Agreement for Purchase and Sale dated as of July 29, 2005 between Avondale Multi-Family Limited Partnership and Wilshire Enterprises, Inc.
Exhibit
10.2
Agreement
for Purchase and Sale dated as of July 29, 2005 between Avondale Multi-Family
Limited Partnership and Wilshire Enterprises, Inc.
48
AGREEMENT
FOR PURCHASE AND SALE
This
Agreement for Purchase and Sale (“Agreement”)
is
dated as of July _____, 2005 (the “Effective
Date”),
and
is entered into between AVONDALE MULTI-FAMILY LIMITED PARTNERSHIP, an Arizona
limited partnership (“Seller”),
and
WILSHIRE ENTERPRISES, INC., a New Jersey corporation (“Purchaser”)
(collectively, the “Parties”,
or
individually, the “Party”).
| 1. |
Definitions.
As
used in this Agreement, the following terms shall have the following
meanings:
|
| 1.1 |
“Property”
means:
|
| (a) |
that
certain real property situated at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, commonly known as The Village at Gateway Pavilions
Apartments (the “Real
Property”
that, together with the “Personal Property,” shall be defined as the
“Property”), consisting of 240 apartment units, as more particularly
described on Exhibit
A
attached hereto and incorporated herein by reference, together
with any
and all improvements thereon and all easements, licenses, rights-of-way
and other appurtenances thereto;
|
| (b) |
the
personal property presently owned by Seller and associated with
the
ownership, operation and maintenance of the Real Property (the
“Personal
Property”);
and
|
| (c) |
the
following intangible personal
property:
|
| (1) |
The
name “The Village at Gateway Pavilions Apartments” (“Trade
Name”);
|
| (2) |
Leases
with tenants (“Tenant
Leases”)
and refundable security deposits (“Tenant
Deposits”)
related thereto;
|
| (3) |
To
the extent assignable, all licenses, permits and certificates of
occupancy
for the Property (“Permits”);
|
| (4) |
To
the extent assignable, warranties and guarantees on Personal Property
purchased, if any (“Warranties”);
and
|
| (5) |
To
the extent assignable, all plans, specifications, surveys, and
other
studies in Seller’s possession and all other general
intangibles.
|
49
| 1.2 |
“Escrow
Agent”
means Title Security Agency of Arizona, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇ , ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇.
|
| 2. |
Purchase
and Sale.
Seller agrees to sell to Purchaser, and Purchaser agrees to purchase
from
Seller, all of Seller’s right, title and interest in and to the Property,
on the terms and conditions set forth in this
Agreement.
|
| 3. |
Purchase
Price.
The purchase price for the Property is Twenty Eight Million One
Hundred
Forty Thousand Dollars ($28,140,000.00) (the “Purchase
Price”),
paid at Closing (as defined below) as
follows:
|
| 3.1 |
▇▇▇▇▇▇▇
Money Deposit.
Upon full execution of this Agreement, Purchaser agrees to deposit
One
Hundred Thousand Dollars ($100,000.00) in cash with Escrow Agent
as
Purchaser’s ▇▇▇▇▇▇▇ Money Deposit (the “Initial
Deposit”).
Upon delivery of the Initial Deposit to Escrow Agent, (a) the
Initial
Deposit shall be non-refundable to Purchaser, unless Seller breaches
this
Agreement beyond any applicable cure period or a damage/condemnation
event
in Sections 14 or 15 shall have occurred and Purchaser timely elects
to
cancel this Agreement pursuant to the applicable section; and (b) the
Initial Deposit shall be paid by Escrow Agent to Seller on the
twenty
second (22nd) day following the Effective Date, unless Purchaser
sooner
has given the Purchaser Title CN (as each such term is defined
in Section
5.2 below) to Seller and Escrow Agent. In addition, Purchaser agrees
to
deposit an additional Four Hundred Thousand Dollars ($400,000)
in cash
(the “Second
Deposit”)
on the twenty second (22nd)
day after the Effective Date, which shall be non-refundable to
Purchaser,
except in the event of Seller’s breach of its obligations under this
Agreement beyond any applicable cure period or a damage/condemnation
event
in Sections 14 or 15 shall have occurred and Purchaser timely elects
to
cancel this Agreement pursuant to the applicable section; from
this Second
Deposit, Fifty Thousand Dollars ($50,000) shall be paid by Escrow
Agent to
Seller on the business day following that on which Purchaser makes
the
Second Deposit. The balance of the Second Deposit shall be placed
in an
interest bearing account of a federally insured depositary of a
major
money center bank, and the interest accruing thereon shall belong
to the
party entitled to the Initial Deposit or the Second Deposit, as
the case
may be. If upon the 66th
day following the Effective Date Purchaser fails to apply to HUD
for the
assumption of the PFC Encumbrance as set forth in Section 13.3(d),
an
additional One Hundred Thousand Dollars ($100,000) of the Second
Deposit
shall become non-refundable and shall immediately be released to
Seller.
Additionally, if prior to Closing Purchaser cancels this Agreement
for any
reason other than Seller’s breach of this Agreement beyond the applicable
cure period or a condemnation or casualty event described in Sections
14
or 15, the Second Deposit balance shall be paid, along with accrued
interest thereon, to Seller without further instructions to Escrow
Agent.
|
50
| 3.2 |
Balance
of Purchase Price.
On or before the Closing Date (as defined in Section 4 below),
Purchaser
shall deposit with Escrow Agent and Escrow Agent shall immediately
release
to Seller the amount equal to (a) the Purchase Price (less
the
Initial Deposit and the Second Deposit specified in Section 3.1
above),
minus (b) the principal balance of the PFC Encumbrance (as
defined
below) as of the Closing Date, plus (c) any amounts owed
to the
holder of the PFC Encumbrance in consideration of Purchaser’s assumption
thereof (including without limitation any assumption fee and the
replacement of all deposits held in reserve by the Lender or HUD)
plus or
minus other sums (e.g.,
escrow fees and tax prorations share) necessary to close, as
applicable.
|
| 4. |
Closing
Date.
The closing of the transaction contemplated by this Agreement (the
“Closing
Date”
or “Closing”)
shall occur in the office of Escrow Agent (or, if required by the
federal
government, at the HUD office so designated therefore) not later
than the
tenth (10th) day after the date on which HUD approves the TPA (as
defined
below) or such earlier date as the parties may agree, but in no
event
later than one hundred eighty (180) calendar days following the
Effective
Date (the “Outside Closing Date”) , unless Purchaser elects to extend the
Closing as set forth herein. The Closing may be extended for up
to thirty
(30) days as follows: Upon Purchaser’s written notice to be given to
Seller at least ten (10) days prior to the Outside Closing Date,
Purchaser
shall have the right to extend the Closing Date for one (1) thirty
(30)
day period, so long as (i) Purchaser has made formal application
to
HUD for the assumption of the PFC Encumbrance as set forth in Section
13.3(d), and (ii) Purchaser demonstrates in the notice to
Seller good
faith, diligent efforts to prosecute the application with HUD and
shares
with Seller Purchaser’s written communications with HUD demonstrating
progress in processing the HUD approval of the TPA, and
(iii) Purchaser instructs Escrow Agent, concurrently with
its
notification of extension of the Closing Date, to release an additional
One Hundred Thousand Dollars ($100,000.00) from the Second Deposit
in
consideration of Seller granting the thirty (30) day extension
period,
such additional deposit to be non-refundable to Purchaser. Escrow
Agent
hereby is instructed to release the One Hundred Thousand Dollar
($100,000)
sum from the Second Deposit to Seller promptly upon its receipt
of
Purchaser’s notice of intention to extend the
Closing.
|
| 5. |
Title
and Title Insurance.
|
| 5.1 |
Condition
of Title.
