<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 15, 1999
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact Name of Registrant as Specified in its Charter)
TEXAS 1-9016 75-6335572
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation or Organization) Identification Number)
6210 NORTH BELTLINE ROAD, SUITE 170, IRVING, TEXAS 75063
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (972) 756-6000
<PAGE> 2
The undersigned Registrant hereby amends its Current Report on Form 8-K dated
January 15, 1999, which was filed with the Securities and Exchange Commission
on January 29, 1999, to include the financial statements for the Northern
California & Colorado Portfolio required by Item 7 (a) and the pro forma
financial information required by Item 7 (b).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements: See Index to Financial Statements and Pro Forma
Financial Information appearing on page F-1 of this Form 8-K/A.
(b) Pro Forma Financial Information: See Index to Financial Statements and
Pro Forma Financial Information appearing on page F-1 of this Form
8-K/A.
(c) Exhibits
The following exhibits are filed with this report:
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
10.1 Agreement of Purchase and Sale, dated as of November
12, 1998, by and between Lincoln-Whitehall Realty,
L.L.C., Lincoln-Whitehall Pacific, L.L.C., WHLNF
Real Estate Limited Partnership, WHSUM Real Estate
Limited Partnership (collectively, the "Sellers")
and the Trust.
10.2 Amendment to Agreement of Purchase and Sale, dated
November 23, 1998, by and among the Sellers and the
Trust.
10.3 Second Amendment to Agreement of Purchase and Sale,
dated December 11, 1998, by and among the Sellers
and the Trust.
10.4 Amended and Restated Second Amendment to Agreement
of Purchase and Sale dated December 11, 1998, by and
among the Sellers and the Trust.
10.5 Third Amendment to Agreement of Purchase and Sale,
dated as of December 22, 1998, by and among the
Sellers and the Trust.
10.6 Fourth Amendment to Agreement of Purchase and Sale,
dated as of January 7, 1999, by and among the
Sellers and the Trust.
10.7 Fifth Amendment to Agreement of Purchase and Sale,
dated as of January 11, 1999, by and among the
Sellers and the Trust.
10.8 Sixth Amendment to Agreement of Purchase and Sale,
dated as of January 13, 1999, by and among the
Sellers and the Trust.
23.1 Consent of Ernst & Young LLP
</TABLE>
<PAGE> 3
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<S> <C>
FINANCIAL STATEMENTS
NORTHERN CALIFORNIA & COLORADO PORTFOLIO
Report of Independent Auditors................................................................... F-2
Combined Historical Summary of Gross Income and Direct Operating
Expenses for the year ended December 31, 1998.................................................... F-3
Notes to Combined Historical Summary of Gross Income and Direct
Operating Expenses............................................................................... F-4
PRO FORMA FINANCIAL INFORMATION........................................................................... F-6
Pro forma condensed consolidated balance sheet as of December 31, 1998........................... F-8
Pro forma condensed consolidated statement of operations for the year
Ended December 31, 1998.......................................................................... F-9
</TABLE>
<PAGE> 4
Northern California & Colorado Portfolio
Combined Historical Summary of
Gross Income and Direct Operating Expenses
For the Year ended December 31, 1998
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors.............................................. F-2
Financial Statements
Combined Historical Summary of Gross Income
and Direct Operating Expenses............................................ F-3
Notes to Combined Historical Summary of Gross Income and
Direct Operating Expenses................................................ F-4
</TABLE>
F-1
<PAGE> 5
Report of Independent Auditors
Board of Trust Managers
American Industrial Properties REIT
We have audited the accompanying Combined Historical Summary of Gross Income and
Direct Operating Expenses (the Combined Historical Summary) of the Northern
California & Colorado Portfolio (the Properties), as described in Note 1 for the
year ended December 31, 1998. This Combined Historical Summary is the
responsibility of the Properties' management. Our responsibility is to express
an opinion on this Combined Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Combined Historical Summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Combined Historical Summary. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the Combined
Historical Summary. We believe our audit provides a reasonable basis for our
opinion.
The accompanying Combined Historical Summary has been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Current Report on Form 8-K, as amended, of
American Industrial Properties REIT, as described in Note 1 and is not intended
to be a complete presentation of the income and expenses of the properties.
In our opinion, the Combined Historical Summary referred to above presents
fairly, in all material respects, the gross income and direct operating
expenses of the Northern California & Colorado Portfolio, as described in Note
1, for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
March 18, 1999
F-2
<PAGE> 6
Northern California & Colorado Portfolio
Combined Historical Summary of
Gross Income and Direct Operating Expenses
Year ended December 31, 1998
<TABLE>
<S> <C>
GROSS INCOME
Rental $12,409,182
Reimbursements 2,068,288
Other 85,514
-----------
Total Gross Income 14,562,984
DIRECT OPERATING EXPENSES
Real estate taxes 1,431,025
Repairs and maintenance 875,910
Management fees 402,811
Utilities 386,227
Insurance 128,514
Other property operating 309,177
-----------
Total Direct Operating Expenses 3,533,664
EXCESS OF GROSS INCOME OVER DIRECT
OPERATING EXPENSES $11,029,320
===========
</TABLE>
See accompanying notes.
F-3
<PAGE> 7
Northern California & Colorado Portfolio
Combined Historical Summary of
Gross Income and Direct Operating Expenses
Year ended December 31, 1998
1. ORGANIZATION AND BASIS OF PRESENTATION
The Northern California & Colorado Portfolio (the Properties) includes three
separate office and six separate industrial flex properties located in the San
Francisco, California, and Denver, Colorado, Metropolitan areas. The Properties,
which are under common management and control, have been summarized as follows:
<TABLE>
<CAPTION>
Property Location Type Square Feet
-------- -------- ---- -----------
<S> <C> <C> <C>
Centre Point Office Park Walnut Creek, CA Office 197,424
Baytech Park San Jose, CA Industrial flex 188,825
Bridgeway Technology Center Newark, CA Industrial flex 169,998
310 Interlocken Parkway Broomfield, CO Office 121,970
Junction II Business Park San Jose, CA Industrial flex 77,374
485 Clyde Mountview, CA Industrial flex 61,600
107 Woodmere Folsom, CA Office 57,496
Stewart Plaza Sunnyvale, CA Industrial flex 47,054
3100 Alfred Santa Clara, CA Industrial flex 33,824
</TABLE>
The Properties have a weighted average occupancy of 98.6%. On January 15, 1999,
the Properties were sold to American Industrial Properties REIT, a publicly
traded real estate investment trust.
The accompanying Combined Historical Summary has been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Current Report on Form 8-K, as amended, of
American Industrial Properties REIT. The Combined Historical Summary is not
intended to be a complete presentation of income and expenses of the Properties
for the year ended December 31, 1998, as certain costs such as depreciation,
amortization, interest and other debt service costs, and asset management fees
have been excluded. These costs are not considered to be direct operating
expenses.
F-4
<PAGE> 8
Northern California & Colorado Portfolio
Combined Historical Summary of
Gross Income and Direct Operating Expenses (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the Combined Historical Summary in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts included in the Combined Historical
Summary and accompanying notes thereto. Actual results could differ from those
estimates.
REVENUE RECOGNITION
Minimum rents are recognized on the straight-line basis; as such, the rental
revenues for the leases which contain rent abatements and contractual increases
are recognized on a straight-line basis over the initial term of the related
lease. Property operating cost recoveries from tenants of common area
maintenance, real estate taxes and other recoverable costs, are recognized in
the period when the recoveries are billable.
CAPITALIZATION POLICY
Ordinary repairs and maintenance are expensed as incurred; major replacements
and improvements are capitalized.
3. TRANSACTIONS WITH AFFILIATES
An affiliate of the owner of the Properties receives management fees related to
the Properties. The management fee is 3% to 4% of gross annual cash receipts. In
addition, a reimbursement for salaries is paid to the affiliate when dedicated
on-site personnel are utilized at the Properties. Salary reimbursements for the
year ended December 31, 1998 were $106,437.
4. OPERATING LEASES
The Properties' minimum future rentals are as follows:
<TABLE>
<S> <C>
1999 $13,742,721
2000 13,566,867
2001 11,141,809
2002 7,749,971
2003 6,172,754
Thereafter 6,705,507
-----------
$59,079,629
===========
</TABLE>
F-5
<PAGE> 9
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
The following Pro Forma Condensed Consolidated Balance Sheet of the
American Industrial Properties REIT (the "Trust") as of December 31, 1998 has
been prepared as if the purchase of the Northern California & Colorado Portfolio
had occurred as of December 31, 1998. The Northern California & Colorado
Portfolio is defined as a portfolio of nine affiliated properties consisting of
955,568 square feet of office and industrial flex space.
The properties in the Northern California & Colorado Portfolio are as
follows:
<TABLE>
<CAPTION>
PROPERTY LOCATION TOTAL SQUARE FEET
- -------- ------------------------ -----------------
<S> <C> <C>
Centre Point Office Park Walnut Creek, California 197,424
Baytech Park San Jose, California 188,825
Bridgeway Technology Center Newark, California 169,998
310 Interlocken Parkway Broomfield, Colorado 121,970
Junction II Business Park San Jose, California 77,374
485 Clyde Mountview, California 61,600
107 Woodmere Folsom, California 57,496
Stewart Plaza Sunnyvale, California 47,057
3100 Alfred Santa Clara, California 33,824
</TABLE>
The following Pro Forma Condensed Consolidated Statement of Operations of
the Trust for the year ended December 31, 1998 has been prepared as if each of
the following transactions had occurred as of January 1, 1998: (i) (a) the
acquisition of North Austin; (b) the acquisition, through AIP Operating, L.P.,
a limited partnership in which the Trust has a 99% controlling ownership
interest, of Spring Valley #6; and (c) the acquisition of the Spieker
Portfolio, all of which are defined and described in Amendment No. 1 to the
Current Report on Form 8-K/A of the Trust dated April 30, 1998 and filed with
the SEC on July 13, 1998 (the "April 30, 1998 Form 8-K/A"), which is
incorporated herein by reference; (ii) the acquisition of Norfolk Commerce Park
("Norfolk"), a 323,731 square foot light industrial project consisting of three
buildings in Norfolk, Virginia; (iii) the acquisition of a portfolio consisting
of five affiliated industrial properties (the "A&A Portfolio"); (iv) the
acquisition of four unrelated properties (the "Other Recent Acquisitions"); (v)
the acquisition, through DDR/Tech 29 Limited Partnership, a limited
partnership in which the Trust has a controlling ownership interest, of Tech 29
("Tech 29"), a 290,991 square foot light industrial project consisting of three
buildings in Silver Spring, Maryland; (vi) the acquisition of five properties
through the merger of the Trust and a subsidiary of Developers Diversified
Realty Corporation ("DDR"), a real estate investment trust which owns
approximately 45% of the Common Shares of the Trust, and the concurrent
issuance to DDR of 1,278,471 Common Shares at $15.50 per share; (vii) the
purchase of the Northern
F-6
<PAGE> 10
California & Colorado Portfolio (i through vii, collectively, the "Recent
Transactions"); and (viii) the sale to DDR of 2,815,192 Common Shares at $15.50
per share and concurrent repayment of loans made by DDR in favor of the Trust
(the "DDR Debt Conversion").
The Pro Forma Condensed Balance Sheet as of December 31, 1998 and the Pro
Forma Condensed Consolidated Statement of Operations of the Trust for the year
ended December 31, 1998 exclude any effect of the option of the Trust to
require DDR to purchase additional shares with a total purchase price not to
exceed $200 million to fund property acquisitions, as no further probable
acquisitions have been identified by the Trust.
The Pro Forma Financial Information of the Trust has been prepared using
the purchase method of accounting for the acquisition of the Recent
Transactions and other property acquisitions, whereby the assets and
liabilities of the properties were adjusted to estimated fair value, based upon
preliminary estimates, which are subject to change as additional information is
obtained. The allocations of purchase costs are subject to final determination
based upon estimates and other evaluations of fair value. Therefore, the
allocations reflected in the following Pro Forma Financial Information may
differ from the amounts ultimately determined.
Such Pro Forma Financial Information is based in part upon (i) the
Consolidated Financial Statements of the Trust for the year ended December 31,
1998 included in the Trust's Annual Report on Form 10-K for the year ended
December 31, 1998; (ii) the Combined Statement of Revenue and Certain Expenses
of Developers Diversified Realty Corporation Properties for the six months ended
June 30, 1998 filed with the SEC with Amendment No. 1 to the Trust's Current
Report on Form 8-K, dated July 30, 1998; (iii) the Combined Statement of Revenue
and Certain Expenses of the Norfolk Commerce Park Properties for the six months
ended June 30, 1998 filed with the SEC with the Trust's Current Report on Form
8-K, dated July 30, 1998; (v) the combined statement of revenue and certain
expenses of The A&A Virginia Properties for the nine months ended September 30,
1998 filed with the SEC with Amendment No. 1 to the Trust's Current Report on
Form 8-K, dated October 14, 1998; (vi) the Combined Historical Summary of Gross
Income and Direct Operating Expenses of the Northern California & Colorado
Portfolio, included elsewhere herein, and (vii) the Pro Forma Financial
Information presented in the April 30, 1998 Form 8-K/A.
The Pro Forma Financial Information is presented for information purposes
only and is not necessarily indicative of the financial position or results of
operations of the Trust that would have occurred if such transactions had been
completed on the dates indicated, nor does it purport to be indicative of future
financial position or results of operations. In the opinion of the Trust's
management, all material adjustments necessary to reflect the effect of these
transactions have been made.
F-7
<PAGE> 11
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
Trust Recent Pro
Historical (A) Transactions (B) Forma
---------- ------------ ---------
<S> <C> <C> <C>
Real estate, net $ 471,683 $ 127,300 $ 598,983
Cash - unrestricted 6,145 -- 6,145
Cash - restricted 5,422 -- 5,422
Other assets, net 17,080 -- 17,080
--------- ----------- ---------
$ 500,330 $ 127,300 $ 627,630
========= =========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $ 252,481 $ 75,500 $ 327,981
Related party notes payable 14,058 -- 14,058
Accrued interest payable 1,477 -- 1,477
Accounts payable, accrued
expenses and other 17,651 -- 17,651
Tenant security deposits 2,138 -- 2,138
--------- ----------- ---------
287,805 75,500 363,305
Minority interests 6,946 -- 6,946
Shareholders' equity:
Shares of beneficial interest
($0.10 par value) 1,721 341 2,062
Additional paid-in capital 330,031 51,459 381,490
Less Shares in treasury, at cost (2,226) -- (2,226)
Accumulated distributions (68,756) -- (68,756)
Accumulated loss from operations
and extraordinary gains (losses) (58,502) -- (58,502)
Accumulated net realized gain on
sales of real estate 3,311 -- 3,311
--------- ----------- ---------
205,579 51,800 257,379
--------- ----------- ---------
$ 500,330 $ 127,300 $ 627,630
========= =========== =========
</TABLE>
(A) Represents the historical financial position of the Trust as of December
31, 1998.
(B) Represents adjustments for the acquisition of the Northern California &
Colorado Portfolio, $75,500 of which was financed with borrowings on the
Trust's acquisition line of credit (the "Credit Facility"), which bears
interest at the 30 day LIBOR rate plus 1.75% and which matures in July 1999
and $51,800 which was financed with the proceeds of the sale of 3,410,615
Common Shares to DDR.
F-8
<PAGE> 12
AMERICAN INDUSTRIAL PROPERTIES REIT
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Trust Recent DDR Debt Pro Forma
Historical (A) Transactions (B) Conversion (C) Total
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
INCOME
Rents and tenant reimbursements $ 48,357 $ 33,016 -- $ 81,373
Interest and other income 705 120 -- 825
---------- ------------ ---------- ---------
49,062 33,136 -- 82,198
---------- ------------ ---------- ---------
EXPENSES
Property operating expenses 16,046 8,147 -- 24,193
Depreciation and amortization 8,383 5,460 (D) -- 13,843
Interest expense 15,139 13,846 (E) (3,889) (F) 25,096
General and administrative 3,729 213 -- 3,942
---------- ------------ ---------- ---------
Total expenses 43,297 27,666 (3,889) 67,074
---------- ------------ ---------- ---------
Income (loss) from operations before
minority interest 5,765 5,470 3,889 15,124
Minority interest 28 -- -- 28
---------- ------------ ---------- ---------
Income (loss) from operations $ 5,793 $ 5,470 3,889 $ 15,152
========== ============ ========== =========
Income from operations per share:
Basic and diluted $ 0.46 $ 0.73
========== =========
Weighted average number of
Common Shares outstanding - basic 12,252 5,951 2,499 20,702
========== ============ ========== =========
</TABLE>
(A) Represents the historical results of operations of the Trust for the year
ended December 31, 1998.
(B) Represents adjustments for the Recent Transactions which are derived from
the historical operating results of the respective properties, except for
depreciation and interest, which are based on the Trust's investment in the
acquisitions and method of financing the acquisitions.
(C) Represents adjustments for the DDR Debt Conversion. Since the intent of the
pro forma condensed statement of operations is to reflect the expected
continuing impact of the DDR Debt Conversion, the one-time adjustment for
payments to management under the Change in Control Agreements has been
excluded. Upon consummation of the DDR Debt Conversion, this expense was
recognized on the Trust's statements of operations.
F-9
<PAGE> 13
(D) Represents adjustment for depreciation which is calculated based on the
allocation of the purchase price, with buildings depreciated using the
straight-line method over a 40-year period.
(E) Represents adjustments for interest expense related to mortgages assumed
and borrowings under the Trust's Credit Facility and the unsecured loans
from DDR in connection with the Recent Transactions, The assumed mortgages
bear interest at fixed rates ranging from 7.28% to 8.13%, the Credit
Facility bears interest at a floating rate of the average 30-day LIBOR rate
plus 1.75%, (7.38% at December 31, 1998) and the unsecured loans from DDR
bears interest at a fixed rate of 10.25%.
(F) Represents adjustments for the reduction in interest expense from the
repayment of unsecured loans from DDR with proceeds received from the sale
of 2,815,192 Common Shares to DDR for net proceeds of $42,742.
F-10
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN INDUSTRIAL PROPERTIES REIT
By: /s/ CHARLES W. WOLCOTT
-----------------------------------
Charles W. Wolcott
President and Chief Executive
Officer
March 30, 1999
<PAGE> 15
EXHIBIT LIST
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
*10.1 Agreement of Purchase and Sale, dated as of November 12, 1998, by and between Lincoln-Whitehall Realty,
L.L.C., Lincoln-Whitehall Pacific, L.L.C., WHLNF Real Estate Limited Partnership, WHSUM Real Estate
Limited Partnership (collectively, the "Sellers") and the Trust.
*10.2 Amendment to Agreement of Purchase and Sale, dated November 23, 1998, by and among the Sellers and the
Trust.
*10.3 Second Amendment to Agreement of Purchase and Sale, dated December 11, 1998, by and among the Sellers
and the Trust.
*10.4 Amended and Restated Second Amendment to Agreement of Purchase and Sale dated December 11, 1998, by and
among the Sellers and the Trust.
*10.5 Third Amendment to Agreement of Purchase and Sale, dated as of December 22, 1998, by and among the
Sellers and the Trust.
*10.6 Fourth Amendment to Agreement of Purchase and Sale, dated as of January 7, 1999, by and among the
Sellers and the Trust.
*10.7 Fifth Amendment to Agreement of Purchase and Sale, dated as of January 11, 1999, by and among the
Sellers and the Trust.
*10.8 Sixth Amendment to Agreement of Purchase and Sale, dated as of January 13, 1999, by and among the
Sellers and the Trust.
*23.1 Consent of Ernst & Young LLP
</TABLE>
---------------------
*Filed herewith
<PAGE> 1
EXECUTION COPY
AGREEMENT OF PURCHASE AND SALE
BETWEEN
LINCOLN-WHITEHALL REALTY, L.L.C.
LINCOLN-WHITEHALL PACIFIC, L.L.C.
WHLNF REAL ESTATE LIMITED PARTNERSHIP
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
AS SELLERS
AND
AMERICAN INDUSTRIAL PROPERTIES REIT,
AS BUYER
November 12, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.................................................................................1
Section 1.2 Terms Generally.............................................................................6
Section 1.3 No Imputation or Cross-Default..............................................................6
ARTICLE II
PURCHASE AND SALE OF PROPERTIES
Section 2.1 Sale........................................................................................7
Section 2.2 Purchase Price..............................................................................9
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions to Buyer's Obligation to Purchase...............................................13
Section 3.2 Conditions to Sellers' Obligations to Sell.................................................14
Section 3.3 Termination................................................................................15
ARTICLE IV
REPRESENTATIONS;
BUYER'S EXAMINATION OF THE PROPERTIES
Section 4.1 Representations of Sellers.................................................................16
Section 4.2 Survival of Representations................................................................17
Section 4.3 Representations of Buyer...................................................................18
Section 4.4 Buyer's Independent Investigation..........................................................19
Section 4.5 Entry and Investigation; Indemnity; Limits on Government Contacts..........................23
Section 4.6 Release....................................................................................24
Section 4.7 Second Deposit After Due Diligence Period..................................................26
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V
TITLE
Section 5.1 Conveyance of Title........................................................................26
Section 5.2 Certain Exceptions to Title................................................................28
Section 5.3 Discharge of Title Defects.................................................................28
Section 5.4 Evidence of Title..........................................................................29
ARTICLE VI
BROKERS AND EXPENSES
Section 6.1 Brokers....................................................................................29
Section 6.2 Expenses...................................................................................30
ARTICLE VII
INTERIM OPERATION OF THE PROPERTIES
Section 7.1 Interim Operation of the Properties........................................................30
Section 7.2 Tenant Improvement Costs, Leasing Commissions and Free Rent................................31
Section 7.3 Sellers' Maintenance of the Properties.....................................................32
Section 7.4 Lease Enforcement..........................................................................33
Section 7.5 Lease Termination Prior to Closing.........................................................33
Section 7.6 Tenant Notices.............................................................................34
Section 7.7 Risk of Loss and Insurance Proceeds........................................................34
Section 7.8 Notifications..............................................................................35
ARTICLE VIII
CLOSING AND ESCROW
Section 8.1 Escrow Instructions........................................................................35
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 8.2 Closing....................................................................................36
Section 8.3 Deposit of Documents.......................................................................36
Section 8.4 Estoppel Certificates......................................................................38
Section 8.5 Prorations.................................................................................39
Section 8.6 Discharge of Sellers' Bonds................................................................42
Section 8.7 Tax Certiorari Proceedings.................................................................42
Section 8.8 Tenant Obligations.........................................................................43
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices....................................................................................43
Section 9.2 Entire Agreement...........................................................................45
Section 9.3 Time.......................................................................................45
Section 9.4 Attorneys' Fees............................................................................45
Section 9.5 No Merger..................................................................................46
Section 9.6 Successors and Assigns.....................................................................46
Section 9.7 Counterparts...............................................................................46
Section 9.8 Governing Law; Jurisdiction and Venue......................................................46
Section 9.9 Waiver of Trial by Jury....................................................................47
Section 9.10 Confidentiality and Return of Documents...................................................47
Section 9.11 Interpretation of Agreement...............................................................49
Section 9.12 Amendments................................................................................49
Section 9.13 No Recording..............................................................................49
Section 9.14 No Third Party Beneficiary................................................................49
Section 9.15 Severability..............................................................................50
Section 9.16 Drafts not an Offer to Enter into a Legally Binding Contract..............................50
Section 9.17 Further Assurances........................................................................50
Section 9.18 Certain Indemnifications by Buyer.........................................................50
EXHIBITS
EXHIBIT A ALLOCATION OF PURCHASE PRICE
EXHIBIT B RESPONSIBLE INDIVIDUALS
EXHIBIT C GRANT DEED
EXHIBIT D NO WARRANTY BILL OF SALE
</TABLE>
-iii-
<PAGE> 5
EXHIBIT E ASSIGNMENT OF LEASES
EXHIBIT F ASSIGNMENT OF CONTRACTS, WARRANTIES AND
GUARANTEES AND OTHER INTANGIBLE PROPERTY
EXHIBIT H BUYER'S AS-IS CERTIFICATE AND AGREEMENT
EXHIBIT I TENANT ESTOPPEL CERTIFICATE
EXHIBIT J NOTICE TO TENANTS
EXHIBIT K COLORADO DEED
EXHIBIT L FORM OF MANAGEMENT LETTER
SCHEDULES
SCHEDULE 2.1(a) PROPERTY DESCRIPTIONS
SCHEDULE 2.1(c) EXISTING LEASES
SCHEDULE 2.2(b) WIRING INSTRUCTIONS
SCHEDULE 4.1(g) TENANT PURCHASE RIGHTS
SCHEDULE 4.3 NATURAL HAZARD DISCLOSURE STATEMENT
SCHEDULE 7.1 APPROVED LEASING TERMS
SCHEDULE 7.2 LEASING COSTS
SCHEDULE 8.4 REQUIRED TENANT ESTOPPELS
SCHEDULE 8.6 SELLERS' BONDS
SCHEDULE 8.7 PENDING TAX APPEALS
-iv-
<PAGE> 6
AGREEMENT OF PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE, dated as of November 12, 1998
(this "Agreement"), between Lincoln-Whitehall Realty, L.L.C., a Delaware
limited liability company, Lincoln-Whitehall Pacific, L.L.C., a Delaware
limited liability company, WHLNF Real Estate Limited Partnership, a Delaware
limited partnership, and WHSUM Real Estate Limited Partnership, a Delaware
limited partnership (each, a "Seller," and collectively, the "Sellers"), and
American Industrial Properties REIT, a Texas real estate investment trust
("Buyer").
