<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION, 12, 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
CARRAMERICA REALTY CORPORATION
(formerly Carr Realty Corporation)
(Exact name of registrant as specified in its charter)
Amendment No. 1
The undersigned registrant hereby amends (i) Item 7(b) of its Current
Report on Form 8-K filed with the Commission on January 23, 1997 as set forth
in the pages attached hereto to file 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 Rio Robles Technology
Center, and (ii) Item 7(c) of its Current Report on Form 8-K filed with the
Commission on January 23, 1997 as set forth in the pages attached hereto to
file the Purchase and Sale Agreement dated as of November 20, 1996 by and
between Knickerbocker Properties, Inc. I and CarrAmerica Realty Corporation
(Exhibits intentionally omitted), relating to Rio Robles Technology Center.
Date: January 27, 1997
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
---------------------------
Chief Financial Officer
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro forma financial information.
CarrAmerica Realty Corporation hereby amends Item 7(b) of its Current
Report on Form 8-K filed with the Commission on January 23, 1997 to file 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 Rio Robles Technology Center.
(c) Exhibits.
CarrAmerica Realty Corporation hereby amends Item 7(b) of its Current
Report on Form 8-K filed with the Commission on January 23, 1997 to file
Exhibit 10.1, the Purchase and Sale Agreement dated as of November 20, 1996 by
and between Knickerbocker Properties, Inc. I and CarrAmerica Realty Corporation
(Exhibits intentionally omitted).
<PAGE> 3
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
On November 27, 1996, CarrAmerica Realty Corporation (the Company)
acquired Rio Robles Technology Center, consisting of 7 buildings located in
Silicon Valley, California, and containing 368,178 square feet of office space
available for lease. The aggregate purchase price for Rio Robles Technology
Center was approximately $46 million, and was paid for through the assumption of
liabilities of approximately $281,000 and a draw of approximately $45,700,000 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 pay down
indebtedness under its 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 Acquisition of
Preferred Stock Rio Robles Pro Forma
Historical (A) Offering (B) Technology Center (C) Consolidated
-------------- --------------- ----------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $ 906,342 $ - $ 45,900 (1) $ 952,242
Development property 40,449 - - 40,449
Restricted and unrestricted cash 22,882 - - 22,882
Other assets 74,235 - 103 (1) 74,338
----------- ------ --------- ----------
Total assets $1,043,908 $ 0 $ 46,003 $1,089,911
=========== ====== ========= ==========
LIABILITIES
Mortgages and notes payable $ 426,069 ($42,915) $ 45,722 (2) $ 428,876
Other liabilities 20,480 - 281 (2) 20,761
----------- ------ --------- ----------
Total liabilities 446,549 (42,915) 46,003 449,637
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 stockholder's
equity $1,043,908 $ 0 $ 46,003 $1,089,911
=========== ====== ========= ==========
</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 Rio Robles
Technology Center:
(1) total acquisiton costs of $46,003; and
(2) the assumption of other liabilities of $281 and a draw on the
line of credit of $45,722.
<PAGE> 4
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 Rio Robles Technology 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 the Company's actual results of
operations would have been assuming the transactions had been consummated as of
the beginning of the respective periods, nor do they purport to represent the
results of operations of the Company for future periods.
<TABLE>
<CAPTION>
For the nine months ended September 30, 1996 (Unaudited)
-----------------------------------------------------------------------------------
Pro Forma Adjustments
---------------------
Series A Acquisition of
Preferred Stock Rio Robles Pro Forma
Historical (A) Offering (B) Technology Center (C) Consolidated
------------- --------------- ------------------ -------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 100,639 $ - $ 3,726 (1) $ 104,365
Real estate service income 9,265 - - 9,265
------------- ----------- ----------- ----------
Total revenues 109,904 - 3,726 113,630
------------- ----------- ----------- ----------
Real estate operating expenses:
Property operating expenses 33,371 - 588 (4) 33,959
Interest expense 21,857 (2,413) 2,572 (2) 22,016
General and administrative 10,661 - - 10,661
Depreciation and amortization 25,744 - 1,102 (3) 26,846
------------- ----------- ----------- ----------
Total operating expenses 91,633 (2,413) 4,262 93,482
------------- ----------- ----------- ----------
Real estate operating income 18,271 2,413 (536) 20,148
Other operating income (expense) 1,610 - - 1,610
------------- ----------- ----------- ----------
Income before minority interest 19,881 2,413 (536) 21,758
------------- ----------- ----------- ----------
Minority interest (3,895) - - (3,895)
------------- ----------- ----------- ----------
Income from continuing operations $ 15,986 $ 2,413 $ (536) $ 17,863
============= =========== ============ ===========
Earnings per common share
from continuing operations (D) $ 0.70 $ 0.69
============= ===========
</TABLE>
<TABLE>
<CAPTION>
For the year ended December 31, 1995 (Unaudited)
--------------------------------------------------------------------------------
Pro Forma Adjustments
Series A Acquisition of
Preferred Stock Rio Robles Pro Forma
Historical (A) Offering (B) Technology Center (C) Consolidated
------------- ----------- ------------------ -------------
<S> <C> <C> <C> <C>
Real estate operating revenue:
Rental revenue $ 89,539 $ - $ 4,815 (1) $ 94,354
Real estate service income 11,315 - - 11,315
------------- ----------- ----------- ----------
Total revenues 100,854 - 4,815 105,669
------------- ----------- ----------- ----------
Real estate operating expenses:
Property operating expenses 31,579 - 806 (4) 32,385
Interest expense 21,873 (3,349) 3,569 (2) 22,093
General and administrative 10,711 - 10,711
Depreciation and amortization 18,495 - 1,469 (3) 19,964
------------- ----------- ----------- ----------
Total operating expenses 82,658 (3,349) 5,844 85,153
------------- ----------- ----------- ----------
Real estate operating income 18,196 3,349 (1,029) 20,516
Other operating income (expense) (912) - - (912)
------------- ----------- ----------- ----------
Income before minority interest 17,284 3,349 (1,029) 19,604
------------- ----------- ----------- ----------
Minority interest (5,217) - - (5,217)
------------- ----------- ----------- ----------
Income from continuing operations $ 12,067 $ 3,349 $ (1,029) $ 14,383
============= ============ =========== ==========
Earnings per common share
from continuing operations (D) $ 0.90 $ 0.87
============= ==========
</TABLE>
<PAGE> 5
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 the line of credit with the
proceeds from the Series A Preferred Stock Offering.
(C) Pro forma adjustments for the purchase of the acquired property reflect:
(1) the historical operating activity of the property acquired;
(2) the additional interest expense on the line of credit;
(3) the depreciation expense for the acquisition based on the new
accounting basis for the rental property acquired; and
(4) the historical operating activity of the rental property ($701 for
the nine months ended September 30, 1996 and $971 in 1995) reduced
by the elimination of management fee expense that is no longer
incurred by the Company upon purchase of the property ($113 for the
nine months ended September 30, 1996 and $165 in 1995).
(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.
<PAGE> 1
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
by
and
between
KNICKERBOCKER PROPERTIES, INC. I
a Delaware corporation
"Seller"
and
CARRAMERICA REALTY CORPORATION
a Maryland corporation
"Purchaser"
Dated as of
November 20, 1996
<PAGE> 2
PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
IDENTIFICATION OF PARTIES.
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
(this "Agreement") is entered into as of November ___, 1996, by and between
KNICKERBOCKER PROPERTIES, INC. I, a Delaware corporation ("Seller"), and
CARRAMERICA REALTY CORPORATION, a Maryland corporation ("Purchaser").
DESCRIPTION OF THE PROPERTY.
Seller hereby agrees to sell, assign and convey to Purchaser,
and Purchaser hereby agrees to purchase from Seller, all of Seller's right,
title and interest in and to the following:
Land. That certain real property commonly known as
the "RIO ROBLES PROJECT", located at the intersection of Rio Robles and
North First Street in the City of San Jose, County of Santa Clara,
State of California, and more particularly described on Exhibit A
attached hereto, together with all rights, privileges, easements and
appurtenances thereto, if any, including, without limitation, all of
Seller's right, title and interest, if any, in and to all mineral and
water rights appurtenant thereto (collectively, the "LAND");
Improvements. All of Seller's right, title and
interest, if any, in and to all buildings and other improvements
located on the Land, but excluding any improvements owned by tenants
under Leases (as defined below), governmental agencies, utilities and
similar entities (the "IMPROVEMENTS");
Leases and Security Deposits. All of Seller's
interest as landlord in all leases and/or rental agreements for
occupancy of the Land and the Improvements (the "LEASES") and any
security deposits paid by tenants to Seller under the Leases (the
"SECURITY DEPOSITS"), which Leases and Security Deposits are listed on
the rent roll attached as Exhibit B hereto (the "RENT ROLL") (the Land,
the Improvements and Seller's interest as landlord under the Leases are
sometimes collectively referred to hereinafter as the "REAL PROPERTY");
Tangible Personal Property. All fixtures, machinery,
equipment, supplies and other tangible personal property, if any, owned
by Seller and located on or in the Real Property, together with all
tools, supplies and
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<PAGE> 3
construction and finish materials, if any, owned by Seller and not
incorporated in the Improvements and held on or offsite for tenant
improvements, repairs and replacements (the "TANGIBLE PERSONAL
PROPERTY");
Service Contracts. To the extent assignable without
the consent of third parties, all of Seller's interest, if any, in and
to (i) any existing labor, service, equipment, supply, management,
maintenance, concession, utility and operating contracts, all leasing
brokerage or commission agreements, and all contracts for the purchase
or delivery of labor, services, materials, goods, inventory or supplies
to which Seller is a party and which relate exclusively to the Real
Property (collectively, "SERVICE CONTRACTS"); provided, however, Seller
shall not assign to Purchaser, and Purchaser shall not be obligated to
assume, those Service Contracts, if any, with respect to which
Purchaser and Seller know there is a default thereunder at the time of
the Closing;
Intangible Personal Property. To the extent
assignable without the consent of third parties, all of Seller's
interest, if any, in and to any transferable guarantees, licenses,
applications, approvals, certificates, permits, warranties or
indemnities in favor of Seller relating exclusively to the Real
Property or the Tangible Personal Property (all of the foregoing,
together with Seller's interest in any Service Contracts with respect
to which there is no known default at Closing, is hereinafter referred
to as the "INTANGIBLE PERSONAL PROPERTY"); and
Property Records. To the extent assignable without
the consent of third parties, all of Seller's interest, if any, in and
to any lease files, printed leasing and marketing materials, leasing
proposals, operating records, manuals and logs, plans, specifications
and architectural drawings, and other books and records relating
exclusively to the Real Property (excluding, however, legally
privileged information, Seller's listing proposals, Seller's
organizational documents, Seller's internal appraisals and analyses,
Seller's economic evaluations of the Property or the sale thereof, and
Seller's accounting and other records prepared for and financial
reports addressed to Seller's shareholder with respect to the Property)
(collectively, the "PROPERTY RECORDS").
(The Real Property, the Tangible Personal Property, the Intangible
Personal Property, and the Property Records are sometimes collectively
hereinafter referred to as the "PROPERTY"). Notwithstanding anything to the
contrary contained in this Agreement, the term "PROPERTY" shall not include: (a)
any operating accounts, replacement or reserve accounts or other accounts
maintained by or on behalf of Seller or Seller's affiliates with respect to the
Real Property (other than Security
2
<PAGE> 4
Deposits); or (b) any refundable cash or other security deposits or any bonds
posted by or on behalf of Seller with any governmental authorities, utilities or
other parties (except any such deposits or bonds posted by Seller with Tenants
shall be included in the Property transferred to Purchaser pursuant to this
Agreement).
THE PURCHASE PRICE.
The purchase price for the Property is Forty-Six Million and
No/100 Dollars ($46,000,000.00) (the "PURCHASE PRICE") and shall be paid to
Seller by Purchaser as follows:
Initial Deposit. Concurrently with the Opening of
Escrow (as defined in Section 20.1 below), Purchaser shall deposit in
escrow (the "ESCROW") with Chicago Title Company ("ESCROW HOLDER") by
wire transfer of immediately available funds an earnest money deposit
in the amount of Four Hundred Sixty Thousand and No/100 Dollars
($460,000.00) (the "INITIAL DEPOSIT"). Purchaser acknowledges and
agrees that time is expressly of the essence with respect to the
delivery of the Initial Deposit into Escrow and in the event Purchaser
fails to deliver the Initial Deposit into Escrow concurrently with the
Opening of Escrow for any reason, this Agreement shall automatically
terminate and neither any party shall have any further rights or
obligations hereunder, except Purchaser shall be responsible for any
title or Escrow cancellation fee, and Purchaser's obligations to
restore the Property under Section 5(b), Purchaser's indemnification
obligations under Section 5(d), Purchaser's confidentiality obligations
under Section 6 and Purchaser's obligations to furnish evidence of
termination under Section 22.16 shall survive such termination.
Additional Deposit. If Purchaser has not terminated
this Agreement in accordance with Section 4 or Section 5, then on or
before the expiration of the Due Diligence Period (as defined in
Section 5(a) below), Purchaser shall deposit into Escrow by wire
transfer of immediately available funds an additional earnest money
deposit in the amount of Five Hundred Forty Thousand and No/100 Dollars
($540,000.00) (the "ADDITIONAL DEPOSIT"). Purchaser acknowledges and
agrees that time is expressly of the essence with respect to the
delivery of the Additional Deposit into Escrow and in the event
Purchaser fails to deliver the Additional Deposit into Escrow on or
before the expiration of the Due Diligence Period for any reason, this
Agreement shall automatically terminate and neither party shall have
any further rights or obligations hereunder, except that the Initial
Deposit plus all interest accrued thereon shall be immediately refunded
to Purchaser (less the amount of any title or Escrow cancellation fee,
which shall be borne entirely by Purchaser in such event), and
Purchaser's obligations to restore the
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<PAGE> 5
Property under Section 5(b), Purchaser's indemnification obligations
under Section 6 and Purchaser's obligations to furnish evidence of
termination under Section 22.16 shall survive such termination.
