SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 1, 1997
HEALTH AND RETIREMENT PROPERTIES TRUST
(Exact name of registrant as specified in charter)
Maryland 1-9317 04-6558834
(State or other (Commission file (IRS employer
jurisdiction of number) identification no.)
incorporation)
400 Centre Street, Newton, Massachusetts 02158
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 617-332-3990
<PAGE>
Item 2. Acquisition or Disposition of Assets
As previously announced, on October 1, 1997, Health and Retirement
Properties Trust and subsidiaries (the "Company") purchased a 420,368 square
foot office building located at 7 West 34th Street in New York City, New York
from 7 West Associates LLC, a wholly owned subsidiary of Orchard Properties,
Inc., for $110 million. The building has been and will continue to be rented as
commercial office space. The building is currently 100% occupied with 60% leased
to health care companies, including the corporate headquarters of Health
Insurance Plan of Greater New York.
As previously announced, on May 15, 1997, the Company acquired two
medical office buildings and two garages located adjacent to Cedars-Sinai
Medical Center in Los Angeles, California. The properties were acquired by a
limited partnership owned 99% by the Company. The Company contributed and loaned
an aggregate of $108.5 million to such limited partnership and Medical Office
Buildings, Ltd., a Washington limited partnership, the Company's limited
partner, contributed the land and the buildings which it acquired from
Wright-Carlyle Partners, in the case of the buildings, and Prudential Insurance
Company of America, in the case of the land, pursuant to existing rights of
first refusal and options, the exercises of which were funded by the Company's
funding of the limited partnership. The two medical office towers and the two
parking garages are interconnected to each other and to the Cedars-Sinai Medical
Center by pedestrian bridges. The medical office buildings are currently more
than 95% occupied and have over 150 separate medical practices as tenants. The
average occupancy of these buildings for the last ten years was approximately
97.2%. The Company currently intends that the building will continue to be
operated as a medical office building.
The properties described above are managed for the Company by M&P
Partners Limited Partnership ("M&P"), which provides property agent and
management services for certain of the Company's multi-tenant buildings. M&P is
owned by its general partner, HRPT Advisors, Inc., the Company's advisor, and
Messrs. Gerar M. Martin and Barry M. Portnoy, who are managing trustees of the
Company. Management fees paid to M&P are based on a percentage of revenues
derived from the multi-tenant buildings under its management.
The consideration for each of these acquisitions was funded initially
by drawings under the Company's existing revolving line of credit with Dresdner
Kleinwort Benson NorthAmerica LLC, as agent and Fleet National Bank, as
administrative agent and available cash.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial Statements of Business Acquired.
The audited financial statements of the properties described in Item 2
of this Report are not filed herewith but will be filed on an amendment to this
Form 8-K within 60 days of the date hereof.
(c) Exhibits.
2.1 Purchase and Sale Agreement dated September 25, 1997 by and
between 7 West Associates LLC, as seller and the Company, as
purchaser.
2.2 Contribution Agreement (and Escrow Instructions) with respect
to the acquisition of the Cedars-Sinai Medical Office Towers
dated as of April 20, 1997 by and between Medical Office
Buildings, Ltd., as seller, and the Company, as buyer.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Ajay Saini
Ajay Saini, Treasurer and
Chief Financial Officer
Date: October 16, 1997
Exhibit 2.1
Purchase And Sale Agreement
7 West 34th Street
New York, New York
between
7 West Associates LLC, as Seller
and
Health and Retirement Properties Trust, as Purchaser
Dated: September 25, 1997
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<TABLE>
<CAPTION>
Purchase And Sale Agreement
Table of Contents
Page
<S> <C> <C>
Article 1 Definitions........................................................................1
Section 1.1 Definitions.............................................................................1
Article 2 Purchase and Sale..................................................................5
Section 2.1 Purchase and Sale.......................................................................5
Section 2.2 Payment of the Purchase Price...........................................................5
Article 3 Purchaser's Review.................................................................6
Section 3.1 Property Documents......................................................................6
Section 3.2 Physical Review.........................................................................6
Section 3.3 Indemnity and Survival..................................................................8
Article 4 Title Documents....................................................................8
Section 4.1 Title Commitment and Survey.............................................................8
Section 4.2 Title Defects...........................................................................8
Article 5 Representations, Warranties, and Covenants........................................11
Section 5.1 Seller's Representations and Warranties................................................11
Section 5.2 Survival of Seller's Representations and Warranties....................................17
Section 5.3 Purchaser's Representations, Warranties and Covenants..................................18
Section 5.4 Seller's Covenants.....................................................................19
Section 5.5 As Is..................................................................................22
Article 6 Closing...........................................................................23
Section 6.1 Conditions to Purchaser's Obligations to Close.........................................23
Section 6.2 Conditions to Seller's Obligations to Close............................................24
Section 6.3 Escrow and Closing.....................................................................25
Section 6.4 Prorations.............................................................................30
Section 6.5 Closing Costs..........................................................................37
Section 6.6 Closing Deliveries.....................................................................38
Section 6.7 Access to Records......................................................................42
Section 6.8 Survival...............................................................................43
Article 7 Brokerage.........................................................................43
Article 8 Casualty and Condemnation.........................................................44
Section 8.1 ..................................................................................44
Section 8.2 ..................................................................................44
Section 8.3 ..................................................................................44
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Page
Section 8.4 ..................................................................................45
Article 9 Defaults..........................................................................47
Section 9.1 Purchaser's Default....................................................................47
Section 9.2 Seller's Default.......................................................................47
Section 9.3 Delivery of Earnest Money Deposit in the Event of a Default............................48
Article 10 Miscellaneous.....................................................................48
Section 10.1 Indemnification.......................................................................48
Section 10.2 Assurances Of Cooperation.............................................................49
Section 10.3 Successors And Assigns................................................................49
Section 10.4 Interpretation........................................................................50
Section 10.5 Joint Cooperation.....................................................................52
Section 10.6 Publicity.............................................................................52
Section 10.7 Notices...............................................................................53
Section 10.8 Exculpations..........................................................................54
Section 10.10 Counterparts.........................................................................55
Exhibit A The Land
Exhibit B The Permitted Title Exceptions
Exhibit C The Contracts
Exhibit D The Rent Roll
Exhibit E The Personal Property
Exhibit F-1 The Bill of Sale
Exhibit F-2 The Assignment of Contracts, Intangible Property Licenses and
Utility Deposits
Exhibit F-3 The Assignment of Leases
Exhibit F-4 The Bargain and Sale Deed
Exhibit G The Claims
Exhibit H The Property Documents
Exhibit I Schedule of Insurance
Exhibit J Form of Tenant's Estoppel Letter
Exhibit K Intentionally Omitted
Exhibit L Licenses
Exhibit M Certificate of Occupancy
Exhibit N Intentionally Omitted
Exhibit O Pending Real Estate Tax Appeals
Exhibit P Intentionally Omitted
Exhibit Q Intentionally Omitted
Exhibit R Letters of Credit
Exhibit S Supplies
Exhibit T Brokerage Agreements
</TABLE>
ii
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THIS PURCHASE AND SALE AGREEMENT is made as of the 25th day of
September, 1997, by and between 7 WEST ASSOCIATES LLC, a Delaware limited
liability company ("Seller") and HEALTH AND RETIREMENT PROPERTIES TRUST, a
Maryland real estate investment trust ("Purchaser").
In consideration of the respective agreements, covenants,
representations, warranties and conditions contained in this Agreement, and for
other good and valuable consideration, the parties hereto agree as follows:
Article 1
Definitions
Section 1.1 Definitions. As used herein, the following terms
shall have the following meanings:
Additional Rents: As defined in Section 6.4.1 of this Agreement.
Adjustment Point: As defined in Section 6.4 of this Agreement.
Agreement: This Agreement, including all exhibits and schedules
hereto, all of which are incorporated into this
Agreement by this reference.
BID: As defined in Section 5.1.2.8 of this Agreement.
Claims: As defined in Section 5.1.2.1 of this Agreement.
Closing: As defined in Section 6.3.8 of this Agreement.
Closing Date: October 1, 1997, as such date may be extended
pursuant to the terms of this Agreement or by mutual
consent of the parties hereto.
Closing Statement: As defined in Section 6.4 of this Agreement.
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2
Contracts: All written contracts and agreements affecting all or
any portion of the Property to which Seller or any
predecessor in interest to Seller is a party
(including without limitation, all agreements
relating to the management, servicing or maintenance
of the Real Property or the Personal Property, and
all agreements for the purchase of materials,
supplies, equipment or parts, but excluding the
Leases and any documents evidencing the Permitted
Title Exceptions). The Contracts are identified on
Exhibit C.
Curable Liens: As defined in Section 4.2.2(a) of this Agreement.
Cure Amount: As defined in Section 4.2.2(a) of this Agreement.
Earnest Money Deposit: Five Million Dollars ($5,000,000). The term "Earnest
Money Deposit" shall also include any interest earned
on the deposited monies.
Escrow Agent: Paul, Weiss, Rifkind, Wharton & Garrison.
Existing Mortgage: That certain first mortgage on the Real Property held
by Credit Lyonnais.
Governmental
Authority: The United States of America, or any state, county,
municipality, or other unit of local government, or
any agency, board, or other public entity empowered
or constituted by any of them having, jurisdiction
over the Real Property, the Property or its or their
use or ownership.
HIP: As defined in Section 5.1.1.5 of this Agreement.
Improvements: All buildings, structures, fixtures, and other
improvements of every kind located on or under the
Land, including any and all plumbing, air
conditioning, heating, ventilating, mechanical,
electrical and other utility systems servicing the
building, security devices, signs and light fixtures,
but not including publicly owned or privately owned
(unless owned by Seller) utility lines or equipment
or tenant fixtures which under the terms of any
Tenant's Lease or as a matter of law may be removed
from the demised premises by such Tenant on the
expiration of its term.
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3
Intangible Property: All intangible property excluding Contracts, Leases
and Licenses which pertain to the Real Property or
Personal Property, including all of Seller's rights
in and to guarantees, warranties, plans and
specifications and reports pertaining to the Property
(or any portion thereof), if any.
Land: That certain parcel of land described on Exhibit A.
Leases: All leases and other agreements for the occupancy of
any portion of the Improvements, including any
amendments and modifications thereof, each of which
is identified on Exhibit D.
Legal Requirements: All laws, statutes, regulations and requirements of
any Governmental Authority having jurisdiction over
the Real Property or the Property.
Licenses: All licenses, permits, certificates of occupancy,
authorizations or other approvals issued by any
Governmental Authority regarding operation of the
Real Property or Personal Property but not including
those required for completed tenant improvements or
work which any Tenant is performing and those related
to any Tenant's business or issued to any Tenants.
Major Tenant: Each of the Tenants listed on Exhibit P to this
Agreement.
Material Part: As defined in Section 8.3 of this Agreement.
Member: As defined in Section 5.1.1.1 of this Agreement.
New Leases: As defined in Section 5.4.2.4 of this Agreement.
Owner's Policy: As defined in Section 4.1 of this Agreement.
Permitted Title
Exceptions: Those matters listed on Exhibit B to this Agreement.
Personal Property: The items of property identified on Exhibit E to this
Agreement.
Property: The Real Property, the Leases, the Personal Property,
the Licenses, the Contracts and the Intangible
Property.
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4
Property Documents: As defined in Section 3.1 of this Agreement.
Prorations: As defined in Section 6.4 of this Agreement.
Purchase Price: One Hundred Ten Million Dollars ($110,000,000).
Purchaser: As defined in the Introduction to this Agreement.
Purchaser's Broker: Williams Real Estate Co.
Real Property: The Land and the Improvements.
Rent Roll: The rent roll attached to this Agreement as Exhibit
D.
Rents: As defined in Section 6.4.1 of this Agreement.
Seller: As defined in the Introduction to this Agreement.
Seller's Broker: CB Commercial Real Estate Group, Inc.
Seller's Closing
Documents: As defined in Section 6.6.1 of this Agreement.
Studies: As defined in Section 3.2.2 of this Agreement.
Survey: As defined in Section 4.1 of this Agreement.
Tenant: A party in possession of a portion of the
Improvements pursuant to one of the Leases.
Title Commitment: As defined in Section 4.1 hereof.
Title Defect: A lien, claim, charge, right, interest, burden,
encumbrance, defect, objection, exception or security
interest which is asserted against or which burdens
the Real Property, or the Personal Property which has
a materially adverse effect on the use or operation
of the Property or the value thereof and which is not
identified in this Agreement as a Permitted Title
Exception.
Title Insurer: Lawyers Title Insurance Corporation.
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5
Article 2
Purchase and Sale
Section 2.1 Purchase and Sale. Subject to the terms and
conditions contained in this Agreement, Purchaser agrees to purchase the
Property from Seller and Seller agrees to sell the Property to Purchaser,
subject only to the Permitted Title Exceptions.
Section 2.2 Payment of the Purchase Price. Purchaser agrees to
pay the Purchase Price to Seller, and Seller agrees to accept payment of the
Purchase Price in the following manner:
2.2.1 Prior to the execution of this Agreement, a
portion of the Earnest Money Deposit, equal to $1,100,000 in cash, was delivered
by Purchaser to Escrow Agent. Concurrently with the execution and delivery of
this Agreement, the balance of the Earnest Money Deposit shall be delivered to
Escrow Agent in immediately available funds.
2.2.2 On the Closing Date, (a) Purchaser shall pay
the balance of the Purchase Price, consisting of the sum of $105,000,000 to
Seller or as directed by Seller, by wire transfer of immediately available funds
to Seller's account at Morgan Guaranty Trust Company of New York or other
financial institution designated by Seller, plus or minus net Prorations and (b)
the Earnest Money Deposit, with the interest earned thereon credited to
Purchaser.
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6
Article 3
Purchaser's Review
Section 3.1 Property Documents. At any reasonable time and
from time to time from the date of the execution and delivery of this Agreement,
until the Closing Date, Seller will permit Purchaser and its authorized agents
to examine and copy the instruments and documents listed on Exhibit H, to the
extent in Seller's Possession or otherwise readily available to Seller (the
"Property Documents"). Such inspection shall take place at the offices of
Seller, as Seller shall otherwise direct or at Purchaser's request and expense,
Seller shall provide Purchaser with copies of such documents.
Section 3.2 Physical Review. At all times prior to the
Closing, Purchaser, its representatives or agents, shall have the right to enter
upon the Real Property. The Purchaser's right to inspect the Real Property shall
be subject to the following:
3.2.1 Purchaser may examine and test the Real
Property, which tests may include non-invasive soil tests, environmental tests
and engineering tests. Purchaser may conduct invasive testing which will not
cause material damage to the Property provided it obtains prior consent from
Seller, which consent Seller agrees shall not be unreasonably withheld, delayed
or conditioned; and
3.2.2 Purchaser may inspect the Improvements to
evaluate their suitability for Purchaser's needs; provided, however, that
examination of the interior of space leased to Tenants may be limited as
provided in such Tenants' Leases.
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7
All of the examinations, inspections, studies, tests and
reports conducted or prepared pursuant to Sections 3.2.1 and 3.2.2 prior to
Closing are referred to in this Agreement as the "Studies."
3.2.3 Purchaser's right to enter onto the Real
Property to conduct the Studies is subject to the following conditions:
3.2.3.1 Purchaser shall provide Seller with
reasonable advance notice of any entry on the Real Property (which
notice may be oral), and Seller may, at its election, have a
representative present during any such entry;
3.2.3.2 All investigations and other
activities conducted by Purchaser shall be at Purchaser's sole cost and
expense, and Purchaser shall keep the Real Property free of any liens
which may be asserted against Seller or the Real Property as a result
of these activities;
3.2.3.3 Purchaser shall exercise due care
with respect to the Real Property in connection with its entry thereon
so as to minimize any damage caused to the Real Property and any
interference with Seller's use thereof. Promptly following any test or
other examination which results in any alteration of the Real Property,
Purchaser will promptly restore the Real Property at Purchaser's sole
cost and expense to the condition which existed prior to such test or
examination; and
3.2.3.4 Purchaser or its agents will not
contact any Tenants directly or indirectly prior to the Closing,
without Seller's consent.
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8
Section 3.3 Indemnity and Survival. Purchaser hereby agrees to
indemnify, defend, protect and hold Seller harmless from any and all costs, loss
and damages, including reasonable attorneys' fees and litigation expenses, which
Seller shall incur as a result of the Studies or any breach of Purchaser's
obligations under Sections 3.1 and 3.2. In the event this Agreement is
terminated, this indemnity shall survive the termination of this Agreement. If
this Agreement is not terminated, this indemnification shall survive the
Closing.
Article 4
Title Documents
Section 4.1 Title Commitment and Survey. Purchaser has
obtained (a) an updated survey of the Real Property (the "Survey") and (b) a
report on title (the "Title Commitment") from the Title Insurer for an owner's
policy of title insurance (the "Owner's Policy") in the amount of the Purchase
Price, and has caused copies of the Survey and the Title Commitment to be
delivered to Seller's counsel, together with specification of those exceptions
to title contained in the Title Commitment and/or Survey which (a) are not
Permitted Title Exceptions and (b) are not acceptable to Purchaser.
Section 4.2 Title Defects.
4.2.1 If Seller shall elect (or shall be required
under Section 4.2.2 below) to attempt to remove any defect in or objection to
title so specified by Purchaser, then Seller shall be entitled, on notice to
Purchaser given on or prior to the Closing Date, to adjourn the Closing Date one
or more times, for a period not to
<PAGE>
9
exceed sixty (60) days in the aggregate, to enable Seller to take such action as
may be required to cause the Title Insurer to issue the Owner's Policy in
accordance with the provisions of this Agreement. If Seller does not so elect to
adjourn the Closing, or if at the adjourned date(s) the Title Insurer is not
prepared to issue the Owner's Policy in accordance with the provisions of this
Agreement, Purchaser may terminate this Agreement by written notice to Seller,
whereupon the Escrow Agent shall return the Earnest Money Deposit to Purchaser
and neither party shall have any further obligations under this Agreement except
for those provisions which specifically survive the termination hereof.
4.2.2 (a) If Seller elects to adjourn the Closing as
provided above, this Agreement shall remain in effect for the period or periods
of adjournment in accordance with its terms. In no event, however, shall Seller
be required to take or bring any action or proceeding or take any other steps to
remove any defect in or objection to title; provided, however, that if an
examination of title indicates the existence of one or more liens or
encumbrances which, in either case, are in liquidated amounts and can be removed
or discharged by payment of a sum of money ("Curable Liens") which is not in
excess of Five Hundred Thousand Dollars ($500,000) (the "Cure Amount") in the
aggregate, and if such removal or discharge can reasonably be expected to be
accomplished prior to the Closing Date initially provided for in Section 1.1
hereof or within a period of sixty (60) days thereafter or such longer period of
time as Purchaser may approve, Seller agrees to take such action as is
reasonably required in order to remove or discharge such Curable Liens and, if
required, to
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10
adjourn the Closing Date for the period required for such purpose. Seller will
be deemed to have satisfied the foregoing requirement with respect to any
Curable Liens, other than as to Curable Liens which are, in the aggregate, in
excess of One Million Dollars ($1,000,000), if the Title Insurer will issue or
bind itself to issue the Owner's Policy without additional premium (unless
Seller shall pay such premium) which will (i) insure Purchaser against
collection of such Curable Liens or enforcement thereof against the Real
Property and (ii) agree to issue a title commitment to any subsequent mortgagee
or purchaser of the Property from Purchaser, which commitment will insure such
mortgagee or purchaser against collection of such Curable Liens or enforcement
against the Real Property.
