Exhibit 10.7
AGREEMENT FOR PURCHASE AND SALE
OF REAL PROPERTY AND ESCROW INSTRUCTIONS
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW
INSTRUCTIONS ("Agreement") between GREIT- HAWTHORNE PLAZA, LP, A VIRGINIA
LIMITED PARTNERSHIP, ("Seller"), and TMG PARTNERS, A CALIFORNIA CORPORATION
("Buyer"), dated June 26, 2006 (for reference purposes only) is made and entered
into as of the later of (i) the date this Agreement is executed by Seller and
delivered to Buyer, or (ii) the date this Agreement is executed by Buyer and
delivered to Seller (the "Effective Date"), with reference to the following
facts:
A. Seller owns certain real property located in the City and County of
San Francisco, State of California and more specifically described
in Exhibit A attached hereto (the "Land"), commonly known as 75
Hawthorne and 95 Hawthorne, San Francisco, California, and also
sometimes referred to as Hawthorne Plaza, and such other assets, as
the same are herein described.
B. Subject to the terms and conditions in this Agreement, Seller
desires to sell the Property (as defined below) to Buyer and Buyer
desires to purchase the Property from Seller on terms and conditions
further set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, premises and
agreements herein contained, the parties hereto do hereby agree as follows:
1. Purchase and Sale.
The purchase and sale includes, and at Closing (hereinafter defined)
Seller shall sell, assign, grant and transfer to Buyer, all of Seller's
right and title, estate interest in and to all of the following
(hereinafter sometimes collectively, the "Property"):
1.1 The Land, described on Exhibit A attached hereto, together with all
structures, buildings, improvements, machinery, fixtures, and
equipment affixed or attached to the Land and all easements and
rights appurtenant thereto (collectively, the "Improvements"),
including: (i) all easements, privileges and rights belonging or in
any way appurtenant to the Land, (ii) any land lying in the bed of
any street, road, alley or right-of-way, open or closed, adjacent to
or abutting the Land, and (iii) any and all air rights, subsurface
rights, development rights, and water rights belonging to or in
anywise appertaining to the Land (all of the foregoing being
collectively referred to herein as the "Real Property");
1.2 All leases, licenses, tenancy and other occupancy agreements (the
"Leases"), including associated amendments, with all persons
("Tenants") leasing the Real Property or any part thereof as of the
Effective Date, and any other Leases pertaining to the Real Property
or any portion thereof that are entered into by
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Seller after the date of this Agreement and prior to the Closing in
accordance with the terms of this Agreement, in each case to the
extent approved by Buyer (or deemed approved by Buyer) in accordance
with this Agreement, together with all security deposits, other
deposits held in connection with the Leases, and all of Seller's
right, title and interest in and to all guarantees, letters of
credit and other similar credit enhancements providing additional
security for such Leases;
1.3 All tangible and intangible personal property owned by Seller
located on or used in connection with the Real Property, including,
specifically, without limitation, all sculptures, paintings and
other artwork, all equipment, furniture, tools and supplies, all
plans and specifications and other architectural and engineering
drawings, if any, with respect to the Land and the Improvements, and
any other personal property and all related intangibles as are owned
by Seller and currently located in, on or about or are used for the
operation, maintenance, administration or repair of the Real
Property, including Seller's interest, if any, in the common name of
the Real Property (the "Personal Property");
1.4 All service, maintenance, construction and other contracts,
agreements, warranties and guaranties relating to the operation of
the Property as of the Effective Date, to the extent assignable
(excluding Seller's existing property management contract with
Triple Net Properties Realty Inc.), and any other service,
maintenance, construction and other contracts, agreements,
warranties and guaranties pertaining to the Property that are
entered into by Seller after the date of this Agreement and prior to
the Closing in accordance with the terms of this Agreement, in each
case to the extent approved by Buyer in accordance with this
Agreement (collectively, the "Contracts") provided, however, any
Contracts not so approved by Buyer shall be terminated by Seller on
or before the Closing; and
1.5 To the extent transferable, all building permits, certificates of
occupancy and other certificates, permits, consents, authorizations,
variances or waivers, dedications, subdivision maps, licenses and
approvals from any governmental or quasi-governmental agency,
department, board, commission, bureau or other entity or
instrumentality relating to the Property (the "Permits").
2. Purchase Price.
Subject to the charges, prorations and other adjustments set forth in this
Agreement, the total purchase price of the Property shall be One Hundred
Twenty Seven Million Dollars ($127,000,000.00) ("Purchase Price") payable
as follows:
2.1 Deposits/Further Payments.
2.1.1 No later than two (2) business days after the Effective Date,
Buyer shall deposit into Escrow the amount of Two Million
Dollars ($2,000,000.00) (the "Initial Deposit"), in the form
of a wire transfer payable to an escrow
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to be established with Chicago Title Insurance Company (the
"Escrow Holder") at Xxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX
00000 (Attn: Xxxx Xxxxx). The Initial Deposit shall be fully
refundable to Buyer until 5:00 p.m. (Pacific Daylight Time) on
the last day of the Inspection Period (the "Due Diligence
Expiration Date").
2.1.2 Provided that Buyer has not earlier elected to terminate this
Agreement as otherwise permitted by this Agreement on or
before the Due Diligence Expiration Date, Buyer shall deposit
into Escrow the additional amount of Two Million Dollars
($2,000,000.00) (the "Additional Deposit") no later than 5:00
p.m. (Pacific Daylight Time) on the Due Diligence Expiration
Date. As used in this Agreement, the term "Deposit" means the
Initial Deposit, the Additional Deposit and all amounts which,
at the time in question, shall have been deposited into escrow
or paid directly to Seller as deposits by Buyer.
2.1.3 At the Closing, the Deposit shall be applied and credited
toward the payment of the Purchase Price. If the Closing does
not occur for any reason other than a material default by
Buyer, the Deposit will be returned to Buyer by Escrow Holder.
If the Closing does not occur as a result of material default
by Buyer hereunder and this Agreement is terminated in
accordance with this Agreement, the Deposit shall be paid to
Seller as liquidated damages as described in Section 14.2 of
this Agreement.
2.1.4 Escrow Holder shall place the Deposit into an interest-bearing
money market account at a bank or other financial institution
reasonably satisfactory to Buyer, and interest thereon shall
be credited to Buyer's account.
2.2 On or before Closing, Buyer shall deposit into Escrow the balance of
the Purchase Price, subject to the closing adjustments, credits and
prorations contemplated by this Agreement, by wire transfer payable
to Escrow Holder.
3. Title to Property.
During the Inspection Period (hereafter defined), Buyer shall review and
approve the Title Documents (hereinafter defined) and the Survey
(hereinafter defined). If the Title Documents or Survey reflect or
disclose any defect, exception or other matter affecting the Property
("Title Defects") that is unacceptable to Buyer, then prior to the
expiration of the Inspection Period, Buyer shall provide Seller with
written notice of Buyer's objections. Seller may, at its sole option,
elect to cure or remove the objections made by Buyer provided that Seller
provides written notice to Buyer before the expiration of the Inspection
Period that Seller intends to cure Buyer's title objections before the
Closing. Should Seller elect to attempt to cure or remove the objection,
then Seller shall cause removal of such disapproved exceptions from title
before Closing, taking such action, at
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Seller's sole cost and expense to do so, and it shall be a condition
precedent to Buyer's obligation to acquire the Property that Seller cures
such title objection prior to the Closing, and only the Title Defects to
which Buyer did not object shall be deemed to be "Permitted Exceptions".
If Seller does not provide written notice to Buyer before the expiration
of the Inspection Period that Seller intends to cure Buyer's title
objections, Seller shall be deemed to have elected not to cure or remove
Buyer's title objections, and Buyer shall be entitled, as Buyer's sole and
exclusive remedy, either to (i) terminate this Agreement and obtain a
refund of the Deposit by providing written notice of termination to Seller
before the end of the Inspection Period and returning the Due Diligence
Items (hereinafter defined) or (ii) waive the objections and close this
transaction as otherwise contemplated herein, in which case all matters
shown on the Survey and all matters described in the Title Report, except
for monetary liens for indebtedness of the Seller and any other matters
the Seller has agreed to cure in writing, shall be deemed "Permitted
Exceptions."
4. Due Diligence Items.
4.1 Seller shall deliver to Buyer each of the following within three (3)
business days of the Effective Date (together with the items
described in Section 4.2, collectively, the "Due Diligence items"):
4.1.1 Any existing survey of the Property, in Seller's possession
(the "Survey");
4.1.2 A current preliminary title report or title commitment (the
"Title Report") for the issuance of a standard coverage
owner's policy of title insurance, with standard provisions
and exceptions (the "Title Policy") to Buyer from the Escrow
Holder, together with copies of all documents constituting
exceptions to the title as reflected in the Title Report
(collectively referred to hereinafter as the "Title
Documents");
4.1.3 A list of all Leases and a list of all Contracts, including
service contracts, warranties, management, maintenance,
leasing commission or other agreements affecting the Property,
if any, together with copies of each Lease and each Contract;
4.1.4 True and correct copies of the real estate and personal
property tax statements covering the Property or any part
thereof for each of the two (2) years prior to the current
year and, if available, for the current year;
4.1.5 A schedule of all current or pending litigation with respect
to the Property or any part, thereof, if any;
4.1.6 Operating statements for the most recent two full calendar
years and monthly operating statements for the calendar year
to date;
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4.1.7 An inventory of all personal property located on the Property,
used in the maintenance of the Property or stored for future
use at the Property and an inventory of all furniture and
appliances used in the units, if any.
