AGREEMENT FOR PURCHASE AND SALE
OF REAL PROPERTY AND ESCROW INSTRUCTIONS
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of this ___ day of ___________, 2002,
by and between PARK SAHARA OFFICE CENTER LIMITED, a Nevada limited partnership
("Seller") and TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company
("Buyer"), with reference to the following facts:
A. Seller owns certain real property located at 1820 thru ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, commonly known as Park
Sahara Office Center and such other assets, as the same are herein
described.
B. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller such real property and the associated assets.
NOW, THEREFORE, in consideration of the mutual covenants, premises and
agreements herein contained, the parties hereto do hereby agree as follows:
1. Purchase and Sale.
1.1. The purchase and sale includes, and at Close of Escrow (hereinafter
defined) Seller shall sell, transfer, grant and assign to Buyer,
Seller's entire right and interest in and to all of the following
(hereinafter sometimes collectively, the "Property"):
1.1.1. That certain real property commonly known as Park Sahara
Office Center, located at 1820 thru ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ and more specifically described in Exhibit
"A" attached hereto, together with all structures,
buildings, improvements, machinery, fixtures, and equipment
affixed or attached to the real property and all easements,
development rights, rights of way, and other rights
appurtenant to the real property (all of the foregoing being
collectively referred to herein as the "Real Property");
1.1.2. All leases (the "Leases"), including associated amendments,
with all persons ("Tenants") leasing the Real Property or
any part thereof or hereafter entered into in accordance
with the terms hereof prior to Close of Escrow, together
with all security deposits, other deposits held in
connection with the Leases,
Lease guarantees and other similar credit enhancements
providing additional security for such Leases;
1.1.3. All tangible and intangible personal property owned by
Seller located on or used in connection with the Real
Property, including, specifically, without limitation,
equipment, furniture, tools and supplies, and all related
intangibles including Seller's interest in the name "Park
Sahara Office Complex" (the "Personal Property")
1.1.4. All service contracts, agreements, warranties and guaranties
relating to the operation, use or maintenance of the
Property (the "Contracts"); and
1.1.5. All building permits, certificates of occupancy and other
certificates, permits, licenses and approvals relating to
the Property, originals of which will be delivered to Escrow
Holder (hereinafter defined) at the Close of Escrow
(hereinafter defined) to the extent the same are in Seller's
possession (the "Permits").
2. Purchase Price.
The total Purchase Price of the Property shall be Twelve Million Two
Hundred Thousand And No/100 Dollars ($12,200,000.00) ("Purchase Price")
payable as follows:
2.1. Deposit/Further Payments.
2.1.1. Within two (2) business days after the expiration of the Due
Diligence Period and if the Buyer has not terminated this
Agreement Buyer shall deposit into Escrow (hereinafter
defined) the amount of Two Hundred Thousand And No/100
Dollars ($200,000.00) (the "Deposit"), in the form of a wire
transfer payable to Old Republic Title Company, Las Vegas,
Nevada ("Escrow Holder"). Escrow Holder shall place the
Deposit into an interest bearing money market account at a
bank or other financial institution reasonably satisfactory
to Buyer, and interest thereon shall be credited to Buyer's
account and shall be deemed to be part of the Deposit. The
Deposit shall become non refundable, provided that, the
Lender approves Buyer's assumption of the loan as herein
defined except in the event of (a) a default by Seller, (b)
a casualty or condemnation which gives the Buyer the right
to terminate this Agreement or (c) a failure of a Buyer
condition precedent. In the event that this Agreement is
terminated by Buyer in accordance with its terms,
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the Deposit shall be immediately and automatically paid over
to Buyer without the need for any further action by either
party hereto.
2.1.2. Reserved
2.1.3. On or before Close of Escrow, Buyer shall deposit with the
Escrow Holder to be held in Escrow the balance of the
Purchase Price less (i) a $7,400,000 loan (the "Loan") made
by IDS (a subsidiary of Shearson American Express) and (ii)
$1,000,000, representing the Seller financing, in
immediately available funds by wire payable to Escrow Holder
except that the First Trust Deed may be adjusted down to
$7,150,000 and the Second Trust Deed increased to provide
aggregate financing of $8,400,000.
3. Title to Property.
3.1. Title Insurance.
Seller will, at Seller's sole expense, cause Escrow Holder to issue an
Extended Coverage ALTA Owner's Policy of Title Insurance (the "Title
Policy") from Old Republic Title Company (the "Title Company") for and
on behalf of Buyer in the total amount of the Purchase Price and
obtainable at standard rates insuring good, marketable and insurable
title in and to the Real Property. The Title Policy shall be free and
clear of exceptions except as follows:
3.1.1. Real property taxes and assessments, which are a lien not
yet due;
3.1.2. The Permitted Exceptions (hereinafter defined) included in
such policy and approved by Buyer as herein described.
3.2. Procedure for Approval of Title.
Seller shall, no later than the approval date of all other books and
records, but, prior to Buyer's physical inspection, provide to Buyer a
current title insurance commitment for the Real Property, including
good and legible copies of all related items certified as exceptions
thereto (the "Title Documents"). Buyer shall have thirty (30) days
following receipt of the later Title Documents and the 1997 Survey
(hereinafter defined) to review and approve, in writing, the condition
of the title to the Real Property ("Title Review Period"). If the
Title
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Documents (or the Survey) reflect or disclose any defect, exception or
other matter affecting the Real Property ("Title Defects") that is
unacceptable to Buyer, then Buyer shall provide Seller with written
notice of Buyer's objections no later than the conclusion of the Title
Review Period; provided, however, if Buyer shall fail to notify Seller
in writing within the Title Review Period either that the condition of
title is acceptable or of any specific objections to the state of
title to the Real Property, then Buyer shall be deemed to have
objected to all exceptions to title or other conditions or matters
which are shown on the Survey or described in the Title Documents.