(b) Seller will, in addition, without limitation as
to the amount thereof, cause to be removed at or prior to the Closing (i) all
mortgages, assignments of leases and rents and financing statements entered into
by Seller or its predecessors in title whether created prior to or after the
date hereof, (ii) judgments or tax liens (other than real estate tax liens which
are addressed in Section 6.4.1) incurred by Seller which are liens against the
Real Property and (iii) other title exceptions which are not Permitted Title
Exceptions and which are willfully caused by Seller from and after the date
hereof.
4.2.3 Notwithstanding the provisions of Section 4.2
hereof, Purchaser may at any time accept such title as Seller is able to
deliver, without reduction of the Purchase Price or any credit or allowance on
account thereof or any claims against Seller.
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11
Article 5
Representations, Warranties, and Covenants
Section 5.1 Seller's Representations and Warranties. In order
to induce Purchaser to enter into this Agreement, Seller represents and warrants
to Purchaser as follows:
5.1.1 As to Organization, Power, Authority and Title.
5.1.1.1 Seller is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Delaware. Seller's only member is Orchid
Properties, Inc. (the "Member").
5.1.1.2 Seller has full right, power and
authority to enter into and perform its obligations under this
Agreement and the other instruments and documents contemplated herein
to be executed and performed by it, including without limitation, those
conveying the Property. The execution and delivery of this Agreement
and such other instruments and documents and the consummation of the
transactions contemplated hereby and thereby (l) have been duly
authorized by all necessary action on the part of the Seller (2) do not
require any consent or approval of or notice to any Governmental
Authority, and (3) will not result in the breach of the limited
liability company agreement of Seller or any agreement or other
instrument to which Seller or the Member is a party or to which Seller,
the Member or the Property is bound. Further, this Agreement
constitutes the valid and binding obligation of Seller.
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12
5.1.1.3 Seller has not made an assignment
for the benefit of creditors, nor has Seller filed, or had filed
against it, any petition in bankruptcy or insolvency.
5.1.1.4 Seller is a "non-foreign person"
within the meaning of section 1445 of the United States Internal
Revenue Code of 1986, as amended, and the regulations issued
thereunder.
5.1.1.5 Seller is the sole owner of the
Property and has full right, power and authority to sell and convey the
same to Purchaser. No third party other than Health Insurance Plan of
Greater New York ("HIP") has any contract, option or right of first
refusal with respect to the Property; HIP's right of first refusal has
been waived in writing by HIP.
5.1.2 As to the Property.
5.1.2.1 There is no litigation, action or
proceeding pending, or to Seller's knowledge, threatened against
Seller, the Property, or any part thereof, before any court, arbitrator
or Governmental Authority nor has Seller received written notice of any
litigation, action or proceeding threatened against Seller, the
Property, or any part thereof (the "Claims") other than negligence
claims fully covered by insurance maintained by Seller, and as set
forth in Exhibit G attached hereto.
5.1.2.2 Exhibit I is a complete list of all
insurance policies applicable to the Real Property as of the date
hereof and each such
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13
policy is presently in full force and effect. All the premiums under
the insurance policies set forth on Exhibit I have been paid in full.
5.1.2.3 Seller has no knowledge of and has
not received any written notice from any Governmental Authority with
respect to any actual or threatened taking of any portion of the Real
Property by the exercise of the right of condemnation or eminent
domain.
5.1.2.4 Seller has one employee.
5.1.2.5 Except as set forth in Exhibit C,
there are no Contracts relating to the Property which would be binding
on the Purchaser subsequent to the Closing. Exhibit C is a complete
list of all such Contracts, such Contracts are all in full force and
effect and have not been amended or modified, except as disclosed in
Exhibit C. Seller is not in default under any such Contract and to the
best of Seller's knowledge, no other party is in default under any such
Contract.
5.1.2.6 There are no proceedings pending to
reduce the assessment of the Real Property for real estate tax purposes
except for the 1992/93, 1993/94, 1994/95, 1995/96 1996/97 and 1997/98
New York City Fiscal Years, copies of the applications for which are
attached hereto as Exhibit O.
5.1.2.7 There are no outstanding special
assessments with respect to the Real Property.
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5.1.2.8 The Real Property is located in the
34th Street Business Improvement District ("BID").
5.1.2.9 The Real Property has not been
designated a New York City Landmark.
5.1.2.10 The Real Property constitutes a
separate tax lot.
5.1.2.11 Seller has not transferred any
development rights with respect to the Real Property.
5.1.2.12 Seller has received no notice that
the Real Property is in violation in any material respect of any
material federal, state, municipal and other governmental statutes,
ordinances, rules, regulations or any other legal requirements,
including, without limitation, those relating to construction,
occupancy, zoning, adequacy of parking, environmental protection,
occupational health and safety and fire safety applicable thereto; and
to Seller's knowledge there are presently in effect all material
licenses, permits and other authorizations necessary for the current
use, occupancy and operation thereof.
5.1.2.13 Except as disclosed to Purchaser or
as described in any environmental report delivered to Purchaser, to
Seller's knowledge, no material adverse environmental conditions or
hazards exist with respect to the Real Property.
5.1.3 As to Leases, Licenses, Etc.
5.1.3.1 (1) There are no occupancy rights
(written or oral), leases or tenancies presently affecting the Real
Property or the Personal Property other than the Leases; (2) Seller has
heretofore delivered to Purchaser
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15
a true and complete copy of each of the Leases, including all
amendments thereto; each such Lease represents the complete agreement
between Seller and the respective Tenant as to all rights, liabilities
and obligations of Seller and said Tenant in and to the premises
demised thereunder; and the Leases have not been modified or amended,
except as set forth on Exhibit D hereto; (3) the Leases are in full
force and effect; (4) to the best of Seller's knowledge, said Tenants
have not assigned their rights under the Leases or sublet any portion
of their respective premises except as noted on Exhibit D; (5) said
Tenants have not been granted any renewal or extension options except
as disclosed in the Leases, nor do any of said Tenants have an option
to purchase the Real Property or any part thereof (other than the first
refusal right in favor of HIP described in Section 5.1.1.5 hereof); (6)
except as otherwise described on Exhibit D, Seller has performed its
obligations under the Leases in all material respects; and Seller has
not received from any Tenant any written notice claiming any material
default by Seller under any of the Leases which has not been complied
with, or claiming any right of set-off or counterclaim against Seller;
(7) except as set forth on Exhibit D, Seller has not given any Tenant
any written notice claiming any material defaults or nonpayment of rent
by such Tenant under any of the Leases which has not been complied
with; (8) except as set forth on Exhibit D, all Tenants are in
occupancy of their respective premises under the Leases and all work
required to be performed by the landlord pursuant to the Leases has
been completed and fully paid for; (9) the information contained in
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16
the Rent Roll annexed hereto as Exhibit D is true and correct in all
material respects and contains a schedule of every Lease and each
modification and amendment to each Lease; (10) except as set forth on
Exhibit D, Seller has not accepted any prepaid rent or prepayment of
any other sum due under the Leases more than thirty (30) days in
advance; (11) the security deposits set forth on Exhibit D hereto are
all the security deposits paid by Tenants under their Leases; (12)
except as set forth in Exhibit D, all Tenants are in possession of
their respective premises and are not more than 30 days in arrears in
payment of fixed rent due under their respective leases, and no Tenant
has contested in a written notice to landlord any amounts payable under
its Lease; and (13) no appraisal or other process provided for in any
Lease has been instituted in writing by Seller or any Tenant to
establish the rental rate payable with respect to any pending extension
or expansion or with respect to any negotiation or appraisal of rent
under any Lease. Except as set forth in Exhibit D, no brokerage
commission, fee or other compensation is payable (or will, with the
passage of time or occurrence of any event or both, be payable), with
respect to any Lease pursuant to any existing agreement which would be
binding on the landlord under such Lease after the Closing Date. True
and complete copies of the agreements (and all amendments thereto)
pursuant to which such brokerage commissions, fees or other
compensation are payable are attached hereto as Exhibit T. There will
not remain in effect after the Closing any exclusive or continuing
brokerage agreements binding on Purchaser as to any of the space
<PAGE>
17
covered by the Leases or as to any space in the Improvements. As of the
Closing Date, no actual or pending claims or rights exist or may accrue
against Seller and which will be binding on Purchaser for any brokerage
commission, fee or other compensation in respect of all or any portion
of the Improvements that is subject to a Lease.
5.1.3.2 No management commission, fee or
other compensation will be payable by Purchaser from and after the
Closing Date with respect to the management of the Real Property prior
to the Closing Date.
5.1.3.3 To the best of Seller's knowledge,
the documents listed on Exhibit L hereto are all of the Licenses
(including all amendments, modifications, supplements and extensions
thereof) and Seller has not received any written notice from any
Governmental Authority that Seller is in default under or has breached
any of the Licenses. No representation is made as to the
transferability of such licenses. Attached hereto as Exhibit M is a
true, correct and complete copy of the current certificate of occupancy
for the Improvements.
5.1.3.4 Seller has no patents, registered
trademarks or registered trade names which are used by Seller with
respect to the Real Property.
Section 5.2 Survival of Seller's Representations and
Warranties. At Closing, Seller shall deliver to Purchaser a certificate of the
Seller which will confirm that its warranties and representations contained in
this Agreement are in all material respects true and correct as of the date of
the Closing (to the best of Seller's
<PAGE>
18
knowledge, where so specified above and limited to the time period described
above, where so specified). Seller's representations and warranties shall not
survive the Closing except as follows: (i) the representations and warranties
contained in Sections 5.1.1.5., 5.1.2.1, 5.1.2.3-13 and 5.1.3.1-4 shall survive
the Closing, provided that Purchaser shall be deemed to have irrevocably waived
any claim with respect thereto as to which Purchaser has not given Seller
written notice within a period of one (1) year after the Closing Date, and (ii)
the representations and warranties contained in subsections 5.1.1.1-4 shall
survive indefinitely, subject to the statute of limitations.
Section 5.3 Purchaser's Representations, Warranties and
Covenants. In order to induce Seller to enter into this Agreement, Purchaser
hereby represents and warrants to and covenants with Seller as follows:
5.3.1 Purchaser is a real estate investment trust
duly organized, validly existing and in good standing under the laws of the
State of Maryland. Purchaser has full right, power and authority to enter into
and perform its obligations under this Agreement and the other instruments and
documents contemplated herein to be executed and performed by it. The execution
and delivery of this Agreement and such other instruments and documents and the
consummation of the transactions contemplated hereby and thereby (1) have been
duly authorized by all necessary action on the part of the Purchaser, (2) do not
require any consent or approval of or notice to any Governmental Authority, and
(3) will not result in the breach of any agreement, indenture or other
instrument to which Purchaser is a party
<PAGE>
19
or is otherwise bound. Further, this Agreement constitutes the valid and binding
obligation of Purchaser.
5.3.2 At Closing, Purchaser shall deliver to Seller a
certificate of the Purchaser which will confirm that its warranties and
representations contained in this Agreement are in all material respects true
and correct as of the date of the Closing. Purchaser's representations and
warranties contained in Section 5.3.1 shall survive the Closing indefinitely,
subject to the statute of limitations.
5.3.3 Prior to the Closing, Purchaser shall not,
without the prior written consent of Seller, enter into any New Lease (as
defined below), nor shall Seller solicit or entertain inquiries with respect to
the leasing of space in the Improvements.
Section 5.4 Seller's Covenants.
5.4.1 Seller agrees that between the date hereof and
the Closing Date it shall continue to operate the Real Property and the Personal
Property in substantially the same manner it has been operated prior to the date
hereof. Such normal operation by Seller shall include, without limitation, the
maintenance by Seller of Seller's usual books and records and compliance by
Seller with its obligations as Landlord under the Leases, subject to the express
provisions of this Agreement.
5.4.2 Seller covenants and agrees that from and after
the date of this Agreement until the Closing Date or earlier termination of this
Agreement:
5.4.2.1 Except as otherwise provided in
Section 5.4.2.8 below, Seller will not, without the prior written
consent of Purchaser, enter into
<PAGE>
20
any new employment, service or maintenance agreements relating to the
Property or renew or extend any Contracts, unless such new agreements
and such Contracts, as renewed or extended, will be cancelable by
Purchaser on not more than thirty (30) days prior notice without any
costs for such cancellation.
5.4.2.2 The insurance policies described on
Exhibit I (or substantially similar substitute polices and with
companies of similar or better financial strength) shall be maintained
in full force and effect.
5.4.2.3 Seller will not sell, encumber or
grant any interest in the Property or any part thereof or interest
therein.
5.4.2.4 Seller will not, without the prior
written consent of Purchaser, enter into any new Lease, permit
occupancy of space on the Real Property which is presently vacant or
which may hereafter become vacant or extend or renew any of the Leases
(collectively, a "New Lease").
5.4.2.5 Seller will not terminate or accept
a surrender of any Lease which is not in default or modify, cancel, or
amend any Lease, or release any Tenant from liability under any Lease
without the prior written consent of Purchaser.
5.4.2.6 Seller will not initiate any action
to alter or amend the zoning classification of the Real Property, or
otherwise intentionally perform any act or deed which shall diminish,
encumber or affect Purchaser's rights in and to the Property or prevent
Seller from performing fully its obligations hereunder.
<PAGE>
21
5.4.2.7 Seller shall not solicit or
encourage directly or indirectly (including solicitation or
encouragement by any broker retained by Seller), inquiries or proposals
with respect to, furnish any information relating to, or participate in
any negotiation concerning any proposal for the sale of the Real
Property or the Property.
5.4.2.8 Seller shall not enter into any new
management agreement relating to the Real Property (and shall cancel or
cause the cancellation as of the Closing Date of any existing
management agreement relating to the Real Property.)
5.4.2.9 Seller shall, upon learning of any
material change in any condition with respect to the Property or of any
event or circumstance which makes any representation or warranty of
Seller to Purchaser under this Agreement untrue or misleading, promptly
notify Purchaser thereof.
5.4.3 From and after the date of this Agreement,
Seller will defend or will cause its insurance carrier to defend any claims
resulting from Seller's alleged breach of any contractual obligation of Seller
(including without limitation, any of the Leases) and any tort claims with
respect to the Real Property or the Property which arose before the Closing Date
so that Purchaser will have no liability with respect to such claims for any
loss, costs or damages in connection therewith, including litigation costs and
expenses.
5.4.4 Seller shall remove or comply with any
violations of law or municipal ordinances, or orders or requirements noted or
issued by any
<PAGE>
22
Governmental Authority against or affecting the Real Property prior to the date
hereof; provided, however, that if such removal or compliance has not been
completed prior to the Closing, Purchaser shall receive at the Closing a credit
against the Purchase Price in an amount to be agreed upon by Seller and
Purchaser to cover the reasonably estimated unpaid cost to effect or complete
such removal or compliance, and Purchaser shall be required to accept title to
the Real Property or the Personal Property subject thereto. Notwithstanding the
foregoing, Purchaser shall have the right to adjourn the Closing in the event
that Seller has failed to remove or comply with any of the aforementioned
matters if the reasonably estimated unpaid cost to effect or complete such
removal or compliance is greater than $500,000 until such time as Seller removes
or complies with such matters to the extent that the reasonably estimated unpaid
cost to effect or complete such removal or compliance with respect to such
matters is less than $500,000, at which time the Closing shall occur within
three (3) business days notice by Seller to Purchaser, provided Seller shall, at
such time, provide Purchaser with evidence reasonably satisfactory to Purchaser
of such removal or compliance. Notwithstanding the foregoing, violations which a
Tenant in occupancy is required to remove or comply with pursuant to the terms
of its Lease, may not be asserted by Purchaser as objections to title and Seller
shall have no obligation to remove the same.
Section 5.5 As Is. Purchaser is purchasing the Property "as
is" and in its present condition, subject to reasonable use, wear, tear and
natural deterioration between the date hereof and the Closing, without any
reduction in the Purchase Price for any such change in such condition by reason
thereof subsequent to the date hereof.
<PAGE>
23
Purchaser acknowledges that in entering into this Agreement Purchaser has made
such examination of the Property, the operation, income and expenses thereof and
all other matters affecting or relating to this transaction as Purchaser has
deemed necessary. In entering into this Agreement, Purchaser has not been
induced by and has not relied upon any representations, warranties or
statements, whether express or implied, made by Seller or any agent, employee or
other representative of Seller or by any other person purporting to represent
Seller, which are not expressly set forth in this Agreement, whether or not any
such representations, warranties or statements were made in writing or orally.
Article 6
Closing
Section 6.1 Conditions to Purchaser's Obligations to Close.
The obligation of Purchaser to close under this Agreement and to pay the
Purchase Price shall be subject to the fulfillment on and as of the Closing Date
of all of the following conditions (in addition to any other conditions to
Purchaser's obligations under this Agreement which are set forth elsewhere
herein):
6.1.1 Seller shall have delivered to Purchaser all of
Seller's Closing Documents provided for in Section 6.6 hereof.
6.1.2 All of the representations and warranties of
Seller contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as if the same were made on and effective
as of such date.
<PAGE>
24
6.1.3 Seller shall have performed and observed, in
all material respects, all covenants, agreements and conditions of this
Agreement to be performed and observed by Seller as of the Closing Date.
Purchaser shall have the right, at its election, at or prior to the Closing by
notice to Seller, to waive the fulfillment of any condition precedent to
Purchaser's obligation to close hereunder and by effecting the Closing,
Purchaser shall be deemed to have waived any such condition not then fulfilled.
Nothing contained in the preceding sentence, however, shall limit, constitute a
waiver or otherwise affect the liability of Seller with respect to any
covenants, indemnities, warranties and representations which survive the Closing
pursuant to the terms hereof.
6.1.4 All management agreements relating to the Real
Property shall have been cancelled.
6.1.5 Seller shall have provided evidence reasonably
satisfactory to Purchaser and the Title Insurer that Seller's execution and
delivery of this Agreement and the instruments executed and delivered pursuant
hereto have been duly authorized by all necessary action on the part of Seller.
6.1.6 No action shall be pending or threatened with a
condemnation or taking by power of eminent domain of all or any material portion
of the Real Property.
6.1.7 Shall have delivered to Purchaser an unaudited
financial statement (prepared by extrapolation from an audited statement
covering other properties as well as the Real Property) for the Real Property
with respect to the 1996
<PAGE>
25
calendar year and the period beginning January 1, 1997 and ending on the last
day of the most recent calendar month prior to the Closing Date which ends at
least 15 days prior to the Closing Date, such financial statements to be in form
and substance reasonably acceptable to Purchaser.
