SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) MARCH 31, 1997
CHELSEA GCA REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-12328 22-3251332
(State or other jurisdiction (Commission File (IRS Employer ID Number)
of incorporation) Number)
103 Eisenhower Parkway, Roseland, New Jersey 07068
(Address of principal executive offices) (Zip Code)
Registrat's Telephone Number, (201) 228-6111
including area code:
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
Pursuant to a Subscription Agreement dated as of March 31, 1997 (the
"Agreement"), by and among Chelsea GCA Realty Partnership, L.P. ("Chelsea"), WCC
Associates and KM Halawa Partners ("Halawa"), Chelsea acquired from Halawa,
Waikele Factory Outlet Stores, a manufacturers outlet shopping center (the
"Property") located in Hawaii. The consideration paid by Chelsea consisted of
the assumption of $70,665,464 of indebtedness outstanding with respect to the
Property (which indebtedness was repaid in full by Chelsea immediately after the
closing) and the issuance to Halawa of special partnership units (the "Special
Units") in Chelsea having a fair market value (after giving effect to the
distribution described in the next sentence) of $500,000. Immediately after the
closing, Chelsea paid a special cash distribution of $5,034,536 on the Special
Units.
The cash used by Chelsea in the transaction was obtained by Chelsea
pursuant to the terms of its Amended and Restated Credit Agreement dated as of
January 27, 1997, with Chelsea's bank lenders. The bank lenders are The First
National Bank of Boston, Wells Fargo Bank, National Association, Keybank
National Association, First American Bank Texas, SSB and Tokai Bank of
California.
The consideration and all negotiations relating to the transaction
were on an arm's length basis. The Property will continue to be used by Chelsea
as a manufacturers outlet shopping center.
The foregoing description of the transaction is qualified in its
entirety by reference to the complete text of the Agreement which is filed as an
exhibit to this Report.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) The appropriate financial statements relating to
the Property are attached hereto.
(b) The appropriate pro forma financial information
giving effect to the acquisition of the Property is attached hereto.
(c) Exhibits
1 Subscription Agreement, dated
as of March 31, 1997, by and
among Chelsea, WCC
Associates and Halawa.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHELSEA GCA REALTY, INC.
By:/s/ Michael J. Clarke
Michael J. Clarke
Vice President
Dated: April 11, 1997
<PAGE>
Statement of Revenues and Certain
Expenses
Waikele Factory Outlet Stores
December 31, 1996
with Report of Independent Auditors
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Chelsea GCA Realty, Inc.
We have audited the combined statement of revenues and certain expenses of the
Waikele Factory Outlet Stores, as described in Note 1, for the year ended
December 31, 1996. The financial statement is the responsibility of management
of Waikele Factory Outlet Stores. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in Form 8-K of Chelsea GCA
Realty, Inc. and is not intended to be a complete presentation of Waikele
Factory Outlet Stores' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the combined revenues and certain expenses of Waikele
Factory Outlet Stores, as described in Note 1 for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
February 21, 1997
<PAGE>
Waikele Factory Outlet Stores
Combined Statement of Revenues and Certain Expenses
Year Ended December 31, 1996
(In thousands)
(Note 1)
Revenues: (Notes 2 and 5)
Base rentals $5,615
Percentage rentals 1,062
Expense reimbursements 1,550
Miscellaneous income 6
-----------
Total revenues 8,233
Certain Expenses:
Maintenance 469
Utilities 112
Insurance 119
Property taxes 333
General excise tax 325
Other operating expenses (Note 4) 353
------------
Total certain expenses 1,711
------------
Revenues in excess of certain expenses $6,522
============
See accompanying notes.
<PAGE>
Waikele Factory Outlet Stores
Notes to Combined Statement of Revenues and Certain Expenses
December 31, 1996
1. BASIS OF PRESENTATION
Presented herein is the statement of revenues and certain expenses related to
the operations of the outlet center property (Waikele Factory Outlet Stores)
located approximately 15 miles west of Honolulu, Hawaii, owned by WCC
Associates, ("WCC")
Waikele Factory Outlet Stores is not a legal entity but rather a portion of the
operations of certain real estate owned by WCC. The accompanying statement of
revenues and certain expenses includes the accounts of the outlet shopping
center.
The accompanying financial statements have been prepared in accordance with the
applicable rules and regulations of the Securities and Exchange Commission for
the acquisition of real estate properties. Accordingly, the financial statements
exclude certain expenses that may not be comparable to those expected to be
incurred by Chelsea GCA Realty Partnership, L.P. in the proposed future
operations of the aforementioned property. Items excluded consist of interest,
depreciation, management fees and certain general and administrative expenses.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. LEASE AND REVENUE RECOGNITION
The property is being leased to tenants under operating leases. Minimum rental
income is generally recognized on a straight-line basis over the term of the
lease. The excess of amounts so recognized over amounts due pursuant to the
underlying leases amounted to approximately $77,000 for the year ended December
31, 1996. The lease agreements generally contain provisions for reimbursement of
real estate taxes and operating expenses over base year rent amounts, as well as
fixed increases in rent.
<PAGE>
Waikele Factory Outlet Stores
Notes to Combined Statement of Revenues and Certain Expenses
(Continued)
3. MANAGEMENT AND LEASING AGREEMENTS
The property is managed and leased by DGM Group, Inc. ("DGM"), an affiliated
entity. DGM provides property management services to the Waikele Factory Outlet
Stores for a fee equal to 4.5% of Gross Rental Receipts, as defined, with a
minimum fee of $15,000 per month. DGM also provides leasing services for a fee
of $4.00, $2.00 or $2.00 per square foot leased to (i) replacement tenants, (ii)
renewals and extension of options or (iii) expansion of existing tenants in new
areas, respectively. The management and leasing contract will terminate upon the
sale of the property and, accordingly, the expenses associated therewith have
been omitted from this statement.
4. PROPERTY OPERATING EXPENSES
Property operating expenses for the year ended December 31, 1996 include
allocations for shared expenses from WCC for maintenance, utilities and other
operating expenses, including security, shuttle services and parking.
5. LEASE AGREEMENTS
Retail stores are leased under operating leases with expiration dates ranging
from 1997 to 2004. Most leases contain renewal options at the election of the
lessee. Future minimum lease receipts under non-cancelable operating leases as
of December 31, 1996 (exclusive of renewal option periods) were as follows (in
thousands):
1997 $ 5,877
1998 5,675
1999 4,676
2000 3,634
2001 1,967
Thereafter 2,413
-------------
$24,242
=============
No single tenant accounts for more than 10% of rental revenue.
<PAGE>
<TABLE>
<CAPTION>
CHELSEA GCA REALTY, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, IN THOUSANDS OF DOLLARS)
Chelsea Waikele Pro Pro
GCA Outlet forma forma
Adjust. Combined
------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Base rental................................ $56,390 $5,615 $62,005
Percentage rentals......................... 7,402 1,062 8,464
Expense reimbursements..................... 24,758 1,550 26,308
Other income............................... 2,806 6 2,812
--------------- ------------- --------------- --------------
TOTAL REVENUES............................... 91,356 8,233 99,589
EXPENSES:
Interest................................... 8,818 $5,506 (a) 14,324
Operating and maintenance 26,979 1,711 91 (b) 28,781
Depreciation and 18,965 1,896 (c) 20,861
amortization.................................
General and administrative 3,342 3,342
Other expenses............................. 1,892 1,892
--------------- ------------- ----------------- -------------
TOTAL EXPENSES............................... 59,996 1,711 7,493 69,200
Income before minority interest and
extraordinary item........................... 31,360 6,522 (7,493) 30,389
Minority interest............................ (9,899) 408 (d) (9,491)
---------------- ------------- ------------------ --------------
Income before extraordinary item............. 21,461 6,522 (7,085) 20,898
Extraordinary item-loss on
early extinguishment of debt, net of minority
interest of $295............................. (607) (607)
------------------ ------------- ------------------ -------------
NET INCOME................................... $20,854 $6,522 ($7,085) $20,291
================== ============= ================== =============
INCOME PER SHARE BEFORE EXTRAORDINARY ITEM $1.78 $1.73
Extraordinary item per share................ (0.05) (0.05)
------------------ -------------
NET INCOME PER SHARE......................... $1.73 $1.68
================== =============
WEIGHTED AVERAGE SHARES OUTSTANDING......... 12,062 12,062
================== =============
NOTES TO PRO FORMA COMBINING STATEMENT OF OPERATIONS:
a) Additional interest expense from $76.5 million of borrowings on the bank
credit for the Waikele Factory Outlets acquisition at an interest rate of
7.2%.
b) Additional operating expenses to be incurred at Waikele Factory Outlets.
c) Increased depreciation expense due to the Waikele Factory Outlets
acquisition
d) Adjustment to minority interest in net income.
</TABLE>
Exhbit 1
SUBSCRIPTION AGREEMENT
BY AND AMONG
WCC ASSOCIATES,
KM HALAWA PARTNERS
AND
CHELSEA GCA REALTY PARTNERSHIP, L.P.
DATED: AS OF MARCH 31, 1997
SUBSCRIPTION AGREEMENT
AGREEMENT dated as of March 31, 1997, by and among WCC Associates, a
Hawaii limited partnership ("WCC"), KM Halawa Partners, a Hawaii limited
partnership ("Halawa") (WCC and Halawa are collectively referred to herein as
the "Partnerships"), and Chelsea GCA Realty Partnership, L.P., a Delaware
limited partnership ("Chelsea").
W I T N E S S E T H:
WHEREAS, WCC is presently the owner of the Property (as herein
defined) commonly known as Waikele Outlet Stores;
WHEREAS, WCC has entered into an agreement with its partners which
provides for the conveyance of the Property to Halawa, one of its partners, in
redemption of Halawa's partnership interest in WCC;
WHEREAS, following such redemption, Halawa, in turn, desires to
subscribe for and acquire Chelsea's Special Units (as herein defined) and to
become a limited partner in Chelsea in exchange for its contribution of the
Property to Chelsea upon the terms and conditions set forth in this Agreement;
and
WHEREAS, WCC wishes to accommodate Halawa's desires and is willing to
enter into this Agreement to enable Chelsea to conduct its due diligence
inspection of the Property, to set forth the representations and warranties
concerning the Property upon which Chelsea will rely and to establish terms and
conditions under which Halawa will ultimately convey the Property to Chelsea.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration set forth herein, the
parties hereto agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
"Actions" mean any claims, actions, suits, proceedings or
investigations, whether at law, in equity or in admiralty or before any court,
arbitrator, arbitration panel or Governmental Authority.
"Affiliate" of a party means any Person which, directly or indirectly,
controls, is controlled by or is under common control with such party.
"Amended Limited Partnership Agreement" means the Agreement of Limited
Partnership of Chelsea as amended pursuant to the provisions of Section 8.8
hereof.
"Assets" means the Property and all the assets, properties, rights and
business related thereto of every kind and description, wherever located,
including, without limitation, all property, tangible or intangible, real,
personal or mixed, and whether or not reflected on the Balance Sheet.
"Balance Sheet" means the balance sheet of the Property at December
31, 1996 referred to in Section 6.3 hereof.
"Built-in-Gain Amount" means with respect to the Building the
difference between the initial Gross Asset Value (as such term is defined in
Section 1.1 of Chelsea's Amended Limited Partnership Agreement) and the tax
basis as set forth on SCHEDULE 3.1 hereto or on a similar schedule attached to
the Amended Limited Partnership Agreement.
"Business" means the factory outlet store business conducted at the
Property, including the kiosk program at the Property.
"Capital Account" has the meaning ascribed in the Amended Limited
Partnership Agreement.
"Closing" means the closing of the transactions contemplated hereby,
which shall take place at the offices of Goodsill Anderson Quinn & Stifel, Alii
Place, Suite 1800, 1099 Alakea Street, Honolulu, Hawaii, on the Closing Date at
10:00 A.M., or at such other time or place as the parties may agree upon in
writing
"Closing Date" means March 31, 1997 or such other date as the parties
may agree upon in writing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contracts" mean all contracts, agreements, indentures, licenses,
leases, commitments, plans, arrangements, and purchase orders of every kind,
whether written or oral.
