EXHIBIT 10.18
PURCHASE AGREEMENT FOR REAL PROPERTY
AND ESCROW INSTRUCTIONS
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This Purchase Agreement for Real Property and Escrow Instructions
("Agreement") is entered into by and between ▇▇ ▇▇▇▇▇ CAL CORP., an Illinois
corporation, ("Seller"), and E-TEK DYNAMICS, INC., a California corporation
("Buyer").
1. PURCHASE OF PROPERTY. Seller agrees to sell to Buyer and Buyer agrees
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to purchase from Seller, the Property (as described in Paragraph 2.1) in
consideration for the payment of the Purchase Price (as described in Paragraph
2.4), together with the respective promises of the parties set forth in this
Agreement.
2. BASIC TERMS AND DEFINITIONS.
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2.1 PROPERTY. The term "Property" shall mean: (i) the land which is
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legally described on Exhibit A attached to this Agreement and made a part
hereof and containing approximately 9.82 acres ("Land") together with all
improvements, fixtures and equipment located on the Land, including the
three (3) two-story research and development/office buildings containing
approximately 177,000 square feet in the aggregate and commonly referred to
as 1865, 1875 and ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (collectively,
the "Building"), (excluding, however, any fixtures or equipment owned by
tenants of the Building or any property manager), (ii) Seller's leasehold
rights in the leases with the tenants described on Exhibit B attached to
this Agreement and made a part hereof ("Leases"), (iii) whatever rights
Seller has in any easements, rights of way, development rights, and real
property rights appurtenant to the Land, to the extent they are assignable
(collectively, "Real Property Rights"), (iv) whatever rights Seller has in
Contracts, Licenses and Permits (as defined in Paragraph 13) and (v) any
personal property owned by Landlord, located on the Land, and used in
connection therewith ("Personal Property").
2.2 BUYER. E-TEK Dynamics, Inc., whose address is c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; Telephone: (▇▇▇) ▇▇▇-▇▇▇▇;
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
2.3 SELLER. ▇▇ ▇▇▇▇▇ Cal Corp., whose address is c/o The ▇▇▇▇
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Company, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇; Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Telecopier: (714) 250-
6055.
2.4 PURCHASE PRICE. The purchase price for the Property shall be
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Eleven Million Dollars ($11,000,000.00) ("Purchase Price").
2.5 EFFECTIVE DATE. The effective date of this Agreement the date on
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which this Agreement is fully executed as indicated by the later date of
the Seller's and Buyer's signatures as shown on page 27 of this Agreement
("Effective Date").
2.6 DUE DILIGENCE PERIOD. The period beginning on the Effective Date
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and ending at 5:00 p.m. on the thirtieth (30th) day thereafter.
2.7 CLOSING DATE. The Closing shall occur within sixty (60) days
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following the expiration of the Due Diligence Period or on such other date
as is mutually agreed upon by the parties ("Closing Date").
2.8 TERMS OF PURCHASE.
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(a) THE DEPOSIT. Initially, a wire transfer or cashier's or
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certified check in the amount of One Hundred Thousand Dollars
($100,000.00) (the "Deposit") shall be delivered to Escrow Holder by
Buyer upon execution of this Agreement as a condition to the "Opening
of Escrow" as provided in Paragraph 7.2. Escrow Holder shall place the
Deposit in an interest-bearing account and all earned interest shall
accrue to the Buyer's benefit, unless Seller is entitled to the
Deposit as liquidated damages under Paragraph 6.5, in which event the
interest shall accrue to Seller's benefit. For purposes of this
Agreement, any accrued interest shall be deemed part to the "Deposit".
If Buyer terminates or is deemed to have terminated this Agreement
prior to the expiration of the Due Diligence Period in accordance with
Section 3.2.2 of this Agreement, the Deposit shall be refunded to
Buyer. If Buyer does not so terminate this Agreement, Buyer shall
increase the Deposit by Two Hundred Thousand Dollars ($200,000.00) for
a total Deposit of Three Hundred Thousand Dollars ($300,000.00) prior
to the expiration of the Due Diligence Period. The Deposit shall be
applied to the Purchase Price at Closing (as hereinafter defined).
(b) BUYER'S CASH AT CLOSING. The balance of the Purchase Price
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less the amount of the Deposit, plus any other amounts to be paid by
Buyer under this Agreement, shall be delivered to Escrow Holder by
Buyer as provided in Paragraph 5.3.
2.9 ESCROW. Escrow Number 760352 at the Escrow Holder which shall be
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opened as provided in Paragraph 7.2.
2.10 ESCROW HOLDER. Chicago Title Company, whose address is 110 W.
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▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Escrow Officer: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇; Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇.
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2.11 TITLE POLICY. A CLTA Owners Protection Policy of Title Insurance
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issued by Chicago Title Insurance Company ("Title Company"), in the amount
of the Purchase Price, subject to the standard preprinted exceptions
therein, the exceptions to title listed on Exhibit C attached hereto and
incorporated herein and any exceptions created or resulting from Buyer's
acts, or otherwise approved by Buyer (collectively, the "Permitted
Exceptions").
3. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE. Buyer's obligation to
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purchase the Property is subject to the satisfaction or waiver of all the
conditions set forth below (which are for Buyer's benefit) on or before the
Closing Date.
3.1 TITLE CONDITION.
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3.1.1 As soon as reasonably practicable after the Opening of
Escrow, Buyer shall request and obtain from the Title Company a
current CLTA coverage preliminary report for the Property (the
"Preliminary Report"), together with copies of all documents available
to the Title company referenced as recorded exceptions in the
Preliminary Report. No later than the last day of the Due Diligence
Period, Buyer may disapprove the Preliminary Report by delivering
written notice to Seller and Escrow Holder (the "Notice of Defect")
specifying each matter shown in the Preliminary Report, if any, which
is disapproved by Buyer (each a "Disapproved Exception"). Seller's
failure to receive the Notice of Defect within the Due Diligence
Period shall be conclusively deemed to constitute Buyer's disapproval
of the Preliminary Report as if Buyer had delivered a Notice of Defect
disapproving each matter shown in the Preliminary Report.
3.1.2 Within five (5) business days after receiving a Notice of
Defect or after the end of the Due Diligence Period if Buyer failed to
deliver the Notice of Defect, Seller shall deliver to Buyer and Escrow
Holder notice as to whether Seller will use its reasonable efforts to
cure the Disapproved Exception(s). Buyer's failure to receive any
notice from Seller within that five (5) business day period shall be
deemed to be notice to Buyer that Seller elected not to cure the
Disapproved Exception(s). Buyer shall be deemed to have terminated
this Agreement under Paragraph 6.3 unless Buyer waives its disapproval
of the Disapproved Exception(s) and agrees to acquire title to the
Property subject to the Disapproved Exception(s) by written notice
delivered to Seller and Escrow Holder within three (3) business days
after Seller's notice (or deemed notice) as provided in this Paragraph
3.1.2.
3.1.3 If Seller notifies Buyer in writing, as provided in
Paragraph 3.1.2, that it would use its reasonable efforts to cure a
Disapproved Exception, and then fails to cure that Disapproved
Exception by no later than three (3) business days
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before the Closing Date, Buyer, as its only remedy for Seller having
failed to cure the Disapproved Exception, may elect by written notice
to Seller and Escrow Holder, to be received no later than two (2)
business days before the Closing Date, either to terminate this
Agreement or to Close Escrow and to acquire the Property, subject to
the Disapproved Exception(s), which Seller shall have no obligation to
cure. Seller's failure to receive notice of Buyer's election by such
time shall be deemed an election by Buyer to terminate this Agreement.
3.1.4 If Buyer properly elects to terminate this Agreement as
provided in this Paragraph 3.1, or if this Agreement is deemed to be
terminated as provided in this Paragraph 3.1, this Agreement shall
terminate and the Deposit shall be returned to Buyer as provided in
Paragraph 6.3. Additionally, if Seller fails to use reasonable efforts
to cure a Disapproved Exception after notifying Buyer of Seller's
intention to do so, and if Buyer terminates this Agreement because of
the Disapproved Exception which Seller failed to use reasonable
efforts to cure, Seller shall pay Buyer's reasonable out-of-pocket
expenses incurred in connection with this transaction (not to exceed
$40,000.00 in any event) during the period between the date on which
Buyer received notice from Seller that Seller would use reasonable
efforts to cure such exception and the date of such termination.
