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) May 4, 1998
PS BUSINESS PARKS, INC.
(Exact name of registrant as specified in its charter)
California 1-10709 95-4300881
---------- ------- ----------
(State or Other Jurisdiction (Commission File Number) I.R.S. Employer
of Incorporation) Identification Number)
701 Western Avenue, Glendale, California 91201-2397
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 244-8080
N/A
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 4, 1998, PS Business Parks, Inc. (the "Company" or "PSB"), through
its consolidated partnerships, acquired 28 commercial properties located in
Texas and Oregon, containing approximately 2,265,000 net rentable square
feet, and approximately 15 acres of vacant land from affiliates of
Principal Mutual Life at an aggregate purchase price of approximately
$190.5 million. The Company is not affiliated with the sellers and the
purchase price was established through arm's length negotiation. The
Company obtained the funds to acquire the facilities through a loan from
Public Storage, Inc., an affiliate of the Company, bearing interest at
LIBOR plus 1.25% (currently 6.9%)and maturing on December 31, 1998. The
Company has repaid a portion of the loan from a recently completed sale of
Common Stock and the Company expects to repay the balance through a private
sale of securities.
The following table provides certain information concerning the facilities
acquired:
<TABLE>
<CAPTION>
Net Rentable Occupancy
Property Type Purchase Price Square Footage at March 31, 1998
------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C>
Beaverton, Oregon Industrial $ 15,946,000 131,000 100%
& Office
Beaverton, Oregon Industrial 5,234,200 43,000 83%
& Office
Beaverton, Oregon Industrial 6,609,700 54,300 100%
& Office
Beaverton, Oregon Industrial 10,456,200 85,900 100%
& Office
Beaverton, Oregon Industrial 11,454,400 94,100 100%
& Office
Beaverton, Oregon Industrial 15,230,100 155,800 100%
& Office
Beaverton, Oregon Industrial 3,225,900 33,000 100%
& Office
Beaverton, Oregon Industrial 1,974,600 20,200 100%
& Office
Beaverton, Oregon Industrial 5,317,800 54,400 100%
& Office
Beaverton, Oregon Industrial 5,298,300 54,200 100%
& Office
Beaverton, Oregon Office 4,477,200 45,800 98%
Beaverton, Oregon Industrial 7,351,100 75,200 100%
& Office
Beaverton, Oregon Industrial 11,525,300 117,900 100%
& Office
Beaverton, Oregon Industrial 3,509,400 35,900 94%
& Office
Richardson, Texas Industrial 4,510,300 116,800 88%
& Office
Plano, Texas Industrial 8,636,100 184,800 100%
& Office
Dallas, Texas Industrial 7,100,000 193,300 85%
& Office
Dallas, Texas Industrial 1,766,600 44,600 81%
& Office
Irving, Texas Industrial 2,716,000 35,000 100%
& Office
Irving, Texas Industrial 4,368,800 56,300 100%
& Office
Irving, Texas Industrial 3,360,000 43,300 99%
& Office
Irving, Texas Industrial 1,714,900 22,100 100%
& Office
Irving, Texas Industrial 17,940,900 231,200 100%
Irving, Texas Industrial 5,424,100 69,900 100%
& Office
Irving, Texas Industrial 2,599,600 33,500 100%
& Office
Irving, Texas Industrial 6,409,700 82,600 100%
& Office
Irving, Texas(1) Industrial 3,802,400 49,000 100%
& Office
Irving, Texas(2) Industrial 7,930,600 102,200 100%
& Office
Subtotal - operating -------------------- ---------------- -------------------
facilities 185,890,200 2,265,300 97%
Vacant land - Beaverton,
Oregon (approx. 15 acres) 4,634,800 - -
Totals ==================== ================ ===================
$ 190,525,000 2,265,300 97%
(1) Property development completed in 1997; first occupancy occurred
in July 1997 and property fully occupied in December 1997.
(2) Property development completed in 1998; property was pre-leased
with leases covering 100% of the rentable square footage
commencing in first quarter of 1998.
</TABLE>
Reference is made to Item 7 for the financial statements of the facilities
acquired for the year ended December 31, 1997.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a)(iii) Financial Statements specified by Rule 3.14 of Regulation S-X
Report of Independent Auditors
Combined Statement of Revenues and Certain Operating Expenses
for the Year Ended December 31, 1997
Notes to Consolidated Financial Statements
(b) Pro forma Consolidated Financial Statements
(c) Exhibits
10.1 Real Estate Purchase and Sale Agreement by and between Petula
Associates, Ltd. and Equity FC, Ltd. (Seller) and PS Business
Parks, LP (Buyer)
10.2 Real Estate Purchase and Sale Agreement by and between
Principal Mutual Life Insurance Company and Petula Associates,
Ltd. (Seller) and PS Business Parks, LP (Buyer)
10.3 Real Estate Purchase and Sale Agreement by and between
Principal Mutual Life Insurance Company (Seller) and TPLP
Office Park Properties, a Texas limited partnership (Buyer)
10.4 Real Estate Purchase and Sale Agreement by and between Petula
Associates, Ltd. (Seller) and TPLP Office Park Properties, a
Texas limited partnership (Buyer)
23. Consent of Independent Auditors.
3
<PAGE>
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.
PS BUSINESS PARKS, INC.
Date: May 12, 1998 By: /s/ Ronald L. Havner, Jr.
--------------------------
Ronald L. Havner, Jr.
President and Chief Executive Officer
4
<PAGE>
Item 7 (a) (iii)
Report of Independent Auditors
The Board of Directors
PS Business Parks, Inc.
We have audited the accompanying combined statement of revenues and certain
operating expenses (combined statement) of the Principal Properties (as defined
in Note 1 to the combined statement) for the year ended December 31, 1997. The
combined statement is the responsibility of management of the Principal
Properties. Our responsibility is to express an opinion on the combined
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined statement is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the combined statement. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall combined statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the combined statement presents fairly, in all material
respects, the combined revenues and certain operating expenses of the Principal
Properties for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
/s/ ERNST & YOUNG LLP
Des Moines, Iowa
April 21, 1998
5
<PAGE>
Principal Properties
Combined Statement of Revenues
and Certain Operating Expenses
Year ended December 31, 1997
Revenues:
Rental income $17,111,000
Reimbursement of expenses by tenants 2,750,000
-------------------
19,861,000
Certain operating expenses:
Repairs and maintenance 1,175,000
Landscaping 381,000
Utilities 595,000
Insurance 57,000
Property taxes 1,697,000
Other 255,000
-------------------
4,160,000
===================
Excess of revenues over certain operating expenses $15,701,000
===================
SEE ACCOMPANYING NOTES.
6
<PAGE>
Principal Properties
Notes to Combined Statement of Revenues
and Certain Operating Expenses
1. Background and Basis of Combination
The accompanying combined statement of revenues and certain operating expenses
(combined statement) includes the accounts of certain retail and service center
real estate assets (the "Principal Properties") located in Texas and Oregon to
be acquired by PS Business Parks, L.P. The combined statement is prepared in
order to comply with Rule 3.14 of Regulation S-X of the Securities and Exchange
Commission. The combined statement includes only the accounts and activities of
the Principal Properties. Items which are not comparable to the future
operations of the Principal Properties have been excluded. Such items include
mortgage interest, depreciation, management fees and interest income.
An audited combined statement is being presented for the most recent year
available instead of the three most recent years based on the following factors:
(i) the Principal Properties are to be acquired from an unaffiliated party and
(ii) based on the investigation of the Principal Properties by the management of
PS Business Parks, L.P., it is not aware of any material factors relating to the
Principal Properties that would cause this financial information not to be
necessarily indicative of future operating results other than the factors
specifically considered by PS Business Parks, L.P. as described below.
In the decision to acquire the Principal Properties, PS Business Parks, L.P.
considered the competition from other commercial property owners, the locations,
the leases, the rental rates and the occupancy levels of the properties.
7
<PAGE>
Principal Properties
Notes to Combined Statement of Revenues
and Certain Operating Expenses (continued)
2. Summary of Significant Accounting Policies
Revenue Recognition
The leases of the Principal Properties are accounted for as operating leases.
Rent revenues are recognized using the straight-line basis over the respective
lease terms. Reimbursements from tenants are recognized as income in the period
the applicable costs are accrued.
Allowances for Uncollectible Accounts
Management periodically evaluates amounts billed to tenants and accrued
reimbursements from tenants and adjusts the allowances for doubtful accounts to
reflect the amounts estimated to be uncollectible. Amounts determined to be
uncollectible are included in operating expenses.
Use of Estimates
The preparation of the combined statement in conformity with generally accepted
accounting principles requires management of the Principal Properties to make
estimates and assumptions that affect the reported amounts of revenues and
certain operating expenses during the reporting periods. Actual results could
differ from those estimates.
3. Leases
Future minimum rental revenues under noncancelable leases as of December 31,
1997 are as follows:
1998 $19,437,000
1999 18,763,000
2000 15,383,000
2001 11,953,000
2002 9,756,000
Thereafter 14,584,000
------------------
$89,876,000
==================
8
<PAGE>
Item 7 (b) PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
PS Business Parks, Inc. (the "Company" or "PSB") is the successor to American
Office Park Properties, Inc. ("AOPP") and the survivor in the merger (the
"Merger") of PSB into Public Storage Properties XI, Inc. ("PSP11") on March 17,
1998. Based upon the terms of the merger (see below), for financial reporting
and accounting purposes the merger has been accounted for as a reverse
acquisition whereby PSB is deemed to have acquired PSP11. However, PSP11 is the
continuing legal entity and registrant for both Securities and Exchange
Commission filing purposes and income tax reporting purposes. All subsequent
references to PSB prior to March 17, 1998, refer to AOPP.
The following unaudited pro forma consolidated financial statements were
prepared to reflect the acquisition of real estate facilities acquired by PSB on
May 4, 1998, through its consolidated partnerships. Pursuant to the acquisition,
PSB acquired 14 properties located in Oregon, 14 properties located in Texas and
approximately 15 acres of vacant land in Oregon (collectively the "Principal
Properties") for an aggregate cost of approximately $190.5 million in cash. PSB
used available cash, proceeds from the issuance of common stock, and borrowings
from Public Storage, Inc. to fund the transaction.
In addition, the pro forma consolidated financial statements reflect the March
17, 1998 Merger, which is described in the Public Storage Properties XI, Inc.
Proxy Statement and Prospectus dated February 5, 1998 (the "Proxy Statement").
Pursuant to the Merger:
* PSB merged into PSP11.
* Each outstanding share of PSP11 Common Stock, with the exception of
106,155 shares which elected to receive $20.50 in cash per share,
continues to be owned by current holders.
* Each share of PSP11 Common Stock Series B and each share of PSP11
Common Stock Series C converted into .8641 share of PSP11 Common
Stock.
* Each share of PSB Common Stock converted into 1.18 shares of PSP11
Common Stock.
* The surviving corporation in the Merger was renamed PS Business Parks,
Inc.
* Concurrent with the Merger, PSP11 exchanged (the "Exchange") 11
mini-warehouses and two properties that combine mini-warehouse and
commercial space for 11 commercial properties owned by Public Storage,
Inc. ("PSI").
The Merger has been accounted for as a reverse merger whereby PSB is treated as
the accounting acquirer using the purchase method. This has been determined
based upon the following:
* The former shareholders and unitholders of PSB own in excess of 80% of
the merged companies.
* The business focus post Merger will continue to be that of PSB's which
includes the acquisition, ownership and management of commercial
properties. Prior to the Merger, PSP11's business focus has been
primarily on the ownership and operation of its self-storage
facilities which represented approximately 81% of its portfolio.
In addition to adjustments to reflect the acquisition of the Principal
Properties and the Merger, pro forma adjustments were made to reflect the
following transactions (all share and Operating Partnership unit amounts have
been adjusted to reflect the conversion factor of 1.18 pursuant to the Merger):
9
<PAGE>
1. On April 1, 1997, PSB (through the operating partnership) acquired
four commercial properties from PSI in exchange for 1,480,968 OP
Units.
2. On July 31, 1997, PSB acquired two commercial properties from an
unaffiliated third party for cash totaling $33,310,000. PSB raised the
cash for this acquisition by issuing 2,025,769 shares of PSB Common
Stock primarily to PSI for cash totaling $33,800,000.
3. On September 24, 1997, PSB acquired one commercial property (the
"Largo Property") from an unaffiliated third party for an aggregate
cost of $10,283,000, consisting of cash of $9,959,000 and the
issuance of 14,384 Operating Partnership units ("OP Units") having a
value of $324,000.
4. On December 10, 1997, PSB purchased a commercial property (the
"Northpointe Property") for $3,854,000, consisting of cash of
$3,554,000 and the issuance of 13,111 OP Units having a value of
$300,000.
5. On December 24, 1997, PSB completed a transaction whereby PSB issued
1,785,007 OP Units and 3,504,758 shares of PSB common stock to a
subsidiary of a state pension fund, and the subsidiary of the state
pension fund, through a merger and contribution, transferred to PSB
six commercial properties (the "Acquiport Properties" - $118,655,000)
and $1,000,000 cash. PSB incurred $3,300,000 in transaction costs. On
January 9, 1998, the subsidiary of the state pension fund exercised
its option to convert its OP Units into shares of PSB common stock on
a one-for-one basis.
6. In January 1998, PSB entered into an agreement with a group of
institutional investors under which PSB would issue up to 6,744,074
shares of PSB common stock at $22.88 per share in separate tranches.
The first tranche, 2,185,189 shares or $50.0 million, was issued in
January 1998. The remainder of the shares ($105 million) were issued
on May 6, 1998. The funds were used to finance a portion of the
acquisition cost of the Principal Properties.
7. On January 13, 1998, PSB purchased a commercial property (the
"Ammendale Property") for $22,518,000, consisting of cash of
$22,325,000 and the issuance of 8,428 OP Units having a value of
$193,000.
8. In March 1998, PSB purchased two commercial properties (the "March
Acquisitions", referred to in the Proxy Statement dated February 5,
1998 as the "Proposed Acquisition Properties") from unaffiliated third
parties for an aggregate cost of $32,916,000, composed of $17,377,000
cash, the issuance of 44,250 OP Units having a value of $1,013,000,
and the assumption of mortgage notes payable of $14,526,000.
The pro forma consolidated balance sheet at December 31, 1997 has been prepared
to reflect (i) the aforementioned acquisitions and proposed acquisitions of
commercial properties which occurred after December 31, 1997, (ii) the related
conversion of OP Units to PSB Common Stock by the subsidiary of the state
pension fund, (iii) the issuance of $155.0 million of PSB Common Stock to
institutional investors, and (iv) the Merger transaction between PSB and PSP11.
The pro forma consolidated statement of income for the year ended December 31,
1997 has been prepared assuming (i) the aforementioned acquisitions and proposed
acquisitions of commercial properties (ii) the issuance of $155.0 million of PSB
Common Stock to institutional investors, and (iii) the Merger between PSB and
PSP11, as if all such transactions were completed at the beginning of fiscal
1997. The operations of all property acquisitions are based on the historical
operating results for 1997. The operations of the Principal Properties include
minimal, if any, operations in 1997 for two facilities for which construction
was completed in late 1997 and early 1998 and for a parcel of vacant land. The
consideration paid related to these three properties is approximately $16.4
million of the $190.5 million purchase price for the entire portfolio.
The pro forma adjustments are based upon available information and upon certain
assumptions as set forth in the notes to the pro forma consolidated financial
10
<PAGE>
statements that PSP11 and PSB believe are reasonable in the circumstances. The
pro forma consolidated financial statements and accompanying notes should be
read in conjunction with the historical financial statements of PSP11, PSB, and
certain financial information with respect to properties acquired. (SEE
"FINANCIAL STATEMENTS -ACQUIRED PROPERTIES, -PSI EXCHANGE PROPERTIES, -BALDON
PROPERTIES, -LARGO PROPERTY, -ACQUIPORT PROPERTIES, -PROPOSED ACQUISITION
PROPERTIES, -NORTHPOINTE PROPERTY, AND -AMMENDALE PROPERTY INCLUDED IN THE ABOVE
REFERENCED PROXY STATEMENT). The following pro forma consolidated financial
statements do not purport to represent what PSB's results of operations would
actually have been if the transactions in fact had occurred at the beginning of
fiscal 1997 or to project PSB's results of operations for any future date or
period.
11
<PAGE>
<TABLE>
<CAPTION>
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
(Amounts in thousands, except share and per share data)
PSB
-------------------------------------------------------------
Pro Forma Adjustments
---------------------
Property Other PSB
ASSETS PSB Acquisitions Adjustments Pre-Merger
(Historical) (Note 1) (Note 2) (Pro Forma)
------------ -------------- ------------- -------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 3,884 $ (148,227) $ 146,200 $ 1,857
Real estate facilities, net of accumulated 314,238 245,959 - 560,197
depreciation
Intangible assets, net of accumulated amortization 3,272 - - 3,272
Other assets 2,060 - - 2,060
Purchase cost - - - -
------------ -------------- ------------- -------------
Total assets $ 323,454 $ 97,732 $ 146,200 $ 567,386
============ ============== ============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued and other liabilities $ 8,331 $ - $ (2,900) $ 5,431
Notes payable 3,500 96,526 (3,500) 96,526
Minority interest 168,665 1,206 (24,663) 145,208
Shareholder's equity:
Common stock , $.10 par value, 100,000,000 shares authorized 7,728,000 issued
and outstanding (18,570,827 pro forma shares
issued and outstanding) 773 856 1,629
Series A - - - -
Series B - - - -
Series C - - - -
Paid-in capital 142,581 176,407 318,988
Cumulative net income 3,154 - - 3,154
Cumulative distribution paid (3,550) - - (3,550)
------------ -------------- ------------- -------------
Total shareholders' equity 142,958 - 177,263 320,221
------------ -------------- ------------- -------------
Total liabilities and shareholders' equity $ 323,454 $ 97,732 $ 146,200 $ 567,386
============ ============== ============= =============
Book value per share of common stock (Note 4) $ 18.50 $ 19.66
============ =============
Shares outstanding 7,728,309 16,287,390
============ =============
</TABLE>
<TABLE>
<CAPTION>
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
(Amounts in thousands, except share and per share data)
Pro Forma Merger
Adjustments
-----------
PSB
ASSETS PSP11 Purchase Valuation Post-Merger
(Historical) (Note 3) (Note 3) (Pro Forma)
------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 2,455 $ (2,976) $ - $ 1,336
Real estate facilities, net of accumulated 25,937 - 23,156 609,290
depreciation
Intangible assets, net of accumulated amortization - - (1,540) 1,732
Other assets 454 - - 2,514
Purchase cost - 48,987 (48,987) -
------------ ----------- ------------ -------------
Total assets $ 28,846 $ 46,011 $ (27,371) $ 614,872
============ =========== ============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued and other liabilities $ 1,475 $ - $ - $ 6,906
Notes payable - - - 96,526
Minority interest - - - 145,208
Shareholder's equity:
Common stock , $.10 par value, 100,000,000 shares
and outstanding (18,570,827 pro forma shares
issued and outstanding) - 228 - 1,857
Series A 18 - (18) -
Series B 2 - (2) -
Series C 5 - (5) -
Paid-in capital 32,421 45,783 (32,421) 364,771
Cumulative net income 29,451 - (29,451) 3,154
Cumulative distribution paid (34,526) - 34,526 (3,550)
------------ ----------- ------------ -------------
Total shareholders' equity 27,371 46,011 (27,371) 366,232
------------ ----------- ------------ -------------
Total liabilities and shareholders' equity $ 28,846 $ 46,011 $ (27,371) $ 614,872
============ =========== ============ =============
Book value per share of common stock (Note 4) $ 10.83 $ 19.72
============ =============
Shares outstanding 2,527,008 18,570,827
============ =============
</TABLE>
See Accompanying Notes to Pro Forma Consolidated Balance Sheet.
12
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
1. ACQUISITION OF REAL ESTATE FACILITIES
-------------------------------------
On January 13, 1998, PSB purchased the Ammendale property for an aggregate
cost of $22,518,000 consisting of $22,325,000 cash and the issuance of
8,428 OP Units having a value of $193,000.
In March 1998, PSB purchased two commercial properties (the "March
Acquisitions," referred to as the "Proposed Acquisition Properties" in the
Proxy Statement dated February 5, 1998) from unaffiliated third parties for
an aggregate cost of $32,916,000, composed of $17,377,000 cash, the
issuance of 44,250 OP Units having a value of $1,013,000, and the
assumption of mortgage notes payable of $14,526,000.
On May 4, 1998, PSB acquired the Principal Properties for an aggregate cost
of approximately $190.5 million in cash. PSB financed the transaction with
cash on hand, cash proceeds from the issuance of common stock to
institutional investors in May 1998, and borrowings from an affiliate.
The following pro forma adjustments have been made to the pro forma
consolidated balance sheet as of December 31, 1997 to reflect the
acquisition and proposed acquisitions of the above commercial properties
and the related issuance of OP Units:
<TABLE>
<CAPTION>
in (000's)
----------
<S> <C>
* Cash and cash equivalents has been decreased to reflect the cash
portion of the acquisition cost of the properties purchased, as follows:
March Acquisitions................................................ $ (17,377)
Ammendale Property................................................ (22,325)
Principal Properties.............................................. (190,525)
Borrowings from Affiliate......................................... 82,000
----------
$ (148,227)
==========
* Real estate facilities has been adjusted to reflect the
acquisition cost of the facilities acquired:
March Acquisitions................................................ $ 32,916
Ammendale Property................................................ 22,518
Principal Properties.............................................. 190,525
----------
$ 245,959
==========
* Notes payable has been increased to reflect:
March Acquisitions (debt assumed)................................. $ 14,526
Borrowings from Affiliate......................................... 82,000
----------
$ 96,526
==========
* Minority interest has been increased to reflect the issuance
of 52,678 OP Units in connection with the acquisition of the
March Acquisitions and Ammendale properties........................... $ 1,206
==========
</TABLE>
13
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
2. OTHER ADJUSTMENTS
-----------------
On December 24, 1997, PSB completed a transaction whereby PSB issued
1,785,007 OP Units and 3,504,758 shares of PSB common stock to a subsidiary
of a state pension fund, and the subsidiary of the state pension fund,
through a merger and contribution, transferred to PSB six commercial
properties ($118,655,000) and $1,000,000 cash. The Company incurred a total
of $3,300,000 in transaction costs. Approximately $400,000 of these costs
were paid in December 1997 and approximately $2,900,000 were paid in
January 1998.
On January 9, 1998, the subsidiary, which was issued OP Units, exercised
its option to convert the OP Units into shares of PSB common stock on a
one-for-one basis.
In January 1998, PSB entered into an agreement with a group of
institutional investors under which PSB would issue up to 6,744,074 shares
of PSB common stock at $22.88 per share in separate tranches. The first
tranche, 2,185,189 shares or $50.0 million, was issued in January 1998 and
the remainder of the shares were issued in May 1998. Funds from the first
tranche were utilized to repay a $3,500,000 loan due to an affiliate, to
fund remaining unpaid costs related to the subsidiary of a state pension
fund transaction, and to complete the real estate transactions that
occurred during the first three months of 1998. The net proceeds from the
shares issued in May 1998, were utilized to fund a portion of the
acquisition cost of the Principal Properties.
The following pro forma adjustments have been made to reflect the issuance
of $155.0 million of PSB Common Stock to institutional investors, the
conversion of the OP Units into shares of PSB stock, PSB's payoff of its
loan from PSI, and the payment of remaining transaction costs for the
subsidiary of the state pension fund transaction:
<TABLE>
<CAPTION>
(in 000's)
----------
<S> <C>
* Cash and cash equivalents has been increased to reflect the net
proceeds from the issuance of common stock to institutional investors
(gross proceeds of $155,000,000 less estimated offering costs of
$2,400,000)........................................................... $ 152,600
* Cash and cash equivalents have been decreased to reflect the
utilization of a portion of the proceeds from the
institutional investors to repay the $3,500,000 loan due to
PSI, and to reflect the payment of $2,900,000 in transaction costs
which were unpaid and accrued at December 31, 1997.................... (6,400)
----------
$ 146,200
==========
* Accounts payable and accrued liabilities have been reduced to reflect
the payment of transaction costs which were unpaid and accrued at
December 31, 1997..................................................... $ (2,900)
==========
* Notes payable have been reduced to reflect the repayment of a
$3,500,000 loan due to PSI............................................ $ (3,500)
==========
* Common Stock has been adjusted to reflect the following items:
* Conversion of 1,785,007 OP Units into PSB common stock............ $ 179
* Issuance of 6,774,074 shares of PSB common stock to institutional
investors......................................................... 677
----------
$ 856
==========
</TABLE>
14
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
(in 000's)
----------
<S> <C>
* Paid in capital has been adjusted to reflect the following items:
* Conversion of 1,785,007 OP Units into PSB common stock............ $ 24,484
* Issuance of 6,774,074 shares of PSB common stock to institutional
investors ($152,600,000 net proceeds less $677,000 Par Value)..... 151,923
----------
$ 176,407
==========
* Minority Interest has been adjusted to reflect the conversion of
1,785,007 OP Units into PSB common stock.............................. $ (24,663)
==========
3. MERGER PRO FORMA ADJUSTMENTS
-----------------------------
The Merger will be accounted for using the purchase method of accounting
with PSB being the accounting acquirer. The total purchase cost will be
allocated to the acquired net assets of PSP11; first to the tangible and
identifiable intangible assets and liabilities acquired based upon their
respective fair values, and the remainder will be allocated to the excess
of purchase cost over fair value of assets acquired, if any. Upon
completion of the Merger, the outstanding shares of PSB common stock were
converted into an aggregate of 11,698,505 shares of PSP11 Common Stock and
the surviving entity was renamed "PS Business Parks, Inc."
In determining the cost of the Merger, PSB evaluated as a measure of cost
of the Merger (i) the aggregate fair value of PSP11's net assets acquired,
(ii) the fair value of PSP11's Common Stock traded in the market, and (iii)
the cash election price of $20.50 per share of PSP11 Common Stock. PSB
determined that the use of the cash price of $20.50 was a reliable measure
of the Merger cost; further, that such cash price was materially equivalent
to the Merger cost had either of the other alternatives been chosen, based
upon the following:
* The fair value of the net assets of PSP11 were readily determinable as
of August 15, 1997 (date the Merger was announced). Substantially all
of the PSP11 assets were comprised of real estate facilities having
current appraised values as determined by independent appraisers. The
estimated fair value per share of PSP11 Common Stock at August 15,
1997 based upon the fair values of the net assets was approximately
$20.50 per share.
* Since PSB is the accounting acquirer, PSB's common stock market price
would have been an indicator of the Merger cost. However, PSB's common
stock was not publicly traded, accordingly, PSB evaluated PSP11's
common stock as a determination of PSB's implied common stock value.
The market price of PSP11's Common Stock from January 1, 1997 through
August 15, 1997 ranged from $20-3/8 to $19-3/8. The closing price of
PSP11's Common Stock on August 15, 1997, was $20.00. PSP11's trading
price for the one month period after the announcement of the proposed
Merger traded in the range from $19-15/16 to $20-9/16.
* Each outstanding share of PSP11 Common Stock with the exception of
106,155 shares, which elected to receive $20.50 in cash per share,
continued to be owned by current holders.
In determining the fair value of the net assets to be acquired, historical
carrying values as of December 31, 1997 were used with respect to PSP11's
other assets and accrued liabilities since they approximate fair value and
appraised values were used for PSP11's real estate facilities. The
aggregate purchase cost and its preliminary allocation to the historical
assets and liabilities is as follows:
15
<PAGE>
</TABLE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
(in 000's)
----------
PURCHASE COST:
--------------
<S> <C>
* Issuance of 1,713,782 shares of Common Stock to PSP11's Series A
common shareholders (1,819,937 shares outstanding less shares electing
cash of 106,155) at $20.50 per share.................................. $ 35,133
* Issuance of 569,655 shares of Common Stock to the holders of PSP11's
Common Stock Series B and Series C (707,071 combined shares
outstanding less cancellation of 47,824 shares of Series C the
remaining of which is multiplied by the conversion ratio of 0.8641) at
$20.50 per share...................................................... 11,678
* Cash elections (106,155 shares of the Series A Common Stock of PSP11
elected to receive $20.50 per share in cash in the Merger)............ 2,176
----------
Total Purchase Cost................................................. $ 48,987
==========
PRELIMINARY ALLOCATION OF PURCHASE COST:
----------------------------------------
Cash.................................................................. $ 2,455
Other assets.......................................................... 454
Accrued and other liabilities......................................... (1,475)
Real estate facilities (fair value of $48,000,000 less $447,000 of
excess aggregate fair values of net assets acquired over purchase 47,553
cost)................................................................. ----------
$ 48,987
==========
The following pro forma adjustments have been made to reflect the Merger as
of December 31, 1997:
PURCHASE ADJUSTMENTS:
---------------------
* Cash and cash equivalents have been reduced to reflect the cash
necessary to satisfy cash elections ($2,176,000) combined with
estimated direct costs and expenses of the merger of $800,000......... $ (2,976)
==========
* Unallocated purchase cost has been increased to reflect the aggregate
purchase cost......................................................... $ 48,987
==========
* Common stock has been increased to reflect the issuance of 2,283,437
shares with a par value of $0.10 per share............................ $ 228
==========
* Paid-in Capital has been increased to reflect the issuance of common
stock ($46,811,000 less par value of $228,000 and estimated direct
costs and expenses of the Merger of $800,000)......................... $ 45,783
==========
</TABLE>
16
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
(in 000's)
----------
VALUATION ADJUSTMENTS:
----------------------
<S> <C>
* Unallocated purchase cost has been decreased to reflect the allocation
of the aggregate purchase cost........................................ $ (48,987)
===========
* Real estate facilities has been increased to reflect the fair value of
the real estate facilities to be acquired in the Merger (purchase
price allocation of $47,553,000 plus related net historical cost of
management contracts on PSB's books with respect to such properties
($1,540,000) less PSP11 historical net book value of $25,937,000)..... $ 23,156
===========
* PSB's intangible assets have been reduced to reflect the
reclassification to real estate with respect to the above pro forma
adjustment............................................................ $ (1,540)
===========
* PSP11's historical equity has been eliminated as follows:
Series A common stock................................................ $ (18)
Series B common stock................................................ (2)
Series C common stock................................................ (5)
Paid-in-capital...................................................... (32,421)
Cumulative net income................................................ (29,451)
Cumulative distributions............................................. 34,526
-----------
$ (27,371)
===========
</TABLE>
EXCHANGE OF PROPERTIES
- ----------------------
Concurrent with the Merger, PSP11 exchanged 11 mini-warehouses and two
properties that combine mini-warehouse and commercial space for 11
commercial properties owned by PSI. The fair value of the mini-warehouse
facilities is approximately $42,400,000 compared to the fair value of the
11 commercial properties received of $42,900,000. Through the pro forma
adjustments above, the commercial facilities are reflected on the pro forma
consolidated balance sheet at their fair approximate values as a result of
the accounting acquisition of PSP11 by PSB. No additional adjustments have
been made to reflect the Exchange as the relative valuations are nearly the
same.