Custody of Deposit. The Initial Deposit (until the
Additional Deposit is made), or the Initial Deposit and the Additional
Deposit collectively (after the Additional Deposit is made), as the
case may be, are sometimes referred to herein as the "DEPOSIT". The
Deposit shall be held by Escrow Holder in a federally-insured interest
bearing account at Bank of America, NT&SA, and invested by Escrow
Holder in a money market account or in U.S. Treasuries, certificates of
deposit or A1-P1 commercial paper which mature prior to the Closing. In
the event the purchase and sale of the Property is consummated as
contemplated hereunder, the Deposit plus all interest accrued thereon
shall be paid to Seller and credited against the Purchase Price. In the
event the purchase and sale of the Property is not consummated for any
other reason except for a default under this Agreement on the part of
Purchaser, the Deposit plus all interest accrued thereon shall be
immediately refunded to Purchaser. In the event the purchase and sale
of the Property is not consummated because of a default under this
Agreement on the part of Purchaser, the Deposit plus all interest
accrued thereon shall be paid to and retained by Seller pursuant to
Section 18(b) below.
Purchase Price Balance. The balance of the Purchase
Price over and above the amounts paid by or credited to Purchaser
pursuant to Section 3(a), Section 3(b), and Section 3(c) above, and net
of all prorations and closing cost adjustments as provided herein,
shall be deposited into Escrow on the Closing Date (as defined in
Section 15 below) by wire transfer of immediately available funds.
Purchaser expressly acknowledges and agrees that it is a material
inducement to Seller that all funds in payment of the Purchase Price
shall be deposited into Escrow in sufficient time so as to ensure the
Closing can occur and the proceeds of the Purchase Price can be
disbursed from Escrow and received and invested by Seller on the
Closing Date and Purchaser agrees to use Purchaser's best efforts to
initiate the wire transfer of the balance of the Purchase Price at the
earliest possible time on the morning of the Closing Date.
TITLE.
Preliminary Title Report. Seller has previously
delivered to Purchaser a copy of that certain First Amended Preliminary Title
Report No. 764168 LM (the "PTR") issued as of September 12, 1996 by Chicago
Title Company (the "TITLE COMPANY") with respect to the Real Property (the
"PTR"),
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<PAGE> 6
together with copies of all documents relating to the title exceptions referred
to in such PTR.
Survey. Seller has previously delivered to Purchaser
a copy of that certain ALTA Survey of the Real Property dated September, 1996
(the "SURVEY"), prepared by Kier & Wright ("SURVEYOR") as Job No. 89599-1. Any
cost or expense incurred to cause the Survey to be recertified specifically to
Purchaser shall be borne entirely by Purchaser. The PTR, the documents relating
to the title exceptions referred to in the PTR, and the Survey are referred to
herein collectively as the "TITLE DOCUMENTS".
Review and Approval of Title. During the Due
Diligence Period, Purchaser shall review title to the Property as disclosed by
the Title Documents. Prior to the end of the Due Diligence Period, Purchaser
shall notify Seller in writing of those title matters disclosed by the Title
Documents which Purchaser approves and any title matters disclosed by the Title
Documents which Purchaser disapproves in Purchaser's sole and absolute
discretion. Purchaser's failure to deliver such written notice to Seller and
Escrow Holder, prior to the end of the Due Diligence Period, approving or
disapproving the Title Documents and all matters of title set forth therein
shall be deemed Purchaser's election to terminate this Agreement as set forth
below in this Section 4(c). All title matters approved in writing by Purchaser
prior to the end of the Due Diligence Period shall constitute "Permitted
Exceptions" in accordance with Section 4(d) below. If Purchaser notifies Seller
in writing prior to the expiration of the Due Diligence Period that Purchaser
disapproves of any title matter, then within ten (10) days after receipt by
Seller of such written disapproval of any title matter by Purchaser, Seller
shall notify Purchaser in writing of any title matter which Seller is unable or
unwilling, in Seller's sole and absolute discretion, to cause to be removed or
insured against prior to or at Closing. Seller shall have no obligation
whatsoever to cure any disapproved title matter other than Obligatory Title
Exceptions. As used herein, "OBLIGATORY TITLE EXCEPTIONS" means (i) monetary
liens and encumbrances upon the Property which are wilfully and deliberately
created by Seller after the date of this Agreement, and (ii) any monetary liens
and encumbrances upon the Property created after the date of this Agreement and
securing, in the aggregate, the sum of Fifty Thousand Dollars ($50,000.00) or
less and which can be removed from title by Seller providing a bond or other
monetary security at Closing; provided, however, the following shall not be
Obligatory Title Exceptions: (1) assessments, local improvement districts,
zoning, general plan amendments, and other actions and impositions by
governmental authorities, (2) liens and encumbrances created by or through
tenants under Leases or other third parties, and (3) any condemnation, taking or
other action by a public authority pursuant to the power of eminent domain
(which condemnation, taking or other action pursuant to the power of eminent
domain shall be governed by Section 17 below). Seller agrees to cure
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<PAGE> 7
any Obligatory Title Exceptions at or before the Closing by removing the same
from title or causing the Title Company to insure against such Obligatory Title
Exceptions. In the event that Seller fails to respond to Purchaser's written
disapproval of any title matter within such ten (10) day period, or in the event
Seller notifies Purchaser within such ten (10) day period that Seller is unable
or unwilling attempt to cure any or all of the disapproved title matters by
removing the same from title or causing the Title Company to insure against such
disapproved title matters, Purchaser then shall elect, by giving written notice
to Seller and Escrow Holder within five (5) business days, (i) to terminate this
Agreement, or (ii) to waive Purchaser's disapproval of such disapproved title
matters, in which case such disapproved title matters shall then be deemed to be
Permitted Exceptions. Purchaser's failure to give such notice shall be deemed
Purchaser's election to terminate this Agreement. Upon such termination of this
Agreement, the Deposit, plus all interest accrued thereon, shall be immediately
refunded to Purchaser; provided, however, that Purchaser and Seller shall each
be responsible for one-half (1/2) of any title or Escrow cancellation fees, and
Purchaser's obligation to restore the Property under Section 5(b), Purchaser's
indemnification obligations under Section 5(d), Purchaser's confidentiality
obligations set forth in Section 6 and Purchaser's obligations to furnish
evidence of termination under Section 22.16 shall survive such termination. In
the event that Seller elects during the aforesaid ten (10) day period to attempt
to remove from title or cause the Title Company to insure over any title matter
and thereafter Seller is unable to so remove or cause the Title Company to
insure over the title matter prior to or concurrently with the Closing, then
except with respect to Obligatory Title Exceptions, Seller shall have no
liability to Purchaser and Purchaser shall elect, by giving written notice to
Seller within five (5) business days after Purchaser discovers that such title
matter cannot or will not be removed or insured over (and the Closing will be
extended, if necessary, to give Purchaser five (5) business days to make such
election), to terminate this Agreement in accordance with the terms and
provisions of the preceding sentence, or waive Purchaser's disapproval of such
title matters, in which case such title matters shall then be deemed to be
Permitted Exceptions. Purchaser's failure to give such notice within said five
(5) business day period shall be deemed an election to terminate this Agreement.
Permitted Exceptions. The following matters shall
constitute "PERMITTED EXCEPTIONS": (i) the lien to secure payment of general and
special real property taxes and assessments, not delinquent; (ii) the lien of
supplemental taxes assessed pursuant to Chapter 3.5 commencing with Section 75
of the California Revenue and Taxation Code; (iii) all matters affecting the
Property which are created by the act or omission of Purchaser or with the
written consent of Purchaser; (iv) all preprinted and standard exceptions and
exclusions set forth in the standard form of an ALTA owner's policy of title
insurance; (v) the rights of the tenants under the Leases (including memoranda
thereof), as tenants only and
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<PAGE> 8
without any right to purchase the Property; (vi) all exceptions disclosed by the
Title Documents which are approved or deemed approved by Purchaser in accordance
with Section 4(c) above; and (vii) all applicable laws, ordinances, rules and
governmental regulations (including, without limitation, those relating to
building, zoning and land use) affecting the development, use, occupancy or
enjoyment of the Property.
DUE DILIGENCE REVIEW AND INSPECTION.
Due Diligence Period. As used in this Agreement, the
term "DUE DILIGENCE PERIOD" shall mean the period from the date of this
Agreement until 5:00 p.m. San Francisco time on November 21, 1996.
Entry. During the Due Diligence Period, and with no
less than two (2) business days' notice to Seller, Purchaser and
Purchaser's employees, agents and representatives shall be entitled (i)
to enter onto the Real Property during reasonable times as mutually
agreed upon by Seller and Purchaser (subject under all circumstances to
the rights of the tenants under the Leases) for the purpose of
reviewing and photocopying the Property Records and (ii) to review and
photocopy any Property Records located at the offices of Seller's
investment advisor, O'Connor Realty Advisors Incorporated (provided,
however, in no event shall Purchaser be permitted to review or
photocopy any legally privileged information, Seller's listing
proposals, Seller's organizational documents, Seller's internal
appraisals and analyses, Seller's economic evaluations of the Property
or the sale thereof, or Seller's accounting and other records prepared
for and financial reports addressed to Seller's shareholders with
respect to the Property). Seller makes no representations or warranties
of any kind whatsoever regarding the truth, accuracy, completeness or
thoroughness of the information contained in such Property Records
except as specifically set forth in Section 7 below. During the Due
Diligence Period, and with no less than two (2) business days' notice
to Seller, Purchaser and Purchaser's engineers, architects, and other
employees, agents and representatives shall be entitled to enter onto
the Real Property during reasonable times as mutually agreed upon by
Seller and Purchaser (subject under all circumstances to the rights of
the tenants under the Leases) for the purpose of inspecting the
physical condition of the Improvements and conducting non-intrusive
physical and environmental inspections and tests of the Land and the
Improvements (provided, however, that in no event shall (1) such
inspections or tests disrupt or disturb the on-going operation of the
Property or any service to the Property or the quiet possession of any
tenants under the Leases, or (2) Purchaser or Purchaser's engineers,
architects or other employees, agents or representatives drill or bore
on or through the surface of the Property or
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<PAGE> 9
conduct or allow any other physically intrusive testing of, on or under
the Property without Seller's prior written consent as to the timing
and the scope of the work to be performed, which consent shall be in
Seller's sole and absolute discretion). Any such review and/or
photocopying of the Property Records and any such tests and inspections
of the Property shall be made at Purchaser's sole cost and expense and
in strict accordance with applicable law. Purchaser agrees to promptly
deliver to Seller, without representation or warranty, copies of all
final written environmental and geotechnical reports and studies
obtained or conducted by Purchaser with respect to the Property. After
making any tests and inspections of the Property, Purchaser agrees to
promptly restore the Property to its condition prior to such tests and
inspections (which obligation shall survive the Closing or any
termination of this Agreement). Seller shall have the right to have a
representative of Seller present at all times during any review of the
Property Records and any tests and inspections of the Property.
Purchaser shall cooperate with any reasonable request made by Seller
with regard to the timing of any such test or inspection.
Insurance. Prior to Purchaser or Purchaser's
engineers, architects or other employees, agents or representatives
entering the Property to conduct the inspections and tests described in
Section 5(b) above, Purchaser shall obtain and maintain or shall cause
each of Purchaser's contractors and agents to maintain (and shall
deliver to Seller evidence thereof) at no expense to Seller, general
liability insurance from an insurer reasonably acceptable to Seller,
with a contractual liability endorsement and with limits and coverage
satisfactory to Seller. Such insurance shall provide coverage against
any claim for personal liability or property damage caused by Purchaser
or Purchaser's engineers, architects and other agents, employees and
contractors in connection with the inspections and tests made by
Purchaser pursuant hereto, and Purchaser hereby agrees that in no event
shall any such inspections and tests be performed without such
insurance insuring against the acts of the person conducting such
inspections and tests.
Indemnification of Seller. Purchaser agrees to keep
the Property free from all liens and to indemnify, defend, and hold
harmless Seller, and Seller's officers, directors, shareholders,
beneficiaries, partners, agents, employees and attorneys, and their
respective successors and assigns, from and against all claims,
actions, losses, liabilities, damages, costs and expenses (including,
but not limited to, attorneys' fees and costs) incurred, suffered by,
or claimed against Seller by reason of any physical damage to the
Property (or any property of tenants under the Leases) or injury to
persons caused by Purchaser and/or Purchaser's agents, employees or
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<PAGE> 10
contractors in exercising Purchaser's rights under this Agreement. This
indemnity shall survive the Closing or any termination of this
Agreement.