3.1.5 A Disapproved Exception shall be considered to have been
cured if the Title Company agrees to issue the Title Policy to Buyer
without that Disapproved Exception being reflected as an exception to
coverage under the Title Policy or with such Disapproved Exception
reflected but insured over via an endorsement acceptable to Buyer.
3.1.6 For purposes of this Paragraph 3.1, "reasonable efforts"
shall not include any obligation of Seller to incur any expense
whatsoever in connection with correcting any Disapproved Exception
(except with respect to Seller's own financing or other security
transactions), nor shall Seller's notice to Buyer regarding any of
those items obligate Seller to incur any expense, except to the extent
expressly stated otherwise in the notice. Nothing in this Paragraph
3.1 shall obligate Buyer to expend any funds to cure a Disapproved
Exception(s).
3.1.7 Seller covenants not to encumber the Property or any
portion thereof at any time after the Effective Date. If Seller does
so encumber the Property, the release of any such encumbrance or
provision of title insurance coverage over such encumbrance to Buyer's
satisfaction shall be a condition precedent to Buyer's obligation to
close.
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3.2 FEASIBILITY CONDITION.
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3.2.1 Buyer shall have until 5:00 p.m. on the last day of
the Due Diligence Period to confirm in Buyer's sole discretion, at
Buyer's sole expense, whether Buyer may feasibly acquire and use the
Property for Buyer's intended purpose. During the Due Diligence
Period, Buyer shall, in addition to all other matters regarding the
Property, have reviewed (or shall have assumed the risk of not
reviewing) all of the following:
(a) the physical condition of the Property;
(b) title to Property;
(c) the availability of all necessary utilities and
gravity sewers and storm drains for the Property;
(d) rental agreements, leases, service contracts,
tax bills and other written agreements or notices which affect
the Property to the extent furnished to Buyer;
(e) building inspection reports and engineering
reports to the extent furnished to Buyer;
(f) the environmental condition of the Land and the
Building, including the existence of toxic waste and hazardous
substances; and
(g) the economic feasibility of Buyer's intended use
of the Property.
3.2.2 By the end of the Due Diligence Period, Buyer shall
provide written notice to Seller and Escrow Holder as to whether Buyer
approves the feasibility of acquiring the Property (either
"Feasibility Notice" or "Non-Feasibility Notice"). If Seller and
Escrow Holder receive a Feasibility Notice from Buyer by the end of
the Due Diligence Period, or do not receive either form of written
notice, this feasibility condition shall be conclusively deemed
satisfied in all respects including Buyer's approval of each of the
items set out in Paragraph 3.2.1. If Seller and Escrow Holder receive
the Non-Feasibility Notice by the end of the Due Diligence Period,
Escrow and this Agreement shall terminate, and the Deposit shall be
returned to Buyer, as provided in Paragraph 6.3.
3.2.3 Within three (3) business days following the Effective
Date, Seller shall make available for Buyer's review, in the offices
of Seller's property
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manager or at the Building, originals or true copies of the following
documents to the extent that such documents exist and are within the
possession or control of Seller or any of its agents: all Leases,
Contracts, Licenses and Permits, current tax and utility bills,
surveys, plans and specifications, current operating and expense
reports, environmental assessment reports, engineering reports,
notices from governmental agencies, repair records and inspection and
maintenance reports. Seller may, at its option and expense, provide
copies of any or all of the aforesaid documents or materials in lieu
of having Buyer examine the same at the offices of the property or at
the Building.
3.3 ESTOPPELS. No later than three (3) business days prior to the
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Closing Date, Seller shall have delivered to Buyer estoppel certificates
("Estoppels") substantially in the form of Exhibit D attached hereto and
incorporated herein, from GenRad, Inc., Ornetix Network Products
("Ornetix"), PC-tel, Inc., County of Santa ▇▇▇▇▇ and VLSI Technology, Inc.
and from such additional tenants of the Property under Leases (excluding
Buyer) such that the Estoppels cover no less than seventy percent (70%) of
the occupied square footage of the Building (excluding square footage
leased by Buyer). If Seller has not delivered such Estoppels on or before
the Closing Date, Buyer shall notify Seller in writing as to the status of
such Estoppels, and Seller may, but shall not be obligated to, execute a
Seller estoppel or estoppels ("Seller Estoppel") in the form of Exhibit E
attached hereto and incorporated herein, certifying as to the status of any
Lease for which an Estoppel has not been received, and Buyer shall accept a
Seller Estoppel in lieu of Estoppels from tenants, to the extent necessary
to satisfy the percentage closing condition described above.
Notwithstanding the foregoing, (a) Seller shall be required to deliver a
Seller Estoppel for Ornetix if Ornetix does not furnish an Estoppel, and
(b) Seller shall not be permitted to furnish, and Buyer need not accept, a
Seller Estoppel for GenRad, Inc., PC-tel, Inc., County of Santa ▇▇▇▇▇ or
VLSI Technology, Inc. (collectively, the "Required Tenants"). Seller shall
use reasonable efforts to obtain Estoppels from all tenants of the Property
but shall be under no obligation to execute any Seller Estoppel (except
with respect to Ornetix). The failure to obtain Estoppels from any of the
Required Tenants or to provide the Estoppels in the percentage required
above shall not constitute a default by Seller hereunder, but shall only
constitute a failure of a closing condition entitling Buyer to terminate
the Agreement and receive a refund of the Deposit. Notwithstanding anything
to the contrary stated in this Section 3.3, if the provisions of any Lease
allow a tenant to submit a tenant estoppel certificate which contains
different or less information than provided for in Exhibit D, and such
tenant furnishes such an estoppel certificate based on the requirements of
its Lease, such estoppel shall be deemed sufficient for the purposes hereof
notwithstanding the fact that it may not be in the form of Exhibit D.
Seller's liability under any Seller Estoppel shall terminate as of the
earlier to occur of (i) the ninetieth (90th) day following the Closing (or
the one hundred eightieth (180th) day, with respect to Ornetix), and (ii)
the date on which Seller delivers to Buyer the Estoppel from the relevant
tenant. If and to the extent that Buyer's lender requires tenant estoppel
certificates from a greater number of tenants
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or in a different form than is required under this Section 3.3,
satisfaction of such lender requirements shall not be a condition to
Buyer's obligation to perform its obligations under this Agreement and
Seller shall have no obligation to comply with such lender requirements.
Additionally, once Estoppels are delivered to Buyer, Seller shall have no
obligation to update any Estoppel nor shall any such updating be a
condition to Buyer's obligation to perform its obligations under this
Agreement.
Buyer shall have the option, in its sole discretion, at any time prior
to Closing, to terminate this Agreement by written notice thereof to
Seller, if (i) the requisite Estoppels as set forth above are not delivered
to Buyer by such time or (ii) any such requisite Estoppel reflects a
material and adverse deviation from matters shown on the Rent Roll (as
defined in Section 9.1(j) of this Agreement); provided, however, that Buyer
shall first provide written notice to Seller of any such material adverse
deviation or of Buyer's intention to terminate due to failure to deliver
the requisite Estoppels (either, an "Estoppel Deficiency") together with a
copy of the relevant Estoppel(s) and upon receipt of such notice Seller
shall have the right, at its option, to attempt to cure or reconcile such
Estoppel Deficiency and the Closing shall be extended for five (5) business
days to allow Seller to accomplish such cure or reconciliation. If Seller
is unable to effect a cure or reconciliation or elects not to cure or
reconcile (or not to continue attempts to cure or reconcile) and Buyer
elects to terminate this Agreement pursuant to its aforesaid right, the
Deposit and all interest earned accrued thereon shall be returned to Buyer
and neither party shall have any further liability under this Agreement
except for those which expressly survive such termination. For purposes
hereof, the term "material adverse deviation" shall mean (a) a deviation or
deviations from the state of facts set forth in the Rent Roll which is not
refuted by written evidence in Seller's possession or control, or (b) a
claim of a landlord default which has been made in accordance with a
tenant's lease; and which deviation or claim, if true, would, in the
aggregate, result in a reduction in the net income from the Property
(either by virtue of a reduction in the reported rental stream or an
increase in landlord liability) of more than $50,000.00. In respect to
deviations from the Rent Roll which result in a net income reduction of
$50,000.00 or less, Seller shall, at its option, either cure or reconcile
such deviations as provided above or provide Buyer with a credit against
the Purchase Price for the amount of any uncured or unreconciled deviation
at Closing. A "material adverse deviation" shall also include a deviation
or deviations from the stated expiration dates of Leases the result of
which is that tenants occupying at least 10,000 square feet of space claim
that the expiration dates of their Leases are at least 180 days later than
the dates set forth in the Rent Roll.
