Exhibit 10.01
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
By
And Between
LBWTC Real Estate Partners, LLC,
a Delaware limited liability company
As Seller
And
Triple Net Properties, LLC
a Virginia limited liability company
As Buyer
Regarding
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Dated As Of
October 22, 2003
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS .................................................... 2
SECTION 2. PURCHASE AND SALE OF PROPERTY .................................. 8
SECTION 3. PURCHASE PRICE; PAYMENT; BUYER'S DEFAULT; LIQUIDATED
DAMAGES ........................................................ 8
SECTION 4. ESCROW; CLOSING; COSTS ......................................... 10
SECTION 5. PRORATIONS AND ASSUMPTION OF OBLIGATIONS........................ 14
SECTION 6. REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY .......... 17
SECTION 7. TITLE TO THE REAL PROPERTY; BUYER'S DUE DILIGENCE REVIEW ....... 21
SECTION 8. INTERIM ACTIVITIES ............................................. 24
SECTION 9. CONDITIONS PRECEDENT TO CLOSING ................................ 29
SECTION 10. BROKER ......................................................... 32
SECTION 11. REMEDIES FOR SELLER DEFAULT .................................... 32
SECTION 12. DAMAGE TO OR DESTRUCTION OF THE PROPERTY ....................... 34
SECTION 13. CONDEMNATION ................................................... 35
SECTION 14. NOTICES ........................................................ 36
SECTION 15. GENERAL PROVISIONS ............................................. 37
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EXHIBITS
Exhibit A Description of Land
Exhibit A-1 Site Plan
Exhibit B Form of ▇▇▇▇ of Sale
Exhibit C Form of General Assignment
Exhibit D Form of Grant Deed
Exhibit E Schedule of Miscellaneous Agreements
Exhibit F Form of Non-Foreign Person Certification
Exhibit G Schedule of Service Contracts
Exhibit H Schedule of Tenant Leases, Space Agreements and Rent Roll
Exhibit I Schedule of Leasing Commission and Tenant Improvement
Allowances/Tenant Improvement Expenses
Exhibit J Form of Seller's Estoppel
Exhibit K Excluded Tangible Personal Property
Exhibit L Form of Tenant Estoppel Certificate
Exhibit M Form of Tenant Lease Assignment
Exhibit N Form of Tenant Notification Letter
Exhibit O Form of Subordination, Non-Disturbance and Attornment Agreement
Exhibit P Pending Litigation
Exhibit Q Pending Deals
Exhibit R List of Due Diligence Materials
Exhibit S Office/Hotel CC&R's
Exhibit T Parking Easement Agreement
Exhibit U Intentionally Omitted
Exhibit V Intentionally Omitted
Exhibit W Cost of Corridor Work on Remaining 3 Floors
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PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
(World Trade Center Office/Retail Building)
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (the
"Agreement") is made as of this 22nd day of October, 2003, by and between LBWTC
Real Estate Partners, LLC ("Seller"), and the "Buyer" identified below in the
Basic Provisions ("Buyer").
B A S I C P R O V I S I O N S
1. Buyer: Triple Net Properties, LLC, a Virginia limited liability
company. Buyer's tax identification no. is ▇▇-▇▇▇▇▇▇▇.
2. Buyer's address is: ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
3. Buyer's Counsel: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
The Federal Reserve Bank Building
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
4. Purchase Price: One Hundred Thirteen Million Six Hundred
Forty Eight Thousand and 00/100 Dollars
(U.S. $113,648,000.00).
5. Due Diligence
Period: 5:00 p.m. California time on October 31, 2003.
6. Scheduled Closing
Date: December 3, 2003.
7. Buyer's Broker: Triple Net Properties Realty, Inc.
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AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are acknowledged, Seller and Buyer agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS.
1.1.1 "Additional Deposit" has the meaning ascribed to it in Section
3.2.2.
1.1.2 "Affiliate" of a party means an entity controlling, controlled
by or under common control with such party. "Controlling, "controlled," and
"control" shall mean the possession of the power to direct the management and
policies of an entity through the ownership of voting securities. An Affiliate
shall specifically not include a group of individuals or entities which form a
tenancy-in-common arrangement to hold title to the Property.
1.1.3 "Alternate Addressee" means a Buyer's Alternate Addressee or
Seller's Alternate Addressee, as the case may be.
1.1.4 "Basic Provisions" means the terms and information set forth
on the immediately preceding page of this Agreement.
1.1.5 "▇▇▇▇ of Sale" means a ▇▇▇▇ of sale in the form of EXHIBIT B,
duly executed by Seller, conveying to Buyer the Tangible Personal Property.
1.1.6 "Broadway/Magnolia Parking Agreement" has the meaning ascribed
to it in Section 8.6.2.
1.1.7 "Building" means the office/retail building, parking structure
and other related improvements located on the Land and all fixtures attached
thereto (including but not limited to all HVAC equipment, elevators, and
electrical, plumbing, and mechanical systems owned by Seller).
1.1.8 "Business Day" or "business day" means a day when Escrow
Holder is open for business.
1.1.9 "Buyer" means the party identified as "Buyer" in the Basic
Provisions and any permitted assignee of or successor to Buyer's rights under
this Agreement.
1.1.10 "Buyer's Alternate Addressee" means the person identified as
"Buyer's Alternate Addressee" in the Basic Provisions.
1.1.11 "Buyer's Breach" has the meaning ascribed to it in SECTION 3.5.
1.1.12 "Buyer's Broker" means the person identified as "Buyer's
Broker" in the Basic Provisions.
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1.1.13 "Buyer's Counsel" means the law firm identified as "Buyer's Counsel"
in the Basic Provisions.
1.1.14 "CC&R's" has the meaning ascribed to it in SECTION 8.7.
1.1.15 "Close of Escrow" and "Closing" mean the recordation in the official
records of Los Angeles County of the Grant Deed.
1.1.16 "Closing Certificate" has the meaning ascribed to it in SECTION 6.2.
1.1.17 "Closing Date" means the day on which Close of Escrow occurs.
1.1.18 "Deposit" initially means the Initial Deposit and, at the time the
Additional Deposit is required to be deposited pursuant to Section 3.2.2 below,
shall also mean the Additional Deposit, together with all interest earned
thereon and all interest earned on such interest while held by Escrow Holder.
1.1.19 "Due Diligence Materials" means any documents provided by Seller to
Buyer prior to the date hereof (a list of which is identified on EXHIBIT R
attached hereto) or made available by Seller for review by Buyer.
1.1.20 "Due Diligence Period" means the period commencing upon the mutual
execution and delivery of this Agreement and ending on the date set forth in
Paragraph 6 of the Basic Provisions.
1.1.21 "Escrow" means the escrow opened with the Escrow Holder for the sale
of the Property.
1.1.22 "Escrow Holder" means Chicago Title Company, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇ ▇▇▇▇▇▇▇▇.
1.1.23 "Escrow Instructions" has the meaning ascribed to it in SECTION 4.1.
1.1.24 "General Assignment" means an assignment in the form of EXHIBIT C,
executed by Seller and Buyer, assigning to Buyer all of Seller's right, title
and interest in and to the Intangible Property.
1.1.25 "Grant Deed" means a grant deed in the form of EXHIBIT D, executed
and acknowledged by Seller, conveying the Real Property to Buyer.
1.1.26 "Initial Deposit" has the meaning ascribed to it in Section 3.2.1.
1.1.27 "Insured Casualty Notice" has the meaning ascribed to it in SECTION
12.1.1.
1.1.28 "Intangible Property" means all of Seller's interest in and to (i)
all licenses, permits and entitlements owned by Seller in connection with the
construction, rehabilitation or operation of the Real Property in accordance
with its current use, including but not limited to all
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temporary and final certificates of occupancy; (ii) any and all development
rights, land use rights and other intangible property, rights, titles,
interests, privileges and appurtenances owned by Seller and related to or used
in connection with the Real Property or its operation; (iii) any and all
warranties and guaranties of architects, engineers, contractors,
subcontractors, suppliers or materialmen involved in the repair, construction,
design, reconstruction or operation of the Real Property; (iv) Miscellaneous
Agreements; and (v) Service Contracts.
1.1.29 "Land" means the land described on EXHIBIT A.
1.1.30 "Major Tenant" means a Tenant leasing from Seller at least
one (1) full floor of office space in the Building.
1.1.31 "Material Inaccuracy" has the meaning ascribed to it in
SECTION 6.2.
1.1.32 "Miscellaneous Agreements" means the various agreements
relating to the Property to which Seller is a party listed on EXHIBIT E, as well
as other agreements (which are not Tenant Leases, Service Contracts or Space
Agreements) entered into after the date of this Agreement, less such other
agreements which are terminated after the date of this Agreement.
1.1.33 "New Management Agreement" has the meaning ascribed to it in
Section 8.9.
1.1.34 "Non-Foreign Person Certificate" means a certificate,
executed under penalty of perjury by a Seller, in the form of EXHIBIT F.
1.1.35 "Office/Hotel CC&R's" has the meaning ascribed to it in
SECTION 8.7.
1.1.36 "Pacific Standard Time" means Pacific Standard Time in effect
in Los Angeles, California, as adjusted for Daylight Savings for those days of
the year affected thereby.
1.1.37 "Parking Agreements" shall mean the Tri-Party Parking
Agreement and Broadway/Magnolia Parking Agreement.
1.1.38 "Parking Easement Agreement" has the meaning ascribed to it
in SECTION 8.7.
1.1.39 "Parking Owner" shall mean the owner of the properties
identified as the "Broadway Parking" and "Magnolia Parking" on the site plan
attached hereto as EXHIBIT A-1.
1.1.40 "Parking Related Restrictions" has the meaning ascribed to
it in SECTION 8.8.
1.1.41 "Past-Due Amounts" has the meaning ascribed to it in SECTION
5.2.3.
1.1.42 "Pending Deals" has the meaning ascribed to it in SECTION
8.3.1.
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1.1.43 "Permitted Title Exceptions" has the meaning ascribed to it in
SECTION 7.1.2.
1.1.44 "Person" means any natural person, partnership, corporation,
association or other legal entity.
1.1.45 "Personal Property" means the Tangible Personal Property and
Intangible Property.
1.1.46 "Preliminary Title Report" means that certain preliminary title
report dated as of May 17, 2003, issued by Chicago Title Company and identified
as Order No. 31057294A.
1.1.47 "Property" means the Real Property, the Personal Property and
Tenant Leases.
1.1.48 "Proration Time" means 12:00 A.M. (Pacific Standard Time) on the
Closing Date.
1.1.49 "Purchase Price" means the amount set forth as the "Purchase Price"
in the Basic Provisions.
1.1.50 "Real Property" means the Land, the Building and all rights, rights
of way, easements, water or littoral rights, all minerals, oil, gas and other
hydrocarbon substances, development rights and air rights appurtenant to or
used in connection with the Land and Building, and Seller's right, title and
interest in and to all streets, alleys, strips and gores abutting the Land.
1.1.51 "Records and Plans" means all financial records showing income and
expenses of the Building, Tenant files, records of Building operations, and all
building plans, specifications and drawings, engineering, soils and geologic
reports, surveys and other similar documents in Seller's possession or control
prepared or used in connection with the construction, maintenance, repair,
management or operation of the Building, excluding, however, any
attorney-client privileged communications or work product, any documents which
Seller is prohibited from disclosing to Buyer by any confidentiality agreement
with a third party and any proprietary manuals, forms, other documents and
software of Seller or any of its subsidiaries or affiliates.
1.1.52 "Released Parties" has the meaning ascribed to it in SECTION 6.3.3.
1.1.53 "Schedule of Service Contracts" means the list of Service Contracts
attached as EXHIBIT G.
1.1.54 "Schedule of Tenant Leases, Space Agreements and Rent Roll" means
the list of Tenant Leases and Space Agreements and Rent Roll attached as
EXHIBIT H.
1.1.55 "Scheduled Closing Date" means the date identified as the
"Scheduled Closing Date" in the Basic Provisions, or such later date to which
the final date for Close of Escrow shall be extended pursuant to this Agreement.
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1.1.56 "Seller" means LBWTC Real Estate Partners, LLC, a Delaware limited
liability company.
1.1.57 "Seller's Alternate Addressee(s)" means the person or persons
designated as such in SECTION 14.1.
1.1.58 "Seller's Counsel" means the law firm of Jeffer, Mangels, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, acting by or through ▇▇▇▇▇ ▇. ▇▇▇▇, Esq. or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esq.
1.1.59 "Seller's Default" has the meaning ascribed to it in SECTION
11.1.1.
1.1.60 "Seller's Estoppel" means an estoppel certificate of Seller in the
form of EXHIBIT J, respecting one or more Tenant Leases.
1.1.61 "Service Contracts" means any and all service contracts, art
contracts, leasing listing agreements, landscaping contracts, equipment leases,
maintenance agreements, open purchase orders, construction contracts and other
contracts for the provision of labor, services, materials or supplies to or for
the benefit of the Real Property, which are shown on the Schedule of Service
Contracts or which are entered into after the date of this Agreement and are
either approved by Buyer in writing or are terminable by the owner of the
Property without cause and without penalty on no more than thirty (30) days
notice, together with all supplements, amendments and modifications thereto
shown on the Schedule of Service Contracts or approved by Buyer in writing.
1.1.62 "Space Agreements" means the storage space agreements,
telecommunications facility licenses, location agreements and other licenses and
agreements for use or occupancy of space in the Real Property which (a)(i) are
described as Space Agreements on the Schedule of Tenant Leases, Space Agreements
and Rent Rolls or (ii) are entered into after the date of this Agreement in the
ordinary course of Seller's operation of the Real Property and are either
approved by Buyer in writing, terminate no more than thirty (30) days after the
Closing or are terminable by the owner of the Property without cause and without
penalty on no more than thirty (30) days notice, and (b) remain in effect as of
the Closing. Tenant Leases are not included in the Space Agreements.
1.1.63 "Space Agreement Occupants" means the parties to the Space
Agreements having rights to use or occupy portions of the Real Property.
1.1.64 "Tangible Personal Property" means all (i) Records and Plans; and
(ii) all depreciable personal property and all other tools, supplies, artwork,
furniture, furnishings, machinery, equipment and other tangible personal
property owned or leased by Seller in connection with the ownership, operation
or maintenance of the Property, excluding those items, if any, set forth on
EXHIBIT K and any replacements or additions thereto made between the date of
this Agreement and the Closing.
1.1.65 "Tenants" means the tenants leasing space in the Building pursuant
to the Tenant Leases.
1.1.66 "Tenant Deposits" means all security deposits paid by Tenants.
