PURCHASE AND SALE AGREEMENT
REAL PROPERTY PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
by and between
FRONTIER II PROPERTIES LIMITED PARTNERSHIP,
a Texas limited partnership
as Seller
and
ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
as Buyer
August 15, 1997
Relating to Real Property Located At:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇
TABLE OF CONTENTS
Section Page
RECITALS 1
1. PURCHASE AND SALE 1
1.1 Agreement to Buy and Sell 1
1.2 Purchase Price 2
1.3 Payment of Purchase Price 2
2. OPENING OF ESCROW 2
2.1 Escrow; Escrow Holder 2
2.2 Closing Date 3
3. ACTIONS PENDING CLOSING 3
3.1 Deliveries by Seller 3
3.2 Buyer's Review of Title 4
3.3 Buyer's Review of the Property and Agreements 5
3.4 No Processing 7
3.5 Buyer's Termination 7
3.6 Seller's Termination 8
4. ADDITIONAL AGREEMENTS OF THE PARTIES 8
4.1 Representations and Warranties 8
4.1.1 Buyer's Representations and Warranties 8
4.1.2 Sellers Covenants, Representations and
Warranties 10
4.2 Reaffirmation 13
4.3 Hazardous Material Indemnification 14
4.4 Condemnation 14
4.5 Damage or Destruction 15
4.6 Indemnity 15
5. CLOSING 16
5.1 Deposits Into Escrow 16
5.2 Prorations 17
5.3 Payment of Closing Costs 18
5.4 Closing of Escrow 18
5.5 Failure to Close; Cancellation 19
5.6 LIQUIDATED DAMAGES 19
5.7 BUYER'S REMEDIES 19
5.8 Possession 21
5.9 Conditions Precedent/Consurrent to Closing 21
6. GENERAL PROVISIONS 21
6.1 Counterparts 21
6.2 Entire Agreement 21
6.3 Legal Advice; Neutral Interpretation; Headings 22
6.4 Choice of Law 22
6.5 Severability 22
6.6 Waiver of Covenants, Conditions or Remedies 22
6.7 Exhibits 22
6.8 Amendment 22
6.9 Relationship of Parties 22
6.10 No Third Party Benefit 22
6.11 Time of the Essence 23
6.12 Further Acts 23
6.13 Recordation; Actions to Clear Title 23
6.14 Assignment 23
6.15 Attorneys' Fees 23
6.16 Brokers 23
6.17 Confidentiality 23
6.18 Manner of Giving Notice 24
6.19 Survival 25
6.20 Acceptance of Offer 25
REAL PROPERTY PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS REAL PROPERTY PURCHASE AND SALE AGREEMENT (this
"Agreement") is entered into as of August 15, 1997, by and
between FRONTIER II PROPERTIES LIMITED PARTNERSHIP, a Texas
limited partnership (the "Seller"), and ARDEN REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (the "Buyer").
RECITALS:
A. Seller is the owner of approximately 4.37 acres of real
property improved with an approximately 84,081 square foot
suburban office building located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, in
the City of Diamond Bar, County of Los Angeles, State of
California.
B. Buyer desires to purchase that property, and Seller
desires to sell that property on the terms and conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, Buyer and Seller agree as
follows:
1. PURCHASE AND SALE
1.1 Agreement to Buy and Sell. Subject to all of the terms
and conditions of this Agreement, Seller hereby agrees to sell
and convey to Buyer and Buyer hereby agrees to acquire and
purchase from Seller the following (all of which are collectively
called the "Property" in this Agreement):
1.1.1 That certain real property described on
Exhibit "A", and all of Seller's right, title and interest in and
to all easements, rights and privileges appurtenant thereto,
including any right, title and interest of Seller in and to
adjacent streets, alleys or rights of way (collectively, the
"Land"), together with all of Seller's right, title and interest
in and to all improvements, structures, equipment and fixtures
currently located on or under the Land (the "Improvements");
1.1.2 All of Seller's right, title and interest in
and to all tangible personal property, if any, located on,
affixed to, or pertaining to the Property and used in connection
with the ownership, operation or maintenance of the Property, and
all intangible property, if any (including, without limitation,
plans and specifications, surveys, permits, licenses and
approvals) owned or held by Seller that pertains to the
ownership, maintenance, use or operation of the Property
(collectively, the "Personal Property"), all as listed on Exhibit
"B" attached hereto;
1.1.3 All of Seller's right, title and interest in
any leases, licenses, security deposits, letters of credit,
guarantees, occupancy agreement or other agreements demising
space in, providing for the use of and/or occupancy of the Land
or the Improvements (collectively, the "Leases");
1.1.4 All of Seller's right, title and interest, if
any, in and to any and all Leases, service contracts, maintenance
agreements, construction contracts, architect's agreements,
parking agreements, consultant agreements, warranties,
guaranties, bonds and all other contracts and agreement relating
to the Property which continue in full force and effect beyond
the Closing, together with all supplements, amendment and
modifications thereto (collectively, the "Surviving Contracts").
1.2 Purchase Price. The purchase price of the Property
shall be the sum of Ten Million Eight Hundred Thousand Dollars
($10,800,000.00) (the "Purchase Price").
1.3 Payment of Purchase Price. The Purchase Price shall be
payable as follows:
1.3.1 "Effective Date" means the date a fully
executed original of this Agreement is delivered to Fidelity
National Title Insurance Company, at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ("Escrow Holder"). Within three business days after the
Effective Date hereof, Buyer shall deposit into "Escrow" (as
defined below), into an interest bearing account, the sum of
Three Hundred Thousand Dollars ($300,000.00) (the "Deposit") by
certified check or wire transfer of federal funds, or in other
immediately available funds. Except as otherwise set forth in
this Agreement, the Deposit shall be non-refundable to Buyer
after the Decision Date. Any income or interest earned on the
Deposit while in Escrow prior to "Closing" (as defined below)
shall be held in Escrow and shall be deemed a part of the Deposit
for all purposes of this Agreement. The Deposit and all interest
accrued thereon while in Escrow shall be applied to the Purchase
Price upon Closing.
1.3.2 At least one (1) business day prior to the
"Closing Date" (as defined below), Buyer shall deposit into
Escrow the balance of the Purchase Price (i.e., $10,500,000.00),
subject to adjustment by reason of any applicable prorations and
the allocation of closing costs described below. The deposit
required by this paragraph shall be made by wire transfer of
federal funds or in another immediately available form.
2. OPENING OF ESCROW
2.1 Escrow; Escrow Holder. On the Effective Date, an
escrow (the "Escrow") shall be opened with the Escrow Holder.
The terms and conditions set forth in this Agreement shall
constitute both an agreement between Seller and Buyer and escrow
instructions for Escrow Holder. Seller and Buyer shall promptly
execute and deliver to Escrow Holder any separate or additional
escrow instructions requested by Escrow Holder which are
consistent with the terms of this Agreement. Any separate or
additional instructions shall not modify or amend the provisions
of this Agreement unless otherwise expressly set forth by mutual
consent of Buyer and Seller. As used in this Agreement,
"Closing" means the recordation of the "Deed" (as defined below)
in the Official Records of Los Angeles County, California.
2.2 Closing Date. Escrow shall close on or before
September 4, 1997 (the "Closing Date").
3. ACTIONS PENDING CLOSING
3.1 Deliveries by Seller.
3.1.1 On or prior to the execution of this
Agreement, Seller shall deliver to Buyer a copy of a current
standard coverage preliminary title report issued by Fidelity
National Title Insurance Company (the "Title Company") showing
the condition of title to the Property, accompanied by copies of
all documents referred to therein (collectively, the "PTR").
3.1.2 Prior to the date hereof, Seller has
delivered or made available to Buyer the following items and
documents (the "Delivered Documents") pertaining to the Property
(but only to the extent the same are in Seller's or Seller's
management company's possession). By signing this Agreement
Buyer acknowledges receipt of a package containing all of the
following documents except the documents that Seller has agreed
to make available to Buyer. Where Seller has agreed to make
documents available to Buyer, such documents shall be assembled
by Seller within twenty-four (24) hours after a request by Buyer,
either at the property manager's office at the Property or at
Seller's Los Angeles office, and shall be available for Buyer's
review and/or duplication during regular business hours.
