AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS
("Agreement") is made as of May 21, 1997, by and between ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Buyer") and NEW YORK LIFE INSURANCE COMPANY, a New York mutual
insurance company (together with its successors and assigns,
collectively, "Seller").
For valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Buyer and Seller agree as follows:
AGREEMENT
1. Certain Basic Definitions. For purposes of this Agreement,
the following terms shall have the following definitions:
Assumed Liabilities means all costs, expenses (including
reasonable attorneys' fees and expenses), claims, losses,
commitments, liabilities and obligations of any kind or
nature, accrued or contingent, now existing or hereafter
arising from or related to (i) the Leases or the New Leases,
past, present or future, or (ii) the ownership, use,
possession, enjoyment or operation of the Property, past,
present or future, excluding only the Excluded Liabilities.
Assumed Liabilities shall not include any costs, expenses,
claims, losses, commitments, liabilities or obligations of
any kind or nature arising from the presence of any
Environmental Matters which were introduced on, under or
about the Real Property prior to the time that Seller
acquired fee title to the Real Property.
Business Day means any day which is not a Saturday, Sunday,
legal or banking holiday in the States of California or New
York.
Buyer's Address means c/o Arden Realty, Inc., 0000 Xxxxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000,
Attention: Xxxxxx Xxxxxxx.
Claim means any claim, demand or Legal Proceeding.
Closing Date means the date the Close of Escrow occurs,
which shall be no later than August 1, 1997.
Contingency Period means the period commencing on the
Effective Date and expiring at 5:00 P.M., Pacific Daylight
Time, on the date which is twenty (20) days after the
Effective Date.
Contingency Termination Date means June 10, 1997.
Deposit means the Initial Deposit and, if posted pursuant to
Section 2.2.1(b), the Subsequent Deposit.
Effective Date means May 21, 1997.
Environmental Matter is defined in Section 9.11.
Environmental Reports is defined in Section 3.3.3(a)(ii).
Escrow Holder means the Los Angeles, California office of
Chicago Title Insurance Company.
Escrow Holder's Address means 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx
000, Xxx Xxxxxxx, Xxxxxxxxxx 00000.
Excluded Liabilities means all costs, expenses (including
reasonable attorneys' fees and expenses), claims, losses,
commitments, liabilities and obligations of any kind or
nature, accrued or contingent, now existing or hereafter
arising from or related to (i) a breach of any of Seller's
representations and warranties set forth in Sections 9.1
through 9.12 and 9.17 hereof, (ii) any Service Contract not
assumed by Buyer, and (iii) any liability or damage relating
to injury or death of any person or persons, or damage to
property, based on an act or omission occurring prior to the
Closing Date, which (a) if not covered by any insurance
policy owned by Seller, is asserted in writing within twelve
(12) months after the Close of Escrow, or (b) if covered by
an insurance policy owned by Seller is asserted in writing
within forty-eight (48) months after the Close of Escrow.
Excluded Liabilities shall not include any costs, expenses,
claims, losses, commitments, liabilities or obligations of
any kind or nature arising from the presence of any
Environmental Matters which were introduced on, under or
about the Real Property prior to the time that Seller
acquired fee title to the Real Property.
Improvements means all buildings and other improvements
located on the Real Property.
Initial Deposit means the amount of Six Hundred Thousand
Dollars ($600,000).
Intangible Personal Property means all of Seller's
assignable right, title and interest, if any, in and to all
rights to condemnation or insurance proceeds and other
awards or compensation arising from any taking, casualty or
permitted disposition of any portion of the Real Property
and any other intangible personal property of every kind and
character appurtenant to or used in connection with the
ownership or operation of the Real Property, including,
without limitation, the Service Contracts, any third party
claims related to the Real Property, the Licenses and
Permits, the Trade Names and the Warranties.
Leases is defined in Section 3.3.3(b).
Legal Proceeding means any action at law or in equity filed
in any court as to which process has been served, or any
administrative proceeding or any binding arbitration
proceeding as to which a demand has been served that has not
been terminated by dismissal, final judgment or settlement.
Licenses and Permits means all of Seller's assignable right,
title and interest, if any, in and to all licenses, permits,
certificates of occupancy, approvals, dedications,
subdivision maps or plats, land sale registrations, property
reports, conditional use permits, special use permits,
declarations of nonsignificance, environmental impact
statements and entitlements issued, approved or granted to
or for the benefit of Seller or Seller's predecessors in
interest by applicable governmental authorities or otherwise
in effect and which relate to the Real Property, and
including (without limitation) all of Seller's assignable
right, title and interest, if any, in and to any and all
development rights and other intangible rights, titles,
interests, privileges and appurtenances owned by Seller or
Seller's predecessors-in-interest as owner of the Real
Property and in any way related to or used in connection
with the Real Property; and all of Seller's assignable
right, title and interest, if any, in and to all licenses,
consents, easements, rights of way and approvals required to
make use of utilities and to ensure vehicular and pedestrian
ingress and egress to the Real Property.
Loss means any loss, reasonable cost or reasonable expense
actually incurred by a party which is directly related to
the breach by either Buyer or Seller, as the case may be, of
the performance of their respective obligations under
Section 35(b) or (c) of this Agreement, but does not include
(i) any loss of profit, or (ii) any other consequential
damages.
Property means the Real Property, the Tangible Personal
Property and the Intangible Personal Property.
Purchase Price means the sum of Twenty-Five Million One
Hundred Fifty Thousand Dollars ($25,150,000).
Real Property means (a) the real property known as 00000
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx, upon which is
located an office building, which real property is more
particularly described in Exhibit A attached hereto and
incorporated herein for all purposes, together with the
Improvements, and (b) any rights, privileges, easements and
appurtenances pertaining to such real property, including
the Leases and any right, title and interest (but without
warranty whether statutory, express or implied) in and to
adjacent streets, alleys or rights-of-way.
Seller's Address means New York Life Insurance Company, 00
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Senior Vice President, Mortgage Finance Department, with a
copy to New York Life Insurance Company, 00 Xxxxxxx Xxxxxx,
Xxx Xxxx 00000-0000, Attention: Xxxxxxx X. Xxxxxx, Esq.
Service Contracts is defined in Section 3.3.3(d).
Shell is defined in Section 3.3.1(f).
Shell Indemnity is defined in Section 3.3.1(f).
Subsequent Deposit means the amount of Four Hundred Thousand
Dollars ($400,000).
Tangible Personal Property means all of Seller's assignable
right, title and interest, if any, in and to all equipment,
appliances, tools, machinery, supplies, building materials,
fixtures, furnishings, and any other tangible personal
property of every kind and character owned by Seller and
appurtenant to, located in or used in connection with the
operation of the Real Property, including, without
limitation: (A) all preliminary, final and proposed
building plans and specifications (including "as-built
drawings") respecting the Improvements, (B) all structural
reviews, environmental assessments and audits, architectural
drawings and engineering, geophysical, soils, seismic,
geologic, environmental (including with respect to the
impact of materials used in the construction of the
Improvements) and architectural reports, studies and
certificates pertaining to the Real Property, (C) all
accounting, tax, financial, and other books and records
relating to the use, maintenance, leasing and operation of
the Real Property, and (D) those items of Personal Property
described on the Personal Property Schedule attached as
Schedule F-2 to the Xxxx of Sale.
Tangible Property means, collectively, the Real Property and
the Tangible Personal Property.
Trade Names means the non-exclusive right in and to the use
of the trade name "Pacific Gateway II" and any and all other
trade names, trademarks, and logos used by Seller in the
operation and identification of the Real Property or the
Improvements, other than the tradenames or trademarks of New
York Life Insurance Company or its affiliates or PM Realty
Company or its affiliates.
Tenant means the tenant under any Lease.
Warranties means all of Seller's assignable right, title and
interest, if any, in and to all warranties, guaranties,
representations or covenants which are presently effective
and assignable and were given to or made in favor of Seller
or its predecessors in interest or their affiliates in
connection with the acquisition, development, construction,
maintenance, repair, renovation or inspection of the Real
Property, including, without limitation, any made under any
construction contracts for the construction of the
Improvements and the Service Contracts, but subject to any
and all terms and conditions to performance thereof.
2. Sale of Property: Purchase Price.
2.1 Sale of Property. Seller shall sell the Property to
Buyer, and Buyer shall purchase the Property from Seller,
for the Purchase Price on the terms and conditions of this
Agreement.
2.2 Purchase Price. The Purchase Price shall be payable as
follows:
2.2.1 Deposits.
(a) The Initial Deposit shall be
delivered by Buyer to Escrow Holder not later than
June 16, 1997, and upon the acceptance of this
Agreement by Escrow Holder in writing, in the form
of wire transfer pursuant to wiring instructions
provided to Buyer, cash or cashier's check drawn
on good and sufficient funds on a federally
insured bank in the State of California and made
payable to the order of Escrow Holder, and shall
be deposited by Escrow Holder pursuant to the
provisions of Section 3.1.
(b) In the event that the condition in
Section 3.3.1(f) is satisfied or waived on or
before July 9, 1997, the Subsequent Deposit shall
be delivered by Buyer to Escrow Holder not later
than July 11, 1997, in the form of wire transfer
pursuant to wiring instructions provided to Buyer,
cash or cashier's check drawn on good and
sufficient funds on a federally insured bank in
the State of California and made payable to the
order of Escrow Holder, and shall be deposited by
Escrow Holder into Escrow.
(c) The Deposit, plus accrued interest
thereon, shall be refunded to Buyer if (i) any of
the conditions in Section 3.3 are neither
satisfied nor waived by Buyer and Buyer notifies
Seller and Escrow Holder in writing that Buyer is
terminating this Agreement pursuant to Section 3.5
of this Agreement within one (1) day after the
Contingency Termination Date, (ii) Title Company
does not issue to Buyer a Title Policy pursuant to
Section 3.6.5, (iii) a casualty or condemnation
occurs in accordance with Section 8.1, (iv) the
transaction fails to close because of Seller's
default hereunder or (v) prior to the Closing
Date, a material change occurs in the condition of
the Property, the rent roll, or the
representations and warranties of Seller in
Section 9; provided however, that if the condition
set forth in Section 3.3.1(f) is not satisfied or
waived by Buyer on or before July 9, 1997, then
the Deposit, plus accrued interest thereon, minus
the sum of $100,000 shall be returned to Buyer,
and Seller shall be entitled to retain the sum of
$100,000. In all other events, the Deposit, plus
accrued interest thereon, shall be nonrefundable
to Buyer. Subject to the first sentence of this
Section 2.2.1(c), upon the satisfaction or waiver
by Buyer of the conditions in Section 3.3,
including the condition set forth in Section
3.3.1(f), the Deposit, plus accrued interest
thereon, shall belong to Seller, and shall
immediately be paid by Escrow Holder to Seller.
2.2.2 Balance. Buyer shall deposit into Escrow
an amount in immediately available federal funds equal
to the Purchase Price minus the Deposit plus interest
thereon accrued ("Cash Balance"), as reduced by the
amount of any credits due, or increased by the amount
of any items chargeable to, Buyer under this Agreement.
Buyer shall deposit the Cash Balance into Escrow in the
form of immediately available federal funds no later
than one (1) Business Day before the Closing Date (or
such earlier date as is required by Escrow Holder),
unless Escrow Holder advises Buyer and Seller that a
special recording time is available which would permit
Buyer to deposit the Cash Balance into Escrow on the
Closing Date, such that Escrow Holder will be in a
position to disburse the cash proceeds to Seller on the
Closing Date.
