<PAGE> 1
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): December 19, 1996
CARRAMERICA REALTY CORPORATION
(formerly Carr Realty Corporation)
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Maryland 1-11706 52-1796339
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification No.)
</TABLE>
1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 624-7500
<PAGE> 2
FORM 8-K
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Not applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 19, 1996, CarrAmerica Realty Corporation acquired Unisys
Center, a two building, approximately 387,000 square foot suburban office
complex located in Lombard, Illinois, in the Oak Brook submarket of Chicago.
The purchase price of $51.0 million was funded through a draw on the Company's
line of credit. Unisys Center was acquired from HMS Office, L.P. , an
unrelated third party.
Because the aggregate book value of the two buildings that constitute
Unisys Center are in excess of 10% of the Company's total assets as of December
31, 1995, additional information regarding Unisys Center is provided below. As
of December 31, 1996, 96.7% of the rentable square feet of Unisys Center was
leased. The Company has no immediate plans to renovate Unisys Center, other
than for the routine maintenance of the properties, and believes the properties
are adequately covered by insurance. Since the Company just acquired Unisys
Center on December 19, 1996, the percent leased and average annualized rent per
square foot for the past five years is not available.
Three tenants in the two buildings constituting Unisys Center each
occupy over 10% of the rentable square footage. Unisys, a defense contractor
specializing in computer hardware, leases 78,375 square feet of office space
(20.3% of the aggregate net rentable square feet) under a lease which expires
in April 2000. In addition, Unisys is currently paying penalty rent of $19.50
per square foot per annum for 5,447 square feet of space they previously
occupied on the 5th floor of Unisys I, and will continue to pay such penalty
rent until February 1998. In accordance with a buy-out agreement between
Unisys and the prior owner of the properties, on January 1, 1997, Unisys
vacated 20,372 square feet of space in exchange for the payment of a lease
termination fee of $470,000 and the payment of additional rent ($8.50 per
square foot per annum in 1997) intended to compensate the Company for the
differential in rent with the new lessee of this 20,372 square feet. Unisys's
aggregate current rent per square foot per annum is $30.66. Unisys has certain
rights to take expansion space at its current lease rate. The Company has
certain rights to any space Unisys may choose to sublet.
PNC Mortgage Corporation of America, a financial institution, leases
an aggregate of 62,795 square feet of office space (16.2% of the aggregate net
rentable square feet) under two leases: 53,330 square feet (13.8% of the
aggregate net rentable square feet) under a lease which expires in February
1998 and 9,465 square feet (2.4% of the aggregate net rentable square feet)
under a sublease which expires in October 1997. PNC Mortgage has an option to
renew its sublease with respect to 9,465 square feet for
<PAGE> 3
an additional five years at the then-prevailing market rental rate. PNC
Mortgage has certain rights of first refusal with respect to additional space
at Unisys Center under its primary lease and its sublease. With respect to
53,330 square feet, PNC Mortgage's rent per square foot per annum is $7.50
(triple net). Under its sublease of 9,465 square feet, PNC Mortgage's rent
per square foot per annum is $9.57 (triple net). PNC Mortgage has agreed to
lease 59,348 square feet of space commencing in March 1998 for a five year term
at a rental rate per square foot per annum of $14.50 (triple net). PNC
Mortgage has the right to extend the term of its lease for 5 years at
then-prevailing market rental rates, subject thereafter to annual escalations
of 3%.
Sears Logistics Services, Inc., a trucking company, leases 51,970
square feet of office space (13.4% of the aggregate net rentable square feet)
under a lease which expires in December 1997. Sears' rent per square foot per
annum is $22.46. The HUB Group has entered into an agreement to lease 42,164
square feet of the space which will become vacant at the expiration of Sears'
lease (10.9% of the aggregate net rentable square feet) commencing in January
1998 for a 5 year term at a rental rate per square foot per annum of $12.00.
The following table sets out a schedule of aggregate lease expirations
for the two buildings that constitute Unisys Center for leases in effect as of
January 1, 1997, assuming no tenants exercise any of their renewal rights or
termination options, for each of the ten years beginning with 1997 and
thereafter:
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<CAPTION>
Percentage
Total Leased
Number of Net Rentable Annual Square Footage
Tenants with Area Subject to Base Rent Under Represented by
Year of Lease Expiring Expiring Leases Expiring Lease (1) Expiring Leases
Expiration Leases (square feet) (in thousands) (2)
---------------- ---------------- ------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
1997 13 88,517 $1,520 25.4%
1998 4 62,423 500 17.9
1999 5 20,905 187 6.0
2000 6 110,796 2,670 31.8
2001 3 23,426 262 6.7
2002 1 21,054 289 6.1
2003 0 --
2004 0
2005 1 21,054 249 6.1
2006 0
and
thereafter
</TABLE>
(1) Excludes operating expense recoveries
(2) Excludes 38,442 square feet of vacant and uncommitted space as of
January 1, 1997.
<PAGE> 4
The aggregate tax basis of depreciable real property for Unisys Center
is $44,625,000. Depreciation is computed on the Modified Accelerated Cost
Recovery System (MACRS) method over 39 years for Federal income tax purposes.
No depreciable personal property was acquired in connection with the
acquisition of Unisys Center.
The current realty tax rate for Unisys Center is $6.35 per $100 of
assessed value. The total annual tax at this rate paid in 1996 was $695,460 at
an assessed value of $11,065,908.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable.
ITEM 5. OTHER EVENTS.
None.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
On December 18, 1996, the Company filed a Current Report on
Form 8-K with the Commission providing the historical financial statements
relating to Unisys Center required by Item 7(a) of Form 8-K.
(b) Pro forma financial information.
Attached hereto as Exhibit 99.1 are a pro forma condensed
consolidated balance sheet (unaudited) at September 30, 1996 and pro forma
condensed consolidated statements of operations (unaudited) for the nine months
ended September 30, 1996 and for the year ended December 31, 1995 relating to
Unisys Center.
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(c) Exhibits
Exhibit
Number
------
10.1 Agreement of Purchase and Sale dated as of
December 9, 1996 between CarrAmerica Realty
Corporation and HMS Office, L.P. (Exhibits
intentionally omitted).
99.1 Pro forma condensed consolidated balance
sheet (unaudited) at September 30, 1996 and
pro forma condensed consolidated statements
of operations (unaudited) for the nine months
ended September 30, 1996 relating to Unisys
Center.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable.
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: January 3, 1997
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
----------------------------
Brian K. Fields
Chief Financial Officer
<PAGE> 7
EXHIBIT INDEX
Exhibit
Number
- ------
10.1 Agreement of Purchase and Sale dated as of December 9, 1996
between CarrAmerica Realty Corporation and HMS Office, L.P.
(Exhibits intentionally omitted).
99.1 Pro forma condensed consolidated balance sheet (unaudited) at
September 30, 1996 and pro forma condensed consolidated
statements of operations (unaudited) for the nine months ended
September 30, 1996 and for the year ended December 31, 1995
relating to Unisys Center.
<PAGE> 1
EXHIBIT 10.1
================================================================================
AGREEMENT OF PURCHASE AND SALE
BETWEEN
HMS OFFICE, L.P.
as Seller
AND
CARRAMERICA REALTY CORPORATION
as Purchaser
pertaining to
UNISYS CENTER I AND II, LOMBARD, ILLINOIS
EXECUTED EFFECTIVE AS OF
December 9, 1996
================================================================================
1
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TABLE OF CONTENTS
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ARTICLE I.
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II.
AGREEMENT OF PURCHASE AND SALE
Section 2.1. Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.2. Indivisible Economic Package . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III.
CONSIDERATION
Section 3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Method of Payment of Purchase Price . . . . . . . . . . . . . . . . . . . 7
Section 3.3. Independent Consideration . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV.
EARNEST MONEY DEPOSIT
Section 4.1. The Deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V.
INSPECTION OF PROPERTY
Section 5.1. Inspection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.2. Inspection Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.3. Sale "As Is" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.4. Purchaser's Release of Seller . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VI.
TITLE AND SURVEY MATTERS
Section 6.1. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.2. Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<TABLE>
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Section 6.3. Title Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VII.
INTERIM OPERATING COVENANTS AND ESTOPPELS
Section 7.1. Interim Operating Covenants . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.2. Estoppels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VIII.
REPRESENTATIONS AND WARRANTIES
Section 8.1. Seller's Representations and Warranties . . . . . . . . . . . . . . . . . 15
Section 8.2. Purchaser's Representations and Warranties . . . . . . . . . . . . . . . . 17
ARTICLE IX.
CONDEMNATION AND CASUALTY
Section 9.1. Significant Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 9.2. Casualty of Less Than a Significant Portion . . . . . . . . . . . . . . . 18
Section 9.3. Condemnation of Property. . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE X.
CLOSING
Section 10.1. Conditions to the Parties' Obligations to Close. . . . . . . . . . . . . . 19
Section 10.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.3. Purchaser's Closing Obligations . . . . . . . . . . . . . . . . . . . . . 20
Section 10.4. Seller's Closing Obligations . . . . . . . . . . . . . . . . . . . . . . . 20
Section 10.5. Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 10.6. Leasing Commissions and Tenant Improvements . . . . . . . . . . . . . . . 24
Section 10.7. Delivery of Real Property . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 10.8. Costs of Escrow Agent and Closing Costs . . . . . . . . . . . . . . . . . 25
ARTICLE XI.
BROKERAGE
Section 11.1. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XII.
CONFIDENTIALITY
Section 12.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
ii
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ARTICLE XIII.
REMEDIES
Section 13.1. Default by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 13.2. Default by Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE XIV.
NOTICES
Section 14.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE XV.
ASSIGNMENT AND BINDING EFFECT
Section 15.1. Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XVI.
DISCLAIMER, WAIVER AND LIMITED SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 16.1. Disclaimer and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 16.2. Survival of Representations, Warranties and
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE XVII.
MISCELLANEOUS
Section 17.1. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17.2. Recovery of Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17.3. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17.4. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 17.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 17.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 17.7. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 17.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 17.9. No Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 17.10. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 17.11. Information and Audit Cooperation. . . . . . . . . . . . . . . . . . . . . 32
Section 17.12. Tort Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 17.13. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
iii
<PAGE> 5
LIST OF EXHIBITS AND SCHEDULES
INTENTIONALLY OMITTED FROM EDGAR FILED DOCUMENT
Exhibit A Legal Description
Exhibit B List of Service Contracts
Exhibit C List of Tenants
Exhibit D Form of Special Warranty Deed
Exhibit E Form of Blanket Conveyance, Bill of Sale, Assignment and
Assumption
Exhibit F Form of Tenant Estoppel
Exhibit G Certificate as to Foreign Status
Exhibit H Permitted Exceptions
Exhibit I Earnest Money Escrow Agreement
Exhibit J Purchaser's Leasing Commissions and Tenant Improvement
Obligations
Exhibit K Litigation
Exhibit L Form of Audit Letter
Exhibit M Form of Tenant Notice Letter
Exhibit N List of Warranties and Guaranties
Exhibit O List of Licenses and Permits
Exhibit P Form of Press Release
Exhibit Q Draft PNC Lease
iv
<PAGE> 6
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE (this "Agreement") is entered into
and effective for all purposes as of the 9th day of December, 1996, by and
between HMS OFFICE, L.P., a Delaware limited partnership (hereinafter referred
to as the "Seller"), and CARRAMERICA REALTY CORPORATION, a Maryland corporation
(hereinafter referred to as the "Purchaser").
In consideration of the mutual promises, covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:
DEFINITIONS
DEFINITIONS. For purposes of this Agreement, the following
capitalized terms used herein shall have the meanings ascribed to such terms in
this Section 1.1:
AFFILIATE. The term "Affiliate" shall mean any person or entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, Purchaser or Seller, as the
case may be. For the purposes of this definition, "control" shall mean the
possession, direct or indirect, of the power to direct or cause the direction
of the management and policies of a person, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" shall have the meanings correlative to the foregoing.
ASSIGNMENT AND ASSUMPTION. The term "Assignment and Assumption" shall
have the meaning ascribed to such term in Section 10.3(e).
AUTHORITIES. The term "Authorities" shall mean the various
governmental and quasi-governmental bodies or agencies having jurisdiction over
Seller, the Real Property, the Improvements, or any portion thereof.
BLANKET CONVEYANCE. The term "Blanket Conveyance" shall have the
meaning ascribed to such term in Section 10.3(b).
BUSINESS DAY. The term "Business Day" shall mean any day other than a
Saturday, Sunday or a day on which national banking associations are authorized
or required to close.
