EXCHANGE AGREEMENT (Real Property)
Exhibit
99.2
(Real
Property)
This
Exchange Agreement (this "Agreement") is made and entered into on this 6th day
of April, 2005 between Xxxxxxx
Properties, L.P. ("Exchanger"),
and Investment
Property Exchange Services, Inc., a
California corporation, as Qualified Intermediary, under Exchange No.
EX-19-05411 ("Qualified Intermediary").
RECITALS
A. Exchanger
beneficially owns certain real property or properties (the "Relinquished
Property") more particularly described in Exhibit "A" attached to this Agreement
and incorporated in this Agreement by this reference;
B. Exchanger
has agreed to transfer the Relinquished Property to a buyer or buyers ("Buyer"),
who has agreed to acquire the Relinquished Property in a sale (the "Sale"),
under a written sale agreement (the "Sale Agreement") and a written Sale
Assignment ("Sale Assignment");
C. Exchanger
desires and intends to exchange the Relinquished Property for other like-kind
real
property or properties (the "Replacement Property") that is more particularly
described in Exhibit "B" attached
to this Agreement and incorporated in this Agreement by this reference or that
Exchanger will designate
in accordance with this Agreement, in compliance with the provisions of Section
1031 of the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations promulgated under
Section 1031, as
amended (the "Exchange"), rather than effect a sale of the Relinquished Property
for cash or other
consideration.
D. Exchanger
intends to acquire a beneficial interest in the Replacement Property from
National
Safe Harbor Exchanges, a California corporation, an exchange accommodation
titleholder as defined
in Revenue Procedure 2000-37 ("EAT"), who has agreed to transfer the Replacement
Property (the
"Purchase") under a written Qualified Exchange Accommodation Agreement (the
"QEAA") and a written
QEAA Assignment (the "QEAA Assignment");
E. Qualified
Intermediary is a "qualified intermediary" pursuant to the provisions of
Treasury Regulation Section 1.1031(k)-1(g)(4). Qualified Intermediary is not a
"disqualified person" pursuant to the provisions of Treasury Regulation Section
1.1031(k)-I(k); and
F. Qualified
Intermediary will facilitate the Exchange by acquiring the Relinquished Property
from Exchanger, transferring the Relinquished Property to Buyer, acquiring the
Replacement Property from EAT and transferring the Replacement Property to
Exchanger in accordance with the terms, covenants and conditions of this
Agreement.
AGREEMENT
NOW,
THEREFORE, with reference to the foregoing recitals, and in consideration of the
mutual covenants hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Exchanger and Qualified Intermediary agree as follows:
ARTICLE
I. DEFINITIONS
1.1 Relinquished
Property.
"Relinquished Property" means the parcel or parcels of real property that
Exchanger beneficially owned and held either for productive use in a trade or
business or for investment, and that Qualified Intermediary will sell and convey
(or cause to be conveyed) in exchange for Exchanger's interest in the
Replacement Property in accordance with this Agreement.
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1.2 Replacement
Property.
"Replacement Property" means the parcel or parcels of real property identified
on Exhibit B or that Exchanger will identify to be held either for productive
use in a trade or business or for investment, and that Qualified Intermediary
will acquire and convey (or cause to be conveyed) to Exchanger in exchange for
Exchanger's beneficial interest in the Relinquished Property in accordance with
this Agreement.
1.3 Exchange
Account.
(a) Definition.
"Exchange Account" means the balance of the total consideration collected by
Qualified Intermediary from the closing of the Sale, (i) reduced by all closing
and title fees, real estate and other brokerage commissions, prorations, closing
costs and any other amounts otherwise chargeable to Exchanger in the Sale, to
the extent such costs are paid by the Qualified Intermediary at the closing of
the Sale, and (ii) increased by any principal payments and accrued interest that
Qualified Intermediary receives on any note, contract or deed of trust arising
from the Sale, and (iii) increased by any additional cash contributed by
Exchanger to the Exchange Account, and (iv) further reduced by the total costs
and expenses that Qualified Intermediary incurs relating to the acquisition of
the Replacement Property and the conveyance of the Replacement Property to
Exchanger, including, without limitation, the aggregate of all deposits and
expenditures made by Qualified Intermediary and attributable to the purchase
price, real estate and other brokerage commissions, prorations of expenses
(including interest on encumbrances, real property taxes, documentary transfer
taxes, etc.), improvement expenses, escrow fees, closing costs, title insurance
premiums and any other costs or charges incurred by Qualified Intermediary in
connection therewith (excluding any existing mortgage, trust deed or other
secured or unsecured loan that Exchanger may assume or take subject
to).
(b) Memorandum
Account. The
Exchange Account is a memorandum account maintained by Qualified Intermediary
for record keeping purposes only, and Qualified Intermediary is not required to
segregate or escrow any portion of the Exchange Account.