Seller may, at its sole option, elect, by written notice given to
Buyer within three (3) days following the conclusion of the Title
Review Period ("Seller's Notice Period"), to cure or remove the
objections made or deemed to have been made by Buyer; provided,
however, Seller shall in all events have the obligation to (i) act in
good faith in making such election and curing any Title Defects that
Seller elects to cure, (ii) specifically remove any monetary
encumbrances affecting the Real Property, and (iii) remove any Title
Defect that attaches to the Real Property subsequent to the conclusion
of the Title Review Period. The failure of Seller to deliver written
notice electing to cure any or all such objected to exceptions during
the Seller's Notice Period shall be deemed an election by Seller not
to cure such exceptions. Should Seller elect to attempt to cure or
remove any objection, Seller shall have fifteen (15) days from the
conclusion of the Title Review Period ("Cure Period") in which to
accomplish the cure. In the event Seller elects (or is deemed to have
elected) not to cure or remove any objection, then Buyer shall be
entitled, as Buyer's sole and exclusive remedies, either to (i)
terminate this Agreement and obtain a refund of the Deposit or (ii)
waive any objections that Seller has not elected to cure and close
this transaction as otherwise contemplated herein. The failure of
Buyer to provide written notice to Seller within ten (10) days
following the expiration of the Seller's Notice Period waiving any
objections Seller has not elected to cure shall be deemed an election
by Buyer to terminate this Agreement. Any exceptions to title accepted
by Buyer pursuant to the terms of this paragraph shall be deemed
"Permitted Exceptions."
4. Due Diligence Items.
4.1. Seller shall, within ten (10) days following Buyer's request (the
"Delivery Date"), deliver to Buyer each of the following
(collectively, the "Due Diligence Items"):
4.1.1. An ALTA survey of the Real Property dated 1997 (the
"Survey");
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4.1.2. Copies of all Leases presently in effect with respect to the
Real Property, together with any amendments or modifications
thereof;
4.1.3. A "rent roll" with respect to the Real Property for the
calendar month immediately preceding the date that a fully
executed copy of this Agreement is received by the Buyer,
showing with respect to each Tenant of the Real Property:
(1) the name of the Tenant, (2) the number of rentable
square feet in Tenant's premises as set forth in Tenant's
Lease, (3) the current monthly base rental payable by such
Tenant, (4) the term of the Lease, (5) any available options
for the Tenant under the Lease; and (6) the amount of any
security deposit;
4.1.4. A "rent roll" current as of December 2000, 2001 and 2002
year to date;
4.1.5. An aging report showing, with respect to each Tenant of the
Real Property, the date through which such Tenant has paid
rent and a Tenant by Tenant monthly aging report for the
preceding 24 months and showing any rents paid on a
delinquent basis, if any;
4.1.6. A list of all contracts, including service contracts,
warranties, management, maintenance, leasing commission or
other agreements affecting the Real Property, if any,
together with copies of the same;
4.1.7. All site plans, leasing plans, as-built plans, drawings,
environmental, mechanical, electrical, structural, soils and
similar reports and/or audits and plans and specifications
relative to the Real Property in the possession of Seller or
under the control of Seller, if any;
4.1.8. True and correct copies of the real estate and personal
property tax statements covering the Property or any part
thereof for each of the two (2) years prior to the current
year and, if available, for the current year;
4.1.9. A schedule of all current or pending litigation with respect
to the Real Property or any part thereof, if any, or
otherwise with respect to Seller that might have a material
adverse effect on Seller's ability to perform hereunder,
together with a brief description of each such proceeding;
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4.1.10. Operating statements for the Real Property five (5) years,
for any periods during which Seller was owner of the Real
Property;
4.1.11. Copies of Tenant files and records relating to the ownership
and operation of the Real Property (provided, however, with
Buyer's consent such files and records may be made available
for inspection by Buyer during ordinary business hours at
Seller's management office);
4.1.12. An inventory of all personal property located on the Real
Property which is used in the maintenance of the Real
Property or stored for future use with the Real Property;
4.1.13. Copies of existing loan documents and notes affecting the
Real Property, if loan is to be assumed;
4.1.14. Copies of utility bills for the Real Property for the
calendar years 2000, 2001 and 2002 year to date;
4.1.15. Reserved;
4.1.16. Reserved;
4.1.17. Seller's most recent Environmental Impact Report for the
Real Property; and
4.1.18. Reserved.
4.2. Estoppel Certificates.
Seller shall obtain and deliver to Buyer, no later than ten (10) days
prior to Close of Escrow, estoppel certificates from (a) Old Republic
Title Company, Dept. of Education, Nevada/Appeals, ABPA (3 suites),
The ▇▇▇▇▇▇▇▇ Law Firm, Answer Plus, Inc., Consumer Affairs, Nevada
Public Works Board (the "Major Tenants") and (b) seventy five percent
(75%) of all remaining Tenants of the Real Property (measured by
square footage occupied) (the "Required Percentage Estoppels"), in all
cases in a form provided by, or otherwise approved by, Buyer. In the
event Seller is unable to obtain the Required Percentage Estoppels
despite diligent efforts to do so, Seller may deliver to Buyer an
estoppel certificate executed by Seller and otherwise in form approved
by Buyer covering sufficient estoppels that, together with those
obtained, equal the Required Percentage Estoppels; provided, however,
Seller shall thereafter continue to use diligent efforts to obtain an
estoppel
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certificate executed by any such Tenant. Whether executed by the
Tenant or by Seller, the matters certified in the estoppel
certificates shall be subject to Buyer's reasonable approval. Buyer
shall notify Seller within three (3) business days following receipt
of a copy of any executed estoppel certificate of Buyer's approval or
disapproval and the basis of such disapproval, if disapproved. If (a)
Buyer reasonably disapproves of any estoppel certificate, and Seller
is unable to deliver a reasonably acceptable estoppel certificate
prior to the Close of Escrow, and, without such estoppel certificate
Seller will have failed to deliver the Required Percentage Estoppels
or (b) Seller is unable to deliver acceptable forms of the Major
Estoppels, this Agreement shall automatically terminate, Buyer shall
be entitled to a refund of the Deposit without any further action
required by any party, and neither party shall have any further
obligation to the other. In addition to the foregoing, Seller shall
use diligent efforts to obtain any and all subordination, attornment
and non-disturbance agreements required by Buyer's lender.
