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EXHIBIT 10.18
CONTRIBUTION AGREEMENT
AND ESCROW INSTRUCTIONS
(Rancho Las Palmas Shopping Center)
By and Between
RANCHO LAS PALMAS CENTER ASSOCIATES,
a California limited partnership,
and
PAN PACIFIC RETAIL PROPERTIES, INC.,
a Maryland corporation
Dated for Reference Purposes As Of
August 13, 1999
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CONTRIBUTION AGREEMENT
AND ESCROW INSTRUCTIONS
(Rancho Las Palmas Shopping Center)
This CONTRIBUTION AGREEMENT AND ESCROW INSTRUCTIONS (this "Agreement")
is dated for reference purposes only as of August 13, 1999, and is made to be
effective as of the Effective Date (as hereafter defined), by and between RANCHO
LAS PALMAS CENTER ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP ("Contributor"),
and PAN PACIFIC RETAIL PROPERTIES, INC., A MARYLAND CORPORATION ("Company").
R E C I T A L S :
A. Contributor is the owner of the Property (as hereafter defined),
which consists of a shopping center project containing approximately 168,000
square feet of improvements located at the intersection of Highway 111 and ▇▇▇
▇▇▇▇ Drive in Rancho Mirage, California, as more particularly described in
EXHIBIT A.
B. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, AS TRUSTEE OF THE ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
("Waranch") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, AS TRUSTEE OF THE ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ TRUST
("▇▇▇▇▇▇▇"), are the sole limited partners of Contributor, and are the sole
shareholders of RLP ASSOCIATES, INC., A CALIFORNIA CORPORATION, the sole general
partner of Contributor.
C. PAN PACIFIC (RANCHO MIRAGE), LLC (the "DownREIT LLC"), a limited
liability company qualified under the Internal Revenue Code of 1986, as amended
(the "Code"), will be formed as a real estate investment trust subsidiary.
D. Upon the formation of the DownREIT LLC, PAN PACIFIC RETAIL
PROPERTIES, INC. will assign all of its rights and delegate all of its
obligations under and pursuant to this Agreement as "Company" to the DownREIT
LLC, which will issue and deliver to Contributor Units in exchange for
Contributor's conveyance of the Property to the DownREIT LLC, all as more fully
and particularly below set forth. Upon such assignment and delegation, all
references to Company herein shall refer to the DownREIT LLC.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Contributor and
Company hereby agree as follows:
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ARTICLE I
EFFECTIVE DATE
This Agreement shall be effective on the day (the "EFFECTIVE DATE") when
a fully executed copy of this Agreement (or a fully executed copy in
counterparts) is deposited with Escrow Holder (as hereafter defined). Escrow
Holder is hereby instructed to immediately notify each party to this Agreement
of the Effective Date.
ARTICLE II
DEFINITIONS
The following terms and references shall have the meanings indicated
below (such meanings to be equally applicable to both the singular and plural
forms of the terms defined and to verbs of any tense):
(a) "ADDITIONAL RENTS" means amounts tenants may be obligated to pay as
additional rent, including certain percentage rent, certain escalations in base
rent, and certain pass-throughs of operating and similar expenses.
(b) "▇▇▇▇ OF SALE" means a ▇▇▇▇ of sale as defined in Article III(c).
(c) "BUSINESS DAY" means any day other than a Saturday, Sunday or a
Holiday.
(d) "CLOSING" means the consummation of the transactions contemplated by
this Agreement.
(e) "CLOSING DATE" means the date which is three (3) days after Lender
advises Company that the Assumption has been approved and that Lender is ready
to close the Assumption.
(f) "CLTA POLICY" means a standard coverage owner's policy of title
insurance.
(g) "CONTRIBUTION CONSIDERATION" shall have the meaning set forth in
Section 4.1.
(h) "CONTRACTS" shall have the meaning set forth in Article III(d).
(i) "CONTRACT ASSIGNMENT" shall have the meaning set forth in Article
III(d).
(j) "CONTRIBUTOR'S EQUITY" shall mean the equity, at Closing, of
Contributor in the Property determined by (x) subtracting from the amount of
Twenty Million Two
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Hundred Thousand and No/100ths Dollars ($20,200,000.00) the principal balance,
at Closing, of the loan made by Column Financial, Inc., a Delaware Corporation,
to Contributor, which is secured by a first deed of trust encumbering the
Property (the "Column Financial Deed of Trust"), and (y) adjusting such
difference pursuant to Sections 9.7 and 9.8 below.
(k) "CONTRIBUTOR'S NON-FOREIGN AFFIDAVIT" shall have the meaning set
forth in Section 7.5.
(l) "DEED" shall have the meaning set forth in Article III(a).
(m) "DEPOSIT" shall have the meaning set forth in Section 4.2(a).
(n) "DIMINUTION THRESHOLD" shall have the meaning set forth in Section
13.1(a)(i).
(o) "DOCUMENTS" means the transfer documents attached as Exhibits to
this Agreement.
(p) "EFFECTIVE DATE" shall have the meaning set forth in Article I.
(q) "ENVIRONMENTAL LAWS" shall mean any and all presently existing
federal, state and local laws (whether under common law, statute, rule,
regulation or otherwise), requirements under permits issued with respect
thereto, and other requirements of any federal, state or local governmental
agency, court, board, bureau or other authority having jurisdiction with respect
to or relating to the environment, to any Hazardous Substance or to any activity
involving Hazardous Substances, and shall include, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.
Section 9601, et seq.), the Federal Resource Conservation and Recovery Act (42
U.S.C. Section 6901, et seq.) and all amendments thereto in effect as of the
Closing Date.
(r) "ESCROW HOLDER" means the company where escrow shall be established,
whose address for this transaction shall be:
Transnation Title Insurance Company
2200 US Bancorp Tower
▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
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(s) "ESCROW PERIOD" means the period from and after the Effective Date
through the Closing Date or any earlier termination of this Agreement.
(t) "EXCHANGE CONSIDERATION" shall have the meaning set forth in Section
4.3(b).
(u) "FF&E" means furniture, fixtures, equipment, machinery, appliances,
fittings, and other removable articles of personal property of every kind and
nature that are owned by Contributor and used in the operation of the Property,
including, without limitation, (i) furnishings, furniture, and equipment, (ii)
art work and other decorative items, (iii) built-in appliances, and (iv) office
furniture and equipment.
(v) "GENERAL INTANGIBLES" means the Offsite Rights, the Permits, the
Repair Warranties, and other intangible personal property rights of whatever
nature (other than the rights evidenced by the Contracts) owned by Contributor
and used in the operation and maintenance of the Property.
(w) "HAZARDOUS MATERIALS" shall mean and include any chemical, compound,
material, mixture, waste or substance that is now or hereafter defined or listed
in, or otherwise classified pursuant to, any Environmental Laws as a "hazardous
substance," "hazardous material," "hazardous waste," "extremely hazardous
waste," "infectious waste," "toxic substance," "toxic pollutant" or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, or toxicity including any petroleum, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixture of
natural gas and such synthetic gas). "Hazardous Materials" shall include,
without limitation, any hazardous or toxic substance, material or waste or any
chemical, compound or mixture which is (i) asbestos, (ii) motor oil, gasoline,
petroleum or any petroleum by-product, (iii) designated as a "hazardous
substance" pursuant to Section 1317 of the Federal Water Pollution Control Act
(33 U.S.C. Section 1251 et seq.), (iv) defined as a "hazardous waste" pursuant
to Section 6903 of the Federal Resource Conservation and Recovery Act, (42
U.S.C. Section 6901 et seq., (v) defined as "hazardous substances" pursuant to
Section 9601 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq.), or (vi) listed in the United
States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances (40 CFR part 302); or in
any and all amendments thereto in effect as of the Closing Date; or such
chemicals, compounds, mixtures, substances, materials or wastes otherwise
regulated under any applicable local, state or federal Environmental Laws.
(x) "HOLIDAY" means any day on which banking institutions in the State
of California are authorized or obligated by law or executive order to close.
(y) "IMPROVEMENTS" shall have the meaning set forth in Article III(b).
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(z) "INFORMATION" means all documents, reports, studies, and other
information or materials (including, without limitation, the Records) delivered
or disclosed to Company by Contributor or its agents.
(aa) "INSPECTION PERIOD" means the period from and after the Effective
Date and ending at 5:00 p.m., Pacific Time, on August 16, 1999.
(ab) "INVENTORY" means the stock of supplies and other consumables of
every kind and nature that are owned by Contributor and used exclusively in the
operation and maintenance of the Property in the ordinary course of business.
(ac) "LAND" shall have the meaning set forth in Article III(a).
(ad) "LEASE" means any lease, sublease, license, or other agreement for
the occupancy, possession, or use of any space within the Property (including,
without limitation, any storage space, containers, or other facilities),
including, without limitation, those leases described on EXHIBIT H attached
hereto.
(ae) "LEASE ASSIGNMENT" shall have the meaning set forth in Article
III(e).
(af) "OFFSITE RIGHTS" means any lease, license, or other agreement
(other than a recorded easement) providing for the use of another's real
property in conjunction with the operation of the Property (as, by way of
illustration and not limitation, use for vehicular parking and/or access).
(ag) "OWNER'S TITLE POLICY" means a CLTA Policy in the amount of Twenty
Million Two Hundred Thousand and No/100ths Dollars ($20,200,000.00), with
extended coverage if Company so elects.
(ah) "PERMIT" means any permit, certificate, license, or other form of
authorization or approval issued by a governmental agency or authority and
legally required for the proper operation and use of the Property (including,
without limitation, any certificates of occupancy with respect to the
Improvements, elevator permits, conditional use permits, and zoning variances)
to the extent held and assignable by Contributor or otherwise transferable with
the Property.
(ai) "PERMITTED EXCEPTIONS" shall have the meaning set forth in Section
5.1.
(aj) "PERSONAL PROPERTY" shall have the meaning set forth in Article
III(c).
(ak) "PLANS AND SPECIFICATIONS" shall have the meaning set forth in
Section 7.2(a).
(al) "PROPERTY" shall have the meaning set forth in Article III.
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(am) "PRORATIONS" shall have the meaning set forth in Section 8.7(a).
(an) "PTR" means a current preliminary title report concerning the Real
Property issued by the Title Company.
(ao) "REAL PROPERTY" shall have the meaning set forth in Article III(a).
(ap) "RECORDS" means all books, records, correspondence, and other files
that have been received or generated and maintained in the course of operating
the Property that are in Contributor's possession or control.
(aq) "REPAIR WARRANTIES" means any written guaranties, warranties, or
other obligations of any contractor, manufacturer, or vendor for the repair or
maintenance of any of the Improvements or FF&E, to the extent assignable by
Contributor.
(ar) "REVENUES" shall have the meaning set forth in Section 8.7(a).
(as) "SERVICE CONTRACT" means any contract or other arrangement, written
or oral, for the continuing provision of services relating to the improvement,
maintenance, repair, protection, or operation of the Property.
(at) "TENANT" means the tenant and occupant of, and any other holder of
a possessory right in, all or any portion of the Property pursuant to a Lease.
(au) "TENANT ESTOPPEL CERTIFICATES" means estoppel certificates to be
executed and delivered by each Tenant to Company as provided by Section 7.6.
