CONTRIBUTION AGREEMENT
CONTINENTAL GRAND PLAZA
(Project Name)
000 Xxxxxxxxxxx Xxxxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
(Address)
BASIC TERMS
Date: March 30, 1998
Contributor: Highridge-Apollo Grand Plaza, L.P.
a California limited partnership, or its
constituent (direct and indirect through
tiered entities) partners who qualify as
"accredited investors" (but not more than
10).
OP: Arden Realty Limited Partnership,
a Maryland limited partnership
Property: The real estate described on Exhibit A,
together with all improvements thereon and
all personal property used in the operation
of the Property.
Consideration: $47,500,000 (Adjusted Payment Amount plus the
amount of all Scheduled Liabilities).
Adjusted Payment Amount: $47,500,000 reduced by (1) all existing
loans and liabilities to which the Property
is subject plus the amount of Contributor's
other unsecured indebtedness with respect to
the Property, all to the extent listed on
Exhibit D (collectively, the "Scheduled
Liabilities") and (2) Contributor's portion
of all costs and expenses associated with the
transactions contemplated hereby plus (or
minus) Contributor's adjustments and
prorations to be credited (or debited) to OP
pursuant to this Agreement.
Contribution Value: Adjusted Payment Amount (approximately
$300,000) delivered in the form of OP Units
at Closing.
Deposit: $1,000,000 upon the Effective Date
Due Diligence Period: Ends on the Effective Date.
Due Diligence Documents: The documents listed on Exhibit C.
Rent Roll: The list of tenants and the term and terms of
each lease as set forth on Exhibit B.
Scheduled Liabilities: The liabilities listed on Exhibit D.
Service Contracts: The service agreements listed on Exhibit D.
Closing: April 21, 1998
Closing Costs: Each party is responsible for paying the
legal fees of its counsel. Contributor shall
be responsible for the cost of the CLTA
portion of an owner's title policy in the
amount of the Consideration and satisfying
the requirements of this Agreement, the cost
of any requisite recording costs including
all documentary transfer taxes and all
brokerage/finder's fees. OP shall be
responsible for any additional costs
associated with title insurance including any
costs associated with obtaining an updated
ALTA survey covering the Property and for
payment of the costs of its tests and
inspections. Each party shall be responsible
for paying any other fees, costs, and
expenses identified herein as being the
responsibility of such party.
OP's Notice Address: Arden Realty Limited Partnership
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000 Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxx, Xxxxxxxxx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 310-201-4746
Contributor's
Notice Address: Summit Commercial Properties, Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxx
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
Title Company: Fidelity National Title Company
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxx, XX 00000
Attention: Xxxx Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Title Order No. 62707
Contributor's Broker: Xxxxxxx & Wakefield, Inc.
000 Xxxx 000xx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx Silk / Xxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Escrow Agent: Commerce Escrow Company
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
Effective Date: This Agreement shall be effective on the date
the OP receives a fully executed original of
this Agreement ("Effective Date").
ARTICLE I
1.1 Basic Terms. Each capitalized term used but not defined
below, shall have the meaning set forth in the Basic Terms. If a
conflict exists between the Basic Terms and the provisions below,
the provisions below will control.
1.2 Contribution. Subject to the terms of this Contribution
Agreement (the "Agreement"), Contributor agrees to contribute to
OP, and OP agrees to accept from Contributor, the Property for the
Consideration which shall be paid at Closing, subject to adjustment
as otherwise provided herein, as follows:
(a) OP Units. At Contributor's direction, OP shall
issue to the partners of Contributor or to their partners or
members, as directed by Contributor ("Unit Holders"), provided
there are no more than an aggregate of ten (10) such Unit Holders
and each qualifies as an "Approved Investor," units of limited
partnership interest in OP (the "OP Units") having a value equal to
the Adjusted Payment Amount, with the value and number of OP Units
to be issued described in Subsection (b) below. If such direction
is not made, the OP Units having a value equal to the Adjusted
Payment Amount shall be issued to Contributor. Contributor shall
give notice not later than two (2) business days prior to the
Closing Date to OP setting forth the identity and applicable
percentage interest of each Unit Holder for purposes of determining
the number of OP Units to be issued to each of such Unit Holder.
If the foregoing direction to issue the OP Units to the partners of
Contributor is made, such direction is for convenience only as part
of the liquidation of (or the distribution of the OP Units from)
Contributor. In that connection (and notwithstanding any such
direct issuance to the partners), it shall be deemed that such OP
Units were first issued to Contributor and then immediately
distributed by Contributor to the Unit Holders. OP Units shall
only be issued to Approved Investors, as hereinafter defined. Upon
receipt of the OP Units, the Approved Investors shall become
limited partners of OP and shall execute an Admission of New
Partner and Amendment to Limited Partnership Agreement, in the form
attached hereto as Exhibit N (the "Partnership Amendment").
"Approved Investors" shall mean the partners of the Contributor who
meet the "Accredited Investor" qualifications set forth in Rule
501(a) of Regulation D of the Securities Act of 1933, as amended
(the "Securities Act"). To the extent that Contributor has not
made the direction to OP to issue OP Units to Unit Holders and
Contributor is issued OP Units, such OP Units may be distributed to
Unit Holders (and such Unit Holders shall be admitted as limited
partners of OP) within twenty (20) days after such notice of such
distribution is given by Contributor to OP (but in no event shall
there be more than ten (10) such Unit Holders, and all of such Unit
Holders shall be Approved Investors).
(b) Determination of Number of OP Units. For purposes
of determining the number of OP Units to be delivered by OP at
Closing, each OP Unit shall be deemed to have a value equal to the
last reported sale price of the common shares of beneficial
interest (the "Common Shares") of Arden Realty, Inc., a Maryland
corporation (the "REIT") on the New York Stock Exchange on the
fifth (5th) trading day ("Trading Day") immediately before Closing
(the "Closing Price"). Upon request, Contributor shall receive
certificates at Closing representing the number of OP Units
calculated by dividing the Consideration less the amounts described
in Section 1.2(c) by the Closing Price, provided the number of OP
Units will be adjusted as set forth in subsection (d) below with
respect to the Distribution Loan. The certificates evidencing the
OP Units shall bear appropriate legends indicating (i) that the OP
Units have not been registered under the Securities Act, and (ii)
that the Partnership Agreement restricts the transfer of OP Units.
(c) Liabilities. The balance of the Consideration shall
consist of OP accepting the contribution of the Property subject to
the Scheduled Liabilities.
(d) Certain Borrowings. OP shall cause to be lent to
Contributor, as a condition precedent to the contribution of the
Property to OP by Contributor and prior to the contribution of the
Property, the sum of $15,000,000 whether or not secured by the
Property (the "Pre-Contribution Loan") to be used by Contributor to
accomplish the following in the order indicated: (i) first,
Contributor shall redeem (for approximately $9,500,000) interests
in itself from two of its partners, and with respect to such
redemptions, Contributor shall timely file an election under
Section 754 of the Internal Revenue Code of 1986 (as amended, the
"Code") and make a comparable election under state and local tax
laws, and then, (ii) Contributor shall satisfy the participation
owed to Bankers Trust Company in connection with Contributor's
acquisition of the Property in the approximate amount of
$5,500,000. The Pre-Contribution Loan shall constitute a Scheduled
Liability of the Contributor.