5. Inspections.
5.1. Procedure; Indemnity.
Buyer, at its sole expense, shall have the right to conduct a
feasibility, environmental, engineering and physical study of the Real
Property at any time from and after the Delivery Date and for a period
of sixty (60) days (30 days for books and records and 30 days for
physical inspection) thereafter (the "Due Diligence Period");
provided, however, if the Due Diligence Items are not delivered on the
Delivery Date, the commencement of the Due Diligence Period shall
automatically be extended for a period equal to the associated delay
in delivery of such materials beyond the Delivery Date, but, in no
event, beyond August 30, 2002. Buyer and its duly authorized agents or
representatives shall be permitted to enter upon the Real Property at
all reasonable times during the Due Diligence Period in order to
conduct engineering studies, soil tests and any other inspections
and/or tests that Buyer may deem necessary or advisable (collectively,
the "Inspections"). Buyer agrees to promptly discharge any liens that
may be imposed against the Real Property as a result of Buyer's
Inspections and to defend, indemnify and hold Seller harmless from all
claims, suits, losses, costs, expenses (including without limitation
court costs and attorneys' fees), liabilities, judgments and damages
incurred by Seller as a result of any Inspections performed by Buyer.
5.2. Approval.
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5.2.1. Buyer shall have until the conclusion of the Due Diligence
Period (as the same may be extended in accordance with the
terms of Paragraph 5.1 above) to approve or disapprove of
the Inspections and the Due Diligence Items enumerated in
Paragraph 4. If Buyer shall fail to deliver a written notice
to Seller within the Due Diligence Period approving the
condition of the Real Property this Agreement shall
thereupon be automatically terminated, Buyer shall not be
entitled to purchase the Real Property, Seller shall not be
obligated to sell the Real Property to Buyer and the parties
shall be relieved of any further obligation to each other
with respect to the Real Property 5.2.2. Notwithstanding
anything to the contrary contained herein, Buyer hereby
agrees that in the event this Agreement is terminated for
any reason, then Buyer shall promptly and at its sole
expense return to Seller all Due Diligence Items which have
been delivered by Seller to Buyer in connection with Buyer's
inspection of the Real Property.
6. Escrow.
6.1. Opening.
Purchase and sale of the Property shall be consummated through an
escrow ("Escrow") to be opened with Escrow Holder within two (2)
business days of the expiration of the Due Diligence Period or sooner
if Buyer has completed and approved all Due Diligence Inspection (the
"Opening of Escrow"). This Agreement shall be considered as the Escrow
instructions between the parties, with such further consistent
instructions as Escrow Holder shall require in order to clarify its
duties and responsibilities. If Escrow Holder shall require further
Escrow instructions, Escrow Holder may prepare such instructions on
its usual form. Such further instructions shall, so long as not
inconsistent with the terms of this Agreement, be promptly signed by
Buyer and Seller and returned to Escrow Holder within three (3)
business days of receipt thereof. In the event of any conflict between
the terms and conditions of this Agreement and any further Escrow
instructions, the terms and conditions of this Agreement shall
control.
6.2. Close of Escrow.
Escrow shall close at a mutually agreeable date ("Close of Escrow")
within sixty (60) days after the expiration of the Due Diligence
Period
6.3. Buyer Required to Deliver.
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Buyer shall deliver to Escrow the following:
6.3.1. In accordance with Paragraph 2, the Deposit;
6.3.2. On or before Close of Escrow, the balance of the Purchase
Price; provided, however that Buyer shall not be required to
deposit the balance of the Purchase Price into Escrow until
Buyer has been notified by Escrow Holder that (i) Seller has
delivered to Escrow each of the documents and instruments to
be delivered by Seller in connection with Buyer's purchase
of the Property, (ii) Title Company has committed to issue
and deliver the Title Policy to Buyer, and (iii) the only
impediment to Close of Escrow is delivery of such amount by
or on behalf of Buyer;
6.3.3. On or before Close of Escrow, such other documents as Escrow
Holder may require from Buyer in order to issue the Title
Policy;
6.3.4. An original Assignment and Assumption Agreement, duly
executed by Buyer assuming all of Seller's right, title and
interest in and to the Leases, the Permits and the Contracts
from and after the Close of Escrow; and
6.3.5. A Loan Assumption Agreement pursuant to which the Buyer
assumes the Loan;
6.3.6. $1,000,000 promissory note in the form attached hereto as
Exhibit "B" payable to the Seller (the "Deferred Note") and
with interest payable at the rate of 7% and all principal
payable on September 1, 2007;
6.3.7. A deed of trust in the form attached hereto as Exhibit "C"
securing the Deferred Note.