At closing, title to the Real Property shall be marketable of record
free
of (and title insurance shall insure that title is free of) encumbrances
or defects, except Permitted Exceptions (as defined below). “Permitted
Exceptions” include (i) nondelinquent taxes, (ii) usual rights
of tenants as identified in the rental agreements or leases,
(iii) building or use restrictions general to the area in
which the
Real Property is located, (iv) the “Regulatory Agreement for
Multifamily Housing Projects” for FHA Project No. 123-35386, recorded as
Instrument No. 2003-1502707 in the official records of Maricopa
County,
Arizona (the “HUD
Covenant”),
and (v) other exceptions as are approved, or deemed approved
or
waived, by Purchaser pursuant to Section
5.2.
|
51
| 5.2 |
Preliminary
Title Commitment.
Within seven (7) days after the Effective Date, Escrow Agent will
make
available to Purchaser a commitment for title insurance (“Preliminary
Commitment”),
along with legible copies of all recorded exceptions to title,
issued by
First American Title Insurance Company (the “Title
Company”)
showing the condition of title to the
Property.
|
Purchaser
shall give written notice to Seller on or before seven (7) days following
the
date of Purchaser’s receipt of the Preliminary Commitment (the “PO Notice”) of
any defects or exceptions to title to which Purchaser objects. Within five
(5)
days of receipt of Purchaser’s notice, Seller shall notify Purchaser in writing
whether Seller intends to remove, at or prior to closing, the defects or
exceptions to title to which Purchaser objects, which Seller shall have the
sole
election whether to remove. Seller must remove all monetary encumbrances
against
title to the Real Property (except the PFC Encumbrance, as defined below),
which
Seller has consensually granted in writing as a lien against the Property
and
any mechanic’s liens (or bond over such disputed mechanic’s lien) unless
resulting from the acts or omissions of Purchaser). If Seller notifies Purchaser
of its agreement to remove any of the defects or exceptions, then Seller
shall
remove such defects or exceptions on or before the Closing Date.
If
Seller
notifies Purchaser that Seller will not remove one or more of such defects
or
exceptions noted in the PO Notice (the “SR Refusal Notice”), Purchaser may elect
to accept such defects or exceptions to title as Seller declines to, or fails
to
offer to, cure or, alternatively, elect to terminate this Agreement. If
Purchaser elects to terminate this Agreement, it must do so in writing within
five (5) days of Seller’s election not to remove all defects to which Purchaser
objected (the “Purchaser Title CN”), whereupon the Initial Deposit shall be
refunded to Purchaser and all rights and obligations of Seller and Purchaser
under this Agreement shall terminate and be of no further force or effect.
Purchaser’s failure to timely provide the notice described in the preceding
sentence shall be deemed to be Purchaser’s election to accept such defects or
exceptions and a waiver of Purchaser’s right to terminate this Agreement
pursuant to this Section 5.2. If a mechanic’s lien not resulting from the acts
or omissions of Purchaser, is recorded between the date of Purchaser’s receipt
of the Preliminary Commitment and the Closing Date, Purchaser shall have
the
right to cause Seller to pay or bond over such monetary lien or encumbrance
through escrow at closing. Other than the removal of any consensual monetary
lien granted in writing by Seller, any mechanic’s lien arising from work
authorized by Seller, and any other encumbrance executed by Seller after
issuance of the Preliminary Commitment and prior to Closing, Seller shall
have
no obligation to cure any title defect or remove any matter from title to
the
Property, and Purchaser’s sole remedy in the event of Seller’s inability or
unwillingness to cure or remove any exception to title to which Purchaser
objects will be to terminate this Agreement and obtain the return of its
Initial
Deposit.
52
| 5.3 |
Title
Policy.
The Title Company shall deliver to Purchaser as soon as practicable
after
Closing, at Seller’s expense, an ALTA standard coverage owner’s policy of
title insurance insuring Purchaser’s fee simple title to the Real Property
in the face amount of the Purchase Price and containing no exclusions
other than the form printed exclusions and no exceptions other
than the
Permitted Exceptions and those created or caused by Purchaser (the
“Title
Policy”).
Purchaser, at Purchaser’s sole expense, may require the Title Company to
issue an ALTA extended coverage owner’s title policy, and if it does so,
Purchaser shall bear all additional costs associated with obtaining
the
extended coverage policy or any endorsements
thereto.
|
| 6. |
Entry
and Inspection.
Purchaser shall have rights of physical inspection of the Property
or the
books and records thereof, including without limitation examination
of
those due diligence matters contained within the items reflected
on
Exhibit
B
attached hereto. Seller agrees to promptly furnish the necessary
documents
stated on Exhibit B for inspection not later than ten (10) days
from
Effective Date. Purchaser, within twenty one (21) days from the
Effective
Date (the “Due
Diligence Period”),
shall specifically approve in writing all matters contained in
the items
set forth on Exhibit B as well as the forms of the Closing documents,
and
affirm that Purchaser will proceed with the transaction contemplated
by
the Agreement for the full Purchase Price. If Purchaser fails to
provide
timely such unambiguous written approval to Seller by the last
day of the
Due Diligence Period, this Agreement shall terminate and be of
no further
force or effect except that Purchaser shall forfeit its Initial
Deposit to
Seller, and thereafter the Parties shall have no obligations to
each other
except for any express surviving indemnity obligations contained
herein.
Notwithstanding the foregoing, the Due Diligence Period shall be
extended
by one (1) day for each day or portion thereof beyond the aforesaid
ten
(10) day period for delivery of the necessary documents stated
on Exhibit
B that any of said documents have not been delivered by Seller.
Except as
otherwise expressly provided in Section 13.1 below or in the Closing
documents, the sale of the Property is and will be made on an “AS IS,
WHERE IS” basis, with all defects of any nature, and Seller has not made,
does not make and specifically negates and disclaims, any representations,
warranties or guaranties of any kind or character whatsoever, whether
express or implied, oral or written, past, present or future of,
as to,
concerning or with respect to the Property or any other matter
whatsoever,
including without limitation its income, its tenancies, its value,
its
zoning, its environmental condition, and its compliance with any
other
laws.
|
| 7. |
Purchaser’s
Contingencies.