Notice of Approval. Prior to the expiration of the
Due Diligence Period, Purchaser shall deliver to Seller and Escrow
Holder written notice stating either that this contingency regarding
Purchaser's review of the Property Records and the results of
Purchaser's tests, inspections, analyses and other due diligence
investigations of the Property is satisfied, or that Purchaser
disapproves of the foregoing and is electing to terminate this
Agreement, which disapproval (and election to terminate this Agreement)
shall be at Purchaser's sole and absolute discretion. Purchaser and
Seller agree that written notice from Purchaser to Seller and Escrow
Holder that this contingency in this Section 5 is satisfied shall be
conclusively deemed to be notice pursuant to Section 9(a)(i) below that
the Purchaser's Condition Precedent in Section 9(a)(i) regarding the
approval of the Board of Directors of Purchaser is satisfied (without
the need for Purchaser to expressly state the same in Purchaser's
notice). Purchaser's failure to deliver such written notice to Seller
and Escrow Holder prior to the end of the Due Diligence Period shall be
deemed Purchaser's disapproval and election to terminate this
Agreement. In the event Purchaser so terminates this Agreement, the
Deposit, plus all interest accrued thereon, shall be immediately
refunded to Purchaser; provided, however, that Purchaser and Seller
shall each be responsible for one-half (1/2) of any title or Escrow
cancellation fees, and Purchaser's obligation to restore the Property
under Section 5(b), Purchaser's indemnification obligations under
Section 5(d), and Purchaser's confidentiality obligations set forth in
Section 6 and Purchaser's obligations to furnish evidence of
termination under Section 22.16 shall survive such termination.
Tenants and Governmental Authorities. Notwithstanding
anything to the contrary contained in this Agreement, neither Purchaser
nor any of Purchaser's engineers, architects or other employees, agents
or representatives shall contact or make any inquiry of any tenants
under Leases or any governmental authorities having jurisdiction over
the Property without Purchaser first providing Seller with two (2)
business days' prior notice and the opportunity for Seller to accompany
Purchaser or Purchaser's engineers, architects or other employees,
agents or representatives during any such contact or inquiry. Purchaser
agrees any such contact or inquiry shall be made at reasonable times
during business hours, without cost or expense to Seller and without
disturbing the business or operations of the tenants under the Leases.
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<PAGE> 11
CONFIDENTIALITY.
Purchaser shall keep all information contained in the Property
Records and all information obtained from Purchaser's tests, inspections,
analyses and other due diligence investigations of the Property strictly
confidential in accordance with that certain Confidentiality and NonDisclosure
Agreement dated September 5, 1996 between Seller and Purchaser (the
"CONFIDENTIALITY AGREEMENT") and that certain Inspection Agreement dated October
22, 1996 between Seller and Purchaser (the "INSPECTION AGREEMENT"). The
Confidentiality Agreement and the Inspection Agreement are ratified and shall
remain in full force and effect as provided in this Section 6. The
Confidentiality Agreement and the Inspection Agreement are intended to
supplement and be consistent with this Agreement and to the extent of any
inconsistency between the Confidentiality Agreement and/or the Inspection
Agreement and this Agreement, the Confidentiality Agreement and/or the
Inspection Agreement shall govern.
REPRESENTATIONS AND WARRANTIES OF SELLER.
Representations and Warranties. Seller represents
and warrants to Purchaser that the following matters are true and correct as of
the execution of this Agreement and, subject to Section 7(f) below, will also be
true and correct as of the Closing:
Seller is a corporation, duly organized and
validly existing and in good standing under the laws of the State of
Delaware.
This Agreement is, and all the documents
executed by Seller which are to be delivered to Purchaser at the
Closing will be, duly authorized, executed, and delivered by Seller,
and is and will be legal, valid, and binding obligations of Seller
enforceable against Seller in accordance with their respective terms
(except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium and other principles
relating to or limiting the right of contracting parties generally).
This Agreement, and all of the documents executed by Seller which are
to be delivered to Purchaser at the Closing, does not and will not
violate any provisions of any agreement to which Seller is a party or,
to Seller's knowledge, which is binding on Seller.
To Seller's knowledge, Seller has not
received any written notice that the use and operation of the Property
is in material violation of any applicable building codes or any
environmental, zoning, life safety and land use laws, rules and
regulations.
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<PAGE> 12
To Seller's knowledge, all Property Records
made available by Seller to Purchaser in accordance with Section 5
above are true, correct and complete copies of all such documents in
Seller's files (other than those specifically excepted in Section 5(b)
above).
There are no Service Contracts by which
Purchaser would by bound that are not cancelable upon thirty (30) days
written notice other than (A) that certain Standard Form of Agreement
between Owner and Architect for Designated Services, undated, between
Seller and DES Architects + Engineers (for the preparation of
construction documents for repair work to the roof gutter system of the
Improvements), (B) that certain Service Contract, dated October 16,
1996, between Seller and Royal Roofing Company, Inc., (C) that certain
Service Contract, dated October 22, 1996, between Seller and G.T.
Jordan Electric, Inc., and (D) that certain Standard Form of Agreement
between Owner and Contractor where the basis of payment is a Stipulated
Sum, dated September 18, 1996, between Seller and Dycon, a Jack Dymond
Company. To Seller's knowledge, Seller has received no written notice
that Seller is in material default under any Service Contract affecting
the Property.
To Seller's knowledge, Seller has not
received written notice that any condemnation, zoning or other land-use
regulation proceedings directly affecting the Property (as opposed to
any of general application or affecting a number of properties) have
been instituted.
To Seller's knowledge, there is no pending
action, suit or proceeding before any court or other governmental
agency naming Seller as a party that arises out of Seller's ownership
of the Property (other than the pending proceeding to contest the ad
valorem real property tax assessment of the Property).
All of the Leases are set forth on the Rent
Roll attached as Exhibit B hereto, and true, correct and complete
copies of all documents which constitute the Leases, including all
amendments or supplements thereto and all guaranties of the tenant's
obligations thereunder, have been made available to Purchaser. To
Seller's knowledge (which, for purposes of this sentence and the
immediately following sentence only, shall include also the present
actual knowledge of Byron Woodworth, without duty of inquiry), there
exist no material defaults or events which, with the giving of notice
or passage of time, or both, would constitute a material default by
Seller as landlord under the Leases listed on the attached Rent Roll.
To Seller's knowledge (which, for purposes of this sentence and the
immediately preceding sentence only, shall include also the present
actual knowledge of
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<PAGE> 13
Byron Woodworth, without duty of inquiry), there exist no material
defaults and no events which, with the giving of notice or passage of
time, or both, would constitute a material default by any tenants under
the Leases listed on the attached Rent Roll thereon.
There are no leases and/or rental agreements
for occupancy of the Land and the Improvements to which Seller or
Seller's agents is a party and which would be binding on Purchaser
after the Closing, other than the Leases set forth in the Rent Roll
attached as Exhibit B hereto, any subleases, subtenancies or licenses
which would be subject to the Leases, and the Permitted Exceptions.
Except for the rights, if any, of cooperating brokers as set forth in
the Leases, there are no real estate broker commission or listing
agreements relating to the Property to which Seller or any of Seller's
agents is a party and which would be binding upon Purchaser after the
Closing.
All leasing commissions due and payable in
connection with the current term of any existing Lease (as opposed to
leasing commissions, if any, due in connection with any renewal or
extension of any Lease or any expansion of the tenant's leased premises
thereunder) have been paid in full. Except for the rights, if any, of
cooperating brokers as set forth in the Leases, Seller has not entered
into any agreement for the payment of a leasing commission in
connection with any renewal or extension of any Lease or any expansion
of the tenant's leased premises thereunder.
Definition of Seller's Knowledge. For purposes of
this Agreement, whenever the phrase "to Seller's knowledge" or words of similar
import are used, they shall be deemed to refer to the present actual knowledge
of only Scott M. MacDonald, Dennis Keyes and Scott Pritchett, without duty of
inquiry.
Survival Period. The representations and warranties
of Seller set forth in this Section 7 shall be deemed made as of the date of
this Agreement and, subject to Section 7(e) below, as of the Closing and shall
survive for a period of only six (6) months after the Closing and shall
automatically expire at the end of such six (6) month period unless (i)
Purchaser has delivered written notice to Seller with respect to any alleged
breach thereof prior to the expiration of the six (6) month period (and, in the
event any such written notice is timely delivered by Purchaser to Seller, shall
survive thereafter only insofar as the subject matter of the alleged breach
specified in such written notice suit is concerned), and (ii) Purchaser
thereafter commences suit within nine (9) months after the Closing with respect
to the alleged breach specified in the written notice delivered by Purchaser to
Seller
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<PAGE> 14
within said six (6) month period. If written notice of an alleged breach is not
timely delivered within said six (6) month period, or if suit is not thereafter
timely commenced by Purchaser within nine (9) months following the Closing, then
Seller's representations and warranties shall thereafter be void and of no force
or effect.
Limitation on Seller's Liability. Notwithstanding
anything the contrary contained herein, Seller shall not have any liability,
obligation or responsibility of any kind to Purchaser or any party claiming by,
under or through Purchaser with respect to the following: (i) the content or
accuracy of any report, study, opinion or conclusion of any soils, toxic,
environmental or other engineer or other person or entity who has examined the
Property or any aspect thereof; (ii) the content or accuracy of any information
released to Purchaser by an engineer or planner in connection with the
development of the Property; (iii) the availability of building or other permits
or approvals for the Property by any state or local governmental bodies with
jurisdiction over the Property; (iv) any of the items delivered to Purchaser
pursuant to Purchaser's review of the Property Records or condition of the
Property prepared by anyone other than Seller (including, without limitation,
any of the Title Documents); or (v) the content or accuracy of any other
development or construction cost, projection, financial or marketing analysis
given to Purchaser by Seller or reviewed by Purchaser with respect to the
Property.
Purchaser's Knowledge. Notwithstanding anything to
the contrary contained in this Agreement, Seller shall have no liability,
obligation or responsibility of any kind to Purchaser or any party claiming by,
under or through Purchaser with respect to any of the foregoing representations
and warranties if, prior to the Closing, Purchaser has knowledge that
contradicts any of the foregoing representations and warranties, or renders any
of the foregoing representations and warranties untrue or incorrect, and
Purchaser nevertheless consummates the transaction contemplated by this
Agreement. For purposes hereof, the knowledge of Purchaser shall mean the actual
knowledge of Purchaser's officers, consultants and agents. Purchaser further
agrees to provide Seller with written notice (a "REPRESENTATION NOTICE")
promptly upon Purchaser's learning that any representation or warranty of Seller
in this Agreement is untrue or incorrect or has been breached by Seller. In the
event Purchaser gives a Representation Notice and Seller fails to correct any
inaccuracy or cure any such breach of any representation or warranty of Seller,
then Purchaser's sole remedy shall be to elect, in Purchaser's sole discretion,
to proceed with the Closing or terminate this Agreement. If Purchaser elects to
proceed with the Closing, Purchaser shall be deemed to have waived the breach of
any representation or warranty of Seller in this Agreement of which Purchaser
has knowledge at the time of the Closing.
Change in Circumstance. Without limiting the
foregoing
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<PAGE> 15
provisions of Section 7(d) and Section 7(e), Purchaser acknowledges that Seller
shall have no liability, obligation or responsibility with respect to any
representation or warranty which was true and accurate when made by Seller upon
the execution and delivery of this Agreement and which subsequently becomes
untrue or inaccurate for any reason which is not a breach or default by Seller
of the covenants made by Seller in Section 10 below (e.g., an untruth or
inaccuracy due to the passage of time, litigation initiated against Seller by a
third party, events occurring after the date of this Agreement, knowledge
acquired by Seller after the date of this Agreement, etc.). In the event that
any representation or warranty made by Seller is untrue or inaccurate in any
material respect as of the Closing and such untruth or inaccuracy is caused by a
reason which is not a breach or default of Seller's covenants in Section 10
below, then Purchaser's sole right by reason of such untruth or inaccuracy shall
be to elect, in Purchaser's sole discretion to either (a) waive such untruth or
inaccuracy in Seller's representations or warranties and proceed to the Closing
hereunder (in which event, Seller shall have no liability to Purchaser for such
untruth or inaccuracy) or (b) to terminate this Agreement in accordance with
Section 9(c) below. In addition to the foregoing, Purchaser acknowledges that
any express written disclosures made by Seller prior to the Closing Date shall
constitute notice to Purchaser of the matter disclosed, and Seller shall have no
further liability thereafter if Purchaser thereafter consummates the transaction
contemplated hereby.
REPRESENTATIONS, WARRANTIES, COVENANTS AND
ACKNOWLEDGMENTS OF PURCHASER.
Representations and Warranties. Purchaser represents
and warrants to Seller that the following matters are true and correct as of the
execution of this Agreement and will also be true and correct as of the Closing:
Purchaser is a corporation, duly organized,
and validly existing and in good standing under the laws of the State
of Maryland.
Subject to Section 9(a)(i) below, this
Agreement is, and all the documents executed by Purchaser which are to
be delivered to Seller at the Closing will be, duly authorized,
executed, and delivered by Purchaser, and is and will be legal, valid,
and binding obligations of Purchaser enforceable against Purchaser in
accordance with their respective terms (except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency,
moratorium and other principles relating to or limiting the right of
contracting parties generally). This Agreement, and all of the
documents executed by Purchaser which are to be delivered to Seller at
the Closing, does not and will not violate any provisions of any
agreement to which Purchaser is a party or, to Purchaser's knowledge,
which is binding
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upon Purchaser.
Purchaser is acquiring the Property solely
for rental or investment purposes.
Covenants. Purchaser agrees that:
Purchaser will review all instruments,
records and documents which Purchaser deems appropriate or advisable to
review in connection with this transaction, including, but not by way
of limitation, any and all architectural drawings, plans,
specifications, surveys, building and occupancy permits, and any
licenses, leases, contracts, warranties and guarantees relating to the
Property or the business conducted thereon, and by proceeding with this
transaction following the expiration of the Due Diligence Period
Purchaser will be deemed to have determined that the same and the
information and data contained therein and evidenced thereby are
acceptable to Purchaser.