(a) copies of all leases, modifications, riders,
amendments, lease guarantees and a copy of the standard form
lease (including all standard addenda and exhibits thereto);
(b) a current rent roll (the "Rent Roll"),
reflecting, as of the date hereof, with respect to each tenant of
the Property: (1) suite/unit number; (2) name of tenant; (3)
annual rental; (4) the amount of such tenant's security deposit
(and any other deposits), if any; (5) the expiration date of such
tenant's lease; (6) any future free rent or other rental
concessions thereunder and the period to which the same apply;
(7) any renewal, purchase, and expansion options; and (8) any
cancellation or termination rights;
(c) a list and copies of all maintenance and
repair contracts, all service or supply contracts, any other
contracts or agreements relating to the Property ("Service
Contracts"), together with copies of all other contracts (if any)
that shall survive Closing;
(d) a list and complete copies of licenses,
permits, certificates of occupancy, building inspection reports
and approvals, and other governmental approvals (if any), and a
list of all building, health and safety violations within the
last three (3) years;
(e) copies of any warranties or guarantees
currently in effect;
(f) the Property's operating expense statements
(the "Operating Statements") for the past two (2) years and year
to date as of June 30, 1997, and Seller shall make available to
Buyer the Property's other books and records for such periods;
(g) certificate of insurance;
(h) any topographical information and a complete
set of plans and specifications for the Property, and Seller
shall make available to Buyer tenant improvement plans and
specifications for premises in the Property;
(i) copies of tax bills for the past three (3)
years, and Seller shall make available to Buyer utility bills for
the Property for the past three (3) years;
(j) any soils reports, termite inspection
reports, earthquake, environmental, engineering, ADA,
architectural or other structural reports or studies relating to
the Property, and copies of correspondence with or notices from
any governmental agency relating to Hazardous Materials on the
Property;
(k) a schedule of all personal property owned or
leased by Seller and used in connection with the operation of the
Property;
(l) copies of Seller's most current title policy
and surveys;
(m) Seller shall make available to Buyer copies
of tenant correspondence and financial statements of tenants of
the Property;
(n) Seller shall make available to Buyer all
"base year" information applicable to Leases; and
(o) all brokerage commission agreements.
3.1.3 Upon receipt of Buyer's reasonable written
request, Seller shall promptly provide or make available to Buyer
copies of such other non-privileged documents and materials that
materially relate to the Property that are in Seller's
possession.
3.2 Buyer's Review of Title.
3.2.1 Buyer shall have until August 20, 1997,
within which to deliver to Seller written notice of Buyer's
disapproval or conditional approval of title as shown on the PTR
("Disapproved Exceptions"). Buyer's failure to provide such
notice on or before such date shall constitute Buyer's approval
of the condition of title as shown on the PTR.
3.2.2 If Buyer timely notifies Seller of its
Disapproved Exceptions, Seller shall notify Buyer in writing on
or before August 25, 1997, that: (a) Seller has removed such
Disapproved Exceptions from title (or met Buyer's conditions for
approval of a title exception); or (b) Seller is covenanting to
do so as of or before Closing; or (c) Seller will not remove (or
meet the conditions of approval of) specified Disapproved
Exceptions. Failure to address Disapproved Exceptions in any
notice, or failure to give such a notice, shall constitute
Seller's statement that it will not remove or otherwise address
such Disapproved Exceptions.
3.2.3 If Seller does not timely remove or covenant
to remove (or meet or covenant to meet the conditions of approval
of) any Disapproved Exceptions, Buyer shall have the right to
terminate this Agreement on or before August 27, 1997 (the
"Decision Date"), or to waive its objection to the Disapproved
Exceptions in question and proceed to Closing as Buyer's sole and
exclusive remedy. Buyer's failure to provide written notice of
termination on or before the Decision Date shall constitute
Buyer's waiver of its disapproval of the Disapproved Exceptions.
In the case of Buyer's waiver (or deemed waiver) of Disapproved
Exceptions, Seller shall have no obligation to remove or
otherwise address such Disapproved Exception from title and such
waived Disapproved Exceptions shall be deemed approved. If Buyer
elects to terminate this Agreement, the provisions of Section 3.5
shall apply.
3.2.4 Except for the Disapproved Exceptions that
Seller removes or covenants to remove, the exceptions to title
shown by the PTR and any encumbrance arising from the acts or
omissions of Buyer are called the "Permitted Exceptions" in this
Agreement.
3.3 Buyer's Review of the Property and Agreements.
3.3.1 Review of Agreements. Buyer shall have until
the Decision Date to review the documents and other materials
delivered pursuant to Section 3.1. If on the basis of such
review, Buyer determines in its sole and absolute discretion that
the Property is not suitable for Buyer's intended use, then on or
before the Decision Date, Buyer may deliver written notice to
Seller to terminate this Agreement in accordance with Section 3.5
below. Buyer's failure to provide such notice on or before the
Decision Date shall constitute Buyer's approval of each document
and each other material described in Section 3.1 (which was
reviewed or which could have been reviewed).
3.3.2 Inspection of the Property.
(a) Nonexclusive License. Seller hereby grants
to Buyer and its agents, employees, representatives or
contractors (collectively, "Buyer's Agents") a nonexclusive
license to enter onto the Property solely for the purpose of
conducting Buyer's inspection, tests, studies and feasibility
analysis of the Property to determine if the Property is suitable
for Buyer's purposes (the "Inspection"). Any Inspection work
shall be at the sole cost and expense of Buyer. Seller agrees to
reasonably cooperate with Buyer in the conduct of Buyer's
Inspection. The license created under this paragraph shall
expire on the Decision Date. At least forty-eight (48) hours
prior to any entry and Inspection, Buyer shall deliver to Seller
notice of its intention to enter the Property to conduct such
Inspection and the proposed date and time of such entry (and
Buyer may enter only on the dates and at the times contained in
such notices, and Seller shall have the right to have one or more
of its representatives or agents accompany Buyer and Buyer's
Agents at all times while Buyer or Buyer's Agents are on the
Property). In addition, Buyer shall have the right to interview
tenants of the Property, in which case Buyer shall notify Seller
of its desire and Seller shall schedule the interviews and Seller
shall have the right to have a representative present at any and
all such interviews.
(b) Physical Testing. Notwithstanding the
foregoing, without first obtaining Seller's prior written consent
(which shall not be unreasonably withheld or delayed), Buyer
shall only conduct a visual inspection, with no right to conduct
any boring, sampling or removal of any portion of the Property
(collectively, "Physical Testing"). (Without limiting the
generality of the foregoing sentence, it is specifically agreed
that a Phase II environmental inspection shall constitute
"Physical Testing" for purposes of this Agreement.) If Buyer
wishes to conduct any Physical Testing of the Property, Buyer
shall submit a work plan to Seller for Seller's prior written
approval (not to be unreasonably withheld or delayed), which work
plan Seller may modify, limit or disapprove in its reasonable
discretion. It shall be reasonable for Seller to disapprove a
Phase II environmental inspection if there is no Phase I
environmental report that sets forth adequate grounds for
conducting a Phase II inspection. If Seller approves a work
plan, all Physical Testing shall comply strictly with the work
plan that has been approved by Seller, and if Seller does not
approve a work plan, Buyer shall not conduct any Physical Testing
of the Property. If Buyer intends to conduct any Physical
Testing, prior to commencing any such Physical Testing, Buyer
shall provide Seller with sufficient evidence to show that Buyer
and Buyer's Agents who are to enter upon the Property are
adequately covered by policies of insurance insuring Buyer and
Seller against any and all liability arising out of Buyer's or
Buyer's Agents' entry upon and Inspection of the Property,
including without limitation any loss or damage to the Property,
with coverage in the amount not less than $1,000,000 per
occurrence. If Buyer or Buyer's Agents conduct any activities on
the Property that are excluded from the definition of
"Inspection" (except pursuant to a work plan approved by Seller
in accordance with this paragraph), that shall be a material
breach of this Agreement and Seller may terminate this Agreement
in accordance with the terms of Section 3.6 and keep the Deposit
and any interest accrued thereon as liquidated damages pursuant
to Section 5.6.
(c) Indemnification. Buyer hereby agrees to hold
harmless, protect, defend and indemnify and hereby releases
Seller and its partners, and each of their officers, partners,
trustees, directors, employees, contractors, agents,
subsidiaries, affiliates and its and their respective successors
and assigns ("Indemnitees") and the Property from and against any
and all claims, demands, causes of actions, losses, liabilities,
liens, encumbrances, costs or expenses (including without
limitation reasonable attorneys' fees and litigation costs) to
the extent arising out of or resulting from any injuries to
persons (including death) or property (real or personal) by
reason of the work or activities conducted on the Property by
Buyer or Buyer's Agents. The provisions of this paragraph shall
not be limited in any way by any other terms of this Agreement,
including, but not limited to, Section 5.6 of this Agreement.
