EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE
January 16, 2001
TABLE OF CONTENTS
ARTICLE PAGE
ARTICLE 1 BASIC DEFINITIONS........................... 1
ARTICLE 2 PURCHASE.................................... 4
ARTICLE 3 CONDITIONS PRECEDENT........................ 9
ARTICLE 4 COVENANTS, WARRANTIES AND REPRESENTATIONS... 13
ARTICLE 5 DEPOSIT; DEFAULT............................ 20
ARTICLE 6 CLOSING..................................... 22
ARTICLE 7 MISCELLANEOUS............................... 31
ARTICLE 8 RIGHTS OF FIRST REFUSAL; PROPERTY EXCLUSIONS 35
List of Exhibits
Exhibit A -- Properties
Exhibit B -- Disclosure Materials List & Statement
Exhibit C-1 -- Rent Roll (December 1, 2000)
Exhibit C-2 -- Security Deposits
Exhibit D -- Transfer Documents
Exhibit E -- Litigation/condemnation/building code/zoning
Exhibit F -- Due Diligence Matters
Exhibit G -- Closing Cost Customs
Exhibit H -- Arbitration
Exhibit I -- Excluded Claims
Exhibit J -- Preliminary title reports
Exhibit K -- Asbestos information
Exhibit L -- Certified Copy of Resolutions of Members of Seller
Exhibit M -- Certified Copy of Resolutions of Directors of ▇▇▇▇▇▇▇ Pacific
Properties, Inc.
Exhibit N -- Contracts
Exhibit O -- Environmental Insurance
Exhibit P -- List of Nomura Loan Documents
AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT FOR PURCHASE AND SALE is made and entered into as of January
16, 2001, by and among BPP/GOLDEN STATE ACQUISITIONS, L.L.C., a Delaware limited
liability company ("Seller"), and ▇▇▇▇▇▇▇▇▇▇ ▇▇, INC., a Texas corporation
("Buyer"). This Agreement shall be effective on the "Effective Date", which is
the date on which the last person signing this Agreement shall have signed this
Agreement.
RECITALS
A. The Seller holds ownership of a portfolio of properties listed on
Exhibit A to this Agreement and defined below with greater specificity as the
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"Properties."
B. Buyer desires to acquire and Seller desires to convey, assign and
transfer, subject to the terms and conditions contained in this Agreement, the
entirety of the Properties.
AGREEMENT
NOW, THEREFORE, Buyer and Seller do hereby agree as follows:
ARTICLE 1
BASIC DEFINITIONS
"Closing" shall mean the consummation of the transaction contemplated
hereunder, as evidenced by the delivery of all required funds and documents to
the Escrow Agent.
"Closing Date" shall mean the date which is ten (10) days after the parties
obtain Lender's approval of Buyer's assumption of the Loan, but not later than
May 1, 2001.
"Contract Period" shall mean the period from the Effective Date through and
including the Closing Date (or any earlier termination of this Agreement).
"Contracts" shall mean all maintenance, service and other operating
contracts, equipment leases and other arrangements or agreements to which Seller
is a party affecting the ownership, repair, maintenance, management, leasing or
operation of the Properties.
"Disclosure Materials" shall mean those materials described in Exhibit B,
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the Disclosure Materials List & Statement, to which Buyer shall be afforded
access and review rights pursuant to this Agreement.
"Disclosure Materials List & Statement" shall mean the statement set forth
as Exhibit B to this Agreement.
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"Due Diligence Expiration Date" shall mean January 31, 2001.
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"Hazardous Materials" means any chemical, compound, pollutant material,
substance or other matter that: (a) is defined as a hazardous substance,
hazardous material, hazardous waste or toxic substance under any Hazardous
Materials Law, (b) is controlled or governed by any Hazardous Materials Law, (c)
actually or potentially gives rise to any remediation, permitting, licensing,
reporting, notice or publication requirement on the part of any party hereto,
(d) actually or potentially gives rise to any liability, responsibility or duty
on the part of any party hereto with respect to any third person or governmental
agency, (c) is asbestos or an asbestos-containing material, or (d) is flammable
or explosive material, oil, petroleum product, urea formaldehyde, radioactive
material, or nuclear medicine material.
"Hazardous Materials Laws" means any and all federal, state or local laws,
ordinances, rules, decrees, orders, regulations or court decisions (including
the so-called "common law") relating to Hazardous Materials, environmental
conditions on, under or about the Property, soil and ground water conditions or
other similar substances or conditions, including without limitation the
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Federal Clean Air Act,
the Federal Water Pollution Control Act, the Resource Conservation and Recovery
Act, the Hazardous Materials Transportation Act, The Clean Water Act, the Toxic
Substance Control Act, California Health and Public Safety Code Section 25117,
Sections 6680 through 6685 of Title 22 of the California Administrative Code,
Division 4, Chapter 30, any amendments to any of the foregoing, and all rules
and regulations promulgated under any of the foregoing, and any similar federal,
state or local laws, ordinances, rules, decrees, orders or regulations.
"Improvements" shall mean, as to each of the properties listed on Exhibit
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A, any and all structures, buildings, facilities, parking areas or other
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improvements situated on such Property's Land and all related fixtures,
improvements, building systems and equipment (including, without limitation,
HVAC, security and life safety systems).
"Intangible Property" shall mean, as to each Real Property: (a) any and all
permits, entitlements, filings, building plans, specifications and working
drawings, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, engineering, soils, pest control, survey, environmental, appraisal,
market and other reports relating to such Real Property and associated Personal
Property; (b) all trade names, service marks, tenant lists, advertising
materials and telephone exchange numbers identified with such Real Property; (c)
the Contracts and the Leases; (d) except as set forth on Exhibit I attached
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hereto (the "Excluded Claims"), claims, awards, actions, remedial rights and
judgments, and escrow accounts relating to environmental remediation, to the
extent relating to such Real Property and associated Personal Property; (e) all
books, records, files and correspondence relating to such Real Property and
associated Personal Property; and (f) all other transferable intangible
property, miscellaneous rights, benefits or privileges of any kind or character
with respect to such Real Property and associated Personal Property, including,
without limitation, under any REAs, provided that the Intangible Property shall
not include any Seller's name or any right to the reference "BPP," "▇▇▇▇▇▇▇
Pacific," or "▇▇▇▇▇▇▇". Seller shall retain all right, title and interest in
the Excluded Claims.
"Land" shall mean, as to each of the Properties listed on Exhibit A, the
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land component of the property as described with precision in the Title
Policies.
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"Leases" shall mean, as to each Real Property, all leases, concession
agreements, rental agreements or other agreements (including all amendments or
modifications thereto) which entitle any person other than Seller to the
occupancy or use of any portion of the Real Property.
"Lender" shall mean Nomura Asset Capital Corporation, a Delaware
corporation, and its successors, participants and assigns.
"Loan" shall mean collectively that certain loan in the original principal
amount of One Hundred Thirty Five Million Thirty Nine Thousand Nine Hundred
Fifty and 82/100 ($135,039, 950.82) ("Principal Amount") and that certain
interest rate buy-up premium in the original amount of Fourteen Million Nine
Hundred Sixty Thousand Forty Nine and 34/100 Dollars ($14,960,049.34), from
Lender to Seller, as evidenced by the Loan Documents. "Loan Documents" shall
mean the Note, that certain Loan Agreement dated December 31, 1997 between
Lender and Seller, that certain letter agreement regarding the loan amount dated
December 31, 1997, those certain Fee and Leasehold Deeds of Trust, Assignments
of Rents, Security Agreements and Fixture Filings from Seller for the benefit of
Lender, those certain Assignments of Leases and Rents from Seller for the
benefit of Lender dated December 31, 1997 and such other loan documents securing
the Note.
"Note" shall mean that certain Promissory Note dated December 31, 1997 made
by Seller in favor of Lender in the original principal amount of One Hundred
Thirty Five Million Thirty Nine Thousand Nine Hundred Fifty and 82/100
($135,039, 950.82).
"Permitted Exceptions" shall mean the various matters affecting title to
the Properties that are approved or deemed approved by Buyer pursuant to Section
2.5 below.
"Personal Property" shall mean, as to each Real Property, all furniture,
furnishings, trade fixtures and other tangible personal property directly or
indirectly owned by the Seller that is located at and used in connection with
the operation of any Real Property.
"Property" shall mean, with respect to each of the properties described on
Exhibit A and Schedule A of Exhibit J, the Real Property, the Personal Property
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and the Intangible Property. Collectively, such properties shall be referred to
as the "Properties."
"Purchase Price" shall mean the sum of One Hundred Forty-Five Million Five
Hundred Thousand and 00/100 Dollars ($145,500,000.00) plus the unpaid
obligations under the Loan, subject to adjustment as stated in Exhibit F,
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payable as set forth in Section 2.2 below.
"Real Property" shall mean, as to each property listed on Exhibit A and
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Schedule A of Exhibit J, the Land, the Improvements and all the rights,
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privileges, easements, and appurtenances to the Land or the Improvements,
including, without limitation, any air, development, water, hydrocarbon or
mineral rights, all licenses, easements, rights-of-way, claims, rights or
benefits, covenants, conditions and servitude and other appurtenances used or
connected with the beneficial use or enjoyment of the Land or the Improvements
and all rights or interests relating to any roads, alleys or parking areas
adjacent to or servicing the Land or the Improvements.
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"Rent Rolls" shall refer to the information schedules attached as Exhibit
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C-1 to this Agreement pertaining to the Leases.
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"Title Company" shall mean Chicago Title Company; Attn: ▇▇▇▇▇ ▇▇▇▇
(Telephone: (▇▇▇) ▇▇▇-▇▇▇▇.
"Title Policies" shall refer to Seller's existing title insurance policies
with respect to the Properties, complete copies of which have been or will be
made available by Seller to Buyer.
ARTICLE 2
PURCHASE
Section 2.1 Purchase and Transfer. Seller agrees to sell the Properties to
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Buyer and Buyer agrees to purchase or cause to be purchased by an affiliate of
Buyer the Properties upon all of the terms, covenants and conditions set forth
in this Agreement.
Section 2.2 Terms of Payment; Allocation of Purchase Price. Buyer shall
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pay the Purchase Price to Seller as follows:
(a) On or before 3 business days after the Effective Date, and as
a condition precedent to the effectiveness of this Agreement, Buyer shall
deliver to Title Company a cashier's check or make a Bank wire transfer to Title
Company in the amount of Five Million and 00/100 Dollars ($5,000,000.00) (the
"Deposit"), as an ▇▇▇▇▇▇▇ money deposit on account of the Purchase Price. As
used in this Agreement, the term "Deposit" means the Deposit and all amounts
which, at the time in question, shall have been deposited into escrow by Buyer,
but excludes interest on such amount (which interest shall be the property of
Buyer).
(b) The balance of the Purchase Price shall be payable as follows:
(i) acceptance by Buyer of the conveyance of the Properties subject to liens
which secure the Loan and, if required by Lender, Buyer's assumption of the Loan
as of the Closing Date, (ii) disbursement of the Deposit to Seller on the
Closing Date, and (iii) payment by Buyer to Seller of One Hundred Forty Million
Five Hundred Thousand and 00/100 Dollars ($140,500,000.00) in cash at Closing,
provided the Loan is not in default on the Closing Date.
(c) Prior to Closing, Seller and Buyer will agree upon the
allocation of the Purchase Price to the individual Properties, and Seller and
Buyer will adhere to such allocation with respect to reports to all governmental
entities and in all other contexts.
Section 2.3 Deposit.
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(a) Title Company shall hold and deliver the Deposit in accordance
with the terms and provisions of this Agreement. Title Company shall invest the
Deposit in U.S. Treasury obligations or other investments approved in writing by
both Seller and Buyer.
