EXHIBIT 10.25
OPTION AGREEMENT
BETWEEN
ACD2,
a California corporation,
OPTIONOR
AND
AMWEST INSURANCE GROUP, INC.,
a Delaware corporation
OPTIONEE
CALABASAS COMMERCE CENTER, BUILDING 6
TABLE OF CONTENTS
Page
1. Grant of Option 1
2. Exercise of Option 2
3. Property Information, Access and Inspection 3
4. Purchase Price 8
5. Escrow Instructions 10
A. Opening of Escrow 10
B. Documents and Funds to be Delivered 10
C. Conditions to Close 13
D. Recordation and Transfer ▇▇
▇. ▇▇▇▇▇ of Escrow 15
F. Title Insurance Policy 15
G. Prorations 15
H. Optionor's Cooperation With Optionee 16
I. Costs 16
J. Failure to Close 16
6. Nominee/Assignment 17
7. Optionor's Representations and Warranties 17
A. Power and Authority of Optionor 17
B. Validity of Agreement 18
C. Leases and Rent Roll 18
D. Contracts 18
E. Hypothecation of Property Income 18
F. Operating Statements. 18
G. Hazardous Substances 19
H. Litigation 19
I. Compliance with Laws. 20
J. Land Use Regulations 20
K. Other Written Contracts 20
L. True Copies 20
M. Insolvency 21
N. Personal Property; Intangible Rights
and Warranties 21
O. Optionor's Knowledge 21
8. Optionee's Representations and Warranties 21
A. Power of Authority of Optionee 22
B. Validity of Agreement 22
9. Change in Condition of Property 22
10. Covenants of Optionor and Optionee 23
A. Covenants of Optionor 23
B. Sale of Property 24
11. Recordation of Memorandum of Option 24
12. Waiver of Performance 24
13. Section Headings 25
14. Notices 25
15. Property "As Is" 26
A. Side Letter Agreement 26
B. No Other Side Agreements of
Representations 26
C. AS IS CONDITION 26
16. Governmental Approvals 27
17. Determination of Land Value 28
18. Counterparts 30
19. Governing Law 30
20. Attorneys' Fees and Costs 30
21. Prior Agreements 30
22. Further Assurances 30
23. Successors and Assigns 30
24. Possession. 30
25. Severability 31
26. Performance Due on Non-Business Day 31
27. Amendments 31
EXHIBITS
Exhibit A Legal Description of the Land
Exhibit B Estoppel Certificate
Exhibit C Purchase Price Calculation
Exhibit D Grant Deed
Exhibit E Assignment of Leases
Exhibit F ▇▇▇▇ of Sale
Exhibit G Assignment and Assumption of Service Contracts
Exhibit H Assignment of Intangible Property
Exhibit I ss.1445 Affidavit
Exhibit J California Real Estate Withholding Exemption Certificate
Exhibit K Title Insurance Commitment
Exhibit L Side Letter Agreement
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is executed as of the
24th day of January, 1996 by ACD2, a California corporation ("Optionor"), and
AMWEST INSURANCE GROUP, INC., a Delaware corporation ("Optionee"), with
reference to the following facts:
A. Optionor, as Landlord, and Optionee, as Tenant, are
concurrently herewith entering into that certain Office Building Lease (the
"Lease"), pursuant to which Optionee has agreed to lease initially from Optionor
approximately 64,543 rentable square feet (the "Premises") in Building 6 (the
"Building") to be constructed by Optionor together with the exclusive right to
the use of certain parking spaces in the parking facilities related to the
Building (the "Parking Area") and the non-exclusive right to use, in common with
other tenants in the Building and the Development (as defined below), the Common
Areas (as defined in the Lease) on the land described on Exhibit "A" attached
hereto (the "Land") and which will be part of a larger business park known as
the Calabasas Commerce Center (the "Project") in Calabasas, California. The
Building, together with the Land, the Common Areas and all other easements,
rights-of-way and licenses are known as and shall be referred to herein as the
"Development". The Development is a portion of the Project. All capitalized
terms used but not defined herein shall have the meaning given thereto in the
Lease.
B. Optionee is to enter into possession of the Premises for an
initial lease term of fifteen (15) years (the "Initial Term"), with two (2) five
(5) year extension options. The Initial Term and any extension options exercised
by Optionee are collectively referred to herein as the "Lease Term."
C. Optionor now desires to grant to Optionee and Optionee
desires to accept an option to acquire the Property (as defined in Section 1
below) on the terms and conditions contained herein. It is the intention of the
parties hereto that, upon exercise of the option granted herein, this Agreement
shall act as the purchase agreement for the sale of the Property to Optionee.
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein and for other good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereto agree as follows:
1. Grant of Option.
In consideration of One Hundred and No/100 Dollars ($100.00)
and other good and valuable consideration, receipt of which is hereby
acknowledged, Optionor grants to Optionee the exclusive right and option (the
"Option") to purchase the following:
(a) The Land;
(b) All rights, privileges, easements and rights of
way appurtenant to the Land, including, without limitation, all
mineral, oil and gas and other subsurface rights, development rights,
air rights, and water rights (the "Appurtenances");
(c) All improvements, fixtures and personal property
located on the Land at the time of the exercise of the Option owned by
Optionor, including, without limitation, the Building, the Parking Area
and related landscaping, all apparatus, equipment and appliances owned
by Optionor and used in connection with the operation or occupancy
thereof, such as heating and air conditioning systems and facilities
used to provide any utility services, parking services, refrigeration,
ventilation, trash disposal, recreation or other services thereto
(collectively, the "Improvements");
(d) All of the interest of Optionor in any and all
contracts, rights, warranties, guaranties, agreements, utility
contracts and deposits, approvals (governmental or otherwise), surveys,
plans and specifications, other rights relating to the construction,
ownership, use and operation of all or any part of the Land and
Improvements and any agreements, covenants or indemnifications received
by Optionor from a prior owner or any other third party relating to the
Land, Appurtenances or Improvements (collectively, the "Intangible
Property"), all to the extent assignable and to the extent approved by
Optionee, all of which shall be assigned to Optionee pursuant to an
assignment described herein below; and
(e) All of the interest of Optionor in all leases,
lease amendments, exhibits, addenda and riders thereto including,
without limitation, any contracts, operating leases, rental agreements,
licenses or similar instruments creating a possessory interest in the
Property (as defined below), lease guaranties, work letter agreements
which will survive the Close of Escrow (as hereinafter defined), side
letter agreements, improvement agreements, subleases, assignments,
licenses, concessions and other agreements which will survive the Close
of Escrow (collectively, the "Leases") with all persons leasing, using
or occupying the Land or the Improvements or any part thereof.
The Land, the Appurtenances, the Improvements, the
Intangible Property and the Leases are hereinafter collectively referred
to as the "Property."
2. Exercise of Option.
(a) Exercise of Option by Optionee. The Option may be
exercised by Optionee at any time between the thirty-sixth (36th) and
forty-second (42nd) months of the Initial Term (the "Option Period") by
delivering written notice of such exercise to Optionor in accordance
with Section 14 hereof (the "Option Exercise Notice") along with
Optionee's determination of "Land Value" as defined and described in
Section 17 below. The Close of Escrow (as defined in Section 5.E.
below) shall occur one hundred twenty (120) days from the date Optionee
delivers the Option Exercise Notice, or such other date as mutually
agreed in writing by Optionor and Optionee. Notwithstanding the
foregoing, in the event Optionor and Optionee are unable to agree upon
a Land Value by the "Outside Agreement Date" (as defined in Section 17
below), the Close of Escrow shall occur on the later to occur of: (i)
the one hundred twentieth (120th) day following the date Optionee
delivers the Option Exercise Notice; or (ii) the thirtieth (30th) day
following the date the Land Value is determined following arbitration
proceedings as described in Section 17 below ("Land Value Determination
Date"), or such other date as mutually agreed in writing by Optionor
and Optionee.
(b) Exercise of Put Option by Optionor. If Optionor
intends to sell the Property to a third party at any time following the
Commencement Date and prior to expiration of the Option Period,
Optionor shall have the right to "put" the Option to Optionee by giving
written notice to Optionee of such intention ("Put Notice") along with
Optionor's determination of Land Value and Optionee shall have thirty
(30) days after the Land Value Determination Date in which to elect to
exercise the Option in accordance with Section 14 hereof (the
"Put/Option Exercise Notice"). If Optionee elects to so exercise the
Option, the Close of Escrow shall occur sixty (60) days following
delivery by Optionee to Optionor of the Put/Option Exercise Notice. If
Optionee fails to elect to exercise the Option within such thirty (30)
day period, Optionor shall have one hundred eighty (180) days from the
Land Value Determination Date to close a sale of the Property to a
third party buyer unaffiliated with Optionor on terms acceptable to
Optionor. If Optionor fails to close such a sale within said one
hundred eighty (180) day period, Optionee shall again have the Option
under all of the same terms and conditions set forth herein.