4.1.8 A rent roll of the Property in the form prepared by the
Seller's property manager in the normal course of Seller's
business (provided, however, that Seller shall not be deemed
to have made any representation or warranty whatsoever with
regard to the rent roll, except as provided in Section 8.1.1
of this Agreement),
4.2 Seller shall make the following available for inspection and copying
by Buyer during ordinary business hours at Seller's management
office in San Francisco, California, within three (3) business days
after the Effective Date (excepting for items described in Section
4.2.4, which shall be provided by Seller as soon as reasonably
practicable following Buyer's written request therefore):
4.2.1 All site plans, leasing plans, as-built plans, drawings,
environmental, mechanical, electrical, structural, soils and
similar reports and/or audits and plans and specifications
relative to the Property in the possession of Seller, if any;
4.2.2 The tenant files, books and records relating to the ownership
and operation of the Property;
4.2.3 All permits, licenses, approvals and other entitlements
relating to the Property in the possession of Seller; and
4.2.4. Such other material records and documentation relating to the
Property in Seller's possession, excluding Seller's
confidential materials, as Buyer may reasonably request.
5. Inspections; Tenant Meetings
5.1 Buyer and its authorized consultants, contractors, representatives
and agents shall have a temporary non-exclusive license to enter and
conduct non-invasive feasibility, environmental, and physical
studies, surveys and inspections of the Property that Buyer may deem
necessary or advisable (the "Inspections") at any time during the
Inspection Period, on the terms set forth in this Article 5. Buyer
shall not conduct invasive testing of any kind, including without
limitation, "Phase II" environmental testing without Seller's
consent. Buyer's right to conduct the Inspections shall be subject
to rights of Tenants and shall be subject to such conditions as may
be reasonably imposed by the Seller in order to avoid disruption at
the Property.
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5.2 Buyer must arrange all Inspections of the Property with Seller at
least two (2) business days in advance of any Inspections. Buyer and
its agents shall maintain equipment and other materials in an
orderly manner while they are located on the Property and to
maintain them in locations specified by Seller. Buyer agrees to
remove all debris and trash resulting from the Inspections on a
daily basis and to remove all equipment and other materials used by
Buyer or its agents as soon as the activity for which such equipment
and other materials are used is completed. Buyer and its agents
shall take all appropriate measures for the safety of persons and
property on the Property and shall comply with all applicable legal
requirements. Buyer shall restore any damage to the Property
resulting from the Inspections including but not limited to repair
of surface openings resulting from tests. Buyer shall promptly
provide to Seller a copy of all reports and test results prepared or
furnished in connection with the Inspections.
5.3 In the event that the Inspections show any fact, matter or condition
to exist with respect to the Property that is unacceptable to Buyer,
in Buyer's sole subjective discretion, then Buyer shall be entitled,
as its sole and exclusive remedy, to (1) terminate this Agreement
and obtain a refund of the Deposit, or (2) waive the objection, and
close the transaction as otherwise contemplated herein. Buyer agrees
to promptly discharge any liens that may be imposed against the
Property as a result of the Inspections and to defend, indemnify and
hold Seller harmless from all, claims, suits, losses, costs,
expenses (including without limitation court costs and attorneys'
fees), liabilities, judgments and damages incurred by Seller as a
result of any Inspections.
5.4 Buyer shall indemnify, save and hold Seller and Seller's officers,
agents, employees, directors, trustees, invitees, successors, and
assigns (collectively "Indemnitees") harmless against all losses,
costs, expenses, liabilities, claims, litigation, demands,
proceedings and damages (including but not limited to attorney's
fees) suffered or incurred by Seller or any such Indemnitees arising
out of and limited to the Inspections, provided that Buyer shall not
incur any liability due to its discovery, without exacerbation of
the condition of any Hazardous Materials or other circumstances at
the Property. Buyer waives any claims against Seller arising out of
the Inspections or this Agreement except to the extent such claims
arise from Seller's negligence or willful misconduct. Buyer hereby
assumes all responsibility for claims against Seller by the
contractors, subcontractors, employees, and agents of Buyer except
to the extent such claims arise from Seller's negligence or willful
misconduct. The obligations of Buyer described in Section 5.4 shall
survive the Closing or any termination of this Agreement.
5.5 Buyer shall, during the term of this Agreement and at all times
during which access is available to it, require its subcontractors
and agents, to maintain insurance, in form and substance reasonably
satisfactory to Seller, with insurance companies acceptable to
Seller, the following insurance: Comprehensive General
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Liability or Commercial General Liability Insurance, with limits of
not less than One Million Dollars ($1,000,000) combined single limit
per occurrence and not less than Two Million Dollars ($2,000,000) on
a general aggregate basis, for bodily injury, death and property
damage. Each policy of insurance shall name Seller as an additional
insured. Further, each policy of insurance shall state that such
policy is primary and noncontributing with any insurance carried by
Seller. Such policy shall contain a provision that the naming of the
additional insured shall not negate any right the additional insured
would have had as a claimant under the policy if not so named and
shall contain severability of interest and cross-liability clauses.
A certificate, together with any endorsements to the policy required
to evidence the coverage which is to be obtained hereunder, shall be
delivered to Seller prior to entry on the Property. The certificate
shall expressly provide that no less than thirty (30) days prior
written notice shall be given Seller in the event of any material
alteration to or cancellation of the coverages evidenced by said
certificate. A renewal certificate for each of the policies required
in this Section shall be delivered to Seller not less than thirty
(30) days prior to the expiration date of the term of such policy.
Any policies required by the provisions of this Section may be made
a part of a blanket policy of insurance with a "per project, per
location endorsement" so long as such blanket policy contains all of
the provisions required herein and does not reduce the coverage,
impair the rights of the other party to this Agreement or negate the
requirements of this Agreement.
5.6 During the course of its performance of the Inspections, Buyer will
acquire knowledge concerning the Property or Seller, or knowledge of
other matters of a sensitive business nature (collectively,
"Privileged Information"). Except as described below, neither Buyer
nor its agents shall disclose to any third party, publicize or
suffer or permit any of their respective employees to so disclose or
publicize any such Privileged Information, other than to
consultants, attorneys and agents as necessary for the Buyer's
inspection and analysis of the Property, and Buyer's potential
lenders and equity investors. In the event that Buyer believes in
good faith that it is required by any legal requirement to disclose
any such Privileged Information, then Buyer shall immediately notify
Seller of such belief and the reasons for such belief. If Seller
within 10 days after receipt of such notice, advises the party that
sent the notice that Seller shall itself disclose the information,
then Buyer shall not make such disclosure (unless either such party
reasonably believes that it must disclose such information by law).
If Buyer reasonably believes that such disclosure is required to be
made in less than the 10-day period, then the notice to Seller shall
so state and Seller's time to respond will be reduced accordingly.
5.7 Buyer may contact tenants or other occupants of the Real Property
during normal business hours on any day after the Effective Date
provided that Buyer delivers at least two (2) business days prior
written notice of any such meetings or calls to Seller and, if
Seller so elects, Seller shall be allowed to accompany Buyer to any
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meeting or participate in any such call. The obligations of Buyer
described in this Article 5 shall survive any termination of this
Agreement except as provided otherwise in this Article 5.
5.8 Seller acknowledges that, as a part of Buyer's due diligence review
of the Property, Buyer requires further information regarding the
status of possible reassessments of the Property attributable to the
period of Seller's ownership of the Property. Seller has had
discussions with the Assessor's Office for the City and County of
San Francisco regarding expected reassessments and has provided the
Assessor's Office with information to assist in establishing the
appropriate reassessment. Following the Effective Date, Seller shall
use commercially reasonable efforts to cooperate with Buyer's review
of such tax matters, and in connection therewith, Seller shall make
available its tax consultant to discuss such matters with Buyer and
shall authorize Buyer to discuss such matters with the Assessor's
Office (in both cases, with a representative of Seller available if
Seller so requests).
6. Approval.
6.1 Buyer shall have the period commencing on the Effective Date and
ending on the date that is thirty-five (35) days after the earlier
of (a) the date on which Seller notifies Buyer in writing that the
condition set forth in Section 10.2.2 below has been satisfied, or
(b) the date on which such condition is deemed satisfied as provided
in Section 10.2.2 below (such period being referred to herein as the
"Inspection Period") to approve or disapprove the Inspections
(which, for the purposes hereof, shall include Buyer's review and
approval or disapproval of the Due Diligence Items and all other
aspects of Buyer's due diligence review of the Property). If Buyer
shall fail to notify Seller and Escrow Holder of its disapproval of
the Inspections in writing within the Inspection Period, the
condition of the Property shall be deemed approved. If Buyer shall
disapprove the Inspections within the Inspection Period, this
Agreement and the Escrow shall thereupon be terminated, the Deposit
shall be immediately returned to Buyer, Buyer shall not be entitled
to purchase the Property, Seller shall not be obligated to sell the
Property to Buyer, and the parties shall be relieved of any further
obligation to each other with respect to the Property, except for
the obligations of Buyer in Section 5.4 of this Agreement.
6.2 Notwithstanding anything to the contrary contained herein, Buyer
hereby agrees that, in the event this Agreement is terminated for
any reason, then Buyer shall promptly and at its sole expense return
to Seller all Due Diligence Items which have been delivered by
Seller to Buyer in connection with the Inspections, along with
copies of all reports, drawings, plans, studies, summaries, surveys,
maps and other data prepared by third parties relating to the
Property, subject to restrictions on Buyer's ability to make any
such materials available to Seller that are imposed in any agreement
with a third party consultant preparing any such reports or
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materials ("Buyer's Reports"); provided, however, that delivery of
such copies and information by Buyer shall be without warranty or
representation whatsoever, express or implied, including without
limitations, any warranty or representation as to ownership,
accuracy, adequacy or completeness thereof or otherwise.
6.3 On or before the end of the Inspection Period, Buyer will designate
in a written notice to Seller which Contracts Buyer will assume and
which Contracts must be terminated by Seller at Closing. Taking into
account any credits or prorations to be made pursuant to this
Agreement for payments coming due after Closing but accruing prior
to Closing, Buyer will assume the obligations arising from and after
the Closing Date under those Contracts which Buyer has designated
will not be terminated. At Seller's expense, Seller shall terminate
at Closing all Contracts that are not so assumed.