2.3 Interest. All funds received from or for the account
of Buyer shall be deposited by Escrow Holder in an interest-
bearing account with a federally insured state or national
bank or savings and loan association ("Account") located in
California and selected by Seller and approved by Buyer,
which approval shall not be unreasonably withheld or
delayed.
3. Escrow: Closing Conditions.
3.1 Escrow. On or after the Effective Date, and upon the
acceptance of this Agreement by Escrow Holder in writing,
this Agreement shall constitute the joint escrow
instructions of Buyer and Seller to Escrow Holder to open an
escrow ("Escrow") for the consummation of the sale of the
Property to Buyer pursuant to the terms of this Agreement.
Upon Escrow Holder's receipt of the Deposit and Escrow
Holder's written acceptance of this Agreement ("Opening of
Escrow"), Escrow Holder is authorized to act in accordance
with the terms of this Agreement. Escrow Holder's general
provisions, a copy of which is attached hereto and
incorporated herein as Exhibit B, shall be a part of this
Agreement; provided, however, that if there is any conflict
or inconsistency between such general provisions and this
Agreement, this Agreement shall control. Upon the Close of
Escrow, Escrow Holder shall pay all sums owed to Seller or
Buyer, as applicable, with immediately available federal
funds.
3.2 Closing Date. The Escrow shall close on the Closing
Date, provided that all conditions to the Close of Escrow
set forth in this Agreement have been satisfied or waived in
writing by the party intended to be benefitted thereby.
3.3 Buyer's Conditions to Closing. Buyer's obligation to
close the Escrow is subject to and contingent on the
satisfaction (or waiver) of the following conditions:
3.3.1 Inspection. Buyer's approval of the
physical condition of the Property at Buyer's sole cost
and expense within the Contingency Period.
(a) Buyer shall have the right to
commence Buyer's physical inspection of the
Property immediately on the Effective Date upon
one (1) Business Day's prior notice to Seller and
after Seller's receipt of written evidence that
Buyer has procured the insurance required by
Section 3.3.1(c). Buyer's physical inspection of
the Property shall be conducted during normal
business hours at a time mutually acceptable to
Buyer and Seller. Such inspection shall be
conducted in a manner that does not disturb the
present tenants and occupants of the Real Property
and Buyer and Buyer's agent shall perform
inspections only while accompanied by one or more
representatives of Seller. Buyer may interview
Seller's property manager in connection with the
Real Property upon one (1) Business Day's prior
notice to Seller.
(b) Buyer acknowledges that prior to
the Contingency Termination Date: (i) Buyer has or
may have conducted such surveys and inspections
and other studies of the Property; and (ii) Seller
has provided Buyer with adequate opportunity to
make such inspection of the Property (including an
inspection for zoning, land use, environmental and
other laws, regulations and restrictions) as Buyer
has, in Buyer's discretion, deemed necessary or
advisable as a condition precedent to Buyer's
purchase of the Property and to determine the
physical, environmental and land use
characteristics of the Property, including without
limitation, its subsurface) and its suitability
for Buyer's intended use. Buyer shall deliver to
Seller a copy of each report of findings that is
issued as a result of such activities. As to
environmental matters, Buyer represents and
warrants to Seller that Buyer has reviewed the
environmental reports and related materials
provided by Seller and has, to the extent it has
deemed it necessary or desirable to do so,
conducted its own independent due diligence as to
the environmental condition of the Property.
Based on such review and independent due diligence
Buyer has determined that it is not necessary for
it to conduct further environmental due diligence
concerning the Property, and its satisfaction as
to the environmental condition of the Property
shall not be a condition to closing under this
Agreement. Moreover, based on its familiarity
with and approval of the environmental condition
of the Property, Buyer agrees that it will not
need to conduct any type of testing or inspections
of the subsurface of the Property, including, but
not limited to boring, percolation, geologic,
environmental and soils tests. Seller has relied
on these representations in deciding to enter into
this Agreement with Buyer.
(c) Buyer shall obtain or cause its
consultants to obtain, at Buyer's sole cost and
expense prior to commencement of any investigative
activities on the Property, a policy of commercial
general liability insurance covering any and all
liability of Buyer and Seller with respect to or
arising out of any investigative activities. Such
policy of insurance shall be kept and maintained
in force during the term of this Agreement and so
long thereafter as necessary to cover any claims
of damages suffered by persons or property
resulting from any acts or omissions of Buyer,
Buyer's employees, agents, contractors, suppliers,
consultants or other related parties. Such policy
of insurance shall have liability limits of not
less than Three Million Dollars ($3,000,000)
combined single limit per occurrence for bodily
injury, personal injury and property damage
liability. Such insurance policy shall name
Seller as an additional insured and shall be in
form and substance and issued by an insurance
company licensed to do business in the State of
California and satisfactory to Seller.
(d) Buyer shall protect, indemnify,
defend and hold the Property, Seller and Seller's
officers, directors, shareholders, participants,
affiliates, employees, representatives, invitees,
agents and contractors free and harmless from and
against any and all claims, damages, liens, stop
notices, liabilities, losses, costs and expenses,
including reasonable attorneys' fees and court
costs, resulting from Buyer's inspection and
testing of the Property, including, without
limitation, repairing any and all damages to any
portion of the Property, arising out of or related
(directly or indirectly) to Buyer's conducting
such inspections, surveys, tests, and studies.
Buyer shall keep the Property free and clear of
any mechanics' liens or materialmen's liens
related to Buyer's right of inspection and the
activities contemplated by Section 3.3.1. Buyer's
indemnification obligations set forth herein shall
survive the Close of Escrow and shall not be
merged with the Deed, and shall survive the
termination of this Agreement and Escrow prior to
the Close of Escrow.
(e) Except as otherwise set forth in
Section 9 hereof, it is understood by the parties
that Seller does not make any representation or
warranty, express or implied, as to the accuracy
or completeness of any information contained in
Seller's files or in the documents produced by
Seller, including, without limitation, any
environmental audit or report. Except as
otherwise set forth in Section 9 hereof, Buyer
acknowledges that Seller and Seller's affiliates
shall have no responsibility for the contents and
accuracy of such disclosures, and Buyer agrees
that the obligations of Seller in connection with
the purchase of the Property shall be governed by
this Agreement irrespective of the contents of any
such disclosures or the timing or delivery
thereof.
(f) Buyer has advised Seller that, with
respect to the environmental condition at the
Property, it has entered into negotiations with
Shell Oil Company ("Shell") regarding the terms of
an agreement (the "Shell Indemnity") which Buyer
shall seek to obtain from Shell pursuant to which
Shell would hold Buyer harmless from and against
environmental response costs and/or third party
tort claims arising in connection with the
Property, directly or indirectly, as a result of
the ownership and/or operation of a tri-plant
synthetic rubber manufacturing complex or other
facility by Shell on or about the Property. It
shall be a condition to Buyer's obligations under
this Agreement that Buyer shall have obtained and
approved, in Buyer's sole discretion, the Shell
Indemnity, and delivered to Seller a copy of the
same on or before July 9, 1997. Buyer agrees to
keep Seller apprised of the status of any
negotiations it shall engage in with Shell, and
agrees that Seller shall have the right to contact
Shell directly to confirm the status of such
negotiations or otherwise to discuss matters of
interest to Seller and Shell concerning the
Property. Buyer agrees to (i) negotiate a
suitable exception to any confidentiality
provision contained in the Shell Indemnity in
order to permit Buyer to deliver to Seller a copy
of the fully-executed Shell Indemnity when
executed by the parties thereto, (ii) promptly
deliver a copy of the Shell Indemnity to Seller
when obtained by Buyer, and (iii) direct Shell in
writing before July 9, 1997 to deliver a copy of
the fully-executed Shell Indemnity when executed
by the parties thereto.
3.3.2 Preliminary Title Report. Buyer's approval
of (i) a current extended coverage, owner's preliminary
title report for the Real Property issued by Chicago
Title Insurance Company ("Title Company"), and (ii) all
exceptions to title described in Schedule B of the PTR
(which together with complete copies of all documents
and instruments referred to in any exceptions set forth
therein are collectively referred to as the "PTR").
(a) No later than two Business Days
after the Effective Date, Seller shall deliver to
Buyer (i) a copy of the PTR and (ii) a copy of
each survey of the Real Property (including
without limitation the most recently performed
survey ) in Seller's possession with respect to
the Real Property (the "Survey"). If Buyer does
not expressly object in writing to any exception
or other matter in the PTR or the Survey within
five (5) Business Days after the later to occur of
(x) Seller's delivery of the PTR and Survey to
Buyer, or (y) the Effective Date, then Buyer shall
be deemed to have approved the PTR and all
exceptions set forth therein. Buyer and Seller
agree that Buyer shall have five (5) Business Days
to review the PTR in its entirety, including,
without limitation, the legal description of the
Real Property and all title exceptions referred to
in the PTR. If Buyer disapproves of any item in
the PTR within the five (5) Business Day period,
then Buyer shall so notify Seller in writing,
specifying in detail the reasons for Buyer's
disapproval. Seller shall have the right, but not
the obligation, to notify Buyer in writing within
five (5) Business Days after Seller's receipt of
Buyer's notice that Seller desires to have until
the Closing Date in which to remove or cure, or
agree to remove or cure, such disapproved items,
and/or (subject to Buyer's reasonable
satisfaction) to obtain a bond or title commitment
or endorsement reasonably acceptable to Buyer at
the Close of Escrow insuring Buyer against such
disapproved item. Seller's failure to deliver
such notice to Buyer shall be deemed an election
not to cure the items Buyer has disapproved, and
Seller shall be deemed to have delivered the
notice described in Section 3.3.2(b).
(b) If Seller is unable or unwilling to
cure such disapproved items by removing such items
or by obtaining a bond, title commitment or
endorsement insuring Buyer against such items,
then Seller shall so notify Buyer, and Buyer shall
have the right either (i) to waive such exceptions
to title, and proceed to take title to the Real
Property subject to such exceptions, without any
deduction or offset in the Purchase Price, and
without any cause of action against Seller, or
(ii) to terminate this Agreement and the Escrow by
giving written notice of such termination to
Seller and to Escrow Holder, on or before five (5)
Business Days after the date Seller so notifies
Buyer. Buyer's failure to provide Seller or
Escrow Holder with such written notice of
termination on or before five (5) Business Days
after Seller's notice or deemed notice shall
constitute Buyer's election under clause (i)
above.
3.3.3 Seller Delivery Items. Buyer's approval
within the Contingency Period of all Seller Delivery
Items (as defined below) and any other matters related
to the Property or otherwise related to the transaction
described in this Agreement in Buyer's sole discretion.
Not later than two (2) Business Days after the
Effective Date Seller shall deliver to Buyer for
Buyer's review copies of the items (the "Seller
Delivery Items") set forth in Sections (a) through (i).
In the event that Seller shall delay in delivering the
Seller Delivery Items to Buyer, the Contingency Period
shall be extended by one day for each such day of delay
by Seller, provided that, promptly after such delay,
Buyer shall have notified Seller in writing of such
delay and Buyer's request for an extension of the
Contingency Period.
(a) If or to the extent in the Seller's
possession or in the possession of Seller's
property manager:
(i) Copies of complete sets
of all architectural, mechanical, structural
and/or electrical plans and specifications
used in connection with the construction of
or alterations or repairs to the Property
together with copies of as-built plans and
specifications for the Property.
