EXHIBIT 10.1
PURCHASE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
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TO: Chicago Title Insurance Company Escrow No.:______________________
0000 XXX Xxxxxxx, Xxxxx 000 Escrow Officer: Xxxxxx X. Xxxxxx
Xxxxxx, Xxxxx 00000-0000 Title Order No.:_________________
Attention: Xxxxxx X. Xxxxxx Title Officer:___________________
THIS PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement") is
made and entered into as of this 30th day of January, 1998 (the "Effective
Date"), by and between XXXXX XXXXXXX AND XXXXXXXX XXXXXXX, Co-trustees of the
Xxxxx Xxxxxxx and Xxxxxxxx Xxxxxxx Declaration of Trust Dated May 11, 1977,
(jointly and severally, "Seller"), and XXXXXXXX PROPERTIES ACQUISITION PARTNERS,
L.P., a Delaware limited partnership ("Buyer"), with respect to the following
with limited joinders by Xxxxxxxx Properties Trust, a Maryland real estate
investment trust ("Company") and Xxxxxxxx Properties I, Inc., a Delaware
corporation ("OP General Partner"):
R E C I T A L S :
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A. Seller owns that certain real property (the "Land") located in the
City of Carlsbad, County of San Diego, State of California, more particularly
described on Exhibit "A" attached hereto and incorporated herein by this
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reference, together with all buildings located thereon, commonly known as
Carlsbad Pacifica (the "Building").
B. Seller desires to sell and convey to Buyer the following:
1. The "Land", together with the Buildings and all associated
parking garages and areas, and all other improvements located on the Land
(collectively, the "Improvements");
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2. All of Seller's interest in all rights, privileges, easements
and appurtenances benefiting the Land and/or the Improvements, including,
without limitation, all mineral and water rights and all easements, rights-
of-way and other appurtenances used or connected with the beneficial use or
enjoyment of the Land and/or the Improvements (the Land, the Improvements
and all such rights, privileges, easements and appurtenances are sometimes
collectively hereinafter referred to as the "Real Property");
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3. All of Seller's interest, as landlord, in and to all leases,
subleases, licenses and other occupancy agreements affecting any portion of
the Real Property (collectively, the "Leases");
4. All personal property, equipment, supplies and fixtures
(collectively, the "Personal Property") owned by Seller, located at and
used in the operation of the Real Property and described on Exhibit "A-1"
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attached hereto; and
5. All of Seller's interest in any intangible property
appurtenant to the foregoing, including, without limitation, contract
rights, warranties, guaranties, licenses, permits, entitlements, plans
(including, without limitation, plans or permits relating to seismic
retrofitting), governmental approvals and certificates of occupancy which
benefit the Real Property and/or the Personal Property (the "Intangible
Personal Property"). The Real Property, the Personal Property, Seller's
interest as landlord under the Leases, and the Intangible Personal Property
are collectively hereinafter referred to as the "Property."
C. Seller desires to sell the Property to Buyer, and Buyer desires
to purchase the Property from Seller upon the terms and conditions hereinafter
set forth.
A G R E E M E N T :
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NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree
that the terms and conditions of this Agreement and the instructions to Chicago
Title Company ("Escrow Holder") with regard to the escrow ("Escrow") created
pursuant hereto are as follows:
1. Purchase and Sale. Seller hereby agrees to sell the Property to
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Buyer, and Buyer hereby agrees to purchase the Property from Seller, upon the
terms and conditions herein set forth.
2. Purchase Price. Subject to adjustment as provided for in this
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Agreement, the contribution price ("Purchase Price") for the Property shall be
Seven Million Five Hundred Fifty Thousand Dollars ($7,550,000.00).
3. Payment of Purchase Price. The Purchase Price for the Property
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shall be payable by Buyer as follows:
(a) Deposit. Two (2) business days after the Effective Date,
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Buyer shall deposit with Escrow Holder a sum equal to Forty-Five Thousand
Dollars ($45,000.00) (the "Deposit"). Notwithstanding any other provision
of this Agreement to the contrary, the Deposit shall be nonrefundable to
Buyer in the event this Agreement and the Escrow are canceled unless (i)
Buyer terminates this Agreement pursuant to Paragraph 7(a)(vii),
7(a)(viii), 7(a)(ix) or 16 hereof or (ii) Buyer terminates this
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Agreement because of a material breach by Seller of its obligations under
this Agreement including, but not limited to, Seller's failure to convey
the Property to Buyer as provided herein, in which event the Deposit and
all accrued interest thereon shall be refunded to Buyer upon the
termination of this Agreement.
(b) Units.
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(i) Seller shall receive Four Million Dollars
($4,000,000.00) of the Purchase Price in Units. The number of Units
to be issued shall be based upon each Unit having a value equal to
Twenty-Seven and 59/00 Dollars ($27.59) which was determined as the
average of the closing sales price of the common shares of beneficial
interest of the Company (the "Common Shares") on the New York Stock
Exchange for the ten (10) trading days from January 14, 1998 through
January 28, 1998.
(ii) To the extent that Seller receives a portion of the
Purchase Price in the form of Units, the parties agree that Seller's
receipt of Units as contemplated by this Agreement shall be reported,
for federal income tax purposes, as a contribution by Seller of all or
a portion of the Property, as applicable, to the capital of the
Operating Partnership (as defined in Paragraph 25 hereof) in exchange
for the Units pursuant to Section 721 of the Internal Revenue Code of
1986, as amended.
(c) Closing Funds. On the Close of Escrow, Buyer shall deposit
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or cause to be deposited with Escrow Holder, in Immediately Available
Funds, the balance of the cash portion of the Purchase Price (i.e., the
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Purchase Price less the amounts and Units provided for in paragraphs (a)
and (b) above and elsewhere in this Agreement) plus or minus Buyer's share
of closing costs, prorations and charges payable pursuant to this
Agreement.
4. Escrow.
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(a) Opening of Escrow. For purposes of this Agreement, the
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Escrow shall be deemed opened on the date Escrow Holder shall have received
a fully executed original or originally executed counterparts of this
Agreement from both Buyer and Seller (such date being referred to
hereinafter as the "Opening of Escrow").
(b) Close of Escrow. For purposes of this Agreement, the "Close
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of Escrow" shall be the date that the grant deed, the form of which is
attached hereto as Exhibit "B" (the "Grant Deed"), conveying the Real
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Property to Buyer, are recorded in the Official Records of San Diego County
(the "Official Records"). Unless extended in writing by Buyer and Seller,
the Close of Escrow shall occur on or before February 5, 1998 (the "Closing
Date"). Seller shall deliver possession of the Property to Buyer upon the
Close of Escrow, subject only to the "Approved Condition of Title" (as
defined in Paragraph 5 below).
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5. Condition of Title. It shall be a condition to the Close of
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Escrow for Buyer's benefit (which Buyer may waive in its sole and absolute
discretion) that title to the Real Property be conveyed to Buyer by Seller by
the Grant Deed subject only to the following approved condition of title
("Approved Condition of Title"):
(a) a lien to secure payment of real estate taxes and
assessments, not delinquent;
(b) the lien of supplemental taxes assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code
("Code") (but not any delinquent supplement taxes);
(c) matters affecting the Real Property created by or with the
written consent of Buyer; and
(d) exceptions which are disclosed by the Title Report described
in Paragraph 7(a)(i) hereof and which are approved or deemed approved by
Buyer in accordance with such Paragraph 7(a)(i).
Seller covenants that, during the term of the Escrow, it will not
intentionally cause title to the Real Property to differ from the Approved
Condition of Title described in this Paragraph 5, provided that Seller shall
have no obligation to remove any liens or other encumbrances affecting title to
the Property except for liens evidencing monetary encumbrances (other than
nondelinquent real property taxes and assessments which Seller shall cause to be
removed as of the Close of Escrow). Any liens, encumbrances, encroachments,
easements, restrictions, conditions, covenants, rights, rights-of-way or other
matters affecting the Approved Condition of Title which may appear of record or
be revealed after the date of the Title Report described in Paragraph 7(a)(i)
below shall also be subject to Buyer's approval as a condition to the Close of
Escrow for Buyer's benefit.
6. Title Policy. It shall be a condition to the Close of Escrow
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for Buyer's benefit (which Buyer may waive in its sole and absolute discretion)
that the "Title Company" (as defined in Paragraph 7(a)(i) hereof) is prepared to
issue its ALTA (Form B 1970) Owner's Extended Policy of Title Insurance ("Title
Policy") in the amount of the Purchase Price, showing title to the Real Property
vested in Buyer (or its assignee), subject only to the Approved Condition of
Title and with such endorsements as are reasonably requested by Buyer. If the
Title Company does not commit to issue a Title Policy for each Property by the
Close of Escrow, Buyer may elect to terminate this Agreement.
7. Conditions to Close of Escrow.
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(a) Conditions to Buyer's Obligations. The Close of Escrow and
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Buyer's obligation to consummate the transaction contemplated by this
Agreement are
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subject to the satisfaction of the following conditions (or Buyer's written
waiver thereof, it being agreed that Buyer may waive in writing any or all
of such conditions) for Buyer's benefit on or prior to the dates designated
below for the satisfaction of such conditions. Whether or not Buyer
terminates this Agreement and the Escrow due to the nonsatisfaction of any
such conditions, Buyer shall not be entitled to the return of the Deposit
and all interest accrued thereon except in accordance with Paragraph 3(a)
above.
(i) Title. Buyer shall have the right to review and approve
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or disapprove, in its reasonable discretion, the legal description of
the Land and any matters of title as disclosed by the following
documents ("Title Documents") to be delivered to Buyer at Seller's
sole cost and expense: a CLTA title commitment issued by Chicago
Title Company (the "Title Company") with respect to the Property (the
"Title Report"), together with legible copies of the underlying
documents relating to the Schedule B exceptions set forth in such
title commitment. Buyer acknowledges that Seller has caused the Title
Company to deliver the Title Documents to Buyer prior to the Effective
Date. Buyer has obtained, at its sole cost and expense, a survey of
each Property. Buyer has had until the Effective Date to give Seller
and Escrow Holder written notice ("Buyer's Title Notice") of Buyer's
disapproval or conditional approval of the legal description or any
matters shown in the Title Documents or the survey. The failure of
Buyer to give Buyer's Title Notice on or before the Effective Date
shall be deemed to constitute Buyer's approval of the legal
description and all of the Title Documents.
If Buyer disapproves or conditionally approves any matters
of title shown in the Title Documents, Seller shall give Buyer written
notice (which shall hereinafter be referred to as "Seller's Title
Notice"), within three (3) days of its receipt of Buyer's Title
Notice, of those matters of title disclosed on the Title Documents
that have not been approved by Buyer pursuant to this Paragraph
7(a)(i) which Seller covenants and agrees to either eliminate from the
Title Policy as exceptions to title to the Property or to ameliorate
to Buyer's satisfaction by the Closing Date as a condition to the
Close of Escrow for Buyer's benefit. If Seller does not elect in
Seller's Title Notice to eliminate or ameliorate any disapproved or
conditionally approved matters as provided above, or if Buyer
disapproves, in Buyer's reasonable discretion, Seller's Title Notice,
then Buyer shall have the right, by a writing delivered to Seller and
Escrow Holder within two (2) days of Buyer's receipt of Seller's Title
Notice, to (A) waive its prior disapproval, in which event said
disapproved matter(s) shall be deemed approved, or (B) terminate this
Agreement and the Escrow created pursuant hereto, in which event the
Deposit shall be immediately delivered to Seller, and this Agreement,
the Escrow and the rights and obligations of the parties hereunder
shall terminate. If Seller fails to timely deliver Seller's Title
Notice, then Seller will be deemed to have elected not to eliminate or
ameliorate to Buyer's satisfaction any disapproved or conditionally
approved matters set forth in Buyer's Title Notice on or before the
Close of Escrow.