6.4. Seller Required to Deliver.
On or before Close of Escrow, Seller shall deliver to Escrow or Buyer,
as applicable, the following:
6.4.1. A duly executed and acknowledged Warranty Deed, conveying
fee title to the Real Property in favor of Buyer;
6.4.2. A completed Certificate of Non-Foreign Status, duly executed
by Seller under penalty of perjury;
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6.4.3. Reserved;
6.4.4. A ▇▇▇▇ of Sale, for the Personal Property, if any, in favor
of Buyer and duly executed by Seller;
6.4.5. Such other documents as Escrow Holder may require from
Seller in order to issue the Title Policy;
6.4.6. Tenant's estoppel certificates as required by and provided
for in Paragraph 4.2;
6.4.7. An original Assignment and Assumption Agreement duly
executed and acknowledged by Seller, assigning all of
Seller's interest in and to the Leases, Contracts and
Permits to Buyer from and after the Close of Escrow;
6.4.8. To Buyer, all keys to all buildings and other improvements
located on the Real Property, combinations to any safes
thereon, and security devices therein in Seller's
possession;
6.4.9. A letter from Seller addressed to each Tenant informing such
Tenant of the change in ownership as set forth;
6.4.10. To Buyer, the original Leases; and
6.4.11. To Buyer, all records and files relating to the management
or operation of the Real Property, including, without
limitation, all insurance policies, all security contracts,
all tenant files (including correspondence), property tax
bills, and all calculations used to prepare statements of
rental increases under the Leases and statements of common
area charges, insurance, property taxes and other charges
which are paid by Tenants of the Real Property.
6.4.12. To Buyer, the services of Seller's Property Manager for the
purpose of assisting Buyer with orientation for a period of
90 days at Seller's expense.
6.5. Buyer's Costs.
Buyer shall pay the following:
6.5.1. One-half (1/2) of Escrow Holder's fee, costs and expenses;
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6.5.2. The cost of recording Second Trust Deed and the Loan
Assumption Agreement and the assumption fee charged by the
lender; and
6.5.3. All other costs customarily borne by purchasers of real
property in ▇▇▇▇▇ County, Nevada.
6.6. Seller's Costs.
Seller shall pay the following:
6.6.1. One-half (1/2) of Escrow Holder's fees, costs and expenses;
6.6.2. The cost of recording the Warranty Deed and any transfer
tax;
6.6.3. Escrow Holder premium for the Title Policy; and
6.6.4. All other costs customarily borne by sellers of real
property in ▇▇▇▇▇ County, Nevada; and
6.6.5. The cost to buy down the interest rate on the loan by 1% to
7%.
6.7. Prorations.
6.7.1. Real property taxes, personal property taxes, assessments,
rents, and CAM expenses shall be prorated through Escrow
between Buyer and Seller as of Close of Escrow. All security
deposits shall be paid over to Buyer. Rents and CAM expenses
shall be approved by Buyer prior to Close of Escrow. Any
delinquent rents attributable to periods prior to the Close
of Escrow and which are collected by Buyer or Seller shall
be retained by or paid to Seller; provided, however, that
any amounts collected by Buyer or Seller shall be first
applied to any rents then due to Buyer and, if collected by
Seller, remitted to Buyer for such purpose. Seller shall
have the right to pursue any Tenant for delinquent rent, but
shall not (a) cause Tenant to be delinquent for their
current rent or become financially unstable or (b) have the
right to seek eviction of the Tenant by unlawful detainer or
other means. Tax and assessment prorations shall be based on
the latest available tax ▇▇▇▇. If after Close of Escrow
either party receives any further or supplemental tax ▇▇▇▇
relating to any period prior to Close of Escrow, the
recipient shall promptly deliver a copy of such tax ▇▇▇▇ to
the other party, and not later than ten (10) days prior to
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the delinquency date shown on such tax ▇▇▇▇ Buyer and Seller
shall deliver to the taxing authority their respective
shares of such tax ▇▇▇▇, prorated as of Close of Escrow. All
prorations shall be based on a 360-day year.
6.7.2. All leasing commissions owing and tenant improvements with
respect to the Real Property entered into prior to execution
of the Agreement including, but not limited to, commissions
for lease renewals and expansion options, shall be paid by
Seller, and Seller shall indemnify and hold Buyer harmless
for lease commission claims brought against the Real
Property arising therefrom. All leasing commissions and
tenant improvement costs for new Leases executed after the
date of this Agreement shall be prorated between Buyer and
Seller as their respective periods of ownership bears to the
primary term of the new Lease subject, in all events, to the
prior approval of said Leases as herein provided by Buyer
pursuant to Paragraph 7.3.
6.7.3. Seller agrees to indemnify and hold Buyer harmless from any
and all liabilities, claims, demands, suits, and judgments,
of any kind or nature, including court costs and reasonable
attorney fees (except those items which under the terms of
this Agreement specifically become the obligation of Buyer),
brought by third parties and based on events occurring on or
before the Close of Escrow and which are in any way related
to the Property.
6.7.4. Buyer agrees to indemnify and hold Seller harmless of and
from any and all liabilities, claims, demands, suits and
judgments, of any kind or nature, including court costs and
reasonable attorneys fees, brought by third parties and
based on events occurring subsequent to the Close of Escrow
and which are in any way related to the Property.
6.8. Determination of Dates of Performance.
Promptly after the Opening of Escrow, Escrow Holder shall prepare and
deliver to Buyer and Seller a schedule which shall state each of the
following Projected Dates:
6.8.1. The date by which the amounts described in Paragraph 2 must
be deposited by Buyer, for which determination Escrow Holder
shall assume satisfaction of the condition expressed in
Paragraph 2 on the last date stated for its satisfaction;
and (September 17th)
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6.8.2. The date of Close of Escrow pursuant to Paragraph 6.2.
(November 17, 2002)
If any events which determine any of the aforesaid dates occur on a
date other than the date specified or assumed for its occurrence in
this Agreement, Escrow Holder shall promptly redetermine as
appropriate each of the dates of performance in the aforesaid schedule
and notify Buyer and Seller of the dates of performance, as
redetermined.
