SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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) December 4, 1996
(November 19, 1996)
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GLENBOROUGH REALTY TRUST INCORPORATED
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(Exact name of registrant as specified in its charter)
Maryland 001-14162 94-3211970
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(State or other (Commission (IRS Employer
jurisdiction of File Number) I.D. Number)
incorporation)
400 South El Camino Real, Ste. 1100, San Mateo, California 94402
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(Address of principal executive offices)
Registrant's Telephone number, including area code:(415) 343-9300
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 19, 1996, the Company's Operating Partnership purchased five rental
properties (the "Carlsberg Properties") located in Arizona and California. The
acquisition included one retail and four office properties comprising 294,000
square feet. The total purchase price was $19,490,000, which was comprised of
approximately $10,280,000 in cash, the assumption of $8,860,000 of mortgage debt
and issuance of 24,844 shares of the Company's common stock having an initial
redemption value of $350,000 (based on a $14.09 per share value). The
acquisition was funded in part from the Company's $50,000,000 credit facility
with Wells Fargo Bank N.A.
Additionally, on November 19, 1996, the Company's Operating Partnership entered
into a Loan Agreement and an Option Agreement with Carlsberg Properties, Ltd.
("the Borrower"). The loan amount is $3,600,000, of which $2,700,000 was
disbursed to the Borrower and $900,000 was held by the Operating Partnership as
leasing and interest reserves. The loan is secured by a 48,000 square foot
property located in Arizona (the "Secured Property"). Pursuant to the Option
Agreement, the Operating Partnership has the option to purchase the Secured
Property on either the second or third anniversary of the closing date of
November 19, 1996, for the greater of i) the $3,600,000 original loan amount
plus $50,000 and any remaining leasing reserves or ii) the value of the Secured
Property, deemed to be the Secured Property's net annual income (as defined in
the Option Agreement), capitalized at 11%.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a)&(b) FINANCIAL STATEMENTS
As of the date of filing of this Current Report
on Form 8-K, it is impracticable for the Company
to provide the financial statements required by
Item 7 (a) & (b) of Form 8-K. In accordance with
Item 7(a)(4) of Form 8-K, the Company will by
amendment to this Form 8-K no later than 60 days
after December 4, 1996, file such financial
statements.
(c) EXHIBITS
Purchase agreement related to the acquisition of
Carlsberg Plaza
Purchase agreement related to the acquisition of
Dallidet Professional Center
Purchase agreement related to the acquisition of
Hillcrest Office Building
Purchase agreement related to the acquisition of
Tradewinds Office Building
Purchase agreement related to the acquisition of
Sonora Plaza
Loan agreement between Glenborough Properties,
L.P. and Carlsberg Properties, Ltd. for
$3,600,000
Option agreement between Glenborough Properties,
L.P. and Carlsberg Properties, Ltd. for Grunow
Medical Building
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GLENBOROUGH REALTY TRUST INCORPORATED
By: Glenborough Realty Trust Incorporated,
Date:December 3, 1996 /s/ Andrew Batinovich
Andrew Batinovich
Director, Executive Vice President,
Chief Operating Officer
and Chief Financial Officer
(Principal Financial Officer)
Date:December 3, 1996 /s/ Terri Garnick
Terri Garnick
Senior Vice President,
Chief Accounting Officer,
Treasurer
(Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
10.1 Purchase agreement related to the
acquisition of Carlsberg Plaza
10.2 Purchase agreement related to the
acquisition of Dallidet Professional Center
10.3 Purchase agreement related to the
acquisition of Hillcrest Office Building
10.4 Purchase agreement related to the
acquisition of Tradewinds Office Building
10.5 Purchase agreement related to the
acquisition of Sonora Plaza
10.6 Loan agreement between Glenborough
Properties, L.P. and Carlsberg Properties,
Ltd. for $3,600,000
10.7 Option agreement between Glenborough
Properties, L.P. and Carlsberg Properties,
Ltd. for Grunow Medical Building
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Purchase Agreement
by and between
Terra Plaza, Ltd. dba Terra Plaza Building Limited Partnership,
a California limited partnership
and
Glenborough Properties, L.P.,
a California limited partnership,
dated as of November __, 1996
for
Carlsberg Plaza
Phoenix, Arizona
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List Of Exhibits
Exhibit A Registration Rights Agreement
Exhibit B Grant Deed
Exhibit C Assignment of Leases
Exhibit D Warranty Bill Of Sale
Exhibit E Assignment of Service Contracts, Warranties and Guaranties
and Other Intangible Property
Exhibit F Certificate of Transferor other than an Individual (FIRPTA
Affidavit)
Exhibit G Form of Tenant's Estoppel Certificate
Exhibit H Rent Roll
Exhibit I Notice To Tenants
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List Of Schedules
Schedule 1(a) Real Property
Schedule 2(a)(i) Loan
Schedule 3(c) Permitted Exceptions
Schedule 3(h) Related Agreements
Schedule 7(g) Defects
Schedule 7(h) Violations
Schedule 7(i) Proceedings
Schedule 7(l) Litigation
Schedule 7(m) Outstanding Contracts
Schedule 7(p) Personal Property
Schedule 7(r) Lease Exceptions
Schedule 7(x) Brokerage Fees
Schedule 7(z) Contracts
Schedule 7(aa) Loan Documents
Schedule 7(bb) Environmental Reports
Schedule 12(c) Tenant Improvements Costs and Leasing
Commissions -- Seller's Responsibility
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Purchase Agreement
This Purchase Agreement is dated as of November__, 1996, by and between
Terra Plaza, Ltd., dba Terra Plaza Building Limited Partnership, a California
limited partnership ("Seller"), and Glenborough Properties, L.P., a California
limited partnership ("Buyer").
Recitals
A. Buyer is a California limited partnership whose general partner is
Glenborough Realty Trust Incorporated, a Maryland corporation ("GLB"), whose
stock is publicly traded on the New York Stock Exchange.
B. Buyer desires to acquire the Property (as defined in Subparagraph 1(a)
below) from Seller and Seller desires to sell the Property to Buyer, upon the
terms and subject to the conditions set forth in this Agreement.
Now, Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Property
Subject to and upon the terms and conditions hereinafter set forth and the
representations and warranties contained herein, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, subject to the terms, covenants and
conditions set forth herein, (a) the real property described in Schedule 1(a)
attached hereto, together with any and all buildings and other improvements
thereon and, to the extent owned by Seller, or held directly for the benefit of
Seller, any interest therein, and any and all rights, privileges and easements
appurtenant thereto (the "Real Property"), (b) all of Seller's right, title and
interest in and to the Leases listed in Exhibit H attached hereto (the
"Leases"), and any and all guarantees of the Leases (the "Lease Rights"), and
(c) all of Seller's right, title and interest in and to the personal property
and any interest therein owned by Seller or held directly for the benefit of
Seller, if any, located on the Real Property and used in the operation or
maintenance of the Real Property (the "Personal Property"), (d) all of Seller's
right, title and interest, if any, in and to the following to the extent
assignable: the Contracts listed in Schedule 7(z), that certain tax impound
account which is held by Provident National Assurance Company, a Tennessee
corporation ("Provident"), in connection with the Loan (as described in
Subparagraph 2(a)(i) below) secured by the Property (the "Loan Reserve"), all
general intangibles relating to design, development, operation, management and
use of the Real Property, all certificates of occupancy, zoning variances,
building, use or other permits, approvals, authorizations, licenses and consents
obtained from any governmental authority in connection with the
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development, use, operation or management of the Real Property, all soil tests,
engineering reports, appraisals, architectural drawings, plans and
specifications relating to all or any portion of the Real Property, and all
payment and performance bonds or warranties or guarantees relating to the Real
Property; and (e) all of Seller's right, title and interest in and to any and
all of the following to the extent assignable: trademarks, service marks, logos,
other source and business identifiers, trademark registration and applications
for registration used at or relating to the Real Property and any written
agreement granting to Seller any right to use any trademark or trademark
registration at or in connection with the Real Property (such property, together
with the property described in clause (d) of this Paragraph 1, is herein called
the "Intangible Property"). The term "Property" means all of the Real Property,
the Lease Rights, the Personal Property and the Intangible Property.
2. Purchase Price.
(a) Buyer and Seller agree that the purchase price of the Property shall be
Three Million Six Hundred Thousand Dollars ($3,600,000) (the "Purchase Price"),
which shall comprise the following components:
(i) At the closing of the purchase and sale contemplated herein (the
"Closing"), Buyer shall take title to the Property subject to the mortgage or
deed of trust (as approved by Buyer) securing the loan (the "Loan") described on
Schedule 2(a)(i) attached hereto. At the Closing, Buyer shall receive a credit
against the Purchase Price in an amount equal to the amount that would be
required to repay the Loan in full (excluding prepayment penalties and accrued
interest) as of the Closing Date (as defined in Subparagraph 4(b) below), which
is presently estimated to be Two Million One Hundred Seven Thousand Nine Hundred
Eight and 25/100 Dollars ($2,107,908.25);
(ii) One Hundred Twenty-Five Thousand Dollars ($125,000) worth of
Stock (as defined in Subparagraph 2(b) below) to be issued to Buyer or Carlsberg
Properties, Inc., a California corporation ("Carlsberg"); and
(iii) Immediately available funds ("Cash") to be paid to Seller, in
the amount equal to (A) the Purchase Price less (B) the sum of the amount of the
Loan assumed and the value of the Stock as of the Closing Date.
(b) For purposes of determining the number of shares of Stock to be issued
pursuant to Subparagraph 2(a)(ii) above, each share of Stock shall be deemed to
be worth an amount equal to the greater of (i) the weighted average trading
closing prices for the sale of shares of GLB's common stock (the "Stock") for
the thirty (30) business days preceding the Closing Date, or (ii) the weighted
average trading closing prices for the sale of shares of GLB's common stock for
the ten (10) business days preceding the Closing Date.
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(c) With respect to any Stock to be issued to Seller:
(i) All certificates for the Stock shall bear a legend in
substantially the following form:
"The securities evidenced by this certificate have
not been registered under the Securities Act of
1933 or any state securities laws and may not be
sold or offered for sale except in compliance with
such act and laws.
The securities represented by this certificate are
not transferable, except in accordance with the
procedures and restrictions set forth in the
Registration Rights Agreement dated as of
November __, 1996, between Glenborough Realty Trust
Incorporated, a Maryland corporation ("GLB") and
Carlsberg Properties, Inc., a California
corporation, copies of which are filed at the
principal office of GLB and are available to any
holder without charge upon written request
therefor. Any purported transfer in violation of
such restrictions shall be void and of no effect.
As used herein, transfer shall mean sale,
exchange, assignment, transfer, pledge,
hypothecation or other disposition of any interest
in a share except by operation of law in connection
with a merger or consolidation of the corporation."
(ii) The certificates for shares of the Stock shall also bear any
other legend required by any applicable state securities law.
(iii) In addition, GLB shall make a notation regarding the
restrictions on transfer of the Stock in its stock records, and such Stock shall
be transferred on the records of GLB only if transferred or sold in compliance
with the provisions of the Registration Rights Agreement in the form of
Exhibit A attached hereto (the "Registration Rights Agreement").
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(iv) The holder of the Stock issued to Seller at the Closing shall
have "piggyback" registration rights for a period of one year as well as certain
other rights, all as more particularly described in the Registration Rights
Agreement.
(d) On the Closing Date, Seller shall, or shall cause Carlsberg to, execute
and deliver, and Buyer shall cause GLB, so to execute and deliver, the
Registration Rights Agreement.
(e) Seller acknowledges and agrees that Buyer may be required to withhold a
portion of the Purchase Price pursuant to Section 1445 of the Code (as defined
in Subparagraph 4(c)(x) below) or Sections 18805 and 26131 of the California
Revenue and Taxation Code or similar laws or regulations of other states. Any
amount properly so withheld by Buyer shall be deemed to have been paid by Buyer
as part of the Purchase Price, and Seller's obligation to consummate the
transactions contemplated herein shall not be excused, reduced, terminated or
otherwise affected thereby.
3. Conditions to Closing
(a) The following conditions are precedent to Buyer's obligation to
purchase the Property (the "Buyer's Conditions Precedent"):
(i) The representations and warranties of Seller contained herein
shall be true and correct as of the Closing Date as though made at and as of the
Closing Date, and Seller's covenants under this Agreement shall be satisfied as
of the Closing Date (to the extent such covenants are to be satisfied as of the
Closing Date).
(ii) At the Closing, Seller shall convey to Buyer (A) fee simple title
to the Property identified in Schedule 1(a) by special warranty deed in the form
of Exhibit B attached hereto, (B) title to the Lease Rights pursuant to an
assignment and assumption of tenant leases in the form of Exhibit C attached
hereto (the "Assignment of Leases"), (C) title to the Personal Property pursuant
to a bill of sale in the form of Exhibit D attached hereto and (D) an assignment
and assumption of service contracts, guaranties and warranties and other
intangible property in the form of Exhibit E attached hereto (the "Assignment of
Service Contracts").
(iii) Lawyer's Title Insurance Corporation (the "Title Company") shall
be committed to issue at Closing for its extended coverage American Land Title
Association Policy of Owner's Title Insurance (Form B, rev. 10/17/70) in the
amount of the Purchase Price, showing title to the Real Property vested in
Buyer, subject only to exceptions described on Schedule 3(c) attached hereto
(the "Permitted Exceptions"). The foregoing title policy, together with
endorsements covering subdivision map act, survey, access, contiguity, no
violations of covenants, conditions or restrictions and such other endorsements
as Buyer has requested prior to the Effective Date (as defined in
Subparagraph 14(l) below), is referred to herein as the
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"Title Policy." On or before the Closing, Seller shall cause the Title Company
to deliver to Buyer a certification that, in issuing the Title Policy, the Title
Company has not relied on any representations or indemnities of Seller or any of
its affiliates (except as disclosed in such certification). In addition, as a
condition to Buyer's obligation to close, Buyer shall be satisfied that, as of
the Closing, there is no outstanding financing statement filed in accordance
with the Uniform Commercial Code of any applicable jurisdiction with respect to
the Property or Seller except for any financing statements approved by Buyer
prior to the Effective Date or relating to the Loan.
(iv) Seller obtaining and delivering to Buyer the tenant estoppel
certificates required under Paragraph 6 below.
(v) Seller obtaining and delivering to Buyer the Registration Rights
Agreement duly executed by the recipient of the Stock.
(vi) The physical condition of the Real Property shall be
substantially the same on the Closing Date as on the date hereof, reasonable
wear and tear and loss by casualty excepted (subject to the provisions of
Paragraph 10 below).
(vii) All of the property management and leasing brokerage agreements
affecting the Property (whether between Seller, Carlsberg Management Company
("CMC") or any other party and such property managers and leasing agents) shall
be terminated as of the Closing Date at no cost or expense to Seller.
The Buyer's Conditions Precedent contained in Subparagraphs 3(a)(i)
through 3(a)(vii) are intended solely for the benefit of Buyer. If any of the
Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its
sole discretion either to waive the Buyer's Condition Precedent and proceed with
the purchase or terminate this Agreement by written notice to Seller and the
Title Company.
(b) The simultaneous closing of all of the transactions contemplated by the
agreements described on Schedule 3(h) attached hereto (the "Related Agreements")
with the Closing of this transaction is a condition precedent (the "Mutual
Condition Precedent") to both Seller's and Buyer's obligations under this
Agreement. The Mutual Condition Precedent is for the benefit of both Seller and
Buyer. If the Mutual Condition Precedent is not satisfied, each party shall have
the right in its sole discretion, either to waive the Mutual Condition Precedent
and proceed with the transaction so long as both of them have waived this
condition, or to terminate this Agreement by written notice to the other party
and Title Company.
(c) In the event that any party having the right of cancellation under this
Paragraph 3 does not inform the other party and Title Company in writing of its
disapproval of any condition precedent (the "Condition Precedent") for such
party's benefit provided in this Paragraph 3 prior to the Closing, such
Condition Precedent
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shall be deemed to have been satisfied, approved or waived, effective as of the
Closing; provided that a party shall not be deemed to have waived any claim for
breach of any representation or warranty by the other party unless such party
has actual knowledge of such breach prior to Closing. For purposes of this
Subparagraph 3(c), "actual knowledge" of Buyer shall be deemed to mean the
present actual knowledge of Mr. Andrew Batinovich, Mr. Steve Saul or Mr.
Frank E. Austin, without any duty of investigation or inquiry on their part, and
"actual knowledge" of Seller shall be deemed to mean the present actual
knowledge of Mr. William G. Geary, Jr., Ms. Janet DaVall and Mr. Ron Lema,
without any duty of investigation or inquiry on their part. Upon termination of
this Agreement and the escrow for failure of a Condition Precedent, (i) Buyer
shall deliver to Seller copies of any and all soils, geologic, engineering and
environmental reports or studies concerning the Property prepared by or on
behalf of Seller and (ii) Seller shall bear the cost of any title and escrow
cancellation fees.
4. Closing and Escrow
(a) Upon mutual execution of this Agreement, the parties hereto shall
deposit an executed counterpart of this Agreement with Title Company and this
Agreement shall serve as instructions to Title Company as the escrow holder for
consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional escrow instructions as may be appropriate to
enable Title Company to comply with the terms of this Agreement; provided,
however, that in the event of any conflict between the provisions of this
Agreement and any supplementary escrow instructions, the terms of this Agreement
shall control unless a contrary intent is expressly indicated in such
supplementary instructions.
(b) The parties shall endeavor to conduct the Closing through an escrow
closing pursuant to Subparagraph 4(a) above. If, however, an escrow Closing is
not practical, the Closing hereunder shall be held and delivery of all items to
be made at the Closing shall be made at the offices of Morrison & Foerster llp,
345 California Street, San Francisco, California 94104, on or before
November 15, 1996 (the "Closing Date"). In the event the Closing does not occur
on or before the Closing Date, Title Company shall, unless it is notified by
both parties to the contrary within five (5) days after the Closing Date, return
to the depositor thereof items which were deposited hereunder. Any such return
shall not, however, relieve either party of any liability it may have for its
wrongful failure to close.
(c) At or before the Closing, Seller shall deliver or cause to be delivered
to Buyer the following:
(i) a duly executed Registration Rights Agreement;
(ii) the duly executed and acknowledged Deed;
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(iii) a duly executed Assignment of Leases; (iv) a duly executed Bill
of Sale;
(v) a duly executed Assignment of Service Contracts;
(vi) originals of the Leases;
(vii) duly executed tenant estoppel certificates as required pursuant
to Subparagraph 3(a)(iv) above;
(viii) originals of the Contracts not previously delivered to Buyer;
(ix) originals of any and all building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements that are in the possession or control of Seller and/or an affiliate
of Seller that have not been previously delivered to Buyer;
(x) a FIRPTA affidavit (in the form attached as Exhibit F) pursuant to
Section 1445(b)(2) of the Internal Revenue Code of 1986 (the "Code"), and on
which Buyer is entitled to rely, that Seller is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code;
(xi) such resolutions, authorizations, bylaws or other corporate
and/or partnership documents or agreements relating to Seller as shall be
reasonably required by Buyer;
(xii) A signed notice in the form of Exhibit I attached hereto for
each of the Tenants (as defined in Paragraph 6 below);
(xiii) a closing statement in form and content satisfactory to Buyer
and Seller; and
(xiv) any other instruments, records or correspondence called for
hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any of the foregoing items by
an instrument in writing.
(d) At or before the Closing, Buyer shall deliver or cause to be delivered
to Seller the following:
(i) a closing statement in form and content satisfactory to Buyer and
Seller;
(ii) the duly executed certificate(s) for shares of the Stock in the
name of Carlsberg, evidencing the issuance of the Stock;
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(iii) a duly executed Registration Rights Agreement;
(iv) a duly executed Assignment of Leases;
(v) a duly executed Assignment of Service Contracts; and
(vi) the Cash.
(e) Seller and Buyer shall each deposit such other instruments as are
reasonably required by Title Company or otherwise required to close the escrow
and consummate the transactions described herein in accordance with the terms
hereof. Seller and Buyer hereby designate Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code and the
regulations promulgated thereunder.
(f) With respect to the Property the following adjustments shall be made,
and the following procedures shall be followed:
(i) As nearly as practicable prior to the Closing, Buyer and Seller
shall prepare a statement for the Property ("Proration Statement") showing
prorations for the items set forth below, calculated as of 12:01 a.m. on the
Closing Date, on the basis of a 365-day year:
(A) rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, common area expenses,
marketing fund charges, operating expenses, maintenance escalation rents or
charges, cost-of-living increases or other charges of a similar nature, if any,
and any additional charges and expenses payable under tenant Leases (whether
such collection occurs prior to, on or after the Closing Date);
(B) real property taxes and assessments;
(C) the current installments (only) of any improvement bonds
or assessments which are a lien on the Property or which are pending and may
become a lien on the Property;
(D) water, sewer and utility charges;
(E) amounts payable under any Contract that will be continued
after the Closing;
(F) permits, licenses and/or inspection fees (calculated on
the basis of the period covered);
(G) interest on the Loan; and
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(H) any other expenses normal to the operation and maintenance
of the Property.
(ii) Buyer shall use commercially reasonable efforts consistent with
prudent business practices to collect rents or other amounts payable under the
Leases that were delinquent as of the Closing Date and that relate to a period
prior to the Closing. To the extent such delinquent rents and other amounts are
collected by Buyer, Buyer may deduct from the amount owed to Seller an amount
equal to the out-of-pocket third-party collection costs actually incurred by
Buyer in collecting such rents and other amounts due to Seller. Any rent or
other payment (including percentage rent) collected after the Closing from any
tenant which owed rent that was delinquent as of the Closing Date and that
relate to a period prior to the Closing shall be applied first, to satisfy such
tenant's rent obligations first becoming due and payable in the month in which
such rent was paid (or within five (5) days after the date on which such rent
was paid), and then to satisfy such delinquent rent obligations (including those
that relate to the period after the Closing Date) in the inverse order of
maturity. After the Closing, Buyer shall have the exclusive right to enforce
claims for rents and all other obligations due and owing under the Leases and
terminate any Leases as Buyer, in its sole discretion, deems appropriate.
(iii) At the Closing, Seller shall deliver to Buyer all security
deposits, letters of credit and other collateral given to Seller or any of its
affiliates or predecessor-in-interest pursuant to any of the Leases, less any
portions thereof applied in accordance with the respective Lease (together with
a statement regarding such applications).
(iv) If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
operating expenses, maintenance escalation rents or charges, cost-of-living
increases or other charges of a similar nature ("Additional Rents") and such
Additional Rents are not finally adjusted between the landlord and tenant under
any Lease until after the Closing Date, then Buyer shall submit to Seller within
sixty (60) days after such Additional Rents are finally adjusted with any
tenant, a supplemental statement (the "Supplemental Statement") to the extent
such Additional Rents have been finally adjusted between Buyer and such tenant,
containing a calculation of the prorations of such Additional Rents, prepared
based on the principles set forth in this Subparagraph 4(f) , provided that in
making such adjustment, the parties shall exclude any Additional Rents arising
from increased real property taxes for the Property to the extent such increase
is the result of Buyer's purchase of the Property. To the extent the
Supplemental Statement indicates that one party is entitled to any amounts under
this Subparagraph 4(f)(iv), the other party shall pay such sum to such party
within thirty (30) days after the delivery of the Supplemental Statement.
(v) Buyer shall pay the following costs of closing this Transaction:
(A) the costs of the Buyer's legal counsel, accounting services and engineering
and environmental analyses, (B) fifty percent (50%) of the escrow charges, fees
for
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recording the Deed and the premium for the Title Policy and (C) the cost of
preparing three (3) years' audited operating statements for the Property to be
completed prior to the Closing as required under federal securities laws. All
other costs associated with the transaction, (including, but not limited to, any
transfer taxes, all survey costs, and fifty percent (50%) of the escrow charges,
fees for recording the Deed and the premium for the Title Policy) shall be
charged against Seller and, provided the Closing occurs, will be deducted from
the Purchase Price.
(vi) All of Seller's right, title and interest in and to the Loan
Reserve shall be assigned to Buyer at Closing, and at the Closing Buyer shall
pay to Seller through escrow a sum in cash equal to the balance of the Loan
Reserve as of the Closing Date.
(vii) Notwithstanding anything to the contrary contained in this
Subparagraph 4(f), if the real property taxes and assessments payable for any
period prior to Closing are determined to be more than the amounts prorated
herein (in the case of the current year) or paid by Seller (in the case of any
prior year), due to a reassessment of the value of the Property or otherwise,
Seller and Buyer shall promptly adjust the proration of such real property taxes
and assessments after the determination of such amounts, and Seller shall pay to
Buyer any increase in the amount of such real property taxes and assessment
applicable to any period prior to Closing.
(viii) The obligations of Seller and Buyer under this
Subparagraph 4(f) shall survive the Closing.
5. Loan
(a) Buyer may elect to attempt, and Seller shall reasonably cooperate with
Buyer in such attempt, to obtain the consent of the lender of the Loan to the
transfer of the Property to Buyer, which consent shall confirm for the benefit
of Buyer and Seller, the following items with respect to the Loan: the
identification of the applicable Loan Documents, the interest rate, the date
through which interest is paid, the principal amount outstanding, the maturity
date, the monthly payment, the absence of any default relating to the payment of
money to the lender, and to such lender's knowledge the absence of any other
defaults (the "Lender Consent"); provided, however, that no party shall be
obligated to pay any consideration to a lender to obtain such consent except as
provided in this Subparagraph 5(a). Each party hereto shall promptly keep the
other party informed of its discussions with the lender in connection with the
matters described in this Subparagraph 5(a). Notwithstanding anything to the
contrary in this Subparagraph 5(a), Buyer may elect by written notice to Seller,
to pay the entire outstanding balance of the Loan on or prior to the date which
is one hundred eighty (180) days after the Closing Date (the "Loan Payoff
Date"), in which case Buyer shall make such payments as stated in such notice at
or before the Loan Payoff Date, together with any consideration in the nature of
a fee or expense reimbursement (i.e., not a payment which reduces principal)
which is required
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under the terms of a provision that presently exists in the applicable Loan
Documents to obtain the Lender Consent, including any and all costs and expenses
of the lender's counsel or representatives in connection therewith. If Buyer
pays the entire outstanding balance of the Loan on or prior to the Loan Payoff
Date, Seller shall pay any prepayment penalties applicable to the Loan payoff.
(b) In addition, Seller hereby grants Buyer the right to renegotiate the
Loan and to negotiate new loans or loans to replace the existing Loan; provided
that (i) Seller incurs no cost or liability in connection therewith (except for
any applicable prepayment penalties), (ii) if Buyer does not pay off the Loan on
or before the Loan Payoff Date, Buyer shall use commercially reasonable efforts
(but at no additional cost to Buyer) to cause the lender of the Loan to release
Seller from all liability under the Loan and the Loan Documents, and (iii) such
new loans and modifications to the Loan are not effective until the Closing. The
parties shall execute all documents necessary or desirable to evidence or
effectuate the modification of the Loan as provided in this Paragraph 5.
(c) The provisions of this Paragraph 5 shall survive the Closing.
6. Estoppel Certificates
Seller shall use all reasonable efforts to obtain an estoppel certificate
from each tenant of the Property (each, a "Tenant"), dated no earlier than
thirty (30) days prior to the Closing Date, substantially in the form of
Exhibit H attached hereto, conforming to the most recent rent roll approved by
Buyer and alleging no defaults, offsets, or claims against the lessor (the
"Estoppel Certificate"). It shall be a condition to Buyer's obligation to close
the sale and purchase of the Property that on or before the Closing:
(a) Seller delivers to Buyer an Estoppel Certificate from Tenants occupying
seventy-five percent (75%) of the rentable area of the Property, including all
tenants occupying more than ten percent (10%) of the rentable area of the
Property (collectively, the "Required Tenants"), and, with respect to all other
tenants (collectively, the "Non-Required Tenants"), there shall exist no dispute
with Seller, which dispute is material to the use, value or economics of the
Property, as determined on an individual basis by Buyer in good faith in Buyer's
sole discretion (a "Material Non-Required Tenant Dispute") (and Buyer shall be
afforded the opportunity to inquire of any Non-Required Tenant which does not
provide an Estoppel Certificate as to whether any such dispute exists); or
(b) To the extent that Seller is unable to obtain Estoppel Certificates, or
any items required to be therein, from the Required Tenants, or to the extent
that there is any Material Non-Required Tenant Dispute, Seller shall deliver to
Buyer and Buyer may, but shall not be obligated to, accept, on the Closing Date
a certification in which Seller warrants and represents to Buyer, with respect
to such missing Estoppel
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Certificates, or any missing items required to be included therein, each item
set forth in the Estoppel Certificate attached as Exhibit H for the missing
Estoppel Certificates and/or indemnifies Buyer as to any such Material
Non-Required Tenant Dispute.
(c) If the conditions contained in Subparagraphs 6(a) and (b) above are not
satisfied, then Buyer may, by written notice given to Seller before the Closing,
elect to waive such conditions or terminate this Agreement.
7. Seller's Representations and Warranties
Seller hereby represents and warrants to Buyer as follows:
(a) Seller is a limited partnership duly organized, validly existing and in
good standing under the laws of the State of California, and is registered to do
business and is in good standing in the State of Arizona.
(b) Seller has full partnership power and authority to execute and deliver
this Agreement and to perform all of the terms and conditions hereof to be
performed by Seller and to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and is the legal, valid
and binding obligation of Seller and is enforceable against Seller in accordance
with its terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general equitable principles (whether or
not such enforceability is considered in a proceeding at law or in equity).
Seller is not presently subject to any bankruptcy, insolvency, reorganization,
moratorium, or similar proceeding.
(c) Neither the execution and delivery of this Agreement, the consummation
of the transactions contemplated by this Agreement, nor the compliance with the
terms and conditions hereof will (i) violate or conflict, in any material
respect, with any provision of Seller's partnership agreement or any statute,
regulation or rule, or, to Seller's knowledge, any injunction, judgment, order,
decree, ruling, charge or other restrictions of any government, governmental
agency or court to which Seller is subject, and which violation or conflict
would have a material adverse effect on the ownership and operation of the
Property, or (ii) result in any material breach or the termination of any lease,
agreement or other instrument or obligation to which Seller is a party or by
which any of the Property may be subject, or cause a lien or other encumbrance
to attach to any of the Property, other than any due-on-sale provisions in the
Loan Documents. Seller is not a party to any contract or subject to any other
legal restriction that would prevent fulfillment by Seller of all of the terms
and conditions of this Agreement or compliance with any of the obligations under
it, other than any due-on-sale provisions in the Loan Documents.
(d) All material consents required from any governmental authority or third
party in connection with the execution and delivery of this Agreement by Seller
or the
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consummation by Seller of the transactions contemplated hereby have been made or
obtained or shall have been made or obtained by the Closing Date. Complete and
correct copies of all such consents shall be delivered to Buyer.
(e) Seller has fee simple title to the Real Property, subject only to the
Permitted Exceptions.
(f) There are no adverse or other parties in possession of the Property, or
any part thereof, except Seller and tenants under the Leases. No party has been
granted any license, lease, or other right relating to the use or possession of
the Property or any part thereof, except tenants under the Leases.
(g) Except as set forth on Schedule 7(g), to Seller's knowledge, there are
no material defects with respect to the Real Property, including, without
limitation, no material defects in the structural and load-bearing components of
the Property, the roof(s), the parking lot(s), the plumbing, heating, air
conditioning and electrical and life safety systems, and all such items are in
good operating condition and repair.
(h) Except as set forth on Schedule 7(h), to Seller's knowledge, the use
and operation of the Property is in compliance in all material respects with all
applicable restrictive covenants, building codes, environmental, zoning and land
use laws, and other applicable local, state and federal laws and regulations
(collectively, "Laws").
(i) Except as set forth on Schedule 7(i), to Seller's knowledge, there are
no condemnation, environmental, zoning or other land-use regulation proceedings
that have been instituted, and Seller has not received any notice of any such
proceeding that is planned to be instituted, which would detrimentally and
materially affect the use, operation or value of any of the Property, nor has
Seller received notice of any special assessment proceedings affecting any of
the Property. Seller shall notify Buyer promptly of any such proceedings of
which Seller becomes aware.
(j) All water, sewer, gas, electric, telephone, and drainage facilities and
all other utilities required, to Seller's knowledge, by law, or by the normal
use and operation of the Property are installed to the property lines of the
Property, and are connected pursuant to valid permits, and are adequate to
service the Property as presently operated and, to Seller's knowledge, to permit
compliance with all Laws.
(k) Seller has obtained all licenses, permits, variances, approvals,
authorizations, easements and rights of way, including proof of dedication,
required from all governmental authorities having jurisdiction over the Property
or from private parties for the present use, operation and occupancy of the
Property and to insure vehicular and pedestrian ingress to and egress from the
Property.
(l) Except as set forth on Schedule 7(l), there is no litigation pending
or, to Seller's knowledge, threatened, against Seller that arises out of the
ownership of the
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Property or that might materially and detrimentally affect the value or the use
or operation of any of the Property for its intended purpose or the ability of
Seller to perform its obligations under this Agreement. Seller shall notify
Buyer promptly of any such litigation of which Seller becomes aware.
(m) Except as set forth on Schedule 7(m), at the time of Closing (i) there
will be no outstanding written or oral contracts made by Seller for any
improvements to the Property which have not been fully paid for and Seller shall
cause to be discharged all mechanics' and materialmen's liens arising from any
labor or materials furnished to the Property prior to the time of Closing, and
(ii) Seller shall have completed all punch-list items with respect to any tenant
improvements constructed by Seller as landlord under the Leases.
(n) Seller knows of no facts nor has Seller failed to disclose any fact
which would prevent Buyer from using and operating the Property after Closing in
the manner in which the Property is currently operated.
(o) Other than the rights of Tenants, as tenants only, under the Leases,
Seller has not entered into any purchase contracts, options or other agreements
of any kind, written or oral, recorded or unrecorded, whereby any person or
entity other than Buyer will have acquired or will have any basis to assert any
right, title or interest, or right to possession, use, enjoyment or proceeds of
all or any portion of the Property. None of the Leases contain any rights to
purchase, rights of first offer to purchase, or first refusal to purchase the
Property.
(p) To Seller's knowledge, Schedule 7(p) lists all of the tangible Personal
Property.
(q) Attached hereto as Exhibit J is a list (the "Rent Roll") of each of the
Leases as of the date of this Agreement. Said Rent Roll is complete in all
material respects and all information therein is accurate in all material
respects as of its date, and there are no Leases or tenancies with respect to
the Property or any part thereof except as therein set forth. Except as
disclosed on the Rent Roll, no rental under any Lease has been collected in
advance of the current month. The Rent Roll shall be updated at the Closing to
reflect any changes which occur after the Effective Date. Seller is the owner of
the entire lessor's interest in and to each of the Leases and none of the Leases
or the rentals or other sums payable thereunder has been assigned or otherwise
encumbered, except in connection with the Loan .
(r) To Seller's knowledge, each of the Leases, including, without
limitation, any guaranties thereof, is an enforceable Lease and is in full force
and effect according to the terms set forth therein, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles. Except as specifically provided on Schedule 7(r)
attached hereto or on the Rent Roll, (i) no
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Tenant under any of the Leases is greater than fifteen (15) days delinquent in
the payment of its rental and other sums due, (ii) no Tenant has abandoned or
otherwise vacated the Property in violation of any Lease, (iii) to Seller's
knowledge, no Tenant or guarantor has filed a voluntary petition in bankruptcy,
insolvency or similar proceedings, has been the subject of an involuntary
bankruptcy petition, or otherwise been adjudged bankrupt or insolvent in any
proceedings filed against such tenant or guarantor; (iv) to Seller's knowledge,
no trustee or receiver has been appointed for any Tenant; (v) no written notice
has been provided to any tenant notifying the Tenant that it is in default under
the Lease which default has not been remedied by such Tenant; and (vi) no
Tenant, to Seller's knowledge, is otherwise in default under any of the Leases.
Except as otherwise provided in the Lease, to Seller's knowledge, each Tenant is
legally required to pay all sums and perform all other material obligations set
forth in its respective Lease, without concessions, abatements, offsets or other
basis for relief or adjustment, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally, and by general equitable principles.
(s) To Seller's knowledge, no material event of default on behalf of
Seller, as lessor, exists under any Lease and no event or condition exists that,
upon the giving of notice or lapse of time, or both, would constitute a default
by Seller under any Lease. Seller has not received any notice from any Tenant of
any offsets, defenses or claims available against rent or other charges payable
by such Tenant or other performance or obligations otherwise due from it under
any Lease, except as specifically set forth in the Rent Roll and/or the Estoppel
Certificates.
(t) No guarantor of any Lease has been released or discharged, voluntarily
or involuntarily, from any obligation under or in connection with any Lease or
any transaction related thereto.
(u) Seller has not received from any Tenant or any other party written
notice of any claim (other than for customary refund at the expiration of a
Lease) to all or any part of any security deposit, except as set forth on the
Rent Roll and/or the Estoppel Certificates. The Rent Roll sets forth all
security deposits held by Seller.
(v) Except as shown on the Rent Roll, Seller has paid in full any of
landlord's leasing costs or obligations, including, without limitation, any
costs incurred by Seller in connection with any tenant improvements.
(w) No Tenant has indicated to Seller either orally or in writing its
present intent to terminate its Leases prior to expiration of the term of such
Lease except as shown on the Estoppel Certificates.
(x) Except as shown on Schedule 7(x), (A) no brokerage or similar fee is
due or unpaid by Seller with respect to the Leases, and (B) no brokerage or
similar fee shall be due or payable by Seller after the Closing in connection
with the Leases.
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(y) All permits, governmental licenses, registrations and approvals with
respect to the Property which are necessary or required by law or the rules and
regulations of any governmental entity having jurisdiction over the Property or
its owner to carry on business as presently conducted (collectively, the
"Licenses"), the lack of which, individually or in the aggregate, would
reasonably be likely to have a material adverse effect on the value, use or
operation of the Property, are in full force and effect.
(z) Schedule 7(z) attached hereto sets forth a list of all service
contracts, construction contracts for work in progress, any warranties
thereunder, management contracts, unrecorded reciprocal easement agreements,
operating agreements, maintenance agreements, franchise agreements and other
similar agreements relating to the Property, (such contracts and agreements
together with any recorded reciprocal easements agreements are hereinafter
referred to, collectively, as the "Contracts"). With respect to each of the
Contracts, (i) the Contract is legal, valid, binding, and, to Seller's
knowledge, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency or similar laws of general application relating to or
affecting the enforcement of creditor's rights and subject to general principles
of equity, (ii) to Seller's knowledge, except for a Contract that is terminable
upon thirty (30) day written notice, the Contract will not be adversely affected
by the occurrence of the Closing and will be legal, valid, binding, enforceable
in accordance with its terms and in full force and effect on identical terms
following the consummation of the sale of the Property, (iii) Seller is not,
and, to Seller's knowledge, no other party to the Contract is, in breach or
default under any obligation thereunder or any provisions thereof which would
have material adverse affect upon Seller, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default, or permit any
termination under the Contract which would have a material adverse affect upon
Seller, (iv) no event has occurred under the Contract which would permit the
creation of any lien upon, or the restriction of the right to the use of, the
Property and (v) no party to any Contract has repudiated any material provision
of the Contract.
(aa) Schedule 7(aa) attached hereto sets forth a list of all notes or other
evidence of indebtedness, loan agreements, mortgages, guaranty agreements, and
any and all other documents entered into by Seller and all amendments,
modifications and supplements thereto (collectively the "Loan Documents") in
connection with the Loan and all matters in connection with the Loan set forth
therein and certain factual information with respect to the Loan. With respect
to each of the Loan Documents, (i) the Loan Document is legal, valid, binding
and, to Seller's knowledge, enforceable in accordance with its terms and in full
force and effect, except as may be limited by bankruptcy, reorganization,
fraudulent conveyance, insolvency or similar laws of general application
relating to or affecting the enforcement of creditor's rights and subject to
general principles of equity, (ii) Seller is not, and to Seller's knowledge, no
other party to the Loan Document is, in breach or default under any obligation
thereunder or any provisions thereof which would have material adverse effect
upon Seller, and no event has occurred which, with notice or lapse of time,
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would constitute a breach or default, or permit any termination, modification or
acceleration under the Loan Document which would have a material adverse affect
upon Seller other than the sale of the Property contemplated herein, (iii) to
Seller's knowledge, no event has occurred under the Loan Document which would
permit the creation of any lien upon, or the restriction of the right to the use
of, the Property and (v) no party to the Loan Document has repudiated any
material provision of the Loan Document.
(bb) Seller has delivered to Buyer all environmental reports and
investigations relating to the Property which are available to Seller. A list of
such reports and all environmental reports and investigations that have been
obtained by Buyer relating to the Property is attached hereto as Schedule 7(bb)
(collectively, the "Environmental Reports"). Except as set forth in the
Environmental Reports: (i) to Seller's knowledge, the Property is not, and
Seller has not received any written notice that, any real estate in the vicinity
of the Property is, in violation of any federal, state, local or administrative
agency ordinance, law, rule, regulation, order or requirement (collectively,
"Environmental Laws") relating to hazardous or toxic materials, substances or
wastes, or other materials injurious to human health or the environment
(collectively, "Hazardous Materials"); (ii) neither Seller nor, to Seller's
knowledge, any third party, has used, manufactured, generated, treated, stored,
disposed of, or released any Hazardous Material on or under the Property or
transported any Hazardous Material over the Property; (iii) neither Seller, nor
to Seller's knowledge, any third party has installed, used or removed any
storage tank on or from the Property except in full compliance with all
Environmental Laws, and to Seller's knowledge there are no storage tanks or
wells (whether existing or abandoned) located on or under the Property and to
Seller's knowledge no storage tank has been installed on, used on or removed
from the Property in violation of any Environmental Laws; (iv) to Seller's
knowledge, the Property does not consist of any building materials that contain
Hazardous Materials; and (v) no claim, action, suit or proceeding is pending or,
to Seller's knowledge, threatened against Seller, before any court or other
governmental authority or arbitration tribunal, relating to Hazardous Materials,
and there is no outstanding judgment, order, writ, injunction, decree or award
against Seller or otherwise having a material adverse effect on the Property
with respect to the same.
(cc) The Exhibits and Schedules attached hereto, as provided by or on
behalf of Seller, completely and correctly present in all material respects the
information required by this Agreement to be set forth therein. Seller or CMC
has delivered to Buyer true and correct copies of all of the due diligence
materials pertaining to the Property which are in the possession or control of
Seller. No representation or warranty by Seller herein and no information
disclosed in the Exhibits and Schedules hereto supplied by or on behalf of
Seller contains any untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein not materially
misleading. Seller has no knowledge of any events, transactions or other facts
which, either individually or in the aggregate might reasonably give rise
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to circumstances or conditions which might have a material adverse effect on the
Property.
(dd) Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(ee) Seller has provided a copy of the representations and warranties set
forth in this Paragraph 7 to the Responsible Individuals (as defined below), and
each of the Responsible Individuals has reviewed such copy of the
representations and warranties.
Buyer and Seller hereby agree that (x) except for the representations
and warranties of Seller set forth in this Agreement and the documents to be
delivered by Seller to Buyer at Closing (the "Conveyance Documents"), Buyer is
purchasing the Property on an "AS IS" basis without relying of any
communications that may have been made by Seller or any of Seller's agents or
employees, with respect to the Property or Buyer's intended use thereof; (y) the
only representations and warranties made with respect to the Property are
contained herein and in the Conveyance Documents; and (z) for purposes of this
Paragraph 7, "Seller's knowledge" shall be deemed to mean the present actual
knowledge of Mr. William W. Geary, Jr., Ms. Janet DaVall or Mr. Ron Lema (the
"Responsible Individuals"), which individuals Seller represents and warrants are
the employees, partners or officers of Seller or CMC that are most responsible
for the operation and management of the Property, without any duty of
investigation or inquiry on their part. Without limiting the generality of the
foregoing, but subject to Seller's representations and warranties hereunder and
in the Conveyance Documents, Buyer shall be solely responsible for determining
the condition of the Property, including, but not limited to, the existence or
risk of any Hazardous Materials, and all aspects regarding the fees, charges and
assessments relating to the Property. For purposes of this Paragraph 7, an item
shall be deemed "material" if the reasonably estimated cost or damage incurred
by Buyer and/or the diminution of the market value of the Property as a result
thereof, individually or in the aggregate, exceeds Twenty-Five Thousand Dollars
($25,000). All representations and warranties set forth in this Paragraph 7
shall be deemed to be given as of the Effective Date and the Closing Date unless
Seller otherwise notifies Buyer in writing prior to the Closing.
8. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
(a) Buyer is a duly organized and validly existing limited partnership in
good standing under the laws of the State of California; this Agreement and all
documents executed by Buyer which are to be delivered to Seller at the Closing
are or at the time of Closing will be duly authorized, executed and delivered by
Buyer, and are or at the Closing will be legal, valid and binding obligations of
Buyer, and do not and at the
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time of Closing will not violate any provisions of any agreement or judicial
order to which Buyer is subject.
(b) Buyer has made (or will make prior to the Closing Date) an independent
investigation with regard to the Property and Buyer's intended use thereof,
including, without limitation, review and/or approval of matters disclosed
pursuant to Paragraph 3(a) above.
(c) There is no litigation pending or, to Buyer's knowledge, threatened,
against Buyer or any basis therefor that might materially and detrimentally
affect the ability of Buyer to perform its obligations under this Agreement.
Buyer shall notify Seller promptly of any such litigation of which Buyer becomes
aware.
(d) The Stock, when issued, shall be duly authorized, fully paid and
non-assessable.
All representations and warranties set forth in this Paragraph 8 shall be true
as of the Effective Date and the Closing Date.
9. Indemnification
(a) Each party hereby agrees to indemnify the other party and defend and
hold it harmless from and against any and all claims, demands, liabilities,
costs, expenses, penalties, damages and losses, including, without limitation,
attorneys' fees, resulting from any misrepresentation or breach of warranty or
breach of covenant made by such party in this Agreement or in any document,
certificate, or Exhibit given or delivered to the other pursuant to or in
connection with this Agreement.
(b) Seller agrees to indemnify Buyer and its partners and defend and hold
Buyer and its partners harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, asserted against, incurred or suffered by Buyer
resulting from or arising out of (i) any personal injury or property damage
occurring in, on or under the Property during Seller's ownership thereof, from
any cause whatsoever other than as a consequence of the acts or omissions of
Buyer, its agents, employees or contractors; and (ii) the failure of Seller to
perform any obligation under the Loan Documents to be performed by the borrower
prior to the Closing Date (other than the obligation to obtain the lender's
consent for the sale of the Property contemplated herein).
(c) Buyer agrees to indemnify Seller and its partners and defend and hold
Seller and its partners harmless from any claims, losses, demands, liabilities,
costs, expenses, penalties, damages and losses, including, without limitation,
attorneys' fees, asserted against, incurred or suffered by Seller resulting from
or arising out of (i) any personal injury or property damage first occurring in,
on or under the Property during Buyer's ownership thereof, from any cause
whatsoever other than as a consequence of the acts
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or omissions of Seller, or its agents, employees or contractors, and (ii) if
Buyer does not pay off the Loan on or before the Loan Payoff Date, the failure
of Seller to perform any obligation under the Loan Documents to be performed by
the borrower after the Closing Date.
(d) The indemnification provisions of this Paragraph 9 shall survive beyond
the Closing, or, if the Closing does not occur pursuant to this Agreement,
beyond any termination of this Agreement.
10. Risk of Loss
(a) Minor Loss. Buyer shall be bound to purchase the Property for the full
Purchase Price as required by the terms hereof, without regard to the occurrence
or effect of any damage to the Property or destruction of any improvements
thereon or condemnation of any portion of the Property, provided that: (i) the
cost to repair any such damage or destruction does not exceed ten percent (10%)
of the Purchase Price or, in the case of a partial condemnation, the value of
the portion of the Property taken does not exceed ten percent (10%) of the
Purchase Price; (ii) upon the Closing, there shall be a credit against the
Purchase Price due hereunder equal to the amount of any insurance proceeds or
condemnation awards collected by Seller as a result of any such damage or
destruction or condemnation, plus the amount of any insurance deductible;
(iii) insurance or condemnation proceeds available to Seller are sufficient to
cover the cost of restoration; and (iv) the insurance carrier has admitted
liability for the payment of such costs; and (v) the Loan on the Property in
question is not accelerated or defaulted by reason of such casualty or
condemnation. If the proceeds or awards have not been collected as of the
Closing, then Seller's right, title and interest to such proceeds or awards
shall be assigned to Buyer.
(b) Major Loss. If the cost to repair such damage or destruction to the
Property exceeds ten percent (10%) of the Purchase Price allocated to the
Property or, in the case of condemnation, if the value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price allocated to the
Property, then Buyer may, at its option to be exercised by written notice to
Seller within twenty (20) days of Seller's notice to Buyer of the occurrence of
the damage or destruction or the commencement of condemnation proceedings,
either (i) elect to terminate this Agreement, or (ii) consummate the purchase of
the Property for the full Purchase Price as required by the terms hereof,
subject to the credits against the Purchase Price provided below. If Buyer
elects to proceed with the purchase of all of the Property, then, upon the
Closing, Buyer shall be given a credit against the Purchase Price due hereunder
equal to the amount of any insurance proceeds or condemnation awards collected
by Seller as a result of any such damage or destruction or condemnation, plus
the amount of any insurance deductible. If the proceeds or awards have not been
collected as of the Closing, then Seller's right, title and interest to such
proceeds or awards shall be assigned to Buyer. If Buyer fails to give Seller
notice within such 20-day period, then Buyer will be deemed to have elected to
terminate this Agreement.
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In the event of any damage or destruction of the Property covered by this
Paragraph 10(b), the Closing shall be postponed to the date which is five (5)
days after Buyer elects to consummate the Purchase of the Property as set forth
above.
11. Inspections
Prior to the Closing Date, Seller shall afford authorized representatives
of Buyer reasonable access to the Property for purposes of satisfying Buyer with
respect to the representations, warranties and covenants of Seller contained
herein and with respect to satisfaction of any Conditions Precedent to the
Closing contained herein, including, without limitation, and the taking of soil
borings from the Property; provided, however, that Buyer shall use commercially
reasonable efforts not to unreasonably disturb or interfere with the rights of
Tenants under the Leases. Buyer hereby agrees to indemnify and hold Seller
harmless from any damage or injury to persons or property caused by Buyer or its
authorized representatives during their entry and investigations prior to the
Closing. In the event this Agreement is terminated, Buyer shall restore the
Property to substantially the condition in which it was found. This indemnity
shall survive the termination of this Agreement or the Closing, as applicable.
12. Leases And Other Agreements; Capital Improvements
(a) Except as otherwise contemplated or permitted by this Agreement or
approved by Buyer in writing, from the Effective Date to the Closing Date,
Seller will cause Seller to operate, maintain, repair and lease the Property in
a prudent manner, in the ordinary course, on an arm's-length basis and
consistent with their past practices (and without limiting the foregoing, Seller
shall, in the ordinary course, negotiate with prospective tenants and enter into
leases of the Property, enforce leases in all material respects, pay all costs
and expenses of the Property, including, without limitation, debt service, real
estate taxes and assessments, maintain insurance and pay and perform obligations
under the Loan Documents) and will not dispose of or encumber any of the
Property, except for dispositions of personal property in the ordinary course of
business.