The obligation of Purchaser to purchase the Property pursuant to
this
Agreement is expressly contingent upon approval or waiver of the
following
contingency (“Purchaser’s
Contingency”)
in Purchaser’s reasonable discretion within the time period specified for
each condition:
|
53
Purchaser
obtaining approval of (i) the assumption of the existing first deed of trust
and
promissory note due April 1, 2045, encumbering the Property in favor of Capstone
Realty Advisors, LLC (“Lender”),
which
succeeded to the interest of PFC (“PFC
Encumbrance”)
and
(ii) the transfer of physical assets under HUD Form 92266 (or its successor
application form), provided that Purchaser shall timely submit the necessary
assumption documents to each person from whom consent to assume is required
within the time frame described in the terms of Section 13.3(d)
hereof.
| 8. |
Confidentiality.
Except as may be required by law (in which event Purchaser shall
give not
less than five (5) business days notice to Seller of such legal
obligation
in advance of the intended disclosure) Purchaser and Purchaser’s agents
and representatives hereby covenant with Seller that Purchaser
and its
agents and representatives, without the prior written consent of
Seller
(which consent may be withheld for any reason or none) shall not
disclose
to any other person beyond its accountants and legal counsel, by
any means
whatsoever, (i) any information pertaining to this Agreement
and the
transaction contemplated hereby, or (ii) any information,
data or
documents provided by Seller or its agents or representatives regarding
Seller, its business and the
Property.
|
| 9. |
Prorations.
|
| 9.1 |
Taxes.
Property taxes shall be prorated as of the Closing Date based upon
a three
hundred sixty-five (365) day year.
|
| 9.2 |
Rents.
All non-delinquent rents shall be prorated on an accrual basis;
however,
Purchaser shall receive no credit for any outstanding rental concessions
or future rent credits. Purchaser shall receive credit for rents
on the
day of Closing. In the event Seller receives any payments of rent
from
tenants subsequent to Closing that are applicable to any period
after
Closing, such payments shall be endorsed by Seller in favor of
Purchaser
and promptly delivered to Purchaser. In the event Purchaser receives
any
payments of any delinquent rent from tenants subsequent to Closing
that
are applicable to periods prior to the Closing, such payments shall,
as
applicable, either be endorsed by Purchaser in favor of Seller
and
promptly delivered to Seller or promptly paid to Purchaser by Seller.
Purchaser shall use commercially reasonable efforts to collect
delinquent
rent from tenants owed to Seller prior to Closing, but Purchaser
shall not
be obligated to commence eviction efforts in an effort to collect
rents.
Purchaser shall be entitled to apply all payments by tenants first
to the
payment of current rent and other charges and second to the payment
of
pre-Closing delinquent rent when the current month’s rent is past due; but
rent payments received more than ten (10) days prior to their due
date
during the two (2) months next following the month of the Closing
Date
shall be presumed to be a “catch-up” payment of pre-Closing delinquent
rent (unless any such payment is accompanied by a notation from
the tenant
indicating to the contrary) and shall be remitted to Seller. The
refundable portion of all tenant deposits and accrued interest
as to those
leases that provide that the landlord shall pay interest on such
deposits
shall be credited by Seller to Purchaser at Closing. Purchaser
shall
receive no credit for any non-refundable fees or deposits unless
the date,
circumstance or event which makes same non-refundable has not occurred
as
of the Closing Date.
|
54
| 9.3 |
Utilities
and Operating Expenses.
Purchaser agrees to open accounts with the utility companies serving
the
Property and to cooperate with Seller in requesting readings as
of the
Closing Date. If readings cannot be obtained as of the Closing
Date, the
Parties shall prorate all utility charges relating to the Property,
including water, gas, electricity, sewer and the like, outside
of escrow,
with such prorations to be finalized as soon as practicable following
Closing. Expenses under any Approved Contracts assumed by Purchaser
shall
be prorated as of the Closing Date. If any errors or omissions
are made
regarding adjustments or prorations, the parties shall make the
appropriate corrections promptly upon the discovery thereof. If
any
estimates are made regarding adjustments or prorations, the Parties
shall
make the appropriate correction promptly when accurate information
becomes
available. Any corrected adjustment or proration shall be paid
in cash
outside of escrow to the party entitled thereto. The obligations
of the
Parties under this Section 9.3 shall survive for a period of twelve
(12)
months after the Closing Date.
|
| 10. |
Closing
Costs.
|
| 10.1 |
Seller’s
Closing Costs.
Seller shall pay the following:
|
| (a) |
One-half
of Escrow Agent’s fee;
|
| (b) |
The
cost of an ALTA standard coverage owner’s Title Policy, including search
fees;
|
| (c) |
Real
estate sales commissions as set forth in Section
18;
|
| (d) |
Seller’s
attorneys’ fees in connection with the transaction contemplated by this
Agreement (which shall not include any fees of attorneys engaged
by
Purchaser with regard to the assumption of the PFC Encumbrance);
and
|
| (e) |
Recording
fees customarily paid by sellers.
|
| 10.2 |
Purchaser’s
Closing Costs.
Purchaser shall pay:
|
| (a) |
One-half
of Escrow Agent’s fee;
|
55
| (b) |
Any
sales/use tax in connection with transfer of the Personal
Property;
|
| (c) |
That
portion of the cost of obtaining a satisfactory title insurance
policy
that is in excess of the cost of the Title Policy, including the
costs of
an ALTA survey, if required;
|
| (d) |
All
costs and fees associated with assumption of the PFC Encumbrance
on the
Property and replacement of all reserves held by the holder of
the PFC
Encumbrance and HUD, and upon the Closing Date, any tax, insurance,
replacement reserve, operating deficiency reserve, and any other
impounds
maintained by Lender in accordance with the HUD Loan (collectively,
the
“Impounds”)
shall be reimbursed by Purchaser to Seller. The amount of the Impounds
as
of the Closing Date is to be determined by the Escrow Agent by
obtaining
written confirmation from the Lender. Also, Purchaser shall pay
all its
attorneys’ fees in connection with the transaction contemplated by this
Agreement and those fees charged by the PFC Encumbrance holder
or HUD in
connection with the assumption of same, including without limitation
the
fees of its legal counsel; all costs incurred in connection with
the
consummation of Purchaser’s IRC Section 1031 exchange; and those recording
fees customarily paid by purchasers, including without limitation
all the
PFC Encumbrance assumption instruments.
|
| 11. |
Closing
Deliveries.