"Court Order" means any judgment, decree, injunction, order, decision,
directive, regulation or ruling of any Governmental Authority that is binding on
any Person or its property under Law.
"Damages" mean losses, liabilities, costs, damages, claims and
expenses (including reasonable attorneys fees and disbursements).
"Default" means (i) a breach of or default under any Contract, (ii)
the occurrence of an event that with the passage of time or the giving of notice
or both would constitute a breach of or default under any Contract, or (iii) the
occurrence of an event that with or without the passage of time or the giving of
notice or both would give rise to a right of termination, renegotiation or
acceleration under any Contract.
"Development Agreement" means that certain Development Agreement and
Declaration of Development Covenants, Conditions and Restrictions, made as of
January 23, 1992 by and between Amfac Property Development Corp. and WCC, that
certain Amendment of Development Agreement and Declaration of Development
Covenants, Conditions and Restrictions dated December 24, 1992, and that certain
Memorandum of Development Agreement and Declaration of Development Covenants,
Conditions and Restrictions dated January 23, 1992.
"Environmental Complaint" means any complaint, order, directive,
claim, citation or notice by any Governmental Authority or any other Person of
legitimate standing and connection to the Property or Business with respect to
(i) air emissions, (ii) spills, releases or discharges to soils or any
improvements located thereon, surface water, ground water or the sewer, septic
system or waste treatment, storage or disposal systems servicing the Property,
(iii) noise emissions, (iv) solid or liquid waste disposal, (v) the use,
generation, storage, transportation or disposal of toxic or hazardous substances
or wastes or (vi) other environmental, health or safety matters affecting the
Property or the Business, including, without limitation, Environmental Laws.
"Environmental Laws" mean all federal, state and local environmental,
health and safety laws, codes and ordinances and all rules and regulations
promulgated thereunder, including, without limitation laws relating to
emissions, discharge, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, air, surface water, ground
water, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals, or industrial,
solid, toxic or hazardous substances or wastes. As used in this Agreement, the
term "Hazardous Substances or Wastes" includes, without limitation, (i) all
substances which are designated pursuant to Section 311(b)(2)(A) of the Federal
Water Pollution Control Act ("FWPCA"), 33 U.S.C. ss.1251 ET SEQ.; (ii) any
element, compound, mixture, solution, or substance which is designated pursuant
to Section 102 of the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 ET SEQ.; (iii) anY hazardous waste
having the characteristics which are identified under or listed pursuant to
Section 3001 of the Resource Conservation and Recovery Act ("RCRA"), ss.6901 ET
SEQ.; (iv) any toxic pollutant listed under Section 307(a) of the FWPCA; (v) any
hazardous air pollutant which is listed under Section 112 of the Clean Air Act,
42 U.S.C. ss.7401 ET SEQ.; (vi) any imminently hazardous chemical substance or
mixture with respect to which action has been taken pursuant to Section 7 of the
Toxic Substance Control Act, 15 U.S.C. ss.2601 ET SEQ.; and (vii) petroleum,
petroleum products, petroleum by-products, petroleum decomposition by-products,
and waste oil; (viii) "hazardous materials" within the meaning of the Hazardous
Materials Transportation Act, 49 U.S.C. ss. 1802 ET SEQ., (ix) any hazardous
substance or material identified or regulated by or under any applicable
provisions of the laws of the State of Hawaii; (x) asbestos or any asbestos
containing materials; (xi) any radioactive material or substance; (xii) all
toxic wastes, hazardous wastes and hazardous substances as defined by, used in,
controlled by or subject to all implementing regulations adopted and
publications promulgated pursuant to the foregoing statutes; and (xiii)any other
hazardous or toxic substance or pollutant identified in or regulated under any
other applicable federal, state or local Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Governmental Authority" means any agency, instrumentality,
department, commission, court, tribunal or board of any government, whether
foreign or domestic and whether national, federal, state, provincial or local.
"Laws" mean laws, statutes, rules, regulations, codes, orders,
ordinances, judgments, injunctions, decrees and policies.
"Liabilities" mean debts, liabilities, obligations, guarantees,
indemnities, duties and responsibilities of any kind and description, whether
absolute or contingent, monetary or non- monetary, direct or indirect, known or
unknown or matured or unmatured, or of any other nature.
"Licenses" means licenses, franchises, permits, certificates,
certificates of occupancy, easements, rights and other authorizations.
"Lien" means any security interest, lien, mortgage, claim, charge,
pledge, restriction, equitable interest, restrictive covenant or encumbrance of
any nature.
"Market Value" for a Special Unit means the average of the per share
closing prices of a share of Common Stock of Chelsea GCA Realty, Inc. on the New
York Stock Exchange for the ten consecutive trading days ending on the fifth
trading day prior to the Closing Date.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, limited liability entity, firm, partnership, or
other entity or government or Governmental Authority.
"Property" means all that certain real property known as the Waikele
Outlet Stores, located on the Island of Oahu, City and County of Honolulu, State
of Hawaii, and more particularly described in EXHIBIT A annexed hereto and made
a part hereof (the "Land"), together with all buildings and improvements located
on the Land (collectively, the "Building"), and all of the Partnerships' right,
title and interest in, to and under the following: (a) all easements, rights of
way, privileges, appurtenances, strips, gores and other rights pertaining to the
Premises (as hereinafter defined), if any, including, without limitation,
development rights, and all income therefrom (collectively, the "Appurtenances")
(which Land, Building and Appurtenances are hereinafter collectively referred to
as the "Premises"); (b) the fixtures, equipment, machinery, furniture,
furnishings, appliances, supplies and other items of personal property (and
replacements thereof), now owned or hereafter acquired by the Partnerships and
contained in or on, or used in connection with, the ownership, maintenance, use,
occupancy and operation of the Premises (collectively, the "Personalty"); (c)
all leases, subleases, lettings and licenses, and all amendments, modifications,
supplements, additions, extensions and renewals thereof and, except as expressly
provided herein, security and other deposits thereunder affecting the Premises
(collectively, "Tenant Leases"); (d) all reciprocal easement agreements,
development agreements, concession agreements, operating agreements, service
agreements, maintenance agreements, supply agreements, and any other contracts
and agreements affecting the Premises and all income therefrom (collectively,
"Operating Agreements"); (e) any and all plans and specifications for the
Building, warranties for the Building and Personalty, current surveys of the
Land and Building, current catalogs, current booklets, manuals, files, logs,
records, material correspondence with existing Tenants and other material
correspondence, current tenant lists, current tenant prospect lists and other
mailing lists, current sales brochures and material, current leasing brochures
and materials, current advertising materials and other items, including without
limitation, title information, soil, engineering and environmental inspections
in the possession of WCC, studies and reports, market studies, and similar
inspections with respect to the sale, management, leasing, promotion, ownership,
maintenance, use, occupancy and operation of the Premises in the possession of
WCC (collectively, the "Documents"); (f) any Licenses required or used in or
relating to the ownership, use, maintenance, occupancy or operation of any part
of the Premises; and (g) all of the Partnerships' right, title and interest in
and to the names Waikele Factory Outlet Stores and Waikele Factory Store (the
"Name") and any other right, title and interest, if any, in and to the foregoing
held by the Partnerships and the rights of the Partnerships in and to any
claims, counterclaims and litigations brought by the Partnerships (the "Residual
Rights").
"Proprietary Right" means any trade name, trademark, service mark,
patent or copyright and any application for any of the foregoing.
"Returns" mean all returns, declarations, reports, estimates,
information returns and statements required to be filed with or supplied to any
taxing authority in connection with any Taxes.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Units" means limited partnership units of Chelsea which are
identical to the existing limited partnership units of Chelsea with all rights,
benefits and privileges as are available to the holder thereof except that (a)
upon delivery to Halawa at the Closing such Special Units shall have an initial
aggregate Capital Account balance and an Agreed Value (as defined in the Amended
Limited Partnership Agreement) in Chelsea equal to the difference between $76.2
million and the amount of the Loans (as herein defined) on the Property being
assumed and repaid by Chelsea on the conveyance thereof as provided in Section
3.1(b) hereof, (b) after the Closing, the holders thereof in the aggregate shall
have the one time right, at such holders' sole option, to receive a debt
financed cash distribution (the "Distribution") from Chelsea which is intended
to qualify as a distribution under IRS Regs. ss.1.707-5(b) in an amount equal to
the difference between $75.7 million and the amount of the Loans on the Property
being assumed and repaid by Chelsea on the conveyance thereof as provided in
Section 3.1(b) hereof, (c) to the extent such election for Distribution is made,
then Chelsea shall finance the Distribution by borrowing such proceeds under a
specific loan arrangement under which the holders of Special Units are (i) to be
specially allocated any interest deduction attributable to such borrowing and a
corresponding amount of Chelsea's income and (ii) to either guarantee or
indemnify a prior guarantor of such loan on a last loss basis, (d) following
such Distribution, the Special Units shall have a Capital Account balance of
$500,000 and a Market Value of $500,000, (e) upon the occurrence of an event (a
"Recognition Event") which otherwise would result in an allocation of income or
gain to holders of Special Units under Section 704(c) of the Code in respect of
the Building assuming, whether or not it is in fact the case, that at the time
of such Recognition Event the Building's Gross Asset Value exceeds its tax
basis, there shall be specially allocated to the holders of Special Units under
Section 704(c) an aggregate amount of income or gain from the disposition of the
Building or other source equal to the Built-in Gain Amount, and (f) they will
not be exchangeable for REIT Shares (as defined in and provided for in Section
8.6 of the Amended Limited Partnership Agreement); provided, however, that at
any time following the second anniversary of the Closing Date the holders
thereof shall have the right to require Chelsea to repurchase all or any portion
of the Special Units for cash at their then Value (as defined in the Amended
Limited Partnership Agreement), all as provided for in the Amended Limited
Partnership Agreement. The character of any income or gain (as ordinary or
capital) recognized by Chelsea and allocated to holders of Special Units
pursuant to Section 704(c) shall be consistent with the character of income or
gain which would have been recognized by holders of Special Units had such
holders sold the Property on the Closing Date at the values set forth on
Schedule 3.1.
"Taxes" mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, excise, real and personal
property, sales, transfer, license, payroll and franchise taxes, imposed by any
Governmental Authority and shall include any interest, penalties or additions to
tax attributable to any of the foregoing.
"Title Company" means Title Guarantee of Hawaii, Inc., as agent.
SECTION 2. ACQUISITION OF PROPERTY.
2.1. ACQUISITION OF PROPERTY. Based upon and subject to the terms,
agreements, warranties, representations and conditions of this Agreement, Halawa
hereby agrees to contribute, convey, transfer, assign and deliver to Chelsea on
the Closing Date, and Chelsea hereby agrees to acquire and accept on the Closing
Date, the Property.
SECTION 3. CONSIDERATION FOR THE PROPERTY.
3.1. AMOUNT OF CONSIDERATION. The total consideration to be paid by
Chelsea for the Property shall be as follows:
(a) The issuance to Halawa of the Special Units;
(b) The assumption of Liabilities on the Property in
existence on the Closing Date which will consist solely of first
mortgage indebtedness held by the Employee Retirement System of the State of
Hawaii ("ERS") and second mortgage indebtedness held by the Bank of Hawaii in an
aggregate amount estimated to be $71.2 million, inclusive of principal, interest
and contingent interest (collectively, the "Loans"), all of which Loans will be
paid in full in cash by Chelsea at the Closing; provided, however that the
aggregate amount of the Loans to be paid by Chelsea shall not exceed $75.7
million. The parties agree that each of the Land and Building and other assets
described in Schedule 3.1 transferred by Halawa to Chelsea shall be treated as
having an initial Gross Asset Value (as such term is defined in Section 1.1 of
Chelsea's Amended Limited Partnership Agreement) and a tax basis as set forth on
SCHEDULE 3.1 annexed hereto and made a part hereof or on a similar schedule
attached to the Amended Limited Partnership Agreement.
