Agrmt. Of Purchase & Sale & Joint Escrow Instr.

AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS


THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of April 30, 1997 (the "Effective Date") by and between CAMARILLO PARTNERS, a California general partnership ("Seller"), and KILROY REALTY L.P., a Delaware limited partnership ("Buyer").


Buyer and Seller agree as follows:


1. Definitions. For the purposes of this Agreement, the following terms will
----------- have the meanings indicated below, or are defined where indicated below:


"awareness of Seller" and words of similar effect are defined in Subsection 13.4.


"Assignment and Assumption" is defined in Subsection 7.1.


"Bill of Sale" is defined in Subsection 7.1.


"Broker" shall mean Jones Lang Wootten USA.


"Closing" and "Close of Escrow": Closing and Close of Escrow are terms used interchangeably in this Agreement. The Closing or the Close of Escrow will be deemed to have occurred when the Deed is recorded in the official records of the county in which the Property is located, and the Purchase Price is paid to Seller.


"Closing Date" shall mean the date on which the Closing actually occurs.


"Contingency Date" shall mean the last day of the Due Diligence Period. Unless otherwise agreed in writing by the parties, the Contingency Date shall be the earlier to occur of (i) May 12, 1997, or (ii) the Scheduled Closing Date designated in any notice sent by Buyer to Seller in accordance with Section 2.


"Deed" is defined in Subsection 7.1.


"Deposit": The Deposit will be $500,000.00, and will be placed into escrow on the Opening of Escrow as defined in Section 4.


"Due Diligence Period" shall mean the period of time starting on and including the Effective Date and continuing


through and including the earlier to occur of (i) May 12, 1997, or (ii) the Scheduled Closing Date designated in any notice sent by Buyer to Seller in accordance with Section 2.


"Effective Date" is defined in the first paragraph of this Agreement.


"Environmental Audit" is defined in Section 19.


"Environmental Law" is defined in Section 19.


"Escrow" is defined in Section 4.


"Escrow Holder" shall mean Title Company.


"Excluded Additional Items" is defined in Subsection 23.2.


"FIRPTA Certificate" is defined in Subsection 7.1.


"Hazardous Substance" is defined in Section 19.


"Improvements" shall mean all of Seller's right, title and interest in and to all improvements and fixtures situated on the Land.


"Intangibles" shall mean any and all of Seller's right, title and interest in and to all assignable existing warranties and guaranties, express or implied, issued to Seller in connection with the Improvements or the Personal Property, and all assignable existing permits, licenses, approvals and authorizations issued by any governmental authority in connection with the Property.


"Known to Seller" shall mean within Seller's awareness, as defined in Subsection 13.4.


"Land" shall mean that certain land located in the County of Ventura, State of California, more particularly described in Exhibit A attached hereto.
---------


"M/R Systems" shall mean M/R Systems Corporation.


"M/R Systems Lease" shall mean that certain Standard Industrial Lease- Special Net dated as of April 15, 1991, by and between Seller and M/R Systems.


"M/R Systems Lease Documents" shall mean the M/R Systems Lease and the documents identified in Exhibit B.
--------


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"Newly Discovered Condition" is defined in Subsection 12.3.


"Objections" is defined in Subsection 6.6.


"Opening of Escrow" is defined in Section 4.


"Personal Property" shall mean (i) all tangible personal property owned by Seller and located at the Real Property, including without limitation appliances, furniture, fixtures, equipment, carpeting, draperies, tools and supplies, and (ii) the Intangibles. Buyer acknowledges that there may be little or no such Personal Property.


"Property" shall mean, collectively, (i) the Real Property, (ii) the Improvements, (iii) Seller's interest in the M/R Systems Lease Documents, and (iv) the Personal Property.


"PTR" is defined in Subsection 6.3.


"Purchase Price" is defined in Section 3.


"Real Property" shall mean the Land and the Improvements, together with all rights appurtenant thereto.


"Scheduled Closing Date" shall mean the date on which the Closing is scheduled to occur. As of the Effective Date, the Scheduled Closing Date is May 22, 1997. See Section 2.