Immediately following the Closing of the Contribution of the
Property to OP by the Contributor, OP shall borrow the sum of
$8,487,000 (as adjusted by prorations owed by OP to Contributor, or
by Contributor to OP, under this Agreement), which amount (the
"Distribution Loan") shall be distributed to Contributor
immediately thereafter by OP (in the manner contemplated by
Treasury Regulations Section 1.707-5(b)(i)), so as to cause
Contributor's Capital Account in OP to be reduced to $300,000, and
Contributor's OP Units to be reduced to the "Adjusted Unit Amount"
(as defined below), after the Property has been contributed and
after such distribution has been made. The Distribution Loan (and
the distribution thereof to Contributor) shall be reduced by the
amount of the proration adjustments owed by Contributor to OP under
this Agreement, and shall be increased by the amount of the
proration adjustments owed by OP to Contributor under this
Agreement. Repayment of the Distribution Loan shall be guaranteed
by Contributor (and by the direct and indirect partners thereof) as
provided in Section 9.1 of the Partnership Amendment attached
hereto as Exhibit N, pursuant to documentation reasonably approved
by OP and Contributor (the "Guaranty Agreements") and executed and
delivered by Contributor to OP and OP's General Partner, and
accepted by OP and OP's General Partner, prior to the Closing Date.
The amount of the Pre-Contribution Loan, the Distribution Loan and
the distribution thereof to Contributor (and the portion thereof
guaranteed pursuant to the Guaranty Agreements) shall be adjusted
as final numbers are determined in light of prorations, adjustments
and actual expenses of the Contribution transaction. The Adjusted
Unit Amount shall be equal to $300,000 divided by the Closing
Price.
1.3 Deposit. Concurrently with the Effective Date, OP shall
deliver the Deposit to the Escrow Agent. The Deposit shall be held
by the Escrow Agent pursuant to the terms of this Agreement. The
term "Deposit" shall include all interest earned thereon. At
Closing, the Deposit shall be returned to OP.
1.4 Investor Questionnaires. Contributor covenants and
agrees to provide OP with original completed investor
questionnaires in the form attached as Exhibit I, on or before the
expiration of the Due Diligence Period. The Closing shall not
occur unless OP has approved all such investor questionnaires at
least two (2) business days prior to the Closing Date, which
approval shall not be unreasonably delayed or withheld. If no Unit
Holder is to receive OP Units on the Closing Date, only
Contributor's Investor Questionnaire will be required to be
delivered and approved by the Closing Date (and an Investor
Questionnaire must be received from each Unit Holder and approved
(OP agrees not to unreasonably withhold such approval) before
Contributor distributes any OP Units to such Unit Holder).
ARTICLE II
DUE DILIGENCE
2.1 Due Diligence Period. Upon the Effective Date, OP shall
have completed its various inspections of the Property, review of
the books and records concerning the Property and Contributor.
2.2 Title Matters. The Contributor has reviewed a CLTA
Preliminary Title Report covering the Real Property and the
Improvements, (the "Preliminary Title Report"), issued by Fidelity
National Title Company ("Title Company"), together with true copies
of all documents evidencing matters of record shown as exceptions
to title thereon. The Contributor has caused to be delivered to OP
a copy of a preexisting survey of the Property prepared by Xxxxxxx
& Associates (the "Survey"). OP has caused the same to be so
updated at OP's sole cost and expense. OP may on or before the
Effective Date object to any exceptions contained in the
Preliminary Title Report or the Survey (or updated Survey) by
giving notice to Contributor. Notwithstanding any of the
foregoing, OP shall at Closing receive a credit to the
Consideration sufficient to pay off all encumbrances, tax and
mechanic's liens (except only for the liens of the taxes and
assessments to be prorated to the OP). Unless OP gives written
notice that it disapproves any such exceptions to title matters,
stating the exceptions so disapproved, OP shall be deemed to have
approved said exceptions. OP's approval of the Preliminary Title
Report and Survey shall be without prejudice to OP's right to
disapprove additional title matters resulting from any supplemen
tary reports issued by Title Company or disclosed after the
Effective Date; provided, however, OP's approval shall not be
unreasonably withheld. If for any reason, on or before the Closing
Date Contributor does not cause such exceptions to title or survey
matters which OP timely disapproves (to the extent OP is permitted
hereunder to so disapprove) to be removed at no cost or expense to
OP (Contributor having the right but not the obligation to do so),
the obligation of Contributor to contribute, and OP to acquire, the
Property as herein provided shall terminate (and the Contributor
and OP shall have no further obligations in connection herewith).
OP shall have the option to waive the condition precedent set forth
in this paragraph by notice to the Contributor. In the event of
such waiver, such condition shall be deemed satisfied. All matters
set forth on the Preliminary Title Report, the Survey or any
updated Survey obtained by OP which are not timely objected to by
OP shall be permitted exceptions to title and shall additionally
include (i) any title or survey matters objected to by OP, which
objections are subsequently waived in writing by OP, and (ii) any
title or survey matters objected to by OP in accordance with the
terms and provisions of this Agreement, which objections are cured
to OP's satisfaction, (iii) real estate taxes and assessments not
yet due and payable; and (iv) the printed exceptions which appear
in the standard form ALTA owner's policy of title insurance (with
extended coverage).
2.3 Due Diligence Documents. To the extent Contributor has
possession or control of the Due Diligence Documents, Contributor
has delivered them to OP prior to the Effective Date. In the event
Contributor does not have possession or control of any of the Due
Diligence Documents, Contributor shall so state in writing.
2.4 Access and Inspection.
(a) Prior to the Effective Date, OP and its agents,
employees and contractors have been afforded full access to the
Property for the purpose of making such investigations as OP deemed
prudent with respect to the physical condition of the Property. OP
has agreed to hold the Contributor harmless from and against any
loss, cost, damage, claim or expense suffered by the Contributor or
the Property and caused by OP's investigations (the foregoing
obligation surviving any termination of this Agreement). In no
event shall OP make any intrusive physical testing (environmental,
structural or otherwise) at the Property (such as soil borings or
the like) without Contributor's prior consent. Contributor
acknowledges that OP has restored the Property to its condition
immediately prior to such investigations. At the request of the
Contributor, OP shall promptly deliver to the Contributor true,
accurate and complete copies of any written reports relating to the
Property prepared for or on behalf of OP by any third party. OP
shall keep all information or data received or discovered in
connection with any of the inspections, reviews or examinations
strictly confidential; provided; however, that OP shall be entitled
to disclose such information to OP's attorneys, accountants and
prospective debt and equity financing sources who reasonably need
to be informed in connection with OP's determinations hereunder
(and who shall, in turn, be required to keep such information
confidential).
(b) Prior to the Effective Date, OP and its agents have
been afforded full opportunity by Contributor to examine all
operating books and records that relate to the Property, including
all specifications and as-built drawings (to the extent they are in
Contributor's possession), all building permits, certificates of
occupancy, soil reports, engineers' reports and studies, leases,
service contracts and similar information relating to the Property
or its management, operation, maintenance or use, and all
warranties and operating manuals that Contributor may have from
vendors, contractors or servicing agents with respect to the
physical condition of the Property or any portion thereof or the
equipment located thereon.
(c) Based upon the foregoing, as of the Effective Date,
OP has approved the matters referred to in subparagraphs (a) and
(b) above.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Contributor.
Except as specifically set forth in this Paragraph 3.1, the
acquisition of the Property hereunder is and will be made on an "as
is" basis, without representations and warranties of any kind or
nature, express, implied or otherwise, including but not limited
to, any representation or warranty concerning title to the
Property, the physical condition of the Property (including, but
not limited to, the presence or absence of hazardous substances on
or respecting the Property), the compliance of the Property with
applicable laws and regulations (including, but not limited to,
zoning and building codes or the status of development or use
rights respecting the Property), the financial condition of the
Property or any other representation or warranty respecting any
income, expenses, charges, liens or encumbrances, rights or claims
on, affecting or pertaining to the Property or any party thereof.