7. Escrow.
7.1 Opening.
7.1.1 The purchase and sale of the Property shall be consummated
through an escrow ("Escrow") to be opened with Escrow Holder
within two (2) business days after the Effective Date. Escrow
shall be deemed to be opened as of the date fully executed
copies (or counterparts) of this Agreement are delivered to
Escrow Holder by Buyer and Seller ("Opening of Escrow"). This
Agreement shall be considered as the escrow instructions
between the parties, with such further instructions as Escrow
Holder in order to clarify its duties and responsibilities
shall require or as required by either Buyer and/or Seller. If
Escrow Holder shall require further Escrow instructions,
Escrow Holder may prepare such instructions on its usual form.
Such further instructions shall be promptly signed by Buyer
and Seller and returned to Escrow Holder within three (3)
business days of receipt thereof. In the event of any conflict
between the terms and conditions of this Agreement and any
further instructions from Escrow Holder, Buyer or Seller, the
terms and conditions of this Agreement shall control.
7.2 Closing.
7.2.1 Escrow shall close ("Closing") on the date that is thirty (30)
days following the end of the Inspection Period, or such
earlier date as shall be mutually agreed to by the parties.
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7.3 Buyer Required to Deliver.
Buyer shall deliver to Escrow the following:
7.3.1 No later than two (2) business days after the Effective Date,
the Initial Deposit, as described in Section 2.1 above;
7.3.2 On or before Closing, the Purchase Price, subject to the
closing adjustments, credits and prorations contemplated
hereby;
7.3.3 On or before Closing, such other documents as Title Company
may reasonably require from Buyer in order to issue the Title
Policy;
7.3.4 An original counterpart executed by Buyer of an assignment and
assumption agreement (the "Assignment and Assumption
Agreement") in substantially the form attached hereto as
Exhibit B, whereby Seller assigns and conveys to Buyer all of
Seller's right, title and interest in and to, and Buyer
assumes all of Seller's obligations under, the Leases and the
Contracts and the Permits to be assumed by Buyer under this
Agreement on terms and conditions set forth in the Assignment
and Assumption Agreement;
7.3.5 A counterpart closing statement (the "Closing Statement")
setting forth the Purchase Price and all amounts charged
against Buyer pursuant to Section 7.7 of this Agreement.
7.4 Seller Required to Deliver,
On or before Closing, Seller shall deliver to Escrow the following:
7.4.1 A duly executed and acknowledged grant deed, conveying fee
title to the Property in favor of Buyer (the "Deed") except
that the amount of transfer tax shall not be shown on the
Deed, but shall be set forth on a separate affidavit or
instrument which, after recordation of the Deed, shall be
attached thereto so that the amount of such transfer tax shall
not be of record. The Deed shall be in the form of Exhibit C
to this Agreement.
7.4.2 An executed original certificate of non-foreign status for
Seller ("FIRPTA Certificate") and an executed original
California withholding exemption certificate (Form 593-C);
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7.4.3 A xxxx of sale of the Personal Property, if any, without
warranty, in favor of Buyer and duly executed by Seller, in
substantially the form attached hereto as Exhibit D;
7.4.4 An original counterpart executed by Seller of the Assignment
and Assumption Agreement;
7.4.5 A counterpart Closing Statement setting forth the Purchase
Price and all amounts charged against Seller pursuant to
Section 7.7 of this Agreement;
7.4.6 Such other documents as Escrow Holder may reasonably require
from Seller in order to issue the Title Policy, including,
without limitation, an Owner's Affidavit and a certified list
of all Leases as of Closing;
7.4.7 A letter from Seller addressed to each Tenant informing such
Tenant of the change in ownership and directing that future
rent payments be made to Buyer and a letter to each vendor
under each Contract informing such vendor of the change in
ownership and the address for contacting Buyer;
7.4.8 All keys to all buildings and other improvements located on
the Property, combinations to any safes thereon, and security
devices therein in Seller's possession;
7.4.9 All records and files relating to the management or operation
of the Property, including, without limitation, all insurance
policies, all security contracts, all tenant files (including
correspondence), property tax bills, and all calculations used
to prepare statements of rental increases under the Leases and
statements of common area charges, insurance, property taxes
and other charges which are paid by tenants of the Project;
and
7.4.10 Original letters of credit posted by any Tenants as security
deposits under Leases, together with a completed transfer of
beneficiary form for each such letter of credit, as required
to effect a post-closing assignment of such letters of credit
to Buyer.
7.4.11 Such evidence as shall reasonably establish that Seller's
execution of this Agreement and its execution of any documents
required to be executed by Seller hereunder and performance of
all of its other obligations hereunder have been duly
authorized and that the person or persons executing this
Agreement on behalf of Seller have been duly authorized and
empowered to do so, and that Seller is duly organized, validly
existing and in good standing under the laws of the State of
Virginia.
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7.4.12 An original of the Guaranty (as defined below), executed by
GREIT, Inc., as guarantor.
7.5 Costs.
7.5.1 Seller shall pay the following closing costs: (i) all fees and
costs for releasing all encumbrances, liens and security
interests of record which are not Permitted Exceptions; (ii)
the title premium for the basic CLTA policy, not to exceed
$0.22 per thousand, (iii) fifty percent (50%) of the escrow
fees or escrow cancellation fees, which fifty percent (50%)
share shall not exceed $2,000.00; and (iv) all county
documentary or other transfer taxes payable upon recordation
of the Deed. Buyer shall pay the following closing costs: (x)
the total premium for Buyer's policy of title insurance other
than the amount to be paid by Seller under clause (ii) above;
(y) any and all costs, fees, title insurance premiums and
other charges payable in connection with any financing
obtained by Buyer to acquire the Property, including all
escrow fees relating to the funding and/or recordation of such
financing; and (z) all escrow fees or escrow cancellation fees
other than the amount to be paid by Seller under clause (iii)
above. All other closing costs shall be paid by the parties in
accordance with the custom then prevailing in the County in
which the Real Property is located.
7.6 Prorations,
7.6.1 Items to be Prorated, The following shall be prorated between
Seller and Buyer as of the Closing with the Buyer being deemed
the owner of the Property as of the Closing:
(a) Taxes and Assessments All non-delinquent real property
taxes, assessments and other governmental impositions of any
kind or nature, including, without limitation, any special
assessments or similar charges (collectively, "Taxes") shall
be prorated as of the Closing Date. With respect to any
portion of the Taxes which are payable by any Tenant directly
to the authorities, no proration or adjustment shall be made.
If the Closing Date occurs before the tax rate or assessment
is fixed, the proration of such taxes and assessments by
Escrow Holder shall be made at the Closing based upon the most
recent tax bills available. With respect to all periods for
which Seller has paid Taxes, Seller hereby reserves the right
to institute or continue any proceeding or proceedings for the
reduction of the assessed valuation of the Property, and, in
its sole discretion, to settle the same. Seller shall have
sole authority to control the progress of, and to make all
decisions with respect to, such proceedings but shall provide
Buyer with copies of all communications with the taxing
authorities. All net tax refunds and credits attributable to
any period prior to the Closing which Seller has paid or for
which Seller
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has given a credit to Buyer shall belong to and be the
property of Seller, provided, however, that any such refunds
and credits that are the property of Tenants under Leases
shall be promptly remitted by Seller directly to such Tenants
or to Buyer for the credit of such Tenants. All net tax
refunds and credits attributable to any period subsequent to
the Closing shall belong to and be the property of Buyer.
Buyer agrees to cooperate with Seller, without cost or
liability to Buyer, in connection with the prosecution of any
such proceedings and to take all steps, whether before or
after the Closing, as may be necessary to carry out the
intention of this subsection, including the delivery to
Seller, upon demand, of any relevant books and records,
including receipted tax bills and cancelled checks used in
payment of such taxes, the execution of any and all consent or
other documents, and the undertaking of any acts necessary for
the collection of such refund by Seller. Buyer agrees that, as
a condition to the transfer of the Property by Buyer, Buyer
will use commercially reasonably efforts to cause any
transferee to assume the obligations set forth herein.
(b) Rents Buyer will receive a credit at the Closing for all
rents collected by Seller prior to the Closing and allocable
to the period from and after the Closing based upon the actual
number of days in the month. No credit shall be given the
Seller for accrued and unpaid rent or any other non-current
sums due from Tenants until these sums are paid, and Seller
shall retain the right to collect any such rent provided
Seller does not xxx to evict any tenants or terminate any
Tenant Leases. Buyer shall cooperate with Seller after the
Closing to collect any rent under the Tenant Leases which has
accrued as of the Closing; provided, however, Buyer shall not
be obligated to xxx any Tenants or exercise any legal remedies
under the Tenant Leases or to incur any expense over and above
its own regular collection expenses. All payments collected
from Tenants after the Closing shall first be applied to the
month in which the Closing occurs, then to any rent due to
Buyer for the period after Closing and finally to any rent due
to Seller for the period prior to Closing; provided, however,
notwithstanding the foregoing, if Seller collects after
Closing, through its own collection efforts, any payments from
Tenants that are attributable to periods prior to Closing,
Seller may first apply such payments to rent due the Seller
for the period prior to Closing. If any rent payments that are
attributable to periods following Closing are inadvertently
paid to Seller, Seller shall immediately deliver all such
amounts to Buyer.
(c) CAM Expenses To the extent that Tenants are reimbursing
the landlord for common area maintenance and other operating
expenses (collectively, "CAM Charges"), CAM Charges shall be
prorated at Closing and again subsequent to Closing, as of the
date of Closing on a
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lease-by-lease basis with each party being entitled to receive
a portion of the CAM Charges payable under each Lease for the
CAM Lease Year in which Closing occurs, which portion shall be
equal to the actual CAM Charges incurred during the party's
respective periods of ownership of the Property during the CAM
Lease Year. As used herein, the term "CAM Lease Year" means
the twelve (12) month period as to which annual CAM Charges
are owed under each Lease. Five (5) days prior to Closing the
Seller shall submit to Buyer an itemization of its actual CAM
Charges operating expenses through such date and the amount of
CAM Charges received by the Seller as of such date, together
with an estimate of CAM Charges to be incurred to, but not
including, the Closing. In the event that the Seller has
received CAM Charges payments in excess of its actual CAM
Charges operating expenses, the Buyer shall be entitled to
receive a credit against the Purchase Price for the excess. In
the event that the Seller has received CAM Charges payments
less than its actual CAM Charges operating expenses, to the
extent that the Leases provide for a "true up" at the end of
the CAM Lease Year, the Seller shall be entitled to receive
any deficit but only after the Buyer has received any true up
payment from the Tenant. Upon receipt by either party of any
CAM Charge true up payment from a Tenant, the party receiving
the same shall provide to the other party its allocable share
of the "true up" payment within five (5) days of the receipt
thereof.
