<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (date of earliest event reported): June 14, 1996
CarrAmerica Realty Corporation
(formerly Carr Realty Corporation)
(Exact name of registrant as specified in its charter)
Maryland 1-11706 52-1796339
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
1700 Pennsylvania Avenue, N.W., Washington, D.C.
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 624-7500
<PAGE>
FORM 8-K
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
On June 14, 1996, CarrAmerica Realty Corporation (the
"Company") acquired Parkway North Center, an office park located in Deerfield,
Illinois, for an aggregate purchase price of approximately $80 million. The
property was acquired from One Parkway L.L.C., Three Parkway L.L.C, Parkway Land
L.L.C and Parkway Center L.L.C. The property was built from 1986 to 1989. The
property currently includes two office buildings containing approximately
514,000 square feet of rentable space, and a special use building which contains
approximately 15,000 square feet of common area space which is not currently
held out for rent. The Company also acquired additional land which will support
the development of at least 900,000 square feet of office space. As part of the
purchase price, the Company assumed approximately $29 million of mortgage
indebtedness that bears interest at an annual rate of 7.96% and matures in
December 2003. The cash portion of the purchase price of approximately $51
million was financed through a draw on the Company's unsecured line of credit
with Morgan Guaranty Trust Company of New York (the "Line of Credit").
Borrowings under the Line of Credit currently bear interest at a floating rate
of 175 basis points over LIBOR.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
Parkway North Center. As described in Item 2 of this Current
Report on Form 8-K, on June 14, 1996, the Company acquired Parkway North Center.
Because the aggregate book value of the three buildings and additional land that
constitute Parkway North Center are in excess of 10% of the Company's total
assets as of June 14, 1996, additional information regarding Parkway North
Center is provided below.
2
<PAGE>
As of March 31, 1996, 93.7% of the rentable square feet of
Parkway North Center was leased. The Company has no immediate plans to renovate
Parkway North Center and believes the property is adequately covered by
insurance. The average annualized rent per square foot (excluding storage space)
was $15.40 per annum at March 31, 1996. Since the Company only acquired Parkway
North Center on June 14, 1996, the percent leased is not available for the past
five years and average annualized rent per square foot (excluding storage space)
for Parkway North Center for the prior five years is not available.
Three tenants at Parkway North Center each occupy over 10% of the
rentable square footage. As of March 31, 1996, Fujisawa USA, Inc. ("Fujisawa"),
a pharmaceutical company, occupied approximately 135,000 square feet or 26% of
the rentable square footage under a lease which expires on May 31, 2000.
Fujisawa's rent per square foot per annum was $22.22 at March 31, 1996. Fujisawa
has one option to renew its lease for five years at 100% of the then prevailing
market rental rate. Fujisawa also has a first right to negotiate for available
space in the building subordinate to the renewal and expansion rights of other
tenants in the building. As of March 31, 1996, Alliant Foodservice ("Alliant"),
a food products distributor, occupied approximately 107,000 square feet or 21%
of the rentable square footage under a lease which expires on April 30, 1998.
Alliant's rent per square foot per annum was $12.50 at March 31, 1996. Alliant
has one option to extend the term of its lease for a five-year term at 100% of
the then prevailing market rental rate not to exceed $24 per square foot.
Alliant has an option to expand into certain other space in the building
subordinate to the renewal and expansion rights of other tenants in the building
at the then prevailing market rental rate. As of March 31, 1996, Clintec
Nutrition Company ("Clintec"), a manufacturer of dietary products, occupied
approximately 80,000 square feet or 16% of the rentable square footage under
four leases, one of which expires on January 31, 1997 with respect to
approximately 40,000 square feet, and three of which expire on November 8, 2000
with respect to an aggregate of approximately 40,000 square feet. Clintec's rent
per square foot per annum was $22.17 at March 31, 1996. Clintec has an option to
extend the term of its two primary leases each for a five-year term at 100% of
the then prevailing market rental rate. Clintec has certain rights to expand
into contiguous space, subject to the right of the existing tenants. Clintec has
the right to terminate its lease with respect to 28,531 square feet after
January 31, 1997 with 12 months notice and the payment of $21 per square foot,
the right to terminate its lease with respect to 5,226 square feet after January
31, 1997 with 12 months notice and the payment of $19.60 per square foot, and
the right to terminate its lease with respect to 6,379 square feet after January
31, 1997 with 12 months notice and the payment of $25 per square foot.
3
<PAGE>
The following table sets out a schedule of lease expirations
for Parkway North Center for leases in effect as of March 31, 1996, assuming no
tenants exercise any of their renewal rights or termination options, for each of
the ten years beginning with 1996 and thereafter:
<TABLE>
<CAPTION>
Number Annual Base Percentage
of Tenants Net Rentable Rent Under Total Leased
Year With Area Subject to Expiring Square Footage
of Lease Expiring Expiring Leases Leases (1) Represented By
Expiration Leases (square feet) (in thousands) Expiring Leases (2)
- ---------- ------ ------------- -------------- -------------------
<C> <C> <C> <C> <C>
1996 1 1,687 17 .3
1997 1 39,960 886 8.3
1998 3 122,915 1,542 25.5
1999 1 5,279 79 1.1
2000 6 184,363 3,633 38.3
2001 3 87,501 1,107 18.2
2002 1 15,436 139 3.2
2003 1 12,921 0 2.7
2004 1 11,500 81 2.4
2005 and thereafter 0 0 0 0
- -----------------------------
<FN>
(1)Excludes operating expense recoveries.
(2)Excludes 32,467 square feet of vacant and uncommitted space and 15,495 square
feet of common area space not held out for rent, as of March 31, 1996.
</FN>
</TABLE>
The aggregate tax basis of depreciable real property for
Parkway North Center is approximately $52.0 million as of June 14, 1996.
Depreciation and amortization are computed on the Modified Accelerated Cost
Recovery System (MACRS) method over 39 years. No personal property was purchased
in association with Parkway North Center for Federal income tax purposes.
4
<PAGE>
The current realty tax rate for Parkway North Center is $7.08
per $100 of assessed value. The total annual tax at this rate for 1996 is $1.3
million at an assessed value of $18.8 million.
AT&T Center. On March 29, 1996, the Company acquired six
office buildings in Pleasanton, California in San Francisco's East Bay Area, as
reported on a Current Report on Form 8-K dated March 29, 1996, and amended by a
Form 8-K/A dated May 14, 1996. The six buildings also include as part of their
campus two special purpose buildings. The campus, known as AT&T Center, was
built in 1988 and contains approximately 1,082,000 square feet of space. Because
the aggregate book value of the six office buildings and additional facilities
that constitute AT&T Center are in excess of 10% of the Company's total assets
as of June 14, 1996, additional information regarding AT&T Center is provided
below. The Company has no immediate plans to renovate AT&T Center and believes
the property is adequately covered by insurance.
As of May 31, 1996, AT&T Center was 100% leased to AT&T
Resource Management Corporation. AT&T presently subleases 39% of the space to
other users. The property has been 100% leased to AT&T since the completion of
each of the buildings in 1988 and 1989. The average annualized rent per square
foot was $14.95 per annum at May 31, 1996. Since the Company only acquired AT&T
Center on March 29, 1996, the average annualized rent per square foot for AT&T
Center for the prior five years is not available.
AT&T leases 1,082,000 square feet under a lease that expires
in increments on a building-by-building basis beginning in February 1998 and
ending in April 1999. AT&T's rent per square foot per annum was $14.95 as of May
31, 1996. The lease is a triple net lease with AT&T responsible for payment of
all operating expenses except owners' assessment fees, for which AT&T reimburses
the Company. AT&T has one option to extend the term of its lease for 10 years at
90% of the then prevailing market rental rate and two ten-year options to extend
its lease with respect to portions of the basement and parking facility at 100%
of the then prevailing market rental rate. AT&T's renewal rights can be
exercised on a building-by-building basis.
5
<PAGE>
The following table sets out a schedule of lease expirations
for AT&T Center for leases in effect as of March 31, 1996, for each of the ten
years beginning with 1996 and thereafter:
<TABLE>
<CAPTION>
Number Annual Base Percentage
of Tenants Net Rentable Rent Under Total Leased
Year With Area Subject to Expiring Square Footage
of Lease Expiring Expiring Leases Leases (1) Represented By
Expiration Leases (square feet) (in thousands) Expiring Leases
- ---------- ------ ------------- -------------- ---------------
<C> <C> <C> <C> <C>
1996 __ ___ ___ __
1997 __ ___ ____ __
1998 1 827,209 $12,236 76.4%
1999 1 254,823 $ 3,945 23.6%
2000 __ ___ ____ __
2001 __ ___ ____ __
2002 __ ___ ____ __
2003 __ ___ ____ __
2004 __ ___ ____ __
2005 and
thereafter __ ___ ____ __
- -----------------------------
(1) Excludes operating expense recoveries
The aggregate tax basis of depreciable real property for AT&T Center is
$62.0 million as of June 14, 1996. Depreciation and amortization are computed on
the Modified Accelerated Cost Recovery System (MACRS) method over 39 years. No
depreciable personal property exists in association with AT&T Center for Federal
income tax purposes as of June 14, 1996.
The current realty tax rate for AT&T Center is $1.23 per $100
of assessed value. The total annual tax at this rate for 1996 is $1.1 million at
an assessed value of $88.0 million. In addition, the property has special
assessments which approximate $1.4 million per year.
6
<PAGE>
Financial Statements. Attached hereto as Exhibit 99.1 are
audited historical summaries of operating expenses and revenues for the year
ended December 31, 1995 for the following properties: AT&T Center; Harlequin
Plaza North, Harlequin Plaza South, Quebec Court I and Quebec Court II; Parkway
North Center; Redmond East Business Campus; Reston Quadrangle; and Warner Center
Business Park. In accordance with Rule 3-14 of Regulation S-X, financial
statements with respect to the listed properties are being filed because the
Company has either (a) already acquired the properties and the book value of the
properties, individually by project or in the aggregate, are significant, or (b)
deemed the acquisition to be probable and the book value of the properties,
individually by project or in the aggregate, are significant.
Item 6. Resignations of Registrant's Directors.
Not applicable.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
Attached hereto as Exhibit 99.1 are the following
financial statements:
(i) Historical Summary of Operating Revenue and
Expenses for AT&T Center for the year ended December 31, 1995, with accompanying
notes and Independent Auditors' Report.
(ii) Combined Historical Summaries of Operating
Revenue and Expenses for Harlequin Plaza North and South and Quebec Court I and
II for the three months ended March 31, 1996 (unaudited) and the year ended
December 31, 1995, with accompanying notes and Independent Auditors' Report.
(iii) Historical Summaries of Operating Revenue and
Expenses for Parkway North Center for the three months ended March 31, 1996
(unaudited) and the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and
Expenses for Redmond East Business Campus for the three months ended March 31,
1996 (unaudited) and the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
7
<PAGE>
(v) Historical Summaries of Operating Revenue and
Expenses for Reston Quadrangle for the three months ended March 31, 1996
(unaudited) and the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
(vi) Historical Summaries of Operating Revenue and
Expenses for Warner Center Business Park for the three months ended March 31,
1996 (unaudited) and the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
(b) Pro forma financial information.
None.
(c) Exhibits.
Exhibit
Number
------
10.1 Real Estate Acquisition Agreement by and between Carr
Realty Corporation, as Purchaser, and One Parkway L.L.C., Three Parkway L.L.C,
Parkway Land L.L.C and Parkway Center L.L.C., as Sellers, dated as of April 3,
1996 (without exhibits).
99.1 Financial Statements
(i) Historical Summary of Operating Revenue and
Expenses for AT&T Center for the year ended December 31, 1995, with accompanying
notes and Independent Auditors' Report.
(ii) Combined Historical Summaries of Operating
Revenue and Expenses for Harlequin Plaza North and South and Quebec Court I and
II for the three months ended March 31, 1996 (unaudited) and the year ended
December 31, 1995, with accompanying notes and Independent Auditors' Report.
(iii) Historical Summaries of Operating Revenue and
Expenses for Parkway North Center for the three months ended March 31, 1996
(unaudited) and the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and
Expenses for Redmond East Business Campus for the three months ended March 31,
1996 (unaudited) and the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
8
<PAGE>
(v) Historical Summaries of Operating Revenue and
Expenses for Reston Quadrangle for the three months ended March 31, 1996
(unaudited) and the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
(vi) Historical Summaries of Operating Revenue and
Expenses for Warner Center Business Park for the three months ended March 31,
1996 (unaudited) and the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
Item 8. Change in Fiscal Year.
Not applicable.
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 hereto duly authorized.
Date: June 26, 1996
CarrAmerica Realty Corporation
By: /s/Brian K. Fields
------------------------------
Brian K. Fields
Chief Financial Officer
9
<PAGE>
EXHIBIT INDEX
Exhibit
Number
10.1 Real Estate Acquisition Agreement by and between Carr
Realty Corporation, as Purchaser, and One Parkway L.L.C., Three Parkway L.L.C,
Parkway Land L.L.C and Parkway Center L.L.C., as Sellers, dated as of April 3,
1996 (without exhibits).
99.1 Financial Statements
(i) Historical Summary of Operating Revenue and
Expenses for AT&T Center for the year ended December 31, 1995, with accompanying
notes and Independent Auditors' Report.
(ii) Combined Historical Summaries of Operating
Revenue and Expenses for Harlequin Plaza North and South and Quebec Court I and
II for the three months ended March 31, 1996 (unaudited) and the year ended
December 31, 1995, with accompanying notes and Independent Auditors' Report.
(iii) Historical Summaries of Operating Revenue and
Expenses for Parkway North Center for the three months ended March 31, 1996
(unaudited) and the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
(iv) Historical Summaries of Operating Revenue and
Expenses for Redmond East Business Campus for the three months ended March 31,
1996 (unaudited) and the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
(v) Historical Summaries of Operating Revenue and
Expenses for Reston Quadrangle for the three months ended March 31, 1996
(unaudited) and the year ended December 31, 1995, with accompanying notes and
Independent Auditors' Report.
(vi) Historical Summaries of Operating Revenue and
Expenses for Warner Center Business Park for the three months ended March 31,
1996 (unaudited) and the year ended December 31, 1995, with accompanying notes
and Independent Auditors' Report.
10
<PAGE>
</TABLE>
REAL ESTATE ACQUISITION AGREEMENT
by and between
CARR REALTY CORPORATION,
as Purchaser,
and
ONE PARKWAY L.L.C.
THREE PARKWAY L.L.C.
PARKWAY LAND L.L.C.
and
PARKWAY CENTER L.L.C.,
as Sellers
April 3, 1996
<PAGE>
REAL ESTATE ACQUISITION AGREEMENT
---------------------------------
THIS REAL ESTATE ACQUISITION AGREEMENT (this "Agreement"), is made and
entered into as of April 3, 1996 by and between CARR REALTY CORPORATION, a
Delaware corporation ("Carr"), on the one hand, and ONE PARKWAY L.L.C. a
Delaware limited liability company, THREE PARKWAY L.L.C., a Delaware limited
liability company, PARKWAY LAND L.L.C., a Delaware limited liability company,
and PARKWAY CENTER L.L.C., a Delaware limited liability company (collectively,
the "Sellers"), on the other hand.
RECITALS:
---------
A. One Parkway L.L.C. is the owner of the tract of land more
particularly described on Exhibit A attached hereto ("Parcel I"), and the
improvements located thereon, which are known collectively as Phase I of the
"Parkway North Center" office campus (the "Project") located in the Village of
Deerfield, Illinois, having a property address of One Parkway North Boulevard,
Parkway North Center, Deerfield, Illinois ("Phase I").
B. Three Parkway L.L.C is the owner of the tract of land more
particularly described on Exhibit B attached hereto ("Parcel III"), and the
improvements located thereon, which are known collectively as Phase III of the
Project, having a property address of Three Parkway North Boulevard, Parkway
North Center, Deerfield, Illinois ("Phase III").
C. Parkway Land L.L.C. is the owner of those certain undeveloped tracts
of land in the Project more particularly described on Exhibit C attached hereto
(collectively, the "Development Parcels").
D. Parkway Center L.L.C. is the owner of the tract of land more
particularly described on Exhibit D attached hereto, and the improvements
located thereon, which has a property address of Five Parkway North Boulevard,
Parkway North Center, Deerfield, Illinois (the "Clubhouse Parcel").
E. Carr desires to purchase and assume, and the Sellers desire to sell
and assign, the Property (as hereinafter defined), including, without
limitation, all of Sellers' right, title and interest in and to Phase I, Phase
III, the Development Parcels and the Clubhouse Parcel.
ARTICLE 1: DEFINITIONS
----------------------
1.1 Definitions.
In addition to the terms defined elsewhere in this Agreement, the
following terms wherever used herein shall have the meanings set forth in this
Article 1:
"Affiliate" means, as to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with
such Person. As used in this definition, the term "control" means the
possession, directly or indirectly, of the power
<PAGE>
to direct or cause the direction of the management or policies of a
Person whether through the ownership of voting securities, by contract,
or otherwise.
"Annexation Agreement" means the Annexation Agreement, dated
February 4, 1985 and amended October 5, 1987, December 3, 1990, October
5, 1992, and September 7, 1993, by and among the Village of Deerfield,
Illinois, Deerfield Saunders Joint Venture, and American National Bank
and Trust Company of Chicago, as Trustee.