3.4 REPRESENTATIONS AND WARRANTIES. All of Seller's Representations
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and Warranties shall be true as of Closing or qualified as provided in
Paragraph 9.1.
3.5 DELIVERY OF DOCUMENTS. Seller shall have signed, acknowledged and
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timely delivered all documents and instruments to Escrow Holder as required
by
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Paragraph 5.3 below and shall have timely performed all of the obligations
of Seller hereunder.
4. CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE. Seller's obligation to
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sell the Property is subject to the satisfaction (or waiver) of all conditions
set forth below (which are for Seller's benefit) within the time periods
specified.
4.1 PERFORMANCE OF COVENANTS. Buyer shall have timely performed all
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of its covenants under this Agreement.
4.2 REPRESENTATIONS AND WARRANTIES. All of Buyer's Representations
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and Warranties provided in Paragraph 9.2 shall be true as of Closing or
qualified as provided in Section 9.2.
4.3 DELIVERY OF DOCUMENTS. Buyer shall have signed, acknowledged and
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timely delivered all documents, monies, and instruments to Escrow Holder as
required by this Agreement.
5. CLOSING.
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5.1 THE CLOSING.
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(a) The Closing shall occur by no later than 5:00 p.m on the
Closing Date.
(b) The terms "Close of Escrow" and/or "Closing" are used in this
Agreement to mean the time the Grant Deed is filed of record by the
Escrow Holder in the Office of the County Recorder of Santa ▇▇▇▇▇
County.
(c) The occurrence of the Closing shall constitute Buyer's and
Seller's agreement that all of its conditions precedent to each of
their respective obligations to perform have been satisfied or waived.
5.2 SELLER'S CLOSING OBLIGATIONS. On or before 12:00 noon on the last
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business day immediately before the Closing Date, Seller shall deliver to
Escrow Holder:
(a) A Grant Deed in the form attached as Exhibit F ("Grant
Deed"), signed by Seller and acknowledged, covering the Land;
(b) An Assignment of Leases in the form attached as Exhibit G
("Assignment of Leases") signed by Seller;
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(c) A General Assignment in the form attached as Exhibit H
("General Assignment"), signed by Seller;
(d) A certificate of non-foreign status in the form attached as
Exhibit I ("Seller's Certificate") and a California Real Estate
Withholding Exemption Certificate (Form 590RE), signed by Seller;
(e) A ▇▇▇▇ of sale in the form attached as Exhibit J ("▇▇▇▇ of
Sale"), signed by Seller;
(f) Documents evidencing Seller's good standing and valid
existence in the State of California; and
(g) Any additional instruments (signed by Seller and
acknowledged, if appropriate) as may be necessary to comply with this
Agreement.
5.3 BUYER'S CLOSING OBLIGATIONS. On or before 12:00 noon on the last
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business day immediately before the Closing Date, Buyer shall deliver to
Escrow Holder;
(a) Cash equal to that amount provided for in Paragraph 2.8(b).
The cash must be by direct deposit or by wire transfer of funds
actually made in Escrow Holder's depository bank account by 12:00 noon
on the last business day immediately before the Closing Date;
(b) The Assignment of Leases (or counterpart), signed by Buyer;
(c) The General Assignment (or counterpart), signed by Buyer;
(d) Documents evidencing Buyer's good standing and valid
existence in the State of California and authority of Buyer and
parties acting on behalf of Buyer to consummate this transaction; and
(e) Any additional funds and instruments (signed by Buyer and
acknowledged, if appropriate) as may be necessary to comply with this
Agreement, including without limitation, a Statement(s) of
Identification.
5.4 TITLE POLICY. If Buyer desires any special endorsements to the
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coverage provided by the Title Policy (including, without limitation,
extended ALTA coverage and affirmative coverage over, or deletion of, any
creditor's rights exception or exclusion), Buyer shall obtain and pay for
these endorsements and coverage, including any survey costs; and obtaining
such endorsements shall not be a condition of Closing. The issuance of the
endorsements and coverage shall not delay the Closing. The issuance of the
Title Policy shall be in lieu of any express or implied warranty of Seller
concerning title to the
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Property (other than any warranties provided by the giving of the Grant
Deed), and, following the Closing, Buyer agrees that its only remedy for
damages incurred by reason of any defect in the title shall be against only
the Title Company (except with respect to any violation of any warranties
provided by the giving of the Grant Deed).
6. TERMINATION OF THIS AGREEMENT.
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6.1 FAILURE TO CLOSE BY CLOSING DATE. If Escrow fails to close as of
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5:00 p.m. on the Closing Date, and except as otherwise agreed in writing by
Seller and Buyer, this Agreement and Escrow shall automatically terminate
and cancel without further action by Escrow Holder or any party (unless the
failure to close is a result of Seller's default) and notwithstanding any
provision contained in Escrow Holder's general provisions, and the Deposit
shall be disbursed to the party entitled thereto pursuant to the terms of
this Agreement.
6.2 FAILURE OF A CONDITION. Except in those instances where Escrow
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automatically terminates under the terms of this Agreement, if any
condition is not satisfied or waived within the time period and in the
manner set forth in this Agreement, then the party for whose benefit the
condition exists (as provided in Paragraphs 3 and 4 of this Agreement) may
terminate this Agreement by delivering written notice to the other party
and to Escrow Holder after the end of the applicable time period; provided
that if Buyer terminates because of a failure of a condition in Paragraph 3
hereof, Buyer shall be entitled to a return of the Deposit.
6.3 CONSEQUENCES. If this Agreement terminates (or is properly
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terminated by either party) as specifically provided by its terms, then
each of the following shall occur: Escrow shall be deemed automatically
canceled regardless of whether cancellation instructions are signed;
neither party shall have any further obligation to the other under this
Agreement (except for breach of this Agreement as those remedies may be
limited hereunder; and as provided under Paragraphs 10.1, 10.2, 10.3 and
15.18 which shall survive termination of this Agreement); all rights
granted to Buyer under this Agreement and in the Property shall terminate;
and, except as provided to the contrary in Paragraph 6.5 (concerning
Seller's right to retain the Deposit as liquidated damages), Escrow Holder
shall return all funds and documents then held in Escrow to the party
depositing the same.
6.4 ESCROW CANCELLATION CHARGES. If Escrow fails to close because of
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either party's default, the defaulting party shall be liable for all Escrow
cancellation and Title Company charges. If Escrow fails to close for any
other reason, Buyer and Seller shall each pay one-half of any Escrow
cancellation and Title Company charges.
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6.5 LIQUIDATED DAMAGES. IF BUYER FAILS TO COMPLETE THE PURCHASE OF
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THE PROPERTY AS PROVIDED IN THIS AGREEMENT AND THE FAILURE TO CLOSE
CONSTITUTES A DEFAULT BY BUYER IN THE PERFORMANCE OF BUYER'S OBLIGATIONS
UNDER THIS AGREEMENT, SELLER SHALL BE RELEASED FROM ALL OF ITS OBLIGATIONS
UNDER THIS AGREEMENT, AND ESCROW HOLDER SHALL IMMEDIATELY DELIVER, DESPITE
ANY INSTRUCTIONS TO THE CONTRARY, THE DEPOSIT TO SELLER, AND SELLER SHALL
BE ENTITLED TO RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES. SELLER AND BUYER
SHALL INDEMNIFY ESCROW HOLDER FOR ANY LIABILITY, COSTS AND EXPENSES BY
REASON OF ESCROW HOLDER'S GOOD FAITH COMPLIANCE WITH THIS PARAGRAPH. THE
PARTIES EXPRESSLY AGREE THAT THE AMOUNT OF THE DEPOSIT IS A REASONABLE
ESTIMATE OF THE EXTENT TO WHICH SELLER WOULD BE DAMAGED IF THIS TRANSACTION
FAILS TO CLOSE AS A RESULT OF BUYER'S DEFAULT, IN LIGHT OF THE DIFFICULTY
THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES, AS A RESULT
OF A FAILURE OF THIS TRANSACTION TO CLOSE BECAUSE OF BUYER'S DEFAULT.