(b) Notwithstanding the above terms of this Paragraph 12, Seller shall not,
without the prior written approval of Buyer, take any of the following actions:
(i) execute or terminate any lease covering in excess of 5,000 square
feet in the case of any lease of industrial space, 2,000 square feet in the case
of any lease of office space, or 2,000 square feet in the case of any lease of
retail space, or modify or waive any material term thereof;
(ii) except as otherwise required under this Agreement, enter into,
execute or terminate any operating agreement, reciprocal easement agreement,
management agreement or any lease, contract, agreement or other commitment of
any sort
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<PAGE>
(including any contract for capital items or expenditures), with respect to the
Property requiring payments to or by Seller in excess of Ten Thousand Dollars
($10,000) per annum, or the performance of services by Seller the value of which
is in excess of Ten Thousand Dollars ($10,000) per annum; or
(iii) waive or modify any material term under any Loan Document.
(c) In connection with any new leases or Lease modifications affecting the
Property entered into between the Effective Date and the Closing in accordance
with Subparagraph 12(b) above, the cost of tenant improvement work and leasing
commissions shall be paid solely by Buyer. Seller shall be responsible for the
cost of tenant improvement work and leasing commissions for all Leases (and
amendments thereto) entered into prior to the Effective Date (regardless of when
the same are payable), including, without limitation, those leases described on
Schedule 12(c) attached hereto, and Seller's obligations with respect thereto
shall survive the Closing.
(d) Between the Effective Date and the Closing, Seller shall continue to
undertake capital improvements with respect to the Property in the ordinary
course of business.
(e) Seller shall pay for all costs incurred in connection with the window
waterproofing currently being performed on the Property. The provisions of this
Subparagraph 12(e) shall survive the Closing.
13. Cooperation
Seller and Buyer shall cooperate and do all acts as may be reasonably
required or requested by the other with regard to the fulfillment of any
Condition Precedent or the consummation of the transactions contemplated hereby
including execution of any documents, applications or permits. Seller hereby
irrevocably authorizes Buyer and its agents to make all inquiries of any third
party, including any governmental authority, as Buyer may reasonably require to
complete its due diligence.
14. Miscellaneous
(a) Notices. Any notice, consent or approval required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
given upon (i) hand delivery, (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or transmitted by
facsimile telecopy, or (iii) two (2) days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
required, and addressed as follows:
Page 30 of 401
<PAGE>
If to Seller: c/o Carlsberg Management Company
2800 28th Street, Suite 222
Santa Monica, California 90405
Attention: William W. Geary, Jr.
Telephone: (310) 450-9696
Fax : (310) 399-5633
With a copy to: Sandler and Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, California 90067
Attention: Ming-chu C. Rouse
Telephone: (310) 277-4411
Fax : (310) 277-5954
If to Buyer: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
With a copy to: Morrison & Foerster llp
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Telephone: (415) 677-7000
Fax : (415) 677-7522
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein, except that Seller acknowledges that it has requested the
services of Carlsberg Management Company in connection with this transaction and
shall be responsible for paying a commission to Carlsberg Management Company in
the amount of four percent (4%) of the Purchase Price if the Closing occurs. In
the event that any broker or finder perfects a claim for a commission or
finder's fee based upon any such contact, dealings or communication, the party
through whom the broker or finder makes its claim shall be responsible for said
commission or fee and shall indemnify and hold harmless the other party from and
against all liabilities, losses, costs and expenses (including reasonable
attorneys' fees) arising in connection with such claim
Page 31 of 401
<PAGE>
for a commission or finder's fee. The provisions of this Subparagraph shall
survive the Closing.
(c) Successors and Assigns. Subject to the following two (2) sentences,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns. Buyer
shall have the right, with notice to Seller (but without the necessity of
Seller's consent), to assign its right, title and interest in and to this
Agreement to one or more assignees at any time before the Closing Date;
provided, however that such assignee(s) shall assume all obligations of Buyer,
and such assignment and assumption shall not release Buyer from any obligation
hereunder. Seller shall not have the right to assign its interest in this
Agreement.
(d) Amendments. Except as otherwise provided herein, this Agreement may be
amended or modified only by a written instrument executed by Seller and Buyer.
(e) Continuation and Survival of Representations and Warranties, Etc. All
representations and warranties by the respective parties contained herein or
made in writing pursuant to this Agreement are intended to and shall remain true
and correct as of the time of Closing, shall be deemed to be material, and,
together with all conditions, covenants and indemnities made by the respective
parties contained herein or made in writing pursuant to this Agreement (except
as otherwise expressly limited or expanded by the terms of this Agreement),
shall survive the execution and delivery of this Agreement and shall survive the
Closing for a period of twenty-four (24) months after the Closing, or, to the
extent the context requires, beyond any termination of this Agreement for a
period of twenty-four (24) months.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. The parties recognize that,
since the Property is located in the State of Arizona, it may be necessary for
the parties to comply with certain aspects of the laws of such state in order to
consummate the purchase and sale of the Property. The parties agree to comply
with such other laws to the extent necessary to consummate the purchase and sale
of the Property, provided that it is the parties' intent that the provisions of
this Agreement and the Related Purchase Agreements be applied to each Property
described in this Agreement and the Related Purchase Agreements in a manner
which results in the greatest consistency possible. For this reason, and because
a large number of properties described in the Related Purchase Agreements are
located in the State of California, the parties have agreed that California law
shall govern with respect to the purchase and sale of the Property to the
greatest extent possible.
(g) Merger of Prior Agreements. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all prior
agreements and understandings between the parties relating to the subject matter
hereof,
Page 32 of 401
<PAGE>
including, without limitation, the Letter of Intent dated October 22, 1996,
entered into by and between Buyer and CMC.
(h) Enforcement. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
(k) Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date" shall mean
the first date on which both Seller and Buyer shall have executed this
Agreement.
(m) Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material or information about the other or, in the case of Buyer and
its agents, employees, consultants and contractors, about the Property, and
shall not disclose such information to any third party, except, in the case of
information about the Property and Seller, to Buyer's lender or prospective
lenders, insurance and reinsurance firms, attorneys, environmental assessment
and remediation service firms and consultants, as may be reasonably required for
the consummation of the transaction contemplated hereunder and/or as required by
law.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Page 33 of 401
<PAGE>
15. Acceptance of Agreement by Seller
This Agreement shall be null and void unless it is accepted by Seller and
two fully executed copies hereof are returned to Buyer on or before 5:00 p.m.
(P.S.T.) on November 13, 1996.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
Dated:
By:
Its:
Dated:
Seller: Terra Plaza, Ltd., dba Terra Plaza
Building Limited Partnership,
a California limited partnership
By: RJRB Properties, Inc.,
a California corporation,
its General Partner
By:__________________________________
Charles E. Kunz,
President
Dated: ______________________________
Page 34 of 401
<PAGE>
Title Company agrees to act as escrow holder in accordance with the terms
of this Agreement and to act as the Reporting Person (as such term is defined in
this Agreement).
Lawyer's Title Insurance Corporation
By:
Its:
Dated:
Page 35 of 401
<PAGE>
Schedule 1(a)
Real Property
Page 36 of 401
<PAGE>
Schedule 2(a)(i)
Loan
Secured loan in the original principal amount of Two Million One Hundred
Twenty-Eight Thousand Dollars ($2,128,000) extended by Provident National
Assurance Company, a Tennessee corporation ("Provident"), to Seller.
Page 37 of 401
<PAGE>
Schedule 3(c)
Permitted Exceptions
Page 38 of 401
<PAGE>
Schedule 3(h)
Related Agreements
All of the following documents are dated as of even date herewith:
1. Purchase Agreement between Terra Plaza, Ltd., a California limited
partnership, and Buyer for the property commonly known as Carlsberg Plaza
located at 2633 East Indian Road, Phoenix, Arizona.
2. Purchase Agreement between Carlsberg Managed Properties Fund, Ltd.,
a California limited partnership, and Buyer for the property commonly known as
Dallidet Professional Center located at 1194 Pacific Street, San Luis Obispo,
California.
3. Purchase Agreement between IHH Partnership, a California general
partnership, and Buyer for the property commonly known as Hillcrest Office
Building located at 1370 North Brea Boulevard, Fullerton, California.
4. Purchase Agreement between Tradewinds Office Building, a California
general partnership, and Buyer for the property commonly known as Trade Winds
Financial Center located at 2266 South Dobson Road, Mesa, Arizona.
5. Purchase Agreement among Sonora Plaza, Ltd., a California limited
partnership, GDA Investment, Ltd., a Florida limited partnership, and Buyer for
the property commonly known as Sonora Plaza located at 708-824 East Mono Way,
Sonora, California.
6. Loan Agreement between Carlsberg Properties, Ltd., a California
limited partnership, and Buyer for the property commonly known as Grunow Medical
Building located at 926 East McDowell Road, Phoenix, Arizona.
7. Agreement Concerning Property Management Agreements executed by
Carlsberg Management Company, a California corporation, and Glenborough
Corporation, a California corporation.
The documents described as items 1 through 5 above, other than this Agreement,
are called the "Related Purchase Agreements."
Page 39 of 401
<PAGE>
Schedule 7(g)
Defects
Page 40 of 401
<PAGE>
Schedule 7(h)
Violations
Page 41 of 401
<PAGE>
Schedule 7(i)
Proceedings
Page 42 of 401
<PAGE>
Schedule 7(l)
Litigation
Page 43 of 401
<PAGE>
Schedule 7(m)
Outstanding Contracts
Page 44 of 401
<PAGE>
Schedule 7(p)
Personal Property
Page 45 of 401
<PAGE>
Schedule 7(r)
Lease Exceptions
Page 46 of 401
<PAGE>
Schedule 7(x)
Brokerage Fees
Page 47 of 401
<PAGE>
Schedule 7(z)
Contracts
Page 48 of 401
<PAGE>
Schedule 7(aa)
Loan Documents
1. Promissory Note in the original principal amount of Two Million One
Hundred Twenty-Eight Thousand Dollars ($2,128,000), dated as of October 16,
1990, made by Seller in favor of Provident.
2. Deed of Trust, Assignment of Rents and Security Agreement dated as
of October 16, 1990, executed by Seller for the benefit of Provident and
recorded on October 16, 1990 in the Official Records of Maricopa County, Arizona
as Document No. 90-465035.
Factual Information:
Date of last payment: November 7, 1996
Outstanding principal balance as of November 1, 1996: $2,107,908.25
Per diem accrual of interest since November 1, 1996: $472.40
Amount of last payment: $25,306.00
Real Estate Tax Impound Balance as of November 1, 1996: $26,718.10
Page 49 of 401
<PAGE>
Schedule 7(bb)
Environmental Reports
1.
2. Phase I report dated as of August 12, 1996 prepared by Eckland
Consultants at the request of Buyer.
Page 50 of 401
<PAGE>
Schedule 12(c)
Tenant Improvements Costs and
Leasing Commissions -- Seller's Responsibility
None.
Page 51 of 401
<PAGE>
Exhibit A
Registration Rights Agreement
Page 52 of 401
<PAGE>
Exhibit B
Grant Deed
When Recorded Return To:
Morrison & Foerster llp
345 California Street
San Francisco, CA 94104
Attn: Craig B. Etlin
- --------------------------------------------------------------------------------
(Space Above for Recorder's Use)
Special Warranty Deed
For the consideration of Ten Dollars, and other valuable considerations,
the undersigned, a
("Grantor"), does
hereby convey to Glenborough Properties, L.P., a California limited partnership
("Grantee"), the following described real property situated in
County, Arizona, and more particularly described on Exhibit A
attached hereto and by this reference made a party hereof, together with all
rights and privileges appurtenant thereto; subject however, to all taxes and
other assessments, reservations in patents and all easements, rights of way,
encumbrances, liens, covenants, conditions, restrictions, obligations and
liabilities as may appear of record.
Grantor hereby binds itself and its successors to warrant and defend the
title, as against all acts of the Grantor herein and no other, subject to the
maters above set forth.
Dated this _____ day of November, 1996.
Grantor: _______________________________,
a ______________________________
By: _____________________________
Its: _____________________________
[ADD NOTARY FORM]
Page 53 of 401
<PAGE>
Exhibit C
Assignment of Leases
This Assignment of Leases ("Assignment") dated as of November __, 1996, is
entered into by and between
, a
("Assignor"), and Glenborough Properties, L.P., a California limited partnership
("Assignee").
Witnesseth:
Whereas, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as
(the "Property") as more fully described in
Exhibit A attached hereto, which leases are described in Schedule 1 attached
hereto (the "Leases"); and
Whereas, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
Now, Therefore, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Except as otherwise set forth in the Purchase Agreement (as defined in
paragraph 5 below), Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all cost, liability, loss, damage or
expense, including without limitation, reasonable attorneys' fees, originating
prior to the Effective Date and arising out of the lessor's obligations under
the Leases.
4. Except as set forth in the Purchase Agreement, effective as of the
Effective Date, Assignee hereby assumes all of the lessor's obligations under
the Leases and agrees to indemnify Assignor against and hold Assignor harmless
from any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, originating subsequent to the Effective
Date and arising out of the lessor's obligations under the Leases.
5. Any rental and other payments under the Leases shall be prorated between
the parties as provided in the Purchase Agreement between Assignor, as Seller,
and Assignee, as Buyer, dated as of November __, 1996 (the "Purchase
Agreement").
Page 54 of 401
<PAGE>
6. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
7. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
8. This Assignment shall be governed by and construed in accordance with
the laws of the State of California. The parties recognize that, since the
Property is located in the State of Arizona, it may be necessary for the parties
to comply with certain aspects of the laws of such state in order to consummate
the transactions contemplated herein. The parties agree to comply with such
other laws to the extent necessary to consummate the transactions contemplated
herein, provided that it is the parties' intent that the provisions of this
Assignment and the Related Purchase Agreements (as defined in the Purchase
Agreement) be applied to the transactions contemplated in this Assignment and
the Related Purchase Agreements in a manner which results in the greatest
consistency possible. For this reason, and because a large number of properties
described in the Related Purchase Agreements are located in the State of
California, the parties have agreed that California law shall govern with
respect to the transactions contemplated herein to the greatest extent possible.
Page 55 of 401
<PAGE>
9. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 56 of 401
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 57 of 401
<PAGE>
Schedule 1 to
Assignment of Leases
Amendment Security
Tenants Premises Leases Date Date(s) Deposit
Page 58 of 401
<PAGE>
Exhibit D
Warranty Bill Of Sale
For good and valuable consideration the receipt of which is hereby
acknowledged, , a
("Seller"), does
hereby sell, transfer, and convey to Glenborough Properties, L.P., a California
limited partnership ("Buyer"), all personal property owned by Seller and located
on or in or used in connection with the Real Property and Improvements (as such
terms are defined in that certain Purchase Agreement dated as of November __,
1996, between Seller and Buyer), including, without limitation, those items
described in Schedule A attached hereto.
Seller does hereby represent to Buyer that Seller is the lawful owner of
such personal property, that such personal property is free and clear of all
encumbrances, and that Seller has good right to sell the same as aforesaid and
will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands of all persons whomsoever.
Dated this _____day of November __, 1996.
Seller: ,
a
By:
Its:
Page 59 of 401
<PAGE>
Schedule A to
Warranty Bill of Sale
Page 60 of 401
<PAGE>
Exhibit E
Assignment of Service Contracts,
Warranties and Guaranties
and Other Intangible Property
This Assignment of Service Contracts, Warranties and Guaranties and Other
Intangible Property ("Assignment") is made and entered into as of this _____ day
of November, 1996, by
, a
("Assignor"), to Glenborough Properties, L.P., a California limited partnership
("Assignee").
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third
party with respect to any building, building component, structure, fixture,
machinery, equipment, or material situated on, contained in any building or
other improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto;
and
(c) any Intangible Property (as defined in that certain Purchase
Agreement dated as of November __, 1996 between Assignor and Assignee (or
Assignee's predecessor in interest) (the "Purchase Agreement")).
Assignor and Assignee further hereby agree and covenant as follows:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Effective as of the Effective Date, Assignee hereby assumes all of the
owner's obligations under the Service Contracts and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including, without limitation, reasonable attorneys' fees,
originating on or subsequent to the Effective Date and arising out of the
owner's obligations under the Service Contracts.
Page 61 of 401
<PAGE>
3. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with laws of the State of California. The parties recognize that, since the
Property is located in the State of Arizona, it may be necessary for the parties
to comply with certain aspects of the laws of such state in order to consummate
the transactions contemplated herein. The parties agree to comply with such
other laws to the extent necessary to consummate the transactions contemplated
herein, provided that it is the parties' intent that the provisions of this
Assignment and the Related Purchase Agreements (as defined in the Purchase
Agreement) be applied to the transactions contemplated in this Assignment and
the Related Purchase Agreements in a manner which results in the greatest
consistency possible. For this reason, and because a large number of properties
described in the Related Purchase Agreements are located in the State of
California, the parties have agreed that California law shall govern with
respect to the transactions contemplated herein to the greatest extent possible.
Page 62 of 401
<PAGE>
6. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Dated:
Page 63 of 401
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 64 of 401
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 65 of 401
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 66 of 401
<PAGE>
Exhibit F
Certificate of Transferor
other than an Individual
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located in
, that withholding of tax is not
required upon the disposition of such U.S. real property interest by
, a
("Transferor"), the undersigned hereby certifies
the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
; and
3. Transferor's office address is
.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: November ____, 1996.
[Individual signature line]
on behalf of
a
Page 67 of 401
<PAGE>
Exhibit G
Form of Tenant's Estoppel Certificate
Glenborough Properties, L.P. ("Purchaser")
400 S. El Camino Real
San Mateo, California 94402-1708
RE: Lease Dated , and amended
(the "Lease"), by and between
, as lessor ("Lessor"), and
, as lessee ("Lessee"), with respect to certain
premises (the "Leased Premises") located at
(the "Property"). The
Leased Premises are comprised of square feet.
Ladies and Gentlemen:
The undersigned hereby acknowledges that Purchaser is entering into an
agreement to purchase the Property. The undersigned further acknowledges the
right of Lessor and Purchaser to rely upon the statements and representations of
the undersigned contained in this Certificate and further acknowledges that
Purchaser will be purchasing the Property in material reliance on this
Certificate.
Given the foregoing, the undersigned Lessee hereby certifies and represents
unto Purchaser, its successors and assigns, with respect to the above described
Lease, a true and correct copy of which is attached as Exhibit A hereto, as
follows:
1. Lease Effective. The Lease has been duly executed and delivered by
Lessee and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Lessee thereunder are valid and binding and
there have been no further amendments, modifications or additions to the Lease,
written oral;
2. No Default. To the best of Lessee's knowledge, as of the date hereof:
(i) there exists no breach, default, or event or condition which, with the
giving of notice or the passage of time or both, would constitute a breach or
default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
3. Entire Agreement. The Lease constitutes the entire agreement between
Lessor and Lessee with respect to the Property and Lessee claims no rights with
respect to the Property other than as set forth in the Lease; and
4. No Prepaid Rent. No deposits or prepayments of rent have been made in
connection with the Lease, except as follows: (if none, state "none")
.
Page 68 of 401
<PAGE>
Dated: , 1996. "Lessee"
_________________________________
By:______________________________
Its:_____________________________
Page 69 of 401
<PAGE>
Exhibit H
Rent Roll
Page 70 of 401
<PAGE>
Exhibit I
Notice To Tenants
(Date)
(Name)
(Street Address)
(City, State, Zip Code)
Re: (Name of Property)
Dear (Tenant, or address individually to each Tenant):
Glenborough Properties, L.P., a California limited partnership has acquired
the subject property. We are pleased to advise you that, as of November ___,
1996, Glenborough Corporation has been engaged to lease and manage the property.
Please send your monthly rent and all future remittances to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
We value your tenancy and urge you to direct any questions regarding your
lease or this letter to (Name of Property Manager) at (Phone Number for Property
Manager or Building Property Manager) for (Name of Property).
Very truly yours,
Carlsberg Management Company,
a California corporation,
Property Manager for (Seller)
By: _______________________
Its: ________________________
Page 71 of 401
<PAGE>
Purchase Agreement
by and between
Carlsberg Managed Properties Fund, Ltd.,
a California limited partnership,
and
Glenborough Properties, L.P.,
a California limited partnership,
dated as of November __, 1996
for
Dallidet Professional Center
San Luis Obispo, California
Page 72 of 401
<PAGE>
List Of Exhibits
Exhibit A Registration Rights Agreement
Exhibit B Grant Deed
Exhibit C Assignment of Leases
Exhibit D Warranty Bill Of Sale
Exhibit E Assignment of Service Contracts, Warranties and Guaranties
and Other Intangible Property
Exhibit F Certificate of Transferor other than an Individual (FIRPTA
Affidavit)
Exhibit G Form of Tenant's Estoppel Certificate
Exhibit H Rent Roll
Exhibit I Notice To Tenants
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<PAGE>
List Of Schedules
Schedule 1(a) Real Property
Schedule 2(a)(i) Loan
Schedule 3(c) Permitted Exceptions
Schedule 3(h) Related Agreements
Schedule 7(g) Defects
Schedule 7(h) Violations
Schedule 7(i) Proceedings
Schedule 7(l) Litigation
Schedule 7(m) Outstanding Contracts
Schedule 7(p) Personal Property
Schedule 7(r) Lease Exceptions
Schedule 7(x) Brokerage Fees
Schedule 7(z) Contracts
Schedule 7(aa) Loan Documents
Schedule 7(bb) Environmental Reports
Schedule 12(c) Tenant Improvements Costs and Leasing
Commissions -- Seller's Responsibility
Page 74 of 401
<PAGE>
Purchase Agreement
This Purchase Agreement is dated as of November __, 1996, by and between
Carlsberg Managed Properties Fund, Ltd., a California limited partnership
("Seller"), and Glenborough Properties, L.P., a California limited partnership
("Buyer").
Recitals
A. Buyer is a California limited partnership whose general partner is
Glenborough Realty Trust Incorporated, a Maryland corporation ("GLB"), whose
stock is publicly traded on the New York Stock Exchange.
B. Buyer desires to acquire the Property (as defined in Subparagraph 1(a)
below) from Seller and Seller desires to sell the Property to Buyer, upon the
terms and subject to the conditions set forth in this Agreement.
Now, Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Property
Subject to and upon the terms and conditions hereinafter set forth and the
representations and warranties contained herein, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, subject to the terms, covenants and
conditions set forth herein, (a) the real property described in Schedule 1(a)
attached hereto, together with any and all buildings and other improvements
thereon and, to the extent owned by Seller, or held directly for the benefit of
Seller, any interest therein, and any and all rights, privileges and easements
appurtenant thereto (the "Real Property"), (b) all of Seller's right, title and
interest in and to the Leases listed in Exhibit H attached hereto (the
"Leases"), and any and all guarantees of the Leases (the "Lease Rights"), and
(c) all of Seller's right, title and interest in and to the personal property
and any interest therein owned by Seller or held directly for the benefit of
Seller, if any, located on the Real Property and used in the operation or
maintenance of the Real Property (the "Personal Property"), (d) all of Seller's
right, title and interest, if any, in and to the following to the extent
assignable: the Contracts listed in Schedule 7(z), all general intangibles
relating to design, development, operation, management and use of the Real
Property, all certificates of occupancy, zoning variances, building, use or
other permits, approvals, authorizations, licenses and consents obtained from
any governmental authority in connection with the development, use, operation or
management of the Real Property, all soil tests, engineering reports,
appraisals, architectural drawings, plans and specifications relating to all or
any portion of the Real Property, and all payment and performance
Page 75 of 401
<PAGE>
bonds or warranties or guarantees relating to the Real Property; and (e) all of
Seller's right, title and interest in and to any and all of the following to the
extent assignable: trademarks, service marks, logos, other source and business
identifiers, trademark registration and applications for registration used at or
relating to the Real Property and any written agreement granting to Seller any
right to use any trademark or trademark registration at or in connection with
the Real Property (such property, together with the property described in
clause (d) of this Paragraph 1, is herein called the "Intangible Property"). The
term "Property" means all of the Real Property, the Lease Rights, the Personal
Property and the Intangible Property.
2. Purchase Price.
(a)......... Buyer and Seller agree that the purchase price of the Property
shall be Three Million Three Hundred Thousand Dollars ($3,300,000) (the
"Purchase Price"), which shall comprise the following components:
(i)... At the closing of the purchase and sale contemplated herein
(the "Closing"), Buyer shall take title to the Property subject to the mortgage
or deed of trust (as approved by Buyer) securing the loan (the "Loan") described
on Schedule 2(a)(i) attached hereto. At the Closing, Buyer shall receive a
credit against the Purchase Price in an amount equal to the amount that would be
required to repay the Loan in full (excluding prepayment penalties and accrued
interest) as of the Closing Date (as defined in Subparagraph 4(b) below), which
is presently estimated to be One Million Seven Hundred Seven Thousand Eight
Hundred Eighty-Eight and 27/100 Dollars ($1,707,888.27);
(ii).. Two Hundred Twenty-Five Thousand Dollars ($225,000) worth of
Stock (as defined in Subparagraph 2(b) below) to be issued to Buyer or Carlsberg
Properties, Inc., a California corporation ("Carlsberg"); and
(iii). Immediately available funds ("Cash") to be paid to Seller, in
the amount equal to (A) the Purchase Price less (B) the sum of the amount of the
Loan assumed and the value of the Stock as of the Closing Date.
(b)......... For purposes of determining the number of shares of Stock to
be issued pursuant to Subparagraph 2(a)(ii) above, each share of Stock shall be
deemed to be worth an amount equal to the greater of (i) the weighted average
trading closing prices for the sale of shares of GLB's common stock (the
"Stock") for the thirty (30) business days preceding the Closing Date, or
(ii) the weighted average trading closing prices for the sale of shares of GLB's
common stock for the ten (10) business days preceding the Closing Date.
Page 76 of 401
<PAGE>
(c)......... With respect to any Stock to be issued to Seller:
(i)... All certificates for the Stock shall bear a legend in
substantially the following form:
"The securities evidenced by this certificate have
not been registered under the Securities Act of
1933 or any state securities laws and may not be
sold or offered for sale except in compliance with
such act and laws.
The securities represented by this certificate are
not transferable, except in accordance with the
procedures and restrictions set forth in the
Registration Rights Agreement dated as of
November __, 1996, between Glenborough Realty Trust
Incorporated, a Maryland corporation ('GLB') and
Carlsberg Properties, Inc., a California
corporation, copies of which are filed at the
principal office of GLB and are available to any
holder without charge upon written request
therefor. Any purported transfer in violation of
such restrictions shall be void and of no effect.
As used herein, 'transfer' shall mean sale,
exchange, assignment, transfer, pledge,
hypothecation or other disposition of any interest
in a share except by operation of law in connection
with a merger or consolidation of the corporation."
(ii).. The certificates for shares of the Stock shall also bear any
other legend required by any applicable state securities law.
(iii). In addition, GLB shall make a notation regarding the
restrictions on transfer of the Stock in its stock records, and such Stock shall
be transferred on the records of GLB only if transferred or sold in compliance
with the provisions of the Registration Rights Agreement in the form of
Exhibit A attached hereto (the "Registration Rights Agreement").
Page 77 of 401
<PAGE>
(iv).. The holder of the Stock issued to Seller at the Closing shall
have "piggyback" registration rights for a period of one year as well as certain
other rights, all as more particularly described in the Registration Rights
Agreement.
(d)......... On the Closing Date, Seller shall, or shall cause Carlsberg
to, execute and deliver, and Buyer shall cause GLB, so to execute and deliver,
the Registration Rights Agreement.
(e)......... Seller acknowledges and agrees that Buyer may be required to
withhold a portion of the Purchase Price pursuant to Section 1445 of the Code
(as defined in Subparagraph 4(c)(x) below) or Sections 18805 and 26131 of the
California Revenue and Taxation Code or similar laws or regulations of other
states. Any amount properly so withheld by Buyer shall be deemed to have been
paid by Buyer as part of the Purchase Price, and Seller's obligation to
consummate the transactions contemplated herein shall not be excused, reduced,
terminated or otherwise affected thereby.
3. Conditions to Closing
(a)......... The following conditions are precedent to Buyer's obligation
to purchase the Property (the "Buyer's Conditions Precedent"):
(i)... The representations and warranties of Seller contained herein
shall be true and correct as of the Closing Date as though made at and as of the
Closing Date, and Seller's covenants under this Agreement shall be satisfied as
of the Closing Date (to the extent such covenants are to be satisfied as of the
Closing Date).
(ii).. At the Closing, Seller shall convey to Buyer (A) fee simple
title to the Property identified in Schedule 1(a) by grant deed in the form of
Exhibit B attached hereto, (B) title to the Lease Rights pursuant to an
assignment and assumption of tenant leases in the form of Exhibit C attached
hereto (the "Assignment of Leases"), (C) title to the Personal Property pursuant
to a bill of sale in the form of Exhibit D attached hereto and (D) an assignment
and assumption of service contracts, guaranties and warranties and other
intangible property in the form of Exhibit E attached hereto (the "Assignment of
Service Contracts").
(iii). Lawyer's Title Insurance Corporation (the "Title Company")
shall be committed to issue at Closing for its extended coverage American Land
Title Association Policy of Owner's Title Insurance (Form B, rev. 10/17/70) in
the amount of the Purchase Price, showing title to the Real Property vested in
Buyer, subject only to exceptions described on Schedule 3(c) attached hereto
(the "Permitted Exceptions"). The foregoing title policy, together with
endorsements covering subdivision map act, survey, access, contiguity, no
violations of covenants, conditions or restrictions and such other endorsements
as Buyer has requested prior to the Effective Date (as defined in
Subparagraph 14(l) below), is referred to herein as the
Page 78 of 401
<PAGE>
"Title Policy." On or before the Closing, Seller shall cause the Title Company
to deliver to Buyer a certification that, in issuing the Title Policy, the Title
Company has not relied on any representations or indemnities of Seller or any of
its affiliates (except as disclosed in such certification). In addition, as a
condition to Buyer's obligation to close, Buyer shall be satisfied that, as of
the Closing, there is no outstanding financing statement filed in accordance
with the Uniform Commercial Code of any applicable jurisdiction with respect to
the Property or Seller except for any financing statements approved by Buyer
prior to the Effective Date or relating to the Loan.
(iv).. Seller obtaining and delivering to Buyer the tenant estoppel
certificates required under Paragraph 6 below.
(v)... Seller obtaining and delivering to Buyer the Registration
Rights Agreement duly executed by the recipient of the Stock.
(vi).. The physical condition of the Real Property shall be
substantially the same on the Closing Date as on the date hereof, reasonable
wear and tear and loss by casualty excepted (subject to the provisions of
Paragraph 10 below).
(vii). All of the property management and leasing brokerage agreements
affecting the Property (whether between Seller, Carlsberg Management Company
("CMC") or any other party and such property managers and leasing agents) shall
be terminated as of the Closing Date at no cost or expense to Seller.
The Buyer's Conditions Precedent contained in Subparagraphs 3(a)(i)
through 3(a)(vii) are intended solely for the benefit of Buyer. If any of the
Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its
sole discretion either to waive the Buyer's Condition Precedent and proceed with
the purchase or terminate this Agreement by written notice to Seller and the
Title Company.
(b)...... The simultaneous closing of all of the transactions contemplated
by the agreements described on Schedule 3(h) attached hereto (the "Related
Agreements") with the Closing of this transaction is a condition precedent (the
"Mutual Condition Precedent") to both Seller's and Buyer's obligations under
this Agreement. The Mutual Condition Precedent is for the benefit of both Seller
and Buyer. If the Mutual Condition Precedent is not satisfied, each party shall
have the right in its sole discretion, either to waive the Mutual Condition
Precedent and proceed with the transaction so long as both of them have waived
this condition, or to terminate this Agreement by written notice to the other
party and Title Company.
(c)...... In the event that any party having the right of cancellation
under this Paragraph 3 does not inform the other party and Title Company in
writing of its disapproval of any condition precedent (the "Condition
Precedent") for such party's benefit provided in this Paragraph 3 prior to the
Closing, such Condition Precedent
Page 79 of 401
<PAGE>
shall be deemed to have been satisfied, approved or waived, effective as of the
Closing; provided that a party shall not be deemed to have waived any claim for
breach of any representation or warranty by the other party unless such party
has actual knowledge of such breach prior to Closing. For purposes of this
Subparagraph 3(c), "actual knowledge" of Buyer shall be deemed to mean the
present actual knowledge of Mr. Andrew Batinovich, Mr. Steve Saul or
Mr. Frank E. Austin, without any duty of investigation or inquiry on their part,
and "actual knowledge" of Seller shall be deemed to mean the present actual
knowledge of Mr. William G. Geary, Jr., Ms. Janet DaVall and Mr. Ron Lema,
without any duty of investigation or inquiry on their part. Upon termination of
this Agreement and the escrow for failure of a Condition Precedent, (i) Buyer
shall deliver to Seller copies of any and all soils, geologic, engineering and
environmental reports or studies concerning the Property prepared by or on
behalf of Seller and (ii) Seller shall bear the cost of any title and escrow
cancellation fees.
4. Closing and Escrow
(a)......... Upon mutual execution of this Agreement, the parties hereto
shall deposit an executed counterpart of this Agreement with Title Company and
this Agreement shall serve as instructions to Title Company as the escrow holder
for consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional escrow instructions as may be appropriate to
enable Title Company to comply with the terms of this Agreement; provided,
however, that in the event of any conflict between the provisions of this
Agreement and any supplementary escrow instructions, the terms of this Agreement
shall control unless a contrary intent is expressly indicated in such
supplementary instructions.
(b)......... The parties shall endeavor to conduct the Closing through an
escrow closing pursuant to Subparagraph 4(a) above. If, however, an escrow
Closing is not practical, the Closing hereunder shall be held and delivery of
all items to be made at the Closing shall be made at the offices of Morrison &
Foerster llp, 345 California Street, San Francisco, California 94104, on or
before November 15, 1996 (the "Closing Date"). In the event the Closing does not
occur on or before the Closing Date, Title Company shall, unless it is notified
by both parties to the contrary within five (5) days after the Closing Date,
return to the depositor thereof items which were deposited hereunder. Any such
return shall not, however, relieve either party of any liability it may have for
its wrongful failure to close.
(c)......... At or before the Closing, Seller shall deliver or cause to be
delivered to Buyer the following:
(i)... a duly executed Registration Rights Agreement;
(ii).. the duly executed and acknowledged Deed;
Page 80 of 401
<PAGE>
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Bill of Sale;
(v)... a duly executed Assignment of Service Contracts;
(vi).. originals of the Leases;
(vii). duly executed tenant estoppel certificates as required pursuant
to Subparagraph 3(a)(iv) above;
(viii) originals of the Contracts not previously delivered to Buyer;
(ix).. originals of any and all building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements that are in the possession or control of Seller and/or an affiliate
of Seller that have not been previously delivered to Buyer;
(x)... a FIRPTA affidavit (in the form attached as Exhibit F) pursuant
to Section 1445(b)(2) of the Internal Revenue Code of 1986 (the "Code"), and on
which Buyer is entitled to rely, that Seller is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code;
(xi).. a California Form 590 from Buyer certifying that Seller has a
permanent place of business in California or is qualified to do business in
California;
(xii). such resolutions, authorizations, bylaws or other corporate
and/or partnership documents or agreements relating to Seller as shall be
reasonably required by Buyer;
(xiii) A signed notice in the form of Exhibit I attached hereto for
each of the Tenants (as defined in Paragraph 6 below);
(xiv). a closing statement in form and content satisfactory to Buyer
and Seller; and
(xv).. any other instruments, records or correspondence called for
hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
(d)......... At or before the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i)... a closing statement in form and content satisfactory to Buyer
and Seller;
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<PAGE>
(ii).. the duly executed certificate(s) for shares of the Stock in the
name of Carlsberg, evidencing the issuance of the Stock;
(iii). a duly executed Registration Rights Agreement;
(iv).. a duly executed Assignment of Leases;
(v)... a duly executed Assignment of Service Contracts; and
(vi).. the Cash.
(e)......... Seller and Buyer shall each deposit such other instruments as
are reasonably required by Title Company or otherwise required to close the
escrow and consummate the transactions described herein in accordance with the
terms hereof. Seller and Buyer hereby designate Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code and the
regulations promulgated thereunder.
(f)......... With respect to the Property the following adjustments shall
be made, and the following procedures shall be followed:
(i)... As nearly as practicable prior to the Closing, Buyer and Seller
shall prepare a statement for the Property ("Proration Statement") showing
prorations for the items set forth below, calculated as of 12:01 a.m. on the
Closing Date, on the basis of a 365-day year:
(A) rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, common area expenses,
marketing fund charges, operating expenses, maintenance escalation rents or
charges, cost-of-living increases or other charges of a similar nature, if any,
and any additional charges and expenses payable under tenant Leases (whether
such collection occurs prior to, on or after the Closing Date);
(B) real property taxes and assessments;
(C) the current installments (only) of any improvement bonds
or assessments which are a lien on the Property or which are pending and may
become a lien on the Property;
(D) water, sewer and utility charges;
(E) amounts payable under any Contract that will be continued
after the Closing;
(F) permits, licenses and/or inspection fees (calculated on
the basis of the period covered);
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<PAGE>
(G) interest on the Loan; and
(H) any other expenses normal to the operation and
maintenance of the Property.
(ii).. Buyer shall use commercially reasonable efforts consistent with
prudent business practices to collect rents or other amounts payable under the
Leases that were delinquent as of the Closing Date and that relate to a period
prior to the Closing. To the extent such delinquent rents and other amounts are
collected by Buyer, Buyer may deduct from the amount owed to Seller an amount
equal to the out-of-pocket third-party collection costs actually incurred by
Buyer in collecting such rents and other amounts due to Seller. Any rent or
other payment (including percentage rent) collected after the Closing from any
tenant which owed rent that was delinquent as of the Closing Date and that
relate to a period prior to the Closing shall be applied first, to satisfy such
tenant's rent obligations first becoming due and payable in the month in which
such rent was paid (or within five (5) days after the date on which such rent
was paid), and then to satisfy such delinquent rent obligations (including those
that relate to the period after the Closing Date) in the inverse order of
maturity. After the Closing, Buyer shall have the exclusive right to enforce
claims for rents and all other obligations due and owing under the Leases and
terminate any Leases as Buyer, in its sole discretion, deems appropriate.
(iii). At the Closing, Seller shall deliver to Buyer all security
deposits, letters of credit and other collateral given to Seller or any of its
affiliates or predecessor-in-interest pursuant to any of the Leases, less any
portions thereof applied in accordance with the respective Lease (together with
a statement regarding such applications).
(iv).. If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
operating expenses, maintenance escalation rents or charges, cost-of-living
increases or other charges of a similar nature ("Additional Rents") and such
Additional Rents are not finally adjusted between the landlord and tenant under
any Lease until after the Closing Date, then Buyer shall submit to Seller within
sixty (60) days after such Additional Rents are finally adjusted with any
tenant, a supplemental statement (the "Supplemental Statement") to the extent
such Additional Rents have been finally adjusted between Buyer and such tenant,
containing a calculation of the prorations of such Additional Rents, prepared
based on the principles set forth in this Subparagraph 4(f) , provided that in
making such adjustment, the parties shall exclude any Additional Rents arising
from increased real property taxes for the Property to the extent such increase
is the result of Buyer's purchase of the Property. To the extent the
Supplemental Statement indicates that one party is entitled to any amounts under
this Subparagraph 4(f)(iv), the other party shall pay such sum to such party
within thirty (30) days after the delivery of the Supplemental Statement.
Page 83 of 401
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(v)... Buyer shall pay the following costs of closing this
Transaction: (A) the costs of the Buyer's legal counsel, accounting services and
engineering and environmental analyses, (B) fifty percent (50%) of the escrow
charges, fees for recording the Deed and the premium for the Title Policy and
(C) the cost of preparing three (3) years' audited operating statements for the
Property to be completed prior to the Closing as required under federal
securities laws. All other costs associated with the transaction, (including,
but not limited to, any transfer taxes, all survey costs, and fifty percent
(50%) of the escrow charges, fees for recording the Deed and the premium for the
Title Policy) shall be charged against Seller and, provided the Closing occurs,
will be deducted from the Purchase Price.
(vi).. Notwithstanding anything to the contrary contained in this
Subparagraph 4(f), if the real property taxes and assessments payable for any
period prior to Closing are determined to be more than the amounts prorated
herein (in the case of the current year) or paid by Seller (in the case of any
prior year), due to a reassessment of the value of the Property or otherwise,
Seller and Buyer shall promptly adjust the proration of such real property taxes
and assessments after the determination of such amounts, and Seller shall pay to
Buyer any increase in the amount of such real property taxes and assessment
applicable to any period prior to Closing.
(vii). The obligations of Seller and Buyer under this
Subparagraph 4(f) shall survive the Closing.
5. Loan
(a)......... Buyer may elect to attempt, and Seller shall reasonably
cooperate with Buyer in such attempt, to obtain the consent of the lender of the
Loan to the transfer of the Property to Buyer, which consent shall confirm for
the benefit of Buyer and Seller, the following items with respect to the Loan:
the identification of the applicable Loan Documents, the interest rate, the date
through which interest is paid, the principal amount outstanding, the maturity
date, the monthly payment, the absence of any default relating to the payment of
money to the lender, and to such lender's knowledge the absence of any other
defaults (the "Lender Consent"); provided, however, that no party shall be
obligated to pay any consideration to a lender to obtain such consent except as
provided in this Subparagraph 5(a). Each party hereto shall promptly keep the
other party informed of its discussions with the lender in connection with the
matters described in this Subparagraph 5(a). Notwithstanding anything to the
contrary in this Subparagraph 5(a), Buyer may elect by written notice to Seller,
to pay the entire outstanding balance of the Loan on or prior to the date which
is one hundred eighty (180) days after the Closing Date (the "Loan Payoff
Date"), in which case Buyer shall make such payments as stated in such notice at
or before the Loan Payoff Date, together with any consideration in the nature of
a fee or expense reimbursement (i.e., not a payment which reduces principal)
which is required under the terms of a provision that presently exists in the
applicable Loan Documents
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to obtain the Lender Consent, including any and all costs and expenses of the
lender's counsel or representatives in connection therewith. If Buyer pays the
entire outstanding balance of the Loan on or prior to the Loan Payoff Date,
Seller shall pay any prepayment penalties applicable to the Loan payoff.
(b)......... In addition, Seller hereby grants Buyer the right to
renegotiate the Loan and to negotiate new loans or loans to replace the existing
Loan; provided that (i) Seller incurs no cost or liability in connection
therewith (except for any applicable prepayment penalties), (ii) if Buyer does
not pay off the Loan on or before the Loan Payoff Date, Buyer shall use
commercially reasonable efforts (but at no additional cost to Buyer) to cause
the lender of the Loan to release Seller from all liability under the Loan and
the Loan Documents, and (iii) such new loans and modifications to the Loan are
not effective until the Closing. The parties shall execute all documents
necessary or desirable to evidence or effectuate the modification of the Loan as
provided in this Paragraph 5.
(c)......... The provisions of this Paragraph 5 shall survive the Closing.
6. Estoppel Certificates
Seller shall use all reasonable efforts to obtain an estoppel certificate
from each tenant of the Property (each, a "Tenant"), dated no earlier than
thirty (30) days prior to the Closing Date, substantially in the form of
Exhibit H attached hereto, conforming to the most recent rent roll approved by
Buyer and alleging no defaults, offsets, or claims against the lessor (the
"Estoppel Certificate"). It shall be a condition to Buyer's obligation to close
the sale and purchase of the Property that on or before the Closing:
(a)......... Seller delivers to Buyer an Estoppel Certificate from Tenants
occupying seventy-five percent (75%) of the rentable area of the Property,
including all tenants occupying more than ten percent (10%) of the rentable area
of the Property (collectively, the "Required Tenants"), and, with respect to all
other tenants (collectively, the "Non-Required Tenants"), there shall exist no
dispute with Seller, which dispute is material to the use, value or economics of
the Property, as determined on an individual basis by Buyer in good faith in
Buyer's sole discretion (a "Material Non-Required Tenant Dispute") (and Buyer
shall be afforded the opportunity to inquire of any Non-Required Tenant which
does not provide an Estoppel Certificate as to whether any such dispute exists);
or
(b)......... To the extent that Seller is unable to obtain Estoppel
Certificates, or any items required to be therein, from the Required Tenants, or
to the extent that there is any Material Non-Required Tenant Dispute, Seller
shall deliver to Buyer and Buyer may, but shall not be obligated to, accept, on
the Closing Date a certification in which Seller warrants and represents to
Buyer, with respect to such missing Estoppel Certificates, or any missing items
required to be included therein, each item set forth
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<PAGE>
in the Estoppel Certificate attached as Exhibit H for the missing Estoppel
Certificates and/or indemnifies Buyer as to any such Material Non-Required
Tenant Dispute.
(c)......... If the conditions contained in Subparagraphs 6(a) and (b)
above are not satisfied, then Buyer may, by written notice given to Seller
before the Closing, elect to waive such conditions or terminate this Agreement.
7. Seller's Representations and Warranties
Seller hereby represents and warrants to Buyer as follows:
(a)......... Seller is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of California.
(b)......... Seller has full partnership power and authority to execute and
deliver this Agreement and to perform all of the terms and conditions hereof to
be performed by Seller and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and is the legal,
valid and binding obligation of Seller and is enforceable against Seller in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general equitable principles
(whether or not such enforceability is considered in a proceeding at law or in
equity). Seller is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar proceeding.
(c)......... Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of Seller's partnership agreement or
any statute, regulation or rule, or, to Seller's knowledge, any injunction,
judgment, order, decree, ruling, charge or other restrictions of any government,
governmental agency or court to which Seller is subject, and which violation or
conflict would have a material adverse effect on the ownership and operation of
the Property, or (ii) result in any material breach or the termination of any
lease, agreement or other instrument or obligation to which Seller is a party or
by which any of the Property may be subject, or cause a lien or other
encumbrance to attach to any of the Property, other than any due-on-sale
provisions in the Loan Documents. Seller is not a party to any contract or
subject to any other legal restriction that would prevent fulfillment by Seller
of all of the terms and conditions of this Agreement or compliance with any of
the obligations under it, other than any due-on-sale provisions in the Loan
Documents.
(d)......... All material consents required from any governmental authority
or third party in connection with the execution and delivery of this Agreement
by Seller or the consummation by Seller of the transactions contemplated hereby
have been made or
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obtained or shall have been made or obtained by the Closing Date. Complete and
correct copies of all such consents shall be delivered to Buyer.
(e)......... Seller has fee simple title to the Real Property, subject only
to the Permitted Exceptions.
(f)......... There are no adverse or other parties in possession of the
Property, or any part thereof, except Seller and tenants under the Leases. No
party has been granted any license, lease, or other right relating to the use or
possession of the Property or any part thereof, except tenants under the Leases.
(g)......... Except as set forth on Schedule 7(g), to Seller's knowledge,
there are no material defects with respect to the Real Property, including,
without limitation, no material defects in the structural and load-bearing
components of the Property, the roof(s), the parking lot(s), the plumbing,
heating, air conditioning and electrical and life safety systems, and all such
items are in good operating condition and repair.
(h)......... Except as set forth on Schedule 7(h), to Seller's knowledge,
the use and operation of the Property is in compliance in all material respects
with all applicable restrictive covenants, building codes, environmental, zoning
and land use laws, and other applicable local, state and federal laws and
regulations (collectively, "Laws").
(i)......... Except as set forth on Schedule 7(i), to Seller's knowledge,
there are no condemnation, environmental, zoning or other land-use regulation
proceedings that have been instituted, and Seller has not received any notice of
any such proceeding that is planned to be instituted, which would detrimentally
and materially affect the use, operation or value of any of the Property, nor
has Seller received notice of any special assessment proceedings affecting any
of the Property. Seller shall notify Buyer promptly of any such proceedings of
which Seller becomes aware.
(j)......... All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required, to Seller's knowledge, by law, or
by the normal use and operation of the Property are installed to the property
lines of the Property, and are connected pursuant to valid permits, and are
adequate to service the Property as presently operated and, to Seller's
knowledge, to permit compliance with all Laws.
(k)......... Seller has obtained all licenses, permits, variances,
approvals, authorizations, easements and rights of way, including proof of
dedication, required from all governmental authorities having jurisdiction over
the Property or from private parties for the present use, operation and
occupancy of the Property and to insure vehicular and pedestrian ingress to and
egress from the Property.
(l)......... Except as set forth on Schedule 7(l), there is no litigation
pending or, to Seller's knowledge, threatened, against Seller that arises out of
the ownership of the Property or that might materially and detrimentally affect
the value or the use or
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operation of any of the Property for its intended purpose or the ability of
Seller to perform its obligations under this Agreement. Seller shall notify
Buyer promptly of any such litigation of which Seller becomes aware.
(m)......... Except as set forth on Schedule 7(m), at the time of Closing
(i) there will be no outstanding written or oral contracts made by Seller for
any improvements to the Property which have not been fully paid for and Seller
shall cause to be discharged all mechanics' and materialmen's liens arising from
any labor or materials furnished to the Property prior to the time of Closing,
and (ii) Seller shall have completed all punch-list items with respect to any
tenant improvements constructed by Seller as landlord under the Leases.
(n)......... Seller knows of no facts nor has Seller failed to disclose any
fact which would prevent Buyer from using and operating the Property after
Closing in the manner in which the Property is currently operated.
(o)......... Other than the rights of Tenants, as tenants only, under the
Leases, Seller has not entered into any purchase contracts, options or other
agreements of any kind, written or oral, recorded or unrecorded, whereby any
person or entity other than Buyer will have acquired or will have any basis to
assert any right, title or interest, or right to possession, use, enjoyment or
proceeds of all or any portion of the Property. None of the Leases contain any
rights to purchase, rights of first offer to purchase, or first refusal to
purchase the Property.
(p)......... To Seller's knowledge, Schedule 7(p) lists all of the tangible
Personal Property.
(q)......... Attached hereto as Exhibit J is a list (the "Rent Roll") of
each of the Leases as of the date of this Agreement. Said Rent Roll is complete
in all material respects and all information therein is accurate in all material
respects as of its date, and there are no Leases or tenancies with respect to
the Property or any part thereof except as therein set forth. Except as
disclosed on the Rent Roll, no rental under any Lease has been collected in
advance of the current month. The Rent Roll shall be updated at the Closing to
reflect any changes which occur after the Effective Date. Seller is the owner of
the entire lessor's interest in and to each of the Leases and none of the Leases
or the rentals or other sums payable thereunder has been assigned or otherwise
encumbered, except in connection with the Loan.
(r)......... To Seller's knowledge, each of the Leases, including, without
limitation, any guaranties thereof, is an enforceable Lease and is in full force
and effect according to the terms set forth therein, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles. Except as specifically provided on Schedule 7(r)
attached hereto or on the Rent Roll, (i) no Tenant under any of the Leases is
greater than fifteen (15) days delinquent in the
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payment of its rental and other sums due, (ii) no Tenant has abandoned or
otherwise vacated the Property in violation of any Lease, (iii) to Seller's
knowledge, no Tenant or guarantor has filed a voluntary petition in bankruptcy,
insolvency or similar proceedings, has been the subject of an involuntary
bankruptcy petition, or otherwise been adjudged bankrupt or insolvent in any
proceedings filed against such tenant or guarantor; (iv) to Seller's knowledge,
no trustee or receiver has been appointed for any Tenant; (v) no written notice
has been provided to any tenant notifying the Tenant that it is in default under
the Lease which default has not been remedied by such Tenant; and (vi) no
Tenant, to Seller's knowledge, is otherwise in default under any of the Leases.
Except as otherwise provided in the Lease, to Seller's knowledge, each Tenant is
legally required to pay all sums and perform all other material obligations set
forth in its respective Lease, without concessions, abatements, offsets or other
basis for relief or adjustment, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the rights of creditors
generally, and by general equitable principles.