Section 2.4 Buyer's Review and Inspection and Seller's Disclaimer.
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(a) Within five (5) days following the Effective Date, Seller
shall have delivered copies, or otherwise made available to Buyer for Buyer's
review at Seller's offices in San Diego, California, or, at Buyer's election
sent to Buyer at Buyer's address in Houston, Texas, as stated in Section 7.4,
and Buyer shall have reviewed and approved, on or before the Due Diligence
Expiration Date, all of the Disclosure Materials. Buyer shall assume fully the
obligation to completely and adequately review and consider any or all of such
materials. The Disclosure Materials shall be made continuously available to
Buyer at such location throughout the Contract Period. Buyer shall not have a
right to terminate this Agreement based on Buyer's dissatisfaction with
Disclosure Materials, but will have such rights only pursuant to Section 3.1(a)
and Exhibit F.
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(b) Following the execution and delivery of this Agreement and
until the Due Diligence Expiration Date, and subject to the restrictions,
limitations and other provisions of this Section 2.4, Seller shall allow Buyer
(and its authorized representatives and agents) reasonable access to the
Properties, during business hours, for the purpose of making examinations,
tests, analyses, investigations, surveys, inquiries and other inspections in
connection with Buyer's efforts to bring about satisfaction of the condition
precedent set forth in Section 3.1(a)(ii). Buyer's exercise of such right of
access shall be subject to the following limitations: (i) any entry onto any
Property by Buyer, its agents or representatives, shall be during normal
business hours, following not less than 24 hours' prior notice to Seller (which
notice may be by telephone, facsimile or email) and, at Seller's discretion, if
Seller so requests, accompanied by a representative of Seller; (ii) Buyer shall
not conduct any invasive or destructive physical diligence or inspections of the
Properties including, without limitation, drilling, test borings or other
disturbance of any Property for review of soils, compaction, environmental,
structural or other conditions, without Seller's prior written consent (which
may be withheld in Seller's sole and absolute discretion) provided that Seller
shall respond in writing to Buyer's request for permission to conduct any such
diligence or inspections within two (2) business days after Buyer's request;
(iii) prior to any discussions or interviews with any third party, any partner
of Seller, any tenants of a Property or their respective personnel; and prior to
any discussions or interviews with employees at any Property (which shall be
limited to designated senior employees), Buyer shall offer Seller the
opportunity to have a representative present; (iv) Buyer not disturb the use or
occupancy or the conduct of business at any Property; and (v) Buyer shall
indemnify, defend and hold Seller harmless from all loss, cost, and expense
relating to personal injury or property damage resulting from any entry by
Buyer, its agents or representatives; provided however that Buyer's indemnity
shall not include liability for the mere discovery of any condition already
existing on the Properties and not the result of Buyer's activities. Following
the Due Diligence Expiration Date and for the remainder of the Contract Period,
but subject to the provisions of this Section 2.4, Seller shall permit Buyer,
and Buyer's representatives, continued access to the Properties, and to tenants,
parties to REAs, parties to options and rights of first refusal, and parties to
management agreements and Contracts, for Buyer's further investigation of the
Properties; provided, however that such continued access and investigation shall
have no effect on the waiver or satisfaction of Buyer's conditions as of the Due
Diligence Expiration Date.
(c) Buyer acknowledges that if Buyer shall not have terminated
this Agreement pursuant to Exhibit F, Seller will have afforded Buyer and its
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agents and representatives an opportunity to conduct such appraisals and
investigations of the Properties
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including, without limitation, investigations with respect to the physical,
environmental, economic and legal condition of the Properties, prior to the Due
Diligence Expiration Date and the Buyer will have completed all such
investigations to its satisfaction; provided, however, that Buyer shall not have
a right to terminate this Agreement based on Buyer's dissatisfaction with such
matters, but will have such rights only pursuant to Section 3.1(a) and Exhibit
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F. Except in the case of fraud by Seller, Buyer assumes the full risk that Buyer
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has failed completely and adequately to cause such inspections and consider any
and all results of such inspections. Buyer acknowledges (i) that Buyer has
entered into this Agreement with the intention of making and relying upon its
own investigation of the physical, environmental, economic and legal condition
of the Properties and the warranties and representations of Seller as set forth
in Article 4 hereof, (ii) that, other than those specifically set forth in
Article 4 below or in any document to be delivered pursuant to Section 6.1,
Seller is not making and have not at any time made any warranty or
representation of any kind, expressed or implied, with respect to the
Properties, including, without limitation, warranties or representations as to
habitability, merchantability, fitness for a particular purpose, title (other
than Seller's limited warranty of title set forth in the Deeds), zoning, tax
consequences, latent or patent physical or environmental condition, utilities,
operating history or projections, valuation, projections, compliance with law or
the truth, accuracy or completeness of the Disclosure Materials, (iii) that
other than those specifically set forth in Article 4 below or in any document to
be delivered pursuant to Section 6.1, Buyer is not relying upon and is not
entitled to rely upon any representations and warranties made by Seller or
anyone acting or claiming to act on Seller's behalf, (iv) that the Disclosure
Materials include soils, environmental and/or physical reports prepared for
Seller by third parties as to which Buyer has no right of reliance (provided,
however, that nothing herein shall be deemed to limit Buyer's right to seek to
obtain from the third parties which prepared such reports the right to rely on
such reports at no cost to Seller or to conduct Buyer's own independent
evaluation of the Properties with respect to the matters covered in such
reports), and (v) that the Disclosure Materials may include economic projections
which reflect assumptions as to future market status and future Property income
and expense with respect to the Properties which are inherently uncertain and as
to which Seller has not made any guaranty or representation whatsoever. With
respect to the soils, environmental and/or physical reports prepared for Seller
by third parties, Buyer acknowledges that Seller has made no representation
whatsoever as to accuracy, completeness or adequacy thereof. Buyer further
acknowledges that it has not received from Seller any accounting, tax, legal,
architectural, engineering, property management or other advice with respect to
this transaction and is relying solely upon the advice of its own accounting,
tax, legal, architectural, engineering, property management and other advisors.
Except as provided in the representations and warranties of Seller set forth in
Article 4 below and except as otherwise expressly set forth in this Agreement or
in any document to be delivered pursuant to Section 6.1, based upon Buyer's
familiarity with and due diligence to be conducted by Buyer relating to the
Properties and pertinent knowledge as to the markets in which the Properties are
situated and in direct consideration of Seller's decision to sell the Properties
to Buyer for the Purchase Price, and not to pursue available disposition
alternatives, Buyer shall purchase the Properties in an "as is, where is and
with all faults" condition on the Closing Date and (except in the case of fraud
by Seller ) assumes fully the risk that adverse latent or patent physical,
environmental, economic or legal conditions may not have been revealed by its
investigations. Seller and Buyer acknowledge that the compensation to be paid to
Seller for the Properties has taken into account that the Properties are being
sold subject to the provisions of
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this Section 2.4. Seller and Buyer agree that the provisions of this Section 2.4
shall survive Closing.
(d) Consistent with the foregoing and subject solely to the express
covenants and indemnities set forth in this Agreement and the representations
set forth in Section 4.1 or in any document to be delivered pursuant to Section
6.1 below (as such covenants, indemnities and representations are limited
pursuant to Section 4.4 hereof) and except for rights, claims, demands and
liabilities arising out of or based upon any fraud by any of the Releasees (as
defined below), effective as of the Closing Date, Buyer, for itself and its
agents, affiliates, successors and assigns, hereby releases and forever
discharges Seller, and its members and beneficial owners and ▇▇▇▇▇▇▇ Pacific
Properties, Inc., a Maryland corporation ("BPPI"), and its shareholders,
officers and directors (collectively, the "Releasees") from any and all rights,
claims and demands at law or in equity, whether known or unknown at the time of
this agreement, which Buyer has or may have in the future, arising out of the
physical, environmental, economic or legal condition of the Properties,
including, without limitation, all claims in tort or contract and 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 for environmental matters. Without limiting the
foregoing, Buyer, upon Closing, shall be deemed to have waived, relinquished and
released Seller and all other Releasees from and against any and all matters
arising out of latent or patent defects or physical conditions, violations of
applicable laws and any and all other acts, omissions, events, circumstances or
matters affecting the Properties, except for breach of the express covenants and
indemnities set forth in this Agreement and the representations and warranties
set forth in Section 4.1 or in any document to be delivered pursuant to Section
6.1 (as such covenants, indemnities and representations are limited pursuant to
Section 4.4 hereof) and except for rights, claims, demands and liabilities
arising out of or based upon any fraud by any of the Releasees. 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.
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Buyer
(e) Subject to the express covenants and indemnities set forth in this
Agreement and the representations of Seller set forth in Section 4.1 or in any
document to be delivered pursuant to Section 6.1 (as such covenants, indemnities
and representations are limited pursuant to Section 4.4 hereof), Buyer shall
indemnify, defend, protect and hold Seller harmless from and against any and all
claims, actions, causes of action, demands, liabilities, damages, costs and
expenses (including attorneys' fees), whether direct or indirect, known or
unknown,
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foreseeable or unforeseeable, which may be asserted against Seller at any time
after the Closing due to acts or omissions occurring and first arising after
Closing, on account of or in any way arising out of or connected with the
Property, including: (i) the physical condition, nature or quality of the
Property (including the soils and groundwater on and under the Real Property);
(ii) the presence or release in, under, on or about the Property (including the
soils and groundwater on and under the Real Property) of any Hazardous
Materials; and (iii) the ownership, management or operation of the Property,
including any claim or demand by any tenant for the refund or return of any
security deposit or other deposit. At the Closing, upon the request of Seller,
Buyer shall deliver to Seller a certificate reaffirming the foregoing.
Section 2.5 Title Exceptions.
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(a) Title to the Real Property shall be conveyed from Seller to
Buyer by grant deed (the "Deed"), subject to: (i) liens to secure payment of
real estate taxes and assessments not delinquent; (ii) applicable zoning and use
laws, ordinances, rules and regulations of any municipality, township, county,
state or other governmental agency or authority; (iii) all matters that would be
disclosed by a physical inspection or survey of the Real Property or that are
actually known to Buyer; (iv) the Loan Documents; (v) any exceptions or matters
created by Buyer, its agents, employees or representatives; (vi) all Leases,
(vii) Contracts accepted by Buyer pursuant hereto; and (viii) the exceptions
(other than those marked through for deletion) set forth on Schedule B of the
preliminary title reports approved by Seller and Buyer and attached to this
Agreement as Exhibit J. The foregoing exceptions to title are referred to as
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the "Permitted Exceptions."
(b) On or before the Closing, Seller shall eliminate any deeds of
trust, mortgages, judgment liens, mechanics' liens, and materialmen's liens
encumbering the Properties, except the lien securing the Loan, monetary liens
not arising from the acts or omissions of Seller or any of its employees,
agents, contractors, or affiliates, or mechanics' liens or material liens
pertaining to work in progress as of the Closing, the completion of which Buyer
has agreed to undertake. If Seller does not remove or provide to the
satisfaction of Buyer for removal of the objectionable exceptions to title
before Closing, Buyer shall have the right (i) to terminate this Agreement and
receive a refund of the Deposit, or (ii) to proceed with consummation of this
transaction notwithstanding such objectionable items.
(c) Seller shall have no obligation to execute any affidavits or
indemnifications in connection with the issuance of Buyer's title insurance
excepting only the such customary affidavits as to authority, the rights of
tenants in occupancy, the status of mechanics' liens and other affidavits or
indemnifications reasonably necessary to address matters of title which Seller
has agreed to or is required to remove or cure pursuant to this Section 2.5.