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the
following terms shall have the meanings set forth below, which meanings shall
be applicable equally to the singular and plural of the terms defined:
"Acceptable Permitted Exceptions" shall have the meaning set
forth in Section 5.1.
"Additional Rents" shall have the meaning set forth in
Section 8.5(a).
"Affiliate" shall mean with respect to any Person (i) any
other Person that directly or indirectly through one or more
intermediaries controls or is controlled by or is under common control
with such Person, (ii) any other Person owning or controlling 10% or
more of the outstanding voting securities of or other ownership
interests in such Person, (iii) any officer, director or partner of
such Person or (iv) if such Person is an officer, director or partner,
any other company for which such Person acts in any such capacity.
"Allocated Purchase Price" shall have the meaning set forth
in Section 2.2(a).
"Assignment of Contracts" shall have the meaning set forth in
Section 8.3(a).
"Assignment of Leases" shall have the meaning set forth in
Section 8.3(a).
"Bill of Sale" shall have meaning set forth in Section
8.3(a).
"Business Day" shall mean any day other than a Saturday, a
Sunday, or a federal holiday recognized by the Federal Reserve Bank of
San Francisco.
<PAGE> 7
"Buyer Party" or "Buyer Parties" shall have the meaning set
forth in Section 4.5(a).
"Claims" shall have the meaning set forth in Section 4.2(a).
"Closing" shall have the meaning set forth in Section 2.2(b).
"Closing Date" shall have the meaning set forth in Section
8.2.
"Closing Documents" shall have the meaning set forth in
Section 4.2(a).
"Closing Month" shall have the meaning set forth in Section
8.5.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or any corresponding provision(s) of any succeeding law.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated June 29, 1998, between Buyer and Cushman & Wakefield.
"Contracts" shall have the meaning set forth in Section
2.1(d).
"Cushman & Wakefield" shall mean Cushman & Wakefield of
California, Inc.
"Deed" shall have the meaning set forth in Section 5.1.
"Deposit" shall have the meaning set forth in Section 2.2(b).
"Due Diligence Materials" shall mean all of the documents and
other materials to the extent actually in Sellers' possession and
delivered to or otherwise made available for inspection by Buyer and
its Representatives prior to the Closing Date.
"Due Diligence Period" shall mean the period commencing on
October 12, 1998 and ending at 5:00 p.m. (San Francisco time) on
November 23, 1998 (as such period may be extended by written notice
from Sellers to Buyer), during which period Buyer shall conduct the
due diligence activities contemplated by Section 4.4(a) of this
Agreement.
"Evaluation Material" shall have the meaning set forth in
Section 9.10(a).
"Existing Leases" shall mean those leases and occupancy
agreements identified on Schedule 2.1(c), as the same may be amended,
modified or extended from time to time in accordance with the terms of
this Agreement.
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<PAGE> 8
"Fee Parcel" shall have the meaning set forth in Section
2.1(a).
"Governmental Authority" shall mean any federal, state,
county or municipal government, or political subdivision thereof, any
governmental agency, authority, board, bureau, commission, department,
instrumentality, or public body, or any court or administrative
tribunal.
"Hazardous Materials" shall mean materials, wastes or
substances that are (A) included within the definition of any one or
more of the terms "hazardous substances," "hazardous materials,"
"toxic substances," "toxic pollutants" and "hazardous waste" in the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (42 U.S.C. Sections 9601, et seq.), the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901, et
seq.), the Clean Water Act (33 U.S.C. Section 1251, et seq.), the Safe
Drinking Water Act (14 U.S.C. Section 1401, et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, et seq.), and
the Toxic Substance Control Act (15 U.S.C. Section 2601, et seq.) and
the regulations promulgated pursuant to such laws, (B) regulated, or
classified as hazardous or toxic, under federal, state or local
environmental laws or regulations, (C) petroleum or petroleum
by-products, including gasoline and diesel, (D) asbestos or
asbestos-containing materials, (E) polychlorinated biphenyls, (F)
flammable explosives or (G) radioactive materials.
"Improvements" shall have the meaning set forth in Section
2.1(a).
"Indemnified Party" shall have the meaning set forth in
Section 6.1.
"Initial Deposit" shall have the meaning set forth in Section
2.2(b).
"Intangible Property" shall have the meaning set forth in
Section 2.1(g).
"knowledge" or "known" shall mean, with respect to any
Seller's knowledge, the actual (not constructive) personal knowledge,
without imputation of actual or constructive knowledge of any other
person and expressly without independent inquiry, verification or
investigation or any duty or obligation to conduct any inquiry,
verification or investigation, of Barry DiRaimondo, Robert Phipps, and
solely with respect to the Properties listed next to their respective
names on the attached Exhibit B, Todd Hedrick, Donna Dunlap Sherman,
Monica Baytos, Gina Donaldson and Nico Coulouras (it being understood
and agreed that none of Messrs. DiRaimondo, Phipps, Hedrick, Sherman,
Baytos, Donaldson or Coulouras shall have any personal liability
hereunder with respect to any matter, representation, covenant or
certificate as to which his or her knowledge is attributed or
otherwise in any way related to the transactions contemplated hereby).
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<PAGE> 9
"Leases" shall mean all Existing Leases and New Leases,
collectively.
"Leasing Costs" shall have the meaning set forth in Section
7.2.
"Licenses and Permits" shall have the meaning set forth in
Section 2.1(g).
"Losses" shall have the meaning set forth in Section 9.18.
"Major Leases" shall have the meaning set forth in Section
7.1(b).
"Natural Hazard Disclosure Statement" shall mean the form of
natural hazard disclosure statement required to be delivered by Seller
under California law, a copy of which is attached as Schedule 4.3.
"New Leases" shall mean those leases and occupancy agreements
encumbering any Real Property which are entered into after the date
hereof in accordance with the terms of this Agreement (other than any
amendments, modifications or extensions of any Existing Leases), as
the same may be amended or modified from time to time in accordance
with the terms of this Agreement.
"Order" shall mean an order or decree of any Governmental
Authority.
"Permitted Exceptions" shall have the meaning set forth in
Section 5.1.
"Person" shall mean any individual, partnership, corporation,
limited liability company, trust or other legal entity.
"Personal Property" shall have the meaning set forth in
Section 2.1(b).
"Preliminary Title Report" or "PTR" shall have the meaning
set forth in Section 3.1(b).
"Prescribed Form" shall have the meaning set forth in Section
8.4.
"Prime Rate" shall mean the prime (or base) rate of interest
publicly announced in The City of New York by Citibank, N.A. or its
successors from time to time.
"Property" or "Properties" shall have the meaning set forth
in Section 2.1(g).
"Purchase Price" shall have the meaning set forth in Section
2.2(a).
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<PAGE> 10
"Real Estate Taxes" shall mean all real estate taxes and
assessments, water rates, water meter charges, sewer rates, sewer
charges, and similar matters, imposed by any Governmental Authority.
"Real Property" or "Real Properties" shall have the meaning
set forth in Section 2.1(a).
"Records and Plans" shall have the meaning set forth in
Section 2.1(f).
"Rent Rolls" shall have the meaning set forth in Section
4.1(f).
"Representatives" shall have the meaning set forth in Section
9.10(a).
"Second Deposit" shall have the meaning set forth in Section
2.2(b).
"Second Deposit Date" shall mean November 23, 1998.
"Seller" or "Sellers" shall have the meaning set forth in the
first paragraph of this Agreement, subject to the limitations
described in Section 1.3.
"Seller Party" or "Seller Parties" shall have the meaning set
forth in Section 4.6(a).
"Sellers' Bonds" shall have the meaning set forth in Section
8.6.
"Seller's Estoppels" shall have the meaning set forth in
Section 8.4.
"Significant Transaction" shall have the meaning set forth in
Section 7.1(b).
"Survey" shall have the meaning set forth in Section 4.4(a).
"Tenant" shall mean the tenant or occupant under any lease or
other occupancy agreement relating to any portion of any Real
Property.
"Tenant Bankruptcy Event" shall have the meaning set forth in
Section 7.5.
"Title Company" shall have the meaning set forth in Section
2.2(b).
"Title Defects" shall have the meaning set forth in Section
5.2.
"Title Policy" shall have the meaning set forth in Section
5.4.
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<PAGE> 11
"Warranties" shall have the meaning set forth in Section
2.1(e).
Section 1.2 Terms Generally. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(b) the words "including" and "include" and other words of
similar import shall be deemed to be followed by the phrase "without
limitation"; and
Section 1.3 No Imputation or Cross-Default. Notwithstanding
anything to the contrary contained herein, Buyer expressly acknowledges and
agrees that in no event or circumstance shall the acts, omissions,
representations (if any), covenants, breach and/or failures by any one of the
parties or entities comprising the Sellers be attributable or imputed to any
other party or entity comprising the Sellers. Each of the parties or entities
comprising the Sellers shall be conclusively deemed to be acting solely on its
own behalf, solely with respect to the Property such party or entity actually
owns and solely in its own name without any express or implied cross-reference
or cross-default hereunder or with respect thereto. Without limiting the
generality of the foregoing, Buyer understands and agrees that (i) any
covenant, agreement and/or representation made herein by Sellers with respect
to the Properties shall be interpreted conclusively to be as though made solely
by the party or entity with respect to the Property actually owned by said
party or entity, and (ii) the references made herein collectively to the
parties or entities comprising the Sellers, the Real Properties, the
Improvements, the Personal Properties and the Properties are merely made for
convenience and ease of administration of this Agreement and the sale of the
Properties as contemplated herein.
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ARTICLE II
PURCHASE AND SALE OF PROPERTIES
Section 2.1 Sale. Each Seller agrees to sell to Buyer, and
Buyer agrees to purchase from each such Seller, subject only to the Permitted
Exceptions and to all other terms, covenants and conditions set forth herein,
all of each such Seller's right, title and interest in and to the following:
(a) each parcel of land legally described in Schedule 2.1(a)
attached hereto (each, a "Fee Parcel") identified as being owned by
such Seller on Schedule 2.1(a), together with any and all rights,
privileges and easements appurtenant thereto owned by such Seller
(including any rights of such Seller as declarant), together with all
buildings, improvements and fixtures (other than fixtures owned or
removable by any Tenant or third party) located thereon (collectively,
the "Improvements"; each Fee Parcel, together with the Improvements
thereon, a "Real Property" and, collectively, the "Real Properties");
(b) all tangible personal property owned by such Seller,
located on the Real Properties and used exclusively in the operation
or maintenance of any one or more of the Real Properties, but
specifically excluding the personal property in each Seller's
management offices and the personal property owned by tenants or other
third parties (the "Personal Property");
(c) (i) such Seller's interest, as landlord in each of the
Existing Leases, (ii) such Seller's interest, as landlord in any New
Leases and (iii) such Seller's rights under any security deposits and
letters of credit relating to such Leases;
(d) such Seller's interest, to the extent assignable, in and
to any service contracts, maintenance contracts, listing agreements,
parking contracts and like contracts and agreements relating to the
Real Properties, and commission agreements, equipment leases,
contracts, subcontracts and agreements relating to the construction of
any unfinished tenant improvements (collectively, the "Contracts");
provided, however, that the applicable Seller shall not assign to the
Buyer any Contracts that (i) the Buyer requests, on or prior to the
Second Deposit Date, the applicable Seller to terminate before the
Closing Date and (ii) the Seller may lawfully terminate after the
Second Deposit Date and prior to the Closing Date without resulting in
the obligation to make any early termination or similar penalty or
charge (and the Buyer shall assume and pay, and indemnify and hold
harmless the applicable Seller
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<PAGE> 13
and its Affiliates for, any early termination or similar penalty or
charge or other loss incurred by any Seller or any Affiliate of a
Seller in respect of any termination of any such Contract).
(e) to the extent owned by a Seller and assignable, all
warranties and guaranties made by or received from any third party
with respect to any building, building component, structure, fixture
or machinery situated on any Real Property, or contained in any or
comprising a part of any Improvement (collectively, the "Warranties");
provided that Seller shall not be deemed to assign or forfeit any
claims under any such Warranties arising prior to the Closing Date;
(f) to the extent such Seller currently has such items in its
possession or control, all (i) preliminary, final and proposed
building plans and specifications (including "as-built" floor plans
and drawings) and tenant improvement plans and specifications for the
Improvements and (ii) surveys, grading plans, topographical maps,
architectural and structural drawings and engineering, soils, seismic,
geologic and architectural reports, studies and tests relating to any
Real Property ((f)(i) and (f)(ii) collectively, the "Records and
Plans"); and
(g) to the extent transferable, any intangible personal
property now or hereafter owned by such Seller and used in the
ownership, use or operation of any one or more of the Real Properties
and/or the Personal Property including Sellers' assignable interests
in and to the project names Alfred, Baytech, Centre Point, Clyde,
Interlocken, Jefferson, Junction II, Opus, Stewart and Woodmere, but
excluding the names or tradenames Lincoln Property Company, Whitehall
Street Real Estate Limited Partnership, Lincoln-Whitehall,
Lincoln-Whitehall Pacific, WHSUM Real Estate Limited Partnership,
WHLNF Real Estate Limited Partnership or any abbreviations or
derivations of any of the foregoing and related names and proprietary
computer equipment, software and systems, but including all (i)
licenses, permits, approvals and certificates of occupancy, issued or
granted by Governmental Authorities in connection with a Real
Property, (ii) unrecorded covenants, conditions and restrictions,
easement agreements and other common or planned development agreements
or documents affecting any Real Property and (iii) licenses, consents,
easements, rights of way and approvals obtained from private parties
to make use of utilities and to ensure vehicular and pedestrian
ingress and egress for any Real Property ((g)(i), (g)(ii) and (g)(iii)
collectively, the "Licenses and Permits") or other rights relating to
the ownership, use or operation of any of the Real Properties or the
Personal Property (collectively, the "Intangible Property"). Sellers
will cause their property managers to deliver any of the foregoing
materials to the extent presently in such property managers'
possession to Buyer, but without any warranty of any kind or nature.
Each Real Property, together with the Personal Property, the Leases,
the Contracts, the Warranties, the Records and Plans and the
Intangible Property relating thereto, are referred to herein as a
"Property" and, collectively, as the "Properties."
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<PAGE> 14
Section 2.2 Purchase Price.
(a) The purchase price for the Properties is One Hundred
Forty-One Million and no/100 Dollars ($141,000,000.00) (the "Purchase
Price"), subject to prorations, credits and adjustments as set forth
herein. Buyer and Sellers agree that the Purchase Price shall be
allocated among the Properties (the "Allocated Purchase Price") in
accordance with the allocations specified in Exhibit A attached
hereto.
(b) The Purchase Price shall be paid by Buyer as follows:
(i) Within one Business Day of the execution of this
Agreement, Buyer shall deposit by wire transfer (made in
accordance with the wiring instructions set forth on Schedule
2.2(b) attached hereto) of immediately available funds, in
escrow with Fidelity National Title Insurance Company, 50
California Street, Suite 2950, San Francisco, California
94111 (Escrow Officer, Bill Waite) (the "Escrow Agent" or
"Title Company") a cash payment in the amount of One Million
and no/100 Dollars ($1,000,000.00) (the "Initial Deposit").
(ii) By 12:00 noon (San Francisco time) on the
Second Deposit Date, Buyer shall deposit by wire transfer
(made in accordance with the wiring instructions set forth on
Schedule 2.2(b) attached hereto) of immediately available
funds, in escrow with the Escrow Agent, a cash payment in the
amount of One Million and no/100 Dollars ($1,000,000.00) (the
"Second Deposit", and together with the Initial Deposit, the
"Deposit"). On or prior to the Second Deposit Date, unless
this Agreement has been terminated, Buyer shall provide
evidence satisfactory to Seller that the requisite number of
members of the Board of Trust Managers of the Buyer have
approved the acquisition of the Properties contemplated
hereby.
(iii) The Deposit shall be held in an interest
bearing account reasonably designated by Buyer and all
interest thereon shall be deemed a part of the Deposit. If
the sale of the Properties as contemplated hereunder is
consummated, then the Deposit (including the interest accrued
on the Deposit) shall be paid to Sellers at the consummation
of the purchase and sale of the Properties contemplated
hereunder (the "Closing") and credited against the Purchase
Price. Notwithstanding anything that may be construed to the
contrary herein, Buyer and Sellers understand and agree that
Buyer shall have no obligation to fund the Second Deposit on
the Second Deposit Date unless Buyer has completed and is
satisfied with its independent due diligence investigation as
contemplated by Section 4.4. The parties hereto acknowledge
and agree that (A) Buyer shall have the right to terminate
this Agreement by written notice to Sellers without liability
(other than for Buyer's indemnity obligations set forth in
Sections 4.5(a), 6.1 and 9.4 and Buyer's indemnity and
confidentiality
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<PAGE> 15
obligations set forth in Section 9.10(a)) at any time prior
to or on the Second Deposit Date and (B) by posting the
Second Deposit, Buyer will evidence and acknowledge its
complete satisfaction with and approval of all of the Due
Diligence Materials and its due diligence investigation. Upon
delivery of written notice to Sellers as specified in clause
(A) of the preceding sentence, Buyer shall receive a refund
of the Initial Deposit (together with all accrued interest
thereon) and the Buyer and Sellers shall have no further
rights or obligations under this Agreement, other than those
expressly stated to survive the termination of this
Agreement.
(iv) The balance of the Purchase Price over and
above the Deposit as adjusted pursuant to Section 8.5, shall
be deposited by Buyer, by wire transfer (made in accordance
with the wiring instructions set forth on Schedule 2.2(b)
attached hereto) of immediately available funds, with the
Title Company (or as otherwise directed by the Sellers) and
paid to Sellers at the Closing.
(c)(i) LIQUIDATED DAMAGES/REMEDIES. IF THE SALE OF THE
PROPERTIES IS NOT CONSUMMATED DUE TO THE FAILURE OF ANY CONDITION TO
BUYER'S OBLIGATION TO PURCHASE OR SELLERS' INABILITY TO PERFORM
HEREUNDER (OTHER THAN ANY SUCH FAILURE OR INABILITY CAUSED BY A
DEFAULT BY BUYER HEREUNDER), THEN THE DEPOSIT SHALL BE RETURNED TO
BUYER, AND BUYER'S SOLE REMEDY, AT LAW OR IN EQUITY, SHALL BE THE
RETURN OF THE DEPOSIT, PROVIDED, THAT IF THE SALE OF THE PROPERTIES IS
NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER THIS AGREEMENT ON THE PART
OF SELLERS, BUYER MAY EITHER (A) TERMINATE THIS AGREEMENT BY WRITTEN
NOTICE OF TERMINATION TO SELLERS, WHEREUPON THE DEPOSIT SHALL BE
IMMEDIATELY RETURNED TO BUYER, OR (B) CONTINUE THIS AGREEMENT PENDING
BUYER'S ACTION FOR SPECIFIC PERFORMANCE, IN WHICH LATTER EVENT BUYER,
AS A CONDITION TO SUCH ACTION, SHALL NOT BE PERMITTED TO SEEK DAMAGES
AND SHALL NOT ACCEPT RETURN OF THE DEPOSIT. NOTWITHSTANDING THE
FOREGOING, IN THE EVENT THAT THE SALE OF ONE OR MORE, BUT NOT ALL, OF
THE PROPERTIES IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF ONE OR MORE OF THE SELLERS, THE BUYER MAY
ELECT TO (I) CONSUMMATE THE PURCHASE OF THE PROPERTY OR PROPERTIES AS
TO WHICH NO SUCH DEFAULT HAS OCCURRED (AND THE PURCHASE PRICE PAYABLE
AT THE CLOSING SHALL BE REDUCED BY AN AMOUNT EQUAL TO THE ALLOCATED
PURCHASE PRICE SET FORTH ON EXHIBIT A FOR THE PROPERTY OR PROPERTIES
THAT ARE NOT SOLD TO THE BUYER AS A RESULT OF SUCH DEFAULT) AND (II)
EITHER (A) TERMINATE ITS OBLIGATIONS UNDER THIS
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<PAGE> 16
AGREEMENT WITH RESPECT TO THE PROPERTY OR PROPERTIES AS TO WHICH SUCH
A DEFAULT HAS OCCURRED BY WRITTEN NOTICE OF TERMINATION TO SELLERS, OR
(B) CONTINUE THIS AGREEMENT WITH RESPECT TO SUCH PROPERTY OR
PROPERTIES PENDING BUYER'S ACTION FOR SPECIFIC PERFORMANCE, IN WHICH
LATTER EVENT BUYER, AS A CONDITION TO SUCH ACTION, SHALL NOT BE
PERMITTED TO SEEK DAMAGES (IT BEING UNDERSTOOD THAT IF THE BUYER MAKES
THE ELECTION DESCRIBED IN THIS SENTENCE NO PART OF THE DEPOSIT SHALL
BE RETURNED TO THE BUYER). FOR THE PURPOSES OF THE FOREGOING
PARAGRAPH, ANY SUCH DEFAULT BY A SELLER OR SELLERS WITH RESPECT TO A
PROPERTY OR PROPERTIES SHALL, AT BUYER'S ELECTION, ALSO BE DEEMED A
DEFAULT WITH RESPECT TO ANY OTHER PROPERTY OR PROPERTIES OWNED BY SUCH
DEFAULTING SELLER AND THE BUYER MAY, UPON THE MAKING OF SUCH ELECTION,
TERMINATE ITS OBLIGATIONS UNDER THIS AGREEMENT WITH RESPECT TO ALL
PROPERTIES OWNED BY SUCH SELLER.
(ii) IF THE SALE OF THE PROPERTIES IS NOT CONSUMMATED AS A RESULT OF A
DEFAULT BY BUYER HEREUNDER OR THE FAILURE BY BUYER TO SATISFY THE
CONDITIONS TO SELLERS' OBLIGATIONS REQUIRED TO BE SATISFIED BY BUYER
PRIOR TO THE CLOSING DATE, THEN, AS THE SELLERS' SOLE AND EXCLUSIVE
REMEDY, BUYER SHALL RETURN THE DUE DILIGENCE MATERIALS TO SELLERS AND
DELIVER COPIES OF BUYER'S THIRD PARTY DUE DILIGENCE REPORTS TO
SELLERS, AND SELLERS SHALL RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES.
NOTWITHSTANDING THE FOREGOING, IN THE EVENT THAT THE SALE OF ONE OR
MORE, BUT NOT ALL, OF THE PROPERTIES IS NOT CONSUMMATED BECAUSE OF A
DEFAULT UNDER THIS AGREEMENT ON THE PART OF THE BUYER OR THE FAILURE
BY BUYER TO SATISFY THE CONDITIONS TO SELLER'S OBLIGATIONS REQUIRED TO
BE SATISFIED BY BUYER PRIOR TO THE CLOSING DATE WITH RESPECT TO ONE OR
MORE, BUT NOT ALL, OR THE PROPERTIES, THEN THE SELLERS MAY ELECT TO
(I) CONSUMMATE THE SALE OF THE PROPERTY OR PROPERTIES AS TO WHICH NO
SUCH DEFAULT OR FAILURE BY THE BUYER HAS OCCURRED (AND THE PURCHASE
PRICE PAYABLE AT THE CLOSING SHALL BE REDUCED BY AN AMOUNT EQUAL TO
THE ALLOCATED PURCHASE PRICE SET FORTH ON EXHIBIT A FOR THE PROPERTY
OR PROPERTIES THAT ARE NOT SOLD TO THE BUYER AS A RESULT OF SUCH
DEFAULT) AND (II) WITH RESPECT TO THE PROPERTY OR PROPERTIES AS TO
WHICH SUCH A DEFAULT OR FAILURE HAS OCCURRED, AS THE SELLERS' SOLE AND
EXCLUSIVE REMEDY WITH RESPECT TO SUCH DEFAULT OR FAILURE,
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<PAGE> 17
BUYER SHALL RETURN THE DUE DILIGENCE MATERIALS TO SELLERS AND DELIVER
COPIES OF BUYER'S THIRD PARTY DUE DILIGENCE REPORTS TO SELLERS, AND
SELLERS SHALL RETAIN THE ENTIRE AMOUNT OF THE DEPOSIT AS LIQUIDATED
DAMAGES (IT BEING UNDERSTOOD AND AGREED THAT IF THE SELLERS MAKE THE
ELECTION DESCRIBED IN THIS SENTENCE THAT THE DEPOSIT SHALL NOT BE
APPLIED AGAINST THE PURCHASE PRICE PAYABLE AT THE CLOSING).