(c) Non-customary
Costs. In
effecting the Exchange, Qualified Intermediary is not obligated to pay any
transaction costs that do not ordinarily appear under local custom in typical
closing statements as the responsibility of a buyer or a seller. To the extent
Qualified Intermediary does pay any non-typical costs, Exchanger and not
Qualified Intermediary will be liable for the tax consequences of such
payments.
1.4 Exchange
Period.
"Exchange Period" means the period that begins on the date on which the
Exchanger transfers the first Relinquished Property and ends at midnight on the
earlier of (i) the 180th day after that date or (ii) the due date (including
extensions) for Exchanger's federal income tax return for the taxable year in
which the transfer of the Relinquished Property occurs). For purposes of
computing the Exchange Period and the Identification Period, Exchanger will be
treated as having transferred the Relinquished Property on the date a document
conveying a Relinquished Property is delivered to Buyer.
1.5 Identification
Period.
"Identification Period" means the period that begins on the date the Exchanger
transfers the first Relinquished Property and ends at midnight on the 45th day
after that date. If, as part of the same tax-deferred exchange, Exchanger
transfers more than one Relinquished Property, and the Relinquished Properties
are transferred on different dates, the commencement date of both the
Identification Period and the Exchange Period will be the earliest date on which
Exchanger transfers any of the Relinquished Properties.
1.6 Termination
Date.
"Termination Date" means, with respect to the Exchange, the date on which the
obligations of Qualified Intermediary under this Agreement terminate and all
accounts between the parties with respect thereto are settled as provided in
Section 4.1.
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1.7 Qualified Intermediary
Fault. "Qualified
Intermediary Fault", means a direct breach by the Qualified Intermediary of its
duties or responsibilities under this Agreement, or the gross negligence of
Qualified Intermediary, or the willful misconduct of Qualified Intermediary,
including the loss of any Exchange Account funds received by Qualified
Intermediary caused by the discretionary investment of such funds by Qualified
Intermediary, and not including investments made at the written direction of
Exchanger.
1.8 Other
Defined Terms. The
defined terms, "Relinquished Property," "Buyer," "Sale Agreement," "Replacement
Property," "EAT," "QEAA," "Sale Assignment," "Sale," "QEAA Assignment and
"Purchase" have the meanings set forth in the Recitals. The defined term "Claim"
has the meaning set forth in Section 3.7 hereof.
ARTICLE
II. ACQUISITION
AND CONVEYANCE OF RELINQUISHED PROPERTY
2.1 Agreement
to Acquire and Convey Relinquished Property. Subject
to Buyer's performance of its obligations to acquire the Relinquished Property
in accordance with the Sale Agreement, and otherwise subject to and upon the
terms and conditions set forth in this Agreement, Exchanger shall assign to
Qualified Intermediary all of or a specified percentage of Exchanger's rights
under the Sale Agreement with respect to the Relinquished Property under the
Sale Assignment, and Qualified Intermediary shall acquire the Relinquished
Property from Exchanger and convey the Relinquished Property to
Buyer.
2.2 Successive
Transfers of the Relinquished Property.
Exchanger shall transfer all of or a specified percentage of Exchanger's
interest in the Relinquished Property to Qualified Intermediary at the close of
the Sale. At the closing of the Sale, Qualified Intermediary shall immediately
transfer the Relinquished Property to Buyer. The Sale Assignment substitutes
Qualified Intermediary as the seller of Exchanger's interest in the Relinquished
Property. Exchanger shall furnish Qualified Intermediary with all funds and
information that Qualified Intermediary requires to fulfill its obligations
under this Agreement, including the conveyance of the Relinquished Property to
Buyer. All conveyance documents must be in a form acceptable to Qualified
Intermediary, in its sole discretion.
2.3 Form
of Sale Agreement.
Exchanger shall deliver the Sale Agreement to Qualified Intermediary for its
review and comment before the date on which Exchanger desires Qualified
Intermediary's approval. Exchanger's delivery to Qualified Intermediary of a
copy of the Sale Agreement that Exchanger has signed will be considered
Exchanger's approval of all of the terms of the Sale Agreement.
2.4 Closing
of Sale. If the
form and content of the Sale Agreement is approved by Qualified Intermediary and
otherwise complies with the terms and conditions in this Agreement, Exchanger
and Qualified Intermediary shall sign the Sale Assignment, and Qualified
Intermediary shall sell the specified Relinquished Property. Without the fully
signed Sale Assignment, Qualified Intermediary will not be obligated to close
the sale of the Relinquished Property and complete the Exchange as provided in
this Agreement. Qualified Intermediary will sign a settlement statement for the
Sale after Qualified Intermediary receives a copy of the Settlement Statement
signed by Exchanger as "read and approved." Qualified Intermediary is entitled
to two (2) business days' notice before Exchanger requires any deposit or
disbursement from the Exchange Account.