"Association" means the Parkway North Owners' Association
established under the Declaration.
"Benthaus Agreement" means, collectively, that certain
Construction Agreement, dated July 15, 1993, by and among American
National Bank and Company of Chicago, as Trustee, Deerfield-Saunders
Joint Venture and Adoph and Emmi Benthaus, and that certain Covenants,
Restrictions and Easement Agreement, dated July 15, 1993, by and among
American National Bank and Company of Chicago, as Trustee,
Deerfield-Saunders Joint Venture and Adoph and Emmi Benthaus.
"Buildings" means the buildings and other structures currently
located on all or any part of the Land, including, without limitation,
a 5-story building located on Phase I, containing approximately 226,996
square feet of Gross Leasable Area, a 5-story building on Phase III
containing approximately 216,973 square feet of Gross Leasable Area, a
parking structure on Phase III and a building on the Clubhouse Parcel
containing a health club and a day care center operation containing
approximately 25,000 square feet of Gross Leasable Area. It is
understood that the Sellers make no representations regarding building
size, which may be verified by Carr during the Due Diligence Period.
"Business Day" means any day of the year other than a
Saturday, Sunday or a federal, State of Illinois or Washington, D.C.
government holiday.
"CMBS Lender" means the CMBS Trustee or the Servicer acting on
its behalf.
"CMBS Trustee" means State Street Bank and Trust Company, as
Trustee under the Pooling and Servicing Agreement.
"Common Area" has the meaning ascribed to that term in the
Declaration.
"Declaration" means that certain Declaration of Protective
Covenants and Easements, dated March 6, 1986 and amended December 2,
1987, by American National Bank and Trust Company of Chicago, as
Trustee.
"Due Diligence Period" has the meaning set forth Paragraph 3.1
hereof.
"Existing Title Policies" means the policies of title insurance
listed on Exhibit H-1 attached hereto.
2
<PAGE>
"Event of Default" has the meaning set forth in Paragraph 12.1
hereof.
"Gross Leaseable Area" has the meaning ascribed to it in the
Annexation Agreement.
"Improvements" means the Buildings and all other improvements
located on or affixed to the Land, or any part thereof, and all
replacements and additions thereto, including, without limitation,
parking areas, parking structures, driveways, roadways, walls, curbing,
sidewalks, landscaping, sewer, water, drainage, gas, electric and other
utility systems, lighting systems, irrigation systems,
telecommunications systems, antennae and other improvements of whatever
kind or nature owned by the Sellers and located on the Real Property.
"Intangible Property" means all intangible property now or on
the Closing Date owned by any or all of the Sellers and used in
connection with the Real Property or the Personal Property including,
without limitation, all of each Seller's right, title and interest in
and to all: licenses, approvals, applications and permits issued or
approved by any governmental authority and relating to the use,
operation, ownership, occupancy and/or maintenance of the Real Property
or the Personal Property; well rights and well permits, water and sewer
taps, sanitary or storm sewer capacity or reservations and rights under
utility agreements with any applicable governmental or
quasi-governmental entities or agencies with respect to the providing
of utility services to such Land; Leases and all security deposits held
by any Seller under any of the Leases; Service Contracts; utility
arrangements; rights under construction, workmanship or materials
guaranties; to the extent assignable, and without impairing Sellers'
rights thereunder with respect to the period prior to Closing or with
respect to other properties, rights under indemnities of third parties
relating to events or conditions arising or discovered on or after the
Closing Date and relating to the Property; to the extent assignable,
and without impairing Sellers' rights thereunder with respect to the
period prior to Closing or with respect to other properties, claims
against third parties relating to the condition of the Property or
events occurring or discovered after the Closing and relating to the
Property; the Phase IV Materials, plans; drawings; specifications;
surveys; maps; engineering or environmental reports and other technical
descriptions; books and records; development rights, rights in the
Association (including, without limitation, the Sellers' control of the
Association and the Sellers' rights under the Declaration and as a
member of the Association to the Real Property in the Common Area); and
other intangible rights used in connection with or relating to the
Property, including the name and the address of the Project and each of
the Buildings and all goodwill or other rights associated therewith.
"Joint Venture" means Deerfield-Saunders Joint Venture, an
Illinois general partnership, the managing member of each Seller.
"KILICO Mortgage" means the mortgage held by Kemper Investors
Life Insurance Company ("KILICO"), encumbering the Phase I Parcel,
securing the original principal amount of $33,000,000.00, which was
subsequently reduced to $3,737,628.00, of which $2,414,340.00 of
principal remains outstanding as of the date hereof. Accrued interest
of $555,629 will be outstanding as of April 1, 1996
3
<PAGE>
"Land" means the land more particularly described on Exhibits
A through D attached hereto, inclusive.
"Leases" means all leases affecting all or any part of the
Improvements, including, without limitation, any leases that may be
made by any Seller after the date hereof and before Closing as
permitted by this Agreement.
"Marriott Lot" means the Marriott hotel property, known as
Phase II of the Project and more particularly described on Exhibit P
attached hereto, which property is not included in the intended
purchase of Property under this Agreement.
"Parcel" or "Parcels" means one or more of Parcel I, Parcel
III, the Development Parcels and the Clubhouse Parcel, in each case
together with the Improvements located thereon.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, business trust, or other
entity.
"Personal Property" means all tangible property owned by any of
the Sellers now or on the Closing Date, and used in conjunction with
the operation, maintenance, ownership, use and/or occupancy of the Real
Property, including, without limitation all: furniture; fixtures,
furnishings not owned by the Property manager; art work; sculptures;
paintings; office equipment and supplies not owned by the Property
manager; landscaping; plants; and, whether stored on or off the Real
Property, tools and supplies, lawn and maintenance equipment not owned
by the Property manager, materials and supplies used in the operation
of the Real Property, shelving and partitions, and any construction and
finish materials and supplies now or on the Closing Date owned by any
Seller, intended for use in repairs and replacements to the Property
and not incorporated into the Improvements as of the Closing Date.
"Phase I Debt" means the loan, in the original principal amount
of $29,250,000, from CBA Conduit, Inc, as Lender, to One Parkway,
L.L.C., as Borrower, which Loan was assigned by CBA Conduit, Inc. to
CBA Mortgage Corp. and was further assigned to the CMBS Trustee, as
trustee for the benefit of holders of the Certificates described in the
Pooling and Servicing Agreement, which Phase I Debt is not prepayable
until November 1, 1998.
"Phase I Mortgage" means the Mortgage and Security Agreement
dated December 1, 1993, from One Parkway, L.L.C. to CBA Conduit, Inc.
encumbering the Phase I Parcel as security for the Phase I Debt.
"Phase IV Materials" means all plans, specifications, drawings,
reports, models, approval applications and other materials relating to
the improvements, including a building of approximately 216,973 square
feet of Gross Leasable Area, contemplated on the portion of the
Development Parcel immediately west of the Phase III Parcel that were
approved by the Village of Deerfield in 1989 but not constructed, the
approval for which has lapsed.
4
<PAGE>
"Pooling and Servicing Agreement" means that certain Pooling
and Servicing Agreement dated as of December 22, 1993, by and among CBA
Mortgage Corp., as Depositor, and the Servicer, the Trustee, and State
Street Bank and Trust Company of California, N.A. as Co-Trustee.
"Property" means, collectively, the Real Property, the
Personal Property, and the Intangible Property.
"Real Property" means (a) the Land, together with all rights,
privileges, hereditaments and interests appurtenant thereto, or to any
portion thereof, including, without limitation: the easement parcels
and other beneficial rights insured on the Existing Title Policies, any
and all minerals and mineral rights, water and water rights, wells,
development rights, air rights, easements, rights to the use of the
Common Area, and any and all rights of Sellers in and to any streets,
alleys, passages and other rights of way, (b) all Buildings, (c) all
Personal Property that constitutes "fixtures" under applicable State
law, and (d) all other Improvements.
"Riverwoods Declaration" means that certain Declaration of
Covenants and Restrictions, dated February 4, 1985 and amended October
6, 1992 and September 7, 1993, by and among the Village of Riverwoods,
American National Bank and Trust Company of Chicago, as Trustee, and
Deerfield Saunders Joint Venture.
"Seller Event of Default" means any Event of Default arising by
reason of a default by any Seller of its obligations hereunder.
"Service Contracts" means all management, service, supply,
equipment rental, maintenance, and other contracts related to the
operation of the Real Property or the Personal Property.
"Servicer" means GE Capital Asset Management Corporation, as
servicer under the Pooling and Servicing Agreement.
"Water Agreement" means, collectively, that certain Amended and
Restated Water Agreement, dated February 4, 1985, by and among AMR
Realty Venture, Commerce Clearing House, Inc., Deerfield Saunders Joint
Venture and Travenol Laboratories, Inc. (collectively, the "Interested
Parties") and that certain Water Agreement, dated February 4, 1985,
among the Villages of Deerfield and Riverwoods and the Interested
Parties.
ARTICLE 2: AGREEMENT TO PURCHASE AND SELL
-----------------------------------------
2.1 Agreement.
(a) Purchase Price. Subject to the terms and conditions of this
Agreement, each of the Sellers agrees to sell, grant, assign and convey to Carr,
and Carr, directly or through a designee, agrees to accept and assume, the
Property for a total purchase price (the "Purchase Price") of $80,000,000. The
Purchase Price will be paid in part by the assumption of the obligations of the
borrower under the Phase I Debt arising from and
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after the Closing Date and, if the KILICO Mortgage cannot be prepaid at Closing,
by the purchase of the KILICO Mortgage for an amount equal to the outstanding
principal amount secured thereby, and all accrued interest thereon, as of the
Closing Date, without premium or prepayment penalty. The Purchase Price, net of
the principal amount and accrued interest assumed in respect of the Phase I Debt
and the KILICO Mortgage, if applicable, will be paid in cash. The Purchase Price
shall be delivered at closing to the Joint Venture, on behalf of the Sellers.
The Purchase Price shall be applied by the Sellers to retire all debt secured by
liens on any of the Property (except the Phase I Debt and, if the same cannot be
prepaid, the KILICO Mortgage) and to procure releases for all such liens. Carr
shall have no responsibility for seeing to the proper allocation of the Purchase
Price among the Sellers, and the Sellers shall have no responsibility for seeing
to the proper allocation of the Purchase Price by Carr among the Parcels.
(b) Assumption of Phase I Debt. Carr shall be solely responsible for
satisfying the conditions set forth in the Phase I Mortgage for the assumption
by Carr or its designee of the Phase I Debt, including the establishment of any
reserves which are required to be maintained, any principal reduction reserve
and interest thereon which may be required, any legal opinions that may be
required, and the payment of the servicer's attorney's fees and any servicer's
fee or charge which may be imposed in connection with the assumption. Any
reserves or other amounts paid in connection with the assumption of the Phase I
Debt will not reduce or affect the purchase price. All conditions to assumption
of the Phase I Debt must be reasonably satisfactory to Carr; provided, however,
that Carr specifically acknowledges that, if necessary, it will post in cash the
full reserves specified in Section 2.32(b)(vii) of the Phase I Mortgage and any
necessary Principal Reduction Amount and interest thereon required by the second
grammatical paragraph of Section 2.32(b) of the Phase I Mortgage. It is
understood, however, that Carr may wish to post other collateral such as Parcel
III in lieu of such reserves. The Sellers agree to cooperate with Carr in Carr's
efforts to satisfy the conditions to assumption of the Phase I Debt and to seek
alternatives to the cash reserve requirements; provided, however, that such
cooperation does not require the Sellers to incur any expense or additional
obligations.
(c) Association. Sellers will cooperate with Carr during the Due
Diligence Period to take such actions as may be necessary for Carr to have
voting control over the Association that is consistent with the Sellers'
existing control, provided, however, that any inability by the Sellers to obtain
any necessary third party consents to such actions shall not constitute a
failure of any condition to Carr's obligation to proceed to Closing.
2.2 Deposit of Earnest Money.
Within two (2) Business Days after full execution of this Agreement
by all parties, Carr shall deposit with Chicago Title Insurance Company (the
"Title Company"), by delivery of a check or by wire transfer of immediately
available or "next day" federal funds, the amount of $800,000 as an earnest
money deposit hereunder (such amount, together with any interest earned thereon,
is referred to herein as the "Earnest Money"). The Earnest Money may be invested
by the Title Company in U.S. government obligations or federally insured
certificates of deposit or deposit accounts at the direction of Carr. All such
investments shall be made using Carr's taxpayer identification number, and Carr
shall be responsible for the payment of any investment fees. The Title Company
shall hold
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the Earnest Money pursuant to a written earnest money escrow agreement (the
"Escrow Agreement"), substantially in the form of Exhibit E attached hereto. The
parties shall execute such certificates and other written confirmations as the
Title Company may reasonably require with regard to the disposition of the
Earnest Money in accordance with this Agreement. The Title Company shall be
specifically authorized to disburse the Earnest Money to Carr immediately upon
receipt of notice from Carr, with a copy to Sellers, on or before April 30, 1996
that this Agreement has been terminated in accordance with the terms of
Paragraph 3.1 hereof and without any consent or authorization of any Seller and
even despite any objection or potential objection by any Seller, it being agreed
that the Title Company shall be entitled to rely solely upon such notice by Carr
on or before the expiration of the Due Diligence Period. After April 30, 1996,
any disposition of the Earnest Money shall require the joint instructions or
order of the parties, consistent with this Agreement. In addition to any other
right or remedy of Carr under this Agreement, the Earnest Money and any earnings
thereon shall be promptly refunded to Carr upon demand if a Seller Event of
Default shall have occurred.
ARTICLE 3: DUE DILIGENCE
------------------------
3.1 Due Diligence Period.
During the period beginning upon the date of execution of this
Agreement through 6:00 p.m. Central Time on April 30, 1996, subject to extension
for limited purposes as provided in Paragraphs 3.6 or 3.7 hereof) (the "Due
Diligence Period"), Carr shall perform its due diligence review and examination
of the Property and all other aspects of the proposed transactions described
herein, and shall, before the expiration of the Due Diligence Period, determine
in its sole discretion whether it is satisfied in all respects with its review
of the information delivered pursuant to Paragraph 3.3, the physical condition
of the Property, the condition of title to the Property and its suitability for
Carr's intended investment therein. Carr shall have the absolute right to
terminate this Agreement and all obligations of Carr hereunder, for any reason
or for no reason, subject to the last sentence of Paragraph 3.6 hereof, by
giving notice to the Joint Venture, on behalf of the Sellers, and to the Escrow
Agent as provided herein at or before the expiration of the Due Diligence
Period. If Carr does not timely give such notice, then this Agreement shall not
so terminate, and Carr will be deemed to have waived its right to terminate this
Agreement except as expressly set forth elsewhere in this Agreement. Upon any
such termination of this Agreement, no party hereto shall have any further
rights, obligations or liabilities hereunder except to the extent that any
right, obligation or liability set forth herein expressly survives termination
of this Agreement.
3.2 Access to Information; Environmental Audits.
During the Due Diligence Period, and at all times before the Closing
Date, each Seller shall provide Carr and its Affiliates, and their respective
agents, employees, consultants, and representatives (each a "Carr
Representative"), with reasonable access to all files, books, records and other
materials relating to the Property and the right to examine, inspect and make
copies of any or all of such materials. Each Seller shall also grant or cause to
be granted to Carr and each Carr Representative reasonable access to the
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Property upon at least 24 hours' prior notice to the Joint Venture for the
purpose of conducting surveys, architectural, engineering, geotechnical, and
environmental inspections and soil tests (including sampling and invasive
testing for the presence of Hazardous Materials performed in connection with any
Phase One or Phase Two environmental audits elected to be performed),
feasibility studies and any other inspections, studies or tests reasonably
required by them; provided, however, that Carr shall provide to the Sellers
copies of any work plans for any invasive work to be conducted on the Property
at least 24 hours prior to conducting such invasive work. Upon the completion of
any such inspection or test, Carr shall restore the Property to its condition
prior to such inspection or test. Carr shall indemnify, hold harmless, and
defend the Sellers and the Sellers' constituent entities' partners,
shareholders, members, officers, directors, employees and agents from any loss,
cause of action, claim, lien or costs (including reasonable attorneys' fees and
defense costs) arising out of or resulting from Carr's actions under this
Paragraph 3.2. Carr's indemnity and restoration obligations under this Paragraph
3.2 shall survive the Closing or a termination of this Agreement,
notwithstanding anything to the contrary in this Agreement. Prior to entering
the Property, Carr and any contractor acting on its behalf shall provide
evidence of liability insurance satisfactory to the Sellers. If this transaction
does not close, Carr shall provide the Sellers with copies of all tests
performed on the Property by Carr and/or its contractors at no cost to the
Sellers. With reasonable advance notice to the Joint Venture, on behalf of the
Sellers, Carr may conduct a "walk-through" of tenant spaces, subject to the
rights of tenants. Carr shall not inspect the space of tenant(s) of the Property
more than one time without the express permission of such tenant(s). The Joint
Venture shall be responsible for giving all necessary or appropriate notices to
tenants to permit such "walk-throughs." In the course of its investigations,
Carr may make such inquiries to third parties as Carr may see fit, including
without limitation, inquiries to contractors, property managers, parties to
Service Contracts, lenders of debt being purchased or assumed by Carr, tenants
and municipal, local and other governmental officials and representatives, and
each Seller consents to such inquiries; provided, however, that Carr shall
coordinate any such contact with any tenants with the Joint Venture, and a
representative of the Sellers shall have the right (if available) to be present
for each contact between Carr or any Carr Representative and any tenant. Carr
shall not cause the Property to become subject to any liens as a result of
Carr's activities, or the activities of any Carr Representative. Seller
acknowledges that Carr may also require direct contact with governmental
officials, and Seller agrees to cooperate to provide direct access. Carr
acknowledges that Seller has advised Carr of the sensitivity of its
relationships with local governments (including the Villages of Deerfield and
Riverwoods) concerning the Property, which could be jeopardized by premature
disclosure of this transaction, and Carr acknowledges that Carr's initial access
to governmental officials will need to be coordinated with Seller. If Seller
requests, a representative of Seller shall have the right (if available) to be
present for the initial meeting or other contact between Carr or any Carr
Representative and governmental officials, and Carr shall make reasonable
efforts to schedule such initial meetings at times which are satisfactory to
Carr and Seller. After such initial contact, Carr may deal with any such
governmental official directly.
