PURCHASE AGREEMENT
DATED AS OF DECEMBER 31, 1996
Between
GSSW-REO OWNERSHIP CORPORATION,
GSSW LIMITED PARTNERSHIP
and
SOUTHWEST ASSOCIATES, L.P.
With Respect to
All of the General Partnership and Limited Partnership Interests
of certain Limited Partnerships
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is made and entered into this 31st
day of December, 1996, by and between SOUTHWEST ASSOCIATES, L.P., a Delaware
limited partnership or its designee (the "Purchaser") and GSSW Limited
Partnership, a Texas limited partnership (the "Company") and GSSW-REO Ownership
Corporation, a Texas corporation ("GSSW-REO") (sometimes collectively referred
to as the "Seller").
Introductory Provisions:
The following provisions are true and correct and form the basis for and
are a part of this Agreement:
A. GSSW-REO owns one hundred percent (100%) of the general partnership
interests (the "General Partnership Interests") of each of the Property
Partnerships (as hereinafter defined), which General Partnership Interests
represent one percent (1%) of the legal and equitable ownership interests in
each of the Property Partnerships.
B. The Company owns one hundred percent (100%) of the limited partnership
interests (the "Limited Partnership Interests") of the Property Partnerships,
which Limited Partnership Interests represent ninety-nine percent (99%) of the
legal and equitable ownership interests in each of the Property Partnerships.
C. Seller desires to sell to Purchaser and Purchaser desires to purchase
from GSSW-REO and the Company, the General Partnership Interests and the Limited
Partnership Interests, respectively, on the terms and subject to the conditions
and other provisions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
The capitalized terms used herein will have the following meanings.
"Affiliate" shall mean any Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with the Person.
"Agreement" shall mean this Purchase Agreement, together with the exhibits
attached hereto and the Disclosure Schedule.
"Allocated Price" shall mean with respect to each Property the portion of
the Purchase Price allocated with respect to such Property as shown on Exhibit
"B" hereto.
"Assets and Properties" shall mean all assets or properties of every kind,
nature, character, and description (whether real, personal, or mixed, whether
tangible or intangible, whether absolute, accrued, contingent, fixed, or
otherwise, and wherever situated) as now operated, owned, or leased by a
specified Person (directly or indirectly), including without limitation cash,
cash equivalents, securities, accounts and notes receivable, real estate,
equipment, furniture, fixtures, goodwill, and going-concern value.
"Assignment of Partnership Interests" shall mean an Assignment of
Partnership Interests in form and substance as set forth on Exhibit "A" attached
hereto.
"Claim Notice" shall mean written notification of a Third Party Claim by an
Indemnified Party to an Indemnifying Party pursuant to Section 9.2 hereof,
enclosing a copy of all papers served, if any.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement as provided in Section 2.3 hereof.
"Closing Date" shall mean December 31, 1996.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean GSSW Limited Partnership, a Texas limited partnership.
"Company's Knowledge" shall mean the current actual knowledge of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and J. ▇▇▇▇▇ ▇▇▇▇▇▇ without any duty of inquiry or
investigation.
"Contract" shall mean any written agreement, Lease, license, sublicense,
promissory note, evidence of indebtedness, guaranty (directly or indirectly) of
indebtedness, or other contract or commitment.
"Control" shall mean the power to elect a majority of the board of
directors or other governing body of any such Person or otherwise manage, direct
or govern the business operations or policies of such Person.
"Damages" shall mean any and all monetary damages, liabilities, fines,
fees, penalties, interest obligations, deficiencies, losses, and expenses
(including without limitation punitive, treble, or other exemplary or other
extra contractual damage amounts paid in settlement, interest,
court costs, costs of investigation, fees and expenses of attorneys,
accountants, appraisers and other experts).
"Disclosure Schedule" shall mean the disclosure schedule dated the date
hereof furnished by the Seller to the Purchaser and containing all lists,
descriptions, exceptions, and other information and materials as are required to
be included therein pursuant to this Agreement.
"Environmental Laws" shall mean without limitation (a) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984, as now or hereafter amended ("RCRA") (42 U.S.C. Section6901
et seq.), (b) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as now or hereafter amended ("CERCLA") (42 U.S.C.
Section 9601 et seq.), (c) the Clean Water Act, as now or hereafter amended
("CWA") (33 U.S.C. Section 1251 et seq.), (d) the Toxic Substances Control Act,
as now or hereafter amended ("TSCA") (15 U.S.C. Section 2601 et seq.), (e) the
Clean Air Act, as now or hereafter amended ("CAA") (42 U.S.C. Section 7401 et
seq.), (f) all regulations promulgated under any of the foregoing, (g) any
local, state or foreign law, statute, regulation or ordinance analogous to any
of the foregoing, and (h) any other federal, state, local, or foreign law
(including any common law), statute, regulation, or ordinance regulating,
prohibiting, or otherwise restricting the placement, discharge, release,
threatened release, generation, treatment, or disposal upon or into any
environmental media of any Hazardous Materials.
"Environmental Noncompliance" shall mean, but is not limited to: (a) the
Release of any Hazardous Material into the environment, any storm drain, sewer,
septic system or publicly owned treatment works, in violation of any effluent or
emission limitations, standards or other criteria or guidelines established by
any Environmental Law; (b) any noncompliance of physical structure, equipment,
process or premises with the requirements of building or fire codes, zoning or
land use regulations or ordinances, conditional use permits and the like; (c)
any noncompliance with federal, state or local requirements governing
occupational safety and health; (d) any operations, procedures, designs, and the
like at or on any Property which do not conform to the statutory or regulatory
requirements of any Environmental Law (including land use regulations and
ordinances) intended to protect public health, welfare and the environment; (e)
the failure to have obtained permits, licenses, variances or other
authorizations of any Governmental Authority necessary for the legal use and/or
operation of any equipment, process, or any activity at any Property; and (f)
the operation and/or use of any process or equipment in violation of any permit
condition, schedule of compliance, administrative or court order and the like,
as any of the foregoing may be applicable to any Property.
"Environmental Reports" shall mean certain Phase I environmental reports
prepared by environmental consultants covering each of the Properties as more
fully shown on Section 3.1(s) of the Disclosure Schedule.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall mean generally accepted accounting principles, consistently
applied throughout the specified period and in the comparable period in the
immediately preceding year.
"GSSW-REO" shall mean GSSW-REO Ownership Corporation, a Texas corporation.
"General Partnership Interests" shall have the meaning set forth in
Introductory Provision A herein.
"Governmental Authority" shall mean any and all applicable courts, boards,
agencies, commissions, offices, or authorities of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇,
departmental or otherwise) whether now or hereafter in existence.
"Ground Lease" shall mean that certain Lease made as of January 22, 1971,
by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇ as landlord and APCO NO. 1, a
limited partnership, as tenant, the leasehold interest of which was acquired by
▇▇▇▇▇▇▇▇▇ Forest-REO, L.P.
"Hazardous Materials" shall mean any substance, product matter, material,
waste, solid, liquid, gas, or pollutant, the generation, storage, disposal,
handling, recycling, release (or threatened release), treatment, discharge, or
emission of which is regulated, prohibited, or limited under any Environmental
Law and shall also include, without limitation, (a) gasoline, diesel fuel, fuel
oil, motor oil, waste oil, and any other petroleum hydrocarbons, including any
additives or other by-products associated therewith, (b) asbestos and
asbestos-containing materials in any form, (c) polychlorinated biphenyls, (d)
any substance the presence of which on any Property (i) requires reporting or
remediation under any Environmental Law; (ii) causes or threatens to cause a
nuisance on any Property or poses or threatens to pose a hazard to the health or
safety of persons on any Property; or (iii) which, if it emanated or migrated
from any Property, could constitute a trespass, nuisance or health or safety
hazard to persons on adjacent property, (e) radon, (f) urea formaldehyde foam
insulation, and (g) underground storage tanks, whether empty, filled or
partially filled with any substance.
"Indemnified Party" shall mean a person or entity claiming indemnification
under ARTICLE IX hereof.
"Indemnifying Party" shall mean a person or entity against whom claims of
indemnification are being asserted under ARTICLE IX hereof.
"IRS" shall mean the United States Internal Revenue Service.
"Law" shall mean all laws, statutes, ordinances, rules, decrees and
regulations of the United States of America or any state, commonwealth, city,
county, municipality or department thereof, including without limitation the
Americans with Disabilities Act.
"Leases" shall mean all leases, subleases, licenses or other agreements for
the use or occupancy of all or any part of any Property.
"Lien" shall mean any mortgage, pledge, assessment, security interest,
Lease, lien, adverse claim, levy, charge, or other encumbrance of any kind, or
any conditional sale contract, title retention contract, or other contract to
give or to refrain from giving any of the foregoing other than Permitted
Exceptions.
"Limited Partnership Interests" shall have the meaning set forth in
Introductory Provision B herein.
"Material Adverse Effect" shall mean any effect that is materially adverse
to the validity or enforceability of this Agreement, the ability of Seller or
Purchaser, as the case may be, to perform its obligations under this Agreement
or the business or condition of the Company, GSSW-REO and the Property
Partnerships, or any Property individually or taken as a whole.
"Mortgage Liens" shall mean the liens created under the deeds of trust and
mortgages more particularly described on Section 2.2 to the Disclosure Schedule
and securing certain indebtedness as more particularly identified thereon.
"Notification" shall mean any summons, citation, directive, order, claim,
litigation, pleading, investigation, proceeding, judgment, letter, or any other
written communication from any Governmental Authority, any entity or any
individual, concerning any intentional or unintentional act or omission which
has resulted in or which may result in any Environmental Noncompliance.
"Partnership Interests" shall mean the Limited Partnership Interests and
the General Partnership Interests.
"Permits" shall mean all permits, consents, licenses, certificates,
approvals, registrations, and authorizations which are required by any Law for
operation of any Property.
"Permitted Exceptions" shall mean the Permitted Liens and any and all other
restrictions, easements, encumbrances and other exceptions approved by
Purchaser.
"Permitted Liens" shall mean with respect to each Property (a) the Mortgage
Liens, (b) any lien for real property Taxes, assessments, and other governmental
charges that are not due and payable, and (c) all of the matters listed on the
Title Information.