CERTIFICATE AS TO FOREIGN STATUS. The term "Certificate as to Foreign
Status" shall have the meaning ascribed to such term in Section 10.4(i).
CLOSING. The term "Closing" shall mean the consummation of the
purchase and sale of the Property contemplated by this Agreement.
v
<PAGE> 7
CLOSING DATE. The term "Closing Date" shall mean the date on which
the Closing occurs, which shall be December 18, 1996 or such earlier or later
date as Purchaser and Seller may mutually agree to in writing.
CLOSING SURVIVING OBLIGATIONS. The term "Closing Surviving
Obligations" shall mean the rights, liabilities and obligations set forth in
Sections 5.3, 5.4, 10.4(j), 10.5, 11.1, 12.1, 16.1, 16.2, 17.2, 17.12 and
17.13.
COMMITMENT. The term "Commitment" shall mean that certain Commitment
for Title Insurance issued by Chicago Title Insurance Company dated October 25,
1996 as Order No. 1410 00960824 UL.
CONFIDENTIALITY AGREEMENT. The term "Confidentiality Agreement" shall
mean that certain Confidentiality Agreement dated July 17, 1996 between Seller
and Security Capital (U.S.) Investment Research Incorporated as authorized
agent for Purchaser.
DEED. The term "Deed" shall mean a special warranty deed
substantially in the form attached hereto as Exhibit "D" and incorporated
herein by this reference for all purposes.
DELINQUENT RENTALS. The term "Delinquent Rentals" shall have the
meaning ascribed to such term in Section 10.5(b).
DOCUMENTS. The term "Documents" shall have meaning ascribed to such
term in Section 5.1(a).
EARNEST MONEY DEPOSIT. The term "Earnest Money Deposit" shall mean
the cash sum of One Million and No/100 Dollars (together with interest, if any,
thereon) deposited by Purchaser with Escrow Agent pursuant to Section 4.1.
EARNEST MONEY ESCROW AGREEMENT. The term "Earnest Money Escrow
Agreement" shall have the meaning ascribed to such term in Section 4.1.
EFFECTIVE DATE. The term "Effective Date" shall mean the date set
forth in the opening paragraph of this Agreement, provided however that if
Purchaser's Board fails to approve the transactions contemplated hereby on
December 12, 1996, this Agreement shall become null and void and Purchaser
shall be entitled to a return of the Earnest Money Deposit in accordance with
the terms of the certain Escrow Agreement of even date herewith.
ENVIRONMENTAL LAWS. The term "Environmental Laws" shall mean all
federal, state and local environmental laws, rules, statutes, directives,
binding written interpretations, binding written policies, ordinances and
regulations issued by any Authorities and in effect as of the date of this
Agreement with respect to or which otherwise pertains to or affects the Real
Property or the Improvements, or any portion thereof, the use, ownership,
occupancy or operation of the Real Property or the Improvements, or any portion
thereof, Purchaser, and as same have been amended, modified or supplemented
from time to time prior to the date of this Agreement, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980
vi
<PAGE> 8
(42 U.S.C. Section 9601 et seq.), the Hazardous Substances Transportation Act
(49 U.S.C. Section 1802 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Water Pollution Control Act (33 U.S.C.
Section 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Solid Waste
Disposal Act (42 U.S.C. Section 6901 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 2601 et seq.), the Emergency Planning and Community
Right-to-Know Act of 1986 (42 U.S.C. Section 11001 et seq.), the Radon and
Indoor Air Quality Research Act (42 U.S.C. Section 7401 note, et seq.), the
Superfund Amendment Reauthorization Act of 1986 (42 U.S.C. Section 9601 et
seq.), comparable state and local laws, and any and all rules and regulations
which have been promulgated under any and all of the aforementioned laws.
ESCROW AGENT. The term "Escrow Agent" shall mean Chicago Title and
Trust Company, 171 North Clark Street, Chicago, Illinois 60601; Attention:
Diane Nelson.
EXISTING SURVEY. The term "Existing Survey" shall mean the survey of
the Real Property dated March 1, 1995, prepared by Allen D. Ludlow, Registered
Illinois Land Surveyor No. 35-1954 (the "Surveyor").
GOVERNMENTAL REGULATIONS. The term "Governmental Regulations" shall
mean all laws, ordinances, rules and regulations of the Authorities applicable
to Seller or the use or operation of the Real Property or the Improvements or
any portion thereof, including but not limited to Environmental Laws.
GROUND LEASES. The term "Ground Leases" means those leasing
agreements under which the leasehold estates described in Exhibit "A" were
created, which leasehold estates constitute part of the Real Property
hereunder.
HAZARDOUS SUBSTANCES. The term "Hazardous Substances" shall mean all
(a) asbestos, radon gas, electromagnetic waves, urea formaldehyde foam
insulation and transformers or other equipment that contains dielectric fluid
containing polychlorinated biphenyls of 50 ppm or greater, (b) any solid,
liquid, gaseous or thermal contaminant, including smoke vapor, soot, fumes,
acids, alkalis, chemicals, waste, petroleum products or byproducts, asbestos,
PCBs, phosphates, lead or other heavy metals, chlorine, or radon gas, (c) any
solid or liquid wastes (including hazardous wastes), hazardous air pollutants,
hazardous substances, hazardous chemical substances and mixtures, toxic
substances, pollutants and contaminants, as such terms are defined in any
Environmental Law, including, without limitation the National Environmental
Policy Act (42 U.S.C. Section 4321 et seq.), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et
seq.), as amended by the Superfund Amendments and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), as
amended by the Hazardous and Solid Wastes Amendments of 1984, the Hazardous
Substances Transportation Act, the Toxic Substances Control Act, the Clean
Water Act (33 U.S.C. Section 1321 et seq.), the Clean Air Act, the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), as such Laws have been
amended and/or supplemented from time to time prior to the date of this
Agreement, and any and all rules and regulations promulgated under any of the
above, and (D) any other chemical, material or substance, the use or presence
of, or exposure to the use or presence of, which is prohibited, or limited or
regulated by any Environmental Laws.
vii
<PAGE> 9
IMPROVEMENTS. The term "Improvements" shall mean all buildings,
structures, fixtures, parking areas and improvements located on the Real
Property.
INDEPENDENT CONSIDERATION. The term "Independent Consideration" shall
have the meaning ascribed to such term in Section 3.3.
INTANGIBLE PROPERTY. The term "Intangible Property" shall mean,
collectively: (A) the Licenses and Permits; (B) names, trade names and logos
used by Seller exclusively in the operation and identification of the
Improvements; (C) warranties, guaranties, indemnities, bonds, claims against
third parties, and contract rights expressly assumed by Purchaser pursuant
hereto, including, without limitation, the warranties and guaranties listed on
Exhibit "N" attached hereto and incorporated herein; and (D) other intangible
rights, titles, interests, privileges and appurtenances owned by Seller and
used exclusively in connection with the ownership, use or operation of the Real
Property or the Improvements.
LICENSES AND PERMITS. The term "Licenses and Permits" shall
collectively mean licenses, permits, certificates of occupancy, approvals,
dedications, subdivision maps and entitlements now or hereafter issued,
approved or granted by the Authorities in connection with the Real Property and
the Improvements together with all renewals and modifications thereof,
including, without limitation, the Licenses and Permits listed on Exhibit "O"
attached hereto and incorporated herein.
PERMITTED EXCEPTIONS. The term "Permitted Exceptions" shall mean the
title exceptions listed on Exhibit "H" attached hereto and incorporated herein.
PERSONAL PROPERTY. The term "Personal Property" shall mean all
equipment, appliances, tools, supplies, machinery, furnishings and other
tangible personal property owned by Seller attached to, appurtenant to, located
in or used exclusively in connection with the ownership, maintenance,
management, improvement or operation of the Improvements. The term "Personal
Property" shall mean and include any and all deposits, bonds or other security
deposited or delivered by Seller with or to any Authorities, utilities or other
third parties in connection with the operation, ownership, maintenance,
management, occupancy or improvement of the Real Property.
PROPERTY. The term "Property" shall have the meaning ascribed to
such term in Section 2.1.
PURCHASE PRICE. The term "Purchase Price" shall have the meaning
ascribed to such term in Section 3.1.
PURCHASER'S ENDORSEMENTS. The term "Purchaser's Endorsements" shall
have the meaning set forth in Section 6.3.
REAL PROPERTY. The term "Real Property" shall mean those certain
parcels of real property (including, without limitation, the leasehold estates
under the Ground Leases) located at 333 and 377 East Butterfield Road, Lombard,
Illinois, as more particularly described on Exhibit "A" attached hereto and
incorporated herein by this reference for all purposes, together with all of
Seller's right, title and interest, if any, in and to the rights, benefits,
privileges, easements,
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hereditaments and appurtenances pertaining thereto, including, without
limitation, Seller's right, title and interest in and to the adjacent streets,
alleys and right-of-ways, and any easement rights, air rights, development
rights and water rights.
RECORDS AND PLANS. The term "Records and Plans" shall mean
collectively (A) all books and records, including, without limitation, property
operating statements, specifically relating to the Improvements; (B) all
structural reviews, architectural drawings and engineering, soils, seismic,
geologic and architectural reports, studies and certificates pertaining to the
Real Property or the Improvements; and (C) all preliminary, final and proposed
plans, specifications and drawings of the Improvements or the Real Property or
any portion thereof.
SERVICE CONTRACTS. The term "Service Contracts" shall mean the
elevator service agreements, which will be assigned to Purchaser at Closing
together with all renewals, supplements, amendments and modifications thereof,
as more particularly described on Exhibit "B" attached hereto and incorporated
herein by this reference for all purposes.
SIGNIFICANT PORTION. The term "Significant Portion" shall mean damage
by fire or other casualty to the Real Property or Improvements requiring repair
costs in excess of Two Percent (2%) of the Purchase Price in Seller's
reasonable determination.
TENANTS. The term "Tenants" shall mean all persons or entities
leasing, renting or occupying space within the Improvements pursuant to the
Tenant Leases. Tenants shall not include subtenants, licensees,
concessionaires, franchisees or other persons or entities whose occupancy is
derived through Tenants.
TENANT CHARGES. The term "Tenant Charges" shall have the meaning
ascribed to such term in Section 10.5(c).
TENANT DEPOSITS. The term "Tenant Deposits" shall mean all security
deposits, paid or deposited by the Tenants to Seller, as landlord, or any other
person on Seller's behalf pursuant to the Tenant Leases (together with any
interest which has accrued thereon, but only to the extent such interest has
accrued for account of the respective Tenants).
TENANT LEASES. The term "Tenant Leases" shall mean all leases, rental
agreements or occupancy agreements with Tenants, and all amendments,
modifications and supplements thereto, and all guaranties and/or other security
given in connection therewith, together with all renewals and modifications
thereof, and any new leases entered into after the Effective Date and approved
by Purchaser (if required) pursuant to Section 7.1(e). Tenant Leases shall not
include subleases, franchise agreements or similar occupancy agreements entered
into by Tenants which, by their nature, are subject to Tenant Leases.
TERMINATION SURVIVING OBLIGATIONS. The term "Termination Surviving
Obligations" shall mean the rights, liabilities and obligations set forth in
Sections 5.1(a), 5.2, 11.1, 12.1., 17.2 and 17.13.
TITLE COMPANY. The term "Title Company" shall have the meaning
ascribed to such term in Section 6.1.
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TITLE POLICY. The term "Title Policy" shall have the meaning ascribed
to such term in Section 6.1.
TO SELLER'S KNOWLEDGE. The term "To Seller's Knowledge" shall mean
the present actual (as opposed to constructive or imputed) knowledge solely of
Tom Danilek, Asset Manager for the Property and Kurt Hartman, Property Manager
for the Property, without independent investigation or inquiry whatsoever.
UPDATED SURVEY. The term "Updated Survey" shall mean the survey of
the Real Property dated November 16, 1996, prepared by the Surveyor and
certified to Purchaser.
REFERENCES. Except as otherwise specifically indicated, all
references in this Agreement to Articles or Sections refer to Articles or
Sections of this Agreement, and all references to Exhibits or Schedules refer
to Exhibits or Schedules attached hereto. The words "herein," "hereof,"
"hereinafter" and words and phrases of similar import refer to this Agreement
as a whole and not to any particular Section or Article.
