1
Exhibit 10.1
AGREEMENT FOR SALE OF
PARTNERSHIP INTERESTS
by and between
DSL SERVICE COMPANY,
A CALIFORNIA CORPORATION
and
XXXXXX SAVINGS AND LOAN ASSOCIATION, F.A.
as Seller
and
XXXXXXX PACIFIC PROPERTIES, INC.,
A CALIFORNIA CORPORATION
as Buyer
Dated: September 30, 1996
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TABLE OF CONTENTS
Page
1. Definitions ........................................................... 2
2. Assignment of Partnership Interests ................................... 8
3. Purchase Price ........................................................ 8
3.1 Deposit ........................................................... 8
3.2 Cash Balance ...................................................... 9
4. Due Diligence ......................................................... 9
4.1 Delivery of Due Diligence Materials ............................... 9
4.2 Right of Entry .................................................... 9
4.2.1 Notice ..................................................... 9
4.2.2 Expenses ................................................... 9
4.2.3 License .................................................... 10
4.2.4 Physical Testing ........................................... 10
4.2.5 Scheduling of Tests ........................................ 10
4.2.6 Representative ............................................. 10
4.2.7 No Interference ............................................ 10
4.2.8 Liens ...................................................... 10
4.2.9 Restoration ................................................ 11
4.2.10 Indemnity .................................................. 11
4.2.11 Confidential ............................................... 11
4.3 Disapproval of Seller's Studies or Buyer
Inspections ....................................................... 11
4.4 Contracts ......................................................... 12
5. As Is Purchase ........................................................ 12
6. Indemnity ............................................................. 13
6.1 Seller's Indemnity ................................................ 13
6.2 Buyer's Indemnity ................................................. 13
6.3 Indemnified Parties ............................................... 13
6.4 Survival .......................................................... 14
7. Grant Deeds ........................................................... 14
8. Conditions Precedent to Close of Escrow ............................... 14
8.1 Seller ............................................................ 14
8.1.1 No Suit .................................................... 14
8.1.2 Buyer's Representations .................................... 14
8.1.3 Buyer's Covenants .......................................... 14
8.1.4 Resolutions ................................................ 14
8.1.5 Consents ................................................... 15
8.1.6 Concurrent Transaction ..................................... 15
8.1.7 Xxxxx Finder Fee ........................................... 15
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Page
8.2 Buyer .............................................................. 15
8.2.1 Due Diligence Period ........................................ 15
8.2.1.1 Inspection ......................................... 15
8.2.1.2 Preliminary Report ................................. 15
8.2.1.3 Board of Directors ................................. 15
8.2.2 Close of Escrow ............................................. 15
8.2.2.1 Title Policy ....................................... 15
8.2.2.2 No Suit ............................................ 16
8.2.2.3 Seller's Representations ........................... 16
8.2.2.4 Seller's Covenants ................................. 16
8.2.2.5 Concurrent Transaction ............................. 16
8.2.2.6 Resolutions ........................................ 16
8.2.2.7 Consents ........................................... 16
8.2.2.8 Contracts .......................................... 17
8.2.2.9 Tenant Estoppels ................................... 17
8.2.2.10 REA Estoppels ...................................... 17
8.2.2.11 Condition of Real Property ......................... 17
8.2.2.12 No Material Change ................................. 17
9. Closing ............................................................... 18
9.1 Time .............................................................. 18
9.2 Documents ......................................................... 18
9.2.1 Seller ..................................................... 18
9.2.1.1 Assignments of Partnership Interest ............... 18
9.2.1.2 Non-Foreign Certificate ........................... 18
9.2.1.3 Notice to Tenants ................................. 18
9.2.1.4 California Form 590 ............................... 18
9.2.1.5 Amended and Restated Statements of Partnership .... 18
9.2.1.6 Additional Documents .............................. 19
9.2.1.7 Beneficiary Statement ............................. 19
9.2.2 Buyer ...................................................... 19
9.2.2.1 Purchase Price .................................... 19
9.2.2.2 Additional Funds .................................. 19
9.2.2.3 Notice to Tenants ................................. 19
9.2.2.4 Amended and Restated
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Page
Statements of Partnership ......................... 19
9.2.2.5 Additional Documents .............................. 19
9.2.3 JV Partnerships ............................................ 19
9.2.3.1 Deeds ............................................. 19
9.2.3.2 Assignments ....................................... 19
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Page
9.3 Procedure ........................................................ 20
9.3.1 Amended and Restated Statements ........................... 20
9.3.2 Deeds ..................................................... 20
9.3.3 Purchase Price ............................................ 20
9.3.4 Deliveries to Buyer ....................................... 20
9.3.5 Deliveries to Seller ...................................... 20
9.4 Escrow Instructions .............................................. 20
9.5 Closing Costs and Prorations ..................................... 21
9.5.1 Closing Costs ............................................. 21
9.5.2 Prorations ................................................ 21
9.5.2.1 Lease Rentals .................................... 21
9.5.2.2 CAM Charges ...................................... 22
9.5.2.3 Leasing Costs .................................... 22
9.5.2.4 Security Deposits ................................ 22
9.5.2.5 Real Estate Taxes ................................ 22
9.5.2.6 Utilities ........................................ 23
9.5.2.7 Final Adjustment After Closing ................... 23
9.5.3 Refunds of Real Estate Taxes .............................. 23
9.5.4 Additional Costs .......................................... 24
9.5.5 Replacement of Bonds, Passbooks, Etc ...................... 24
9.6 Delivery of Real Property
Documents ........................................................ 24
10. No Brokerage Commissions ............................................. 24
11. Condemnation/Casualty ................................................ 25
11.1 Condemnation .................................................... 25
11.2 Casualty ........................................................ 25
11.2.1 Material Casualty ....................................... 25
11.2.2 Nonmaterial Casualty .................................... 26
12. Representations and Warranties ....................................... 26
12.1 Buyer ........................................................... 26
12.1.1 Binding ................................................. 26
12.1.2 Authority ............................................... 26
12.1.3 No Bankruptcy ........................................... 27
12.2 DSL and Downey .................................................. 27
12.2.1 Binding ................................................. 27
12.2.2 Authority ............................................... 27
12.3 DSL ............................................................. 27
12.3.1 Environmental Matters ................................... 27
12.3.2 Notice of Noncompliance ................................. 28
12.3.3 Use and Operation ....................................... 28
12.3.4 Legal Action ............................................ 28
12.3.5 Leases; Rent Roll ....................................... 28
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Page
12.3.6 Contracts ............................................... 28
12.3.7 Other Rights ............................................ 29
12.3.8 Due Diligence Materials ................................. 29
12.3.9 Persons With Actual Knowledge ........................... 29
12.3.10 Related Entities ........................................ 29
12.3.11 Violation of Laws ....................................... 29
12.3.12 Access .................................................. 29
13. Operation of Real Property ........................................... 29
13.1 Ordinary Operation ............................................. 29
13.2 Leasing ........................................................ 30
13.3 New Contracts .................................................. 30
13.4 Tax Proceedings ................................................ 30
13.5 Copies of Notices .............................................. 30
13.6 Prohibition on Marketing ....................................... 30
14. Liquidated Damages ................................................... 31
15. Miscellaneous ........................................................ 31
15.1 Successors and Assigns ......................................... 31
15.2 Entire Agreement ............................................... 31
15.3 Professional Fees and Costs .................................... 31
15.4 Waiver of Trial by Jury ........................................ 32
15.5 Governing Law .................................................. 32
15.6 Further Assurances ............................................. 32
15.7 Severability ................................................... 32
15.8 Notices ........................................................ 32
15.9 Counterparts ................................................... 32
15.10 Time ........................................................... 33
15.11 Nonwaiver ...................................................... 33
15.12 Captions ....................................................... 33
15.13 Exhibits ....................................................... 33
15.14 Construction ................................................... 33
15.15 Confidentiality ................................................ 33
EXHIBIT A Partnership Interests
EXHIBIT B Form of Assignment of Partnership Interest
EXHIBIT C Environmental Reports
EXHIBIT D Legal Description of LVA Property
EXHIBIT E-1 Legal Description of Cameron Park Property
EXHIBIT E-2 Legal Description of West Lancaster Property
EXHIBIT E-2 Legal Description of Ontario Property
EXHIBIT F Due Diligence Materials
EXHIBIT G Form of Grant Deed
EXHIBIT H Form of Estoppel and List of Major Tenants
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Page
EXHIBIT I Form of Notice to Tenants
EXHIBIT J Form of Assignment of Leases and Contracts
EXHIBIT K Litigation
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AGREEMENT FOR SALE OF PARTNERSHIP INTERESTS
This Agreement for Sale of Partnership Interests ("Agreement") is
entered into as of September 30, 1996 by and between DSL Service Company, a
California corporation ("DSL"), individually and in its capacity as the managing
general partner of the JV Partnerships, and Downey Savings and Loan Association,
F.A. ("Downey", and together with DSL collectively "Seller") and Xxxxxxx Pacific
Properties, Inc., a California corporation ("Buyer").
