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Title: |
Agreement of Purchase and Sale |
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Date: |
2000 |
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$46 |
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#1455096 |
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<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>EXHIBIT 10.12
<TEXT>
225 BUSH STREET
AGREEMENT OF PURCHASE AND SALE
This Agreement, dated as of July 19, 2000 (the "Effective Date"), is
among OAIC Bush Street, LLC, a Delaware limited liability company ("Seller"),
and Flynn Land Company, Inc., a California corporation ("Flynn") and GEM
Investors, Inc., a Delaware corporation ("GEM," together with Flynn, "Buyer").
ARTICLE I
PURCHASE AND SALE OF PROPERTY
SECTION 1.1 SALE.
Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, subject to the terms, covenants and conditions set forth herein, that
certain real property located at 225 Bush Street, San Francisco, CA 94102,
together with any and all rights, privileges, improvements and easements
appurtenant thereto owned by Seller, which real property is more particularly
described in an EXHIBIT A attached hereto and made a part hereof (collectively
the "Real Property"), together with the tangible personal property owned by
Seller, if any, located on the Real Property and used exclusively in the
operation or maintenance of the Real Property and described in EXHIBIT F
attached hereto, and including the items required to be delivered by Seller
under Section 8.3(d) herein (the "Personal Property"), and all right, title and
interest of Seller in any intangible personal property now or on the Closing
Date owned by Seller and used in the ownership, use or operation of the Real
Property or the Personal Property, including Seller's rights, if any, to all
building or trade names, including the right to use the name "225 Bush Street,"
(provided however, Seller makes no representation or warranty that Seller has
any rights with respect to ownership or use of such trade names), any lease and
occupancy rights (including the lessor's interest in and to the tenant leases
described in EXHIBIT B attached hereto and made a part hereof as well as any
additional tenant leases or amendments or modifications thereto approved by
Buyer or which are permitted to be entered into by Seller pursuant to this
Agreement (collectively, the "Leases"), all security deposits and prepaid rent,
if any, under the Leases and any and all guaranties, letters of credit or other
credit enhancement relating to the Leases), utility contracts, advertising
materials, plans and specifications and, all other agreements or rights relating
to the ownership, use and operation of the Real Property or the Personal
Property (including the service contracts described in EXHIBIT G attached hereto
and additional service contracts entered into after the date hereof in
accordance with this Agreement the ("Service Contracts") and the construction
contracts described in EXHIBIT H attached hereto and additional construction
contract entered into after the date hereof in accordance with this Agreement
(the "Construction Contracts") (collectively, the "Intangible Property"). The
Real Property, Personal Property and Intangible Property are collectively
referred to herein as the "Property".
SECTION 1.2 PURCHASE PRICE.
(a) The purchase price of the Property is One Hundred Fifty
Four Million Dollars ($154,000,000) (the "Purchase Price").
<PAGE>
(b) The Purchase Price shall be paid as follows:
(1) Upon the execution of this Agreement Buyer shall
deposit with the Title Company (as defined below), cash or other immediately
available funds in the amount of Five Hundred Thousand Dollars ($500,000)
($450,000 of which amount shall constitute the "Initial Deposit" and $50,000 of
which amount shall constitute the "Nonrefundable Payment"). The Nonrefundable
Payment shall be fully and completely earned by Seller as consideration for
entering into this Agreement with Buyer and for not marketing the Property
further prior to entering into an agreement with a potential purchaser of the
Property, and the Nonrefundable Payment shall only be refundable as specifically
provided in Section 1.2(b)(3) below and shall otherwise not be refundable under
any circumstances. If the Closing occurs, then the Nonrefundable Payment shall
be credited against the Purchase Price.
(2) If at the end of the Contingency Period Buyer elects
to proceed with the purchase of the Property Buyer shall deposit in escrow with
Chicago Title Insurance Company (the "Title Company") an all-cash payment in the
amount of One Million Five Hundred Thousand Dollars ($1,500,000) (the
"Additional Deposit," and the same, together with the Initial Deposit of
$450,000, and the "Supplemental Deposit" (as defined in Section 8.2 (b)), if
made by Buyer, shall be collectively referred to as the "Deposit").