3. Property Information, Access and Inspection.
In order to assist Optionee in determining whether to exercise
the Option:
(a) Optionor shall promptly deliver to Optionee, upon
written request, at any time between the thirty-second (32nd) and
forty-second (42nd) months of the Initial Term or following delivery of
a Put Notice, the following information (or an update of such
information if previously delivered to Optionee):
(i) A current CLTA preliminary title report
with a full legal description of the Land and legible
copies of all documents referred to therein
(collectively the "PTR") from Chicago Title Company
(the "Title Company").
(ii) To the extent in Optionor's possession,
or readily available to Optionor, true and complete
copies of the following as they relate to the
Property:
(A) surveys;
(B) site plans, parking plans,
as-built plans, grading plans, and the
plans, specifications and design documents
related to the Improvements;
(C) drawings, specifications,
engineering and architectural studies and
similar documents, maps, topographical maps,
soils reports and construction testing
documents:
(D) warranties and guarantees,
provided same are in full force and effect;
(E) draft and final studies,
reports, surveys and assessments relating to
the environmental condition of the Property
or any property within the vicinity of the
Property, including, without limitation, any
soils, toxics and hazardous waste
(including, without limitation, asbestos)
reports;
(F) correspondence, applications,
permits and other communications to or from
any governmental or quasi-governmental
agency in connection with any Hazardous
Substances (as hereinafter defined) or the
environmental condition of the Property or
any property within the vicinity of the
Property;
(G) notifications required by
applicable law to be provided to any tenant
or any other party as a result of the
condition of the Property, if applicable
(including, without limitation, notices
relating to Hazardous Substances on or near
the Property; and
(H) building, occupancy and use
permits and approvals and any other
governmental licenses, permits or approvals
for the Property or the equipment used in
connection with the Property;
(iii) a list setting forth (as of the time
the list is prepared):
(A) to the best of Optionor's actual
knowledge, all current and past uses of the
Property by Optionor or any tenant, licensee
or occupant of the Property during
Optionor's ownership or occupancy of the
Property;
(B) to the best of Optionor's actual
knowledge, all uses of the Property by any
prior "Owner or Operator" of the Property
(as that phrase is defined in CERCLA (as
hereinafter defined);
(C) to the best of Optionor's actual
knowledge, all Hazardous Substances
currently or previously used, generated,
stored, transported to, transported from, or
disposed of on the Property by any current
or prior "Owner or Operator" of the Property
or any other person (whether legal or
illegal, accidental or intentional);
(D) to the best of Optionor's actual
knowledge, the location or former location
on or under the Property of all storage
tanks, ▇▇▇▇▇ pits, clarifier pits and other
storage or treatment facilities, if any;
(E) to the best of Optionor's actual
knowledge, the location of any Hazardous
Substances disposed of on the Property by
Optionor, if any (whether legal or illegal,
accidental or intentional);
(F) to the best of Optionor's actual
knowledge, the location of any Hazardous
Substances from the Property disposed of
off-site, if any (whether legal or illegal,
accidental or intentional);
(G) to the best of Optionor's actual
knowledge, the location of any release (as
that term is defined under the Environmental
Laws (as hereinafter defined)) of any
Hazardous Substances either on the Property
or on property located within two thousand
(2,000) feet of the Property;
(iv) a list and complete copies (as of the
time prepared) of all written contracts, agreements
or other documents affecting the Property which would
survive the Close of Escrow including, without
limitation, service contracts, maintenance contracts,
management contracts, employment contracts, union
contracts, retirement plans (including information
relating to unfunded obligations), warranties and
indemnity agreements;
(v) a schedule setting forth an inventor
of any personal property which would be delivered to
Optionee at the Close of Escrow;
(vi) any and all Leases and proposed leases
(if any) currently being negotiated (collectively,
the "Proposed Leases") affecting the Property which
would not be terminated prior to the Close of Escrow,
including all amendments and supplements thereto;
(vii) complete copies of the property tax
bills for the Property for the most recent three (3)
years or, if Optionor has not owned the Property for
three (3) years, then for the period of Optionor's
ownership;
(viii) a rent roll for the Property (the
"Rent Roll"), current up through the date it is
delivered, certified to be true and correct by
Optionor, which shall set forth the following
information: (a) the commencement date of each Lease;
(b) the name and location of the tenant under each
Lease and any guarantor thereof; (c) the monthly
rental and all adjustments to the basic rent,
including any free rent periods; (d) any option
rights, including, without limitation, any right to
renew, extend or terminate; (e) any expansion or
contraction rights and information relating thereto
including, without limitation, conditions precedent
to the exercise of such rights, and the term and
scope of such rights; (f) the base year and relevant
percentage, if any, for purposes of calculating
additional rent based upon operating costs, as well
as the number of rentable square feet leased by each
tenant that is used in calculating such percentage
and the basis upon which such rentable square footage
is calculated; (g) whether the tenant is current in
its payment of rental or, to the best of Optionor's
knowledge, is otherwise in material default; (h) the
name of any broker entitled to any commission under
any of the Leases as a result of rentals, the
exercise of options or otherwise and the amount of
commissions payable thereto and the dates upon which
such commissions are payable; (i) the expiration date
of the term of each Lease; (j) the number and
location of any parking spaces allocated to any
tenant and the rate paid therefor (if any); (k) the
amount of any security deposits, prepaid rent or
other deposits; and (l) the amount of rentable square
footage in the Improvements not occupied by tenants
and the basis upon which such rentable square footage
is calculated;
(ix) Annual operating statements for the
Property from the date of completion of the
Improvements to date, or the last three (3) years,
whichever is shorter, covering all items of operation
of the Property, including, without limitation,
taxes, common area maintenance fees (if any), and
utilities, and the source and nature of all income
from operations of the Property for such periods,
together with all appropriate back-up information
reasonably requested by Optionee, and a schedule of
all Improvements made and capital costs incurred; and
(x) such other documents or information
regarding the Property in Optionor's possession or
readily available to Optionor as Optionee reasonably
requests. Notwithstanding any provision in this
Section 3(a), Optionor shall not be obligated to
disclose to Optionee any proprietary, privileged or
confidential information of Optionor relating to the
Property, including but not limited to, Optionor's
internal financial analyses, Optionor's credit
analyses and collection plans, and any documents or
communications subject to the attorney/client
privilege. Furthermore, it is understood by the
parties hereto that Optionor does not make any
representation or warranty, express or implied, as to
the accuracy or completeness of any information
contained in Optionor's files or in the documents or
lists produced by Optionor which were not prepared by
Optionor, including, without limitation, documents or
lists prepared by unaffiliated third party
consultants, such as environmental audits or reports.
Optionee acknowledges that Optionor and Optionor's
affiliates shall have no responsibility for the
contents and accuracy of such disclosures from
parties other than Optionor, and Optionee agrees that
the obligations of Optionor in connection with the
purchase of the Property shall be governed by this
Agreement and the documents and certifications
prepared by Optionor and delivered to Optionee
pursuant to this Agreement irrespective of the
contents of any such disclosures from documents
prepared by parties other than Optionor or the timing
or delivery thereof.
(b) In the event Optionee desires to assess whether
or not to exercise the Option, Optionee may inspect and approve the
physical condition of the Property, at Optionee's sole cost and
expense, prior to the expiration of the Option Period. The parties
agree that Optionee shall have the right to inspect the Property and to
make the investigations set forth herein. Subject to the rights of
tenants in possession, Optionee and its agents, employees and
contractors shall be afforded full access to any portion of the
Property during normal business hours following at least three (3)
calendar days' prior notice from Optionee to Optionor for the purpose
of making such investigations as Optionee deems prudent with respect to
the physical condition of the Property, including, without limitation,
engineering studies, seismic tests, environmental studies (including,
without limitation, surface and subsurface tests, borings, samplings
(including, without limitation, soil, groundwater and asbestos
sampling) and measurements) and a survey of the Property.