AGREEMENT OF PURCHASE AND SALE
AGREEMENT. Seller hereby agrees to sell, convey and assign to
Purchaser, and Purchaser hereby agrees to purchase and accept from Seller, on
the Closing Date and subject to the terms and conditions of this Agreement, the
following properties and assets (hereinafter collectively referred to as the
"Property"):
the Real Property;
the Improvements;
all of Seller's right, title and interest in and to
the Personal Property;
all of Seller's right, title and interest as lessor
in and to the Tenant Leases and the Tenant Deposits;
all of Seller's right, title and interest in and to
the Intangible Property, but only to the extent assignable;
all of Seller's right, title and interest in and to
the Service Contracts, but only to the extent assignable; and
the Records and Plans, but only to the extent such
Records and Plans are in the possession of or under the control of
Seller or Seller's agents.
INDIVISIBLE ECONOMIC PACKAGE. Purchaser shall have no right
to purchase, and Seller shall have no obligation to sell, less than all of the
Property, it being the express agreement
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and understanding of Purchaser and Seller that, as a material inducement to
Seller and Purchaser to enter into this Agreement, Purchaser has agreed to
purchase, and Seller has agreed to sell, all of the Property, subject to and in
accordance with the terms and conditions hereof.
CONSIDERATION
PURCHASE PRICE. The purchase price for the Property (the
"Purchase Price") shall be Fifty One Million and No/100 Dollars ($51,000,000)
in lawful currency of the United States of America, payable as provided in
Section 3.3, provided however, that if the PNC Mortgage lease ("PNC Lease") in
substantially the form attached hereto as Exhibit "P" (which form is hereby
approved by Purchaser) has not been executed as of the Closing Date, an amount
equal to Four Hundred Thousand and No/100 Dollars ($400,000.00) shall be held
back from the Purchase Price to be paid at Closing ("Holdback"). The Holdback
shall be placed in Escrow with the Escrow Agent, under instructions reasonably
approved by the parties and consistent with this Section 3.1, and shall be paid
to Seller within one (1) day of Escrow Agent's receipt of a full executed copy
of the PNC Lease provided that if Escrow Agent does not receive a copy of the
fully executed PNC Lease on or before six (6) months following the Closing
Date, Escrow Agent will deliver the Holdback to Purchaser.
METHOD OF PAYMENT OF PURCHASE PRICE. No later than 12:01 p.m.
(Central Standard Time) on the Closing Date, Purchaser shall pay to Seller or
cause the Escrow Agent to pay to Seller, the Purchase Price (subject to
adjustments described in Section 10.5) by Federal Reserve wire transfer of
immediately available funds to an account which shall be designated by Seller
on or before two (2) Business Days prior to the Closing.
INDEPENDENT CONSIDERATION. Contemporaneously with the
execution and delivery of this Agreement, Purchaser has paid to Seller as
further consideration for this Agreement, in cash, the sum of One Hundred
Dollars ($100.00) (the "Independent Consideration"), in addition to the Earnest
Money Deposit and the Purchase Price and independent of any other consideration
provided hereunder, which Independent Consideration is fully earned by Seller
and is not refundable under any circumstances.
EARNEST MONEY DEPOSIT
THE DEPOSIT. Simultaneously with the execution and delivery
of this Agreement, Purchaser has deposited the Earnest Money Deposit with the
Escrow Agent, to be held pursuant to the terms of an Earnest Money Escrow
Agreement ("Earnest Money Escrow Agreement") substantially in the form attached
hereto as Exhibit "I" between Escrow Agent, Seller and Purchaser.
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<PAGE> 13
INSPECTION OF PROPERTY
(a) INSPECTION. Purchaser hereby acknowledges that it has been
given a full, complete and adequate opportunity to make such legal, factual and
other determinations, analyses, inquiries and investigations as Purchaser
deemed necessary or appropriate in connection with the acquisition of the
Property including without limitation the opportunity to review the following:
(i) environmental, soil and other inspection reports and studies prepared in
connection with Seller's acquisition of the Property, (ii) the current year's
assessments (special or otherwise), ad valorem and personal property tax bills,
(iii) Seller's most current rent roll, (iv) operating statements for the
previous 12 calendar months, (v) copies of the Tenant Leases, the Service
Contracts and the Records and Plans, (vi) a current Personal Property
inventory, (vii) materials relating to any litigation or proceeding relating to
the Property, (viii) existing title and survey documents relating to the
Property, (ix) leasing commission agreements, if any, and (x) maintenance
records, accounting and lease administrative records, capital improvement
records, land/development records, and architectural/engineering records
relating to the Property (collectively, "Documents"). Seller shall have the
continuing obligation during the pendency of this Agreement to provide or make
available to Purchaser any document described above and coming into the
possession of or produced by Seller or its property manager after the Effective
Date. Purchaser has relied upon its own independent examination of the
Property and all matters relating thereto and not upon any statements of Seller
(excluding the limited matters represented by Seller in Section 8.1 hereof) or
of any officer, director, employee, agent or attorney of Seller. Purchaser
acknowledges that all information obtained by Purchaser was obtained from a
variety of sources and Seller (except for the limited matters represented by
Seller in Section 8.1 hereof) shall not be deemed to have represented or
warranted the completeness, truth or accuracy of any of the Documents or other
such information heretofore or hereafter furnished to Purchaser, and Purchaser
acknowledges that Seller has not undertaken any independent investigation as to
the truth, accuracy or completeness of the Documents. The provisions of this
Section 5.1(a) shall survive closing and termination hereof without limitation.
If this Agreement is terminated for any reason permitted hereby, Purchaser
shall return all copies of the Documents, and, unless contractually prevented
from doing so, all copies of any studies, reports or test results regarding any
part of the Property obtained by Purchaser in connection with its inspection of
the Property, it being acknowledged that Purchaser makes no warranty or
representation as to any such studies, reports or test results, and Seller may
not rely thereon without the consent of the party preparing such study, report
or test.
Purchaser acknowledges that any and all of the Documents may
be proprietary and confidential in nature and will be provided to Purchaser
solely to assist Purchaser in determining the feasibility of purchasing the
Property. Subject only to the provisions of Article XII, Purchaser agrees not
to disclose the contents of the Documents, or any of the provisions, terms or
conditions thereto, to any party outside of Purchaser's organization other than
its attorneys, accountants, consultants, lenders or investors (collectively,
the "Permitted Outside Parties"). Purchaser further agrees that within its
organization, or as to the Permitted Outside Parties, the Documents shall be
disclosed and exhibited only to those persons within Purchaser's organization
or to those Permitted Outside Parties who are responsible for determining the
feasibility of Purchaser's acquisition of the Property and who have agreed in
writing to preserve the
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<PAGE> 14
confidentiality of such information as required herein. Purchaser agrees not
to divulge the contents of such Documents and other information except in
strict accordance with Article XII and the confidentiality standards set forth
in this Section 5.1(b). In permitting the Permitted Outside Parties to review
the Documents or information to assist Purchaser, Seller has not waived any
privilege or claim of confidentiality with respect thereto, and no third party
benefits or relationships of any kind, either express or implied, have been
offered, intended or created by Seller and any such claims are expressly
rejected by Seller and waived by Purchaser and the Permitted Outside Parties.
INSPECTION OBLIGATIONS. (a) Upon twenty-four (24) hours prior notice
to Seller, Purchaser shall have the right to enter the Real Property during
normal business hours to inspect the Property and take certain necessary
actions incident to the Closing. In conducting any inspections, investigations
of the Property and/or Documents, Purchaser and its agents and representatives
shall: (i) not disturb the Tenants or interfere with their use of the Property
pursuant to their respective Tenant Leases; (ii) not interfere with the
operation and maintenance of the Real Property or Improvements; (iii) not
damage any part of the Property (or, if such damage occurs, restore the
Property) or any personal property owned or held by any Tenant or any other
person or entity; (iv) not injure or otherwise cause bodily harm to Seller, or
its agents, guests, invitees, contractors and employees or any Tenant or any
other person or entity; (v) maintain comprehensive general liability
(occurrence) insurance covering any accident arising in connection with the
presence of Purchaser, its agents and representatives on the Real Property or
Improvements; (vi) not permit any liens to attach to the Real Property by
reason of the exercise of its rights hereunder; (vii) fully restore the Real
Property or Improvements to the condition in which the same was found before
any such inspection or tests were undertaken; and (viii) not communicate with
the Tenants or service providers without Seller's prior consent, which consent
shall not be unreasonably withheld or delayed.
PURCHASER HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD
SELLER AND ITS PARTNERS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS HARMLESS
FROM AND AGAINST ANY AND ALL LIENS, CLAIMS, CAUSES OF ACTION, DAMAGES,
LIABILITIES, DEMANDS, SUITS, OBLIGATIONS, LOSSES, PENALTIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF PURCHASER'S INSPECTIONS OR
TESTS MADE BEFORE OR AFTER THE EFFECTIVE DATE OR ANY VIOLATION OF THE PROVISIONS
OF THIS SECTION 5.2. Notwithstanding any provision of this Agreement to the
contrary, no termination of this Agreement shall terminate Purchaser's
obligations pursuant to this Section 5.2.
SALE "AS IS". OTHER THAN THE LIMITED MATTERS REPRESENTED IN
SECTION 8.1 HEREOF AND IN ANY CLOSING DOCUMENTS DELIVERED PURSUANT HERETO,
PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR
INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ANY OF ITS AGENTS OR
EMPLOYEES REGARDING THE PROPERTY, GOVERNMENT REGULATIONS OR ANY OTHER MATTERS
AND ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS HAVE BEEN MADE. PURCHASER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER
OF REAL ESTATE THAT IT UNDERSTANDS AND IS AWARE OF THE APPLICABILITY, IF ANY, OF
ANY GOVERNMENT REGULATIONS, AND THAT, EXCEPT AS EXPRESSLY PROVIDED HEREIN, IT IS
RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF PURCHASER'S CONSULTANTS IN
PURCHASING THE PROPERTY. PURCHASER HAS CONDUCTED SUCH INSPECTIONS AND
INVESTIGATIONS OF THE PROPERTY AS PURCHASER DEEMED NECESSARY, INCLUDING, BUT NOT
LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND SHALL RELY
UPON SAME. UPON CLOSING, PURCHASER SHALL ASSUME THE RISK (SUBJECT TO THE LAST
SENTENCE OF SECTION 5.4
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<PAGE> 15
BELOW) THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL
AND ENVIRONMENTAL CONDITIONS AND VIOLATIONS OF OR LIABILITY UNDER ANY
GOVERNMENTAL REGULATIONS INCLUDING BUT NOT LIMITED TO ENVIRONMENTAL LAWS, MAY
NOT HAVE BEEN REVEALED BY PURCHASER'S INSPECTIONS AND INVESTIGATIONS.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, EXCEPT TO THE EXTENT
PROVIDED HEREIN, SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL
ACCEPT THE PROPERTY "AS IS, WHERE IS," WITH ALL FAULTS. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE PROPERTY BY SELLER, ANY AGENT
OR EMPLOYEE OF SELLER OR ANY THIRD PARTY. THE TERMS AND CONDITIONS OF THIS
SECTION 5.3 SHALL EXPRESSLY SURVIVE THE CLOSING, NOT MERGE WITH THE PROVISIONS
OF ANY CLOSING DOCUMENTS AND SHALL BE INCORPORATED INTO THE DEED. SELLER IS
NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS,
REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY
REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS THE SAME
ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. PURCHASER ACKNOWLEDGES THAT
THE PURCHASE PRICE REFLECTS THE "AS IS" NATURE OF THIS SALE AND ANY FAULTS,
LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED WITH THE
PROPERTY. PURCHASER HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH
IN THIS AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE SIGNIFICANCE AND EFFECT
THEREOF. PURCHASER ACKNOWLEDGES AND AGREES THAT THE DISCLAIMERS AND OTHER
AGREEMENTS SET FORTH HEREIN ARE AN INTEGRAL PART OF THIS AGREEMENT AND THAT
SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO PURCHASER FOR THE PURCHASE
PRICE WITHOUT THE DISCLAIMER AND OTHER AGREEMENTS SET FORTH IN THIS AGREEMENT.