Section 2.6 Estoppels
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(a) Prior to the Effective Date, Buyer has made efforts to obtain
and between the Effective Date and Closing Buyer will continue to make such
efforts as Buyer deems appropriate, to obtain estoppel certificates
("Estoppels") from tenants occupying the Properties, from the ground lessor of
the Property commonly known as Discovery Plaza and from parties to Reciprocal
Easement Agreements ("REA's") which affect certain of the Properties; however,
the
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receipt by Buyer of Estoppels from any tenant or REA party shall not constitute
a condition precedent to Buyer's obligation to purchase the Properties.
ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 Conditions.
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(a) Notwithstanding anything in this Agreement to the contrary, if
this Agreement shall not have been terminated by Buyer pursuant to Exhibit F,
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Buyer's obligation to purchase the Properties shall be subject to and contingent
upon the satisfaction or written waiver by Buyer of the following conditions
precedent with respect to each Property:
(i) The willingness, upon the sole condition of the payment
of any regularly scheduled premium, of the Title Company
to issue an ALTA owner's policy or policies of title
insurance, with such co-insurers and re-insurers as Buyer
may designate, with respect to each Property (or such
other form(s) as may be reasonably satisfactory to
Buyer), insuring Buyer (or Buyer's permitted assignee or
nominee) that title to the applicable Real Property is
vested of record in Buyer (or Buyer's permitted assignee
or nominee) on the Closing Date subject only to the
printed conditions and exceptions of such policies (but
deleting (by endorsement or otherwise), where permitted
under applicable laws or regulations and at Buyer's
expense, any co-insurance, creditors rights and so-called
"standard" exceptions) and the Permitted Exceptions
applicable to such Real Property (excluding the
exceptions referred to in Section 2.5(a)(iii) [other than
matters shown by new surveys acquired after the Effective
Date by Buyer or matters imposed by the Title Company
based on its inspection of the Properties] and excluding
Contracts referred to in clause (vii) of such Section
other than recorded Contracts) containing the affirmative
insurance noted on Exhibit J and containing CLTA
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endorsements 100, 100.20, 101.4, 103.3, 103.1A, 103.5,
103.7, 116, 116.1, 116.4, 116.7, 123.2, and 129 (the
"Buyer's Title Policies"); provided that, if and to the
extent that the Title Company requires, as a condition of
issuance of an ALTA (instead of a CLTA) policy or
issuance of any aforesaid endorsement up-dated or more
current surveys, Buyer shall cause such surveys to be
obtained before the Closing Date and Buyer shall bear the
cost of such surveys.
(ii) On or before the Due Diligence Expiration Date, Buyer
shall have reviewed and approved matters referred to in
Exhibit F, but Buyer shall only have the right to
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terminate this Agreement with respect to such matters
strictly in accordance with the provisions of Exhibit F;
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(iii) Seller's performance or tender of performance of all
material obligations under this Agreement with respect
to the applicable Property, including Seller's covenants
under Section 4.2 with respect to such Property;
(iv) On or before the Closing Date, Seller and Buyer shall
have obtained the written approval of Buyer's purchase
of the Properties from the Lender and an acknowledgement
from Lender that no Loan default exists in the payment
of principal or interest or monetary payments and, to
Lender's knowledge, no other material default exists;
(v) On or before the Effective Date, this Agreement and the
transaction contemplated herein shall have been approved
by the board of directors of BPPI;
(vi) On or before the Closing Date, the party having a right
of first refusal on the Property known as Discovery
Plaza ("RFOR Party--DP") shall have waived (or is deemed
to have waived under the terms of the applicable lease)
its right of first refusal as set forth in such lease;
provided that, in the event that Seller asserts that
such RFOR Party--DP has waived or is deemed to have
waived its right of first refusal, Seller shall, on or
before Closing, furnish to Buyer Seller's affidavit or
certificate which constitutes proof satisfactory to
Buyer, in the exercise of reasonable judgment, of all
relevant facts, including the date on which notice was
sent to the RFOR Party--DP, a copy of such notice, the
copy of any responsive waiver by the RFOR Party--DP or
certification by Seller that no response was given by
RFOR Party--DP within the required period, thus
constituting a deemed waiver. In the event that the RFOR
Party--DP shall have exercised its right of first
refusal and purchased the Discovery Plaza Property, then
the foregoing provisions of this clause (vi) shall not
apply, and, instead, the provisions of Section 8.2 shall
apply.
(vii) On or before the Closing Date, the party having a right
of first refusal on the Property known as 580
Marketplace ("RFOR Party--580") shall have waived (or is
deemed to have waived under the terms of the applicable
lease) its right of first refusal as set forth in such
lease; provided that, in the event that Seller asserts
that such RFOR Party--580 has waived or is deemed to
have waived its right of first refusal, Seller shall, on
or before Closing, furnish to Buyer Seller's affidavit
or certificate which constitutes proof satisfactory to
Buyer, in the exercise of reasonable judgment, of all
relevant facts, including the date on which notice was
sent to the RFOR Party--580, a copy of such notice, the
copy of any responsive waiver by the RFOR Party--580 or
certification by Seller that no
10
response was given by RFOR Party--580 within the
required period, thus constituting a deemed waiver. In
the event that the RFOR Party--580 shall have exercised
its right of first refusal and purchased the 580
Marketplace Property, then the foregoing provisions of
this clause (vii) shall not apply, and, instead, the
provisions of Section 8.2 shall apply.
(viii) On or before the Closing Date, the party having a
purported right of first refusal on the Property known
as Southampton ("RFOR Party--S") shall have waived (or
is deemed to have waived under the terms of the
applicable document) its right of first refusal as set
forth in such document; provided that, in the event
that Seller asserts that such RFOR Party--S has waived
or is deemed to have waived its right of first refusal,
Seller shall, on or before Closing, furnish to Buyer
Seller's affidavit or certificate which constitutes
proof satisfactory to Buyer, in the exercise of
reasonable judgment, of all relevant facts, including
the date on which notice was sent to the RFOR Party--S,
a copy of such notice, the copy of any responsive
waiver by the RFOR Party--S or certification by Seller
that no response was given by RFOR Party--S within the
required period, thus constituting a deemed waiver. In
the event that the RFOR Party--S shall have exercised
its right of first refusal and purchased the
Southampton Property, then the foregoing provisions of
this clause (viii) shall not apply, and, instead, the
provisions of Section 8.2 shall apply; provided,
further, that if the Title Company furnishes, as an
endorsement to the title policy referred to in Section
3.1(a)(i) affirmative insurance insuring that no right
of first refusal affects the Southampton Property, then
none of the foregoing provisions of this clause (viii)
shall apply.
(ix) On or before the Closing, Buyer shall have received
certifications that no Uniform Commercial Code
financing statements evidencing the existence of any
security interest encumbering the Personal Property and
no fixture filings are on file in either the central
filing records of the State of California for Uniform
Commercial Code filings or in the Uniform Commercial
Code records of any county in which any Property is
located;
(x) As of the date of Closing, there shall not have been
bankruptcy filings during the Contract Period (either
voluntary or involuntary) involving tenants whose
aggregate annual rent as stated in the respective
leases of such tenants aggregates more than $2,000,000
(provided, however, that if bankruptcy filings have
occurred with respect to leases in which the annual
rent exceeds $2,000,000, then Seller shall have the
right to cause Buyer to waive this condition precedent
if Seller agrees that the Purchase Price shall be
reduced
11
by an amount equal to 10 times the aggregate annual
rent in excess of such $2,000,000 payable under the
leases affected by such bankruptcy filings);
(xi) All of Seller's representations and warranties as set
forth in Article 4 are true and correct in all material
respects;
(xii) There shall have occurred no damage, destruction or
Taking which would entitle Buyer to terminate this
Agreement pursuant to the provisions of Section 7.1;
and
(xiii) Seller shall deliver to Buyer the AIG Environmental
Insurance Policy (referred to in Exhibit F) or, upon
---------
Buyer's option, pay to Buyer an amount equal to the
premium for such policy. Prior to Closing, Seller shall
have removed, at Buyer's sole cost and expense, all
friable asbestos identified on Exhibit K.
---------
(b) Notwithstanding anything in this Agreement to the contrary,
Seller's obligation to sell the Properties shall be subject to and contingent
upon the satisfaction or waiver of the following conditions precedent:
(i) Buyer shall tender to Seller payment of the Purchase
Price as adjusted pursuant to the provisions of this
Agreement; and
(ii) On or before the Closing, Seller and Buyer shall have
obtained the written approval of Buyer's purchase of
the Properties, and the assumption by Buyer (or Buyer's
affiliated designee) of the Note and the Loan
Documents, from the Lender, and the release of Seller
and its affiliates from all obligations under the Note
and Loan Documents arising after Closing, upon terms
reasonably acceptable to Seller and Buyer; and
(iii) Seller's obligation to sell the Properties is subject
to the provisions of Article 8 which would result in
the exclusion from the sale to Buyer of the Property or
Properties purchased by RFOR Parties pursuant to
Article 8.
Section 3.2 Failure or Waiver of Conditions Precedent.
-----------------------------------------
(a) If any of the conditions set forth in Section 3.1(a) is not
fulfilled or waived in writing by Buyer, Buyer may, by written notice to Seller,
terminate this Agreement. If any of the conditions set forth in Section 3.1(b)
is not fulfilled or waived in writing by Seller, Seller may, by written notice
to Buyer, terminate this Agreement. Either party may, at its election, at any
time or times on or before the date specified for the satisfaction of the
condition, waive in writing the benefit of any of the conditions set forth in
Sections 3.1(a) and 3.1(b) above. In any event, Buyer's consent to the close of
escrow with respect to the Properties pursuant to this Agreement shall waive any
remaining unfulfilled conditions for the benefit of Buyer with respect
12
to the Properties, but such consent shall not waive Buyer's right with respect
to any of Seller's covenants, representations, or warranties which survive
Closing as herein provided.
(b) Notwithstanding the foregoing, if Buyer desires to terminate
this Agreement based upon a failure of the condition set forth in Sections
3.1(a)(i), (iii), (iv), (v), (vi), (vii), (viii), (ix), (xi) or (xiii) above,
Seller shall have the right (by giving notice to Buyer), but not the obligation,
for a period of 30 days within which to cure such failure and the Closing shall
be deferred for such curative period. If Seller has not cured such failure
within such cure period then Buyer may elect to terminate this Agreement. The
parties shall mutually cooperate and use reasonable good faith efforts to obtain
the consent of the Lender to this transaction.
(c) In the event this Agreement is terminated by either Seller or
Buyer as a result of the failure of a condition precedent which is not waived in
writing by the party for whose benefit such condition precedent exists, and
other than a termination resulting from a default by Buyer under this Agreement,
the Deposit and all interest thereon shall be returned to Buyer.
ARTICLE 4
COVENANTS, WARRANTIES AND REPRESENTATIons
Section 4.1 Seller's Warranties and Representations. Seller expresses to
---------------------------------------
Buyer the representations and warranties set forth below as of the date of this
Agreement. Seller hereby represents and warrants with respect to itself as
follows:
(a) The Seller is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and the Seller is
qualified to do business in California. The Seller has full power and lawful
authority to enter into and carry out the terms and provisions of this Agreement
and to execute and deliver all documents which are contemplated by this
Agreement, and all actions of the Seller necessary to confer such power and
authority upon the persons executing this Agreement (and all documents which are
contemplated by this Agreement) on behalf of the Seller have been taken.
