AGREEMENT TO RESTRUCTURE PARTNERSHIP BETWEEN WESTERN-MOUNTAIN VIEW II INVESTORS, A CALIFORNIA LIMITED PARTNERSHIP “PARTNERSHIP” AND ESSEX PORTFOLIO, L.P., A CALIFORNIA LIMITED PARTNERSHIP “EPLP” AND ESSEX PROPERTY TRUST, INC., A MARYLAND CORPORATION...
Section
2: EX-10.2 (EXHIBIT 10.2)
Section 2: EX-10.2 (EXHIBIT
10.2)
Agreement
were integrated pursuant to Rule 502(a) promulgated under the Securities
Act
(“Integrated Offerings”).
Closing,
if such Continuing Partner at the Closing: (i) executes and
delivers to the Partnership a counterpart original signature page to the
Limited
Partnership Agreement, an executed copy of the Registration Rights Agreement,
and an agreement to be bound by this Agreement, each dated as of the Closing
Date; (ii) executes pledges, in form reasonably satisfactory to Essex, (and
authorizes the execution and filing of related financing statements by Essex)
confirming and perfecting the grant of a security interest in certain of
such
Continuing Partner’s Units to secure certain of the indemnity obligations of
such Existing Partner pursuant to Article 7 hereof; (iii) makes such
investment and other representations as are reasonably required by Essex,
including, without limitation, those set forth in Exhibit B attached
hereto; (iv) is an Accredited Investor (as demonstrated to Essex’s
reasonable satisfaction); and (v) delivers a Prospective Subscriber
Questionnaire and such other documents and information as are requested by
Essex
to enable it to conclude that the restructuring of the Partnership, including
without limitation, the issuance of Units to Existing Partners, is exempt
from
registration under all applicable federal and state securities laws in reliance
upon Rule 506 and Regulation D promulgated under the Securities
Act.
accompanied
by complete copies of all documents referred to in such report (such report
and
documents, collectively, the “Preliminary Report”), and the
Survey;
placed
on
the Property prior to Closing, and all interest shall be paid in accordance
with
the terms thereof prior to the Closing Date. Exhibit E
includes a list of every Mortgage Instrument, and none of the Mortgage
Instruments has been amended or modified in any way except as indicated on
Exhibit E. There exists no default under any of the
Mortgage Instruments, nor any fact or circumstance which, with the passage
of
time and/or the giving of notice would constitute a default under any of
the
Mortgage Instruments.
the
time
of apportionment. Any amounts received by the Existing Partners on
account of rent or other income from and after the Closing Date shall be
turned
over to Essex for application in accordance with the terms of this
Section 5.3. The Existing Partners’ obligations under this
Section shall survive the Closing.
BETWEEN
WESTERN-MOUNTAIN
VIEW II INVESTORS,
A
CALIFORNIA LIMITED PARTNERSHIP
“PARTNERSHIP”
AND
ESSEX
PORTFOLIO, L.P.,
A
CALIFORNIA LIMITED PARTNERSHIP
“EPLP”
AND
ESSEX
PROPERTY TRUST, INC.,
A
MARYLAND CORPORATION
“ESSEX
REIT”
AND
ESSEX
MANAGEMENT CORPORATION,
A
CALIFORNIA CORPORATION
“EMC”
AND
GENERAL
PARTNERS OF THE PARTNERSHIP
TABLE
OF CONTENTS
|
Page
|
|
|
||
Article
1 - CONSENT SOLICITATION AND CLOSING
|
9
|
|
1.1
|
Cooperation
of the General Partner
|
9
|
1.2
|
Consent
Solicitation.
|
9
|
1.3
|
Requirements
to Obtain or Retain Units
|
10
|
1.4
|
Consent
Solicitation Timing
|
11
|
1.5
|
Results
of Consent Solicitation
|
11
|
1.6
|
Failure
to Obtain Partner Consent
|
12
|
1.7
|
Redemption
of Interests of Certain Partners at Closing
|
12
|
1.8
|
Interests
in the Partnership Following Closing
|
12
|
1.9
|
Closing
Mechanics and Costs
|
13
|
1.1
|
Closing
Date
|
13
|
1.11
|
Blue
Sky Cooperation
|
13
|
1.12
|
Consent
of Mortgage Lender
|
13
|
Article
2 - CERTAIN COVENANTS AND CONDITIONS TO CLOSING
|
14
|
|
2.1
|
Certain
Covenants and Conditions to Essex’s Obligations
|
14
|
2.2
|
Conditions
to the Obligations of the Partnership
|
22
|
2.3
|
Negotiation
of Documents
|
23
|
Article
3 - REPRESENTATIONS AND WARRANTIES
|
23
|
|
3.1
|
Representations
and Warranties of the Partnership
|
23
|
3.2
|
Representations
and Warranties of Each Existing Partner
|
31
|
3.3
|
Representations
and Warranties of Essex
|
32
|
3.4
|
Representations
and Warranties of the Cash Interest Holders
|
35
|
Article
4 - MAINTENANCE AND OPERATION OF THE PROPERTY
|
36
|
|
4.1
|
Maintenance
and Operation
|
36
|
4.2
|
Insurance
|
36
|
4.3
|
Personal
Property
|
36
|
4.4
|
Leasing
|
36
|
4.5
|
Operating
Agreements
|
36
|
4.6
|
Damage
or Destruction; Condemnation.
|
37
|
4.7
|
Tests
and Inspections
|
38
|
4.8
|
Mortgage
Debt
|
38
|
4.9
|
Availability
of Records
|
38
|
4.1
|
Title
and Survey Defects
|
40
|
4.11
|
Cooperation
with Essex
|
40
|
4.12
|
Post-Closing
Property Management
|
40
|
4.13
|
Notices
Received
|
40
|
4.14
|
Cash
Distributions
|
40
|
4.15
|
Representations
and Warranties
|
41
|
Article
5 - CLOSING ADJUSTMENTS
|
41
|
-i-
5.1
|
Adjustments
Generally
|
41
|
5.2
|
Taxes,
Assessments and Utilities
|
41
|
5.3
|
Rent
|
41
|
5.4
|
Payments
on Permitted Exceptions
|
42
|
5.5
|
Contract
Payments and Other Expenses
|
42
|
5.6
|
Partner
Consent
|
42
|
5.7
|
Adjustments
and Prorations Generally
|
42
|
5.8
|
Post-Closing
Audit
|
42
|
Article
6 - DEFAULTS AND REMEDIES
|
43
|
|
6.1
|
Defaults
|
43
|
6.2
|
Reimbursement
of Loan-Related Fees Paid by Essex
|
43
|
Article
7 - INDEMNIFICATION
|
43
|
|
7.1
|
By
the General Partners and the other Existing Partners
|
43
|
7.2
|
Indemnification
Procedure
|
46
|
7.3
|
Cooperation
in Defense
|
47
|
7.4
|
Survival
|
47
|
Article
8 - MISCELLANEOUS
|
47
|
|
8.1
|
Brokers
|
47
|
8.2
|
Marketing
|
48
|
8.3
|
Entire
Agreement; No Amendment
|
48
|
8.4
|
Certain
Expenses
|
48
|
8.5
|
Audit
|
49
|
8.6
|
Notices
|
49
|
8.7
|
No
Assignment
|
50
|
8.8
|
Governing
Law
|
50
|
8.9
|
Multiple
Counterparts; Facsimile Signatures
|
50
|
8.1
|
Further
Assurances
|
50
|
8.11
|
Miscellaneous
|
50
|
8.12
|
Invalid
Provisions
|
50
|
8.13
|
Confidentiality;
Publicity
|
51
|
8.14
|
Time
of Essence
|
51
|
8.15
|
Attorneys
Fees
|
51
|
8.16
|
Essex
Approvals and Decisions
|
51
|
The
following schedules and exhibits have been omitted and will be
furnished
to the SEC upon request:
|
||
EXHIBIT
A LIST OF ALL EXISTING PARTNERS OF THE
PARTNERSHIP
|
54
|
|
EXHIBIT
B INVESTMENT REPRESENTATIONS AND WARRANT
|
57
|
|
EXHIBIT
C UCC JURISDICTIONS
|
59
|
|
EXHIBIT
D FORM OF PROSPECTIVE SUBSCRIBER QUESTIONNAIRE
|
61
|
-ii-
EXHIBIT
E MORTGAGE DEBT DOCUMENTS
|
67
|
|
EXHIBIT
F RENT ROLL
|
68
|
|
EXHIBIT
G PROPERTY INVENTORY
|
69
|
|
EXHIBIT
H LEGAL DESCRIPTION OF LAND
|
71
|
|
EXHIBIT
I INSURANCE
|
72
|
|
EXHIBIT
J FORM OF AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP
|
73
|
|
EXHIBIT
K FORM OF REGISTRATION RIGHTS AGREEMENT
|
74
|
|
EXHIBIT
L LICENSES AND OTHER RIGHTS
|
75
|
|
EXHIBIT
M APPRAISAL
|
77
|
|
EXHIBIT
N FORM OF ASSIGNMENT OF INTEREST
|
77
|
|
EXHIBIT
O FORM OF PLEDGE INSTRUCTION LETTERS
|
78
|
|
SCHEDULE
1 EQUITY VALUE AND REDEMPTION EQUITY VALUE FOR EACH EXISTING
PARTNER
|
79
|
|
SCHEDULE
3.1(x) EMPLOYEES
|
80
|
|
SCHEDULE
3.1(y) CAPITAL STRUCTURE
|
81
|
|
SCHEDULE
3.2(e) EXISTING PARTNERS MATERIAL TRANSACTIONS WITH THE
PARTNERSHIP
|
83
|
-iii-
This
AGREEMENT TO RESTRUCTURE PARTNERSHIP (this “Agreement”) is entered into
as of this 13th day of June, 2007, by Western-Mountain View II Investors, a
California limited partnership, having an address of 000 Xxxxxxxxxx Xxxxxx,
Xxxx
Xxxx, Xxxxxxxxxx 00000 (the “Partnership”), Xxxxxx X. Xxxxxx, Xxxxxx X.
Baptist and Xxxxx Xxxxx, three of the four current general partners of the
Partnership (each a “General Partner” and, collectively, the “General
Partners”), Essex Portfolio, L.P., a California limited partnership
(“EPLP”), having an address of 000 Xxxx Xxxxxx Xxxxx, Xxxx Xxxx, XX
00000, Essex Property Trust, Inc., a Maryland corporation, having an address
of
000 Xxxx Xxxxxx Xxxxx, Xxxx Xxxx, XX 00000 (“Essex REIT”) and Essex
Management Corporation, a California corporation, having an address of 000
Xxxx
Xxxxxx Xxxxx, Xxxx Xxxx, XX 00000 (“EMC”). EPLP, Essex REIT
and EMC shall collectively be known as “Essex”.
RECITALS
1. The
Partnership is a 61.83% tenant-in-common owner of the land and improvements
consisting of a 000-xxxx xxxxxxxxx xxxxxxx located at 000 X. Xxxx Xxxxxx in
the
City of Sunnyvale, County of Santa Xxxxx, State of California, commonly known
as
the “Xxxxxx Xxxxxxxxx Apartments” and the General Partners are three of the four
current general partners of the Partnership. Western-San Xxxx XX
Investors, a California limited partnership (the “Co-Owner Partnership”),
is a 38.17% tenant-in-common owner of such property.
2. EPLP
and EMC each wish to acquire partnership interests in the Partnership for the
consideration set forth in this Agreement. In a simultaneous
transaction, EPLP and EMC each wish to acquire partnership interests in the
Co-Owner Partnership and restructure the Co-Owner Partnership in accordance
with
the terms set forth in a separate Agreement to Restructure Partnership, dated
the date hereof, relating to the Co-Owner Partnership (the “Other
Restructuring Agreement”).
3. The
individuals and entities listed in Exhibit A are the general and
limited partners of the Partnership (collectively, the “Existing
Partners”). The restructuring of the Partnership to admit EPLP
and EMC and amend and restate the Partnership Agreement, as set forth in this
Agreement, requires the written consent of 100% of the Existing Partners (the
“Partner Consent”). The “Partner Consent” shall include the
written consent of the Existing Partners with respect to the Partnership’s entry
into this Agreement.
4. The
Partnership proposes to seek the Partner Consent and, in connection therewith,
to offer the Existing Partners the opportunity to remain as partners of the
Partnership (subject to Section 1.3 hereof) or receive cash in exchange for
their interests in the Partnership (subject to Section 2.1(r) hereof) (so long
as (i) the Existing Partners who wish to receive Units (as defined below)
consist of Accredited Investors and (ii) the offering is conducted in all
respects in compliance with Regulation D promulgated under the Securities
Act (the conditions described in clauses (i) and (ii) above are
hereafter referred to as the “Reg. D Compliance Test”). The parties
agree and acknowledge that the Reg. D Compliance Test must be applied on an
aggregate basis as if this transaction and the transaction contemplated by
the
Other Restructuring
-1-
5. Subject
to the satisfaction of the Reg. D Compliance Test, the receipt of the Partner
Consent and the other conditions to closing set forth herein, the parties to
this Agreement propose to amend and restate the limited partnership agreement
of
the Partnership to make EMC its sole general partner and each of the following
limited partners, with interests in the form of units (“Units”) in the
Partnership: (i) EPLP; and (ii) each of the Existing
Partners which is offered and properly accepts the opportunity to remain as
a
limited partner of the Partnership in accordance with Section 1.3(a) below
(collectively, the “Continuing Partners”).
6. The
parties propose that upon closing of the transactions contemplated hereby,
the
General Partners and the other Continuing Partners who hold Units in the
Partnership shall enter into the Registration Rights Agreement (as defined
below).
7. Each
of the parties hereto has been advised by the other parties and acknowledges
that the parties hereto would not be entering into this Agreement without the
representations, warranties and covenants which are being made and agreed to
herein by each party hereto and that each party is entering into this Agreement
in reliance on such representations, warranties and other
covenants.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, and in reliance on all representations,
warranties and covenants made by each of the parties hereto, the parties agree
as follows:
DEFINITIONS
The
following terms as used in this Agreement will have the meanings attributed
to
them as set forth below unless the context clearly requires another
meaning. The terms set forth below do not constitute all defined
terms set forth in this Agreement. Such other defined terms shall
have the meanings ascribed to them elsewhere in this Agreement.
“Accountants”
has the meaning set forth in Section 4.9.
“Accredited
Investor” means a person who qualifies as an “accredited investor” under
Rule 501 of the Securities Act.
“Action”
shall mean any claim, suit, litigation, labor dispute, arbitration,
investigation or other action or proceeding.
“Affiliate”
shall mean any entity in which the Person (as defined below) in question owns
directly or indirectly more than fifty percent (50%) of any class of securities
or interest issued by such entity or any entity controlling, controlled by
or
under common control with the Person in question.
“Appraised
Value” shall mean $28,000,000.
“Appurtenances”
- See definition of “Real Property.”
-2-
“Authority”
shall mean a governmental body or agency having jurisdiction over Essex, the
Partnership, an Existing Partner or the Property.
“Bank
Accounts” has the meaning set forth in
Section 2.1(a)(xvi).
“Business
Day” means any day except a Saturday, Sunday or other day on which
commercial banks in San Francisco, California are authorized or required by
law
to close.
“Cash
Interest Holders” shall mean persons holding partnership interests in the
Partnership who, pursuant to this Agreement, are to have interests redeemed
for
cash at or prior to the Closing, as provided in Section 1.7 hereof and subject
to Section 2.1(r) hereof.
“Claims”
shall mean all restrictions, liens, claims, charges, pledges or encumbrances
of
any kind or nature whatsoever.
“Closing”
shall mean the restructuring of the Partnership as contemplated by this
Agreement.
“Closing
Date” shall have the meaning set forth in Section 1.10.
“Code”
shall mean the Internal Revenue Code of 1986, as in effect from time to time,
and applicable rules and regulations thereunder. Any reference herein
to a specific section or sections of the Code shall be deemed to include a
reference to any corresponding provision of future law.
“Commission”
shall mean the Securities and Exchange Commission.
“Consent
Solicitation” has the meaning set forth in Section 1.2.
“Consents”
has the meaning set forth in Section 2.1(b).
“Continuing
Partners” has the meaning set forth in Paragraph 5 of the
Recitals.
“Contracts”
shall mean, subject to the terms of this definition below, all contracts,
undertakings, commitments, agreements, obligations, guarantees and warranties
(i) relating to the Property, (ii) to which the Partnership is a party
or (iii) by which the Partnership or the Property is
bound. “Contracts” include, without limitation, utility contracts,
management contracts, construction contracts, maintenance and service contracts,
parking contracts, employment contracts, equipment leases and brokerage and
leasing agreements, but excludes the Leases (as defined below) and the Mortgage
Instruments (as defined below).
“Co-Owner
Partnership” has the meaning set forth in Paragraph 1 of the
Recitals.
“Elections”
has the meaning set forth in Section 2.1(b).
“EMC”
has the meaning set forth in the introductory paragraph of this
Agreement.
“EPLP”
has the meaning set forth in the introductory paragraph of this
Agreement.
-3-
“Equity
Value” shall mean (i) with respect to the interest of each General Partner,
the amount determined by multiplying such General Partner’s general partner
percentage interest in the Partnership by the GP Net Equity Amount and (ii)
with
respect to the interest of each Existing Limited Partner, the amount determined
by multiplying such Existing Limited Partner’s limited partner percentage
interest in the Partnership by the LP Net Equity Amount. A pro forma
calculation of the Equity Value for each of the Existing Partners of the
Partnership is set forth in Schedule 1.
“Essex”
has the meaning set forth in the introductory paragraph of this
Agreement.
“Essex
Documents” has the meaning set forth in Exhibit B.
“Essex
Indemnified Parties” shall mean EMC, EPLP, Essex REIT, the Partnership and
their respective subsidiaries, Affiliates, successors and assigns, and all
of
such parties’ officers, directors, shareholders, members, employees, agents,
representatives and attorneys.
“Essex
REIT” has the meaning set forth in the introductory paragraph of this
Agreement.
“Essex
Stock” shall mean the common stock, par value $.01 per share, of Essex
REIT.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as in effect from time
to time, and applicable rules and regulations thereunder. Any
reference herein to specific section or sections of the Exchange Act shall
be
deemed to include a reference to any corresponding provision of future
law.
“Existing
Limited Partners” shall mean the Existing Partners other than the General
Partners.
“Existing
Partners” has the meaning set forth in Paragraph 3 of Recitals.
“Final
Fiscal Year” has the meaning set forth in Section 4.9(h).
“General
Partners” has the meaning set forth in the introductory paragraph of this
Agreement.
“GP
Net Equity Amount” shall mean 20% of the Net Equity Amount.
“Improvements”
-- See definition of “Real Property.”