Purchaser will review all applicable laws,
ordinances, rules and governmental regulations (including, but not
limited to, those relating to building, zoning and land use) affecting
the development, use, occupancy or enjoyment of the Property which
Purchaser deems appropriate or advisable to review in connection with
this transaction; and
Purchaser will, at Purchaser's own cost and
expense, make such independent investigations respecting the Property
and all other aspects of this transaction, as Purchaser deems
appropriate or advisable, and shall rely thereon and on the advice of
Purchaser's consultants in entering into this Agreement and, by
proceeding with this transaction following the expiration of the Due
Diligence Period, will be deemed to have determined that the same are
acceptable to Buyer in all respects.
Acknowledgements. Purchaser hereby expressly
acknowledges:
That no financing for this transaction shall
be provided by Seller.
That Seller's existing insurance pertaining
to the Property shall be cancelled at Closing, and Seller shall receive
any premium refund due thereon, and Purchaser shall be required to
obtain Purchaser's own insurance coverage from and after the Closing.
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<PAGE> 17
THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 7(a)
ABOVE, PURCHASER IS ACQUIRING THE PROPERTY AS- IS, WHERE-IS, AND WITH
ALL FAULTS, AND WITHOUT ANY WARRANTIES OF WHATSOEVER NATURE,EXPRESS OR
IMPLIED, IT BEING THE INTENTION OF SELLER AND PURCHASER EXPRESSLY TO
NEGATE AND EXCLUDE ALL WARRANTIES (EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN SECTION 7(a) ABOVE), INCLUDING, WITHOUT LIMITATION, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR
PURPOSE, WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY
ANY DESCRIPTION OF THE PROPERTY CONVEYED HEREUNDER (INCLUDING, WITHOUT
LIMITATION, ANY AND ALL WARRANTIES WHATSOEVER CONTAINED IN OR CREATED
UNDER THE CALIFORNIA UNIFORM COMMERCIAL CODE), WARRANTIES AS TO
COMPLIANCE WITH LAWS AND WARRANTIES AS TO THE CONDITION OR SOUNDNESS OF
THE PHYSICAL COMPONENTS OF THE IMPROVEMENTS. Without limitation on the
foregoing, Purchaser will be acquiring the Property solely in reliance
on Purchaser's own inspections, examinations, and evaluations of the
Property, and prior to taking title to the Property, Purchaser shall
have had the opportunity to have examined and inspected the Property,
including, without limitation, the physical components thereof, and to
determine whether Purchaser is satisfied with the condition, quality,
quantity, operation, state of repair, and prospects of the Property in
all respects, and Purchaser shall have decided that Purchaser is
willing to acquire the Property "AS-IS, WHERE-IS," and with all faults.
Purchaser agrees and acknowledges that, except for Seller's express
representations and warranties set forth in Section 7(a) of this
Agreement, no other representations, statements or warranties have at
any time been made by Seller, or Seller's employees, officers, advisors
or agents, as to the physical condition, quality, quantity or state of
repair of the Property, or as to the condition, quality, quantity,
operation, state of repair, or prospects for the Property in any
respect. Seller is not liable or bound in any manner by any verbal or
written statements or representations made by any real estate broker,
advisor or other third party, including, without limitation, any real
estate brokers' "set-ups" or information pertaining to the Property,
the Leases, the Service Contracts or the operation, layout, expenses,
condition, income, rents, agreements, licenses, easements, instruments
or documents.
Environmental Matters. Without limitation on Section
8(c) above, Purchaser acknowledges that Seller makes no representations or
warranties regarding the presence or absence of any Hazardous Materials (as
defined below) in, on or under the Property. By proceeding with this transaction
following the expiration of the Due Diligence Period, Purchaser will be deemed
to have made Purchaser's own independent investigation of the Property with
regard to the
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<PAGE> 18
presence of Hazardous Materials as Purchaser deems appropriate. Accordingly,
Purchaser hereby expressly waives and relinquishes any and all rights and
remedies Purchaser may now or hereafter have against Seller and Seller's
affiliates and their respective successors and assigns, partners, shareholders,
officers, directors, employees, and/or agents, whether known or unknown, with
respect to any past, present or future presence or existence of Hazardous
Materials on, under or about the Property or with respect to any past, present
or future violation of any rules, regulations or laws, now or hereafter enacted,
regulating or governing the use, handling, storage or disposal of Hazardous
Materials, including, without limitation, (i) any and all rights and remedies
Purchaser may now or hereafter have under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), as amended, and any
similar law, rule or regulation, (ii) any and all rights Purchaser may now or
hereafter have against Seller under the Carpenter- Presley-Tanner Hazardous
Substance Account Act (California Health and Safety Code, Section 25300 et
seq.), as amended, and any similar law, rule or regulation, and (iii) any and
all claims, whether known or unknown, now or hereafter existing, with respect to
the Property under Section 107 of CERCLA (42 U.S.C.A. ss. 9607). As used herein,
the term "HAZARDOUS MATERIAL(s)" includes, without limitation, any hazardous or
toxic materials, substances or wastes, such as (A) those materials identified in
Sections 66680 through 66685 and Sections 66693 through 66740 of Title 22 of the
California Administrative Code, Division 4, Chapter 30, as amended from time to
time, (B) those materials defined in Section 25501(j) of the California Health
and Safety Code, (C) any materials, substances or wastes which are toxic,
ignitable, corrosive or reactive and which are regulated by any local
governmental authority, any agency of the State of California or any agency of
the United States government, (D) any other material, substance, or waste which
is defined or regulated as a hazardous material, extremely hazardous material,
hazardous waste or toxic substance pursuant to any laws, rules, regulations or
orders of the United States government, the State of California or any local
governmental body, (E) asbestos, (F) petroleum and petroleum based products, (G)
formaldehyde, (H) polychlorinated biphenyls (PCBs), (I) radon, and (J) freon and
other chloroflurocarbons.
PURCHASER HEREBY ACKNOWLEDGES THAT PURCHASER HAS READ AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 ("SECTION
1542"), WHICH IS SET FORTH BELOW:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
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<PAGE> 19
BY INITIALLING BELOW, PURCHASER HEREBY WAIVES THE PROVISIONS
OF SECTION 1542 SOLELY IN CONNECTION WITH THE MATTERS WHICH ARE THE SUBJECT OF
THE WAIVERS AND RELEASES SET FORTH IN THIS SECTION 8(d):
-------------------------
PURCHASER'S INITIALS
Survival. The foregoing waivers and releases by
Purchaser (as well as the provisions of Section 7(d) and Section 7(e) above)
shall survive either (i) the Closing and the recordation of the Grand Deed (as
defined in Section 11(a) below), and shall not be deemed merged into the Grant
Deed upon its recordation, or (ii) any termination of this Agreement.
Reservation. The foregoing provisions of Section 8
(and the provisions of Section 7(d) and Section 7(e) above) shall not (i)
require Purchaser to indemnify Seller from or against any claim or loss, or (ii)
operate to release Seller from liability for Seller's actual fraud or
intentional misrepresentation, or (iii) prevent Purchaser from impleading Seller
in any proceeding brought by an independent third party provided such proceeding
did not arise by reason of any act by Purchaser or Purchasers or agents or
representatives with the intention circumventing the provisions of Section 7(d),
Section 7(e) or this Section 8.
CONDITIONS PRECEDENT TO CLOSING.
Purchaser's Conditions Precedent. The following
matters set forth below in this Section 9(a) shall be conditions precedent to
Purchaser's obligation to consummate the purchase and sale transaction
contemplated herein (the "PURCHASER'S CONDITIONS PRECEDENT"). The Purchaser's
Conditions Precedent set forth in Section 9(a)(i) and Section 9(a)(ii) must be
satisfied on or before the expiration of the Due Diligence Period and the
Purchaser's Conditions Precedent in Section 9(a)(ii) through Section 9(a)(ix)
must be satisfied as of the Closing Date (as defined in Section 15 below).
The Board of Directors of Purchaser shall have given
its final approval of the purchase of the Property by Purchaser upon
the terms and conditions of this Agreement, which approval Seller
acknowledges may be withheld in the sole and absolute discretion of
Purchaser's Board of Directors. The failure of Purchaser to notify
Seller in writing on or before the expiration of the Due Diligence
Period of such approval of the Board of Directors of Purchaser shall be
deemed to be the failure of this Purchaser's Condition Precedent.
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<PAGE> 20
Purchase shall not have terminated this Agreement in
accordance with Section 4 or Section 5 of this Agreement within the
time periods set forth in said Sections.
Purchaser shall not have terminated this Agreement in
accordance with Section 7(e), Section 7(f), Section 9(c), Section 17(a)
or Section 17(b) of this Agreement within the time periods set forth in
said
Sections.
The Title Company shall have irrevocably committed to
issue, upon the Closing, an ALTA extended coverage owner's policy of
title insurance on the standard form issued in the State of California,
with such endorsements as Purchaser shall have reasonably requested and
which the Title Company shall have agreed to issue prior to the
expiration of the Due Diligence Period (the "Title Policy"), insuring
that title to the Real Property is vested of record in Purchaser as of
the Closing, subject only to the Permitted Exceptions.
Purchaser shall have received an estoppel certificate
from each tenant of the Property in the form attached as Exhibit C-1
hereto; provided, however, Purchaser expressly acknowledges and agrees
that if any tenant is unwilling for any reason to execute and return an
estoppel certificate in the form of Exhibit C-1 hereto, then an
estoppel certificate received from a tenant in the form attached as
Exhibit C-2 shall satisfy the requirements of this Section 9(a)(iii)
notwithstanding any variations between such form and the form attached
as Exhibit C-1 hereto. Seller agrees to provide Purchaser with copies
of the proposed estoppel certificates not less than three (3) business
days prior to Seller's delivery of the same to the tenants.
Unless previously waived in writing by Purchaser, or
deemed to have been waived by Purchaser pursuant to the terms hereof,
there shall be no material breach of any of Seller's representations,
warranties or covenants set forth in this Agreement, as of the Closing
(solely for purposes of this Section 9(a)(vi), a "material breach"
includes any representation or warranty made by Seller which is untrue
or inaccurate in any material respect for a reason which is not a
breach or default of Seller's covenants in Section 10, as provided in
Section 7(f) above).
Seller shall have delivered to the Escrow Holder the
items described in Section 11.
Each Lease listed in the Rent Roll attached as
Exhibit B hereto shall be in full force and effect and no material
default, claim or dispute shall
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<PAGE> 21
then exist or have arisen thereunder that was not specifically
disclosed in the Property Records provided for Purchaser's review
during the Due Diligence Period pursuant to Section 5 above.
No lawsuit or arbitration proceeding shall be pending
(or threatened in writing and not subsequently resolved, settled or
otherwise terminated) against Seller which, if determined adversely to
Seller, would prohibit or invalidate the transaction contemplated by
this Agreement (other than an action or arbitration proceeding
threatened by Seller or Purchaser).
Seller shall have delivered to the Escrow Holder with
respect to those contracts listed in Section 7(a)(v)(A) through (D)
above lien releases for amounts paid thereunder prior to the Closing by
Seller and consents to the assignment thereof to Purchaser, which lien
releases and consents to assignment shall be executed by the
contractors thereunder in a form reasonably satisfactory to Seller.
The Purchaser's Conditions Precedent set forth in this Section 9(a) are solely
for the benefit of Purchaser and may be waived only by Purchaser. Purchaser
shall, at all times prior to the termination of this Agreement, have the right
to waive any of these Purchaser's Conditions Precedent.
Seller's Conditions Precedent. The following matters
set forth in this Section 9(b) shall be conditions precedent to Seller's
obligation to consummate the purchase and sale transaction contemplated herein
(the "SELLER'S CONDITIONS PRECEDENT"). The Seller's Condition Precedent set
forth in Section 9(b)(i) must be satisfied on or before the expiration of the
Due Diligence Period and the Seller's Conditions Precedent set forth in Sections
9(b)(ii) through Section 9(b)(vi) must be satisfied on or before the Closing
Date.
Purchaser shall not have terminated this Agreement in
accordance with Section 4 or Section 5 of this Agreement within the
time periods set forth in said Sections.
Purchaser shall not have terminated this Agreement in
accordance with Section 7(e), Section 7(f), Section 9(c), Section 17(a)
or Section 17(b) of this Agreement within the time periods set forth in
said
Sections.
Purchaser shall have delivered to Escrow Holder, no
later than 12:00 p.m. (noon), New York time, on the Closing Date for
disbursement as directed hereunder, all cash or other immediately
available funds due from Purchaser in accordance with this Agreement.
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The Title Company shall have irrevocably committed to
issue the Title Policy upon the Closing.
There shall be no material breach of any of
Purchaser's representations, warranties or covenants set forth in this
Agreement, as of the Closing.
Purchaser shall have delivered to Escrow Holder the
items described in Section 12.
The Seller's Conditions Precedent set forth in this Section 9(b) are solely for
the benefit of Seller and may be waived only by Seller. Seller shall, at all
times prior to the termination of this Agreement, have the right to waive any of
these Seller's Conditions Precedent.