2.5 No
Obligation to Assume Liabilities.
Qualified Intermediary will not be obligated to sign any promissory note or any
type of security instrument, or to sign or assume any lease or agreement, or to
undertake any other obligation or liability in connection with the sale of the
Relinquished Property, unless Qualified Intermediary has first received, in a
form acceptable to Qualified Intermediary in its sole discretion, an
unconditional release from, and indemnification
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against,
any potential recourse or continuing liability or obligation from any party
reasonably specified by Qualified Intermediary.
2.6 NoLiability forChanges RegardingRelinquished Property.Qualified
Intermediary
will not be liable to Exchanger for any change in the status of title to, or
condition of, or any other matter relating to, the Relinquished Property unless
directly caused by a Qualified Intermediary Fault.
ARTICLE
III. ACQUISITION
AND CONVEYANCE OF REPLACEMENT PROPERTY
3.1 Agreement
to Acquire and Convey Replacement Property. Subject
to EAT's performance of its obligations to sell the Replacement Property in
accordance with the QEAA, and otherwise subject to and upon the terms and
conditions set forth in this Agreement, Exchanger shall assign to Qualified
Intermediary all of or a specified percentage of Exchanger's rights under the
QEAA with respect to the Replacement Property by the QEAA Assignment, and
Qualified Intermediary shall acquire the Replacement Property from EAT and
transfer the Replacement Property to Exchanger.
3.2 Designation
of Replacement Property.
Exchanger may identify and request Qualified Intermediary to acquire one or more
parcels of Replacement Property by delivering to Qualified Intermediary a
written identification notice describing the Replacement Property. Exchanger's
designation of the Replacement Property must:
Exchanger; (i) Be made
by one or more written identification notices signed by
(ii) Be
hand-delivered, mailed by United States mail, telecopied or otherwise sent to
Qualified Intermediary on or before the end of the Identification
Period;
(iii) Unambiguously
state a street address, legal description, or distinguishable name;
and
(iv) If
applicable, include a legal description of the underlying land and as much
detail regarding the construction of the improvements as is practicable when the
identification is made.
An
identification notice sent by Exchanger that complies with the applicable
Treasury Regulations becomes a part of this Agreement.
3.3 Acquisition
of Additional Replacement Property. If
Exchanger's identification includes properties not held by EAT under the QEAA,
Exchanger shall be responsible for locating a seller or sellers ("Seller"), who
will agree to transfer the Replacement Property under a written purchase
agreement (the "Purchase Agreement"). Concurrently with, or within a reasonable
time after, Exchanger's identification of any additional Replacement Property
and request, Exchanger must deliver to Qualified Intermediary the Purchase
Agreement. Exchanger shall deliver the Purchase Agreement to Qualified
Intermediary for its review and comment before the date on which Exchanger
desires Qualified Intermediary's approval. Exchanger's delivery to Qualified
Intermediary of a copy of the Purchase Agreement that Exchanger has signed will
be considered Exchanger's approval of (i) all of the terms of the Purchase
Agreement and (ii) all documents referred to in the Purchase
Agreement.
3.4 Closing
of Purchase. If the
form and content of the QEAA is approved by Qualified Intermediary and otherwise
complies with the terms and conditions in this Agreement, Exchanger and
Qualified Intermediary shall sign the QEAA Assignment, and
Qualified
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Intermediary
shall acquire the specified Replacement Property. Without the fully signed QEAA
Assignment, Qualified Intermediary will not be obligated to close the
acquisition of the Replacement Property and complete the Exchange as provided in
this Agreement. Qualified Intermediary will sign a settlement statement for the
Purchase after Qualified Intermediary receives a copy of the Settlement
Statement signed by Exchanger as "read and approved." Qualified Intermediary is
entitled to two (2) business days' notice before Exchanger requires any deposit
or disbursement from the Exchange Account.
3.5 Payment
Cannot Exceed Exchange Account Balance. Cash
payable by Qualified Intermediary to the EAT, exclusive of the aggregate amount
of any indebtedness secured by the Replacement Property, plus any purchase money
non-recourse note that Qualified Intermediary may deliver to EAT, plus all other
costs to Qualified Intermediary of acquiring the Replacement Property, must not
exceed the balance of the Exchange Account as of the date funds to consummate
the Purchase are required from Qualified Intermediary, unless Exchanger has
delivered any required excess amount as collected funds to Qualified
Intermediary and/or the settlement agent, with written instructions to apply
that amount to acquire the Replacement Property.
3.6 No
Obligation to Assume Liabilities.
Qualified Intermediary will not be obligated to sign any promissory note or any
type of security instrument, or to sign or assume any lease or agreement, or to
undertake any other obligation or liability in connection with the acquisition
of any Replacement Property, unless Qualified Intermediary has first received,
in a form acceptable to Qualified Intermediary in its sole discretion, an
unconditional release from, and indemnification against, any potential recourse
or continuing liability or obligation from any party reasonably specified by
Qualified Intermediary.