“Indebtedness”
shall mean all obligations (i) for borrowed money, (ii) evidenced by
bonds, debentures, notes or similar instruments, (iii) to pay the deferred
purchase price of property or services (other than accrued expenses arising
in
the ordinary course of business), (iv) under leases that would, in
accordance with generally accepted accounting principles, appear on the balance
sheet of the lessee as liabilities, (v) secured by a lien, (vi) in
respect of letters of credit, or bankers acceptances, contingent or otherwise,
or (vii) in respect of any guaranty or endorsement or other obligations to
be liable for the debts of another Person.
“Indemnitee”
has the meaning set forth in Section 7.2(a).
-4-
“Indemnitor”
has the meaning set forth in Section 7.2(a).
“Intangibles”
shall mean all intangible property owned or used by the Partnership in
connection with the ownership, use, operation or development of the Property,
including, without limitation: (i) the right to use the name
“Xxxxxx Xxxxxxxxx Apartments” hereto and any other trade name used in connection
with the Property, (ii) the Partnership’s rights in, to and under the
Contracts, (iii) the Partnership’s rights in, to and under the Leases (as
defined below), all guaranties of the Leases, all security deposits under the
Leases, all other security, if any, under the Leases and any rent prepaid under
the Leases and (iv) the Partnership’s rights in, to and under all Licenses
(as defined below) and any warranties, guaranties and other rights relating
to
the ownership, use, operation or development of the Property to the extent
transferable (collectively, the “Other Rights”), including, without
limitation, the Licenses and Other Rights listed on Exhibit L
hereto.
“Integrated
Offerings” has the meaning set forth in Paragraph 4 of the
Recitals.
“Intellectual
Property” shall have the meaning set forth in Section 3.1(u).
“Investment
Company Act” shall mean the Investment Company Act of 1940, as in effect
from time to time, and applicable rules and regulations
thereunder. Any reference herein to a specific section or sections of
the Investment Company Act shall be deemed to include a reference to any
corresponding provision of future law.
“Land”
-- See definition of “Real Property.”
“Law”
or “Laws” has the meaning set forth in Section 3.1(e).
“Leases”
has the meaning set forth in Section 3.1(c).
“Liabilities”
shall mean liabilities, Indebtedness, obligations, commitments, expenses, Claims
or guarantees of any nature (whether absolute, accrued, contingent or
otherwise).
“Licenses”
has the meaning set forth in Section 3.1(e).
“Limited
Partnership Agreement” shall mean that certain Amended and Restated
Agreement of Limited Partnership of Western-Mountain View II Investors, a
California limited partnership, to be dated as of the Closing Date, in the
form
attached hereto as Exhibit J.
“Loss”
or “Losses” shall mean any and all claims, losses, damages, costs,
liabilities, fines, penalties, deficiencies, diminution of value, causes of
action and expenses, including, without limitation, attorney’s fees and
disbursements, whether direct, contingent or consequential.
“LP
Net Equity Amount” shall mean 80% of the Net Equity Amount.
“Material
Adverse Effect” shall mean a material adverse effect on the business,
assets, condition (financial or otherwise) or prospects of such Person or
Persons, as the case may be.
-5-
“Major
Casualty” has the meaning set forth in Section 4.6(a).
“Major
Condemnation” has the meaning set forth in Section 4.6(b).
“Mortgage
Debt” shall mean (i) the existing mortgage financing encumbering the
Property as of the date of this Agreement ($14,000,000 principal balance as
of
the date hereof) plus (ii) an additional $6,000,000 principal in mortgage
financing to be placed on the Property prior to Closing, each as described
in
Exhibit E hereto, and as reduced by regularly scheduled payments of
principal actually paid in full when due from and after the date hereof through
the Closing Date.
“Mortgage
Debt Consent Documents” has the meaning set forth in
Section 1.12.
“Mortgage
Debt Estoppels” has the meaning set forth in Section 1.12.
“Mortgage
Instruments” shall mean all agreements and other instruments securing or
evidencing the Mortgage Debt or otherwise executed and delivered in connection
therewith, as described on Exhibit E hereto.
“Mortgage
Lender” has the meaning set forth in Section 1.12.
“Net
Equity Amount” shall mean the excess of (i) the sum of (A) 61.83% of the
Appraised Value and (B) all other assets (including cash) of the Partnership
over (ii) the sum of (A) 61.83% of the Mortgage Debt and (B) all other
indebtedness and liabilities of the Partnership.
“New
Matters” has the meaning set forth in Section 2.1(a).
“Notice”
has the meaning set forth in Section 7.2(a).
“Old
Bank Accounts” has the meaning set forth in Section 4.14.
“Other
Restructuring Agreement” has the meaning set forth in Paragraph 2 of the
Recitals.
“Other
Rights” -- See definition of “Intangibles.”
“Partner
Consent” has the meaning set forth in Paragraph 3 of the
Recitals.
“Partnership”
has the meaning set forth in the introductory paragraph to this
Agreement.
“Partnership
Agreement” shall mean that certain Limited Partnership Agreement of the
Partnership dated August 31, 1971, as amended, in effect on the date
hereof.
“Partnership
Financial Statements” has the meaning set forth in Section
2.1(a)(x).
“Permitted
Exceptions” means, with respect to the Property, those exceptions to title
to the Property and those encumbrances on the Personal Property as are approved
in writing by Essex on or before the date hereof.
-6-
“Person”
shall mean any individual, corporation, partnership, joint venture, association,
joint-stock company, business trust, limited liability company, trust,
unincorporated organization or government or a political subdivision, agency
or
instrumentality thereof or other entity or organization of any
kind.
“Personal
Property” shall mean all tangible personal property owned by the Partnership
located on or in or used in connection with the Real Property as of the date
of
this Agreement or the Closing Date, including, without limitation, all
equipment, systems and appliances relating to the Property and other items
listed in Exhibit G hereto.
“Post-Closing
Audit” has the meaning set forth in Section 5.8.
“Preliminary
Report” has the meaning set forth in Section 2.1(a)(i).
“Pricing
Value” shall mean the weighted average (by daily trading volume) of the
closing price of one share of Essex Stock as reported by the New York Stock
Exchange for the thirty (30) consecutive trading days ending on the third (3rd)
Business Day immediately preceding the Closing Date; provided, however, that
(i)
if such weighted average is less than $112.00 per share, then the Pricing Value
shall be deemed equal to $112.00 per share and (ii) if such weighted average
is
greater than $120.00 per share, then the Pricing Value shall be deemed equal
to
$120.00 per share.
“Property”
shall mean, individually and collectively, all Real Property, Personal Property
and Intangibles owned by the Partnership. All references in this
Agreement to the Property shall be deemed to refer to all or any portion of
the
Property.
“Prospective
Subscriber Questionnaire” shall mean the questionnaire in the form attached
hereto as Exhibit D to be completed and delivered to Essex by the
Partnership and each Existing Partner, or Affiliate or constituent owner of
such
Existing Partner, who will receive Units, directly or indirectly, in connection
with the Closing or any other transaction or series of related transactions
contemplated hereby or by the Related Agreements.
“Real
Property” shall mean, individually for each parcel and collectively for all
parcels, the land more particularly described in Exhibit H hereto
(the “Land”), together with all rights, licenses, privileges and
easements appurtenant thereto, including, without limitation, all minerals,
oil,
gas and other hydrocarbon substances on and under and that may be produced
from
the Land, as well as all development rights, land use entitlements and rights
in
off-site facilities and amenities servicing the Land or any improvements located
thereon, including, without limitation, building permits, licenses, permits
and
certificates, utilities commitments, air rights, water, water rights, riparian
rights and water stock relating to the Land and any rights-of-way or other
appurtenances used in connection with the beneficial use and enjoyment of the
Land and all of the Partnership’s right, title and interest in and to all roads,
easements, rights of way, strips or gores and alleys adjoining or servicing
the
Land (collectively, the “Appurtenances”) and all improvements and
fixtures located on the Land or the Appurtenances, including, without
limitation, the building(s) located or to be located on the Land, containing
as
of the date of this Agreement an aggregate of 156 apartment units, and all
apparatus and equipment used in connection with the operation or occupancy
of
the Land, such improvements or the
-7-
Appurtenances,
including, without limitation, heating and air conditioning systems and
facilities used to provide any services on the Land or the Appurtenances
or for
the improvements, and all parking and related facilities and amenities
(collectively, the “Improvements”).
“Redemption
Equity Value” shall mean, with respect to the interest of each Existing
Limited Partner, such Existing Limited Partner’s limited partner percentage
interest as set forth on Exhibit A attached hereto, multiplied by
the LP Net Equity Amount. A pro forma calculation of the Redemption
Equity Value for each of the Existing Limited Partners of the Partnership is
set
forth in Schedule 1.
“Reg.
D Compliance Test” has the meaning set forth in Paragraph 4 in the
Recitals.
“Reference
Rate” has the meaning set forth in Section 7.1(d).
“Registration
Rights Agreement” shall mean the Registration Rights and Lock-Up Agreement
to be entered into among the Continuing Partners and Essex REIT in the form
attached hereto as Exhibit K.
“Related
Agreements” means, collectively, all documents to be executed and delivered
in connection with this Agreement, including, without limitation, the Limited
Partnership Agreement, the Registration Rights Agreement, the election or
subscription documents to be executed and returned by the Existing Partners,
the
questionnaire or other certifications to ascertain the Accredited Investor
status of the Existing Partners and all other documents referred to in Section
2.1(n).
“Related
Transaction Documents” has the meaning set forth in Section
8.3.
“Rent
Roll” has the meaning set forth in Section 2.1(a)(xi).
“Refinancing”
has the meaning set forth in Section 1.12.
“Schedule
of Actions” has the meaning set forth in Section 2.1(a)(xiv).
“Schedule
of Agreements” has the meaning set forth in Section 2.1(a)(v).
“Schedule
of Partners” has the meaning set forth in Section 1.5.
“Securities
Act” shall mean the Securities Act of 1933, as in effect from time to time,
and applicable rules and regulations thereunder. Any reference herein
to a specific section or sections of the Securities Act shall be deemed to
include a reference to any corresponding provision of future law.
“Securities
Laws” has the meaning set forth in Section 2.1(c).
“Survey”
has the meaning set forth in Section 2.1(e).
“Taxes”
has the meaning set forth in Section 3.1(o)(i).
-8-
“Tenant
Ready” shall mean that the applicable apartment unit is clean, freshly
painted, all appliances are working and generally ready for an immediate move-in
by a tenant.
“Terminable
Contracts” has the meaning set forth in Section 2.1(a)(v).
“Title
Company” has the meaning set forth in Section 2.1(a)(i).
“Title
Policy” has the meaning set forth in Section 2.1(d).
“Transaction
Documents” has the meaning set forth in Section 3.4(a).
“Units”
has the meaning set forth in Paragraph 5 of the Recitals.
“Warranties”
has the meaning set forth in Section 2.1(a)(iv).
ARTICLE
1 – CONSENT SOLICITATION AND CLOSING
1.1 Cooperation
of the General Partner
The
General Partners have conducted due diligence with respect to the transactions
contemplated by this Agreement and, subject to receipt of the Partner Consent
as
provided herein, hereby (i) approve and consent as general partners of the
Partnership to each of such transactions; (ii) agree to recommend (and not
to withdraw such recommendation) to the Existing Partners that they grant the
Partner Consent; and (iii) agree to exercise their reasonable best efforts
to obtain the Partner Consent through the consent solicitation described in
Section 1.2 hereof, as well as other required third party consents to the
restructuring of the Partnership as contemplated by this
Agreement. Notwithstanding the foregoing, the parties agree that (i)
the General Partners may discuss with the Limited Partners to the extent that
the General Partners deem necessary or appropriate the information in the
Consent Solicitation and related materials and (ii) the General Partners will
attempt to contact by telephone all Existing Partners who do not respond to
the
Consent Solicitation within ten (10) business days of mailing and whenever
practicable, to direct any questions regarding Essex to a person or persons
to
be designated by Essex, although in general, the parties contemplate that the
General Partners may, at their option, address questions about Essex that are
answered in the information provided by Essex for inclusion in the Consent
Solicitation.
1.2 Consent
Solicitation.
(a) Promptly
after the execution and delivery of this Agreement, the General Partners shall
prepare a solicitation to be delivered to the Existing Partners (i) seeking
the
Partner Consent and setting forth the General Partners’ recommendation to the
Existing Partners that they grant the Partner Consent; (ii) offering to the
Existing Partners a choice between (A) remaining as limited partners in the
Partnership after the Closing and receiving Units as provided in Sections 1.3
and 1.8 hereof, (B) receiving cash upon redemption of their interest in the
Partnership as provided in Section 1.7 hereof, or (C) receiving cash in
redemption of a portion of their interest in the Partnership as provided in
Section 1.7 hereof and receiving Units as provided in Sections 1.3 and 1.8
hereof with respect to the balance of their interest in the Partnership; and
(iii) setting forth such information as the General Partners and Essex, in
consultation, deem reasonably required and material to allow the Existing
Partners to make an informed decision, including those items as set forth
below. The General Partners shall consult with Essex with
-9-
regard
to
the structure, terms and form of the disclosure document or documents to
be used
in the solicitation, the consent, election or subscription documents to be
executed and returned by Existing Partners, the questionnaire or other
certification to establish Accredited Investor status and related instruments
or
agreements (collectively, the “Consent Solicitation”) and, if requested
by Essex, revise such documents so as to be reasonably satisfactory to Essex
so
long as any such requested changes or revisions are not inconsistent with
the
terms of this Agreement and are reasonably acceptable the General
Partners. Essex and the General Partners hereby agree that the
Consent Solicitation shall include that certain appraisal of the Property
attached hereto as Exhibit M which has been prepared by an appraiser
retained by the General Partners and at the Partnership’s
expense.
(b) Except
as
provided in subsection (c) below, the General Partners shall be solely
responsible for the compliance of the Consent Solicitation with applicable
law
and in particular shall ensure that the Consent Solicitation complies with
the
requirements of Regulation D promulgated under the Securities Act with respect
to offers and sales of securities in reliance on Rule 506.
(c) Essex
shall be responsible for providing in writing to the General Partners such
accurate disclosure with regard to Essex as may be reasonably required for
inclusion in the Consent Solicitation, shall cooperate with the General Partners
and assist the General Partners as reasonably requested in connection with
the
Consent Solicitation, and shall indemnify the General Partners and the
Partnership from and against all Losses which are incurred or suffered by them
based upon, arising out of, or by reason of information supplied by Essex
specifically for inclusion or incorporation by reference in the Consent
Solicitation or contained in any document prepared or filed by Essex containing
any untrue statement of a material fact or omitting any information necessary
to
make the statements contained therein not materially misleading.
(d) The
General Partner shall exercise their reasonable best efforts to obtain the
Partner Consent from the Existing Partners, which may include multiple attempts
to communicate with Existing Partners as part of the Consent Solicitation
process.
(e) Unless
otherwise required by law, the Consent Solicitation shall be structured so
that
following a period of time of not more than thirty (30) days following the
sending of the Consent Solicitation to the Existing Partners, if the Partner
Consent is obtained in accordance with the Partnership Agreement such that
the
transactions contemplated hereby are allowed to proceed pursuant to the
Partnership Agreement, then the General Partners and Essex shall determine,
consistent with the terms of this Agreement and the election of the Existing
Partners, whether each Existing Partner is to receive at the Closing cash as
provided in Section 1.7 hereof or Units as provided in Section 1.3
hereof.
1.3 Requirements
to Obtain or Retain Units
(a) If
the Partner Consent has been obtained, the Reg. D Compliance Test is
satisfied and all other conditions to Closing are satisfied or waived by the
party authorized to waive such condition, then at the Closing, each Continuing
Partner shall retain an interest in the Partnership in the form of
Units. 100% of the total number of Units calculated pursuant to
Section 1.8 with respect to a Continuing Partner shall be issued in the name
of
such Continuing Partner, and shall be delivered to such Continuing Partner
at
the
-10-
(b) Any
Existing Partner who either elects to receive cash in response to the Consent
Solicitation or is not entitled to receive Units pursuant to this Section 1.3
shall, prior to the Closing involving the restructuring of the Partnership,
(i)
deliver to the Partnership an agreement to be bound by this Agreement dated
as
of the Closing Date and (ii) receive cash pursuant to Section 1.7 hereof in
the
amount of the Redemption Equity Value of such Partner’s interest in the
Partnership being redeemed, notwithstanding any election on the part of such
Existing Partner to receive Units. Each of the General Partners
represents that he personally does now and will as of the Closing satisfy the
requirements of Section 1.3(a) and will elect to be a Continuing Partner, and
that he will use his reasonable best efforts to cause satisfaction of the
requirements of Section 1.3(a) by all Continuing Partners.
1.4 Consent
Solicitation Timing
The
General Partners agree to send the Consent Solicitation to the Existing Partners
within five (5) business days after the date hereof, and to exercise their
reasonable best efforts to obtain the Partner Consent as promptly as
possible. If, within thirty (30) days following the sending of the
Consent Solicitation, the Partnership has not obtained the Partner Consent,
then
each of the Partnership and Essex shall be entitled to extend the time period
during which the Partnership shall seek to obtain the Partner Consent for a
period of thirty (30) days.
1.5 Results
of Consent Solicitation
At
the
request of Essex from time to time, the Partnership will advise Essex which
of
the Existing Partners have consented to the transactions contemplated by this
Agreement, which have elected to receive cash for their interests in the
Partnership, which have elected to receive Units, and such other information
as
Essex may reasonably request concerning the Consent Solicitation and the results
thereof. The Partnership will notify Essex within five (5) business
days of the receipt of written objections from Existing Partners as to the
terms
and conditions of the transactions contemplated hereby and will forward to
Essex
copies of all correspondence or other written materials to the Existing Partners
relating to the transactions contemplated hereby, including the Partner Consents
for the Partnership and executed Prospective Subscriber Questionnaire consent
and subscription documents. The Partnership will promptly notify
Essex in writing at such time as it has received the Partner Consent as required
to authorize the restructuring of the Partnership contemplated by
this
-11-
Agreement. If
the Partner Consent is obtained, then within five (5) business days after
the
later of the date on which the Partner Consents for the Partnership are obtained
or the expiration of the time period for responding to the Consent Solicitation,
the Partnership shall furnish to Essex a true and complete schedule (the
“Schedule of Partners”) indicating (i) the name and address of each of
the Continuing Partners, a pro forma calculation of the Equity Value of such
Continuing Partner’s interest in the Partnership, and the number of Units to
which such Continuing Partner will be entitled following the Closing, subject
to
Section 1.3 hereof and (ii) the names, addresses, telephone numbers, and
wire
transfer instructions of each Existing Partner to which a cash payment is
required to be made in order to redeem its interest in the Partnership and
to
satisfy in full all liabilities of the Partnership other than those which
have
been disclosed to Essex in writing and which Essex has agreed in writing
may
remain outstanding. Neither Essex nor the Partnership shall have any
liability or responsibility for the allocation of Units and cash set forth
in
the Schedule of Partners, and they shall be entitled to rely on the Schedule
of
Partners in full and without inquiry. The General Partners agree to
make such allocations of Units and cash in accordance with the Partnership
Agreement, and in accordance with other agreements and obligations binding
on
the Partnership.