Failure of Conditions Precedent. Neither Purchaser
nor Seller shall wilfully or in bad faith act or fail to act for the purpose of
permitting any Purchaser's Condition Precedent or Seller's Condition Precedent
to fail (except to the extent Purchaser, in Purchaser's own discretion,
exercises Purchaser's right to disapprove any such items or matters in Section
4, Section 5, Section 7(e) or Section 7(f) hereof). Subject to Section 7(e) and
Section 7(f) above, nothing contained in Section 9(a) or Section 9(b) shall
relieve either Seller or Purchaser (as the case may be) of any liability or
diminish or limit the other party's rights or remedies in the event any
condition fails, and the transaction contemplated by this Agreement fails to
close, due to a breach of any representation, warranty or covenant of either
Seller or Purchaser. In the event that the purchase and sale of the Property is
not consummated because of the failure of any Purchaser's Condition Precedent or
Seller's Condition Precedent or any other reason except for a default under this
Agreement on the part of Purchaser, this Agreement shall terminate and neither
party shall have any further rights or obligations hereunder, except that the
Deposit plus all interest accrued thereon shall be immediately refunded to
Purchaser, Purchaser and Seller shall each be responsible for one-half (1/2) of
any title or Escrow cancellation fee, and Purchaser's obligation to restore the
Property under Section 5(b), Purchaser's indemnification obligations under
Section 5(d), Purchaser's confidentiality obligations under Section 6 and
Purchaser's obligations to furnish evidence of termination under Section 22.16
shall survive such termination.
Waiver of Conditions. The election of Seller and
Purchaser to proceed with the Closing by recording the Grant Deed in the
Official Records and disbursing the Purchase Price (as well as the execution and
/or delivery of the other items set forth in Section 11 and Section 12,
respectively, below) shall be deemed to be Purchaser's waiver of the conditions
set forth in Section 9(a) above and
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Seller's waiver of the condition set forth in Section 9(b) above, to the extent
any of such conditions have not previously been satisfied or waived.
COVENANTS OF SELLER.
Seller hereby covenants with Purchaser, as follows:
After the date hereof and prior to the Closing, no
part of the Property, or any interest therein, will be sold, encumbered
or otherwise transferred without Purchaser's consent (except for new
leases or amendments, modifications, supplements or extensions of
existing Leases entered into in accordance with Section 10(b) below).
After the date hereof and until the expiration of the
Due Diligence Period, Seller shall be entitled to enter into any new
leases, or amend, modify, supplement, terminate or extend the existing
Leases, in any case in Seller's sole discretion and without any consent
or approval from Purchaser. During the Due Diligence Period, Seller
shall promptly notify Purchaser and furnish Purchaser with a copy of
any new lease or any amendment, modification, supplement, termination
or extension of an existing Lease which is entered into during the Due
Diligence Period, together with a copy of any applicable tenant
financial information, term sheet, commission agreement and other
relevant information received by Seller with respect to the new lease
or amendment, modification, supplement, termination or extension of an
existing Lease. After the expiration of the Due Diligence Period, and
prior to the Closing, Seller shall not enter into any new leases, or
amend, modify, supplement, terminate or extend the existing Leases,
without the prior written consent of Purchaser, (which consent shall be
in Purchaser's sole and absolute discretion).
Until the Closing, Seller shall keep the Property
insured against fire, vandalism and other loss, damage and destruction
with the same coverage, policy limits and deductible amounts as are
currently held by Seller.
Until the Closing, Seller shall operate and maintain
the Property in the manner as Seller has previously done and consistent
with reasonable commercial practices of industrial/warehouse/office
buildings of the same or similar character as the Property.
Until the Closing, Seller shall not undertake any
capital improvements to the Real Property (except as may be required
under Leases or any applicable law or governmental order).
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Until the Closing, Seller shall not enter into any
new Service Contract or other agreement affecting the Real Property
which would survive the Closing; provided that no consent of Purchaser
shall be required as to any proposed Service Contract or other
agreement that provides that it is terminable upon thirty (30) days (or
less) notice without premium or penalty payable by Purchaser.
Until the Closing, Seller shall not remove from the
Real Property any article of Tangible Personal Property except as may
be necessary for repairs, or the discarding of worn out or obsolescent
or useless items and except as necessary to comply with the Leases or
any applicable law or governmental order; provided, however, that any
article removed for repairs shall be returned to the Real Property
promptly upon its repair and shall remain a part of the Tangible
Personal Property whether or not such article shall be located on the
Real Property at the time of the Closing, and any article so discarded
shall be replaced with a new article of similar quality and utility
prior to the Closing.
Until the Closing, Seller shall not undertake or
commence any material renovations or alterations at the Real Property,
except those necessary to comply with any of the provisions of Leases
or any applicable law or governmental order.
Upon the Closing, Seller shall terminate any existing
on-site management and listing agreement for the Property in accordance
with the terms thereof.
From and after the expiration of the Due Diligence
Period and until the Closing Date, Seller will not enter into any
contracts or agreements (whether binding or not) for the sale or other
disposition of the Property.
SELLER'S CLOSING DELIVERIES TO ESCROW HOLDER.
At least one (1) business day prior to the Closing Date,
Seller shall deliver or cause to be delivered to Escrow Holder the following:
A Grant Deed executed by Seller, in the form of
Exhibit D attached hereto, conveying the Real Property to Purchaser
subject to the Permitted Exceptions and matters arising by or through
Purchaser (the "GRANT DEED").
An Assignment of Leases executed by Seller, in the
form of Exhibit E attached hereto, assigning to Purchaser all of
Seller's interest under
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the Leases (the "ASSIGNMENT OF LEASES").
A Bill of Sale executed by Seller, in the form of
Exhibit F attached hereto, conveying to the Purchaser title to the
Tangible Personal Property, if any (the "BILL OF SALE").
A General Assignment executed by Seller, in the form
of Exhibit G attached hereto, assigning to Purchaser the Service
Contracts and the Intangible Personal Property, if any, to the extent
that such items are assignable (the "GENERAL ASSIGNMENT").
An affidavit in the form of Exhibit H attached
hereto, certifying that Seller is not a "foreign person"within the
meaning of Section 1445(f)(3) of the Code (the "CERTIFICATE OF
NON-FOREIGN STATUS"), together with a California Form 590.
A Closing Statement (as defined in Section 14(b)
below) duly executed by Seller.
Any other documents, instruments or agreements
reasonably necessary to effectuate the transaction contemplated by this
Agreement, including, without limitation any affidavit or other
statement reasonably and customarily requested by the Title Company in
order to issue the Title Policy.
PURCHASER'S CLOSING DELIVERIES TO ESCROW HOLDER.
On the Closing Date, Purchaser shall deliver to
Escrow Holder, by wire transfer of immediately available funds, the
balance of the Purchase Price, together with such other sums as Escrow
Holder shall require to pay Purchaser's share of the Closing costs,
prorations, reimbursements and adjustments as set forth in Section 14
and Section 16 herein.
At least one (1) business day prior to the Closing
Date, Purchaser shall deliver to Escrow Holder:
An executed counterpart of the General Assignment and
the Assignment of Leases, whereby Purchaser shall assume the
obligations relating to the matters set forth in such documents.
A Closing Statement duly executed by Purchaser.
A letter in the form of Exhibit I hereto, dated as of
the date of the Closing addressed to each of the tenants under the
Leases and duly
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executed by Purchaser, notifying such tenant that (A) the Property has
been sold to Purchaser, (B) commencing immediately, all rentals and
other payments and any notices under the Lease are to be paid and sent
in accordance with Purchaser's directions, (C) Purchaser has custody of
any tenant deposit under the Lease, and (D) effective as of the
Closing, Tenant is to name Purchaser and Purchaser's managing agent as
additional insureds under all insurance policies maintained pursuant to
the Lease (the "Tenant NOTIFICATION LETTER"). Promptly following the
Closing, Seller shall also execute each such Tenant Notification Letter
and deliver it to the respective tenant by certified mail, return
receipt requested.
Any other documents, instruments or agreements
reasonably necessary to effectuate the transaction contemplated by this
Agreement.
SELLER'S POST-CLOSING DELIVERIES TO BUYER. Within
one (1) business day following the Closing, Seller shall deliver the following
items to Buyer by leaving them at the management office of the Property:
the originals of all Leases and the originals of all
Service Contracts (or to the extent Seller does not possess any
original, the best copy in Seller's possession);
the originals, or the best copies in Seller's
possession, of all guarantees, licenses, applications, approvals,
certificates, permits,warranties or indemnities which constitute
Intangible Personal Property hereunder and which are evidenced by
written instrument or document; and
the Property Records.
PRORATIONS AND ADJUSTMENTS.
Definitions. For purposes of this Section 14, the
terms set forth below shall have the following meanings:
"BASE RENT" means all base rent, minimum
rent or fixed rent or basic rental payable in fixed
installments for stated periods by tenants under Leases.
"OPERATING EXPENSE REIMBURSEMENTS" means
expense reimbursements, operating cost pass-throughs,
utility charges, common area maintenance charges,
administrative charges, property taxes and assessments,
project association dues, retroactive rental escalations,
insurance cost reimbursements and other sums or charges
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payable by tenants under their Leases (but excluding Base
Rents).
"PRORATION DATE" means 11:59 P.M. on the day
preceding the Closing, so that Purchaser shall be deemed to
own the Property, and therefore entitled to any revenues and
responsible for any expenses, for the entire day upon which
the Closing occurs.
"RENTAL" OR "RENTALS" means, collectively,
all Base Rents, all Operating Expense Reimbursements and all
other sums and charges payable by tenants pursuant to Leases.
General. All Rentals, revenues and other income of
the Property, if any, and all utilities, real estate taxes,
assessments, maintenance charges, improvement bonds and other regular
operating expenses of the Property, if any, shall be paid or shall be
prorated between Purchaser and Seller as of the Proration Date in
accordance with the provisions set forth below in this Section 14. Any
apportionments and prorations which are not expressly provided for
below shall be made in accordance with the customary practice in the
County of Santa Clara. On or prior to the Closing Date, Purchaser and
Seller shall make a preliminary estimate of the Closing prorations in
accordance with the provisions of this Section 14 based upon the best
information available to date. Such preliminary estimate of Closing
prorations shall include, without limitation, an estimate of the
payments of Operating Expense Reimbursements which are due and payable
after the Closing by tenants under Leases but which are attributable to
the period prior to the Proration Date. Such preliminary estimated
Closing prorations shall be set forth on a preliminary closing
statement to be prepared by Seller and submitted to Purchaser for
Purchaser's approval prior to the Closing Date (THE "CLOSING
STATEMENT"). The Closing Statement, once agreed upon, shall be signed
by Purchaser and Seller and delivered to Escrow Holder for purposes of
making the preliminary proration adjustment at Closing subject to the
"FINAL CLOSING ADJUSTMENT" provided for below. The preliminary
proration shall be paid at Closing by Purchaser to Seller (if the
preliminary prorations result in a net credit to Seller) or by Seller
to Purchaser (if the preliminary prorations result in a net credit to
Purchaser) by increasing or reducing the cash to be delivered by
Purchaser in payment of the Purchase Price at the Closing. Any
proration adjustments which are estimates only as of the Closing shall
be fixed and determined in accordance with the actual data or
information upon the Final Closing Adjustment pursuant to Section 14(j)
below.
Rentals. Rentals shall be prorated as of the
Proration Date in accordance with the following provisions of this
Section 14(c):
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Base Rent. Base Rent payable in the month in
which the Closing occurs shall be prorated between Purchaser
and Seller as of the Proration Date on an accrual basis based
on the actual number of days in the month during which the
Closing occurs. Seller shall be entitled to all Base Rent
which accrues prior to the Proration Date and Purchaser shall
be entitled to all Base Rent which accrues on and after the
Proration Date. Base Rents which are delinquent as of the
Proration Date will not be prorated, but will be paid to
Seller by Purchaser promptly upon collection by Purchaser, and
Seller shall retain the right to collect such amounts
post-Closing in accordance with Section 14(c)(iii) below. The
first monies received by Purchaser from each tenant after the
Closing Date shall be applied first to current Rentals due,
second, to the month in which the Closing occurred, third, to
the month immediately preceding the month in which the Closing
occurred, fourth, to the month or months following the month
in which the Closing occurred and fifth, to the months
preceding the month in which the Closing occurred. Buyer shall
use commercially reasonable efforts to collect delinquent Base
Rent for the account of Seller (but without any obligation to
institute legal proceedings).
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Operating Expense Reimbursements. Monthly or
quarterly payments of Operating Expense Reimbursements for the
month or the calendar quarter in which the Closing occurs, and
payments of Operating Expense Reimbursements which are due and
payable after the Closing but which are attributable to the
period prior to the Proration Date, shall be prorated between
Purchaser and Seller as of the Proration Date, based on the
number of days in the month or calendar quarter during which
the Closing occurs. Any monthly or quarterly payments of
Operating Expense Reimbursements which are delinquent as of
the Proration Date shall not be prorated, but will be paid to
Seller by Purchaser promptly upon their collection, and Seller
shall retain the right to collect such amounts post-Closing in
accordance with Section 14(c)(iii) below. Following the
Closing, Purchaser shall use commercially reasonable efforts
to collect any such monthly or quarterly payments of Operating
Expense Reimbursements which are delinquent as of the
Proration Date (but without any obligation to institute legal
proceedings). The preliminary proration of Operating Expense
Reimbursements made at the Closing shall be deemed an estimate
only, and at the Final Closing Adjustment, Purchaser and
Seller shall prorate the total Operating Expense
Reimbursements due from tenants based upon the entire annual
period in which the Closing occurs as provided in Section
14(j)(ii) below.