(3) THE DEPOSIT AND THE NONREFUNDABLE PAYMENT SHALL BE
HELD IN AN INTEREST BEARING ACCOUNT AND ALL INTEREST THEREON SHALL BE DEEMED A
PART OF THE DEPOSIT AND THE NONREFUNDABLE PAYMENT. IF THE SALE OF THE PROPERTY
AS CONTEMPLATED HEREUNDER IS CONSUMMATED, THEN THE DEPOSIT AND THE NONREFUNDABLE
PAYMENT SHALL BE PAID TO SELLER AT THE CLOSING AND CREDITED AGAINST THE PURCHASE
PRICE. IF THE SALE OF THE PROPERTY IS NOT CONSUMMATED DUE TO (A) SELLER'S
DEFAULT HEREUNDER OR (B) THE FAILURE OF THE CONDITIONS FOR THE BENEFIT OF BUYER
SET FORTH IN SECTIONS 2.1(G), OR 2.1(H), OR (C) THE TERMINATION OF THIS
AGREEMENT BY BUYER UNDER SECTION 5.2, THEN, AS BUYER'S SOLE REMEDY, BUYER MAY
TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO SELLER AND RECEIVE A REFUND OF THE
DEPOSIT AND THE NONREFUNDABLE PAYMENT, IN WHICH EVENT NEITHER PARTY SHALL HAVE
ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT AS PROVIDED IN SECTIONS 6.1,
9.3 AND 9.9 BELOW, PROVIDED, HOWEVER, THAT IF THE SALE OF THE PROPERTY IS NOT
CONSUMMATED AS RESULT OF THE WILLFUL DEFAULT OF SELLER, BUYER SHALL BE ENTITLED
TO BRING AN ACTION AGAINST SELLER FOR ACTUAL DAMAGES INCURRED BY BUYER UP TO AN
AMOUNT NOT TO EXCEED THREE PERCENT (3%) OF THE PURCHASE PRICE, PROVIDED (A) ANY
CLAIM THAT BUYER MAKES AGAINST SELLER MUST BE FILED IN THE APPROPRIATE COURT OF
COMPETENT JURISDICTION WITHIN NINETY (90) DAYS AFTER SUCH TERMINATION NOTICE TO
SELLER BY BUYER AND (B) SUCH THREE PERCENT (3%) CAP SHALL NOT APPLY IN THE EVENT
THAT SELLER WILLFULLY DEFAULTS UNDER THIS AGREEMENT BY SELLING THE PROPERTY TO
ANY THIRD PARTY (OR ENTERS INTO AN AGREEMENT TO DO SO) IN BREACH OF THE TERMS
HEREOF WITHIN NINETY (90) DAYS OF THE CLOSING DATE SUBJECT TO THE LIMITATIONS
SET FORTH IN THE SECOND SENTENCE OF SECTION 9.18 BELOW. IF THE SALE OF THE
PROPERTY IS NOT CONSUMMATED DUE TO THE TERMINATION OF THE AGREEMENT BY BUYER
PURSUANT TO SECTION 8.4 OR THE TERMINATION OF THIS AGREEMENT BY BUYER UNDER
SECTION 4.1, THEN, AS BUYER'S SOLE REMEDY, BUYER MAY TERMINATE THIS AGREEMENT BY
WRITTEN NOTICE TO SELLER AND RECEIVE A REFUND OF THE DEPOSIT AND THE
NONREFUNDABLE PAYMENT SHALL BE RETAINED BY SELLER, IN WHICH EVENT NEITHER PARTY
SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER EXCEPT AS PROVIDED IN
SECTIONS 6.1, 9.3 AND 9.9 BELOW. IF THE SALE IS NOT CONSUMMATED DUE TO ANY
DEFAULT BY BUYER HEREUNDER, THEN THE TITLE COMPANY SHALL DELIVER TO SELLER THE
NONREFUNDABLE PAYMENT AND THE DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES HAVE
AGREED THAT SELLER'S ACTUAL DAMAGES IN THE EVENT OF A FAILURE TO CONSUMMATE THIS
2
<PAGE>
SALE DUE TO BUYER'S DEFAULT, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO
DETERMINE. AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE
CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE
NONREFUNDABLE PAYMENT AND THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES
THAT SELLER WOULD INCUR IN SUCH EVENT. BY PLACING THEIR INITIALS BELOW, EACH
PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE
FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS
AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE
FOREGOING IS NOT INTENDED TO LIMIT THE PARTIES OBLIGATIONS UNDER SECTIONS 6.1,
9.3 AND 9.9.
INITIALS: SELLER ________ BUYER _______
(4) The balance of the Purchase Price, which is One
Hundred Fifty Two Million Dollars ($152,000,000) shall be deposited by Buyer
with the Title Company and paid to Seller all in cash at the consummation of the
purchase and sale contemplated hereunder (the "Closing").
ARTICLE II
CONDITIONS
SECTION 2.1 CONDITION PRECEDENT.