Purchaser Initials
PURCHASER'S RELEASE OF SELLER. EFFECTIVE AS OF THE CLOSING,
SELLER SHALL BE RELEASED BY PURCHASER FROM ALL RESPONSIBILITY AND LIABILITY
REGARDING THE CONDITION (INCLUDING THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND
SURFACE AND SUBSURFACE WATERS, OF HAZARDOUS SUBSTANCES OR SUBSTANCES THAT HAVE
BEEN OR MAY IN THE FUTURE BE DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR
SUBJECT TO ENVIRONMENTAL LAWS OR OTHER REGULATION OR THAT MAY NEED TO BE
SPECIALLY TREATED, HANDLED AND/OR REMOVED FROM THE PROPERTY UNDER CURRENT OR
FUTURE FEDERAL, STATE AND LOCAL LAWS, REGULATIONS OR GUIDELINES), STATUS UNDER
GOVERNMENT REGULATIONS, VALUATION, SALABILITY OR UTILITY OF THE PROPERTY, OR ITS
SUITABILITY FOR ANY PURPOSE WHATSOEVER. NOTWITHSTANDING THE FOREGOING,
PURCHASER'S RELEASE OF SELLER (i) SHALL NOT INCLUDE RESPONSIBILITY OR LIABILITY
FOR THE RELEASE OR DISCHARGE BY SELLER OF HAZARDOUS SUBSTANCES (OTHER THAN
QUANTITIES USED IN THE ORDINARY COURSE OF OPERATION OF THE PROPERTY NOT
OTHERWISE IN VIOLATION OF LAW) ON THE PROPERTY DURING SELLER'S OWNERSHIP
THEREOF, (ii) SHALL NOT INCLUDE CLAIMS BROUGHT BY THIRD PARTIES (OTHER THAN
PURCHASER'S PERMITTED ASSIGNS UNDER SECTION 15.3), AND (iii) SHALL NOT BE DEEMED
TO OBLIGATE PURCHASER TO INDEMNIFY OR HOLD HARMLESS SELLER WITH RESPECT TO ANY
SUCH LIABILITIES OR CLAIMS SO RELEASED.
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TITLE AND SURVEY MATTERS
TITLE. Seller has delivered to Purchaser and Purchaser hereby
acknowledges receipt of a copy of the Commitment by the terms of which Chicago
Title Insurance Company, 171 North Clark Street, Chicago, Illinois 60601;
Attention: Robin Carlucci (the "Title Company") agrees to issue to Purchaser at
Closing an owner's policy of title insurance ("Title Policy") in the amount of
the Purchase Price on the ALTA Owner's Policy of Title Insurance (revised
10/17/70) with extended coverage, insuring fee simple title to the Real
Property to be good, marketable and indefeasible subject to the terms of such
policy and the exceptions shown on the Commitment. Purchaser has had a full,
complete and adequate opportunity to make such legal, factual and other
determinations, analyses and inquiries as Purchaser deemed necessary with
respect to the Commitment, all documents described as exceptions in the
Commitment and the state of the title of the Real Property and Improvements.
Notwithstanding anything in this Section 6.2 to the contrary, Seller shall have
no obligation to remove and/or cure any exceptions to title other than: (i)
liens and security interests securing the loan from Connecticut General Life
Insurance Company to Homart Development Company; (ii) liens and security
interests voluntarily created by, under or through Seller after the date of the
Commitment; and (iii) liens and security interests created by, through or under
third parties, up to a maximum of $100,000.
SURVEY. Purchaser acknowledges receipt of the Updated Survey
and the Existing Survey and Purchaser has had a full, complete and adequate
opportunity to make such legal, factual and other determinations, analyses and
inquiries as Purchaser deemed necessary with respect to the Updated Survey and
the Existing Survey. All matters indicated or disclosed by the Existing Survey
and the Updated Survey are acceptable and are deemed to be "Permitted
Exceptions" for purposes of this Agreement.
TITLE POLICY. It shall be a condition to Purchaser's
obligation to close that the Title Company agree to issue the Title Policy at
Closing pursuant to the Commitment subject only to the Permitted Exceptions,
and containing the Purchaser's Endorsements (as defined herein); provided
however, that except as expressly provided in Section 6.1 above, Seller shall
not be obligated to make any monetary expenditures or incur any other costs or
deliver any other indemnities or affidavits other than an ALTA statement and
the standard Gap Undertaking to facilitate obtaining the Purchaser's
Endorsements. For purposes of this Agreement, the term "Purchaser's
Endorsements" shall mean; (a) owner's comprehensive; (b) access; (c) survey
(accuracy of survey); (d) location (survey of legal matches title); (e)
separate tax lot (legal lot); (f) zoning 3.1, (modified) with parking and (g)
contiguity. Seller shall execute at Closing an ALTA statement and the Gap
Undertaking and any other documents and agreements (but not any other affidavit
or indemnity) reasonably required by the Title Company to issue the Title
Policy in accordance with the provisions of this Agreement. Seller shall pay
the premium for the Title Policy, including the premium for extended coverage.
Purchaser shall pay for the cost of Purchaser's Endorsements.
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INTERIM OPERATING COVENANTS AND ESTOPPELS
INTERIM OPERATING COVENANTS. Seller covenants and agrees with
Purchaser that from the Effective Date until Closing, Seller will:
OPERATIONS. Continue to operate, manage and maintain
the Improvements in the ordinary course of Seller's business and
substantially in accordance with Seller's present practice, subject to
ordinary wear and tear and further subject to Article IX of this
Agreement;
MAINTAIN INSURANCE. Maintain fire and extended
coverage insurance on the Property which is at least equivalent in all
material respects to the insurance policies covering the Real Property
and the Improvements as of the Effective Date;
PERSONAL PROPERTY. Not transfer or remove any
Personal Property from the Improvements except for the purpose of
repair or replacement thereof. Any items of Personal Property
replaced after the Effective Date shall be promptly installed prior to
Closing and shall be of substantially similar quality of the item of
Personal Property being replaced. Seller will not encumber or grant
any security interest in the Personal Property after the Effective
Date.
COMPLY WITH GOVERNMENTAL REGULATIONS. Not knowingly
take any action that would result in a failure to comply in all
material respects with all Governmental Regulations applicable to the
Property, it being understood and agreed that prior to Closing, Seller
shall have the right to contest any such Governmental Regulations (and
Seller shall notify Purchaser of any such contest);
LEASES. Not enter into any new Tenant Lease or
materially amend or terminate any existing Tenant Lease without the
prior written consent of Purchaser, which consent shall not be
unreasonably withheld. Purchaser's failure to disapprove in writing
any request within three (3) business days shall be deemed to
constitute Purchaser's consent thereto. Purchaser shall not be deemed
unreasonable if it withholds consent to a new Tenant Lease or material
amendment or renewal of an existing Tenant Lease not meeting all of
the following criteria: (i) is substantially on the standard building
lease form; (ii) provides for a minimum annual net rental of Fifteen
and No/100 Dollars ($15.00) per square foot of rentable area leased
with minimum annual increases of 3% or $.50 per square foot of
rentable area leased; (iii) provides for a five year term; (iv)
requires Tenant Improvements of no more than Fifteen and No/100
Dollars ($15.00) per square foot for a new Tenant Lease or Seven and
No/100 Dollars ($7.00) per square foot for a renewal; (v) results in
brokerage commissions of no more than 7% on the first year gross
rentals, and 2% on gross rentals during the next four years of the
lease term (excluding renewals and expansions) for a new Tenant Lease;
(vi) provides no renewal or early termination rights; and (vii)
provides no lease assumptions or forgiveness of existing obligations.
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SERVICE CONTRACTS. Not enter into any new service
contract, unless Purchaser consents thereto in writing, which consent
will not be unreasonably withheld or delayed. Seller shall not
materially amend or terminate the Service Contracts described in
Exhibit "B" without Purchaser's written consent. Except with respect
to the Service Contracts described in Exhibit "B", Seller shall send
termination notices effective upon the transfer of legal title of the
Property to Purchaser to all service providers (including any leasing
commission agreements with third parties for leasing the Property
except any existing commission agreements for leasing commissions
listed on Exhibit J attached hereto which shall be assumed by
Purchaser, provided that it is expressly acknowledged by Seller that
the property management agreement with Hines which provides for
leasing commissions, shall be terminated as of Closing with respect to
the Property) pursuant to service contracts (or applicable commission
agreements) relating to the Property. Notwithstanding the foregoing,
Purchaser hereby acknowledges and agrees that following the Closing,
Hines shall continue to negotiate the PNC Lease through to the final
execution thereof (but Hines shall not be entitled to execute same),
provided that if the PNC Lease is not executed within six (6) months
of the Closing Date, Hines shall no longer be entitled to negotiate
the PNC Lease. Purchaser shall have final approval rights which will
not be unreasonably withheld or delayed, for any lease negotiated by
Hines with PNC Mortgage, provided that Purchaser shall not be deemed
unreasonable if the business terms of such lease are materially
different from those contained in the form attached hereto as Exhibit
"P".
NO SOLICITATION. After the Effective Date, Seller
will not solicit offers or enter into any other agreement for the Sale
of the Property.
MAINTENANCE OF LICENSES AND PERMITS. Seller shall
maintain in existence all Licenses and Permits in existence as of the
Effective Date necessary to the ownership and operation of the
Property until Closing.
MANAGEMENT AGREEMENTS. Seller shall terminate
effective upon the transfer of legal title to the Property of all
management agreements relating to the Property.
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ESTOPPELS.
Seller shall use its reasonable efforts to secure and
deliver to Purchaser, no later than two (2) business days before the
Closing Date, Estoppel Certificates from Tenants under all Tenant
Leases substantially in the form attached hereto as Exhibit "F" (or in
the event that the Tenant Lease prescribes the form of estoppel, in
the form prescribed by the Tenant Lease). Seller has delivered to
Purchaser for Purchaser's review and approval and Purchaser hereby
acknowledges its receipt and approval of completed forms of Estoppel
Certificates for all Tenant Leases to be delivered by Seller to the
Tenants. It shall be a condition to Closing that Seller obtain and
deliver to Purchaser executed Estoppel Certificates substantially in
the form attached hereto as Exhibit "F" (or in the event that the
Tenant Lease prescribes the form of estoppel, in the form prescribed
by the Tenant Lease) dated no earlier than thirty (30) days prior to
the Closing Date disclosing no defaults or exceptions objectionable to
Purchaser from (i) each Tenant under a Tenant Lease for which the
lease term has commenced which individually leases 9,000 or more
leased square footage of the Improvements and (ii) Tenants under a
Tenant Lease for which the lease term has commenced whose combined
leased square footage is at least seventy-five percent (75%) of the
remaining leased square footage of the Improvements. Seller shall use
reasonable efforts to obtain the Estoppel Certificates, but Seller
shall not have any obligation to make any payment of money, grant any
economic concessions to any tenant or commence litigation against any
tenant to obtain any Estoppel Certificate. Any failure to obtain the
required Estoppel Certificates or to satisfy Section 7.2(a)(ii) by
delivering a Seller's Certificate as provided in Section 7.2(b) shall
only constitute a failure of a condition precedent to Closing and
shall not constitute a breach or default by Seller under this
Agreement.
Seller, at its sole option, may elect to satisfy
Section 7.2(a)(ii) to the extent provided hereinbelow by delivering
one or more representation certificates of Seller ("Seller's
Certificate") representing that to Seller's actual knowledge (i) the
copy of the Tenant Lease attached thereto is true and correct; (ii)
there are no defaults by the landlord or the Tenant (or disclosing any
such defaults); and (iii) the Tenant Lease is in full force and
effect; provided, that, Seller may only deliver Seller's Certificates
covering up to 10,000 leased square feet at the Improvements in the
aggregate. If Seller subsequently obtains an Estoppel Certificate
from a Tenant for which Seller has delivered a Seller Certificate, the
delivered Seller Certificate shall be null and void, and Purchaser
shall accept such Estoppel Certificate in its place.
In the event that Seller is unable to satisfy the
Estoppel Certificate condition in Section 7.2(a) or 7.2(b), Purchaser
may elect to terminate this Agreement by giving written notice of such
termination to Seller and thereupon Purchaser shall be entitled to the
return of the Earnest Money Deposit pursuant to the terms of the
Earnest Money Escrow Agreement.
Seller shall also use reasonable efforts to obtain an
executed estoppel certificate from each of the lessors under the
Ground Leases ("Ground Lease Estoppels") in
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a form reasonably acceptable to Purchaser, but Seller shall not have
any obligation to make any payment of money, grant economic
concessions to any lessor under a Ground Lease or commence litigation
against any lessor under a Ground Lease, to obtain the Ground Lease
Estoppels, and delivery of the Ground Lease Estoppels is not a
condition to Closing nor shall Seller's failure to obtain the Ground
Lease Estoppels be a default by Seller hereunder.
REPRESENTATIONS AND WARRANTIES
SELLER'S REPRESENTATIONS AND WARRANTIES. Subject to the
limitations set forth in Section 5.5 and Article XVI of this Agreement, Seller
represents and warrants to Purchaser the following:
STATUS. Seller is a limited partnership duly
organized and validly existing under the laws of the State of
Delaware.
AUTHORITY. The execution and delivery of this
Agreement and the performance of Seller's obligations hereunder have
been or will be duly authorized by all necessary action on the part of
Seller, and this Agreement constitutes the legal, valid and binding
obligation of Seller, subject to equitable principles and principles
governing creditors' rights generally.