Delinquent Rentals. If within sixty (60)
days after the Closing, any Base Rents, any monthly or
quarterly payments of Operating Expense Reimbursements or any
other Rentals which are delinquent as of the Proration Date
have not been collected by Purchaser, Seller shall have the
right to collect such amounts post-Closing directly from such
tenants, including, if necessary in Seller's sole discretion,
the right to bring an action for damages against any such
tenant for the amount owed, but not an action for ejectment or
unlawful detainer.
Taxes and Assessments. Except to the extent paid
directly by tenants to the taxing authorities, all non-delinquent real
property taxes, personal property taxes and installments of assessments
imposed or levied upon the Property shall be prorated between Purchaser
and Seller on an accrual basis. If the most recent tax bill received by
Seller as of the Proration Date is not the actual current tax bill,
then Purchaser and Seller shall make an estimated proration of property
taxes and assessments at the Closing based upon the most current tax
bill available, and shall reprorate the property taxes and assessments
at the Final Closing Adjustment. All
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amounts payable for property taxes and the installments of the
assessments accruing prior to the Proration Date shall be the
obligation of Seller and all amounts payable for property taxes and the
installments of the assessments accruing on and after the Proration
Date shall be the obligation of Purchaser. Any refund of property
taxes attributable to any period prior to the Closing which is paid or
credited to Purchaser or received by Purchaser shall be paid by
Purchaser to Seller (net of any credit due to tenants under their
Leases) in cash or cash equivalent within ten (10) business days after
Purchaser's receipt thereof.
Operating Expenses. All costs, expenses, charges and
fees for sewer, water, electricity, heat and air-conditioning service
and other utilities, common area maintenance charges, insurance
premiums, rental taxes, business occupational taxes, periodic charges
payable under Service Contracts, periodic fees payable under
transferable licenses and permits for the Property, periodic charges
under any reciprocal easement agreements, and any other costs incurred
in the ordinary course of business or the management and operation of
the Property shall be prorated between Purchaser and Seller on an
accrual basis, based on the actual number of days in the month during
which the Closing occurs. Except to the extent paid directly by tenants
to the service provider or other payee, Seller shall be responsible for
all such expenses that are attributable to the period prior to the
Proration Date and Purchaser shall be responsible for all such expenses
which are attributable to the period on and after the Proration Date.
To the extent commercially reasonable and practicable, Purchaser and
Seller shall obtain billings and meter readings as of the day preceding
the Proration Date to aid in such prorations. If billings or meter
readings as of the day preceding the Proration Date are obtained,
adjustments of any costs, expenses, charges or fees shown thereon shall
be made in accordance with such billings or meter readings.
Tenant Deposits and Other Credits. Purchaser shall be
credited with and Seller shall be charged with an amount equal to the
sum of (a) Seller's liability for security deposits (and any interest
due to tenants thereon) under the Leases, and (b) any prepaid Rentals
attributable to a period on or after the Closing Date. Upon the
Closing, Seller shall be entitled to retain all such security deposits
and prepaid Rentals. Purchaser agrees to be responsible for repayment
to the applicable tenants of all security deposits for which and to the
extent Purchaser receives a credit for such security deposits pursuant
to this Section 14(f).
Refundable Utility and Permit Deposits. Any
refundable deposits made by Seller to utilities companies, governmental
authorities,
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licensing or permitting agencies or similar parties shall not be
prorated. Seller shall not assign any such deposits to Purchaser.
Seller shall be entitled to obtain a refund of any refundable deposits
being held by utilities companies, governmental authorities, licensing
or permitting agencies or similar parties and Purchaser shall replace
such deposits with Purchaser's own deposits. The parties shall endeavor
to have the account name on all utilities changed from Seller to
Purchaser as of the Proration Date, it being understood that under no
circumstances shall Purchaser have any liability for any utility
charges relating to any period prior to the Proration Date nor shall
Seller have any liability for any utility charges relating to any
period from and after the Proration Date. Purchaser shall arrange with
such companies to have accounts open in Purchaser's name, to the extent
appropriate, beginning on the Proration Date.
Leasing Costs. Any and all leasing commissions,
tenant improvement costs, assumed lease liabilities, "free rent", or
other concessions or inducements (collectively, "TENANT TI AND
PROCUREMENT COSTS" incurred or assumed in connection with any new lease
or any amendment, modification, supplement, termination or extension of
an existing Lease which is executed after the date of this Agreement
shall be borne by Purchaser. Any Tenant TI and Procurement Costs
incurred or assumed in connection with any Lease or any amendment,
modification, supplement, termination or extension of an existing Lease
which is executed prior to the date of this Agreement shall be borne by
Seller. Subject to Section 7(a)(x) above, Purchaser shall be
responsible for any leasing commissions which may become due as a
result of any renewal or extension of any Lease or any expansion of the
leased premises under any Lease which is entered into, or which results
from the exercise of a right, after the Closing.
NEC Tenant Improvement Allowance. Seller and
Purchaser acknowledge that pursuant to that certain Second Amendment to
Lease (the "NEC SECOND AMENDMENT"), dated June 20, 1996, between Seller
and NEC SYSTEMS LABORATORY, INC., a New York corporation ("NEC"), the
landlord under NEC's Lease is obligated to provide NEC with a "Tenant
Improvement Allowance" up to a maximum amount of Four Hundred Thirty
Thousand Nine Hundred Eighty Dollars ($430,980.00) (the "NEC TI
ALLOWANCE"). The NEC TI Allowance is to be paid by the landlord for
certain "Interior Improvement Costs" incurred for "Interior
Improvements" to NEC's "Leased Premises" (as those terms are defined in
the NEC Second Amendment) in accordance with that certain "Improvement
Agreement" attached as Exhibit A to the NEC Second Amendment. The
landlord is obligated to pay the NEC TI Allowance only for Interior
Improvement Costs which are incurred prior to
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December 31, 1996. In furtherance of, and without limiting the
provisions of, Section 14(h) above, Purchaser shall receive a credit at
the Closing equal to that portion of the NEC TI Allowance which has not
been paid as of the Closing by Seller as landlord under NEC's Lease
(the "NEC TI ALLOWANCE CREDIT"). As soon as practicable after December
31, 1996 (but in no event later than ten (10) days after completion of
the final accounting by Purchaser as landlord pursuant to Section 5C of
the Improvement Agreement attached as Exhibit A to the NEC Second
Amendment), Purchaser shall promptly remit to Seller in cash or cash
equivalent any portion of the NEC TI Allowance Credit which is not paid
by Purchaser following the Closing substantially in accordance with the
NEC Second Amendment (but in any event, any portion of the NEC TI
Allowance Credit which is not actually paid out (as opposed to merely
contracted for) before March 10, 1997 shall be remitted to Seller).
Purchaser agrees to use Seller's commercially reasonable efforts to
complete such final accounting as soon as possible after December 31,
1996. Purchaser agrees that following the Closing Seller and Seller's
agents and representatives may, upon reasonable notice and during
reasonable business hours, inspect and audit Purchaser's books and
records (and any Property Records) relating to NEC TI Allowance, and
such books and records (and Property Records) will be made available at
the Property or Purchaser's principal office for review, copying and
audit at Seller's expense. Except to the extent disclosure is permitted
by Section 22.17 below, all such books and records (and Property
Records) and the results of any such inspection and audit shall be kept
strictly confidential as provided in Section 22.17 below.
Final Closing Adjustment. No later than six (6)
months after the Closing, Buyer and Seller shall make a final
adjustment to the prorations made pursuant to this Section 14 (the
"FINAL CLOSING ADJUSTMENT"). The Final Closing Adjustment shall be made
as set forth below in this Section 14(j):
General. Payment of any Base Rents, Operating Expense
Reimbursements and other Rentals which are delinquent as of the
Proration Date and collected by Purchaser after the Proration Date,
shall be made by Purchaser to Seller, net of Purchaser's out-of-pocket
costs of collection, when and as collected and as soon as practicable
following receipt. Payment of any refund of the NEC TI Allowance Credit
which is due Seller shall be made by Purchaser to Seller as soon as
practicable following the Closing. All other adjustments or prorations
which were incorrectly made or only estimated at the Closing or which
could not be calculated based upon the actual numbers as of the Closing
due to the lack of actual statements, bills or invoices for the current
period, the year-end adjustment of Operating
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Expense Reimbursements or any other reason shall be determined at the
Final Closing Adjustment. Any net adjustment in favor of Purchaser
shall be paid in cash or cash equivalent by Seller to Purchaser no
later than twenty (20) days after the Final Closing Adjustment and any
net adjustment in favor of Seller shall be paid in cash or cash
equivalent by Purchaser to Seller no later than twenty (20) days after
the Final Closing Adjustment.
Operating Expense Reimbursements Adjustment. The
actual amount of Operating Expense Reimbursements paid by each tenant
for the annual period in which the Proration Date occurs (as
distinguished from the estimated amounts prorated as of the Proration
Date pursuant to Section 14(c)(ii) above) shall be separately prorated
between Purchaser and Seller at the Final Closing Adjustment as
follows: (A) if Seller collected or received a credit at Closing for
Operating Expense Reimbursements in excess of amounts owed by tenants
for such items for the period prior to the Closing Date, then there
shall be an adjustment and credit given to Purchaser for such excess
amounts collected and Purchaser shall apply all such excess amounts to
the charges owed by Purchaser for such items for the period after the
Closing Date and, if required by the Leases, shall rebate or credit
tenants with any remainder; and (B) if the amount collected (or
credited to Seller at Closing) during Seller's ownership period was
less than the amount actually paid by Seller on account of such items,
and additional Operating Expense Reimbursements on account of such
items actually paid by Seller are collected by Purchaser after the
Closing, Purchaser shall promptly pay to Seller the Seller's
proportionate share of such amounts actually collected by Purchaser.
Purchaser shall use responsible efforts consistent with Purchaser's
normal operational practices to collect such amounts from tenants of
the Property (but without any obligation to institute legal
proceedings); provided, that if Purchaser is unable to collect any such
Operating Expense Reimbursements which are payable to Seller within one
(1) year after the Closing, then, upon written request of Seller,
Purchaser shall assign to Seller's right to collect such sums and
Seller shall have the right to the institute proceedings to collect
such sums.
No Further Adjustments. Except for any items of
Operating Expense Reimbursements which may be contested by tenants and
any refund of the NEC TI Allowance which may not as yet have been
determined, the Final Closing Adjustment shall be conclusive and
binding upon Purchaser and Seller, and Purchaser and Seller hereby
waive any right to contest after the Final Closing Adjustment any
prorations, apportionments or adjustments to be made pursuant to this
Section 14. The provisions of this Section 14 shall survive the
Closing.
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CLOSING.
The purchase and sale contemplated herein shall close (the
"CLOSING") on November 26, 1996, or on such earlier date and time expressly and
specifically agreed to by both Purchaser and Seller (the "CLOSING DATE"). In
furtherance of, and not in limitation of, the provisions of Section 21.4 below,
Purchaser and Seller expressly agree that time is of the essence as to said
Closing Date. For purposes of calculating time periods under this Agreement, the
"Closing" shall be deemed to have occurred on the date and time that the Grant
Deed is recorded in the Official Records of Santa Clara County, California (the
"OFFICIAL RECORDS").
CLOSING COSTS.
Purchaser shall pay (a) any documentary transfer tax due in
connection with the consummation of the transaction contemplated herein, (b) any
costs of obtaining the Title Documents (including the cost of the Survey), (c)
the entire premium for the Title Policy (including the cost of any endorsements
requested by Purchaser pursuant to Section 9(a)(iv) above), (d) the Escrow
Holder's fees and expenses, (e) all document recording fees and charges, and (f)
all other Escrow and closing costs. Each party shall bear the expense of its own
counsel. The provisions of this Section 16 shall survive the Closing.
RISK OF LOSS.
Material Damage. If prior to the Closing, the
Improvements, or any part thereof, are materially damaged (as defined in Section
17(d) below), Purchaser shall have the right, exercisable by giving notice to
Seller within ten (10) business days after receiving written notice of such
damage (and, if necessary, the Closing shall be extended by the number of days
necessary to give Purchaser such a ten (10) business day period), either (i) to
terminate this Agreement, in which case neither party shall have any further
rights or obligations hereunder (except as may be expressly provided to the
contrary elsewhere in this Agreement), any money (including, without limitation,
the Deposit and all interest accrued thereon) or documents in Escrow shall be
returned to the party depositing the same, Purchaser and Seller shall each be
responsible for one-half (1/2) of any title or Escrow cancellation fee, and
Purchaser's obligation to restore the Property under Section 5(b), Purchaser's
indemnification obligations under Section 5(d), Purchaser's confidentiality
obligations set forth in Section 6 and Purchaser's obligations to furnish
evidence of termination under Section 22.16 shall survive such termination, or
(ii) to accept the Property in its then condition and to proceed with the
Closing without any abatement or reduction in the Purchase Price (other than a
credit equal to the amount of the deductible under Seller's insurance policies)
and receive an assignment of all of Seller's right to any insurance
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proceeds payable by reason of such damage or destruction. If Purchaser elects to
proceed under clause (ii) above, Seller shall not compromise, settle or adjust
any claims to such proceeds without Purchaser's prior written consent.