(av) "TENANT NOTICES" means notices to the Tenants in the form of
EXHIBIT G.
(aw) "TITLE COMPANY" means Lawyer's Title Insurance Company.
(ax) "UNIT" means the representative measurement of ownership interest
in the DownREIT LLC, whether or not so denominated in the Operating Agreement of
the DownREIT LLC.
ARTICLE III
PROPERTY SUBJECT TO AGREEMENT
Contributor hereby agrees to contribute to the DownREIT LLC, and
Company, as the managing member of the DownREIT LLC, hereby agrees to accept
from Contributor, subject to the terms and conditions set forth herein, all of
Contributor's right, title, and interest in the following (collectively, the
"PROPERTY"):
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(a) LAND - that certain land described in EXHIBIT A, and all appurtenant
rights, privileges, and easements thereto owned by Contributor (collectively,
the "LAND"). The Land and the Improvements (collectively, the "REAL PROPERTY")
shall be contributed by Contributor to Company pursuant to a Grant Deed ("DEED")
substantially in the form of EXHIBIT B attached hereto.
(b) IMPROVEMENTS - all buildings, structures, fixtures, and other
improvements located on the Land (collectively, the "IMPROVEMENTS").
(c) PERSONAL PROPERTY - all personal property, if any, owned by
Contributor and used by Contributor exclusively in the operation, maintenance,
and management of the Real Property as of the Closing Date, including, without
limitation, the FF&E, the Inventory, the Records, and the General Intangibles
(collectively, the "PERSONAL PROPERTY"). The Personal Property shall be
contributed by Contributor to Company pursuant to a ▇▇▇▇ of Sale (the "▇▇▇▇ OF
SALE") substantially in the form of EXHIBIT C.
(d) CONTRACTS - all contracts and agreements in effect on the Closing
Date, if any, including, without limitation, the Service Contracts
(collectively, the "CONTRACTS"). Contributor's interest in the Contracts shall
be contributed to Company pursuant to an Assignment and Assumption of Contracts,
Permits and Other Rights (the "CONTRACT ASSIGNMENT") substantially in the form
of EXHIBIT D.
(e) LEASES - Contributor's interest in the Leases shall be contributed
to Company pursuant to an Absolute Assignment and Assumption of Leases (the
"LEASE ASSIGNMENT") substantially in the form of EXHIBIT E.
ARTICLE IV
CONTRIBUTION CONSIDERATION
AND LIQUIDATED DAMAGES
4.1 CONTRIBUTION CONSIDERATION. The total consideration to be given by
Company for Contributor's contribution of the Property (the "Contribution
Consideration") shall consist of (i) the assumption by Company of the Existing
Loan (below defined) and (ii) delivery of the Exchange Consideration (below
defined), all as more particularly set forth below in this Article IV.
4.2 DEPOSIT.
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(a) Upon the full execution of this Agreement by Company and
Contributor, Company shall tender to Escrow Holder an ▇▇▇▇▇▇▇ money
deposit in the amount of Two Hundred Thousand and No/100ths Dollars
($200,000.00) (the "DEPOSIT"). The Deposit shall be tendered by
certified check or cashier's check made payable to Escrow Holder or by
wire transfer of current federal funds received and credited to the
account of Escrow Holder;
(b) Provided that Company does not terminate this Agreement
pursuant to Article 7, within one (1) Business Day following expiration
of the Inspection Period, Company shall tender to the Escrow Holder an
additional ▇▇▇▇▇▇▇ money deposit in the amount of Three Hundred Thousand
and No/100ths Dollars ($300,000.00), which shall become a part of the
Deposit from and after the date of tender. Upon the satisfaction, or
waiver by Company of all of Company's conditions precedent to closing as
set forth in this Agreement, the Deposit shall become non-refundable to
Company, except upon a failure of Contributor to consummate the
transactions contemplated by this Agreement in accordance with the terms
and provisions hereof, or the failure, unless waived in writing by
Company, of any other condition provided for in this Agreement for the
benefit of Company. Any balance of the Deposit remaining after payment
of Company's share of closing costs pursuant to Section 9.8 shall be
refunded immediately to Company.
4.3 DELIVERY OF CONTRIBUTION CONSIDERATION. The Contribution
Consideration shall be delivered by Company as below set forth:
(a) ASSUMPTION OF LIABILITIES. The Real Property is presently
encumbered by the Column Financial Deed of Trust securing a loan in the
original principal amount of $12,750,000 with a principal balance of
$12,661,554.14 as of June 11, 1999 (the "Existing Loan"). The Existing
Loan is held presently by LaSalle National Bank, as Trustee ("Lender").
Contributor hereby represents and warrants to Company with respect to
the Existing Loan that:
(i) Subject to the terms and conditions set forth in the
Column Financial Deed of Trust, the Existing Loan is assumable
with the prior written consent of Lender and the payment to
Lender of an assumption fee of one percent (1%) of the then
existing principal balance;
(ii) The Existing Loan is in full force and effect and
there is no event of default existing thereunder or any event
which with the passage of time or notice, or both, would
constitute an event of default either by Contributor, or to the
actual knowledge of Contributor, or Lender; and
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(iii) As of the Closing, all payments and the performance
of all other obligations of Contributor pursuant to the terms and
provisions of the Existing Loan will be fully current.
Within ten (10) days after the Effective Date, Company, with the
full cooperation of Contributor, shall apply to Lender to assume the
Existing Loan. Subject to the further provisions of this Agreement,
Company shall assume the Existing Loan at Closing (the "Assumption").
While not a condition to Contributor's obligations hereunder,
Contributor and Company shall endeavor to secure Contributor's release
from its obligations under the Existing Loan; but if Contributor is not
released from its obligations under the Existing Loan pursuant to
Company's assumption thereof, then Company shall defend, indemnify and
hold Contributor and its partners harmless from and against any and all
liability for the performance of such obligations arising from and after
the Closing. In any event, Company shall defend, indemnify and hold
Waranch harmless from and against any and all liability for the
performance of any environmental indemnity obligation or "non-recourse
carve-out" guaranty obligation undertaken by Waranch, individually, in
connection with the Assumption, but only to the extent such performance
is required because of environmental or recourse events occurring after
the Closing.
(b) EXCHANGE CONSIDERATION. Subject to the terms and conditions
of this Agreement, Contributor agrees to accept Units as the remainder
of the consideration to be given for its contribution of the Property
(the "EXCHANGE CONSIDERATION"), which shall be issued to Contributor in
an amount which shall be determined by dividing Contributor's Equity by
Twenty-one Dollars and Twelve and One-Half Cents ($21.125) and rounding
to the nearest whole Unit. The parties intend that this exchange of
Contributor's Equity for Units shall be treated as a contribution under
Section 721(a) of the Internal Revenue Code of 1986, as amended. Sixteen
percent (16%) of the Units issued as the Exchange Consideration shall be
managing Units, and eighty-four percent (84%) shall be non-managing
Units.
4.4 ADDITIONAL CONSIDERATION. In addition to the Contribution
Consideration, Contributor shall receive additional consideration (the
"Additional Consideration") in an amount which shall be determined as follows:
(x) determine the amount of the difference, if any, between (a) eighty-four
percent (84%) of Contributor's Equity and (b) the product of (i) the current
price of stock in Pan Pacific Retail Properties, Inc., multiplied by (ii) the
number of non-managing Units issued to Contributor pursuant to Section 4.3(b)
above, and (y) divide such difference by the current price of stock in Pan
Pacific Retail Properties, Inc.; provided, however, that in no event shall the
Additional Consideration exceed the number of non-managing Units determined by
dividing 500,000 by the current price of stock in Pan Pacific Retail Properties,
Inc.
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The "current price" of stock in Pan Pacific Retail Properties, Inc.
shall be determined by taking the ten (10) day average public trade/selling
price of stock in Pan Pacific Retail Properties, Inc. for the immediate ten (10)
trade days prior to the date which is five (5) days prior to the Closing Date.
4.5 INVESTMENT OF DEPOSIT. Escrow Holder shall place the Deposit in an
interest-bearing account with a bank or savings association, the deposits of
which are federally insured (up to the amount of One Hundred Thousand and
No/100ths Dollars ($100,000.00), as directed in writing by Company, with notice
to Contributor. All references in this Agreement to the Deposit shall include
the interest thereon.
4.6 DEPOSIT AS LIQUIDATED DAMAGES. IF THE SALE OF THE PROPERTY AS
CONTEMPLATED HEREUNDER IS NOT CONSUMMATED BECAUSE OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF COMPANY, ESCROW HOLDER, WITHOUT ANY FURTHER INSTRUCTION
FROM EITHER CONTRIBUTOR OR COMPANY, SHALL PAY TO CONTRIBUTOR THE DEPOSIT AND
CONTRIBUTOR SHALL RETAIN THE DEPOSIT AND ALL INTEREST EARNED THEREON AS
LIQUIDATED DAMAGES. THE PARTIES ACKNOWLEDGE THAT CONTRIBUTOR'S ACTUAL DAMAGES IN
THE EVENT OF A DEFAULT BY COMPANY WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE
TO DETERMINE. THEREFORE, BY PLACING THEIR SIGNATURES BELOW, THE PARTIES
EXPRESSLY AGREE AND ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER
NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF CONTRIBUTOR'S DAMAGES. THE
PARTIES FURTHER ACKNOWLEDGE THAT CONTRIBUTOR'S RETENTION OF THE DEPOSIT AND ALL
INTEREST EARNED THEREON HAS BEEN AGREED UPON AS CONTRIBUTOR'S EXCLUSIVE REMEDY
AGAINST COMPANY IN THE EVENT OF A DEFAULT ON THE PART OF COMPANY, OTHER THAN THE
ADDITIONAL AND SEPARATE OBLIGATIONS OF COMPANY UNDER SECTIONS 5.3, 5.5, 15.2,
AND 15.10 HEREOF, WHICH OBLIGATIONS SHALL SURVIVE THE TERMINATION OF THIS
AGREEMENT. IN ADDITION, COMPANY SHALL PAY ALL TITLE AND ESCROW CANCELLATION
CHARGES IN THE EVENT OF A DEFAULT BY COMPANY.
"Contributor" "Company"
RANCHO LAS PALMAS CENTER ASSOCIATES, PAN PACIFIC RETAIL PROPERTIES, INC.,
A CALIFORNIA LIMITED PARTNERSHIP A MARYLAND CORPORATION
By: RLP ASSOCIATES, INC.
Its: GENERAL PARTNER
________________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇
________________________________ Its: PRESIDENT & CHIEF EXECUTIVE OFFICER
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By:
Its:
ARTICLE V
INSPECTION
5.1 DUE DILIGENCE REVIEW. Company, at its sole cost and expense, shall
have the right to a Due Diligence Review in accordance with the following terms
and conditions. A "DUE DILIGENCE REVIEW" means (a) an inspection, examination
and evaluation of the Information, and (b) the conduct of physical tests,
inspections and other investigations on the Property and all portions thereof
leased by Tenants ("INSPECTION STUDIES"), all in order that Company may
determine, in its sole and absolute judgment and discretion, whether the
Property is acceptable to Company.