Buyer's obligation to purchase the Property is conditioned upon the
following:
(a) Buyer has reviewed that certain Preliminary Report issued
by Title Company, dated July 3, 2000 under Order No. 9560955-SH (the "PTR"),
copies of the underlying documents referenced therein and that certain ALTA
Survey, last revised on March 27, 1998, prepared by Martin M. Ron & Associates,
Inc. (the "Survey").
(b) Buyer's review and approval of all Leases, Service
Contracts and Construction Contracts affecting the Property. Seller shall
furnish to Buyer copies of the Leases, Service Contracts and Construction
Contracts within five (5) days after the date Seller receives a fully executed
original of this Agreement (the "Delivery Period").
(c) Buyer's review and approval of the physical condition of
the Property.
(d) Buyer's review and approval of all zoning, land use,
building, environmental and other statutes, rules, or regulations applicable to
the Property.
(e) Subject to the provisions of the paragraph below, Buyer's
review and approval of operating statements with respect to the Property for
1999 and the partial calendar year ending on May 31, 2000, certificates of
occupancy, plans and specifications, soils and other reports, service contracts,
operating budget, invoices and other contracts or documents which will be
binding on Buyer after Closing. Seller shall make available to Buyer within the
Delivery Period copies of all such items in Seller's possession solely for
Buyer's inspection during reasonable business hours. Notwithstanding the
foregoing, Buyer's review shall not include a review of Seller's internal
economic memoranda or reports, attorney-client privileged materials or Seller's
appraisals of the Property, if any.
3
<PAGE>
(f) Buyer's review and approval of any other matters Buyer
deems relevant to the Property in its sole and absolute discretion.
(g) Buyer's receipt of the "Title Policy" (as defined in
Section 4.2) or Title Company's unconditional agreement to issue the same.
(h) The absence of any voluntary or involuntary bankruptcy
affecting Seller under applicable state or local laws.
SECTION 2.2 CONTINGENCY PERIOD.
Buyer shall have thirty (30) days from the Effective Date (such period
being referred to herein as the "Contingency Period"), to review and approve the
matters described in Sections 2.1(a)-(f) above in Buyer's sole and absolute
discretion. If Buyer determines in its sole and absolute discretion to proceed
with the purchase of the Property, then Buyer shall, before the end of the
Contingency Period, notify Seller in writing (the "Acceptance Notice") that
Buyer has approved all of the matters described in Section 2.1(a)-(f) above,
including, without limitation, all documents, agreements, surveys, reports and
other items and materials delivered to or made available to Buyer in connection
with this Agreement during the Contingency Period (the "Due Diligence
Materials"), and Buyer shall place the Additional Deposit in escrow with the
Title Company pursuant to Section 1.2(b)(2) above. If before the end of the
Contingency Period Buyer fails, for any reason or no reason in its sole and
absolute discretion, to give Seller such Acceptance Notice and deliver the
Additional Deposit, then Buyer shall be deemed not to have elected to proceed
with the purchase of the Property, this Agreement shall so terminate, the
Nonrefundable Payment shall be retained by Seller, the Deposit shall be
delivered to Buyer and neither party shall have any further rights or
obligations hereunder except as provided in Sections 6.1, 9.3 and 9.9 below.
ARTICLE III
BUYER'S EXAMINATION
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
Subject to the provisions of Sections 3.2 and 3.3 below, Seller hereby
makes the following representations and warranties with respect to the Property,
provided that Seller makes no representations or warranties with respect to the
matters (the "Disclosure Items") to the extent expressly set forth in Schedule 1
attached hereto or in the documentation referenced in Schedule 1 attached
hereto. Notwithstanding anything to the contrary contained herein or in any
document delivered in connection herewith, Seller shall have no liability with
respect to such Disclosure Items.
(a) Seller has not (i) made a general assignment for the
benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of any involuntary petition by Seller's creditors, (iii)
suffered the appointment of a receiver to take possession of all, or
substantially all, of Seller's assets, (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of Seller's assets, (v) admitted
in writing its inability to pay its debts as they come due, or (vi) made an
offer of settlement, extension or composition to its creditors generally.
4
<PAGE>
(b) Seller is not a "foreign person" as defined in Section
1445 of the Internal Revenue Code of 1986, as amended (the "Code") and any
related regulations.
(c) This Agreement (i) has been duly authorized, executed and
delivered by Seller, and (ii) does not violate any provision of any agreement or
judicial order to which Seller is a party or to which Seller or the Property is
subject.
(d) Seller has the power and authority to enter into this
Agreement and to perform its obligations hereunder.