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1.1.67 "Tenant Estoppel Certificate" means an estoppel certificate
duly executed by a Tenant in substantially the form of EXHIBIT L (or, if a form
of estoppel certificate is attached to a Tenant Lease, on such other form),
dated no more than thirty (30) days prior to the Closing Date, provided that
the estoppel certificate for any GSA lease shall be in the form prepared by the
GSA.
1.1.68 "Tenant Lease Assignment" means an assignment in the form of
EXHIBIT M, duly executed by Seller and Buyer, assigning to Buyer the rights of
Seller in, to and under the Tenant Leases, Tenant Deposits and Space Agreements.
1.1.69 "Tenant Leases" means all leases for the occupancy of space
in the Building shown on the Schedule of Tenant Leases, Space Agreements and
Rent Roll, all leases entered into after the date of this Agreement and all
supplements, amendments and modifications thereto which are Pending Deals or
which are approved in writing by Buyer, less any leases which are terminated
after the date of this Agreement. Space Agreements are not included in the
Tenant Leases.
1.1.70 "Tenant Notification Letter" means a letter from Seller
addressed to a Tenant, in the form attached as EXHIBIT N respecting the
transfer of the Property and delivery of the Tenant Deposit of such Tenant to
Buyer.
1.1.71 "Termination Notice" has the meaning ascribed to it in
SECTION 3.5.
1.1.72 "Title Company" means Chicago Title Company.
1.1.73 "Title Documents" has the meaning ascribed to it in SECTION
7.1.
1.1.74 "Title Policy" has the meaning ascribed to it in SECTION
9.1.4.
1.1.75 "Title Review Period" has the meaning ascribed to it in
SECTION 7.1.
1.1.76 "To Seller's knowledge" means the actual knowledge without
inquiry or investigation of ▇▇▇ ▇▇▇▇▇▇▇, but (a) shall not mean such
individuals are charged with knowledge of the acts, omissions, and/or knowledge
of the predecessors in title to the Property or with knowledge of the acts,
omissions and/or knowledge of Seller's agents or employees; and (b) shall not
mean information or material which may be in the possession of Seller generally
or incidentally, but which is not actually known to the individuals named above.
None of the persons named above in this SECTION 1.1.75 shall have any personal
liability based upon this Agreement, including but not limited to Seller's
warranties and representations contained in this Agreement.
1.1.77 "Tri-Party Parking Agreement" has the meaning ascribed to it
in SECTION 8.6.1.
1.1.78 "Uninsured Casualty Notice" has the meaning ascribed to it in
SECTION 12.2.1.
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1.1.79 "Uninsured Estimate to Repair" has the meaning ascribed to it
in SECTION 12.2.1.
1.2 OTHER DEFINITIONAL PROVISIONS. The terms "hereof," "hereto,"
"hereunder" and similar terms when used in this Agreement shall refer to the
Agreement generally, rather than to the section in which such term is used,
unless otherwise specifically provided. Unless the context otherwise requires,
any defined term used in the plural shall refer to all members of the relevant
class, and any defined term used in the singular shall refer to any one or more
of the members of the relevant class.
SECTION 2.
PURCHASE AND SALE OF PROPERTY
On the terms and subject to the conditions of this Agreement, Seller
agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property
from Seller and to assume certain of Seller's obligations arising out of or
relating to the Property, as hereinafter provided.
SECTION 3.
PURCHASE PRICE; PAYMENT;
BUYER'S DEFAULT; LIQUIDATED DAMAGES
3.1 PURCHASE PRICE. The purchase price for the Property shall be the
Purchase Price.
3.2 PAYMENT; DEPOSIT. The Purchase Price shall be payable by Buyer to
Seller as follows:
3.2.1 Concurrently with the execution and delivery of this
Agreement, Buyer shall deliver to Escrow Holder in cash or other immediately
available funds the sum of One Million and 00/100 Dollars ($1,000,000.00) as
Buyer's Initial Deposit, which Initial Deposit shall, after the expiration of
the Due Diligence Period, be nonrefundable to Buyer (unless the sale of the
Property fails to close solely as a result of a default by Seller under this
Agreement);
3.2.2 Provided that Buyer has not terminated this Agreement pursuant
to the term hereof on or before the expiration of the Due Diligence Period, then
within one (1) business day following the expiration of the Due Diligence
Period, Buyer shall deliver to Escrow Holder an additional Two Million and
00/100 Dollars ($2,000,000.00) (the "Additional Deposit"), which, together with
the Initial Deposit, shall be immediately released by Escrow Holder to Seller.
The Initial Deposit and the Additional Deposit shall be non-refundable to Buyer
(unless the sale of the Property fails to close solely as a result of a default
by Seller under this Agreement); and
3.2.3 At least one (1) business day prior to the Scheduled Closing
Date, Buyer shall deliver to Escrow Holder in cash or other immediately
available funds an amount equal to the balance of the Purchase Price, plus such
additional amounts as may be required to pay Buyer's costs and expenses and all
other sums to be paid by Buyer through the Escrow, less any credits to which
Buyer is entitled, including proration credits. Such deposit shall be invested
by Escrow Holder, if Buyer so directs, pursuant to SECTION 3.4.
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3.3 APPLICATION OF DEPOSIT TO PURCHASE PRICE. At the Close of Escrow, the
Deposit shall be credited against the Purchase Price.
3.4 INVESTMENT OF ESCROWED FUNDS. Escrow Holder shall invest and reinvest
the Deposit and any other funds deposited by Buyer in the Escrow only in bonds,
notes, Treasury bills or other securities constituting direct obligations of, or
fully guaranteed by, the United States of America (and provided, further, that
such direct obligations or guarantees, as the case may be, are entitled to the
full faith and credit of the United States of America) or such other investments
as Buyer may direct and Seller may approve, until the earlier of (i) Close of
Escrow, or (ii) payment of the Deposit to Seller or Buyer pursuant to any other
provision of this Agreement, if this Agreement is terminated prior to the Close
of Escrow. Unless Seller is entitled to receive the Deposit as liquidated
damages pursuant to SECTION 3.5, any interest earned on and included in the
Deposit shall inure to the benefit of Buyer.
3.5 DEFAULT BY BUYER; LIQUIDATED DAMAGES. IF BUYER BREACHES ANY OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND FAILS TO CURE SUCH BREACH ON OR BEFORE THE
EARLIER OF THE SCHEDULED CLOSING DATE OR THREE (3) BUSINESS DAYS AFTER RECEIPT
OF NOTICE FROM SELLER OR ESCROW HOLDER OF SUCH BREACH (EXCEPT THAT NO NOTICE
SHALL BE NECESSARY OR CURE PERIOD AVAILABLE TO BUYER FOR A FAILURE OF BUYER TO
DEPOSIT THE BALANCE OF THE PURCHASE PRICE WHEN REQUIRED UNDER SECTION 3.2 OR ANY
DOCUMENTS REQUIRED TO BE DEPOSITED BY BUYER UNDER SECTION 4.3.1) (A "BUYER
BREACH"), AND IF SELLER IS NOT IN BREACH OF ANY OBLIGATION UNDER THIS AGREEMENT
WHICH CAUSES A CLOSING CONDITION IN FAVOR OF BUYER NOT TO BE SATISFIED, THEN
UPON UNILATERAL WRITTEN NOTICE OF TERMINATION (A "TERMINATION NOTICE") FROM
SELLER TO BUYER AND ESCROW HOLDER, NOTWITHSTANDING ANY CONTRARY DEMAND OR
INSTRUCTIONS OF BUYER OR ANY THIRD PARTY, THE ESCROW AND THIS AGREEMENT SHALL
TERMINATE, AND THE DEPOSIT SHALL BE PAID TO SELLER AS LIQUIDATED DAMAGES, WHICH
SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR THE BUYER BREACH. HOWEVER,
NOTHING IN THIS SECTION 3.5 SHALL BE CONSTRUED TO RELIEVE BUYER OF ANY LIABILITY
UNDER ANY INDEMNIFICATION PROVISIONS CONTAINED IN THIS AGREEMENT. FURTHERMORE,
BUYER AGREES THAT THE LIQUIDATED DAMAGES SUM SHALL BE IN ADDITION TO AND SHALL
NOT BE DEEMED TO INCLUDE ATTORNEYS' FEES WHICH MAY BECOME DUE TO SELLER PURSUANT
TO SECTION 15.7 HEREOF.
THE PARTIES ACKNOWLEDGE AND AGREE BY INITIALING THIS SECTION 3.5 THAT
IF A BUYER BREACH OCCURS AND IF, AS A RESULT OF SUCH BUYER BREACH, CLOSE OF
ESCROW FAILS TO OCCUR ON OR BEFORE THE SCHEDULED CLOSING DATE, SELLER WILL INCUR
CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT
OR IMPRACTICAL TO ASCERTAIN; AND THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO
THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE SUFFERED BY SELLER BY REASON OF
FAILURE OF THE CLOSE OF ESCROW SO TO OCCUR.
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INITIALS
-------------------------- -----------------------------------
Seller Buyer
SECTION 4.
ESCROW; CLOSING; COSTS
4.1 ESCROW. The purchase and sale of the Property shall be consummated
through the Escrow. Immediately upon the execution of this Agreement, the
parties shall deposit a copy of this Agreement with Escrow Holder. This
Agreement shall constitute the escrow instructions for the transfer of the
Property (the "ESCROW INSTRUCTIONS"). In the event of any conflict between this
Agreement and the general provisions of Escrow Holder attached as EXHIBIT O,
this Agreement shall control. If any requirements relating to the duties or
obligations of Escrow Holder are not acceptable to Escrow Holder, or if Escrow
Holder requires additional instructions, the parties shall make such deletions,
substitutions and additions to the Escrow Instructions as Buyer's Counsel and
Seller's Counsel shall mutually approve and which do not substantially alter
this Agreement or its intent. Written instructions from Seller's Counsel, in the
case of Seller, or from Buyer's Counsel, in the case of Buyer, shall be accepted
by Escrow Holder and shall be binding upon the party whose counsel gave such
instructions to Escrow Holder.
4.2 SELLER'S DELIVERIES TO ESCROW HOLDER.
4.2.1 Seller shall deliver to Escrow Holder prior to the Scheduled Closing
Date the following documents duly executed and where applicable, acknowledged
by Seller, each of which shall be undated and the delivery of each of which
shall be a condition precedent to the Close of Escrow:
4.2.1.1 Grant Deed. The Grant Deed;
4.2.1.2 Tenant Lease Assignment. The Tenant Lease Assignment;
4.2.1.3 General Assignment. The General Assignment;
4.2.1.4 ▇▇▇▇ of Sale. The ▇▇▇▇ of Sale;
4.2.1.5 Non-Foreign Person Certificate. A Non-Foreign Person
Certificate from Seller;
4.2.1.6 Tenant Notification Letters. The Tenant Notification Letter,
which shall be duplicated for purposes of delivery to each Tenant;
4.2.1.7 Parking Agreements. The Parking Agreements;
4.2.1.8 CC&R's.
(a) The Office/Hotel CC&R's; and
(b) The Parking Easement Agreement.
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4.2.1.9 Closing Certificate. The Closing Certificate;
4.2.1.10 Management Agreement. The New Management Agreement;
and
4.2.1.11 Other. Any other incidental documents, not otherwise
expressly provided for herein, reasonably required by Buyer or the Escrow Holder
to consummate the purchase and sale of the Property, provided that Seller is
given written notice by Buyer or Escrow Holder of the requirement of the
incidental documents within a reasonably sufficient time in advance of the
Scheduled Closing Date.
4.2.2 Escrow Holder is authorized to use the foregoing documents to
effect Closing, as provided in SECTION 4.7, when Escrow Holder receives all
funds and documents required hereunder to be delivered by Buyer.
4.3 BUYER'S DELIVERIES TO ESCROW HOLDER.
4.3.1 Buyer shall deliver to Escrow Holder prior to the Scheduled
Closing Date the following funds and documents duly executed and where
appropriate, acknowledged, by Buyer, each of which shall be undated and the
delivery of each of which shall be a condition precedent to the Close of Escrow:
4.3.1.1 Funds. The Funds required by SECTION 3.2.3 of this
Agreement;
4.3.1.2 Tenant Lease Assignment. The Tenant Lease Assignment;
4.3.1.3 General Assignment. The General Assignment;
4.3.1.4 Parking Agreements. The Parking Agreements;
4.3.1.5 The Parking Easement Agreement;
4.3.1.6 Management Agreement. The New Management Agreement;
and
4.3.1.7 Other. Any other incidental documents, not otherwise
expressly provided for herein, reasonably required by Seller or the Escrow
Holder to consummate the purchase and sale of the Property, provided that Buyer
is given written notice by Seller or Escrow Holder of the requirement of the
incidental documents within a reasonably sufficient time in advance of the
Scheduled Closing Date.
4.3.2. Escrow Holder is authorized to use the foregoing documents and
funds to effect the Closing, as provided in SECTION 4.7, when (i) Escrow Holder
holds for the account of Buyer the documents required to be delivered by Seller
to Escrow Holder; and (ii) the Title Company can and will issue the Title
Policy concurrently with the Closing.
4.4 SELLER'S DELIVERIES TO BUYER. After the Close of Escrow, Seller shall
promptly deliver to Buyer the following documents.
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4.4.1 Tenant Leases/Tenant Deposits. The original Tenant Leases
(or if not available, the best available copies), and the originals of the
Tenant Deposits which are evidenced by letters of credit or escrow agreements
and if necessary to enable Buyer to realize or draw upon same, consents of the
applicable Tenants and financial institutions or replacement letters of credit
or escrow agreements in favor of Buyer;
4.4.2 Space Agreements, Service Contracts and Miscellaneous
Agreements. The originals, or if not available, the best available copies of
the Space Agreements, Service Contracts and Miscellaneous Agreements;
4.4.3 Intangible Property. The originals, or if not available,
the best available copies of the Intangible Property; and
4.4.4 Records and Plans. The originals, or if not available, the
best available copies of Records and Plans.
The documents described in this SECTION 4.4 shall be deemed to be
appropriately delivered if left in the Building.
4.5 POSSESSION. Seller shall deliver possession of the Property to
Buyer at the Close of Escrow free and clear of all leases, tenancies and
occupancies, except for the Tenants under the Tenant Leases (including their
subtenants), the Space Agreement Occupants under the Space Agreements, and any
rights of occupancy granted in the Permitted Title Exceptions.