1.6 Failure
to Obtain Partner Consent
If
(i)
the Partner Consent for the Partnership has not been obtained within thirty
(30)
days after the sending of the Consent Solicitation (or such later date as either
Essex or the Partnership shall have extended such date to pursuant to Section
1.4), or (ii) if the consent of the partners of the Co-Owner Partnership to
the
transactions contemplated by the Other Restructuring Agreement has not been
obtained within the time frames set forth in the Other Restructuring Agreement,
then none of the parties to this Agreement shall be required to proceed with
the
restructuring of the Partnership.
1.7 Redemption
of Interests of Certain Partners at Closing
If
the
Partner Consent has been obtained, the Reg. D Compliance Test is satisfied
and all other conditions to Closing are satisfied or waived by the party
authorized to waive such condition, then, subject to Section 2.1(r), at the
Closing, each Existing Partner who has properly elected to receive cash upon
redemption of its interest in the Partnership, or portion thereof, as described
in Section 1.2 hereof, shall receive in redemption of such Existing Partner’s
interest, or portion thereof, in the Partnership, cash in the amount of the
Redemption Equity Value thereof. Such redemptions shall be funded by
a loan from EPLP to the Partnership.
1.8 Interests
in the Partnership Following Closing
If
the
Partner Consent has been obtained, the Reg. D Compliance Test is satisfied
and all other conditions to Closing are satisfied or waived by the party
authorized to waive such condition, then at the
Closing: (i) EMC, EPLP and the Continuing Partners shall enter
into the Limited Partnership Agreement, (ii) EMC shall be issued 100% of
the general partnership interest in the Partnership in exchange for the capital
contribution of one one-hundreth (1/100th) of the aggregate amount of the book
capital accounts attributable to all of the Units, (iii) the interest in
the Partnership of each Continuing Partner shall be that number of Units
determined by dividing the Equity Value of such Continuing Partner’s interest,
or portion thereof, in the Partnership by the Pricing Value, (iv) the book
capital account of each Continuing Partner shall initially be set at the Equity
Value of such Continuing Partner’s interest in the Partnership, or portion
thereof, and (v) the book capital account of EMC and EPLP shall be set at
the respective cash contributions made by each of them to the
Partnership. If EPLP contributes cash to the Partnership, then it
will receive that number of Units determined by
-12-
dividing
the amount of cash it has contributed by the Pricing Value. The
initial distribution payable with regard to any Units issued at the Closing
shall be prorated based upon the number of days remaining in the applicable
calendar quarter in which such Units are issued and the actual number of
days in
such calendar quarter and the provisions of this sentence shall survive the
Closing.
1.9 Closing
Mechanics and Costs
Upon
receipt of the Partner Consent, the General Partners agree to take all action
necessary on the part of the Partnership to facilitate the prompt consummation
of the transactions contemplated by this Agreement. The Closing shall
take place through escrow arrangements reasonably acceptable to the parties,
and
if a meeting is required, it shall take place at the offices of Essex or such
other location as may be agreed upon by Essex and the General
Partner. The cost of escrow shall be paid one-half by Essex and
one-half by the Existing Partners. All other costs shall be paid in
accordance with the custom in the County where the Property is
located.
1.10 Closing
Date
The
parties shall conduct the Closing on June 30, 2007, subject to extensions as
provided for in this Agreement (the date of such Closing, the “Closing
Date”). If either Essex or the Partnership extends the date for
responding to the Consent Solicitation, the date for the Closing shall
automatically be extended to the first business day which is at least three
(3)
weeks after the last date for responding to the Consent
Solicitation. In addition, Essex shall be entitled to extend the date
for the Closing until the first (1st) business day which is at least ten (10)
days, but no more than twenty (20) days, after the date on which Essex receives
notice from the Partnership that it has obtained the Partner
Consent.
1.11 Blue
Sky Cooperation
The
Partnership and each Continuing Partner shall cooperate and do all acts as
may
be reasonably required to comply with any requirement under applicable federal
and state securities law to qualify the Units for distribution to such
Continuing Partners, including but not limited to the making of any and all
representations or undertakings required by applicable state securities law
or
state securities regulators (or deemed distribution, in the case of persons
holding interests in the Partnership) in connection with the
Units. Essex shall be responsible for preparing all filings under the
state securities laws of California and Essex and/or the Partnership
(post-closing) shall be responsible for paying any legal and filing fees
required in connection with Blue Sky compliance.
1.12 Consent
of Mortgage Lender
The
General Partners and Essex shall each exercise commercially reasonable efforts
to seek the required approvals from the holder of the Mortgage Debt for the
transactions contemplated by this Agreement, including, but not limited to,
if
required, obtaining consent to grant security interests pursuant to Section
7.1(b)(ii) (and file related financing statements). The previous
mortgage debt on the Property was refinanced with $14,000,000 of the Mortgage
Debt on February 9, 2007; $6,000,000 of the Mortgage Debt will be placed on
the
Property prior to Closing (collectively, the
“Refinancing”). All Refinancing proceeds in excess of the
previous mortgage debt shall be distributed to the Partners prior to the Closing
in accordance with the terms of the Partnership Agreement. The
approval from the lender (the “Mortgage Lender”) under the Mortgage Debt
for the consummation of the transactions contemplated by this Agreement shall
be
sought by the Partnership, and the Partnership shall use all commercially
reasonable efforts in cooperating with Essex in the joint pursuit of such
approval as requested by Essex, but shall not incur any costs or expenses
without
-13-
the
prior
written approval of Essex. Those terms include but are not limited to
the amendment of various provisions and the delivery of consent documentation
(the “Mortgage Debt Consent Documents”) and estoppel certificates
(“Mortgage Debt Estoppels”) dated as of the Closing Date, in form and
substance reasonably satisfactory to Essex, which shall include, among other
things, (i) the current balance of the loan, (ii) the interest rate on
the loan, (iii) the amount of the monthly payments for the loan,
(iv) a representation that the applicable Mortgage Instruments are all the
documents that were executed and delivered in connection with applicable
Mortgage Debt, and (v) a statement that no default exists under any of the
applicable Mortgage Instruments and that no default would exist, but for
the
giving of notice or the passage of time, or both. Essex shall be
entitled to extend the Closing Date, if necessary, for a period of up
to thirty (30) days to obtain the Mortgage Debt Consent Documents and/or
Mortgage Debt Estoppels.
ARTICLE
2 - CERTAIN COVENANTS AND CONDITIONS TO CLOSING
2.1 Certain
Covenants and Conditions to Essex’s Obligations
The
obligation of Essex to consummate the transactions contemplated hereunder shall
be subject to the satisfaction or waiver by Essex of each of the conditions
set
forth below and the performance by the Partnership, the General Partners and
each of the other Existing Partners of their respective obligations set forth
below and elsewhere in this Agreement
(a) Due
Diligence. Essex has already conducted preliminary due diligence
on the Property. Essex and its authorized representatives, agents and employees
shall have the right, however, to continue to conduct any and all due diligence
relative to the Property and the Partnership as may be deemed necessary or
appropriate by Essex in its sole discretion. It shall be a condition
to Essex’s obligations under this Agreement that Essex shall be satisfied in its
sole discretion with all such due diligence. Without limiting the foregoing,
the
Partnership shall make available to Essex for review and copying at Essex’s
election any and all materials, files, books, records, information and documents
relating to (i) the Property, including, without limitation, all Leases,
management agreements, service and other contracts, financial reports, the
Rent
Roll, existing surveys, permits and other similar or dissimilar materials,
and
(ii) the Partnership, including, without limitation, all organizational
documents, financial reports and supporting records, books, records, minutes
and
other similar materials. Essex shall have the right to talk with
third-parties selected by Essex in the performance of its due
diligence. The Partnership shall promptly, and in any event within
five (5) days of Essex’s request therefor, deliver or otherwise make available
to Essex true, correct and complete copies of any requested materials in the
possession of the Partnership or under its control and all of the Partnership’s
other materials, files, books, records and information relating to the Property
and/or the Partnership. Essex shall have the right to communicate
with third-parties selected by Essex in the performance of its due
diligence. Without limiting the foregoing, the Partnership shall,
within five (5) days of the date of this Agreement, except as otherwise
expressly provided or except to the extent previously delivered to, or currently
in the possession of, Essex, cause to be delivered to Essex, at the
Partnership’s sole cost and expense, the following with respect to the Property
and/or the Partnership to the extent same are in the possession or control
of
the Partnership:
(i) a
current
extended coverage preliminary title report on the Real Property and commitment
to issue the Title Policy, issued by First American Title Insurance Company,
0000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxx Xxxxx (the
“Title Company”),
-14-
(ii) copies
of
any and all existing and proposed easements, covenants, restrictions, agreements
or other documents or instruments which affect or may in the future affect
title
to the Property and which are not disclosed by the Preliminary
Report;
(iii) copies
of
the property tax bills and assessments for the Property, as well as any other
tax bills payable by the Partnership, for the three (3) most recent years,
including evidence of payment of each;
(iv) all
presently effective warranties or guaranties from any contractors,
subcontractors, suppliers, servicemen or materialmen in connection with the
Property, including, without limitation, any construction, renovation, repairs
or alterations of any Improvements, any Personal Property or any tenant
improvements, including, without limitation, all construction and building
component labor and/or materials warranties and guarantees from contractors
or
subcontractors (collectively, the “Warranties”);
(v) a
schedule (the “Schedule of Agreements”) setting forth a list of all of
the Contracts relating to the Property, together with true, correct and complete
copies of all of the Contracts; Essex shall have the right to designate those
Contracts that the Partnership shall terminate prior to Closing (the
“Terminable Contracts”);
(vi) reports
of insurance carriers insuring the Property, and each portion thereof,
respecting the claims history of the Property, if any, certificates of insurance
and insurance policies and insurance claims history for the three (3) most
recent calendar years prior to Closing and, to the extent available, for the
current year;
(vii) environmental
reports, environmental audits, soil reports, site plans (with dimensions),
engineering reports and plans (including, without limitation, regarding
foundation, walls, roofs, floors, supports and mechanical systems such as HVAC
to the extent available), reports regarding the compliance of the Property
with
the requirements of the Americans with Disabilities Act of 1990 (42 U.S.C.
12181, et seq.) to the extent available, seismographic reports to the extent
available, traffic reports, demographic information, landscape plans, structural
calculations, floor plans (identifying tenant and vacancy locations), certified
copies of the as-built plans and specifications, architect’s certificate
certifying the square footage of the Improvements, if available, all items
pertaining to any remodeling or renovation of the Property, construction
contracts, a current inspection report by a licensed Structural Pest Control
Operator, other reports or documents of significance to the Property, copies
of
the zoning description applicable to the Property, and copies of final
certificates of occupancy for all improvements on the Land;
(viii) a
complete inventory of all Personal Property owned by the Partnership or used
at
or in connection with the Property;
(ix) all
income and expense statements, year-end financial statements, monthly operating
statements and year-to-date statements for the three (3) most recent calendar
-15-
years
prior to Closing (audited, if available) and, to the extent available, the
current year, all of which shall be certified by the General Partners as
true,
complete and correct and accurately representing the results of operation
of the
Property for the relevant periods;
(x) balance
sheets as of December 31, 2006, for the Partnership, together with
statements of income and cash flows for each of the preceding three (3) calendar
years and three-month period most recently ended, all of which financial
statements, together with the notes thereto, and any updates thereto and interim
financial statements provided to Essex, are collectively referred to as the
“Partnership Financial Statements”, provided that, to the extent they are
in the possession of the Partnership as of the date hereof, the Partnership
shall deliver to Essex audited Partnership Financial Statements;
(xi) (A) copies
of the operating and capital budgets for the Property for the current year,
(B) a comparison of actual to budgeted results for the current year and an
explanation of significant variances, (C) list of all capital expenditures
for the Property for the three (3) most recent calendar years, (D) an aged
receivables report through the date of this Agreement, and (E) monthly
receivables reports for the previous twenty (24) calendar months.
(xii) (A) copies
of all existing and pending Leases, lease files (including, without limitation,
all guarantees, subleases and assignments) and tenant correspondence,
(B) copies of all executed or pending letters of intent with prospective
tenants, (C) a current leasing status report from the leasing broker(s),
(D) a schedule of leasing commissions now or hereafter payable on a space
by space basis, (E) a copy of the current standard lease form, (F) a
current rent roll of the Property containing each tenant name, suite number,
size of premises, rent, rental increases, percentage rent, pro rata share,
caps,
security deposit, term, commencement and expiration dates, options and other
material provisions (the “Rent Roll”), (G) a list of all concessions
made to tenants, including free or reduced rent, above standard tenant
improvements, cash payments, moving allowances, or takeover of previous lease
obligations; and (H) copies of the most recent financial statements and
credit reports or other credit information, if any, on any tenant and of any
guarantors of any Leases.
(xiii) all
Licenses and documents evidencing Intellectual Property;
(xiv) (A) a
schedule (the “Schedule of Actions”) setting forth all Actions pending or
threatened against the Partnership, any general partner of the Partnership
or
the Property, which (y) question or could reasonably be expected to
question the validity or legality of the transaction contemplated hereunder
or
under the Related Agreements or (z) affect or could reasonably be expected
to affect the Property or the Partnership in any adverse way, and
(B) copies of all notices of any violations of any Law relating to the
Property or the Partnership;
(xv) all
Mortgage Instruments;
(xvi) upon
written request from Essex, access to records of all bank accounts maintained
by
or on behalf of the Partnership (the “Bank Accounts”);
(xvii) UCC
searches showing any and all filings against (A) the Partnership in
California or any other jurisdictions where the filing of financing statement
could
-16-
perfect
a
lien against the assets of the Partnership and (B) the Existing Partners in
the jurisdictions in which the Existing Partners reside. The
Partnership shall remove and release from the public records all UCC filings
against the Partnership that pertain to the Property (other than filings
relating to the Mortgage Debt) effective as of the Closing
Date;
(xviii) true
and
complete copies of all of the Partnership’s organizational documents and
certificates of limited partnership filed with any Authorities, and all material
written communications relating to the Partnership from or to the Existing
Partners made within the past five (5) years; and
(xix) any
updates, modifications, amendments, substitutes, or additional items
relating to the categories listed in Section 2.l(a) of this Agreement and not
previously delivered to Essex.
As
soon
as reasonably practicable after any updated version of the items described
in
this Section 2.l(a) becomes available to the Partnership, (collectively, such
updated version of the items described in Section 2.l(a) shall be referred
to
herein as “New Matters”), the Partnership shall provide copies of such
New Matters to Essex.
(b) Consents. It
shall be a condition to Essex’s obligation to close that, not later than twenty
(20) days prior to the Closing, the General Partners shall have obtained the
Partner Consent and the Partnership and the Cash Interest Holders shall have
obtained, and such parties shall use their best effort to timely obtain, all
authorizations, consents, approvals, elections and waivers from third parties
other than partners in the Partnership (as approved by Essex pursuant to the
terms of this Section 2.1(b), collectively, the “Consents”), including,
without limitation, from all applicable Authorities, necessary (i) to
enable the redemption for cash of all of the Partnership interests that Existing
Holders have elected to have redeemed, all in accordance with the terms of
this
Agreement and all other agreements by which the Partnership or the Property
is
bound or to which the Partnership or the Property is subject; (ii) to
enable the Partnership, the General Partners and the other Existing Partners
to
perform all of their respective obligations under this Agreement and the Related
Agreements and (iii) to consummate the transactions contemplated by this
Agreement. It shall be a condition to Essex’s obligation to close
that, no later than twenty (20) days before the Closing Date, the Partnership
and the General Partners shall have obtained, and such parties shall use their
best efforts to timely obtain, such elections (the “Elections”) from the
Existing Partners as are necessary to permit issuance of the Units and the
payment of cash, if applicable, to the Cash Interest Holders and the Existing
Partners in accordance with all applicable Securities Laws and legal
obligations, including, without limitation, regarding distribution of disparate
consideration by the Partnership as reasonably determined by Essex upon the
advice of counsel, as well as an affirmation of the indemnities set forth in
Article 7 hereof. The Consents shall include, without
limitation, any authorizations, consents, approvals and waivers necessary in
connection with any Securities Laws. The form and substance of the
Consents and Elections shall be reasonably satisfactory to Essex and duly
authorized, executed and delivered copies thereof in form and substance
reasonably satisfactory to Essex shall be obtained by or delivered to Essex
on
or before the date which is twenty (20) days prior to the Closing.
-17-
(c) Exempt
Transactions. It is expressly acknowledged and agreed by all
parties hereto that it is a condition to Essex’s obligations under this
Agreement that the issuance and distribution of each Unit to Continuing Partners
pursuant to the terms of this Agreement be an exempt transaction under all
applicable Securities Laws, including without limitation as
follows: (i) the Consent Solicitation and the offer and sale of
Units to Existing Partners shall be exempt from the registration requirements
of
the Securities Act by reason of Regulation D promulgated thereunder;
(ii) the Consent Solicitation shall comply as to form with all applicable
federal and state securities laws, including specifically Rule 502 and 506
promulgated under the Securities Act; and (iii) the documents delivered to
the Existing Partners in the Consent Solicitation (other than information
provided by Essex in writing specifically for inclusion therein) shall not
contain any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements made, in light of the circumstances under
which
they were made, not misleading. If, upon the advice of counsel, Essex
determines that it would be a violation of the Securities Act, the Exchange
Act
or any applicable state or other federal securities Law or any rule or
regulation promulgated thereunder, including, without limitation, of any
so-called “roll-up” laws, rules or regulations, (collectively, “Securities
Laws”) to deliver or issue Units to the Continuing Partners, then Essex
shall have the right to terminate this Agreement unless either (i) one (1)
or more Existing Partners who may receive Units without violation of Securities
Laws purchase before Closing the interest of the person who is unable to receive
Units or (ii) the person who is unable to receive Units elects to accept
cash for his interest in lieu of Units, which election must be made not later
than twenty (20) days prior to Closing or ten (10) days after Essex delivers
notice that receipt of Units is not permissible, whichever is
later. The Closing Date shall be extended if necessary to allow for
an election as contemplated by clause (ii) of the preceding
sentence. Such termination by Essex shall be made by delivery of
written notice thereof to the Partnership. If a condition of this
Section 2.l(c) is not satisfied as a result of any intentional act on the part
of a General Partner, or as a result of an omission by a General Partner to
take
action which, under the terms of this Agreement, he has agreed to take, the
Partnership shall be deemed to have breached its obligations under this
Agreement unless such matter is cured within ten (10) days after receipt by
a
General Partner of written notice of such breach.