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3.3 Property Information
The Sellers shall have provided to Carr, no later than March 29, 1996,
true and complete copies of all of the following information by delivering such
copies to Carr or its counsel or by providing access to, with the right to copy
at, a central location designated by the Joint Venture on behalf of the Sellers:
(i) all Leases or license agreements encumbering any part of the Property, (ii)
all Service Contracts, all loan documents relating to any loan that is secured
by or affects any portion of the Property and is to be purchased or assumed by
Carr pursuant to this Agreement, and all other contractual obligations that are
now, or may after the Closing become, binding upon the Property or Carr, (iii)
all notices or communications relating to uncured violations by the Sellers or
the Property of any law, ordinance, covenant or condition and all agreements
relating to the use, occupancy or ability to develop the Real Property or that
may affect title to the Property or give rise to any liabilities that may be
enforceable against Carr or the Property after the Closing, (iv) all surveys,
plans and specifications relating to the Property and in any Seller's possession
or control, (v) audited operating statements for the Property for 1993, 1994,
and 1995 (vi) annual operating budgets for the Property for 1995 and 1996; (vii)
a list of all capital expenditures made in connection with the Property since
1992; (viii) copies of notes, deeds of trust, mortgages and other similar
instruments relating to any indebtedness that is not prepayable upon sale of the
Property; (ix) copies of all correspondence in the possession of the Sellers
with the Illinois State Toll Highway Authority (the "Authority") regarding
expansion of the Deerfield section of the Tri-State Tollway and the Authority's
request for a donation of a portion of the Common Area east of the Phase I
Property to the State of Illinois in connection with such expansion; (x) any
studies or reports in the possession of the Sellers relating to (a) the presence
(or absence) of toxic materials (including asbestos) at the Property, (b) the
condition of the soil underlying the Property, (c) the physical condition of the
Property, (d) compliance or non-compliance of the Property with the Americans
with Disabilities Act, and (e) the presence or absence on the Property of
endangered species, wetlands or other environmentally sensitive areas; (xi) the
latest property tax bills and assessment notices from all taxing authorities;
and (xii) all existing agreements with or pending applications to any
governmental authority with respect to any zoning modification, variance,
exception, platting or other matter relating to the zoning, use, development
subdivision or platting of the Property. The Sellers also agree to provide to
Carr or to make available for copying at Sellers offices any other documents in
the possession of the Sellers that Carr shall reasonably request with respect to
the economic, physical, environmental and other conditions of the Property,
including, without limitation, insurance policies affecting the Property,
documentation of any loans secured by the Property, the Sellers' books and
records relating to the Property and the use, ownership, development management
or financing thereof (but not including information regarding the internal
business structuring and allocation of income, gain and loss among the Sellers
or their investors), general correspondence files relating to the Property, and
any written notices, reports, citations, orders, decisions, correspondence or
memoranda from any governmental authority (including, but not limited to, copies
of any zoning letters). Each Seller agrees to provide with reasonable promptness
the Phase IV Materials and any updated information coming into such Seller's
possession or produced by such Seller after the initial delivery of the
documents described above and to continue to provide same during the pendency of
this Agreement. Nothing contained in this Paragraph 3.3
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shall require the Sellers to furnish any information to Carr in a form other
than the form in which such Seller customarily prepares or retains that
information.
3.4 Tenant Estoppels
Each Seller shall endeavor to secure and deliver to Carr, no later than
5 Business Days before the Closing Date, estoppel certificates from tenants
under all Leases, substantially in the form of Exhibit F-1 attached hereto (the
"Tenant Estoppels"). Carr's obligation to close this transaction is subject to
the condition that, as of Closing: (i) (A) Tenant Estoppels for all Leases
covering 15,000 square feet or more of leased area in any building and for
Leases in the aggregate representing not less than 85% of the leased area of
Phase I and Phase III collectively, and (B) estoppel certificates from the
applicable Sellers in substantially the form of Exhibit F-2 attached hereto for
all Leases that are not covered by Tenant Estoppels, in each case consistent
with the Rent Roll attached hereto as Exhibit G (the "Rent Roll") and the
representations of Sellers in Paragraph 6.1, shall have been delivered to Carr,
(ii) all of the Leases shall be in full force and effect and no material default
or claim by the landlord or tenant thereunder shall have arisen, (iii) no tenant
shall have initiated or had initiated against it any insolvency, bankruptcy,
receivership or other similar proceeding, and (iv) the Tenant Estoppels shall be
current as of a date no earlier than the date that is 30 days before the Closing
Date; provided, however, that the conditions set forth in clauses (ii) and (iii)
above shall be deemed to have been met, even if leases covering in the aggregate
not more than 15,000 square feet of the leased area of Phase I and Phase III,
collectively, fail either of such conditions.
3.5 Service Contracts
During the Due Diligence Period, the parties will endeavor to agree as
to which Service Contracts Carr will assume and which Service Contracts will be
terminated by the Sellers at Closing. The Sellers will not be required to
terminate any Service Contracts in breach of such Service Contract or otherwise
prior to the time termination is permitted under such Service Contract. Carr
will assume the obligations arising from and after the Closing Date under those
Service Contracts that are not in default as of the Closing Date and which
either are not terminable at Closing or which the Sellers and Carr have agreed
will not be terminated. The Sellers shall be responsible for terminating, as of
a date no later than 30 days after Closing, all Service Contracts which by their
terms can be so terminated and that Carr does not specifically agree in writing
prior to the end of the Due Diligence Period to assume. All Service Contracts
that cannot be terminated as of a date that is no more than 30 days after the
Closing Date must be satisfactory to Carr. The Sellers shall terminate at
Closing, and the Partnership shall not assume, any property management or
leasing agreements affecting all or any portion of the Property. The Sellers
shall indemnify and hold Carr harmless from any losses, costs, claims, actions,
liabilities or expenses incurred by or asserted against Carr relating to the
termination of such contracts. Carr's obligation to close this transaction is
subject to the condition that, as of the Closing Date, any Service Contracts to
be assigned to Carr which are material to the operation of the Property and
cannot be replaced without a material adverse effect on the Property's financial
condition shall be in full force and effect, unmodified, and free from default.
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3.6 Delivery of Title Commitment, Survey and UCC Searches
Carr acknowledges that the Sellers have furnished to it the existing
title insurance policies listed on Exhibit H-1 attached hereto, all documents
referred to in the existing title policies (other than documents relating to
mortgage loans which will be paid off on the Closing Date), and the existing
surveys listed on Exhibit H-2 (collectively, the "Existing Title Information").
Within thirty (30) days after the date hereof, the Sellers shall cause to be
prepared and delivered to Carr (i) a current, effective commitment or
commitments of the Title Company to issue one or more owner's Title Policies (as
hereinafter defined), on the American Land Title Association standard form
(collectively, the "Title Commitment"), in the aggregate amount of $80,000,000,
with Carr or its designee as the proposed insured and accompanied by true,
complete, and legible copies of all documents referred to in the Title
Commitment; (ii) a current ALTA-ACSM as-built survey or surveys of the Real
Property meeting the minimum detail requirements of a "Class A" urban survey and
including the items indicated on Table A attached hereto as Exhibit H-3
(collectively the "Survey") including a certification addressed to Carr, in the
form attached hereto as Exhibit H-4; and (iii) copies of Uniform Commercial Code
financing statement searches in the name of each Seller and the name of the
Project issued by a company acceptable to Carr ("UCC Searches"). If the
foregoing are not delivered to Carr within such thirty (30) day period, the Due
Diligence Period shall be extended on a day-for-day basis for each day beyond
the end of such thirty (30) day period until all of the foregoing are delivered;
provided, however, that Carr may not terminate this Agreement under Paragraph
3.1 hereof after April 30, 1996 for any reason other than Carr's reasonable
dissatisfaction with the state of title reflected thereon or the failure of any
other condition precedent to Carr's obligation to consummate the transactions
contemplated hereby.
3.7 Title Review and Cure
During the Due Diligence Period, Carr shall review title to the
Property as disclosed by the Existing Title Information, the Title Commitment,
the Survey and the UCC Searches. Carr shall be entitled to object to any matters
shown on the (i) Existing Title Information, or (ii) Title Commitment, Survey or
the UCC Searches, in its sole discretion (or, after April 30, 1996, in its
reasonable discretion) by a written notice of objections delivered to the Joint
Venture, on behalf of the Sellers, at or before the expiration of the Due
Diligence Period, as the same may be extended pursuant to Paragraph 3.6 hereof.
Carr shall deliver to Sellers a non-binding preliminary report regarding the
acceptability or unacceptability of matters shown in the Existing Title
Information within twenty (20) days after the date hereof. Each Seller will
cooperate with Carr in curing any objections Carr may have to title to the
Property or other matters relating to the Property; provided, however, that the
Sellers shall have no obligation to cure any title objections other than (A)
liens and security interests created by, under or through any Seller or (B)
liens and security interests created by, under or through any third parties
which liens and security interests Sellers shall cause to be released on or
before the Closing Date; and provided, further, that (1) Sellers shall not be
required to secure a release of the liens securing the Phase I Debt or, if the
same cannot be prepaid in full at Closing, the KILICO Mortgage and (2) Sellers
shall not be required to expend more than $50,000 in the aggregate to release
liens and security interests of the kind referred to in clause (B) above. Each
Seller further
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agrees to remove all exceptions or encumbrances to title that arise or become
indexed of record on or after the date of this Agreement that result from the
actions or inactions of any Seller and to which Carr reasonably objects. As to
any other exceptions or objections raised by Carr, the Sellers shall have 10
Business Days from the receipt of Carr's notice of objections either to have
such exceptions or objections removed or, if acceptable to Carr, to provide
affirmative title insurance protection for such exceptions satisfactory to Carr,
in Carr's sole discretion. If any Seller fails within such 10 Business Day
period either to provide for the removal of such exceptions or objections or to
obtain affirmative title insurance protection for such exceptions or objections
satisfactory to Carr, in Carr's sole discretion, then Carr may elect to
terminate this Agreement by delivering written notice to the Joint Venture, on
behalf of the Sellers, within 10 Business Days following such period (and the
Due Diligence Period shall be extended, as necessary, to be co-terminous with
the expiration of the second of such 10 Business Day periods). If the Title
Company revises any Title Commitment, or the surveyor revises the Survey, to add
or modify exceptions, or to add or modify the conditions to obtaining any
Endorsement (as defined in Paragraph 3.8) requested by Carr during the Due
Diligence Period, then Carr may terminate this Agreement if provision for their
removal or modification prior to Closing reasonably satisfactory to Carr is not
made. Carr shall be deemed to have approved any title exception to which Carr
did not object, as provided above, or to which Carr objected without terminating
this Agreement.
3.8 Delivery of Title Policy at Closing
As a condition to Carr's obligation to close, the Title Company shall
deliver to Carr at Closing an owner's policy or policies of title insurance on
the Standard ALTA Form B-1970 (revised 10-17-70 and 10-17-84) (the "Title
Policies"), with extended coverage (i.e., with ALTA General Exceptions 1 through
5 deleted), issued by the Title Company as of the date and time of the recording
of the Deed (as defined herein), in the full amount of the Purchase Price,
containing the Endorsements (as defined below), and insuring Carr as owner of
good, marketable and indefeasible fee simple title to the Real Property, subject
only to the Permitted Exceptions (as defined below). "Permitted Exceptions"
means exceptions created or suffered by Carr, exceptions approved by Carr
pursuant to this Agreement; the liens securing the Phase I Debt; the lien of the
KILICO Mortgage (if the same cannot be prepaid at Closing); real estate taxes
for 1995 and subsequent years, not yet due and payable; and tenants in
possession as tenants only under the Leases without any option to purchase or
acquire an interest in the Property. "Endorsements" means, to the extent such
endorsements are available under the laws of the state in which the Property is
located, the following endorsements: (1) owner's comprehensive; (2) access; (3)
survey (accuracy of survey) (4) location (survey legal matches title legal); (5)
separate tax lot; (6) legal lot; (7) contiguity; (8) as to Phase I and Phase
III, zoning 3.1, with parking (subject to the violations noted in Paragraph 6.3
hereof) and loading docks; and (9) such other endorsements normally available in
similar transactions as Carr may reasonably require during the Due Diligence
Period based on its review of the Existing Title Information, the Title
Commitment, the Survey and the UCC Searches. Carr will pay any additional charge
required by the Title Company to issue the Endorsements described in clauses (8)
and (9) of the preceding sentence. Each Seller shall execute at Closing an ALTA
Extended Coverage Statement in such form as the Title Company shall reasonably
require for the issuance of the Title Policy and the Endorsements. The Title
Policy may be
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delivered after the Closing if at the Closing the Title Company issues a
currently effective, duly-executed "marked-up" Title Commitment in acceptable
form and irrevocably commits in writing to issue the Title Policy in the form of
the "marked-up" Title Commitment promptly after the Closing Date.
3.9 Title and Survey Costs
The Sellers shall pay for the cost of the Survey, including any
revisions necessary to make the Survey conform to the requirements of this
Agreement, the premium for the Title Policy, including the premium for extended
coverage and the Endorsements (other than the Endorsements for which Carr agrees
to pay in Paragraph 3.8 hereof), and the cost of the UCC Searches.
ARTICLE 4: OPERATIONS
---------------------
4.1 Preservation of Business
From the date of this Agreement until the Closing Date, the Sellers
shall cause the Property to be operated only in the ordinary and usual course of
business and consistent with their past practices, shall maintain the Property
in its condition as of the date hereof, shall preserve the existing
relationships of each Seller with suppliers, independent contractors, employees,
parties under Service Contracts, and other Persons material to the operation of
the Property, shall perform their material obligations under the Leases and all
other material agreements affecting the Property, including, without limitation,
the Annexation Agreement, the Benthaus Agreement, the Declaration, the
Riverwoods Declaration and the Water Agreement, and shall not take or permit any
action or omission which would cause any of the representations or warranties of
the Sellers contained herein to become inaccurate in any material respect or any
of the covenants of the Sellers contained herein to be breached.
4.2 Maintenance of Insurance
Each Seller shall continue to carry its existing insurance through the
Closing Date.
4.3 Exclusivity
Each Seller agrees that during the pendency of this Agreement, such
Seller shall not, directly or indirectly, solicit or provide any confidential
information to, or participate in any discussions or negotiations with, any
Person other than Carr concerning any sale or other similar transaction
involving the Property.
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4.4 New Contracts; Water Agreement Termination
Without Carr's prior written consent in each instance, the Sellers will
not enter into or amend, terminate, or grant concessions regarding any contract
or agreement that will be an obligation affecting the Property or binding on
Carr after the Closing except contracts entered into in the ordinary course of
business that are terminable without cause on 30-days' notice or less (and each
Seller agrees to terminate any such contracts by the Closing Date if Carr gives
the Joint Venture notice 30 days before the Closing Date).
It is understood that the Property is presently served by Lake Michigan
water provided by the Village of Deerfield pursuant to the Water Agreement. The
water serving the Property is furnished from a reservoir located off-site at the
southeast corner of the Property. The Villages of Deerfield and Riverwoods (the
"Villages") have proposed to construct a second water reservoir located off-site
on the west side of Saunders Road, which second reservoir will be
cross-connected to the existing water system associated with the existing
reservoir. It is expected that the second reservoir and "loop" formed by the
cross connect between reservoirs will provide additional back-up safety capacity
and will obviate the need for the water gallonage use limits presently set forth
in the Water Agreement. The Villages have requested that the Property and
several other private owners participate in the cost of the water reservoir up
to a maximum cost to the Property of $170,000. The Villages have also proposed
that the Property and the other private owners who participate in the water
system join in an agreement which would terminate the Water Agreement and remove
the water gallonage use limits set forth therein. Carr agrees to participate in
the proposed cost sharing and agreement modification, subject to Carr's
approval, acting reasonably, of any agreement evidencing such modification. The
Sellers will not enter into any agreement modifying the Water Agreement without
Carr's approval, as aforesaid. The Sellers will keep Carr informed as to the
status of the Water Agreement modification. If the Water Agreement modification
is not finalized by the Closing, then finalization of the Water Agreement
modification and payment of the Property's share of the cost sharing (up to an
amount not to exceed $170,000) shall be Carr's responsibility.
