4
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)April 3, 1998
DEAN WITTER REALTY YIELD PLUS II, L.P.
(Exact name of registrant as specified in its charter)
Delaware 0-18149 13-
3469111
(State or other jurisdiction Commission (I.R.S. Employer
of incorporation) File Number) Identification
No.)
Two World Trade Center, New York, New York 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code(212) 392-1054
(Former name or former address, if changed since
last report)
Item 2. Acquisition or Disposition of Assets
Pursuant to a Purchase and Sale Agreement dated as of
December 26, 1997, DW Michelson Associates ("DMA"), which is
owned 49.19% by the Partnership and 50.81% by Dean Witter
Realty Yield Plus, L.P. ("Yield Plus"), an affiliated public
partnership, agreed to sell to SC Enterprises ("SCE") DMA's
90% general partnership interest in Michelson Company
Limited Partnership (the "Company"), owner of the Michelson
property, and two promissory notes (totaling approximately
$1.2 million) due from SCE for a negotiated aggregate sale
price of $64 million. SCE, an affiliate of the developer of
the property, owns the remaining 10% limited partnership
interest in the Company. SCE assigned its right to purchase
the interest in the Company to Spieker Properties, L.P.,
which is not affiliated with the Partnership, its affiliated
partnerships or SCE.
The sale price was received in cash at closing on April 3,
1998. The Partnership received approximately $31.1 million,
representing its share of proceeds, net of closing costs and
other deductions.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
On a pro forma basis, if the sale of the Michelson
property had been consummated on December 31, 1997, the
Partnership's Balance Sheet as of such date would have
reflected an increase in cash and cash equivalents of
$31.2 million, a decrease in investments in
unconsolidated partnerships of $18.5 million and an
increase in Partners' capital of $12.7 million. For
the Statement of Income for the year ended December 31,
1997, if the property was sold at the beginning of
1997, then the Partnership's equity in earnings and net
income would have decreased by $0.9 million, and the
net income per limited partnership unit of $9.05 would
have decreased by $4.85 to $4.20. The pro forma
adjustments to the Statement of Income exclude the
Partnership's share of the non-recurring gain on the
sale of the property.
(c) Exhibits
(1) Purchase and Sale Agreement, dated as of December
26, 1997, between DW Michelson Associates, as
Seller, Michelson Company Limited Partnership, as
Acquired Partnership, and SC Enterprises, as
Purchaser, First Amendment to Purchase and Sale
Agreement dated as of February 13, 1998 and Assignment
and Assumption Agreement dated as of April 3, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
DEAN WITTER REALTY YIELD PLUS
II, L.P.
By: Dean Witter Realty Yield
Plus II, Inc.
Managing General Partner
Date: April 20, 1998 By: /s/E. Davisson
Hardman, Jr.
E. Davisson Hardman, Jr.
President
Exhibit Index for Dean Witter Realty Yield Plus II, L.P.
Exhibit
No. Description
10(m) Purchase and Sale Agreement, dated as of
December 26, 1997 between DW Michelson Associates, as
Seller, Michelson Company Limited Partnership, as
Acquired Partnership, and SC Enterprises, as
Purchaser, First Amendment to Purchase and Sale
Agreement dated as of February 13, 1998 and
Assignment and Assumption Agreement dated as of
April 3, 1998.
E-1
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
the 26th day of December, 1997, by and between DW Michelson
Associates, a California general partnership, having an
office c/o Dean Witter Realty Inc., Two World Trade Center,
64th Floor, New York, New York 10048, (the "Seller"),
Michelson Company Limited Partnership, a California limited
partnership (the "Acquired Partnership") and SC Enterprises,
a California limited partnership having an office at 2377
Crenshaw Boulevard, Suite 200, Torrance, California 90501
("Purchaser").
W I T N E S S E T H
WHEREAS, the Seller is the owner of the land known and
numbered as (i) 2600 Michelson Drive, Irvine, California,
and (ii) One Center, Irvine, California;
WHEREAS, the Seller is the owner of 90% of the partnership
interests (collectively, the "Interests") in the Acquired
Partnership;
WHEREAS, the Seller is the owner of the Notes (as defined
herein);
WHEREAS, the Acquired Partnership is the Owner of two
buildings and other improvements (the "Buildings") located
on the Land;
WHEREAS, the Seller and the Purchaser have entered into
negotiations wherein the Purchaser expressed intent to
purchase the Property (as defined herein), the Notes and the
Interests from the Seller and the Seller expressed its
intent to sell the Property, the Notes and the Interests to
the Purchaser; and
WHEREAS, the Seller and the Purchaser now desire to enter
into an agreement whereby, subject to the terms and
conditions contained herein, the Seller shall sell the
Property, the Notes and the Interests to the Purchaser and
the Purchaser shall purchase the Property, the Notes and the
Interests from the Seller.
NOW, THEREFORE, in consideration of ten ($10.00) dollars and
the mutual covenants and agreements hereinafter set forth,
and intending to be legally bound hereby, it is hereby
agreed as follows:
Sale of the Property, the Notes and Interests.
The Seller agrees to sell and convey to the Purchaser, and
the Purchaser agrees to purchase from the Seller, at the
price and upon the terms and conditions set forth in this
Agreement, (A) all those certain plots, pieces and parcels
of land described in Schedule 1 hereto (the "Land") listed
thereon as owned by the Seller, together with (i) all
easements, rights of way, reservations, privileges,
appurtenances, and other estates and rights of the Seller
pertaining to the Land, (ii) all right, title and interest
of the Seller, if any, in and to the Buildings, (iii) all
right, title and interest of the Seller, if any, in and to
the trade names of the Buildings (the Land, together with
all of the foregoing items listed in clauses (i)-(iii) above
being hereinafter sometimes referred to as the "Property");
(B) all right, title and interests of the Seller in and to
the Interests; and (C) the following promissory notes: (a) a
certain Unsecured Promissory Note (the "Unsecured Note")
dated as of October 23, 1991 made payable by Shurl Curci
payable to the Seller in the principal amount of Nine
Hundred and Fifty Thousand Dollars ($950,000), and (b) a
certain Secured Promissory Note (the "Secured Note") dated
as of October 23, 1991 made payable by Shurl Curci to the
Seller in the principal amount of Two Hundred and Fifty
Thousand Dollars ($250,000) (the Secured Note and the
Unsecured Note are hereinafter collectively referred to as
the "Notes").
Excluded Property.
Specifically excluded from the Property and this sale are
all items of personal property not described in Section 1
(and all personal property of tenants under the Leases) and
the items described in Schedule 2 annexed hereto and made a
part hereof.
Closing Date.
The delivery of the Deed and the other documents referenced
in Sections 8 and 9 hereof and the consummation of the
transactions contemplated by this Agreement (the "Closing")
shall take place at the Los Angeles, California or other
local California offices of the Escrow Agent no later than
10:00 A.M. on February 15, 1998 or such earlier date as
Purchaser may elect, upon not less than five business days'
written notice to Seller (the "Closing Date"). No further
extensions of the Closing Date will be permitted except in
accordance with Sections 5.1 or 6.2 hereof.
Purchase Price.
Payment of Purchase Price.
The purchase price to be paid by the Purchaser to the Seller
for the Property, the Interests and the Notes (the "Purchase
Price") is Sixty Four Million and no/100 Dollars
($64,000,000.00) (of which Sixteen Million Dollars
($16,000,000) is allocable to the Property, of which Twenty-
Six Million Dollars ($26,000,000) is allocable to the
satisfaction of all amounts outstanding under the Old
Michelson Note (as hereinafter defined) and the remainder is
allocable to the Interests and the Notes) payable as
follows:
(a) Fifty Thousand and no/100 Dollars ($50,000.00) (the
"Downpayment") shall be payable simultaneously with the
execution and delivery of this Agreement, by delivery to
Commonwealth Land Title Insurance Company (the "Escrow
Agent") of a certified or bank check drawn on or by a bank
which is a member of the New York Clearing House Association
(a "Clearing House Bank") or a certified or bank check drawn
on or by a local California bank which is approved by the
Seller or by wire transfer of immediately available funds to
the Escrow Agent's account as set forth in the Escrow
Agreement. The Downpayment shall be held and disbursed by
the Escrow Agent in accordance with the terms of Section 15.
At the Closing, the Deposit shall be delivered to the Seller
and such amount shall be credited against the portion of the
Purchase Price payable pursuant to Section 2(b);
(b) Purchaser or Purchaser's Nominee (provided that this
Agreement is assigned in accordance with Section 19 hereof)
shall take title to the property subject to a deed of trust
securing that certain Promissory Note (the "Old Michelson
Note") dated March 14, 1988 made by Michelson Co. in the
principal amount of $64,450,695, the balance of which is
$26,000,000.
(c) The balance of the Purchase Price (i.e., the Purchase
Price minus the credit set forth in Section 2(a) above),
plus or minus the apportionments set forth in Section 3,
shall be paid at the Closing by bank wire transfer of
immediately available funds to the Seller's account or to
the account or accounts of such other party or parties as
may be designated by the Seller on or before the Closing
Date.
Order of Transaction.
The parties acknowledge that although the entire transaction
is to close concurrently, the components of the entire
transaction shall be deemed to close in the following order:
First: Purchaser is to purchase the Notes for the purchase
price of $1,000,000;
Second: Purchaser or Purchaser's Nominee (provided this
Agreement is assigned in accordance with Section 19 hereof)
is to purchase the Property and the Interests for
$63,000,000 less the amount of the indebtedness evidenced by
the Old Michelson Note; and
Third: Purchaser, in accordance with Section 9(a), is to
satisfy, in full, all amounts outstanding under the loan
evidenced by the Old Michelson Note.
Apportionments
The following revenues and expenses attributable to both the
Property and the Buildings shall be apportioned between the
Seller and the Purchaser at the Closing as of 11:59 p.m. of
the day preceding the Closing Date (the "Adjustment Date"):
(a) fixed or base rents ("Rents") which have been prepaid,
security deposits referred to in Section 8(b), Rents for the
month in which the Closing occurs and Additional Rents and
other amounts paid by tenants applicable to periods which
expire after the Closing Date, which have been received by
the Acquired Partnership shall be retained by the Acquired
Partnership;
(b) real estate taxes, special assessments (but only any
installment relating to the period in which the Adjustment
Date occurs), water charges, sewer rents and charges and
vault charges, if any, on the basis of the fiscal years (or
applicable billing period if other than a fiscal year),
respectively, for which same have been assessed and not
recoverable from tenants under Leases;
(c) value of prepaid fuel belonging to the Acquired
Partnership stored on the Property, at the Acquired
Partnership's cost, including any taxes, on the basis of a
statement from the Acquired Partnership's suppliers shall be
credited to Seller;
(d) any prepaid items, including, without limitation, fees
for licenses and annual permit and inspection fees which are
paid in connection with the Property shall be credited to
Seller;
(e) utilities, to the extent required by Section 3.4;
(f) deposits with telephone and other utility companies,
and any other persons or entities who supply goods or
services in connection with the Property shall be credited
to Seller;
(g) personal property taxes, if any, on the basis of the
fiscal year for which assessed and not recoverable from
tenants under Leases; and
(h) New Lease Expenses as provided in Section 10.1.2.
Taxes.
If the amount of real estate taxes, special assessments or
other taxes for the Property for the fiscal year during
which Closing occurs is not finally determined at the
Adjustment Date, such taxes shall be apportioned on the
basis of the full amount of the assessment for such period
(or the assessment for the prior tax period if the
assessment for the current tax period is not then known) and
the rate for the immediately prior tax year, and shall be
reapportioned as soon as the new tax rate and valuation, if
any, has been finally determined. If any taxes which have
been apportioned shall subsequently be reduced by abatement,
the amount of such abatement, less the cost of obtaining the
same and after deduction of sums payable to tenants under
Leases or expired or terminated Leases, shall be equitably
apportioned between the parties hereto.
Rents.