(d) Condition of the Property. Except in
connection with the performance of its Inspection, in no event
shall Buyer or Buyer's Agents have the right to place any
materials or equipment on the Property (including, without
limitation, signs or other advertising material) until after the
Closing has occurred. Buyer shall, at its sole cost and expense,
clean up the Property, in a manner reasonably satisfactory to
Seller, after Buyer's or Buyer's Agents' entry thereon so that
the Property shall be returned to the same condition that existed
prior to Buyer's or Buyer's Agents' entry thereon.
(e) Copies of Due Diligence Materials. If this
Agreement is terminated prior to Closing, Seller shall promptly
be provided with a copy of any and all information, materials and
data that Buyer and/or Buyer's Agents discover, obtain or
generate in connection with or resulting from its Inspection and
work under Section 3.3.2 hereof, which information, materials and
data shall be confidential "Information" as such term is used in
Section 6.17 below.
(f) Termination of this Agreement. On or before
the Decision Date, Buyer shall have caused the preparation of,
obtained, reviewed (or shall have chosen not to have reviewed)
and approved, among other things, all reports of investigations
of the Property, including such soil, geological, engineering and
environmental tests and reports and other inspections of the
Property as Buyer shall deem necessary in order to determine
whether the Property is suitable for Buyer's intended use, as
well as investigated all applicable zoning requirements, federal,
state and local laws, ordinances, rules, regulations, permits,
licenses, approvals and orders. If, on the basis of the review
and the Inspection described in this Section 3.3.2, Buyer
determines in its sole and absolute discretion that the Property
is not suitable for Buyer's intended use, then on or before the
Decision Date, Buyer may terminate this Agreement by providing
written notice in accordance with Section 3.5 below. Buyer's
failure to provide such written notice on or before the Decision
Date shall constitute Buyer's approval of the aforementioned
items and of the condition of the Property.
3.3.3 Estoppel Certificates. Seller shall use all
reasonable good faith efforts to obtain from each tenant of the
Property an estoppel certificate in the form attached hereto as
Exhibit AE@. If Seller has not obtained and delivered to Buyer
an estoppel certificate in such form from at least 80% of the
current tenants of the Property and from all tenants who rent in
excess of 3,000 square feet in the Property on or before the
Decision Date, Buyer shall have the right to terminate this
Agreement in accordance with Section 3.5 below, or to waive the
right to terminate this Agreement based on the failure to deliver
such estoppel certificates. If Buyer does waive the right to
terminate this Agreement, Seller shall nevertheless continue
until the Closing Date to use all reasonable good faith efforts
to obtain and deliver to Buyer the remaining estoppel
certificates in such form.
3.4 No Processing. Until the Closing, without obtaining
Seller's prior consent (not to be unreasonably withheld or
delayed), Buyer shall not make any application to any
governmental agency for any permit, approval, license or other
entitlement for the Property or the use or development thereof.
3.5 Buyer's Termination. If Buyer elects to terminate this
Agreement in accordance with Sections 3.2, 3.3 or 4.5, then, on
or before the Decision Date or later date with respect to 4.5,
Buyer shall give Seller and Escrow Holder written notice that
Buyer elects to terminate this Agreement. Buyer's failure to
provide such notice by the specified deadline shall constitute
Buyer's waiver of Buyer's right to terminate this Agreement for
reasons for which that deadline applied and a waiver of any
condition to Closing relating to such deadline, but not as to the
reasons for which a later deadline applies. In the event Buyer
elects to terminate this Agreement pursuant to this Section 3.5,
Escrow Holder shall return to the depositor thereof any funds and
interest thereon accrued while in Escrow and materials previously
placed in Escrow and remaining in Escrow; Seller shall return to
Buyer any of the Deposit and interest earned thereon while in
Escrow to the extent that such sums were released to Seller;
Buyer shall pay all title and escrow charges; and neither party
shall thereafter have any further rights or obligations under
this Agreement unless expressly provided otherwise herein.
3.6 Seller's Termination. If Seller elects to terminate
this Agreement in accordance with Sections 3.3, 6.14 or as a
result of a material breach of Buyer's obligations hereunder,
then, on or before the Decision Date, or within five (5) business
days after the date of such material breach (whichever is
applicable), Seller shall give Buyer and Escrow Holder written
notice that Seller elects to terminate this Agreement. Seller's
failure to provide such notice by the specified deadline shall
constitute Seller's waiver of Seller's right to terminate this
Agreement for reasons for which that deadline applied and a
waiver of any condition to Closing relating to such deadline, but
not as to the reasons for which a later deadline applies. In the
event Seller elects to terminate this Agreement pursuant to this
Section 3.6, subject to Section 5.6, Escrow Holder shall return
to the depositor thereof any funds and interest thereon accrued
while in Escrow and materials previously placed in Escrow and
remaining in Escrow; subject to Section 5.6, Seller shall return
to Buyer any of the Deposit and interest earned thereon while in
Escrow to the extent that such sums were released to Seller; if
the termination was the result of Buyer's material breach
hereunder Buyer shall pay all title and escrow charges, and
otherwise Seller shall pay all title and escrow charges; and
neither party shall thereafter have any further rights or
obligations under this Agreement unless expressly provided
otherwise herein.
4. ADDITIONAL AGREEMENTS OF THE PARTIES
4.1 Representations and Warranties.
4.1.1 Buyer's Representations and Warranties.
Buyer hereby represents, warrants and covenants to and agrees
with Seller as follows:
(a) Disclosures. Buyer acknowledges that Seller
has delivered to Buyer the documents and materials described in
Section 3.1.2 above, which contain information concerning the
condition of the Property. Except as provided in Section 4.1.2
below, Buyer acknowledges and agrees that Seller delivers the
material and information described in Section 3.1.2 without
representation or warranty as to the accuracy thereof, and Buyer
specifically acknowledges and agrees that Seller shall have no
liability or responsibility for any inaccuracy thereof. BUYER
ACKNOWLEDGES AND UNDERSTANDS THAT THE DELIVERED DOCUMENTS AND
OTHER MATERIALS MAY HAVE BEEN PREPARED BY PARTIES OTHER THAN
SELLER AND THAT, EXCEPT AS SPECIFICALLY SET FORTH HEREIN, SELLER
AND ITS EMPLOYEES, OFFICERS, PARTNERS, AGENTS, BROKERS AND
CONTRACTORS MAKE NO REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, AS TO THE COMPLETENESS, CONTENT OR ACCURACY
OF THE DELIVERED DOCUMENTS AND OTHER MATERIALS.
(b) Buyer's Investigation. (i) On or prior to
the Decision Date Buyer will have (or will have chosen not to
have) fully investigated the Property and all matters pertaining
thereto; (ii) except for Seller's representations and warranties
that are specifically set forth in this Agreement, Buyer, in
entering into this Agreement and in completing its purchase of
the Property, is relying entirely on its own investigation of the
Property based on its extensive experience in and knowledge of
real property in Southern California; and (iii) On or prior to
the Decision Date Buyer will be aware (or will have chosen not to
be aware) of all zoning regulations, other governmental
requirements, reasonably discoverable site and physical
conditions, and other matters affecting the use and condition of
the Property.
(c) Disclaimer of Warranties. Buyer is acquiring
the Property "AS IS" with all faults and defects. Except as
specifically stated in this Agreement, Seller hereby specifically
disclaims any representation or warranty, oral or written,
including but not limited to those concerning (1) the nature and
condition of the Property and the suitability of the Property for
any and all activities and uses which Buyer may elect to conduct
thereon, (2) the manner, construction, condition and state of
repair or lack of repair of any improvements located on the
Property, (3) except for any warranties contained in the Deed,
the nature and extent of any right-of-way, lease, possession,
lien, encumbrance, license, reservation, condition, covenant,
restriction or otherwise, and (4) the compliance of the Property
or its operation with any laws, rules, ordinances, or regulations
of any government or other body, it being specifically understood
that before the date hereof Buyer has had a full opportunity to
determine for itself the condition of the Property. The sale of
the Property as provided for herein is made on an "AS IS" basis,
and Buyer expressly acknowledges that, in consideration of the
agreements of Seller herein, except as otherwise specified
herein, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR
IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY
LIMITED TO, ANY WARRANTY OF QUANTITY, QUALITY, CONDITION,
HABITABILITY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PROPERTY, ANY IMPROVEMENTS, THE
PERSONAL PROPERTY, OR SOIL, WATER, AIR OR OTHER ENVIRONMENTAL
CONDITIONS. SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY
OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR
IMPLIED, CONCERNING THE PROPERTY, EXCEPT AS SPECIFICALLY SET
FORTH IN THIS AGREEMENT AND THE WARRANTY AS TO TITLE TO BE
PROVIDED IN THE DEED TO BE DELIVERED TO BUYER AT CLOSING. BUYER
ACKNOWLEDGES THAT BUYER IS PURCHASING THE PROPERTY BASED SOLELY
UPON BUYER'S OWN INDEPENDENT INVESTIGATIONS AND FINDINGS AND NOT
IN RELIANCE ON ANY INFORMATION PROVIDED BY SELLER OR SELLER'S
AGENTS OR CONTRACTORS, EXCEPT AS SPECIFICALLY SET FORTH IN THIS
AGREEMENT.