(s)......... To Seller's knowledge, no material event of default on behalf
of Seller, as lessor, exists under any Lease and no event or condition exists
that, upon the giving of notice or lapse of time, or both, would constitute a
default by Seller under any Lease. Seller has not received any notice from any
Tenant of any offsets, defenses or claims available against rent or other
charges payable by such Tenant or other performance or obligations otherwise due
from it under any Lease, except as specifically set forth in the Rent Roll
and/or the Estoppel Certificates.
(t)......... No guarantor of any Lease has been released or discharged,
voluntarily or involuntarily, from any obligation under or in connection with
any Lease or any transaction related thereto.
(u)......... Seller has not received from any Tenant or any other party
written notice of any claim (other than for customary refund at the expiration
of a Lease) to all or any part of any security deposit, except as set forth on
the Rent Roll and/or the Estoppel Certificates. The Rent Roll sets forth all
security deposits held by Seller.
(v)......... Except as shown on the Rent Roll, Seller has paid in full any
of landlord's leasing costs or obligations, including, without limitation, any
costs incurred by Seller in connection with any tenant improvements.
(w)......... No Tenant has indicated to Seller either orally or in writing
its present intent to terminate its Leases prior to expiration of the term of
such Lease except as shown on the Estoppel Certificates.
(x)......... Except as shown on Schedule 7(x), (A) no brokerage or similar
fee is due or unpaid by Seller with respect to the Leases, and (B) no brokerage
or similar fee shall be due or payable by Seller after the Closing in connection
with the Leases.
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(y)......... All permits, governmental licenses, registrations and
approvals with respect to the Property which are necessary or required by law or
the rules and regulations of any governmental entity having jurisdiction over
the Property or its owner to carry on business as presently conducted
(collectively, the "Licenses"), the lack of which, individually or in the
aggregate, would reasonably be likely to have a material adverse effect on the
value, use or operation of the Property, are in full force and effect.
(z)......... Schedule 7(z) attached hereto sets forth a list of all service
contracts, construction contracts for work in progress, any warranties
thereunder, management contracts, unrecorded reciprocal easement agreements,
operating agreements, maintenance agreements, franchise agreements and other
similar agreements relating to the Property, (such contracts and agreements
together with any recorded reciprocal easements agreements are hereinafter
referred to, collectively, as the "Contracts"). With respect to each of the
Contracts, (i) the Contract is legal, valid, binding, and, to Seller's
knowledge, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency or similar laws of general application relating to or
affecting the enforcement of creditor's rights and subject to general principles
of equity, (ii) to Seller's knowledge, except for a Contract that is terminable
upon thirty (30) day written notice, the Contract will not be adversely affected
by the occurrence of the Closing and will be legal, valid, binding, enforceable
in accordance with its terms and in full force and effect on identical terms
following the consummation of the sale of the Property, (iii) Seller is not,
and, to Seller's knowledge, no other party to the Contract is, in breach or
default under any obligation thereunder or any provisions thereof which would
have material adverse affect upon Seller, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default, or permit any
termination under the Contract which would have a material adverse affect upon
Seller, (iv) no event has occurred under the Contract which would permit the
creation of any lien upon, or the restriction of the right to the use of, the
Property and (v) no party to any Contract has repudiated any material provision
of the Contract.
(aa)........ Schedule 7(aa) attached hereto sets forth a list of all notes
or other evidence of indebtedness, loan agreements, mortgages, guaranty
agreements, and any and all other documents entered into by Seller and all
amendments, modifications and supplements thereto (collectively the "Loan
Documents") in connection with the Loan and all matters in connection with the
Loan set forth therein and certain factual information with respect to the Loan.
With respect to each of the Loan Documents, (i) the Loan Document is legal,
valid, binding and, to Seller's knowledge, enforceable in accordance with its
terms and in full force and effect, except as may be limited by bankruptcy,
reorganization, fraudulent conveyance, insolvency or similar laws of general
application relating to or affecting the enforcement of creditor's rights and
subject to general principles of equity, (ii) Seller is not, and to Seller's
knowledge, no other party to the Loan Document is, in breach or default under
any obligation thereunder or any provisions thereof which would have material
adverse effect upon Seller, and no event has occurred which, with notice or
lapse of time, would
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constitute a breach or default, or permit any termination, modification or
acceleration under the Loan Document which would have a material adverse affect
upon Seller other than the sale of the Property contemplated herein, (iii) to
Seller's knowledge, no event has occurred under the Loan Document which would
permit the creation of any lien upon, or the restriction of the right to the use
of, the Property and (v) no party to the Loan Document has repudiated any
material provision of the Loan Document.
(bb)........ Seller has delivered to Buyer all environmental reports and
investigations relating to the Property which are available to Seller. A list of
such reports and all environmental reports and investigations that have been
obtained by Buyer relating to the Property is attached hereto as Schedule 7(bb)
(collectively, the "Environmental Reports"). Except as set forth in the
Environmental Reports: (i) to Seller's knowledge, the Property is not, and
Seller has not received any written notice that, any real estate in the vicinity
of the Property is, in violation of any federal, state, local or administrative
agency ordinance, law, rule, regulation, order or requirement (collectively,
"Environmental Laws") relating to hazardous or toxic materials, substances or
wastes, or other materials injurious to human health or the environment
(collectively, "Hazardous Materials"); (ii) neither Seller nor, to Seller's
knowledge, any third party, has used, manufactured, generated, treated, stored,
disposed of, or released any Hazardous Material on or under the Property or
transported any Hazardous Material over the Property; (iii) neither Seller, nor
to Seller's knowledge, any third party has installed, used or removed any
storage tank on or from the Property except in full compliance with all
Environmental Laws, and to Seller's knowledge there are no storage tanks or
wells (whether existing or abandoned) located on or under the Property and to
Seller's knowledge no storage tank has been installed on, used on or removed
from the Property in violation of any Environmental Laws; (iv) to Seller's
knowledge, the Property does not consist of any building materials that contain
Hazardous Materials; and (v) no claim, action, suit or proceeding is pending or,
to Seller's knowledge, threatened against Seller, before any court or other
governmental authority or arbitration tribunal, relating to Hazardous Materials,
and there is no outstanding judgment, order, writ, injunction, decree or award
against Seller or otherwise having a material adverse effect on the Property
with respect to the same.
(cc)........ The Exhibits and Schedules attached hereto, as provided by or
on behalf of Seller, completely and correctly present in all material respects
the information required by this Agreement to be set forth therein. Seller or
CMC has delivered to Buyer true and correct copies of all of the due diligence
materials pertaining to the Property which are in the possession or control of
Seller. No representation or warranty by Seller herein and no information
disclosed in the Exhibits and Schedules hereto supplied by or on behalf of
Seller contains any untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein not materially
misleading. Seller has no knowledge of any events, transactions or other facts
which, either individually or in the aggregate might reasonably give rise
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to circumstances or conditions which might have a material adverse effect on the
Property.
(dd)........ Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(ee)........ Seller has provided a copy of the representations and
warranties set forth in this Paragraph 7 to the Responsible Individuals (as
defined below), and each of the Responsible Individuals has reviewed such copy
of the representations and warranties.
Buyer and Seller hereby agree that (x) except for the representations and
warranties of Seller set forth in this Agreement and the documents to be
delivered by Seller to Buyer at Closing (the "Conveyance Documents"), Buyer is
purchasing the Property on an "AS IS" basis without relying of any
communications that may have been made by Seller or any of Seller's agents or
employees, with respect to the Property or Buyer's intended use thereof; (y) the
only representations and warranties made with respect to the Property are
contained herein and in the Conveyance Documents; and (z) for purposes of this
Paragraph 7, "Seller's knowledge" shall be deemed to mean the present actual
knowledge of Mr. William W. Geary, Jr., Ms. Janet DaVall or Mr. Ron Lema (the
"Responsible Individuals"), which individuals Seller represents and warrants are
the employees, partners or officers of Seller or CMC that are most responsible
for the operation and management of the Property, without any duty of
investigation or inquiry on their part. Without limiting the generality of the
foregoing, but subject to Seller's representations and warranties hereunder and
in the Conveyance Documents, Buyer shall be solely responsible for determining
the condition of the Property, including, but not limited to, the existence or
risk of any Hazardous Materials, and all aspects regarding the fees, charges and
assessments relating to the Property. For purposes of this Paragraph 7, an item
shall be deemed "material" if the reasonably estimated cost or damage incurred
by Buyer and/or the diminution of the market value of the Property as a result
thereof, individually or in the aggregate, exceeds Twenty-Five Thousand Dollars
($25,000). All representations and warranties set forth in this Paragraph 7
shall be deemed to be given as of the Effective Date and the Closing Date unless
Seller otherwise notifies Buyer in writing prior to the Closing.
8. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
(a)......... Buyer is a duly organized and validly existing limited
partnership in good standing under the laws of the State of California; this
Agreement and all documents executed by Buyer which are to be delivered to
Seller at the Closing are or at the time of Closing will be duly authorized,
executed and delivered by Buyer, and are or at the Closing will be legal, valid
and binding obligations of Buyer, and do not and at the
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time of Closing will not violate any provisions of any agreement or judicial
order to which Buyer is subject.
(b)......... Buyer has made (or will make prior to the Closing Date) an
independent investigation with regard to the Property and Buyer's intended use
thereof, including, without limitation, review and/or approval of matters
disclosed pursuant to Paragraph 3(a) above.
(c)......... There is no litigation pending or, to Buyer's knowledge,
threatened, against Buyer or any basis therefor that might materially and
detrimentally affect the ability of Buyer to perform its obligations under this
Agreement. Buyer shall notify Seller promptly of any such litigation of which
Buyer becomes aware.
(d)......... The Stock, when issued, shall be duly authorized, fully paid
and non-assessable.
All representations and warranties set forth in this Paragraph 8 shall be true
as of the Effective Date and the Closing Date.
9. Indemnification
(a)......... Each party hereby agrees to indemnify the other party and
defend and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, resulting from any misrepresentation or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or Exhibit given or delivered to the other pursuant to or
in connection with this Agreement.
(b)......... Seller agrees to indemnify Buyer and its partners and defend
and hold Buyer and its partners harmless from and against any and all claims,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys' fees, asserted against, incurred or suffered by
Buyer resulting from or arising out of (i) any personal injury or property
damage occurring in, on or under the Property during Seller's ownership thereof,
from any cause whatsoever other than as a consequence of the acts or omissions
of Buyer, its agents, employees or contractors; and (ii) the failure of Seller
to perform any obligation under the Loan Documents to be performed by the
borrower prior to the Closing Date (other than the obligation to obtain the
lender's consent for the sale of the Property contemplated herein).
(c)......... Buyer agrees to indemnify Seller and its partners and defend
and hold Seller and its partners harmless from any claims, losses, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, asserted against, incurred or suffered by Seller
resulting from or arising out of (i) any personal injury or property damage
first occurring in, on or under the Property during Buyer's ownership thereof,
from any cause whatsoever other than as a consequence of the acts
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or omissions of Seller, or its agents, employees or contractors, and (ii) if
Buyer does not pay off the Loan on or before the Loan Payoff Date, the failure
of Seller to perform any obligation under the Loan Documents to be performed by
the borrower after the Closing Date.
(d)......... The indemnification provisions of this Paragraph 9 shall
survive beyond the Closing, or, if the Closing does not occur pursuant to this
Agreement, beyond any termination of this Agreement.
10. Risk of Loss
(a)......... Minor Loss. Buyer shall be bound to purchase the Property for
the full Purchase Price as required by the terms hereof, without regard to the
occurrence or effect of any damage to the Property or destruction of any
improvements thereon or condemnation of any portion of the Property, provided
that: (i) the cost to repair any such damage or destruction does not exceed ten
percent (10%) of the Purchase Price or, in the case of a partial condemnation,
the value of the portion of the Property taken does not exceed ten percent (10%)
of the Purchase Price; (ii) upon the Closing, there shall be a credit against
the Purchase Price due hereunder equal to the amount of any insurance proceeds
or condemnation awards collected by Seller as a result of any such damage or
destruction or condemnation, plus the amount of any insurance deductible;
(iii) insurance or condemnation proceeds available to Seller are sufficient to
cover the cost of restoration; and (iv) the insurance carrier has admitted
liability for the payment of such costs; and (v) the Loan on the Property in
question is not accelerated or defaulted by reason of such casualty or
condemnation. If the proceeds or awards have not been collected as of the
Closing, then Seller's right, title and interest to such proceeds or awards
shall be assigned to Buyer.
(b)......... Major Loss. If the cost to repair such damage or destruction
to the Property exceeds ten percent (10%) of the Purchase Price allocated to the
Property or, in the case of condemnation, if the value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price allocated to the
Property, then Buyer may, at its option to be exercised by written notice to
Seller within twenty (20) days of Seller's notice to Buyer of the occurrence of
the damage or destruction or the commencement of condemnation proceedings,
either (i) elect to terminate this Agreement, or (ii) consummate the purchase of
the Property for the full Purchase Price as required by the terms hereof,
subject to the credits against the Purchase Price provided below. If Buyer
elects to proceed with the purchase of all of the Property, then, upon the
Closing, Buyer shall be given a credit against the Purchase Price due hereunder
equal to the amount of any insurance proceeds or condemnation awards collected
by Seller as a result of any such damage or destruction or condemnation, plus
the amount of any insurance deductible. If the proceeds or awards have not been
collected as of the Closing, then Seller's right, title and interest to such
proceeds or awards shall be assigned to Buyer. If Buyer fails to give Seller
notice within such 20-day period, then Buyer will be deemed to have elected to
terminate this Agreement.
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In the event of any damage or destruction of the Property covered by this
Paragraph 10(b), the Closing shall be postponed to the date which is five (5)
days after Buyer elects to consummate the Purchase of the Property as set forth
above.
11. Inspections
Prior to the Closing Date, Seller shall afford authorized representatives
of Buyer reasonable access to the Property for purposes of satisfying Buyer with
respect to the representations, warranties and covenants of Seller contained
herein and with respect to satisfaction of any Conditions Precedent to the
Closing contained herein, including, without limitation, and the taking of soil
borings from the Property; provided, however, that Buyer shall use commercially
reasonable efforts not to unreasonably disturb or interfere with the rights of
Tenants under the Leases. Buyer hereby agrees to indemnify and hold Seller
harmless from any damage or injury to persons or property caused by Buyer or its
authorized representatives during their entry and investigations prior to the
Closing. In the event this Agreement is terminated, Buyer shall restore the
Property to substantially the condition in which it was found. This indemnity
shall survive the termination of this Agreement or the Closing, as applicable.
12. Leases And Other Agreements; Capital Improvements
(a)......... Except as otherwise contemplated or permitted by this
Agreement or approved by Buyer in writing, from the Effective Date to the
Closing Date, Seller will cause Seller to operate, maintain, repair and lease
the Property in a prudent manner, in the ordinary course, on an arm's-length
basis and consistent with their past practices (and without limiting the
foregoing, Seller shall, in the ordinary course, negotiate with prospective
tenants and enter into leases of the Property, enforce leases in all material
respects, pay all costs and expenses of the Property, including, without
limitation, debt service, real estate taxes and assessments, maintain insurance
and pay and perform obligations under the Loan Documents) and will not dispose
of or encumber any of the Property, except for dispositions of personal property
in the ordinary course of business.
(b)......... Notwithstanding the above terms of this Paragraph 12, Seller
shall not, without the prior written approval of Buyer, take any of the
following actions:
(i)... execute or terminate any lease covering in excess of 5,000
square feet in the case of any lease of industrial space, 2,000 square feet in
the case of any lease of office space, or 2,000 square feet in the case of any
lease of retail space, or modify or waive any material term thereof;
(ii).. except as otherwise required under this Agreement, enter into,
execute or terminate any operating agreement, reciprocal easement agreement,
management agreement or any lease, contract, agreement or other commitment of
any sort
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(including any contract for capital items or expenditures), with respect to the
Property requiring payments to or by Seller in excess of Ten Thousand Dollars
($10,000) per annum, or the performance of services by Seller the value of which
is in excess of Ten Thousand Dollars ($10,000) per annum; or
(iii). waive or modify any material term under any Loan Document.
(c)......... In connection with any new leases or Lease modifications
affecting the Property entered into between the Effective Date and the Closing
in accordance with Subparagraph 12(b) above, the cost of tenant improvement work
and leasing commissions shall be paid solely by Buyer. Seller shall be
responsible for the cost of tenant improvement work and leasing commissions for
all Leases (and amendments thereto) entered into prior to the Effective Date
(regardless of when the same are payable), including, without limitation, those
leases described on Schedule 12(c) attached hereto, and Seller's obligations
with respect thereto shall survive the Closing.
(d)......... Between the Effective Date and the Closing, Seller shall
continue to undertake capital improvements with respect to the Property in the
ordinary course of business.
13. Cooperation
Seller and Buyer shall cooperate and do all acts as may be reasonably
required or requested by the other with regard to the fulfillment of any
Condition Precedent or the consummation of the transactions contemplated hereby
including execution of any documents, applications or permits. Seller hereby
irrevocably authorizes Buyer and its agents to make all inquiries of any third
party, including any governmental authority, as Buyer may reasonably require to
complete its due diligence.
14. Miscellaneous
(a)......... Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) hand delivery, (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or transmitted by
facsimile telecopy, or (iii) two (2) days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
required, and addressed as follows:
If to Seller: c/o Carlsberg Management Company
2800 28th Street, Suite 222
Santa Monica, California 90405
Attention: William W. Geary, Jr.
Telephone: (310) 450-9696
Fax : (310) 399-5633
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With a copy to: Sandler and Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, California 90067
Attention: Ming-chu C. Rouse
Telephone: (310) 277-4411
Fax : (310) 277-5954
If to Buyer: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
With a copy to: Morrison & Foerster llp
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Telephone: (415) 677-7000
Fax : (415) 677-7522
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein, except that Seller acknowledges that it has requested the
services of Carlsberg Management Company in connection with this transaction and
shall be responsible for paying a commission to Carlsberg Management Company in
the amount of six percent (6%) of the Purchase Price if the Closing occurs. In
the event that any broker or finder perfects a claim for a commission or
finder's fee based upon any such contact, dealings or communication, the party
through whom the broker or finder makes its claim shall be responsible for said
commission or fee and shall indemnify and hold harmless the other party from and
against all liabilities, losses, costs and expenses (including reasonable
attorneys' fees) arising in connection with such claim for a commission or
finder's fee. The provisions of this Subparagraph shall survive the Closing.
(c) Successors and Assigns. Subject to the following two (2) sentences,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns. Buyer
shall have the right, with notice to Seller (but without the necessity of
Seller's consent), to assign its right, title and interest in and to this
Agreement to one or more assignees at any time
Page 97 of 401
<PAGE>
before the Closing Date; provided, however that such assignee(s) shall assume
all obligations of Buyer, and such assignment and assumption shall not release
Buyer from any obligation hereunder. Seller shall not have the right to assign
its interest in this Agreement.
(d) Amendments. Except as otherwise provided herein, this Agreement may be
amended or modified only by a written instrument executed by Seller and Buyer.
(e) Continuation and Survival of Representations and Warranties, Etc. All
representations and warranties by the respective parties contained herein or
made in writing pursuant to this Agreement are intended to and shall remain true
and correct as of the time of Closing, shall be deemed to be material, and,
together with all conditions, covenants and indemnities made by the respective
parties contained herein or made in writing pursuant to this Agreement (except
as otherwise expressly limited or expanded by the terms of this Agreement),
shall survive the execution and delivery of this Agreement and shall survive the
Closing for a period of twenty-four (24) months after the Closing, or, to the
extent the context requires, beyond any termination of this Agreement for a
period of twenty-four (24) months.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(g) Merger of Prior Agreements. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all prior
agreements and understandings between the parties relating to the subject matter
hereof, including, without limitation, the Letter of Intent dated October 22,
1996, entered into by and between Buyer and CMC.
(h) Enforcement. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent
Page 98 of 401
<PAGE>
jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
(k) Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date" shall mean
the first date on which both Seller and Buyer shall have executed this
Agreement.
(m) Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material or information about the other or, in the case of Buyer and
its agents, employees, consultants and contractors, about the Property, and
shall not disclose such information to any third party, except, in the case of
information about the Property and Seller, to Buyer's lender or prospective
lenders, insurance and reinsurance firms, attorneys, environmental assessment
and remediation service firms and consultants, as may be reasonably required for
the consummation of the transaction contemplated hereunder and/or as required by
law.
Page 99 of 401
<PAGE>
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
15. Acceptance of Agreement by Seller
This Agreement shall be null and void unless it is accepted by Seller and
two fully executed copies hereof are returned to Buyer on or before 5:00 p.m.
(P.S.T.) on November 13, 1996.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
Dated:
By:
Its:
Dated:
Page 100 of 401
<PAGE>
Seller: Carlsberg Managed Properties Fund, Ltd.,
a California limited partnership
By: Carlsberg Realty Corporation,
a California corporation,
General Partner
By: ________________________________
William W. Geary, Jr.,
President
Dated: _____________________________
Title Company agrees to act as escrow holder in accordance with the terms
of this Agreement and to act as the Reporting Person (as such term is defined in
this Agreement).
Lawyer's Title Insurance Corporation
By:
Its:
Dated:
Page 101 of 401
<PAGE>
Schedule 1(a)
Real Property
Page 102 of 401
<PAGE>
Schedule 2(a)(i)
Loan
Secured loan in the original principal amount of Two Million Dollars
($2,000,000) extended by Great Western Bank, a Federal Savings Bank ("GWB")
successor-in-interest to Great Western Savings, a Federal Savings and Loan
Association ("GWS"), to Seller, successor-in-interest to Carlsberg Resources
Corporation, a California corporation ("CRC"), successor-in-interest to
Donald D. Rose ("Rose").
Page 103 of 401
<PAGE>
Schedule 3(c)
Permitted Exceptions
Page 104 of 401
<PAGE>
Schedule 3(h)
Related Agreements
All of the following documents are dated as of even date herewith:
1. Purchase Agreement between Terra Plaza, Ltd., a California limited
partnership, and Buyer for the property commonly known as Carlsberg Plaza
located at 2633 East Indian Road, Phoenix, Arizona.
2. Purchase Agreement between Carlsberg Managed Properties Fund, Ltd., a
California limited partnership, and Buyer for the property commonly known as
Dallidet Professional Center located at 1194 Pacific Street, San Luis Obispo,
California.
3. Purchase Agreement between IHH Partnership, a California general
partnership, and Buyer for the property commonly known as Hillcrest Office
Building located at 1370 North Brea Boulevard, Fullerton, California.
4. Purchase Agreement between Tradewinds Office Building, a California
general partnership, and Buyer for the property commonly known as Trade Winds
Financial Center located at 2266 South Dobson Road, Mesa, Arizona.
5. Purchase Agreement among Sonora Plaza, Ltd., a California limited
partnership, GDA Investment, Ltd., a Florida limited partnership, and Buyer for
the property commonly known as Sonora Plaza located at 708-824 East Mono Way,
Sonora, California.
6. Loan Agreement between Carlsberg Properties, Ltd., a California limited
partnership, and Buyer for the property commonly known as Grunow Medical
Building located at 926 East McDowell Road, Phoenix, Arizona.
7. Agreement Concerning Property Management Agreements executed by
Carlsberg Management Company, a California corporation, and Glenborough
Corporation, a California corporation.
Page 105 of 401
<PAGE>
Schedule 7(g)
Defects
Page 106 of 401
<PAGE>
Schedule 7(h)
Violations
Page 107 of 401
<PAGE>
Schedule 7(i)
Proceedings
Page 108 of 401
<PAGE>
Schedule 7(l)
Litigation
Page 109 of 401
<PAGE>
Schedule 7(m)
Outstanding Contracts
Page 110 of 401
<PAGE>
Schedule 7(p)
Personal Property
Page 111 of 401
<PAGE>
Schedule 7(r)
Lease Exceptions
Page 112 of 401
<PAGE>
Schedule 7(x)
Brokerage Fees
Page 113 of 401
<PAGE>
Schedule 7(z)
Contracts
Page 114 of 401
<PAGE>
Schedule 7(aa)
Loan Documents
1. Promissory Note Adjustable Rate Mortgage Loan in the original principal
amount of Two Million Dollars, dated as of June 14, 1985 made by Donald D. Rose
("Rose") in favor of Great Western Savings, a Federal Savings and Loan
Association ("GWS").
2. Deed of Trust dated as of June 14, 1985, executed by Rose for the
benefit of GWS and recorded on July 11, 1985 in the Official Records (the
"Official Records") of San Luis Obispo County, California, as Document
No. 038571.
3. Assumption Agreement dated as of August 12, 1987, executed by
D&R Energy, Inc., a corporation, CRC and GWB.
4. Assignment of Leases executed by Carlsberg Resources Corporation, a
California corporation ("CRC"), to Great Western Bank, a Federal Savings Bank
("GWB"), and recorded on September 30, 1987, in the Official Records as Document
No. 70728.
5. Security Agreement dated as of August 12, 1987, executed by CRC in favor
of GWB.
6. Continuing Guaranty dated as of August 12, 1987, executed by William W.
Geary and Elmer Simbol in favor of GWB.
Factual Information:
Date of last payment: November 1, 1996 (for payment due October 15, 1996)
Outstanding principal balance as of October 15, 1996: $1,707,888.27
Per diem accrual of interest since October 15, 1996: $373.36
Amount of last payment: $14,513.51
Real Estate Tax Impound Balance: None.
Page 115 of 401
<PAGE>
Schedule 7(bb)
Environmental Reports
1. Phase I report dated as of August 26, 1996 prepared by Eckland
Consultants at the request of Buyer.
Page 116 of 401
<PAGE>
Schedule 12(c)
Tenant Improvements Costs and
Leasing Commissions -- Seller's Responsibility
None.
Page 117 of 401
<PAGE>
Exhibit A
Registration Rights Agreement
Page 118 of 401
<PAGE>
Exhibit B
Grant Deed
Recording Requested By:
Lawyer's Title Insurance Corporation
Escrow No. __________
When Recorded Return To:
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Mail Tax Statements To:
Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention:_____________________
Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.
Grant Deed
For valuable consideration, receipt of which is hereby acknowledged,
________________________, a _____________________ hereby grants to Glenborough
Properties, L.P., a California limited partnership, the real property located in
the City of __________, County of _______________, State of California, more
particularly described on Exhibit A attached hereto.
Executed as of this ___ day of November, 1996.
Grantor: ________________________,
a _______________________
By: ___________________
Its: ___________________
[ADD NOTARY FORM]
Page 119 of 401
<PAGE>
______________, 1996
________ County Recorder
_______________________
_______________________
_______________________
Re:______Request That Statement of Documentary
_________Transfer Tax Not be Recorded
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.
The attached deed names _________________, a ________________, as grantor,
and Glenborough Properties, L.P., a California limited partnership, as grantee.
The property being transferred and described in the attached deed is
located in the City of ____________, County of _______________, State of
California.
The amount of Documentary Transfer Tax due on the attached deed is
$________ computed on full value of the property conveyed.
________________________,
a _______________________
By: ___________________
Its: ___________________
Page 120 of 401
<PAGE>
Exhibit C
Assignment of Leases
This Assignment of Leases ("Assignment") dated as of November __, 1996, is
entered into by and between
, a
("Assignor"), and Glenborough Properties, L.P., a California limited partnership
("Assignee").
Witnesseth:
Whereas, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as
(the "Property") as more fully described in
Exhibit A attached hereto, which leases are described in Schedule 1 attached
hereto (the "Leases"); and
Whereas, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
Now, Therefore, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Except as otherwise set forth in the Purchase Agreement (as defined in
paragraph 5 below), Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all cost, liability, loss, damage or
expense, including without limitation, reasonable attorneys' fees, originating
prior to the Effective Date and arising out of the lessor's obligations under
the Leases.
4. Except as set forth in the Purchase Agreement, effective as of the
Effective Date, Assignee hereby assumes all of the lessor's obligations under
the Leases and agrees to indemnify Assignor against and hold Assignor harmless
from any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, originating subsequent to the Effective
Date and arising out of the lessor's obligations under the Leases.
5. Any rental and other payments under the Leases shall be prorated between
the parties as provided in the Purchase Agreement between Assignor, as Seller,
and Assignee, as Buyer, dated as of November __, 1996 (the "Purchase
Agreement").
Page 121 of 401
<PAGE>
6. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
7. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
8. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
9. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 122 of 401
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 123 of 401
<PAGE>
Schedule 1 to
Assignment of Leases
Amendment Security
Tenants Premises Leases Date Date(s) Deposit
Page 124 of 401
<PAGE>
Exhibit D
Warranty Bill Of Sale
For good and valuable consideration the receipt of which is hereby
acknowledged, , a
("Seller"), does
hereby sell, transfer, and convey to Glenborough Properties, L.P., a California
limited partnership ("Buyer"), all personal property owned by Seller and located
on or in or used in connection with the Real Property and Improvements (as such
terms are defined in that certain Purchase Agreement dated as of November __,
1996, between Seller and Buyer, including, without limitation, those items
described in Schedule A attached hereto.
Seller does hereby represent to Buyer that Seller is the lawful owner of
such personal property, that such personal property is free and clear of all
encumbrances, and that Seller has good right to sell the same as aforesaid and
will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands of all persons whomsoever.
Dated this _____ day of November __, 1996.
Seller: ,
a
By:
Its:
Page 125 of 401
<PAGE>
Schedule A to
Warranty Bill of Sale
Page 126 of 401
<PAGE>
Exhibit E
Assignment of Service Contracts,
Warranties and Guaranties
and Other Intangible Property
This Assignment of Service Contracts, Warranties and Guaranties and Other
Intangible Property ("Assignment") is made and entered into as of this _____ day
of November, 1996, by
, a
("Assignor"), to Glenborough Properties, L.P., a California limited partnership
("Assignee").
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third party
with respect to any building, building component, structure, fixture, machinery,
equipment, or material situated on, contained in any building or other
improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto; and
(c) any Intangible Property (as defined in that certain Purchase Agreement
dated as of November __, 1996 between Assignor and Assignee (or Assignee's
predecessor in interest) (the "Purchase Agreement")).
Assignor and Assignee further hereby agree and covenant as follows:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Effective as of the Effective Date, Assignee hereby assumes all of the
owner's obligations under the Service Contracts and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including, without limitation, reasonable attorneys' fees,
originating on or subsequent to the Effective Date and arising out of the
owner's obligations under the Service Contracts.
Page 127 of 401
<PAGE>
3. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with laws of the State of California.
Page 128 of 401
<PAGE>
6. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor:
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Dated:
Page 129 of 401
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 130 of 401
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 131 of 401
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 132 of 401
<PAGE>
Exhibit F
Certificate of Transferor
other than an Individual
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located in
, that withholding of tax is not
required upon the disposition of such U.S. real property interest by
, a
("Transferor"), the undersigned hereby certifies
the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
; and
3. Transferor's office address is
.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: November ____, 1996.
[Individual signature line]
on behalf of
,
a
Page 133 of 401
<PAGE>
Exhibit G
Form of Tenant's Estoppel Certificate
Glenborough Properties, L.P. ("Purchaser")
400 S. El Camino Real
San Mateo, California 94402-1708
RE: Lease Dated , and amended
(the "Lease"), by and between
, as lessor ("Lessor"), and
, as lessee ("Lessee"), with respect to certain
premises (the "Leased Premises") located at
(the "Property"). The
Leased Premises are comprised of square feet.
Ladies and Gentlemen:
The undersigned hereby acknowledges that Purchaser is entering into an
agreement to purchase the Property. The undersigned further acknowledges the
right of Lessor and Purchaser to rely upon the statements and representations of
the undersigned contained in this Certificate and further acknowledges that
Purchaser will be purchasing the Property in material reliance on this
Certificate.
Given the foregoing, the undersigned Lessee hereby certifies and represents
unto Purchaser, its successors and assigns, with respect to the above described
Lease, a true and correct copy of which is attached as Exhibit A hereto, as
follows:
1. Lease Effective. The Lease has been duly executed and delivered by
Lessee and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Lessee thereunder are valid and binding and
there have been no further amendments, modifications or additions to the Lease,
written oral;
2. No Default. To the best of Lessee's knowledge, as of the date hereof:
(i) there exists no breach, default, or event or condition which, with the
giving of notice or the passage of time or both, would constitute a breach or
default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
3. Entire Agreement. The Lease constitutes the entire agreement between
Lessor and Lessee with respect to the Property and Lessee claims no rights with
respect to the Property other than as set forth in the Lease; and
4. No Prepaid Rent. No deposits or prepayments of rent have been made in
connection with the Lease, except as follows: (if none, state "none")
.
Page 134 of 401
<PAGE>
Dated: , 1996. "Lessee"
____________________________________
By: ________________________________
Its:________________________________
Page 135 of 401
<PAGE>
Exhibit H
Rent Roll
Page 136 of 401
<PAGE>
Exhibit I
Notice To Tenants
(Date)
(Name)
(Street Address)
(City, State, Zip Code)
Re: (Name of Property)
Dear (Tenant, or address individually to each Tenant):
Glenborough Properties, L.P., a California limited partnership has acquired
the subject property. We are pleased to advise you that, as of November ___,
1996, Glenborough Corporation has been engaged to lease and manage the property.
Please send your monthly rent and all future remittances to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
We value your tenancy and urge you to direct any questions regarding your
lease or this letter to (Name of Property Manager) at (Phone Number for Property
Manager or Building Property Manager) for (Name of Property).
Very truly yours,
Carlsberg Management Company,
a California corporation,
Property Manager for (Seller)
By: ________________________
Its: ________________________
Page 137 of 401
<PAGE>
Purchase Agreement
by and between
IHH Partnership,
a California general partnership,
and
Glenborough Properties, L.P.,
a California limited partnership,
dated as of November __, 1996
for
Hillcrest Office Building
Fullerton, California
Page 138 of 401
<PAGE>
List Of Exhibits
Exhibit A [Intentionally Omitted]
Exhibit B Grant Deed
Exhibit C Assignment of Leases
Exhibit D Warranty Bill Of Sale
Exhibit E Assignment of Service Contracts, Warranties and Guaranties
and Other Intangible Property
Exhibit F Certificate of Transferor other than an Individual (FIRPTA
Affidavit)
Exhibit G Form of Tenant's Estoppel Certificate
Exhibit H Rent Roll
Exhibit I Notice To Tenants
Page 139 of 401
<PAGE>
List Of Schedules
Schedule 1(a) Real Property
Schedule 3(c) Permitted Exceptions
Schedule 3(h) Related Agreements
Schedule 7(g) Defects
Schedule 7(h) Violations
Schedule 7(i) Proceedings
Schedule 7(l) Litigation
Schedule 7(m) Outstanding Contracts
Schedule 7(p) Personal Property
Schedule 7(r) Lease Exceptions
Schedule 7(x) Brokerage Fees
Schedule 7(z) Contracts
Schedule 7(bb) Environmental Reports
Schedule 12(c) Tenant Improvements Costs and Leasing
Commissions -- Seller's Responsibility
Page 140 of 401
<PAGE>
Purchase Agreement
This Purchase Agreement is dated as of November __, 1996, by and between
IHH Partnership, a California general partnership ("Seller"), and Glenborough
Properties, L.P., a California limited partnership ("Buyer").
Recitals
A. Buyer is a California limited partnership whose general partner is
Glenborough Realty Trust Incorporated, a Maryland corporation, whose stock is
publicly traded on the New York Stock Exchange.
B. Buyer desires to acquire the Property (as defined in Subparagraph 1(a)
below) from Seller and Seller desires to sell the Property to Buyer, upon the
terms and subject to the conditions set forth in this Agreement.
Now, Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Property
Subject to and upon the terms and conditions hereinafter set forth and the
representations and warranties contained herein, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, subject to the terms, covenants and
conditions set forth herein, (a) the real property described in Schedule 1(a)
attached hereto, together with any and all buildings and other improvements
thereon and, to the extent owned by Seller, or held directly for the benefit of
Seller, any interest therein, and any and all rights, privileges and easements
appurtenant thereto (the "Real Property"), (b) all of Seller's right, title and
interest in and to the Leases listed in Exhibit H attached hereto (the
"Leases"), and any and all guarantees of the Leases (the "Lease Rights"), and
(c) all of Seller's right, title and interest in and to the personal property
and any interest therein owned by Seller or held directly for the benefit of
Seller, if any, located on the Real Property and used in the operation or
maintenance of the Real Property (the "Personal Property"), (d) all of Seller's
right, title and interest, if any, in and to the following to the extent
assignable: the Contracts listed in Schedule 7(z), all general intangibles
relating to design, development, operation, management and use of the Real
Property, all certificates of occupancy, zoning variances, building, use or
other permits, approvals, authorizations, licenses and consents obtained from
any governmental authority in connection with the development, use, operation or
management of the Real Property, all soil tests, engineering reports,
appraisals, architectural drawings, plans and specifications relating to all or
any portion of the Real Property, and all payment and performance bonds or
warranties or guarantees relating to the Real Property; and (e) all of Seller's
Page 141 of 401
<PAGE>
right, title and interest in and to any and all of the following to the extent
assignable: trademarks, service marks, logos, other source and business
identifiers, trademark registration and applications for registration used at or
relating to the Real Property and any written agreement granting to Seller any
right to use any trademark or trademark registration at or in connection with
the Real Property (such property, together with the property described in
clause (d) of this Paragraph 1, is herein called the "Intangible Property"). The
term "Property" means all of the Real Property, the Lease Rights, the Personal
Property and the Intangible Property.
2. Purchase Price.
(a)......... Buyer and Seller agree that the purchase price of the Property
shall be One Million Six Hundred Ten Thousand Dollars ($1,610,000) (the
"Purchase Price"), which shall be comprised of immediately available funds
("Cash") to be paid to Seller.
(b)......... Seller acknowledges and agrees that Buyer may be required to
withhold a portion of the Purchase Price pursuant to Section 1445 of the Code
(as defined in Subparagraph 4(c)(x) below) or Sections 18805 and 26131 of the
California Revenue and Taxation Code or similar laws or regulations of other
states. Any amount properly so withheld by Buyer shall be deemed to have been
paid by Buyer as part of the Purchase Price, and Seller's obligation to
consummate the transactions contemplated herein shall not be excused, reduced,
terminated or otherwise affected thereby.
3. Conditions to Closing
(a)......... The following conditions are precedent to Buyer's obligation
to purchase the Property (the "Buyer's Conditions Precedent"):
(i)... The representations and warranties of Seller contained herein
shall be true and correct as of the Closing Date as though made at and as of the
Closing Date, and Seller's covenants under this Agreement shall be satisfied as
of the Closing Date (to the extent such covenants are to be satisfied as of the
Closing Date).
(ii).. At the Closing, Seller shall convey to Buyer (A) fee simple
title to the Property identified in Schedule 1(a) by grant deed in the form of
Exhibit B attached hereto, (B) title to the Lease Rights pursuant to an
assignment and assumption of tenant leases in the form of Exhibit C attached
hereto (the "Assignment of Leases"), (C) title to the Personal Property pursuant
to a bill of sale in the form of Exhibit D attached hereto and (D) an assignment
and assumption of service contracts, guaranties and warranties and other
intangible property in the form of Exhibit E attached hereto (the "Assignment of
Service Contracts").
(iii). Lawyer's Title Insurance Corporation (the "Title Company")
shall be committed to issue at Closing for its extended coverage American Land
Title
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Association Policy of Owner's Title Insurance (Form B, rev. 10/17/70) in the
amount of the Purchase Price, showing title to the Real Property vested in
Buyer, subject only to exceptions described on Schedule 3(c) attached hereto
(the "Permitted Exceptions"). The foregoing title policy, together with
endorsements covering subdivision map act, survey, access, contiguity, no
violations of covenants, conditions or restrictions and such other endorsements
as Buyer has requested prior to the Effective Date (as defined in
Subparagraph 14(l) below), is referred to herein as the "Title Policy." On or
before the Closing, Seller shall cause the Title Company to deliver to Buyer a
certification that, in issuing the Title Policy, the Title Company has not
relied on any representations or indemnities of Seller or any of its affiliates
(except as disclosed in such certification). In addition, as a condition to
Buyer's obligation to close, Buyer shall be satisfied that, as of the Closing,
there is no outstanding financing statement filed in accordance with the Uniform
Commercial Code of any applicable jurisdiction with respect to the Property or
Seller except for any financing statements approved by Buyer prior to the
Effective Date.
(iv).. Seller obtaining and delivering to Buyer the tenant estoppel
certificates required under Paragraph 6 below.
(v)... The physical condition of the Real Property shall be
substantially the same on the Closing Date as on the date hereof, reasonable
wear and tear and loss by casualty excepted (subject to the provisions of
Paragraph 10 below).
(vi).. All of the property management and leasing brokerage agreements
affecting the Property (whether between Seller, Carlsberg Management Company
("CMC") or any other party and such property managers and leasing agents) shall
be terminated as of the Closing Date at no cost or expense to Seller.
The Buyer's Conditions Precedent contained in Subparagraphs 3(a)(i)
through 3(a)(vi) are intended solely for the benefit of Buyer. If any of the
Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its
sole discretion either to waive the Buyer's Condition Precedent and proceed with
the purchase or terminate this Agreement by written notice to Seller and the
Title Company.
(b)...... The simultaneous closing of all of the transactions contemplated
by the agreements described on Schedule 3(h) attached hereto (the "Related
Agreements") with the Closing of this transaction is a condition precedent (the
"Mutual Condition Precedent") to both Seller's and Buyer's obligations under
this Agreement. The Mutual Condition Precedent is for the benefit of both Seller
and Buyer. If the Mutual Condition Precedent is not satisfied, each party shall
have the right in its sole discretion, either to waive the Mutual Condition
Precedent and proceed with the transaction so long as both of them have waived
this condition, or to terminate this Agreement by written notice to the other
party and Title Company.
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(c)...... In the event that any party having the right of cancellation
under this Paragraph 3 does not inform the other party and Title Company in
writing of its disapproval of any condition precedent (the "Condition
Precedent") for such party's benefit provided in this Paragraph 3 prior to the
Closing, such Condition Precedent shall be deemed to have been satisfied,
approved or waived, effective as of the Closing; provided that a party shall not
be deemed to have waived any claim for breach of any representation or warranty
by the other party unless such party has actual knowledge of such breach prior
to Closing. For purposes of this Subparagraph 3(c), "actual knowledge" of Buyer
shall be deemed to mean the present actual knowledge of Mr. Andrew Batinovich,
Mr. Steve Saul or Mr. Frank E. Austin, without any duty of investigation or
inquiry on their part, and "actual knowledge" of Seller shall be deemed to mean
the present actual knowledge of Mr. William G. Geary, Jr., Ms. Janet DaVall and
Mr. Ron Lema, without any duty of investigation or inquiry on their part. Upon
termination of this Agreement and the escrow for failure of a Condition
Precedent, (i) Buyer shall deliver to Seller copies of any and all soils,
geologic, engineering and environmental reports or studies concerning the
Property prepared by or on behalf of Seller and (ii) Seller shall bear the cost
of any title and escrow cancellation fees.
4. Closing and Escrow
(a)......... Upon mutual execution of this Agreement, the parties hereto
shall deposit an executed counterpart of this Agreement with Title Company and
this Agreement shall serve as instructions to Title Company as the escrow holder
for consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional escrow instructions as may be appropriate to
enable Title Company to comply with the terms of this Agreement; provided,
however, that in the event of any conflict between the provisions of this
Agreement and any supplementary escrow instructions, the terms of this Agreement
shall control unless a contrary intent is expressly indicated in such
supplementary instructions.
(b)......... The parties shall endeavor to conduct the Closing through an
escrow closing pursuant to Subparagraph 4(a) above. If, however, an escrow
Closing is not practical, the Closing hereunder shall be held and delivery of
all items to be made at the Closing shall be made at the offices of Morrison &
Foerster llp, 345 California Street, San Francisco, California 94104, on or
before November 15, 1996 (the "Closing Date"). In the event the Closing does not
occur on or before the Closing Date, Title Company shall, unless it is notified
by both parties to the contrary within five (5) days after the Closing Date,
return to the depositor thereof items which were deposited hereunder. Any such
return shall not, however, relieve either party of any liability it may have for
its wrongful failure to close.
(c)......... At or before the Closing, Seller shall deliver or cause to be
delivered to Buyer the following:
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(i)... [Intentionally omitted];
(ii).. the duly executed and acknowledged Deed;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Bill of Sale;
(v)... a duly executed Assignment of Service Contracts;
(vi).. originals of the Leases;
(vii). duly executed tenant estoppel certificates as required pursuant
to Subparagraph 3(a)(iv) above;
(viii) originals of the Contracts not previously delivered to Buyer;
(ix).. originals of any and all building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements that are in the possession or control of Seller and/or an affiliate
of Seller that have not been previously delivered to Buyer;
(x)... a FIRPTA affidavit (in the form attached as Exhibit F) pursuant
to Section 1445(b)(2) of the Internal Revenue Code of 1986 (the "Code"), and on
which Buyer is entitled to rely, that Seller is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code;
(xi).. a California Form 590 from Buyer certifying that Seller has a
permanent place of business in California or is qualified to do business in
California;
(xii). A signed notice in the form of Exhibit I attached hereto for
each of the Tenants (as defined in Paragraph 6 below);
(xiii) such resolutions, authorizations, bylaws or other corporate
and/or partnership documents or agreements relating to Seller as shall be
reasonably required by Buyer;
(xiv). a closing statement in form and content satisfactory to Buyer
and Seller; and
(xv).. any other instruments, records or correspondence called for
hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
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(d)......... At or before the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i)... a closing statement in form and content satisfactory to Buyer
and Seller;
(ii).. a duly executed Registration Rights Agreement;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Assignment of Service Contracts; and
(v)... the Cash.
(e)......... Seller and Buyer shall each deposit such other instruments as
are reasonably required by Title Company or otherwise required to close the
escrow and consummate the transactions described herein in accordance with the
terms hereof. Seller and Buyer hereby designate Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code and the
regulations promulgated thereunder.
(f)......... With respect to the Property the following adjustments shall
be made, and the following procedures shall be followed:
(i)... As nearly as practicable prior to the Closing, Buyer and Seller
shall prepare a statement for the Property ("Proration Statement") showing
prorations for the items set forth below, calculated as of 12:01 a.m. on the
Closing Date, on the basis of a 365-day year:
(A) rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, common area expenses,
marketing fund charges, operating expenses, maintenance escalation rents or
charges, cost-of-living increases or other charges of a similar nature, if any,
and any additional charges and expenses payable under tenant Leases (whether
such collection occurs prior to, on or after the Closing Date);
(B) real property taxes and assessments;
(C) the current installments (only) of any improvement bonds
or assessments which are a lien on the Property or which are pending and may
become a lien on the Property;
(D) water, sewer and utility charges;
(E) amounts payable under any Contract that will be continued
after the Closing;
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<PAGE>
(F) permits, licenses and/or inspection fees (calculated on
the basis of the period covered); and
(G) any other expenses normal to the operation and
maintenance of the Property.
(ii).. Buyer shall use commercially reasonable efforts consistent with
prudent business practices to collect rents or other amounts payable under the
Leases that were delinquent as of the Closing Date and that relate to a period
prior to the Closing. To the extent such delinquent rents and other amounts are
collected by Buyer, Buyer may deduct from the amount owed to Seller an amount
equal to the out-of-pocket third-party collection costs actually incurred by
Buyer in collecting such rents and other amounts due to Seller. Any rent or
other payment (including percentage rent) collected after the Closing from any
tenant which owed rent that was delinquent as of the Closing Date and that
relate to a period prior to the Closing shall be applied first, to satisfy such
tenant's rent obligations first becoming due and payable in the month in which
such rent was paid (or within five (5) days after the date on which such rent
was paid), and then to satisfy such delinquent rent obligations (including those
that relate to the period after the Closing Date) in the inverse order of
maturity. After the Closing, Buyer shall have the exclusive right to enforce
claims for rents and all other obligations due and owing under the Leases and
terminate any Leases as Buyer, in its sole discretion, deems appropriate.
(iii). At the Closing, Seller shall deliver to Buyer all security
deposits, letters of credit and other collateral given to Seller or any of its
affiliates or predecessor-in-interest pursuant to any of the Leases, less any
portions thereof applied in accordance with the respective Lease (together with
a statement regarding such applications).
(iv).. If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
operating expenses, maintenance escalation rents or charges, cost-of-living
increases or other charges of a similar nature ("Additional Rents") and such
Additional Rents are not finally adjusted between the landlord and tenant under
any Lease until after the Closing Date, then Buyer shall submit to Seller within
sixty (60) days after such Additional Rents are finally adjusted with any
tenant, a supplemental statement (the "Supplemental Statement") to the extent
such Additional Rents have been finally adjusted between Buyer and such tenant,
containing a calculation of the prorations of such Additional Rents, prepared
based on the principles set forth in this Subparagraph 4(f) , provided that in
making such adjustment, the parties shall exclude any Additional Rents arising
from increased real property taxes for the Property to the extent such increase
is the result of Buyer's purchase of the Property. To the extent the
Supplemental Statement indicates that one party is entitled to any amounts under
this Subparagraph 4(f)(iv), the other party shall pay such sum to such party
within thirty (30) days after the delivery of the Supplemental Statement.
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(v)... Buyer shall pay the following costs of closing this
Transaction: (A) the costs of the Buyer's legal counsel, accounting services and
engineering and environmental analyses, (B) fifty percent (50%) of the escrow
charges, fees for recording the Deed and the premium for the Title Policy and
(C) the cost of preparing three (3) years' audited operating statements for the
Property to be completed prior to the Closing as required under federal
securities laws. All other costs associated with the transaction, (including,
but not limited to, any transfer taxes, all survey costs, and fifty percent
(50%) of the escrow charges, fees for recording the Deed and the premium for the
Title Policy) shall be charged against Seller and, provided the Closing occurs,
will be deducted from the Purchase Price.
(vi).. Notwithstanding anything to the contrary contained in this
Subparagraph 4(f), if the real property taxes and assessments payable for any
period prior to Closing are determined to be more than the amounts prorated
herein (in the case of the current year) or paid by Seller (in the case of any
prior year), due to a reassessment of the value of the Property or otherwise,
Seller and Buyer shall promptly adjust the proration of such real property taxes
and assessments after the determination of such amounts, and Seller shall pay to
Buyer any increase in the amount of such real property taxes and assessment
applicable to any period prior to Closing.
(vii). The obligations of Seller and Buyer under this
Subparagraph 4(f) shall survive the Closing.
5. [Intentionally Omitted].
6. Estoppel Certificates
Seller shall use all reasonable efforts to obtain an estoppel certificate
from each tenant of the Property (each, a "Tenant"), dated no earlier than
thirty (30) days prior to the Closing Date, substantially in the form of
Exhibit H attached hereto, conforming to the most recent rent roll approved by
Buyer and alleging no defaults, offsets, or claims against the lessor (the
"Estoppel Certificate"). It shall be a condition to Buyer's obligation to close
the sale and purchase of the Property that on or before the Closing:
(a)......... Seller delivers to Buyer an Estoppel Certificate from Tenants
occupying seventy-five percent (75%) of the rentable area of the Property,
including all tenants occupying more than ten percent (10%) of the rentable area
of the Property (collectively, the "Required Tenants"), and, with respect to all
other tenants (collectively, the "Non-Required Tenants"), there shall exist no
dispute with Seller, which dispute is material to the use, value or economics of
the Property, as determined on an individual basis by Buyer in good faith in
Buyer's sole discretion (a "Material Non-Required Tenant Dispute") (and Buyer
shall be afforded the
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<PAGE>
opportunity to inquire of any Non-Required Tenant which does not provide an
Estoppel Certificate as to whether any such dispute exists); or
(b)......... To the extent that Seller is unable to obtain Estoppel
Certificates, or any items required to be therein, from the Required Tenants, or
to the extent that there is any Material Non-Required Tenant Dispute, Seller
shall deliver to Buyer and Buyer may, but shall not be obligated to, accept, on
the Closing Date a certification in which Seller warrants and represents to
Buyer, with respect to such missing Estoppel Certificates, or any missing items
required to be included therein, each item set forth in the Estoppel Certificate
attached as Exhibit H for the missing Estoppel Certificates and/or indemnifies
Buyer as to any such Material Non-Required Tenant Dispute.