3.7 Acquisition of Replacement
Property: Exchanger's Release and Indemnity.
Subject
to the provisions and conditions set forth in this Agreement and the QEAA,
Qualified Intermediary shall acquire each parcel of Replacement Property that
Exchanger identified as provided in this Agreement from the EAT or respective
Seller and transfer each parcel of Replacement Property to Exchanger within the
Exchange Period. Qualified Intermediary shall acquire the Replacement Property
for the purchase price and upon the other terms and conditions
specified in the QEAA and accepted by Qualified Intermediary. But Qualified
Intermediary will not incur, and Exchanger releases Qualified Intermediary from,
any liability to Exchanger if Qualified Intermediary fails to acquire the
Replacement Property for any reason except an act by Qualified Intermediary that
is directly attributable to a Qualified Intermediary Fault. Exchanger is
responsible for locating the Seller and negotiating the terms of each Purchase
Agreement. Qualified Intermediary will only agree to buy or otherwise convey the
Replacement Property on terms and conditions that Exchanger approves.
Exchanger's sole recourse will be to proceed against the EAT or Seller
concerning any disputed matters in connection with the QEAA or Purchase
Agreement, respectively. Exchanger shall defend, indemnify and hold harmless
Qualified Intermediary from and against any claim, demand, liability, loss,
cost, damage or expense (collectively, "Claim"), Qualified Intermediary may
incur arising from or in connection with any QEAA or Purchase Agreement,
including, without limitation, any claim or liability arising from any covenant,
condition, agreement, purchase instruction, lease, tenant, loan or security
instrument except a Claim directly attributable to a Qualified Intermediary
Fault.
3.8 [Intentionally
Omitted]
3.9 NoLiabilityforChangesRegardingReplacementProperty.Qualified
Intermediary
will not be liable to Exchanger for any change in the status of title to, or
condition of, or any other matter relating to, the Replacement Property unless
directly caused by an affirmative act of Qualified Intermediary that constitutes
a Qualified Intermediary Fault.
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3.10 Conveyance
of Replacement Property from EAT or Seller to Exchanger When Qualified
Intermediary Does Not Hold Title. If
Qualified Intermediary, or its designee, does not take title to the Replacement
Property, then concurrently with the acquisition of the Replacement Property by
Qualified Intermediary, Qualified Intermediary shall cause EAT or Seller (for
reasons unrelated to the federal tax laws) to convey title to the Replacement
Property directly to Exchanger, subject to all liens, encumbrances and other
title matters in effect as of the date when Qualified Intermediary acquired the
Replacement Property.
ARTICLE
IV. TERMINATION
4.1 Termination. The
obligations of Qualified Intermediary under this Agreement terminate, and
Qualified Intermediary will release to Exchanger all remaining funds, notes and
contracts in the Exchange Account, if any, only upon the occurrence of one of
the following events, in accordance with Treasury Regulations Section
1.1031(k)-1(g)(6):
(a) The end
of the Identification Period, if Exchanger has not selected and identified the
Replacement Property before that time; or
(b) Exchanger's
receipt of all the Replacement Property (or the beneficial interest therein) to
which Exchanger is entitled under this Agreement; or
(c) The
occurrence after the end of the Identification Period of a material and
substantial contingency that:
(i) Relates
to the deferred exchange;
(ii) Is
provided for in writing; and
(iii) Is beyond
the control of Exchanger and of any disqualified person, as defined in Treasury
Regulation Section 1.1031 (k), other than the person obligated to transfer the
Replacement Property to Exchanger; or
(d) The end
of the Exchange Period.
When the
obligations of Qualified Intermediary under this Agreement terminate, if any
balance in the Exchange Account remains, Qualified Intermediary shall, within
ten (10) business days after receipt of Exchanger's written request, disburse
the balance by check or wire transfer, and Qualified Intermediary shall have no
further obligation regarding the acquisition and conveyance of any Replacement
Property.
4.2 QualifiedIntermediary's
Exclusive Control.
Exchanger has no right to receive, control, pledge, borrow, assign or otherwise
obtain the benefits of any portion of the Exchange Account except in accordance
with Section 4.1. Exchanger has no right or claim to (or risk of loss for) any
other earnings or losses attributable to any Exchange Account funds. For
purposes of Treasury Regulation Section 1.468B, Qualified Intermediary is the
sole owner of the Exchange Account funds. This Agreement and all instructions
and notices delivered by each party to the other party or to a closing agent
under the Sale Agreement, the QEAA or a Purchase Agreement, do not and will not
entitle Exchanger to receive, control, pledge, borrow, assign or otherwise
obtain the benefits of any portion of the Exchange Account before the earliest
of the dates set forth in Section 4.1.
ARTICLE
V. REPRESENTATIONS,
WARRANTIES AND COVENANTS
5.1 Risk
of Loss.