7. Seller Representations, Warranties, and Covenants
7.1. Representations and Warranties.
Seller hereby represents and warrants as of the date hereof and as of
the Close of Escrow by appropriate certificate to Buyer as follows:
7.1.1. Seller is a limited partnership duly formed and validly
existing under the law of the State of Nevada. Seller has
full power and authority to enter into this Agreement, to
perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance
of this Agreement and all documents contemplated hereby by
Seller have been duly and validly authorized by all
necessary action on the part of Seller and all required
consents and approvals have been duly obtained and will not
result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, agreement or
instrument to which Seller is a party or otherwise bound.
This Agreement is a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its
terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar laws affecting the rights of creditors generally.
7.1.2. Seller has good and marketable title to the Real Property,
subject to the Permitted Exceptions. There are no
outstanding rights of first refusal, rights of reverter or
options relating to the Real Property or any interest
therein. To Seller's knowledge, there are no unrecorded or
undisclosed documents or other matters which affect title to
the Real Property. Subject to the Leases, Seller has enjoyed
the continuous and uninterrupted quiet possession, use and
operation of the Real Property, without material complaint
or objection by any person.
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7.1.3. Seller is not a "foreign person" within the meaning of
Section 1445(f) of the Internal Revenue Code.
7.1.4. There are no on-site employees of Seller at the Real
Property, and following the Close of Escrow, Buyer shall
have no obligation to employ or continue to employ any
individual employed by Seller or its affiliates in
connection with the Real Property.
7.1.5. Except as set forth on any schedule of litigation delivered
pursuant to Paragraph 4.1.9, there are no actions, suits or
proceedings pending, or to the best of Seller's knowledge,
threatened against Seller and affecting any portion of the
Real Property, at law or in equity, or before or by any
federal, state, municipal, or other governmental court,
department, commission, board, bureau, agency, or
instrumentality, domestic or foreign.
7.1.6. Seller has not received any notice of any violations of any
ordinance, regulation, law, or statute of any governmental
agency pertaining to the Real Property or any portion
thereof.
7.1.7. There are no unpaid bills, claims, or liens in connection
with any construction or repair of the Real Property except
for those that will be paid in the ordinary course of
business prior to Close of Escrow or which have been bonded
over or the payment of which has otherwise been adequately
provided for to the satisfaction of Buyer.
7.1.8. Seller has not experienced any material physical or
mechanical defects in the buildings or any material
settlement or earth movement affecting the Real Property.
7.1.9. To Seller's knowledge, the zoning of the Real Property
permits the current building and use of the Real Property,
and to Seller's knowledge there is no pending, or
contemplated, rezoning. To Seller's knowledge, the Real
Property complies with all applicable subdivision laws and
all local ordinances enacted thereunder and no subdivision
or parcel map not already obtained is required to transfer
the Real Property to Buyer.
7.1.10. The information in the Rent Roll is true, correct, and
complete. Seller has or will pursuant to Paragraph 4 and
Paragraph 7.3 deliver to Buyer true, accurate and complete
copies of all of the Leases and there are no leases,
subleases, licenses, occupancies
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or tenancies in effect pertaining to any portion of the Real
Property, and no persons, tenants or entities occupy space
in the Real Property, except as stated in the Rent Roll, a
copy of which is attached hereto as Exhibit "D". There are
no options or rights to renew, extend or terminate the
Leases or expand any Lease premises, except as shown in the
Rent Roll and the Leases. No brokerage commission or similar
fee is due or unpaid by Seller with respect to any Lease,
and there are no written or oral agreements that will
obligate Buyer, as Seller's assignee, to pay any such
commission or fee under any Lease or extension, expansion or
renewal thereof. The Leases and any guaranties thereof are
in full force and effect, and are subject to no defenses,
setoffs or counterclaims for the benefit of the Tenants
thereunder. Neither Seller nor, to Seller's knowledge, any
Tenant is in default under its Lease. Seller is in full
compliance with all of the landlord's obligations under the
Leases, and Seller has no obligation to any Tenant under the
Leases to further improve such Tenant's premises or to grant
or allow any rent or other concessions. No rent or other
payments have been collected in advance for more than one
(1) month and no rents or other deposits are held by Seller,
except the security deposits described on the Rent Roll and
rent for the current month. Each rental concession, rental
abatement or other benefit granted to Tenants under the
Leases will have been fully utilized prior to the Close of
Escrow.
7.1.11. To Seller's knowledge, there are no presently pending or
contemplated proceedings to condemn the Real Property or any
part of it.
7.1.12. To Seller's knowledge, all water, sewer, gas, electric,
telephone and drainage facilities, and all other utilities
required by law or by the normal operation of the Real
Property are connected to the Real Property and are adequate
to service the Real Property in its present use and normal
usage by the Tenants and occupants of the Real Property and
are in good working order and repair.
7.1.13. To Seller's knowledge, Seller has all licenses, permits
(including, without limitation, all building permits and
occupancy permits), easements and rights-of-way which are
required in order to continue the present use of the Real
Property and ensure adequate vehicular and pedestrian
ingress and egress to the Real Property.
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7.1.14. Except for the Contracts, there are no agreements or other
obligations which may affect the current use of the Real
Property. Seller has fully performed all of the obligations
required to be performed by Seller under the Contracts, and
to Seller's knowledge, the other parties to the same are not
in default thereunder.
7.1.15. The operating statements furnished to Buyer in connection
with or pursuant to this Agreement (a) accurately reflect
the financial condition of the Real Property as of the date
thereof and (b) do not fail to state any material liability,
contingent or otherwise, or any other facts the omission of
which would be misleading.
7.1.16. Seller has no knowledge of nor received any written notice
of violation issued pursuant to any environmental law with
respect to the Real Property or any use or condition
thereof. There are no above-ground or underground storage
tanks located on the Real Property.