On
or before the Closing Date, the Parties shall cause to be delivered
to
Escrow Agent fully executed originals of the following documents,
satisfactory in form and substance to both Seller and Purchaser,
together
with escrow instructions, funds required to close and any other
documents
reasonably required to complete the transaction contemplated by
this
Agreement:
|
| 11.1 |
Seller’s
Deliveries.
|
| (a) |
Special
Warranty Deed conveying title to the Property to Purchaser and
containing
a reference to the HUD Covenant and a restriction prohibiting converting
the use of the Property into condominiums, a horizontal property
regime or
other form of separate ownership as to any of the dwelling units,
for a
period of ten (10) years from the date of issuance of the final
certificate of occupancy upon completion of the improvements to
the
Property, in form and substance identical, subject to any corrections
or
revisions jointly agreed to by the parties or required by law,
to that
instrument to be delivered to Purchaser within fourteen (14) days
after
the Effective Date (the “Deed”);
|
| (b) |
▇▇▇▇
of Sale conveying title to the Personal Property to
Purchaser;
|
56
| (c) |
Rent
Roll, certified as correct as of the Closing Date by Seller, identifying
each unit, the tenant of each unit, the lease expiration date,
the monthly
rent, the status of payment of rent, all refundable tenant deposits
and/or
prepaid rents on deposit from tenants to be transferred by Seller
to
Purchaser at Closing, and any rental concessions to tenants then
in
effect;
|
| (d) |
Assignment
and Assumption of Leases assigning to Purchaser all of Seller’s interests
in all of the Tenant Leases;
|
| (e) |
Assignment
and Assumption of Contracts and Intangibles assigning to Purchaser
all of
Seller’s rights and obligations under the contracts affecting the Property
which Purchaser has elected to assume in accordance with the terms
of this
Agreement (collectively, the “Approved
Contracts”);
|
| (f) |
General
Assignment assigning to Purchaser all of Seller’s interest in warranties
and other intangible Personal
Property;
|
| (g) |
Non-foreign
affidavit stating that Seller is not a “foreign person” for purposes of
Section 1445 of the Internal Revenue Code;
|
| (h) |
An
Affidavit of Property Value required in connection with the conveyance
of
the Real Property and such other documents as are customary for
similar
transactions or as may be reasonably required by the Title Company
in its
capacities as underwriter or escrow agent;
and
|
| (i) |
A
certificate updating Seller’s representations and warranties as of the
Closing Date.
|
Additionally,
Seller shall cause fully executed originals of the following documents to
be
delivered directly to Purchaser on or before the Closing Date:
|
(a)
|
Originals
of all Tenant Leases (or copies, if any original has been lost)
and any
material correspondence related thereto, i.e, all tenant
files;
|
|
(b)
|
Originals
of all Approved Contracts and any material correspondence related
thereto;
|
|
(c)
|
Materials
relating to the intangible Personal Property assigned to Purchaser
that
Seller has in its possession and/or
control;
|
|
(d)
|
All
soils, seismic, geologic, drainage, toxic waste and environmental
reports,
surveys, “as-built” plans and specifications, working drawings, grading
plans, elevations and similar information with respect to the
Real
Property which Seller has in its possession and/or control to
the extent
that originals of such items have not been delivered previously
by Seller
to Purchaser; and
|
| (e) |
All
keys to the improvements located on the Real Property which Seller
or
Seller’s agents have in their possession, which keys shall include at
least one (1) key for every apartment unit, and which keys shall
be
properly tagged for identification;
and
|
| (f) |
The
originals of the certificate of occupancy for the improvements
on the Real
Property and any other document readily accessible by Seller
that is
identified on Exhibit B.
|
| 11.2 |
Purchaser’s
Deliveries.
Purchaser shall deliver on the Closing Date, the Purchase Price
for the
Property in accordance with Sections 3.1 and 3.2 above and any
documents
necessary to complete the transaction contemplated by this Agreement,
which shall include without limitation a letter from Purchaser’s President
authorizing (for so long as Purchaser owns the Property) Seller’s
affiliates to enter upon the Property (with due concern for the
rights of
tenants) upon forty-eight (48) hours prior written notice to Purchaser
to
tour the Real Property with prospective investors in or lenders
to
Seller’s affiliates’ other developments. Such deliveries shall be made in
a timely manner to allow for disbursement of the Purchase Price
to Seller
on the Closing Date.
|
| 12. |
Seller’s
Obligations Pending
Closing.
|
| 12.1 |
Maintenance
of Property; Agreements Affecting Property.
From the Effective Date until the Closing Date, Seller will continue
to
conduct its business on and to manage the Property in a manner
similar to
Seller’s current conduct and will maintain the Property in its current
condition, subject to normal wear and tear, depreciation and damage
by
insured casualty. Seller will maintain ▇▇▇▇▇▇▇▇ Ekre & Bart as
property manager and will not terminate ▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇ as
property manager unless for cause or with the consent of Purchaser
which
shall not be unreasonably withheld. Seller has not previously entered
into
any agreements with respect to the operation of the business conducted
on
the Property (other than Tenant Leases, and any other agreements
which
would be disclosed by the documents described in Exhibit B
attached to this Agreement) which will be binding on Purchaser
after the
Closing Date, and following the Effective Date, Seller will not
enter into
any such agreement which will be binding on Purchaser without the
consent
in writing of Purchaser. Seller will not sell, assign or convey
any right,
title or interest in the Property to any third party or permit
to exist
any lien, encumbrance or charge thereon without discharging the
same prior
to the Closing Date.
|
57
| 12.2 |
Property
Insurance.
Until the Closing Date, Seller shall maintain its insurance policy
or
policies insuring the Property in full force and
effect.
|
| 13. |
Representations
and Warranties.
|
| 13.1 |
Seller’s
Representations and Warranties.
The phrase “Seller’s Knowledge” or “Seller has not received written
notice” or “Seller has no knowledge of” or other phrases of similar import
shall mean and be limited to information actually known to or acquired
by,
in each case as of the Effective Date and without any special inquiry,
▇▇▇▇▇ ▇. ▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, who are principals
of Seller.
In addition to other representations herein, Seller represents
and
warrants to Purchaser as of the date hereof and as of the Closing
Date
that:
|
| (a) |
Seller
is an Arizona limited partnership, duly formed and validly existing
in the
State of Arizona. Seller, and the persons and entities signing
on behalf
of Seller, have full power and right to enter into and perform
their
obligations under this Agreement and the documents contemplated
herein,
including, without limitation, conveying the Property as herein
provided;
|
| (b) |
Neither
Seller nor any of the persons or entities constituting Seller is
a
“foreign person” within the meaning of Section 1445 of the United States
Internal Revenue Code of 1986, as amended, and the regulations
issued
thereunder, and Seller and each of the persons and entities constituting
Seller shall execute an affidavit at Closing, in form acceptable
to
Purchaser, confirming such matters; additionally, Seller is not,
and shall
not be at any time, a person with whom the Lenders are restricted
from
doing business under the regulations of the Office of Foreign Asset
Control ("OFAC") of the Department of Treasury of the United States
of
America (including those Persons named on OFAC's Specially Designated
and
Blocked Persons list) or under any statute, executive order (including,
the September 24, 2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism), or other governmental action and is not and shall not
engage
in any dealings or transactions or otherwise be associated with
such
persons. In addition, the Borrower hereby agrees to provide to
the
Administrative Agent any information that the Administrative Agent
deems
necessary from time to time in order to ensure compliance with
all
applicable Laws concerning money laundering and similar
activities.
|
| (c) |
Seller’s
interest in the Personal Property, Warranties, Permits, Tenant
Leases,
Tenant Deposits, Approved Contracts, and Trade Name is free of
any liens
or encumbrances, including without limitation any leases or financing
(with the exception of the PFC Encumbrance and the HUD Covenant).