THE PARTIES HAVE AGREED THAT SELLERS' ACTUAL DAMAGES, IN THE EVENT OF
A FAILURE TO CONSUMMATE THIS SALE DUE TO BUYER'S DE FAULT, WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE. AFTER NEGOTIATION,
THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES
EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A
REASONABLE ESTIMATE OF THE DAMAGES THAT SELLERS WOULD INCUR IN SUCH
EVENT. EACH OF THE DELIVERY TO SELLERS BY BUYER OF THE DUE DILIGENCE
MATERIALS, DELIVERY OF BUYER'S DUE DILIGENCE REPORTS TO SELLERS, AND
SELLERS' RETAINMENT OF THE DEPOSIT AS LIQUIDATED DAMAGES IS NOT
INTENDED TO BE A FORFEITURE OR PENALTY BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLERS PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 1671, 1676 AND 1677. BY PLACING THEIR INITIALS BELOW, EACH
PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE
AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED,
AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS
LIQUIDATED DAMAGES PROVISION. THE FOREGOING IS NOT INTENDED TO LIMIT
SELLERS' RIGHTS, OR BUYER'S INDEMNITY OBLIGATIONS UNDER SECTIONS
4.5(a), 6.1, 9.4 AND 9.10(a).
INITIALS: SELLERS BUYER
-------------- ----------------
(d) In the event that Buyer fails to fund on the Second
Deposit Date (with time being of the essence) the full amount of the
Second Deposit in accordance with the terms of Section 2.2(b)(ii),
this Agreement shall immediately and automatically terminate and Buyer
shall be entitled to receive a refund of its Initial Deposit (together
with all accrued interest thereon); provided that, as a condition
precedent to Sellers returning the Initial Deposit, Buyer shall
deliver to Sellers copies of Buyer's third party due diligence
reports. Upon any termination of this Agreement pursuant to this
Section 2.2(d), no party shall have any further rights or obligations
hereunder, except as provided in Sections 4.5(a), 6.1, 9.4 and
9.10(a).
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ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 Conditions to Buyer's Obligation to Purchase.
Buyer's obligation to purchase the Properties is conditioned upon the
satisfaction (or Buyer's written waiver) on or prior to the Closing Date of the
following conditions:
(a) There shall exist on the Closing Date no pending Order
prohibiting, enjoining or restraining any Seller from consummating the
transactions contemplated hereby with respect to any Property;
provided that if an Order exists prohibiting, enjoining or restraining
Seller from consummating the transactions contemplated hereby with
respect to one or more, but not all, of the Properties, Buyer shall,
upon the request of Seller, nevertheless be obliged to fulfill its
obligations hereunder with respect to the Property or Properties as to
which no such Order exists.
(b) The Title Company shall have issued or shall have
irrevocably committed to issue, upon payment of the applicable premium
therefor, a CLTA or 1992 ALTA Owner's Policy of Title Insurance
(provided, that in jurisdictions where local regulations require a
form of policy other than a CLTA or 1992 ALTA Owner's Policy, such
other required form shall be used) with respect to each Real Property
in the form of the preliminary title report issued by the Title
Company and delivered to Buyer prior to the fifth Business Day after
the execution and delivery by Buyer and Seller of this Agreement
(each, a "Preliminary Title Report" or "PTR"), showing title to such
Real Property vested in Buyer, subject only to the Acceptable
Permitted Exceptions.
(c) Buyer shall have received estoppel certificates for each
Real Property by the time and to the extent required by Section 8.4.
(d) Each of the documents required to be delivered by Sellers
pursuant to Section 8.3 shall have been delivered as provided therein
and Sellers shall not otherwise be in material default of their
obligations hereunder, and all of Sellers' representations contained
herein shall be true and correct in all material respects as of the
Closing Date; provided, however, that notwithstanding anything
contained herein to the contrary, this condition shall be deemed to
have been satisfied even if such representations were not true and
correct in all material respects on the date of this Agreement but are
so true and correct in all material respects on the Closing Date; and
provided, further, that a failure of one or more of the Sellers to
sell one or more of the Properties, but not all of the Properties,
shall enable the Buyer to make the election described in Section
2.2(c)(i).
(e) Legacy Partners Commercial, Inc. shall have delivered to
Ernst & Young LLP, on or prior to the Closing Date, a letter in
substantially the form of Exhibit L hereto.
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Section 3.2 Conditions to Sellers' Obligations to Sell. Each
Seller's obligation to sell the Properties is conditioned upon the
satisfaction (or such Seller's written waiver) on or prior to the
Closing Date of the following conditions:
(a) There shall exist on the Closing Date no pending Order
prohibiting, enjoining or restraining Buyer from consummating the
transactions contemplated hereby with respect to any Property;
provided that if an Order exists prohibiting, enjoining or restraining
Buyer from consummating the transactions contemplated hereby with
respect to one or more, but not all, of the Properties, Buyer shall,
upon the request of Seller, nevertheless be obliged to fulfill its
obligations hereunder with respect to the Property or Properties as to
which no such Order exists.
(b) Buyer shall have paid to Sellers in cash the balance of
the Purchase Price.
(c) Buyer shall not otherwise be in material default of its
obligations hereunder, it being understood and agreed that (unless the
Sellers shall determine otherwise) Sellers are acting jointly (subject
to the provisions of Section 1.3) in selling the Properties contingent
upon the Closing of each such Property, and that a failure of Buyer to
purchase any Property shall be deemed a material breach by Buyer of
this Agreement, excusing performance by any or all of the Sellers and
giving the Sellers the right to make the election described in Section
2.2(c)(ii).
(d) Each of the documents required to be delivered by Buyer
pursuant to Section 8.3 shall have been delivered as provided therein,
and all of Buyer's representations contained herein shall be true and
correct in all material respects as of the Closing Date; provided,
however, that notwithstanding anything contained herein to the
contrary, this condition shall be deemed to have been satisfied even
if such representations were not true and correct in all material
respects on the date of this Agreement but are so true and correct in
all material respects on the Closing Date.
(e) On or prior to the Second Deposit Date, Buyer shall have
provided evidence satisfactory to Seller that the requisite number of
members of the Board of Trust Managers of the Buyer have approved the
acquisition of the Properties contemplated hereby.
(f) The Buyer shall have signed a Natural Hazard Disclosure
Statement, substantially in the form of Schedule 4.3, in respect of
each of the Properties listed on Schedule 2.1(a), which signature
shall serve to acknowledge Buyer's receipt from the applicable Seller
of such Natural Hazard Disclosure Statement and the Buyer's
understanding thereof.
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Section 3.3 Termination.
(a) In the event that any condition set forth in Section 3.1
or Section 3.2 is not satisfied on or prior to the Closing Date, then
the party to this Agreement whose obligations are conditioned upon the
satisfaction of such condition may in its sole and absolute discretion
terminate this Agreement, subject to Section 2.2(c), by written notice
delivered to the other party at or prior to the occurrence of the
Closing. This Agreement may also, prior to the Second Deposit Date, be
terminated in accordance with Section 2.2.
(b) Upon any termination of this Agreement pursuant to this
Section 3.3, no party shall have any further rights or obligations
hereunder, except as otherwise provided in Sections 2.2(c), 4.4.(b),
4.5(a), 6.1, 9.4 and 9.10.
ARTICLE IV
REPRESENTATIONS;
BUYER'S EXAMINATION OF THE PROPERTIES
Section 4.1 Representations of Sellers. Subject to the
provisions of Sections 4.2, 4.3 and 4.4, each Seller, severally and not
jointly, hereby makes the following representations as to only itself and only
its own Properties:
(a) Such Seller has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy
or suffered the filing of any involuntary petition by such Seller's
creditors, (iii) suffered the appointment of a receiver to take
possession of any of the Properties or all, or substantially all, of
such Seller's other assets, (iv) suffered the attachment or other
judicial seizure of any of the Properties or all, or substantially
all, of such Seller's other assets, (v) admitted in writing its
inability to pay its debts as they come due, or (vi) made an offer of
settlement, extension or composition to its creditors generally.
(b) Such Seller is not a "foreign person" as defined in
Section 1445 of the Code and any related regulations.
(c) Such Seller is duly organized and validly existing and in
good standing under the laws of its state of formation. Such Seller
further represents that this Agreement and all documents executed by
such Seller that are to be delivered to Buyer at Closing (i) are, or
at the time of Closing will be, duly authorized, executed and
delivered by such Seller, (ii) do not, and at the time of Closing will
not, violate any provision of any judicial order to which such Seller
is a party or to which such Seller or any Property owned by such
Seller is subject and (iii) constitute (or in the case of Closing
documents will constitute) a valid and legally binding obligation of
such Seller, enforceable in accordance with its terms, subject to
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bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(d) Such Seller has full and complete power and authority to
enter into this Agreement and, subject to obtaining any consents or
waivers required to be obtained prior to Closing, to perform its
obligations hereunder.
(e) The Due Diligence Materials contain true, correct and
complete copies of all Existing Leases, all material Contracts and all
material environmental and structural reports to the extent in the
actual possession of such Seller and, to such Seller's actual
knowledge, the Due Diligence Materials delivered to or otherwise made
available to Buyer under this Agreement by such Seller contain
complete copies of the documents in Sellers' possession.
Notwithstanding anything contained herein to the contrary, Sellers are
only making available Due Diligence Materials to the extent currently
in Sellers' possession and no Seller shall be required to prepare or
obtain any information, document, report or survey. No Seller is
making any express or implied representation as to the accuracy or
thoroughness of the contents of any of the Due Diligence Materials or
of the ability of Buyer to rely on any of the Due Diligence Materials.
This representation shall not be deemed breached by virtue of any New
Leases or Contracts entered into after the date hereof in accordance
with Section 7.1.
(f) Except as included in the Due Diligence Materials
(including the rent rolls delivered to Buyer prior to the execution of
this Agreement (the "Rent Rolls")),there are to such Seller's actual
knowledge no material leases or occupancy agreements (or any
amendments or supplements thereto) encumbering, or in force with
respect to, any Property (except for any New Leases entered into after
the date hereof in accordance with Section 7.1).
(g) Except as otherwise set forth in Schedule 4.1(g) attached
to this Agreement or as set forth in the Due Diligence Materials, such
Seller has not granted any option or right of first refusal or first
opportunity to any party to acquire any fee or ground leasehold
interest in any portion of any Property.
Each of the representations of each Seller contained in this
Section 4.1: (1) is made as of the date hereof; (2) shall be deemed remade by
such Seller, as applicable and appropriate, and shall be true in all material
respects as of the Closing Date, subject to matters expressly permitted in this
Agreement or otherwise specifically approved in writing by Buyer; and (3) shall
survive the Closing for a period of six (6) months.
Section 4.2 Survival of Representations. Notwithstanding any
provision to the contrary herein or in any document or instrument (including,
without limitation, any deeds or assignments) executed by any Seller and
delivered to Buyer at or in connection with the Closing
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(collectively, "Closing Documents"), no Seller shall have any (and each Seller
is exculpated and released from any) liability whatsoever with respect to any
suits, actions, proceedings, investigations, demands, claims, liabilities,
fines, penalties, liens, judgments, losses, injuries, damages, expenses or
costs, including, without limitation, attorneys' and experts' fees and costs of
investigation and remediation costs (collectively "Claims"), except to the
extent (and only to the extent) that (i) with respect to Claims for breach of
representations relating to a specific Property, the amount of such Claims
exceed Two Hundred Thousand Dollars ($200,000) with respect to such single
Property and (ii) the aggregate amount of all Claims for breach of Sellers'
representations exceeds $1,000,000 (and, in such case, such Claims shall only
be valid (and the Sellers shall only be liable) for the portion that exceeds
$1,000,000); provided, however, notwithstanding any provision to the contrary
herein or in any Closing Document, the total liability of all Sellers for any
or all Claims shall not exceed $7,500,000. Further notwithstanding any
provision to the contrary herein or in any Closing Document, Buyer assumes
responsibility for and Sellers shall have no liability with respect to, any
Claim under any of the representations contained in this Agreement or in any
Closing Document, which Claim relates to or arises in connection with (1) any
Hazardous Materials, (2) the physical condition of any Property or (3) any
other matter not expressly set forth in the Sellers' representations and
warranties set forth in Section 4.1 that, pursuant to this Section 4.2, survive
the Closing Date. Buyer shall not make any Claim unless it in good faith
believes the Claims would exceed the minimum thresholds to recovery provided in
this Section 4.2. The provisions of this Section 4.2 shall survive the Closing
for a period of six (6) months.
Section 4.3 Representations of Buyer. Buyer hereby makes the
following representations:
(a) Buyer is a real estate investment trust duly organized
and validly existing and in good standing under the laws of the State
of Texas. Buyer further represents to Sellers that this Agreement and
all documents executed by Buyer that are to be delivered to Sellers at
Closing (i) are, or at the time of Closing will be, duly authorized,
executed and delivered by Buyer, (ii) do not, and at the time of
Closing will not, violate any provision of any agreement or judicial
order to which Buyer is a party or to which Buyer or any property
owned by Buyer is subject and (iii) constitutes (or in the case of
Closing documents will constitute) a valid and legally binding
obligation of Buyer, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(b) Buyer has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy
or suffered the filing, of any involuntary petition by Buyer's
creditors, (iii) suffered the appointment of a receiver to take
possession of all, or substantially all, of Buyer's assets, (iv)
suffered the attachment or other judicial seizure of all, or
substantially all, of Buyer's assets, (v) admitted in writing its
inability to pay its debts
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as they come due, or (vi) made an offer of settlement, extension or
composition to its creditors generally. Buyer has, and as of the
Closing Date will have, sufficient funds to pay the Purchase Price and
consummate the transactions contemplated by this Agreement.
(c) Buyer has full and complete power and authority to enter
into this Agreement and, subject to obtaining the approval of the
Board of Trust Managers described in Section 3.2(e), to perform its
obligations hereunder.
(d) Buyer (i) is a sophisticated investor, (ii) is
represented by competent counsel, (iii) understands the assumptions of
risk and liability set forth in this Agreement and that, prior to
Closing, Buyer and its agents will have inspected the Properties,
fully observed the physical characteristics and condition of the
Properties, performed a thorough investigation of the suitability of
Buyer's intended use of the Properties, including without limitation,
the suitability of the topography, the availability of water rights or
utilities, the present and future zoning, subdivision and any and all
other land use matters, the condition of the soil, subsoil or
groundwater of the Properties and any and all other environmental
matters, the purpose(s) to which the Properties are suited, drainage,
flooding, access to public roads, and proposed routes or roads or
extensions relative to the Properties, (iv) acknowledges that its
posting of the Second Deposit shall be deemed to be an acknowledgment
by the Buyer that, as of the Second Deposit Date, it has received the
Due Diligence Materials and the Natural Hazard Disclosure Statement
set forth on Schedule 4.3 in respect of each of the Properties listed
on Schedule 2.1(a) and (v) understands that it will have no recourse
whatsoever against any Seller or its Affiliates except as expressly
set forth in this Agreement.
(e) No consents are required to be obtained from, and no
filings are required to be made with, any Governmental Authority or
third party in connection with the execution and delivery of this
Agreement by Buyer or the consummation by Buyer of the transactions
contemplated hereby.
Each of the representations of Buyer contained in this
Section (i) is made on the date hereof; (ii) shall be deemed remade by Buyer
and shall be true in all material respects, as of the Closing Date; and (iii)
shall survive the Closing for a period for six (6) months.
Section 4.4 Buyer's Independent Investigation.
(a) Buyer acknowledges and agrees that (i) it has been and
will be given the full opportunity during the Due Diligence Period to
inspect and investigate all aspects of each Property, either
independently or through agents, representatives or experts of Buyer's
choosing, as Buyer considers necessary or appropriate, including
without limitation those set forth below, (ii) on or prior to the
Second Deposit Date, it will have completed its independent
investigation of the Properties and the Due Diligence Materials made
available
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to it prior to the Second Deposit Date (provided that the Sellers will
provide the Buyer, after the Second Deposit Date, with reasonable
access to the Properties during normal business hours and upon
reasonable notice to the Sellers) and (iii) it is acquiring the
Properties based exclusively on such independent investigation and the
representations of the Sellers contained herein. The funding of the
Second Deposit by Buyer shall conclusively constitute Buyer's approval
of each and every aspect of the Properties. Such independent
investigation by Buyer during the Due Diligence Period shall include
the following items, the Buyer agreeing that, except for such items,
it has completed its due diligence investigation of the Properties
prior to the date hereof and is satisfied with the results of such
investigation and the Due Diligence Materials:
(i) all matters relating to governmental and other
legal requirements with respect to the Properties, such as
taxes, assessments, zoning, use permit requirements and
building codes;
(ii) all zoning, land use, building, environmental
and other statutes, rules, or regulations applicable to each
Real Property;
(iii) to the extent in the possession of the
applicable Seller or such Seller's property manager, a copy
of a survey of each Real Property (each, a "Survey");
(iv) to the extent in the possession of the
applicable Seller or such Seller's property manager, reports,
studies, assessments, investigations and other materials
related to the presence of Hazardous Materials at, on or
under each Real Property and the compliance of such Real
Property with all environmental laws, including environmental
assessment reports;
(v) the Leases with respect to such Real Property
and all matters in connection therewith, including, without
limitation, the ability of the Tenants thereto to pay the
rent;
(vi) the Contracts and any other documents or
agreements of significance affecting the Properties;
(vii) all matters relating to the income and
operating or capital expenses of the Properties and all other
financial matters;
(viii) all matters relating to title to such
Property;
(ix) the physical condition of each Real Property,
including, without limitation, the interior, the exterior,
the square footage of the improvements or the
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leasehold improvements and of each tenant space therein, the
structure, the roof, the paving, the utilities, and all other
physical and functional aspects of such Real Property,
including the presence or absence of Hazardous Materials;
(x) any easements and/or access rights affecting
such Real Property;
(xi) all matters that would be revealed by an ALTA
as-built survey, a physical inspection or an environmental
site assessment of such Real Property;
(xii) all matters reflected on each of the Natural
Hazard Disclosure Statements; and
(xiii) all other matters of significance affecting,
or otherwise deemed relevant by Buyer with respect to, such
Property.
Sellers have delivered, or shall deliver within five (5)
Business Days of the execution and delivery by the Buyer and the Sellers of
this Agreement, the Due Diligence Materials listed in clauses (iii), (iv), (v)
and (vi) above, together with a preliminary title report relating to each of
the Properties. Prior to the Closing Date, Sellers shall deliver to Buyer a
Natural Hazard Disclosure Statement relating to each of the Properties.
(b) BUYER SPECIFICALLY REPRESENTS, ACKNOWLEDGES AND AGREES
THAT (i) EACH SELLER SHALL SELL AND BUYER SHALL PURCHASE EACH PROPERTY
"AS IS, WHERE IS AND WITH ALL FAULTS," (ii) EXCEPT AS EXPRESSLY SET
FORTH IN SECTION 4.1, BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR
IMPLIED, STATUTORY OR OTHERWISE, FROM ANY SELLER, NOR ANY PARTNER,
OFFICER, EMPLOYEE, ATTORNEY, PROPERTY MANAGER, AGENT OR BROKER OF ANY
SELLER, AS TO ANY MATTER, CONCERNING ANY PROPERTY, OR SET FORTH,
CONTAINED OR ADDRESSED IN THE DUE DILIGENCE MATERIALS (INCLUDING
WITHOUT LIMITATION, THE COMPLETENESS THEREOF), INCLUDING WITHOUT
LIMITATION: (i) the quality, nature, habitability, merchantability,
use, operation, value, marketability, adequacy or physical condition
of any Property or any aspect or portion
thereof, including, without limitation, structural elements,
foundation, roof, appurtenances, access, landscaping, parking
facilities, electrical, mechanical, HVAC, plumbing, sewage, and
utility systems, facilities and appliances, soils, geology and
groundwater, or whether the Real Property lies within a special flood
hazard area, an area of potential flooding, a very high fire hazard
severity zone, a wildland fire area, an earthquake fault zone or a
seismic hazard zone, (ii) the dimensions or lot size of any Real
Property or the square footage of the Improvements thereon or of any
tenant space therein, (iii) the development or income potential, or
rights of
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or relating to, any Real Property, or any Real Property's use,
habitability, merchantability, or fitness, or the suitability, value
or adequacy of such Real Property for any particular purpose, (iv) the
zoning or other legal status of any Real Property or any other public
or private restrictions on the use of such Real Property, (v) the
compliance of any Real Property or its operation with any applicable
codes, laws, regulations, statutes, ordinances, covenants, conditions
and restrictions of any Governmental Authority or of any other person
or entity (including, without limitation, the Americans with
Disabilities Act), (vi) the ability of Buyer to obtain any necessary
governmental approvals, licenses or permits for Buyer's intended use
or development of any Real Property, (vii) the presence or absence of
Hazardous Materials on, in, under, above or about any Real Property or
any adjoining or neighboring property, (viii) the quality of any labor
and materials used in any Improvements, (ix) the condition of title to
any Real Property, (x) the Leases, Contracts or any other agreements
affecting any Real Property or the intentions of any party with
respect to the negotiation and/or execution of any lease or contract
with respect to any Real Property, (xi) any Seller's ownership of any
Property or any portion thereof or (xii) the economics of, or the
income and expenses, revenue or expense projections or other financial
matters, relating to, the operation of any Real Property. Without
limiting the generality of the foregoing, Buyer expressly acknowledges
and agrees that Buyer is not relying on any representation or warranty
of any Seller, nor any partner, officer, employee, attorney, property
manager, agent or broker of any Seller, whether implied, presumed or
expressly provided at law or otherwise, arising by virtue of any
statute, common law or other legally binding right or remedy in favor
of Buyer except as provided in Section 4.1. Buyer further acknowledges
and agrees that no Seller is under any duty to make any inquiry
regarding any matter that may or may not be known to such Seller or
any partner, officer, employee, attorney, property manager, agent or
broker of such Seller. This Section 4.4(b) shall survive the Closing,
or, if the Closing does not occur, beyond the termination of this
Agreement.
INITIALS: SELLERS: BUYER:
-------------- -------------
(c) ANY REPORTS, REPAIRS OR WORK REQUIRED BY BUYER ARE THE
SOLE RESPONSIBILITY OF BUYER, AND BUYER AGREES THAT THERE IS NO
OBLIGATION ON THE PART OF ANY SELLER TO MAKE ANY CHANGES, ALTERATIONS
OR REPAIRS TO ANY PROPERTY OR TO CURE ANY VIOLATIONS OF LAW OR TO
COMPLY WITH THE REQUIREMENTS OF ANY INSURER. BUYER IS SOLELY
RESPONSIBLE FOR OBTAINING ANY CERTIFICATE OF OCCUPANCY OR ANY OTHER
APPROVAL OR PERMIT NECESSARY FOR TRANSFER OR OCCUPANCY OF ANY PROPERTY
AND FOR ANY REPAIRS OR ALTERATIONS NECESSARY TO OBTAIN THE SAME, ALL
AT BUYER'S SOLE COST AND EXPENSE.
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Section 4.5 Entry and Investigation; Indemnity; Limits on
Government Contacts.
(a) In connection with any entry by Buyer or any of its
agents, employees or contractors (collectively, the "Buyer Parties"
and each a "Buyer Party") onto a Real Property, Buyer shall give the
applicable Seller reasonable advance notice of such entry and shall
conduct such entry and any inspections in connection therewith so as
to minimize, to the greatest extent possible, interference with such
Seller's business and the business of the Tenants and otherwise in a
manner reasonably acceptable to such Seller. Prior to any Buyer Party
contacting any Tenant, Buyer shall give the applicable Seller written
notice thereof, including the identity of the company or persons who
will perform any Tenant interview or contacts. The Seller or its
representative may be present at any such interview or meeting with
the Tenants and the Buyer will reasonably cooperate and coordinate
with the Seller to effectuate the same. Without limiting the
foregoing, prior to any entry to perform any necessary on-site
testing, Buyer shall give the applicable Seller written notice
thereof, including the identity of the company or persons who will
perform such testing and the proposed scope of the testing and the
party performing the testing. Such Seller shall approve or disapprove
any proposed testing and the party performing the same within three
(3) Business Days after receipt of such notice. If a Buyer Party takes
any sample from a Real Property in connection with any such approved
testing, Buyer shall provide to the applicable Seller, at such
Seller's additional expense, a portion of such sample being tested to
allow such Seller, if it so chooses, to perform its own testing. The
applicable Seller or its representative may be present to observe any
testing, or other inspection performed on any Real Property. Buyer
shall promptly deliver to the applicable Seller copies of any third
party reports relating to any testing or other inspection of any Real
Property performed on behalf of any Buyer Party. Buyer shall maintain,
and shall ensure that its contractors maintain, public liability and
property damage insurance insuring the Buyer Parties against any
liability arising out of any entry or inspections of any Real Property
pursuant to the provisions hereof. Such insurance maintained by Buyer
shall be in the amount of Ten Million Dollars ($10,000,000) combined
single limit for injury to or death of one or more persons in an
occurrence, and for damage to tangible property (including loss of
use) in an occurrence. The policy maintained by Buyer shall insure the
contractual liability of Buyer covering the indemnities herein and
shall (i) name such Seller and the management company retained by
Sellers (together with its Affiliates, the "Manager") (and their
successors, assigns and Affiliates) as additional insureds, (ii)
contain a cross-liability provision, and (iii) contain a provision
that "the insurance provided by Buyer hereunder shall be primary and
noncontributing with any other insurance available to such Seller."