(d) Operating Expenses All operating expenses (including all
charges under the service contracts and agreements assumed by
Buyer) shall be prorated, and as to each service provider,
operating expenses payable or paid to such service provider in
respect to the billing period of such service provider in
which the Closing occurs (the "Current Billing Period"), shall
be prorated on a per diem basis based upon the number of days
in the Current Billing Period prior to the Closing and the
number of days in the Current Billing Period from and after
the Closing, and assuming that all charges are incurred
uniformly during the Current Billing Period. If actual bills
for the Current Billing Period are unavailable as of the
Closing, then such proration shall be made on an estimated
basis based upon the most recently issued bills, subject to
readjustment upon receipt of actual bills. Notwithstanding the
foregoing, all bills for work performed at or for the benefit
of the Property prior to Closing shall be paid in full by
Seller prior to Closing and shall not be the responsibility of
Buyer (except for Buyer's Leasing Costs (as defined below),
which shall be the responsibility of Buyer).
(e) Security Deposits; Prepaid Rents. Prepaid rentals and
other tenant charges and security deposits (including any
portion thereof which may be designated as prepaid rent) under
Tenant Leases, if and to the
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extent that such deposits have not been otherwise applied by
Seller to any obligations of any Tenants pursuant to the terms
of the Tenant Leases, shall be credited against the Purchase
Price, and upon the Closing, Buyer shall assume full
responsibility for all security deposits to be refunded to the
Tenants under the Tenant Leases (to the extent the same are
required to be refunded by the terms of such Tenant Leases or
applicable). In the event that any security deposits are in
the form of letters of credit or other financial instruments
(the "Non-Cash Security Deposits"), after the Closing, Seller
will be responsible to ensure that such Non-Cash Security
Deposits are assigned to Buyer and that Buyer is named as
beneficiary under the Non-Cash Security Deposits without cost
to Buyer. Buyer will not receive a credit against the Purchase
Price for such security deposits.
(f) Leasing Costs. Seller shall receive a credit at the
Closing for all leasing costs, including tenant improvement
costs and allowances, and its pro-rata leasing commissions,
previously paid by Seller in connection with any Lease or
modification to an existing Lease which was entered into after
the Effective Date and which is approved or deemed approved by
Buyer pursuant to this Agreement, which approval included
approval of the tenant improvement costs. The Seller's
pro-rata share shall be equal to a fraction which has as its
numerator the number of months left in the base term of the
Lease after the Closing and which has as its denominator the
number of months in the base term of the Lease.
Except as to any such costs that are expressly identified as
Buyer's Leasing Costs pursuant to the following paragraph,
Seller shall bear all tenant improvement costs (for the
purposes of this Agreement, references to "tenant improvement
costs" shall be deemed to include any base building work
required in connection with such tenant improvements) and
leasing commissions related to all Leases executed prior to
the Closing Date (the obligations of Seller for such costs and
such work are referred to herein as "Seller's Leasing Costs").
To the extent that any of Seller's Leasing Costs are not fully
paid or performed as of the date of this Agreement, then, at
Seller's election, Seller will either pay them at Closing or
will give Buyer a credit at Closing in the amount of such
Seller's Leasing Costs (provided that if Buyer receives a
credit for all or any portion of Seller's Leasing Costs then
Buyer shall assume the obligation to pay such Seller's Leasing
Costs).
Notwithstanding anything herein to the contrary, if the
Closing occurs, then (i) Buyer shall bear all tenant
improvement costs and leasing commissions of the following:
(A) Lease dated June 5, 2006, by and between Vibrant Media as
tenant,
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and Seller, as landlord, which tenant improvement costs and
commissions are identified on Exhibit E attached hereto;
(B) any new leases or amendments to existing Leases that are
entered into by Seller during the period commencing with the
Effective Date and ending on the date that is five (5)
business days prior to the Due Diligence Expiration Date
provided that Seller has provided Buyer with a true, correct
and complete copy of any such lease or amendment at least five
(5) business days prior to the Due Diligence Expiration Date,
in which case Buyer shall be deemed to have approved such
leases and/or amendments if Buyer elects to proceed with the
purchase of the Property as described herein as of the end of
the Inspection Period;
(C) any new leases or amendments to existing Leases that are
entered into by Seller during the period commencing with the
day after the Due Diligence Expiration Date and ending on the
date that is five (5) business days prior to the Closing Date
provided that Seller has provided Buyer with a true, correct
and complete copy of any such lease or amendment at least five
(5) business days prior to the Closing Date and Buyer has
expressly approved such final new lease and/or amendments in
writing prior to Closing (the costs described in (A), (B) and
(C) above, collectively, are referred to herein as "Buyer's
Leasing Costs.
(g) Percentage Rent Any percentage rents due or paid under any
of the Leases ("Percentage Rent") shall be prorated between
Buyer and Seller outside of Closing as of the Closing on a
Lease-by-Lease basis, as follows; (a) Seller shall be entitled
to receive the portion of the Percentage Rent under each Lease
for the Lease Year in which Closing occurs, which portion
shall be the ratio of the number of days of said Lease Year in
which Seller was Landlord under the Lease to the total number
of days in the Lease Year, and (b) Buyer shall receive the
balance of Percentage Rent paid under each Lease for the Lease
Year. As used herein, the term "Lease Year" means the twelve
(12) month period as to which annual Percentage Rent is owed
under each Lease. Upon receipt by either Buyer or Seller of
any gross sales reports ("Gross Sales Reports") and any full
or partial payment of Percentage Rent from any tenant of the
Property, the party receiving the same shall provide to the
other party a copy of the Gross Sales Report and a check for
the other party's prorata share of the Percentage Rent within
five (5) days of the receipt thereof. In the event that the
Tenant only remits a partial payment, then the amount to be
remitted to the other party shall be its prorata share of the
partial payment. Nothing contained herein shall be deemed or
construed to require either Buyer to Seller to pay to the
other party its prorata share of the Percentage Rent prior to
receiving the Percentage Rent from the Tenant, and the
acceptance or negotiation of
16
any check for Percentage Rent by either party shall not be
deemed a waiver of that party's right to contest the accuracy
or amount of the Percentage Rent paid by the Tenant.
7.7.2 Calculation; Reproration. Prior to Closing the parties shall
jointly prepare an estimated closing statement which shall set
forth the costs payable under Sections 7.5 and 7.6 and the
prorations and credits provided for in Section 7.7.1 and
elsewhere in this Agreement, Any item which cannot be finally
prorated because of the unavailability of information shall be
tentatively prorated on the basis of the best data then
available and adjusted when the information is available in
accordance with this subsection; provided, the parties shall
cooperate with each other to reprorate taxes and assessments
following the Closing as accurate or new information becomes
available and in no event later than one (1) year after
Closing; and the parties agree that there shall be no
reproration for taxes and assessments later than one year
after the Closing. The estimated closing statement as adjusted
as aforesaid and approved in writing by the parties shall be
referred to herein as the "Closing Statement". If the
prorations and credits made under the Closing Statement shall
prove to be incorrect or incomplete for any reason, then
either party shall be entitled to an adjustment to correct the
same provided that, as indicated above with respect to taxes,
the parties shall cooperate with each other to reprorate taxes
and assessments following the Closing as accurate or new
information becomes available and in no event later than one
(1) year after Closing and there shall be no reproration for
taxes and assessments later than one year after the Closing;
and further provided that any adjustment as to any other items
shall be made, if at all, within sixty (60) days after the
Closing (except with respect to CAM Charges, in which case
such adjustment shall be made within thirty (30) days after
the information necessary to perform such adjustment is
available), and if a party fails to request an adjustment to
the Closing Statement by a written notice delivered to the
other party within the applicable period set forth above (such
notice to specify in reasonable detail the items within the
Closing Statement that such party desires to adjust and the
reasons for such adjustment), then the prorations and credits
set forth in the Closing Statement shall be binding and
conclusive against such party.
7.7.3 Items Not Prorated . Seller and Buyer agree that (a) on the
Closing, the Property will not be subject to any financing
arranged by Seller; (b) none of the insurance policies
relating to the Property will be assigned to Buyer and Buyer
shall responsible for arranging for its own insurance as of
the Closing; and (c) utilities, including telephone,
electricity, water and gas, shall be read on the Closing and
Buyer shall be responsible for all the necessary actions
needed to arrange for utilities to be transferred
17
to the name of Buyer on the Closing, including the posting of
any required deposits and Seller shall be entitled to recover
and retain from the providers of such utilities any refunds or
overpayments to the extent applicable to the period prior to
the Closing, and any utility deposits which it or its
predecessors may have posted. Accordingly, there will be no
prorations for debt service, insurance or utilities. In the
event a meter reading is unavailable for any particular
utility, such utility shall be prorated in the manner provided
in Section 7.6.l(d).
7.7.4 Indemnification. Buyer and Seller shall each indemnify,
protect, defend and hold the other harmless from and against
any claim in any way arising from the matters for which the
other receives a credit or otherwise assumes responsibility
pursuant to this Section.
7.7.5 Survival. This Section 7.7 shall survive the Closing.
7.8 Determination of Dates of Performance.
Promptly after delivery to Buyer of the Title Report, Escrow Holder
shall prepare and deliver to Buyer and Seller a schedule which shall
state each of the following dates:
7.8.1 The date of Opening of Escrow pursuant to Section 7.1.1;
7.8.2 The date of receipt of the Title Report by Buyer;
7.8.3 The date by which title must be approved by Buyer pursuant to
Section 3;
7.8.4 The date by which the Inspections must be approved by Buyer
pursuant to Section 6.1;
7.8.5 The date by which the amounts described in Section 2 must be
deposited by Buyer, for which determination Escrow Holder
shall assume satisfaction of the condition expressed in
Section 2 on the last date stated for its satisfaction; and
7.8.6 The date of Closing pursuant to Section 7.2.1.
If any events which determine any of the aforesaid dates occur on a
date other than the date specified or assumed for its occurrence in
this Agreement, Escrow Holder shall promptly redetermine as
appropriate each of the dates of performance in the aforesaid
schedule and notify Buyer and Seller of the dates of performance, as
redetermined.