3.2. ESCROW. On the date of this Agreement, Chelsea is
depositing with Title Guaranty Escrow Service, Inc. (the "Escrow Agent"),
pursuant to an escrow agreement dated the date hereof, a copy of which is
annexed hereto as EXHIBIT B, the amount of $5,000,000 in cash (the "Escrow
Deposit"). In the event the Closing occurs, the Escrow Agent shall return the
Escrow Deposit, and all accrued interest thereon, to Chelsea. In the event the
Closing does not occur for any reason, except for Chelsea's default in its
obligations under this Agreement, then the Escrow Deposit, and all accrued
interest thereon, shall be returned to Chelsea and none of the parties shall
have any further obligations or liabilities under this Agreement. In the event
the Closing does not occur because of Chelsea's default in its obligations under
this Agreement, the Escrow Deposit, and all accrued interest thereon, shall be
delivered to WCC and the parties shall not have any further obligations or
liabilities under this Agreement.
SECTION 4. CONDITION OF TITLE.
(a) From and after the date hereof, except as provided in Section
4(b), neither of the Partnerships shall, without the written consent of Chelsea
which may be granted or withheld in Chelsea's sole and absolute discretion: (i)
initiate, support or acquiesce in any zoning reclassification of the Land or the
Building, seek any variance under existing zoning ordinances applicable to the
Land or the Building or use or permit the use of the Premises in a manner which
would result in such use becoming a non-conforming use under applicable zoning
ordinances, (ii) modify, amend or supplement any of the items set forth on
EXHIBIT C annexed hereto and made a part hereof (the "Permitted Encumbrances"),
(iii) impose or suffer to be imposed any title exceptions or reservations of any
kind on the Property (other than Permitted Encumbrances), (iv) impose or suffer
to be imposed any Liens upon the Premises, or execute or file any subdivision
plat affecting the Land or the Building or consent to the annexation of any part
of the Premises to any municipality, (v) grant any consents under the
Development Agreement or (vi) permit or suffer the Premises to be used by the
public or any Person in such manner as might make possible a claim of adverse
usage or possession or of any implied dedication or easement.
(b) From and after the date hereof, WCC shall have the right to
negotiate with Amfac Property Development Corp. and, as a result of such
negotiations, to subject the Property to such common area easements and extended
land covenants as may be required in order to comply with the provisions of the
Development Agreement with regards to the formation of an association to
administer and maintain the real property covenants; provided, however, that all
such actions and undertakings shall be subject to Chelsea's prior reasonable
approval.
(c) At the Closing, WCC shall cause the Title Company to issue to
Chelsea an ALTA Owner's Title Policy in the amount of $76.2 million showing the
Property to be free and clear of all exceptions and reservations of any kind,
except the Permitted Encumbrances (provided that the mortgages held by ERS and
the Bank of Hawaii shall not be shown as Permitted Encumbrances if Chelsea pays
the applicable amounts due thereunder), together with such endorsements as
Chelsea may reasonably require, including, without limitation, subdivision and
zoning endorsements (the "Title Policy"). Upon Closing, costs of the Title
Policy shall be paid by Chelsea. Prior to Closing, WCC shall provide Chelsea
with chattel lien reports from the Title Company, and, at Chelsea's option,
current searches of all Uniform Commercial Code Financing Statements filed in
Hawaii against WCC or the Property. As a condition to Closing, the title search,
chattel lien report and UCC search shall be updated as of the Closing Date
showing no new Lien or exception except as expressly agreed to in writing by
Chelsea.
SECTION 5. CASUALTY AND CONDEMNATION.
(a) Notwithstanding anything to the contrary implied or provided by
law or in equity, if, prior to the Closing, any material portion of the Property
is impaired by fire, the elements or any other casualty or if any material
portion of the Property is taken by eminent domain or otherwise, Chelsea shall
have the right to terminate this Agreement by written notice to WCC given by
Chelsea. If Chelsea does not terminate this Agreement, this Agreement shall
remain in full force and effect and the parties shall nonetheless proceed to the
Closing in accordance with this Agreement and all proceeds received, or rights
to proceeds, from the foregoing shall be assigned to Chelsea.
(b) WCC shall promptly notify Chelsea of any such casualty and of any
proposed taking. Chelsea shall be given an opportunity to participate in all
discussions, meetings and proceedings with the insurer of any casualty and with
the Governmental or quasi-Governmental Authority proposing a taking. WCC shall
not make any settlement with respect to a casualty or a taking without Chelsea's
prior written consent. All proceeds received, or rights to proceeds, from such
taking or casualty shall be assigned to Chelsea.
(c) For purposes of this Section 5, a casualty or condemnation shall
be deemed material if the amount of the loss or claim arising as a result
thereof shall exceed One Million and 00/100 Dollars ($1,000,000). The parties
hereby waive the provisions of any statute which provides for a different
outcome or treatment in the event of a casualty or a taking.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF WCC AND HALAWA. (a) WCC
hereby warrants and represents to and agrees with Chelsea as follows:
6.1. GOOD STANDING. WCC is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Hawaii, has
full power and authority to own, lease and operate its properties and assets and
to conduct the Business as now being conducted.
6.2. AUTHORIZATION. A true and complete copy of the Agreement of
Limited Partnership of WCC has been furnished to Chelsea and there will be no
amendments thereto prior to the Closing Date. WCC has the full power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby and the execution, delivery and performance of this
Agreement by WCC has been duly authorized by all necessary action. The transfer
of the Property to Chelsea, the execution and delivery of this Agreement, the
fulfillment of the terms set forth in this Agreement and the consummation of the
transactions contemplated by this Agreement will not conflict with or constitute
a Default under the Agreement of Limited Partnership of WCC, or a Default under,
or require the consent under, any Contract by which WCC is bound or to which any
of the Property is subject, or would be a violation of any Laws or Court Orders
applicable to WCC or the Property, except as may be set forth on SCHEDULE 6.2
annexed hereto and made a part hereof. This Agreement has been duly executed and
delivered and constitutes the legal, valid and binding obligation of WCC,
enforceable against WCC in accordance with its terms. WCC does not require any
consent, approval, authorization or order of, or declaration, filing or
registration with, any Governmental Authority or Person in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
6.3. FINANCIAL STATEMENTS. WCC delivered to Chelsea the financial
statements relating to the Business and the promotional fund for the two years
ended December 31, 1996, consisting of balance sheets and income statements,
together with any operating statements and budgets covering periods subsequent
to December 31, 1996 and the final 1996 CAM report (collectively, the "Financial
Statements"). The Financial Statements in each case are true and complete with
respect to each item therein and have been prepared in conformity with, and
applied consistently with, the past practices of, WCC and fairly present the
financial position and results of operations of the Business as at, or for the
periods ended on, such dates. Since December 31, 1996, the Property has been
operated in a consistent manner without change of policy or procedure.
6.4. RECORDS AND BOOKS OF ACCOUNT. The records and books of account of
WCC and the Property have been regularly kept and maintained in a consistent
manner. The Property transferred by Halawa to Chelsea has an approximate $60.0
million tax basis.
6.5. LIABILITIES. Except as set forth on SCHEDULE 6.5 annexed hereto
and made a part hereof, there are no Liabilities on or affecting the Property
(including, but not limited to, Liabilities for Taxes relating to any period
prior to the Closing Date). WCC has paid all Taxes and filed all Returns
required by Law.
6.6. INSURANCE POLICIES. SCHEDULE 6.6 annexed hereto and made a part
hereof sets forth a true and complete list and description (including face
amount of policy, name of insured, carrier, premium, amount of deductible,
expiration date and whether it is a "claims made" or an "occurrence" policy) of
all insurance policies relating to the Property. True and complete copies of all
such policies have heretofore been provided to Chelsea. All premiums due on such
policies have been paid in full. All pending claims, if any, made against the
Property or WCC which are covered by insurance are being defended by the
appropriate insurance companies and are described on SCHEDULE 6.6. Such
insurance to the date hereof has, and to the Closing Date will have, (a) been
maintained in full force and effect and (b) not been canceled or changed except
to extend the maturity dates thereof. WCC has not received any written notice
from any insurance company which has issued a policy with respect to the
Premises or from the holder of any mortgage encumbering the Premises requesting
or requiring performance of any structural or other major repairs or alterations
to the Premises which has not been complied with.
6.7. LABOR RELATIONS. Neither WCC nor Halawa has any employees. There
are no labor strikes, disputes, slow downs, work stoppages or other labor
troubles or grievances pending or, to WCC's knowledge, threatened against or
involving the Property, except as set forth on SCHEDULE 6.7 annexed hereto and
made a part hereof. WCC has not received notice, or have knowledge, of the
intent of any Governmental Authority responsible for the enforcement of labor or
employment laws to conduct any investigation of or relating to the operations of
the Property. WCC has not entered into any union contracts or labor agreements
pertaining to employees of the Property.
6.8. LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 6.8 annexed
hereto and made a part hereof, there are no Actions pending or, to the knowledge
of WCC, threatened against or affecting the Property or the Business, which are
not otherwise covered by insurance and described on SCHEDULE 6.6. SCHEDULE 6.8
contains an accurate summary of the status of all matters shown thereon.
6.9. COURT ORDERS. There are no Court Orders issued against, or
binding on, WCC or the Property which do or may affect, limit or control the
Assets or method or manner of doing Business. WCC is not in default with respect
to any Court Order. Neither WCC nor the Property is a party to, or is subject to
or bound by, any Court Order or Contract that could prevent the performance of
all or any of the terms of this Agreement.
6.10. COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 6.10
annexed hereto and made a part hereof, WCC has complied and is in compliance
with, and the Property, and the current use, occupation and condition thereof,
do not violate any and all Court Orders and Laws of any Governmental Authority
applicable to the Assets, the Property or its Business, including, without
limitation, Laws relating to zoning, building codes, antitrust, occupational
safety and health, consumer product safety, product liability, hiring, wages,
hours, employee benefit plans and programs, collective bargaining, withholding
and social security taxes and Environmental Laws.
6.11. LICENSES. All Licenses for or used in connection with the use or
operation of the Assets or the conduct of the Business are described in SCHEDULE
6.11 annexed hereto and made a part hereof. The current use and occupation of
any portion of the Property does not violate any of the Licenses. No additional
Licenses or amendments thereto are required for the current or contemplated use
or operation of the Assets or the conduct of the Business. All of the Licenses
are in full force and effect, and all of the Licenses are transferable with the
Property to Chelsea without charge.
6.12. VIOLATIONS. WCC has not received any written notice of (a) any
violation of any Laws (including, without limitation, building code, health and
safety or zoning violations), or Court Orders issued by any court or
Governmental or quasi-Governmental Authority affecting the Assets (collectively,
"Violations") or (b) any written notice that an investigation has been commenced
respecting any such possible Violations.
6.13. EMPLOYEE BENEFITS. Neither WCC nor Halawa has, or has ever had,
any employees.
6.14. ENVIRONMENTAL PROTECTION.
(a) Except as set forth in SCHEDULE 6.14 annexed hereto and made a
part hereof, the Property has, and through the Closing Date will have, complied
in all respects with all Environmental Laws. WCC and the Property have obtained
and will maintain through the Closing Date all Licenses which are required with
respect to their operation under any Environmental Laws.
(b) Except as set forth in SCHEDULE 6.14 hereto, the Property is in
compliance in all respects with all Licenses required by any Environmental Laws,
and is also in full compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Laws or contained in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder. WCC has delivered to Chelsea true
and complete copies of all environmental studies in WCC's possession made in the
last ten years relating to the Business or Property.
(c) Except as set forth in SCHEDULE 6.14 hereto, there is no pending
or, to WCC's knowledge, threatened civil, criminal or administrative Action,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter that affects or applies to the Property, the Assets or the
Business relating in any way to any Environmental Laws or any regulation, code,
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder.
(d) Except as set forth in SCHEDULE 6.14 hereto, there are no past or
present (or, to the knowledge of WCC, anticipated) events, conditions,
circumstances, activities, practices, incidents, Actions or plans which may
interfere with or prevent compliance or continued compliance by the Property
with any Environmental Laws or with any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or investigation, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, by WCC of any pollutant, contaminant,
chemical, or industrial, toxic or Hazardous Substance or Waste.
(e) To WCC's best knowledge, there has been no emission, spill,
release or discharge from any site at which any of the Assets are or were
located or from the Property at any other location or disposal site, into or
upon (i) the air, (ii) soils or improvements, (iii) surface water or ground
water, or (iv) the sewer, septic system or waste treatment, storage or disposal
system servicing the Assets of any toxic or hazardous substances or wastes used,
stored, generated, treated or disposed at or from any of the Assets (any of
which events is hereinafter referred to as "Hazardous Discharge"). All of the
Assets are free of all toxic or hazardous substances or wastes.