NON-CONTRAVENTION. The execution and delivery of
this Agreement by Seller and the consummation by Seller of the
transactions contemplated hereby will not violate any judgment, order,
injunction, decree, regulation or ruling of any court or Authority or
conflict with, result in a breach of, or constitute a default under
the organic documents of Seller, any note or other evidence of
indebtedness, any mortgage, deed of trust or indenture, or any lease
or other material agreement or instrument to which Seller is a party
or by which it is bound.
CONSENTS. No consent, waiver, approval or
authorization is required from any person or entity (or, if required,
will be obtained prior to Closing) in connection with the execution
and delivery of this Agreement by Seller or the performance by Seller
of the transactions contemplated hereby.
SUITS AND PROCEEDINGS. To Seller's Knowledge, except
as disclosed on Exhibit "K" attached hereto and incorporated herein,
there are no legal actions, suits or similar proceedings pending and
served, or threatened against Seller or the Property.
NON-FOREIGN ENTITY. Seller is not a "foreign person"
or "foreign corporation" as those terms are defined in the Internal
Revenue Code of 1986, as amended, and the regulations promulgated
thereunder.
TENANTS. To Seller's Knowledge, as of the Effective
Date the list of Tenants of the Improvements attached hereto as
Exhibit "C" constitutes all the tenants from which Seller has accepted
rental payments during Seller's ownership and operation of the
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Improvements and from whom Seller is currently accepting rental
payments. To Seller's Knowledge and except as disclosed on Exhibit
"C", as of the Effective Date no Tenant listed thereon is in default
under a Tenant Lease and Seller has not received written notice from a
Tenant of a landlord default under any of such Tenant Leases. To
Seller's Knowledge, the Documents made available to Purchaser pursuant
to Section 5.2 contain true, correct and complete copies of all of the
Tenant Leases and leasing commission agreements, if any, affecting the
Property, including any and all amendments or supplements thereto, and
guaranties or other security in connection therewith.
SERVICE CONTRACTS. To Seller's Knowledge, the
Documents made available to Purchaser pursuant to Section 5.2 contain
true and correct copies of the Service Contracts. To Seller's
Knowledge and except as disclosed on Exhibit "B," as of the Effective
Date no service provider is in default under the Service Contracts and
Seller has received no written notice from any service provider of a
Seller default under the Service Contracts.
VIOLATIONS; NOTICES. To Seller's knowledge, Seller
has received no written notification from any Authority of any
violations of applicable laws or ordinances with respect to the
Property. Except to the extent previously disclosed to Purchaser in
writing, to Seller's Knowledge, no notice has been received from the
applicable Authority regarding the re-assessment or change in the
assessed valuation of the Property.
ERISA. Seller is not and is not 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, 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. Section 2510.3-101 of any such employee benefit
plan or plans.
IRPTA. To Seller's Knowledge, the Real Property does
not contain any facilities which are subject to reporting under
Section 312 of the Federal Emergency Planning and Community
Right-to-Know Act of 1986 and the Real Property does not contain any
underground storage tanks which required notification under Section
9002 of the Solid Waste Disposal Act (42 USC 6991).
LICENSES AND PERMITS. To Seller's Knowledge, Seller
has all Licenses and Permits necessary for its operation of the
Property, including, without limitation, all certificates of occupancy
necessary for the occupancy of the Property.
UTILITIES. To Seller's Knowledge, all water, sewer,
gas, electric, telephone, and drainage facilities, and other utilities
required for the normal and proper operation of the Property are
installed and connected to the Property with valid permits, and are
adequate to serve the Property for its current use and to permit full
compliance with all requirements of law and the Tenant Leases.
EMPLOYEES. Seller has no employees.
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<PAGE> 22
ENVIRONMENTAL REPORTS. Seller has made available to
Purchaser copies of all environmental and soils reports relating to
the Property in Seller's or Seller's property manager's possession.
RENT ROLL; OPERATING STATEMENTS. The rent roll for
the Property and the operating statements for the Property delivered
or made available (as the case may be) by Seller to Purchaser were
prepared in the ordinary course of Seller's operation of the Property.
NET WORTH. Without taking into consideration its
interest in the Property, Seller has a net worth in excess of
$10,000,000.
PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser
represents and warrants to Seller the following:
STATUS. Purchaser is a corporation duly organized
and validly existing under the laws of the State of Maryland.
AUTHORITY. The execution and delivery of this
Agreement and the performance of Purchaser's obligations hereunder
have been or will be duly authorized by all necessary action on the
part of Purchaser including Purchaser's Board of Directors and
Investment Committee, and this Agreement constitutes the legal, valid
and binding obligation of Purchaser subject to equitable principles
and principles governing creditors' rights generally.
NON-CONTRAVENTION. The execution and delivery of
this Agreement by Purchaser and the consummation by Purchaser of the
transactions contemplated hereby will not violate any judgment, order,
injunction, decree, regulation or ruling of any court or Authority or
conflict with, result in a breach of, or constitute a default under
the organic documents of Purchaser, any note or other evidence of
indebtedness, any mortgage, deed of trust or indenture, or any lease
or other material agreement or instrument to which Purchaser is a
party or by which it is bound.
CONSENTS. No consent, waiver, approval or
authorization is required from any person or entity (or if required,
will be obtained prior to Closing) in connection with the execution
and delivery of this Agreement by Purchaser or the performance by
Purchaser of the transactions contemplated hereby.
NET WORTH. Without taking into consideration the
Purchase Price to be paid by Purchaser pursuant hereto, Purchaser has
a net worth in excess of $10,000,000.
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<PAGE> 23
CONDEMNATION AND CASUALTY
SIGNIFICANT CASUALTY. If, prior to the Closing Date, all or a
Significant Portion of the Real Property and Improvements is destroyed or
damaged by fire or other casualty, Seller shall notify Purchaser of such
casualty. Purchaser shall have the option to terminate this Agreement upon
notice to Seller given not later than ten (10) days after receipt of Seller's
notice. If this Agreement is terminated, the Earnest Money Deposit shall be
returned to Purchaser in accordance with the Earnest Money Escrow Agreement and
thereafter neither Seller nor Purchaser shall have any further rights or
obligations to the other hereunder except with respect to the Termination
Surviving Obligations. In the case of fire or other casualty, if Purchaser
does not elect to terminate this Agreement, Seller shall not be obligated to
repair such damage or destruction but (x) Seller shall assign and turn over to
Purchaser all of the insurance proceeds net of reasonable collection costs (or,
if such have not been awarded, all of its right, title and interest therein)
payable with respect to such fire or other casualty along with an amount equal
to the deductible and (y) the parties shall proceed to Closing pursuant to the
terms hereof without abatement of the Purchase Price.
CASUALTY OF LESS THAN A SIGNIFICANT PORTION. If less than a
Significant Portion of the Property is damaged as aforesaid, then the Closing
shall occur without abatement of the Purchase Price and Seller shall not be
obligated to repair such damage or destruction and Seller shall assign and turn
over to Purchaser all of the insurance proceeds net of reasonable collection
costs (or, if such have not been awarded, all of its right, title and interest
therein) payable with respect to such fire or other casualty along with an
amount equal to the deductible.
CONDEMNATION OF PROPERTY. In the event of condemnation or sale
in lieu of condemnation of all or any portion of the Property prior to the
Closing, or in the event any such condemnation is instituted, Purchaser shall
have the option, to be exercised within ten (10) days after receipt of notice
of such pending condemnation or sale, of terminating Purchaser's obligations
under this Agreement or electing to have this Agreement remain in full force
and effect. In the event Purchaser does not terminate this Agreement pursuant
to the preceding sentence, Seller shall assign to Purchaser any and all claims
for the proceeds of such condemnation or sale to the extent the same are
applicable to the Property, and Purchaser shall take title to the Property with
the assignment of such proceeds and subject to such condemnation and without
reduction of the Purchase Price. Should Purchaser elect to terminate
Purchaser's obligations under this Agreement under the provisions of this
Section 9.3, the Earnest Money Deposit shall be returned to Purchaser in
accordance with the Earnest Money Escrow Deposit and neither Seller not
Purchaser shall have any further obligation under this Agreement except for the
Termination Surviving Obligations. Notwithstanding anything to the contrary
herein, if any eminent domain or condemnation proceeding is instituted (or
notice of which shall be given) solely for the taking of any subsurface rights
for utility easements or for any right-of-way easement, and the surface may,
after such taking, be used in substantially the same manner as though such
rights have not been taken, Purchaser shall not be entitled to terminate this
Agreement as to any part of the Property, but any award resulting therefrom
shall be assigned to Purchaser at Closing and shall be the exclusive property
of Purchaser upon Closing.
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<PAGE> 24
CLOSING
CONDITIONS TO THE PARTIES' OBLIGATIONS TO CLOSE. In addition
to all other conditions set forth herein, the obligations of each of the
parties hereto to consummate the transactions contemplated hereunder shall be
conditioned upon the following:
Except as disclosed to and waived by the relying
party, the other party's representations and warranties contained
herein shall be true and correct in all material respects as of the
Effective Date and the Closing Date;
As of the Closing Date, the other party shall have
performed in all material respects its obligations hereunder and all
deliveries to be made by it at Closing shall have been tendered;
As of the Closing Date, no action or proceeding by or
before any Authority shall have been instituted (and not subsequently
dismissed, settled or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions
contemplated by this Agreement;
As of the Closing Date, the Personal Property shall
not be subject to any material lien or other security interest created
after November 21, 1996; and
Any other condition set forth in this Agreement to
such a party's obligation to close is satisfied by the applicable
date.
It shall be a further condition to Purchaser's obligations to close that the
lessors under the Ground Leases shall have consented to the conveyance and
assignment of the leasehold estates thereunder to Purchaser, and that such
consent not be conditioned in a manner reasonably objectionable to Purchaser.
Seller shall use reasonable efforts to obtain such consent, but Seller shall
not have any obligation to make any payment of money, grant economic
concessions to any lessor under the Ground Leases or commence any litigation
against any lessor under the Ground Leases to obtain the consents to the
assignment of the Ground Leases and Purchaser acknowledges that Seller's
failure to obtain such consent shall not be a default by Seller hereunder.
CLOSING. The Closing of the sale of the Property by Seller to
Purchaser shall occur at 12:01 p.m. Central Standard Time on the Closing Date.
The Closing shall occur in the offices of Title Company or such other location
mutually acceptable to Seller and Purchaser. The Closing shall be conducted
through an escrow (the "Closing Escrow") established with the Title Company, as
"Closing Escrow Agent," and shall be consummated by a New York Style Closing.
The closing escrow instructions shall be in the form customarily used by
Closing Escrow Agent with respect to "Deed and Money Escrows," with such
special provisions added thereto as may be required (a) to conform to the
provisions of this Agreement, (b) to provide for immediate disbursement of
funds upon the delivery of the Title Policy to Purchaser (a "New York Style
Closing"). The Closing
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Escrow shall be auxiliary to this Agreement, and this Agreement shall not be
merged into, nor in any manner superseded by, the Closing Escrow;
PURCHASER'S CLOSING OBLIGATIONS. Purchaser, at its sole cost
and expense, shall deliver or cause to be delivered to Seller at Closing the
following:
The Purchase Price, after all adjustments are made at
the Closing as herein provided, by Federal Reserve wire transfer of
immediately available funds.
A Blanket Conveyance, Bill of Sale, Assignment and
Assumption of Leases, substantially in the form attached hereto as
Exhibit "E" (the "Blanket Conveyance"), duly executed by Purchaser,
and assuming all of the lessor's obligations under the Tenant Leases
and for the Tenant Deposits for which it receives a credit from and
after the Closing and assuming all of the owner's obligations under
the Service Contracts and the Licenses and Permits assigned pursuant
to the Blanket Conveyance from and after the Closing.
Evidence reasonably satisfactory to Seller that
Purchaser has authorized the transaction contemplated hereby and that
the person executing the Closing documents on behalf of Purchaser has
full right, power, and authority to do so.
A certificate from Purchaser that except as disclosed
therein, each of the representations and warranties contained in
Section 8.2 herein are true and correct of the Closing Date.
An assignment and assumption, in a form reasonably
satisfactory to the parties hereto ("Assignment and Assumption") duly
executed and acknowledged by Purchaser assuming Seller's obligations
under the Ground Leases from and after the Closing.
Such other documents as may be reasonably necessary
or appropriate to effect the consummation of the transactions which
are the subject of this Agreement.