"Person" shall mean any natural person, corporation, general partnership,
limited partnership, proprietorship, trust, union, association, court, tribunal,
agency, government department, commission, self-regulatory organization,
arbitrator, board, bureau, instrumentality, or other entity, enterprise,
authority, or business organization.
"Property" shall mean the real property and improvements thereon, if any,
owned by a Property Partnership as more fully described in Exhibit "C" attached
hereto.
"Property Partnership" shall mean each limited partnership owner of a
Property as identified on Exhibit "D" attached hereto.
"Property Partnerships' Partnership Agreements" shall mean the limited
partnership agreements and the certificates of limited partnership of each of
the Property Partnerships as each are included in Section 3.1(d) of the
Disclosure Schedule.
"Purchase Price" shall have the meaning set forth in Section 2.2 hereof.
"Purchaser" shall mean Southwest Associates, L.P., a Delaware limited
partnership.
"Purchaser's Knowledge" shall mean the current actual knowledge of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ without any duty of inquiry
or investigation.
"Purchaser-Related Persons" shall mean Purchaser, together with their
respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of any such Persons.
"Release" shall mean releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, ejecting, escaping, leaching, disposing,
seeping, infiltrating, draining, or dumping of any Hazardous Material. This term
shall be interpreted to include both the present and past tense, as appropriate.
"Seller" shall mean the Company and GSSW-REO.
"Seller-Related Persons" shall mean Seller, together with their respective
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of any such Persons.
"Seller's Tax Return" shall mean all appropriate and necessary Federal,
state and other applicable Tax Returns which include, on a consolidated or any
other reporting basis, the results of operations of the Company, GSSW-REO and
each of the Property Partnerships for all taxable periods ending on or before
the Closing Date.
"SWLIC" shall mean Southwestern Life Insurance Company, a Texas life
insurance company.
"Taxes" shall mean all taxes, charges, fees, levies, guaranty fund
assessments or other similar assessments or liabilities, including without
limitation income, gross receipts, ad valorem, premium, excise, real property,
personal property, windfall profit, sales, use, transfer, licensing,
withholding, employment, payroll, and franchise taxes imposed by the United
States of America or any state, local, or foreign government, or any
subdivision, agency, or other similar Person of the United States or any such
government; and such term shall include any interest, fines,
penalties, assessments, or additions to tax resulting from, attributable to, or
incurred in connection with any such tax or any contest or dispute thereof.
"Tax Returns" shall mean any report, return, or other information required
to be supplied by the Company, each Property Partnership, GSSW-REO and of each
consolidated or affiliated group of which the Company, each Property Partnership
or GSSW-REO has been a part to a taxing authority in connection with Taxes.
"Title Information" shall mean those matters set forth in Section 3.1(l) of
the Disclosure Schedule.
Unless the context of this Agreement otherwise requires, (a) words of any
gender are deemed to include each other gender; (b) words using the singular or
plural number also include the plural or singular number, respectively; (c) the
terms "hereof," "herein," "hereby," "hereto," and derivative or similar words
refer to this entire Agreement; (d) the terms "ARTICLE" or "Section" refer to
the specified ARTICLE or Section of this Agreement; (e) the term "party" means,
on the one hand, the Purchaser and, on the other hand, the Seller; (f) the
phrase "in the ordinary course of business and consistent with past practice"
refers to the business, operations, affairs, and practice of the Company which
operations and practice are consistent with the prudent operations and practices
of Persons engaged in the ownership and operation of real properties similar to
the Properties; and (g) all references to "dollars" or "$" refer to currency of
the United States of America.
ARTICLE II
SALE OF INTERESTS AND CLOSING
Section 2.1 Purchase and Sale of Interests. Subject to the terms and
conditions, and in reliance upon the representations and warranties, set forth
in this Agreement, the Company and GSSW-REO agree to sell the Limited
Partnership Interests and the General Partnership Interests, respectively, to
the Purchaser and the Purchaser agrees to purchase the Partnership Interests
from the Company and GSSW-REO at the Closing.
Section 2.2 Purchase Price. The purchase price for the Partnership
Interests is $109,218,558.00, plus $7,250,000.00 delivered in escrow pursuant to
an Escrow Agreement of event date in relation to the Partnership Interests in
GSSW-REO Dallas, L.P., to the extent such Partnership Interests are transferred
as provided therein (the "Purchase Price"). At the Closing, the outstanding
principal balance (as of the Closing Date) of the indebtedness secured by the
Mortgage Liens shall be deducted from the Purchase Price to obtain the cash
portion of the Purchase Price, subject to no other adjustment of any kind except
as expressly set forth in herein. The cash portion of the Purchase Price shall
be payable to the Company and GSSW-REO by the Purchaser at the Closing.
Section 2.3 Closing.
(a) The Closing will take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ P.C., 5400 Renaissance Tower, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
at 10:00 a.m., local time on the Closing Date.
(b) At the Closing, the Purchaser will (i) pay the cash portion of the
Purchase Price to Seller by wire transfer of funds immediately available in
Dallas, Texas, to such account or accounts as Seller specifies and (ii)
deliver to Seller such documents and instruments required to be delivered
by the Purchaser under the terms of this Agreement.
(c) At the Closing, Seller will deliver to the Purchaser (i) the
Assignment of Partnership Interests duly executed by Seller, and (ii) such
other documents and instruments required to be delivered by Seller under
the terms of this Agreement.
Section 2.4 Adjustments as of the Closing Date. Rental income from
each Property, real and personal property ad valorem taxes, insurance
premiums (if and to the extent that policies are continued for periods
subsequent to the Closing Date), utility charges, common area maintenance
charges and operating charges pursuant to any reciprocal easement
agreements or similar agreements, rent and other charges under the Ground
Lease, and other operating expenses of each Property, shall be prorated to
the Closing Date, based upon actual days involved. Except as set forth in
Section 2.5 hereof, Seller shall be entitled to receive all cash in the
Property Partnerships' accounts on the Closing Date (with the exception of
$100 in each Property Partnership account which amount will remain in each
account). Notwithstanding the foregoing, all escrow accounts of the
Property Partnerships which are maintained in connection with the Mortgage
Liens and having an aggregate balance on the Closing Date of $546,298.00
shall remain in place after Closing. Seller shall be responsible for all
real and personal property taxes payable by any Property Partnership for
any period prior to and including the Closing Date. All accrued charges
(including the interest payments on the Mortgage Liens) pursuant to
Contracts and utility charges (whether or not service is continued by
Purchaser) for periods prior to and including the Closing Date shall be
determined as of the Closing Date and paid by Seller ("Accrued Expenses").
Any of such Accrued Expenses for periods prior to and including the Closing
Date which have not been paid and are not reflected on the closing
statement prepared by Seller and Purchaser as of the Closing Date shall be
paid by Seller prior to delinquency (subject to Seller's right to contest
same). Seller shall receive all income of the Property Partnerships for the
Closing Date and bear all expenses of the Property Partnerships for the
Closing Date. No proration shall be made in relation to delinquent rents
existing as of the Closing Date, but Purchaser shall make a good-faith
attempt to cause each Property Partnership to collect the same for Seller's
benefit after the Closing and after first applying any such rental payments
so received to rents and late charges and the costs of collection thereof
in each case accruing after the Closing Date, the remainder of such
collections, if any, shall be remitted to Seller promptly upon receipt by
Purchaser (up to the amount of such delinquent rents); provided, however,
that nothing contained herein shall be construed to require Purchaser to
institute any suit or collection procedure to collect such delinquent
rents. Purchaser need not attempt to collect
rents that are more than ninety days delinquent and the foregoing
obligation of Purchaser to remit any amounts in respect thereof to Seller
shall also terminate ninety days after the Closing Date. To the extent that
the actual amount of all such charges, expenses and income referred to in
this section are unavailable on the Closing Date, the foregoing prorations
shall be based on estimates using the most recently available statement for
each such item to be prorated (provided that, if the actual amount of real
and personal property ad valorem taxes and special assessments for the
present tax year are not available, the proration shall be based upon the
taxes for the previous tax year) and, if after the Closing Date the actual
amount of any such closing proration that was based on an estimate is
determined to be more or less than the amount adjusted for at Closing, the
parties shall promptly (but no later than the date which is the first
anniversary of the Closing Date) adjust such proration. All obligations
under Leases with tenants set forth on Exhibit "E" attached hereto, shall
remain obligations of the Property Partnership from and after the Closing
Date for periods occurring after the Closing Date. Seller shall promptly
deliver to Purchaser any monies received by any Seller-Related Persons
after the Closing Date that are for the account of Purchaser pursuant to
the provisions of this Section 2.4. Purchaser shall promptly deliver to
Seller any monies received by any Purchaser-Related Persons after the
Closing that are for the account of Seller pursuant to the provisions of
this Section 2.4.
Section 2.5 Security Deposits. All security deposits (including
non-refundable pet deposits in the amount of $125,000.00) and any prepayment of
rental or other sums attributable to any period beyond the Closing Date,
collected (and, except to the extent previously returned to tenants whether
presently held) by any Property Partnership under the terms of any Leases shall
be offset against the Purchase Price; provided, however, in any instance where
state law requires that security deposits be segregated and delivered to the
Purchaser, the deposits so held pursuant to such state law together with any
interest accrued thereon shall be delivered to Purchaser at the Closing and no
such offset against the Purchase Price shall be made with respect to those
deposits.
Section 2.6 Title and Survey Costs. All costs and expenses incurred in
connection with this Agreement or the transactions contemplated herein and
related to title commitments, title updates, owner and mortgagee policies of
title insurance, endorsements, surveys and recording and transfer taxes or
similar related charges shall be the sole responsibility of Purchaser.
Section 2.7 Insurance Deductibles. Seller shall pay to Purchaser within 30
days after notice from Purchaser the amount of any insurance deductibles
pursuant to its existing insurance coverages which may be incurred by a Property
Partnership in relation to any litigation matter described on Section 3.1(p) of
the Disclosure Schedule.