7.1.17. Seller has not released and, to the best of Seller's
knowledge, there has been no release of, any pollutant or
hazardous substance of any kind onto or under the Real
Property that affects the Real Property or that would result
in the prosecution of any claim, demand, suit, action or
administrative proceeding against Buyer as owner of the Real
Property based on any environmental requirements of state,
local or federal law including, but not limited to, the
Comprehensive Environmental Response Compensation and
Liability Act of 1980, U.S.C. 9601 et seq.
7.1.18. Since the date of the Survey (a) the Seller has not conveyed
any of the Real Property; (b) constructed any improvement on
the Real Property nor has any adjoining property owner
constructed any improvement on the Real Property and (c)
granted any easement on the Real Property.
7.1.19. No litigation pending or threatened with respect to the Real
Property or any part thereof.
7.2. Indemnity; Survival.
The foregoing representations and warranties of Seller are made by
Seller as of the date hereof and again as of Close of Escrow and shall
survive the Close of Escrow for a period of one year and shall not be
merged as of the date of the Close of Escrow hereunder. Seller shall
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indemnify and defend Buyer against and hold Buyer harmless from, and
shall be responsible for all claims, demands, liabilities, losses,
damages, costs and expenses, including reasonable attorney's fees,
that may be suffered or incurred by Buyer, including any third party
due diligence expenses incurred by Buyer, if any representation or
warranty made by Seller is untrue or incorrect in any material respect
when made. The terms of Seller's indemnity set forth above with
respect to the representations and warranties made herein shall
survive for a period of one year following the Close of Escrow.
7.3. Covenants of Seller. Seller hereby covenants from and after the date
of this Agreement as follows:
7.3.1. To cause to be in force fire and extended coverage insurance
upon the Real Property, and public liability insurance with
respect to damage or injury to persons or property occurring
on the Real Property in at least such amounts as are
maintained by Seller on the date hereof.
7.3.2. That any building constituting an improvement on the Real
Property will be in the same physical condition at the Close
of Escrow that it was at the date of Buyer's inspection, and
that all normal maintenance has been conducted from and
after the expiration of the Due Diligence Period in the same
fashion as prior to the expiration of the Due Diligence
Period.
7.3.3. To not enter into any new lease with respect to the Real
Property, without Buyer's prior written consent, which shall
not be unreasonably withheld. Exercise of a mandatory
renewal option shall not be considered a new lease. To the
extent specifically disclosed to Buyer in connection with
any request for approval, any brokerage commission and the
cost of Tenant improvements or other allowances payable with
respect to a new Lease shall be prorated between Buyer and
Seller in accordance with their respective periods of
ownership as it bears to the primary term of the new Lease.
Further, Seller will not modify or cancel any existing Lease
covering space in the Real Property without first obtaining
the written consent of Buyer which shall not be unreasonably
withheld. Buyer shall have five (5) business days following
receipt of a request for any consent pursuant to this
paragraph in which to approve or disapprove of any new Lease
or any modification or cancellation of any existing Lease.
Failure to respond in writing within said time period shall
be deemed to be consent. Seller's execution of a new lease
or modification or cancellation of an existing Lease
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following Buyer's reasonable refusal to consent thereto
shall constitute a default hereunder.
7.3.4. To not sell, assign, or convey any right, title, or interest
whatsoever in or to the Real Property, or create or permit
to attach any lien, security interest, easement,
encumbrance, charge, or condition affecting the Real
Property (other than the Permitted Exceptions).
7.3.5. To not, without Buyer's written approval, (a) amend or waive
any right under any Contract, or (b) enter into any service,
operating or maintenance agreement affecting the Real
Property that would survive the Close of Escrow.
7.3.6. To fully and timely comply with all obligations to be
performed by it under the Leases and Contracts, and all
Permits, licenses, approvals and laws, regulations and
orders applicable to the Real Property.
7.3.7. To provide Buyer with monthly rent rolls containing the same
information in its rent roll delivered pursuant to Section
4.1.3.
7.3.8. To provide Buyer with copies of (a) any default letters sent
to tenants and, (b) any copies of correspondence received
from a Tenant that it is "going dark" or seeking to
re-negotiate its lease and (c) notices of bankruptcy filings
received with respect to any Tenant.
8. Buyer Representations and Warranties.
Buyer hereby represents and warrants to Seller as of the date hereof and as
of the Close of Escrow by appropriate certificate that Buyer is a limited
liability company duly organized and validly existing under the laws of
Virginia. Buyer has full power and authority to enter into this Agreement,
to perform this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and all
documents contemplated hereby by Buyer have been duly and validly
authorized by all necessary action on the part of Buyer and all required
consents and approvals have been duly obtained and will not result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, agreement or instrument to which Buyer is a party or
otherwise bound. This Agreement is a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting the rights of
creditors generally.
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9. Conditions Precedent to Close of Escrow
9.1. Conditions Precedent.
The obligations of Buyer to purchase the Property pursuant to this
Agreement shall, at the option of Buyer, be subject to the following
conditions precedent:
9.1.1. All of the representations, warranties and agreements of
Seller set forth in this Agreement shall be true and correct
in all material respects as of the date hereof and as of the
Close of Escrow, and Seller shall not have on or prior to
the Close of Escrow, failed to meet, comply with or perform
in any material respect any covenants or agreements on
Seller's part as required by the terms of this Agreement.
9.1.2. There shall be no change in the matters reflected in the
Title Documents, and there shall not exist any encumbrance
or title defect affecting the Real Property not described in
the Title Documents except for the Permitted Exceptions or
matters to be satisfied at the Close of Escrow.