(d) Formation. Buyer is a limited partnership
duly organized and validly existing under the laws of the State
of Maryland, and is duly qualified to do business in the State of
California.
(e) Authority. Buyer has the power and authority
to own the Property and to consummate the transactions
contemplated by this Agreement. This Agreement and all
instruments, documents and agreements to be executed by Buyer in
connection herewith are or when delivered shall be duly
authorized, executed and delivered by Buyer and are valid,
binding and enforceable obligations of Buyer. Each individual
executing this Agreement on behalf of Buyer represents and
warrants to Seller that he or she is duly authorized to do so.
(f) Consents. Buyer is not required to obtain
any consents or approvals to consummate the transactions
contemplated in this Agreement.
4.1.2 Seller's Covenants, Representations and
Warranties. As used in this Section 4.1.2, the words "to
Seller's actual knowledge" or other words of similar effect shall
mean the actual knowledge of the following individuals only
without a duty of investigation other than a review of their own
files, and shall not mean the knowledge of any other individual
employed by or under contract with Seller: ▇▇▇▇▇ ▇▇▇▇▇▇ - Asset
Manager and ▇▇▇▇▇ ▇▇▇▇▇▇▇ - Property Manager. Seller represents
that such individuals are the individuals in Seller's
organization who have had in-depth, day-to-day involvement with
the ownership and management of the Property and are the
individuals who are most likely to have any information relating
to the following representations and warranties. Seller hereby
represents, warrants and covenants to and agrees with Buyer as
follows:
(a) Insurance. At all times from the date hereof
to the Closing or earlier termination of this Agreement, Seller
shall cause to be maintained in force, fire and extended coverage
insurance on the Property in the same amounts as the insurance
coverage on the Property on the date hereof.
(b) Operation of the Property. At all times from
the date hereof to the Closing or earlier termination of this
Agreement, Seller shall operate and maintain the Property in
substantially the same manner as it is now managed and as if
Seller were retaining the Property, use reasonable efforts to
maintain the physical condition of the property in its current
condition, reasonable and ordinary wear and tear and damage by
fire and casualty and condemnation excepted, and use reasonable
efforts to perform all obligations to be performed by the
landlord under the Leases.
(c) Removal of Personal Property. From the date
hereof until the Closing or earlier termination of this
Agreement, Seller shall neither transfer nor remove any Personal
Property or fixtures from the Property, except in the ordinary
course of business or unless the same are no longer needed for
the maintenance and operation of the Property or except for
purposes of replacement thereof, in which case such replacements
shall be promptly installed prior to Closing and shall be
comparable in quality to the items being replaced.
(d) New Documents. From the date hereof until
the Closing or earlier termination of this Agreement, Seller
shall not enter into any "New Document" (as defined below)
without the prior written consent of the Buyer, which consent
shall not be unreasonably withheld or delayed. "New Document"
means (1) any lease, lease extension, lease termination or lease
modification affecting the Property, (2) any other document
creating or consenting to an additional encumbrance upon the
Property, and (3) any contract or agreement that will bind Buyer
after the Closing unless the same is terminable on no more than
30 days notice.
(e) New Restrictive Covenants. From the date
hereof until the Closing or earlier termination of this
Agreement, Seller will not impose any restrictive covenants or
encumbrances (other than tenant leases) on the Property or
execute or file any subdivision plat affecting the Property
without the prior written consent of Buyer, which consent shall
not be unreasonably withheld or delayed.
(f) Formation. Seller is a limited partnership
duly organized and validly existing under the laws of the State
of Texas, and is duly qualified to do business in the State of
California.
(g) Authority. Seller has the power and
authority to own the Property and to consummate the transactions
contemplated by this Agreement. This Agreement and all
instruments, documents and agreements to be executed by Seller in
connection herewith are or when delivered shall be duly
authorized, executed and delivered by Seller and are valid,
binding and enforceable obligations of Seller. Each individual
executing this Agreement on behalf of Seller represents and
warrants to Buyer that he or she is duly authorized to do so.
(h) Consents. Prior to the execution of this
Agreement, Seller has obtained all necessary approvals to
consummate this Agreement.
(i) Contracts. There are no contracts or
agreements, written or oral, which would bind Buyer, affecting
the ownership or operation of the Property, except: (1) those
that have been delivered to Buyer pursuant to Section 3.1.2, (2)
the Permitted Exceptions, or (3) as permitted under Section
4.1.2(d) above.
(j) Proceedings. To Seller's actual knowledge,
there are no (i) taking, condemnation, betterment or assessment
actions, suits, arbitration, or claims, (ii) attachments,
proceedings, or assignments for the benefit of creditors, or
(iii) insolvency, bankruptcy, reorganization or other
proceedings, actual or proposed, pending or threatened against
Seller and which, individually or in the aggregate, would
materially and adversely affect the operation or value of the
Property or Seller's ability to perform its obligations under
this Agreement.
(k) Actions Pending. Seller shall notify Buyer
promptly of any lawsuits, condemnation proceedings, or
governmental action or order affecting the Property. Between the
date hereof and the Closing Date, Seller shall comply with all
applicable laws, ordinances, rules and regulations of
governmental agencies with competent jurisdiction with respect to
the Property.
(l) Commissions. Prior to Closing, Seller shall
pay in full all outstanding brokerage commissions relating to the
Property or any premises therein.
(m) Rent Roll. To Seller's actual knowledge, the
information set forth in the Rent Roll is true and correct in all
material respects as of the date thereof;
(n) Service Contracts. Except as permitted under
Section 4.1.2(d), disclosed to Buyer in writing before the date
hereof, or contained in the Delivered Documents, there are no
management, service, supply, equipment rental, and similar
agreements affecting the Property and which will bind Buyer after
the Closing other than the Service Contracts and, to Seller's
actual knowledge, the Service Contracts are in full force and
effect;
(o) Operating Statements. To Seller's actual
knowledge, the information shown on the Operating Statements is
true and correct in all material respects;
(p) No Defaults. Neither the entry into, nor the
performance of, nor the compliance with this Agreement, has
resulted or will result in any violation of, or be in conflict
with, or invalidate, cancel or make inoperative, or interfere
with, or constitute a default under, or result in the creation of
a lien, encumbrance or other charge upon the Property pursuant
to, any charter, bylaw, partnership agreement, trust agreement,
mortgage, deed of trust, contract, indenture, credit agreement,
franchise, permit, judgment, decree, order, ordinance, statute,
rule, regulation, easement, restriction, or other charge, right,
or interest applicable to Seller or to the Property;
(q) Service Contracts. All Service Contracts
relating to the Property can be terminated on thirty (30) days'
notice.
(r) Post-Closing Financial Records. As soon as
reasonably practicable following the Closing Date, Seller shall
deliver to Buyer the following: (a) a final income statement
through the Closing Date, (b) a final cumulative general ledger
through the Closing Date, and (c) a final aged delinquency
listing, including all security deposits received by Seller.
(s) Audit Rights. At Buyer's request at any time
from and after the date hereof until the date that is one (1)
year after the Closing Date, Seller shall, at Buyer's expense,
provide to Buyer's designated independent auditor access to the
books and records of the Property regarding the period for which
Buyer is required to have audited financial statements prepared
with respect to the Property as may be required by the Securities
and Exchange Commission, to the extent that such books, records
and related information are in Seller's possession or control and
relate to the period during which Seller held title to the
Property. Further, Seller agrees to provide to such auditor a
representation letter regarding the books and records of the
Property, in substantially the form of Exhibit "D" attached
hereto, in connection with the normal course of auditing the
Property in accordance with generally accepted auditing
standards.
(t) Management and Listing Agreements. Seller
agrees to terminate, at Seller's sole cost and expense, any
property management agreement and brokerage leasing agreement
effective as of the Closing Date.