"Seller Parties" shall mean each and all of Seller, Weingart Foundation, D/L Camarillo Partners, The Deutsch Company, Stephen Lebowitz, and each of their employees, officers, directors, trustees, representatives, agents, servants, attorneys, affiliates, parent companies, subsidiaries, successors and assigns, and all persons, firms, corporations and organizations acting or providing information on their behalf and their successors and assigns.


"Tenant Notice" is defined in Section 7.


"Termination Provisions" shall mean the provisions of Section 17.


"Title Company" shall mean Chicago Title Insurance Company or such other title company as may be reasonably designated by Seller. Seller's designation of any of Lawyers Title Insurance Company, First American Title Insurance Company, or Stewart Title Guaranty Company shall be reasonable. Seller will not designate any other title company without Buyer's consent, which consent shall not be unreasonably withheld.


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"Title Policy" is defined in Section 12.


2. Purchase and Sale: Scheduled Closing Date. Upon and subject to the terms
----------------------------------------- and conditions set forth in this Agreement, Seller agrees to sell the Property to Buyer and Buyer agrees to buy the Property from Seller, and in consideration thereof Buyer will pay to Seller the Purchase Price at the Closing, subject to prorations as provided herein. Subject to the express provisions of this Agreement pertaining to extensions of the time for Closing, the Closing shall occur on the earlier of (i) the 10th day after the Contingency Date, or (ii) the Scheduled Closing Date designated by Buyer on not less than seven day's prior written notice to Seller.


3. Purchase Price. The Purchase Price for the Property shall be
--------------- $24,000,000.00.


4. Escrow; Deposit.
---------------


4.1 Opening of Escrow. Within two business days after the execution and
----------------- delivery of this Agreement, Buyer and Seller will open an escrow (the "Escrow") for the transaction contemplated herein with the Escrow Holder by delivering to Escrow Holder a fully executed copy of this Agreement. Such delivery by either party shall constitute the "Opening of Escrow". Contemporaneously with execution and delivery of this Agreement, Buyer and Seller shall execute and deliver instructions to Escrow Holder in the form attached hereto as Exhibit C.
---------


4.2 Deposit. Immediately upon the Opening of Escrow, Buyer will deliver
------- the Deposit to Escrow Holder for deposit into Escrow. Escrow Holder is hereby instructed to invest the Deposit in an interest-bearing account. Interest on the Deposit will accrue for the account of Buyer except as otherwise provided in this Agreement. If the Deposit or any portion thereof is not delivered to Escrow Holder or to Seller as and when required hereunder, then Seller shall have the right to terminate this transaction by giving written notice of such termination to Buyer and Escrow Holder.


4.3 Provisions Regarding Escrow Holder. Escrow Holder shall hold and
---------------------------------- dispose of the Deposit and any interest earned thereon in accordance with the terms of this Agreement. Escrow Holder shall incur no liability in connection with the safekeeping or disposition of the Deposit for any reason other than Escrow Holder's failure to follow instructions pertaining thereto which Escrow Holder has accepted, or Escrow Holder's willful misconduct or gross negligence. If Escrow Holder is in doubt as to its duties or obligations with regard to the Deposit, or if


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Escrow Holder receives conflicting instructions from Buyer and Seller with respect to the Deposit, Escrow Holder shall not be required to disburse the Deposit or any interest earned thereon and may, at its option, continue to hold such funds until both Buyer and Seller execute and deliver instructions satisfactory to Escrow Holder as to it's disposition, or until a final judgement is entered by a court of competent jurisdiction directing its disposition, or Escrow Holder may interplead such funds in accordance with applicable law. Escrow Holder shall not be responsible for any interest on the Deposit except as is actually earned, or for the loss of interest resulting from the withdrawal of the Deposit prior to the date interest is posted thereon.


5. Excluded Items. Notwithstanding anything to the contrary herein or in the
-------------- instruments delivered pursuant hereto, Seller shall not sell or transfer to Buyer and Buyer shall not acquire any contractual rights which Seller has under the agreements (other than the M/R Systems Lease Documents) pursuant to which Seller acquired the Property.


6. Due Diligence Period.
--------------------


6.1 Right to Investigate. During the Due Diligence Period, Buyer shall
-------------------- have the right (and is hereby encouraged) to conduct any inquiry and investigation pertaining to the Property, subject to the rights of tenants and parties in possession and subject to the provisions of this Agreement.