OP acknowledges that OP has examined, reviewed and inspected all
matters which in OP's judgment bear upon the Property and its value
and suitability for OP's purposes. Except as to matters
specifically set forth in this Paragraph 3.1, OP will acquire the
Property solely on the basis of its own physical and financial
examinations, reviews and inspections and the title insurance
protection afforded by the Title Policy. Subject to the foregoing
and except as disclosed by Contributor to OP or otherwise
discovered by OP prior to the expiration of the Due Diligence
Period as contained in the materials delivered to OP and identified
in Exhibit C hereto, Contributor hereby makes the following
representations, warranties and covenants. Except as disclosed in
the materials delivered to OP and listed in Exhibit C attached
hereto or on Exhibit L attached hereto:
(a) Contributor has no knowledge of any of the following
that it has not disclosed to OP:
(i) existing latent defects or seismic conditions
concerning the Real Property or the Improvements or materially
incorrect income or expense figures in any financial statements
prepared by or for Owner and delivered to OP regarding the Property
(with respect to periods of time occurring prior to the date hereof
and, without limitation on the foregoing, Contributor does not make
any representation or warranty with respect to any projections);
(ii) any pending claim, litigation or administra
tive action, arbitration, proceeding pending before any court,
agency or official, nor any such claim or action threatened in
writing, relating to the Contributor or the Property;
(iii) written notice of violations of City, County,
State, Federal, building, zoning, fire or health codes, regulations
or ordinances, filed or issued against the Property;
(iv) Hazardous Substance in existence on or below
the surface of the Real Property or in any building located upon
the Real Property, including, without limitation, contamination of
soil, subsoil or ground water, which constitutes a violation of any
applicable law, rule or regulation of any government entity having
jurisdiction thereof except for office supplies in customary
quantities; and
(v) matter that would suggest any portion of the
Property having ever been used by Contributor or any tenant of any
portion of the Property during Contributor's ownership thereof as a
waste storage or disposal site or gasoline station. Without
limiting the other provisions of this Agreement, Contributor shall
reasonably cooperate with OP's investigation of matters relating to
the foregoing provisions of this paragraph and to provide access to
and copies of any third party data and/or documents dealing with
potentially Hazardous Substances used at the Property and any
disposal practices followed. Contributor agrees that OP may make
inquiries of governmental agencies regarding such matters, without
liability for the outcome of such discussions. For the purposes of
this Agreement, "Hazardous Substances" shall mean (A) substances
defined as "hazardous substances" in (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S. C. '' 9601 et seq.), or (ii) the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. '' 6901 et seq.),
together with the regulations enacted pursuant to such acts, and
(B) those substances defined as "hazardous wastes" in ' 25117 of
the California Health and Safety Code or as "hazardous substances"
in ' 25316 of the California Health and Safety Code together with
the regulations enacted pursuant to such statutes.
(b) The Tenant Leases and Service Contracts and any
other agreements, matters and things to be submitted to OP by
Contributor for approval, or otherwise, shall be true, correct and
complete copies thereof as of the date of submission thereof, and
as thereafter supplemented by supplements or additions, approved in
writing by OP, on or before Closing. Notwithstanding anything to
the contrary contained herein, Contributor shall have no obligation
or liability to OP with respect to any of the foregoing tenant
lease matters which shall be confirmed as correct in any estoppel
certificate delivered to OP as provided in this Agreement.
(c) To Contributor's knowledge, the operating financial
information prepared by Contributor and delivered to OP with
respect to the Property, consisting of Statements of Operations for
all calendar years beginning on and after January 1, 1995 and for
the current calendar year are true and correct in all material
respects; in this regard Contributor agrees to make available to OP
and its accountants, at OP's cost, all accounting records for the
calendar year ended December 31, 1996 and for the period from
January 1, 1997 through the date of Closing, including but not
limited to all general ledgers, cash receipts, cancelled checks and
any other accounting documents and information directly relating to
the operations of the Property reasonably requested to the extent
in Contributor's possession and the right to audit the same through
the end of 1998.
(d) As used in this Agreement, "to Contributor's
knowledge" or other similar knowledge limitations as to Contributor
shall mean the actual knowledge, without any duty to investigate,
of Xxxx Xxxxxxx.
(e) Notwithstanding anything contained in this Section
3.1 to the contrary, Contributor is neither responsible nor liable
for any representation or warranty, either expressed or implied,
guaranty, promise or other information pertaining to the Property
or the Improvements made or furnished to OP by any broker
representing or purporting to represent Contributor, and no partner
of Contributor (or the respective partners or members of such
partner) shall be liable for any such representation or warranty.
(f) Securities Law Matters.
(i) The Contributor acknowledges its understanding
that the offering and sale of the OP Units to be acquired pursuant
to this Agreement is intended to be exempt from registration under
the Securities Act of 1933, as amended and the rules and
regulations in effect thereunder (the "Act"). In furtherance
thereof, the Contributor represents and warrants to OP as follows:
(ii) The Contributor is acquiring the OP Units
solely for its own account for the purpose of investment and not as
a nominee or agent for any other person and not with a view to, or
for offer or sale in connection with, any distribution of any
thereof except for the distribution thereof to the Unit Holders as
provided in Section 1.2 (a) above. The Contributor agrees and
acknowledges that except for the transfer of the OP Units to the
Unit Holders or the exercise of its redemption rights pursuant to
Section 8 of the Partnership Agreement or the exercise of the
redemption or pledge rights set forth in Section 7 of the
Partnership Amendment it will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any of the OP Units unless (i) the
Transfer is pursuant to an effective registration statement under
the Act and qualification or other compliance under applicable blue
sky or state securities laws, or (ii) counsel for the Contributor
(which counsel shall be reasonably acceptable to the OP) shall have
furnished the OP with an opinion, reasonably satisfactory in form
and substance to the OP, to the effect that no such registration is
required because of the availability of an exemption from
registration under the Act and qualification or other compliance
under applicable blue sky or state securities laws.
(iii) The Contributor is knowledgeable,
sophisticated and experienced in business and financial matters;
the Contributor has previously invested in securities similar to
the OP Units and fully understands the limitations on transfer
imposed by the Federal securities laws and as described herein.
The Contributor is able to bear the economic risk of holding the OP
Units for an indefinite period and is able to afford the complete
loss of its investment in the OP Units; the Contributor has
received and reviewed all information and documents about or
pertaining to the Company, the OP, the business and prospects of
the REIT and the OP and the issuance of the OP Units as the
Contributor deems necessary or desirable, and has been given the
opportunity to obtain any additional information or documents and
to ask questions and receive answers about such information and
documents, the REIT, the OP, the business and prospects of the REIT
and the OP and the OP Units which the Contributor deems necessary
or desirable to evaluate the merits and risks related to its
investment in the OP Units; and the Contributor understands and has
taken cognizance of all risk factors related to the purchase of the
OP Units. The Contributor hereby represents and warrants that it
is an "accredited investor" (as such term is defined in Rule 501(a)
of Regulation D under the Securities Act of 1933, as amended).
(iv) The Contributor acknowledges that it has been
advised that (i) the OP Units must be held indefinitely unless
redeemed pursuant to Section 8 of the Partnership Agreement, and
the Contributor must continue to bear the economic risk of the
investment in the OP Units unless they have been or are
subsequently registered under the Act or an exemption from such
registration is available, (ii) a restrictive legend in the form
hereafter set forth shall be placed on the certificates
representing the OP Units, and (iii) a notation shall be made in
the appropriate records of the OP (and the Company) indicating that
the OP Units are subject to restrictions on transfer.