Buyer shall provide such Seller with evidence of such insurance
coverage prior to any entry or inspection of any Real Property. Buyer
shall indemnify and hold the Seller Parties harmless from and against
any Claims arising out of or relating to any entry on any Real
Property by any Buyer Party, in the course of performing any
inspections, testings or inquiries. In addition to the foregoing
indemnity, if there is any damage to the Properties caused by Buyer's
and/or its agents' entry
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in or on the Properties, Buyer shall immediately restore the
Properties substantially to the same condition existing prior to
Buyer's entry onto the Properties. The foregoing indemnity and
obligations shall survive the Closing, or, if the Closing does not
occur, beyond the termination of this Agreement.
(b) Notwithstanding any provision in this Agreement to the
contrary, neither Buyer nor any other Buyer Party shall contact any
Governmental Authority regarding any Hazardous Materials on or the
environmental condition of any Real Property without the applicable
Seller's prior written consent thereto. In addition, if the applicable
Seller's consent is obtained by Buyer, such Seller shall be entitled
to receive at least five (5) Business Days prior written notice of the
intended contact and to have a representative present when Buyer has
any such contact with any governmental official or representative.
Section 4.6 Release.
(a) Without limiting the provisions of Section 4.4, Buyer,
for itself and any successors and assigns of Buyer, waives its right
to recover from, and forever releases and discharges, and covenants
not to sue, Sellers, Sellers' Affiliates, Sellers' asset manager,
property managers, any lender to any Seller or Sellers (in their
capacity as lender), the partners, trustees, shareholders, controlling
persons, directors, officers, attorneys, employees and agents of each
of them, and their respective heirs, successors, personal
representatives and assigns (each a "Seller Party", and collectively,
the "Seller Parties") with respect to any and all Claims, whether
direct or indirect, known or unknown, foreseen or unforeseen, that may
arise on account of or in any way be connected with any Property
including, without limitation, the physical, environmental and
structural condition of the related Real Property or any law or
regulation applicable thereto, including, without limitation, any
Claim or matter (regardless of when it first appeared) relating to or
arising from (i) the use, presence, discharge or release of Hazardous
Materials on, under, in, above or about any Real Property, (ii) any
patent or latent defects or deficiencies with respect to any of the
Properties, (iii) any and all matters related to the Properties or any
portion thereof, including without limitation, the condition and/or
operation of the Properties and each part thereof, and (iv) the
presence, release and/or remediation of asbestos and asbestos
containing materials in, on or about any of the Properties regardless
of when such asbestos and asbestos containing materials were first
introduced in, on or about any of the Properties; provided, however,
Buyer does not waive its rights, if any, to recover from, and does not
release or discharge or covenant not to sue any Seller or any Seller
Party for any act of such Seller that is found by a court of competent
jurisdiction to constitute fraud or any breach of such Seller's
obligations or representations (subject to the provisions of Section
4.2) set forth in this Agreement.
(b) Buyer hereby waives and agrees not to commence any
action, legal proceeding, cause of action or suits in law or equity,
of whatever kind or nature, including, but not
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limited to, a private right of action under the federal superfund
laws, 42 U.S.C. sections 9601 et seq. and California Health and Safety
Code sections 25300 et seq., directly or indirectly, against any of
the Sellers, Sellers' Affiliates or Seller Parties or their agents in
connection with the Claims described above and expressly waives the
provisions of Section 1542 of the California Civil Code (or any
similar provision or principle of law which may apply in any other
state where any other state where any Property is located) which
provides:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS
FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED THE
SETTLEMENT WITH THE DEBTOR."
and all similar provisions or rules of law. Buyer elects to and does
assume all risk for such claims heretofore and hereafter arising,
whether now known or unknown by Buyer. To the extent permitted by law,
Buyer hereby agrees, represents and warrants that Buyer realizes and
acknowledges that factual matters now unknown to it may have given or
may hereafter give rise to causes of action, claims, demands, debts,
controversies, damages, costs, losses and expenses which are presently
unknown, unanticipated and unsuspected, and Buyer further agrees,
represents and warrants that the waivers and releases herein have been
negotiated and agreed upon in light of that realization and that Buyer
nevertheless hereby intends to release, discharge and acquit Sellers
from any such unknown causes of action, claims, demands, debts,
controversies, damages, costs, losses and expenses which might in any
way be included as a material portion of the consideration given to
Sellers by Buyer in exchange for Sellers' performance hereunder.
Without limitation of the foregoing, if Buyer has actual knowledge of
(i) a default in any of the covenants, agreements or obligations to be
performed by any Seller under this Agreement and/or (ii) any breach of
or inaccuracy in any representation of any Seller made in this
Agreement, nonetheless elects to proceed to Closing, then, upon the
consummation of the Closing, Buyer shall be deemed to have waived any
such default and/or breach or inaccuracy and shall have no Claim
against any Seller with respect thereto.
Sellers have given Buyer material concessions regarding this
transaction in exchange for Buyer agreeing to the provisions of this
Section 4.6. Sellers and Buyer have each initialed this Section 4.6 to
further indicate their awareness and acceptance of each and every
provision hereof. The provisions of this Section 4.6 shall survive the
Closing and shall not be deemed merged into any instrument or
conveyance delivered at the Closing.
INITIALS: SELLERS: BUYER:
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Section 4.7 Second Deposit After Due Diligence Period. At any
time prior to the expiration of the Due Diligence Period, Buyer shall be free
either to (i) post the Second Deposit as required by Section 2.2(b) or (ii)
terminate this Agreement by written notice to Sellers delivered on or prior to
the Second Deposit Date. If the Second Deposit is posted on or prior to the
Second Deposit Date, Buyer shall be deemed to have reviewed, accepted and
approved all of the Due Diligence Materials made available to it prior to the
Second Deposit Date. Notwithstanding anything to the contrary herein, no Seller
shall have any liability whatsoever to Buyer with respect to any matter
disclosed to or discovered by Buyer or its agents prior to the Closing Date.
ARTICLE V
TITLE
Section 5.1 Conveyance of Title. At the Closing, Sellers
shall deliver to Buyer a grant deed for each Real Property in the form of
Exhibit C for the applicable jurisdiction, with the exception that the
applicable Seller shall deliver a deed in the form of Exhibit K for the
Bloomfield, Colorado Real Property (each, a "Deed"), subject to no exceptions
other than the exceptions listed below and the defects deemed by Section 5.2 to
constitute Acceptable Permitted Exceptions (collectively, the "Acceptable
Permitted Exceptions"):
(i) Interests and rights of Tenants in possession
under Leases, including, without limitation, those Tenant
purchase rights listed on Schedule 4.1(g);
(ii) Liens for Real Estate Taxes that are
apportioned as provided in Section 8.5, including, without
limitation, special assessments and special improvement
district or local improvement district bonds;
(iii) Any exceptions, exclusions and other matters
set forth or disclosed by the PTR for such Real Property or
other documents made available to Buyer pursuant to Section
4.4 prior to the Closing Date and that are, pursuant to
Section 5.2, deemed to constitute "Acceptable Permitted
Exceptions", and any other exceptions to title that would be
disclosed by an inspection and/or survey of such Real
Property, including those disclosed on any Survey obtained by
Buyer;
(iv) Any and all present and future laws,
ordinances, restrictions, requirements, resolutions, orders,
rules and regulations of any Governmental Authority, as now
or hereafter existing or enforced (including, without
limitation, those related to zoning and land use), and all
notes or notices of violation of any such laws, ordinances,
rules or regulations set forth in the Due Diligence Materials
or in any title reports, commitments or updates delivered to
Buyer prior to the Closing Date;
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(v) Any lien or encumbrance encumbering such
Property as to which the applicable Seller shall deliver to
Buyer, or the Title Company, at or prior to the Closing,
proper instruments, in recordable form, canceling such lien
or encumbrance, together with funds to pay the cost of
recording and canceling the same;
(vi) Such other exceptions as the Title Company
shall commit to insure over, without any additional cost to
Buyer and in a manner reasonably acceptable to Buyer;
(vii) Uniform Commercial Code filings that have
expired or terminated by operation of law on or prior to the
Closing Date;
(viii) Any exceptions caused by Buyer, its agents,
representatives or employees; and
(ix) Any other matters affecting title to such
Property that have been approved, deemed approved or waived
by Buyer pursuant to the terms hereof.
Section 5.2 Certain Exceptions to Title. Prior to November
17, 1998, Buyer shall have the right to object in writing to any title matters
that materially adversely affect Buyer's title to the Real Property which may
appear on the PTR, any supplemental title reports or updates to the PTR issued
at the request of Buyer after the date hereof or any surveys of the Real
Property (herein collectively called the "Title Defects"). Unless Buyer shall
timely object to such Title Defects, all such Title Defects and any matters
which do not materially adversely affect Buyer's title to the Real Property
which are set forth on the PTR or in any such supplemental reports or updates
shall be deemed to constitute "Acceptable Permitted Exceptions". The applicable
Seller may elect (but shall not be obligated) to remove, or cause to be removed
at its expense, any Title Defects that are timely objected to by Buyer, and
shall be entitled to a reasonable adjournment of the Closing (not to exceed
ninety (90) days) for the purpose of such removal, which removal will be deemed
effected by the issuance of title insurance eliminating or insuring against the
effect of the Title Defects. The applicable Seller shall notify Buyer in
writing within five (5) days after receipt of Buyer's notice of Title Defects
whether such Seller elects to remove the same. If such Seller is unable to
remove or endorse over any Title Defects prior to the Closing, or if such
Seller elects not to remove one or more Title Defects, Buyer may elect to
either (a) not to purchase the Property or Properties that may be subject to
such Title Defects, in which event the parties shall thereafter have no further
rights or obligations hereunder with respect to such Property or Properties
except for obligations which expressly survive the termination of this
Agreement, or (b) waive such Title Defects, in which event such Title Defects
shall be deemed "Acceptable Permitted Exceptions" and the Closing shall occur
as herein provided without any reduction of or credit against the Purchase
Price (it being understood and agreed that the funding by the Buyer of the
Second Deposit shall be deemed to constitute a waiver of all Title Defects
which the applicable Seller has not, prior to the time the Second Deposit is
funded, agreed to remove or cause to be removed in accordance with this Section
5.2).
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Notwithstanding the foregoing, in the event that Buyer makes the election set
forth in clause (a) in the preceding sentence, the Sellers may, within three
(3) Business Days of receipt of written notice from Buyer of such election,
elect to terminate this Agreement in its entirety, in which event the Sellers
shall refund the Deposit to the Buyer and thereafter, the parties shall have no
further rights or obligations under this Agreement except for obligations which
expressly survive the termination of this Agreement.
Section 5.3 Discharge of Title Defects. If on the Closing
Date there are any Title Defects which a Seller has elected to pay and
discharge, such Seller may use any portion of the Purchase Price to satisfy the
same, provided such Seller shall deliver to Buyer at the Closing instruments in
recordable form and sufficient to satisfy such Title Defects of record,
together with the cost of recording or filing such instruments, or provided
that such Seller shall cause the Title Company to insure over the same, without
any additional cost to Buyer, whether such insurance is made available in
consideration of payment, bonding, indemnity of such Seller or otherwise.
Section 5.4 Evidence of Title. Delivery of title in
accordance with the foregoing shall be evidenced by the Title Company issuing,
or to committing to issue, at Closing, upon payment of the applicable premium
therefor, one or more CLTA or 1992 ALTA Owner's Policies of Title Insurance
(provided, that in jurisdictions where local regulations require a form of
policy other than a CLTA or 1992 ALTA Owner's Policy, such other required form
shall be used and provided, further, that the Title Company shall issue an ALTA
Owner's Policy only if the Buyer has provided to the Title Company an insurable
survey prior to the Second Deposit Date) in the aggregate amount of the
Purchase Price for the Properties showing title to each Property vested in
Buyer, subject only to the Permitted Exceptions (the "Title Policy").
ARTICLE VI
BROKERS AND EXPENSES
Section 6.1 Brokers. Sellers and Buyer represent and warrant
to each other that no broker or finder, other than Cushman & Wakefield and
Goldman, Sachs & Co., was instrumental in arranging or bringing about this
transaction and that there are no claims or rights for brokerage commissions or
finders' fees in connection with the transactions contemplated hereby by any
person or entity other than Cushman & Wakefield and Goldman, Sachs & Co. whose
fees will be the responsibility of Sellers pursuant to separate agreements
between Sellers and Cushman & Wakefield and Goldman, Sachs & Co., as
applicable. If any person brings a claim for a commission or finder's fee based
upon any contact, dealings or communication with Buyer or any Seller, then the
party through whom such person makes its claim shall defend the other party
(the "Indemnified Party") from such claim, and shall indemnify the Indemnified
Party and hold the Indemnified Party harmless from any and all costs, damages,
claims, liabilities or expenses (including without limitation,
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reasonable attorneys' fees and disbursements) incurred by the Indemnified Party
in defending against the claim. In addition, Buyer hereby agrees to indemnify
and hold harmless each Seller Party from any and all Claims resulting from any
claim made by any Person for a brokerage commission, finders' fee or similar
fee arising out of or relating to any action taken (or any communication made)
by a Buyer Party in connection with the proposed resale by Buyer of any
Property or the marketing of such Property by Buyer or by any Person on behalf
of Buyer. The provisions of this Section 6.1 shall survive the Closing or, if
the Closing does not occur, any termination of this Agreement.
Section 6.2 Expenses. Except as provided in Section 8.5(d),
each party hereto shall pay its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby.
ARTICLE VII
INTERIM OPERATION OF THE PROPERTIES
Section 7.1 Interim Operation of the Properties.
(a) Except as otherwise contemplated or permitted by this
Agreement or approved by Buyer in writing, from the date hereof to the
Closing Date, each Seller agrees that it will operate, maintain,
repair and lease the Real Property owned by it in the ordinary course
and consistent with such Seller's past practices and will not dispose
of or encumber any Property, except for dispositions of personal
property in the ordinary course of business or as otherwise permitted
by Section 7.1 or Section 7.3. Without limiting the foregoing, Sellers
shall, in the ordinary course, negotiate with prospective Tenants and
enter into New Leases (on terms that Sellers believe, in their
commercially reasonable business judgment, to be market terms),
enforce Leases in all material respects and perform in all material
respects all of landlord's obligations under the Leases (other than
Leases that are or that are in the process of being terminated due to
Tenant's default thereunder). Sellers will promptly notify Buyer of
any New Leases entered into by, or proposals to enter into New Leases
made by, any Seller prior to the Second Deposit Date and provide Buyer
with a summary of the terms of each such New Lease or proposal.
(b) Sellers shall notify Buyer (in reasonable detail) of any
of the following (each, a "Significant Transaction") which may occur
from and after the Second Deposit Date and prior to the Closing Date,
at least three (3) Business Days prior to becoming legally bound with
respect thereto:
(i) the execution, termination or material
modification of any Lease covering in excess of 10,000 square
feet (collectively, "Major Leases"); or
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(ii) the entry into, execution or termination of any
operating agreement or any lease, contract, agreement or
other commitment of any sort (including any contract for
capital items or expenditures, but excluding any liens or
other encumbrances on title other than Acceptable Permitted
Exceptions), with respect to any one or more of the
Properties that (A) requires payments to or by a Seller in
excess of $50,000 per annum, or the performance of services
by a Seller the value of which is in excess of $50,000 per
annum and (B) is not terminable without cause and without
penalty on thirty (30) days' notice or less.
(c) At least three (3) Business Days prior to becoming
legally bound with respect to any Significant Transaction after the
Second Deposit Date, the applicable Seller shall consult with and seek
the consent of Buyer, and shall provide reasonable detail to Buyer
(including, at Buyer's request, copies of the relevant documentation),
with respect thereto; provided, that, Buyer hereby provides its
consent to a Lease of the space described in Schedule 7.1 on the terms
set forth on Schedule 7.1. Any consent to be given by Buyer pursuant
to this Section 7.1(c) shall not be unreasonably withheld, conditioned
or delayed and shall be deemed granted if Buyer does not respond in
writing to Sellers' request for consent within three (3) Business
Days.
(d) Except for New Leases or other agreements entered into in
accordance with this Section 7.1, no Seller shall enter into any
agreement to create a lien or encumbrance on any Property which will
survive the Closing without Buyer's prior written consent (which
consent shall not be unreasonably withheld, conditioned or delayed
with respect to any utility or similar easement necessary for the
operation of a Property, and which shall be deemed granted if Buyer
does not respond in writing to Seller's request for consent within
three (3) Business Days).
(e) Prior to the Closing Date or the earlier termination of
this Agreement, no Seller shall sell any Property or portion thereof
without Buyer's prior written consent.
(f) Prior to Closing, Sellers shall (with reasonable
promptness) provide Buyer with copies of all Contracts entered into by
a Seller affecting any Property (other than Contracts terminable on 30
days' notice or less) made after the expiration of the Due Diligence
Period.
Section 7.2 Tenant Improvement Costs, Leasing Commissions and
Free Rent. If the Closing occurs, Buyer shall be responsible and shall pay for
the costs of tenant improvement work or allowances, third-party leasing
commissions and other leasing costs (collectively, "Leasing Costs") relating to
or arising from (i) those Leases or modifications of Leases entered into on or
after the date hereof, (ii) the exercise by a Tenant of a renewal, expansion or
extension option contained in any Lease, which renewal or extension period
commences, or which expansion space such Tenant first has the right to occupy,
on or after the date hereof (notwithstanding that such Tenant may have
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exercised such option prior to the date hereof) and (iii) any items set forth
on Schedule 7.2, and any amounts paid by Sellers in respect of such Leasing
Costs shall be reimbursed by Buyer at the Closing. Sellers shall be responsible
and shall pay for all other Leasing Costs and any such other Leasing Costs
otherwise remaining unpaid by Sellers shall result in a downward adjustment to
the Purchase Price at Closing. Free rent periods that occur, in whole or in
part, after the Closing Date shall be for the account of, and borne by, Buyer.
Free rent periods that occur prior to the Closing Date shall be for the account
of, and borne by, Sellers. The provisions of this Section 7.2 shall survive the
Closing for one year after the Closing Date.
Section 7.3 Sellers' Maintenance of the Properties. Between
the date hereof and the Closing Date, the applicable Seller shall (a) maintain
each Real Property in substantially the same manner as prior hereto pursuant to
such Seller's normal course of business, subject to reasonable wear and tear
and further subject to the occurrence of any damage or destruction to such Real
Property by casualty or other causes or events beyond the control of such
Seller; provided, however, that such Seller's maintenance obligations under
this Section 7.3 shall not include any obligation to make capital expenditures
not incurred in such Seller's normal course of business or any other
expenditures not incurred in such Seller's normal course of business; (b)
continue to maintain its existing insurance coverage; and (c) not grant any
voluntary liens or encumbrances affecting such Property other than Permitted
Exceptions. Notwithstanding the foregoing, in the event the Seller makes
emergency capital expenditures after the Due Diligence Period to any Property
and the cost of such capital expenditures is less than 1/2 of 1% of the
Allocated Purchase Price for such Property set forth on Exhibit A, the
applicable Seller shall, deliver to Buyer, promptly following the occurrence of
an event that would require Seller to make such capital expenditure, a written
notice describing in reasonable detail the nature and cost of such capital
expenditure, and Buyer shall be obligated to reimburse Seller for such
emergency capital expenditures, and the Purchase Price payable at the Closing
shall be increased by an amount equal to the amount spent by the Sellers in
respect of such emergency capital expenditure. If the cost of any emergency
capital expenditure in respect of any Property shall exceed 1/2 of 1% of the
Allocated Purchase Price set forth on Exhibit A of such Property, Seller shall
deliver to Buyer, promptly following the occurrence of an event that would
require Seller to make such capital expenditure, a written notice describing in
reasonable detail the nature and cost of such emergency capital expenditure and
Buyer shall have the right, by delivering written notice to Seller, to either
(i) agree to reimburse Seller for such emergency capital expenditures at the
Closing (in which case the Purchase Price payable at the Closing shall be
increased by an amount equal to the amount spent by the Sellers in respect of
such emergency capital expenditure), or (ii) terminate its obligations under
this Agreement with respect to such Property. In the event that Buyer makes the
election described in clause (ii) of the preceding sentence with respect to one
or more Properties, the Buyer shall be entitled to reduce the Purchase Price by
the amount of the Allocated Purchase Price set forth on Exhibit A next to such
Property or Properties as to which such election has been made, and neither
party shall have any further rights or obligations under this Agreement with
respect to such Property or Properties, other than those expressly stated to
survive the termination of this Agreement. Notwithstanding the foregoing, Buyer
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shall be obligated to consummate the purchase of the remaining Properties on
Exhibit A as required by the terms hereof. Any consent to be given by Buyer
pursuant to this Section 7.3 shall not be unreasonably withheld, conditioned or
delayed and shall be deemed granted if Buyer does not respond in writing to
Sellers' request for consent within two (2) Business Days. For the purposes of
this paragraph, "emergency capital expenditures" shall mean any emergency
capital expenditures performed by Seller that are (i) necessary to prevent an
immediate threat to the health or safety of any person or to prevent or remedy
a breach by a Seller under a Lease, or (ii) necessary to make any repairs
resulting from the occurrence of any damage or destruction by casualty or other
causes or events beyond the control of the applicable Seller.
Section 7.4 Lease Enforcement. Subject to the provisions of
Section 7.1, prior to the Closing Date, the applicable Seller shall have the
right, but not the obligation (except to the extent that such Seller's failure
to act shall constitute a waiver of such rights or remedies), to enforce the
rights and remedies of the landlord under any Lease, by summary proceedings or
otherwise, and to apply all or any portion of any security deposits then held
by such Seller toward any loss or damage incurred by such Seller by reason of
any defaults by any Tenant, provided, that with respect to any application by
such Seller of Tenant security deposits held by such Seller, such Seller will
deliver, in connection with any such application, written notice to the
affected Tenant(s) indicating that their security deposits have been or are
being so applied). The applicable Seller shall provide the Buyer with written
notice of any action taken by such Seller pursuant to this Section 7.4.
Section 7.5 Lease Termination Prior to Closing. The
bankruptcy or default of any Tenant or the termination of any Lease or the
removal of any Tenant by reason of a default by such Tenant (by summary
proceedings or otherwise) or by operation of the terms of such Lease shall not
affect the obligations of Buyer under this Agreement in any manner or entitle
Buyer to a reduction in, or credit or allowance against, the Purchase Price or
give rise to any other Claim on the part of Buyer; provided, that, if a
voluntary or involuntary filing is made with respect to a Tenant under the
federal bankruptcy laws after the Second Deposit Date and prior to the Closing
Date (a "Tenant Bankruptcy Event"), and the Tenant to which such Tenant
Bankruptcy Event relates occupies space contributing more than 50% of the total
gross revenue received in respect of a Property, then the Buyer may, at its
option to be exercised by notice to such Seller within five (5) Business Days
of Seller's notice to the Buyer of the occurrence of such Tenant Bankruptcy
Event, elect not to purchase such Property under this Agreement. If Buyer so
elects not to purchase a Property pursuant to this Section 7.5 and the Buyer is
not then in default under this Agreement, then Buyer shall be entitled to
reduce the Purchase Price by the amount of the Allocated Purchase Price set
forth next to such Property on Exhibit A and neither party shall have any
further rights or obligations under this Agreement with respect to such
Property, other than those expressly stated to survive the termination of this
Agreement. If the Buyer does not elect, pursuant to this Section 7.5, not to
purchase a Property, the Buyer shall be obligated to consummate the purchase of
all the Properties for the full Purchase Price as required by the terms hereof.
The Sellers shall give the Buyer prompt written
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notice of the occurrence of any Tenant Bankruptcy Event prior to the Closing
Date or termination of this Agreement.
Section 7.6 Tenant Notices. Two business days prior to the
Closing, each Seller shall furnish to the Escrow Agent for mailing by the
Escrow Agent on the Closing Date, a signed notice to be given to each Tenant in
the form attached as Exhibit J. Such notice shall disclose that the applicable
Property has been sold to Buyer and that, after the Closing, all rents should
be paid to Buyer.