ARTICLE III
COMPANY'S AND GSSW-REO'S REPRESENTATIONS AND WARRANTIES
Section 3.1 Warranties and Representations of the Company. Company
represents and warrants to Purchaser as of the date of this Agreement and as of
the Closing Date that:
(a) Organization of the Company and Property Partnerships. The Company
and each of the Property Partnerships are limited partnerships duly
organized and validly existing under the laws of the state set opposite
their name on Section 3.1(a) of the Disclosure Schedule and each has the
requisite organizational power and authority to carry out its business as
presently conducted. The principal place of business of the Company is in
Dallas, Texas.
(b) Authority. The execution and delivery of this Agreement by the
Company and each other agreement, instrument, certificate and document to
be executed by the Company hereunder and the performance by the Company of
its obligations under this Agreement have been duly and validly authorized
by all necessary partnership action on the part of the Company. This
Agreement constitutes a legal, valid, and binding obligation of the Company
and is enforceable against the Company in accordance with its terms, except
to the extent that (i) enforcement may be limited by or subject to any
bankruptcy, insolvency, reorganization, moratorium, or similar Laws now or
hereafter in effect relating to or limiting creditors' rights generally and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the
discretion of the court or other similar person or entity before which any
proceeding therefor may be brought.
(c) Partnership Interests.
(i) The Partnership Interests of the Property Partnerships
consist solely of the Limited Partnership Interests which are
outstanding and 100% owned legally and beneficially by the Company and
the General Partnership Interests which are outstanding and are 100%
owned legally and beneficially by GSSW-REO;
(ii) All of the Limited Partnership Interests are owned by the
Company and all of the General Partnership Interests are owned by
GSSW-REO and each is free and clear of all Liens, and neither the
Limited Partnership Interests nor the General Partnership Interests is
the subject of any Contract (other than this Agreement) under which
any such Lien might arise. There are no outstanding securities,
rights, subscriptions, warrants, options, or Contracts (except for
this Agreement) that give any Person the right to purchase or
otherwise receive or be issued any partnership interest
in the Company or any Property Partnership or any rights to
participate in the equity or income of the Company (except for this
Agreement and the Partnership Agreement of the Company) or any
Property Partnership.
(d) Partnership Agreements; Approval of Partners. The Property
Partnerships' Partnership Agreements are attached in Section 3.1(d) of the
Disclosure Schedule and each is an accurate copy of each such agreement. No
amendments or modifications have been made to any of such agreements except
as shown on and attached in Section 3.1(d) of the Disclosure Schedule. The
Company has obtained all necessary approvals from the partners of the
Company and the partners of the Property Partnerships to allow the
Purchaser to acquire the Partnership Interests on the Closing Date.
(e) No Conflicts or Violations. The execution and delivery of this
Agreement by the Company does not, and the performance by the Company of
the Company's obligations under this Agreement and the consummation of the
transactions contemplated hereby will not:
(i) violate any term or provision of any Law or any writ,
judgment, decree, or injunction applicable to the Company or any
Property Partnership, except such violations that do not have a
Material Adverse Effect on the Company;
(ii) conflict with or result in a violation or breach of any of
the provisions of the partnership agreement of the Company or any
Property Partnership, except such conflicts, violations, or breaches
that do not have a Material Adverse Effect on the Company; or
(iii) conflict with or result in a violation or breach of any
Contract to which the Company or any Property Partnership is a party,
except such conflicts, violations, or breaches that do not have a
Material Adverse Effect on the Company.
(f) Controlled Entities. Except as shown on Section 3.1(f) of the
Disclosure Schedule, the Property Partnerships do not (nor in the past did
the Property Partnerships) own (legally or beneficially) or Control (either
directly or indirectly) any Person or any other Assets and Properties or
conduct or engage (nor in the past did the Property Partnerships conduct or
engage) in any other businesses or operations.
(g) Taxes.
(i) Except as disclosed in Section 3.1(g)(i) of the Disclosure
Schedule, all Federal, state and other applicable Tax Returns required
to be filed by or with respect to the Property Partnerships have been
filed
and all Taxes that are due and payable by the Property Partnership
have been paid.
(ii) Except as shown on Section 3.1(g)(ii) of the Disclosure
Schedule no deficiencies for Federal, state or other applicable Taxes
have been claimed, assessed or, to Company's Knowledge, proposed
against the Company or GSSW-REO by any Governmental Authority. To the
Company's Knowledge, except as set forth in Section 3.1(g)(ii) of the
Disclosure Schedule, there are no pending or threatened audits,
investigations or claims for or relating to any liability in respect
of Federal, state or other applicable Taxes, and there are no matters
under discussion with any Governmental Authorities with respect to
Federal, state or other applicable Taxes that could result in an
assessment of Federal, state or other applicable Taxes against the
Company or GSSW-REO. Audits of Federal, state or other applicable Tax
Returns by the relevant taxing authorities have been completed for
each period shown on Section 3.1(g)(ii) of the Disclosure Schedule,
and, except as shown on Section 3.1(g)(ii) of the Disclosure Schedule,
none of the Property Partnerships has been notified that any taxing
authority intends to audit a Federal, state or other applicable Tax
Return for any other period. Complete copies of all Federal income tax
schedules and reports relating to the operation of the Company and
each of the Property Partnerships and all reports received by the
Company from the IRS relating to examinations thereof have been made
available for Purchaser's review.
(iii) Since its creation each Property Partnership has maintained
a status such that each Property Partnership is taxed as a partnership
for Federal, state and local tax purposes.
(h) Compliance With Laws. Except as shown on Section 3.1(h) of the
Disclosure Schedule, no Property Partnership (as opposed to the Property
owned by such Property Partnership) is in violation of any Law or any writ,
judgment, decree, injunction, or similar order applicable to such entity,
which violation has or may reasonably be expected to have a Material
Adverse Effect.
(i) Financial Statements. Section 3.1(i) of the Disclosure
Schedule sets forth (i) the audited consolidated balance sheets and
statements of income partners' capital accounts and cash flow as of
and for the fiscal year ended 1995 for the Company which includes all
assets and liabilities of GSSW-REO and of the respective Property
Partnerships as of the date thereof, (ii) the unaudited consolidated
balance sheets and statements of income, partners' capital accounts
and cash flow statements as of and for the fiscal year ended 1995 for
each of the Property Partnerships and (iii) unaudited
balance sheets and statements of income, partners' capital accounts
and cash flow statements as and for the months ended October 31, 1996
for each of the Property Partnerships (collectively the "Financial
Statements"). The Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP and present fairly the
financial condition of the Property Partnerships for such periods
(including all liabilities or obligations of any kind (whether
accrued, absolute, fixed or contingent) of the Property Partnership
for such period and no other material liabilities have been incurred
for the period commencing November 1, 1996 and ending on the Closing
Date other than as set forth on the Disclosure Schedule and there has
been no change in the financial condition as reflected therein since
the dates of such Financial Statements that would have a Material
Adverse Effect.
(j) Intercompany Liabilities. Except as reflected in the
Financial Statements, or except as shown on Section 3.1(j) of the
Disclosure Schedule, (i) there are no Liabilities between any Property
Partnership and the Company or any other Affiliate of the Company, and
(ii) neither the Company nor any Affiliate of the Company provides or
causes to be provided to the Property Partnerships any products,
services, equipment, facilities, or similar items.
(k) Operations Insurance. Section 3.1(k) of the Disclosure
Schedule contains a complete list of all material fire and casualty,
liability and other similar insurance Contracts that insure the
business, operations or affairs of the Company or any Property
Partnership or affect or relate to the ownership, use or operations of
the Properties. All such insurance is in full force and effect and to
the Company's Knowledge is with financially sound and reputable
insurers and, in light of the respective business, operations, and
affairs of the Company, is in amounts and provides coverage that are
reasonable and customary for Persons in similar businesses.
(l) Title to Property.
(i) Each Property Partnership other than ▇▇▇▇▇▇▇▇▇
Forest-REO, L.P. has good and indefeasible fee simple title to
the Property it owns, free and clear of all Liens, conditions,
exceptions, or reservations, except the Permitted Exceptions in
respect of each such Property.
(ii) ▇▇▇▇▇▇▇▇▇ Forest-REO, L.P. has good leasehold title to
the Property known as ▇▇▇▇▇▇▇▇▇ Forest free and clear of all
Liens, conditions, exceptions, or reservations, except the
Permitted Exceptions in respect of such Property.
(iii) With respect to the Ground Lease: (A) such Ground
Lease is in full force and effect; (B) the Company has delivered
to Purchaser a correct copy of such Ground Lease (including all
amendments, modifications and supplements thereto); (C) neither
the Company
nor the Property Partnership which is a party to such Ground
Lease has received any notice of default under such Ground Lease;
(D) neither the Property Partnership that is a party to the
Ground Lease nor to the Company's Knowledge the lessor under the
Ground Lease is in default thereunder; and (E) rent and other
charges in respect of the Ground Lease have been paid through
December 31, 1996.
(m) Not a Foreign Person. Seller is not a "foreign person" but is
a "United States person" as such terms are defined in the Foreign
Investment in Real Property Tax Act of 1980 and Section 1445 and 7701
of the Code; that is to say, Seller is a citizen or resident of the
United States, a domestic partnership, a domestic corporation, or an
estate or trust which is not a foreign estate or foreign trust within
the meaning of Section 7701(a)(31) of the Code.
(n) No Condemnation. To the Company's Knowledge, there is no
pending condemnation proceeding affecting any Property or any portion
thereof, and neither Seller nor any Property Partnership has received
any written notice of any such proceeding, and neither Seller nor any
Property Partnership has received any written notice or has any
knowledge that any such proceeding is contemplated.
(o) No Violations of Law. Except as shown on Section 3.1(o) of
the Disclosure Schedule, to the Company's Knowledge, the continued
ownership, operation, use, and occupancy of each Property by the
respective Property Partnership does not violate any Law. To the
Company's Knowledge, there are no violations of any Law affecting any
portion of any Property and to the Company's Knowledge, no written
notice of any such violation by any Governmental Authority has been
received by any Property Partnership.
(p) No Litigation. Except as shown on Section 3.1(p) to the
Disclosure Schedule there is no action, suit, proceeding, arbitration,
unsatisfied order or judgment, governmental investigation or claim
against or affecting any Property or any portion thereof, or affecting
any Property Partnership or relating to or arising out of the
ownership, operation, use or occupancy of any Property, pending or
being prosecuted before or by any Governmental Authority or otherwise
of which Seller has received notice nor, to the Company's Knowledge,
is any such action, suit, proceeding, arbitration, unsatisfied order
or judgment, governmental investigation or claim threatened or being
asserted.