5.2 RIGHT TO TERMINATE. Notwithstanding anything to the contrary in this
Agreement, Company may terminate this Agreement by giving notice of termination
to Contributor on or before the termination of the Inspection Period. If Company
duly exercises that right, then Escrow Agent is hereby instructed to return the
Deposit to Company without further instruction from either Company or
Contributor. If Company does not give the notice of termination, then Company
shall be deemed to have approved the Property with respect to the matters set
forth in Sections 5.1 and 7.2, and provided Company makes the additional ▇▇▇▇▇▇▇
money deposit pursuant to Section 4.2 (b) hereof, this Agreement shall continue
in full force and effect, subject, however, to Company's other termination
rights hereunder. Contributor acknowledges that Company may, but is not
obligated to, expend time, money, and other resources in connection with the Due
Diligence Review of the Property, and that, notwithstanding the fact that this
Agreement may terminate pursuant to this Section 5.2 and other applicable
provisions of this Agreement, such time, money, and other resources that may be
expended constitute adequate consideration for Contributor's execution of and
entry into this Agreement.
5.3 ACCESS & INQUIRIES.
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(a) Company and its representatives, agents and contractors shall
have reasonable access to the Property, including all areas leased to
Tenants, for the purpose of causing any necessary update of an ALTA
survey of the Land and Improvements prepared previously and which
Contributor will make available to Company, and conducting
architectural, engineering, geotechnical, and environmental inspections
and tests (including intrusive inspection and sampling), feasibility
studies, and any other inspections, studies, or tests reasonably
required by Company; provided, however, that Company shall not undertake
any intrusive inspection or sampling without first obtaining the written
consent of Contributor, which consent shall not be withheld
unreasonably. Company shall keep the Property free and clear of any
liens as a result of any entry on the Property pursuant to this Section
5.3(a).
(b) During the pendency of this Agreement, Contributor shall make
available to Company, and Company and its representatives, agents and
contractors shall have a continuing right of reasonable access to and
the right to examine and make copies of, all books and records;
construction plans; correspondence; documents; contracts; agreements;
Leases, as well as Lease files with histories; and other materials
relating to the Property in Contributor's possession or control,
including, without limitation, the right to conduct a "walk-through" of
the Property prior to the Closing upon appropriate notice to Tenants and
subject to the rights of all Tenants under their Leases.
(c) In the course of its Due Diligence Review, Company may make
inquiries to third parties including, without limitation, Tenants,
lenders, contractors, property managers, parties to the Information and
Contracts, and municipal, local, and other government officials and
representatives, and Contributor consents to such inquiries.
5.4 NEW AGREEMENTS. During the period from the Effective Date until the
Closing Date, and as a condition to Company's obligations to purchase the
Property, Contributor shall comply with the following:
(a) During the period from the Effective Date until the Closing
Date, and as a condition to Company's obligations to purchase the
Property, Contributor, without the prior written consent of Company,
such consent not to be unreasonably withheld or delayed, shall not (i)
amend or terminate any Lease, tenancy, license or other right of
occupancy or use for any portion of the Property or any assignment or
sublet thereunder, (ii) consent to the assignment of any Leases or
subleasing of any of the Property, or (iii) enter into any new Lease of
the Property or any portion thereof. In the event Contributor elects to
seek Company's approval of any such matters, then Contributor shall so
notify Company, and if Company fails to notify Contributor, within five
(5) Business Days after Company's receipt of such notice, of any
objection Company has
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hereunder to any action described therein, then Company shall be deemed
to have consented to such action.
(b) Contributor shall not, without the prior written consent of
Company in each instance (such consent not to be unreasonably withheld),
enter into any commitment, contract, option or other agreement of any
kind with respect to the repair, maintenance or operation of the
Property, unless such contracts, etc. have terms that expire prior to
Closing.
5.5 CONDUCT OF INSPECTIONS.
(a) Any entry by Company onto the Property shall be subject to,
and conducted in accordance with, all applicable laws, statutes, rules
and regulations and the terms of any Leases so as to avoid any material
interference with the operations and occupancy of the Property and to
avoid any material disturbance of any of the Tenants or the possessory
rights of any of the Tenants. Company shall promptly restore the
Property to its previous condition before any such inspections, studies,
or tests were performed.
(b) Company or its agents may undertake borings or other
disturbances of the soil with Contributor's prior written approval (not
to be unreasonably withheld), provided that the soil borings and other
disturbances shall be sealed and closed using materials and techniques
that conform with all applicable laws, statutes, rules and regulations
and industry and governmental standards, and the soil shall be
recompacted to the condition immediately before any such borings were
undertaken.
(c) Notwithstanding any general liability or other insurance that
may be maintained by Company, Company hereby agrees to indemnify, defend
and hold harmless Contributor and its partners and its and their
partners, shareholders, directors, officers, employees, and agents and
all Tenants from and against any claims, losses or damages (including
attorneys' fees and costs) arising from or in connection with the due
diligence and inspection activities conducted on the Property by Company
and or its agents, including, without limitation, any damages to the
Property or any property of any Tenant arising from or relating to any
inspections, studies or tests performed by Company or its agents. The
foregoing indemnification obligation of Company shall survive any
termination of this Agreement or the delivery of the Deed, and the
transfer of title to the Property. If this Agreement is terminated,
Company shall deliver to Contributor, within ten (10) Business Days of
such termination, the results and copies of any and all surveys,
reports, tests or studies made by or for Company with respect to the
Property.
ARTICLE VI
TITLE TO PROPERTY
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6.1 TITLE. At the Closing, Contributor shall convey to Company title to
the Real Property by execution and delivery of the Deed. The Owner's Title
Policy shall show title as subject to no exceptions other than the following
(collectively, the "PERMITTED EXCEPTIONS"):
(a) The lien for real estate taxes and assessments not yet
delinquent;
(b) Interests of Tenants pursuant to the Leases;
(c) The Column Financial Deed of Trust; and
(d) Such other exceptions to title as may be approved in writing
by Company pursuant to Section 7.1 hereof.
6.2 TITLE INSURANCE. Company's obligation to purchase the Property shall
be subject to the irrevocable commitment of the Title Company to issue the
Owner's Title Policy upon payment of its normal premium on the Closing Date. In
addition, and provided Company satisfies any requirements of the Title Company
therefor prior to the Closing Date, the Owner's Title Policy shall be issued
together with such endorsements thereto as Company may request; provided,
however, that if any such endorsements are required to change an exception to
title to which Company has objected, and which Contributor has agreed to cure,
into a Permitted Exception, then the cost of such endorsement shall be paid by
Contributor.
6.3 PERSONAL PROPERTY AND CONTRACTS. At the Closing, Contributor shall
transfer to Company title to the Personal Property and Contributor's interest in
the Contracts by execution and delivery of the ▇▇▇▇ of Sale and the Contract
Assignment. Company shall assume the performance of all of Contributor's
obligations under the Contracts arising after the Closing Date, but only as to
those Contracts listed on Schedule I to the Contract Assignment.
ARTICLE VII
COMPANY'S ADDITIONAL CONDITIONS PRECEDENT TO CLOSING
Company's obligation to accept the Property shall be conditioned upon
the fulfillment of each of the following conditions precedent:
7.1 APPROVAL OF TITLE.
(a) Company shall have reviewed and approved, within the time
period and in the manner provided below, the PTR, including copies of
all documents referred to in the PTR (other than encumbrances to be
discharged by Contributor on or before Closing).
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(b) Contributor shall cause the PTR and all supporting materials,
including copies of all documents referred to in the PTR to be delivered
to Company by 4:00 p.m., Pacific time, on or before the fifth (5th)
Business Day after the Effective Date (the "Title Delivery Date"). On or
before the seventh (7th) Business Day from and after delivery to Company
of the PTR and all supporting materials, Company shall notify
Contributor and Escrow Holder in writing which exceptions to title shown
in the PTR, if any, will not be accepted by Company (collectively, the
"DISAPPROVED TITLE MATTERS"); all other matters and exceptions to title
shown in the PTR shall be deemed approved by Company. If Company fails
to notify Contributor and Escrow Holder within the required time period
of any Disapproved Title Matters, Company shall be deemed to have
approved the condition to the Real Property as to such title and survey
matters. If Company notifies Contributor of any Disapproved Title
Matters, Contributor shall have until 5:00 p.m., Pacific time, on the
third (3rd) Business Day after Contributor's receipt of such notice to
notify Company and Escrow Holder in writing that:
(i) Contributor shall use its reasonable efforts to either
(A) cause any Disapproved Title Matters to be removed by the
Closing, or (B) obtain, at Contributor's expense, an endorsement
or other curative effect acceptable to Company in Company's sole
and absolute discretion; or
(ii) Contributor elects not to cause any such Disapproved
Title Matters to be removed.
(c) If Contributor gives Company and Escrow Holder notice under
subsection (b)(ii) above, Company shall have until 5:00 p.m., Pacific
time, on the third (3rd) Business Day after Company's receipt of such
notice to notify Contributor and Escrow Holder that (i) Company revokes
its disapproval of such exceptions(s) and will proceed with the purchase
without any reduction in the Contribution Consideration and take title
to the Property subject to such exception(s), or (ii) Company will
terminate this Agreement, in which case the terms and provisions of
Section 7.11 shall apply. The foregoing procedure shall also be
applicable to any new matters which are disclosed in any updates,
supplements or amendment to the PTR or Survey.
7.2 APPROVAL OF OTHER MATTERS.
(a) By 5:00 p.m., Pacific time, on or before the third (3rd)
Business Day after the Effective Date, Contributor will deliver to
Company, or allow Company reasonable access to, at the Property, at
Contributor's place of business, or at such other location as
Contributor may reasonably indicate, during reasonable times agreed upon
in advance by Company and Contributor, the following, expressly subject
to such items being in the possession of or reasonably available to
Contributor or its manager for the Property:
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(i) a current rent roll and copies of all Leases disclosed
thereon, together with all amendments thereto;
(ii) copies of all Contracts;
(iii) a schedule of all Personal Property;
(iv) copies of the most recent property tax bills for the
Property;
(v) operating statements for Contributor's fiscal years
1997, 1998 and 1999 year to date;
(vi) plans and specifications (as-builts, if available)
for construction of the Improvements (the "PLANS AND
SPECIFICATIONS");
(vii) copies of certificate(s) of occupancy, and any
governmental licenses and permits regarding the Property;
(viii) financial statements for the Tenants;
(ix) a schedule of filed litigation regarding or
affecting, directly or indirectly, the Property;
(x) an aged receivables report current as of the Effective
Date;
(xi) copies of environmental reports, studies and
assessments within Contributor's possession or control covering
the Property;
(xii) copies of all CC&R's affecting the Property;
(xiii) copies of all soil reports and analyses within
Contributor's possession or control pertaining to the soils,
seismological, geological and drainable conditions of the
Property;
(xiv) copies of construction and equipment warranties
within Contributor's possession; and
(xvi) all other material, non-proprietary materials,
reports and information relevant to the Property.
(b) On or before the expiration of the Inspection Period, Company
shall notify Contributor and Escrow Holder in writing if Company objects
to any of the matters referred to above or to Company's own inspection
of the Property
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described in Section 5.1 hereof, and Company's failure to notify
Contributor of any such objection shall be deemed to be Company's
approval of such matters.