(u) Change in Condition. Seller shall promptly
notify Buyer of any material adverse change in any physical or
financial condition of the Property or any event or circumstance
which makes any representation or warranty of Seller under this
Agreement untrue or misleading, or any covenant of Buyer or
Seller under this Agreement incapable of being performed, it
being understood that Seller's obligation to provide notice to
Buyer shall in no way relieve Seller of any liability for a
breach by Seller of any of its representations, warranties or
covenants under this Agreement.
(v) Agreements. There are no oral or written
agreements or executory agreements whatsoever for the use and
occupancy of the Improvements other than the Leases and there are
no tenants or occupants of the Property except pursuant to the
Leases.
(w) Hazardous Materials. To Seller's actual
knowledge, Seller has delivered to Buyer all environmental
reports, studies and other material relating to the potential
presence of Hazardous Materials on the Property, and Seller has
no actual knowledge of an environmental issue relating to the
Property that is not disclosed in such delivered materials.
(x) Use Permits and Other Approvals. To Seller's
actual knowledge, all licenses, permits, approvals and easements
and rights of way, including proof of dedication, are all in full
force and effect.
(y) Compliance with Agreements. To Seller's
actual knowledge, no default exists under any covenant,
restriction or agreement related to or affecting the Property or
the Leases, except as previously disclosed to Buyer.
(z) Leases. Except as stated in this paragraph,
there are no uncured monetary defaults (with or without the
giving of notice or the passage of time) and, to Seller's actual
knowledge, no uncured non-monetary defaults (with or without the
giving of notice or the passage of time), or outstanding notices
of default or termination under the Leases; Seller, as landlord,
has received no written notice from any tenant that Seller is in
default or not complying with Seller's obligations, as landlord,
under any Lease. Notwithstanding the foregoing, Seller hereby
advises Buyer that the State of California (a tenant of the
Property) has delivered its rent payments for May, June and July
1997 to the wrong address and is in the process of issuing new
checks for such rent payments, and it is anticipated that such
rent payments shall be made prior to the Closing Date.
4.2 Reaffirmation. The representations and warranties of
Buyer and Seller set forth in Section 4.1 are true and correct as
of the date of this Agreement and shall be true and correct as of
the Closing. The Closing shall constitute Buyer's and Seller's
reaffirmation of those representations and warranties as of the
Closing. Seller shall be entitled to rely upon Buyer's
representations and warranties set forth in Sections 4.1.1(b) and
(c), notwithstanding any inspection or investigation of the
Property which was made or could have been made by Buyer.
4.3 Hazardous Material Indemnification.
4.3.1 Indemnification. If this transaction closes
and Buyer acquires title to the Property, Buyer, on behalf of
itself, its successors, assigns and successors-in-interest, shall
protect, defend, indemnify, hold harmless Indemnitees from and
against any and all liabilities, claims, demands, suits,
judgments, causes of action (including, but not limited to,
causes of action arising under the Comprehensive Environmental
Response Compensation and Liability Act of 1980, 42 U.S.C. 9601 et. seq.),
losses, costs, damages, injuries, penalties, enforcement actions, fines,
taxes, remedial actions, removal and disposal costs, investigation and
remediation costs and expenses (including, without limit, reasonable
attorneys' fees, litigation, arbitration and administrative proceeding costs,
expert and consultant fees and laboratory costs), sums paid in
settlement of claims, whether direct or indirect, known or
unknown, arising out of, related in any way to, or resulting from
or in connection with, in whole or in part, the presence or
suspected presence of Hazardous Materials (defined below) in, on,
under, or about the Property, but only to the extent Hazardous
Materials first become present in, on, under, or about the
Property on or after the Closing Date.
4.3.2 Definition. "Hazardous Material(s)" means
any chemical, substance, material, controlled substance, object,
condition, waste living organisms or combination thereof which is
or may be hazardous to human health or safety or to the
environment due to its radioactivity, ignitability, corrosivity,
reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially
harmful properties or effects, including, without limitation,
petroleum hydrocarbons and petroleum products, lead, asbestos,
radon, polychlorinated biphenyls (PCBs) and all of those
chemicals, substances, materials, controlled substances, objects,
conditions, wastes, living organisms or combinations thereof
which are now or become in the future listed, defined or
regulated in any manner by any federal, state or local law based
upon, directly or indirectly, such properties or effects.
4.3.3 No Limitation to Liability. The provisions
of this Section 4.3 shall not be limited in any way by any other
terms of this Agreement including, but not limited to,
Section 5.6 of this Agreement (Liquidated Damages).
4.4 Condemnation. If, prior to Closing, any portion of the
Property shall be condemned or becomes the subject of any pending
or threatened condemnation action, Seller shall promptly notify
Buyer thereof. If a material portion of the Property shall be
condemned or becomes the subject of any pending or threatened
condemnation action, Buyer shall have the right, as its sole and
exclusive remedy, to terminate this Agreement in accordance with
Section 3.5. If the portion of the Property condemned or subject
of a condemnation action is not material, or if Buyer does not
elect to terminate this Agreement, this Agreement shall remain in
full force and effect, regardless of such condemnation or
threatened or pending action, and if any condemnation award is
received by Seller prior to Closing, the amount of such award
shall be applied as a credit against the Purchase Price. Any
condemnation awards received by Seller on or after Closing shall
be promptly delivered by Seller to Buyer.
4.5 Damage or Destruction. In the event of any damage to
or destruction of the Property prior to the Closing, the Closing
shall nevertheless occur as otherwise provided for in this
Agreement except Seller shall assign to Buyer upon the Closing
all insurance proceeds payable to Seller in connection with such
occurrences, and the Purchase Price shall be reduced by the
deductible amount and any repair costs in excess of such
insurance proceeds (in which case the amount by which the
Purchase Price is reduced shall be held in escrow and shall be
released pursuant to escrow instructions to be mutually
acceptable to Buyer and Seller that shall require evidence of
satisfactory lien-free completion of repairs prior to release of
the funds). Seller shall have no obligation to repair such
damage or destruction. If cost to repair such damage or
destruction to the Property exceeds ten percent (10%) of the
Purchase Price, then Seller shall promptly notify Buyer and
within five (5) business days after receipt of such notice, Buyer
shall deliver written notice to Seller and Escrow Holder,
electing either: (a) to proceed with this transaction and
Closing in accordance with this Agreement notwithstanding such
damage or destruction; or (b) to terminate this Agreement in
accordance with the terms of Section 3.5. Buyer's failure to
deliver either of such notices to Seller and Escrow Holder within
such five (5) business day period shall constitute Buyer's
election to proceed to Closing under clause (a).
4.6 Indemnity.
4.6.1 Buyer shall hold harmless, indemnify protect
and defend Indemnitees from and against (a) any and all claims,
demands, causes of action, loss, liability, liens or
encumbrances, other than matters arising from any act, conduct or
omission of Indemnitees in any way related to the Property and
occurring after the Closing, or in any way related to or arising
from any act, conduct, omission, contract or commitment of Buyer
and/or Buyer's Agents; (b) any loss or damage to Seller resulting
from any inaccuracy in or breach of any representation or
warranty of Buyer or resulting from any breach or default by
Buyer under this Agreement; and (c) all costs and expenses,
including reasonable attorneys' fees, related to any actions,
suits or judgments incident to any of the foregoing.
4.6.2 Seller shall hold harmless, indemnify protect
and defend Buyer and its partners, and each of their officers,
trustees, directors, employees, contractors, agents,
subsidiaries, affiliates and its and their respective successors
and assigns ("Buyer's Indemnitees") from and against (a) any and
all claims, demands, causes of action, loss, liability, liens or
encumbrances, other than matters arising from any act, conduct or
omission of Buyer's Indemnitees in any way related to the
Property and occurring prior to the Closing, or in any way
related to or arising from any act, conduct, omission, contract
or commitment of Seller and/or its agents, employees,
representatives or contractors; (b) any loss or damage to Buyer
resulting from any inaccuracy in or breach of any representation
or warranty of Seller or resulting from any breach or default by
Seller under this Agreement; and (c) all costs and expenses,
including reasonable attorneys' fees, related to any actions,
suits or judgments incident to any of the foregoing.
5. CLOSING
5.1 Deposits Into Escrow.
5.1.1 At least one (1) business day prior to the
Closing Date, Seller shall deposit into Escrow:
(a) A grant deed conveying the Property to Buyer
(the "Deed") on the Title Company's form, subject to the
following (collectively, the "Permitted Exceptions"): (i) the
Permitted Exceptions, (ii) installments of general and special
real property taxes and assessments not then delinquent, and
(iii) any encumbrance arising from the acts or omissions of
Buyer.