(ii) Copies of all soil
tests, structural engineering tests, ADA
surveys, masonry tests, percolation tests,
water, oil, gas, mineral, radon,
formaldehyde, PCB, asbestos or other
environmental tests, audits or reports,
market studies and site plans related to the
Property, including, without limitation, the
environmental reports ("Environmental
Reports") listed on Exhibit D.
(iii) Parking, structural,
mechanical or other engineering reports or
studies related to the Property, if any.
(iv) Copies of any title
insurance policies covering the Property and
any surveys of all or any portion of the
Property.
(v) Copies of all
authorization, including, without limitation,
all certificates of occupancy, permits,
authorizations, approvals and licenses issued
by governmental authorities having
jurisdiction over the Property and copies of
all certificates issued by the local board of
fire underwriters (or other body exercising
similar functions) relating to the Property.
(vi) Financial and operating
statements for the Property for the previous
three (3) calendar years and the year to
date.
(vii) All Base Year (as
defined in the Leases) information applicable
to Leases.
(viii) A cumulative general ledger for year-
to-date 1997.
(ix) A current rent roll.
(x) Property tax bills for the last three
(3) years.
(b) All written rental agreements,
leases, lease guarantees and occupancy agreements
in Seller's actual possession currently affecting
the Property ("Leases").
(c) Intentionally Deleted.
(d) All landscaping, air conditioning,
janitorial and other service contracts relating to
the Property, if any, that are in Seller's actual
possession and that will remain in effect after
the Closing ("Service Contracts").
(e) The PTR, as defined in Section
3.3.2.
(f) Intentionally Deleted.
(g) The operating and capital
expenditure budget for the Property for the
current calendar year.
(h) A complete list of all personal
property of Seller located at and used in
connection with the Property.
(i) A complete list of all warranties
and guaranties in effect as of the Effective Date
and complete copies of all such warranties and
guaranties.
(j) In addition to the Seller Delivery
Items described in Sections (a) through (i) above,
Seller shall make available at the offices of the
property manager located at the Real Property for
review by Buyer and Buyer's representatives (upon
twenty-four (24) hours written notice, in a manner
that will not unreasonably disrupt Seller's or
such property manager's business operations) any
and all other documents in Seller's or Seller's
property manager's actual possession that bind the
Property or materially affect its use, provided
such documents are not confidential, proprietary
or privileged.
3.3.4 Estoppel Certificates. Buyer's approval of
the Estoppel Certificates to be delivered by Seller
pursuant to Section 4 of this Agreement.
3.4 Approval Procedure. Buyer shall notify Seller of
Buyer's disapproval, if at all, of the matters described in
Sections 3.3.1, 3.3.2 and 3.3.3 by written notice delivered
to Seller and Escrow Holder within the applicable time
periods specified in such Sections, but in no event later
than the one (1) day after the expiration of the Contingency
Termination Date. Buyer shall notify Seller of Buyer's
disapproval of the Estoppel Certificates described in
Section 3.3.4, if at all, by written notice delivered to
Seller and Escrow Holder within five (5) Business Days after
receipt thereof, and the Closing Date shall be subject to
extension for a period of up to five (5) Business Days as
required in order to allow Buyer the required time period
for review and approval (or disapproval) of such Estoppel
Certificates. Buyer's failure to disapprove of any of the
matters described in Sections 3.3.1, 3.3.2, 3.3.3 or 3.3.4
in the manner and within the applicable time periods
provided for herein shall be deemed Buyer's approval of such
matter and waiver of such condition.
3.5 Termination.
3.5.1 Termination Upon Disapproval. This
Agreement shall terminate at Buyer's option upon
Buyer's disapproval of any of the matters described in
Sections 3.3.1, 3.3.2, 3.3.3 and 3.3.4, within the time
period specified in such Section for such approval, but
with respect to any matter set forth in Sections 3.3.1,
3.3.2 or 3.3.3, in no event later than one (1) day
after the Contingency Termination Date. In no event
shall Buyer have the right to disapprove any matter set
forth in Sections 3.3.1, 3.3.2 or 3.3.3 any later than
one (1) day after the Contingency Termination Date.
Upon termination of this Agreement pursuant to this
Section 3.5.1: (a) each party shall promptly execute
and deliver to Escrow Holder such documents as Escrow
Holder may reasonably require to evidence such
termination; (b) Escrow Holder shall return all
documents to the respective parties who delivered such
documents to Escrow; (c) Escrow Holder shall return all
funds deposited into Escrow by Buyer together with any
accrued interest on such funds; (d) Buyer and Seller
shall each pay one-half of Escrow Holder's title and
escrow cancellation fees; (e) Buyer shall return to
Seller all Seller Delivery Items in Buyer's possession;
and (f) the respective obligations of Buyer and Seller
under this Agreement shall terminate; provided,
however, notwithstanding the foregoing, Buyer's
indemnity obligations under Sections 3.3.1(d) and 7 and
Buyer's obligations under Sections 27 and 32 shall
survive any such termination of the Agreement, and the
termination of this Agreement shall not release any
other indemnity obligation of Buyer or Seller.
3.5.2 Good Faith Determination. Buyer shall
approve or disapprove the matters described in Sections
3.3.1, 3.3.2, 3.3.3 and 3.3.4, according to the good
faith judgment of Buyer.
3.6 Title and Title Insurance.
3.6.1 Deed. Seller shall convey title to the
Real Property and Improvements to Buyer by grant deed
in the form of Exhibit E attached hereto ("Deed").
3.6.2 Assignment of Leases. Seller shall assign,
without recourse, to Buyer Seller's right, title and
interest in the Leases, subject to any rights of
consent as provided therein, pursuant to an assignment
in the form of Exhibit F attached hereto ("Assignment
of Leases").
3.6.3 General Assignment. Seller shall assign,
without recourse, to Buyer Seller's right, title and
interest in and to all permits, licenses, and
agreements with respect to the operation of the
Property, including, without limitation, the Service
Contracts, subject to any rights of consent as provided
therein, pursuant to an assignment in the form of
Exhibit G attached hereto ("General Assignment").
3.6.4 Xxxx of Sale. Seller shall convey, without
recourse, all of Seller's right, title and interest, if
any, to the Tangible Personal Property pursuant to a
Xxxx of Sale in the form of Exhibit H attached hereto
("Xxxx of Sale").
3.6.5 Buyer's Title Policy. Buyer shall not be
obligated to close the Escrow unless, at the Close of
Escrow, Escrow Holder causes the Title Company to issue
to Buyer a CLTA Coverage Owner's Policy of Title
Insurance (the "Title Policy") which:
(a) shall be written with liability in
the amount of the Purchase Price; and
(b) shall insure title to the Real
Property, to be vested in Buyer, subject only to
the following exceptions ("Permitted Exceptions"):
(i) the standard printed exceptions set forth in
the Title Policy; (ii) general and special real
property taxes and assessments for the current
fiscal year, a lien not yet due and payable; (iii)
the Leases; (iv) such other exceptions as Buyer
has approved or is deemed to have approved
pursuant to Section 3.3.2; and (v) any exceptions
directly or indirectly caused by Buyer.
3.6.6 ALTA Policy. Buyer shall have the right to
procure an ALTA Extended Coverage Owner's Policy of
Title Insurance ("ALTA Policy") as long as the issuance
of the ALTA Policy does not delay or extend the Closing
Date. Buyer shall pay for the increased cost of such
ALTA Policy and for the cost of any other increase in
the amount or scope of title insurance if Buyer elects
to increase the amount or scope of title insurance
coverage provided in the Title Policy.
3.7 Closing Costs and Charges.
3.7.1 Seller's Costs. Seller shall pay (a) the
premium for a CLTA Standard Coverage Owner's Policy of
Title Insurance written with liability in the amount of
the Purchase Price; (b) one-half (1/2) of all of Escrow
Holder's fees in connection with the Escrow; (c) all
expenses and charges incurred in connection with the
discharge of delinquent taxes, if any, which may be
required in order for the Title Company to issue the
Title Policy in accordance with Section 3.6.5; (d) all
documentary transfer taxes payable in connection with
the transfer of the Real Property; and (e) the cost of
any recertification to the survey delivered by Seller
to Buyer as part of the Seller Delivery Items which is
required by the Title Company as a condition of its
issuance of an ALTA Policy, if requested by Buyer.
3.7.2 Buyer's Costs. Buyer shall pay (a) any
additional premium for the Title Policy and all
endorsements requested by Buyer; (b) all recording fees
payable in connection with the transfer of the Real
Property; (c) one-half (1/2) of all of Escrow Holder's
fees in connection with the Escrow; and (d) the costs
of any audit or inspection by Buyer in connection with
the Property.
3.7.3 Other Costs. All other costs, if any,
shall be apportioned in the customary manner for real
property transactions in the county where the Real
Property is located.
3.8 Deposit of Documents and Funds by Seller. Not later
than two (2) Business Days prior to the Closing Date, Seller
shall deposit the following items into Escrow, each of which
shall be duly executed and acknowledged by Seller where
appropriate.
3.8.1 The Deed.
3.8.2 The Xxxx of Sale.
3.8.3 A counterpart of the Assignment of Leases.
3.8.4 A counterpart of the General Assignment.
3.8.5 Intentionally Deleted.
3.8.6 Intentionally Deleted.
3.8.7 Other documents that may reasonably be
required by Escrow Holder to close the Escrow in
accordance with this Agreement.
3.9 Deposit of Documents and Funds by Buyer. Not later
than two (2) Business Days prior to the Closing Date (with
respect to the Cash Balance, one (1) Business Day, unless
Escrow Holder advises Buyer and Seller that a special
recording time is available which would permit Buyer to
deposit the Cash Balance into Escrow on the Closing Date),
Buyer shall deposit the following items into Escrow, each of
which shall be duly executed and acknowledged by Buyer where
appropriate:
3.9.1 The Cash Balance, reduced by the amount of
any credits due to Buyer under this Agreement, and
increased by the amount of all items chargeable to
Buyer under this Agreement.
3.9.2 A counterpart of the Assignment of Leases.
3.9.3 A counterpart of the General Assignment.
3.9.4 Intentionally Deleted.
3.10 Delivery of Documents and Funds at Closing. Provided
that all conditions to Closing set forth in this Agreement
have been satisfied or, as to any condition not satisfied,
waived by the party intended to be benefitted thereby, on
the Closing Date Escrow Holder shall conduct the Closing by
recording or distributing the following documents and funds
in the following manner:
3.10.1 Recorded Documents. Record the Deed and
Assignment of Leases in the Official Records of the
County in which the Real Property is located.
3.10.2 Buyer's Documents. Deliver to Buyer: (a)
the original Title Policy; (b) the original Tenant
Estoppel Certificates; (c) an original counterpart of
the Assignment of Leases, executed by Seller; (d) an
original counterpart of the General Assignment,
executed by Seller; and (e) an original of the Xxxx of
Sale, executed by Seller.
3.10.3 Seller's Documents. Deliver to Seller: (a)
an original counterpart of the Assignment of Leases,
executed by Buyer; and (b) an original counterpart of
the General Assignment, executed by Buyer.
3.10.4 Intentionally Deleted.
3.10.5 Purchase Price. Deliver to Seller the
Purchase Price, plus such other funds, if any, as may
be due to Seller by reason of credits under this
Agreement, less all items chargeable to Seller under
this Agreement.