(q) No Other Contracts. Except for the Permitted Exceptions and
as shown on Section 3.1(q) of the Disclosure Schedule, there are no
Contracts relating to any Property or any portion thereof.
(r) No Bankruptcy or Insolvency Proceedings. There are no
attachments, executions, assignments for the benefit of creditors,
receiverships, conservatorships or voluntary or involuntary
proceedings in bankruptcy or pursuant to any other debtor relief laws
filed by SWLIC, the Company, GSSW-REO, any Property Partnership or
pending against any Property Partnership or any Property.
(s) Environmental. To the Company's Knowledge, there is no
Environmental Noncompliance with respect to any Property, except as
shown on the Environmental Reports set forth on Schedule 3.1(s) of the
Disclosure Schedule. No Property Partnership has received any
Notification from any Governmental Authority alleging any violation of
any Environmental Law.
(t) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company
and GSSW-REO directly with Purchaser, without the intervention of any
Person on behalf of the Company and GSSW-REO in such manner as to give
rise to any valid claim by any Person against Purchaser for a finder's
fee, brokerage commission, or similar payment.
(u) Leases; Rent Rolls. With respect to each Property, a rent
roll as of December 24, 1996 is attached as Section 3.1(u) of the
Disclosure Schedule and each of such rent rolls is true and complete
in all material respects. No tenant at any Property that is
multifamily residential property (a "Residential Property") is subject
to any rent-control Law. None of the Residential Properties is subject
to any Law relating to low-income or moderate-income housing or any
rent-subsidy program provided by any Governmental Authority. Except as
shown on Section 3.1(u) of the Disclosure Schedule, no rent concession
or deferral agreements (whether written or oral) are presently in
effect with respect to any tenant of the Residential Properties. With
respect to any Property which is a commercial or retail property (a
"Commercial Property"), such Commercial Property is not subject to any
Lease except as disclosed on the rent roll. The Company has provided
Purchaser with true and correct copies of all Leases (including
amendments and modifications thereto) relating to such Commercial
Properties. There are no outstanding tenant improvement allowances,
outstanding leasing commissions or deferred rent abatements for any
Commercial Property Leases except as shown on Exhibit "E". The
Commercial Property Leases are in full force and effect and neither
the Company nor any Property Partnership has delivered or received any
notice of any default under any such Commercial Property Leases which
has not been resolved as of the date hereof.
(v) Employees; Employment Contracts. Neither the Company,
GSSW-REO, nor any Property Partnership (i) has (nor have any of such
parties ever had) any employees, (ii) is (nor have any of such parties
ever been) a party to or is bound by any collective bargaining
agreement or other contract with a labor union, or (iii) has (nor have
any of such parties had) any obligations or liabilities arising from
or relating to the employment of any individual and did not at any
time on or after the effective date of
ERISA maintain, contribute to or otherwise have any obligation
with respect to any "employee benefit plan" within the meaning of
section 3(3) of ERISA.
(w) Consents. Except as set forth on Section 3.1(w) of the
Disclosure Schedule, no consent, license, approval, order, permit or
authorization of any Governmental Agency is required to be obtained or
made, and no consent of any mortgagee under any of the Mortgage Liens
is required to be obtained and no consent of any other third party,
including the landlord under the Ground Lease, is required to be
obtained by the Seller or any of the Property Partnerships in
connection with the execution, delivery and performance of this
Agreement and any of the transactions contemplated hereby.
(x) Mortgage Liens. Section 2.2 to the Disclosure Schedule
includes true and correct copies of the promissory notes, mortgages
and deeds of trust (including any and all amendments and modifications
thereto) constituting the Mortgage Liens. The outstanding principal
balances of the indebtedness as of December 31, 1996 (after deducting
the January 1, 1997 scheduled payments which have been paid by Seller)
and the maturity dates are as shown on Section 2.2 and to the
Company's Knowledge, no default exists under any of the notes,
mortgages or deeds of trust which remains uncured.
(y) Personal Property. Each Property Partnership has good title
to the machinery, apparatus, equipment or other fixtures, furniture,
furnishings, fittings, appliances and other articles of personal
property located at such Property and used in connection with such
Property except for (i) software owned by the management companies
managing the Properties (ii) property owned by tenants; and (iii) the
items set forth on Section 3.1(q) of the Disclosure Schedule.
(z) Taxes and Assessments. Neither the Company nor any Property
Partnership has received any notice of, nor to the Company's Knowledge
are there any, material non-recurring or special taxes or assessments
or any planned public improvements that may result in a material
non-recurring or special tax or assessment with respect to any
Property Partnership or any Property other than as set forth in the
Permitted Exceptions.
(aa) Mechanic's Liens. To the Company's Knowledge, there are no
disputes pending between any Property Partnership and any mechanic or
materialman with respect to work or materials furnished to any
Property on behalf of any Property Partnership which could or is
likely to result in a mechanic's or materialman's lien being filed
against any Property and Seller is not aware of any work which has
been performed or materials which have been supplied which are likely
to give rise to such a dispute.
(bb) Streets and Roads. To the Company's Knowledge, no change in
the route, grade or width of, or otherwise affecting any street or
road adjacent to or serving any Property that would have a Material
Adverse Effect has been proposed or is contemplated.
(cc) Operation of Properties. Since November 15, 1996, Seller has
caused each Property to be managed in the ordinary course of business
and consistent with past practices.
Section 3.2 Warranties and Representations of GSSW-REO. GSSW-REO represents
and warrants to Purchaser as of the date of this Agreement and as of the Closing
Date that:
(a) Organization of GSSW-REO. GSSW-REO is a corporation duly organized
and validly existing under the laws of the state of Texas and has the
requisite corporate power and authority to carry out its business as
presently conducted. The principal place of business of GSSW-REO is in
Dallas, Texas.
(b) Authority. The execution and delivery of this Agreement by
GSSW-REO and the performance by GSSW-REO of its obligations under this
Agreement have been duly and validly authorized by all necessary corporate
action on the part of the GSSW-REO. This Agreement constitutes a legal,
valid, and binding obligation of GSSW-REO and is enforceable against the
GSSW-REO in accordance with its terms, except to the extent that (i)
enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar Laws now or hereafter in effect
relating to or limiting creditors' rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar person or entity before which any proceeding therefor may be
brought.
(c) No Conflicts or Violations. The execution and delivery of this
Agreement by GSSW-REO does not, and the performance by GSSW-REO of the
GSSW-REO's obligations under this Agreement will not:
(i) violate any term or provision of any Law or any writ,
judgment, decree, or injunction applicable to GSSW-REO, except such
violations that do not have a Material Adverse Effect;
(ii) conflict with or result in a violation or breach of any of
the provisions of the articles or certificate of incorporation or
bylaws of GSSW-REO, except such conflicts, violations, or breaches
that do not have a Material Adverse Effect; or
(iii) conflict with or result in a violation or breach of any
Contract to which the GSSW-REO is a party, except such conflicts,
violations, or breaches that do not have a Material Adverse Effect.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1 Assignment of Claims. On or before the Closing Date the
Property Partnerships shall transfer to the Company, or its designee, to the
extent such claims shall be transferable, pursuant to the assignment attached
hereto as Exhibit "F" all insurance claims filed or pending by the Property
Partnerships as of the Closing Date and there shall be no reduction in the
Purchase Price due to such transfers. If the claims set forth on Exhibit"F" are
not transferable, Purchaser or any Purchaser-Related Person agrees to transfer
any and all recoveries in relation to such claims to Seller promptly upon
receipt of any and all such recoveries less any actual expenses incurred in
collecting such recoveries.
Section 4.2 Books and Records. On the Closing Date, the Seller will deliver
to Purchaser or will make available to Purchaser all books and records of each
of the Property Partnerships that are in the possession of Seller, including,
without limitation, all plans and specifications relating to any Property (in
Seller's possession), all of the Leases, Contracts, documents or instruments
creating or evidencing the indebtedness secured by the Mortgage Liens or
otherwise related to the Mortgage Liens, the Title Information, all other
insurance policies and certificates related to the Properties and any and all
bank account records related to any security deposits required by state law to
be separately maintained as described in Section 2.5 and any other bank account
which will continue to be owned by any Property Partnership after the Closing
Date. If at any time after the Closing Date the Company or GSSW-REO discovers in
its possession or under its control any other books and records of any Property
Partnership, the Company or GSSW-REO, as applicable, will deliver such books and
records to Purchaser.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Section 5.1 Purchaser hereby represents and warrants to Seller as of the
date hereof and as of the Closing Date as follows:
(a) Organization. Purchaser is a limited partnership duly organized,
validly existing, and in good standing under the Laws of Delaware and has
the requisite partnership power and authority to enter into this Agreement
and to perform its obligations under this Agreement.
(b) Authority. The execution and delivery of this Agreement by
Purchaser and the performance by Purchaser of its obligations under this
Agreement have been duly and validly authorized by all requisite
partnership action on the part of Purchaser. This Agreement constitutes a
legal, valid, and binding obligation of Purchaser and is enforceable
against Purchaser in accordance with its terms, except to the extent that
(i)
enforcement may be limited by or subject to any bankruptcy, insolvency,
reorganization, moratorium, or similar Laws now or hereafter in effect
relating to or limiting creditors, rights generally and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the court or
other similar person or entity before which any proceeding therefor may be
brought.
(c) No Conflicts or Violations. The execution and delivery of this
Agreement by Purchaser do not, and the performance by Purchaser of
Purchaser's obligations under this Agreement will not:
(i) violate any term or provision of any applicable Law or any
writ, judgment, decree, or injunction applicable to Purchaser, except
such violations that do not have a Material Adverse Effect;
(ii) conflict with or result in a violation or breach of any of
the provisions of the articles or certificate of incorporation or
bylaws of Purchaser, except such conflicts, violations, or breaches
that do not have a Material Adverse Effect; or
(iii) conflict with or result in a violation or breach of any
Contract to which Purchaser is a party, except such conflicts,
violations, or breaches that do not have a Material Adverse Effect.