7.3 COMPLIANCE BY CONTRIBUTOR. Contributor shall have complied with each
and every material covenant, undertaking and agreement to be kept or performed
by Contributor as provided in this Agreement; and each representation and
warranty made in this Agreement by Contributor shall remain true and accurate in
all material respects both at the time made and on the Closing Date.
7.4 NO MATERIAL ADVERSE CHANGE IN PHYSICAL CONDITION. As of the Closing
Date, there shall have been no material adverse change in the condition of the
Property or any material portion thereof, excepting any event(s) of destruction,
damage, or condemnation described in Section 13.1 or 13.2.
7.5 NO INSOLVENCY. Contributor (i) shall not be in receivership or
dissolution, (ii) shall not have made an assignment for the benefit of creditors
or admitted in writing its inability to pay its debts as they mature, or (iii)
shall not have been adjudicated a bankrupt or filed a petition in voluntary
bankruptcy or a petition or answer seeking reorganization or an arrangement with
creditors under the Federal bankruptcy law or any other similar law or statute
of the United States or any jurisdiction and no such petition shall have been
filed against Company or any of its general partner(s), if any.
7.6 TENANT ESTOPPELS. Company shall have received a Tenant Estoppel
Certificate for all Tenants whose leasable square footage under their respective
Leases is greater than 4,000 square feet, and from eighty percent (80%) of all
remaining Tenants, which Estoppel Certificates shall be in substantially the
same form as EXHIBIT H attached hereto, or in such other form as is acceptable
to Company in the reasonable exercise of its discretion; and otherwise as to
each such Tenant Estoppel Certificate in such content as is acceptable to
Company. Company shall have five (5) Business Days from receipt of such Tenant
Estoppel Certificates to advise Contributor in writing of its approval or
disapproval of same, which approval will not be withheld unreasonably. If
necessary, at Company's election the Closing Date shall be extended so as to
allow such five (5) day inspection period. In the event Company disapproves of
any of such Tenant Estoppel Certificates, Company may terminate this Agreement
as provided in Section 7.11 below. In the event Contributor is unable through
diligent efforts to obtain any of the Tenant Estoppel Certificates, Company may,
but will not be obligated to, accept in lieu thereof an estoppel certificate
from Contributor (a "Contributor's Estoppel") in substantially the form of
Exhibit "H" attached hereto, or in such other form and content acceptable to
Company in the reasonable exercise of its discretion.
7.7 APPROVAL OF ASSUMPTION DOCUMENTS. Company shall have reviewed and
approved, which approval shall not be withheld unreasonably, the form and
content of each of the documents, instruments, schedules and any and all other
writings required by Lender to be executed and delivered by Company in order for
Company to assume the Existing Loan (collectively, the "Assumption Documents").
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7.8 LEASE PAYMENTS AND RENTS. Contributor shall have paid fully, or
Company shall receive a credit against the Contribution Consideration, for any
and all rent concessions, leasing commissions and tenant improvement costs, and
all other amounts payable by Contributor as provided in this Agreement with
respect to such Lease and the premises leased thereunder.
7.9 CONSTRUCTION COSTS. Contributor shall have paid fully for the
construction and all other costs for all Improvements relative to the Property,
such Improvements shall have been substantially completed, notices of completion
shall have been recorded for such Improvements, and final certificates of
occupancy issued therefor.
7.10 DOWNREIT LLC; DISTRIBUTION OF UNITS; OPERATING AGREEMENT. The
DownREIT LLC shall have been formed under and pursuant to the laws of the State
of Nevada, fully qualified to transact business in the State of California, all
on such terms as are mutually agreeable to Pan Pacific Retail Properties, Inc.,
and Contributor through good faith and diligent negotiations; and all of Pan
Pacific Retail Properties, Inc.'s, rights and obligations hereunder shall have
been assigned and delegated to the DownREIT LLC.
Concurrently with the Closing (i) Contributor shall have distributed to
Waranch the non-managing Units issued to Contributor, and the managing Units to
▇▇▇▇▇▇▇ (ii) ▇▇▇▇▇▇▇ and Pan Pacific Retail Properties, Inc. shall have
consummated the transaction contemplated pursuant to the Membership Interest
Purchase Agreement ("Related Agreement") entered into of even date herewith by
and between Pan Pacific Retail Properties, Inc. and ▇▇▇▇▇▇▇ and (iii) Waranch
and Pan Pacific Retail Properties, Inc. shall have entered into an operating
agreement with respect to the DownREIT LLC on such terms as are mutually
agreeable to each party through good faith and diligent negotiations.
7.11 WAIVER; TERMINATION.
(a) At any time or times on or before the Closing, at Company's
election, Company may waive any of the foregoing conditions by written
notice to Contributor. Other than Company's closing the transaction
contemplated by this Agreement which shall waive all such unfulfilled
conditions, no waiver shall be effective unless made in writing specific
as to the conditions or matters so waived. Except as expressly provided
otherwise herein, no such waiver shall be inferred or implied by any act
or conduct of Company or reduce the rights or remedies of Company
arising from any breach of any undertaking, agreement, covenant,
warranty, or representation of Contributor under this Agreement.
(b) If any of the foregoing conditions are neither fulfilled,
waived, nor deemed to have been approved or waived as herein provided,
Company, at its election by written notice to Contributor, may terminate
this Agreement and be
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released from all obligations under this Agreement (other than those
described in this Section 7.11 and Sections 5.3, 5.5, 15.2 and 15.10
hereof). In the event of such termination by Company, the Deposit and
all interest accrued thereon shall be returned immediately to Company,
all documents deposited in Escrow by Company or Contributor shall be
returned to the depositing party, the costs of the Title Company and
Escrow Holder shall be borne equally by Company and Contributor, and,
except as otherwise set forth in this Article VII, each party hereto
shall bear its own costs incurred herewith. If any non-fulfilled
conditions also constitute a breach by Contributor of its obligations
under this Agreement, then Company may proceed also under Section
9.12(a) below.
ARTICLE VIII
CONTRIBUTOR'S CONDITIONS PRECEDENT TO CLOSING
Contributor's obligation to contribute the Property shall be conditioned
upon the fulfillment of each of the following conditions precedent:
8.1 COMPLIANCE BY COMPANY. Company shall have complied with each and
every covenant, undertaking and agreement to be kept or performed by Company as
provided in this Agreement; and each representation and warranty made in this
Agreement by Company shall remain true and accurate in all material respects
both at the time made and on the Closing Date.
8.2 CURRENT PRICE. The current price of Pan Pacific Retail Properties,
Inc.'s stock shall not be below Eighteen and 50/100ths Dollars ($18.50).
8.3 DOWNREIT LLC; DISTRIBUTION OF UNITS; OPERATING AGREEMENT. The
DownREIT LLC shall have been formed on such terms as are mutually agreeable to
Contributor and Pan Pacific Retail Properties, Inc. through good faith and
diligent negotiations; and all of Pan Pacific Retail Properties, Inc.'s rights
and obligations hereunder shall have been assigned and delegated to the DownREIT
LLC.
Concurrently with the Closing (i) Contributor shall have distributed to
Waranch the non-managing Units issued to Contributor, and the managing Units to
▇▇▇▇▇▇▇ (ii) ▇▇▇▇▇▇▇ and Pan Pacific Retail Properties, Inc. shall have
consummated the transaction contemplated pursuant to the Related Agreement and
(iii) Waranch and Pan Pacific Retail Properties, Inc. shall have entered into an
operating agreement with respect to the DownREIT LLC on such terms as are
mutually agreeable to each party through good faith and diligent negotiations.
8.4 NO MATERIAL ADVERSE CHANGE. Except as provided in Section 7.2 above,
there shall have been no material adverse change in the business, financial
condition or results of operations of Company. For purposes of the foregoing
sentence, the parties
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acknowledge that variations in the share price of Company's capital stock on the
New York Stock Exchange shall not be considered in making such determination.
8.5 TERMINATION. If any of the foregoing conditions are neither
fulfilled nor waived by Contributor, Contributor shall have the option to
terminate this Agreement by delivering to Company and Escrow Holder written
notice of such termination; provided, however, that Contributor may not
terminate this Agreement under this Section 8.5 unless Company fails to cause
any non-fulfilled condition(s) to be satisfied within three (3) days after
written notice thereof from Contributor. If any non-fulfilled condition(s) also
constitute a breach by Company of its obligations under this Agreement,
Contributor shall have the right to proceed under Section 9.12(b) below. If
Contributor elects to terminate this Agreement, Escrow Holder, without any
further instruction from either Company or Contributor, shall pay to Contributor
the Deposit if the condition that was not satisfied is the condition set forth
in Section 8.1, or if Company fails to make the additional ▇▇▇▇▇▇▇ money deposit
required by Section 4.2(b) following Company's approval or deemed approval
pursuant to Sections 7.1 and Section 7.2. Thereafter, this Agreement shall be
null and void and of no further force or effect and, except as provided in this
Section 8.5 and Sections 5.3, 5.5, 15.2 and 15.10 hereof, neither party shall
have any further rights or obligations hereunder, other than those rights and
obligations that, by their terms survive the termination of this Agreement. In
the event of such termination by Contributor, all documents deposited in Escrow
by Company or Contributor shall be returned to the depositing party, the costs
of the Title Company and Escrow Holder shall be borne equally by Company and
Contributor and each party hereto shall bear its own costs incurred herewith.
ARTICLE IX
ESCROW AND CLOSING
9.1 DEPOSIT WITH ESCROW HOLDER AND ESCROW INSTRUCTIONS. Escrow herein
(the "ESCROW") shall be established with Escrow Holder, at the address set forth
above. Upon execution of this Agreement, the parties shall deposit an executed
copy of this Agreement with Escrow Holder. This Agreement shall serve as the
instructions to Escrow Holder to consummate the transaction contemplated hereby.
9.2 CLOSING.
(a) Except as may be provided otherwise herein, the Closing shall
occur on the Closing Date, unless the parties hereto agree in writing to
an earlier or later date.
(b) If either party has complied with the terms and conditions of
this Agreement before the scheduled Closing Date and the other party is
not in a position to close by the scheduled Closing Date (other than for
reasons beyond such party's control), the defaulting party shall be
deemed to be in material
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breach of this Agreement. The party who has fully complied may terminate
this Agreement and, whether or not this Agreement is terminated, Company
may exercise all remedies available to it at law or in equity, and
Contributor's remedies shall be limited to the provisions for liquidated
damages set forth in Section 4.6 hereof.
9.3 DELIVERIES BY CONTRIBUTOR. At least one (1) Business Day prior to
the Closing Date, Contributor shall deliver or cause to be delivered to Escrow
Holder the following:
(a) the Deed, duly executed and acknowledged by Contributor and
in recordable form;
(b) the Assumption Documents executed by Contributor as required
by Lender, if at all;
(c) Contributor's Non-Foreign Affidavit, if required, in the form
of EXHIBIT F attached hereto, duly executed and acknowledged by
Contributor;
(d) any other documents, or instruments called for hereunder to
be paid, executed, or delivered by Contributor that have not previously
been delivered by Contributor to Escrow Holder; and
(e) such articles of incorporation, agreements or certificates of
partnership, resolutions, authorizations, bylaws, certifications or
other corporate, partnership or trust documents or agreements or other
reasonable proof of authority relating to Contributor as Company or
Escrow Holder shall reasonably require in connection with this
transaction.