R E C I T A L S:
A. DSL and Downey own the interests in the JV Partnerships as more
particularly set forth on EXHIBIT A (the "Partnership Interests").
B. The real property owned by LVA and the real property owned by
DSL/West Lancaster Phase II are currently encumbered by the Downey Loans. The
real property owned by DSL/Cameron Park and the real property owned by
DSL/Ontario are currently encumbered by the Sun Life Loans.
C. Buyer wishes to acquire the Partnership Interests and Seller is
willing to sell the Partnership Interests to Buyer on the terms set forth in
this Agreement.
D. Concurrently with the Closing, each Xxxxx/Xxxxxxxx Partner will
contribute all of its right, title and interest in and to the respective JV
Partnership to the Umbrella Partnership, Buyer will acquire at no cost to Buyer
the interest held by Costco in LVA, Buyer will contribute the Partnership
Interests acquired hereunder to the Umbrella Partnership and the Partnership
Properties and the LVA Property will be deeded to the Umbrella Partnership (the
"Concurrent Transaction"). The cost to acquire the interest held by Costco in
LVA, which is the "Distributable Cash" required to be paid to Costco pursuant to
the terms of the Agreement of Limited Partnership of LVA, will be paid by DSL up
to $100,000; and if such amount exceeds $100,000, subject to the mutual
agreement of DSL and LVCLP, each of LVCLP and DSL will pay one-half of any
amount in excess of $100,000.
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NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. Definitions. For the purposes of this Agreement the following terms
shall be defined as follows:
Actual Knowledge of Seller: "Actual Knowledge of Seller" means and
is limited to the actual knowledge of Xxxxx Xxxxx, Director of Property
Management, and Xxxxxxx Xxxxxxx, Vice President of Real Estate, without having
conducted any independent inquiry or inspection.
Assignment: "Assignment" shall have the meaning given thereto in
Section 9.2.3.2.
Assignment of Partnership Interest: "Assignment of Partnership
Interest" shall mean the document, the form of which is attached hereto as
EXHIBIT B, pursuant to which Seller will transfer the Partnership Interests to
Buyer.
Business Hours: "Business Hours" means 8:00 a.m. to 7:00 p.m. Monday
through Friday.
Buyer Inspection: "Buyer Inspection" shall have the meaning given
thereto in Section 4.2.
Closing and Close of Escrow: "Closing" or "Close of Escrow" shall be
deemed to have occurred when the four Assignments of Partnership Interest, duly
executed, are delivered to Buyer and the four Deeds have recorded in the
Official Records. "Closing" and "Close of Escrow" are terms used interchangeably
in this Agreement.
Closing Date: "Closing Date" means the date the Closing occurs which
is scheduled to be December 15, 1996, which date can be extended by either party
to satisfy any conditions to Closing, but in no event beyond the Outside Closing
Date.
Concurrent Transaction: The "Concurrent Transaction" shall have the
meaning given thereto in Recital D.
Contracts: "Contracts" means all of the contracts affecting the
Partnership Properties.
Costco: "Costco" means Costco Wholesale Corporation, a Washington
corporation.
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Deeds: "Deeds" shall have the meaning given thereto in Section 7.
Deposit: "Deposit" means the deposit of Two Hundred Fifty Thousand
Dollars ($250,000) which Buyer will place in Escrow no later than the expiration
of the Due Diligence Period.
Downey Loans: "Downey Loans" means those certain loans to (a) LVA
from Downey in the original principal amount of $37,000,000 and (b) DSL/West
Lancaster Phase II from Downey in the original principal amount of
$3,662,941.00.
DSL/Ontario: "DSL/Ontario" means the general partnership formed
between DSL and Ontario Village Limited Partnership, a California Limited
Partnership ("OVLP") pursuant to that certain Joint Venture Agreement dated
October 31, 1985, as amended by a First Amendment to Joint Venture Agreement
dated January 15, 1993 between Downey, as successor in interest to DSL, and
OVLP, and a Second Amendment to Joint Venture Agreement of DSL/Ontario dated
June 25, 1993 between Downey, OVLP and DSL, pursuant to which DSL was appointed
to manage the partnership and its property and Downey was released from all
obligations as managing general partner.
DSL/Cameron Park: "DSL/Cameron Park" means the general partnership
formed between DSL and Cameron Park Limited Partnership, a California limited
partnership ("CPLP") pursuant to that certain Joint Venture Agreement of
DSL/Cameron Park dated April 18, 1988, as amended by a First Amendment to Joint
Venture Agreement dated January 15, 1993 between DSL and CPLP.
DSL/Valley Central: "DSL/Valley Central" means the general
partnership formed between DSL and Lancaster Valley Central Limited Partnership,
a California Limited Partnership ("LVCLP") pursuant to that certain Joint
Venture Agreement of DSL/Valley Central dated January 8, 1988, as amended by a
First Amendment to Joint Venture Agreement between DSL and LVCLP, dated
September 1, 1989, a Second Amendment to Joint Venture Agreement between DSL and
LVCLP, dated March 20, 1990, and a Third Amendment to Joint Venture Agreement of
DSL/Valley Central between DSL and LVCLP, dated January 15, 1993.
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XXX/Xxxx Xxxxxxxxx Xxxxx XX: "DSL/West Lancaster Phase II" means the
general partnership formed between DSL and West Lancaster Phase II, a California
limited partnership ("WLP") pursuant to that certain Joint Venture Agreement
dated September 13, 1984, as amended by a First Amendment to Joint Venture
Agreement of DSL/West Lancaster Phase II between DSL and WLP, dated November 11,
1986 and a Second Amendment to Joint Venture Agreement dated January 15, 1993.
Due Diligence Materials: "Due Diligence Materials" shall have the
meaning given thereto in Section 4.1.
Due Diligence Period: The "Due Diligence Period" is the period
commencing on the date hereof and ending at 5:00 p.m. Pacific Time on October
31, 1996 during which Buyer must complete its due diligence as described in
Section 4.
Environmental Law: "Environmental Law" means any law, statute,
ordinance or regulation pertaining to health, industrial hygiene or the
environment including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, and the Resources
Conservation and Recovery Act of 1976, as amended.
Environmental Report(s): "Environmental Reports" means all of the
environmental reports in Seller's possession with respect to the Partnership
Properties and the LVA Property, as listed on EXHIBIT C.
Escrow: "Escrow" shall have the meaning given thereto in Section 3.
Escrow Holder: "Escrow Holder" is:
Commonwealth Land Title Insurance Company
000 Xxxx Xxxxx Xxx Xxxxxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxx
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Exhibits: "Exhibits" means the following, each of which is attached
hereto and incorporated herein by this reference:
Exhibit A Partnership Interests
Exhibit B Form of Assignment of Partnership Interest
Exhibit C Environmental Reports
Exhibit D Legal Descriptions of LVA Property
Exhibit E-1 Legal Description of Cameron Park Property
Exhibit E-2 Legal Description of West Lancaster Property
Exhibit E-3 Legal Description of Ontario Property
Exhibit F Due Diligence Materials
Exhibit G Form of Grant Deed
Exhibit H Form of Estoppel and List of Major Tenants for Each
Property
Exhibit I Form of Notice to Tenants
Exhibit J Form of Assignment of Leases and Contracts
Exhibit K Litigation
Hazardous Substance: "Hazardous Substance" means any substance,
material or waste which is or becomes designated, classified or regulated as
being "toxic" or "hazardous" or a "pollutant" or which is or becomes similarly
designated, classified or regulated, under any Environmental Law, including,
without limitation, PCB's, asbestos, petroleum and petroleum products.
JV Partnerships: "JV Partnerships" means XXX/Xxxxxx Xxxxxxx,
XXX/Xxxx Xxxxxxxxx Xxxxx XX, XXX/Xxxxxxx and DSL/Cameron Park.
Leases: "Leases" means all leases of space or occupancy agreements
(including licenses and concession agreements) affecting the Real Property.
Leasing Costs: "Leasing Costs" shall have the meaning given thereto
in Section 9.5.2.2.
LVA: "LVA" means Lancaster Valley Associates, a California limited
partnership formed between DSL/Valley Central, as general partner, and Costco,
as limited partner.
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LVA Property: "LVA Property" means that certain improved real
property owned by LVA, as more particularly described on EXHIBIT D.
Non-Foreign Certificate: "Non-Foreign Certificate" shall have the
meaning given thereto in Section 9.2.1.4.
Notices: "Notices" means all notices or other communications
required or permitted hereunder, which Notices shall be sent as follows to:
DSL and/or Downey: DSL Service Company
Downey Savings and Loan Association
North Tower
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
and
Xxxxx X. Xxxxxx, Esq.
Telecopy No. (000) 000-0000
with a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
Seventeenth Floor
000 Xxxx Xxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Esq.
Telecopy No. (000) 000-0000
Buyer: Xxxxxxx Pacific Properties, Inc.,
a California corporation
000 X. Xxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxx
Telecopy No. (000) 000-0000
with a copy to: Xxxxxxx & Verges
00 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Telecopy No. (000) 000-0000
Notice to Tenants: "Notice to Tenants" shall have the meaning given
thereto in Section 9.2.1.5.