Arrearages. If on the Closing Date
any tenant is in arrears in the payment of Rent or has not
paid the Rent payable by it for the month in which the
Closing occurs (whether or not it is in arrears for such
month on the Closing Date), any Rents received by the
Purchaser or the Seller from such tenant after the Closing
shall be applied to amounts due and payable by such tenant
in the manner specified by such tenant, provided that, if
the tenant does not so specify, such Rents shall be applied
to amounts due and payable by such tenant during the
following periods in the following order of priority: (i)
first, to the month in which the Closing occurred, (ii)
second, to the months following the month in which the
Closing occurred, and (iii) third, to the months preceding
the month in which the Closing occurred. If Rents or any
portion thereof received by the Seller or the Purchaser
after the Closing are due and payable to the other party by
reason of this allocation, the appropriate sum, less a
proportionate share of any reasonable attorneys' fees and
costs and expenses expended in connection with the
collection thereof, (to the extent not collected form or
reimbursed by tenant) shall be promptly paid to the other
party.
3.2.2 Additional Rents.
If any tenants are required to pay percentage rent,
escalation charges for real estate taxes, parking charges,
operating expenses and maintenance escalation charges, cost-
of-living increases or other charges of a similar nature
("Additional Rents") and any Additional Rents are collected
by the Purchaser or the Seller from a tenant after the
Closing Date, then such Additional Rents shall be applied to
amounts due and payable by such tenant in the manner
specified by such tenant, provided that, if the tenant does
not so specify, such Additional Rents shall be applied to
amounts due and payable by such tenant during the following
periods in the following order of priority: (i) first, to
the month in which the Closing occurred, (ii) second, to the
months following the month in which the Closing occurred,
and (iii) third, to the months preceding the month in which
the Closing occurred. If Additional Rents or any portion
thereof received by the Seller or the Purchaser after the
Closing are due and payable to the other party by reason of
this allocation, the appropriate sum, less a proportionate
share of any reasonable attorneys' fees and costs and
expenses expended in connection with the collection thereof,
(to the extent not collected from or reimbursed by tenants)
shall be promptly paid to the other party.
3.2.3 Collection After Closing..
After the Closing, the Seller shall continue to have the
right, in its own name, to demand payment of and to collect
Rent and Additional Rent arrearages owed to the Seller by
any tenant, which right shall include, without limitation,
the right to continue or commence legal actions or
proceedings against any tenant (but which right shall
specifically exclude any right to terminate the Lease). The
Purchaser agrees to cooperate with the Seller in connection
with all efforts by the Seller to collect such Rents and
Additional Rents and to take all steps, whether before or
after the Closing Date, as may be reasonably necessary to
carry out the intention of the foregoing, including, without
limitation, the delivery to the Seller, upon demand, of any
relevant books and records, (including any Rent or
Additional Rent statements, receipted bills and copies of
tenant checks used in payment of such Rent or Additional
Rent), the execution of any and all consents or other
documents, and the undertaking of any action reasonably
necessary for the collection of such Rents and Additional
Rents by the Seller, provided, that the cooperation required
pursuant to this sentence shall not require the Purchaser to
incur any costs or initiate any legal action against any
tenant. If for any fiscal period which includes the
Adjustment Date tenants are paying Additional Rent based
upon estimates prepared by the Seller, such Additional Rents
shall be reapportioned when the actual expenses for the
fiscal period are known.
Water.
If there is a water meter on the Property, the Seller shall
furnish a reading to a date not more than thirty (30) days
prior to the Closing Date, and the unfixed water charges and
sewer rent, if any, based thereon for the intervening time
shall be apportioned on the basis of such last reading.
Utilities.
The Seller will attempt to obtain readings of fuel,
telephone, electricity, and gas to be made as of the
Adjustment Date. The Seller shall pay the bills based on
such readings promptly after the same are rendered. If
arrangements cannot be made for any such cut-off reading,
the parties shall apportion the charges for such services on
the basis of the bill therefor for the most recent billing
period prior to the Adjustment Date, and when final bills
are rendered for the period which includes the Adjustment
Date the Seller and Purchaser shall promptly readjust the
apportionments in accordance with such final bills.
Post-Closing Adjustments.
The items set forth in this Section 3 shall be apportioned
at the Closing by payment of the net amount of such
apportionments to the Seller in the manner set forth herein
for the payment of the Purchase Price if the net
apportionment is in favor of the Seller or by a credit
against the Purchase Price if the net apportionment is in
favor of Purchaser. However, if any of the items subject to
apportionment under the foregoing provisions of this Section
3 cannot be apportioned at the Closing because of the
unavailability of the information necessary to compute such
apportionment, or if any errors or omissions in computing
apportionments at the Closing are discovered subsequent to
the Closing, then such item shall be reapportioned and such
errors and omissions corrected as soon as practicable after
the Closing Date and the proper party reimbursed, which
obligation shall survive the Closing for a period of one
year after the Closing Date. Notwithstanding any of the
foregoing provisions of this Section 3.5 to the contrary,
the Purchaser and the Seller agree that the one year
limitation set forth in this Section 3.5 shall not apply to
the parties' obligations under Sections 3.1 and 3.2 and that
such obligations shall survive the Closing forever.
The Seller shall pay in the ordinary course any accounts
payable which are listed on Schedule 2 hereto as Excluded
Property.
Due Diligence Period.
Notwithstanding anything to the contrary contained herein,
the Purchaser shall have a forty-five (45) day period
commencing on the date hereof (the "Due Diligence Period")
to examine title to the Property, to inspect the physical
and financial condition of the Property and to review the
Property Information. Seller shall, within ten (10) days
after Purchaser's written request, deliver to Purchaser
Property Information, requested with adequate specificity by
Purchaser, to the extent such Property Information is in the
Seller's possession. Purchaser shall be responsible for the
cost of locating, reproducing and forwarding such Property
Information to Purchaser. Neither Purchaser nor the
Purchaser's Representatives shall contact any governmental
authority or any of the Seller's or the Acquired
Partnership's tenants, vendors, employees, consultants or
contractors prior to the Closing without (i) providing one
(1) day's advance notice (which notice may be telephonic) of
each such proposed contact to the Seller, and (ii) providing
the Seller and/or its representatives an opportunity to be
present at the time of any such contact.
Access to the Property.
During the Due Diligence Period, the Purchaser and the
Purchaser's Representatives shall have the right to enter
upon the Property and the Buildings for the sole purpose of
inspecting the Property and the Buildings and making
surveys, soil borings, engineering tests and other
investigations, inspections and tests (collectively,
"Investigations"), provided (i) the Purchaser shall give the
Seller not less than three (3) business days' prior written
notice before each entry, (ii) the first such notice shall
include sufficient information to permit the Seller to
review the scope of the proposed Investigations, and (iii)
neither the Purchaser nor the Purchaser's Representatives
shall permit any borings, drillings or samplings to be done
on the Property or the Buildings without the Seller's prior
written consent. Any entry upon the Property and all
Investigations shall be during the Seller's normal business
hours and at the sole risk and expense of the Purchaser and
the Purchaser's Representatives, and shall not interfere
with the activities on or about the Buildings or Property of
the Seller or the Acquired Partnership, their tenants and
their employees and invitees. The Purchaser shall:
(a) promptly repair any damage to the Property or the
Buildings resulting from any such Investigations and
replace, refill and regard any holes made in, or excavations
of, any portion of the Property or the Buildings used for
such Investigations so that the Property or the Buildings
shall be in the same condition as that which existed prior
to such Investigations;
(b) fully comply with all Laws applicable to the
Investigations and all other activities undertaken in
connection therewith;
(c) permit the Seller to have a representative present
during all Investigations undertaken hereunder;
(d) take all actions and implement all protections
necessary to ensure that all actions taken in connection
with the Investigations, and the equipment, materials, and
substances generated, used or brought onto the Property or
into the Buildings pose no threat to the safety or health of
persons or the environment, and cause no damage to the
Property, or the Buildings or other property of the Seller,
the Acquired Partnership or other persons;
(e) if requested by the Seller, furnish to the Seller,
at Seller's expense, copies of all surveys, soil test
results, engineering, asbestos, environmental and other
studies and reports prepared by third parties relating to
the Investigations which the Purchaser shall obtain with
respect to the Property or the Buildings promptly after the
Purchaser's receipt of same;
(f) maintain or cause to be maintained, at the
Purchaser's expense, a policy of comprehensive general
public liability insurance with a combined single limit of
not less than $1,000,000 per occurrence for bodily injury
and property damage, automobile liability coverage including
owned and hired vehicles with a combined single limit of
$1,000,000 per occurrence for bodily injury and property
damage, and an excess umbrella liability policy for bodily
injury and property damage in the minimum amount of
$3,000,000, insuring the Purchaser and the Seller and
certain of Seller's Affiliates listed on Schedule 4, as
additional insureds, against any injuries or damages to
persons or property that may result from or are related to
(i) the Purchaser's and/or the Purchaser's Representatives'
entry upon the Property or into the Buildings, (ii) any
Investigations or other activities conducted thereon or
therein, and (iii) any and all other activities undertaken
by the Purchaser and/or the Purchaser's Representatives in
connection with the Property or the Buildings, and deliver
evidence of such insurance policy to the Seller at the
earlier of ten (10) days after the date of this Agreement or
the first entry on the Property; provided, however, this
requirement may be satisfied by evidence satisfactory to
Seller that Purchaser's blanket coverages include the
coverages herein required.
(g) indemnify the Seller and the Seller's Affiliates and
hold the Seller and the Seller's Affiliates harmless from
and against any and all claims, demands, causes of action,
losses, damages, liabilities, costs and expenses (including
without limitation attorneys' fees and disbursements),
suffered or incurred by the Seller or any of the Seller's
Affiliates to the extent caused by (i) the Purchaser's
and/or the Purchaser's Representatives' entry upon the
Property or into the Buildings, (ii) any investigations or
other activities conducted thereon or therein by the
Purchaser or the Purchaser's Representatives, and (iii) any
liens or encumbrances filed or recorded against the Property
or the Buildings as a consequence of the Investigations; and
(h) not, at any time, contact or communicate with any tenant
of the Property or the Buildings for any reason whatsoever
without the prior written approval of the Seller, which
communications, whether by telephone, in writing or in
person, Seller or its designee shall have the right to be
present at or otherwise participate in.
The provisions of this Section 4.1 shall survive the
termination of this Agreement and the Closing.
Purchaser's Termination Notice.
Subject to the provisions of the last paragraph of this
Section 4.2, the Purchaser shall have the right to elect to
terminate this Agreement by giving written notice (the
"Purchaser's Termination Notice") of such election to the
Seller at any time prior to the expiration of the Due
Diligence Period if the Purchaser shall determine in its
reasonable judgment and discretion that any of the following
conditions to termination are not met as of the date of the
Purchaser's Termination Notice, in which event the
provisions of Section 14.1 shall apply:
(a) the transaction, and the financing requirements
with respect thereto, satisfy the financial criteria of
Purchaser; and
(b) the results of any and all inspections,
investigations, tests and studies (including but not limited
to inspections with regard to environmental conditions,
hazardous materials, zoning, building codes and other
governmental regulations, economic feasibility studies and
seismic reports) with respect to the Property (including all
structural and mechanical systems) are satisfactory and
approved.
If for any reason whatsoever the Seller shall not have
received the Purchaser's Termination Notice prior to the
expiration of the Due Diligence Period, the Purchaser shall
be deemed to have irrevocably waived the right of
termination granted under this Section 4.2, and such right
of termination shall be of no further force or effect.
Estoppel Certificates.
Promptly after execution and delivery of this Agreement, the
Seller agrees to request an Estoppel Certificate from each
tenant under a Lease, but in no event shall it be deemed to
be an obligation of the Seller under this Agreement to
obtain executed Estoppel Certificates. The Estoppel
Certificates shall be in the form annexed hereto as
Exhibit B and made a part hereof; provided, however, if any
tenant is required or permitted under its Lease to make
different statements in a certificate of such nature than
are set forth in Exhibit B, prior to requesting an Estoppel
Certificate from such tenant, the Seller may modify the
Estoppel Certificate for such tenant to set forth only the
statements required under such tenant's Lease to be made by
such tenant in such a certificate. If any tenant fails to
deliver an Estoppel Certificate in the form required by this
Agreement, Seller shall substitute in lieu thereof an
estoppel certificate substantially in such form executed by
Seller. If, however, subsequent to Closing, Seller obtains
Estoppel Certificates from any tenant, such estoppel
certificate will replace that executed by Seller. Each
Estoppel Certificate shall be dated not earlier than forty-
five (45) days prior to the Closing Date.