9.4 DELIVERIES BY COMPANY. At least one Business Day prior to the
Closing Date, Company shall deliver or cause to be delivered to Escrow Holder
the following:
(a) immediately available funds sufficient to pay Company's
portion of the closing costs, and any other amounts payable by Company
in order to permit Escrow Holder to close the Escrow;
(b) the Assumption Documents executed by Company;
(c) Units sufficient to satisfy the Exchange Consideration, and
the Additional Consideration, if any; and
(d) any other cash, documents or instruments called for hereunder
to be paid, executed or delivered by Company or that are required for
the Closing hereunder that have not been previously delivered by Company
to Escrow Holder.
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9.5 ADDITIONAL DELIVERIES BY COMPANY AND CONTRIBUTOR. At least one (1)
business day prior to the Closing Date, Contributor and Company also shall
deliver or cause to be delivered to Escrow Holder, the following documents:
(a) the ▇▇▇▇ of Sale, duly executed and acknowledged by
Contributor;
(b) the Contract Assignment, duly executed and acknowledged by
Contributor and Company;
(c) the Lease Assignment, duly executed and acknowledged by
Contributor and Company and in recordable form; and
(d) a closing statement prepared by Escrow Holder and approved by
Company and approved by Contributor.
9.6 OTHER INSTRUMENTS. Contributor shall execute and deliver all Tenant
Notices to Tenants concurrently with the Closing, and shall provide copies of
same for Company's review not later than two (2) days prior to the Closing Date.
Contributor and Company each shall deposit any other documents or instruments
that may be reasonably required by the other party and/or Escrow Holder, or that
are otherwise required to close the Escrow and consummate the purchase and sale
of the Property in accordance with the terms hereof.
9.7 PRORATIONS AND APPORTIONMENTS.
(a) All revenues from the Property and all expenses of the
Property shall be prorated and apportioned as of 12:01 a.m., Pacific
time, on the Closing Date (the "PRORATIONS"). Taxes shall be prorated as
of the Closing Date, based on a 365-day year. Contributor shall be
charged and credited for such Prorations up to the Closing Date and
Company shall be charged and credited (or, at Contributor's option, paid
by check for unused security or other deposits) for all of the same on
and after the Closing Date. Prior to the Closing, Company and
Contributor shall review and approve the Prorations. If the actual
amounts to be prorated are not then known, or if any additional expenses
are incurred or income received after the date the Prorations are made,
the Prorations shall be made on the basis of the best evidence then
available. When actual figures are later received, a cash settlement
will be made between Contributor and Company. To the extent possible,
Contributor shall have all metered utilities read by the applicable
utility provider as of the Closing Date. As to each utility which is so
read, Contributor shall have the responsibility to pay at Closing each
▇▇▇▇ therefore, and Company shall be responsible for all subsequent
charges for such utilities. To the extent such utilities may not be read
as of the Closing, such utility bills shall be prorated when the last
▇▇▇▇ incurred by Contributor is received. No Prorations shall be made
for rents, license payments, receivables or accounts
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("REVENUES") delinquent as of the Closing Date, and no credit shall be
given to Contributor for any Revenues delinquent as of the Closing Date.
As used in the immediately preceding sentence, the term "delinquent"
shall mean, with respect to any Revenue, that the Revenue in question
accrued at any time prior to the then-current calendar month.
Nevertheless, if Company collects any Revenues that were delinquent on
or before the Closing, such Revenues shall be attributed first to the
current Revenues and then to the portion that was delinquent on or
before the Closing and Company shall promptly remit to Contributor the
portion of such Revenues collected, if any, attributable to the period
of time prior to the Closing Date; provided, however, that Contributor
shall not be entitled to commence any legal proceeding or alternative
proceedings seeking to evict any Tenant because of such Tenant's failure
to pay delinquent rents or amounts claimed to be owing by Contributor.
(b) Tenants may be obligated to pay Additional Rents. Contributor
shall estimate a "true-up" of Additional Rents as of the Closing Date,
and Additional Rents shall be prorated as of the Closing on the basis of
such estimated true-up. Contributor and Company shall re-prorate
Additional Rents (including any portions thereof that may be required to
be refunded to Tenants) at the time that such estimated true-up is
actually adjusted and/or reconciled. Any amounts that may be due from
Contributor as a result of such re-prorations shall be paid by
Contributor to Company promptly after written request therefor is
delivered to Contributor by Company (together with evidence reasonably
satisfactory to Contributor of the amounts due the Tenants). Any amounts
that may be due to Contributor as a result of such re-prorations shall
be paid by Company to Contributor promptly following such re-prorations.
Notwithstanding the foregoing, Contributor shall have reconciled fully,
and made all necessary adjustments with Tenants, Additional Rents for
all prior years through 1998, prior to the Closing Date; and Contributor
shall be responsible for reconciling with Tenants all Additional Rents
for the period January 1, 1999 to the Closing Date within ninety (90)
days following the Closing Date. Contributor shall be responsible for
reimbursing to Tenants, and may collect from Tenants, as applicable, all
Additional Rents required pursuant to such reconciliation; Contributor
shall not be entitled to commence any legal proceeding or alternative
proceedings seeking to evict any Tenant because of such Tenant's failure
to pay delinquent rents or amounts claimed to be owing to Contributor.
If Contributor is not entitled under the applicable Leases to collect
from Tenants any underpayments in Additional Rents at the time
Contributor completes such reconciliation, Company shall pay to
Contributor the amount of such underpayments at the time that estimates
are adjusted and/or reconciled in accordance with the Leases, but only
to the extent such payments are actually made by such Tenants to
Company. Company agrees to cooperate with Contributor in sending bills
for such underpayments to the applicable Tenants.
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(c) Contributor shall be responsible for the payment of all
leasing commissions earned prior to the Effective Date, and Company
shall be responsible for the payment of any leasing commissions earned
from and after the Effective Date, regardless of when any such leasing
commissions become due, provided that such commissions have been
disclosed to and approved by Company prior to expiration of the
Inspection Period. Each party to this Agreement shall indemnify the
other party against and hold the other party harmless (using counsel
reasonably satisfactory to such other party) from and against any and
all damages, liabilities, costs, expenses and losses (including, but not
limited to attorneys' fees and costs) arising out of any action for the
collection of leasing commissions that are such party's responsibility
pursuant to this subsection.
(d) The provisions of this Section shall survive the Closing.
9.8 COSTS AND EXPENSES; CREDITS.
(a) Company and Contributor shall pay equally all costs and fees
charged by Lender in accordance with the terms and provisions of the
Existing Loan with respect to Company's assumption of the Existing Loan,
including the assumption fee. Contributor shall pay for that portion of
the premium for the Owner's Title Policy in the amount of the
Contribution Consideration attributable to standard coverage, and
Company shall pay the portion attributable to extended coverage.
Contributor shall pay the cost of any city and/or county transfer taxes
applicable to the transfer of the Property to Company, all recording
charges for the Deed, and the cost, if any, to record any corrective
instruments. If Company elects to obtain endorsements for the Owner's
Title Policy, in addition to those necessary to cure title objections as
provided for in Section 6.2, Company shall pay all the premiums for such
additional endorsements. Company shall also pay any special sales, gross
receipts or transaction taxes imposed on Company in connection with the
purchase and sale of the Property. Costs and charges of the Escrow shall
be borne equally by Contributor and Company. All other taxes, costs, and
charges for the sale of the Property shall be paid by Contributor and/or
Company, as the case may be, in accordance with the usual customs and
practices in the county in which the Real Property is located.
All costs, prorations or adjustments not known as of Closing
shall be handled after Closing in cash or other mutually agreeable
medium.
(b) If at Closing the Property has greater than 8,000 square feet
of vacant leaseable space, Contributor shall credit Company through
Escrow an amount equal to one year's base rent and estimated triple net
charges on all such vacancy over 8,000 square feet. The lease rate to be
applied shall be Eleven and no/100ths Dollars ($11.00) per square foot.
In addition, Company
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shall receive a credit through Escrow at the rate of Fifteen and
No/100ths Dollars ($15.00) per square foot for such vacancy over 8,000
square feet to compensate Company for anticipated tenant improvements
and commissions. If at the Closing the Property has greater than 8,000
square feet of vacant leasable space, but Contributor, with the consent
and approval of Company as herein provided, has entered into a binding
Lease with a Tenant for a portion or all of such vacant space, then the
amount to be credited Company for such leased but vacant space shall be
based on the actual tenant improvement allowance and commission, if any,
for which the landlord is to be responsible with respect to such
Lease(s), and the credit for one year's base rent for such Lease(s)
shall be limited to that portion of the first (1st) full calendar year
from and after Closing for which such Tenant(s) is not required to pay
base rent; provided, however, that Company shall be credited fully for
all rent concessions applicable to such period.
If Contributor and Company agree to proceed with the proposed
Applebee's ground lease, Contributor shall be responsible for all costs
associated with such leasing, including, without limitation, all site
work, tenant improvement allowances and commissions. In addition,
Company will receive a credit through Escrow for an amount equal to the
monthly rent for the period of time from close of Escrow until
Applebee's is obligated to start paying rent pursuant to its Lease. If
Contributor proceeds with another mutually acceptable tenant at a ground
rent higher than $65,000.00 per year, the Contribution Consideration
will be increased by the amount of rent over $65,000.00 divided by ten
percent (10%). The total amount of such increase, if any, to the
Contribution Consideration shall be payable in Units in the same manner
as provided for the Exchange Consideration. Contributor shall be
responsible for all costs to put a tenant other than Applebee's in place
in the same manner as above provided. If a lease is not consummated with
Applebee's or any other tenant for this pad location, the existing pad
building will be factored into the maximum vacancy calculation noted in
the immediately preceding paragraph.
9.9 INSURANCE; UTILITIES. Company acknowledges that Contributor will
cause its policies of casualty and liability insurance to be terminated with
respect to the Property as of the Closing Date. Company shall be responsible for
obtaining its own insurance as of the Closing Date and thereafter. Any deposits
for utilities made by Contributor shall be refunded to Contributor and Company
shall arrange for any required replacements therefor and Company shall be
responsible for obtaining its own utilities as of the Closing Date and
thereafter.