(f) There have been no Environmental Complaints.
(g) The Property is not now nor has it ever been a Super-Fund Site.
There are no underground storage tanks located on the Property.
(h) If WCC receives any notice from any Governmental Authority, or any
other Person, with regard to any Hazardous Substances or Hazardous Discharges
on, from, or affecting the Property, WCC shall immediately notify Chelsea in
writing.
6.15. CONDEMNATION. WCC has no knowledge of any Federal, State,
County, municipal or other governmental plans to change the highway or road
system in the vicinity of the Premises or to restrict or change access from any
such highway or road to the Property or of any pending or threatened
condemnation or eminent domain proceedings relating to or affecting the
Property.
6.16. OPTION TO PURCHASE. No Person (including, without limitation,
any Tenant (as hereinafter defined)), has any conditional or unconditional right
and/or option to purchase the Property (or any portion thereof) and/or net lease
the Property (or any portion thereof), and/or right of first refusal or offer to
purchase the Property (or any portion thereof).
6.17. BANKRUPTCY. WCC has not (a) made a general assignment for the
benefit of its creditors, (b) admitted in writing its inability to pay its debts
as they mature, (c) had an attachment, execution or other judicial seizure of
any property interest which remains in effect or (d) taken, failed to take or
submitted to any action indicating a general inability to meet its financial
obligations as they accrue. There is not pending any case, proceeding or other
action seeking reorganization, arrangement, adjustment, liquidation, dissolution
or recomposition of WCC or any of its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking appointment
of a receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its property.
6.18. LEASING COMMISSION. No leasing commission or other compensation
is now or will hereafter become due or owing in connection with any of the
Tenant Leases, including, without limitation, in connection with any renewals or
extensions of the term thereof, except as disclosed on SCHEDULE 6.18 annexed
hereto and made a part hereof.
6.19. TITLE TO THE PROPERTY. WCC presently owns legal and beneficial
fee simple absolute title to the Property, free and clear of all Liens except
(i) the Loans and the Permitted Encumbrances and (ii) the agreement to transfer
title to the Property to Halawa prior to Closing. WCC has no knowledge of any
violation of any of the Permitted Encumbrances.
6.20. SPECIAL ASSESSMENTS. Except as set forth on the current tax
bills, copies of which have been delivered to Chelsea, which copies are true and
correct copies of such tax bills, there are no special assessments or charges
which have been levied against the Property or which will result from work,
activities or improvements done to the Property, nor does WCC know of any
pending or threatened special assessments affecting the Property or any
contemplated improvements affecting the Property that may result in any such
special assessments.
6.21. PROPERTY MANAGEMENT AGREEMENT. No contract or agreement with any
third party for the management of the Property will be binding on the Property
as of the date of the Closing.
6.22. OPERATING AGREEMENTS. (a) SCHEDULE 6.22 annexed hereto and made
a part hereof, is a true, correct and complete list of all Operating Agreements
entered into by WCC and which are either binding on or otherwise affect the
Property. The copies of the Operating Agreements that have been delivered to
Chelsea are true, correct and complete.
(b) Each of the Operating Agreements is in full force and effect and
none of the parties thereto is in Default of any of its obligations thereunder.
6.23. TENANT LEASES. (a) SCHEDULE 6.23 annexed hereto and made a part
hereof sets forth all agreements (written or oral) in the nature of space
leases, subleases, licenses, guaranties, permits, franchises, concessions or
occupancy agreements, and all amendments and side letters thereto, affecting the
Property (collectively referred to as the "Tenant Leases") to which WCC is a
party in existence on the date hereof. The copies of the Tenant Leases that have
been delivered to Chelsea are true, correct and complete.
(b) The Tenant Leases are in full force and effect, and to WCC's best
knowledge there are no parties in possession of the Property, except the tenants
under the Tenant Leases (the "Tenants").
(c) Except as set forth in SCHEDULE 6.23(B) annexed hereto and made a
part hereof, all tenant improvements required under the Tenant Leases to be
completed by the date hereof by the landlord thereunder have been completed, all
space demised pursuant to Tenant Leases has been built out and all tenant
allowances and/or reimbursements required under the Tenant Leases to be paid in
full as of the date hereof have been paid in full.
(d) Except as set forth in SCHEDULE 6.23(C) annexed hereto and made a
part hereof, there are no disputes with Tenants as to the amount of their rent,
additional rent, percentage rent, common area maintenance charges or other
charges under a Tenant Lease (collectively, the "Rent").
(e) Except as set forth in the Tenant Leases, no Tenant has any option
to cancel its Tenant Lease.
(f) Except as set forth on SCHEDULE 6.23(D) annexed hereto and made a
part hereof, WCC has not received from any Tenant any written notice claiming
any Default by the landlord under its Tenant Lease. Except as set forth in
SCHEDULE 6.23(d), WCC has not delivered to any Tenant any written notice
claiming a Default by Tenant under its Tenant Lease. None of the parties to the
Tenant Leases are in Default of any of its obligations thereunder, and to the
best knowledge of WCC, there are no circumstances which, after notice and the
expiration of any applicable grace period, would constitute a Default by either
WCC or any Tenant under any of the Tenant Leases.
(g) Except as set forth on SCHEDULE 6.23(D), no Tenant has asserted,
or has any defense to, offsets or claims against Rent payable or obligations
under the Tenant Leases.
(h) No guarantor of any of the Tenant Leases has been released or
discharged, voluntarily (or to the best of WCC's knowledge, involuntarily, or by
operation of law) from any obligation related to a Tenant Lease.
(i) No Tenant Lease has been assigned, and there are no subleases of
any portion of the Premises, except for assignments and subleases which WCC has
approved in accordance with the provisions of the respective Tenant Lease and
which are set forth on SCHEDULE 6.23(E) annexed hereto and made a part hereof.
(j) WCC has no obligations to any Tenant to advertise or otherwise
promote the Premises or the operations thereof, except as set forth in the
Tenant Leases.
(k) All consents of Tenants required in order to build the 14
forecasted kiosks have been obtained.
(l) To the best knowledge of WCC, except for exclusives under the
Chili's lease or other leases set forth on SCHEDULE 6.23(1) or Permitted
Encumbrances, there are no exclusives or restrictions on use granted to or
possessed by any Person (other than a Tenant) which affect the Property or
restrict the use of the Property.
6.24. RENT ROLL. (a) Annexed hereto and made a part hereof as SCHEDULE
6.24 is a rent roll and security deposit schedule (the "Rent Roll") for all
Tenant Leases at the Property in effect as of the date hereof.
(b) The information contained in the Rent Roll is true and complete in
all respects. All Rents as shown on the Rent Roll are being paid and current,
except as otherwise set forth therein.
(c) The full amount of all security deposits required under the Tenant
Leases are as shown on the Rent Rolls, but no cash reserves representing such
security deposits are maintained by WCC.
(d) No Tenant has paid any Rent, fees, or other charges for more than
one month in advance.
6.25. PERSONALTY. (a) The list of Personalty set forth in SCHEDULE
6.25 annexed hereto and made a part hereof is true, accurate and complete. The
Personalty has been fully paid for and is not subject to any Liens, except the
Liens securing the Loans or any Liens set forth on SCHEDULE 6.25(A) annexed
hereto and made a part hereof. WCC has good and marketable title to such
Personalty free and clear of any Liens, except as set forth on SCHEDULE 6.25(A).
The Personalty listed in SCHEDULE 6.25 is located on the Premises and is the
Personalty used in the ownership, use, operation, leasing and maintenance of the
Property (other than personal property owned by Tenants).
(b) All fixtures, machinery, equipment, lighting fixtures and
appliances comprising a portion of the Personalty and all heating,
air-conditioning, ventilating, electrical and plumbing systems on the Premises
are free of defects and in good working order and comply with the requirements
of all applicable Governmental and quasi-Governmental Authorities having
jurisdiction thereover, and Laws, including, without limitation, all
Environmental Laws and all Licenses required thereby have been obtained and are
in full force and effect.
6.26. CONTRACTS. SCHEDULE 6.26 annexed hereto and made a part hereof
sets forth all of the Contracts which affect the Property and to which WCC is a
party or subject to or bound by, including: (i) royalty, distribution, agency,
territorial or license agreement; (ii) Contract (for employment or otherwise)
with any present or former officer, employee, director or partner (or any
Affiliate of any such officer, employee, director or partner) or any
professional person or firm, consultant, independent contractor or advertising
firm or agency; (iii) Contract or collective bargaining agreement with any labor
union or representative of employees; (iv) Contract guaranteeing the payment or
performance of the obligations of others; (v) Contract pursuant to which
indebtedness may be incurred; (vi) group health or life insurance, pension,
profit sharing, retirement, medical, bonus, incentive, severance, stock option
or purchase plan or other similar benefit plan in effect with respect to its
employees or others; (vii) Contract limiting the freedom of the owners of the
Property to engage in any line of business or to compete with any Person; (viii)
Contract not entered into in the ordinary course of business which involves
$25,000 or more and is not cancelable without penalty within 30 days; (ix) any
Contract which may have a potential adverse impact on the Business or the
Property; or (x) any management agreement, joint venture agreement or other
Contract with respect to the operation or management of the Property. True and
complete copies of all Contracts listed on SCHEDULE 6.26 have heretofore been
made available by WCC to Chelsea. Each of the Contracts (including the documents
relating to the Loans) to which WCC or the Property is a party or to which it is
subject or by which it is bound is a valid and subsisting Contract of all of the
parties thereto in full force and effect without modification. WCC has performed
all obligations required to be performed by it and is not in Default under any
Contract or document relating to a Loan to which it or the Property is a party
or to which it or the Property is subject or by which it or the Property is
bound. To the knowledge of WCC, no other party is in Default under any such
Contract.
6.27. USE AND OCCUPATION. The Premises and the current use, occupation
and condition thereof are in compliance with and do not violate any applicable
deed restrictions or other covenants, restrictions or agreements (including,
without limitation, any of the Permitted Encumbrances), site plan approvals,
zoning or subdivision regulations or urban redevelopment plans applicable to the
Premises, including, without limitation, the Development Agreement, that certain
Unilateral Agreement and Declaration for Conditional Zoning dated November 14,
1986, the Findings of Fact, Conclusions of Law and Decision and Order, dated
February 28, 1986, the Waikele Urban Design Plan, dated January 1992 (Revised),
and the Waikele Commercial Center Design Guidelines, dated January 23, 1992
(collectively, the "Master Development Agreements").
6.28. UTILITIES All water, storm and sanitary sewer, gas, electricity,
telephone and other utilities serving the Premises are (a) supplied directly to
the Premises by facilities of public utilities through lands as to which public
or private easements exist that will continue to inure to the benefit of the
Property, (b) adequate to service the normal operations of the Premises, and (c)
the cost of installation of such utilities has been fully paid.
6.29. BUILDING. All costs and expenses of any and all labor,
materials, supplies and equipment used in the construction of the Building have
been paid in full. The construction of the Building and all materials used
therein conform in all respects to the final drawings, plans and specifications
prepared therefor. The roofs and basements of the Building are watertight and
free of leaks and to the best of WCC's knowledge, there are no structural
defects, latent or patent, at the Premises, except as may be set forth on
SCHEDULE 6.29 annexed hereto and made a part hereof.
6.30. ROADS. All roads bounding the Premises are public roads and have
been completed and are physically and legally open for use by the public, and
Chelsea shall have full access to and the right to use such roads freely as well
as to convey all rights appurtenant to the Premises in such roads.
6.31. PARKING The parking facilities at the Premises contain spaces
for 805 automobiles, which spaces are sufficient to comply with all Laws,
including, without limitation, the Americans with Disabilities Acts, and with
all parking commitments made by WCC under any Tenant Leases or other documents.
6.32 CONTRACTORS. True and complete copies of all contractors' or
subcontractors' guarantees and warranties relating to the Building or the
Personalty, and all agreements, amendments, guarantees, side letters and other
documents relating thereto, have been delivered to Chelsea, and there are no
other such documents or agreements, written or oral, and all such guaranties are
in full force and effect and have not been invalidated by any act or omission of
WCC or any former owner of the Premises.