Title.
The Seller shall convey and Purchaser or Purchaser's Nominee
(provided this Agreement is assigned in accordance with
Section 19 hereof) shall accept title to the Property
subject to those matters set forth on Schedule 5 hereto
(collectively the "Permitted Encumbrances"). The Seller
shall deliver to Purchaser or Purchaser's Nominee (provided
this Agreement is assigned in accordance with Section 19
hereof), with costs therefor allocated as set forth on
Schedule 6 within five (5) days after the execution of this
Agreement, a commitment for an owner's fee title insurance
policy with respect to the Property (the "Title Commitment")
from Commonwealth Land Title Insurance Company (the "Title
Company"), together with true and complete copies of all
instruments giving rise to any defects or exceptions to
title to the Property. The Seller has delivered to
Purchaser or Purchaser's Nominee (provided this Agreement is
assigned in accordance with Section 19 hereof), with costs
therefor allocated as set forth on Schedule 6, hereto, an as-
built survey ("Survey") of the Land and Building dated
December 11, 1997 and prepared by PSOMAS and Associates in
accordance with the "Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys" jointly established and
adopted by ALTA and ACSM.
Unacceptable Encumbrances.
If the Title Commitment or the Survey indicate the existence
of any liens or encumbrances (collectively, "Liens") or
other defects or exceptions in or to title to the Property
other than the Permitted Encumbrances (collectively, the
"Unacceptable Encumbrances") subject to which Purchaser or
Purchaser's Nominee (provided this Agreement is assigned in
accordance with Section 19 hereof) is unwilling to accept
title and Purchaser gives the Seller notice of the same
within ten (10) days after the date hereof, the Seller shall
undertake to eliminate the same (or to arrange for title
insurance insuring against enforcement of such Unacceptable
Encumbrances against, or collection of the same out of, the
Property or the Buildings) subject to Section 5.2. Seller
covenants to remove any monetary encumbrances which are not
Permitted Encumbrances prior to the Closing. Purchaser
hereby waives any right Purchaser or any person claiming by,
through or under Purchaser, including Purchaser's Nominee
(provided that this Agreement is assigned in accordance with
Section 19 hereof) may have to advance as objections to
title or as grounds for Purchaser's refusal to close this
transaction any Unacceptable Encumbrance which Purchaser
does not notify the Seller of within such ten (10) day
period unless (i) such Unacceptable Encumbrance was first
raised by the Title Company subsequent to the date of the
Title Commitment or Purchaser shall otherwise first discover
same or be advised of same subsequent to the date of the
Title Commitment, and (ii) Purchaser shall notify the Seller
of the same within five (5) days after Purchaser first
becomes aware of such Unacceptable Encumbrance. The Seller,
in its sole discretion, may adjourn the Closing one or more
times for up to sixty (60) days in the aggregate in order to
eliminate Unacceptable Encumbrances. Notwithstanding
anything contained in this Section 5.1, no lien or
encumbrance which is not set forth in First American Title
Insurance Company Commitment OR-9732345, (a copy of which
has been provided to Purchaser) shall constitute an
Unacceptable Encumbrance unless such lien or encumbrance
shall have arisen subsequent to September 10, 1997.
Removal of Unacceptable Encumbrances.
The Seller shall not be obligated to bring any action or
proceeding, to make any payments or otherwise to incur any
expense in order to eliminate Unacceptable Encumbrances not
waived by Purchaser or to arrange for title insurance
insuring against enforcement of such Unacceptable
Encumbrances against, or collection of the same out of, the
Property; except that the Seller shall satisfy Unacceptable
Encumbrances which are (i) mortgages and past due real
estate taxes and assessments secured by or affecting the
Property or the Buildings, and (ii) judgments against the
Seller or other Liens secured by or affecting the Property
which judgments and other Liens can be satisfied by payment
of liquidated amounts not to exceed $50,000 in the aggregate
for all such judgments and other Liens. The Seller may
eliminate any such Unacceptable Encumbrance by the payment
of amounts necessary to cause the removal thereof of record,
by bonding over such Unacceptable Encumbrance in a manner
reasonably satisfactory to Purchaser or by arranging for
title insurance reasonably satisfactory to Purchaser
insuring against enforcement of such Unacceptable
Encumbrance against, or collection of the same out of, the
Property or the Buildings.
Options Upon Failure to Remove Unacceptable Liens.
If the Seller is unable or is not otherwise obligated
(pursuant to Section 5.2) to eliminate all Unacceptable
Encumbrances not waived by Purchaser, or to bond over in a
manner reasonably satisfactory to Purchaser any Unacceptable
Encumbrances not waived by Purchaser, or to arrange for
title insurance reasonably acceptable to Purchaser insuring
against enforcement of such Unacceptable Encumbrances
against, or collection of the same out of, the Property, and
to convey title in accordance with the terms of this
Agreement on or before the Closing Date (whether or not the
Closing is adjourned as provided in Section 5.1), Purchaser
shall elect on the Closing Date, as its sole remedy for such
inability of the Seller, either (i) to terminate this
Agreement by notice given to the Seller pursuant to Section
14.1, in which event the provisions of Section 14.1 shall
apply, or (ii) to accept title subject to such Unacceptable
Encumbrances and receive no credit against, or reduction of,
the Purchase Price.
Use of Purchase Price.
If on the Closing Date there may be any Liens or other
encumbrances which the Seller must pay or discharge in order
to convey to Purchaser or Purchaser's Nominee, provided this
Agreement is assigned in accordance with Section 19 hereof)
such title as is herein provided to be conveyed, the Seller
may use any portion of the Purchase Price to satisfy the
same, provided:
(a) the Seller shall deliver to Purchaser, Purchaser's
Nominee (provided this Agreement is assigned in accordance
with Section 19 hereof) or the Title Company, at the
Closing, instruments in recordable form and sufficient to
satisfy such Liens or other encumbrances of record together
with the cost of recording or filing said instruments; or
(b) the Seller, having made arrangements with the
Title Company, shall deposit with said company sufficient
moneys acceptable to said company to insure the obtaining
and the recording of such satisfactions.
Franchise Taxes.
Any franchise or corporate tax open, levied or imposed
against the Seller or other owners in the chain of title
that may be a Lien on the Closing Date shall not be an
objection to title if the Title Company omits same from the
title policy issued pursuant to the Title Commitment or
excepts same but insures Purchaser or Purchaser's Nominee
(provided this Agreement is assigned in accordance with
Section 19 hereof) against collection thereof out of the
Property.
Transfer Taxes; Title Insurance Premiums.
At the Closing, the Seller and Purchaser shall each pay
fifty percent (50%) of all documentary transfer and
recording taxes (the "Transfer Tax Payments") imposed
pursuant to the Laws of the State of California or any other
governmental authority in respect of the transactions
contemplated by this Agreement by delivery to the Title
Company of sufficient funds to pay such taxes. Purchaser
shall not be entitled to receive a credit against or
abatement of the Purchase Price payable to the Seller at the
Closing as a result of the Purchaser's share of the Transfer
Tax Payments. At the Closing, the premiums due the Title
Company to obtain title insurance policies in the form
contemplated by the Title Commitment (as the same may be
amended pursuant to this Agreement), the cost of obtaining
the survey and other Closing-related expenses shall be paid
in the manner set forth on Schedule 6 hereto.
Representations and Warranties of the Seller.
The Seller represents and warrants to the Purchaser as
follows:
(a) The Seller is a duly formed and validly existing
general partnership organized under the laws of the State of
California and is qualified under the laws of the State of
California to conduct business therein.
(b) The Seller has the full, legal right, power and
authority to execute and deliver this Agreement and all
documents now or hereafter to be executed by the Seller
pursuant to this Agreement (collectively, the "Seller's
Documents"), to consummate the transaction contemplated
hereby, and to perform its obligations hereunder and under
the Seller's Documents.
(c) This Agreement and the Seller's Documents do not and
will not contravene any provision of the partnership
agreement of the Seller, any judgment, order, decree, writ
or injunction issued against the Seller, or, to the Seller's
actual knowledge, any provision of any laws or governmental
ordinances, rules, regulations, orders or requirements
(collectively, the "Laws") applicable to the Seller. The
consummation of the transactions contemplated hereby will
not result in a breach or constitute a default or event of
default by the Seller under any agreement to which the
Seller or any of its assets are subject or bound and will
not result in a violation of any Laws applicable to the
Seller.
(d) The Seller has no actual knowledge of any leases,
licenses or other occupancy agreements affecting any portion
of the Property or the Buildings (collectively, the
"Leases") on the date hereof, except for the Leases listed
in Schedule 7 annexed hereto and made a part hereof and that
certain ground lease dated March 14, 1988 between the
Seller, as lessor, and the Acquired Partnership, as lessee
(the "Ground Lease"). To Seller's actual knowledge, the
copies of the Leases furnished by the Seller to the
Purchaser are true and complete. To the Seller's actual
knowledge, the Leases are in full force and effect, without
any material default by the Seller thereunder. To the
Seller's actual knowledge, except as listed on Schedule 7,
the Seller has not given or received any notice of default
which remains uncured or unsatisfied, with respect to any of
the Leases.
(e) To the Seller's actual knowledge, there are no pending
actions, suits, proceedings or investigations to which the
Seller is a party before any court or other governmental
authority with respect to the Property or the Acquired
Partnership except as set forth on Schedule 8 hereto.
(f) Except as disclosed on Schedule 9 hereto, since the
date the Seller acquired legal and beneficial title to the
Interests (i) to Seller's actual knowledge, neither Seller
nor any third party has engaged in the generation, use,
manufacture, treatment, storage or disposal of any Hazardous
Substance (as hereinafter defined) on the Property or the
Buildings in violation of Applicable Environmental Law (as
hereinafter defined), the cost of correction or remediation
of which would have a material adverse effect upon the value
of the Property and the Buildings, and (ii) to Seller's
actual knowledge, neither Seller nor any third party has
received any written notice from any governmental authority
having jurisdiction over the Property or the Buildings of
any violation of Applicable Environmental Law with respect
to the Property or the Buildings which requires corrective
action, the cost of which would have a material adverse
effect upon the value of the Property or the Buildings.
Disclosure of any matter on Schedule 9 hereto shall not
constitute any admission by Seller that such matter was
material or a violation of Applicable Environmental Law. As
used in this Agreement, the term "Hazardous Substance" shall
mean any substance, chemical or waste that is currently
listed as hazardous, toxic or dangerous under Applicable
Environmental Law. As used in this Agreement, the term
"Applicable Environmental Law" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. 9601 et seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. 6901,
et seq.; the Water Pollution Control Act, 33 U.S.C. 1251
et seq.; the Clean Air Act, 42 U.S.C. 7401 et seq.; and
the Toxic Substances Control Act, 15 U.S.C. 2601 et seq.;
as the foregoing have been amended from time to time to the
date of this Agreement; and any similar federal, state and
local laws and ordinances and the regulations implementing
such statutes in effect on the date hereof imposing
liability or establishing standards of conduct for
environmental protection.
(g) Schedule 11 contains a list of the Licenses. To the
Seller's knowledge, the Licenses are in full force and
effect and are sufficient for the operation of the Property
and the Buildings as currently operated.
(h) The Seller has not entered into any agreement for the
sale of all or any portion of the Property, the Notes or the
Interests, or any option agreement for the acquisition of
all or any portion of the Property, the Notes or the
Interests, with any person other than the Purchaser.
(i) The Seller has no knowledge of any Contracts on the
date hereof, except for the Contracts listed on Schedule 3
annexed hereto. The copies of the Contracts furnished by
the Seller to the Purchaser are true and complete. To
Seller's knowledge, there are no existing Seller defaults
under any of the Contracts.
(j) To the Seller's knowledge it has not received any
written notice from any governmental authority regarding any
violation of any federal, state or local land use, zoning or
other similar statute, regulation, ruling or order
applicable to the Property or the Buildings.