9.10 CLOSE OF ESCROW. Provided that (i) Escrow Holder has received the
documents and funds described in Sections 9.3, 9.4, and 9.5 hereof; (ii) Escrow
Holder has not received prior written notice from either party to the effect
that an agreement of either party made hereunder has not been performed or to
the effect that any condition set forth herein has not been satisfied or waived;
(iii) Company has not elected to terminate its rights and obligations hereunder
pursuant to Article VII; and (iv) the Title
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Company has issued or is unconditionally prepared and committed to issue the
Owner's Title Policy to Company, Escrow Holder is authorized and instructed on
the Closing Date to:
(a) cause the Deed to be recorded, in that order, in the Official
Records of the appropriate county;
(b) deliver the Exchange Consideration and the Additional
Consideration, if any, in the manner specified by Contributor in
separate instructions to Escrow Holder;
(c) deliver the Assumption Documents to Lender or in accordance
with Lender's instructions;
(d) deliver to Company an original of each of the ▇▇▇▇ of Sale,
the Lease Assignment and the Contract Assignment, (1) as-recorded
conformed copy of the Deed, and a copy of the fully executed Assumption
Documents; and deliver to Contributor a copy of the fully executed ▇▇▇▇
and Sale, the Lease Assignment, the Contract Assignment, and (1)
as-recorded conformed copy of the Deed, and a copy of the fully executed
Assumption Documents; and
(e) deliver Contributor's Non-Foreign Affidavit to Company.
9.11 NOTIFICATION; CLOSING STATEMENTS. If Escrow Holder cannot comply
with the instructions herein (or as may be provided later), Escrow Holder is not
authorized to cause the recording of any of the Documents. If Escrow Holder is
unable to cause the recording, Escrow Holder shall notify the parties without
delay. Immediately after the Closing, Escrow Holder shall deliver to Company and
Contributor, respectively, at their addresses listed in Section 15.1 hereof, a
true, correct and complete copy of the Contributor's and Company's Closing
Statements, in forms customarily prepared by Escrow Holder, as well as all other
instruments and documents to be delivered to Company and Contributor.
9.12 DEFAULT AND REMEDIES.
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(a) If prior to or at Closing, Contributor shall have failed to
perform in any material respects any of the covenants and/or agreements
contained herein which are to be performed by Contributor, or if any
warranty or representation made by Contributor herein is not true and
correct in all material respects, Company may seek specific performance
of this Agreement or may bring suit for damages against Contributor;
provided, however, that any suit for damages brought by Company shall be
limited to recovery of Company's actual out of pocket costs and expenses
incurred by Company in pursuit of the transactions contemplated hereby.
Any such suit for specific performance or damages must be filed within
the earlier of (i) ninety (90) days from and after the date Company has
actual knowledge of any material misrepresentation or failure of
warranty and (ii) one (1) year following Contributor's breach or shall
be deemed waived for all purposes. Notwithstanding the foregoing, absent
independent arrangements between Company and Contributor, Company shall
not be entitled to seek redress against Contributor following the
Closing for breaches of representations and warranties that occurred
prior to or at Closing, if such breach(es) or the facts underlying such
breach(es) were known at the time of Closing by Company.
With respect to any breach of a representation or warranty of and
by Contributor which is not known by Company at Closing, Company shall
be entitled, in addition to the foregoing remedies, to be indemnified
and held harmless from and against the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including, without
limitation, related counsel and paralegal fees and expenses) incurred by
Company and resulting from or arising out of such breach of a
representation or warranty made by Contributor in or pursuant to this
Agreement.
(b) If prior to or at Closing, Company shall have failed to
perform in any material respect any of the covenants and/or agreements
contained herein which are to be performed by Company or if any warranty
or representation made by Company herein is not true and correct in all
material respects, then Contributor shall be entitled, after providing
Company with written notice thereof and the same remaining uncured for
at least three (3) days thereafter, to exercise the remedies set forth
in Section 4.6, which shall be Contributor's sole and exclusive remedies
in such event.
ARTICLE X
REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 COMPANY'S REPRESENTATIONS AND WARRANTIES. Company represents and
warrants to Contributor as follows:
(a) Pan Pacific Retail Properties, Inc. is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of Maryland,
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with full right, power, and authority to take title to the Property, and
to enter into and otherwise perform and comply with the terms of this
Agreement;
(b) As of Company's assignment and delegation of its rights and
remedies hereunder, the DownREIT LLC will be a limited liability company
duly organized, validly existing, and in good standing under the laws of
the State of Nevada, and qualified to do business in the State of
California, with full right, power and authority to take title to the
Property, and to enter into and otherwise perform and comply with the
terms of this Agreement;
(c) This Agreement and all documents executed by Company that are
to be delivered to Contributor at the Closing are, or at the time of
Closing will be, duly authorized, executed and delivered by Company; and
(d) This Agreement and all documents executed by Company that are
to be delivered to Contributor at the Closing are, or at the Closing
will be, legal, valid and binding obligations of Company, and do not,
and at the time of Closing will not, violate any provisions of any
agreement or judicial order to which Company is a party or to which
Company is subject.
10.2 CONTRIBUTOR'S REPRESENTATIONS AND WARRANTIES. Contributor
represents and warrants to Company as follows:
(a) Contributor is a limited partnership duly organized, validly
existing, and in good standing under the laws of the State of
California, with full right, power, and authority to convey to Company
all of Contributor's right, title and interest in and to the Property,
and to enter into and otherwise perform and comply with the terms of
this Agreement.
(b) This Agreement and all documents executed by Contributor that
are to be delivered to Company at the Closing are, or at the time of
Closing will be, duly authorized, executed and delivered by Contributor.
(c) This Agreement and all documents executed by Contributor that
are to be delivered to Company at Closing are, or at the time of Closing
will be, legal, valid and binding obligations of Contributor, and do
not, and at the time of Closing will not, violate any provisions of any
agreement or judicial order to which Contributor is a party or to which
Contributor or the Property is subject.
(d) To the best of Contributor's knowledge, other than the
Property, there are no items, tangible or intangible, real or personal,
owned by the Contributor or any affiliate of Contributor as of now or at
any time heretofore and used in conjunction with the Property or any
portion thereof.
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(e) Contributor has received no notice that the Property, and the
existing uses of the Property, are not in compliance with all applicable
laws, ordinances, rules, regulations, and requirements of all
governmental authorities having jurisdiction thereof, including, without
limitation thereto, those pertaining to zoning, land use, subdivision,
building, safety, fire and health.
(f) Contributor has not received any notice that there is any
action, suit, proceeding or investigation pending, nor to Contributor's
knowledge is any of the foregoing threatened, before any agency, court,
or other governmental authority which relates to the Contributor or the
ownership, maintenance, or operation of the Property.
(g) Contributor has not received any notice that there is any
condemnation or eminent domain proceeding affecting the Property or any
portion thereof currently pending nor, to Contributor's knowledge, is
any such proceeding threatened.
(h) Contributor has received no notice of any failure of the
Contributor to comply with any applicable governmental requirements in
respect of the use, occupation and construction of the Property,
including but not limited to environmental, zoning, platting and other
land use requirements which have not been heretofore corrected to the
satisfaction of the appropriate governmental authority, and Contributor
has received no notice of and has no knowledge of any violations or
investigations relating to any such governmental requirement.
(i) Contributor has received no notice of any default or breach
by the Contributor under any covenants, conditions, restrictions,
rights-of-way, or easements which may effect the Contributor in respect
to the Property or may effect the Property or any portion thereof, and
no such default or breach now exists.
(j) To the best of Contributor's knowledge, there has been no
material default or any claim of material default, and no event has
occurred which with notice or lapse of time or both would constitute a
material default, under any Lease, and to Contributor's knowledge no
Tenant has asserted or has any defense, set off, or claim with regard to
his tenancy pursuant to his Lease, any law or otherwise.
(k) To Contributor's actual knowledge, the heating, ventilation,
air conditioning, mechanical, electrical and other systems and equipment
forming a part of or used in connection with the Property are operative
and in good working condition, normal wear and tear excepted, and in
compliance with all applicable laws, ordinances, regulations and
requirements.
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(l) Contributor is not a foreign person as defined in Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended.
(m) Contributor has not received any notice or complaint from any
authority or person that the Property does not comply with all
applicable requirements of the Equal Opportunity for Individuals Act
(ADA), 42 U.S.C. 12101 and the regulations promulgated and set forth at
28 CFR 36.401 et seq.
(n) To the best of Contributor's knowledge, the survey,
mechanical and structural plans and specifications, soils reports,
certificates of occupancy, warranties, operating statements, income and
expense reports and all other books and records relating to or affecting
the Property, and all other contracts or documents delivered to Company
pursuant to this Agreement or in connection with the execution hereof
are and at the time of Closing will be true and correct copies, are and
at the time of Closing will be in full force and effect and contain no
material inaccuracies or misstatements of fact, and all such documents
in Contributor's possession or control relating to or affecting the
Property have been or will be delivered to Company pursuant to this
Agreement.
(o) To the best of Contributor's knowledge, no representation,
warranty or statement of Contributor in this Agreement or in any
certificate, exhibit or schedule furnished or to be furnished to Company
pursuant to this Agreement or in connection with the transactions
contemplated hereby contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary
to make the statements or facts contained therein misleading.
(p) The copies of the Leases delivered to Company are true and
correct copies of all such Leases and are in full force and effect and
there are no other agreements, written or oral, with respect to the
tenancies.
(q) To the best of Contributor's knowledge, the copies of the
Contracts and all Information previously delivered to Company are true
and correct copies of all such Contracts and Information and are in full
force and effect. There are no unpaid amounts due and owing by
Contributor under any such Contract, except for amounts for which
Company is to receive full credit through proration at Closing. There
are no other service or maintenance contracts relating to the Property.
(r) Except as disclosed in writing to Company, there are no
commissions, finder's fees or other compensation owing or which may
become owing to any broker or any other person or entity with respect to
any Lease or occupancy agreement including, without limitation, any such
compensation with respect to any future renewals, extensions or
expansions thereof.
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(s) Contributor is not party to, or otherwise bound by, any
collective bargaining agreement or multi-employer pension fund covering
employees who service the Property.
(t) To the best of Contributor's knowledge, there is no current
labor dispute with any maintenance or other personnel or employees of
Contributor or any contracts with respect to the Property which could
adversely affect the use, operation or value of the Property.
(u) Contributor knows of no facts nor has Contributor failed to
disclose to Company any fact which would prevent Company from using and
operating the Property after Closing in the manner in which the Property
has been used, leased and operated prior to the date hereof.
(v) Contributor has not committed nor obligated itself in any
manner whatsoever to sell the Property to any party other than Company.
Contributor has not hypothecated or assigned any rents or income from
the Property in any manner, other than pursuant to any existing mortgage
financing secured by the Property as of the Effective Date.
(w) No governmental authority has notified Contributor of the
need to take corrective action regarding elimination or control of
Hazardous Materials on or about the Property. Except in accordance with
applicable laws, neither Contributor nor, to the best of Contributor's
knowledge, any other tenant, occupant or user of the Property has used,
generated, manufactured, installed, released, discharged, stored or
disposed of any Hazardous Materials on, under, in or about the Property,
or transported any Hazardous Materials to or from the Property, and
there are no Hazardous Materials or underground storage tanks located
on, under, in or about the Property.
(x) Contributor shall hold as confidential all information
concerning Company or the transaction contemplated hereby disclosed to
Contributor in connection with said transaction; and Contributor shall
not, prior to Closing, release any such information to third parties
without Company's prior written consent, except pursuant to a court
order requiring such release or as otherwise may be required by law.