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8. Representations, Warranties, and Covenants.
8.1 Representations of Seller. Seller hereby makes the following
representations and warranties as of the date of this Agreement: As used in this
Agreement, the term "Seller's Current Actual Knowledge" means the current
actual knowledge, without the duty of further investigation, of Xxxxxx Xxxxxx
("Seller's Representative"), whose current title is Senior Asset Manager.
8.1.1. Leases. To Seller's Current Actual Knowledge, the rent
roll to be delivered pursuant to Section 4.1.8 of this Agreement is the rent
roll prepared by the Seller's property manager in the normal course of Seller's
business. To Seller's Current Actual Knowledge, there are no leases, subleases,
license, tenancy or occupancy agreements (or any amendments or modifications
thereof) affecting any portion of the Real Property which are not shown on the
List of Leases attached hereto as Exhibit F. To Seller's Current Actual
Knowledge as of the date of this Agreement only, there is no current material
default in the performance of the obligations of any tenant under any of the
Lease or of the landlord under any Lease.
8.1.2. Hazardous Materials. To Seller's Current Actual
Knowledge, except as may be disclosed in any documents or reports delivered by
Seller to Buyer before the Due Diligence Expiration Date, Seller has not
received written notice from any governmental authority of the need of Seller to
take any remedial or corrective action under any environmental laws with respect
to any hazardous materials on or under the Real Property. As used in this
Agreement, "environmental laws" means all present and future statutes,
ordinances, orders, rules and regulations of all federal, state and local
governmental agencies relating to the use, generation, manufacture,
installation, release, discharge, storage, transportation or disposal of
hazardous materials; and "hazardous materials" means petroleum, asbestos,
polychlorinated biphenyls, radioactive materials, radon gas, underground storage
tanks or any chemical, material or substance now or hereafter defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous waste", "restricted hazardous waste"
or "toxic substances", or words of similar import, under any environmental laws.
8.1.3. Condemnation. To Seller's Current Actual Knowledge, Seller
has not received written notice of any pending condemnation or eminent domain
proceedings affecting the Real Property or any part thereof.
8.1.4. Non-Foreign Person. Seller is not a foreign person as defined
in Internal Revenue Code Section 1445(f)(3) and Seller is not subject to
withholding under Section 26131 of the California Revenue and Taxation Code. At
the Closing, Seller shall deliver to Buyer through Escrow a declaration under
penalty of perjury confirming the foregoing statement.
8.1.5. No Official Notices. To Seller's Current Actual Knowledge,
Seller has not received any written notice from any insurance company,
governmental agency, the Board of Fire Underwriters or any similar rating
organization requiring or requesting that any work or repairs be done at or to
the Real Property.
19
8.1.6. No Consents. To Seller's Current Actual Knowledge, no consent
to the sale and conveyance of the Property by Seller is required to be obtained
from any governmental agency or public administrative body.
8.1.7. Non-Contravention. To Seller's Current Actual Knowledge, the
execution and delivery of this Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby will not violate any judgment,
order, injunction, decree, regulation or ruling of any court or governmental
entity or conflict with, result in a breach of, or constitute a default under
the organizational documents of Seller, any note or other evidence of
indebtedness, any mortgage, deed of trust or indenture, or any lease or other
material agreement or instrument to which Seller is a party or by which it is
bound.
8.1.8. Contracts. To Seller's Current Actual Knowledge, attached
hereto as Exhibit G is a current, accurate and complete list of all Contracts
affecting the Property.
8.1.9 Seller Representatives. The person identified in Section 8.1
as "Seller's Representative" is the person within Seller's organization who is
most familiar with the management of the Property and most familiar with the
Property overall.
8.1.10 Authority. Seller is a limited partnership duly formed and
validly existing under the laws of the Commonwealth of Virginia. Subject to
receipt of the approval described in Section 10.2.2, Seller has full power and
authority to enter into this Agreement, to perform this Agreement and to
consummate the transactions contemplated hereby. This Agreement is a legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms, subject to the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting the
rights of creditors generally.
8.2 Approval of Property: Limitations on Seller Representations and
Warranties.
8.2.1 Except as may be specifically provided in Section 8.1 of this
Agreement, Seller makes no representations or warranties as to
the truth, accuracy, completeness, methodology of preparation
or otherwise concerning any engineering or environmental
reports, audits, the materials prepared by the Seller, or any
other materials, data or other information whatsoever supplied
to Buyer in connection with Buyer's inspection of the
Property. It is the parties' express understanding and
agreement that such materials are provided only for Buyer's
convenience in making its own examination and determination
prior to the expiration of the Inspection Period as to whether
it wishes to purchase the Property, and, in doing so, Buyer
shall rely exclusively on its own independent investigation
and evaluation of every aspect of the Property and not on any
materials supplied by Seller. Except as may be specifically
provided elsewhere in this Agreement, Buyer expressly
disclaims any intent to rely on any such materials provided to
it by Seller in connection with its inspection and agrees that
it shall rely solely on its own independently developed or
verified information. Except with respect to Seller's breach
of any covenant, representation or warranty contained in this
Agreement or in any documents delivered in connection with the
closing of the
20
transactions contemplated by this Agreement (collectively, the
"Surviving Obligations") and except with respect to any
fraudulent acts by Seller, Buyer hereby releases Seller and
its agents, representatives, and employees from any and all
claims, demands, and causes of action, past, present, and
future that Buyer may have relating to (a) the condition of
the Property at any time, before or after the Closing,
including without limitation, the presence of any hazardous
materials, or (b) any other matter pertaining to the Property.
This release shall survive the Closing or the termination of
this Agreement.
8.2.2 In the event of any breach by Seller of any of the preceding
representations or warranties or any other breach by Seller of
any other provision of this Agreement which is discovered
prior to Closing, Buyer's sole remedy shall be to elect in
writing to terminate this Agreement or waive such breach and
proceed with the Closing. In the event of any breach by Seller
of any of such representations or warranties or any other
material breach by Seller of any other provision of this
Agreement or any document delivered in connection herewith
discovered after Closing ("Seller Breaches"), Seller shall be
liable only for direct and actual damages suffered by Buyer on
account of Seller's breach, up to the applicable limits
described hereunder, and shall in no event be liable for
consequential or punitive damages. Any liability of Seller
hereunder for breach by Seller of any of such representations
or warranties or any other material breach by Seller of any
other provision of this Agreement or any document delivered in
connection herewith discovered after Closing shall be limited
to (a) claims in excess of an aggregate of Fifty Thousand
Dollars ($50,000.00), and (b) a maximum aggregate cap of Two
Million Dollars ($2,000,000.00); provided, however, the
foregoing shall not apply to Seller's fraudulent acts and
shall not limit or otherwise modify the parties right to
recovery of attorneys' fees as permitted under Section 18 of
this Agreement. Notice of such claim must be delivered to
Seller in writing within one (1) year of the Closing Date. In
no event shall Seller be liable for any indirect or
consequential damages on account of Seller's breach of any
representation or warranty contained in this Agreement.
Additionally, notwithstanding the foregoing, if Buyer becomes
aware prior to the Closing that any representation or warranty
hereunder is untrue, or any covenant or condition to Closing
has not been fulfilled or satisfied (if not otherwise waived
by Buyer), and Buyer nonetheless proceeds to close on the
purchase of the Property, then Buyer shall be deemed to have
irrevocably and absolutely waived, relinquished and released
all rights and claims against Seller for any damage or other
loss arising out of or resulting from such untrue
representation or warranty or such unfulfilled or unsatisfied
covenant or condition. Seller's representations and warranties
set forth in Section 8.1 shall survive the Closing for a
period of one (1) year, except for pending claims regarding
Seller's Breaches, if any, as to which Buyer has actually
filed and served a lawsuit against Seller prior to the end of
such one (1) year period. Seller's obligations under this
Section 8.2.2 shall be guaranteed by GREIT, Inc., a Maryland
corporation, pursuant to a guaranty agreement in the form of
Exhibit H
21
8.2.3 Approval of Property, The consummation of the purchase and
sale of the Property pursuant to this Agreement shall be
deemed Buyer's acknowledgement that it has had an adequate
opportunity to make such legal, factual and other inspections,
inquiries and investigations as it deems necessary, desirable
or appropriate with respect to the Property. Such inspections*
inquiries and investigations of Buyer shall be deemed to
include, but shall not be limited to, any leases and contracts
pertaining to the Property, the physical components of all
portions of the Property, the physical condition of the
Property, such state of facts as an accurate survey,
environmental report and inspection would show, the present
and future zoning ordinance, ordinances, resolutions. Buyer
shall not be entitled to and shall not rely upon, Seller or
Seller's agents with regard to, and Seller will not make any
representation or warranty with respect to: (i) the quality,
nature, adequacy or physical condition of the Property
including, but not limited to, the structural elements,
foundation, roof, appurtenances, access, landscaping, parking
facilities, or the electrical, mechanical, HVAC, plumbing,
sewage or utility systems, facilities, or appliances at the
Property, if any; (ii) the quality, nature, adequacy or
physical condition of soils or the existence of ground water
at the Property; (iii) the existence, quality, nature,
adequacy or physical condition of any utilities serving the
Property; (iv) the development potential of the Property, its
habitability, merchantability, or the fitness, suitability, or
adequacy of the Property for any particular purpose; (v) the
zoning or other legal status of the Property; (vi) the
Property or its operations' compliance with any applicable
codes, laws, regulations, statutes, ordinances, covenants,
conditions or restrictions of any governmental or
quasi-governmental entity or of any other person or entity:
(vii) the quality of any labor or materials relating in any
way to the Property; or (viii) the condition of title to the
Property or the nature, status and extent of any right-of-way,
lease, right of redemption, possession, lien, encumbrance,
license, reservation, covenant, condition, restriction, or any
other matter affecting the Property except as expressly set
forth in this Agreement. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT OR THE DEED, SELLER HAS NOT, DOES NOT, AND WILL NOT
MAKE ANY WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE
PROPERTY AND SELLER SPECIFICALLY DISCLAIMS ANY OTHER IMPLIED
WARRANTIES OR WARRANTIES ARISING BY OPERATION OF LAW,
INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF
CONDITION, MERCHANTABILITY, HABITABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE OR USE. FURTHERMORE, SELLER HAS NOT, DOES
NOT, AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY WITH
REGARD TO COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION,
POLLUTION, OR LAND USE LAWS, RULES, REGULATIONS, ORDERS, OR
REQUIREMENTS INCLUDING, BUT NOT LIMITED TO, THOSE PERTAINING
TO THE HANDLING, GENERATING, TREATING, STORING OR DISPOSING OF
ANY HAZARDOUS WASTE OR SUBSTANCE INCLUDING, WITHOUT
LIMITATION, ASBESTOS, PCB AND RADON.