(d) Litigation. There is no action, suit, or proceeding pending, or
(to the knowledge of Purchaser) threatened, against Purchaser, at Law or in
equity, in, before, or by any person or entity that, if adversely
determined, would have a Material Adverse Effect.
(e) Purchase for Investment. The Partnership Interests will be
acquired by Purchaser for its own account for the purpose of investment and
not for the purpose or with the intent of a distribution or other sale and
disposition thereof. Purchaser will refrain from transferring or otherwise
disposing of any of the Partnership Interests, or any interest therein, in
such manner as to violate any provisions of the Securities Act of 1933, as
amended, or of any securities Laws of any state or other jurisdiction
regulating the disposition thereof.
(f) Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser
directly with the Company and its Affiliates, without the intervention of
any Person on behalf of Purchaser in such manner as to give rise to any
valid claim by any Person against the Company or its Affiliates for a
finder's fee, brokerage commission, or similar payment.
Section 5.2 Properties. WITH RESPECT TO THE INTEREST IN EACH PROPERTY
BEING ACQUIRED BY PURCHASER BY VIRTUE OF THE ASSIGNMENT OF THE PARTNERSHIP
INTERESTS PROVIDED HEREIN, EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE
INTEREST IN EACH PROPERTY EXCEPT AS EXPRESSLY PROVIDED HEREIN TO THE
CONTRARY IS ACQUIRED ON AN AS IS, WHERE IS AND WITH ALL FAULTS BASIS,
WITHOUT REPRESENTATIONS, WARRANTIES OR COVENANTS, EXPRESS OR IMPLIED, OF
ANY KIND OR NATURE. PURCHASER HEREBY WAIVES AND RELINQUISHES ALL RIGHTS AND
PRIVILEGES ARISING OUT OF, OR WITH RESPECT OR IN RELATION TO, ANY
REPRESENTATIONS, WARRANTIES OR COVENANTS, WHETHER EXPRESS OR IMPLIED, WHICH
MAY HAVE BEEN MADE OR GIVEN, OR WHICH MAY HAVE BEEN DEEMED TO HAVE BEEN
MADE OR GIVEN, BY THE SELLER OR SELLER-RELATED PERSONS EXCEPT AS OTHERWISE
SPECIFICALLY PROVIDED HEREIN. EXCEPT AS SPECIFICALLY PROVIDED HEREIN,
PURCHASER HEREBY TAKES SUBJECT TO ALL RISK AND LIABILITY (AND AGREES THAT
EXCEPT AS SPECIFICALLY PROVIDED NEITHER THE SELLER OR SELLER-RELATED
PERSONS SHALL BE LIABLE FOR ANY SPECIAL, DIRECT, INDIRECT, CONSEQUENTIAL OR
OTHER DAMAGES) RESULTING OR ARISING FROM OR RELATING TO THE OWNERSHIP, USE,
CONDITION, LOCATION, MAINTENANCE, REPAIR, OR OPERATION OF ANY PROPERTY.
WITHOUT LIMITING THE ABOVE GENERAL PROVISIONS, IT IS UNDERSTOOD AND
AGREED THAT EXCEPT AS EXPRESSLY PROVIDED HEREIN TO THE CONTRARY, NEITHER
THE SELLER NOR SELLER-RELATED PERSONS IS MAKING AND SPECIFICALLY DISCLAIMS
ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR
IMPLIED, AS TO (1) MATTERS OF TITLE, (2) ZONING, (3) TAX CONSEQUENCES, (4)
PHYSICAL OR ENVIRONMENTAL CONDITIONS, (5) AVAILABILITY OF ACCESS, INGRESS
OR EGRESS, (6) OPERATING HISTORY OR PROJECTIONS, (7) VALUATION, (8)
GOVERNMENTAL APPROVALS, (9) GOVERNMENTAL REGULATIONS OR ANY OTHER MATTER OR
THING RELATING TO OR AFFECTING ANY PROPERTY, INCLUDING, WITHOUT LIMITATION:
(A) THE VALUE, CONDITION, MERCHANTABILITY, MARKETABILITY, PROFITABILITY,
SUITABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OF ANY PROPERTY, (B)
THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO
ANY PROPERTY, AND (C) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF
REPAIR OF ANY PROPERTY. PURCHASER FURTHER EXPRESSLY ACKNOWLEDGES AND AGREES
THAT EXCEPT AS SPECIFICALLY PROVIDED, NEITHER THE SELLER NOR SELLER-RELATED
PERSONS IS REPRESENTING OR WARRANTING THAT ANYTHING CAN OR WILL BE
ACCOMPLISHED THROUGH PURCHASER'S OR THE SELLER NOR SELLER-RELATED PERSONS
EFFORTS WITH REGARD TO THE PLANNING, PLATTING OR ZONING PROCESS OF ANY
CITY, COUNTY, OR ANY OTHER GOVERNMENTAL OR MUNICIPAL AUTHORITIES, BOARDS OR
ENTITIES IN RELATION TO ANY PROPERTY. PURCHASER FURTHER ACKNOWLEDGES THAT
NEITHER THE SELLER NOR SELLER-RELATED PERSONS HAS WARRANTED, AND DOES NOT
HEREBY WARRANT,
THAT, EXCEPT AS SPECIFICALLY PROVIDED HEREIN, ANY PROPERTY NOW OR IN THE
FUTURE WILL MEET OR COMPLY WITH THE REQUIREMENTS OF ANY SAFETY CODE,
ENVIRONMENTAL LAW OR REGULATION OF THE STATE, CITY, COUNTY, OR ANY
AUTHORITY, BOARD, AGENCY OR OTHER ENTITY HAVING AUTHORITY OR JURISDICTION
OVER ANY OF THE PROPERTIES.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder are subject to the fulfillment, at
or before the Closing, of each of the following conditions (all or any of which
may be waived in whole or in part by Purchaser):
Section 6.1 Representations and Warranties. The representations and
warranties made by the Company and GSSW-REO in this Agreement and the
disclosures of the Company and GSSW-REO in the Disclosure Schedule and all other
schedules and exhibits attached hereto shall be true in all material respects as
of the date hereof and shall be true in all material respects on and as of the
Closing Date as though such representations, warranties and disclosures were
made on and as of the Closing Date.
Section 6.2 Performance. Seller shall have performed and complied in all
material respects with all agreements, covenants, obligations, and conditions
required by this Agreement to be so performed or complied with by Seller at or
before the Closing Date.
Section 6.3 No Injunction. There shall not be in effect on the Closing Date
any writ, judgment, injunction, decree, or similar order of any court or
Governmental Authority, or otherwise, restraining, enjoining, or otherwise
preventing consummation of any of the transactions contemplated by this
Agreement.
Section 6.4 No Proceeding or Litigation. There shall not be instituted,
pending, or (to the best knowledge of Purchaser or Seller) threatened, any
action, suit, investigation, or other proceeding in, before, or by any court or
Governmental Authority to restrain, enjoin, or otherwise prevent consummation of
any of the transactions contemplated by this Agreement.
Section 6.5 Seller's Closing Deliveries. Seller shall have delivered to
Purchaser on or before the Closing the following:
(i) the Assignment of Partnership Interests;
(ii) FIRPTA Certificates; and
(iii) such other documents and instruments as may be reasonably
required in order to consummate the transactions contemplated hereunder.
Section 6.6 Termination of Management Agreements. All Management Agreements
listed on Schedule 3.1(q) of the Disclosure Schedule shall have been terminated
by Seller as of the Closing Date. Seller and Purchaser shall each pay one-half
of the amount of any sums which are payable under such Management Agreements by
reason of such termination as of the Closing Date, but in no event shall
Purchaser be responsible for more than $60,000 of such obligations. The
provisions of this Section 6.5 shall surviving Closing.
Section 6.7 Insurance. The Seller will cause each Property Partnership to
cancel existing insurance coverages (including casualty and liability coverage)
with respect to each Property as of midnight on the Closing Date at no cost or
expense to Purchaser.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the fulfillment, at or
before the Closing, of each of the following conditions (all or any of which may
be waived in whole or in part by Seller):
Section 7.1 Representations and Warranties. The representations and
warranties made by Purchaser in this Agreement shall be true in all material
respects as of the date hereof and shall be true in all material respects on and
as of the Closing Date as though such representations and warranties were made
on and as of the Closing Date.
Section 7.2 Performance. Purchaser shall have performed and complied in all
material respects with all agreements, covenants, obligations, and conditions
required by this Agreement to be so performed or complied with by Purchaser at
or before the Closing Date.
Section 7.3 No Injunction. There shall not be in effect on the Closing Date
any writ, judgment, injunction, decree, or similar order of any court or
Governmental Authority, or otherwise, restraining, enjoining, or otherwise
preventing consummation of any of the transactions contemplated by this
Agreement.
Section 7.4 No Proceeding or Litigation. There shall not be instituted,
pending, or (to the knowledge of Purchaser or Seller) threatened, any action,
suit, investigation, or other proceeding in, before, or by any court or
Governmental Authority to restrain, enjoin, or otherwise prevent consummation of
any of the transactions contemplated by this Agreement.
Section 7.5 Purchaser's Closing Deliveries. Purchaser shall have delivered
to Seller on or before Closing the following:
(i) the Purchase Price in funds immediately available in Dallas,
Texas; and
(ii) such other documents and instruments as may be reasonably
required in order to consummate the transactions contemplated hereunder.
ARTICLE VIII
SURVIVAL OF PROVISIONS
The provisions in Section 2.4, Section 2.5, Section 2.7, Section 4.1,
Section 5.2, Section 6.6, Section 6.7, ARTICLE IX, ARTICLE X and Section 11.5 of
this Agreement shall survive the Closing hereunder. The representations,
warranties and covenants respectively made by Seller and Purchaser in this
Agreement, in the Disclosure Schedule, and in any certificate delivered to
Purchaser or Seller hereunder will not survive the Closing hereunder except in
accordance with the provisions of ARTICLE IX. Seller has requested tenant
estoppel certificates from tenants of Commercial Properties and the
representations and warranties of Seller relating to Commercial Property Leases
set forth in the last two sentences of Section 3.1(u) shall be automatically
extinguished and of no effect as to any Commercial Lease for which Purchaser is
provided an executed tenant estoppel certificate following Closing which
conforms in all material respects to Seller's representations and warranties
contained in the last two sentences of Section 3.1(u).