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Outside Closing Date: "Outside Closing Date" means December 31, 1996
and is the last date on which the Closing/Close of Escrow can occur.
Partnership Interests: "Partnership Interests" shall have the
meaning given thereto in Recital A.
Partnership Properties: "Partnership Properties" means those certain
improved real properties owned by DSL/Cameron Park, DSL/West Lancaster II and
DSL/Ontario, respectively, each as more particularly described on EXHIBITS E-1,
E-2, E-3.
Permitted Exceptions: "Permitted Exceptions" shall have the meaning
given thereto in Section 8.2.1.2.
Proration Date: "Proration Date" shall have the meaning given
thereto in Section 9.5.2.
Purchase Price: The "Purchase Price" for the Partnership Interests
is Fifty-Five Million Dollars ($55,000,000) less, if Buyer elects to assume
either or both of the Sun Life Loans and the lender consents thereto, the
outstanding principal balance, any accrued and unpaid interest and any other
amounts then payable to the lender under the Sun Life Loans assumed, as set
forth in the lender's beneficiary statement(s) delivered to Escrow Holder. The
Purchase Price shall not be reduced by any prepayment penalty if the Sun Life
Loans (or either of them) are paid off or by any assumption fee if the Sun Life
Loans (or either of them) are assumed.
Real Property: "Real Property" means collectively the Partnership
Properties and the LVA Property.
Xxxxx/Xxxxxxxx Partner: "Xxxxx/Xxxxxxxx Partner" means collectively
OVLP, CPLP, LVCLP and WLP.
Xxxxx Finder Fee: The "Xxxxx Finder Fee" means the Two Million Five
Hundred Thousand Dollar ($2,500,000) payment to be made by Buyer to Xxxxxxx
Xxxxx or an affiliated entity ("Xxxxx") and, pursuant to a separate agreement,
to be paid to DSL at Close of Escrow in repayment of amounts owed to DSL with
respect to DSL/West Lancaster II, DSL/Ontario and DSL/Cameron Park.
Sun Life Loans: "Sun Life Loans" means those certain loans to (a)
DSL/Cameron Park from Sun Life Assurance Company of Canada in the original
principal amount
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of $5,250,000 and (b) DSL/Ontario from Sun Life Assurance Company of Canada in
the original principal amount of $4,850,000.
Tenants: "Tenants" means the tenants under the Leases.
Termination Notice: "Termination Notice" shall have the meaning
given thereto in Section 4.3.
Title Policies: "Title Policies" shall have the meaning given
thereto in Section 8.2.2.1.
Title Company: The "Title Company" is:
Commonwealth Land Title Insurance Company
000 Xxxx Xxxxx Xxx Xxxxxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxxx
Umbrella Partnership: "Umbrella Partnership" means the partnership
to be formed by Buyer prior to the Close of Escrow.
2. Assignment of Partnership Interests. Subject to the terms of this
Agreement, Seller hereby agrees to sell, transfer, assign and convey to Buyer,
and Buyer hereby agrees to purchase from Seller, all right, title and interest
of Seller in and to the Partnership Interests.
3. Purchase Price. The Purchase Price will be paid as follows:
3.1 Deposit. No later than the expiration of the Due Diligence
Period, Buyer will deliver to Escrow Holder in cash, by wire transfer or by
certified or cashier's check collectible in same day funds, the Deposit which,
except as expressly provided otherwise in this Agreement, shall be
nonrefundable. Escrow Holder will invest the Deposit in an interest-bearing
account and interest will accrue for the account of Buyer except as otherwise
provided in this Agreement and will be applied against the Purchase Price at
Closing. The Deposit and all interest accrued thereon will be immediately
returned to Buyer in the event of a Seller default or failure of a condition
precedent to Buyer's obligations or a termination pursuant to Sections 11.1 or
11.2.
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3.2 Cash Balance. On or before the day immediately prior to the
Close of Escrow, Buyer shall deposit with Escrow Holder by immediately available
federal wire transfer the Purchase Price, plus or minus the closing adjustments
and prorations described in Section 9.5, and the Xxxxx Finder Fee with an
assignment thereof from Xxxxx to DSL.
4. Due Diligence.
4.1 Delivery of Due Diligence Materials. Seller has delivered to
Buyer all of the materials relating to the Partnership Interests and the Real
Property as listed on EXHIBIT F (collectively, the "Due Diligence Materials")
for use by Buyer in connection with Buyer's investigation of the Partnership
Interests and the Real Property. Seller shall make available to Buyer, at
Seller's offices, all additional materials regarding the Partnership Interests
and the Real Property in Seller's possession. Seller makes no representation or
warranty of any kind with respect to the Due Diligence Materials, including
their accuracy, completeness or suitability for reliance thereon by Buyer,
except to the extent specifically set forth in Section 12. Seller shall deliver
to Buyer within one (1) day following the execution of this Agreement evidence
of the net worth of DSL as set forth in the Xxxxxx Financial Corporation Annual
Report Form 10K for 1995 and the second quarter form 10Q for the period ending
June 30, 1996.
4.2 Right of Entry. During the Due Diligence Period, provided that
Buyer is not in default hereunder, Buyer shall have the right to (i) have
discussions concerning the Real Property with Tenants, lenders on the Real
Property, parties to reciprocal easement agreements or other agreements
affecting the Real Property ("REA Agreements"), service providers and
governmental agencies, subject to the provisions of Section 15.15, and (ii)
enter and inspect the Real Property (each, a "Buyer Inspection") during Business
Hours pursuant to the following terms and conditions:
4.2.1 Notice. Buyer shall provide Seller with at least one (1)
business day's prior written notice of any Buyer Inspection (describing Buyer's
intended activities on the Real Property).
4.2.2 Expenses. Each Buyer Inspection shall be at Buyer's sole
cost and expense.
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4.2.3 License; Insurance. The persons or entities performing
the Buyer Inspection shall, if they are to make any invasive inspections or
studies, be properly licensed and qualified, shall have obtained all of the
appropriate permits for performing relevant tests and shall have delivered to
Seller, prior to performing any tests or entering the Real Property, evidence of
proper and adequate insurance reasonably satisfactory to Seller. In addition,
Buyer shall arrange for Seller to be named as an additional insured on Buyer's
commercial public liability insurance policy covering liability to property or
persons for Buyer's activities on or about the Real Property in an amount not
less than Two Million Dollars ($2,000,000.00).
4.2.4 Physical Testing. Seller shall have the right of
approval (which shall not be unreasonably withheld or delayed) of any proposed
physical testing or drilling of the Real Property. If Buyer, or its agents,
representatives or employees, undertake any borings or other disturbance of the
soil, such borings or disturbance shall be recompacted to the original condition
before such activities and Buyer shall obtain at its expense a certification
from a soils engineer that the borings or disturbance has been so recompacted.
4.2.5 Scheduling of Tests. Buyer shall schedule all tests
during Business Hours unless otherwise requested by Seller.
4.2.6 Representative. Seller shall have the right to have a
representative of Seller accompany Buyer and Buyer's representatives, agents or
designees while they are on the Real Property, provided Seller shall not delay
or inhibit Buyer's Inspection.
4.2.7 No Interference. Buyer and its representatives, agents
or designees shall use reasonable efforts to minimize interference with the
business operations on, or use of, the Real Property by Seller, the JV
Partnerships, or any tenant on the Real Property.
4.2.8 Liens. Buyer shall not cause or suffer any lien or other
encumbrance to be recorded against the Real Property, or any portion thereof,
and shall promptly cause any lien or other encumbrance caused or suffered by
Buyer (including mechanics' liens arising out of Buyer's activities under this
Section 4.2) to be immediately discharged or bonded over, to Seller's reasonable
satisfaction.
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4.2.9 Restoration. If any portion of the Real Property is
damaged due to Buyer's entry thereon, Buyer shall, at its sole cost and expense,
immediately repair and restore the Real Property, or portion thereof, to
substantially the same condition the Real Property was in immediately prior to
the date the damage occurred.
4.2.10 Indemnity. Buyer shall indemnify, protect and defend
(by counsel reasonably acceptable to Seller) and hold harmless Seller for, from
and against any and all claims for property damage, personal injury or
mechanics' liens, arising out of any entry, investigations, inspections, tests
and other activities undertaken by Buyer or its agents, designees or
representatives, including (a) reasonable attorneys' fees and expenses and other
reasonable costs and expenses incurred by Seller in connection with
investigating or defending any such matters, (b) any and all costs or expenses
incurred by Seller resulting from or arising out of the aggravation of physical
defects or conditions regarding hazardous, toxic or contaminated substances or
materials and (c) any and all costs or expenses incurred by Seller in defending,
discharging or bonding over any liens or encumbrances against any of the Real
Property resulting from Buyer's activities with respect thereto. This indemnity
provision shall survive Close of Escrow or any earlier termination of this
Agreement.
4.2.11 Confidential. Each Buyer Inspection, and the results
thereof, shall remain confidential pursuant to the terms of Section 13.15.