6.33. SEPARATE TAX LOT. The Property is assessed for real estate tax
purposes as one wholly independent tax lot, separate from any adjoining land or
improvements not constituting a part of such lot, and no other land or
improvements is assessed and taxed together with the Property or any portion
thereof.
6.34. THE MASTER DEVELOPMENT DOCUMENTS. (a) WCC and, to the best of
WCC's knowledge, Amfac Property Development Corp. ("Amfac") have satisfied and
are otherwise in full compliance with the covenants, conditions, obligations,
requirements and restrictions set forth in the Master Development Documents, and
all work, development, construction and improvements performed or required
pursuant thereto with respect to, relating to, or for use in connection with,
the Property, or which will be obligations of the Commercial Association prior
to Closing, whether by WCC or Amfac, have been completed and paid for in
conformity therewith (except as otherwise set forth in SCHEDULE 6.34 annexed
hereto and made a part hereof).
(b) Amfac's consent to the transaction contemplated herein is not
required, except for the creation and recording of the Commercial Covenants and
Extended Covenants as such capitalized terms are defined in the Development
Agreement.
6.35. NO OMISSIONS. WCC does not know of any facts or circumstances
not disclosed to Chelsea which indicate that the Property or the Business may be
materially adversely affected or which otherwise should be disclosed to Chelsea
in order to make any of the representations or warranties made herein on the
part of WCC not misleading in any material respect. No representation or
warranty by WCC contained in this Agreement, and no statement contained in any
Schedule, Exhibit, certificate or other instrument furnished to Chelsea under or
in connection with this Agreement, contains any untrue statement of any material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein not misleading in any material respect.
(b) Halawa hereby warrants and represents to and agrees with Chelsea
as follows:
(i) GOOD STANDING. Halawa is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Hawaii, has full power and authority to own, lease and operate its properties
and assets and to conduct its business as now being conducted.
(ii) OWNER OF PARTNERSHIP INTERESTS. Halawa owns its
partnership interests in WCC and has good and marketable title to such
partnership interests free and clear of any Liens. Halawa has entered into an
agreement to acquire and on the Closing Date will have acquired all right, title
and interest of WCC in and to the Property and Business, including all books,
records and other documents related thereto.
(iii) AUTHORIZATION. A true and complete copy of the
Agreement of Limited Partnership of Halawa has been furnished
to Chelsea and there will be no amendments thereto prior to the
Closing Date. Halawa has the full power and authority to enter
into this Agreement and to carry out the transactions
contemplated hereby and the execution, delivery and performance of this
Agreement by Halawa has been duly authorized by all necessary action. The
conveyance of the property by Halawa to Chelsea, the execution and delivery of
this Agreement, the fulfillment of the terms set forth in this Agreement and the
consummation of the transactions contemplated by this Agreement will not
conflict with or constitute a Default under the Agreement of Limited Partnership
of Halawa, or a Default under, or require the consent under, any Contract by
which Halawa is bound or to which any of the Property is subject, or would be a
violation of any Laws or Court Orders applicable to Halawa or the Property. This
Agreement has been duly executed and delivered and constitutes the legal, valid
and binding obligation of Halawa, enforceable against Halawa in accordance with
its terms. Halawa does not require any consent, approval, authorization or order
of, or declaration, filing or registration with, any Governmental Authority or
Person in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(iv) BANKRUPTCY. Halawa has not (a) made a general assignment
for the benefit of its creditors, (b) admitted in writing its inability to pay
its debts as they mature, (c) had an attachment, execution or other judicial
seizure of any property interest which remains in effect or (d) taken, failed to
take or submitted to any action indicating a general inability to meet its
financial obligations as they accrue. There is not pending any case, proceeding
or other action seeking reorganization, arrangement, adjustment, liquidation,
dissolution or recomposition of Halawa or any of its debts under any law
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its property.
(v) INVESTMENT INTENT. (a) Halawa is acquiring the Special Units to be
received by it for its own account and not with the view to the sale or
distribution of the same or any part hereof in violation of the Securities Act.
(b) Halawa understands that the Special Units to be issued to it will
not be registered under the Securities Act or the securities laws of any state
("Blue Sky Laws") by reason of a specific exemption or exemptions from
registration under the Securities Act and applicable Blue Sky Laws.
(c) Halawa understands that, for the reasons set forth in paragraph
(b) above, the Special Units may not be offered, sold, transferred, pledged, or
otherwise disposed of by it except (i) pursuant to an effective registration
statement under the Securities Act and any applicable Blue Sky Laws, (ii)
pursuant to a no-action letter issued by the Securities and Exchange Commission
to the effect that a proposed transfer of the Special Units may be made without
registration under the Securities Act, together with either registration or an
exemption under applicable Blue Sky Laws, or (iii) upon Chelsea receiving an
opinion of counsel knowledgeable in securities law matters and reasonably
acceptable to Chelsea to the effect that the proposed transfer is exempt from
the registration requirements of the Securities Act and any applicable Blue Sky
Laws. Accordingly, Halawa must bear the economic risk of an investment in the
Special Units for an indefinite period of time.
(d) Halawa is an accredited investor as defined in Rule 501
promulgated under the Securities Act.
(e) Halawa understands that an investment in Chelsea involves
substantial risks and it has had the opportunity to review all documents and
information which it has requested concerning its investment in Chelsea and to
ask questions of the management of Chelsea, which questions were answered to its
satisfaction.
(f) Halawa understands that any certificates representing the Special
Units will bear a legend substantially to the effect of the following: "The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Act"), or the securities laws of any
state. The securities may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under the Act
and under any applicable state securities laws, receipt of a no-action letter
issued by the Securities and Exchange Commission (together with either
registration or an exemption under applicable state securities laws) or an
opinion of counsel acceptable to the Partnership and Chelsea GCA Realty, Inc.
that the proposed transaction will be exempt from registration under the Act and
applicable state securities laws." and that Chelsea reserves the right to place
a stop order against the transfer of any certificates representing the Special
Units, and to refuse to effect any transfers thereof, in the absence of
satisfying the conditions contained in the foregoing legend.
(vi) NO OMISSIONS. Halawa does not know of any facts
or circumstances not disclosed to Chelsea or which should be
disclosed to Chelsea in order to make any of the representations
or warranties made herein on the part of Halawa not misleading in any material
respect. No representation or warranty by Halawa contained in this Agreement,
and no statement contained in any Schedule, Exhibit, certificate or other
instrument furnished to Chelsea under or in connection with this Agreement,
contains any untrue statement of any material fact, or omits to state any
material fact necessary in order to make the statements contained herein or
therein not misleading in any material respect.
(c) The representations and warranties of WCC contained in this
Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, will be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date. In
the event facts and circumstances change from and after the date of this
Agreement which facts and circumstances formed the basis of any representation
or warranty of WCC set forth in this Agreement, WCC shall promptly notify
Chelsea and WCC shall modify, update and/or supplement any such representations
and/or warranties, exhibits and schedules attached to or delivered with this
Agreement through the Closing Date, provided, however, nothing herein shall be
deemed to or be construed as a cure of any default arising from any
representation or warranty which shall have been false or misleading in any
material respect when made, and, provided, further, that if any such
modification, update or supplement includes any matter which will have a
material adverse effect on the value or current use of the Property, Chelsea
shall have the right to terminate this Agreement by notifying WCC in writing.
(d) The representations and warranties of Halawa contained in this
Agreement, or otherwise made in writing in connection with the transactions
contemplated hereby, will be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date. In
the event facts and circumstances change from and after the date of this
Agreement which facts and circumstances formed the basis of any representation
or warranty of Halawa set forth in this Agreement, Halawa shall promptly notify
Chelsea and Halawa shall modify, update and/or supplement any such
representations and/or warranties, exhibits and schedules attached to or
delivered with this Agreement through the Closing Date, provided, however,
nothing herein shall be deemed to or be construed as a cure of any default
arising from any representation or warranty which shall have been false or
misleading in any material respect when made, and, provided, further, that if
any such modification, update or supplement includes any matter which will have
a material adverse effect on the value or current use of the Property, Chelsea
shall have the right to terminate this Agreement by notifying Halawa in writing.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF Chelsea. Chelsea warrants
and represents to and agrees with the Partnerships as follows:
7.1. GOOD STANDING. Chelsea is a limited partnership duly organized,
validly existing and in good standing under the laws of Delaware.
7.2. AUTHORIZATION. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized by Chelsea, and all other action of Chelsea, including all approvals,
authorizations and ratifications, necessary to authorize the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been taken. This Agreement constitutes a binding obligation of
Chelsea, enforceable against Chelsea in accordance with its terms. The execution
and delivery of this Agreement by Chelsea and the consummation of the
transactions contemplated hereby will not (a) require the consent of any lender,
trustee or security holder of Chelsea or of any other Person, except for the
consent of Chelsea's partners to the Amended Limited Partnership Agreement (as
defined herein), (b) result in a Default under any Contract, (c) violate any Law
or Court Order or (d) require the obtaining by Chelsea of any License.
7.3. SPECIAL UNITS. The Special Units to be issued pursuant to this
Agreement, when so issued, will be duly and validly authorized and issued, fully
paid and nonassessable and will be free and clear of any Liens created by
Chelsea (other than restrictions arising under the Securities Act and state
securities laws).
7.4. NO DISCLOSURE NEEDED. The Distribution to the holder of the
Special Units being made in accordance with this Agreement is intended to
qualify as a debt-financed distribution under IRS Regs ss.1.707-5(b) and,
therefore, to the extent such qualification is available, Chelsea is not
required and shall not file a disclosure report otherwise called for under IRS
Regs. ss.1.707-3(c) if such qualification were not available.
7.5. AS IS. Chelsea has, through its own staff and through outside
consultants, such as its attorneys, engineers, architects and accountants,
inspected the Property, is aware of the condition thereof, including, but not
limited to the fact that certain ADA and other alleged deficiencies exist, and
has approved of and is acquiring the Property in an "AS IS - WHERE IS" basis,
and is not relying on any representations of the Partnerships, except as
expressly provided for in this Agreement. Chelsea shall be responsible for any
corrective actions required under the ADA.
7.6. ACCOUNTING ALLOCATION METHOD. After the Closing, the tax
accounting method with respect to allocations for "built-in gains" ascribed to
for the Special Units held by Halawa or its successors and assigns as required
under ss.704(c) of the Code shall be the "traditional method with a curative
allocation" as contemplated by IRS Regs. 1.704-3(c), except that upon the
occurrence of a Recognition Event which otherwise would result in an allocation
of income or gain to holders of Special Units under Section 704(c) of the Code
in respect of the Building assuming, whether or not it is in fact the case, that
at the time of such Recognition Event the Building's Gross Asset Value exceeds
its tax basis, there shall be specially allocated to the holders of Special
Units under Section 704(c) an aggregate amount of income or gain from the
disposition of the Building or other source equal to the Built-in Gain Amount.
The character of any income or gain (as ordinary or capital) recognized by
Chelsea and allocated to holders of Special Units pursuant to Section 704(c)
shall be consistent with the character of income or gain which would have been
recognized by holders of Special Units had such holders sold the Property on the
Closing Date at the values set forth on Schedule 3.1. Allocations pursuant to
the preceding sentence are solely for purposes of federal, state, and local
taxes and shall not affect, or in any way be taken into account in computing,
the Capital Account or share of Profits, Losses, other items, or distributions
pursuant to any provision of the Amended Limited Partnership Agreement.
SECTION 8. CONDUCT PRIOR TO THE CLOSING
8.1. INVESTIGATION BY CHELSEA. Chelsea may, prior to the Closing Date,
through its own representatives (including its counsel, accountants and
consultants) make such investigations of the Property and Business and such
audit of the financial condition of the Property and Business as it deems
necessary or advisable in connection with the transactions contemplated hereby,
including, without limitation, any investigation enabling it to familiarize
itself with such Property and Business and financial condition; such
investigation shall not, however, affect the Partnerships' representations,
warranties and agreements hereunder. WCC shall permit Chelsea and its authorized
representatives to have, after the date hereof and during normal business hours
and upon reasonable notice, full access to the Premises and to all books and
records of the Property and WCC; and Chelsea shall have the right, at its
expense, to make copies thereof and excerpts therefrom. WCC shall furnish
Chelsea, as and when available, monthly sales and other financial reports for
WCC and the Property and with such other financial and operating data and other
information with respect to the Property and Business as Chelsea may from time
to time reasonably request. If through no fault of WCC the transaction fails to
close, Chelsea shall return all such copies and reports obtained from WCC to WCC
at Chelsea's expense.