Attached hereto as Exhibit L is a true and correct copy of a resolution of the
---------
members of Seller authorizing, confirming and ratifying the execution of this
Agreement and the performance by Seller of all actions necessary or appropriate
to consummate the transactions contemplated by this Agreement; attached hereto
as Exhibit M is a resolution of the board of directors of ▇▇▇▇▇▇▇ Pacific
---------
Properties, Inc., general partner of ▇▇▇▇▇▇▇ Pacific Operating Partnership L.P.
authorizing, ratifying and confirming the execution of this Agreement by ▇▇▇▇▇▇▇
Pacific Properties, Inc. as general partner of ▇▇▇▇▇▇▇ Pacific Operating
Partnership L.P. and the performance by ▇▇▇▇▇▇▇ Pacific Properties, Inc. in such
capacity of all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement.
(b) Except with respect to the third party consents expressly
described in or contemplated under this Agreement or expressly required under
any agreements included in Intangible Property, the Seller's execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the performance of the Seller's obligations under the instruments
required to be delivered by the Seller at the Closing, do not and will not
require the consent, approval or other authorization of, or registration,
declaration or filing with,
13
(collectively, "Consents") any governmental authority (excepting the recordation
of Closing documents contemplated in this Agreement and any filings required
under applicable state or federal securities or tax laws) or any other person or
entity, except such Consents as will be obtained on or before Closing or as to
which the failure to obtain would not have a material and adverse effect on
Seller's performance of its obligations under this Agreement, and do not and
will not result in any material violation of, or material default under, any
term or provision of any agreement, instrument, mortgage, loan agreement or
similar document to which the Seller is a party or by which the Seller is bound;
(c) Except as set forth in Exhibit E, there is no litigation,
---------
investigation or proceeding pending or, to the best of the Seller's knowledge,
contemplated or threatened which would impair or adversely affect the Seller's
ability to perform its obligations under this Agreement;
(d) The Seller is not a "foreign person" as defined in Internal
Revenue Code 1445(f)(3);
(e) Except as set forth in Exhibit E, as of the date of this
---------
Agreement, Seller has no knowledge that, and has received no written notice from
any governmental authorities that, eminent domain proceedings for the
condemnation of any Property or any part of a Property are pending;
(f) Except as set forth in Exhibit E, as of the date of this
---------
Agreement, Seller has no knowledge of, and has received no written notice of,
any threatened or pending litigation affecting the Property;
(g) Except as set forth in Exhibit E, as of the date of this
---------
Agreement, Seller has received no written notice from any governmental authority
that the improvements constituting any Property are presently in material
violation of any applicable building codes where such violation has not been
cured in all material respects;
(h) Except as set forth in Exhibit E, as of the date of this
---------
Agreement, Seller has received no written notice from any governmental authority
that any Property is presently in material violation of any applicable zoning,
land use or other law, order, ordinance, rule or regulation affecting the
Property which violation has not been cured, that any investigation has been
commenced or is contemplated with respect to any such possible failure of
compliance and Seller has not received written notice from any insurance company
or Board of Fire Underwriters of any defect or inadequacy in connection with a
Property or its operation where such defect or inadequacy has not been cured in
all material respects;
(i) Except as set forth in Exhibit N, as of the date of this
---------
Agreement, no Contracts involving payment in excess of $5,000 per annum with
respect to any Property will be binding upon Buyer after the Closing, other than
such Contracts that are cancelable by the owner of the Property within 30 days
after written notice from such owner without penalty or premium;
(j) As of the date of this Agreement, except as set forth in the
environmental reports included within the Disclosure Materials and any reports
or studies prepared by or for Buyer, Seller has received no written notice of
the presence or release of any Hazardous
14
Materials presently deposited, stored, or otherwise located on, under, in or
about any Property which require reporting or potentially require reporting to
any governmental authority, monitoring, clean up or remediation or are otherwise
not in material compliance with environmental laws, regulations and orders;
(k) The Rent Rolls constituting Exhibit C-1 to this Agreement
-----------
accurately identify as to each Lease as of December 1, 2000; the date of the
rent start; the expiration date of the current term of the Lease; the current
base rental payable under such Lease; amount of additional rent (i.e., cost
recovery) currently billed to the tenant under the Lease; and the approximate
gross leaseable area of the premises, and the list of security deposits attached
hereto as Exhibit C-2 accurately identifies each Lease the amount of any
-----------
security deposit held by Seller. As of December 1, 2000, Seller had not
received written notice of any material default by Seller under any Leases,
which default had not been cured in all material respects, and Seller has not
delivered any default notice to a tenant under any Lease, except with respect to
delinquent rents disclosed in the aged delinquency report contained within the
Disclosure Materials, and, to Seller's knowledge and except as set forth in the
delinquency reports provided by Seller to Buyer, Seller was not aware of any
other material default by a tenant under a Lease, which defaults have not been
cured in all material respects; and
(l) With respect to the matters contained in the Disclosure Materials
List & Statement and the Disclosure Materials, to Seller's knowledge, Seller has
not willfully or intentionally or as a result of gross negligence omitted to
state any material facts required to be stated therein or willfully and
intentionally or as a result of gross negligence made any untrue statement of a
material fact, which would render the Disclosure Materials List & Statement or
the Disclosure Materials materially misleading.
(m) With respect to financial records which are included within the
Disclosure Materials, the information for 1998 and 1999 as to historical minimum
rents, historical percentage rents, historical expenses and historical
additional rent (cost recoveries) is true and correct in all material respects.
Seller's warranty as to accuracy does not apply with respect to budgets or
projections for future periods.
(n) The list of leases (identified by date) and amendments (also
identified by date) as contained in the Disclosure Materials and included as
part of Exhibit B is accurate and complete in all material respects.
---------
(o) Seller is not in default in payment of principal or interest under
the Loan or in payment of rent or other monetary amounts under the Ground Lease.
To Seller's knowledge, Seller is not in default of any other material provision
of the Loan or the Ground Lease.
(p) The documents listed in Exhibit P are the only documents to which
Seller is a party relating to the Loan.
Subject to the provisions of Section 4.4, Seller shall be liable for
the breach of any representation and warranty of Seller set forth in this
Section 4.1.
* * * * *
15
For the foregoing purposes, the terms "Seller's knowledge" or words of
similar effect shall mean the current actual, subjective knowledge of ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ (who are the
asset managers of one or more of the Properties), ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇ (collectively, the "Knowledge Persons"), in each case without
independent investigation or inquiry. Seller represents and warrants to Buyer
that these individuals are the individuals employed by Seller that have primary
management, or maintenance responsibility for the Properties so that no
individual likely to have material and specialized knowledge as to the
Properties has been omitted from this list. Such individuals' knowledge shall
not include information or material which may be in the possession of Seller or
the named individuals, but of which the named individuals are not actually
aware. None of the named individuals whose sole knowledge is imputed to a
Seller under this Section nor any party other than the Seller affording a
representation shall bear responsibility for any breach of such representation.
Section 4.2 Seller's Covenants. Seller hereby covenants and agrees as
------------------
follows:
(a) During the Contract Period, Seller will exercise reasonable
and good faith efforts (i) to operate and maintain the Properties in a manner
consistent with current practices and (ii) to comply, where such compliance is
the obligation of Seller (and not of a tenant or other party) in all material
respects with all material laws and regulations applicable to the Properties;
(b) During the Contract Period, Seller will not sell or otherwise
dispose of any significant items of Personal Property unless replaced with an
item of like value, quality and utility;
(c) Following the Effective Date and until the end of the Contract
Period, Seller shall not enter into or modify any Contracts relating to the
operation or maintenance of a Property, except for (i) those entered into in the
ordinary course of business with parties which are not affiliates of Seller and
(A) which are cancelable upon not more than thirty (30) days prior notice
without penalty or premium or (B) which require payments to the applicable
vendor of $2,000 or less per year , or (ii) those otherwise approved in writing
by Buyer, which approval shall not be unreasonably withheld and shall be deemed
given if Buyer should fail to approve or disapprove proposed Contract matters in
writing within three (3) business days following Seller's written request (which
shall include all material information necessary to allow Buyer to make an
informed decision). At Buyer's written request provided at least three (3)
business days prior to the Closing Date, Seller shall deliver notice of
termination on the Closing Date as to any and all Contracts that Buyer desires
to terminate, provided that such termination shall be effective following any
notice or waiting period for such termination described in the Contract.
Notwithstanding the foregoing, Seller shall terminate all property management
agreements and exclusive leasing agreements applicable to the Properties as of
the Closing Date, at Seller's expense;
(d) Following the Effective Date and until the end of the Contract
Period, Seller will not execute or modify in any material fashion any Leases or
any ground lease, other than with Buyer's prior consent, which shall be deemed
given if Buyer (in the person of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice Chairman, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President, or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President, of
the general partner of Buyer) should fail to approve or
16
disapprove proposed lease matters in writing within five (5) business days
following Seller's written request (which shall include all material information
necessary to allow Buyer to make an informed decision). Buyer shall exercise its
rights of approval of leasing matters reasonably and in good faith. Seller shall
use reasonable efforts to continue to seek leases for the Properties in a manner
consistent with present practice;
(e) During the Contract Period, Seller shall not voluntarily
create, consent to or acquiesce in the creation of liens or exceptions to title
without Buyer's prior written consent, provided that Buyer shall not
unreasonably withhold or delay consent to any proposed matters affecting title
necessary to maintain or enhance the value of the pertinent Property;
(f) During the Contract Period, Seller shall maintain its
currently effective policies of property insurance and rental loss insurance for
the Improvements;
(g) During the Contract Period, Seller shall use commercially
reasonable efforts (but at no material cost to Seller except as may otherwise be
expressly provided in this Agreement) to obtain all third party and governmental
approvals and consents necessary to consummate the transactions contemplated
hereby;
(h) During the Contract Period, Seller shall maintain its books
accounts and records in accordance with generally accepted accounting principles
and in a manner consistent with past practice;
(i) During the Contract Period, Seller shall observe and comply
with the material terms and conditions of all Contracts, Leases, Property
licenses, and Property approvals;
(j) During the Contract Period, Seller shall not knowingly or
intentionally take any action which would cause the representations and
warranties contained in Section 4.1 (other than as permitted in this Agreement)
to cease to be true and correct in all material respects as of the Closing Date
as though then made and shall promptly notify Buyer of any event, circumstances
or discovery inconsistent therewith;
(k) During the Contract Period, Seller shall comply in all
material respects with the Leases and all existing easements, covenants,
conditions, restrictions and other encumbrances affecting any Property;
(l) On the Closing Date, Seller shall deliver to Buyer an
environmental insurance policy with respect to the Property on the terms set
forth in Exhibit O attached to this Agreement;
---------
(m) During the Contract Period, Seller shall use reasonable
efforts to provide Buyer with copies of any written notices received by Seller
during the Contract Period, which notices relate to matters described in Section
4.1;
(n) During the Contract Period, Seller shall notify Buyer of any
litigation filed against Seller or concerning any of the Properties during the
Contract Period within a reasonable period of time after Seller is made aware of
such litigation and Exhibit E shall be revised to include such litigation;
---------
17
(o) Seller will cooperate with Deloitte & Touche ("D&T"), acting
as auditors for Buyer, in connection with an audit of 1999 and 2000 combined
financial statements for the Properties, including allowing D&T access to all
relevant records of Seller, access to Seller's MRI system and rendering such
other assistance as is reasonable, which audit will begin after the Effective
Date and conclude within 75 days after Closing; provided that Buyer shall pay
all fees and expenses charged by D&T for such audit; .
(p) During the Contract Period, in cooperation with Buyer, Seller
shall use commercially reasonable efforts to obtain from the City of Sacramento
evidence satisfactory to Buyer, in the exercise of its reasonable judgment, that
the fact that a building is built over the lot line in Discovery Plaza property
is not a violation of any zoning, building, subdivision, or other law,
ordinance, rule, or regulation and that there will be no prohibition against
rebuilding the building in the same location. Notwithstanding the foregoing,
Buyer shall have no right to terminate this Agreement or to seek a reduction in
the Purchase Price in the event that the City of Sacramento is not willing to
provide such evidence to Buyer.