(k) The Acquired Partnership is a limited partnership
company duly organized, validly existing, and in good
standing under the laws of the State of California and has
all requisite power and authority to own and lease its
properties and to conduct its business as presently
conducted.
(l) The Partnership interests of the Acquired Partnership
are as set forth in Schedule 12 hereto and the Interests
constitute 90% of such Partnership interests and are owned
(of record and beneficially) by the Seller. The Interests
are duly authorized, validly issued, fully paid,
nonassessable, and free and clear of liens. Neither the
Seller nor the Acquired Partnership has or is bound by any
(i) outstanding subscriptions, options, warrants, calls,
commitments, or agreements of any character calling for it
to issue, deliver, or sell, or cause to be issued,
delivered, or sold, any membership interests or any other
equity security of the Acquired Partnership, or any
securities described in the following clause (ii), or
(ii) securities convertible into, exchangeable for, or
representing the right to subscribe for, purchase, or
otherwise receive any membership interest or any other
equity security of the Acquired Partnership, or obligating
it to grant, extend, or enter into any such subscriptions,
options, warrants, calls, commitments, or agreements.
(m) The Seller has delivered to Purchaser copies of the
December 31, 1996 audited Consolidated Statement of
Operations of the Acquired Partnership. To the knowledge of
Seller, such financial statement was prepared in accordance
with generally accepted accounting principles applied on a
basis consistent with prior, subject, in the case of interim
and/or unaudited financial statements, to exclusion of
statements of cash flows and changes in partnership interest
owners' equity, compensation, the absence of footnotes, and
adjustments consisting of normal year-end accruals, the
effect of which, both individually and in the aggregate, is
not material. To the knowledge of Seller, each of the
balance sheets included in such financial statement fairly
presents the financial condition of the Acquired
Partnership, as of its date; and each of the statements of
income, changes in partnership interest owners' equity, and
cash flows included in such financial statements fairly
presents the results of operations, changes in membership
interest owners' equity, or cash flows, as the case may be,
of the Acquired Partnership for the period covered thereby,
subject, in the case of interim and/or unaudited financial
statements, to the exceptions referred to above.
(n) To the knowledge of Seller, since December 31, 1996,
there has not occurred any Material Adverse Effect with
respect to the Acquired Partnership.
(o) To the knowledge of Seller, except with respect to
matters that are the subject of specific representations and
warranties set forth elsewhere in this Agreement, and except
to the extent reflected or reserved against in the December
31, 1996 balance sheet, or incurred in the ordinary course
of business after the date of such balance sheet, or
incurred in connection with the transactions contemplated by
this Agreement and described in Schedule 13, the Acquired
Partnership has no material liabilities or obligations of
any nature, whether accrued, absolute, contingent, or
otherwise (including without limitation liabilities as
guarantor or otherwise with respect to obligations of
others) and whether due or to become due.
(p) To the knowledge of Seller, the Acquired Partnership
has timely filed all tax returns required to be filed by it,
each such tax return has been prepared in compliance with
all applicable laws and regulations, and all taxes shown to
be due thereon have been paid. To the knowledge of Seller,
all taxes due and payable by the Acquired Partnership have
been paid or properly accrued, and the Acquired Partnership
will not be liable for any additional taxes in respect of
any taxable period ending on or before the Closing in an
amount that exceeds the corresponding reserve therefor, if
any, reflected in Schedule 14.
(q) To the knowledge of Seller, no deficiency or proposed
adjustment in respect of taxes that has not been settled or
otherwise resolved has been asserted or assessed by any
taxing authority against the Acquired Partnership. Seller
covenants that it shall pay any and all taxes which may be
assessed or levied against the Acquired Partnership
attributable to any period of time preceding the Closing.
Survival of Representations.
The representations and warranties of the Seller set forth
in this Section 6 (i) shall be true, accurate and correct in
all material respects upon the execution of this Agreement
and shall be deemed to be repeated on and as of the Closing
Date (except as they relate only to an earlier date), and
(ii) shall remain operative and shall survive the Closing
and the execution and delivery of the Deed for a period of
one year following the Closing Date and then shall expire,
and no action or claim based thereon shall be commenced
after such period.
Discovery of Untrue Representation.
If at or prior to the Closing, (i) the Purchaser shall
become aware that any of the representations or warranties
made herein by the Seller is untrue, inaccurate or incorrect
in any material respect and shall give the Seller notice
thereof at or prior to the Closing, or (ii) the Seller shall
notify the Purchaser that a representation or warranty made
herein by the Seller is untrue, inaccurate or incorrect,
then the Seller may, in its sole discretion, elect by notice
to the Purchaser to adjourn the Closing one or more times
for up to sixty (60) days in the aggregate in order to cure
or correct such untrue, inaccurate or incorrect
representation or warranty. If any such representation or
warranty is not cured or corrected by the Seller on or
before the Closing Date (whether or not the Closing is
adjourned as provided above), then the Purchaser, as its
sole remedy for such inability of Seller, shall elect either
(i) to waive such misrepresentations or breaches of
warranties and consummate the transactions contemplated
hereby without any reduction of or credit against the
Purchase Price, or (ii) to terminate this Agreement by
notice given to Seller pursuant to the provisions of Section
14.1. In the event the Closing occurs, Purchaser hereby
expressly waives, relinquishes and releases any right or
remedy available to Purchaser or any person claiming by,
through or under Purchaser, including, without limitation,
Purchaser's Nominee (provided this Agreement is assigned in
Accordance with Section 19 of this Agreement) at law, in
equity or under this Agreement to make a claim against the
Seller for damages that the Purchaser or any such party
individually or jointly may incur, or to rescind this
Agreement and the transactions contemplated hereby, as the
result of any of the Seller's representations or warranties
being untrue, inaccurate or incorrect if the Purchaser knew,
should have known or is deemed to have known that such
representation or warranty was untrue, inaccurate or
incorrect at the time of the Closing and the Purchaser
nevertheless accepts title hereunder.
Limited Nature of Representations.
The Purchaser acknowledges that neither the Seller nor any
of the Seller's Affiliates, nor any of their agents or
representatives, nor Broker has made any representations or
held out any inducements to the Purchaser other than those
specifically set forth in this Agreement. The Purchaser
acknowledges that the Seller, pursuant to the terms of this
Agreement, has afforded the Purchaser the opportunity for
full and complete investigations, examinations and
inspections of the Property, the Buildings, the Acquired
Partnership and all Property Information. The Purchaser
acknowledges and agrees that (i) the Property Information
delivered or made available to the Purchaser and the
Purchaser's Representatives by the Seller or the Seller's
Affiliates, or any of their agents or representatives may
have been prepared by third parties and may not be the work
product of the Seller and/or any of the Seller's Affiliates;
(ii) neither the Seller nor any of the Seller's Affiliates
has made any independent investigation or verification of,
or has any knowledge of, the accuracy or completeness of,
the Property Information; (iii) the Purchaser is relying
solely on its own investigations, examinations and
inspections of the Property, the Buildings and the Acquired
Partnership and those of the Purchaser's Representatives and
are not relying in any way on the Property Information
furnished by the Seller or any of the Seller's Affiliates,
or any of their agents or representatives; and (iv) except
as otherwise expressly set forth herein, the Seller
expressly disclaims any representations or warranties with
respect to the accuracy or completeness of the Property
Information, and the Purchaser releases the Seller and the
Seller's Affiliates, and their agents and representatives,
from any and all liability with respect thereto. The
Purchaser hereby fully and irrevocably releases the Seller
and the Seller's Affiliates from any and all claims that it
or any person claiming by, through or under Purchaser,
including, without limitation, Purchaser's Nominee (provided
this Agreement is assigned in accordance with Section 19
hereof) may now have or hereafter acquire against any of the
Seller or the Seller's Affiliates for any cost, loss,
liability, damage, expense, action or cause of action,
whether foreseen or unforeseen, arising from or related to
the presence of environmentally hazardous, toxic or
dangerous substances, or any other conditions (whether
patent, latent or otherwise) affecting the Property, the
Buildings and the Acquired Partnership, except for (i)
claims against the Seller based upon any obligations and
liabilities of the Seller expressly provided in this
Agreement or any other document to be executed and delivered
by the Seller pursuant to Section 8 hereof, and (ii) claims
based upon the fraudulent actions (or failure to act) of the
Seller.
The provisions of this Section 6 shall survive the Closing.
Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Seller as
follows:
(a) The Purchaser has the full, legal right, power,
authority and financial ability to execute and deliver this
Agreement and all documents now or hereafter to be executed
by them pursuant to this Agreement (collectively, the
"Purchaser's Documents"), to consummate the transactions
contemplated hereby, and to perform its obligations
hereunder and under the Purchaser's Documents.
(b) This Agreement and the Purchaser's Documents do not and
will not contravene any provision of the limited partnership
agreement of Purchaser, any judgment, order, decree, writ or
injunction issued against the Purchaser, or any provision of
any Laws applicable to the Purchaser. The consummation of
the transactions contemplated hereby will not result in a
breach or constitute a default or event of default by the
Purchaser under any agreement to which the Purchaser or any
of its assets are subject or bound and will not result in a
violation of any Laws applicable to the Purchaser.
(c) To the Purchaser's actual knowledge, there are no
pending actions, suits, proceedings or investigations to
which the Purchaser is a party before any court or other
governmental authority which may have an adverse impact on
the transactions contemplated hereby.
(d) The Purchaser acknowledges that neither the Interests
nor the Notes have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), nor under any
state securities or "Blue Sky" laws, and represents and
warrants that it is acquiring the Interests and the Notes
for investment only, and not with a view toward distribution
thereof.
The representations and warranties of the Purchaser set
forth in this Section 7 and elsewhere in this Agreement
shall be true, accurate and correct in all material respects
upon the execution of this Agreement, shall be deemed to be
repeated on and as of the Closing Date (except as they
relate only to an earlier date) and shall survive the
Closing.
Documents to be Delivered by the Seller at Closing.
At the Closing, the Seller shall execute, acknowledge and/or
deliver, as applicable, the following to the Purchaser or
the Purchaser's Nominee (provided this Agreement is assigned
in accordance with Section 19 hereof) or the Title Company:
(a) A grant deed or its equivalent (the "Deed") conveying
title to the Property to Purchaser or Purchaser's Nominee
(provided this Agreement is assigned in accordance with
Section 19 hereof) in the form of Exhibit A annexed hereto
and made a part hereof.
(b) To the extent in the Seller's possession, executed
counterparts of all Leases and New Leases and any
amendments, guarantees and other documents relating thereto,
together with a schedule of all tenant security deposits
thereunder and the accrued interest on such security
deposits payable to tenants which are in the possession of
or received by the Seller.
(c) A certificate of a general partner of the Seller that
the Seller has taken all necessary partnership action to
authorize the execution, delivery and performance of this
Agreement and the consummation of the transaction
contemplated hereby.
(d) Executed originals of all Estoppel Certificates
referenced in Section 4.3 and any other Estoppel
Certificates, received by the Seller from tenants prior to
the Closing Date and not previously delivered to the
Purchaser; provided, that all required Estoppel Certificates
shall be delivered to the Purchaser not later than three (3)
days prior to the Closing Date.
(e) To the extent in the Seller's possession and not
already located at the Property, keys to all entrance doors
to, and equipment and utility rooms located in, the
Property.
(f) To the extent in the Seller's possession and not
already located at the Property, all licenses, permits,
certificates, approvals, authorizations and variances issued
for or with respect to the Property or the Buildings by any
governmental authority (collectively, the "Licenses").
(g) To the extent in the Seller's possession, executed
counterparts of all purchase orders, equipment leases,
advertising agreements, franchise agreements, license
agreements, management agreements, leasing and brokerage
agreements and other service contracts relating to the
operation of the Property or the Buildings (collectively,
the "Contracts") and all warranties in connection therewith
which are in effect on the Closing Date.
(h) To the extent in the Seller's possession and not
located at the Buildings, plans and specifications of the
Buildings.