Section 7.7 Risk of Loss and Insurance Proceeds. Buyer shall
be bound to purchase the Properties for the full Purchase Price as required by
the terms hereof, without regard to the occurrence or effect of any damage to
the related Real Properties or destruction of any improvements thereon or
condemnation of any portion of any Property, provided that upon the Closing,
there shall be a credit against the Purchase Price due hereunder equal to the
amount of any insurance proceeds or condemnation awards collected by the
applicable Seller as a result of any such damage or destruction or
condemnation, plus the amount of any insurance deductible or any uninsured
amount or retention, less any sums expended by such Seller prior to the Closing
for the restoration or repair of any Property or in collecting such insurance
proceeds or condemnation awards. Sellers have provided Buyer with a certificate
of insurance for Sellers' casualty insurance policy so that Buyer can confirm
its satisfaction with such policy. Sellers agree that they will maintain such
policy in full force and effect until the Closing. If the proceeds or awards
have not been collected as of the Closing, then such proceeds or awards shall
be assigned to Buyer, except to the extent needed to reimburse the applicable
Seller for sums it expended prior to the Closing for the restoration or repair
of such Property or in collecting such insurance proceeds or condemnation
awards. Notwithstanding the foregoing, if any of the Properties shall be
damaged or destroyed by a casualty or shall be condemned, to the extent that
the cost of repair or restoration to substantially their condition prior to
such casualty (or, in the case of a condemnation, the value of the Property (or
portion thereof) so condemned) would exceed an amount equal to 50% of the
allocated Purchase Price of such Property (as set forth on Exhibit A), then the
applicable Seller shall give the Buyer prompt notice thereof and the Buyer may,
at its option to be exercised by notice to such Seller within five (5) Business
Days of Seller's notice to the Buyer of the occurrence of such casualty or
condemnation, elect not to purchase such Property under this Agreement. If
Buyer so elects not to purchase a Property pursuant to this Section 7.7 and the
Buyer is not then in default under this Agreement, then Buyer shall be entitled
to reduce the Purchase Price by the amount of the Allocated Purchase Price set
forth next to such Property on Exhibit A and neither party shall have any
further rights or obligations under this Agreement with respect to such
Property, other than those expressly stated to survive the termination of this
Agreement. Any dispute as to the costs of such repair or restoration or value
of a condemned portion of a Property shall be referred to a licensed architect
jointly selected by the Buyer and the applicable Seller for resolution, and the
determination of such architect, which shall be made within a period of twenty
(20) days after such submittal by the parties, shall be final, conclusive and
binding on the parties. If the parties shall fail to agree upon the identity of
such architect within ten (10) days
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after either party has notified the other of its choice of architect, then
either party may at any time thereafter apply to a court of competent
jurisdiction to appoint immediately such architect. The fees and expenses of
such architect shall be paid equally by the Buyer and the applicable Seller,
and the parties shall cooperate with such architect by providing such
information as such architect may reasonably require to resolve the dispute. If
the Buyer does not elect, pursuant to this Section 7.7, not to purchase a
Property that suffers a casualty loss or is condemned or to terminate this
Agreement as described above, the Buyer shall be obligated to consummate the
purchase of such Property for the full Purchase Price as required by the terms
hereof.
Section 7.8 Notifications. Between the date hereof and the
Closing, each Seller shall promptly notify Buyer of any condemnation,
environmental, zoning or other land-use regulation proceedings relating to any
of the Properties of which such Seller obtains any written notices, or any
written notice of violations of any legal requirements relating to any of the
Properties, any written notice of any litigation of which such Seller obtains
actual knowledge that arises out of the ownership of any of the Properties
unless fully covered by insurance (subject to customary deductibles), and any
other matters that would materially affect any of Sellers' representations
hereunder.
ARTICLE VIII
CLOSING AND ESCROW
Section 8.1 Escrow Instructions. Upon execution of this
Agreement, the parties hereto shall deposit an executed counterpart of this
Agreement with the Title Company, and this instrument shall serve as the
instructions to the Title Company as the escrow holder for consummation of the
purchase and sale contemplated hereby. Sellers and Buyer agree to execute such
reasonable additional and supplementary escrow instructions as may be
appropriate to enable the Title Company to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control, unless a contrary intent is expressly
indicated in such supplementary instructions.
Section 8.2 Closing. The Closing hereunder shall be held and
delivery of all items to be made at the Closing under the terms of this
Agreement shall be made at the offices of the Title Company (or such other
location as the parties may agree) at 10:00 A.M. Pacific Daylight Time, on
December 3, 1998 or such earlier or later date and time as Buyer and Sellers
may mutually agree upon in writing (the "Closing Date"), in either case, with
time being of the essence. Except as otherwise permitted under this Agreement,
such date and time may not be extended without the prior written approval of
both Sellers and Buyer.
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Section 8.3 Deposit of Documents.
(a) At or before the Closing, Sellers shall deposit into
escrow the following items:
(i) a duly executed and acknowledged Deed for each
Real Property;
(ii) four (4) duly executed counterparts of a Bill
of Sale for each Real Property in the form attached hereto as
Exhibit D (each, a "Bill of Sale");
(iii) four (4) duly executed counterparts of an
Assignment and Assumption of Leases for each Real Property in
the form attached hereto as Exhibit E (each, an "Assignment
of Leases");
(iv) four (4) duly executed counterparts of an
Assignment and Assumption of Contracts, Warranties and
Guaranties and Other Intangible Property for each Real
Property in the form attached hereto as Exhibit F (each, an
"Assignment of Contracts");
(v) the applicable executed Tenant Notices,
substantially in the form of Exhibit J; and
(vi) an affidavit pursuant to Section 1445(b)(2) of
the Code, and on which Buyer is entitled to rely, that no
Seller is a "foreign person" within the meaning of Section
1445(f)(3) of the Code and a California Form 590-RE with
respect to each of the Properties.
(b) At or before Closing, Buyer shall deposit into escrow the
following items:
(i) the Purchase Price;
(ii) four (4) duly executed counterparts of each Bill
of Sale;
(iii) four (4) duly executed counterparts of each
Assignment of Leases;
(iv) four (4) duly executed counterparts of each
Assignment of Contracts;
(v) a countersigned copy of the Natural Hazard
Disclosure Statement for each Property;
(vi) two (2) duly executed counterpart of Buyer's
As-Is Certificate and Agreement, substantially in the form of
Exhibit H attached hereto; and
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(vii) such documents, resolutions, forms, agreements
or other items as may be reasonably requested by the Title
Company.
(c) On the Closing Date, Buyer shall effect a wire transfer
of federal funds to the Title Company's escrow account or to such
other account as shall be designated by Sellers (in accordance with
the wiring instructions set forth on Schedule 2.2(b)) in an amount
equal to the sum of (i) the Purchase Price and (ii) the amount (if
any) of the costs, expenses and adjustments payable by Buyer under
this Agreement. The amount of funds to be wired to the Title Company's
escrow account shall be reduced by the Deposit (including all interest
thereon). After Sellers' confirmation of receipt of the Purchase Price
(as reduced by the costs, expenses, prorations and adjustments payable
by Sellers under this Agreement) by wire transfer of federal funds by
the Title Company to one or more accounts designated by Sellers, the
Title Company shall deliver to Buyer all documents and instruments
received by it which, in accordance with the terms of this Agreement,
are to be delivered by Sellers to Buyer on the Closing Date and the
Title Company shall deliver to Sellers all documents and instruments
received by it which, in accordance with the terms of this Agreement
are to be delivered by Buyer to Sellers on the Closing Date. Buyer and
Sellers shall each deposit such other instruments as are reasonably
required by the Title Company or otherwise required to close the
escrow and consummate the purchase and sale of the Properties in
accordance with the terms hereof; provided, that Sellers shall not be
required to provide any indemnities or to escrow any funds.
(d) Sellers shall deliver to Buyer originals of the Leases
(or, if originals are not available, certified copies), copies (or, if
available, originals) of the tenant correspondence files of the Real
Properties in Sellers' possession, a set of keys to each Real Property
and originals (or copies, if originals are not available) of any other
items in Sellers' possession relating to the use, ownership, operation
or maintenance of the Real Properties, all within five (5) Business
Days after the Closing Date. Following the Closing, Buyer shall make
all Leases, Contracts, other documents, books, records and any other
materials in its possession, to the extent the same relate to the
period of Sellers' ownership of the Properties, available to Sellers
or their representatives for inspection and/or copying at reasonable
times and upon reasonable notice.
Section 8.4 Estoppel Certificates. It shall be a condition to
Buyer's obligation to close the sale and purchase of a Property that on or
prior to five (5) Business Days before the Closing Date, the applicable Seller
delivers to the Buyer tenant estoppel certificates substantially in the form
attached hereto as Exhibit I (provided, however, that if a form of estoppel
certificate is attached to or otherwise prescribed in a particular lease
document, that form (the "Prescribed Form") shall be deemed to be acceptable to
Buyer in the event that any Tenant is unwilling to sign the form attached
hereto as Exhibit I) from Tenants occupying space contributing at least eighty
percent (80%) of the total gross revenue received in respect of the Properties
(taken as a whole) in the most recent fiscal
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year (the "Required Percentage"); provided, however, if such Seller is unable
to obtain the aforesaid tenant estoppel certificates from Tenants occupying the
Required Percentage, such Seller may, but shall not be obligated to, provide a
certificate to Buyer (the "Seller's Estoppels"), with respect to such missing
estoppel certificates, as chosen by such Seller, representing those Tenants
whose Leases cover space contributing not more than ten percent (10%) of the
total gross revenue received in respect of the Properties (taken as a whole) in
the most recent fiscal year to equal or exceed the difference between the
Required Percentage and the Leases covering space contributing the percentage
of the gross revenue received in respect of the Properties (taken as a whole)
in the most recent fiscal year covered by the estoppel certificates received by
Buyer as to all other Tenants to the effect that (except as disclosed in the
Due Diligence Materials or in the Leases to which such estoppels relate): (i)
to such Seller's actual knowledge the Leases for those Tenants are in full
force and effect; (ii) the amount of the Tenants' security deposits; (iii) the
dates through which rent has been paid; (iv) neither such Seller nor, to such
Seller's actual knowledge, any of those Tenants (as the case may be) is in
default thereunder; (v) a true, correct and complete copy of the Leases are
attached; (vi) the Leases expire on the dates specified and are not subject to
any renewal or extension options, except as specified, and (viii) there are no
options to purchase or rights of first refusal except as specified. Buyer shall
be obligated to accept such Seller's certification in lieu of any missing
estoppel certificates up to such ten percent (10%) level. The Seller's
Estoppels shall survive the Closing for a period of six (6) months.
Notwithstanding the foregoing, in the event that the conditions contained in
this Section 8.4 are otherwise satisfied but the Sellers have not delivered to
the Buyer Tenant Estoppels from any Tenant listed on Schedule 8.4, then the
Buyer shall have the right not to purchase the Property set forth opposite such
Tenant's name on Schedule 8.4 and as to which no such Tenant Estoppel has been
delivered to the Buyer. In the event the Buyer makes such election, the
Purchase Price shall be reduced by an amount equal to the Allocated Purchase
Price set forth on Exhibit A for the Property or Properties as to which such
election has been made, and in which event the parties shall thereafter have no
further rights or obligations hereunder with respect to such Property or
Properties except for obligations which expressly survive the termination of
this Agreement.
Section 8.5 Prorations.
(a) Rents, including, without limitation, escalation charges
for Real Estate Taxes, operating expenses, maintenance escalation
rents or charges, cost-of-living increases or other charges of a
similar nature ("Additional Rents"), and any additional charges and
expenses payable under Leases, all as and when actually collected
(whether such collection occurs prior to, on or after the Closing
Date); Real Estate Taxes and personal property taxes, including
refunds with respect thereto, if any; the current installment (only)
of any improvement bond or assessment that is a lien on any Property
or that is pending and may become a lien on any Property; water, sewer
and utility charges; amounts payable under any existing Contract;
annual permits and/or inspection fees (calculated on the basis of the
period covered); and any other income or expenses relating to the
operation and maintenance of
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each Property (other than any Leasing Costs and free rent which shall
be prorated as provided in Section 7.2), shall all be prorated as of
12:01 a.m. Pacific Standard Time on the Closing Date, on the basis of
a 365-day year, with Buyer deemed the owner of the Properties on the
entire Closing Date. Any delinquent rents or other charges collected
after the Closing shall be applied as follows: (i) first, to the
calendar month in which the Closing occurs (the "Closing Month"), (ii)
second, to the to the current month in which such rents or other
charges are collected, (iii) third, to any delinquent rents or other
charges accruing prior to the Closing Month, and (iv) fourth, to any
other delinquent rents or other charges accruing after the Closing
Month; provided that in no event will Buyer be entitled to receive any
payments on or under the promissory notes or other agreements referred
to in Section 8.8. Buyer shall use its commercially reasonable efforts
to collect any delinquent rents that accrued prior to the Closing Date
and shall provide the Sellers with a monthly report describing in
reasonable detail any delinquent rents or charges accruing during or
prior to the Closing Month and the status of collection efforts
relating thereto, provided that in no event shall Buyer be required to
sue any Tenant, terminate any Lease or threaten to do same (but
Sellers shall have the right to commence and pursue litigation against
any Tenant to collect delinquent rents and/or expense reimbursements
without the right to evict the Tenant or terminate the Lease. Each
Seller agrees to forward any rents received by it after the Closing
Date to Buyer for application in accordance with the provisions
hereof. The amount of any security deposits that are required to be
returned to Tenants under any Lease, and actually being held by
Sellers, shall be credited against the Purchase Price (and Sellers
shall be entitled to retain such security deposits). Notwithstanding
the foregoing terms of this Section 8.5(a), no Seller shall have any
obligation to pay (and Buyer shall not receive a credit at Closing
for) any Real Estate Taxes, personal property taxes or any other
expense relating to the operation and maintenance of any Property, to
the extent that Buyer is entitled after Closing to reimbursement of
such amounts from Tenants under the Leases, regardless of whether
Buyer actually collects such reimbursements from such Tenants, it
being understood and agreed by Buyer and Sellers that the burden of
collecting such reimbursements shall be solely on Buyer. With respect
to all expense reimbursements and recoveries from Tenants, to the
extent that any Seller has collected from the Tenants amounts in
excess of that owed by the Tenants under the terms of their Leases
with respect to the period prior to the Closing Date, Buyer shall
receive a credit at Closing in the amount of such over-collection. In
the event any Property has been assessed for property taxes purposes
at such rates as would result in reassessment (i.e., "escape
assessment" or "roll-back taxes") based upon the change in land usage
or ownership of such Property resulting from or after the consummation
of the transactions described in this Agreement, as between Buyer and
Sellers, Buyer hereby agrees to pay all such taxes and to indemnify
and save Sellers harmless from and against all claims and liability
for such taxes. Such indemnity shall survive the Closing.
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(b) Sellers and Buyer hereby agree that if any of the
aforesaid prorations cannot be calculated accurately on the Closing
Date (including, without limitation, if any supplemental assessments
are issued after the Closing as a result of events occurring prior to
the Closing), then the same shall be calculated as soon as reasonably
practicable after the Closing Date, and that if any Tenant is required
to pay Additional Rents and such Additional Rents are not finally
adjusted between the landlord and tenant under the applicable Lease
until after the end of the 1998 calendar year, then such prorations
shall be calculated as soon as reasonably practicable after such
Additional Rents have been finally adjusted. Either party owing the
other party a sum of money based on proration(s) calculated after the
Closing Date shall promptly pay said sum to the other party, together
with interest thereon at the rate of two percent (2%) per annum over
the Prime Rate from the Closing Date to the date of payment, if
payment is not made within ten (10) days after delivery of a bill
therefor. If the real estate and/or personal property tax rate and
assessments have not been set for the calendar year in which the
Closing occurs, then the proration of such taxes shall be based upon
the rate and assessments for the preceding calendar year, and such
proration shall be adjusted between the applicable Seller and Buyer as
soon as reasonably practicable after such tax rate or assessment has
been set. The Agreements contained in this subparagraph (b) shall
survive the Closing.
(c) Buyer shall calculate the prorations contemplated by
Section 8.5(b). Sellers and their representatives and auditors shall
be afforded the opportunity to review all underlying financial records
and work papers pertaining to the preparation of Buyer's proration
statements, and Buyer shall permit Sellers and their representatives
and auditors during regular business hours and upon reasonable prior
written notice to have reasonable access to the books and records in
the possession of Buyer or any party to whom Buyer has given custody
of the same relating to the Properties to permit Sellers to review
Buyer's proration statements. Buyer's proration statements shall be
final and binding for purposes of this Agreement unless a Seller
shall, exercising commercially reasonable business judgment, give
written notice to Buyer of disagreement with the prorations contained
therein within sixty (60) days following its receipt of Buyer's
proration statements, specifying in reasonable detail the nature and
extent of such disagreement; provided that if all such disagreements
with all Sellers total less than $25,000 in the aggregate, no further
adjustments will be made. If Buyer and the applicable Seller are
unable to resolve any disagreement with respect to Buyer's proration
statements within ten (10) Business Days following receipt by Buyer of
the notice referred to above and the total amount remaining in dispute
is greater than $25,000, either party may pursue any remedy available
for the resolution of such dispute.
(d) Sellers shall pay one-half of recording and escrow fees.
Buyer shall pay the costs of the PTRs, Title Policies and all
endorsements thereto and all PTRs, the costs of any new Surveys and
Survey updates, one-half of recording and escrow fees and all costs of
any appraisal, engineering and environmental reports obtained by Buyer
not delivered by Sellers.
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Sellers and Buyer shall allocate and pay for transfer, excise and deed
taxes in accordance with County custom. Sellers and Buyer shall each
be responsible for paying their respective attorneys' fees and costs.
Buyer and Sellers agree that, given the de minimis amount of Personal
Property included within the Properties, no portion of the Purchase
Price is allocable or attributable to such Personal Property.
(e) Each of the Sellers and the Buyer agrees that for
purposes of any appeals relating to Real Estate Taxes after the
Closing Date, it shall not value the Properties in a manner (or
otherwise take a position) inconsistent with the relative Allocated
Purchase Price set forth in Exhibit A attached hereto.
(f) Notwithstanding anything to the contrary herein, to the
extent set forth in Section 8.7, Sellers reserve the right to protest
any Real Estate Taxes relating to the period prior to the Closing Date
and to receive and retain any refunds on account of such Real Estate
Taxes.
(g) The obligations of Sellers and Buyer under this Section
8.5 shall survive the Closing until the first anniversary of the
Closing Date.
Section 8.6 Discharge of Sellers' Bonds. With respect to any
performance bonds or other bonds relating to work in progress at a Property,
deferred improvement agreements or street improvement agreements as set forth
on Schedule 8.6 (collectively, "Sellers' Bonds") that were paid for or
otherwise procured by Sellers or its Affiliates and remains in effect after the
Closing Date, Buyer shall on or prior to the Closing Date replace such Sellers'
Bonds with equivalent bonds procured by Buyer and cause Sellers to be fully
discharged and released from any and all liability or obligation under the
Sellers' Bonds.
Section 8.7 Tax Certiorari Proceedings. Sellers are hereby
authorized, but not obligated, to (a) commence (prior to the Closing Date) or
continue (after the Closing Date) any proceeding for the reduction of the
assessed valuation of any Property for any tax year which, in accordance with
the laws and regulations applicable to such Property, requires that, to
preserve the right to bring a tax certiorari proceeding with respect to such
tax year, such proceeding be commenced prior to the Closing Date and (b)
endeavor to settle any such proceeding in Sellers' discretion; provided,
however, that if such proceeding is (i) for a tax year in which the Closing
Date occurs or would affect such tax year or any subsequent tax year, such
settlement shall not be made without Sellers' prior consent, which consent
shall not be unreasonably withheld or delayed, and (ii) for a tax year which
commences after the Closing Date, the right to continue and settle such
proceeding, including, without limitation, any contracts or agreements with tax
certiorari counsel with respect to any such tax year, shall be deemed assigned
to and assumed by Buyer at the Closing. After the Closing, with respect to any
Property, (i) Sellers shall retain all rights (subject to any rights of Tenants
under their Leases) with respect to any tax year ending prior to the tax year
(and all
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refunds relating thereto) in which the Closing Date occurs, and shall have the
sole right to participate in and settle any proceeding relating thereto
(provided, that such settlement does not affect the assessed tax value for any
subsequent tax year), and (ii) Buyer shall have all rights (subject to any
rights of Tenants under their Leases) with respect to any tax year (and all
refunds relating thereto) which ends after the Closing Date; provided, however,
that if the proceeding is for a tax year in which the Closing Date occurs, such
settlement shall not be made without Buyer's prior consent, which consent shall
not be unreasonably withheld or delayed. With respect to any such proceeding
for a tax year in which the Closing Date occurs (whether commenced by Sellers
or Buyer), any refund or credit of taxes for such tax year shall be applied
first to the unreimbursed out-of-pocket expenses, including reasonable counsel
fees, necessarily incurred in obtaining such refund or credit, and second, to
any Tenant entitled to same, and the balance shall be apportioned between
Sellers and Buyer as of the Closing Date in accordance with the proportion of
the applicable tax year occurring before and after the Closing Date. In each
case, the party which prosecuted the proceeding shall deliver to the other
copies of receipted tax bills and any decision or settlement agreement
evidencing the reduction in taxes. If any refund shall be received by Sellers
which is for the account of Buyer as provided in this Section 8.7, then Sellers
shall hold Buyer's share thereof in trust for Buyer and, promptly upon receipt
thereof, pay such share to Buyer or any other party entitled to same as
provided above. If any refund shall be received by Buyer which is for the
account of Sellers as provided in this Section 8.7, then Buyer shall hold
Sellers' share thereof in trust for Sellers and, promptly upon receipt thereof,
pay such share to Sellers or any other party entitled to same as provided
above. Each party shall execute any and all consents or other documents as may
be reasonably necessary to be executed by such party so as to permit the other
party to commence or continue any tax certiorari proceeding which such other
party is authorized to commence or continue pursuant to the terms of this
Section 8.7, or to collect any refund or credit with respect to any such tax
proceeding. Schedule 8.7 sets forth a list of all pending tax certiorari
proceedings to which a Seller is a party. The provisions of this Section 8.7
shall survive the Closing.
Section 8.8 Tenant Obligations. Notwithstanding anything
herein that may be construed to the contrary (including, without limitation,
Section 8.5), promissory notes or other agreements (other than the Leases)
delivered to Sellers that evidence, deal with or otherwise relate solely to a
Tenant's rental or other obligations under its Lease that, as of the Closing
Date, are or were past due, shall not be conveyed to Buyer and shall be
retained by Sellers. Sellers agree that in enforcing their rights against
Tenants under any such promissory notes or other agreements, Sellers will not
seek to exercise any remedies that may be available to them under the affected
Leases.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. Any notices required or permitted to be
given hereunder shall be given in writing and shall be delivered (a) in person,
(b) by certified mail, postage prepaid, return receipt requested, (c) by a
commercial overnight courier that guarantees next day delivery and provides a
receipt, or (d) by legible facsimile (followed by hard copy delivered in
accordance with preceding subsections (a)-(c)), and such notices shall be
addressed as follows:
<TABLE>
<S> <C>
To Buyer: American Industrial Properties REIT
6210 North Boltline Road, Suite 170
Irving, Texas 75063-2626
Attention: Mr. Lewis D. Friedland and
Mr. Robert G. Baker
Phone Number: (972) 756-6000
Facsimile Number: (972) 756-0704
with copies to: Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
2001 Ross Avenue, Suite 3000
Dallas, Texas 75201
Attention: Brad B. Hawley, Esq.
Phone Number: (214) 849-5500
Facsimile Number: (214) 849-5599
To Sellers: Legacy Partners Commercial, Inc.
101 Lincoln Centre Drive, Fourth Floor
Foster City, California 94404
Attention: Mr. Barry DiRaimondo, Mr. Robert F. Phipps and Ms.
Darleen Fraser
Phone Number: (650) 571-2200
Facsimile Number: (650) 573-8624; and
Whitehall Street Real Estate Limited Partnership
85 Broad Street
New York, New York 10004
Attention: Edward M. Siskind
Facsimile Number: (212) 357-5505
</TABLE>
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<TABLE>
<S> <C>
Whitehall Street Real Estate Limited Partnership
100 Crescent Court, Suite 1000
Dallas, Texas 75201
Attention: Paul Milosevich
Facsimile Number: (214) 855-6305
with a copy to: Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Gary Israel, Esq.
Facsimile Number: (212) 558-3588; and to
Real Estate Law Group, LLP
2330 Marinship Way, Suite 211
Sausalito, California 94965
Attention: Bonnie Frank, Esquire
Phone Number: (415) 331-2555
Facsimile Number: (415) 331-7272
</TABLE>
or to such other address as either party may from time to time specify in
writing to the other party. Any notice shall be effective only upon receipt (or
refusal by the intended recipient to accept delivery).