4.5 Leasing Arrangements
The Sellers will not amend, terminate, grant concessions regarding, or
enter into any Lease unless Carr has given its prior written consent thereto,
which consent shall not be unreasonably withheld (and such consent shall be
assumed if Carr fails to object or otherwise reply within five (5) Business Days
of the applicable Seller's notice and delivery to Carr of (i) a true and
complete copy of the proposed Lease or amendment, and (ii) such information
regarding the tenant, business terms, concession arrangements and other
information as Carr may reasonably request.
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ARTICLE 5:
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[INTENTIONALLY OMITTED]
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ARTICLE 6A: REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------------------
Each Seller represents and warrants to Carr as follows:
6.1 Leases and Rent Roll
The documents constituting the Leases that are delivered to Carr
pursuant to this Agreement will be true, correct and complete copies of all of
the Leases affecting the Property, including all amendments and guarantees
related thereto. There are and will be no Leases other than Leases reflected on
the Rent Roll or approved by Carr pursuant to Paragraph 4.5 hereof. To the best
knowledge of the Sellers, all information set forth in the Rent Roll is true,
correct, and complete in all material respects as of its date. Except as set
forth in the Rent Roll, there are no leasing or other fees or commissions due,
nor will any become due, in connection with any Lease or any renewal or
extension or expansion of any Lease, and no understanding or agreement with any
party exists which will survive the Closing and become binding on Carr or the
Project as to payment of any leasing commissions or fees regarding future leases
or as to the procuring of tenants. To such Seller's knowledge, except as
disclosed in the Rent Roll, no tenants have asserted, nor are there, any
defenses or offsets to rent accruing after the Closing Date and no monetary
default or other material breach exists on the part of any tenant. Such Seller
has not received any notice of any default or breach on the part of the landlord
under any Lease which remains uncured, nor, to the best of such Seller's
knowledge, does there exist any such default or breach.
Except as set forth in the Rent Roll, all of the Sellers' obligations
to construct tenant improvements or reimburse the tenants for tenant
improvements under the Leases have been paid and performed in full, and all
concessions from any Seller, as the landlord under any Lease, have been paid and
performed in full. All rental abatements under any Leases with respect to the
periods prior to Closing will have been fully applied to rent payments accruing
prior to Closing or paid in cash to the applicable tenants. Except as disclosed
on the Rent Roll, no tenants under any Leases will be entitled to rent
abatements for any periods from and after the Closing. The Rent Roll identifies
all renewal and expansion options of the tenants under all Leases. No such
tenant has an option to purchase all or any part of the Property (including,
without limitation, any rights of first offer, rights of first negotiation,
rights of first refusal or similar rights).
6.2 Service Contracts and Operating Statements
The list of Service Contracts attached hereto as Exhibit N is true,
correct, and complete. Neither any Seller nor, to each Seller's knowledge, any
other party is in default in any material respect under any Service Contract. To
each Seller's knowledge, the operating and financial statements to be delivered
to Carr pursuant to this Agreement will
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fairly represent the income and expense (operating and capital) incurred in
connection with such Seller's ownership, operation, and management of the
Property for the periods indicated and will be true, correct, and complete in
all material respects. The operating budgets prepared for 1996 fairly reflect
each Seller's good faith estimates of real estate taxes, insurance premiums and
operating expenses for the Property for 1996. The Sellers are collecting monthly
operating expense pass-through amounts from tenants under Leases based on those
estimates.
6.3 No Violations
To each Seller's knowledge, neither the Property nor any Seller is in
violation in any material respect of any of its obligations under the Annexation
Agreement, the Benthaus Agreement, the Declaration, the Riverwoods Declaration,
the Water Agreement or the articles, bylaws and other operational documents of
the Association. The Sellers have disclosed to Carr that the Additional County
Dedication and installation of a signal light at Deerfield Road and Parkway
North Boulevard remain to be performed under the Annexation Agreement. Each
Seller has not received any written notice from any insurance company or
underwriter of any defect that would materially adversely affect the
insurability of the Property or cause an increase in insurance premiums. Each
Seller has not received any written notice of violations or alleged violations
of any laws, rules, regulations or codes with respect to the Property which have
not been corrected to the satisfaction of the issuer of the notice, except the
Sellers have disclosed to the Village of Deerfield that Phase I may have 18
fewer than the required number of parking spaces (the "Phase I Parking
Shortage").
6.4 Environmental
To each Seller's knowledge, except as disclosed in the reports listed
on Exhibit R, (as to which Sellers make no representation or warranty of
accuracy) (i) such Seller has not received any written notice pertaining to any
violation of Environmental Laws (as defined below) related to the Property or
the presence or release of Hazardous Materials (as defined below) on or from the
Property, (ii) such Seller has not manufactured, introduced, released or
discharged from or onto the Property any Hazardous Materials or any toxic
wastes, substances or materials (including, without limitation, asbestos, PCBs
or urea formaldehyde insulation), and (iii) such Seller has not used the
Property for the generation, treatment, storage, handling or disposal of any
Hazardous Materials in violation of any Environmental Laws; provided, however,
that the foregoing clauses (i) (as it relates to Hazardous Materials), (ii) and
(iii) are subject to an exception for (a) de minimis uses in operations and
maintenance as are customary at office properties similar to the Property, and
(b) Hazardous Materials in test laboratories operated by tenants of the
Property. The Sellers make no representation regarding the compliance of any
tenant with applicable Environmental Laws, except that the Sellers represent
that they have no knowledge of any violation by any tenant of any Environmental
Laws. The term "Environmental Laws" includes without limitation the Resource
Conservation and Recovery Act and the Comprehensive Environmental Response
Compensation and Liability Act and other federal laws governing the environment
as in effect on the date of this Agreement together with their implementing
regulations and guidelines as of the date of this Agreement, and all
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<PAGE>
state, regional, county, municipal and other local laws, regulations and
ordinances that are equivalent or similar to the federal laws recited above or
that purport to regulate Hazardous Materials. The term "Hazardous Materials"
includes petroleum, including crude oil or any fraction thereof, petroleum
byproducts, natural gas, natural gas liquids, liquefied natural gas, or
synthetic gas usable for fuel (or mixtures of natural gas or such synthetic
gas), and any substance, material waste, pollutant or contaminant listed or
defined as hazardous or toxic under any Environmental Law. Except for claims for
breaches of the representations set forth above that are brought within the
period prescribed by Paragraph 14.1 hereof, Carr waives the right to assert any
private right of action it may have against Sellers or any of their members,
partners, officers, directors, employees or Affiliates, in their capacities as
such, under any applicable Environmental Law.
6.5 Disclosure
To each Seller's knowledge, other than this Agreement, the documents
delivered at Closing pursuant hereto, the Permitted Exceptions, the Leases and
Service Contracts disclosed pursuant to Paragraph 3.3 hereof, the Water
Agreement, the Annexation Agreement, the Benthaus Agreement, the Declaration,
the Riverwoods Declaration, conditions, covenants and restrictions that are
recorded against the Property, and any other items disclosed to Carr by the
Sellers in writing during the Due Diligence Period, there are, and as of the
Closing Date there will be, no contracts or agreements of any kind relating to
the Property to which any Seller or its agents is a party and which would be
binding on Carr or the Property after Closing, including, without limitation,
brokerage, management or leasing agreements, except contracts or agreements
which are terminable by either party thereto on 30 days' notice or less and
which, singly or in the aggregate, would not have a material adverse effect on
Carr, on all or any part of the Property, or on the use, occupancy, operation or
condition (financial or otherwise) thereof. No consent of any party, including,
without limitation, the lender of the Phase I Debt, is necessary as a condition
to the valid termination, effective as of the Closing Date, of any Service
Contracts, leasing, brokerage or management agreements, or other agreements
affecting the Property, except that the Phase I Lender may have the right to
approve a change in the party managing the Property.
6.6 ERISA
No Seller is, nor is any Seller acting on behalf of, an "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which is subject to Title I
of ERISA, a "plan" within the meaning of Section 4975 of the Internal Revenue
Code of 1986, as amended, or an entity deemed to hold "plan assets" within the
meaning of 29 C.F.R. ss. 2510.3-101 of any such employee benefit plan or plans.
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6.7 Zoning; Development Rights.
The Property is zoned in the I-1 Office, Research and Restricted
Industrial PUD zoning district in Deerfield, Illinois, which allows for the
operation of the Improvements as currently conducted. Except for an application
to amend the I-1 designation to allow senior citizen housing and health care
facilities as a permitted or special use, the Sellers have no knowledge of any
pending or threatened zoning change. In 1989, the Village of Deerfield approved
a final site plan for the development of the vacant land west of Three Parkway
North with an office building ("Phase IV") comprising approximately 216,973
square feet of Gross Leasable Area. Such Phase IV site plan approval expired by
its terms and is not presently in effect. The Sellers have not pledged, assigned
or otherwise transferred any of the development rights associated with the
Property, except for (i) collateral assignments to mortgage lenders in
connection with loans which will be paid in full, assigned and assumed, or
purchased in connection with this Agreement, or (ii) the transfer to the
Marriott Lot of (a) not more than 171,090 square feet of Gross Leasable Area in
development rights (subject to the requirement that not less than 32% of the
land area of the Marriott Lot be at all times maintained as landscaped area) and
(b) rights to 50,000 gallons of water allocated to the Project under the Water
Agreement. All existing development has received all necessary approvals of the
Association.
6.8 Condemnation.
Other than a request by the Authority for the donation of an additional
1.3 acres of the Common Area abutting Parcel I, as depicted on Exhibit I
attached hereto (the "Toll Road Expansion Parcel"), there are not pending nor,
to the Sellers' knowledge have there been threatened, any proceedings for the
condemnation or taking of any portion of the Property by any governmental or
quasi-governmental authority, by exercise of rights of eminent domain as
otherwise (each a "Taking"). The Sellers have provided copies of all material
written notices and communications, including any notices alleging any
violations of any agreements or undertakings of Sellers, regarding such request
by the Authority. The Sellers hereby disclose to Carr that it remains obligated
to dedicate a 10-foot strip of land along Saunders Road fronting the Clubhouse
Parcel pursuant to the last paragraph of Section 8 of the Annexation Agreement
(the "Additional County Dedication").
6.9 Sellers.
Each of the Sellers is a Delaware limited liability company, the
managing member of which is the Joint Venture, as to a 99% member interest, and
the other member of which is K/Parkway Limited Partnership, an Illinois limited
partnership, as to a 1% member interest. The signature of the partners of the
Joint Venture set forth on the signature pages hereof are sufficient to bind
each of the Sellers.
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6.10 Authority, Enforceability, Etc.
This Agreement has been duly executed and delivered by each of the
Sellers and by each of the general partners of the members of each Seller
pursuant to authority legally adequate therefor, and each of the Sellers has
been and is authorized and empowered by all necessary persons having the power
of direction over it to execute and deliver this Agreement and to carry out the
transactions contemplated herein and therein. The Agreement is the legal, valid
and binding obligation of each of the Sellers, enforceable against each of the
Sellers in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
6.11 No Litigation.
There are not pending, and the Sellers have not received any written
notice of any threatened, actions, suits, claims, or proceedings in any court or
by or before any governmental agency (a) affecting or challenging any Seller's
ability to enter into and perform its obligations under this Agreement or (b)
related to or arising out of the ownership, management, leasing or operation of
the Property which would have a material and adverse effect on the ownership,
management, leasing or operation of the Property by Carr, or (c) asserting a
right of a tenant under any of the Leases to terminate its lease or to offset or
reduce the rent it is obligated to pay under its Lease, and the Sellers have not
received written notice of any intention by any governmental authority to take
any action by reason of non-compliance with any applicable governmental
requirement. The Sellers have informed Carr that Vincent R. Vecchione, a limited
partner in ESP Limited Partnership ("ESP"), a general partner of the Joint
Venture, has filed a lawsuit (the "Vecchione Action") alleging that Vecchione
was not given proper notice and opportunity to exercise certain rights to
purchase a partnership interest in ESP. The Sellers agree that the Vecchione
Action is not a limitation of the foregoing warranty.
6.12 Mechanics' Liens.
Sellers represent and warrant that there are no construction contracts
relating to the performance of any tenant improvement or other work at the
Property currently being performed by Seller (i.e., not by tenants). Except for
the Service Contracts, no contracts exist which were entered into by Seller or,
to Seller's knowledge, any tenants, that are or would become binding on Carr or
the Property at or subsequent to Closing. All contractors and materialmen who
are or were contracted by the Sellers or its authorized agents to furnish labor
and/or materials to the Sellers to improve the Property prior to Closing shall
be paid by the Sellers on a current basis for all amounts properly payable to
them for work performed or services rendered prior to Closing.
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6.13 No Assessments
Except as shown on the assessment notices (if any) delivered to Carr
pursuant to Section 3.3(xi), the Existing Title Policies and the Title
Commitments, the Sellers have not received any notice of, and have no knowledge
of, any pending or threatened liens, special assessments (except to the extent
described in Paragraph 4.4 hereof) or increases in assessed valuations to be
made against the Property by any governmental authority.
6.14 Title to Property
The Sellers represent and warrant to Carr that, to their knowledge they
are, collectively the holders of good and marketable fee simple title to the
Land and Improvements and the holders of good title to all of the other
Property, in each case subject to no claims, liens interests, restrictions or
other rights not disclosed in the Existing Title Information and the Rent Roll
delivered to Carr pursuant to Paragraph 3.3 hereof; provided, however, that the
Sellers' liability for any breach of this Section 6.16 shall be limited to such
amount as it is able in good faith to recover under its title insurance
policies.
6.15 Limitation.
The Sellers have not made any representations or warranties to Carr
concerning this transaction or the Property other than any representations or
warranties expressly set forth in Article 6 of this Agreement; AND THE PROPERTY
WILL BE SOLD AND DELIVERED TO CARR IN AN "AS IS" CONDITION, WITHOUT ANY WARRANTY
AS TO FITNESS FOR A PARTICULAR USE OR MERCHANTIBILITY, AND WITHOUT ANY OTHER
WARRANTY, EXCEPT AS EXPRESSLY PROVIDED HEREIN.
As used in this Agreement, the phrases "to Sellers' knowledge," "to the
best of Sellers' knowledge," "known by Seller" or other phrases of similar
import shall mean only matters actually known by Betsy Henschel, Steve Adamczyk,
Harlan Stanley or Mike Watts. It is further understood that Carr waives any
right of action it may otherwise have against such individuals, but not against
the Sellers, should any representations or warranties be incorrect for any
reason.
ARTICLE 6B: REPRESENTATIONS AND WARRANTIES OF CARR
--------------------------------------------------
6.16 ERISA
Carr is not, nor is Carr acting on behalf of, an "employee benefit
plan" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which is subject to Title I of
ERISA, a "plan" within the meaning of Section 4975 of the Internal Revenue Code
of 1986, as amended, or an entity deemed to hold "plan assets" within the
meaning of 29 C.F.R. ss. 2510.3-101 of any such employee benefit plan or plans.
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6.17 Authority, Enforceability, Etc.
Carr is duly organized, validly existing and in good standing as a
corporation under the laws of the State of Delaware and is qualified to do
business in all jurisdictions in which the conduct of its business makes such
qualification necessary. This Agreement has been duly executed and delivered by
Carr pursuant to authority legally adequate therefor, and Carr has been and is
authorized and empowered by all necessary persons having the power of direction
over it to execute and deliver this Agreement and to carry out the transactions
contemplated herein and therein. The Agreement is the legal, valid and binding
obligation of Carr, enforceable against Carr in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
ARTICLE 7: CONDITIONS PRECEDENT TO OBLIGATIONS OF CARR
------------------------------------------------------
The obligation of Carr to consummate the Closing is subject to the
fulfillment, at or prior to the Closing of each of the following conditions, and
failure to satisfy any such condition shall excuse and discharge all obligations
of Carr to carry out the provisions of this Agreement and shall entitle Carr to
a full return of the Earnest Money, unless such failure is waived in writing by
Carr:
7.1 Representations and Warranties
The representations and warranties made by the Sellers in this
Agreement shall be true and complete in all material respects when made and on
and as of the Closing Date, with the same effect as though such representations
and warranties were made on and as of the Closing Date. In the event at any time
prior to the Closing any of the Sellers learn or have reason to believe that any
of the aforesaid representations and warranties made by the Sellers is no longer
true or valid, such party shall promptly notify Carr in writing and therein
specify the factors rendering or likely to render such representations or
warranties untrue or invalid. The Sellers shall not have liability or obligation
by reason of any representation being untrue or invalid when made or becoming
untrue or invalid after the date of this Agreement, unless the Sellers knew such
representation to be untrue or invalid when made or caused such representation
to become untrue or invalid through their fraud or intentional acts; provided,
however, that Carr retains the right to terminate this Agreement for the failure
of any such representation to be true and, if such representation shall be or
become untrue due to the knowing misrepresentation, fraud or intentional acts of
any Seller, to be reimbursed by the Sellers for the costs incurred by Carr in
performing its due diligence.
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7.2 Legal Proceedings
No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which is reasonably expected to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or to impose
liability on Carr or its designee or a lien on the Property not insured over
under the Title Policy, other than an action or proceeding instituted or
threatened by Carr or any action to acquire the Toll Road Expansion Parcel.