SELLER'S RETENTION OF THE DEPOSIT AS LIQUIDATED DAMAGES SHALL BE SELLER'S
EXCLUSIVE REMEDY FOR DAMAGES BY REASON OF BUYER'S FAILURE TO COMPLETE THE
PURCHASE OF THE PROPERTY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT;
PROVIDED, HOWEVER, THAT NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
SELLER'S RIGHTS OR REMEDIES UNDER SECTIONS 10.1, 10.2, 10.3 AND 15.18
BELOW.
SELLER'S INITIALS /s/ [SIGNATURE] BUYER'S INITIALS
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/s/ [SIGNATURE]
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7. GENERAL ESCROW PROVISIONS.
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7.1 ESCROW INSTRUCTIONS. This Agreement when signed by Buyer and
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Seller shall also constitute Escrow Instructions to Escrow Holder.
7.2 OPENING ESCROW. When both (i) this Agreement, fully signed or in
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signed counterparts, and (ii) Buyer's Deposit are delivered to Escrow
Holder, Escrow shall be deemed open and Escrow Holder shall immediately
notify Buyer and Seller by telephone and in writing of the date of Opening
of Escrow.
7.3 GENERAL PROVISIONS. Notwithstanding anything to the contrary in
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this Agreement, the General Provisions of Escrow Holder, if any, which are
later signed by the parties, are incorporated by reference to the extent
they are not inconsistent with the provisions of this Agreement. If there
is any inconsistency between the provisions of those General Provisions and
any of the provisions of this Agreement, the provisions of
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this Agreement shall control. If any requirements relating to the duties or
obligations of the Escrow Holder are unacceptable to the Escrow Holder, or
if the Escrow Holder requires additional instructions, the parties agree to
make any deletions, substitutions and additions as counsel for Buyer and
Seller shall mutually approve and which do not materially alter the terms
of this Agreement. Any supplemental instructions shall be signed only as an
accommodation to Escrow Holder and shall not be deemed to modify or amend
the rights of Buyer and Seller, as between Buyer and Seller, unless the
supplemental instructions expressly so provide.
7.4 PRORATIONS. The following prorations shall be made between Seller
----------
and Buyer at the Close of Escrow, based on the actual number of days in the
month in which the Closing occurs and a three hundred sixty-five (365) day
year:
(a) Taxes, real property taxes, special taxes, utility fees and
deposits, common area maintenance expenses, Property operating
expenses, personal property taxes, if any, with respect to the
Personal Property, assessments, sewer charges, and other costs and
expenses attributable to the Property shall be prorated as of the
Close of Escrow. To the extent any expenses or charges for the
Property are paid by tenants to the landlord under the Leases on an
estimated basis, for which a future reconciliation of actual to
estimates is to be performed, Seller and Buyer shall make an
adjustment at Closing for the applicable reconciliation period in
which the Closing occurs based on a comparison of the actual Property
expenses paid by Seller as of the Closing Date to the estimated
Property expenses paid by tenants to Seller. The adjustment for such
reconciliation period shall be calculated as follows: To the extent
the estimated payments made by tenants to Seller as of the Closing
Date exceed the actual Property expenses paid by Seller as of the
Closing Date, Buyer shall receive a credit for the excess tenant
payments. To the extent actual Property expenses paid by Seller as of
the Closing Date exceed the estimated payments made by tenant as of
the Closing Date, Seller shall receive a credit at Closing, to the
extent Seller is entitled to receive from the tenants payments of such
shortfall under the terms of the applicable Leases. Buyer shall then
assume all rights and obligations to collect from or pay to Lease
tenants any reconciliation amounts.
(b) All rents, additional rent, income, and other amounts
payable to the owner or landlord of the Property (collectively,
"Property Rent") shall also be prorated as of Close of Escrow. Accrued
but unpaid Property Rent existing as of the Closing shall not be
prorated; provided, however, that Buyer shall use reasonable efforts
to collect such accrued but unpaid Property Rent (but shall not be
obligated to institute litigation or to incur expenses other than
nominal expenses), from and after the Closing, and Buyer shall remit
any Property Rent received from and after the Closing attributable to
the period prior to the Closing immediately to Seller. For purposes of
this Agreement, any payments received
12
by Buyer after Closing from a tenant whose Property Rent was due and
unpaid as of the Closing, regardless of how such payment is labeled or
designated by such tenant, shall be accounted for and applied as
follows: (i) first, to due and unpaid Property Rent for the month in
which Closing occurs and Seller shall be entitled to its prorated
portion of such Property Rent for such month, (ii) second, to Property
Rent then due and payable to Buyer, and (iii) third, to delinquent
Property Rent owed to Seller for periods prior to the month in which
Closing occurs. Amounts received after Closing by Buyer to which
Seller is entitled pursuant to the foregoing provisions, up to the
amount of the delinquency as of the Closing, shall be remitted
immediately by Buyer to Seller. Seller hereby reserves its rights
under the Leases to the extent any tenant under any of the Leases is
delinquent in the payment of Property Rent thereunder as of the
Closing Date, and Buyer shall from and after the Closing Date,
reasonably cooperate with Seller to the extent necessary to enable
Seller to pursue recovery of the delinquent Property Rent, including
any litigation instituted by and paid for by Seller on or prior to
Closing. Seller shall notify Buyer in writing of the name of each
tenant, if any, whose Property Rent is delinquent. Notwithstanding the
foregoing, in no event shall Seller have the right to take any action
after Closing against any tenant that is delinquent in the payment of
Property Rent as of the Closing if such action would cause a
termination of the tenant's lease or disturb such tenant in its
occupancy of its premises.
(c) Security deposits and advance rents (which have not been
applied pursuant to the terms of the Leases) shall be transferred or
credited to Buyer at Closing.
(d) Any tenant improvement or leasing commission costs or
referral fees paid or incurred by Seller from the Effective Date
through the Closing Date with respect to leases or other rental
agreements (and renewals, extensions or expansions under existing
leases or rental agreements) executed from the Effective Date through
the Closing Date shall be paid by Buyer to Seller at Closing (prorated
based upon the rental income received by Seller or Buyer for the
applicable lease, renewal or expansion term), provided that, with
respect to any lease or other rental agreement entered into after the
expiration of the Due Diligence Period, Buyer will only be responsible
for such costs or fees if Buyer approves such lease or other rental
agreement in writing, prior to lease execution, such approval not to
be unreasonably withheld or delayed. Buyer shall provide its written
consent or rejection of any proposed lease within five (5) business
days of receipt of a copy of the proposed lease terms. Buyer's failure
to provide such written rejection or consent within such five (5)
business day period shall be deemed approval of the proposed lease. If
Closing occurs, Buyer shall also reimburse Seller for any costs
related to capital improvements incurred by Seller for life safety
work or asset preservation, repairs or replacements incurred from
13
the Effective Date through the Closing Date, so long as Buyer has
approved the same in writing in advance of such costs being incurred,
such approval not to be unreasonably withheld, conditioned or delayed.
(e) Buyer shall provide Seller with such information and copies
of invoices and other documents and records as Seller shall reasonably
request, evidencing that Buyer has remitted to Seller all amounts
required as a result of any reconciliation of the expenses of the
Property referenced in Section 7.4(a) above to the estimated payments
of such expenses received from the tenants of the Property (including
any post-closing adjustments thereto).
(f) If any errors or omissions are made regarding adjustments
and prorations, the parties shall make the appropriate corrections
promptly upon the discovery thereof. If any estimations are made at
the Close of Escrow regarding adjustments or prorations, the parties
shall make the appropriate correction promptly when accurate
information becomes available. Any corrected adjustment or proration
shall be paid in cash to the party entitled to the adjustment.