Section 4.3 Buyer's Warranties and Representations.
Buyer hereby represents and warrants to Seller that the following are true
as of the date of this Agreement:
(a) Buyer is a duly formed and validly existing limited
partnership under the law of the state of its formation and is (or on the
Closing Date will be) in good standing under the laws of the states where each
Property is located and Buyer has the full right, authority and power to enter
into this Agreement, to consummate the transactions contemplated herein and to
perform its obligations hereunder and under those documents and instruments to
be executed by it at the Closing, and each of the individuals executing this
Agreement on behalf of Buyer is authorized to do so, and this Agreement
constitutes a valid and legally binding obligation of Buyer enforceable against
Buyer in accordance with its terms.
(b) Buyer's execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of
Buyer's obligations under the instruments required to be delivered by Buyer at
the Closing, do not and will not result in any material violation of, or
material default under, any term or provision of any agreement, instrument,
mortgage, loan agreement or similar document to which Buyer is a party or by
which Buyer is bound.
(c) There is no litigation, investigation or proceeding pending
or, to the best knowledge of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chairman, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice Chairman, or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President of the General Partner of Buyer,
contemplated or threatened against Buyer which would impair or adversely affect
Buyer's ability to perform its obligations under this Agreement or any other
instrument or document related hereto.
Section 4.4 Survival/Limitations.
--------------------
(a) Subject to subsection (b) below, the parties agree that
Seller's warranties and representations contained in Sections 4.1 of this
Agreement shall survive Buyer's purchase of the Properties and the Closing Date
for a period ending one year following the Closing Date
18
(the "Limitation Period"). Such termination as of the close of the Limitation
Period shall apply to known as well as unknown breaches of such warranties or
representations. Subject to subsection (b) below, Buyer's waiver and release set
forth in Section 2.4 shall apply fully to liabilities under such representations
and warranties not set forth in a Claim Notice as described below. Buyer
specifically acknowledges that such termination of liability represents a
material element of the consideration to Seller.
(b) Any claim of Buyer based upon a breach of any representation or
warranty or covenant or a claim under any indemnity contained in this Agreement
or any representation, warranty, covenant or indemnity contained in any other
document or instrument delivered by Seller to Buyer at Closing (collectively a
"Breach") shall be expressed, if at all, in writing setting forth in reasonable
detail the basis and character of the claim (a "Claim Notice"), and must be
delivered to Seller prior to the expiration of the applicable Limitation Period.
Notwithstanding the foregoing, Buyer's right to make and recover any claim
pursuant to a Claim Notice shall be subject to the following: (i) with respect
to a Breach of Seller's representations and warranties contained in this
Agreement or a Breach under an indemnity contained in the Assignment of
Intangibles or the Assignment of Leases (as such terms are defined in Section
6.1(a) below), Buyer shall not make any claim on account of such Breach unless
and until the aggregate measure of such claims with respect to the Property
exceeds $500,000, in which event Buyer's claims shall be limited to an amount
equal to the amount by which such aggregate claims exceed such $500,000
threshold and (ii) Seller's aggregate liability for claims arising out of all
Breaches (i.e., those described in clause (i) above as well as all other
Breaches) shall not, in the aggregate, exceed $5,000,000.00 exclusive of the
amounts of any insurance proceeds actually received by Seller which are to be
applied to Breaches, and (iii) Buyer shall have no right to deliver a Claim
Notice with respect to a Breach of a representation and warranty of Seller
contained in this Agreement to the extent that Buyer had knowledge of such
Breach as of the Closing Date. Notwithstanding anything to the contrary
provided in this Agreement, in no event shall Seller be liable to Buyer for any
consequential or punitive damages based upon any breach of this Agreement,
including breaches of representation or warranty. Subject to applicable
principles of fraudulent conveyance, in no event shall Buyer seek satisfaction
for any obligation from any shareholders, officers, directors, employees,
agents, legal representatives, successors or assigns of such trustees or
beneficiaries, nor shall any such person or entity have any personal liability
for any such obligations of Seller. Provided, however, that the limitations set
forth in this Section 4.4(b) shall not apply in the event of fraud.
(c) Seller shall have a period of 30 days within which to cure a
Breach for which a Claim Notice has been received, or, if such Breach cannot
reasonably be cured within 30 days, an additional reasonable time period of up
to an additional 60 days (for a total of 90 days), so long as such cure has been
commenced within such 30 days and is at all times diligently pursued. If the
Breach is not cured after actual written notice and within such cure period,
Buyer's sole remedy shall be an action at law for damages against Seller, which
must be commenced with respect to a Breach of a representation or warranty
contained in this Agreement or a Breach of a covenant contained in Section 4.2
hereof, if at all, within fifteen (15) months after the Closing Date. The
existence or pendency of such cure rights shall not delay the Closing Date. The
provisions of this Section 4.4 shall survive the Closing or any termination of
this Agreement.
19
Section 4.5 Operating Records
-----------------
Each party agrees to make available to the other party from time to time,
but not more frequently than quarterly, upon reasonable notice, for a period of
two years following the Closing Date, such party's operating records for the
Properties, to the extent such party has operating records, in order to permit
the requesting party to prepare such historical financial statements for the
Properties as such party requires to satisfy legal or contractual obligations.
The party making its operating records available shall have no obligation to
prepare any operating statements or incur any expense in connection with the
provisions of this Section. Seller shall not be obligated to retain operating
records or make such operating records available to Buyer to the extent such
records have been delivered to Buyer.
Section 4.6 Seller's Employees.
------------------
During the Contract Period, Buyer shall have the right to discuss with any
officer, director, employee or agent of Seller or any of Seller's affiliates the
possibility of such person's becoming an officer, director, employee or agent of
Buyer or an affiliate of Buyer prior to or after the Closing.
ARTICLE 5
DEPOSIT; DEFAULT
Section 5.1 Buyer's Default & Deposit. Buyer shall deliver the Deposit as
-------------------------
required under Section 2.2. In the event that this transaction is consummated
as contemplated by this Agreement, then the entire amount of the Deposit,
together with any interest accrued thereon, shall be credited against the
Purchase Price. The entire amount of the Deposit, together with any interest
accrued thereon, shall be returned immediately to Buyer in the event that the
transaction fails to close due to termination of this Agreement pursuant to
Section 5.2 or Section 3.2. BUYER ACKNOWLEDGES THAT THE CLOSING OF THE SALE OF
THE PROPERTIES TO BUYER, ON THE TERMS AND CONDITIONS AND WITHIN THE TIME PERIOD
SET FORTH IN THIS AGREEMENT, IS MATERIAL TO SELLER. BUYER ALSO ACKNOWLEDGES
THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IF SUCH TRANSACTION IS NOT
SO CONSUMMATED DUE TO BUYER'S DEFAULT UNDER THIS AGREEMENT. BUYER FURTHER
ACKNOWLEDGES THAT, AS OF THE DATE OF THIS AGREEMENT, SELLER'S DAMAGES WOULD BE
EXTREMELY DIFFICULT OR IMPOSSIBLE TO COMPUTE IN LIGHT OF THE UNPREDICTABLE STATE
OF THE ECONOMY AND OF GOVERNMENTAL REGULATIONS, THE FLUCTUATING MARKET FOR REAL
ESTATE AND REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS WHICH DIRECTLY
AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTIES. IN LIGHT OF THE FOREGOING
AND ALL OF THE OTHER FACTS AND CIRCUMSTANCES SURROUNDING THIS TRANSACTION, AND
FOLLOWING NEGOTIATIONS BETWEEN THE PARTIES, BUYER AND SELLER AGREE THAT THE
AMOUNT OF THE DEPOSIT REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH
SELLER WOULD SUFFER BY REASON OF BUYER'S DEFAULT HEREUNDER. ACCORDINGLY, BUYER
AND SELLER HEREBY AGREE THAT, IN THE EVENT OF SUCH DEFAULT BY BUYER UNDER THIS
AGREEMENT, SELLER MAY TERMINATE THIS AGREEMENT BY
20
GIVING NOTICE TO BUYER AND TITLE COMPANY. IN THE EVENT OF SUCH TERMINATION,
SELLER SHALL RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES IN LIEU OF ANY OTHER CLAIM
SELLER MAY HAVE AT LAW OR IN EQUITY (INCLUDING, WITHOUT LIMITATION, SPECIFIC
PERFORMANCE) ARISING BY REASON OF BUYER'S DEFAULT. THE PARTIES HAVE INITIALED
THIS SECTION 5.1 TO ESTABLISH THEIR INTENT SO TO LIQUIDATE DAMAGES.
Seller's Buyer's
Initials: _________________ Initials: ___________________
This Section 5.1 is intended only to liquidate and limit Seller's rights to
damages arising due to Buyer's failure to purchase the Properties and shall not
limit the indemnification or other obligations of Buyer pursuant to (A) any
other documents delivered pursuant to this Agreement or (B) Sections 2.4(e), 7.2
and 7.8 of this Agreement.
Section 5.2 Seller's Default. If (a) the conditions precedent set forth
----------------
in Section 3.1(b) shall have been satisfied or waived and (b) Seller shall
refuse to perform its material closing obligations under this Agreement (e.g.,
by refusing to convey the Properties to Buyer at Closing), then Buyer's sole and
exclusive remedy shall be either (i) to receive (a) a return of the Deposit in
the event Seller refuses to perform its material closing obligations with
respect to the Properties plus all accrued interest plus (b) the additional sum
of $5,000,000.00 as liquidated damages. In connection with such liquidated
damage amount, SELLER ACKNOWLEDGES THAT THE CLOSING OF THE SALE OF THE
PROPERTIES TO SELLER, ON THE TERMS AND CONDITIONS AND WITHIN THE TIME PERIOD SET
FORTH IN THIS AGREEMENT, IS MATERIAL TO BUYER. SELLER ALSO ACKNOWLEDGES THAT
SUBSTANTIAL DAMAGES WILL BE SUFFERED BY BUYER IF SUCH TRANSACTION IS NOT SO
CONSUMMATED DUE TO SELLER'S DEFAULT UNDER THIS AGREEMENT. SELLER FURTHER
ACKNOWLEDGES THAT, AS OF THE DATE OF THIS AGREEMENT, BUYER'S DAMAGES WOULD BE
EXTREMELY DIFFICULT OR IMPOSSIBLE TO COMPUTE IN LIGHT OF THE UNPREDICTABLE STATE
OF THE ECONOMY AND OF GOVERNMENTAL REGULATIONS, THE FLUCTUATING MARKET FOR REAL
ESTATE AND REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS WHICH DIRECTLY
AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTIES. IN LIGHT OF THE FOREGOING
AND ALL OF THE OTHER FACTS AND CIRCUMSTANCES SURROUNDING THIS TRANSACTION, AND
FOLLOWING NEGOTIATIONS BETWEEN THE PARTIES, SELLER AND BUYER AGREE THAT
$5,000,000.00 REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH BUYER WOULD
SUFFER BY REASON OF SELLER'S DEFAULT HEREUNDER IF BUYER DOES NOT ELECT TO
ENFORCE SPECIFIC PERFORMANCE. ACCORDINGLY, SELLER AND BUYER HEREBY AGREE THAT,
IN THE EVENT OF SUCH DEFAULT BY SELLER UNDER THIS AGREEMENT, BUYER MAY TERMINATE
THIS AGREEMENT BY GIVING NOTICE TO SELLER AND TITLE COMPANY AND IN THE EVENT OF
SUCH TERMINATION, BUYER SHALL RECEIVE A REFUND OF THE DEPOSIT AND ALSO RECEIVE
FROM SELLER THE SUM OF $5,000,000.00 AS LIQUIDATED DAMAGES.