There
shall not be any obligations of Seller in connection with the Property
that will be binding upon Purchaser after the Closing Date, except
for the
Tenant Leases, the Approved Contracts, and the Permitted
Exceptions;
|
58
| (d) |
The
execution and delivery of this Agreement and the documents contemplated
herein, and the consummation of the transactions contemplated herein,
will
not result in the breach of any agreement, indenture, or other
instrument
to which Seller is a party or is otherwise bound, so long as the
PFC
Encumbrance and the HUD Covenant are fully assumed by Purchaser
with each
lienholder’s consent;
|
| (e) |
Except
for the consent of the Lender and HUD, no consent, approval, authorization
or order of any court or governmental agency or body or other third
party
is required in connection with Seller’s execution and delivery of this
Agreement or in connection with Seller’s performance of its obligations
under this Agreement;
|
| (f) |
Seller
has not received written notice and has no actual knowledge (a) that
any permits required for the Property’s present use and status have not
been obtained or that any conditions contained in any permits have
not
been satisfied, except as set forth in subsection (k) of this Section
13.1, or (b) of any attachments, executions, or assignments
for the
benefit of creditors, or voluntary proceedings in bankruptcy or
under any
other debtor relief laws contemplated by or pending or threatened
by or
against any of the persons or entities constituting
Seller;
|
| (g) |
Except
for the Tenant Leases, and those recorded exceptions set forth
in the
Preliminary Commitment, there are no options, rights of first refusal,
occupancy agreements (written or oral), licenses, contracts, restrictive
covenants, parking agreements, or any other agreements affecting
the
Property or the ownership, use, occupancy, operation, construction
or
maintenance of the Property;
|
| (h) |
Seller
has not received written notice and has no actual knowledge that
any
water, sewer, gas, electricity, telephone, cable TV, drainage or
other
utility or system required by law or necessary for the use, occupancy,
operation and maintenance of the Property (i) is not installed
across
public property (or across valid easements which will inure to
the benefit
of Purchaser pursuant to this Agreement) to the boundary lines
of the Real
Property; (ii) is not connected pursuant to valid permits;
(iii) is not paid current as of the date of mutual acceptance
of this
Agreement and will be paid current as of the Closing Date; or (iv) is
not billed at normal metered charges for apartment
use;
|
59
| (i) |
No
services, material or work have been supplied to the Property by
or on
behalf of Seller for which payment has not been made in full in
a timely
manner, or which will not be paid in full before the Closing
Date;
|
| (j) |
All
financial information about the Property heretofore or hereafter
prepared
by Seller and furnished to Purchaser is true, complete, and correct
in all
material respects as of the date therein specified and presents
fairly the
financial condition of the
Property;
|
| (k) |
Seller
has received no written notices and Seller has no actual knowledge
(a) concerning any actual or alleged violation of or claim
relating
to any applicable governing regulation relating to the Property,
including
without limitation the Americans with Disabilities Act, or Seller’s use of
the Property; (b) that any of the uses or structures on
the Real
Property constitute a nonconforming use or structure under the
applicable
governmental regulation, provided, a secondary fire access issue
is being
discussed between the City of Avondale and Seller’s contractor and shall
reach final resolution prior to Closing; (c) that a variance
or
special exception from any Board of Adjustment of the City of Avondale
or
from any other applicable governmental entity has been obtained
by Seller,
or that any such variance or special exception is required for
the
Property or its use, occupancy, and operation to fully comply with
the
applicable governmental regulation; (d) that any federal,
state,
county, municipal or other governmental plans to change the highway
or
road system in the vicinity of the Property or to restrict or change
access from any such highway or road to the Property; or (e) of
any
violation of any covenant, or condition applicable to the
Property;
|
| (l) |
Seller
has received no written notice of and Seller has no actual knowledge
of:
(i) any claim, action, suit, proceeding (including without
limitation
any proceeding in the nature of eminent domain) or investigation
pending
or threatened before any agency, court or other governmental authority
or
by any tenant, supplier or material man which relates to the ownership,
use, occupancy, value, operation of or title to the Property or
any
portion thereof; or (ii) any pending or contemplated special
or
general assessments, whether or not a lien on the Property, affecting
any
portion of the Property which will not be paid in full by Seller
prior to
the Closing Date; or (iii) any proceeding for any increase
in the
assessed valuation of any portion of the Property (other than normal
reassessment for ad
valorem
tax purposes which is part of a continuing and ongoing process);
|
| (m) |
Seller
has disclosed to Purchaser, in writing, information to the extent
of
Seller’s Knowledge in respect to (a) current, pending, or threatened
litigation involving the Property or any portion thereof, and (b) any
pending or threatened litigation involving any tenants, suppliers,
or
materialmen; and
|
60
| (n) |
The
PFC Encumbrance has an outstanding principal balance in the approximate
amount of $14,694,000 and accrues interest at an annual rate of
five and
four-tenths percent (5.4%). The note evidencing such financing
was
obtained through the U.S. Department of Housing and Urban Development
(“HUD”),
and such note is assumable in accordance with its terms, upon the
prior
written approval of the HUD
Secretary.
|
| 13.2 |
Seller’s
Disclaimer.
Except to the extent expressly set forth in this Section 13 and
elsewhere
in this Agreement, Seller makes no representations or warranties
with
respect to, and shall have no liability for: (i) the condition
of the
Property or the suitability of the Property for habitation or for
Purchaser’s intended use or for any use whatsoever; (ii) any
applicable building, zoning, fire or life safety laws or regulations
or
with respect to compliance therewith or with respect to the existence
of
or compliance with any required permits, if any, of any government
agency,
other than that described in Section 13.1(k) above; (iii) the
availability or existence of any water, sewer or other utilities,
any
rights thereto, or any water, sewer or other utility districts;
or
(iv) the presence of any environmentally hazardous wastes,
substances
or materials on, in or under the property or any adjacent properties.