4.6 EVIDENCE OF AUTHORIZATION. At the Close of Escrow, each party shall
deliver to the other party an opinion of its counsel or other evidence in form
and content reasonably satisfactory to the other party that (a) the party is
duly organized and validly existing under the laws of the state of its
organization and has the power and authority to enter into this Agreement, (b)
this Agreement and all documents delivered pursuant hereto have been duly
executed and delivered by the party, and (c) the performance by the party of
its obligations under this Agreement have been duly authorized by all necessary
corporate or other action.
4.7 CLOSE OF ESCROW.
4.7.1 The Escrow shall close on or before the Scheduled Closing
Date.
4.7.2 Provided that Escrow Holder has not received from either
party written notice of the failure of any condition precedent specified in
SECTION 9 to the obligations of such party (or any previous such notice has
been withdrawn), then when the parties have each deposited into the Escrow the
documents and funds required by this Agreement and the Title Company can issue
the Title Policy at the Close of Escrow, Escrow Holder shall:
4.7.2.1 Prepare Escrow closing statements;
4.7.2.2 Insert the Closing Date as the date of any
undated document to be delivered through Escrow;
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4.7.2.3 Cause the Office/Hotel CC&R's, Parking Easement Agreement and
Grant Deed to be recorded, in that order, in the official records of Los
Angeles County;
4.7.2.4 Deliver to Buyer the documents deposited into the Escrow for
delivery to Buyer at the Close of Escrow, and any funds deposited by Buyer in
excess of the amount required to be paid by Buyer;
4.7.2.5 Deliver to Seller all sums to be received by Seller from
Buyer through Escrow at the Close of Escrow less all amounts to be paid by
Seller for Escrow Holder's fees and expenses and all amounts paid by Escrow
Holder in satisfaction of liens and encumbrances on the Real Property pursuant
to the instruction of Seller, and the documents deposited into the Escrow for
delivery to Seller at the Close of Escrow;
4.7.2.6 Cause the Title Policy to be issued by the Title Company; and
4.7.2.7 Mail the Tenant Notification Letters to the Tenants by
certified mail, return receipt requested.
4.8 COSTS OF ESCROW. Costs of the Escrow shall be allocated as follows:
4.8.1 Buyer and Seller shall each pay one-half (1/2) of the Escrow
fees.
4.8.2 Buyer shall pay the fee for recording the Grant Deed,
Office/Hotel CC&R's and Parking Easement Agreement and the premiums for the
Title Policy and any title endorsements requested by Buyer in excess of the
cost of a CLTA owner's policy of title insurance in the amount of the Purchase
Price without endorsements.
4.8.3 Seller shall pay all documentary transfer taxes imposed upon
the conveyance of the Real Property to Buyer and the premium for a CLTA owner's
policy of title insurance in the amount of the Purchase Price (excluding any
endorsements requested by Buyer).
4.8.4 Any other costs incurred through the Escrow shall be
apportioned in the manner customary in escrows of Escrow Holder in Los Angeles
County.
4.8.5 If the Escrow fails to close on or before the Scheduled Closing
Date for any reason whatsoever, including, without limitation, a failure of a
condition precedent set forth in SECTION 9, the Escrow Holder's charges,
including cancellation costs, shall be borne by the party who failed to perform
an applicable condition precedent, or, if neither or both parties have failed
so to perform, such costs shall be divided equally between Buyer and Seller.
4.9 OTHER COSTS. Except as otherwise expressly provided to the contrary in
this Agreement, each party shall pay all of its own legal, accounting and
consulting fees and other costs and expenses incurred in connection with this
Agreement, including but not limited to costs of due diligence. If Buyer or the
Title Company requires any survey work in addition to the survey, if any,
previously prepared for Seller, Buyer shall bear the expense of such additional
survey work.
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4.10 MAINTENANCE OF CONFIDENTIALITY BY ESCROW HOLDER. Except as may
otherwise be required by law or by this Agreement, Escrow Holder shall maintain
in strict confidence and not disclose to anyone the existence of the Escrow, the
identity of the parties thereto, the amount of the Purchase Price, the
provisions of this Agreement or any other information concerning the Escrow or
the transactions contemplated hereby, without the prior written consent of Buyer
and Seller.
SECTION 5.
PRORATIONS AND ASSUMPTION OF OBLIGATIONS
5.1 GENERAL. Except as otherwise expressly provided in this Agreement,
all income, receivables expenses and payables of the Property hereafter
described in this SECTION 5 shall be apportioned equitably between the parties
as of the Proration Time. The obligation to make apportionments shall survive
Closing for a period of six (6) months.
5.2 GENERAL AND SPECIFIC PRORATIONS
5.2.1 Except as otherwise provided in this SECTION 5, the following
items shall be apportioned:
5.2.1.1 Monthly rent, escalation charges for Building
expenses, parking fees, parking validation coupons and other charges paid or
owed by Tenants and Space Agreement Occupants. Regularly scheduled payments due
from Tenants and Space Agreement Occupants and billed but unpaid amounts owed
by Tenants and Space Agreement Occupants which are no more than thirty (30)
days past due as of the Close of Escrow shall be prorated as if paid and
credited to Seller, and Buyer shall be entitled to such amounts from the
Tenants and Space Agreement Occupants if and when collected. Amounts due and
owing from Tenants and Space Agreement Occupants which are more than thirty
(30) days past due shall be handled under SECTION 5.2.3;
5.2.1.2 Transferable annual permits, licenses, and/or
inspection fees, if any; and
5.2.1.3 Utility charges levied against Seller or the Property.
Seller shall use due diligence to cause all utilities furnished to the
Property, including, but not limited to, electricity, gas, water and sewer, to
be read the day prior to the Proration Time. Seller shall be responsible for
paying all costs and charges therefor for the period prior to the Proration
Time, and Buyer shall be responsible for paying all such costs and charges from
and after the Proration Time.
5.2.1.4 All income, receivables, expenses and payables of the
Property which are not specifically referenced herein but which shall continue
after the Close of Escrow.
5.2.2 Real and personal property taxes, assessments and special
district levies shall be prorated for the tax fiscal year in which the Closing
Date occurs on the basis of the then most current available tax bills, Seller
being charged through the day prior to the Closing Date and Buyer with the
closing Date and thereafter.
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5.2.3 If at Closing there are any rents, parking fees or other charges
owed by Tenants or Space Agreement Occupants which are more than thirty (30)
days past due (the "PAST-DUE AMOUNTS"), Seller shall not receive a credit to
Seller's account in the amount of its share of the Past-Due Amounts. On or
before the Closing, Seller shall certify the amount of the Past-Due Amounts to
Buyer. Following the Closing, Buyer shall use reasonable efforts (which shall
not be deemed to require commencement of litigation or termination of Tenant
Leases or Space Agreements) to collect Past Due Amounts. After Closing, if Buyer
receives payments of rent or other sums from Tenants or Space Agreement
Occupants, Buyer shall be entitled to apply such payments to rent or other sums
presently due Buyer (with any remainder to be paid to Seller within thirty (30)
days after receipt). If any Past Due Amounts are not collected within ninety
(90) days after the Closing, Seller at Seller's expense, may seek collection and
retain the proceeds of such Past Due Amounts but shall have no right to
terminate any Tenant Leases or Space Agreements or any parties' rights to
possession or use thereunder.
5.2.4 Except as otherwise provided in SECTION 5.2.1.1, escalation
charges for Building expenses owed by Tenants shall be prorated as and when
collected. If, after Closing, Buyer shall receive any escalation charges,
percentage rent payments or other revenues which are attributable in whole or in
part to any period prior to Closing and which are due Seller under the Tenant
Lease in question, Buyer shall within thirty (30) day after receipt remit such
amount to Seller. All collections of such escalation charges, percentage rent
payments or other revenues shall be apportioned between Buyer and Seller based
upon the allocation thereof equally over the period for which they are
attributable. If based upon its estimated payments on account of escalations or
percentage rent, any Tenant is entitled to be reimbursed for the excess of such
estimated payments over the Tenant's actual shares of escalations or percentage
rent obligations, as the case may be, then Seller shall reimburse to Buyer the
portion of such excess attributable to the period prior to the Close of Escrow
within thirty (30) days after receipt of a written request therefor from Buyer.
5.2.5 Security Deposits, plus accrued interest, if any, payable thereon
to Tenants, and any other deposit shall be credited (or assigned) to Buyer. If
any tenant security deposits are in the form of letters of credit or other
financial instruments (the "Non-Cash Security Deposits"), Seller will, at
Closing, cause Buyer to be named as beneficiary under the Non-Cash Security
Deposits or to assign the Non-Cash Security Deposits to Buyer with any necessary
consents of third parties to the assignment obtained. Buyer will not receive a
credit against the Purchase Price for the Non-Cash Security Deposits. If Buyer
cannot be named the beneficiary under any of the Non-Cash Security Deposits as
of the Closing Date or any of the Non-Cash Security Deposits cannot be assigned
to Buyer with all necessary consents of third parties to the assignment obtained
as of the Closing Date, an escrow shall be established with Escrow Agent at
Closing in an amount equal to all Non-Cash Security Deposits under which Buyer
is not the beneficiary as of the Closing Date or the assignment with consents
has not occurred as of the Closing Date, and the funds in the escrow in the
amount of a Non-Cash Security Deposit shall be released to Seller as and when
Buyer is named as beneficiary under that Non-Cash Security Deposit and it is
assigned to Buyer with all necessary consents to the assignment obtained. Escrow
Agent shall be instructed to invest the funds in escrow for the benefit of
Seller, and any interest earned thereon may be withdrawn by Seller from time to
time. On or before the Closing, the parties shall execute and deliver any escrow
instructions in form
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and content reasonably approved by Seller and Buyer as may be necessary in
connection with such escrow of funds.
5.2.6 Except as otherwise specifically provided herein, all income,
receivables, expenses and payables of the Property which cannot be ascertained
with certainty as of the Proration Time shall be prorated on the basis of
Seller's reasonable estimates of such amounts and shall be subject to a final
proration thirty (30) days after the Closing Date, or as soon thereafter as the
precise amounts can reasonably be ascertained. Either party owing money to the
other based on any adjustments to the prorations shall promptly pay such sum
within ten (10) days after mutual agreement of the amount due. All prorations,
unless otherwise provided herein, shall be on an accrual basis and based upon
actual elapsed calendar days.
5.3 LEASING COMMISSIONS AND TENANT IMPROVEMENTS. Except as may otherwise
be set forth on the schedule attached hereto as EXHIBIT I, commissions of
leasing agents and tenant improvement allowances/tenant improvement expenses
for any Tenant Leases entered into prior to the date of this Agreement shall be
the responsibility of Seller (except that to the extent identified in any
Tenant Leases or other documents provided to or made available to Buyer, Seller
shall have no responsibility for the payment of commissions which relate to any
future expansion or lease renewal or extension or take down of space which
occurs after the Close of Escrow, nor shall Seller be responsible for the
payment of any tenant improvement allowance/tenant improvement expenses or
refurbishment allowances which are not due and owing as of the Close of Escrow,
and Buyer shall be solely responsible for all of the same). Except as may
otherwise be set forth on the schedule attached hereto as EXHIBIT I,
commissions of leasing agents and tenant improvement allowances/tenant
improvement expenses for any Tenant Leases entered into on or subsequent to the
date of this Agreement, whether with respect to base lease term, future
expansions, renewals, or otherwise, shall be prorated between Seller and Buyer
based upon the portions of the lease term which occur prior to (which shall be
the obligation of Seller) and after (which shall be the obligation of Buyer)
the Close of Escrow.
5.4 TENANT LEASES. At the Close of Escrow, pursuant to the Tenant Lease
Assignment, Buyer shall assume all of the obligations of Seller under the Tenant
Leases and Space Agreements, if any, arising from and after the Close of Escrow.
5.5 SERVICE CONTRACTS AND OTHER INTANGIBLE PROPERTY. At the Close of
Escrow, Seller shall assign to Buyer, pursuant to the General Assignment, all
right, title and interest of Seller in and to the Service Contracts,
Miscellaneous Agreements and other Intangible Property, and Buyer shall assume
all of the obligations of Seller under the Miscellaneous Agreements and Service
Contracts arising from and after the Close of Escrow.
5.6 CREDIT FOR REMAINING RENOVATION WORK. Buyer acknowledges that Seller
has performed or is in the process of performing the Corridor Work (defined
below) in the Building. The term "Corridor Work" shall mean the common area
corridor work currently being performed, recently performed or contemplated to
be performed on eight (8) floors within the Building (five (5) of which floors
have been completed or are currently under construction and the remaining three
(3) floors of which have yet to be commenced). With respect to the five (5)
floors which have been completed or are currently under construction, to the
extent all five (5) floors have not been fully renovated as of the Close of
Escrow, Seller shall have the right to
16
complete such work post-closing, at Seller's expense, and Buyer shall provide
Seller with reasonable access and otherwise cooperate with Seller in connection
with Seller's efforts to complete the same. With respect to the remaining three
(3) floors for which the renovation work has yet to commence, Buyer shall
receive a credit against the Purchase Price for the cost to perform the
Corridor Work on such three (3) floors (which cost is identified on Exhibit W
attached hereto). In connection therewith, as of the Close of Escrow, Buyer
shall assume all of Seller's obligations under any construction contracts
relating to the completion of the Corridor Work with respect to such remaining
three (3) floors.
SECTION 6.
REPRESENTATIONS AND WARRANTIES; CONDITION OF PROPERTY
6.1 OF BUYER. As an inducement to Seller to enter into this Agreement,
Buyer hereby represents, warrants and covenants to Seller as follows.
6.1.1 POWER AND AUTHORITY. Buyer is duly organized and validly
existing under the State of its organization. Buyer has the power and authority
to carry on its present business, to enter into this Agreement and to
consummate the transactions herein contemplated; neither the execution and
delivery hereof by Buyer nor the performance by Buyer of Buyer's obligations
hereunder nor the performance by Buyer of Buyer's obligations hereunder will
violate or constitute an event of default under any material terms or material
provisions of any material agreement, document, instrument judgment, order or
decree to which Buyer is a party or by which Buyer is bound.
6.1.2 AUTHORIZATION; VALID OBLIGATION. All proceedings required to be
taken by or on behalf of Buyer to authorize Buyer to make, deliver and carry
out the terms of this Agreement have been or will be duly taken prior to the
Scheduled Closing Date. No consent to the execution, delivery and performance
of this Agreement is required from any partner, board of directors,
shareholders, creditor, investor, judicial or administrative body, governmental
authority or other person, other than any such consent which already has been
unconditionally given. This Agreement is a valid and binding obligation of
Buyer enforceable in accordance with its terms, except as the same may be
affected by bankruptcy, insolvency, moratorium or similar laws, or by legal or
equitable principles relating to or limiting the rights of contracting parties
generally.