Notwithstanding the foregoing, no invasive testing or boring shall be
done without the prior notification of Optionor and Optionor's written
permission of the same, which permission shall not be unreasonably
withheld, conditioned or delayed by Optionor. Optionee may conduct such
feasibility studies as Optionee deems reasonably necessary and
investigate all matters relating to the zoning, use and compliance with
other applicable laws which relate to the use and occupancy of the
Property and any proposed impositions, assessments or governmental
regulations affecting the Property. Optionor shall reasonably cooperate
to assist Optionee in completing such inspections, provided, however,
Optionor shall not be obligated to incur any costs or expenses in
connection with such cooperation. Optionee shall promptly repair any
damage to the Property caused by its inspections and investigations.
Optionee shall hold harmless, defend and indemnify Optionor and
Optionor's officers, directors, shareholders, participants, affiliates,
employees, representatives, invitees, agents and contractors
(collectively, "Indemnified Parties") from and against all claims,
damages, liens, stop notices, liabilities, losses, costs and expenses,
including reasonable attorneys' fees and court costs arising from any
such entry and activities on the Property by Optionee, its agents,
employees and contractors. Notwithstanding the foregoing, Optionee
shall not be liable to Indemnified Parties, nor shall Optionee have any
obligation to hold harmless, defend or indemnify Indemnified Parties
from any liability, costs, damage or claims (including, without
limitation, claims that the Property has declined in value) which are
related to (i) pre-existing adverse conditions affecting the Property
except such pre-existing adverse conditions as were caused by Optionee
as a tenant of the Property, (ii) Optionor's negligence or willful
misconduct, or (iii) Optionee's discovery of any information
potentially having a negative impact on the Property (including,
without limitation, any claims arising out of, resulting from or
incurred in connection with the discovery of any Hazardous Substances
on or about the Property). The Optionee's indemnification obligations
set forth herein shall survive the termination of this Agreement shall
survive the Close of Escrow and shall not be merged with any grant
deed. Furthermore, Optionee shall obtain or cause its consultants to
obtain, at Optionee's sole cost and expense prior to any investigative
activities relating to the Property, a policy of commercial general
liability insurance covering any and all liability of Optionee and
Optionor with respect to or arising out of any investigative
activities. Such insurance policy shall be in form and substance and
issued by an insurance company reasonably satisfactory to Optionor and
contain liability limits in an amount reasonably satisfactory to
Optionor.
(c) If there are any tenants of the Property other
than Optionee, upon written request by Optionee, Optionor shall use its
best efforts to cause each such other tenant to deliver to Optionee a
full and complete estoppel certificate (or an update thereof if
previously delivered to Optionee), in the form attached hereto as
Exhibit "B" (the "Estoppel Certificate"), executed by each such other
tenant. If Optionor is unable to obtain the Estoppel Certificate from
all such other tenants, Optionor shall deliver to Optionee a landlord
estoppel certificate for any such other tenant certifying to the
matters which would have been contained in the Estoppel Certificate.
4. Purchase Price.
The total purchase price ("Purchase Price") for the Property
shall be an amount equal to:
(i) the lesser of:
(y) the actual cost of constructing the
Building shell and core and Tenant Improvements (as
defined in the Lease), including applicable plans,
permits and fees, as qualified and quantified in the
attached Exhibit "C" ("Project Cost") or (z)
$7,572,482,
less
(a) the amount, if any, by which $25.00 per
rentable square foot of Expansion Premises (as
defined in the Lease) exceeds the actual amount
expended on real property tenant improvements in the
Expansion Premises approved by Optionee;
less
(b) the actual costs and expenses, if any,
of removing Hazardous Substances or remediating any
condition relating to the presence or release of
Hazardous Substances on or about the Property which
were known by Optionor to exist as of the
Commencement Date (as defined in the Lease) and which
have not been removed or remediated as of the Land
Value Determination Date;
plus
(ii) Land Value, as determined pursuant to
Section 17 below;
plus
(iii) the actual costs and expenses of Optionor
(which are not covered or reimbursed by any insurance coverage on the
Property), if any, of repairing, restoring or reconstructing the
Property following a fire, earthquake, flood, accident or other
casualty;
plus
(iv) the actual costs and expenses of Optionor, if
any, of repairing, upgrading, or improving the Property after the
completion of the Improvements and the issuance of a Certificate of
Occupancy, which are required by the adoption or implementation of any
law, regulation, or policy of any governmental entity or authority or
are agreed to by Optionee;
plus
(v) the actual costs and expenses, if any, of
removing Hazardous Substances or remediating any condition relating to
the presence or release of Hazardous Substances on or about the
Property which either Optionor did not know to exist as of the
Commencement Date or which were not directly caused by Optionor.
Upon the Commencement Date, Optionor shall calculate
the Purchase Price for the Property (except for Land Value) and deliver
a detailed accounting of such calculation to Optionee, in form and
substance acceptable to Optionee. Furthermore, Optionor shall
recalculate the Purchase Price for the Property (except for Land Value)
concurrently with its delivery of any Put Notice and on or before the
date the Option Period commences, and Optionor shall deliver a detailed
accounting of such calculation to Optionee, in form and substance
acceptable to Optionee. In the event Optionor incurs any costs and
expenses after the date of the commencement of the Option Period, or
following delivery of a Put Notice to Optionee, which entitles Optionor
to adjust the Purchase Price, Optionor shall promptly recalculate the
Purchase Price for the Property (except for Land Value) and deliver a
detailed accounting of such calculation to Optionee, in form and
substance acceptable to Optionee. Optionee, at its sole cost and
expense, may cause the books, records, receipts and expenses of
Optionor to be audited in connection with the determination of the
Purchase Price. If Optionee disagrees with Optionor's determination of
the Purchase Price (except for Land Value) and the parties cannot reach
an agreement, then upon written notice from Optionee to Optionor the
determination of the Purchase Price (including Land Value) shall be
decided by binding arbitration as provided in Section 17 below and the
qualifications of the arbitrators shall include at least five (5) years
experience in the appraisal of first class office buildings in the
Calabasas area. The cost of such arbitration shall be split between the
parties equally. Optionee shall have the right, in its sole and
absolute discretion, to elect whether or not to exercise its Option to
purchase the Property or to complete its acquisition of the Property,
whichever is applicable, if the Purchase Price is not acceptable to
Optionee.
5. Escrow Instructions.
A. Opening of of Escrow. As soon as
reasonably practicable following determination of the Land Value and
Optionee's election to close the transaction, the parties shall open an
escrow (the "Escrow") at Chicago Title Company located at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such
other escrow company as the parties shall mutually select (the "Escrow
Holder"), in order to consummate the purchase in accordance with the
terms and provisions hereof. A copy of this Agreement shall be
deposited in the Escrow and the provisions hereof shall constitute
joint primary escrow instructions to the Escrow Holder; provided,
however, that the parties shall execute such additional instructions as
requested by the Escrow Holder not inconsistent with the provisions
hereof.
B. Documents and Funds to be
and Funds to be Delivered. The following shall be delivered into the
Escrow in connection with the transfer of the Property:
(1) Delivery by Optionor. At least two (2)
business days prior to the Closing Date (as
hereinafter defined), Optionor shall deposit into
Escrow:
(a) a grant deed (the "Deed") to the
Land, Appurtenances and Improvements in
recordable form, duly executed by Optionor
and acknowledged and in substantially the
same form as set forth in Exhibit "D"
attached hereto;
(b) If there are any tenants of the
Property other than Optionee, three (3)
originals of an assignment and assumption of
Leases and security deposits (the "Lease
Assignment"), duly executed in counterpart
by Optionor assigning to Optionee Optionor's
interest and rights, as lessor, under all of
the Leases and security deposits in
substantially the same form as set forth in
Exhibit "E" attached hereto;
(c) three (3) originals of a ▇▇▇▇ of
sale (the "▇▇▇▇ of Sale"), duly executed by
Optionor, pursuant to which Optionor shall
quitclaim, without any representations or
warranties, except as otherwise provided in
this Agreement all of Optionor's right,
title and interest, if any, in all personal
property, owned by Optionor used exclusively
in connection with the Property in
substantially the same form as set forth in
Exhibit "F" attached hereto;
(d) three (3) originals of an
assignment and assumption of service
contracts (the "Service Contracts
Assignment"), duly executed in counterpart
by Optionor, assigning to Optionee, without
any representations or warranties except as
otherwise provided in this Agreement, and
subject to the right of consent of any third
parties where consent is necessary to the
transfer thereof, Optionor's right, title
and interest, if any, in all service
contracts which will remain in effect after
the Close of Escrow in substantially the
same form as set forth in Exhibit "G"
attached hereto;
(e) three (3) originals of an
assignment of intangible property (the
"Assignment of Intangible Property"), duly
executed in counterpart by Optionor,
conveying to Optionee, without any
representations or warranties except as
otherwise provided in this Agreement, all of
Optionor's right, title and interest in and
to the Intangible Property in substantially
the same form as set forth in Exhibit "H"
attached hereto;
(f) three (3) originals of an
affidavit from Optionor which satisfies the
requirements of Section 1445 of the Internal
Revenue Code, as amended (the "Section 1445
Affidavit") in substantially the same form
as set forth in Exhibit "I" attached hereto;
(g) An original California Real
Estate Withholding Exemption Certificate
("California Affidavit") in substantially
the same form as set forth in Exhibit "J"
attached hereto;
(h) a certificate reconfirming
Optionor's representations and warranties as described in
Section 7 below; and
(i) such other instruments and
documents as may be reasonably requested by
Escrow Holder or Optionee and are reasonably
required to transfer the Property to
Optionee in accordance with this Agreement.