SELLER'S CLOSING OBLIGATIONS. Seller, at its sole cost and
expense, shall deliver or cause to be delivered to Purchaser the following:
The Commitment modified (by interlineation or
otherwise) to reflect the Permitted Exceptions, thereby indicating the
commitment of the Title Company to issue Purchaser the Title Policy.
The Deed, duly executed and acknowledged by Seller
conveying to Purchaser the Real Property (other than the leasehold
estates under the Ground Leases) and the Improvements subject only to
the Permitted Exceptions.
The Assignment and Assumption, duly executed and
acknowledged by Seller, assigning to Purchaser all of Seller's right,
title and interest in the leasehold estates under the Ground Leases
subject only to the Permitted Exceptions.
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<PAGE> 26
A Blanket Conveyance, duly executed by Seller,
conveying and assigning to Purchaser all of Seller's right, title and
interest as lessor in and to the Tenant Leases, Tenant Deposits, and
all of Seller's right, title and interest in the Personal Property,
the Service Contracts, and the Licenses and Permits.
Tenant notice letters executed by Seller notifying
the Tenant of the sale of the Property to Purchaser, the assignment of
its Lease to Purchaser and transfer of its security deposit to
Purchaser substantially in the form attached hereto as Exhibit "M".
A stop order from the Illinois Department of Revenue
stating that the Illinois Bulk Sales Law does not apply to the
transactions contemplated by this Agreement.
Evidence reasonably satisfactory to Purchaser and the
Title Company that the Seller has authorized the transaction
contemplated hereby and that the person executing the Closing
documents on behalf of Seller has full right, power and authority to
do so.
The Tenant Deposits, at Seller's option, either (i)
in the form of a cashier's check issued by a bank reasonably
acceptable to Purchaser or (ii) as part of an adjustment to the
Purchase Price.
A certificate in the form attached hereto as Exhibit
"G" ("Certificate as to Foreign Status") certifying that Seller is not
a "foreign person" as defined in Section 1445 of the Internal Revenue
Code of 1986, as amended.
The following items, to the extent that they are in
the possession of Seller or Seller's agents (which may be delivered by
making them available at the Improvements): (i) all keys, access
cards, access codes, and any other codes, ciphers or computer software
for the Property, including, but not limited to, for all entrance
doors and spaces which may be locked (whether occupied or not) in the
Improvements, elevator, mechanical equipment and ventilation,
electrical, telephone and other operating systems, and keys or other
access devices to all Personal Property located on the Property, which
keys or devices shall be properly tagged for identification; (ii) the
Records and Plans; and (iii) the originals (or copies where originals
are not available) of all Tenant Leases, Licenses and Permits and
Service Contracts to the extent such are in Seller's or Seller's
agents possession or control. Seller retains the right to inspect and
copy all such items set forth in (ii) and (iii) above for a period of
two years after the Closing Date, and, upon at least forty-eight (48)
hours notice, Purchaser shall make such items available to Seller or
its representatives during normal business hours at the Property. The
provisions of this Section 10.4(j) shall survive the Closing.
A statement from the property manager for the
Property that as of the Closing Date, all fees owed in connection with
any management agreement for the Property have been paid, and a lien
waiver from such property manager.
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A certificate from Seller that except as disclosed
therein, each of the representations and warranties contained in
Section 8.1 herein are true and correct as of the Closing Date.
Estoppel Certificates satisfying the conditions in
Section 7.2.
Evidence of terminations, effective upon the transfer
of legal title to the Property to Purchaser, of all management,
leasing and service agreements relating to the Property, except as
expressly provided in Section 7.1(f).
An updated rent roll and delinquency report (but
Seller specifically disclaims any representation or warranty with
respect thereto).
Such other documents as may be reasonably necessary
or appropriate to effect the consummation of the transactions which
are the subject of this Agreement.
PRORATIONS.
Seller and Purchaser agree to adjust the following as
of 11:59 p.m. Central Standard Time on the day immediately preceding
the Closing Date: personal property taxes and assessments, utility
bills (except as hereinafter provided), collected Rentals (subject to
the terms of (b) below), rental payments under the Ground Leases and
operating expenses payable by the owner of the Property (subject to
the terms of (c) below), Seller being charged and credited for all of
same relating to the period up to and including the Closing Date and
Purchaser being charged and credited for all of same relating to the
period after the Closing Date. If the actual amounts to be prorated
under this Section 10.5 are not known as of the Closing Date, the
prorations shall be made on the basis of the best evidence then
available, and thereafter, when actual figures are received, a final
cash settlement will be made between Seller and Purchaser which shall
occur no later than June 30, 1997. No prorations will be made in
relation to insurance premiums, and the insurance policies will not be
assigned to Purchaser. Final readings and final billings for
utilities will be made if possible as of the Closing Date, in which
event no proration shall be made at the Closing with respect to
utility bills. Seller shall receive a credit for all deposits
presently in effect with the utility providers and assigned to
Purchaser pursuant hereto. The provisions of this Section 10.5 shall
survive the Closing until June 30, 1997.
At the Closing, Seller shall cause to be paid,
credited or turned over to Purchaser all Rentals received by Seller
attributable to periods subsequent to the Closing Date. "Rentals" as
used herein includes fixed monthly rentals, additional rentals,
percentage rentals, escalation rentals, retroactive rentals, all
administrative charges, utility charges, tenant or real property
association dues, storage rentals, special event proceeds, temporary
rents, telephone receipts, locker rentals, vending machine receipts
and other sums and charges payable by tenants under the Tenant Leases
or from other occupants or users of the Property, but excluding Tenant
Charges (as defined in Section 10.5(c)), billings for tenant work
orders governed by Section 10.5(c) below and real estate taxes and
assessments governed by Section 10.5(d) below). No proration shall be
made for Delinquent Rentals.
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Rentals are "Delinquent" when they were due prior to the Closing Date,
and payment thereof has not been made on or before the Closing Date.
Purchaser agrees to bill and attempt to collect all such Delinquent
Rentals in the ordinary course of business, but Purchaser shall have
no liability for the failure to collect any such amounts and shall not
be required to conduct lock-outs or take any other legal action to
enforce collection of any such amounts owed to Seller by tenants of
the Property. All sums collected by Purchaser from and after Closing
from each tenant (excluding Tenant Charges and billings for tenant
work orders which shall be governed by Section 10.5(c) below) shall be
applied as follows: first, to reimburse Purchaser for costs of
collection; second, to current or delinquent rentals owed to
Purchaser; and third, to any other Delinquent Rentals owed to Seller;
provided, however, that checks received after the Closing and prior to
January 1, 1997 which are designated by a tenant for payment of
December 1996 rent will be applied (after collection costs) to
Delinquent Rentals of such tenant for December 1996, and Seller's
proportionate share thereof shall be remitted to Seller. Any sums due
Seller shall be promptly remitted to Seller. Notwithstanding the
foregoing, however, after the Closing Date Seller may collect
Delinquent Rentals, Tenant Charges and billings for tenant work orders
from tenants, provided, however, in no event shall Seller have the
right to threaten termination of or terminate any Tenant Lease.
Notwithstanding anything herein to the contrary,
operating cost pass-throughs, expense reimbursements, common area
maintenance charges and billings for tenant work orders (excluding
pass-throughs for taxes and assessments) shall be prorated as follows:
Effective as of the Closing, Seller shall prepare a reconciliation of
all amounts collected from the Tenants for each of the foregoing
("Tenant Charges") and all amounts expended on or prior to Closing for
which Seller is entitled to reimbursement from the Tenant. If more
amounts have been expended than collected, Purchaser shall pay such
difference to Seller promptly after collecting such amounts from
Tenants. If more amounts have been collected than expended, Seller
shall permit Purchaser to credit the Purchase Price by such amount.
Purchaser shall be solely responsible, from and after Closing, for
reimbursing Tenants based on annual reconciliations for any amounts
owing to the Tenants, it being the express understanding of Purchaser
and Seller that the proration of such charges at Closing shall fully
relieve Seller from any responsibility to the Tenants for such
matters, whether any such reimbursements owing to Tenants under the
Tenant Leases relate to periods before or after the Closing.
Purchaser shall receive a credit for all 1996 real
estate taxes accrued for the period ending on the Closing Date less
the tax escalation for 1996 to be collected by Purchaser from Unisys
Corporation in 1997 pursuant to its Tenant Lease for which Purchaser
shall have the risk of collection. Purchaser assumes and shall be
responsible to pay all real estate taxes and installments of
assessments due and payable after the Closing Date. Purchaser
acknowledges that there may be supplemental or reassessed real
property taxes attributable to the Real Property for the period
following Closing and Purchaser agrees to be responsible for such
amounts. If the actual amount of the credit for accrued 1996 real
estate taxes to be prorated pursuant to this Section 10.5(d) is not
known as of the Closing Date, the prorations shall be made on the
basis of 105% of the most recent ascertainable taxes, and thereafter,
when the accrued taxes are finally determined, a final
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<PAGE> 29
cash settlement will be made between Seller and Purchaser which shall
occur no later than June 30, 1997.
All Tenant Deposits shall be transferred or credited
to Purchaser at Closing. As of the Closing, Purchaser shall assume
Seller's obligations related to Tenant Deposits.
Purchaser 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
and other compensation accruing before Closing for employees at the
Property or arising from the termination of such employees at or prior
to Closing. Purchaser shall not be liable for any obligations
accruing before Closing under any union contract or multi-employer
pension plan applicable to any such employees or arising from the
termination of any such employees at or prior to Closing.
Seller agrees that it will be responsible for any
additional tenant improvement allowance owing to Unisys Corporation
under its Tenant Lease pursuant to the First Amendment to Lease dated
August 23, 1991, and will indemnify, defend and hold harmless
Purchaser from any claim by Unisys Corporation against Purchaser with
respect to any additional tenant improvement allowance owed to Unisys
Corporation pursuant to First Amendment to Lease, dated August 23,
1991 ("First Amendment"). To secure the foregoing obligation, the
parties agree that at Closing, $230,000 shall be held back from the
Purchase Price (the "Unisys Holdback"). The Unisys Holdback shall be
placed in escrow with the Escrow Agent, under instructions reasonably
approved by the parties and consistent with this Section 10.5(g). The
Unisys Holdback shall be paid to Seller within one (1) day of Escrow
Agent's receipt of (i) the unconditional written release by Unisys
Corporation releasing the landlord under its Tenant Lease with respect
to any such tenant improvement allowance, (ii) a court order directing
the disposition of the Unisys Holdback, or (iii) notice from Purchaser
to Escrow Agent that it has received evidence satisfactory to
Purchaser that Seller has performed the foregoing obligations to
Unisys Corporation.
At Closing, Purchaser shall receive a credit for the
outstanding amount due on Special Assessment #203 against the Real
Property.
Seller acknowledges that the Office Space Reduction
Fee as defined in Section 5 of that certain Fourth Amendment to Lease
dated October 31, 1996 by and between Seller and Unisys Corporation is
to be paid to Purchaser. Therefore should any portion of the Office
Space Reduction Fee be paid by Unisys Corporation to Seller prior to
Closing, Purchaser shall receive a credit on the closing statement for
such amount.
LEASING COMMISSIONS AND TENANT IMPROVEMENTS.
Notwithstanding anything herein to the contrary,
Purchaser shall be solely responsible for all renewal leasing
commissions with respect to the Tenant Leases existing as of the
Effective Date, and all leasing commissions, and tenant improvement
costs with respect to the Tenant Leases as more particularly described
on Exhibit "J" attached hereto and Seller shall receive a credit at
closing for any such leasing commissions or tenant
xxviii
<PAGE> 30
improvement costs paid by it. Purchaser further agrees to assume and
be solely responsible for all leasing commissions and tenant
improvement costs ("New Tenant Costs") incurred or to be incurred in
connection with any lease executed after the Effective Date in
accordance with this Agreement, and Seller shall receive a credit at
Closing for any New Tenant Costs paid by it.
If Purchaser is responsible for completing any tenant
improvements pursuant to Section 10.6(a), to the extent that Seller
enters into any contracts with contractors, architects and/or
consultants related to the construction of such tenant improvements
("Construction Contracts"), Purchaser shall be entitled to reasonable
approval rights with respect to the Construction Contracts. At
Closing, Seller shall assign to Purchaser the Construction Contracts
pursuant to an instrument in form and substance reasonably acceptable
to Purchaser and Seller shall also cause to be delivered to Purchaser
at Closing written consents (in form and substance reasonably
acceptable to Purchaser and Seller) to the assignments of the
Construction Contracts of the applicable parties thereto.