PURCHASER ACKNOWLEDGES TO SELLER THAT PURCHASER WAS OFFERED, BUT
AT THE
CLOSE OF THE DUE DILIGENCE PERIOD SHALL HAVE WAIVED, THE OPPORTUNITY
UNDER
THIS AGREEMENT TO FURTHER INSPECT THE PROPERTY IN ALL RESPECTS
AND EXCEPT
TO THE EXTENT OF SELLER’S EXPRESS REPRESENTATIONS HEREUNDER, PURCHASER
ASSUMES THE RESPONSIBILITY AND RISKS OF ALL DEFECTS AND CONDITIONS,
INCLUDING SUCH DEFECTS AND CONDITIONS, IF ANY, THAT CANNOT BE OBSERVED
BY
CASUAL INSPECTION AND ALL RISKS ASSOCIATED WITH ADVERSE PHYSICAL
CHARACTERISTICS AND EXISTING ENVIRONMENTAL CONDITIONS ON, IN OR
AT THE
PROPERTY OR ANY ADJACENT PROPERTIES. Purchaser acknowledges and
agrees
that neither Seller not any member, manager, employee or agent
of Seller
has made any representations or warranties regarding the truth,
accuracy
or thoroughness of any reports, studies or assessments relating
to the
Property which Seller may have delivered or otherwise made available
to
Purchaser, except as otherwise expressly set forth in this Agreement.
Purchaser acknowledges that Seller would not agree to sell the
Property to
Purchaser on the terms and conditions of this Agreement but for
Purchaser’s acknowledgements and agreements set forth in this Section
13.2.
|
Purchaser’s
Initials:___________________________
61
| 13.3 |
Purchaser’s
Representations and Warranties.
Purchaser hereby represents and warrants to Seller as of the date
hereof,
and as of the Closing Date, that (a) Purchaser has full
power to
execute, deliver and carry out the terms and provisions of this
Agreement;
(b) Purchaser is a sophisticated purchaser who is familiar
with the
ownership and operation of real estate projects similar to the
Property;
(c) Purchaser has or will have adequate opportunity to complete
all
physical and financial examinations relating to the acquisition
of the
Property that it deems necessary, and will acquire the same solely
on the
basis of such examinations and the title insurance protection afforded
by
the owner’s policy and not on any information provided or to be provided
by Seller; and (d) Purchaser shall complete and submit to
HUD, HUD
Form 92266 (or its successor application form) and all other forms
and
information required to assume the PFC Encumbrance within sixty
six (66)
days after the Effective Date.
|
| 13.4 |
Survival;
Knowledge.
All representations and warranties made in this Agreement shall
survive
the Closing for a period of twelve (12) months. Any and all claims
for
misrepresentation or breach of warranty under this Agreement must
be
commenced or filed within twelve (12) months from the date of Closing.
Purchaser shall have no recourse against Seller with respect to
any claim
for misrepresentation or breach of warranty arising out of facts
or
circumstances of which Purchaser or its employees or agents (excluding
real estate agents) were aware prior to Closing.
|
| 14. |
Destruction
of Improvements.
Prior to Seller’s delivery of possession of the Property to Purchaser at
Closing, the risk of loss or damage to the Property shall remain
upon
Seller. The risk of loss transfers to Purchaser after delivery
of
possession of the Property to Purchaser at Closing. If, prior to
Closing,
the Property is materially damaged or destroyed by fire or other
casualty,
Seller shall promptly notify Purchaser of such fact. Purchaser
shall have
the option to terminate this Agreement upon notice to Seller given
not
later than five (5) days after receipt of Seller’s notice. If this
Agreement is so terminated, then the Initial and Second Deposits
and all
interest accrued thereon in the depository bank shall be refunded
to
Purchaser. Purchaser and Seller shall pay one-half (1/2) the cost
of any
cancellation fees and costs of Escrow Agent or Title Company in
such
event; and neither Purchaser nor Seller shall have any further
rights or
obligations under this Agreement except for any surviving indemnity
provisions of this Agreement. If Purchaser fails to notify Seller
of its
election within ten (10) days of receiving notification of the
material
damage or destruction, the Purchaser shall be deemed to have elected
to
proceed with Closing and the acquisition under this Agreement.
For
purposes of this Section 14, “material” damage or destruction shall mean
damage or destruction that costs in excess of two percent (2%)
of the
Purchase Price to repair or
replace.
|
If
Purchaser does not so terminate this Agreement or in the event any damage
or
destruction is not material, then neither Purchaser nor Seller shall have
the
right to either terminate this Agreement by reason of such damage or
destruction, or waive its right to terminate, in which case Seller shall
promptly comply with the terms and requirements of any Tenant Lease, the
PFC
Encumbrance or any other applicable agreement binding on Seller and/or the
Real
Property and any obligations under applicable law with regard to the repair
or
restoration of such damage, provided, however, that if the date of occurrence
of
the loss is such that it can not reasonably be repaired or restored prior
to
Closing and the failure to repair does not otherwise (a) prevent the Closing,
including, without limitation, (i) the assumption of the PFC Encumbrance
and
(ii) the transfer of physical assets under HUD Form 92266 (or its successor
application form), or (b) expose Purchaser or the Real Property to any claim
for
damages or penalty, then at Closing Seller shall assign and turn over to
Purchaser all insurance proceeds paid or payable with respect to such damage
or
destruction, plus the amount of any deductible under Seller’s insurance policy
and Purchaser and Seller shall proceed to close the transaction pursuant
to the
terms of this Agreement, without modifications of the terms of this Agreement
and without any reduction in the Purchase Price. It is expressly understood
and
agreed to by Purchaser that except as provided in this paragraph Seller shall
not and is not obligated to make any repairs to the Property in the event
of
damage or destruction by fire or other casualty and Seller’s assignment of the
insurance proceeds and the payment of the deductible under Seller’s insurance
policy to Purchaser is made so that Purchaser is responsible for any such
repairs.
62
| 15. |
Condemnation.
In
the event that, prior to the Closing Date, any governmental entity
shall
commence any actions of eminent domain or similar type proceedings
to take
any portion of the Real Property, Seller shall give prompt written
notice
thereof to Purchaser, and Purchaser shall have the option either
to (a)
elect to terminate this Agreement, or (b) complete the acquisition
of the
Property, in which case Purchaser shall be entitled to all the
proceeds of
such taking and Seller hereby agrees that it shall not settle or
compromise the proceedings without Purchaser’s prior written consent,
which consent shall not be unreasonably withheld or delayed. If
Purchaser
fails to notify Seller of its election within ten (10) days of
receiving
notification of the proceeding, then Purchaser shall be deemed
to have
elected to proceed with Closing and the acquisition under this
Agreement.
|
| 16. |
Default.
|
| 16.1 |
Default
by Purchaser.
In the event the Purchaser fails, without legal excuse, to complete
the
purchase of the Property, Seller shall have the right to direct
the Escrow
Agent to pay the Deposit to Seller or to retain said Deposit to
the extent
already received by Seller, as liquidated damages for Purchaser’s failure.
The Parties agree that Seller’s actual damages would be difficult or
impossible to determine if Purchaser defaults, and that the Deposit
is the
best estimate of the amount and damages Seller would suffer. The
Deposit
shall be the amount that Seller is entitled to receive as liquidated
damages and shall be Seller’s sole and exclusive remedy for Purchaser’s
failure to complete the purchase of the Property. Payment of the
Deposit
in consequence of Purchaser’s default represents damages and not any
penalty against Purchaser. Notwithstanding anything to the contrary
in
this Agreement, Purchaser’s indemnity obligations under this Agreement are
separate and distinct obligations not subject to this Section 16.1.
|
63
| 16.2 |
Default
by Seller.