(2) Delivery by Optionee. At least one
(1) business day prior to the Closing Date,
Optionee shall deposit into Escrow:
(a) If applicable, three (3)
originals of the Lease Assignment, duly
executed in counterpart by Optionee,
assuming Optionor's interest and obligations
as lessor under the Leases;
(b) If applicable, three (3)
originals of the Service Contracts
Assignment, duly executed in counterpart by
Optionee, assuming Optionor's interest and
obligations under the service contracts
which will remain in effect after the Close
of Escrow;
(c) three (3) originals of the
Assignment of Intangible Property, duly
executed in counterpart by Optionee,
assuming Optionor's interest in and
obligations with respect to the Intangible
Property;
(d) a certificate reconfirming
Optionee's representations and warranties as
described in Section 8 below; and
(e) such other instruments and
documents as may be reasonably requested by
Escrow Holder or Optionor and are reasonably
required to transfer the Property to
Optionee in accordance with this Agreement.
(3) Further Delivery by Optionee. Upon the
Closing Date, Optionee shall deliver into Escrow by
certified or cashier's check if acceptable to Escrow
Holder (or a wire transfer of immediately available
funds) the amount of the Purchase Price as adjusted
and prorated herein, plus such additional sums as
shall be necessary to pay the expenses payable by
Optionee hereunder.
(4) Closing Statement. At least five (5)
business days prior to the Close of Escrow, Escrow
Holder shall deliver to Optionor and Optionee a pro
forma closing statement which sets forth the
prorations and other credits and debits contemplated
by this Agreement, which closing statement shall be
subject to the approval of Optionor and Optionee
prior to the Close of Escrow.
C. Conditions to Close.
(1) Optionee. Escrow shall not close unless
and until the following conditions precedent and contingencies
have been satisfied or waived in writing by Optionee:
(a) All instruments described
in this Section 5 have been delivered to the
Escrow Holder;
(b) On the Closing Date, Optionor
shall not be in material default in the
performance of any material covenant or
agreement to be performed by Optionor under
this Agreement or the Lease;
(c) On the Closing Date, all
material representations and warranties made
by Optionor in Section 7 hereof shall be
true and correct as if made on and as of the
Closing Date;
(d) The Title Company is in a
position to issue to Optionee an ALTA policy
of title insurance for the Property as set
forth in Subsection E below;
(2) Optionor. Escrow shall not close unless
and until the following conditions precedent and contingencies
have been satisfied or waived in writing by Optionor:
(a) All funds and instruments
described in this Section 5 have been
delivered to the Escrow Holder;
(b) On the Closing Date, Optionee
shall not be in material default in the
performance of any material covenant or
agreement to be performed by Optionee under
this Agreement or the Lease; and
(c) On the Closing Date, all
material representations and warranties made
by Optionee in Section 8 hereof shall be
true and correct as if made on and as of the
Closing Date.
D. Recordation and and
Transfer. Upon satisfaction of the conditions set forth in Section 5
above, Escrow Holder shall transfer the Property as follows:
(1) Cause the Grant Deed to be recorded
in the Official Records of Los Angeles County, California;
(2) Deliver to (a) Optionee at least one
fully executed original of the Lease Assignment (if any), the
Service Contracts Assignment, the ▇▇▇▇ of Sale, the Assignment
of Intangible Property, the Section 1445 Affidavit, the
California Affidavit and at least one conformed copy of the
recorded Grant Deed, (b) Optionor at least one fully executed
original of the Lease Assignment (if any), the Service
Contracts Assignment, the ▇▇▇▇ of Sale, the Assignment of
Intangible Property, the Section 1445 Affidavit, the
California Affidavit and at least one conformed copy of the
recorded Grant Deed, and (c) the parties entitled thereto any
other closing documents;
(3) Disburse all funds deposited with Escrow
Holder by Optionee in payment of the Purchase Price for the
Property as follows:
(a) to the extent that Optionor is a
foreign person pursuant to Section 1445 of
the Internal Revenue Code of 1986, as
amended, and is not otherwise exempt from
such section's withholding requirements,
withhold the cash equivalent of ten percent
(10%) of the Purchase Price (unless some
lesser amount is authorized by the Internal
Revenue Service);
(b) to the extent that Optionor is a
non-California resident pursuant to Revenue
and Taxation Code Sections 18805 and 26131,
and is not otherwise exempted from such
sections withholding requirements, withhold
the cash equivalent of three and one-third
percent (3-1/3%) of the Purchase Price
(unless some lesser amount is authorized by
the Franchise Tax Board);
(c) deduct the amount of all
items chargeable to the account of Optionor
pursuant hereto;
(d) deliver to Optionor the
remaining portion of the Purchase Price
pursuant to instructions to be delivered by
Optionor to Escrow Holder;
(e) deduct the amounts of all
items chargeable to Optionee;
(f) disburse the remaining balance
of the funds deposited by Optionee to
Optionee promptly upon the Close of Escrow
pursuant to instructions to be delivered by
Optionee to Escrow Holder;
(4) If appropriate, deliver the
California Affidavit to the California
Franchise Tax Board.
E. Close of of Escrow. Subject to the
terms and provisions of this Agreement, the transaction contemplated by
this Agreement shall close ("Close of Escrow or Closing Date") on or
before the date set forth in Section 2(a) or 2(b) above, whichever is
applicable, unless otherwise extended pursuant to the terms of this
Agreement or in writing by mutual agreement between Optionee and
Optionor. If the Closing Date does not fall on a Tuesday, Wednesday or
Thursday, Escrow shall close on the Tuesday following such date. Upon
the Close of Escrow, the Lease shall automatically terminate.
F. Title Insurance Insurance Policy. Upon
the transfer of the Property, title to the Property shall be insured by
an ALTA policy of title insurance issued by the Title Company with
liability in the amount of the Purchase Price and including title
endorsement nos. 103.3 and 103.7, insuring title to the Property to be
vested in Optionee or Optionee's nominee, subject only to current real
estate taxes not delinquent, exceptions to title described on
Optionee's title insurance commitment dated as of January 23, 1996
issued by Title Company (the "Option Policy"), a copy of which is
attached hereto as Exhibit "K", and all other matters of record
approved in writing by Optionee.
G. Prorations.
(1) As of the Close of Escrow, all real and
personal property taxes based on the most recent property tax
bills available, rents, issues and profits from the Property,
utilities, and such other matters as the parties shall agree
to be prorated.
(2) All bonds or special assessments against
the Property due before the Close of Escrow shall be paid by
Optionor and all bonds or special assessments due after the
Close of Escrow, which relate to events occurring prior to the
Close of Escrow, shall be prorated as of the Close of Escrow.
(3) All past due rent (including operating
expense pass throughs) shall for purposes of proration be
deemed received by Optionor except rent due by Optionee or its
affiliates for which Optionor shall receive a credit at Close
of Escrow; provided, however, Optionee agrees to use its good
faith efforts (without litigation) to obtain and promptly
deliver to Optionor all past due rents accrued prior to the
Close of Escrow from any tenants of the Property other than
Optionee.
(4) Rentals and operating expense pass
throughs received by Optionee shall first be credited to
current obligations, and when those are satisfied, then to
past due obligations owed to Optionor which shall be promptly
paid to Optionor by Optionee.