Section 9.2 Entire Agreement. This Agreement, together with
the Exhibits and Schedules hereto and the Confidentiality Agreement, contains
all representations, warranties and covenants made by Buyer and Sellers and
constitutes the entire understanding between the parties hereto with respect to
the subject matter hereof. Any correspondence, memoranda or agreements between
the parties (including the Letter of Intent, dated October 2, 1998 between
Buyer and Sellers), or any oral or written statements made by Seller, its
Affiliates, employees or agents, are not binding on or enforceable against any
party, and are superseded and replaced in total by this Agreement together with
the Exhibits and Schedules hereto; provided that, this Section 9.2 shall not
apply to the Confidentiality Agreement, the provisions of which shall survive
and not merge with and into this Agreement.
Section 9.3 Time. Time is of the essence in the performance of
each of the parties' respective obligations contained herein.
Section 9.4 Attorneys' Fees. If any party hereto fails to
perform any of its obligations under this Agreement or if any dispute arises
between the parties hereto concerning the meaning or interpretation of any
provision of this Agreement, then the defaulting party(s) or the party(s) not
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prevailing in such dispute, as the case may be, shall pay any and all costs and
expenses incurred by the other party on account of such default and/or in
enforcing or establishing its rights hereunder, including, without limitation,
court costs (including costs of any trial or appeal therefrom) and reasonable
attorneys' fees and disbursements. This Section 9.4 shall survive the Closing,
or if this Agreement is terminated, the termination of this Agreement.
Section 9.5 No Merger. The obligations contained herein, the
performance of which is contemplated after the Closing, shall not merge with
the transfer of title to the Properties but shall remain in effect until
fulfilled.
Section 9.6 Successors and Assigns. This agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that the Buyer may not
assign its rights or obligations hereunder without the prior written consent of
each of the Sellers; provided further, that, Buyer may assign its rights and
obligations to a wholly owned subsidiary of Buyer without Seller's prior
written consent. Notwithstanding the previous sentence, Buyer shall remain
liable to the applicable Seller for any and all of its rights and obligations
hereunder in the event that Buyer's assignee fails to perform any such rights
or obligations. This Agreement shall be binding upon, and inure to the befit
of, the parties hereto and their respective successors and assigns.
Section 9.7 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
Section 9.8 Governing Law; Jurisdiction and Venue.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES
RECOGNIZE THAT, WITH RESPECT TO SOME OF THE PROPERTIES, IT MAY BE
NECESSARY FOR THE PARTIES TO COMPLY WITH CERTAIN ASPECTS OF THE LAWS
OF OTHER STATES IN ORDER TO CONSUMMATE THE PURCHASE AND SALE OF SUCH
PROPERTIES PURSUANT HERETO. THE PARTIES AGREE TO COMPLY WITH SUCH
OTHER LAWS TO THE EXTENT NECESSARY TO CONSUMMATE THE PURCHASE AND SALE
OF SUCH PROPERTIES. IT IS THE PARTIES' INTENT THAT THE PROVISIONS OF
THIS AGREEMENT BE APPLIED TO EACH PROPERTY IN A MANNER THAT RESULTS IN
THE GREATEST CONSISTENCY POSSIBLE.
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(b) For the purposes of any suit, action or proceeding
involving this Agreement, Buyer hereby expressly submits to the
jurisdiction of all federal and state courts sitting in the State of
California and consents that any order, process, notice of motion or
other application to or by any such court or a judge thereof may be
served within or without such court's jurisdiction by registered mail
or by personal service, provided that a reasonable time for appearance
is allowed, and Buyer agrees that such courts shall have the exclusive
jurisdiction over any such suit, action or proceeding commenced by any
party. In furtherance of such agreement, Buyer agrees upon the request
of any Seller to discontinue (or agree to the discontinuance of) any
such suit, action or proceeding pending in any other jurisdiction.
(c) Buyer hereby irrevocably waives any objection that it may
now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement brought in any
federal or state court sitting in the State of California and hereby
further irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an
inconvenient forum.
Section 9.9 Waiver of Trial by Jury. EACH PARTY HEREBY
WAIVES, IRREVOCABLY AND UNCONDITIONALLY, TRIAL BY JURY IN ANY ACTION BROUGHT
ON, UNDER OR BY VIRTUE OF OR RELATING IN ANY WAY TO THIS AGREEMENT OR ANY OF
THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH, THE PROPERTIES, OR ANY CLAIMS,
DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING HERETO OR TO ANY OF THE
FOREGOING.
Section 9.10 Confidentiality and Return of Documents.
(a) As a condition to Sellers' agreement to furnish and/or
disclose Evaluation Material (as defined below) to Buyer, and its
Affiliates and representatives for review and inspection, Buyer (on
behalf of itself and its respective Affiliates and representatives)
hereby agrees to be bound by the terms set forth in this Section
9.10(a).
(i) "Evaluation Material" shall include all
documents, and other written or oral information, furnished
to Buyer, or its officers, directors, employees, agents,
advisors, Affiliates or representatives (collectively
"Representatives") by Sellers or their Affiliates relating to
the Properties, as well as written memoranda, notes,
analyses, reports, compilations, or studies prepared by Buyer
or its Representatives (in whatever form of medium) that
contain, or are derived from, such information provided by
Sellers. Notwithstanding the foregoing, information provided
by Sellers shall not constitute "Evaluation Material" if such
information (i) is or becomes generally available to the
public other than as a result of a disclosure by or through
Buyer or its Representatives in contravention of this Section
9.10(a) or (ii) is or becomes available to Buyer from a
source (other than Sellers) not bound by any legal
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or contractual obligation prohibiting the disclosure of
Evaluation Material by such source to Buyer.
(ii) Buyer agrees that it and its Representatives
will use the Evaluation Material exclusively for the purpose
of evaluating the merits of a possible purchase of the
Properties as contemplated by this Agreement and not for any
other purpose whatsoever. Buyer (on behalf of itself and its
Representatives) further agrees that it will not disclose any
Evaluation Material or use it to the detriment of Sellers or
their Affiliates; provided, however, that Buyer may without
liability disclose Evaluation Material (x) to any
Representative of Buyer who needs to know such Evaluation
Material for the purpose of evaluating the transactions
described in this Agreement involving Sellers and the
Properties and Buyer (it being understood and agreed that
Buyer shall be fully responsible for any disclosures by any
such Person) and (y) pursuant to administrative order or as
otherwise required by law.
(iii) In the event that Buyer desires to disclose
Evaluation Material under the circumstances contemplated by
clause (y) of the preceding paragraph, Buyer will (x) provide
Sellers with prompt notice thereof, (y) consult with Sellers
on the advisability of taking steps to resist or narrow such
disclosure, and (z) cooperate with Sellers in any attempt
that Sellers may make to obtain an order or other reliable
assurance that confidential treatment will be accorded to
designated portions of the Evaluation Material.
(iv) Buyer agrees that, in the event this Agreement
is terminated prior to the consummation of the purchase and
sale contemplated hereunder, all written Evaluation Material
and all copies thereof will be returned to Sellers promptly
upon Sellers' request. All analyses, compilations, studies or
other documents prepared by or for Buyer and reflecting
Evaluation Material or otherwise based thereon will be (at
Buyer's option) either (x) destroyed or (y) retained by Buyer
in accordance with the confidentiality restrictions set forth
in this Section 9.10(a).
(v) Buyer acknowledges that significant portions of
the Evaluation Material are proprietary in nature and that
Sellers and their Affiliates would suffer significant and
irreparable harm in the event of the misuse or disclosure of
the Evaluation Material. Without affecting any other rights
or remedies that either party may have, Buyer acknowledges
and agrees that Sellers shall be entitled to seek the
remedies of injunction, specific performance and other
equitable relief for any breach, threatened breach or
anticipatory breach of the provisions of this agreement by
Buyer or its Representatives.
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(vi) Buyer agrees to indemnify and hold harmless
Sellers from and against all loss, liability, claim, damage
and expense arising out of any breach of this Section 9.10(a)
by Buyer or any of its Representatives.
(vii) This Section 9.10(a) shall survive, if the
Closing does not occur, any termination of this Agreement,
but shall terminate upon the Closing.
(b) Each Seller and Buyer hereby covenant that (i) prior to
the Closing it shall not issue any press release or public statement
(a "Release") with respect to the transactions contemplated by this
Agreement without the prior consent of all parties to this Agreement,
except to the extent required by law or the regulations of the
Securities and Exchange Commission, and (ii) after the Closing, any
Release issued by any Seller or Buyer (other than any Release required
by law or the regulations of the Securities and Exchange Commission)
shall be subject to the approval of all such parties (which approval
shall not be unreasonably withheld), . If any Seller or Buyer is
required by law to issue a Release, such party shall, at least two (2)
Business Days prior to the issuance of the same, deliver a copy of the
proposed Release to the other parties for their review.
Section 9.11 Interpretation of Agreement. The article,
section and other headings of this Agreement are for convenience of reference
only and shall not be construed to affect the meaning of any provision
contained herein. Where the context so requires, the use of the singular shall
include the plural and vice versa and the use of the masculine shall include
the feminine and the neuter. The term "person" shall include any individual,
partnership, joint venture, corporation, trust, limited liability company,
unincorporated association, any other entity and any government or any
department or agency thereof, whether acting in an individual, fiduciary or
other capacity.
Section 9.12 Amendments. This Agreement may be amended or
modified only by a written instrument signed by each of Buyer and Sellers.
Section 9.13 No Recording. Neither this Agreement nor any
memorandum or short form thereof may be recorded by Buyer.
Section 9.14 No Third Party Beneficiary. The provisions of
this Agreement are not intended to benefit any third parties.
Section 9.15 Severability. If any provision of this Agreement,
or the application thereof to any person, place or circumstance, shall be held
by a court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
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Section 9.16 Drafts not an Offer to Enter into a Legally
Binding Contract. The parties hereto agree that the submission of a draft of
this Agreement by one party to another is not intended by either party to be an
offer to enter into a legally binding contract with respect to the purchase and
sale of the Properties. The parties shall be legally bound with respect to the
purchase and sale of the Properties pursuant to the terms of this Agreement
only if and when the parties have been able to negotiate all of the terms and
provisions of this Agreement in a manner acceptable to each of the parties in
their respective sole discretion, including, without limitation, all of the
Exhibits and Schedules hereto, and each of Seller and Buyer have fully executed
and delivered to each other a counterpart of this Agreement, including, without
limitation, all Exhibits and Schedules hereto.
Section 9.17 Further Assurances. Each party shall, whenever
and as often as it shall be requested to do so by the other party, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all such other documents and do any and all other acts as may be
necessary to carry out the intent and purpose of this Agreement including,
without limitation, using commercially reasonable efforts to cause the
satisfaction of the conditions to the consummation of the transactions
contemplated by this Agreement. In addition, each Seller shall use its
reasonable efforts to assist Buyer in obtaining subordination and
non-disturbance agreements from its respective Tenants to the extent that the
delivery of such agreements is a condition to the obligation of the Buyer's
lenders to finance a portion of the Purchase Price. From and after the
execution of this Agreement the Sellers shall, upon reasonable notice, provide
the Buyer and its representatives and independent accounting firm access to
such financial and other information relating solely to the Properties retained
by the Sellers as the Buyer shall reasonably request in connection with the
preparation by Buyer and its accountants of financial statements required by
law or regulation of the Securities and Exchange Commission to be presented by
the Buyer in its filings under the Federal securities laws.
Section 9.18 Certain Indemnifications by Buyer. Except as
expressly stated herein, Buyer hereby covenants and agrees to indemnify and
hold the Sellers and the Seller Parties (including, without limitation, Legacy
Partners Commercial, Inc. and its affiliates, related entities, personnel and
successors and assigns) harmless from and against any and all losses,
liabilities, damages, costs, charges, fees or expenses (including without
limitation, attorneys fees and expenses, court costs, collection fees and
expenses and reasonable investigation costs and expenses) (collectively,
"Losses") arising out of or in connection with (i) the letter from Legacy
Partners Commercial, Inc. to Ernst & Young contemplated by Section 3.1(e)
hereof or (ii) any document or financial statement (including, without
limitation, any financial statement or other information relating to the
Properties) prepared by the Buyer or any of its affiliates, accountants,
representatives, successors or assigns or filed by any such person with the
Securities and Exchange Commission or any Claim relating thereto (provided,
that the indemnity covered hereby shall not extend to Losses directly resulting
from Claims made by investors in, or partners of, any of the Sellers or any
affiliate of any of the Sellers alleging that such Seller or such affiliate
breached its fiduciary duty to such partners or investors). In connection with
the foregoing indemnification, the Buyer shall, upon the
-47-
<PAGE> 53
written request of the applicable indemnified party, assume the defense of any
such Claim and shall pay all fees and expenses of counsel retained in
connection with such defense, subject, however, to the right of the applicable
indemnified party to again assume control of the defense of such Claim and to
be indemnified pursuant to this Section 9.18 in respect of all Losses incurred
in connection with such defense. In event the Buyer assumes the defense of any
such Claim pursuant to the preceding sentence, the Buyer shall obtain the prior
written consent of the applicable indemnified party before entering into a
settlement of such Claim or ceasing to defend such Claim. This Section 9.18
shall survive the Closing or, in the event this Agreement is terminated, the
termination of this Agreement.
-48-
<PAGE> 54
The parties hereto have executed this Agreement as of the
date first written above.
<TABLE>
<S> <C>
BUYER: AMERICAN INDUSTRIAL PROPERTIES REIT
By:
By: /s/ L. D. FRIEDLAND
---------------------------------------
Name: Lewis D. Friedland
Title: Senior Vice President
SELLERS: LINCOLN-WHITEHALL REALTY, L.L.C.
By: Whitehall Street Real Estate Limited
Partnership V, Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ [ILLEGIBLE]
---------------------------------
Name:
Title:
</TABLE>
-49-
<PAGE> 55
<TABLE>
<S> <C>
LINCOLN-WHITEHALL PACIFIC, L.L.C.
By: Lincoln-Whitehall Realty, L.L.C., Member
By: Whitehall Street Real Estate Limited
Partnership V, Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ [ILLEGIBLE]
----------------------------------
Name:
Title:
WHLNF REAL ESTATE LIMITED PARTNERSHIP
By: WHLNF Gen-Par, Inc.,
General Partner
By: /s/ [ILLEGIBLE]
--------------------------------------
Name:
Title:
WHSUM REAL ESTATE LIMITED PARTNERSHIP
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ [ILLEGIBLE]
--------------------------------------
Name:
Title:
</TABLE>
-50-
<PAGE> 56
EXHIBIT A
ALLOCATION OF PURCHASE PRICE
<TABLE>
<CAPTION>
PROPERTY ALLOCATED PORTION
-------- OF PURCHASE PRICE
-----------------
<S> <C>
110-140 Baytech Drive, San Jose, California $ 36,000,000
2051 & 2055 Junction Avenue, San Jose, California 11,000,000
3100 Alfred Street, Santa Clara, California 5,200,000
846-850 Stewart Drive, Sunnyvale, California 6,000,000
141 Jefferson, Menlo Park, California 11,500,000
7015 & 7151 Gateway Boulevard, Newark, California 21,000,000
485 Clyde Avenue, Mountain View, California 8,500,000
165-225 Lennon, Walnut Creek, California 20,000,000
107 Woodmere Road, Folsom, California 5,000,000
310 Interlocken Parkway, Bloomfield, Colorado 16,800,000
PORTFOLIO TOTAL
</TABLE>
A-1
<PAGE> 57
EXHIBIT B
RESPONSIBLE INDIVIDUALS
<TABLE>
<CAPTION>
Responsible
Property Owner Individual
-------- ----- ----------
<S> <C> <C>
110-140 Baytech Drive, San Jose, California WHLNF Hedrick
2045-2055 Junction Avenue, San Jose, California WHSUM Hedrick
3100 Alfred Street, Santa Clara, California LW Hedrick
846-850 Stewart Drive, Sunnyvale, California LWPAC Hedrick
141 Jefferson, Menlo Park, California WHSUM Donaldson
7015 and 7151 Gateway Boulevard, Newark, California WHLNF Donaldson
485 Clyde Avenue, Mountain View, California LWPAC Hedrick
165-225 Lennon, Walnut Creek, California LWPAC Sherman
107 Woodmere, Folsom, California LWPAC Coulouras
310 Interlocken Parkway, Bloomfield, Colorado WHLNF Baytos
</TABLE>
Key:
LWPAC - Lincoln-Whitehall Pacific, L.L.C.
WHLNF - WHLNF Real Estate L.P.
L-W - Lincoln Whitehall Realty LLC
WHSUM - WHSUM Real Estate, L.P.
B-1
<PAGE> 58
EXHIBIT C
GRANT DEED
Recording Requested by and
When Recorded Mail to,
and Mail Tax Statements to:
- ----------------------------
- ----------------------------
- ----------------------------
Attention:
------------------
- -------------------------------------------------------------------------------
Space Above This Line for Recorder's use
GRANT DEED
The undersigned Grantor declared that Documentary Transfer
Tax is not part of the public records.
For valuable consideration, receipt of which is acknowledged,
______________, a _______________ ("Grantor"), hereby grants to
__________________, a ________________ ("Grantee"), that certain real property
located in the City of _____________________, County of _________________,
State of California, as legally described in Exhibit A attached hereto and made
a part hereof (the "Property") together with all of Grantor's right, title and
interest in and to all improvements and structures located thereon, and all
easements, appurtenances, rights and privileges of Grantor appertaining to the
Property.
The Property is conveyed subject to:
(a) The lien of supplemental taxes, if any, assessed pursuant
to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue
and Taxation Code of the State of California;
(b) The liens for real property taxes for the fiscal year
19__ - 19__ not yet due and payable;
(c) All liens, encumbrances, easements, leases, covenants,
conditions and restrictions of record;
C-1
<PAGE> 59
(d) All matters which would be disclosed by an inspection of
the Property; and
(e) Zoning ordinances and regulations and any other laws,
ordinances, regulations or orders of any governmental agency having or claiming
jurisdiction over the use, occupancy or enjoyment of the Property.
IN WITNESS WHEREOF, Grantor has caused its duly authorized
representative to execute this instrument as of the date hereinafter written.
DATED: _____________, 1998
GRANTOR:
- -----------------------------------
a ---------------------------------
By:
--------------------------------
Its:
-------------------------------
C-2
<PAGE> 60
EXHIBIT D
NO WARRANTY BILL OF SALE
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ________________________, a
__________________ ("Seller"), does hereby sell, transfer and convey to
__________________, a __________________ ("Buyer"), without recourse and
without any express or implied representation or warranty whatsoever, any and
all personal property owned by Seller and used in connection with the operation
of that certain real property located at ____________________ in
________________________, ________________, and more particularly described on
Exhibit A attached hereto (the "Property"), which includes, without limitation,
the personal property more particularly described in the attached Schedule 1.
This Bill of Sale is delivered pursuant to that certain
Agreement of Purchase and Sale, dated as of __________, 1998 (the "Purchase
Agreement"), and Buyer and Seller expressly acknowledge and affirm the
provisions thereof. This Bill of Sale may be executed in counterparts, each of
which shall be deemed an original, and all of which shall taken together be
deemed one document.
Buyer hereby acknowledges, covenants, represents, and
warrants that Seller has made absolutely no warranties or representations of
any kind or nature regarding title to the Personal Property or the condition of
the Personal Property.
Dated this ____ day of ______________, 1998.
Seller:
----------------------------------
By:
--------------------------------------
Name:
Title:
Buyer:
-----------------------------------
By:
--------------------------------------
Name:
Title:
D-1
<PAGE> 61
EXHIBIT A TO BILL OF SALE
DESCRIPTION OF REAL PROPERTY
D-2
<PAGE> 62
SCHEDULE 1 TO BILL OF SALE
DESCRIPTION OF PERSONAL PROPERTY
D-3
<PAGE> 63
EXHIBIT E
ASSIGNMENT OF LEASES
This Assignment dated as of _____________, 1998 (the
"Assignment"), is entered into by and between _______________________, a
________________________ ("Assignor"), and _________________________ a
__________________ ("Assignee").
W I T N E S S E T H
WHEREAS, Assignor is the lessor under certain leases executed
with respect to that certain real property commonly known as _________________
(the "Property") as more fully described in Exhibit A attached hereto, which
leases are described in Schedule 1 attached hereto (the "Leases"); and
WHEREAS, Assignor, as Seller, and Assignee, as Buyer, and
certain affiliates of the foregoing, have entered into an Agreement of Purchase
and Sale, dated ____________, 1998 (the "Purchase Agreement"), conveying the
Property; and
WHEREAS, Assignor desires to assign its interest as lessor in
the Leases to Assignee, and Assignee desires to accept the assignment thereof;
Now, THEREFORE, in consideration of the promises and
conditions contained herein, the parties hereby agree as follows:
1. Effective as of the date hereof, Assignor hereby assigns
to Assignee all of its right, title and interest in and to the Leases.
2. Effective as of the date hereof, Assignee hereby assumes
and agrees to perform all of the lessor's obligations under, relating to or
arising out of the Leases; originating on or subsequent to the date hereof.
3. Effective as of the date hereof, Assignee hereby agrees to
indemnify, defend (with counsel reasonably acceptable to Assignor), and hold
Assignor and each other Seller Party (as defined in the Purchase Agreement)
harmless from any and all Claims (as defined in the Purchase Agreement),
originating on or subsequent to the date hereof, under, relating to or arising
out of the Leases.
4. Any rental and other payments under the Leases shall be
prorated between the parties as provided in the Purchase Agreement.
E-1
<PAGE> 64
5. In the event of any dispute between Assignor and Assignee
arising out of the obligations of Assignor under this Assignment or concerning
the meaning or interpretation of any provision contained herein, the losing
party shall pay the prevailing party's costs and expenses of such dispute,
including, without limitation, reasonable attorneys' fees and costs. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately
from and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other
provisions of this Assignment and to survive and not be merged into any such
judgment.
6. This Assignment shall be binding on and inure to the
benefit of the parties hereto, their heirs, executors, administrators,
successors in interest and assigns.
7. This Assignment shall be governed by and construed in
accordance with the laws of the State of California.
8. This Assignment is made without recourse and without any
express or implied representation or warranty of any kind. Assignee on behalf
of itself and its agents, employees, representatives, successors and assigns
hereby agrees that in no event or circumstance shall any of the members,
partners, employees, representatives, officers, directors, agents, property
management company, affiliated or related entities of Assignor or Assignor's
property management company, Legacy Partners Commercial, Inc. (formerly known
as Lincoln Property Company Management Services, Inc.), have any personal
liability under this Assignment, or to any of Assignee's creditors, or to any
other party in connection with the Property. This Assignment may be executed in
counterparts, each of which shall be deemed an original, and all of which shall
taken together be deemed one document.
9. This Assignment is delivered pursuant to the Purchase
Agreement and Assignee expressly acknowledges and affirms the provisions
thereof.
E-2
<PAGE> 65
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment the day and year first above written.
ASSIGNOR:
By:
-------------------------------------
Name:
Title:
ASSIGNEE:
By:
-------------------------------------
Name:
Title:
E-3
<PAGE> 66
EXHIBIT A TO ASSIGNMENT OF LEASES
PROPERTY DESCRIPTION
E-4
<PAGE> 67
SCHEDULE 1 TO ASSIGNMENT OF LEASES
<TABLE>
<CAPTION>
AMENDMENT
TENANT PREMISES LEASE DATE DATE(S)
<S> <C> <C> <C>
</TABLE>
E-5
<PAGE> 68
EXHIBIT F
ASSIGNMENT OF CONTRACTS,
WARRANTIES AND GUARANTEES
AND OTHER INTANGIBLE PROPERTY
THIS ASSIGNMENT is made and entered into as of this ___ day
of __________, 1998, by _____________________________________________, a
________________________ ("Assignor"), to ____________________________, a
________________________ ("Assignee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, effective as of the date hereof,
Assignor hereby assigns and transfers unto Assignee all of its right, title,
claim and interest in and under:
(A) to the extent assignable, all warranties and guaranties
made by or received from any third party with respect to any building, building
component, structure, fixture, machinery, equipment, or material situated on,
contained in any building or other improvement situated on, or comprising a
part of any building or other improvement situated on, any part of that certain
real property described on Exhibit A attached hereto including, without
limitation, those warranties and guaranties listed in Schedule 1 attached
hereto (collectively, "Warranties");
(B) to the extent assignable, all of the Contracts listed in
Schedule 2 attached hereto (the "Contracts"); and
(C) to the extent assignable, any Intangible Property (as
defined in that certain Agreement of Purchase and Sale, dated as
of________,1998, by and between Assignor and Assignee (the "Purchase
Agreement").
ASSIGNOR AND ASSIGNEE FURTHER HEREBY AGREE AND COVENANT
AS FOLLOWS:
1. Effective as of the date hereof, Assignee hereby assumes
and unconditionally agrees to observe and perform all of the Assignor's
obligations under, relating to or arising out of the Contracts, originating on
or subsequent to the date hereof. Assignee hereby agrees to indemnify Assignor
and each other Seller Party (as defined in the Purchase Agreement) against and
hold Assignor and each other Seller Party harmless from any and all Claims (as
defined in the Purchase Agreement), originating on or subsequent to the date
hereof, under, relating to or arising out of the Contracts.