17
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
4. BOOK VALUE PER SHARE OF COMMON STOCK
------------------------------------
Book value per share has been determined by dividing total shareholders'
equity by the outstanding shares of Common Stock. The following summarizes
the shares outstanding:
<TABLE>
<CAPTION>
Common shares
outstanding
-----------
<S> <C>
* PSB historical shares outstanding at December 31, 1997................ 7,728,309
* PSB shares issued to subsidiary of state pension fund in connection
with conversion of its OP Units into common stock of PSB.............. 1,785,007
* Pro forma shares issued to institutional investors.................... 6,774,074
-----------
Pre-Merger pro forma PSB shares outstanding....................... 16,287,390
* PSP11's Series A shares (see "Purchase cost" above)................... 1,713,782
* PSP11's Series B and C (see "Purchase cost" above).................... 569,655
-----------
Post-Merger pro forma PSB shares outstanding...................... 18,570,827
===========
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1997
(Unaudited)
(Amounts in thousands, except per share data)
PSB
------------------------------------------------------------------------------
Pro Forma Adjustments
----------------------------------------------
Acquisition of Acquisition of
real estate real estate from Other PSB
PSB from affiliates third parties adjustments Pre-Merger
(Historical) (Note 1) (Note 2) (Note 3) (Pro forma)
------------ -------- -------- -------- -----------
REVENUES:
Rental income:
<S> <C> <C> <C> <C> <C>
Commercial properties $ 30,169 $ 1,038 $ 46,885 $ - $ 78,092
Mini-warehouse properties - - - - -
Facility management fees 956 (52) - - 904
Interest and other income 453 - - - 453
------------ -------- -------- -------- -----------
31,578 986 46,885 - 79,449
------------ -------- -------- -------- -----------
EXPENSES:
Cost of operations:
Commercial properties 12,330 363 12,415 - 25,108
Mini-warehouse properties - - - - -
Cost of managing facilities 189 (12) - - 177
Depreciation and amortization 5,195 92 10,863 - 16,150
General and administrative 1,461 - - 300 1,761
Interest expense 1 - 7,665 - 7,666
------------ -------- -------- -------- -----------
19,176 443 30,943 300 50,862
------------ -------- -------- -------- -----------
Income before minority interest in
income 12,402 543 15,942 (300) 28,587
Minority interest in income (Note 7) (8,566) - - (353) (8,919)
------------ -------- -------- -------- -----------
Net income (loss) $ 3,836 $ 543 $ 15,942 $ (653) $ 19,668
============ ======== ======== ========= ===========
PER SHARE OF COMMON STOCK:
Net income (Note 4 and 6) $ 1.23 $ 1.21
------------ ===========
Weighted average shares (Note 4 and 6) 3,117 16,287
============ ===========
</TABLE>
<TABLE>
<CAPTION>
PS BUSINESS PARKS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1997
(Unaudited)
(Amounts in thousands, except per share data)
Pro Forma
Merger
Adjustments
-------------
Exchange of
real estate PSB
PSP11 facilities Post-Merger
(Historical) (Note 5) (Pro forma)
------------ -------- -----------
REVENUES:
Rental income:
<S> <C> <C> <C>
Commercial properties $ 1,418 $ 8,008 $ 87,518
Mini-warehouse properties 6,143 (6,143) -
Facility management fees - (471) 433
Interest and other income 82 - 535
------------ -------- -----------
7,643 1,394 88,486
------------ -------- -----------
EXPENSES:
Cost of operations:
Commercial properties 682 3,271 29,061
Mini-warehouse properties 2,082 (2,082) -
Cost of managing facilities - (93) 84
Depreciation and amortization 1,198 146 17,494
General and administrative 201 - 1,962
Interest expense - - 7,666
------------ -------- -----------
4,163 1,242 56,267
------------ -------- -----------
Income before minority interest in
income 3,480 152 32,219
Minority interest in income (Note 7) - (248) (9,167)
------------ -------- -----------
Net income (loss) $ 3,480 $ (96) $ 23,052
============ ======== ===========
PER SHARE OF COMMON STOCK:
Net income (Note 4 and 6) $ 1.38 $ 1.24
============ ===========
Weighted average shares (Note 4 and 6) 2,527 18,571
============ ===========
</TABLE>
See Accompanying Notes to Pro-Forma Consolidated Statements of Income.
19
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the Year Ended December 31, 1997
(Unaudited)
1. Acquisition of real estate facilities from affiliates (the "Acquired
Properties")
On April 1, 1997, the Operating Partnership acquired four commercial
properties from PSI in exchange for 1,480,968 OP Units.
The following pro forma adjustments have been made to the pro forma
consolidated statements of income to reflect the above as if the
transaction was completed as of January 1, 1997:
<TABLE>
<CAPTION>
(in 000's)
----------
<S> <C>
* Rental income has been increased to reflect:
* the pro forma rental income as if the real estate facilities
acquired on April 1, 1997 were owned by PSB throughout the entire
period.......................................................... $ 4,127
* less the rental income with respect to these properties included
in PSB's historical amounts...................................... (3,089)
----------
Total incremental rental income............................... $ 1,038
==========
* Facility management fee income has been decreased to eliminate
PSB's historical management fee income (5% of rental income) with
respect to the commercial properties acquired on April 1, 1997, as
such fee is not collected
on owned facilities............................................... $ (52)
==========
* Cost of operations has been increased as follows:
* To reflect the pro forma cost of operations as if the real
estate facilities acquired on April 1, 1997 were owned by PSB
throughout the entire full period............................. $ 1,227
* The above adjustment excludes facility management fees,
accordingly, a pro forma adjustment has been made to reflect
the actual cost of management................................. 41
* To eliminate cost of operations included in PSB's historical
amounts....................................................... (905)
==========
Total incremental cost of operations...................... $ 363
==========
* Cost of managing facilities has been decreased to eliminate the
costs associated with the management fee income with respect to
the properties acquired on April 1, 1997. The reduction in
management fee income will result in a reduction in cost of
operations with respect to facility management.................... $ (12)
==========
* Depreciation has been increased to reflect the incremental
depreciation of the commercial properties acquired on
April 1, 1997..................................................... $ 92
==========
</TABLE>
20
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
2. ACQUISITION OF REAL ESTATE FACILITIES FROM THIRD PARTIES
--------------------------------------------------------
During 1997 and 1998, PSB has completed the acquisition of several
properties:
* Baldon Properties: In July 1997, PSB issued 2,025,769 shares of common
stock primarily to PSI for cash totaling $33,310,000. PSB used
substantially all of the proceeds to acquire two commercial properties
in July 1997 from an unaffiliated third party for $33,750,000 in cash.
* Largo Property: On September 24, 1997, PSB acquired one commercial
property for an aggregate cost of $10,283,000, consisting of
$9,959,000 cash and the issuance of 14,384 OP units having a value of
$324,000.
* On December 10, 1997, PSB purchased a commercial property (the
"Northpointe Property") for $3,854,000, consisting of cash of
$3,554,000 and the issuance of 13,111 OP units having a value of
$300,000.
* Acquiport Properties: On December 24, 1997, PSB completed a
transaction where PSB issued 1,785,007 OP Units and 3,504,758 shares
of PSB common stock to a subsidiary of a state pension fund, and the
subsidiary of the state pension fund, through a merger and
contribution, transferred to PSB six commercial properties
($118,655,000) and $1,000,000 cash. The Company incurred $3,300,000 in
transaction costs. In January 1998, the subsidiary of the state
pension fund exercised its option to convert the OP units into shares
of PSB common stock.
* On January 13, 1998, PSB purchased a commercial property (the
"Ammendale Property") for $22,518,000, consisting of cash of
$22,325,000 and the issuance of 8,428 OP units having a value of
$193,000.
* March Acquisition Properties: In March 1998, PSB purchased two
commercial properties from unaffiliated third parties for an aggregate
cost of $32,916,000 consisting of cash totaling $17,377,000, the
issuance of 44,250 OP Units having a value of $1,013,000 and the
assumption of $14,526,000 of mortgage debt.
* On May 4, 1998, PSB acquired the Principal Properties for an aggregate
cost of approximately $190.5 million in cash. PSB financed the
acquisition costs through the use of available cash, cash proceeds
from the issuance of common stock in May 1998, and borrowings from an
affiliate.
The following pro forma adjustments have been made to reflect the
operations of these properties as if such properties had been acquired
at the beginning of the year:
21
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
(000's)
-------
<S> <C>
* Rental income has been increased to reflect the pro forma rental
income of the properties, as if these facilities were owned by PSB
throughout 1997:
* Rental income for 1997 for the following properties:
Baldon properties ....................................................... $ 6,570
Largo property........................................................... 1,343
Acquiport properties.................................................... 14,813
Northpointe Property..................................................... 631
Ammendale Property....................................................... 2,883
March Acquisitions....................................................... 3,916
Principal Properties..................................................... 19,861
* Less: the portion of rental income with respect to these properties which
has been included in PSB's historical amounts............................... (3,132)
----------
$ 46,885
==========
* Cost of operations has been increased to reflect the pro
forma cost of operations of these properties, as if they were
owned by PSB throughout the entire period presented:
* Cost of operations for the entire year's properties'
historical operations:
Baldon................................................................. $ 2,280
Largo.................................................................. 367
Acquiport Properties................................................... 3,059
Northpointe Property................................................... 125
Ammendale Property..................................................... 640
March Acquisitions..................................................... 1,089
Principal Properties................................................... 4,160
* Less: the portion of cost of operations with respect to these
properties which has been included in PSB's historical amounts...... (1,157)
* Plus: Pro forma adjustment to reflect additional estimated personnel
cost to manage the facilities and property taxes..................... 1,852
==========
$ 12,415
==========
* Depreciation has been increased to reflect a full year's
depreciation expense........................................................ $ 10,863
==========
* Interest expense has been increased to reflect the historical
interest expense for each of the periods presented with
respect to the assumption of mortgage notes payable and the
borrowings from Public Storage, Inc. in
connection with the acquisition of the Principal Properties................. $ 7,665
==========
</TABLE>
22
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
3. Other pro forma adjustments
---------------------------
<TABLE>
<CAPTION>
<S> <C>
* A pro forma adjustment has been made to increase general and
administrative expense to reflect additional costs with respect to
payroll as PSB hires
acquisition and executive personnel............................................. $ 300
==========
* Many of the properties acquired were acquired by the consolidated
Operating Partnership in exchange for OP Units of PSB. Such
ownership interests are represented as minority interest in the
consolidated financial statements. Accordingly, a pro forma
adjustment has been made to increase "Minority interest in income"
to reflect the incremental income associated with pro forma
adjustments allocable to the minority interest (representing the
difference between the pro forma amounts less the historical
amounts included in PSB's
historical financial statements)................................................ $ (353)
==========
</TABLE>
23
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
4. NET INCOME PER COMMON SHARE (PSB PRE-MERGER PRO FORMA) HAS BEEN COMPUTED AS FOLLOWS:
------------------------------------------------------------------------------------
(000's)
-------------
<S> <C>
Historical net income......................................................... $ 3,836,000
Historical weighted average common shares..................................... 3,116,688
Historical net income per common share........................................ $ 1.23
Pro forma net income.......................................................... $ 19,668,000
Pro forma weighted average common shares (1).................................. 16,287,390
Pro forma net income per common share......................................... $ 1.21
- ----------------------------------------------------------------------------------------------------------------------------
(1)
Historical weighted average shares (common and equivalents)................... 3,116,688
Adjusted for:
Issuance of common shares in July 1997 in connection with
property acquisitions (2,025,769 shares less 851,507 included
in the historical
amounts)............................................................... 1,174,262
Issuance of common stock to subsidiary of a state pension fund on
December 24, 1997 (3,504,758 shares less 67,399 shares
included in the
historical amounts).................................................... 3,437,359
Issuance of common stock to subsidiary of a state pension fund in
connection with conversion of OP Units into common stock............... 1,785,007
Pro forma issuance of common stock to institutional investors............. 6,774,074
-------------
Total Pre-Merger pro forma weighted average shares................... 16,287,390
=============
</TABLE>
24
<PAGE>
5. PRO FORMA MERGER ADJUSTMENTS - EXCHANGE OF PROPERTIES:
------------------------------------------------------
Concurrent with the Merger, PSP11 exchanged 11 mini-warehouses and two
properties that combine mini-warehouse and commercial space for 11
commercial properties owned by PSI.
<TABLE>
<CAPTION>
(000's)
-------
<S> <C>
* Rental income- commercial properties has been increased to
reflect the rental income with respect to the 11 commercial
properties received through
the Exchange.................................................................. $ 8,008
==============
* Rental income- mini-warehouses has been decreased to eliminate
the rental income with respect to the 11 mini-warehouse
facilities and two properties that combine mini-warehouse and
commercial space given up through the Exchange $ (6,143)
==============
* A pro forma adjustment has been made to facility management fees to:
* eliminate the historical facility management fees related to 11
commercial properties acquired in the Exchange as such fee will no longer
be charged to these properties as PSB will own them....................... $ (400)
* eliminate the historical facility management fees related to the two
commercial properties of PSP11 acquired in the Merger..................... (71)
--------------
$ (471)
==============
* A pro forma adjustment has been made to cost of operations to:
* eliminate historical management fees paid to PSB to manage
PSP11's two commercial properties which are included in
historical amounts and as a
result of the Merger will no longer be incurred........................... $ (71)
* reflect the cost of operations of the 11 commercial properties acquired
in the Exchange (before cost of management)............................... 3,249
* reflect the cost of management for PSP11's two commercial properties and
the 11 commercial properties acquired in the Exchange..................... 93
--------------
$ 3,271
==============
* Cost of operations- mini-warehouses has been decreased to
eliminate the cost of operations with respect to the 11
mini-warehouse facilities and two properties that combine
mini-warehouse and commercial space given up through
the Exchange.................................................................. $ (2,082)
==============
* Cost of managing facilities has been decreased to eliminate the
historical cost of managing the two PSP11 commercial properties
and the 11 commercial properties acquired in the Exchange, such
costs are reclassified to Cost of
operations- commercial properties............................................. $ (93)
==============
</TABLE>
25
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
(000's)
---------------
<S> <C>
* A pro forma adjustment has been made to depreciation expense to eflect the:
* Eliminate the historical depreciation expense of PSP11's facilities...... $ (1,198)
* Record depreciation expense based on the acquired cost of
the remaining PSP11 facilities ($47,553,000 cost, 30%
allocated to land, the remaining cost allocated to buildings,
depreciated straight-line over 25 years)............................. 1,344
--------------
$ 146
==============
* A pro forma adjustment has been made to increase the minority
interests' share of income based upon its pro rata ownership
interest in the above pro
forma adjustments............................................................. $ (248)
==============
</TABLE>
26
<PAGE>
PS BUSINESS PARKS, INC.
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
6. POST-MERGER PRO FORMA NET INCOME PER SHARE OF COMMON STOCK HAS BEEN
COMPUTED AS FOLLOWS:
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
December 31, 1997
-----------------
<S> <C>
Post-Merger pro forma net income....................................................... $ 23,052,000
Post-Merger pro forma weighted average common shares (1)............................... 18,570,827
Pro forma net income per share of Common Stock......................................... $ 1.24
- -----------------------------------------------------------------------------------------------------------------------------------
(1)
Pre-Merger pro forma weighted average shares from Note 4 above.......................... 16,287,390
PSP11's Series A shares (see Note 4 to the Pro Forma Consolidated Balance Sheet)........ 1,713,782
PSP11's Series B and C (see Note 4 to the Pro Forma Consolidated Balance Sheet)......... 569,655
------------
Post-Merger pro forma weighted average Common Stock common shares....................... 18,570,827
============
7. MINORITY INTEREST:
-----------------
Minority interest represents ownership interests of OP Units in the
consolidated Operating Partnership which are not owned by PSB. The OP
Units, subject to certain conditions of the Operating Partnership
Agreement, are convertible into Common Shares of PSB on a one-for-one
basis. Pro forma weighted average OP Units outstanding during each
period owned by minority interests totaled 7,385,529. The following
table summarizes the ownership interests:
Year Ended
December 31, 1997
-----------------
Pro forma PSB Common Shares outstanding................................................. 18,570,827
Pro forma OP Units owned by minority interests which are convertible
into PSB Common
Shares............................................................................... 7,385,529
------------
Total PSB Common Shares outstanding assuming conversion of OP Units..................... 25,956,356
============
Percentage ownership of PSB Common Shares outstanding................................... 71.5%
Percentage ownership of minority interests.............................................. 28.5%
------------
Total ownership interest........................................................... 100.0%
============
</TABLE>
27
Exhibit 10.1
REAL ESTATE PURCHASE AND SALE AGREEMENT
by and between
PETULA ASSOCIATES, LTD. AND EQUITY FC, LTD.
SELLER
and
PS BUSINESS PARKS, L.P.
BUYER
Exhibits to this Agreement have been omitted and will be furnished to the
Securities and Exchange Commission upon Request
<PAGE>
INDEX TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
1. Property Included in Sale...............................................1
2. Purchase Price/Remedies.................................................2
3. Title to the Property...................................................3
4. Seller's Pre-Closing Deliveries.........................................4
5. Buyer's Due Diligence...................................................4
6. Buyer's Conditions to Closing...........................................5
7. Seller's Conditions to Closing..........................................6
8. The Closing.............................................................8
9. Representations and Warranties..........................................13
10. Responsibility for Violations..........................................19
11. Maintenance of Insurance...............................................19
12. Casualty or Condemnation...............................................19
13. Indemnification........................................................20
<PAGE>
14. Condition of Property..................................................20
15. Possession.............................................................21
16. Tax-Deferred Exchange..................................................22
17. Miscellaneous..........................................................22
18. Escrow Agent...........................................................26
<PAGE>
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (the "Agreement") is made as
of the 30th day of April, 1998 (the "Agreement Date") which shall be the later
to occur of execution of this Agreement by Buyer or Seller by and between PETULA
ASSOCIATES, LTD. ("Petula"), an Iowa corporation, and EQUITY FC, LTD., ("Equity
FC"), an Iowa corporation, herein referred to as "Seller", and PS BUSINESS
PARKS, L.P. (formerly known as AMERICAN OFFICE PARK PROPERTIES, L.P.), a
California limited partnership, herein referred to as "Buyer."
R E C I T A L S:
WHEREAS, each Seller desires to sell its undivided interest in certain
improved and unimproved real property along with certain related personal and
intangible property, and Buyer desires to purchase said real, personal and
intangible property on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Buyer and Seller
hereby agree as follows:
1. PROPERTY INCLUDED IN SALE. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, at the price and upon
the terms and conditions set forth in this Agreement, the following:
(a) that certain real property more particularly described in EXHIBIT
A attached hereto (the "Real Property");
(b) all right, title and interest of Seller in all rights, privileges,
alleys, strips and gores, rights of way and easements appurtenant to the Real
Property, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances as well as all development rights, air rights, water,
water rights (and water stock, if any) relating to the Real Property and any
easements, rights-of-way or other appurtenances used in connection with the
beneficial use and enjoyment of the Real Property;
(c) all improvements and fixtures located on the Real Property,
including all buildings and structures presently located on the Real Property
listed on SCHEDULE A, as more particularly described in EXHIBIT A, attached
hereto, and all related facilities, amenities, all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Real
Property, such as heating and air conditioning systems and facilities used to
provide any utility
<PAGE>
services, refrigeration, ventilation, garbage disposal, recreation or other
services on the Real Property (all of which are collectively referred to as the
"Improvements");
(d) all tangible or intangible personal property owned by Seller and
used in the ownership, use or operation of the Real Property and/or
Improvements, including, without limitation, the right to use any trade name now
used in connection with the Real Property (the "Personal Property") and any
contract or lease rights, agreements, utility contracts or other rights relating
to the ownership, use and operation of the Real Property.
(e) all of Seller's interest as lessor in all leases covering the Real
Property and Improvements, including all tenant security and other deposits and
interest earned thereon and prepaid rent and interest earned thereon. Interest
on deposits and prepaid rents shall only be transferred to Buyer if applicable
state law or the applicable lease requires that such funds be held in
interest-bearing accounts.
All of the items referred to in Subsections (a), (b), (c), (d) and
(e) above are hereinafter collectively referred to as the "Property."
2. PURCHASE PRICE/REMEDIES
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(a) The total purchase price (the "Purchase Price") for the Property
is Seventy-seven Million Seven Hundred Fourteen Thousand Seven Hundred
Seventy-five and 09/100 Dollars ($77,714,775.09) allocated as follows: Petula
($53,131,726.60) and Equity FC ($25,583,048.49). The Purchase Price is payable
by wire transfer of immediately available funds in U.S. dollars via the federal
bank wire transfer system to Chicago Title Insurance Company, San Francisco, CA,
(the "Title Company") as follows:
(i) $76,714,775.09 at Closing; and
(ii) $1,000,000, which shall be placed in an interest-bearing
escrow account with the Title Company and shall be released on the date on which
the City of Beaverton, Oregon ("Beaverton"), confirms in a non-appealable form
that not less than 199,989 rentable square feet of space ("FAR") can be built on
the approximately 12.6 acres of land comprising a part of the Property (the
"Development Parcel"); provided, in the event Beaverton determines that less
than 199,989 net rentable square feet of space can be built on the Development
Parcel, the escrow amount, including interest earned thereon, shall be released
to Seller and Buyer as follows: (A) an amount to Buyer equal to (x) one (1)
minus a fraction, the numerator of which is the total FAR which can be built on
the Development Parcel, divided by 199,989, times (y) 100, times (z) $38,462;
and (B) an amount equal to the balance to the Seller; provided, if Beaverton has
not confirmed in a final non-appealable order the total FAR which may be built
on the Development Parcel within twelve months of the date hereof, the escrow
amount, including the interest earned thereon, shall be released to Buyer.
Seller and Buyer shall cooperate in obtaining the aforesaid FAR confirmation
from Beaverton.
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3. TITLE TO THE PROPERTY.
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(a) At the Closing, Seller shall convey to Buyer and Buyer shall
accept title to the Property in fee simple in accordance with the terms of this
Agreement, and Buyer's obligation to accept said title shall be conditioned upon
Buyer then being conveyed good and clear record, marketable and insurable title
(in fee simple) to the Real Property, all rights, privileges and easements
appurtenant thereto, and to the Improvements, by duly executed and acknowledged
special warranty deed - statutory form. It shall be a condition precedent to
Buyer's obligation to close hereunder that the Title Company stands ready to
issue, at the Closing an ALTA standard full coverage form Owner's Policy of
Title Insurance with extended coverage and all endorsements reasonably requested
by Buyer, insuring Buyer's interest in the Property, dated the date of Closing,
with liability in the amount of the Purchase Price, subject only to the
Permitted Exceptions (the "Title Policy"). The Title Policy shall insure against
all mechanics' liens and shall have full survey coverage and shall be an
extended coverage policy insuring against, among other things, mechanics' liens,
easements and claims of parties in possession not shown by the public records
with all general and standard exceptions deleted. Seller shall pay the cost of
the standard owner's policy. Buyer shall bear the expense for extended coverage
and the cost of any endorsements requested by Buyer.
(b) Buyer shall, prior to the Approval Date, provide Seller with
Buyer's objections to any matters disclosed by the Commitment, Title Documents
or Survey. All matters shown on the Title Exceptions which are not objected to
by Buyer prior to the Approval Date shall be "Permitted Exceptions". Seller
agrees to use its best efforts to satisfy such objections noted by Buyer,
provided that: (i) Seller shall obtain a satisfaction and release or bond over
any monetary liens, in a manner reasonably satisfactory to Buyer, including,
without limitation, any and all mortgages, mechanics' liens and judgment liens
(collectively, "Monetary Liens"); and (ii) Seller shall not be obligated to
litigate or spend more than $10,000.00 in the aggregate to cure non-monetary
lien objections or to seek any cure which cannot be allowed within fifteen (15)
days. Seller shall notify Buyer of Seller's proposed actions to satisfy such
objections, and shall have up to the Closing Date to satisfy such objections and
the Closing Date shall be extended a reasonable period of time, not to exceed
fifteen (15) days, if necessary to allow such cure period. If, despite its best
efforts to do so, Seller cannot satisfy such objections (other than the Monetary
Liens, which shall be satisfied or bonded over by Seller) on or before the
expiration of such additional fifteen (15) day period, Buyer shall have the
option to waive its objection(s) to such title and/or other defect(s) and
proceed to Closing or terminate this transaction. Buyer acknowledges that the
termination of the transaction pursuant to this section of the Agreement shall
not entitle Buyer to receive reimbursement for third party expenses or to seek
specific performance or any other legal or equitable remedy against Seller.
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4. SELLER'S PRE-CLOSING DELIVERIES
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Buyer acknowledges that prior to execution of this Agreement Seller
has delivered the items listed in Schedule B for Buyer's review and approval.
Seller shall be under no further obligation to deliver additional items to Buyer
unless Buyer requests such items prior to the Approval Date and such additional
items are reasonably necessary to complete Buyer's due diligence. Seller shall
only be obligated to provide such additional items if: (i) the items requested
are in Seller's or Seller's property manager's actual possession or control;
(ii) the items are not privileged; and (iii) Buyer has identified the specific
property for which the item is requested.
5. BUYER'S DUE DILIGENCE. Buyer shall be allowed to conduct the following
due diligence prior to purchasing the Property:
(a) Review and approve title to the Property as shown on a preliminary
title report (the "Title Report") from the Title Company.
(b) Review and approve the operating statements of the Property for
the previous two (2) calendar years as well as the current calendar year-to-date
and audited financial statements for 1997, provided same are available and in
Seller's actual possession.
(c) Review and approve true, correct and complete copies of all tenant
leases relating to the Property and a certified rent roll of even date herewith
in the form attached hereto as EXHIBIT B, (the "Certified Rent Roll").
(d) Review and approve copies of any site plans and building drawings
and specifications, existing environmental reports, construction estimates,
design agreements and land purchase contracts currently in the possession or
control of the Seller.
(e) Review and approve copies of any maintenance and service
agreements currently in force.
(f) Review and approve an as-built survey showing the location of all
improvements and recorded easements on the Property.
(g) Performance of a feasibility study of the Property, including, but
not limited to, review and approval of the physical and environmental
characteristics and condition of the Property and performance of marketing and
feasibility studies, structural and engineering investigations, auditing of
books and records of the Property, financial analyses and verification of
existing zoning.. Seller agrees to provide Buyer and its agents and
representatives reasonable access to the Property and to all books, records,
files, financial data, leases and contracts relating to the Property and to
reasonably cooperate in such examinations and to cause the property manager to
reasonably cooperate in such examinations following the Agreement Date for the
purpose of performing, at Buyer's sole cost and expense, the above-referenced
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studies, physical inspections, investigations and tests on the Property (the
"Tests") provided that no such tests shall be conducted without at least two (2)
business days prior written notice to Seller and if any such tests are invasive
Seller's prior approval of such Tests, which approval shall be in Seller's sole
and absolute discretion. Notwithstanding anything herein to the contrary, Buyer
shall not need Seller's further consent to conduct Phase I environmental
studies. Buyer's access is further conditioned on Buyer complying with the terms
of the Access and Indemnification Agreement attached hereto as Exhibit E. Buyer
shall be required to conduct such Tests in a manner as to not disturb or
interfere with the current use of the Property and upon completion of such
Tests, Buyer agrees at its sole cost to restore the Property to the condition it
was in immediately prior to such Tests, including, but not limited to the prompt
removal of anything placed on the Property in connection with such Tests. Copies
of any third party reports, letters or other written information generated as a
result of such Tests shall be provided to Seller if the sale contemplated by
this Agreement does not close for any reason other than Seller's default. Buyer
shall indemnify, defend (with counsel reasonably satisfactory to Seller),
protect, and hold Seller harmless from and against any and all liability, loss,
cost, damage, or expense (including, without limitation, reasonable attorney's
fees and costs) which Seller may sustain or incur by reason of or in connection
with any Tests made by Buyer or Buyer's agents or contractors relating to or in
connection with the Property, or entries by Buyer or its agents or contractors
onto the Property. Notwithstanding any provision to the contrary in this
Agreement, the indemnity obligations of Buyer under this Agreement shall survive
any termination of this Agreement or the delivery of the deed and the transfer
of title pursuant to this Agreement.
The items referred to above in SUBSECTIONS 5(A)-(G) and those
listed on SCHEDULE B shall be collectively referred to as the "Due Diligence
Items." Buyer acknowledges that Seller has provided Buyer with the Due Diligence
Items prior to execution of this Agreement.
The date this Agreement is executed by both parties shall be the
"Approval Date" and upon such execution there shall be a conclusive presumption
that Buyer has approved the Due Diligence Items and the physical and
environmental condition of the Property. Notwithstanding the foregoing, Buyer
shall be entitled to rely upon the representations and warranties of the Seller
set forth in this Agreement.
6. BUYER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Buyer's obligation to purchase the Property:
(a) Seller shall conduct business at the Property in a good and
diligent manner consistent with Seller's current business practices and shall
maintain the Property in its present condition through the date of Closing,
reasonable wear and tear excepted.
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(b) Seller have terminated, at Seller's sole cost and expense, all
Service/Equipment Contracts except to the extent Buyer has given Seller written
notice that certain Service/Equipment contracts should be continued and Buyer
has assumed post Closing liability for such contracts, however, such services
shall be continued at Seller's expense until the Closing Date.
(c) The Title Company shall stand ready to issue the Title Policy in
the form required herein.
(d) Delivery by Seller at Closing of the Closing Documents described
in Section 8 hereof.
(e) Performance by Seller as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Seller pursuant to this Agreement and all of Seller's representations and
warranties contained in this Agreement shall be true and correct on and as of
the Closing Date as if made anew on that date.
(f) Delivery by Seller of Tenant Estoppel Certificates in the form
attached hereto as Exhibit F for tenants comprising at least 80% of the net
rentable square feet of the Property, which shall include all tenants listed on
Exhibit F-1, the substance and content of which shall be consistent with the
Certified Rent Roll and Seller shall use commercially reasonable efforts to
obtain the required Tenant Estoppel Certificates. Buyer shall cooperate with
Seller post Closing to complete collection of Tenant Estoppels. In the event
sufficient Tenant Estoppels cannot be obtained, Buyer shall accept a Seller
Estoppel in the form attached hereto as Exhibit F-2 and all post Closing Tenant
Estoppels shall be delivered pursuant to the terms of Exhibit F-2. In the event
that the conditions set forth above in this Section 6 are not satisfied (and
Buyer is not otherwise in default of this Agreement), Buyer may elect to
terminate this Agreement or waive satisfaction of the condition and close escrow
in either instance by giving written notice to Seller.
7. SELLER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Seller's obligation to sell the Property:
(a) Delivery by Buyer at Closing of the Purchase Price and the
executed Assignment and Assumption of Leases in the form attached hereto as
Exhibit G.
(b) Performance by Buyer as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Buyer pursuant to this Agreement.
In the event that the conditions in this Section 7 are not
satisfied, Seller may elect, at its sole discretion, to terminate this Agreement
or waive satisfaction of the condition and close escrow.
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8. THE CLOSING
(a) The Closing hereunder shall be held and delivery of all items to
be made at the Closing under the terms of this Agreement shall be made at the
offices of the Title Company on April 30, 1998, or such other date prior thereto
as Buyer and Seller may mutually agree in writing (the "Closing Date"). Such
date may not be extended without the prior written approval of both Seller and
Buyer. In the event the Closing does not occur on or before the Closing Date,
the Title Company shall, subject to the provisions of Section 2, and unless it
is notified by both parties to the contrary, within five (5) days after the
Closing Date, return to the depositor thereof items which may have been
deposited pursuant to this Agreement. Any such return shall not, however,
relieve either party hereto of any liability it may have for its wrongful
failure to close. The delivery to the Escrow Agent of the Closing Documents, as
hereinafter defined, by both parties and the Purchase Price by Buyer shall be
deemed sufficient to effect a closing under Section 8(a).
(b) At or before the Closing, Seller shall deliver to escrow the
following (collectively, the "Closing Documents"):
(i) special warranty deed - statutory form, conveying to the
Buyer the Property as required by Section 3 above in the form attached hereto as
Exhibit I;
(ii) originals or, if Seller does not have originals, certified
true, complete and correct copies of all leases (and amendments thereto, if any)
in Seller's actual and physical possession covering any portion of the Property,
any security deposits relating thereto, and an executed Assignment and
Assumption of Lease in the form attached hereto as Exhibit G;
(iii) a Bill of Sale, in the form attached hereto as Exhibit J;
(iv) a certificate by Seller to the effect that all of the
representations, warranties and covenants set forth in this Agreement remain
true, correct and complete as of the Closing Date;
(v) a Certified Rent Roll in the form attached hereto as Exhibit
B, dated as of the date of Closing Date consistent with prior Certified Rent
Rolls and Tenant Estoppel Certificates;
(vi) such title affidavits or other documents as may be
reasonably required by the Title Company with copies thereof to the Buyer;
(vii) all rent records and related documents in the possession or
under the control of Seller. Such records may include a schedule of all cash
deposits and a check or credit to Buyer in the amount of such deposits,
including any interest thereon (to the extent that applicable state law or the
applicable lease requires payment of interest on such amounts) held by Seller at
the Closing under the Lease. To the extent any deposits are in a form other than
cash, such deposits shall be transferred to Buyer at Closing without recourse.
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(viii) To the extent in Seller's possession or control, originals
or copies of all current site plans, surveys, architectural drawings, plans and
specifications, engineering plans and studies, floor plans, soil reports,
environmental studies, and landscape plans. To the extent such items are in
Seller's possession or control, Seller shall also deliver (i) originals (or
copies, if originals are not then available) of all then effective assignable
guaranties, warranties and/or payments and performance bonds made by any person
for the benefit of Seller with respect to the Property of any of its components,
together with an instrument assigning such guaranties and warranties to Buyer
and (ii) originals (or copies, if originals are not then available) of all
certificates, Licenses, permits authorizations and approvals issued for or with
respect to the Property by governmental and quasi-governmental authorities
having jurisdiction, to the extent such items are in Seller's possession or
control.
(ix) to the extent available, originals (or copies, if originals
are not available) of all documents and books and records necessary for the
continued operation of the Project, including without limitation, rent rolls,
lease files, rent records, escalation records and statements and maintenance
records;
(x) an original resolution of Seller authorizing the execution of
this Agreement, the conveyance documents and all other documents to be executed
by Seller and the performance by Seller hereunder;
(xi) Seller's Non-Foreign Certification in the form attached as
EXHIBIT C; and
(xii) notices to the tenants at the Property in the form attached
as EXHIBIT D, executed by Seller informing them of the change in ownership of
the Property.
(xiii) an executed Assignment of Warranties and Guaranties in the
form attached as Exhibit O.