Exchanger assumes all risk of loss or damage adversely affecting
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the value
of the Relinquished Property, the Replacement Property and any other property
conveyed to or by Qualified Intermediary or an entity selected by Qualified
Intermediary in connection with this Agreement (excluding any investment loss on
any Exchange Funds invested at the discretion of Qualified Intermediary, who
shall bear the sole risk of loss for such funds), whether resulting from fire or
other casualty, natural event or disaster, condemnation or any other physical,
legal or economic circumstances. Exchanger's assumption of risk excludes loss or
damage directly caused by a Qualified Intermediary Fault.
5.2 Qualification
of Exchange Under I.R.C. Section 1031.
EXCHANGER HEREBY ACKNOWLEDGES THAT QUALIFIED INTERMEDIARY IS NOT ACTING AS
EXCHANGER'S TAX ADVISOR OR LEGAL COUNSEL AND THAT QUALIFIED INTERMEDIARY DOES
NOT WARRANT OR REPRESENT THAT THE TRANSACTION UNDER THIS AGREEMENT WILL QUALIFY
FOR NON RECOGNITION OF GAIN OR LOSS UNDER SECTION 1031 OF THE
INTERNAL
REVENUE CODE. EXCHANGER ACKNOWLEDGES THAT EXCHANGER OBTAINED SEPARATE,
INDEPENDENT ADVICE FROM AN ATTORNEY OR TAX ADVISOR CONCERNING THE REQUIREMENTS
FOR A LIKE-KIND EXCHANGE UNDER SECTION 1031. THE PARTIES AGREE THAT THE
CONVEYANCE OF THE RELINQUISHED OR REPLACEMENT PROPERTY TO QUALIFIED INTERMEDIARY
IS NOT CONDITIONED UPON QUALIFICATION OF THIS EXCHANGE ARRANGEMENT UNDER SECTION
1031, AND THAT THE RELINQUISHED OR REPLACEMENT PROPERTY WILL BE CONVEYED TO
QUALIFIED INTERMEDIARY REGARDLESS OF THE ULTIMATE TAX CONSEQUENCES OF
ANY
TRANSACTION
PURSUANT TO THIS AGREEMENT. EXCHANGER FURTHER ACKNOWLEDGES AND AGREES THAT
EXCHANGER HAS RELIED SOLELY UPON THE ADVICE AND JUDGMENT OF ITS OWN INDEPENDENT
TAX ADVISORS AND THAT EXCHANGER HAS NOT RELIED UPON ANY WRITTEN MATERIALS
PROVIDED TO EXCHANGER BY ANY AGENT OR EMPLOYEE OF QUALIFIED INTERMEDIARY OR UPON
ANY CONVERSATIONS WITH, OR ADVICE OF, ANY AGENT OR EMPLOYEE OF QUALIFIED
INTERMEDIARY REGARDING THE TAX CONSEQUENCES OF THE EXCHANGE
5.3 ResponsibilityofQualifiedIntermediary;Limitation
on Damages.
Intermediary
is liable to Exchanger for actual damages in the amount stated below incurred by
Exchanger if directly caused by a Qualified Intermediary Fault. Qualified
Intermediary is not liable to Exchanger for punitive, exemplary, consequential
or lost profits damages, or damages measured by any income taxes payable by
Exchanger, or for any other losses that Exchanger may incur and not directly
caused by a Qualified Intermediary Fault. The amount of damages for which
Qualified Intermediary is liable under all circumstances is limited to the sum
of: (i) double the amount of the fees and expense reimbursements received by
Qualified Intermediary from Exchanger plus (ii) any earnings retained by
Qualified Intermediary on any Exchange Account funds arising under this
Agreement prior to the Termination Date plus (iii) the amount of the Exchange
Account funds received by Qualified Intermediary and not available to acquire a
Replacement Property in accordance with this Agreement solely because of a
Qualified Intermediary Fault. Exchanger acknowledges that the provisions of this
Section 5.3 that fix the amount of the damages of Exchanger have been negotiated
at arm's length and are fair and reasonable in the light of the scope of the
duties of Qualified Intermediary and the amount of the fees payable to Qualified
Intermediary under this Agreement. This Section 5.3 does not bar any claim by
Exchanger requiring specific performance by Qualified Intermediary of its
obligations under this Agreement.
5.4 Procedure
for Asserting Claims for QualifiedIntermediary
Fault.