22
BUYER ACKNOWLEDGES THAT BUYER IS A SOPHISTICATED BUYER
FAMILIAR WITH THIS TYPE OF PROPERTY AND THAT, SUBJECT ONLY TO
THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT OR THE
CLOSING DOCUMENTS, BUYER WILL BE ACQUIRING THE PROPERTY "AS IS
AND WHERE IS, WITH ALL FAULTS," IN ITS PRESENT STATE AND
CONDITION SUBJECT ONLY TO NORMAL WEAR AND TEAR AND BUYER SHALL
ASSUME THE RISK THAT ADVERSE MATTERS AND CONDITIONS MAY NOT
HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND INVESTIGATIONS.
BUYER SHALL ALSO ACKNOWLEDGE AND AGREE THAT THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR
AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY
THIRD PARTY. THE TERMS AND CONDITIONS OF THIS SECTION SHALL
SURVIVE THE CLOSING, AND NOT MERGE WITH THE PROVISIONS OF ANY
CLOSING DOCUMENTS. SELLER SHALL NOT BE LIABLE OR BOUND IN ANY
MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY REAL
ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN
THIS AGREEMENT. EXCEPT WITH REGARD TO THE OBLIGATIONS
EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE REPRESENTATIONS
AND WARRANTIES IN SECTION 8.1, BUYER HEREBY RELEASES SELLER
AND ITS AGENTS, REPRESENTATIVES AND EMPLOYEES FROM ANY AND
ALL LIABILITY RELATING TO THE CONDITION OF THE PROPERTY
BEFORE OR AFTER THE CLOSING AND ANY OTHER MATTER RELATING TO
THE PROPERTY, WHETHER KNOWN OR UNKNOWN AT THE TIME OF THE
CLOSING.
8.2.4 Release. Except as expressly set forth in this Agreement to
the contrary and except for any claims arising under the
express representations, warranties or covenants of Seller
under this Agreement or under the provisions of any document
delivered in connection with the closing of the transactions
contemplated by this Agreement and except with respect to
Seller's fraudulent acts, Buyer for itself and its agents,
affiliates, successors and assigns, hereby releases and
forever discharges Seller, and any party related to or
affiliated with Seller and their respective successors and
assigns (the "Seller Related Parties") from and against any
and all claims at law or equity which Buyer or any party
related to or affiliated with Buyer and their respective
successors and assigns (each a "Buyer Related Party") whether
known or unknown at the time of this agreement, which Buyer or
a Buyer Related Party has or may have in the future, arising
from or related to any matter or thing relating to or in
connection with the Property, including but not limited to,
the documents and information referred to in this Agreement,
the leases and the tenants, any construction defects, errors
or omissions in the design or
23
construction and arising out of the physical, environmental,
economic or legal condition of the Property, including,
without limitation, any claim for indemnification or
contribution arising under the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section
9601 et. sm.) or any similar federal, state or local
statute, rule or ordinance relating to liability of property
owners or operators for environmental matters. For the
foregoing purposes, Buyer hereby specifically waives the
provisions of Section 1542 of the California Civil Code and
any similar law of any other state, territory or jurisdiction.
Section 1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
BUYER HEREBY SPECIFICALLY ACKNOWLEDGES THAT BUYER HAS
CAREFULLY REVIEWED THIS SUBSECTION AND DISCUSSED ITS IMPORT
WITH LEGAL COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION
ARE A MATERIAL PART OF THIS AGREEMENT.
BUYER: CG
8.5 Covenants of Seller. Seller hereby covenants as follows:
8.5.1 At all times from the date hereof through the date of Closing,
Seller shall cause to be in force fire and extended coverage
insurance upon the Property, and public liability insurance
with respect to damage or injury to persons or property
occurring on the Property in at least such amounts as are
maintained by Seller on the Effective Date;
8.5.2 From the end of the Inspection Period through the date of
Closing, Seller will not enter into any new lease with respect
to the Property, without Buyer's prior written consent, which
may be given or withheld in Buyer's sole discretion. Exercise
of a renewal option shall not be considered a new lease. Any
brokerage commission payable with respect to a new lease
approved by Buyer shall be paid by Buyer. Further, Seller will
not modify any existing Lease covering space in the Property
without first obtaining the written consent of Buyer which
shall not be unreasonably withheld (except that as to any
lease modifications following the end of the Inspection
Period, such consent may be given or withheld in Buyer's sole
discretion). Buyer shall have five (5) business days in which
to approve or disapprove of any new lease or lease
modification for which it has a right to consent. Failure to
respond in writing within said time period small be deemed to
be consent;
24
8.5.3. Seller shall not execute any new lease or an amendment to any
existing lease during (a) the period that commences five (5)
business days prior to the Due Diligence Expiration Date and
ends on the Due Diligence Expiration Date, or (b) during the
period that commences five (5) business days prior to the
Closing Date and ends on the Closing Date;
8.5.3 From the Effective Date through the date of Closing, Seller
shall not sell, assign, or convey any right, title or interest
whatsoever in or to the Property, or create or permit to
attach any lien, security interest, easement, encumbrance,
charge, or condition affecting the Property (other than the
Permitted Exceptions) without promptly discharging the same
prior to Closing;
8.5.4 Seller shall not, without Buyer's written approval, (a) amend
or waive any right under any Service Contract, or (b) enter
into any agreement of any type affecting the Property that is
not terminable on 30 days notice.
8.5.5 During the period between the Effective Date of this Agreement
and the earlier to occur of (i) the Closing Date or (ii) the
termination of this Agreement, Seller shall (A) generally
operate the Property in the same manner in which Seller
operated the Property before the date of this Agreement (such
operation obligations not including capital expenditures or
expenditures not incurred in the normal course of business),
and (B) endeavor to provide Buyer with copies of all material
written correspondence (which shall not be deemed to include
electronic correspondence) between Seller (and its property
manager), on the one hand, and any existing or prospective
Tenants at the Property, on the other.
8.5.6. Within two (2) business days after Buyer's request to Seller,
Seller shall deliver a subordination, nondisturbance and
attornment agreement ("SNDA") in the form required by Buyer to
each of the Tenants then occupying any portion of the Real
Property and request of each Tenant that each form be executed
and promptly returned to Seller.
8.5.7. Buyer shall prepare completed estoppels for each Tenant under
each of the Leases (which Buyer acknowledges requires using
the form required by such Lease for any government Tenant) and
Buyer shall deliver the completed estoppels to Seller no later
than three (3) business days after the Effective Date. Seller
shall deliver the completed estoppels prepared by Buyer to all
Tenants under the Leases no later than one (1) business day
after Seller receives such completed estoppels from Buyer.
Seller shall use reasonable efforts to obtain prior to
Closing, at Buyer's request, (a) an estoppel certificate from
any party to any CC&Rs, easement agreement or similar
agreement affecting the Property in form and
25
substance acceptable to Buyer (or the form required under the
applicable agreement) if such party is obligated to deliver
an estoppel under the terms of the applicable agreement; and
(b) a Change of Lessor Form from any government Tenant at the
Real Property if such completed form is required under the
terms of its Lease.
9. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:
9.1 Buyer is a corporation duly organized and validly existing under the
laws of the State of California. Buyer has full power and authority
to enter into this Agreement, to perform this Agreement and to
consummate the transactions contemplated hereby. This Agreement is a
legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of creditors
generally.
10. Conditions Precedent to Closing.
10.1 The obligations of Buyer pursuant to this Agreement shall, at the
option of Buyer, be subject to the following conditions precedent:
10.1.1 All of the representations, warranties and agreements of
Seller set forth in this Agreement shall be true and correct
in all material respects as of the Effective Date and as of
the Closing Date, and Seller shall not have, on or prior to
Closing, failed to meet, comply with or perform in any
material respect any conditions or agreements on Seller's
part as required by the terms of this Agreement.
10.1.2 As of the Closing, the Chicago Title Insurance Company
("Title Company") shall be irrevocably committed to issue to
Buyer, upon payment of its regularly scheduled premium, its
CLTA owner's policy of title insurance, in the amount of the
Purchase Price, showing title to the Real Property vested of
record in Buyer, subject only to the Permitted Exceptions. If
Seller for any reason is unable to deliver title to the Real
Property subject only to the Permitted Exceptions or is
unwilling to remove or otherwise cure any title matter that
is not a Permitted Exception, then Buyer's sole remedy shall
be to terminate this Agreement within five days after written
notice from Seller of such inability or unwillingness (but
not later than the Closing Date) and receive a return of the
Deposit, and neither Seller nor Buyer shall thereafter have
any further rights or obligations under this Agreement.
Notwithstanding the foregoing, it shall be a condition
precedent to Buyer's obligation to consummate this
transaction, that as of the Closing
26
Date there are no monetary liens or monetary encumbrances not
previously approved by Buyer encumbering the Property.