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Notwithstanding anything to the contrary contained in this
Agreement, Buyer hereby disapproves all liens evidencing monetary
encumbrances (other than liens for non-delinquent real property taxes
or assessments), and Seller agrees to cause all such liens to be
eliminated at Seller's sole cost and expense (including all prepayment
penalties and charges) prior to or concurrently with the Close of
Escrow. In the event any additional matters encumber the Property
which are set forth in any amendment or a supplement to the Title
Documents ("Supplemental Title Documents"), Buyer shall give Seller
and Escrow Holder written notice ("Buyer's Supplemental Title Notice")
of Buyer's disapproval or conditional approval of any matters shown on
the Supplemental Title Documents on or before the date which is three
(3) business days after Buyer's receipt of the Supplemental Title
Documents. Seller may elect to eliminate or ameliorate any
disapproved or conditionally approved matters relating to the
Supplemental Title Documents, and Buyer may elect to waive its prior
disapproval of such matters or terminate this Agreement in accordance
with the time periods and provisions set forth herein.
(ii) Review and Approval of Documents and Materials. Seller
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has made available to Buyer at the offices of Newport National
Corporation in Carlsbad, California, (A) the documents and materials
respecting the Property set forth on Exhibit "A-2" attached hereto, or
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(B) such other documents in Seller's possession or control which
relate to the Property which Buyer shall reasonably request
(collectively, the "Documents and Materials"). Buyer may make copies
of the Documents and Materials, but Seller shall have no obligation to
provide Buyer with copies. Buyer shall have the right to review and
approve or disapprove, in its sole and absolute discretion, any or all
of the Documents and Materials prior to the Effective Date. The
failure of Buyer to give Seller written notice of its approval of all
of the Documents and Materials on or before the Effective Date shall
be deemed to constitute Buyer's approval thereof.
(iii) Inspections and Studies. Prior to the Effective
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Date, Buyer has had the right to approve or disapprove, in Buyer's
sole and absolute discretion, the results of any and all inspections,
investigations, tests and studies, including, without limitation,
investigations with regard to zoning, building codes and other
governmental regulations; architectural inspections; engineering
tests; soils, seismic and geologic reports; inspections of all or any
portion of the Improvements (including, without limitation,
structural, mechanical and electrical systems, roofs, pavement,
landscaping and public utilities); inspections, investigations, tests
and studies with respect to the environmental condition of the
Property; and any other physical inspections and/or investigations as
Buyer may elect to make or obtain. The failure of Buyer to give
Seller written disapproval of said results on or prior to the
Effective Date shall be deemed to constitute Buyer's approval thereof.
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During the term of this Escrow, Buyer, its agents,
consultants, contractors and subcontractors shall have the right to
enter upon the Real Property (subject to the terms of the Leases) to
conduct environmental tests, inspect the Improvements, monitor and
inspect the construction activities at the Property, if any, and to
conduct or make any and all inspections and tests (including, without
limitation, environmental assessments of the Land, Buildings and
Improvements and structural assessments of the Buildings and
Improvements) as may be necessary or desirable in Buyer's discretion,
provided that such inspections and tests do not materially interfere
with the tenants' use or enjoyment of the Property. Prior to the
exercise of the right of entry, and at all times while Buyer or its
agents are present upon the Real Property, Buyer shall arrange for,
keep and maintain in full force and effect a policy of commercial
general liability insurance with a per occurrence limit of not less
than $1,000,000 and an aggregate single limit of at least $1,000,000.
Buyer hereby indemnifies, agrees to defend, and holds Seller and the
Property harmless from and against any and all costs, losses, damages,
liabilities, liens, claims and expenses arising out of or resulting
from such entry by Buyer or its agents, consultants, contractors and
subcontractors. Buyer agrees to return the Property to substantially
the same condition in which the Property was prior to Buyer's making
any inspection.
(iv) Representations, Warranties and Covenants of Seller.
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Seller shall have duly performed each and every covenant and agreement
to be performed by Seller pursuant to this Agreement as of the Close
of Escrow, and Seller's representations, warranties and covenants set
forth in Paragraph 14(a) hereof shall be true and correct in all
material respects as of the Close of Escrow.
(v) No Material Changes. As of the Close of Escrow, there
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shall have been no material adverse changes in the physical condition
of the Property from and after the Opening of Escrow.
(vi) Tenant Estoppel Certificates. No later than five (5)
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business days prior to the Close of Escrow, Seller shall have obtained
and delivered to Buyer a tenant estoppel certificate disclosing no
material defaults or material deferred maintenance under the Leases
and otherwise consistent with the Rent Roll for each Property
("Estoppel Certificate"), substantially in the form attached hereto as
Exhibit "C", duly executed by seventy-five percent (75%) of all
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tenants occupying a premises which exceeds 2,300 rentable square feet
and whose Lease does not expire prior to July 1, 1998 (as shown on the
Rent Roll) and in all events from tenants occupying no less than fifty
percent (50%) of the rentable square footage of all the Properties.
Each Estoppel Certificate shall be dated not earlier than sixty-five
(65) days prior to the Close of Escrow. Buyer's failure to approve or
disapprove the Estoppel Certificates (or any one of them), as
determined in Buyer's reasonable discretion, prior to the Close of
Escrow shall be deemed to constitute Buyer's disapproval thereof.
Seller shall use its commercially reasonable efforts to obtain the
Estoppel Certificates from the
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tenants and hereby grants Buyer the right to communicate with any
tenant under the Leases in connection with the Estoppel Certificates.
Such commercially reasonable efforts shall not be construed to require
Seller to threaten or initiate litigation, grant any concession or pay
any consideration.
(vii) Unit Recipient Certifications. No later than one (1)
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business days prior to the Close of Escrow, each Unit Recipient shall
deliver to Buyer a written statement wherein it shall represent,
warrant and covenant as follows:
(A) Unit Recipient is an "accredited investor" within
the meaning of Rule 501(a) promulgated under the Securities Act
of 1933, as amended (the "Securities Act"). Unit Recipient
understands the risks of, and other considerations relating to,
the acquisition of the UnitS. Unit Recipient, by reason of its
business and financial experience, together with the business and
financial experience of those persons, if any, retained by it to
represent or advise it with respect to its investment in the
UnitS, (i) has such knowledge, sophistication and experience in
financial and business matters and in making investment decisions
of this type, that it is capable of evaluating the merits and
risks of an investment in the Operating Partnership and of making
an informed investment decision, (ii) is capable of protecting
its own interests or has engaged representatives or advisors to
assist it in protecting its interests and (iii) is capable of
bearing the economic risk of such investment.
(B) The Units to be issued to each Unit Recipient will
be acquired by each Unit Recipient for its 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, or the
grant of any participation therein until the UnitS are redeemed
for Common Stock of the Company following the lock-up period
specified in the Registration Rights Agreement in accordance with
the Partnership Agreement. Unit Recipient shall confirm that all
documents, records, and books pertaining to investment in the
Operating Partnership and requested by Unit Recipient have been
made available or delivered to Unit Recipient. Unit Recipient has
had an opportunity to ask questions of and receive answers from
the Operating Partnership, or from a person or persons acting on
the Operating Partnership's behalf, concerning the terms and
conditions of the transaction contemplated by this Agreement and
its acquisition of Units. Unit Recipient has relied upon, and is
making its investment decisions, solely upon such information as
has been provided to Unit Recipient by the Operating Partnership.
Unit Recipient was not formed for the specific purpose of
acquiring an interest in the Operating Partnership.
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(C) Unit Recipient acknowledges that (i) the Units to
be issued to Unit Recipient have not been registered under the
Securities Act or state securities laws by reason of a specific
exemption or exemptions from registration under the Securities
Act and applicable state securities laws, (ii) the Operating
Partnership's reliance on such exemptions is predicated in part
on the accuracy and completeness of the representations and
warranties of Unit Recipient referred to herein, and in the
Prospective Subscriber Questionnaires delivered to Buyer pursuant
to Paragraph 13(i) hereto, (iii) such Units, therefore, cannot be
resold unless registered under the Securities Act and applicable
state securities laws, or unless an exemption from registration
is available, (iv) there is no public market for such Units, and
(v) the Operating Partnership has no obligation or intention to
register such Units for resale under the Securities Act or any
state securities laws or to take any action that would make
available any exemption from the registration requirements of
such laws. Unit Recipient hereby acknowledges that because of the
restrictions on transfer or assignment of such Units to be issued
hereunder which are set forth in this Agreement and in the
Partnership Agreement, Unit Recipient may have to bear the
economic risk of the investment commitment evidenced by this
Agreement and any Units acquired hereby for an indefinite period
of time, and that, under the terms of the Partnership Agreement
of the Operating Partnership, as it will be in effect on the
Closing Date, Units will not be exchangeable at the request of
the holder thereof for cash or Common Shares of the Company prior
to the first (1st) anniversary of their issuance.
(D) The address of Unit Recipient's residence or
principal place of business, as applicable, shall be set forth,
together with a statement as to whether such Unit Recipient has
any present intention of becoming a resident of any country,
state or jurisdiction other than the country and state in which
it present principal place of business or residence, as
applicable, is sited.
(viii) Offering of Units. There shall have been no change
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in any securities or related law, regulation or interpretation, nor
any change in any Unit Recipient's status as an "accredited investor"
under the Securities Act, that would render consummation of the
conveyance of any portion of the Property for Units as contemplated by
this Agreement a violation of any such laws, regulation or
interpretations thereof. The representations and warranties of each
Unit Recipient contained in this Agreement and in the Prospective
Subscriber Questionnaire shall be true and correct as of the Close of
Escrow.
(ix) Related Property. Concurrently with the execution of
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this Agreement, Buyer and Seller have entered into a separate Purchase
Agreement and Joint Escrow Instructions for certain property commonly
known as the Plaza Buildings (the "Other Agreement"). The Other
Agreement provides for the
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consummation of the transaction contemplated thereby through an escrow
closing on the Closing Date. Concurrently with the Close of Escrow,
Buyer and Seller shall consummate the close of the escrow conveying
the property identified in the Other Agreement pursuant to the terms
of the Other Agreement.
(b) Conditions to Seller's Obligations. For the benefit of
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Seller, the Close of Escrow shall be conditioned upon all of the following
occurring prior to or concurrently with the Close of Escrow: (i) the
timely performance by Buyer of all of the obligations required by the terms
of this Agreement to be performed by Buyer (or Seller's waiver
thereof, it being agreed that Seller may waive such condition); and (ii)
Buyer's representations and warranties set forth in Paragraph 14(b) hereof
shall be true and correct in all material respects as of the Close of
Escrow and (iii) concurrently with the Close of Escrow, Buyer and Seller
shall consummate the close of the escrow conveying the property identified
in the Other Agreement pursuant to the terms of the Other Agreement.