(c)......... If the conditions contained in Subparagraphs 6(a) and (b)
above are not satisfied, then Buyer may, by written notice given to Seller
before the Closing, elect to waive such conditions or terminate this Agreement.
7. Seller's Representations and Warranties
Seller hereby represents and warrants to Buyer as follows:
(a)......... Seller is a general partnership duly organized and validly
existing under the laws of the State of California.
(b)......... Seller has full partnership power and authority to execute and
deliver this Agreement and to perform all of the terms and conditions hereof to
be performed by Seller and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and is the legal,
valid and binding obligation of Seller and is enforceable against Seller in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general equitable principles
(whether or not such enforceability is considered in a proceeding at law or in
equity). Seller is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar proceeding.
(c)......... Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of Seller's partnership agreement or
any statute, regulation or rule, or, to Seller's knowledge, any injunction,
judgment, order, decree, ruling, charge or other restrictions of any government,
governmental agency or court to which Seller is subject, and which violation or
conflict would have a material adverse effect on the ownership and operation of
the Property, or (ii) result in any material breach or the termination of any
lease, agreement or other instrument or obligation to which Seller is a party or
by which any of the Property may be subject, or cause a lien or other
encumbrance to attach to any of the Property. Seller is not a party to any
contract
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or subject to any other legal restriction that would prevent fulfillment by
Seller of all of the terms and conditions of this Agreement or compliance with
any of the obligations under it.
(d)......... All material consents required from any governmental authority
or third party in connection with the execution and delivery of this Agreement
by Seller or the consummation by Seller of the transactions contemplated hereby
have been made or obtained or shall have been made or obtained by the Closing
Date. Complete and correct copies of all such consents shall be delivered to
Buyer.
(e)......... Seller has fee simple title to the Real Property, subject only
to the Permitted Exceptions.
(f)......... There are no adverse or other parties in possession of the
Property, or any part thereof, except Seller and tenants under the Leases. No
party has been granted any license, lease, or other right relating to the use or
possession of the Property or any part thereof, except tenants under the Leases.
(g)......... Except as set forth on Schedule 7(g), to Seller's knowledge,
there are no material defects with respect to the Real Property, including,
without limitation, no material defects in the structural and load-bearing
components of the Property, the roof(s), the parking lot(s), the plumbing,
heating, air conditioning and electrical and life safety systems, and all such
items are in good operating condition and repair.
(h)......... Except as set forth on Schedule 7(h), to Seller's knowledge,
the use and operation of the Property is in compliance in all material respects
with all applicable restrictive covenants, building codes, environmental, zoning
and land use laws, and other applicable local, state and federal laws and
regulations (collectively, "Laws").
(i)......... Except as set forth on Schedule 7(i), to Seller's knowledge,
there are no condemnation, environmental, zoning or other land-use regulation
proceedings that have been instituted, and Seller has not received any notice of
any such proceeding that is planned to be instituted, which would detrimentally
and materially affect the use, operation or value of any of the Property, nor
has Seller received notice of any special assessment proceedings affecting any
of the Property. Seller shall notify Buyer promptly of any such proceedings of
which Seller becomes aware.
(j)......... All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required, to Seller's knowledge, by law, or
by the normal use and operation of the Property are installed to the property
lines of the Property, and are connected pursuant to valid permits, and are
adequate to service the Property as presently operated and, to Seller's
knowledge, to permit compliance with all Laws.
(k)......... Seller has obtained all licenses, permits, variances,
approvals, authorizations, easements and rights of way, including proof of
dedication, required from all
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governmental authorities having jurisdiction over the Property or from private
parties for the present use, operation and occupancy of the Property and to
insure vehicular and pedestrian ingress to and egress from the Property.
(l)......... Except as set forth on Schedule 7(l), there is no litigation
pending or, to Seller's knowledge, threatened, against Seller that arises out of
the ownership of the Property or that might materially and detrimentally affect
the value or the use or operation of any of the Property for its intended
purpose or the ability of Seller to perform its obligations under this
Agreement. Seller shall notify Buyer promptly of any such litigation of which
Seller becomes aware.
(m)......... Except as set forth on Schedule 7(m), at the time of Closing
(i) there will be no outstanding written or oral contracts made by Seller for
any improvements to the Property which have not been fully paid for and Seller
shall cause to be discharged all mechanics' and materialmen's liens arising from
any labor or materials furnished to the Property prior to the time of Closing,
and (ii) Seller shall have completed all punch-list items with respect to any
tenant improvements constructed by Seller as landlord under the Leases.
(n)......... Seller knows of no facts nor has Seller failed to disclose any
fact which would prevent Buyer from using and operating the Property after
Closing in the manner in which the Property is currently operated.
(o)......... Other than the rights of Tenants, as tenants only, under the
Leases, Seller has not entered into any purchase contracts, options or other
agreements of any kind, written or oral, recorded or unrecorded, whereby any
person or entity other than Buyer will have acquired or will have any basis to
assert any right, title or interest, or right to possession, use, enjoyment or
proceeds of all or any portion of the Property. None of the Leases contain any
rights to purchase, rights of first offer to purchase, or first refusal to
purchase the Property.
(p)......... To Seller's knowledge, Schedule 7(p) lists all of the tangible
Personal Property.
(q)......... Attached hereto as Exhibit J is a list (the "Rent Roll") of
each of the Leases as of the date of this Agreement. Said Rent Roll is complete
in all material respects and all information therein is accurate in all material
respects as of its date, and there are no Leases or tenancies with respect to
the Property or any part thereof except as therein set forth. Except as
disclosed on the Rent Roll, no rental under any Lease has been collected in
advance of the current month. The Rent Roll shall be updated at the Closing to
reflect any changes which occur after the Effective Date. Seller is the owner of
the entire lessor's interest in and to each of the Leases and none of the Leases
or the rentals or other sums payable thereunder has been assigned or otherwise
encumbered.
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(r)......... To Seller's knowledge, each of the Leases, including, without
limitation, any guaranties thereof, is an enforceable Lease and is in full force
and effect according to the terms set forth therein, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles. Except as specifically provided on Schedule 7(r)
attached hereto or on the Rent Roll, (i) no Tenant under any of the Leases is
greater than fifteen (15) days delinquent in the payment of its rental and other
sums due, (ii) no Tenant has abandoned or otherwise vacated the Property in
violation of any Lease, (iii) to Seller's knowledge, no Tenant or guarantor has
filed a voluntary petition in bankruptcy, insolvency or similar proceedings, has
been the subject of an involuntary bankruptcy petition, or otherwise been
adjudged bankrupt or insolvent in any proceedings filed against such tenant or
guarantor; (iv) to Seller's knowledge, no trustee or receiver has been appointed
for any Tenant; (v) no written notice has been provided to any tenant notifying
the Tenant that it is in default under the Lease which default has not been
remedied by such Tenant; and (vi) no Tenant, to Seller's knowledge, is otherwise
in default under any of the Leases. Except as otherwise provided in the Lease,
to Seller's knowledge, each Tenant is legally required to pay all sums and
perform all other material obligations set forth in its respective Lease,
without concessions, abatements, offsets or other basis for relief or
adjustment, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles.
(s)......... To Seller's knowledge, no material event of default on behalf
of Seller, as lessor, exists under any Lease and no event or condition exists
that, upon the giving of notice or lapse of time, or both, would constitute a
default by Seller under any Lease. Seller has not received any notice from any
Tenant of any offsets, defenses or claims available against rent or other
charges payable by such Tenant or other performance or obligations otherwise due
from it under any Lease, except as specifically set forth in the Rent Roll
and/or the Estoppel Certificates.
(t)......... No guarantor of any Lease has been released or discharged,
voluntarily or involuntarily, from any obligation under or in connection with
any Lease or any transaction related thereto.
(u)......... Seller has not received from any Tenant or any other party
written notice of any claim (other than for customary refund at the expiration
of a Lease) to all or any part of any security deposit, except as set forth on
the Rent Roll and/or the Estoppel Certificates. The Rent Roll sets forth all
security deposits held by Seller.
(v)......... Except as shown on the Rent Roll, Seller has paid in full any
of landlord's leasing costs or obligations, including, without limitation, any
costs incurred by Seller in connection with any tenant improvements.
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(w)......... No Tenant has indicated to Seller either orally or in writing
its present intent to terminate its Leases prior to expiration of the term of
such Lease except as shown on the Estoppel Certificates.
(x)......... Except as shown on Schedule 7(x), (A) no brokerage or similar
fee is due or unpaid by Seller with respect to the Leases, and (B) no brokerage
or similar fee shall be due or payable by Seller after the Closing in connection
with the Leases.
(y)......... All permits, governmental licenses, registrations and
approvals with respect to the Property which are necessary or required by law or
the rules and regulations of any governmental entity having jurisdiction over
the Property or its owner to carry on business as presently conducted
(collectively, the "Licenses"), the lack of which, individually or in the
aggregate, would reasonably be likely to have a material adverse effect on the
value, use or operation of the Property, are in full force and effect.
(z)......... Schedule 7(z) attached hereto sets forth a list of all service
contracts, construction contracts for work in progress, any warranties
thereunder, management contracts, unrecorded reciprocal easement agreements,
operating agreements, maintenance agreements, franchise agreements and other
similar agreements relating to the Property, (such contracts and agreements
together with any recorded reciprocal easements agreements are hereinafter
referred to, collectively, as the "Contracts"). With respect to each of the
Contracts, (i) the Contract is legal, valid, binding, and, to Seller's
knowledge, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency or similar laws of general application relating to or
affecting the enforcement of creditor's rights and subject to general principles
of equity, (ii) to Seller's knowledge, except for a Contract that is terminable
upon thirty (30) day written notice, the Contract will not be adversely affected
by the occurrence of the Closing and will be legal, valid, binding, enforceable
in accordance with its terms and in full force and effect on identical terms
following the consummation of the sale of the Property, (iii) Seller is not,
and, to Seller's knowledge, no other party to the Contract is, in breach or
default under any obligation thereunder or any provisions thereof which would
have material adverse affect upon Seller, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default, or permit any
termination under the Contract which would have a material adverse affect upon
Seller, (iv) no event has occurred under the Contract which would permit the
creation of any lien upon, or the restriction of the right to the use of, the
Property and (v) no party to any Contract has repudiated any material provision
of the Contract.
(aa)........ [Intentionally omitted].
(bb)........ Seller has delivered to Buyer all environmental reports and
investigations relating to the Property which are available to Seller. A list of
such reports and all environmental reports and investigations that have been
obtained by Buyer relating to the Property is attached hereto as Schedule 7(bb)
(collectively, the "Environmental
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<PAGE>
Reports"). Except as set forth in the Environmental Reports: (i) to Seller's
knowledge, the Property is not, and Seller has not received any written notice
that, any real estate in the vicinity of the Property is, in violation of any
federal, state, local or administrative agency ordinance, law, rule, regulation,
order or requirement (collectively, "Environmental Laws") relating to hazardous
or toxic materials, substances or wastes, or other materials injurious to human
health or the environment (collectively, "Hazardous Materials"); (ii) neither
Seller nor, to Seller's knowledge, any third party, has used, manufactured,
generated, treated, stored, disposed of, or released any Hazardous Material on
or under the Property or transported any Hazardous Material over the Property;
(iii) neither Seller, nor to Seller's knowledge, any third party has installed,
used or removed any storage tank on or from the Property except in full
compliance with all Environmental Laws, and to Seller's knowledge there are no
storage tanks or wells (whether existing or abandoned) located on or under the
Property and to Seller's knowledge no storage tank has been installed on, used
on or removed from the Property in violation of any Environmental Laws; (iv) to
Seller's knowledge, the Property does not consist of any building materials that
contain Hazardous Materials; and (v) no claim, action, suit or proceeding is
pending or, to Seller's knowledge, threatened against Seller, before any court
or other governmental authority or arbitration tribunal, relating to Hazardous
Materials, and there is no outstanding judgment, order, writ, injunction, decree
or award against Seller or otherwise having a material adverse effect on the
Property with respect to the same.
(cc)........ The Exhibits and Schedules attached hereto, as provided by or
on behalf of Seller, completely and correctly present in all material respects
the information required by this Agreement to be set forth therein. Seller or
CMC has delivered to Buyer true and correct copies of all of the due diligence
materials pertaining to the Property which are in the possession or control of
Seller. No representation or warranty by Seller herein and no information
disclosed in the Exhibits and Schedules hereto supplied by or on behalf of
Seller contains any untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein not materially
misleading. Seller has no knowledge of any events, transactions or other facts
which, either individually or in the aggregate might reasonably give rise to
circumstances or conditions which might have a material adverse effect on the
Property.
(dd)........ Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(ee)........ Seller has provided a copy of the representations and
warranties set forth in this Paragraph 7 to the Responsible Individuals (as
defined below), and each of the Responsible Individuals has reviewed such copy
of the representations and warranties.
Buyer and Seller hereby agree that (x) except for the representations and
warranties of Seller set forth in this Agreement and the documents to be
delivered by
Page 154 of 401
<PAGE>
Seller to Buyer at Closing (the "Conveyance Documents"), Buyer is purchasing the
Property on an "AS IS" basis without relying of any communications that may have
been made by Seller or any of Seller's agents or employees, with respect to the
Property or Buyer's intended use thereof; (y) the only representations and
warranties made with respect to the Property are contained herein and in the
Conveyance Documents; and (z) for purposes of this Paragraph 7, "Seller's
knowledge" shall be deemed to mean the present actual knowledge of
Mr. William W. Geary, Jr., Ms. Janet DaVall or Mr. Ron Lema (the "Responsible
Individuals"), which individuals Seller represents and warrants are the
employees, partners or officers of Seller or CMC that are most responsible for
the operation and management of the Property, without any duty of investigation
or inquiry on their part. Without limiting the generality of the foregoing, but
subject to Seller's representations and warranties hereunder and in the
Conveyance Documents, Buyer shall be solely responsible for determining the
condition of the Property, including, but not limited to, the existence or risk
of any Hazardous Materials, and all aspects regarding the fees, charges and
assessments relating to the Property. For purposes of this Paragraph 7, an item
shall be deemed "material" if the reasonably estimated cost or damage incurred
by Buyer and/or the diminution of the market value of the Property as a result
thereof, individually or in the aggregate, exceeds Twenty-Five Thousand Dollars
($25,000). All representations and warranties set forth in this Paragraph 7
shall be deemed to be given as of the Effective Date and the Closing Date unless
Seller otherwise notifies Buyer in writing prior to the Closing.
8. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
(a)......... Buyer is a duly organized and validly existing limited
partnership in good standing under the laws of the State of California; this
Agreement and all documents executed by Buyer which are to be delivered to
Seller at the Closing are or at the time of Closing will be duly authorized,
executed and delivered by Buyer, and are or at the Closing will be legal, valid
and binding obligations of Buyer, and do not and at the time of Closing will not
violate any provisions of any agreement or judicial order to which Buyer is
subject.
(b)......... Buyer has made (or will make prior to the Closing Date) an
independent investigation with regard to the Property and Buyer's intended use
thereof, including, without limitation, review and/or approval of matters
disclosed pursuant to Paragraph 3(a) above.
(c)......... There is no litigation pending or, to Buyer's knowledge,
threatened, against Buyer or any basis therefor that might materially and
detrimentally affect the ability of Buyer to perform its obligations under this
Agreement. Buyer shall notify Seller promptly of any such litigation of which
Buyer becomes aware.
Page 155 of 401
<PAGE>
All representations and warranties set forth in this Paragraph 8 shall be
true as of the Effective Date and the Closing Date.
9. Indemnification
(a)......... Each party hereby agrees to indemnify the other party and
defend and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, resulting from any misrepresentation or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or Exhibit given or delivered to the other pursuant to or
in connection with this Agreement.
(b)......... Seller agrees to indemnify Buyer and its partners and defend
and hold Buyer and its partners harmless from and against any and all claims,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys' fees, asserted against, incurred or suffered by
Buyer resulting from or arising out of any personal injury or property damage
occurring in, on or under the Property during Seller's ownership thereof, from
any cause whatsoever other than as a consequence of the acts or omissions of
Buyer, its agents, employees or contractors.
(c)......... Buyer agrees to indemnify Seller and its partners and defend
and hold Seller and its partners harmless from any claims, losses, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, asserted against, incurred or suffered by Seller
resulting from or arising out of any personal injury or property damage first
occurring in, on or under the Property during Buyer's ownership thereof, from
any cause whatsoever other than as a consequence of the acts or omissions of
Seller, or its agents, employees or contractors.
(d)......... The indemnification provisions of this Paragraph 9 shall
survive beyond the Closing, or, if the Closing does not occur pursuant to this
Agreement, beyond any termination of this Agreement.
10. Risk of Loss
(a)......... Minor Loss. Buyer shall be bound to purchase the Property for
the full Purchase Price as required by the terms hereof, without regard to the
occurrence or effect of any damage to the Property or destruction of any
improvements thereon or condemnation of any portion of the Property, provided
that: (i) the cost to repair any such damage or destruction does not exceed ten
percent (10%) of the Purchase Price or, in the case of a partial condemnation,
the value of the portion of the Property taken does not exceed ten percent (10%)
of the Purchase Price; (ii) upon the Closing, there shall be a credit against
the Purchase Price due hereunder equal to the amount of any insurance proceeds
or condemnation awards collected by Seller as a result of any such damage or
destruction or condemnation, plus the amount of any insurance deductible;
(iii) insurance or condemnation proceeds available to Seller are sufficient
Page 156 of 401
<PAGE>
to cover the cost of restoration; and (iv) the insurance carrier has admitted
liability for the payment of such costs. If the proceeds or awards have not been
collected as of the Closing, then Seller's right, title and interest to such
proceeds or awards shall be assigned to Buyer.
(b)......... Major Loss. If the cost to repair such damage or destruction
to the Property exceeds ten percent (10%) of the Purchase Price allocated to the
Property or, in the case of condemnation, if the value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price allocated to the
Property, then Buyer may, at its option to be exercised by written notice to
Seller within twenty (20) days of Seller's notice to Buyer of the occurrence of
the damage or destruction or the commencement of condemnation proceedings,
either (i) elect to terminate this Agreement, or (ii) consummate the purchase of
the Property for the full Purchase Price as required by the terms hereof,
subject to the credits against the Purchase Price provided below. If Buyer
elects to proceed with the purchase of all of the Property, then, upon the
Closing, Buyer shall be given a credit against the Purchase Price due hereunder
equal to the amount of any insurance proceeds or condemnation awards collected
by Seller as a result of any such damage or destruction or condemnation, plus
the amount of any insurance deductible. If the proceeds or awards have not been
collected as of the Closing, then Seller's right, title and interest to such
proceeds or awards shall be assigned to Buyer. If Buyer fails to give Seller
notice within such 20-day period, then Buyer will be deemed to have elected to
terminate this Agreement. In the event of any damage or destruction of the
Property covered by this Paragraph 10(b), the Closing shall be postponed to the
date which is five (5) days after Buyer elects to consummate the Purchase of the
Property as set forth above.
11. Inspections
Prior to the Closing Date, Seller shall afford authorized representatives
of Buyer reasonable access to the Property for purposes of satisfying Buyer with
respect to the representations, warranties and covenants of Seller contained
herein and with respect to satisfaction of any Conditions Precedent to the
Closing contained herein, including, without limitation, and the taking of soil
borings from the Property; provided, however, that Buyer shall use commercially
reasonable efforts not to unreasonably disturb or interfere with the rights of
Tenants under the Leases. Buyer hereby agrees to indemnify and hold Seller
harmless from any damage or injury to persons or property caused by Buyer or its
authorized representatives during their entry and investigations prior to the
Closing. In the event this Agreement is terminated, Buyer shall restore the
Property to substantially the condition in which it was found. This indemnity
shall survive the termination of this Agreement or the Closing, as applicable.
Page 157 of 401
<PAGE>
12. Leases And Other Agreements; Capital Improvements
(a)......... Except as otherwise contemplated or permitted by this
Agreement or approved by Buyer in writing, from the Effective Date to the
Closing Date, Seller will cause Seller to operate, maintain, repair and lease
the Property in a prudent manner, in the ordinary course, on an arm's-length
basis and consistent with their past practices (and without limiting the
foregoing, Seller shall, in the ordinary course, negotiate with prospective
tenants and enter into leases of the Property), enforce leases in all material
respects, pay all costs and expenses of the Property and will not dispose of or
encumber any of the Property, except for dispositions of personal property in
the ordinary course of business.
(b)......... Notwithstanding the above terms of this Paragraph 12, Seller
shall not, without the prior written approval of Buyer, take any of the
following actions:
(i)... execute or terminate any lease covering in excess of 5,000
square feet in the case of any lease of industrial space, 2,000 square feet in
the case of any lease of office space, or 2,000 square feet in the case of any
lease of retail space, or modify or waive any material term thereof; or
(ii).. except as otherwise required under this Agreement, enter into,
execute or terminate any operating agreement, reciprocal easement agreement,
management agreement or any lease, contract, agreement or other commitment of
any sort (including any contract for capital items or expenditures), with
respect to the Property requiring payments to or by Seller in excess of Ten
Thousand Dollars ($10,000) per annum, or the performance of services by Seller
the value of which is in excess of Ten Thousand Dollars ($10,000) per annum.
(c)......... In connection with any new leases or Lease modifications
affecting the Property entered into between the Effective Date and the Closing
in accordance with Subparagraph 12(b) above, the cost of tenant improvement work
and leasing commissions shall be paid solely by Buyer. Seller shall be
responsible for the cost of tenant improvement work and leasing commissions for
all Leases (and amendments thereto) entered into prior to the Effective Date
(regardless of when the same are payable), including, without limitation, those
leases described on Schedule 12(c) attached hereto, and Seller's obligations
with respect thereto shall survive the Closing.
(d)......... Between the Effective Date and the Closing, Seller shall
continue to undertake capital improvements with respect to the Property in the
ordinary course of business.
Page 158 of 401
<PAGE>
13. Cooperation
Seller and Buyer shall cooperate and do all acts as may be reasonably
required or requested by the other with regard to the fulfillment of any
Condition Precedent or the consummation of the transactions contemplated hereby
including execution of any documents, applications or permits. Seller hereby
irrevocably authorizes Buyer and its agents to make all inquiries of any third
party, including any governmental authority, as Buyer may reasonably require to
complete its due diligence.
14. Miscellaneous
(a)......... Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) hand delivery, (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or transmitted by
facsimile telecopy, or (iii) two (2) days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
required, and addressed as follows:
If to Seller: c/o Carlsberg Management Company
2800 28th Street, Suite 222
Santa Monica, California 90405
Attention: William W. Geary, Jr.
Telephone: (310) 450-9696
Fax : (310) 399-5633
With a copy to: Sandler and Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, California 90067
Attention: Ming-chu C. Rouse
Telephone: (310) 277-4411
Fax : (310) 277-5954
If to Buyer: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
With a copy to: Morrison & Foerster llp
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Telephone: (415) 677-7000
Fax : (415) 677-7522
Page 159 of 401
<PAGE>
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein, except that Seller acknowledges that it has requested the
services of Carlsberg Management Company in connection with this transaction and
shall be responsible for paying a commission to Carlsberg Management Company in
the amount of three percent (3%) of the Purchase Price if the Closing occurs. In
the event that any broker or finder perfects a claim for a commission or
finder's fee based upon any such contact, dealings or communication, the party
through whom the broker or finder makes its claim shall be responsible for said
commission or fee and shall indemnify and hold harmless the other party from and
against all liabilities, losses, costs and expenses (including reasonable
attorneys' fees) arising in connection with such claim for a commission or
finder's fee. The provisions of this Subparagraph shall survive the Closing.
(c) Successors and Assigns. Subject to the following two (2) sentences,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns. Buyer
shall have the right, with notice to Seller (but without the necessity of
Seller's consent), to assign its right, title and interest in and to this
Agreement to one or more assignees at any time before the Closing Date;
provided, however that such assignee(s) shall assume all obligations of Buyer,
and such assignment and assumption shall not release Buyer from any obligation
hereunder. Seller shall not have the right to assign its interest in this
Agreement.
(d) Amendments. Except as otherwise provided herein, this Agreement may be
amended or modified only by a written instrument executed by Seller and Buyer.
(e) Continuation and Survival of Representations and Warranties, Etc. All
representations and warranties by the respective parties contained herein or
made in writing pursuant to this Agreement are intended to and shall remain true
and correct as of the time of Closing, shall be deemed to be material, and,
together with all conditions, covenants and indemnities made by the respective
parties contained herein or made in writing pursuant to this Agreement (except
as otherwise expressly limited or expanded by the terms of this Agreement),
shall survive the execution and delivery of this Agreement and shall survive the
Closing for a period of twenty-four (24) months after the Closing, or, to the
extent the context requires, beyond any termination of this Agreement for a
period of twenty-four (24) months.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
Page 160 of 401
<PAGE>
(g) Merger of Prior Agreements. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all prior
agreements and understandings between the parties relating to the subject matter
hereof, including, without limitation, the Letter of Intent dated October 22,
1996, entered into by and between Buyer and CMC.
(h) Enforcement. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
(k) Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date" shall mean
the first date on which both Seller and Buyer shall have executed this
Agreement.
(m) Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material or information about the other or, in the case of Buyer and
its agents, employees, consultants and contractors, about the Property, and
shall not disclose such information to any third party, except, in the case of
information about the Property and Seller, to Buyer's lender or prospective
lenders, insurance and reinsurance firms, attorneys, environmental assessment
and remediation service firms and consultants, as may be reasonably required for
the consummation of the transaction contemplated hereunder and/or as required by
law.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Page 161 of 401
<PAGE>
15. Acceptance of Agreement by Seller
This Agreement shall be null and void unless it is accepted by Seller and
two fully executed copies hereof are returned to Buyer on or before 5:00 p.m.
(P.S.T.) on November 13, 1996.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
Dated:
By:
Its:
Dated:
Page 162 of 401
<PAGE>
Seller: IHH Partnership,
a California general partnership
By: ______________________________________
Howard Kaufman
General Partner
Dated:______________________________________
By: ______________________________________
Irving Azoff
General Partner
Dated:______________________________________
By: ______________________________________
Howard Rose
General Partner
Dated:______________________________________
Title Company agrees to act as escrow holder in accordance with the terms of
this Agreement and to act as the Reporting Person (as such term is defined in
this Agreement).
Lawyer's Title Insurance Corporation
By:
Its:
Dated:
Page 163 of 401
<PAGE>
Schedule 1(a)
Real Property
Page 164 of 401
<PAGE>
Schedule 3(c)
Permitted Exceptions
Page 165 of 401
<PAGE>
Schedule 3(h)
Related Agreements
All of the following documents are dated as of even date herewith:
1. Purchase Agreement between Terra Plaza, Ltd., a California limited
partnership, and Buyer for the property commonly known as Carlsberg Plaza
located at 2633 East Indian Road, Phoenix, Arizona.
2. Purchase Agreement between Carlsberg Managed Properties Fund, Ltd.,
a California limited partnership, and Buyer for the property commonly known as
Dallidet Professional Center located at 1194 Pacific Street, San Luis Obispo,
California.
3. Purchase Agreement between IHH Partnership, a California general
partnership, and Buyer for the property commonly known as Hillcrest Office
Building located at 1370 North Brea Boulevard, Fullerton, California.
4. Purchase Agreement between Tradewinds Office Building, a California
general partnership, and Buyer for the property commonly known as Trade Winds
Financial Center located at 2266 South Dobson Road, Mesa, Arizona.
5. Purchase Agreement among Sonora Plaza, Ltd., a California limited
partnership, GDA Investment, Ltd., a Florida limited partnership, and Buyer for
the property commonly known as Sonora Plaza located at 708-824 East Mono Way,
Sonora, California.
6. Loan Agreement between Carlsberg Properties, Ltd., a California
limited partnership, and Buyer for the property commonly known as Grunow Medical
Building located at 926 East McDowell Road, Phoenix, Arizona.
7. Agreement Concerning Property Management Agreements executed by
Carlsberg Management Company, a California corporation, and Glenborough
Corporation, a California corporation.
Page 166 of 401
<PAGE>
Schedule 7(g)
Defects
Page 167 of 401
<PAGE>
Schedule 7(h)
Violations
Page 168 of 401
<PAGE>
Schedule 7(i)
Proceedings
Page 169 of 401
<PAGE>
Schedule 7(l)
Litigation
Page 170 of 401
<PAGE>
Schedule 7(m)
Outstanding Contracts
Page 171 of 401
<PAGE>
Schedule 7(p)
Personal Property
Page 172 of 401
<PAGE>
Schedule 7(r)
Lease Exceptions
Page 173 of 401
<PAGE>
Schedule 7(x)
Brokerage Fees
Page 174 of 401
<PAGE>
Schedule 7(z)
Contracts
Page 175 of 401
<PAGE>
Schedule 7(bb)
Environmental Reports
1.
2. Phase I report dated as of August 13, 1996 prepared by Eckland
Consultants at the request of Buyer.
Page 176 of 401
<PAGE>
Schedule 12(c)
Tenant Improvements Costs and
Leasing Commissions -- Seller's Responsibility
Suite No. Tenant
225 Jason Shin
238, 240 Petrusse-Norris
109, 110 North Orange County Escrow (expansion)
Page 177 of 401
<PAGE>
Exhibit A
[Intentionally Omitted]
Page 178 of 401
<PAGE>
Exhibit B
Grant Deed
Recording Requested By:
Lawyer's Title Insurance Corporation
Escrow No. __________
When Recorded Return To:
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Mail Tax Statements To:
Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention:_____________________
Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.
Grant Deed
For valuable consideration, receipt of which is hereby acknowledged,
________________________, a _____________________ hereby grants to Glenborough
Properties, L.P., a California limited partnership, the real property located in
the City of __________, County of _______________, State of California, more
particularly described on Exhibit A attached hereto.
Executed as of this ___ day of November, 1996.
Grantor: _______________________,
a _____________________
By: _________________
Its: _________________
[ADD NOTARY FORM]
Page 179 of 401
<PAGE>
______________, 1996
________ County Recorder
_______________________
_______________________
_______________________
Re: Request That Statement of Documentary
Transfer Tax Not be Recorded
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.
The attached deed names _________________, a ________________, as grantor,
and Glenborough Properties, L.P., a California limited partnership, as grantee.
The property being transferred and described in the attached deed is
located in the City of ____________, County of _______________, State of
California.
The amount of Documentary Transfer Tax due on the attached deed is
$________ computed on full value of the property conveyed.
_______________________,
a _____________________
By: _________________
Its: _________________
Page 180 of 401
<PAGE>
Exhibit C
Assignment of Leases
This Assignment of Leases ("Assignment") dated as of November __, 1996, is
entered into by and between
, a
("Assignor"), and Glenborough Properties, L.P., a California limited partnership
("Assignee").
Witnesseth:
Whereas, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as
(the "Property") as more fully described in
Exhibit A attached hereto, which leases are described in Schedule 1 attached
hereto (the "Leases"); and
Whereas, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
Now, Therefore, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Except as otherwise set forth in the Purchase Agreement (as defined in
paragraph 5 below), Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all cost, liability, loss, damage or
expense, including without limitation, reasonable attorneys' fees, originating
prior to the Effective Date and arising out of the lessor's obligations under
the Leases.
4. Except as set forth in the Purchase Agreement, effective as of the
Effective Date, Assignee hereby assumes all of the lessor's obligations under
the Leases and agrees to indemnify Assignor against and hold Assignor harmless
from any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, originating subsequent to the Effective
Date and arising out of the lessor's obligations under the Leases.
5. Any rental and other payments under the Leases shall be prorated between
the parties as provided in the Purchase Agreement between Assignor, as Seller,
and Assignee, as Buyer, dated as of November __, 1996 (the "Purchase
Agreement").
Page 181 of 401
<PAGE>
6. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
7. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
8. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
9. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 182 of 401
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 183 of 401
<PAGE>
Schedule 1 to
Assignment of Leases
Amendment Security
Tenants Premises Leases Date Date(s) Deposit
Page 184 of 401
<PAGE>
Exhibit D
Warranty Bill Of Sale
For good and valuable consideration the receipt of which is hereby
acknowledged, , a
("Seller"), does
hereby sell, transfer, and convey to Glenborough Properties, L.P., a California
limited partnership ("Buyer"), all personal property owned by Seller and located
on or in or used in connection with the Real Property and Improvements (as such
terms are defined in that certain Purchase Agreement dated as of November __,
1996, between Seller and Buyer, including, without limitation, those items
described in Schedule A attached hereto.
Seller does hereby represent to Buyer that Seller is the lawful owner of
such personal property, that such personal property is free and clear of all
encumbrances, and that Seller has good right to sell the same as aforesaid and
will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands of all persons whomsoever.
Dated this _____ day of November __, 1996.
Seller: ,
a
By:
Its:
Page 185 of 401
<PAGE>
Schedule A to
Warranty Bill of Sale
Page 186 of 401
<PAGE>
Exhibit E
Assignment of Service Contracts,
Warranties and Guaranties
and Other Intangible Property
This Assignment of Service Contracts, Warranties and Guaranties and Other
Intangible Property ("Assignment") is made and entered into as of this _____ day
of November, 1996, by
, a
("Assignor"), to Glenborough Properties, L.P., a California limited partnership
("Assignee").
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third party
with respect to any building, building component, structure, fixture, machinery,
equipment, or material situated on, contained in any building or other
improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto; and
(c) any Intangible Property (as defined in that certain Purchase Agreement
dated as of November __, 1996 between Assignor and Assignee (or Assignee's
predecessor in interest) (the "Purchase Agreement")).
Assignor and Assignee further hereby agree and covenant as follows:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Effective as of the Effective Date, Assignee hereby assumes all of the
owner's obligations under the Service Contracts and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including, without limitation, reasonable attorneys' fees,
originating on or subsequent to the Effective Date and arising out of the
owner's obligations under the Service Contracts.
Page 187 of 401
<PAGE>
3. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with laws of the State of California.
6. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 188 of 401
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 189 of 401
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 190 of 401
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 191 of 401
<PAGE>
Exhibit F
Certificate of Transferor
other than an Individual
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located in
, that withholding of tax is not
required upon the disposition of such U.S. real property interest by
, a
("Transferor"), the undersigned hereby certifies
the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
; and
3. Transferor's office address is
.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: November ____, 1996.
[Individual signature line]
on behalf of
Page 192 of 401
<PAGE>
,
Exhibit G
Form of Tenant's Estoppel Certificate
Glenborough Properties, L.P. ("Purchaser")
400 S. El Camino Real
San Mateo, California 94402-1708
RE: Lease Dated , and amended
(the "Lease"), by and between
, as lessor ("Lessor"), and
, as lessee ("Lessee"), with respect to certain
premises (the "Leased Premises") located at
(the "Property"). The
Leased Premises are comprised of square feet.
Ladies and Gentlemen:
The undersigned hereby acknowledges that Purchaser is entering into an
agreement to purchase the Property. The undersigned further acknowledges the
right of Lessor and Purchaser to rely upon the statements and representations of
the undersigned contained in this Certificate and further acknowledges that
Purchaser will be purchasing the Property in material reliance on this
Certificate.
Given the foregoing, the undersigned Lessee hereby certifies and represents
unto Purchaser, its successors and assigns, with respect to the above-described
Lease, a true and correct copy of which is attached as Exhibit A hereto, as
follows:
1. Lease Effective. The Lease has been duly executed and delivered by
Lessee and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Lessee thereunder are valid and binding and
there have been no further amendments, modifications or additions to the Lease,
written oral;
2. No Default. To the best of Lessee's knowledge, as of the date hereof:
(i) there exists no breach, default, or event or condition which, with the
giving of notice or the passage of time or both, would constitute a breach or
default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
3. Entire Agreement. The Lease constitutes the entire agreement between
Lessor and Lessee with respect to the Property and Lessee claims no rights with
respect to the Property other than as set forth in the Lease; and
4. No Prepaid Rent. No deposits or prepayments of rent have been made in
connection with the Lease, except as follows: (if none, state "none")
.
Page 193 of 401
<PAGE>
Dated: , 1996.
"Lessee"
____________________________________
By: ________________________________
Its:________________________________
Page 194 of 401
<PAGE>
Exhibit H
Rent Roll
Page 195 of 401
<PAGE>
Exhibit I
Notice To Tenants
(Date)
(Name)
(Street Address)
(City, State, Zip Code)
Re: (Name of Property)
Dear (Tenant, or address individually to each Tenant):
Glenborough Properties, L.P., a California limited partnership has acquired
the subject property. We are pleased to advise you that, as of November ___,
1996, Glenborough Corporation has been engaged to lease and manage the property.
Please send your monthly rent and all future remittances to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
We value your tenancy and urge you to direct any questions regarding your
lease or this letter to (Name of Property Manager) at (Phone Number for Property
Manager or Building Property Manager) for (Name of Property).
Very truly yours,
Carlsberg Management Company,
a California corporation,
Property Manager for (Seller)
By: _________________________
Its:_________________________
Page 196 of 401
<PAGE>
Purchase Agreement
by and between
Tradewinds Office Building,
a California general partnership,
and
Glenborough Properties, L.P.,
a California limited partnership,
dated as of November __, 1996
for
Trade Winds Financial Center
Mesa, Arizona
Page 197 of 401
<PAGE>
List Of Exhibits
Exhibit A [Intentionally Omitted]
Exhibit B Special Warranty Deed
Exhibit C Assignment of Leases
Exhibit D Warranty Bill Of Sale
Exhibit E Assignment of Service Contracts, Warranties and Guaranties
and Other Intangible Property
Exhibit F Certificate of Transferor other than an Individual (FIRPTA
Affidavit)
Exhibit G Form of Tenant's Estoppel Certificate
Exhibit H Rent Roll
Exhibit I Notice To Tenants
Page 198 of 401
<PAGE>
List Of Schedules
Schedule 1(a) Real Property
Schedule 2(a)(i) Loan
Schedule 3(c) Permitted Exceptions
Schedule 3(h) Related Agreements
Schedule 7(g) Defects
Schedule 7(h) Violations
Schedule 7(i) Proceedings
Schedule 7(l) Litigation
Schedule 7(m) Outstanding Contracts
Schedule 7(p) Personal Property
Schedule 7(r) Lease Exceptions
Schedule 7(x) Brokerage Fees
Schedule 7(z) Contracts
Schedule 7(aa) Loan Documents
Schedule 7(bb) Environmental Reports
Schedule 12(c) Tenant Improvements Costs and Leasing
Commissions -- Seller's Responsibility
Page 199 of 401
<PAGE>
Purchase Agreement
This Purchase Agreement is dated as of November __, 1996, by and between
Tradewinds Office Building, a California general partnership ("Seller"), and
Glenborough Properties, L.P., a California limited partnership ("Buyer").
Recitals
A. Buyer is a California limited partnership whose general partner is
Glenborough Realty Trust Incorporated, a Maryland corporation, whose stock is
publicly traded on the New York Stock Exchange.
B. Buyer desires to acquire the Property (as defined in Subparagraph 1(a)
below) from Seller and Seller desires to sell the Property to Buyer, upon the
terms and subject to the conditions set forth in this Agreement.
Now, Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Property
Subject to and upon the terms and conditions hereinafter set forth and the
representations and warranties contained herein, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, subject to the terms, covenants and
conditions set forth herein, (a) the real property described in Schedule 1(a)
attached hereto, together with any and all buildings and other improvements
thereon and, to the extent owned by Seller, or held directly for the benefit of
Seller, any interest therein, and any and all rights, privileges and easements
appurtenant thereto (the "Real Property"), (b) all of Seller's right, title and
interest in and to the Leases listed in Exhibit H attached hereto (the
"Leases"), and any and all guarantees of the Leases (the "Lease Rights"), and
(c) all of Seller's right, title and interest in and to the personal property
and any interest therein owned by Seller or held directly for the benefit of
Seller, if any, located on the Real Property and used in the operation or
maintenance of the Real Property (the "Personal Property"), (d) all of Seller's
right, title and interest, if any, in and to the following to the extent
assignable: the Contracts listed in Schedule 7(z), that certain tax impound
account which is held by General American Life Insurance Company in connection
with the Loan (as defined in Subparagraph 2(a)(i) below) secured by the Property
(the "Loan Reserve"), all general intangibles relating to design, development,
operation, management and use of the Real Property, all certificates of
occupancy, zoning variances, building, use or other permits, approvals,
authorizations, licenses and consents obtained from any governmental authority
in connection with the development, use, operation or management of the Real
Property, all soil tests, engineering reports, appraisals,
Page 200 of 401
<PAGE>
architectural drawings, plans and specifications relating to all or any portion
of the Real Property, and all payment and performance bonds or warranties or
guarantees relating to the Real Property; and (e) all of Seller's right, title
and interest in and to any and all of the following to the extent assignable:
trademarks, service marks, logos, other source and business identifiers,
trademark registration and applications for registration used at or relating to
the Real Property and any written agreement granting to Seller any right to use
any trademark or trademark registration at or in connection with the Real
Property (such property, together with the property described in clause (d) of
this Paragraph 1, is herein called the "Intangible Property"). The term
"Property" means all of the Real Property, the Lease Rights, the Personal
Property and the Intangible Property.
2. Purchase Price.
(a)......... Buyer and Seller agree that the purchase price of the Property
shall be One Million Four Hundred Eighty Thousand Dollars ($1,480,000) (the
"Purchase Price"), which shall comprise the following components:
(i)... At the closing of the purchase and sale contemplated herein
(the "Closing"), Buyer shall take title to the Property subject to the mortgage
or deed of trust (as approved by Buyer) securing the loan (the "Loan") described
on Schedule 2(a)(i) attached hereto. At the Closing, Buyer shall receive a
credit against the Purchase Price in an amount equal to the amount that would be
required to repay the Loan in full (excluding prepayment penalties and accrued
interest) as of the Closing Date (as defined in Subparagraph 4(b) below), which
is presently estimated to be Five Hundred Eighty Thousand Two Hundred Sixty-Nine
and 64/100 Dollars ($580,269.64); and
(ii).. Immediately available funds ("Cash") to be paid to Seller, in
the amount equal to the Purchase Price less the amount of the Loan assumed as of
the Closing Date.
(b)......... Seller acknowledges and agrees that Buyer may be required to
withhold a portion of the Purchase Price pursuant to Section 1445 of the Code
(as defined in Subparagraph 4(c)(x) below) or Sections 18805 and 26131 of the
California Revenue and Taxation Code or similar laws or regulations of other
states. Any amount properly so withheld by Buyer shall be deemed to have been
paid by Buyer as part of the Purchase Price, and Seller's obligation to
consummate the transactions contemplated herein shall not be excused, reduced,
terminated or otherwise affected thereby.
3. Conditions to Closing
(a)......... The following conditions are precedent to Buyer's obligation
to purchase the Property (the "Buyer's Conditions Precedent"):
Page 201 of 401
<PAGE>
(i)... The representations and warranties of Seller contained herein
shall be true and correct as of the Closing Date as though made at and as of the
Closing Date, and Seller's covenants under this Agreement shall be satisfied as
of the Closing Date (to the extent such covenants are to be satisfied as of the
Closing Date).
(ii).. At the Closing, Seller shall convey to Buyer (A) fee simple
title to the Property identified in Schedule 1(a) by special warranty deed in
the form of Exhibit B attached hereto, (B) title to the Lease Rights pursuant to
an assignment and assumption of tenant leases in the form of Exhibit C attached
hereto (the "Assignment of Leases"), (C) title to the Personal Property pursuant
to a bill of sale in the form of Exhibit D attached hereto and (D) an assignment
and assumption of service contracts, guaranties and warranties and other
intangible property in the form of Exhibit E attached hereto (the "Assignment of
Service Contracts").
(iii). Lawyer's Title Insurance Corporation (the "Title Company")
shall be committed to issue at Closing for its extended coverage American Land
Title Association Policy of Owner's Title Insurance (Form B, rev. 10/17/70) in
the amount of the Purchase Price, showing title to the Real Property vested in
Buyer, subject only to exceptions described on Schedule 3(c) attached hereto
(the "Permitted Exceptions"). The foregoing title policy, together with
endorsements covering subdivision map act, survey, access, contiguity, no
violations of covenants, conditions or restrictions and such other endorsements
as Buyer has requested prior to the Effective Date (as defined in
Subparagraph 14(l) below), is referred to herein as the "Title Policy." On or
before the Closing, Seller shall cause the Title Company to deliver to Buyer a
certification that, in issuing the Title Policy, the Title Company has not
relied on any representations or indemnities of Seller or any of its affiliates
(except as disclosed in such certification). In addition, as a condition to
Buyer's obligation to close, Buyer shall be satisfied that, as of the Closing,
there is no outstanding financing statement filed in accordance with the Uniform
Commercial Code of any applicable jurisdiction with respect to the Property or
Seller except for any financing statements approved by Buyer prior to the
Effective Date or relating to the Loan.
(iv).. Seller obtaining and delivering to Buyer the tenant estoppel
certificates required under Paragraph 6 below.
(v)... The physical condition of the Real Property shall be
substantially the same on the Closing Date as on the date hereof, reasonable
wear and tear and loss by casualty excepted (subject to the provisions of
Paragraph 10 below).
(vi).. All of the property management and leasing brokerage agreements
affecting the Property (whether between Seller, Carlsberg Management Company
("CMC") or any other party and such property managers and leasing agents) shall
be terminated as of the Closing Date at no cost or expense to Seller.
Page 202 of 401
<PAGE>
The Buyer's Conditions Precedent contained in Subparagraphs 3(a)(i)
through 3(a)(vi) are intended solely for the benefit of Buyer. If any of the
Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its
sole discretion either to waive the Buyer's Condition Precedent and proceed with
the purchase or terminate this Agreement by written notice to Seller and the
Title Company.
(b)...... The simultaneous closing of all of the transactions contemplated
by the agreements described on Schedule 3(h) attached hereto (the "Related
Agreements") with the Closing of this transaction is a condition precedent (the
"Mutual Condition Precedent") to both Seller's and Buyer's obligations under
this Agreement. The Mutual Condition Precedent is for the benefit of both Seller
and Buyer. If the Mutual Condition Precedent is not satisfied, each party shall
have the right in its sole discretion, either to waive the Mutual Condition
Precedent and proceed with the transaction so long as both of them have waived
this condition, or to terminate this Agreement by written notice to the other
party and Title Company.
(c)...... In the event that any party having the right of cancellation
under this Paragraph 3 does not inform the other party and Title Company in
writing of its disapproval of any condition precedent (the "Condition
Precedent") for such party's benefit provided in this Paragraph 3 prior to the
Closing, such Condition Precedent shall be deemed to have been satisfied,
approved or waived, effective as of the Closing; provided that a party shall not
be deemed to have waived any claim for breach of any representation or warranty
by the other party unless such party has actual knowledge of such breach prior
to Closing. For purposes of this Subparagraph 3(c), "actual knowledge" of Buyer
shall be deemed to mean the present actual knowledge of Mr. Andrew Batinovich,
Mr. Steve Saul or Mr. Frank E. Austin, without any duty of investigation or
inquiry on their part, and "actual knowledge" of Seller shall be deemed to mean
the present actual knowledge of Mr. William G. Geary, Jr., Ms. Janet DaVall and
Mr. Ron Lema, without any duty of investigation or inquiry on their part. Upon
termination of this Agreement and the escrow for failure of a Condition
Precedent, (i) Buyer shall deliver to Seller copies of any and all soils,
geologic, engineering and environmental reports or studies concerning the
Property prepared by or on behalf of Seller and (ii) Seller shall bear the cost
of any title and escrow cancellation fees.
4. Closing and Escrow
(a)......... Upon mutual execution of this Agreement, the parties hereto
shall deposit an executed counterpart of this Agreement with Title Company and
this Agreement shall serve as instructions to Title Company as the escrow holder
for consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional escrow instructions as may be appropriate to
enable Title Company to comply with the terms of this Agreement; provided,
however, that in the event of any conflict between the provisions of this
Agreement and any supplementary escrow
Page 203 of 401
<PAGE>
instructions, the terms of this Agreement shall control unless a contrary intent
is expressly indicated in such supplementary instructions.
(b)......... The parties shall endeavor to conduct the Closing through an
escrow closing pursuant to Subparagraph 4(a) above. If, however, an escrow
Closing is not practical, the Closing hereunder shall be held and delivery of
all items to be made at the Closing shall be made at the offices of Morrison &
Foerster llp, 345 California Street, San Francisco, California 94104, on or
before November 15, 1996 (the "Closing Date"). In the event the Closing does not
occur on or before the Closing Date, Title Company shall, unless it is notified
by both parties to the contrary within five (5) days after the Closing Date,
return to the depositor thereof items which were deposited hereunder. Any such
return shall not, however, relieve either party of any liability it may have for
its wrongful failure to close.
(c)......... At or before the Closing, Seller shall deliver or cause to be
delivered to Buyer the following:
(i)... [Intentionally omitted];
(ii).. the duly executed and acknowledged Deed;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Bill of Sale;
(v)... a duly executed Assignment of Service Contracts;
(vi).. originals of the Leases;
(vii). duly executed tenant estoppel certificates as required pursuant
to Subparagraph 3(a)(iv) above;
(viii) originals of the Contracts not previously delivered to Buyer;
(ix).. originals of any and all building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements that are in the possession or control of Seller and/or an affiliate
of Seller that have not been previously delivered to Buyer;
(x)... a FIRPTA affidavit (in the form attached as Exhibit F) pursuant
to Section 1445(b)(2) of the Internal Revenue Code of 1986 (the "Code"), and on
which Buyer is entitled to rely, that Seller is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code;
Page 204 of 401
<PAGE>
(xi).. such resolutions, authorizations, bylaws or other corporate
and/or partnership documents or agreements relating to Seller as shall be
reasonably required by Buyer;
(xii). a signed notice in the form of Exhibit I attached hereto for
each of the Tenants (as defined in Paragraph 6 below);
(xiii) a closing statement in form and content satisfactory to Buyer
and Seller; and
(xiv). any other instruments, records or correspondence called for
hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
(d)......... At or before the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i)... a closing statement in form and content satisfactory to Buyer
and Seller;
(ii).. a duly executed Registration Rights Agreement;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Assignment of Service Contracts; and
(v)... the Cash.
(e)......... Seller and Buyer shall each deposit such other instruments as
are reasonably required by Title Company or otherwise required to close the
escrow and consummate the transactions described herein in accordance with the
terms hereof. Seller and Buyer hereby designate Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code and the
regulations promulgated thereunder.
(f)......... With respect to the Property the following adjustments shall
be made, and the following procedures shall be followed: (i)... As nearly as
practicable prior to the Closing, Buyer and Seller shall prepare a statement for
the Property ("Proration Statement") showing prorations for the items set forth
below, calculated as of 12:01 a.m. on the Closing Date, on the basis of a
365-day year:
(A) rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, common area expenses,
marketing fund
Page 205 of 401
<PAGE>
charges, operating expenses, maintenance escalation rents or charges,
cost-of-living increases or other charges of a similar nature, if any, and any
additional charges and expenses payable under tenant Leases (whether such
collection occurs prior to, on or after the Closing Date);
(B) real property taxes and assessments;
(C) the current installments (only) of any improvement bonds
or assessments which are a lien on the Property or which are pending and may
become a lien on the Property;
(D) water, sewer and utility charges;
(E) amounts payable under any Contract that will be continued
after the Closing;
(F) permits, licenses and/or inspection fees (calculated on
the basis of the period covered);
(G) interest on the Loan; and
(H) any other expenses normal to the operation and
maintenance of the Property.