Material Taking. If prior to the Closing, all or any
material portion (as defined in Section 17(d) below) of the Property is subject
to a taking by public authority, Purchaser shall have the right, exercisable by
giving notice to Seller within ten (10) business days after receiving written
notice of such taking (and, if necessary, the Closing shall be extended by the
number of days necessary to give Purchaser such a ten (10) business day period),
either (i) to terminate this Agreement, in which case neither party shall have
any further rights or obligations hereunder (except as may be expressly provided
to the contrary elsewhere in this Agreement), any money (including, without
limitation, the Deposit and all interest accrued thereon) or documents in Escrow
shall be returned to the party depositing the same, Purchaser and Seller shall
each be responsible for one-half (1/2) of any title or Escrow cancellation fee,
and Purchaser's obligation to restore the Property under Section 5(b),
Purchaser's indemnification obligations under Section 5(d), Purchaser's
confidentiality obligations set forth in Section 6 and Purchaser's obligations
to furnish evidence of termination under Section 22.16 shall survive such
termination, or (ii) to accept the Property in its then condition, without any
abatement or reduction in the Purchase Price, and receive an assignment of all
of Seller's rights to any condemnation award payable by reason of such taking.
If Purchaser elects to proceed under clause (ii) above, Seller shall not
compromise, settle or adjust any claims to such award without Purchaser's prior
written consent. As used in this Section 17, "TAKING" shall mean any transfer
of the Property or any portion thereof to a governmental entity or other party
with appropriate authority, by exercise of the power of eminent domain.
Non-Material Damage or Taking. In the event that
prior to the Closing, any non-material portion of the Property is damaged or
subject to a taking, Purchaser shall accept the Property in its then condition
and proceed with the Closing without any abatement or reduction in the Purchase
Price (other than a credit equal to the amount of any deductible under Seller's
insurance policies, if the event was damage to the Improvements rather than a
taking) and, Purchaser shall be entitled to an assignment of all of Seller's
rights to any insurance proceeds or any award in connection with such taking, as
the case may be. In the event of any such non-material damage or taking, Seller
shall not compromise, settle or adjust any claims to such insurance proceeds or
such condemnation award, as the case may be, without Purchaser's prior written
consent.
Definition of Material. For the purpose of this
Section 17, damage to the Property or a taking of a portion thereof shall be
deemed to involve a material portion thereof if (i) more than five percent (5%)
of the gross leasable
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area of the Improvements is damaged or taken, or (ii) the Improvements cannot be
repaired or restored within one hundred twenty (120) days after the occurrence
of the damage or taking, or (iii) the cost to repair or replace the damage to
the Improvements exceeds One Million Five Hundred Thousand Dollars
($1,500,000.00), or (iv) the available parking is reduced such that the parking
ratio violates applicable law or the requirements of any existing Leases, or (v)
existing access to the Real Property is materially and permanently diminished,
or (vi) any tenant is entitled to terminate such tenant's Lease by reason of
such damage or taking, or (vii) the taking or threatened taking would cause the
Real Property to be in violation of existing zoning or other land-use laws and
regulations (even if the Real Property would be a legal non-conforming use
thereunder).
Notice of Damage or Taking. Seller agrees to give
Purchaser notice of any taking, damage or destruction of the Property promptly
after Seller obtains knowledge thereof.
DEFAULT.
SELLER'S DEFAULT PRIOR TO CLOSING. IN THE EVENT THE
CLOSING FAILS TO OCCUR DUE TO A SELLER DEFAULT BY SELLER IN SELLER'S OBLIGATIONS
UNDER THIS AGREEMENT, PURCHASER SHALL BE ENTITLED TO BRING AN ACTION AGAINST
SELLER FOR PURCHASER'S ACTUAL GENERAL AND COMPENSATORY DAMAGES (AND NOT ANY
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES) SUFFERED BY PURCHASER BY REASON OF
SUCH DEFAULT. SAID ACTION FOR PURCHASER'S ACTUAL GENERAL AND COMPENSATORY
DAMAGES SHALL BE PURCHASER'S SOLE REMEDY FOR SUCH DEFAULT BY SELLER AND
PURCHASER SHALL NOT HAVE THE RIGHT TO RECEIVE ANY EQUITABLE RELIEF, INCLUDING,
WITHOUT LIMITATION, THE RIGHT TO RECORD A LIS PENDENS AGAINST THE PROPERTY UNDER
APPLICABLE LAW, OR TO PURSUE THE SPECIFIC PERFORMANCE OF THIS AGREEMENT, EXCEPT
IN THE EVENT OF A DELIBERATE, WILFUL AND MATERIAL DEFAULT BY SELLER OF SELLER'S
OBLIGATIONS HEREUNDER, IN WHICH EVENT OF A DELIBERATE, WILFUL AND MATERIAL
DEFAULT BY SELLER PURCHASER SHALL BE ENTITLED TO PURSUE THE SPECIFIC PERFORMANCE
OF THIS AGREEMENT. WITHOUT LIMITATION ON THE FOREGOING, PURCHASER HEREBY WAIVES
ANY RIGHT PURCHASER MIGHT OTHERWISE HAVE, WHETHER NOW OR IN THE FUTURE, TO
PURSUE (1) ANY EQUITABLE REMEDY AGAINST SELLER (INCLUDING AN ACTION FOR SPECIFIC
PERFORMANCE EXCEPT IN THE EVENT OF A WILFUL, DELIBERATE AND MATERIAL DEFAULT BY
SELLER), AND (2) ANY AND ALL CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES AGAINST
SELLER AND PURCHASER HEREBY RELEASES SELLER FROM ANY AND ALL LIABILITY FOR
SPECIFIC PERFORMANCE (EXCEPT IN THE EVENT OF A WILFUL, DELIBERATE AND MATERIAL
DEFAULT BY SELLER), CONSEQUENTIAL
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DAMAGES, SPECIAL DAMAGES, OR PUNITIVE DAMAGES ARISING FROM, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT.
PURCHASER'S DEFAULT PRIOR TO CLOSING. IF PURCHASER
FAILS TO CLOSE THE PURCHASE OF THE PROPERTY BY REASON OF A DEFAULT BY PURCHASER
HEREUNDER, THE DEPOSIT, PLUS ANY INTEREST ACCRUED THEREON, SHALL BE PAID TO AND
RETAINED BY SELLER AS LIQUIDATED DAMAGES. THE AMOUNT PAID TO AND RETAINED BY
SELLER AS LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE REMEDY IN THE EVENT OF
PURCHASER'S FAILURE TO CLOSE THE PURCHASE OF THE PROPERTY, ALL OTHER REMEDIES AT
LAW OR IN EQUITY BEING EXPRESSLY WAIVED BY SELLER. THE PARTIES HERETO EXPRESSLY
AGREE AND ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY
PURCHASER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND THAT
THE AMOUNT OF THE DEPOSIT PLUS ANY INTEREST ACCRUED THEREON REPRE SENTS THE
PARTIES' REASONABLE ESTIMATE OF SUCH DAMAGES. THE PAYMENT OF SUCH AMOUNT AS
LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING
OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671,
1676 AND 1677. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
SECTION 18(b), SELLER AND PURCHASER AGREE THAT THIS LIQUIDATED DAMAGES PROVISION
IS NOT INTENDED AND SHOULD NOT BE DEEMED OR CONSTRUED TO LIMIT IN ANY WAY
PURCHASER'S INDEMNITY OBLIGATIONS UNDER SECTION 5 AND SECTION 19 OR PURCHASER'S
RESTORATION OBLIGATIONS SET FORTH UNDER SECTION 5.
SELLER'S INITIALS: ___ PURCHASER'S INITIALS: ___
Default After Closing. If either Purchaser or Seller
breaches any of their respective covenants under this Agreement which survive
the Closing, and such breach is not cured within ten (10) days after written
notice from the other party, the non-defaulting party shall be entitled to
maintain an action for breach of the defaulting party's covenants under this
Agreement for damages, specific performance or any other relief available
hereunder, at law, in equity, or otherwise; provided, however, that any action
for damages shall be limited to recovering a party's actual general and
compensatory damages but not any consequential, special or punitive damages.
Minimum Amount Requirement for Damages.
Notwithstanding anything to the contrary contained herein, if the Closing is
consummated neither party shall have any liability to the other party following
the Closing with respect to any breaches of representations, warranties or
covenants hereunder unless and
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until the aggregate amount of the actual general and compensatory damages
suffered by the non-defaulting party by reason of any such breach of
representations, warranties or covenants (as opposed to compensatory damages for
due diligence costs, legal fees, and other costs and expenses incurred prior to
the Closing) exceeds the sum of Fifty Thousand Dollars ($50,000.00). Unless and
until the amount of the actual damages suffered or incurred by the
non-defaulting party by reason of any such breach of representations, warranties
or covenants (as opposed to compensatory damages for due diligence costs, legal
fees and other costs and expenses incurred prior to Closing) exceeds in the
aggregate the sum of Fifty Thousand Dollars ($50,000.00), the non-defaulting
party shall not be entitled to file an action or lawsuit or undertake any other
legal proceeding against the defaulting party by reason of such breach of
representations, warranties or covenants.
BROKER'S COMMISSION.
Purchaser and Seller each represents and warrants to the other
that no broker or finder has been engaged by either of them with respect to the
transaction contemplated hereby other than Cornish & Carey Commercial
("BROKER"), whose commission shall be paid by Seller upon the Closing pursuant
to a separate agreement between Seller and Broker. Purchaser hereby agrees to
indemnify, defend, and hold Seller harmless from and against any losses,
damages, costs and expenses (including, but not limited to, attorneys' fees and
costs) incurred by Seller by reason of any claims for a brokerage commission or
finder's fee with respect to the transaction contemplated by this Agreement
which are asserted by any person or party purporting to act or to have acted on
behalf of Purchaser. Seller hereby agrees to indemnify, defend, and hold
Purchaser harmless from and against any losses, damages, costs and expenses
(including, but not limited to, attorneys' fees and costs) incurred by Purchaser
by reason of any claims for a brokerage commission or finder's fee with respect
to the transaction contemplated by this Agreement made by Broker or which are
asserted by any person or party purporting to act or to have acted on behalf of
Seller. The provisions of this Section 19 shall survive the Closing.
ESCROW.
INSTRUCTIONS. Immediately upon execution of this
Agreement by Purchaser and Seller, an original of this Agreement executed by
Seller and Purchaser shall be deposited with Escrow Holder, and the Escrow will
be opened as of the date that this Agreement is so deposited with Escrow Holder
(the "OPENING OF ESCROW"). This Agreement, together with such further
instructions as the parties shall provide to Escrow Holder by written agreement
(including, without limitation, Escrow Holder's general provisions in the
modified form set forth in
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Exhibit J attached hereto), shall constitute the Escrow instructions. If any
requirements relating to the duties or obligations of Escrow Holder hereunder
are not acceptable to Escrow Holder, or if Escrow Holder requires additional
instructions, Purchaser and Seller agree to make such deletions, substitutions
and additions hereto and to execute any reasonably separate or additional Escrow
instructions (including the general instructions in the modified form attached
hereto as Exhibit J) required by Escrow Holder as counsel for Purchaser and
Seller shall mutually approve, which additional instructions shall not
substantially alter the terms of this Agreement unless otherwise expressly
agreed to by Seller and Purchaser. In the event of any conflict or inconsistency
between the terms of any such Escrow instructions and the terms of this
Agreement, the terms and provisions of this Agreement shall govern and prevail,
unless the terms and provisions of the additional instructions clearly state
that they amend and supersede the terms of this Agreement. Purchaser and Seller
also authorize their respective attorneys to execute and deliver to Escrow
Holder any supplementary instructions as may be necessary or convenient to close
the transaction contemplated hereby; provided, such supplementary instructions
shall be consistent with and merely supplement this Agreement and shall not in
any way modify, amend or supersede this Agreement. Escrow Holder shall execute
this Agreement below in order to evidence Escrow Holder's receipt of the same
and Escrow Holder's agreement to act as "escrow holder" in accordance with the
terms and provisions hereof.
DEPOSITS INTO ESCROW. Seller shall make Seller's
deposits into Escrow in accordance with Section 11. Purchaser shall make
Purchaser's deposits into Escrow in accordance with Section 12. Escrow Holder is
hereby authorized to close the Escrow only if and when: (i) Escrow Holder has
received all items to be delivered by Seller and Purchaser pursuant to Section
11 and Section 12, respectively, (ii) Escrow Holder is prepared to immediately
disburse the proceeds of the Purchase Price due to Seller by federal wire
transfer of immediately available funds in accordance with the separate
disbursement instructions from Seller; and (iii) the Title Company has
irrevocably committed to issue the Title Policy to Purchaser upon the Closing.
ESCROW HOLDER'S CLOSING DISBURSEMENTS. Upon the
Closing, Escrow Holder shall:
DELIVERIES TO PURCHASER. Deliver to Purchaser: (i)
the Grant Deed by causing the Grant Deed to be recorded in the Official
Records and immediately upon recording delivering to Purchaser and to
Seller a conformed copy of the Grant Deed as recorded; (ii) the Bill of
Sale; (iii) the Certificate of Non-Foreign Status and California Form
590; (iv) the General Assignment executed in counterpart by Seller; and
(v) the Assignment of
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Leases executed by Seller.
DELIVERIES TO SELLER. Deliver to Seller: (i) the
Purchase Price, after satisfying the Closing costs, prorations and
adjustments pursuant to Section 14 and Section 16, respectively, (ii) a
conformed copy of the Grant Deed as recorded; (iii) a copy of the Bill
of Sale; (iv) a copy of the Certificate of Non-Foreign Status and
California Form 590; (v) the copy of the General Assignment executed in
counterpart by Purchaser; and (vi) the copy of the Assignment of Leases
executed in counterpart by Purchaser.