(e) As of the Effective Date, the only Leases and amendments
thereto in force for the Property as of the date hereof are set forth in the
list attached hereto as EXHIBIT B and made a part hereof. As of the Effective
Date, the only Service Contracts that affect the Property are set forth in
EXHIBIT G attached hereto. As of the Effective Date, the only Construction
Contracts that affect the Property are set forth in EXHIBIT H attached hereto.
To the best of Seller's knowledge, there are no unrecorded agreements which will
affect the Property on the Closing Date other than the Leases, the Service
Contracts and the Construction Contracts. Unless otherwise indicated on EXHIBIT
G, all Service Contracts are terminable without penalty upon not more than
thirty (30) days prior written notice. To the best of Seller's knowledge, Seller
is not in default under the Leases, the Service Contracts or the Construction
Contracts.
(f) To the best of Seller's knowledge, there is no litigation
pending with respect to the Property (or affecting Seller and which would
adversely affect Seller's ability to perform under this Agreement) other than as
set forth in SCHEDULE 1.
(g) To the best of Seller's knowledge, except as set forth in
SCHEDULE 1 or as may be disclosed in Due Diligence Materials, Seller has
received no written notice from any governmental authority that the present use
and operation of the Property is in violation of any of the applicable law
(including, without limitation, (i) the Americans with Disabilities Act ("ADA"),
Title 24 of the California Administrative Code, and other similar federal, state
and local laws, (ii) building codes and any other laws relating to the
construction or design of the improvements on the Property, including, without
limitation, fire, safety, handicapped access, or seismic design (collectively,
"Building Codes"), and (iii) any laws relating to environmental matters (the
"Environmental Laws").
(h) Seller represents that Gregory Breskin, Vice Presdent,
and William Stolberg, Senior Asset Manager are the only persons currently within
Seller's organization with primary responsibility for the management for the
Property.
(i) Seller represents and warrants that it retained or
engaged no broker or finder instrumental in arranging or bringing about this
transaction except for Grubb & Ellis Real Estate Company ("Seller's Broker").
(j) Seller represents that after the expiration of the
Contingency Period and prior to Closing, Seller shall terminate the following
service contracts listed on EXHIBIT G attached hereto: (i) the management
agreement with Jones Lang LaSalle dated April 1, 1998; (ii) the office leasing
agreement with Grubb & Ellis Company dated April 24, 1998; and (iii) the retail
leasing agreement with CB Richard Ellis dated January 2, 1999; provided that
5
<PAGE>
Buyer acknowledges and agrees that those agreements provided for herein allow
such brokers to submit a list of tenants with which such broker was negotiating
at the time of termination of such contracts and Buyer will be obligated to pay
a commission to such broker if Buyer subsequently enters into any lease with
such tenant during the time period specified in such agreement (the "Post
Termination Obligations") and after such termination, Buyer shall assume such
Post Termination Obligations pursuant to the Assignment of Leases.
Each of the representations and warranties of Seller contained in this
Section 3.1: (1) is true as of the date of this Agreement; (2) shall be deemed
remade by Seller, and shall be true in all material respects as of the date of
Closing (as if made on and as of the Closing), subject to (A) any Exception
Matters (as defined below), (B) the Disclosure Items, and (C) other matters
expressly permitted in this Agreement or otherwise specifically approved in
writing by Buyer including, without limitation, the Due Diligence Materials; and
(3) shall survive the close of escrow as provided in Section 3.3 below.
SECTION 3.2 NO LIABILITY FOR EXCEPTION MATTERS.
As used herein, the term "Exception Matter" shall refer to a matter
disclosed to Buyer in writing or discovered by Buyer before the Closing, that
would make a representation or warranty of Seller contained in this Agreement
materially untrue or incorrect, including, without limitation, matters disclosed
in writing to Buyer by Seller or by any other person. If Buyer obtains knowledge
of any Exception Matter after the date hereof, Buyer may terminate this
Agreement and receive a return of the Deposit upon written notice to Seller
within five (5) days after Buyer learns of such Exception Matter if Seller
elects not to cure or remedy any such Exception Matter. Buyer shall promptly
notify Seller in writing of any Exception Matter of which Buyer obtains
knowledge before the Closing. If Buyer obtains knowledge of any Exception Matter
before the Closing, but nonetheless elects to proceed with the acquisition of
the Property, Buyer shall consummate the acquisition of the Property subject to
such Exception Matter and Seller shall have no liability with respect to such
Exception Matter, notwithstanding any contrary provision, covenant,
representation or warranty contained in this Agreement. If Buyer elects to
terminate this Agreement on the basis of any Exception Matter, Buyer shall so
notify Seller in writing within five (5) days following Buyer's discovery of the
Exception Matter, and the Deposit shall be returned to Buyer and the
Nonrefundable Payment shall be retained by Seller. Buyer's failure to give such
notice within such five (5) day period shall be deemed a waiver by Buyer of such
Exception Matter. Upon any such termination of this Agreement, neither party
shall have any further rights or obligations hereunder, except as provided in
Sections 6.1, 9.3, and 9.9 below. Notwithstanding the foregoing, if Buyer elects
to terminate this Agreement on the basis that Seller has breached a material
representation or warranty at the time of the Effective Date and for which
Seller had actual knowledge on the Effective Date, then Buyer shall have the
remedies set forth in Section 1.2(b)(3) above in connection with such default by
Seller, even if the same constitutes an Exception Matter but subject to the
limitations set forth therein and in Section 9.18. Seller shall have no
obligation to cure or remedy any Exception Matter, and, subject to Buyer's right
to terminate this Agreement as set forth above and the remedies set forth in
Section 1.2(b)(3), in the event that Seller has breached a material
representation or warranty at the time of the Effective Date and for which
Seller had actual knowledge on the Effective Date, Seller shall have no
liability whatsoever to Buyer with respect to any Exception Matters.