6.1.3 CONFIDENTIALITY. Buyer shall hold as confidential all
information concerning Seller or the Property disclosed in connection with this
transaction; and Buyer shall not, prior to the Close of Escrow, release any such
information relating to Seller or the Property to third parties without Seller's
prior written consent, except (i) pursuant to a court order requiring such
release or as otherwise may be required by law, (ii) from and after the end of
the Due Diligence Period, as may be required by the Securities and Exchange
Commission, and (iii) from and after the end of the Due Diligence Period, to
broker-dealers, provided they sign a confidentiality agreement limiting any
further disclosure of such information, on a form acceptable to Seller. Seller
hereby gives its consent to Buyer's disclosure of information relating to the
Property to its lenders and financial partners to the extent reasonably
necessary in order to obtain such lenders' and/or partners' participation in the
contemplated transaction and to Buyer's disclosure of information relating to
the Property to Buyer's consultants and contractors, in each
17
instance to the extent reasonably necessary to verify information given to
Buyer by Seller or otherwise to carry out the purposes of this Agreement.
6.2 OF SELLER. As an inducement to Buyer to enter into this Agreement,
Seller represents, warrants and covenants to Buyer as follows, which shall be
true and correct as of the Execution Date and unless expressly limited by their
terms to the Execution Date, shall be true and correct as of the Close of
Escrow, as if made on such date.
6.2.1 Regarding Seller's Authority.
6.2.1.1 It is duly organized and validly existing under the
laws of the state of its organization. It has the power and authority to enter
into this Agreement and to sell its interest in the Property on the terms set
forth in this Agreement. The execution and delivery hereof and the performance
by it of its obligations hereunder will not violate or constitute an event of
default under any material terms or material provisions of any agreement,
document, instrument, judgment, order or decree to which it is a party or by
which it is bound. It is not a party to or bound by any agreement to sell its
interest in the Property or any interest therein to any third party.
6.2.1.2 All requisite action (corporate, trust, partnership
or otherwise) has been taken by it in connection with entering into this
Agreement, the documents referenced herein and the consummation of the
transactions contemplated hereby. No consent to the execution, delivery and
performance of this Agreement by it is required from any partner, board of
directors, shareholder, creditor, investor, judicial or administrative body,
governmental authority or other person, other than any such consent which
already has been unconditionally given. The individuals executing this Agreement
and the documents referenced herein on behalf of it have the legal power, right
and actual authority to bind it to the terms and conditions hereof and thereof.
This Agreement is a valid and binding obligation of it, enforceable in
accordance with its terms, except as the same may be affected by bankruptcy,
insolvency, moratorium or similar laws, or by legal or equitable principles
relating to or limiting the rights of contracting parties generally.
6.2.2 Tenant Leases and Space Agreements. There are no leases or
other agreements for the use or occupancy of the Property which will affect or
be obligations of Buyer or the Property or any portion thereof following the
Close of Escrow, except the Tenant Leases and Space Agreements. As of the
Execution Date, to Seller's knowledge, no Tenant or Space Agreement Occupant is
in material default under any Tenant Lease or Space Agreements, except as shown
on the Schedule of Tenant Leases, Space Agreements and Rent Roll. Neither
Seller's interest in the Tenant Leases or Space Agreements nor any of the
rentals or other sums due or to become due under the Tenant Leases and Space
Agreements will, as of the Close of Escrow, be assigned to any third party.
6.2.3 Other Agreements.
6.2.3.1 There are no written service contracts, art
contracts, leasing listing agreements, landscaping contracts, equipment leases,
maintenance agreements, open purchase orders and other contracts for the
provision of labor, services, materials or supplies to
18
or for the benefit of the Real Property which will affect or be obligations of
Buyer or of the Property or any portion thereof following the Close of Escrow,
other than the Service Contracts and Miscellaneous Agreements. To Seller's
knowledge, no parties to the Service Contracts are in material default
thereunder.
6.2.3.2 To Seller's knowledge, Seller is not in material
default under any of the Miscellaneous Agreements.
6.2.4 Litigation. As of the Execution Date, to Seller's knowledge,
there is no pending litigation which could become a liability of Buyer or the
Property or any portion thereof following the Close of Escrow, other than as
shown on EXHIBIT P attached hereto.
6.2.5 Hazardous Materials. To Seller's knowledge, it has not been
notified in writing by any governmental authority that the Property is in
violation of or is being investigated respecting the violation of any federal,
state or local law, ordinance or regulation relating to industrial hygiene or to
the environmental conditions on, under or about the Property, including but not
limited to soil and groundwater condition.
6.2.6 Compliance with Laws. To Seller's knowledge, Seller has
received no written notice from any municipal, state, federal or other
governmental authority of zoning, building, fire, water, use, health,
environmental or other statute, ordinance, code or regulatory violations issued
in respect of the Property which have not been heretofore corrected.
An inaccuracy in any warranty and representation of Seller contained
in this SECTION 6.2 shall not entitle Buyer to terminate this Agreement or
refuse to close Escrow, unless such inaccuracy, when considered together with
any other such inaccuracies, materially and adversely affects the value of the
Property by an amount equal to or in excess of Five Hundred Thousand Dollars
($500,000) (a "MATERIAL INACCURACY"). If Buyer shall discover prior to the Close
of Escrow any inaccuracies in any of Seller's warranties and representations,
Buyer shall promptly notify Seller thereof. At or prior to the Close of Escrow,
Seller shall deliver to Buyer through Escrow a Closing Certificate (the "CLOSING
CERTIFICATE") stating that the foregoing warranties and representations are true
and correct as of the Closing Date, or if no longer true and correct, setting
forth any inaccuracies in the warranties and representations. If any Material
Inaccuracy in Seller's warranties and representations shall be discovered by
Buyer prior to the Close of Escrow or shall be disclosed to Buyer in the Closing
Certificate, then as its sole right and remedy, Buyer shall have the right to
terminate this Agreement by delivering notice thereof to Seller and Escrow
Holder on or before the Scheduled Closing Date, in which case the terms of
SECTION 9.3 shall be applicable. If Buyer does not so elect to terminate this
Agreement, then Seller's warranties and representations shall be deemed to have
been modified so as to be accurate as of the Closing Date, and Buyer shall be
obligated to acquire the Property without any adjustment of the Purchase Price.
6.3 PURCHASE AS IS.
6.3.1 Prior to the Closing date, Buyer will be afforded access to
the Records and Plans and to other information available to Seller with respect
to the Property and will have
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an opportunity to review and analyze the same. Seller has made no
representations or warranties as to the accuracy or completeness of such
information except as expressly set forth herein.
6.3.2 THE PURCHASE PRICE IS A DISCOUNTED PURCHASE PRICE REPRESENTING THE
FACT THAT THE PROPERTY IS BEING PURCHASED BY BUYER ON AN "AS IS," "WHERE IS" AND
"WITH ALL FAULTS" BASIS. BUYER 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 BE DEEMED TO HAVE BEEN MADE OR GIVEN, BY
SELLER, EXCEPT FOR THOSE REPRESENTATIONS, WARRANTIES AND COVENANTS SET FORTH IN
THIS AGREEMENT. BUYER HEREBY FURTHER ACKNOWLEDGES AND AGREES THAT WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXCLUDED FROM THE
TRANSACTION CONTEMPLATED HEREBY, AS ARE ANY WARRANTIES ARISING FROM A COURSE OF
DEALING OR USAGE OF TRADE, AND THAT THE SELLER HAS NOT WARRANTED, AND DOES NOT
HEREBY WARRANT, THAT THE PROPERTY NOW OR IN THE FUTURE WILL MEET OR COMPLY WITH
THE REQUIREMENTS OF ANY LAW, CODE OR REGULATION OF ANY APPLICABLE GOVERNMENTAL
AUTHORITY OR JURISDICTION. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
BUYER HEREBY ASSUMES ALL RISK AND LIABILITY (AND AGREES THAT SELLER SHALL NOT 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 THE PROPERTY. BUYER ACKNOWLEDGES
AND AGREES THAT THE SALE PROVIDED FOR HEREIN IS MADE WITHOUT ANY WARRANTY BY
SELLER AS TO THE NATURE OR QUALITY OF THE PROPERTY; THE DEVELOPMENT POTENTIAL OF
THE PROPERTY; THE PRIOR HISTORY OF OR ACTIVITIES ON THE PROPERTY; THE QUALITY OF
LABOR AND/OR MATERIALS INCLUDED IN ANY OF THE IMPROVEMENTS; THE FITNESS OF THE
PROPERTY FOR AND/OR THE SOIL CONDITIONS EXISTING AT THE PROPERTY FOR ANY
PARTICULAR PURPOSE OR DEVELOPMENT POTENTIAL; THE PRESENCE OR SUSPECTED PRESENCE
OF HAZARDOUS WASTE OR SUBSTANCES ON, ABOUT, OR UNDER THE PROPERTY OR THE
IMPROVEMENTS; OR THE ZONING OR OTHER LEGAL STATUS OF THE PROPERTY. EXCEPT AS
SPECIFICALLY SET FORTH IN THIS AGREEMENT, NO PERSON ACTING ON BEHALF OF SELLER
IS AUTHORIZED TO MAKE, AND BY THE EXECUTION HEREOF BUYER HEREBY ACKNOWLEDGES
THAT NO PERSON HAS MADE, ANY REPRESENTATION, AGREEMENT, STATEMENT, WARRANTY,
GUARANTY OR PROMISE REGARDING THE PROPERTY, OR THE TRANSACTION CONTEMPLATED
HEREIN, OR REGARDING THE ZONING, CONSTRUCTION, PHYSICAL CONDITION OR OTHER
STATUS OF THE PROPERTY, AND NO REPRESENTATION, WARRANTY, AGREEMENT, STATEMENT,
GUARANTY OR PROMISE, IF ANY, MADE BY ANY PERSON ACTING ON BEHALF OF SELLER WHICH
IS NOT CONTAINED HEREIN SHALL BE VALID OR BINDING UPON SELLER.
6.3.3 Buyer waives its right to recover from Seller and its affiliates,
shareholders, officers, directors, employees, agents, representatives and
attorneys (collectively,
20
"RELEASED PARTIES") any and all damages, losses, liabilities, costs or expenses
whatsoever (including attorneys' fees, court costs and litigation expenses) and
claims therefor, whether direct or indirect, known or unknown, foreseen or
unforeseen, which may arise on account of or in any way growing out of or
connected with the physical or environmental condition of the Property
(including the improvements thereon) or any law or regulation applicable
thereto, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, including the
Superfund Amendments and Reauthorization Act of 1986, (42 U.S.C. Sections 9601
et seq.), the Resources Conservation and Recovery Act of 1976, (42 U.S.C.
Sections 6901 et seq.), the Clean Water Act, (33 U.S.C. Sections 466 et seq.),
the Safe Drinking Water Act, (14 U.S.C. Sections 1401-1450), the Hazardous
Materials Transportation Act, (49 U.S.C. Sections 1801 et seq.), the Toxic
Substance Control Act, (15 U.S.C. Sections 2601-2629), the California Hazardous
Waste Control Law, (California Health and Safety Code Sections 25100-25600), and
the ▇▇▇▇▇▇-Cologne Water Quality Control Act (California Health and Safety Code
Sections 13000 et seq.), except that the following are not waived or
relinquished by Buyer: (a) subject to the limitations contained in SECTION 6.4
and SECTION 15.19 of this Agreement, rights of Buyer for recovery against Seller
based upon any inaccuracy in Seller's warranty and representation contained in
SECTION 6.2.5 of this Agreement, and (b) rights that Buyer may have as a matter
of law for recovery against Seller for liability of Buyer to third parties
arising out of any release of hazardous materials, hazardous substances or
hydrocarbons occurring in, on or under the Property during the period of
Seller's ownership of the Property.
BUYER EXPRESSLY WAIVES THE BENEFITS OF SECTION 1542 OF THE CALIFORNIA
CIVIL CODE, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR EXPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED THE
SETTLEMENT WITH THE DEBTOR."
6.4 SURVIVAL. Buyer and Seller each hereby covenants and agrees with the
other that the representations and warranties of Buyer and Seller (as the case
may be) set forth in SECTION 6.1.1, SECTION 6.1.2 and SECTION 6.2.1 shall
survive the Close of Escrow without limitation as to duration. Each of the
warranties and representations of Seller contained in SECTION 6.2.2 with
respect to a Tenant Lease shall survive until the earlier of (a) delivery to
Buyer of a Tenant Estoppel Certificate confirming any such matters warranted
and represented with respect to such Tenant Lease, or (b) six (6) months after
the Close of Escrow. The remaining warranties and representations of Seller set
forth in SECTION 6.2 shall survive the Close of Escrow for a period of six (6)
months.
SECTION 7.
TITLE TO THE REAL PROPERTY; BUYER'S DUE DILIGENCE REVIEW
7.1 TITLE CLEARANCE. Seller (i) has previously delivered to Buyer the
Preliminary Title Report for a CLTA owner's title policy, together with
photostatic copies of all documents
21
affecting title, as disclosed in the Preliminary Title Report, and (ii) shall
deliver to Buyer, to the extent in its actual possession, any existing survey
affecting the Property (collectively, "TITLE DOCUMENTS"). Buyer shall approve
or reasonably disapprove the Preliminary Title Report or any part thereof, by
written notice to Seller and Escrow Holder within five (5) business days
after the Buyer's receipt of the Title Documents (the "TITLE REVIEW PERIOD"),
unless otherwise waived by Buyer. If Buyer fails to so approve or reasonably
disapprove the Preliminary Title Report, or any part thereof, in writing within
the Title Review Period, it shall be conclusively presumed that Buyer has
approved the Preliminary Title Report.
7.1.1 Title Exceptions. If the Title Company issues any additional
supplements before the Closing Date that add exceptions to the Preliminary Title
Report, Buyer shall have five (5) business days after delivery to Buyer of each
supplement with copies of all documents referred to in the supplements to
approve or disapprove, in Buyer's sole discretion, these supplements by written
notice to Seller and Escrow Holder. If Buyer fails to so approve or disapprove
such items within this five (5) business day period, it shall be conclusively
presumed that Buyer has approved these supplements. If there are any title
exceptions not approved (or deemed approved) by Buyer as provided above, Seller
shall have the right until the close of Escrow to have the exceptions removed or
corrected by the Title Company or to extend the Closing Date for a period not to
exceed five (5) business days until such exceptions have been removed or
corrected for approval by Buyer, which shall not be unreasonably withheld or
delayed. If Seller is unable to have such exceptions removed or corrected by the
Title Company for approval by Buyer, which shall not be unreasonably withheld or
delayed, Buyer may elect, upon written notice to Seller and Escrow Holder no
later than five (5) days after written notice from Seller that the exceptions
will not be removed, to either (i) waive such exceptions or disapprovals; or
(ii) terminate this Agreement. Buyer's failure to so terminate within the five
(5) day period constitutes a waiver of Buyer's termination rights and for this
reason such title exceptions shall be deemed approved. If the Agreement is
terminated by Buyer as provided above, Escrow Holder shall return to Buyer any
Deposit being held in Escrow plus accrued interest and the Escrow shall
terminate. Upon such termination Seller shall pay the Escrow costs if Buyer
reasonably disapproves of any condition of title not corrected by Seller.