3.11 Prorations and Adjustments.
3.11.1 Taxes. Escrow Holder shall prorate real
property taxes and assessments on the Real Property as
of the Close of Escrow for the current fiscal year
based on the most current official real property tax
information available from the Los Angeles County
Assessor's office or other assessing authorities. If
real property tax and assessment figures for the
current fiscal year are not available, real property
taxes shall be prorated based on the real property
taxes for the previous fiscal year. Buyer and Seller
shall re-prorate the real estate taxes following the
Close of Escrow upon receipt of the actual real estate
tax xxxx for the fiscal year in which the Closing Date
occurs. Buyer shall be credited with an amount equal
to all real estate taxes which have accrued prior to
the Closing Date but only to the extent such real
estate taxes are not paid or payable by Tenants, which
credit amount shall be adjusted after the Closing Date
depending on whether real estate taxes are paid by
Tenant in advance or in arrears. Buyer shall also be
credited with an amount equal to all real estate taxes
already collected or received by Seller from Tenants
and attributable to periods prior to the Closing Date,
so long as such amounts have not previously been used
to pay real estate taxes already due. If, after the
Closing Date, any additional real estate taxes are
assessed against the Property by reason of back
assessments, corrections to previous tax bills and
similar reasons relating to the period prior to the
Closing Date, Seller shall pay all such additional real
estate taxes, except to the extent the same are
collected from Tenants or which would then be currently
due from Tenants pursuant to the terms of their
respective Leases. If, after the Close of Escrow, any
real estate tax or assessment savings are achieved or
refunds are made with respect to the Property by reason
of successful tax contest proceedings or appeals,
corrections to tax bills or similar reasons relating to
the period prior to the Closing Date, if funds remain
after required payments to Tenants, then Seller shall
be promptly reimbursed for all amounts of such
refund(s) or saving(s) attributable to the period prior
to the Closing Date, less Buyer's reasonable out-of-
pocket costs of collection, and Buyer shall be entitled
to all amounts of such refund(s) or saving(s)
attributed to the periods after the Closing Date.
Seller reserves the right to meet with governmental
officials and, subject to Buyer's reasonable approval
and cooperation, to contest any reassessment concerning
or affecting Seller's obligations under this
Section 3.11.1.
3.11.2 Rent and other Lease Monies and Expenses.
(a) Rentals. Subject to the provisions of
Sections 3.11.2(b) and (c), monthly rentals
("Rentals") which have been collected shall be
prorated as of the Closing Date.
(b) Delinquent Rentals. Delinquent Rentals
shall be prorated between Buyer and Seller as of
the Closing Date but not paid to Seller until they
are actually collected by Buyer. Rentals are
"Delinquent" when payment thereof has been due on
or before the Closing Date and is past due as of
the Closing Date. Buyer shall use Buyer's best
good faith efforts to collect any Delinquent
Rentals. Buyer shall not, however, be required to
institute legal proceedings and Buyer shall not be
required to expend more than nominal cost and
expense in collecting Delinquent Rentals. After
the Close of Escrow, Seller shall not institute
any legal proceedings against a Tenant (or other
occupant or user of the Project) owing Delinquent
Rentals unless Buyer has failed to institute such
legal proceedings with thirty (30) days after
receipt of Seller's written request that Buyer do
so and Seller's claim is limited to an action to
collect unpaid rent and to seek damages. Rentals
collected by the Buyer shall be applied first
against any amount currently due, and then against
any amount past due accruing after the Closing
Date, then to amounts due to Seller for past due
amounts that accrued prior to the Closing Date.
Buyer agrees that any payments due to Seller as a
result of collected Delinquent Rentals shall be
payable to Seller (less reasonable out-of-pocket
costs of collection actually incurred by Buyer)
not less often than monthly. Seller agrees that
any amounts collected by Seller after the Close of
Escrow but which are due to Buyer hereunder shall
be payable to Buyer (less reasonable out-of-pocket
costs of collection actually incurred by Seller)
not less often than monthly. Buyer shall not
compromise any rights to collect delinquent
Rentals or other amounts owed under Leases which,
if collected, would be credited to Seller
hereunder without having first obtained Seller's
written consent.
(c) Operating Cost Pass-Through, Etc.
Operating cost pass-throughs, expense
reimbursements, utility charges, common area
maintenance charges, any administrative charges,
tenant or property association dues, additional
rentals and other retroactive rentals,
escalations, sums or charges payable by Tenants
which accrue as of the Closing Date but are not
yet due and payable, shall be prorated as of the
Closing Date when such payments are received by
Buyer from Tenants. Seller agrees that any
amounts collected by Seller after the Close of
Escrow but which are due to Buyer hereunder shall
be payable to Buyer promptly upon receipt thereof,
but not less often than monthly (less reasonable
out-of-pocket costs of collection actually
incurred by Seller). Promptly upon completion of
the applicable payment periods therefor which
include the Close of Escrow, Buyer and Seller
agree to determine the amount of reimbursements
received from Tenants with respect to estimated
tax, insurance and operating expense pass-
throughs. To the extent Seller has received from
Tenants reimbursements for expenses in excess of
those reimbursable expenses actually paid by
Seller for the period prior to the Close of
Escrow, Buyer shall be reimbursed by Seller for
such amount. Conversely, to the extent Seller has
received from Tenants less than the reimbursement
required by their Leases for such expenses, Seller
shall be reimbursed by Buyer for such amounts at
the Close of Escrow.
(d) Prepaid Rentals. Rentals already
received by Seller attributable to periods after
the Closing Date and the amount of any other
credits due Tenants applicable to any period or
periods after the Closing Date shall be credited
to Buyer at the Close of Escrow.
(e) Tenant Deposits. Buyer shall be credited
at the Close of Escrow with an amount equal to all
Tenant security deposits remaining after any
permitted deduction or charge.
(f) Responsibility for Certain Obligations of
Landlord. Subject to Section 5.1 hereof, Buyer
shall be responsible for the performance of all
Lease obligations (including, without limitation,
obligations under Leases entered into prior to or
after the Effective Date, and modifications of
Leases pursuant to Lease Modifications) but Buyer
shall be credited at the Close of Escrow with an
amount equal to the amount necessary to satisfy
(i) the obligations of Seller, if any, to pay
tenant improvement allowances, construction
management fees and brokers commissions arising
pursuant to the terms of the lease dated January
7, 1997, made by Seller, as landlord, and
Healthcare Partners, as tenant (the "Healthcare
Partners Lease"), and (ii) the obligations of
Seller, if any, to pay any relocation expenses or
other sums to Tenants who are being relocated as a
result of the Healthcare Partners Lease, in either
case to the extent that such obligations have not
been paid or provided for by Seller prior to Close
of Escrow. The amount credited at the Close of
Escrow shall be established by delivery either (i)
of an estoppel by the Seller's contractor for the
construction of tenant improvements in the form
attached hereto as Exhibit M, or (ii) other
reasonable evidence of the amount due under the
contract for the construction of tenant
improvements. Buyer shall not be entitled to
receive any fee for its performance pursuant to
this Section 3.11.2(f). Buyer may consult with
Seller regarding the construction of the tenant
improvements; provided, however, Seller shall have
no obligation to obtain the approval of Buyer for
any aspect of the construction of such tenant
improvements. Notwithstanding anything to the
contrary contained herein, after the Contingency
Termination Date, Seller shall not modify any
contract for the construction of tenant
improvements without the consent of Buyer.
3.11.3 Utilities and Other Expenses.
(a) Utilities. Utilities shall be prorated
as of the Closing Date based upon meter readings
at Closing or the prior month's actual invoices.
Seller shall notify all water, gas, electric and
other utility companies servicing the Property
(collectively, "Utility Companies") of the sale of
the Property to Buyer and shall request that all
Utility Companies send Seller a final xxxx for the
period ending on the last day prior to the Close
of Escrow. Buyer shall notify all Utility
Companies servicing the Property that as of the
Close of Escrow, Buyer shall own the Property and
that all utility bills for the period commencing
on the Close of Escrow are to be sent to Buyer.
In addition to the Purchase Price, to the extent
that any subject utility company allows the
transfer of utility deposits and agrees to
recognize such transfer from Seller to Buyer,
Buyer shall be charged at Closing with an amount
equal to the amount of all utility deposits of
Seller that are on deposit with such utility
company and Seller shall assign to Buyer all of
Seller's right, title and interest in any such
utility deposits. If any of the Utility Companies
sends Seller or Buyer a xxxx for a period in which
the Close of Escrow occurs, Buyer and Seller shall
prorate such bills outside the Escrow. In
connection with such proration, it shall be
presumed that utility charges were uniformly
incurred during the billing period.
(b) Operating Expenses. Operating expenses
shall be prorated between Buyer and Seller based
upon the actual days of their respective ownership
of the Property utilizing the actual expenses.
Buyer and Seller shall prorate outside of Escrow
any prepayments, credits or past due expenses of
operating the Property which are applicable to any
period prior to or after the Close of Escrow,
based upon actual days elapsed. Buyer and Seller
each shall have the right to review and copy the
other's books and records with respect to the
ownership of the Property in order to facilitate
any such proration or collection by either party.
3.11.4 Insurance. All insurance policies and
property management and leasing agreements shall be
terminated as of the Closing Date and there shall be no
proration or surviving obligations for any payments or
commissions which would become the obligation of Buyer
with respect to these items.
3.11.5 Prorations. All prorations shall be made
as of the Close of Escrow on the basis of the actual
days of the month in which the Closing occurs. All
rents, income and profits derived from the Real
Property, if any, along with all expenses (other than
taxes addressed in Section 3.11.1) shall be prorated at
the Closing with appropriate debits and credits to the
accounts of Buyer and Seller so that, as between Buyer
and Seller, Seller shall receive, as appropriate, all
of the same to the extent duly allocable to the period
ending on the date immediately prior to the Closing
Date, and Buyer shall receive, as appropriate, all of
the same to the extent duly allocable to the period
commencing upon the Closing Date. Notwithstanding the
foregoing provisions in this Section 3.11.5, if
information is not available on or prior to the Closing
Date, which information is necessary to accurately
prorate the items to be prorated pursuant to this
Section 3.11.5, Buyer and Seller shall prorate such
items following the Close of Escrow upon the receipt of
the necessary information. The obligations in Section
3.11.1 and Section 3.11.2(c) of this Agreement shall
survive the Close of Escrow.
3.12. Material Adverse Change. No material adverse
change shall have occurred after the Contingency Termination
Date in the physical or financial condition of the Real
Property .
3.13. Seller's Representations and Warranties. All
representations and warranties of the Seller in Section 9
hereof, shall be true as of the Closing Date.
3.14. Tenant Notices. Seller shall deliver notices to
Tenants to inform them of the change of ownership in the Property
and to direct the Tenants to make all payments due under their
respective Leases to Buyer as of the Closing Date.
4. Estoppel Certificates. Seller shall use its reasonable
efforts to deliver to Buyer and Escrow Holder not later than five
Business Days prior to the Close of Escrow tenant estoppel
certificates substantially in the form of Exhibit I-1 ("Estoppel
Certificate") executed by all of the respective Tenants under the
Leases; provided, however, that Seller shall not have liability
of any kind to Buyer as a result of Seller's failure to deliver
any or all of the Estoppel Certificates to Buyer. Buyer's
obligation to Close pursuant to this Agreement shall be
conditioned and contingent upon Buyer's receipt of completed
Estoppel Certificates in the form of Exhibit I-1 hereto, with
only such modifications as are reasonably acceptable to Buyer,
from tenants of the Real Property occupying not less than 85% of
the rentable square footage of the Real Property which is under
lease as of the Effective Date (the "Required Estoppel
Certificates"). In the event that Seller is unable to obtain a
Required Estoppel Certificate, Seller may, but shall not be
obligated to, provide to Buyer an estoppel certificate
substantially in the form of Exhibit I-2 hereto ("Landlord's
Estoppel Certificate"), in lieu of the Required Estoppel
Certificates. Delivery by Seller of a Landlord's Estoppel
Certificate for a tenant shall be deemed a delivery of a Required
Estoppel Certificate for such tenant for all purposes under this
Agreement.