(v) Each certificate representing the OP Units
shall bear the following legend and no other restrictions or
legends:
THE OP UNITS REPRESENTED BY THIS CERTIFICATE OR
INSTRUMENT MAY NOT BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE
PARTNERSHIP AGREEMENT AS OF OCTOBER 9, 1996 AS IT MAY BE
AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE
WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE
PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF
THE OP UNITS REPRESENTED BY THIS CERTIFICATE MAY BE MADE
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR (B) IF THE OPERATING PARTNERSHIP HAS BEEN
FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER.
(vi) Prior to the issuance of the OP Units,
Contributor and the Approved Investors and OP shall execute all
such other documents and instruments as may be reasonably necessary
to allow OP to comply with federal and state securities law
requirements with respect to the issuance of the OP Units and to
comply with the terms of the Partnership Agreement.
(vii) All of the partnership interests in the
Contributor are owned by the persons or entities set forth on
Exhibit J and are free and clear of all liens, claims and
encumbrances except as set forth as Scheduled Liabilities on
Exhibit D hereto. The information set forth on Exhibit J is true
and correct as of the date hereof and, except for a transfer in
connection with the death or incapacity of a partner, or as
otherwise indicated on Exhibit J, shall be true and correct as of
the Closing Date. Each Approved Investor that is receiving OP
Units on the Closing Date will, prior to the expiration of the Due
Diligence Period, complete, sign and deliver to OP an Investor
Questionnaire in the form attached hereto as Exhibit I (the
"Investor Questionnaire").
(g) None of Contributor, its partners or their partners
or members is a "foreign person" for purposes of the withholding
provisions of the Internal Revenue Code or under comparable
provisions of California law.
(h) The Property is free and clear of all liabilities
(including liabilities for taxes of any kind) other than the
Scheduled Liabilities.
3.2 Representations and Warranties of OP. OP represents
and warrants as follows:
(a) Organization, Power. OP is a duly formed and
validly existing entity in good standing under the laws of the
jurisdiction of its formation. The OP has a general partner which
qualifies as a REIT under the Internal Revenue Code, and
substantially all of the General Partner's assets are beneficially
owned by OP. Subject to Board Approval as herein provided, this
Agreement is duly authorized, executed and delivered by all
necessary action on the part of OP, and constitutes the valid and
binding agreement of OP, and is enforceable in accordance with its
terms.
(b) Noncontravention. The execution and delivery of and
the performance by OP of its obligations hereunder do not and will
not contravene, or constitute a default under any provisions of
applicable law or regulation or any agreement, judgment,
injunction, order, decree or other instrument binding upon OP or
result in the creation of any lien or other encumbrance on any
asset of OP.
(c) Material Documents. Exhibit K attached hereto and
made a part hereof represents a list of all documents comprising
the Partnership Agreement and all material filings with Securities
and Exchange Commission with respect to ARI within the last twelve
(12) months.
(d) Independent Investigation. As of the expiration of
the Due Diligence Period and as of the Closing Date (i) OP has
received and reviewed all materials provided to OP by Contributor
pursuant to Article II above (collectively, the "Due Diligence
Materials"), (ii) OP has inspected the Property, (iii) OP has made
such investigation of the information contained in the Due
Diligence Materials as it deems appropriate, and (iv) OP is
satisfied based upon its examination of the Due Diligence Materials
and its investigation of all other aspects of the Property which OP
deems material to its purchase thereof, including, without
limitation, the condition of title to the Property, the zoning of
the Property, the condition and physical aspects of all structures
located on the Real Property (including the Improvements) and the
presence or absence of Hazardous Substances on the Property.
Except as set forth in Section 3.1 and elsewhere in this Agreement,
OP is not relying on the any representation, written information,
data, reports, warranty, or statement of Owner or their agents
concerning the Property or the accuracy or completeness of the Due
Diligence Materials, and OP is acquiring the Property in "AS-IS"
condition based solely upon OP's own independent inspection,
investigation and review, as more particularly set forth in Section
3.1 hereof.
ARTICLE IV
CONDITIONS PRECEDENT; ADDITIONAL COVENANTS
4.1 Conditions Precedent to OP's Obligation to Close. OP's
obligations hereunder are subject to the satisfaction of the
following conditions precedent and the compliance by Contributor
with the following covenants:
(a) Representations and Warranties True at Closing. The
representations and warranties of Contributor contained in this
Agreement shall be true on the date of Closing in all material
respects as though such representations and warranties were made on
and as of such date.
(b) Delivery of Tenant Estoppels. Contributor shall
have delivered to OP estoppel letters (the "Tenant Estoppels") from
tenants representing 80% of the leased area and from all tenants
leasing more than 5,000 square feet in the Improvements in
substantially the form of Exhibit G attached hereto and forming a
part hereof, consistent in all material respects with the
information to be provided by Contributor hereunder and certifying
inter alia to the effect that there are no defaults by landlord
under the lease known to tenant thereunder; that such lease is
unmodified except as may be set forth therein and in full force and
effect; that there are no defenses or offsets against the landlord
known to tenant thereunder; and that rental is current and has not
been paid more than one month in advance.
(c) Compliance with This Agreement. Contributor shall
have performed and complied with in all material respects all
agreements and conditions required by this Agreement to be
performed or complied with by it on or prior to Closing.
(d) Reciprocal and Other Easement Agreements. OP and
Contributor shall have mutually approved of a new easement
agreement and an amendment to the Agreement regarding reciprocal
access, recreation, and parking, among other things, before the
close of business on April 1, 1998 regulating the use of the
Property and an adjacent to be developed property owned by an
entity affiliated with Contributor.
(e) Title Policy. Title Company shall be ready, willing
and able to issue the Title Policy required by this Agreement.
(f) Change in Condition. Subject to the provisions of
Section 7.1, there shall exist no material damage, destruction or
condemnation of the Property prior to Closing.
4.2 Conditions Precedent to Contributor's Obligation to
Close. The obligation of Contributor to consummate the transaction
contemplated hereby is subject to the following conditions:
(a) Representations and Warranties True at Closing. The
representations and warranties of OP contained in this Agreement,
or in any certificate or document signed by OP pursuant to the
provisions hereof, shall be true on and as of Closing in all
material respects as though such representations and warranties
were made on and as of such date.
(b) Delivery of Consideration and Documents. OP shall
have delivered all funds and documents to Escrow Holder required by
it hereunder to enable it to close the Escrow.
(c) Reciprocal and Other Easement Agreements. OP and
Contributor shall have mutually approved of a new easement
agreement and an amendment to the Agreement regarding reciprocal
access, recreation, and parking, among other things, before the
close of business on April 1, 1998 regulating the use of the
Property and an adjacent to be developed property owned by an
entity affiliated with Contributor.
(d) Compliance with This Agreement. OP shall have
performed and complied with all agreements and conditions required
by this Agreement to be performed or complied with by it on or
prior to Closing.
4.3 Operation of Property Pending Closing.
(a) Tenant Leases. Contributor has leased portions of
the Property to various occupancy tenants. From and after the date
of execution of this Agreement and until the Closing Date
Contributor shall not enter into any new leases or amend or extend,
terminate or accept the surrender of any existing tenancies or
approve any subleases without the prior written consent of OP
(which consent shall not be unreasonably delayed or withheld). In
requesting such consent, Contributor shall inform OP in writing of
the amount, if any, proposed to be required to pay for, or any
allowance proposed to be given for, tenant improvement work, any
leasing commissions and fees, in connection with such lease and any
rent concessions. Also included in the request for consent, shall
be Contributor's proposed draft of the lease or amendment
agreement. The failure of OP to respond within five (5) business
days after written request for any such approval shall be deemed to
constitute approval. Contributor shall not collect in advance any
rent or other sum due under any of the Tenant Leases, except for
collection of current rents no more than one month in advance.