7.1.2 Effect of Closing. Upon the Close of Escrow, Buyer shall
accept title to the Property subject to all exceptions approved, deemed approved
or waived by Buyer as provided in this Agreement (the "PERMITTED TITLE
EXCEPTIONS").
7.1.3 Seller Indemnity. To the extent required by the Title Company
in order to issue the Title Policy in favor of Buyer without any exceptions for
mechanic's liens arising out of the work described in Sections 5.6 and 8.5 of
this Agreement, Seller agrees to enter into an Indemnity Agreement, on a form
approved by Seller, indemnifying the Title Company from any losses suffered by
the Title Company arising out of such work.
7.2 BUYER INVESTIGATION.
7.2.1 Subject to the terms of SECTION 8.1 below, Buyer shall have the
right to conduct and complete an inspection and evaluation of the Property
during the Due Diligence Period to determine if Buyer wishes to purchase the
Property, subject to the rights of tenants under the Tenant Leases and Space
Agreement Occupants under the Space Agreements. This
22
determination shall be in the sole and absolute discretion of Buyer.
Notwithstanding the above, Buyer agrees that Buyer's investigation shall not
include the penetration of the ground surface of the Property, or of any
flooring, exterior walls or roofing. Additionally, the scope of any analysis
which requires physical sampling of all or any part of the Property shall be
subject to: (a) the prior approval of Seller, which Seller may withhold or
condition in its sole discretion, (b) Seller's receipt of written evidence that
Buyer has procured the insurance required pursuant to SECTION 8.1.2. below, and
(c) the requirement that Buyer dispose of all such test samples in accordance
with applicable law and at no cost or liability to Seller. Buyer shall have the
right to conduct tenant interviews of any tenant either directly leasing more
than 5,000 rentable square feet in the Building or whose lease expires prior to
May 31, 2005, provided any such interview is scheduled through Seller and
Seller is given the opportunity to be present during any such interview.
7.2.2 Buyer hereby agrees not to contact any governmental agencies
with respect to the Property without Seller's prior written consent, which
Seller may withhold or condition in its sole discretion. Buyer shall keep the
Property free and clear of any mechanics' liens or materialmen's liens related
to Buyer's right of inspection and the activities contemplated in this SECTION 7
and SECTION 8.1 below. All of Buyer's obligations set forth in this SECTION 7.2
shall survive the termination of this Agreement.
7.2.3 Seller has delivered the Due Diligence Materials to Buyer and
Buyer acknowledges receipt of the same.
7.2.4 Upon expiration of the Due Diligence Period, Buyer's
investigation of the Property for any and all reasons in accordance with the
terms of this SECTION 7.2 and SECTION 8.1 below, including Buyer's review of
the Due Diligence Materials (hereinafter collectively referred to as "BUYER'S
INVESTIGATION") shall be deemed completed for purposes of this Agreement except
as to matters disclosed by supplements to the Preliminary Title Report in
accordance with SECTION 7.1.1 above.
7.3 CONTINGENCY FOR BUYER'S PROPERTY INVESTIGATION. If Buyer's
Investigation discloses any condition or circumstance about the Property that is
unsatisfactory to Buyer during the Due Diligence Period, Buyer shall promptly
notify Seller and Escrow Holder in writing of all facts and circumstances
regarding such conditions and, at Buyer's election, Buyer may in its sole and
absolute discretion either (i) terminate this Agreement (in which case the
provisions of Section 9.3 below shall apply); or (ii) waive such conditions or
circumstances and this Agreement shall continue to the Close of Escrow in
accordance with its terms and conditions. Except as otherwise provided in this
Agreement, Buyer's right to terminate as provided above shall expire on the last
day of the Due Diligence Period. Buyer shall exercise the right to terminate by
giving Seller and Escrow Holder written notice of the unconditional termination
of this Agreement before the expiration of the Due Diligence Period. Failure to
so exercise this right on or before that date shall be deemed to constitute
Buyer's election to proceed to the Close of Escrow and to not terminate this
Agreement.
7.3.1 Return of Due Diligence Materials. If this Agreement is
terminated as provided in this Agreement, Buyer shall promptly deliver to
Seller all original copies of the Due Diligence Materials provided by Seller to
Buyer.
23
SECTION 8.
INTERIM ACTIVITIES
8.1 ENTRY ON PROPERTY TO INSPECT.
8.1.1 Buyer shall make all inspections in good faith and with due
diligence. All inspection fees, appraisal fees, engineering fees and other
expenses of any kind incurred by Buyer relating to the inspection of the
Property will be solely Buyer's expense. Seller shall cooperate with Buyer in
all reasonable respects in making such inspections. Seller hereby reserves the
right to have a representative present at the time of making any such
inspection. Buyer shall notify Seller not less than two (2) business days in
advance of making any such inspection. In making any inspection hereunder,
Buyer will treat, and will cause any representative of Buyer to treat, all
information obtained by Buyer pursuant to this Agreement as strictly
confidential except for such information which Buyer is required to disclose to
its consultants, attorneys, lenders and transferees. Buyer shall deliver to
Seller copies of all third party reports and studies obtained by or for Buyer
with respect to the Property, whether obtained before or after the date of this
Agreement, and shall cause its consultants preparing reports and studies to
agree that Seller may rely thereon. If the Close of Escrow does not occur,
other than by reason of a Seller Default, Buyer shall be deemed to have
assigned to Seller without warranty all of Buyer's rights in such reports and
studies, and Buyer shall execute any documents necessary to evidence such
assignment. Buyer's obligations under the foregoing sentence shall survive the
termination of this Agreement, other than by reason of a Seller Default.
8.1.2 Prior to any entry on the Property by Buyer or any agent of
Buyer, Buyer shall cause the activities of Buyer and its agents on and about
the Property to be covered by a policy of commercial general liability
insurance in the amount of at least $3,000,000, combined single limit, naming
Seller, its affiliates and its respective trustees, officers, directors,
contractors, agents and employees as additional insureds, and shall deliver to
Seller a certificate evidencing the existence of such coverage, which Buyer
shall keep in effect until the earlier of the Closing or termination of this
Agreement. Buyer shall indemnify, protect and hold Seller, its affiliates and
its respective trustees, shareholders, officers, directors, employees, agents
and contractors harmless from any and all injuries, losses, liens, claims,
judgments, liabilities, costs, expenses or damages (including reasonable
attorneys' fees and court costs) which result from or arise out of any acts or
omissions of Buyer or its representatives in, on or about the Property;
provided, however, that the foregoing indemnity shall not include any injuries,
losses, liens, claims, judgments, liabilities, costs, expenses or damages
resulting from or arising out of any pre-existing conditions. Buyer agrees to
return the Property to substantially the same condition in which the Property
was prior to Buyer's making any inspection. Buyer's obligations under this
SECTION 8.1.2 shall survive the termination of this Agreement.
8.2 ESTOPPEL CERTIFICATES. Except as provided below in this SECTION 8.2,
Seller shall use commercially reasonable efforts to deliver to Buyer, at least
three (3) business days prior to the Scheduled Closing Date, Tenant Estoppel
Certificates for all Tenants in the Building. Any material modification of a
Tenant Estoppel Certificate and any material discrepancy in the information
contained in any Tenant Estoppel Certificate from the information contained in
the Schedule of Tenant Leases, Space Agreements and Rent Roll or the terms of
the applicable Tenant Lease shall be subject to Buyer's reasonable approval. If
after use of due diligence, Seller
24
is unable to obtain from any Tenant in the Building an executed Tenant Estoppel
Certificate, then the provisions of this SECTION 8.2 shall be deemed to be
satisfied if Seller at its sole option furnishes Buyer with a Seller's Estoppel,
as to the applicable Tenant; provided, however, that Tenant Estoppel
Certificates executed by Tenants in satisfactory form and content for all Major
Tenants and for Tenants (including the Major Tenants) leasing at least eighty
percent (80%) of the total leased rentable square footage of office space in the
Building (exclusive of month-to-month tenancies and any GSA lease) must be
delivered to satisfy the requirements of this SECTION 8.2 (and such estoppel
certificates shall be deemed to be in satisfactory form unless they contain any
of the material modifications or material discrepancies described in the second
sentence of this Section 8.2). The foregoing provisions of this SECTION 8.2 are
referred to collectively as the "MINIMUM ESTOPPEL REQUIREMENTS". Seller shall
not have any obligation whatsoever to deliver a Seller's Estoppel. If Buyer does
not approve any material modification or discrepancy in a Tenant Estoppel
Certificate, then such disapproved Tenant Estoppel Certificate shall not be
included for purposes of determining whether the Minimum Estoppel Requirements
are satisfied. If the Minimum Estoppel Requirements are not satisfied, then
Buyer may terminate this Agreement by delivering written notice thereof to
Seller and Escrow Holder on or before the Scheduled Closing Date, in which case
the Deposit shall be returned to Buyer, upon Buyer's execution of escrow
cancellation instructions, and the provisions of SECTION 9.3 shall be
applicable. Seller further agrees, at no cost or expense to Seller, to assist
Buyer in delivering Subordination, Non-Disturbance and Attornment Agreements
(each, an "SNDA") (in a form substantially similar to that attached hereto as
EXHIBIT O) to all Tenants in the Building, provided that obtaining said SNDA's
shall not be a condition to Buyer's obligations under this Agreement.
8.3 OPERATION OF PROPERTY THROUGH THE CLOSE OF ESCROW. During the period
from the Execution Date through the earlier of (i) the Close of Escrow or (ii)
termination of this Agreement pursuant to any provision hereof:
8.3.1 Modifications of Leases, Service Contracts, Space Agreements
or Miscellaneous Agreements. Seller may execute, without the consent of Buyer,
those documents listed under the heading "Pending Deals" on EXHIBIT Q (the
"PENDING DEALS"), and upon the execution of a Pending Deal by Seller, such
Pending Deal shall become a Tenant Lease for purposes of this Agreement.
Furthermore, prior to the expiration of the Due Diligence Period, Seller shall
have the right to enter into new leases and cancel, extend or otherwise modify
existing Tenant Leases, Space Agreements and Miscellaneous Agreements, without
the consent of Buyer. Seller shall also have the right, without the consent of
Buyer, to renew or replace or enter into Service Contracts, Space Agreements or
Miscellaneous Agreements that expire prior to Closing for any term, provided
that such Service Contracts, Space Agreements or Miscellaneous Agreements are
terminable by Seller or its successors in interest without cause and without
payment or penalty upon not more than thirty (30) days' notice to the service
provider. Except as provided for in this SECTION 8.3.1, Tenant Leases, Service
Contracts, Space Agreements or Miscellaneous Agreements will not be modified,
cancelled, extended, renewed or otherwise changed, and no other leases or
service contracts with respect to the Property will be entered into, renewed or
extended, without the prior written consent of Buyer, which consent shall not
be unreasonably withheld or delayed.
25
8.3.2 Operations and Services. Unless interrupted by fire or other
casualty, or by another cause beyond the control of Seller, Seller shall
use due diligence to cause the Building to be operated in substantially the
manner in which it was operated on the Execution Date and to perform all of
its obligations under the Tenant Leases, the Space Agreements, the
Miscellaneous Agreements and the Service Contracts;
8.3.3 Maintenance. Seller shall use due diligence to perform all
services necessary to maintain and keep the Real Property and Tangible Personal
Property (including mechanical equipment of every kind used in the operation
thereof) in substantially the same condition as it is on the Execution Date,
except for reasonable wear and tear, casualty and condemnation;
8.3.4 Notices of Certain Defaults. Unless interrupted by fire or
other casualty, or by another cause beyond the control of Seller, Seller shall
promptly notify Buyer of any bankruptcy filing by any Tenant which Seller is
notified of in writing or any material default by Seller or by the other party
thereto existing on or after the Execution Date and prior to the Close of
Escrow under any of the Tenant Leases, and actually known to Seller;
8.3.5 Insurance Policies. All existing insurance policies (or
replacements thereof) affecting the Property or any portion thereof will be
kept in full force and effect;
8.3.6 Consents. Seller shall at its expense use due diligence to
obtain, by the Scheduled Closing Date, any consents, approvals or
authorizations of third parties required to assign the Intangible Property to
the Buyer. If any such requirement is discovered after the Close of Escrow,
then upon delivery of written notice thereof to Seller, Seller shall at its
expense use due diligence to obtain the required consent, approval or
authorization promptly thereafter; and
8.3.7 Termination of Management Contract. Seller shall effectively
terminate any property management agreement for the Property on or before the
Close of Escrow.
8.4 PERSONAL PROPERTY. Seller shall cause any security interests in the
Personal Property to be terminated at or prior to the Close of Escrow.
8.5 SELLER'S POST-CLOSING OBLIGATION. Buyer acknowledges and agrees that
Seller is currently renovating the plaza area located in front of the Building
in accordance with an approved set of plans and specifications with respect
thereto (the "APPROVED PLAZA RENOVATION PLANS"). The work being performed
pursuant to the Approved Plaza Renovation Plans is herein referred to as the
"PLAZA RENOVATION". Buyer further acknowledges and agrees that (i) the Plaza
Renovation may not be completed as of the Close of Escrow, (ii) if the Plaza
Renovation is not completed as of the Close of Escrow, Seller shall have the
right to complete such Plaza Renovation, at Seller's expense, after the Close
of Escrow and Buyer shall provide Seller with reasonable access and otherwise
cooperate with Seller in connection with Seller's efforts to complete the Plaza
Renovation, and (iii) in connection with the performance of the Plaza
Renovation Work, the entrance to the courtyard may be temporarily blocked or
impaired. Seller agrees to indemnify, defend and hold harmless Buyer from and
against any and all actual damages, costs or losses sustained by Buyer as a
direct result of the completion of such Plaza
26
Renovation by Seller after the Close of Escrow (other than to the extent
arising out of or resulting from any act or the negligence or willful
misconduct of Buyer or any of Buyer's agents, representatives or employees).