6
<PAGE>
SECTION 3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties of Seller and Buyer contained herein
shall survive for a period of nine (9) months after the Closing, except that
Buyer's representations and warranties in Sections 3.5(d), (e) and (f) shall
survive indefinitely. Any claim which Buyer or Seller may have at any time
against the other for a breach of any such representation or warranty (other
than those contained in Sections 3.5(d), (e) and (f)), whether known or unknown,
which is not asserted (i) by written notice to Seller or Buyer within such nine
(9) month period and (ii) by Seller's or Buyer's filing a legal action with
respect thereto whether such nine (9) month period shall not be valid or
effective, and the other party shall have no liability with respect thereto.
SECTION 3.4 SELLER'S KNOWLEDGE.
For purposes of this Agreement and any document delivered at Closing,
whenever the phrase "to the best of Seller's knowledge" or the "knowledge" of
Seller or words of similar import are used, they shall be deemed to refer to the
current actual knowledge of Gregory Breskin, Vice President, and William
Stolberg, Senior Asset Manager.
SECTION 3.5 REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as follows:
(a) Buyer represents and warrants to Seller that this
Agreement and all documents executed by Buyer which are to be delivered to
Seller at Closing do not and at the time of Closing will not violate any
provision of any agreement or judicial order to which Buyer is a party or to
which Buyer is subject.
(b) Buyer represents and warrants to Seller that Buyer has
not (i) made a general assignment for the benefit of creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition by Buyer's creditors, (iii) suffered the appointment of a receiver to
take possession of all, or substantially all, of Buyer's assets, (iv) suffered
the attachment or other judicial seizure of all, or substantially all, of
Buyer's assets, (v) admitted in writing its inability to pay its debts as they
come due, or (vi) made an offer of settlement, extension or composition to its
creditors generally.
(c) Buyer is duly formed, validly existing and in good
standing under the laws of the State of California. Buyer has duly authorized,
executed and delivered this Agreement.
(d) Buyer is not a party in interest with respect to any
employee benefit or other plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), which is subject to ERISA or Section 4975 of the Code and which is an
investor in Seller.
(e) Other than Seller's Broker, as defined below, Buyer has
had no contact with any broker or finder instrumental in arranging or bringing
about this transaction with respect to the Property.
7
<PAGE>
Each of the representations and warranties of Buyer contained in this Section
shall be deemed remade by Buyer as of the Closing and shall survive the Closing
as provided in Section 3.3 above.
SECTION 3.6 BUYER'S INDEPENDENT INVESTIGATION.
(a) Buyer acknowledges and agrees that it has been given or
will be given before the end of the Contingency Period, a full opportunity to
inspect and investigate each and every aspect of the Property, either
independently or through agents of Buyer's choosing, including, without
limitation:
(1) All matters relating to title, together with all
governmental and other legal requirements such as taxes, assessments, zoning,
use permit requirements and building codes.
(2) The physical condition and aspects of the Property,
including, without limitation, the interior, the exterior, the square footage
within the improvements on the Real Property and within each tenant space
therein, the structure, seismic aspects of the Property, the paving, the
utilities, and all other physical and functional aspects of the Property. Such
examination of the physical condition of the Property shall include an
examination for the presence or absence of Hazardous Materials, as defined
below, which shall be performed or arranged by Buyer at Buyer's sole expense.
For purposes of this Agreement, "Hazardous Materials" shall mean inflammable
explosives, radioactive materials, asbestos, polychlorinated biphenyls, lead,
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