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification.
(a) Subject to the provisions of Section 9.4 hereof, SWLIC agrees to
indemnify each Purchaser-Related Person and each Property Partnership in
respect of, and hold each of them harmless against any and all Damages
resulting from or relating to (i) all liabilities and the performance of
all obligations of the Property Partnerships arising or accruing prior to
the Closing Date (including any litigation arising prior to the Closing
whether Seller had any knowledge of such litigation); and (ii) any
misrepresentation or breach of warranty on the part of the Company or
GSSW-REO made as a part of or contained in Sections 3.1 or 3.2 in this
Agreement, provided, however, no indemnification shall be available under
this Section 9.1(a) with respect to any breaches of any representations or
warranties of the Company, if such breaches and the materiality thereof
were within Purchaser's Knowledge prior to Closing.
(b) Subject to the provisions of Section 9.4 hereof, Purchaser agrees
to indemnify each Seller-Related Persons in respect of, and hold each of
them harmless against, any and all Damages resulting from or relating to
(i) any misrepresentation, breach of warranty, or nonfulfillment of or
failure to perform any covenant or agreement on the part of Purchaser made
as a part of or contained in this Agreement or any certificate delivered by
or for Purchaser, and (ii) all liabilities and the performance of all
obligations of the Property Partnerships arising or accruing from and after
the Closing Date.
Section 9.2 Method of Asserting Claims. All claims for indemnification by
any Indemnified Party under Section 9.1 hereof will be asserted and resolved as
follows:
(a) In the event any claim or demand for which an Indemnifying Party
may be liable for Damages to an Indemnified Party under Section 9.1 hereof
is asserted against or sought to be collected from such Indemnified Party
by a Person other than the Company, GSSW-REO, any Property Partnership, any
Purchaser-Related Persons or any Seller-Related Persons ("Third Party
Claim"), the Indemnified Party will deliver a Claim Notice with reasonable
promptness to the Indemnifying Party; provided, however, that except as set
forth in Section 9.2(d) hereof, no Claim Notice will be required with
respect to any action, suit, investigation, or proceeding that is in
existence on the Closing Date. If the Indemnified Party fails to provide
the Indemnifying Party with the Claim Notice required by the preceding
sentence at least 14 calendar days before the date on which the
Indemnifying Party's ability to defend against the Third Party Claim is
irrevocably prejudiced by the Indemnified Party's failure to provide such
Claim Notice, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such portion of the Third Party Claim as
to which the Indemnifying Party's ability to defend has been irrevocably
prejudiced by such failure of the Indemnified Party; however, the foregoing
limitation shall not be applicable as to Third Party Claims of which the
Indemnified Party did not have notice prior to such 14th day. The
Indemnifying Party will notify the Indemnified Party with reasonable
promptness after the Indemnifying Party's receipt of a Claim Notice, but in
all events within 7 calendar days after receipt thereof ("Notice Period"),
of whether the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
Third Party Claim and whether the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Third Party Claim. If the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Third Party Claim, the Indemnifying Party and Indemnified
Party will negotiate in good faith for a period of thirty days failing
resolution of which the matter shall be submitted for arbitration in
accordance with the provisions of Section 9.6 below. A failure of the
Indemnifying Party to respond to a Claim Notice within the period required
shall be deemed to constitute a dispute of the claim described in such
Claim Notice by the Indemnifying Party.
(b) If the Indemnifying Party notifies the Indemnified Party within
the Notice Period or at any time thereafter that the Indemnifying Party
(without any reservation of rights) does not dispute its liability to the
Indemnified Party and that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
ARTICLE IX (the "Non-Dispute Notice"), or in the event any matter submitted
for arbitration pursuant to Section 9.6 results in a determination that the
Third Party Claim is subject to indemnification pursuant to the terms
hereof (the "Arbitration Determination"), then the Indemnifying Party will
have the right to defend, at its sole cost and expense, such Third Party
Claim by all appropriate proceedings, which proceedings will be diligently
prosecuted by the Indemnifying Party to a final conclusion or will be
settled at the discretion of the Indemnifying Party (with the consent of
the Indemnified Party, which consent will not be withheld or delayed
unreasonably). Any legal counsel engaged by the Indemnifying Party to
defend a Third Party Claim shall be approved by the Indemnified Party, such
approval not to be unreasonably withheld or delayed. From the date of the
Non-Dispute Notice or Arbitration Determination, as applicable, the
Indemnifying Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that the
Indemnified Party may, at any time prior to its receipt of the Non-Dispute
Notice or the Arbitration Determination, as applicable, file any motion,
answer, or other pleadings that the Indemnified Party may deem necessary or
appropriate to protect its interests or those of the Indemnifying Party and
not irrevocably prejudicial to the Indemnifying Party (it being understood
and agreed that, except as provided in Section 9.2(c) hereof, if an
Indemnified Party takes any such action that is irrevocably prejudicial and
conclusively causes a final adjudication that is materially adverse to the
Indemnifying Party during the Notice Period or thereafter if the
Indemnifying Party has given notice to the Indemnified Party of its desire
to defend the Third Party Claim, or prior to the Arbitration Determination,
the Indemnifying Party will be relieved of its obligations hereunder with
respect to the portion of such Third Party Claim irrevocably prejudiced by
the Indemnified Party's action); and provided further, that if requested by
the Indemnifying Party, the Indemnified Party agrees, at the sole cost and
expense of the Indemnifying Party (except that the Indemnifying Party shall
not be responsible for any attorneys fees of the Indemnified Party unless
the retention of such attorneys is required by the Indemnifying Party), to
cooperate with the Indemnifying Party and its counsel in contesting any
Third Party Claim that the Indemnifying Party elects to contest, or, if
appropriate and related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party Claim, or any
cross-complaint against any Person (other than the Indemnified Party or any
of its Affiliates). The Indemnified Party may participate in, but not
control, any defense or settlement of any Third Party Claim controlled by
the Indemnifying Party pursuant to this Section 9.2(b), but all such
settlements shall be subject to the Indemnified Party's approval, and
except as provided in the preceding sentence, the Indemnified Party will
bear its own costs and expenses with respect to such participation.
(c) If the Indemnifying Party fails to provide the Non-Dispute Notice
to the Indemnified Party (without any reservation of rights) with respect
to the Third Party
Claim pursuant to this ARTICLE IX, or if the Indemnifying Party fails to
diligently and promptly prosecute or settle the Third Party Claim either
following the Arbitration Determination or after the Indemnifying Party
gives the Non-Dispute Notice, then the Indemnified Party will have the
right (but not the obligation) to defend, at the sole cost and expense of
the Indemnifying Party, the Third Party Claim by all appropriate
proceedings, which proceedings and defense, if commenced, will be promptly
and vigorously prosecuted by the Indemnified Party to a final conclusion or
will be settled at the discretion of the Indemnified party (with the
consent of the Indemnifying Party, which consent will not be withheld or
delayed unreasonably). The Indemnified Party will have full control of such
defense and proceedings, including any compromise or settlement thereof;
provided, however, that if requested by the Indemnified Party, the
Indemnifying Party agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnified Party and its counsel in
contesting any Third Party Claim which the Indemnified Party is contesting,
or, if appropriate and related to the Third Party Claim in question, in
making any counterclaim against the Person asserting the Third Party Claim,
or any cross-complaint against any Person (other than the Indemnifying
Party or any of its Affiliates). Notwithstanding the foregoing provisions
of this Section 9.2(c), if the Indemnifying Party has timely notified the
Indemnified Party that the Indemnifying Party disputes its liability to the
Indemnified Party and if such dispute is resolved in favor of the
Indemnifying Party, pursuant to the arbitration process provided in Section
9.6 below or otherwise, if applicable, by final, nonappealable order of a
court of competent jurisdiction, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's defense
pursuant to this Section 9.2(c) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in full for all
costs and expenses incurred by the Indemnifying Party in connection with
such proceedings. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party
pursuant to this Section 9.2(c), and the Indemnifying Party will bear its
own costs and expenses with respect to such participation.
(d) In the event any Indemnified Party shall have a claim against any
Indemnifying Party hereunder that does not involve a Third Party Claim
being asserted against or sought to be collected from the Indemnified
Party, the Indemnified Party will notify the Indemnifying Party with
reasonable promptness of such claim by the Indemnified Party, specifying
the nature of and specific basis for such claim and the amount or the
estimated amount of such claim (the "Indemnity Notice"). If the
Indemnifying Party disputes such claim (which dispute shall be communicated
to the Indemnified Party in writing within 15 days of receipt of an
Indemnity Notice), the Indemnifying Party and the Indemnified Party agree
to proceed in good faith to attempt to negotiate a resolution of such
dispute for a period of thirty days, and if not resolved through
negotiations, either party may submit the matter to arbitration to
determine whether the Indemnifying Party has such liability in accordance
with the provisions of Section 9.6 below.
Section 9.3 After-Tax Damages; Refunds. With respect to the indemnification
agreements set forth in this ARTICLE IX, Seller and Purchaser agree that:
(a) the amount of all Damages shall be (i) increased to take account
of any income Tax cost incurred (grossed up for such increase) by the
Indemnified Party arising from the receipt of indemnification payments made
hereunder and (ii) all Damages will be adjusted downward by the income Tax
benefit obtained by the Indemnified Party arising from the incurrence or
payment of any such Damages. Such Tax cost or Tax benefit shall be computed
for any year using the Indemnified Party's actual income Tax liability with
and without (x) the incurrence or payment of any Damages for which
indemnification is provided under this Agreement or (y) the payment of any
indemnification payments made pursuant to this Agreement in such year;
(b) the amount of any tax cost or tax benefit will be promptly paid to
Seller or Purchaser or offset against indemnification payments, as adjusted
by (a) above, if appropriate, then owed to the other party to this
Agreement; and
(c) all Damages indemnifiable under Section 9.1 will be payable by any
party as set forth in the terms of the applicable judgment or settlement,
but in no event later than 30 days after the rendition of a final
non-appealable judgment is obtained or a final settlement has been agreed
to, in writing in relation to the Damages.