9.1.3. Unless Seller receives notice from Buyer at least thirty
(30) days prior to the Close of Escrow, effective as of the
Close of Escrow, any management agreement affecting the Real
Property shall be terminated by Seller and any and all
termination fees incurred as a result thereof shall be the
sole obligation of Seller.
9.1.4. Seller shall have operated the Real Property from and after
the date hereof in substantially the same manner as prior
thereto.
9.1.5. Seller shall deliver to Buyer copies of Tenant insurance
certificates.
9.1.6. No Major Tenant shall be in default under its lease nor
shall any Major Tenant have (i) given notice that it is
discontinuing operations at the Real Property (ii) filed
bankruptcy or sought any similar debtor protective measure
or (iii) gone dark.
9.1.7. Reserved.
9.1.8. If any security deposit is in a form other than cash, the
instrument constituting the security deposit must be
reissued in Buyer's name or else a cash escrow equal to the
amount of the
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security deposit will be established at closing until the
instrument is reissued in Buyer's name.
9.1.9. In the event that after the expiration of the Due Diligence
Period any Tenant, other than a Major Tenant, goes dark,
files for bankruptcy, seeks protection under any other
debtor protection law or gives notice that it is vacating
the premises prior to the expiration of its Lease, the Buyer
shall be required to enter into a master lease for that
Tenant's Space for the remainder of the term of the Lease at
the rent payable under the lease including, but not limited
to, all CAM charges, insurance reimbursements, and tax
reimbursements.
9.2. Effect of Failure.
If Buyer notifies Seller of a failure to satisfy the conditions
precedent set forth in this Paragraph 9, Seller may, within five (5)
days after receipt of Buyer's notice, agree to satisfy the condition
by written notice to Buyer, and Buyer shall thereupon be obligated to
close the transaction provided (a) Seller so satisfies such condition
and (b) no such right to cure shall extend the Close of Escrow. If
Seller fails to agree to cure or fails to cure such condition by the
Close of Escrow, this Agreement shall be automatically terminated, the
Deposit shall be returned to Buyer without any further action required
from either party and neither party shall have any continuing
obligations hereunder; provided, however, if such failure constitutes
a breach or default of its covenants, representations or warranties
Seller shall remain liable for such breach or default as otherwise set
forth in this Agreement.
10. Damage or Destruction Prior to Close of Escrow
In the event that the Real Property should be damaged by any casualty prior
to Close of Escrow, then Seller shall promptly provide Buyer with written
notice of such casualty. If the cost of repairing such damage, as estimated
by an architect or contractor retained pursuant to the mutual agreement of
the parties, is (a) less than One Hundred Thousand Dollars ($100,000), the
Close of Escrow shall proceed as scheduled and any insurance proceeds, plus
the cash amount of any associated deductible, shall be paid over to Buyer;
or (b) greater than One Hundred Thousand Dollars ($100,000), then Buyer may
in its discretion either (i) elect to terminate this Agreement, in which
case the Deposit shall be returned to Buyer without any further action
required from either party and neither party shall have any further
obligation to the other or (ii) proceed to Close of Escrow in which event
any insurance proceeds, plus the cash amount of any associated deductible,
shall be paid over to Buyer.
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The foregoing notwithstanding, in the event any casualty results in the
cancellation of, or rental abatement under, any Lease, Buyer shall have the
option to terminate this Agreement without regard to the cost of repairs.
Any notice required to terminate this Agreement pursuant to this Paragraph
shall be delivered no later than thirty (30) days following Buyer's receipt
of Seller's notice of such casualty.
11. Eminent Domain
If, before the Close of Escrow, proceedings are commenced for the taking by
exercise of the power of eminent domain of all or a material part of the
Real Property which, as reasonably determined by Buyer, would render the
Real Property unacceptable to Buyer or unsuitable for Buyer's intended use,
Buyer shall have the right, by giving written notice to Seller within
thirty (30) days after Seller gives notice of the commencement of such
proceedings to Buyer, to terminate this Agreement, in which event this
Agreement shall automatically terminate, the Deposit shall be returned to
Buyer without any further action required from either party and neither
party shall have any continuing obligations hereunder. If, before the Close
of Escrow, proceedings are commenced for the taking by exercise of the
power of eminent domain of less than a material part of the Real Property,
or if Buyer has the right to terminate this Agreement pursuant to the
preceding sentence but Buyer does not exercise such right, then this
Agreement shall remain in full force and effect and, on the Close of
Escrow, the condemnation award (or, if not theretofore received, the right
to receive such portion of the award) payable on account of the taking
shall be assigned, or paid to, Buyer. Seller shall give written notice to
Buyer within three (3) business days after Seller's receiving notice of the
commencement of any proceedings for the taking by exercise of the power of
eminent domain of all or any part of the Real Property.
12. Notices.
All notices, demands, or other communications of any type given by any
party hereunder, whether required by this Agreement or in any way related
to the transaction contracted for herein, shall be void and of no effect
unless given in accordance with the provisions of this Paragraph. All
notices shall be in writing and delivered to the person to whom the notice
is directed, either (a) in person, (b) by United States Mail, as a
registered or certified item, return receipt requested, (c) by telecopy or
(d) by a nationally recognized overnight delivery courier. Notices
delivered by telecopy or overnight courier shall be deemed received on the
business day following transmission. Notices delivered by certified or
registered mail shall be deemed delivered three (3) days following posting.
Notices shall be given to the following addresses:
Seller: Park Sahara Office Center Limited
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Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
C/o National Equity Investments, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With Required Copy to: ----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
Buyer: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
TRIPLE NET PROPERTIES, LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ Fax
With Required Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ Fax
13. Remedies
13.1. Defaults by Seller. If there is any default by Seller under this
Agreement, following notice to Seller and seven (7) days thereafter
during which period Seller may cure the default, Buyer may at its
option, either (a) declare this Agreement terminated in which case
the Deposit shall be returned to Buyer without any further action
required from either party, and bring an action for any damages
incurred by Buyer or (b) treat the Agreement as being in full force
and effect and bring an action against Seller for specific
performance. The foregoing notwithstanding, no right to cure shall
extend the Close of Escrow.
