this Agreement only for the purpose
of agreeing to perform the duties assigned to it under this Agreement. The
Escrow Holder shall deposit the Escrowed Amount in an interest bearing account.
From the Opening of Escrow the Escrow Holder shall, upon receiving a copy of a
notice given by a party in accordance with this Agreement claiming entitlement
to all or a portion of the Escrowed Amount, give a notice to the other party
that such claim of entitlement has been made. The Escrow Holder shall not cause
or permit any portion of the Escrowed Amount to be disbursed until the
expiration of five (5) days of giving such notice whereupon, if the party to
whom such notice was given has not given the Escrow Holder notice of its
objection to a disbursement in accordance with the claim of entitlement, the
Escrow Holder shall cause a disbursement of the Escrowed Amount as requested. If
such party timely objects, however, the Escrow Holder shall retain the Escrowed
Amount and not disburse any portion of the same unless directed by the mutual
written direction of the parties. The Escrow Holder shall at all times disburse
the Escrowed Amount as required in a mutual written direction of the parties.
This Agreement shall terminate upon any such request from Buyer pursuant to
Sections 4.5, 5.3, 6.1 and 7.1 and Article 8 above.
11.12 In the event of any disagreement between the parties, the Title
Company shall retain all deposits pending instructions mutually agreed to by
Seller and Buyer. In the event there is no mutual agreement by Seller and Buyer
for disbursements, the Title Company shall hold said deposits pending a court
order to disburse. The Title Company may conclusively rely on the authenticity,
validity and effectiveness of any writing delivered to it, and Title Company
shall not be obligated to make any investigation or determination, except as
provided in the case of disputes as to the truth and accuracy of any information
contained therein. Buyer and Seller agree to defend, indemnify and hold Title
Company harmless from any liabilities, suits, claims, or expenses arising from
or out of or in connection with Title Company's acts or failure to act
hereunder, unless caused or created as a result of Title Company's gross
negligence, and Title Company shall be entitled to reimbursement by Buyer and/or
Seller for all reasonable costs and expenses incurred in the performance of its
duties hereunder including, without limitation, all out-of-pocket expenses and
reasonable Attorneys' fees of counsel retained by Title Company. Any such costs
and expenses not paid by the parties after billing and supporting documentation
by Title Company may be paid by Title Company out of the Escrowed Amount. If
there is a settlement by Buyer and Seller prior to a court order, Buyer and
Seller will share equally in the expenses incurred by the Title Company.
Otherwise, the non-prevailing party shall assume full responsibility for the
Title Company's expenses. Title Company is not required to advance or expend or
risk its own funds or otherwise incur personal liability in performance of its
duties hereunder and it may require advancement of funds by the parties.
11.13 Time is expressly declared to be of the essence of this Agreement.
11.14 The obligations of Seller hereunder shall be binding only on the
Property and neither Buyer nor anyone claiming by, through or under Buyer shall
be entitled to obtain any judgment extending liability beyond the Property or
creating personal liability on the part of the officers, directors,
shareholders, or agents of Seller or any of their successors. The obligations of
Buyer hereunder shall be binding only on the assets of Buyer and neither Seller
nor anyone claiming by, through or under Seller shall be entitled to obtain any
judgment creating personal liability on the part of the partners, officers,
shareholders, or agents of Buyer or any of their successors or any affiliated
entities.
11.15 As used herein, the term business day shall mean any day other than
on Saturday, Sunday, or federal holiday.