8. Deposits by Seller. At least one (1) business day prior to the
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Close of Escrow, Seller shall deposit or cause to be deposited with Escrow
Holder for each Property the following documents and instruments (except for the
items listed in subparagraphs (b), (d) and (i), which Seller shall cause to be
delivered to Buyer outside of the Escrow on or before the Close of Escrow):
(a) Grant Deed. The Grant Deed conveying the Real Property to
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Buyer, duly executed as appropriate by Seller, acknowledged and in
recordable form in the form attached hereto as Exhibit "B";
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(b) Leases. The original Leases (and originals of all amendments
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thereto) or correct copies of such documents to the extent originals are
not in Seller's possession;
(c) Tenant Lease Assignment. Tenant Lease Assignment
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("Assignment of Leases"), duly executed by Seller, in the form attached
hereto as Exhibit "D", pursuant to which Seller shall assign to Buyer all
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of Seller's right, title and interest in and to the Leases;
(d) Contracts. Any and all original management contracts,
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maintenance contracts, service contracts, reciprocal easement agreements,
if any, and any other contracts or agreements affecting or relating to the
leasing, ownership, operation, maintenance, construction or development of
the Property (collectively, the "Contracts") which may remain in effect
following the Close of Escrow and all warranties related thereto, if any,
which Buyer has approved and elected to assume in accordance with Paragraph
7(a) hereof, including, without limitation, any and all operating manuals
for all building systems and components to the extent the same are in
Seller's possession;
(e) Assignment of Contracts and Assumption Agreement. Assignment
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of Contracts and Assumption Agreement ("Assignment of Contracts"), duly
executed by
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Seller, in the form attached hereto as Exhibit "E", pursuant to which
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Seller shall assign to Buyer all of Seller's right, title and interest in,
under and to the Contracts and Buyer has approved and elected to assume any
and all warranties relative thereto;
(f) Xxxx of Sale. Xxxx of Sale ("Xxxx of Sale"), duly executed
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by Seller, in the form attached hereto as Exhibit "F", conveying all of
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Seller's right, title and interest in and to the Personal Property;
(g) Tenant Letters. A letter signed by Seller, addressed to the
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tenants advising the tenants of the sale herein to Buyer and directing that
all future rent payments and other charges are to be forwarded to Buyer at
an address to be supplied by Buyer;
(h) Transferor's Certification of Non-Foreign Status. The
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Transferor's Certification of Non-Foreign Status in the form attached
hereto as Exhibit "G", duly executed by Seller ("FIRPTA Certificate");
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(i) Permits, Entitlements and the Like. Any and all original
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building and development permits, certificates of occupancy, utility will
serve letters, use permits and other governmental approvals and/or
entitlements relative to the Property, to the extent the same are in
Seller's possession;
(j) General Assignment. General Assignment ("General
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Assignment"), duly executed by Seller, in the form attached herein as
Exhibit "H", conveying all of Seller's right, title and interest in and to
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the Intangible Personal Property; and
(k) UCC. A current certified UCC Report showing no financing
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statements by Seller as debtor covering the Property. Seller shall deliver
copies of the same to Buyer no less than two (2) days prior to the Close of
Escrow.
(l) Limited Partner Signatures. A limited partner signature page
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to the Partnership Agreement ("LP Signature Page") in substantially the
form attached hereto as Exhibit "N" executed by each Unit Recipient.
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(m) Other Instruments. Such other instruments and documents as
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are described in Paragraph 21(b) herein.
9. Deposits by Buyer. Buyer shall deposit or cause to be deposited
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with Escrow Holder the funds which are to be applied towards the payment of the
Purchase Price in the amounts and at the times designated in Paragraph 3 above
(as adjusted by the prorations and credits hereinafter provided). In addition,
Buyer shall deposit with Escrow Holder prior to the Close of Escrow the
following documents and instruments for each Property:
(a) Assignment of Lease. Counterpart of the Assignment of
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Leases, duly executed by Buyer;
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(b) Assignment of Contracts. Counterpart of the Assignment of
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Contracts, duly executed by Buyer;
(c) General Assignment. Counterpart of the General Assignment,
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duly executed by Buyer; and
(d) Other Instruments. Such other instruments and documents as
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are described in Paragraph 21(b) herein.
10. Costs and Expenses.
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(a) Title. The cost and expense of the CLTA standard portion of
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the Title Policy shall be paid by Seller, and Buyer shall pay for the
portion of the Title Policy premium attributable and/or payable for the
ALTA extended coverage portion of the Title Policy and all endorsements
thereto. The escrow fee of Escrow Holder shall be paid equally by Seller
and Buyer. Seller shall pay all documentary transfer taxes payable in
connection with the recordation of the Grant Deed. Buyer and Seller shall
pay, respectively, the Escrow Holder's customary charges to buyers and
sellers for document drafting, recording and miscellaneous charges. If, as
a result of no fault of Buyer or Seller, Escrow fails to close, Buyer and
Seller shall share equally all of Escrow Holder's fees and charges. If
Escrow fails to close due to the Fault of Buyer or Seller, such party at
fault shall pay all of Escrow Holder's fees and charges, if any.
(b) Financing. Seller, at its sole cost and expense, shall pay
---------
for the costs associated with the releases of any deeds of trust,
mortgages and other financing encumbering the Property and any prepayment
premiums in connection with all the indebtedness secured by the same.
11. Prorations. The following prorations between Seller and Buyer
----------
shall be made by Escrow Holder computed as of the Close of Escrow:
(a) Taxes. Real and personal property taxes and assessments on
-----
the Property (including any supplemental taxes resulting from any new
construction in the Property) shall be prorated on the basis that Seller is
responsible for (i) all such taxes for the fiscal year of the applicable
taxing authorities occurring prior to the "Current Tax Period" (as
hereinafter defined) and (ii) that portion of such taxes for the Current
Tax Period determined on the basis of the number of days which have elapsed
from the first day of the Current Tax Period to the Close of Escrow,
inclusive, whether or not the same shall be payable prior to the Close of
Escrow. The phrase "Current Tax Period" refers to the fiscal year of the
applicable taxing authority in which the Close of Escrow occurs. In the
event that as of the Close of Escrow the actual tax bills for the year or
years in question are not available and the amount of taxes to be prorated
as aforesaid cannot be ascertained, then rates and assessed valuation of
the previous year, with known changes, shall be used, and when the actual
amount of taxes and assessments for the year or years in question shall be
determinable, then such taxes and assessments will be reprorated between
the parties to reflect the actual amount of such taxes and assessments.
Seller
-12-
shall be responsible for, and shall indemnify, protect, defend (with
counsel chosen by Buyer) and hold harmless Buyer and the Real Property from
and against any and all supplemental taxes, to the extent that such taxes
relate to any period occurring prior to the Close of Escrow.
(b) Rentals. Rentals and other payments (including, without
-------
limitation, common area maintenance charges and payments for real property
taxes and insurance premiums) payable by tenants, licensees,
concessionaires and other occupants of the Property or any portion thereof
(collectively, the "Tenants") shall be prorated as of the Close of Escrow.
However, Buyer shall not be obligated to make any payment or give any
credit to Seller on account of, or by reason of, any rental or other
payments which are unpaid as of the Close of Escrow, but shall be required
merely to pay to Seller Seller's share of the same if, as and when received
by Buyer. After the Close of Escrow, all payments received by Buyer from
the Tenants shall be applied as follows: first, to the obligation or
obligations of the Tenants under the Leases accruing during the month in
which the Close of Escrow occurs; second, to any obligation or obligations
of the Tenants under the Leases attributable to any period occurring after
the Close of Escrow through the month in which payment is made and/or with
respect to obligations accruing after the Close of Escrow which are past
due on the date of receipt by Buyer; third, to all of Buyer's costs of
collection incurred with respect to the recovery of any such payments; and
then, to any amounts due Seller from such Tenants under the Leases for
periods prior to the Close of Escrow. Any rental payments received by
Seller following the Close of Escrow shall be paid over to Buyer within
five (5) business days of receipt and shall be applied in the manner
described above. Seller shall have no right whatsoever to initiate any
action against any Tenant for unlawful detainer or other right or action to
dispossess such Tenant of its leased premises with respect to any duties or
obligations of such Tenant under the Leases.
(c) Security Deposits. Buyer shall be credited and Seller shall
-----------------
be charged with any security deposits and advanced rentals in the nature of
security deposits made by the Tenants under the Leases, except to the
extent such amounts have previously been applied to obligations of the
Tenants under the Leases and have been shown as having been so applied on
the Rent Roll for each Property attached hereto as Exhibit "J". Buyer
-----------
shall also be credited and Seller shall be charged for all operating cost
pass-throughs paid by the Tenants and held by Seller in reserve for the
benefit of the Tenants for the repair and/or improvement of the Property.
Seller hereby agrees that it will not during the term of this Escrow or
upon the Close of Escrow apply any security deposits toward any delinquent
rental payments or any other amounts due under any Leases.
(d) Utilities. Gas, water, electricity, heat, fuel, sewer and
---------
other utilities and the operating expenses relating to the Real Property
shall be prorated as of the Close of Escrow to the extent such items are
not directly paid for by the Tenants under the Leases. If the parties are
unable to obtain final meter readings as of the Close of Escrow, such
expenses shall be estimated as of the Close of Escrow on the basis of the
prior operating history of the Real Property.
-13-
(e) Existing Lease Obligations. Buyer shall be credited and
--------------------------
Seller shall be charged with operating costs (i.e., maintenance charges,
taxes and insurance), including, but not limited to maintenance obligations
under the Leases, tenant improvement costs and allowances, all leasing
commissions for leases entered into prior to the Close of Escrow, and
specifically including the amount of Two Hundred Nine Thousand Two Hundred
Sixty-Six and 00/00 Dollars ($209,266.00) for commissions and tenant
improvement costs arising in connection with the Lease with Xxxxx Xxxxx
(including all commissions relating to any renewal or extension of a Lease
or the leasing of additional space exercised prior to the Close of Escrow)
of the landlord associated with the Leases existing prior to the Close of
Escrow. Seller shall have no obligation to Buyer for expenses relating to
lease renewals or expansions which are exercised by tenants under the
Leases after the Close of Escrow.
(f) Insurance. Buyer acknowledges that Buyer is not assuming any
---------
insurance policies currently maintained by Seller.
Prior to the Close of Escrow, the parties shall agree upon all of the prorations
to be made and submit a statement to Escrow Holder setting forth the same. In
the event that any prorations, apportionments or computations made under this
Paragraph 11 shall require final adjustment (including any such adjustment based
on any post-closing, annual reconciliation of operating expenses performed under
the Leases), then the parties shall make the appropriate adjustments promptly
when accurate information becomes available and either party hereto shall be
entitled to an adjustment to correct the same. The parties agree that they will
estimate the prorations of rents based on rental payments received, and expenses
incurred, prior to the end of business on January 31, 1998, and that an
appropriate adjustment shall be promptly made following the Close of Escrow
based on the rental payments received, and expenses incurred, through the Close
of Escrow. Provided that all such information is available, all such adjustments
shall be made within one hundred and twenty (120) days after the Close of
Escrow. Any corrected adjustment or proration shall be paid in cash to the party
entitled thereto. The provisions of this Paragraph 11 shall survive the Close of
Escrow and the recordation of the Grant Deed.