(5) Any supplementary tax bills received by
Optionee following the Close of Escrow relating to a period
prior to the Close of Escrow shall be prorated by the parties
as if said tax bills had been available at the Close of
Escrow.
(6) Security and other deposits and unused
portions of advance rentals, if any, actually paid by any
tenant and received by Optionor under any of the Leases shall
be transferred to Optionee upon the Close of Escrow without
additional consideration by Optionee.
(7) Prepaid expenses, the benefits of which
are enjoyed by Optionee after Close of Escrow, such as
advertising expenses and utility charges.
H. Optionor's Cooperation With Optionee
Optionor agrees to cooperate with Optionee
in providing for an orderly transition in utility service for the
Property. In this connection, Optionor agrees, upon receipt of a
request from Optionee, to continue the utility service for the Property
in Optionor's name but at Optionee's expense for a period not to exceed
five (5) business days following the Close of Escrow.
I. Costs. Optionor and Optionee shall each pay
one half (1/2) of the Escrow fees. Optionor shall pay for the costs of
obtaining a CLTA policy of title insurance, all documentary or other
transfer taxes, sales taxes, deed preparation and recordation charges.
Optionee shall pay for the cost of the premium for the difference
between an ALTA policy of title insurance and a CLTA policy of title
insurance, any survey prepared for Optionee in connection with the
issuance of an ALTA policy of title insurance, and any endorsements
requested by Optionor in connection with any title insurance coverage
for the Property not described in Sub-Section F above. Each party shall
pay its own attorneys' fees and other expenses incurred by it in
connection herewith. Each party shall pay for any and all other title
or closing charges necessary to close Escrow pursuant to the local
customs of the County of Los Angeles. Concurrently with the execution
of this Agreement, the Title Company has issued to Optionee the Option
Policy at Optionee's sole expense. Optionee shall receive a credit
against the Purchase Price for any credit given by the Title Company
against the title insurance premium which otherwise would be owed by
Optionor under this Sub-Section I.
J. Failure to Close. If for any
reason this transaction fails to close after Optionee exercises the
Option including, without limitation, due to a failure of any condition
set forth above, except for a default by Optionee under this Agreement,
then this Agreement shall remain in full force and effect and Optionee
may elect to exercise the Option at a future date so long as Optionee
exercises the Option between the thirty-sixth (36th) and forty-second
(42nd) months of the Initial Term.
6. Nominee/Assignment.
Optionee shall have the right to designate a nominee to take
title to the Property, or assign its rights hereunder, by delivering written
notice thereof to Optionor at least five (5) business days prior to the Closing;
provided, however, (i) such assignee or nominee shall be an affiliate of
Optionee or such other entity which has succeeded to the rights of Optionee
under this Agreement and/or under the Lease and (ii) such assignment or
substitution shall not relieve Optionee of its obligations hereunder.
7. Optionor's Representations and Warranties.
Optionor hereby covenants that the following representations
and warranties of Optionor are true as of the date of this Agreement and shall
be true and correct as of the Closing. Representations and warranties as to
Improvements, Intangible Property, Leases and the operation of the Improvements
shall only be applicable and shall be true and correct as of the completion of
the Improvements and as of the Closing. It is hereby expressly understood and
agreed that all liability of Optionor for breach of the representations and
warranties contained in this Section 7 shall terminate if no written claim of
breach, specifying the representation or warranty allegedly breached and the
supporting evidence for the alleged breach, shall be delivered to Optionor on or
prior to the date which is one (1) year following the Closing Date. Optionor
shall reconfirm the following representations and warranties as of the Closing
or disclose in writing to Optionee any exceptions thereto which exist as of the
date of the new certificate. The sale of the Property to Optionee pursuant to
this Agreement shall be, except as provided in this Agreement, "as-is,"
"where-is," "with all faults" and without warranties, implied or expressed.
A. Power and Authority of Optionor.
Optionor is a corporation duly organized and validly
existing under the laws of the State of California and duly qualified
to conduct business activities in the State of California. Optionor has
the requisite right, power and authority to enter into and carry out
the terms of this Agreement and the execution and delivery hereof and
of all other instruments referred to herein. The performance by
Optionor of Optionor's obligations hereunder will not violate or
constitute an event of default under the terms and provisions of any
material agreement, document or instrument to which Optionor is a party
or by which Optionor is bound. All proceedings required to be taken by
or on behalf of Optionor to authorize it to make, deliver and carry out
the terms of this Agreement have been duly and properly taken. No
further consent of any person or entity is required in connection with
the execution and delivery of, or performance by Optionor of its
obligations under this Agreement, including, without limitation, the
consent or approval of any bankruptcy or other court having
jurisdiction over Optionor or the Property.
B. Validity of Agreement.
This Agreement is a valid and binding obligation of Optionor,
enforceable against Optionor in accordance with its terms.
C. Leases and Rent Roll. The
copies of the Leases delivered to Optionee pursuant to this Agreement
are true and correct copies thereof. The Leases are in full force and
effect. The Leases are the only leases affecting the Property which
will not be terminated as of the Closing and the tenants under the
Leases are the only tenants thereof. To the best of Optionor's actual
knowledge, there are no other agreements, written or oral, with respect
to the tenancies, or the Improvements. There are no material defaults
by Optionor under any of the Leases nor have events occurred which with
notice or passage of time, or both, would constitute a material event
of default by Optionor thereunder. Except as disclosed to Optionee in
writing, there are no material defaults by any tenant under any of the
Leases which is known to Optionor, nor have events occurred which with
notice or the passage of time, or both, would constitute a material
event of default by such tenant thereunder which is known to Optionor.
Optionor has not made any previous assignment, transfer or other
disposition of all or any part of its interest in any of the Leases
(except in connection with financing the Property and which has been
disclosed to Optionee) and there are no encumbrances by Optionor
covering the Leases that will survive the Closing. The information
contained in the Rent Roll is true, complete and correct as of the date
the Rent Roll was delivered to Optionee and shall be revised as
necessary to be true, complete and correct as of the Closing. The Rent
Roll shall specify the amount of the Property's operating expenses
which are passed through to the Property's tenant(s) in accordance with
generally accepted accounting principles consistently applied.
D. Contracts. The copies of the contracts,
if any, delivered to Optionee pursuant to this Agreement are true,
complete and correct copies of all such contracts and to the best of
Optionor's actual knowledge there are no other contracts relating to
the Property. To the best of Optionor's actual knowledge, there are no
defaults thereunder by Optionor or, by any other parties thereto which
is known to Optionor except as disclosed to Optionee in writing, and
there exists no condition that, with the passage of time, the giving of
notice, or both, would constitute such a default by Optionor or, by any
other parties thereto which is known to Optionor except as disclosed to
Optionee in writing.
E. Hypothecation
of Property Income. Optionor has not hypothecated the rents or income
from the Property in any manner other than in accordance with the terms
of any loans (which loans shall be discharged in full by Optionor at
the Closing).
F. Operating Statements.
The copies of the operating statements for the Property delivered by
Optionor to Optionee are true, complete and correct copies of the
originals thereof, and accurately show all income and expenses of the
Property in all material respects, for the periods indicated.
G. Hazardous Substances. To the
best of Optionor's actual knowledge, except as disclosed to Optionee in
writing or otherwise discovered by Optionee prior to the Closing Date:
(i) no Hazardous Substances are present in, on or under the Property;
and (ii) Optionor has never used the Property or any part thereof, and
has never permitted any person to use the Property or any part thereof,
for the production, processing, manufacture, generation, treatment,
handling, storage or disposal of Hazardous Substances, and no
underground storage tanks of any kind are located in, on or under the
Property, nor, were any underground storage tanks previously located
in, on or under the Property; and (iii) no notice of any order,
directive, complaint or other written communication, has been made or
issued by any governmental or quasi-governmental agency nor has
Optionor received a written notice from any other third party alleging
the occurrence of any activity on the Property in violation of any
applicable Environmental Laws (as hereinafter defined) or demanding
payment or contribution for environmental damage or injury to the
Property.