(ii).. Buyer shall use commercially reasonable efforts consistent with
prudent business practices to collect rents or other amounts payable under the
Leases that were delinquent as of the Closing Date and that relate to a period
prior to the Closing. To the extent such delinquent rents and other amounts are
collected by Buyer, Buyer may deduct from the amount owed to Seller an amount
equal to the out-of-pocket third-party collection costs actually incurred by
Buyer in collecting such rents and other amounts due to Seller. Any rent or
other payment (including percentage rent) collected after the Closing from any
tenant which owed rent that was delinquent as of the Closing Date and that
relate to a period prior to the Closing shall be applied first, to satisfy such
tenant's rent obligations first becoming due and payable in the month in which
such rent was paid (or within five (5) days after the date on which such rent
was paid), and then to satisfy such delinquent rent obligations (including those
that relate to the period after the Closing Date) in the inverse order of
maturity. After the Closing, Buyer shall have the exclusive right to enforce
claims for rents and all other obligations due and owing under the Leases and
terminate any Leases as Buyer, in its sole discretion, deems appropriate.
(iii). At the Closing, Seller shall deliver to Buyer all security
deposits, letters of credit and other collateral given to Seller or any of its
affiliates or predecessor-in-interest pursuant to any of the Leases, less any
portions thereof applied in accordance with the respective Lease (together with
a statement regarding such applications).
Page 206 of 401
<PAGE>
(iv).. If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
operating expenses, maintenance escalation rents or charges, cost-of-living
increases or other charges of a similar nature ("Additional Rents") and such
Additional Rents are not finally adjusted between the landlord and tenant under
any Lease until after the Closing Date, then Buyer shall submit to Seller within
sixty (60) days after such Additional Rents are finally adjusted with any
tenant, a supplemental statement (the "Supplemental Statement") to the extent
such Additional Rents have been finally adjusted between Buyer and such tenant,
containing a calculation of the prorations of such Additional Rents, prepared
based on the principles set forth in this Subparagraph 4(f) , provided that in
making such adjustment, the parties shall exclude any Additional Rents arising
from increased real property taxes for the Property to the extent such increase
is the result of Buyer's purchase of the Property. To the extent the
Supplemental Statement indicates that one party is entitled to any amounts under
this Subparagraph 4(f)(iv), the other party shall pay such sum to such party
within thirty (30) days after the delivery of the Supplemental Statement.
(v)... Buyer shall pay the following costs of closing this
Transaction: (A) the costs of the Buyer's legal counsel, accounting services and
engineering and environmental analyses, (B) fifty percent (50%) of the escrow
charges, fees for recording the Deed and the premium for the Title Policy and
(C) the cost of preparing three (3) years' audited operating statements for the
Property to be completed prior to the Closing as required under federal
securities laws. All other costs associated with the transaction, (including,
but not limited to, any transfer taxes, all survey costs, and fifty percent
(50%) of the escrow charges, fees for recording the Deed and the premium for the
Title Policy) shall be charged against Seller and, provided the Closing occurs,
will be deducted from the Purchase Price.
(vi).. All of Seller's right, title and interest in and to the Loan
Reserve shall be assigned to Buyer at Closing, and at the Closing Buyer shall
pay to Seller through escrow a sum in cash equal to the balance of the Loan
Reserve as of the Closing Date.
(vii). Notwithstanding anything to the contrary contained in this
Subparagraph 4(f), if the real property taxes and assessments payable for any
period prior to Closing are determined to be more than the amounts prorated
herein (in the case of the current year) or paid by Seller (in the case of any
prior year), due to a reassessment of the value of the Property or otherwise,
Seller and Buyer shall promptly adjust the proration of such real property taxes
and assessments after the determination of such amounts, and Seller shall pay to
Buyer any increase in the amount of such real property taxes and assessment
applicable to any period prior to Closing.
(viii) The obligations of Seller and Buyer under this
Subparagraph 4(f) shall survive the Closing.
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5. Loan
(a)......... Buyer may elect to attempt, and Seller shall reasonably
cooperate with Buyer in such attempt, to obtain the consent of the lender of the
Loan to the transfer of the Property to Buyer, which consent shall confirm for
the benefit of Buyer and Seller, the following items with respect to the Loan:
the identification of the applicable Loan Documents, the interest rate, the date
through which interest is paid, the principal amount outstanding, the maturity
date, the monthly payment, the absence of any default relating to the payment of
money to the lender, and to such lender's knowledge the absence of any other
defaults (the "Lender Consent"); provided, however, that no party shall be
obligated to pay any consideration to a lender to obtain such consent except as
provided in this Subparagraph 5(a). Each party hereto shall promptly keep the
other party informed of its discussions with the lender in connection with the
matters described in this Subparagraph 5(a). Notwithstanding anything to the
contrary in this Subparagraph 5(a), Buyer may elect by written notice to Seller,
to pay the entire outstanding balance of the Loan on or prior to the date which
is one hundred eighty (180) days after the Closing Date (the "Loan Payoff
Date"), in which case Buyer shall make such payments as stated in such notice at
or before the Loan Payoff Date, together with any consideration in the nature of
a fee or expense reimbursement (i.e., not a payment which reduces principal)
which is required under the terms of a provision that presently exists in the
applicable Loan Documents to obtain the Lender Consent, including any and all
costs and expenses of the lender's counsel or representatives in connection
therewith. If Buyer pays the entire outstanding balance of the Loan on or prior
to the Loan Payoff Date, Seller shall pay any prepayment penalties applicable to
the Loan payoff.
(b)......... In addition, Seller hereby grants Buyer the right to
renegotiate the Loan and to negotiate new loans or loans to replace the existing
Loan; provided that (i) Seller incurs no cost or liability in connection
therewith (except for any applicable prepayment penalties), (ii) if Buyer does
not pay off the Loan on or before the Loan Payoff Date, Buyer shall use
commercially reasonable efforts (but at no additional cost to Buyer) to cause
the lender of the Loan to release Seller from all liability under the Loan and
the Loan Documents, and (iii) such new loans and modifications to the Loan are
not effective until the Closing. The parties shall execute all documents
necessary or desirable to evidence or effectuate the modification of the Loan as
provided in this Paragraph 5.
(c)......... The provisions of this Paragraph 5 shall survive the Closing.
6. Estoppel Certificates
Seller shall use all reasonable efforts to obtain an estoppel certificate
from each tenant of the Property (each, a "Tenant"), dated no earlier than
thirty (30) days prior to the Closing Date, substantially in the form of
Exhibit H attached hereto, conforming to the most recent rent roll approved by
Buyer and alleging no defaults,
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offsets, or claims against the lessor (the "Estoppel Certificate"). It shall be
a condition to Buyer's obligation to close the sale and purchase of the Property
that on or before the Closing:
(a)......... Seller delivers to Buyer an Estoppel Certificate from Tenants
occupying seventy-five percent (75%) of the rentable area of the Property,
including all tenants occupying more than ten percent (10%) of the rentable area
of the Property (collectively, the "Required Tenants"), and, with respect to all
other tenants (collectively, the "Non-Required Tenants"), there shall exist no
dispute with Seller, which dispute is material to the use, value or economics of
the Property, as determined on an individual basis by Buyer in good faith in
Buyer's sole discretion (a "Material Non-Required Tenant Dispute") (and Buyer
shall be afforded the opportunity to inquire of any Non-Required Tenant which
does not provide an Estoppel Certificate as to whether any such dispute exists);
or
(b)......... To the extent that Seller is unable to obtain Estoppel
Certificates, or any items required to be therein, from the Required Tenants, or
to the extent that there is any Material Non-Required Tenant Dispute, Seller
shall deliver to Buyer and Buyer may, but shall not be obligated to, accept, on
the Closing Date a certification in which Seller warrants and represents to
Buyer, with respect to such missing Estoppel Certificates, or any missing items
required to be included therein, each item set forth in the Estoppel Certificate
attached as Exhibit H for the missing Estoppel Certificates and/or indemnifies
Buyer as to any such Material Non-Required Tenant Dispute.
(c)......... If the conditions contained in Subparagraphs 6(a) and (b)
above are not satisfied, then Buyer may, by written notice given to Seller
before the Closing, elect to waive such conditions or terminate this Agreement.
7. Seller's Representations and Warranties
Seller hereby represents and warrants to Buyer as follows:
(a)......... Seller is a general partnership duly organized and validly
existing under the laws of the State of California.
(b)......... Seller has full partnership power and authority to execute and
deliver this Agreement and to perform all of the terms and conditions hereof to
be performed by Seller and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and is the legal,
valid and binding obligation of Seller and is enforceable against Seller in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general equitable principles
(whether or not such enforceability is considered in a proceeding at law or in
equity). Seller is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar proceeding.
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(c)......... Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of Seller's partnership agreement or
any statute, regulation or rule, or, to Seller's knowledge, any injunction,
judgment, order, decree, ruling, charge or other restrictions of any government,
governmental agency or court to which Seller is subject, and which violation or
conflict would have a material adverse effect on the ownership and operation of
the Property, or (ii) result in any material breach or the termination of any
lease, agreement or other instrument or obligation to which Seller is a party or
by which any of the Property may be subject, or cause a lien or other
encumbrance to attach to any of the Property, other than any due-on-sale
provisions in the Loan Documents. Seller is not a party to any contract or
subject to any other legal restriction that would prevent fulfillment by Seller
of all of the terms and conditions of this Agreement or compliance with any of
the obligations under it, other than any due-on-sale provisions in the Loan
Documents.
(d)......... All material consents required from any governmental authority
or third party in connection with the execution and delivery of this Agreement
by Seller or the consummation by Seller of the transactions contemplated hereby
have been made or obtained or shall have been made or obtained by the Closing
Date. Complete and correct copies of all such consents shall be delivered to
Buyer.
(e)......... Seller has fee simple title to the Real Property, subject only
to the Permitted Exceptions.
(f)......... There are no adverse or other parties in possession of the
Property, or any part thereof, except Seller and tenants under the Leases. No
party has been granted any license, lease, or other right relating to the use or
possession of the Property or any part thereof, except tenants under the Leases.
(g)......... Except as set forth on Schedule 7(g), to Seller's knowledge,
there are no material defects with respect to the Real Property, including,
without limitation, no material defects in the structural and load-bearing
components of the Property, the roof(s), the parking lot(s), the plumbing,
heating, air conditioning and electrical and life safety systems, and all such
items are in good operating condition and repair.
(h)......... Except as set forth on Schedule 7(h), to Seller's knowledge,
the use and operation of the Property is in compliance in all material respects
with all applicable restrictive covenants, building codes, environmental, zoning
and land use laws, and other applicable local, state and federal laws and
regulations (collectively, "Laws").
(i)......... Except as set forth on Schedule 7(i), to Seller's knowledge,
there are no condemnation, environmental, zoning or other land-use regulation
proceedings that have been instituted, and Seller has not received any notice of
any such proceeding that is planned to be instituted, which would detrimentally
and materially affect the
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use, operation or value of any of the Property, nor has Seller received notice
of any special assessment proceedings affecting any of the Property. Seller
shall notify Buyer promptly of any such proceedings of which Seller becomes
aware.
(j)......... All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required, to Seller's knowledge, by law, or
by the normal use and operation of the Property are installed to the property
lines of the Property, and are connected pursuant to valid permits, and are
adequate to service the Property as presently operated and, to Seller's
knowledge, to permit compliance with all Laws.
(k)......... Seller has obtained all licenses, permits, variances,
approvals, authorizations, easements and rights of way, including proof of
dedication, required from all governmental authorities having jurisdiction over
the Property or from private parties for the present use, operation and
occupancy of the Property and to insure vehicular and pedestrian ingress to and
egress from the Property.
(l)......... Except as set forth on Schedule 7(l), there is no litigation
pending or, to Seller's knowledge, threatened, against Seller that arises out of
the ownership of the Property or that might materially and detrimentally affect
the value or the use or operation of any of the Property for its intended
purpose or the ability of Seller to perform its obligations under this
Agreement. Seller shall notify Buyer promptly of any such litigation of which
Seller becomes aware.
(m)......... Except as set forth on Schedule 7(m), at the time of Closing
(i) there will be no outstanding written or oral contracts made by Seller for
any improvements to the Property which have not been fully paid for and Seller
shall cause to be discharged all mechanics' and materialmen's liens arising from
any labor or materials furnished to the Property prior to the time of Closing,
and (ii) Seller shall have completed all punch-list items with respect to any
tenant improvements constructed by Seller as landlord under the Leases.
(n)......... Seller knows of no facts nor has Seller failed to disclose any
fact which would prevent Buyer from using and operating the Property after
Closing in the manner in which the Property is currently operated.
(o)......... Other than the rights of Tenants, as tenants only, under the
Leases, Seller has not entered into any purchase contracts, options or other
agreements of any kind, written or oral, recorded or unrecorded, whereby any
person or entity other than Buyer will have acquired or will have any basis to
assert any right, title or interest, or right to possession, use, enjoyment or
proceeds of all or any portion of the Property. None of the Leases contain any
rights to purchase, rights of first offer to purchase, or first refusal to
purchase the Property.
(p)......... To Seller's knowledge, Schedule 7(p) lists all of the tangible
Personal Property.
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(q)......... Attached hereto as Exhibit J is a list (the "Rent Roll") of
each of the Leases as of the date of this Agreement. Said Rent Roll is complete
in all material respects and all information therein is accurate in all material
respects as of its date, and there are no Leases or tenancies with respect to
the Property or any part thereof except as therein set forth. Except as
disclosed on the Rent Roll, no rental under any Lease has been collected in
advance of the current month. The Rent Roll shall be updated at the Closing to
reflect any changes which occur after the Effective Date. Seller is the owner of
the entire lessor's interest in and to each of the Leases and none of the Leases
or the rentals or other sums payable thereunder has been assigned or otherwise
encumbered, except in connection with the Loan.
(r)......... To Seller's knowledge, each of the Leases, including, without
limitation, any guaranties thereof, is an enforceable Lease and is in full force
and effect according to the terms set forth therein, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles. Except as specifically provided on Schedule 7(r)
attached hereto or on the Rent Roll, (i) no Tenant under any of the Leases is
greater than fifteen (15) days delinquent in the payment of its rental and other
sums due, (ii) no Tenant has abandoned or otherwise vacated the Property in
violation of any Lease, (iii) to Seller's knowledge, no Tenant or guarantor has
filed a voluntary petition in bankruptcy, insolvency or similar proceedings, has
been the subject of an involuntary bankruptcy petition, or otherwise been
adjudged bankrupt or insolvent in any proceedings filed against such tenant or
guarantor; (iv) to Seller's knowledge, no trustee or receiver has been appointed
for any Tenant; (v) no written notice has been provided to any tenant notifying
the Tenant that it is in default under the Lease which default has not been
remedied by such Tenant; and (vi) no Tenant, to Seller's knowledge, is otherwise
in default under any of the Leases. Except as otherwise provided in the Lease,
to Seller's knowledge, each Tenant is legally required to pay all sums and
perform all other material obligations set forth in its respective Lease,
without concessions, abatements, offsets or other basis for relief or
adjustment, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles.
(s)......... To Seller's knowledge, no material event of default on behalf
of Seller, as lessor, exists under any Lease and no event or condition exists
that, upon the giving of notice or lapse of time, or both, would constitute a
default by Seller under any Lease. Seller has not received any notice from any
Tenant of any offsets, defenses or claims available against rent or other
charges payable by such Tenant or other performance or obligations otherwise due
from it under any Lease, except as specifically set forth in the Rent Roll
and/or the Estoppel Certificates.
(t)......... No guarantor of any Lease has been released or discharged,
voluntarily or involuntarily, from any obligation under or in connection with
any Lease or any transaction related thereto.
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(u)......... Seller has not received from any Tenant or any other party
written notice of any claim (other than for customary refund at the expiration
of a Lease) to all or any part of any security deposit, except as set forth on
the Rent Roll and/or the Estoppel Certificates. The Rent Roll sets forth all
security deposits held by Seller.
(v)......... Except as shown on the Rent Roll, Seller has paid in full any
of landlord's leasing costs or obligations, including, without limitation, any
costs incurred by Seller in connection with any tenant improvements.
(w)......... No Tenant has indicated to Seller either orally or in writing
its present intent to terminate its Leases prior to expiration of the term of
such Lease except as shown on the Estoppel Certificates.
(x)......... Except as shown on Schedule 7(x), (A) no brokerage or similar
fee is due or unpaid by Seller with respect to the Leases, and (B) no brokerage
or similar fee shall be due or payable by Seller after the Closing in connection
with the Leases.
(y)......... All permits, governmental licenses, registrations and
approvals with respect to the Property which are necessary or required by law or
the rules and regulations of any governmental entity having jurisdiction over
the Property or its owner to carry on business as presently conducted
(collectively, the "Licenses"), the lack of which, individually or in the
aggregate, would reasonably be likely to have a material adverse effect on the
value, use or operation of the Property, are in full force and effect.
(z)......... Schedule 7(z) attached hereto sets forth a list of all service
contracts, construction contracts for work in progress, any warranties
thereunder, management contracts, unrecorded reciprocal easement agreements,
operating agreements, maintenance agreements, franchise agreements and other
similar agreements relating to the Property, (such contracts and agreements
together with any recorded reciprocal easements agreements are hereinafter
referred to, collectively, as the "Contracts"). With respect to each of the
Contracts, (i) the Contract is legal, valid, binding, and, to Seller's
knowledge, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency or similar laws of general application relating to or
affecting the enforcement of creditor's rights and subject to general principles
of equity, (ii) to Seller's knowledge, except for a Contract that is terminable
upon thirty (30) day written notice, the Contract will not be adversely affected
by the occurrence of the Closing and will be legal, valid, binding, enforceable
in accordance with its terms and in full force and effect on identical terms
following the consummation of the sale of the Property, (iii) Seller is not,
and, to Seller's knowledge, no other party to the Contract is, in breach or
default under any obligation thereunder or any provisions thereof which would
have material adverse affect upon Seller, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default, or permit any
termination under the Contract which would have a material adverse affect upon
Seller, (iv) no event has occurred under the Contract which would permit the
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creation of any lien upon, or the restriction of the right to the use of, the
Property and (v) no party to any Contract has repudiated any material provision
of the Contract.
(aa)........ Schedule 7(aa) attached hereto sets forth a list of all notes
or other evidence of indebtedness, loan agreements, mortgages, guaranty
agreements, and any and all other documents entered into by Seller and all
amendments, modifications and supplements thereto (collectively the "Loan
Documents") in connection with the Loan and all matters in connection with the
Loan set forth therein and certain factual information with respect to the Loan.
With respect to each of the Loan Documents, (i) the Loan Document is legal,
valid, binding and, to Seller's knowledge, enforceable in accordance with its
terms and in full force and effect, except as may be limited by bankruptcy,
reorganization, fraudulent conveyance, insolvency or similar laws of general
application relating to or affecting the enforcement of creditor's rights and
subject to general principles of equity, (ii) Seller is not, and to Seller's
knowledge, no other party to the Loan Document is, in breach or default under
any obligation thereunder or any provisions thereof which would have material
adverse effect upon Seller, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default, or permit any termination,
modification or acceleration under the Loan Document which would have a material
adverse affect upon Seller other than the sale of the Property contemplated
herein, (iii) to Seller's knowledge, no event has occurred under the Loan
Document which would permit the creation of any lien upon, or the restriction of
the right to the use of, the Property and (v) no party to the Loan Document has
repudiated any material provision of the Loan Document.
(bb)........ Seller has delivered to Buyer all environmental reports and
investigations relating to the Property which are available to Seller. A list of
such reports and all environmental reports and investigations that have been
obtained by Buyer relating to the Property is attached hereto as Schedule 7(bb)
(collectively, the "Environmental Reports"). Except as set forth in the
Environmental Reports: (i) to Seller's knowledge, the Property is not, and
Seller has not received any written notice that, any real estate in the vicinity
of the Property is, in violation of any federal, state, local or administrative
agency ordinance, law, rule, regulation, order or requirement (collectively,
"Environmental Laws") relating to hazardous or toxic materials, substances or
wastes, or other materials injurious to human health or the environment
(collectively, "Hazardous Materials"); (ii) neither Seller nor, to Seller's
knowledge, any third party, has used, manufactured, generated, treated, stored,
disposed of, or released any Hazardous Material on or under the Property or
transported any Hazardous Material over the Property; (iii) neither Seller, nor
to Seller's knowledge, any third party has installed, used or removed any
storage tank on or from the Property except in full compliance with all
Environmental Laws, and to Seller's knowledge there are no storage tanks or
wells (whether existing or abandoned) located on or under the Property and to
Seller's knowledge no storage tank has been installed on, used on or removed
from the Property in violation of any Environmental Laws; (iv) to Seller's
knowledge, the Property does not consist of any building materials that contain
Hazardous Materials; and (v) no claim, action, suit or
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proceeding is pending or, to Seller's knowledge, threatened against Seller,
before any court or other governmental authority or arbitration tribunal,
relating to Hazardous Materials, and there is no outstanding judgment, order,
writ, injunction, decree or award against Seller or otherwise having a material
adverse effect on the Property with respect to the same.
(cc)........ The Exhibits and Schedules attached hereto, as provided by or
on behalf of Seller, completely and correctly present in all material respects
the information required by this Agreement to be set forth therein. Seller or
CMC has delivered to Buyer true and correct copies of all of the due diligence
materials pertaining to the Property which are in the possession or control of
Seller. No representation or warranty by Seller herein and no information
disclosed in the Exhibits and Schedules hereto supplied by or on behalf of
Seller contains any untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein not materially
misleading. Seller has no knowledge of any events, transactions or other facts
which, either individually or in the aggregate might reasonably give rise to
circumstances or conditions which might have a material adverse effect on the
Property.
(dd)........ Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(ee)........ Seller has provided a copy of the representations and
warranties set forth in this Paragraph 7 to the Responsible Individuals (as
defined below), and each of the Responsible Individuals has reviewed such copy
of the representations and warranties.
Buyer and Seller hereby agree that (x) except for the representations and
warranties of Seller set forth in this Agreement and the documents to be
delivered by Seller to Buyer at Closing (the "Conveyance Documents"), Buyer is
purchasing the Property on an "AS IS" basis without relying of any
communications that may have been made by Seller or any of Seller's agents or
employees, with respect to the Property or Buyer's intended use thereof; (y) the
only representations and warranties made with respect to the Property are
contained herein and in the Conveyance Documents; and (z) for purposes of this
Paragraph 7, "Seller's knowledge" shall be deemed to mean the present actual
knowledge of Mr. William W. Geary, Jr., Ms. Janet DaVall or Mr. Ron Lema (the
"Responsible Individuals"), which individuals Seller represents and warrants are
the employees, partners or officers of Seller or CMC that are most responsible
for the operation and management of the Property, without any duty of
investigation or inquiry on their part. Without limiting the generality of the
foregoing, but subject to Seller's representations and warranties hereunder and
in the Conveyance Documents, Buyer shall be solely responsible for determining
the condition of the Property, including, but not limited to, the existence or
risk of any Hazardous Materials, and all aspects regarding the fees, charges and
assessments relating to the Property. For purposes of this Paragraph 7, an item
shall be deemed "material" if the reasonably estimated cost or damage incurred
by Buyer
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and/or the diminution of the market value of the Property as a result thereof,
individually or in the aggregate, exceeds Twenty-Five Thousand Dollars
($25,000). All representations and warranties set forth in this Paragraph 7
shall be deemed to be given as of the Effective Date and the Closing Date unless
Seller otherwise notifies Buyer in writing prior to the Closing.
8. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
(a)......... Buyer is a duly organized and validly existing limited
partnership in good standing under the laws of the State of California; this
Agreement and all documents executed by Buyer which are to be delivered to
Seller at the Closing are or at the time of Closing will be duly authorized,
executed and delivered by Buyer, and are or at the Closing will be legal, valid
and binding obligations of Buyer, and do not and at the time of Closing will not
violate any provisions of any agreement or judicial order to which Buyer is
subject.
(b)......... Buyer has made (or will make prior to the Closing Date) an
independent investigation with regard to the Property and Buyer's intended use
thereof, including, without limitation, review and/or approval of matters
disclosed pursuant to Paragraph 3(a) above.
(c)......... There is no litigation pending or, to Buyer's knowledge,
threatened, against Buyer or any basis therefor that might materially and
detrimentally affect the ability of Buyer to perform its obligations under this
Agreement. Buyer shall notify Seller promptly of any such litigation of which
Buyer becomes aware.
All representations and warranties set forth in this Paragraph 8 shall be
true as of the Effective Date and the Closing Date.
9. Indemnification
(a)......... Each party hereby agrees to indemnify the other party and
defend and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, resulting from any misrepresentation or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or Exhibit given or delivered to the other pursuant to or
in connection with this Agreement.
(b)......... Seller agrees to indemnify Buyer and its partners and defend
and hold Buyer and its partners harmless from and against any and all claims,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys' fees, asserted against, incurred or suffered by
Buyer resulting from or arising out of (i) any personal injury or property
damage occurring in, on or under the
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Property during Seller's ownership thereof, from any cause whatsoever other than
as a consequence of the acts or omissions of Buyer, its agents, employees or
contractors; and (ii) the failure of Seller to perform any obligation under the
Loan Documents to be performed by the borrower prior to the Closing Date (other
than the obligation to obtain the lender's consent for the sale of the Property
contemplated herein).
(c)......... Buyer agrees to indemnify Seller and its partners and defend
and hold Seller and its partners harmless from any claims, losses, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, asserted against, incurred or suffered by Seller
resulting from or arising out of (i) any personal injury or property damage
first occurring in, on or under the Property during Buyer's ownership thereof,
from any cause whatsoever other than as a consequence of the acts or omissions
of Seller, or its agents, employees or contractors, and (ii) if Buyer does not
pay off the Loan on or before the Loan Payoff Date, the failure of Seller to
perform any obligation under the Loan Documents to be performed by the borrower
after the Closing Date.
(d)......... The indemnification provisions of this Paragraph 9 shall
survive beyond the Closing, or, if the Closing does not occur pursuant to this
Agreement, beyond any termination of this Agreement.
10. Risk of Loss
(a)......... Minor Loss. Buyer shall be bound to purchase the Property for
the full Purchase Price as required by the terms hereof, without regard to the
occurrence or effect of any damage to the Property or destruction of any
improvements thereon or condemnation of any portion of the Property, provided
that: (i) the cost to repair any such damage or destruction does not exceed ten
percent (10%) of the Purchase Price or, in the case of a partial condemnation,
the value of the portion of the Property taken does not exceed ten percent (10%)
of the Purchase Price; (ii) upon the Closing, there shall be a credit against
the Purchase Price due hereunder equal to the amount of any insurance proceeds
or condemnation awards collected by Seller as a result of any such damage or
destruction or condemnation, plus the amount of any insurance deductible;
(iii) insurance or condemnation proceeds available to Seller are sufficient to
cover the cost of restoration; and (iv) the insurance carrier has admitted
liability for the payment of such costs; and (v) the Loan on the Property in
question is not accelerated or defaulted by reason of such casualty or
condemnation. If the proceeds or awards have not been collected as of the
Closing, then Seller's right, title and interest to such proceeds or awards
shall be assigned to Buyer.
(b)......... Major Loss. If the cost to repair such damage or destruction
to the Property exceeds ten percent (10%) of the Purchase Price allocated to the
Property or, in the case of condemnation, if the value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price allocated to the
Property, then Buyer may, at its option to be exercised by written notice to
Seller within twenty (20) days
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of Seller's notice to Buyer of the occurrence of the damage or destruction or
the commencement of condemnation proceedings, either (i) elect to terminate this
Agreement, or (ii) consummate the purchase of the Property for the full Purchase
Price as required by the terms hereof, subject to the credits against the
Purchase Price provided below. If Buyer elects to proceed with the purchase of
all of the Property, then, upon the Closing, Buyer shall be given a credit
against the Purchase Price due hereunder equal to the amount of any insurance
proceeds or condemnation awards collected by Seller as a result of any such
damage or destruction or condemnation, plus the amount of any insurance
deductible. If the proceeds or awards have not been collected as of the Closing,
then Seller's right, title and interest to such proceeds or awards shall be
assigned to Buyer. If Buyer fails to give Seller notice within such 20-day
period, then Buyer will be deemed to have elected to terminate this Agreement.
In the event of any damage or destruction of the Property covered by this
Paragraph 10(b), the Closing shall be postponed to the date which is five (5)
days after Buyer elects to consummate the Purchase of the Property as set forth
above.
11. Inspections
Prior to the Closing Date, Seller shall afford authorized representatives
of Buyer reasonable access to the Property for purposes of satisfying Buyer with
respect to the representations, warranties and covenants of Seller contained
herein and with respect to satisfaction of any Conditions Precedent to the
Closing contained herein, including, without limitation, and the taking of soil
borings from the Property; provided, however, that Buyer shall use commercially
reasonable efforts not to unreasonably disturb or interfere with the rights of
Tenants under the Leases. Buyer hereby agrees to indemnify and hold Seller
harmless from any damage or injury to persons or property caused by Buyer or its
authorized representatives during their entry and investigations prior to the
Closing. In the event this Agreement is terminated, Buyer shall restore the
Property to substantially the condition in which it was found. This indemnity
shall survive the termination of this Agreement or the Closing, as applicable.
12. Leases And Other Agreements; Capital Improvements
(a)......... Except as otherwise contemplated or permitted by this
Agreement or approved by Buyer in writing, from the Effective Date to the
Closing Date, Seller will cause Seller to operate, maintain, repair and lease
the Property in a prudent manner, in the ordinary course, on an arm's-length
basis and consistent with their past practices (and without limiting the
foregoing, Seller shall, in the ordinary course, negotiate with prospective
tenants and enter into leases of the Property, enforce leases in all material
respects, pay all costs and expenses of the Property, including, without
limitation, debt service, real estate taxes and assessments, maintain insurance
and pay and perform obligations under the Loan Documents) and will not dispose
of or encumber
Page 218 of 401
<PAGE>
any of the Property, except for dispositions of personal property in the
ordinary course of business.
(b)......... Notwithstanding the above terms of this Paragraph 12, Seller
shall not, without the prior written approval of Buyer, take any of the
following actions:
(i)... execute or terminate any lease covering in excess of 5,000
square feet in the case of any lease of industrial space, 2,000 square feet in
the case of any lease of office space, or 2,000 square feet in the case of any
lease of retail space, or modify or waive any material term thereof;
(ii).. except as otherwise required under this Agreement, enter into,
execute or terminate any operating agreement, reciprocal easement agreement,
management agreement or any lease, contract, agreement or other commitment of
any sort (including any contract for capital items or expenditures), with
respect to the Property requiring payments to or by Seller in excess of Ten
Thousand Dollars ($10,000) per annum, or the performance of services by Seller
the value of which is in excess of Ten Thousand Dollars ($10,000) per annum; or
(iii). waive or modify any material term under any Loan Document.
(c)......... In connection with any new leases or Lease modifications
affecting the Property entered into between the Effective Date and the Closing
in accordance with Subparagraph 12(b) above, the cost of tenant improvement work
and leasing commissions shall be paid solely by Buyer. Seller shall be
responsible for the cost of tenant improvement work and leasing commissions for
all Leases (and amendments thereto) entered into prior to the Effective Date
(regardless of when the same are payable), including, without limitation, those
leases described on Schedule 12(c) attached hereto, and Seller's obligations
with respect thereto shall survive the Closing.
(d)......... Between the Effective Date and the Closing, Seller shall
continue to undertake capital improvements with respect to the Property in the
ordinary course of business.
13. Cooperation
Seller and Buyer shall cooperate and do all acts as may be reasonably
required or requested by the other with regard to the fulfillment of any
Condition Precedent or the consummation of the transactions contemplated hereby
including execution of any documents, applications or permits. Seller hereby
irrevocably authorizes Buyer and its agents to make all inquiries of any third
party, including any governmental authority, as Buyer may reasonably require to
complete its due diligence.
Page 219 of 401
<PAGE>
14. Miscellaneous
(a)......... Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) hand delivery, (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or transmitted by
facsimile telecopy, or (iii) two (2) days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
required, and addressed as follows:
If to Seller: c/o Carlsberg Management Company
2800 28th Street, Suite 222
Santa Monica, California 90405
Attention: William W. Geary, Jr.
Telephone: (310) 450-9696
Fax : (310) 399-5633
With a copy to: Sandler and Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, California 90067
Attention: Ming-chu C. Rouse
Telephone: (310) 277-4411
Fax : (310) 277-5954
If to Buyer: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
With a copy to: Morrison & Foerster llp
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Telephone: (415) 677-7000
Fax : (415) 677-7522
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein, except that Seller acknowledges that it has requested the
services of Carlsberg
Page 220 of 401
<PAGE>
Management Company in connection with this transaction and shall be responsible
for paying a commission to Carlsberg Management Company in the amount of four
percent (4%) of the Purchase Price if the Closing occurs. In the event that any
broker or finder perfects a claim for a commission or finder's fee based upon
any such contact, dealings or communication, the party through whom the broker
or finder makes its claim shall be responsible for said commission or fee and
shall indemnify and hold harmless the other party from and against all
liabilities, losses, costs and expenses (including reasonable attorneys' fees)
arising in connection with such claim for a commission or finder's fee. The
provisions of this Subparagraph shall survive the Closing.
(c) Successors and Assigns. Subject to the following two (2) sentences,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns. Buyer
shall have the right, with notice to Seller (but without the necessity of
Seller's consent), to assign its right, title and interest in and to this
Agreement to one or more assignees at any time before the Closing Date;
provided, however that such assignee(s) shall assume all obligations of Buyer,
and such assignment and assumption shall not release Buyer from any obligation
hereunder. Seller shall not have the right to assign its interest in this
Agreement.
(d) Amendments. Except as otherwise provided herein, this Agreement may be
amended or modified only by a written instrument executed by Seller and Buyer.
(e) Continuation and Survival of Representations and Warranties, Etc. All
representations and warranties by the respective parties contained herein or
made in writing pursuant to this Agreement are intended to and shall remain true
and correct as of the time of Closing, shall be deemed to be material, and,
together with all conditions, covenants and indemnities made by the respective
parties contained herein or made in writing pursuant to this Agreement (except
as otherwise expressly limited or expanded by the terms of this Agreement),
shall survive the execution and delivery of this Agreement and shall survive the
Closing for a period of twenty-four (24) months after the Closing, or, to the
extent the context requires, beyond any termination of this Agreement for a
period of twenty-four (24) months.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. The parties recognize that,
since the Property is located in the State of Arizona, it may be necessary for
the parties to comply with certain aspects of the laws of such state in order to
consummate the purchase and sale of the Property. The parties agree to comply
with such other laws to the extent necessary to consummate the purchase and sale
of the Property, provided that it is the parties' intent that the provisions of
this Agreement and the Related Purchase Agreements be applied to each Property
described in this Agreement and the Related Purchase Agreements in a manner
which results in the greatest consistency possible. For this reason, and because
a large number of properties
Page 221 of 401
<PAGE>
described in the Related Purchase Agreements are located in the State of
California, the parties have agreed that California law shall govern with
respect to the purchase and sale of the Property to the greatest extent
possible.
(g) Merger of Prior Agreements. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all prior
agreements and understandings between the parties relating to the subject matter
hereof, including, without limitation, the Letter of Intent dated October 22,
1996, entered into by and between Buyer and CMC.
(h) Enforcement. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
(k) Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date" shall mean
the first date on which both Seller and Buyer shall have executed this
Agreement.
(m) Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material or information about the other or, in the case of Buyer and
its agents, employees, consultants and contractors, about the Property, and
shall not disclose such information to any third party, except, in the case of
information about the Property and Seller, to Buyer's lender or prospective
lenders, insurance and reinsurance firms, attorneys, environmental assessment
and remediation service firms and consultants, as may be reasonably required for
the consummation of the transaction contemplated hereunder and/or as required by
law.
Page 222 of 401
<PAGE>
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
Page 223 of 401
<PAGE>
15. Acceptance of Agreement by Seller
This Agreement shall be null and void unless it is accepted by Seller and
two fully executed copies hereof are returned to Buyer on or before 5:00 p.m.
(P.S.T.) on November 13, 1996.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
Seller: Tradewinds Office Building,
a California limited partnership
By:
Charles E. Kunz,
General Partner
Dated:
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
Dated:
By:
Its:
Dated:
Page 224 of 401
<PAGE>
Title Company agrees to act as escrow holder in accordance with the terms of
this Agreement and to act as the Reporting Person (as such term is defined in
this Agreement).
Lawyer's Title Insurance Corporation
By:
Its:
Dated:
Page 225 of 401
<PAGE>
Schedule 1(a)
Real Property
Page 226 of 401
<PAGE>
Schedule 2(a)(i)
Loan
Secured loan in the original principal amount of Two Million Dollars
($2,000,000) extended by General American Life Insurance Company, a Missouri
corporation ("GALIC"), to Seller, successor-in-interest to Dobson Road, Ltd., a
California limited partnership ("Dobson"), successor-in-interest to Allan Fuller
and Liane Fuller (collectively, the "Fullers").
Page 227 of 401
<PAGE>
Schedule 3(c)
Permitted Exceptions
Page 228 of 401
<PAGE>
Schedule 3(h)
Related Agreements
All of the following documents are dated as of even date herewith:
1. Purchase Agreement between Terra Plaza, Ltd., a California limited
partnership, and Buyer for the property commonly known as Carlsberg Plaza
located at 2633 East Indian Road, Phoenix, Arizona.
2. Purchase Agreement between Carlsberg Managed Properties Fund, Ltd.,
a California limited partnership, and Buyer for the property commonly known as
Dallidet Professional Center located at 1194 Pacific Street, San Luis Obispo,
California.
3. Purchase Agreement between IHH Partnership, a California general
partnership, and Buyer for the property commonly known as Hillcrest Office
Building located at 1370 North Brea Boulevard, Fullerton, California.
4. Purchase Agreement between Tradewinds Office Building, a California
general partnership, and Buyer for the property commonly known as Trade Winds
Financial Center located at 2266 South Dobson Road, Mesa, Arizona.
5. Purchase Agreement among Sonora Plaza, Ltd., a California limited
partnership, GDA Investment, Ltd., a Florida limited partnership, and Buyer for
the property commonly known as Sonora Plaza located at 708-824 East Mono Way,
Sonora, California.
6. Loan Agreement between Carlsberg Properties, Ltd., a California
limited partnership, and Buyer for the property commonly known as Grunow Medical
Building located at 926 East McDowell Road, Phoenix, Arizona.
7. Agreement Concerning Property Management Agreements executed by
Carlsberg Management Company, a California corporation, and Glenborough
Corporation, a California corporation.
The documents described as items 1 through 5 above, other than this Agreement,
are called the "Related Purchase Agreements."
Page 229 of 401
<PAGE>
Schedule 7(g)
Defects
Page 230 of 401
<PAGE>
Schedule 7(h)
Violations
Page 231 of 401
<PAGE>
Schedule 7(i)
Proceedings
Page 232 of 401
<PAGE>
Schedule 7(l)
Litigation
Page 233 of 401
<PAGE>
Schedule 7(m)
Outstanding Contracts
Page 234 of 401
<PAGE>
Schedule 7(p)
Personal Property
Page 235 of 401
<PAGE>
Schedule 7(r)
Lease Exceptions
Page 236 of 401
<PAGE>
Schedule 7(x)
Brokerage Fees
Page 237 of 401
<PAGE>
Schedule 7(z)
Contracts
Page 238 of 401
<PAGE>
Schedule 7(aa)
Loan Documents
1. First Mortgage Amortized Payment Note in the original principal
amount of Two Million Dollars ($2,000,000) dated as of May 9, 1986, by Allan
Fuller and Liane Fuller (collectively, the "Fullers") in favor of General
American Life Insurance Company, a Missouri corporation ("GALIC").
2. Deed of Trust (Arizona) dated as of May 9, 1986, executed by the
Fullers for the benefit of GALIC and recorded on May 14, 1986 in the Official
Records ("Official Records") of Maricopa County, Arizona, as Document
No. 86-238436.
3. Note and Deed of Trust Revision Agreement dated as of April 1, 1992,
executed by and between GALIC and Dobson Road, Ltd., a California limited
partnership ("Dobson"), and recorded on May 11, 1992 in the Official Records as
Document No. 92-253189.
4. Second Note and Deed of Trust Revision Agreement dated as of
February 1, 1993, executed by and between GALIC and Dobson and recorded on
December 8, 1993 in the Official Records as Document No. 93-0857603.
Factual Information
Date of last payment: November 6, 1996
Outstanding principal balance as of November 1, 1996: $580,269.64
Per diem accrual of interest since November 1, 1996: $128.95
Amount of last payment: $6,647.00
Real Estate Tax Impound Balance: $2,385.99
Page 239 of 401
<PAGE>
Schedule 7(bb)
Environmental Reports
1. Phase I report dated as of August 8, 1996 prepared by Eckland
Consultants at the request of Buyer.
Page 240 of 401
<PAGE>
Schedule 12(c)
Tenant Improvements Costs and
Leasing Commissions -- Seller's Responsibility
None.
Page 241 of 401
<PAGE>
Exhibit A
[Intentionally Omitted]
Page 242 of 401
<PAGE>
Exhibit B
Special Warranty Deed
When Recorded Return To:
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
- --------------------------------------------------------------------------------
(Space above this line for Recorder's use)
Special Warranty Deed
For the consideration of Ten Dollars, and other valuable considerations,
the undersigned, a
("Grantor"), does
hereby convey to Glenborough Properties, L.P., a California limited partnership
("Grantee"), the following described real property situated in
County, Arizona, and more particularly described on Exhibit A
attached hereto and by this reference made a party hereof, together with all
rights and privileges appurtenant thereto; subject however, to all taxes and
other assessments, reservations in patents and all easements, rights of way,
encumbrances, liens, covenants, conditions, restrictions, obligations and
liabilities as may appear of record.
Grantor hereby binds itself and its successors to warrant and defend the
title, as against all acts of the Grantor herein and no other, subject to the
maters above set forth.
Dated this _____ day of November, 1996.
Grantor: ________________________,
a _______________________
By: ___________________
Its: ___________________
[Add Notary Form]
Page 243 of 401
<PAGE>
Exhibit C
Assignment of Leases
This Assignment of Leases ("Assignment") dated as of November __, 1996, is
entered into by and between
, a
("Assignor"), and Glenborough Properties, L.P., a California limited partnership
("Assignee").
Witnesseth:
Whereas, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as
(the "Property") as more fully described in
Exhibit A attached hereto, which leases are described in Schedule 1 attached
hereto (the "Leases"); and
Whereas, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
Now, Therefore, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Except as otherwise set forth in the Purchase Agreement (as defined in
paragraph 5 below), Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all cost, liability, loss, damage or
expense, including without limitation, reasonable attorneys' fees, originating
prior to the Effective Date and arising out of the lessor's obligations under
the Leases.
4. Except as set forth in the Purchase Agreement, effective as of the
Effective Date, Assignee hereby assumes all of the lessor's obligations under
the Leases and agrees to indemnify Assignor against and hold Assignor harmless
from any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, originating subsequent to the Effective
Date and arising out of the lessor's obligations under the Leases.
5. Any rental and other payments under the Leases shall be prorated between
the parties as provided in the Purchase Agreement between Assignor, as Seller,
and Assignee, as Buyer, dated as of November __, 1996 (the "Purchase
Agreement").
Page 244 of 401
<PAGE>
6. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
7. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
8. This Assignment shall be governed by and construed in accordance with
the laws of the State of California. The parties recognize that, since the
Property is located in the State of Arizona, it may be necessary for the parties
to comply with certain aspects of the laws of such state in order to consummate
the transactions contemplated herein. The parties agree to comply with such
other laws to the extent necessary to consummate the transactions contemplated
herein, provided that it is the parties' intent that the provisions of this
Assignment and the Related Purchase Agreements (as defined in the Purchase
Agreement) be applied to the transactions contemplated in this Assignment and
the Related Purchase Agreements in a manner which results in the greatest
consistency possible. For this reason, and because a large number of properties
described in the Related Purchase Agreements are located in the State of
California, the parties have agreed that California law shall govern with
respect to the transactions contemplated herein to the greatest extent possible.
Page 245 of 401
<PAGE>
9. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 246 of 401
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 247 of 401
<PAGE>
Schedule 1 to
Assignment of Leases
Amendment Security
Tenants Premises Leases Date Date(s) Deposit
Page 248 of 401
<PAGE>
Exhibit D
Warranty Bill Of Sale
For good and valuable consideration the receipt of which is hereby
acknowledged, , a
("Seller"), does
hereby sell, transfer, and convey to Glenborough Properties, L.P., a California
limited partnership ("Buyer"), all personal property owned by Seller and located
on or in or used in connection with the Real Property and Improvements (as such
terms are defined in that certain Purchase Agreement dated as of November __,
1996, between Seller and Buyer), including, without limitation, those items
described in Schedule A attached hereto.
Seller does hereby represent to Buyer that Seller is the lawful owner of
such personal property, that such personal property is free and clear of all
encumbrances, and that Seller has good right to sell the same as aforesaid and
will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands of all persons whomsoever.
Dated this _____ day of November __, 1996.
Seller: ,
a
By:
Its:
Page 249 of 401
<PAGE>
Schedule A to
Warranty Bill of Sale
Page 250 of 401
<PAGE>
Exhibit E
Assignment of Service Contracts,
Warranties and Guaranties
and Other Intangible Property
This Assignment of Service Contracts, Warranties and Guaranties and Other
Intangible Property ("Assignment") is made and entered into as of this _____ day
of November, 1996, by
, a
("Assignor"), to Glenborough Properties, L.P., a California limited partnership
("Assignee").
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third party
with respect to any building, building component, structure, fixture, machinery,
equipment, or material situated on, contained in any building or other
improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto; and
(c) any Intangible Property (as defined in that certain Purchase Agreement
dated as of November __, 1996 between Assignor and Assignee (or Assignee's
predecessor in interest) (the "Purchase Agreement")).
Assignor and Assignee further hereby agree and covenant as follows:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Effective as of the Effective Date, Assignee hereby assumes all of the
owner's obligations under the Service Contracts and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including, without limitation, reasonable attorneys' fees,
originating on or subsequent to the Effective Date and arising out of the
owner's obligations under the Service Contracts.
Page 251 of 401
<PAGE>
3. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with laws of the State of California. The parties recognize that, since the
Property is located in the State of Arizona, it may be necessary for the parties
to comply with certain aspects of the laws of such state in order to consummate
the transactions contemplated herein. The parties agree to comply with such
other laws to the extent necessary to consummate the transactions contemplated
herein, provided that it is the parties' intent that the provisions of this
Assignment and the Related Purchase Agreements (as defined in the Purchase
Agreement) be applied to the transactions contemplated in this Assignment and
the Related Purchase Agreements in a manner which results in the greatest
consistency possible. For this reason, and because a large number of properties
described in the Related Purchase Agreements are located in the State of
California, the parties have agreed that California law shall govern with
respect to the transactions contemplated herein to the greatest extent possible.
Page 252 of 401
<PAGE>
6. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Dated:
Page 253 of 401
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 254 of 401
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 255 of 401
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 256 of 401
<PAGE>
Exhibit F
Certificate of Transferor
other than an Individual
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located in
, that withholding of tax is not
required upon the disposition of such U.S. real property interest by
, a
("Transferor"), the undersigned hereby certifies
the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
; and
3. Transferor's office address is
.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: November ____, 1996.
[Individual signature line]
on behalf of
,
a
Page 257 of 401
<PAGE>
Exhibit G
Form of Tenant's Estoppel Certificate
Glenborough Properties, L.P. ("Purchaser")
400 S. El Camino Real
San Mateo, California 94402-1708
RE: Lease Dated , and amended
(the "Lease"), by and between
, as lessor ("Lessor"), and
, as lessee ("Lessee"), with respect to certain
premises (the "Leased Premises") located at
(the "Property"). The
Leased Premises are comprised of square feet.
Ladies and Gentlemen:
The undersigned hereby acknowledges that Purchaser is entering into an
agreement to purchase the Property. The undersigned further acknowledges the
right of Lessor and Purchaser to rely upon the statements and representations of
the undersigned contained in this Certificate and further acknowledges that
Purchaser will be purchasing the Property in material reliance on this
Certificate.
Given the foregoing, the undersigned Lessee hereby certifies and represents
unto Purchaser, its successors and assigns, with respect to the above-described
Lease, a true and correct copy of which is attached as Exhibit A hereto, as
follows:
1. Lease Effective. The Lease has been duly executed and delivered by
Lessee and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Lessee thereunder are valid and binding and
there have been no further amendments, modifications or additions to the Lease,
written oral;
2. No Default. To the best of Lessee's knowledge, as of the date hereof:
(i) there exists no breach, default, or event or condition which, with the
giving of notice or the passage of time or both, would constitute a breach or
default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
3. Entire Agreement. The Lease constitutes the entire agreement between
Lessor and Lessee with respect to the Property and Lessee claims no rights with
respect to the Property other than as set forth in the Lease; and
4. No Prepaid Rent. No deposits or prepayments of rent have been made in
connection with the Lease, except as follows: (if none, state "none")
.
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Lessee:
By:
Its:
Dated:
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Exhibit H
Rent Roll
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Exhibit I
Notice To Tenants
(Date)
(Name)
(Street Address)
(City, State, Zip Code)
Re: (Name of Property)
Dear (Tenant, or address individually to each Tenant):
Glenborough Properties, L.P., a California limited partnership has acquired
the subject property. We are pleased to advise you that, as of November ___,
1996, Glenborough Corporation has been engaged to lease and manage the property.
Please send your monthly rent and all future remittances to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
We value your tenancy and urge you to direct any questions regarding your
lease or this letter to (Name of Property Manager) at (Phone Number for Property
Manager or Building Property Manager) for (Name of Property).
Very truly yours,
Carlsberg Management Company,
a California corporation,
Property Manager for (Seller)
By: ________________________
Its: ________________________
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Purchase Agreement
by and among
GDA Investments, Ltd.,
a Florida limited partnership,
Sonora Plaza, Ltd.,
a California limited partnership,
and
Glenborough Properties, L.P.,
a California limited partnership,
dated as of November __, 1996
for
Sonora Plaza
Sonora, California
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List Of Exhibits
Exhibit A [Intentionally Omitted]
Exhibit B Grant Deed
Exhibit C Assignment of Leases
Exhibit D Warranty Bill Of Sale
Exhibit E Assignment of Service Contracts, Warranties and Guaranties
and Other Intangible Property
Exhibit F Certificate of Transferor other than an Individual (FIRPTA
Affidavit)
Exhibit G Form of Tenant's Estoppel Certificate
Exhibit H Rent Roll
Exhibit I Notice To Tenants
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List Of Schedules
Schedule 1(a) Real Property
Schedule 2(a)(i) Loan
Schedule 3(c) Permitted Exceptions
Schedule 3(h) Related Agreements
Schedule 7(g) Defects
Schedule 7(h) Violations
Schedule 7(i) Proceedings
Schedule 7(l) Litigation
Schedule 7(m) Outstanding Contracts
Schedule 7(p) Personal Property
Schedule 7(r) Lease Exceptions
Schedule 7(x) Brokerage Fees
Schedule 7(z) Contracts
Schedule 7(aa) Loan Documents
Schedule 7(bb) Environmental Reports
Schedule 12(c) Tenant Improvements Costs and Leasing
Commissions -- Seller's Responsibility
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Purchase Agreement
This Purchase Agreement is dated as of November __, 1996, by and among GDA
Investments, Ltd., a Florida limited partnership ("GDA"), and Sonora Plaza,
Ltd., a California limited partnership ("Sonora," and together with GDA,
collectively, the "Seller"), and Glenborough Properties, L.P., a California
limited partnership ("Buyer").