6.2 Physical Access. Subject to the rights of tenants and other parties
--------------- in possession, and subject to the provisions of this Agreement, on reasonable notice and at reasonable times during the Due Diligence Period, Seller will allow Buyer and/or its agents access to the Property to perform any and all investigations and inspections desired by Buyer (provided that any entry will be subject to the provisions of Section 22, and any Environmental Audit will be subject to the provisions of Section 19).


6.3 Preliminary Title Report. Buyer hereby acknowledges receipt of a
------------------------ preliminary title report pertaining to the Real Property issued by Title Company as of September 23, 1996 (the "PTR") accompanied by all documents referred to in such report.


6.4 Other Documents and Materials.
-----------------------------


A. Inspection of Files. Upon reasonable request during the Due
------------------- Diligence Period, Seller will make its files, books, and records pertaining to the Property reasonably available for inspection and copying by Buyer in Los Angeles


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and/or Santa Monica (at the election of Seller), to the extent that the same are Known to Seller to be in the possession of any of the Seller Parties, except: (i) appraisals or valuation information, (ii) internal memoranda, communications, analyses, and business plans, (iii) correspondence and other materials to or from legal counsel for Seller or any of the Seller Parties, (iv) correspondence and other materials pertaining to potential other buyers, and (v) other information which is privileged, confidential, or proprietary.


B. Lease Documents. Buyer acknowledges receipt of copies of the M/R
--------------- Systems Lease Documents.


C. Estoppel Certificate. Seller promptly will request from M/R
-------------------- Systems an estoppel certificate in the form attached hereto as Exhibit D.
---------- Notwithstanding the foregoing, there shall be no obligation to threaten or declare a default under the M/R Systems Lease if such M/R Systems fails to deliver such an estoppel certificate.


6.5 Commercial Property Owner's Guide to Earthquake Safety. Buyer
------------------------------------------------------ hereby acknowledges receipt of a copy of the Commercial Property Owner's Guide to Earthquake Safety.


6.6 Objections; Supplemental Agreement. If on or before the Contingency
---------------------------------- Date, any condition or other matter affecting the Property or the suitability of the Property for Buyer's purposes is unsatisfactory to Buyer for any reason or for no reason (such conditions or matters may be referred to herein as "Objections"), then Buyer may inform Seller of any such Objections; and Seller and Buyer may, but shall have no obligation to, arrange to resolve such Objections on or before the Contingency Date through a written supplemental agreement duly executed and delivered by Buyer and Seller. If Buyer does not terminate this transaction in accordance with the following Subsection, Buyer shall be deemed conclusively to have waived any and all Objections for which resolution is not arranged expressly in such a written supplemental agreement.


6.7 Buyer's Option to Terminate. Buyer shall have the option to terminate
--------------------------- this transaction for any reason or for no reason in Buyer's sole discretion, which option may be exercised only by delivering written notice to Seller on or before the Contingency Date, which notice expressly sets forth Buyer's exercise of its option to terminate this transaction. If Buyer so exercises its option to terminate this transaction in accordance with the preceding sentence, then Seller and Buyer shall each instruct Escrow Holder to return the Deposit and all interest earned thereon to Buyer, less Buyer's share of any


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escrow cancellation charges as provided below (which obligation to so instruct Escrow Holder shall survive termination of this Agreement), and the Termination Provisions shall apply.


6.8 Waiver of Objections. Buyer's failure to terminate this transaction
-------------------- in accordance with the foregoing Subsection shall constitute an irrevocable election to proceed with the purchase of the Property (subject only to the rights of the parties to subsequently terminate this transaction as expressly provided in this Agreement), and upon the close of business on the Contingency Date, except only as otherwise provided in this Agreement, the Deposit shall become nonrefundable and all Objections other than those that Seller and Buyer have mutually agreed in writing to resolve, if any, shall be deemed waived.


7. Deliveries to Escrow Holder.
---------------------------


7.1 Deliveries by Seller. The Closing shall be consummated through the
--------------------- Escrow and shall be administered by Escrow Holder in accordance with the terms of this Agreement. On or before the day prior to the Scheduled Closing Date, Seller will deliver or cause to be delivered to Escrow Holder the following items:


A. A Grant Deed (the "Deed"), in the form attached to this Agreement as Exhibit E, duly executed and acknowledged by Seller.
---------


B. A Transferor's Certificate of Non-Foreign Status in the form attached to this Agreement as Exhibit F ("FIRPTA Certificate"), duly executed by
--------- Seller.