(d) Title
Insurance. The Partnership shall provide to Essex an original
ALTA owner’s policy of title insurance (Form B, rev. 10/17/70) issued by the
Title Company in an amount equal to the sum of Twenty-Eight Million Dollars
($28,000,000), insuring fee simple title to the Real Property in the
Partnership, subject only to such exceptions as Essex shall have approved in
writing, without boundary, encroachment or survey exceptions and with such
endorsements and reinsurance as Essex shall require, and otherwise in form
and
substance satisfactory to Essex (the “Title Policy”). The
Title Policy shall also provide full coverage against mechanic’s and
materialmen’s liens and parties in possession other than tenants under Leases as
tenants only.
(e) Survey. The
Partnership shall provide to Essex within ten (10) days of the date hereof
an
“as-built” survey of the Real Property in form and substance meeting Essex’s
survey requirements (the “Survey”).
(f) UCC
Search. The Partnership shall provide to Essex the results of a
UCC Search from the jurisdictions listed on Exhibit C, with no individual
result dated earlier than ten
-18-
(10)
days
prior to the Closing Date, showing any and all filings against the
Partnership, the General Partners and any Existing Partner as debtor
or lessor, and shall remove and release from the public records all such
filings
with respect to the Property or the Existing Partners’ interest in the
Partnership (other than filings in which the Partnership is the debtor and
in
which the holder of the Mortgage Debt is the Secured Party) effective as
of the
Closing Date.
(g) Accuracy
of Representations and Warranties. The representations and
warranties of the Partnership, the General Partners and the Existing Partners
contained herein shall be true and correct as of the date of this Agreement
and
as of the Closing Date, and a certificate to such effect shall be executed
and
delivered by the General Partners as of the Closing Date with respect to the
representations and warranties of the General Partners and the
Partnership.
(h) Opinion
of Counsel. The Partnership shall have delivered to Essex an
opinion of its legal counsel, The Law Offices of Xxxxx X. Xxxx, dated as of
the
Closing Date, in form and substance satisfactory to Essex regarding the due
organization and authority of the Partnership, the absence of conflicts, the
due
execution, delivery and enforceability of this Agreement and the Related
Agreements, the power and authority of the Partnership and the General Partners
to consummate the transactions which are the subject of this Agreement and
the
Related Agreements and to perform their obligations under this Agreement and
the
Related Agreements, that the offer and issuance of Units to the Continuing
Partners is exempt from the registration requirements of the Securities Act,
and
other customary matters covered by closing opinions in similar
transactions.
(i) Authority. On
or before the date hereof, the Partnership shall have delivered to Essex
evidence of the Partnership’s and the General Partners’ authority to execute and
deliver this Agreement and all Related Agreements and to consummate the
transactions which are the subject of this Agreement and to perform their
respective obligations hereunder and under the Related
Agreements. All such evidence shall be in form and substance
reasonably satisfactory to Essex and shall include, without limitation,
organization documents of the Partnership, certified by the Secretary of State
of California, certificates of legal existence and good standing, qualifications
to do business, if applicable, and secretary’s certificates as to resolutions
and incumbency.
(j) Absence
of Litigation. No Action shall be pending or threatened against
Essex, the Partnership, the General Partners, any of the Existing Partners
or
the Property, which (i) questions or could reasonably be expected to
question the validity or legality of the transaction contemplated under this
Agreement or the Related Agreements or (ii) affects or could reasonably be
expected to affect the Property in any adverse way. The Partnership
shall certify as to the foregoing items (i) and (ii) at Closing (other
than with respect to Essex as to which the General Partners make no
certification).
(k) Contract
Termination. The Partnership shall have terminated all of the
Terminable Contracts on or before the Closing Date.
-19-
(l) Delivery
of Partnership Documents. At the Closing, the Partnership and/or
the General Partners shall deliver to Essex, to the extent not previously
delivered to, or in the possession of, Essex, the following, in form and
substance satisfactory to Essex:
(i) FIRPTA
Certificate(s). Certification confirming that the Partnership is
not a “foreign person” as defined in Section 1445(f)(3) of the Code, or under
any similar sections of any similar laws of the State of California, i.e.,
the
Partnership is not a nonresident alien, foreign corporation, foreign
partnership, foreign trust or foreign estate as those terms are defined in
the
Code and income Tax Regulations or similar laws or regulations of the State
of
California;
(ii) Keys. Keys
to all locks located at the Property;
(iii) Letters
to Tenants. If requested by Essex, a letter executed by a General
Partner on behalf of the Partnership (in a form provided by Essex), addressed
to
all tenants of the Property, notifying all such tenants of the change in general
partner of the Partnership and directing payment of all rents accruing after
the
Closing Date to be made to EPLP on behalf of the Partnership or at EPLP’s
direction;
(iv) Letters
to Vendors. If requested by Essex, a letter executed by the
Partnership (in a form provided by Essex), addressed to all vendors under the
Contracts, notifying all such vendors of the change in the general partner
of
the Partnership;
(v) Original
Documents and Files. To the extent not previously delivered to
Essex and in the Partnership’s possession or under its control, originals of any
of the Contracts, Leases, Licenses, all books and records of the Partnership,
and all other financial or other information or documents pertaining to the
Partnership and the Property; or if the original is not in the Partnership’s
possession or control, copies thereof;
(vi) Tax
Bills. Copies of the most currently available tax bills for the
Property;
(vii) Rent
Roll. An updated Rent Roll for the Property dated no later than
five (5) days prior to Closing, which updated Rent Roll will be used to identify
all Leases of space at the Property for purposes of this Agreement as of the
Closing Date and shall reflect no adverse changes from the Rent Roll attached
hereto as Exhibit F. The General Partners shall specifically identify any
changes from the Rent Roll attached hereto as Exhibit F, and shall
deliver a certificate dated as of Closing Date certifying that such updated
Rent
Roll is true, complete and correct (including, without limitation, the amount
of
security deposits and description of uncured tenant defaults and delinquencies
listed thereon) and stating whether there exist any events which with the
passage of time and/or the giving of notice would constitute a tenant default
under any Lease;
(viii) Title
Insurance. The Title Policy for the Property;
(ix) Survey. A
survey meeting the requirements of Section 2.1(e);
-20-
(x) Consents. All
Consents and Elections required pursuant to Section 2.1(b);
(xi) Opinion
of Counsel. The opinion of counsel to the Partnership required
pursuant to Section 2.1(h);
(xii) Consent
of Mortgage Lender. The written consent of the Mortgage lender to the
transactions described herein and the fully executed Mortgage Debt Consent
Documents and Mortgage Debt Estoppels;
(xiii) Mortgage
Instruments. Originals of all of the Mortgage Instruments;
and
(xiv) Other. Such
other documents, instruments, consents, authorizations or approvals as may
be
required by, and reasonably satisfactory to, Essex, its counsel or the Title
Company and that may be reasonably necessary or desirable to consummate the
transactions that are the subject of this Agreement and the Related Agreements
and to otherwise effect the agreements of the parties hereto, including, without
limitation, as required under this Section.
(m) Timing
of Certain Document Deliveries. At least five (5) Business Days
prior to the Closing, the Partnership shall make, or cause to be made, all
document deliveries required by Sections 2.1(b) through 2.1(k) and Section
2.1(l), Items (vii), (xii) and (xiii).
(n) Delivery
of Continuing Partner Documents. At Closing, each of the
Continuing Partners shall deliver to Essex the following:
(i) A
signature page to the Limited Partnership Agreement, a signature page to the
Registration Rights Agreement, and an agreement to be bound by this Agreement,
each dated as of the Closing Date, duly executed and delivered;
(ii) to
the
extent not previously delivered to Essex, the investment representations and
warranties contained in Exhibit B and a Prospective Subscriber
Questionnaire;
(iii) All
tax
and financial information relating to the Continuing Partners’ interests in the
Property as may be reasonably requested by Essex; and
(iv) Such
other documents and instruments as may be reasonably necessary or desirable
to
consummate the transactions involving as contemplated by this Agreement and
the
Related Agreements.
(o) Delivery
of the Cash Interest Holder Documents. At Closing, each of the
Cash Interest Holders shall deliver an assignment of the portion of its
Partnership interest being redeemed to the Partnership to be paid for in cash,
containing the representations and warranties set forth in Section 3.4 and
otherwise in the form attached as Exhibit N to this
Agreement.
-21-
(p) Accuracy
of Documents. The General Partners shall have certified to Essex
that to the best of their knowledge all materials delivered pursuant to Section
2.1(a) are true, correct and complete copies of all such documents in the
Partnership’s possession or under its control and, to the best of their
knowledge, there are no other material agreements or documents relating to
the
subject matter thereof in the Partnership’s possession or under its control that
have not been made available to Essex.
(q) Closing
of Other Restructuring Agreement. It shall be a condition to
Essex’s obligation to close hereunder that all conditions to closing set forth
in the Other Restructuring Agreement have been satisfied or waived by the party
authorized to waive such condition.
(r) Limitation
on Redemptions. Existing Partners may not have elected to have,
in the aggregate, more than 40% of all of the pre-Closing interests in the
Partnership redeemed.
(s) Financing
Statements. Subject to obtaining consent from the Mortgage
Lenders, if required, all Continuing Partners shall execute and deliver to
Essex
such documentation as Essex may reasonably require to confirm and perfect the
security interest granted to Essex in Article 7 in certain of the Units,
and proceeds thereof, to be owned by Continuing Partners after the Closing
(and
hereby authorizes Essex to file related financing statements in connection
therewith). Such security interest shall be released on the fourth
(4th)
anniversary of the Closing; provided, however, that the security interest
granted and financing statements shall be extended if any unresolved claims
are
then outstanding as provided in Article 7 below.
2.2 Conditions
to the Obligations of the Partnership
The
obligation of the Partnership to consummate the transaction contemplated under
this Agreement shall be subject to the satisfaction or waiver by the
Partnership, on or before the Closing Date, of each of the conditions set forth
below and the performance by EMC and EPLP of their respective obligations set
forth below and elsewhere in this Agreement.
(a) Accuracy
of Representations and Warranties. All representations and
warranties of Essex hereunder shall be true and correct as of the date of this
Agreement and as of the Closing Date, and a certificate to such effect shall
be
executed and delivered by Essex as of the Closing Date.
(b) Absence
of Litigation. No Action shall be pending or threatened against
Essex which questions or could reasonably be expected to question the validity
or legality of the transactions contemplated under this Agreement or the Related
Agreements.
(c) Limited
Partnership Agreement. EPLP and EMC shall execute and deliver the
Limited Partnership Agreement, and the Partnership shall issue the Units to
the
Continuing Partners.
(d) Registration
Rights Agreement. Essex REIT shall execute and deliver the
Registration Rights Agreement.
-22-
(e) Release. Essex
shall use commercially reasonable efforts to have the Mortgage Lender release
the General Partners from their pre-Closing obligations under any guaranties
entered into in connection with obtaining the Mortgage Debt.
2.3 Negotiation
of Documents
The
parties agree that prior to Closing, they will in good faith negotiate all
documents which are required to be executed and delivered by any party hereto
at
Closing and are not attached as exhibits to this Agreement, with the
understanding that such documents will contain such customary provisions,
representations and warranties and indemnifications as are customarily contained
in documents designed to effect similar transactions.
ARTICLE
3 - REPRESENTATIONS AND WARRANTIES
3.1 Representations
and Warranties of the Partnership
The
Partnership and the General Partners hereby represent and warrant to Essex
as of
the date of this Agreement as follows, and each of the Partnership and the
General Partners shall, as a condition to Essex’s obligations to complete the
transactions contemplated by this Agreement, be deemed to remake the following
representations and warranties as of the Closing Date as if fully made again
thereon.
(a) Existence
and Power. The Partnership has been duly formed and is a validly
existing limited partnership under the laws of the State of California and
is
duly authorized to transact business in the State of California and in all
other
jurisdictions where such qualification is necessary to carry on its business
as
now conducted. The Partnership has all power and authority
under its organizational documents and applicable Laws (i) to enter into
and deliver this Agreement and all other documents to be executed and delivered
in connection with the transaction that is the subject of this Agreement,
including, without limitation, all Related Agreements, to the extent they are
to
be executed by the Partnership, (ii) to perform its obligations under this
Agreement and the Related Agreements executed by the Partnership, and
(iii) to own the Property, the Personal Property and its other assets and
conduct its business. To the best of the General Partners’ knowledge,
the Partnership possesses all Licenses necessary to conduct its business as
presently carried on by it and as contemplated by it to be carried on by the
Partnership after the Closing and the closing of the transactions contemplated
hereby. The Partnership has delivered to Essex recently certified
true and complete copies of its limited partnership agreement, certificate
of
limited partnership, and certificate of good standing in the State of
California.
(b) Authorization;
No Contravention. The execution and delivery of this Agreement
and the Related Agreements executed by the Partnership and the performance
by
the Partnership of its obligations under all of the foregoing have been duly
authorized by all requisite organizational action on the part of the
Partnership. Subject to obtaining the Partner Consent, this Agreement
constitutes and, upon execution thereof, the Related Agreements executed by
the
Partnership will constitute, the valid, legal and binding obligations of the
Partnership, enforceable against the Partnership. None of this
Agreement or the Related Agreements executed by the Partnership or the General
Partners, nor the performance by the Partnership or the General Partners of
their respective obligations thereunder, will (i) violate any provision of
the Partnership Agreement or other organizational documents of the Partnership;
(ii) violate,
-23-
conflict
with or result in a default under any material contract or obligation to
which
the Partnership is a party or by which it or its assets are bound;
(iii) violate or result in a violation of, or constitute a default under
any provision of any law, regulation or rule, or any order of, or any
restriction imposed by, any Authority on the Partnership or the Property;
(iv) require the Partnership to obtain any approval, consent or waiver of,
or make any filing with, any Person or Authority that has not been obtained
or
made, except as contemplated in this Agreement, the General Partners shall
use
their reasonable best efforts to obtain all approvals, consents, waiver or
filings, as applicable, prior to the Closing or, at any earlier time required
hereunder or under applicable Law; or (v) except as provided by this
Agreement, result in the creation or imposition of any Claim on any of the
assets of the Partnership, or to the best of the General Partners’ knowledge on
any of the Existing Partners’ interest in the Partnership. There is
no Action pending or threatened involving the Partnership which, if determined
adversely to it or its assets, would interfere with its ability to execute
or
deliver, or perform its obligations under this Agreement or the Related
Agreements executed by it or have a Material Adverse Effect on the financial
position, operations, business or prospects of the Partnership or the
Property.
(c) Descriptive
Information; Diligence. The General Partners and the Partnership
have made all disclosures to Essex required under applicable Laws and under
this
Agreement. All documents delivered by or on behalf of the Partnership
to Essex, or made available to Essex for review in connection with the
transactions contemplated by this Agreement and the Related Agreements,
including, without limitation, all leases, tenancy and occupancy agreements
(including, without limitation, all amendments, modifications, agreements,
records, substantive correspondence and other documents affecting in any way
a
right to occupy any portion of the Land or the Improvements) affecting the
Property (collectively, the “Leases”) and all other materials delivered
pursuant to Section 2.1(a), are true, correct and complete copies of all such
documents in the Partnership’s possession or control. The documents
described in the immediately preceding sentence have not been amended or
modified by any oral agreements, and there are no other such agreements or
documents in existence. The General Partners and the Partnership have
delivered or made available to Essex all of the Partnership’s books, records and
files and all other materials relating to the Property or the Partnership that
are in their possession or under their control.
(d) Defaults
and Mortgage Debt. The Partnership is not in monetary or material
nonmonetary default under any of the documents, recorded or unrecorded,
encumbering or affecting the Property, including without limitation, the
Licenses, the Mortgage Instruments, the Leases and the Contracts, any documents
referred to in any title commitment delivered to Essex by the Partnership,
any
other documents to which the Partnership is a party or by which the Partnership
or its assets (including, without limitation, the Property) are bound, or any
documents or instruments executed in connection with all or any of the
foregoing. The General Partners and the Partnership have delivered to
Essex true, complete and accurate copies of all of the material documents
evidencing, securing and otherwise executed in connection with all or any
portion of its Mortgage Debt. The Mortgage Debt (A) provides for
interest computed on the principal amount of the loan only, without any
participation in the income from or appreciation of the Property, and (B) is
not
secured by a mortgage or pledge of collateral other than a mortgage of the
Property and related assets of the Partnership. The outstanding
principal balance of the Mortgage Debt as of the date hereof is $14,000,000,
and
all interest has been paid as of the end of the most recent calendar
month. An additional $6,000,000 in Mortgage Debt shall be
-24-
(e) Compliance
With Law. There is no Action pending or threatened in which the
Partnership is engaged in connection with the business, affairs, properties
or
assets of the Partnership or which might call into question the validity or
hinder the enforceability or performance of this Agreement, or of the Related
Agreements or any of the other agreements and transactions contemplated hereby
and thereby. The Partnership is, and at all times has been, in
material compliance with all laws, rules, regulations, ordinances, codes or
interpretations of any Authority (collectively, “Laws”), including,
without limitation, all federal or state securities laws applicable to its
business and affairs or to the ownership and operation of the Property or the
assets of the Partnership. Neither the Partnership nor any General
Partner is in material default with respect to any judgment, order, writ,
injunction, decree, demand or assessment issued by any court or any Authority,
relating to any aspect of the business or affairs or properties or assets of
the
Partnership. Neither the Partnership nor any General Partner is
charged or, to the best knowledge of the Partnership, threatened with, or under
investigation with respect to, any violation of any provision of federal, state,
municipal or other law or any administrative rule or regulation, domestic or
foreign, including, without limitation, any federal or state securities laws,
affecting the Partnership or the transactions contemplated hereby. To
the best of the General Partners’ knowledge, the Property does not violate, and
no state of facts with regards to the Property exists which would constitute
a
violation of, any Law or any requirement of any insurer or board of fire
underwriters or similar entity. As of the date of this Agreement, the
Partnership has not received written notice of any special assessment not
disclosed on the Preliminary Title Report or condemnation proceedings affecting
the Property, and, to the best of the General Partners’ knowledge, there is no
such special assessment or condemnation action pending or
threatened. To the best of General Partners’ knowledge, all licenses,
franchises permits, approvals, variances, easements and rights of way and other
rights, including, without limitation, proof of dedication and authorizations
(collectively, the “Licenses”) required for the ownership, use or
operation of the Property as presently used and operated, or required to conduct
the Partnership’s business as presently carried on by it and as contemplated by
it to be carried on by the Partnership after the Closing hereunder and the
closing of the transactions contemplated hereby, have been validly issued and
are in full force and effect, and the General Partners have not received any
notice, and otherwise has no knowledge, of proceedings relating to the
revocation or modification of any License.