Section 6.2 Conditions to Seller's Obligations to Close. The
obligation of Seller to close under this Agreement shall be subject to the
fulfillment on or before the Closing Date of all of the following conditions (in
addition to any other conditions to Seller's obligations under this Agreement
which are set forth in this Agreement):
6.2.1 Purchaser shall have delivered to Seller all of
the items required to be delivered to Seller pursuant to Section 6.6 hereof, and
the Escrow Agent shall pay the Earnest Money Deposit to Seller.
6.2.2 All of the representations and warranties of
Purchaser contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as if the same were made on and effective
as of such date.
6.2.3 Purchaser shall have performed and observed, in
all material respects, all covenants, agreements and conditions of this
Agreement to be performed or observed by Purchaser as of the Closing Date.
Seller shall have the right, at its election at or prior to the Closing by
notice to Purchaser, to waive the fulfillment of any condition precedent to
Seller's obligation to close hereunder and by effecting the Closing, Seller
shall be deemed to have waived any such condition not then fulfilled. Nothing
contained in the preceding sentence, however, shall limit, constitute a waiver
or otherwise affect the liability of Purchaser with respect to any
<PAGE>
26
covenants, warranties, representations or indemnities which survive the Closing
pursuant to the terms hereof.
6.2.4 Purchaser shall have provided evidence
reasonably satisfactory to Seller that Purchaser's execution and delivery of
this Agreement and the instruments executed and delivered pursuant hereto have
been duly authorized by all necessary action on the part of Purchaser.
Section 6.3 Escrow and Closing.
6.3.1 Prior to the date hereof, Purchaser and Seller
have caused an escrow to be opened by the Escrow Agent for the purpose of
holding the Earnest Money Deposit. The Earnest Money Deposit shall be held in
escrow by Escrow Agent until (a) the Closing, upon which event the Earnest Money
Deposit shall be delivered to Seller; (b) five (5) business days after Escrow
Agent shall have given Seller or Purchaser notice that it has received a written
notice sent by the other party to this Agreement stating that this Agreement has
been terminated and that the party so notifying Escrow Agent is entitled to the
Earnest Money Deposit, following which period the Earnest Money Deposit shall be
(i) delivered to Seller, in the case of a notice from Seller stating that Seller
is entitled to the Earnest Money Deposit, or (ii) delivered to Purchaser, in the
case of a notice from Purchaser stating that Purchaser is entitled to the
Earnest Money Deposit, provided that within such five (5) business day period
Escrow Agent does not receive either a notice containing contrary instructions
from the other party hereto or a court order restraining payment of the Earnest
Money Deposit; or (c) a joint notice is received from Seller and Purchaser, in
<PAGE>
27
which event Escrow Agent shall deliver the Earnest Money Deposit or the proceeds
thereof in accordance with the instructions therein contained. The Earnest Money
Deposit shall be invested by Escrow Agent in an interest bearing money market or
bank account at Citibank, N.A. or any other member bank of the New York
Clearinghouse Association, but Escrow Agent shall not be liable for any failure
to do so or for any loss incurred by reason of any such investments. Interest
earned on the Earnest Money Deposit shall be credited to Purchaser at the
Closing.
6.3.2 In the event that (i) Escrow Agent shall have
received a notice containing conflicting instructions as provided for in Section
6.3.1 hereof and within the time therein prescribed, or a court order
restraining payment of the Earnest Money Deposit or under the Letter of Credit
or (ii) any other disagreement or dispute shall arise between the parties hereto
resulting in adverse claims or demands being made upon Escrow Agent for the
Earnest Money Deposit or the Letter of Credit or the proceeds thereof, whether
or not litigation has been instituted, then and in any such event Escrow Agent
shall refuse to comply with any claims or demands on it and continue to hold the
Earnest Money Deposit or the Letter of Credit or the proceeds thereof, until
Escrow Agent receives either (a) a written notice signed by both Seller and
Purchaser directing the disposition of the Earnest Money Deposit or the Letter
of Credit or the proceeds thereof, or (b) a final order of a court of competent
jurisdiction, entered in a proceeding in which Seller, Purchaser and Escrow
Agent are named as parties, directing the disposition of the Earnest Money
Deposit or the Letter of Credit or the proceeds thereof, in either of which
events Escrow Agent shall then dispose of
<PAGE>
28
the Earnest Money Deposit or the Letter of Credit or the proceeds thereof, in
accordance with said direction. Escrow Agent shall not be or become liable in
any way to any person or entity for its refusal to comply with any such claims
or demands until and unless it has received a direction of the nature described
in (a) or (b) above. Upon the taking by Escrow Agent of any of the actions
described in (a) and (b) above, Escrow Agent shall be released of and from all
liability hereunder except as otherwise expressly provided for herein.
Notwithstanding the foregoing provisions of this Section 6.3.2, Escrow Agent
shall have the following rights in the circumstances described in subsections
(i) and (ii) above: (x) if Escrow Agent shall have received a written notice
signed by either Seller or Purchaser advising that litigation between Seller or
Purchaser over entitlement to the Earnest Money Deposit or the Letter of Credit
or the proceeds thereof has been commenced, Escrow Agent may, on written notice
to Seller and Purchaser, deposit the Earnest Money Deposit or the Letter of
Credit or the proceeds thereof with the Clerk of the court in which such
litigation is pending, or (y) Escrow Agent may, on written notice to Seller and
Purchaser, take such affirmative steps as it may, at its option, elect in order
to terminate its duties as Escrow Agent hereunder, including, but not limited
to, the deposit of the Earnest Money Deposit or the Letter of Credit or the
proceeds thereof with a court of competent jurisdiction and the commencement of
an action for interpleader, the costs thereof to be borne by whichever of Seller
or Purchaser is the losing party, i.e., the party not entitled to the Earnest
Money Deposit or the Letter of Credit or the proceeds thereof. Upon the taking
by Escrow Agent of either of the actions described in (x)
<PAGE>
29
or (y) above, Escrow Agent shall be released of and from all liability hereunder
except for any previous willful misconduct or gross negligence.
6.3.3 Seller and Purchaser understand that Escrow
Agent acts hereunder as depository only and is not responsible in any manner
whatever for the sufficiency, correctness, genuineness or validity of any
instrument delivered to it, or for the form of execution of such instrument or
for the identity, authority or rights of any person(s) executing or delivering
the same or for the terms or conditions of any instrument pursuant to which the
parties may act. Escrow Agent shall not have any liability or obligation for
loss of all or any portion of the Earnest Money Deposit or the Letter of Credit
or the proceeds thereof by reason of the insolvency or failure of the
institution or depositary with which such proceeds are maintained.
6.3.4 Escrow Agent shall not have any duties or
responsibilities except those set forth in this Agreement and shall not incur
any liability in acting upon any signature, notice, request, waiver, consent,
receipt or other paper or document believed by Escrow Agent to be genuine, and
Escrow Agent may assume that any person purporting to give it any notice on
behalf of any party in accordance with the provisions hereof has been duly
authorized to do so. Escrow Agent shall not be liable for any errors in judgment
or for any acts done or omitted by it in good faith, or for any mistakes of fact
or law and is released and exculpated from all liability hereunder except for
willful misconduct or gross negligence.
6.3.5 Subject to Section 6.3.2 as to the costs to be
borne by Seller or Purchaser, Seller and Purchaser jointly and severally agree
to reimburse
<PAGE>
30
Escrow Agent for its reasonable costs and expenses, including reasonable
attorneys' fees (either paid to retained attorneys or representing the fair
value of legal services rendered by Escrow Agent to itself), disbursements and
other charges, incurred as a result of any dispute or litigation concerning the
right to the Earnest Money Deposit. Escrow Agent has executed this Agreement
solely to confirm that it is holding and will hold the Earnest Money Deposit in
escrow pursuant to the provisions herein contained and for no other purpose.
6.3.6 Purchaser acknowledges that Escrow Agent is
representing Seller in connection with the sale of the Property pursuant to this
Agreement and agrees that Escrow Agent may continue to represent Seller with
respect thereto and in any dispute arising out of this Agreement or the
documents and instruments contemplated hereby, notwithstanding that Escrow Agent
shall simultaneously be acting as the escrow agent hereunder or in such dispute.
6.3.7 The terms and provisions herein contained shall
create no right in any person, firm or corporation other than Seller and
Purchaser and their respective successors and permitted assigns, and no third
party shall have the right to enforce or benefit from any of the terms and
provisions herein contained.
6.3.8 The closing of the transaction provided for in
this Agreement (the "Closing") will be held at 10:00 a.m. at the offices of
Paul, Weiss, Rifkind, Wharton & Garrison in New York, New York (or at
Purchaser's request, at the offices of Purchaser's lender in New York City, or
at such other place upon which Seller and Purchaser shall agree) on the Closing
Date. Time shall be of the essence as
<PAGE>
31
to each party's obligation to close title to the Property on the scheduled
closing date, as such date may be adjourned as provided in this Agreement.
Notwithstanding the foregoing, the Closing Date may be adjourned by Seller or
Purchaser one or more times to a business day not later than ten (10) days in
the aggregate following the Closing Date, by notice given to the other party at
least two (2) business days prior to the original or previously scheduled
Closing Date.
Section 6.4 Prorations. Each of the following shall be
apportioned between Seller and Purchaser as of 11:59 P.M. Eastern Standard Time
on the day preceding the date of the Closing (the "Adjustment Point") and shall
be documented in a statement (the "Closing Statement") executed and delivered by
Seller and Purchaser:
6.4.1 Rents as and when collected. The word "Rents"
as used in this Section 6.4.1 shall be deemed to include fixed monthly rents as
well as any additional rents (including, without limitation, real estate tax,
cost of living, operating cost and labor wage rate escalations and electric
charges) (the "Additional Rents") payable by Tenants, and the term "costs of
collection" shall mean and include reasonable attorneys' fees and other costs
incurred by Purchaser or Seller in collecting any Rents, but shall not include
the regular fees payable to any managing agent of the Premises, the payroll cost
of any of Purchaser's employees or any other internal costs or overhead of
Purchaser.
(i) Any Rents collected by Purchaser (which,
for purposes of this Section 6.4.1, shall include Rents collected by any
managing agent acting for Purchaser) subsequent to the Closing (whether due and
payable prior to or
<PAGE>
32
subsequent to the Adjustment Point) shall be adjusted as of the Adjustment
Point, and any portion thereof properly allocable to periods prior to the
Adjustment Point, net of costs of the collection properly allocable thereto, if
any, shall be paid by Purchaser to Seller promptly after the collection thereof
by Purchaser, but subject to the further provisions of this Section 6.4.1 in the
case of Rents due prior to the Adjustment Point. Additional Rents shall be
adjusted based on the calendar or fiscal year or other period for which the same
are charged pursuant to each Lease.
(ii) At the Closing Seller shall deliver to
Purchaser a list of all Tenants which are delinquent in payment of Rents as at
the Adjustment Point, which list shall set forth the amount of each such
delinquency, the period to which each such delinquency relates and the nature of
the amount due, itemizing separately fixed monthly rent, escalation charges,
electric charges, charges for tenant services, charges for overtime services and
other charges, if any. The first amounts collected by Purchaser from each
delinquent Tenant, net of costs of collection, if any, shall be deemed to be in
payment of Rents for the month in which the Closing occurs, next in payment of
delinquent Rents (or the specific components of Rents) owed by such Tenant which
are not more than one (1) month in arrears as of the first day of the month in
which the Closing occurs, as set forth in such list, next in payment of Rents
then due on account of any month after the month in which the Closing occurs and
finally in payment of delinquent Rents (or the specific components of Rents)
which are more than one (1) month in arrears as of the first day of the month in
which the Closing occurs, as set forth on such list. Any amounts collected by
Purchaser from
<PAGE>
33
each delinquent Tenant which, in accordance with the preceding sentence, are
allocable to the month in which the Closing occurs (as adjusted as of the
Adjustment Point) or any prior month, net of costs of collection properly
allocable thereto, if any, shall be paid promptly by Purchaser to Seller.
Purchaser shall exert reasonable efforts to bill and collect any delinquencies
and the amount thereof, as, when and to the extent collected by Purchaser, shall
be remitted by Purchaser to Seller, net of costs of collection, if any, promptly
after the collection thereof by Purchaser; provided that Purchaser shall be
deemed to have met its obligation hereunder to bill and collect delinquencies if
it shall have (i) billed such delinquencies and (ii) followed up such billings
with a telephone call to each of the delinquent Tenants.
6.4.2 Taxes, vault charges and sewer rents, if any,
on the basis of the New York City Fiscal Year for which assessed. Prior to the
Closing Date, Seller is hereby authorized to continue any proceeding or
proceedings now pending for the reduction of the assessed valuation of the
Premises, which relate to the New York City Fiscal Year during which the Closing
Date occurs, or any prior New York City Fiscal Year, and to try or settle the
same in Seller's reasonable discretion, provided, however, that (i) any decision
by Seller to settle any such proceeding relating to the New York City Fiscal
Years 1992/93, 1993/94, 1994/95, 1996/97 and/or 1997/98 shall be subject to
approval by Purchaser, in Purchaser's reasonable discretion, and (ii) that the
net refund of taxes, if any, for any tax year for which Purchaser shall be
entitled to share in the refund shall be divided between Seller and Purchaser in
accordance with the apportionment of taxes pursuant to the provisions of this
Section 6.4 after deducting
<PAGE>
34
therefrom a pro rata share of all expenses, including counsel fees, necessarily
incurred in obtaining such refund, the allocation of such expenses to be based
upon the total refund obtained in such proceeding and in any other proceeding
simultaneously involved in the trial or settlement. At the Closing, all of
Seller's interest in any such proceeding for the New York City Fiscal Year
following the year in which the Closing Date occurs shall be transferred to
Purchaser, which shall be substituted for Seller as protesting party or
plaintiff thereunder. Following the Closing Date, Purchaser may try or settle
the aforementioned 1992/93, 1993/94, 1994/95, 1995/96, 1996/97 and 1997/98
proceedings in Purchaser's sole discretion, provided, however, that any decision
to settle any such proceeding relating to the New York City Fiscal Years
1992/93, 1993/94, 1994/95, 1995/96, and 1996/97 shall be subject to Seller's
approval, in Seller's reasonable discretion. Seller agrees to cooperate with
Purchaser in a reasonable manner in any such proceedings following the Closing
Date until such proceedings are settled or otherwise resolved. Each party shall
deliver to the other, upon demand, receipted tax bills and cancelled checks used
in payment of such taxes and shall execute any and all consents or other
documents, and do any act or thing reasonably requested by the other party for
the continuation of such proceedings and the collection of any refund by such
party. In the event that following the Closing Date Purchaser receives any real
estate tax refund on account of the applications previously filed by Seller for
the New York City Fiscal Years 1992/93, 1993/94, 1994/95, 1995/96, 1996/97
and/or 1997/98, such refund amounts, if any, shall be promptly paid over by
Purchaser to Purchaser's managing agent, and Seller and Purchaser shall direct
<PAGE>
35
such person or entity to reimburse the appropriate Tenants their respective
shares of any such amounts and apportion any remaining amounts to Seller and
Purchaser in accordance with the provisions of Section 6.4 of this Agreement.
Seller shall use reasonable efforts to cause any such refunds to be paid to
Purchaser rather than Seller. If, notwithstanding such efforts, any such refund
is paid to Seller, Seller shall reimburse the appropriate Tenants (or pay over
to Purchaser or its managing agent, which shall promptly thereafter reimburse
the appropriate Tenants) their respective shares of such refunds and apportion
any remaining amounts to Seller and Purchaser in accordance with the provisions
of Section 6.4 of this Agreement. The provisions of this Section 6.4.2 shall
survive the Closing.
6.4.3 Utilities, including steam, electricity, water
and gas, except those charges (if any) that Tenants are obligated to pay
directly to the providers of such utilities. Seller shall endeavor to have
meters for such utilities read the day preceding the Closing and agrees to cause
the bills rendered to it on the basis of such readings to be paid. If Seller
does not obtain such a meter reading for any such utility, the adjustment
therefor shall be made on the basis of the most recently issued bill therefor.
If there be water meters on the Premises, Seller shall furnish readings to a
date not more than thirty days prior to the date of Closing, and the unfixed
meter charges and the unfixed sewer rents, if any, based thereon for the
intervening time, except those charges and rents that Tenants are obligated to
pay directly to the utility or governmental authority in question, if any, shall
be apportioned on the basis of such last readings.
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6.4.4 Charges paid or payable under Contracts and
assumed by Purchaser.
6.4.5 Fees for transferable governmental licenses and
permits required for the operation and maintenance of the Premises.
6.4.6 Purchaser shall have the right, upon reasonable
advance notice (which notice may be oral) within the 5 business day period
immediately preceding the Closing, to inspect the supplies at the Property in
order to determine whether the condition set forth in the immediately preceding
sentence has been satisfied. Seller shall have the right to have its
representative present during any such inspection. Seller agrees that
substantially all of the materials and supplies (collectively, "supplies")
listed on Exhibit S annexed hereto shall be located at the Property on the
Closing Date and that title to such supplies shall be transferred to Purchaser
on the Closing Date. Purchaser shall pay the sum of $25,000 to Seller at the
Closing in full consideration for such supplies. In the event the supplies
located at the Property at the Closing Date are substantially the same as those
listed on Exhibit S, the aforesaid $25,000 amount shall be equitably redeemed at
the Closing.
6.4.7 Deposits, if any, made by Seller with utility
companies or governmental agencies in respect of the Premises which will inure
to the benefit of Purchaser subsequent to the Closing.
6.4.8 Any other items which are customarily
apportioned upon the sale of an office building similar to the Real Property in
New York City.
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6.4.9 All accrued wages and benefits (including,
without limitation, accrued vacation pay) of the employee referred to in Section
5.1.2.5 hereof who will be employed by Seller shall be paid (or caused to be
paid) by Seller at or prior to the Closing, or to the extent not so paid, all
unpaid amounts shall be allowed to Purchaser as a credit at Closing, and
Purchaser will be responsible for payment thereof to such employees.
Notwithstanding anything to the contrary contained in this
Section 6.4, Seller has given permission to Accessory Network to sublet all of
the Premises demised to it under its Lease with Seller in return for a cash
payment equal to $500,000. This amount is to be paid directly by Accessory
Network to Seller notwithstanding the fact that this payment is not due and
payable by Accessory Network until October, 1997, and if for any reason
collected by Purchaser, shall be immediately remitted by Purchaser to Seller.
The provisions of this Section 6.4 shall survive the Closing.
Section 6.5 Closing Costs.
6.5.1 Seller agrees to pay and indemnify Purchaser in
respect of the following expenses in respect to the transactions contemplated by
this Agreement: (a) New York State and City transfer taxes payable in respect of
this transaction; (b) Seller's legal fees; (c) the commission due Seller's
Broker; and (d) one-half of any sales tax imposed with respect to the supplies
referred to in Section 6.4.6.