12. Escrow Disbursements and Other Actions. Upon the Close of Escrow,
--------------------------------------
Escrow Holder shall promptly undertake all of the following in the following
manner:
(a) Prorations. Prorate all matters referenced in Paragraph 11
----------
based upon the statement delivered into Escrow signed by the parties;
(b) Recording. Cause the Grant Deeds and any other documents
---------
which the parties hereto may mutually direct, to be recorded in the
Official Records in the order directed by the parties;
(c) Funds. Disburse from funds deposited by Buyer with Escrow
-----
Holder towards payment of all items (including, without limitation, the net
amount of the cash portion of the Purchase Price) chargeable to the account
of Buyer pursuant hereto in payment of such costs and disburse the balance
of such funds, if any, to Buyer;
-14-
(d) Documents to Seller. Deliver to Seller counterparts of the
-------------------
Assignment of Lease, the Assignment of Contracts and the General Assignment
executed by Buyer;
(e) Documents to Buyer. Deliver to Buyer originals of the Xxxx
------------------
of Sale, and the FIRPTA Certificate, and counterparts of the Assignment of
Leases, the Assignment of Contracts and the General Assignment
appropriately executed by Seller, the approved form of letter described in
Paragraph 8(g) above addressed to the Tenants advising such Tenants of this
transaction and any other documents which are to be delivered to Buyer
hereunder;
(f) Title Policy. Direct the Title Company to issue the Title
------------
Policy to Buyer;
(g) Units. Concurrently with the Close of Escrow, Buyer shall
-----
deliver to Seller evidence of the issuance of the Units to Seller in
accordance with Exhibit "M"; and
----------------
(h) Registration Rights Agreements. At or prior to the Close of
------------------------------
Escrow, Buyer, the Company and the Unit Recipients will enter into the
Registration Rights Agreement (defined in Paragraph 25 hereof).
13. Covenants of Seller. Seller hereby covenants with Buyer, as
-------------------
follows:
(a) New Contracts. From the Effective Date through the Close of
-------------
Escrow, Seller shall not, without the prior written consent of Buyer, which
Buyer may withhold in its reasonable discretion, enter into any maintenance
contract, service contract, listing agreement or any other contract
affecting or relating to the Property or any portion thereof which will
survive the Close of Escrow or will otherwise affect the use, operation or
enjoyment of the Property after the Close of Escrow. Buyer's failure to
notify Seller within one (1) business day after receipt of Seller's request
for consent to such a contract whether or not Buyer consents shall be
deemed Buyer's consent.
(b) Insurance. All insurance policies carried by Seller with
---------
respect to the Property and in effect as of the Effective Date shall remain
continuously in full force and effect from the Effective Date through the
day upon which the Close of Escrow occurs;
(c) Amendments. From the Effective Date through the Close of
----------
Escrow, Seller shall not amend, modify, alter or supplement any Lease or
any Contract which is approved by Buyer pursuant to Paragraphs 7(a) or
13(a) hereof, or enter into any new lease or contract or binding proposal
for a new lease or contract, without the prior written consent of Buyer
which may be withheld in Buyer's reasonable discretion. Buyer's failure to
notify Seller within three (3) business days after receipt of Seller's
request for consent to such a contract whether or not Buyer consents shall
be deemed
-15-
Buyer's consent. Further, Seller shall terminate on or before the Close of
Escrow any Contract which Buyer disapproves in accordance with Paragraph
7(a) hereof.
(d) Operation. From the date of this Agreement until the Close
---------
of Escrow, Seller shall operate, manage, maintain and repair the Property
consistent with Seller's existing business practices and subject to the
terms of Paragraph 11(e), shall satisfy and perform all obligations under
the Leases arising prior to the Close of Escrow.
(e) No New Financing. After the date of this Agreement, Seller
----------------
shall not alienate, lien, encumber or otherwise transfer all or any portion
of or interest in the Property (other than to Buyer at the Close of
Escrow). All Personal Property and Intangible Personal Property shall be
conveyed to Buyer by Seller at the Close of Escrow free from any liens,
encumbrances or security interests of any kind or nature;
(f) Records. For a period of one (1) year following the Close of
-------
Escrow, Seller shall, upon Buyer's request and upon reasonable prior
notice, make all of Seller's non-proprietary records with respect to the
Property, which have not otherwise been turned over to Buyer, available to
Buyer for inspection, copying and audit by Buyer's designated employees,
accountants or consultants; and
(g) Materially Changed Condition. Seller shall, promptly upon
----------------------------
becoming aware of any such occurrence, notify Buyer in writing of any
material change in any condition with respect to the Property or of any
event or circumstance which makes any representation or warranty of Seller
to Buyer under this Agreement untrue or misleading, and of any material
covenant of Seller under this Agreement which Seller will be incapable of
substantial performing (hereinafter, a "Materially Changed Condition"). If
Seller notifies Buyer of any Materially Changed Condition, Buyer shall have
two (2) business days following receipt of written notice from Seller of
such condition to review the events and circumstances giving rise to such
condition. If Buyer disapproves the Materially Changed Condition (as
determined in Buyer's reasonable discretion), Buyer may terminate this
Agreement. If Buyer does not elect to terminate this Agreement and elects
to consummate its acquisition of the Property, it shall be deemed to have
(i) waived any claim regarding the Materially Changed Condition, (ii)
accepted title to and possession of the Property subject to the Materially
Changed Condition and (iii) amended this Agreement to reflect the
Materially Changed Condition.
(h) Accounting Information. The parties acknowledge that Seller
----------------------
has provided to Buyer's representatives and independent accounting firm
access to financial and other information relating to the Property in the
possession of or otherwise available to Seller and its affiliates from
which Buyer's representatives and independent accounting firm have
prepared, at Buyer's expense, audited financial statements for 1994, 1995
and 1996 in conformity with generally accepted accounting principles and to
enable them to prepare such statements, reports or disclosures as Buyer may
deem necessary or advisable. All such information is being provided to
Buyer without any representation or warranty by Seller except that such
information was used by Seller in the ordinary course
-16-
of its business. Seller shall authorize and shall cause its management
company to authorize any attorneys who have represented Seller or its
management company in material litigation pertaining to or affecting the
Property to respond, at Seller's expense, to inquiries from Buyer's
representatives and independent accounting firm provided that any such
responses do not require an undertaking. If and to the extent Seller's
financial statements pertaining to the Property for any periods during the
years 1994, 1995 or 1996 have been audited, promptly after the execution of
this Agreement, Seller shall provide Buyer with copies of such audited
financial statements and shall cooperate with Buyer's representatives and
independent public accountants to enable them to contact the auditors who
prepared such audited financial statements and to obtain, at Buyer's
expense, a reissuance of such audited financial statements.
(i) Prospective Subscriber Questionnaire. Seller, as a Unit
------------------------------------
Recipient, shall deliver to the Operating Partnership, no less than three
(3) business days prior to the Close of Escrow a completed and duly
executed Prospective Subscriber Questionnaire in substantially the form
attached hereto as Exhibit "O", which Questionnaires shall confirm to the
-----------
satisfaction of the Operating Partnership that each Unit Recipient is an
"accredited" investor within the meaning of Rule 501(a) promulgated under
the Securities Act. Seller shall also deliver to the Operating
Partnership, upon the Operating Partnership's reasonable request, such
other information, certificates and materials as the Operating Partnership
may reasonably request in connection with offering the Units without
registration under the Securities Act and the securities laws of applicable
states and other jurisdictions.
(j) Depreciation and Amortization. In connection with the
-----------------------------
issuance of Units to any Unit Recipient, Seller shall deliver to Buyer on
or before the date which is forty-five (45) days after the Close of Escrow,
at Seller's sole cost and expense, prepared as of the date of this
Agreement, depreciation and amortization schedules for the assets
constituting the Property, as kept for tax purposes, showing original
basis, accumulated depreciation or amortization, original useful life of
such assets, remaining useful life of such assets and the date(s) when such
assets were placed in service.
(k) Notifications. From the date of this Agreement until the
-------------
Close of Escrow, and then so long as any Unit Recipient holds any Units,
each such Unit Recipient shall notify the Operating Partnership in writing
promptly upon any change in the identity or number of its partners or of
its indirect partners as identified pursuant to this Agreement, and shall
provide the information called for in Paragraph 13(j) hereof with respect
to any such change. In addition, so long as any Unit Recipient holds any
Units, without the prior written consent of the Operating Partnership, each
Unit Recipient shall not (i) admit additional partners, (ii) permit the
transfer of interests in each Unit Recipient to a look-through entity (as
hereinafter defined) or (iii) permit any transfer of interests in such Unit
Recipients if, as a result of the admissions or transfers described in (i)
through (iii) the number of direct or indirect beneficial owners in such
Unit Recipients would increase. Each Unit Recipient shall use their best
efforts to secure the compliance of any look-through entities that hold
direct or indirect interests of such Unit Recipients with the
-17-
requirements of this Paragraph as if such requirements applied directly to
such entities. Each Unit Recipient acknowledge that the provisions of this
Paragraph are imposed to aid the Operating Partnership in avoiding taxation
as a corporation for federal income tax purposes, agrees that monetary
damages may be insufficient to remedy the potential harm caused by any
breach of the provisions of this Paragraph, and agree that injunctive
relief, including specific performance or another equitable remedy would be
an appropriate remedy. The provisions of this Paragraph shall survive the
recording of the Grant Deed and the Close of Escrow. For purposes of this
Agreement, a "look-through entity" shall mean a partnership (or other
entity treated as a partnership for federal income tax purposes), S-
corporation or grantor trust.
(l) Partnership Agreement. Seller acknowledges that each Unit
---------------------
Recipient shall be bound by and subject to all terms of the Partnership
Agreement. At or prior to the Closing, Seller shall deliver to the
Operating Partnership a Limited Partner Signature Page in substantially the
form attached hereto as Exhibit "N" executed by each Unit Recipient.
-----------
(m) No Marketing. Upon execution of this Agreement, Seller shall
------------
not market the Property for sale or enter into discussions or negotiations
---
with potential purchasers of the Property unless this Agreement has been
terminated pursuant to its terms.
(n) Additional Cooperation. After the Close of Escrow, Seller
----------------------
shall cooperate with, and promptly respond to reasonable requests from,
Buyer's accountants, including, but not limited to, audit letters
requesting information relating to matters prior to the Close of Escrow,
including, but not limited to, pending or threatened litigation, claims and
assessments; provided, however, information provided by Seller to Buyer's
accountants shall not constitute additional representations and warranties
of Seller.
14. Representations and Warranties.
------------------------------
(a) By Seller. In consideration of Buyer entering into this
---------
Agreement and as an inducement to Buyer to purchase the Property, Seller
makes the following representations and warranties (subject to the matters
disclosed on the Disclosure Statement attached hereto as Exhibit "K"
-----------
("Disclosure Statement")), each of which is material and is being relied
upon by Buyer (and the continued truth and accuracy of which shall
constitute a condition precedent to Buyer's obligations hereunder):
(i) Representations Regarding Seller's Authority.