Recitals
A. Buyer is a California limited partnership whose general partner is
Glenborough Realty Trust Incorporated, a Maryland corporation, whose stock is
publicly traded on the New York Stock Exchange.
B. Buyer desires to acquire the Property (as defined in Subparagraph 1(a)
below) from Seller and Seller desires to sell the Property to Buyer, upon the
terms and subject to the conditions set forth in this Agreement.
Now, Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Property
Subject to and upon the terms and conditions hereinafter set forth and the
representations and warranties contained herein, Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller, subject to the terms, covenants and
conditions set forth herein, (a) the real property described in Schedule 1(a)
attached hereto, together with any and all buildings and other improvements
thereon and, to the extent owned by Seller, or held directly for the benefit of
Seller, any interest therein, and any and all rights, privileges and easements
appurtenant thereto (the "Real Property"), (b) all of Seller's right, title and
interest in and to the Leases listed in Exhibit H attached hereto (the
"Leases"), and any and all guarantees of the Leases (the "Lease Rights"), and
(c) all of Seller's right, title and interest in and to the personal property
and any interest therein owned by Seller or held directly for the benefit of
Seller, if any, located on the Real Property and used in the operation or
maintenance of the Real Property (the "Personal Property"), (d) all of Seller's
right, title and interest, if any, in and to the following to the extent
assignable: the Contracts listed in Schedule 7(z), those certain capital reserve
account and tax impound accounts which are held by Morgan Stanley Mortgage
Capital, Inc., a Delaware corporation, in connection with the Loan (as described
in Subparagraph 2(a)(i) below) secured by the Property (collectively, the "Loan
Reserve"), all general intangibles relating to design, development, operation,
management and use of the Real Property, all certificates of occupancy, zoning
variances, building, use or other permits, approvals,
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authorizations, licenses and consents obtained from any governmental authority
in connection with the development, use, operation or management of the Real
Property, all soil tests, engineering reports, appraisals, architectural
drawings, plans and specifications relating to all or any portion of the Real
Property, and all payment and performance bonds or warranties or guarantees
relating to the Real Property; and (e) all of Seller's right, title and interest
in and to any and all of the following to the extent assignable: trademarks,
service marks, logos, other source and business identifiers, trademark
registration and applications for registration used at or relating to the Real
Property and any written agreement granting to Seller any right to use any
trademark or trademark registration at or in connection with the Real Property
(such property, together with the property described in clause (d) of this
Paragraph 1, is herein called the "Intangible Property"). The term "Property"
means all of the Real Property, the Lease Rights, the Personal Property and the
Intangible Property.
2. Purchase Price.
(a)......... Buyer and Seller agree that the purchase price of the Property
shall be Nine Million Five Hundred Thousand Dollars ($9,500,000) (the "Purchase
Price"), which shall comprise the following components:
(i)... At the closing of the purchase and sale contemplated herein
(the "Closing"), Buyer shall take title to the Property subject to the mortgage
or deed of trust (as approved by Buyer) securing the loan (the "Loan") described
on Schedule 2(a)(i) attached hereto. At the Closing, Buyer shall receive a
credit against the Purchase Price in an amount equal to the amount that would be
required to repay the Loan in full (excluding prepayment penalties and accrued
interest) as of the Closing Date (as defined in Subparagraph 4(b) below), which
is presently estimated to be Five Million Forty-Three Thousand Four Hundred
Ninety-Five and 03/100 Dollars ($5,043,495.03); and
(ii).. Immediately available funds ("Cash") to be paid to Seller, in
the amount equal to the Purchase Price less the amount of the Loan assumed as of
the Closing Date.
(b)......... Seller acknowledges and agrees that Buyer may be required to
withhold a portion of the Purchase Price pursuant to Section 1445 of the Code
(as defined in Subparagraph 4(c)(x) below) or Sections 18805 and 26131 of the
California Revenue and Taxation Code or similar laws or regulations of other
states. Any amount properly so withheld by Buyer shall be deemed to have been
paid by Buyer as part of the Purchase Price, and Seller's obligation to
consummate the transactions contemplated herein shall not be excused, reduced,
terminated or otherwise affected thereby.
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3. Conditions to Closing
(a)......... The following conditions are precedent to Buyer's obligation
to purchase the Property (the "Buyer's Conditions Precedent"):
(i)... The representations and warranties of Seller contained herein
shall be true and correct as of the Closing Date as though made at and as of the
Closing Date, and Seller's covenants under this Agreement shall be satisfied as
of the Closing Date (to the extent such covenants are to be satisfied as of the
Closing Date).
(ii).. At the Closing, Seller shall convey to Buyer (A) fee simple
title to the Property identified in Schedule 1(a) by grant deed in the form of
Exhibit B attached hereto, (B) title to the Lease Rights pursuant to an
assignment and assumption of tenant leases in the form of Exhibit C attached
hereto (the "Assignment of Leases"), (C) title to the Personal Property pursuant
to a bill of sale in the form of Exhibit D attached hereto and (D) an assignment
and assumption of service contracts, guaranties and warranties and other
intangible property in the form of Exhibit E attached hereto (the "Assignment of
Service Contracts").
(iii). Lawyer's Title Insurance Corporation (the "Title Company")
shall be committed to issue at Closing for its extended coverage American Land
Title Association Policy of Owner's Title Insurance (Form B, rev. 10/17/70) in
the amount of the Purchase Price, showing title to the Real Property vested in
Buyer, subject only to exceptions described on Schedule 3(c) attached hereto
(the "Permitted Exceptions"). The foregoing title policy, together with
endorsements covering subdivision map act, survey, access, contiguity, no
violations of covenants, conditions or restrictions and such other endorsements
as Buyer has requested prior to the Effective Date (as defined in
Subparagraph 14(l) below), is referred to herein as the "Title Policy." On or
before the Closing, Seller shall cause the Title Company to deliver to Buyer a
certification that, in issuing the Title Policy, the Title Company has not
relied on any representations or indemnities of Seller or any of its affiliates
(except as disclosed in such certification). In addition, as a condition to
Buyer's obligation to close, Buyer shall be satisfied that, as of the Closing,
there is no outstanding financing statement filed in accordance with the Uniform
Commercial Code of any applicable jurisdiction with respect to the Property or
Seller except for any financing statements approved by Buyer prior to the
Effective Date or relating to the Loan.
(iv).. Seller obtaining and delivering to Buyer the tenant estoppel
certificates required under Paragraph 6 below.
(v)... The physical condition of the Real Property shall be
substantially the same on the Closing Date as on the date hereof, reasonable
wear and tear and loss by casualty excepted (subject to the provisions of
Paragraph 10 below).
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(vi).. All of the property management and leasing brokerage agreements
affecting the Property (whether between Seller, Carlsberg Management Company
("CMC") or any other party and such property managers and leasing agents) shall
be terminated as of the Closing Date at no cost or expense to Seller.
The Conditions Precedent contained in Subparagraphs 3(a)(i)
through 3(a)(vi) are intended solely for the benefit of Buyer. If any of the
Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its
sole discretion either to waive the Buyer's Condition Precedent and proceed with
the purchase or terminate this Agreement by written notice to Seller and the
Title Company.
(b)...... The simultaneous closing of all of the transactions contemplated
by the agreements described on Schedule 3(h) attached hereto (the "Related
Agreements") with the Closing of this transaction is a condition precedent (the
"Mutual Condition Precedent") to both Seller's and Buyer's obligations under
this Agreement. The Mutual Condition Precedent is for the benefit of both Seller
and Buyer. If the Mutual Condition Precedent is not satisfied, each party shall
have the right in its sole discretion, either to waive the Mutual Condition
Precedent and proceed with the transaction so long as both of them have waived
this condition, or to terminate this Agreement by written notice to the other
party and Title Company.
(c)...... In the event that any party having the right of cancellation
under this Paragraph 3 does not inform the other party and Title Company in
writing of its disapproval of any condition precedent (the "Condition
Precedent") for such party's benefit provided in this Paragraph 3 prior to the
Closing, such Condition Precedent shall be deemed to have been satisfied,
approved or waived, effective as of the Closing; provided that a party shall not
be deemed to have waived any claim for breach of any representation or warranty
by the other party unless such party has actual knowledge of such breach prior
to Closing. For purposes of this Subparagraph 3(c), "actual knowledge" of Buyer
shall be deemed to mean the present actual knowledge of Mr. Andrew Batinovich,
Mr. Steve Saul or Mr. Frank E. Austin, without any duty of investigation or
inquiry on their part, and "actual knowledge" of Seller shall be deemed to mean
the present actual knowledge of Mr. William G. Geary, Jr., Ms. Janet DaVall and
Mr. Ron Lema, without any duty of investigation or inquiry on their part. Upon
termination of this Agreement and the escrow for failure of a Condition
Precedent, (i) Buyer shall deliver to Seller copies of any and all soils,
geologic, engineering and environmental reports or studies concerning the
Property prepared by or on behalf of Seller and (ii) Seller shall bear the cost
of any title and escrow cancellation fees.
4. Closing and Escrow
(a)......... Upon mutual execution of this Agreement, the parties hereto
shall deposit an executed counterpart of this Agreement with Title Company and
this Agreement shall serve as instructions to Title Company as the escrow holder
for consummation of the
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purchase and sale contemplated hereby. Seller and Buyer agree to execute such
additional escrow instructions as may be appropriate to enable Title Company to
comply with the terms of this Agreement; provided, however, that in the event of
any conflict between the provisions of this Agreement and any supplementary
escrow instructions, the terms of this Agreement shall control unless a contrary
intent is expressly indicated in such supplementary instructions.
(b)......... The parties shall endeavor to conduct the Closing through an
escrow closing pursuant to Subparagraph 4(a) above. If, however, an escrow
Closing is not practical, the Closing hereunder shall be held and delivery of
all items to be made at the Closing shall be made at the offices of Morrison &
Foerster llp, 345 California Street, San Francisco, California 94104, on or
before November 15, 1996 (the "Closing Date"). In the event the Closing does not
occur on or before the Closing Date, Title Company shall, unless it is notified
by both parties to the contrary within five (5) days after the Closing Date,
return to the depositor thereof items which were deposited hereunder. Any such
return shall not, however, relieve either party of any liability it may have for
its wrongful failure to close.
(c)......... At or before the Closing, Seller shall deliver or cause to be
delivered to Buyer the following:
(i)... [Intentionally omitted];
(ii).. the duly executed and acknowledged Deed;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Bill of Sale;
(v)... a duly executed Assignment of Service Contracts;
(vi).. originals of the Leases;
(vii). duly executed tenant estoppel certificates as required pursuant
to Subparagraph 3(a)(iv) above;
(viii) originals of the Contracts not previously delivered to Buyer;
(ix).. originals of any and all building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements that are in the possession or control of Seller and/or an affiliate
of Seller that have not been previously delivered to Buyer;
(x)... a FIRPTA affidavit (in the form attached as Exhibit F) pursuant
to Section 1445(b)(2) of the Internal Revenue Code of 1986 (the "Code"), and on
which
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Buyer is entitled to rely, that Seller is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code;
(xi).. a California Form 590 from Buyer certifying that Seller has a
permanent place of business in California or is qualified to do business in
California;
(xii). such resolutions, authorizations, bylaws or other corporate
and/or partnership documents or agreements relating to Seller as shall be
reasonably required by Buyer;
(xiii) a signed notice in the form of Exhibit I attached hereto for
each of the Tenants (as defined in Paragraph 6 below);
(xiv). a closing statement in form and content satisfactory to Buyer
and Seller; and
(xv).. any other instruments, records or correspondence called for
hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
(d)......... At or before the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i)... a closing statement in form and content satisfactory to Buyer
and Seller;
(ii).. a duly executed Registration Rights Agreement;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Assignment of Service Contracts; and
(v)... the Cash.
(e)......... Seller and Buyer shall each deposit such other instruments as
are reasonably required by Title Company or otherwise required to close the
escrow and consummate the transactions described herein in accordance with the
terms hereof. Seller and Buyer hereby designate Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code and the
regulations promulgated thereunder.
(f)......... With respect to the Property the following adjustments shall
be made, and the following procedures shall be followed:
(i)... As nearly as practicable prior to the Closing, Buyer and Seller
shall prepare a statement for the Property ("Proration Statement") showing
prorations for
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the items set forth below, calculated as of 12:01 a.m. on the Closing Date, on
the basis of a 365-day year:
(A) rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, common area expenses,
marketing fund charges, operating expenses, maintenance escalation rents or
charges, cost-of-living increases or other charges of a similar nature, if any,
and any additional charges and expenses payable under tenant Leases (whether
such collection occurs prior to, on or after the Closing Date);
(B) real property taxes and assessments;
(C) the current installments (only) of any improvement bonds
or assessments which are a lien on the Property or which are pending and may
become a lien on the Property;
(D) water, sewer and utility charges;
(E) amounts payable under any Contract that will be continued
after the Closing;
(F) permits, licenses and/or inspection fees (calculated on
the basis of the period covered);
(G) interest on the Loan; and
(H) any other expenses normal to the operation and
maintenance of the Property.
(ii).. Buyer shall use commercially reasonable efforts consistent with
prudent business practices to collect rents or other amounts payable under the
Leases that were delinquent as of the Closing Date and that relate to a period
prior to the Closing. To the extent such delinquent rents and other amounts are
collected by Buyer, Buyer may deduct from the amount owed to Seller an amount
equal to the out-of-pocket third-party collection costs actually incurred by
Buyer in collecting such rents and other amounts due to Seller. Any rent or
other payment (including percentage rent) collected after the Closing from any
tenant which owed rent that was delinquent as of the Closing Date and that
relate to a period prior to the Closing shall be applied first, to satisfy such
tenant's rent obligations first becoming due and payable in the month in which
such rent was paid (or within five (5) days after the date on which such rent
was paid), and then to satisfy such delinquent rent obligations (including those
that relate to the period after the Closing Date) in the inverse order of
maturity. After the Closing, Buyer shall have the exclusive right to enforce
claims for rents and all other obligations due and owing under the Leases and
terminate any Leases as Buyer, in its sole discretion, deems appropriate.
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(iii). At the Closing, Seller shall deliver to Buyer all security
deposits, letters of credit and other collateral given to Seller or any of its
affiliates or predecessor-in-interest pursuant to any of the Leases, less any
portions thereof applied in accordance with the respective Lease (together with
a statement regarding such applications).
(iv).. If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
operating expenses, maintenance escalation rents or charges, cost-of-living
increases or other charges of a similar nature ("Additional Rents") and such
Additional Rents are not finally adjusted between the landlord and tenant under
any Lease until after the Closing Date, then Buyer shall submit to Seller within
sixty (60) days after such Additional Rents are finally adjusted with any
tenant, a supplemental statement (the "Supplemental Statement") to the extent
such Additional Rents have been finally adjusted between Buyer and such tenant,
containing a calculation of the prorations of such Additional Rents, prepared
based on the principles set forth in this Subparagraph 4(f) , provided that in
making such adjustment, the parties shall exclude any Additional Rents arising
from increased real property taxes for the Property to the extent such increase
is the result of Buyer's purchase of the Property. To the extent the
Supplemental Statement indicates that one party is entitled to any amounts under
this Subparagraph 4(f)(iv), the other party shall pay such sum to such party
within thirty (30) days after the delivery of the Supplemental Statement.
(v)... Buyer shall pay the following costs of closing this
Transaction: (A) the costs of the Buyer's legal counsel, accounting services and
engineering and environmental analyses, (B) fifty percent (50%) of the escrow
charges, fees for recording the Deed and the premium for the Title Policy and
(C) the cost of preparing three (3) years' audited operating statements for the
Property to be completed prior to the Closing as required under federal
securities laws. All other costs associated with the transaction, (including,
but not limited to, any transfer taxes, all survey costs, and fifty percent
(50%) of the escrow charges, fees for recording the Deed and the premium for the
Title Policy) shall be charged against Seller and, provided the Closing occurs,
will be deducted from the Purchase Price.
(vi).. All of Seller's right, title and interest in and to the Loan
Reserve shall be assigned to Buyer at Closing, and at the Closing Buyer shall
pay to Seller through escrow a sum in cash equal to the balance of the Loan
Reserve as of the Closing Date.
(vii). Notwithstanding anything to the contrary contained in this
Subparagraph 4(f), if the real property taxes and assessments payable for any
period prior to Closing are determined to be more than the amounts prorated
herein (in the case of the current year) or paid by Seller (in the case of any
prior year), due to a reassessment of the value of the Property or otherwise,
Seller and Buyer shall promptly adjust the proration of such real property taxes
and assessments after the determination of such amounts, and Seller shall pay to
Buyer any increase in the
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amount of such real property taxes and assessment applicable to any period prior
to Closing.
(viii) The obligations of Seller and Buyer under this
Subparagraph 4(f) shall survive the Closing.
5. Loan
(a)......... Buyer may elect to attempt, and Seller shall reasonably
cooperate with Buyer in such attempt, to obtain the consent of the lender of the
Loan to the transfer of the Property to Buyer, which consent shall confirm for
the benefit of Buyer and Seller, the following items with respect to the Loan:
the identification of the applicable Loan Documents, the interest rate, the date
through which interest is paid, the principal amount outstanding, the maturity
date, the monthly payment, the absence of any default relating to the payment of
money to the lender, and to such lender's knowledge the absence of any other
defaults (the "Lender Consent"); provided, however, that no party shall be
obligated to pay any consideration to a lender to obtain such consent except as
provided in this Subparagraph 5(a). Each party hereto shall promptly keep the
other party informed of its discussions with the lender in connection with the
matters described in this Subparagraph 5(a). Notwithstanding anything to the
contrary in this Subparagraph 5(a), Buyer may elect by written notice to Seller,
to pay the entire outstanding balance of the Loan on or prior to the date which
is one hundred eighty (180) days after the Closing Date (the "Loan Payoff
Date"), in which case Buyer shall make such payments as stated in such notice at
or before the Loan Payoff Date, together with any consideration in the nature of
a fee or expense reimbursement (i.e., not a payment which reduces principal)
which is required under the terms of a provision that presently exists in the
applicable Loan Documents to obtain the Lender Consent, including any and all
costs and expenses of the lender's counsel or representatives in connection
therewith. If Buyer pays the entire outstanding balance of the Loan on or prior
to the Loan Payoff Date, Seller shall pay any prepayment penalties applicable to
the Loan payoff.
(b)......... In addition, Seller hereby grants Buyer the right to
renegotiate the Loan and to negotiate new loans or loans to replace the existing
Loan; provided that (i) Seller incurs no cost or liability in connection
therewith (except for any applicable prepayment penalties), (ii) if Buyer does
not pay off the Loan on or before the Loan Payoff Date, Buyer shall use
commercially reasonable efforts (but at no additional cost to Buyer) to cause
the lender of the Loan to release Seller from all liability under the Loan and
the Loan Documents, and (iii) such new loans and modifications to the Loan are
not effective until the Closing. The parties shall execute all documents
necessary or desirable to evidence or effectuate the modification of the Loan as
provided in this Paragraph 5.
(c)......... The provisions of this Paragraph 5 shall survive the Closing.
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6. Estoppel Certificates
Seller shall use all reasonable efforts to obtain an estoppel certificate
from each tenant of the Property (each, a "Tenant"), dated no earlier than
thirty (30) days prior to the Closing Date, substantially in the form of
Exhibit H attached hereto, conforming to the most recent rent roll approved by
Buyer and alleging no defaults, offsets, or claims against the lessor (the
"Estoppel Certificate"). It shall be a condition to Buyer's obligation to close
the sale and purchase of the Property that on or before the Closing:
(a)......... Seller delivers to Buyer an Estoppel Certificate from Tenants
occupying seventy-five percent (75%) of the rentable area of the Property,
including all tenants occupying more than ten percent (10%) of the rentable area
of the Property (collectively, the "Required Tenants"), and, with respect to all
other tenants (collectively, the "Non-Required Tenants"), there shall exist no
dispute with Seller, which dispute is material to the use, value or economics of
the Property, as determined on an individual basis by Buyer in good faith in
Buyer's sole discretion (a "Material Non-Required Tenant Dispute") (and Buyer
shall be afforded the opportunity to inquire of any Non-Required Tenant which
does not provide an Estoppel Certificate as to whether any such dispute exists);
or
(b)......... To the extent that Seller is unable to obtain Estoppel
Certificates, or any items required to be therein, from the Required Tenants, or
to the extent that there is any Material Non-Required Tenant Dispute, Seller
shall deliver to Buyer and Buyer may, but shall not be obligated to, accept, on
the Closing Date a certification in which Seller warrants and represents to
Buyer, with respect to such missing Estoppel Certificates, or any missing items
required to be included therein, each item set forth in the Estoppel Certificate
attached as Exhibit H for the missing Estoppel Certificates and/or indemnifies
Buyer as to any such Material Non-Required Tenant Dispute.
(c)......... If the conditions contained in Subparagraphs 6(a) and (b)
above are not satisfied, then Buyer may, by written notice given to Seller
before the Closing, elect to waive such conditions or terminate this Agreement.
7. Seller's Representations and Warranties
Seller hereby represents and warrants to Buyer as follows:
(a)......... (i) GDA is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Florida and is
registered to do business in the State of California, and (ii) Sonora is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of California.
(b)......... Each of GDA and Sonora has full partnership power and
authority to execute and deliver this Agreement and to perform all of the terms
and conditions
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hereof to be performed by Seller and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Seller and is the
legal, valid and binding obligation of Seller and is enforceable against Seller
in accordance with its terms, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general equitable principles
(whether or not such enforceability is considered in a proceeding at law or in
equity). Seller is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar proceeding.
(c)......... Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of either GDA or Seller's partnership
agreement or any statute, regulation or rule, or, to Seller's knowledge, any
injunction, judgment, order, decree, ruling, charge or other restrictions of any
government, governmental agency or court to which Seller is subject, and which
violation or conflict would have a material adverse effect on the ownership and
operation of the Property, or (ii) result in any material breach or the
termination of any lease, agreement or other instrument or obligation to which
Seller is a party or by which any of the Property may be subject, or cause a
lien or other encumbrance to attach to any of the Property, other than any
due-on-sale provisions in the Loan Documents. Seller is not a party to any
contract or subject to any other legal restriction that would prevent
fulfillment by Seller of all of the terms and conditions of this Agreement or
compliance with any of the obligations under it, other than any due-on-sale
provisions in the Loan Documents.
(d)......... All material consents required from any governmental authority
or third party in connection with the execution and delivery of this Agreement
by Seller or the consummation by Seller of the transactions contemplated hereby
have been made or obtained or shall have been made or obtained by the Closing
Date. Complete and correct copies of all such consents shall be delivered to
Buyer.
(e)......... Seller has fee simple title to the Real Property, subject only
to the Permitted Exceptions.
(f)......... There are no adverse or other parties in possession of the
Property, or any part thereof, except Seller and tenants under the Leases. No
party has been granted any license, lease, or other right relating to the use or
possession of the Property or any part thereof, except tenants under the Leases.
(g)......... Except as set forth on Schedule 7(g), to Seller's knowledge,
there are no material defects with respect to the Real Property, including,
without limitation, no material defects in the structural and load-bearing
components of the Property, the roof(s), the parking lot(s), the plumbing,
heating, air conditioning and electrical and life safety systems, and all such
items are in good operating condition and repair.
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(h)......... Except as set forth on Schedule 7(h), to Seller's knowledge,
the use and operation of the Property is in compliance in all material respects
with all applicable restrictive covenants, building codes, environmental, zoning
and land use laws, and other applicable local, state and federal laws and
regulations (collectively, "Laws").
(i)......... Except as set forth on Schedule 7(i), to Seller's knowledge,
there are no condemnation, environmental, zoning or other land-use regulation
proceedings that have been instituted, and Seller has not received any notice of
any such proceeding that is planned to be instituted, which would detrimentally
and materially affect the use, operation or value of any of the Property, nor
has Seller received notice of any special assessment proceedings affecting any
of the Property. Seller shall notify Buyer promptly of any such proceedings of
which Seller becomes aware.
(j)......... All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required, to Seller's knowledge, by law, or
by the normal use and operation of the Property are installed to the property
lines of the Property, and are connected pursuant to valid permits, and are
adequate to service the Property as presently operated and, to Seller's
knowledge, to permit compliance with all Laws.
(k)......... Seller has obtained all licenses, permits, variances,
approvals, authorizations, easements and rights of way, including proof of
dedication, required from all governmental authorities having jurisdiction over
the Property or from private parties for the present use, operation and
occupancy of the Property and to insure vehicular and pedestrian ingress to and
egress from the Property.
(l)......... Except as set forth on Schedule 7(l), there is no litigation
pending or, to Seller's knowledge, threatened, against Seller that arises out of
the ownership of the Property or that might materially and detrimentally affect
the value or the use or operation of any of the Property for its intended
purpose or the ability of Seller to perform its obligations under this
Agreement. Seller shall notify Buyer promptly of any such litigation of which
Seller becomes aware.
(m)......... Except as set forth on Schedule 7(m), at the time of Closing
(i) there will be no outstanding written or oral contracts made by Seller for
any improvements to the Property which have not been fully paid for and Seller
shall cause to be discharged all mechanics' and materialmen's liens arising from
any labor or materials furnished to the Property prior to the time of Closing,
and (ii) Seller shall have completed all punch-list items with respect to any
tenant improvements constructed by Seller as landlord under the Leases.
(n)......... Seller knows of no facts nor has Seller failed to disclose any
fact which would prevent Buyer from using and operating the Property after
Closing in the manner in which the Property is currently operated.
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(o)......... Other than the rights of Tenants, as tenants only, under the
Leases, Seller has not entered into any purchase contracts, options or other
agreements of any kind, written or oral, recorded or unrecorded, whereby any
person or entity other than Buyer will have acquired or will have any basis to
assert any right, title or interest, or right to possession, use, enjoyment or
proceeds of all or any portion of the Property. None of the Leases contain any
rights to purchase, rights of first offer to purchase, or first refusal to
purchase the Property.
(p)......... To Seller's knowledge, Schedule 7(p) lists all of the tangible
Personal Property.
(q)......... Attached hereto as Exhibit J is a list (the "Rent Roll") of
each of the Leases as of the date of this Agreement. Said Rent Roll is complete
in all material respects and all information therein is accurate in all material
respects as of its date, and there are no Leases or tenancies with respect to
the Property or any part thereof except as therein set forth. Except as
disclosed on the Rent Roll, no rental under any Lease has been collected in
advance of the current month. The Rent Roll shall be updated at the Closing to
reflect any changes which occur after the Effective Date. Seller is the owner of
the entire lessor's interest in and to each of the Leases and none of the Leases
or the rentals or other sums payable thereunder has been assigned or otherwise
encumbered, except in connection with the Loan.
(r)......... To Seller's knowledge, each of the Leases, including, without
limitation, any guaranties thereof, is an enforceable Lease and is in full force
and effect according to the terms set forth therein, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles. Except as specifically provided on Schedule 7(r)
attached hereto or on the Rent Roll, (i) no Tenant under any of the Leases is
greater than fifteen (15) days delinquent in the payment of its rental and other
sums due, (ii) no Tenant has abandoned or otherwise vacated the Property in
violation of any Lease, (iii) to Seller's knowledge, no Tenant or guarantor has
filed a voluntary petition in bankruptcy, insolvency or similar proceedings, has
been the subject of an involuntary bankruptcy petition, or otherwise been
adjudged bankrupt or insolvent in any proceedings filed against such tenant or
guarantor; (iv) to Seller's knowledge, no trustee or receiver has been appointed
for any Tenant; (v) no written notice has been provided to any tenant notifying
the Tenant that it is in default under the Lease which default has not been
remedied by such Tenant; and (vi) no Tenant, to Seller's knowledge, is otherwise
in default under any of the Leases. Except as otherwise provided in the Lease,
to Seller's knowledge, each Tenant is legally required to pay all sums and
perform all other material obligations set forth in its respective Lease,
without concessions, abatements, offsets or other basis for relief or
adjustment, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles.
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<PAGE>
(s)......... To Seller's knowledge, no material event of default on behalf
of Seller, as lessor, exists under any Lease and no event or condition exists
that, upon the giving of notice or lapse of time, or both, would constitute a
default by Seller under any Lease. Seller has not received any notice from any
Tenant of any offsets, defenses or claims available against rent or other
charges payable by such Tenant or other performance or obligations otherwise due
from it under any Lease, except as specifically set forth in the Rent Roll
and/or the Estoppel Certificates.
(t)......... No guarantor of any Lease has been released or discharged,
voluntarily or involuntarily, from any obligation under or in connection with
any Lease or any transaction related thereto.
(u)......... Seller has not received from any Tenant or any other party
written notice of any claim (other than for customary refund at the expiration
of a Lease) to all or any part of any security deposit, except as set forth on
the Rent Roll and/or the Estoppel Certificates. The Rent Roll sets forth all
security deposits held by Seller.
(v)......... Except as shown on the Rent Roll, Seller has paid in full any
of landlord's leasing costs or obligations, including, without limitation, any
costs incurred by Seller in connection with any tenant improvements.
(w)......... No Tenant has indicated to Seller either orally or in writing
its present intent to terminate its Leases prior to expiration of the term of
such Lease except as shown on the Estoppel Certificates.
(x)......... Except as shown on Schedule 7(x), (A) no brokerage or similar
fee is due or unpaid by Seller with respect to the Leases, and (B) no brokerage
or similar fee shall be due or payable by Seller after the Closing in connection
with the Leases.
(y)......... All permits, governmental licenses, registrations and
approvals with respect to the Property which are necessary or required by law or
the rules and regulations of any governmental entity having jurisdiction over
the Property or its owner to carry on business as presently conducted
(collectively, the "Licenses"), the lack of which, individually or in the
aggregate, would reasonably be likely to have a material adverse effect on the
value, use or operation of the Property, are in full force and effect.
(z)......... Schedule 7(z) attached hereto sets forth a list of all service
contracts, construction contracts for work in progress, any warranties
thereunder, management contracts, unrecorded reciprocal easement agreements,
operating agreements, maintenance agreements, franchise agreements and other
similar agreements relating to the Property, (such contracts and agreements
together with any recorded reciprocal easements agreements are hereinafter
referred to, collectively, as the "Contracts"). With respect to each of the
Contracts, (i) the Contract is legal, valid, binding, and, to Seller's
knowledge, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, reorganization, fraudulent
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conveyance, insolvency or similar laws of general application relating to or
affecting the enforcement of creditor's rights and subject to general principles
of equity, (ii) to Seller's knowledge, except for a Contract that is terminable
upon thirty (30) day written notice, the Contract will not be adversely affected
by the occurrence of the Closing and will be legal, valid, binding, enforceable
in accordance with its terms and in full force and effect on identical terms
following the consummation of the sale of the Property, (iii) Seller is not,
and, to Seller's knowledge, no other party to the Contract is, in breach or
default under any obligation thereunder or any provisions thereof which would
have material adverse affect upon Seller, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default, or permit any
termination under the Contract which would have a material adverse affect upon
Seller, (iv) no event has occurred under the Contract which would permit the
creation of any lien upon, or the restriction of the right to the use of, the
Property and (v) no party to any Contract has repudiated any material provision
of the Contract.
(aa)........ Schedule 7(aa) attached hereto sets forth a list of all notes
or other evidence of indebtedness, loan agreements, mortgages, guaranty
agreements, and any and all other documents entered into by Seller and all
amendments, modifications and supplements thereto (collectively the "Loan
Documents") in connection with the Loan and all matters in connection with the
Loan set forth therein and certain factual information with respect to the Loan.
With respect to each of the Loan Documents, (i) the Loan Document is legal,
valid, binding and, to Seller's knowledge, enforceable in accordance with its
terms and in full force and effect, except as may be limited by bankruptcy,
reorganization, fraudulent conveyance, insolvency or similar laws of general
application relating to or affecting the enforcement of creditor's rights and
subject to general principles of equity, (ii) Seller is not, and to Seller's
knowledge, no other party to the Loan Document is, in breach or default under
any obligation thereunder or any provisions thereof which would have material
adverse effect upon Seller, and no event has occurred which, with notice or
lapse of time, would constitute a breach or default, or permit any termination,
modification or acceleration under the Loan Document which would have a material
adverse affect upon Seller other than the sale of the Property contemplated
herein, (iii) to Seller's knowledge, no event has occurred under the Loan
Document which would permit the creation of any lien upon, or the restriction of
the right to the use of, the Property and (v) no party to the Loan Document has
repudiated any material provision of the Loan Document.
(bb)........ Seller has delivered to Buyer all environmental reports and
investigations relating to the Property which are available to Seller. A list of
such reports and all environmental reports and investigations that have been
obtained by Buyer relating to the Property is attached hereto as Schedule 7(bb)
(collectively, the "Environmental Reports"). Except as set forth in the
Environmental Reports: (i) to Seller's knowledge, the Property is not, and
Seller has not received any written notice that, any real estate in the vicinity
of the Property is, in violation of any federal, state, local or administrative
agency ordinance, law, rule, regulation, order or requirement (collectively,
"Environmental Laws") relating to hazardous or toxic materials,
Page 279 of 401
<PAGE>
substances or wastes, or other materials injurious to human health or the
environment (collectively, "Hazardous Materials"); (ii) neither Seller nor, to
Seller's knowledge, any third party, has used, manufactured, generated, treated,
stored, disposed of, or released any Hazardous Material on or under the Property
or transported any Hazardous Material over the Property; (iii) neither Seller,
nor to Seller's knowledge, any third party has installed, used or removed any
storage tank on or from the Property except in full compliance with all
Environmental Laws, and to Seller's knowledge there are no storage tanks or
wells (whether existing or abandoned) located on or under the Property and to
Seller's knowledge no storage tank has been installed on, used on or removed
from the Property in violation of any Environmental Laws; (iv) to Seller's
knowledge, the Property does not consist of any building materials that contain
Hazardous Materials; and (v) no claim, action, suit or proceeding is pending or,
to Seller's knowledge, threatened against Seller, before any court or other
governmental authority or arbitration tribunal, relating to Hazardous Materials,
and there is no outstanding judgment, order, writ, injunction, decree or award
against Seller or otherwise having a material adverse effect on the Property
with respect to the same.
(cc)........ The Exhibits and Schedules attached hereto, as provided by or
on behalf of Seller, completely and correctly present in all material respects
the information required by this Agreement to be set forth therein. Seller or
CMC has delivered to Buyer true and correct copies of all of the due diligence
materials pertaining to the Property which are in the possession or control of
Seller. No representation or warranty by Seller herein and no information
disclosed in the Exhibits and Schedules hereto supplied by or on behalf of
Seller contains any untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein not materially
misleading. Seller has no knowledge of any events, transactions or other facts
which, either individually or in the aggregate might reasonably give rise to
circumstances or conditions which might have a material adverse effect on the
Property.
(dd)........ Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(ee)........ Seller has provided a copy of the representations and
warranties set forth in this Paragraph 7 to the Responsible Individuals (as
defined below), and each of the Responsible Individuals has reviewed such copy
of the representations and warranties.
Buyer and Seller hereby agree that (x) except for the representations and
warranties of Seller set forth in this Agreement and the documents to be
delivered by Seller to Buyer at Closing (the "Conveyance Documents"), Buyer is
purchasing the Property on an "AS IS" basis without relying of any
communications that may have been made by Seller or any of Seller's agents or
employees, with respect to the Property or Buyer's intended use thereof; (y) the
only representations and warranties made with respect to the Property are
contained herein and in the Conveyance
Page 280 of 401
<PAGE>
Documents; and (z) for purposes of this Paragraph 7, "Seller's knowledge" shall
be deemed to mean the present actual knowledge of Mr. William W. Geary, Jr.,
Ms. Janet DaVall or Mr. Ron Lema (the "Responsible Individuals"), which
individuals Seller represents and warrants are the employees, partners or
officers of Seller or CMC that are most responsible for the operation and
management of the Property, without any duty of investigation or inquiry on
their part. Without limiting the generality of the foregoing, but subject to
Seller's representations and warranties hereunder and in the Conveyance
Documents, Buyer shall be solely responsible for determining the condition of
the Property, including, but not limited to, the existence or risk of any
Hazardous Materials, and all aspects regarding the fees, charges and assessments
relating to the Property. For purposes of this Paragraph 7, an item shall be
deemed "material" if the reasonably estimated cost or damage incurred by Buyer
and/or the diminution of the market value of the Property as a result thereof,
individually or in the aggregate, exceeds Twenty-Five Thousand Dollars
($25,000). All representations and warranties set forth in this Paragraph 7
shall be deemed to be given as of the Effective Date and the Closing Date unless
Seller otherwise notifies Buyer in writing prior to the Closing.
8. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
(a)......... Buyer is a duly organized and validly existing limited
partnership in good standing under the laws of the State of California; this
Agreement and all documents executed by Buyer which are to be delivered to
Seller at the Closing are or at the time of Closing will be duly authorized,
executed and delivered by Buyer, and are or at the Closing will be legal, valid
and binding obligations of Buyer, and do not and at the time of Closing will not
violate any provisions of any agreement or judicial order to which Buyer is
subject.
(b)......... Buyer has made (or will make prior to the Closing Date) an
independent investigation with regard to the Property and Buyer's intended use
thereof, including, without limitation, review and/or approval of matters
disclosed pursuant to Paragraph 3(a) above.
(c)......... There is no litigation pending or, to Buyer's knowledge,
threatened, against Buyer or any basis therefor that might materially and
detrimentally affect the ability of Buyer to perform its obligations under this
Agreement. Buyer shall notify Seller promptly of any such litigation of which
Buyer becomes aware.
All representations and warranties set forth in this Paragraph 8 shall be
true as of the Effective Date and the Closing Date.
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<PAGE>
9. Indemnification
(a)......... Each party hereby agrees to indemnify the other party and
defend and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, resulting from any misrepresentation or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or Exhibit given or delivered to the other pursuant to or
in connection with this Agreement.
(b)......... Seller agrees to indemnify Buyer and its partners and defend
and hold Buyer and its partners harmless from and against any and all claims,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys' fees, asserted against, incurred or suffered by
Buyer resulting from or arising out of (i) any personal injury or property
damage occurring in, on or under the Property during Seller's ownership thereof,
from any cause whatsoever other than as a consequence of the acts or omissions
of Buyer, its agents, employees or contractors; and (ii) the failure of Seller
to perform any obligation under the Loan Documents to be performed by the
borrower prior to the Closing Date (other than the obligation to obtain the
lender's consent for the sale of the Property contemplated herein).
(c)......... Buyer agrees to indemnify Seller and its partners and defend
and hold Seller and its partners harmless from any claims, losses, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, asserted against, incurred or suffered by Seller
resulting from or arising out of (i) any personal injury or property damage
first occurring in, on or under the Property during Buyer's ownership thereof,
from any cause whatsoever other than as a consequence of the acts or omissions
of Seller, or its agents, employees or contractors, and (ii) if Buyer does not
pay off the Loan on or before the Loan Payoff Date, the failure of Seller to
perform any obligation under the Loan Documents to be performed by the borrower
after the Closing Date.
(d)......... The indemnification provisions of this Paragraph 9 shall
survive beyond the Closing, or, if the Closing does not occur pursuant to this
Agreement, beyond any termination of this Agreement.
10. Risk of Loss
(a)......... Minor Loss. Buyer shall be bound to purchase the Property for
the full Purchase Price as required by the terms hereof, without regard to the
occurrence or effect of any damage to the Property or destruction of any
improvements thereon or condemnation of any portion of the Property, provided
that: (i) the cost to repair any such damage or destruction does not exceed ten
percent (10%) of the Purchase Price or, in the case of a partial condemnation,
the value of the portion of the Property taken does not exceed ten percent (10%)
of the Purchase Price; (ii) upon the Closing, there shall be a credit against
the Purchase Price due hereunder equal to the amount of
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<PAGE>
any insurance proceeds or condemnation awards collected by Seller as a result of
any such damage or destruction or condemnation, plus the amount of any insurance
deductible; (iii) insurance or condemnation proceeds available to Seller are
sufficient to cover the cost of restoration; and (iv) the insurance carrier has
admitted liability for the payment of such costs; and (v) the Loan on the
Property in question is not accelerated or defaulted by reason of such casualty
or condemnation. If the proceeds or awards have not been collected as of the
Closing, then Seller's right, title and interest to such proceeds or awards
shall be assigned to Buyer.
(b)......... Major Loss. If the cost to repair such damage or destruction
to the Property exceeds ten percent (10%) of the Purchase Price allocated to the
Property or, in the case of condemnation, if the value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price allocated to the
Property, then Buyer may, at its option to be exercised by written notice to
Seller within twenty (20) days of Seller's notice to Buyer of the occurrence of
the damage or destruction or the commencement of condemnation proceedings,
either (i) elect to terminate this Agreement, or (ii) consummate the purchase of
the Property for the full Purchase Price as required by the terms hereof,
subject to the credits against the Purchase Price provided below. If Buyer
elects to proceed with the purchase of all of the Property, then, upon the
Closing, Buyer shall be given a credit against the Purchase Price due hereunder
equal to the amount of any insurance proceeds or condemnation awards collected
by Seller as a result of any such damage or destruction or condemnation, plus
the amount of any insurance deductible. If the proceeds or awards have not been
collected as of the Closing, then Seller's right, title and interest to such
proceeds or awards shall be assigned to Buyer. If Buyer fails to give Seller
notice within such 20-day period, then Buyer will be deemed to have elected to
terminate this Agreement. In the event of any damage or destruction of the
Property covered by this Paragraph 10(b), the Closing shall be postponed to the
date which is five (5) days after Buyer elects to consummate the Purchase of the
Property as set forth above.
11. Inspections
Prior to the Closing Date, Seller shall afford authorized representatives
of Buyer reasonable access to the Property for purposes of satisfying Buyer with
respect to the representations, warranties and covenants of Seller contained
herein and with respect to satisfaction of any Conditions Precedent to the
Closing contained herein, including, without limitation, and the taking of soil
borings from the Property; provided, however, that Buyer shall use commercially
reasonable efforts not to unreasonably disturb or interfere with the rights of
Tenants under the Leases. Buyer hereby agrees to indemnify and hold Seller
harmless from any damage or injury to persons or property caused by Buyer or its
authorized representatives during their entry and investigations prior to the
Closing. In the event this Agreement is terminated, Buyer shall restore the
Property to substantially the condition in which it was found. This
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<PAGE>
indemnity shall survive the termination of this Agreement or the Closing, as
applicable.
12. Leases And Other Agreements; Capital Improvements
(a)......... Except as otherwise contemplated or permitted by this
Agreement or approved by Buyer in writing, from the Effective Date to the
Closing Date, Seller will cause Seller to operate, maintain, repair and lease
the Property in a prudent manner, in the ordinary course, on an arm's-length
basis and consistent with their past practices (and without limiting the
foregoing, Seller shall, in the ordinary course, negotiate with prospective
tenants and enter into leases of the Property, enforce leases in all material
respects, pay all costs and expenses of the Property, including, without
limitation, debt service, real estate taxes and assessments, maintain insurance
and pay and perform obligations under the Loan Documents) and will not dispose
of or encumber any of the Property, except for dispositions of personal property
in the ordinary course of business.
(b)......... Notwithstanding the above terms of this Paragraph 12, Seller
shall not, without the prior written approval of Buyer, take any of the
following actions:
(i)... execute or terminate any lease covering in excess of 5,000
square feet in the case of any lease of industrial space, 2,000 square feet in
the case of any lease of office space, or 2,000 square feet in the case of any
lease of retail space, or modify or waive any material term thereof;
(ii).. except as otherwise required under this Agreement, enter into,
execute or terminate any operating agreement, reciprocal easement agreement,
management agreement or any lease, contract, agreement or other commitment of
any sort (including any contract for capital items or expenditures), with
respect to the Property requiring payments to or by Seller in excess of Ten
Thousand Dollars ($10,000) per annum, or the performance of services by Seller
the value of which is in excess of Ten Thousand Dollars ($10,000) per annum; or
(iii). waive or modify any material term under any Loan Document.
(c)......... In connection with any new leases or Lease modifications
affecting the Property entered into between the Effective Date and the Closing
in accordance with Subparagraph 12(b) above, the cost of tenant improvement work
and leasing commissions shall be paid solely by Buyer. Seller shall be
responsible for the cost of tenant improvement work and leasing commissions for
all Leases (and amendments thereto) entered into prior to the Effective Date
(regardless of when the same are payable), including, without limitation, those
leases described on Schedule 12(c) attached hereto, and Seller's obligations
with respect thereto shall survive the Closing.
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<PAGE>
(d)......... Between the Effective Date and the Closing, Seller shall
continue to undertake capital improvements with respect to the Property in the
ordinary course of business.
13. Cooperation
Seller and Buyer shall cooperate and do all acts as may be reasonably
required or requested by the other with regard to the fulfillment of any
Condition Precedent or the consummation of the transactions contemplated hereby
including execution of any documents, applications or permits. Seller hereby
irrevocably authorizes Buyer and its agents to make all inquiries of any third
party, including any governmental authority, as Buyer may reasonably require to
complete its due diligence.
14. Miscellaneous
(a)......... Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) hand delivery, (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or transmitted by
facsimile telecopy, or (iii) two (2) days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
required, and addressed as follows:
If to Seller: c/o Carlsberg Management Company
2800 28th Street, Suite 222
Santa Monica, California 90405
Attention: William W. Geary, Jr.
Telephone: (310) 450-9696
Fax : (310) 399-5633
With a copy to: Sandler and Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, California 90067
Attention: Ming-chu C. Rouse
Telephone: (310) 277-4411
Fax : (310) 277-5954
If to Buyer: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
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With a copy to: Morrison & Foerster llp
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Telephone: (415) 677-7000
Fax : (415) 677-7522
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein, except that Seller acknowledges that it has requested the
services of Carlsberg Management Company in connection with this transaction and
shall be responsible for paying a commission to Carlsberg Management Company in
the amount of three percent (3%) of the Purchase Price if the Closing occurs. In
the event that any broker or finder perfects a claim for a commission or
finder's fee based upon any such contact, dealings or communication, the party
through whom the broker or finder makes its claim shall be responsible for said
commission or fee and shall indemnify and hold harmless the other party from and
against all liabilities, losses, costs and expenses (including reasonable
attorneys' fees) arising in connection with such claim for a commission or
finder's fee. The provisions of this Subparagraph shall survive the Closing.
(c) Successors and Assigns. Subject to the following two (2) sentences,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns. Buyer
shall have the right, with notice to Seller (but without the necessity of
Seller's consent), to assign its right, title and interest in and to this
Agreement to one or more assignees at any time before the Closing Date;
provided, however that such assignee(s) shall assume all obligations of Buyer,
and such assignment and assumption shall not release Buyer from any obligation
hereunder. Seller shall not have the right to assign its interest in this
Agreement.
(d) Amendments. Except as otherwise provided herein, this Agreement may be
amended or modified only by a written instrument executed by Seller and Buyer.
(e) Continuation and Survival of Representations and Warranties, Etc. All
representations and warranties by the respective parties contained herein or
made in writing pursuant to this Agreement are intended to and shall remain true
and correct as of the time of Closing, shall be deemed to be material, and,
together with all conditions, covenants and indemnities made by the respective
parties contained herein or made in writing pursuant to this Agreement (except
as otherwise expressly limited
Page 286 of 401
<PAGE>
or expanded by the terms of this Agreement), shall survive the execution and
delivery of this Agreement and shall survive the Closing for a period of
twenty-four (24) months after the Closing, or, to the extent the context
requires, beyond any termination of this Agreement for a period of twenty-four
(24) months.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
(g) Merger of Prior Agreements. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all prior
agreements and understandings between the parties relating to the subject matter
hereof, including, without limitation, the Letter of Intent dated October 22,
1996, entered into by and between Buyer and CMC.
(h) Enforcement. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
(k) Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date" shall mean
the first date on which both Seller and Buyer shall have executed this
Agreement.
(m) Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material or information about the other or, in the case of Buyer and
its agents, employees, consultants and contractors, about the Property, and
shall not disclose such information to any third party, except, in the case of
information about the
Page 287 of 401
<PAGE>
Property and Seller, to Buyer's lender or prospective lenders, insurance and
reinsurance firms, attorneys, environmental assessment and remediation service
firms and consultants, as may be reasonably required for the consummation of the
transaction contemplated hereunder and/or as required by law.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
(o) Joint and Several Liability. The liability of GDA and Sonora for all
obligations of Seller under this Agreement, including, without limitation, all
obligations that survive closing or termination of this Agreement, shall be
joint and several.
(p) Section 1031 Exchange. Seller reserves the right to complete its sale
of the Property as part of one (1) or more tax-deferred exchange ("Exchange")
pursuant to Section 1031 of the Internal Revenue Code and the applicable
regulations promulgated thereunder. Buyer agrees to reasonably cooperate with
Seller in effectuating such a tax-deferred exchange and to execute all documents
and take all reasonable actions as are necessary and reasonably requested to
facilitate such the Exchange, provided that (i) Buyer shall not be required to
so cooperate if the Exchange will delay the Closing Date, (ii) Buyer shall not
be required to incur any cost, liability or expense which Buyer would not
otherwise incur under this Agreement in the absence of such cooperation, and
(iii) the Exchange shall in no way reduce, abridge or modify any of Seller's
obligations or duties or any of Buyer's rights or remedies hereunder. Seller
shall defend and protect Buyer from and against any and all claims made against
Buyer by reason of Buyer's cooperating with Seller in effectuating the Exchange
and shall indemnify and hold Buyer harmless from and against all costs,
expenses, losses, damages and liabilities arising out of such claims including,
but not limited to, attorneys' fees reasonably incurred by Buyer with respect to
any such claims.
Page 288 of 401
<PAGE>
15. Acceptance of Agreement by Seller
This Agreement shall be null and void unless it is accepted by Seller and
two fully executed copies hereof are returned to Buyer on or before 5:00 p.m.
(P.S.T.) on November 13, 1996.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
Seller: GDA Investments, Ltd.,
a Florida limited partnership
By:
George D. Anderson, as Trustee
of the GDA/GLA Irrevocable Trust
Dated January 1, 1996,
General Partner
Dated:
By:
George D. Anderson,
General Partner
Dated:
By:
Gretchen L. Anderson,
General Partner
Dated:
Sonora Plaza, Ltd.,
a California limited partnership
By: Carlsberg Realty Corporation,
a California corporation,
General Partner
By:
William W. Geary, Jr.
President
Dated:
Page 289 of 401
<PAGE>
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
Dated:
By:
Its:
Dated:
Title Company agrees to act as escrow holder in accordance with the terms of
this Agreement and to act as the Reporting Person (as such term is defined in
this Agreement).
Lawyer's Title Insurance Corporation
By:
Its:
Dated:
Page 290 of 401
<PAGE>
Schedule 1(a)
Real Property
Page 291 of 401
<PAGE>
Schedule 2(a)(i)
Loan
Secured loan in the original principal amount of Five Million One Hundred
Thousand Dollars ($5,100,000) extended by Morgan Stanley Capital, Inc., a
Delaware corporation, successor-in-interest to Belgravia Capital Corporation, a
California corporation ("Belgravia"), to Seller, successor-in-interest to Sonora
Plaza Partnership, a Florida general partnership ("SPP").
Page 292 of 401
<PAGE>
Schedule 3(c)
Permitted Exceptions
Page 293 of 401
<PAGE>
Schedule 3(h)
Related Agreements
All of the following documents are dated as of even date herewith:
1. Purchase Agreement between Terra Plaza, Ltd., a California limited
partnership, and Buyer for the property commonly known as Carlsberg Plaza
located at 2633 East Indian Road, Phoenix, Arizona.