6.5.2 Purchaser agrees to pay and indemnify Seller in
respect of the following fees and expenses in respect to the transaction
contemplated by this Agreement: (a) the cost of all engineering, environmental
and other reports and
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studies of the Premises ordered by Purchaser or its authorized representative;
(b) Purchaser's legal fees; (c) sales tax, if any, payable by reason of the sale
of the personal property (other than the supplies referred to in Section 6.4.6)
included in this sale (the parties agreeing, however, that no portion of the
Purchase Price is allocable to personal property); (d) one-half of any sales tax
imposed with respect to the supplies referred to in Section 6.4.6; (e) survey
costs; (f) the premium on the title insurance policy issued by the Title
Company; and (g) all recording and filing fees or charges payable on account of
the recording of the deed delivered in connection with this Agreement.
6.5.3 The provisions of this Section 6.5 shall
survive the Closing or any termination of this Agreement.
Section 6.6 Closing Deliveries.
6.6.1 Seller shall deliver at Closing the following
documents ("Seller's Closing Documents"):
6.6.1.1 A bargain and sale deed without
covenant against grantor's acts with respect to the Real Property in
the form attached hereto as Exhibit F-4, together with a duly executed
NYS Form TP-584, and such other completed transfer declarations, tax
returns and affidavits with respect to such deed as may be required for
recordation of the deed by state, county or local law, if any;
6.6.1.2 A bill of sale from Seller
evidencing the sale of the Personal Property, if any, in the form of
Exhibit F-1;
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6.6.1.3 An assignment of the Contracts,
Licenses, Utility Deposits and Intangible Property, if any, from Seller
in the form of Exhibit F-2;
6.6.1.4 A certificate of Seller confirming
the continued accuracy of the warranties and representations made by
Seller in this Agreement as required by Section 5.2;
6.6.1.5 Estoppel letters, dated not earlier
than thirty (30) days prior to the Closing Date, from all of the
Tenants of the Building, such estoppel letters to be in substantially
the form annexed hereto as Exhibit J; provided, however, that if any
Lease provides for the form or content of an estoppel letter, Purchaser
shall accept an estoppel letter as called for in such Lease. Seller
will request, and use reasonable efforts to obtain, on or before the
Closing Date, from the Tenants under the Leases, estoppel letters in
substantially the form annexed hereto as Exhibit J;
6.6.1.6 A letter to Tenants advising them
(i) of the change in ownership of the Property, (ii) the amount of
their security deposit and any prepaid rent that has been delivered to
Purchaser, and the name of the banking institution in which such
deposits will be maintained following the Closing, (iii) directing them
to pay rent to Purchaser or as Purchaser may direct, and (iv) directing
them to deliver to Purchaser or as Purchaser may direct, an insurance
certificate in the form required under such Tenant's Lease for the
benefit of Purchaser;
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40
6.6.1.7 A letter to all parties (other than
Seller) to the Contracts advising them of the change in ownership of
the Property.
6.6.1.8 Appropriate evidence of Seller's
right, power and authority to sell the Property to Purchaser on the
terms and conditions of this Agreement as Purchaser or the Title
Insurer may reasonably require;
6.6.1.9 An affidavit executed on behalf of
Seller providing Seller's taxpayer identification number and a
statement that Seller is not a foreign person within the meaning of
Section 1445(f)(3) of the Internal Revenue Code, as amended;
6.6.1.10 A complete set of all keys and
magnetic pass cards to the Improvements, appropriately tagged for
identification, to the extent in Seller's possession or control;
6.6.1.11 To the extent in Seller's or the
Seller's managing agent's possession or control, and not already
delivered, (a) the maintenance records for the Property, (b) all
original licenses and permits, authorizations and approvals which are
currently in force pertaining to the Real Property or the Personal
Property, (c) the standard form of lease used in the building, together
with a computer diskette therefor, if available, and (d) all guarantees
and warranties which are currently in force and which Seller has
received in connection with any work or services performed or equipment
installed in and to Improvements;
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41
6.6.1.12 True and complete originals of the
Leases and all files with respect thereto, together with copies of
Seller's abstracts and other data in Seller's or the Seller's managing
agent's possession necessary for the preparation of bills for rent
escalations and other Tenant charges;
6.6.1.13 An instrument duly executed and
acknowledged by Seller, in which Seller assigns to Purchaser all of
Seller's right, title and interest as landlord in, to and under the
Leases in the form of Exhibit F-3;
6.6.1.14 To the extent in Seller's or the
Seller's managing agent's possession or control, the originals of the
Property Documents and in all other instances copies thereof;
6.6.1.15 The Tenant security deposits held
by Seller pursuant to the Leases, including, without limitation, the
Letters of Credit listed on Exhibit R. Seller will cooperate with
Purchaser to cause such Letters of Credit to be transferred to
Purchaser as soon as possible after the Closing, and as to any of such
Letters of Credit which are not transferable to Purchaser as of right,
Seller will take such steps as Purchaser may reasonably request to
cause the transfer thereof to Purchaser and/or to make the proceeds
thereof available to Purchaser following a default by the Tenant in
question. Any transfer fees charged by the issuing banks shall be the
responsibility of Purchaser.
6.6.1.16 Such other and further customary
instruments and documents as Seller's counsel and Purchaser's counsel
may reasonably
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42
require to evidence and conclude the transaction contemplated by this
Agreement;
6.6.1.17 A duly executed Closing Statement;
6.6.1.18 The amounts, if any, required to be
paid to Purchaser pursuant to the Closing Statement; and
6.6.1.19 A counterpart of the agreement
referred to in Section 6.6.2.8.
6.6.2 Purchaser shall deliver at Closing the
following items:
6.6.2.1 The balance of the Purchase Price.
6.6.2.2 A duly executed Closing Statement;
6.6.2.3 Counterpart copies of any of
Seller's Closing Documents which require execution by Purchaser;
6.6.2.4 A certificate confirming the
continued accuracy of the warranties and representations made by
Purchaser in this Agreement as required by Section 5.3;
6.6.2.5 A statement from Purchaser's counsel
required by Section 6045 of the Internal Revenue Code, as amended, if
required by law;
6.6.2.6 The amounts, if any, required to be
paid to Seller pursuant to the Closing Statement;
6.6.2.7 Such other and further customary
instruments and documents as Seller's counsel and Purchaser's counsel
may reasonably
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43
require to evidence and conclude the transaction contemplated by this
Agreement; and
6.6.2.8 An agreement in form and substance
reasonably satisfactory to Seller, permitting Seller, at no cost, to
store files and other items in certain agreed upon storage space in the
basement of the Property until November 1, 1997.
Section 6.7 Access to Records.
6.7.1 Purchaser agrees that (i) all records and files
delivered to Purchaser by Seller pursuant to this Agreement will be preserved by
Purchaser, its successors and assigns, for a period of three (3) years
subsequent to the Closing and (ii) Seller may have access to such records and
files from time to time after the Closing during normal business hours and upon
reasonable prior notice to Purchaser at the place in the continental United
States where such records are maintained by Purchaser.
6.7.2 Seller agrees that (i) Seller, its successors
and assigns, will preserve such records and files with respect to the Property
that it is not required to deliver to Purchaser on the Closing Date for a period
of three (3) years subsequent to the Closing at a location in the City of New
York, State of New York and (ii) Purchaser may have access to such records and
files from time to time after the Closing during normal business hours and upon
reasonable prior notice to Seller.
Section 6.8 Survival. The provisions of this Article 6 shall
survive the Closing.
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44
Article 7
Brokerage
Each party represents and warrants to the other that, except
for the Purchaser's Broker and the Seller's Broker, it has dealt with no broker
or finder with respect to this Agreement. Each party hereby indemnifies and
agrees to save, defend and hold the other party harmless from and against any
loss, cost, damage, claim, liability or expense, including reasonable attorneys'
fees and litigation costs, suffered or incurred as a result of its breach of the
foregoing representation and warranty. Seller shall pay any commission, fee, or
other charge for services due to Seller's Broker pursuant to a separate
agreement and Seller shall hold Purchaser harmless from and against the payment
of any such amount. Purchaser shall pay any commission, fee or other charge for
services due to Purchaser's Broker pursuant to a separate agreement and
Purchaser shall hold Seller harmless from and against the payment of any such
amount. The provisions of this Article 7 will survive the termination of this
Agreement or the Closing.
Article 8
Casualty and Condemnation
Section 8.1 Seller and Purchaser waive the provisions of all
applicable laws relating to the occurrence of a casualty or condemnation between
the date hereof and the Closing, and Seller and Purchaser agree that the
provisions of this Article 8 shall govern in lieu thereof.
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45
Section 8.2 If the Improvements shall hereafter be destroyed
or damaged in whole or in part by fire or other cause, or if the Real Property
be taken in whole or in part by right of eminent domain or by condemnation, the
obligations of the parties hereunder shall continue unaffected by reason of any
such damage, destruction or taking and the transaction contemplated by this
Agreement shall be fully consummated in accordance with the terms hereof without
any reduction or abatement in the Purchase Price or any credit or allowance
against the same, except as expressly provided for in Section 8.3 and 8.4
herein. Seller covenants and agrees that it will give Purchaser prompt notice of
any casualty, condemnation or threatened condemnation.
Section 8.3 If prior to the Closing Date a Material Part (as
defined below) of the Improvements is damaged or destroyed by fire or other
cause or a Material Part of the Real Property is taken by right of eminent
domain or condemnation, Purchaser may, by written notice given to Seller at or
prior to the Closing, cancel this Agreement, whereupon this Agreement shall
terminate, and neither party shall have any further rights or liabilities
against or to the other except for those that specifically survive the
termination hereof and the parties shall direct the Escrow Agent to return the
Earnest Money Deposit to Purchaser. For the purposes of this Article 8, a
"Material Part" shall mean (i) damage or destruction (A) the cost of repair of
which shall exceed Two Million Dollars ($2,000,000), or (B) which would permit
Tenants occupying five percent (5%) or more of the rentable space in the
Improvements to cancel their Leases, or (ii) a taking of (A) five percent (5%)
or more of the rentable square footage in the Improvements, or (B) a taking
which would permit
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46
Tenants occupying five percent (5%) or more of the rentable space in the
Improvements to cancel their Leases, or (C) a permanent taking which would
materially impede access to the Improvements.
Section 8.4 If prior to the Closing Date (i) an immaterial
part of the Improvements is damaged or destroyed in whole or in part by fire or
other cause, (ii) an immaterial part of the Real Property is taken by right of
eminent domain or by condemnation or eminent domain, (iii) a Material Part of
the Improvements is damaged or destroyed in whole or in part by fire or other
cause and Purchaser has not canceled this Agreement in accordance with the
provisions of Section 8.3 above or (iv) a Material Part of the Real Property is
taken by eminent domain or condemnation and Purchaser has not canceled this
Agreement in accordance with Section 8.3 above, then Seller as its sole
obligation shall (i) remit to Purchaser an amount equal to the net proceeds of
any fire insurance and condemnation award actually received by Seller (the term
"net proceeds" as used in this paragraph to mean such proceeds reduced by (a)
the reasonable cost of collection and (b) the cost of any repairs effected by or
on behalf of Seller with Purchaser's consent, which consent shall not be
unreasonably withheld or delayed, or without Purchaser's consent (with respect
to repairs of an emergency nature)) and (ii) if any such proceeds have not been
received by Seller, transfer and assign to Purchaser, without recourse, all of
Seller's right, title and interest in and to any insurance and condemnation
proceeds payable to Seller, and there shall be no abatement or credit on account
of the Purchase Price and no duty or obligation on Seller to repair or restore
any damage or to make any repairs by reason of such fire,
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47
casualty or taking, except that if the amount of any such proceeds is equal to
less than the cost to repair or restore any damage by reason of any such fire,
casualty or taking, as reasonably determined by Purchaser and Seller, then
Purchaser shall receive at Closing a credit on account of the Purchase Price in
an amount equal to any deductible(s) related thereto. If any such casualty
results in a loss of rental income which continues after the Closing, Seller
will use reasonable efforts to assign to Purchaser its rental value insurance
covering such loss (and an adjustment shall be made between the parties to cover
the premium for the period following the Closing); but Seller does not represent
that its insurer will honor such assignment, or that the proceeds thereof for
periods after the Closing will be paid by the insurer to Purchaser. Adjustment
of any insurance or condemnation claim to be paid prior to the Closing shall be
conducted jointly by Seller and Purchaser. In the event of an assignment of all
insurance claims as provided for above, Purchaser shall receive at Closing a
credit against the Purchase Price in an amount equal to any deductible(s) and
uninsured amounts.
Article 9
Defaults
Section 9.1 Purchaser's Default. In the event that Purchaser
defaults under this Agreement and the Closing does not occur as the result
thereof, Seller shall, as its sole and exclusive remedy, retain the Earnest
Money Deposit as liquidated and agreed damages for such default by Purchaser,
whereupon neither party hereto shall have any further obligations to the other
under this Agreement; provided, however,
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48
that neither party shall be released from its obligations which specifically
survive the termination of this Agreement.
Section 9.2 Seller's Default. If Seller shall, as a result of
circumstances beyond Seller's reasonable control, be unable to perform its
obligations under this Agreement, Purchaser's sole remedy shall be to terminate
this Agreement by notice to Seller, in which event Seller's sole responsibility
shall be to cause the Escrow Agent to return to Purchaser the Earnest Money
Deposit made by Purchaser upon the execution of this Agreement, together with
the interest earned thereon, and thereupon, both parties shall be released of
all obligations and liability under this Agreement, except for those matters
that expressly survive any termination of this Agreement. The foregoing shall
not be deemed to relieve Seller from the consequences of a default by Seller
hereunder as a result of circumstances other than circumstances beyond Seller's
reasonable control, in which event Purchaser shall be entitled to seek either
(i) the return of the Earnest Money Deposit, together with the interest earned
thereon, or (ii) specific performance of the obligations of Seller hereunder;
provided that in no event shall Purchaser have the right to seek money damages
for such claimed default by Seller. The rights granted Purchaser in this Section
9.2 shall be exclusive in the event of Seller's failure or inability to perform
its obligations hereunder.
Section 9.3 Delivery of Earnest Money Deposit in the Event of
a Default. In any case where either party is entitled to receive the Earnest
Money Deposit hereunder due to a default by the other party to this Agreement
(or as otherwise provided in this Agreement), the parties agree to give the
Escrow Agent
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49
prompt written instructions to deliver the Earnest Money Deposit to the party
entitled thereto.
Article 10
Miscellaneous
Section 10.1 Indemnification.
10.1.1 Seller agrees to indemnify, defend and hold
harmless Purchaser, its successors and assigns from and against any and all
claims, liabilities and expenses (including without limitation, reasonable
attorneys' fees and disbursements) of any nature whatsoever suffered or incurred
by Purchaser, its successors and assigns (except for amounts for which Purchaser
received a proration credit under this Agreement) arising out of (i) any of
Seller's obligations, duties or liabilities in connection with the Property
prior to the Closing Date and (ii) a breach of any of the representations and
warranties which survive the Closing pursuant to Section 5.2, provided that
Purchaser gives Seller written notice of any such claimed breach within the
period that such representation or warranty survives the Closing, as provided in
Section 5.3.
10.1.2 Purchaser agrees to indemnify, defend and hold
harmless Seller, its successors and assigns (except for amounts for which Seller
received a proration credit under this Agreement) from and against any and all
claims, liabilities and expenses (including without limitation, reasonable
attorneys' fees and disbursements) of any nature whatsoever suffered or incurred
by Seller, its successors or assigns arising out of (i) any obligations, duties
or liabilities on the Purchaser's part
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50
to be performed in connection with the Property on and subsequent to the Closing
Date, and (ii) a breach of any representations and warranties which survive the
Closing pursuant to Section 5.3, provided that Seller gives Purchaser written
notice of any such claimed breach within the period that such representation or
warranty survives the Closing, as provided in Section 5.2.
Section 10.2 Assurances Of Cooperation. The parties hereby
covenant and agree that they will at any time prior to and after the Closing and
from time to time, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered all such further acts, documents and
instruments as may reasonably be required by the other party in order to carry
out fully and effectuate the transactions herein contemplated in accordance with
the provisions of this Agreement.
Section 10.3 Successors And Assigns. This Agreement shall be
binding in all respects on and shall inure to the benefit of the Seller and
Purchaser and their respective successors and assigns. Seller may not assign its
interests under this Agreement. Purchaser may assign its interests under this
Agreement to an entity which controls, is controlled by, or is under common
control with, Purchaser; provided that (i) Purchaser provides Seller with prior
notice of any such assignment and evidence to Purchaser's reasonable
satisfaction that the assignee is in fact an entity which controls, is
controlled by, or is under common control with, Purchaser and (ii) that upon
Purchaser's assignment the assignee assumes in writing, for Seller's benefit,
all liabilities of Purchaser under this Agreement and reaffirms all of the
representations and warranties contained in Section 5.3 hereof with respect to
the assignee, except that the
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51
representations and warranties may be appropriately modified in the event the
assignee is a limited partnership, a limited liability company or corporation,
and a counterpart of such assignment and assumption is delivered to Seller.
Following any such assignment made with Seller's consent, Purchaser named herein
shall be released of any further liability hereunder. This Agreement is made for
the sole and exclusive benefit of the parties hereto and their respective
successors and assigns; no third party is intended to have or shall have any
rights under this Agreement.
Section 10.4 Interpretation.
10.4.1 This Agreement represents the entire agreement
between the parties hereto and shall not be modified or affected by any offer,
proposal, statement or representation, oral or written, made by or for either
party in connection with the negotiation of the terms hereof. No future
modification, termination or amendment of this Agreement may be made, except by
written agreement executed by the parties hereto.
10.4.2 No failure by the parties hereto to insist
upon the strict performance of any covenant, duty, agreement or condition of
this Agreement or to exercise any right or remedy upon a breach thereof shall
constitute a waiver of any such right or remedy or any other covenant,
agreement, term or condition. Any party to this Agreement may by written notice
waive any of its rights or any conditions to its obligations hereunder, or any
duty, obligation or covenant of any other party hereto.
10.4.3 If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent,
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52
the remainder of this Agreement and the application of such provision to other
persons or circumstances shall not be affected thereby and shall be enforced to
the fullest extent permitted by law.
10.4.4 Use of the terms "include," "including," or
"includes," followed by specific examples shall not be deemed to limit the
object of the reference to the specific examples.
10.4.5 The masculine, feminine or neuter pronouns
used herein shall be interpreted without regard to gender, and the use of the
singular or plural shall be deemed to include the other whenever the context so
requires. The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of
this Agreement.
10.4.6 The validity, construction and enforceability
of this Agreement shall be governed in all respects by the laws of the State of
New York, without regard to its conflict of laws rules.
10.4.7 All provisions of this Agreement which are
expressly stated to survive the Closing, shall not merge with, be extinguished
or otherwise affected by any of the closing documents.