C. A duly executed California Form 590, duly executed by Seller.


D. A bill of sale in the form attached to this Agreement as Exhibit
------- G (the "Bill of Sale"), duly executed by Seller. - -


E. Two counterpart originals of an Assignment and Assumption of M/R Systems Lease Documents in the form attached to this Agreement as Exhibit H (the
--------- "Assignment and Assumption"), duly executed by Seller.


F. Originals of the M/R Systems Lease Documents (or copies if originals are not available).


G. An Assignment of Guaranty and Deed of Trust in the form attached hereto as Exhibit I, duly executed by Seller.
---------


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H. A Tenant Notice in the form of Exhibit J (the "Tenant Notice"),
--------- duly executed by Seller.


I. A closing statement in form mutually satisfactory to Seller and Buyer, duly executed by Seller, reflecting debits and credits to the accounts of Seller and Buyer in accordance with this Agreement.


7.2 Deliveries by Buyer. On or before 1:00 pm local time on the day prior
------------------- to the Scheduled Closing Date, Buyer will deliver or cause to be delivered to Escrow Holder the following items:


A. Funds in an amount equal to the sum of the following:


(i) The balance of the Purchase Price (that is, the Purchase Price less any portion of the Deposit and any interest thereon that is then held by Escrow Holder); and


(ii) Any additional amounts required to fund Buyer's obligations hereunder; and


(iii) Plus any additional amount due from Buyer to Seller, or less any additional amount due from Seller to Buyer, as the case may be, if any, as a result of the prorations and cost allocations provided for herein.


B. Two counterpart originals of the Assignment and Assumption, duly executed by Buyer.


C. The Tenant Notice, duly executed by Buyer.


D. A closing statement in form mutually satisfactory to Seller and Buyer, duly executed by Buyer, reflecting debits and credits to the accounts of Seller and Buyer in accordance with this Agreement.


7.3 Additional Deliveries by Buyer and Seller. Buyer and Seller each
----------------------------------------- shall deliver to Escrow Holder such resolutions, certificates of good standing and/or other entity documents as Escrow Holder may reasonably require.


8. Conditions to the Close of Escrow. The following are conditions precedent
--------------------------------- to the Closing:


8.1 Seller's Deliveries. Seller shall have performed its covenants under
------------------- Subsections 7.1 and 7.3, and shall not have


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breached its covenants under Section 14. This is a condition in favor of Buyer.


8.2 Buyer's Deliveries. Buyer shall have performed its covenants under
------------------ Subsections 7.2 and 7.3. This is a condition in favor of Seller.


8.3 Representations Remain True. The representations of each party
--------------------------- contained in this Agreement shall remain true and correct in all material respects as of the Closing. This is a condition in favor of Buyer if the representation is made by Seller, and in favor of Seller if the representation is made by Buyer.


8.4 Title Insurance. As of the Close of Escrow, the Title Company will
--------------- be prepared and committed to issue the Title Policy to Buyer. This is a condition in favor of each of Buyer. Seller shall not be deemed in breach of any covenant hereunder by reason of the Title Company's not being so prepared and committed.


Subsections 8.1 through 8.4 are conditions only and are not covenants, provided however that this sentence shall not prevent any such condition from being a covenant if separately stated as a covenant elsewhere in this Agreement.


The conditions set forth in Subsections 8.1 through 8.4 are solely for the benefit of the party or parties indicated. Where such conditions are for one party, they may be asserted or waived only by that party. Where such conditions are for both parties, they may be asserted by either party but may only be waived by both parties. If any conditions are not satisfied on or before the Closing, then the party in favor of whom such condition exists may (i) waive such condition and proceed to close this transaction, (ii) suspend performance for so long as is reasonably necessary to obtain satisfaction of the condition, but in any event not more than 30 days, or (iii) terminate this transaction. Any such election shall be executed by written notice of the same delivered to the other party and to Escrow Holder, and an election under the second part of the preceding sentence shall not preclude a subsequent election under the first or third part of such sentence. If the transaction is so terminated, then the Termination Provisions shall apply.