Exchanger
agrees to promptly notify Qualified Intermediary of any complaint or claim that
may constitute a Qualified Intermediary Fault in order to provide Qualified
Intermediary a reasonable opportunity to remedy or correct any claimed Qualified
Intermediary Fault. Exchanger agrees to not assert any claim against Qualified
Intermediary after the passage of more than 180 days after the termination of
this Agreement under Section 4.1. If Exchanger timely asserts any claim against
Qualified Intermediary and the claim cannot be resolved through negotiations
between
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Exchanger
and Qualified Intermediary, Exchanger and Qualified Intermediary agree to
negotiate in good faith to settle the claim by mediation before resorting to
litigation. The mediation shall be administered by the American Arbitration
Association under its commercial mediation rules or by such other mediation
provider as agreed upon by Exchanger and Qualified Intermediary. Any mediation
sessions shall be held in the city in which the regional office of Qualified
Intermediary is located where this Agreement is being administered, or such
other venue as agreed upon by Exchanger and Qualified Intermediary.
5.5 Indemnification
of Qualified Intermediary.
(a) Exchanger
shall defend, indemnify and hold harmless Qualified Intermediary and Qualified
Intermediary's directors, officers, shareholders, employees, successors and
assigns from and against any claim, including, without limitation, costs and
expenses of defending or settling disputed claims at litigation or on appeal,
and attorney's fees incurred by Qualified Intermediary, that arise from or in
connection with:
(i) Any
representation, warranty, covenant, obligation or liability of Exchanger
relating to the Relinquished Property or the Replacement Property, or their
acquisition or conveyance in accordance with the QEAA, Purchase Agreement or
Sale Agreement, including, without limitation, any Claim relating to any
hazardous wastes, substances, solid wastes, or related materials, or any toxic
substances or any pollutants or contaminants, any Claim arising from Qualified
Intermediary's taking title to real property as requested by Exchanger, any
Claim arising from Qualified Intermediary's entering into a purchase agreement
for real property as requested by Exchanger, any Claim or allegation by Buyer,
EAT, Seller, or any lender, tenant, lien holder or other third party connected
with the Relinquished Property or the Replacement Property, and
(ii) Qualified
Intermediary's proper performance of any of its duties, responsibilities or
obligations under this Agreement.
(b) Notwithstanding any
conflicting term or provision of this Agreement, Exchanger's indemnification and
related covenants and obligations in this Agreement (including Exchanger's
indemnification and related covenants and obligations set forth in Section 3.7
and above in this Section 5.5) will:
(i) Survive
and continue in effect after the closing, or delivery and/or recordation of any
deed or conveyance document or any termination of this Agreement (whether from
completion of the exchange arrangements provided for in this Agreement, or
otherwise);
(ii) Not apply
to any Claim incurred by Qualified Intermediary and directly caused by a
Qualified Intermediary Fault; and
(iii) Apply, if
Qualified Intermediary has elected to hold title to the Replacement Property in
a different entity pursuant to Section 3.8, to the entity and the entity's
directors, officers, shareholders, employees, successors and
assigns.
5.6 Exchanger's
Responsibilities. Without
prejudice to any other limitation of Qualified Intermediary's duties,
responsibilities or obligations under this Agreement, Exchanger and not
Qualified Intermediary is responsible for:
(a) The
sufficiency, accuracy or validity of any document or instrument
arising
from or relating to the QEAA, Purchase Agreement or the Sale Agreement;
or
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(b) The
manner of signing of any document or instrument; or
(c) The
identity, authority or rights of any person or entity signing any document or
instrument, unless signed by or on behalf of Qualified Intermediary;
or
(d) Any act
or omission of Qualified Intermediary unless the act or omission constitutes a
Qualified Intermediary Fault; or
(e) Risk of
loss or damage to the Relinquished Property, the Replacement Property and all
other property received by Qualified Intermediary under this Agreement, by
casualty, act of God, or otherwise; or)
Agreement.
(f) The
federal or state tax aspects of the transactions contemplated by
this
5.7 Reimbursements
to Qualified Intermediary. If
Qualified Intermediary makes any advances or incurs any expenses (other than
those overhead expenses incurred in acting as a qualified intermediary) under
this Agreement or incurs any out-of-pocket expense because it is a party to any
litigation in connection with this Agreement, or if Qualified Intermediary is
compelled to pay money on account of this Agreement, whether for breach of
contract, injury to person or property, fines or penalties under any law, or
otherwise, except in the case of a Qualified Intermediary Fault, Exchanger
shall, on demand, pay to Qualified Intermediary, with interest at a rate for the
entire month equal to the bank prime rate in effect on the first business day of
such month, as published in the "Wall Street Journal", the amount of all those
expenses, advances or payments made by Qualified Intermediary, plus all
Qualified Intermediary's out-of-pocket expenses and reasonable outside
attorney's fees.
5.8 No
Unlawful Actions.
Qualified Intermediary is not required to sign any agreement or participate in
any transaction that, in the reasonable opinion of Qualified Intermediary, would
require Qualified Intermediary to engage in any unlawful or fraudulent action or
would be unduly burdensome to Qualified Intermediary.
ARTICLE
VI. DIRECT
DEEDING
6.1 Direct
Deeding.