Section 10.5 Joint Cooperation. Upon obtaining knowledge of
any event which could give rise to a claim of indemnity under this Agreement,
the party seeking indemnification shall promptly notify the other party of that
event. If such claim or demand relates to a claim or demand asserted by a third
party, the indemnifying party shall have the right, at its expense, to employ
counsel reasonably
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53
acceptable to the indemnified party, except that in the case of a claim covered
by insurance, maintained by the indemnifying party, counsel designated by the
insurance company of the indemnifying party shall be deemed acceptable, and the
indemnified party shall have the right, but not the obligation, to participate
in the defense of any such claim or demand. So long as the indemnifying party is
defending such claim or demand in good faith, the indemnified party will pay its
own attorney fees for participating in such defense and will not settle such
claim or demand without the indemnifying party's consent. The indemnified party
shall make available to the indemnifying party all records and other materials
reasonably required by it in contesting a claim or demand asserted by a third
party against the indemnified party and shall cooperate in the defense thereof.
The parties shall make their records avail able to each other to the extent
required to comply with any audit or other review of a party's records or tax
returns by a governmental agency.
Section 10.6 Publicity. Neither Purchaser nor Seller shall
announce or disclose publicly the terms or provisions hereof without the prior
written approval of the other party, except as such disclosure may be required
by law and except that this provision shall not prohibit either party from
disclosing such terms or provisions to its attorneys, accountants, lenders,
bankers, financial advisors, investors or any other advisor or consultant.
Neither Seller nor Purchaser shall record this Agreement or any evidence thereof
in the public records of the county in which the Real Property is located.
Simultaneously with the execution of this Agreement, Seller shall deliver a
letter to Seller's Broker and Purchaser shall deliver a letter to Purchaser's
Broker
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54
requesting that each such Broker not announce or disclose the terms or
provisions hereof without the prior written approval of Seller and Purchaser and
shall use reasonable efforts to obtain such agreement from each of their
Brokers.
Section 10.7 Notices. All elections, notices and other
communications to be given hereunder by either party to the other shall be in
writing and sent by personal delivery, reliable overnight courier with evidence
of receipt, or by facsimile transmission (commonly known as "fax") (with
confirmation by one of the other methods of notice), addressed:
If to Seller: 7 West Associates LLC
c/o Devon Properties
One Penn Plaza - 40th Floor
New York, NY 10119
Attention: Joseph R. Wenk
Fax No.: (212) 971-9283
with a copy to
Seller's Counsel: Joseph E. Browdy, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Fax No.: (212) 373-2042
If to Purchaser: Health and Retirement Properties Trust
400 Centre Street
Newton, MA 02158
Attention: David J. Hegarty
Fax No.: (617) 332-2261
with a copy to
Purchaser's
Counsel: Jennifer B. Clark, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Fax No.: (617) 338-2880
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If to Escrow
Agent: Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Joseph E. Browdy, Esq.
Fax No.: (212) 373-2042
or at such other addresses as the parties may designate to the other by written
notice in the manner herein provided. Any such notices or elections may be given
by Seller's or Purchaser's counsel and shall be effective upon receipt or
refusal thereof.
Section 10.8 Exculpations.
10.8.1 The obligations of Seller under or with
respect to this Agreement and any instruments executed pursuant hereto shall not
constitute personal obligations of Seller or its members or their respective
directors, officers, employees or agents, and shall not create or involve any
claim against, or personal liability on the part of, any of them, and Purchaser,
and anyone claiming by, through or under Purchaser, agrees to look solely to
Seller's interest in the Property and/or any proceeds arising therefrom
(including all payments made with respect to the proceeds from the Purchase
Price) for satisfaction of any liability of Seller under or in respect of this
Agreement or any such instruments and will not seek recourse against such
parties, or any of them, or any of their personal assets for such satisfaction.
The foregoing shall not be deemed to prohibit the remedy of specific performance
where expressly provided for in this Agreement.
10.8.2 The Declaration of Trust of Purchaser, a copy
of which is duly filed with the Department of Assessments and Taxation of the
State of Maryland, provides that the name "Health and Retirement Properties
Trust" refers to
<PAGE>
56
the trustees under such Declaration of Trust collectively as trustees, but not
individually or personally, and that no trustee, officer, shareholder, employee
or agent of Purchaser shall be held to any personal liability, jointly or
severally, for any obligation of, or claim against, Purchaser. All persons
dealing with Purchaser in any way shall look only to the assets of Purchaser for
the payment of any sum or the performance of any obligation.
10.8.3 The provisions of this Section 10.8 shall
survive the Closing or any termination of this Agreement.
Section 10.9 Attorney's Fees. In the event of any litigation
between the parties hereto with respect to their rights and obligations
hereunder, the reasonable attorneys' fees and costs of the party successful in
such action will be borne by the party which is the losing party in such
litigation.
Section 10.10 Counterparts. This Agreement may be executed and
delivered in counterpart copies, all of which together will constitute one
executed original agreement.
<PAGE>
57
IN WITNESS WHEREOF, Seller and Purchaser have executed this
Agreement as of the day and year first above written.
SELLER:
7 WEST ASSOCIATES LLC
By Orchid Properties, Inc., its sole member
By: /s/ Robert H. Rodgers, Jr.
Name: Robert H. Rodgers, Jr.
Title: Vice President
PURCHASER:
HEALTH AND RETIREMENT PROPERTIES TRUST
By: /s/ Ajay Saini
Name: Ajay Saini
Title: Treasurer and C.F.O.
THE UNDERSIGNED IS
SIGNING SOLELY TO
EVIDENCE ITS CONSENT
TO ACT AS ESCROW AGENT
UPON AND SUBJECT TO
THE TERMS OF SECTION 6.3
OF THIS AGREEMENT:
PAUL, WEISS, RIFKIND,
WHARTON & GARRISON
By: /s/ Mitchell J. Berg
Mitchell J. Berg
Partner
<PAGE>
The schedules to this agreement have been omitted pursuant to Regulation S-K,
Item 601(b)(2). The contents of such schedules are identified on the List of
Exhibits which is a part of the agreement. The Company undertakes to provide
such schedules to the Securities and Exchange Commission upon request.
Exhibit 2.2
CONTRIBUTION AGREEMENT
(and Escrow Instructions)
THIS CONTRIBUTION AGREEMENT is made and entered into as of April 20,
1997, by and between MEDICAL OFFICE BUILDINGS, LTD., a Washington limited
partnership ("Seller"), and HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland
real estate investment trust ("Buyer").
R E C I T A L S
A. CARLYLE REAL ESTATE LIMITED PARTNERSHIP IX, an Illinois limited
partnership ("Carlyle"), and Seller are the sole partners in WRIGHT-CARLYLE
PARTNERS, a California general partnership ("WCP"), which is governed by those
certain Articles of Partnership of Wright-Carlyle Partnership dated as of
December 27, 1979 (the "WCP Partnership Agreement") between Carlyle and Seller.
B. WCP is the tenant under that certain Lease dated as of February 1,
1977 between Howard S. Wright Development Co., a Washington corporation
("Wright"), as landlord, and Seller, as tenant, as amended by (1) that certain
First Amendment of Lease dated as of July 16, 1979 by and between The Prudential
Insurance Company of America, a New Jersey corporation ("Prudential"), as
assignee of Wright, as landlord, and Seller, as tenant; (2) that certain Second
Amendment of Lease dated as of December 19, 1985 between Prudential, as
landlord, and WCP, as assignee of Seller, as tenant; and (3) that certain Third
Amendment to Lease dated as of October 1, 1996 between Prudential, as landlord,
and WCP, as tenant (such ground lease and all amendments thereto being
hereinafter individually and collectively called "Ground Lease").
C. Prudential is the present owner of the fee interest in the real
property which is encumbered by the Ground Lease, which real property is more
particularly described on Exhibit "A" attached hereto and made a part hereof
(the "Land").
D. WCP is the owner of an option to purchase the fee interest of
Prudential in the Land pursuant to that certain Option Agreement dated as of
October 1, 1996 (the "Land Option Agreement") between Prudential and WCP. The
Option Agreement requires the execution of a Purchase and Sale Agreement in the
form attached thereto as Exhibit "B" (the "Land Purchase Agreement") in order to
consummate the purchase of the Land.
E. On or about March 20, 1997, WCP and Arden Realty Limited
Partnership, a Maryland limited partnership, entered into a Purchase Agreement
and Joint Escrow Instructions (the "WCP/Arden Agreement") pursuant to which WCP
agreed to sell the Property for cash. On or about the date hereof, Seller
exercised its right of first opportunity under Section 6.2D of the WCP
Partnership
<PAGE>
Agreement and, in accordance therewith, Seller will acquire Carlyle's
partnership interest in WCP (the "Partnership Interest") which acquisition
Seller intends to consummate substantially on the terms of the proposed Purchase
Agreement (the "MOBL/Carlyle Agreement"), a copy of which has previously been
delivered to Buyer. As a consequence of the exercise of such right of first
opportunity, the WCP/Arden Agreement terminates by its terms.
F. WCP owns certain Property (as defined below).
G. Seller and Buyer desire, simultaneously upon acquisition of the
Partnership Interest by Seller or its nominee, to form a Delaware limited
partnership ("New Partnership"), in which Buyer or its nominee shall hold a 1%
general partner interest and a 98% limited partner interest and Seller shall
hold a 1% limited partner interest, to which partnership Seller shall contribute
the Property and certain obligations and Buyer shall contribute cash, all
subject to and upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. Acquisition of the Partnership Interest. Seller shall acquire or cause its
nominee to acquire the Partnership Interest subject to the Prudential Loan from
Carlyle in accordance with the MOBL/Carlyle Agreement, for the purpose of
contributing the Property to New Partnership as contemplated by this Agreement.
Seller's purchase of the Partnership Interest shall shall be funded by Buyer as
provided in Section 2 below.
1.1 Transfer of Property.
Seller, immediately following acquisition of the Partnership Interest,
shall cause WCP to contribute to New Partnership, and New Partnership shall
acquire from Seller, subject to all the terms and conditions hereof, all of the
following described property (collectively, the "Property"):
(a) Leasehold Estate. All of WCP's right, title and interest in the
Ground Lease;
(b) Land. All of WCP's right, title and interest in the Land Option
Agreement;
(c) Improvements. All buildings, structures, improvements and fixtures
on the Land belonging to WCP (collectively, the "Improvements");
2 DBLA-179348L.6
<PAGE>
(d) Easements. All easements, interests in roadways, strips and rights
appurtenant to the Land;
(e) Leases. All leases and agreements demising space in or providing
for the use or occupancy of the Improvements (collectively, the "Leases");
(f) Licenses. To the extent assignable, all of WCP's right, title and
interest in and to all licenses, permits, rights, contracts, water rights,
mineral rights, privileges and appurtenances pertaining to any of the foregoing;
(g) Personal Property. All of WCP's right, title and interest in and to
all furniture, equipment, supplies, tools and machinery set forth on Exhibit "B"
attached hereto and made a part hereof, together with all of WCP's right, title
and interest in and to any plans, permits or drawings located on or pertaining
to the Land or Improvements and belonging to WCP (collectively, the "Personal
Property"); and
(h) Miscellaneous Rights. All of WCP's right, title and interest in and
to any building tradenames used in connection with the Land or Improvements (but
only to the extent that the same are not trademarks or trade names of WCP, any
of its partners or any of its or their affiliated or related entities),
warranties (including those related to construction or fabrication of the
Improvements), telephone exchange numbers, advertising materials, plans and
specifications, governmental approvals and development rights related to the
Land or Improvements.
1.2 Treatment as Contribution.
Buyer and Seller intend that the contribution by Seller to New
Partnership shall shall be governed by Section 721(a) of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Consideration.
As consideration for the foregoing, Buyer shall (a) contribute to New
Partnership, on the Closing Date (as hereinafter defined), an amount, in cash,
equal to $47,000,000 and (b) cause Buyer or one of its affiliates to make a
first mortgage loan (the "HRPT Loan") to New Partnership in an amount equal to
$59,000,000. The HRPT Loan shall be for a term of not less than 10 years,
payable interest only at 10% per annum in monthly installments. Concurrently,
MOBL and some of its constituant partners shall execute a guaranty of the
payment by New Partnership of the HRPT Loan, which guaranty shall be in the form
of Exhibit "C" attached hereto (the "Guaranty"). The HRPT Loan shall prohibit
prepayment of any portion of the principal thereof to an amount below
$22,000,000, except to the extent New
3 DBLA-179348L.6
<PAGE>
Partnership obtains replacement financing of not less than $22,000,000,
repayment of which can be guaranteed by the Guarantees or in connection with a
sale of the Property.
The sums contributed to New Partnership by Buyer as described above
(the "New Partnership Funds") shall be used to pay (i) the outstanding balance
of principal, interest and any other sums accrued or payable on the Closing Date
under the Prudential Loan (the "Prudential Payoff Amount"); (ii) the Purchase
Price and the brokerage fee payable by Seller under the MOBL/Carlyle Agreement;
(iii) the Purchase Price, as such term is used in the Land Option Agreement (the
"Land Option Purchase Price"), (iv) the closing costs and (v) all prorations
charged to Buyer or New Partnership hereunder; provided, however, that it is
expressly understood and agreed that in no event shall the aggregate amount
advanced by Buyer pursuant to clauses (i), (ii), and (iii) and closing costs
payable by New Partnership pursuant to Section 5.6 exceed $106,000,000 and
Seller shall contribute any amounts in excess thereof required to consummate the
transactions contemplated hereby.
3. Deposit.
Upon the "Opening of Escrow" (as hereinafter defined), Buyer shall
deliver by wire transfer of immediately available federal funds an amount equal
to $1,500,000 (which amount, together with all interest earned thereon, is
herein called the "Escrow Deposit") to Chicago Title Company/Escrow Division, at
its offices at 700 South Flower Street, Ninth Floor, Los Angeles, California,
Attention: Ms. Rose Martinez which company, in its capacity as escrow holder
hereunder, is called "Escrow Holder." Such amount shall be held by Escrow Holder
as a deposit in accordance with the terms and provisions of this Agreement. The
Escrow Deposit shall be invested by Escrow Holder in the following investments
("Approved Investments"): (i) United States Treasury obligations, (ii) United
States Treasury-backed repurchase agreements issued by a major national money
center banking institution reasonably acceptable to the Company, or (iii) such
other manner as may be reasonably agreed to by Seller and Buyer. The Escrow
Deposit shall be disposed of by Escrow Holder only as provided in this
Agreement.
4. Conditions Precedent.
The obligations and liabilities of the parties hereunder are subject to
satisfaction of each of the following conditions precedent (any of which may be
waived in writing by the party in whose favor such condition exists) on or
before the applicable date specified for satisfaction of the applicable
condition. If any of such conditions are not satisfied (or waived) pursuant to
the terms of this Agreement, then this Agreement shall terminate
4 DBLA-179348L.6
<PAGE>
and, in connection with any such termination made in accordance with this
paragraph, Seller and Buyer shall be released from further obligation or
liability hereunder (except for those obligations and liabilities which,
pursuant to the terms of this Agreement, survive such termination), and Buyer
shall be entitled to a return of the Escrow Deposit. Close of Escrow (as defined
below) shall constitute approval by each party of all matters to which such
party has a right of approval and a waiver of all conditions.
4.1 Title Matters.
4.1.1 Title Report. A Pro forma title policy no. 6144435 X59
dated February 10, 1997 ("Pro Forma") covering the Property issued by
Chicago Title Insurance Company (such company, in its capacity as title
insurer hereunder, is herein called the "Title Company") has been
delivered to Buyer and is attached hereto as Exhibit "D". In addition,
Seller has delivered an updated ALTA survey dated as of November 26,
1996 ("Updated Survey") of the Property from Psomas and Associates.
Buyer has approved the Title Report and the Updated Survey with the
changes noted in Exhibit "D" attached hereto. Approval by Buyer of any
additional exceptions to title or survey matters which may be disclosed
after the date of this Agreement shall be a further condition precedent
to Buyer's obligation to purchase the Rights. If any such additional
exceptions to title or survey matters are disclosed, Seller shall give
Buyer prompt written notice thereof. Unless Buyer gives written notice
that it disapproves such additional exceptions to title or survey
matters, stating the additional exceptions or survey matters so
disapproved, on or before the earlier to occur of the Closing Date
(provided Seller has given Buyer 2 business days prior written notice
thereof) or 10 days after receipt of Seller's written notice of such
additional exceptions or survey matters (together with copies of the
underlying documents evidencing the same), Buyer shall be deemed to
have approved said additional exceptions or survey matters. If, for any
reason, on or before the Closing Date (as defined below) Seller does
not cause any exceptions to title or survey matters which Buyer
disapproves (to the extent Buyer is permitted hereunder to so
disapprove) to be removed at no cost or expense to Buyer (Seller having
the right but not the obligation to do so), then, at Buyer's option
(exercised by giving written notice thereof on or before the Closing
Date), this Agreement shall terminate. Notwithstanding anything to the
contrary contained herein, Seller shall be obligated to remove (or
cause the Title Company to insure over) (i) any mechanics' liens for
work performed by or on behalf of WCP at the Property prior to the
Closing and (ii) any tax or judgment liens against WCP or Seller and
any other encumbrances which may be satisfied
5 DBLA-179348L.6
<PAGE>
by the payment of a liquidated sum other than the Prudential
Loan.
4.1.2 Title Policy. It shall be a condition to Buyer's
obligations to close hereunder that on the Closing Date the Title
Company shall agree to issue to New Partnership an ALTA extended
coverage (Form 1970) owner's title insurance policy ("Owner's Policy")
in the form (and with the endorsements) of the Pro Forma with
amendments provided in Exhibit "D" and with liability in an amount
reasonably determined by Buyer, and that the updated survey be
certified to New Partnership.
4.2 Due Diligence Matters
4.2.1 Completed Due Diligence. Buyer acknowledges that it has
reviewed and inspected all matters respecting the Property, including
such environmental and engineering tests and reports (including a Phase
I environmental audit and a structural and curtain wall engineering
report) and other inspections of the Property and review of applicable
federal, state and local laws, ordinances, rules, regulations, permits,
licenses, appraisals, financing documents, approvals and orders and any
other matters as Buyer deemed necessary or appropriate in its sole
discretion, in order to determine whether the Property is suitable for
Buyer's intended use and purpose. By executing this Agreement, Buyer
hereby acknowledges that Buyer has approved its due diligence
examinations, reviews and inspections and has elected to proceed with
the acquisition of the Property in accordance with the terms of this
Agreement. Without limitation on the foregoing, Buyer acknowledges that
the consideration given by Buyer hereunder has been agreed upon after
the completion, and fully reflective of, Buyer's due diligence reviews,
examinations and inspections.