8.2. OPERATIONS PRIOR TO CLOSING. Between the date of the execution of
this Agreement and the Closing Date, WCC agrees at no cost or expense to
Chelsea, to conduct the Business in the ordinary course, and:
(a) In accordance with its normal practices and procedures, continue
to maintain and to make all repairs and replacements to the Property and the
Personalty so as to keep the Property and the Personalty in substantially its
present condition, and operate and manage the Property and the Personalty in the
same manner as it has operated the Property prior to the date hereof.
(b) Not accept the surrender of any of the Operating Agreements or
Tenant Leases or grant any concession, rebate, allowance or free rent at the
Property without Chelsea's prior written consent, which Chelsea agrees to
respond to within five business days after receipt.
(c) Not incur any Liabilities outside the ordinary course of business
without Chelsea's prior written consent, which Chelsea agrees to respond to
within five business days, provided such Liabilities are incurred in the
ordinary course of its business, and any such indebtedness shall be satisfied at
or prior to the Closing and evidence of such satisfaction shall be delivered at
the Closing.
(d) Promptly provide Chelsea with copies of all notices and other
correspondence received from, or sent to, the lenders under or with respect to
the Loans.
(e) Promptly notify Chelsea of any damage to or destruction of all or
any portion of the Property.
(f) Promptly deliver to Chelsea copies of any notices received from
Governmental or quasi-Governmental Authorities with respect to any (i)
Violations, (ii) condemnation or similar taking of all or any portion of the
Property, or (iii) with respect to Hazardous Substances located in, on or about
the Property.
(g) Promptly notify Chelsea of any notices or other correspondence
given or received by WCC under or in connection with the Operating Agreements
and the Tenant Leases.
(h) Pay all real estate taxes and insurance premiums in a timely
manner.
(i) Without limiting the generality of Section 8.2(a), not remove any
Personalty reasonably necessary for the operation of the Property unless the
same is immediately replaced. Replacements shall be (x) free and clear of any
Liens, (y) of quality at least equal to the replaced items, and (z) deemed
included in the sale, without cost or expense to Chelsea.
(j) Without limiting the generality of Section 8.2(a), (i) keep all
existing insurance policies affecting the Property or any portion thereof in
full force and effect, (ii) use due diligence and its good faith reasonable
efforts to keep in full force and effect and/or renew all Licenses, (iii) make
all regular payments of interest and principal on the Loans, (iv) provide all
services and continue to operate, manage and maintain the Property (including
mechanical equipment of every kind used in the operation thereof) in such
condition so that the Property shall be in the same condition at the Closing as
on the date hereof, reasonable wear and tear excepted, (v) timely comply with
all Laws, (vi) keep Chelsea timely advised of any repair or improvement required
to keep the Property in such condition as aforesaid and which costs exceed Fifty
Thousand Dollars ($50,000.00), and (vii) pay all obligations and trade creditors
in the normal course of business, not accelerate the collection of receivables
and not defer any expenses or costs which would be paid or incurred in the
normal course of business.
(k) Not hereafter engage any employees at the Property or modify,
renew, extend, replace, or otherwise change any of the terms, covenants or
conditions of the Operating Agreements, Loans or Tenant Leases, or enter into
new Tenant Leases, Operating Agreements, or any other obligations or agreements
affecting the Property, without the prior written consent of Chelsea, which
Chelsea agrees to respond to within five business days after receipt. WCC shall
not accept from any of the Tenants payment of rent more than one month in
advance or, without the prior written consent of Chelsea, which Chelsea agrees
to respond to within five business days after receipt, apply any security
deposit to rent due from any Tenant. Nothing contained herein shall restrict the
right of WCC to grant month-to-month extensions of existing Tenant Leases in the
ordinary course of business at market rates, nor shall anything herein restrict
the right of WCC to enter into Operating Agreements in the ordinary course of
business so long as such Operating Agreements can be terminated, without penalty
or payment by WCC upon thirty days or less notice.
(l) Pay in full, prior to the Closing, or at Chelsea's option, deposit
with Chelsea, all then due brokerage commissions, tenant improvement allowances
and reimbursements or other charges which may be due and owing under Tenant
Leases, notwithstanding that the same may be paid in future installments
subsequent to the Closing.
(m) Use its best efforts to obtain estoppel certificates in form and
substance satisfactory to WCC and Chelsea (the "Tenant Estoppel Certificates"),
from each of the Tenants leasing space at the Property. WCC shall deliver the
original executed Tenant Estoppel Certificates to Chelsea as they are received.
WCC shall, as a condition to Closing, be required to deliver such estoppel
certificates from only those Tenants listed on SCHEDULE 8.2(m) annexed hereto
and made a part hereof. If this condition is not satisfied by the Closing or
waived by Chelsea at the Closing, then WCC or Chelsea shall have the right to
terminate this Agreement and none of the parties hereto shall have any further
rights, obligations or liabilities under this Agreement.
(n) Promptly cure and remove any Violations, except for corrective
action required for ADA violations, which will be Chelsea's responsibility. If,
after using its best efforts, WCC has not been able to cure and remove any such
Violation prior to the Closing Date, WCC shall pay Chelsea, at the Closing, the
amount required to cure and remove any such Violation, as estimated by a
licensed contractor, architect or professional engineer reasonably approved by
Chelsea.
(o) Perform and complete (i) the improvement work in accordance with
the plans and specifications previously approved by Chelsea for the 14 Kiosks
which were included in the projections furnished by WCC to Chelsea and (ii) the
relocation of Benetton, Van's and Jockey into spaces in the Property as
previously reported by WCC to Chelsea.
(p) Shall not, without the prior written consent of Chelsea, which
Chelsea agrees to respond to within five business days after receipt:
(i) change its governing instruments;
(ii) guarantee or agree to guarantee the
obligations of others;
(iii) make any capital expenditure or commit
itself to make any capital expenditure;
(iv) increase the compensation of any employee;
(v) enter into any Contract except as otherwise
provided above;
(vi) waive any rights of value;
(vii) sell, lease, encumber or otherwise dispose
of any assets; or
(viii) without limiting any of the foregoing,
take or refrain from taking any action the result of which would
render any representation or warranty made to Chelsea in or in
connection with this Agreement inaccurate in any material respect when deemed
made on and as of the Closing Date.
8.3. WCC'S OBLIGATIONS. From the date hereof to the Closing, WCC shall
(a) comply with its obligations set forth in Section 8.2, and (b) use its best
efforts to preserve its business organization intact, keep available to Chelsea
the services of present manager of the Property and preserve for Chelsea the
present relationship between the Property on the one hand and its tenants,
suppliers, customers and others having business relations with it on the other.
WCC shall perform all obligations which, pursuant to this Agreement, are
required to be performed by WCC on or prior to the Closing Date.
8.4. OTHER TRANSACTIONS. WCC will not, and will use its best efforts
to cause the directors, officers, employees, agents and Affiliates of WCC not
to, directly or indirectly, through any employees, representatives or otherwise
(a) solicit, initiate or encourage submission of proposals or offers from any
person or entity relating to the acquisition of all or any part of the Property,
whether through any lease, acquisition of stock, partnership interests or assets
or a merger (collectively, "Purchase Proposal") or (b) participate in any
discussions or negotiations regarding, or furnish to any other person or entity
any information with respect to, or otherwise cooperate in any way with or
assist, facilitate or encourage, a Purchase Proposal.
8.5. CONSENTS. WCC shall obtain in writing, prior to the Closing, all
consents, approvals, waivers, authorizations and orders (collectively,
"Consents") and Licenses necessary or reasonably required in order to permit it
to effectuate this Agreement and to consummate the transactions contemplated
hereby. All such Consents will be in writing and copies thereof will be
delivered to Chelsea promptly after WCC's receipt thereof but no later than
immediately prior to Closing.
8.6. PUBLIC ANNOUNCEMENTS. WCC and Chelsea agree that they will
consult with each other before issuing any press releases or otherwise making
any public statements with respect to this Agreement or the transactions
contemplated hereby and shall not issue any press release or make any public
statement prior to such consultation, except as may be required by law.
8.7. NOTIFICATION. The Partnerships shall give Chelsea prompt written
notice of (i) the existence of any fact or the occurrence of any event which
constitutes, or with the giving of notice or the passage of time or both would
constitute, a breach of any representation or warranty of the Partnerships made
herein or pursuant hereto and (ii) the taking of any action by the Partnerships
that would, in any material respect, breach or violate, or constitute a default
under, any agreement or covenant of either Partnership made herein or pursuant
hereto. The giving of any such notice shall not affect, modify or limit in any
way any representation, warranty, agreement or covenant of either Partnership
made herein or pursuant hereto or Chelsea's right to rely thereon.
8.8. AMENDMENT OF CHELSEA'S LIMITED PARTNERSHIP AGREEMENT. Chelsea
shall effect an amendment to the Agreement of Limited Partnership Agreement of
Chelsea (the "Amended Limited Partnership Agreement"), to WCC's reasonable
satisfaction, to create the Special Units and to allow for such Special Units to
be issued to Halawa at the Closing. Halawa shall become a party to the Amended
Limited Partnership Agreement effective on the Closing Date. To the extent
necessary, Chelsea shall obtain the consent of its lenders under its credit
agreement to such amendment to the Limited Partnership Agreement and to the
issuance of the Special Units to Halawa.
8.9. CREATION OF INDEMNITIES AND GUARANTEES. Chelsea will reasonably
cooperate with WCC in allowing for the indemnity referred to in Section 10.5 to
be created and put in place so the same shall become effective on the Closing
Date.
SECTION 9. CONDITIONS OF CHELSEA'S OBLIGATIONS TO CLOSE. The
obligations of Chelsea under this Agreement are, at the option of Chelsea,
subject to the conditions set forth below, which conditions may be waived by
Chelsea without releasing or waiving any of its rights hereunder.
9.1. AGREEMENT AND CONDITIONS. On or before the Closing Date, the
Partnerships shall have, in all material respects, complied with and duly
performed all agreements and conditions on their part to be complied with and
performed pursuant to or in connection with this Agreement on or before the
Closing Date.
9.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Partnerships contained in this Agreement, or otherwise made in
writing in connection with the transactions contemplated hereby, shall be true
and correct, in all material respects, on and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made on and as of the Closing Date.
9.3. OPINION OF COUNSEL. Chelsea shall have received an opinion of
Goodsill Anderson Quinn & Stifel, counsel for WCC, dated as of the Closing Date,
in form and substance reasonably satisfactory to counsel to WCC and Chelsea.
9.4. NO LEGAL PROCEEDING. No Action by a Governmental Authority shall
have been instituted to restrain or prohibit the acquisition by Chelsea, or the
conveyance by Halawa, of the Property, and on the Closing Date there will be no
Actions pending against or affecting the Property which involve a demand for any
judgment or liability, not covered by insurance, and which may result in any
material adverse change in the business, operations, properties or assets or in
the condition, financial or otherwise, of the Property.
9.5. DELIVERIES. Chelsea shall have received the deliveries to be made
by the Partnerships pursuant to Section 11.
9.6. CONSENTS AND APPROVALS. The Partnerships shall have (a) delivered
to Chelsea all Consents required to be obtained in connection with this
Agreement and (b) obtained all approvals under any Laws required to be obtained
in connection with this Agreement. In addition, ERS and Bank of Hawaii shall
have delivered to Chelsea letters confirming the pay-off amounts on the Loans
and their commitment to release their respective mortgages upon Chelsea's
payment of the pay-off amounts.
9.7. WCC NON-COMPETE. WCC and its partners (including Richard W.
Gushman) shall have entered into a non-competition agreement with Chelsea in
form and substance mutually acceptable to the parties.