Notwithstanding anything to the contrary above, the above right to
adjustment shall terminate six (6) months after Close of Escrow.
7.5 PAYMENT OF COSTS. Seller shall pay for (i) the base premium
----------------
charges for the CLTA portion of the Title Policy ("Standard Premium"), (ii)
one-half (1/2) of all Escrow costs and fees, and (iii) all county
documentary transfer taxes and one-half of any City transfer taxes. Buyer
shall pay (i) one-half (1/2) of all Escrow costs and fees; (ii) any
additional Title Company charges in excess of the Standard Premium
(including, without limitation, the ALTA portion of the Title Policy and
any endorsements or survey costs), (iii) one-half of any city transfer
taxes, (iv) all costs arising from or relating to the financing by Buyer of
this transaction, (v) recording fees for the Grant Deed and other documents
(including, without limitation, any financing documents). Other Escrow
costs and fees shall be paid in the manner customary in Santa ▇▇▇▇▇ County.
7.6 ESCROW HOLDER AUTHORIZED TO COMPLETE BANKS. If necessary, Escrow
------------------------------------------
Holder is authorized to insert in all blanks in the Closing documents, the
date of recordation of the Grant Deed.
7.7 RECORDATION AND DELIVERY OF FUNDS AND DOCUMENTS. When Buyer and
-----------------------------------------------
Seller have satisfied their respective Closing obligations under Paragraphs
5.2 and 5.3 and each of the conditions under Paragraphs 3 and 4 have either
been satisfied or waived, Escrow Holder shall promptly undertake all of the
following in the manner indicated.
(a) Prorate all matters as described in Paragraph 7.4.
14
(b) Cause the Grant Deed, and any other documents which the
parties hereto may mutually direct, to be recorded in the Official
Records of Santa ▇▇▇▇▇ County, California in the order set forth in
this Agreement. Escrow Holder is instructed not to affix the amount of
the documentary transfer tax on the face of the Grant Deed, but to
supply same by separate affidavit.
(c) Disburse funds deposited by Buyer with Escrow Holder towards
payment of all items chargeable to the account of Buyer pursuant
hereto in payment of such costs including, without limitation, the
payment of the Purchase Price to Seller.
(d) Deliver originals and conformed copies of all documents to
Seller and Buyer, as appropriate.
(e) Direct the Title Company to issue the Title Policy to Buyer.
8. BROKERAGE COMMISSIONS. Upon the Close of Escrow, Seller shall pay a
---------------------
real estate brokerage commission to CPS, Inc. ("Broker") with respect to this
transaction in accordance with Seller's separate agreement with the Broker. It
is understood that neither Seller nor Buyer has engaged a broker or finder in
connection with this transaction other than the Broker. Each party shall
indemnify and hold the other harmless from and against all claims, liabilities,
costs, damages and expenses (including, without limitation, attorneys' fees and
costs), resulting from or arising out of any claims for finder's fees or
commissions arising out of any contract or commitments made by or through the
indemnifying party by any broker or finder other than the Broker. The
obligations of the parties under this Section 8 shall survive the Closing.
9. REPRESENTATIONS AND WARRANTIES.
------------------------------
9.1 SELLER'S REPRESENTATIONS AND WARRANTIES. In consideration of
---------------------------------------
Buyer entering into this Agreement and as an inducement to Buyer to buy the
Property from Seller, Seller makes the following representations and
warranties, each of which is true, accurate and material and is being
relied upon by Buyer:
(a) AUTHORITY. Seller is an Illinois corporation, in good
---------
standing, and qualified to do business in California. Seller has the
legal right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby, and the execution,
delivery and performance of this Agreement have been duly authorized
and no other action by Seller is requisite to the valid and binding
execution, delivery and performance of this Agreement, except as
otherwise expressly set forth herein.
15
(b) FOREIGN PERSON AFFIDAVIT. Seller is not a foreign person as
------------------------
defined in Section 1445 of the Internal Revenue Code of 1986, as
amended.
(c) LEASES AND PERMITTED EXCEPTIONS. Except for the Leases and
-------------------------------
Permitted Exceptions, to Seller's knowledge, there are no other leases
or other agreements (whether oral or written) affecting or relating to
the right of any party to possession of the Property or any portion
thereof.
(d) LEASE NOTICES. Seller has not received any written notice of
-------------
any pending or threatened claims by any tenant(s) of the Property
against Seller or of the breach or nonperformance of any agreement or
covenant with respect to any tenant(s) under Leases of the Property,
except as otherwise noted in the Estoppels or in any other information
provided by Seller to Buyer with respect to the Leases or the
Property. To Seller's knowledge, the Leases are in full force and
effect. No rent has been prepaid for the benefit of tenant(s) nor
security deposits paid, other than as disclosed in the Leases, as
otherwise disclosed to Buyer by Seller in writing, or as otherwise
disclosed in the Estoppels.
(e) DEFAULT NOTICES. Except as otherwise disclosed to Buyer in
---------------
writing, Seller has not received any written notice of default with
respect to any obligation of Seller pertaining to the Property which
remains uncured or which will be binding upon Buyer from and after the
Closing.
(f) LAWSUITS. Seller has not initiated and has not received
--------
written notice of any suits, proceedings or governmental
investigations pending or threatened in writing before any agency,
court or other governmental authority which relate to the Property.
(g) NOTICES OF VIOLATIONS. Seller has not received any written
---------------------
notice of any violation of applicable law, ordinance or regulation
with respect to the Property which has not been remedied or which has
not otherwise been disclosed by Seller to Buyer in the information and
materials previously delivered by Seller to Buyer.
(h) CONDEMNATION. Seller has not received any written notice
------------
from any governmental authority of any pending or threatened
proceedings in eminent domain which would adversely affect the
Property or any portion thereof.
(i) LEASING COSTS. There are no tenant improvement allowances or
-------------
costs or leasing commission costs or referral fees owed by Seller
under any of the Leases which will be unpaid as of Closing, except for
allowances, costs or fees pursuant to any Leases or Lease amendments
entered into pursuant to Section 16
16
of this Agreement; provided, however, that Buyer shall have no
liability for any such allowances, costs or fees unless Buyer was
given prior notice of the relevant Lease or Lease amendment and
consented in writing to be obligated for such matters.
(j) RENT ROLL. Attached as Exhibit B to this Agreement is a
---------
current tenant status report relating to the Leases (the "Rent Roll")
which is true and correct in all material respects.
(k) ENVIRONMENTAL CLAIMS. Seller has not received any written
--------------------
notice of any claim from the owner of any other property regarding
contamination emanating from the Property and Seller has not received
any written notice of any claim from any individual regarding exposure
to environmental contamination on or about the Property.
Seller shall remake and update the foregoing representations and warranties
as of the Closing Date. To the extent that the remade and updated
representations and warranties disclose a "material adverse change" from
the information contained in the representations and warranties set forth
in this Agreement and Buyer was not advised of the facts giving rise to
such "material adverse change" prior to the expiration of the Due Diligence
Period, such "material adverse change" shall not constitute a Seller
default, but Buyer shall have the right to terminate this Agreement in
which event the Deposit and all interest earned thereon shall be returned
to Buyer and neither party shall have any further liability under this
Agreement except for those which expressly survive such termination. For
purposes hereof, the term "material adverse change" shall mean a change or
changes from the state of facts set forth in the original Seller
representations and warranties set forth in this Agreement which would, in
the aggregate, result in a potential reduction in the net income from the
Property (either by virtue of a reduction in the reported rental stream or
an increase in landlord liability) of more than $50,000.00. With regard to
changes the effect of which would cause a net income reduction of
$50,000.00 or less, Seller shall, at its option, either remedy the
situation involving the changed state of facts or provide Buyer with a
credit against the Purchase Price for the amount of the reasonably
estimated cost or liability associated with the "material adverse change."
A "material adverse change," with respect to the representation and
warranty set forth in Section 9.1(j) above, shall also include a change
from the stated expiration dates of Leases the result of which is that the
leases of tenants occupying at least 10,000 square feet of space expire at
least 180 days later than the dates set forth in the Rent Roll.