4.3 Disapproval of Seller's Studies or Buyer Inspections. Buyer
shall have the right, at any time during the Due Diligence Period, in Buyer's
sole and absolute discretion to disapprove the results of Buyer's review of the
Due Diligence Materials or the Buyer Inspections of the Real Property by
providing Seller and Escrow Holder with written notice thereof (a "Termination
Notice"). If Buyer delivers a Termination Notice to Seller and Escrow Holder
during the Due Diligence Period, then (a) this Agreement, and all of the
obligations, rights and liabilities of the parties to each other hereunder
(except for Buyer's indemnification obligations under Section 4.2.11, Buyer's
restoration obligations under Section 4.2.10, and the parties' confidentiality
obligations under Section 13.15), shall terminate and be of no further effect,
(b) Buyer shall immediately return to Seller the Due Diligence Materials and, if
requested by Seller and Seller pays to Buyer the cost thereof, deliver to Seller
any written reports, tests
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or memoranda in Buyer's possession relating to the Buyer Inspections. If Buyer
does not provide Seller and Escrow Holder with a Termination Notice unless Buyer
has elected to proceed with the transaction by written notice to Seller and
Escrow Holder prior to the expiration of the Due Diligence Period, then (i)
Buyer shall be deemed irrevocably to have delivered a Termination Notice and
(ii) this Agreement and the Escrow shall terminate without further instructions.
The parties' participation in Close of Escrow shall be deemed a waiver of (i)
each party's ability to terminate this Agreement on the basis of any failure of
any conditions precedent and (ii) each party's right to seek damages from the
other party for the breach of any representation, warranty or covenant of which
the non-breaching party had actual knowledge prior to Close of Escrow.
4.4 Contracts. During the Due Diligence Period, Buyer shall review
all of the Contracts and advise Seller of those Contracts which Buyer agrees to
assume ("Approved Contracts") and those Contracts which Buyer requests be
terminated on or before the Closing Date ("Disapproved Contracts"). Seller
agrees to terminate all Disapproved Contracts which are terminable without
payment or penalty at the Closing Date.
5. As Is Purchase. Buyer shall examine, inspect and conduct its own
investigation of (1) all matters relating to the Partnership Interests, (ii) all
matters relating to the Real Property including with respect to taxes, bonds,
environmental condition, permissible uses, zoning, covenants, conditions and
restrictions and (iii) all other matters which, in Buyer's judgment, bear upon
the value and suitability of the Partnership Interests and the Real Property or
Buyer's purposes. Except as otherwise specifically stated in Section 12, Seller
hereby specifically disclaims any warranty, guaranty or representation, oral or
written, past, present or future, of, as to or concerning (i) the nature and
condition of the Real Property, including the water, soil, geology,
environmental conditions (including the presence or absence of any Hazardous
Substance), and the suitability thereof for any and all activities and uses
which Buyer may elect to conduct thereon; (ii) the nature and extent of any
right-of-way, lease, possession, lien, encumbrance, license, reservation,
condition or otherwise; or (iii) the compliance of the Real Property or the
operation thereof with any laws, ordinances or regulations of any government or
other body (including the Americans With Disabilities Act). The sale of the
Partnership Interests and the transfer of the Partnership
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Properties as provided for herein is made on an "AS IS" basis, and Buyer
expressly acknowledges that, in consideration of the agreements of Seller
herein, except as otherwise expressly specified in this Agreement, SELLER MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF
LAW, WITH RESPECT TO THE PARTNERSHIP INTERESTS OR THE REAL PROPERTY, INCLUDING,
BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE REAL PROPERTY. The
foregoing shall not relieve Seller of any claim based on the fraud or
intentional misrepresentation by Seller.
6. Indemnity.
6.1 Seller's Indemnity. Seller shall indemnify, protect and defend
by counsel reasonably acceptable to Buyer and hold harmless Buyer from and
against any and all claims, damages, losses, costs, expenses and liabilities
(including all reasonable attorneys' fees and court costs paid or incurred by
Buyer) which arise out of or are in any way connected with (i) the ownership of
the Partnership Interests or the ownership and/or operation of the Real Property
from and after January 1, 1993 through the Closing or (ii) any misrepresentation
or breach of warranty or covenant by Seller in this Agreement. This indemnity
does not apply, however, to any item, matter, occurrence or condition which was
actually known to Buyer prior to the Closing Date.
6.2 Buyer's Indemnity. Buyer shall indemnify, protect and defend by
counsel reasonably acceptable to Seller and hold harmless Seller from and
against any and all claims, damages, losses, costs, expenses and liabilities
(including all reasonable attorneys' fees and court costs paid or incurred by
Seller) which arise out of or are in any way connected with (i) the ownership of
the Partnership Interests or the ownership and/or operation of the Real Property
after the Closing Date through the date of sale of the Real Property by the
Umbrella Partnership to an unrelated third party or (ii) any misrepresentation
or breach of warranty or covenant by Buyer in this Agreement. This indemnity
does not apply, however, to any item, matter, occurrence or condition which was
actually known to Seller prior to the Closing.
6.3 Indemnified Parties. For purposes of this Section 6.3, all
references to "Buyer" or "Seller" shall include (A) their parent, subsidiary or
affiliate corpora-
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tions and (B) their directors, officers, shareholders, employees and agents.
6.4 Survival. The provisions of this Section 6 shall survive the
Closing Date.
7. Grant Deeds. At the Closing, Buyer, as assignee of the Partnership
Interests, and the respective Xxxxx/Xxxxxxxx Partner shall cause each of
DSL/Ontario, DSL/West Lancaster Phase II and DSL/Cameron Park to convey the
Partnership Properties and LVA Associates to convey the LVA Property to the
Umbrella Partnership by grant deed (the "Deeds"), in the form of EXHIBIT G,
attached hereto.
8. Conditions Precedent to Close of Escrow. In addition to the
documents and funds which must be deposited into Escrow prior to Close of Escrow
as detailed in Section 9.2, the following are conditions precedent to Close of
Escrow:
8.1 Seller. Seller's conditions precedent to Close of Escrow are the
following:
8.1.1 No Suit. No suit, action or other proceeding shall be
pending or threatened which seeks, nor shall there exist any judgment the effect
of which is, to restrain the transactions contemplated in this Agreement.
8.1.2 Buyer's Representations. Buyer's representations and
warranties set forth herein shall be true and correct as of Close of Escrow.
8.1.3 Buyer's Covenants. Buyer shall have performed all of
Buyer's covenants and agreements contained herein which are required to be
performed by Buyer on or prior to Close of Escrow.
8.1.4 Resolutions. To the extent requested by either Seller or
Title Company, Buyer shall have provided Seller and Title Company at Close of
Escrow with certified copies of corporate resolutions approving the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby, together with such other certificates of incumbency and
other evidences of corporate or regulatory authority, including but not limited
to certificates of good standing, as Seller or Title Company may reasonably
require.
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8.1.5 Consents. Any consents or waivers required from the
Xxxxx/Xxxxxxxx Partner and Costco and, if either or both of the Sun Life Loans
is to be assumed by Buyer, the lender under the Sun Life Loans shall have been
obtained.
8.1.6 Concurrent Transaction. The Concurrent Transaction shall
close concurrently with the transactions contemplated herein.
8.1.7 Xxxxx Finder Fee. The Xxxxx Finder Fee shall have been
deposited in Escrow with instructions that it be delivered with the Purchase
Price to Seller at Close of Escrow.
8.2 Buyer. Buyer's conditions precedent to Close of Escrow are the
following:
8.2.1 Due Diligence Period. Prior to the end of the Due
Diligence Period, Buyer's inspection and approval, in its sole and absolute
discretion, of the following:
8.2.1.1 Inspection. The Buyer Inspections, surveys
(if any) and all other physical, environmental, legal and any other matters
relating to the Real Property as Buyer may elect to investigate.
8.2.1.2 Preliminary Report. The current preliminary
reports issued by Title Company for each of the Partnership Properties and the
LVA Property and all of the exceptions contained in such reports. The Sun Life
Loans, if assumed by Buyer, and all of the exceptions contained in the
preliminary reports, including any survey exceptions, which are approved are
hereinafter referred to as the "Permitted Exceptions."
8.2.1.3 Board of Directors. Buyer shall have obtained
the approval of this Agreement and the trans actions contemplated herein by
Buyer's Board of Directors evidence of which shall be delivered to Seller prior
to the end of the Due Diligence Period.
8.2.2 Close of Escrow. As of Close of Escrow:
8.2.2.1 Title Policy. The willingness of Title Company
to issue, upon the payment of its regularly scheduled premium, an Owner's ALTA
Extended Coverage title insurance policy for each of the Partnership Properties
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showing title to the Partnership Properties vested of record in the Umbrella
Partnership ("Title Policies"), subject only to (i) a lien for real property
taxes and assessments not then delinquent; (ii) the Permitted Exceptions; and
(iii) matters affecting the condition of title to the Partnership Properties
created by or with the written consent of Buyer, with such endorsements
reasonably requested by Buyer and available from the Title Company. The Xxxxxx
Loans shall be removed from title at the Close of Escrow. Seller, as general
partner of the JV Partnership, agrees to provide an owner's certificate to Title
Company as may be required for the issuance of the Title Policies.