21
Seller's Buyer's
Initials: _________________ Initials: ___________________
or (ii) to pursue an action for specific performance, provided, that
notwithstanding anything to the contrary contained herein, Buyer's right to
pursue an action for specific performance is expressly conditioned on Buyer not
being in default hereunder. Nothing contained in this Section 5.2 is intended
to limit Buyer's rights under Sections 7.2 and 7.8 of this Agreement.
It is expressly understood and agreed that Seller shall become
obligated to pay the aforesaid liquidated damage amount only if Seller shall
refuse to perform its material closing obligations under this Agreement, e.g.,
by refusing to convey the Properties to Buyer at Closing upon Buyer's tender of
the cash portion of the Purchase Price.
ARTICLE 6
CLOSING
Section 6.1 Escrow Arrangements. Escrow for the purchase and sale
-------------------
contemplated by this Agreement shall be opened by Buyer and Seller with Title
Company. At least one business day prior to the Closing Date, Seller and Buyer
shall each deliver escrow instructions to Title Company consistent with this
Article 6, and designating Title Company as the "Reporting Person" for the
transaction pursuant to Section 6045(e) of the Code. By signing below, Title
Company agrees to act as the "Reporting Person" for the transaction pursuant to
Section 6045(e) of the Code and to complete and file with the IRS Forms 1099-S
(and furnish Buyer and Seller with copies thereof) on or before the due date
therefor. In addition, the parties shall deposit in escrow, at least one
business day prior to the Closing Date (unless otherwise provided below in this
Section 6.1) the funds and documents described below:
(a) Seller shall deposit (or cause to be deposited):
(i) a duly executed and acknowledged deed pertaining to the Real
Property portion of each of the Properties, each in the form
attached to this Agreement as Exhibit D-1 (collectively, the
-----------
"Deeds"), and an assignment of ground lease with respect to
the Discovery Plaza Property in the form attached to this
Agreement as Exhibit D-5 (the "Ground Lease Assignment");
-----------
(ii) a duly executed ▇▇▇▇ of sale pertaining to the Personal
Property portion of each of the Properties, each in the form
attached to this Agreement as Exhibit D-2 (collectively, the
-----------
"Bills of Sale");
(iii) a duly executed counterpart assignment and assumption
pertaining to the Intangible Property portion of each of the
Properties, each in the form attached to this Agreement as
Exhibit D-3 (collectively, the "Assignments of
-----------
Intangibles");
22
(iv) a duly executed counterpart assignment and assumption
pertaining to the Leases, each in the form attached to
this Agreement as Exhibit D-4 (collectively, the
-----------
"Assignments of Leases");
(v) a certificate from Seller certifying the information
required by any of the states in which any of the
Properties are located to establish that the transaction
contemplated by this Agreement is exempt from the tax
withholding requirements of such states (the "State
Certificates");
(vi) a certificate from Seller certifying the information
required by 1445 of the Code to establish, for the
purposes of avoiding Buyer's tax withholding obligations,
that Seller is not a "foreign person" as defined in
1445(f)(3) of the Code (the "FIRPTA Certificate");
(vii) a letter executed by Seller and, if applicable, its
management agent and the Buyer, in form and substance
satisfactory to Buyer, addressed to all tenants of each
respective Property, notifying all such tenants of the
transfer of ownership of the Property and directing
payment of all rents accruing after the Closing Date to be
made to Buyer or such other party as Buyer directs (the
"Tenant Notices");
(viii) to the extent not previously delivered to Buyer and in
Buyer's possession or under its control, originals of any
of the Contracts, Leases, licenses, approvals, plans,
specifications, warranties, other Intangible Property and
other books and records relating to the ownership and
operation of the Property (or if the original is not in
the Seller's possession or control, copies thereof
certified by Seller to be true, correct and complete
copies to the extent in Seller's possession or control);
(ix) an updated Rent Roll for each Property in the same format
as was used for the Rent Rolls attached hereto as Exhibit
-------
C-1 or in such other format as is reasonably acceptable to
---
Buyer dated no later than five (5) days prior to Closing;
(x) subject to the provisions of Section 2.5, such affidavits
as may be reasonably and customarily required by the Title
Company to issue the Buyer's Title Policies in the form
required hereby (including, without limitation, without
exception for parties-in-possession (other than tenants
under the Leases) or mechanics' or materialmen's liens
which are to be satisfied by Seller pursuant to Section
2.5) together with such other documents reasonably
required by the Title Company for Seller to comply with
the obligations under Section 2.5;
23
(xi) evidence reasonably satisfactory to the Title Company as
to the legal existence and authority of the Seller and the
authority and incumbency of the persons signing documents
on behalf of the Seller;
(xii) duly executed documentation required by the Lender and
acceptable to Seller evidencing that Buyer has accepted
the conveyance of the Properties subject to the Note and
other Loan Documents and the release of Seller and its
affiliates from all obligations under the Note and Loan
Documents arising from and after Closing (the "Loan
Assignment and Release Documents");
(xiii) A duly executed assignment assigning to Buyer all reserve
accounts established pursuant to that certain Cash
Collateral Account Agreement between LaSalle National
Bank, Seller and Lender, including, without limitation,
escrow accounts for property taxes, property insurance and
deferred maintenance in the form attached to this
Agreement as Exhibit D-6;
-----------
(xiv) Documents which are effective to transfer from Seller to
Buyer all authority with respect to the lock-box account
used in connection with the Loan; and
(xv) such other documents and instruments as may be required by
any other provision of this Agreement or as may reasonably
be required by Title Company or otherwise to carry out the
terms and intent of this Agreement.
In addition, Seller shall deliver to Buyer on the Closing Date, outside of
escrow, to the extent in Seller's possession or control, the originals of all
Leases, Contracts and tenant files and all keys to the Properties.
(b) Buyer shall deposit:
(i) on the Closing Date, immediately available funds sufficient
to pay the balance of the Purchase Price, plus sufficient
additional cash to pay Buyer's share of all escrow costs
and closing expenses;
(ii) a duly executed counterpart for each of the Assignments of
Intangibles, Ground Lease Assignment, the Loan Assignment
and Release Documents, Assignments of Leases (and Tenant
Notices where required);
(iii) a certificate duly executed by Buyer in favor of Seller
confirming the waivers and acknowledgments set forth in
Sections 2.5 and 4.4 above;
24
(iv) evidence reasonably satisfactory to Title Company as to
the legal existence and authority of the Buyer and the
authority and incumbency of the persons signing documents
on behalf of the Buyer; and
(v) Such other documents and instruments as may be required by
any other provision of this Agreement or as may reasonably
be required by Title Company or otherwise to carry out the
terms and intent of this Agreement.
Section 6.2 Title. Title Company shall close escrow on the Closing Date
-----
by:
(a) recording the Deeds and Ground Lease Assignment;
(b) issuing the Buyer's Title Policies to Buyer pursuant to Section
3.1(a)(i) above;
(c) delivering to Buyer originals of the Bills of Sale, the FIRPTA
Certificate, the State Certificates, executed counterparts of each of the
Assignments of Intangibles, Assignments of Leases, the Loan Assignment and
Release Documents, and all of the other documents in escrow under Section
6.1(a);
(d) delivering to Seller (i) a counterpart for each of the
Assignments of Intangibles, the Assignments of Leases and the Loan Assignment
and Release Documents executed by Buyer, (ii) the certificate described in
Section 6.1(b)(iii) above, and (iii) funds in the amount of One Hundred Forty-
Five Million Five Hundred Thousand Dollars ($145,500,000), as adjusted for
credits, adjustments, prorations and closing costs in accordance with this
Agreement and as allocated pursuant to this Agreement (upon which allocation
Title Company shall have the right to conclusively rely); and
(e) if directed by the parties, delivering the Tenant Notices to the
tenants by certified mail, return receipt requested.
Section 6.3 Prorations.
----------
(a) Taxes. Real estate taxes, personal property taxes and any
general or special assessments with respect to the Properties which are not the
direct payment obligation of tenants pursuant to the Leases (as opposed to a
reimbursement obligation) shall be prorated as of the Closing Date -- to the end
that Seller shall be responsible for all taxes and assessments that are
allocable to any period prior to the Closing Date and Buyer shall be responsible
for all taxes and assessments that are allocable to any period from and after
the Closing Date. To the extent any real or personal property taxes subject to
apportionment in accordance with the foregoing are, as of the Closing Date, the
subject of any appeal filed by or on behalf of Seller, then notwithstanding
anything to the contrary contained in this subparagraph, (i) no apportionment of
the taxes being appealed shall occur at the Closing, but instead such
apportionment shall be deferred until the outcome of the appeal is final and the
amount of taxes owing becomes fixed at which ▇▇▇▇ ▇▇▇▇▇▇ shall be responsible
for all such taxes that are allocable to any period prior to the Closing Date
and Buyer shall be responsible for all such taxes that are allocable to any
period
25
from and after the Closing Date, and (ii) Seller shall provide Buyer with
adequate security, either in the form of a bond or by escrowing the amounts
being appealed, to assure Buyer that Seller's portion of such tax liability,
including any penalty, will be available. To the extent any taxes which are the
subject of an appeal have been paid by Seller under protest and the appeal
results in Buyer receiving a credit toward future tax liability or a refund,
then Buyer shall, within thirty (30) days following receipt of such refund or
notice of such credit, pay to Seller the full amount of such refund or credit
allocable to the period prior to the Closing Date, excluding, however, any
portion of such refund or credit that is required to be passed through to the
tenants pursuant to any Leases or to other parties by contract (existing on the
Closing Date).
(b) Prepaid Expenses. Buyer shall be charged for those prepaid
expenses paid by Seller allocable to any period from and after the Closing Date,
including, without limitation, annual permit and confirmation fees, fees for
licenses and all security or other deposits paid by Seller to third parties
which Buyer elects to assume and to which Buyer then shall be entitled to the
benefits and refund following the Closing Date.
(c) Property Income and Expense. The following prorations and
adjustments shall occur as of the Closing. Prior to the Closing Date, Seller
shall provide all information to Buyer required to calculate such prorations and
adjustments, and representatives of Buyer and Seller shall together make such
calculations:
(i) General. Subject to the specific provisions of clauses
(ii), (iii) and (iv) below, income and expense shall be
prorated on the basis of a 30-day month and on a cash basis
(except for items of income and expense that are payable
less frequently than monthly, which shall be prorated on an
accrual basis). All such items attributable to the period
prior to the Closing Date shall be allocated to Seller; all
such items attributable to the period on and following the
Closing Date shall be allocated to Buyer. Buyer shall be
credited in escrow with (a) any portion of rental agreement
or lease deposits which are refundable to the tenants and
have not been applied to outstanding tenant obligations in
accordance with the terms of the applicable Lease and (b)
rent prepaid beyond the Closing Date. Seller shall transfer
Seller's entire interest in any letters of credit or
certificates of deposit held by Seller as the deposits
described in clause (a) above and shall diligently cooperate
with Buyer in obtaining any reissuance or confirmation of
the effect of the transfer of such instruments. Buyer shall
not be entitled to any interest on rental agreement or lease
deposits or prepaid rent accrued on or before the Closing
Date, except to the extent any such amount of interest is
refundable or payable to any tenant under a Lease or
applicable law. Seller shall be credited in escrow with any
prepaid rent under the Discovery Plaza ground lease, any
impounds or escrow accounts held by the Lender or by LaSalle
National Bank, as confirmed by Lender or LaSalle National
Bank, as applicable, and any refundable deposits or bonds
held by any utility, governmental agency or service
contractor, to the extent
26
such deposits or bonds are assigned to Buyer on the Closing
Date. If Lender or LaSalle National Bank has not confirmed
the aforesaid amounts on or before the Closing Date, such
credit will be given to Seller within five (5) business days
after such amounts are so confirmed.