(f) Leases. To
the best of the General Partners’ knowledge, the Leases are in full force and
effect. As of the Closing Date, all brokerage commissions or
compensation in respect of any of the Leases shall have been paid by the
Partnership. True, complete and correct copies of all Leases have
been made available to Essex. True, complete and correct copies of
all Leases in effect on the Closing Date shall be located at the Property on
such date. No person or entity has any option or right of first
refusal or first opportunity to acquire any interest in the Property or any
portion thereof.
-25-
(g) Hazardous
Materials. To the best of the General Partners’ actual knowledge,
the Property does not contain any hazardous or toxic materials, including,
but
not limited to, any chemicals or materials regulated as hazardous or toxic
under
any federal, state or local law, including, without limitation, petroleum,
asbestos, or PCB’s, and does not have located under it any underground storage
tanks. In addition, to the General Partners’ actual knowledge, no
such hazardous or toxic materials have ever migrated from the Property to any
other property. The General Partners and the Partnership agree to
provide Essex promptly in writing any information which they have or may acquire
regarding the presence and location of any hazardous materials or underground
storage tanks on or about the Property.
(h) Personal
Property. The list of personal property for the Property attached
hereto as Exhibit G, is an accurate and complete list of all Personal
Property.
(i) Rent
Roll. Attached hereto as Exhibit F is the Rent Roll
which is true, complete and correct as of the date of this
Agreement. The Rent Roll attached as Exhibit F shall be
updated through Closing. As of the Closing Date such updated Rent
Roll shall be true and correct in all material respects, shall reflect no
monetary or other material defaults under Leases by the Partnership, and shall
reflect the existence of no Leases other than those existing as of the date
of
this Agreement or entered into in accordance with the terms hereof.
(j) Contracts. True,
complete and correct copies of all Contracts have been provided to
Essex. The Contracts (i) are in full force and effect and
(ii) are terminable on not more than thirty (30) days’ prior written notice
and without payment of any penalty. The Partnership agrees to
terminate prior to Closing, at its own expense, the Terminable
Contracts. There shall be no agreements or other obligations or
liabilities with respect to all or any portion of the Property that are binding
on the Partnership or the Property following Closing, other than the Leases,
the
Contracts (excluding the Terminable Contracts), the Permitted Exceptions, the
Licenses required for the ownership, use or operation of the Property and other
documents executed in connection with the foregoing.
(k) FIRPTA. The
Partnership is not a “foreign person” as defined in Section 1445(f)(3) of the
Code, or under any similar sections of any similar laws of the State of
California, i.e., the Partnership is not a nonresident alien, foreign
corporation, foreign partnership, foreign trust or foreign estate as those
terms
are defined in the Code and income Tax Regulations or similar laws or
regulations of the State of California.
(l) Disclosure. The
representations and warranties and the statements and information contained
in
this Agreement, in the Exhibits and Schedules hereto and in all of the materials
delivered by the General Partners and the Partnership to Essex and its counsel,
accountants, appraisers and consultants pursuant to this Agreement or in
connection with the due diligence investigations conducted by or on behalf
of
Essex in connection with this Agreement do not contain any untrue statement
of a
material fact and, when taken together, do not omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties, statements or information not misleading in light
of the circumstances under which they were made.
-26-
(m) Financial
Statements. All operating statements for the Property delivered
to Essex by the Partnership were prepared by the Partnership in the ordinary
course of business, are complete, accurate, true and correct in all material
respects, and in all material respects accurately set forth the results of
the
operation of the Property for the periods covered. Since the date of
the most recent internally prepared operating statements referred to above,
(i) there has been no material adverse change in the condition, financial
or otherwise, of the Property or the Partnership whether or not arising in
the
ordinary course of business and (ii) there has been no material change in
the ownership of the Partnership or any increase in the indebtedness of the
Partnership (excluding account trade payables incurred in the ordinary course
of
business)
(n) Pending
Actions; Labor Disputes. There is no existing or threatened
Action of any kind involving the Partnership or which, if determined adversely
to it or its assets, including, without limitation, the Property would interfere
with the ability of the Partnership to execute or deliver, or perform each
of
its obligations under, this Agreement, the Limited Partnership Agreement, the
Registration Rights Agreement or the Related Agreements executed by it or have
a
material adverse effect on the financial position, operations, business or
prospects of the Partnership or its assets, including, without limitation,
the
use, occupancy, operation or value of the Property. To the best of
the Partnership’s and the General Partners’ knowledge, there are no labor
troubles or complaints of unfair labor practices pending with respect to any
Person.
(o) Taxes.
(i) All
tax
or information returns required to be filed on or before the date hereof by
or
on behalf of the Partnership (i) have been filed through the date hereof or
will be filed on or before the date when due in accordance with all applicable
Laws and (ii) there is no Action pending against or with respect to the
Partnership or the Property in respect of any tax nor is any claim for
additional tax asserted by any Authority against the Partnership or the
Property. The Partnership has paid, or caused to be paid, all
material federal, state, county, local, foreign, and other taxes, and all
deficiencies, or other additions to tax, interest, fines and penalties
(collectively, “Taxes”), required to be paid by it, and in accordance
with applicable Laws, has filed all federal, state, county, local and foreign
tax returns which are required to be filed by it, and all such returns correctly
and accurately set forth the amount of any Taxes relating to the applicable
period. No taxing authority is now asserting or, to the best
knowledge of the Partnership, threatening to assert against the Partnership,
any
deficiency or claim for additional Taxes. All real estate taxes and
assessments relating to the Property that are due and payable have been
paid.
(ii) The
Partnership acknowledges that none of the reconstituted Partnership, Essex,
nor
any Affiliate thereof, shall assume any responsibility for the tax consequences
of the transactions contemplated by this Agreement, the Limited Partnership
Agreement and the Related Agreements to the Partnership or the Existing
Partners, other than to agree to report the transactions for federal and state
tax purposes consistently with the manner agreed to by Essex and the
Partnership.
(iii) Prior
to
Closing, Section 64(d) of the California Revenue and Taxation Code does not
apply with respect to the Real Property held by the Partnership.
-27-
(iv) The
current assessed value of the Real Property for applicable property tax purposes
is $8,612,682. There has been no “change in ownership” (as that term is defined
in Section 60, et seq., of the California Revenue and Taxation Code)
with respect to the Real Property at any time following its original acquisition
by the Partnership.
(v) The
co-ownership arrangement between the Partnership and the Co-Owner Partnership
relating to the Real Property does not constitute a partnership for U.S. federal
of California state tax purposes.
(p) Insurance. The
Partnership currently has in place the public liability, casualty and other
insurance coverage with respect to the Property set forth in
Exhibit I, and each of such insurance policies is in full force and
effect and all premiums due and payable thereunder have been fully paid when
due. The General Partners have delivered or made available to Essex
all copies of all insurance policies and arrangements with respect to the
Property.
(q) Authorizations,
Approvals and Consents. The Partnership has obtained all
authorizations, approvals and consents necessary to enter into this Agreement
and the Related Agreements, and, prior to Closing, the Partnership will have
obtained all authorizations, approvals and consents necessary to perform all
obligations associated with the transactions contemplated by this
Agreement.
(r) Physical
Condition. The General Partners have received no written notice
nor do they otherwise have knowledge of (i) pending or contemplated annexation
or condemnation proceedings, or private purchase in lieu thereof, affecting
or
which may affect the Property or any part thereof, (ii) proposed or pending
proceedings to change or redefine the zoning classification of all or any part
of the Property, (iii) proposed or pending special assessments affecting the
Property or any portion thereof, (iv) penalties or interest due with respect
to
real estate taxes assessed against the Property and (v) proposed changes in
any
road or grades with respect to the roads providing a means of ingress and egress
to the Property.
(s) Solvency. The
Partnership has been and will be solvent at all times prior to the Closing
of
the transactions provided for in this Agreement. There does not exist
in effect with respect to the Partnership (i) any general assignment for the
benefit of creditors, (ii) any voluntary petition in bankruptcy, (iii) any
involuntary petition filed by the creditors of the Partnership, (iv) any
appointment of a receiver to take possession of all, or substantially all,
of
the assets of the Partnership, (v) any attachment or other judicial seizure
of
all, or substantially all, of the assets of the Partnership, (vi) any admission
in writing of the inability of the Partnership to pay its debts as they come
due
or (vii) any offer of settlement, extension or composition to the creditors
generally.
(t) Title
to Assets. The Partnership’s Personal Property, Intangibles and
other assets will on the Closing Date be owned by the Partnership free and
clear
of any Claim, conditional xxxx of sale, chattel mortgage, security agreement
or
financing statement or other security interest of any kind, other than liens
securing the Mortgage Debt.
(u) Intellectual
Property. To the best knowledge of the General Partners, the
Partnership has not infringed upon or violated any trademark, trade name,
patent, copyright,
-28-
trade
secret or other intellectual property right or contractual relation of
another. The General Partners have not received any notice, claim or
protest respecting any such infringement or violation, or given any
indemnification to any Person for any such infringement or
violation. Except as shown on Schedule 3.1(u) hereto, the Partnership
does not own any material franchises, permits, licenses, trademarks, trade
names, patents, patent applications, copyrights, trade secrets, computer
software, formulas, designs, inventions (together, “Intellectual
Property”) or ideas, that are currently used or are necessary to conduct its
business as presently conducted, and as proposed to be conducted by the
Partnership after the Closing, without infringing on the rights of any other
Person. All of the Partnership’ s rights in and to such Intellectual
Property are being transferred to the Partnership as part of the transactions
contemplated hereby and, after the Closing, the Partnership will own all
such
Intellectual Property free and clear of any Claims and without infringing
on the
rights of any other Person.
(v) Insurance/Casualty
Losses. The Partnership has not received written notice of any
outstanding requirements or recommendations by (i) any insurance company
currently insuring the Property or (ii) any board of fire underwriters or other
body exercising similar functions, which in any case require or recommend any
repairs or work to be done on the Property of a material nature. There has
been
no damage to any portion of the Property caused by fire or casualty that has
not
been fully repaired or restored.
(w) Partnership
Financial Statements; Absence of Undisclosed Liabilities.
(i) The
Partnership Financial Statements provided to Essex fairly present the complete
operating results of the Partnership in accordance with income tax method of
accounting applied on a consistent basis. Since the date of the last Partnership
Financial Statements, there has been no material adverse change in the
condition, financial or otherwise, of the Partnership other than refinancing
the
Mortgage Debt and distributing some or all of the proceeds to the Existing
Partners, and (ii) there has been no material change in the ownership of the
Partnership or any increase in the Indebtedness of the Partnership (not taking
into account trade payables incurred in the ordinary course of business and
refinancing of the Mortgage Debt).
(ii) On
the
Closing Date, the Partnership will have no Liability of any type, including,
without limitation, any Liability to the Person from whom or which the
Partnership acquired the Property, except (v) Permitted Exceptions,
(w) prepaid rents, (x) refundable security deposits, (y) Mortgage
Debt and (z) current real estate taxes, the payment of which is not
delinquent and usual and customary operating expenses, all subject to
proration.
(x) Employees. Except
as listed on Schedule 3.1(x), the Partnership does not have any
employees.
(y) Capital
Structure. The capital structure of the Partnership is as set
forth on Schedule 3.1(y) hereto. All of the equity interests of the Partnership
have been duly and validly issued. Except as set forth on Schedule 3.1(y),
there
are no equity interests of the Partnership issuable upon conversion or exchange
of any security of the Partnership. Except as set forth on Schedule 3.1(y),
no
holder of any equity interest of the Partnership is entitled to any preemptive
or similar right (i) to subscribe for any equity interests of the Partnership
or
(ii) with respect to
-29-
any
of
the transactions contemplated hereby. Except as set forth on Schedule 3.1(y)
or
in this Agreement, there are no existing rights, agreements or commitments
obligating or which might obligate the Partnership to issue, transfer, sell
or
redeem any equity interests of the Partnership. The Partnership does not
own any
equity interests in any other Person.
(z) Indebtedness. Other
than the Mortgage Debt, the Partnership has no Indebtedness other than current
real property taxes and operating expenses subject to proration, nor is the
Partnership a party to any agreement providing for the borrowing or lending
of
money. Except for the Mortgage Debt, after giving effect to the
transactions contemplated hereby, the Partnership will not have any
Indebtedness, nor will it be a party to any agreement providing for the
borrowing or lending of money.
(aa) Business. The
Partnership is and has, since its inception, been engaged solely in the business
of owning, managing and developing the Property.
(bb) General
Partner Fees and Reimbursements. Any and all monetary fees
payable to, or expenses or other amounts reimbursable to the General Partner
or
any other person engaged by the Partnership, whether payable before or after
the
Closing, shall be borne by the Existing Partners.
(cc) Consent
Solicitation. On the date the Consent Solicitation is delivered
to the Existing Partners and on the Closing Date, none of the information
supplied by or on behalf of the Partnership for inclusion in the Consent
Solicitation that was not based on information about Essex supplied in writing
by Essex will be false or misleading with respect to any material fact or will
omit to state any material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading or necessary to correct any statement in any
earlier communication with respect to the subject matter thereof. The foregoing
sentence shall not apply to information supplied in writing by Essex for
inclusion in the Consent Solicitation.
For
purposes of this Section where the terms “to the best of the Partnership’s
knowledge” or “to the best of the General Partners’ knowledge” or similar
phrases are used, such terms shall mean that none of the Partnership or any
of
the General Partners, as the case may be, has actual knowledge of the matter
in
question after due inquiry as of the date with respect to which the
representation or warranty is made.
The
representations and warranties contained in Sections 3.1(c) (second and third
sentences only), 3.1(d) (as to Leases and Contracts, to the extent they relate
solely to the Property and are with third parties unaffiliated with the
Partnership or any Existing Partner, in the first sentence only), 3.1(e) (fifth,
sixth and seventh sentences only), 3.1(f), 3.1(g), 3.1(h), 3.1(i), 3.1(j),
3.1(m), 3.1(n) (last sentence only), 3.1(p), 3.1(r) and 3.1(v), solely to the
extent such representations and warranties relate specifically to the Property,
are qualified to the extent of the actual knowledge as of the date hereof,
without any independent inquiry, of Jordan X. Xxxxxx and Xxxxxx Xxxxxxx;
provided, however, that the foregoing qualification shall not apply or limit
the
Partnership’s, the General Partners’ and/or any of the other Existing Partners’
liability with respect to any knowledge of Jordan X. Xxxxxx and Xxxxxx Xxxxxxx
regarding the
-30-
presence
of radon on or in any portion of the Property. In no event shall such
individuals have any personal liability under this Agreement or
otherwise.
3.2 Representations
and Warranties of Each Existing Partner
It
shall
be a condition to Essex’s obligation to close the transactions contemplated
under this Agreement that each Existing Partner shall expressly make the
following representations and warranties to Essex in connection with the Partner
Consent and shall remake such representations and warranties as of the Closing
Date or if made again on such date, it being understood and agreed that the
remaking of such representations and warranties can be evidenced by a customary
bring-down certificate executed and delivered by the General Partners as
attorneys-in-fact pursuant to a power of attorney signed by such Existing
Partners in connection with the Partner Consent (so long as the General Partners
have not received written notice from an Existing Partner that any such
representations or warranties have become not true since the date
hereof). All Existing Partners shall, as a condition to Essex’s
obligations to complete the transactions contemplated by this Agreement, be
deemed to have made the following representations and warranties as of the
Closing Date as if fully made on such date:
(a) Existence
and Power. Each Existing Partner that is an entity warrants that
it has been duly formed and is validly existing under the laws of the state
of
formation. Each Existing Partner that is an entity warrants that it has all
power and authority under its organizational documents and applicable Laws
(i)
to enter into and deliver the Partner Consent and all other documents to be
executed and delivered in connection with the transaction that is the subject
of
this Agreement, including, without limitation, all Related Agreements, to the
extent they are to be executed by the such Existing Partner, (ii) to perform
its
obligations under the Partner Consent, this Agreement and the Related Agreements
executed by such Existing Partner, and (iii) to own its interest in the
Partnership.
(b) Authorization;
No Contravention. The execution and delivery of this Agreement
and the Related Agreements executed by each Existing Partner and the performance
by each Existing Partner of its obligations under all of the foregoing have
been
duly authorized by all requisite corporate, partnership, limited liability
company or other action on the part of each such Existing Partner.
(c) Ownership;
No Default. Each Existing Partner owns beneficially and of record
his, her or its partnership interest in the Partnership free and clear of any
claim, lien, pledge, voting agreement, option charge, security interest,
mortgage, deed of trust, encumbrance, right of assignment, purchase right or
other right of any nature whatsoever, except such rights as are contained in
the
Partnership Agreement of the Partnership or as created or contemplated by this
Agreement. To the best of such Existing Partner’s knowledge, such
Existing Partner’s interest was validly issued and such Existing Partner is not
currently in default of any obligation to be performed by it under the
Partnership Agreement, including without limitation, to fund any capital
contribution remaining due. The Partnership Agreement and any
documents, subscriptions or other agreements executed in connection with the
Partner Consent are the only agreements between such Existing Partner and the
Partnership.
(d) Accredited
Investors . Each Continuing Partner warrants that he, she or it
(A) is an Accredited Investor and (B) by reason of his, her or its business
and
financial
-31-
experience,
together with the business and financial experience of those persons,
if any,
retained by each of the undersigned to represent or advise him, her or
it with
respect to transactions contemplated hereby, has such knowledge, sophistication
and experience in financial and business matters and in making investment
decisions of this type that he, she or it (x) is capable of evaluating
the
merits and risks of an investment in Units and of making an informed
investment
decision, (y) is capable of protecting his, her or its own interest or
has
engaged representatives or advisors to assist him. her or it in protecting
his,
her or its interests and (z) is capable of bearing the economic risk
of such
investment. Each Continuing Partner warrants that any securities
acquired by such Continuing Partner will be so acquired for the Continuing
Partner’s own account for investment only and not with a view to, or with any
intention of, a distribution or resale thereof, in whole or in part,
in
violation of the Securities Act or state securities or “blue sky” laws, without
prejudice, however, to such Continuing Partner’s rights (subject to restrictions
contained in the Limited Partnership Agreement) at all times to sell
or
otherwise dispose of all or any part of the Units pursuant to an effective
registration statement under the Securities Act or under an exemption
from
registration available under the Securities Act or to transfer such Units
as
authorized in the Limited Partnership Agreement.
(e) Certain
Transactions. No Existing Partner is presently a party to any
material transaction with the Partnership, except as disclosed on Schedule
3.2(e).