As used in this Agreement, the following definitions
shall apply: "Environmental Laws" shall mean all federal, state and
local laws, ordinances, rules and regulations now or hereafter in
force, as amended from time to time, in any way relating to or
regulating human health or safety, or industrial hygiene or
environmental conditions, or protection of the environment, or
pollution or contamination of the air, soil, surface water or
groundwater, and includes, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. ss. 9601, et seq. ("CERCLA"), the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901, et seq., the Clean Water Act, 33
U.S.C. ss. 1251, et seq. "Hazardous Substance(s)" shall mean any
substance or material that is described as a toxic or hazardous
substance, waste or material or a pollutant or contaminant or
infectious waste, or words of similar import, in any of the
Environmental Laws, and includes asbestos, petroleum or petroleum
products (including crude oil or any fraction thereof, natural gas,
natural gas liquids, liquefied natural gas, or synthetic gas usable for
fuel, or any mixture thereof), polychlorinated biphenyls, urea
formaldehyde, radon gas, radioactive matter, medical waste, and
chemicals which may cause cancer or reproductive toxicity. "Release"
shall mean any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, dumping or disposing into
the environment including continuing migration, of Hazardous Substances
into or through soil, air, surface water or groundwater.
H. Litigation. To the best of Optionor's
actual knowledge, except as disclosed to Optionee in writing or
otherwise discovered by Optionee prior to the Closing Date, there are
no pending or, to the best of Optionor's actual knowledge, contemplated
actions, suits, arbitrations, claims or proceedings, at law or in
equity, affecting all or any portion of the Property or in which
Optionor is or will be a party by reason of its ownership of the
Property, including, without limitation, judicial, municipal or
administrative proceedings in eminent domain, unlawful detainer or
tenant evictions, collections, alleged building code, health and safety
or zoning violations, personal injuries or property damages alleged to
have occurred on the Property or by reason of the condition or use of
the Property.
I. Compliance with Laws. To the
best of Optionor's actual knowledge, except as disclosed to Optionee in
writing or otherwise discovered by Optionee prior to the Closing Date,
(i) the Property is being operated in full compliance with all federal,
state and local building, zoning, planning, handicapped (including,
without limitation, the Americans with Disabilities Act), parking,
health and insurance laws and regulations and (ii) no notices of
violation of or exemptions from governmental regulations relating to
the Property or Optionor have been issued to, served upon, received by
or entered against Optionor.
J. Land Use Regulations. To the
best of Optionor's actual knowledge, except as disclosed to Optionee in
writing or otherwise discovered by Optionee prior to the Closing Date,
Optionor has not received any written notice of any condemnation,
environmental, planning, zoning or other land use regulation adversely
affecting the Property or any part thereof.
K. Other Written Contracts.
To the best of Optionor's actual knowledge, Optionor has not entered
into any other contracts for the sale of the Property, nor do there
exist any rights of first refusal or options to purchase the Property.
L. True Copies. To the best of Optionor's
actual knowledge, all documents to be submitted to Optionee for
Optionee's approval pursuant to this Agreement will be true, correct
and complete copies thereof as of the date of submission thereof and as
of the Close of Escrow, and all supplements or additions will be true,
correct and complete copies thereof as of the date submitted and as of
the Close of Escrow. Optionor has no actual knowledge of any material
error, misrepresentation or inconsistency with any of the documents or
supplemental documents delivered to Optionee pursuant to this
Agreement. Notwithstanding any of the foregoing, Optionor makes no
representation or warranty, express or implied, as to the accuracy or
completeness of any document prepared by any party other than Optionor,
including, without limitation, unaffiliated third party consultants.
M. Insolvency. This Agreement is the
product of an arms-length transaction. Optionor has not taken any
action relating to the Property which would invalidate this transaction
or the transfer of the Property to Optionee. Optionor is currently
solvent, and shall not be rendered insolvent by virtue of the sale of
the Property to Optionee, and Optionor has not otherwise taken any
action which may subject Optionor to applicable bankruptcy or similar
laws affecting the rights of creditors generally.
N. Personal Property; Intangible Rights and
Warranties. Except
in connection with the financing of the Property or as disclosed to
Optionee in writing or otherwise discovered by Optionee prior to the
Closing Date, Optionor has not made any previous assignments, sales or
conveyances of any personal property covered by this Agreement and
there are no encumbrances covering any such personal property which
will survive the Closing. Except in connection with the financing of
the Property and as disclosed to Optionee in writing or otherwise
discovered by Optionee prior to the Closing Date, Optionor has not made
any previous assignment, transfer or disposition of all or any part of
its interest in the Intangible Property or any warranties relating to
the Property (the "Warranties").
O. Optionor's Knowledge. As used
anywhere in this Agreement the term "to the best of Optionor's actual
knowledge" refers to the actual knowledge of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice
President of ▇▇▇▇ Development Company, and ▇▇▇▇▇▇ ▇▇▇▇▇, Executive Vice
President of Home Savings of America (collectively, "Seller's
Representatives") without the obligation to undertake any investigation
or inquiry. Optionor represents that each of Seller's Representatives
has been involved with the Property for approximately the past two (2)
years.
The representations and warranties set forth in this
Section 7 are solely for the benefit of Optionee and/or the nominee or
assignee of Optionee as described in Section 6 above.
8. Optionee's Representations and Warranties.
Optionee hereby covenants that the following representations
and warranties of Optionee are true and shall be true and correct as of the
Closing. It is expressly understood and agreed that all liability of Optionee
for breach of the representations and warranties contained in this Section 8
shall terminate if no written claim of breach, specifying the representation or
warranty allegedly breached and the supporting evidence for the alleged breach,
shall be delivered to Optionee on or prior to the date which is one (1) year
following the Closing Date. Optionee shall reconfirm the following
representations and warranties as of the Closing or disclose in writing to
Optionor any exceptions thereto which exist as of the date of the new
certificate:
A. Power of Authority
of Optionee. Optionee is a corporation duly organized and existing
under the laws of the State of Delaware and duly qualified to conduct
business activities in the State of California. Optionee has the
requisite power and authority to enter into and carry out the terms of
this Agreement and the execution, performance and delivery hereof and
of all other agreements and instruments referred to herein to be
executed, performed or delivered by Optionee and the performance by
Optionee of Optionee's obligations hereunder will not violate or
constitute an event of default under the terms and provisions of any
material agreement, document or instrument to which Optionee is a party
or by which Optionee is bound. All proceedings required to be taken by
or on behalf of Optionee to authorize it to make, deliver and carry out
the terms of this Agreement have been duly and properly taken. No
further consent of any person or entity is required in connection with
the execution and delivery of, or performance by Optionee of its
obligations under this Agreement.
B. Validity of Agreement. This
Agreement is a valid and binding obligation of Optionee, enforceable
against Optionee in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, reorganization, or other similar
laws affecting the rights of creditors generally.
9. Change in Condition of Property.
Optionor covenants and agrees to advise Optionee of any
material change in the physical condition of the Property (ordinary wear and
tear excepted), or of any damage or destruction to the Property, or upon receipt
of any notice regarding the condemnation of the Property or any portion thereof
("Change in Condition").
In the event that, after the exercise of the Option and prior
to the Closing any material portion of the Property is destroyed or damaged,
Optionor shall immediately notify Optionee of such damage and inform Optionee if
it intends to repair such damage. If Optionor elects to repair the damage, the
Closing shall be extended until the repairs are completed. If Optionor notifies
Optionee that it does not intend to repair such damage, Optionee shall have the
right, exercisable by giving notice of such decision to Optionor within fifteen
(15) calendar days after receiving such written notice from Optionor, to elect
not to acquire the Property, in which case this Agreement shall terminate. If
Optionee elects to accept the Property in its then condition, all proceeds of
insurance payable to Optionor by reason of such damage or destruction shall be
paid or assigned to Optionee.
If, after the exercise of the Option, Optionor receives notice
of any pending action by any federal, state, local or other agency concerning
any material violation of any law, statute, ordinance or regulation affecting
the Property, (a) Optionor may elect to correct such violation at Optionor's
expense prior to the Closing, and shall notify Optionee of such violation and
Optionor's intended action within ten (10) calendar days after receipt of such
notice; (b) if Optionor desires to correct such violation but if such correction
cannot be accomplished prior to the Closing, Optionor shall notify Optionee of
such violation and its desire to correct such violation and shall thereupon
commence and diligently prosecute the same to completion, at Optionor's sole
cost and expense, as promptly as possible and the Closing shall be delayed until
completion of such correction, or (c) Optionor shall submit such notice to
Optionee and notify Optionee that Optionor does not intend to correct such
violation. Within ten (10) calendar days of receipt of such notice not to cure,
Optionee may elect to acquire the Property subject to such violation or such
matters or requirements, respectively, or Optionee may elect not to acquire the
Property, in which case this Agreement shall terminate. Any work required to be
performed by Optionor pursuant to the terms of this Agreement shall be performed
in accordance with all applicable laws in effect at the time such work is
performed.