10.3 INVESTMENT REPRESENTATIONS OF CONTRIBUTOR, WARANCH AND ▇▇▇▇▇▇▇.
Each of Contributor, Waranch and ▇▇▇▇▇▇▇ hereby acknowledges its understanding
that the Units to be acquired pursuant to this Agreement are intended to be
exempt from registration under the Securities Act of 1933, as amended and the
rules and regulations in effect thereunder (the "SECURITIES ACT"). In
furtherance thereof, Contributor, and each of Waranch and ▇▇▇▇▇▇▇ in
contemplation of a distribution of Units to each of them by Contributor, hereby
represents and warrants to the Company as follows:
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(a) Except as herein provided, each is acquiring the Units solely
for its own account for the purpose of investment and not as a nominee
or agent for any other person and not with a view to, or with any
intention of, a distribution or resale thereof, in whole or in part, in
violation of the Securities Act or state securities or "blue sky" laws.
Waranch agrees and acknowledges that, except for the exercise of
redemption rights pursuant to the DownREIT operating agreement, and
▇▇▇▇▇▇▇ agrees and acknowledges that, except for the sale contemplated
to Company pursuant to the Related Agreement, neither will directly or
indirectly, offer, sell, transfer, assign, pledge, hypothecate or
otherwise dispose of any of the Units it is issued pursuant to this
Agreement in the absence of an effective registration statement under
the Securities Act and qualification or other compliance under
applicable "blue sky" or state securities laws unless it delivers to the
Company an opinion of a lawyer experienced in securities matters and
reasonably satisfactory to the Company, to the effect that the proposed
sale, transfer, assignment, pledge, hypothecation or other disposition
may be affected without registration under the Securities Act and under
applicable "blue sky" or state securities laws. Each understands that
the Company is under no obligation to register the sale or other
transfer of the Units.
(b) Each is knowledgeable, sophisticated and experienced in
business and financial matters and fully understands the limitations on
the transfer of restricted securities imposed by the Federal securities
laws and as described herein. Each is able to bear the economic risk of
holding the Units for an indefinite period and is able to afford the
complete loss of its investment in the Units; each has received and
reviewed all information and documents about or pertaining to the
Company and the issuance of the Units as each deems necessary or
desirable, and has been given the opportunity to obtain any additional
information or documents and to ask questions and receive answers about
such information and documents, the Company, the business and prospects
of the Company and the Units which each deems necessary or desirable to
evaluate the merits and risks related to its investments in the Units;
and each understands and has taken cognizance of all risk factors
related to the purchase of the Units.
(c) Each is an "accredited investor" as such term is defined in
Rule 501 or Regulation D promulgated under the Securities Act.
(d) Each certificate representing the Units shall bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE
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OF SUCH REGISTRATION UNLESS THE COMPANY HAS BEEN FURNISHED WITH
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO COMPANY, IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO COMPANY, TO THE EFFECT
THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS. IN
ADDITION, THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER
SET FORTH IN THE DownREIT OPERATING AGREEMENT, AS IT MAY BE
AMENDED AND RESTATED FROM TIME TO TIME (A COPY OF WHICH MAY BE
OBTAINED FROM COMPANY'S MANAGING MEMBERS AT ITS PRINCIPAL
EXECUTIVE OFFICES."
(e) In making the investment in the Units, each has and will rely
solely upon the advice of its personal tax advisers with respect to the
federal and/or state tax aspects of an investment in the Units and
neither the Company nor its managing member, nor any officer, director
or other person representing the Company, its managing member, or any of
its affiliates, has made any representation regarding the tax
consequences of the investments in the Units. The Company shall have no
responsibility for any adverse tax consequences imposed on any of them.
(f) Restrictions on and Information Regarding Beneficial
Ownership of LLC Units; Publicly Traded Partnership Representation.
(i) Notwithstanding anything to the contrary contained in
this Agreement or the DownREIT operating agreement, without the
consent of the DownREIT LLC, which consent may be given or
withheld in the DownREIT LLC's sole and absolute discretion, in
no event shall any of them or any transferees or prospective
transferees of any of them own or transfer Units such that the
number of such holders (or such prospective holders) of Units
would, in the aggregate, exceed thirty-five (35) (including as
holders any person (a "BENEFICIAL OWNER") owning an interest in a
partnership, a limited liability company, a grantor trust, or an
S corporation (a "FLOW-THROUGH ENTITY"), that would own, directly
or through other Flow-Through Entities, an interest in the
DownREIT LLC where substantially all the value of the Beneficial
Owner's interest in the Flow-Through Entity would be attributable
to the Flow-Through Entity's interest (direct or indirect) in the
DownREIT LLC (a "SPECIAL PURPOSE FLOW-THROUGH ENTITY"), and
treating Contributor as a Special Purpose Flow-Through Entity for
purposes of this paragraph).
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(ii) From the date of this Agreement until the Closing,
and then so long as any recipient of Units (each, a "HOLDER" and
collectively, the "UNIT HOLDERS") who is not a natural person
holds any Units, such Unit Holder shall notify the DownREIT LLC
in writing promptly upon any change in the identity or number of
its direct or indirect Partners (as defined below) as identified
pursuant to this Agreement, and shall provide such information as
the DownREIT LLC may reasonably request with respect to any such
change. Each Unit Holder shall use its best efforts to secure the
compliance of any Flow-Through Entities that hold direct or
indirect interests in such Unit Holder with the requirements of
this Section as if such requirements applied directly to such
entities. For purposes of this Agreement, the term "Partners"
means, collectively, with respect to an entity, the holders of
all beneficial or other direct or indirect ownership interests in
such entity, including, without limitation, all partners,
members, and beneficiaries and, to the extent any such partner,
member, or beneficiary is not a natural person, the holders of
all beneficial other direct or indirect ownership interests in
such partner, member, or beneficiary. Each Unit Holder
acknowledges that the provisions of this Section are imposed to
aid the DownREIT LLC in avoiding taxation as a "publicly traded
partnership" for federal income tax purposes, agrees that
monetary damages may be insufficient to remedy the potential harm
caused by any breach of the provisions of this Section, and
agrees that injunctive relief, including specific performance or
other equitable remedy would be an appropriate remedy. The
provisions of this Section shall survive the Closing.
(iii) Contributor represents and warrants to the DownREIT
LLC that it is not and has never been a "publicly traded
partnership" (as such term is defined in Section 469(k)(2) or
Section 7704(b) of the Internal Revenue Code of 1986, as
amended).
No examination or investigation of the Property by or on behalf of the Company
prior to the Closing shall in any way modify, affect, or diminish Contributor's
obligation under the representations, warranties, covenants, and agreements
contained in this Agreement.
10.4 CONTINUATION AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties by the respective parties contained in this
Article 10 are intended to and shall remain true and correct as of the time of
the Closing, shall be deemed to be material, and shall survive the execution and
delivery of this Agreement, the delivery of the Deed and transfer of title to
the Property for a period of one (1) year following the Closing Date.
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ARTICLE XI
POSSESSION
Possession of the Property shall be delivered to Company immediately
following the Closing, subject to the rights of Tenants.
ARTICLE XII
OPERATION OF THE PROPERTY
During the Escrow Period, Contributor shall not accept any payment of
rent (except as a security deposit) or other charges from any tenant of the
Property applicable to a period exceeding one (1) month in advance, nor apply
any security deposit to rent due from any tenant of the Property without in each
case obtaining Company's prior written consent thereto (which consent shall not
be unreasonably withheld or delayed by Company). In addition to the foregoing,
Contributor: (i) shall manage, maintain, operate, and service the Property
consistent with standards in the industry for the first class operation of
similar projects of comparable quality in the same area as the Property is
located, maintaining present services; (ii) shall keep the Property and every
portion thereof in reasonably good working order and repair; (iii) shall
maintain a sufficient inventory of supplies, materials, equipment and other
personal property for the proper management, maintenance, operation and
servicing of the Property; and (iv) shall not, except with Company's prior
written consent (which consent shall not be unreasonably withheld or delayed by
Company), approve, consent to, or otherwise permit any material change in the
operations of the Property during the Escrow Period, including, without
limitation:
(a) any material alterations to the Improvements except as may be
necessary in order to perform ordinary, scheduled maintenance;
(b) cancellation of or material reduction in the amount or scope of
coverage under any insurance currently maintained with respect to the Property;
(c) cancellation or surrender of any existing Permit; and
(d) any other material variation from Contributor's ordinary course of
business in connection with the Property.
ARTICLE XIII
LOSS BY FIRE OR OTHER CASUALTY; CONDEMNATION
13.1 DAMAGE OR DESTRUCTION.
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(a) Before the Closing, risk of loss with regard to the Property
shall be borne by Contributor. If, before the Closing, the Improvements
or the Personal Property are destroyed or materially damaged, Company's
rights and obligations with respect to the Property shall be as follows:
(i) if with respect to the Property the destruction or
damage involves a diminution in value equal to or less than One
Hundred Thousand and No/100ths Dollars ($100,000.00) ("DIMINUTION
THRESHOLD"), Company shall be obligated to proceed to close the
transaction (subject to satisfaction of the other provisions
hereof) and, if, but only if, Escrow actually closes, Company
shall receive a credit against the Contribution Consideration
equal to the lesser of (A) the cost to repair the damage or
destruction and (B) the amount of the deductible under
Contributor's casualty insurance policy; or
(ii) if the destruction or damage involves a diminution in
value of more than the Diminution Threshold, Company shall have
the option (which must be exercised by Company within fifteen
(15) calendar days after Company's receipt of written notice from
Contributor advising of such destruction or damage), to terminate
this Agreement or proceed with the Closing. If Company elects to
proceed with Closing, Company shall receive a credit against the
Contribution Consideration equal to the lesser of (A) the cost to
repair the damage or destruction and (B) the amount of the
deductible under Contributor's casualty insurance policy.
(b) If Company and Contributor cannot agree as to the diminution
in value, then such diminution in value shall be determined by
subtracting from the Contribution Consideration the fair market value of
the Property after the damage, as determined by an M.A.I. appraiser
appointed by two (2) other M.A.I. appraisers nominated one (1) each by
Contributor and Company. The expense of the appraiser shall be borne
equally by Company and Contributor.
(c) If Company elects to terminate this Agreement under
subsection (a)(ii) above, this Agreement shall become null and void and
of no further force or effect as to all unperformed rights and
obligations of the parties and, except as provided in Sections 5.3, 5.5,
15.2 and 15.10 hereof, neither Company nor Contributor shall have any
further rights, duties, liabilities or obligations to the other by
reason thereof, other than those rights and obligations that, by their
terms, survive termination of this Agreement. In the event of such
termination, the costs of the Title Company and Escrow Holder shall be
borne equally by Company and Contributor. Also, each party shall bear
its own costs incurred hereunder.
13.2 CONDEMNATION.
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(a) If, before the Closing, all of the Property shall be taken by
condemnation or eminent domain, this Agreement shall become null and
void and of no further force or effect as to all unperformed rights and
obligations of the parties and, except as provided in Sections 5.3, 5.5,
15.2 and 15.10 hereof, neither Company nor Contributor shall have any
further rights, duties, liabilities or obligations to the other by
reason hereof, other than those rights and obligations that, by their
terms, survive the termination of this Agreement. In the event of such
termination, the costs of the Title Company and Escrow Holder shall be
borne equally by Company and Contributor. Also, each party shall bear
its own costs incurred hereunder.