4.2.2 Conduct of Due Diligence Reviews. All due diligence
examinations, reviews and inspections conducted by Buyer have been and
shall be at Buyer's sole cost and expense (including, without
limitation, those related to appraisers, inspectors, auditors and
environmental and engineering consultants). Buyer has at all times
conducted its due diligence and environmental reviews, inspections and
examinations in a manner so as to not cause damage, loss, cost or
expense to Seller, WCP or the Property, and Buyer will indemnify,
defend and hold Seller, WCP and the Property harmless from and against
any such damage, loss, cost or expense. The foregoing indemnification
obligation shall survive the closing of the transactions contemplated
herein or the earlier termination of this Agreement until the
expiration of the Survival Period (as hereinafter defined),
6 DBLA-179348L.6
<PAGE>
at which time such obligations (and any cause of action not then in
litigation) shall terminate. Buyer shall promptly deliver to Seller
true, accurate and complete copies of any written reports relating to
the Property prepared for or on behalf of Buyer by any third party and,
in the event of termination hereunder, shall return all documents and
other materials furnished by Seller hereunder. Buyer shall keep all
information or data received or discovered in connection with any of
the inspections, reviews or examinations strictly confidential.
4.3 Tenant Estoppel Certificates. Receipt of estoppel certificates
("Tenant Estoppel Certificates") from (i) each tenant occupying 3,000 or more
rentable square feet identified on Exhibit "F" attached hereto and made a part
hereof ("Required Tenants"), and (ii) a sufficient number of other tenants at
the Property such that estoppel certificates shall have been received pursuant
to clauses (i) and (ii) hereof with respect to not less than 80% of the total
net rentable square footage of the Property covered by Leases in effect as of
the Closing Date, shall be a condition precedent to Buyer's obligations
hereunder. Each Tenant Estoppel Certificate shall be substantially in the form
previously delivered to Buyer (or if Seller, after using commercially reasonable
efforts to obtain certificates in such form, is unable to obtain the same, then
in the form, if any, prescribed in the applicable Lease or other operative
document). Seller's sole obligation hereunder shall be to utilize commercially
reasonable efforts to obtain such Tenant Estoppel Certificates from each tenant
(not including any obligation to institute legal proceedings or to expend any
monies therefor). If on or before the Closing Date such condition is not
satisfied (or waived), then this Agreement shall terminate. Without limitation
on the foregoing, if any Tenant Estoppel Certificate discloses material adverse
matters which are not cured or satisfied by Seller on or before the Closing
Date, then Buyer shall have the right to terminate this Agreement on or before
the Closing Date. All such estoppel certificates shall be addressed to Buyer or
shall permit reliance thereon by unidentified purchasers and lenders with
respect to the Property.
4.4 Existing Loans. On the Closing Date, the Prudential Loan shall be
concurrently prepaid and satisfied in full.
4.5 Land Purchase. On the Closing Date, concurrently with the Closing
hereunder, New Partnership shall have acquired fee title to the Land pursuant to
the Land Option Agreement.
4.6 Guarantees. Buyer shall have received Guarantees substantially in
the form of Exhibit "C" attached hereto (the "Guarantees") executed by Seller
and those of Seller's constituent partners who elect, in their sole and absolute
discretion, to execute the Guarantees by which the signatories
7 DBLA-179348L.6
<PAGE>
thereto shall agree to guaranty the HRP Loan, on terms and conditions set forth
more fully therein.
4.7 New Partnership. Buyer and Seller shall have formed New Partnership
substantially on the terms set forth in Exhibit "E" hereto, such partnership to
be otherwise on terms and conditions reasonably satisfactory to Seller and
Buyer. New Partnership shall execute supplementary escrow instructions to
authorize the actions to be taken by New Partnership hereunder.
4.8 Partnership Elections. Seller shall cause WCP to make
the election contemplated by Section 754 of the Code.
5. Escrow.
On the first business day after execution of this Agreement, the
parties shall deposit an executed copy of this Agreement (or a fully executed
copy in counterparts) with Escrow Holder and Buyer shall, on the terms and
conditions of Section 3, place the Escrow Deposit with Escrow Holder. Escrow
Holder shall promptly execute this Agreement upon receipt of this Agreement (and
the Escrow Deposit) and thereupon escrow hereunder (the "Escrow") shall be
established (the foregoing being herein called the "Opening of Escrow"). This
Agreement shall serve as the instructions to Escrow Holder to consummate the
purchase and sale contemplated hereunder. Seller and Buyer agree to execute such
additional and supplementary escrow instructions as may be reasonably
appropriate to enable Escrow Holder to comply with the terms of this Agreement.
If there is any conflict between the provisions of this Agreement and any such
additional or supplementary escrow instructions, then, unless such additional or
supplementary escrow instructions are executed by both Seller and Buyer, the
terms of this Agreement shall control. The transactions contemplated herein
shall be consummated through the Escrow. "Close of Escrow" shall occur on the
Closing Date. The "Closing Date" shall be May 30, 1997 or such earlier date as
shall be agreed upon by Seller and Buyer. The parties hereto shall make
reasonable best efforts to cause a pre-closing into Escrow to occur on the
business day prior to the Closing Date. The Closing Date shall occur
concurrently with the acquisiton by Seller, or its nominee, from Carlyle of the
Partnership Interest pursuant to the MOBL/Carlyle Agreement, the contribution of
the Property to New Partnership by WCP at the request of Seller, the acquisition
by New Partnership from Prudential of the Land pursuant to the Land Option
Agreement, the payment in full by New Partnership of the Prudential Loan and the
making by Buyer or its affiliate of the HRP Loan to New Partnership.
5.1 Deliveries to Escrow by Seller. Prior to the Closing Date, Seller
shall deliver or cause to be delivered to Escrow Holder the following:
8 DBLA-179348L.6
<PAGE>
5.1.1 Two original assignment and assumption agreements in
respect of the Ground Lease ("Leasehold Assignment"), duly executed and
acknowledged by WCP, in the form of Exhibit "I-1" attached hereto and
made a part hereof;
5.1.2 Two original assignment and assumption agreements in
respect of the Land Option Agreement ("Land Option Assignment"), duly
executed by WCP, in a form approved by Seller and Buyer and fully
executed "Hazardous Materials Indemnity Agreements", as defined in the
Land Option Agreement, executed by Seller and Carlyle for delivery to
Prudential;
5.1.3 Two bill of sale, assignment and assumption agreements
("General Assignment"), duly executed by WCP, in the form of Exhibit
"I-2" attached hereto and made a part hereof;
5.1.4 A duly executed and acknowledged certificate regarding
the "non-foreign" status of WCP and MOBL satisfying the requirements of
Section 1445 of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder;
5.1.5 A duly executed "Withholding Exemption Certificate, Form
590" or a certificate issued by the California Franchise Tax Board,
pursuant to the Revenue and Taxation Code Sections 18805 and 26131,
stating either the amount of withholding required from WCP's or MOBL's
proceeds or that WCP and MOBL are exempt from such withholding
requirement;
5.1.6 Evidence reasonably satisfactory to Escrow Holder
respecting the due organization of Seller and WCP and the due
authorization and execution of this Agreement and the documents
required to be delivered hereunder;
5.1.7 Original Guarantees duly executed by Seller and those of
Seller's constituent partners who elect, in their sole and absolute
discretion, to execute the Guaranty Agreement;
5.1.8 Security Deposits attributable to the leases (the
"Security Deposits") held by WCP;
5.1.9 Seller's share of the closing costs described in
paragraph 5.6
9 DBLA-179348L.6
<PAGE>
hereof and prorations made hereunder;
5.1.10 Such additional documents as may be reasonably required
by Escrow Holder or Buyer in order to consummate the transactions
hereunder (provided the same do not materially increase the costs to,
or liability or obligations of, Seller in a manner not otherwise
provided for herein).
5.2 Deliveries to Escrow by Buyer. Prior to the Closing Date, Buyer
shall deliver or cause to be delivered to Escrow Holder the following:
5.2.1 Buyer's contribution to New Partnership and the proceeds
of the HRPT Loan described in Section 2 hereof;
5.2.2 Two original Leasehold Assignments, duly executed and
acknowledged by New Partnership;
5.2.3 Two original Land Option Assignments, duly
executed by New Partnership;
5.2.4 One original of the Note evidencing the HRPT Loan, duly
executed by New Partnership and a Deed of Trust securing the HRPT Note
(the "HRPT Deed of Trust"), duly executed and acknowledged by New
Partnership;
5.2.5 Two original General Assignment and Assumption
Agreements, duly executed by New Partnership;
5.2.6 Evidence reasonably satisfactory to Escrow Holder
respecting the due organization of Buyer and the due authorization and
execution of this Agreement and the documents required to be delivered
hereunder;
5.2.7 Buyer's share of the closing costs described in
paragraph 5.6 hereof and prorations made hereunder;
5.2.8 Such additional documents as may be reasonably required
by Escrow Holder in or to consummate the transactions hereunder
(provided the same do not materially increase the costs to, or
liability or obligations of, Buyer in a manner not otherwise provided
for herein).
10 DBLA-179348L.6
<PAGE>
5.3 Deliveries to Buyer by Seller. On or before the Closing Date,
Seller shall deliver or cause to be delivered to Buyer the following:
5.3.1 A certificate updating the representations and
warranties of Seller contained in paragraph 7.1.2 hereof as of the
Closing Date (with any changes thereto being noted on such
certificate);
5.3.2 Evidence reasonably satisfactory to Buyer respecting the
due organization of Seller and WCP and the due authorization and
execution of this Agreement and the documents required to be delivered
hereunder and UCC searches confirming that there are no outstanding
security interests affecting the Property;
5.3.3 Such additional documents as may be reasonably required
by Buyer in order to consummate the transactions hereunder (provided
the same do not materially increase the costs to, or liability or
obligations of, Seller in a manner not otherwise provided for herein).
5.4 Deliveries to Seller by Buyer. On or before the Closing Date, Buyer
shall deliver or cause to be delivered to Seller the following:
5.4.1 A Certificate updating the representations and
warranties of Buyer contained in paragraph 7.2 hereof as of the Closing
Date (with any changes thereto being noted on such certificate);
5.4.2 Evidence reasonably satisfactory to Seller respecting
the due organization of Buyer and the due authorization and execution
of this Agreement and the documents required to be delivered hereunder;
and
5.4.3 Such additional documents as may be reasonably required
by Seller in order to consummate the transactions hereunder (provided
the same do not materially increase the costs to, or liability or
obligations of, Buyer in a manner not otherwise provided for herein).
5.5 The Closing. Escrow Holder shall close the Escrow on the Closing
Date by (i) causing the Leasehold Assignment to be recorded in the office of the
County Recorder of Los Angeles County, (ii) delivering the HRPT Note to Buyer,
(iii) delivering an amount equal to the sum of (y) the Prudential Payoff Amount
and (z) the Land Option Purchase Price to Prudential pursuant to Prudential
escrow instructions, (iv) delivering the Purchase Price under the MOBL/Carlyle
Agreement to Carlyle, (v) delivering the brokerage fee payable under the
MOBL/Carlyle Agreement to Richard Ellis, LLC as directed by Seller and Buyer,
(vi)
11 DBLA-179348L.6
<PAGE>
delivering the Security Deposits to New Partnership, (vi) delivering the Deposit
to Buyer and (vi) causing the HRPT Deed of Trust to be recorded in the office of
the County Recorder of Los Angeles County WHEN AND ONLY WHEN each of the
following conditions has been satisfied:
5.5.1 All documents described in paragraphs 5.1 and 5.2 hereof
have been delivered to Escrow Holder;
5.5.2 Title Company is prepared to deliver to New Partnership
the Owner's Policy in the form (and with the endorsements) of the Pro
Forma;
5.5.3 All conditions to the acquisition by New Partnership of
fee title to the Land pursuant to the Land Option Agreement have been
satisfied; and
5.5.4 All conditions to the pay-off and release of the
Prudential Loan have been satisfied.
5.6 Closing Costs. Seller shall pay one-half of the escrow fees, as
well as one-half of any escrow termination fees of Escrow Holder. Buyer shall
pay (i) one-half of the escrow fees, as well as one-half of any escrow
termination fees of Escrow Holder and (ii) all other costs and expenses related
to Buyer's due diligence examinations, reviews and inspections (including,
without limitation, those related to any engineering reports). Subject to the
limitations set forth in Section 2, New Partnership shall pay (x) the transfer
tax payable on recordation of the Leasehold Assignment and (y) the title
insurance premium attributable to the Owner's Policy. Each party shall pay its
own legal and accounting fees.
5.7 Prorations. The following prorations shall be made as of the
Closing Date (on the basis of the actual number of days elapsed over the
applicable period):
(i) All real estate and personal property taxes and
assessments on the Property for the current year. In no event shall Seller be
charged with or be responsible for any increase in the taxes on the Property
resulting from the sale of the Property or from any improvements made or leases
entered into on or after the Closing Date.
(ii) All fixed and additional rentals under the
Leases, and other tenant charges. Seller shall deliver or provide a credit in an
amount equal to all prepaid rentals for periods after the Closing Date and the
Security Deposits held by WCP (to the extent not applied or forfeited prior to
the Closing Date or delivered into Escrow) to New Partnership on the Closing
Date. If any security deposits are in the form of certificates of deposit,
letters of credit or the like, such instruments shall
12 DBLA-179348L.6
<PAGE>
be assigned to New Partnership (and Seller and New Partnership shall reasonably
cooperate in causing the transfer of the same). Rents which are delinquent as of
the Closing Date shall not be prorated on the Closing Date. New Partnership
shall include such delinquencies in its normal billing and shall use
commercially reasonable efforts to collect the same after the Closing Date (but
New Partnership shall not be required to litigate or declare a default in any
Lease). To the extent New Partnership receives rents (other than "Additional
Amounts", as hereinafter defined) on or after the Closing Date, such payments
shall be applied first toward the reasonable third party costs of collection
paid by New Partnership with respect thereto, next toward then current rent owed
to New Partnership in connection with the applicable Lease for which such
payments are received, and finally toward any excess monies received shall be
applied toward the payment of any delinquent rents, with Seller's share thereof
being promptly delivered to Seller. New Partnership may not waive any delinquent
rents nor modify a Lease so as to reduce or otherwise affect amounts owed
thereunder for any period in which Seller is entitled to receive a share of
charges or amounts without first obtaining Seller's written consent. Common area
charges, taxes, operating expense and other similar expense reimbursement
obligations of the tenants under the Leases, as well as any percentage payable
thereunder (collectively, "Additional Amounts") shall be prorated effective as
of the Closing Date. The parties will finalize such Additional Amounts
prorations on the Closing Date or as soon as practicable thereafter (but in any
event not later than three (3) months after the Closing Date). Proration of
expense items contained in the calculation of the Additional Amounts shall be
made on the basis that Seller shall be entitled to reimbursement of the
applicable expenses incurred by Seller (annualized or otherwise appropriately
apportioned) prior to the Closing Date. To the extent that, based on such
determinations, Seller has received amounts in excess of the amount due Seller,
then Seller shall deliver such excess amount to Buyer on the Closing Date (or if
determined thereafter then within 15 days of such determination). To the extent
that Seller has received an amount less than the amount so due, Buyer shall
deliver such shortfall amount to Seller on the Closing Date (or if determined
thereafter, then within 15 days of such determination). The amount of percentage
rent to be allocated to Seller with respect to each Tenant Lease for the lease
year ("the "Current Lease Year") in which the Closing Date occurs shall be that
amount equal to (i) the amount by which (A) the tenant's gross receipts (to the
extent taken into account in determining percentage rent under such Tenant
Lease) for that portion of such Current Lease Year occurring prior to the
Closing Date exceed (B) the "Allocable Base Amount", multiplied by (ii) the
percentage specified in such Tenant Lease to be used in determining such
tenant's percentage rent for such Current Lease Year. The "Allocable Base
Amount" means that portion of the "Base Amount" for such Current Lease Year
determined by multiplying such Base
13 DBLA-179348L.6
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Amount for the entire Current Lease Year by a fraction, the numerator of which
is the number of days in such Current Lease Year occurring prior to the Closing
Date and the denominator of which is the number of days of such Current Lease
Year. "Base Amount" is the amount specified in each Tenant Lease for such
Current Lease Year that must be exceeded by the sales of the tenant during such
Current Lease Year before such tenant shall be obligated thereunder to pay
percentage rent for such Current Lease Year. Buyer shall not be obligated to pay
or credit Seller any sum on account of the proration of percentage rent as
aforesaid unless and until the percentage rent to be prorated as aforesaid shall
be received by Buyer. Buyer shall reasonably cooperate with Seller in any
collection efforts hereunder (but shall not be required to litigate or declare a
default in any Lease). Buyer shall notify Seller of its collection efforts from
time to time and shall not trade or exchange any such delinquent amount for any
consideration. With respect to delinquent rents, Additional Amounts and any
other amounts or other rights of any kind respecting tenants who are no longer
tenants of the Property as of the Closing Date, Seller shall retain all rights
relating thereto.
(iii) All customary operating expenses incurred in
the ordinary course of management and operation of the Property.
(iv) It is acknowledged and agreed by Buyer that
Buyer shall be responsible for all tenant improvement costs and leasing
commissions attributable to (i) Leases identified as post 3/20/97 Leases on
Exhibit "O", to the extent that such costs (or the obligation to pay the same)
have been incurred and (ii) all other Leases executed prior to the Closing Date
which have been approved by Buyer.
(v) Any interest credit between April 28, 1997 and
the Close of Escrow on the Prudential Loan shall be credited to Seller.
(1) Calculation. The prorations and payments shall be made on
the basis of a written statement submitted by Seller to Buyer and Escrow Holder
two (2) days prior to the Close of Escrow and shall be subject to Buyer and
Seller (which statement shall include a list of delinquent rental amounts as of
the Closing Date). In the event any prorations or apportionments made under this
subsection 8.7.2 shall prove to be incorrect for any reason, then any party
shall be entitled to an adjustment to correct the same. Any item which cannot be
finally prorated because of the unavailability of information shall be
tentatively prorated on the basis of the best data then available and reprorated
when the information is available.
14 DBLA-179348L.6
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6. Condemnation or Destruction of the Property.
In the event that, after the date hereof but prior to the Closing Date,
(i) any material portion of the Property is taken pursuant to eminent domain
proceedings or (ii) any of the Improvements are materially damaged or destroyed
by any casualty, Buyer may, by written notice to Seller, terminate this
Agreement; provided, however, that in the event this Agreement shall not be so
terminated, all insurance proceeds and/or awards paid or payable on account
thereof shall be credited to Buyer. If any casualty occurs as to which an
insurance deductible applies or as to which the proceeds of insurance are
insufficient, in Buyer's reasonable determination, to restore, repair and/or
rebuild the Property, Buyer may terminate this Agreement.