9.8. REPAIRS. WCC shall have fulfilled its obligations referred to in
Section 8.2(o).
9.9. MANAGEMENT AGREEMENTS. Chelsea shall have entered into a shared
services agreement with DMG Group, Inc. or its Affiliate in form and substance
satisfactory to Chelsea under which the Property shall have the continuing
benefit of the Waikele Trolley Agreement in accordance with its terms and the
use of common facilities (including the off-site parking) and Chelsea will share
in such costs. The existing management agreement with DGM Group, Inc. and the
existing management services agreement with Monroe & Friedlander Management,
Inc. shall have been terminated without cost to Chelsea.
9.10. OFF-SITE PARKING. The Property shall have continuing rights to
use the off-site employee parking facilities located under Tax Map Keys No.
(1)9-4-2-24 and (1)9-4-96-149, together with appurtenant easements (which are
the facilities presently being utilized), and Chelsea shall share in such costs.
9.11. COMMERCIAL ASSOCIATION. WCC shall have complied in all respects
with the requirements set forth in Article VI of the Development Agreement.
9.12. MATERIAL CHANGES. There shall not have been any material adverse
change (a) in the gross sales at the Property, (b) in the cash flow projections
provided by WCC to Chelsea or (c) in the operations or financial condition of
the Property. The Kiosks which were included in the 1997 11 Year Cash Flow
Projection dated November 15, 1996 (the "Projections") furnished to Chelsea
shall be operating and paying an aggregate monthly rent as of April 1, 1997 of
no less than $13,100 per month, which is the "Projected Rent" shown in the
Projections. If this is not the situation, then Chelsea shall nonetheless
proceed to close the transaction and WCC shall pay to Chelsea, from time to time
after the Closing, the rent equal to the difference between the Projected Rents
and the rents actually received therefrom until (i) all of the 14 Kiosks are
rented and occupied under lease agreements approved by Chelsea or (ii) the
actual rents from the 14 Kiosks either equal or exceed the Projected Rents as
measured over a two month period, whichever subpart (i) or (ii) first occurs.
Chelsea understands and agrees that two of the 14 Kiosks initially may not be
used for income producing purposes; one may be used as a concierge station and
the other as a customer convenience station.
SECTION 10. CONDITIONS OF THE PARTNERSHIPS' OBLIGATIONS TO CLOSE. The
obligations of the Partnerships under this Agreement are, at the option of the
Partnerships, subject to the following express conditions, which conditions may
be waived by the Partnerships without releasing or waiving any of their rights
hereunder.
10.1. AGREEMENTS AND CONDITIONS. On or before the Closing Date,
Chelsea shall have, in all material respects, complied with and duly performed
all of the agreements and conditions on its part required to be complied with or
performed pursuant to this Agreement on or before the Closing Date.
10.2. REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Chelsea contained in this Agreement shall be true and correct, in
all material respects, on and as of the Closing Date with the same force and
effect as though such representations and warranties had been made on and as of
the Closing date.
10.3. OPINION OF COUNSEL. WCC shall have received an opinion of
Stroock & Stroock & Lavan LLP, counsel for Chelsea, dated the Closing Date, in
form and substance reasonably satisfactory to counsel for WCC and Chelsea.
10.4. NO LEGAL PROCEEDING. No Action by a Governmental Authority shall
have been instituted to restrain or prohibit the acquisition by Chelsea, or the
conveyance by Halawa, of the Property.
10.5. GUARANTEES OF INDEBTEDNESS. At the Closing, indemnities will
become effective which allow Halawa to indemnify Chelsea GCA Realty, Inc. as a
guarantor against $18.0 million of indebtedness of Chelsea, on a last loss
basis. After the Closing, a new indemnity will become effective which will allow
Halawa to indemnify Chelsea GCA Realty, Inc. as a guarantor for up to $4.5
million of debt incurred by Chelsea to finance the Distribution to Halawa, on a
last loss basis. The indemnities shall be in form reasonably acceptable to
Halawa and Chelsea. At such time, upon Halawa's request, Chelsea GCA Realty,
Inc. will agree to reduce the indemnity with respect to the initial $18.0
million indemnity by an amount equal to Halawa's indemnity under the second loan
made to finance the Distribution to Halawa. The indemnity agreement will provide
for its extension, continuation or renewal should the underlying Chelsea debt be
extended, refinanced or otherwise modified and give the indemnitor the right to
directly guaranty the loan up to the respective amounts set forth in this
section should Chelsea GCA Realty, Inc. not be required to provide a guaranty of
the underlying Chelsea debt.
10.6. AMENDMENT OF CHELSEA'S LIMITED PARTNERSHIP AGREEMENT. Chelsea
shall have effected the Amended Limited Partnership Agreement as provided for
under Section 8.8 hereof.
SECTION 11. CLOSING DELIVERIES OF THE PARTNERSHIPS. At the Closing,
the Partnerships shall execute, acknowledge where appropriate, and/or deliver to
Chelsea the following:
11.1. OPINION OF COUNSEL. The opinion of counsel for WCC described in
Section 9.3 hereof.
11.2. DEED. Warranty deed to the Property containing customary
covenants conveying good and marketable fee simple absolute title to the
Property to Chelsea from Halawa, free and clear of all Liens, other than
Permitted Encumbrances.
11.3. BILL OF SALE. A bill of sale from Halawa to Chelsea conveying
good and marketable title to all Personalty to Chelsea, containing a warranty
that such Personalty is free and clear of all Liens.
11.4. ASSIGNMENTS. Assignment Agreements or Agreements assigning to
Chelsea all Tenant Leases, Operating Agreements, Documents, Licenses, Name and
Residual Rights from Halawa.
11.5. CONSENTS. All Consents required in connection with the execution
and delivery of this Agreement and the transactions contemplated hereby.
11.6. GOOD STANDING CERTIFICATES. Good standing certificate (or
analogous documents) with respect to the Partnerships from the State of Hawaii,
Department of Commerce and Consumer Affairs, dated not more than 45 days prior
to the Closing Date.
11.7. TITLE. The Title Policy, dated as of the date of the Closing.
11.8. FIRPTA AFFIDAVIT. The affidavit referred to in Section 1445 of
the Code with all pertinent information confirming that Halawa is not a foreign
person, trust, estate, corporation or partnership.
11.9. DOCUMENTS. All documents in the possession of the Partnerships
or the managing agent of the Property relating to the operation of the Property
shall be delivered to Chelsea or its managing agent at the Premises.
11.10. TENANT LEASES. To the extent in the possession of WCC,
ink-signed originals of all of the Tenant Leases, or, to the extent the original
is unavailable, duplicate originals with a certificate executed by WCC
warranting the authenticity of such duplicate original.
11.11. OPERATING AGREEMENTS. The list of Operating Agreements, updated
as of the Closing Date duly executed by WCC to certify its accuracy. Ink-signed
originals of all Operating Agreements listed on SCHEDULE 6.22, or, to the extent
the original is unavailable, duplicate originals with a certificate executed by
WCC warranting the authenticity of such duplicate original.
11.12. LICENSES. Originals of all Licenses, or the best copies
available to WCC, of all Licenses.
11.13. TENANT ESTOPPEL CERTIFICATES. Originals of all Tenant Estoppel
Certificates not previously delivered to Chelsea from those Tenants listed on
Schedule 8.2(m).
11.14. AUTHORITY OF THE PARTNERSHIPS. Resolutions adopted by and
signed by the respective partners of the Partnerships confirming the respective
Partnership's authority and authorization to enter into the transactions
contemplated hereby, and designating the power and authority of the
individual(s) executing and/or delivering any instruments, documents or
certificates on behalf of any entity to act for and bind such entity, as may be
reasonably required by Chelsea.
11.15. THE RENT ROLL. The Rent Roll, updated as of the Closing Date
duly executed by WCC to certify its accuracy.
11.16. UPDATED SCHEDULES. SCHEDULES 6.6, 6.8, 6.14, 6.18, 6.23(B),
6.23(C), 6.23(D), 6.23(E) AND 6.25, updated as of the Closing Date, duly
executed by WCC to certify their accuracy.
11.17. PAY-OFF LETTERS. Letters from ERS and the Bank of Hawaii
stating the pay-off amounts necessary to satisfy the Loans.
11.18. MASTER COMMERCIAL DECLARATION. All the documents and
declarations required pursuant to Article VI of the Development Agreement.
11.19. CONVEYANCE TAX CERTIFICATE. The State of Hawaii Department of
Taxation Conveyance Tax Certificate, duly executed.
11.20. HARPTA CERTIFICATE. The State of Hawaii Department of Taxation
Certification For Exemption From The Withholding Of Tax On The Disposition Of
Hawaii Real Property.
11.21. OTHER DOCUMENTS AND DELIVERIES. Such other documents,
instruments and deliveries customarily delivered by sellers of property similar
to the Property in Honolulu, Hawaii.
SECTION 12. DELIVERIES OF CHELSEA ON THE CLOSING Date. Chelsea agrees
on the Closing Date to deliver to Halawa the following:
12.1. CONSIDERATION. Special Units and other consideration to be
delivered pursuant to Section 3.1 hereof.
12.2. OPINION OF COUNSEL. The opinion of counsel for Chelsea described
in SECTION 10.3 hereof.
12.3. GOOD STANDING CERTIFICATE. Good standing certificate with
respect to Chelsea from the Secretary of State of Delaware dated not earlier
than 45 days prior to the Closing Date.
12.4. TAX CERTIFICATE. The State of Hawaii Department of Taxation
Conveyance Tax Certificate, duly executed.
12.5. DEED AND ASSIGNMENTS. The deed and Assignment Agreements
referred to in Sections 11.2 and 11.4 hereof.
SECTION 13. COVENANTS AFTER CLOSING.
13.1. FURTHER ASSURANCES. Each party agrees at any time and from time
to time after the Closing Date, upon the request of the other party, to do,
execute, acknowledge and deliver, or to cause to be done, executed, acknowledged
and delivered, all such further acts, assignments, transfers, powers of attorney
and assurances as may be required to carry out the terms and conditions of this
Agreement.
13.2. DISTRIBUTION. Immediately after the Closing, Chelsea will make
the Distribution to the holders of Special Units.
13.3. ACCOUNTANTS REPORTS. WCC will provide, as necessary, an
appropriate management representation letter to Chelsea's independent public
accountants, in form and substance satisfactory to WCC and Chelsea.
13.4. EXCLUSIVE USE RIGHTS. Chelsea acknowledges that the Property
will be conveyed to it subject to exclusive use rights in favor of Eagle
Hardware & Garden, Inc. and M & B Pets, Inc., dba Pets Discount, as disclosed in
Schedule 6.23(1) attached hereto, and Chelsea agrees, for itself and its
successors as owner of the Property, that it shall not take, perform or allow
any action or condition upon the Property after Closing which would result in a
breach of said exclusive rights. Chelsea further agrees that any conveyance of
the Property (or any interest therein or portion thereof) after Closing shall
include a covenant by the transferee to observe and respect said exclusive use
rights, so long as said exclusive use rights remain in effect. The provisions of
this Section 13.4 shall survive the Closing, and in the event of any breach of
said exclusive use rights with respect to the Property after the Closing Date,
Chelsea shall, in accordance with the provisions of Section 14.3 below,
indemnify and hold the Partnerships harmless from and against any Damages which
the Partnerships may sustain as a result of such breach.
SECTION 14. INDEMNIFICATION.