11.16 Property Conveyed AS IS.
(a) NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IT IS
UNDERSTOOD AND AGREED THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER AND ITS
PROPERTY MANAGER HAVE NOT MADE AND ARE NOT NOW MAKING, AND THEY SPECIFICALLY
DISCLAIM, ANY OTHER WARRANTIES, REPRESENTATIONS OR GUARANTIES OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, WITH
RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES,
REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF TITLE (OTHER THAN SELLER=S
WARRANTY OF TITLE SET FORTH IN THE DEED (HEREINAFTER DEFINED) TO BE DELIVERED AT
CLOSING), (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR ANY PORTION
THEREOF, (III) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUBSIDENCE,
SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER RESERVOIRS, LIMITATIONS
REGARDING THE WITHDRAWAL OF WATER, AND EARTHQUAKE FAULTS AND THE RESULTING
DAMAGE OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND TO THE EXTENT TO
WHICH THE PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM (SURFACE OR
UNDERGROUND), BODY OF WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY OR SPECIAL
FLOOD HAZARD, (V) DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE EXISTENCE OF
INSTABILITY, PAST SOLID REPAIRS, SOIL ADDITIONS OR CONDITIONS OF SOIL FILL, OR
SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY UNDERSHORING, (VII)
ZONING TO WHICH THE PROPERTY OR ANY PORTION THEREOF MAY BE SUBJECT, (VIII) THE
AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION THEREOF INCLUDING,
WITHOUT LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (IX) USAGES OF ADJOINING
PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF, (XI) THE VALUE,
COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION, AGE, USE, DESIGN,
QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY, OPERATION, TITLE TO, OR
PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY PORTION THEREOF, OR ANY
INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR AFFECTING
OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, OR ANY INCOME, EXPENSES,
CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR AFFECTING OR PERTAINING TO
THE PROPERTY OR ANY PART THEREOF, (XII) THE PRESENCE OF HAZARDOUS SUBSTANCES IN
OR ON, UNDER OR IN THE VICINITY OF THE PROPERTY, (XIII) THE CONDITION OR USE OF
THE PROPERTY OR COMPLIANCE OF THE PROPERTY WITH ANY OR ALL PAST, PRESENT OR
FUTURE FEDERAL, STATE OR LOCAL ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING,
FIRE OR ZONING ORDINANCES, CODES OR OTHER SIMILAR LAWS, (XIV) THE EXISTENCE OR
NON-EXISTENCE OF UNDERGROUND STORAGE TANKS, (XV) ANY OTHER MATTER AFFECTING THE
STABILITY OR INTEGRITY OF THE REAL PROPERTY, (XVI) THE POTENTIAL FOR FURTHER
DEVELOPMENT OF THE PROPERTY, (XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR
BUILDING ENTITLEMENTS AFFECTING THE PROPERTY, (XVIII) THE MERCHANTABILITY OF THE
PROPERTY OR FITNESS OF THAT PROPERTY FOR ANY PARTICULAR PURPOSE (BUYER AFFIRMING
THAT BUYER HAS NOT RELIED ON SELLER'S OR ITS PROPERTY MANAGERS SKILL OR JUDGMENT
TO SELECT OR FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT SELLER
MAKES NO WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE), OR (XIX)
TAX CONSEQUENCES.
(b) BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER
DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ITS PROPERTY
MANAGER OR ANY OF THEIR RESPECTIVE AGENTS, EXPECT AS EXPRESSLY SET FORTH HEREIN,
AND ACKNOWLEDGES THAT NO OTHER SUCH REPRESENTATIONS HAVE BEEN MADE. BUYER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF
REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
BUYER'S CONSULTANT'S IN PURCHASING THE PROPERTY. BUYER WILL CONDUCT SUCH
INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY AS BUYER DEEMS NECESSARY,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF, AND SHALL RELY UPON SAME. UPON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND
INVESTIGATIONS. BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER SHALL
SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY AS IS, WHERE IS,
WITH ALL FAULTS. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE
PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. THE TERMS AND
CONDITIONS OF THIS SECTION 11.4(B) SHALL EXPRESSLY SURVIVE THE CLOSING, NOT
MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE INCORPORATED
INTO THE DEED. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. BUYER
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE AS IS NATURE OF THIS SALE AND
ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED
WITH THE PROPERTY. BUYER HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET
FORTH IN THIS AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE SIGNIFICANCE AND
EFFECT THEREOF.