(i) A "FIRPTA" affidavit sworn to by the Seller in the form
of Exhibit D annexed hereto and made a part hereof. The
Purchaser acknowledges and agrees that upon the Seller's
delivery of such affidavit, the Purchaser shall not withhold
any portion of the Purchase Price pursuant to Section 1445
of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder.
(j) A California Form 590.
(k) A closing statement setting forth the adjustments
contemplated by Section 3 hereof.
(l) All books and records of the Acquired Partnership in
the Seller's possession and all other documents the Seller
is required to deliver pursuant to the provisions of this
Agreement.
(m) An Assignment and Assumption of Partnership Interest
Agreement (the "Assignment Agreement") in favor of Purchaser
substantially in the form of Exhibit E attached hereto.
(n) Amended and Restated Certificate of Limited
Partnership.
(o) A Non-Recourse Assignment of the Notes (the "Notes
Assignment") in the form of Exhibit I attached hereto.
(p) Either (i) each original Note endorsed to Purchaser, or
(ii) if any original Note is not in Seller's possession a
Lost Note Affidavit with respect to such Note.
(q) An Assignment of the Ground Lease by Seller to
Purchaser or Purchaser's Nominee.
Documents to be Delivered by the Purchaser at Closing.
At the Closing, the Purchaser shall execute, acknowledge
and/or deliver, as applicable, the following to the Seller
or the Title Company, as applicable:
(a) The cash portion of the Purchase Price payable at the
Closing pursuant to Section 2, subject to apportionments,
credits and adjustments as provided in this Agreement.
(b) The Assignment Agreement.
(c) The Notes Assignment.
(d) Copies of Purchaser's partnership agreement and
partnership certificate (if applicable) and, if required by
law or its partnership agreement, copies of partnership
resolutions and/or consents of the partners authorizing the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this
Agreement, all certified as true and correct by the managing
general partner of Purchaser, or in the absence thereof,
then by all of the partnership's general partners; (ii) a
legal existence certificate issued by the State of
California of the organization of Purchaser, dated within
thirty (30) days preceding the Closing Date; and (iii) a
qualification to do business certificate issued by the State
of California, dated within thirty (30) days preceding the
Closing Date.
(e) The payments of the Purchaser as set forth in Schedule
6 hereto.
(f) The Release, Covenant Not to Sue and Indemnification
Agreement, the form of which is attached as Exhibit J
hereto.
(g) All other documents the Purchaser is required to
deliver pursuant to the provisions of this Agreement.
Operation of the Property prior to the Closing Date.
Between the date hereof and the Closing Date, the Seller
shall, subject to this Section 10, continue to operate and
maintain the Property and the Buildings in a manner
consistent with past practices.
New Leases.
Except as hereinafter provided in this Section 10.1, the
Acquired Partnership may not modify, extend, renew, cancel
or permit the expiration of any Lease or enter into any
proposed Lease of all or any portion of the Buildings
without Purchaser's written consent which consent shall not
be unreasonably withheld (and which consent shall be deemed
given three (3) business days following the Seller's
notifying Purchaser of its proposed action under this
Section 10.1, unless Purchaser expressly objects to such
action in writing prior to such time); provided, however,
that such Lease is on Acquired Partnership's standard form
with such changes as Acquired Partnership deems appropriate
in the exercise of its reasonable discretion (or, in the
case of any Lease amendment, such amendment is in a form
commonly used by landlords operating properties similar to
the Buildings). After the expiration of the Due Diligence
Period, the Acquired Partnership shall not modify, extend,
renew or cancel (subject to Section 10.2) any Lease or enter
into any proposed Lease of all or any portion of the
Buildings if such then existing or proposed Lease demises
more than 5,000 rentable square feet of the Buildings
without Purchaser's prior consent in each instance, which
consent shall not be unreasonably withheld and shall be
given or denied, with the reasons for any such denial,
within five (5) days after receipt by Purchaser of the
Acquired Partnership's notice requesting Purchaser's consent
to the proposed action relating to such existing or proposed
Lease. If Purchaser fails to reply to the Acquired
Partnership's request for consent in a notice given within
such period or if Purchaser expressly denies its consent but
fails to provide the Acquired Partnership with the reasons
for such denial, Purchaser's consent shall be deemed to have
been granted. The Purchaser hereby acknowledges receipt of
that Second Amendment of Lease (the "Second Amendment")
executed November 25, 1997 by and between the Acquired
Partnership as landlord, and Citicorp North American, Inc.,
a Delaware Corporation as tenant, which amends the Lease
Agreement dated March 22, 1988 between the aforesaid
parties, and agrees to abide by its terms, which include the
covenant that Purchaser agrees to accept all responsibility
for all costs associated with the obligations of the
Acquired Partnership under the Second Amendment.
New Lease Expenses.
If after the date of this Agreement the Acquired Partnership
enters into any Leases, or if there is any extension or
renewal of any Leases, whether or not such Leases provide
for their extension or renewal, or any expansion or
modification of any Leases (each, a "New Lease"), the
Acquired Partnership shall keep accurate records of all
expenses (collectively, "New Lease Expenses") incurred in
connection with each New Lease, including, without
limitation, the following: (i) brokerage commissions and
fees relating to such leasing transaction, (ii) expenses
incurred for repairs, improvements, equipment, painting,
decorating, partitioning and other items to satisfy the
tenant's requirements with regard to such leasing
transaction, (iii) reimbursements to the tenant for the
cost of any of the items described in the preceding clause
(ii), (iv) rent concessions relating to the demised space
provided the tenant has the right to take possession of such
demised space during the period of such rent concessions,
and (v) expenses incurred for the purpose of satisfying or
terminating the obligations of a tenant pursuant to a New
Lease with the Acquired Partnership as landlord that may be
due under another lease (whether or not such other lease
covers space in the Property or the Buildings).
Allocation of New Lease Expenses.
The New Lease Expenses for each New Lease allocable to and
payable by the Seller shall be determined by multiplying the
amount of such New Lease Expenses by a fraction, the
numerator of which shall be the number of days contained in
that portion, if any, of the term of such New Lease
commencing on the date on which the tenant thereunder shall
have commenced to pay fixed rent ("Rent Commencement Date")
and expiring on the date immediately preceding the Closing
Date, and the denominator of which shall be the total number
of days contained in the period commencing on the Rent
Commencement Date and expiring on the date of the scheduled
expiration of the term of such New Lease, without provision
for any optional extensions or renewals, and the remaining
balance of the New Lease Expenses for each New Lease shall
be allocable to and payable by the Purchaser by addition to
the Purchase Price. At the Closing, the Purchaser shall
reimburse the Seller for all New Lease Expenses theretofore
paid by the Seller or the Acquired Partnership, if any, in
excess of the portion of the New Lease Expenses allocated to
the Seller pursuant to the provisions of the preceding
sentence. At the Closing, the Seller shall reimburse the
Purchaser for all New Lease Expenses not theretofore paid by
the Seller or the Acquired Partnership, if any, attributable
to the portion of the New Lease Expenses allocated to the
Seller pursuant to the provisions of the preceding sentence.
For purposes of this Section 10.1.2, the Rent Commencement
Date under a renewal, extension, expansion or modification
of a Lease shall be deemed to be (i) in the case of a
renewal or extension (whether effective prior to or after
the Closing, or in the form of an option exercisable in the
future), the first date during such renewal or extension
period after the originally scheduled expiration of the term
of such Lease on which the tenant under such Lease commences
to pay fixed rent, (ii) in the case of an expansion (whether
effective prior to or after the Closing, or in the form of
an option exercisable in the future), the date on which the
tenant under such Lease commences to pay fixed rent for the
additional space, and (iii) in the case of a modification
not also involving a renewal, extension or expansion of such
Lease, the effective date of such modification agreement.
The provisions of this Section 10.1.2 shall survive the
Closing.
Termination of Existing Leases.
Notwithstanding anything to the contrary contained in this
Agreement, the Acquired Partnership may, with the written
consent of Purchaser, which consent shall not be
unreasonably withheld (and which consent shall be deemed
given three (3) business days following the Seller's
notifying Purchaser of its proposed action under this
Section 10.2, unless Purchaser expressly objects to such
action in writing prior to such time), but is not obligated,
to institute summary proceedings against any tenant or
terminate any Lease as a result of a default by the tenant
thereunder prior to the Closing Date. Neither the Seller
nor the Acquired Partnership makes any representations nor
assumes any responsibility with respect to (i) the continued
occupancy of the Property or any part thereof by any tenant
and (ii) the fulfillment by any tenant of its obligations
under any Lease. The removal of a tenant whether by summary
proceedings or otherwise prior to the Closing Date shall not
give rise to any claim on the part of Purchaser. Further,
Purchaser agrees that it shall not be grounds for
Purchaser's refusal to close this transaction that any
tenant is a holdover tenant or in default under its Lease
pursuant to any economic or non-economic terms of its Lease
on the Closing Date and Purchaser shall accept title subject
to such holding over or default without credit against, or
reduction of, the Purchase Price.
Contracts.
Except as hereinafter provided in this Section 10.3, the
Acquired Partnership may cancel, modify, extend, renew or
permit the expiration of Contracts and may enter into any
new Contract without the Purchaser's prior consent. After
the expiration of the Due Diligence Period, the Acquired
Partnership shall not modify, extend, renew or cancel
(except as a result of a default by the other party
thereunder or if Purchaser has given notice pursuant to
Section 4.2(e) that a Contract is unacceptable) any
Contracts, or enter into any new Contract without the
Purchaser's prior consent in each instance, which consent
shall not be unreasonably withheld or delayed, and if
withheld, the Purchaser shall promptly give the Seller and
the Acquired Partnership a notice stating the reasons
therefor. If the Purchaser fails to reply within five (5)
days to the Acquired Partnership's request for consent in a
notice given pursuant to this Section 10.3 or if the
Purchaser expressly denies its consent but fails to provide
the Seller and the Acquired Partnership with the reasons for
such denial, the Purchaser's consent shall be deemed to have
been granted. Seller agrees to terminate the property
management agreement currently in place on or prior to the
Closing.
Broker.
The Purchaser and the Seller represent and warrant to each
other they have not dealt with any Broker in connection with
the Property, the Notes, the Interests and the transactions
described herein. Each party hereto agrees to indemnify,
defend and hold the other harmless from and against any and
all claims, causes of action, losses, costs, expenses,
damages or liabilities, including reasonable attorneys' fees
and disbursements, which the other may sustain, incur or be
exposed to, by reason of any claim or claims by any broker,
finder or other person, for fees, commissions or other
compensation arising out of the transactions contemplated in
this Agreement if such claim or claims are based in whole or
in part on dealings or agreements with the indemnifying
party. The obligations and representations and warranties
contained in this Section 11 shall survive the termination
of this Agreement and the Closing.
Casualty; Condemnation.
Damage or Destruction.
If a "material" part (as hereinafter defined) of either the
Property or the Buildings is damaged or destroyed by fire or
other casualty, the Seller shall notify the Purchaser of
such fact and the Purchaser shall have the option to
terminate this Agreement upon notice to the Seller given not
later than ten (10) days after receipt of the Seller's
notice; provided, however, that the Purchaser's election
shall be ineffective if within ten (10) days after the
Seller's receipt of the Purchaser's election notice, the
Seller shall elect by notice to the Purchaser to repair such
damage or destruction and shall thereafter complete such
repair within ninety (90) days after the then scheduled
Closing Date at the time of the Purchaser's election. If
the Seller makes such election to repair, the Seller shall
have the right to adjourn the Closing Date one or more times
for up to ninety (90) days in the aggregate in order to
complete such repairs and shall have the right to retain all
insurance proceeds which the Seller may be entitled to
receive as a result of such damage or destruction. If
(i) the Purchaser does not elect to terminate this Agreement
as to the damaged Property or Buildings, (ii) the Purchaser
elects to terminate this Agreement as to the damaged
Property or damaged Buildings but such election is
ineffective because the Seller elects to repair such damage
and completes such repair within such ninety (90) day period
provided above, or (iii) there is damage to or destruction
of an "immaterial" part ("immaterial" is herein deemed to be
any damage or destruction which is not "material", as such
term is hereinafter defined) of the Property or the
Buildings, the Purchaser shall close title as provided in
this Agreement and, at the Closing, the Seller shall, unless
the Seller has repaired such damage or destruction prior to
the Closing, (x) pay over to the Purchaser the proceeds of
any insurance collected by the Seller, plus an amount equal
to any deductible attributable to such insurance policy,
less the amount of all costs incurred by the Seller in
connection with the repair of such damage or destruction,
and (y) assign and transfer to the Purchaser all right,
title and interest of the Seller in and to any uncollected
insurance proceeds which the Seller may be entitled to
receive from such damage or destruction. A "material" part
of the Property or the Buildings shall be deemed to have
been damaged or destroyed if the cost of repair or
replacement shall be five percent (5%) or more of the
Purchase Price, or if such damage or destruction is not an
insured casualty.