Purchaser shall have as its sole remedy election, the right to
either:
(a) bring an action for specific performance, or (b) terminate
this Agreement and obtain the return of its Deposit. If Purchaser
fails to
file suit for its remedy of specific performance within thirty
(30) days
following the then-scheduled Closing Date, Purchaser shall be deemed
to
have waived its specific performance remedy. The remedies granted
to
Purchaser under this Section 16.2 apply only in the event of a
breach or
default or event that is not otherwise dealt with under terms of
this
Agreement. Under no circumstances shall Purchaser have the right
to ▇▇▇
for damages of any nature. Notwithstanding anything to the contrary
in
this Agreement, Purchaser’s indemnity obligations under this Agreement are
separate and distinct obligations that are not subject to the liquidated
damages provisions contained in this Section 16.2. Further,
notwithstanding anything to the contrary contained in this Agreement,
the
liquidated damage provisions of this Section 16.2 will not limit
Seller’s
damages under A.R.S. sections 12-1103, 12-1191 or
33-420.
|
| 17. |
Notices.
All notices or other communications required or permitted to be
given to a
party to this Agreement shall be in writing and shall be personally
delivered, sent by reliable overnight courier which obtains a delivery
receipt, designated for next business day delivery and shipping
prepaid,,
sent via registered or certified mail, postage prepaid, return
receipt
requested, or sent by facsimile with hard copy sent on the same
day by one
of the means set forth above, to such party at the following respective
addresses:
|
| Purchaser: |
Wilshire
Enterprises, Inc.
1 Gateway
Center
▇▇-▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
|
| With a copy to: | Wilentz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇.
▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Phone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
|
64
| Seller: |
Avondale
Multi-Family Limited Partnership
Attn:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇
▇/▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
|
| With a copy to: |
▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
Bonnett,
Fairbourn, et al.
▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Phone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail:
▇▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
|
Each
such
notice or other communication shall be deemed given, delivered and received
upon
its actual receipt, except that in the case of registered or certified mailings,
these shall be deemed received on the fourth (4th) business day following
its
posting.
| 18. |
Agency
and Commissions.
Each Party agrees to defend, indemnify and hold the other harmless
from
and against all liabilities, costs, damages and expenses, including,
without limitation, reasonable attorneys’ fees, resulting from any claims
or fees or commissions, based upon agreements by it, if any, to
pay any
additional broker’s commission and/or finder’s fee. Each Party represents
and warrants that no real estate brokers or finders were involved
in this
transaction that entitle any such person to a commission upon the
consummation of this purchase and
sale.
|
| 19. |
Disclosure
to Parties.
It
is hereby disclosed that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an owner of an interest
in
Seller, is a licensed Arizona and Colorado real estate broker.
The Parties
understand and accept these disclosures and waive any rights that
may
otherwise relate to the described relationships. The disclosure
of such
relationship shall not in any way limit the scope of the representations
and warranties of the parties in Section 18 or limit the defense
or
indemnification obligations of the parties under Section 18.
|
| 20. |
Transfer
in Accordance with HUD Requirements.
Notwithstanding any provision set forth in this Agreement, the
transaction
is conditioned upon preliminary approval by HUD of the transaction
as set
forth in Form HUD-92266, Application for Transfer of Physical Assets,
and
supporting documents submitted to HUD. No transfer of any interest
in the
Property under this Agreement shall be allowed or effective prior
to such
approval by HUD. Purchaser will not take possession of the Property
nor
assume benefits of property ownership prior to such approval by
HUD. The
Purchaser, its heirs, executors, administrators, or assigns shall
have no
right upon any breach by the Seller hereunder to seek damages,
directly or
indirectly, from the Property which is the subject of this transaction,
including from any assets, rents, issues or profits thereof, and
Purchaser
shall have no right to effect a lien upon this Property or the
assets,
rents, issues or profits thereof. At the Closing as defined herein,
Purchaser shall assume the loan made to the Seller and to be assumed
by
the Purchaser and insured by HUD in connection with this Project
(“HUD
Loan”).
Purchaser shall be responsible for applying for approval of a Transfer
of
Physical Assets (“TPA”)
with the HUD Phoenix Office in connection with the purchase of
the
Property and assumption of the HUD Loan. Purchaser shall pay for
the
services of ▇▇▇▇▇▇▇ & Bosco, P.A. in connection with the preparation
and submission of the TPA, and Purchaser shall be responsible for
all
legal fees and costs associated with the TPA, whether or not the
TPA is
approved. ▇▇▇▇▇▇▇ & ▇▇▇▇▇, P.A. shall process the assumption of the
HUD Loan. The parties’ obligations under this Agreement shall be
contingent upon HUD’s approval of the TPA and Purchaser’s assumption of
the HUD Loan. If HUD does not approve of the TPA and Purchaser’s
assumption of the HUD Loan on or before the Close of Escrow, then
either
Party to this Agreement shall have the option at any time thereafter
to
terminate this Agreement; but in any event, One Hundred Thousand
Dollars
($100,000) being the full Initial Deposit and Fifty Thousand Dollars
($50,000) of the Second Deposit shall belong to Seller, and the
balance of
the Second Deposit shall be returned to Purchaser unless (i) Purchaser
failed to apply to HUD for the assumption of the PFC Encumbrance
as set
forth in Section 13.3(d), in which case an additional One Hundred
Thousand
Dollars ($100,000) of the Second Deposit shall belong to Seller
or (ii)
HUD’s disapproval of the TPA and Purchaser’s assumption of the HUD Loan is
a result of a) Purchaser’s failure to provide all requested items to HUD
and or the Lender within its control; b) Purchaser’s failure to perform
any HUD or Lender requirements within its control; c) a prior default
by
Purchaser on a HUD insured loan; or d) Purchaser’s insufficient credit, in
which case the balance of the Second Deposit shall be immediately
released
to and belong to Seller.
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65
| 21. |
Assignment
by Purchaser.
Purchaser may assign its rights and/or obligations under this Agreement
with the prior written consent of Seller, which consent shall not
be
unreasonably withheld, conditioned or delayed. Notwithstanding
the
foregoing, Seller’s consent shall not be required with respect to the
assignment of this Agreement to an entity in which Purchaser will
remain
as a manager and member, subject to HUD approval (and Seller shall
have no
responsibility for this approval). Any assignment shall be documented
and
notice given at least three (3) business days prior to the Closing
Date;
and the assignee must execute and deliver the license described
in Section
11.2 in favor of the Seller. Any permitted assignment by Purchaser
shall
not relieve Purchaser from performing the obligations of the buyer
under
this Agreement.
|
| 22. |
1031
Exchange.
Either Party may elect to qualify this transaction under Section
1031 of
the Internal Revenue Code (the “1031
Exchange”).