7. Representations and Warranties.
7.1 Representations and Warranties of Seller.
7.1.1 General Disclaimer. Except as specifically set forth in
paragraph 7.1.2 hereof or elsewhere in this Agreement, the transfer of
the Property hereunder is and will be made on an "as is" basis, without
representations and warranties of any kind or nature, express, implied
or otherwise, including, but not limited to, any representation or
warranty concerning title to the Property, the physical condition of
the Property (including, but not limited to, the condition of the soil
or the Property), the environmental condition of the Property
(including, but not limited to, the presence or absence of hazardous
substances on or respecting the Property), the compliance of the
Property with applicable laws and regulations (including, but not
limited to, zoning and building codes or the status of development or
use rights respecting the Property), the financial condition of WCP or
any other representation or warranty respecting any income, expenses,
charges, liens or encumbrances, rights or claims on, affecting or
pertaining to the Property or any part thereof. Buyer acknowledges that
Buyer has examined, reviewed and inspected all matters which in Buyer's
judgment bear upon the Property and its value and suitability for
Buyer's purposes. Except as to matters specifically set forth in
paragraph 7.1.2 hereof or elsewhere in this Agreement, Buyer will
acquire the Property solely on the basis of its own physical and
financial examinations, reviews and inspections and the title insurance
protection afforded by the Owner's Policy.
7.1.2 Limited Representations and Warranties of Seller.
Subject to the provisions of paragraph 7.1.1 above, Seller hereby
represents and warrants to Buyer as follows:
15 DBLA-179348L.6
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(a) Organization Etc. of Seller. Seller is a limited
partnership duly formed and validly existing under the laws of
the State of Washington and has all requisite power and
authority to own and lease its properties and to carry on its
business as presently conducted. The general partner of Seller
is a limited partnership duly formed and validly existing
under the laws of the State of Washington and has all
requisite power and authority to own and lease its properties
and to carry on its business as presently conducted.
(b) Organization Etc. of WCP. WCP is a general
partnership duly formed and validly existing under the laws of
the State of California and has all requisite power and
authority to own and lease it properties and to carry on its
business as presently conducted.
(b) Authorization. Seller and its general partner has
all requisite power and authority to execute and deliver this
Agreement and the other agreements and instruments to be
executed and delivered by it hereunder and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance by Seller of this Agreement and such
other agreements and instruments has been duly and validly
authorized by the general partner of Seller, and no other
action or authorization on behalf of Seller is required in
connection therewith.
(c) Validity and Enforceability. This Agreement has
been duly authorized, executed and delivered by Seller and
constitutes and the other agreements and instruments to be
executed and delivered hereunder by Seller, when executed and
delivered by Seller, will constitute, legal, valid and binding
obligations of Seller enforceable against Seller in accordance
with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the enforcement of
creditors' rights generally or by general equitable
principles.
(d) No Conflict. Neither the execution and delivery
of this Agreement by Seller nor the execution and delivery by
Seller of the other agreements and instruments to be executed
and delivered by it here under, nor the consummation of the
transactions contemplated hereunder or thereunder, will (i)
conflict with or result in a breach or violation of, or
constitute a default under, or result in the creation of any
lien, charge or encumbrance upon, any of the properties or
assets of Seller pursuant to the WCP
16 DBLA-179348L.6
<PAGE>
Partnership Agreement or any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which Seller is
a party or by which it is bound or to which any of its
properties or assets is subject or (ii) violate any law,
statute, rule, regulation, judgment or decree applicable to
Seller. Since the Ground Lease will terminate upon acquisition
of the Land by New Partnership, no third party consents are
required by the terms of any indenture, mortgage, lease, loan
agreement or other agreement or instrument to which Seller is
a party or by which it is bound or to which any of its
properties or assets is subject for the execution and delivery
of this Agreement or any other agreement or instrument to be
executed and delivered by Seller hereunder or the consummation
of the transactions provided for herein or therein.
(e) No Governmental Consent or Approval Required. No
consent, approval or authorization of, or declaration to or
filing with, any governmental or regulatory authority is
required for the valid execution and delivery by Seller of
this Agreement or any other agreement or instrument to be
executed and delivered by Seller hereunder or the consummation
of the transactions provided for herein or therein.
(f) Leases.
(1) There are no leases, occupancy rights,
licenses, amendments or agreements, oral or written, now in
effect with respect to occupancy at the Property, except those
listed on the lease summary attached as Exhibit "K" and made a
part hereof (collectively, the "Leases"). WCP is not in
default of any landlord obligations under any Leases and,
except as disclosed on Exhibit "J", WCP has completed all
tenant improvement work required under the Leases or any work
letter executed by WCP in connection therewith.
(2) As of the Closing Date, there shall be
no commissions or costs for tenant improvements owing on or
with respect to any Leases in effect as of the Closing Date,
except for extensions, options or renewals of existing Leases
(provided that said commissions are set forth in the
applicable Lease or in Exhibit "K" attached hereto) or in
connection with new Leases which are approved by Buyer.
(3) All of the Leases are in full force and
effect and none of them has been modified or amended except as
set forth in Exhibit "K"; the rents set forth
17 DBLA-179348L.6
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in Exhibit "K" are being collected on a current basis and
there are no rent arrearages exceeding one month except as set
forth in Exhibit "K" attached hereto; and there are no
security deposits except as set forth in Exhibit "K".
(4) Neither WCP nor Seller has sent written
notice to any tenant claiming that such tenant is in default,
which default remains uncured, and no action or proceeding
instituted against WCP or Seller by any tenant of the Property
is presently pending in any court.
(5) Notwithstanding anything to the contrary
contained herein, Seller shall have no obligation or liability
to Buyer with respect to any of the foregoing matters which
shall be confirmed as correct in any Tenant Estoppel
Certificate delivered hereunder.
(g) Prudential Matters. WCP is not in monetary
default or, to Seller's knowledge, material non-monetary
default under the Prudential Loan or the Land Option
Agreement.
(h) Litigation. There is no pending (nor, to Seller's
knowledge, has WCP or Seller received any written notice of
any threatened) action, litigation, condemnation or other
proceeding against the Property or against WCP or Seller with
respect to the Partnership Interest.
(i) Compliance. Neither WCP nor Seller has received
any written notice from any governmental authority having
jurisdiction over the Property to the effect that the Property
is not in compliance with applicable laws and ordinances.
(j) Service Agreements. Other than those which are
cancelable on 30 days' notice, neither WCP nor Seller has
entered into any service agreements or contracts ("Service
Agreements") or other agreements, oral or written (other than
as set forth in this Agreement) relating to the Property which
will be in force on the Closing Date, except as described in
Exhibit "L" attached hereto, and neither WCP nor Seller has
received any written notice of any material default thereunder
that remains uncured.
(k) Hazardous Substances. Except as otherwise
disclosed in writing to Buyer, neither WCP nor Seller
has received any written notice from any governmental
agency or third party professional consultants that the
18 DBLA-179348L.6
<PAGE>
Property contains any Hazardous Material which would, as of
the date this representation is made, give rise to an
"Environmental Claim" or "Environmental Compliance Obligation"
(as hereinafter defined). In addition, except as otherwise
disclosed in writing to Buyer, the Property does not contain
asbestos, PCB or other materials known to Seller to have, as
of the date of this Agreement, to have been determined to be
hazardous by any Governmental Agency (other than any Excluded
Items) nor does the Property contain, to Seller's knowledge,
any underground storage tank which has not been disclosed in
writing to Buyer. The term "Hazardous Material" means: (I)
asbestos, PCB, urea formaldehyde, any chemicals, flammable
substances or explosive, any radioactive materials (including
radon), any hazardous wastes or substances, any toxic wastes
or substances, or any other materials or pollutants which
have, as of the date of this Agreement, been determined to be
hazardous by any applicable Federal, state, or local law or by
regulations of the U.S. Environmental Protection Agency, the
U.S. Department of Energy, the U.S. Department of Labor, the
U.S. Department of Transportation, and/or any instrumentality
authorized to regulate materials and substances in the
environment which has jurisdiction over the Property
("Environmental Agency"), or (II) any oil, petroleum or
petroleum or petroleum derived substance, any drilling fluids,
produced waters and other wastes associated with the
exploration, development, or production of crude oil, which
materials listed under items (I) and (II) above cause the
Property to be in material violation of any applicable
environmental laws or the regulations of any Environmental
Agency. The term "Hazardous Material" does not include (1)
motor oil and gasoline contained in vehicles not used
primarily for the transport of motor oil or gasoline, or (2)
materials which are stored or used in the ordinary course of a
tenant's occupancy at (or Seller or Seller's managing agents'
operation of) the Property, or which are stored, used, held,
or disposed of in compliance with all applicable laws or
ordinance, or (3) any other materials, items and matters which
are present in connection with, or which otherwise result
from, the use or occupancy of the Property for medical
purposes (it being understood and agreed that Seller makes no
representations or warranties of any kind or nature respecting
the presence of any such medical-related materials, items or
matters). The term "Environmental Claim" means any third-party
claim for personal injury, death and/or property damage (other
than property damage to the Property themselves) made,
asserted or prosecuted by or on behalf of any person or
19 DBLA-179348L.6
<PAGE>
entity, including, without limitation, any governmental
entity, or any present or former tenant, and arising or
allegedly arising out of any Hazardous Material which was
present or released in, on, under, or about the Property (or
any part). The term "Environmental Compliance Obligation"
means any requirement imposed by an Environmental Agency to
bring the Property into compliance with applicable Federal,
state, and local laws and regulations directly relating to the
existence in, on, under or about the Property of any Hazardous
Material.
(l) Insurance. Attached hereto as Exhibit "M" is a
summary of the insurance currently carried by WCP with respect
to the Property.
(m) Tax Bills. Attached hereto as Exhibit "N" are
copies of current tax bills with respect to the Property.
(n) Compliance with Law. To Seller's knowledge, the
Property and the use and operation thereof does not violate
any material federal, state, municipal and other governmental
statutes, ordinances, by-laws, rules, regulations or any other
legal requirements, including, without limitation, those
relating to construction, occupancy, zoning, adequacy of
parking, environmental protection, occupational health and
safety and fire safety applicable thereto; and there are
presently in effect all material licenses, permits and other
authorizations necessary for the current use, occupancy and
operation thereof. Neither Seller nor WCP has received written
notice of any threatened request, application, proceeding,
plan, study or effort which would materially adversely affect
the present use or zoning of the Property or which would
modify or realign any adjacent street or highway.
(o) Seller's Knowledge. As used herein, the terms
"Seller's knowledge", "known to Seller" or other similar
phrases means the present actual knowledge of Douglas Norberg
and Ronald Blake (which individuals Seller represents and
warrants are or have been sufficiently involved and reasonably
familiar with WCP). Such individuals shall not have any
personal liability in connection herewith.
7.2 Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows:
20 DBLA-179348L.6
<PAGE>
7.2.1 Organization, Etc. Buyer is a real estate investment
trust duly organized, validly existing and in good standing under the
laws of the State of Maryland and has all requisite power and authority
to own and lease its properties and to carry on its business as
presently conducted.
7.2.2 Authorization. Buyer has all requisite power and
authority to execute and deliver this Agreement and the other
agreements and instruments to be executed and delivered by it hereunder
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Buyer of this Agreement and such
other agreements and instruments has been duly and validly authorized
by the trustees of Buyer, and no other action or authorization on
behalf of Buyer is required in connection therewith.
7.2.3 Validity and Enforceability. This Agreement has been
duly authorized, executed and delivered by Buyer and constitutes and
the other agreements and instruments to be executed and delivered
hereunder by Buyer, when executed and delivered by Buyer, will
constitute, legal, valid and binding obligations of Buyer enforceable
against Buyer in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally or by general equitable
principles.
7.2.4 No Conflict. Neither the execution and delivery of this
Agreement by Buyer nor the execution and delivery by Buyer of the other
agreements and instruments to be executed and delivered by it
hereunder, nor the consummation of the transactions contemplated
hereunder or thereunder, will (i) conflict with or result in a breach
or violation of, or constitute a default under, or result in the
creation of any material lien, charge or encumbrance upon, any of the
properties or assets of Buyer or the Declaration of Trust of Buyer or
any material indenture, mortgage, lease, loan agreement or other
agreement or instrument to which Buyer is a party or by which it is
bound or to which any of its material properties or assets is subject
or (ii) violate any material law, statute, rule, regulation, judgment
or decree applicable to Buyer. No third party consents are required by
the terms of any indenture, mortgage, lease, loan agreement or other
agreement or instrument to which Buyer is a party or by which any of
them is bound or to which any of their respective properties or assets
is subject for the execution and delivery of this Agreement or any
other agreement or instrument to be executed and delivered by Buyer
hereunder
21 DBLA-179348L.6
<PAGE>
or the consummation of the transactions provided for herein or therein
which will not be obtained prior to Closing.
7.2.5 No Governmental Consent or Approval Required. No
consent, approval or authorization of, or declaration to or filing
with, any governmental or regulatory authority is required for the
valid execution and delivery by Buyer of this Agreement or any other
agreement or instrument to be executed and delivered by Buyer hereunder
or the consummation of the transactions provided for herein or therein.
7.3 Survival. Any cause of action of a party for a breach of the
foregoing representations and warranties shall survive until December 1, 1997,
at which time such representations and warranties (and any cause of action
resulting from a breach thereof not then asserted in writing or in litigation)
shall terminate (such period ending on December 1, 1997 being herein called the
"Survival Period"). Notwithstanding the foregoing, if Buyer shall have knowledge
as of the Closing Date that any of the representations or warranties of Seller
contained herein are false or inaccurate or that Seller is in breach or default
of any of its obligations under this Agreement, and Buyer nonetheless closes the
transactions hereunder and acquires the Property, then Seller shall have no
liability or obligation respecting such false or inaccurate representations or
warranties or other breach or default (and any cause of action resulting
therefrom shall terminate upon such closing hereunder).
7.4 Limitation of Liability.
7.4.1 Notwithstanding anything to the contrary contained
herein, if the closing of the transactions hereunder shall have occurred (and
Buyer shall not have waived, relinquished or released any applicable rights in
further limitation), the aggregate liability of Seller (and any direct or
indirect partner in Seller) arising pursuant to or in connection with the
representations, warranties, indemnifications, covenants or other obligations
(whether express or implied) of Seller under this Agreement (or any document
executed or delivered in connection herewith) shall not exceed $500,000.00 (plus
up to $50,000.00 in the aggregate for legal fees and costs to the extent payable
pursuant to Section 10.10 hereof).
7.4.2 No constituent partner in, or agent of Seller, nor any
advisor, trustee, director, officer, employee, beneficiary, shareholder,
participant, representative or agent of any corporation or trust that is, or
becomes, a constituent partner in Seller and Wright Runstad Associates Limited
Partnership, a Washington limited partnership ["WRALP"] shall have any personal
liability, directly or indirectly, under or in connection with this Agreement or
any agreement made or entered
22 DBLA-179348L.6
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into under or pursuant to the provisions of this Agreement, or any amendment or
amendments to any of the foregoing made at any time or times, heretofore or
hereafter, and Buyer and its successors and assigns and, without limitation, all
other persons and entities, shall look solely to the assets of Seller for the
payment of any claim or for any performance, and Buyer, on behalf of itself and
its successors and assigns, hereby waives any and all such personal liability.
Notwithstanding anything to the contrary contained in this Agreement, neither
the negative capital account of any constituent partner in Seller (or in any
other constituent partner of Seller), nor any obligation of any constituent
partner in WCP (or in any other constituent partner of Seller) to restore a
negative capital account or to contribute capital to MOBL (or to any other
constituent partner of Seller), shall at any time be deemed to be the property
or an asset of Seller or any such other constituent partner (and neither Buyer
nor any of its successors or assigns shall have any right to collect, enforce or
proceed against or with respect to any such negative capital account of
partner's obligation to restore or contribute).
8. Covenants.
8.1 Interim Covenants of Buyer. Until the Closing Date or the sooner
termination of this Agreement:
8.1.1 Representations. Buyer covenants and agrees that it will not take
any action or enter into any transaction which would cause any representation
contained in paragraph 7.2 of this Agreement to be inaccurate in any material
respect if remade immediately after the occurrence of such action or
transaction.
8.2 Interim Covenants of Seller. Until the Closing Date or the sooner
termination of this Agreement:
8.2.1 Representations. Seller covenants and agrees that it
will not take any action or enter into any transaction which would
cause any representation contained in paragraph 7.1.2 of this Agreement
to be inaccurate in any material respect if remade immediately after
the occurrence of such action or transaction.
8.2.2 Additional Actions. Seller will use diligent efforts to
take, or cause to be taken, all action, and to do, or cause to be done,
all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and, in connection
therewith, shall exercise all rights and remedies at law and in equity
against any third party to the extent available and necessary to cause
the Closing to occur, provided that Buyer shall agree to reimburse
Seller the costs thereof. Seller and Buyer shall
23 DBLA-179348L.6
<PAGE>
consult with respect to the exercise of any such rights and remedies.
8.2.3 Compliance with Laws, Etc.. Seller shall comply, and
cause WCP to comply, in all material respects, with (i) all laws,
regulations and other requirements from time to time applicable of
every governmental body having jurisdiction of the Property or the use
or occupancy of the Improvements located thereon and (ii) all terms,
covenants and conditions of all leases, all instruments of record and
any other agreements affecting the Property.
8.2.4 Approval of Agreements. Seller shall not permit WCP to
and shall not enter into, modify, amend or terminate any lease or any
other agreement with respect to the Property which would encumber or be
binding upon the Property or WCP from and after the Closing Date
without in each instance obtaining the prior written consent of the
Buyer.
8.2.5 Notice of Material Changes or Untrue Representations.
Upon learning of any material change in any condition with respect to
the Property or of any event or circumstance which makes any
representation or warranty of Seller to Buyer under this Agreement
untrue or misleading, Seller shall promptly to notify Buyer thereof
(Buyer agreeing, on learning of any such fact or condition, promptly to
notify Seller thereof).
8.2.6 Operation of Property. Seller shall continue to operate
and cause WCP to continue to operate the Property in a good and
businesslike fashion consistent with their past practices and to cause
the Property to be maintained in good working order and condition in a
manner consistent with past practice.
9. Indemnification.
9.1 By Buyer. Buyer shall hold harmless, indemnify and defend Seller
from and against: (1) any claims, losses, damages, liabilities and expenses
(including reasonable attorneys' fees), imposed upon or incurred in connection
with any breach of a representation and warranty of Buyer contained in this
Agreement; (2) any and all loss, damage or third party claims in any way arising
from Buyer's inspections or examinations of the Property prior to the Closing
Date; and (3) all costs and expenses, including reasonable attorneys' fees,
incurred by Seller as a result of the foregoing.
9.2 By Seller. Seller shall hold harmless, indemnify and defend Buyer
from and against: (1) any claims, losses, damages, liabilities and expenses
(including reasonable attorneys' fees),
24 DBLA-179348L.6
<PAGE>
imposed upon or incurred in connection with any breach of a representation and
warranty of Seller contained in this Agreement; and (2) all costs and expenses,
including reasonable attorneys' fees, incurred by Buyer as a result of such
claims. The foregoing indemnity shall not cover any matters relating to title or
marketability of the Property (Buyer relying exclusively upon the coverage
provided by the Owner's Policy as to such matters).