5. Leasing and Contracts.
5.1 Leasing. From the Effective Date through the
Contingency Termination Date, Seller may not agree to
terminate any existing Leases, but may enter into any
amendment or modification of any existing lease (a "Lease
Modification") or any new lease affecting the Real Property
(a "New Lease") with the prior written consent of Buyer,
which consent shall not be unreasonably withheld,
conditioned or delayed; provided, however, that (a) with
respect to any Lease Modification, Seller shall not (i)
reduce the rental rate; (ii) reduce the term of the Lease;
or (iii) provide for any act that negatively impacts the
landlord's economic interests or increases landlord's
obligations under the Lease; and (b) with respect to any New
Lease, the Lease shall contain commercially reasonable
terms. After the Contingency Termination Date, provided
that Buyer is not in default under this Agreement, Seller
shall refrain from entering into any New Lease or Lease
Modification without the prior written consent of Buyer, as
described below, except as expressly provided in this
Section 5.1. After the Contingency Termination Date, any
Lease Modification or New Lease shall be subject to clause
(a) of this Section 5.1, and prior to signing any Lease
Modification or New Lease or, Seller shall submit the
proposed form of Lease Modification or New Lease to Buyer
for Buyer's approval, which approval may be withheld in
Buyer's sole and absolute discretion. Buyer shall notify
Seller in writing of Buyer's approval or disapproval of each
proposed Lease Modification or New Lease submitted to Buyer
within three (3) Business Days after Buyer's receipt
thereof. Buyer's failure to disapprove any Lease
Modification or New Lease in accordance with the procedure
and within the three (3) Business Day period specified in
this Section shall be deemed to constitute Buyer's approval
of such Lease Modification or New Lease. Any notice of
disapproval of a Lease Modification or New Lease by Buyer
shall set forth in detail Buyer's specific objections
thereto. Seller may submit a Lease Modification or New
Lease to Buyer for approval after Seller's execution
thereof, provided the New Lease or Lease Modification
contains appropriate conditions regarding Buyer's approval
of such Lease Modification or New Lease. In the event that
Seller enters into a New Lease approved by Buyer prior to
the Closing Date, Seller shall perform all of the landlord's
obligations in connection with the New Lease which are to be
performed prior to the Closing Date. Notwithstanding any
provision to the contrary, however, on the Closing Date,
Seller shall receive a credit for all sums expended by
Seller in connection with such performance. Additionally,
for the period of time on and after the Closing Date, Buyer
shall be obligated to perform all obligations, monetary and
otherwise, of the Seller under or in connection with such
New Lease, including payment of all tenant improvements and
broker's commissions except such broker's commissions with
respect to PM Realty.
5.2 Other Contracts. Seller shall refrain from entering
into or amending any contracts or other agreements regarding
the Property or any portion thereof (other than contracts or
amendments thereof entered into in the ordinary and usual
course of business which are cancelable by the owner of the
Property without penalty within thirty (30) days after
giving notice thereof).
5.3 Intentionally Deleted.
6. Delivery and Possession of Tangible Property. Seller shall
deliver possession of the Tangible Property to Buyer at the Close
of Escrow, subject to the rights of the Tenants under the Leases.
7. Commissions. Buyer and Seller each represent and warrant to
the other that except for the commissions due to The Xxxxxx
Company ("Seller's Broker") and CB Commercial ("Buyer's Broker"),
they are unaware of any commission, finder's fee or brokerage fee
arising out of the transactions contemplated by this Agreement.
Buyer and Seller shall indemnify and hold the other harmless from
and against any and all liabilities, claims, demands, damages,
costs and expenses, including, without limitation, reasonable
attorneys' fees and court costs, in connection with claims for
any such commissions, finders' fees or brokerage fees arising out
of the indemnifying party's conduct or the inaccuracy of the
foregoing representation and/or warranty of such indemnifying
party. Upon the Close of Escrow and Seller's receipt of the
Purchase Price (minus items properly charged to Seller, plus
items properly credited to Seller) from Escrow Holder, Seller
shall pay a commission ("Commission") to Seller's Broker outside
of Escrow pursuant to a written agreement between Seller and
Broker. Upon the Close of Escrow, Buyer shall pay a commission
to Buyer's Broker.
8. Damage or Destruction: Condemnation.
8.1 Uniform Act. This Agreement shall be governed by the
Uniform Vendor and Purchaser Risk Act as set forth in
Section 1662 of the California Civil Code ("Act") as
supplemented by this Section 8. For purposes of the Act,
(a) a taking by eminent domain of a portion of the Property
shall be deemed to affect a "material part" of the Property
if the estimated value of the portion of the Property taken
exceeds Five Hundred Thousand Dollars ($500,000) or if
Tenants can terminate their Leases because of such event,
and (b) the destruction of a "material part" of the Property
shall be deemed to mean an insured or uninsured casualty to
the Property following Buyer's inspection of the Property
and prior to the Close of Escrow having an estimated cost of
repair which equals or exceeds Five Hundred Thousand Dollars
($500,000) or that Tenants can terminate their leases
because of such event.
8.2 Definitions. The phrase "estimated value" shall mean
an estimate obtained from a M.A.I. appraiser, who has at
least five (5) years experience evaluating property located
in the County where the Real Property is located, similar in
nature and function to that of the Property, selected by
Seller and approved by Buyer, and the phrase "estimated cost
of repair shall" mean an estimate obtained from an
independent contractor selected by Seller and approved by
Buyer. Buyer shall not unreasonably withhold, condition or
delay Buyer's approval under this Section.
8.3 Notice; Credit to Buyer. Buyer shall have the right to
terminate this Agreement if all or a material part of the
Property is destroyed without fault of Buyer or a material
part of the Property is taken by eminent domain. Buyer
shall give written notice of Buyer's election to terminate
this Agreement under the Act within five (5) Business Days
after Buyer first learns of any damage to or condemnation of
the Property which entitles Buyer to terminate this
Agreement. If Buyer does not give such notice, then this
Agreement shall remain in effect and upon the Close of
Escrow, Seller shall assign to Buyer (a) any insurance
proceeds payable with respect to such damage; or the entire
award payable with respect to such condemnation proceeding,
whichever is applicable. If there is damage to the Real
Property as a result of an insured casualty, and this
Agreement remains in effect, Buyer shall receive a credit at
Close of Escrow in the amount of Seller's deductible. Buyer
shall receive no credit with respect to an uninsured
casualty.
9. Seller's Representations and Warranties. Except for any
breach of a representation or warranty set forth in this Section
9 which arises from and out of any matter disclosed in the
Disclosure Materials (as hereinafter defined) as to the
representations and warranties in Section 9.4 through Section
9.12 and Section 9.17, Seller represents and warrants to Buyer
that as of the date of this Agreement and as of the Closing Date:
9.1 Seller's Existence and Authority.
(a) Seller is duly organized, validly existing,
and in good standing under the laws of the state of its
formation. Seller is qualified to do business in, and
is in good standing under the laws of, the State of
California.
(b) Seller has the full power and authority to
execute, deliver and perform its obligations under this
Agreement, such execution, delivery and performance
have been duly authorized by all requisite action, and
the person executing this Agreement on behalf of Seller
has the authority to do so. Seller has full power to
execute, deliver and carry out the terms and provisions
of this Agreement and each of the other agreements,
instruments and documents herein required to be made or
delivered by Seller pursuant hereto, and has taken all
necessary action in connection with the execution,
delivery and performance of this Agreement and such
other agreements, instruments and documents. The
individuals executing this Agreement and all other
agreements, instruments and documents herein required
to be made or delivered by Seller pursuant hereto on
behalf of Seller are and shall be duly authorized to
sign the same on Seller's behalf and to bind Seller
thereto.
9.2 Valid Obligation. This Agreement constitutes a legal,
valid and binding obligation of Seller enforceable in
accordance with its terms, except as enforceability may be
limited by the application of bankruptcy, insolvency,
reorganization, moratorium or similar laws or by equitable
principles affecting creditors' rights generally or the
rights of buyers and sellers of real or personal property
generally.
9.3 No Violation of Contract; Consents. The execution,
delivery and performance of Seller's obligations under this
Agreement and the consummation of the transactions
contemplated hereby (i) will not result in a breach or
violation of any contract, commitment or restriction to
which Seller is a party or by which Seller or the Tangible
Property is bound; and (ii) do not require any consent,
approval or other authorization of any person, entity or
authority not previously obtained.
9.4 No Violations. To the best of Seller's knowledge,
Seller has not received any written notice that the Property
is in violation of any laws, statutes, codes, acts,
ordinances, orders, judgements, decrees, injunctions or
regulations of any governmental entity having jurisdiction
over the Property.
9.5 Legal Proceedings. To the best of Seller's knowledge,
except as expressly disclosed to Buyer on Exhibit J attached
hereto and made a part hereof, Seller has not been served
with any summons relating to any legal proceedings or
actions affecting the Property to Buyer at the Closing,
except for the Permitted Exceptions as defined in
Section 3.6.5(b).
9.6 Leases; Tenancies. To the best of Seller's knowledge,
there are no leases, tenancies and other rights of occupancy
or use for any portion of the Real Property under which any
other party has a right to occupy all or any part of the
Real Property in effect on the date of this Agreement except
as set forth on Exhibit K attached hereto and incorporated
herein for all purposes.
9.7 Material Contracts. To the best of Seller's knowledge,
Seller has made available for review by Buyer true, correct
and complete copies of all material documents and agreements
affecting the Property.
9.8 Condemnation. To the best of Seller's knowledge,
Seller has not received any written notice that any
condemnation or eminent domain proceeding affecting the Real
Property is pending.
9.9 Assessments. To the best of Seller's knowledge, except
as disclosed in the Title Report, Seller has not received
any written notice of any special assessment with respect to
the Real Property.
9.10 Section 1445(f) IRC. Seller is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal
Revenue Code.
9.11 Environmental Matters.
(a) Neither Seller, nor tenants who have leased
and occupied the Real Property, nor any other person or
entity, has during any period of Seller's ownership of
the Real Property caused there to exist on the Real
Property any hydrocarbon substances, polychlorinated
biphenyls, or any other hazardous or toxic substances,
wastes or materials (as determined under federal, state
or local law), asbestos or asbestos-bearing materials,
or any other environmental condition subject to legal
requirements for corrective action (collectively, any
"Environmental Matter"); and
(b) To the best of Seller's knowledge, there is no
Environmental Matter on or Environmental Report
relating to the Real Property which has not been
disclosed to Buyer by Seller or discovered by Buyer
through Buyer's due diligence.
9.12 Rent Roll. The rent roll submitted by Seller to Buyer
is true and correct.
9.13 Seller's Knowledge; Seller's Actual Possession. As
used in this Agreement, the phrase "to the best of Seller's
knowledge", or words of like import, means that the facts in
question are actually known (as opposed to imputed, inquiry
or constructive knowledge) to, and the phrase "Seller's
actual possession" means in the actual possession of, the
employee of Seller responsible for managing the Real
Property, based upon a review of files relating to the
Property that are in his possession, without any due
diligence or duty of inquiry. Seller shall have no duty of
investigation with respect to any representation made to the
best of its knowledge and shall not be charged with
"constructive", "inquiry", "imputed" or deemed knowledge.