Each Party agrees to cooperate with the other to the extent necessary
to
qualify for the 1031 Exchange but neither shall be obligated to
incur any
out of pocket cost in connection therewith unless the exchanging
party
initiating the 1031 Exchange agrees to reimburse the cooperating
party for
such cost. Either Party may, without the other’s consent and in
furtherance of the 1031 Exchange, assign this Agreement and convey
the
Property to a person or entity (the “Exchange
Intermediary”)
at or prior to Closing on the following conditions: (a) the
assigning
Party shall not be released from its obligations under this Agreement;
(b) the other (non-assigning) party shall not bear any cost,
expense
or liability in connection with the conveyance or assignment; and
(c) the assigning Party shall indemnify and save the other
party
harmless from same.
|
66
| 23. |
Attorneys’
Fees.
If
there is any litigation between Seller and Purchaser to enforce
or
interpret any provisions or rights of this Agreement, the unsuccessful
party in such litigation, as determined by the court, agrees to
pay the
successful party, as determined by the court, all reasonable out
of pocket
costs, legal fees, and expenses (through trial and appeal), including,
but
not limited to, reasonable attorneys’ fees incurred by the successful
party.
|
| 24. |
Time.
Time is of the essence of this Agreement, it being understood that
each
date set forth herein and the obligation of the Parties to be satisfied
by
such date have been the subject of specific negotiations by the
Parties.
The time for the performance of any obligation or the taking of
any action
under this Agreement will be deemed to expire at 5:00 p.m. (Phoenix
time)
on the last day of the applicable time period established in this
Agreement. In calculating any time period in this Agreement which
commences upon the receipt of any notice, request, demand, or document,
or
upon the happening of an event (e.g.,
the Opening of Escrow), the date upon which the notice, request,
demand,
or document is deemed received, as determined above, or the date
an event
occurs (or is deemed to have occurred) is not included with the
applicable
time period, but the applicable time period will commence on the
day
immediately following. If the time for the performance of any obligation
or taking any action under this Agreement expires on a Saturday,
Sunday,
or legal holiday, the time for performance or taking such action
will be
extended to the next succeeding day with is not a Saturday, Sunday,
or
legal holiday and during which Escrow Agent and both Purchaser’s and
Escrow Agent’s banks are open for
business.
|
| 25. |
Possession.
Possession of the Property shall be delivered by Seller to Purchaser
on
the Closing Date, subject to the right of
tenants.
|
| 26. |
Entire
Agreement.
This Agreement contains the entire agreement between the Parties
to this
Agreement with respect to the subject matter of this Agreement
and
supersedes all prior understandings, agreements, representations
and
warranties, if any, with respect to such subject
matter.
|
| 27. |
Modification
in Writing.
This Agreement may only be modified by a writing executed by both
Purchaser and Seller.
|
67
| 28. |
Headings.
The headings of the various paragraphs of this Agreement have been
inserted only for convenience and shall not be deemed in any manner
to
modify or limit any of the provisions of this Agreement, or be
used in any
manner in the interpretation of this
Agreement.
|
| 29. |
Interpretation.
Whenever the context so requires, all words used in the singular
shall be
construed to have been used in the plural (and vice versa), each
gender
shall be construed to include any other gender, and the word “person”
shall be construed to include a natural person, a corporation,
a firm, a
partnership, a joint venture, an estate or any other
entity.
|
| 30. |
Effectiveness.
This Agreement shall become effective as a contract binding the
parties
if, and only when, it has been signed by, and delivered to, both
Purchaser
and Seller. There is no offer to sell represented by Seller’s forwarding
this Agreement draft to Purchaser. If this Agreement is executed
and
delivered by Purchaser to Seller prior to 5:00 p.m. Arizona time
on or
after July 29, 2005, it shall constitute Purchaser’s offer to acquire
the Property from Seller. Seller shall have the right to accept
other
offers to purchase the Property before or after July 29,
2005, so
long as Seller has not signed this Agreement and delivered it to
Purchaser.
|
| 31. |
Further
Assurances.
The Parties shall execute all instruments and documents and take
all
actions as may be reasonably required to effectuate this Agreement.
Prior
to the expiration of the Due Diligence Period, Purchaser and Seller
will
agree upon the form of all closing documents which are to be executed
at
Close of Escrow and which have not been attached to this Agreement
as
exhibits.
|
| 32. |
Counterparts.
This Agreement may be executed in any number of counterparts, or
with
signatures sent by facsimile, each of which shall be deemed an
original,
but all of which when taken together shall constitute but one and
the same
agreement.
|
| 33. |
Governing
Law.
The validity, meaning and effect of this Agreement shall be determined
in
accordance with the internal laws of the State of Arizona. Any
action
brought to interpret, enforce, or construe any provision of this
Agreement
must be commenced and maintained in the Superior Court of the State
of
Arizona, Maricopa County, or in the United States District Court
for the
District of Arizona. All parties irrevocably consent to this jurisdiction
and venue and agree not to transfer or remove any action commenced
in
accordance with this Agreement.
|
| 34. |
Successors.
The terms, covenants and conditions of this Agreement shall be
binding
upon and shall inure to the benefit of the heirs, executors,
administrators and assigns of the respective Parties
hereto.
|
[Signatures
Appear on the Following Page]
68
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day
and year first above written.
|
SELLER:
AVONDALE
MULTI-FAMILY LIMITED PARTNERSHIP, an Arizona limited
partnership
By Avondale
Investments, Inc., an Arizona corporation, its sole General
Partner
By__________________________________
▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, its Treasurer
|
PURCHASER:
WILSHIRE
ENTERPRISES, INC., a New Jersey corporation
By__________________________________
▇▇▇▇▇▇
▇. ▇▇▇▇▇, its President
|
69
EXHIBIT
A
TO
AGREEMENT
FOR PURCHASE AND SALE
Legal
Description
SEE
ATTACHED LEGAL DESCRIPTION FROM TSA TITLE AGENCY
1
EXHIBIT
B
TO
AGREEMENT
FOR PURCHASE AND SALE
List
of Due Diligence Items
|
Operating
Statements (2004 and year to date)
|
|
Operating
Budget (2005)
|
|
Capital
Improvements (2004 and year to date)
|
|
Current
Rent Roll
|
|
Real
and Personal Property Tax Statements (2004)
|
|
ALTA
Survey
|
|
Service
Contracts
|
|
Personal
Property List
|
|
Delinquency
Report
|
|
Vendor
List
|
|
Employee
Payroll
|
|
Correspondence
received from governmental or municipal agencies concerning building
and
code violations of any nature, if any
|
|
Certificates
of Occupancy
|
|
Miscellaneous
Income Report
|
|
Property
Management Agreement
|
|
Certificate
of Insurance
|
|
Phase
I Environmental
|
|
Special
Warranty Deed - (To be provided within fourteen (14) days of the
Effective
Date)
|
|
Copies
of all executed loan documents related to the PFC
Encumbrance
|
2