-------------- --------------
Seller's Initials Buyer's Initials
ARTICLE 12
IRS FORM 1099-S DESIGNATION
12.1 In order to comply with information reporting requirements of Section
6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder, the parties agree (1) to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as Schedule D at or prior to
the Closing to designate the Title Company (the Designee) as the party who shall
be responsible for reporting the contemplated sale of the Property to the
Internal Revenue Service (the IRS) on IRS Form 1099-S; (2) to provide the
Designee with the information necessary to complete Form 1099-S; (3) that the
Designee shall not be liable for the actions taken under this Agreement, or for
the consequences of those actions, except as they may be the result of gross
negligence or willful misconduct on the part of the Designee; and (4) that the
Designee shall be indemnified by the parties for any costs or expenses incurred
as a result of the actions taken hereunder, except as they may be the result of
gross negligence or willful misconduct on the part of the Designee. The Designee
shall provide all parties to this transaction with copies of the IRS Forms
1099-S filed with the IRS and with any other documents used to complete IRS Form
1099-S.
[Remainder of page left intentionally blank]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first set forth above.
SELLER:
WARNER/REDHILL ASSOCIATES
By: PaineWebber Equity Partners One Limited
Partnership, its Partner
By: First Equity Partners, Inc.
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first set forth above.
By: First Equity Partners, Inc., its Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first set forth above.
BUYER:
TOUCHSTONE INVESTMENTS, INC.
By: /s/ Gregory A. Erickson
-----------------------
Name: GREGORY A. ERICKSON
Title: President
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first set forth above.
LANDAMERICA FINANCIAL GROUP:
By: /s/ David M. Walker
-------------------
Name: David M. Walker
Title: National Title Officer
<PAGE>
Bill of Sale
This Bill of Sale is made as of this 24th day of September, 1999 from
Warner/Red Hill Associates, a California general partnership, having an office
at c/o PaineWebber Properties Incorporated, 265 Franklin Street, Boston,
Massachusetts 02110 (the Seller) to AG/Touchstone Warner Redhill, L.L.C., a
Delaware limited liability company, as assignee of Touchstone Investments, Inc.,
having an office at c/o Angelo, Gordon & Co., L.P., 245 Park
Avenue, 26th Floor, New York, New York 10167 (the Buyer).
WHEREAS, in connection with the conveyance of the real property commonly
known as Warner/Red Hill Business Center, Tustin, California (the Real
Property), Seller is obligated to convey, transfer, set over and assign to Buyer
all of the Sellers right, title and interest, if any, in and to all personal
property owned by Seller located at the Real Property, including all furniture,
carpeting, appliances, equipment, machinery, inventories, supplies, signs and
other tangible personal property of every kind and nature, if any, owned by
Seller and installed, located at and used in connection with the ownership,
occupation and operation of the Real Property, including, without limitation,
the personal property listed on Schedule A attached hereto, but specifically
excluding (i) any items of personal property owned by Tenants at or on the Real
Property, and (ii) any items of personal property owned by third parties and
leased to Seller (collectively Personal Property).
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller does hereby sell, deliver,
transfer, set over and assign unto Buyer the Personal Property in its as is
condition without express or implied warranty of any kind or nature except as
expressly set forth in the Purchase and Sale Agreement by and between Seller and
Buyer, to have and to hold the same unto Buyer and the Buyers successors and
assigns, forever.
<PAGE>
EXECUTED UNDER SEAL as of the date first written above.
WARNER RED/HILL ASSOCIATES
By: PaineWebber Equity Partners One Limited
Partnership, its Partner
By: First Equity Partners, Inc., its Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: First Equity Partners, Inc., its Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
<PAGE>
Grant Deed
RECORDING REQUESTED BY
WHEN RECORDED MAIL TO
AND MAIL TAX STATEMENTS TO
NAME AG/Touchstone Warner Redhill, L.L.C.
ADDRESS c/o Angelo, Gordon & Co., L.P., 245 Park Avenue, 26th Floor
CITY New York
STATE & ZIP New York 10167
- --------------------------------------------------------------------------------
APN Number: 43023103
GRANT DEED
IN ACCORDANCE WITH SECTION 11932 OF THE CALIFORNIA REVENUE AND TAXATION CODE,
GRANTOR HAS DECLARED THE AMOUNT OF THE TRANSFER TAX WHICH IS DUE BY SEPARATE
STATEMENT WHICH IS NOT BEING RECORDED WITH THIS GRANT DEED.