Further, Seller's obligations to disclose matters "known to
Seller" or words of like import as used in this Agreement
shall be deemed breached only if Xxx Xxxxx had actual
knowledge (as opposed to imputed or constructive knowledge)
of the falsity of such matter not disclosed to Buyer, based
upon a review of files relating to the Property that are in
Seller's possession.
9.14 Seller shall obtain, during the Contingency Period, a
certification from its property management company in
connection with the Property to the effect that to the best
of its knowledge, all of Seller's representations and
warranties listed in Section 9.4 through Section 9.12 and
Section 9.17 are true and correct (the "Property Management
Certificate"). However, to the extent that any of the
foregoing representations and warranties are untrue or
incorrect, the Property Management Certificate shall set
forth such reasons therein. The disclosures made in the
Property Management Certificate shall be subject to the
qualifications in Section 9.13, except that the word
"Seller" shall be replaced with the words "Property Manager"
and the name "Xxx Xxxxx" shall be replaced with the name
Xxxxxx Xxxxxx. Notwithstanding any provision to the
contrary, the disclosures in the Property Management
Certificate shall not be deemed representations and
warranties of Seller and Seller shall have no responsibility
to Buyer in the event that any such disclosure is false.
9.15 Definition of "Disclosure Materials". As used herein,
the term "Disclosure Materials" shall mean all written
disclosure, including the Property Management Certificate,
submitted by Seller to Buyer prior to the Contingency
Termination Date.
9.16 Survival of Seller's Representations and Warranties.
The representations and warranties in this Section 9 shall
survive the Close of Escrow but shall terminate (and no
Claim may be instituted with respect thereto) twelve (12)
months after the Closing Date.
9.17 Brokers. There are no brokers' commissions or
finder's fees currently due and payable in connection with
the Leases, any extension of the Leases, or any expansion of
any existing premises being leased pursuant to the leases,
except with respect to the Healthcare Partners Lease, New
Leases or Lease Modifications.
10. Buyer's Representations and Warranties. Buyer represents
and warrants to Seller that as of the date of this Agreement and
as of the Closing Date:
10.1 Buyer's Existence and Authority.
(1) If Buyer is other than an individual, Buyer is
duly organized, validly existing, and in good standing
under the laws of the state of its formation. Buyer is
qualified to do business in, and is in good standing
under the laws of, the State of California.
(2) Buyer has the full power and authority to
execute, deliver and perform its obligations under this
Agreement, such execution, delivery and performance
have been duly authorized by all requisite action, and
the person executing this Agreement on behalf of Buyer
has the authority to do so. Buyer has full power to
execute, deliver and carry out the terms and provisions
of this Agreement and each of the other agreements,
instruments and documents herein required to be made or
delivered by Buyer pursuant hereto, and has taken all
necessary action in connection with the execution,
delivery and performance of this Agreement and such
other agreements, instruments and documents. The
individuals executing this Agreement and all other
agreements, instruments and documents herein required
to be made or delivered by Buyer pursuant hereto on
behalf of Buyer are and shall be duly authorized to
sign the same on Buyer's behalf and to bind Buyer
thereto;
10.2 Valid Obligation. This Agreement constitutes a legal,
valid and binding obligation of Buyer enforceable in
accordance with its terms, except as enforceability may be
limited by the application of bankruptcy, insolvency,
reorganization, moratorium or similar laws or by equitable
principles affecting creditors' rights generally or the
rights of buyers and sellers of real or personal property
generally.
10.3 No Violation of Contract; Consents. The execution,
delivery and performance of Buyer's obligations under this
Agreement and the consummation of the transactions
contemplated hereby (i) will not result in a breach or
violation of any contract, commitment or restriction to
which Buyer is a party or by which Buyer is bound; and (ii)
do not require any consent, approval or other authorization
of any person, entity or authority not previously obtained.
11. Default.
11.1 Liquidated Damages - Deposit.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENT WITHIN
ONE (1) DAY AFTER THE CONTINGENCY TERMINATION DATE AND IF
THE SALE OF THE PROPERTY TO BUYER IS NOT CONSUMMATED FOR ANY
REASON OTHER THAN SELLER'S DEFAULT UNDER THE AGREEMENT OR A
FAILURE OF A CONDITION FOR BUYER'S BENEFIT SET FORTH HEREIN,
SELLER SHALL BE ENTITLED AS ITS SOLE AND EXCLUSIVE REMEDY AT
LAW OR IN EQUITY TO RETAIN THE DEPOSIT AND ALL INTEREST
ACCRUED THEREON AS SELLER'S LIQUIDATED DAMAGES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENT WITHIN
ONE (1) DAY AFTER THE EXPIRATION OF THE CONTINGENCY PERIOD
AND IF THE SALE OF THE PROPERTY TO BUYER IS NOT CONSUMMATED
DUE TO SELLER'S DEFAULT UNDER THIS AGREEMENT, BUYER SHALL BE
ENTITLED TO A RETURN OF THE DEPOSIT PLUS ALL INTEREST
ACCRUED THEREON. THE PARTIES AGREE THAT IT WOULD BE
IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE
ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S
FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO
THIS AGREEMENT, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS
OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES
PROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE
ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT
OF SUCH DEFAULT OF BUYER AND FAILURE PRIOR TO THE CLOSE OF
ESCROW, PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT
WAIVE OR AFFECT ANY PARTY'S RIGHTS OR OBLIGATIONS UNDER
SECTIONS 3.3.1(d), 7, 27 AND/OR 32 OF THIS AGREEMENT. THE
PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED
DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN
THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369,
BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO THE
PARTY ENTITLED THERETO PURSUANT TO CALIFORNIA CIVIL CODE
SECTIONS 1671, 1676, AND 1677. NOTWITHSTANDING THE
FOREGOING, IF BUYER WRONGFULLY INTERFERES WITH OR MAKES ANY
ATTEMPT TO WRONGFULLY INTERFERE WITH SELLER'S RECOVERING THE
DEPOSIT HELD BY ESCROW HOLDER, INCLUDING, WITHOUT
LIMITATION, GIVING ANY NOTICE OR INSTRUCTIONS TO ESCROW
HOLDER NOT TO DELIVER THE DEPOSIT TO SELLER, SELLER SHALL
HAVE THE RIGHT TO ELECT TO RECOVER THE GREATER OF ITS ACTUAL
DAMAGES OR THE LIQUIDATED DAMAGES BY GIVING WRITTEN NOTICE
TO BUYER AND IN ADDITION SHALL HAVE ALL OTHER RIGHTS AND
REMEDIES AGAINST BUYER PROVIDED AT LAW AND IN EQUITY, AND
SHALL HAVE THE RIGHT TO REQUIRE THAT BUYER SPECIFICALLY
PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT. THE
PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE
THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION
CONTAINED IN THIS SECTION.
SELLER'S INITIALS: /s/ RP BUYER'S INITIALS: /s/ VJC
11.2 Intentionally Deleted
11.3 No Contesting Liquidated Damages. As material
consideration to each party's agreement to the liquidated
damages provisions stated above, each party hereby agrees to
waive any and all rights whatsoever to contest the validity
of the liquidated damage provisions for any reason
whatsoever, including, but not limited to, that such
provision was unreasonable under circumstances existing at
the time this Agreement was made.
11.4 Remedies. If either party breaches its obligations
hereunder, then the other party may, without terminating
this Agreement, suspend performance until such breach is
cured. If Buyer breaches this Agreement, Seller's sole
remedy shall be to terminate this Agreement and cause Escrow
Holder to deliver the Deposit (less Seller's share of any
fees or expenses payable to or through Escrow Holder as
provided herein) as liquidated damages. If Seller breaches
its obligations hereunder, Buyer's remedies shall be to
terminate this Agreement and receive a refund of the Deposit
(less Buyer's share of any fees or expenses payable to or
through Escrow Holder as provided herein) and either (i)
exercise its remedies at law; provided, however, that, Buyer
(x) shall not seek nor be entitled to receive damages in
connection with any action under or with respect to this
Agreement in excess of $750,000; and (y) agrees that Seller
shall not be responsible for any consequential damages
(including without limitation, lost profits) arising from
any breach hereunder or tort (excluding a tort claim based
upon Seller's willful misconduct or gross negligence), or
any other wrong or claim arising under this Agreement; or
(ii) solely in the event of the willful breach by Seller of
its obligations under this Agreement, such specific
performance of Seller's obligations under this Agreement if
(x) Buyer shall have fully performed all obligations of
Buyer under this Agreement, except that with respect to
depositing the balance of the purchase price, Buyer shall
have evidenced to Seller's reasonable satisfaction that
Buyer is ready, willing and able to timely deposit said
funds in Escrow; and (y) the action shall be commenced, and
service of process upon Seller made, not later than forty-
five (45) days after Seller's default; provided, however,
that, notwithstanding anything to the contrary herein, in no
event may Seller be required to perform its obligations
hereunder if the expense of such performance would exceed
$750,000. The foregoing limitations on remedies available
to Buyer and Seller shall not apply with respect to any
breach by Buyer or Seller of their respective obligations
under this Agreement which are to be performed after the
Close of Escrow, including without limitation, obligations
set forth in Section 35 hereof. With respect to any such
breach, the parties shall have all of their respective
rights and remedies arising at law or in equity. The
obligations of Seller under this Agreement shall be without
recourse to the assets of any officer, shareholder,
director, or employee of Seller or any parent company,
affiliate or subsidiary of Seller.
12. Waiver of Trial by Jury. Seller and Buyer, to the extent
they may legally do so, hereby expressly waive any right to trial
by jury of any claim, demand, action, cause of action, or
proceeding arising under or with respect to this Agreement, or in
any way connected with, or related to, or incidental to, the
dealings of the parties hereto with respect to this Agreement or
the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and irrespective of whether
sounding in contract, tort, or otherwise. To the extent they may
legally do so, Seller and Buyer hereby agree that any such claim,
demand, action, cause of action, or proceeding shall be decided
by a court trial without a jury and that any party hereto may
file an original counterpart or a copy of this section with any
court as written evidence of the consent of the other party or
parties hereto to waiver of its or their right to trial by jury.
13. Attorney's Fees. If any action or proceeding or arbitration
is commenced by either party to enforce their rights under this
Agreement or to collect damages as a result of the breach of any
of the provisions of this Agreement, the prevailing party in such
action or proceeding or arbitration, including any bankruptcy,
insolvency or appellate proceedings, shall be entitled to recover
all reasonable costs and expenses, including, without limitation,
reasonable attorneys' fees and court costs, in addition to any
other relief awarded by the court or arbitrator.
14. Notices. All notices, demands, approvals, and other
communications provided for in this Agreement shall be in writing
and shall be effective upon the earliest of the following to
occur: (a) when transmitted by facsimile to the recipient; or (b)
when delivered to the recipient; or (c) three (3) Business Days
after deposited in a sealed envelope in the United States mail,
postage prepaid by registered or certified mail, return receipt
requested, addressed to the recipient as set forth below. All
notices to Seller shall be sent to Seller's Address. All notices
to Buyer shall be sent to Buyer's Address. All notices to Escrow
Holder shall be sent to Escrow Holder's Address. If the date on
which any notice to be given hereunder falls on a Saturday,
Sunday or legal holiday, then such date shall automatically be
extended to the next Business Day immediately following such
Saturday, Sunday or legal holiday. The foregoing addresses may
be changed by written notice given in accordance with this
Section.