DELIVERY OF REAL PROPERTY. Upon completion of the Closing,
Seller shall deliver to Purchaser possession of the Real Property, subject to
the Tenant Leases and the Permitted Exceptions.
COSTS OF ESCROW AGENT AND CLOSING COSTS. Costs of the Escrow
Agent and other Closing costs incurred in connection with the Closing shall be
allocated as follows:
Purchaser shall pay 1/2 of the Escrow Agent's fees
and 1/2 of any costs associated with the New York Style Closing, if
any.
Purchaser shall pay all recording fees, and any
municipal transfer taxes, sales taxes, the costs for any deletions and
Purchaser Endorsements to the Title Policy, survey charges, all costs
associated with a mortgagee's policy, if any, and Purchaser's
attorneys' fees.
Seller shall pay 1/2 of the Escrow Agent's fees, and
1/2 of any costs associated with the New York Style Closing, costs
associated with issuing the Title Policy, state and county transfer
taxes and Seller's attorneys' fees.
If the Closing does not occur on or before the
Closing Date for any reason whatsoever, the costs incurred through the
date of termination shall be borne by the party incurring same.
xxix
<PAGE> 31
BROKERAGE
BROKERS. Purchaser and Seller represent to the other that no
real estate brokers, agents or finders' fees or commissions are due or will be
due or arise in conjunction with the execution of this Agreement or
consummation of this transaction by reason of the acts of such party, and
Purchaser and Seller shall indemnify and hereby agree to hold the other party
harmless from any brokerage or finder's fee or commission claimed by any person
asserting his entitlement thereto at the alleged instigation of the
indemnifying party for or on account of this Agreement or the transactions
contemplated hereby. The provisions of this Article XI shall survive Closing.
CONFIDENTIALITY
CONFIDENTIALITY. Seller and Purchaser each expressly
acknowledges and agrees that, except as expressly provided herein, the
transactions contemplated by this Agreement and the terms, conditions, and
negotiations concerning the same shall be held in the strictest confidence by
each of them and shall not be disclosed by either of them except to their
respective legal counsel, accountants, consultants, lenders, officers,
partners, directors, and shareholders, and except and only to the extent that
such disclosure may be necessary for their respective performances hereunder.
Purchaser further acknowledges and agrees that, except as expressly provided
herein, unless and until the Closing occurs, all information obtained by
Purchaser in connection with the Property will not be disclosed by Purchaser
to any third persons without the prior written consent of Seller. Nothing
contained in this Article XII shall affect the obligations of any party hereto
under the Confidentiality Agreement or any other separate confidentiality
agreement pertaining to the transactions contemplated hereby or preclude or
limit either party from disclosing or accessing any information otherwise
deemed confidential under this Article XII in connection with that party's
enforcement of its rights following a disagreement hereunder or in response to
lawful process or subpoena or other valid or enforceable order of a court of
competent jurisdiction or as may be required by applicable law.
Notwithstanding the foregoing, (i) Purchaser may make any disclosure required
by, or reasonably deemed applicable by Purchaser under, applicable laws, rules
or regulations (including, without limitation, governmental regulatory,
disclosure, tax and reporting requirements) prior to Closing, and (ii)
Purchaser agrees that any press release issued by it immediately following
Closing of the transaction will be substantially in the form attached hereto as
Exhibit P. Purchaser will use reasonable efforts (based upon the exigencies of
the circumstances with no minimum notice required) to furnish Seller a copy of
any written disclosure it intends to make in reliance on clause (i) of the
preceding sentence prior to making such disclosure. In addition, Seller will
not make any disclosure prior to Closing of the specific purchase price of the
Property without Purchaser's prior consent (not to be unreasonably withheld or
delayed), provided that the foregoing shall not prohibit Purchaser from
disclosing Purchaser's "total acquisition cost" of the Property including the
Purchase Price, estimated closing costs and other expenditures required to be
made by Purchaser related to the Property.
xxx
<PAGE> 32
REMEDIES
DEFAULT BY SELLER. In the event the Closing and the
transactions contemplated hereby do not occur as herein provided by reason of
any default of Seller, as its sole and exclusive remedies Purchaser may: (a)
terminate this Agreement by giving Seller timely written notice of such
election prior to Closing, and receive the Earnest Money Deposit from the
Escrow Agent, and in such event Seller shall not have any liability whatsoever
to Purchaser hereunder, or if Purchaser does not terminate this Agreement as
provided in (a) above, (b) Purchaser must seek to enforce specific performance
of the Agreement; provided, however, that if specific performance is not
available as a remedy, Purchaser may recover the Earnest Money Deposit and seek
recovery of its third party out-of-pocket costs incurred in connection with its
due diligence review of the Property not to exceed $200,000 unless specific
performance is not available due to Seller's voluntary conveyance of the
Property to a third party in violation of this Agreement, then Purchaser may
recover the Earnest Money Deposit and seek recovery of its actual damages
(including lost profits) resulting from its inability to enforce specific
performance not to exceed the Purchase Price but in no event shall Purchaser be
entitled to consequential, exemplary or punitive damages; provided, however,
Purchaser must bring an action for recovery of the Earnest Money Deposit and
any such damages within ninety (90) days of the Closing Date, and Seller shall
in no event have any liability to Purchaser hereunder in excess of Five Million
Dollars. Notwithstanding the foregoing, nothing contained herein shall limit
Purchaser's remedies at law, in equity or as herein provided in the event of a
breach by Seller of any of its obligations hereunder that survive termination
of this Agreement.
DEFAULT BY PURCHASER. In the event the Closing and the
consummation of the transactions contemplated herein do not occur as provided
herein by reason of any default of Purchaser, Purchaser and Seller agree it
would be impractical and extremely difficult to fix the damages which Seller
may suffer. Therefore, Purchaser and Seller hereby agree a reasonable estimate
of the total net detriment Seller would suffer in the event Purchaser defaults
and fails to complete the purchase of the Property is and shall be, as Seller's
sole and exclusive remedy (whether at law or in equity), a sum equal to the
Earnest Money Deposit. Upon such default by Purchaser, Seller shall have the
right to receive the Earnest Money Deposit from the Escrow Agent as its sole
and exclusive remedy and thereupon this Agreement shall be terminated and
neither Seller nor Purchaser shall have any further rights or obligations
hereunder. The amount of the Earnest Money Deposit shall be the full, agreed
and liquidated damages for Purchaser's default and failure to complete the
purchase of the Property, all other claims to damages or other remedies being
hereby expressly waived by Seller. Notwithstanding the foregoing, nothing
contained herein shall limit Seller's remedies at law, in equity or as herein
provided in the event of a breach by Purchaser of any of its obligations
hereunder that survive termination of this Agreement.
xxxi
<PAGE> 33
NOTICES
NOTICES. All notices or other communications required or
permitted hereunder shall be in writing, and shall be given by (a) personal
delivery, or (b) professional expedited delivery service with proof of
delivery, or (c) United States mail, postage prepaid, registered or certified
mail, return receipt requested, (d) prepaid telegram, facsimile or telex with
confirmation or receipt, or (e) by facsimile transmission, sent to the intended
addressee at the address set forth below, or to such other address or to the
attention of such other person as the addressee shall have designated by
written notice sent in accordance herewith and shall be deemed to have been
given either at the time of personal delivery, or, in the case of expedited
delivery service or mail, as of the date of first attempted delivery at the
address or in the manner provided herein, or, in the case of telegram,
telecopy, telex or facsimile transmission, upon confirmation of receipt.
Unless changed in accordance with the preceding sentence, the addresses for
notices given pursuant to this Agreement shall be as follows:
TO PURCHASER: CarrAmerica Realty Corporation
Parkway North Center
Three Parkway North
Deerfield, Illinois 60015
Attn: Gerald J. O'Malley
Fax: (847) 945-0750
and to
CarrAmerica Realty Corporation
1700 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Attn: William Krokowski
Fax: (202) 739-2147
AND WITH COPY TO: Jeffrey A. Usow
Mayer, Brown & Platt
190 South La Salle Street
Chicago, IL 60605
Fax: (312) 701-7711
TO SELLER: HMS Office, L.P.
_ Hines Office Company
2800 Post Oak Boulevard
Houston, Texas 77056
Attn: Tom Owens
Fax: (713) 966-2636
xxxii
<PAGE> 34
WITH COPY TO: David J. Lowery, Esq.
Jones, Day, Reavis & Pogue
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Fax: (214) 969-5100
ASSIGNMENT AND BINDING EFFECT
ASSIGNMENT; BINDING EFFECT. Neither Seller nor Purchaser
shall have the right to assign this Agreement without the other parties' prior
written consent. Notwithstanding the foregoing sentence, Purchaser and Seller
may each assign their rights under this Agreement to an Affiliate of such
assigning party without the consent of the non-assigning party, provided that
any such assignment shall not relieve the assigning party of obligations
hereunder. This Agreement shall be binding upon and inure to the benefit of
Seller and Purchaser and their respective successors and permitted assigns, and
no other party shall be conferred any rights by virtue of this Agreement or be
entitled to enforce any of the provisions hereof. Whenever a reference is made
in this Agreement to Seller or Purchaser, such reference shall include the
successors and permitted assigns of such party under this Agreement.
DISCLAIMER, WAIVER AND LIMITED SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND COVENANTS
DISCLAIMER AND WAIVER. EXCEPT FOR THE LIMITED REPRESENTATIONS
AND WARRANTIES SET FORTH IN SECTION 8.1 OF THIS AGREEMENT AND WARRANTIES OF
TITLE SET FORTH IN THE DEED (AND ANY REPRESENTATIONS AND WARRANTIES SET FORTH
IN THE OTHER CLOSING DOCUMENTS), NEITHER SELLER, ITS AFFILIATES NOR ANY OTHER
PERSON IS MAKING ANY REPRESENTATION, WARRANTY OR ASSURANCE WHATSOEVER TO
PURCHASER AND NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EITHER
EXPRESS OR IMPLIED, ARE MADE BY SELLER OR RELIED UPON BY PURCHASER WITH RESPECT
TO THE TITLE OR THE MAINTENANCE, REPAIR, CONDITION, DESIGN OR MARKETABILITY OF
THE PROPERTY, OR ANY PORTION THEREOF, INCLUDING, WITHOUT LIMITATION, (a) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF
PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (e)
ANY CLAIM BY PURCHASER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN
WITH RESPECT TO THE IMPROVEMENTS OR THE PERSONAL PROPERTY, (f) THE FINANCIAL
CONDITION OR PROSPECTS OF THE PROPERTY, AND (g) THE COMPLIANCE OR LACK THEREOF
OF THE REAL PROPERTY OR THE IMPROVEMENTS WITH GOVERNMENTAL REGULATIONS, IT
xxxiii
<PAGE> 35
BEING THE EXPRESS INTENTION OF SELLER AND PURCHASER THAT EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT (AND THE CLOSING DOCUMENTS), THE PROPERTY SHALL BE
CONVEYED AND TRANSFERRED TO PURCHASER IN ITS PRESENT CONDITION AND STATE OF
REPAIR, "AS IS" AND "WHERE IS", WITH ALL FAULTS. PURCHASER AGREES THAT THE
DISCLAIMERS AND AGREEMENTS SET FORTH HEREIN ARE AN INTEGRAL PART OF THIS
AGREEMENT AND THAT SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO
PURCHASER FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS
SET FORTH HEREIN. THE PROVISIONS OF THIS SECTION 16.1 SHALL SURVIVE THE
CLOSING WITHOUT LIMITATION.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Closing Surviving Obligations and the Termination Surviving Obligations shall
survive Closing without limitation. All other representations, warranties,
covenants and agreements made or undertaken by Seller under this Agreement,
unless otherwise specifically provided herein, shall not survive the Closing
Date but shall be merged into the Deed and other Closing documents delivered at
the Closing. Seller's representation and warranties in Section 8.1 and
Purchaser's representations and warranties in Section 8.2 shall survive Closing
and the delivery of the Deed for a period of twelve (12) months. In addition,
Purchaser shall not have any right to bring any action against Seller as a
result of the breach of any such representations and warranties unless and
until the aggregate amount of such losses, expenses and liabilities arising out
of or which result from the inaccuracy of any such representation or warranty
exceeds $100,000.
MISCELLANEOUS
WAIVERS. No waiver of any breach of any covenant or
provisions contained herein shall be deemed a waiver of any preceding or
succeeding breach thereof, or of any other covenant or provision contained
herein. No extension of time for performance of any obligation or act shall be
deemed an extension of the time for performance of any other obligation or act.