(ii) Leasing Costs. Buyer shall be credited in escrow with any
leasing commissions, tenant improvements or other allowances
to be paid by Buyer on or after the Closing Date with
respect to the current term of any Relevant Lease (as
defined in Paragraph 3 of Exhibit F) or Relevant Lease
modification executed, or any extension term or expansion of
premises exercised, in each case, shown on the Rent Rolls
attached hereto as Exhibit C-1, and Seller shall pay on or
-----------
before the Closing Date all such items payable prior to the
Closing Date. Seller shall be credited in escrow with an
amount equal to (A) the amount of any leasing commissions,
tenant improvements and other allowances paid by Seller
after the Effective Date to the extent such items relate to
new Leases or Lease modifications executed or extensions of
terms or expansions of premises that are not shown on the
Rent Rolls attached hereto as Exhibit C-1 and permitted
-----------
under the terms of this Agreement, multiplied by (B) a
fraction in which the numerator is the number of months or
partial months of the stabilized term (i.e., the term
following the tenant's entry into occupancy and commencement
of unabated rental obligations) of any such Lease following
the Closing Date and the denominator is the number of months
or partial months in the stabilized term of such Lease.
Buyer shall assume all obligations for any leasing
commissions, tenant improvement or other allowances payable
following the Closing Date with respect to Leases or Lease
modifications executed or extensions of terms or expansions
of premises that are not shown on the Rent Rolls attached
hereto as Exhibit C-1 and which are permitted under the
-----------
terms of this Agreement. Any expenditures or commitments to
expenditures relating to Leases or modifications or
extensions of terms or expansions of premises, in excess of
the amounts budgeted and approved as part of Buyer's
approval of the Lease (where such approval is required)
shall be subject to Buyer's specific approval, which shall
not be unreasonably withheld and shall be deemed given if
Buyer should fail to approve or disapprove such excess
expenditure within five (5) business days following Seller's
written request and delivery of material information
reasonably necessary to allow Buyer to make an informed
decision.
(iii) Rents. Rents (including both minimum rent and Additional
Rent, as herein defined) payable by tenants under the Leases
(other than delinquent rents), shall be prorated as and when
collected (whether
27
such collection occurs prior to, on, or after the Closing
Date). Buyer shall receive a credit for the amounts actually
received by Seller (i.e., landlord) before the Closing Date
and which pertain to any period after the Closing Date.
Buyer shall not receive a credit at the Closing for any
rents for the month in which the Closing occurs which are in
arrears and have not then been received. As to any tenants
who are delinquent in the payment of rent on the Closing
Date, Seller shall be permitted to use reasonable efforts
(but shall not be permitted to commence legal action or
terminate or evict a tenant) to collect or cause to be
collected such delinquent rents following the Closing Date.
Any and all rents so collected by either party following the
Closing (less a deduction for all reasonable collection
costs and expenses incurred by the collecting party) shall
be successively applied (after deduction for reasonable
collection costs) to the payment of (x) rent due and payable
for the month in which the Closing occurs, (y) rent due and
payable for the months succeeding the month in which the
Closing occurs (through and including the month in which
payment is made) and (z) rent due and payable for the months
preceding the month in which the Closing occurs. If all or
part of any rents or other charges received by Buyer
following the Closing are allocable to Seller pursuant to
the foregoing sentence, then such sums shall be promptly
paid to Seller; if all or part of any rents or other charges
received by Seller following the Closing are allocable to
Buyer pursuant to the foregoing sentence, then such sums
shall be promptly paid to Buyer. Seller reserves the right
to pursue any damages remedy Seller may have against any
tenant with respect to such delinquent rents, but shall have
no right to exercise any other remedy under the Lease
(including, without limitation, termination or eviction).
(iv) Additional Rents. Any percentage rent, escalation charges
for real estate taxes, parking charges, operating and
maintenance expenses, pass-throughs for roof, parking area
and other capital asset replacements (including amortization
payments), escalation rents or charges, electricity charges,
cost of living increases or any other charges of a similar
nature other than fixed or base rent under the Leases
(collectively, the "Additional Rents") shall be prorated as
of the Closing Date between Buyer and Seller proration
payments to be made on or before the date which is ninety
(90) days following the end of the calendar year in which
the Closing occurs based on the actual number of days of the
year and month which shall have elapsed as of the Closing
Date. Prior to Closing, Seller shall provide Buyer on an
estimated basis with information regarding Additional Rents
which were received by Seller prior to Closing and the
amount of reimbursable expenses paid by Seller prior to
Closing. If Seller's collections of such amounts is in
28
excess of the amounts actually paid by Seller for such items
for the period prior to Closing, then Buyer shall receive a
credit at Closing for the excess amounts collected. Buyer
shall apply all such excess amounts to the charges owed by
Buyer for such items for the period after the Closing and,
if required by the Leases, shall rebate or credit the
tenants with any remainder. If it is determined that the
amount collected during Seller's ownership period was less
than the amounts actually paid by Seller for such items for
the period prior to the Closing, then the collection and
remitting of such amounts shall be governed by the
provisions of subsection (iii) above regarding the post-
closing application of rents. With respect to reimbursable
expenses paid by Seller prior to Closing, but not billed to
tenants prior to Closing, Seller will provide to Buyer all
relevant information including supporting documentation and
Seller's calculation of the amount to be billed to each
tenant. On or before the date which is ninety (90) days
following the end of the calendar year in which the Closing
occurs, Buyer shall deliver to Seller a reconciliation of
all expenses reimbursable by tenants under the Leases, and
the amount of Additional Rents received by Seller and Buyer
relating thereto (the "Reconciliation"). Upon reasonable
notice and during normal business hours, each party shall
make available to the other all information reasonably
required to confirm the Reconciliation. In the event of any
overpayment of Additional Rents by the tenants to Seller,
Seller shall promptly, but in no event later than fifteen
(15) days after receipt of the Reconciliation, pay to Buyer
the amount of such overpayment and Buyer, as the landlord
under the particular Leases, shall pay or credit to each
applicable tenant the amount of such overpayment. In the
event of an underpayment of Additional Rents by the tenants
to Seller, Buyer shall pay to Seller the amount of such
underpayment within fifteen (15) days following Buyer's
receipt of any such amounts from the tenants.
(d) Adjustments to Prorations. Subject to Section 6.3(a) and
6.3(c)(iv) above, after the Closing, the parties shall from time to time, as
soon as is practicable after accurate information becomes available and in any
event within one (1) year following the Closing Date, recalculate and
reapportion any of the items subject to proration or apportionment (i) which
were not prorated and apportioned at the Closing because of the unavailability
of the information necessary to compute such proration, or (ii) which were
prorated or apportioned at the Closing based upon estimated or incomplete
information, or (iii) for which any errors or omissions in computing prorations
at the Closing are discovered subsequent thereto, and thereafter the proper
party shall be reimbursed based on the results of such recalculation and
reapportionment. Unless otherwise specified herein, all such reimbursements
shall be made on or before thirty (30) days after receipt of notice of the
amount due. Any such reimbursements not timely paid shall bear interest at a
per annum rate equal to ten percent (10%) from the due date until all such
unpaid sums together with all interest accrued thereon are paid if payment is
not made within ten (10) days after receipt of a ▇▇▇▇ therefor.
29
(e) Prior Year's Reconciliation. If the Closing occurs before
Seller has performed the annual reconciliation of Additional Rent for the
calendar year immediately preceding the calendar year in which the Closing
occurs, then Seller shall, as soon as practicable after Closing, perform such
reconciliation at its sole cost and expense. Upon completion of such annual
reconciliation, Seller shall immediately deliver to Buyer a detailed description
of any Additional Rent which are payable by or reimbursable to any present
tenant (the "Prior Year Reconciliation"). The Prior Year Reconciliation shall be
accompanied by all applicable back-up documentation, together with Seller's
check for such Additional Rent which is reimbursable to a tenant. Based upon
Seller's calculations, Buyer shall send customary statements for reimbursement
of Additional Rent to tenants under the Leases based on the Prior Year
Reconciliation, and shall remit to Seller within thirty (30) days of receipt,
all sums so collected. If Seller's calculations show that Additional Rent has
been overpaid by any present tenant and Seller has submitted its check to Buyer
for such amounts, Buyer shall refund such Additional Rent to such tenant.
(f) Survival. The provisions of this Section 6.3 shall survive
the Closing.
Section 6.4 Other Closing Costs.
-------------------
(a) Payment of the premium for the issuance of the Buyer's Title
Policies (other than that portion of the premium for obtaining an ALTA, rather
than a CLTA owner's policy of title insurance and the premium for any
endorsements to Buyer's Title Policies), i.e., for a CLTA form policy, in the
amount of the Purchase Price shall be paid by Buyer or Seller according to
custom as set forth in Exhibit G. Buyer shall pay the additional premium for
---------
obtain an ALTA , rather than a CLTA, owner's policy of title insurance and the
premium for the issuance of any endorsements to Buyer's Title Policies. Seller
shall pay all county and city documentary transfer or transaction taxes or fees
due on the transfer of the Properties. All other Closing costs, except as
otherwise provided below, shall be paid by Seller and Buyer according to custom
in the county in which the applicable Property is located as set forth on
Exhibit G attached hereto.
---------
(b) Seller shall pay 50% of any escrow or other costs charged by
or reimbursable to the Title Company.
(c) Buyer shall pay 50% of any escrow or other costs charged by or
reimbursable to the Title Company.
(d) Seller shall pay Loan transfer fees.
Section 6.5 Further Documentation. At or following the close of escrow,
---------------------
Buyer and Seller shall execute any certificate, memoranda, assignment or other
instruments required by this Agreement, law or local custom or otherwise
reasonably requested by the other party to effect the transactions contemplated
by this Agreement and shall take such other actions (but at no material cost or
expense) as are reasonably requested by the other party to effect the
transactions contemplated by this Agreement.
30
ARTICLE 7
MISCELLANEOUS
Section 7.1 Damage or Destruction. If at any time prior to the Closing,
---------------------
Seller determines that any of the Properties has been destroyed or damaged by
earthquake, flood or other casualty and that such damage will require more than
$750,000 for any one Property or more than $2,000,000 in the aggregate for all
Properties, (a "Casualty"), or if a proceeding is instituted for the taking of
all or any material portion of any of the Properties under the power of eminent
domain (a "Taking"), then Buyer shall have the right by giving written notice to
Seller and Title Company within fifteen (15) days after the date of receipt of
written notice of any such Casualty or Taking, either to: (i) consummate the
purchase of all of the Properties in accordance with this Agreement, in which
event Seller shall assign to Buyer at the Closing (A) any insurance proceeds
payable to Seller on account of such Casualty (excluding rental income insurance
proceeds allocable to the period prior to Closing) or (B) any award payable to
Seller by reason of the Taking (excluding any award for a temporary taking to
the extent allocable to the period prior to Closing), as the case may be; or
(ii) terminate this Agreement effective as of the date such notice of
termination is given. If Buyer fails to give such notice within such 15-day
period, then Buyer shall be deemed to have elected to terminate this Agreement
pursuant to this Section 7.1. The Closing Date shall be deferred, if necessary,
to permit Buyer to have the 15-day period following receipt of notice of a
Casualty or a Taking to make the election specified hereinabove. If Buyer
terminates this Agreement pursuant to this Section 7.1, then the Deposit shall
be returned to Buyer, and neither Seller nor Buyer shall have any further
obligations under this Agreement, except Buyer's obligation to perform those
obligations set forth in Sections 2.4(b), 2.4(e), 7.2, and 7.8 of this
Agreement. Except as provided in Section 4.2(f), nothing herein shall be deemed
to constitute an obligation on the part of Seller to carry or maintain any
insurance of any kind whatsoever pertaining to the Property.