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
Warner/Red Hill Associates, a California general partnership hereby
GRANT(s) to:
AG/Touchstone Warner Redhill, L.L.C., a Delaware limited liability company
certain real property located in the City of Tustin, County of Orange, State of
California as more particularly described in Exhibit A attached hereto, subject
to and having the benefit of matters of record to the extent in effect.
Dated: September 24, 1999 Warner/Red Hill Associates
------------------
By: PaineWebber Equity Partners One Limited
Partnership, its Partner
By: First Equity Partners, Inc., its
Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: First Equity Partners, Inc., its Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
<PAGE>
Assignment and Assumption of Contracts and Intangibles
This Assignment and Assumption of Contracts and Intangibles (this
Assignment) is made and entered into as of this 24th day of September, 1999, by
and between Warner/Red Hill Associates, a California general partnership,
(Assignor), and AG/Touchstone Warner Redhill, L.L.C., a Delaware limited
liability company, as assignee of Touchstone Investments, Inc., a California
corporation, (Assignee).
WITNESSETH:
Assignor hereby assigns, sells, transfers, sets over and delivers unto
Assignee all of Assignor's estate, right, title and interest in and to the
following:
1. all licenses, permits, certificates of occupancy, approvals,
entitlement, dedications, and subdivision maps issued, approved or granted by
any governmental authorities or otherwise in connection with the real property
known as Warner/Red Hill Business Center, Tustin, California (Property)
described in Exhibit A attached hereto; the use of the name Warner/Red Hill
Business Center and any other trade names, trademarks, and logos used by
Assignor in the operation and identification of the Property; all development
rights and other intangible rights, titles, interests, privileges and
appurtenances of Assignor related to or used in connection with the Property and
its operation; and all licenses, consents, easements, rights of way and
approvals issued, approved or granted by any private parties to make use of
utilities and to insure vehicular and pedestrian ingress and egress to the
Property (collectively, Licenses and Permits);
2. all plans and specifications respecting any buildings or improvements
located on the Property; and all building inspection reports pertaining to the
Property which are owned by and within the possession or control of Assignor
(collectively, Records and Plans);
3. all warranties and guaranties in effect with respect to the Property
(the Warranties); and
4. the interest of Assignor in all other intangible personalty relating to
the use and operation of the Property including good will if any (the
Intangibles).
Assignor makes no warranties of any kind or nature, express or implied,
regarding the Licenses and Permits, Records and Plans and Warranties and
Intangibles.
Assignee hereby assumes the performance of all of the terms, convents and
conditions imposed upon Assignor under the Licenses and Permits, Records and
Plans and Warranties arising on or after the date of delivery of this
Assignment. Assignor shall be responsible for the performance of all of the
terms, covenants and conditions imposed upon Assignor under the Licenses and
Permits, Records and Plans and Warranties arising prior to the date of delivery
of this Assignment.
This Assignment may be executed in one or more counterparts, each of which
shall be deemed an original, and all of such counterparts, taken together, shall
constitute one and the same instrument.
The terms and provisions of this Assignment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of
the date first written above.
ASSIGNOR:
WARNER/RED HILL ASSOCIATES
By: PaineWebber Equity Partners One Limited
Partnership, its Partner
By: First Equity Partners, Inc., its
Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: First Equity Partners, Inc., its Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
ASSIGNEE:
AG/TOUCHSTONE WARNER REDHILL, L.L.C.
By: AG Asset Manager, Inc., a Delaware
Corporation, its Manager
By: /s/ Gregory A. Erickson
-----------------------
Name: Gregory A. Erickson
Title: President
<PAGE>
Assignment and Assumption of Leases and Security Deposits
THIS ASSIGNMENT OF LEASES AND SECURITY DEPOSITS (Assignment) is made
and entered into effective this 24th day of September, 1999, by and between
Warner/Red Hill Associates, a California general partnership (Assignor) and
AG/Touchstone Warner Redhill, L.L.C., a Delaware limited liability company, as
assignee of Touchstone Investments, Inc., a California corporation (Assignee).