7.3 No Material Adverse Changes or Developments
There shall not have been any material adverse change or development in
or affecting the condition, financial or otherwise, of the Property or the
business affairs of any Seller. Without limiting what may be a material adverse
change, a change having a financial impact of greater than a five percent (5%)
reduction in net operating income shall be regarded as material adverse change
for these purposes.
7.4 Phase I Debt; Other Debt
At Closing, Carr shall have obtained the unconditional written consent
of the CMBS Lender under the Phase I Debt to the assumption by Carr of such
Phase I Debt as set forth in Paragraph 2.1(b) above, together with written
confirmation from such CMBS Lender, that no default in payment or, to the
knowledge of the CMBS Lender, any other default has occurred and is continuing
thereunder and confirming the absence of any amendments to the documents
evidencing the Phase I Debt, except amendments disclosed to Carr in writing. All
documentation necessary for the assignment and assumption to Carr of the Phase I
Debt and, if applicable, the KILICO Mortgage shall have been received by Carr,
fully executed and in form and substance reasonably satisfactory to Carr,
subject to Paragraph 2.1(b) above.
7.5 Rent Roll, Leases and Other Agreements.
Carr shall have received a true and complete update of the Rent Roll,
current as of the Closing Date, and identical in all material respects to the
Rent Roll attached hereto as Exhibit G, except for matters approved by Carr
pursuant to Paragraph 4.5 hereof, and showing no material defaults by the tenant
or the landlord under any such Lease. Carr shall have received the estoppels
required by Paragraph 3.4 hereof.
7.6 Personal Property.
The Sellers shall have delivered to Carr, within ten (10) days after
the date of this Agreement, a complete inventory of the Personal Property that
is excluded from the sale contemplated hereby. The Personal Property included in
the sale shall be in its present order and repair, reasonable wear and tear
excepted.
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7.7 Other Conditions
All other conditions to Carr's obligations set forth in this Agreement
shall have been satisfied as of the dates required.
Carr shall not be required to consummate the purchase of any of the
Property unless all of the Sellers are able simultaneously to consummate the
sale of all of the Property.
ARTICLE 8: CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
---------------------------------------------------------
The obligation of each Seller to consummate the Closing is subject to
the fulfillment, at or prior to the Closing, of each of the following
conditions, and failure to satisfy any such condition shall excuse and discharge
all obligations of the Sellers to carry out the provisions of this Agreement
unless such failure is waived in writing by the Sellers:
8.1 Legal Proceedings
No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which is reasonably expected to restrain, prohibit or
invalidate the transactions contemplated by this Agreement, other than an action
or proceeding instituted or threatened by any Seller.
8.2 Phase I Debt
The consent described in Paragraph 7.4 hereof shall have been obtained.
8.3 Other Conditions.
All conditions to the Sellers' obligations set forth in this Agreement
shall have been satisfied as of the dates required.
8.4 No Conflicts
There is no agreement to which Carr is party or to Carr's knowledge
binding on Carr which is in conflict with this Agreement.
8.5 Representations and Warranties
The representations and warranties made by the Carr in this Agreement
shall be true and complete in all material respects when made and on and as of
the Closing Date, with the same effect as though such representations and
warranties were made on and as of the Closing Date.
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ARTICLE 9: CLOSING
------------------
9.1 Closing
The consummation of the transactions contemplated herein (the
"Closing") shall take place at the law offices of Mayer Brown & Platt, 190 South
LaSalle Street, Chicago, Illinois 60603, or at such other place to which the
parties may agree, on the date which is ten (10) Business Days after the
expiration of the Due Diligence Period described in Paragraph 3.1 or such
earlier time as Carr may designate upon not less than thirty (30) days' prior
written notice to the Sellers (such date being the "Closing Date"); provided,
however, that the Closing Date may be extended for an additional period of up to
30 days, at Carr's election, if necessary to obtain the approval of the lender
under the Phase I Debt to the assumption by Carr of the Phase I Debts, as
contemplated by Paragraphs 2.1 and 7.4 hereof; and provided, further, if such
extension is necessary because the lender's approval is sought in connection
with an amendment or waiver of the conditions presently contained in the loan
documents evidencing the Phase I Debt (including without limitation substituting
the Phase III collateral for the case deposits required by Section 2.32 of the
Phase I Mortgage), then upon such extension the Earnest Money shall become
non-refundable except if the Closing does not occur because of a Seller's
breach. If, through no fault of Carr, the Closing shall not have taken place by
close of business on July 1, 1996, Carr shall have the right to terminate this
Agreement, and the Earnest Money shall thereupon be disbursed as otherwise
described herein. If, through no fault of the Sellers, the Closing shall not
have taken place by close of business on July 1, 1996, the Sellers shall have
the right to terminate this Agreement, and the Earnest Money shall thereupon be
disbursed as otherwise described herein. Upon completion of the deliveries
hereunder and satisfaction of the other conditions to Closing herein set forth,
the parties shall deliver to the Title Company the items described in Paragraph
9.2 and shall direct the Title Company to make such deliveries and disbursements
thereof as are consistent with the terms of this Agreement.
9.2 Deliveries by Sellers
At the Closing, in addition to any other documents or agreements
required under any other provision of this Agreement, each Seller shall make the
following deliveries and performance (and the obligation of Carr to consummate
the Closing shall be conditioned thereon):
(a) Deeds. A special warranty deed or deeds (warranting title against
claims by, through or under the applicable Seller, but not otherwise) in the
form of Exhibit J.
(b) Personal Property Conveyance. A Bill of Sale and Assignment of
Leases and Contracts for each Parcel, and for all Property relating thereto,
each in the form of Exhibit K attached hereto (each, an "Assignment"), executed
and acknowledged by the applicable Seller, vesting in Carr good title to the
property described therein free of any claims, except for Permitted Exceptions,
provided, however, that all Intangible Property will be conveyed on a quitclaim
basis;
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(c) Payment of Obligations Not Assumed. Payment or provision for the
payment, in a manner reasonably satisfactory to Carr, of all obligations of the
Sellers that are to be paid by the Sellers pursuant to this Agreement, and which
would bind Carr or the Property if not paid, including evidence of such payment
to such effect reasonably satisfactory to Carr;
(d) Releases. Release or satisfaction, or provision for the release or
satisfaction, of all liens or encumbrances affecting the Property, other than
the Phase I Mortgage, the KILICO Mortgage (if applicable) and other Permitted
Exceptions;
(e) Certificates. A certificate from such Seller confirming that its
representations and warranties contained in Paragraph 6 hereof are true and
correct as set forth herein as of the Closing Date. Such certificate shall
contain an updated list of the Leases and Service Contracts which such Seller
shall certify to be true and complete as of Closing;
(f) Notice to Tenants. A notice to each tenant under each Lease in the
form of Exhibit L attached hereto;
(g) State Law Disclosures. Such disclosures and reports as are required
by applicable state and local law in connection with the conveyance of real
property;
(h) FIRPTA. A Foreign Investment in Real Property Tax Act affidavit
executed by such Seller. If any Seller fails to provide the necessary affidavit
and/or documentation of exemption on the Closing Date, Carr may proceed in
accordance with the withholding provisions as provided in such Act;
(i) Tenant Estoppels and Service Contract Estoppels. Estoppel
certificates satisfying the conditions in Paragraph 3.4, dated (or recertified
and updated as of a date) not earlier than the date required for such Lease
under such Paragraph 3.4, and, for such Service Contracts as Carr may designate
prior to April 30, 1996, written acknowledgments from vendors or providers under
such Service Contracts which are to be assumed by Carr and that are not
terminable by Sellers or Carr in accordance with their terms on 30 days' notice
or less, in form satisfactory to Carr, dated as of a date not more than 30 days
before Closing;
(j) [Intentionally omitted]
(k) Terminations. Terminations, effective as of a date no later than 30
days after the Closing Date, of those Service Contracts which are to be
terminated pursuant to Paragraph 3.5, except that any management agreements
affecting all or any part of the Property must be terminated as of the Closing
Date;
(l) Lien Waivers. If applicable under local law, a waiver of any lien
rights by any company managing the Property for any Seller at the time of
closing; and evidence reasonably satisfactory to Carr that no person has a right
now or in the future to file any liens against the Property for brokerage
commissions or fees in connection with the Leases or the transactions set forth
herein except as may be specifically described in the information delivered
pursuant to Paragraph 3.3;
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(m) Authority. Evidence of the existence, organization and authority of
each Seller and of each entity signing on behalf of the Sellers, as named in the
"signature blocks" of each Seller on the signature pages hereto, and of the
authority of the Persons executing documents on behalf of each Seller to do so,
all reasonably satisfactory to the Title Company and Carr;
(n) Phase I Debt. The materials described in the first sentence of
Paragraph 7.4 hereof;
(o) Title Policy. The Title Policy or the "marked-up" Title Commitment
referred to in the last sentence of Paragraph 3.8 hereof;
(p) Survey. The final ALTA survey of the Property contemplated by
Paragraph 3.6 hereof; and
(q) Additional Documents. Any additional documents that Carr, the
Escrow Agent or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement.
At Closing, the Sellers shall deliver absolute possession of the
Property, subject only to the applicable Permitted Exceptions, and immediately
after the Closing, the Sellers shall deliver to the property management office
in the Phase I Building: the original Leases and Service Contracts; copies or
originals of all books and records of account; contracts; copies of
correspondence with tenants and suppliers; receipts for deposits; papers or
documents which pertain to the current or future operation of the Property;
unpaid bills (for which Carr shall receive a credit against the Purchase Price);
all advertising materials, booklets, keys and other items, if any, used in the
operation of the Property (provided that Carr shall not distribute any
advertising materials, booklets or other items identifying or bearing any
trademark or logo of Sellers or their property manager without taking actions to
mask, omit or otherwise delete such identification, trademark or logo); and, if
in any Seller's possession or control, the original "as-built" plans and
specifications and all other available plans and specifications relating to the
Property. Each Seller shall cooperate with Carr after Closing to provide to Carr
any such information stored electronically, in a manner consistent with such
Seller's obligations under any software licenses or such Seller's rights in any
proprietary software programs.
9.3 Deliveries by Carr
At the Closing, Carr shall make the following deliveries and
performance (and the obligation of the Sellers to consummate the Closing shall
be conditioned thereon):
(a) Phase I Debt. Execution of the documents reasonably required by the
lender of the Phase I Debt to evidence Carr's assumption thereof;
(b) Personal Property Conveyance. The Assignments, executed by Carr;
(c) State Law Disclosures. Such disclosures and reports as are required
of a purchaser by applicable state and local law in connection with the
conveyance of real property; and
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(d) Authority. Evidence of the existence, organization and authority of
Carr or its designee and of the authority of the persons executing documents on
behalf of Carr or its designee reasonably satisfactory to the Title Company and
the Sellers;
(e) Assumption of Agreements: The assumption by Carr of all of the
obligations of the Joint Venture, Trustee and Developer under the Benthaus
Agreement and all obligations of Sellers under the Annexation Agreement and
Water Agreement, in each case, arising from and after the Closing Date; and
(f) Additional Documents. Any additional documents that the Sellers,
the Escrow Agent or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement.
9.4 Closing Statements/Escrow Fees
The Sellers and Carr each shall deposit with the Title Company executed
closing statements consistent with this Agreement in the form required by the
Title Company. The Title Company's escrow fee and any cancellation fee shall be
divided equally between and paid by the Sellers and Carr.
9.5 Sales, Transfer, and Documentary Taxes
The Sellers shall pay all sales, gross receipts, compensating, stamp,
excise, documentary, transfer, deed or similar taxes and fees imposed in
connection with this transaction under applicable state or local law.
ARTICLE 10: PRORATIONS AND ADJUSTMENTS/BUSINESS/MANAGEMENT
-----------------------------------------------------------
REVIEW
------
10.1 Prorations
Before Closing, the Sellers shall provide to Carr such information and
verification as may be reasonably necessary to support the prorations and
adjustments under this Article 10. The items in subparagraphs (a) through (d) of
this Paragraph 10.1, and other customary items of income and expense, except as
expressly provided below, shall be prorated as of the close of the day
immediately preceding the Closing Date, the Closing Date being a day of income
and expense to Carr:
(a) Collected Rent. Carr shall receive a credit for any rent and other
income (and any applicable state or local tax on rent) under Leases collected by
any Seller before Closing and applicable to any period of time on or after the
Closing Date. Uncollected rent and other income shall not be prorated. If Carr
collects delinquent rent after Closing, Carr shall apply such rent to the
obligations currently owing Carr for its period of ownership and to costs of
collection, remitting the balance, if any, to the Sellers. Carr shall bill and
attempt to collect such delinquent rent in the ordinary course of business, but
shall not be obligated to engage a collection agency or take legal action to
collect any delinquencies. Carr shall have no liability to any Seller for its
failure or inability to collect such
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delinquent rent, and Seller shall have the right to seek collection of any
delinquent rents for any period before the Closing. Any rental abatement
accruing for any period under any Lease, including, without limitation, the
Clintec Lease, shall be the responsibility of the party in ownership of the
Property during the applicable portion of such period. The Sellers are currently
engaged in a dispute with the Lake County Assessor (the "Assessor") regarding
1991-1992 real estate taxes. If any amount is owing to the Assessor upon
resolution of such dispute, such amount shall be paid by the Sellers. Carr shall
receive at Closing affirmative title insurance against any tax liens on the
Property that may arise out of such dispute. If the Sellers are required to pay
additional tax to the Assessor upon resolution of such dispute, Carr agrees that
such amount shall be treated as delinquent rent under the Leases that existed
during the years for which such taxes are due, which the Sellers may seek to
recover from the Tenants under such Leases; provided, however, that the Sellers
shall have no right to terminate any Lease for non-payment of delinquent rent.
Carr will cooperate with the Sellers, at the Sellers' cost, in the Sellers'
efforts to collect such delinquent rent; provided, however, that the Sellers
shall take no actions that might reasonably be expected to delay or impair
Carr's ability to collect current rent from tenants under any Leases or
otherwise impair Carr's relationship with such tenants. The Sellers agree to
indemnify Carr from and against any liability, claim, loss, cost or expense
incurred by Carr in seeking collection of sums respecting such real estate
taxes.
(b) Operating Expense Pass-throughs. The Sellers, as landlords under
the Leases, are currently collecting from tenants under the Leases additional
rent to cover taxes, insurance, utilities, maintenance and other operating costs
and expenses (collectively, "Operating Expense Pass-throughs") incurred in
connection with the ownership, operation, use, maintenance and management of the
Property. At Closing, Carr shall receive a credit equal to the amount of all
accounts payable relating to the Property as of the Closing Date and shall be
responsible for the payment thereof.
(c) Service Contracts. The Sellers or Carr, as the case may be, shall
receive a credit for regular charges under the Service Contracts assumed by Carr
pursuant to this Agreement to the extent paid and applicable to Carr's period of
ownership or payable and applicable to any Seller's period of ownership.
(d) Utilities. The Sellers shall cause the meters, if any, for
utilities to be read on the day on which the Closing Date occurs and to pay the
bills rendered on the basis of such readings, except for utilities paid directly
by tenants. If any such meter reading for any utility is not available, then
adjustment therefor shall be made on the basis of the most recently issued bills
therefor which are based on meter readings no earlier than 30 days before the
Closing Date, and such adjustment shall be reprorated when the next utility
bills are received.
(e) Obligations Not Subject to Proration. Carr agrees that it will be
responsible for the payment of, and except as set forth below there will be no
proration at closing in respect of, (i) all 1995 (payable in 1996) and 1996
(payable in 1997) real estate taxes applicable to the Property (subject to a
credit for any amounts thereof received by Sellers from tenants under Leases
attributable to the period after May 30, 1996), and (ii) a contribution not to
exceed $170,000 in the aggregate to the Villages of Riverwoods and Deerfield for
improvements to the public water system serving the Project and other
properties, described in Paragraph 4.4 hereof. If any Seller pays any part of
either of
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such items prior to Closing, then the amount so paid shall be credited to such
Seller at Closing. Any refunds of taxes for 1994 (payable in 1995) or prior
years shall be the property of the Sellers. It is understood that Fujisawa and
Clintec pay taxes under their Leases as tax bills are rendered, and that any
1995 (payable in 1996) payments made by them (i) after Closing will be Carr's
property to apply as required by the applicable Lease, and (ii) before Closing
will be credited to Carr.
10.2 Tenant Reconciliations and Post-Closing Adjustments
No later than April 30, 1997, Carr shall prepare and present to the
Sellers a calculation of the re-proration of Operating Expense Pass-throughs,
taxes (only to the extent of the over-collection or under-collection of taxes by
Sellers from tenants; provided however, that adjustments for incorrect estimates
of such taxes will not exceed 10% (plus or minus) of the Sellers reasonable
estimate used in collecting such taxes from tenants) and other items under the
Leases, based upon the actual amount of such items charged to or received by the
parties for calendar year 1996. The parties shall make the appropriate adjusting
payment between them within 30 days after presentment to the Sellers of Carr's
calculation based on that portion of the year during which the Sellers owned the
Property. The Sellers may inspect Carr's books and records related to the
Property to confirm the calculations made pursuant to this Paragraph 10.2.
Either party shall be entitled to post-Closing reconciliations and adjustments
for any incorrect proration or adjustment. Except as otherwise expressly
provided herein, all post-Closing reconciliations and adjustments between the
parties shall be paid in cash on demand.