Section 7.2 Fees & Commissions. Each party to this Agreement warrants to
------------------
the other that no person or entity can properly claim a right to a real estate
or investment banker's commission, finder's fee, acquisition fee or other
brokerage-type compensation (collectively, "Real Estate Compensation") based
upon the acts of that party with respect to the transaction contemplated by this
Agreement. Each party hereby agrees to indemnify and defend the other against
and to hold the other harmless from any and all loss, cost, liability or expense
(including but not limited to attorneys' fees and returned commissions)
resulting from any claim for Real Estate Compensation by any person or entity
based upon such acts.
Section 7.3 Successors and Assigns. Prior to the Closing Date, Buyer will
----------------------
assign this Agreement to a Delaware limited liability company, of which the sole
member will be a Texas limited partnership, of which Buyer (▇▇▇▇▇▇▇▇▇▇ ▇▇, Inc.)
will be the sole general partner and two other entities, each directly or
indirectly owned by ▇▇▇▇▇▇▇▇▇▇ Realty Investors, a Texas real estate investment
trust, will be the initial limited partners; provided further, that on the
Closing Date the entities owned directly or indirectly by ▇▇▇▇▇▇▇▇▇▇ Realty
Investors will own not less than 25% of the interests in such limited
partnership. Except as stated in the preceding sentence, Buyer may not assign
any of Buyer's rights or duties hereunder without the prior written consent of
Seller, which may be withheld in Seller's sole discretion.
31
Section 7.4 Notices. Any notice, consent or approval (or request for
-------
consent or approval) required or permitted to be given under this Agreement
shall be in writing and shall be given or requested by (i) hand delivery, (ii)
Federal Express or another reliable overnight courier service, (iii) facsimile
telecopy, or (iv) United States mail, registered or certified mail, postage
prepaid, return receipt required, and addressed as follows:
To Seller:
▇▇▇▇▇▇▇ Pacific Properties, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy at the same time to:
▇▇▇▇▇▇▇ Pacific Properties
▇▇▇ ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy at the same time to:
MBV Law LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
To Buyer:
▇▇▇▇▇▇▇▇▇▇ ▇▇, Ltd.
c/o Weingarten Realty Investors
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy at the same time to:
Dow, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
#▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, K. ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
32
Any such notice, consent or approval (or request for consent or approval) shall
be deemed given or requested (i) if given by hand delivery, upon such hand
delivery, (ii) one (1) business day after being deposited with Federal Express
or another reliable overnight courier service, (iii) if sent by facsimile, the
day the facsimile is successfully transmitted, or (iv) if sent by registered or
certified mail, three (3) business days after being deposited in the United
States mail. Any address or name specified above may be changed by notice given
to the addressee by the other party in accordance with this Section 7.4. The
inability to deliver because of a changed address of which no notice was given,
or rejection or other refusal to accept any notice, shall be deemed to be the
receipt of the notice as of the date of such inability to deliver or rejection
or refusal to accept. Any notice to be given by any party hereto may be given
by the counsel for such party.
Section 7.5 Entire Agreement. Excepting this Agreement and the attached
----------------
exhibits, which are by this reference incorporated herein, and all documents in
the nature of such exhibits, when executed, contain the entire understanding of
the parties and supersede any and all other written or oral understanding.
Section 7.6 Time. Time is of the essence of every provision contained in
----
this Agreement.
Section 7.7 Incorporation by Reference. All of the exhibits attached to
--------------------------
this Agreement or referred to herein and all documents in the nature of such
exhibits, when executed, are by this reference incorporated in and made a part
of this Agreement.
Section 7.8 Attorneys' Fees. If any dispute between Buyer and Seller
---------------
should result in litigation, the prevailing party shall be reimbursed for all
reasonable costs incurred in connection with such litigation or arbitration,
including, without limitation, reasonable attorneys' fees and costs, and the
cost of experts. For purposes of this Agreement, the terms "attorneys' fees"
and "attorneys' costs" shall include the fees and expenses of counsel to the
prevailing party, which may include printing, photocopying, duplicating and
other expenses, air freight charges and fees billed for law clerks, paralegals
and other persons not admitted to the bar but performing services under the
supervision of an attorney
Section 7.9 Construction. The parties acknowledge that each party and its
------------
counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
Section 7.10 Governing Law. This Agreement shall be construed and
-------------
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California (without giving effect
to conflicts of laws principles).
Section 7.11 Confidentiality. Following the full execution of this
---------------
Agreement and Buyer's delivery of the Deposit to Title Company, the parties
shall issue a joint press release with respect to this transaction, which press
release shall be in a form approved by Seller and Buyer.
33
Section 7.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.
Section 7.13 Representative. Buyer shall be entitled to rely upon any
--------------
notice, approval or decision expressed in writing by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇
▇▇▇▇▇ acting alone on behalf Seller. Seller shall be entitled to rely upon any
notice, approval or decision expressed by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ acting alone or on behalf of Buyer.
Section 7.14 State Specific Provisions.
-------------------------
(a) Buyer is hereby apprised of and shall determine whether any
Real Property is located within the coastal zone under the California Coastal
Act.
(b) Buyer is hereby apprised of and shall determine whether any
Real Property is located within a special studies zone under the ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Geologic Hazard Act.
(c) To the extent required by law, Seller and Buyer agree to
provide a Real Estate Transfer Disclosure Statement.
(d) Seller shall provide Buyer with a form California 590-RE.
(e) Buyer and Seller acknowledge that Seller is required to
disclose if the Property lies within the following natural hazard areas or
zones: (1) a special flood hazard area designated by the Federal Emergency
Management Agency (Cal. Civ. Code 1102.17); (2) an area of potential flooding
(Cal. Gov. Code 8589.4); (3) a very high fire hazard severity zone (Cal. Gov.
Code 51183.5); (4) a wild land area that may contain substantial forest fire
risks and hazards (Pub. Resources Code 4136); (5) an earthquake fault zone (Pub.
Resources Code 2621.9); or (6) a seismic hazard zone (Pub. Resources Code 2694).
Buyer and Seller acknowledge that they have employed the services of either
Vista Information Solutions, Inc. or Environmental Data Resources, Inc. (which,
in such capacity is herein called "Natural Hazard Expert") to examine the maps
and other information specifically made available to the public by government
agencies for the purpose of enabling each of Seller to fulfill its disclosure
obligations with respect to the natural hazards referred to in California Civil
Code Section 1102.6c(a) and to report the result of its examination to Buyer and
Seller in writing. The written report prepared by the Natural Hazard Expert
regarding the results of its examination fully and completely discharges Seller
from their disclosure obligations referred to herein, and, for the purpose of
this Agreement, the provisions of Civil Code Section 1102.4 regarding the non-
liability of Seller for errors or omissions not within its personal knowledge
shall be deemed to apply and the Natural Hazard Expert shall be deemed to be an
expert, dealing with matters within the scope of its expertise with respect to
the examination and written report regarding the natural hazards referred to
above. In no event shall Seller have any responsibility for matters not actually
known to Seller.
Section 7.15 Calculation of Time Periods.
---------------------------
The term "business days" when used in this Agreement means all days
excluding Saturdays, Sundays, and any state or national holidays (including the
optional bank holidays
34
listed in California Civil Code Section 7.1). All periods of time referred to in
this Agreement shall include all Saturdays, Sundays and state and national
holidays unless the period of time specifies business days. In the computation
of any period of time provided for in this Agreement or by law, the day of the
act or event from which said period of time runs shall be excluded, and the last
day of such period shall be included, unless it is not a business day, in which
case the period shall be deemed to run until the end of the next business day.
ARTICLE 8
RIGHTS OF FIRST REFUSAL; PROPERTY EXCLUSIONS
Section 8.1 Relevant Properties. Reference is made to the fact that under
-------------------
applicable documentation certain parties (i.e., the lessors under the Ground
Lease, a prior grantor of Southampton, and the assignee or successor of
▇▇▇▇▇▇▇'▇ Meat, Inc., a tenant at 580 Marketplace) (collectively, "RFOR
Parties") may have rights to purchase the individual Property listed below or
all Properties. To the extent that Seller has not done so prior to the
Effective Date, immediately after the Effective Date Seller will send to each
RFOR Party such notices and related documentation as are appropriate to comply
with applicable provisions of the relevant documentation ("RFOR Notice") and
Seller will furnish copies of all such RFOR Notices to Buyer for Buyer's
comments prior to sending such RFOR Notices to the RFOR Parties. Buyer hereby
approves the RFOR Notice previously sent by Seller with respect to 580
Marketplace, provided such RFOR Notice is also sent to the current tenant under
the relevant lease.
Section 8.2 Purchase of Individual Properties. If and to the extent any
---------------------------------
right of first refusal applies only to an individual Property (instead of to all
Properties covered by this Agreement), the purchase price to be stated in the
RFOR Notice shall be the following amount for each relevant individual Property
listed below:
Discovery Plaza $10,900,000
580 Marketplace $19,400,000
Southampton $21,600,000
Seller and Buyer further agree that the respective amounts indicated above
are their agreed allocation of portions of the Purchase Price to such individual
Property. Accordingly, if any RFOR Party purchases an individual Property as
listed above, then the Purchase Price payable by Buyer to Seller for the
remaining Properties shall be reduced, in the manner set forth below, by the
portion of the total Purchase Price allocated to such individual Property as
listed above. By way of example, illustrating (but not limiting) the
applicability of the foregoing provision, if the relevant RFOR Parties purchase
Discovery Plaza but no other RFOR Party purchases any other Property, then the
Purchase Price payable by Buyer to Seller shall be reduced as follows. First,
the parties shall determine the amount of the Allocated Loan Amount (as defined
in the Loan Documents) applicable to Discovery Plaza (the "Principal Amount
Reduction"). Second, the cash portion of the Purchase Price shall be reduced by
an amount equal to $10,900,000 minus the Principal Amount Reduction. In no
event shall Buyer have any obligation with respect to defeasance of the Loan for
any of the aforesaid Properties.
35
Section 8.3 Purchase of All Properties. If any RFOR Party is entitled to
--------------------------
and properly and validly exercises its rights to purchase all Properties, then
upon the actual close of escrow of such purchase by such RFOR Party this
Agreement shall terminate, the Deposit and all interest accrued thereon shall be
paid to Buyer, and Seller shall pay to Buyer the amount referred to in Paragraph
4 of Exhibit F.
[NO FURTHER TEXT ON THIS PAGE; SIGNATURES FOLLOW ON NEXT PAGE]
36
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of
the day and year first written above.
SELLER:
BPP/GOLDEN STATE ACQUISITIONS, L.L.C.,
a Delaware limited liability company
By: ▇▇▇▇▇▇▇ Pacific Operating Partnership, L.P.,
a Delaware limited partnership
Its: Managing Member
By: ▇▇▇▇▇▇▇ Pacific Properties, Inc.,
a Maryland corporation
Its: General Partner
By:
-------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Its: President and CEO
BUYER:
▇▇▇▇▇▇▇▇▇▇ ▇▇, Inc.,
a Texas corporation
Its: General Partner
By:
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Its: President and CEO
37
The undersigned party is joining this Agreement solely for the purpose of
acknowledging and agreeing to the provisions of Article VI hereof and any other
provisions of this Agreement expressly applicable to Title Company.
CHICAGO TITLE COMPANY
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
38