(b) Leasing Commissions; Tenant Improvements and Rent
Concessions. Contributor covenants and agrees to be responsible
for all leasing commissions, and tenant improvement costs with
respect to any leases (including amendments and renewals) entered
into on or before the Effective Date. OP covenants and agrees to
be responsible for (1) all leasing commissions, tenant improvement
costs and unamortized rent concessions with respect to any new
leases, extensions of existing leases and renewals occurring after
the Effective Date and (2) unamortized rent concessions with
respect to leases entered into prior to the Effective Date,
provided that (i) with respect to clause (2) hereof, OP has
approved or is deemed to have approved such action or event by
Contributor and (ii) Contributor has delivered to OP copies of the
proposed lease and other agreements with respect thereto and to
which any brokerage commissions are payable. Failing such delivery
and approval (or deemed approval), Contributor shall remain
responsible for all of costs and expenses including commissions.
(c) Insurance Policies. Contributor shall keep all of
the insurance policies covering the Property (or substantially
equivalent coverage) in full force and effect between the date of
this Agreement and Closing (the "Insurance Policies").
(d) Service Contracts. Contributor shall have the right
to renew or replace Service Contracts that expire prior to Closing
or to enter into new Service Contracts for emergency purposes if
deemed reasonably necessary by Contributor for any term provided
that such Service Contracts are terminable by Contributor or its
successors in interest upon not more than thirty (30) days' notice
to the service provider.
(e) Property Management. Contributor shall maintain the
Property in the same manner as prior hereto pursuant to its normal
course of business (such maintenance obligations not including
extraordinary capital expenditures or expenditures not incurred in
such normal course of business), subject to reasonable wear and
tear and further subject to destruction by casualty or other events
beyond the reasonable control of Contributor.
ARTICLE V
SPECIAL PROVISIONS
5.1 Debt Maintenance Agreement. The parties have agreed to
the debt maintenance and other obligations of OP concerning debt
that are contained in Section 9.1 of the Partnership Amendment
admitting Contributor (or other Unit Holders) as limited partners.
A dissolution, merger, consolidation reorganization or other
combination of the OP which results in the termination of the
Partnership (a so-called "Termination Transaction" in the
Partnership Agreement) shall not constitute a default by the OP
under this Section 5.1 provided the OP shall comply with the
provisions of the Partnership Agreement.
5.2 Minimum Holding Period. For a period of seven (7) years
following the Closing, OP agrees that it will not voluntarily sell,
distribute in kind, exchange, transfer or otherwise dispose of the
Property other than (i) in a tax-deferred exchange qualifying under
Section 1031 of the Internal Revenue Code or under any equivalent,
successor, replacement or additional Internal Revenue Code Sections
in which no gain or loss is recognized for income tax purposes or
(ii) a sale under threat of eminent domain (described in Section
1033 of the Internal Revenue Code) or an (iii) involuntary sale (a)
pursuant to foreclosure of a first deed of trust securing the
Property, (b) a deed in lieu of foreclosure or (c) a proceeding in
connection with a Bankruptcy of the OP, unless the OP has been
merged into its general partner and/or the OP or such general
partner sells or transfers or is not the survivor in any
Termination Transaction (as described in the Partnership Agreement
of the OP) and not in control of substantially all of the OP's
assets by means of a single or series of related taxable trans
actions, and that no property other than cash will be distributed
to any Unit Holder except in connection with a Termination
Transaction or as may be approved by such Unit Holder.
Notwithstanding the foregoing, there shall be no limit on the OP's
ability to dispose of the Property after the date on which there
has been a "step-up" in the basis of all interests in the OP which
were transferred by the OP to Contributor (and any Unit Holders)
pursuant to this Agreement (e.g., as a result of a taxable
disposition of such interests by such parties or the death of each
such Unit Holder or their spouse), provided that the OP has made an
election under Section 754 of the Internal Revenue Code which is in
effect.
5.3 Treatment for Tax Purposes. Contributor represents that
all liabilities being transferred to OP in the subject contribution
are "qualified liabilities" as defined in Treasury Regulations
under Internal Revenue Code Section 707. Based on this
representation, the OP agrees to treat such liabilities as
qualified liabilities absent discovery of evidence to the contrary
(OP confirms that no such discovery has been made as of the date of
this Agreement). The parties agree to treat the entire subject
transaction as a contribution under Internal Revenue Code Sections
707 and 721(a), notwithstanding the exercise of any redemption or
exchange rights by any Unit Holders under Section 7 of the
Partnership Amendment.
ARTICLE VI
CLOSING
6.1 Closing. Closing of the transaction contemplated by this
Agreement shall be through the Escrow. OP and Contributor may,
upon mutual agreement, set an earlier or later Closing Date. It
shall be a condition to Closing that possession of the Property
shall be delivered to OP, subject only to the Scheduled
Liabilities.
6.2 Prorations. All rents and other income from the
Property, including any initial lump sum or disproportionate
payments which shall be allocable over the term of any agreement to
which such payments relate, and real estate and personal property
ad valorem taxes, and other operating expenses from the Property
shall be prorated on the basis of a 365 day year through the day
preceding the day of Closing. If Closing is extended by mutual
agreement, all adjustments shall be made as of the day prior to the
extended date. Without limitation upon the foregoing, the
following items shall be adjusted or prorated between Contributor
and OP as set forth below:
(a) Monthly rents and percentage rent and "passthroughs"
of real estate taxes and operating expenses due from occupancy
tenants under Tenant Leases, as and when collected. If at Closing
there are any past due rents or charges owed by occupancy tenants,
they shall not be prorated until received; OP shall include such
delinquencies in its normal billing and shall pursue the collection
thereof in good faith after the Closing Date (but OP shall not be
required to litigate or declare a default in any Tenant Lease). To
the extent OP receives amounts on account of Tenant Leases on or
after the Closing Date, such payments shall be applied first toward
then current rent owed to OP in connection with the applicable
Tenant Lease for which such payments are received, and any excess
monies received shall be applied toward the payment of any
delinquent rents, with Contributor's share thereof being promptly
delivered to Contributor. OP may not waive any delinquent rents
nor modify a Tenant Lease so as to reduce or otherwise affect
amounts owed thereunder for any period in which Contributor is
entitled to receive its share of charges or amounts without first
obtaining Contributor's written consent. Contributor hereby
reserves the right to pursue any remedy against any tenant owing
delinquent rents and any other amounts to Contributor. OP shall
reasonably cooperate with Contributor in any collection efforts
hereunder (but shall not be require to litigate or declare a
default in any Lease). With respect to delinquent rents and any
other amounts or other rights of any kind respecting tenants who
are no longer tenants of the Property as of the Closing Date,
Contributor shall retain all rights relating thereto.
(b) Real estate and personal property taxes and any
special assessments, taking into consideration discounts for the
earliest permitted payment, based upon the latest previous tax
levies. Such items shall be reapportioned between Contributor and
OP if current tax rates differ from the latest previous tax rates
as soon as the same are known. Contributor agrees that to the
extent any additional taxes, assessments or levies are imposed,
assessed or levied against the Property, or any portion thereof,
the Contributor or the OP at any time subsequent to Closing but
with reference to any period prior thereto during Contributor's
ownership thereof, Contributor shall promptly pay to OP an amount
equal to such additional assessments or levies. Similarly, if tax
refunds become payable for periods during Contributor's ownership
of the Property, such amounts (subject to adjustments for the
potential claims of occupancy tenants that paid tax increases by
way of rent escalations to Contributor) shall be promptly paid over
to Contributor. In the event that any assessments on the Property
are payable in installments, then the installment for the current
period shall be prorated (with OP assuming the obligation to pay
any installment due after the Closing Date). In no event shall
Contributor be charged with or be responsible for any increase in
the taxes on the Property resulting from the sale of the Property
or from any improvements made or lease entered into on or after the
Closing Date.