The parties enter into this Assignment on the basis of and in
reliance upon the following facts:
A. Assignor has conveyed contemporaneously herewith to Assignee that
certain improved parcel of land located in Tustin, California, more particularly
described on EXHIBIT A attached hereto and by this reference incorporated
herewith (the Property).
B. Assignor has previously, in its capacity as owner of the Property,
entered into certain occupancy leases at the Property, which are currently in
force and effect, as described in EXHIBIT B attached hereto and by this
reference incorporated herewith (Leases).
C. Assignor now desires to assign and transfer to Assignee all of the
Leases, together with any security deposits paid pursuant to the terms thereof
and listed on EXHIBIT C attached hereto and made a part hereof for all purposes,
and Assignee desires to accept the Leases and all of Assignors right, title,
interest and obligations in, to and under the Leases, as set forth herein.
NOW, THEREFORE, in consideration of (i) Ten Dollars ($10.00) and
other good and valuable cash consideration and (ii) the mutual covenants and
promises of the parties provided for herein, Assignor and Assignee agree as
follows:
1. Assignment. Assignor hereby assigns all of its right, title and
interest in, to and under the Leases and any security deposits paid pursuant
thereto as set forth on EXHIBIT C to Assignee.
2. Assumption. Assignee hereby accepts said assignment and assumes all of
the obligations of Assignor under the Leases from and after the date hereof.
3. Counterparts. This Assignment may be executed in one (1) or more
counterparts, each of which shall be an original but such counterparts together
shall constitute one and the same instrument notwithstanding that all parties
are not signatory to the same counterpart.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have executed this Assignment
as of the date first written above.
ASSIGNOR:
WARNER/RED HILL ASSOCIATES
By: PaineWebber Equity Partners One Limited
Partnership, its Partner
By: First Equity Partners, Inc., its
Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
By: First Equity Partners, Inc., its Partner
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
ASSIGNEE:
AG/TOUCHSTONE WARNER REDHILL, L.L.C.
By: AG Asset Manager, Inc., a Delaware
Corporation, its Manager
By: /s/ Gregory A. Erickson
------------------------
Name: Gregory A. Erickson
Title: President
<PAGE>
<TABLE>
LAWYERS TITLE COMPANY
18551 Von Karman Avenue, Suite 100
Irvine, CA 92512
Escrow Statement
Escrow No.: 23916-JB
Seller: Warner/Red Hill Associates
C/0 PaineWebber Properties Inc.
265 Franklin Street, 15th Floor
Property Address: Red Hill/Warner Avenue Documents Recorded: 9/24/99
Irvine, CA
- --------------------------------------------------------------------------------
<CAPTION>
Debits Credits
<S> <C> <C>
Total consideration 10,900,000.00
Interest on money market
Warner/Redhill Associates 2,470.06
Demand for reconveyance of Trust Deed
Metropolitan Life Ins. 6,947,851.45
Principal balance 4,969,170.43
Interest thru 9/24/99 9,002.37
Interest from 9/25/99 to 9/27/99
Daily rate 391.410000
Total interest amount 1,174.23
Escrow balance (156,353.18)
Appreciation interest 2,124,857.60
County Pro rata taxes
From 7/1/99 to 9/24/99 12,563.28
83 days at 151.36477 per day
Broker's commission 168,000.00
Documentary transfer fee (City/County) 11,990.00
Recording of reconveyance 14.00
Amendment Lawyers Title 27.00
Policy of title insurance
Lawyers Title 10,900.00
Escrow fee 2,500.00
Recon/Tracking fee 25.00
Messenger fees LT500g 100.00
Release
Warner Redhill 3,000,000.00
Security deposits 168,633.76
Adjustment to purchase price 75,296.00
Rent proration 9/24 to 9/30 33,420.00
Utilities 9/1 to 9/24 16,242.91
Sub-totals 10,447,563.40 10,902,470.06
Check herewith 454,906.66
TOTAL 10,902,470.06 10,902,470.06
APPROVED:
By: /s/ Rock M. D'Errico
--------------------
Name: Rock M. D'Errico
Title: Vice President
</TABLE>