(b) An affidavit or qualifying statement which
satisfies the requirements of Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder
(the "Non-Foreign Affidavit").
(c) A Withholding Exemption Certificate, Form
590, or in the event that the Seller is a non-California
resident, a certificate issued by the California Franchise Tax
Board, pursuant to the Revenue and Taxation Code Sections 18805
and 26131, stating either the amount of withholding required from
Seller's proceeds or that Seller is exempt from such withholding
requirement (the "Withholding Certificate");
(d) A counterpart original of a ▇▇▇▇ of Sale (the
"▇▇▇▇ of Sale"), duly executed by Seller, assigning and conveying
to Buyer all of Seller's right, title and interest in and to the
Personal Property. The ▇▇▇▇ of Sale shall be substantially in
the form of, and upon the terms contained in, Exhibit "B"
attached hereto and incorporated herein.
(e) A counterpart original of an Assignment and
Assumption Agreement (the "Assignment and Assumption Agreement")
duly executed by Seller assigning all of Seller's right, title
and interest in and to the Surviving Contracts. The Assignment
and Assumption Agreement shall be substantially in the form of,
and upon the terms contained in, Exhibit "C" attached hereto and
incorporated herein.
(f) Written notices addressed to all tenants of
the Property informing them of the sale of the Property and the
name and address of the new owner (the "Tenant Notices").
5.1.2 At least one (1) business day prior to the
Closing Date, Buyer shall deposit into Escrow:
(a) Funds in accordance with the provisions of
Section 1.3.2.
(b) A counterpart original of the ▇▇▇▇ of Sale
duly executed by Buyer.
(c) A counterpart original of the Assignment and
Assumption Agreement duly executed by Buyer and assuming all of
Seller's obligations under the Surviving Contracts.
5.1.3 Seller and Buyer shall each deposit such
other instruments and funds as are reasonably required by Escrow
Holder or otherwise required to close Escrow and consummate the
sale of the Property in accordance with the terms of this
Agreement.
5.2 Prorations. The following prorations shall be made as
of 12:01 a.m. on the day the Closing occurs on the basis of a 365-
day year. At least two (2) business days prior to the Closing
Date, Escrow Holder shall deliver to Seller and Buyer a tentative
proration schedule setting forth a preliminary determination.
5.2.1 Rentals, prepaid rentals and prepaid payments
(and all accrued interest thereon, if any) (collectively, "Rent")
shall be prorated on the basis that Buyer shall receive a credit
for all Rent which Seller has actually received before the
Closing which is allocable to the period after the Closing and
for all security deposits held by Seller. Buyer shall not
receive a credit for any Rent Seller has not received as of the
Closing which is allocable to the period prior to the Closing.
If Buyer shall collect any such Rent after the Closing, Buyer
shall promptly pay the same to Seller (provided that all rent
collected by Buyer after Closing shall be first applied to unpaid
rent accruing after the Closing Date).
5.2.2 Real estate taxes and assessments shall be
prorated as of the Closing on the basis of the most recent tax
statement for the Property.
5.2.3 Any adjustments or prorations not finally
determined or agreed upon as of the Closing Date shall be paid by
Buyer to Seller, or by Seller to Buyer, as the case may be, from
time to time in cash as soon as practicable following the receipt
or determination of the information necessary to make the
adjustments after the Closing Date.
5.2.4 Without limiting the generality of Section
5.2.3, after the adjustments with tenants under the Leases at the
end of the calendar year in which the Closing occurs (or other
applicable period) for taxes, assessments, maintenance charges
and operating expenses (collectively, "CAM Charges"), Buyer shall
prepare and present to Seller a calculation of the re-proration
of taxes, assessments, CAM Charges and those operating expenses
to which the CAM Charges relate, based on the actual amount of
such items charged to or received by the parties for the year or
other applicable fiscal period. The parties shall make the
appropriate adjusting payment between them within thirty (30)
days after presentment to Seller of Buyer's calculation. In
addition, Seller shall provide Buyer with a credit for any unpaid
tenant improvement expenses that are the landlord's obligation
under Leases (other than New Documents and other than the $38,200
tenant improvement expense under the Lease with the University of
Phoenix), and a credit for any free rent granted to tenants under
Leases other than New Documents (other than the one month of free
rent granted to the University of Phoenix for the month of March
2000). Seller represents to Buyer that Seller shall not dissolve
or otherwise cease conducting business within one year after
Closing and shall maintain sufficient assets to enable it to
reasonably comply with its obligations under this paragraph and
satisfy its other indemnification obligations under this
Agreement.
5.2.5 For a period of twelve (12) months following
the Closing Date, Buyer and Buyer's successors and assigns shall
make available to Seller, and Seller shall make available to
Buyer and Buyer's successors and assigns, and their respective
employees, agents and representatives, all books and records
maintained with respect to the Property which relate to any of
the items to be prorated or allocated under this Agreement in
connection with the Closing, which books and records shall be
made available for inspection and copying upon reasonable notice
during ordinary business hours. Any such inspection shall be at
reasonable intervals and at the inspecting party's sole cost and
expense.
5.3 Payment of Closing Costs.
5.3.1 Closing Costs Borne by Seller. Seller shall
bear and Escrow Holder shall discharge on Seller's behalf out of
the sums payable to Seller hereunder the portion of the costs
associated with the standard coverage premium for the "Owner's
Policy" (defined below), equal to the premium on a CLTA owner's
policy of title insurance in the amount of the Purchase Price,
the documentary transfer tax and all sales and use taxes required
in connection with the transfer of the Property to Buyer, the
sums necessary to obtain and the cost of recording any
reconveyance required hereby, one-half of Escrow Holder's fee,
and any additional costs and charges customarily charged to
sellers in accordance with common escrow practices in Southern
California.
5.3.2 Closing Costs Borne by Buyer. Buyer shall
deposit with Escrow Holder for disbursement by Escrow Holder one-
half of Escrow Holder's fee, all costs and expenses of the
Owner's Policy in excess of the premium to be borne by Seller
(including, without limitation, any additional premium charged
for any extended coverage policy or endorsements requested by
Buyer and the cost of any survey which may be required by the
Title Company in connection therewith), the recording fees
required in connection with the transfer of the Property to
Buyer, and any additional charges customarily charged to buyers
in accordance with common escrow practices in Southern
California.
5.4 Closing of Escrow.
5.4.1 Escrow Holder shall hold the Closing on the
Closing Date if: (i) it has received in a timely manner all the
funds and materials required to be delivered into Escrow by Buyer
and Seller; and (ii) it has received assurances satisfactory to
it that, effective as of the Closing, the Title Company will
issue to Buyer its standard coverage title insurance policy in
the amount of the Purchase Price, insuring Buyer as the owner of
the Property, subject only to the Permitted Exceptions other than
any encumbrance created by an act or omission of Buyer (the
"Owner's Policy").
5.4.2 To Close the Escrow, Escrow Holder shall:
(a) Cause the Deed to be recorded and thereafter
mailed to Buyer, and deliver the Owner's Policy, ▇▇▇▇ of Sale,
Assignment and Assumption Agreement, Non-Foreign Affidavit and
Withholding Certificate to Buyer;
(b) Deliver to Seller the ▇▇▇▇ of Sale, the
Assignment and Assumption Agreement and by wire transfer of
federal funds, funds in the amount of the Purchase Price, plus or
less any net debit or credit to Seller by reason of the
prorations and allocations of closing costs provided for in this
Agreement;
(c) Cause the Title Company to issue the Owner=s
Policy to Buyer; and
(d) Mail the Tenant Notices to all tenants of the
Property.
5.4.3 Pursuant to Section 6045 of the Internal
Revenue Code, Escrow Holder shall be designated the closing agent
hereunder and shall be solely responsible for complying with the
tax reform act of 1986 with regard to reporting all settlement
information to the Internal Revenue Service.
5.5 Failure to Close; Cancellation. If the Escrow Holder
is not in a position to Close the Escrow on the Closing Date,
then, except as provided in Section 5.6, Escrow Holder shall
return to the depositor thereof any funds or other materials
previously placed in Escrow. No such return shall relieve either
party of liability for any failure to comply with the terms of
this Agreement.