8.6 PARKING AGREEMENTS.
8.6.1 TRI-PARKING AGREEMENT. In connection with the Closing,
Seller, in its capacity as owner of the Hotel, intends to enter into a parking
agreement with Buyer and the current parking operator of the subterranean garage
located under the Building (hereinafter, the "TRI-PARTY PARKING AGREEMENT") on a
form to be agreed upon by and among such parties. Buyer shall have until five
(5) business days after its receipt of a draft of a form of the Tri-Parking
Agreement to deliver to Seller its approval or disapproval of the Tri-Parking
Agreement. If Buyer timely disapproves of the draft of the Tri-Parking Agreement
submitted by Seller, Seller may make such changes as it deems appropriate based
upon Buyer's input and submit revised draft(s) to Buyer for its approval, and
Buyer shall have a period of three (3) days after delivery of any revised draft
to notify Seller of whether it approves or disapproves the revised draft. Seller
may continue such process of submission of revised draft(s) until Buyer's
approval is obtained. In order to be effective, any notice of disapproval must
specify in detail the changes to the draft(s) necessary to obtain Buyer's
approval. If Buyer fails timely to deliver its approval or disapproval of any
submitted draft(s), it shall be deemed to have approved the draft(s) submitted.
If on or before the expiration of the Due Diligence Period, Buyer has not
approved or deemed to have approved the draft of the Tri-Parking Agreement,
Seller may terminate this Agreement by delivering notice thereof to Buyer on or
before ten (10) days after expiration of the Due Diligence Period, in which case
the Deposit shall be returned to Buyer, each party shall pay one-half (1/2) of
the Escrow cancellation charges, and except with respect to the surviving
provisions of this Agreement, neither party shall have any rights or remedies
against the other based upon this Agreement.
8.6.2 BROADWAY/MAGNOLIA PARKING AGREEMENT. In connection
with the Closing, Seller intends to enter into a parking agreement with Buyer
and a parking operator selected by Parking Owner (the "BROADWAY/MAGNOLIA PARKING
AGREEMENT") on a form to be agreed upon by and among such parties. Buyer shall
have until five (5) business days after its receipt of a draft of a form of the
Broadway/Magnolia Parking Agreement to deliver to Seller its approval or
disapproval of the Broadway/Magnolia Parking Agreement. If Buyer timely
disapproves of the draft of the Broadway/Magnolia Parking Agreement submitted by
Seller, Seller may make such changes at it deems appropriate based upon Buyer's
input and submit revised draft(s) to Buyer for its approval, and Buyer shall
have a period of three (3) days after delivery of any revised draft to notify
Seller of whether it approves or disapproves the revised draft. Seller may
continue such process of submission of revised draft(s) until Buyer's approval
is obtained. In order to be effective, any notice of disapproval must specify in
detail the changes to the draft(s) necessary to obtain Buyer's approval. If
Buyer fails timely to deliver its approval or disapproval of any submitted
draft(s), it shall be deemed to have approved the draft(s) submitted. If on or
before the expiration of the Due Diligence Period, Buyer has not approved or
deemed to have approved the draft of the Broadway/Magnolia Parking Agreement,
Seller may terminate this Agreement by delivering notice thereof to Buyer on or
before ten (10) days after expiration of the Due Diligence Period, in which case
the Deposit shall be returned to Buyer, each party shall pay one-half (1/2) of
the Escrow cancellation charges, and except with respect to
27
the surviving provisions of this Agreement, neither party shall have any rights
or remedies against the other based upon this Agreement.
8.7 CC&R's. Buyer acknowledges that the Property is encumbered by that
certain Declaration of Parking and Access Easements and Covenants, Conditions
and Restrictions recorded as No. 87-359666 in the Official Records of Los
Angeles County, California, as amended on December 6, 1990, as Instrument No.
▇▇-▇▇▇▇▇▇▇ (collectively the "EXISTING CC&R'S"). Seller intends to amend and
restate the Existing CC&R's by executing the following documents in connection
with the closing of this transaction (or terminate the Existing CC&R's and
replace the same with the following documents): (i) Declaration of Reciprocal
Easements and Restrictions (the "OFFICE/HOTEL CC&R'S"), substantially in the
form of that attached hereto as EXHIBIT "S"; and (ii) Parking Easement Agreement
(the "PARKING EASEMENT AGREEMENT"), substantially in the form of that attached
hereto as EXHIBIT "T". The Office/Hotel CC&R's and Parking Easement Agreement
are herein collectively referred to as the "CC&R's." Buyer shall have until five
(5) business days after the date of this Agreement to deliver to Seller its
approval or disapproval of the CC&R's. If Buyer timely disapproves of the drafts
of the CC&R's attached hereto, Seller may make such changes at it deems
appropriate based upon Buyer's input and submit revised draft(s) to Buyer for
its approval, and Buyer shall have a period of three (3) days after delivery of
any revised draft to notify Seller of whether it approves or disapproves the
revised draft. Seller may continue such process of submission of revised
draft(s) until Buyer's approval is obtained. In order to be effective, any
notice of disapproval must specify in detail the changes to the draft(s)
necessary to obtain Buyer's approval. If Buyer fails timely to deliver its
approval or disapproval of any submitted draft(s), it shall be deemed to have
approved the draft(s) submitted. If on or before the expiration of the Due
Diligence Period, Buyer has not approved or deemed to have approved the drafts
of the CC&R's, Seller may terminate this Agreement by delivering notice thereof
to Buyer on or before ten (10) days after expiration of the Due Diligence
Period, in which case the Deposit shall be returned to Buyer, each party shall
pay one-half (1/2) of the Escrow cancellation charges, and except with respect
to the surviving provisions of this Agreement, neither party shall have any
rights or remedies against the other based upon this Agreement.
8.8 MODIFICATION TO PARKING AGREEMENTS AND/OR CC&R's.
8.8.1 After Seller has obtained Buyer's approval of the Parking
Agreements under SECTION 8.6 and the CC&R's under SECTION 8.7 (such documents to
be individually and collectively referred to in this SECTION 8.8 as the "PARKING
RELATED RESTRICTIONS"), Seller may nonetheless make changes in the draft(s) of
one or more of the Parking Related Restrictions without Buyer's further approval
being necessary, to the extent the changes are required by the City of Long
Beach or other governmental entity(ies) to obtain any necessary development
permits or approvals; provided, however, that if changes to the draft of any one
or more of the Parking Related Restrictions are required that would reduce the
number of parking spaces as to which rights appurtenant to the Property are
granted, materially increase the obligations thereunder of the owner of the
Property or otherwise materially and adversely affect the rights of the owner of
the Property thereunder, and Seller elects to make such changes, Buyer may elect
to terminate this Agreement by delivering notice thereof to Seller and Escrow
Holder within ten (10) days after Seller delivers a revised draft of the
applicable Parking Related Restrictions to Buyer, in which case unless Seller
notifies Buyer within ten (10) days that Seller will not make
28
the objectionable changes, this Agreement shall terminate, in which case the
Deposit shall be returned to Buyer, each party shall pay one-half (1/2) of the
Escrow cancellation charges, and except with respect to the surviving
provisions of this Agreement, neither party shall have any rights or remedies
against the other based upon this Agreement. If Buyer does not timely elect to
terminate this Agreement based upon the changes being made to the applicable
Parking Related Restrictions, Buyer shall be deemed to have accepted such
changes. Seller agrees to deliver to Buyer copies of any revised drafts of the
applicable Parking Related Restrictions at or prior to the time when they are
submitted to the applicable governmental authority for its approval of the
changes. If Seller desires to make any other changes to the draft(s) of the
Parking Related Restrictions after Buyer's approval thereof under SECTION 8.6
AND/OR 8.7, Seller will submit the proposed changes to Buyer for its approval,
which shall not be unreasonably withheld or conditioned. Buyer shall have a
period of ten (10) days after deliver of the proposed changes to notify Seller
of its approval or disapproval, or else the proposed changes shall be deemed to
be approved by Buyer.
8.8.2 At or prior to the Close of Escrow, Seller will cause to be
recorded in the official records of Los Angeles County the Office/Hotel CC&R's
and Parking Easement Agreement in the forms approved by Buyer under SECTION
8.7, with such changes as may be made pursuant to SECTION 8.8.1.
8.9 MANAGEMENT AGREEMENT. In connection with the Closing, Buyer agrees to
enter into a property management agreement with Ensemble Real Estate Inc. for a
period of nine (9) months following the Closing, on a form previously delivered
to Buyer (the "New Management Agreement"). Buyer shall have until five (5)
business days after the date of this Agreement to deliver to Seller its approval
or disapproval of the New Management Agreement. If Buyer timely disapproves of
the draft of the New Management Agreement delivered to it, Seller may make such
changes as it deems appropriate based upon Buyer's input and submit revised
draft(s) to Buyer for its approval, and Buyer shall have a period of three (3)
days after delivery of any revised draft to notify Seller of whether it approves
or disapproves the revised draft. Seller may continue such process of submission
of revised draft(s) until Buyer's approval is obtained. In order to be
effective, any notice of disapproval must specify in detail the changes to the
draft(s) necessary to obtain Buyer's approval. If Buyer fails timely to deliver
its approval or disapproval of any submitted draft(s), it shall be deemed to
have approved the draft(s) submitted. If on or before the expiration of the Due
Diligence Period, Buyer has not approved or deemed to have approved the draft of
the New Management Agreement, Seller may terminate this Agreement by delivering
notice thereof to Buyer on or before ten (10) days after expiration of the Due
Diligence Period, in which case the Deposit shall be returned to Buyer, each
party shall pay one-half (1/2) of the Escrow cancellation charges, and except
with respect to the surviving provisions of this Agreement, neither party shall
have any rights or remedies against the other based upon this Agreement.
SECTION 9.
CONDITIONS PRECEDENT TO CLOSING
9.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The Close of Escrow and
the obligation of Buyer to purchase the Property are subject to the
satisfaction, no later than the Scheduled Closing Date (except as otherwise
noted), of the following conditions.
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9.1.1 Estoppel Certificates. Buyer shall have received the Tenant
Estoppel Certificates and/or at Seller's sole option, Seller's Estoppels,
satisfying the Minimum Estoppel Requirements;
9.1.2 No Material Casualty or Condemnation. There shall have been no
casualty or condemnation for which Buyer has elected to terminate this
Agreement pursuant to SECTION 12 or 13 of this Agreement;
9.1.3 Seller's Deliveries. Seller shall have delivered the items
described in SECTION 4.2 and shall be prepared to deliver the items described
in SECTION 4.4;
9.1.4 Title Policy. The Title Company shall be unconditionally
prepared to issue to Buyer an ALTA Extended Coverage owner's policy of title
insurance (10-17-92) (the "TITLE POLICY");
9.1.5 Representations, Warranties and Covenants of Seller. There
shall not be any Material Inaccuracies in Seller's representations and
warranties set forth in SECTION 6.2 as of the Close of Escrow;
9.1.6 Seller's Performance. Seller shall have performed in all
material respects all of the obligations of Seller under this Agreement, to the
extent required to be performed at or prior to the Close of Escrow. Any such
failure by Seller under this Agreement shall not be "material" unless the
effect of such failure, when considered together with any such other failures,
is to reduce the value of the Property to Buyer by at least Five Hundred
Thousand Dollars ($500,000); and
9.1.7 Physical Condition. The Property shall be in substantially the
same physical condition as it was on the Execution Date, reasonable wear and
tear, damage due to casualty (subject to SECTION 12), and tenant improvement
work being completed pursuant to the Tenant Leases excepted.
9.1.8 Management Agreement. Any property management agreement for the
Property has been terminated as of the Closing.
The conditions set forth in this SECTION 9.1 are solely for the benefit
of Buyer and may be waived only by Buyer. Buyer shall at all times have the
right to waive any condition. Any such waiver or waivers shall be in writing
and shall be delivered to Seller and Escrow Holder. Neither Seller nor Buyer
shall act or fail to act for the purpose of permitting or causing any condition
to fail. Nothing contained in this Agreement shall require Seller to bring any
suit or other proceeding or, except as otherwise expressly required by this
Agreement, to pay any substantial sum, to satisfy any of such conditions. If
any of the conditions in this SECTION 9.1 is not satisfied or has not been so
waived by Buyer prior to the Scheduled Closing Date, Buyer shall deliver
written notice to Seller describing the condition that has not been satisfied
or waived, and if such condition remains unsatisfied as of the Scheduled Closing
Date, then, subject to the provisions of SECTION 11 of this Agreement, if
applicable, Buyer shall have the right to terminate this Agreement and the
Escrow by written notice to Seller and the Escrow Holder if such condition
remains unsatisfied at the time Buyer gives such notice, provided that, except
as provided in SECTION 11 of this Agreement, Buyer's right to so terminate this
Agreement shall be
30
Buyer's sole right and remedy with respect to such failure of condition, and the
terms of SECTION 9.3 shall be applicable.
9.2 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The Close of Escrow and
Seller's obligation with respect to the transactions contemplated by this
Agreement are subject to the satisfaction, not later than the then existing
Scheduled Closing Date, of the following conditions:
9.2.1 Funds and Documents. Buyer shall have delivered to Escrow
Holder, prior to the Scheduled Closing Date, for disbursement as directed by
seller, all cash or other immediately available funds due from Buyer in
accordance with SECTION 4 of this Agreement and the documents described in
SECTION 4.3;
9.2.2 Representations, Warranties and Covenants of Buyer. There
shall be no material breach of any of Buyer's representations, warranties and
covenants set forth in SECTION 6.1 of this Agreement as of the Close of Escrow;
and
9.2.3 No Material Casualty. There shall have been no casualty for
which Seller has elected to terminate this Agreement pursuant to SECTION 12.2.
The conditions set forth in this SECTION 9.2 are solely for the
benefit of Seller and may be waived only by Seller. Seller shall at all times
have the right to waive any condition. Any such waiver or waivers shall be in
writing and shall be delivered to Buyer and Escrow Holder. Neither Seller nor
Buyer shall act or fail to act for the purpose of permitting or causing any
condition to fail. Nothing contained in this Agreement shall require Buyer or
Seller to bring any suit or other proceeding or, except as otherwise expressly
required by this Agreement, to pay any substantial sum, to satisfy any of said
conditions. If any of the conditions set forth in this SECTION 9.2 is not
satisfied, or has not been so waived by Seller before the Scheduled Closing
Date, Seller shall have the right to terminate this Agreement and the Escrow by
written notice to Buyer and the Escrow Holder, in which case the provisions of
SECTION 9.3 shall govern.