(c) Interest with respect to all indebtedness or
liabilities which will be a credit to the Consideration to be paid
by OP for the contribution of the Property by Contributor;
(d) Transferable annual permits, licenses, and/or
inspection fees, if any, on the basis of the duration of the same;
(e) Security Deposits, plus accrued interest, if any,
payable thereon to tenants, and any other deposits and prepaid
rent, shall be credited (or assigned) to OP;
(f) Utility charges levied against Contributor or the
Property, and OP shall transfer all such utility services to its
name and account immediately upon Closing;
(g) Service Contracts on the basis of the charge or
premium for the period involved;
(h) Tenant improvements costs and leasing commissions
for leases signed after the Effective Date shall be paid by OP if
approved by OP in accordance with Section 4.3.
(i) All other operating expenses incurred in the
management and operation of the Property.
No insurance policies shall be assigned hereunder, and accordingly
there shall be no proration of insurance premiums. Notwithstanding
anything to the contrary contained in this Agreement, the
provisions of this Section 6.2 shall survive Closing. Any
prorations of any kind described in this Agreement payable by
Contributor to OP shall be treated as a reduction in the amount of
the Distribution Loan Proceeds that are distributed to Contributor
under Section 1.2(d). Any such prorations payable by OP to
Contributor shall be funded by an increase in the amount of the
Distribution Loan and the proceeds thereof that are distributed to
Contributor under Section 1.2(d) of this Agreement.
6.3 Contributor's Deliveries. Contributor shall deliver the
following to OP at Closing:
(a) The Deed;
(b) A Xxxx of Sale and Assignment Agreement in the form
attached as Exhibit E (the "Xxxx of Sale");
(c) An affidavit in form acceptable to the Title Company
sufficient to remove any exception for mechanics' and materialmen's
liens and parties in possession and appropriate lien waivers, if
necessary;
(d) Current information on the Property as of Closing
including a current rent roll, delinquent rent aging, and all
outstanding work orders, all certified to be complete and correct
by the Contributor;
(e) To be delivered at the Property, the original of
each of the tenant leases (including any amendments) in effect at
the Property as of the day of Closing, all tenant files in its
possession or control and all ledger cards;
(f) Evidence reasonably satisfactory to the OP of
Contributor's authority to close the transactions contemplated by
this Agreement;
(g) An affidavit certifying that the Contributor (and
each of the Unit Holders) is not a foreign entity under the Foreign
Investment in Real Property Act and a similar affidavit (Form
590RE) under California law;
(h) A notice letter to all tenants of the Property in
the form attached as Exhibit H (the "Notice Letter");
(i) A proposed prorations and adjustments statement;
(j) All keys, security codes, or other access devices in
the possession of Contributor to all locks used or applicable to
the Property;
(k) An authorization transferring the Property telephone
numbers to OP (the "Telephone Transfer");
(l) Copies of the Partnership Amendments executed by the
Approved Investors; and
(m) All such other documents that are normally
transferred at Closing in the jurisdiction in which the Property is
located or are reasonably requested by the OP, its title company or
its counsel; provided, however, the same do not impose any
additional material obligations, liabilities or costs on
Contributor.
6.4 OP's Deliveries. OP shall deliver the following to
Contributor at Closing:
(a) The Adjusted Payment Amount and written confirmation
that such distribution was funded by the Distribution Loan as
provided in Section 1.2(d);
(b) The Xxxx of Sale;
(c) The Notice Letter;
(d) A proposed prorations and adjustments statement;
(e) Evidence reasonably satisfactory to Contributor of
OP's authority to close the transactions contemplated by this
Agreement;
(f) Copies of the Partnership Amendment for each Unit
Holder executed by the OP;
(g) Certificates for OP Units in accordance with Section
1.2(a) of this Agreement;
(h) Guaranty Agreements acceptable to the General
Partner of OP as provided in Section 1.2(d); and
(i) All such other documents that are normally
transferred at Closing in the jurisdiction in which the Property is
located or are reasonably requested by the Contributor or its
counsel; provided, however, the same do not impose any additional
material obligations, liabilities or costs on OP.
ARTICLE VII
RISK OF LOSS; CONDEMNATION AND CASUALTY; TERMINATION RIGHTS
7.1 Risk of Loss; Condemnation and Casualty. Until
Closing, all risk of any loss or damage to all or part of the
Property, including eminent domain, shall be and remain on
Contributor. In the event that such loss or damage shall occur,
Contributor shall give OP written notice pursuant to this Agreement
of such loss or damage along with its estimate of the amount of the
loss or damage, within five (5) calendar days of such event
occurring. In the event of any loss due to eminent domain or
damage due to casualty in which the estimate of the loss is greater
than One Hundred Fifty Thousand Dollars ($150,000.00), then within
five (5) calendar days after receipt of Contributor's written
notice, OP, at its option by written notice to Contributor, may
elect to terminate this Agreement in which event the Deposit shall
be promptly returned to OP. In the event that OP does not elect to
terminate this Agreement or in the event that the loss is One
Hundred Fifty Thousand Dollars ($150,000.00) or less, Contributor
shall assign to OP all of its rights, title and interest to the
proceeds of any insurance or award covering such unrepaired loss or
damage at Closing, and OP shall receive a credit against the
Consideration at Closing in the amount of any deductible of such
insurance. Notwithstanding anything to the contrary, Contributor
has no obligation to repair any damage resulting from a casualty or
a condemnation.
7.2 Default by OP. THE PARTIES HERETO, BEFORE ENTERING
INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT THAT
SUBSTANTIAL DAMAGES WILL BE SUFFERED BY CONTRIBUTOR IF OP SHOULD
WRONGFULLY FAIL TO PURCHASE THE PROPERTY. WITH THE FLUCTUATION IN
VALUE OF REAL PROPERTY, THE CURRENT AND HIGHLY UNPREDICTABLE STATE
OF THE ECONOMY, THE FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS
OF ALL TYPES, AND OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND
MARKETABILITY OF THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT
IT WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IM
POSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO
SIGNING THIS AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED
BY CONTRIBUTOR IN THE EVENT OF OP'S WRONGFUL FAILURE TO PURCHASE
THE PROPERTY. THE PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL
ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES CONTRIBUTOR
WOULD SUFFER IN THE EVENT OF OP'S WRONGFUL FAILURE TO PURCHASE THE
PROPERTY, HEREBY AGREE THAT THE REASONABLE ESTIMATE OF SAID DAMAGES
IS AN AMOUNT EQUAL TO THE DEPOSIT; AND IN THE EVENT OF OP'S
WRONGFUL FAILURE TO PURCHASE THE PROPERTY, CONTRIBUTOR SHALL BE
ENTITLED TO SUCH AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT
PAYMENT OR TENDER TO CONTRIBUTOR BY OP OF SUCH AMOUNT SHALL
TERMINATE ALL OF CONTRIBUTOR'S RIGHTS AND REMEDIES AT LAW OR IN
EQUITY AGAINST OP WITH RESPECT TO SUCH FAILURE TO PERFORM.
/s/ SAB /s/ VJC
Contributor's Initials OP's Initials
7.3 Default by Contributor.
(a) In the event that Contributor fails to keep and
perform each and every obligation, covenant and agreement herein by
Contributor to be kept or performed after OP has made the Pre-
Contribution Loan to Contributor, then OP may pursue an action
against Contributor and the Property for specific performance
and/or damages but agrees that it shall have no right to seek or
obtain consequential or punitive damages resulting from a breach of
Contributor's agreements to convey the Property. Notwithstanding
the foregoing, OP's right to file an action for specific
performance against Contributor (i) shall be limited to the period
of thirty (30) days following notice by OP to Contributor setting
forth the obligation, covenant or agreement which Contributor has
failed to keep or perform and (ii) shall require evidence of OP's
ability to perform all of the obligations of OP then capable of
being performed at the point in time of Contributor's breach or
default.