10.3 Obligations Not Assumed
No expense, liability or obligation related to the ownership or
operation of the Property and allocable to any period before the Closing shall
be charged to or paid or assumed by Carr, other than those obligations for which
a proration is given or any obligations otherwise expressly assumed by Carr
under this Agreement or in writing.
10.4 Leasing Commissions
It is understood that there are no leasing commissions which are due or
will become due for any of the Leases in effect as of the date of this
Agreement, except that a commission would be payable to Cushman & Wakefield
("C&W") if C&W is retained by Alliant Foodservice ("Alliant") as its authorized
leasing agent or broker in connection with an extension or expansion of its
existing lease. Alliant is currently negotiating a renewal of its lease. Sellers
understand that Alliant is currently using Grubb & Ellis as its authorized
leasing agent, not C&W. Seller shall remain liable for any leasing commissions
claimed under contracts with Seller relating to all Leases in effect as of the
date of this Agreement other than (1) the Alliant renewal, which shall be the
obligation of Carr if Alliant retains C&W as its leasing agent, and (2) any
matters disclosed on Exhibit O attached hereto. If any Leases are entered into
after the date of this Agreement and prior to the Closing pursuant to Paragraph
4.5 above (an "Agreement Period Lease"), Carr shall assume and be liable to pay
all leasing commissions which may be earned in connection with such Agreement
Period Leases (as long as such Leases are entered into in a manner consistent
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with Paragraph 4.5). Carr acknowledges that LaSalle Partners Asset Management
would earn a commission as set forth on Exhibit O in such event as leasing agent
for the Property. In addition, if after the date of this Agreement but prior to
the Closing a tenant agrees to a letter of intent or termsheet or other similar
document indicating major business terms (which may be a nonbinding expression
of intent) for a Lease at the Property, and if Carr enters into a Lease with
such tenant within 120 days after the Closing, then, in addition to any other
commissions which may be owing in connection with such Lease, Carr will pay
LaSalle Partners Asset Management a commission as set forth on Exhibit O.
10.5 Tenant Deposits
All tenant security deposits (and interest thereon if required by law
or contract to be earned thereon) shall be transferred or credited to Carr at
Closing. As of the Closing, Carr shall assume the Sellers' obligations related
to tenant security deposits, but only to the extent they are properly credited
and transferred to Carr.
10.6 Tenant Improvements and Allowances
Carr shall be responsible for completing only those tenant improvements,
including any punchlist items, which the landlord is obligated to complete under
the Leases after Closing that are disclosed on the Rent Roll and for which any
existing applicable construction and architecture contracts have been
specifically assigned to Carr at the Closing. The Rent Roll discloses which
Leases have unperformed tenant improvements. At Closing, Sellers shall provide
to Carr (i) the Title Policies, which shall be free of any exception for
possible liens relating to work performed at the Property prior to Closing,
whether filed before or after the Closing, and (ii) acknowledgements from the
respective construction companies that are parties to construction contracts
with any Seller relating to the performance of any ongoing work consenting to
the assignment of such contracts to Carr and certifying that such contracts are
unmodified and in full force and effect, that no change orders or other
modifications have been executed in connection therewith (other than change
orders (i) approved by Carr, or (ii) which relate solely to work which a tenant
is obligated to perform, or (iii) which would not increase the aggregate
contract price by more than 5% and that true and correct copies of such
contracts and any such modifications are attached to such certificates.
10.7 Wages
Carr shall not be liable for any wages, fringe benefits, payroll taxes,
unemployment insurance contributions, accrued vacation pay, accrued pay for
unused sick leave, accrued severance pay or other compensation accruing prior to
Closing for employees of the Property. Carr agrees that, for a period of three
(3) years after the Closing (or termination of this Agreement without a Closing)
Carr shall not hire any of employees of LaSalle Partners Assets Management
presently or formerly employed at the Property at or above the grade of
Assistant Manager unless they shall first have been employed by another property
management company for a period of at least 30 days.
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10.8 Deposits
The Sellers shall receive a credit for the amount of deposits, if any,
with lenders (including the Phase I lender) or utility companies that are
transferable and that are assigned to Carr at the Closing. The Sellers shall
also receive a credit for prepaid insurance premiums paid on environmental
insurance policies insuring Phase I and attributable to the period from and
after the Closing Date. Carr agrees that the Sellers may request to be added as
additional insureds on such environmental insurance policies, provided that Carr
shall incur no cost in connection thereof and that the addition of Sellers as
additional insureds shall not impair Carr's rights thereunder.
10.9 Sales Commissions
The Sellers and Carr represent and warrant each to the other that they
have not dealt with any real estate broker, sales person or finder in connection
with this transaction other than LaSalle Partners Limited ("Broker"). If this
transaction is closed, the Sellers shall pay Broker in accordance with their
separate agreement. Broker is not authorized to make any agreement or
representation on behalf of either party. Except as expressly set forth above,
in the event of any claim for broker's or finder's fees or commissions in
connection with the negotiation, execution or consummation of this Agreement or
the transactions contemplated hereby, each party shall indemnify and hold
harmless the other party from and against any such claim based upon any
statement, representation or agreement, or alleged statement, representation or
agreement, of the indemnifying party.
ARTICLE 11: RISK OF LOSS; DAMAGE OR CONDEMNATION
------------------------------------------------
11.1 Risk of Loss.
Until the Closing, subject to Paragraphs 11.2 and 11.3 hereof, the
Sellers assume all risk of loss and liabilities for damage or casualty to all or
any part of the Property or damage or injury to any Person or other property
arising out of any fire, storm, accident, or other casualty, occurrence, event,
or condition on or relating to the Property.
11.2 Damage
The Sellers shall promptly give Carr written notice of any damage to
the Property, describing such damage, whether such damage is covered by
insurance, and the estimated cost of repairing such damage. If such damage is
not material, (1) the applicable Seller shall, to the extent possible, begin
repairs prior to the Closing out of any insurance proceeds received by such
Seller for such damage, pursuant to contracts that are assignable to Carr, (2)
Carr shall receive all insurance proceeds not applied to the repair of any such
Property prior to the Closing (including rent loss insurance applicable to any
period from and after the Closing Date) due to such Seller for the damage, (3)
any uninsured damage as reasonably estimated by a third-party adjustor, or
deductible, as reasonably estimated by a third-party adjustor, shall be credited
to Carr at Closing, and (4) Carr shall assume the responsibility for the repair
after the Closing. If such damage is
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material, Carr may elect by notice to the Sellers given within 10 Business Days
after Carr is notified of such damage (and the Closing shall be extended, if
necessary, to give Carr such 10 Business Day period to respond to such notice)
(a) to proceed in the same manner as in the case of damage that is not material
or (b) to terminate this Agreement, in which event the Earnest Money shall be
immediately returned to Carr. Damage as to any one or multiple occurrences shall
be deemed to be material if the cost of repairing the damage (and the cost of
rent abatement after Closing resulting from the damage) exceeds $500,000 or if
the damage entitles tenants whose Leases cover, in the aggregate, in excess of
10,000 rentable square feet to terminate their Leases.
11.3 Condemnation
The Sellers shall promptly give Carr written notice of any proceedings
in eminent domain or for any form of Taking that are contemplated, threatened or
instituted by any body having the power of eminent domain with respect to the
Property by notice to the Sellers, given within 10 Business Days after Carr
receives such notice from Sellers, Carr may elect (and if necessary the Closing
Date shall be extended to give Carr the full 10 Business Day period to make such
election) (a) to terminate this Agreement or (b) to proceed under this
Agreement, in which event the applicable Seller shall, at the Closing, assign to
Carr its entire right, title and interest in and to any condemnation award.
Unless and until the Closing shall have occurred or this Agreement shall have
been terminated, the applicable Seller and Carr shall jointly negotiate and
otherwise deal with the condemning authority in respect of such matter. After
the Closing, Carr shall have the sole right to negotiate and otherwise deal with
the condemning authority. If this Agreement is terminated, the applicable Seller
shall have the sole right to negotiate and otherwise deal with the condemning
authority. Notwithstanding anything herein to the contrary, Carr shall not have
any right to terminate this Agreement by reason of (i) the condemnation of the
Toll Road Expansion Parcel or (ii) the Additional County Dedication. Sellers at
the Closing will assign to Carr on a quit claim basis (as Intangible Property)
any and all claims or rights of action they may have against the Illinois Toll
Highway Authority respecting the Sellers' 1994 donation of approximately 1.2317
acres from the Common Area east of the Phase I Parcel, provided that any
recovery on any such claims or right of action shall remain the sole property of
the Sellers.
ARTICLE 12: EVENT OF DEFAULT; REMEDIES
--------------------------------------
12.1 Events of Default
It shall be an "Event of Default" hereunder if any party (a) shall
default in its obligation to close the transactions contemplated by this
Agreement, and such default continues for seven (7) days after notice of such
default is furnished by the party asserting such default to the defaulting party
or (b) shall make any knowing misrepresentation or make any fraudulent
representation or warranty.
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12.2 Seller Default
Carr shall have all rights and remedies to which it may be entitled at
law or in equity (including the remedy of specific performance) if any Seller
Event of Default occurs Notwithstanding the foregoing, Carr may seek and recover
money damages only for a Seller Event of Default that was committed
intentionally and in bad faith, and in no event shall the Sellers be liable for
any indirect, consequential or punitive damages.
12.3 Carr Default; Liquidated Damages
The Sellers' sole remedy if Carr defaults in its obligation to close
the transaction contemplated by this Agreement is to terminate this Agreement
and to retain the Earnest Money as liquidated damages, the Sellers each hereby
waiving all other rights or remedies in the event of such default by Carr. The
parties acknowledge that the Sellers' actual damages for an Event of Default by
Carr under this Agreement will be difficult to ascertain, and that such
liquidated damages represent the parties' best estimate of such damages.
ARTICLE 13: INDEMNIFICATION
---------------------------
13.1 Sellers' Indemnity
Subject to Paragraph 13.5 below, the Sellers hereby jointly and
severally agree to indemnify, defend and hold Carr harmless of, from and against
any liability, claim, demand, loss, cost, expense or damage (collectively,
"loss") suffered by Carr (1) arising from any act or omission of any Seller, or
its agents, employees or contractors, occurring during the Sellers' period of
ownership before the Closing or (2) arising from any breach or inaccuracy of the
Sellers' representations and warranties in Article 6 (subject to the limitations
contained in Paragraphs 6.15 and 14.1 hereof). As to claims asserted in respect
of matters addressed in clause (1) above, Carr agrees that Sellers' liability
shall be limited to any proceeds that it may recover under the policy of
insurance referred to in Paragraph 13.6. The Joint Venture agrees to maintain
reserves on behalf of the Sellers of not less than $100,000, until the date that
is one year after the Closing, to provide for the satisfaction of the Sellers'
indemnity obligations under clause (2) above and its financial obligations under
Section 10 hereof.
13.2 Carr's Indemnity
Carr agrees to indemnify, defend and hold the Sellers harmless of, from
and against any loss suffered by the Sellers (1) arising from any act or
omission of Carr, as its agents, employees or contractors, occurring during
Carr's period of ownership after the Closing, (2) arising as a result of any
entry or inspection of the Property pursuant to Paragraph 3.2 hereof, (3)
arising from any breach by Carr of any obligation related to the Property which
by this Agreement, or any closing delivery, specifically becomes the obligation
of Carr or (4) costs or expenses or other liabilities or obligations incurred by
Sellers, and disclosed to Carr on a timely basis as such costs, expenses,
liabilities or other obligations
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are incurred, in connection with claims under clause (1) of Paragraph 13.1, to
the extent such costs, expenses, liabilities or other obligations are not
covered by Sellers' insurance policy and do not arise out of the Sellers' fraud,
bad faith or intentional misconduct.
13.3 Environmental Excluded
The indemnities set forth in this Article 13 do not cover
indemnification relating to environmental conditions or claims.
13.4 Procedure
The following provisions govern all actions for indemnity under this
Article 13. Promptly after receipt by an indemnitee of notice of any claim, such
indemnitee will, if a claim in respect thereof is to be made against an
indemnitor (or, as contemplated by Paragraph 13.6, against the indemnitor's
insurer, if the indemnitor is a Seller), deliver to the indemnitor written
notice thereof and the indemnitor shall have the right to participate in and, if
the indemnitor agrees in writing that it will be responsible for any costs,
expenses, judgments, damages, and losses incurred by the indemnitee with respect
to such claim, to assume the defense thereof, with counsel mutually satisfactory
to the parties; provided, however, that an indemnitee shall have the right to
retain its own counsel, with the fees and expenses to be paid by the indemnitor,
if the indemnitee reasonably believes that representation of such indemnitee by
the counsel retained by the indemnitor would be inappropriate due to actual or
potential differing interests between such indemnitee and any other party
represented by such counsel in such proceeding. The failure of indemnitee to
deliver written notice to the indemnitor within a reasonable time after
indemnitee receives notice of any such claim shall relieve such indemnitor of
any liability to the indemnitee under this indemnity only if and to the extent
that such failure is prejudicial to its ability to defend such action, and the
omission so to deliver written notice to the indemnitor will not relieve it of
any liability that it may have to any indemnitee other than under this
indemnity. If an indemnitee settles a claim without the prior written consent of
the indemnitor, then the indemnitor shall be released from liability with
respect to such claim unless the indemnitor has unreasonably withheld such
consent.
13.5 Limitation of Liability
Carr shall not assert claims under clause (1) of Paragraph
13.1 hereof directly against Sellers by subrogation or otherwise, except as may
be necessary to make a claim under the policy of insurance described in the next
sentence. Sellers agree to maintain their existing comprehensive liability
insurance, including an appropriate contractual liability endorsement thereto,
in effect for a period of not less than one (1) year after the Closing. If Carr
shall assert a claim under said clause (1) it shall have the right, to the
extent permitted by law and the terms of such insurance, to file a claim
directly with the applicable Seller's insurance and to file such claims, suits,
complaints, actions or other documents or proceedings against Seller as shall be
necessary to prosecute such claim against such insurer.
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ARTICLE 14: MISCELLANEOUS
-------------------------
14.1 Survival
The representations and warranties contained in this Agreement and the
provisions of this Agreement that contemplate performance after the Closing
shall survive the Closing and shall not be deemed to be merged into or waived by
the instruments of such Closing, provided, however, that (i) if Carr desires to
make a claim based upon a failure of any representation or warranty to be true,
it must give the Sellers notice of such claim within twelve (12) months
following the Closing (failing which such claim shall be deemed waived), (ii)
Carr may not make a claim for breach of a representation or warranty unless the
aggregate damages claimed by Carr by reason of the breach of representations and
warranties (including, without limitation, the present value, discounted at
8.0%, of any damages expected to be incurred on a periodic basis) exceeds
$25,000.00 in the aggregate, and (iii) Carr may not make a claim for breach of a
representation or warranty if prior to the Closing, Carr obtained actual
knowledge of the existence and extent of such breach and failed to assert such
claim prior to the Closing.
14.2 Expenses
Except as otherwise expressly provided herein, each party hereto shall
pay its own expenses incident to this Agreement and the transactions
contemplated hereunder, including all legal and accounting fees and
disbursements. If any litigation arises between the parties by reason of this
transaction, the prevailing party in such litigation shall be entitled to
recover its reasonable legal fees and expenses in connection with such
litigation from the non-prevailing party.
14.3 Additional Actions and Documents
Each of the parties hereto hereby agrees to take or cause to be taken
such further actions, to execute, deliver and file, or cause to be executed,
delivered and filed, such further documents, releases, assignments and other
instruments, and to obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes, terms and
conditions of this Agreement, including, without limitation the transfer and
assignment to Carr of, and the full vestment in Carr of title to, all of the
Property.
14.4 Entire Agreement; Amendment
This Agreement, including the Exhibits and other documents referred to
herein or furnished pursuant hereto, constitute the entire agreement among the
parties hereto with respect to the transactions contemplated herein and
supersede all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein; provided, however, that nothing
in this Paragraph 14.4 shall have any effect on any other agreements between the
parties entered into contemporaneously herewith or subsequent hereto. No
amendment, modification or discharge of this Agreement shall be
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valid or binding unless set forth in writing and duly executed and delivered by
the party against whom enforcement of the amendment, modification, or discharge
is sought.
14.5 Notices
All notices, demands, requests, or other communications which may be or
are required to be given, served, or sent by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered, sent
by overnight courier or mailed by first-class, registered or certified mail,
return receipt requested, postage prepaid, or transmitted by facsimile,
telegram, or telecopy, addressed as follows:
(i) If to Sellers:
c/o Deerfield Saunders Joint Venture
200 Randolph Street
Chicago, Illinois 60601
Attn: Harlan F. Stanley
Fax: (312) 782-4339
With a copy to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attn: Ivan P. Kane
Fax: (312) 701-7711
With a copy to:
Kemper National Insurance Company
One Kemper Drive
Legal B-6
Long Grove, Illinois 60099
Attn: Dale Raczkowski
Fax: (847) 320-4202
(ii) If to Carr:
Carr Realty Corporation
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: Joseph A. Wallace
Fax: (202) 638-0102
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request or communication which shall be hand delivered,
sent, mailed, faxed, or telecopied in
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the manner described above, or which shall be delivered to a telegraph company,
shall be deemed sufficiently given, served, sent, received or delivered for all
purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, the confirmation receipt (with respect to a
facsimile), or the answerback (with respect to a telecopy or telex) being deemed
conclusive, but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
14.6 Waivers
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other documents
furnished in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party against
whom enforcement of such waiver is sought and then only to the extent expressly
specified therein.