If, after the exercise of the Option and prior to the Closing,
Optionor receives written notice of a pending condemnation proceeding concerning
any portion of the Property, Optionor shall promptly deliver to Optionee written
notice of such pending condemnation. In such event, Optionee shall have the
option to acquire the Property upon written notice to Optionor delivered not
later than ten (10) days after receipt of Optionor's notice. If Optionee does
not elect to acquire the Property, this Agreement shall terminate. In the event
Optionee does elect to acquire the Property, Optionor shall assign and turn over
to Optionee all awards for the taking by eminent domain which accrue to Optionor
pursuant to an assignment between Optionor, as assignor, and Optionee, as
assignee, and containing terms and conditions reasonably acceptable to Optionee,
and the parties shall proceed to the Closing pursuant to the terms hereof,
without modification of the terms of this Agreement and without any reduction in
the Purchase Price.
10. Covenants of Optionor and Optionee.
A. Covenants of Optionor. From
and after the date hereof and until the Closing or the earlier
expiration of the Option or termination of this Agreement, Optionor
shall do the following, in addition to the covenants set forth
elsewhere in this Agreement:
(i) Not permit or suffer to exist any
encumbrance, charge or lien to be placed or claimed upon the
Property unless such encumbrance, charge or lien has been
approved in writing by Optionee or unless such monetary
encumbrance, charge or lien would be removed by Optionor prior
to the Closing;
(ii) Promptly notify Optionee in writing if
any of the representations and warranties set forth in this
Agreement are no longer true and correct in any material
respect; and
(iii) Not sell, lease, convey, assign,
transfer or otherwise dispose of the Property including,
without limitation, the Leases, and the Improvements, or any
part thereof or interest therein, without the prior written
consent of Optionee, which consent shall not be unreasonably
withheld by Optionee with respect to a new Lease for the
Expansion Premises but which may be withheld by Optionee in
its sole and absolute discretion with respect to a sale of all
or a portion of the Property unless Optionor exercises its
"put" right under Section 2 of this Agreement with respect to
such sale.
B. Sale of Property. Subject to
subsection (iii) above, if Optionee consents to the sale of all or any
portion of the Property, then (i) such sale shall be made subject to
the Option and this Agreement, (ii) the Purchase Price shall not
include any of the costs incurred by Optionor or such purchaser in
connection with the sale of the Property and (iii) such purchaser shall
be bound by the terms of this Agreement. Following any such approved
sale, the Purchase Price shall continue to be calculated as provided in
this Agreement. Prior to the sale of the Property to such purchaser,
Optionor shall deliver to Optionee all of the documentation and
information described in Section 3 above. Upon sale of the Property to
such purchaser, Optionor and Optionee shall calculate the Purchase
Price as of such date and such purchaser shall be bound by the agreed
amount of costs and expenses incurred by Optionor and agreed to by
Optionee as of such date.
11. Recordation of Memorandum of Option.
As soon as reasonably practicable following mutual execution
of this Agreement, the parties shall record a memorandum of this Agreement in a
form reasonably acceptable to Optionor and Optionee, in the Official Records of
the Los Angeles County Recorder's Office.
12. Waiver of Performance.
Either party may waive the satisfaction or performance of any
conditions or agreements in this Agreement which have been inserted for its own
and exclusive benefit, so long as the waiver is signed (unless the Agreement
provides for a non-written waiver) and specifies the waived condition or
agreement and is delivered to the other party hereto and the Escrow Holder.
13. Section Headings.
The section headings of this Agreement are for the purposes of
reference only and shall not be used for limiting or interpreting the meaning of
any section.
14. Notices.
All notices under this Agreement shall be in writing and shall
be effective upon receipt whether delivered by personal delivery or recognized
overnight delivery service, telecopy, or sent by United States registered or
certified mail, return receipt requested, postage prepaid, addressed to the
respective parties as follows:
If to Optionor:
ACD2
c/o Ahmanson Commercial Development Company
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Attention: Mr. ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
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Attention: M. Guy Maisnik, Esq.
If to Optionee:
Amwest Insurance Group, Inc.
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
Senior Vice President
Chief Financial Officer
With a copy to:
Pillsbury Madison & Sutro LLP
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Any party can notify the other party of their change of
address by notifying the other party in writing of the new address.
15. Property "As Is"
A. Side Letter Agreement.
Attached hereto as Exhibit "L" and incorporated herein by this
reference is a copy of the Side Letter Agreement of even date herewith
(the "Side Letter Agreement") between Optionor and Optionee clarifying
certain matters relating to the Declaration of Covenants, Conditions
and Restrictions for Calabasas Commerce Center II which affects the
Property.
B. No Other Side Agreements of Representations.
No person acting on behalf of
Optionor is authorized to make, and by execution hereof, Optionee
acknowledges that no person has made any representation, agreement,
statement, warranty, guarantee or promise regarding the Property or the
transaction contemplated herein or the zoning, construction, physical
condition or other status of the Property except as set forth in the
Side Letter Agreement or as may be expressly set forth in this
Agreement. No representation, warranty, agreement, statement, guarantee
or promise, if any, made by any person acting on behalf of Optionor
which is not contained in this Agreement or the Side Letter Agreement
will be valid or binding on Optionor.
C. AS IS CONDITION. OPTIONEE
ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN
SECTION 7 HEREIN OR IN THE SIDE LETTER AGREEMENT, OPTIONOR HAS NOT
MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR
GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO,
CONCERNING OR WITH RESPECT TO (I) VALUE; (II) THE INCOME TO BE DERIVED
FROM THE PROPERTY; (III) THE SUITABILITY OF THE PROPERTY FOR ANY AND
ALL ACTIVITIES AND USES WHICH OPTIONEE MAY CONDUCT THEREON, INCLUDING
THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE PROPERTY; (IV) THE
HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OF THE PROPERTY; (V) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (VI) THE NATURE,
QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION,
THE WATER, SOIL AND GEOLOGY; (VII) THE COMPLIANCE OF OR BY THE PROPERTY
OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY
APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (VIII) THE MANNER OR QUALITY
OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE
PROPERTY; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION
OR LAND USE LAWS, RULES, REGULATION, ORDERS OR REQUIREMENTS, INCLUDING
BUT NOT LIMITED TO, TITLE III OF THE AMERICANS WITH DISABILITIES ACT OF
1990, CALIFORNIA HEALTH & SAFETY CODE, THE FEDERAL WATER POLLUTION
CONTROL ACT, THE FEDERAL RESOURCE CONSERVATION AND RECOVERY ACT, THE
U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., PART
261, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND
LIABILITY ACT OF 1980, AS AMENDED, THE RESOURCE CONSERVATION AND
RECOVERY ACT OF 1976, THE CLEAN WATER ACT, THE SAFE DRINKING WATER ACT,
THE HAZARDOUS MATERIALS TRANSPORTATION ACT, THE TOXIC SUBSTANCE CONTROL
ACT, AND REGULATIONS PROMULGATED UNDER ANY OF THE FOREGOING; (X) THE
PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT
TO THE PROPERTY; (XI) THE CONTENT, COMPLETENESS OR ACCURACY OF THE DUE
DILIGENCE MATERIALS DISCLOSED BY OR ON BEHALF OF OPTIONOR TO OPTIONEE
OR PRELIMINARY TITLE REPORT REGARDING TITLE; (XII) THE CONFORMITY OF
THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY,
INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE
PROVIDED TO OPTIONEE; (XIII) THE CONFORMITY OF THE PROPERTY TO PAST,
CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (XIV)
DEFICIENCY OF ANY UNDERSHORING; (XV) DEFICIENCY OF ANY DRAINAGE; (XVI)
THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR
NEAR AN EARTHQUAKE FAULT LINE; (XVII) THE EXISTENCE OF VESTED LAND USE,
ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; OR (XVIII) WITH
RESPECT TO ANY OTHER MATTER. OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY AND
REVIEW INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTY, EXCEPT AS
SPECIFICALLY PROVIDED IN SECTION 7 HEREIN OR IN THE SIDE LETTER
AGREEMENT OPTIONEE IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE
PROPERTY AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION, AND NOT ON
ANY INFORMATION PROVIDED OR TO BE PROVIDED BY OPTIONOR. OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT CERTAIN INFORMATION MADE AVAILABLE
TO OPTIONEE WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM UNAFFILIATED
THIRD PARTY CONSULTANTS AND THAT OPTIONOR HAS NOT MADE ANY INDEPENDENT
INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO
REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT
PERMITTED BY LAW, EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 7 HEREIN
OR IN THE SIDE LETTER AGREEMENT THE SALE OF THE PROPERTY AS PROVIDED
FOR HEREIN IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS,
AND THAT OPTIONOR HAS NO OBLIGATIONS TO MAKE REPAIRS, REPLACEMENTS OR
IMPROVEMENTS EXCEPT AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN OR IN
THE LEASE.