(b) EXCEPT IN THE CASE WHERE OP HAS MADE THE PRE-
CONTRIBUTION LOAN TO CONTRIBUTOR AS PROVIDED IN SUBPARAGRAPH (a)
ABOVE, IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED BY
REASON OF THE CONTRIBUTOR'S DEFAULT UNDER THIS AGREEMENT AND OP
SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE DEPOSIT
SHALL BE RETURNED TO OP. IN ADDITION, THE PARTIES HERETO, BEFORE
ENTERING INTO THIS TRANSACTION, HAVE BEEN CONCERNED WITH THE FACT
THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY OP IF THE CONTRIBUTOR
SHOULD WRONGFULLY FAIL TO CLOSE THE TRANSACTIONS HEREUNDER. THE
CONTRIBUTOR HAS STATED THAT IT WILL NOT PERMIT ANY ACTION FOR
SPECIFIC PERFORMANCE OF THIS AGREEMENT UNTIL AFTER OP HAS MADE THE
PRE-CONTRIBUTION LOAN. WITH THE FLUCTUATION IN VALUE OF REAL
PROPERTY, THE CURRENT AND HIGHLY UNPREDICTABLE STATE OF THE
ECONOMY, THE FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL
TYPES, AND OTHER FACTORS THAT DIRECTLY AFFECT THE VALUE AND MARKET
ABILITY OF THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT IT
WOULD BE EXTREMELY DIFFICULT AND IMPRACTICABLE, IF NOT IMPOSSIBLE,
TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY PRIOR TO SIGNING THIS
AGREEMENT THE AMOUNT OF DAMAGES THAT WOULD BE SUFFERED BY OP IN THE
EVENT OF THE CONTRIBUTOR'S WRONGFUL FAILURE TO CLOSE THE
TRANSACTIONS HEREUNDER. IN ADDITION, OP DESIRES TO PROVIDE A
FINANCIAL DISINCENTIVE FOR ANY SUCH FAILURE BY CONTRIBUTOR. THE
PARTIES, HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO
ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES OP WOULD SUFFER IN THE
EVENT OF CONTRIBUTOR'S WRONGFUL FAILURE TO CLOSE THE TRANSACTIONS
HEREUNDER, HEREBY AGREE THAT THE REASONABLE ESTIMATE OF SAID
DAMAGES IS AN AGGREGATE AMOUNT EQUAL TO TWO MILLION DOLLARS
($2,000,000); AND IN THE EVENT OF CONTRIBUTOR'S WRONGFUL FAILURE TO
CLOSE THE TRANSACTIONS HEREUNDER PRIOR TO THE TIME OP HAS MADE THE
PRE-CONTRIBUTION LOAN TO CONTRIBUTOR, OP SHALL BE ENTITLED TO SUCH
AMOUNT AS FULL LIQUIDATED DAMAGES, AND THAT PAYMENT OR TENDER TO OP
OF SUCH AMOUNT SHALL TERMINATE ALL OF OP'S RIGHTS AND REMEDIES AT
LAW OR IN EQUITY AGAINST CONTRIBUTOR WITH RESPECT TO SUCH FAILURE
TO PERFORM. AS USED HEREIN, CONTRIBUTOR'S WRONGFUL FAILURE TO
CLOSE THE TRANSACTIONS HEREUNDER SHALL MEAN SUCH CONTRIBUTOR'S
WILLFUL AND UNWARRANTED REFUSAL TO DELIVER THE GRANT DEED WITH OP
HAVING COMPLIED WITH ITS OBLIGATIONS HEREUNDER (EXCEPT FOR ITS
OBLIGATION TO FUND THE PRE-CONTRIBUTION LOAN, BALANCE OF THE
ADJUSTED PAYMENT AMOUNT) AND BEING READY, WILLING AND ABLE TO CLOSE
(AND SUCH TERM SHALL NOT APPLY TO ANY OTHER DEFAULT OR BREACH BY
CONTRIBUTOR HEREUNDER).
/s/ SAB /s/ VJC
Contributor's Initials OP's Initials
(c) Without limitation on the other limitations or
remedies contained herein, in the event of any dispute between the
parties respecting this Agreement or the transactions herein
contemplated prior to the time that OP has made the Pre-
Contribution Loan to Contributor, OP hereby waives (i) any right to
record or file a lis pendens or other similar notice of suit, (ii)
any right to seek specific performance of this Agreement, and (iii)
any right to assert any claim affecting the right of possession or
title to the Property.
7.4 Breach by Contributor. Subject to Section 7.3(b),
but notwithstanding any other provision to the contrary contained
herein, the aggregate liability of Contributor arising pursuant to
or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express
or implied) of Contributor under this Agreement (or any document
executed or delivered in connection herewith) shall not exceed
$1,000,000.00. In no event shall this Agreement (or any short form
or memorandum thereof) be recorded against or with respect to the
Property.
ARTICLE VIII
INDEMNITIES
8.1 OP Indemnities. OP shall indemnify Contributor
against and hold the Contributor harmless from any and all loss,
damage, claim of damage, liability or expense, including court
costs and reasonable attorneys' fees, for third party claims
arising out of or in connection with any tort committed by OP
(including any personal injury or property damage or claim of
personal injury or property damage of any kind whatsoever,
including death, to property or persons, including employees of OP)
unless caused by Contributor, resulting from such tort occasioned
in or about the Property (a) as a result of its investigation of
the Property during the Due Diligence Period and (b) on or
subsequent to Closing. These covenants shall survive Closing.
8.2 Contributor Indemnities. Contributor shall
indemnify OP against and hold OP harmless from any and all loss,
cost, damage, claim, liability or expense, including court costs
and reasonable attorneys' fees, for third party claims arising out
of or in connection with any tort committed by the Contributor
(including any personal injury or property damage or claim of
personal injury or property damage of any kind whatsoever,
including death, to property or persons, including employees of the
Contributor) unless caused by OP, resulting from such tort
occasioned in or about the Property prior to Closing, or in
connection with a breach of Contributor's representations and
warranties contained herein. These covenants shall survive
Closing.
8.3 Brokerage Commission. Except for any Broker set
forth in the Basic Terms of this Agreement, whose commission shall
be paid by the party represented by such Broker, neither
Contributor nor OP has engaged the services of, nor is it or will
it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder's fee,
commission or other amount with respect to the transactions
described herein. Each party shall indemnify, defend and hold the
other party harmless against all loss, liability and expense,
including reasonable attorneys' fees and costs, suffered by such
other party due to a breach of the foregoing representation,
covenant, and warranty. These covenants shall survive Closing.
ARTICLE IX
EMPLOYEES
9.1 Property Employees. Contributor has no employees.
Furthermore, nothing in this Agreement or any document delivered
pursuant hereto, express or implied, shall obligate OP to employ
any person now employed at the Property.
ARTICLE X
ESCROW AGREEMENT
10.1 Investment and Use of Funds. The Deposit shall be at all
times invested by Escrow Agent in the following investments
("Approved Investments"): (i) United States Treasury obligations,
(ii) United States Treasury-backed repurchase agreements issued by
a major money center banking institution reasonably acceptable to
the Contributor, (iii) Certificates of Deposit or Money Market
Accounts of institutions whose deposits are insured by the FDIC or
(iv) such other manner as may be reasonably agreed to by
Contributor and OP. The Deposit shall be disposed of by Escrow
Agent only as provided in this Agreement.