3.3 Representations
and Warranties of Essex
Essex
hereby represent and warrant to the Partnership as of the date of this Agreement
as follows, and Essex shall, as a condition to the Partnership’s obligation to
complete the transaction contemplated by this Agreement, remake the following
representations and warranties in all material respects as of the Closing Date
as if fully made again thereon:
(a) Essex
REIT:
(i) Existence
and Power. Essex REIT has been duly formed, is validly existing
as a Maryland corporation, is duly qualified to do business in all jurisdictions
where such qualification is necessary to carry on its business as now
conducted. Essex REIT has all power and authority under its
organizational documents and applicable Laws (i) to enter into and deliver
this
Agreement and all other documents to be executed and delivered in connection
with the transaction that is the subject of this Agreement, including, without
limitation, all Related Agreements, to the extent they are to be executed by
Essex REIT and (ii) to perform its obligations under this Agreement and the
Related Agreements executed by Essex REIT.
(ii) Authorization;
No Contravention. The execution and delivery of this Agreement,
the Registration Rights Agreement and the Related Agreements executed by Essex
REIT, and the performance of its obligations under all of the foregoing have
been duly authorized by all requisite organizational action on the part of
Essex
REIT. This Agreement has been, and each Related Agreement to which
Essex REIT is a party will on the Closing Date have been, duly executed and
delivered by Essex REIT. None of the foregoing will (i) violate
any provision of the charter, bylaws or other organizational documents of Essex
REIT; (ii) violate, conflict with or result in a default under any material
contract or obligation to which Essex REIT is a party or by which it is bound;
(iii) violate or result in a violation of, or constitute a default under
any provision of any law, regulation or rule, or any order of, or any
restriction imposed by,
-32-
any
Authority on Essex REIT; or (iv) require Essex REIT to obtain any approval,
consent or waiver of, or make any filing with, any Person or Authority that
has
not been obtained or made. This Agreement constitutes and, upon the
execution thereof, the Registration Rights Agreement and the other Related
Agreements executed by Essex REIT will constitute the valid and binding
obligations of Essex REIT, enforceable in accordance with their respective
terms, subject to bankruptcy and similar laws affecting the remedies or
resources of creditors generally and principles of equity.
(iii) Pending
Actions. There is no existing or, to the best of Essex REIT’s
knowledge, threatened Action of any kind involving Essex REIT, any of its assets
or the operation of any of the foregoing, which, if determined adversely to
Essex REIT or its assets, would have a material adverse effect on the
consolidated financial position, stockholders’ equity, results of operations or
business of Essex REIT or its assets or which would interfere with Essex REIT’s
ability to execute or deliver, or perform its obligations under this Agreement,
the Registration Rights Agreement or any of the other Related Agreements
executed by it.
(iv) Investment
Company Act. Essex REIT is not an “investment company” or an
entity “controlled” by an “investment company” as such terms are defined under
the Investment Company Act.
(v) Essex
REIT Qualification. Essex REIT is organized and operates, and
intends to continue to operate, in a manner so as to qualify as a “real estate
investment trust” under Sections 856 through 860 of the Code.
(b) EPLP:
(i) Existence
and Power. EPLP has been duly formed, is validly existing as a
California limited partnership and is duly qualified to do business in all
jurisdictions where such qualification is necessary to carry on its business
as
now conducted. EPLP has all power and authority under its
organizational documents and under applicable Laws to (i) enter into and
deliver this Agreement and all other documents to be executed and delivered
in
connection with the transactions that are the subject of this Agreement,
including, without limitation, all Related Agreements, to the extent they are
to
be executed by EPLP and (ii) perform its obligations under this Agreement
and the Related Agreements executed by EPLP. EPLP has delivered to
the Partnership true and complete copies of its limited partnership agreement,
certificate of limited partnership, and certificate of good standing in the
State of California.
(ii) Authorization;
No Contravention. The execution and delivery of this Agreement
and the Related Agreements executed by EPLP, and the performance of its
obligations under all of the foregoing have been duly authorized by all
requisite organizational action on the part of EPLP. This Agreement
has been, and each Related Agreement to which EPLP is a party will on the
Closing Date have been, duly executed and delivered by EPLP. None of
the foregoing will (i) violate any provision of the partnership agreement
or other organizational documents of EPLP; (ii) violate, conflict with or
result in a default under any material contract or obligation to which EPLP
is a
party or by which it is bound; (iii) violate or result in a violation of,
or constitute a default under, any provision of any law, regulation or rule,
-33-
or
any
order of, or any restriction imposed by, any Authority on EPLP; or
(iv) require EPLP to obtain any approval, consent or waiver of, or make any
filing with, any Person or Authority that has not been obtained or
made. This Agreement constitutes and, upon the execution of the
Related Agreements executed by EPLP will constitute, the valid, legal and
binding obligations of EPLP, enforceable in accordance with their respective
terms, subject to bankruptcy and similar laws affecting the remedies or
resources of creditors generally and principles of equity.
(iii) Pending
Actions. There is no existing or, to the best of EPLP’s
knowledge, threatened Action involving EPLP, any of its assets or the operation
of any of the foregoing, which, if determined adversely to EPLP or its assets,
would have a material adverse effect on the consolidated financial position,
partners’ equity, results of operations, business or prospects of EPLP or its
assets or which would interfere with EPLP’s ability to execute or deliver, or
perform its obligations under this Agreement or any of the Related Agreements
executed by it.
(c) EMC:
(i) Existence
and Power. EMC has been duly formed, is validly existing as a
California corporation and is duly qualified to do business in all jurisdictions
where such qualification is necessary to carry on its business as now
conducted. EMC has all power and authority under its organizational
documents and under applicable Laws to (i) enter into and deliver this
Agreement and all other documents to be executed and delivered in connection
with the transactions that are the subject of this Agreement, including, without
limitation, all Related Agreements, to the extent they are to be executed by
EMC
and (ii) perform its obligations under this Agreement and the Related
Agreements executed by EMC.
(ii) Authorization;
No Contravention. The execution and delivery of this Agreement
and the Related Agreements executed by EMC, and the performance of its
obligations under all of the foregoing have been duly authorized by all
requisite organizational action on the part of EMC. This Agreement
has been, and each Related Agreement to which EMC is a party will on the Closing
Date have been, duly executed and delivered by EMC. None of the
foregoing will (i) violate any provision of the charter, bylaws or other
organizational documents of EMC; (ii) violate, conflict with or result in a
default under any material contract or obligation to which EMC is a party or
by
which it is bound; (iii) violate or result in a violation of, or constitute
a default under, any provision of any law, regulation or rule, or any order
of,
or any restriction imposed by, any Authority on EMC; or (iv) require EMC to
obtain any approval, consent or waiver of, or make any filing with, any Person
or Authority that has not been obtained or made. This Agreement
constitutes and, upon the execution of the Related Agreements executed by EMC
will constitute, the valid, legal and binding obligations of EMC, enforceable
in
accordance with their respective terms, subject to bankruptcy and similar laws
affecting the remedies or resources of creditors generally and principles of
equity.
(iii) Pending
Actions. There is no existing or, to the best of EMC’s knowledge,
threatened Action involving EMC, any of its assets or the operation of any
of
the foregoing, which, if determined adversely to EMC or its assets, would have
a
material adverse effect on the consolidated financial position, stockholders’
equity, results of operations, business or prospects of EMC or its assets or
which would interfere with EMC’s ability to execute or
-34-
deliver,
or perform its obligations under this Agreement or any of the Related Agreements
executed by it.
For
purposes of this Section 3.3 where the term “to Essex REIT’s knowledge”,
“to EPLP’s knowledge” or “to EMC’s knowledge” is used, such term shall mean that
Xxxxx Xxxxxxxx and Xxxxxx Xxxxxx have no actual knowledge of the matter in
question as of the date with respect to which the representation or warranty
is
made, without inquiry as to such matter. In no event shall such
individuals have any personal liability under this Agreement or
otherwise.
3.4 Representations
and Warranties of the Cash Interest Holders
It
shall
be a condition to Essex’s obligation to close the transactions contemplated
under this Agreement that each Cash Interest Holder shall make the following
representations and warranties to Essex in its Consent and its assignment of
its
interest in the Partnership:
(a) Existence
and Power. If such Cash Interest Holder is not an
individual: such Cash Interest Holder is a duly formed and validly
existing entity; such Cash Interest Holder has all power and authority under
its
organizational documents to enter into and deliver all agreements and other
documents to be executed and delivered in connection with the transaction that
is the subject of this Agreement, including, without limitation, all Related
Agreements, to the extent they are to be executed and delivered by such Cash
Interest Holder (for such Cash Interest Holder, collectively, its “Transaction
Documents”) and to perform its obligations under its Transaction
Documents.
(b) Authorization;
No Contravention.
(i) If
such
Cash Interest Holder is not an individual: the execution and delivery
of its Transaction Documents and the performance of its obligations thereunder
have been duly authorized by all requisite organizational action.
(ii) Each
Cash
Interest Holder: Its Transaction Documents, upon execution thereof,
will constitute the valid, legal and binding obligations of such Cash Interest
Holder; none of the Transaction Documents will violate any term of any material
agreement, order or decree to which such Cash Interest Holder is a party or
by
which such Cash Interest Holder is bound; there is no pending, or to the best
of
such Cash Interest Holder’s knowledge, threatened Action involving such Cash
Interest Holder which, if determined adversely to it or its assets, would
interfere with the ability of such Cash Interest Holder to execute or deliver,
or perform its obligations under any of its Transaction Documents or
have a material adverse effect on its interest in the Partnership.
(c) Cash
Interest. Each Cash Interest Holder: Such Cash
Interest Holder owns beneficially and of record, and is transferring free and
clear of any claim, lien, pledge, voting agreement, option, charge, security
interest, mortgage, deed of trust, encumbrance, right of assignment, purchase
right or other right of any nature whatsoever (except such rights as are
contained in the partnership agreement of Partnership), its interest in the
Partnership to be redeemed. Such Cash Interest Holder’s interest in
the Partnership was validly issued, and such Cash Interest Holder is not
currently in breach of any provisions of the Partnership Agreement, including,
without limitation, to fund any capital contribution remaining
due. The Partnership
-35-
Agreement
and any documents, subscriptions and other agreements executed in connection
with the Partner Consent are the only agreements between such Cash Interest
Holder and the Partnership. There is no agreement, instrument or
understanding with respect to such Cash Interest Holder’s interest in the
Partnership, except the partnership agreement of the
Partnership.
ARTICLE
4 - MAINTENANCE AND OPERATION OF THE
PROPERTY
4.1 Maintenance
and Operation
Through
the Closing, the Partnership agrees to maintain and operate the Property in
accordance with established operating policies and procedures reasonably
satisfactory to Essex. Prior to the Closing Date, the Partnership
shall perform all work and other obligations required to be performed by the
landlord under the terms of any applicable Lease to the satisfaction of the
tenant(s) thereunder. On or before the Closing Date, the Partnership
shall cause all applicable vacant units vacated more than five (5) days prior
to
the Closing to be made Tenant Ready and available for occupancy, or, if same
are
not Tenant Ready, there will be an adjustment at Closing of Five Hundred Dollars
($500.00) for each such vacant unit that is not Tenant Ready. Upon
Closing, any apartment units occupied by personnel of the Partnership, any
Existing Partner or any related entity, if any, shall be delivered subject
only
to month-to-month tenancies at then current fair market rental rates for the
Property.
4.2 Insurance
Through
the Closing Date, the Partnership shall maintain at its sole cost and expense
all insurance in effect on the date of this Agreement and otherwise consistent
with prudent insurance maintenance practices on property of the type and in
the
geographical area of the Property.
4.3 Personal
Property
Essex
acknowledges that the Partnership shall have the right, from and after the
date
of this Agreement through the Closing with respect to the Property, to remove
or
replace items of its Personal Property from time to time in the normal course
of
operation of the Property and any items of Personal Property that are damaged
or
destroyed by fire or other casualty. Essex agrees that the
Partnership may remove items of Personal Property from the Property if such
items are obsolete and replaced by Personal Property of equal or greater utility
or value. Any such Personal Property removed shall cease to
constitute “Personal Property” for all purposes under this
Agreement. Any Personal Property replaced in the Property pursuant to
this Section shall, to the extent not thereafter removed in accordance with
the
terms of this Section, constitute “Personal Property” for all purposes under
this Agreement.
4.4 Leasing
The
Partnership shall not execute, modify, approve and/or cancel any Leases,
contracts or commitments of any kind affecting the Property or any interest
therein without Essex’s prior written approval, said approval not to be
unreasonably withheld. The Partnership shall lease space in the Property at
rates and for terms approved by Essex pursuant to the preceding sentence and
pursuant to the Partnership’s standard form of Lease. All Leases
entered into from and after the date of this Agreement in accordance with the
terms of this Section 4.4 shall constitute Leases under this
Agreement. The Partnership shall comply with the terms of all
Leases.
4.5 Operating
Agreements
Except
as
set forth in Section 4.4, the Partnership shall not enter into any contract
or
other agreement affecting the Property, or any amendment of any contract or
agreement, that will be binding on the Partnership or the Property without
the
prior
-36-
written
consent of Essex. Notwithstanding the foregoing, the Partnership may
enter into a contract or agreement which by its own terms shall terminate
prior
to the Closing Date and which shall not create any liability for or be binding
on the Partnership or the Property on or after the Closing Date. The
Partnership shall not waive, compromise or settle any rights of the Partnership
under any such contract or agreement, nor modify, amend or terminate any
applicable Retained Contract or other such contract or agreement, without
in
each case obtaining Essex’s prior written consent thereto.
4.6 Damage
or Destruction; Condemnation.
(a) All
risk
of loss to the Property shall be borne by the Partnership until the Closing
subject to the provisions of this Section 4.6. The Partnership shall
promptly deliver to Essex written notice of any casualty or taking involving
the
Property. If, prior to the Closing, all or any part of the Property
is damaged or destroyed by casualty such that the cost to repair and/or restore
such damage and/or destruction (which cost, for purposes of this
Section 4.6(a), shall be deemed to include reasonably anticipated
post-Closing rental loss through completion of such repair and/or restoration)
would exceed Three Hundred Thousand Dollars ($300,000) (a “Major
Casualty”), then Essex shall have the right to terminate its obligation to
consummate the transactions contemplated by this Agreement by delivery of
written notice thereof to the Partnership within ten (10) Business Days after
Essex’s first learning of the occurrence of such casualty and the cost of such
repair and/or restoration. If all or any part of the Property is
damaged and/or destroyed by fire or other casualty prior to the Closing but
(i) the event is not a Major Casualty or (ii) the event is a Major
Casualty but this Agreement is not terminated pursuant to this
Section 4.6(a) as a result thereof, then the Closing Date shall occur as
scheduled notwithstanding such damage or destruction, and the Partnership’s
interest in all proceeds of insurance payable by reason of such casualty shall
be assigned to Essex as of the Closing Date or credited to Essex if previously
received by the Partnership, and the Partnership shall be responsible for any
cost of repair not covered by such insurance (whether by reason of insurance
deductible, uninsured casualty or otherwise). The Partnership’s
obligations under this Section 4.6(a) shall survive the Closing.
(b) If,
prior
to Closing, an Authority commences any eminent domain or condemnation proceeding
to take any portion of the Property or the Partnership enters into an agreement
in lieu thereof or becomes aware that any such agreement may be offered, and
the
award to be paid in connection therewith is to exceed Three Hundred Thousand
Dollars ($300,000), or any units or parking spaces are taken or to be taken
in
connection therewith, or any access to the Property has been or will be
materially impaired (each, a “Major Condemnation”), Essex shall have the
option to terminate its obligation to consummate the transactions contemplated
by this Agreement by delivery of written notice thereof to the Partnership
within ten (10) Business Days after Essex first learns of such commencement,
entry or offer. If, prior to the Closing Date, an Authority commences
any eminent domain or condemnation proceeding to take any portion of the
Property or the Partnership enters into an agreement in lieu thereof or becomes
aware that any such agreement may be offered and such event does not constitute
a Major Condemnation then the Closing Date shall occur as scheduled
notwithstanding such proceeding, entry or offer, and the Partnership’s interest
in all awards or payments arising out of such proceedings or agreement shall
be
assigned to Essex as of the
-37-
Closing
Date or credited to Essex if previously received by the
Partnership. The Partnership’s obligations under this Section 4.6(b)
shall survive the Closing.
4.7 Tests
and Inspections
The
Partnership hereby authorizes Essex and its authorized representatives, agents
and employees to enter upon the Property from time to time to perform such
tests
and inspections as Essex deems necessary or appropriate in its sole discretion,
including, without limitation, such soil boring and compacting tests, test
well
and water table, soil porosity and liquid absorption tests, other environmental
inspections and tests, and engineering tests. Any entry by Essex onto
the Property in connection with its due diligence shall not unreasonably
interfere with the rights of tenants under Leases. Essex hereby
agrees to indemnify, protect, defend and hold the Partnership harmless from
and
against any and all direct, but not consequential, Losses arising on account
of
any test or inspection performed by Essex; provided, however, the provisions
of
this sentence shall not be applicable to any such Losses to the extent same
arises out of or in connection with either (i) the mere discovery of any
pre-existing condition at the Property, or (ii) the negligence or willful
misconduct of the Partnership or any of the Existing Partners, or any of their
respective employees, contractors, subcontractors, tenants or others under
any
of their direction or control. The provisions of the previous
sentence shall survive a termination of this Agreement or Closing.
4.8 Mortgage
Debt
Prior
to
the Closing, the Partnership will keep all debt service payments and other
payments owed in connection with its Mortgage Debt current on the Property
and
will not permit or suffer to exist any default under any Mortgage
Instrument. On or before the Closing, if required, the Partnership
shall obtain the written consent from the holder of the Mortgage Debt to any
deemed assumption of such Mortgage Debt by the Partnership due to a change
in
its general partner upon the Closing. All costs, fees and charges
required to be paid to the holder of the Mortgage Debt or on behalf of such
holder in connection with such deemed assumption of the Mortgage Debt shall
be
paid by the Existing Partners. Any and all debts secured by the
Property or other liens or judgments filed against the Property (except for
the
respective Permitted Encumbrances and the Mortgage Debt) shall be satisfied
and
released of record by the Existing Partners. Except as provided in
this Section 4.8, the Partnership will not amend or in any way modify without
the prior written consent of Essex any term of its Mortgage Debt or any
documents or instruments executed in connection therewith.