Condemnation.
If, prior to the Closing Date, all or any "significant"
portion (as hereinafter defined) of the Property or the
Buildings is taken by eminent domain or condemnation (or is
the subject of a pending taking which has not been
consummated), the Seller shall notify the Purchaser of such
fact and the Purchaser shall have the option to terminate
this Agreement upon notice to the Seller given not later
than ten (10) days after receipt of the Seller's notice. If
the Purchaser does not elect to terminate this Agreement, or
if an "insignificant" portion ("insignificant" is herein
deemed to be any taking which is not "significant", as such
term is herein defined) of the Property or the Buildings is
taken by eminent domain or condemnation, at the Closing the
Seller shall assign and turnover, and the Purchaser shall be
entitled to receive and keep, all awards or other proceeds
for such taking by eminent domain or condemnation. A
"significant" portion of the Property or the Buildings means
(i) 10% or more of the Buildings (ii) a portion of the
parking areas if the taking thereof reduces the remaining
available number of parking spaces below the minimum legally
required, or (iii) a legally required driveway on the Land
if such driveway is the predominant means of ingress thereto
or egress therefrom.
Termination.
If the Purchaser effectively terminates this Agreement
pursuant to Section 12.1 or 12.2, this Agreement shall be
terminated and the rights of the parties shall be the same
as if notice of termination were given pursuant to Section
14.1.
Conditions Precedent to Closing.
Conditions Precedent to the Purchaser's Obligations to
Perform.
The Purchaser's obligation under this Agreement to purchase
the Property, the Notes and the Interests is subject to the
fulfillment of each of the following conditions: (i) the
representations and warranties of the Seller contained
herein shall be materially true, accurate and correct as of
the Closing Date except to the extent they relate only to an
earlier date; (ii) the Seller shall be ready, willing and
able to deliver title to the Property, the Notes and the
Interests in accordance with the terms and conditions of
this Agreement; (iii) any conditions precedent to the
Purchaser's obligation to purchase the Property, the Notes
and the Interests is validly listed in the Purchaser's
Termination Notice as being unsatisfied has been satisfied;
and (iv) the Seller shall have delivered all the documents
and other items required pursuant to Section 8, and shall
have performed all other covenants, undertakings and
obligations, and complied with all conditions required by
this Agreement to be performed or complied with by the
Seller at or prior to the Closing.
Conditions Precedent to the Seller's Obligations to
Perform.
The Seller's obligation under this Agreement to sell the
Property, the Notes and the Interests to the Purchaser is
subject to the fulfillment of each of the following
conditions: (i) the representations and warranties of the
Purchaser contained herein shall be materially true,
accurate and correct as of the Closing Date; (ii) the
Purchaser shall have delivered the funds required hereunder
and all the documents to be executed by the Purchaser set
forth in Section 9 and shall have performed all other
covenants, undertakings and obligations, and complied with
all conditions required by this Agreement to be performed or
complied with by the Purchaser at or prior to the Closing;
(iii) all consents and approvals of governmental authorities
and parties to agreements to which the Purchaser is party or
by which the Purchaser's assets are bound that are required
with respect to the consummation of the transactions
contemplated by this Agreement shall have been obtained and
copies thereof shall have been delivered to the Seller at or
prior to the Closing; and (iv) the additional matters set
forth in Schedule 10 annexed hereto and made a part hereof
shall have occurred or been delivered to the Seller, as
applicable, at or prior to the Closing.
Remedies Upon Failure to Satisfy Conditions.
In the event that any condition contained in Sections 13.1
or 13.2 is not satisfied, the party entitled to the
satisfaction of such condition as a condition to its
obligation to close title shall have as its sole remedy
hereunder the right to elect to (i) waive such unsatisfied
condition whereupon title shall close as provided in this
Agreement or (ii) proceed as provided in Section 14 hereof.
Remedies.
Seller's Inability to Perform.
If the Closing fails to occur by reason of the Seller's
inability to perform its obligations under this Agreement
which has not been waived pursuant to Section 13.3, then the
Purchaser, as its sole remedy for such inability of the
Seller, may terminate this Agreement by notice to the
Seller. If the Purchaser elects to terminate this
Agreement, then this Agreement shall be terminated and
neither party shall have any further rights, obligations or
liabilities hereunder, except as otherwise expressly
provided herein (collectively, the "Surviving Obligations"),
and except that the Purchaser shall be entitled to a return
of the Deposit provided the Purchaser is not otherwise in
default hereunder. Except as set forth in this Section 14.1,
the Purchaser hereby expressly waives, relinquishes and
releases any other right or remedy available to it at law,
in equity or otherwise by reason of the Seller's inability
to perform its obligations hereunder (Nothing contained in
this Section 14.1 shall be construed to limit any right or
remedy to which the Purchaser may be entitled pursuant to
Section 14.3, in the event of Seller's failure or refusal to
perform its obligations hereunder at Closing).
Notwithstanding anything to the contrary herein, if the
Seller's inability to perform its obligations under this
Agreement is a result of any action of, or failure to act
by, the Purchaser or any of the Purchaser's Representatives,
the Purchaser shall not be relieved of its obligations under
this Agreement and Purchaser shall not be entitled to any
right or remedy provided in this Section 14.1 or elsewhere
in this Agreement.
Purchaser's Failure to Perform.
In the event of a default hereunder by the Purchaser or if
the Closing fails to occur by reason of the Purchaser's
failure or refusal to perform their obligations hereunder,
then the Seller may terminate this Agreement by notice to
the Purchaser. PURCHASER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, AT THE TIME OF
SIGNING THIS AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE
SUFFERED IF THE PURCHASER FAILS OR REFUSES TO PERFORM ITS
OBLIGATIONS HEREUNDER. THEREFORE, IF PURCHASER FAILS OR
REFUSES TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND
IF THE SELLER ELECTS TO TERMINATE THIS AGREEMENT, THEN THIS
AGREEMENT SHALL BE TERMINATED AND THE SELLER MAY RETAIN THE
DEPOSIT AS LIQUIDATED DAMAGES FOR ALL LOSS, DAMAGE AND
EXPENSES SUFFERED BY THE SELLER, AND NO PARTY SHALL HAVE ANY
FURTHER RIGHTS, OBLIGATIONS OR LIABILITIES HEREUNDER, EXCEPT
FOR THE SURVIVING OBLIGATIONS.
Purchaser's Initials Seller's Initials
Nothing contained herein shall limit or restrict the
Seller's ability to pursue any rights or remedies it may
have against the Purchaser with respect to the Surviving
Obligations. Except as set forth in this Section 14.2 and
the Surviving Obligations, the Seller hereby expressly
waives, relinquishes and releases any other right or remedy
available to it at law, in equity or otherwise by reason of
the Purchaser's default hereunder or the Purchaser's failure
or refusal to perform their obligations hereunder.
Notwithstanding anything to the contrary herein, if the
Purchaser's default or the Purchaser's failure or refusal to
perform their obligations under this Agreement is a result
of any action of, or failure to act by, the Seller or any of
the Seller's Affiliates, the Seller shall not be relieved of
its obligations under this Agreement and the Seller shall
not be entitled to any right or remedy provided in this
Section 14.2 or elsewhere in this Agreement.
Seller's Failure to Perform.
If the Closing fails to occur by reason of the Seller's
failure or refusal to perform its obligations hereunder
which has not been waived by the Purchaser, then the
Purchaser, as its sole remedy hereunder, may (i) seek
specific performance from the Seller, provided that the
Purchaser is ready, willing and able to consummate the
transaction and satisfy each and every obligation of
Purchaser hereunder as of the Closing Date or (ii) terminate
this Agreement by notice to the Seller. If the Purchaser
elects to terminate this Agreement, the Deposit shall be
refunded to the Purchaser as set forth in the Escrow
Agreement attached hereto as Exhibit F. As a condition
precedent to the Purchaser exercising any right it may have
to bring an action for specific performance as the result of
the Seller's failure or refusal to perform its obligations
hereunder, the Purchaser must commence such an action for
specific performance within ninety (90) days after the
occurrence of such default. The Purchaser agrees that its
failure to timely commence such an action for specific
performance within such ninety (90) day period shall be
deemed a waiver by the Purchaser, or any person or entity
claiming by, through, or under Purchaser, including without
limitation, Purchaser's Nominee (provided this Agreement is
assigned in accordance with Section 19 hereof), of any right
which it or they may have had to commence such an action.
Notwithstanding anything to the contrary herein, if the
Seller's failure or refusal to perform its obligations under
this Agreement is a result of any action of, or failure to
act by, the Purchaser or any of the Purchaser's
Representatives, the Purchaser shall not be relieved of its
obligations under this Agreement and Purchaser shall not be
entitled to any right or remedy provided in this Section
14.3 or elsewhere in this Agreement.
Escrow.
The Escrow Agent shall hold the Downpayment and all interest
accrued thereon, if any (collectively, the "Deposit") in
escrow and shall dispose of the Deposit only in accordance
with the provisions of that certain Escrow Agreement of even
date herewith by and among the Escrow Agent, the Purchaser
and the Seller relating to the Property, the Notes and the
Interests (the "Escrow Agreement") in the form of Exhibit F
hereto. Simultaneously with their execution and delivery of
this Agreement, the Purchaser and the Seller shall furnish
the Escrow Agent with their true Federal Taxpayer
Identification Numbers so that the Escrow Agent may file
appropriate income tax information returns with respect to
any interest earned on or credited to the Deposit. The
party entitled to the economic benefit of the Deposit
representing interest earned on the Downpayment shall be the
party responsible for the payment of any tax due thereon.
The provisions of the Escrow Agreement shall survive the
termination of this Agreement and the Closing.
Notices.
All notices, elections, consents, approvals, demands,
objections, requests or other communications which the
Seller, the Acquired Partnership or the Purchaser may be
required or desire to give pursuant to, under or by virtue
of this Agreement must be in writing and (i) delivered by
hand to the addresses set forth below, or (ii) (a) sent by
express mail or courier (for next business day delivery), or
(b) sent by certified or registered mail, return receipt
requested with proper postage prepaid, addressed as follows:
If to the Seller:
DW Michelson Associates
c/o Dean Witter Realty Inc.
Two World Trade Center
64th Floor
New York, NY 10048
Attention: Robert B. Austin
with copies to:
Vincent M. Sacchetti, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
If to the Purchaser:
SC Enterprises
2377 Crenshaw Boulevard
Suite 200
Torrance, California 90501
With a copy to:
John L. Child, Esq.
Greenberg, Glusker, Fields
Claman & Machtinger LLP
1900 Avenue of the Stars
Suite 2100
Los Angeles, CA 90067-4590
If to the Acquired Partnership:
Michelson Company Limited Partnership
c/o Dean Witter Realty Inc.
Two World Trade Center
64th Floor
New York, NY 10048
Attention: Robert B. Austin
with copies to:
Vincent M. Sacchetti, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
if to Spieker:
Spieker Properties, L.P.
2180 Sand Hill Road, Suite 200
Menlo Park, CA 94025
Attn: Craig Vought and
Sara Reynolds, Esq.
with copies to:
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111-3143
Attn: David S. Fries, Esq.
The Seller, the Acquired Partnership or the Purchaser may
designate another addressee or change its address for
notices and other communications hereunder by a notice given
to the other parties in the manner provided in this Section
16. A notice or other communication sent in compliance with
the provisions of this Section 16 shall be deemed given and
received (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set
forth above (or to such other address as such party has
designated as provided above), (ii) if sent by express mail
or overnight courier, on the date it is delivered to the
other party, or (iii) if sent by registered or certified
mail, on the third business day following the day such
mailing is made.
Property Information and Confidentiality.
The Purchaser agrees that, prior to the Closing, all
Property Information shall be kept strictly confidential and
shall not, without the prior consent of the Seller, be
disclosed by the Purchaser or the Purchaser's
Representatives, in any manner whatsoever, in whole or in
part, and will not be used by the Purchaser or the
Purchaser's Representatives, directly or indirectly, for any
purpose other than evaluating the Property. Moreover, the
Purchaser agrees that, prior to the Closing, the Property
Information will be transmitted only to the Purchaser's
Representatives (i) who need to know the Property
Information for the purpose of evaluating the Property, and
who are informed by the Purchaser of the confidential nature
of the Property Information, (ii) who agree to be bound by
the terms of this Section 17 and Section 6.3 and (iii) who
have executed and delivered to the Seller the letter
regarding use of the Property Information in the form of
Exhibit G hereto. The provisions of this Section 17 shall
in no event apply to Property Information which is a matter
of public record and shall not prevent the Purchaser from
complying with Laws, including, without limitation,
governmental regulatory, disclosure, tax and reporting
requirements.
Press Releases.
The Purchaser and Seller, for the benefit of each other,
hereby agree that between the date hereof and the Closing
Date, they will not release or cause or permit to be
released any press notices, publicity (oral or written) or
advertising promotion relating to, or otherwise announce or
disclose or cause or permit to be announced or disclosed, in
any manner whatsoever, the terms, conditions or substance of
this Agreement or the transactions contemplated herein,
without first obtaining the written consent of the other
party hereto. It is understood that the foregoing shall not
preclude either party from discussing the substance or any
relevant details of the transactions contemplated in this
Agreement with any of its attorneys, accountants,
professional consultants or potential lenders, as the case
may be, or prevent either party hereto from complying with
Laws, including, without limitation, governmental
regulatory, disclosure, tax and reporting requirements.
Return of Property Information.
In the event this Agreement is terminated, the Purchaser and
the Purchaser's Representatives shall promptly deliver to
the Seller all originals and copies of the Property
Information (other than materials prepared by the Purchaser,
its employees or their officers) in the possession of the
Purchaser and the Purchaser's Representatives.
Notwithstanding anything contained herein to the contrary,
in no event shall the Purchaser be entitled to receive a
return of the Downpayment or the accrued interest thereon,
if any, if and when otherwise entitled thereto pursuant to
this Agreement until such time as the Purchaser and the
Purchaser's Representatives shall have performed the
obligations contained in the preceding sentence.
Property Information Defined.
As used in this Agreement, the term "Property Information"
shall mean (i) all information and documents in any way
relating to the Property and/or the Buildings, the operation
thereof or the sale thereof (including, without limitation,
Leases, Contracts and Licenses) furnished to, or otherwise
made available for review by, the Purchaser or their
directors, officers, employees, affiliates, partners,
brokers, agents or other representatives, including, without
limitation, attorneys, accountants, contractors,
consultants, engineers and financial advisors (collectively,
the "Purchaser's Representatives"), by the Seller or any of
the Seller's Affiliates, or their agents or representatives,
including, without limitation, their contractors, engineers,
attorneys, accountants, consultants, brokers or advisors,
and (ii) all analyses, compilations, data, studies, reports
or other information or documents prepared or obtained by
the Purchaser or the Purchaser's Representatives containing
or based, in whole or in part, on the information or
documents described in the preceding clause (i), or the
Investigations, or otherwise reflecting their review or
investigation of the Property and/or the Buildings.
Remedies.
In addition to any other remedies available to the Seller,
the Seller shall have the right to seek equitable relief,
including, without limitation, injunctive relief or specific
performance, against the Purchaser or the Purchaser's
Representatives in order to enforce the provisions of this
Section 17.
The provisions of this Section 17 shall survive the
termination of this Agreement and the Closing.
Access to Records.
For a period of three (3) years subsequent to the Closing
Date, the Seller, the Seller's Affiliates and their
employees, agents and representatives shall be entitled to
access during business hours to all documents, books and
records given to the Purchaser by the Seller at the Closing,
including, without limitation, the books and records of the
Acquired Partnership, for tax and audit purposes, regulatory
compliance, and cooperation with governmental investigations
upon reasonable prior notice to the Purchaser, and shall
have the right, at their sole cost and expense, to make
copies of such documents, books and records.
Assignments.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and to their respective heirs,
executors, administrators, successors and permitted assigns.
This Agreement may not be assigned by the Purchaser without
the prior written consent of the Seller and any assignment
or attempted assignment by the Purchaser without such prior
written consent shall constitute a default by the Purchaser
hereunder and shall be null and void. Notwithstanding the
foregoing, Purchaser shall have the right, so long as
Purchaser or Purchaser's Nominee (provided this Agreement is
assigned in accordance with Section 19 hereof) shall execute
an Assignment and Assumption of all of Purchaser's rights,
obligations, covenants, representations and warranties with
respect to this Agreement in form and in substance
reasonably satisfactory to Seller, to nominate Spieker
Properties L.P., a California limited partnership as the
Assignee under the Assignment Agreement and as the Grantee
under the Deed ("Purchaser's Nominee").
Entire Agreement, Amendments.
All prior statements, understandings, representations and
agreements between the parties, oral or written, are
superseded by and merged in this Agreement, which alone
fully and completely expresses the agreement between them in
connection with this transaction and which is entered into
after full investigation, neither party relying upon any
statement, understanding, representation or agreement made
by the other not embodied in this Agreement. This Agreement
shall be given a fair and reasonable construction in
accordance with the intentions of the parties hereto, and
without regard to or aid of canons requiring construction
against the Seller or the party drafting this Agreement.
This Agreement shall not be altered, amended, changed,
waived, terminated or otherwise modified in any respect or
particular, and no consent or approval required pursuant to
this Agreement shall be effective, unless the same shall be
in writing and signed by or on behalf of the party to be
charged.
Merger.
Except as otherwise expressly provided herein, the
Purchaser's acceptance of the Deed and the Purchaser's
Documents shall be deemed a discharge of all of the
obligations of the Seller hereunder and all of the Seller's
representations, warranties, covenants and agreements herein
shall merge in the documents and agreements executed at the
Closing and shall not survive the Closing.
Limited Recourse.
The Purchaser agrees that neither it nor any party claiming,
by, through or under Purchaser, including, without
limitation, Purchaser's Nominee (provided this Agreement is
assigned in accordance with Section 19 hereof) has and will
not have any claims or causes of action against any
disclosed or undisclosed officer, director, employee,
trustee, shareholder, partner, principal, parent, subsidiary
or other affiliate of the Seller, including, without
limitation, Dean Witter Realty Inc. and the parent and
affiliates of Dean Witter Realty Inc. (collectively, the
"Seller's Affiliates"), arising out of or in connection with
this Agreement or the transactions contemplated hereby. The
Purchaser agrees to look solely to the Seller and the
Seller's assets directly attributable to the Property for
the satisfaction of the Seller's liability or obligation
arising under this Agreement or the transactions
contemplated hereby, or for the performance of any of the
covenants, warranties or other agreements of the Seller
contained herein, and further agrees not to sue or otherwise
seek to enforce any personal obligation against any of the
Seller's Affiliates with respect to any matters arising out
of or in connection with this Agreement or the transactions
contemplated hereby. The total liability of the Seller
hereunder shall in no event exceed $700,000.00.
Miscellaneous.
Neither this Agreement nor any memorandum thereof shall be
recorded and any attempted recordation hereof shall be void
and shall constitute a default by the party to this
Agreement who records or attempts to record this Agreement.
Each of the Exhibits and Schedules referred to herein and
attached hereto is incorporated herein by this reference.
The caption headings in this Agreement are for convenience
only and are not intended to be a part of this Agreement and
shall not be construed to modify, explain or alter any of
the terms, covenants or conditions herein contained. If any
provision of this Agreement shall be unenforceable or
invalid, the same shall not affect the remaining provisions
of this Agreement and to this end the provisions of this
Agreement are intended to be and shall be severable. This
Agreement shall be interpreted and enforced in accordance
with the laws of the State of California without reference
to principles of conflicts of laws.
Time of the Essence.
Time is of the essence with respect to this Agreement,
including but not limited to the occurrence of the Closing
as of the originally scheduled date.
IRS Form 1099-S Designation.
In order to comply with information reporting requirements
of Section 6045(e) of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations thereunder, the
parties agree (i) to execute an IRS Form 1099-S Designation
Agreement in the form attached hereto as Exhibit H at or
prior to the Closing to designate the Title Company as the
party who shall be responsible for reporting the
contemplated sale of the Property to the Internal Revenue
Service (the "IRS") on IRS Form 1099-S; (ii) to provide the
Title Company with the information necessary to complete
Form 1099-S; (iii) that the Title Company shall not be
liable for the actions taken under this Section 25, or for
the consequences of those actions, except as they may be the
result of gross negligence or willful misconduct on the part
of the Title Company; and (iv) that the Title Company shall
be indemnified by the parties for any costs or expenses
incurred as a result of the actions taken under this Section
25, except as they may be the result of gross negligence or
willful misconduct on the part of the Title Company. The
Title Company shall provide all parties to this transaction
with copies of the IRS Forms 1099-S filed with the IRS and
with any other documents used to complete IRS Form 1099-S.
Access to Records.
Subsequent to the Closing Date and until the fourth
anniversary thereof, Purchaser shall have the right to audit
the books and records of Seller in respect of the Property
for the last two entire fiscal years of the Seller ending
prior to the Closing Date and the portion of the Seller's
fiscal year in which the Closing occurs to and including the
Closing Date.
Attorney's Fees.
In any event that at any time Seller or Purchaser shall
institute any action or proceeding against the other
relating to this Agreement or any default hereunder, then
and in that event the prevailing party in such action or
proceeding shall be entitled to recover from the other party
its reasonable attorneys' fees which shall be deemed to have
accrued on the commencement of such action or proceeding and
shall be payable whether or not such action is prosecuted to
judgment.
Counterparts.
This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Tax Free Exchange.
Purchaser may consummate the purchase of the Property as
part of a so-called like kind exchange (the "Exchange")
pursuant to 1031 of the Internal Revenue Code of 1986, as
amended (the "Code"), provided that: (i) the Closing shall
not be delayed or affected by reason of the Exchange nor
shall the consummation or accomplishment of the Exchange be
a condition precedent or condition subsequent to Purchaser's
obligations under this Agreement; (ii) Purchaser shall
effect the Exchange through an assignment of this Agreement,
or their rights under this Agreement, to a qualified
intermediary; (iii) Seller shall not be required to take an
assignment of the purchase agreement for the relinquished
property or be required to acquire or hold title to any real
property for purposes of consummating the Exchange; and (iv)
Purchaser shall pay any additional costs that would not
otherwise have been incurred by Purchaser or Seller had
Purchaser not consummated its purchase through the Exchange.
Seller shall not by this agreement or acquiescent to the
Exchange (1) have its rights under this Agreement affected
or diminished in any manner or (2) be responsible for
compliance with or be deemed to have warranted to Purchaser
that the Exchange in fact complies with 1031 of the Code.
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above
written.
SELLER:
DW MICHELSON ASSOCIATES, a
California general partnership
By: DEAN WITTER REALTY YIELD
PLUS, L.P., a Delaware
limited partnership
general partner
By: DEAN WITTER REALTY YIELD
PLUS INC., a Delaware corporation
general partner
By: /s/Robert B. Austin
Name: Robert B. Austin
Title: Vice President
By: DEAN WITTER REALTY YIELD
PLUS II, L.P.,a Delaware limited partnership
general partner
By: DEAN WITTER REALTY
YIELD PLUS II INC.,
a
Delaware corporation
general partner
By: /s/Robert B. Austin
Name: Robert B. Austin
Title: Vice President
PURCHASER:
SC ENTERPRISES, a California
limited partnership
By: /s/Shurl Curci
its general partner
By: _________________
Name: _________________
Title:
_________________
Acquired Partnership:
MICHELSON COMPANY Limited
Partnership, a California
limited
partnership
By: DW MICHELSON ASSOCIATES
general partner
By: DEAN WITTER REALTY
YIELD PLUS, L.P.
general partner
By: DEAN WITTER REALTY
YIELD PLUS INC.
general partner
By: /s/Robert B.
Austin
Name: Robert B. Austin
Title: Vice President
By: DEAN WITTER REALTY
YIELD PLUS II, L.P.
general partner
By: DEAN WITTER REALTY
YIELD PLUS II INC.
general partner
By: /s/Robert B. Austin
Name: Robert B.
Austin
Title: Vice President
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
This Amendment to Purchase and Sale Agreement (this
"Amendment") is dated as of February 13, 1997, by and among
DW Michelson Associates, a California general partnership
("Seller"), SC Enterprises, a California limited partnership
("Purchaser"), and Commonwealth Land Title Insurance Company
(the "Escrow Agent").
WITNESSETH:
WHEREAS, Seller and Buyer have entered into that
certain Purchase and Sale Agreement (the "Agreement") dated
as of December 26, 1997, pursuant to which Seller has agreed
to sell, and Buyer has agreed to buy, on the terms and
conditions stated therein, certain real and personal
property located in Irvine, California, more particularly
described in the Agreement and defined therein as the
"Property", and certain promissory notes and interests in
the Acquired Partnership, more particularly described in the
Agreement and defined therein as the "Notes" and the
"Interests", respectively; and
WHEREAS, the Due Diligence Period referenced in Section
4 of the Agreement has ended on the date hereof; and
WHEREAS, the Purchaser has requested that the Seller
extend the Closing Date referenced in Section 1.2 of the
Agreement; and
WHEREAS, the Seller is willing to extend the Closing
Date but only in accordance with the terms and provisions
contained herein.
NOW THEREFORE, in consideration of Ten Dollars
($10.00), the mutual covenants herein contained and other
good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by the parties hereto,
Buyer, Seller and Escrow Agent hereby agree as follows:
1. Capitalized terms used herein and not otherwise
defined shall have the same meaning herein as the meanings
ascribed to them in the Agreement.
2. Purchaser acknowledges that it has had ample time
to examine all aspects of the Property and the Property
Information in accordance with Section 4 of the Agreement
and waives any and all objections it may have with respect
to the condition of the property or status of Seller's title
thereto, including, without limitation, objections to
Unacceptable Encumbrances pursuant to Section 5.1 of the
Agreement.
3. With the exception of those conditions listed in
Section 8 and Section 13.1(i) of the Agreement, Purchaser
acknowledges that the Seller has fulfilled every condition
of Closing and Condition Precedent to Purchaser's obligation
to perform Purchaser's obligations as set forth in the
Agreement, including, without limitation, (i) delivery of
Estoppel Certificates pursuant to Section 4.3 of the
Agreement; (ii) delivery of the Survey pursuant to Section 5
of the Agreement; (iii) delivery of the Title Commitment
pursuant to Section 5 of the Agreement; and (iv) removal of
any Unacceptable Encumbrances pursuant to Section 5.2 of the
Agreement. Notwithstanding the foregoing, at the Closing
Seller shall execute and deliver to Purchaser a Seller's
Estoppel Certificate as to any tenant under a Lease who has
failed to deliver an Estoppel Certificate, as provided in
Section 4.3 of the Agreement.
4. Purchaser acknowledges that it has been advised of
Los Angeles Superior Court Case No. 788402, Town & Country
Credit Corp. v. Michelson Company, Ltd. (the "Action") and
the Lis Pendens which has been filed against the Property in
connection with the Action. Purchaser hereby agrees to take
title to the Property subject to the Lis Pendens and to
defend the Action on behalf of the Acquired Partnership.
Seller agrees to indemnify Purchaser against and to hold
Purchaser harmless from any and all liabilities, losses,
claims, damages and expenses, including attorneys' fees and
expenses and other expenses relating to the Action incurred
prior to or at any time after the date hereof.
5. Seller and Purchaser agree that no later than two
(2) business days after the mutual execution of this
Amendment, Purchaser shall deliver an extension fee of One
Million Dollars ($1,000,000) (the "Extension Fee") to
Commonwealth Land Title Company (the "Escrow Agent") by wire
transfer, certified funds or other immediately available
funds reasonably satisfactory to Seller. The Extension Fee
shall be added to the Downpayment and the term "Downpayment"
shall be deemed to include the Extension Fee and all
interest accrued thereon.
6. Seller and Purchaser agree that the date "February
15, 1998" appearing in Section 1.2 of the Agreement is
hereby deleted and replaced with the following: "April 3,
1998".
7. Seller and Purchaser agree that the phrase "at the
Closing" appearing in the third line of Section 2.1(c) of
the Agreement is hereby deleted and replaced with the
following: "no later than 3:00 P.M., New York, New York
time, April 2, 1998".
8. The Downpayment as increased by the Extension Fee
shall be held and disbursed by the Escrow Agent in
accordance with the Agreement.
9. The Seller and Purchaser hereby confirm, reaffirm
and ratify all and singular the terms and conditions of the
Agreement as specifically amended hereby.
10. This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all
such counterparts shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed
this Amendment as of the day and year first above written.
SELLER:
DW MICHELSON ASSOCIATES, a
California general partnership
By: DEAN WITTER REALTY
YIELD PLUS, L.P.,
a Delaware limited
partnership
general partner
By: DEAN WITTER
REALTY
YIELD PLUS INC., a
Delaware corporation
general partner
By: /s/Robert B. Austin
Name: Robert B. Austin
Title: Vice President
By: DEAN WITTER REALTY
YIELD PLUS II, L.P.,
a Delaware limited
partnership
general partner
By: DEAN WITTER
REALTY
YIELD PLUS II INC.,
a
Delaware corporation
general partner
By: /s/Robert B. Austin
Name: Robert B. Austin
Title: Vice President
PURCHASER:
SC ENTERPRISES, a California
limited partnership
By: /s/Shurl Curci
its general partner
By: ___________________
Name: ___________________
Title: ____________________
ESCROW AGENT:
COMMONWEALTH LAND TITLE
INSURANCE COMPANY
By:_________________________
Name:______________________
Title:_______________________
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the
"Agreement"), dated as of April 3, 1998, is entered into by
and between SC ENTERPRISES, a California limited partnership
("Assignor"), and SPIEKER PROPERTIES, L.P., a California
limited partnership ("Assignee").
WHEREAS, Assignor is the "Purchaser" under that certain
Purchaser and Sale Agreement dated as of December 16, 1997
by and among DW Michelson Associates, a California general
partnership, as "Seller," Michelson Company Limited
Partnership, a California limited partnership, as "Acquired
Partnership"), and Assignor (as such may have been amended,
if at all, the "Purchase Contract").
WHEREAS, pursuant to Section 19 of the Purchase
Contract, Assignor has the right to assign certain of its
rights and obligations under the Purchaser Contract to
Assignor, provided that the form of the assignment agreement
has been approved by Seller.
WHEREAS, Assignor desires to assign to Assignee all of
its right, title and interest in, to and under the Purchase
contract, other than Assignor's right to purchase the
Secured Note and the Unsecured Note (collectively, the
"Retained Notes"), and Assignee desires to accept the
assignment thereof and assume Assignor's obligations under
the Purchaser Contract, other than to pay the portion of the
Purchase Price allocable under the Purchase Contract to the
Retained Notes (i.e., $1,000,000) and to execute the deliver
documents relating to the purchase of the Retained Notes.
NOW, THEREFORE, in consideration of the agreements and
conditions contained herein and other valuable
consideration, the receipt and sufficiently of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
1. Capitalized terms used herein and no otherwise
defined herein shall have the meanings set forth in the
Purchase Agreement.
2. Assignor hereby assigns to Assignee all its right,
title and interest in, to and under the Purchase Contract,
other than Assignor's right to purchase the Retained Notes,
and Assignee hereby accepts such assignment.
3. Assignee hereby assumes all of Assignor's
obligations under the Purchase Contract other than
Assignor's right to purchase the Retained Notes and agrees
fully and faithfully to perform and discharge, as and when
performance and discharge are due, all of such obligations;
provided that, notwithstanding the foregoing, in no event
shall Assignee assume any of Assignor's obligations under
the Purchase Contract to pay the portion of the Purchase
Price allocable under the Purchase Contract to the Retained
Notes (i.e., $1,000,000) or to execute or deliver any
documents relating to the purchase of the Retained Notes.
Assignor shall remain jointly and severally liable with
Assignee for all obligations assumed by Assignee hereunder,
and nothing contained herein shall be construed to limit
Assignor's obligations under the Purchase Contract.
4. Assignor agrees fully and faithfully to perform
and discharge, as and when performance and discharge are
due, its obligations under the Purchase Contract to pay the
portion of the Purchase Price allocable under the Purchase
Contract to the Retained Notes (i.e., $1,000,000) and to
execute and deliver all documents relating to the purchase
of the Retained Notes.
5. Assignor hereby agrees to indemnify, defend and
hold Assignee harmless from and against any all claims,
obligations, liabilities, damages, actions or causes of
action that Assignee may incur in connection with the
Purchase Contract and the transactions described therein to
the extent resulting from any default under the Purchase
contract by Assignor prior to the date hereof or as a result
of Assignor's default in its obligations set forth in
Paragraph 4 above. Except to the extent Assignee is
entitled to indemnification pursuant to the immediately
preceding sentence, Assignee hereby agrees to indemnify,
defend and hold Assignor harmless from and against any all
claims, obligations, liabilities, damages, actions or causes
of action that Assignor may incur in connection with any
default under the Purchase Contract by Assignee after the
date hereof or as a result of Assignee's default in its
obligations set forth in Paragraph 3 above.
6. Assignor hereby represents and warrants to
Assignee that, to the best of Assignor's knowledge, the
Purchase Contract is in full force and effect and Assignor
is not in default under the terms of the Purchase Contract.
7. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises
between the parties hereto concerning the meanings or
interpretation of any provision of this Agreement, then the
defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the
other party on account of such default and/or in enforcing
or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses
incurred by either party in enforcing a judgment in its
favor under this Agreement shall be recoverable separately
from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to
be severable from the other provisions of this Agreement and
to survive and not be merged into any such judgment.
8. This Agreement shall be binding on and inure to
the benefit of the parties hereto and their respective
heirs, executors, administrators, successors in interest and
assigns.
9. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
10. In the event that any portion of this Agreement
shall be illegal, null or void, the remaining portions of
its Agreement shall not be affected thereby and shall remain
in force and effect to the fullest extent permitted by law.
11. This Agreement may be executed in counterparts,
each of which shall be deemed an original, and all of which,
when taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed
this Agreement as of the day and year first above written.
Assignor: SC ENTERPRISES, a California
limited partnership
By: /s/Shurl Curci
Shurl Curci, as Trustee
of The Curci Trust of 1983 (Restated)
Its: General Partner
Assignee: SPIEKER PROPERTIES, L.P., a
California limited partnership
By: Spieker Properties,
Inc.,
a Maryland corporation,
its General Partner
By: Jeffrey K. Nickerl
Its: Vice President
Pursuant to the provisions of Section 19 of the
Purchase contract, the undersigned hereby consents to and
approves of the foregoing Agreement and shall be entitled to
the rights and benefits hereunder at law and at equity.
DW MICHELSON ASSOCIATES, a
California general partnership
By: Dean Witter Realty
Yield Plus, L.P., a Delaware
limited partnership, General Partner
By: Dean Witter Realty
Yield Plus Inc., a Delaware
corporation, General Partner
By: /s/Robert B.
Austin
Name: Robert B. Austin
Title: Vice President
By: Dean Witter Realty Yield
Plus II, L.P., a Delaware limited partnership,
General Partner
By: Dean Witter Realty
Yield Plus II Inc., a Delaware
corporation, General Partner
By: /s/Robert B.
Austin
Name: Robert B.
Austin
Title:Vice President