9. Closing; Disbursements and Other Actions by Escrow Holder. At the Close of
--------------------------------------------------------- Escrow, Escrow Holder will promptly undertake all of the following:


9.1 Funds. Disburse all funds deposited with Escrow Holder as follows:
-----


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A. Deliver to Seller the Purchase Price, after deducting therefrom (i) the amount of all items, costs and prorations chargeable to the account of Seller, and (ii) the amount of the Deposit to the extent that the same previously shall have been disbursed to Seller. All disbursements hereunder to or for the benefit of Seller shall be made 50 percent to Weingart Foundation and 50 percent to D/L Camarillo Partners, in each case in accordance with written instructions to be provided by the applicable recipient.


B. Disburse the remaining balance, if any, of the funds deposited by Buyer to Buyer, less amounts chargeable to Buyer.


9.2 Recording. Cause the Deed (with documentary transfer tax information
--------- to be affixed after recording) to be recorded in the county where the Real
----- Property is located, and cause the Assignment of Guaranty and Deed of Trust to be recorded in the county where the encumbered property is located, and obtain conformed copies thereof for distribution to Buyer and Seller.


9.3 Title Policy. Direct the Title Company to issue the Title Policy to
------------ Buyer.


9.4 Delivery of Documents.
---------------------


A. Deliver to Buyer (i) the following documents and instruments executed by Seller: FIRPTA Certificate, the California Form 590, the Bill of Sale, the Assignment and Assumption, and the closing statement, and (ii) The M/R Systems Lease Documents, any other documents (or copies thereof) deposited into Escrow by Seller.


B. Deliver to Seller (i) the following documents and instruments executed by Buyer: the Assignment and Assumption and the closing statement, and (ii) any other documents (or copies thereof) deposited into Escrow by Buyer.


C. Mail the Tenant Notice to the addressee thereof by certified mail, return receipt requested.


9.5 Escrow Holder as Reporting Person. Seller and Buyer hereby
-------------------------------- designate Escrow Holder as the "Reporting Person" for the transaction pursuant to Section 6045(e) of the Internal Revenue Code.


10. Costs and Expenses. Seller will pay: (a) the premium for the Title Policy;
------------------ (b) one-half of all escrow fees and costs,


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including recording costs; (c) all city and county documentary transfer taxes; (d) one-half (but not to exceed $2,500) of the costs of a survey or survey update of the Real Property obtained by Buyer; (e) the compensation owing by Seller to Broker in accordance with Section 21 hereof; and (f) prorations duly allocated to Seller.


Buyer will pay: (a) one-half of the costs of a survey or survey update of the Real Property obtained by Buyer, and any excess of such costs over the amount that Seller is obligated to pay; (b) one-half of all escrow fees and costs, including recording costs; (c) additional title insurance premiums and costs as described in Subsection 12.2 hereof; and (e) prorations duly allocated to Buyer.


Each of Buyer and Seller will pay the fees and expenses of its own legal counsel and other consultants and professionals. Such persons are not third-party beneficiaries of this Agreement.


11. Prorations.
-----------


11.1 Rent Under M/R Systems Lease. The rents referred to in this
---------------------------- Subsection are the rents under the M/R Systems Lease. All rents for the month in which the Closing occurs which are actually received by Seller as of the Closing will be prorated. Delinquent rents and rents not paid by Close of Escrow will not be prorated, and Seller shall have the right to continue to collect such rents, provided that Seller shall not have the right to bring or prosecute an action for unlawful detainer in connection with the same after the Closing. Rents allocable to the period prior to Closing will be the property of Seller, and rents allocable to the period after Closing will be the property of Buyer. All rents collected by either party after Closing will be applied first to current rent then due (that is, rent for the month in which the collection occurs), then to past due rents (if any), and then to rent for months after the month in which collection occurs. Each party that receives any rents owned by the other party shall promptly pay the same to the other party. Prorations under this Subsection will be made as of the date of Closing based on the actual number of days of the applicable month.


11.2 No Other Prorations. Except for rents under the M/R Systems Lease,
------------------- there shall be no other prorations. Without limitation, there shall be no prorations for real estate taxes and assessments, utilities, insurance, or other operating expenses.


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