Section 9.4 Claims Limitation. Notwithstanding the foregoing provisions of
this ARTICLE IX, SWLIC shall not have any liability for any Damages under
Section 9.1(a) hereof, until and unless the cumulative total of such Damages
exceeds (a) individually as to any Property $100,000 or (b) in the aggregate as
to all Properties $600,000, it being understood that after such Damages exceed
(a) individually as to any Property $100,000 or (b) in the aggregate as to all
Properties $600,000, SWLIC shall be liable to any Purchaser-Related Person for
all of such Damages (e.g., if the aggregate Damages are $600,001, Seller shall
be liable for $600,001) provided, however, that the limitations of this
Section 9.4 shall not apply to any Damages resulting from Seller's intentional,
willful or reckless breaches of warranty in this Agreement or for Accrued
Expenses. Notwithstanding any other provision in this Agreement to the contrary:
(x) any claim against SWLIC for any misrepresentation or breach of warranty by
Seller pursuant to Section 3.1(l), 3.1(o) and any other Title Issues (as
hereinafter defined) must be asserted during the Adjustment Period (as
hereinafter defined) pursuant to Section 9.5 after which date all of such claims
shall be barred; (y) any claim against SWLIC for any misrepresentation or breach
of warranty by Seller pursuant to Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d),
3.1(f), 3.1(g), 3.1(h), 3.1(i), 3.1(j), 3.1(m), 3.2(a) 3.2(b) and 3.2(c) may be
asserted at any time; and (z) any other claim by Purchaser against SWLIC
pursuant to Section 9.1(a) must be asserted prior to December 31, 1997, after
which date all such claims shall be barred. Any claim against Purchaser pursuant
to Section 9.2(b) may be asserted at any time. If more than one
Purchaser-Related Person or more than one Seller-Related Person shall assert a
claim which is based on the same claimed breach, misrepresentation or Title
Issues, the Damages payable in relation to such claim shall be limited to the
maximum amount which would have been payable
if only one Purchaser-Related Person or one Seller-Related Person, as
applicable, had brought such claim and fees and expenses of only one legal
counsel employed by Purchaser or SWLIC, as applicable, to defend such claim as
against all of such parties (with any parties desiring or seeking separate
representation, to in all such events pay their own attorneys' fees and
expenses). If Purchaser or SWLIC, as applicable, shall fail within the time
periods specified herein to pursue such claim or shall choose not to defend such
claim with counsel of its choice the attorneys fees, costs and expenses which
Purchaser or SWLIC, as applicable, may otherwise be responsible pursuant to the
provisions of this Article IX shall be limited to only one of such parties
attorneys' fees and expenses.
Section 9.5 Title Claim Procedure. Purchaser shall have a period of
forty-five (45) days following the Closing Date (the "Adjustment Period") to
advise Seller and SWLIC in writing (the "Purchaser's Notice") of: (a) any
imperfections of title or other encumbrances which do not otherwise constitute
Permitted Exceptions; (b) the absence of vehicular or pedestrian access to and
from a Property pursuant to frontage on a dedicated street or road or by
enforceable easement; (c) an existing use of a Property not authorized or
permitted under applicable zoning Law; or (d) a violation of Law relating to the
continued ownership, operation, use or occupancy of a Property ((a) through (d)
above being herein collectively referred to as "Title Issues"). The Purchaser's
Notice shall include a statement of the Damages claimed by Purchaser as to any
Title Issues. SWLIC shall have no responsibility for any claimed Damages in
respect of Title Issues under this Section 9.5 not in excess of $50,000.00 in
the aggregate for all Properties and if such Damages exceed in the aggregate
$50,000.00 as to all Properties, Seller shall be liable to Purchaser only for
Damages in excess of such $50,000.00 in the aggregate as to all Properties. If a
Purchaser's Notice claims Damages in excess of $50,000.00, but not exceeding
$250,000.00, for a single Property, SWLIC shall have a period of seven (7) days
following receipt of a Purchaser's Notice to notify Purchaser in writing of its
election to either: (a) dispute the Purchaser's claim of Damages in respect of
Title Issues under this Section 9.5 and/or the amount of Damages as shown on the
Purchaser's Notice, (b) pay the Damages as shown in the Purchaser's Notice
directly to Purchaser in cash, (c) cause a title insurer to provide title
insurance coverage insuring over or around or providing express insurance
against all loss due to such Title Issues, or (d) cure the Title Issues. In the
event SWLIC elects either items (b) or (c) immediately preceding, such cash
payment to Purchaser or title insurance coverage, as applicable, shall be
provided by SWLIC within a period of thirty (30) days following the date of
SWLIC's written responses to the Purchaser's Notice. In the event SWLIC elects
item (d) preceding, such cure shall be completed within a period of forty-five
(45) days following the date of SWLIC's response to the Purchaser's Notice;
provided that so long as SWLIC is diligently pursuing cure, such period shall be
automatically extended for an additional period of up to thirty (30) days in
order for SWLIC to complete the cure of the Title Issues. If SWLIC disputes the
Purchaser's claim pursuant to this Section 9.5(a), SWLIC and Purchaser shall
negotiate in good faith for a period of thirty days and if such claim is not
resolved within such thirty day period the matter shall be submitted for
arbitration pursuant to Section 9.6. In the event the Purchaser's Notice asserts
Damages in excess of $250,000.00 with respect to any single Property, the
Purchaser's Notice may provide for SWLIC to repurchase the partnership interests
of the Property Partnership which is the owner of the Property for which the
Damages are asserted. Subject to SWLIC's
right to dispute the claim and/or amount of Damages in such Purchaser's Notice
and any submission of the matter to arbitration pursuant to Section 9.6, SWLIC
shall be required to repurchase such partnership interests for a price equal to
the Allocated Price of the applicable Property as reflected on Exhibit "B"
hereto less the then outstanding principal balance of any Mortgage Liens
covering such Property, if any. Purchaser may, in its sole discretion, elect to
accept a cure of any Title Issues in lieu of requiring SWLIC to repurchase such
partnership interests. Any such repurchase shall be consummated within a period
of thirty (30) days following the later to occur of SWLIC's receipt of the
Purchaser's Notice or the date of an Arbitration Determination. Purchaser shall
execute and deliver an Assignment of Partnership Interests in the same form as
attached hereto as Exhibit "A" in respect to the Property Partnership to be so
repurchased and Seller shall contemporaneously therewith deliver to Purchaser
the cash sum equal to the Allocated Price for such Property less the then
outstanding principal balance of any Mortgage Liens covering such Property, if
any. Simultaneously with the execution and delivery of an Assignment of
Partnership Interests, (i) all income and expenses in relation to the Property
owned by the Property Partnership so repurchased shall be prorated in accordance
with the provisions of Section 2.4 of this Agreement and (ii) the Seller shall
take the Property subject to the Mortgage Liens, if any, covering such Property.
If the Property required by Purchaser to be repurchased is the Property commonly
known as Broadmoor Apartments, it shall be a condition to SWLIC's obligation to
repurchase that the Property commonly known as Ashland Towne Square Apartments
also be repurchased, each at the Allocated Price as specified in Exhibit "B"
hereto less the outstanding principal balance of any Mortgage Liens covering
such Properties, if any. Any Purchaser Notice must be delivered to Seller and
SWLIC prior to the expiration of the Adjustment Period. Following the expiration
of the Adjustment Period, Purchaser shall have no right to make any claim
related to any Title Issues except to the extent Seller failed to perform as
required with respect to a Purchaser's Notice which was timely delivered. The
remedies of this Section 9.5 shall control over the indemnification procedures
of Section 9.1(a) above with respect to Title Issues. A failure of SWLIC to
dispute the Purchaser's Notice in the required time period shall be deemed to
constitute a dispute of such Purchaser's Notice. If SWLIC disputes the
Purchaser's Notice as provided in (a) above or is deemed to have disputed the
Purchaser's Notice, Purchaser may elect to obtain express title insurance or
proceed to cure any such claimed Title Issues pending completion of the
arbitration process provided in Section 9.6. If any such disputed Purchaser's
Notice is resolved against SWLIC pursuant to arbitration in accordance with
Section 9.6, SWLIC shall be responsible only for the amount of Damages as
determined pursuant to the arbitration process, notwithstanding any amounts
which may have been paid or incurred by any Purchaser-Related Persons during the
pendency of the arbitration proceeding in relation to such claimed Title Issues.
Section 9.6 Arbitration Process. If a Claim Notice, Indemnity Notice or
Purchaser's Notice is given in accordance with the provisions of this Agreement
and the party receiving the notice disputes the coverage of the claim under the
provisions of Article IX ("Coverage of the Claim") or the amount of the claim
(the "Amount of the Claim"), then at any time on or before the date occurring
thirty (30) days after such claim is disputed, either party may initiate the
arbitration of the Coverage of the Claim or Amount of the Claim by giving notice
to that effect which notice shall specify the name and address of the person
designated to act as an arbitrator
on its behalf. Within fifteen (15) days after the notified party receives such
notice from the notifying party, the notified party shall give notice to the
notifying party specifying the name and address of the person designated to act
as an arbitrator on its behalf. The two arbitrators so chosen shall meet within
ten (10) days after the second arbitrator is appointed, and if, within ten (10)
days after the second arbitrator is appointed, the two arbitrators do not agree
upon the Coverage of the Claim or the Amount of the Claim, they shall together
appoint a third arbitrator. If, within fifteen (15) days after the appointment
of the second arbitrator, the two arbitrators are unable to agree upon the third
arbitrator or they otherwise fail to make such appointment, the third arbitrator
shall be selected by the parties themselves if they can agree thereon within a
further period of five (5) days. If the parties do not so agree, then either
party upon notice to the other made within thirty (30) days after the
appointment of the second arbitrator, may request such appointment by the
American Arbitration Association (or any organization successor thereto) in
accordance with its rules then prevailing or if the American Arbitration
Association (or such successor organization) shall fail to appoint said third
arbitrator within fifteen (15) days after such request is made, then either
party may apply within five (5) days after such fifteen (15) day period, upon
notice to the other, to the Senior Judge of the Federal District Court of the
Northern District of Texas (or any other court having jurisdiction and
exercising functions similar to those now exercised by said Court) for the
appointment of such third arbitrator.