Buyer may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
(c) At or before the Closing, Buyer shall deliver to escrow the
Purchase Price, as adjusted for prorations, and an executed Assignment and
Assumption of Leases in the form attached hereto as EXHIBIT G.
(d) Seller and Buyer shall each deposit such other instruments as are
reasonably required by the escrow holder to close the escrow and consummate the
purchase of the Property in accordance with the terms hereof.
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(e) The following items shall be prorated separately for each property
identified on SCHEDULE A as of 11:59 p.m. on the date immediately preceding the
Closing Date and the net amount thereof shall be added to or deducted from, as
the case may be, the amount of the Purchase Price to be paid at the Closing:
(i) general real estate, personal property and ad valorem taxes
and assessments for the current tax year of the Property. If any such taxes or
assessments are payable in installments, all installments due through the
Closing together with the accrued but unpaid portion of any other installments
not yet due as of the Closing shall be paid for by the Seller;
(ii) taxes, water, sewer and front foot benefit charges, and
charges for electricity, gas, telephone and other utilities and license fees;
(iii) rent and other charges under the Leases (to the extent
monies have actually been collected therefor), including any free rent under any
of the Leases; Buyer shall receive a credit at Closing for any free rent or
other tenant concessions due under any Lease subsequent to Closing;
(iv) all other income and expenses relating to the Property;
(v) any other items that are customarily prorated in transactions
of this nature; and (vi) any and all cash security deposits, prepaid rent and
all interest earned thereon (to the extent interest is payable to tenant under
applicable state law or the applicable lease) shall be a credit to Buyer at
Closing. Seller shall be fully liable for any wages and other amounts due and
owing any employees at the Property which have accrued up to the date of
Closing. Seller shall retain and Buyer shall not be entitled to any credit for,
the deposits, if any, made by Seller in connection with the provision of
electric, sewer, water, telephone and other utility services to the Property.
For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property, and, therefore, entitled to the income therefrom and
responsible for the expenses thereof for the entire day upon which the Closing
occurs. All such prorations shall be made on the basis of the actual number of
days of the month which shall have elapsed as of the date of the Closing and
based upon the actual number of days in the month and a three hundred sixty-five
(365) day year. The amount of such prorations shall initially be performed by
Seller and mutually agreed to by the parties prior to Closing, but shall be
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subject to adjustment in cash after the Closing outside of escrow as and when
complete and accurate information becomes available, if such information is not
available at the Closing. Seller and Buyer agree to cooperate and use their best
efforts to make such adjustments no later than sixty (60) days after the Closing
(except with respect to property taxes, which shall be adjusted within sixty
(60) days after the tax bills for the applicable period are received).
Buyer shall, post Closing based on April 30, 1998 receivables, purchase
accounts receivable relating to the Property from Seller at a price equal to the
following percentage of such outstanding accounts receivable:
100% of the amount of accounts receivable less than 31 days old; and
0% of the amount of accounts receivable over 30 days old;
The term "Rent" as used herein shall mean all rents, including any
percentage rent and any accrued tax and operating expense escalation, charges
and other revenue of any kind generated from or in connection with the Leases.
Except as set forth in this Section 8(e)(vii), all items of income and expense
which accrue for the period prior to the Closing will be for the account of
Seller and all items of income and expense which accrue for the period on and
after the Closing will be for the account of Buyer. Buyer shall receive a credit
against the Purchase Price for all amounts of Rent which are allocable to the
period on and after the Closing and which have accrued as of the Closing Date,
including those Rents which have accrued but remain uncollected as of the date
of Closing. The provisions of this Section 8(e)(vii) shall survive the Closing.
(viii) With respect to expenses of the Property which are
chargeable to the tenants pursuant to the provisions of the Leases (the "CAM
Charges"), Seller shall determine (1) the amount of those expenses paid or
payable by Seller from January 1 in the year in which the Closing occurs through
the date of Closing or, with regard to taxes and assessments, the amount of the
proration thereof charged to Seller and (2) the amount tenants have paid to
Seller from January 1 in the year in which Closing occurs until the date of
Closing as the tenants' pro rata share of such tenant expenses. If accurate
allocations of CAM Charges, accounts receivable, or any other expenses cannot be
made at Closing because current bills are not obtainable, the parties shall
allocate such expenses at Closing on the best and most current information
available, subject to adjustment in cash as soon as reasonably possible after
the Closing when final bills or other evidence of the applicable expenses are
received, but such adjustment shall be made no later than six (6) months after
the Closing Date. Buyer shall also be entitled to a credit at Closing equal to
any CAM Charges for 1997 and prior years which are owing to any of the tenants
of the Property. The provisions of this Section 8(e)(viii) shall survive the
Closing.
(ix) Those items described in the Settlement Statement executed
by the parties hereof of even date herewith.
(f) The costs incurred in this transaction shall be allocated as
follows:
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(i) Seller shall pay standard rates for the Title Policy. Buyer
shall pay for any title endorsements and extended coverage. Seller shall pay all
transfer taxes associated with the sale.
(ii) Buyer shall pay the cost of recording fees applicable to the
sale.
(iii) Buyer shall pay the cost of the updated survey.
(iv) Each party shall pay its own legal fees and expenses and 50%
of all escrow charges.
(v) Seller shall pay all costs associated with the Tax Deferred
Exchange (as described in Section 16 hereof).
(vi) Seller shall pay for local improvement district assessments,
farm or timber real property tax deferrals, if any.
(g) As additional consideration for Buyer's purchasing the Property
and paying the Purchase Price to the Seller, Seller hereby covenants and agrees
to remain fully liable for the performance and payment of all tenant
improvements and the payment of all leasing commissions currently due and owing
(including any delinquent amounts) under any of the Leases and under any
leasing/commission agreement up to the Closing Date except for amounts which
shall hereafter be due and owing under any of the Leases or under any
leasing/commission agreement, including, without limitation, leasing commissions
with respect to any option to renew or extend the Leases, (it being expressly
understood and agreed that Buyer is assuming the obligations to perform or pay
for any tenant improvements, and to pay for any leasing commissions which shall
hereafter be owing under any renewals or extensions of the Leases or under any
leasing/commission agreement before or after the Closing Date which are approved
by Buyer); (ii) for any New Leases approved by Buyer.
(h) Each party hereto shall indemnify, defend and hold the other party
(together with its officers, directors, and employees) harmless from and against
all claims, demands, causes of actions, judgments, damages, costs and expenses
(including, without limitation, reasonable, actual attorneys' fees and courts
costs), deficiencies, settlements and investigations which relate to matters,
actions or omissions which arise out of or are based upon any of the following
during such parties' period of ownership, which for Seller shall be the period
of time prior to Closing and for Buyer shall be the period of time on or after
Closing:
(i) any obligation under any contracts, agreements and writings
entered into by or on behalf of such party in respect of the use, construction,
operation, ownership, occupancy or maintenance of any portion of the Property
arising out of an event occurring during such parties' period of ownership;
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(ii) any accident, injury, death or damage whatsoever caused to
any person or entity or loss of property, occurring in or about the Property or
any part thereof, or on any other property connected with or adjacent thereto
during such parties' period of ownership; or
(iii) any breach of the covenant set forth in Section 8(g), or
with respect to any payment or performance obligation under any of the Leases
for tenant improvements or under any of the Leases and/or leasing/commission
agreements for leasing commissions which have heretofore accrued, which are now
due and owing or which shall hereafter accrue, as described in Section 8(g).
(iv) any breach of a representation or warranty set forth in this
Agreement.
(v) Notwithstanding the above but subject to the limitations on
Seller's indemnity set forth in Section 8(g), Seller shall not be indemnified
for any leasing commissions which are payable subsequent to the Closing and
relate to leases in force on the date hereof, including those leasing
commissions listed on Schedule C, and Buyer shall not be obligated to indemnify
Seller for Service/Equipment Contracts (as hereinafter defined) which are not
assumed by the Buyer at Closing.
9. REPRESENTATIONS AND WARRANTIES. "To the best of Seller's knowledge" or
other references herein to Seller's knowledge means the actual (not
constructive) knowledge which Mike Duffy and Doug Kintzle have based upon
reasonable familiarity with the property records and continued involvement with
the Property. Notwithstanding the foregoing, the term "to the best of Seller's
knowledge" shall not be construed to imply any covenant that such individuals
have conducted any review of files or other inquiry in connection with the
transaction contemplated by this Agreement. Furthermore, the foregoing
individuals are acting in the capacity as agents or employees of Seller and
shall have no personal liability with respect to any representations, warranties
or covenants of Seller in this Agreement.
(a) Seller hereby represents and warrants to Buyer as of the date
hereof and as of the date of Closing as follows:
(i) Seller is a corporation duly organized and validly existing
under the laws of the State of Iowa and is in good standing under the laws of
the State of Oregon.
(ii) Ownership.
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(A) Seller is the owner of the Property of record and in
fact, legally and beneficially, and to the best of Seller's knowledge, Seller
has good, marketable and insurable title to the Property.
(B) No person or entity other than Seller and Seller's
affiliates has any interest in the legal or beneficial title to the Property;
there are no options to purchase the Property which are effective, nor has
Seller previously entered into any other contract of sale or agreement of any
kind with a party other than Buyer which is presently effective and which will
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not be terminated before the date of this Agreement, except the Meredith letter
of intent as further explained in Section 9(a)(xv)(A). After the date hereof
Seller will not enter into any agreement or contract or negotiate with any party
other than Buyer with respect to the sale of the Property, nor enter into
financial arrangements of any kind with respect to the Property nor will Seller
pledge or assign any right, title, interest in or to the Property or any part
thereof to any person or entity.
(iii) Leases.
(A) As of the date of the Agreement there are no leases,
subleases, licenses or other rental agreements or occupancy agreements (written
or verbal) which grant any possessory interest in and to any space situated on
or in any of the Property or that otherwise give rights with regard to use of
any portions of any of the Property other than the Leases described in the
Certified Rent Roll, as set forth in Exhibit B attached hereto (said leases,
together with any and all amendments, modifications and supplements thereto and
guarantees thereof, are herein referred to collectively as the "Leases");
(B) The copies of the Leases provided to Buyer are true,
accurate and complete, are in full force and effect and none of them has been
modified, amended or extended;
(C) There are no security deposits or other deposits other
than those listed on SCHEDULE D.
(iv) Service and Management Contracts. To the best of Seller's
knowledge, except as set forth on SCHEDULE E, neither Seller nor any other party
has entered into any construction, design, engineering, service, maintenance,
supply, brokerage/leasing agreements, employee agreements, management contracts
or Leases of personal property (collectively, "Service/Equipment Contracts")
affecting the construction, use, ownership, maintenance and/or operation of the
Property that will continue subsequent to the Closing. Seller shall terminate,
at Seller's sole cost and expense, all Service/Equipment Contracts which Buyer
does not elect to assume in writing prior to the expiration of the Study Period.
All work required to be performed by Seller in connection with all Service
Equipment Contracts or other contracts or requirements with respect to periods
prior to the date of Closing has been or will be fully performed and that all
such bills in connection with such work will be Seller's responsibility. Seller
is not in default and to best of Seller's knowledge no other party is in default
under the Service/Equipment Contracts.
(v) Hazardous Substances. To the best of Seller's knowledge, (i)
the Property has not been used for the generation, treatment, storage or
disposal of any hazardous substances during the period in which Seller has owned
the Property; and (ii) there are no underground storage tanks located on or
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under the Property. For the purposes of this Section 9(a)(v), "hazardous
substances" shall include "hazardous substances" as defined in the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss. 9601 et. seq., and regulations adopted pursuant to said Act, or
any similar environmental protection law of the state in which the Property is
located or its political subdivisions.
(vi) Ability to Perform. Seller has full power to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and this Agreement constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms. No order,
permission, consent, approval, license, authorization, registration or
validation of, or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is required
in connection with, the execution, delivery and performance of this Agreement by
Seller or the taking by Seller of any action contemplated by this Agreement.
The execution and delivery of this Agreement and the closing documents and
the consummation of the transactions contemplated hereby will not result in or
constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach, or
violation, of the organizational documents of Seller or any of the following
with respect to Seller or the Property: any agreements, contracts, leases,
promissory notes, conditional sales contracts, commitments, indentures,
mortgages, deeds of trust, or other agreements, instruments or arrangements to
which Seller is a party or by which it or the Property is bound and that relate
to the Property; (ii) a violation of or conflict with any term or provision of
any judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to Seller or the Property; (iii) the creation or
imposition of any lien, charge or encumbrance on the Property; or (iv) not
require approval, waiver or authorization from a governmental or regulatory body
which has not been obtained.
(vii) Compliance with Laws, Etc. Neither the entering into of
this Agreement nor the consummation of the transaction contemplated hereby will
constitute or result in a violation or breach by Seller of any judgment, order,
writ, injunction or decree issued against or imposed upon it, or will result in
a violation of any applicable law, order, rule or regulation of any governmental
authority. There are no actions, suits, proceedings, arbitrations or
investigations pending or threatened against, relating to or affecting Seller or
the Property which might interfere in a material respect with the transaction
contemplated by this Agreement, become a cloud on the title to the Property or
any portion thereof or otherwise affect the Property or Seller's ability to
consummate the transaction contemplated hereby.
(viii) No Violation Notice. Except as set forth in SCHEDULE F,
Seller has not received notices:
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(A) from any federal, state, county or municipal authority
alleging any fire, health, safety, building, pollution, environmental, zoning or
other violation of law in respect of the Property or any part thereof,
including, without limitation, the occupancy or operation thereof, which has not
been entirely corrected;
(B) concerning the possible or anticipated condemnation of
any part of the Property, or the widening, change of grade or limitation on use
of streets abutting the same or concerning any special taxes or assessments
levied or to be levied against the Property or any part thereof;
(C) concerning any change in the zoning or other land use
classification of the Property or any part thereof.
(D) of any pending insurance claim.
(E) from any governmental authority that any licenses,
permits, certificates, easements and rights of way, including proof of
dedication, required from any authorities having jurisdiction over the Property
or from private parties for the existing use, occupancy and operation of the
Property and to insure vehicular and pedestrian ingress to and egress from the
Property are in violation of any governmental laws or regulations, which has not
been corrected or will not be corrected by Closing.
(ix) No Management Contracts, Employment Contracts, Unions,
Pension Plans. Seller has not entered into any management contracts, employment
contracts or labor union contracts and has not established any retirement,
health insurance, vacation, pension, profit sharing or other benefit plans
relating to the operation or maintenance of the Property for which Buyer shall
have any liability or obligation. Seller has no employees at the Property, other
than at-will employees who shall remain the responsibility of Seller and as to
whom Buyer shall have no liability or obligation whatsoever. As of the Closing,
there shall be no employees working at the Property. Seller shall have paid or
caused to be paid to all employees of the Seller all salary and any other
payments which shall be payable on account of each such employee for such period
through Closing. Seller agrees to defend, indemnify and hold Buyer harmless from
any loss, expense, cost and/or damage (including without limitation reasonable
attorneys' fees and costs incurred in the defense of such claims) resulting from
claims well-founded or unfounded, by or on behalf of persons who are to have
been employees of Seller on or prior to the Closing arising out of any matter,
cause or thing prior to the Closing or any claims which may have accrued prior
to the Closing.
(x) Seller has not received any written notice of the termination
or impairment of the furnishing of services to the Property of water, sewer, gas
(if any), electric, telephone, drainage and other such utility services.
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(xi) Assessments. Seller has not received notice that assessments
for public improvements have been made against the Property which are unpaid,
including, without limitation, those for construction of sewer and water lines,
streets, sidewalks and curbs. To the best of Seller's knowledge, there are no
pending or proposed special assessments affecting or which may affect the
Property or any portion thereof.
(xii) Pre-Closing Deliveries Accurate. Except with respect to the
Certified Rent Roll, to the best of Seller's knowledge, all of the documents,
writings and other matters delivered by Seller to Buyer pursuant to Section 4
and information provided to Buyer pursuant to the terms of this Agreement, as of
the date hereof, and as of the Closing, are true, accurate and complete in all
material respects and accurately indicate all of the information referred to
therein, are not misleading in any respect, and none of such disclosures
misstated any material facts or omitted to state any material facts necessary to
make the statements made, in the light of the circumstances under which they
were made, not misleading. This representation shall be applicable only to due
diligence items listed on Schedule B and not any items delivered thereafter.
(xiii) Miscellaneous Representations and Warranties.
(A) Seller agrees to conduct the business operations of the
Property in the Seller's usual and normal manner until the Closing. Seller shall
not, without the prior written consent thereto of Buyer, make (or permit) any
physical change in the Property.
(B) All bills and claims for labor performed and materials
furnished to or for the benefit of the Property for all periods prior to the
Closing date have been paid by Seller or will be paid by Seller as of the
Closing.
(C) (Intentionally Deleted)
(D) Seller is not a "foreign person", as defined in the
Internal Revenue Code.
(E) The premiums are paid and current for replacement cost
insurance policies on the Property and, to the best of Seller's knowledge,
insurance policies are in full force and effect.
(xiv) All documents executed by Seller which are to be delivered
to Buyer at the Closing are or at the Closing will be duly authorized, executed
and delivered by Seller, are or at the Closing will be legal, valid, and binding
obligations of Seller, are sufficient to convey title, and do not violate any
provisions of any agreement to which Seller is a party or to which it is
subject.
(xv) Additional Representations and Warranties Regarding Parcels
of Land with No Improvements:
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(A) Contracts. There are no sale, construction, management,
leasing, service, equipment, supply, maintenance or concession agreements in
effect with respect to the Property that will survive Closing. Notwithstanding
the above, Seller has disclosed to Buyer the letter of intent regarding a
pending sale of certain unimproved land to the Meredith Corporation and the
pending purchase agreement negotiations with the Meredith Corporation. Upon
Closing of this transaction, Seller shall terminate the letter of intent.
(B) Commitments. Other than as set forth in Exhibit K
attached hereto, Seller has not made any commitment or proffer to any
governmental or quasi-governmental authority having jurisdiction or to any third
party, to dedicate or grant any portion of the Property for roads, easements,
rights-of-way, park lands or for any other public purposes, to construct any
improvement, to grant any restrictions or to incur any other expense or
obligation relating to the Property.
(xvi) Additional Representation and Warranties Regarding Land
Under a Ground Lease: (Intentionally Deleted)
(xvii) Additional Representations and Warranties Regarding
Properties Where Improvements Are Under Construction. (Intentionally Deleted)
(xviii) Additional Representations and Warranties Regarding
Properties with Covenants, Conditions and Restrictions.
Seller represents and warrants that (i) to the best of
Seller's knowledge that the Property conveyed pursuant to the Agreement is not
in default in the performance of any covenant, condition or restriction
contained in any Declaration of Covenants, Conditions or Restrictions, as
amended, as more fully described in the Title Policy ("CCRs"), and no condition
or circumstance exists which, with the giving of notice or the passage of time,
would constitute a default thereunder; (ii) no assessments, payments, fees or
expenses are presently due and payable under such CCRs; (iii) Seller hereby
represents and warrants that none of the property conveyed hereby is subject to
the terms of a repurchase option, right of first refusal or other option to
purchase such property, or declarant's right of approval (individually, a
"Right"; collectively, the "Rights"), which Right has not lapsed, fully and
irrevocably, prior to being exercised by the beneficiary thereof. This
representation and warranty shall survive for the period of any applicable
statute of limitations with regard to such Rights and shall be null and void in
the event any such action is triggered by an affirmative action of Buyer
(provided, however, the foregoing is not intended to mean that the statute of
limitations commences on the date hereof); (iv) Buyer and Seller acknowledge
that all setback violations and landscaping violations with regard to the
Properties, if any, have been satisfied by credits at Closing on the Settlement
Statement. Buyer hereby agrees that upon assumption of title it will not take
action to initiate any such option or revoke approval against the Property; in
such event this representation shall be null and void and Buyer shall not be
entitled to claim a Seller default for any action taken by Buyer.
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(b) Buyer hereby represents and warrants to Seller as follows: (i)
Buyer is a California limited partnership, duly organized and validly existing
under the laws of the State of California; all documents executed by Buyer which
are to be delivered to Seller at Closing are or at the Closing will be duly
authorized, executed, and delivered by Buyer, and are or at the Closing will be
legal, valid, and binding obligations of Buyer, and do not and at the Closing
will not violate any provisions of any agreement to which Buyer is a party or to
which it is subject; and (ii) Buyer shall furnish all of the funds for the
purchase of the Property (other than funds supplied by institutional lenders
which will hold valid mortgage liens against the Property) and such funds will
not be from sources of funds or properties derived from any unlawful activity.
10. RESPONSIBILITY FOR VIOLATIONS. All notices of violations of laws,
ordinances, or regulations ("Violations of Law"), which are received prior to
the Closing from any governmental department, agency or bureau having
jurisdiction as to conditions affecting the Property shall be remedied or
complied with by Seller. If such violations are subject to challenge or
objection by Seller or are the obligation of any tenant under the terms of such
tenant's lease, Buyer shall cooperate with Seller to defend such challenge
and/or require tenant to cure the violation. Seller shall indemnify Buyer for
the reasonable third-party costs of such challenge incurred by Buyer, including
reasonable attorney's fees. This obligation shall survive Closing on the part of
both parties.
11. MAINTENANCE OF INSURANCE. Until the Closing, Seller shall maintain its
present insurance on the Property. The risk of loss in and to the Property shall
remain vested in Seller until the recordation of the Deed to Buyer.
12. CASUALTY OR CONDEMNATION. If prior to the Closing, the Property or any
"material" portion thereof is damaged or destroyed by fire or casualty, or any
part of the Property is taken or threatened to be taken by eminent domain by any
governmental entity, then Buyer shall have the option, exercisable by written
notice given to Seller at or prior to the Closing, either to (a) terminate this
Agreement, whereupon all obligations of all parties hereto shall cease, the
Deposit shall be returned to Buyer and this Agreement shall be void and without
recourse to the parties hereto except for provisions which are expressly stated
to survive such termination; or (b) proceed with the purchase of the Property,
and in such case, unless Seller shall have previously restored the Property to
its condition prior to the occurrence of any such damage or destruction, Seller
shall pay over or assign to Buyer, without recourse, all amounts received or due
(plus an amount equal to the sum of any deductible under any insurance policy
covering the Property and any additional proceeds which shall be necessary to
effect such restoration) from, and all claims against, any insurance company or
governmental entity as a result of such destruction or taking, together with any
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additional proceeds which shall be necessary to effect such restoration. Within
five (5) days after receipt of written notice of such casualty or condemnation,
Buyer will advise Seller in writing whether Buyer desires to proceed with this
transaction in light of such casualty or condemnation. The term "material" as
used in this Section 12 shall mean damage or destruction in an amount equal to
or greater than 5% of the Purchase Price.
13. INDEMNIFICATION. Each party hereby agrees to indemnify the other party
and hold it harmless from and against any and all claims, demands, liabilities,
costs, expenses, penalties, damages and losses, including, without limitation,
reasonable attorneys' fees, resulting from any misrepresentations or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or exhibit given or delivered to the other pursuant to or
in connection with this Agreement except as provided herein.
14. CONDITION OF PROPERTY. At or before the Approval Date, Buyer will have
approved the physical and environmental characteristics and condition of the
Property, as well as the economic characteristics of the Property. Buyer hereby
waives any and all defects in the physical, environmental and economic
characteristics and condition of the Property which would be disclosed by such
inspection which exist as of the Approval Date except such waiver does not
extend to or negate the effect of any matters which are covered by any
representation, warranty or covenant of Seller in Section 9 of this Agreement or
in any of the conveyance documents, Buyer further acknowledges that except as
set forth in this Agreement, neither Seller nor any of Seller's officers or
directors, nor Seller's employees, agents, representatives, or any other person
or entity acting on behalf of Seller (hereafter, for the purpose of this
Section, such persons and entities are individually and collectively referred to
as the "Seller") have made any representations, warranties or agreements
(express or implied) by or on behalf of Seller as to any matters concerning the
Property, the economic results to be obtained or predicted, or the present use
thereof or the suitability for Buyer's intended use of the Property, including,
without limitation, the following: suitability of the topography; the
availability of water rights or utilities; the present and future zoning,
subdivision and any and all other land use matters; the condition of the soil,
subsoil, or groundwater; the purpose(s) to which the Property is suited;
drainage; flooding; access to public roads; or proposed routes of roads or
extensions thereof. Buyer acknowledges and agrees that except for the
representations and warranties contained herein and in the conveyance documents,
the Property is to be purchased, conveyed and accepted by Buyer in its present
condition, "as is" and that no patent or latent defect in the physical or
environmental condition of the Property whether or not known or discovered,
shall affect the rights of either party hereto. Except as set forth in Section
9, any documents furnished to Buyer by Seller relating to the Property
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including, without limitation, service agreements, management contracts, maps,
surveys, studies, pro formas, reports and other information shall be deemed
furnished as a courtesy to Buyer but without warranty from Seller. All work done
by Buyer in connection with preparing the Property for the uses intended by
Buyer including any and all fees, studies, reports, approvals, plans, surveys,
permits, and any expenses whatsoever necessary or desirable in connection with
Buyer's acquiring, developing, using and/or operating the Property shall be
obtained and paid for by, and shall be the sole responsibility of Buyer. Buyer
has investigated and has knowledge of operative or proposed governmental land
use laws and regulations to which the Property may be subject and shall acquire
the Property upon the basis of its review and determination of the applicability
and effect of such laws and regulations.
Except for the representations and warranties in Section 9
of this Agreement, Buyer has neither received nor relied upon any
representations concerning such land use laws and regulations from Seller.
Except for the representations, warranties and indemnities
provided by Seller contained herein and in the documents delivered at Closing,
Buyer, on behalf of itself and its employees, agents, successors and assigns
attorneys and other representatives, and each of them, hereby releases Seller
from and against any and all claims, demands, causes of action, obligations,
damages and liabilities of any nature whatsoever, directly or indirectly,
arising out of or related to the condition of the Property.
By signing in the space provided below in this SECTION 14,
Buyer acknowledges that it has read and understood the provisions of this
SECTION 14.
BUYER:
------
PS BUSINESS PARKS, L.P.,
a California Limited Partnership
By: PS BUSINESS PARKS, INC.,
a California corporation, General Partner
By: /s/Ronald L. Havner, Jr.
---------------------------------
Ronald L. Havner, Jr.
President and Chief Executive Officer
15. POSSESSION. Buyer shall have and as a condition precedent to Closing,
the right of possession on the Closing Date, provided, however, that Seller
shall allow authorized representatives of Buyer reasonable access to the
Property for the purposes of satisfying Buyer with respect to satisfaction of
any conditions precedent to the Closing contained herein.
16. TAX-DEFERRED EXCHANGE. Buyer and Seller agree that, at Seller's sole
election, this transaction shall be structured as an exchange of like-kind
properties under Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations and proposed regulations thereunder. The
parties agree that if Seller wishes to make such election, it must do so prior
to the Closing Date. If Seller so elects, Buyer shall reasonably cooperate with
Seller, provided any such exchange is consummated pursuant to an agreement that
is mutually acceptable to Buyer and Seller and which shall be executed and
delivered on or before the Closing Date. Seller shall in all events be
responsible for all costs and expenses related to the Section 1031 exchange and
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shall fully indemnify, defend and hold Buyer harmless from and against any and
all liability, claims, damages, expenses (including reasonable attorneys' and
paralegal fees and reasonable attorneys' and paralegal fees on appeal),
proceedings and causes of action of any kind or nature whatsoever arising out
of, connected with or in any manner related to such 1031 exchange that would not
have been incurred by Buyer if the transaction were a purchase for cash. The
provisions of the immediately preceding sentence shall survive closing and the
transfer of title to subject Property to Buyer. Notwithstanding anything to the
contrary contained in this Section, any such Section 1031 exchange shall be
consummated through the use of a facilitator or intermediary so that Buyer shall
in no event be requested or required to acquire title to any property other than
the Property.
17. MISCELLANEOUS
(a) Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and addressed as follows:
If to Seller:
Petula Associates, Ltd.
c/o Law Department
711 High Street
Des Moines, Iowa 50392-0301
Attn: Dennis D. Ballard
With a copy to:
Petula Associates, Ltd.
c/o CRE-Equities
711 High Street
Des Moines, Iowa 50392-1370
Attn: Michael S. Duffy
If to Buyer:
PS Business Parks, Inc.
701 Western Ave., Suite 200
Glendale, CA 91201
Attention: Ronald L. Havner, Jr.
with a copy to:
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PS Business Parks, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201
Attention: David Goldberg, Esq., General Counsel
and a courtesy copy which shall not be required for valid
notice to:
Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Steven S. Snider, Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed to be effective: (i) one (1) business day after deposit with the courier
if sent by Federal Express or other recognized overnight delivery service; or
(ii) upon receipt if accomplished by hand delivery or by confirmed telecopied
delivery. Either party may, from time to time, by notice in writing served upon
the other party, in the same manner as prescribed in this Section designate a
different mailing address or a different person to which all such notices are
thereafter to be addressed.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any licensed real estate broker, entity,
agent, commission salesperson, or other person who will claim a right to
compensation or a commission or finder's fee as a procuring cause of the sale
contemplated herein, except for Chadwick, Saylor & Co., Inc., whose commission
shall be paid by Buyer. In the event that any company, firm, broker, agent,
commission salesperson or finder perfects a claim for a commission or finder's
fee based upon any such contract, dealings or communication, the party through
whom the company, firm, broker, agent, commission salesperson or finder makes
his claim shall be responsible for said commission or fee and all costs and
expenses (including reasonable attorneys' fees) incurred by the other party in
defending against the same. No commission shall be paid or become payable unless
the Closing actually occurs. The provisions of this Subsection (b) shall survive
Closing and any termination, cancellation or recision of this Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns; provided further, however, Seller's consent
to an assignment of Buyer's rights and delegation of its obligations hereunder
shall not be required with respect to an assignment of this Agreement by Buyer
to any person or any corporation, general partnership, limited partnership,
limited liability company or other lawful entity which is controlled by or under
common control with Buyer.
(d) Amendments and Terminations. Except as otherwise provided herein,
this Agreement may be amended or modified by, and only by, a written instrument
executed by Seller and Buyer.
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(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
(f) Merger of Prior Agreements. This Agreement supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
(g) Enforcement. In the event either party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees. Buyer and Seller both acknowledge
each has been advised by counsel as to their respective rights, duties and
obligations in this Agreement and have had ample opportunity to negotiate same.
Thus, both Buyer and Seller acknowledge that any ambiguity in this Agreement
should not necessarily be resolved against the drafter of this Agreement.
(h) Time of the Essence. Time is of the essence of this Agreement.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but such counterparts when taken
together shall constitute but one Agreement.
(j) Survivability. Except as otherwise provided herein, the covenants
contained in this Agreement shall survive the closing of the purchase and sale
and shall not be deemed merged in the deed, but shall remain in full force and
effect.
(k) No Recordation. Neither Seller nor Buyer shall record this
Agreement or memorandum thereof in or among the land or chattel records of any
jurisdiction.
(l) Proper Execution. The submission by Seller to Buyer of this
Agreement in unsigned form shall have no binding force and effect, shall not
constitute an option, and shall not confer any rights upon Buyer or impose any
obligations on Seller irrespective of any reliance thereon, change of position
or partial performance until Seller shall have executed this Agreement and the
Deposit shall have been received by the Title Company. Notwithstanding the
foregoing sentence, Seller's submission to Buyer of this Agreement shall be
deemed withdrawn, revoked and incapable of being executed by Buyer in the event
Buyer has not returned a duly executed original Agreement to Seller on or before
5:00 p.m. (EST) on April 30, 1998.
(m) Personal Liability. There shall be no personal liability imposed
on the individuals who have executed this Agreement (or the attached exhibits)
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(n) Survival of Representations. Except as expressly provided
otherwise in this Agreement, all representations and warranties made by the
parties herein or in any instrument or document furnished in connection herewith
(except warranties of title in the conveyance documents) shall survive for a
period of one (1) year from the date of Closing and any action thereon must be
commenced within such period or they are deemed waived and released; provided,
however, Representation 9(a)(iii) regarding leases shall survive for the
remaining term of any lease (excluding renewals) for which Buyer did not receive
a tenant estoppel executed prior to Closing; however, to the extent that tenant
estoppels are obtained post closing, the survival period for such leases shall
be one (1) year from the date of Closing.
(o) Dates. Whenever used herein, unless expressly provided otherwise,
the term "days" shall mean consecutive calendar days, except that if the
expiration of any time period measured in days occurs on a Saturday, Sunday,
legal holiday or other day when federal offices are closed in Washington, D.C.,
such expiration shall automatically be extended to the next business day.
(p) Prior to the Closing, information received in connection with the
Property shall be kept strictly confidential and shall not, without the prior
consent of the other party, be disclosed by such other party or used for any
purpose other than evaluating the Property except in the event of litigation
between the parties hereto, Buyer and Seller agree that such information shall
only be transmitted to Buyer's and Seller's respective officers, directors,
trustees, employees, attorneys, accountants, contractors, consultants, advisors
and agents who need to know such information for purposes of evaluating the
Property and transactions contemplated under this Agreement. The provisions of
this Section 17(p) shall not apply to any information which is a matter of
public record or obtainable from other sources and shall not prevent either
Buyer or Seller from complying with laws, rules, regulations and court orders,
including, without limitation, governmental regulatory, disclosure, tax and
reporting requirements.
(q) Liability of Sellers. Any liability of Seller for damages for a
breach of any representations, warranties or covenants in the Agreement shall be
joint and several liability.
18. ESCROW AGENT. Escrow Agent shall hold the Deposit in accordance with
the terms and provisions of this Agreement, subject to the following:
(a) Escrow Agent undertakes to perform only such duties as are
expressly set forth in this Agreement and no implied duties or obligations shall
be read into this Agreement against Escrow Agent.
(b) Escrow Agent may act in reliance upon any writing or instrument or
signature which it, in good faith, believes of any statement or assertion
contained in such writing or instrument, and may assume that any person
purporting to give any writing, notice, advice or instrument in connection with
the provisions of this Agreement has been duly authorized to do so. Escrow Agent
shall not be liable in any manner for the sufficiency or correctness as to form,
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manner and execution, or validity of any instrument deposited in escrow, nor as
to the identity, authority, or right of any person executing the same, and
Escrow Agent's duties under this Agreement shall be limited to those provided in
this Agreement.
(c) Unless Escrow Agent discharges any of its duties under this
Agreement in a negligent manner or is guilty of willful misconduct with regard
to its duties under this Agreement, Seller and buyer shall indemnify Escrow
Agent and hold it harmless from any and all claims, liabilities, losses,
actions, suits or proceedings at law or in equity, or other expenses, fees, or
charges of any character or nature, which it may incur or with which it may be
threatened by reason if its acting as Escrow Agent under this Agreement; and in
such connection Seller and Buyer shall indemnify Escrow Agent against any and
all expenses including reasonable attorneys' fees and the cost of defending any
action, suit or proceeding or resisting any claim in such capacity.
(d) If the parties (including Escrow Agent) shall be in disagreement
about the interpretation of this Agreement, or about their respective rights and
obligations, or the propriety of any action contemplated by Escrow Agent, Escrow
Agent may, but shall not be required to, file an action in interpleader to
resolve the disagreement. Escrow Agent shall be indemnified for all costs and
reasonable attorneys' fees in its capacity as Escrow Agent in connection with
any such interpleader action and shall be fully protected in suspending all or
part of its activities under this Agreement until a final judgment in the
interpleader action is received.
(e) Escrow Agent may consult with counsel of its own choice and have
full and complete authorization and protection in accordance with the opinion of
such counsel. Escrow Agent shall otherwise not be liable for any mistakes of
fact or errors of judgment, or for any acts or omissions of any kind, unless
caused by its negligence or willful misconduct.
(f) The Escrow Agent may in its sole discretion resign by giving
thirty (30) days' written notice thereof to the Buyer and Seller. The Buyer and
Seller shall furnish to the Escrow Agent written instructions for the release of
the escrow funds and escrow documents in such event. If the Escrow Agent shall
not have received such written instructions, the Escrow Agent may petition any
court of competent jurisdiction for the appointment of a successor Escrow Agent,
and upon such appointment deliver the escrow funds and escrow documents to such
successor.
19. SELLER'S ADDITIONAL AGREEMENTS RELATED TO PROPERTIES WITH IMPROVEMENTS
UNDER CONSTRUCTION. (Intentionally Deleted)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
PETULA ASSOCIATES., LTD.,
an Iowa corporation
By: /s/ M.S. Duffy
-------------------------
M.S. Duffy
Its: Vice President
By: /s/ D.D. Ballard
-------------------------
D.D. Ballard
Its: Counsel
EQUITY FC, LTD., an Iowa Corporation
By: /s/ Thomas J. Bell
-------------------------
Thomas J. Bell
Its: Vice President
By: /s/ Clint Woods
-------------------------
Clint Woods
Its: Counsel
BUYER:
PS BUSINESS PARKS, L.P.,
a California Limited Partnership
By: PS BUSINESS PARKS, INC.,
a California corporation, General Partner
By:/s/ Ronald L. Havner, Jr.
------------------------------
Ronald L. Havner, Jr.
President and Chief Executive Officer
Buyer's Social Security Number or Tax
Identification Number:95-4609260
27
Exhibit 10.2
REAL ESTATE PURCHASE AND SALE AGREEMENT
by and between
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
AND PETULA ASSOCIATES, LTD.
SELLER
and
PS BUSINESS PARKS, L.P.
BUYER
Exhibits to this Agreement have been omitted and will be furnished to the
Securities and Exchange Commission upon Request
<PAGE>
INDEX TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
1. Property Included in Sale...............................................1
2. Purchase Price/Remedies.................................................2
3. Title to the Property...................................................2
4. Seller's Pre-Closing Deliveries.........................................3
5. Buyer's Due Diligence...................................................3
6. Buyer's Conditions to Closing...........................................4
7. Seller's Conditions to Closing..........................................5
8. The Closing.............................................................5
9. Representations and Warranties..........................................9
10. Responsibility for Violations..........................................13
11. Maintenance of Insurance...............................................13
12. Casualty or Condemnation...............................................13
13. Indemnification........................................................14
14. Condition of Property..................................................14
15. Possession.............................................................15
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16. Tax-Deferred Exchange..................................................15
17. Miscellaneous..........................................................15
18. Escrow Agent...........................................................18
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REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (the "Agreement") is made as
of the 30 day of April, 1998 (the "Agreement Date") which shall be the later
to occur of execution of this Agreement by Buyer or Seller by and between
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY ("Principal Mutual"), an Iowa
corporation, and PETULA ASSOCIATES, LTD. ("Petula"), an Iowa corporation, herein
collectively referred to as "Seller", and PS BUSINESS PARKS, L.P. (formerly
known as AMERICAN OFFICE PARK PROPERTIES, L.P.), a California limited
partnership, herein referred to as "Buyer."
R E C I T A L S:
WHEREAS, each Seller desires to sell its undivided interest in certain
improved real property along with certain related personal and intangible
property, and Buyer desires to purchase said real, personal and intangible
property on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Buyer and Seller
hereby agree as follows:
1. PROPERTY INCLUDED IN SALE. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, at the price and upon
the terms and conditions set forth in this Agreement, the following:
(a) that certain real property more particularly described in Exhibit
A attached hereto (the "Real Property");
(b) all right, title and interest of Seller in all rights, privileges,
alleys, strips and gores, rights of way and easements appurtenant to the Real
Property, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances as well as all development rights, air rights, water,
water rights (and water stock, if any) relating to the Real Property and any
easements, rights-of-way or other appurtenances used in connection with the
beneficial use and enjoyment of the Real Property;
(c) all improvements and fixtures located on the Real Property,
including all buildings and structures presently located on the Real Property
listed on Schedule A, as more particularly described in Exhibit A, attached
hereto, and all related facilities, amenities, all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Real
Property, such as heating and air conditioning systems and facilities used to
provide any utility services, refrigeration, ventilation, garbage disposal,
recreation or other services on the Real Property (all of which are collectively
referred to as the "Improvements");
(d) all tangible or intangible personal property owned by Seller and
used in the ownership, use or operation of the Real Property and/or
Improvements, including, without limitation, the right to use any trade name now
used in connection with the Real Property (the "Personal Property") and any
contract or lease rights, agreements, utility contracts or other rights relating
to the ownership, use and operation of the Real Property.
(e) all of Seller's interest as lessor in all leases covering the Real
Property and Improvements, including all tenant security and other deposits and
interest earned thereon and prepaid rent and interest earned thereon. Interest
on deposits and prepaid rents shall only be transferred to Buyer if applicable
state law or the applicable lease requires that such funds be held in
interest-bearing accounts.
All of the items referred to in Subsections (a), (b), (c), (d) and (e)
above are hereinafter collectively referred to as the "Property."
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2. PURCHASE PRICE/REMEDIES
(a) The total purchase price (the "Purchase Price") for the Property
is Thirty-four Million Six Thousand Eight Hundred Twenty-four and 91/100 Dollars
($34,006,824.91) allocated as follows: Principal Mutual ($11,334,219.93) and
Petula ($22,672,604.98). The Purchase Price is payable by wire transfer of
immediately available funds in U.S. dollars via the federal bank wire transfer
system to Chicago Title Insurance Company, San Francisco, CA, (the "Title
Company") at Closing.
(b) (Intentionally Deleted)
(c) (Intentionally Deleted)
(d) (Intentionally Deleted)
(e) (Intentionally Deleted)
(f) (Intentionally Deleted)
3. TITLE TO THE PROPERTY
(a) At the Closing, Seller shall convey to Buyer and Buyer shall
accept title to the Property in fee simple in accordance with the terms of this
Agreement, and Buyer's obligation to accept said title shall be conditioned upon
Buyer then being conveyed good and clear record, marketable and insurable title
(in fee simple to the Real Property, all rights, privileges and easements
appurtenant thereto, and to the Improvements, by duly executed and acknowledged
special warranty deed - statutory form. It shall be a condition precedent to
Buyer's obligation to close hereunder that the Title Company stands ready to
issue, at the Closing an ALTA standard full coverage form Owner's Policy of
Title Insurance with extended coverage and all endorsements reasonably requested
by Buyer, insuring Buyer's interest in the Property, dated the date of Closing,
with liability in the amount of the Purchase Price, subject only to the
Permitted Exceptions (the "Title Policy"). The Title Policy shall insure against
all mechanics' liens and shall have full survey coverage and shall be an
extended coverage policy insuring against, among other things, mechanics' liens,
easements and claims of parties in possession not shown by the public records
with all general and standard exceptions deleted. Seller shall pay the cost of
the standard owner's policy. Buyer shall bear the expense for extended coverage
and the cost of any endorsements requested by Buyer.
(b) Buyer shall, prior to the Approval Date, provide Seller with
Buyer's objections to any matters disclosed by the Commitment, Title Documents
or Survey. All matters shown on the Title Exceptions which are not objected to
by Buyer prior to the Approval Date shall be "Permitted Exceptions". Seller
agrees to use its best efforts to satisfy such objections noted by Buyer,
provided that: (i) Seller shall obtain a satisfaction and release or bond over
any monetary liens, in a manner reasonably satisfactory to Buyer, including,
without limitation, any and all mortgages, mechanics' liens and judgment liens
(collectively, "Monetary Liens"); and (ii) Seller shall not be obligated to
litigate or spend more than $10,000.00 in the aggregate to cure non-monetary
lien objections or to seek any cure which cannot be obtained within fifteen (15)
days. Seller shall notify Buyer of Seller's proposed actions to satisfy such
objections, and shall have up to the Closing Date to satisfy such objections and
the Closing Date shall be extended a reasonable period of time, not to exceed
fifteen (15) days, if necessary to allow such cure period. If, despite its best
efforts to do so, Seller cannot satisfy such objections (other than the Monetary
Liens, which shall be satisfied or bonded over by Seller) on or before the
expiration of such additional fifteen (15) day period, Buyer shall have the
option to waive its objection(s) to such title and/or other defect(s) and
proceed to Closing or terminate this transaction. Buyer acknowledges that the
termination of the transaction pursuant to this section of the Agreement shall
not entitle Buyer to receive reimbursement for third party expenses or to seek
specific performance or any other legal or equitable remedy against Seller.
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4. SELLER'S PRE-CLOSING DELIVERIES
Buyer acknowledges that prior to execution of this Agreement Seller
has delivered the items listed in Schedule B for Buyer's review and approval.
Seller shall be under no further obligation to deliver additional items to Buyer
unless Buyer requests such items prior to the Approval Date and such additional
items are reasonably necessary to complete Buyer's due diligence. Seller shall
only be obligated to provide such additional items if: (i) the items requested
are in Seller's or Seller's property manager's actual possession or control;
(ii) the items are not privileged; and (iii) Buyer has identified the specific
property for which the item is requested.
5. BUYER'S DUE DILIGENCE. Buyer shall be allowed to conduct the following
due diligence prior to purchasing the Property:
(a) Review and approve title to the Property as shown on a preliminary
title report (the "Title Report") from the Title Company.
(b) Review and approve the operating statements of the Property for
the previous two (2) calendar years as well as the current calendar year-to-date
and audited financial statements for 1997, provided same are available and in
Seller's actual possession.
(c) Review and approve true, correct and complete copies of all tenant
leases relating to the Property and a certified rent roll of even date herewith
in the form attached hereto as Exhibit B, (the "Certified Rent Roll").
(d) Review and approve copies of any site plans and building drawings
and specifications and existing environmental reports currently in the
possession or control of the Seller.
(e) Review and approve copies of any maintenance and service
agreements currently in force.
(f) Review and approve an as-built survey showing the location of all
improvements and recorded easements on the Property.
(g) Performance of a feasibility study of the Property, including, but
not limited to, review and approval of the physical and environmental
characteristics and condition of the Property and performance of marketing and
feasibility studies, structural and engineering investigations, auditing of
books and records of the Property, financial analyses and verification of
existing zoning. Seller agrees to provide Buyer and its agents and
representatives reasonable access to the Property and to all books, records,
files, financial data, leases and contracts relating to the Property and to
reasonably cooperate in such examinations and to cause the property manager to
reasonably cooperate in such examinations following the Agreement Date for the
purpose of performing, at Buyer's sole cost and expense, the above-referenced
studies, physical inspections, investigations and tests on the Property (the
"Tests") provided that no such tests shall be conducted without at least two (2)
business days prior written notice to Seller and if any such tests are invasive
Seller's prior approval of such Tests, which approval shall be in Seller's sole
and absolute discretion. Notwithstanding anything herein to the contrary, Buyer
shall not need Seller's further consent to conduct Phase I environmental
studies. Buyer's access is further conditioned on Buyer complying with the terms
of the Access and Indemnification Agreement attached hereto as Exhibit E. Buyer
shall be required to conduct such Tests in a manner as to not disturb or
interfere with the current use of the Property and upon completion of such
Tests, Buyer agrees at its sole cost to restore the Property to the condition it
was in immediately prior to such Tests, including, but not limited to the prompt
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removal of anything placed on the Property in connection with such Tests. Copies
of any third party reports, letters or other written information generated as a
result of such Tests shall be provided to Seller if the sale contemplated by
this Agreement does not close for any reason other than Seller's default. Buyer
shall indemnify, defend (with counsel reasonably satisfactory to Seller),
protect, and hold Seller harmless from and against any and all liability, loss,
cost, damage, or expense (including, without limitation, reasonable attorney's
fees and costs) which Seller may sustain or incur by reason of or in connection
with any Tests made by Buyer or Buyer's agents or contractors relating to or in
connection with the Property, or entries by Buyer or its agents or contractors
onto the Property. Notwithstanding any provision to the contrary in this
Agreement, the indemnity obligations of Buyer under this Agreement shall survive
any termination of this Agreement or the delivery of the deed and the transfer
of title pursuant to this Agreement.
The items referred to above in Subsections 5(a)-(g) and those
listed on Schedule B shall be collectively referred to as the "Due Diligence
Items." Buyer acknowledges that Seller has provided Buyer with the Due Diligence
Items prior to execution of this Agreement.
The date this Agreement is executed by both parties shall be the
"Approval Date" and upon such execution there shall be a conclusive presumption
that Buyer has approved the Due Diligence Items and the physical and
environmental condition of the Property. Notwithstanding the foregoing, Buyer
shall be entitled to rely upon the representations and warranties of Seller set
forth in this Agreement.
6. BUYER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Buyer's obligation to purchase the Property:
(a) Seller shall conduct business at the Property in a good and
diligent manner consistent with Seller's current business practices and shall
maintain the Property in its present condition through the date of Closing,
reasonable wear and tear excepted.
(b) Seller has terminated, at Seller's sole cost and expense, all
Service/Equipment Contracts except to the extent Buyer has given Seller written
notice that certain Service/Equipment contracts should be continued and Buyer
has assumed post Closing liability for such contracts, however, such services
shall be continued at Seller's expense until the Closing Date.
(c) The Title Company shall stand ready to issue the Title Policy in
the form required herein.
(d) Delivery by Seller at Closing of the Closing Documents described
in Section 8 hereof.
(e) Performance by Seller as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Seller pursuant to this Agreement and all of Seller's representations and
warranties contained in this Agreement shall be true and correct on and as of
the Closing Date as if made anew on that date.
(f) Delivery by Seller of Tenant Estoppel Certificates in the form
attached hereto as Exhibit F for tenants comprising at least 80% of the net
rentable square feet of the Property which shall include all tenants listed on
Exhibit F-1, the substance and content of which shall be consistent with the
Certified Rent Roll and Seller shall use commercially reasonable efforts to
obtain the required Tenant Estoppel Certificates. Buyer shall cooperate with
Seller post Closing to complete collection of Tenant Estoppels. In the event
sufficient Tenant Estoppels cannot be obtained, Buyer shall accept a Seller
Estoppel in the form attached hereto as Exhibit F-2 and all post Closing Tenant
Estoppels shall be delivered pursuant to the terms of Exhibit F-2. In the event
that the conditions set forth above in this Section 6 are not satisfied (and
Buyer is not otherwise in default of this Agreement), Buyer may elect to
terminate this Agreement or waive satisfaction of the condition and close escrow
in either instance by giving written notice to Seller.
(g) Seller has hired legal counsel and consultants to review a pending
application by Sequent Computer Company to change the existing traffic patterns
at the Property and filed objections to the plan on the condition that Buyer
reimburse Seller for the cost of such objections, including, but not limited to
the cost of any consultants hired and reasonable attorney fees. The objections
have been overruled and the Seller has filed an appeal of even date herewith.
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7. SELLER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Seller's obligation to sell the Property:
(a) Delivery by Buyer at Closing of the Purchase Price and the
executed Assignment and Assumption of Leases in the form attached hereto as
Exhibit G.
(b) Performance by Buyer as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Buyer pursuant to this Agreement.
In the event that the conditions in this Section 7 are not
satisfied, Seller may elect, at its sole discretion, to terminate this Agreement
or waive satisfaction of the condition and close escrow.
8. THE CLOSING
(a) The Closing hereunder shall be held and delivery of all items to
be made at the Closing under the terms of this Agreement shall be made at the
offices of the Title Company on April 30, 1998, or such other date prior thereto
as Buyer and Seller may mutually agree in writing (the "Closing Date"). Such
date may not be extended without the prior written approval of both Seller and
Buyer. In the event the Closing does not occur on or before the Closing Date,
the Title Company shall, subject to the provisions of Section 2, and unless it
is notified by both parties to the contrary, within five (5) days after the
Closing Date, return to the depositor thereof items which may have been
deposited pursuant to this Agreement. Any such return shall not, however,
relieve either party hereto of any liability it may have for its wrongful
failure to close. The delivery to the Escrow Agent of the Closing Documents, as
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hereinafter defined, by both parties and the Purchase Price by Buyer shall be
deemed sufficient to effect a closing under Section 8(a).
(b) At or before the Closing, Seller shall deliver to escrow the
following (collectively, the "Closing Documents"):
(i) special warranty deed - statutory form conveying to the Buyer
the Property as required by Section 3 above in the form attached hereto as
Exhibit I;
(ii) originals or, if Seller does not have originals, certified
true, complete and correct copies of all leases (and amendments thereto, if any)
in Seller's actual and physical possession covering any portion of the Property,
any security deposits relating thereto, and an executed Assignment and
Assumption of Lease in the form attached hereto as Exhibit G;
(iii) a Bill of Sale, in the form attached hereto as Exhibit J;
(iv) a certificate by Seller to the effect that all of the
representations, warranties and covenants set forth in this Agreement remain
true, correct and complete as of the Closing Date;
(v) a Certified Rent Roll in the form attached hereto as Exhibit
B, dated as of the date of Closing Date consistent with prior Certified Rent
Rolls and Tenant Estoppel Certificates;
(vi) such title affidavits or other documents as may be
reasonably required by the Title Company with copies thereof to the Buyer;
(vii) all rent records and related documents in the possession or
under the control of Seller. Such records may include a schedule of all cash
deposits and a check or credit to Buyer in the amount of such deposits,
including any interest thereon (to the extent that applicable state law or the
applicable lease requires payment of interest on such amounts) held by Seller at
the Closing under the Lease. To the extent any deposits are in a form other than
cash, such deposits shall be transferred to Buyer at Closing without recourse.
(viii) To the extent in Seller's possession or control, originals
or copies of all current site plans, surveys, architectural drawings, plans and
specifications, engineering plans and studies, floor plans, soil reports,
environmental studies, and landscape plans. To the extent such items are in
Seller's possession or control, Seller shall also deliver (i) originals (or
copies, if originals are not then available) of all then effective assignable
guaranties, warranties and/or payments and performance bonds made by any person
for the benefit of Seller with respect to the Property of any of its components,
together with an instrument assigning such guaranties and warranties to Buyer
and (ii) originals (or copies, if originals are not then available) of all
certificates, Licenses, permits authorizations and approvals issued for or with
respect to the Property by governmental and quasi-governmental authorities
having jurisdiction, to the extent such items are in Seller's possession or
control.
(ix) to the extent available, originals (or copies, if originals
are not available) of all documents and books and records necessary for the
continued operation of the Project, including without limitation, rent rolls,
lease files, rent records, escalation records and statements and maintenance
records;
(x) an original resolution of Seller authorizing the execution of
this Agreement, the conveyance documents and all other documents to be executed
by Seller and the performance by Seller hereunder;
(xi) Seller's Non-Foreign Certification in the form attached as
Exhibit C; and
(xii) notices to the tenants at the Property in the form attached
as Exhibit D, executed by Seller informing them of the change in ownership of
the Property.
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(xiii) an executed Assignment of Warranties, Guaranties and
Service Contracts in the form attached as Exhibit O.
Buyer may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
(c) At or before the Closing, Buyer shall deliver to escrow the
Purchase Price, as adjusted for prorations, and an executed Assignment and
Assumption of Leases in the form attached hereto as Exhibit G.
(d) Seller and Buyer shall each deposit such other instruments as are
reasonably required by the escrow holder to close the escrow and consummate the
purchase of the Property in accordance with the terms hereof.
(e) The following items shall be prorated separately for each property
identified on Schedule A as of 11:59 p.m. on the date immediately preceding the
Closing Date and the net amount thereof shall be added to or deducted from, as
the case may be, the amount of the Purchase Price to be paid at the Closing:
(i) general real estate, personal property and ad valorem taxes
and assessments for the current tax year of the Property. If any such taxes or
assessments are payable in installments, all installments due through the
Closing together with the accrued but unpaid portion of any other installments
not yet due as of the Closing shall be paid for by the Seller;
(ii) taxes, water, sewer and front foot benefit charges, and
charges for electricity, gas, telephone and other utilities and license fees;
(iii) rent and other charges under the Leases (to the extent
monies have actually been collected therefor), including any free rent under any
of the Leases; Buyer shall receive a credit at Closing for any free rent or
other tenant concessions due under any Lease subsequent to Closing;
(iv) all other income and expenses relating to the Property;
(v) any other items that are customarily prorated in transactions
of this nature; and
(vi) any and all cash security deposits, prepaid rent and all
interest earned thereon (to the extent interest is payable to tenant under
applicable state law or the applicable lease) shall be a credit to Buyer at
Closing. Seller shall be fully liable for any wages and other amounts due and
owing any employees at the Property which have accrued up to the date of
Closing. Seller shall retain and Buyer shall not be entitled to any credit for,
the deposits, if any, made by Seller in connection with the provision of
electric, sewer, water, telephone and other utility services to the Property.
For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property, and, therefore, entitled to the income therefrom and
responsible for the expenses thereof for the entire day upon which the Closing
occurs. All such prorations shall be made on the basis of the actual number of
days of the month which shall have elapsed as of the date of the Closing and
based upon the actual number of days in the month and a three hundred sixty-five
(365) day year. The amount of such prorations shall initially be performed by
Seller and mutually agreed to by the parties prior to Closing, but shall be
subject to adjustment in cash after the Closing outside of escrow as and when
complete and accurate information becomes available, if such information is not
available at the Closing. Seller and Buyer agree to cooperate and use their best
efforts to make such adjustments no later than sixty (60) days after the Closing
(except with respect to property taxes, which shall be adjusted within sixty
(60) days after the tax bills for the applicable period are received).
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Buyer shall, post Closing based on April 30, 1998 receivables, purchase
accounts receivable relating to the Property from Seller at a price equal to the
following percentage of such outstanding accounts receivable:
100% of the amount of accounts receivable less than 31 days old; and
0% of the amount of accounts receivable over 30 days old;
The term "Rent" as used herein shall mean all rents, including any
percentage rent and any accrued tax and operating expense escalation, charges
and other revenue of any kind generated from or in connection with the Leases.
Except as set forth in this Section 8(e)(vii), all items of income and expense
which accrue for the period prior to the Closing will be for the account of
Seller and all items of income and expense which accrue for the period on and
after the Closing will be for the account of Buyer. Buyer shall receive a credit
against the Purchase Price for all amounts of Rent which are allocable to the
period on and after the Closing and which have accrued as of the Closing Date,
including those Rents which have accrued but remain uncollected as of the date
of Closing. The provisions of this Section 8(e)(viii) shall survive the Closing.
(viii) With respect to expenses of the Property which are
chargeable to the tenants pursuant to the provisions of the Leases (the "CAM
Charges"), Seller shall determine (1) the amount of those expenses paid or
payable by Seller from January 1 in the year in which the Closing occurs through
the date of Closing or, with regard to taxes and assessments, the amount of the
proration thereof charged to Seller and (2) the amount tenants have paid to
Seller from January 1 in the year in which Closing occurs until the date of
Closing as the tenants' pro rata share of such tenant expenses. If accurate
allocations of CAM Charges, accounts receivable, or any other expenses cannot be
made at Closing because current bills are not obtainable, the parties shall
allocate such expenses at Closing on the best and most current information
available, subject to adjustment in cash as soon as reasonably possible after
the Closing when final bills or other evidence of the applicable expenses are
received, but such adjustment shall be made no later than six (6) months after
the Closing Date. Buyer shall also be entitled to a credit at Closing equal to
any CAM Charges for 1997 and prior years which are owing to any of the tenants
of the Property. The provisions of this Section 8(e)(vii) shall survive the
Closing.
(ix) Those items described in the Settlement Statement executed
by the parties hereto of even date herewith.
(f) The costs incurred in this transaction shall be allocated as
follows:
(i) Seller shall pay standard rates for the Title Policy. Buyer
shall pay for any title endorsements and extended coverage. Seller shall pay all
transfer taxes associated with the sale.
(ii) Buyer shall pay the cost of recording fees applicable to the
sale.
(iii) Buyer shall pay the cost of the updated survey.
(iv) Each party shall pay its own legal fees and expenses and 50%
of all escrow charges.
(v) Seller shall pay all costs associated with the Tax Deferred
Exchange (as described in Section 16 hereof).
(vi) Seller shall pay for local improvement district assessments,
farm or timber real property tax deferrals, if any.
(g) As additional consideration for Buyer's purchasing the Property
and paying the Purchase Price to the Seller, Seller hereby covenants and agrees
to remain fully liable for the performance and payment of all tenant
improvements and the payment of all leasing commissions currently due and owing
(including any delinquent amounts) under any of the Leases and under any
leasing/commission agreement up to the Closing Date except for amounts which
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shall hereafter be due and owing under any of the Leases or under any
leasing/commission agreement, including, without limitation, leasing commissions
with respect to any option to renew or extend the Leases, (it being expressly
understood and agreed that Buyer is assuming the obligations to perform or pay
for any tenant improvements, and to pay for any leasing commissions which shall
hereafter be owing under any renewals or extensions of the Leases or under any
leasing/commission agreement before or after the Closing Date which are approved
by Buyer).
(h) Each party hereto shall indemnify, defend and hold the other party
(together with its officers, directors, and employees) harmless from and against
all claims, demands, causes of actions, judgments, damages, costs and expenses
(including, without limitation, reasonable, actual attorneys' fees and courts
costs), deficiencies, settlements and investigations which relate to matters,
actions or omissions which arise out of or are based upon any of the following
during such parties' period of ownership, which for Seller shall be the period
of time prior to Closing and for Buyer shall be the period of time on or after
Closing:
(i) any obligation under any contracts, agreements and writings
entered into by or on behalf of such party in respect of the use, construction,
operation, ownership, occupancy or maintenance of any portion of the Property
arising out of an event occurring during such parties' period of ownership;
(ii) any accident, injury, death or damage whatsoever caused to
any person or entity or loss of property, occurring in or about the Property or
any part thereof, or on any other property connected with or adjacent thereto
during such parties' period of ownership; or
(iii) any breach of the covenant set forth in Section 8(g), or
with respect to any payment or performance obligation under any of the Leases
for tenant improvements or under any of the Leases and/or leasing/commission
agreements for leasing commissions which have heretofore accrued, which are now
due and owing or which shall hereafter accrue, as described in Section 8(g).
(iv) any breach of a representation or warranty set forth in this
Agreement.
(v) Notwithstanding the above but subject to the limitations on
Seller's indemnity set forth in section 8(g), Seller shall not be indemnified
for any leasing commissions which are payable subsequent to the Closing and
relate to leases in force on the date hereof, including those leasing
commissions listed on Schedule C, and Buyer shall not be obligated to indemnify
Seller for Service/Equipment Contracts (as hereinafter defined) which are not
assumed by the Buyer at Closing.
9. REPRESENTATIONS AND WARRANTIES. "To the best of Seller's knowledge" or
other references herein to Seller's knowledge means the actual (not
constructive) knowledge which Mike Duffy and Doug Kintzle have based upon
reasonable familiarity with the property records and continued involvement with
the Property. Notwithstanding the foregoing, the term "to the best of Seller's
knowledge" shall not be construed to imply any covenant that such individuals
have conducted any review of files or other inquiry in connection with the
transaction contemplated by this Agreement. Furthermore, the foregoing
individuals are acting in the capacity as agents or employees of Seller and
shall have no personal liability with respect to any representations, warranties
or covenants of Seller in this Agreement.
(a) Seller hereby represents and warrants to Buyer as of the date
hereof and as of the date of Closing as follows:
(i) Seller is a corporation duly organized and validly existing
under the laws of the State of Iowa and is in good standing under the laws of
the State of Oregon.
(ii) Ownership.
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(A) Seller is the owner of the Property of record and in
fact, legally and beneficially, and to the best of Seller's knowledge, Seller
has good, marketable and insurable title to the Property.
(B) No person or entity other than Seller and Seller's
affiliates has any interest in the legal or beneficial title to the Property;
there are no options to purchase the Property which are effective, nor has
Seller previously entered into any other contract of sale or agreement of any
kind with a party other than Buyer which is presently effective and which will
not be terminated before the date of this Agreement. After the date hereof
Seller will not enter into any agreement or contract or negotiate with any party
other than Buyer with respect to the sale of the Property, nor enter into
financial arrangements of any kind with respect to the Property nor will Seller
pledge or assign any right, title, interest in or to the Property or any part
thereof to any person or entity.
(iii) Leases.
(A) As of the date of the Agreement there are no leases,
subleases, licenses or other rental agreements or occupancy agreements (written
or verbal) which grant any possessory interest in and to any space situated on
or in any of the Property or that otherwise give rights with regard to use of
any portions of any of the Property other than the Leases described in the
Certified Rent Roll, as set forth in Exhibit B attached hereto (said leases,
together with any and all amendments, modifications and supplements thereto and
guarantees thereof, are herein referred to collectively as the "Leases");
(B) The copies of the Leases provided to Buyer are true,
accurate and complete, are in full force and effect and none of them has been
modified, amended or extended;
(C) There are no security deposits or other deposits other
than those listed on Schedule D.
(iv) Service and Management Contracts. To the best of Seller's
knowledge, except as set forth on Schedule E, neither Seller nor any other party
has entered into any construction, design, engineering, service, maintenance,
supply, brokerage/leasing agreements, employee agreements, management contracts
or Leases of personal property (collectively, "Service/Equipment Contracts")
affecting the construction, use, ownership, maintenance and/or operation of the
Property that will continue subsequent to the Closing. Seller shall terminate,
at Seller's sole cost and expense, all Service/Equipment Contracts which Buyer
does not elect to assume in writing prior to the expiration of the Study Period.
All work required to be performed by Seller in connection with all Service
Equipment Contracts or other contracts or requirements with respect to periods
prior to the date of Closing has been or will be fully performed and that all
such bills in connection with such work will be Seller's responsibility. Seller
is not in default and to best of Seller's knowledge no other party is in default
under the Service/Equipment Contracts.
(v) Hazardous Substances. To the best of Seller's knowledge, (i)
the Property has not been used for the generation, treatment, storage or
disposal of any hazardous substances during the period in which Seller has owned
the Property; and (ii) there are no underground storage tanks located on or
under the Property. For the purposes of this Section 9(a)(v), "hazardous
substances" shall include "hazardous substances" as defined in the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss. 9601 et. seq., and regulations adopted pursuant to said Act, or
any similar environmental protection law of the state in which the Property is
located or its political subdivisions.
(vi) Ability to Perform. Seller has full power to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and this Agreement constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms. No order,
permission, consent, approval, license, authorization, registration or
validation of, or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is required
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in connection with, the execution, delivery and performance of this Agreement by
Seller or the taking by Seller of any action contemplated by this Agreement.
The execution and delivery of this Agreement and the closing documents and
the consummation of the transactions contemplated hereby will not result in or
constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach, or
violation, of the organizational documents of Seller or any of the following
with respect to Seller or the Property: any agreements, contracts, leases,
promissory notes, conditional sales contracts, commitments, indentures,
mortgages, deeds of trust, or other agreements, instruments or arrangements to
which Seller is a party or by which it or the Property is bound and that relate
to the Property; (ii) a violation of or conflict with any term or provision of
any judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to Seller or the Property; (iii) the creation or
imposition of any lien, charge or encumbrance on the Property; or (iv) not
require approval, waiver or authorization from a governmental or regulatory body
which has not been obtained.
(vii) Compliance with Laws, Etc. Neither the entering into of
this Agreement nor the consummation of the transaction contemplated hereby will
constitute or result in a violation or breach by Seller of any judgment, order,
writ, injunction or decree issued against or imposed upon it, or will result in
a violation of any applicable law, order, rule or regulation of any governmental
authority. There are no actions, suits, proceedings, arbitrations or
investigations pending or threatened against, relating to or affecting Seller or
the Property which might interfere in a material respect with the transaction
contemplated by this Agreement, become a cloud on the title to the Property or
any portion thereof or otherwise affect the Property or Seller's ability to
consummate the transaction contemplated hereby.
(viii) No Violation Notice. Except as set forth in Schedule F,
Seller has not received notices:
(A) from any federal, state, county or municipal authority
alleging any fire, health, safety, building, pollution, environmental, zoning or
other violation of law in respect of the Property or any part thereof,
including, without limitation, the occupancy or operation thereof, which has not
been entirely corrected;
(B) concerning the possible or anticipated condemnation of
any part of the Property, or the widening, change of grade or limitation on use
of streets abutting the same or concerning any special taxes or assessments
levied or to be levied against the Property or any part thereof;
(C) concerning any change in the zoning or other land use
classification of the Property or any part thereof.
(D) of any pending insurance claim.
(E) from any governmental authority that any licenses,
permits, certificates, easements and rights of way, including proof of
dedication, required from any authorities having jurisdiction over the Property
or from private parties for the existing use, occupancy and operation of the
Property and to insure vehicular and pedestrian ingress to and egress from the
Property are in violation of any governmental laws or regulations, which has not
been corrected or will not be corrected by Closing.
(ix) No Management Contracts, Employment Contracts, Unions,
Pension Plans. Seller has not entered into any management contracts, employment
contracts or labor union contracts and has not established any retirement,
health insurance, vacation, pension, profit sharing or other benefit plans
relating to the operation or maintenance of the Property for which Buyer shall
have any liability or obligation. Seller has no employees at the Property, other
than at-will employees who shall remain the responsibility of Seller and as to
whom Buyer shall have no liability or obligation whatsoever. As of the Closing,
there shall be no employees working at the Property. Seller shall have paid or
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caused to be paid to all employees of the Seller all salary and any other
payments which shall be payable on account of each such employee for such period
through Closing. Seller agrees to defend, indemnify and hold Buyer harmless from
any loss, expense, cost and/or damage (including without limitation reasonable
attorneys' fees and costs incurred in the defense of such claims) resulting from
claims well-founded or unfounded, by or on behalf of persons who are to have
been employees of Seller on or prior to the Closing arising out of any matter,
cause or thing prior to the Closing or any claims which may have accrued prior
to the Closing.
(x) Seller has not received any written notice of the termination
or impairment of the furnishing of services to the Property of water, sewer, gas
(if any), electric, telephone, drainage and other such utility services.
(xi) Assessments. Seller has not received notice that assessments
for public improvements have been made against the Property which are unpaid,
including, without limitation, those for construction of sewer and water lines,
streets, sidewalks and curbs. To the best of Seller's knowledge, there are no
pending or proposed special assessments affecting or which may affect the
Property or any portion thereof.
(xii) Pre-Closing Deliveries Accurate. Except with respect to the
Certified Rent Roll, to the best of Seller's knowledge, all of the documents,
writings and other matters delivered by Seller to Buyer pursuant to Section 4
and information provided to Buyer pursuant to the terms of this Agreement, as of
the date hereof, and as of the Closing, are true, accurate and complete in all
material respects and accurately indicate all of the information referred to
therein, are not misleading in any respect, and none of such disclosures
misstated any material facts or omitted to state any material facts necessary to
make the statements made, in the light of the circumstances under which they
were made, not misleading. This representation shall only be applicable to due
diligence items listed on Schedule B and not any items delivered thereafter.
(xiii) Miscellaneous Representations and Warranties.
(A) Seller agrees to conduct the business operations of the
Property in the Seller's usual and normal manner until the Closing. Seller shall
not, without the prior written consent thereto of Buyer, make (or permit) any
physical change in the Property.
(B) All bills and claims for labor performed and materials
furnished to or for the benefit of the Property for all periods prior to the
Closing date have been paid by Seller or will be paid by Seller as of the
Closing.
(C) (Intentionally Deleted)
(D) Seller is not a "foreign person", as defined in the
Internal Revenue Code.
(E) The premiums are paid and current for replacement cost
insurance policies on the Property and, to the best of Seller's knowledge,
insurance policies are in full force and effect.
(xiv) All documents executed by Seller which are to be delivered
to Buyer at the Closing are or at the Closing will be duly authorized, executed
and delivered by Seller, are or at the Closing will be legal, valid, and binding
obligations of Seller, are sufficient to convey title, and do not violate any
provisions of any agreement to which Seller is a party or to which it is
subject.
(xv) Additional Representations and Warranties Regarding Parcels
of Land with No Improvements: (Intentionally Deleted)
(xvi) Additional Representation and Warranties Regarding Land
Under a Ground Lease: (Intentionally Deleted)
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(xvii) Additional Representations and Warranties Regarding
Properties Where Improvements Are Under Construction. (Intentionally Deleted)
(xviii) Additional Representations and Warranties Regarding
Properties with Covenants, Conditions and Restrictions.
Seller represents and warrants that (i) to the best of
Seller's knowledge that the Property conveyed pursuant to the Agreement is not
in default in the performance of any covenant, condition or restriction
contained in any Declaration of Covenants, Conditions or Restrictions, as
amended, as more fully described in the Title Policy ("CCRs"), and no condition
or circumstance exists which, with the giving of notice or the passage of time,
would constitute a default thereunder; (ii) no assessments, payments, fees or
expenses are presently due and payable under such CCRs; (iii) Seller hereby
represents and warrants that none of the property conveyed hereby is subject to
the terms of a repurchase option, right of first refusal or other option to
purchase such property, or declarant's right of approval (individually, a
"Right"; collectively, the "Rights"), which Right has not lapsed, fully and
irrevocably, prior to being exercised by the beneficiary thereof. This
representation and warranty shall survive for the period of any applicable
statute of limitations with regard to such Rights and shall be null and void in
the event any such action is triggered by an affirmative action of Buyer
(provided, however, the foregoing is not intended to mean that the statute of
limitations commences on the date hereof); (iv) Buyer and Seller acknowledge
that all setback violations and landscaping violations with regard to the
Properties, if any, have been satisfied by credits at Closing on the Settlement
Statement. Buyer hereby agrees that upon assumption of title it will not take
action to initiate any such option or revoke approval against the Property; in
such event this representation shall be null and void and Buyer shall not be
entitled to claim a Seller default for any action taken by Buyer.
(b) Buyer hereby represents and warrants to Seller as follows: (i)
Buyer is a California limited partnership, duly organized and validly existing
under the laws of the State of California; all documents executed by Buyer which
are to be delivered to Seller at Closing are or at the Closing will be duly
authorized, executed, and delivered by Buyer, and are or at the Closing will be
legal, valid, and binding obligations of Buyer, and do not and at the Closing
will not violate any provisions of any agreement to which Buyer is a party or to
which it is subject; and (ii) Buyer shall furnish all of the funds for the
purchase of the Property (other than funds supplied by institutional lenders
which will hold valid mortgage liens against the Property) and such funds will
not be from sources of funds or properties derived from any unlawful activity.
10. RESPONSIBILITY FOR VIOLATIONS. All notices of violations of laws,
ordinances, or regulations ("Violations of Law"), which are received prior to
the Closing from any governmental department, agency or bureau having
jurisdiction as to conditions affecting the Property shall be remedied or
complied with by Seller. If any such violations are subject to challenge or
objection by Seller or are the obligation of any tenant under the terms of such
tenant's lease, Buyer shall cooperate with Seller to defend such challenge
and/or require tenant to cure such violation. Seller shall indemnify the Buyer
for the reasonable third-party cost of such challenge incurred by Buyer,
including reasonable attorney's fees. These obligations shall survive closing on
the part of both parties.
11. MAINTENANCE OF INSURANCE. Until the Closing, Seller shall maintain its
present insurance on the Property. The risk of loss in and to the Property shall
remain vested in Seller until the recordation of the Deed to Buyer.
12. CASUALTY OR CONDEMNATION. If prior to the Closing, the Property or any
"material" portion thereof is damaged or destroyed by fire or casualty, or any
part of the Property is taken or threatened to be taken by eminent domain by any
governmental entity, then Buyer shall have the option, exercisable by written
notice given to Seller at or prior to the Closing, either to (a) terminate this
Agreement, whereupon all obligations of all parties hereto shall cease, the
Deposit shall be returned to Buyer and this Agreement shall be void and without
recourse to the parties hereto except for provisions which are expressly stated
to survive such termination; or (b) proceed with the purchase of the Property,
and in such case, unless Seller shall have previously restored the Property to
its condition prior to the occurrence of any such damage or destruction, Seller
shall pay over or assign to Buyer, without recourse, all amounts received or due
(plus an amount equal to the sum of any deductible under any insurance policy
covering the Property and any additional proceeds which shall be necessary to
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effect such restoration) from, and all claims against, any insurance company or
governmental entity as a result of such destruction or taking, together with any
additional proceeds which shall be necessary to effect such restoration. Within
five (5) days after receipt of written notice of such casualty or condemnation,
Buyer will advise Seller in writing whether Buyer desires to proceed with this
transaction in light of such casualty or condemnation. The term "material" as
used in this Section 12 shall mean damage or destruction in an amount equal to
or greater than 5% of the Purchase Price.
13. INDEMNIFICATION. Each party hereby agrees to indemnify the other party
and hold it harmless from and against any and all claims, demands, liabilities,
costs, expenses, penalties, damages and losses, including, without limitation,
reasonable attorneys' fees, resulting from any misrepresentations or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or exhibit given or delivered to the other pursuant to or
in connection with this Agreement except as provided herein.
14. CONDITION OF PROPERTY. At or before the Approval Date, Buyer will have
approved the physical and environmental characteristics and condition of the
Property, as well as the economic characteristics of the Property. Buyer hereby
waives any and all defects in the physical, environmental and economic
characteristics and condition of the Property which would be disclosed by such
inspection which exist as of the Approval Date except such waiver does not
extend to or negate the effect of any matters which are covered by any
representation, warranty or covenant of Seller in Section 9 of this Agreement or
in any of the conveyance documents, Buyer further acknowledges that except as
set forth in this Agreement, neither Seller nor any of Seller's officers or
directors, nor Seller's employees, agents, representatives, or any other person
or entity acting on behalf of Seller (hereafter, for the purpose of this
Section, such persons and entities are individually and collectively referred to
as the "Seller") have made any representations, warranties or agreements
(express or implied) by or on behalf of Seller as to any matters concerning the
Property, the economic results to be obtained or predicted, or the present use
thereof or the suitability for Buyer's intended use of the Property, including,
without limitation, the following: suitability of the topography; the
availability of water rights or utilities; the present and future zoning,
subdivision and any and all other land use matters; the condition of the soil,
subsoil, or groundwater; the purpose(s) to which the Property is suited;
drainage; flooding; access to public roads; or proposed routes of roads or
extensions thereof. Buyer acknowledges and agrees that except for the
representations and warranties contained herein and in the conveyance documents,
the Property is to be purchased, conveyed and accepted by Buyer in its present
condition, "as is" and that no patent or latent defect in the physical or
environmental condition of the Property whether or not known or discovered,
shall affect the rights of either party hereto. Except as set forth in Section
9, any documents furnished to Buyer by Seller relating to the Property
including, without limitation, service agreements, management contracts, maps,
surveys, studies, pro formas, reports and other information shall be deemed
furnished as a courtesy to Buyer but without warranty from Seller. All work done
by Buyer in connection with preparing the Property for the uses intended by
Buyer including any and all fees, studies, reports, approvals, plans, surveys,
permits, and any expenses whatsoever necessary or desirable in connection with
Buyer's acquiring, developing, using and/or operating the Property shall be
obtained and paid for by, and shall be the sole responsibility of Buyer. Buyer
has investigated and has knowledge of operative or proposed governmental land
use laws and regulations to which the Property may be subject and shall acquire
the Property upon the basis of its review and determination of the applicability
and effect of such laws and regulations.
Except for the representations and warranties in Section 9 of
this Agreement, Buyer has neither received nor relied upon any representations
concerning such land use laws and regulations from Seller.
Except for the representations, warranties and indemnities
provided by Seller contained herein and in the documents delivered at Closing,
Buyer, on behalf of itself and its employees, agents, successors and assigns
attorneys and other representatives, and each of them, hereby releases Seller
from and against any and all claims, demands, causes of action, obligations,
damages and liabilities of any nature whatsoever, directly or indirectly,
arising out of or related to the condition of the Property.
By signing in the space provided below in this Section 14, Buyer
acknowledges that it has read and understood the provisions of this Section 14.
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BUYER:
------
By: PS BUSINESS PARKS, INC.,
a California corporation, General Partner
By:/s/ Ronald L. Havner, Jr.
------------------------------
Ronald L. Havner, Jr.
President and Chief Executive Officer
15. POSSESSION. Buyer shall have and as a condition precedent to Closing,
the right of possession on the Closing Date, provided, however, that Seller
shall allow authorized representatives of Buyer reasonable access to the
Property for the purposes of satisfying Buyer with respect to satisfaction of
any conditions precedent to the Closing contained herein.
16. TAX-DEFERRED EXCHANGE. Buyer and Seller agree that, at Seller's sole
election, this transaction shall be structured as an exchange of like-kind
properties under Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations and proposed regulations thereunder. The
parties agree that if Seller wishes to make such election, it must do so prior
to the Closing Date. If Seller so elects, Buyer shall reasonably cooperate with
Seller, provided any such exchange is consummated pursuant to an agreement that
is mutually acceptable to Buyer and Seller and which shall be executed and
delivered on or before the Closing Date. Seller shall in all events be
responsible for all costs and expenses related to the Section 1031 exchange and
shall fully indemnify, defend and hold Buyer harmless from and against any and
all liability, claims, damages, expenses (including reasonable attorneys' and
paralegal fees and reasonable attorneys' and paralegal fees on appeal),
proceedings and causes of action of any kind or nature whatsoever arising out
of, connected with or in any manner related to such 1031 exchange that would not
have been incurred by Buyer if the transaction were a purchase for cash. The
provisions of the immediately preceding sentence shall survive closing and the
transfer of title to subject Property to Buyer. Notwithstanding anything to the
contrary contained in this Section, any such Section 1031 exchange shall be
consummated through the use of a facilitator or intermediary so that Buyer shall
in no event be requested or required to acquire title to any property other than
the Property.
17. MISCELLANEOUS.
(a) Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and addressed as follows:
If to Seller:
Principal Mutual Life Insurance Company
c/o Law Department
711 High Street
Des Moines, Iowa 50392-0301
Attn: Dennis D. Ballard
With a copy to:
Principal Mutual Life Insurance Company
c/o CRE-Equities
711 High Street
Des Moines, Iowa 50392-1370
Attn: Michael S. Duffy
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If to Buyer:
PS Business Parks, Inc.
701 Western Ave., Suite 200
Glendale, CA 91201
Attention: Ronald L. Havner, Jr.
with a copy to:
PS Business Parks, Inc.
701 Western Avenue, Suite 200
Glendale, California 91201
Attention: David Goldberg, Esq., General Counsel
and a courtesy copy which shall not be required for valid
notice to:
Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Steven S. Snider, Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed to be effective: (i) one (1) business day after deposit with the courier
if sent by Federal Express or other recognized overnight delivery service; or
(ii) upon receipt if accomplished by hand delivery or by confirmed telecopied
delivery. Either party may, from time to time, by notice in writing served upon
the other party, in the same manner as prescribed in this Section designate a
different mailing address or a different person to which all such notices are
thereafter to be addressed.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any licensed real estate broker, entity,
agent, commission salesperson, or other person who will claim a right to
compensation or a commission or finder's fee as a procuring cause of the sale
contemplated herein, except for Chadwick, Saylor & Co., Inc., whose commission
shall be paid by Buyer. In the event that any company, firm, broker, agent,
commission salesperson or finder perfects a claim for a commission or finder's
fee based upon any such contract, dealings or communication, the party through
whom the company, firm, broker, agent, commission salesperson or finder makes
his claim shall be responsible for said commission or fee and all costs and
expenses (including reasonable attorneys' fees) incurred by the other party in
defending against the same. No commission shall be paid or become payable unless
the Closing actually occurs. The provisions of this Subsection (b) shall survive
Closing and any termination, cancellation or recision of this Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns; provided further, however, Seller's consent
to an assignment of Buyer's rights and delegation of its obligations hereunder
shall not be required with respect to an assignment of this Agreement by Buyer
to any person or any corporation, general partnership, limited partnership,
limited liability company or other lawful entity which is controlled by or under
common control with Buyer.
(d) Amendments and Terminations. Except as otherwise provided herein,
this Agreement may be amended or modified by, and only by, a written instrument
executed by Seller and Buyer.
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(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
(f) Merger of Prior Agreements. This Agreement supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
(g) Enforcement. In the event either party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees. Buyer and Seller both acknowledge
each has been advised by counsel as to their respective rights, duties and
obligations in this Agreement and have had ample opportunity to negotiate same.
Thus, both Buyer and Seller acknowledge that any ambiguity in this Agreement
should not necessarily be resolved against the drafter of this Agreement.
(h) Time of the Essence. Time is of the essence of this Agreement.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but such counterparts when taken
together shall constitute but one Agreement.
(j) Survivability. Except as otherwise provided herein, the covenants
contained in this Agreement shall survive the closing of the purchase and sale
and shall not be deemed merged in the deed, but shall remain in full force and
effect.
(k) No Recordation. Neither Seller nor Buyer shall record this
Agreement or memorandum thereof in or among the land or chattel records of any
jurisdiction.
(l) Proper Execution. The submission by Seller to Buyer of this
Agreement in unsigned form shall have no binding force and effect, shall not
constitute an option, and shall not confer any rights upon Buyer or impose any
obligations on Seller irrespective of any reliance thereon, change of position
or partial performance until Seller shall have executed this Agreement and the
Deposit shall have been received by the Title Company. Notwithstanding the
foregoing sentence, Seller's submission to Buyer of this Agreement shall be
deemed withdrawn, revoked and incapable of being executed by Buyer in the event
Buyer has not returned a duly executed original Agreement to Seller on or before
5:00 p.m. (EST) on April 30, 1998.
(m) Personal Liability. There shall be no personal liability imposed
on the individuals who have executed this Agreement (or the attached exhibits)
(n) Survival of Representations. Except as expressly provided
otherwise in this Agreement, all representations and warranties made by the
parties herein or in any instrument or document furnished in connection herewith
(except warranties of title in the conveyance documents) shall survive for a
period of one (1) year from the date of Closing and any action thereon must be
commenced within such period or they are deemed waived and released; provided,
however, Representation 9(a)(iii) regarding leases shall survive for the
remaining term of any lease (excluding renewals) for which Buyer did not receive
a tenant estoppel executed prior to Closing; however, to the extent that tenant
estoppels are obtained post closing, the survival period for such leases shall
be one (1) year from the date of Closing.
(o) Dates. Whenever used herein, unless expressly provided otherwise,
the term "days" shall mean consecutive calendar days, except that if the
expiration of any time period measured in days occurs on a Saturday, Sunday,
legal holiday or other day when federal offices are closed in Washington, D.C.,
such expiration shall automatically be extended to the next business day.
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(p) Prior to the Closing, information received in connection with the
Property shall be kept strictly confidential and shall not, without the prior
consent of the other party, be disclosed by such other party or used for any
purpose other than evaluating the Property except in the event of litigation
between the parties hereto, Buyer and Seller agree that such information shall
only be transmitted to Buyer's and Seller's respective officers, directors,
trustees, employees, attorneys, accountants, contractors, consultants, advisors
and agents who need to know such information for purposes of evaluating the
Property and transactions contemplated under this Agreement. The provisions of
this Section 17(p) shall not apply to any information which is a matter of
public record or obtainable from other sources and shall not prevent either
Buyer or Seller from complying with laws, rules, regulations and court orders,
including, without limitation, governmental regulatory, disclosure, tax and
reporting requirements.
(q) Liability of Sellers. Any liability of Seller for damages for a
breach of any representations, warranties or covenants in the Agreement shall be
joint and several liability.
18. ESCROW AGENT. (Intentionally Deleted)
19. SELLER'S ADDITIONAL AGREEMENTS RELATED TO PROPERTIES WITH IMPROVEMENTS
UNDER CONSTRUCTION. (Intentionally deleted)
20. TANK REMOVAL INDEMNITY. Seller shall indemnify Buyer for any and all
losses, liabilities and costs (including reasonable attorneys' fees) relating to
the removal of the water tank and test required by Spencer Environmental's plan
attached as Exhibit XX with respect to space occupied by Epitope at the
Creekside Property until such time, if any, that Seller delivers to Buyer the
Indemnification Agreement of Epitope in the form attached as Exhibit XX.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
-------
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY, an Iowa corporation
By: /s/ Jon C. Heiny
-------------------------
Jon C. Heiny
Its: Counsel
By: /s/ Shannon G. Holz
-------------------------
Shannon G. Holz
Its: Counsel
BUYER:
------
PS BUSINESS PARKS, L.P.,
a California Limited Partnership
By: PS BUSINESS PARKS, INC.,
a California corporation, General Partner
By:/s/ Ronald L. Havner, Jr.
------------------------------
Ronald L. Havner, Jr.
President and Chief Executive Officer
Buyer's Social Security Number or Tax
Identification Number:95-4609260
19
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PETULA ASSOCIATES., LTD.,
an Iowa corporation
By: /s/ Michael S. Duffy
-------------------------
Michael S. Duffy
Its: Vice President
By: /s/ Dennis D. Ballard
-------------------------
Dennis D. Ballard
Its: Counsel
20
Exhibit 10.3
REAL ESTATE PURCHASE AND SALE AGREEMENT
by and between
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SELLER
and
TPLP OFFICE PARK PROPERTIES, a Texas limited partnership
BUYER
Exhibits to this Agreement have been omitted and will be furnished to the
Securities and Exchange Commission upon Request
<PAGE>
INDEX TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
1. Property Included in Sale...............................................1
2. Purchase Price/Remedies.................................................1
3. Title to the Property...................................................2
4. Seller's Pre-Closing Deliveries.........................................2
5. Buyer's Due Diligence...................................................3
6. Buyer's Conditions to Closing...........................................4
7. Seller's Conditions to Closing..........................................4
8. The Closing.............................................................4
9. Representations and Warranties..........................................9
10. Responsibility for Violations..........................................14
11. Maintenance of Insurance...............................................14
12. Casualty or Condemnation...............................................14
13. Indemnification........................................................14
14. Condition of Property..................................................15
<PAGE>
15. Possession.............................................................15
16. Tax-Deferred Exchange..................................................15
17. Miscellaneous..........................................................16
18. Escrow Agent...........................................................19
3
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REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (the "Agreement") is made as
of the 30th day of April, 1998 (the "Agreement Date") which shall be the later
to occur of execution of this Agreement by Buyer or Seller by and between
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, an Iowa corporation, herein referred to
as "Seller", and TPLP OFFICE PARK PROPERTIES, a Texas limited partnership,
herein referred to as "Buyer."
R E C I T A L S:
WHEREAS, Seller desires to sell certain improved real property along with
certain related personal and intangible property, and Buyer desires to purchase
said real, personal and intangible property on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Buyer and Seller
hereby agree as follows:
1. Property Included in Sale. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, at the price and upon
the terms and conditions set forth in this Agreement, the following:
(a) that certain real property more particularly described in Exhibit
A attached hereto (the "Real Property");
(b) all right, title and interest of Seller in all rights, privileges,
alleys, strips and gores, rights of way and easements appurtenant to the Real
Property, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances as well as all development rights, air rights, water,
water rights (and water stock, if any) relating to the Real Property and any
easements, rights-of-way or other appurtenances used in connection with the
beneficial use and enjoyment of the Real Property;
(c) all improvements and fixtures located on the Real Property,
including all buildings and structures presently located on the Real Property
listed on Schedule A, as more particularly described in Exhibit A, attached
hereto, and all related facilities, amenities, all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Real
Property, such as heating and air conditioning systems and facilities used to
provide any utility services, refrigeration, ventilation, garbage disposal,
recreation or other services on the Real Property (all of which are collectively
referred to as the "Improvements");
(d) all tangible or intangible personal property owned by Seller and
used in the ownership, use or operation of the Real Property and/or
Improvements, including, without limitation, the right to use any trade name now
used in connection with the Real Property (the "Personal Property") and any
contract or lease rights, agreements, utility contracts or other rights relating
to the ownership, use and operation of the Real Property.
(e) all of Seller's interest as lessor in all leases covering the Real
Property and Improvements, including all tenant security and other deposits and
interest earned thereon and prepaid rent and interest earned thereon. Interest
on deposits and prepaid rents shall only be transferred to Buyer if applicable
state law or the applicable lease requires that such funds be held in
interest-bearing accounts.
All of the items referred to in Subsections (a), (b), (c), (d) and (e)
above are hereinafter collectively referred to as the "Property."
2. PURCHASE PRICE/REMEDIES.MEDIES
(a) The total purchase price (the "Purchase Price") for the Property
is Twenty-one Million Seven Hundred Fifty-eight Thousand Eight Hundred Nineteen
and No/100 Dollars ($21,758,819.00). The Purchase Price is payable by wire
transfer of immediately available funds in U.S. dollars via the federal bank
wire transfer system to Chicago Title Insurance Company, San Francisco,
California (the "Title Company") at Closing.
<PAGE>
(b) (Intentionally Deleted)
(c) (Intentionally Deleted)
(d) (Intentionally Deleted)
(e) (Intentionally Deleted)
(f) (Intentionally Deleted)
3. TITLE TO THE PROPERTY.
(a) At the Closing, Seller shall convey to Buyer and Buyer shall
accept title to the Property (in fee simple) in accordance with the terms of
this Agreement, and Buyer's obligation to accept said title shall be conditioned
upon Buyer then being conveyed good and clear record, marketable and insurable
title in fee simple to the Real Property, all rights, privileges and easements
appurtenant thereto, and to the Improvements, by duly executed and acknowledged
special warranty deed. It shall be a condition precedent to Buyer's obligation
to close hereunder that the Title Company stands ready to issue, at the Closing
a TLTA standard full coverage form Owner's Policy of Title Insurance with
extended coverage and all endorsements reasonably requested by Buyer, insuring
Buyer's interest in the Property, dated the date of Closing, with liability in
the amount of the Purchase Price, subject only to the Permitted Exceptions (the
"Title Policy"). The Title Policy shall insure against all mechanics' liens and
shall have full survey coverage and shall be an extended coverage policy
insuring against, among other things, mechanics' liens, easements and claims of
parties in possession not shown by the public records with all general and
standard exceptions deleted. Seller shall pay the cost of the standard owner's
policy. Buyer shall bear the expense for extended coverage and the cost of any
endorsements requested by Buyer.
(b) Buyer shall, prior to the Approval Date, provide Seller with
Buyer's objections to any matters disclosed by the Commitment, Title Documents
or Survey. All matters shown on the Title Exceptions which are not objected to
by Buyer prior to the Approval Date shall be "Permitted Exceptions". Seller
agrees to use its best efforts to satisfy such objections noted by Buyer,
provided that (i) Seller shall obtain a satisfaction and release or bond over
any monetary liens, in a manner reasonably satisfactory to Buyer, including,
without limitation, any and all mortgages, mechanics' liens and judgment liens
(collectively, "Monetary Liens"); and (ii) Seller shall not be obligated to
litigate or spend more than $10,000.00 in the aggregate to cure non-monetary
lien objections or to seek any cure which cannot be obtained within fifteen (15)
days. Seller shall notify Buyer of Seller's proposed actions to satisfy such
objections, and shall have up to the Closing Date to satisfy such objections and
the Closing Date shall be extended a reasonable period of time, not to exceed
fifteen (15) days, if necessary to allow such cure period. If, despite its best
efforts to do so, Seller cannot satisfy such objections (other than the Monetary
Liens, which shall be satisfied or bonded over by Seller) on or before the
expiration of such additional fifteen (15) day period, Buyer shall have the
option to waive its objection(s) to such title and/or other defect(s) and
proceed to Closing or terminate this transaction. Buyer acknowledges that the
termination of the transaction pursuant to this section of the Agreement shall
not entitle Buyer to receive reimbursement for third party expenses or to seek
specific performance or any other legal or equitable remedy against Seller.
4. SELLER'S PRE-CLOSING DELIVERIES.
Buyer acknowledges that prior to execution of this Agreement Seller
has delivered the items listed in Schedule B for Buyer's review and approval.
Seller shall be under no further obligation to deliver additional items to Buyer
unless Buyer requests such items prior to the Approval Date and such additional
items are reasonably necessary to complete Buyer's due diligence. Seller shall
only be obligated to provide such additional items if: (i) the items requested
are in Seller's or Seller's property manager's actual possession or control;
(ii) the items are not privileged; and (iii) Buyer has identified the specific
property for which the item is requested.
2
<PAGE>
5. BUYER'S DUE DILIGENCE. Buyer shall be allowed to conduct the following
due diligence prior to purchasing the Property:
(a) Review and approve title to the Property as shown on a preliminary
title report (the "Title Report") from the Title Company.
(b) Review and approve the operating statements of the Property for
the previous two (2) calendar years as well as the current calendar year-to-date
and audited financial statements for 1997, provided same are available and in
Seller's actual possession. Buyer acknowledges that no audited financial
statements are available from Seller for the properties listed on Schedule A.
(c) Review and approve true, correct and complete copies of all tenant
leases relating to the Property and a certified rent roll of even date herewith
in the form attached hereto as Exhibit B, (the "Certified Rent Roll").
(d) Review and approve copies of any site plans and building drawings
and specifications and existing environmental reports in the possession or
control of the Seller.
(e) Review and approve copies of any maintenance and service
agreements currently in force.
(f) Review and approve an as-built survey showing the location of all
improvements and recorded easements on the Property.
(g) Performance of a feasibility study of the Property, including, but
not limited to, review and approval of the physical and environmental
characteristics and condition of the Property and performance of marketing and
feasibility studies, structural and engineering investigations, auditing of
books and records of the Property, financial analyses and verification of
existing zoning.. Seller agrees to provide Buyer and its agents and
representatives reasonable access to the Property and to all books, records,
files, financial data, leases and contracts relating to the Property and to
reasonably cooperate in such examinations and to cause the property manager to
reasonably cooperate in such examinations following the Agreement Date for the
purpose of performing, at Buyer's sole cost and expense, the above-referenced
studies, physical inspections, investigations and tests on the Property (the
"Tests") provided that no such tests shall be conducted without at least two (2)
business days prior written notice to Seller and if any such tests are invasive
Seller's prior approval of such Tests, which approval shall be in Seller's sole
and absolute discretion. Notwithstanding anything herein to the contrary, Buyer
shall not need Seller's further consent to conduct Phase I environmental
studies. Buyer's access is further conditioned on Buyer complying with the terms
of the Access and Indemnification Agreement attached hereto as Exhibit E. Buyer
shall be required to conduct such Tests in a manner as to not disturb or
interfere with the current use of the Property and upon completion of such
Tests, Buyer agrees at its sole cost to restore the Property to the condition it
was in immediately prior to such Tests, including, but not limited to the prompt
removal of anything placed on the Property in connection with such Tests. Copies
of any third party reports, letters or other written information generated as a
result of such Tests shall be provided to Seller if the sale contemplated by
this Agreement does not close for any reason other than Seller's default. Buyer
shall indemnify, defend (with counsel reasonably satisfactory to Seller),
protect, and hold Seller harmless from and against any and all liability, loss,
cost, damage, or expense (including, without limitation, reasonable attorney's
fees and costs) which Seller may sustain or incur by reason of or in connection
with any Tests made by Buyer or Buyer's agents or contractors relating to or in
connection with the Property, or entries by Buyer or its agents or contractors
onto the Property. Notwithstanding any provision to the contrary in this
Agreement, the indemnity obligations of Buyer under this Agreement shall survive
any termination of this Agreement or the delivery of the deed and the transfer
of title pursuant to this Agreement.
The items referred to above in Subsections 5(a)-(g) and those
listed on Schedule B shall be collectively referred to as the "Due Diligence
Items." Buyer acknowledges that Seller has provided Buyer with the Due Diligence
Items prior to execution of this Agreement.
3
<PAGE>
The date this Agreement is executed by both parties shall be the
"Approval Date" and upon such execution there shall be a conclusive presumption
that Buyer has approved the Due Diligence Items and the physical and
environmental condition of the Property. Notwithstanding the foregoing, Buyer
shall be entitled to rely upon the representations and warranties of the Seller
set forth in this Agreement.
6. BUYER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Buyer's obligation to purchase the Property:
(a) Seller shall conduct business at the Property in a good and
diligent manner consistent with Seller's current business practices and shall
maintain the Property in its present condition through the date of Closing,
reasonable wear and tear excepted.
(b) Seller have terminated, at Seller's sole cost and expense, all
Service/Equipment Contracts except to the extent Buyer has given Seller written
notice that certain Service/Equipment contracts should be continued and Buyer
has assumed post Closing liability for such contracts, however, such services
shall be continued at Seller's expense until the Closing Date.
(c) The Title Company shall stand ready to issue the Title Policy in
the form required herein.
(d) Delivery by Seller at Closing of the Closing Documents described
in Section 8 hereof.
(e) Performance by Seller as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Seller pursuant to this Agreement and all of Seller's representations and
warranties contained in this Agreement shall be true and correct on and as of
the Closing Date as if made anew on that date.
(f) Delivery by Seller of Tenant Estoppel Certificates in the form
attached hereto as Exhibit F for tenants comprising at least 80% of the net
rentable square feet of the Property which shall include all Tenants listed in
Exhibit F-1, the substance and content of which shall be consistent with the
Certified Rent Roll and Seller shall use commercially reasonable efforts to
obtain the required Tenant Estoppel Certificates. Buyer shall cooperate with
Seller post Closing to complete collection of Tenant Estoppels. In the event
sufficient Tenant Estoppels cannot be obtained, Buyer shall accept a Seller
Estoppel in the form attached hereto as Exhibit F-2 and all post Closing Tenant
Estoppels shall be delivered pursuant to the terms of Exhibit F-2. In the event
that the conditions set forth above in this Section 6 are not satisfied (and
Buyer is not otherwise in default of this Agreement), Buyer may elect to
terminate this Agreement or waive satisfaction of the condition and close escrow
in either instance by giving written notice to Seller.
7. SELLER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Seller's obligation to sell the Property:
(a) Delivery by Buyer at Closing of the Purchase Price and the
executed Assignment and Assumption of Leases in the form attached hereto as
Exhibit G.
(b) Performance by Buyer as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Buyer pursuant to this Agreement.
In the event that the conditions in this Section 7 are not
satisfied, Seller may elect, at its sole discretion, to terminate this Agreement
or waive satisfaction of the condition and close escrow.
8. THE CLOSING.
(a) The Closing hereunder shall be held and delivery of all items to
be made at the Closing under the terms of this Agreement shall be made at the
offices of the Title Company on April 30, 1998, or such other date prior thereto
as Buyer and Seller may mutually agree in writing (the "Closing Date"). Such
date may not be extended without the prior written approval of both Seller and
4
<PAGE>
Buyer. In the event the Closing does not occur on or before the Closing Date,
the Title Company shall, subject to the provisions of Section 2, and unless it
is notified by both parties to the contrary, within five (5) days after the
Closing Date, return to the depositor thereof items which may have been
deposited pursuant to this Agreement. Any such return shall not, however,
relieve either party hereto of any liability it may have for its wrongful
failure to close. The delivery to the Escrow Agent of the Closing Documents, as
hereinafter defined, by both parties and the Purchase Price by Buyer shall be
deemed sufficient to effect a closing under Section 8(a).
(b) At or before the Closing, Seller shall deliver to escrow the
following (collectively, the "Closing Documents"):
(i) special warranty deed conveying to the Buyer the Property as
required by Section 3 above in the form attached hereto as Exhibit I;
(ii) originals or, if Seller does not have originals, certified
true, complete and correct copies of all leases (and amendments thereto, if any)
in Seller's actual and physical possession covering any portion of the Property,
any security deposits relating thereto, and an executed Assignment and
Assumption of Lease in the form attached hereto as Exhibit G;
(iii) a Bill of Sale, in the form attached hereto as Exhibit J;
(iv) a certificate by Seller to the effect that all of the
representations, warranties and covenants set forth in this Agreement remain
true, correct and complete as of the Closing Date;
(v) a Certified Rent Roll in the form attached hereto as Exhibit
B, dated as of the date of Closing Date consistent with prior Certified Rent
Rolls and Tenant Estoppel Certificates;
(vi) such title affidavits or other documents as may be
reasonably required by the Title Company with copies thereof to the Buyer;
(vii) all rent records and related documents in the possession or
under the control of Seller. Such records may include a schedule of all cash
deposits and a check or credit to Buyer in the amount of such deposits,
including any interest thereon (to the extent that applicable state law or the
applicable lease requires payment of interest on such amounts) held by Seller at
the Closing under the Lease. To the extent any deposits are in a form other than
cash, such deposits shall be transferred to Buyer at Closing without recourse.
(viii) To the extent in Seller's possession or control, originals
or copies of all current site plans, surveys, architectural drawings, plans and
specifications, engineering plans and studies, floor plans, soil reports,
environmental studies, and landscape plans. To the extent such items are in
Seller's possession or control, Seller shall also deliver (i) originals (or
copies, if originals are not then available) of all then effective assignable
guaranties, warranties and/or payments and performance bonds made by any person
for the benefit of Seller with respect to the Property of any of its components,
together with an instrument assigning such guaranties and warranties to Buyer
and (ii) originals (or copies, if originals are not then available) of all
certificates, Licenses, permits authorizations and approvals issued for or with
respect to the Property by governmental and quasi-governmental authorities
having jurisdiction, to the extent such items are in Seller's possession or
control.
(ix) to the extent available, originals (or copies, if originals
are not available) of all documents and books and records necessary for the
continued operation of the Project, including without limitation, rent rolls,
lease files, rent records, escalation records and statements and maintenance
records;
(x) an original resolution of Seller authorizing the execution of
this Agreement, the conveyance documents and all other documents to be executed
by Seller and the performance by Seller hereunder;
(xi) Seller's Non-Foreign Certification in the form attached as
Exhibit C; and
5
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(xii) notices to the tenants at the Property in the form attached
as Exhibit D, executed by Seller informing them of the change in ownership of
the Property.
(xiii) an executed Assignment of Warranties, Guarantees and
Service Contracts in the form attached hereto as Exhibit O.
Buyer may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
(c) At or before the Closing, Buyer shall deliver to escrow the
Purchase Price, as adjusted for prorations, and an executed Assignment and
Assumption of Leases in the form attached hereto as Exhibit G.
(d) Seller and Buyer shall each deposit such other instruments as are
reasonably required by the escrow holder to close the escrow and consummate the
purchase of the Property in accordance with the terms hereof.
(e) The following items shall be prorated separately for each property
identified on Schedule A as of 11:59 p.m. on the date immediately preceding the
Closing Date and the net amount thereof shall be added to or deducted from, as
the case may be, the amount of the Purchase Price to be paid at the Closing:
(i) general real estate, personal property and ad valorem taxes
and assessments for the current tax year of the Property. If any such taxes or
assessments are payable in installments, all installments due through the
Closing together with the accrued but unpaid portion of any other installments
not yet due as of the Closing shall be paid for by the Seller;
(ii) taxes, water, sewer and front foot benefit charges, and
charges for electricity, gas, telephone and other utilities and license fees;
(iii) rent and other charges under the Leases (to the extent
monies have actually been collected therefor), including any free rent under any
of the Leases; Buyer shall receive a credit at Closing for any free rent or
other tenant concessions due under any Lease subsequent to Closing.
(v) all other income and expenses relating to the Property;
(vi) any other items that are customarily prorated in
transactions of this nature; and (vii) any and all cash security deposits,
prepaid rent and all interest earned thereon (to the extent interest is payable
to tenant under applicable state law or the applicable lease) shall be a credit
to Buyer at Closing. Seller shall be fully liable for any wages and other
amounts due and owing any employees at the Property which have accrued up to the
date of Closing. Seller shall retain and Buyer shall not be entitled to any
credit for, the deposits, if any, made by Seller in connection with the
provision of electric, sewer, water, telephone and other utility services to the
Property.
For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property, and, therefore, entitled to the income therefrom and
responsible for the expenses thereof for the entire day upon which the Closing
occurs. All such prorations shall be made on the basis of the actual number of
days of the month which shall have elapsed as of the date of the Closing and
based upon the actual number of days in the month and a three hundred sixty-five
(365) day year. The amount of such prorations shall initially be performed by
Seller and mutually agreed to by the parties prior to Closing, but shall be
subject to adjustment in cash after the Closing outside of escrow as and when
complete and accurate information becomes available, if such information is not
available at the Closing. Seller and Buyer agree to cooperate and use their best
efforts to make such adjustments no later than sixty (60) days after the Closing
(except with respect to property taxes, which shall be adjusted within sixty
(60) days after the tax bills for the applicable period are received).
6
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Buyer shall post Closing based on April 30, 1998 receivables purchase
accounts receivable relating to the Property from Seller at a price equal to the
following percentage of such outstanding accounts receivable:
100% of the amount of accounts receivable less than 31 days old; and
0% of the amount of accounts receivable over 30 days old;
The term "Rent" as used herein shall mean all rents, including any
percentage rent and any accrued tax and operating expense escalation, charges
and other revenue of any kind generated from or in connection with the Leases.
Except as set forth in this Section 8(e)(vii), all items of income and expense
which accrue for the period prior to the Closing will be for the account of
Seller and all items of income and expense which accrue for the period on and
after the Closing will be for the account of Buyer. Buyer shall receive a credit
against the Purchase Price for all amounts of Rent which are allocable to the
period on and after the Closing and which have accrued as of the Closing Date,
including those Rents which have accrued but remain uncollected as of the date
of Closing. The provisions of this Section 8(e)(viii) shall survive the Closing.
(viii) With respect to expenses of the Property which are
chargeable to the tenants pursuant to the provisions of the Leases (the "CAM
Charges"), Seller shall determine (1) the amount of those expenses paid or
payable by Seller from January 1 in the year in which the Closing occurs through
the date of Closing or, with regard to taxes and assessments, the amount of the
proration thereof charged to Seller and (2) the amount tenants have paid to
Seller from January 1 in the year in which Closing occurs until the date of
Closing as the tenants' pro rata share of such tenant expenses. If accurate
allocations of CAM Charges, accounts receivable, or any other expenses cannot be
made at Closing because current bills are not obtainable, the parties shall
allocate such expenses at Closing on the best and most current information
available, subject to adjustment in cash as soon as reasonably possible after
the Closing when final bills or other evidence of the applicable expenses are
received, but such adjustment shall be made no later than six (6) months after
the Closing Date. Buyer shall also be entitled to a credit at Closing equal to
any CAM Charges for 1997 and prior years which are owing to any of the tenants
of the Property. The provisions of this Section 8(e)(vii) shall survive the
Closing.
(ix) Those items described in the Settlement Statement executed
by the parties hereto of even date herewith.
(f) The costs incurred in this transaction shall be allocated as
follows:
(i) Seller shall pay standard rates for the Title Policy. Buyer
shall pay for any title endorsements and extended coverage.
(ii) Buyer shall pay recording fees applicable to the sale.
(iii) Buyer shall pay the cost of the updated survey.
(iv) Each party shall pay its own legal fees and expenses and 50%
of all escrow charges.
(v) Seller shall pay all costs associated with the Tax Deferred
Exchange (as described in Section 16 hereof).
(g) As additional consideration for Buyer's purchasing the Property
and paying the Purchase Price to the Seller, Seller hereby covenants and agrees
to remain fully liable for the performance and payment of all tenant
improvements and the payment of all leasing commissions currently due and owing
(including any delinquent amounts) under any of the Leases and under any
leasing/commission agreement up to the Closing Date except for amounts which
shall hereafter be due and owing under any of the Leases or under any
leasing/commission agreement, including, without limitation, leasing commissions
with respect to any option to renew or extend the Leases, (it being expressly
understood and agreed that Buyer is assuming the obligations to perform or pay
for any tenant improvements, and to pay for any leasing commissions which shall
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<PAGE>
hereafter be owing under any renewals or extensions of the Leases or under any
leasing/commission agreement before or after the Closing Date which are approved
by Buyer).
(h) Each party hereto shall indemnify, defend and hold the other party
(together with its officers, directors, and employees) harmless from and against
all claims, demands, causes of actions, judgments, damages, costs and expenses
(including, without limitation, reasonable, actual attorneys' fees and courts
costs), deficiencies, settlements and investigations which relate to matters,
actions or omissions which arise out of or are based upon any of the following
during such parties' period of ownership, which for Seller shall be the period
of time prior to Closing and for Buyer shall be the period of time on or after
Closing:
(i) any obligation under any contracts, agreements and writings
entered into by or on behalf of such party in respect of the use, construction,
operation, ownership, occupancy or maintenance of any portion of the Property
arising out of an event occurring during such parties' period of ownership;
(ii) any accident, injury, death or damage whatsoever caused to
any person or entity or loss of property, occurring in or about the Property or
any part thereof, or on any other property connected with or adjacent thereto
during such parties' period of ownership; or
(iii) any breach of the covenant set forth in Section 8(g), or
with respect to any payment or performance obligation under any of the Leases
for tenant improvements or under any of the Leases and/or leasing/commission
agreements for leasing commissions which have heretofore accrued, which are now
due and owing or which shall hereafter accrue, as described in Section 8(g).
(iv) any breach of a representation or warranty set forth in this
Agreement.
(v) Notwithstanding the above but subject to the limitations on
Seller's indemnity set forth in Section 8(g), Seller shall not be indemnified
for any leasing commissions
8
<PAGE>
which are payable subsequent to Closing and relate to leases in force on the
date hereof, including those leasing commissions listed on Schedule C, and Buyer
shall not be obligated to indemnify Seller for Service/Equipment Contracts (as
hereinafter defined) which are not assumed by the Buyer at Closing.
9. REPRESENTATIONS AND WARRANTIES. "To the best of Seller's knowledge" or
other references herein to Seller's knowledge means the actual (not
constructive) knowledge which Mike Duffy and Vance Voss have based upon
reasonable familiarity with the property records and continued involvement with
the Property. Notwithstanding the foregoing, the term "to the best of Seller's
knowledge" shall not be construed to imply any covenant that such individuals
have conducted any review of files or other inquiry in connection with the
transaction contemplated by this Agreement. Furthermore, the foregoing
individuals are acting in the capacity as agents or employees of Seller and
shall have no personal liability with respect to any representations, warranties
or covenants of Seller in this Agreement.
(a) Seller hereby represents and warrants to Buyer as of the date
hereof and as of the date of Closing as follows:
(i) Seller is a corporation duly organized and validly existing
under the laws of the State of Iowa and is in good standing under the laws of
the State of Texas.
(ii) Ownership.
(A) Seller is the owner of the Property of record and in
fact, legally and beneficially, and to the best of Seller's knowledge, Seller
has good, marketable and insurable title to the Property.
(B) No person or entity other than Seller and Seller's
affiliates has any interest in the legal or beneficial title to the Property;
there are no options to purchase the Property which are effective, nor has
Seller previously entered into any other contract of sale or agreement of any
kind with a party other than Buyer which is presently effective and which will
not be terminated before the date of this Agreement. After the date hereof
Seller will not enter into any agreement or contract or negotiate with any party
other than Buyer with respect to the sale of the Property, nor enter into
financial arrangements of any kind with respect to the Property nor will Seller
pledge or assign any right, title, interest in or to the Property or any part
thereof to any person or entity.
(iii) Leases.
(A) As of the date of the Agreement there are no leases,
subleases, licenses or other rental agreements or occupancy agreements (written
or verbal) which grant any possessory interest in and to any space situated on
or in any of the Property or that otherwise give rights with regard to use of
any portions of any of the Property other than the Leases described in the
Certified Rent Roll, as set forth in Exhibit B attached hereto (said leases,
together with any and all amendments, modifications and supplements thereto and
guarantees thereof, are herein referred to collectively as the "Leases");
(B) The copies of the Leases provided to Buyer are true,
accurate and complete, are in full force and effect and none of them has been
modified, amended or extended;
(C) There are no security deposits or other deposits other
than those listed on Schedule D.
(iv) Service and Management Contracts. To the best of Seller's
knowledge, except as set forth on Schedule E, neither Seller nor any other party
has entered into any construction, design, engineering, service, maintenance,
supply, brokerage/leasing agreements, employee agreements, management contracts
or Leases of personal property (collectively, "Service/Equipment Contracts")
affecting the construction, use, ownership, maintenance and/or operation of the
Property that will continue subsequent to the Closing. Seller shall terminate,
at Seller's sole cost and expense, all Service/Equipment Contracts which Buyer
does not elect to assume in writing prior to the expiration of the Study Period.
All work required to be performed by Seller in connection with all Service
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Equipment Contracts or other contracts or requirements with respect to periods
prior to the date of Closing has been or will be fully performed and that all
such bills in connection with such work will be Seller's responsibility. Seller
is not in default and to best of Seller's knowledge no other party is in default
under the Service/Equipment Contracts.
(v) Hazardous Substances. To the best of Seller's knowledge, (i)
the Property has not been used for the generation, treatment, storage or
disposal of any hazardous substances during the period in which Seller has owned
the Property; and (ii) there are no underground storage tanks located on or
under the Property. For the purposes of this Section 9(a)(v), "hazardous
substances" shall include "hazardous substances" as defined in the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss. 9601 et. seq., and regulations adopted pursuant to said Act, or
any similar environmental protection law of the state in which the Property is
located or its political subdivisions.
(vi) Ability to Perform. Seller has full power to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and this Agreement constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms. No order,
permission, consent, approval, license, authorization, registration or
validation of, or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is required
in connection with, the execution, delivery and performance of this Agreement by
Seller or the taking by Seller of any action contemplated by this Agreement.
The execution and delivery of this Agreement and the closing documents and
the consummation of the transactions contemplated hereby will not result in or
constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach, or
violation, of the organizational documents of Seller or any of the following
with respect to Seller or the Property: any agreements, contracts, leases,
promissory notes, conditional sales contracts, commitments, indentures,
mortgages, deeds of trust, or other agreements, instruments or arrangements to
which Seller is a party or by which it or the Property is bound and that relate
to the Property; (ii) a violation of or conflict with any term or provision of
any judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to Seller or the Property; (iii) the creation or
imposition of any lien, charge or encumbrance on the Property; or (iv) not
require approval, waiver or authorization from a governmental or regulatory body
which has not been obtained.
(vii) Compliance with Laws, Etc. Neither the entering into of
this Agreement nor the consummation of the transaction contemplated hereby will
constitute or result in a violation or breach by Seller of any judgment, order,
writ, injunction or decree issued against or imposed upon it, or will result in
a violation of any applicable law, order, rule or regulation of any governmental
authority. There are no actions, suits, proceedings, arbitrations or
investigations pending or threatened against, relating to or affecting Seller or
the Property which might interfere in a material respect with the transaction
contemplated by this Agreement, become a cloud on the title to the Property or
any portion thereof or otherwise affect the Property or Seller's ability to
consummate the transaction contemplated hereby.
(viii) No Violation Notice. Except as set forth in Schedule F,
Seller has not received
notices:
(A) from any federal, state, county or municipal authority
alleging any fire, health, safety, building, pollution, environmental, zoning or
other violation of law in respect of the Property or any part thereof,
including, without limitation, the occupancy or operation thereof, which has not
been entirely corrected;
(B) concerning the possible or anticipated condemnation of
any part of the Property, or the widening, change of grade or limitation on use
of streets abutting the same or concerning any special taxes or assessments
levied or to be levied against the Property or any part thereof;
(C) concerning any change in the zoning or other land use
classification of the Property or any part thereof.
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(D) of any pending insurance claim.
(E) from any governmental authority that any licenses,
permits, certificates, easements and rights of way, including proof of
dedication, required from any authorities having jurisdiction over the Property
or from private parties for the existing use, occupancy and operation of the
Property and to insure vehicular and pedestrian ingress to and egress from the
Property are in violation of any governmental laws or regulations, which has not
been corrected or will not be corrected by Closing.
(ix) No Management Contracts, Employment Contracts, Unions,
Pension Plans. Seller has not entered into any management contracts, employment
contracts or labor union contracts and has not established any retirement,
health insurance, vacation, pension, profit sharing or other benefit plans
relating to the operation or maintenance of the Property for which Buyer shall
have any liability or obligation. Seller has no employees at the Property, other
than at-will employees who shall remain the responsibility of Seller and as to
whom Buyer shall have
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no liability or obligation whatsoever. As of the Closing, there shall be no
employees working at the Property. Seller shall have paid or caused to be paid
to all employees of the Seller all salary and any other payments which shall be
payable on account of each such employee for such period through Closing. Seller
agrees to defend, indemnify and hold Buyer harmless from any loss, expense, cost
and/or damage (including without limitation reasonable attorneys' fees and costs
incurred in the defense of such claims) resulting from claims well-founded or
unfounded, by or on behalf of persons who are to have been employees of Seller
on or prior to the Closing arising out of any matter, cause or thing prior to
the Closing or any claims which may have accrued prior to the Closing.
(x) Seller has not received any written notice of the termination
or impairment of the furnishing of services to the Property of water, sewer, gas
(if any), electric, telephone, drainage and other such utility services.
(xi) Assessments. Seller has not received notice that assessments
for public improvements have been made against the Property which are unpaid,
including, without limitation, those for construction of sewer and water lines,
streets, sidewalks and curbs. To the best of Seller's knowledge, there are no
pending or proposed special assessments affecting or which may affect the
Property or any portion thereof.
(xii) Pre-Closing Deliveries Accurate. Except with respect to the
Certified Rent Roll, to the best of Seller's knowledge, all of the documents,
writings and other matters delivered by Seller to Buyer pursuant to Section 4
and information provided to Buyer pursuant to the terms of this Agreement, as of
the date hereof, and as of the Closing, are true, accurate and complete in all
material respects and accurately indicate all of the information referred to
therein, are not misleading in any respect, and none of such disclosures
misstated any material facts or omitted to state any material facts necessary to
make the statements made, in the light of the circumstances under which they
were made, not misleading. This representation shall be applicable only to due
diligence items listed on Schedule B and not any delivered thereafter.
(xiii) Miscellaneous Representations and Warranties.
(A) Seller agrees to conduct the business operations of the
Property in the Seller's usual and normal manner until the Closing. Seller shall
not, without the prior written consent thereto of Buyer, make (or permit) any
physical change in the Property.
(B) All bills and claims for labor performed and materials
furnished to or for the benefit of the Property for all periods prior to the
Closing date have been paid by Seller or will be paid by Seller as of the
Closing.
(C) (Intentionally Deleted)
(D) Seller is not a "foreign person", as defined in the
Internal Revenue Code.
(E) The premiums are paid and current for replacement cost
insurance policies on the Property and, to the best of Seller's knowledge,
insurance policies are in full force and effect.
(xiv) All documents executed by Seller which are to be delivered
to Buyer at the Closing are or at the Closing will be duly authorized, executed
and delivered by Seller, are or at the Closing will be legal, valid, and binding
obligations of Seller, are sufficient to convey title, and do not violate any
provisions of any agreement to which Seller is a party or to which it is
subject.
(xv) Additional Representations and Warranties Regarding Parcels
of Land with No Improvements: (Intentionally Deleted)
(xvi) Additional Representation and Warranties Regarding Land
Under a Ground Lease: (Intentionally Deleted)
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(xvii) Additional Representations and Warranties Regarding
Properties Where Improvements Are Under Construction. (Intentionally Deleted)
(xviii) Additional Representations and Warranties Regarding
Properties With Covenants, Conditions and Restrictions.
(A) Seller represents and warrants, to the best of Seller's
knowledge, that with regard to the Declaration of Covenants, Conditions and
Restrictions dated June 20, 1985 and recorded in Volume 2156, Page 456 of the
Land Records of Collin County, Texas, as amended (the "Summit Business Center
CCRs"): (i) the Summit Business Center is not in default in the performance of
any covenant, agreement or condition contained in the Summit Business Center
CCRs, and no condition or circumstance exists which, with the giving of notice
or the passage of time, would constitute a default thereunder; and (ii) no
assessments, payments, fees or expenses are presently due and payable under the
Summit Business Center CCRs.
(B) Seller represents and warrants, to the best of Seller's
knowledge, that with regard to the Declaration of Covenants, Conditions and
Restrictions dated September 27, 1982, and recorded in Volume 82189, Page 3264
of the Land Records of the City of Dallas, Texas, as amended (the "Northgate
CCRs"), the Northgate Business Park is not in default in the performance of any
covenant, agreement or condition contained in the Northgate CCRs, and no
condition or circumstance exists which, with the giving of notice or the passage
of time, would constitute a default thereunder; and (ii) no assessments,
payments, fees or expenses are presently due and payable under the Northgate
CCRs.
(C) Seller represents and warrants, to the best of Seller's
knowledge, that with regard to the Declaration of Covenants, Conditions and
Restrictions recorded on December 5, 1957 in Volume 4810, Page 87 of the Land
Records of Dallas County, Texas, as amended (the "Empire CCRs"): (I) the Empire
Commerce Center is not in default in the performance of any covenant, agreement
or condition contained in the Empire CCRs, and no condition or circumstance
exists which, with the giving of notice or the passage of time, would constitute
a default thereunder; and (ii) no assessments, payments, fees or expenses are
presently due and payable under the Empire CCRs.
(D) Seller represents and warrants, to the best of Seller's
knowledge, that with regard to the Declaration of Covenants, Conditions and
Restrictions shown in the Title Policy, if any (the "Business Parkway CCRs"):
(i) the Business Parkway Center is not in default in the performance of any
covenant, agreement or condition contained in the Empire CCRs, and no condition
or circumstance exists which, with the giving of notice or the passage of time,
would constitute a default thereunder; and (ii) no assessments, payments, fees
or expenses are presently due and payable under the Business Parkway CCR.
(E) To the best of Seller's knowledge, Seller hereby
represents and warrants that none of the business parks referenced above in
Sections (A), (B), (C) or (D), in whole or in part, is subject to the terms of a
repurchase option, right of first refusal or other option to purchase such
property ("Purchase Option"), which right has not lapsed, fully and irrevocably,
prior to being exercised by the beneficiary thereof. This representation and
warranty shall survive for the period of any applicable statute of limitations
with regard to such Purchase Option and shall be null and void in the event any
such action is triggered by an affirmative action of Buyer (provided, however,
the foregoing is not intended to mean that the statute of limitations commences
on the date hereof).
(F) Buyer and Seller acknowledge that all setback violations
and landscaping violations with regard to the Properties, if any, have been
satisfied by credits at Closing on the Settlement Statement.
(b) Buyer hereby represents and warrants to Seller as follows: (i)
Buyer is a California limited partnership, duly organized and validly existing
under the laws of the State of California; all documents executed by Buyer which
are to be delivered to Seller at Closing are or at the Closing will be duly
authorized, executed, and delivered by Buyer, and are or at the Closing will be
legal, valid, and binding obligations of Buyer, and do not and at the Closing
will not violate any provisions of any agreement to which Buyer is a party or to
which it is subject; and (ii) Buyer shall furnish all of the funds for the
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purchase of the Property (other than funds supplied by institutional lenders
which will hold valid mortgage liens against the Property) and such funds will
not be from sources of funds or properties derived from any unlawful activity.
10. RESPONSIBILITY FOR VIOLATIONS. All notices of violations of laws,
ordinances, or regulations ("Violations of Law"), which are received prior to
the Closing from any governmental department, agency or bureau having
jurisdiction as to conditions affecting the Property shall be remedied or
complied with by Seller. If any such violations are subject to challenge or
objection by Seller or are the obligation of any tenant under the terms of such
tenant's lease, Buyer shall cooperate with Seller to defend such challenge
and/or require tenant to cure the violation. Seller shall indemnify Buyer for
the reasonable third party costs of such challenge incurred by Buyer, including
reasonable attorney's fees. This obligation shall survive Closing on the part of
both parties.
11. MAINTENANCE OF INSURANCE. Until the Closing, Seller shall maintain its
present insurance on the Property. The risk of loss in and to the Property shall
remain vested in Seller until the recordation of the Deed to Buyer.
12. CASUALTY OR CONDEMNATION. If prior to the Closing, the Property or any
"material" portion thereof is damaged or destroyed by fire or casualty, or any
part of the Property is taken or threatened to be taken by eminent domain by any
governmental entity, then Buyer shall have the option, exercisable by written
notice given to Seller at or prior to the Closing, either to (a) terminate this
Agreement, whereupon all obligations of all parties hereto shall cease, the
Deposit shall be returned to Buyer and this Agreement shall be void and without
recourse to the parties hereto except for provisions which are expressly stated
to survive such termination; or (b) proceed with the purchase of the Property,
and in such case, unless Seller shall have previously restored the Property to
its condition prior to the occurrence of any such damage or destruction, Seller
shall pay over or assign to Buyer, without recourse, all amounts received or due
(plus an amount equal to the sum of any deductible under any insurance policy
covering the Property and any additional proceeds which shall be necessary to
effect such restoration) from, and all claims against, any insurance company or
governmental entity as a result of such destruction or taking, together with any
additional proceeds which shall be necessary to effect such restoration. Within
five (5) days after receipt of written notice of such casualty or condemnation,
Buyer will advise Seller in writing whether Buyer desires to proceed with this
transaction in light of such casualty or condemnation. The term "material" as
used in this Section 12 shall mean damage or destruction in an amount equal to
or greater than 5% of the Purchase Price.
13. INDEMNIFICATION. Each party hereby agrees to indemnify the other party
and hold it harmless from and against any and all claims, demands, liabilities,
costs, expenses, penalties, damages and losses, including, without limitation,
reasonable attorneys' fees, resulting from any misrepresentations or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or exhibit given or delivered to the other pursuant to or
in connection with this Agreement except as provided herein.
14. CONDITION OF PROPERTY. At or before the Approval Date, Buyer will
have approved the physical and environmental characteristics and condition of
the Property, as well as the economic characteristics of the Property. Buyer
hereby waives any and all defects in the physical, environmental and economic
characteristics and condition of the Property which would be disclosed by such
inspection which exist as of the Approval Date except such waiver does not
extend to or negate the effect of any matters which are covered by any
representation, warranty or covenant of Seller in Section 9 of this Agreement or
in any of the conveyance documents, Buyer further acknowledges that except as
set forth in this Agreement, neither Seller nor any of Seller's officers or
directors, nor Seller's employees, agents, representatives, or any other person
or entity acting on behalf of Seller (hereafter, for the purpose of this
Section, such persons and entities are individually and collectively referred to
as the "Seller") have made any representations, warranties or agreements
(express or implied) by or on behalf of Seller as to any matters concerning the
Property, the economic results to be obtained or predicted, or the present use
thereof or the suitability for Buyer's intended use of the Property, including,
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without limitation, the following: suitability of the topography; the
availability of water rights or utilities; the present and future zoning,
subdivision and any and all other land use matters; the condition of the soil,
subsoil, or groundwater; the purpose(s) to which the Property is suited;
drainage; flooding; access to public roads; or proposed routes of roads or
extensions thereof. Buyer acknowledges and agrees that except for the
representations and warranties contained herein and in the conveyance documents,
the Property is to be purchased, conveyed and accepted by Buyer in its present
condition, "as is" and that no patent or latent defect in the physical or
environmental condition of the Property whether or not known or discovered,
shall affect the rights of either party hereto. Except as set forth in Section
9, any documents furnished to Buyer by Seller relating to the Property
including, without limitation, service agreements, management contracts, maps,
surveys, studies, pro formas, reports and other information shall be deemed
furnished as a courtesy to Buyer but without warranty from Seller. All work done
by Buyer in connection with preparing the Property for the uses intended by
Buyer including any and all fees, studies, reports, approvals, plans, surveys,
permits, and any expenses whatsoever necessary or desirable in connection with
Buyer's acquiring, developing, using and/or operating the Property shall be
obtained and paid for by, and shall be the sole responsibility of Buyer. Buyer
has investigated and has knowledge of operative or proposed governmental land
use laws and regulations to which the Property may be subject and shall acquire
the Property upon the basis of its review and determination of the applicability
and effect of such laws and regulations.
Except for the representations and warranties in Section 9
of this Agreement, Buyer has neither received nor relied upon any
representations concerning such land use laws and regulations from Seller.
Except for the representations, warranties and indemnities
provided by Seller contained herein and in the documents delivered at Closing,
Buyer, on behalf of itself and its employees, agents, successors and assigns
attorneys and other representatives, and each of them, hereby releases Seller
from and against any and all claims, demands, causes of action, obligations,
damages and liabilities of any nature whatsoever, directly or indirectly,
arising out of or related to the condition of the Property.
By signing in the space provided below in this Section 14,
Buyer acknowledges that it has read and understood the provisions of this
Section 14.
BUYER:
TPLP OFFICE PARK PROPERTIES
a Texas Limited Partnership
By: AMERICAN OFFICE PARK PROPERTIES,
TPGP, INC. a California Corporation doing
business in Texas under the name
TPGP OFFICE PARK PROPERTIES, INC.
By:
-----------------------------
Ronald L. Havner, Jr.
President
15. POSSESSION. Buyer shall have and as a condition precedent to Closing,
the right of possession on the Closing Date, provided, however, that Seller
shall allow authorized representatives of Buyer reasonable access to the
Property for the purposes of satisfying Buyer with respect to satisfaction of
any conditions precedent to the Closing contained herein.
16. TAX-DEFERRED EXCHANGE. Buyer and Seller agree that, at Seller's sole
election, this transaction shall be structured as an exchange of like-kind
properties under Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations and proposed regulations thereunder. The
parties agree that if Seller wishes to make such election, it must do so prior
to the Closing Date. If Seller so elects, Buyer shall reasonably cooperate with
Seller, provided any such exchange is consummated pursuant to an agreement that
is mutually acceptable to Buyer and Seller and which shall be executed and
delivered on or before the Closing Date. Seller shall in all events be
responsible for all costs and expenses related to the Section 1031 exchange and
shall fully indemnify, defend and hold Buyer harmless from and against any and
all liability, claims, damages, expenses (including reasonable attorneys' and
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paralegal fees and reasonable attorneys' and paralegal fees on appeal),
proceedings and causes of action of any kind or nature whatsoever arising out
of, connected with or in any manner related to such 1031 exchange that would not
have been incurred by Buyer if the transaction were a purchase for cash. The
provisions of the immediately preceding sentence shall survive closing and the
transfer of title to subject Property to Buyer. Notwithstanding anything to the
contrary contained in this Section, any such Section 1031 exchange shall be
consummated through the use of a facilitator or intermediary so that Buyer shall
in no event be requested or required to acquire title to any property other than
the Property.
17. MISCELLANEOUS.
(a) Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and addressed as follows:
If to Seller:
Principal Mutual Life Insurance Company
c/o Law Department
711 High Street
Des Moines, Iowa 50392-0301
Attn: Dennis D. Ballard
With a copy to:
Principal Mutual Life Insurance Company
c/o CRE-Equities
711 High Street
Des Moines, Iowa 50392-1370
Attn: Michael S. Duffy
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If to Buyer:
TPLP Office Park Properties
701 Western Ave., Suite 200
Glendale, CA 91201
Attention: Ronald L. Havner, Jr.
with a copy to:
TPLP Office Park Properties
701 Western Avenue, Suite 200
Glendale, California 91201
Attention: David Goldberg, Esq., General Counsel
and a courtesy copy which shall not be required for valid
notice to:
Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Steven S. Snider, Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed to be effective: (i) one (1) business day after deposit with the courier
if sent by Federal Express or other recognized overnight delivery service; or
(ii) upon receipt if accomplished by hand delivery or by confirmed telecopied
delivery. Either party may, from time to time, by notice in writing served upon
the other party, in the same manner as prescribed in this Section designate a
different mailing address or a different person to which all such notices are
thereafter to be addressed.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any licensed real estate broker, entity,
agent, commission salesperson, or other person who will claim a right to
compensation or a commission or finder's fee as a procuring cause of the sale
contemplated herein, except for Chadwick, Saylor & Co., Inc., whose commission
shall be paid by Buyer. In the event that any company, firm, broker, agent,
commission salesperson or finder perfects a claim for a commission or finder's
fee based upon any such contract, dealings or communication, the party through
whom the company, firm, broker, agent, commission salesperson or finder makes
his claim shall be responsible for said commission or fee and all costs and
expenses (including reasonable attorneys' fees) incurred by the other party in
defending against the same. No commission shall be paid or become payable unless
the Closing actually occurs. The provisions of this Subsection (b) shall survive
Closing and any termination, cancellation or recision of this Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns; provided further, however, Seller's consent
to an assignment of Buyer's rights and delegation of its obligations hereunder
shall not be required with respect to an assignment of this Agreement by Buyer
to any person or any corporation, general partnership, limited partnership,
limited liability company or other lawful entity which is controlled by or under
common control with Buyer.
(d) Amendments and Terminations. Except as otherwise provided herein,
this Agreement may be amended or modified by, and only by, a written instrument
executed by Seller and Buyer.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(f) Merger of Prior Agreements. This Agreement supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
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(g) Enforcement. In the event either party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees. Buyer and Seller both acknowledge
each has been advised by counsel as to their respective rights, duties and
obligations in this Agreement and have had ample opportunity to negotiate same.
Thus, both Buyer and Seller acknowledge that any ambiguity in this Agreement
should not necessarily be resolved against the drafter of this Agreement.
(h) Time of the Essence. Time is of the essence of this Agreement.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but such counterparts when taken
together shall constitute but one Agreement.
(j) Survivability. Except as otherwise provided herein, the covenants
contained in this Agreement shall survive the closing of the purchase and sale
and shall not be deemed merged in the deed, but shall remain in full force and
effect.
(k) No Recordation. Neither Seller nor Buyer shall record this
Agreement or memorandum thereof in or among the land or chattel records of any
jurisdiction.
(l) Proper Execution. The submission by Seller to Buyer of this
Agreement in unsigned form shall have no binding force and effect, shall not
constitute an option, and shall not confer any rights upon Buyer or impose any
obligations on Seller irrespective of any reliance thereon, change of position
or partial performance until Seller shall have executed this Agreement and the
Deposit shall have been received by the Title Company. Notwithstanding the
foregoing sentence, Seller's submission to Buyer of this Agreement shall be
deemed withdrawn, revoked and incapable of being executed by Buyer in the event
Buyer has not returned a duly executed original Agreement to Seller on or before
5:00 p.m. on April 30, 1998.
(m) Personal Liability. There shall be no personal liability imposed
on the individuals who have executed this Agreement (or the attached exhibits)
(n) Survival of Representations. Except as expressly provided
otherwise in this Agreement, all representations and warranties made by the
parties herein or in any instrument or document furnished in connection herewith
(except warranties of title in the conveyance documents) shall survive for a
period of one (1) year from the date of Closing and any action thereon must be
commenced within such period or they are deemed waived and released; provided,
however, Representation 9(a)(iii) regarding leases shall survive for the
remaining term of any lease (excluding renewals) for which Buyer did not receive
a tenant estoppel executed prior to Closing; however, to the extent that tenant
estoppels are obtained post closing, the survival period for such leases shall
be one (1) year from the date of Closing.
(o) Dates. Whenever used herein, unless expressly provided otherwise,
the term "days" shall mean consecutive calendar days, except that if the
expiration of any time period measured in days occurs on a Saturday, Sunday,
legal holiday or other day when federal offices are closed in Washington, D.C.,
such expiration shall automatically be extended to the next business day.
(p) Prior to the Closing, information received in connection with the
Property shall be kept strictly confidential and shall not, without the prior
consent of the other party, be disclosed by such other party or used for any
purpose other than evaluating the Property except in the event of litigation
between the parties hereto, Buyer and Seller agree that such information shall
only be transmitted to Buyer's and Seller's respective officers, directors,
trustees, employees, attorneys, accountants, contractors, consultants, advisors
and agents who need to know such information for purposes of evaluating the
Property and transactions contemplated under this Agreement. The provisions of
this Section 17(p) shall not apply to any information which is a matter of
public record or obtainable from other sources and shall not prevent either
Buyer or Seller from complying with laws, rules, regulations and court orders,
including, without limitation, governmental regulatory, disclosure, tax and
reporting requirements.
18
<PAGE>
18. ESCROW AGENT. (Intentionally Deleted)
19. SELLER'S ADDITIONAL AGREEMENTS RELATED TO PROPERTIES WITH IMPROVEMENTS
UNDER CONSTRUCTION. (Intentionally Deleted)
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
-------
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY, an Iowa corporation
By: /s/ Jon C. Heiny
-------------------------
Jon C. Heiny
Its: Counsel
By: /s/ Shannon G. Holz
-------------------------
Shannon G. Holz
Its: Counsel
BUYER:
------
TPLP OFFICE PARK PROPERTIES
a Texas Limited Partnership
By: AMERICAN OFFICE PARK PROPERTIES,
TPGP, INC. a California Corporation doing
business in Texas under the name
TPGP OFFICE PARK PROPERTIES, INC.
By:/s/ Ronald L. Havner, Jr.
------------------------------
Ronald L. Havner, Jr.
President
Buyer's Social Security Number or Tax
Identification Number:95-4609260
20
Exhibit 10.4
REAL ESTATE PURCHASE AND SALE AGREEMENT
by and between
PETULA ASSOCIATES, LTD.
SELLER
and
TPLP OFFICE PARK PROPERTIES,
a Texas Limited Partnership
BUYER
Exhibits to this Agreement have been omitted and will be furnished to the
Securities and Exchange Commission upon Request
<PAGE>
INDEX TO
REAL ESTATE PURCHASE AND SALE AGREEMENT
1. Property Included in Sale...............................................1
2. Purchase Price/Remedies.................................................2
3. Title to the Property...................................................2
4. Seller's Pre-Closing Deliveries.........................................3
5. Buyer's Due Diligence...................................................4
6. Buyer's Conditions to Closing...........................................5
7. Seller's Conditions to Closing..........................................5
8. The Closing.............................................................5
9. Representations and Warranties..........................................10
10. Responsibility for Violations..........................................15
11. Maintenance of Insurance...............................................16
12. Casualty or Condemnation...............................................16
13. Indemnification........................................................16
14. Condition of Property..................................................16
15. Possession.............................................................17
2
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16. Tax-Deferred Exchange..................................................17
17. Miscellaneous..........................................................18
18. Escrow Agent...........................................................22
<PAGE>
REAL ESTATE PURCHASE AND SALE AGREEMENT
THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (the "Agreement") is made as
of the 30th day of April, 1998 (the "Agreement Date") which shall be the later
to occur of execution of this Agreement by Buyer or Seller by and between PETULA
ASSOCIATES, LTD., an Iowa corporation, herein referred to as "Seller", and TPLP
OFFICE PARK PROPERTIES, a Texas limited partnership, herein referred to as
"Buyer."
R E C I T A L S:
WHEREAS, Seller desires to sell certain improved and unimproved real
property along with certain related personal and intangible property, and Buyer
desires to purchase said real, personal and intangible property on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
undertakings set forth herein, and for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Buyer and Seller
hereby agree as follows:
1. PROPERTY INCLUDED IN SALE. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, at the price and upon
the terms and conditions set forth in this Agreement, the following:
(a) that certain real property more particularly described in Exhibit
A attached hereto (the "Real Property");
(b) all right, title and interest of Seller in all rights, privileges,
alleys, strips and gores, rights of way and easements appurtenant to the Real
Property, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances as well as all development rights, air rights, water,
water rights (and water stock, if any) relating to the Real Property and any
easements, rights-of-way or other appurtenances used in connection with the
beneficial use and enjoyment of the Real Property;
(c) all improvements and fixtures located on the Real Property,
including all buildings and structures presently located on the Real Property
listed on Schedule A, as more particularly described in Exhibit A, attached
hereto, and all related facilities, amenities, all apparatus, equipment and
appliances used in connection with the operation or occupancy of the Real
Property, such as heating and air conditioning systems and facilities used to
provide any utility services, refrigeration, ventilation, garbage disposal,
recreation or other services on the Real Property (all of which are collectively
referred to as the "Improvements");
(d) all tangible or intangible personal property owned by Seller and
used in the ownership, use or operation of the Real Property and/or
Improvements, including, without limitation, the right to use any trade name now
used in connection with the Real Property (the "Personal Property") and any
contract or lease rights, agreements, utility contracts or other rights relating
to the ownership, use and operation of the Real Property.
(e) all of Seller's interest as lessor in all leases covering the Real
Property and Improvements, including all tenant security and other deposits and
interest earned thereon and prepaid rent and interest earned thereon. Interest
on deposits and prepaid rents shall only be transferred to Buyer if applicable
state law or the applicable lease requires that such funds be held in
interest-bearing accounts.
All of the items referred to in Subsections (a), (b), (c), (d) and (e)
above are hereinafter collectively referred to as the "Property."
<PAGE>
2. PURCHASE PRICE/REMEDIES.
(a) The total purchase price (the "Purchase Price") for the Property
is Fifty-seven Million Five Hundred Forty-one Thousand One Hundred Eighty-One
and No/100 Dollars ($57,541,181.00). The Purchase Price is payable by wire
transfer of immediately available funds in U.S. dollars via the federal bank
wire transfer system to Chicago Title Insurance Company, San Francisco,
California ("the "Title Company") at Closing.
(b) (Intentionally Deleted)
(c) (Intentionally Deleted)
(d) (Intentionally Deleted)
(e) (Intentionally Deleted)
(f) (Intentionally Deleted)
3. TITLE TO THE PROPERTY.
(a) At the Closing, Seller shall convey to Buyer and Buyer shall
accept title to the Property (either in fee simple or a leasehold estate as
specified in Schedule A) in accordance with the terms of this Agreement, and
Buyer's obligation to accept said title shall be conditioned upon Buyer then
being conveyed good and clear record, marketable and insurable title (either in
fee simple or a leasehold estate as specified in Schedule A) to the Real
Property, all rights, privileges and easements appurtenant thereto, and to the
Improvements, by duly executed and acknowledged special warranty deed or an
assignment and assumption of the leasehold estate, as the case may be. It shall
be a condition precedent to Buyer's obligation to close hereunder that the Title
Company stands ready to issue, at the Closing a TLTA standard full coverage form
Owner's Policy of Title Insurance with extended coverage and all endorsements
reasonably requested by Buyer, insuring Buyer's interest in the Property, dated
the date of Closing, with liability in the amount of the Purchase Price, subject
only to the Permitted Exceptions (the "Title Policy"). The Title Policy shall
insure against all mechanics' liens and shall have full survey coverage and
shall be an extended coverage policy insuring against, among other things,
mechanics' liens, easements and claims of parties in possession not shown by the
public records with all general and standard exceptions deleted. Seller shall
pay the cost of the standard owner's policy. Buyer shall bear the expense for
extended coverage and the cost of any endorsements requested by Buyer.
(b) Buyer shall, prior to the Approval Date, provide Seller with
Buyer's objections to any matters disclosed by the Commitment, Title Documents
or Survey. All matters shown on the Title Exceptions which are not objected to
by Buyer prior to the Approval Date shall be "Permitted Exceptions". Seller
agrees to use its best efforts to satisfy such objections noted by Buyer,
provided that: (i) Seller shall obtain a satisfaction and release or bond over
any monetary liens, in a manner reasonably satisfactory to Buyer, including,
without limitation, any and all mortgages, mechanics' liens and judgment liens
(collectively, "Monetary Liens"); and (ii) Seller shall not be obligated to
litigate or spend more than $10,000.00 in the aggregate to cure non-monetary
lien title objections or to seek any cure which cannot be obtained within
fifteen (15) days. Seller shall notify Buyer of Seller's proposed actions to
satisfy such objections, and shall have up to the Closing Date to satisfy such
objections and the Closing Date shall be extended a reasonable period of time,
not to exceed fifteen (15) days, if necessary to allow such cure period. If,
despite its best efforts to do so, Seller cannot satisfy such objections (other
than the Monetary Liens, which shall be satisfied or bonded over by Seller) on
or before the expiration of such additional fifteen (15) day period, Buyer shall
have the option to waive its objection(s) to such title and/or other defect(s)
and proceed to Closing or terminate this transaction. Buyer acknowledges that
the termination of the transaction pursuant to this section of the Agreement
shall not entitle Buyer to receive reimbursement for third party expenses or to
seek specific performance or any other legal or equitable remedy against Seller
2
<PAGE>
4. SELLER'S PRE-CLOSING DELIVERIES.
Buyer acknowledges that prior to execution of this Agreement Seller
has delivered the items listed in Schedule B for Buyer's review and approval.
Seller shall be under no further obligation to deliver additional items to Buyer
unless Buyer requests such items prior to the Approval Date and such additional
items are reasonably necessary to complete Buyer's due diligence. Seller shall
only be obligated to provide such additional items if: (i) the items requested
are in Seller's or Seller's property manager's actual possession or control;
(ii) the items are not privileged; and (iii) Buyer has identified the specific
property for which the item is requested.
3
<PAGE>
5. BUYER'S DUE DILIGENCE. Buyer shall be allowed to conduct the following
due diligence prior to purchasing
the Property:
(a) Review and approve title to the Property as shown on a preliminary
title report (the "Title Report") from the Title Company.
(b) Review and approve the operating statements of the Property for
the previous two (2) calendar years as well as the current calendar year-to-date
and audited financial statements for 1997, provided same are available and in
Seller's actual possession.
(c) Review and approve true, correct and complete copies of all tenant
leases relating to the Property and a certified rent roll of even date herewith
in the form attached hereto as Exhibit B, (the "Certified Rent Roll").
(d) Review and approve copies of any site plans and building drawings
and specifications, existing environmental reports, construction contracts,
design agreements and land purchase contracts currently in the possession or
control of the Seller.
(e) Review and approve copies of any maintenance and service
agreements currently in force.
(f) Review and approve an as-built survey showing the location of all
improvements and recorded easements on the Property.
(g) Performance of a feasibility study of the Property, including, but
not limited to, review and approval of the physical and environmental
characteristics and condition of the Property and performance of marketing and
feasibility studies, structural and engineering investigations, auditing of
books and records of the Property, financial analyses and verification of
existing zoning.. Seller agrees to provide Buyer and its agents and
representatives reasonable access to the Property and to all books, records,
files, financial data, leases and contracts relating to the Property and to
reasonably cooperate in such examinations and to cause the property manager to
reasonably cooperate in such examinations following the Agreement Date for the
purpose of performing, at Buyer's sole cost and expense, the above-referenced
studies, physical inspections, investigations and tests on the Property (the
"Tests") provided that no such tests shall be conducted without at least two (2)
business days prior written notice to Seller and if any such tests are invasive
Seller's prior approval of such Tests, which approval shall be in Seller's sole
and absolute discretion. Notwithstanding anything herein to the contrary, Buyer
shall not need Seller's further consent to conduct Phase I environmental
studies. Buyer's access is further conditioned on Buyer complying with the terms
of the Access and Indemnification Agreement attached hereto as Exhibit E. Buyer
shall be required to conduct such Tests in a manner as to not disturb or
interfere with the current use of the Property and upon completion of such
Tests, Buyer agrees at its sole cost to restore the Property to the condition it
was in immediately prior to such Tests, including, but not limited to the prompt
removal of anything placed on the Property in connection with such Tests. Copies
of any third party reports, letters or other written information generated as a
result of such Tests shall be provided to Seller if the sale contemplated by
this Agreement does not close for any reason other than Seller's default. Buyer
shall indemnify, defend (with counsel reasonably satisfactory to Seller),
protect, and hold Seller harmless from and against any and all liability, loss,
cost, damage, or expense (including, without limitation, reasonable attorney's
fees and costs) which Seller may sustain or incur by reason of or in connection
with any Tests made by Buyer or Buyer's agents or contractors relating to or in
connection with the Property, or entries by Buyer or its agents or contractors
onto the Property. Notwithstanding any provision to the contrary in this
Agreement, the indemnity obligations of Buyer under this Agreement shall survive
any termination of this Agreement or the delivery of the deed and the transfer
of title pursuant to this Agreement.
The items referred to above in Subsections 5(a)-(g) and those
listed on Schedule B shall be collectively referred to as the "Due Diligence
Items." Buyer acknowledges that Seller has provided Buyer with the Due Diligence
Items prior to execution of this Agreement.
4
<PAGE>
The date this Agreement is executed by both parties shall be the
"Approval Date" and upon such execution there shall be a conclusive presumption
that Buyer has approved the Due Diligence Items and the physical and
environmental condition of the Property. Notwithstanding the foregoing, Buyer
shall be entitled to rely upon the representations and warranties of Seller set
forth in this Agreement.
6. BUYER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Buyer's obligation to purchase the Property:
(a) Seller shall conduct business at the Property in a good and
diligent manner consistent with Seller's current business practices and shall
maintain the Property in its present condition through the date of Closing,
reasonable wear and tear excepted.
(b) Seller have terminated, at Seller's sole cost and expense, all
Service/Equipment Contracts except to the extent Buyer has given Seller written
notice that certain Service/Equipment contracts should be continued and Buyer
has assumed post Closing liability for such contracts, however, such services
shall be continued at Seller's expense until the Closing Date.
(c) The Title Company shall stand ready to issue the Title Policy in
the form required herein.
(d) Delivery by Seller at Closing of the Closing Documents described
in Section 8 hereof.
(e) Performance by Seller as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Seller pursuant to this Agreement and all of Seller's representations and
warranties contained in this Agreement shall be true and correct on and as of
the Closing Date as if made anew on that date.
(f) Delivery by Seller of Tenant Estoppel Certificates in the form
attached hereto as Exhibit F for tenants comprising at least 80% of the net
rentable square feet of the Property which shall include all tenants listed in
Exhibit F-1, the substance and content of which shall be consistent with the
Certified Rent Roll and Seller shall use commercially reasonable efforts to
obtain the required Tenant Estoppel Certificates. Buyer shall cooperate with
Seller post Closing to complete collection of Tenant Estoppels. In the event
sufficient Tenant Estoppels cannot be obtained, Buyer shall accept a Seller
Estoppel in the form attached hereto as Exhibit F-2 and all post Closing Tenant
Estoppels shall be delivered pursuant to the terms of Exhibit F-2. In the event
that the conditions set forth above in this Section 6 are not satisfied (and
Buyer is not otherwise in default of this Agreement), Buyer may elect to
terminate this Agreement or waive satisfaction of the condition and close escrow
in either instance by giving written notice to Seller.
7. SELLER'S CONDITIONS TO CLOSING. The following conditions are conditions
precedent to Seller's obligation to
sell the Property:
(a) Delivery by Buyer at Closing of the Purchase Price and the
executed Assignment and Assumption of Leases in the form attached hereto as
Exhibit G.
(b) Performance by Buyer as and when required by this Agreement of
each and every term, covenant, condition and agreement required to be performed
by Buyer pursuant to this Agreement.
In the event that the conditions in this Section 7 are not
satisfied, Seller may elect, at its sole discretion, to terminate this Agreement
or waive satisfaction of the condition and close escrow.
8. THE CLOSING.
5
<PAGE>
(a) The Closing hereunder shall be held and delivery of all items to
be made at the Closing under the terms of this Agreement shall be made at the
offices of the Title Company on April 30, 1998, or such other date prior thereto
as Buyer and Seller may mutually agree in writing (the "Closing Date"). Such
date may not be extended without the prior written approval of both Seller and
Buyer. In the event the Closing does not occur on or before the Closing Date,
the Title Company shall, subject to the provisions of Section 2, and unless it
is notified by both parties to the contrary, within five (5) days after the
Closing Date, return to the depositor thereof items which may have been
deposited pursuant to this Agreement. Any such return shall not, however,
relieve either party hereto of any liability it may have for its wrongful
failure to close. The delivery to the Escrow Agent of the Closing Documents, as
hereinafter defined, by both parties and the Purchase Price by Buyer shall be
deemed sufficient to effect a closing under Section 8(a).
(b) At or before the Closing, Seller shall deliver to escrow the
following (collectively, the "Closing Documents"):
(i) special warranty deed or an assignment and assumption of
leasehold estate, as applicable, conveying to the Buyer the Property as required
by Section 3 above in the form attached hereto as Exhibit I or Exhibit I-1;
(ii) originals or, if Seller does not have originals, certified
true, complete and correct copies of all leases (and amendments thereto, if any)
in Seller's actual and physical possession covering any portion of the Property,
any security deposits relating thereto, and an executed Assignment and
Assumption of Lease in the form attached hereto as Exhibit G;
(iii) a Bill of Sale, in the form attached hereto as Exhibit J;
(iv) a certificate by Seller to the effect that all of the
representations, warranties and covenants set forth in this Agreement remain
true, correct and complete as of the Closing Date;
(v) a Certified Rent Roll in the form attached hereto as Exhibit
B, dated as of the date of Closing Date consistent with prior Certified Rent
Rolls and Tenant Estoppel Certificates;
(vi) such title affidavits or other documents as may be
reasonably required by the Title Company with copies thereof to the Buyer;
(vii) all rent records and related documents in the possession or
under the control of Seller. Such records may include a schedule of all cash
deposits and a check or credit to Buyer in the amount of such deposits,
including any interest thereon (to the extent that applicable state law or the
applicable lease requires payment of interest on such amounts) held by Seller at
the Closing under the Lease. To the extent any deposits are in a form other than
cash, such deposits shall be transferred to Buyer at Closing without recourse.
(viii) To the extent in Seller's possession or control, originals
or copies of all current site plans, surveys, architectural drawings, plans and
specifications, engineering plans and studies, floor plans, soil reports,
environmental studies, and landscape plans. To the extent such items are in
Seller's possession or control, Seller shall also deliver (i) originals (or
copies, if originals are not then available) of all then effective assignable
guaranties, warranties and/or payments and performance bonds made by any person
for the benefit of Seller with respect to the Property of any of its components,
together with an instrument assigning such guaranties and warranties to Buyer
and (ii) originals (or copies, if originals are not then available) of all
certificates, Licenses, permits authorizations and approvals issued for or with
respect to the Property by governmental and quasi-governmental authorities
having jurisdiction, to the extent such items are in Seller's possession or
control.
6
<PAGE>
(ix) to the extent available, originals (or copies, if originals
are not available) of all documents and books and records necessary for the
continued operation of the Project, including without limitation, rent rolls,
lease files, rent records, escalation records and statements and maintenance
records;
(x) an original resolution of Seller authorizing the execution of
this Agreement, the conveyance documents and all other documents to be executed
by Seller and the performance by Seller hereunder;
(xi) Seller's Non-Foreign Certification in the form attached as
Exhibit C; and
(xii) notices to the tenants at the Property in the form attached
as Exhibit D, executed by Seller informing them of the change in ownership of
the Property.
(xiii) an executed Assignment of Warranties, Guaranties and
Service Contracts in the form attached hereto as Exhibit O.
Buyer may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
(c) At or before the Closing, Buyer shall deliver to escrow the
Purchase Price, as adjusted for prorations, and an executed Assignment and
Assumption of Leases in the form attached hereto as Exhibit G, and if applicable
an Assignment and Assumption of Leasehold Estate in the form of Exhibit I-1.
(d) Seller and Buyer shall each deposit such other instruments as are
reasonably required by the escrow holder to close the escrow and consummate the
purchase of the Property in accordance with the terms hereof.
(e) The following items shall be prorated separately for each property
identified on Schedule A as of 11:59 p.m. on the date immediately preceding the
Closing Date and the net amount thereof shall be added to or deducted from, as
the case may be, the amount of the Purchase Price to be paid at the Closing:
(i) general real estate, personal property and ad valorem taxes
and assessments for the current tax year of the Property. If any such taxes or
assessments are payable in installments, all installments due through the
Closing together with the accrued but unpaid portion of any other installments
not yet due as of the Closing shall be paid for by the Seller;
(ii) taxes, water, sewer and front foot benefit charges, and
charges for electricity, gas, telephone and other utilities and license fees;
7
<PAGE>
(iii) rent and other charges under the Leases (to the extent
monies have actually been collected therefor), including any free rent under any
of the Leases; Buyer shall receive a credit at Closing for any free rent or
other tenant concessions due under any Lease subsequent to Closing;
(v) all other income and expenses relating to the Property;
(vi) any other items that are customarily prorated in
transactions of this nature; and (vii) any and all cash security deposits,
prepaid rent and all interest earned thereon (to the extent interest is payable
to tenant under applicable state law or the applicable lease) shall be a credit
to Buyer at Closing. Seller shall be fully liable for any wages and other
amounts due and owing any employees at the Property which have accrued up to the
date of Closing. Seller shall retain and Buyer shall not be entitled to any
credit for, the deposits, if any, made by Seller in connection with the
provision of electric, sewer, water, telephone and other utility services to the
Property.
For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property, and, therefore, entitled to the income therefrom and
responsible for the expenses thereof for the entire day upon which the Closing
occurs. All such prorations shall be made on the basis of the actual number of
days of the month which shall have elapsed as of the date of the Closing and
based upon the actual number of days in the month and a three hundred sixty-five
(365) day year. The amount of such prorations shall initially be performed by
Seller and mutually agreed to by the parties prior to Closing, but shall be
subject to adjustment in cash after the Closing outside of escrow as and when
complete and accurate information becomes available, if such information is not
available at the Closing. Seller and Buyer agree to cooperate and use their best
efforts to make such adjustments no later than sixty (60) days after the Closing
(except with respect to property taxes, which shall be adjusted within sixty
(60) days after the tax bills for the applicable period are received).
Buyer shall, post Closing based on April 30, 1998 receivables, purchase
accounts receivable relating to the Property from Seller at a price equal to the
following percentage of such outstanding accounts receivable:
100% of the amount of accounts receivable less than 31 days old; and
0% of the amount of accounts receivable over 30 days old;
The term "Rent" as used herein shall mean all rents, including any
percentage rent and any accrued tax and operating expense escalation, charges
and other revenue of any kind generated from or in connection with the Leases.
Except as set forth in this Section 8(e)(vii), all items of income and expense
which accrue for the period prior to the Closing will be for the account of
Seller and all items of income and expense which accrue for the period on and
after the Closing
8
<PAGE>
will be for the account of Buyer. Buyer shall receive a credit against the
Purchase Price for all amounts of Rent which are allocable to the period on and
after the Closing and which have accrued as of the Closing Date, including those
Rents which have accrued but remain uncollected as of the date of Closing. The
provisions of this Section 8(e)(vii) shall survive the Closing.
(viii) With respect to expenses of the Property which are
chargeable to the tenants pursuant to the provisions of the Leases (the "CAM
Charges"), Seller shall determine (1) the amount of those expenses paid or
payable by Seller from January 1 in the year in which the Closing occurs through
the date of Closing or, with regard to taxes and assessments, the amount of the
proration thereof charged to Seller and (2) the amount tenants have paid to
Seller from January 1 in the year in which Closing occurs until the date of
Closing as the tenants' pro rata share of such tenant expenses. If accurate
allocations of CAM Charges, accounts receivable or any other property expenses
cannot be made at Closing because current bills are not obtainable, the parties
shall allocate such expenses at Closing on the best and most current information
available, subject to adjustment in cash as soon as reasonably possible after
the Closing when final bills or other evidence of the applicable expenses are
received, but such adjustment shall be made no later than six (6) months after
the Closing Date. Buyer shall also be entitled to a credit at Closing equal to
any CAM Charges for 1997 and prior years which are owing to any of the tenants
of the Property. The provisions of this Section 8(e)(viii) shall survive the
Closing.
(ix) Those items described in the Settlement Statement executed
by the parties hereto of even date herewith.
(f) The costs incurred in this transaction shall be allocated as
follows:
(i) Seller shall pay standard rates for the Title Policy. Buyer
shall pay for any title endorsements and extended coverage.
(ii) Buyer shall pay the cost of any recording fees applicable to
the sale.
(iii) Buyer shall pay the cost of the updated survey.
(iv) Each party shall pay its own legal fees and expenses and 50%
of all escrow charges.
(v) Seller shall pay all costs associated with the Tax Deferred
Exchange (as described in Section 16 hereof).
(g) As additional consideration for Buyer's purchasing the Property
and paying the Purchase Price to the Seller, Seller hereby covenants and agrees
to remain fully liable for the performance and payment of all tenant
improvements and the payment of all leasing commissions currently due and owing
(including any delinquent amounts) under any of the Leases and under any
leasing/commission agreement up to the Closing Date except for amounts which
shall hereafter be due and owing under any of the Leases or under any
leasing/commission agreement, including, without limitation, leasing commissions
with respect to any option to renew or extend the Leases, (it being expressly
understood and agreed that Buyer is assuming the obligations to perform or pay
for any tenant improvements, and to pay for any leasing commissions which shall
hereafter be owing under any renewals or extensions of the Leases or under any
leasing/commission agreement before or after the Closing Date which are approved
by Buyer).
(h) Each party hereto shall indemnify, defend and hold the other party
(together with its officers, directors, and employees) harmless from and against
all claims, demands, causes of actions, judgments, damages, costs and expenses
(including, without limitation, reasonable, actual attorneys' fees and courts
costs), deficiencies, settlements and investigations which relate to matters,
actions or omissions which arise out of or are based upon any of the following
during such parties' period of ownership, which for Seller shall be the period
of time prior to Closing and for Buyer shall be the period of time on or after
Closing:
9
<PAGE>
(i) any obligation under any contracts, agreements and writings
entered into by or on behalf of such party in respect of the use, construction,
operation, ownership, occupancy or maintenance of any portion of the Property
arising out of an event occurring during such parties' period of ownership;
(ii) any accident, injury, death or damage whatsoever caused to
any person or entity or loss of property, occurring in or about the Property or
any part thereof, or on any other property connected with or adjacent thereto
during such parties' period of ownership; or
(iii) any breach of the covenant set forth in Section 8(g), or
with respect to any payment or performance obligation under any of the Leases
for tenant improvements or under any of the Leases and/or leasing/commission
agreements for leasing commissions which have heretofore accrued, which are now
due and owing or which shall hereafter accrue, as described in Section 8(g).
(iv) any breach of a representation or warranty set forth in this
Agreement.
(v) Notwithstanding the above but subject to the limitations on
Seller's indemnity set forth in Section 8(g), Seller shall not be indemnified
for any leasing commissions which are payable subsequent to the Closing and
relate to leases in force on the date hereof, including those leasing
commissions listed on Schedule C, and Buyer shall not be obligated to indemnify
Seller for Service/Equipment Contracts (as hereinafter defined) which are not
assumed by the Buyer at Closing.
9. REPRESENTATIONS AND WARRANTIES. "To the best of Seller's knowledge" or
other references herein to Seller's knowledge means the actual (not
constructive) knowledge which Mike Duffy and Vance Voss have based upon
reasonable familiarity with the property records and continued involvement with
the Property. Notwithstanding the foregoing, the term "to the best of Seller's
knowledge" shall not be construed to imply any covenant that such individuals
have conducted any review of files or other inquiry in connection with the
transaction contemplated by this Agreement. Furthermore, the foregoing
individuals are acting in the capacity as agents or employees of Seller and
shall have no personal liability with respect to any representations, warranties
or covenants of Seller in this Agreement.
(a) Seller hereby represents and warrants to Buyer as of the date
hereof and as of the date of Closing as follows:
(i) Seller is a corporation duly organized and validly existing
under the laws of the State of Iowa and is in good standing under the laws of
the State of Texas.
(ii) Ownership.
(A) Seller is the owner of the Property of record and in
fact, legally and beneficially, and to the best of Seller's knowledge, Seller
has good, marketable and insurable title to the Property in either fee simple or
leasehold estate.
(B) No person or entity other than Seller and Seller's
affiliates has any interest in the legal or beneficial title to the Property;
there are no options to purchase the Property which are effective, nor has
Seller previously entered into any other contract of sale or agreement of any
kind with a party other than Buyer which is presently effective and which will
not be terminated before the date of this Agreement. After the date hereof
Seller will not enter into any agreement or contract or negotiate with any party
other than Buyer with respect to the sale of the Property, nor enter into
financial arrangements of any kind with respect to the Property nor will Seller
pledge or assign any right, title, interest in or to the Property or any part
thereof to any person or entity.
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(C) Pursuant to that certain Assignment and Assumption dated
June 26, 1995, by and between Trammell Crow Company No. 90 Limited Partnership
("Trammell Crow") and Petula Associates, Ltd. ("Petula"), filed on July 29, 1995
in Volume 95126, Page 2245 in the Deed Records of Dallas County, Texas, Trammell
Crow intended to assign to Petula one hundred percent (100%) of Trammell Crow's
entire remaining undivided interest in the Ground Lease dated on or about
October 1, 1984 ("Ground Lease No. 1"), which Ground Lease No. 1 is evidenced by
that certain Memorandum of Lease dated March 1, 1988 by and between Principal
Mutual Life Insurance Company and Dallas-Fort Worth Regional Airport Board,
recorded on March 4, 1988 in Volume 88044, Page 1790 in the Deed Records of
Dallas County, Texas and in that certain Ground Lease dated on or about October
1, 1984 ("Ground Lease No. 2"), which Ground Lease No. 2 is evidenced by that
certain Memorandum of Lease dated March 1, 1988 by and between Principal Mutual
Life Insurance Company and Dallas-Fort Worth Regional Airport Board, recorded on
March 4, 1988 in Volume 88044, Page 1801 in the Deed Records of Dallas County,
Texas and in that certain Ground Lease dated on or about October 1 ,1984
("Ground Lease No. 3"), which Ground Lease No. 3 is evidenced by that certain
Memorandum of Lease dated March 1, 1988 by and between Principal Mutual Life
Insurance Company and Dallas-Fort Worth Regional Airport Board, recorded on
March 4, 1988 in Volume 88044, Page 1806 in the Deed Records of Dallas County,
Texas. The Assignment and Assumption, because of an inadvertent drafting error,
did not refer to Ground Lease No. 2 and Ground Lease No. 3. Trammell Crow fully
intended to assign its entire remaining undivided interest in both Ground Lease
No. 1, Ground Lease No. 2, and Ground Lease No. 3 to Petula. Trammell Crow
received good and adequate consideration for such conveyance, and Petula is the
owner of all of Trammell Crow's interest in Ground Lease No. 1, Ground Lease No.
2, and Ground Lease No. 3.
(D) The parties hereto agree that they shall jointly
cooperate to obtain a quit claim deed from Trammell Crow post Closing. Until
such time as a quit claim deed is obtained from Trammell Crow, Seller shall
indemnify and hold Buyer harmless from any claim that Seller has conveyed less
than 100% of the Lessee's interest in the above-referenced ground leases. This
indemnity shall survive the Closing until a quit claim deed is given.
(iii) Leases.
(A) As of the date of the Agreement there are no leases,
subleases, licenses or other rental agreements or occupancy agreements (written
or verbal) which grant any possessory interest in and to any space situated on
or in any of the Property or that otherwise give rights with regard to use of
any portions of any of the Property other than the Leases described in the
Certified Rent Roll, as set forth in Exhibit B attached hereto (said leases,
together with any and all amendments, modifications and supplements thereto and
guarantees thereof, are herein referred to collectively as the "Leases");
(B) The copies of the Leases provided to Buyer are true,
accurate and complete, are in full force and effect and none of them has been
modified, amended or extended;
(C) There are no security deposits or other deposits other
than those listed on Schedule D.
(iv) Service and Management Contracts. To the best of Seller's
knowledge, except as set forth on Schedule E, neither Seller nor any other party
has entered into any construction, design, engineering, service, maintenance,
supply, brokerage/leasing agreements, employee agreements, management contracts
or Leases of personal property (collectively, "Service/Equipment Contracts")
affecting the construction, use, ownership, maintenance and/or operation of the
Property that will continue subsequent to the Closing. Seller shall terminate,
at Seller's sole cost and expense, all Service/Equipment Contracts which Buyer
does not elect to assume in writing prior to the expiration of the Study Period.
All work required to be performed by Seller in connection with all Service
Equipment Contracts or other contracts or requirements with respect to periods
prior to the date of Closing has been or will be fully performed and that all
such bills in connection with such work will be Seller's responsibility. Seller
is not in default and to best of Seller's knowledge no other party is in default
under the Service/Equipment Contracts.
(v) Hazardous Substances. To the best of Seller's knowledge, (i)
the Property has not been used for the generation, treatment, storage or
disposal of any hazardous substances during the period in which Seller has owned
the Property; and (ii) there are no underground storage tanks located on or
under the Property. For the purposes of this Section 9(a)(v), "hazardous
substances" shall include "hazardous substances" as defined in the Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss. 9601 et. seq., and regulations adopted pursuant to said Act, or
any similar environmental protection law of the state in which the Property is
located or its political subdivisions.
(vi) Ability to Perform. Seller has full power to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and this Agreement constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms. No order,
permission, consent, approval, license, authorization, registration or
validation of, or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is required
in connection with, the execution, delivery and performance of this Agreement by
Seller or the taking by Seller of any action contemplated by this Agreement.
The execution and delivery of this Agreement and the closing documents and
the consummation of the transactions contemplated hereby will not result in or
constitute any of the following: (i) a default, breach, or violation, or an
event that, with notice or lapse of time or both, would be a default, breach, or
violation, of the organizational documents of Seller or any of the following
with respect to Seller or the Property: any agreements, contracts, leases,
promissory notes, conditional sales contracts, commitments, indentures,
mortgages, deeds of trust, or other agreements, instruments or arrangements to
which Seller is a party or by which it or the Property is bound and that relate
to the Property; (ii) a violation of or conflict with any term or provision of
any judgment, decree, order, statute, injunction, rule or regulation of a
governmental unit applicable to Seller or the Property; (iii) the creation or
imposition of any lien, charge or encumbrance on the Property; or (iv) not
require approval, waiver or authorization from a governmental or regulatory body
which has not been obtained.
(vii) Compliance with Laws, Etc. Neither the entering into of
this Agreement nor the consummation of the transaction contemplated hereby will
constitute or result in a violation or breach by Seller of any judgment, order,
writ, injunction or decree issued against or imposed upon it, or will result in
a violation of any applicable law, order, rule or regulation of any governmental
authority. There are no actions, suits, proceedings, arbitrations or
investigations pending or threatened against, relating to or affecting Seller or
the Property which might interfere in a material respect with the transaction
contemplated by this Agreement, become a cloud on the title to the Property or
any portion thereof or otherwise affect the Property or Seller's ability to
consummate the transaction contemplated hereby.
(viii) No Violation Notice. Except as set forth in Schedule F,
Seller has not received notices:
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(A) from any federal, state, county or municipal authority
alleging any fire, health, safety, building, pollution, environmental, zoning or
other violation of law in respect of the Property or any part thereof,
including, without limitation, the occupancy or operation thereof, which has not
been entirely corrected;
(B) concerning the possible or anticipated condemnation of
any part of the Property, or the widening, change of grade or limitation on use
of streets abutting the same or concerning any special taxes or assessments
levied or to be levied against the Property or any part thereof;
(C) concerning any change in the zoning or other land use
classification of the Property or any part thereof.
(D) of any pending insurance claim.
(E) from any governmental authority that any licenses,
permits, certificates, easements and rights of way, including proof of
dedication, required from any authorities having jurisdiction over the Property
or from private parties for the existing use, occupancy and operation of the
Property and to insure vehicular and pedestrian ingress to and egress from the
Property are in violation of any governmental laws or regulations, which has not
been corrected or will not be corrected by Closing.
(ix) No Management Contracts, Employment Contracts, Unions,
Pension Plans. Seller has not entered into any management contracts, employment
contracts or labor union contracts and has not established any retirement,
health insurance, vacation, pension, profit sharing or other benefit plans
relating to the operation or maintenance of the Property for which Buyer shall
have any liability or obligation. Seller has no employees at the Property, other
than at-will employees who shall remain the responsibility of Seller and as to
whom Buyer shall have no liability or obligation whatsoever. As of the Closing,
there shall be no employees working at the Property. Seller shall have paid or
caused to be paid to all employees of the Seller all salary and any other
payments which shall be payable on account of each such employee for such period
through Closing. Seller agrees to defend, indemnify and hold Buyer harmless from
any loss, expense, cost and/or damage (including without limitation reasonable
attorneys' fees and costs incurred in the defense of such claims) resulting from
claims well-founded or unfounded, by or on behalf of persons who are to have
been employees of Seller on or prior to the Closing arising out of any matter,
cause or thing prior to the Closing or any claims which may have accrued prior
to the Closing.
(x) Seller has not received any written notice of the termination
or impairment of the furnishing of services to the Property of water, sewer, gas
(if any), electric, telephone, drainage and other such utility services.
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(xi) Assessments. Seller has not received notice that assessments
for public improvements have been made against the Property which are unpaid,
including, without limitation, those for construction of sewer and water lines,
streets, sidewalks and curbs. To the best of Seller's knowledge, there are no
pending or proposed special assessments affecting or which may affect the
Property or any portion thereof.
(xii) Pre-Closing Deliveries Accurate. Except with respect to the
Certified Rent Roll, to the best of Seller's knowledge, all of the documents,
writings and other matters delivered by Seller to Buyer pursuant to Section 4
and information provided to Buyer pursuant to the terms of this Agreement, as of
the date hereof, and as of the Closing, are true, accurate and complete in all
material respects and accurately indicate all of the information referred to
therein, are not misleading in any respect, and none of such disclosures
misstated any material facts or omitted to state any material facts necessary to
make the statements made, in the light of the circumstances under which they
were made, not misleading. This representation shall only be applicable to
delivery of any due diligence items listed on Schedule B and not any items
delivered thereafter.
(xiii) Miscellaneous Representations and Warranties.
(A) Seller agrees to conduct the business operations of the
Property in the Seller's usual and normal manner until the Closing. Seller shall
not, without the prior written consent thereto of Buyer, make (or permit) any
physical change in the Property.
(B) All bills and claims for labor performed and materials
furnished to or for the benefit of the Property for all periods prior to the
Closing date have been paid by Seller or will be paid by Seller as of the
Closing.
(C) (Intentionally Deleted)
(D) Seller is not a "foreign person", as defined in the
Internal Revenue Code.
(E) The premiums are paid and current for replacement cost
insurance policies on the Property and, to the best of Seller's knowledge,
insurance policies are in full force and effect.
(xiv) All documents executed by Seller which are to be delivered
to Buyer at the Closing are or at the Closing will be duly authorized, executed
and delivered by Seller, are or at the Closing will be legal, valid, and binding
obligations of Seller, are sufficient to convey title, and do not violate any
provisions of any agreement to which Seller is a party or to which it is
subject.
(xv) Additional Representations and Warranties Regarding Parcels
of Land with No Improvements:
(A) Contracts. There are no construction, management,
leasing, service, equipment, supply, maintenance or concession agreements in
effect with respect to the Property that will survive Closing.
(B) Commitments. Other than as set forth in Exhibit K
attached hereto, Seller has not made any commitment or proffer to any
governmental or quasi-governmental authority having jurisdiction or to any third
party, to dedicate or grant any portion of the Property for roads, easements,
rights-of-way, park lands or for any other public purposes, to construct any
improvement, to grant any restrictions or to incur any other expense or
obligation relating to the Property.
(xvi) Additional Representation and Warranties Regarding Land
Under a Ground Lease:
(A) True, correct and complete copies of the Ground Leases
are attached hereto as Exhibit L. The Ground Leases are in full force and effect
and have not been modified, altered or amended other than as included in Exhibit
L nor has Seller received any written notice of a default by Seller under the
Ground Leases, which default remains uncured. All payments of rent and other
charges under the Ground Leases which were due and payable by Seller prior to
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the date hereof under the terms of the Ground Leases have been paid and no
additional payments or other obligations are currently due and owing under such
terms. Seller is not in default under the Ground Leases and, to the best of
Seller's knowledge, the Ground Lessor is not in default under the Ground Leases.
(B) Ground Lessor Estoppel Certificates. Seller shall
deliver to Buyer Ground Lessor Estoppel Certificates in the form attached hereto
as Exhibit M from all Ground Lessors five (5) business days prior to the Closing
Date.
(xvii) Additional Representations and Warranties Regarding
Properties Where Improvements Are Under Construction. (Intentionally Deleted)
(xviii) Additional Representations and Warranties Regarding
Properties with Covenants, Conditions and Restrictions.
Seller represents and warrants that (i) to the best of
Seller's knowledge that the Property conveyed pursuant to the Agreement is not
in default in the performance of any covenant, condition or restriction
contained in any Declaration of Covenants, Conditions or Restrictions, as
amended, as more fully described in the Title Policy ("CCRs"), and no condition
or circumstance exists which, with the giving of notice or the passage of time,
would constitute a default thereunder; (ii) no assessments, payments, fees or
expenses are presently due and payable under such CCRs; (iii) Seller hereby
represents and warrants that none of the property conveyed hereby is subject to
the terms of a repurchase option, right of first refusal or other option to
purchase such property, or declarant's right of approval (individually, a
"Right"; collectively, the "Rights"), which Right has not lapsed, fully and
irrevocably, prior to being exercised by the beneficiary thereof. This
representation and warranty shall survive for the period of any applicable
statute of limitations with regard to such Rights and shall be null and void in
the event any such action is triggered by an affirmative action of Buyer
(provided, however, the foregoing is not intended to mean that the statute of
limitations commences on the date hereof); (iv) Buyer and Seller acknowledge
that all setback violations and landscaping violations with regard to the
Properties, if any, have been satisfied by credits at Closing on the Settlement
Statement. Buyer hereby agrees that upon assumption of title it will not take
action to initiate any such option or revoke approval against the Property; in
such event this representation shall be null and void and Buyer shall not be
entitled to claim a Seller default for any action taken by Buyer.
(b) Buyer hereby represents and warrants to Seller as follows: (i)
Buyer is a California limited partnership, duly organized and validly existing
under the laws of the State of California; all documents executed by Buyer which
are to be delivered to Seller at Closing are or at the Closing will be duly
authorized, executed, and delivered by Buyer, and are or at the Closing will be
legal, valid, and binding obligations of Buyer, and do not and at the Closing
will not violate any provisions of any agreement to which Buyer is a party or to
which it is subject; and (ii) Buyer shall furnish all of the funds for the
purchase of the Property (other than funds supplied by institutional lenders
which will hold valid mortgage liens against the Property) and such funds will
not be from sources of funds or properties derived from any unlawful activity.
10. RESPONSIBILITY FOR VIOLATIONS. All notices of violations of laws,
ordinances, or regulations ("Violations of Law"), which are received prior to
the Closing from any governmental department, agency or bureau having
jurisdiction as to conditions affecting the Property shall be remedied or
complied with by Seller. If any such violations are subject to challenge or
objection by Seller or are the obligation of any tenant under the terms of such
tenant's lease, Buyer shall cooperate with Seller to defend such challenge
and/or require tenant to cure the violation. Seller shall indemnify Buyer for
the reasonable, actual third-party costs of such challenge incurred by Buyer,
including reasonable attorney fees. This obligation shall survive Closing on the
part of both parties.
11. MAINTENANCE OF INSURANCE. Until the Closing, Seller shall maintain its
present insurance on the Property. The risk of loss in and to the Property shall
remain vested in Seller until the recordation of the Deed to Buyer.
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12. CASUALTY OR CONDEMNATION. If prior to the Closing, the Property or any
"material" portion thereof is damaged or destroyed by fire or casualty, or any
part of the Property is taken or threatened to be taken by eminent domain by any
governmental entity, then Buyer shall have the option, exercisable by written
notice given to Seller at or prior to the Closing, either to (a) terminate this
Agreement, whereupon all obligations of all parties hereto shall cease, the
Deposit shall be returned to Buyer and this Agreement shall be void and without
recourse to the parties hereto except for provisions which are expressly stated
to survive such termination; or (b) proceed with the purchase of the Property,
and in such case, unless Seller shall have previously restored the Property to
its condition prior to the occurrence of any such damage or destruction, Seller
shall pay over or assign to Buyer, without recourse, all amounts received or due
(plus an amount equal to the sum of any deductible under any insurance policy
covering the Property and any additional proceeds which shall be necessary to
effect such restoration) from, and all claims against, any insurance company or
governmental entity as a result of such destruction or taking, together with any
additional proceeds which shall be necessary to effect such restoration. Within
five (5) days after receipt of written notice of such casualty or condemnation,
Buyer will advise Seller in writing whether Buyer desires to proceed with this
transaction in light of such casualty or condemnation. The term "material" as
used in this Section 12 shall mean damage or destruction in an amount equal to
or greater than 5% of the Purchase Price.
13. INDEMNIFICATION. Each party hereby agrees to indemnify the other party
and hold it harmless from and against any and all claims, demands, liabilities,
costs, expenses, penalties, damages and losses, including, without limitation,
reasonable attorneys' fees, resulting from any misrepresentations or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or exhibit given or delivered to the other pursuant to or
in connection with this Agreement except as provided herein.
14. CONDITION OF PROPERTY. At or before the Approval Date, Buyer will
have approved the physical and environmental characteristics and condition of
the Property, as well as the economic characteristics of the Property. Buyer
hereby waives any and all defects in the physical, environmental and economic
characteristics and condition of the Property which would be disclosed by such
inspection which exist as of the Approval Date except such waiver does not
extend to or negate the effect of any matters which are covered by any
representation, warranty or covenant of Seller in Section 9 of this Agreement or
in any of the conveyance documents, Buyer further acknowledges that except as
set forth in this Agreement, neither Seller nor any of Seller's officers or
directors, nor Seller's employees, agents, representatives, or any other person
or entity acting on behalf of Seller (hereafter, for the purpose of this
Section, such persons and entities are individually and collectively referred to
as the "Seller") have made any representations, warranties or agreements
(express or implied) by or on behalf of Seller as to any matters concerning the
Property, the economic results to be obtained or predicted, or the present use
thereof or the suitability for Buyer's intended use of the Property, including,
without limitation, the following: suitability of the topography; the
availability of water rights or utilities; the present and future zoning,
subdivision and any and all other land use matters; the condition of the soil,
subsoil, or groundwater; the purpose(s) to which the Property is suited;
drainage; flooding; access to public roads; or proposed routes of roads or
extensions thereof. Buyer acknowledges and agrees that except for the
representations and warranties contained herein and in the conveyance documents,
the Property is to be purchased, conveyed and accepted by Buyer in its present
condition, "as is" and that no patent or latent defect in the physical or
environmental condition of the Property whether or not known or discovered,
shall affect the rights of either party hereto. Except as set forth in Section
9, any documents furnished to Buyer by Seller relating to the Property
including, without limitation, service agreements, management contracts, maps,
surveys, studies, pro formas, reports and other information shall be deemed
furnished as a courtesy to Buyer but without warranty from Seller. All work done
by Buyer in connection with preparing the Property for the uses intended by
Buyer including any and all fees, studies, reports, approvals, plans, surveys,
permits, and any expenses whatsoever necessary or desirable in connection with
Buyer's acquiring, developing, using and/or operating the Property shall be
obtained and paid for by, and shall be the sole responsibility of Buyer. Buyer
has investigated and has knowledge of operative or proposed governmental land
use laws and regulations to which the Property may be subject and shall acquire
the Property upon the basis of its review and determination of the applicability
and effect of such laws and regulations.
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Except for the representations and warranties in Section 9 of
this Agreement, Buyer has neither received nor relied upon any representations
concerning such land use laws and regulations from Seller.
Except for the representations, warranties and indemnities
provided by Seller contained herein and in the documents delivered at Closing,
Buyer, on behalf of itself and its employees, agents, successors and assigns
attorneys and other representatives, and each of them, hereby releases Seller
from and against any and all claims, demands, causes of action, obligations,
damages and liabilities of any nature whatsoever, directly or indirectly,
arising out of or related to the condition of the Property.
By signing in the space provided below in this Section 14, Buyer
acknowledges that it has read and understood the provisions of this Section 14.
BUYER:
------
TPLP OFFICE PARK PROPERTIES
a Texas Limited Partnership
By: AMERICAN OFFICE PARK PROPERTIES,
TPGP, INC. a California Corporation doing
business in Texas under the name
TPGP OFFICE PARK PROPERTIES, INC.
By: /s/Ronald L. Havner, Jr.
---------------------------------
Ronald L. Havner, Jr.
President
15. POSSESSION. Buyer shall have and as a condition precedent to Closing,
the right of possession on the Closing Date, provided, however, that Seller
shall allow authorized representatives of Buyer reasonable access to the
Property for the purposes of satisfying Buyer with respect to satisfaction of
any conditions precedent to the Closing contained herein.
16. TAX-DEFERRED EXCHANGE. Buyer and Seller agree that, at Seller's sole
election, this transaction shall be structured as an exchange of like-kind
properties under Section 1031 of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations and proposed regulations thereunder. The
parties agree that if Seller wishes to make such election, it must do so prior
to the Closing Date. If Seller so elects, Buyer shall reasonably cooperate with
Seller, provided any such exchange is consummated pursuant to an agreement that
is mutually acceptable to Buyer and Seller and which shall be executed and
delivered on or before the Closing Date. Seller shall in all events be
responsible for all costs and expenses related to the Section 1031 exchange and
shall fully indemnify, defend and hold Buyer harmless from and against any and
all liability, claims, damages, expenses (including reasonable attorneys' and
paralegal fees and reasonable attorneys' and paralegal fees on appeal),
proceedings and causes of action of any kind or nature whatsoever arising out
of, connected with or in any manner related to such 1031 exchange that would not
have been incurred by Buyer if the transaction were a purchase for cash. The
provisions of the immediately preceding sentence shall survive Closing and the
transfer of title to subject Property to Buyer. Notwithstanding anything to the
contrary contained in this Section, any such Section 1031 exchange shall be
consummated through the use of a facilitator or intermediary so that Buyer shall
in no event be requested or required to acquire title to any property other than
the Property.
17. MISCELLANEOUS.
(a) Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and addressed as follows:
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If to Seller:
Petula Associates, Ltd.
c/o Law Department
711 High Street
Des Moines, Iowa 50392-0301
Attn: Dennis D. Ballard
With a copy to:
Petula Associates, Ltd.
c/o CRE-Equities
711 High Street
Des Moines, Iowa 50392-1370
Attn: Michael S. Duffy
If to Buyer:
TPLP Office Park Properties
701 Western Ave., Suite 200
Glendale, CA 91201
Attention: Ronald L. Havner, Jr.
with a copy to:
TPLP Office Park Properties
701 Western Avenue, Suite 200
Glendale, California 91201
Attention: David Goldberg, Esq., General Counsel
and a courtesy copy which shall not be required for valid
notice to:
Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attention: Steven S. Snider, Esq.
Unless otherwise specified herein, such notices or other communications shall be
deemed to be effective: (i) one (1) business day after deposit with the courier
if sent by Federal Express or other recognized overnight delivery service; or
(ii) upon receipt if accomplished by hand delivery or by confirmed telecopied
delivery. Either party may, from time to time, by notice in writing served upon
the other party, in the same manner as prescribed in this Section designate a
different mailing address or a different person to which all such notices are
thereafter to be addressed.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any licensed real estate broker, entity,
agent, commission salesperson, or other person who will claim a right to
compensation or a commission or finder's fee as a procuring cause of the sale
contemplated herein, except for Chadwick, Saylor & Co., Inc., whose commission
shall be paid by Buyer. In the event that any company, firm, broker, agent,
commission salesperson or finder perfects a claim for a commission or finder's
fee based upon any such contract, dealings or communication, the party through
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whom the company, firm, broker, agent, commission salesperson or finder makes
his claim shall be responsible for said commission or fee and all costs and
expenses (including reasonable attorneys' fees) incurred by the other party in
defending against the same. No commission shall be paid or become payable unless
the Closing actually occurs. The provisions of this Subsection (b) shall survive
Closing and any termination, cancellation or recision of this Agreement.
(c) Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors,
heirs, administrators and assigns; provided further, however, Seller's consent
to an assignment of Buyer's rights and delegation of its obligations hereunder
shall not be required with respect to an assignment of this Agreement by Buyer
to any person or any corporation, general partnership, limited partnership,
limited liability company or other lawful entity which is controlled by or under
common control with Buyer.
(d) Amendments and Terminations. Except as otherwise provided herein,
this Agreement may be amended or modified by, and only by, a written instrument
executed by Seller and Buyer.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas.
(f) Merger of Prior Agreements. This Agreement supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter hereof.
(g) Enforcement. In the event either party hereto fails to perform any
of its obligations under this Agreement or in the event a dispute arises
concerning the meaning or interpretation of any provision of this Agreement, the
defaulting party or the party not prevailing in such dispute, as the case may
be, shall pay any and all costs and expenses incurred by the other party in
enforcing or establishing its rights hereunder, including, without limitation,
court costs and reasonable attorneys' fees. Buyer and Seller both acknowledge
each has been advised by counsel as to their respective rights, duties and
obligations in this Agreement and have had ample opportunity to negotiate same.
Thus, both Buyer and Seller acknowledge that any ambiguity in this Agreement
should not necessarily be resolved against the drafter of this Agreement.
(h) Time of the Essence. Time is of the essence of this Agreement.
(i) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but such counterparts when taken
together shall constitute but one Agreement.
(j) Survivability. Except as otherwise provided herein, the covenants
contained in this Agreement shall survive the Closing of the purchase and sale
and shall not be deemed merged in the deed, but shall remain in full force and
effect.
(k) No Recordation. Neither Seller nor Buyer shall record this
Agreement or memorandum thereof in or among the land or chattel records of any
jurisdiction.
(l) Proper Execution. The submission by Seller to Buyer of this
Agreement in unsigned form shall have no binding force and effect, shall not
constitute an option, and shall not confer any rights upon Buyer or impose any
obligations on Seller irrespective of any reliance thereon, change of position
or partial performance until Seller shall have executed this Agreement and the
Deposit shall have been received by the Title Company. Notwithstanding the
foregoing sentence, Seller's submission to Buyer of this Agreement shall be
deemed withdrawn, revoked and incapable of being executed by Buyer in the event
Buyer has not returned a duly executed original Agreement to Seller on or before
5:00 p.m. EST on April 30, 1998.
19
<PAGE>
(m) Personal Liability. There shall be no personal liability imposed
on the individuals who have executed this Agreement (or the attached exhibits)
(n) Survival of Representations. Except as expressly provided
otherwise in this Agreement, all representations and warranties made by the
parties herein or in any instrument or document furnished in connection herewith
(except warranties of title in the conveyance documents) shall survive for a
period of one (1) year from the date of Closing or with regard to Section
9(vvii) and Section 19, one (1) year after completion of the Authorized
Construction and any action thereon must be commenced within such period or they
are deemed waived and released; provided, however, Representation 9(a)(iii)
regarding leases shall survive for the remaining term of any lease (excluding
renewals) for which Buyer did not receive a tenant estoppel executed prior to
Closing; however, to the extent that tenant estoppels are obtained post Closing,
the survival period for such leases shall be one (1) year from the date of
Closing. Provided, however, the indemnity set forth in Section 9(a)(ii)(D) shall
survive Closing until such time as a quit claim deed is given by Trammell Crow
as provided in Section 9(a)(ii)(D).
(o) Dates. Whenever used herein, unless expressly provided otherwise,
the term "days" shall mean consecutive calendar days, except that if the
expiration of any time period measured in days occurs on a Saturday, Sunday,
legal holiday or other day when federal offices are closed in Washington, D.C.,
such expiration shall automatically be extended to the next business day.
(p) Prior to the Closing, information received in connection with the
Property shall be kept strictly confidential and shall not, without the prior
consent of the other party, be disclosed by such other party or used for any
purpose other than evaluating the Property except in the event of litigation
between the parties hereto, Buyer and Seller agree that such information shall
only be transmitted to Buyer's and Seller's respective officers, directors,
trustees, employees, attorneys, accountants, contractors, consultants, advisors
and agents who need to know such information for purposes of evaluating the
Property and transactions contemplated under this Agreement. The provisions of
this Section 17(p) shall not apply to any information which is a matter of
public record or obtainable from other sources and shall not prevent either
Buyer or Seller from complying with laws, rules, regulations and court orders,
including, without limitation, governmental regulatory, disclosure, tax and
reporting requirements.
20
<PAGE>
18. ESCROW AGENT. (Intentionally Deleted)
19. SELLER'S ADDITIONAL AGREEMENTS RELATED TO PROPERTIES WITH IMPROVEMENTS
UNDER CONSTRUCTION. (Intentionally Deleted)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
-------
PETULA ASSOCIATES., LTD.,
an Iowa corporation
By: /s/ M.S. Duffy
-------------------------
M.S. Duffy
Its: Vice President
By: /s/ D.D. Ballard
-------------------------
D.D. Ballard
Its: Counsel
BUYER:
------
TPLP OFFICE PARK PROPERTIES
a Texas Limited Partnership
By: AMERICAN OFFICE PARK PROPERTIES,
TPGP, INC. a California Corporation doing
business in Texas under the name
TPGP OFFICE PARK PROPERTIES, INC.
By:/s/ Ronald L. Havner, Jr.
------------------------------
Ronald L. Havner, Jr.
President
Buyer's Social Security Number or Tax
Identification Number:95-4609260
21
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 333-48313) of PS Business Parks, Inc., pertaining to the PS
Business Parks, Inc. 1997 Stock Option and Incentive Plan, and the Registration
Statement on Form S-3 (No. 333-50463) and the related prospectus of (i) our
report dated February 23, 1998 except for Note 9 as to which the date is March
18, 1998, with respect to the consolidated financial statements of PS Business
Parks, Inc. (successor to American Office Park Properties, Inc.) included in the
Current Report on Form 8-K/A dated April 17, 1998 of PS Business Parks, Inc. and
(ii) our report dated April 21, 1998 on the combined statement of revenues and
certain operating expenses of the Principal Properties for the year ended
December 31, 1997 included in the Current Report on Form 8-K dated May 4, 1998
of PS Business Parks, Inc.
/s/ ERNST & YOUNG LLP
Los Angeles, California
May 12, 1998