F-1
<PAGE> 69
2. In the event of any dispute between Assignor and Assignee
arising out of the obligations of Assignor under this Assignment or concerning
the meaning or interpretation of any provision contained herein, the losing
party shall pay the prevailing party's costs and expenses of such dispute,
including, without limitation, reasonable attorneys' fees and costs. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately
from and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other
provisions of this Assignment and to survive and not be merged into any such
judgment.
3. This Assignment shall be binding on and inure to the
benefit of the parties hereto, their heirs, executors, administrators,
successors in interest and assigns.
4. This Assignment shall not be construed as a representation
or warranty by Assignor as to the transferability or enforceability of the
Warranties, the Contracts or the Intangible Property (collectively, the
"Interests"), and Assignor shall have no liability to Assignee in the event
that any or all of the Interests (a) are not transferable to Assignee or (b)
are canceled or terminated by reason of this assignment or any acts of
Assignee. Furthermore, Assignee on behalf of itself and its agents, employees,
representatives, successors and assigns hereby agrees that in no event or
circumstance shall any of the members, partners, employees, representatives,
officers, directors, agents, property management company, affiliated or related
entities of Assignor or Assignor's property management company, Legacy Partners
Commercial, Inc. (formerly known as Lincoln Property Company Management
Services, Inc.), have any personal liability under this Assignment, or to any
of Assignee's creditors, or to any other party in connection with the Property.
5. This Assignment shall be governed by and construed and in
accordance with the laws of the State of California.
6. This Assignment is made without recourse and without any
express or implied representation or warranty of any kind or nature, except as
expressly set forth in the Purchase Agreement.
7. This Assignment is delivered pursuant to the Purchase
Agreement and Assignee expressly acknowledges and affirms the provisions
thereof. This Assignment may be executed in counterparts, each of which shall
be deemed an original, and all of which shall taken together be deemed one
document.
F-2
<PAGE> 70
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment the day and year first above written.
ASSIGNOR:
By:
--------------------------------------
Name:
Title:
ASSIGNEE:
By:
--------------------------------------
Name:
Title:
F-3
<PAGE> 71
EXHIBIT A TO ASSIGNMENT OF CONTRACTS,
WARRANTIES AND GUARANTIES AND OTHER INTANGIBLE PROPERTY
F-4
<PAGE> 72
SCHEDULE 1 TO ASSIGNMENT OF CONTRACTS,
WARRANTIES AND GUARANTIES AND OTHER INTANGIBLE PROPERTY
LIST OF WARRANTIES
F-5
<PAGE> 73
SCHEDULE 2 TO ASSIGNMENT OF CONTRACTS,
WARRANTIES AND GUARANTIES AND OTHER INTANGIBLE PROPERTY
LIST OF CONTRACTS
F-6
<PAGE> 74
EXHIBIT H
BUYER'S AS-IS CERTIFICATE AND AGREEMENT
THIS CERTIFICATE AND AGREEMENT ("Certificate"), is made as of
the ____ day of __________, 1998, by American Industrial Properties, REIT
("Buyer") to and for the benefit of Lincoln-Whitehall Realty, L.L.C.,
Lincoln-Whitehall Pacific, L.L.C., WHLNF Real Estate Limited Partnership, WHSUM
Real Estate Limited Partnership and WHLW Real Estate Limited Partnership
(collectively, "Sellers").
RECITALS
Sellers, as sellers, and Buyer, as buyer, are parties to an
Agreement of Purchase and Sale, dated as of November , 1998 (the "Purchase
Agreement"), which provides for the sale of certain real properties
(collectively, the "Properties") legally described on Schedule 2.1(a) attached
to the Purchase Agreement and incorporated herein by this reference. Any
capitalized terms not otherwise defined herein shall have the meaning ascribed
to such term in the Purchase Agreement; and
The Purchase Agreement requires, inter alia, that, as a
condition precedent to Sellers' obligations under the Purchase Agreement, Buyer
shall execute and deliver this Certificate to Sellers at Closing.
NOW, THEREFORE, in consideration of TEN AND NO/100 DOLLARS
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Buyer hereby certifies and agrees as follows:
1. Buyer hereby acknowledges that it has examined and
investigated to its full satisfaction all facts, circumstances and matters
relating to the Properties, or otherwise relevant to its purchase of the
foregoing, including without limitation:
(i) all matters relating to governmental and other
legal requirements with respect to the Properties, such as taxes,
assessments, zoning, use permit requirements and building codes;
(ii) all zoning, land use, building, environmental
and other statutes, rules, or regulations applicable to each Real
Property;
H-1
<PAGE> 75
(iii) to the extent in the possession of the
applicable Seller or such Seller's property manager, a copy of a
survey of each Real Property (each, a "Survey");
(iv) to the extent in the possession of the
applicable Seller or such Seller's property manager, reports, studies,
assessments, investigations and other materials related to the
presence of Hazardous Materials at, on or under each Real Property and
the compliance of such Real Property with all environmental laws,
including environmental assessment reports;
(v) the Leases with respect to such Real Property
and all matters in connection therewith, including, without
limitation, the ability of the Tenants thereto to pay the rent;
(vi) the Contracts and any other documents or
agreements of significance affecting the Properties;
(vii) all matters relating to the income and
operating or capital expenses of the Properties and all other
financial matters; and
(viii) all matters relating to title to such
Property;
(ix) the physical condition of each Real Property,
including, without limitation, the interior, the exterior, the square
footage of the improvements or the leasehold improvements and of each
tenant space therein, the structure, the roof, the paving, the
utilities, and all other physical and functional aspects of such Real
Property, including the presence or absence of Hazardous Materials;
(x) any easements and/or access rights affecting
such Real Property;
(xi) all matters that would be revealed by an ALTA
as-built survey, a physical inspection or an environmental site
assessment of such Real Property;
(xii) all matters reflected on each of the Natural
Hazard Disclosure Statements; and
(xiii) all other matters of significance affecting,
or otherwise deemed relevant by Buyer with respect to, such Property.
2. Buyer acknowledges and agrees that (i) it has been given
the full opportunity to inspect and investigate all aspects of each Property,
either independently or through agents, representatives or experts of Buyer's
choosing, as Buyer considers necessary or
H-2
<PAGE> 76
appropriate, including without limitation those set forth in the Purchase
Agreement, (ii) it has completed its independent investigation of the
Properties and the Due Diligence Materials, and (iii) it is acquiring the
Properties based exclusively on such independent investigation and the
representations of the Sellers contained in the Purchase Agreement. The funding
of the Second Deposit by Buyer and the execution of this certificate
conclusively constitute Buyer's approval of each and every aspect of such
Properties. Buyer (i) is a sophisticated investor, (ii) is represented by
competent counsel, (iii) understands the assumptions of risk and liability set
forth in this Certificate and that, prior to Closing, Buyer and its agents have
inspected the Properties, fully observed the physical characteristics and
condition of the Properties, performed a thorough investigation of the
suitability of Buyer's intended use of the Properties, including without
limitation, the suitability of the topography, the availability of water rights
or utilities, the present and future zoning, subdivision and any and all other
land use matters, the condition of the soil, subsoil or groundwater of the
Properties and any and all other environmental matters, the purpose(s) to which
the Properties are suited, drainage, flooding, access to public roads, and
proposed routes or roads or extensions relative to the Properties, (iv)
acknowledges that its posting of the Second Deposit was deemed to be an
acknowledgment by the Buyer that, as of the Second Deposit Date, it had
received the Date Diligence Materials and the Natural Hazard Disclosure
Statement set forth on Schedule 4.3 attached to the Purchase Agreement in
respect of each of the Properties listed on Schedule 2.1(a) attached to the
Purchase Agreement and (v) understands that it will have no recourse whatsoever
against any Seller or its Affiliates except as expressly set forth in the
Purchase Agreement and this Certificate. Such independent investigation by
Buyer during the Due Diligence Period included items set forth in the Purchase
Agreement, the Buyer agreeing that it has completed its due diligence
investigation of the Properties prior to the date hereof and is satisfied with
the results of such investigation and the Due Diligence Materials.
3. BUYER SPECIFICALLY REPRESENTS, ACKNOWLEDGES AND AGREES
THAT (i) EACH SELLER SHALL SELL AND BUYER SHALL PURCHASE EACH PROPERTY "AS IS,
WHERE IS AND WITH ALL FAULTS," (ii) EXCEPT AS EXPRESSLY SET FORTH IN SECTION
4.1 OF THE PURCHASE AGREEMENT, BUYER IS NOT RELYING ON ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, FROM ANY SELLER, NOR ANY PARTNER, OFFICER, EMPLOYEE,
ATTORNEY, PROPERTY MANAGER, AGENT OR BROKER OF ANY SELLER, AS TO ANY MATTER,
CONCERNING ANY PROPERTY, OR SET FORTH, CONTAINED OR ADDRESSED IN THE DUE
DILIGENCE MATERIALS (INCLUDING WITHOUT LIMITATIONS, THE COMPLETENESS THEREOF),
INCLUDING WITHOUT LIMITATION: (i) the quality, nature, habitability,
merchantability, use, operation, value, marketability, adequacy or physical
condition of any Property or any aspect or portion thereof, including, without
limitation, structural elements, foundation, roof, appurtenances, access,
H-3
<PAGE> 77
landscaping, parking facilities, electrical, mechanical, HVAC, plumbing,
sewage, and utility systems, facilities and appliances, soils, geology and
groundwater, or whether the Real Property lies within a special flood hazard
area, an area of potential flooding, a very high fire hazard severity zone, a
wildland fire area, an earthquake fault zone or a seismic hazard zone, (ii) the
dimensions or lot size of any Real Property or the square footage of the
Improvements thereon or of any tenant space therein, (iii) the development or
income potential, or rights of or relating to, any Real Property, or any Real
Property's use, habitability, merchantability, or fitness, or the suitability,
value or adequacy of such Real Property for any particular purpose, (iv) the
zoning or other legal status of any Real Property or any other public or
private restrictions on the use of such Real Property, (v) the compliance of
any Real Property or its operation with any applicable codes, laws,
regulations, statutes, ordinances, covenants, conditions and restrictions of
any Governmental Authority or of any other person or entity (including, without
limitation, the Americans with Disabilities Act), (vi) the ability of Buyer to
obtain any necessary governmental approvals, licenses or permits for Buyer's
intended use or development of any Real Property, (vii) the presence or absence
of Hazardous Materials on, in, under, above or about any Real Property or any
adjoining or neighboring property, (viii) the quality of any labor and
materials used in any Improvements, (ix) the condition of title to any Real
Property, (x) the Leases, Contracts or any other agreements affecting any Real
Property or the intentions of any party with respect to the negotiation and/or
execution of any lease or contract with respect to any Real Property, (xi) any
Seller's ownership of any Property or any portion thereof or (xii) the
economics of, or the income and expenses, revenue or expense projections or
other financial matters, relating to, the operation of any Real Property.
Without limiting the generality of the foregoing, Buyer expressly acknowledges
and agrees that Buyer is not relying on any representation or warranty of any
Seller, nor any partner, officer, employee, attorney, property manager, agent
or broker of any Seller, whether implied, presumed or expressly provided at law
or otherwise, arising by virtue of any statute, common law or other legally
binding right or remedy in favor of Buyer except as provided in Section 4.1 of
the Purchase Agreement. Buyer further acknowledges and agrees that no Seller is
under any duty to make any inquiry regarding any matter that may or may not be
known to such Seller or any partner, officer, employee, attorney, property
manager, agent or broker of such Seller.
4. ANY REPORTS, REPAIRS OR WORK REQUIRED BY BUYER ARE THE
SOLE RESPONSIBILITY OF BUYER, AND BUYER AGREES THAT THERE IS NO OBLIGATION ON
THE PART OF ANY SELLER TO MAKE ANY CHANGES, ALTERATIONS OR REPAIRS TO ANY
PROPERTY OR TO CURE ANY VIOLATIONS OF LAW OR TO COMPLY WITH THE REQUIREMENTS OF
ANY INSURER. BUYER IS SOLELY RESPONSIBLE FOR OBTAINING ANY CERTIFICATE OF
OCCUPANCY OR ANY OTHER APPROVAL OR PERMIT NECESSARY FOR TRANSFER OR OCCUPANCY
OF ANY PROPERTY AND FOR ANY REPAIRS OR ALTERATIONS NECESSARY TO OBTAIN THE
SAME, ALL AT BUYER'S SOLE COST AND EXPENSE.
H-4
<PAGE> 78
5. Buyer acknowledges and agrees that the provisions of this
Certificate were a material factor in Sellers' acceptance of the Purchase Price
and agreement to sell the Properties to Buyer, and Sellers are unwilling to
sell the Properties unless Sellers and the other Seller Parties are expressly
released to the extent set forth in Section 4.6 of the Purchase Agreement.
IN WITNESS WHEREOF, Buyer has executed this Certificate as of
the date first set forth herein above.
[BUYER]
By:
--------------------------------------
Name:
Title:
H-5
<PAGE> 79
EXHIBIT I
TENANT ESTOPPEL CERTIFICATE
TO: -----------------------------
-----------------------------
-----------------------------
Re:
-----------------------------
The undersigned (the "Lessee") hereby certifies to
_________________, a _________________ (the "Buyer") the following information
with respect to the lease (the "Lease", including any amendments to or
modifications of the same) under which the Lessee is a tenant and agrees that
the Buyer may rely upon the same:
1. The Lease is in full force and effect and has not been
modified or amended except as follows: __________________. No separate oral
agreements have been made by Lessee and Lessor with respect to the Lease or the
Premises. The leased Premises consist of __________ net rentable square feet
located at _______________________________________.
2. The Lessee asserts no claim of default or offset or
defense against the payment of rent or other charges payable by the Lessee and
asserts no claim against the Lessor under the Lease in regard to the premises
occupied by Lessee. To the best of Lessee's knowledge and belief, there is no
default by Lessor under the Lease and no event has occurred that, with the
passage of time or the giving of notice, or both, would constitute a default by
Lessor under the Lease.
3. All fixed base rental has been paid to the end of the
current calendar month, which is ______________, and no rent under the Lease
has been paid in advance of its due date except for any security deposit
referenced herein. Current monthly fixed based rental for the Premises is
$____________.
4. The Lease provides for an option to renew the Lease term
as follows: ___________________________________________________. The Lease
contains no first right of refusal to purchase, option to expand, option to
terminate, or option to purchase except as
follows: _______________________________________________________.
5. Lessor is presently holding a security deposit of
$______________.
I-1
<PAGE> 80
6. To the best of the Lessee's knowledge, the Lessee is not
in default under the Lease nor has any event occurred which, with the passage
of time or the giving of notice, or both, would constitute a default or breach
by the Lessee.
7. The Lessee certifies that it is required to pay a pro rata
share of real property taxes and insurance, as well as a pro rata share of the
common area expenses above a base year of expense stop of
______________________ (if Net Lease, none). In 19__ the Lessee paid to Lessor
$__________ for real property taxes [on a monthly/annual basis] and
$____________ for operating expenses [on a monthly/annual basis].
8. The Lessee has not entered into any sublease, assignment
or any other agreement transferring any of its interest in the Lease or the
premises leased by the Lessee under the Lease (the "Premises").
9. The Lessee recognizes and acknowledges it is making these
representations to you with the intent that the Buyer and Lessor may rely
hereon and as a material inducement to the Buyer's transaction with the
landlord, as the seller.
10. There are no outstanding unsatisfied obligations of
Landlord under the Lease except as follows:
______________________________________________________-.
11. The following is[are] guarantor(s) or Tenant's
obligations under the Lease:
______________________________________________________ and [its][her][their]
current address(es) [is][are] as follows:
_______________________________________________.
12. Tenant does not have any rights or options to purchase
the Property except as follows: _____________________________.
13. Except as set forth on Exhibit B, Tenant does not use,
store, manufacture, generate, handle or dispose of at the Property, any
chemical element or compound which is identified or classified as a regulated
substance, toxic substance, hazardous substance, hazardous waste, pollution,
pollutant, toxic pollutant, contaminant, solid waste or special waste
("Hazardous Materials") under any law, ordinance, rule, regulation, order,
directive or requirement of any governmental authority ("Laws") other than
small quantities of household cleaning and office supplies. To the extent
Hazardous Materials are set forth on Exhibit B, each of such Hazardous
Materials is used, stored, manufactured, generated, handled and disposed of in
accordance with Laws.
14. That no actions, whether voluntary or otherwise, are
pending against the undersigned under the bankruptcy laws of the United States
or any State thereof.
I-2
<PAGE> 81
15. Attached as Exhibit "A" is a true and correct copy of the
Lease, together with all amendments, modifications or renewals.
Dated: ________________, 19___
Very truly yours,
-----------------------------------------
a
---------------------------------------
By:
--------------------------------------
Its:
-------------------------------------
Dated: ______________, 19__
Very truly yours,
-----------------------------------------
a
----------------------------------------
By:
--------------------------------------
Its:
-------------------------------------
I-3
<PAGE> 82
EXHIBIT J
NOTICE TO TENANTS
[SELLER'S PROPERTY MANAGER'S LETTERHEAD]
VIA CERTIFIED MAIL
[TENANT'S NAME]
[TENANT'S ADDRESS]
Attention:
--------------------------
Re: , California
------------------------
Dear :
-------------------
Please be advised that on [CLOSING DATE], ownership of the above-referenced
real property was transferred to ______________________, a
______________________ (the "Purchaser"). In connection with the sale of the
property, and in conformance with the laws of the State of California, the
obligations under and with respect to the tenant security deposits were
transferred to the Purchaser, whose address is ______________________,
______________________, California _____; Attention: ______________________.
Hereafter, please make rent payable to "_____________________," and mail your
payments to:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
This notice is given in accordance with the requirements of California Civil
Code Section 1950.7(d). From and after _________________, 1998, your sole
recourse for the return of your security deposit upon the termination of your
tenancy will be against Purchaser. If you
J-1
<PAGE> 83
have any questions, please call [Mr./Ms.] ___________________ at
_____________________. Thank you.
Very truly yours,
Lincoln Property Company Management Services, Inc.,
as manager for _______________________________
By:
--------------------------------
Name:
Title:
cc: [name of acquisition person]
[name of property manager]
J-2
<PAGE> 84
EXHIBIT L
FORM OF MANAGEMENT LETTER
Ernst & Young LLP
2200 Ross Avenue, Suite 1100
Dallas, Texas 75201
Gentlemen:
In accordance with the terms of the Agreement of Purchase and
Sale, dated as of November 12, 1998 (the "Purchase Agreement"), by and between
Lincoln-Whitehall Realty, L.L.C., Lincoln-Whitehall Pacific, L.L.C., WHLNF Real
Estate Limited Partnership, and WHSUM Real Estate Limited Partnership, as
Sellers, and American Industrial Properties REIT (the "Buyer"), we are
providing this letter to you in connection with (i) your proposed audit of an
Historical Summary of Gross Income and Direct Operating Expenses (the
"Historical Summary") of the properties to be purchased by the Buyer pursuant
to the Purchase Agreement (the "Properties") and (ii) your proposed review of
an nterim Historical Summary relating to the Properties for the nine months
ended September 30, 1998 (the "Interim Historical Summary"). You and we
understand and agree that such Historical Summary and Interim Historical
Summary will be prepared by the Buyer or its accountants or representatives and
will not be prepared by the undersigned or any of the Sellers or their
representatives or accountants.
We recognize that, as the property management company for the
Properties, we are responsible for the financial records of the Properties for
the twelve month period ending December 31, 1997 ("1997"), the nine month
period ending September 30, 1998 (the "Interim Period") and the period
beginning on October 1, 1998 and ending on the Closing Date (as defined in the
Purchase Agreement). To our knowledge (as defined below), the financial records
for the Properties for 1997 and the Interim Period fairly present on a
consistent basis the financial condition of the Properties for such periods. In
addition, to our knowledge there have been no material transactions or events
since December 31, 1997, and no such material transactions or events are
currently pending, in each case other than those transactions or events
contemplated by the Purchase Agreement or otherwise known or disclosed to you
or the Buyer, as the case may be, that would have a material effect on the
financial statements of the Sellers for 1997 that have been audited by Arthur
Andersen or that would render such financial statements misleading regarding
the gross income or direct operating expenses for the Properties for such
period.
The undersigned hereby agrees that, from and after the
Closing Date until the earlier to occur of ninety (90) days after the Closing
Date or the filing by the Buyer of a report under the Securities Exchange Act
of 1934, as amended, containing financial statements meeting
L-1
<PAGE> 85
the requirements of Rule 3-14 of Regulation S-X (the "SEC Statement"), it will,
upon reasonable advance written notice of at least ten (10) business days,
provide Ernst & Young, the Buyer and their representatives access to such
financial records and other information retained by the Sellers after the
Closing Date and relating solely to the Properties as Ernst & Young or the
Buyer shall reasonably request in connection with the preparation by Buyer and
Ernst & Young of such SEC Statement. In addition, provided that any and all
third party costs are paid by Ernst & Young or the Buyer, during such period
the undersigned agrees to reasonably cooperate with, and be reasonably
responsive to reasonable inquiries made by, Ernst & Young or the Buyer with
respect to the preparation of the SEC Statement. By execution hereof, the
undersigned agrees (without the imposition of any need or requirement that the
undersigned or any of the Seller Parties execute any release, indemnification
or other document or agreement in connection therewith) to grant permission to
Arthur Andersen to make available to Ernst & Young certain work papers of
Arthur Andersen relating to the audits conducted by Arthur Andersen of the
Sellers' 1997 financial statements to the extent such work papers relate solely
to the Properties and are necessary for the preparation and delivery of the SEC
Statement.
The statements contained in this letter shall terminate and
be of no force or effect as of, and shall not survive, the closing of the
transactions contemplated by the Purchase Agreement, and neither the
undersigned nor any of the undersigned's affiliates, related entities,
personnel, successors or assigns, or any of the Seller Parties (as defined in
the Purchase Agreement), shall have any liability in respect of such
statements.
For purposes of this letter, the phrase "to our knowledge"
means the actual (not constructive) personal knowledge, without imputation of
actual or constructive knowledge of any other person and expressly without
independent inquiry, verification or investigation or any duty or obligation to
conduct any inquiry, verification or investigation, of Kevin Brink (it being
understood and agreed that Mr. Brink shall not have any personal liability
hereunder with respect to any matter, representation, covenant or certificate
as to which his knowledge is attributed or otherwise in any way related to this
letter or the transactions contemplated hereby or by the Purchase Agreement).
Very truly yours,
Legacy Partners Commercial, Inc.
By:
--------------------------------------
Name:
Title:
L-2
<PAGE> 1
AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
This Amendment to Agreement of Purchase and Sale (this "Amendment") is
entered into effective as of the 23rd day of November, 1998, by and among
LINCOLN-WHITEHALL REALTY, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY,
LINCOLN-WHITEHALL PACIFIC, L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, WHLNF
REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP, AND WHSUM REAL
ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP (EACH, "SELLER", AND
COLLECTIVELY, THE "SELLERS"), and AMERICAN INDUSTRIAL PROPERTIES REIT, A TEXAS
REAL ESTATE INVESTMENT TRUST ( "BUYER ").
W I T N E S S E T H:
WHEREAS, Sellers and Buyer have entered into that certain Agreement of
Purchase and Sale dated November 12, 1998 (the "Agreement"), pursuant to which
Sellers have agreed to sell and Buyer has agreed to purchase certain real
properties comprising the "Lincoln-Whitehall Portfolio," as more particularly
described therein; and
WHEREAS, the parties hereto desire to amend the Agreement, as more
fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. The reference to "November 23, 1998" contained in the definition of
"Due Diligence Period" (as defined in Section 1.1 of the Agreement) is
hereby amended to read "December 11, 1998."
2. The reference to "November 23, 1998" contained in the definition of
"Second Deposit Date" (as defined in Section 1.1 of the Agreement) is
hereby amended to read "December 11, 1998."
3. The definition of "Second Deposit" contained in Section 2.2(b)(ii) of
the Agreement is hereby amended to be "Two Million and No/100 Dollars
($2,000,000.00)" instead of "One Million and No/100 Dollars
($1,000,000.00)."
4. The reference to "December 3, 1998" contained in Section 8.2 of the
Agreement is hereby amended to read "January 6, 1999."
5. The Agreement, as amended by this Amendment, is hereby ratified and
confirmed and remains in full force and effect.
EXECUTED effective as of the day and year first above written.
<PAGE> 2
"BUYER"
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ MARC A. SIMPSON
-----------------------------
Name: Marc A. Simpson
-----------------------------
Title: Sr. V-P
-----------------------------
<PAGE> 3
"SELLERS"
LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate Limited Partnership V,
Member
By: WH Advisors, L.P. V
General Partner
By: WH Advisors, Inc., V,
General Partner
By: [ILLEGIBLE]
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty, L.L.C.