Regardless of any terms to the contrary in this Agreement, Qualified
Intermediary at its sole discretion may elect to have the title to the
Relinquished Property transferred directly from Exchanger or Exchanger's nominee
to Buyer. Except when Qualified Intermediary is holding title to the Replacement
Property for the purpose of completing improvements to the Replacement Property,
Qualified Intermediary may elect to have the title to the Replacement Property
transferred directly from EAT or Seller to Exchanger or Exchanger's nominee. In
the event of this "direct deeding", all other terms and conditions of this
Agreement remain intact and will only be modified to the extent that title to
either the Relinquished Property or the Replacement Property is not be
transferred to Qualified Intermediary at any time.
ARTICLE
VII. MISCELLANEOUS
PROVISIONS
7.1 Survivalof
Warranties.All
representations, warranties, indemnities and
limitations
on the liability of Qualified Intermediary set forth in or otherwise made
pursuant to this Agreement will survive and remain in effect after the closing
and the delivery and/or recording of any deeds or conveyance documents, and will
not be merged into those deeds or conveyance documents, and will survive the
termination of this Agreement.
7.2 Attorney's
Fees. If any
legal action or proceeding is commenced by any party in order to
enforce this Agreement or any provision of this Agreement or in connection with
any
9
alleged
dispute, breach, default or misrepresentation in connection with any provision
in this Agreement, the prevailing party will be entitled to recover, subject to
Section 5.3, reasonable attorneys' fees and costs incurred in connection with
that action or proceeding, including costs of pursuing or defending any legal
action, discovery or negotiation and preparation of any settlement arrangements,
in addition to any other relief as may be granted.
7.3 Entire
Agreement. This
Agreement constitutes the entire Agreement between the parties and supersedes
any contemporaneous or previous written or oral agreements, representations or
undertakings concerning the matters and arrangements provided for in this
Agreement. No supplement, modification or amendment to this Agreement will be
binding unless signed in this Agreement by all parties. A waiver of any
provisions of this Agreement will not be considered a waiver of any other
provision, whether or not similar, nor will any waiver on one occasion
constitute a continuing or permanent waiver.
7.4 Notices. Any
request, notice or other communication to be given under this Agreement must be
in writing and delivered personally or by messenger, private mail, courier
service, facsimile or sent by registered, certified mail, return receipt
requested, or postage prepaid, as follows:
To
Exchanger: SEE ADDRESS NOTED BELOW EXCHANGER'S SIGNATURE
To
Qualified Intermediary:
|
Investment
Property Exchange Services, Inc. | ||
|
0000
X. Xxxxxxxxx Xxxx, Xxxxx 000 | ||
|
Xxxxxxx,
XX 00000 | ||
|
Telephone: |
000-000-0000 | |
|
Facsimile: |
000-000-0000 | |
All
notices will be considered effective (i) upon receipt if delivered personally or
by messenger or private mail courier, (ii) on the business day of successful
transmission by facsimile or (iii) otherwise on the third business day after
deposit in the US mail.
7.5 Headings. Captions
of the articles and sections of this Agreement are for convenience only and must
not be interpreted or construed to explain, modify, amplify or aid in the
interpretation, construction or meaning of any provision of this
Agreement.
7.6 State
Law. This
Agreement, each term and condition in this Agreement and all of the respective
rights, duties, responsibilities, obligations and liabilities of the parties
must be interpreted, construed and enforced in accordance with the laws of the
State in which the regional office of Qualified Intermediary is located where
this Agreement is being administered.
7.7 QualifiedIntermediary's
Resignation. When
deemed necessary by Qualified Intermediary, Qualified Intermediary in its sole
discretion may resign from this Agreement at any time by serving written notice
of Qualified Intermediary's intention to resign on Exchanger. This resignation
will become effective 15 calendar days after service of the notice of the
resignation on Exchanger. Upon Qualified Intermediary's resignation, Exchanger
may appoint a successor to Qualified Intermediary in writing. Qualified
Intermediary shall then convey to Exchanger's successor qualified intermediary
all documents, instruments, funds in the Exchange Account, title to any property
held by Qualified Intermediary and whatever else is in Qualified Intermediary's
possession at the time of the resignation, subject to such successor qualified
intermediary's obligation to restrict Exchanger's access to any Exchange Account
funds or other property in accordance with Treasury Regulation Section
1.1031(k)-1(g)(6). If Exchanger does not appoint a successor qualified
intermediary within the 15-day time period, then Qualified Intermediary may, at
its option, file a complaint in any court of competent jurisdiction
seeking
10
appropriate
relief, including the appointment of a successor qualified intermediary. The
resignation of Qualified Intermediary does not accelerate the time for the
release of Exchange Account funds and other properties by Qualified Intermediary
to Exchanger under Section 4.1 of this Agreement.