RECOVERY OF CERTAIN FEES. In the event a party hereto files
any action or suit against another party hereto by reason of any breach of any
of the covenants, agreements or provisions contained in this Agreement, then in
that event the prevailing party shall be entitled to have and recover of and
from the other party all costs and expenses of the action or suit, including
actual reasonable attorneys' fees, reasonable accounting and engineering fees,
and any other reasonable professional fees resulting therefrom. The
obligations set forth in this Section 17.2 shall survive the Closing.
TIME OF ESSENCE. Seller and Purchaser hereby acknowledge and
agree that time is strictly of the essence with respect to each and every term,
condition, obligation and provision hereof.
CONSTRUCTION. Headings at the beginning of each article and
section are solely for the convenience of the parties and are not a part of
this Agreement. Whenever required by the
xxxiv
<PAGE> 36
context of this Agreement, the singular shall include the plural and the
masculine shall include the feminine and vice versa. This Agreement shall not
be construed as if it had been prepared by one of the parties, but rather as if
both parties had prepared the same. All exhibits and schedules referred to in
this Agreement are attached and incorporated by this reference, and any
capitalized term used in any exhibit or schedule which is not defined in such
exhibit or schedule shall have the meaning attributable to such term in the
body of this Agreement. In the event the date on which Purchaser or Seller is
required to take any action under the terms of this Agreement is not a Business
Day, the action shall be taken on the next succeeding Business Day.
COUNTERPARTS. To facilitate execution of this Agreement, this
Agreement may be executed in as many counterparts as may be required, and it
shall not be necessary that the signatures of, or on behalf of, each party, or
that the signatures of all persons required to bind any party, appear on each
counterpart; rather, it shall be sufficient that the signatures of, or on
behalf of, each party, or that the signatures of the persons required to bind
any party, appear on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be necessary to make
proof of this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
law or public policy, all of the other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect, so long as the
economic or legal substance of the transactions contemplated hereby is not
effected in any adverse manner to either party. Upon such determination that
any term or other provision is invalid, illegal, or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to reflect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
ENTIRE AGREEMENT. This Agreement is the final expression of,
and contains the entire agreement between, the parties with respect to the
subject matter hereof, and supersedes all prior understandings with respect
thereto provided, however, that this Agreement does not supersede the
Confidentiality Agreement or the Inspection Agreement to the extent the terms,
provisions and obligations of such agreements are not inconsistent with the
terms, provisions and obligations of this Agreement. This Agreement may not be
modified, changed, supplemented or terminated, nor may any obligations
hereunder be waived, except by written instrument, signed by the party to be
charged or by its agent duly authorized in writing, or as otherwise expressly
permitted herein.
GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED, PERFORMED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.
NO RECORDING. The parties hereto agree that neither this
Agreement nor any affidavit concerning it shall be recorded.
FURTHER ASSURANCES. In addition to the acts and deeds recited herein
and contemplated to be performed, executed and/or delivered by either party at
Closing, each party agrees to perform,
xxxv
<PAGE> 37
execute and deliver, on or after the Closing any further actions, documents,
and will obtain such consents, as may be reasonably necessary or as may be
reasonably requested to fully effectuate the purposes, terms and conditions of
this Agreement or to further perfect the conveyance, transfer and assignment of
the Property to Purchaser.
INFORMATION AND AUDIT COOPERATION. At Purchaser's request, before and
after the Closing and until May 15, 1997 Seller shall provide to Purchaser's
designated independent auditor access to books and records for the Property in
Seller's possession and all related information regarding the period during
which Seller owned and operated the Property which coincides with the period
for which Purchaser is required to have the Property audited under the
regulations of the Securities and Exchange Commission and Seller shall promptly
following receipt of a request from Purchaser, provide to such auditor an audit
letter, substantially in the form attached hereto as Exhibit "L".
TORT CLAIMS. Except as otherwise provided herein, Purchaser hereby
agrees to indemnify and hold Seller harmless from and against any tort claim
(including reasonable attorneys' fees and expenses) brought against Seller by a
third party relating to acts or omissions of Purchaser and its agents,
employees or contractors from and after the Closing. Except as otherwise
provided herein, Seller hereby agrees to indemnify and hold Purchaser harmless
from and against any tort claims brought by a third party (including reasonable
attorneys' fees and expenses) brought against Purchaser by a third party,
relating to acts or omissions of Seller and its agents, employees or
contractors prior to Closing. The foregoing indemnities do not cover any
environmental conditions or claims, including without limitation, asbestosis.
The indemnification contained in this Section 17.12 shall survive Closing for
one year and any claim hereunder must be brought within that period.
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.
IN WITNESS WHEREOF, Seller and Purchaser have respectively executed
this Agreement as of the date first above written.
PURCHASER:
---------
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ ROBERT S. STUCKEY
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
xxxvi
<PAGE> 38
SELLER:
------
HMS OFFICE, L.P., a Delaware limited partnership
By: Hines Office Company, L.L.C., a Delaware
limited liability company, general partner
By: /s/ Tom Owens
------------------
Name:
----------------------------------
Title:
---------------------------------
xxxvii
<PAGE> 1
EXHIBIT 99.1
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
On December 19, 1996, CarrAmerica Realty Corporation (the Company)
acquired 2 buildings located in Lombard, Illinois containing a total of
approximately 387,000 square feet of office space, referred to as the Unisys
Center. The aggregate purchase price for the Unisys Center was approximately
$50.7 million, and was financed by a draw of $50.7 million on the Company's
line of credit. In October 1996, the Company consummated an offering of Series
A Preferred Shares that raised net proceeds of approximately $43 million. The
net proceeds of the October offering were used to pay down indebtedness under
the line of credit, thereby increasing the Company's borrowing capacity.
This unaudited pro forma Condensed Consolidated Balance Sheet is
presented as if the aforementioned transactions had been consummated on
September 30, 1996. In management's opinion, all adjustments necessary to
reflect the effects of the aforementioned transactions have been made.
This unaudited pro forma Condensed Consolidated Balance Sheet is not
necessarily indicative of what the Company's actual financial position would
have been at September 30, 1996, had the transactions occurred on that date,
nor does it purport to represent the future financial position of the Company.
<TABLE>
<CAPTION>
At September 30, 1996 (Unaudited)
------------------------------------------------------------------------
Pro Forma Adjustments
------------------------------------
Series A
Preferred Stock Acquisition of Pro Forma
Historical (A) Offering (B) Unisys Center (C) Consolidated
-------------- --------------- ------------------ -------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ 906,342 $ - $ 50,651 (1) $ 956,993
Development property 40,449 - - 40,449
Restricted and unrestricted cash 22,882 - - 22,882
Other assets 74,235 - - 74,235
------------- ---------- ---------- ------------
Total assets $ 1,043,908 $ - $ 50,651 $ 1,094,559
============= ========== ========== ============
LIABILITIES
Mortgages and notes payable $ 426,069 $ (42,915) $ 50,651 (2) $ 433,805
Other liabilities 20,480 - - 20,480
------------- ---------- ---------- ------------
Total liabilities 446,549 (42,915) 50,651 454,285
Minority interest 51,611 - - 51,611
STOCKHOLDERS' EQUITY
Preferred stock - 17 - 17
Common stock 355 - - 355
Additional paid-in capital 588,684 42,898 - 631,582
Dividends in excess of earnings (43,291) - - (43,291)
------------- ---------- ---------- ------------
Total stockholders' equity 545,748 42,915 - 588,663
------------- ---------- ---------- ------------
Total liabilities and stockholders' equity $ 1,043,908 $ - $ 50,651 $ 1,094,559
============= ========== ========== ============
</TABLE>
Notes:
(A) Reflects the Company's historical consolidated balance sheet as of
September 30, 1996.
(B) Reflects the issuance of 1,740,000 Series A Preferred Shares at the price
of $25 per share. Transaction costs of $585 were incurred. The Company
used all of the proceeds to pay down amounts outstanding under its line
of credit.
(C) Reflects the following pro forma adjustments related to the Unisys
Center:
(1) total acquisiton costs of $50,651; and
(2) a draw on the line of credit of $50,651.
<PAGE> 2
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
These unaudited pro forma Condensed Consolidated Statements of Operations
are presented as if the aforementioned transactions had been consummated as of
the beginning of the respective periods.
These unaudited pro forma Condensed Consolidated Statements of Operations
should be read in conjunction with the Historical Summary of Operating Revenue
and Expenses of Unisys Center and Notes thereto. In management's opinion, all
adjustments necessary to reflect the effects of the aforementioned transactions
have been made.
These unaudited pro forma Condensed Consolidated Statements of Operations
are not necessarily indicative of what actual results of operations of the
Company would have been assuming the transactions had been consummated as of
the beginning of the respective periods, nor does it purport to represent the
results of operations for future periods.
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 (Unaudited)
------------------------------------------------------------------------
Pro Forma Adjustments
--------------------------------
Series A
Preferred Stock Acquisition of Pro Forma
Historical (A) Offering (B) Unisys Center (C) Consolidated
-------------- --------------- ----------------- --------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 100,639 $ - $ 5,016 (1) $ 105,655
Real estate service income 9,265 - - 9,265
------------ ------------- ----------- ------------
Total revenues 109,904 - 5,016 114,920
------------ ------------- ----------- ------------
Real estate operating expenses:
Property operating expenses 33,371 - 1,881 (1) 35,252
Interest expense 21,857 (2,413) 2,849 (2) 22,293
General and administrative 10,661 - - 10,661
Depreciation and amortization 25,744 - 1,117 (3) 26,861
------------ ------------- ----------- ------------
Total operating expenses 91,633 (2,413) 5,847 95,067
------------ ------------- ----------- ------------
Real estate operating income 18,271 2,413 (831) 19,853
Other operating income (expense) 1,610 - - 1,610
------------ ------------- ----------- ------------
Income before minority interest 19,881 2,413 (831) 21,463
------------ ------------- ----------- ------------
Minority interest (3,895) - - (3,895)
------------ ------------- ----------- ------------
Income from continuing operations $ 15,986 $ 2,413 $ (831) $ 17,568
============ ============= =========== ============
Earnings per common share
from continuing operations (D) $ 0.70 $ 0.68
============ ============
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1995 (Unaudited)
------------------------------------------------------------------------------
Pro Forma Adjustments
-----------------------------------
Series A
Preferred Stock Acquisition of Pro Forma
Historical (A) Offering (B) Unisys Center (C) Consolidated
--------------- --------------- ----------------- ------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 89,539 $ - $ 6,675 (1) $ 96,214
Real estate service income 11,315 - - 11,315
------------ ------------ ----------- ------------
Total revenues 100,854 - 6,675 107,529
------------ ------------ ----------- ------------
Real estate operating expenses:
Property operating expenses 31,579 - 2,425 (1) 34,004
Interest expense 21,873 (3,349) 3,953 (2) 22,477
General and administrative 10,711 - - 10,711
Depreciation and amortization 18,495 - 1,489 (3) 19,984
------------ ------------ ----------- ------------
Total operating expenses 82,658 (3,349) 7,867 87,176
------------ ------------ ----------- ------------
Real estate operating income 18,196 3,349 (1,192) 20,353
Other operating income (expense) (912) - - (912)
------------ ------------ ----------- ------------
Income before minority interest 17,284 3,349 (1,192) 19,441
------------ ------------ ----------- ------------
Minority interest (5,217) - - (5,217)
------------ ------------ ----------- ------------
Income from continuing operations $ 12,067 $ 3,349 $ (1,192) $ 14,224
============ ============ =========== ============
Earnings per common share
from continuing operations (D) $ 0.90 $ 0.86
============ ============
</TABLE>
<PAGE> 3
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1996 and the Year Ended December 31,
1995
(Unaudited)
Adjustments (dollars in thousands):
(A) Reflects the Company's historical consolidated statements of
operations for the nine months ended September 30, 1996 and the year
ended December 31, 1995.
(B) Pro forma adjustment reflects the reduction in interest expense
associated with the pay down of amounts outstanding under the
Company's line of credit with the proceeds from the Series A Preferred
Stock Offering.
(C) Pro forma adjustments for the purchase of the Unisys Center reflect:
(1) the historical operating activity of the properties acquired;
(2) the additional interest expense on the line of credit ($2,849
for the nine months ended September 30, 1996 and $3,953 in
1995); and
(3) the depreciation expense for the acquisition based on the new
accounting basis for the rental property acquired.
(D) Based upon 27,723,006 and 18,156,687 pro forma shares of Common Stock
outstanding and common stock equivalents on a weighted average basis
during the nine months ended September 30, 1996 and the year ended
December 31, 1995, respectively. Net income and weighted average
shares outstanding have been adjusted for certain minority interests
which have a dilutive effect on earnings per share.