TITLE POLICY. Deliver the Title Policy issued by
Title Company to Purchaser.
REAL ESTATE REPORTING PERSON. Escrow Holder is
hereby designated the "real estate reporting person" for purposes of section
6045 of Title 26 of the United States Code and Treasury Regulation 1.6045-4 and
any instructions or settlement statement prepared by Escrow Holder shall so
provide. Upon the consummation of the transaction contemplated by this
Agreement, Escrow Holder shall file a Form 1099 information return and send the
statement to Seller as required under the aforementioned statute and regulation.
INDEMNIFICATION.
INDEMNIFICATION BY PURCHASER. Except as otherwise
expressly provided herein, Purchaser shall hold harmless, indemnify and
defend Seller from and against: (i) any and all third party claims for
Purchaser's torts or breaches of contract related to the Property first
arising and accruing on or after the Closing Date; and (ii) all costs
and expenses, including reasonable attorneys' fees, incurred by Seller
as a result of the foregoing.
INDEMNIFICATION BY SELLER. Except as otherwise
expressly provided herein, Seller shall hold harmless, indemnify and
defend Purchaser from and against: (i) any and all third party claims
for Seller's torts or breaches of contract related to the Property
arising and accruing prior to the Closing Date; and (ii) all costs and
expenses, including reasonable attorneys' fees, incurred by Purchaser
as a result of such claims. The foregoing indemnity shall not cover any
matters relating to title to the Property (Purchaser relying on the
coverage provided by the Title Policy as to such matters.)
GENERALLY. Each indemnification under this Agreement
shall be subject to the following provisions: The indemnitee shall
notify the indemnitor of any such claim against the indemnitee within
thirty (30) days
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after the indemnitee has notice of such claim, but failure to notify
the indemnitor shall in no case prejudice the rights of the indemnitee
under this Agreement unless the indemnitor shall be prejudiced by such
failure and then only to the extent of such prejudice. Should the
indemnitor fail to discharge or undertake to defend the indemnitee
against such liability within ten (10) days after the indemnitee gives
the indemnitor written notice of the same, then the indemnitee may
settle such liability, and the indemnitor's liability to the indemnitee
shall be conclusively established by such settlement, the amount of
such liability to include both the settlement consideration and the
reasonable costs and expenses, including attorneys' fees, incurred by
the indemnitee in effecting such settlement. The provisions of Section
22 shall survive the Closing hereunder.
MISCELLANEOUS.
AUTHORITY. Each individual and entity executing this
Agreement hereby represents and warrants that he, she or it has the capacity set
forth on the signature pages hereof with full power and authority to bind the
party on whose behalf he, she or it is executing this Agreement to the terms
hereof.
ENTIRE AGREEMENT. This Agreement is the entire
Agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, whether oral or written,
between the parties with respect to the matters contained in this Agreement
(including, without limitation, that certain Letter of Intent dated October 4,
1996 but excluding the Confidentiality Agreement and the Inspection Agreement
referred to in Section 6 above). Any waiver, modification, consent or
acquiescence with respect to any provision of this Agreement shall be set forth
in writing and duly executed by or in behalf of the party to be bound thereby.
No waiver by any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which when taken together shall constitute one and the same instrument. The
signature page of any counterpart may be detached therefrom without impairing
the legal effect of the signature(s) thereon provided such signature page is
attached to any other counterpart identical thereto except having additional
signature pages executed by other parties to this Agreement attached thereto.
TIME OF ESSENCE. Time is of the essence in the
performance of and compliance with each of the provisions and conditions of this
Agreement.
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NOTICES. Any communication, notice or demand of any kind whatsoever
which either party may be required or may desire to give to or serve upon the
other shall be in writing and delivered by personal service (including express
or courier service), by telecopy (which telecopy notice shall be effective upon
confirmed transmission but shall be confirmed in writing sent the same day by
registered or certified mail, postage prepaid, return receipt requested), or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
<TABLE>
<S> <C>
Seller: Knickerbocker Properties, Inc. I
c/o O'Connor Realty Advisors Incorporated
399 Park Avenue
New York, New York 10022
Attention: Scott M. MacDonald
Telephone: (212) 308-7700
Telecopy: (212) 308-7881
With a copy to: Graham & James LLP
801 South Figueroa Street
14th Floor
Los Angeles, California 90017-5554
Attention: Thomas J. Masenga, Esq.
Telephone: (213) 624-2500
Telecopy: (213) 623-4581
Seller: CarrAmerica Realty Corporation
1700 Pennsylvania Avenue, NW
Washington, DC 20006
Attention: Joseph Wallace
Telephone: (202) 624-7500
Telecopy: (202) 638-0102
With a copy to: Mayer Brown & Platt
141 East Palace Avenue
Santa Fe, New Mexico 87501
Attention: George Ruhlen, Esq.
Telephone: (505) 820-8180
Telecopy: (505) 820-7334
Title Company/
Escrow Holder: Chicago Title Company
110 West Taylor Street
San Jose, California 95110
</TABLE>
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<PAGE> 43
Attention: Sharmon McKenna
Telephone: (408) 292-4212
Telecopy: (408) 282-1404
Any party may change its address for notice by written notice given to the other
in the manner provided in this Section 22.5. Any such communication, notice or
demand shall be deemed to have been duly given or served on the date personally
served, if by personal service, on the date of confirmed dispatch, if by
electronic communication, or three (3) days after being placed in the U.S. Mail,
if mailed.
FURTHER ACTIONS. The parties agree to execute such
instructions to Escrow Holder and such other instruments and to do such further
acts as may be reasonably necessary to carry out the provisions of this
Agreement.
NO OTHER INDUCEMENTS. The making, execution and
delivery of this Agreement by the parties hereto has been induced by no
representations, statements, warranties or agreements other than those expressly
set forth herein.
SEVERABILITY. Wherever possible, each provision of
this Agreement shall be interpreted in such a manner as to be valid under
applicable law, but, if any provision of this Agreement shall be invalid or
prohibited thereunder, such invalidity or prohibition shall be construed as if
such invalid or prohibited provision had not been inserted herein and shall not
affect the remainder of such provision or the remaining provisions of this
Agreement.
INTERPRETATION. The language in all parts of this Agreement
shall be in all cases construed simply according to its fair meaning and not
strictly for or against any of the parties hereto. Section headings of this
Agreement are solely for convenience of reference and shall not govern the
interpretation of any of the provisions of this Agreement. References to
"Sections" are to Sections of this Agreement, unless otherwise specifically
provided.
GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
ATTORNEYS' FEES. If any action is brought by either party
against the other party, relating to or arising out of this Agreement, the
transaction described herein or the enforcement hereof, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees,
costs and expenses incurred in connection with the prosecution or defense of
such action. For purposes of this Agreement, the term "ATTORNEYS' FEES" or
"ATTORNEYS' FEES AND COSTS" shall mean the fees and expenses of counsel to the
parties hereto, which may include printing, photostating, duplicating and other
expenses, air freight charges, and fees billed for
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law clerks, paralegals and other persons not admitted to the bar but performing
services under the supervision of an attorney, and the costs and fees incurred
in connection with the enforcement or collection of any judgment obtained in
any such proceeding. The provisions of this Section 22.11 shall survive the
entry of any judgment, and shall not merge, or be deemed to have merged, into
any judgment.
ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of each of the parties hereto and to their respective
transferees, successors, and assigns who are Affiliates. Neither this Agreement
nor any of the rights or obligations of Seller or Purchaser hereunder shall be
transferred or assigned by Seller or Purchaser without the prior written consent
of the non- assigning party; provided, however, Purchaser shall be entitled to
assign this Agreement to an Affiliate of Purchaser without Seller's prior
written consent, so long as (a) Purchaser gives Seller written notice of such
assignment no later than three (3) business days prior to the Closing, (b) no
such assignment by Purchaser to an Affiliate shall relieve Purchaser of any of
its obligations hereunder, and (c) such assignee Affiliate expressly assumes in
writing Purchaser's obligations hereunder for the benefit of Seller. For
purposes of this Agreement, an "Affiliate" means (i) an entity that directly or
indirectly controls, is controlled by or under common control with Purchaser or
Seller, as the case may be, or (ii) an entity at least a majority of whose
economic interest is owned by Purchaser or Seller, as the case may be; and the
term "control" means the power to direct the management of such entity through
voting rights, ownership or contractual obligations.
EXHIBITS. Exhibits A through J, inclusive, are incorporated
herein by reference.
NO PARTNERSHIP. Notwithstanding anything to the contrary
contained herein, this Agreement shall not be deemed or construed to make the
parties hereto partners or joint venturers, or to render either party liable for
any of the debts or obligations of the other, it being the intention of the
parties to merely create the relationship of Seller and Purchaser with respect
to the Property to be conveyed as contemplated hereby.
RECORDING. This Agreement shall not be recorded or filed in
the public land or other public records of any jurisdiction by either party and
any attempt to do so may be treated by the other party as a material breach of
this Agreement.
EVIDENCE OF TERMINATION. In the event this Agreement
terminates for any reason other than a default by Seller, Purchaser agrees to
promptly furnish to Seller a written instrument in recordable form or such other
evidence of the
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termination of this Agreement as may be reasonably requested by Seller, any
title company or any prospective buyer, tenant or lender for all or any part of
the Property.
CONFIDENTIALITY. Prior to the Closing or if the Closing does
not occur, all information provided by Seller to Purchaser in connection with
the Property shall be kept strictly confidential and shall not, without the
specific prior consent of Seller, be disclosed by Purchaser or used for any
purpose other than evaluating the Property. Purchaser agrees that such
information shall only be transmitted to Purchaser's officers, directors,
trustees, employees, attorneys, accountants, contractors, consultants, advisors
and agents who need to know such information for purposes of evaluating the
Property and who agree to be bound by these confidentiality provisions, and
Purchaser agrees that in the event Purchaser terminates this Agreement,
Purchaser shall return all such information to Seller. The provisions of this
Section 22.17 shall not apply to any information which is a matter of public
record or obtainable from other sources (without violating any confidentiality
obligation) and shall not prevent either party from complying with applicable
laws, rules, regulations and court orders, including, without limitation,
governmental regulatory, disclosure, tax and reporting requirements. Between the
date of this Agreement and the first (1st) anniversary of the Closing Date,
neither party shall release or cause or permit to be released any press notices
or advertising promotion or other publicity relating to this transaction without
first giving reasonable notice to, and consulting with, the other party and, as
required herein, obtaining the written consent of the other party. From and
after the first (1st) anniversary of the Closing, no press notice or advertising
promotion or other publicity released or caused or permitted to be released by
either party shall identify the other party or any of such other party's
Affiliates without the specific prior written consent of such other party. No
provision in this Section 22.17 shall preclude a party from discussing the
substance or any relevant details of such transactions with any of its
attorneys, accountants, professional consultants, lenders, partners, affiliates,
investors, or any prospective lender, partner or investor, as the case may be,
or prevent a party hereto, from complying with laws, rules, regulations and
court orders, including without limitation, governmental regulatory, disclosure,
tax and reporting requirements and stock exchange rules or making an
announcement or making any communication to its shareholders in accordance with
its corporate policy. The provisions of this Section 22.17 shall survive the
Closing.
THIRD PARTIES. Seller and Purchaser agree that it is their
specific intent that no broker shall be a party to or a third party beneficiary
of this Agreement or the Escrow; and further that the consent of a broker shall
not be necessary to any agreement, amendment, or document with respect to the
transaction contemplated by this Agreement.
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NEXT BUSINESS DAY. In the event that any of the dates
specified in this Agreement shall fall on a Saturday, a Sunday, or a holiday,
then the date of such action shall be deemed to be extended to the next business
day.
SURVIVAL. Except as expressly provided in this Agreement,
the representations, warranties and covenants set forth in this Agreement shall
not survive the Closing and shall be merged into the instruments and conveyances
delivered at the Closing.
SELLER COOPERATION FOLLOWING CLOSING. Seller shall,
for a period of six (6) months following the Closing and without cost to Seller,
cooperate with Purchaser's designated independent auditor ("PURCHASER'S
AUDITOR") and provide Purchaser's Auditor with reasonable access to the books
and records maintained by Seller with respect to the Property and any reasonably
related information relating solely to the Property, so as to enable Purchaser
to prepare such audited financial statements with respect to the Property for
the year in which the Closing occurs as may be required of Purchaser pursuant to
the regulations of the Securities and Exchange Commission. Such reasonable
cooperation and assistance shall include directing the accounting firm
("SELLER'S ACCOUNTING FIRM") which audited any books and records of Seller and
prepared any audited financial statements or reports for Seller to provide any
reasonable assistance requested by Purchaser (at no cost to Seller or such
Seller's Accounting Firm). Nothing contained in this Section 22.21 shall
obligate or require Seller to provide Purchaser or Purchaser's Auditor access to
any legally privileged information, Seller's listing proposals, Seller's
organizational documents, Seller's internal appraisals and analyses, Seller's
economic evaluations of the Property or the sale thereof, or Seller's accounting
and other records prepared for financial reports addressed to Seller's
shareholder with respect to the Property.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SELLER: KNICKERBOCKER PROPERTIES, INC. I,
a Delaware corporation
By: /s/ Scott McDonald
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Its:
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PURHCHASER: CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Joseph D. Wallace
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Its:
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The undersigned hereby acknowledges receipt of this Agreement and agrees to act
as Escrow Holder hereunder in accordance with the terms hereof.
CHICAGO TITLE COMPANY,
a California corporation
By:/s/ Sharon Yarber
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Its:
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Date: , 1996
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46