10.2 Termination of Escrow. Upon not less than five (5)
business days' prior written notice to the Escrow Agent and the
other party, Escrow Agent shall deliver the Deposit to the party
requesting the same; provided, however, that if the other party
shall, within said five (5) business day period, deliver to the
requesting party and the Escrow Agent a written notice that it
disputes the claim to the Deposit, Escrow Agent shall retain the
Deposit until it receives written instructions executed by both
Contributor and OP as to the disposition and disbursement of the
Deposit, or until ordered by final court order, decree or judgment,
which is not subject to appeal, to deliver the Deposit to a
particular party, in which event the Deposit shall be delivered in
accordance with such notice, instructions, order, decree or
judgment. Notwithstanding the foregoing, in the event OP
terminates this Agreement prior to the expiration of the Due
Diligence Period, the Escrow Agent shall pay the Deposit to OP
without first notifying Contributor, and Contributor's consent to
such payment shall not be required.
10.3 Interpleader. Contributor and OP mutually agree that in
the event of any controversy regarding the Deposit, unless mutual
written instructions are received by the Escrow Agent directing the
Deposit's disposition, the Escrow Agent shall not take any action,
but instead shall await the disposition of any proceeding relating
to the Deposit or, at the Escrow Agent's option, the Escrow Agent
may interplead all parties and deposit the Deposit with a court of
competent jurisdiction in which event the Escrow Agent may recover
all of its court costs and reasonable attorneys' fees. Contributor
or OP, whichever loses in any such interpleader action, shall be
solely obligated to pay such costs and fees of the Escrow Agent, as
well as the reasonable attorneys' fees of the prevailing party in
accordance with the other provisions of this Agreement.
10.4 Liability of Escrow Agent. The parties acknowledge that
the Escrow Agent is acting solely as a stakeholder at their request
and for their convenience, that the Escrow Agent shall not be
deemed to be the agent of either of the parties, and that the
Escrow Agent shall not be liable to either of the parties for any
act or omission on its part taken or made in good faith, and not in
disregard of this Agreement, but shall be liable for its negligent
acts and for any loss, cost or expense incurred by Contributor or
OP resulting from the Escrow Agent's mistake of law respecting the
Escrow Agent's scope or nature of its duties. Contributor and OP
shall jointly and severally indemnify and hold the Escrow Agent
harmless from and against all costs, claims and expenses, including
reasonable attorneys' fees, incurred in connection with the
performance of the Escrow Agent's duties hereunder, except with
respect to actions or omissions taken or made by the Escrow Agent
in bad faith, in disregard of this Agreement or involving
negligence on the part of the Escrow Agent.
ARTICLE XI
MISCELLANEOUS
11.1 Notice. Whenever any notice may be given or is required
to be given under the terms of this Agreement, the same shall be
given in writing and either sent by certified mail, return receipt
requested, postage pre-paid or by a national overnight delivery
service, delivery pre-paid or delivered by hand with written
receipt acknowledged, or by telecopy followed by another permitted
means of delivery at the address set forth in the Basic Terms of
this Agreement. Any notice required or given hereunder shall be
deemed given when received if sent by telecopy, hand or overnight
courier, or when sent if sent by certified mail, return receipt
requested. Further, all notices given pursuant to this Agreement
from Contributor to OP or from OP to Contributor shall be effective
if executed and sent by counsel to the respective party and be
deemed given when sent as provided above. The time to respond to
any notice shall commence to run upon the date of actual delivery
provided above (or attempted delivery if delivery is refused during
normal business hours at the appropriate address).
11.2 Successors and Assigns. OP may not assign any of its
rights or duties hereunder without the prior written consent of
Contributor (which consent may be given or withheld in
Contributor's discretion). Subject to the foregoing, all rights
and obligations of Contributor and OP under this Agreement shall
inure to and be binding on their respective successors and assigns.
11.3 Severability. If any provision of this Agreement shall
be in violation of any applicable law or unenforceable for any
reason, the invalidity or unenforceability of any provision shall
not invalidate or render unenforceable any other provision hereof,
which other provisions shall remain in full force and effect.
11.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior
discussions, understandings, agreements and negotiations between
the parties hereto.
11.5 Modification. This Agreement may be modified only by a
written instrument duly executed by the OP and Contributor hereto.
Any modification to Article IX must be by a written instrument also
executed by Escrow Agent.
11.6 Incorporation by Reference. The Basic Terms and all of
the exhibits attached hereto are by this reference incorporated
herein and made a part hereof.
11.7 Survival. All warranties, representations, indemnities
and agreements made herein shall survive Closing for a period of
one year, except to the extent they relate to taxes as specified in
paragraph 3.1(h), which shall survive until one-month following the
applicable statute of limitations.
11.8 Cooperation; Further Assurances. Contributor agrees to
reasonably cooperate at OP's expense with OP after Closing, and to
assist OP after Closing in order for there to be an orderly
transition of ownership and management of the Property.
Contributor further covenants and agrees to sign, execute and
deliver or cause to be signed, executed and delivered and to do or
make, or to cause to be done or make, upon the written request of
OP, any and all agreements, instruments, papers, deeds, acts or
things, supplemental, confirming or otherwise, as may be reasonably
required by OP for the purpose of or in connection with the
transaction contemplated hereby. Not withstanding the foregoing,
Contributor shall not be required to incur any material costs or
any additional liabilities or obligations.
11.9 Time is of the Essence. Time is of the essence with
respect to every provision of this Agreement.
11.10 No Presumption Against Draftsman. The parties
acknowledge that each party and its counsel have participated in
the negotiation and preparation of this Agreement. This Agreement
shall be construed without regard to any presumption or other rule
requiring construction against the party causing the Agreement to
be drafted.
11.11 Days. If any action is required to be performed, or
if any notice, consent or other communication is given, on a day
that is a Saturday or Sunday or a legal federal holiday, such
performance shall be deemed to be required, and such notice,
consent or other communication shall be deemed to be given, on the
first Business Day following such Saturday, Sunday or legal
holiday. Unless otherwise specified herein, all references herein
to a "day" or "days" shall refer to calendar days and not Business
Days. A "Business Day" shall mean any day other than a Saturday,
Sunday or legal federal holiday.
11.12 Applicable Law. This Agreement shall be construed,
performed and enforced in accordance with the laws of the
jurisdiction in which the Property is located.
11.13 Attorneys' Fees. If any controversy shall arise
among the parties hereto and/or the Unit Holders concerning the
interpretation of this Agreement or the Partnership Amendment, the
prevailing party(ies) shall be entitled to receive its (their)
attorneys' fees and costs (including costs of collection) from the
non-prevailing party(ies).
11.14 Counterparts. To facilitate execution, this
Agreement may be executed in as many counterparts as may be
required. It shall not be necessary that the signatures on behalf
of all parties appear on each counterpart hereof. All counterparts
hereof shall collectively constitute a single agreement.
IN WITNESS WHEREOF, this Agreement has been executed by the
duly authorized representatives of the parties hereto as of the
date designated below.
Contributor: HIGHRIDGE-APOLLO GRAND PLAZA, L.P.,
a California limited partnership
By: OLYMPIC BEND ASSOCIATES,
a California limited partnership,
Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Co-Managing General Partner
Date: March 31, 1998
OP: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY, INC., a
Maryland corporation, General Partner
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President and COO
Date: March 31, 1998
Escrow Agent: COMMERCE ESCROW COMPANY
a California corporation
By: /s/ Xxxxx Xxx
Its: Escrow Officer
Date: March 31, 1998