2. Purchase Agreement between Carlsberg Managed Properties Fund, Ltd.,
a California limited partnership, and Buyer for the property commonly known as
Dallidet Professional Center located at 1194 Pacific Street, San Luis Obispo,
California.
3. Purchase Agreement between IHH Partnership, a California general
partnership, and Buyer for the property commonly known as Hillcrest Office
Building located at 1370 North Brea Boulevard, Fullerton, California.
4. Purchase Agreement between Tradewinds Office Building, a California
general partnership, and Buyer for the property commonly known as Trade Winds
Financial Center located at 2266 South Dobson Road, Mesa, Arizona.
5. Purchase Agreement among Sonora Plaza, Ltd., a California limited
partnership, GDA Investment, Ltd., a Florida limited partnership, and Buyer for
the property commonly known as Sonora Plaza located at 708-824 East Mono Way,
Sonora, California.
6. Loan Agreement between Carlsberg Properties, Ltd., a California
limited partnership, and Buyer for the property commonly known as Grunow Medical
Building located at 926 East McDowell Road, Phoenix, Arizona.
7. Agreement Concerning Property Management Agreements executed by
Carlsberg Management Company, a California corporation, and Glenborough
Corporation, a California corporation.
Page 294 of 401
<PAGE>
Schedule 7(g)
Defects
Page 295 of 401
<PAGE>
Schedule 7(h)
Violations
Page 296 of 401
<PAGE>
Schedule 7(i)
Proceedings
Page 297 of 401
<PAGE>
Schedule 7(l)
Litigation
Page 298 of 401
<PAGE>
Schedule 7(m)
Outstanding Contracts
Page 299 of 401
<PAGE>
Schedule 7(p)
Personal Property
Page 300 of 401
<PAGE>
Schedule 7(r)
Lease Exceptions
Page 301 of 401
<PAGE>
Schedule 7(x)
Brokerage Fees
Page 302 of 401
<PAGE>
Schedule 7(z)
Contracts
Page 303 of 401
<PAGE>
Schedule 7(aa)
Loan Documents
1. Fixed Rate Mortgage Note in the original principal amount of Five
Million One Hundred Thousand Dollars ($5,100,000) dated as of November 3, 1995,
made by Sonora Plaza Partnership, a Florida general partnership ("SPP"), in
favor of Belgravia Capital Corporation, a California corporation ("Belgravia"),
together with that certain Allonge dated as of November 3, 1995, by Belgravia in
favor or Morgan Stanley Mortgage Capital, Inc., a Delaware corporation ("MSMC").
2. Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Finding dated as of November 3, 1995, executed by SPP for the benefit of
Belgravia and recorded on November 13, 1995, in the Official Records (the
"Official Records") of Tuolumne County, California, as Document No. 15772.
3. Loan Assignment dated as of November 13, 1995, executed by Belgravia
for the benefit of MSMC and recorded on November 13, 1995, in the Official
Records in Book 1363, Page 258.
4. UCC-1 Financing Statement executed by SPP, as debtor, in favor of
Belgravia, as secured party, and MSMC, as assignee of Belgravia, to be filed
with the California Secretary of State.
5. UCC-1 Financing Statement executed by SPP, as debtor, in favor of
Belgravia, as secured party, and MSMC, as assignee of Belgravia, and recorded on
November 21, 1995, in the Official Records in Book 1364, Page 597.
Page 304 of 401
<PAGE>
Factual Information
Date of last payment: November 7, 1996
Outstanding principal balance as of November 1, 1996: $5,043,495.03
Per diem accrual of interest since November 1, 1996: $1,188.02
Amount of last payment: $49,514.87
Real Estate Tax Impound Balance: $49,168.05
Capital Improvement Reserve Balance: $26,081.00
Page 305 of 401
<PAGE>
Schedule 7(bb)
Environmental Reports
1.
2. Phase I report dated as of August 9, 1996 prepared by Eckland
Consultants at the request of Buyer.
Page 306 of 401
<PAGE>
Schedule 12(c)
Tenant Improvements Costs and
Leasing Commissions -- Seller's Responsibility
Suite No. Tenant
Blue Collar Restaurant
J&M Pinocchio
Page 307 of 401
<PAGE>
Exhibit A
[Intentionally Omitted]
Page 308 of 401
<PAGE>
Exhibit B
Grant Deed
Recording Requested By:
Lawyer's Title Insurance Corporation
Escrow No.
When Recorded Return To:
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Mail Tax Statements To:
Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention:
- --------------------------------------------------------------------------------
(Space above this line for Recorder's use)
Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.
Grant Deed
For valuable consideration, receipt of which is hereby acknowledged,
________________________, a _____________________ hereby grants to Glenborough
Properties, L.P., a California limited partnership, the real property located in
the City of __________, County of _______________, State of California, more
particularly described on Exhibit A attached hereto.
Executed as of this ___ day of November, 1996.
Grantor: ,
a
By:
Its:
[Add Notary Form]
Page 309 of 401
<PAGE>
______________, 1996
________ County Recorder
_______________________
_______________________
_______________________
Re: Request That Statement of Documentary
Transfer Tax Not be Recorded
Dear Sir or Madam:
Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.
The attached deed names
, a , as
grantor, and Glenborough Properties, L.P., a California limited partnership, as
grantee.
The property being transferred and described in the attached deed is
located in the City of , County of
, State of California.
The amount of Documentary Transfer Tax due on the attached deed is
$____________ computed on full value of the property conveyed.
________________________,
a ______________________
By: __________________
Its: __________________
Page 310 of 401
<PAGE>
Exhibit C
Assignment of Leases
This Assignment of Leases ("Assignment") dated as of November __, 1996, is
entered into by and between
, a
("Assignor"), and Glenborough Properties, L.P., a California limited partnership
("Assignee").
Witnesseth:
Whereas, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as
(the "Property") as more fully described in
Exhibit A attached hereto, which leases are described in Schedule 1 attached
hereto (the "Leases"); and
Whereas, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
Now, Therefore, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Except as otherwise set forth in the Purchase Agreement (as defined in
paragraph 5 below), Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all cost, liability, loss, damage or
expense, including without limitation, reasonable attorneys' fees, originating
prior to the Effective Date and arising out of the lessor's obligations under
the Leases.
4. Except as set forth in the Purchase Agreement, effective as of the
Effective Date, Assignee hereby assumes all of the lessor's obligations under
the Leases and agrees to indemnify Assignor against and hold Assignor harmless
from any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, originating subsequent to the Effective
Date and arising out of the lessor's obligations under the Leases.
5. Any rental and other payments under the Leases shall be prorated between
the parties as provided in the Purchase Agreement between Assignor, as Seller,
and Assignee, as Buyer, dated as of November __, 1996 (the "Purchase
Agreement").
Page 311 of 401
<PAGE>
6. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
7. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
8. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
9. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Purchase Agreement).
Page 312 of 401
<PAGE>
10. The liability of GDA and Sonora for all obligations of Assignor under
this Assignment shall be joint and severable.
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 313 of 401
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 314 of 401
<PAGE>
Schedule 1 to
Assignment of Leases
Amendment Security
Tenants Premises Leases Date Date(s) Deposit
Page 315 of 401
<PAGE>
Exhibit D
Warranty Bill Of Sale
For good and valuable consideration the receipt of which is hereby
acknowledged, , a
("Seller"), does
hereby sell, transfer, and convey to Glenborough Properties, L.P., a California
limited partnership ("Buyer"), all personal property owned by Seller and located
on or in or used in connection with the Real Property and Improvements (as such
terms are defined in that certain Purchase Agreement dated as of November __,
1996, between Seller and Buyer), including, without limitation, those items
described in Schedule A attached hereto.
Seller does hereby represent to Buyer that Seller is the lawful owner of
such personal property, that such personal property is free and clear of all
encumbrances, and that Seller has good right to sell the same as aforesaid and
will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands of all persons whomsoever.
Dated this _____ day of November __, 1996.
Seller: ,
a
By:
Its:
Page 316 of 401
<PAGE>
Schedule A to
Warranty Bill of Sale
Page 317 of 401
<PAGE>
Exhibit E
Assignment of Service Contracts,
Warranties and Guaranties
and Other Intangible Property
This Assignment of Service Contracts, Warranties and Guaranties and Other
Intangible Property ("Assignment") is made and entered into as of this _____ day
of November, 1996, by
, a
("Assignor"), to Glenborough Properties, L.P., a California limited partnership
("Assignee").
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third party
with respect to any building, building component, structure, fixture, machinery,
equipment, or material situated on, contained in any building or other
improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto; and
(c) any Intangible Property (as defined in that certain Purchase Agreement
dated as of November __, 1996 between Assignor and Assignee (or Assignee's
predecessor in interest) (the "Purchase Agreement")).
Assignor and Assignee further hereby agree and covenant as follows:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Effective as of the Effective Date, Assignee hereby assumes all of the
owner's obligations under the Service Contracts and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including, without limitation, reasonable attorneys' fees,
originating on or subsequent to the Effective Date and arising out of the
owner's obligations under the Service Contracts.
Page 318 of 401
<PAGE>
3. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with laws of the State of California.
Page 319 of 401
<PAGE>
6. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Purchase Agreement).
7. The obligations of GDA and Sonora for all obligations of Assignor under
this Assignment shall be joint and severable.
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: ,
a
By:
Its:
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Dated:
Page 320 of 401
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 321 of 401
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 322 of 401
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 323 of 401
<PAGE>
Exhibit F
Certificate of Transferor
other than an Individual
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located in
, that withholding of tax is not
required upon the disposition of such U.S. real property interest by
, a
("Transferor"), the undersigned hereby certifies
the following on behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
; and
3. Transferor's office address is
.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: November ____, 1996.
[Individual signature line]
on behalf of
,
a
Page 324 of 401
<PAGE>
Exhibit G
Form of Tenant's Estoppel Certificate
Glenborough Properties, L.P. ("Purchaser")
400 S. El Camino Real
San Mateo, California 94402-1708
RE: Lease Dated , and amended
(the "Lease"), by and between
, as lessor ("Lessor"), and
, as lessee ("Lessee"), with respect to certain
premises (the "Leased Premises") located at
(the "Property"). The
Leased Premises are comprised of square feet.
Ladies and Gentlemen:
The undersigned hereby acknowledges that Purchaser is entering into an
agreement to purchase the Property. The undersigned further acknowledges the
right of Lessor and Purchaser to rely upon the statements and representations of
the undersigned contained in this Certificate and further acknowledges that
Purchaser will be purchasing the Property in material reliance on this
Certificate.
Given the foregoing, the undersigned Lessee hereby certifies and represents
unto Purchaser, its successors and assigns, with respect to the above-described
Lease, a true and correct copy of which is attached as Exhibit A hereto, as
follows:
1. Lease Effective. The Lease has been duly executed and delivered by
Lessee and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Lessee thereunder are valid and binding and
there have been no further amendments, modifications or additions to the Lease,
written oral;
2. No Default. To the best of Lessee's knowledge, as of the date hereof:
(i) there exists no breach, default, or event or condition which, with the
giving of notice or the passage of time or both, would constitute a breach or
default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
3. Entire Agreement. The Lease constitutes the entire agreement between
Lessor and Lessee with respect to the Property and Lessee claims no rights with
respect to the Property other than as set forth in the Lease; and
4. No Prepaid Rent. No deposits or prepayments of rent have been made in
connection with the Lease, except as follows: (if none, state "none")
.
Page 325 of 401
<PAGE>
Lessee:
By:
Its:
Dated:
Page 326 of 401
<PAGE>
Exhibit H
Rent Roll
Page 327 of 401
<PAGE>
Exhibit I
Notice To Tenants
(Date)
(Name)
(Street Address)
(City, State, Zip Code)
Re: (Name of Property)
Dear (Tenant, or address individually to each Tenant):
Glenborough Properties, L.P., a California limited partnership has acquired
the subject property. We are pleased to advise you that, as of November ___,
1996, Glenborough Corporation has been engaged to lease and manage the property.
Please send your monthly rent and all future remittances to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
We value your tenancy and urge you to direct any questions regarding your
lease or this letter to (Name of Property Manager) at (Phone Number for Property
Manager or Building Property Manager) for (Name of Property).
Very truly yours,
Carlsberg Management Company,
a California corporation,
Property Manager for (Seller)
By:
Its: ________________________
Page 328 of 401
<PAGE>
LOAN AGREEMENT
GLENBOROUGH PROPERTIES, L.P., a California limited partnership ("Lender"),
has agreed to make a loan in the amount of $3,600,000 (the "Loan") to CARLSBERG
PROPERTIES, LTD., a California limited partnership ("Borrower"), subject to
certain terms and conditions set forth herein.
Borrower will use the Loan to (i) repay an existing loan secured by the
real property and improvements located in Maricopa County, Arizona and described
in Exhibit A attached hereto (the "Property"), (ii) pay for such capital
expenditures, leasing commissions and tenant improvements relating to the
Property as Lender may approve, and (iii) fund certain interest payments to be
made by Borrower, all on the conditions set forth herein.
Borrower is today also executing a promissory note (the "Note") payable to
Lender in the amount of the Loan, for a term of 36 months, at 11.0% per annum,
computed on a 360-day basis and the actual number of days elapsed. Interest on
the Loan will be payable monthly and principal will be due and payable at Loan
maturity. The Note is to be secured by a Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing (the "Deed of Trust") covering the
Property, and a Third Party Pledge and Security Agreement executed by Carlsberg
Management Company.
This Agreement describes how the Loan proceeds not used for the refinance
of the existing loan may be used for capital expenditures, leasing commissions,
tenant improvements and the payment of interest, and contains various
representations, warranties and covenants of Borrower and other provisions
relating to Lender's making of the Loan to Borrower.
I. RESERVE ACCOUNT
1. Reserve Account
A portion of the Loan proceeds in the amount of $900,000 shall be held by
Lender as a reserve account (the "Reserve Account"). $600,000 of the funds in
the Reserve Account shall be allocated to the "Leasing Reserve," and $300,000 of
the funds in the Reserve Account shall be allocated to the "Interest Reserve."
From time to time and in its sole and absolute discretion, Lender may disburse
to Borrower from the Reserve Account funds representing the Leasing Reserve to
(i) pay leasing commissions approved in advance by Lender or pay for tenant
improvements in connection with leases approved by Lender in advance pursuant to
Section I.6 of the Deed of Trust, and/or (ii) fund capital expenditures relating
to the Property that have been approved in advance by Lender. As a condition to
making any such disbursement, Lender may require that Borrower submit
documentation of Borrower's obligation to pay the expenses for which such
disbursement is to be made, including, without limitation, copies of written
brokerage agreements (with respect to leasing commissions) and invoices and
conditional lien releases (with respect to tenant improvements and capital
expenditures). Upon Borrower's written request from time to time, Lender shall
disburse to itself from the Reserve Account funds representing the Interest
Reserve and apply the same in payment of Borrower's monthly payments of interest
accrued under the Loan; provided, however, that such disbursements shall not
exceed $100,000 in any 12-month period. Upon Borrower's written request, Lender
may, in its sole discretion,
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permit reallocation of funds between the Interest Reserve and the Leasing
Reserve. Lender shall have no obligation to segregate the funds in the Reserve
Account from its other funds, nor to pay interest to Borrower on such funds, nor
invest the same for Borrower's benefit. Notwithstanding the foregoing and
Lender's complete discretionary control over the disbursement of funds from the
Leasing Reserve, Borrower acknowledges and agrees that all of the funds in the
Reserve Account shall be deemed to have been advanced to Borrower as of the date
of recordation of the Deed of Trust, and that the amount of such funds shall be
included in the amount of the outstanding principal balance of the Loan. Without
limitation of the foregoing, when the Loan becomes due and payable in full,
Lender shall disburse to itself any funds remaining in the Reserve Account and
apply the same to repayment of the Loan in such order and priority as Lender may
determine in its sole and absolute discretion. If any funds remain in the
Reserve Account after the Loan is fully repaid, Lender shall disburse such
remaining funds to Borrower.
2. Security Interest.
Borrower hereby grants to Lender a security interest in the Reserve
Account, any investments of, and certificates or other instruments representing
the funds deposited therein, and all additions thereto, substitutions therefor
and proceeds thereof (collectively, the "Reserves"), for the purpose of securing
all indebtedness secured by the Deed of Trust, and in addition to the rights
granted thereunder, Lender shall have all rights of a secured party with respect
to such Reserves. Borrower shall have no right to assign its rights and/or its
obligations under this Agreement or to pledge or otherwise encumber its interest
in the Reserves, and any such attempted assignment, pledge or encumbrance shall
be null and void. Lender and Borrower agree that the provisions of the Deed of
Trust relating to a security agreement for personal property and the remedies
with respect thereto, and generally all references therein to the Property,
shall apply with equal force and effect to the Reserves. Notwithstanding
anything else herein to the contrary, if an event of default has occurred and is
continuing under this Agreement or any other document evidencing or securing the
Loan (the "Loan Documents"), Lender shall have no obligation to make
disbursements from the Reserves.
II. BORROWER'S REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender's entry into this Agreement, Borrower
represents and warrants to Lender as of the date hereof and continuing
thereafter that:
1. Authority/Enforceability. Borrower is in compliance with all laws and
regulations applicable to its organization, existence and transaction of
business and has all necessary rights and powers to own and improve the Property
as contemplated by the Loan Documents.
2. Binding Obligations. Borrower is authorized to execute, deliver and
perform its obligations under the Loan Documents, and such obligations shall be
valid and binding obligations of Borrower.
3. Formation and Organizational Documents. Borrower has delivered to Lender
all formation and organizational documents of Borrower, and all such formation
and organizational documents remain in full force and effect and have not been
amended or modified since they were
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delivered to Lender. Borrower shall immediately provide Lender with copies of
any amendments or modifications of the formation or organizational documents.
4. No Violation. Borrower's execution, delivery, and performance under the
Loan Documents do not: (a) require any consent or approval not heretofore
obtained under any partnership agreement, articles of incorporation, bylaws or
other document; (b) violate any governmental requirement applicable to the
Property or any other statute, law, regulation or ordinance or any order or
ruling of any court or governmental entity; (c) conflict with, or constitute a
breach or default or permit the acceleration of obligations under any agreement,
contract, lease, or other document by which the Borrower is or the Property is
bound or regulated; or (d) violate any statute, law, regulation or ordinance, or
any order of any court or governmental entity.
5. Compliance with Laws. Borrower has, and at all times shall have
obtained, all permits, licenses, exemptions, and approvals necessary to occupy,
operate and market the Property, and shall maintain compliance with all
governmental requirements applicable to the Property and all other applicable
statutes, laws, regulations and ordinances necessary for the transaction of its
business.
6. Litigation. Except as disclosed to Lender in writing, there are no
claims, actions, suits, or proceedings pending, or to Borrower's knowledge,
threatened against Borrower or affecting the Property.
7. Financial Condition. All financial statements and information heretofore
delivered to Lender by Borrower, including, without limitation, information
relating to the financial condition of Borrower, the Property, and/or any
guarantors, fairly and accurately represent the financial condition of the
subject thereof and have been prepared (except as noted therein) in accordance
with generally accepted accounting principles consistently applied. Borrower
acknowledges and agrees that Lender may request and obtain additional
information from third parties regarding any of the above, including, without
limitation, credit reports.
8. No Material Adverse Change. There has been no material adverse change in
the financial condition of Borrower and/or any guarantors since the dates of the
latest financial statements furnished to Lender and, except as otherwise
disclosed to Lender in writing, Borrower has not entered into any material
transaction which is not disclosed in such financial statements.
9. Accuracy. All reports, documents, instruments, information and forms of
evidence delivered to Lender concerning the Loan or security for the Loan or
required by the Loan Documents are accurate, correct and sufficiently complete
to give Lender true and accurate knowledge of their subject matter, and do not
contain any misrepresentation or omission.
10. Americans with Disabilities Act Compliance. Borrower represents and
warrants to Lender that the Property shall be hereafter maintained in full and
strict compliance with the requirements and regulations of the Americans With
Disabilities Act, of July 26, 1990, Pub. L. No. 101-336, 104 Stat. 327, 42
U.S.C. Sec. 12191, et seq., as hereafter amended. At Lender's written request
from time to time, Borrower shall provide Lender with written evidence of such
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compliance satisfactory to Lender. Borrower shall be solely responsible for all
costs of such compliance and such reporting to Lender.
III. BORROWER'S COVENANTS
1. Payment of Expenses. Borrower shall pay Lender's out-of-pocket costs and
expenses incurred in connection with the administration of the Loan or in the
exercise of any of its rights or remedies under this Agreement, including, but
not limited to, title insurance and escrow charges, recording charges and
mortgage taxes, reasonable legal fees and disbursements and any other reasonable
fees and costs for services which are not customarily performed by Lender's
salaried employees. The provisions of this paragraph will survive the
termination of this Agreement and the repayment of the Loan.
2. Management of Property. Without the prior written consent of Lender,
Borrower shall not enter into any agreement providing for the management,
leasing or operation of the Property.
3. Certain Leasing and Maintenance Expenses. At its own expense and without
requesting any disbursement therefor from the Reserve Account. Borrower shall
pay for (i) all tenant improvements and leasing commissions that are Borrower's
obligations as of the date hereof relating to the leasing of (a) Suite 134 of
the Property to University Medical Center, (b) Suite 211 of the Property to
Dr. T. Harlan, (c) Suite 206 of the Property to Dr. Benjamin Harris, and
(d) Suite 109 of the Property to the Grunow Pharmacy, and (ii) the repainting of
the exterior of the building on the Property, at a cost of up to $26,000.
Nothing in this Section shall be deemed to imply that Lender has any obligation
to make any disbursements from the Leasing Reserve on any basis other than
Lender's sole and absolute discretion.
4. Further Assurances. Upon Lender's request and at Borrower's sole cost
and expense, Borrower shall execute, acknowledge and deliver any other
instruments and perform any other acts necessary, desirable or proper, as
reasonably determined by Lender, to carry out the purposes of this Agreement and
the other Loan Documents or to perfect and preserve any liens created by the
Loan Documents.
IV. DEFAULT AND REMEDIES
1. Events of Default. Borrower will be in default under this Agreement if:
(a) Borrower fails to comply with any covenant contained in this Agreement
which calls for the payment of money, and does not cure that failure within four
(4) days after notice from Lender; or
(b) Borrower fails to comply with any covenant contained in this Agreement
other than those covenants referred to in a. and b. above, and does not cure
that failure within thirty (30) days after written notice from Lender; provided,
however, that if the nature of such failure to perform is such that the same
cannot reasonably be cured within such thirty (30) day period, there shall not
be deemed to be a default if Trustor shall within such thirty (30) day period
commence to cure that failure to perform and thereafter diligently prosecute the
cure to completion; or
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(c) A default occurs under the Note or the Deed of Trust.
2. Remedies. If Borrower is in default under this Agreement, Lender may
exercise any right or remedy which it has under the Deed of Trust, this
Agreement or any other agreement with Borrower relating to the Loan, or under
any agreement guaranteeing the Loan , or otherwise available at law or in equity
or by statute, and all of Lender's rights and remedies will be cumulative.
V. CONDITIONS TO EFFECTIVENESS
The simultaneous closing of all of the transactions contemplated by the
agreements described on Schedule A attached hereto with the closing of this
transaction is a condition precedent to both Borrower's and Lender's obligations
under this Agreement. This condition is for the benefit of both Borrower and
Lender. If this condition is not satisfied, each party shall have the right in
its sole discretion, either to waive the condition and proceed with the
transaction so long as both of them have waived the condition, or to terminate
this Agreement by written notice to the other party. It shall be an additional
condition precedent to Lender's obligations under this Agreement, which
condition shall be for the benefit of Lender only, that Borrower shall have
executed (and acknowledged, where applicable) and delivered to Lender: (i) an
Option Agreement (the "Option Agreement") in favor of Lender, in form and
substance satisfactory to Lender, relating to the Property; (ii) a Memorandum of
Option Agreement, in form and substance satisfactory to Lender, relating to the
Option Agreement, and (iii) an estoppel letter relating the Option Agreement, in
substantially the form attached hereto as Exhibit B.
VI. MISCELLANEOUS
1. No Waiver; Consents. Any waiver by Lender must be in writing and will
not be construed as a continuing waiver. No waiver will be implied from any
delay or failure by Lender to take action on account of any default of Borrower.
Consent by Lender to any act or omission by Borrower will not be construed to be
a consent to any other or subsequent act or omission or to waive the requirement
for Lender's consent to be obtained in any future or other instance.
2. No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and benefit of Lender and Borrower and their successors and
assigns. No trust fund is created by this Agreement and no other persons or
entities will have any right of action under this Agreement or any right to the
Loan funds.
3. Notices. All notices given under this Agreement must be in writing and
will be effectively served upon personal delivery or one day after being
deposited with Federal Express or another reliable overnight courier service or
transmitted by facsimile, or, if mailed, no later than forty-eight hours after
deposit in first-class or certified United States mail, postage prepaid, sent to
the party at its address appearing below its signature. Those addresses may be
changed by either party by notice to the other party.
4. Authority to File Notices. Borrower irrevocably appoints Lender as its
attorney-in-fact, with full power of substitution, to file for record, at
Borrower's cost and expense and in Borrower's name, any notices of completion,
notices of cessation of labor, or any other notices that Lender considers
necessary or
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desirable to protect its security; provided, however, that such appointment as
attorney-in-fact shall apply only where (i) Borrower has failed, within five (5)
business days after Lender's written request, to file such notice, or (ii) in
Lender's reasonable judgment, failure to file such notice before such five (5)
day period expires may impair the value of Lender's security.
5. Actions. Lender will have the right, but not the obligation, to
commence, appear in, and defend any action or proceeding which might affect its
security or its rights, duties or liabilities relating to the Loan, the Property
or this Agreement. Borrower will pay promptly on demand all of Lender's
reasonable out-of-pocket costs, expenses, and legal fees and disbursements
incurred in those actions or proceedings.
6. Applicable Law. This Agreement will be governed by Arizona law.
7. Heirs, Successors and Assigns; Participations. The terms of this
Agreement will bind and benefit the heirs, legal representatives, successors and
assigns of the parties; provided, however, that Borrower may not assign this
Agreement or any Loan funds, or assign or delegate any of its rights or
obligations, without the prior written consent of Lender. Lender shall have the
right to sell participations in the Loan to any other persons or entities
without the consent of or notice to Borrower. Without the consent of or notice
to Borrower, Lender may disclose to any prospective purchaser of any securities
issued or to be issued by Lender, and to any prospective or actual purchaser of
any participation or other interest in the Loan or any other loans made by
Lender to Borrower (whether under this Agreement or otherwise), any financial or
other information, data or material in Lender's possession relating to Borrower,
the Loan or the construction project.
8. Attorneys' Fees. If any lawsuit is commenced to enforce any of the terms
of this Agreement, the prevailing party will have the right to recover its
reasonable attorneys' fees and costs of suit from the other party. Any reference
to "attorney fees", "attorney's fees", or "attorneys' fees" in this document
includes but is not limited to both the fees, charges and costs incurred by
Lender through its retention of outside legal counsel and the allocable fees,
costs and charges for services rendered by Lender's in-house counsel. Any
reference to "attorney fees", "attorney's fees", or "attorneys' fees" shall also
include but not be limited to those attorneys' or legal fees, costs and charges
incurred by Lender subsequent to a default hereunder in the collection of any
indebtedness evidenced or secured by the Loan Documents, the enforcement of any
obligations hereunder, the protection of the Property, the foreclosure of or
exercise of the power of sale under the Deed of Trust, the sale of the Property,
the defense of actions arising hereunder and the collection, protection or
setoff of any claim Lender may have in a proceeding under Title 11, United
States Code. Attorneys' fees provided for hereunder shall accrue whether or not
Lender has provided notice of a default or of an intention to exercise its
remedies for such default; provided, however, that Borrower's obligation
hereunder to pay Lender's attorneys' fees that accrue before Lender gives such
notice shall be limited to the amount of $2,000 in each instance.
9. Restriction on Personal Property. Borrower shall not sell, convey, or
otherwise transfer or dispose of its interest in any personal property in which
Lender has a security interest, or contract to do any of the foregoing, without
the prior written consent of Lender.
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10. Separate Agreement. Notwithstanding that Borrower and Glenborough
Corporation, a California corporation ("GC"), an affiliate of Lender, are
entering into that certain Management Agreement dated as of even date herewith
(the "Management Agreement"), pursuant to which GC is undertaking certain
management responsibilities relating to the Property, Borrower hereby
acknowledges and agrees that: (i) Borrower's and Lender's respective rights and
obligations with respect to the Loan shall be governed solely by the Loan
Documents and shall not be affected in any way by (and, without limitation,
Lender shall not be deemed a mortgagee-in-possession by virtue of ) the
Management Agreement, GC's performance of, or failure to perform, its
obligations thereunder, or GC's exercise of, or failure to exercise, its rights
thereunder; and (ii) GC's and Borrower's respective rights and obligations with
respect to GC's management of the Property shall be governed solely by the terms
of the Management Agreement and shall not be affected in any way by the Loan,
the Loan Documents, Lender's performance of, or failure to perform, its
obligations thereunder, or Lender's exercise of, or failure to exercise, its
rights thereunder. GC shall be a third party beneficiary of this Section 10.
11. Severability. The invalidity or unenforceability of any one or more
provisions of this Agreement will in no way affect any other provision.
12. Interpretation. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice versa, and
each gender will include any other gender. The captions of the paragraphs of
this Agreement are for convenience only and do not define or limit any terms or
provisions. Time is of the essence in the performance of this Agreement by
Borrower.
13. Amendments. This Agreement may not be modified or amended except by a
written agreement signed by the parties.
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14. Counterparts. This Agreement and any attached Consents or Exhibits
requiring signatures may be executed in counterparts, but all counterparts shall
constitute but one and the same document.
Date: November , 1996
Borrower: Lender:
CARLSBERG PROPERTIES, LTD., GLENBOROUGH PROPERTIES, L.P.
a California limited partnership a California limited partnership
By: Carlsberg Properties, Inc. By: Glenborough Realty Trust Incorporated
a California corporation a Maryland corporation,
General Partner
By________________________ By __________________________________
Its_______________________ Its__________________________________
By:__________________________________
Its__________________________________
Address:2800-28th Street, Suite 222 Address:400 South El Camino Real
Santa Monica, California 90405 San Mateo, California
94402-1708
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Schedule A
Related Agreements
All of the following documents are dated as of even date herewith:
1. Purchase Agreement between Terra Plaza, Ltd., a California limited
partnership, and Lender for the property commonly known as Carlsberg Plaza
located at 2633 East Indian School Road, Phoenix, Arizona.
2. Purchase Agreement between Carlsberg Managed Properties Fund, Ltd., a
California limited partnership, and Lender for the property commonly known as
Dallidet Professional Center located at 1194 Pacific Street, San Luis Obispo,
California.
3. Purchase Agreement between IHH Partnership, a California general
partnership, and Lender for the property commonly known as Hillcrest Office
Building located at 1370 North Brea Boulevard, Fullerton, California.
4. Purchase Agreement between Tradewinds Office Building, a California
general partnership, and Lender for the property commonly known as Trade Winds
Financial Center located at 2266 South Dobson Road, Mesa, Arizona.
5. Purchase Agreement among Sonora Plaza, Ltd., a California limited
partnership, GDA Investment, Ltd., a Florida limited partnership, and Lender for
the property commonly known as Sonora Plaza located at 708-824 East Mono Way,
Sonora, California.
6. Agreement Concerning Property Management Agreements executed by
Carlsberg Management Company, a California corporation, and Glenborough
Corporation, a California corporation.
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<PAGE>
Exhibit B
November ____, 1996
Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
RE: The Grunow Medical Building - Phoenix, Arizona
Gentlemen:
On this date you have made a loan (the "Loan") in the amount of $3,600,000
to the undersigned. The Loan is secured by first-lien Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Filing (the "Deed of Trust")
encumbering certain real property (the "Property") located in the City of
Phoenix, County of Maricopa, State of Arizona, which Property is more
particularly described in the Deed of Trust. On this date you have also entered
into an Option Agreement (the "Option Agreement") with us to purchase the
Property.
By this letter the undersigned wish to confirm the following:
As to each of the transactions described above, your right to purchase the
property in accordance with the terms of the Option Agreement is separate and
independent of the making of the Loan. The purchase price to be paid for the
Property in the event you elect to exercise the option granted under the terms
of the Option Agreement represents the undersigned's good faith estimate of the
fair market value of the Property as of the time the option thereunder may be
exercised. Alternative forms of structuring the transactions were available to
us, and we chose to proceed in the manner described. We understand that the
Option Agreement permits you to purchase the Property, notwithstanding any right
or ability of the undersigned to pay off the Loan and obtain a release and
reconveyance of the Deed of Trust. The undersigned hereby agree that we waive
any right, at law or in equity, to challenge the validity or enforceability of
the Option Agreement or your right to specifically enforce the terms thereof, as
long as the purchase price paid for the Property is paid as provided in the
Option Agreement.
Neither party has made any representation to the other regarding, nor are
the transactions in any way conditioned upon, the accounting or tax consequences
of the transactions.
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We agree that you are reasonably relying on this letter in entering into
the transactions described above.
CARLSBERG PROPERTIES, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.,
a California corporation
By _______________________________
Its_______________________________
Address: 2800-28th Street, Suite 222
Santa Monica, California 90405
Page 339 of 401
<PAGE>
Option Agreement
by and between
Carlsberg Properties, LTD.,
a California limited partnership,
and
Glenborough Properties, L.P.,
a California limited partnership,
dated as of November ___, 1996
for
Grunow Medical Building
Phoenix, Arizona
Page 340 of 401
<PAGE>
List Of Exhibits
Exhibit A Memorandum of Option Agreement
Exhibit B Grant Deed
Exhibit C Assignment of Leases
Exhibit D Warranty Bill Of Sale
Exhibit E Assignment of Service Contracts, Warranties and Guaranties
and Other Intangible Property
Exhibit F Certificate of Transferor other than an Individual (FIRPTA
Affidavit)
Exhibit G Form of Tenant's Estoppel Certificate
Exhibit H Rent Roll
Exhibit I Notice to Tenants
Page 341 of 401
<PAGE>
List Of Schedules
Schedule 1(a) Real Property
Schedule 3(c) Permitted Exceptions
Schedule 7(g) Defects
Schedule 7(h) Violations
Schedule 7(i) Proceedings
Schedule 7(l) Litigation
Schedule 7(m) Outstanding Contracts
Schedule 7(p) Personal Property
Schedule 7(r) Lease Exceptions
Schedule 7(x) Brokerage Fees
Schedule 7(z) Contracts
Schedule 7(bb) Environmental Reports
Page 342 of 401
<PAGE>
Option Agreement
This Option Agreement (this "Agreement") is dated as of November ___, 1996,
by and between Carlsberg Properties, LTD., a California limited partnership
("Seller"), and Glenborough Properties, L.P., a California limited partnership
("Buyer").
Recitals
A. Seller is the owner of the Property (as defined in Subparagraph 1(a)
below).
B. Contemporaneously herewith, Buyer is making a loan (the "Loan") to
Seller in the amount of $3,600,000, evidenced by that certain Promissory Note
Secured by Deed of Trust of even date herewith made by Seller in favor of Buyer
(the "Note"), and secured by, among other security, that certain Loan Agreement
of even date herewith between Buyer and Seller (the "Loan Agreement") and that
certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture
Filing of even date herewith executed by Seller (the "Deed of Trust"), the
proceeds of which are to be used by Seller to repay an existing loan secured by
the Property. In partial consideration for the Loan, Seller has agreed to grant
Buyer an option to purchase the Property upon the terms and subject to the
conditions set forth in this Agreement.
Now, Therefore, in consideration of the premises, the mutual
representations, warranties, covenants and agreements hereinafter contained, and
other good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
hereby agree as follows:
1. Purchase and Sale of Property
(a)......... Subject to and upon the terms and conditions hereinafter set
forth and the representations and warranties contained herein, Seller hereby
grants to Buyer an irrevocable option (the "Option") to purchase from Seller,
subject to the terms, covenants and conditions set forth herein, (a) the real
property described in Schedule 1(a) attached hereto, together with any and all
buildings and other improvements thereon and, to the extent owned by Seller, or
held directly for the benefit of Seller, any interest therein, and any and all
rights, privileges and easements appurtenant thereto (the "Real Property"),
(b) all of Seller's right, title and interest in and to the Leases listed in
Exhibit H attached hereto (the "Leases"), and any and all guarantees of the
Leases (the "Lease Rights"), as such Leases are in effect as of the Closing, and
(c) all of Seller's right, title and interest in and to the personal property
and any interest therein owned by Seller or held directly for the benefit of
Seller, if any, located on the Real Property and used in the operation or
maintenance of the Real Property as of the Closing (the "Personal Property"),
(d) all of Seller's right, title and interest, if any, in and to the following
to the extent assignable: the Contracts listed in Schedule 7(z), as such
Contracts are in effect as of the Closing, all general
Page 343 of 401
<PAGE>
intangibles relating to design, development, operation, management and use of
the Real Property, all certificates of occupancy, zoning variances, building,
use or other permits, approvals, authorizations, licenses and consents obtained
from any governmental authority in connection with the development, use,
operation or management of the Real Property, all soil tests, engineering
reports, appraisals, architectural drawings, plans and specifications relating
to all or any portion of the Real Property, and all payment and performance
bonds or warranties or guarantees relating to the Real Property; and (e) all of
Seller's right, title and interest in and to any and all of the following to the
extent assignable: trademarks, service marks, logos, other source and business
identifiers, trademark registration and applications for registration used at or
relating to the Real Property and any written agreement granting to Seller any
right to use any trademark or trademark registration at or in connection with
the Real Property (such property, together with the property described in
clause (d) of this Paragraph 1, is herein called the "Intangible Property"). The
term "Property" means all of the Real Property, the Lease Rights, the Personal
Property and the Intangible Property.
(b)......... On either the second or third anniversary of the date of
recordation of the Deed of Trust, Buyer may exercise the Option by giving
written notice to Seller at the address set forth in Section 14 below, which
notice shall specify a closing date (the "Closing Date") which shall be not
sooner than thirty (30) days, and not later than sixty (60) days, after the date
of such notice. Except as expressly provided herein, the Closing Date may not be
extended without the prior written consent of both Buyer and Seller. If Buyer
fails to timely exercise the Option, this Agreement shall be terminated and of
no further force and effect. If Buyer timely exercises the Option, this
Agreement shall become and be deemed a contract for the purchase of the Property
on the terms and conditions hereinafter set forth.
(c)......... Concurrently with the execution of this Agreement, Buyer and
Seller shall execute a Memorandum of Option Agreement in the form attached
hereto as Exhibit A for recordation upon the execution hereof. If the Option
terminates for any reason whatsoever, Buyer shall, within three (3) days of
receiving Seller's written request therefor, record a quitclaim deed or similar
instrument giving notice of such termination.
2. Purchase Price.
(a)......... Buyer and Seller agree that the purchase price of the Property
(the "Purchase Price") shall be the greater of:
(i)... the sum of (x) the outstanding balance owed by Seller to Buyer
under the Loan as of the Closing Date, after application to such balance of any
funds remaining in that portion of the Reserve Account (as defined in the Loan
Agreement) which is allocated to the Leasing Reserve (as defined in the Loan
Agreement) on the Closing Date; plus (y) $50,000; or
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(ii).. the value of the Property (the "Property Value"), which shall
be deemed to be the quotient of (x) the Property's Net Annual Income (as defined
below), divided by (y) eleven percent (11.0%). As used herein, "Net Annual
Income" shall mean the amount, if any, by which the Property's Gross Annual
Income (as defined below) exceeds the Property's Total Annual Expenses (as
defined below). As used herein, "Gross Annual Income" shall mean the total
amount of rental payments (including CAM charges and all payments and
reimbursements required under the Leases) reasonably expected to be received by
Seller during the 12-month period commencing on the Closing Date under all
leases of the Property or any portion thereof as of the Closing Date. As used
herein, "Total Annual Expenses" shall mean all expenses and liabilities that
accrue, as determined by Generally Accepted Accounting Principles ("GAAP"), in
connection with the ownership or operation of the Property during the 12-month
period ending on the last day of the last calendar month ending on or before the
Closing Date, including, without limitation, all expenses for maintenance,
repairs, service contracts, taxes on the ownership or operation of the Property,
ground lease payments (if any), insurance and management fees, but excluding any
amounts for leasing commissions, tenant improvement costs or capital
improvements; provided, however, that the amount of Total Annual Expenses shall
be increased or reduced, as applicable, by the amount of (i) any change
reasonably anticipated during the 12-month period commencing on the Closing Date
in the amount of annual property taxes payable in relation to the Property, and
(ii) any change reasonably anticipated during the 12-month period commencing on
the Closing Date in the amount of annual operating expenses generated by the
Property because of a change in the Property's occupancy rate.
(iii). Within ten (10) days of its written notice to Seller of its
exercise of the Option, Buyer shall deliver to Seller a written statement of its
proposed calculation of the Property Value ("Buyer's Calculation"), together
with such reasonable supporting detail as may be available to Buyer. Seller
shall have ten (10) days from its receipt of such written statement to
disapprove of Buyer's Calculation. If Buyer does not receive a notice of
disapproval from Seller, together with a written statement of Seller's
alternative calculation of the Property Value, including reasonable supporting
detail, within such ten (10) day period, Seller shall be deemed to have approved
Buyer's Calculation. If Seller timely disapproves of Buyer's Calculation, the
parties shall meet and negotiate in good faith to reach agreement on the
Property Value. If the parties cannot reach agreement within ten (10) days after
Buyer's receipt of Seller's notice of disapproval, each party shall appoint a
certified public accountant, the two of which shall in turn appoint a third
certified public accountant (the "Accountant") who shall resolve the dispute.
The parties shall share equally the fees of the Accountant.
(b)......... The Purchase Price shall be paid as follows:
(i)... If the Loan has not been fully repaid and the Note remains
outstanding at the time of the Closing, the amount of any funds then remaining
in the Reserve
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Account (as defined in the Loan Agreement) shall first be applied in repayment
of the Loan, and at the Closing Buyer shall cancel and return the Note to
Seller, and the outstanding principal balance of the Loan, together with all
accrued but unpaid interest thereon, shall be credited to Buyer against the
Purchase Price.
(ii).. The balance of the Purchase Price (or the entire Purchase Price
if the loan has been repaid in full prior to the Closing) (in either case, the
"Purchase Price Balance") shall be paid by Buyer to Seller, in immediately
available funds, at the Closing.
(c)......... Seller acknowledges and agrees that Buyer may be required to
withhold a portion of the Purchase Price pursuant to Section 1445 of the Code
(as defined in Subparagraph 4(c)(x) below) or Sections 18805 and 26131 of the
California Revenue and Taxation Code or similar laws or regulations of other
states. Any amount properly so withheld by Buyer shall be deemed to have been
paid by Buyer as part of the Purchase Price, and Seller's obligation to
consummate the transactions contemplated herein shall not be excused, reduced,
terminated or otherwise affected thereby.
3. Conditions to Closing
(a)......... The following conditions are precedent to Buyer's obligations
hereunder (the "Buyer's Conditions Precedent"):
(i)... Subject to the provisions of Section 14(e) hereof, the
representations and warranties of Seller contained herein shall be true and
correct as of the Closing Date as though made at and as of the Closing Date, and
Seller's covenants under this Agreement shall be satisfied as of the Closing
Date (to the extent such covenants are to be satisfied as of the Closing Date).
(ii).. At the Closing, Seller shall convey to Buyer (A) fee simple
title to the Property identified in Schedule 1(a) by grant deed in the form of
Exhibit B attached hereto, (B) title to the Lease Rights pursuant to an
assignment and assumption of tenant leases in the form of Exhibit C attached
hereto (the "Assignment of Leases"), (C) title to the Personal Property pursuant
to a bill of sale in the form of Exhibit D attached hereto and (D) an assignment
and assumption of service contracts, guaranties and warranties and other
intangible property in the form of Exhibit E attached hereto (the "Assignment of
Service Contracts").
(iii). Lawyer's Title Insurance Corporation (the "Title Company")
shall be committed to issue at Closing for its extended coverage American Land
Title Association Policy of Owner's Title Insurance (Form B, rev. 10/17/70) in
the amount of the Purchase Price, showing title to the Real Property vested in
Buyer, subject only to exceptions described on Schedule 3(c) attached hereto,
any future exceptions caused by Buyer, and such other exceptions as Buyer may
approve in writing in its
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<PAGE>
sole and absolute discretion (the "Permitted Exceptions"). The foregoing title
policy, together with endorsements covering subdivision map act, survey, access,
contiguity, no violations of covenants, conditions or restrictions and such
other endorsements as Buyer has requested prior to the Effective Date (as
defined in Subparagraph 14(l) below), is referred to herein as the "Title
Policy." On or before the Closing, Seller shall cause the Title Company to
deliver to Buyer a certification that, in issuing the Title Policy, the Title
Company has not relied on any representations or indemnities of Seller or any of
its affiliates (except as disclosed in such certification). In addition, as a
condition to Buyer's obligation to close, Buyer shall be satisfied that, as of
the Closing, there is no outstanding financing statement filed in accordance
with the Uniform Commercial Code of any applicable jurisdiction with respect to
the Property or Seller except for any financing statements approved by Buyer
prior to the Effective Date or created by Buyer thereafter.
(iv).. Seller obtaining and delivering to Buyer the tenant estoppel
certificates required under Paragraph 6 below.
(v)... Subject to the provisions of Paragraph 10 below, the physical
condition of the Real Property shall be substantially the same on the Closing
Date as on the date hereof, except only for reasonable wear and tear, loss by
casualty, and changes made with Buyer's approval.
(vi).. All of the property management and leasing brokerage agreements
affecting the Property other than any management agreement with any affiliate of
Buyer (whether between Seller, Carlsberg Management Company ("CMC") or any other
party and such property managers and leasing agents) shall be terminated as of
the Closing Date at no cost or expense to Seller.
The Buyer's Conditions Precedent contained in Subparagraphs 3(a)(i)
through 3(a)(vi) are intended solely for the benefit of Buyer. If any of the
Buyer's Conditions Precedent is not satisfied, Buyer shall have the right in its
sole discretion either to waive the Buyer's Condition Precedent and proceed with
the purchase or terminate this Agreement by written notice to Seller and the
Title Company.
(b)...... In the event that any party having the right of cancellation
under this Paragraph 3 does not inform the other party and Title Company in
writing of its disapproval of any condition precedent (the "Condition
Precedent") for such party's benefit provided in this Paragraph 3 prior to the
Closing, such Condition Precedent shall be deemed to have been satisfied,
approved or waived, effective as of the Closing; provided that a party shall not
be deemed to have waived any claim for breach of any representation or warranty
by the other party unless such party has actual knowledge of such breach prior
to Closing. For purposes of this Subparagraph 3(b), "actual knowledge" of
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<PAGE>
Buyer shall be deemed to mean the present actual knowledge of Mr. Andrew
Batinovich, Mr. Steve Saul or Mr. Frank E. Austin, without any duty of
investigation or inquiry on their part, and "actual knowledge" of Seller shall
be deemed to mean the present actual knowledge of Mr. William G. Geary, Jr.,
Ms. Janet DaVall and Mr. Ron Lema, without any duty of investigation or inquiry
on their part. Upon termination of this Agreement and the escrow for failure of
a Condition Precedent, (i) Buyer shall deliver to Seller copies of any and all
soils, geologic, engineering and environmental reports or studies concerning the
Property prepared by or on behalf of Seller and (ii) Seller shall bear the cost
of any title and escrow cancellation fees.
4. Closing and Escrow
(a)......... If Buyer exercises the Option by giving written notice to
Seller, then upon delivery of such notice, the parties hereto shall deposit an
executed counterpart of this Agreement with Title Company and this Agreement
shall serve as instructions to Title Company as the escrow holder for
consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional escrow instructions as may be appropriate to
enable Title Company to comply with the terms of this Agreement; provided,
however, that in the event of any conflict between the provisions of this
Agreement and any supplementary escrow instructions, the terms of this Agreement
shall control unless a contrary intent is expressly indicated in such
supplementary instructions. (b)......... The parties shall endeavor to conduct
the Closing through an escrow closing pursuant to Subparagraph 4(a) above. If,
however, an escrow Closing is not practical, the Closing hereunder shall be held
and delivery of all items to be made at the Closing shall be made at the offices
of Morrison & Foerster llp, 345 California Street, San Francisco, California
94104, or such other place as the parties shall agree, on or before the Closing
Date. In the event the Closing does not occur on or before the Closing Date,
Title Company shall, unless it is notified by both parties to the contrary
within five (5) days after the Closing Date, return to the depositor thereof
items which were deposited hereunder. Any such return shall not, however,
relieve either party of any liability it may have for its wrongful failure to
close.
(c)......... At or before the Closing, Seller shall deliver or cause to be
delivered to Buyer the following:
(i)... [Intentionally omitted];
(ii).. the duly executed and acknowledged Deed;
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Bill of Sale;
(v)... a duly executed Assignment of Service Contracts;
(vi).. originals of the Leases;
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<PAGE>
(vii). duly executed tenant estoppel certificates as required pursuant
to Subparagraph 3(a)(iv) above;
(viii) originals of the Contracts not previously delivered to Buyer;
(ix).. originals of any and all building permits and certificates of
occupancy for the Improvements and all tenant-occupied space included within the
Improvements that are in the possession or control of Seller and/or an affiliate
of Seller that have not been previously delivered to Buyer;
(x)... a FIRPTA affidavit (in the form attached as Exhibit F) pursuant
to Section 1445(b)(2) of the Internal Revenue Code of 1986 (the "Code"), and on
which Buyer is entitled to rely, that Seller is not a "foreign person" within
the meaning of Section 1445(f)(3) of the Code;
(xi).. a signed notice in the form of Exhibit I attached hereto for
each of the Tenants (as defined in Paragraph 6 below);
(xii). such resolutions, authorizations, bylaws or other corporate
and/or partnership documents or agreements relating to Seller as shall be
reasonably required by Buyer;
(xiii) a closing statement in form and content satisfactory to Buyer
and Seller; and
(xiv). any other instruments, records or correspondence called for
hereunder which have not previously been delivered.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
(d)......... At or before the Closing, Buyer shall deliver or cause to be
delivered to Seller the following:
(i)... a closing statement in form and content satisfactory to Buyer
and Seller;
(ii).. [Intentionally omitted];
(iii). a duly executed Assignment of Leases;
(iv).. a duly executed Assignment of Service Contracts;
(v)... the canceled Note (if the Loan has not been fully repaid before
the Closing Date); and
(vi).. the Purchase Price Balance.
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<PAGE>
(e)......... Seller and Buyer shall each deposit such other instruments as
are reasonably required by Title Company or otherwise required to close the
escrow and consummate the transactions described herein in accordance with the
terms hereof. Seller and Buyer hereby designate Title Company as the "Reporting
Person" for the transaction pursuant to Section 6045(e) of the Code and the
regulations promulgated thereunder.
(f)......... With respect to the Property the following adjustments shall
be made, and the following procedures shall be followed:
(i)... As nearly as practicable prior to the Closing, Buyer and Seller
shall prepare a statement for the Property ("Proration Statement") showing
prorations for the items set forth below, calculated as of 12:01 a.m. on the
Closing Date, on the basis of a 365-day year:
(A) rents, including, without limitation, percentage rents,
escalation charges for real estate taxes, parking charges, common area expenses,
marketing fund charges, operating expenses, maintenance escalation rents or
charges, cost-of-living increases or other charges of a similar nature, if any,
and any additional charges and expenses payable under tenant Leases (whether
such collection occurs prior to, on or after the Closing Date);
(B) real property taxes and assessments;
(C) the current installments (only) of any improvement bonds
or assessments which are a lien on the Property or which are pending and may
become a lien on the Property;
(D) water, sewer and utility charges;
(E) amounts payable under any Contract that will be continued
after the Closing;
(F) permits, licenses and/or inspection fees (calculated on
the basis of the period covered); and
(G) any other expenses normal to the operation and
maintenance of the Property.