9.3 FAILURE OF CONDITION. Except as otherwise provided in this Agreement,
if the Escrow fails to close on or before the then-extant Scheduled Closing Date
for any reason whatsoever, including, without limitation, a failure of a
condition precedent set forth in this SECTION 9, either Buyer or Seller, if not
then in default under this Agreement, may terminate the Escrow and this
Agreement in accordance with the provisions of this Agreement; and, thereupon:
9.3.1 The costs of the Escrow through the Scheduled Closing Date
shall be governed by SECTION 4.8.5;
9.3.2 Subject to the provisions of SECTION 3.5, all monies paid into
the Escrow and all documents deposited in the Escrow shall be returned to the
party paying or depositing the same together with interest earned thereon, upon
execution by such party of an escrow cancellation instruction;
9.3.3 Except as provided in SECTION 4.8.5, each party shall pay its
own costs and expenses; and
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9.3.4 Each party shall be released from all obligations under this
Agreement, except for the obligations set forth in SECTIONS 3.5, 8.1, 10, and
15.7.
Without limiting the generality of the foregoing, if Seller terminates this
Agreement due to a Buyer Breach, as described in SECTION 3.5, Seller shall be
entitled (i) to the immediate return to Seller of all documents and instruments
deposited by Seller in the Escrow or delivered to Buyer, upon demand therefor by
Seller and without the necessity for any release thereof or approval of such
release by Buyer; and (ii) to the immediate release to Seller of the Deposit as
liquidated damages. If Buyer shall be entitled to the return of any funds or
documents delivered into escrow, then Seller shall deliver to Escrow Holder
immediately any consents, approvals or instructions which may be requested by
Escrow Holder to return the funds to Buyer.
SECTION 10.
BROKER
Buyer and Seller each represents and warrants to the other that it has not
dealt with any broker, finder or other middleman in connection with this
Agreement, except for CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc., and Buyer's Broker, and that it
does not know of any other broker, finder, middleman or other person who has
claimed or may have the right to claim a commission, finder's fee or other
brokerage fee in connection with this transaction. Seller shall pay any
commission due to CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc., pursuant to a separate agreement
between Seller and CB ▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc. In the event the transaction
contemplated herein is consummated, Seller shall also pay a commission to
Buyer's Broker equal to $2,400,000, pursuant to a separate agreement between
Buyer and Buyer's Broker. Each party shall indemnify, protect, defend and hold
the other party harmless from and against any costs, claims or expenses
(including actual attorneys' fees and expenses), arising out of the breach by
the indemnifying party of any of its representations, warranties or agreements
contained in this SECTION 10. The representations and obligations under this
SECTION 10 shall survive the Close of Escrow, or, if the Close of Escrow does
not occur, the termination of this Agreement.
SECTION 11.
REMEDIES FOR SELLER DEFAULT
11.1 BUYER'S REMEDIES IN GENERAL.
11.1.1 A default by Seller in the performance of its obligations under
this Agreement discovered by Buyer on or before the Close of Escrow shall not
entitle Buyer to terminate this Agreement or refuse to close Escrow, unless (a)
Buyer notified Seller of such default within three (3) days after its discovery
by Buyer, (b) such default is not cured by Seller within ten (10) business days
after Seller's receipt of written notice of such default or on or before the
Scheduled Closing Date, whichever is earlier, and (c) such uncured default when
considered together with any other such uncured defaults materially and
adversely affects the value of the consideration being received by Buyer under
this Agreement (a "SELLER DEFAULT"). An uncured default or defaults by Seller
under this Agreement shall not materially and adversely affect the value of the
consideration being received by Buyer, unless the effect of such default or
defaults is to reduce the value of the Property to Buyer by at least Five
Hundred Thousand Dollars ($500,000). If Buyer shall discover prior to the Close
of Escrow any default in any of
32
Seller's obligations under this Agreement, Buyer shall promptly notify Seller
thereof, and Seller shall have until the Scheduled Closing Date to cure the
default. If there shall be any default by Seller discovered by Buyer prior to
the Close of Escrow and not cured by the Scheduled Closing Date and such
default (when combined with any other such uncured defaults) constitutes a
Seller Default, then Buyer may elect not to close Escrow, in which case Buyer's
sole rights and remedies shall be as follows: (i) to enforce specific
performance of this Agreement solely in accordance with the procedures and
subject to the time limitations set forth in SECTION 11.2, and/or (ii) to
terminate this Agreement and receive back the Deposit and the amount of Buyer's
actual, out-of-pocket expenses incurred in connection with the due diligence of
the Property, up to a maximum of $50,000.00, in which case Buyer shall not have
any further right or remedy against Seller for the Seller Default, and the
terms of SECTION 9.3 shall apply. If Buyer elects to close Escrow
notwithstanding the existence of any default by Seller, Buyer shall not be
entitled to any adjustment of the Purchase Price, Buyer shall be deemed to
have waived such defaults by Seller, and Seller shall not have any liability to
Buyer based upon such defaults of Seller.
11.1.2 If the Close of Escrow occurs, except as provided to the
contrary in SECTION 6.4, Buyer shall not have the right to commence any legal
action for damages or other right or remedy against Seller for any default or
alleged default of Seller's obligations under this Agreement first discovered by
Buyer after the Close of Escrow, or otherwise recover against Seller, whether by
cross-complaint, counterclaim, offset or otherwise, for such default or alleged
default, more than six (6) months after the Closing Date.
11.2 EXCLUSIVE PROCEDURES FOR BUYER'S SPECIFIC PERFORMANCE REMEDY. Solely
in the case of a Seller Default, Buyer shall be entitled to bring an action for
specific performance against Seller with respect to this Agreement and file a
lis pendens or other notice of pending action which affects the Property only
under the following conditions and circumstances:
11.2.1 Buyer shall have fully performed all obligations of Buyer
under this Agreement, except for depositing funds in the amount of the balance
of the Purchase Price into escrow, but shall be ready, willing and able to do
so; and
11.2.2 Either (a) the Title Company shall not as of the Scheduled
Closing Date be in a position to issue to Buyer upon recordation of the Grant
Deed the Title Policy; or (b) Seller shall not have delivered to Escrow Holder
the Grant Deed duly executed and acknowledged by Seller and otherwise in a form
to be recorded and the other documents described in SECTION 4.2.1.3 through
4.2.1.10; and
11.2.3 The action must be commenced, if at all, and service of process
made on Seller, not later than thirty (30) days after the Scheduled Closing
Date; and
11.2.4 All of the issues in such action, whether of fact or law,
shall be heard by a reference proceeding pursuant to the provisions of
California Code of Civil Procedure, Section 638, et. seq. Within ten (10) days
following the commencement of any such action, the parties shall make
application to the court in which the action is pending for the appointment of
a retired Superior Court Judge or Court of Appeal Justice from the then current
list of retired judges available to serve as referees in the county in which
such action is commenced to serve as the referee. The parties shall use
reasonable efforts to expedite the process of selection of the referee
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and the proceedings thereafter. Buyer may file a notice of pending action in
the Los Angeles County Official Records with respect to such reference
proceeding, which notice shall remain of record unless and until the earlier to
occur of the following: (i) the referee in such action or reference proceeding
shall request that the court in which such action is pending order the
expungement of such notice; or (ii) the court in which the action is pending
shall order such expungement. The parties shall advance, in equal shares, the
fees and expenses of the referee selected pursuant to this provision, but the
losing party in any such action shall reimburse the prevailing party for any
and all fees and expenses previously advanced by such prevailing party for the
referee.
SECTION 12.
DAMAGE TO OR DESTRUCTION OF THE PROPERTY
12.1 INSURED CASUALTY.
12.1.1 If, prior to the Close of Escrow, the Improvements are
damaged or destroyed, whether by fire or other insured casualty, Seller shall
promptly notify Buyer of such damage or destruction and of the good-faith
estimate of a reputable licensed contractor selected by Seller and reasonably
approved by Buyer of the cost to repair the damage and Seller's good-faith
belief that such casualty is insured (the "INSURED CASUALTY NOTICE"). If such
estimated cost to repair to Seller is in excess of Three Million Dollars
($3,000,000), Buyer may terminate the Escrow and this Agreement by delivering
to Seller written notice of Buyer's intent to do so within ten (10) business
days after the date Buyer receives the Insured Casualty Notice. Upon such
termination, the terms of SECTION 9.3 shall be applicable. If Buyer shall not
have received the Insured Casualty Notice at least ten (10) business days prior
to the Scheduled Closing Date, then if Buyer does not elect to terminate the
Escrow and this Agreement, the Scheduled Closing Date shall be extended to
twenty (20) business days after delivery of the Insured Casualty Notice to
Buyer.
12.12 If the casualty is insured, and (i) the estimated cost of
repair to Seller is Three Million Dollars ($3,000,000) or less, or (ii) the
estimated cost of repair to Seller exceeds Three Million Dollars ($3,000,000)
but Buyer elects not to terminate this Agreement in accordance with this SECTION
12.1, then the Escrow and this Agreement shall remain in full force and effect,
the Closing shall occur on or before the Scheduled Closing Date, and Seller
shall assign to Buyer, as a condition precedent to the Close of Escrow, all of
Seller's right, title and interest in and to any of the casualty insurance
proceeds or claims therefor with respect to such damage or destruction (which
shall thereafter be repaired or not, at Buyer's option), and to the extent
assignable, any and all rental loss insurance of Seller payable with respect to
the Building for any period after the Proration Time and any and all claims
against other Persons for such damage or destruction. Additionally, if the
Escrow and this Agreement remain in full force and effect, Seller shall pay to
Buyer, by way of a reduction in the Purchase Price at Closing, an amount equal
to the deductible under the casualty insurance policy (such deductible amount to
be that determined, prior to Closing, by Seller's good-faith estimate).
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12.2 UNINSURED CASUALTY.
12.2.1 If, prior to the Close of Escrow, the Improvements are damaged
or destroyed by an uninsured casualty (including, without limitation, a casualty
as to which coverage has been disclaimed by Seller's insurers), Seller shall
promptly notify Buyer of such damage or destruction and of the good-faith
estimate of the cost to Seller to repair the same of a reputable licensed
contractor selected by Seller and reasonably approved by Buyer (the "UNINSURED
ESTIMATE TO REPAIR") and Seller's good-faith belief that such casualty is
uninsured (the "UNINSURED CASUALTY NOTICE").
12.2.2 If such Uninsured Estimate to Repair is in excess of Three
Million Dollars ($3,000,000), either party may terminate the Escrow and this
Agreement by giving the other party written notice of its intent to do so within
ten (10) business days after the date Buyer receives the Uninsured Casualty
Notice, except that Seller shall not have the right to terminate if within such
ten (10) business day period, Buyer elects to bear the loss in excess of Three
Million Dollars ($3,000,000) upon the Close of Escrow. Upon such termination,
the terms of SECTION 9.3 shall be applicable.
12.2.3 If the casualty is uninsured, and (i) the Uninsured Estimate to
Repair is Three Million Dollars ($3,000,000) or less, or (ii) the Uninsured
Estimate to Repair is more than Three Million Dollars ($3,000,000) and neither
party has elected to terminate this Agreement in accordance with SECTION 12.2.2,
then the Escrow and this Agreement shall remain in full force and effect, the
Closing shall occur on or before the Scheduled Closing Date, and Buyer shall be
entitled to a reduction in the Purchase Price in an amount equal to the
Uninsured Estimate to Repair, less any amount thereof which Buyer has elected
under SECTION 12.2.2 to bear. If Buyer shall not have received the Uninsured
Casualty Notice at least ten (10) Business Days prior to the Scheduled Closing
Date, then if neither party elects to terminate the Escrow and this Agreement,
the Scheduled Closing Date shall be extended to twenty (20) business days after
delivery of the Uninsured Casualty Notice.
12.2.4 If and to the extent that the Purchase Price is adjusted
pursuant to this SECTION 12.2 as a result of a disclaimer of coverage by
Seller's insurers, Buyer shall not be entitled to insurance proceeds due under
Seller's policies or to be assigned any claim under or with respect to Seller's
policies, and Seller shall retain all rights thereunder or with respect thereto
and to proceeds therefrom, it being the intent of this SECTION 12 that there be
no double recovery by or double compensation of Buyer for the casualty.
SECTION 13.
CONDEMNATION
If, prior to the Close of Escrow, either more than ten percent (10%)
of the area of the Land or any part of the Building is taken by power of eminent
domain and, as a result, the Improvements can no longer be operated in
substantially the same manner as they were prior to the taking, or if access to
the Land or Improvements is materially reduced or restricted by eminent domain
(or is the subject of such a pending taking which has not been consummated),
Seller shall notify Buyer of such fact promptly after Seller receives written
notice thereof from the condemning governmental authority. In such event, Buyer
shall have the option to terminate
35
this Agreement upon written notice to Seller given not later than three (3)
Business Days after receipt of Seller's notice. If this Agreement is so
terminated, the terms of SECTION 9.3 shall be applicable. If Buyer does not so
exercise any option which Buyer may have pursuant to this SECTION 13 to
terminate this Agreement, or if Buyer does not have the option to terminate
based upon the taking, then neither party shall have the right to terminate
this Agreement based upon the taking, but Seller shall assign and turn over,
and Buyer shall be entitled to receive and keep, all awards for the taking of
any of the Real Property by eminent domain which accrue to Seller, and the
parties shall proceed to the Close of Escrow pursuant to the terms hereof,
without modification of the terms of this Agreement and without any reduction
in the Purchase Price.
SECTION 14.
NOTICES
14.1 ADDRESSES. Whenever any notice, demand or request is required or
permitted hereunder, such notice, demand or request shall be made in writing
and shall be personally delivered to the individuals listed below, sent via
prepaid courier, telecopier, or deposited in the United States by mail,
registered or certified, return receipt requested, postage prepaid, addressed
to the addressees (and individuals) set forth below:
As to Seller:
LBWTC Real Estate Partners, LLC
c/o Ensemble Real Estate Services, LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AEW Capital Management, LP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Jeffer, Mangels, ▇▇▇▇▇▇ & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
36
As to Buyer:
To Buyer's address and/or facsimile number set forth in the
Basic Provisions.
With a copy to Buyer's Alternate Addressee.
As to Escrow Holder:
Chicago Title Company
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
14.2 RECEIPT OF NOTICES. Any notice, demand or request that shall be
served upon Buyer and its Alternate Addressee in the manner aforesaid shall be
deemed sufficiently given to and received by Buyer for all purposes hereunder,
and any notice, demand or request that shall be served upon Seller and their
Alternate Addressee in the manner aforesaid shall be deemed sufficiently given
to and received by us for all purposes hereunder, (i) at the time such notice,
demand or request is personally delivered, to such party and its Alternate
Addressee, if on or before 5 p.m. Los Angeles time on a business day and if
not, then on the next business day following delivery, or (ii) if sent via
prepaid courier, telecopier, or by registered or certified mail, at the time of
receipt by such party and its Alternate Addressee, whether or not such notice,
demand or request then or thereafter is delivered to any other addressee if
delivered by 5 p.m. Los Angeles time on a business day and if not, on the next
business day after delivery.