10.1.3 Seller shall have obtained, and delivered to Buyer prior to
the Due Diligence Expiration Date, estoppels in form and
substance satisfactory to Buyer (which Buyer acknowledges
requires using the form required by such Lease for any
government Tenant) from Tenants representing seventy percent
(70%) of the leasable area of the Real Property that is leased
and occupied as of the Effective Date (to be dated within
forty-five (45) days of Closing). Within one (1) business day
after Seller receives an executed estoppel from any Tenant,
Seller shall deliver a copy there of to Buyer (and shall
promptly thereafter send the original thereof to Buyer). Buyer
shall notify Seller within three (3) business days of receipt
of a copy of the executed estoppel certificate of its approval
or disapproval and the basis of such disapproval, if
disapproved. If Buyer elects to proceed with the purchase of
the Property as of the Due Diligence Expiration Date and Buyer
has not received, as of the Closing, estoppels from Tenants
occupying one hundred percent (100%) of the leasable area of
the Real Property, then at Closing, Seller shall also deliver
to Buyer a "Seller's Estoppel" in the form attached hereto as
Exhibit I with respect to each such Lease as to which no
estoppel from the Tenant has been received.
10.2 The obligations of Seller pursuant to this Agreement shall, at the
option of Seller, be subject to the following conditions precedent:
10.2.1 All of the representations, warranties and agreements of
Buyer set forth in this Agreement shall be true and correct in
all material respects as of the Effective Date and as of the
Closing Date, and Buyer shall not have on or prior to closing,
failed to meet, comply with or perform in any material respect
any conditions or agreements on Buyer's part as required by
the terms of this Agreement.
10.2.2 Seller's obligation to sell the Property is subject to the
condition precedent that approval of the sale is obtained from
the board of directors of G REIT, Inc., which shall be deemed
to have been obtained (and this condition shall in such case
be deemed satisfied) unless Seller advises Buyer that the sale
has been disapproved no later than two (2) business days after
the Effective Date.
If any such condition is not fully satisfied by the Closing (or such
earlier applicable date as set forth above with respect to any specific
condition), Buyer shall so notify Seller and may terminate this Agreement
by written notice to Seller whereupon this Agreement may be canceled, the
Deposit shall be returned to Buyer and, thereafter, neither Seller nor
Buyer shall have any continuing obligations hereunder, except as expressly
provided in
27
this Agreement. If Buyer notifies Seller of a failure to satisfy the
conditions precedent set forth in this Section, Seller may, within five
(5) days of receipt of Buyer's notice agree to satisfy the condition by
written notice to Buyer, and Buyer shall thereupon be obligated to close
the transaction provided Seller so satisfies such condition. If Seller
fails to agree to cure or fails to cure such condition by the Closing
Date, this Agreement shall be canceled and the Deposit shall be returned
to Buyer and neither party shall have any continuing obligations
hereunder.
11. Damage or Destruction Prior to Closing.
In the event that the Property should be damaged by any casualty prior to
the Closing, then if the cost of repairing such damage, as reasonably
estimated by Seller, is:
11.1 Less than One Million Dollars ($1,000,000), the Closing shall
proceed as scheduled and any insurance proceeds shall be distributed
to Buyer to the extent not expended by Seller for restoration
(provided, however, if as a result of such casualty, any Lease
covering more than 10,000 rentable square feet of space is
terminated then Buyer may elect to terminate this Agreement, in
which case the Deposit shall be returned to Buyer and neither party
shall have any further obligation to the other party hereunder
except for Buyer's indemnification obligations under Section 5. but
if Buyer elects to proceed to Closing, then all insurance proceeds
shall be distributed to Buyer to the extent not expended by Seller
for restoration);
or if said cost is:
11.2 Greater than One Million Dollars ($1,000,000), then either Seller or
Buyer may elect to terminate this Agreement, in which case the
Deposit shall be returned to Buyer and neither party shall have any
further obligation to the other except for Buyer's indemnification
obligations under Section 5.
12. Eminent Domain.
12.1 If, before the Closing, proceedings are commenced for the taking by
exercise of the power of eminent domain of all or a material part of
the Property which, as determined by Buyer in its sole discretion,
would render the Property unacceptable to Buyer or unsuitable for
Buyer's intended use or would affect access to or the use of the
Property, Buyer shall have the right, by giving notice to Seller
within thirty (30) days after Seller gives notice of the
commencement of such proceedings to Buyer, to terminate this
Agreement, in which event this Agreement shall terminate, the
Deposit shall be returned to Buyer and neither party shall have any
further obligation to the other except for Buyer's indemnification
obligations under Section 5. If, before the Closing, proceedings are
commenced for the taking by exercise of the power of eminent domain
of and Buyer elects to proceed with Closing, then this Agreement
shall remain in full
28
force and effect and, at the Closing, the condemnation award (or, if
not therefore received, the right to receive such portion of the
award) payable on account of the taking shall be transferred in the
same manner as title to the Property is conveyed. Seller shall give
notice to Buyer within three (3) business days after Seller's
receiving notice of the commencement of any proceedings for the
taking by exercise of the power of eminent domain of all or any part
of the Property.
13. Notices.
13.1 All notices, demands, or other communications of any type given by
any party hereunder, whether required by this Agreement or in any
way related to the transaction contracted for herein, shall be void
and of no effect unless given in accordance with the provisions of
this Section. All notices shall be in writing and delivered to the
person to whom the notice is directed, either in person, by United
States Mail, as a registered or certified item, return receipt
requested, or by fax or by Federal Express or other overnight
delivery service, or by fax if followed by delivery by overnight
delivery service. Notices delivered by mail, Federal Express or
other overnight delivery service shall be deemed given when received
(or upon attempted delivery, if delivery is refused). Notices
delivered by fax shall be deemed received on the same day sent if
sent before 5 p.m. (Pacific time) Notices shall be given to the
following addresses:
Seller: Xxxxxxx Xxxxxx
Triple Net Properties, LLC
0000 X. Xxxxxx Xxx. #000
Xxxxx Xxx, XX 00000
(000)000-0000
(000)000-0000 fax
With Required Copy to: Xxxxxx X. XxXxxxx, Esq.
Xxxxxxxxx Xxxxxxxxx
The Federal Reserve Bank Building,
16th Floor
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
(000)000-0000
(000)000-0000 fax
And Required Copy to: Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx
G REIT, Inc.
0000 X. Xxxxxx Xxx, #000
Xxxxx Xxx,XX 00000
(000)000-0000
(000)000-0000 fax
BUYER: TMG Partners
29
000 Xxxx Xxxxxx, 00xx xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx
Attn: Xxxxx Xxxxxxxxx
(000) 000-0000
(000) 000-0000 (fax)
With Required Copy to: Xxx XxxXxxx, Esq.
c/o TMG Partners
000 Xxxx Xxxxxx, 00xx xxxxx
Xxx Xxxxxxxxx, XX 00000
(000) 000-0000
(000) 000-0000 (fax)
14. Remedies.
14.1 Defaults by Seller. If there is any default by Seller under this
Agreement, following notice to Seller and seven (7) days (or date of
Closing, whichever is earlier), during which period Seller may cure
the default, Buyer may, as it sole options elect to either (a)
declare this Agreement terminated in which case the Deposit shall be
returned to Buyer; or (b) treat this Agreement as being in full
force and effect and bring an action against Seller for specific
performance.
14.2 Defaults by Buyer. If there is any default by Buyer under this
Agreement and if, as a result, Buyer does not acquire the Property
at Closing, then following notice to Buyer and seven (7) days (or
date of Closing, whichever is earlier), during which period Buyer
may cure the default, then Seller may, as its sole remedy, declare
this Agreement terminated, in which case the Deposit shall be paid
to Seller as liquidated damages and each party shall thereupon be
relieved of all further obligations and liabilities, except any
which survive termination. Notwithstanding the foregoing, the
Buyer's right to cure shall not be applicable to a failure to close
and the Closing shall in no event be extended pursuant to this
Section. In the event this Agreement is terminated due to the
default of Buyer hereunder, Buyer shall deliver to Seller, at no
cost to Seller, the Due Diligence Items and all of Buyer's Reports.
THE PARTIES ACKNOWLEDGE THAT THIS TRANSACTION FAILS TO CLOSE AS THE
RESULT OF A MATERIAL DEFAULT BY BUYER OF ITS OBLIGATION TO PURCHASE
THE PROPERTY UNDER THIS AGREEMENT, SELLER'S DAMAGES WOULD BE
DIFFICULT OR IMPOSSIBLE TO COMPUTE AND THAT THE DEPOSIT MADE BY
BUYER UNDER SECTION 2.1 ABOVE REPRESENTS THE REASONABLE ESTIMATE OF
SUCH DAMAGES ESTABLISHED BY THE PARTIES THROUGH GOOD FAITH
CONSIDERATION OF THE FACTS AND CIRCUMSTANCES SURROUNDING THE
TRANSACTION
30
CONTEMPLATED UNDER THIS AGREEMENT AS OF THE EFFECTIVE DATE, IN THE
EVENT OF SUCH MATERIAL DEFAULT BY BUYER UNDER THIS AGREEMENT, SELLER
SHALL RETAIN SUCH AMOUNT AS LIQUIDATED DAMAGES IN LIEU OF ANY OTHER
CLAIM SELLER MAY HAVE AT LAW OR IN EQUITY (INCLUDING, WITHOUT
LIMITATION, SPECIFIC PERFORMANCE) ARISING BY REASON OF SUCH DEFAULT.
THE PARTIES HAVE INITIALED THIS SECTION 14.2 TO ESTABLISH THEIR
INTENT SO TO LIQUIDATE DAMAGES.