14.7 Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
14.8 Governing Law
This Agreement, the rights and obligations of the parties hereto, and
any claim or disputes relating thereto, shall be governed by and construed in
accordance with the laws of the State of Illinois.
14.9 Assignment
No party hereto shall assign its rights and/or obligations under this
Agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the other parties hereto; provided,
however, that Carr may assign its rights and/or obligations under this Agreement
to any subsidiary or other Affiliate or any other person or entity in connection
with a merger, consolidation, sale or contribution of all or substantially all
of its assets, or other similar corporate transaction (each of whom shall have
all of the rights inuring to the benefit of "Carr" hereunder), and any party
hereto may designate any of its Affiliates (to the extent permitted by law) to
receive directly the consideration proposed to be received by such party
pursuant hereto; provided, further, that no assignment pursuant to the preceding
clause shall release the assigning party from its respective liabilities and
obligations hereunder.
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14.10 No Third Party Beneficiaries
This Agreement is solely for the benefit of the parties hereto, and no
provision of this Agreement shall be deemed to confer any third party benefit.
14.11 Confidentiality
Carr and the Sellers each agree to keep the terms of this Agreement
confidential. If the Closing does not occur on the Closing Date as provided in
Paragraph 9.1, Carr shall return to the Sellers all documents obtained from the
Sellers regarding the Property.
14.12 Severability
If any provision of this Agreement shall be held invalid, illegal or
unenforceable, the validity, legality or enforceability of the other provisions
hereof shall not be affected thereby, and there shall be deemed substituted for
the provision at issue a valid, legal and enforceable provision as similar as
possible to the provision at issue.
14.13 Information and Audit Cooperation
At Carr's request and upon reasonable notice to Sellers, at any time
before the Closing or within a period of 120 days after the Closing, the Sellers
shall provide to Carr's designated independent auditor access to the books and
records of the Property and all related information regarding the period for
which Carr or its affiliates is required to have the Property audited under the
regulations of the Securities and Exchange Commission, and a representation
letter regarding such books and records in substantially the form of Exhibit M
attached hereto in connection with the normal course of auditing the Property in
accordance with generally accepted auditing standards.
14.14 Waiver of Jury Trial
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
14.15 Construction
The parties acknowledge that the parties and their counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any exhibits or
amendments thereto.
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14.16 Calculation of Time Periods
Unless otherwise specified, in computing any period of time described
herein, the day of the act or event after which the designated period of time
begins to run is not to be included and the last day of the period so computed
is to be included, unless such last day is a Saturday, Sunday or legal holiday,
in which event the period shall run until the end of the next day which is
neither a Saturday, Sunday or legal holiday.
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IN WITNESS WHEREOF, the parties have caused this Real Estate
Acquisition Agreement to be duly executed on their behalf as of the date first
above written.
SELLERS:
ONE PARKWAY L.L.C., a Delaware
limited liability company
By: DEERFIELD-SAUNDERS JOINT VENTURE,
an Illinois general partnership, a member
By: DIVERSE REAL ESTATE HOLDINGS LIMITED
PARTNERSHIP, formerly known as LP EQUITY
ASSOCIATES LIMITED, General Partner
By: Lakewood Equities Incorporated, an
Illinois corporation, General Partner
By: /s/ Jeffrey Olian
--------------------------------------
Its: Vice President
--------------------------------------
By: TRAVENOL REALTY CORPORATION,
General Partner
By: /s/ Robert Pease
--------------------------------------------
Its: Vice President
--------------------------------------------
By: KEMPER REALTY CORPORATION,
General Partner
By: /s/ D.M. Steirer
--------------------------------------------
Its: Vice President
--------------------------------------------
By: /s/ J. K. Conway
--------------------------------------------
Its: Secretary
--------------------------------------------
By: ESP LIMITED PARTNERSHIP, General Partner
By: K/PARKWAY LIMITED PARTNERSHIP,
General Partner
By: FKLA Realty Corporation, an Illinois
corporation
<PAGE>
By: /s/ William E. Murray
----------------------
Its: Asst. Secretary
----------------------
By: /s/ Beth Schlies
----------------------
Its: Authorized Signatory
----------------------
By: K/PARKWAY LIMITED
PARTNERSHIP, General Partner
By: FKLA Realty Corporation,
an Illinois corporation
By: /s/ William E. Murray
---------------------------
Its: Asst. Secretary
---------------------------
By: /s/ Beth Schlies
---------------------------
Its: Authorized Signatory
---------------------------
And by: K/PARKWAY LIMITED PARTNERSHIP, a member
By: FKLA Realty Corporation, an Illinois
corporation
By: /s/ William E. Murray
--------------------------------
Its: Asst. Secretary
--------------------------------
By: /s/ Beth Schlies
--------------------------------
Its: Authorized Signatory
--------------------------------
<PAGE>
THREE PARKWAY L.L.C., a Delaware
limited liability company
By: DEERFIELD-SAUNDERS JOINT VENTURE, an Illinois
general partnership, a member
By: DIVERSE REAL ESTATE HOLDINGS LIMITED,
LIMITED PARTNERSHIP, formerly known as LP
EQUITY ASSOCIATES, General Partner
By: Lakewood Equities Incorporated, an Illinois
corporation, General Partner
By: /s/ Jeffrey Olian
---------------------------------------
Its: Vice President
---------------------------------------
By: TRAVENOL REALTY CORPORATION,
General Partner
By: /s/ Robert Pease
------------------------------------------------
Its: Vice President
------------------------------------------------
By: KEMPER REALTY CORPORATION,
General Partner
By: /s/ D. M. Steirer
------------------------------------------------
Its: Vice President
------------------------------------------------
By: /s/ J. K. Conway
------------------------------------------------
Its: Secretary
------------------------------------------------
By: ESP LIMITED PARTNERSHIP, General Partner
By: K/PARKWAY LIMITED
PARTNERSHIP, General Partner
By: FKLA Realty Corporation,
an Illinois corporation
By: /s/ William Murray
------------------------------
Its: Asst. Secretary
------------------------------
By: /s/ Beth Schlies
------------------------------
Its: Authorized Signatory
------------------------------
<PAGE>
By: K/PARKWAY LIMITED
PARTNERSHIP, General Partner
By: FKLA Realty Corporation,
an Illinois corporation
By: /s/ William Murray
-----------------------------
Its: Asst. Secretary
-----------------------------
By: /s/ Beth Schlies
--------------------
Its: Authorized Secretary
--------------------
And by: K/PARKWAY LIMITED PARTNERSHIP, a member
By: FKLA Realty Corporation, an Illinois
corporation
By: /s/ William Murray
-------------------------------------
Its: Asst. Secretary
-------------------------------------
By: /s/ Beth Schlies
-----------------------------
Its: Authorized Signatory
-----------------------------
<PAGE>
PARKWAY LAND L.L.C., a Delaware limited liability
company
By: DEERFIELD-SAUNDERS JOINT VENTURE,
an Illinois general partnership, a member
By: DIVERSE REAL ESTATE HOLDINGS LIMITED
PARTNERSHIP, formerly known as LP EQUITY
ASSOCIATES LIMITED, General Partner
By: Lakewood Equities Incorporated, an Illinois
corporation, General Partner
By: /s/ Jeffrey Olian
----------------------------------------
Its: Vice President
----------------------------------------
By: TRAVENOL REALTY CORPORATION,
General Partner
By: /s/ Robert Pease
-------------------------------------------------
Its: Vice President
-------------------------------------------------
By: KEMPER REALTY CORPORATION,
General Partner
By: /s/ D. M. Steirer
-------------------------------------------------
Its: Vice President
-------------------------------------------------
By: /s/ J. K. Conway
-------------------------------------------------
Its: Secretary
-------------------------------------------------
By: ESP LIMITED PARTNERSHIP, General Partner
By: K/PARKWAY LIMITED
PARTNERSHIP, General Partner
By: FKLA Realty Corporation,
an Illinois corporation
By: /s/ William Murray
-------------------------------
Its: Asst. Secretary
-------------------------------
By: /s/ Beth Schlies
-------------------------------
Its: Authorized Signatory
-------------------------------
<PAGE>
By: K/PARKWAY LIMITED PARTNERSHIP, General
Partner
By: FKLA Realty Corporation,
an Illinois corporation
By: /s/ William Murray
----------------------------------
Its: Asst. Secretary
----------------------------------
By: /s/ Beth Schlies
----------------------------------
Its: Authorized Signatory
----------------------------------
And by: K/PARKWAY LIMITED PARTNERSHIP, a member
By: FKLA Realty Corporation, an Illinois corporation
By: /s/ William Murray
-------------------------------------------
Its: Asst. Secretary
-------------------------------------------
By: /s/ Beth Schlies
-------------------------------------------
Its: Authorized Signatory
-------------------------------------------
<PAGE>
PARKWAY CENTER L.L.C., a Delaware limited liability
company
By: DEERFIELD-SAUNDERS JOINT VENTURE, an Illinois
general partnership, a member
By: DIVERSE REAL ESTATE HOLDINGS LIMITED
PARTNERSHIP, formerly known as LP EQUITY
ASSOCIATES LIMITED, General Partner
By: Lakewood Equities Incorporated, an Illinois
corporation, General Partner
By: /s/ Jeffrey Olian
---------------------------------------
Its: Vice President
---------------------------------------
By: TRAVENOL REALTY CORPORATION, General
Partner
By: /s/ Robert Pease
------------------------------------------------
Its: Vice President
------------------------------------------------
By: KEMPER REALTY CORPORATION, General
Partner
By: /s/ D. M. Steirer
------------------------------------------------
Its: Vice President
------------------------------------------------
By: /s/ J. K. Conway
------------------------------------------------
Its: Secretary
------------------------------------------------
By: ESP LIMITED PARTNERSHIP, General Partner
By: K/PARKWAY LIMITED PARTNERSHIP,
General Partner
By: FKLA Realty Corporation, an Illinois
corporation
By: /s/ William Murray
--------------------------------
Its: Asst. Secretary
--------------------------------
By: /s/ Beth Schlies
--------------------------------
Its: Authorized Signatory
--------------------------------
<PAGE>
By: K/PARKWAY LIMITED PARTNERSHIP, General
Partner
By: FKLA Realty Corporation, an Illinois
corporation
By: /s/ William Murray
--------------------------------
Its: Asst. Secretary
--------------------------------
By: /s/ Beth Schlies
--------------------------------
Its: Authorized Signatory
--------------------------------
And by: K/PARKWAY LIMITED PARTNERSHIP, a member
By: FKLA Realty Corporation, an Illinois corporation
By: /s/ William Murray
-------------------------------------------
Its: Asst. Secretary
-------------------------------------------
By: /s/ Beth Schlies
-------------------------------------------
Its: Authorized Signatory
-------------------------------------------
CARR:
CARR REALTY CORPORATION, a Delaware corporation
By: /s/ Thomas A. Carr
-----------------------------------------------------------
Name: Thomas A. Carr
---------------------------------------------------------
Title: President
--------------------------------------------------------
<PAGE>
Independent Auditor's Report
The Board of Directors
Carr Realty Corporation:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 1, of AT&T Center for the year ended December 31,
1995. This historical summary is the responsibility of the Company's management.
Our responsibility is to express an opinion on the historical summary based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the historical summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the historical summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and is
not intended to be a complete presentation of the revenue and expenses of AT&T
Center.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the operating revenue and expenses, as defined in note 1, of
AT&T Center for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
April 29, 1996
<PAGE>
AT&T Center
Historical Summary of Operating Revenue and Expenses
Year ended December 31, 1995
(In thousands)
- --------------------------------------------------------------------------------
Operating revenue:
Minimum base rent $ 16,016
Recoveries from tenant 253
- --------------------------------------------------------------------------------
Total rental revenue 16,269
- --------------------------------------------------------------------------------
Operating expenses:
Management fees 94
Owners' association fees 159
- --------------------------------------------------------------------------------
Total operating expenses 253
- --------------------------------------------------------------------------------
Operating revenue in excess of operating expenses $ 16,016
- --------------------------------------------------------------------------------
See accompanying notes to historical summary of operating revenue and expenses.
1
<PAGE>
AT&T CENTER
Notes to Historical Summary of Operating Revenue and Expenses
Year ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
Description of the Property
AT&T Center is an eight-building office complex located in
Pleasanton, California, containing approximately 1,082,000
square feet of office space. At December 31, 1995, 100 percent
of the office space was leased to AT&T under a lease that
provides for expiration of various amounts of space from
February 1998 through April 1999. Under the terms of the lease
AT&T is responsible for payment of all operating expenses
except owners' association fees, for which AT&T reimburses the
owner of the buildings.
Basis of Presentation
The accompanying historical summary of operating revenue and
expenses is not representative of the actual operations for
the periods presented, as certain revenues and expenses, which
may not be comparable to those expected to be incurred by
CarrAmerica Realty Corporation in the proposed future
operations of the building, have been excluded. Interest
income has been excluded from revenue, and interest,
depreciation and amortization, and other costs not directly
related to the future operations of AT&T Center have been
excluded from expenses. Management is not aware of any
material factors relating to AT&T Center that would cause the
historical summary of operating revenue and expenses to not be
indicative of future operating results of the building.
Revenue Recognition
Revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(2) Acquisition Transaction
CarrAmerica Realty Corporation acquired AT&T Center on March
29, 1996.
<PAGE>
AT&T CENTER
Notes to Historical Summary of Operating Revenue and Expenses
- --------------------------------------------------------------------------------
(3) Proforma Taxable Operating Results and Cash Available
from Operations (Unaudited)
The unaudited proforma table reflects the taxable operating
results and cash available from operations of AT&T Center for
the year ended December 31, 1995, as adjusted for certain
items which can be factually supported. For purposes of
presenting proforma net taxable operating income, revenue is
recognized when it is either collectible under the lease terms
or collected. Tax depreciation for the building is computed on
the modified accelerated cost recovery system method over a
39-year life. This statement does not purport to forecast
actual operating results for any period in the future.
Proforma net operating income (exclusive of
depreciation and amortization expense) $ 15,598
Less - estimated depreciation and amortization expense 1,960
--------------------------------------------------------------
Proforma taxable operating income $ 13,638
--------------------------------------------------------------
Proforma cash available from operations $ 15,598
--------------------------------------------------------------
3
<PAGE>
Independent Auditors' Report
The Board of Directors
CarrAmerica Realty Corporation:
We have audited the accompanying combined historical summary of operating
revenue and expenses, as defined in Note 1, of Harlequin Plaza North, Harlequin
Plaza South, Quebec Court I and Quebec Court II (the Properties) for the year
ended December 31, 1995. This combined historical summary is the responsibility
of the Properties' management. Our responsibility is to express an opinion on
the combined historical summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined historical summary is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined historical summary. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluting the overall presentation of the combined
historical summary. We believe that our audit provides a reasonable basis for
our opinion.
The accompanying combined historical summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and is not intended to be a complete presentation of the revenue and
expenses of the Properties.
In our opinion, the combined historical summary referred to above presents
fairly, in all material respects, the operating revenue and expenses described
in Note 1 of Harlequin Plaza North, Harlequin Plaza South, Quebec Court I and
Quebec Court II for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 19, 1996
<PAGE>
HARLEQUIN PLAZA NORTH, HARLEQUIN PLAZA SOUTH,
QUEBEC COURT I AND QUEBEC COURT II (the Properties)
Combined Historical Summaries of Operating Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
1996 1995
---- ----
(unaudited)
Operating revenue:
Building rental $ 1,618 6,170
Recovery of operating expenses 343 1,151
Other 12 32
----- -----
Total operating revenue 1,973 7,353
----- -----
Operating expenses:
Real estate taxes 285 1,218
Utilities 262 957
Repairs and maintenance 117 545
Janitorial 110 389
General operating services 69 304
Management fees 77 274
Insurance 10 37
Accounting 19 28
----- -----
Total operating expenses 949 3,752
----- -----
Operating revenue in excess of
operating expenses $ 1,024 3,601
===== =====
See accompanying notes to combined historical summaries of operating revenue and
expenses.
2
<PAGE>
HARLEQUIN PLAZA NORTH, HARLEQUIN PLAZA SOUTH,
QUEBEC COURT I AND QUEBEC COURT II (the Properties)
Notes to Combined Historical Summaries of Operating
Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
(a) Description of the Properties
Harlequin Plaza North, Harlequin Plaza South, Quebec Court I and
Quebec Court II (the Properties) are office buildings located in
Englewood, Colorado. At March 31, 1996, occupancy percentages
were as follows:
Harlequin Plaza North - 89%
Harlequin Plaza South - 98%
Quebec Court I - 100%
Quebec Court II - 100%
(b) Basis of Presentation
The accounts of the Properties have been included in the
combined historical summaries of operating revenue and expenses.
The accompanying combined historical summaries of operating
revenue and expenses are not representative of the actual
operations for the periods presented as certain revenues and
expenses, which may not be comparable to those expected to be
incurred by CarrAmerica Realty Corporation in the proposed
future operations of the buildings, have been excluded. Interest
income has been excluded from revenue, and interest,
depreciation and amortization, and other costs not directly
related to the future operations of the Properties have been
excluded from expenses. Management is not aware of any material
factors relating to the Properties that would cause the
historical summaries of operating revenue and expenses to not be
indicative of future operating results of the Properties.