--------------------------------------------
(A) Seller has the legal power, right and authority to
enter into this Agreement and the instruments referenced herein,
and to consummate the transaction contemplated hereby;
(B) All requisite action (corporate, trust, partnership
or otherwise) has been taken by Seller in connection with the
entering into
-18-
this Agreement, the instruments referenced herein, and the
consummation of the transaction contemplated hereby. No consent
of any partner, shareholder, trustee, trustor, beneficiary,
creditor, investor, judicial or administrative body, governmental
authority or other party is required or, if required, has been
obtained; and
(C) The individuals executing this Agreement and the
instruments referenced herein on behalf of Seller have the legal
power, right, and actual authority to bind Seller to the terms
and conditions hereof and thereof.
(ii) Threatened Actions. To Seller's actual knowledge,
------------------
there are no pending, and to Seller's actual knowledge no threatened,
actions, suits, arbitrations, claims or proceedings, at law, in equity
or otherwise, that would adversely affect the Property or Seller's
ability to perform its obligations under this Agreement including, but
not limited to, judicial, municipal or administrative proceedings in
eminent domain, collection actions, claims relating to alleged
building code violations or health and safety violations, federal,
state or local agency actions regarding environmental matters, lease
disputes, claims relating to federal environmental protection agency
or zoning violations, or actions relating to personal injuries or
property damages alleged to have occurred at the Real Property or by
reason of the condition or use of or construction on the Real
Property;
(iii) No Contracts. Other than the Leases, the Contracts
------------
and the matters disclosed in the Title Report, there are no leases,
surface or subsurface use agreements, tenancy arrangements, service
contracts, management agreements, or other agreements, instruments or
encumbrances created by Seller, or to Seller's actual knowledge
created by any other person or entity, which will be in force or
effect as of the Close of Escrow that grant to any person whomsoever
or any entity whatsoever any right, title, interest or benefit in or
to all or any part of the Property or any right relating to the
ownership, use, operation, management, maintenance, enjoyment or
repair of all or any part of the Property, and no person or entity has
any rights to acquire any of the foregoing by virtue of the acts of
Seller;
(iv) Compliance with Law. To Seller's actual knowledge,
-------------------
Seller has received no written notice and does not otherwise have
knowledge of any violation of any applicable laws, ordinances, rules,
requirements, regulations and building codes of any governmental
agency, body or subdivision thereof bearing on the Property;
(v) Documents True. To Seller's actual knowledge, all
--------------
documents delivered by Seller or made available to Buyer pursuant to
this
-19-
Agreement are true, correct and complete copies of the versions
of such documents that are in Seller's possession;
(vi) Hazardous Wastes. Except as set forth on Exhibit "I"
----------------
or as disclosed in the phase I environmental assessments prepared on
behalf of Buyer, to Seller's actual knowledge: (1) the Property or
any portion thereof is not in violation of any Environmental Law (as
hereinafter defined); (2) neither Seller nor any third party has used,
generated, manufactured, stored or disposed of on, under or about the
Property or transported to or from the Property any Hazardous Material
in violation of any Environmental Law; and (3) there is no asbestos
(in any form) or asbestos containing materials in any of the
Improvements. For purposes of this subparagraph, the term "Hazardous
Material" shall mean any substance, chemical, waste product or other
material which is listed, defined, or otherwise identified as
"hazardous" or "toxic" or as a "hazardous material" under any
federal, state, local or administrative agency ordinance or law,
including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. (S)(S) 9601 et
--
seq.; Resource Conservation and Recovery Act, 42 U.S.C. (S)(S) 6901 et
--- --
seq.; Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et
--- --
seq.; Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq.; Hazardous
--- ------
Materials Transportation Act, 49 U.S.C. (S)(S) 1471 et seq.; Toxic
------
Substances Control Act, 15 U.S.C. (S)(S) 2601 et seq.; Xxxxxx Xxx, 00
------
U.S.C. (S)(S) 407 et seq.; Emergency Planning and Community
------
Right-To-Know Act, 42 U.S.C. (S)(S) 11001 et seq.; Occupational Safety
------
and Health Act, 29 U.S.C. (S)(S) 65 et seq., to the extent it includes
------
the emission of any Hazardous Material and includes any Hazardous
Material for which hazard communication standards have been
established; California Hazardous Substance Account Act, California
Health & Safety Code (S)(S) 25300 et seq.; California Asbestos
------
Notification Laws, California Health & Safety Code (S)(S) 25915 et
--
seq.; California Hazardous Waste Control Law, California Health &
---
Safety Code (S)(S) 22100 et seq.; California Hazardous Materials
------
Release Response Plans and Inventory Act, California Health & Safety
Code (S)(S) 25500 et seq., California Clean Air Act, California Health
------
& Safety Code (S)(S) 39608 et seq.; California Toxic Pits Cleanup Act,
------
California Health & Safety Code (S)(S) 25208 et seq.; California
------
Pipeline Safety Act, California Government Code (S)(S) 51010 et seq.;
------
California Toxic Air Contaminants Law, California Health & Safe Code
(S)(S) 39650 et seq.; California Xxxxxx-Cologne Water Quality Act,
------
California Water Code (S)(S) 13000 et seq.; California Toxic Injection
------
Well Control Act, California Health & Safety Code (S)(S) 25159.10 et
--
seq.; California Underground Storage Tank Act, California Health &
---
Safety Code (S)(S) 25280 et seq.; California Occupational Carcinogens
------
Control Act, California Labor Code (S)(S) 9000 et seq.; or any
------
regulation, order, rule or requirement adopted thereunder; as well as
any formaldehyde, urea, polychlorinated biphenyls, petroleum,
petroleum product or by-product, crude oil, natural gas, natural gas
liquids, liquefied natural gas or synthetic gas usable for fuel or
mixture thereof, radon, asbestos and "source," "special nuclear" and
"by-product" material as defined in the Atomic Energy Act of 1985, 42
U.S.C. (S)(S) 3011 et seq. For purposes of this
------
-20-
Agreement, the term "Environmental Laws" shall mean the statutes and
ordinances set forth above and any and all other federal, state or
local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions or hazardous conditions.
(vii) Taxes. Seller has no actual knowledge, and Seller
-----
has received no notice to the contrary, of any special assessments or
charges which have been levied against the Property or which will
result from work, activities or improvements done to or for the
benefit of the Property except as may be shown on the Title Report.
Seller has no knowledge, and Seller has received no notice to the
contrary, of any intended public improvements which will result in any
charge being levied against, or in the creation of any lien upon, the
Property or any portion thereof;
(viii) Roofs; Utilities; Building Systems. Except as
----------------------------------
expressly set forth in the reports prepared for Buyer by Building
Analytics which are further identified on Exhibit "K", Seller has no
-----------
actual knowledge that the roofs of the Improvements or any of the
utility facilities or the heating, air conditioning, plumbing or
ventilating systems serving the Property are inadequate or are not in
good operating condition nor that any of the same have been inadequate
or failed to be in good operating condition within the two (2) years
immediately preceding the Opening of Escrow;
(ix) Structural. Except as expressly set forth on the
----------
reports prepared for Buyer by Building Analytics which are further
identified on Exhibit "K", Seller has no actual knowledge of any
-----------
material defects or deficiencies in the integrity or condition of the
structural components of the Real Property;
(x) Leases. The Rent Roll for each Property attached hereto
------
as Exhibit "J" is a copy of the rent roll used by Seller in the
-----------
ordinary course of its business. To Seller's actual knowledge, (1)
each Rent Roll is true, accurate and complete and (2) the copies of
the Leases delivered to Buyer are true, correct and complete copies of
the Leases. The Leases are in full force and effect, without default
by any party and without any right of setoff, except as expressly
provided by the terms of the Leases or as disclosed to Buyer in
writing in an Estoppel Certificate or otherwise. As of the Close of
Escrow, all work to be performed by Seller pursuant to the Leases
shall have been fully or substantially completed, paid for and
accepted by the respective Tenants and all tenant improvement
allowances and similar obligations have been paid in full except as
expressly set forth on Exhibit "U". Except as indicated on Exhibit
----------- -------
"U", to Seller's actual knowledge, no leasing or other commissions or
---
fees are due, or will become due, on an absolute or contingent basis
to any real estate brokers or agents or anyone else in connection with
the Real Property or any portion thereof and no such commissions or
fees will become due during the term of any existing Lease or
-21-
with respect to any renewal or extension thereof or the leasing of
additional space by any existing Tenant;
(xi) Specific Liabilities. To Seller's actual knowledge, as
--------------------
of the date of this Agreement, there are no payments, assessments,
fees or charges owing, and no outstanding liabilities, obligations or
commitments, in connection with any of the items identified on Exhibit
-------
"Q" attached hereto and incorporated herein by this reference. Seller
---
shall be deemed to have had actual knowledge of any such matter if a
reasonably prudent manager of commercial property would have had
knowledge of such matter regardless of whether Seller actually had
such knowledge.
(xii) Representations and Warranties at Closing. Subject
-----------------------------------------
to Seller's right to deliver its notice to Buyer of a Materially
Changed Condition as set forth in Paragraph 13(g) above, the
representations and warranties of Seller set forth in this Agreement
shall be deemed to be remade and restated by Seller in a certificate
on and as of the Close of Escrow.
As used herein, the term "Seller's actual knowledge" shall mean
the current actual knowledge of Xxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxx Xxxxxxxx, and Xxxxxxx Xxxxxxx, without any inquiry. Seller
represents and warrants that Xxxxxx Xxxxxxxx is the representative of
Seller with principal administrative and oversight responsibility for the
Property. The parties agree that (i) Seller's warranties and
representations contained in this Agreement and in any document executed by
Seller pursuant to this Agreement shall survive Buyer's purchase of the
Property only for a period of one (1) year after the Close of Escrow (the
"Limitation Period"), and (ii) Buyer shall provide actual written notice to
Seller of any alleged breach of such warranties or representations and
shall allow Seller thirty (30) days within which to cure such alleged
breach, or, if such alleged breach cannot reasonably be cured within thirty
(30) days, an additional reasonable time period, so long as such cure has
been commenced within such thirty (30) days and diligently pursued. In no
event is Seller obligated to cure any alleged breach. If Seller fails or
elects not to cure such alleged breach after actual written notice and
within such cure period, Buyer's sole and exclusive remedy shall be an
action at law for damages, but in no event lost profits or punitive
damages, which must be commenced, if at all, within the Limitation Period;
provided, however, that if within the Limitation Period Buyer gives Seller
written notice of such alleged breach and Seller commenced to cure and
thereafter terminates such cure effort, Buyer shall have an additional
sixty (60) days from the date that Seller notifies Buyer in writing that
Seller has terminated its cure effort within which to commence such an
action.