Seller: ARB; Buyer: CG
14.3 ARBITRATION OF DISPUTES, ANY CLAIM, CONTROVERSY OR DISPUTE, WHETHER
SOUNDING IN CONTRACT, STATUTE, TORT, FRAUD, MISREPRESENTATION OR
OTHER LEGAL THEORY, RELATED DIRECTLY OR INDIRECTLY TO THIS
AGREEMENT, WHENEVER BROUGHT AND WHETHER BETWEEN THE PARTIES TO THIS
AGREEMENT OR BETWEEN ONE OF THE PARTIES TO THIS AGREEMENT AND THE
EMPLOYEES, AGENTS OR AFFILIATED BUSINESSES OF THE OTHER PARTY, SHALL
BE RESOLVED BY ARBITRATION AS PRESCRIBED IN THIS SECTION. THE
FEDERAL ARBITRATION ACT, 9 U.S.C. SECTIONS 1-15, NOT STATE LAW,
SHALL GOVERN THE ARBITRABILITY OF ALL CLAIMS, AND THE DECISION OF
THE ARBITRATOR AS TO ARBITRABILITY SHALL BE FINAL.
A SINGLE ARBITRATOR WHO IS A RETIRED FEDERAL OR CALIFORNIA JUDGE
SHALL CONDUCT THE ARBITRATION UNDER THE THEN CURRENT RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (THE "AAA"). THE ARBITRATOR SHALL
BE SELECTED BY MUTUAL AGREEMENT ON THE ARBITRATOR WITHIN THIRTY (30)
DAYS OF WRITTEN NOTICE BY ONE PARTY TO THE OTHER INVOKING THIS
ARBITRATION PROVISION, IN ACCORDANCE WITH AAA PROCEDURES FROM A LIST
OF QUALIFIED PEOPLE MAINTAINED BY THE AAA. THE ARBITRATION SHALL BE
CONDUCTED IN SAN FRANCISCO, CALIFORNIA AND ALL EXPEDITED PROCEDURES
PRESCRIBED BY THE AAA RULES SHALL APPLY.
THERE SHALL BE NO DISCOVERY OTHER THAN THE EXCHANGE OF INFORMATION
WHICH IS PROVIDED TO THE ARBITRATOR BY THE PARTIES, THE ARBITRATOR
SHALL HAVE AUTHORITY ONLY TO GRANT SPECIFIC PERFORMANCE AND TO ORDER
OTHER EQUITABLE RELIEF AND TO AWARD COMPENSATORY DAMAGES, BUT SHALL
NOT HAVE THE AUTHORITY TO AWARD PUNITIVE DAMAGES OR OTHER
NONCOMPENSATORY DAMAGES OR ANY OTHER FORM OF RELIEF. THE ARBITRATOR
SHALL AWARD TO THE PREVAILING
31
PARTY ITS REASONABLE ATTORNEYS' FEES AND COSTS AND OTHER EXPENSES
INCURRED IN THE ARBITRATION, EXCEPT THE PARTIES SHALL SHARE EQUALLY
THE FEES AND EXPENSES OF THE ARBITRATOR. THE ARBITRATOR'S DECISION
AND AWARD SHALL BE FINAL AND BINDING, AND JUDGMENT ON THE AWARD
RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION THEREOF,
15. Assignment.
Without obtaining Seller's consent, Buyer may assign its rights under this
Agreement to any entity in which Buyer is, directly or indirectly, the
administrative or managing member or any affiliate of Buyer, provided,
however, that Buyer shall have no such right unless a written assignment
is delivered to Seller no later than five (5) business days before
Closing; and further provided that no such assignment shall relieve Buyer
of its obligations hereunder.
16. Interpretation and Applicable Law.
This Agreement shall be construed and interpreted in accordance with the
laws of the state in which the Property is located (the "State"). Where
required for proper interpretation, words in the singular shall include
the plural; the masculine gender shall include the neuter and the
feminine, and vice versa. The terms "successors and assigns" shall include
the heirs, administrators, executors, successors, and assigns, as
applicable, of any party hereto.
32
17. Amendment.
This Agreement may not be modified or amended, except by an agreement in
writing signed by the parties. The parties may waive any of the conditions
contained herein or any of the obligations of the other party hereunder,
but any such waiver shall be effective only if in writing and signed by
the party waiving such conditions and obligations.
18. Attorney's Fees.
In the event it becomes necessary for either party to file a suit or
arbitration to enforce this Agreement or any provisions contained herein,
the prevailing party shall be entitled to recover, in addition to all
other remedies or damages, reasonable attorneys' fees and costs of court
incurred in such suit or arbitration.
19. Entire Agreement; Survival.
This Agreement (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings of the parties in connection therewith. No
representation, warranty, covenant, agreement, or condition not expressed
in this Agreement shall be binding upon the parties hereto nor affect or
be effective to interpret, change, or restrict the provisions of this
Agreement. All of the obligations of the parties hereunder and all other
provisions of this Agreement shall be deemed to have merged into the Deed
and shall be extinguished at Closing or the earlier termination of this
Agreement, except as expressly provided herein.
20. Multiple Originals only; Counterparts.
Numerous agreements may be executed by the parties hereto. Each such
executed duplicate original shall have the full force and effect of an
original executed instrument. This Agreement may be executed in any number
of counterparts, all of which when taken together shall constitute the
entire agreement of the parties.
21. Acceptance.
Time is of the essence of this Agreement. The date of execution of this
Agreement by Seller shall be the date of execution of this Agreement. If
the final date of any period falls upon a Saturday, Sunday, or legal
holiday under Federal law, the laws of the State or the laws of the State
of California, then in such event the expiration date of such period shall
be extended to the next day which is not a Saturday, Sunday, or legal
holiday under Federal law, the laws of the State or the State of
California.
33
22. Real Estate Commission.
Seller and Buyer each represent and warrant to the other that neither
Seller nor Buyer has contracted or entered into any agreement with any
real estate broker, agent, finder or any other party in connection with
this transaction, and that neither party has taken any action which would
result in any real estate broker's, finder's or other fees or commissions
being due and payable to any party with respect to the transaction
contemplated hereby, except that Seller is represented by Triple Net
Properties Realty, Inc., as its broker, and by Xxxxx & Xxxxx, and Seller
shall pay any and all commissions due to said brokers. Each party hereby
indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including reasonable attorneys' fees)
resulting to the other party by reason of a breach of the representation
and warranty made by such party in this Section.
23. Exchange.
At the option of either party, such party may elect to consummate the
transaction hereunder in whole or in part as a like-kind exchange pursuant
to Section 1031 of the Internal Revenue Code of 1986, as amended. If
either party (the "Exchanging Party") so elects, the other party (the
"Cooperating Party") shall cooperate with the Exchanging Party, executing
such documents and taking such action as may be reasonably necessary in
order to effectuate this transaction as a like-kind exchange; provided,
however, that (i) the Cooperating Party's cooperation hereunder shall be
without cost, expense or liability to the Cooperating Party of any kind or
character, including, without limitation, any attorneys' fees, costs or
expense incurred in connection with the review or preparation of
documentation in order to effectuate such like-kind exchange, and the
Cooperating Party shall have no obligation to take title to any real
property; (ii) the Exchanging Party shall assume all risks in connection
with the designation, selection and setting of terms of the purchase or
sale of any exchange-property; (iii) the Exchanging Party shall bear all
costs and expenses in connection with any such exchange transaction in
excess of the costs and expenses which would have otherwise been incurred
in acquiring or selling the Property by means of a straight purchase, so
that the net effect to the Cooperating Party shall be identical to that
which would have resulted had this Agreement closed on a purchase and
sale; (iv) any documents to effectuate such exchange transaction are
consistent with the terms and conditions contained in this Agreement; and
(v) the Exchanging Party shall indemnify, defend and hold the Cooperating
Party harmless from any and all claims, demands, penalties, loss, causes
of action, suits, risks, liability, costs or expenses of any kind or
nature (including, without limitation, reasonable attorneys' fees) which
the Cooperating Party may incur or sustain, directly or indirectly,
related to or in connection with, or arising out of, the consummation of
this transaction as a like-kind exchange as contemplated hereunder.
34
24. Confidentiality.
Buyer agrees that, prior to the closing, all Property information received
by Buyer from Seller shall be kept confidential as provided in this
Section. Without the prior written consent of Seller, the Property
information shall not be disclosed by Buyer or its representatives, in any
manner whatsoever, in whole or in part, prior to the Closing except (1) to
Buyer's consultants, attorneys and agents as necessary for the Buyer's
inspection and analysis of the Property, and Buyer's potential lenders and
equity investors; (2) as may be necessary for Buyer or Buyer's
representatives to comply with applicable laws, including, without
limitation, governmental, regulatory, disclosure, tax and reporting
requirements; to comply with other requirements and requests of regulatory
and supervisory authorities and self-regulatory organizations having
jurisdiction over Buyer or Buyer's representatives; to comply with
regulatory or judicial processes; or to satisfy reporting procedures and
inquiries of credit rating agencies in accordance with customary practices
of Buyer or its affiliates; and (3) to prospective tenants of the
Property.
THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK
35
SIGNATURE PAGE FOR
XXXXXXXXX XXXXX
00 AND 00 XXXXXXXXX XXXXXX
XXX XXXXXXXXX. XXXXXXXXXX
EXECUTED BY SELLER on this the 26th day of June, 2006
SELLER:
GREIT - HAWTHORNE PLAZA, LP
A VIRGINIA LIMITED PARTNERSHIP
By: GREIT - Hawthorne Plaza GP, LLC
a Virginia limited liability company
Its: General Partner
By: G REIT, L.P.
a Virginia limited partnership
Its: Sole Member
By: G REIT, Inc.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------
Title: Executive Vice President
------------------------
[BUYER'S SIGNATURE ON FOLLOWING PAGE]
36
EXECUTED BY BUYER on this the 26th day of June, 2006.
BUYER:
TMG PARTNERS,
a California corporation
By: /s/ Xxxxx Xxxxxxxxx
------------------------
Xxxxx Xxxxxxxxx
Its: Executive Vice-President
37
List of Exhibits
Exhibit A: Description of Property
Exhibit B: Assignment and Assumption
Exhibit C: Grant Deed
Exhibit D: Xxxx of Sale
Exhibit E: Buyer's' Leasing Costs for New Lease
Exhibit F: List of Leases
Exhibit G: List of Contracts
Exhibit H: Guaranty of Seller's Post-Closing Liability
Exhibit I: Form of Seller's Estoppel
38