The representations and warranties made by Seller in this Agreement shall
survive the recordation of the Grant Deed for a period of one hundred
eighty (180) days and any action for a breach of any representation or
warranty must be made and filed within said one hundred eighty (180) day
period.
17
9.2 BUYER'S REPRESENTATIONS AND WARRANTIES. In consideration of
--------------------------------------
Seller entering into this Agreement and as an inducement to Seller to sell
the Property to Buyer, Buyer makes the following representations and
warranties, each of which shall be true and accurate as of the Effective
Date and Close of Escrow, and each of which is material and is being relied
upon by Seller:
(a) AUTHORITY. Buyer has the legal right, power and authority to
---------
enter into this Agreement and to consummate the transactions
contemplated hereby, and the execution, delivery and performance of
this Agreement have been duly authorized and no other action by Buyer
is requisite to the valid and binding execution, delivery and
performance of this Agreement, except as otherwise expressly set forth
herein.
(b) "AS IS". Except for the representations and warranties
-------
expressly provided in Paragraph 9.1 above, Buyer agrees (i) that it is
purchasing the Property on as "As Is" basis and based on its own
investigation of the Property, (ii) that neither Seller nor Seller's
employees, agents, brokers, representatives, managers, property
managers, asset managers, officers, principals, attorneys or
contractors (collectively, "Seller's Representatives") have made any
warranty, representation or guarantee, express, implied or statutory,
written or oral, including, without limitation, any implied warranty
of merchantability or fitness for any use or purpose or of reasonable
workmanship, concerning the Property or any of the products or
improvements located thereon or therein (including, without
limitation, the Building), and (iii) that neither Seller nor Seller's
Representatives have made any warranty, representation or guarantee as
to any government limitation or restriction, or absence thereof,
pertaining to the Property, or as to the presence or absence of any
latent defeat, subsurface soil condition, environmental condition,
hazardous substance, toxic waste or any other matter pertaining to the
physical condition (title, mapping, grading, construction, or
otherwise) of the Property. Buyer is familiar with the Property and
its suitability for Buyer's intended use. Buyer acknowledges that
Buyer has been provided access to the Property, and as of the end of
the Due Diligence Period, will have had an adequate opportunity to
review any and all aspects of the Property Buyer deems relevant to its
decision to purchase the Property, including the Documents (as defined
below), which Buyer acknowledges receipt of. Except for the
representations and warranties expressly provided in Paragraph 9.1
above, all of Seller's and Seller's Representatives' statements
whenever made, are made only as an accommodation to Buyer and are not
intended to be relied or acted upon in any manner by Buyer. All
documents, records, agreements, writings, statistical and financial
information and all other information (collectively, "Documents")
which have been given to Buyer by Seller, or Seller's Representatives,
have been delivered as an accommodation to Buyer and without
18
any representation or warranty (except as specifically provided above)
as to the sufficiency, accuracy, completeness, validity, truthfulness,
enforceability, or assignability of any of the Documents, all of which
Buyer relies on at its own risk. Notwithstanding the foregoing, Seller
is not aware of any material inaccuracies in those Documents which
were prepared by Seller. Buyer acknowledges that neither Seller nor
Seller's Representatives have made any representation regarding the
availability of, or amount of, any fee, assessment, or cost relating
to the development, construction, mapping, access, occupancy or
ownership of the Property.
(c) SELLER'S RESPONSIBILITY. Buyer represents and covenants that
-----------------------
Seller shall not have any liability, obligation or responsibility of
any kind with respect to the following:
(i) The content or accuracy of any report, opinion or
conclusion of any soils or environmental experts
(including, without limitation, those contained in
the Environmental Reports) or other engineer or other
person or entity who has examined the Property;
(ii) The content or accuracy of any information released
to Buyer by an engineer or planned in connection with
the development of the Property;
(iii) Any of the items delivered to Buyer in connection
with Buyer's review of the condition of the Property;
and
(iv) The content or accuracy of any other cost,
projection, financial or marketing analysis or other
information given to Buyer by Seller or Seller's
Representatives or reviewed by Buyer with respect to
the Property.
(d) TRUTH OF REPRESENTATIONS. The representations and warranties
------------------------
of Buyer set forth in this Agreement shall be true on and as of the
Close of Escrow as if those representations and warranties were made
on and as of such time. The representations and warranties made by
Buyer in this Agreement shall survive the recordation of the Grant
Deed for a period of one hundred eighty (180) days and any action for
a breach of any representation or warranty must be made and filed
within said one hundred eighty (180) day period.
10. ENTRY ON PROPERTY.
-----------------
19
10.1 LICENSE TO ENTER FOR INVESTIGATION. Until Escrow closes or this
----------------------------------
Agreement is terminated, Buyer and Buyer's employees, agents, consultants
and contractors shall have a limited license to enter upon the Property,
during usual business hours, after receipt by Seller of twenty-four (24)
business hours advance notice of its intention to enter the Property (the
"License") so long as the activities do not damage the Property and subject
to any rights of tenants under the Leases. Before beginning any tests or
investigations which contemplate the drilling or disturbance of the surface
of the Property, Buyer shall submit to Seller for its approval, which shall
not be unreasonably withheld, to be exercised in good faith, Buyer's
operational plan for conducting the tests or investigations Seller may have
a representative present during any tests or investigations and Buyer shall
provide Seller with prior notice of any tests or investigations. After any
entry, Buyer shall promptly repair any damage caused by Buyer or its
employees, agents, consultants or contractors in connection with the
exercise of the right of entry described above. Buyer shall not allow any
dangerous or hazardous condition to be created on or arise from Buyer's
entry on the Property. Buyer shall comply with all applicable laws and
governmental regulations applicable to its entry to the Property. Buyer
shall keep the Property free and clear of all mechanics' liens and
materialmen's liens arising out of any of Buyer's activities. The License
may be revoked by Seller at any time, and shall in any event be deemed
revoked upon termination of this Agreement.
10.2 INDEMNIFICATION ON ENTRIES. Buyer shall indemnify, defend (with
--------------------------
counsel selected by Buyer and reasonably approved by Seller), and hold
harmless Seller and Seller's officers, directors, shareholders, employees,
agents, managers, property mangers, asset managers, attorneys,
representatives, subsidiary and parent corporations, affiliated entities,
and the above parties' successors and assigns excluding, however, any
person or entity that held title to the Property or any portion thereof
prior to the date Seller acquired title thereto (each, a "Predecessor In
Title"), and the Property, (all of the above parties (other than any
Predecessor In Title) and the Property are collectively referred to as
"Indemnified Parties and Property") from and against all claims, losses,
liens, liabilities, damages, expenses and costs (including, without
limitation, attorneys' fees and costs) arising from or relating to the
entry of Buyer and its representatives, agents, employees, consultants and
contractors on the Property pursuant to the terms of Section 10.1, as
opposed to Buyer's right to possession of portions of the Property pursuant
to a lease or leases of portions of the Property. The obligation to
indemnify, defend and hold harmless referred to in this Section 10.2 shall
not extend to or cover any losses, damages, liens, claims or liabilities
arising from the mere discovery of any hazardous or toxic materials on the
Property except for, and only to the extent that, any actions or omissions
of Buyer or anyone acting for or on behalf of Buyer in making such
discovery either increase losses, damages, liens, claims or liabilities
which Seller could sustain as a result of such materials or cause Seller to
incur losses, damages, liens, claims or liabilities which it would not have
incurred from the presence of such materials alone. Buyer's obligations
under this paragraph shall survive the Close of Escrow and
20
the termination of this Agreement and shall not be limited by any insurance
required under Paragraph 10.3).
10.3 INSURANCE ON ENTRIES. Buyer shall maintain or cause to be
--------------------
maintained either Comprehensive General Liability insurance or Commercial
General Liability insurance to cover Buyer's activities on the Property.
Prior to entering on the Property, Buyer shall deliver to Seller a
Certificate of Insurance evidencing compliance with the terms of this
paragraph. The liability insurance policy shall have a combined single
limit per occurrence liability limit of at least $2,000,000.00 for premises
liability, bodily injury, personal injury and property damage, shall be
primary and noncontributing with any insurance which may be carried by
Seller, and shall name Seller as an additional insured, and shall be
written by companies rated A/XII or better in "Best's Insurance Guide" and
authorized to do business in California. The insurance policy shall be
maintained and kept in effect by Buyer (or Buyer's agent), at Buyer's
agent's) sole expense, at all times during the term of this Agreement. The
insurance policy shall provide that it may not be canceled or modified
without at least thirty (30) days prior written notice to Seller, or until
this Agreement is terminated.