(b) By Buyer. In consideration of Seller entering into this
--------
Agreement and as an inducement to Seller to sell the Property, Buyer (and
Company and OP General Partner, by their joinder herein, solely as to the
representations and warranties relating to Company, OP General Partner and
their respective operations) makes the following representations and
warranties, each of which is material and is being relied upon by
-22-
Seller (and the continued truth and accuracy of which shall constitute a
condition precedent to Seller's obligations hereunder):
(i) Representations Regarding Buyer's Authority.
-------------------------------------------
(A) Buyer has the legal power, right and authority to
enter into this Agreement and the instruments referenced herein,
and to consummate the transaction contemplated hereby;
(B) All requisite action (corporate, trust, partnership
or otherwise) has been taken by Buyer in connection with the
entering into this Agreement, the instruments referenced herein,
and the consummation of the transaction contemplated hereby. No
consent of any partner, shareholder, trustee, trustor,
beneficiary, creditor, investor, judicial or administrative body,
governmental authority or other party is required; and
(C) The individuals executing this Agreement and the
instruments referenced herein on behalf of Buyer and the partners
of Buyer, if any, have the legal power, right, and actual
authority to bind Buyer to the terms and conditions hereof and
thereof.
(ii) AS-IS. Except as expressly set forth in the Agreement,
-----
Buyer is acquiring the Property "AS IS" without any representation or
warranty of Seller, express, implied or statutory, as to the nature or
condition of or title to the Property or its fitness for Buyer's
intended use of same. Except as specifically set forth in this
Agreement, Buyer represents and warrants that it (i) is relying solely
upon its own inspections, investigations and analyses of the Property,
the Title Documents, Documents and Materials, and the Plans and
Reports (collectively, the "Property Documents") in entering into this
Agreement and consummating the transaction set forth herein, and (ii)
is not relying in any way upon any representations, statements,
agreements, warranties, studies, reports, descriptions, guidelines or
other information or material furnished by Seller or its
representatives whether oral or written, express or implied, of any
nature whatsoever regarding any such matters, including, without
limitation, the condition, value, nature, or quality of the Property,
including any constriction on the Property and any materials or
systems incorporated into the Property and seismic conditions or
topography, any income to be derived from the Property, compliance of
the Property or its operation with any law, ordinance, rule,
regulation, or the status of any permits or approvals relating to or
required in connection with the Property, latent defects in the
Property or improvements thereto, safety or building violations or
deficiencies in the Property or improvements thereto, if any, or any
other matter of a similar or dissimilar nature which may be of
relevance to Buyer and relating in any way to the Property or the
market in which it is located. Except as specifically set forth in
this Agreement, Buyer agrees and warrants to Seller that neither
Seller, nor any broker, nor any
-23-
agent or representative of either of them, has made any representation
to Buyer inconsistent with the foregoing nor as to any Hazardous
Materials Laws, the existence of Hazardous Materials on the Property
or the Property Documents. Except as specifically set forth in this
Agreement, Seller is not making any representation or warranty of any
nature concerning the accuracy or completeness of Seller's files or
concerning the authenticity, source, accuracy or completeness of the
Property Documents. As to certain of the materials made available to
Buyer from Seller's files, including, without limitation, the Property
Documents, Buyer specifically acknowledges that they may have been
prepared by third parties with whom Seller has no privity and Buyer
acknowledges and agrees that except as specifically set forth herein,
no warranty or representation, express or implied, has been made, nor
shall any be deemed to have been made, to Buyer either by Seller or by
any third parties that prepared the materials in question. Buyer
waives any claim of any nature against Seller for any information,
conclusion, projection or other statement of any nature contained in
any of the Property Documents if the same should prove not to be true,
complete or accurate for any reason. Buyer, by its execution of this
Agreement, acknowledges and agrees that a material inducement to
Seller's decision to sell the Property to Buyer at the Purchase Price
provided in this Agreement was Buyer's agreement to conduct its own
feasibility studies and purchase the Property in an "as-is" condition.
Except as relating to any matter or relating to a breach of the
representations and warranties made by Seller, (A) no latent condition
affecting the Property in any way (including, without limitation, the
presence or effects of any Hazardous Materials or any violations of
applicable law on the Property), discovered after the Close of Escrow
(collectively, "Property Conditions"), shall give rise to any rights
of damages, specific performance, rescission or other claims by Buyer
against Seller, and (B) Buyer hereby assumes the risk of any and all
liabilities, claims, demands, suits, judgments, losses, damages,
expenses (including, without limitation, attorneys' fees and costs)
and other obligations arising out of the Property and hereby releases,
waives, discharges, covenants not to xxx Seller based solely upon the
same.
(iii) Securities Filings. Each of the Company and the
------------------
Operating Partnership has filed all required documents with the
Securities and Exchange Commission ("SEC") since January 1, 1997
including, without limitation, the Annual Report on Form 10-K for the
year ended December 31, 1996 of the Company and the Operating
Partnership (collectively, the "SEC Documents"). To the knowledge of
the Company and Operating Partnership (defined and limited for
purposes of Paragraphs 14(b)(iii) and (iv) as information contained in
any actual notice received by Company or the Operating Partnership or
information within the actual knowledge of Xxxxxxx X. Xxxxxxxx and
Xxxxxx X. August, Xxxx Xxxxx and Xxxx Xxxxxx (i) as of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or Exchange Act, as the
case may be, and, at the respective times they were filed, none of the
SEC Documents contained any untrue statement of a material fact or
omitted to state a
-24-
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading, (ii) the consolidated financial statements
(including any notes thereto) of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the
SEC with respect thereto, were prepared in accordance with generally
accepted accounting principles (except, in the case of the unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly presented in all
material respects the consolidated financial position of the Company
as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described
therein), and (iii) except as disclosed in the SEC Documents or as
required by generally accepted accounting principles, the Company has
not, since September 30, 1997, made any material change in the
accounting practices or policies applied in the preparation of
financial statements.
(iv) Absence of Certain Changes or Events. To the knowledge
------------------------------------
of Operating Partnership and Company, except as disclosed in SEC
Documents filed with the SEC prior to the date of this Agreement,
since September 30, 1997, (a) neither the Company nor the Operating
Partnership has sustained any loss or interference with its business
or properties from fire, flood, windstorm, accident or other calamity
(whether or not covered by insurance) that has had a material adverse
effect on the Company or the Operating Partnership, and (b) there has
been no event causing a material adverse effect on the Company or the
Operating Partnership, excluding any changes and effects resulting
from changes in economic, regulatory or political conditions or
changes in conditions generally applicable to the industry in which
the Company or the Operating Partnership is involved. The
representations and warranties of Buyer, the Company and the OP
General Partner set forth in this Agreement and in any document
executed by such parties pursuant to this Agreement shall survive
Buyer's purchase of the Property only for the Limitation Period.
Seller shall provide actual written notice to Buyer of any alleged
breach of such warranties or representations and shall allow Buyer
thirty (30) days within which to cure such alleged breach, or, if such
alleged breach cannot reasonably be cured within thirty (30) days, an
additional reasonable time period, so long as such cure has been
commenced within such thirty (30) days and diligently pursued. In no
event is Buyer obligated to cure any alleged breach. If Buyer fails or
elects not to cure such alleged breach after actual written notice and
within such cure period, Seller's sole and exclusive remedy shall be
an action at law for damages, but in no event lost profits or punitive
damages, which must be commenced, if at all, within the Limitation
Period; provided, however, that if within the Limitation Period Seller
gives Buyer written notice of such alleged breach and Buyer commenced
to cure and thereafter
-25-
terminates such cure effort, Seller shall have an additional sixty
(60) days from the date that Buyer notifies Seller in writing that
Buyer has terminated its cure effort within which to commence such an
action.
(c) Indemnification.
---------------
(i) Seller's Indemnification. Notwithstanding anything in
------------------------
this Agreement to the contrary, and without limiting either parties'
rights under this Agreement, Seller hereby agrees to indemnify,
defend, protect and hold harmless Buyer and Buyer's Indemnitees (as
defined in Paragraph 13(a)(xv) hereof) from and against any and all
costs, losses, liabilities, damages, lawsuits, deficiencies, claims
and expenses, including without limitation, interest, penalties,
reasonable attorneys' fees and all amounts paid in investigation,
defense or settlement of any of the foregoing (collectively,
"Damages"), incurred in connection with, arising out of, resulting
-------
from or incident to (i) any breach of any covenant or warranty, or the
inaccuracy of any representation, made by Seller in or pursuant to
this Agreement or (ii) any claim by any person or entity initiated
against Buyer arising from the actions or inaction's of Seller prior
to the Close of Escrow.
(ii) Buyer's Indemnification of Seller. Notwithstanding
---------------------------------
anything in this Agreement to the contrary, Buyer shall indemnify,
defend, protect and hold harmless, Seller from and against any and all
Damages incurred in connection with, arising out of, resulting from or
incident to any breach of any covenant or warranty, or the inaccuracy
of any representation, made by Buyer in or pursuant to this Agreement.
(iii) Initiation of Claims. If any party ("Indemnitee")
-------------------- ----------
hereto desires to make a claim against any other party ("Indemnitor")
----------
pursuant to the provisions of this Paragraph 14(c), then Indemnitee
shall notify Indemnitor of the claim, demand, action or right of
action which is the basis of such claim and the provision or
provisions of this Agreement alleged to have been breached or to be
inaccurate, and shall give the Indemnitor a reasonable opportunity to
participate in the defense thereof. Indemnitee shall provide
Indemnitor with all information available to it regarding such claim,
demand, action or right of action (whether or not it involves a third
party).
(iv) Survival of Indemnification Provisions. The
--------------------------------------
indemnification provision set forth in this Paragraph 14(c) shall
survive the Close of Escrow regardless of any investigation made by
any of the parties hereto; provided, however, that the parties'
respective indemnification obligations arising out of any breach of
any covenant or warranty, or the inaccuracy of any representation,
made by a party in or pursuant to this Agreement shall survive only
with respect to claims made against the Indemnitor within the period
that the underlying covenant, warranty or representation survives
pursuant to this Agreement.
-26-
15. Remedies
--------
(a) LIQUIDATED DAMAGES. SUBJECT TO BUYER'S RIGHT TO HAVE THE
------------------
DEPOSIT RETURNED AS SET FORTH IN PARAGRAPH 3(a) OF THIS AGREEMENT, IF THE
CLOSE OF ESCROW FAILS TO OCCUR FOR ANY REASON OTHER THAN SELLER'S DEFAULT
HEREUNDER, THEN ESCROW HOLDER MAY BE INSTRUCTED BY SELLER TO CANCEL THE
ESCROW AND SELLER SHALL THEREUPON BE RELEASED FROM ITS OBLIGATIONS
HEREUNDER. BUYER AND SELLER AGREE THAT BASED UPON THE CIRCUMSTANCES NOW
EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT
TO ESTABLISH SELLER'S DAMAGE BY REASON OF THE FAILURE OF ESCROW TO CLOSE AS
AFORESAID. ACCORDINGLY, BUYER AND SELLER AGREE THAT IT WOULD BE REASONABLE
AT SUCH TIME TO AWARD SELLER "LIQUIDATED DAMAGES" IN THE AMOUNT OF THE
DEPOSIT AND OWNERSHIP AND POSSESSION OF THE PLANS AND REPORTS PURSUANT TO
PARAGRAPH 24 BELOW.
SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING AMOUNT
AND THE PLANS AND REPORTS ARE REASONABLE AS LIQUIDATED DAMAGES AND SHALL BE
SELLER'S SOLE AND EXCLUSIVE REMEDY IN LIEU OF ANY OTHER RELIEF, RIGHT OR
REMEDY, AT LAW OR IN EQUITY, TO WHICH SELLER MIGHT OTHERWISE BE ENTITLED BY
REASON OF THE FAILURE OF ESCROW TO CLOSE UNDER THIS AGREEMENT.
ACCORDINGLY, SUBJECT TO PARAGRAPH 3(a) OF THIS AGREEMENT, IF THE CLOSE OF
ESCROW FAILS TO OCCUR FOR ANY REASON OTHER THAN SELLER'S DEFAULT, SELLER
MAY INSTRUCT THE ESCROW HOLDER TO CANCEL THE ESCROW, WHEREUPON SELLER SHALL
BE RELIEVED FROM ALL LIABILITY HEREUNDER, AND, PROMPTLY FOLLOWING ESCROW
HOLDER'S RECEIPT OF SUCH INSTRUCTION, ESCROW HOLDER SHALL (i) CANCEL THE
ESCROW, AND (ii) DISBURSE TO SELLER THE DEPOSIT. WITHOUT LIMITING THE
FOREGOING PROVISIONS OF THIS PARAGRAPH, SELLER WAIVES ANY AND ALL RIGHTS
WHICH SELLER OTHERWISE WOULD HAVE HAD UNDER CALIFORNIA CIVIL CODE SECTION
3389, OR OTHERWISE, TO SPECIFICALLY ENFORCE THIS AGREEMENT. NOTWITHSTANDING
ANYTHING TO THE CONTRARY SET FORTH HEREIN, IN NO EVENT SHALL BUYER'S
OBLIGATION TO INDEMNIFY SELLER PURSUANT TO PARAGRAPH 7(a)(iii) ABOVE BE
LIMITED IN ANY MANNER. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ
AND UNDERSTAND THE PROVISIONS OF THIS PARAGRAPH 15 AND BY THEIR INITIALS
IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
Seller's Initials Buyer's Initials
----------------- ----------------
-27-
(b) Buyer's Remedies. Buyer and Seller hereby agree that, if the
----------------
sale contemplated by this Agreement is not completed as herein provided by
reason of any default of Seller hereunder, then in addition to the return
of the Deposit and the right to retain the Plans and Reports, Buyer shall
be entitled to pursue any remedy available under this Agreement or
available at law or in equity, including, without limitation, the right to
specifically enforce this Agreement.
16. Damage or Condemnation Prior to Closing
---------------------------------------
(a) Material Damage. In the event that prior to the Close of
---------------
Escrow, the Real Property, or a material portion thereof, is destroyed or
materially damaged, Buyer shall have the right, exercisable by giving
written notice to Seller within five (5) days after receipt of written
notice of such damage or destruction, either (i) to terminate this
Agreement, in which event the Deposit and all interest accrued thereon
shall be immediately returned to Buyer, any other money or documents in
Escrow shall be returned to the party depositing the same, and neither
party hereto shall have any further rights or obligations hereunder, or
(ii) to accept the Real Property in its then condition and to proceed with
the consummation of the transaction contemplated by this Agreement with an
abatement or reduction in the Purchase Price equal to the amount of the
deductible for the applicable insurance coverage, and to receive an
assignment of all of Seller's rights to any insurance proceeds payable by
reason of such damage or destruction. If Buyer elects to proceed under
clause (ii) above, Seller shall not compromise, settle or adjust any claims
to such proceeds without Buyer's prior written consent, which consent may
be withheld in Buyer's sole and absolute discretion. For purposes of this
Paragraph 16 destruction or damage of a "material portion" of the Real
Property shall mean that the cost to correct such damage or destruction
(for all of the Real Property) may exceed $642,000, as determined by Buyer
and Seller in their reasonable discretion.
(b) Non-Material Damage. In the event that prior to the Close of
-------------------
Escrow there is any non-material damage to the Real Property, or any part
thereof, Buyer shall accept the Real Property in its then condition with an
abatement or reduction in the Purchase Price equal to the amount of the
deductible for the applicable insurance coverage and proceed with the
transaction contemplated by this Agreement, in which event Buyer shall be
entitled to an assignment of all of Seller's rights to any insurance
proceeds payable by reason of such damage or destruction. Seller shall not
compromise, settle or adjust any claims to such proceeds without Buyer's
prior written consent, which consent may be withheld in Buyer's sole and
absolute discretion.
(c) Material Condemnation. In the event that prior to the Close
---------------------
of Escrow, all or any material portion of the Real Property is subject to a
taking by a public or governmental authority, Buyer shall have the right,
exercisable by giving written notice to Seller within two (2) days after
receiving written notice of such taking, either (i) to terminate this
Agreement, in which event the Deposit and all interest accrued thereon
shall be immediately returned to Buyer, any other money or documents in
Escrow shall be returned to the party depositing the same, and neither
party hereto shall have any further
-28-
rights or obligations hereunder, or (ii) to accept the Real Property in its
then condition, without a reduction in the Purchase Price, and to receive
an assignment of all of Seller's rights to any condemnation award or
proceeds payable by reason of such taking. If Buyer elects to proceed under
clause (ii) above, Seller shall not compromise, settle or adjust any claims
to such award without Buyer's prior written consent, which consent may be
withheld in Buyer's sole and absolute discretion. For the purposes of this
Paragraph 16, a taking, as set forth herein, shall be deemed to be of a
"material portion" of the Real Property if the value of the affected Real
Property, or the decrease in the value of the remaining Real Property (for
all of the Real Property), is in excess of $642,000 as determined by Buyer
and Seller in their reasonable discretion.
(d) Non-Material Condemnation. In the event that prior to the
-------------------------
Close of Escrow, any non-material portion of the Real Property is subject
to a taking by any public or governmental authority, Buyer shall accept the
Real Property in its then condition and proceed with the consummation of
the transaction contemplated by this Agreement, in which event Buyer shall
be entitled to an assignment of all of Seller's rights to any award or
proceeds payable in connection with such taking. In the event of any such
non-material taking, Seller shall not compromise, settle or adjust any
claims to such award without Buyer's prior written consent, which consent
may be withheld in Buyer's sole and absolute discretion.
17. Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing, and shall be either (a) personally
delivered, (b) sent by overnight mail for next business day delivery (Federal
Express or the like), (c) sent by registered or certified mail, postage prepaid,
return receipt requested, or (d) sent by fax; and shall be deemed received upon
the earlier of (i) if personally delivered on a business day, the date of
delivery to the address of the person to receive such notice, (ii) if sent by
overnight mail for next business day delivery, the business day following its
deposit in such overnight mail facility, (iii) if mailed, two (2) business days
after the date of posting by the United States post office, or (iv) if given by
fax on a business day, the next business day when sent with confirmation of
receipt. Any notice, request, demand, direction or other communication sent by
fax must be confirmed within forty-eight (48) hours by letter mailed or
delivered in accordance with the foregoing.
To Buyer: Xxxxxxxx Properties Acquisition Partners, L.P.
000 Xxxx 000xx
Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Phone No. (000) 000-0000
Fax No. (000) 000-0000
-29-
With a copy to: Allen, Matkins, Xxxx, Xxxxxx & Xxxxxxx LLP
00000 Xxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. XxXxxxxxxxx, Esq.
Phone No. (000) 000-0000
Fax No. (000) 000-0000
To Seller: Jacob and Xxxxxxxx Xxxxxxx, Trustees
0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Phone No. (000) 000-0000
Fax No. (000) 000-0000
With a copy to: Newport National Corporation
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx
Phone No. (000) 000-0000
Fax No. (000) 000-0000
With a copy to: Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 X. Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Phone No. (000) 000-0000
Fax No. (000) 000-0000
To Escrow Holder: Chicago Title Insurance Company
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx Xxxxxxx
Phone No. (000) 000-0000
Fax No. (972) 404 -8731
Notice of change of address shall be given by written notice in the manner
detailed in this Paragraph. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to constitute receipt of the notice, demand, request or
communication sent.
18. Brokers. Except for Newport National Corporation ("NNC"), Seller
-------
and Buyer represent to each other that no broker or other agent was involved in
the transaction contemplated by this Agreement. Seller will pay NNC a finders
fee pursuant to a separate agreement. If any other claims for broker's or
finders' fees or commissions for the consummation of this Agreement arise, then
Buyer hereby agrees to indemnify, protect, save harmless and
-30-
defend Seller from and against such claims if they are based upon any statement,
representation or agreement made by Buyer, and Seller hereby agrees to
indemnify, protect, save harmless and defend Buyer from and against such claims
if they are based upon any statement, representation or agreement made by
Seller.
19. Legal Fees. In the event of the bringing of any action or suit by
----------
a party hereto against another party hereunder by reason of any breach of any of
the covenants or agreements or any inaccuracies in any of the representations
and warranties on the part of the other party arising out of this Agreement,
then in that event, the prevailing party in such action or dispute, whether by
final judgment or out of court settlement, shall be entitled to have and recover
of and from the other party all costs and expenses of suit, including reasonable
attorneys' fees. Any judgment or order entered in any final judgment shall
contain a specific provision providing for the recovery of all costs and
expenses of suit, including reasonable attorneys' fees (collectively "Costs")
incurred in enforcing, perfecting and executing such judgment. For the purposes
of this paragraph, Costs shall include, without limitation, attorneys' fees,
costs and expenses incurred in (i) post-judgment motions, (ii) contempt
proceeding, (iii) garnishment, levy, and debtor and third party examination,
(iv) discovery, and (v) bankruptcy litigation.
20. Assignment. Seller may assign, transfer or convey its rights or
----------
obligations under this Agreement, provided that its assignee assumes in writing
the obligations of Seller hereunder including the obligation to distribute Units
to Seller. Buyer, without being relieved of liability hereunder and without
obtaining Seller's consent, shall have the right to assign its rights and
obligations hereunder to any affiliate of Buyer.
21. Miscellaneous.
-------------
(a) Survival of Covenants. The covenants, representations and
---------------------
warranties of both Buyer and Seller set forth in this Agreement shall
survive the recordation of the Grant Deed and the Close of Escrow.
(b) Required Actions of Buyer and Seller. Buyer and Seller agree
------------------------------------
to execute such instruments and documents and to diligently undertake such
actions as may be required in order to consummate the purchase and sale
herein contemplated and shall use their commercially reasonable efforts to
accomplish the Close of Escrow in accordance with the provisions hereof.
(c) Computation of Time Periods. If any date or time period
---------------------------
provided for in this Agreement is or ends on a Saturday, Sunday or federal,
state or legal holiday, then such date shall automatically be extended
through the next day which is not a Saturday, Sunday or federal, state or
legal holiday.
(d) Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute but one and the same instrument.
-31-
(e) Captions. Any captions to, or headings of, the paragraphs or
--------
subparagraphs of this Agreement are solely for the convenience of the
parties hereto, are not a part of this Agreement, and shall not be used for
the interpretation or determination of the validity of this Agreement or
any provision hereof.