13.2. Defaults by Buyer. If there is any default by Buyer under this
Agreement, following notice to Buyer and seven (7) days, during which
period Buyer may cure the default, Seller may, as its sole remedy,
declare this Agreement terminated, in which case the Deposit shall be
paid to Seller as liquidated damages and each party shall thereupon
be relieved of all further obligations and liabilities, except any
which survive termination. The foregoing notwithstanding, no right to
cure shall extend the Close of Escrow.
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In the event this Agreement is terminated due to the default of Buyer
hereunder, Buyer shall, in addition, deliver to Seller, at no cost to
Seller, the Due Diligence Items.
14. Assignment.
Buyer may assign any or all of its rights and obligations under this
Agreement to any one or more persons or entities upon notice to Seller;
provided however, that absent the express agreement of Seller, no such
assignment shall release Buyer from its liabilities hereunder and further
provide that the assignee can qualify for the underlying loan.
15. Interpretation and Applicable Law
This Agreement shall be construed and interpreted in accordance with the
laws of the State where the Real Property is located. Where required for
proper interpretation, words in the singular shall include the plural; the
masculine gender shall include the neuter and the feminine, and vice versa.
The terms "successors and assigns" shall include the heirs, administrators,
executors, successors, and assigns, as applicable, of any party hereto.
16. Amendment
This Agreement may not be modified or amended, except by an agreement in
writing signed by the parties. The parties may waive any of the conditions
contained herein or any of the obligations of the other party hereunder,
but any such waiver shall be effective only if in writing and signed by the
party waiving such conditions and obligations.
17. Attorney's Fees
In the event it becomes necessary for either party to file a suit to
enforce this Agreement or any provisions contained herein, the prevailing
party shall be entitled to recover, in addition to all other remedies or
damages, reasonable attorneys' fees and costs of court incurred in such
suit.
18. Entire Agreement; Survival
This Agreement (and the items to be furnished in accordance herewith)
constitutes the entire agreement between the parties pertaining to the
subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings of the parties in connection therewith. No
representation, warranty, covenant, agreement, or condition not expressed
in this Agreement shall be binding upon the parties hereto nor shall affect
or be effective to interpret, change, or restrict the provisions of this
Agreement.
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The obligations of the parties hereunder and all other provisions of this
Agreement shall survive the Close of Escrow or earlier termination of this
Agreement, except as expressly limited herein.
19. Counterparts
This Agreement may be executed in any number of counterparts, all of which
when taken together shall constitute the entire agreement of the parties.
20. Time is of the Essence
Time is of the essence of this Agreement. If the final date of any period
falls upon a Saturday, Sunday, or legal holiday under the laws of the State
of California, then in such event the expiration date of such period shall
be extended to the next day which is not a Saturday, Sunday, or legal
holiday under the laws of the State of California.
21. Real Estate Commission
Seller and Buyer each represent and warrant to the other that neither
Seller nor Buyer has contacted or entered into any agreement with any real
estate broker, agent, finder or any other party in connection with this
transaction, and that neither party has taken any action which would result
in any real estate broker's, finder's or other fees or commissions being
due and payable to any party with respect to the transaction contemplated
hereby, except that Seller has contracted with CB ▇▇▇▇▇▇▇ ▇▇▇▇▇ The ▇▇▇▇▇▇
Team and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as its brokers and will pay a commission to said
brokers of $297,000 and $113,000 respectively and a commission of
$320,000.00 to Triple Net Properties Realty, Inc. if, but only if, the
Close of Escrow occurs pursuant to this Agreement. Such commission shall be
payable upon the Close of Escrow from the proceeds of the Purchase Price
deposited by Buyer. Each party hereby indemnifies and agrees to hold the
other party harmless from any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees) resulting to the other party by
reason of a breach of the representation and warranty made by such party in
this Paragraph.
22. Financing Contingency.
Buyer's obligations under this Agreement are contingent upon Buyer
obtaining approval from the IDS (a subsidiary of Shearson American Express
(the "Lender) for the assumption of the existing loan of record. Seller
will "buy down" the interest rate on the current underlying loan by 1% to
7% and will cooperate with Buyer in increasing the loan amount to
$7,400,000. This underlying structure would result in a split first
consisting of approximately $5,000,000 @7% and $2,400,000 with a target
interest rate of 6.92%. The
24
loan payments would be based on an original 25 year amortization schedule
of which 20 years would be remaining and 5 years remaining on the date
(September 2007). The loan prepayment is subject to a yield maintenance
formula.
Seller would carry back a Second Trust Deed in the amount of $1,000,000 at
rate of 7% interest only, all principal and any accrued interest due
September 1, 2007. Should the Lender decrease the amount of the First Trust
Deed to $7,150,000 or more, then the Seller will increase the Second Trust
Deed under the same terms and conditions, by the amount necessary to
provide $8,400,000 of total financing. Should the lender increase the
interest rate, then the Seller will decrease the interest rate on the
Second Trust deed, such that, the blended rate on the $8,400,000 of
financing, shall not exceed 7%.
THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PARK SAHARA OFFICE COMPLEX
PURCHASE AGREEMENT
EXECUTED on this 14TH day of August, 2002
SELLER:
Park Sahara Office Center Limited
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Title: GENERAL PARTNER
--------------------------
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EXECUTED on this 16 day of August, 2002.
BUYER:
TRIPLE NET PROPERTIES, LLC, a Virginia limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
26
EXHIBIT A
Legal Description of the Real Property