4.9 Availability
of Records
The
Partnership and the General Partners agree to cooperate with Essex to obtain
any
information needed from or pertaining to the Partnership, the Property or the
Existing Partners. Upon written request of Essex, for a period of two
(2) years after the Closing, the General Partners shall (i) make their
records relating to the Partnership available to Essex for inspection, copying
and audit by Essex’s designated accountants (to the extent not already in the
possession of Essex), and (ii) cooperate with Essex to the extent
reasonably necessary to obtain any applicable Licenses not in existence on
the
Closing Date and necessary for the operation of all or any portion of the
Property. Without limiting the foregoing and in addition thereto, for
the period of time commencing on the date of this Agreement and continuing
through the third (3rd) anniversary of the Closing Date, the General Partners
shall, from time to time, upon reasonable advance notice from Essex, provide
Essex and its representatives, agents and employees with access to all
financial, tax and other information relating to the Partnership and the
Property in their possession or control (to the extent not already in the
possession of Essex) pertaining to the period of the Partnership’s ownership in
and
-38-
operation
of, as the case may be, the Property prior to the Closing Date, which
information is relevant and reasonably necessary, in the opinion of Essex’s
outside, third party accountants (the “Accountants”), to enable Essex and
its Accountants to prepare financial statements in compliance with any or
all of
(a) Rule 3-14 of Regulation S-X of the Commission; (b) any other rule
issued by the Commission and applicable to Essex; and (c) any registration
statement, report or disclosure statement filed with the Commission by, or
on
behalf of, Essex. In addition, during such three (3) year period, the
General Partners shall, from time to time, upon reasonable advance notice
from
Essex, provide Essex and its representatives, agents and employees with access
to current and former employees and agents of the Partnership or its General
Partners and of any other entity who assisted in or worked on accounting
or tax
matters with respect to the Partnership. The General Partners’
obligations under this Section 4.9 shall survive the Closing. The
General Partners acknowledge and agree that the following is a representative
description (but not an exhaustive list) of the information and documentation
that Essex and the Accountants may require in order to comply with (a), (b)
and
(c) above (to the extent not already in the possession of
Essex):
(a) Rent
Rolls for the calendar month in which the Closing occurs and the eleven (11)
calendar months immediately preceding the calendar month in which the Closing
occurs and all Leases, whether or not in effect as of the Closing
Date;
(b) The
Partnership’s internally-prepared operating statements;
(c) Access
to
applicable Leases;
(d) The
Partnership’s budgeted annual and monthly income and expenses, and actual annual
and monthly income and expenses;
(e) Access
to
the Partnership’s cash receipt journal(s) and bank statements for the
Property;
(f) The
Partnership’s general ledger with respect to the Property;
(g) The
Partnership’s schedule of expense reimbursements required under Leases in effect
on the Closing Date, if one exists;
(h) The
Partnership’s schedule, if one exists, of those items of repairs and maintenance
performed by, or at the direction of the Partnership, during the Partnership’s
fiscal year in which the Closing occurs (the “Final Fiscal
Year”);
(i) The
Partnership’s schedule, if one exists, of those capital improvements and fixed
asset additions made by, or at the direction of, the Partnership during the
Final Fiscal Year;
(j) Access
to
the Partnership’s invoices with respect to expenditures made during the Final
Fiscal Year;
(k) Access
(during normal and customary business hours) to responsible personnel to answer
accounting questions; and
-39-
(l) A
representation letter, signed by the individual(s) responsible for the
Partnership’s financial reporting, as prescribed by generally accepted auditing
standards promulgated by the Auditing Standards Division of the American
Institute of Certified Public Accountants, which representation letter may
be
required to assist the Accountants in rendering an opinion on such financial
statements.
4.10 Title
and Survey Defects
The
Partnership and the General Partners shall prior to Closing correct or resolve
the following title and survey matters so as to cause them not to be listed
as
exceptions to title in the Title Policy:
(i) Any
and
all title and/or survey matters first arising from and after the date of this
Agreement; and
(ii) Any
and
all title matters which can be cured by the payment of money other than Mortgage
Instruments in connection with Mortgage Debt to be retained as provided in
this
Agreement. If the Partnership and the General Partners are not able
to correct any such matter on or before Closing, same shall be deemed to be
a
material default by the Partnership and the General Partners.
4.11 Cooperation
with Essex
The
Partnership and the General Partners shall cooperate and do all acts as may
be
reasonably required or requested by Essex with regard to the fulfillment of
any
condition to Essex’s obligations hereunder but the Partnership’s and the General
Partners’ representations and warranties shall not be affected or released by
Essex’s waiver or fulfillment of any condition. The Partnership’s and
the General Partners’ obligations under this Section 4.11 shall survive the
Closing.
4.12 Post-Closing
Property Management
The
General Partners agree to cooperate with Essex and/or its designated management
company in good faith prior to Closing with respect to the establishment of
a
qualified management staff for the Property. Essex shall have the
right to establish such management staff for the Property as it deems necessary
or appropriate after the Closing.
4.13 Notices
Received
The
Partnership shall promptly provide copies to Essex of any written notice the
Partnership or any of its General Partners receives on or before the Closing
Date (i) from any Authority concerning any possible violation of applicable
Laws or (ii) concerning any possible breach of or default under any
Contract, Lease, Mortgage Instrument or any other document or instrument to
which the Partnership is a party or by which the Partnership or the Property
is
bound.
4.14 Cash
Distributions
All
of
the Partnership’s bank accounts as in existence immediately prior to the Closing
and all positive prorations in favor of the Existing Partners (“Old Bank
Accounts”) shall be held and disposed of as follows:
(a) At
the
Closing an amount sufficient to pay for prorated expenses hereunder shall be
paid out of the Old Bank Accounts to Essex;
(b) All
bills
relating to the Partnership operations prior to the Closing Date shall be paid
out of the Old Bank Accounts;
-40-
(c) The
Existing Partners shall retain $25,000 in an escrow account controlled by Essex
for a period of at least four (4) months from the Closing to cover payment
of
all operating expenses related to the period prior to the Closing including
prorations. Following the end of such four-month period, any
remaining amount after such payments shall be returned to Xxxxx Xxxxx on behalf
of the Existing Partners. Any cash in the Old Bank Accounts in excess
of the amounts covered in paragraphs (a), (b) and (c) of this Section 4.14
may
be disposed of in such manner as the General Partner and Existing Partners
may
agree.
4.15 Representations
and Warranties
Prior
to
the Closing, the General Partners shall not willfully take any action (or
intentionally omit to act) where such action or omission would cause or
constitute, at the time taken or omitted or at the time of the Closing, a breach
of any of the Partnership’s or any General Partner’s representations, warranties
or covenants contained in this Agreement.
ARTICLE
5 - CLOSING ADJUSTMENTS
5.1 Adjustments
Generally
All
amounts which this Agreement provides are to be paid by the Partnership prior
to
Closing or by the Existing Partners or are for the account of the Partnership
prior to Closing or by the Existing Partners shall be adjusted in cash on or
prior to the Closing out of funds of the Partnership which the Partnership
is
entitled to distribute prior to Closing pursuant to Section 4.14.
5.2 Taxes,
Assessments and Utilities
All
real
estate taxes, charges and assessments affecting the Property and all charges
for
water, sewer, electricity, gas, telephone and all other utilities with respect
to the Property, shall be apportioned on a daily basis as of midnight on the
date preceding the Closing Date. General real estate taxes and
assessments payable for the fiscal year in which the Closing occurs shall be
prorated as of midnight on the date preceding of the Closing
Date. The Existing Partners shall pay on or before Closing the full
amount of any delinquent assessments against the Property for prior fiscal
years, including, without limitation, interest payable therewith. The
Partnership shall cause all the applicable utility meters to be read on the
Closing Date and the Existing Partners will be responsible for the cost of
all
utilities used prior to the Closing Date, except to the extent such utility
charges are billed to and paid by tenants directly. If any prorations
under this Section cannot be calculated finally on the Closing Date, then they
shall be estimated at the Closing and calculated finally as soon after the
Closing Date as practicable. The Existing Partners’ obligations under
this Section shall survive the Closing.
5.3 Rent
Except
for delinquent rent, all rent under the Leases and other income attributable
to
operation of the Property shall be apportioned and prorated in cash on a per
diem basis as of midnight on the date immediately preceding the Closing
Date. Payment received from tenants who are delinquent as of the
Closing Date shall be applied by the Partnership as follows: if such
delinquent rent is received by the Partnership during the month in which the
Closing Date occurs such amount shall be prorated and applied and if such
payments are received by the Partnership from tenants of the Property after
the
month in which the Closing occurs but prior to the date which is six (6) months
after the Closing Date, such rents shall be applied first to rents then due
for
any period following the Closing from such tenant and any excess then delivered
to the Existing Partners to the extent of such tenant’s delinquent rent as of
-41-
5.4 Payments
on Permitted Exceptions
Payments
of interest on the Mortgage Debt and other payments owing under the Mortgage
Instruments and any other Permitted Exceptions shall be apportioned in cash
on a
per diem basis as of midnight on the date immediately preceding the Closing
Date. Such interest and other payments accruing prior to the Closing
Date shall be deemed to be the responsibility of the Existing Partners, and,
subject to the terms of this Agreement, any such interest and other payments
accruing on or after such Closing Date shall be deemed to be an expense of
the
Partnership.
5.5 Contract
Payments and Other Expenses
Payments
under all Contracts and for the Property’s operating and maintenance
expenses, including, without limitation, fuel, shall be apportioned in cash
on a
per diem basis as of midnight on the date immediately preceding the Closing
Date
to the extent possible. All such expenses accruing prior to such
Closing Date shall be deemed to be the responsibility of the Existing Partners
and all such expenses accruing as of such Closing Date and thereafter shall
be
post closing expenses of the Partnership. If final bills are not
available as of Closing, amounts to be prorated under this Section shall be
prorated in cash on the basis of the most current bills then available and
promptly re-prorated on receipt of final bills. All such expenses for
the period preceding such Closing Date shall be the responsibility of the
Existing Partners, and all such expenses commencing as of the Closing Date
with
respect to the Property shall be deemed to be post closing expenses
of the Partnership. In addition, the parties agree that at Closing
Essex shall be credited with the amount of any advance payment made under any
laundry leases, cable television agreements or similar service contracts which
are either (i) allocable to the period from and after close of escrow or
(ii) paid in consideration for the portion of the term of any such contract
which remains unexpired at the close of escrow.
5.6 Partner
Consent
All
costs
and expenses associated with preparing, printing, distributing and collecting
all Consents, including, without limitation, all Existing Partners’ consents and
elections hereunder, shall be the responsibility of the Existing
Partners. All costs and expenses associated with preparing and filing
all federal and state securities filings associated with the issuance of Units
shall be the responsibility of Essex and/or the Partnership
(post-closing).
5.7 Adjustments
and Prorations Generally
All
fees
payable to, or expenses or other amounts reimbursable to, the General Partners
or to any other Person engaged by the Partnership prior to Closing, whether
payable before or after Closing, shall be borne by the Existing
Partners. All net costs, adjustments and prorations allocable to the
Existing Partners or to the Partnership which relate to periods on or before
the
Closing Date under this Agreement, or which relate to any amounts referred
to in
the first sentence of this Section 5.7, shall be paid out of available cash
(and, if necessary, additional capital provided by the Existing Partners) of
the
Partnership.
5.8 Post-Closing
Audit
Within
sixty (60) days after the Closing Date, the Partnership shall conduct a
post-Closing audit to determine the accuracy of all prorations made under this
-42-
Article 5
(the “Post-Closing Audit”). Any party owing another party a sum of
money based on post-Closing prorations required under this Article or the
Post-Closing Audit shall promptly pay such sum to the other party, together
with
interest thereon at the Reference Rate from the Closing Date to the date
of
payment if payment is not made within ten (10) days after delivery of a xxxx
therefor. The Existing Partners shall reserve and set aside cash of
not less than $25,000 to satisfy any obligations they may have under this
Article 5. The provisions of this Section 5.8 shall survive
Closing.
ARTICLE
6 - DEFAULTS AND REMEDIES
6.1 Defaults
Subject
to the other provisions of this Article 6, in the event of (i) a failure by
a party to perform any of its obligations hereunder, which failure continues
for
more than fifteen (15) days following receipt of written notice thereof from
the
other party or (ii) the inaccuracy of any representation or warranty made
by a party in this Agreement or in any document delivered pursuant to the terms
hereof, then the other party shall have the right to terminate its obligation
to
consummate the transactions contemplated by this Agreement by delivery of
written notice thereof to the other party. Subject to Section 6.2, in
the event of a failure of a condition to a party’s obligations under this
Agreement which does not constitute a breach of a covenant, agreement,
representation, warranty and/or indemnity made by such party under this
Agreement, such party shall, as its sole and exclusive remedy, either elect
to
terminate its obligation to complete the transactions contemplated under this
Agreement or to waive satisfaction of such condition, each by delivery of notice
thereof to the other party. In the event of a Major Casualty or Major
Condemnation, Essex shall have the right to terminate this Agreement by delivery
of written notice thereof to the Partnership. Subject to the terms of
this Article 6, upon any such termination or any termination otherwise
permitted under this Agreement, all rights and obligations of the parties under
this Agreement, other than those that by their terms survive termination, shall
terminate without recourse, and this Agreement shall be of no further force
or
effect.
6.2 Reimbursement
of Loan-Related Fees Paid by Essex
In
the event this
Agreement terminates for any reason whatsoever, Essex shall be
entitled to reimbursement or repayment from the Partnership for all loan-related
fees paid by Essex in connection with the Partnership’s obtainment of the
Mortgage Debt to refinance the previous mortgage debt on the Property (to the
extent the reimbursement or repayment of such fees is not covered by the
existing management agreement between Essex and the Partnership).
ARTICLE
7 - INDEMNIFICATION
7.1 By
the
General Partners and the other Existing Partners
(a) Partnership
and Property Related Matters (Excluding Radon Issues). From and
after the Closing Date, the General Partners shall, jointly and severally,
and
the other Existing Partners shall, severally (to the extent of their respective
percentage interests in the Partnership prior to the completion of the
transactions contemplated hereby) but not jointly, indemnify, defend, protect
and hold harmless the Essex Indemnified Parties from and against all Losses
which are incurred or suffered by any of them (A) based upon, arising out
of, in connection with or by reason of the breach of any of the representations
or warranties of the
-43-
Partnership,
the General Partners or any Existing Partner contained in this Agreement,
any
Related Agreement or any document delivered to Essex pursuant to this Agreement,
(B) based upon, arising out of, in connection with or by reason of any liability
or obligation of the Property or the Partnership of any nature (absolute,
accrued, contingent or otherwise) arising or occurring with respect to any
period prior to Closing, including, without limitation, obligations under
Contracts, Leases, Licenses, the Mortgage Debt and the other Permitted
Exceptions performable prior to Closing, but excluding those matters set
forth
in Section 7.1(b), or (C) based upon, arising out of, in connection with
or by
reason of the failure of the Partnership or any Existing Partner to perform
or
comply, in whole or in part, with any of the covenants or agreements contained
herein or in any Related Agreement to be performed or complied with by the
Partnership or any Existing Partner on or prior to the
Closing.
(b) Radon
Issues.
(i) From
and
after the Closing Date, until the pledge of Units described in Section 7(b)(ii)
is released in accordance therewith, the Existing Partners shall, severally
(to
the extent of their respective percentage interests in the Partnership prior
to
the completion of the transactions contemplated hereby) but not jointly,
indemnify, defend, protect and hold harmless the Essex Indemnified Parties
(excluding the management company for the Property) from and against all Losses
which are incurred or suffered by any of them based upon, arising out of, in
connection with or by reason of any liability or obligation of the Property
or
the Partnership of any nature (absolute, accrued, contingent or otherwise)
arising from the presence of radon on or in any portion of the Property prior
to
Closing.
(ii) To
secure
the indemnification obligations of the Existing Partners pursuant to Section
7(b)(i), the Continuing Partners, subject to obtaining consent, if necessary,
from the Mortgage Lender, hereby grant to Essex, on behalf of the parties
covered by such indemnity, a security interest in a portion of the Continuing
Partner’s Units having an aggregate value equal to Six Hundred Eighteen Thousand
Three Hundred Dollars ($618,300) (based on the Pricing Value, and determined
on
a pro rata basis based on the Continuing Partners’ respective number of Units
immediately following the Closing), including, but not limited to, all
distributions thereon and proceeds of all of the foregoing, and shall execute,
and hereby authorizes Essex to file, financing statements or other evidence
of
perfection and take such other actions as Essex may require, including, without
limitation, executing the Pledge Instruction Letters attached hereto as
Exhibit O. Such security interest shall be released on the
fourth (4th)
anniversary of the Closing Date unless prior to such fourth (4th) anniversary
a
claim or written notice asserting such claim under Section 7(b)(i) has been
made
in accordance with this Article 7, in which event Essex may, in its sole and
absolute discretion, release only such portion of such pledged Units as it
reasonably determines will not be required to satisfy any such asserted claim
or
claims. All distributions payable on account of such pledged Units
shall be currently payable to the Continuing Partners, notwithstanding the
existence of this pledge. Notwithstanding anything contained herein
to the contrary, (i) such Essex Indemnified Parties shall be under no
obligation, whether pursuant to fiduciary principles or otherwise, to consider
the interests of the Continuing Partners when exercising any of their rights
under this Section 7.1(b)(ii), and (ii) nothing contained in the Limited
Partnership Agreement shall be construed to limit the rights of such Essex
Indemnified Parties under this Section 7.1(b)(ii). This Section
7.1(b) shall survive the Closing.
-44-
(iii) From
and
after the fourth (4th) anniversary
of
the Closing Date and until the sixth (6th) anniversary
of
the Closing Date, the General Partners shall, severally (to the extent of their
respective general partnership interests in the Partnership prior to the
completion of the transactions contemplated hereby) but not jointly, indemnify,
defend, protect and hold harmless the Essex Indemnified Parties (excluding
the
management company for the Property) from and against all Losses which are
incurred or suffered by any of them based upon, arising out of, in connection
with or by reason of any liability or obligation of the Property or the
Partnership of any nature (absolute, accrued, contingent or otherwise) arising
from the presence of radon on or in any portion of the Property prior to
Closing.
(c) Equity
Holder Claims. The General Partners shall, jointly and severally,
and the other Existing Partners shall, severally (to the extent of their
respective percentage interests in the Partnership prior to the completion
of
the transactions contemplated hereby) but not jointly, indemnify, defend,
protect and hold harmless the Essex Indemnified Parties from and against all
Losses which are incurred or suffered by any of them based upon, arising out
of,
in connection with or by reason of: (i) the breach by the
Partnership, the General Partners or any former general partner (the “Covered
Partner Parties”) of any of their respective fiduciary duties (including
duties of disclosure) to the Existing Partners, any former partner or any other
Person arising in connection with the transactions contemplated by this
Agreement; (ii) any document signed by the General Partner, filed on behalf
of
any Covered Partner Party before the Closing with any Authority, or prepared
or
distributed by or on behalf of any Covered Partner Party before the Closing
in
connection with the transactions contemplated hereby, including any document
distributed in connection with the solicitation of consents to the consummation
by the Partnership of the transactions contemplated hereby; (iii) obligations
or
liabilities of the Partnership to any former partner, member, employee,
consultant or agent on account of such Person’s present or former interest in or
right to participate in the revenues or profits of the Partnership, whether
resulting from the purchase, redemption or acquisition of equity interests
in
the Partnership or the termination of any employment or other relationship
with
the Partnership; (iv) the distribution of the Refinancing proceeds to the
Existing Partners or (v) the failure of the Consent Solicitation, the Partner
Consent or the offer and sale of Units to the Existing Partners to comply with
all applicable Federal securities laws or California state securities laws
(except, in the case of this clause (v) only, to the extent such Losses arise
from the failure to properly prepare and file federal and state securities
filings in connection with the issuance of Units).