15. Amendment; Complete Agreement. All amendments and
supplements to this Agreement must be in writing and executed by
Buyer and Seller. This Agreement contains the entire agreement
and understanding between Buyer and Seller concerning the subject
matter of this Agreement and supersedes all prior agreements,
terms, understandings, conditions, representations and
warranties, whether written or oral, made by Buyer or Seller
concerning the Property or the other matters which are the
subject of this Agreement. This Agreement has been drafted
through a joint effort of the parties and their counsel and,
therefore, shall not be construed in favor of or against either
of the parties.
16. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of
California.
17. Severability. If any provision of this Agreement or
application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this
Agreement (including the application of such provision to persons
or circumstances other than those to which it is held invalid or
unenforceable) shall not be affected thereby, and each provision
of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
18. Counterparts, Headings and Defined Terms. This Agreement
may be executed in counterparts, each of which shall be an
original, but all of which together shall constitute one
agreement. The headings to sections of this Agreement are for
convenient reference only and shall not be used in interpreting
this Agreement. Unless expressly stated to the contrary, all
references to "days" in this Agreement mean calendar days, and
"Business Days" mean calendar days excluding Saturdays, Sundays,
and California state bank holidays.
19. Time of the Essence. Time is of the essence of this
Agreement.
20. Waiver. No waiver by Buyer or Seller of any of the terms or
conditions of this Agreement or any of their respective rights
under this Agreement shall be effective unless such waiver is in
writing and signed by the party charged with the waiver.
21. Third Parties. This Agreement is entered into for the sole
benefit of Buyer and Seller and their respective permitted
successors and assigns. No party other than Buyer and Seller and
such permitted successors and assigns shall have any right of
action under or rights or remedies by reason of this Agreement.
22. Additional Documents. Each party agrees to perform any
further acts and to execute and deliver such further documents
which may be reasonably necessary to carry out the terms of this
Agreement.
23. Independent Counsel. Buyer and Seller each acknowledge
that: (i) they have been represented by independent counsel in
connection with this Agreement; (ii) they have executed this
Agreement with the advice of such counsel; and (iii) this
Agreement is the result of negotiations between the parties
hereto and the advice and assistance of their respective counsel.
The fact that this Agreement was prepared by Seller's counsel as
a matter of convenience shall have no import or significance.
Any uncertainty or ambiguity in this Agreement shall not be
construed against Seller because Seller's counsel prepared this
Agreement in its final form.
24. Condition of Property. Buyer represents and warrants that,
as specified in Section 3.3.1 hereof, Buyer has, or shall have
inspected and conducted tests and studies of the Property, and
that Buyer is familiar with the general condition of the
Property. Buyer understands and acknowledges that the Property
may be subject to earthquake, fire, floods, erosion, high water
table, dangerous underground soil conditions, hazardous materials
and similar occurrences that may alter its condition or affect
its suitability for any proposed use. Except for Buyer's right
to terminate this Agreement in accordance with the terms of
Section 8.3 hereof and Buyer's remedies in case of a breach of
any representation or warranty set forth in Section 9 hereof,
Seller shall have no responsibility or liability with respect to
any such occurrence. Except for the representations and
warranties set forth in Section 9 hereof, Buyer represents and
warrants that Buyer is acting, and will act only, upon
information obtained by Buyer directly from Buyer's own
inspection of the Property. Notwithstanding anything to the
contrary contained in this Agreement, the suitability or lack of
suitability of the Property for any proposed or intended use, or
availability or lack of availability of (a) permits or approvals
of governmental or regulatory authorities, or (b) easements,
licenses or other rights with respect to any such proposed or
intended use of the Property shall not affect the rights or
obligations of the Buyer hereunder; provided, however, that Buyer
shall maintain its right to terminate this Agreement as set forth
in Section 3.5 hereof.
25. No Warranties. Except for the representations and
warranties set forth in Section 9 hereof, the Property is
purchased and sold "AS IS". The Purchase Price and the terms and
conditions set forth herein are the result of arm's-length
bargaining between parties familiar with transactions of this
kind, and said price, terms and conditions reflect the fact that
Buyer shall have the benefit of, and is relying upon, except for
the representations and warranties set forth in Section 9 hereof,
no statements, representations or warranties whatsoever, made by
or enforceable against Seller relating to the condition,
operations, dimensions, descriptions, soil condition,
suitability, compliance or lack of compliance with any state,
federal, county or local law, ordinance, order, permit or
regulation, or any other attribute or matter of or relating to
the Property, including, without limitation, (i) the structural
integrity of the Improvements, (ii) the conformity of the
Improvements to any plans or specifications, including any plans
and specifications that may have been or may be provided to
Buyer, (iii) the conformity of the Property to past, current or
future applicable zoning or building code requirements, (iv) the
existence of soil instability, past soil repairs, soil additions
or conditions of soil fill, or susceptibility to landslides, (v)
the sufficiency of any undershoring, (vi) the sufficiency of any
drainage, (vii) whether the Property is located wholly or
partially in a flood plain or a flood hazard boundary or similar
area, (viii) the existence or non-existence of toxic or hazardous
wastes or materials or friable asbestos or asbestos containing
construction materials in, on or about the Property, (ix) any
other matter affecting the stability or integrity of the land, or
any buildings or improvements situated on or as part of the
Property, (xi) the fitness or suitability of the Property for
Buyer's intended use, (xii) the potential further development of
the Property, (xiii) the existence of vested land use, zoning or
building entitlements affecting the Property. Buyer represents,
warrants and covenants to Seller that, except for Seller's
express representations and warranties specified in this
Agreement, Buyer is relying solely upon Buyer's own investigation
of the Property. If Seller obtains or has obtained the services,
opinions or work product of surveyors, architects, engineers,
Escrow Holder, governmental authorities or any other person or
entity with respect to the Property, Buyer and Seller agree that
Seller shall do so only for the convenience of both parties, and
except to the extent of any breach by Seller of any of its
representations set forth in Section 9 hereof, the reliance by
Buyer upon any such services, opinions or work product shall not
create or give rise to any liability of or against Seller. Buyer
covenants, represents and warrants that as of the Closing Date,
Buyer shall have reviewed and approved the Environmental Reports.
The provisions of this Section 25 shall not be deemed to vitiate
the effect of the representations and warranties set forth in
Section 9 hereof.
26. Governmental Approvals. Nothing contained in this Agreement
shall be construed as authorizing Buyer 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 Buyer agrees
not to do so without Seller's prior written approval, which
approval may be withheld in Seller's sole and absolute
discretion. Buyer 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 Seller, which approval
Seller may withhold in Seller's sole discretion. Buyer's
obligation to purchase the Property shall not be subject to or
conditioned upon Buyer's obtaining any variances, zoning
amendments, subdivision maps, lot line adjustment or other
discretionary governmental act, approval or permit.
27. Release and Covenant Not to Xxx.
27.1 Release. Buyer shall rely solely upon Buyer's own
inspection of the Property in determining the Property's
physical condition. Buyer waives Buyer's right to recover
from and hereby releases Seller, Seller's parent company,
affiliates and subsidiaries, and their respective directors,
officers, participants, employees and agents (the "Seller
Parties"), any and all damages, losses, liabilities, costs
or expenses whatsoever, and claims therefor, whether direct
or indirect, known or unknown, or foreseen or unforeseen,
which may arise from or be related to (i) the physical
condition of the Property and/or (ii) the Property's
compliance, or lack of compliance with any federal, state or
local laws or regulations applicable thereto, and all
regulations, rulings, and orders promulgated or adopted
pursuant thereto, including, without limitation, any and all
damages, losses, liabilities, costs or expenses whatsoever,
and claims therefor, whether direct or indirect, known or
unknown, or foreseen or unforeseen, which may arise from or
be related to any matter as to which Shell agreed to
indemnify, defend and hold harmless Buyer pursuant to the
Shell Indemnity, or any obligation of Shell to remediate
Environmental Matters set forth in the Shell Indemnity or
otherwise to perform covenants to, or for the account or
benefit of, Buyer as set forth in the Shell Indemnity,
without regard to whether or not Shell actually indemnifies,
defends, holds harmless, remediates or otherwise performs
such obligations, ("Shell Environmental Matters"), but
excluding any Environmental Matters, other than the Shell
Environmental Matters, arising on, under or about the Real
Property prior to the time that Seller acquired fee title to
the Real Property; provided, however, that such release
shall not be deemed to prevent Buyer from exercising any
rights or remedies based on (a) a breach of Seller's
representations set forth in Sections 9.4 through 9.12 and
9.17, (b) any failure by Seller to perform Seller's
covenants set forth in this Agreement which are to be
performed after the Close of Escrow and (c) any failure by
Seller to perform any indemnification obligations of Seller
under this Agreement.
27.2 Covenant Not to Xxx. Buyer hereby covenants not to
undertake any legal, equitable, administrative or other
proceeding against any of the Seller Parties based on the
presence of any Environmental Matter on the Real Property,
including, without limitation, all Shell Environmental
Matters, but excluding any Environmental Matters, other than
the Shell Environmental Matters, arising on, under or about
the Real Property prior to the time that Seller acquired fee
title to the Real Property; provided, however, that such
covenant shall not be deemed to prevent Buyer from
exercising any rights or remedies based on (a) a breach of
Seller's representations set forth in Sections 9.4 through
9.12 and 9.17, (b) any failure by Seller to perform Seller's
covenants set forth in this Agreement which are to be
performed after the Close of Escrow and (c) any failure by
Seller to perform any indemnification obligations of Seller
under this Agreement.
27.3 Waiver. Buyer expressly waives the benefits of
Section 1542 of the California Civil Code, which provides as
follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THE
CREDITOR DOES NOT KNOW TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM
MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE
DEBTOR.
In this connection and to the extent permitted by law, Buyer
hereby agrees, represents and warrants that Buyer realizes
and acknowledges that factual matters now unknown to it may
have given or may hereafter give rise to causes of action,
claims, demands, debts, controversies, damages, costs,
losses and expenses which are presently unknown,
unanticipated and unsuspected, and Buyer further agrees,
represents and warrants that the waivers and releases herein
have been negotiated and agreed upon in light of that
realization and that Buyer nevertheless hereby intends to
release, discharge and acquit Seller from any such unknown
causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which might in any way
be included as a material portion of the consideration given
to Seller by Buyer in exchange for Seller's performance
hereunder, including, without limitation, all Shell
Environmental Matters, but excluding any Environmental
Matters, other than the Shell Environmental Matters, arising
on, under or about the Real Property prior to the time that
Seller acquired fee title to the Real Property; provided,
however, that this Section 27.3 shall not act to prevent
Buyer from exercising any rights or remedies based on (a) a
breach of Seller's representations set forth in Sections 9.4
through 9.12 and 9.17, (b) any failure by Seller to perform
Seller's covenants set forth in this Agreement which are to
be performed after the Close of Escrow and (c) any failure
by Seller to perform any indemnification obligations of
Seller under this Agreement.
27.4 Remaking of Release, Covenant Not to Xxx and Waiver.
The release, covenant not to xxx and waiver set forth in
Section 27.1 through Section 27.3 shall be deemed
automatically remade and regiven as of the Closing Date with
no necessity for the execution or delivery of additional
documents by either Seller or Buyer.
27.5 Consideration. Seller has given Buyer material
concessions regarding this transaction in exchange for Buyer
agreeing to the provisions of this Section 27. Seller and
Buyer have each initialed this Section 27 to further
indicate their awareness and acceptance of each and every
provision hereof.