11. CONDEMNATION OR CASUALTY.
------------------------
11.1 CONDEMNATION. Seller, upon actually becoming aware of same,
------------
shall promptly notify Buyer, in writing, of any condemnation proceeding
affecting the Property commenced prior to the Close of Escrow or upon
receipt of any written notice of a potential condemnation. If, by reason of
any such proceeding, the value of the Property is materially impaired,
Buyer may, at its option, elect either to (i) terminate this Agreement, or
(ii) continue the Agreement in effect, in which event, upon the Close of
Escrow, Seller shall assign to Buyer, and Buyer shall be entitled to
receive, any compensation, awards, or other payments or relief resulting
from such condemnation proceeding. As used herein, "materially impaired"
shall mean that the cost to restore the Property or the value of the
portion of the Property to be condemned exceeds Seven Hundred Fifty
Thousand Dollars ($750,000.00).
11.2 CASUALTY. If, before the Closing, all or any portion of the
--------
Property is damaged by a casualty (a "Casualty"), Seller shall notify Buyer
of this event after actual knowledge of the Casualty, and if the cost to
restore the same will exceed Seven Hundred Fifty Thousand Dollars
($750,000.00), Buyer shall have the option to either (i) terminate this
Agreement as of the date of the Casualty, or (ii) continue with this
transaction in accordance with the terms of this Agreement and without any
adjustment in the Purchase Price, by delivery of written notice of Buyer's
election to Seller and Escrow Holder within five (5) days after receipt of
Seller's notice. If Seller and Escrow Holder receive Buyer's election to
terminate this transaction or have not received any notice from Buyer
within the 5-day period, then this transaction shall terminate, and the
21
Deposit shall be returned to Buyer, as provided in Paragraph 6.3. If Buyer
elects to continue with this transaction or is obligated to do so, as
provided above, then the Casualty proceeds from any insurance obtained by
Seller for the Property which are payable as a result of such Casualty, if
any, shall become the property of and be assigned to Buyer after Close of
Escrow and Seller shall pay to Buyer the amount of Seller's deductible
which amount, in any event, shall not exceed the cost to repair the damage
caused by the casualty. If the Casualty is not covered by insurance, Buyer
may elect to terminate this Agreement and the Deposit and interest earned
thereon shall be returned to Buyer.
12. WAIVER BY BUYER. Buyer hereby waives and relinquishes any and all
---------------
rights and remedies Buyer may now or hereafter have against the Indemnified
Parties (excluding any past, present or future tenants of the Property) and
Property, whether know or unknown, with respect to any past, present or future
presence or existence of any hazardous or toxic waste, substances or materials
of any kind or nature ("Hazardous Materials") on, under or about the Property or
surrounding land or with respect to any past, present or future violations of
any rules, regulations or laws, now or hereafter enacted, regulating or
governing the use, handling, storage or disposal of Hazardous Materials
(collectively, "Environmental Laws") including, without limitation, any and all
rights Buyer may now or hereafter have to seek contributions from the
Indemnified Parties and Property under (i) Section 113(f)(i) of the
Comprehensive Environmental Response Compensation and Liability Act of 1980
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("▇▇▇▇") (42 U.S.C. Section 9613), as the same may be further amended or
replaced by any similar law, rule or regulation and (ii) Section 25300 et seq.
-- ---
of the ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇ Hazardous Substance Account Act (California
Health and Safety Code, Division 20, Chapter 6.95), as the same may be further
amended or replaced by any similar law, rule or regulation. Buyer hereby further
releases the Indemnified Parties and Property from any and all liability whether
known or unknown now or hereafter existing with respect to the Property under
Section 107 of CERCLA (42 U.S.C. Section 9607). Solely with respect to matters
released under this Section 12, Buyer expressly waives all rights under
California Civil Code Section 1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
The waivers and releases by Buyer herein contained shall survive the Close
of Escrow and the recordation of the Grant Deed in perpetuity.
/s/ [SIGNATURE] Buyer's Initials
----------------------------
22
13. CONTRACTS, LICENSES AND PERMITS. In connection with the purchase,
-------------------------------
Seller shall assign to Buyer, and Buyer shall assume, "As Is" at Close of
Escrow, without representation or warranty, all of Seller's rights, liabilities
and obligations, if any, and to the extent assignable, to all warranties and
guarantees and all permits and licenses, to the extent they relate to the
Property (collectively, "Licenses and Permits"). Such assignment shall be in the
form attached as Exhibit H to this Agreement. All Service Contracts and
management contracts for the Property entered into by Seller with respect to the
Property (the "Contracts") shall be terminated by Seller as of Closing so long
as such Contracts are so terminable and unless Buyer notifies Seller prior to
the expiration of the Due Diligence Period that Buyer has elected to assume any
such Contracts in which event all of Seller's right, title and interest under
such Contracts shall be assigned to Buyer at Close of Escrow and Buyer shall
assume same.
14. REMEDIES AGAINST SELLER. IF CLOSE OF ESCROW AND THE CONSUMMATION OF
-----------------------
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT DO NOT OCCUR BY REASON OF ANY
DEFAULT OR BREACH BY SELLER IN ITS OBLIGATION TO TRANSFER THE PROPERTY TO BUYER,
BUYER SHALL BE ENTITLED TO EITHER (i) THE RETURN OF THE DEPOSIT AND ANY INTEREST
ACTUALLY ACCRUED THEREON; OR (ii) THE REMEDY OF SPECIFIC PERFORMANCE; AS BUYER
MAY ELECT, AS BUYER'S SOLE AND EXCLUSIVE REMEDIES FOR SUCH BREACH OR DEFAULT,
AND BUYER SHALL NOT BE ENTITLED OR HAVE ANY RIGHT TO RECEIVE ANY OTHER DAMAGES
OR OTHER RELIEF, LEGAL OR EQUITABLE.
/s/ [SIGNATURE] Seller's Initials /s/ [SIGNATURE]
------------------------ ------------------------
Buyer's Initials
In addition to the foregoing remedies, if the consummation of the
transaction contemplated by this Agreement does not occur by reason of Seller's
intentional breach of a provision or obligation of Seller set forth in this
Agreement, Seller shall be liable to Buyer for Buyer's out-of-pocket third party
expenses incurred in connection with this transaction during the period
commencing on the Effective Date and ending upon the termination of the
transaction, in an amount not to exceed Forty Thousand Dollars ($40,000.00) in
any event.
15. GENERAL PROVISIONS.
------------------
15.1 ASSIGNMENT.
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(a) This Agreement shall be binding upon and shall inure to the
benefit of Buyer and Seller and their respective successors and
permitted assigns.
(b) Buyer may only assign this Agreement and any interest or
right under this Agreement or under the Escrow after obtaining
Seller's prior written consent, which shall not be unreasonably
withheld or delayed, provided that
23
Seller's consent shall not be unreasonably withheld with respect to
any assignment by Buyer to an entity or person that controls, is
controlled by, or is under common control with Buyer. Any assignment
shall not relieve Buyer of its obligations under this Agreement.
(c) Buyer shall give Seller at least ten (10) business days prior
notice of any assignment and, for the purpose of Seller considering
its approval, Buyer shall furnish Seller with information reasonably
requested by Seller from which Seller can evaluate financial
creditworthiness of the proposed assignee.
15.2 ATTORNEYS' FEES AND COSTS. In any action or proceeding between
-------------------------
the parties to enforce or interpret any of the terms or provisions of this
Agreement, the prevailing party in the action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to damages,
injunctive relief or other relief, its reasonable costs and expenses,
including, without limitation, costs and reasonable attorneys' fees, both
at trial and on appeal.