5.6 LIQUIDATED DAMAGES. BUYER AND SELLER AGREE THAT IN THE
EVENT OF A MATERIAL DEFAULT OR BREACH HEREUNDER BY BUYER, THE
DAMAGES TO SELLER WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE
TO ASCERTAIN, AND THAT THEREFORE, IN THE EVENT OF A MATERIAL
DEFAULT OR BREACH HEREUNDER BY BUYER, A SUM IN THE AMOUNT OF THE
DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES TO SELLER, SUCH
DAMAGES INCLUDING COSTS OF NEGOTIATING AND DRAFTING OF THIS
AGREEMENT, COSTS OF COOPERATING IN SATISFYING CONDITIONS TO
CLOSING, COSTS OF SEEKING ANOTHER BUYER UPON BUYER'S DEFAULT,
OPPORTUNITY COSTS IN KEEPING THE PROPERTY OUT OF THE MARKETPLACE,
AND OTHER COSTS INCURRED IN CONNECTION HEREWITH. ACCORDINGLY,
BUYER AND SELLER AGREE THAT, EXCEPT FOR ANY DAMAGES, COSTS AND
EXPENSES INCURRED IN CONNECTION WITH OR RESULTING FROM BUYER'S
DEFAULT, OR BREACH OF ITS OBLIGATIONS, UNDER SECTIONS 6.13 AND
6.17 BELOW, RECEIPT AND RETENTION OF THE SPECIFIED SUM SHALL BE
THE SOLE DAMAGES OF SELLER IN THE EVENT OF ANY BREACH OR DEFAULT
BY BUYER HEREUNDER.
Initials of Buyer: Initials of Seller:
/s/ VJC /s/ MJR
5.7 BUYER'S REMEDIES. IN THE EVENT THAT SELLER SHALL FAIL
TO CONSUMMATE THIS AGREEMENT FOR ANY REASON, EXCEPT BUYER'S
DEFAULT OR A TERMINATION OF THIS AGREEMENT BY BUYER OR SELLER
PURSUANT TO A RIGHT TO DO SO UNDER THE PROVISIONS OF THIS
AGREEMENT, BUYER SHALL HAVE THE FOLLOWING REMEDIES, WHICH SHALL
BE BUYER'S SOLE AND EXCLUSIVE REMEDIES BASED UPON A DEFAULT BY
SELLER. SUCH REMEDIES SHALL NOT BE CUMULATIVE, MEANING BUYER MAY
EXERCISE ONE (1) BUT NOT BOTH OF SUCH REMEDIES. BUYER SHALL
DELIVER TO SELLER AND ESCROW HOLDER NOTICE OF ITS ELECTION OF
REMEDIES WITHIN TWO (2) DAYS AFTER SELLER'S DEFAULT. THE SOLE
REMEDIES AVAILABLE TO BUYER ARE AS FOLLOWS:
(A) BUYER MAY TERMINATE THIS AGREEMENT, IN WHICH CASE
ESCROW HOLDER SHALL IMMEDIATELY RETURN THE DEPOSIT, TOGETHER WITH
ANY INTEREST EARNED THEREON, TO BUYER UPON EXECUTION OF
CANCELLATION INSTRUCTIONS BY BUYER, AND SELLER SHALL PAY ANY
ESCROW CANCELLATION CHARGES. IN ADDITION, BUYER SHALL HAVE THE
RIGHT TO PURSUE AN ACTION AGAINST SELLER FOR ALL ACTUAL OUT-OF-
POCKET (BUT NOT CONSEQUENTIAL) DAMAGES SUFFERED BY BUYER; OR
(B) BUYER MAY BRING AN ACTION FOR SPECIFIC PERFORMANCE
AGAINST SELLER WITH RESPECT TO THIS AGREEMENT BUT ONLY UNDER THE
FOLLOWING CONDITIONS AND CIRCUMSTANCES:
(1) BUYER SHALL HAVE FULLY PERFORMED ALL
OBLIGATIONS OF BUYER UNDER THIS AGREEMENT, EXCEPT THAT WITH
RESPECT TO DEPOSITING THE BALANCE OF THE PURCHASE PRICE, BUYER
SHALL HAVE EVIDENCED TO SELLER'S REASONABLE SATISFACTION THAT
BUYER IS READY, WILLING AND ABLE TO TIMELY DEPOSIT SAID FUNDS IN
ESCROW;
(2) THE ACTION SHALL BE COMMENCED, AND SERVICE OF
PROCESS UPON SELLER MADE, NOT LATER THAN THIRTY (30) DAYS AFTER
SELLER'S DEFAULT; AND
(3) ALL OF THE ISSUES IN SUCH ACTION, WETHER OF
FACT OR LAW, SHALL BE HEARD BY A REFERENCE PROCEEDING PURSUANT TO
CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 638, ET SEQ. WITHIN
TEN (10) DAYS FOLLOWING THE COMMENCEMENT OF ANY SUCH ACTION, THE
PARTIES SHALL MAKE APPLICATION TO THE COURT IN WHICH THE ACTION
IS PENDING FOR THE APPOINTMENT OF A RETIRED SUPERIOR COURT JUDGE
OR COURT OF APPEAL JUSTICE FROM THE THEN CURRENT LIST OF RETIRED
JUDGES AVAILABLE TO SERVE AS REFEREES IN THE COUNTY IN WHICH SUCH
ACTION IS COMMENCED TO SERVE AS THE REFEREE. THE REFEREE CHOSEN
SHALL BE DEEMED QUALIFIED ONLY IF HE IS WILLING TO AGREE TO HEAR
THE SUBJECT ACTION WITHIN TWENTY (20) DAYS FOLLOWING THE DATE OF
APPLICATION TO THE COURT, TO HEAR THE SUBJECT ACTION ON
CONSECUTIVE DAYS AND TO RENDER A DECISION WITHIN A FURTHER
FIFTEEN (15) DAY PERIOD. THE PARTIES SHALL ADVANCE, IN EQUAL
SHARES, THE FEES AND EXPENSES OF THE REFEREE SELECTED PURSUANT TO
THIS PROVISION, BUT THE LOSING PARTY IN ANY SUCH ACTION SHALL
REIMBURSE THE PREVAILING PARTY FOR ANY AND ALL FEES AND EXPENSES
PREVIOUSLY ADVANCED BY SUCH PREVAILING PARTY FOR THE REFEREE.
Initials of Buyer: Initials of Seller:
/s/ VJC /s/ MJR
5.8 Possession. Possession of the Property, originals of
all Leases and the Surviving Contracts, shall be delivered to
Buyer upon Closing.
5.9 Conditions Precedent/Concurrent to Closing. Buyer
shall not be required to close the transaction provided for under
this Agreement, unless and until each and every one of the
following conditions has been fulfilled:
5.9.1 Representations, Warranties and Covenants of
Seller. Seller shall have duly and timely performed each and
every covenant to be performed by Seller under this Agreement and
the representations and warranties set forth in this Agreement
shall be true and correct as of the Closing in all material
respects.
5.9.2 Seller's Deliveries. Seller shall have duly
and timely delivered or made available to Buyer all of the items
described in Section 5.1.1 of this Agreement.
5.9.3 No Material Changes. At the Closing, there
will be no material adverse changes in the physical or financial
condition of the Property which occurred after the Decision Date.
6. GENERAL PROVISIONS
6.1 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.
6.2 Entire Agreement. This Agreement contains the entire
integrated agreement between the parties respecting the subject
matter of this Agreement and supersedes all prior understandings
and agreements, whether oral or in writing, between the parties
respecting the subject matter of this Agreement. There are no
representations, agreements, arrangements or understandings, oral
or in writing, between or among the parties to this Agreement
relating to the subject matter of this Agreement which are not
fully expressed in this Agreement. The terms of this Agreement
are intended by the parties as a final expression of their
agreement with respect to those terms and they may not be
contradicted by evidence of any prior agreement or of any
contemporaneous agreement. The parties further intend that this
Agreement constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced
in any judicial proceeding involving this Agreement.
6.3 Legal Advice; Neutral Interpretation; Headings. Each
party has received independent legal advice from its attorneys
with respect to the advisability of executing this Agreement and
the meaning of the provisions hereof. The provisions of this
Agreement shall be construed as to their fair meaning, and not
for or against any party based upon any attribution to such party
as the source of the language in question. Headings used in this
Agreement are for convenience of reference only and shall not be
used in construing this Agreement.
6.4 Choice of Law. This Agreement shall be governed by the
laws of the State of California.
6.5 Severability. If any term, covenant, condition or
provision of this Agreement, or the application thereof to any
person or circumstance, shall to any extent be held by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, covenants, conditions or provisions of
this Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in
no way be affected, impaired or invalidated thereby.