8.2.2.2 No Suit. No suit, action or other proceeding
shall be pending or threatened which seeks, nor shall there exist any judgment
the effect of which is, to restrain the transactions contemplated in this
Agreement.
8.2.2.3 Seller's Representations. Seller's
representations and warranties set forth herein shall be true and correct as of
the Close of Escrow.
8.2.2.4 Seller's Covenants. Seller shall have performed
all of Seller's covenants and agreements contained herein which are required to
be performed by Seller on or prior to Close of Escrow.
8.2.2.5 Concurrent Transaction. The Concurrent
Transaction shall close concurrently with the transactions contemplated herein.
8.2.2.6 Resolutions. To the extent requested by Buyer or
the Title Company, Seller shall have provided Buyer and the Title Company at
Close of Escrow with certified copies of corporate resolutions approving the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, together with such other certificates of
incumbency and other evidences of corporate or regulatory authority, including
but not limited to certificates of good standings, as Buyer or Title Company may
reasonably require.
8.2.2.7 Consents. Any consents or assignments or waivers
required from the Xxxxx/Xxxxxxxx Partner and Costco and, if either or both of
the Sun Life Loans is to be assumed by Buyer, the consent of the lender under
the Sun Life Loans shall have been obtained, in a form satisfactory to Buyer.
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8.2.2.8 Contracts. DSL shall have terminated all
Disapproved Contracts in accordance with Section 4.4.
8.2.2.9 Tenant Estoppels. DSL shall have delivered to
Buyer not less than ten (10) days prior to the Closing, and Buyer shall have
approved not less than five (5) days prior to the Closing, estoppel certificates
in the form attached hereto as EXHIBIT H or in the form required by a Lease with
respect to such Lease ("Estoppels") from the major tenants (listed on the
attachment to EXHIBIT H) and all other Tenants on each of the Partnership
Properties and the LVA Property. If DSL is unable to deliver the required
Estoppels with respect to any Tenant other than a Major Tenant, DSL shall have
the right but not the obligation to deliver its estoppel (in the form attached
as EXHIBIT H and approved by Buyer) in substitution for up to 20% of such
Tenants. The Estoppels shall be dated no earlier than November 1, 1996.
8.2.2.10 REA Estoppels. DSL shall have delivered to Buyer
not less than ten (10) days prior to the Closing, and Buyer shall have approved
not less than five (5) days prior to the Closing, estoppel certificates or
offset statements from any parties to an REA Agreement which requires such party
to provide such an estoppel or offset statement in form and content reasonably
acceptable to Buyer. Seller shall use reasonable efforts to obtain from the
parties to any other REA Agreement, as requested by Buyer, estoppels or offset
statements prior to the end of the Due Diligence Period but receipt of such
estoppels or offset statements shall not be a condition to Closing and failure
to obtain the same shall not be a Seller default.
8.2.2.11 Condition of Real Property. The physical
condition of the Real Property, including, without limitation, the HVAC,
plumbing and electrical systems shall be in the same condition as on the date of
this Agreement, ordinary wear and tear excepted.
8.2.2.12 No Material Change. Buyer shall not have
discovered any new matter between the expiration of the Due Diligence Period and
the Closing Date which is of such a nature that it would materially and
adversely affect Buyer's acquisition, use or sale of the Real Property.
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9. Closing.
9.1 Time. Escrow shall close ("Close of Escrow") when all
documents and funds specified in this Section 9 have been deposited into Escrow.
The failure of Seller or Buyer to be in a position to close Escrow by the
Outside Closing Date shall constitute a default under this Agreement, this
Agreement and the Escrow shall terminate, and the Deposit and all interest
accrued thereon shall be delivered to Seller unless the failure to close is
caused by Seller or a Buyer closing condition has not been satisfied or this
Agreement is terminated pursuant to Sections 11.1 or 11.2.
9.2 Documents. Not less than one (1) day prior to Close of Escrow,
which shall occur on or before the Outside Closing Date, the parties shall
deposit into Escrow the funds and the documents described below.
9.2.1 Seller. Seller shall deposit the following:
9.2.1.1 Assignments of Partnership Interest. A
duly executed Assignment of Partnership Interest for each of the JV Partnerships
assigning and transferring the Partnership Interests.
9.2.1.2 Non-Foreign Certificate. If required, a
duly executed certificate (the "Non-Foreign Certificate") certifying that Seller
is not a "foreign person" within the meaning of Section 1445(f)(3) of the
Internal Revenue Code.
9.2.1.3 Notice to Tenants. Duplicate originals
of letters to the tenants on the Real Property (the "Notice to Tenants") in the
form of, and upon the terms and conditions contained in, EXHIBIT I, attached
hereto.
9.2.1.4 California Form 590. If required, a
properly executed California Form 590 or other evidence sufficient to establish
that no portion of the Purchase Price is required to be withheld pursuant to
Sections 18805 and 26131 of the California Revenue and Taxation Code.
9.2.1.5 Amended and Restated Statements of
Partnership. A duly executed, acknowledged and verified Amended and Restated
Statement of Partnership for each of the JV Partnerships evidencing the removal
of Seller as a
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partner of each of the JV Partnerships and appointing a new managing general
partner ("Amended and Restated Statement").
9.2.1.6 Additional Documents. Such other
documents, including escrow instructions, as may be reasonably required of
Seller to close the transaction in accordance with this Agreement.
9.2.1.7 Beneficiary Statement. If Buyer has
elected to assume either of the Sun Life Loans, Seller will request the lender
to deliver an updated beneficiary statement with respect to the loan or loans to
be assumed.
9.2.2 Buyer. Buyer shall deposit the following:
9.2.2.1 Purchase Price. The Purchase Price and
the Xxxxx Finder Fee.
9.2.2.2 Additional Funds. Additional cash in
the amount necessary to pay Buyer's share of the closing costs and prorations,
as hereinafter set forth.
9.2.2.3 Notice to Tenants. Duplicate originals
of the Notice to Tenants.
9.2.2.4 Amended and Restated Statements of
Partnership. A duly, executed, acknowledged and verified Amended and Restated
Statement for each of the JV Partnerships.
9.2.2.5 Additional Documents. Such other
documents and funds, including escrow instructions, as may be reasonably
required of Buyer to close the transaction in accordance with this Agreement.
9.2.3 JV Partnerships. Buyer and the Xxxxx/Xxxxxxxx
Partner shall deposit the following:
9.2.3.1 Deeds. The Deeds, duly executed and
acknowledged by the JV Partnerships which own the Partnership Properties,
conveying the Partnership Properties to the Umbrella Partnership and by LVA
conveying the LVA Property.
9.2.3.2 Assignments. Two (2) duly executed
counterpart originals of Assignments of the Leases and Contracts (the
"Assignments"), in the form of EXHIBIT J, attached hereto pursuant to which
XXX/Xxxx Xxxxxxxxx Xxxxx
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XX, XXX/Xxxxxxx and DSL/Cameron Park assign to the Umbrella Partnership all of
their right, title and interest in the Leases and Contracts with respect to the
respective Partnership Properties; and an original of an assignment of
partnership interest executed by Costco transferring Costco's interest in LVA to
Buyer.
9.3 Procedure. Escrow Holder shall close Escrow as follows:
9.3.1 Amended and Restated Statements. Publish and file
the Amended and Restated Statements.
9.3.2 Deeds. Record the Deeds in the official records of
the counties in which each of the Partnership Properties is located (instructing
the County Recorder not to affix the amount of any documentary or transfer taxes
to the Deed but to attach a separate statement to the Deed after recording) and
deliver conformed copies thereof to Buyer and Seller.
9.3.3 Purchase Price. Deliver the Purchase Price to Seller
(less prorations credited to Buyer and less the amount of Xxxxxx'x payoff
demands deposited in Escrow with respect to the Downey Loans) via wire transfer
of U.S. federal funds to the account or accounts designated by Seller in
accordance with Seller's instructions provided to Escrow Holder prior to Close
of Escrow.
9.3.4 Deliveries to Buyer. Deliver to Buyer (i) the duly
executed Assignments of Partnership Interest, (ii) one (1) fully-executed
counterpart original of each of the Assignments, (iii) the original Non-Foreign
Certificate and Form 590-RE, (iv) a conformed copy of the recorded Deeds, (v)
Buyer's closing statement and (vi) the original Title Policies.
9.3.5 Deliveries to Seller. Deliver to Seller (i) a
conformed copy of the recorded Deeds, (ii) one (1) fully-executed counterpart
original of each of the Assignments, and (iii) Seller's closing statement.
9.4 Escrow Instructions. This Agreement shall serve as escrow
instructions and an executed copy of this Agreement shall be deposited by Seller
and Buyer with Escrow Holder following the execution and delivery hereof. The
parties agree to execute for the benefit of Escrow Holder such additional escrow
instructions as are necessary to close the Escrow, provided that the additional
escrow
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instructions do not change the terms of this Agreement. In the event of any
conflict between the terms of such additional escrow instructions and this
Agreement, the terms of this Agreement will prevail. Escrow Holder is designated
as the "Reporting Person" for the transaction pursuant to Section 6045(e) of the
Internal Revenue Code.