15.3 NOTICES AND APPROVALS. Any notice, approval, disapproval, demand
---------------------
or other communications required or permitted to be given by any provision
of this Agreement ("notice") which either party desires to give to the
other party or to Escrow Holder shall be deemed to be sufficiently given or
served: (i) when delivered personally to the party to whom the notice is to
be delivered, (ii) on the third (3rd) business day following its deposit in
the U.S. mail (first class) or the first (1st) business day following
delivery to a reputable overnight commercial courier, addressed to the
party at the party's address as it appears in this Agreement, or at any
other address as that party may from time to time specify by written
notice; or (iii) when given by transmittal over electronic transmitting
devices, such as Telex or telecopier machine, if the party to whom the
notice is sent has such a device in its office, provided a complete copy of
any notice so transmitted shall also be mailed in the same manner as
required for mailed notice.
15.4 CONTROLLING LAW. This Agreement shall be deemed to be entered
---------------
into within Santa ▇▇▇▇▇ County and shall be construed under the laws of the
State of California in effect at the time of the signing of this Agreement.
The parties consent to the jurisdiction of the California courts with venue
in Santa ▇▇▇▇▇ County.
15.5 TITLES AND CAPTION. Titles and captions are for conveniences
------------------
only and shall not constitute a portion of this Agreement. References to
paragraph numbers are to paragraphs in this Agreement, unless expressly
stated otherwise.
15.6 INTERPRETATION. As used in this Agreement, masculine, feminine
--------------
or neuter gender and the singular or plural number shall each be deemed to
include the others where and when the context so dictates. The word
"including" shall be construed as if
24
followed by the words "without limitation." If a dispute over the
interpretation or construction of any provision, term or word contained in
this Agreement, this document shall be interpreted and construed neutrally,
and not against either Buyer or Seller.
15.7 NO WAIVER. A waiver by either party of a beach of any of the
---------
covenants, conditions or obligations under this Agreement to be performed
by the other party shall not be construed as a waiver of any succeeding
breach of the same or other covenants, conditions or obligations of this
Agreement.
15.8 MODIFICATIONS. Any alteration, change or modification of or to
-------------
this Agreement, in order to come effective, shall be made in writing and in
each instance signed on behalf of each party.
15.9 SEVERABILITY. If any term or provision of this Agreement, or its
------------
application to any party or set of circumstances, shall be held, to any
extent, invalid or unenforceable, the remainder of this Agreement, or the
application of the term or provision to persons or circumstances other than
those as to whom on which it is held invalid or unenforceable, shall not be
affected, and each shall be valid and enforceable to the fullest extent
permitted by law.
15.10 INTEGRATION OF PRIOR AGREEMENTS AND UNDERSTANDINGS. This
--------------------------------------------------
Agreement contains the entire understanding between the parties relating to
the transactions contemplated by this Agreement. All prior or
contemporaneous agreements, understandings, representations, warranties and
statements, whether oral or written, expressed or implied, are superseded
in their entirety by this Agreement, and are of no force or effect, in
whole or in party.
15.11 NOT AN OFFER. Seller's delivery of unsigned copies of this
------------
Agreement is solely for the purposes of review by Buyer, and neither the
delivery nor any prior communications between Buyer and Seller, whether
oral or written, shall in any way be construed as an offer by Seller, nor
in any way imply that Seller is under any obligation to enter the
transaction which is the subject of this Agreement. The signing of this
Agreement by Buyer constitutes an offer which shall not be deemed accepted
by Seller unless and until Seller has signed this Agreement and delivered a
duplicate original to Buyer.
15.12 TIME OF ESSENCE. Time is expressly made of the essence as to
---------------
the performance of each and every obligation and condition of this
Agreement.
15.13 POSSESSION OF PROPERTY. Buyer shall be entitled to possession
----------------------
of the Property only after the Closing and not before.
25
15.14 COUNTERPARTS. This Agreement may be signed in multiple
------------
counterparts which shall, when signed by all parties, constitute a binding
agreement.
15.15 EXHIBITS INCORPORATED BY REFERENCE. All exhibits attached to
----------------------------------
this Agreement are incorporated in this Agreement by this reference.
15.16 COMPUTATION OF TIME. The time in which any act is to be done
-------------------
under this Agreement is computed by excluding the first day (such as the
Effective Date), and including the last day, unless the last day is a
holiday or Saturday or Sunday, and then that day is also excluded. All
references to time shall be deemed to refer to California time.
15.17 JOINT AND SEVERAL LIABILITY. If Buyer is composed of more than
---------------------------
one individual or entity, all obligations and liabilities of Buyer under
this Agreement shall be joint and several as to each of those individuals
or entities who compose Buyer.
15.18 BUYER'S WORK PRODUCT CONCERNING THE PROPERTY. If for any reason
--------------------------------------------
(other than a breach or default by Seller) Buyer fails to purchase the
Property, Buyer shall promptly deliver to Seller, at no cost or expense to
Seller, and without representation or warranty as to sufficiency, accuracy,
completeness, validity, truthfulness, enforceability or assignability, all
test results, studies, plans, reports or other materials or work product
prepared by Buyer, or its agents, employees or contractors, related to the
Property ("Work Product"). Work Product shall not include any financial
projections, internal memoranda or attorney-client privileged documents.
Buyer's obligation hereunder shall survive termination of the Agreement.
Following delivery, Seller may use this Work Product for any purpose.
15.19 NO OBLIGATIONS TO THIRD PARTIES. The execution and delivery of
-------------------------------
this Agreement shall not be deemed to confer any rights upon, nor obligate
any of the parties to this Agreement to, and person or entity other than
Seller and Buyer. There are not any third party beneficiaries to this
Agreement.
15.20 SURVIVAL OF COVENANTS. The covenants, agreements, indemnitees,
---------------------
representations and warranties of Buyer and Seller shall survive the Close
of Escrow and termination of this Agreement.
16. SPECIAL COVENANTS OF SELLER. Between the Effective Date and the
---------------------------
Closing Date, Seller covenants and agrees that Seller shall (a) maintain the
Property in the manner that Seller is currently maintaining the Property, at
Seller's cost and expense (except as otherwise provided in this Agreement),
reasonable wear and tear accepted; (b) not enter into any contracts or
agreements to sell the Property or which will be binding upon the Property after
the Closing, except as otherwise permitted under this Agreement; (c) not
transfer the Property nor
26
execute or consent to the execution of any Lease or other agreement granting
third party rights to occupancy or possession of any portion of the Property,
except that (i) during the period between the Effective Date and the expiration
of the Due Diligence Period, Seller may continue to lease the Property in the
same manner as it had done prior to the Effective Date and shall promptly give
Buyer written notice of any such Leases entered into by Seller, and (ii) after
the expiration of the Due Diligence Period, Seller shall not execute any Lease
or modify, extend or terminate any Lease without the prior written consent of
Buyer, which consent shall not be unreasonably withheld or delayed, (d) not
encumber the Property or create any new exception to title affecting the
Property, without Buyer's consent; (e) deliver to Buyer each and every material
notice or communication Seller receives in writing from any governmental
authority pertaining to the ownership of the Property, promptly following
Seller's actual receipt of the same; and (f) fully perform the material
obligations of the lessor under the Leases and promptly notify Buyer of any and
all defaults of which Seller has actual knowledge of by the tenants under the
Leases.
17. EXISTING LEASE. Nothing contained in this Agreement is intended to, or
--------------
shall, affect or impair any rights which Buyer may have, as a tenant, under its
existing lease of space in the Building.
SELLER: BUYER:
▇▇ ▇▇▇▇▇ CAL CORP., E-TEK DYNAMICS, INC., a
an Illinois corporation California corporation
By: /s/ [SIGNATURE] By: /s/ ▇▇▇▇▇▇▇ Pan
------------------------------- -------------------------------
Title: Title: President
------------------------- ----------------------------
Name: Name: ▇▇▇▇▇▇▇ Pan
-------------------------- -----------------------------
Date of Seller's signature: Date of Buyer's signature:
____________________, 1996 8/28, 1996
27
EXHIBIT A
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LEGAL DESCRIPTION OF LAND
-------------------------
The land referred to below situated in the County of Santa ▇▇▇▇▇, State of
California and described as follows:
Parcel A, as shown on Parcel Map filed January 15, 1982 in Book 495 of
Maps, at Pages 3 and 4, Santa ▇▇▇▇▇ County Records.
Assessor's Parcel No. ▇▇▇-▇▇-▇▇▇
A-1