Member
By: Whitehall Street Real Estate Limited Partnership V,
Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: [ILLEGIBLE]
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
WHLNF REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.,
General Partner
By: [ILLEGIBLE]
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: [ILLEGIBLE]
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
<PAGE> 1
SECOND AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
This Second Amendment to Agreement of Purchase and Sale (this
"Amendment") is entered into effective as of the 11th day of December, 1998, by
and among LINCOLN-WHITEHALL REALTY, L.L.C., A DELAWARE LIMITED LIABILITY
COMPANY, LINCOLN-WHITEHALL PACIFIC, L.L.C., A DELAWARE LIMITED LIABILITY
COMPANY, WHLNF REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP,
AND WHSUM REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP
(EACH, "SELLER", AND COLLECTIVELY, THE "SELLERS"), and AMERICAN INDUSTRIAL
PROPERTIES REIT, A TEXAS REAL ESTATE INVESTMENT TRUST ( "BUYER ").
W I T N E S S E T H:
WHEREAS, Sellers and Buyer have entered into that certain Agreement of
Purchase and Sale dated November 12, 1998, as amended by an Amendment to
Agreement of Purchase and Sale dated effective November 23, 1998 (collectively,
the "Agreement"), pursuant to which Sellers have agreed to sell and Buyer has
agreed to purchase certain real properties comprising the "Lincoln-Whitehall
Portfolio," as more particularly described therein; and
WHEREAS, the parties hereto desire to amend the Agreement, as more
fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. The reference to "December 11, 1998" contained in the definition of
"Due Diligence Period" (as defined in Section 1.1 of the Agreement) is
hereby amended to read "December 18, 1998."
2. The reference to "December 11, 1998" contained in the definition of
"Second Deposit Date" (as defined in Section 1.1 of the Agreement) is
hereby amended to read "December 18, 1998."
3. The Agreement, as amended by this Amendment, is hereby ratified and
confirmed and remains in full force and effect.
EXECUTED effective as of the day and year first above written.
"BUYER"
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ MARC A. SIMPSON
-----------------------------------
Name: Marc A. Simpson
-----------------------------------
Title: Senior Vice President
-----------------------------------
<PAGE> 2
"SELLERS"
LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate Limited Partnership V,
Member
By: WH Advisors, L.P. V
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ DAVID M.WEIL
----------------------------------
Name: David M. Weil
----------------------------------
Title: Vice President
----------------------------------
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty, L.L.C.
Member
By: Whitehall Street Real Estate Limited Partnership V,
Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ DAVID M.WEIL
----------------------------------
Name: David M. Weil
----------------------------------
Title: Vice President
----------------------------------
WHLNF REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.,
General Partner
By: /s/ DAVID M.WEIL
-------------------------------
Name: David M. Weil
-------------------------------
Title: Vice President
-------------------------------
<PAGE> 3
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ DAVID M.WEIL
-------------------------------
Name: David M. Weil
-------------------------------
Title: Vice President
-------------------------------
<PAGE> 1
AMENDED AND RESTATED SECOND AMENDMENT TO
AGREEMENT OF PURCHASE AND SALE
THIS AMENDED AND RESTATED SECOND AMENDMENT TO AGREEMENT OF
PURCHASE AND SALE (this "AMENDMENT") is executed effective as of the 11th day
of December, 1998 by and between LINCOLN-WHITEHALL REALTY, L.L.C., a Delaware
limited liability company, LINCOLN-WHITEHALL PACIFIC, L.L.C., a Delaware
limited liability company, WHLNF REAL ESTATE LIMITED PARTNERSHIP, a Delaware
limited partnership, and WHSUM REAL ESTATE LIMITED PARTNERSHIP, a Delaware
limited partnership (each, "SELLER", and collectively, "SELLERS") and AMERICAN
INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("PURCHASER").
Purchaser and Sellers have entered into that certain Agreement of
Purchase and Sale dated effective November 12, 1998, providing for the purchase
and sale of those certain real properties comprising the "Lincoln-Whitehall
Portfolio," as more particularly described therein (the "ORIGINAL AGREEMENT").
Effective November 23, 1998, Sellers and Purchaser executed that certain
Amendment to Agreement of Purchase and Sale ("FIRST AMENDMENT") which amended
the Original Agreement in certain respects. Effective December 11, 1998,
Sellers and Purchaser executed that certain Second Amendment to Agreement of
Purchase and Sale ("SECOND AMENDMENT") which amended the Original Agreement, as
amended by the First Amendment, in certain respects. Sellers and Purchaser now
desire to amend and restate the Second Amendment in its entirety by executing
this Amendment. The Original Agreement, as amended by the First Amendment and
by this Amendment, is hereinafter collectively referred to as the "AGREEMENT."
Purchaser and Sellers desire to amend the Original Agreement as hereinafter
provided.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein provided and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Due Diligence Period. The reference to "December 11,
1998" contained in the definition of "Due Diligence
Period" (as defined in Section 1.1 of the Agreement)
is hereby amended to be and read "December 22,
1998."
2. Second Deposit Date. The reference to "December 11,
1998" contained in the definition of "Second Deposit
Date" (as defined in Section 1.1 of the Agreement)
is hereby amended to be and read "December 22,
1998."
3. Purchase Price. The Purchase Price (as defined in
Section 2.2(a)) is hereby amended to be and read One
Hundred Thirty-Seven Million Eight Hundred Thousand
and no/100 Dollars ($137,800,000.00).
4. Defined Terms. Terms defined in the Original
Agreement, as amended by the First Amendment, shall
have the same meaning when used in this Amendment.
<PAGE> 2
5. Ratification of Agreement. Except as provided
otherwise in this Amendment, the Original Agreement,
as amended by the First Amendment, shall continue in
full force and effect in accordance with its terms.
6. Counterparts. This Amendment may be executed in
multiple identical counterparts and when taken
together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the date first written above.
PURCHASER:
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ MARC A. SIMPSON
------------------------------------
Name: Marc A. Simpson
------------------------------------
Title: Sr. V-P
------------------------------------
<PAGE> 3
SELLERS:
LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate Limited
Partnership V,
Member
By: WH Advisors, L.P. V
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ DAVID M. WEIL
------------------------------------
Name: David M. Weil
------------------------------------
Title: Vice President
------------------------------------
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty, L.L.C.
Member
By: Whitehall Street Real Estate Limited Partnership
V,
Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ DAVID M. WEIL
---------------------------------
Name: David M. Weil
---------------------------------
Title: Vice President
---------------------------------
WHLNF REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.,
General Partner
By: /s/ DAVID M. WEIL
------------------------------------
Name: David M. Weil
------------------------------------
Title: Vice President
------------------------------------
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ DAVID M. WEIL
------------------------------------
Name: David M. Weil
------------------------------------
Title: Vice President
------------------------------------
<PAGE> 1
THIRD AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
This Third Amendment to Agreement of Purchase and Sale (this
"Amendment") is entered into effective as of the 22nd day of December, 1998, by
and among LINCOLN-WHITEHALL REALTY, L.L.C., A DELAWARE LIMITED LIABILITY
COMPANY, LINCOLN-WHITEHALL PACIFIC, L.L.C., A DELAWARE LIMITED LIABILITY
COMPANY, WHLNF REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP,
AND WHSUM REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP
(EACH, "SELLER", AND COLLECTIVELY, THE "SELLERS"), and AMERICAN INDUSTRIAL
PROPERTIES REIT, A TEXAS REAL ESTATE INVESTMENT TRUST ( "BUYER ").
W I T N E S S E T H:
WHEREAS, Sellers and Buyer have entered into that certain Agreement of
Purchase and Sale dated November 12, 1998, as amended by an Amendment to
Agreement of Purchase and Sale dated effective November 23, 1998 and by an
Amended and Restated Second Amendment to Agreement of Purchase and Sale dated
effective December 11, 1998 (collectively, the "Agreement"), pursuant to which
Sellers have agreed to sell and Buyer has agreed to purchase certain real
properties comprising the "Lincoln-Whitehall Portfolio," as more particularly
described therein; and
WHEREAS, the parties hereto desire to amend the Agreement, as more
fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. The reference to "December 22, 1998" contained in the
definition of "Due Diligence Period" (as defined in Section
1.1 of the Agreement) is hereby amended to read "December 23,
1998."
2. The reference to "December 22, 1998" contained in the
definition of "Second Deposit Date" (as defined in Section
1.1 of the Agreement) is hereby amended to read "December 23,
1998."
3. The reference to "January 6, 1999" contained in Section 8.2 of
the Agreement is hereby amended to read "January 15, 1999."
4. The Agreement, as amended by this Amendment, is hereby
ratified and confirmed and remains in full force and effect.
EXECUTED effective as of the day and year first above written.
<PAGE> 2
"BUYER"
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ MARC A. SIMPSON
-----------------------------------------
Name: Marc A. Simpson
-----------------------------------------
Title: Senior V-P
-----------------------------------------
<PAGE> 3
"SELLERS"
LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate Limited Partnership V,
Member
By: WH Advisors, L.P. V
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ DAVID M. WEIL
----------------------------------
Name: David M. Weil
----------------------------------
Title: Vice President
----------------------------------
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty, L.L.C.
Member
By: Whitehall Street Real Estate Limited
Partnership V,
Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ DAVID M. WEIL
------------------------------
Name: Dacid M. Weil
------------------------------
Title: Vice President
------------------------------
WHLNF REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.,
General Partner
By: /s/ DAVID M. WEIL
------------------------------------
Name: David M. Weil
------------------------------------
Title: Vice President
------------------------------------
<PAGE> 4
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ DAVID M. WEIL
------------------------------------
Name: David M. Weil
------------------------------------
Title: Vice President
------------------------------------
<PAGE> 1
FOURTH AMENDMENT TO AGREEMENT OF PURCHASE AND SALE
This Fourth Amendment to Agreement of Purchase and Sale (this
"Amendment") is entered into effective as of the 7th day of January, 1999, by
and among LINCOLN-WHITEHALL REALTY, L.L.C., A DELAWARE LIMITED LIABILITY
COMPANY, LINCOLN-WHITEHALL PACIFIC, L.L.C., A DELAWARE LIMITED LIABILITY
COMPANY, WHLNF REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP,
AND WHSUM REAL ESTATE LIMITED PARTNERSHIP, A DELAWARE LIMITED PARTNERSHIP
(EACH, "SELLER", AND COLLECTIVELY, THE "SELLERS"), and AMERICAN INDUSTRIAL
PROPERTIES REIT, A TEXAS REAL ESTATE INVESTMENT TRUST ("BUYER").
W I T N E S S E T H:
WHEREAS, Sellers and Buyer have entered into that certain Agreement of
Purchase and Sale dated November 12, 1998, as amended by an Amendment to
Agreement of Purchase and Sale dated effective November 23, 1998, by an Amended
and Restated Second Amendment to Agreement of Purchase and Sale dated effective
December 11, 1998, and by a Third Amendment to Agreement of Purchase and Sale
dated effective December 22, 1998 (collectively, the "Agreement"), pursuant to
which Sellers have agreed to sell and Buyer has agreed to purchase certain real
properties comprising the "Lincoln-Whitehall Portfolio," as more particularly
described therein; and
WHEREAS, the parties hereto desire to amend the Agreement, as more
fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. The references to "January 8, 1999" contained in Section 3.1(g) of the
Agreement are each hereby amended to be and read "January 11, 1999."
2. The Agreement, as amended by this Amendment, is hereby ratified and
confirmed and remains in full force and effect.
EXECUTED effective as of the day and year first above written.
"BUYER"
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ MARC A. SIMPSON
-----------------------------------------
Name: Marc A. Simpson
-----------------------------------------
Title: Sr. V-P
-----------------------------------------
<PAGE> 2
"SELLERS"
LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate Limited
Partnership V,
Member
By: WH Advisors, L.P. V
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ ALAN KAVA
------------------------------
Name: Alan Kava
------------------------------
Title: Vice President
------------------------------
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty, L.L.C.
Member
By: Whitehall Street Real Estate Limited
Partnership V,
Member
By: WH Advisors, L.P. V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ ALAN KAVA
------------------------
Name: Alan Kava
------------------------
Title: Vice President
------------------------
WHLNF REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.,
General Partner
By: /s/ ALAN KAVA
------------------------------
Name: Alan Kava
------------------------------
Title: Vice President
------------------------------
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ ALAN KAVA
------------------------------
Name: Alan Kava
------------------------------
Title: Vice President
------------------------------
<PAGE> 1
FIFTH AMENDMENT
TO AGREEMENT OF PURCHASE AND SALE
This Fifth Amendment to Agreement of Purchase and Sale (this
"Amendment") is entered into effective as of the 11th day of January, 1999, by
and among LINCOLN-WHITEHALL REALTY, L.L.C., a Delaware limited liability
company, LINCOLN-WHITEHALL PACIFIC, L.L.C., a Delaware limited liability
company, WHLNF REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership,
and WHSUM REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership
(each, a "Seller", collectively, the "Sellers"), and AMERICAN INDUSTRIAL
PROPERTIES REIT, a Texas real estate investment trust ("Buyer").
W I T N E S S E T H:
WHEREAS, Sellers and Buyer have entered into that certain
Agreement of Purchase and Sale dated November 12, 1998, as amended by an
Amendment to Agreement of Purchase and Sale dated effective November 23, 1998,
by an Amended and Restated Second Amendment to Agreement of Purchase and Sale
dated effective December 11, 1998, by a Third Amendment to Agreement of
Purchase and Sale dated effective December 22, 1998 and by a Fourth Amendment
to the Agreement of Purchase and Sale dated effective January 7, 1998
(collectively, the "Agreement"), pursuant to which Sellers have agreed to sell
and Buyer has agreed to purchase certain real properties comprising the
"Lincoln-Whitehall Portfolio", as more particularly described therein; and
WHEREAS, the parties hereto desire to amend the Agreement, as
more fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. The references to "January 11, 1999" contained in Section
3.1(g) of the Agreement are each hereby amended to be and read
"January 13, 1999."
2. This Agreement, as amended by this Amendment, is hereby
ratified and confirmed and remains in full force and effect.
<PAGE> 2
EXECUTED effective as of the day and year first above written.
BUYER: AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ BOB G. BAKER
----------------------------------------
Name: Bob G. Baker
Title: Vice President
SELLERS: LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate Limited
Partnership V,
Member
By: WH Advisors, L.P., V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ [ILLEGIBLE]
----------------------------------------
Name:
Title:
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty, L.L.C.,
Member
By: Whitehall Street Real Estate Limited
Partnership V,
Member
By: WH Advisors, L.P., V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ [ILLEGIBLE]
----------------------------------------
Name:
Title:
<PAGE> 3
WHLNF REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.
General Partner
By: /s/ [ILLEGIBLE]
----------------------------------------
Name:
Title:
WHSUM REAL ESTATE LIMITED PARTNERSHIP
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ [ILLEGIBLE]
----------------------------------------
Name:
Title:
<PAGE> 1
SIXTH AMENDMENT
TO AGREEMENT OF PURCHASE AND SALE
This Sixth Amendment to Agreement of Purchase and Sale (this
"Amendment") is entered into effective as of the 13th day of January, 1999, by
and among LINCOLN-WHITEHALL REALTY, L.L.C., a Delaware limited liability
company, LINCOLN-WHITEHALL PACIFIC, L.L.C., a Delaware limited liability
company, WHLNF REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership,
and WHSUM REAL ESTATE LIMITED PARTNERSHIP, a Delaware limited partnership
(each, a "Seller", collectively, the "Sellers"), and AMERICAN INDUSTRIAL
PROPERTIES REIT, a Texas real estate investment trust ("Buyer").
W I T N E S S E T H:
WHEREAS, Sellers and Buyer have entered into that certain
Agreement of Purchase and Sale, dated November 12, 1998, as amended through the
date hereof, (as so amended, the "Agreement"), pursuant to which Sellers have
agreed to sell and Buyer has agreed to purchase certain real properties
comprising part of the "Lincoln-Whitehall Portfolio", as more particularly
described therein; and
WHEREAS, the parties hereto desire to amend the Agreement, as
more fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The definition of Closing Date contained in
Section 8.2 of the Agreement is hereby amended to be and read "10:00
A.M. Pacific Standard Time on January 15, 1999." The parties agree and
understand that the Sellers will use proceeds of the Purchase Price to
repay currently outstanding indebtedness encumbering the Properties
(the "Mortgage Loans"). Accordingly, in the event the Sellers receive
the Purchase Price after 10:00 A.M. Pacific Standard Time on January
15, 1999 and the Sellers do not (after using commercially reasonable
efforts) effect repayment of the outstanding Mortgage Loans on January
15, 1999 in a manner that avoids the incurrence by the Sellers of any
additional, interest costs, fees, penalties or other costs, then Buyer
shall be held liable for, and Buyer shall reimburse Sellers all
interest costs, fees, penalties or other costs (in an amount not to
exceed $40,000 per calendar day) with respect to the outstanding
Mortgage Loans from such time on January 15, 1999 until such time as
the Sellers repay such loans with the proceeds of the Purchase Price
(it being understood and agreed, however, that for the purpose of
determining the amount of any such interest or other costs, fees or
penalties for which the Buyer is liable hereunder, the Sellers shall
be deemed to have repaid such loan on the date that such loan is
actually repaid, but in any event no later than the Business Day
following the day on which the Sellers receive the Purchase Price from
the Buyer).
2. The Purchase Price (as defined in Section
2.2.(a)) is hereby amended to be and read "One Hundred Twenty-seven
Million Three Hundred Thousand and no/100 Dollars ($127,300,000)."
3. Section 7.2 of the Agreement is hereby amended by
inserting the word "and" immediately before "(ii)" appearing in the
first sentence thereof, by deleting the words "and
<PAGE> 2
understood and agreed that the Purchase Price payable at Closing shall
be reduced by an amount equal to the sum of all such amounts that are
designated on such Schedule 7.2 as not having been paid prior to the
Closing Date and that as a result of such reduction in the Purchase
Price the Sellers shall have no further obligations or responsibilities
with respect to any Leasing Costs set forth on Schedule 7.2 and that
the Buyer shall, from and after the Closing Date, assume and be
responsible for all such Leasing Costs)."
Section 7.2 is further amended by deleting in its entirety
the sentence, "Sellers shall be responsible and shall pay for all
other Leasing Costs and any such other Leasing Costs otherwise
remaining unpaid by Sellers shall result in a downward adjustment to
the Purchase Price at Closing."
4. Schedule 7.2 of the Agreement shall be replaced
in its entirety by the Schedule 7.2 attached hereto.
5. Exhibit A of the Agreement shall be replaced in
its entirety by Exhibit A attached hereto.
6. On the Closing Date, the Sellers shall deposit an
amount equal to $127,656.00 in an escrow account with the Title
Company (the "Escrow Fund") in respect of the Sellers' agreement to
make available such amount as a result of the vacancy of an 8,865
square foot space located at 7011 Gateway Boulevard, Newark,
California (the "Vacant Space"). Subject to the terms and conditions
of this Section 6, Buyer shall have the right to draw from the Escrow
Fund twelve equal monthly installments of an amount equal to $10,638
(the "Monthly Escrow Payments") until the earliest to occur of (i) the
"Leasing" (as defined below) of the Vacant Space or (ii) the making of
the twelfth Monthly Escrow Payment (upon which date the balance in the
Escrow Fund will be zero dollars). The Sellers shall not have any
responsibility to make any payment to the Buyer in respect of the
Vacant Space in excess of the amount at any time remaining in the
Escrow Fund.
Except as provided below, the Buyer shall have the right on
the first day of each month during the period beginning on February 1,
1999 and ending on January 31, 2000, commencing February 1, 1999, to
draw from the Escrow Fund the Monthly Escrow Payments (it being
understood and agreed that any such Monthly Escrow Payment shall be
made in advance in respect of the month in which such day occurs).
Notwithstanding anything to the contrary contained herein, upon the
Leasing of the Vacant Space, the Sellers shall be entitled to receive
any amounts remaining in the Escrow Fund on the date of the Leasing of
the Vacant Space. In addition, if the Leasing of the Vacant Space
occurs on a date other than the first day of a month, the Buyer shall
rebate to the Sellers a pro rata portion of the Monthly Escrow Payment
made in respect of the month in which such Leasing occurs (with such
pro rata calculation being based on the
-2-
<PAGE> 3
number of days in such month and the number of days in such month
remaining after the date of the Leasing of the Vacant Space). For
purposes hereof, the "Leasing" of the Vacant Space shall be deemed to
occur upon the first to occur of (i) the date on which a tenant takes
occupancy of the Vacant Space or (ii) the date from which the tenant
in the Vacant Space begins to accrue the obligation to pay rent in
respect of the Vacant Space.
The parties acknowledge and agree that (i) the Buyer shall be
responsible for, and shall pay for, all payments, improvements, costs,
expenses, fees and taxes that are customarily paid for by the tenant
under a triple net lease and any other payments, improvements, costs,
expenses, fees and taxes relating to the Vacant Space that are due and
payable after the Closing Date and (ii) except for payments from the
Escrow Fund, the Sellers shall have no liability whatsoever with
respect to any loss or losses suffered, or in any way related to, the
Vacant Space.
7. Capitalized terms used herein but not otherwise
defined herein shall have the meanings given to them under the
Agreement.
8. This Agreement, as amended by this Amendment, is
hereby ratified and confirmed and remains in full force and effect.
-3-
<PAGE> 4
EXECUTED effective as of the day and year first above written.
BUYER: AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By: /s/ MARC A. SIMPSON
-----------------------------------
Name: Marc A. Simpson
Title: Sr. V-P
SELLERS: LINCOLN-WHITEHALL REALTY, L.L.C.,
a Delaware limited liability company
By: Whitehall Street Real Estate
Limited Partnership V,
Member
By: WH Advisors, L.P., V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ ELIZABETH BURBAN
-----------------------------------
Name: Elizabeth Burban
Title: Vice President
<PAGE> 5
LINCOLN-WHITEHALL PACIFIC, L.L.C.,
a Delaware limited liability company
By: Lincoln-Whitehall Realty,
L.L.C., Member
By: Whitehall Street Real Estate
Limited Partnership V,
Member
By: WH Advisors, L.P., V,
General Partner
By: WH Advisors, Inc., V,
General Partner
By: /s/ ELIZABETH BURBAN
-----------------------------------
Name: Elizabeth Burban
Title: Vice President
WHLNF REAL ESTATE LIMITED
PARTNERSHIP,
a Delaware limited partnership
By: WHLNF Gen-Par, Inc.
General Partner
By: /s/ ELIZABETH BURBAN
-----------------------------------
Name: Elizabeth Burban
Title: Vice President
WHSUM REAL ESTATE LIMITED PARTNERSHIP,
a Delaware limited partnership
By: WHSUM Gen-Par, Inc.,
General Partner
By: /s/ ELIZABETH BURBAN
-----------------------------------
Name: Elizabeth Burban
Title: Vice President
<PAGE> 6
EXHIBIT A
ALLOCATION OF PURCHASE PRICE
<TABLE>
<CAPTION>
ALLOCATED PORTION OF
PURCHASE PRICE
--------------------
PROPERTY
<S> <C>
110-140 Baytech Drive, San Jose, California $ 35,000,000
2051 & 2055 Junction Avenue, San Jose, California 11,250,000
3100 Alfred Street, Santa Clara, California 5,750,000
846-850 Stewart Drive, Sunnyvale, California 6,000,000
7015 & 7151 Gateway Boulevard, Newark, California 20,750,000
485 Clyde Avenue, Mountain View, California 7,750,000
165-225 Lennon, Walnut Creek, California 21,000,000
107 Woodmere Road, Folsom, California 5,300,000
310 Interlocken Parkway, Bloomfield, Colorado
14,500,000
-------------
PORTFOLIO TOTAL $ 127,300,000
</TABLE>
-6-
<PAGE> 7
SCHEDULE 7.2
LEASING COSTS OUTSTANDING
1. Centre Pointe
Travelers - Tenant Improvements = $674,934
Commission = $83,478
Carl Warren - Tenant Improvements = $29,915
Commission paid in 1998
Cal. Div. of Workers - Tenant Improvements = Paid in full in 1998
Commissions paid in January 1999
2. Gateway
Bank of America - Tenant Improvements = $259,243
Commission paid in 1998
Xerox - Tenant Improvements/Commissions = $100,000
-7-
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-3 (No. 333-46699), the Registration Statement on Form S-3 (No.
333-48555), the Registration Statement on Form S-3 (No. 333-52879), and the
Registration Statement on Form S-8 (No. 333-69625) of American Industrial
Properties REIT of our report dated March 18, 1999 with respect to the Combined
Historical Summary of Gross Income and Direct Operating Expenses of the Northern
California & Colorado Portfolio included in American Industrial Properties
REIT's Current Report on Form 8-K/A dated January 15, 1999.
/s/ ERNST & YOUNG LLP
Dallas, Texas
March 26, 1999