9.5 Closing Costs and Prorations.
9.5.1 Closing Costs. All of the closing costs incurred in
connection with the transactions contemplated herein shall be borne by Buyer
including, without limitation, the following: the title insurance premium for
the Title Policies; all Escrow fees; any endorsements to the Title Policies; all
city and county documentary transfer taxes; the cost of any required survey; and
all recording costs.
9.5.2 Prorations. The adjustments and prorations set forth
below with respect to the Partnership Properties shall be made at Close of
Escrow. For purposes of this Section 9.5.2, the term "Proration Date" shall be
defined as 11:59 p.m. on the day preceding Close of Escrow.
9.5.2.1 Lease Rentals. Except for common area
maintenance charges, taxes and insurance charged to Tenants under the Leases
(collectively, "CAM Charges"), which are covered under Section 9.5.2.2 below,
all accrued rent (including all accrued operating expense and tax escalations
and recoveries), charges and revenues of any kind under the Leases shall be
prorated as of the Proration Date based on the actual number of days in the
month in which Close of Escrow occurs. Delinquent rent and rent not paid by
Close of Escrow shall not be prorated. Buyer shall receive a credit at Close of
Escrow for all rents applicable to the period from and after Close of Escrow
that are due and payable in the month in which Close of Escrow occurs and that
have been collected by Seller. Percentage rent for 1996 which will be calculated
and may be paid by Tenants under the Leases after the Closing will be forwarded
promptly upon receipt to Seller, prorated in the event the Closing occurs prior
to December 31, 1996, without offset. If Buyer, Seller, the Umbrella Partnership
or any JV Partnership receives any revenues to which it is not entitled, said
party shall promptly forward such amounts to Buyer who shall disburse such
amounts to the party entitled thereto; provided, the first rents and other
payments collected after the Proration Date from any Tenant shall be applied
first to current rents, then to Buyer's cost of
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collection and then to delinquent rents in inverse chronological order. Seller
shall have the right to pursue Tenants for payment of rent delinquent at Closing
provided Seller agrees not to bring an action for unlawful detainer or file a
petition for involuntary bankruptcy against any Tenant.
9.5.2.2 CAM Charges. Seller will prepare the
1996 year-end reconciliation of CAM Charges and submit invoices therefor to the
Tenants requesting payment to Seller. Buyer agrees to include a statement on its
rent invoices that statements for 1996 CAM Charges will be sent directly from
Seller and that Tenants are to pay such charges directly to Seller. In the event
the Closing occurs prior to December 31, 1996, CAM Charges for December 1996
will be prorated as of the Proration Date and only the prorated portion for the
period to the Proration Date will be payable to Seller. Any refunds of 1996 CAM
Charges will be paid by Seller to the Tenants without offset. If Buyer receives
any payments for 1996 CAM Charges, Buyer will promptly forward the same to
Seller without offset.
9.5.2.3 Leasing Costs. All amounts payable by
the landlord under the Leases, such as leasing commissions, tenant improvement
costs and any other monetary concessions ("Leasing Costs"), shall be allocated
as follows: Seller shall pay all Leasing Costs with respect to existing Leases
and to New Leases which have not been approved by Buyer under Section 13.2; and,
if the Closing occurs, Buyer shall pay any Leasing Costs with respect to
renewal, extensions or expansion rights under the Leases and any Leasing Costs
with respect to New Leases which have been approved by Buyer under Section 13.2
for space which was unleased at July 31, 1996.
9.5.2.4 Security Deposits. Buyer shall receive
a credit against the Purchase Price equal to all tenant security deposits or any
other tenant deposits deposited by the Tenants under their Leases, less any
portion thereof previously applied by Seller and acknowledged by Tenants in
their estoppels.
9.5.2.5 Real Estate Taxes. All real and
personal property taxes, installments of bonds and special taxes and assessments
attributable to the Partnership Properties shall be prorated as of the Proration
Date based on a 365-day year and the assessed value of the Partnership
Properties in effect at Close of Escrow. Each of the respective JV Partnerships
shall pay all such real estate
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taxes which are due for the period of their ownership of the Partnership
Properties through and including the Proration Date.
9.5.2.6 Utilities. Buyer shall arrange with all
utility services and companies serving the Partnership Properties to have
accounts started in the name of the Umbrella Partnership or its property manager
beginning as of the Closing Date and shall provide deposits, as are required to
obtain the release of any Seller deposit therefor. Seller will retain any
deposits they have with any utility services or companies. Buyer and Seller
shall cooperate to have the utility services and companies make utility readings
as of the Proration Date. If readings cannot be made, utility charges shall be
prorated as of the Proration Date based on estimates from the latest bills
available; provided, in any event, the JV Partnership shall pay, through and
including the Proration Date, all utility charges attributable to the
Partnership Properties and LVA shall pay, through and including the Proration
Date, all utility charges attributable to the LVA Property which are not payable
directly by Tenants.
9.5.2.7 Final Adjustment After Closing. If
final prorations cannot be made at Closing for any item being prorated under
this Section 9.5.2, or if either party discovers an error in the prorations,
then Buyer and Seller agree to allocate such items on a fair and equitable basis
as soon as invoices or bills or information regarding the error are available,
with final adjustment to be made as soon as reasonably possible after the
Closing Date but no later than one hundred twenty (120) days after the Closing
Date at which time all prorations shall be deemed to be final. Payments in
connection with any final adjustment shall be due within thirty (30) days after
the parties have agreed thereto. The parties shall each have reasonable access
to and the right to inspect and audit the other party's books if necessary to
confirm the final prorations.
9.5.3 Refunds of Real Estate Taxes. Buyer specifically
acknowledges that Seller shall be entitled to any refund of real and personal
property taxes, installments of bonds and special taxes and assessments
attributable to the Partnership Properties or to the LVA Property and allocable
to the period prior to Close of Escrow. Any such refunds shall be paid to Seller
regardless of when they are received less Buyer's cost of collection and subject
to the rights of Tenants to receive all or any portion of such refunds. Buyer
shall have the absolute right to retain any
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such refunds which are attributable to any fiscal tax year after the Closing
Date.
9.5.4 Additional Costs. Buyer and Seller each shall pay
its own legal, lending and other fees and expenses incurred in connection with
the negotiation, documentation and closing of the transactions contemplated by
this Agreement.
9.5.5 Replacement of Bonds, Passbooks, Etc. During the Due
Diligence Period, Seller will provide Buyer with a list of any bonds, passbook
accounts, or other similar security (collectively, "Security") which has been
posted or provided by Seller or the Partnership as required by any governmental
entity. Buyer agrees to replace any such Security with its own security at
Closing and assist in the release of Seller's Security. If at any time after the
Closing Seller becomes aware of any Security which has not been replaced prior
to Closing, Seller will notify Buyer and Buyer will provide substitute Security
within thirty (30) days after receipt of notice, provided that Buyer shall not
be required to replace Security in excess of $10,000 per Security and $20,000 in
the aggregate.
9.6 Delivery of Real Property Documents. Within five (5) days
following the Closing or at such later date as may be requested by Buyer, Seller
will deliver to Buyer all original estoppels and Sun Life Loans documents (if
such loans are assumed), and all documents relating to the Real Property in
Seller's possession which have not, as originals, previously been delivered to
Buyer.
10. No Brokerage Commissions. Buyer is a licensed real estate broker acting
as a principal in this transaction and claims no right to payment of a
commission in connection with the transactions contemplated herein. Except for
the Xxxxx Finder Fee which shall be paid by Buyer to Xxxxx and assigned to
Seller as provided herein, each party to this Agreement warrants to the other
parties that no person or entity can properly claim a right to a real estate
commission, finder's fee or other real estate brokerage-type commission based
upon the acts of that party with respect to the transactions contemplated with
respect to this Agreement. Each party hereby agrees to indemnify, protect and
defend the other parties (by counsel acceptable to the party seeking
indemnification) against and hold the other harmless from and against any and
all damages, liabilities, loss, cost and expense, including, but not limited to,
reasonable attorneys' fees and court costs, resulting from any claims
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for a commission or fee by any person or entity based upon such acts. Seller has
advised Buyer of the allegation by Xxxxxxx X. Xxxx and Xxxx X. Xxxxx
("Xxxx/Xxxxx") that a commission of $940,000 is due to Xxxx/Xxxxx in connection
with a proposed sale of the LVA Property to their client. The foregoing
indemnity shall extend to any claim Xxxx/Xxxxx may make against Buyer, provided
that the obligation to defend shall be by joint counsel selected by Seller.
11. Condemnation/Casualty.
11.1 Condemnation. If prior to Close of Escrow a taking or
condemnation of any portion of any one of the Partnership Properties or the LVA
Property has occurred, either party, at its option, may terminate this Agreement
within five (5) days after Seller has sent and Buyer has received written notice
of such event (and, if necessary, Close of Escrow shall be extended by the
number of days necessary to give Buyer this full five (5) day period but not
beyond the Outside Closing Date). If Buyer does not deliver to Seller or Seller
does not deliver to Buyer a Termination Notice within the five (5) day period,
Close of Escrow shall take place as provided in this Section 11.1.1 with a
credit against the Purchase Price in an amount equal to any condemnation awards
actually received by the respective JV Partnership or LVA on account of such
occurrence. If the transaction contemplated by this Agreement is not consummated
due to such an event of condemnation, any condemnation award received as a
result thereof shall be the sole property of the respective JV Partnership or
LVA.