14.3 REFUSAL OF DELIVERY. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in accordance
with this Section 14 refused delivery thereof or no longer can be located at
that address shall constitute delivery thereof to such individual.
14.4 CHANGE OF ADDRESS. Each party shall have the right from time to time
to designate by written notice to the other parties hereto such other person or
persons and such other place or places as said party may desire written notices
to be delivered or sent in accordance herewith.
SECTION 15.
GENERAL PROVISIONS
15.1 APPROVALS. Whenever the approval or consent of either Buyer or Seller
is called for under the terms of this Agreement, such approval or consent shall
not be unreasonably withheld and shall be given or denied within three (3)
Business Days of receipt of a request by Buyer or Seller, as the case may be,
for such approval or consent, but in no event later than the Scheduled Closing
Date (unless a different period for such approval or consent is expressly
provided for in this Agreement). The failure by Buyer or Seller to notify the
other party of its denial of approval or consent within the time period set
forth above (or such different period for
37
such approval or consent if expressly provided for in this Agreement) shall be
deemed to be approval or consent by the party from whom approval or consent is
sought.
15.2 AMENDMENT. Except as provided in SECTION 4.1, no provision of this
Agreement or of any documents or instrument entered into, given or made
pursuant to this Agreement may be amended, changed, waived, discharged or
terminated except by an instrument in writing, signed by the party against whom
enforcement of the amendment, change, waiver, discharge or termination is
sought.
15.3 TIME OF ESSENCE. All times provided for in this Agreement for the
performance of any act will be strictly construed, time being of the essence.
15.4 ENTIRE AGREEMENT. This Agreement and other documents delivered at the
Close of Escrow set forth the entire agreement and understanding of the parties
in respect of the transactions contemplated by this Agreement and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof and thereof. No representation, promise, inducement or statement of
intention has been made by Seller or Buyer which is not embodied in this
Agreement, or in the attached Exhibits or the written certificates, schedules or
instruments of assignment or conveyance delivered pursuant to this Agreement,
and neither Buyer nor Seller shall be bound by or liable for any alleged
representations, promise, inducement or statement of intention not therein so
set forth.
15.5 NO WAIVER. No failure of any party to exercise any power given such
party hereunder or to insist upon strict compliance by the other party with its
obligations hereunder shall constitute a waiver of any party's right to demand
strict compliance with the terms of this Agreement.
15.6 COUNTERPARTS. This Agreement, any document or instrument entered into,
given or made pursuant to this Agreement or authorized hereby, and any amendment
or supplement thereto may be executed in two or more counterparts, and, when so
executed, will have the same force and effect as though all signatures appeared
on a single document. Any signature page of this Agreement or of such an
amendment, supplement, document or instrument may be detached from any
counterpart without impairing the legal effect of any signatures thereon, and
may be attached to another counterpart identical in form thereto but having
attached to it one or more additional signature pages.
15.7 COSTS AND ATTORNEYS' FEES. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement or any
document or instrument entered into, given or made pursuant to this Agreement or
authorized hereby or thereby (including, without limitation, the enforcement of
any obligation to indemnify, defend or hold harmless provided for herein or
therein), or because of an alleged dispute, default, or misrepresentation in
connection with any of the provisions of this Agreement or of such document or
instrument, or if Escrow Holder commences any action with respect to the Escrow,
the successful or prevailing party shall be entitled to recover actual
attorneys' fees, charges and other costs incurred in that action or proceeding,
in addition to any other relief to which it may be entitled.
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15.8 PAYMENTS; INTERESTS. Payment of all amounts required by the terms
of this Agreement shall be made in the United States and in immediately
available funds of the United States of America which, at the time of payment,
is accepted in that country for the payment of all public and private
obligations and debts. Unless the parties otherwise agree, payments shall be
made through the Escrow Holder. If any payment due under this Agreement is not
paid when due, it shall thereafter bear interest at a variable rate equal to the
rate announced from time to time by Citibank, N.A. as its prime or reference
rate, plus five percent (5%) per annum, but in no event more than the maximum
rate, if any, allowed by law to be charged by the party receiving the interest
on such type of indebtedness.
15.9 NO TRANSFERS BY BUYER. Buyer shall not have the right to assign any
of its rights or obligations under this Agreement. Buyer may designate another
entity which is an Affiliate of Buyer to take title to the Property at the Close
of Escrow, provided that Buyer delivers notice thereof to Seller at least five
(5) business days prior to the Scheduled Closing Date. If Buyer designates
another entity to take title to the Property, it shall not relieve Buyer of any
of its obligations under this Agreement. Any assignment made in violation hereof
shall be null and void.
15.10 PARTIES IN INTEREST. Subject to SECTION 15.9, the rights and
obligations of the parties hereto shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and the legal representatives of their respective estates. Nothing in this
Agreement is intended to confer any right or remedy under this Agreement on any
Person other than the parties to this Agreement and their respective successors
and permitted assigns, or to relieve or discharge the obligation or liability of
any Person to any party to this Agreement or to give any Person any right of
subrogation or action over or against any party to this Agreement.
15.11 APPLICABLE LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California without
giving effect to the conflict-of-law rules and principles of that state. Buyer
consents to the exclusive jurisdiction of the state and federal courts located
in Los Angeles County, California for the resolution of all disputes arising out
of or in connection with this Agreement. In connection therewith, the parties
consent to service of all process by mail and/or facsimile transmission and
waive any requirements that services be made personally. Buyer irrevocably
waives any objection which it may now or hereafter have to venue in Los Angeles
County, California of any action arising out of or in connection with this
Agreement.
15.12 RECORDING. Each of Seller and Buyer represents, warrants and
covenants that it will not record this Agreement or cause it to be recorded in
the public records for the county in which any of the Property is located or in
any other jurisdiction.
15.13 INCORPORATION OF RECITALS AND EXHIBITS. The Recitals and Exhibits
attached to this Agreement are incorporated into and made a part of this
Agreement.
15.14 CONSTRUCTION OF AGREEMENT. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties thereto. Headings at the
beginning of sections of this Agreement are solely for the
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convenience of the parties and are not a part of this Agreement. When required
by the context, whenever the singular number is used in this Agreement, the same
shall include the plural, and the plural shall include the singular, the
masculine gender shall include the feminine and neuter genders, and vice versa.
As used in this Agreement, the term "Seller" shall include the respective
successors and assigns of Seller, and the Term "Buyer" shall include the
successors and permitted assigns of Buyer.
15.15 SEVERABILITY. If any term or provision of this Agreement is
determined to be illegal, unconscionable or unenforceable, all of the other
terms, provisions and sections hereof will nevertheless remain effective and
be in force to the fullest extent permitted by law.
15.16 CONFIDENTIALITY; ANNOUNCEMENTS. Until the Close of Escrow, each
party will use reasonable efforts to keep confidential the purchase price and
other terms of this Agreement, and in connection therewith, will use reasonable
efforts to not disclose any such information to any person other than (a) those
employed by Seller or Buyer; (b) those who are actively and directly
participating in the evaluation of the Property and the negotiation and
execution of this Agreement or financing of the purchase of the Property; and
(c) governmental, administrative, regulatory or judicial authorities in the
investigation of the compliance of the Property with applicable legal
requirements; and (d) third parties as required under applicable law. Seller
and Buyer shall consult with each other with regard to all press releases and
other announcements issued at or prior to the Close of Escrow concerning the
existence of this Agreement or the sale of the Property and, except as may be
required by applicable laws or the applicable rules and regulations of any
governmental agency or stock exchange, neither Seller nor Buyer shall issue any
such press release or other such publicity prior to the Close of Escrow without
the prior consent of the other party. Nothing in this SECTION 15.16 shall
alter, amend or supersede the obligations of Buyer under SECTION 6.1.3 of this
Agreement.
15.17 SUBMISSION OF AGREEMENT. The submission of this Agreement to Buyer
or its broker, agent or attorney for review or signature does not constitute an
offer to sell the Property to Buyer or the granting of an option or other
rights with respect to the Property to Buyer. No agreement with respect to the
purchase and sale of the Property shall exist, and this writing shall have no
binding force or effect, until executed and delivered by Buyer and by Seller.
15.18 FURTHER ASSURANCES. Buyer and Seller agree to execute such
instructions to the Escrow Holder and such other instruments and take such
further actions either before or after the Close of Escrow as may be reasonably
necessary to carry out the provisions of this Agreement.
15.19 LIMITATIONS ON LIABILITY.
15.19.1 In addition to any other limitations on Seller's obligations to
Buyer and Buyer's rights and remedies contained in SECTION 11.1 or elsewhere in
this Agreement, if the Closing occurs, Seller's liability to Buyer for any
inaccuracies in Seller's warranties and representations contained in this
Agreement and breaches of Seller's obligations under SECTION 8 of this
Agreement or any other agreements of Seller contained in this Agreement,
whether respecting the condition, operation or leasing of the Property or any
other matter, shall be limited as follows:
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15.19.1.1 Seller shall not have any liability to Buyer based upon
any inaccuracy in Seller's warranties and representations or breach of Seller's
obligations resulting in damage to Buyer of less than Two Hundred Fifty Thousand
Dollars ($250,000); and
15.19.1.2 Seller's aggregate liability to Buyer for damages based
upon, arising out of or proximately caused by any inaccuracy in Seller's
warranties and representations or breach of Seller's obligations shall be
limited to Three Million Dollars ($3,000,000).
15.19.2 This Agreement is being executed and each of the documents to
be executed by Seller in connection with the Close of Escrow will be executed by
the Ensemble Real Estate Services, LLC ("Ensemble") solely in its capacity as
authorized agent for Seller, and not individually, and nothing in this Agreement
or any such other document shall create any personal liability of Ensemble nor
shall any such personal liability be asserted. If this Agreement is executed or
any documents to be executed by Seller in connection with the Close of Escrow
are hereafter executed by Ensemble on behalf of Seller, it shall not be in its
individual capacity but solely as the authorized agent to Seller, and nothing in
this Agreement or any such other document shall create any personal liability to
Buyer on the part of Ensemble, its shareholders, officers, directors, partners
or employees nor shall any such personal liability be asserted.
15.20 WAIVER OF RIGHT TO JURY TRIAL. Each party waives the right to trial
by jury with respect to any litigation arising out of this Agreement.
15.21 COOPERATION WITH S-X-3-14 AUDIT.
If pursuant to Section 15.9, Buyer assigns this Agreement to an Affiliate
that is a publicly registered real estate investment trust, the terms of this
Section 15.21 shall be applicable. Seller has been advised that such an
assignee is required to make certain filings with the Securities and Exchange
Commission that relate to the most recent pre-acquisition fiscal year (the
"Audited Year") for the Property. To assist the assignee in preparing the
filings, Seller agrees to provide the assignee on or before November 10, 2003,
to the extent in Seller's possession or control, and to the extent not
previously provided to, or made available to, Buyer and incapable of being
prepared by the assignee from information otherwise available to it:
(a) Access to Property bank statements for the Audited Year;
(b) A rent roll for the Property as of the end of the Audited Year;
(c) Operating Statements for the Property for the Audited Year;
(d) Access to the general ledger for the Property for the Audited
Year;
(e) Cash receipts schedule for each month in the Audited Year;
(f) Access to invoices for expenses of the Property and capital
improvements of the Property in the Audited Year;
(g) Copies of all insurance policies for the Property for the Audited
Year; and
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(h) Copies of accounts receivable aging as of the end of the Audited
Year and an explanation for all accounts receivable over 30 days past due as of
the end of the Audited Year.
Seller shall not be required to deliver any of the foregoing information
or access to Buyer or its assignee, unless Buyer and its assignee execute and
deliver to Seller a release of, and indemnification from, any claims,
liabilities, damages, costs and expenses against Seller, its partners, and their
respective partners, members, shareholders, directors, officers, managers,
employees, agents and contractors arising out of the use of the information
provided for securities law compliance or disclosure, which release and
indemnification shall be in form and content reasonably satisfactory to Seller.
Seller shall not be required to deliver any representation letter or any other
certification, warranty or representation regarding the information provided,
whether to Buyer, its assignee, any accountant or anyone else. Buyer and the
assignee shall be jointly and severally liable for all reasonable costs and
expenses incurred by Seller in complying with its obligations under this
Section 15.21, and such costs and expenses shall be payable from time to time
on or before ten (10) business days after delivery of demand for payment. Any
amount not paid when due shall bear interest from the date due until paid at
the rate of twelve percent (12%) per year. This Section 15.21 shall survive the
Closing for a period of six (6) months.
15.22 1031 EXCHANGE. Buyer hereby agrees that Seller may assign this
Agreement to any third-party entity or individual, including a nominee to act in
place of Seller in accordance with an IRC Section 1031 Exchange, without the
Buyer's consent (but upon written notice to Buyer and Escrow Holder) and at no
cost or expense to Buyer and with no delay or extension to the Closing. Seller
shall make any such assignment, in writing, and upon such assignment of this
Agreement to a nominee and that nominee's assumption of Seller's obligations,
Seller's nominee shall be substituted for Seller in the Escrow regarding the
Property, provided that Seller shall remain liable for the performance of
Seller's obligations under this Agreement. Buyer hereby further agrees to accept
all required performance under this Agreement from Seller's nominee and to
render its performance of all of its obligations under this Agreement to
Seller's nominee, if requested, in accordance with this Section 15.22. Buyer
will treat performance by Seller's nominee as Seller's performance, and Buyer's
performance to Seller's nominee will be treated as performance to Seller. Buyer
hereby further agrees to reasonably cooperate with Seller and Escrow Holder, if
necessary, at no additional cost to Buyer, to execute such reasonable,
additional documents or provide such reasonable, additional information (if any)
necessary to assist Seller in consummating the IRC Section 1031 Exchange
contemplated under this Section 15.22.
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IN WITNESS WHEREOF, Buyer and Seller have caused this Agreement to be
executed as of the day and year first above written.
"SELLER":
LBWTC REAL ESTATE PARTNERS, LLC,
a Delaware limited liability company
By: Ensemble Real Estate Services, LLC,
an Arizona limited liability company
Its: Authorized Agent
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
"BUYER":
TRIPLE NET PROPERTIES, LLC,
a Virginia limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
check to indicate initialing
----- of SECTION 3.5
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