(d) Interest. The
indemnity against Losses pursuant to this Section 7.1 shall also include
interest on cash disbursements in respect thereof at an annual rate of interest
equal to the prime lending rate of major money center banks as announced in
the
Wall Street Journal in effect from time to time plus two percent (2%), but
not
in excess of ten (10%) per annum (the “Reference Rate”), based on actual
days elapsed from the later of the date a valid claim is made hereunder or
the
date of such disbursement until the date the applicable indemnified parties
are
fully reimbursed therefor.
(e) Limitation
on Indemnity. No Essex Indemnified Party shall be entitled to
indemnification under this Section 7.1 once Essex Indemnified Parties have
recovered from the Existing Partners under this Section 7.1, in the aggregate,
an amount equal to Six Hundred Eighteen Thousand Three Hundred Dollars
($618,300) plus interest to which Essex Indemnified Parties may be entitled
hereunder and all costs and expenses of collection.
-45-
(f) Notwithstanding
anything to the contrary set forth herein, nothing in this Agreement shall
(i)
limit the rights of an Essex Indemnified Party as an “Essex Indemnified Party”
under the Other Restructuring Agreement or (ii) limit an Existing Partner’s
obligations (including, without limitation, indemnification and pledge
obligations) under the other Restructuring Agreement to the extent such Existing
Partner is also an “Existing Partner” and/or “Continuing Partner” under the
Other Restructuring Agreement.
7.2 Indemnification
Procedure
(a) In
the
event that any party shall incur or suffer any Losses in respect of which
indemnification may be sought by such party pursuant to the provisions of this
Article 7, the party seeking to be indemnified hereunder (the “Indemnitee”)
shall assert a claim for indemnification by written notice (a “Notice”) to the
party from whom indemnification is sought (the “Indemnitor”) stating the nature
and basis of such claim. In the case of Losses arising by reason of
any third party claim, the Notice shall be given within thirty (30) days of
the
filing of any such claim against the Indemnitee or the determination by
Indemnitee that a claim will ripen into a claim for which indemnification will
be sought, but the failure of the Indemnitee to give the Notice within such
time
period shall not relieve the Indemnitor of any liability that the Indemnitor
may
have to the Indemnitee except to the extent that the Indemnitor is prejudiced
thereby and then only to the extent of such prejudice.
(b) The
Indemnitee shall provide to the Indemnitor on request all information and
documentation reasonably necessary to support and verify any Losses which the
Indemnitee believes give rise to a claim for indemnification hereunder and
shall
give the Indemnitor reasonable access to all books, records and personnel in
the
possession or under the control of the Indemnitee which would have bearing
on
such claim.
(c) In
the
case of third party claims for which indemnification is sought, the Indemnitor
shall have the option (x) to conduct any proceedings or negotiations in
connection therewith, (y) to take all other steps to settle or defend any such
claim (provided that the Indemnitor shall not, without the consent of the
Indemnitee, settle any such claim on terms which provide for (A) a criminal
sanction or fine, (B) injunctive relief or (C) monetary damages in excess of
the
amount that the Indemnitor is required to pay hereunder) and (z) to employ
counsel, which counsel shall be reasonably acceptable to the Indemnitee, to
contest any such claim or liability in the name of the Indemnitee or
otherwise. In any event, the Indemnitee shall be entitled to
participate at its own expense and by its own counsel in any proceedings
relating to any third party claim; provided, however, that if the
defendants in any such action or claim include both the Indemnitee and the
Indemnitor and the Indemnitee shall have reasonably concluded that there would
be a conflict of interest were the same counsel to represent the Indemnitee
and
the Indemnitor, the Indemnitee shall be entitled to be represented by separate
counsel at the Indemnitor’s expense; providedfurther,
however, that such action or claim shall not be settled without
the
Indemnitor’s consent, which shall not unreasonably be withheld or
delayed. The Indemnitor shall, within thirty (30) days of receipt of
the Notice, notify the Indemnitee of its intention to assume the defense of
such
claim. Until the Indemnitee has received notice of the Indemnitor’s
election whether to defend any claim, the Indemnitee shall take reasonable
steps
to defend (but may not settle) such claim. If the Indemnitor shall
decline to assume the defense of any such claim, or shall fail to notify the
Indemnitee within thirty (30)
-46-
days
after receipt of the Notice of the Indemnitor’s election to defend such claim,
the Indemnitee shall defend against (and may settle) such claim. The
expenses of all proceedings, contests or lawsuits in respect of the claims
described in the preceding sentence shall be borne by the
Indemnitor. Regardless of which party shall assume the defense of the
claim, the parties agree to cooperate fully with one another in connection
therewith. In the case of a claim for indemnification made hereunder,
(a) if (and to the extent) the Indemnitor is responsible pursuant hereto
to
indemnify the Indemnitee in respect of the third party claim, then within
ten
(10) days after the occurrence of a final non-appealable determination with
respect to such third party claim (or sooner if required by such determination),
the Indemnitor shall pay the Indemnitee (or sooner if required by such
determination), in immediately available funds, the amount of any Losses
(or
such portion thereof as the Indemnitor shall be responsible for pursuant
to the
provisions hereof and (b) in the event that any Losses incurred by the
Indemnitee do not involve payment by the Indemnitee of a third party claim,
then, if (and to the extent) the Indemnitor is responsible pursuant hereto
to
indemnify the Indemnitee against such Losses, the Indemnitor shall within
ten
(10) days after agreement on the amount of Losses or the occurrence of a
final
non-appealable determination of such amount pay to the Indemnitee, in
immediately available funds, the amount of such Losses (or such portion thereof
as the Indemnitor shall be responsible for pursuant to the provisions
hereof).
7.3 Cooperation
in Defense
Each
party indemnified under any indemnity contained in this Agreement shall
cooperate in all reasonable respects in the defense of the third-party claim
pursuant to which the indemnifying party is alleged to have
liability.
7.4 Survival
This
Article 7 shall survive Closing or the termination of the parties’ obligations
to consummate the transactions contemplated by this
Agreement. Subject to the terms of this Section 7.4, all
representations and warranties of the Partnership, the General Partners and
the
other Existing Partners contained in this Agreement (other than those contained
in Sections 3.1(b), 3.1(g), 3.1(o), 3.1(q), 3.1(y), 3.1(bb), 3.1(cc) and 8.1,
which shall survive Closing until the expiration of the applicable statute
of
limitations) shall survive Closing for a period of two (2) years and shall
not
be merged in any instrument of conveyance; provided that, if a written notice
asserting a claim for breach of any such representation or warranty or a claim
for indemnification under Section 7.2 shall have been given to the
indemnifying party prior to the expiration of such representation or warranty
or
claim under Section 7.2, as the case may be, such representation and warranty
and any right to indemnification for breach thereof, shall survive, to the
extent of such claim only, until such claim is resolved. No
representation or warranty which is untrue as a result of fraud by the party
making it shall terminate, but shall survive indefinitely.
ARTICLE
8 - MISCELLANEOUS
8.1 Brokers
Each
party to this Agreement represents and warrants that neither it nor any of
its
Affiliates has had any contact or dealings regarding the Property, or any
communication in connection with the subject matter of the transactions
contemplated by this Agreement, through any real estate broker or other person
who can claim a right to a commission or finder’s fee in connection with
therewith. In the event that any other broker or finder claims a
commission or finder’s fee based upon any contact, dealings or communication,
the party through whom or through whose Affiliate such broker or finder makes
its claim shall be
-47-
responsible
for such commission or fee and all costs and expenses (including, without
limitation, reasonable attorneys’ fees and disbursements) incurred by the other
party and its Affiliates in defending against the same. The party
through whom or through whose Affiliate such broker or finder makes a claim
shall hold harmless, protect, indemnify and defend the other party hereto,
its
successors and assigns, agents, employees, officers and directors, and the
Property from and against any and all Losses, arising out of, based on, or
incurred as a result of such claim. The provisions of this Section
shall survive the Closing or termination of the parties’ obligations to
consummate the transactions contemplated by this Agreement.
8.2 Marketing
The
Partnership agrees not to market the Property for sale during the term of this
Agreement or entertain or discuss any offer to purchase or acquire the Property
with any Person other than Essex and their Affiliates.
8.3 Entire
Agreement; No Amendment
This
Agreement, including all Exhibits, the Related Agreements and documents executed
at Closing (the “Related Transaction Documents”), represents the entire
agreement among each of the parties hereto with respect to the subject matter
hereof. It is expressly understood that no representations,
warranties, guarantees or other statements shall be valid or binding upon a
party unless expressly set forth in the Related Transaction
Documents. It is further understood that any prior agreements or
understandings between the parties with respect to the subject matter hereof
have merged in the Related Transaction Documents, which alone fully express
all
agreements of the parties hereto as to the subject matter hereof and supersedes
all such prior agreements and understandings. The Related Transaction
Documents may not be amended, modified or otherwise altered except by a written
agreement signed by the party against whom enforcement is sought. It
is agreed that no obligation under the Related Transaction Documents which
by
its terms is to be performed or continue to be performed after Closing and
no
provision of the Related Transaction Documents which is expressly to survive
Closing shall merge upon Closing, but shall survive Closing.
8.4 Certain
Expenses
Each
party hereto will pay all of its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby (whether or not the Closing
shall take place), including, without limitation, all costs and expenses herein
stated to be borne by such party and all of its respective accounting, legal,
investigatory and appraisal fees. The Partnership shall be
responsible for paying on or before Closing (i) all applicable State, County
and
City transfer taxes and/or transfer fees due in connection with the transactions
contemplated by this Agreement, (ii) all costs associated with obtaining
and issuing the Title Policy, including, without limitation, examination costs,
commitment fees and premiums; provided, however, notwithstanding the foregoing,
Essex shall be responsible for that portion of the cost of the Title Policy
related to extended coverage, (iii) all costs associated with obtaining
applicable UCC searches required under Section 2.1(f) and (iv) all costs
associated with obtaining the Partner Consent. Essex shall be
responsible for (i) all amounts required to be paid to the holder of the
Mortgage Debt in connection with the deemed assumption of the Mortgage Debt,
if
any, and (ii) all costs associated with obtaining a survey as required under
Section 2.1(e). All other costs and charges in connection with the
restructuring of the Partnership contemplated by this Agreement not otherwise
provided for in this Agreement shall be allocated by standard accounting and
conveyancing practices in the relevant jurisdiction where the Property is
located.
-48-
8.5 Audit
The
Partnership acknowledges that Essex may in its discretion audit the last three
(3) years of operations of the Property and the Partnership. If the
Closing occurs or if the Closing fails to occur for any reason other than a
breach by the Partnership or an Existing Partner of their obligations hereunder,
Essex agrees to pay the cost of said audit. The Partnership agrees to
fully cooperate with said audit, and to preserve and supply all books, records,
operating statements, and other information which may be reasonably requested
by
Essex and within the possession or control of the Partnership or the property
manager of the Property. If the Closing occurs, all such materials
will be kept by Essex; otherwise, Essex shall return all such materials to
the
Partnership. The provisions of this Section 8.5 shall survive
the Closing.
8.6 Notices
Any
notice or communication required under or otherwise delivered in connection
with
this Agreement to any of the parties hereto shall be written and shall be
delivered to such party at the following address: If to
Partnership:
Xxxxx
Xxxxx
c/x
Xxxxx
and Baptist Management
0000
Xxx
Xxxxxxx #000
Xxx
Xxxx,
XX 00000
Fax: (000)
000-0000
with
a
copy to:
The
Law
Offices of Xxxxx X. Xxxx
000
Xxx
Xxxxx Xxxxxx
Xxx
Xxxxx, XX 00000-0000
Attention: Xxxxx
X. Xxxx
Fax: (000)
000-0000
If
to
Essex to:
Essex
Portfolio, L.P.
000
Xxxx
Xxxxxx Xxxxx
Xxxx
Xxxx, XX 00000
Attention: Xxxxx
Xxxxxxxx
Fax: (000)
000-0000
with
a
copy to:
Essex
Portfolio, L.P.
000
Xxxx
Xxxxxx Xxxxx
Xxxx
Xxxx, XX 00000
Attention: Xxxxxx
Xxxxxx
Fax: (000)
000-0000
with
an
additional copy to:
Xxxxxxxxx
Traurig, LLP
Xxx
Xxxxxxxxxxxxx Xxxxx
-00-
Xxxxxx,
XX 00000
Attention: Xxxxxxxx
Xxxxx
Fax: (000)
000-0000
Each
notice shall be in writing and shall be sent to the party to receive it, postage
prepaid by certified mail, return receipt requested, or by a nationally
recognized overnight courier service that provides tracking and proof of receipt
or by telecopy transmission (with confirmation from sender’s telecopy machine of
sending being adequate proof of same). Notices shall be deemed
delivered upon receipt.
8.7 No
Assignment
Except
as
provided in this Section 8.7, neither this Agreement nor any of the rights
or obligations hereunder may be assigned by any party hereto without the prior
written consent of the other parties. EMC and/or EPLP may, without
such consent, (i) assign its rights hereunder to any lender as collateral
security and/or (ii) assign its rights and obligations hereunder to an
Affiliate provided such Affiliate assumes all obligations and liabilities of
EMC
and/or EPLP, as applicable, hereunder effective as of the date of any such
assignment.
8.8 Governing
Law
The
laws
of the State of California shall govern the validity, enforcement and
interpretation of this Agreement, without regard to any choice of law
principles.
8.9 Multiple
Counterparts; Facsimile Signatures
This
Agreement may be executed in multiple counterparts. If so executed,
all of such counterparts shall constitute but one agreement, and, in proving
this Agreement, it shall not be necessary to produce or account for more than
one such counterpart. Signatures delivered by facsimile transmission
shall be binding on the other party so signing and delivering same.
8.10 Further
Assurances
From
and
after the date of this Agreement and after the Closing, the parties hereto
shall
take such further actions and execute and deliver such further documents and
instruments as may be reasonably requested by the other party and are reasonably
necessary to provide to the respective parties hereto the benefits intended
to
be afforded hereby, including, without limitation, all books and records
relating to the Property and the addresses of all parties.
8.11 Miscellaneous
Whenever
herein the singular number is used, the same shall include the plural, and
the
plural shall include the singular where appropriate, and words of any gender
shall include the other gender when appropriate. The headings of the
Articles and the Sections contained in this Agreement are for convenience only
and shall not be taken into account in determining the meaning of any provision
of this Agreement. The words “hereof” and “herein” refer to this
entire Agreement and not merely the Section in which such words
appear. If the last day for performance of any obligation hereunder
is not a Business Day, then the deadline for such performance or the expiration
of the applicable period or date shall be extended to the next Business
Day.
8.12 Invalid
Provisions
If
any
provision of this Agreement is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable, this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable
-50-
provision
had never comprised a part of this Agreement, and the remaining provisions
of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from
this
Agreement.
8.13 Confidentiality;
Publicity
The
Partnership agrees to maintain in confidence through Closing, unless otherwise
required by applicable Law to disclose, all material and information received
from Essex or otherwise regarding the Property and the other matters which
are
the subject of this Agreement. In the event this Agreement is
terminated, each party shall promptly return to the other all materials
delivered to such party by the other party. The Partnership agrees
that, prior to the Closing Date, it shall not, without the prior written consent
of Essex, publicly or privately reveal any information relating to the existence
or terms and conditions of the transactions contemplated
hereby. Notwithstanding anything to the contrary contained in this
Agreement, Essex shall have the sole right to determine the form, timing and
substance of, and to issue, all publicity concerning the transactions
contemplated by this Agreement.
8.14 Time
of Essence
Time
is
of the essence with respect to this Agreement.
8.15 Attorneys
Fees
If
this
Agreement or the transactions contemplated herein gives rise to a lawsuit,
arbitration or other legal proceeding between the parties hereto, the prevailing
party shall be entitled to recover its costs and reasonable attorney fees in
addition to any other judgment of the court or arbitrator(s).
8.16 Essex
Approvals and Decisions
If
the
approval, consent or decision of “Essex” is required under this
Agreement, or is “Essex” is required to give notice under this Agreement, then
any such approval, consent, decision or notice may be given by any of EMC,
EPLP
or Essex REIT.
-51-
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement to Restructure
Partnership as an instrument under seal as of the date and year first above
written.
THE
PARTNERSHIP:
|
WESTERN-MOUNTAIN
VIEW II INVESTORS,
a
California limited partnership
|
/s/
XXXXXX X.
XXXXXX
Xxxxxx
X. Xxxxxx, a general partner
/s/
XXXXXX X.
BAPTIST
Xxxxxx
X. Baptist, a general partner
/s/
XXXXX
XXXXX
Xxxxx
Xxxxx, a general partner
|
ESSEX:
|
ESSEX
PORTFOLIO, L.P.,
a
California limited partnership
|
By:
Essex Property Trust, Inc, its general partner
|
/s/
JORDAN X. XXXXXX
By: Jordan
X. Xxxxxx
Its: Senior
Vice President
|
ESSEX
REIT:
|
ESSEX
PROPERTY TRUST, INC.,
a
Maryland corporation
|
/s/
JORDAN X. XXXXXX
By: Jordan
X. Xxxxxx
Its: Senior
Vice President
|
EMC:
|
ESSEX
MANAGEMENT CORPORATION,
a
California corporation
|
/s/
JORDAN X. XXXXXX
By: Jordan
X. Xxxxxx
Its: Senior
Vice President
|
-52-
GENERAL
PARTNERS:
|
/s/
XXXXXX X.
XXXXXX
|
Xxxxxx
X. Xxxxxx
|
/s/
XXXXXX X.
BAPTIST
|
Xxxxxx
X. Baptist
|
/s/
XXXXX
XXXXX
|
Xxxxx
Xxxxx
|
-53-
THE
FOLLOWING SCHEDULES AND EXHIBITS HAVE BEEN OMITTED AND WILL BE FURNISHED TO
THE
SEC UPON REQUEST:
EXHIBIT’S:
A, B, C, D, E, F, G, H, I, J, K, L, M, N, O.
SCHEDULE’S:
1, 3.1(X), 3.1(Y), 3.2(E).
-54-