11.2 Casualty.
11.2.1 Material Casualty. If prior to Close of Escrow any
of the Partnership Properties or the LVA Property is materially damaged or
destroyed by fire or other casualty, Buyer, at its option, may terminate this
Agreement within five (5) days after notice of such event (and, if necessary,
Close of Escrow shall be extended by the number of days necessary to give Buyer
this full five (5) day period but not beyond the Outside Closing Date). For
purposes of this Section 11.2.1, a property shall be deemed "materially" damaged
or destroyed if the cost of repairing or restoring such property is in excess of
ten percent (10%) of the value of such property. If Buyer does not deliver to
Seller a Termination Notice within the five (5) day period, Close of Escrow
shall take place as provided in this Section 11.2.1 with a credit against the
Purchase Price in an amount equal to the cost of repairing or restoring the
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damaged property plus any lost rents and out-of-pocket costs to be incurred by
Buyer, as reasonably determined by Seller; provided, however, in no event shall
Buyer be entitled to a credit to the Purchase Price under this Section 11.2.1 in
excess of ten percent (10%) of the value of the damaged property; and provided,
further, if Seller will be obligated pursuant to the foregoing to pay any such
lost rents or out-of-pocket costs to Buyer as a result of the damage, Seller
shall have the right to terminate this Agreement and the Escrow.
11.2.2 Nonmaterial Casualty. If prior to Close of Escrow
any of the Partnership Properties or the LVA Property is damaged or destroyed by
fire or other casualty which is not governed by Section 11.2.1, Close of Escrow
shall take place as provided in this Agreement with a credit against the
Purchase Price equal to the cost of repairing or restoring the damaged property
plus any lost rents and out-of-pocket costs to be incurred by Buyer, as
reasonably determined by Seller; provided, however, in no event shall Buyer be
entitled to a credit to the Purchase Price under this Section 11.2.2 in excess
of ten percent (10%) of the value of the damaged property; and provided,
further, if Seller will be obligated pursuant to the foregoing to pay any such
lost rents or out-of-pocket costs to Buyer as a result of the damage, Seller
shall have the right to terminate this Agreement and the Escrow.
11.3 Value of Properties. For purposes hereof, the value of each
of the Partnership Properties and the LVA Property are as follows: Cameron Park
Shopping Center - $6,000,000; Ontario Village Plaza - $5,000,000; Xxxx Xxxxxxxxx
Xxxxx - $2,000,000; and the LVA Property - $42,000,000.
12. Representations and Warranties.
12.1 Buyer. Buyer represents and warrants to Seller, which
representations and warranties shall survive the execution of this Agreement and
Close of Escrow, the following:
12.1.1 Binding. This Agreement constitutes a valid and
legally binding obligation of Buyer, enforceable in accordance with its terms.
12.1.2 Authority. Buyer has the full power and authority
to execute and deliver and fully perform its obligations under this Agreement.
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12.1.3 No Bankruptcy. Buyer has not made (i) a general
assignment for the benefit of creditors; (ii) filed any voluntary petition in
bankruptcy or suffered the filing of an involuntary petition by Buyer's
creditors; (iii) suffered the appointment of a receiver to take possession of
all or substantially all of Buyer's assets; (iv) suffered the attachment or
other judicial seizure of all, or substantially all, of Buyer's assets; (v)
admitted in writing its inability to pay its debts as they become due; or (vi)
made an offer of settlement, extension or composition to its creditors
generally.
12.2 DSL and Xxxxxx. DSL and Xxxxxx each represents and warrants
to Buyer, which representations and warranties shall survive the execution of
this Agreement and Close of Escrow, the following:
12.2.1 Binding. This Agreement constitutes a valid and
legally binding obligation of DSL and Xxxxxx, enforceable in accordance with its
terms.
12.2.2 Authority. DSL and Xxxxxx each have the full power
and authority to execute and deliver and fully perform its obligations under
this Agreement.
12.3 DSL. DSL, in its capacity as managing general partner of the
JV Partnerships, represents and warrants to Buyer, which representations and
warranties shall survive the execution of this Agreement and Close of Escrow for
eighteen (18) months following the Close of Escrow, the following:
12.3.1 Environmental Matters. To the Actual Knowledge of
Seller and except as set forth in the Environmental Reports, (i) no Hazardous
Substances are now or have been used, generated, disposed, released, discharged
or stored in, under, about or on the Real Property except those Hazardous
Substances which are or which have been used or stored on the Real Property in
the normal course of use and operation of the Real Property and in compliance
with all applicable Environmental Laws, (ii) there are and have been no federal,
state or local enforcement, clean-up, removal, remedial or other governmental or
regulatory actions instituted or completed affecting the Real Property, and
(iii) no claims have been made by any third party against Seller, the JV
Partnerships which own the Partnership Properties, or LVA with respect to the
LVA Property, relating to any Hazardous Substances on or within the Real
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Property and (iv) there are no underground storage tanks at the Partnership
Properties or the LVA Property.
12.3.2 Notice of Noncompliance. Seller has received no
written notice that the current use and operation of the Partnership Properties
or the LVA Property are not in compliance with applicable Environmental Laws,
building codes, zoning and land use laws, and other applicable local, state and
federal laws and regulations.
12.3.3 Use and Operation. Seller has received no written
notice of any condemnation, environmental, zoning or other land use regulation
proceedings, either instituted or planned to be instituted, which would
detrimentally affect the use and operation of the Real Property.
12.3.4 Legal Action. To Seller's Actual Knowledge (which
for purposes of this representation only shall include the actual knowledge of
Xxxxx X. Xxxxxx, Esq. the agent for service of process for DSL), there are no
condemnation, environmental, zoning or other land-use regulation proceedings,
either instituted, or planned to be instituted or, except as set forth in
EXHIBIT K, any other litigation, actions, suits or proceedings pending or
threatened which would affect the use, occupancy or operation of the Real
Property for its intended purpose or Seller's ability to perform hereunder or
the value of the Real Property, nor has Seller received notice of any pending or
threatened special assessment proceedings affecting the Real Property.
12.3.5 Leases; Rent Roll. There are and will be no oral or
written agreements with respect to any Lease allowing the Tenant any reduction,
abatement, concession, allowance or subsidy of rent under its Lease or allowing
the payment of any portion of the rent in any form other than in cash except as
may be fully noted on the rent roll delivered to Buyer; and no rentals or other
payments for periods in excess of one month have been received under any Lease
except as reflected on the rent roll. The rent roll for each of the Partnership
Properties and the LVA Property delivered to Buyer is true, correct and complete
as of the date thereof.
12.3.6 Contracts. All of the Contracts are valid and in
full force and effect and unmodified, and (i) no party has breached any material
condition or provision of any Contract, (ii) no party is in default in any
material respect under the terms of any Contract, and (iii) no event
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has occurred which with the giving of notice or the passage of time, or both,
would constitute a material default. As of the Closing, there will be no
management, listing or other broker agreement in effect.
12.3.7 Other Rights. No person, firm or entity has any
right to acquire or lease all or any part of the Real Property or the
Partnership Interests, other than the rights of the Tenants under the Leases to
lease portions of the Real Property to the terms of such Leases.
12.3.8 Due Diligence Materials. The Due Diligence
Materials delivered to Buyer in accordance with Section 4.1 are true, complete
and correct copies of those documents in Seller's possession.
12.3.9 Persons With Actual Knowledge. Seller hereby
represents to Buyer (i) that the persons named in the definition of Actual
Knowledge are the persons principally involved with the management and operation
of the Real Property and most familiar with the Real Property and (ii) that
Xxxxx Xxxxx is responsible for the day to day operations of the Real Property.
12.3.10 Related Entities. DSL has no subsidiary or
affiliated management company with possession of documents which DSL is required
to provide, or to provide access to, under the terms of this Agreement.
12.3.11 Violation of Laws. To Seller's Actual Knowledge,
Seller has not received notice of a violation of any law affecting the Real
Property from any governmental entity.
12.3.12 Access. Seller has not denied Buyer or its agents
and representatives access to documents regarding the Real Property in Seller's
possession.
13. Operation of Real Property.
13.1 Ordinary Operation. From the date hereof to the Closing Date,
DSL shall manage and operate the Partnership Properties and the LVA Property in
the ordinary and usual manner in which they have been operated and managed prior
to the date hereof by DSL, and make all necessary repairs and replacements
consistent with its prior practices. DSL shall not remove any fixtures,
equipment or other tangible personal property, if any, from the Real
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Property unless prior to the Closing the same are replaced with similar items of
at least equal quality and value.