(f) No Obligations to Third Parties. Except as otherwise
-------------------------------
expressly provided herein, the execution and delivery of this Agreement
shall not be deemed to confer any rights upon, nor obligate any of the
parties hereto, to any person or entity other than the parties hereto.
(g) Exhibits. The Exhibits attached hereto are hereby
--------
incorporated herein by this reference for all purposes.
(h) Amendment to this Agreement. The terms of this Agreement may
---------------------------
not be modified or amended except by an instrument in writing executed by
each of the parties hereto.
(i) Waiver. The waiver or failure to enforce any provision of
------
this Agreement shall not operate as a waiver of any future breach of any
such provision or any other provision hereof.
(j) Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of California.
(k) Fees and Other Expenses. Except as otherwise provided
-----------------------
herein, each of the parties hereto shall pay its own fees and expenses in
connection with this Agreement.
(l) Entire Agreement. This Agreement supersedes any prior
----------------
agreements, negotiations and communications, oral or written, and contains
the entire agreement between Buyer and Seller as to the subject matter
hereof. No subsequent agreement, representation, or promise made by either
party hereto, or by or to an employee, officer, agent or representative of
either party hereto shall be of any effect unless it is in writing and
executed by the party to be bound thereby.
(m) Successors and Assigns. Subject to the restrictions set
----------------------
forth in Paragraph 20 hereof, this Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the parties
hereto.
(n) Construction. The parties hereto hereby acknowledge and
------------
agree that (i) each party hereto is of equal bargaining strength, (ii) each
such party has actively participated in the drafting, preparation and
negotiation of this Agreement, (iii) each such party has consulted with
such party's own, independent counsel, and such other professional advisors
as such party has deemed appropriate, relative to any and all matters
contemplated under this Agreement, (iv) each such party and such party's
counsel and advisors have reviewed this Agreement, (v) each such party has
agreed to enter into this
-32-
Agreement following such review and the rendering of such advice, and (vi)
any rule of construction to the effect that ambiguities are to be resolved
against the drafting parties shall not apply in the interpretation of this
Agreement, or any portions hereof, or any amendments hereto.
(o) Joint and Several Liability. Each of the Sellers shall be
---------------------------
jointly and severally liable for the obligations of Seller under this
Agreement.
(p) Confidentiality. Buyer and Seller acknowledge that it is in
---------------
the best interest of Buyer and Seller to maintain the confidentiality of
the terms and provisions of this Agreement and the materials relating
hereto. Except as otherwise provided herein, neither party shall disclose
any of the terms or provisions of this Agreement to any third party other
than such party's contractors, agents, and prospective and actual investors
and lenders of either party, nor shall either party issue any press
releases or make any public statements relating to this Agreement until
after the Close of Escrow except (i) to the extent required by any
applicable statute, law, regulation, governmental authority or court order,
or (ii) in connection with any arbitration or litigation that may arise
between the parties in connection with the transaction contemplated by this
Agreement.
22. Seller's Activities. Seller acknowledges that Buyer has incurred
-------------------
costs and expenses in negotiating and entering into this Agreement. Accordingly,
during the Escrow period Seller shall not conduct negotiations or provide
information regarding the Property or enter into any agreement with respect to
the sale, exchange or transfer of the Property, with any party other than Buyer.
23. Seller's Exchange. At its option, Seller may structure its
-----------------
disposition of the Property as a tax-deferred exchange ("Exchange") pursuant to
Section 1031 of the Internal Revenue Code. If Seller elects to undertake an
Exchange, the following terms shall apply:
(a) Seller, at its option, may assign its rights under this
Agreement to an exchange accommodator ("Accommodator") selected by Seller,
and Seller may add the Accommodator as an additional party to the Escrow;
(b) Buyer agrees to cooperate with Seller in connection with the
Exchange, including the execution of documents (including, but not limited
to, escrow instructions and amendments to escrow instructions) therefor,
but Buyer shall have no obligation to take title to any property in
connection with the Exchange;
(c) Buyer shall in no way be obligated to pay any escrow costs,
brokerage commissions, title charges, survey costs, recording costs or
other charges incurred with respect to Seller's replacement property in the
Exchange;
(d) The Close of Escrow shall not be contingent or otherwise
subject to the consummation of the Exchange;
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(e) Escrow shall timely close in accordance with the terms of
this Agreement notwithstanding any failure, for any reason, of the
consummation of the Exchange;
(f) Buyer shall have no responsibility or liability on account of
the Exchange to any third party involved in the Exchange;
(g) Buyer shall not be required to make any representations or
warranties nor assume any obligations, nor spend any out-of-pocket sum in
connection with the Exchange;
(h) All representation, warranties, covenants and indemnification
obligations of Seller to Buyer whether set forth in this Agreement or
otherwise existing at law or at equity, shall inure to the benefit of
Buyer, notwithstanding the Exchange;
(i) All representations, warranties, covenants and
indemnification obligations of Buyer to Seller whether set forth in this
Agreement or otherwise existing at law or at equity, shall inure to the
benefit of Seller, notwithstanding the Exchange;
(j) Seller shall indemnify, protect, defend and hold Buyer
harmless from and against any and all causes of action, claims, demands,
liabilities, costs and expenses, including actual attorneys' fees and
costs, incurred by Buyer in connection with any third party claims which
may arise as a result of or in connection with the Exchange.
Buyer makes absolutely no representations or warranties of any kind or nature
(express or implied) that tax-deferred exchange treatment is available to Seller
with respect to the Exchange, or that such a transaction will qualify in any
respect for such treatment, and Buyer shall incur no liability if the Exchange
fails to qualify for the tax-deferred treatment intended by Seller. If Buyer
defaults under the terms of this Agreement, then Buyer will be liable to Seller
for only those damages that would have occurred if Seller had not included the
Property in any such exchange. Specifically excluded from those damages for
which Buyer would be liable, but not by way of limitation, are any consequential
damages Seller would incur because of a loss of tax advantages, tax deferment or
other detrimental tax impacts Buyer's default would cause to Seller. Seller
hereby acknowledges and represents to Buyer that Seller is relying solely and
entirely upon the advice of Seller's own consultants with respect to any and all
aspects of any such exchange. Seller agrees to indemnify, protect, defend (with
counsel chosen by Buyer), and hold Buyer harmless from and against any and all
losses, damages, liabilities, expenses, causes of action, penalties, judgments
and costs including, without limitation, actual attorneys' fees and costs, which
result from the failure of any such exchange to qualify for tax-deferred
treatment. In no event whatsoever shall the obligations of Seller under this
Agreement be contingent upon this transaction being included as part of any such
tax-deferred exchange for Seller.
24. Plans and Reports. If, for any reason whatsoever, Buyer
-----------------
terminates this Agreement, Seller may elect to have Buyer assign to Seller all
of Buyer' rights, title and interests to feasibility studies, including audits
prepared by Coopers & Xxxxxxx, Buyer's financial models, analyses, economic
reports, marketing studies, maps, surveys, environmental reports, civil and
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soil engineering reports, site plans, plans and specifications relating to the
Improvements on all of the Properties and any and all other plans, reports and
other documents or work relating to any and all of the Properties including but
not limited to, Latitude 33's ALTA surveys of the Property, and the physical
inspection reports and environmental reports prepared by Building Analytics
prepared by or for Buyer, including all land use and other governmental
approvals and applications therefor ("Plans and Reports"), completed to Buyer's
reasonable satisfaction, with all costs and fees relating thereto fully paid
(i.e., at no cost or expense to Seller). Seller agrees that Buyer makes no
warranty to Seller as to the accuracy of such Plans and Reports, and Seller
agrees to indemnify Buyer for all costs, expenses, claims, liabilities, losses,
damages, arising out of or in connection with Seller, its agents or successors
using or relying on the Plans and Reports if Seller elects to have Buyer assign
them to Seller. Buyer agrees to deliver any and all such Plans and Reports, paid
for in full, to Seller within three (3) days after Buyer's receipt of Seller's
written notice regarding Seller's election to have Buyer deliver the same. Buyer
agrees to execute any reasonable assignment documents prepared by Seller within
five (5) days of Seller's request. In addition, Buyer agrees to return any and
all of the Documents and Materials to Seller within five (5) days of
termination.
25. Definitions. For the purposes of this Agreement, the following
-----------
definitions shall apply:
(a) "Company" means Xxxxxxxx Properties Trust, a Maryland real
estate investment trust.
(b) "OP General Partner" means Xxxxxxxx Properties I, Inc., a
Delaware corporation.
(c) "Operating Partnership" means Xxxxxxxx Properties Acquisition
Partners, L.P., a Delaware limited partnership.
(d) "Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of Xxxxxxxx Properties Acquisition
Partners, L.P. as the same may be amended from time to time.
(e) "Unit Recipient" means a Seller or a partner or member of
Seller who will receive Units pursuant to Paragraph 3 hereof.
(f) "Units" means "Seller Units" in the Operating Partnership, as
defined and described in the Operating Partnership's Partnership Agreement.
(g) "Registration Rights Agreement" means the agreement in the
form of Exhibit "P" attached hereto and incorporated herein.
-----------
26. Cross Default. Seller and Buyer each acknowledge and agree that
-------------
each party hereto would not have entered into this Agreement without the other
party also entering into the Other Agreement (as defined in Paragraph 7(a)(ix)
hereof). Notwithstanding anything in this Agreement to the contrary, if either
party is in default under this Agreement (the "Defaulting
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Party"), the Defaulting Party shall be deemed to be in default under the Other
Agreement. In such event, the non-defaulting party may elect, in its sole
discretion, to treat the Defaulting Party as being in default under the Other
Agreement and shall be entitled to exercise all of its rights and remedies under
the Other Agreement in the event of a default under the Other Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
"BUYER" XXXXXXXX PROPERTIES ACQUISITION
PARTNERS, L.P., a Delaware limited
partnership
By: XXXXXXXX PROPERTIES I, INC., a
Delaware corporation, its sole
general partner
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Name:
----------------------------
Title:
---------------------------
"SELLER" XXXXX XXXXXXX AND XXXXXXXX
XXXXXXX, Co-Trustees of the Xxxxx Xxxxxxx
and Xxxxxxxx Xxxxxxx Declaration of Trust
dated May 11, 1977
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Xxxxx Xxxxxxx, Co-Trustee
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------------
Xxxxxxxx Xxxxxxx, Co-Trustee
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JOINDER BY COMPANY AND OP GENERAL PARTNER
-----------------------------------------
The undersigned join in this agreement to evidence their consent to
the provisions hereof and to confirm the representatives, warranties and
certifications contained in this agreement which are expressly stated to be made
by them by their joinder.
XXXXXXXX PROPERTIES TRUST,
a Maryland Real Estate Investment Trust
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXXX PROPERTIES I INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------------
Name:
-------------------------------
Title:
------------------------------
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Acceptance by Escrow Holder:
Chicago Title Insurance Company hereby acknowledges that it has
received a fully executed original or original executed counterparts of the
foregoing Agreement of Purchase and Sale and Joint Escrow Instructions and
agrees to act as Escrow Holder thereunder and to be bound by and strictly
perform the terms thereof as such terms apply to Escrow Holder.
Dated: February 5, 1998 Chicago Title Insurance Company
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Its: Authorized Agent
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