14.1. INDEMNIFICATION BY WCC. From and after the Closing, WCC agrees
to indemnify Chelsea against and hold it harmless from any and all Damages which
Chelsea may sustain at any time by reason of (a) the breach or inaccuracy of or
failure to comply with, or the existence of any facts resulting in the
inaccuracy of, any of the warranties, representations, conditions, covenants or
agreements of WCC contained in this Agreement or in any agreement or document
delivered pursuant hereto or in connection herewith, or arising out of the
consummation of the transactions contemplated hereby, (b) any Liability or claim
under any Environmental Laws relating to any event, action or failure to act
which occurred prior to the Closing Date, (c) any Liability or claim caused by
any preexisting condition within any of the interior tenant spaces of any
Building or any Personalty located therein which, after the Closing Date, is
found to be in violation of any air quality or air health standards under any
Laws in effect as of the Closing Date or causes injury to any persons, and any
Damages resulting therefrom which may arise after the Closing Date, provided,
however, that with respect to the matters referenced in this subclause (c),
WCC's indemnity shall extend for a period of two years after the Closing and
shall only cover Damages caused by such a preexisting condition as claimed
within this two year period of time, (d) any Taxes accrued or incurred prior to
the Closing Date or relating to periods prior to the Closing Date, (e) any
Liability incurred by WCC relating to the execution, delivery and consummation
by WCC of this Agreement and the transactions contemplated hereby, including,
without limitation, any and all Taxes incurred by WCC, or (f) the operations of
the Property prior to the Closing Date, including any services rendered or
actions taken by either of the Partnerships or their agents or misapplication of
security deposits and monetary damages or awards (including attorneys fees and
expenses) arising out of the Actions set forth on SCHEDULE 6.8.
14.2. INDEMNIFICATION BY HALAWA. From and after the Closing, Halawa
agrees to indemnify Chelsea against and hold it harmless from any and all
Damages which Chelsea may sustain at any time by reason of the breach or
inaccuracy of or failure to comply with, or the existence of any facts resulting
in the inaccuracy of, any of the warranties, representations, conditions,
covenants or agreements of Halawa contained in this Agreement or in any
agreement or document executed and delivered by Halawa pursuant hereto or in
connection herewith, or arising out of the consummation of the transactions
contemplated hereby.
14.3. INDEMNIFICATION BY CHELSEA. From and after the Closing, Chelsea
agrees to indemnify and hold the Partnerships harmless from and against (a) any
and all Damages which the Partnerships may sustain at any time by reason of the
breach or inaccuracy of or failure to comply with any warranties,
representations, conditions, covenants or agreements of Chelsea contained in
this Agreement or in any agreement, certificate or document delivered pursuant
to or in connection with this Agreement or arising out of the closing of the
transactions contemplated hereby and (b) the operations of the Property from and
after the Closing Date, other than as the result of conditions existing at, or
arising prior to, the Closing Date, including any Liability or claim under any
Environmental Laws relating to any event, action or failure to act relating to
an event which occurs after the Closing Date; provided, such Liability or claim
results solely from the initial introduction and initial release of Hazardous
Substances by Chelsea or its officers, employees, agents, tenants or business
invitees.
14.4. PROCEDURES FOR INDEMNIFICATION. In the event that any claim is
asserted against any party hereto, or any party hereto is made a party defendant
in any action or proceeding, and such claim, action or proceeding involves a
matter which is the subject of this indemnification, then such party (an
"Indemnified Party") shall give written notice to the other party hereto (the
"Indemnifying Party") of such claim, action or proceeding, and such Indemnifying
Party shall have the right to join in the defense of said claim, action or
proceeding at such Indemnifying Party's own cost and expense and, if the
Indemnifying Party agrees in writing to be bound by and to promptly pay the full
amount of any final judgment from which no further appeal may be taken, then at
the option of the Indemnifying Party, such Indemnifying Party may take over the
defense of such claim, action or proceeding, except that, in such case, the
Indemnified Party shall have the right to join in the defense of said claim,
action or proceeding at its own cost and expense.
SECTION 15. SURVIVAL OF REPRESENTATIONS.
The parties hereto agree that except as otherwise specifically
provided in the Agreement all representations, warranties, covenants,
indemnifications, conditions and agreements contained herein or in any
instrument or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and any investigation or audit made by any party hereto but
for no longer than two years after the Closing Date.
SECTION 16. FEES AND DISBURSEMENTS.
Except as otherwise specifically set forth herein, each party shall be
responsible for its own costs, legal fees and expenses incurred in connection
with this Agreement; provided, however, that WCC shall pay all costs associated
with conveying the Property to Halawa, including, but not limited to, conveyance
and transfer taxes, deed taxes, and recording charges and fees. Chelsea shall
pay the costs of conveying the Property from Halawa to Chelsea, including, but
not limited to, conveyance and transfer taxes, deed taxes, recording charges and
fees and the cost of the Title Policy to be issued in Chelsea's name. No part of
the fees and disbursements of the counsel, accountants or auditors retained by
the Partnerships in connection with the negotiation, preparation, execution and
performance of this Agreement shall be paid or assumed by Chelsea, it being the
intent of the parties that WCC shall be solely responsible for such fees.
SECTION 17. NO BROKER.
Chelsea, on the one hand, and the Partnerships jointly and severally,
on the other hand, each represents to the other that no broker or finder has
been involved with any of the transactions relating to this Agreement, except
for Robert Frommer, who was retained by Chelsea. Chelsea shall have the sole
responsibility for any broker's or finder's fees due to Mr. Frommer in
connection with the transactions contemplated by this Agreement and shall
indemnify and hold the Partnerships harmless therefrom. In the event of a claim
by any other broker or finder that such broker or finder represented or was
retained by the Partnerships, on the one hand, or Chelsea, on the other hand, in
connection herewith, the Partnerships or Chelsea, as the case may be, agrees to
indemnify and hold the other harmless from and against any and all Damages which
may be incurred in connection with such claim.
SECTION 18. NOTICES.
All notices, requests, demands and other communications provided for
by this Agreement shall be in writing and shall be deemed to have been given
when hand delivered, when received if sent by telecopier or by same day or
overnight recognized commercial courier service, or three business days after
being mailed in any general or branch office of the United States Postal
Service, enclosed in a registered or certified postpaid envelope, addressed to
the address of the parties stated below or to such changed address as such party
may have fixed by notice:
To WCC: WCC Associates
700 Bishop Street
Honolulu, Hawaii 96813
Attention: Richard W. Gushman, II
Telecopier: 808-536-2400
- copy to -
Goodsill Anderson Quinn & Stifel
Alii Place, Suite 1800
1099 Alakea Street
Honolulu, Hawaii 96813
Attention: Ronald H. W. Lum
Telecopier: 808-547-5880
To Halawa: KM Halawa Partners
Suite 1050, Pauahi Tower
1001 Bishop Street
Honolulu, Hawaii 96813
To Chelsea: Chelsea GCA Realty Partnership, L.P.
103 Eisenhower Parkway
Roseland, New Jersey 07068
Attention: President
Telecopier: 201-228-3891
- copy to -
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Attention: Martin H. Neidell
Telecopier: 212-806-6006
provided, that any notice of change of address shall be effective only upon
receipt.
SECTION 19. APPORTIONMENTS. (a) Except as expressly set forth herein
to the contrary in this Section 19, all items of income and expense at the
Property shall be apportioned between Halawa and Chelsea on a per diem basis as
of 11:59 P.M. of the Closing Date, in a manner customary for closings of
commercial real estate in Honolulu, Hawaii, in accordance with the procedures
set forth on SCHEDULE 19 annexed hereto and made a part hereof. Real estate
taxes shall be prorated and resolved through escrow.
(b) WCC shall maintain and make reasonably available to Chelsea copies
of any books or records necessary for the retroactive adjustment of any item
pursuant to clause (b) of this Section.
(c) The Partnerships are not obligated to pay to Chelsea any funds
representing the security deposits previously paid by Tenants and Chelsea shall
assume all liability with respect thereto. Chelsea shall not be entitled to any
credit or offset against the Partnerships on account of the assumption of the
security deposit liability.
(d) Notwithstanding any provision in this Agreement to the contrary,
the obligations and rights of the parties set forth in this Section 19 shall
survive the Closing without limitation.
SECTION 20. DEFAULT.
20.1. PARTNERSHIPS' DEFAULT. If the Partnerships shall default in
performance of their obligations under this Agreement, then, in addition to all
other legal remedies available to Chelsea by reason of their default, Chelsea
shall be entitled to (a) the return of the Escrow Deposit, together with all
accrued interest thereon, and all other sums, if any, paid on account of this
Agreement, (b) payment by WCC of all costs incurred by Chelsea in connection
with this transaction, including, without limitation, Chelsea's legal fees and
disbursements and costs incurred in connection with Chelsea's due diligence and
(c) the right to obtain specific performance of the Partnerships' obligations
hereunder and injunctive relief, it being agreed by the parties hereto that the
Property is unique.
20.2. CHELSEA'S DEFAULT. If Chelsea shall default in performance of
its obligations under this Agreement, the sole right of the Partnerships shall
be to retain the Escrow Deposit, and all interest accrued thereon, as liquidated
damages, such amount being fixed as such by reason of the fact that the actual
damages to be suffered by the Partnerships in such event are in their nature
uncertain and unascertainable with exactness. The Partnerships shall not seek or
obtain any money or other judgment against Chelsea or any disclosed or
undisclosed partner, principal, officer or employee of Chelsea or against the
assets or estate of Chelsea or any of the foregoing persons.
SECTION 21. MISCELLANEOUS.
21.1. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, sets forth the entire agreement and understanding between the
parties and merges and supersedes all prior discussions, agreements and
understandings of every kind and nature among them as to the subject matter
hereof, and no party shall be bound by any condition, definition, warranty or
representation other than as expressly provided for in this Agreement or as may
be on a date on or subsequent to the date hereof duly set forth in writing
signed by each party which is to be bound thereby. Unless otherwise expressly
defined, terms defined in this Agreement shall have the same meanings when used
in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall
have the same meanings when used in this Agreement or in any other Exhibit or
Schedule. This Agreement (including the Exhibits and Schedules hereto) shall not
be changed, modified or amended except by a writing signed by each party to be
charged and this Agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by each party to be charged.
21.2. GOVERNING LAW. THIS AGREEMENT AND ITS VALIDITY, CONSTRUCTION AND
PERFORMANCE SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF THE STATE OF
HAWAII, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
21.3. BENEFIT OF PARTIES; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Agreement may not be assigned by the
Partnerships except with the prior written consent of Chelsea. Nothing herein
contained shall confer or is intended to confer on any third party or entity
which is not a party to this Agreement any rights under this Agreement.
21.4. PRONOUNS. Whenever the context requires, the use in this
Agreement of a pronoun of any gender shall be deemed to refer also to any other
gender, and the use of the singular shall be deemed to refer also to the plural.
21.5. HEADINGS. The headings in the sections, paragraphs, Schedules
and Exhibits of this Agreement are inserted for convenience of reference only
and shall not constitute a part hereof. The words "herein," "hereof," "hereto"
and "hereunder," and other words of similar import refer to this Agreement as a
whole and not to any particular provision of this Agreement.
21.6. CONSTRUCTION. This Agreement shall be given a fair and
reasonable construction in accordance with the intentions of the parties hereto.
Each party hereto acknowledges that it has participated in the drafting of this
Agreement, and any applicable rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in connection with the construction or interpretation hereof. Each party has
been represented by independent counsel in connection with this Agreement. For
purposes of construction of this Agreement, provisions which are deleted or
crossed out shall be treated as if never included herein.
21.7. PARTIAL INVALIDITY. If any provision of this Agreement is held
to be invalid or unenforceable as against any person or under certain
circumstances, the remainder of this Agreement and the applicability of such
provision to other persons or circumstances shall not be affected thereby. Each
provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
21.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original, but all of which,
taken together, shall constitute but one and the same instrument. This Agreement
may be executed by facsimile which shall be deemed an original for all purposes.
In the event this Agreement is executed by the exchange of facsimile copies, the
parties agree to exchange ink-signed counterparts promptly after the execution
and delivery of this Agreement.
21.9. WAIVER. No failure or delay of any party in the exercise
of any right given to such party hereunder or the waiver by any party of any
condition hereunder for its benefit (unless the time specified herein for
exercise of such right, or satisfaction of such condition, has expired) shall
constitute a waiver of any other or further right nor shall any single or
partial exercise of any right preclude other or further exercise thereof or any
other right. The waiver of any breach hereunder shall not be deemed to be waiver
of any other or any subsequent breach hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed on the day and year first above written.
CHELSEA GCA REALTY PARTNERSHIP, L.P.
By: Chelsea GCA Realty, Inc.,
its General Partner
By:/s/ _______________________
WCC Associates
By: WRWG,
its general partner
By: /s/ ________________________
KM Halawa Partners
By: Poseiden Properties, Inc.,
its general partner
By:/s/ ____________________________