9.3 General Provisions. The indemnification obligations under this
Agreement shall be subject to the limitations set forth in Section 11.4, shall
survive the Closing and shall be subject to the following provisions:
9.3.1 Procedure. The party seeking indemnification
("Indemnitee") shall notify the other party ("Indemnitor") of any Claim
against Indemnitee within fifteen (15) business days after it has
notice of such Claim, but failure to notify Indemnitor shall in no case
prejudice the rights of Indemnitee under this Agreement unless
Indemnitor shall be prejudiced by such failure and then only to the
extent of such prejudice. Should Indemnitor fail to discharge or
undertake to defend Indemnitee against such liability (with counsel
approved by Indemnitee), within ten (10) days after Indemnitee gives
Indemnitor written notice of the same, then Indemnitee may settle such
Claim, and Indemnitor's liability to Indemnitee shall be conclusively
established by such settlement, the amount of such liability to include
both the settlement consideration and the reasonable costs and
expenses, including attorneys' fees, incurred by Indemnitee in
effecting such settlement. Indemnitee shall have the right to employ
its own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of Indemnitee unless: (a) the
employment of such counsel shall have been authorized in writing by
Indemnitor in connection with the defense of such action, (b)
Indemnitor shall not have employed counsel to direct the defense of
such action, or (c) Indemnitee shall have reasonably concluded that
there may be defenses available to it which are different from or
additional to those available to Indemnitor (in which case Indemnitor
shall not have the right to direct the defense of such action or of
Indemnitee), in any of which events such fees and expenses shall be
borne by Indemnitor.
9.3.2 Beneficiaries. The indemnification obligations
under this Agreement shall also extend to any present or future
advisor, trustee, director, officer, partner, member, employee,
beneficiary, shareholder, participant or agent of or in Indemnitee or
any entity now or hereafter having a direct or indirect ownership
interest in Indemnitee.
25 DBLA-179348L.6
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10. Miscellaneous.
10.1 Brokers. Other than the engagement of Smith Barney by Seller whose
fees shall be paid by Seller out of escrow and a brokerage fee payable to
Richard Ellis, LLP (which is to be paid through escrow by New Partnership),
Seller represents and warrants to Buyer, and Buyer represents and warrants to
Seller that no broker or finder has been engaged by it, respectively, in
connection with any of the transactions contemplated by this Agreement or to its
knowledge is in any way connected with any of such transactions. In the event of
a claim for broker's or finder's fee or commissions in connection herewith, then
Seller shall indemnify and defend Buyer from the same if it shall be based upon
any statement or agreement alleged to have been made by Seller; and Buyer shall
defend and indemnify Seller from the same if it shall be based upon any
statement or agreement alleged to have been made by Buyer.
10.2 Entire Agreement. This Agreement contains the entire agreement
between the parties respecting the matters herein set forth and supersedes all
prior agreements between the parties hereto respecting such matters. This
Agreement may not be modified or amended except by written agreement signed by
both parties.
10.3 Time of the Essence. Time is of the essence of this Agreement.
10.4 Interpretation. Paragraph headings shall not be used in construing
this Agreement. Each party acknowledges that such party and its counsel, after
negotiation and consultation, have reviewed and revised this Agreement. As such,
the terms of this Agreement shall be fairly construed and the usual rule of
construction, to the effect that any ambiguities herein should be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any amendments, modifications or exhibits hereto or thereto.
10.5 Governing Law. Except for matters regarding the internal affairs
of Buyer and issues of or limitations on any personal liability of the
shareholders and trustees of Buyer for obligations of Buyer, as to which the
laws of the State of Maryland shall govern, this Agreement shall be construed
and enforced in accordance with the laws of the State of California.
10.6 Successors and Assigns. Buyer may not assign or transfer its
rights or obligations under this Agreement without the prior written consent of
Seller (in which event such transferee shall assume in writing all of the
transferor's obligations hereunder, but such transferor shall not be released
from its obligations hereunder) which shall not be unreasonably withheld and
shall not be required for assignments or transfers
26 DBLA-179348L.6
<PAGE>
to affiliates of Buyer. No consent given by Seller to any transfer or assignment
of Buyer's rights or obligations hereunder shall be construed as a consent to
any other transfer or assignment of Buyer's rights or obligations hereunder. No
transfer or assignment in violation of the provisions hereof shall be valid or
enforceable. Subject to the foregoing, this Agreement and the terms and
provisions hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
10.7 Notices. Any notice which a party is required or may desire to
give the other shall be in writing and shall be sent by personal delivery or by
mail either (i) by United States registered or certified mail, return receipt
requested, postage prepaid, (ii) by facsimile transmission (followed by
overnight delivery pursuant to clause (iii) hereafter), or (iii) by Federal
Express or similar generally recognized overnight carrier regularly providing
proof of delivery, addressed as follows (subject to the right of a party to
designate a different address for itself by notice similarly given):
To Buyer: To Escrow Holder:
Health and Retirement Properties Chicago Title Company/
Trust Escrow Division
400 Centre Street 700 South Flower Street
Newton, MA 02158 9th Floor
Attention: David J. Hegarty, Los Angeles, California 90017
President Attention: Mr. Rose Martinez
Telephone: (617) 332-3990 Telephone: (213) 488-4300
Facsimile: (617) 332-2261 Facsimile: (213) 488-3287
With Copy To:
Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attn: Jennifer B. Clark, Esq.
Telephone (617) 338-2406
Facsimile: (617) 338-2880
27 DBLA-179348L.6
<PAGE>
To Seller:
Medical Office Buildings, Ltd.
c/o Wright Runstad & Co.
1191 Second Avenue, Suite 2000
Seattle, Washington 98101-2933
Attention: Mr. H. Jon Runstad
Telephone: (206) 223-8791
Facsimile: (206) 447-9000
With Copy To:
Dewey Ballantine
333 South Hope Street, Suite 3000
Los Angeles, California 90071
Attention: Alan Wayte, Esq.
Telephone: (213) 617-6501
Facsimile: (213) 625-0562
Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery, as the case may be. Any
such notice not so given shall be deemed given upon receipt of the same by the
party to whom the same is to be given.
10.8 Third Parties. Nothing in this Agreement, whether expressed or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any other person other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision hereof give any third parties any right of
subrogation or action over or against any party to this Agreement. This
Agreement is not intended to and does not create any third party beneficiary
rights whatsoever.
10.9 ARBITRATION OF CERTAIN DISPUTES. ANY CONTROVERSY OR CLAIM ARISING
UNDER OR RELATING TO THE TERMS OF THIS AGREEMENT OR ANY OF THE EXHIBITS ATTACHED
TO IT, AND ANY PROCEEDINGS TO ENFORCE THIS AGREEMENT OR RIGHTS UNDER THIS
AGREEMENT AND ITS EXHIBITS OTHER THAN THE "EXCLUDED MATTERS" (AS HEREINAFTER
DEFINED) SHALL BE SETTLED BY ARBITRATION IN THE CITY OF LOS ANGELES, IN
ACCORDANCE WITH THE EXISTING RULES ("RULES") OF PRACTICES AND PROCEDURE OF THE
JUDICIAL ARBITRATION & MEDIATION SERVICES ("JAMS"). EACH PARTY SHALL SELECT AN
ARBITRATOR FROM THE APPROVED LIST PROVIDED BY JAMS, SUCH SELECTION TO BE MADE BY
NOTIFICATION TO THE OTHER PARTY GIVEN IN WRITING WITHIN FIFTEEN (15) DAYS OF THE
SUBMISSION OF THE DISPUTE TO ARBITRATION HEREUNDER. FAILURE OF A PARTY TO GIVE
NOTICE OF ITS SELECTION SHALL CAUSE THE SINGLE ARBITRATOR SELECTED BY THE OTHER
PARTY TO
28 DBLA-179348L.6
<PAGE>
BE THE SOLE ARBITRATOR IN CONNECTION WITH THE APPLICABLE DISPUTE HEREUNDER. IF
EACH PARTY DESIGNATES AN ARBITRATOR, THEN WITHIN FIFTEEN (15) DAYS AFTER BOTH
ARBITRATORS HAVE BEEN SO DESIGNATED, SUCH ARBITRATORS SHALL DESIGNATE A THIRD
ARBITRATOR FROM A JAMS-APPROVED LIST. THE DECISION OF A MAJORITY OF THE
ARBITRATORS HEREUNDER SHALL BE CONCLUSIVE. AS SOON AS PRACTICABLE AFTER
SELECTION OF THE ARBITRATOR(S), THE ARBITRATOR(S) SHALL DETERMINE A REASONABLE
ESTIMATE OF THE ANTICIPATED FEES AND COSTS OF THE ARBITRATOR(S), AND SHALL
RENDER A STATEMENT TO EACH PARTY SETTING FORTH SAID FEES AND COSTS. THEREAFTER
EACH PARTY SHALL, WITHIN TEN (10) DAYS OF RECEIPT OF SAID STATEMENT, DEPOSIT
ONE-HALF OF SAID SUM WITH THE ARBITRATOR(S) TO BE APPLIED AGAINST SUCH FEES AND
COSTS (SUBJECT TO THE PROVISIONS OF THIS AGREEMENT). FAILURE OF ANY PARTY TO
MAKE SUCH DEPOSIT SHALL RESULT IN A FORFEITURE BY THE NON-DEPOSITING PARTY OF
THE RIGHT TO PROSECUTE OR DEFEND THE CLAIM WHICH IS THE SUBJECT OF THE
ARBITRATION, BUT SHALL NOT OTHERWISE SERVE TO ABATE, STAY OR SUSPEND THE
ARBITRATION PROCEEDINGS. THE ARBITRATOR(S) SHALL HAVE THE RIGHT TO DETERMINE THE
SCOPE OF THEIR JURISDICTION, THE EXTENT OF DISCOVERY AND TO GRANT EQUITABLE
RELIEF, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO ORDER THE EXPUNGEMENT OF ANY
LIS PENDENS WHICH THE ARBITRATOR(S) DEEM IMPROPER. THE PREVAILING PARTY SHALL BE
ENTITLED TO REASONABLE ATTORNEYS' FEES AND OTHER REASONABLE COSTS INCURRED IN
CONNECTION WITH THE ARBITRATION OR ANY OTHER LITIGATION PLUS INTEREST ON THE
AMOUNT OF ANY AWARD. JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY
BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. THIS PARAGRAPH MUST BE
INITIALED BELOW IN ORDER FOR THIS PARAGRAPH OF THE AGREEMENT TO BE BINDING.
NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES"
PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND YOU
ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A
COURT OR BEFORE A JURY. BY INITIALLING IN THE SPACE BELOW, YOU ARE GIVING UP
YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE
SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE
TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED
TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND
UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS
INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION.
BUYER'S INITIALS: SELLER'S INITIALS:
As used herein, "Excluded Matters" means any controversy, claim or proceeding
with respect to or otherwise related to a breach or default of any
representation or warranty contained in this
29 DBLA-179348L.6
<PAGE>
Agreement (which matters shall not be subject to the arbitration provisions
contained herein).
10.10 Legal Costs. The parties hereto agree that they shall pay
directly any and all legal costs which they have incurred on their own behalf in
the preparation of this Agreement and all deeds and other agreements pertaining
to this transaction and that such legal costs shall not be part of the closing
costs. In addition, if either Buyer or Seller brings any suit or other
proceeding with respect to the subject matter or the enforcement of this
Agreement, the prevailing party (as determined by the court, agency or other
authority before which such suit or proceeding is commenced), in addition to
such other relief as may be awarded, shall be entitled to recover reasonable
attorneys' fees, expenses and costs of investigation actually incurred. The
foregoing includes, but is not limited to, attorneys' fees, expenses and costs
of investigation (including, without limitation, those incurred in appellate
proceedings), costs incurred in establishing the right to indemnification, or in
any action or participation in, or in connection with, any case or proceeding
under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code Sections
101 et seq.), or any successor statutes.
10.11 Further Instruments. Each party will, whenever (whether before or
after Closing) and as often as it shall be reasonably requested so to do by the
other, cause to be executed, acknowledged or delivered any and all such further
instruments and documents as may be necessary or proper, in the reasonable
opinion of the requesting party, in order to carry out the intent and purpose of
this Agreement (provided, however, the same do not materially increase the costs
to, or liability or obligations of, a party in a manner not otherwise provided
for herein). In connection therewith, at Buyer's request, upon prior arrangement
with Seller, at any time during reasonable business hours within two (2) years
after the Closing, Seller shall, at Buyer's cost and expense, provide to Buyer's
designated independent auditor, reasonable access to appropriate books and
records of Seller relating solely to the Property regarding the period for which
Buyer is required by applicable rules or regulations of the Securities Exchange
Commission to have audited financial statements prepared with respect to the
Property, but only to the extent that such books and records are then in the
Seller's possession or control, relate to the period during which WCP or Seller
owned the Property and are not confidential, proprietary or privileged. Seller
shall not make or be deemed to make any representations or warranties of any
kind regarding such books and records (including, without limitation, the
accuracy or thoroughness thereof), nor shall Seller have any liability of any
kind or nature with respect thereto.
30 DBLA-179348L.6
<PAGE>
10.12 Tax Matters. Seller has obtained or will obtain independent
advice on all tax matters and agrees to hold Buyer and its partners and their
officers, directors and employees free and harmless from any tax consequences
whatsoever as a result of the acquisition of the Property and further
acknowledges that Buyer has not made any representations or warranties express
or implied about any tax consequences relating to this transaction.
10.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
11. DEFAULT
11.1 Default by Seller. If Seller shall have made any representation of
warranty herein which shall be untrue or misleading in any material respect, or
if Seller shall fail to perform any of the material covenants and agreements
contained herein to be performed by them and such failure continues for a period
of ten (10) days after notice thereof from Buyer, Buyer may terminate this
Agreement and/or Buyer may pursue any and all remedies available to it at law or
in equity, including, but not limited to, a suit for specific performance or
other equitable relief.
11.2 Default by Buyer. If Buyer shall have made any representation or
warranty herein which shall be untrue or misleading in any material respect, or
if Buyer shall fail to perform any of the covenants and agreements contained
herein to be performed by it and such failure shall continue for a period of ten
(10) days after notice thereof from Seller, Seller may, as its sole remedy at
law and in equity, terminate this Agreement and receive the liquidated damages
provided in Section 11.4 hereof.
11.3 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING
THE BUYER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE BUYER. ALL
PERSONS DEALING WITH THE BUYER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE
BUYER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
11.4 Certain Remedies.
31 DBLA-179348L.6
<PAGE>
LIQUIDATED DAMAGES AND DISPOSITION OF ESCROW DEPOSIT. IF THE
TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT
UNDER THIS AGREEMENT OR THE FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED
IN PARAGRAPH 4 HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH
PARAGRAPH 6 HEREOF, AND BUYER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT,
THEN THE ESCROW DEPOSIT SHALL BE RETURNED TO BUYER, AND NEITHER PARTY SHALL HAVE
ANY FURTHER OBLIGATION OR LIABILITY TO THE OTHER; PROVIDED, HOWEVER, IF THE
TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE BY REASON OF SELLER'S DEFAULT, AND
BUYER SHALL HAVE FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND SHALL BE READY,
WILLING AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO SPECIFICALLY ENFORCE
THIS AGREEMENT (BUT NO OTHER ACTION, FOR DAMAGES OR OTHERWISE, SHALL BE
PERMITTED). IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL NOT CLOSE FOR ANY
REASON OTHER THAN THE FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED IN
PARAGRAPH 4 HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH
PARAGRAPH 6 HEREOF OR THE DEFAULT OF SELLER, THEN THE SUM OF $5,000,000 IS
HEREBY AGREED TO BE FULL COMPENSATION AND LIQUIDATED DAMAGES PAYABLE TO SELLER
UNDER AND IN CONNECTION WITH THIS AGREEMENT AND THE DEPOSIT SHALL BE PAID TO
SELLER AS PARTIAL PAYMENT OF SUCH SUM. IN CONNECTION WITH THE FOREGOING, THE
PARTIES RECOGNIZE THAT SELLER WILL INCUR EXPENSE IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THAT THE PROPERTY WILL BE REMOVED
FROM THE MARKET AND SELLER WILL BE EXPOSED TO DAMAGES TO THIRD PARTIES. FURTHER,
THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF
DETRIMENT TO SELLER CAUSED BY THE BREACH BY BUYER UNDER THIS AGREEMENT AND THE
FAILURE OR THE CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR
THE AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER'S BREACH
OR DEFAULT. IN THE EVENT THE SALE OF THE PROPERTY SHALL NOT BE CONSUMMATED ON
ACCOUNT OF BUYER'S DEFAULT, THEN THE SUM OF $5,000,000, INCLUDING THE ESCROW
DEPOSIT, SHALL BE SELLER'S SOLE AND EXCLUSIVE DAMAGES UNDER THIS AGREEMENT BY
REASON OF SUCH DEFAULT.
Seller's Initials Buyer's Initials
11.5 Confidentiality.
No partner, principal, employee, partner or affiliate of Seller or WCP
shall trade in the shares of Buyer until public announcement of this transaction
has been made. Seller shall not make any public announcement of the transactions
contemplated by this Agreement or otherwise disclose this transaction to any
third party without the prior written consent of Buyer.
32 DBLA-179348L.6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as of the date first above written.
SELLER: MEDICAL OFFICES BUILDINGS, LTD., a Washington
limited partnership
BY: WRIGHT RUNSTAD ASSOCIATES LIMITED
PARTNERSHIP, a Washington limited
partnership
Its General Partner
BY: WRIGHT RUNSTAD & COMPANY, a
Washington corporation
Its General Partner
By: /s/ H.J. Runstad
Name: H.J. Runstad
Title: Chairman and C.E.O.
BUYER: HEALTH AND RETIREMENT PROPERTIES TRUST, a
Maryland real estate investment trust
By: /s/ Ajay Saini
Name: Ajay Saini
Title: Treasurer and C.F.O.
33 DBLA-179348L.6
<PAGE>
ESCROW HOLDER'S ACKNOWLEDGEMENT
The undersigned hereby executes this Exchange Agreement to evidence is
agreement to act as Escrow Holder in accordance with the terms of this
Agreement.
Date: ____________, 1997 CHICAGO TITLE INSURANCE
COMPANY, a Missouri corporation
By:_______________________________
Name:_____________________________
Title:____________________________
34 DBLA-179348L.6
<PAGE>
EXHIBIT LIST
"A" - Property Description
"B" - List of Personal Property
"C" - Form of Guaranty
"D" - Pro Forma Title Policy
"E" - Memorandum Regarding New Partnership
Agreement
"F" - Required Tenants List
"G" - Intentionally Deleted
"H" - Intentionally Deleted
"I-1" - Leasehold Assignment
"I-2" - General Assignment
"J" - Exception List to Seller's Representations
"K" - List of Leases
"L" - Service Agreements
"M" - Current Insurance
"N" - Tax Bills
"O" - Lease Commissions and Tenant Improvement
Costs
35 DBLA-179348L.6
<PAGE>
The schedules to this agreement have been omitted pursuant to Regulation S-K,
Item 601(b)(2). The contents of such schedules are identified on the List of
Exhibits which is a part of the agreement. The Company undertakes to provide
such schedules to the Securities and Exchange Commission upon request.