(a) Each party shall pay the fees and expenses of the original
arbitrator appointed by or for such party, and all other expenses of the
arbitration (not including the attorneys' fees and similar expenses of the
parties which shall be borne separately by each of the parties) shall be
borne by the parties equally.
(b) If a third arbitrator is chosen as provided above, and the Amount
of the Claim is in issue, then such third arbitrator shall select either
the Amount of the Claim determined by the arbitrator appointed by or for
SWLIC or the Amount of the Claim determined by the arbitrator selected by
Purchaser, whichever is closer to the Amount of the Claim determined by the
third arbitrator; the third arbitrator may not select any other amount, and
may not "split the difference" between the determinations of the
arbitrators selected or appointed by or for the parties. The third
arbitrator shall so determine the amount of the claim and render a written
certified report of his determination to both SWLIC and Purchaser within
ten (10) days after appointment of the third arbitrator.
(c) If a third arbitrator is chosen as provided above, and the
Coverage of the Claim is in issue, a majority of the three arbitrators
shall determine the Coverage of the Claim and such majority shall render a
written certified report of their determination to both SWLIC and Purchaser
within ten (10) days after the appointment of the third arbitrator.
(d) Each of the arbitrators selected as herein provided shall have at
least ten (10) years experience in the multifamily real estate business in
the location of the Property as to which a claim has been made (or ten (10)
year retail experience with respect to the Property commonly described as
Northgate). In addition, each of the
arbitrators shall be an independent party not affiliated in any way with
SWLIC, Seller-Related Persons or Purchaser-Related Persons.
(e) The decision or judgment issued by the arbitrator shall be in
writing and final and conclusive upon the parties. Judgment may be had on
the decision and award of the arbitrator and may be entered in any court
having jurisdiction thereof.
ARTICLE X
POST-CLOSING TAX MATTERS
Section 10.1 Seller Tax Returns. Seller will prepare and file, or cause to
be prepared and filed the Seller Tax Returns. Seller will timely pay or
discharge, or cause to be paid or discharged, any and all Taxes for which the
Company, GSSW-REO or the Property Partnership may be held liable as a result of
Seller Tax Returns, unless such Taxes are being contested in good faith. Seller
shall provide a copy of Seller Tax Returns to Purchaser prior to filing and
Seller agrees to reasonably cooperate with any suggestions or requests of
Purchaser in connection with Seller's Tax Returns. Seller reserves the right to
make any filings reasonably deemed by Seller to be necessary under applicable
Law.
Section 10.2 Cooperation. Purchaser and Seller agree to furnish or cause to
be furnished to each other, upon request, as promptly as practicable, such
information (including, without limitation, access to books and records) and
reasonable assistance relating to the Company, GSSW-REO, and each Property
Partnership as is reasonably necessary for the preparation and filing of any Tax
Return which may be required to be filed by either Purchaser or Seller or for
the preparation for any audit, for the prosecution of any proceeding in respect
of any proposed adjustment and for any amendment to the Sellers Tax Returns for
periods prior to the Closing Date, which amendments Seller is specifically
authorized to file with the applicable taxing authority. Purchaser and Seller
shall cooperate with each other in the conduct of any audit or other proceedings
involving the Company, BGFRTS, L.C. (the general partner of the Company)
GSSW-REO, or any Property Partnership or any entity with which they are
consolidated or combined for any Tax purposes and each shall execute and deliver
such documents as are necessary to carry out the intent of this ARTICLE X.
Section 10.3 Tax Matters. Seller and Purchaser agree that Purchaser can
allocate the Purchase Price among the Properties for tax purposes based on
Purchaser's good faith determination of fair market value. Seller agrees to
cooperate with Purchaser to the extent necessary or desirable for Purchaser to
make any Section 754 Tax election that Purchaser may so elect.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Notices. Any notice or other communication given pursuant to
this Agreement must be in writing and (a) delivered personally, (b) sent by
telefacsimile or other similar facsimile transmission, (c) delivered by
overnight express or (d) sent by registered or certified mail, postage prepaid,
as follows:
i) If to Purchaser:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Blackstone Real Estate Advisors II L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Insignia Financial Group, Inc.
One Insignia Financial ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇, Esq.
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
ii) If to Seller:
▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President
Southwestern Life Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇
Knightsbridge Investment Management
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
5400 Renaissance Tower
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
All notices and other communications required or permitted under this
Agreement that are addressed as provided in this Section 11.1 will (A) if
delivered personally or by overnight express, be deemed given upon
delivery; (B) if delivered by telefacsimile or similar facsimile
transmission, be deemed given when electronically confirmed; and (C) if
sent by registered or certified mail, be deemed given when received. Any
party from time to time may change its address for the purpose of notices
to that party by giving a similar notice specifying a new address, but no
such notice will be deemed to have been given until it is actually received
by the party sought to be charged with the contents thereof.
Section 11.2 Entire Agreement. Except for documents executed by Seller and
Purchaser pursuant hereto, this Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter of this
Agreement, and this Agreement contains the sole and entire agreement between the
parties hereto with respect to the subject matter hereof.
Section 11.3 Expenses. Except as otherwise expressly provided in this
Agreement, each of Seller and Purchaser will pay its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby.
Section 11.4 Public Announcement. At all times at or before the Closing,
Seller and Purchaser will each consult with the other before issuing or making
any reports, statements, or releases to the public with respect to this
Agreement or the transactions contemplated hereby and will use good faith
efforts to agree on the text of a joint public report, statement, or release or
will use good faith efforts to obtain the other party's approval of the text of
any public report, statement, release to be made solely on behalf of a party. If
Seller and Purchaser are unable to agree on or approve any such public report,
statement, or release and such report, statement, or release is required by Law
or appropriate to discharge such party's, disclosure obligations, then such
party may make or issue the legally required or appropriate report, statement,
or release. Any such report, statement, or release approved or permitted to be
made pursuant to this Section 11.4 may be disclosed or otherwise provided by
Seller or Purchaser to any person or entity, including without limitation to any
employee or customer of either party hereto and to any governmental or
regulatory authority.
Section 11.5 Further Assurance. Seller and Purchaser agree that, from time
to time after the Closing, upon the reasonable request of the other, they will
cooperate and will cause their respective Affiliates to cooperate with each
other to effect the orderly transition of the business, operations, and affairs
of the Property Partnerships. Without limiting the generality of the foregoing,
(a) Seller will provide, and will cause its respective Affiliates to provide,
representatives of Purchaser reasonable access to all books and records of
Seller and its Affiliates reasonably requested by Purchaser in the preparation
of any post-Closing financial statements, reports, Tax Returns, or Tax filings
of the Property Partnerships; (b) Purchaser will provide, representatives of
Seller reasonable access to all pre-Closing books and records of the Property
Partnerships reasonably requested by Seller in the preparation of any
post-Closing financial statements, reports, Tax Returns, or Tax filings of
Seller; and (c) each party hereto will execute such documents and instruments as
the other party hereto may reasonably request containing terms and conditions
mutually satisfactory to each party hereto to further effectuate the terms
hereof.
Section 11.6 Waiver. Any term or condition of this Agreement may be waived
at any time by the party that is entitled to the benefit thereof. Such waiver
must be in writing and must be executed by an executive officer of such party. A
waiver on one occasion will not be deemed to be a waiver of the same or any
other breach or nonfulfillment on a future occasion. All remedies, either under
this Agreement, or by Law or otherwise afforded, will be cumulative and not
alternative.
Section 11.7 Amendment. This Agreement may be modified or amended only by a
writing duly executed by or on behalf of Seller and Purchaser.
Section 11.8 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
Section 11.9 No Third Party Beneficiary. Except as otherwise set forth
herein, the terms and provisions of this Agreement are intended solely for the
benefit of Seller, Purchaser, and their respective successors and permitted
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person or entity.
Section 11.10 Governing Law. This Agreement will be governed by and
construed and enforced in accordance with the Laws of the State of Texas
(without regard to the principles of conflicts of Law) applicable to a Contract
executed and performable in such state.
Section 11.11 Binding Effect. This Agreement is binding upon and will inure
to the benefit of the parties and their respective successors and permitted
assigns.
Section 11.12 Limited Assignment. Neither this Agreement nor any right or
obligation hereunder or part hereof may be assigned by any party hereto without
the prior written consent of the other party hereto (and any attempt to do so
will be void), except as otherwise specifically provided herein. Notwithstanding
the foregoing (i) Purchaser shall have the right to assign this Agreement at or
prior to the Closing Date to an Affiliate of Purchaser; provided, however, that
the Purchaser shall remain liable for all obligations of the Purchaser under
this Agreement, and (ii) Purchaser (or its permitted assignee) may grant a
collateral assignment of its interests in this Agreement to any lender of
Purchaser (or its permitted assignee).
Section 11.13 Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future Law, and if the
rights or obligations under this Agreement of Seller and the Purchaser will not
be materially and adversely affected thereby, (a) such provision will be fully
severable; (b) this Agreement will be construed and enforced as if such illegal,
invalid, or unenforceable provision had never comprised a part hereof; (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid, or unenforceable provision or by
its severance herefrom; and (d) in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as part of this
Agreement a legal, valid, and enforceable provision as similar in terms to such
illegal, invalid, or unenforceable provision as may then be legal, valid and
enforceable under applicable Law.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
this 31st day of December 1996, by the duly authorized representatives of Seller
and Purchaser.
SELLER:
GSSW-REO OWNERSHIP CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
GSSW LIMITED PARTNERSHIP,
a Texas limited partnership
By: BGFRTS, L.C.,
a Texas limited liability company,
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
PURCHASER:
SOUTHWEST ASSOCIATES L.P.,
a Delaware limited partnership
By: BRE/SOUTHWEST PARTNERS I L.P.,
a Delaware limited partnership,
general partner
By: BRE/SOUTHWEST PARTNERS I, L.L.C.,
a Delaware limited liability company,
sole general partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
By: NPI-AP MANAGEMENT, L.P.,
a Delaware limited partnership,
general partner
By: NPI Property Management Corporation,
sole general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
SWLIC has executed this Agreement in the space provided below solely to
evidence its indemnification obligations pursuant to ARTICLE IX.
SOUTHWESTERN LIFE INSURANCE
COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
Name (print):
Title: