EXHIBIT 10.1
AGREEMENT FOR PURCHASE AND SALE
OF REAL PROPERTY AND ESCROW INSTRUCTIONS
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS
("Agreement") between NNN VF INTERWOOD, LP, a Texas limited partnership
("Seller"), and TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company
("Buyer"), is made and entered into as of the later of (i) the date this
Agreement is executed by Seller and (ii) the date this Agreement is executed by
Buyer (the "Effective Date"), with reference to the following facts:
A. Seller owns certain real property located in ▇▇▇▇▇▇ County, Texas and
more specifically described in Exhibit A attached hereto (the "Land"),
commonly known as the Offices at Interwood and such other assets, as
the same are herein described.
B. Subject to the terms and conditions in this Agreement, Seller desires
to sell to Buyer and Buyer desires to purchase from Seller the Land
and the associated assets.
NOW, THEREFORE, in consideration of the mutual covenants, premises and
agreements herein contained, the parties hereto do hereby agree as follows:
1. Purchase and Sale.
The purchase and sale includes, and at Closing (hereinafter defined) Seller
shall sell, assign, grant and transfer to Buyer, all of Seller's right and
title, estate interest in and to all of the following (hereinafter
sometimes collectively, the "Property"):
1.1 The Land, described on Exhibit A attached hereto, together with all
structures, buildings, improvements, machinery, fixtures, and
equipment affixed or attached to the Land and all easements and rights
appurtenant thereto, including: (i) all easements, privileges and
rights belonging or in any way appurtenant to the Land, (ii) any land
lying in the bed of any street, road, alley or right-of-way, open or
closed, adjacent to or abutting the Land, and (iii) any and all air
rights, subsurface rights, development rights, and water rights
permitting to the Land (all of the foregoing being collectively
referred to herein as the "Land");
1.2 All leases (the "Leases"), including associated amendments, with all
persons ("Tenants") leasing the Real Property or any part thereof or
hereafter entered into in accordance with the terms hereof prior to
Closing, together with all security deposits, other deposits held in
connection with the Leases, and all of Seller's right, title and
interest in and to all guarantees, letters of credit and other similar
credit enhancements providing additional security for such Leases;
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1.3 All tangible and intangible personal property owned by Seller located
on or used in connection with the Real Property, including,
specifically, without limitation, all sculptures, paintings and other
artwork, all equipment, furniture, tools and supplies, all plans and
specifications and other architectural and engineering drawings, if
any, with respect to the Land and the Improvements, and any other
personal property and all related intangibles as are owned by Seller
and currently located in, on or about or are used for the operation,
maintenance, administration or repair of the Real Property, including
Seller's interest, if any, in the common name of the Real Property
(the "Personal Property");
1.4 All service contracts, agreements, warranties and guaranties relating
to the operation of the Property as of the Effective Date, to the
extent assignable, and any other service and operating agreements
pertaining to the Property that are entered into by Seller after the
date of this Agreement and prior to the Closing in accordance with the
terms of this Agreement, in each case to the extent approved by Buyer
in accordance with this Agreement (collectively, the "Contracts");
provided, however, any Contracts not so approved by Buyer shall be
terminated by Seller, at Buyer's expense, on or before the Closing;
and
1.5 To the extent transferable, all building permits, certificates of
occupancy and other certificates, permits, consents, authorizations,
variances or waivers, dedications, subdivision maps, licenses and
approvals from any governmental or quasi-governmental agency,
department, board, commission, bureau or other entity or
instrumentality relating to the Property (the "Permits").
2. Purchase Price.
Subject to the charges, prorations and other adjustments set forth in this
Agreement, the total Purchase Price of the Property shall be Eleven Million
and No/100 Dollars ($11,000,000.00) ("Purchase Price") payable as follows:
2.1 Deposit/Further Payments/Down Payment.
Within three (3) business days of the Effective Date, Buyer shall
deposit into Escrow the amount of Two Hundred Thousand and No/100
Dollars ($200,000.00) (the "Deposit"), in the form of a wire transfer
payable to Fidelity Title Company, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇, Telephone (▇▇▇) ▇▇▇-▇▇▇▇, Fax
(▇▇▇) ▇▇▇-▇▇▇▇ ("Escrow Holder"). Escrow Holder shall place the
Deposit into an interest bearing money market account at a bank or
other financial institution reasonably satisfactory to Buyer, and
interest thereon shall be credited to Buyer's account.
2.2 On or before Closing, Buyer shall deposit into Escrow the balance of
the Purchase Price, by wire transfer payable to Escrow Holder.
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3. Title to Property.
During the Inspection Period (hereafter defined) Buyer shall review and
approve the Title Documents (hereinafter defined) and the Survey
(hereinafter defined). If the Title Documents or Survey reflect or disclose
any defect, exception or other matter affecting the Property ("Title
Defects") that is unacceptable to Buyer, then prior to the expiration of
the Inspection Period, Buyer shall provide Seller with written notice of
Buyer's objections. Seller may, at its sole option, elect to cure or remove
the objections made by Buyer. Should Seller elect to attempt to cure or
remove the objection, it shall be a condition precedent to Buyer's
obligation to acquire the Property that Seller cures such title objection
prior to the Closing. Unless Seller provides written notice to Buyer before
the expiration of the Inspection Period that Seller intends to cure Buyer's
title objections, Seller shall be deemed to have elected not to cure or
remove Buyer's title objections, and Buyer shall be entitled, as Buyer's
sole and exclusive remedy, either to (i) terminate this Agreement and
obtain a refund of the Deposit by providing written notice of termination
to Seller before the end of the Inspection Period and returning the Due
Diligence Items (hereinafter defined) or (ii) waive the objections and
close this transaction as otherwise contemplated herein. If Buyer shall
fail to terminate this Agreement during the Inspection Period, all matters
shown on the Survey and all matters described in the Title Report, except
for monetary liens for indebtedness of the Seller and any matters the
Seller has agreed to cure in writing, shall be deemed "Permitted
Exceptions."
4. Due Diligence Items.
4.1 Seller shall deliver to Buyer each of the following within three
business days of the Effective Date (together with the items described
in Section 4.2, collectively, the "Due Diligence Items"):
4.1.1 Any existing survey of the Property, in Seller's possession (the
"Survey");
4.1.2 A current preliminary title report or title commitment (the
"Title Report") for the issuance of a standard coverage owner's
policy of title insurance, with standard provisions and
exceptions (the "Title Policy") to Buyer from the Escrow Holder,
together with copies of all documents constituting exceptions to
the title as reflected in the Title Report (collectively referred
to hereinafter as the "Title Documents");
4.1.3 A list of all contracts, including service contracts,
warranties, management, maintenance, leasing commission or other
agreements affecting the Property, if any, together with copies
of the same;
4.1.4 True and correct copies of the real estate and personal property
tax statements covering the Property or any part thereof for each
of the two (2) years prior to the current year and, if available,
for the current year;
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4.1.5 A schedule of all current or pending litigation with respect to
the Property or any part, thereof, if any;
4.1.6 Operating statements for the most recent two full calendar years
and monthly operating statements for the calendar year to date;
4.1.7 An inventory of all personal property located on the Property,
used in the maintenance of the Property or stored for future use
at the Property and an inventory of all furniture and appliances
used in the units, if any.
4.2 Seller shall make the following available for inspection by Buyer
during ordinary business hours at Seller's management office:
4.2.1 All site plans, leasing plans, as-built plans, drawings,
environmental, mechanical, electrical, structural, soils and
similar reports and/or audits and plans and specifications
relative to the Property in the possession of Seller, if any.
4.2.2 The tenant files, books and records relating to the ownership
and operation of the Property.
5. Inspections.
5.1 Buyer shall have a temporary non-exclusive license to enter and
conduct non-invasive feasibility, environmental, and physical studies
collectively of the Property that Buyer may deem necessary or
advisable (the "Inspections") at any time during the Inspection
Period, on the terms set forth in this Article 5. Buyer shall not
conduct invasive testing of any kind (including without limitation,
"Phase II" environmental testing without Seller's consent. Buyer's
right to conduct the Inspections shall be subject to rights of Tenants
and shall be subject to such conditions as may be reasonably imposed
by the Seller in order to avoid disruption at the Property.
5.2 Buyer must arrange all Inspections of the Property with Seller at
least two (2) business days in advance of any Inspections. Buyer and
its agents shall maintain equipment and other materials in an orderly
manner while they are located on the Property and to maintain them in
locations specified by Seller. Buyer agrees to remove all debris and
trash resulting from the Inspections on a daily basis and to remove
all equipment and other materials used by Buyer or its agents as soon
as the activity for which such equipment and other materials are used
is completed. Buyer and its agents shall take all appropriate measures
for the safety of persons and property on the Property and shall
comply with all applicable legal requirements. Buyer shall restore any
damage to the Property resulting from the Inspections including but
not limited to repair of surface openings resulting from tests. Buyer
shall promptly provide to Seller a copy of all reports and test
results prepared or furnished in connection with the Inspections.
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5.3 In the event that the Inspections show any fact, matter or condition
to exist with respect to the Property that is unacceptable to Buyer,
in Buyer's sole subjective discretion, then Buyer shall be entitled,
as its sole and exclusive remedy, to (1) terminate this Agreement and
obtain a refund of the Deposit, or (2) waive the objection, and close
the transaction as otherwise contemplated herein. Buyer agrees to
promptly discharge any liens that may be imposed against the Property
as a result of the Inspections and to defend, indemnify and hold
Seller harmless from all, claims, suits, losses, costs, expenses
(including without limitation court costs and attorneys' fees),
liabilities, judgments and damages incurred by Seller as a result of
any Inspections.
5.4 Buyer shall indemnify, save and hold Seller and Seller's officers,
agents, employees, directors, trustees, invitees, successors, and
assigns (collectively "Indemnitees") harmless against all losses,
costs, expenses, liabilities, claims, litigation, demands, proceedings
and damages (including but not limited to attorney's fees) suffered or
incurred by Seller or any such Indemnitees arising out of and limited
to the Inspections, provided that Buyer shall not incur any liability
due to its discovery, without exacerbation of the condition of any
Hazardous Materials or other circumstances at the Property. Buyer
waives any claims against Seller arising out of the Inspections or
this Agreement other than claims that are solely caused by or solely
arise from any negligent or willful misconduct of Seller. Buyer hereby
assume all responsibility for claims against Seller by the
contractors, subcontractors, employees, and agents of Buyer other than
claims that are solely caused by or solely arise from Seller's
negligence or willful misconduct.
5.5 Buyer shall, during the term of this Agreement and at all times during
which access is available to it, require its subcontractors and
agents, to maintain insurance, in form and substance reasonably
satisfactory to Seller, with insurance companies acceptable to Seller,
the following insurance: Comprehensive General Liability or Commercial
General Liability Insurance, with limits of not less than One Million
Dollars ($1,000,000) combined single limit per occurrence and not less
than Two Million Dollars ($2,000,000) on a general aggregate basis,
for bodily injury, death and property damage, and Excess (umbrella)
liability insurance with liability insurance with limits of not less
than Five Million Dollars ($5,000,000) per occurrence. Each policy of
insurance shall name Seller as an additional insured. Further, each
policy of insurance shall state that such policy is primary and
noncontributing with any insurance carried by Seller. Such policy
shall contain a provision that the naming of the additional insured
shall not negate any right the additional insured would have had as a
claimant under the policy if not so named and shall contain
severability of interest and cross-liability clauses. A certificate,
together with any endorsements to the policy required to evidence the
coverage which is to be obtained hereunder, shall be delivered to
Seller prior to entry on the Property. The certificate shall expressly
provide that no less than thirty (30) days prior written notice shall
be given Seller in the event of any
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material alteration to or cancellation of the coverages evidenced by
said certificate. A renewal certificate for each of the policies
required in this Section shall be delivered to Seller not less than
thirty (30) days prior to the expiration date of the term of such
policy. Any policies required by the provisions of this Section may be
made a part of a blanket policy of insurance with a "per project, per
location endorsement" so long as such blanket policy contains all of
the provisions required herein and does not reduce the coverage,
impair the rights of the other party to this Agreement or negate the
requirements of this Agreement.
5.6 During the course of its performance of the Inspections, Buyer will
acquire knowledge concerning the Property or Seller, or knowledge of
other matters of a sensitive business nature (collectively,
"Privileged Information"). Except as described below, neither Buyer
nor its agents shall disclose to any third party, publicize or suffer
or permit any of their respective employees to so disclose or
publicize any such Privileged Information, other than to consultants,
attorneys and agents as necessary for the Buyer's inspection and
analysis of the Property. In the event that Buyer believes in good
faith that it is required by any legal requirement to disclose any
such Privileged Information, then Buyer shall immediately notify
Seller of such belief and the reasons for such belief. If Seller
within 10 days after receipt of such notice, advises the party that
sent the notice that Seller shall itself disclose the information,
then Buyer shall not make such disclosure (unless either such party
reasonably believes that it must disclose such information by law). If
Buyer reasonably believes that such disclosure is required to be made
in less than the 10-day period, then the notice to Seller shall so
state and Seller's time to respond will be reduced accordingly.
5.7 The obligations of Buyer described in this Article shall survive the
Closing or any termination of this Agreement.
6. Approval.
6.1 Buyer shall have until the date which is thirty (30) days from the
Effective Date (the "Inspection Period") to approve or disapprove the
Inspections. If Buyer shall fail to notify Seller and Escrow Holder of
its disapproval of the Inspections in writing within the Inspection
Period, the condition of the Property shall be deemed approved. If
Buyer shall disapprove the Inspections within the Inspection Period,
this Agreement and the Escrow shall thereupon be terminated. Buyer
shall not be entitled to purchase the Property, Seller shall not be
obligated to sell the Property to Buyer and the parties shall be
relieved of any further obligation to each other with respect to the
Property, except as provided in Paragraph 5.
6.2 Notwithstanding anything to the contrary contained herein, Buyer
hereby agrees that, in the event this Agreement is terminated for any
reason, then Buyer shall promptly and at its sole expense return to
Seller all Due Diligence Items which have been delivered by Seller to
Buyer in connection with the Inspections, along with copies of all
reports, drawings, plans, studies, summaries, surveys, maps and
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other data prepared by third parties relating to the Property, subject
to restrictions on Buyer's ability to make any such materials
available to Seller that are imposed in any agreement with a third
party consultant preparing any such reports or materials ("Buyer's
Reports"); provided, however, that delivery of such copies and
information by Buyer shall be without warranty or representation
whatsoever, express or implied, including without limitations, any
warranty or representation as to ownership, accuracy, adequacy or
completeness thereof or otherwise. Buyer shall cooperate with Seller
at no expense to Buyer in order to obtain a waiver of any such
restrictions.
6.3 Contracts. On or before the end of the Inspection Period, Buyer will
designate in a written notice to Seller which Contracts Buyer will
assume and which Contracts must be terminated by Seller at Closing.
Taking into account any credits or prorations to be made pursuant to
this Agreement for payments coming due after Closing but accruing
prior to Closing, Buyer will assume the obligations arising from and
after the Closing Date under those Contracts which Buyer has
designated will not be terminated. At Buyer's expense, Seller shall
terminate at Closing all Contracts that are not so assumed.
7. Escrow.
7.1 Opening.
7.1.1 The purchase and sale of the Property shall be consummated
through an escrow ("Escrow") to be opened with Escrow Holder
within two (2) business days after the Effective Date. Escrow
shall be deemed to be opened as of the date fully executed copies
(or counterparts) of this Agreement are delivered to Escrow
Holder by Buyer and Seller ("Opening of Escrow"). This Agreement
shall be considered as the Escrow instructions between the
parties, with such further instructions as Escrow Holder shall
require in order to clarify its duties and responsibilities. If
Escrow Holder shall require further Escrow instructions, Escrow
Holder may prepare such instructions on its usual form. Such
further instructions shall be promptly signed by Buyer and Seller
and returned to Escrow Holder within three (3) business days of
receipt thereof. In the event of any conflict between the terms
and conditions of this Agreement and such further instructions,
the terms and conditions of this Agreement shall control.
7.2 Closing.
7.2.1 Escrow shall close ("Closing") on or before sixty (60) days
after the Effective Date, or such earlier date as shall be
mutually agreed to by the parties.
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7.3 Buyer Required to Deliver.
Buyer shall deliver to Escrow the following:
7.3.1 Within three (3) days of the Effective Date, the Deposit;
7.3.2 On or before Closing, the Purchase Price, subject to the closing
adjustments, credits and prorations contemplated hereby;
7.3.3 On or before Closing, such other documents as Title Company may
reasonably require from Buyer in order to issue the Title Policy;
7.3.4 An original counterpart executed by Buyer of an assignment and
assumption agreement (the "Assignment and Assumption Agreement")
in substantially the form attached hereto as Exhibit B, whereby
Seller assigns and conveys to Buyer all of Seller's right, title
and interest in and Buyer assumes all of Seller's obligations
under, the Leases and the Contracts and the Permits;
7.3.5 A counterpart closing statement (the "Closing Statement")
setting forth the Purchase Price and all amounts charged against
Buyer pursuant to Section 7.7 of this Agreement.
7.4 Seller Required to Deliver.
On or before Closing, Seller shall deliver to Escrow the following:
7.4.1 A duly executed and acknowledged special warranty deed,
conveying fee title to the Property in favor of Buyer (the
"Deed");
7.4.2 An executed certificate of non-foreign status;
7.4.3 A ▇▇▇▇ of sale of the Personal Property, if any, without
warranty, in favor of Buyer and duly executed by Seller, in
substantially the form attached hereto as Exhibit C;
7.4.4 An original counterpart executed by Seller of the Assignment and
Assumption Agreement;
7.4.5 A counterpart Closing Statement setting forth the Purchase Price
and all amounts charged against Seller pursuant to Section 7.7 of
this Agreement;
7.4.6 Such other documents as Title Company may reasonably require
from Seller in order to issue the Title Policy;
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7.4.7 A letter from Seller addressed to each Tenant informing such
Tenant of the change in ownership and directing that future rent
payments be made to Buyer;
7.4.8 All keys to all buildings and other improvements located on the
Property, combinations to any safes thereon, and security devices
therein in Seller's possession;
7.4.9 All records and files relating to the management or operation of
the Property, including, without limitation, all insurance
policies, all security contracts, all tenant files (including
correspondence), property tax bills, and all calculations used to
prepare statements of rental increases under the Leases and
statements of common area charges, insurance, property taxes and
other charges which are paid by tenants of the Project; and
7.5 Buyer's Costs.
Buyer shall pay the following:
7.5.1 All of Escrow Holder's fees, costs and expenses;
7.5.2 The cost of recording any documents relating to Buyer's
financing
7.5.3 Costs of recording the Deed;
7.5.4 Title Company's premium for the Title Policy except the basic
title premium; and
7.5.5 All other costs customarily borne by Buyers of real property in
the county in which the Property is situated;
7.6 Seller's Costs.
Seller shall pay the following:
7.6.1 All transfer taxes;
7.6.2 The basic title premium for the Title Policy; and
7.6.3 All other costs not itemized above which are customarily borne
by sellers of real property in the county in which the Property
is situated.
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7.7 Prorations.
7.7.1 Items to be Prorated The following shall be prorated between
Seller and Buyer as of the Closing with the Buyer being deemed
the owner of the Property as of the Closing:
(a) Taxes and Assessments All non-delinquent real property taxes,
assessments and other governmental impositions of any kind or
nature, including, without limitation, any special assessments or
similar charges (collectively, "Taxes"), which relate to the tax
year within which the Closing occurs based upon the actual number
of days in the tax year. With respect to any portion of the Taxes
which are payable by any Tenant directly to the authorities, no
proration or adjustment shall be made. The proration for Taxes
shall be based upon the most recently issued tax ▇▇▇▇ for the
Property, and shall be calculated based upon the maximum early
payment discount available. The prorations for taxes and
assessments which are made at Closing shall be final, and not
subject to reproration after Closing. Upon the Closing, Buyer
shall be responsible for real estate taxes and assessments on the
Property payable from and after the Closing. In no event shall
Seller be charged with or be responsible for any increase in the
taxes or assessments on the Property resulting from the sale of
the Property or from any improvements made or leases entered into
after the Closing. With respect to all periods for which Seller
has paid Taxes, Seller hereby reserves the right to institute or
continue any proceeding or proceedings for the reduction of the
assessed valuation of the Property, and, in its sole discretion,
to settle the same. Seller shall have sole authority to control
the progress of, and to make all decisions with respect to, such
proceedings but shall provide Buyer with copies of all
communications with the taxing authorities. All net tax refunds
and credits attributable to any period prior to the Closing which
Seller has paid or for which Seller has given a credit to Buyer
shall belong to and be the property of Seller, provided, however,
that any such refunds and credits that are the property of
Tenants under Leases shall be promptly remitted by Seller
directly to such Tenants or to Buyer for the credit of such
Tenants. All net tax refunds and credits attributable to any
period subsequent to the Closing shall belong to and be the
property of Buyer. Buyer agrees to cooperate with Seller in
connection with the prosecution of any such proceedings and to
take all steps, whether before or after the Closing, as may be
necessary to carry out the intention of this subparagraph,
including the delivery to Seller, upon demand, of any relevant
books and records, including receipted tax bills and cancelled
checks used in payment of such taxes, the execution of any and
all consent or other documents, and the undertaking of any acts
necessary for the collection of such refund by Seller. Buyer
agrees that, as a condition to the transfer of the Property by
Buyer, Buyer will cause any transferee to assume the obligations
set forth herein.
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(b) Rents Buyer will receive a credit at the Closing for all
rents collected by Seller prior to the Closing and allocable to
the period from and after the Closing based upon the actual
number of days in the month. No credit shall be given the Seller
for accrued and unpaid rent or any other non-current sums due
from Tenants until these sums are paid and Seller shall retain
the right to collect any such rent provided Seller does not ▇▇▇
to evict any tenants or terminate any Tenant Leases. Buyer shall
cooperate with Seller after the Closing to collect any rent under
the Tenant Leases which has accrued as of the Closing; provided,
however, Buyer shall not be obligated to ▇▇▇ any Tenants or
exercise any legal remedies under the Tenant Leases or to incur
any expense over and above its own regular collection expenses.
All payments collected from Tenants after the Closing shall first
be applied to the month in which the Closing occurs, then to any
rent due to Buyer for the period after Closing and finally to any
rent due to Seller for the period prior to Closing; provided,
however, notwithstanding the foregoing, if Seller collects any
payments from Tenants after Closing through its own collection
efforts, Seller may first apply such payments to rent due the
Seller for the period prior to Closing.
(c) CAM Expenses To the extent that Tenants are reimbursing the
landlord for common area maintenance and other operating expenses
(collectively, "CAM Charges"), CAM Charges shall be prorated at
Closing and again subsequent to Closing, as of the date of
Closing on a lease-by-lease basis with each party being entitled
to receive a portion of the CAM Charges payable under each Lease
for the CAM Lease Year in which Closing occurs, which portion
shall be equal to the actual CAM Charges incurred during the
party's respective periods of ownership of the Property during
the CAM Lease Year. As used herein, the term "CAM Lease Year"
means the twelve (12) month period as to which annual CAM Charges
are owed under each Lease. Five (5) days prior to Closing the
Seller shall submit to Buyer an itemization of its actual CAM
Charges operating expenses through such date and the amount of
CAM Charges received by the Seller as of such date, together with
an estimate of CAM Charges to be incurred to, but not including,
the Closing. In the event that the Seller has received CAM
Charges payments in excess of its actual CAM Charges operating
expenses, the Buyer shall be entitled to receive a credit against
the Purchase Price for the excess. In the event that the Seller
has received CAM Charges payments less than its actual CAM
Charges operating expenses, to the extent that the Leases provide
for a "true up" at the end of the CAM Lease Year, the Seller
shall be entitled to receive any deficit but only after the Buyer
has received any true up payment from the Tenant. Upon receipt by
either party of any CAM Charge true up payment from a Tenant, the
party receiving the same shall provide to the other party its
allocable share of the "true up" payment within five (5) days of
the receipt thereof.
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(d) Operating Expenses All operating expenses (including all
charges under the service contracts and agreements assumed by
Buyer) shall be prorated, and as to each service provider,
operating expenses payable or paid to such service provider in
respect to the billing period of such service provider in which
the Closing occurs (the "Current Billing Period"), shall be
prorated on a per diem basis based upon the number of days in the
Current Billing Period prior to the Closing and the number of
days in the Current Billing Period from and after the Closing,
and assuming that all charges are incurred uniformly during the
Current Billing Period. If actual bills for the Current Billing
Period are unavailable as of the Closing, then such proration
shall be made on an estimated basis based upon the most recently
issued bills, subject to readjustment upon receipt of actual
bills.
(e) Security Deposits; Prepaid Rents Prepaid rentals and other
tenant charges and security deposits (including any portion
thereof which may be designated as prepaid rent) under Tenant
Leases, if and to the extent that such deposits are in Seller's
actual possession or control and have not been otherwise applied
by Seller to any obligations of any Tenants under the Tenant
Leases, shall be credited against the Purchase Price, and upon
the Closing, Buyer shall assume full responsibility for all
security deposits to be refunded to the Tenants under the Tenant
Leases (to the extent the same are required to be refunded by the
terms of such Tenant Leases or applicable). In the event that any
security deposits are in the form of letters of credit or other
financial instruments (the "Non-Cash Security Deposits"), after
the Closing, Seller will cooperate with Buyer to have Buyer named
as beneficiary under the Non-Cash Security Deposits; provided
that such cooperation shall be at no cost or expense to Seller.
Buyer will not receive a credit against the Purchase Price for
such security deposits.
(f) Leasing Costs Seller shall receive a credit at the Closing
for all leasing costs, including tenant improvement costs and
allowances, and its pro-rata leasing commissions, previously paid
by Seller in connection with any Lease or modification to an
existing Lease which was entered into after the Effective Date
and which is approved or deemed approved by Buyer pursuant to
this Agreement, which approval included approval of the tenant
improvement costs. The Seller's pro-rata share shall be equal to
a fraction which has as its numerator the number of months left
in the base term of the Lease after the Closing and which has as
its denominator the number of months in the base term of the
Lease. Seller shall pay for all tenant improvement allowances and
leasing commissions with respect to the premises leased as of the
Effective Date
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by the Tenants pursuant to the Tenant Leases in effect as of the
Effective Date, to the extent that such improvement allowances
and leasing commissions are unpaid as of the Closing and to the
extent they are a landlord obligation under the terms of the
Tenant Leases. Buyer shall not receive a credit for any unexpired
rent concessions under any of the Leases. Notwithstanding the
foregoing, the Seller shall credit the Buyer for Sixty Six
Thousand Three Hundred Seventy Five and No/100 Dollars
($66,375.00) for leasing costs relating to the tenant Excel Inc.,
a Massachusetts corporation ("Excel").
(g) Gap Rent The Seller shall credit the Buyer for the lost
rental income associated with the tenant Administaff Services,
L.P., a Delaware limited partnership ("Administaff"), calculated
on a per diem basis from the date of Closing until January 1,
2008. Should Administaff take possession of and pay rent for its
expansion space prior to January 1, 2008, the Buyer shall be
liable to the Seller for a refund of the credited amount
calculated on a per diem basis from the date Administaff takes
possession of and pays rent for its expansion space until January
1, 2008. The per diem credit with respect to Administaff shall
be: One Hundred Twenty Three and 96/100 Dollars ($123.96) per
diem for months containing 28 days; One Hundred Fifteen and
69/100 Dollars ($115.69) per diem for months containing 30 days;
and One Hundred Eleven and 96/100 Dollars ($111.96) per diem for
months containing 31 days. The Seller shall credit the Buyer for
the lost rental income associated with Excel, calculated on a per
diem basis from the date of Closing until December 1, 2007.
Should Excel take possession of and pay rent for its expansion
space prior to December 1, 2007, the Buyer shall be liable to the
Seller for a refund of the credited amount calculated on a per
diem basis from the date Excel takes possession of and pays rent
for its expansion space until December 1, 2007. The per diem
credit with respect to Excel shall be: Two Hundred Four and
13/100 Dollars ($204.13) per diem for months containing 28 days;
One Hundred Ninety and 52/100 Dollars ($190.52) per diem for
months containing 30 days; and One Hundred Eighty Four and 38/100
($184.38) per diem for months containing 31 days.
7.7.2 Calculation; Reproration Prior to Closing the parties shall
jointly prepare an estimated closing statement which shall set
forth the costs payable under sections 7.5 and 7.6 and the
prorations and credits provided for in section 7.7.1 and
elsewhere in this Agreement. Any item which cannot be finally
prorated because of the unavailability of information shall be
tentatively prorated on the basis of the best data then available
and adjusted when the information is available in accordance with
this subparagraph; provided, however, that there shall be no
reproration for taxes and assessments. The estimated closing
statement as adjusted as aforesaid and approved in writing by the
parties
13
shall be referred to herein as the "Closing Statement". If the
prorations and credits made under the Closing Statement shall
prove to be incorrect or incomplete for any reason, then either
party shall be entitled to an adjustment to correct the same;
provided, however, that there shall be no reproration for taxes
and assessments; and further provided that any adjustment shall
be made, if at all, within sixty (60) days after the Closing
(except with respect to CAM Charges, in which case such
adjustment shall be made within thirty (30) days after the
information necessary to perform such adjustment is available),
and if a party fails to request an adjustment to the Closing
Statement by a written notice delivered to the other party within
the applicable period set forth above (such notice to specify in
reasonable detail the items within the Closing Statement that
such party desires to adjust and the reasons for such
adjustment), then the prorations and credits set forth in the
Closing Statement shall be binding and conclusive against such
party.
7.7.3 Items Not Prorated Seller and Buyer agree that (a) on the
Closing, the Property will not be subject to any financing
arranged by Seller; (b) none of the insurance policies relating
to the Property will be assigned to Buyer and Buyer shall be
responsible for arranging for its own insurance as of the
Closing; and (c) utilities, including telephone, electricity,
water and gas, shall be read on the Closing and Buyer shall be
responsible for all the necessary actions needed to arrange for
utilities to be transferred to the name of Buyer on the Closing,
including the posting of any required deposits and Seller shall
be entitled to recover and retain from the providers of such
utilities any refunds or overpayments to the extent applicable to
the period prior to the Closing, and any utility deposits which
it or its predecessors may have posted. Accordingly, there will
be no prorations for debt service, insurance or utilities. In the
event a meter reading is unavailable for any particular utility,
such utility shall be prorated in the manner provided in
subparagraph (1)(e) above.
7.7.4 Indemnification Buyer and Seller shall each indemnify, protect,
defend and hold the other harmless from and against any claim in
any way arising from the matters for which the other receives a
credit or otherwise assumes responsibility pursuant to this
Section.
7.7.5 Survival This Section 7.7 shall survive the Closing.
7.8 Determination of Dates of Performance.
Promptly after delivery to Buyer of the Title Report, Escrow Holder
shall prepare and deliver to Buyer and Seller a schedule which shall
state each of the following dates:
7.8.1 The date of Opening of Escrow pursuant to Paragraph 6.1;
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7.8.2 The date of receipt of the Title Report by Buyer;
7.8.3 The date by which title must be approved by Buyer pursuant to
Paragraph 3.2;
7.8.4 The date by which the Inspections must be approved by Buyer
pursuant to Paragraph 5.1.1;
7.8.5 The date by which the amounts described in Paragraph 2 must be
deposited by Buyer, for which determination Escrow Holder shall
assume satisfaction of the condition expressed in Paragraph 2 on
the last date stated for its satisfaction; and
7.8.6 The date of Closing pursuant to Paragraph 6.2.
If any events which determine any of the aforesaid dates occur on a
date other than the date specified or assumed for its occurrence in
this Agreement, Escrow Holder shall promptly redetermine as
appropriate each of the dates of performance in the aforesaid schedule
and notify Buyer and Seller of the dates of performance, as
redetermined.
8. Representations, Warranties, and Covenants.
8.1 Representations of Seller. Seller hereby represents and warrants as of
the date hereof to Buyer as follows:
8.1.1 Seller is a limited partnership duly formed and validly existing
under the laws of the State of Texas. Subject to receipt of the
approval described in Section 10.2.2, Seller has full power and
authority to enter into this Agreement, to perform this Agreement
and to consummate the transactions contemplated hereby. This
Agreement is a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, subject
to the effect of applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
affecting the rights of creditors generally.
8.1.2 Seller is not a "foreign person" within the meaning of Section
1445(f) of the Internal Revenue Code of 1986, as amended (the
"Code").
8.2 Approval of Property; Limitations on Seller Representations and
Warranties.
8.2.1 Except as may be specifically provided in Section 8.1 of this
Agreement, Seller makes no representations or warranties as to
the truth, accuracy, completeness, methodology of preparation or
otherwise concerning any engineering or environmental reports,
audits, the materials prepared by the Seller, or any other
materials, data or other information whatsoever
15
supplied to Buyer in connection with Buyer's inspection of the
Property. It is the parties' express understanding and agreement
that such materials are provided only for Buyer's convenience in
making its own examination and determination prior to the
expiration of the Inspection Period as to whether it wishes to
purchase the Property, and, in doing so, Buyer shall rely
exclusively on its own independent investigation and evaluation
of every aspect of the Property and not on any materials supplied
by Seller. Except as may be specifically provided elsewhere in
this Agreement, Buyer expressly disclaims any intent to rely on
any such materials provided to it by Seller in connection with
its inspection and agrees that it shall rely solely on its own
independently developed or verified information. Except with
respect to all obligations in this Agreement (including without
limitation Seller's express representations and warranties) that
are expressly stated to survive Closing, the indemnity provisions
contained in the documents delivered in connection with the
closing of the transactions contemplated by this Agreement
(collectively, the "Surviving Obligations"), Buyer hereby
releases Seller and its agents, representatives, and employees
from any and all claims, demands, and causes of action, past,
present, and future that Buyer may have relating to (a) the
condition of the Property at any time, before or after the
Closing, including without limitation, the presence of any
hazardous materials, or (b) any other matter pertaining to the
Property. This release shall survive the Closing or the
termination of this Agreement.
8.2.2 In the event of any breach by Seller of any of the preceding
representations or warranties or any other breach by Seller of
any other provision of this Agreement which is discovered prior
to Closing, Buyer's sole remedy shall be to elect in writing to
terminate this Agreement or waive such breach and proceed with
the Closing. In the event of any material breach by Seller of any
of such representations or warranties or any other material
breach by Seller of any other provision of this Agreement or any
agreement delivered in connection herewith discovered after
Closing, Seller shall be liable only for direct and actual
damages suffered by Buyer on account of Seller's breach, up to
the applicable limits described hereunder, and shall in no event
be liable for consequential or punitive damages. Any liability of
Seller hereunder for breach of any such representations or
warranties shall be limited to (a) claims in excess of an
aggregate of Fifty Thousand Dollars ($50,000.00), and (b) a
maximum aggregate cap of Two Hundred Fifty Thousand Dollars
($250,000.00). Notice of such claim must be delivered to Seller
in writing within three (3) months of the Closing Date. In no
event shall Seller be liable for any indirect or consequential
damages on account of Seller's breach of any representation or
warranty contained in this Agreement. Additionally,
notwithstanding the foregoing, if Buyer becomes aware prior to
the Closing that any representation or warranty hereunder is
untrue, or any covenant or condition to Closing has not been
fulfilled or satisfied (if not otherwise waived by Buyer), and
Buyer nonetheless proceeds to close on the purchase of the
Property, then Buyer shall be deemed to have irrevocably and
absolutely waived, relinquished and released all rights and
claims against Seller for any
16
damage or other loss arising out of or resulting from such untrue
representation or warranty or such unfulfilled or unsatisfied
covenant or condition. Seller's representations and warranties
set forth in Section 8.4 shall survive the Closing for a period
of three (3) months.
8.2.3 Approval of Property. The consummation of the purchase and sale
of the Property pursuant to this Agreement shall be deemed
Buyer's acknowledgement that it has had an adequate opportunity
to make such legal, factual and other inspections, inquiries and
investigations as it deems necessary, desirable or appropriate
with respect to the Property. Such inspections, inquiries and
investigations of Buyer shall be deemed to include, but shall not
be limited to, any leases and contracts pertaining to the
Property, the physical components of all portions of the
Property, the physical condition of the Property, such state of
facts as an accurate survey, environmental report and inspection
would show, the present and future zoning ordinance, ordinances,
resolutions. Buyer shall not be entitled to and shall not rely
upon, Seller or Seller's agents with regard to, and Seller will
not make any representation or warranty with respect to: (i) the
quality, nature, adequacy or physical condition of the Property
including, but not limited to, the structural elements,
foundation, roof, appurtenances, access, landscaping, parking
facilities, or the electrical, mechanical, HVAC, plumbing, sewage
or utility systems, facilities, or appliances at the Property, if
any; (ii) the quality, nature, adequacy or physical condition of
soils or the existence of ground water at the Property; (iii) the
existence, quality, nature, adequacy or physical condition of any
utilities serving the Property; (iv) the development potential of
the Property, its habitability, merchantability, or the fitness,
suitability, or adequacy of the Property for any particular
purpose; (v) the zoning or other legal status of the Property;
(vi) the Property or its operations' compliance with any
applicable codes, laws, regulations, statutes, ordinances,
covenants, conditions or restrictions of any governmental or
quasi-governmental entity or of any other person or entity; (vii)
the quality of any labor or materials relating in any way to the
Property; or (viii) the condition of title to the Property or the
nature, status and extent of any right-of-way, lease, right of
redemption, possession, lien, encumbrance, license, reservation,
covenant, condition, restriction, or any other matter affecting
the Property except as expressly set forth in this Agreement.
EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT AND THE DEED,
SELLER HAS NOT, DOES NOT, AND WILL NOT MAKE ANY WARRANTIES OR
REPRESENTATIONS WITH RESPECT TO THE PROPERTY AND SELLER
SPECIFICALLY DISCLAIMS ANY OTHER IMPLIED WARRANTIES OR WARRANTIES
ARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO,
ANY WARRANTY OF CONDITION, MERCHANTABILITY, HABITABILITY, OR
FITNESS FOR A PARTICULAR PURPOSE OR USE. FURTHERMORE, SELLER HAS
NOT, DOES NOT, AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY
WITH REGARD TO COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION,
POLLUTION, OR LAND USE LAWS, RULES, REGULATIONS,
17
ORDERS, OR REQUIREMENTS INCLUDING, BUT NOT LIMITED TO, THOSE
PERTAINING TO THE HANDLING, GENERATING, TREATING, STORING OR
DISPOSING OF ANY HAZARDOUS WASTE OR SUBSTANCE INCLUDING, WITHOUT
LIMITATION, ASBESTOS, PCB AND RADON. BUYER ACKNOWLEDGES THAT
BUYER IS A SOPHISTICATED BUYER FAMILIAR WITH THIS TYPE OF
PROPERTY AND THAT, SUBJECT ONLY TO THE EXPRESS WARRANTIES SET
FORTH IN THIS AGREEMENT AND CLOSING DOCUMENTS, BUYER WILL BE
ACQUIRING THE PROPERTY "AS IS AND WHERE IS, WITH ALL FAULTS," IN
ITS PRESENT STATE AND CONDITION, SUBJECT ONLY TO NORMAL WEAR AND
TEAR AND BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS AND
CONDITIONS MAY NOT HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND
INVESTIGATIONS. BUYER SHALL ALSO ACKNOWLEDGE AND AGREE THAT THERE
ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL
TO OR AFFECTING THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR
ANY THIRD PARTY. THE TERMS AND CONDITIONS OF THIS PARAGRAPH SHALL
SURVIVE THE CLOSING, AND NOT MERGE WITH THE PROVISIONS OF ANY
CLOSING DOCUMENTS. SELLER SHALL NOT BE LIABLE OR BOUND IN ANY
MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY REAL
ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS
THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO IN THIS
AGREEMENT. EXCEPT WITH REGARD TO THE OBLIGATIONS EXPRESSLY SET
FORTH IN THIS AGREEMENT AND THE REPRESENTATIONS AND WARRANTIES IN
SECTION 8.1, BUYER HEREBY RELEASES SELLER AND ITS AGENTS,
REPRESENTATIVES AND EMPLOYEES FROM ANY AND ALL LIABILITY RELATING
TO THE CONDITION OF THE PROPERTY BEFORE OR AFTER THE CLOSING AND
ANY OTHER MATTER RELATING TO THE PROPERTY, WHETHER KNOWN OR
UNKNOWN AT THE TIME OF THE CLOSING.
8.2.4 Release. Except as expressly set forth in this Agreement to the
contrary and except for any claims arising under the express
representations, warranties or covenants of Seller under this
Agreement or under the indemnity provisions of any document
delivered in connection with the closing of the transactions
contemplated by this Agreement, Buyer for itself and its agents,
affiliates, successors and assigns, hereby releases and forever
discharges Seller, and any party related to or affiliated with
Seller and their respective successors and assigns (the "Seller
Related Parties") from and against any and all claims at law or
equity which Buyer or any party related to or affiliated with
Buyer and their respective successors and assigns (each a "Buyer
Related Party") whether known or unknown at the time of this
agreement, which Buyer
18
or a Buyer Related Party has or may have in the future, arising
from or related to any matter or thing relating to or in
connection with the Property, including but not limited to, the
documents and information referred to in this Agreement, the
leases and the tenants, the Loan, any construction defects,
errors or omissions in the design or construction and arising out
of the physical, environmental, economic or legal condition of
the Property, including, without limitation, any claim for
indemnification or contribution arising under the Comprehensive
Environmental Response, Compensation, and Liability Act (42
U.S.C. Section 9601, et. seq.) or any similar federal, state or
local statute, rule or ordinance relating to liability of
property owners or operators for environmental matters. For the
foregoing purposes, Buyer hereby specifically waives the
provisions of Section 1542 of the California Civil Code and any
similar law of any other state, territory or jurisdiction.
Section 1542 provides:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
BUYER HEREBY SPECIFICALLY ACKNOWLEDGES THAT BUYER HAS CAREFULLY
REVIEWED THIS SUBSECTION AND DISCUSSED ITS IMPORT WITH LEGAL
COUNSEL AND THAT THE PROVISIONS OF THIS SUBSECTION ARE A MATERIAL
PART OF THIS AGREEMENT.
BUYER: _________________________
8.3 Covenants of Seller. Seller hereby covenants as follows:
8.3.1 At all times from the date hereof through the date of Closing,
Seller shall cause to be in force fire and extended coverage
insurance upon the Property, and public liability insurance with
respect to damage or injury to persons or property occurring on
the Property in at least such amounts as are maintained by Seller
on the Effective Date;
8.3.2 From the end of the Inspection Period through the date of
Closing, Seller will not enter into any new lease with respect to
the Property, without Buyer's prior written consent, which shall
not be unreasonably withheld. Exercise of a renewal option shall
not be considered a new lease. Any brokerage commission payable
with respect to a new lease shall be paid by Buyer. Further,
Seller will not modify any existing Lease covering space in the
Property without first obtaining the written consent of Buyer
which shall not be unreasonably withheld. Buyer shall have five
(5) business days in which to approve or disapprove of any new
lease for which it has a right to consent. Failure to respond in
writing within said time period shall be deemed to be consent;
19
8.3.3 From the Effective Date through the date of Closing, Seller
shall not sell, assign, or convey any right, title or interest
whatsoever in or to the Property, or create or permit to attach
any lien, security interest, easement, encumbrance, charge, or
condition affecting the Property (other than the Permitted
Exceptions) without promptly discharging the same prior to
Closing;
8.3.4 Seller shall not, without Buyer's written approval, (a) amend or
waive any right under any Service Contract, or (b) enter into any
agreement of any type affecting the Property that is not
terminable on 30 days notice;
9. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:
9.1 Buyer is a limited liability company duly organized and validly
existing under the laws of the State of Virginia. Buyer has full power
and authority to enter into this Agreement, to perform this Agreement
and to consummate the transactions contemplated hereby. This Agreement
is a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of creditors
generally.
10. Conditions Precedent to Closing.
10.1 The obligations of Buyer pursuant to this Agreement shall, at the
option of Buyer, be subject to the following conditions precedent:
10.1.1 All of the representations, warranties and agreements of Seller
set forth in this Agreement shall be true and correct in all
material respects as of the Effective Date, and Seller shall not
have on or prior to Closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Seller's part as required by the terms of this Agreement.
10.1.2 There shall be no material adverse change in the matters
reflected in the Title Report, and there shall not exist any
material adverse encumbrance or title defect affecting the
Property except for the Permitted Exceptions or matters to be
satisfied at Closing.
10.1.3 Seller shall have obtained and delivered to Buyer estoppel
certificates, in accordance with their respective Leases, from
tenants representing seventy percent of the square feet which are
leased and occupied by tenants as of the Effective Date. Estoppel
certificates shall be deemed to satisfy this condition precedent
unless they disclose material adverse matters. Buyer shall notify
Seller within three (3) business days of
20
receipt of a copy of the executed estoppel certificate of its
approval or disapproval and the basis of such disapproval, if
disapproved. If Buyer disapproves of an estoppel certificate
because of a material, adverse matter disclosed therein, and
Seller is unable to obtain a reasonably acceptable estoppel
certificate prior to the Closing, this Agreement shall terminate,
Buyer shall be entitled to a refund of the Deposit, and neither
party shall have any further obligation to the other except
Buyer's indemnification obligations under Paragraph 5.
10.2 The obligations of Seller under this Agreement shall, at the option of
Seller, be subject to the following conditions precedent:
10.2.1 All of the representations, warranties and agreements of Buyer
set forth in this Agreement shall be true and correct in all
material respects as of the Effective Date, and Buyer shall not
have on or prior to closing, failed to meet, comply with or
perform in any material respect any conditions or agreements on
Buyer's part as required by the terms of this Agreement.
10.2.2 Seller shall have received approval of the sale from the board
of directors of NNN 2003 Value Fund, LLC, a Delaware limited
liability company, the parent company of the Seller, no later
than fifteen business days after full execution of this
Agreement.
If any such condition is not fully satisfied by closing, the party is whose
favor the condition runs shall notify the other party and may terminate
this Agreement by written notice whereupon this Agreement may be canceled,
upon return of the Due Diligence Items the Deposit shall be paid to Buyer
and, thereafter, neither Seller nor Buyer shall have any continuing
obligations hereunder; provided, however, that if Buyer notifies Seller of
a failure to satisfy the conditions precedent set forth in this paragraph,
Seller may, within five (5) days of receipt of Buyer's Notices agree to
satisfy the condition by written notice to Buyer, and Buyer shall thereupon
be obligated to close the transaction provided Seller so satisfies such
condition. If Seller fails to agree to cure or fails to cure such condition
by the Closing Date, this Agreement shall be canceled and the Deposit shall
be returned to Buyer and neither party shall have any further liability
hereunder.
11. Damage or Destruction Prior to Closing.
In the event that the Property should be damaged by any casualty prior to
the Closing, then if the cost of repairing such damage, as reasonably
estimated by Seller, is:
11.1 Less than One Million Dollars ($1,000,000), the Closing shall proceed
as scheduled and any insurance proceeds shall be distributed to Buyer
to the extent not expended by Seller for restoration;
21
or if said cost is:
11.2 Greater than One Million Dollars ($1,000,000), then either Seller or
Buyer may elect to terminate this Agreement, in which case upon return
of the Due Diligence Items the Deposit shall be returned to Buyer and
neither party shall have any further obligation to the other except
for Buyer's indemnification obligations under Paragraph 5.
12. Eminent Domain.
12.1 If, before the Closing, proceedings are commenced for the taking by
exercise of the power of eminent domain of all or a material part of
the Property which, as reasonably determined by Buyer, would render
the Property unacceptable to Buyer or unsuitable for Buyer's intended
use, Buyer shall have the right, by giving notice to Seller within
thirty (30) days after Seller gives notice of the commencement of such
proceedings to Buyer, to terminate this Agreement, in which event this
Agreement shall terminate, the Deposit shall be returned to Buyer and
neither party shall have any further obligation to the other except
for Buyer's indemnification under Paragraph 5. If, before the Closing,
proceedings are commenced for the taking by exercise of the power of
eminent domain of less than such a material part of the Property, or
if Buyer has the right to terminate this Agreement pursuant to the
preceding sentence but Buyer does not exercise such right, then this
Agreement shall remain in full force and effect and, at the Closing,
the condemnation award (or, if not therefore received, the right to
receive such portion of the award) payable on account of the taking
shall be transferred in the same manner as title to the Property is
conveyed. Seller shall give notice to Buyer within three (3) business
days after Seller's receiving notice of the commencement of any
proceedings for the taking by exercise of the power of eminent domain
of all or any part of the Property.
13. Notices.
13.1 All notices, demands, or other communications of any type given by any
party hereunder, whether required by this Agreement or in any way
related to the transaction contracted for herein, shall be void and of
no effect unless given in accordance with the provisions of this
Paragraph. All notices shall be in writing and delivered to the person
to whom the notice is directed, either in person, by United States
Mail, as a registered or certified item, return receipt requested by
telecopy or by Federal Express. Notices delivered by mail shall be
deemed given when received. Notices by telecopy or Federal Express
shall be deemed received on the business day following transmission.
Notices shall be given to the following addresses:
Seller: NNN VF INTERWOOD, LP
c/o Triple Net Properties, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Buyer: TRIPLE NET PROPERTIES, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇. #▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
14. Remedies.
14.1 Defaults by Seller. If there is any default by Seller under this
Agreement, following notice to Seller and seven (7) days, during which
period Seller may cure the default, Buyer may, as it sole options
elect to either (a) declare this Agreement terminated in which case
the Deposit shall be returned to Buyer; or (b) treat this Agreement as
being in full force and effect and bring an action against Seller for
specific performance.
14.2 Defaults by Buyer. If there is any default by Buyer under this
Agreement, following notice to Buyer and seven (7) days, during which
period Buyer may cure the default, then Seller may, as its sole
remedy, declare this Agreement terminated, in which case the Deposit
shall be paid to Seller as liquidated damages and each party shall
thereupon be relieved of all further obligations and liabilities,
except any which survive termination. Notwithstanding the foregoing,
the Buyer's right to cure shall not be applicable to a failure to
close and the Closing shall in no event be extended pursuant to this
Section. In the event this Agreement is terminated due to the default
of Buyer hereunder, Buyer shall deliver to Seller, at no cost to
Seller, the Due Diligence Items and all of Buyer's Reports.
14.3 ARBITRATION OF DISPUTES. ANY CLAIM, CONTROVERSY OR DISPUTE, WHETHER
SOUNDING IN CONTRACT, STATUTE, TORT, FRAUD, MISREPRESENTATION OR OTHER
LEGAL THEORY, RELATED DIRECTLY OR INDIRECTLY TO THIS AGREEMENT,
WHENEVER BROUGHT AND WHETHER BETWEEN THE PARTIES TO THIS AGREEMENT OR
BETWEEN ONE OF THE PARTIES TO THIS AGREEMENT AND THE EMPLOYEES, AGENTS
OR AFFILIATED BUSINESSES OF THE OTHER PARTY, SHALL BE RESOLVED BY
ARBITRATION AS PRESCRIBED IN THIS SECTION. THE FEDERAL ARBITRATION
ACT, 9 U.S.C. SECTIONS 1-15, NOT STATE LAW, SHALL GOVERN THE
ARBITRABILITY OF ALL CLAIMS, AND THE DECISION OF THE ARBITRATOR AS TO
ARBITRABILITY SHALL BE FINAL.
23
A SINGLE ARBITRATOR WHO IS A RETIRED FEDERAL OR CALIFORNIA JUDGE SHALL
CONDUCT THE ARBITRATION UNDER THE THEN CURRENT RULES OF THE AMERICAN
ARBITRATION ASSOCIATION (THE "AAA"). THE ARBITRATOR SHALL BE SELECTED
BY MUTUAL AGREEMENT ON THE ARBITRATOR WITHIN THIRTY (30) DAYS OF
WRITTEN NOTICE BY ONE PARTY TO THE OTHER INVOKING THIS ARBITRATION
PROVISION, IN ACCORDANCE WITH AAA PROCEDURES FROM A LIST OF QUALIFIED
PEOPLE MAINTAINED BY THE AAA. THE ARBITRATION SHALL BE CONDUCTED IN
SANTA ANA, CALIFORNIA AND ALL EXPEDITED PROCEDURES PRESCRIBED BY THE
AAA RULES SHALL APPLY.
THERE SHALL BE NO DISCOVERY OTHER THAN THE EXCHANGE OF INFORMATION
WHICH IS PROVIDED TO THE ARBITRATOR BY THE PARTIES. THE ARBITRATOR
SHALL HAVE AUTHORITY ONLY TO GRANT SPECIFIC PERFORMANCE AND TO ORDER
OTHER EQUITABLE RELIEF AND TO AWARD COMPENSATORY DAMAGES, BUT SHALL
NOT HAVE THE AUTHORITY TO AWARD PUNITIVE DAMAGES OR OTHER
NONCOMPENSATORY DAMAGES OR ANY OTHER FORM OF RELIEF. THE ARBITRATOR
SHALL AWARD TO THE PREVAILING PARTY ITS REASONABLE ATTORNEYS' FEES AND
COSTS AND OTHER EXPENSES INCURRED IN THE ARBITRATION, EXCEPT THE
PARTIES SHALL SHARE EQUALLY THE FEES AND EXPENSES OF THE ARBITRATOR.
THE ARBITRATOR'S DECISION AND AWARD SHALL BE FINAL AND BINDING, AND
JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION THEREOF.
15. Assignment.
Buyer may assign its rights under this Agreement to an entity in which
Buyer has a legally controlling interest, provided, however, that Buyer
shall have no such right unless a written assignment is delivered to Seller
no later than 7 business days before Closing; and further provided that no
such assignment shall relieve Buyer of its obligations hereunder.
16. Interpretation and Applicable Law.
This Agreement shall be construed and interpreted in accordance with the
laws of the state in which the Property is located (the "State"). Where
required for proper interpretation, words in the singular shall include the
plural; the masculine gender shall include the neuter and the feminine, and
vice versa. The terms "successors and assigns" shall include the heirs,
administrators, executors, successors, and assigns, as applicable, of any
party hereto.
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17. Amendment.
This Agreement may not be modified or amended, except by an agreement in
writing signed by the parties. The parties may waive any of the conditions
contained herein or any of the obligations of the other party hereunder,
but any such waiver shall be effective only if in writing and signed by the
party waiving such conditions and obligations.
18. Attorney's Fees.
In the event it becomes necessary for either party to file a suit or
arbitration to enforce this Agreement or any provisions contained herein,
the prevailing party shall be entitled to recover, in addition to all other
remedies or damages, reasonable attorneys' fees and costs of court incurred
in such suit or arbitration.
19. Entire Agreement; Survival.
This Agreement (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings of the parties in connection therewith. No
representation, warranty, covenant, agreement, or condition not expressed
in this Agreement shall be binding upon the parties hereto nor affect or be
effective to interpret, change, or restrict the provisions of this
Agreement. All of the obligations of the parties hereunder and all other
provisions of this Agreement shall be deemed to have merged into the Deed
and shall be extinguished at Closing or the earlier termination of this
Agreement, except as expressly provided herein. Notwithstanding anything to
the contrary in this Agreement, the
20. Multiple Originals Only; Counterparts.
Numerous agreements may be executed by the parties hereto. Each such
executed copy shall have the full force and effect of an original executed
instrument. This Agreement may be executed in any number of counterparts,
all of which when taken together shall constitute the entire agreement of
the parties.
21. Acceptance.
Time is of the essence of this Agreement. The date of execution of this
Agreement by Seller shall be the date of execution of this Agreement. If
the final date of any period falls upon a Saturday, Sunday, or legal
holiday under Federal law, the laws of the State or the laws of the State
of California, then in such event the expiration date of such period shall
be extended to the next day which is not a Saturday, Sunday, or legal
holiday under Federal law, the laws of the State or the State of
California.
22. Real Estate Commission.
Seller and Buyer each represent and warrant to the other that neither
Seller nor Buyer has contracted or entered into any agreement with any real
estate broker, agent, finder or any
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other party in connection with this transaction, and that neither party has
taken any action which would result in any real estate broker's and/or
finder's fees or commissions being due and payable to any party with
respect to the transaction contemplated hereby. Each party hereby
indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including reasonable attorneys' fees)
resulting to the other party by reason of a breach of the representation
and warranty made by such party in this paragraph.
23. Exchange.
Either party reserves the right to structure the sale of the Property as a
like kind exchange pursuant to Section 1031 of the Internal Revenue Code of
1986, as amended. In such event such shall have the right to assign its
interest in this Agreement to a qualified exchange intermediary of its
choosing to effect such exchange. The other party shall sign a customary
assignment and/or notice of assignment, however, such assignment shall at
no cost or expense to the other party and shall not otherwise affect the
term of this Agreement.
24. Confidentiality.
Buyer agrees that, prior to the closing, all Property information received
by Buyer shall be kept confidential as provided in this paragraph. Without
the prior written consent of Seller, prior to the closing, the Property
information shall not be disclosed by Buyer or its representatives, in any
manner whatsoever, in whole or in part, except (1) to Buyer's
representatives and prospective lenders, prospective investors and their
representatives who need to know the Property information for the purpose
of evaluating the Property and who are informed by the Buyer of the
confidential nature of the Property information; (2) as may be necessary
for Buyer or Buyer's representatives to comply with applicable laws,
including, without limitation, governmental, regulatory, disclosure, tax
and reporting requirements; to comply with other requirements and requests
of regulatory and supervisory authorities and self-regulatory organizations
having jurisdiction over Buyer or Buyer's representatives; to comply with
regulatory or judicial processes; or to satisfy reporting procedures and
inquiries of credit rating agencies in accordance with customary practices
of Buyer or its affiliates; and (3) to prospective tenants of the Property.
THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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SIGNATURE PAGE FOR
Agreement for Purchase and Sale of Real Property and Escrow Instructions
(Interwood)
EXECUTED on this the 10th day of March, 2007
SELLER: NNN VF INTERWOOD, LP,
a Texas limited partnership
By: NNN VF Interwood GP, LLC,
a Texas limited liability company,
its General Partner
By: Triple Net Properties, LLC
a Virginia limited liability
company, its Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: General Counsel
EXECUTED on this the 10th day of March, 2007.
BUYER: TRIPLE NET PROPERTIES, LLC
a Virginia limited liability company
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director of Real Estate
27