6.6 Waiver of Covenants, Conditions or Remedies. The
waiver by one party of the performance of any covenant, condition
or promise under this Agreement shall not invalidate this
Agreement nor shall it be considered a waiver by it of any other
covenant, condition or promise under this Agreement. The waiver
by either or both parties of the time for performing any act
under this Agreement shall not constitute a waiver of the time
for performing any other act or an identical act required to be
performed at a later time. The exercise of any remedy provided
in this Agreement shall not be a waiver of any consistent remedy
provided by law, and the provision in this Agreement for any
remedy shall not exclude other consistent remedies unless they
are expressly excluded.
6.7 Exhibits. All exhibits to which reference is made in
this Agreement are deemed incorporated in this Agreement, whether
or not actually attached.
6.8 Amendment. This Agreement may be amended at any time
by the written agreement of Buyer and Seller. All amendments,
changes, revisions and discharges of this Agreement, in whole or
in part, and from time to time, shall be binding upon the parties
despite any lack of legal consideration, so long as the same
shall be in writing and executed by the parties hereto.
6.9 Relationship of Parties. The parties agree that their
relationship is that of seller and buyer, and that nothing
contained herein shall constitute either party the agent or legal
representative of the other for any purpose whatsoever, nor shall
this Agreement be deemed to create any form of business
organization between the parties hereto, nor is either party
granted any right or authority to assume or create any obligation
or responsibility on behalf of the other party, nor shall either
party be in any way liable for any debt of the other.
6.10 No Third Party Benefit. This Agreement is intended to
benefit only the parties hereto and no other person or entity has
or shall acquire any rights hereunder.
6.11 Time of the Essence. Time shall be of the essence as
to all dates and times of performance, whether contained herein
or contained in any escrow instructions to be executed pursuant
to this Agreement, and all escrow instructions shall contain a
provision to this effect.
6.12 Further Acts. Each party agrees to perform any further
acts and to execute, acknowledge and deliver any documents which
may be reasonably necessary to carry out the provisions of this
Agreement.
6.13 Recordation; Actions to Clear Title. Buyer shall not
record this Agreement, any memorandum of this Agreement, any
assignment of this Agreement or any other document which would
cause a cloud on the title to the Property.
6.14 Assignment. Except as stated in the preceding
sentence, Buyer shall not assign Buyer's rights or delegate its
obligations hereunder without the prior written consent of Seller
in each instance, which consent Seller may withhold in Seller's
reasonable discretion. If Buyer assigns its rights or delegates
its obligations hereunder in violation of this Section, Seller
shall have the right to terminate this Agreement pursuant to
Section 3.6 above. Subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties to this Agreement.
6.15 Attorneys' Fees. In the event of any litigation
involving the parties to this Agreement to enforce any provision
of this Agreement, to enforce any remedy available upon default
under this Agreement, or seeking a declaration of the rights of
either party under this Agreement, the prevailing party shall be
entitled to recover from the other such attorneys' fees and costs
as may be reasonably incurred, including the costs of reasonable
investigation, preparation and professional or expert
consultation incurred by reason of such litigation. All other
attorneys' fees and costs relating to this Agreement and the
transactions contemplated hereby shall be borne by the party
incurring the same.
6.16 Brokers. Buyer and Seller each represent and warrant
to the other that (a) they have not dealt with any brokers or
finders in connection with the purchase and sale of the Property
except for a commission payable by Seller to The ▇▇▇▇▇▇ Companies
pursuant to separate agreement, and (b) insofar as such party
knows, no other broker or other person is entitled to any
commission or finder's fee in connection with the purchase and
sale of the Property. Seller and Buyer each agree to indemnify
and hold harmless the other against any loss, liability, damage,
cost, claim or expense incurred by reason of any brokerage fee,
commission or finder's fee which is payable or alleged to be
payable to any broker or finder (including The ▇▇▇▇▇▇ Companies)
because of any agreement, act, omission or statement of the
indemnifying party.
6.17 Confidentiality. Pursuant to the terms of this
Agreement, Seller shall furnish to Buyer certain information
concerning the condition, development or value of the Property
(the "Information") which is either confidential, proprietary or
otherwise not available to the public. Any information furnished
to Buyer by a director, officer, employee, agent, contractor or
representative of Seller shall be deemed for purposes of this
Agreement to have been Information furnished by Seller. As a
condition to Seller furnishing the Information, Buyer hereby
represents, warrants and agrees that without the prior written
consent of Seller, which consent may be withheld in Seller's sole
and absolute discretion, Buyer will: (a) Keep the Information
used by Buyer confidential, except information which is in the
public domain or which Buyer may have received from sources other
than Seller, and the Information will not be used other than in
connection with the Buyer's Investigation of the Property; (b)
Use the same efforts that Buyer would use to safeguard its own
confidential or proprietary information to safeguard the
Information from unauthorized disclosure; (c) Not disclose to any
person (i) that the Information has been made available to Buyer,
(ii) that Buyer has inspected any portion of the Information,
(iii) that discussions with respect to the sale of the Property
are taking place (and Seller also agrees to keep confidential the
fact that such discussions are taking place), or (iv) any other
facts with respect to such discussions, including the status
thereof. Notwithstanding the foregoing, Buyer shall have the
right to disclose Information to: (A) its attorneys, accountants,
employees, agents and contractors who are assisting Buyer in its
inspection and purchase of the Property, in which case Buyer
shall require such recipients of the Information to likewise
maintain the confidentiality of the Information in accordance
with this paragraph; (B) any person or entity to whom a court of
competent jurisdiction has required the Buyer to disclose
Information; and (C) any person or entity to whom a government
agency in the proper exercise of its jurisdiction over the
Property has required the Buyer to disclose Information,
provided, however, that before disclosing Information as required
by any such government agency, the Buyer shall give reasonable
advance written notice to the Seller to allow the Seller to
oppose such disclosure if it so desires. Buyer shall indemnify
Seller from and against any and all claims, demands, causes of
action, loss, damage or liability resulting from, arising out of
or in connection with Buyer's breach of its obligations under
this Section 6.17. Upon Seller's request, upon termination of
this Agreement, Buyer agrees to return to Seller all information
furnished to Buyer by Seller in connection with the Property,
including without limitation internally generated rent rolls,
without retaining any copies thereof.
6.18 Manner of Giving Notice. All notices and demands which
either party is required or desires to give to the other shall be
given in writing by personal delivery, express courier service or
by telecopy followed by next day delivery of a hard copy to the
address or telecopy number set forth below for the respective
party, provided that if any party gives notice of a change of
name, address or telecopy number notices to that party shall
thereafter be given as demanded in that notice. All notices and
demands so given shall be effective upon receipt by the party to
whom notice or a demand is being given.
To Seller: With Copies To:
Frontier II Properties Lamb & Baute
Limited Partnership ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
To Buyer: With Copies To:
Arden Realty Limited Partnership Jeffer, Mangels, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, 2121 Avenue of the Stars
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
6.19 Survival. The provisions of Sections 3.7 (Access to
Property), 4.3 (Hazardous Material Indemnification and Waiver),
4.4 (Condemnation), 4.5 (Damage or Destruction), 4.6 (Indemnity),
5.3 (Payment of Closing Costs), 5.6 (Liquidated Damages),
5.7 (Buyer's Remedies), 5.8 (Possession) and Article 6 (General
Provisions) shall survive the Closing and the consummation of the
transactions contemplated by this Agreement or the termination of
this Agreement for any reason without the conveyance of the
Property to Buyer. The provisions of Sections 4.1.1 (Buyer's
Representations and Warranties), 4.1.2 (Seller's Representations
and Warranties), 4.2 (Reaffirmation), and 5.2 (Prorations), shall
survive only if this Agreement Closes and then only for a period
of one (1) year following the Closing Date.
6.20 Acceptance of Offer. This Agreement constitutes an
offer by Seller to sell the Property to Buyer on the terms and
conditions set forth herein. Unless sooner terminated or
withdrawn by notice in writing to Buyer, this offer shall expire
at 12:00 noon Los Angeles time on August 11, 1997.
[Signatures on the following page]
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
"BUYER": ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By:ARDEN REALTY, INC.,
a Maryland corporation,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇▇
Title: President and COO
"SELLER": FRONTIER II PROPERTIES LIMITED
PARTNERSHIP, a Texas limited partnership
By:Frontier Holdings, L.L.C.,
a Texas limited liability company,
its General Partner
By:Frontier Equity Partners II,
Ltd., a Texas liability
partnership, a Member
By:TCV #2 GP Holdings Limited
Partnership, a Texas limited
partnership, its General
Partner
By:Sarofim Realty Advisors
Co., a Texas corporation,
as Agent and Attorney-In-
Fact
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President