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OPTIONOR'S INITIALS OPTIONEE'S INITIALS
16. Governmental Approvals. Nothing
contained in this Agreement shall be construed as authorizing Optionee to apply
for a zone change, variance, subdivision maps, lot line adjustment, or other
discretionary governmental act, approval or permit with respect to the Property
prior to the Close of Escrow, and Optionee agrees not to do so without
Optionor's prior written approval, which approval may be withheld in Optionor's
sole and absolute discretion. Optionee agrees not to submit any reports, studies
or other documents, including, without limitation, plans and specifications,
impact statements for water, sewage, drainage or traffic, environmental review
forms, or energy conservation checklists to any governmental agency, or any
amendment or modification to any such instruments or documents prior to the
Close of Escrow unless first approved by Optionor, which approval Optionor may
withhold in Optionor's reasonable discretion. Optionee's obligation to purchase
the Property shall not be subject to or conditioned upon Optionee's obtaining
any variances, zoning amendments, subdivision maps, lot line adjustment or other
discretionary governmental act, approval or permit.
17. Determination of Land Value.
Optionee shall provide notice of Optionee's determination of Land Value (as
defined below) concurrently with its delivery to Optionor of the Option Exercise
Notice. Optionor shall have fifteen (15) days ("Optionor's Review Period") after
receipt of Optionee's notice within which to accept Optionee's determination of
Land Value or to object reasonably thereto in writing and set forth Optionor's
determination of Land Value. If Optionor so objects, Optionee and Optionor shall
attempt in good faith to agree upon such Land Value, using their best good faith
efforts. If Optionee and Optionor fail to reach agreement within fifteen (15)
days from and after Optionor's Review Period ("Outside Agreement Date"), then
each party's determination shall be submitted to arbitration consistent with the
procedures outlined below. Failure of Optionor to so elect in writing within
such period shall be deemed its acceptance of the Land Value as determined by
Optionee.
The procedure shall be reversed in the event Optionor delivers
to Optionee a Put Notice. Optionor shall provide to Optionee Optionor's
determination of Land Value concurrently with its delivery to Optionee of the
Put Notice, and Optionee shall have fifteen (15) days ("Optionee's Review
Period") after receipt of the Put Notice and Optionor's determination of Land
Value within which to accept Optionor's determination of Land Value or to object
reasonably thereto in writing and set forth Optionor's determination of Land
Value. If Optionee so objects, Optionee and Optionor shall attempt in good faith
to agree upon such Land Value, using their best good faith efforts. If Optionee
and Optionor fail to reach agreement within fifteen (15) days from and after
Optionee's Review Period (also known as the "Outside Agreement Date"), each
party's determination shall be submitted to arbitration consistent with the
procedures outlined below. Failure of Optionee to so elect in writing within
such period shall be deemed its acceptance of the Land Value as determined by
Optionor.
The arbitration procedure for calculating Land Value where the
parties are unable to agree upon Land Value shall be as follows:
(i) Not later than fifteen (15) days from and after
the applicable Outside Agreement Date, Optionor and Optionee shall each
appoint one arbitrator who shall by profession be a real estate
appraiser, which appointee shall have been active over the five (5)
year period ending on the date of such appointment in the appraisal of
unimproved land in the Calabasas area. The determination of the third
arbitrator described below shall be limited solely to the issue of
whether Optionor's or Optionee's submitted Land Value is the closest to
the actual Land Value, as determined by the arbitrator, based upon what
a willing purchaser would pay and a willing seller would accept at
arm's length, for the Land as if it were unimproved land and not
subject to the Lease or the Option ("Land Value").
(ii) The two arbitrators so appointed shall within
fifteen (15) days of the date of the appointment of the last appointed
arbitrator agree upon and appoint a third arbitrator who shall be
qualified under the same criteria set forth herein above for
qualification of the initial two arbitrators. Upon appointment of the
third arbitrator, Optionor and Optionee shall each submit to the third
arbitrator in a sealed envelope their respective determinations of the
Land Value as previously submitted to the other together with any
relevant supporting documentation.
(iii) The third arbitrator shall make an independent
appraisal of the Land Value, shall then review the determination of
Land Value and supporting documentation submitted by Optionor and
Optionee in the sealed envelopes and within sixty (60) days of his
appointment reach a decision as to whether the parties shall use
Optionor's or Optionee's submitted Land Value, and shall notify
Optionor and Optionee thereof. The determination of Land Value shall
conform with the then generally accepted appraisal standards, which is
currently evidenced by the Uniform Standards of Professional Appraisal
Practice promulgated by the Appraisal Standards Board of the Appraisal
Foundation, except that comparable unimproved land located in
Calabasas, Agoura Hills and Westlake Village shall be emphasized to the
extent such comparables are available.
(iv) The decision of the third arbitrator shall be
binding upon Optionor and Optionee.
(v) If either Optionor or Optionee fails to appoint
an arbitrator within fifteen (15) days after the applicable Outside
Agreement Date, the arbitrator timely appointed by one of them shall
reach a decision, notify Optionor and Optionee thereof, and such
arbitrator's decision shall be binding upon Optionor and Optionee.
(vi) If the two arbitrators fail to agree upon and
appoint a third arbitrator within the required fifteen (15) day period,
or if the third arbitrator fails to reach a decision within sixty (60)
days of his appointment, at the election of either party prior to the
date that a decision is made, both arbitrators shall be dismissed,
Optionor and Optionee within fifteen (15) days thereafter shall each
appoint another arbitrator with the same qualifications as are set
forth in subparagraph (i) above and the above process shall again take
place until a third arbitrator reaches a decision within sixty (60)
days of his appointment.
(vii) The cost of arbitration shall be paid by
Optionor and Optionee equally.
18. Counterparts.
This Agreement may be executed in several counterparts and all
such executed counterparts shall constitute one agreement, binding on all of the
parties hereto, notwithstanding that all of the parties hereto are not
signatories to the original or to the same counterpart. This Agreement shall not
be binding unless and until all parties hereto have executed the Agreement.
19. Governing Law.
The validity, construction and operational effect of
this Agreement shall be governed by the laws of the State of California.
20. Attorneys' Fees and Costs.
In any action between the parties hereto seeking the
enforcement of any of the terms and provisions of this Agreement, or in
connection with the Property, the prevailing party in such action shall be
awarded, in addition to damages, injunctive or other relief, its reasonable
costs and expenses, and reasonable attorneys' fees.
21. Prior Agreements.
This Agreement supersedes any and all oral or written
agreements between the parties hereto regarding the acquisition of the Property
which are prior in time to this Agreement. Neither Optionee nor Optionor shall
be bound by any prior understanding, agreement, promise, representation or
stipulation, express or implied, not specified herein.
22. Further Assurances.
Optionee and Optionor agree to execute all documents and
instruments reasonably required in order to consummate the purchase and sale
herein contemplated.
23. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of permitted successors and assigns of the parties hereto.
24. Possession.
Optionor shall deliver possession of the Property to Optionee
as of the Closing, including all keys in Optionor's possession and originals of
documents delivered hereunder, such possession being subject only to rights of
tenants in possession under the Leases.
25. Severability.
If any portion of this Agreement is held to be unenforceable
by a court of competent jurisdiction, the remainder of this Agreement shall
remain in full force and effect.
26. Performance Due on Non-Business Day
If the time period for the performance of any act called for
under this Agreement expires on a Saturday, Sunday, or any other day in which
banking institutions in the State of California are authorized or obligated by
law or executive order to close ("Holiday"), the act in question may be
performed on the next succeeding day that is not a Saturday, Sunday or a
Holiday.
27. Amendments.
This Agreement may be amended only by written agreement signed
by both of the parties hereto.
IN WITNESS WHEREOF, Optionor and Optionee have executed this
Agreement as of the date first above written.
Optionee:
AMWEST INSURANCE COMPANY,
a Delaware corporation
By: ______________________
Title: ___________________
Optionor:
ACD2,
a California corporation
By:_______________________
Title: ___________________