(c) Revenue Recognition
Revenue from rental operations is recognized straight-line over
the terms of the respective leases.
(d) Interim Unaudited Financial Information
The accompanying unaudited financial information has been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements
3
<PAGE>
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments
consisting only of normal recurring accruals, necessary to
present fairly the historical summaries of operating revenue and
expenses for the three months ended March 31, 1996, have been
included. The results of operations for the three-month period
ended March 31, 1996 are not necessarily indicative of the
results for the full year. (continued)
3
<PAGE>
HARLEQUIN PLAZA NORTH, HARLEQUIN PLAZA SOUTH,
QUEBEC COURT I AND QUEBEC COURT II (the Properties)
Notes to Combined Historical Summaries of Operating
Revenue and Expenses
- --------------------------------------------------------------------------------
(2) Acquisition Transaction
CarrAmerica Realty Corporation acquired the Properties on May 24, 1996.
(3) Proforma Taxable Operating Results and Cash Available
from Operations (Unaudited)
The unaudited proforma table reflects the taxable operating results and
cash available from operations of the Properties for the twelve months
ended March 31, 1996, as adjusted for certain items which can be
factually supported. For purposes of presenting proforma net taxable
operating income, revenue is recognized when it is either collectible
under the lease terms or collected. Tax depreciation for the building is
computed on the modified accelerated cost recovery system method over a
39-year life. This statement does not purport to forecast actual
operating results for any period in the future.
Proforma net operating income (exclusive of
depreciation and amortization expense) $ 3,402
Less - estimated depreciation and
amortization expense 964
Proforma taxable operating income $ 2,438
=====
Proforma cash available from operations $ 3,402
=====
4
<PAGE>
Independent Auditors' Report
The Board of Directors
CarrAmerica Realty Corporation:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 1, of Redmond East Business Campus for the year
ended December 31, 1995. This historical summary is the responsibility of the
management of Redmond East Business Campus. Our responsibility is to express an
opinion on the historical summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the historical summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the historical summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and is
not intended to be a complete presentation of the revenue and expenses of
Redmond East Business Campus.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the operating revenue and expenses described in note 1 of
Redmond East Business Campus for the year ended December 31, 1995, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 17, 1996
<PAGE>
REDMOND EAST BUSINESS CAMPUS
Historical Summaries of Operating Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- -------------------------------------------------------------------------------
1996 1995
---- ----
(Unaudited)
Operating revenue:
Building rental $ 1,046 4,242
Recovery of operating expenses 195 838
-----------------------
Total operating revenue 1,241 5,080
-----------------------
Operating expenses:
Real estate taxes 114 458
Management fees 41 156
Repairs and maintenance 27 118
Utilities 23 115
Insurance 7 33
-----------------------
Total operating expenses 212 880
-----------------------
Operating revenue in excess
of operating expenses $ 1,029 4,200
-----------------------
See accompanying notes to historical summaries of operating revenue and
expenses.
2
<PAGE>
REDMOND EAST BUSINESS CAMPUS
Notes to Historical Summaries of Operating
Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- -------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
(a) Description of the Property
Redmond East Business Campus is an office building complex
located in Redmond, Washington containing approximately
396,000 square feet of office space available for lease. At
March 31, 1996, approximately 99 percent of the building's
space is under lease.
(b) Basis of Presentation
The accompanying historical summaries of operating revenue and
expenses are not representative of the actual operations for
the periods presented as certain revenues and expenses, which
may not be comparable to those expected to be incurred by
CarrAmerica Realty Corporation in the proposed future
operations of the building, have been excluded. Interest
income has been excluded from revenue, and interest,
depreciation and amortization, and other costs not directly
related to the future operations of Redmond East Business
Campus have been excluded from expenses. Management is not
aware of any material factors relating to Redmond East
Business Campus that would cause the historical summaries of
operating revenue and expenses to not be indicative of future
operating results of the building.
(c) Revenue Recognition
Revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(d) Interim Unaudited Financial Information
The accompanying unaudited financial information has been
prepared pursuant to the rules and regulations of the
Securites and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments
consisting only of normal recurring accruals, necessary to
present fairly the historical summaries of operating revenue
and expenses for
3
<PAGE>
(continued)
REDMOND EAST BUSINESS CAMPUS
Note to Historical Summaries of Operating
Revenue and Expenses
- --------------------------------------------------------------------------------
the three months ended March 31, 1996, have been included. The results
of operations for the three months ended March 31, 1996 are not
necessarily indicative of the results for the full year.
(2) Acquisition Transaction
CarrAmerica Realty Corporation acquired Redmond East Business Campus on
June 11, 1996.
(3) Pro Forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited pro forma table reflects the taxable operating results
and cash available from operations of Redmond East Business Campus for
the twelve months ended March 31, 1996, as adjusted for certain items
which can be factually supported. For purposes of presenting pro forma
net taxable operating income, revenue is recognized when it is either
collectible under the lease terms or collected. Tax depreciation for
the building is computed on the modified accelerated cost recovery
system method over a 39-year life. This statement does not purport to
forecast actual operating results for any period in the future.
Pro forma net operating income (exclusive of depreciation and
amortization expense) $ 4,278
Less estimated depreciation and amortization expense 852
------
Pro forma taxable operating income $ 3,426
------
Pro forma cash available from operations $ 4,278
------
4
<PAGE>
Indepedent Auditors' Report
The Board of Directors
CarrAmerica Realty Corporation:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 2(a), of Warner Center Business Park (the Property)
for the year ended December 31, 1995. This historical summary is the
responsibility of management of Warner Center Business Park. Our responsibility
is to express an opinion on the historical summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the historical summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the historical summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and is
not intended to be a complete presentation of the revenue and expenses of the
Property.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the operating revenue and expenses of Warner Center Business
Park as described in note 2(a) for the year ended December 31, 1995 in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Los Angeles, California
June 17, 1996
<PAGE>
WARNER CENTER BUSINESS PARK
Historical Summaries of Operating Revenue and Expenses (note 2(a))
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
1996 1995
------ ------
(Unaudited)
Operating revenue:
Building rental $ 1,325 $ 5,385
Recovery of operating expenses 50 149
Other 2 122
------- ------
Total operating revenue 1,377 5,656
------- ------
Operating expenses:
Cleaning 43 210
Utilities 175 847
Repairs and maintenance 66 224
General operating 67 300
Administrative 50 296
Insurance 26 105
------- ------
Total operating expenses 427 1,982
------- -------
Operating revenue in excess of operating
expenses $ 950 $ 3,674
====== =====
See accompanying notes to historical summaries of operating revenue and
expenses.
<PAGE>
WARNER CENTER BUSINESS PARK
Notes to Historical Summaries of Operating
Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
(1) Description of the Property
Warner Center Business Park (the Property) consists of twelve buildings
within a business park located in Woodland Hills, California. These
buildings contain approximately 343,00 square feet of office and retail
space available for lease. The buildings were completed in 1981 to
1985. At March 31, 1996 and December 31, 1995, respectively, 77 percent
and 74 percent of the buildings' space was under lease.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying historical summaries of operating revenue and
expenses are not representative of the actual operations for
the periods presented as certain revenues and expenses, which
may not be comparable to those expected to be incurred by
CarrAmerica Realty Corporation in the proposed future
operations of the building, have been excluded. Interest
income and certain recovered expenses related to the January
1994 earthquake have been excluded from revenue. Real estate
taxes, interest, depreciation, and amortization and certain
expenses related to the January 1994 earthquake have been
excluded from expenses.
In accordance with current California tax law, management
expects that real estate taxes will be reassessed upon
transfer of ownership based on the Property's purchase price.
Therefore, historical real estate tax expenses are not
comparable to those expected to be incurred by the Property's
new owner. Real estate taxes for the three months ended March
31, 1996 and December 31, 1995 were $117,000 and $432,000,
respectively. Upon reassessment, annual real estate taxes are
expected to increase by approximately $250,000.
<PAGE>
(b) Revenue Recognition
Revenue from rental operations is recognized on the
straight-line basis over the terms of the respective leases.
(continued)
<PAGE>
WARNER CENTER BUSINESS PARK
Notes to Historical Summaries of Operating
Revenue and Expenses
- --------------------------------------------------------------------------------
(c) Interim Unaudited Financial Information
The accompanying unaudited financial information has been
prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading.
In the opinion of management, adjustments necessary to present
fairly the historical summaries of operating revenue and
expenses for the three months ended March 31, 1996 have been
included. The results of operations for the three months ended
March 31, 1996 are not necessarily indicative of the results
for the full year.
(3) Pro forma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited pro forma information below reflects the taxable
operating results and cash available from operations of the Property
for the twelve months ended March 31, 1996, as adjusted for certain
items which can be factually supported. For purposes of presenting pro
forma net taxable operating income, revenue is recognized the earlier
of when it is collectible under the lease terms or collected. Tax
depreciation for the building is computed on the modified accelerated
cost recovery system method over a 39-year life based on the
anticipated total purchase cost. Real estate taxes included reflect the
anticipated reassessment described in note 2(a). This statement does
not purport to forecast actual operating results for any period in the
future.
Pro forma net operating income (exclusive of
depreciation and amortization expense) $3,604
Less estimated depreciation and amortization
expense 880
Pro forma taxable operating income $2,724
------
Pro forma cash available from operations $3,604
======
5
<PAGE>
Independent Auditors' Report
The Board of Directors
CarrAmerica Realty Corporation:
We have audited the accompanying historical summary of operating revenue and
expenses, as defined in note 1, of Parkway North Center for the year ended
December 31, 1995. This historical summary is the responsibility of management
of Parkway North Center. Our responsibility is to express an opinion on the
historical summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the historical summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the historical summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and is
not intended to be a complete presentation of the revenue and expenses of
Parkway North Center.
In our opinion, the historical summary referred to above presents fairly, in all
material respects, the operating revenue and expenses described in note 1 of
Parkway North Center for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
June 14, 1996
<PAGE>
PARKWAY NORTH CENTER
Historical Summaries of Operating Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
Three months ended Year ended
March 31, 1996 December 31, 1995
(Unaudited)
Operating revenue:
Building rental $ 1,780 $ 7,138
Recovery of operating expenses 1,032 4,120
Other 6 37
----- -----
Total operating revenue 2,818 11,295
----- -----
Operating expenses:
Cleaning 93 357
Utilities 305 1,267
Management fees 92 408
General operating services 192 780
Administrative 226 733
Real estate taxes 340 1,362
Insurance 22 91
----- -----
Total operating expenses 1,270 4,998
----- -----
Operating revenue in excess of
operating expenses $ 1,548 $ 6,297
===== =====
See accompanying notes to combined historical summaries of operating revenue and
expenses.
2
<PAGE>
PARKWAY NORTH CENTER
Notes to Historical Summaries of Operating
Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
(a) Description of the Property
Parkway North Center is an office park located in Deerfield,
Illinois containing approximately 500,000 square feet of
office space available for lease, 23,000 square feet of retail
space available for lease, and undeveloped land with the
potential for additional square feet of leasable office space.
The office space is comprised of 2 office buildings completed
in 1986 and 1989 which are 90% leased and 100% leased,
respectively, as of March 31, 1996. The retail space was
completed in 1993 and is 100% leased as of March 31, 1996. The
property is managed by an affiliate of the existing owner for
3.5% of its Gross Income, as defined.
(b) Basis of Presentation
The accompanying historical summaries of operating revenue and
expenses is not representative of the actual operations for
the periods presented as certain revenues and expenses, which
may not be comparable to those expected to be incurred by
CarrAmerica Realty Corporation in the proposed future
operations of the property, have been excluded. Interest
income has been excluded from revenue, and interest,
depreciation and amortization, and other costs not directly
related to the future operations of Parkway North Center have
been excluded from expenses. Management is not aware of any
material factors relating to Parkway North Center that would
cause the historical summaries of operating revenue and
expenses to not be indicative of future operating results of
the buildings.
(c) Revenue Recognition
Revenue from rental operations is recognized straight-line
over the terms of the respective leases.
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<PAGE>
(d) Interim Unaudited Financial Information
The accompanying unaudited financial information has been
prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments
consisting only of normal recurring accruals, necessary to
present fairly the historical summary of operating revenue and
expenses for the three months ended March 31, 1996, have been
included. The results of operations for the three month period
ended March 31, 1996 are not necessarily indicative of the
results for the full year.
(2) Acquisition Transaction
CarrAmerica Realty Corporation acquired Parkway North Center on June
14, 1996.
(3) Proforma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited proforma table reflects the taxable operating results and
cash available from operations of Parkway North Center for the twelve
months ended March 31, 1996, as adjusted for certain items which can be
factually supported. For purposes of presenting proforma net taxable
operating income, revenue is recognized when it is either collectible
under the lease terms or collected. Tax depreciation for the building
is computed on the modified accelerated cost recovery system method
over a 39-year life. This statement does not purport to forecast actual
operating results for any period in the future.
Proforma net operating income (exclusive of
depreciation and amortization expense) $ 6,892
Less - estimated depreciation and amortization
expense 1,835
-----
Proforma taxable operating income $ 5,057
=====
Proforma cash available from operations $ 6,892
=====
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<PAGE>
Independent Auditors' Report
The Board of Directors
CarrAmerica Realty Corporation
We have audited the accompanying historical summary of operating
revenue and expenses, as defined in note 1, of Reston Quadrangle for
the year ended December 31, 1995. This historical summary is the
responsibility of the management of Reston Quadrangle. Our
responsibility is to express an opinion on the historical summary based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the historical summary is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
historical summary. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall presentation of the historical summary. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission and is not intended to be a complete presentation of the
revenue and expenses of Reston Quadrangle.
In our opinion, the historical summary referred to above presents
fairly, in all material respects, the operating revenue and expenses
described in note 1 of Reston Quadrangle for the year ended December
31, 1995, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Washington, D.C.
June 14, 1996
<PAGE>
RESTON QUADRANGLE
Historical Summaries of Operating Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
1996 1995
---- ----
(Unaudited)
Operating revenue:
Building rental $ 1,282 $ 4,885
Recovery of operating expenses 262 1,018
Other - 1
----- -----
Total operating revenue 1,544 5,904
----- -----
Operating expenses:
Cleaning 110 267
Utilities 86 272
Repairs and maintenance 105 222
General operating 106 373
Administrative 28 141
Real estate taxes 75 237
Insurance 7 27
----- -----
Total operating expenses 517 1,539
----- -----
Operating revenue in excess of
operating expenses $ 1,027 $ 4,365
===== =====
See accompanying notes to historical summaries of operating revenue and
expenses.
2
<PAGE>
RESTON QUADRANGLE
Notes to Historical Summaries of Operating
Revenue and Expenses
For the Three Months Ended March 31, 1996 (Unaudited)
and the Year Ended December 31, 1995
(Dollars in thousands)
- --------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
(a) Description of the Property
Reston Quadrangle comprises three office buildings located in
Reston, Virginia containing approximately 261,000 square feet
of office space available for lease. The buildings were
completed in 1990. At March 31, 1996, 100 percent of the
office space was under lease.
(b) Basis of Presentation
The accompanying historical summaries of operating revenue and
expenses are not representative of the actual operations for
the periods presented as certain revenues and expenses, which
may not be comparable to those expected to be incurred by
CarrAmerica Realty Corporation, in the proposed future
operations of the building, have been excluded. Interest
income has been excluded from revenue, and interest,
depreciation and amortization, and other costs not directly
related to the future operations of Reston Quadrangle have
been excluded from expenses. Management is not aware of any
material factors relating to Reston Quadrangle that would
cause the historical summaries of operating revenue and
expenses to not be indicative of future operating results of
the building.
(c) Revenue Recognition
Revenue from rental operations is recognized straight-line
over the terms of the respective leases.
(d) Interim Unaudited Financial Information
The accompanying unaudited financial information has been
prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such
rules and regulations, although management believes that the
disclosures are adequate to make the information
3
<PAGE>
presented not misleading. In the opinion of management, all
adjustments consisting only of normal recurring accruals,
necessary to present fairly the historical summaries of
operating revenue and expenses for the three months ended
March 31, 1996, have been included. The results of operations
for the three month period ended March 31, 1996 are not
necessarily indicative of the results for the full year.
(continued)
RESTON QUADRANGLE
Notes to Historical Summaries of Operating
Revenue and Expenses
- --------------------------------------------------------------------------------
(2) Acquisition Transaction
CarrAmerica Realty Corporation acquired Reston Quadrangle on March 28,
1996.
(3) Proforma Taxable Operating Results and Cash Available from Operations
(Unaudited)
The unaudited proforma table reflects the taxable operating results and
cash available from operations of Reston Quadrangle for the twelve
months ended March 31, 1996, as adjusted for certain items which can be
factually supported. For purposes of presenting proforma net taxable
operating income, revenue is recognized when it is either collectible
under the lease terms or collected. Tax depreciation for the building
is computed on the modified accelerated cost recovery system method
over a 39-year life. This statement does not purport to forecast actual
operating results for any period in the future.
Proforma net operating income (exclusive of
depreciation and amortization expense) $ 4,900
Less - estimated depreciation and amortization
expense 886
Proforma taxable operating income $ 4,014
=====
Proforma cash available from operations $ 4,900
=====
4
<PAGE>