SELLER'S INITIALS:/s/ RP BUYER'S INITIALS:/s/ VJC
28. Assignment. Buyer shall neither assign its rights nor
delegate its obligations hereunder without obtaining Seller's
prior written consent, which consent may be granted or withheld
by Seller in its discretion. In no event shall any such
assignment relieve Buyer from its obligations under this
Agreement. Any other purported or attempted assignment or
delegation without obtaining Seller's prior written consent shall
be void and of no effect.
29. Successors and Assigns. Subject to the restrictions on
transfer set forth in Section 28, this Agreement shall be binding
upon and inure to the benefits of the heirs, successors and
assigns of the parties hereto. In no event shall Buyer have any
right to delay or postpone the Closing to create a partnership,
corporation or other form of business association or to obtain
financing to acquire title to the Property or to coordinate with
any other sale, transfer, exchange or conveyance.
30. Exhibits. Each reference to an exhibit in this Agreement
shall mean the exhibit attached to this Agreement. Each such
exhibit is incorporated herein by this reference.
31. No Reservation of Property. The preparation and/or delivery
of unsigned drafts of this Agreement shall not create any legally
binding rights in the Property and/or obligations of the parties,
and Buyer and Seller acknowledge that this Agreement shall be of
no effect until it is duly executed by Buyer and Seller. Buyer
understands and agrees that Seller shall have the right to
continue to market the Property and/or to negotiate with other
potential purchasers of the Property until the expiration of the
Contingency Period and the satisfaction or waiver in writing of
all conditions to the obligations of Buyer under this Agreement,
however, Seller shall not enter into a contract to sell the
Property to a third party in derogation of this Agreement unless
and until this Agreement terminates.
32. Duty of Confidentiality. Buyer and Seller covenant,
represent and warrant that each shall keep all information and/or
reports obtained from the other, or related to or connected with
the Property, the other party, or this transaction, confidential
and will not disclose any such information to any person or
entity without obtaining the prior written consent of the other
party, which consent shall not be unreasonably withheld,
conditioned or delayed. If this Agreement is terminated for any
reason, Buyer shall promptly return to Seller all of the
documents and information theretofore delivered to Buyer by
Seller or obtained by Buyer in connection with its investigation
of the Property. At any time prior to the Closing Date, or at
any time if this Agreement is terminated, Buyer shall not deliver
any of the documents and information theretofore delivered to
Buyer by Seller or obtained by Buyer in connection with its
investigation of the Property, or otherwise knowingly transmit
any of the information contained in such documents to any third
party except Buyer's counsel or other advisors, employees,
consultants and agents, provided such individuals agree to be
bound to the same burdens of confidentiality and nondisclosure as
Buyer, or except in response to lawful process or subpoena or
other valid order of a court of competent jurisdiction. Buyer's
or Seller's obligations set forth herein shall survive the Close
of Escrow and shall not be merged with the Deed, and shall
survive the termination of this Agreement and Escrow prior to the
Close of Escrow.
33. Environmental Disclosure. Buyer acknowledges that Seller
has informed Buyer that there are Environmental Matters located
on, under or about the Property, all as more particularly
described in the Environmental Reports. Seller has made, or will
make, the Environmental Reports available to Buyer (but without
warranty), and this paragraph and the Environmental Reports shall
constitute notice and disclosure as required under California
Health and Safety Code Sections 25359.7, 25915.5 and 25917, as
applicable with respect to the presence of the Environmental
Matters disclosed in the Environmental Reports. As required by
California Health and Safety Code Section 25259.7 and any other
provisions of State law, Seller shall notify Buyer, and Buyer
shall notify Seller, if either knows or has reasonable cause to
believe that any release of Environmental Matters has come to be
located on or beneath the Real Property.
34. Covenants of Seller. Except as otherwise provided herein,
the following covenants shall survive the Closing Date and shall
not be deemed merged in the grant deed, but shall remain in full
force and effect until one (1) year after the Closing Date, at
which time the following covenants shall terminate:
(a) Keys and Document Delivery. Seller shall deliver
all keys in Seller's or Seller's property manager's actual
possession. Seller shall deliver any and all documents in
Seller's actual possession, or in the actual possession of
Seller's property manager, that bind the Property or
materially affect its use, provided such documents are not
confidential, proprietary or privileged. At any time, and
from time to time after the Closing Date, upon the
reasonable request of Buyer, and without payment of further
consideration to the Seller, other than reimbursement for
Seller's out-of-pocket expenses, Seller will cooperate with
Buyer to make available additional documents in connection
with the Property that are not confidential, proprietary or
privileged; provided that Seller shall incur no liability
whatsoever with respect to any third parties by virtue of
such cooperation.
(b) Material Changes. Seller shall notify Buyer promptly
upon becoming aware of any material changes in the condition
of the Property or the condition of Tenants in the Property.
(c) Monetary Liens. Seller shall remove or obtain a bond
over liens on the Property securing obligations of Seller to
pay money, which obligations arose after the date, and are
not shown, on the PTR such that the Title Policy to be
issued pursuant to Section 3.6.5 will not show such liens.
(d) Property Management and Operation. Seller shall
maintain the operation of the Property in a good and
business-like manner. Seller shall provide all services and
operate, manage and maintain the Property (including
mechanical equipment of every kind used in the operation
thereof) in such a manner that the Property shall be in the
same condition on the Closing Date as on the date of this
Agreement, ordinary wear and tear excepted. Without
limiting the foregoing, Seller shall perform all of its
material obligations under the Leases and the Service
Contracts and shall terminate the management agreement and
leasing agreement with PM Realty at the Close of Escrow.
(e) Compliance with Laws. Seller shall comply with all
governmental regulations affecting the Property.
(f) Actions Pending. Seller shall notify Buyer promptly of
any lawsuits, condemnation proceedings, rezoning, or other
governmental order or action thereof affecting the Property
of which Seller has actual knowledge.
(g) Insurance Policies. Seller shall maintain in full
force and effect all existing insurance policies through and
including the Closing Date.
(h) Post-Closing Financial Records. As soon as reasonably
practicable following the Closing Date, Seller shall deliver
to Buyer the following: (a) a final income statement through
the Closing Date, (b) a final cumulative general ledger
through the Closing Date, and (c) a final aged delinquency
listing, including all security deposits received by Seller.
(i) Audit. Seller agrees that during the Contingency
Period, Buyer may conduct an audit of the revenues and
expenses in connection with the Property for the period
commencing January 1, 1996 and ending on the Contingency
Termination Date. Seller shall cooperate with Buyer in
Buyer's efforts to conduct the audit and shall provide Buyer
with such information, in Seller's or Seller's property
manager's possession, reasonably required by Buyer to
conduct the audit.
35. Assumption of Liabilities; Indemnity.
(a) [Intentionally Deleted]
(b) Indemnity of Seller. In addition to such remedies as
are specifically provided in, and subject to the conditions
and limitations of, this Agreement, Seller shall indemnify,
defend and hold Buyer harmless from and against any Loss
incurred by Buyer in respect of, arising out of or involving
a Third Party Claim (as defined in Section 35(d)(i)) as a
result of a material failure by Seller to retain and duly
perform and discharge all of the Excluded Liabilities.
(c) Indemnity of Buyer. In addition to such remedies as
are specifically provided in, and subject to the conditions
and limitations of this Agreement, Buyer shall indemnify,
defend and hold Seller harmless from and against any Loss
incurred by Seller in respect of, arising out of or
involving a Third Party Claim as a result of a material
failure by Buyer, after the Closing, to assume and duly
perform and discharge all of the Assumed Liabilities.
(d) Procedure for Indemnification.
(i) For any party seeking indemnification from the
other under this Section 35 (such party seeking
indemnification being hereinafter referred to as the
"Indemnified Party") to be entitled to any such
indemnification in respect of, arising out of or
involving a legal proceeding, counterclaim or cross
claim instituted by any third party against the
Indemnified Party (a "Third Party Claim"), the
Indemnified Party shall give the party from whom
indemnification is sought (such party from whom
indemnification is sought being hereinafter referred to
as the "Indemnifying Party"), written notice of such
Third Party Claim within ten (10) Business Days after
written notice of the commencement of such proceedings.
Failure by the Indemnified Party to give such notice
shall not result in a waiver by the Indemnified Party
of any right to be indemnified with respect to such
Legal Proceeding so long as the Indemnifying Party has
not been prejudiced by the failure to give timely
notice.
(ii) If the Indemnified Party is entitled to
indemnification pursuant to Section 35(d)(i), the
Indemnifying Party shall defend the Indemnified Party
against such Third Party Claim in such manner as the
Indemnifying Party reasonably deems appropriate, the
Indemnifying Party shall pay the costs of such defense,
including reasonable attorneys' fees and expenses and
witness fees, and the Indemnifying Party may settle
such Third Party Claim on such terms as it deems
appropriate without the necessity of obtaining the
consent of the Indemnified Party; provided, however,
that any such settlement shall include the complete
release of the Indemnified Party, and if no settlement
of such Third Party Claim is made, the Indemnifying
Party shall promptly pay or reimburse the Indemnified
Party for the amount of any judgment rendered with
respect to such Third Party Claim.
(iii) If the Indemnifying Party is unable to
defend the Indemnified Party against a Third Party
claim due to a conflict, of if the Indemnified Party
chooses to do so, the Indemnified Party may secure its
own legal counsel to defend it against the Third Party
Claim at the sole cost and expense of the Indemnified
Party.
(iv) Notwithstanding any provision to the contrary
in this Section 35, before Buyer shall be entitled to
indemnification with respect to any claim by Buyer of
Seller's breach of environmental representations set
forth in Section 9.11 hereof, Buyer must establish that
Seller, its agents or employees, or tenants who leased
and occupied the Real Property during any period of
Seller's ownership of the Real Property, such tenants'
agents or employees or any other party or entity,
caused there to exist Environmental Matters on the Real
Property, which Environmental Matters have not been
disclosed to Buyer by Seller or discovered by Buyer
through Buyer's due diligence performed prior to the
Closing Date.
(e) Survival. The indemnification obligations of each of
the parties under this Section 35 shall survive the Close of
Escrow. If a remedy for a breach of any obligation under
this Agreement is also provided for in any other provision
of this Agreement, such other provision shall control and
the provisions of this Section 35 shall not apply to such
breach.
36. Acknowledgments. Buyer and Seller acknowledge the following:
(a) Ralphs will vacate the building at the expiration of the
lease term;
(b) The utility tax surcharge will result in higher
annual operating expenses than previously reported;
(c) Buyer has assumed a commencement date of August 15,
1997 for the Healthcare Partners lease;
(d) Xxxxxx and Brooke's expansion rights impact
approximately 5,000 square feet through December 1999;
(e) No value can be assigned to future development rights of
the Property;
(f) HRC, Inc. has vacated the Property;
(g) International Network Services has the right to
cancel its lease effective September, 1999;
(h) Infonet Services has the right to cancel its lease
effective April, 1999; and
(i) Right Management has two months of free rent in
November and December of 1997.
IN WITNESS WHEREOF, Buyer and Seller do hereby execute this
Agreement as of the date first written above.
BUYER:
ARDEN REALTY LIMITED PARTNERSHIP, a
Maryland limited partnership
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Its: President and COO
SELLER:
NEW YORK LIFE INSURANCE COMPANY, a New York
mutual insurance company
By:/s/ Xxx X. Xxxxx
Xxx X. Xxxxx
Its:Assistant Vice President
Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and
accepts the instructions contained therein.
CHICAGO TITLE INSURANCE COMPANY
By: X.X. Xxxxxx-Sates
Its:Sr. Escrow Officer