7.8 No
Assignment. No
assignment of any right or interest or delegation of any duty, responsibility or
obligation under this Agreement may be made, in whole or in part, by any party
without the prior written consent of the other party, which consent must not
be
unreasonably
withheld. The representations, warranties, covenants, obligations and
indemnifications of Exchanger made or given by Exchanger and contained in this
Agreement are for the sole benefit of Qualified Intermediary and may not be
relied upon by any other party. This Agreement, and the rights, duties and
obligations under this Agreement may not be sold, assigned or otherwise conveyed
by Qualified Intermediary to any other party without the prior written consent
of Exchanger, which consent must not be unreasonably withheld. Subject to the
foregoing, this Agreement is binding upon and shall continue to the benefit of
each party to this Agreement and its respective heirs, legal representatives,
successors and assigns.
7.9 Additional
Documents. The
parties shall execute any additional documents
reasonably
necessary to effectuate the provisions and purposes of this
Agreement.
7.10 Cooperation. To the
extent the structure of the transaction creates an asset test issue or income
test issue with respect Xxxxxxx Properties, Inc. qualifying as a REIT for
Federal income tax purposes, the parties agree to work together in restructuring
the transaction to ensure qualification of Xxxxxxx Properties, Inc. as a REIT
for Federal income tax purposes.
7.11 Counterparts. This
Agreement may be executed in one or more counterparts, including facsimile
copies, each of which will be considered to be an original. All those
counterparts together will constitute the same instrument, which may be
sufficiently evidenced by one counterpart. The signing of this Agreement at
different times and places by the parties will not affect the validity of this
Agreement.
7.12 No
Agency.
Qualified Intermediary is not acting as the agent of Exchanger in this
Agreement. No agency, partnership or joint venture of any kind is, or is
intended to be, created by or under this Agreement.
7.13 Construction. The
language contained in this Agreement shall be construed simply, according to its
fair meaning and not strictly for or against either party in all cases. The
Recitals set forth on the first page of this Agreement are incorporated into
this Agreement.
7.14 Fees
and Interest Earnings.
(a) Exchange
Fee. QI shall
be entitled to receive from Exchanger certain fees for its services in
connection with the Exchange and reimbursements as set forth in that certain
letter from QI's agent transmitted to Xxxxxxx Properties, L.P. dated March 23,
2005.
(b) Notice
of Withdrawals from Exchange Account.
Qualified Intermediary requires at least two (2) full business days' prior
notice for the application of any Exchange Funds.
(c) Earnings
Received by QualifiedIntermediary. All
earnings and losses attributable to the temporary investment by Qualified
Intermediary of any amounts attributable to the Exchange Account are the sole
and exclusive property of Qualified Intermediary and will not, at any time, be
payable to or under the control of Exchanger.
11
(d) No
interest or other earnings will be credited to the Exchange Account
by
Qualified
Intermediary.
7.15 Exchanger
is Not a Foreign Person.
Exchanger certifies, under penalty of perjury, that Exchanger is not a "foreign
person" as defined by Section 1445 of the Internal Revenue Code and the Treasury
Regulations promulgated under Section 1445.
7.16 Severability. If the
language of any provision of this Agreement is deemed to negate a like-kind
exchange within the meaning of Section 1031 of the Internal Revenue Code, as
amended, that language must be interpreted and applied so that it complies with
the provisions of Internal Revenue Code Section 1031, the Treasury Regulations
promulgated under Section 1031, the applicable case law and administrative
pronouncements interpreting the Internal Revenue Code and the Treasury
Regulations.
7.17 BY SIGNING
BELOW, Exchanger accepts and approves all terms and conditions of this Agreement
and further acknowledges that it has read and fully understands all of Article
V.
[signatures
on following page]
12
QUALIFIED
INTERMEDIARY:
Investment
Property Exchange Services, Inc., a California corporation, as Qualified
Intermediary
under Exchange No. EX-19-05411
|
By: |
/s/
Xxxx X. Xxxxxxx |
|
Name:
Xxxx X. Xxxxxxx | |
|
Its:
Assistant Vice President | |
|
EXCHANGER(S): | ||
|
Xxxxxxx
Properties L.P., a Maryland limited partnership | ||
|
By: |
Xxxxxxx
Properties, Inc., a Maryland corporation, its general
partner | |
|
By: |
/s/
Xxxxxx X. Xxxxx | |
|
Name:
Xxxxxx X. Xxxxx | ||
|
Its:
Executive Vice President & CFO | ||
Please
provide the following information for each Exchanger:
|
Exchanger's
Notice Address: |
000
Xxxxx Xxxxx Xxxxxx, Xxxxx 000 |
|
Xxx
Xxxxxxx, Xxxxxxxxxx 00000 | |
|
Attention:
Xxxx Lammas | |
|
Telephone: |
(000)
000-0000 |
|
Facsimile: |
(000)
000-0000 |
Exchanger's
Taxpayer Identification No.:____________________________________
13