(b) If, before the Closing, (i) less than all of the Property
shall be taken by condemnation or eminent domain, (ii) there is any
taking of land lying in the bed of any street, road, highway or avenue,
open or proposed, in front of or adjoining all or any part of the Land,
or (iii) there is any change of grade of such street, road, highway or
avenue, provided such taken or change of grade involves a diminution in
value of more than the Diminution Threshold, then Company, at Company's
option, may terminate this Agreement as to that portion of the Property
attributable to the affected Shopping Center and proceed with the
Closing as to the remainder of the Property, or to terminate this
Agreement as to all of the Property. If Company elects to terminate this
Agreement under this subsection (b), this Agreement shall become null
and void and of no further force or effect and, except as provided in
Sections 5.3, 5.5, 15.2 and 15.10 hereof, neither Company nor
Contributor shall have any further rights, duties, liabilities or
obligations to the other by reason hereof, other than those rights and
obligations that, by their terms, survive the termination of this
Agreement. In the event of such termination, the costs of the Title
Company and Escrow Holder shall be borne equally by Company and
Contributor. Also, each party shall bear its own costs incurred
hereunder.
(c) If Company and Contributor cannot agree as to the diminution
in value, then such diminution in value shall be determined by
subtracting from the Contribution Consideration the fair market value of
the Property after the taking, as determined by an M.A.I. appraiser
appointed by two (2) other M.A.I. appraisers nominated one (1) each by
Contributor and Company. The expense of the appraiser shall be borne
equally by Company and Contributor.
(d) If this Agreement is not terminated in accordance with the
foregoing, or if such taking involves a diminution in value equal to or
less than the Diminution Threshold, Company shall accept title to the
Property subject to such taking. In such event, Company shall receive a
credit against the Contribution Consideration in amount of the
diminution in value, and the award for such taking shall be paid to
Contributor.
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ARTICLE XIV
AS-IS PURCHASE
Upon entering into this Agreement, Company represents and warrants that
it has performed or will perform a full range of investigation and inspection of
the Property, and will or has satisfied itself as to the condition of the
Property and its suitability for the purposes intended by Company. Company
acknowledges and agrees that Contributor has made no representations or
warranties with respect to the toxic or hazardous materials or other condition
of the Property whatsoever, express or implied, except as expressly set forth
otherwise in Section 10.2 above, and, otherwise, that Company's purchase of the
Property is "As Is" in its present state and condition, and that any and all
improvements and utilities required within the perimeter of the Property and any
and all improvements, utilities, and utility extensions outside of the perimeter
of the Property required to serve the Property, and all costs and expenses
thereof, shall be the sole responsibility of Company. Except as above provided,
in purchasing the Property Company is relying solely upon its own inspection and
investigation of the Property, and not upon any representation, warranty,
statement, study, report, description, guideline, or other information or
materials made or furnished by Contributor or any of its officers, employees,
agents, brokers, attorneys, or representatives, whether written or oral, express
or implied, of any nature whatsoever.
ARTICLE XV
MISCELLANEOUS
15.1 NOTICES. Any communication, notice or demand of any kind whatsoever
that either party may be required or may desire to give to or serve upon the
other shall be in writing, addressed to the parties at the addresses set forth
below, and delivered by personal service, by Federal Express or other reputable
overnight delivery service, or by facsimile transmission:
If to Contributor: Rancho Las Palmas Center Associates
c/o Bend Properties, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: Solomon, Ward, Seidenwurm & ▇▇▇▇▇, LLP
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Company: Pan Pacific Retail Properties, Inc.
▇▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇ Peek ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be deemed delivered as follows: (a) if personally
delivered, the date of delivery to the address of the person to receive such
notice; (b) if sent by Federal Express or other reputable overnight courier
service, the date of delivery to the address of the person to receive such
notice; or (c) if sent by facsimile transmission, on the Business Day
transmitted to the person to receive such notice if sent by 5:00 p.m.,Pacific
time, on such Business Day, and the next Business Day if sent after 5:00 p.m.,
Pacific time, or on a day other than a Business Day. Any notice sent by
facsimile transmission must be confirmed by sending by Federal Express or other
reputable overnight delivery service a copy of the notice sent by facsimile
transmission. Any party may change its address for notice by written notice
given to the other at least five (5) calendar days before the effective date of
such change in the manner provided in this Section 15.1.
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15.2 BROKERS AND FINDERS. In the event of a claim for broker's fees,
finder's fees, commissions or other similar compensation in connection herewith:
(i) Company, if such claim is based upon any agreement alleged to have been made
by Company, shall indemnify, defend (using counsel reasonably satisfactory to
Contributor) and hold Contributor harmless from and against any and all damages,
liabilities, costs, expenses and losses (including, without limitation,
attorneys' fees and costs) that Contributor sustains or incurs by reason of such
claim; and (ii) Contributor, if such claim is based upon any agreement alleged
to have been made by Contributor, shall indemnify, defend (using counsel
reasonably satisfactory to Company) and hold Company harmless from and against
any and all damages, liabilities, costs, expenses and losses (including, without
limitation, attorneys' fees and costs) that Company sustains or incurs by reason
of such claim. The provisions of this subsection shall survive the termination
of this Agreement or the Closing.
15.3 SUCCESSORS AND ASSIGNS. Immediately upon the formation of the
DownREIT LLC, Company shall assign and delegate its rights and obligations
hereunder to the DownREIT LLC, and upon such assignment and delegation, the
DownREIT LLC shall be deemed the Company hereunder for all purposes. Other than
such assignment, neither Contributor nor Company may assign its rights hereunder
without the prior written consent of the other party, which consent may be
withheld in such party's sole and absolute discretion; and any attempted or
purported assignment in contravention of the terms and provisions of this
Section 15.3 shall be null and void. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs,
administrators and permitted successors and assigns.
15.4 AMENDMENTS. This Agreement may be amended or modified only by a
written instrument executed by both parties.
15.5 INTERPRETATION. Words used in the singular shall include the
plural, and vice-versa, and any gender shall be deemed to include the other. The
captions and headings of the Articles and Sections of this Agreement are for
convenience of reference only, and shall not be deemed to define or limit the
provisions hereof. Further, each party hereby acknowledges that such party and
its counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed and
the usual rule of construction, to the effect that any ambiguities herein should
be resolved against the drafting party, shall not be employed in the
interpretation of this Agreement or any amendments, modifications or exhibits
hereto or thereto.
15.6 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
15.7 MERGER OF PRIOR AGREEMENTS. This Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes
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all prior and contemporaneous oral or written representations, warranties,
statements, documents, understandings and agreements with respect thereto.
15.8 ATTORNEYS' FEES AND COSTS. If either Company or Contributor brings
any suit or other proceeding with respect to the subject mater or the
enforcement of this Agreement, the prevailing party (as determined by the court,
agency or other authority before which such suit or proceeding is commenced), in
addition to such other relief as may be awarded, shall be entitled to recover
reasonable attorneys' fees, expenses and costs of investigation actually
incurred. The foregoing includes, without limitation, attorneys' fees, expenses
and costs of investigation incurred in appellate proceedings, costs incurred in
establishing the right to indemnification, or in any action or participation in,
or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the
Bankruptcy ▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code Section 101 et seq., or any successor
statutes.
15.9 TIME OF ESSENCE. Time is of the essence of this Agreement.
15.10 CONFIDENTIALITY. Company and Contributor agree that, to the extent
reasonably practical, they shall keep the contents of this Agreement and the
contents of any environmental report prepared by or for Company in connection
with this Agreement confidential and that no publicity or press release to the
general public or otherwise with respect to this transaction shall be made by
either party without the prior written consent of the other party (which consent
may be given or denied in the other party's sole and absolute discretion),
except that Company is hereby authorized to prepare and issue a press release to
the general public announcing its purchase of the Property at the Closing.
Otherwise, the confidentiality provisions of this Section 15.10 shall survive
the Closing.
15.11 NO WAIVER. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party make the waiver.
15.12 FURTHER ACTS. Each party, at the request of the other, shall
execute, acknowledge (if appropriate) and deliver whatever additional documents,
and do such other additional acts, as may be reasonably required in order to
accomplish the intent and purposes of this Agreement.
15.13 EXHIBITS. Exhibits A through H, inclusive, and Schedule 1 are
attached hereto and incorporated herein by reference.
15.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which, when taken together, shall constitute one and the same instrument,
with the same effect as if all of the parties to this Agreement had executed the
same counterpart. Any
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signature page of any counterpart of this Agreement may be detached and
reattached to any other counterpart of this Agreement.
15.15 NO INTENT TO BENEFIT THIRD PARTIES. Contributor and Company do not
intend by any provision of this Agreement to confer any right, remedy or benefit
upon any third party, and no third party shall be entitled to enforce, or
otherwise shall acquire any right, remedy or benefit by reason of, any provision
of this Agreement.
15.16 PERFORMANCE DUE ON DAY OTHER THAN BUSINESS DAY. If the time period
for the performance of any act called for under this Agreement expires on a
Saturday, Sunday or Holiday, the act in question may be performed on the next
succeeding Business Day.
15.17 JOINT AND SEVERAL OBLIGATIONS. If Company or Contributor is
comprised of more than one person or entity, then all persons or entities that
comprise Company and Contributor, as applicable, shall be jointly and severally
liable for all the covenants, agreements, and obligations of Company or
Contributor, as the case may be, contained in this Agreement.
15.18 SURVIVAL OF OBLIGATIONS. In addition to terms which by their
express provision are to survive the Closing, all other terms and provisions
which by their nature are to be performed or be applicable after the Closing
shall survive the Closing.
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15.19 AUDIT RESPONSIBILITIES. From time to time, both before and after
Closing, Company may be engaged in financing and other transactions which will
require that both Company and the operation of the Property be audited as to
then current and past operations of the Property, including periods of time
during which Contributor owned the Property. As a material inducement for
Company to enter into this Agreement, Contributor agrees that upon written
request of Company, Contributor shall render its timely and cooperative efforts,
at no additional cost to Contributor, to any such auditors in delivering such
responses to inquiries and information as is within the knowledge or records of
Contributor with respect to the operations of the Property or which is within
the control or reasonable ability of Contributor to obtain, including, without
limitation, operating statements and other financial information relevant to the
Property and its operations. In addition to the foregoing, Contributor shall
sign and deliver to any such auditor, such auditor's standard representation
letter with respect to the foregoing matters, revised by Contributor only to the
extent necessary to make same true and correct as to the matters represented
therein by Contributor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the dates written below.
"Contributor"
RANCHO LAS PALMAS CENTER ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
By: RLP ASSOCIATES, INC.
Its: GENERAL PARTNER
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: PRESIDENT
"Company"
PAN PACIFIC RETAIL PROPERTIES, INC.,
A MARYLAND CORPORATION
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: PRESIDENT & CHIEF EXECUTIVE OFFICER
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ACCEPTANCE OF ESCROW INSTRUCTIONS
The undersigned, as Escrow Holder in connection with the purchase and
sale of the Property, hereby acknowledges the terms and conditions of the escrow
instructions set forth in this Agreement and agrees to perform its obligations
in connection therewith.
"ESCROW HOLDER"
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Print Title:
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44.