(ii).. Buyer shall use commercially reasonable efforts consistent with
prudent business practices to collect rents or other amounts payable under the
Leases that were delinquent as of the Closing Date and that relate to a period
prior to the Closing. To the extent such delinquent rents and other amounts are
collected by Buyer, Buyer may deduct from the amount owed to Seller an amount
equal to the out-of-pocket third-party collection costs actually incurred by
Buyer in collecting such rents and other amounts due to Seller. Any rent or
other payment (including percentage rent) collected after the Closing from any
tenant which owed rent that was delinquent as of
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<PAGE>
the Closing Date and that relate to a period prior to the Closing shall be
applied first, to satisfy such tenant's rent obligations first becoming due and
payable in the month in which such rent was paid (or within five (5) days after
the date on which such rent was paid), and then to satisfy such delinquent rent
obligations (including those that relate to the period after the Closing Date)
in the inverse order of maturity. After the Closing, Buyer shall have the
exclusive right to enforce claims for rents and all other obligations due and
owing under the Leases and terminate any Leases as Buyer, in its sole
discretion, deems appropriate.
(iii). At the Closing, Seller shall deliver to Buyer all security
deposits, letters of credit and other collateral given to Seller or any of its
affiliates or predecessor-in-interest pursuant to any of the Leases, less any
portions thereof applied in accordance with the respective Lease (together with
a statement regarding such applications).
(iv).. If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, parking charges, marketing fund charges,
operating expenses, maintenance escalation rents or charges, cost-of-living
increases or other charges of a similar nature ("Additional Rents") and such
Additional Rents are not finally adjusted between the landlord and tenant under
any Lease until after the Closing Date, then Buyer shall submit to Seller within
sixty (60) days after such Additional Rents are finally adjusted with any
tenant, a supplemental statement (the "Supplemental Statement") to the extent
such Additional Rents have been finally adjusted between Buyer and such tenant,
containing a calculation of the prorations of such Additional Rents, prepared
based on the principles set forth in this Subparagraph 4(f) , provided that in
making such adjustment, the parties shall exclude any Additional Rents arising
from increased real property taxes for the Property to the extent such increase
is the result of Buyer's purchase of the Property. To the extent the
Supplemental Statement indicates that one party is entitled to any amounts under
this Subparagraph 4(f)(iv), the other party shall pay such sum to such party
within thirty (30) days after the delivery of the Supplemental Statement.
(v)... Buyer shall pay the following costs of closing this
Transaction: (A) the costs of the Buyer's legal counsel, accounting services and
engineering and environmental analyses, (B) fifty percent (50%) of the escrow
charges, fees for recording the Deed, and any premium for the Title Policy (C)
the cost of preparing three (3) years' audited operating statements for the
Property to be completed prior to the Closing as required under federal
securities laws. All other costs associated with the transaction, (including,
but not limited to, any transfer taxes, all survey costs, and fifty percent
(50%) of the escrow charges, fees for recording the Deed, and any premium for
the Title Policy), shall be charged against Seller and, provided the Closing
occurs, will be deducted from the Purchase Price.
(vi).. Notwithstanding anything to the contrary contained in this
Subparagraph 4(f), if the real property taxes and assessments payable for any
period prior to Closing are determined to be more than the amounts prorated
herein (in the
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<PAGE>
case of the year of the Closing) or paid by Seller (in the case of any prior
year), due to a reassessment of the value of the Property or otherwise, Seller
and Buyer shall promptly adjust the proration of such real property taxes and
assessments after the determination of such amounts, and Seller shall pay to
Buyer any increase in the amount of such real property taxes and assessment
applicable to any period prior to Closing
(vii). The obligations of Seller and Buyer under this Paragraph 4(f)
shall survive the Closing.
5. [Intentionally Omitted].
6. Estoppel Certificates
If Buyer elects to exercise the Option, Seller shall use all reasonable
efforts to obtain an estoppel certificate from each tenant of the Property
(each, a "Tenant"), dated no earlier than thirty (30) days prior to the Closing
Date, substantially in the form of Exhibit H attached hereto, conforming to the
most recent rent roll approved by Buyer and alleging no defaults, offsets, or
claims against the lessor (the "Estoppel Certificate"). It shall be a condition
to Buyer's obligation to close the sale and purchase of the Property that on or
before the Closing:
(a)......... Seller delivers to Buyer an Estoppel Certificate from Tenants
occupying seventy-five percent (75%) of the rentable area of the Property,
including all tenants occupying more than ten percent (10%) of the rentable area
of the Property (collectively, the "Required Tenants"), and, with respect to all
other tenants (collectively, the "Non-Required Tenants"), there shall exist no
dispute with Seller, which dispute is material to the use, value or economics of
the Property, as determined on an individual basis by Buyer in good faith in
Buyer's sole discretion (a "Material Non-Required Tenant Dispute") (and Buyer
shall be afforded the opportunity to inquire of any Non-Required Tenant which
does not provide an Estoppel Certificate as to whether any such dispute exists);
or
(b)......... To the extent that Seller is unable to obtain Estoppel
Certificates, or any items required to be therein, from the Required Tenants, or
to the extent that there is any Material Non-Required Tenant Dispute, Seller
shall deliver to Buyer and Buyer may, but shall not be obligated to, accept, on
the Closing Date a certification in which Seller warrants and represents to
Buyer, with respect to such missing Estoppel Certificates, or any missing items
required to be included therein, each item set forth in the Estoppel Certificate
attached as Exhibit H for the missing Estoppel Certificates and/or indemnifies
Buyer as to any such Material Non-Required Tenant Dispute.
(c)......... If the conditions contained in Subparagraphs 6(a) and (b)
above are not satisfied, then Buyer may, by written notice given to Seller
before the Closing, elect to waive such conditions or terminate this Agreement.
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7. Seller's Representations and Warranties
Seller hereby represents and warrants to Buyer as follows:
(a)......... Seller is a limited partnership duly organized and validly
existing under the laws of the State of California.
(b)......... Seller has full partnership power and authority to execute and
deliver this Agreement and to perform all of the terms and conditions hereof to
be performed by Seller and to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Seller and is the legal,
valid and binding obligation of Seller and is enforceable against Seller in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general equitable principles
(whether or not such enforceability is considered in a proceeding at law or in
equity). Seller is not presently subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar proceeding.
(c)......... Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated by this Agreement, nor the
compliance with the terms and conditions hereof will (i) violate or conflict, in
any material respect, with any provision of Seller's partnership agreement or
any statute, regulation or rule, or, to Seller's knowledge, any injunction,
judgment, order, decree, ruling, charge or other restrictions of any government,
governmental agency or court to which Seller is subject, and which violation or
conflict would have a material adverse effect on the ownership and operation of
the Property, or (ii) result in any material breach or the termination of any
lease, agreement or other instrument or obligation to which Seller is a party or
by which any of the Property may be subject, or cause a lien or other
encumbrance to attach to any of the Property. Seller is not a party to any
contract or subject to any other legal restriction that would prevent
fulfillment by Seller of all of the terms and conditions of this Agreement or
compliance with any of the obligations under it.
(d)......... All material consents required from any governmental authority
or third party in connection with the execution and delivery of this Agreement
by Seller or the consummation by Seller of the transactions contemplated hereby
have been made or obtained or shall have been made or obtained by the Closing
Date. Complete and correct copies of all such consents shall be delivered to
Buyer.
(e)......... Seller has fee simple title to the Real Property, subject only
to the Permitted Exceptions.
(f)......... There are no adverse or other parties in possession of the
Property, or any part thereof, except Seller and tenants under the Leases. No
party has been granted
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any license, lease, or other right relating to the use or possession of the
Property or any part thereof, except tenants under the Leases.
(g)......... Except as set forth on Schedule 7(g), to Seller's knowledge,
there are no material defects with respect to the Real Property, including,
without limitation, no material defects in the structural and load-bearing
components of the Property, the roof(s), the parking lot(s), the plumbing,
heating, air conditioning and electrical and life safety systems, and all such
items are in good operating condition and repair.
(h)......... Except as set forth on Schedule 7(h), to Seller's knowledge,
the use and operation of the Property is in compliance in all material respects
with all applicable restrictive covenants, building codes, environmental, zoning
and land use laws, and other applicable local, state and federal laws and
regulations (collectively, "Laws").
(i)......... Except as set forth on Schedule 7(i), to Seller's knowledge,
there are no condemnation, environmental, zoning or other land-use regulation
proceedings that have been instituted, and Seller has not received any notice of
any such proceeding that is planned to be instituted, which would detrimentally
and materially affect the use, operation or value of any of the Property, nor
has Seller received notice of any special assessment proceedings affecting any
of the Property. Seller shall notify Buyer promptly of any such proceedings of
which Seller becomes aware.
(j)......... All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required, to Seller's knowledge, by law, or
by the normal use and operation of the Property are installed to the property
lines of the Property, and are connected pursuant to valid permits, and are
adequate to service the Property as presently operated and, to Seller's
knowledge, to permit compliance with all Laws.
(k)......... Seller has obtained all licenses, permits, variances,
approvals, authorizations, easements and rights of way, including proof of
dedication, required from all governmental authorities having jurisdiction over
the Property or from private parties for the present use, operation and
occupancy of the Property and to insure vehicular and pedestrian ingress to and
egress from the Property.
(l)......... Except as set forth on Schedule 7(l), there is no litigation
pending or, to Seller's knowledge, threatened, against Seller that arises out of
the ownership of the Property or that might materially and detrimentally affect
the value or the use or operation of any of the Property for its intended
purpose or the ability of Seller to perform its obligations under this
Agreement. Seller shall notify Buyer promptly of any such litigation of which
Seller becomes aware.
(m)......... Except as set forth on Schedule 7(m), at the time of Closing
(i) there will be no outstanding written or oral contracts made by Seller for
any improvements to the Property which have not been fully paid for and Seller
shall cause to be discharged all mechanics' and materialmen's liens arising from
any labor or materials furnished to
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the Property prior to the time of Closing, and (ii) Seller shall have completed
all punch-list items with respect to any tenant improvements constructed by
Seller as landlord under the Leases, except only for those tenant improvements
described in the first sentence of Section 12(c) hereof.
(n)......... Seller knows of no facts nor has Seller failed to disclose any
fact which would prevent Buyer from using and operating the Property after
Closing in the manner in which the Property is currently operated.
(o)......... Other than the rights of Tenants, as tenants only, under the
Leases, Seller has not entered into any purchase contracts, options or other
agreements of any kind, written or oral, recorded or unrecorded, whereby any
person or entity other than Buyer will have acquired or will have any basis to
assert any right, title or interest, or right to possession, use, enjoyment or
proceeds of all or any portion of the Property. None of the Leases contain any
rights to purchase, rights of first offer to purchase, or first refusal to
purchase the Property.
(p)......... To Seller's knowledge, Schedule 7(p) lists all of the tangible
Personal Property.
(q)......... Attached hereto as Exhibit J is a list (the "Rent Roll") of
each of the Leases as of the date of this Agreement. Said Rent Roll is complete
in all material respects and all information therein is accurate in all material
respects as of its date, and there are no Leases or tenancies with respect to
the Property or any part thereof except as therein set forth. Except as
disclosed on the Rent Roll, no rental under any Lease has been collected in
advance of the current month. The Rent Roll shall be updated at the Closing to
reflect any changes which occur after the Effective Date. Seller is the owner of
the entire lessor's interest in and to each of the Leases and none of the Leases
or the rentals or other sums payable thereunder has been assigned or otherwise
encumbered.
(r)......... To Seller's knowledge, each of the Leases, including, without
limitation, any guaranties thereof, is an enforceable Lease and is in full force
and effect according to the terms set forth therein, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally, and by
general equitable principles. Except as specifically provided on Schedule 7(r)
attached hereto or on the Rent Roll, (i) no Tenant under any of the Leases is
greater than fifteen (15) days delinquent in the payment of its rental and other
sums due, (ii) no Tenant has abandoned or otherwise vacated the Property in
violation of any Lease, (iii) to Seller's knowledge, no Tenant or guarantor has
filed a voluntary petition in bankruptcy, insolvency or similar proceedings, has
been the subject of an involuntary bankruptcy petition, or otherwise been
adjudged bankrupt or insolvent in any proceedings filed against such tenant or
guarantor; (iv) to Seller's knowledge, no trustee or receiver has been appointed
for any Tenant; (v) no written notice has been provided to any tenant notifying
the Tenant
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that it is in default under the Lease which default has not been remedied by
such Tenant; and (vi) no Tenant, to Seller's knowledge, is otherwise in default
under any of the Leases. Except as otherwise provided in the Lease, to Seller's
knowledge, each Tenant is legally required to pay all sums and perform all other
material obligations set forth in its respective Lease, without concessions,
abatements, offsets or other basis for relief or adjustment, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally, and by general equitable
principles.
(s)......... To Seller's knowledge, no material event of default on behalf
of Seller, as lessor, exists under any Lease and no event or condition exists
that, upon the giving of notice or lapse of time, or both, would constitute a
default by Seller under any Lease. Seller has not received any notice from any
Tenant of any offsets, defenses or claims available against rent or other
charges payable by such Tenant or other performance or obligations otherwise due
from it under any Lease, except as specifically set forth in the Rent Roll
and/or the Estoppel Certificates.
(t)......... No guarantor of any Lease has been released or discharged,
voluntarily or involuntarily, from any obligation under or in connection with
any Lease or any transaction related thereto.
(u)......... Seller has not received from any Tenant or any other party
written notice of any claim (other than for customary refund at the expiration
of a Lease) to all or any part of any security deposit, except as set forth on
the Rent Roll and/or the Estoppel Certificates. The Rent Roll sets forth all
security deposits held by Seller.
(v)......... Except as shown on the Rent Roll, Seller has paid in full any
of landlord's leasing costs or obligations, including, without limitation, any
costs incurred by Seller in connection with any tenant improvements.
(w)......... No Tenant has indicated to Seller either orally or in writing
its present intent to terminate its Leases prior to expiration of the term of
such Lease except as shown on the Estoppel Certificates.
(x)......... Except as shown on Schedule 7(x), (A) no brokerage or similar
fee is due or unpaid by Seller with respect to the Leases, and (B) no brokerage
or similar fee shall be due or payable by Seller after the Closing in connection
with the Leases.
(y)......... All permits, governmental licenses, registrations and
approvals with respect to the Property which are necessary or required by law or
the rules and regulations of any governmental entity having jurisdiction over
the Property or its owner to carry on business as presently conducted
(collectively, the "Licenses"), the lack of which, individually or in the
aggregate, would reasonably be likely to have a material adverse effect on the
value, use or operation of the Property, are in full force and effect.
Page 356 of 401
<PAGE>
(z)......... Schedule 7(z) attached hereto sets forth a list of all service
contracts, construction contracts for work in progress, any warranties
thereunder, management contracts, unrecorded reciprocal easement agreements,
operating agreements, maintenance agreements, franchise agreements and other
similar agreements relating to the Property, (such contracts and agreements
together with any recorded reciprocal easements agreements are hereinafter
referred to, collectively, as the "Contracts"). With respect to each of the
Contracts, (i) the Contract is legal, valid, binding, and, to Seller's
knowledge, enforceable in accordance with its terms and in full force and
effect, except as may be limited by bankruptcy, reorganization, fraudulent
conveyance, insolvency or similar laws of general application relating to or
affecting the enforcement of creditor's rights and subject to general principles
of equity, (ii) to Seller's knowledge, except for a Contract that is terminable
upon thirty (30) day written notice, the Contract will not be adversely affected
by the occurrence of the Closing and will be legal, valid, binding, enforceable
in accordance with its terms and in full force and effect on identical terms
following the consummation of the sale of the Property, (iii) Seller is not,
and, to Seller's knowledge, no other party to the Contract is, in breach or
default under any obligation thereunder or any provisions thereof which would
have material adverse affect upon Seller, and no event has occurred which, with
notice or lapse of time, would constitute a breach or default, or permit any
termination under the Contract which would have a material adverse affect upon
Seller, (iv) no event has occurred under the Contract which would permit the
creation of any lien upon, or the restriction of the right to the use of, the
Property and (v) no party to any Contract has repudiated any material provision
of the Contract.
(aa)........ [Intentionally omitted].
(bb)........ Seller has delivered to Buyer all environmental reports and
investigations relating to the Property which are available to Seller. A list of
such reports and all environmental reports and investigations that have been
obtained by Buyer relating to the Property is attached hereto as Schedule 7(bb)
(collectively, the "Environmental Reports"). Except as set forth in the
Environmental Reports: (i) to Seller's knowledge, the Property is not, and
Seller has not received any written notice that, any real estate in the vicinity
of the Property is, in violation of any federal, state, local or administrative
agency ordinance, law, rule, regulation, order or requirement (collectively,
"Environmental Laws") relating to hazardous or toxic materials, substances or
wastes, or other materials injurious to human health or the environment
(collectively, "Hazardous Materials"); (ii) neither Seller nor, to Seller's
knowledge, any third party, has used, manufactured, generated, treated, stored,
disposed of, or released any Hazardous Material on or under the Property or
transported any Hazardous Material over the Property; (iii) neither Seller, nor
to Seller's knowledge, any third party has installed, used or removed any
storage tank on or from the Property except in full compliance with all
Environmental Laws, and to Seller's knowledge there are no storage tanks or
wells (whether existing or abandoned) located on or under the Property and to
Seller's knowledge no storage tank has been installed on, used on or removed
from the Property in violation of any Environmental
Page 357 of 401
<PAGE>
Laws; (iv) to Seller's knowledge, the Property does not consist of any building
materials that contain Hazardous Materials; and (v) no claim, action, suit or
proceeding is pending or, to Seller's knowledge, threatened against Seller,
before any court or other governmental authority or arbitration tribunal,
relating to Hazardous Materials, and there is no outstanding judgment, order,
writ, injunction, decree or award against Seller or otherwise having a material
adverse effect on the Property with respect to the same.
(cc)........ The Exhibits and Schedules attached hereto, as provided by or
on behalf of Seller, completely and correctly present in all material respects
the information required by this Agreement to be set forth therein. Seller or
CMC has delivered to Buyer true and correct copies of all of the due diligence
materials pertaining to the Property which are in the possession or control of
Seller. No representation or warranty by Seller herein and no information
disclosed in the Exhibits and Schedules hereto supplied by or on behalf of
Seller contains any untrue statement of a material fact or omits to state a fact
necessary to make the statements contained herein or therein not materially
misleading. Seller has no knowledge of any events, transactions or other facts
which, either individually or in the aggregate might reasonably give rise to
circumstances or conditions which might have a material adverse effect on the
Property.
(dd)........ Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
(ee)........ Seller has provided a copy of the representations and
warranties set forth in this Paragraph 7 to the Responsible Individuals (as
defined below), and each of the Responsible Individuals has reviewed such copy
of the representations and warranties.
Buyer and Seller hereby agree that (x) except for the representations and
warranties of Seller set forth in this Agreement and the documents to be
delivered by Seller to Buyer at Closing (the "Conveyance Documents"), Buyer,
upon exercise of the Option, will purchase the Property on an "AS IS" basis
without relying of any communications that may have been made by Seller or any
of Seller's agents or employees, with respect to the Property or Buyer's
intended use thereof; (y) the only representations and warranties made with
respect to the Property are contained herein and in the Conveyance Documents;
and (z) for purposes of this Paragraph 7, "Seller's knowledge" shall be deemed
to mean the present actual knowledge of Mr. William W. Geary, Jr., Ms. Janet
DaVall or Mr. Ron Lema (the "Responsible Individuals"), which individuals Seller
represents and warrants are the employees, partners or officers of Seller or CMC
that are most responsible for the operation and management of the Property,
without any duty of investigation or inquiry on their part. Without limiting the
generality of the foregoing, but subject to Seller's representations and
warranties hereunder and in the Conveyance Documents, Buyer shall be solely
responsible for determining the condition of the Property, including, but not
limited to, the existence or risk of any Hazardous Materials, and all aspects
regarding the fees, charges and
Page 358 of 401
<PAGE>
assessments relating to the Property. For purposes of this Paragraph 7, an item
shall be deemed "material" if the reasonably estimated cost or damage incurred
by Buyer and/or the diminution of the market value of the Property as a result
thereof, individually or in the aggregate, exceeds Twenty-Five Thousand Dollars
($25,000). Subject to the provisions of Section 14(e) hereof, all
representations and warranties set forth in this Paragraph 7 shall be deemed to
be given as of the Effective Date and the Closing Date unless Seller notifies
Buyer in writing, or Buyer otherwise acquires actual knowledge, before the
Closing, of any change in any matter covered by such representations or
warranties. Without limiting the generality of the foregoing, within ten (10)
days after Buyer's exercise of the Option, Seller shall advise Buyer in writing
of any changes in the representations and warranties since this Agreement was
exercised, including, but not limited to, updated Schedules for the Schedules
attached hereto, and Buyer may, within ten (10) days after receiving notice or
otherwise acquiring actual knowledge of such changes, rescind its exercise of
the Option and terminate this Agreement if any of such changes are not
acceptable to Buyer in its sole and absolute discretion. For purposes of this
Paragraph 7, "actual knowledge" of Buyer shall be deemed to mean the present
actual knowledge of Ms. Sandra Boyle, Mr. Andrew Batinovich or Mr. John Barlow,
without any duty of investigation or inquiry on their part
8. Representations and Warranties of Buyer
Buyer hereby represents and warrants to Seller as follows:
(a)......... Buyer is a duly organized and validly existing limited
partnership in good standing under the laws of the State of California; this
Agreement and, if Buyer executes the Option, all documents executed by Buyer
which are to be delivered to Seller at the Closing are or at the time of Closing
will be duly authorized, executed and delivered by Buyer, and are or at the
Closing will be legal, valid and binding obligations of Buyer, and do not and at
the time of Closing will not violate any provisions of any agreement or judicial
order to which Buyer is subject.
(b)......... Buyer has made (or will make prior to the Closing Date) an
independent investigation with regard to the Property and Buyer's intended use
thereof, including, without limitation, review and/or approval of matters
disclosed pursuant to Paragraph 3(a) above.
(c)......... There is no litigation pending or, to Buyer's knowledge,
threatened, against Buyer or any basis therefor that might materially and
detrimentally affect the ability of Buyer to perform its obligations under this
Agreement. Buyer shall notify Seller promptly of any such litigation of which
Buyer becomes aware.
All representations and warranties set forth in this Paragraph 8 shall be true
as of the Effective Date and the Closing Date.
Page 359 of 401
<PAGE>
9. Indemnification
(a)......... Each party hereby agrees to indemnify the other party and
defend and hold it harmless from and against any and all claims, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, resulting from any misrepresentation or breach of
warranty or breach of covenant made by such party in this Agreement or in any
document, certificate, or Exhibit given or delivered to the other pursuant to or
in connection with this Agreement.
(b)......... Seller agrees to indemnify Buyer and its partners and defend
and hold Buyer and its partners harmless from and against any and all claims,
demands, liabilities, costs, expenses, penalties, damages and losses, including,
without limitation, attorneys' fees, asserted against, incurred or suffered by
Buyer resulting from or arising out of any personal injury or property damage
occurring in, on or under the Property during Seller's ownership thereof, from
any cause whatsoever other than as a consequence of the acts or omissions of
Buyer, its agents, employees or contractors.
(c)......... Buyer agrees to indemnify Seller and its partners and defend
and hold Seller and its partners harmless from any claims, losses, demands,
liabilities, costs, expenses, penalties, damages and losses, including, without
limitation, attorneys' fees, asserted against, incurred or suffered by Seller
resulting from or arising out of any personal injury or property damage first
occurring in, on or under the Property during Buyer's ownership thereof, from
any cause whatsoever other than as a consequence of the acts or omissions of
Seller, or its agents, employees or contractors.
(d)......... The indemnification provisions of this Paragraph 9 shall
survive beyond the Closing, or, if the Closing does not occur pursuant to this
Agreement, beyond any termination of this Agreement.
10. Risk of Loss
(a)......... Minor Loss. If Buyer elects to exercise the Option, then from
and after the date of Buyer's delivery to Seller of its notice of exercise,
Buyer shall be bound to purchase the Property for the full Purchase Price as
required by the terms hereof, without regard to the occurrence or effect of any
damage to the Property or destruction of any improvements thereon or
condemnation of any portion of the Property, provided that: (i) the cost to
repair any such damage or destruction does not exceed ten percent (10%) of the
Purchase Price or, in the case of a partial condemnation, the value of the
portion of the Property taken does not exceed ten percent (10%) of the Purchase
Price; (ii) upon the Closing, there shall be a credit against the Purchase Price
due hereunder equal to the amount of any insurance proceeds or condemnation
awards collected by Seller as a result of any such damage or destruction or
condemnation, plus the amount of any insurance deductible; (iii) insurance or
condemnation proceeds available to Seller are sufficient to cover the cost of
restoration; and (iv) the insurance carrier has admitted liability for the
payment
Page 360 of 401
<PAGE>
of such costs. If the proceeds or awards have not been collected as of the
Closing, then Seller's right, title and interest to such proceeds or awards
shall be assigned to Buyer.
(b)......... Major Loss. If the cost to repair such damage or destruction
to the Property exceeds ten percent (10%) of the Purchase Price allocated to the
Property or, in the case of condemnation, if the value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price allocated to the
Property, then if Buyer has elected to exercise the Option, Buyer may, at its
option to be exercised by written notice to Seller within twenty (20) days of
Seller's notice to Buyer of the occurrence of the damage or destruction or the
commencement of condemnation proceedings, either (i) elect to terminate this
Agreement, or (ii) consummate the purchase of the Property for the full Purchase
Price as required by the terms hereof, subject to the credits against the
Purchase Price provided below. If Buyer elects to proceed with the purchase of
all of the Property, then, upon the Closing, Buyer shall be given a credit
against the Purchase Price due hereunder equal to the amount of any insurance
proceeds or condemnation awards collected by Seller as a result of any such
damage or destruction or condemnation, plus the amount of any insurance
deductible. If the proceeds or awards have not been collected as of the Closing,
then Seller's right, title and interest to such proceeds or awards shall be
assigned to Buyer. If Buyer fails to give Seller notice within such 20-day
period, then Buyer will be deemed to have elected to terminate this Agreement.
In the event of any damage or destruction of the Property covered by this
Paragraph 10(b), the Closing shall be postponed to the date which is five (5)
days after Buyer elects to consummate the Purchase of the Property as set forth
above.
11. Inspections
From and after the Effective Date, Seller shall afford authorized
representatives of Buyer reasonable access to the Property for purposes of
satisfying Buyer with respect to the representations, warranties and covenants
of Seller contained herein, with respect to any inspections desired by Buyer,
and with respect to satisfaction of any Conditions Precedent to the Closing
contained herein, including, without limitation, and the taking of soil borings
from the Property; provided, however, that Buyer shall use commercially
reasonable efforts not to unreasonably disturb or interfere with the rights of
Tenants under the Leases. Buyer hereby agrees to indemnify and hold Seller
harmless from any damage or injury to persons or property caused by Buyer or its
authorized representatives during their entry and investigations prior to the
Closing. In the event this Agreement is terminated, Buyer shall restore the
Property to substantially the condition in which it was found. This indemnity
shall survive the termination of this Agreement or the Closing, as applicable.
Page 361 of 401
<PAGE>
12. Leases And Other Agreements; Capital Improvements
(a)......... Except as otherwise contemplated or permitted by this
Agreement or approved by Buyer in writing, from the Effective Date to the
Closing Date, Seller will operate, maintain, repair and lease the Property in a
prudent manner, in the ordinary course, on an arm's-length basis and consistent
with their past practices (and without limiting the foregoing, Seller shall, in
the ordinary course, negotiate with prospective tenants and enter into leases of
the Property), enforce leases in all material respects, pay all costs and
expenses of the Property and will not dispose of or encumber any of the
Property, except for dispositions of personal property in the ordinary course of
business.
(b)......... If Buyer exercises the Option, then from and after the date of
Buyer's notice of exercise until the Closing Date, notwithstanding the above
terms of this Paragraph 12, Seller shall not, without prior written approval of
Buyer, take any of the following actions:
(i)... execute or terminate any lease covering in excess of 5,000
square feet in the case of any lease of industrial space, 2,000 square feet in
the case of any lease of office space, or 2,000 square feet in the case of any
lease of retail space, or modify or waive any material term thereof; or
(ii).. except as otherwise required under this Agreement, enter into,
execute or terminate any operating agreement, reciprocal easement agreement,
management agreement or any lease, contract, agreement or other commitment of
any sort (including any contract for capital items or expenditures), with
respect to the Property requiring payments to or by Seller in excess of Ten
Thousand Dollars ($10,000) per annum, or the performance of services by Seller
the value of which is in excess of Ten Thousand Dollars ($10,000) per annum.
(c)......... In connection with any new leases or Lease modifications
affecting the Property entered into between the date Buyer exercises the Option
and the Closing in accordance with Subparagraph 12(b) above, the cost of tenant
improvement work and leasing commissions shall be paid solely by Buyer. Seller
shall be responsible for the cost of tenant improvement work and leasing
commissions for all Leases (and amendments thereto) entered into prior to the
date Buyer exercises the Option (regardless of when the same are payable), and
Seller's obligations with respect thereto shall survive the Closing.
(d)......... Between the Effective Date and the Closing, Seller shall
continue to undertake capital improvements with respect to the Property in the
ordinary course of business.
Page 362 of 401
<PAGE>
13. Cooperation
Seller and Buyer shall cooperate and do all acts as may be reasonably
required or requested by the other with regard to the fulfillment of any
Condition Precedent or the consummation of the transactions contemplated hereby
including execution of any documents, applications or permits. Seller hereby
irrevocably authorizes Buyer and its agents to make all inquiries of any third
party, including any governmental authority, as Buyer may reasonably require to
complete its due diligence.
14. Miscellaneous
(a)......... Notices. Any notice, consent or approval required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given upon (i) hand delivery, (ii) one (1) day after being deposited with
Federal Express or another reliable overnight courier service or transmitted by
facsimile telecopy, or (iii) two (2) days after being deposited in the United
States mail, registered or certified mail, postage prepaid, return receipt
required, and addressed as follows:
If to Seller: c/o Carlsberg Management Company
2800 28th Street, Suite 222
Santa Monica, California 90405
Attention: William W. Geary, Jr.
Telephone: (310) 450-9696
Fax : (310) 399-5633
With a copy to: Sandler and Rosen
1801 Avenue of the Stars, Suite 510
Los Angeles, California 90067
Attention: Ming-chu C. Rouse
Telephone: (310) 277-4411
Fax : (310) 277-5954
If to Buyer: Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402-1708
Attention: Frank E. Austin
Telephone: (415) 343-9300
Fax: (415) 343-9690
With a copy to: Morrison & Foerster llp
345 California Street
San Francisco, California 94104
Attention: Craig B. Etlin
Telephone: (415) 677-7000
Fax : (415) 677-7522
Page 363 of 401
<PAGE>
or such other address as either party may from time to time specify in writing
to the other.
(b) Brokers and Finders. Neither party has had any contact or dealings
regarding the Property, or any communication in connection with the subject
matter of this transaction, through any real estate broker or other person who
can claim a right to a commission or finder's fee in connection with the sale
contemplated herein. In the event that any broker or finder perfects a claim for
a commission or finder's fee based upon any such contact, dealings or
communication, the party through whom the broker or finder makes its claim shall
be responsible for said commission or fee and shall indemnify and hold harmless
the other party from and against all liabilities, losses, costs and expenses
(including reasonable attorneys' fees) arising in connection with such claim for
a commission or finder's fee. The provisions of this Subparagraph shall survive
the Closing.
(c) Successors and Assigns. Subject to the following two (2) sentences,
this Agreement shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors, heirs, administrators and assigns. Buyer
shall have the right, with notice to Seller (but without the necessity of
Seller's consent), to assign its right, title and interest in and to this
Agreement to one or more assignees at any time before the Closing Date;
provided, however that such assignee(s) shall assume all obligations of Buyer,
and such assignment and assumption shall not release Buyer from any obligation
hereunder. Seller shall not have the right to assign its interest in this
Agreement.
(d) Amendments. Except as otherwise provided herein, this Agreement may be
amended or modified only by a written instrument executed by Seller and Buyer.
(e) Continuation and Survival of Representations and Warranties, Etc. All
representations and warranties by the respective parties contained herein or
made in writing pursuant to this Agreement shall be true and correct as of the
date when made, and each party shall notify the other immediately in writing if,
at any time before the Closing, such party acquires actual knowledge such that,
as a consequence of acquiring such knowledge, such party would not be able to
make any of the representations and warranties of such party stated herein or
made in writing pursuant to this Agreement; provided, however, that Seller shall
not be required to notify Buyer of its acquisition of such knowledge if Buyer
already has actual knowledge of the matters covered thereby. All representations
and warranties by the respective parties contained herein or made in writing
pursuant to this Agreement, as revised by such notices of revision or qualified
by such actual knowledge of Buyer, shall be true and correct as of the date of
Buyer's exercise of the Option and as of Closing, and shall be deemed to be
material, and, together with all conditions, covenants and indemnities made by
the respective parties contained herein or made in writing pursuant to this
Agreement (except as otherwise expressly limited or expanded by the terms of
this Agreement), shall survive the execution and delivery of this Agreement
Page 364 of 401
<PAGE>
and shall survive the Closing for a period of twenty-four (24) months after the
Closing, or, to the extent the context requires, beyond any termination of this
Agreement for a period of twenty-four (24) months. For purposes of this
Subparagraph 14(e), "actual knowledge" of Buyer shall be deemed to mean the
present actual knowledge of Ms. Sandra Boyle, Mr. Andrew Batinovich or Mr. John
Barlow, without any duty of investigation or inquiry on their part
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
(g) Merger of Prior Agreements. This Agreement and the Exhibits hereto
constitute the entire agreement between the parties and supersede all prior
agreements and understandings between the parties relating to the subject matter
hereof, including, without limitation, the Letter of Intent dated October 22,
1996, entered into by and between Buyer and Seller.
(h) Enforcement. If either party hereto fails to perform any of its
obligations under this Agreement or if a dispute arises between the parties
hereto concerning the meaning or interpretation of any provision of this
Agreement, then the defaulting party or the party not prevailing in such dispute
shall pay any and all costs and expenses incurred by the other party on account
of such default and/or in enforcing or establishing its rights hereunder,
including, without limitation, court costs and attorneys' fees and
disbursements. Any such attorneys' fees and other expenses incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
(i) Time of the Essence. Time is of the essence of this Agreement.
(j) Severability. If any provision of this Agreement, or the application
thereof to any person, place, or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other persons, places and
circumstances shall remain in full force and effect.
(k) Marketing. Seller agrees not to market or show the Property to any
other prospective purchasers during the term of this Agreement.
(l) Effective Date. As used herein, the term "Effective Date" shall mean
the first date on which both Seller and Buyer shall have executed this
Agreement.
(m) Confidentiality. Buyer and Seller shall each maintain as confidential
any and all material or information about the other or, in the case of Buyer and
its agents,
Page 365 of 401
<PAGE>
employees, consultants and contractors, about the Property, and shall not
disclose such information to any third party, except, in the case of information
about the Property and Seller, to Buyer's lender or prospective lenders,
insurance and reinsurance firms, attorneys, environmental assessment and
remediation service firms and consultants, as may be reasonably required for the
consummation of the transaction contemplated hereunder and/or as required by
law.
(n) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
15. Acceptance of Agreement by Seller
This Agreement shall be null and void unless it is accepted by Seller and
two fully executed copies hereof are returned to Buyer on or before 5:00 p.m.
(P.S.T.) on November 13, 1996.
In Witness Whereof, the parties hereto have executed this Agreement as of
the date first above written.
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
Dated:
By:
Its:
Dated:
Page 366 of 401
<PAGE>
Seller: Carlsberg Properties, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.
a California corporation
By: _____________________________
William W. Geary, Jr.
President
Dated:_____________________________
Title Company agrees to act as escrow holder in accordance with the terms of
this Agreement and to act as the Reporting Person (as such term is defined in
this Agreement).
Lawyer's Title Insurance Corporation
By:
Its:
Dated:
Page 367 of 401
<PAGE>
Schedule 1(a)
Real Property
Page 368 of 401
<PAGE>
Schedule 3(c)
Permitted Exceptions
Page 369 of 401
<PAGE>
Schedule 7(g)
Defects
None.
Page 370 of 401
<PAGE>
Schedule 7(h)
Violations
None.
Page 371 of 401
<PAGE>
Schedule 7(i)
Proceedings
None.
Page 372 of 401
<PAGE>
Schedule 7(l)
Litigation
None.
Page 373 of 401
<PAGE>
Schedule 7(m)
Outstanding Contracts
None.
Page 374 of 401
<PAGE>
Schedule 7(p)
Personal Property
None.
Page 375 of 401
<PAGE>
Schedule 7(r)
Lease Exceptions
None.
Page 376 of 401
<PAGE>
Schedule 7(x)
Brokerage Fees
None.
Page 377 of 401
<PAGE>
Schedule 7(z)
Contracts
None.
Page 378 of 401
<PAGE>
Schedule 7(bb)
Environmental Reports
1. Phase I Environmental Report dated as of August 29, 1996 prepared by
Eckland Consultants, Inc.
Page 379 of 401
<PAGE>
Exhibit A
Memorandum of Option Agreement
Recording Requested By And
When Recorded Mail To:
Morrison & Foerster llp
345 California Street
San Francisco, CA 94104
Attn: Craig B. Etlin, Esq.
- --------------------------------------------------------------------------------
(Space Above for Recorder's Use)
Memorandum Of Option Agreement
This Memorandum Of Option Agreement is made and entered into this day
of November, 1996, by and between Carlsberg Properties, LTD., a California
limited partnership, whose address is 2800 - 28th Street, Suite 222, Santa
Monica, California 90405 ("Seller"), and Glenborough Properties, L.P., a
California limited partnership ("Purchaser").
Witnesseth:
1. Seller, for good and valuable consideration, the receipt and adequacy
which are hereby acknowledged, hereby irrevocably grants to Purchaser an option
to purchase the real property located in the City of Phoenix, County of
Maricopa, State of Arizona, more particularly described on the attached
Exhibit A, upon and subject to the terms and conditions set forth in that
certain Option Agreement (the "Option Agreement"), between the parties hereto,
of even date herewith.
2. The purpose of this Memorandum of Option Agreement is to give notice of
the rights and obligations of the parties hereto under the Option Agreement, and
all the terms and conditions of the Option Agreement are incorporated herein by
reference as if they were fully set forth herein.
3. Subject to the terms of the Option Agreement, this Memorandum of Option
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors in interest and assigns.
4. This Memorandum of Option Agreement shall be of no further force and
effect upon the expiration of thirty-nine (39) months following the date of
recordation hereof, without any further act by either party hereto.
Page 380 of 401
<PAGE>
5. This Memorandum of Option Agreement may be executed in counterparts, but
all counterparts shall constitute but one and the same document.
In Witness Whereof, the parties hereto have executed this Memorandum of
Option Agreement on the date first above written.
Buyer: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
By:
Its:
Seller: Carlsberg Properties, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.
a California corporation
By:________________________________
William W. Geary, Jr.
President
Page 381 of 401
<PAGE>
Exhibit B
Grant Deed
Recording Requested By And
When Recorded Mail To:
Morrison & Foerster llp
345 California Street
San Francisco, CA 94104
Attn: Craig B. Etlin, Esq.
- --------------------------------------------------------------------------------
(Space Above for Recorder's Use)
Special Warranty Deed
For the consideration of Ten Dollars, and other valuable considerations,
the undersigned, carlsberg properties, ltd., a California limited partnership
("Grantor"), does hereby convey to Glenborough Properties, L.P., a California
limited partnership ("Grantee"), the following described real property situated
in Maricopa County, Arizona, and more particularly described on Exhibit A
attached hereto and by this reference made a part hereof, together with all
rights and privileges appurtenant thereto; subject however, to all matters
described on Exhibit B attached hereto.
Grantor hereby binds itself and its successors to warrant and defend the
title, as against all acts of the Grantor herein and no other, subject to the
matters above set forth.
Dated this _____ day of November, 1996.
Grantor: Carlsberg Properties, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.
a California corporation,
General Partner
By:________________________
William W. Geary, Jr.
President
Page 382 of 401
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State of
ss.
County of
- ------------------------------------------------------
On this _____ day of , 1996, before me, the
undersigned Notary Public, personally appeared William W. Geary, Jr., the
President of Carlsberg Properties, Inc., a California corporation, the General
Partner of Grantor, and acknowledged that he executed the foregoing instrument.
Witness my hand and official seal.
My Commission Expires: Notary Public
Page 383 of 401
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Exhibit C
Assignment of Leases
This Assignment of Leases ("Assignment") dated this day of
November, 1996, is entered into by and between Carlsberg Properties, LTD., a
California limited partnership, ("Assignor"), and Glenborough Properties, L.P.,
a California limited partnership ("Assignee").
Witnesseth:
Whereas, Assignor is the lessor under certain leases executed with respect
to that certain real property commonly known as the Grunow Medical Building (the
"Property") as more fully described in Exhibit A attached hereto, which leases
are described in Schedule 1 attached hereto (the "Leases"); and
Whereas, Assignor desires to assign its interest as lessor in the Leases to
Assignee, and Assignee desires to accept the assignment thereof;
Now, Therefore, in consideration of the promises and conditions contained
herein, the parties hereby agree as follows:
1. Effective as of the Effective Date (as defined below), Assignor hereby
assigns to Assignee all of its right, title and interest in and to the Leases.
2. Assignor warrants and represents that as of the date hereof Schedule 1
includes all of the leases and occupancy agreements affecting the Property. As
of the date hereof, there are no assignments of or agreements to assign the
Leases to any other party.
3. Except as otherwise set forth in the Purchase Agreement (as defined in
paragraph 5 below), Assignor hereby agrees to indemnify Assignee against and
hold Assignee harmless from any and all cost, liability, loss, damage or
expense, including without limitation, reasonable attorneys' fees, originating
prior to the Effective Date and arising out of the lessor's obligations under
the Leases.
4. Except as set forth in the Purchase Agreement, effective as of the
Effective Date, Assignee hereby assumes all of the lessor's obligations under
the Leases and agrees to indemnify Assignor against and hold Assignor harmless
from any and all cost, liability, loss, damage or expense, including without
limitation, reasonable attorneys' fees, originating subsequent to the Effective
Date and arising out of the lessor's obligations under the Leases.
5. Any rental and other payments under the Leases shall be prorated between
the parties as provided in the Option Agreement between Assignor, as Seller, and
Assignee, as Buyer, dated as of November __, 1996 (the "Purchase Agreement").
Page 384 of 401
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6. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
7. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
8. This Assignment shall be governed by and construed in accordance with
the laws of the State of California.
9. For the purposes of this Assignment, the "Effective Date" shall be the
date of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: Carlsberg Properties, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.
a California corporation
By:________________________
William W. Geary, Jr.
President
Page 385 of 401
<PAGE>
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
General Partner
By:
Its:
By:
Its:
Page 386 of 401
<PAGE>
Exhibit A to
Assignment
of Leases
Property Description
Page 387 of 401
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Schedule 1 to
Assignment of Leases
Amendment Security
Tenants Premises Leases Date Date(s) Deposit
Page 388 of 401
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Exhibit D
Warranty Bill Of Sale
For good and valuable consideration the receipt of which is hereby
acknowledged, Carlsberg Properties, LTD., a California limited partnership
("Seller"), does hereby sell, transfer, and convey to Glenborough Properties,
L.P., a California limited partnership ("Buyer"), all personal property owned by
Seller and located on or in or used in connection with the Real Property and
Improvements (as such terms are defined in that certain Purchase Agreement dated
as of November __, 1996, between Seller and Buyer, including, without
limitation, those items described in Schedule A attached hereto.
Seller does hereby represent to Buyer that Seller is the lawful owner of
such personal property, that such personal property is free and clear of all
encumbrances, and that Seller has good right to sell the same as aforesaid and
will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands of all persons whomsoever.
Dated this _____ day of November __, 1996.
Seller: Carlsberg Properties, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.
a California corporation
By:________________________
William W. Geary, Jr.
President
Page 389 of 401
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Schedule A to
Warranty Bill of Sale
Page 390 of 401
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Exhibit E
Assignment of Service Contracts,
Warranties and Guaranties
and Other Intangible Property
This Assignment of Service Contracts, Warranties and Guaranties and Other
Intangible Property ("Assignment") is made and entered into as of this _____ day
of November, 1996, by Carlsberg Properties, LTD., a California limited
partnership ("Assignor"), to Glenborough Properties, L.P., a California limited
partnership ("Assignee").
For good and valuable consideration, the receipt of which is hereby
acknowledged, effective as of the Effective Date (as defined below), Assignor
hereby assigns and transfers unto Assignee all of its right, title, claim and
interest in and under:
(a) all warranties and guaranties made by or received from any third party
with respect to any building, building component, structure, fixture, machinery,
equipment, or material situated on, contained in any building or other
improvement situated on, or comprising a part of any building or other
improvement situated on, any part of that certain real property described in
Exhibit A attached hereto including, without limitation, those warranties and
guaranties listed in Schedule 1 attached hereto (collectively, "Warranties");
(b) all of the Service Contracts listed in Schedule 2 attached hereto; and
(c) any Intangible Property (as defined in that certain Option Agreement
dated as of November __, 1996 between Assignor and Assignee (or Assignee's
predecessor in interest) (the "Purchase Agreement")).
Assignor and Assignee further hereby agree and covenant as follows:
1. Assignor hereby agrees to indemnify Assignee against and hold Assignee
harmless from any and all cost, liability, loss, damage or expense, including,
without limitation, reasonable attorneys' fees, originating prior to the
Effective Date and arising out of the owner's obligations under the Service
Contracts.
2. Effective as of the Effective Date, Assignee hereby assumes all of the
owner's obligations under the Service Contracts and agrees to indemnify Assignor
against and hold Assignor harmless from any and all cost, liability, loss,
damage or expense, including, without limitation, reasonable attorneys' fees,
originating on or subsequent to the Effective Date and arising out of the
owner's obligations under the Service Contracts.
Page 391 of 401
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3. If either party hereto fails to perform any of its obligations under
this Assignment or if a dispute arises between the parties hereto concerning the
meaning or interpretation of any provision of this Assignment, then the
defaulting party or the party not prevailing in such dispute shall pay any and
all costs and expenses incurred by the other party on account of such default
and/or in enforcing or establishing its rights hereunder, including, without
limitation, court costs and attorneys' fees and disbursements. Any such
attorneys' fees and other expenses incurred by either party in enforcing a
judgment in its favor under this Assignment shall be recoverable separately from
and in addition to any other amount included in such judgment, and such
attorneys' fees obligation is intended to be severable from the other provisions
of this Assignment and to survive and not be merged into any such judgment.
4. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.
5. This Assignment shall be governed by and construed and in accordance
with laws of the State of California.
Page 392 of 401
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6. For purposes of this Assignment, the "Effective Date" shall be the date
of the Closing (as defined in the Purchase Agreement).
In Witness Whereof, Assignor and Assignee have executed this Assignment the
day and year first above written.
Assignor: Carlsberg Properties, LTD.,
a California limited partnership
By: Carlsberg Properties, Inc.
a California corporation
By:___________________________________
William W. Geary, Jr.
President
Assignee: Glenborough Properties, L.P.,
a California limited partnership
By: Glenborough Realty Trust Incorporated,
a Maryland corporation,
its general partner
By:
Its:
Page 393 of 401
<PAGE>
Exhibit A to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
Page 394 of 401
<PAGE>
Schedule 1 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Warranties
Page 395 of 401
<PAGE>
Schedule 2 to
Assignment of Service
Contracts Warranties
and Guaranties and
Other Intangible Property
List of Service Contracts
Page 396 of 401
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Exhibit F
Certificate of Transferor
other than an Individual
(FIRPTA Affidavit)
Section 1445 of the Internal Revenue Code provides that a transferee of a
U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform Glenborough Properties, L.P., a California limited
partnership, the transferee of certain real property located in Phoenix,
Arizona, that withholding of tax is not required upon the disposition of such
U.S. real property interest by Carlsberg Properties, Ltd., a California limited
partnership ("Transferor"), the undersigned hereby certifies the following on
behalf of Transferor:
1. Transferor is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);
2. Transferor's U.S. employer identification number is
; and
3. Transferor's office address is 2800-28th Street, Suite 222, Santa
Monica, California 90405.
Transferor understands that this certification may be disclosed to the
Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of
Transferor.
Dated: November ____, 1996.
[Individual signature line]
on behalf of
CARLSBERG PROPERTIES, LTD.,
a California limited partnership
Page 397 of 401
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Exhibit G
Form of Tenant's Estoppel Certificate
Glenborough Properties, L.P. ("Purchaser")
400 S. El Camino Real
San Mateo, California 94402-1708
RE: Lease Dated , and amended
(the "Lease"), by and between
, as lessor ("Lessor"), and
, as lessee ("Lessee"), with respect to certain
premises (the "Leased Premises") located at
(the "Property"). The
Leased Premises are comprised of square feet.
Ladies and Gentlemen:
The undersigned hereby acknowledges that Purchaser is entering into an
agreement to purchase the Property. The undersigned further acknowledges the
right of Lessor and Purchaser to rely upon the statements and representations of
the undersigned contained in this Certificate and further acknowledges that
Purchaser will be purchasing the Property in material reliance on this
Certificate.
Given the foregoing, the undersigned Lessee hereby certifies and represents
unto Purchaser, its successors and assigns, with respect to the above-described
Lease, a true and correct copy of which is attached as Exhibit A hereto, as
follows:
1. Lease Effective. The Lease has been duly executed and delivered by
Lessee and, subject to the terms and conditions thereof, the Lease is in full
force and effect, the obligations of Lessee thereunder are valid and binding and
there have been no further amendments, modifications or additions to the Lease,
written oral;
2. No Default. To the best of Lessee's knowledge, as of the date hereof:
(i) there exists no breach, default, or event or condition which, with the
giving of notice or the passage of time or both, would constitute a breach or
default under the Lease; and (ii) there are no existing claims, defenses or
offsets against rental due or to become due under the Lease;
3. Entire Agreement. The Lease constitutes the entire agreement between
Lessor and Lessee with respect to the Property and Lessee claims no rights with
respect to the Property other than as set forth in the Lease; and
4. No Prepaid Rent. No deposits or prepayments of rent have been made in
connection with the Lease, except as follows: (if none, state "none")
.
Page 398 of 401
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Dated: , 1996.
"Lessee"
___________________________________
By:________________________________
Its:_______________________________
Page 399 of 401
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Exhibit H
Rent Roll
Page 400 of 401
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Exhibit I
Notice To Tenants
(Date)
(Name)
(Street Address)
(City, State, Zip Code)
Re: (Name of Property)
Dear (Tenant, or address individually to each Tenant):
Glenborough Properties, L.P., a California limited partnership has acquired
the subject property. We are pleased to advise you that, as of November ___,
1996, Glenborough Corporation has been engaged to lease and manage the property.
Please send your monthly rent and all future remittances to:
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
We value your tenancy and urge you to direct any questions regarding your
lease or this letter to (Name of Property Manager) at (Phone Number for Property
Manager or Building Property Manager) for (Name of Property).
Very truly yours,
___________________________,
a __________________________ ,
Property Manager for (Seller)
By:___________________________
Its: _________________________
Page 401 of 401
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