13.2 Leasing. From and after the date hereof, Seller will deliver
to Buyer copies of any new Leases entered into after the date hereof and
amendments to or renewals of existing Leases (collectively ("New Leases"). Prior
to the end of the Due Diligence Period, Buyer shall have no right to approve or
disapprove New Leases. Following the end of the Due Diligence Period, Buyer
shall have the right to approve, prior to execution thereof, all New Leases,
which approval shall not be unreasonably withheld. Failure to disapprove a New
Lease within three (3) business days after delivery shall be deemed approval. If
Buyer disapproves a Lease and, notwithstanding, Seller proceeds with the Lease,
Buyer shall have the right to terminate this Agreement and the escrow and
receive a refund of the Deposit and all interest accrued thereon.
13.3 New Contracts. Without Buyer's prior written consent, Seller
shall not become a party to any new Contracts that are not cancellable as of the
Closing.
13.4 Tax Proceedings. Seller shall not withdraw, settle or
otherwise compromise any protest or reduction proceeding affecting real estate
taxes assessed against the Real Property for any fiscal period in which the
Closing is to occur or any subsequent fiscal period without the prior written
consent of Buyer, which consent shall not be unreasonably withheld.
13.5 Copies of Notices. Promptly upon receipt, Seller shall
provide Buyer with copies of (i) any material notices (including notices of
default or breach) under a Lease received from any Tenant or sent by Seller
after the date of this Agreement, and (ii) any notices and correspondence
received from any insurance company or Board of Fire Underwriters, or from any
governmental authority with respect to the Real Property.
13.6 Prohibition on Marketing. From and after the end of the Due
Diligence Period, Seller shall withdraw the Real Property from the market and
terminate all negotiations for any such sale with any party other than Buyer;
provided, however, the foregoing shall not restrict Seller from accepting
unsolicited back-up offers.
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14. Liquidated Damages. IF THE TRANSACTION CONTEMPLATED HEREUNDER IS NOT
CONSUMMATED DUE SOLELY TO A DEFAULT BY BUYER IN CLOSING THE TRANSACTION, SELLER
MAY IMMEDIATELY TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO BUYER AND WITHOUT
FURTHER OBLIGATION TO BUYER, AND ESCROW HOLDER SHALL WITHOUT FURTHER
INSTRUCTIONS IMMEDIATELY DISBURSE TO SELLER THE DEPOSIT AND ALL INTEREST ACCRUED
THEREON. SELLER SHALL RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES AND AS SELLER'S
SOLE REMEDY. THE PARTIES AGREE THAT SELLER'S ACTUAL DAMAGES AS RESULTED BUYER'S
DEFAULT WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE, AND THE DEPOSIT IS THE
BEST ESTIMATE OF THE AMOUNT OF DAMAGES SELLER WOULD SUFFER AS A RESULT OF SUCH
DEFAULT; PROVIDED, HOWEVER, THAT THIS PROVISION WOULD NOT LIMIT BUYER'S
INDEMNITY OBLIGATION AND SELLER'S RIGHTS TO THOSE INDEMNITY OBLIGATIONS UNDER
THIS AGREEMENT. THE PAYMENT OF THE DEPOSIT OF LIQUIDATED DAMAGES IS NOT INTENDED
AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS
3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGE TO SELLER PURSUANT
TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677. SELLER HEREBY WAIVES THE
PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. THE PARTIES WITNESS THEIR
AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION BY INITIALING THIS SECTION:
----------------- ----------------
Seller's Initials Buyer's Initials
15. Miscellaneous.
15.1 Successors and Assigns. This Agreement is binding upon and
inures to the benefit of the successors and assigns of Seller and Buyer.
15.2 Entire Agreement. This Agreement contains all of the
covenants, conditions and agreements between the parties and shall supersede all
prior correspondence, agreements and understandings, both oral and written, with
respect to the matters set forth herein.
15.3 Professional Fees and Costs. In the event of the bringing of
any action, arbitration or suit by a party hereto against another party or
parties hereunder by reason of any breach of any of the covenants, agreements or
provisions on the part of the other party or parties arising out of this
Agreement, then in that event the prevailing party will be entitled to have the
recovery of and from the other party or parties all costs and expenses of the
action,
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arbitration or suit, actual attorneys' fees, witness fees and any other
professional fees resulting therefrom.
15.4 Waiver of Trial by Jury. Each of Seller and Buyer hereby
waives its rights to a trial by jury as to any matter arising out of or
concerning the subject matter of this Agreement.
15.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
15.6 Further Assurances. Seller and Buyer shall promptly perform,
execute and deliver or cause to be performed, executed and/or delivered at or
after Close of Escrow any and all acts, deeds and assurances as either party or
Escrow Holder may reasonably require in order to carry out the intent and
purpose of this Agreement.
15.7 Severability. In case any one or more of the provisions
contained in this Agreement for any reason is held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
15.8 Notices. All Notices required or permitted hereunder shall be
in writing, and shall be personally delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, national overnight courier
service or facsimile to the addresses stated above. Notices and other
communications shall be deemed received upon the earlier of (i) if personally
delivered, the date of delivery to the address of the person to receive such
notice, (ii) if mailed, three (3) business days after the posting by the United
States Post Office, (iii) if sent by national overnight courier service, one (1)
business day after delivery to such courier service, or (iv) if given by
facsimile, when sent and receipt is confirmed. Any notice, request, demand,
direction or other communication sent by facsimile must be confirmed within
twenty-four (24) hours by a letter mailed or delivered in accordance with the
foregoing.
15.9 Counterparts. This Agreement may be executed in one (1) or
more counterparts, and all of the counterparts shall constitute but one and the
same agreement, notwithstanding that all parties hereto are not signatory to
the
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same or original counterpart. To facilitate execution of this Agreement, the
parties may execute and exchange by facsimile counterparts of the signature
pages to be followed with originally executed counterpart signature pages.
15.10 Time. Time is of the essence of every provision herein
contained.
15.11 Nonwaiver. Unless otherwise expressly provided herein, no
waiver by a party of any provision hereof shall be deemed to have been made
unless expressed in writing and signed by the party waiving the provision. No
delay or omission in the exercise of any right or remedy accruing to a party
upon any breach under this Agreement shall impair such right or remedy or be
construed as a waiver of any such breach theretofore or thereafter occurring.
The waiver by a party of any breach of any term, covenant or condition herein
stated shall not be deemed to be a waiver of any other term, covenant or
condition. All rights or remedies afforded to a party hereunder or by law shall
be cumulative and not alternative, and the exercise of one right or remedy shall
not bar other rights or remedies allowed herein or by law.
15.12 Captions. Section titles or captions contained herein are
inserted as a matter of convenience and for reference, and in no way define,
limit, extend or describe the scope of this Agreement.
15.13 Exhibits. All exhibits attached hereto shall be incorporated
herein by reference as if set out herein in full.
15.14 Construction. The parties acknowledge that each party and
its counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendment or exhibits hereto.
15.15 Confidentiality. Prior to the Close of Escrow or if the
Close of Escrow does not occur, Buyer and Seller agree to keep confidential, and
not publicly disclose, the existence and/or terms of this Agreement and the
transaction contemplated hereby or the results, contents or analysis of the
Buyer Inspections of the Real Property; provided, however, that both Seller and
Buyer may disclose the existence and terms of this Agreement and the Buyer
Inspections to: (i) Buyer's and Seller's respective
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consultants, agents, architects, independent contractors, attorneys or surveyors
associated with the purchase and sale of the Partnership Interests, (ii) any
third party to whom the non-disclosing party to this Agreement has given its
prior written consent for such a disclosure, which consent shall not be
unreasonably withheld or delayed, (iii) governmental, administrative, regulatory
or judicial authorities in the investigation of the compliance of the Real
Property with applicable legal requirements, (iv) governmental or regulatory
authorities pursuant to applicable disclosure requirements, or (v) with respect
to the existence and/or terms of this Agreement and the transaction contemplated
hereby, shareholders and prospective shareholders if the party desiring to make
the disclosure believes in its reasonable judgement that such disclosure is
necessary or prudent and such party gives notice to the other party prior to
disclosure so that the parties can coordinate, if deemed necessary or prudent,
on the timing of any such disclosure. However, Buyer expressly covenants and
agrees that it will not disclose any code compliance, environmental or other
regulatory matters to governmental or other authorities without the express
prior written approval of Seller unless required by law. The provisions of this
Section 15.15 shall survive the termination of this Agreement other than by
Close of Escrow. After the Closing, Buyer agrees not to use the name of Seller
in any published materials without Seller's prior written consent which shall
not be unreasonably withheld or delayed.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in one or more counterparts as of the date first above written.
SELLER:
DSL Service Company, a California
corporation
By:_________________________________
Name:_______________________________
Title:______________________________
By:_________________________________
Name:_______________________________
Title:______________________________
DOWNEY SAVINGS AND LOAN
ASSOCIATION, F.A.
By:_________________________________
Name:_______________________________
Title:______________________________
By:_________________________________
Name:_______________________________
Title:______________________________
(Signature Page Continues)
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BUYER:
Xxxxxxx Pacific Properties, Inc.
a California corporation
By:_________________________________
Name:_______________________________
Title:______________________________
By:_________________________________
Name:_______________________________
Title:______________________________
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