Exhibit 10.78
AGREEMENT OF PURCHASE AND
SALE
THIS AGREEMENT OF PURCHASE AND
SALE (this
“Agreement” ), dated July 5 th ,
2006, is entered into by and between VALLEY VIEW ASSOCIATES
LIMITED PARTNERSHIP , a North Carolina limited partnership (
“Seller” ); and INLAND REAL ESTATE
ACQUISITIONS, INC. , an Illinois corporation (
“Buyer” ).
STATEMENT OF
AGREEMENT
In consideration of an earnest money
deposit in the amount of $1,000,000.00 (referred to in this
Agreement, together with any other earnest money deposits paid by
Buyer, and together with all interest earned thereon, as the
“Deposit” ), which Buyer agrees to pay to Escrow
Agent (as defined in Paragraph 19) within three (3) business days
after the date of complete execution and delivery of this Agreement
by Seller and Buyer (the “Effective Date” ), and
the mutual terms, covenants, conditions and agreements contained in
this Agreement, the parties agree as follows:
1.
Sale of Property
. Seller agrees
to sell, convey, assign, transfer and deliver to Buyer, and Buyer
agrees to purchase, acquire and take from Seller, the following
property:
(a) Parcels of real property
located on Dulles Technology Drive, Herndon, Fairfax County,
Virginia, as more particularly described in Exhibit A
attached hereto and made a part
hereof (the “Land” ).
(b) All easements and other rights
appurtenant to the Land, including without limitation all rights
accruing upon any approval of the application attached hereto
as Exhibit A-1 and
made a part hereof (such application, as it may be amended in
accordance with this Agreement, is referenced herein as the
“ Future Development Application ”, and such easements and other rights
appurtenant to the Land are referenced herein as the “
Appurtenances ”).
(c) All improvements located
on the Land, including but not limited to two (2) office buildings
containing a total of approximately 379,596 square feet of office
space known as “Dulles Executive Plaza I” and
“Dulles Executive Plaza II”, and a structured parking
facility (collectively the “Buildings”
), and all paved areas, utility
facilities and drainage facilities, landscaping, signs, lighting
equipment and other site improvements on the Land and belonging to
Seller (collectively, with the Buildings, the
“Improvements” ).
(d) All furniture, fixtures,
equipment, appliances and other items of personal property now
located upon the Land which are owned by Seller, and which are used
primarily in connection with and for the occupancy and operation of
the Improvements, if any, including but not limited to floor
coverings and wall coverings, light fixtures, mechanical systems
and equipment, and maintenance equipment (collectively, the
“Personal Property” ).
(e) Seller’s right,
title and interest in any surveys, plans, specifications, and
operating manuals covering the Improvements and the Personal
Property, together with any and all right, title and interest of
Seller in and to any plans, documents and other predevelopment work
product prepared by or on behalf of Seller in regard to the Future
Development Application (collectively, the
“Plans” ).
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(f) Seller’s right,
title and interest in any assignable licenses, franchises and
permits relating to the operation of the Improvements in the manner
in which they are being operated on the date hereof (the
“Permits” ).
(g) Seller’s interest in all
leases of space in the Improvements, including, but not limited to,
the leases listed on the schedule (the “ Lease
Schedule ”) attached hereto
as Exhibit B (the
“ Existing Leases ”) and the New Leases, if any, as
defined in (and subject to the terms of) Paragraph 11(a)
(collectively the “Leases” ), as well as all cash security deposits, if
any, made by tenants under the Leases (the “Security
Deposits ”) and any Non-Cash
Security Deposits (as defined in the following sentence). Seller
shall take all commercially reasonable actions, and shall cooperate
with Buyer after Closing, to attempt to cause any letters of
credit, bonds, securities or other non-cash security deposits
(“ Non-Cash Security Deposits ”) given by tenants under their Leases
and held by Seller as the landlord under such Leases, to be
transferred or assigned to, endorsed over to, or re-issued in the
name of Buyer as soon as is reasonably possible after Closing,
provided that Buyer shall pay any fees or other costs of any such
transfers, assignments, endorsements or re-issuance. The agreements
of Buyer and Seller under this subparagraph (g) shall survive
Closing.
(h) Seller’s interest in all
service contracts, maintenance agreements, management agreements,
leasing agreements, equipment leases and other agreements affecting
the Improvements to which Seller is a party, other than any
agreement with CB Richard Ellis, Inc. or Trammell Crow Company, or
their affiliates, as set forth on Exhibit C
attached hereto (the
“Service Agreements” ), but only to the extent that Buyer elects to
assume or is required to assume any or all of the Service
Agreements as provided in Paragraph 11.
(i) Any rights that
Seller may have in the business and trade names “Dulles
Executive Plaza I” and “Dulles Executive Plaza
II” (the “Trade Names” ) primarily in connection with the Project, to
the extent, if any, that Seller has rights in the Trade Names
(Seller making no representation or warranty that it has any such
rights in or to such Trade Names).
The Land, the Appurtenances and the
Improvements are collectively referred to in this Agreement as the
“Real Property.” The Real Property, the
Personal Property, the Plans, the Permits, the Leases, the Security
Deposits, the Non-Cash Security Deposits, the Service Agreements
and the Trade Names are collectively referred to in this Agreement
as the “Project” .
2.
Purchase Price
. The purchase
price to be paid by Buyer to Seller for the Project (the
“Purchase Price”
) shall be the
amount equal to (i) $125,000,000.00, minus (ii) the Purchase Price
Adjustment, as defined below. The Purchase Price shall be paid as
follows:
(a) The Deposit shall be
paid to Seller at Closing and applied in reduction of the Purchase
Price.
(b) The balance of the Purchase
Price, adjusted to reflect the other credits and prorations under
this Agreement, shall be paid by wire transfer at Closing in
accordance with wiring instructions provided by Seller.
For purposes of this Agreement,
the “ Purchase Price Adjustment ” means the sum of (i) one-half (1/2) of
the Grantee Tax, as defined below, plus (ii) the projected cost of
the Window Repairs, as defined below (based on the bids obtained by
Seller and provided to Buyer prior to the end of the Inspection
Period, as defined below), plus (iii) the projected cost of the
Deck
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Repairs, as defined below (based
on the bids obtained by Seller and provided to Buyer prior to the
end of the Inspection Period); provided, however, if the sum of
items (i) – (iii) above exceeds $700,000.00 and Buyer does
not agree by written notice to Seller to limit the amount of the
Purchase Price Adjustment to $700,000.00 prior to the expiration of
the Inspection Period, then Seller may terminate this Agreement by
written notice to Buyer prior to the Closing Date, as defined
below. Upon any such termination by Seller, Buyer shall receive an
immediate return of the Deposit.
3.
Future Development
Application . If Closing occurs, Buyer
shall pay to Seller at Closing, over and above the other amounts
due Seller hereunder, $17,655.00 to reimburse Seller for the cost
of filing the Future Development Application.
Seller shall have
no obligation to obtain approval of the Future Development
Application, and approval of the Future Development Application is
not a condition of Closing. Seller shall take no further action
with respect to the Future Development Application without the
prior approval of Buyer. Buyer agrees to fully cooperate with
Seller in any and all efforts by Seller to obtain approval of the
Future Development Application, and agrees that it shall join in
such applications, consents, affidavits, disclosure statements,
development plans, development conditions, or proffers as may be
reasonably required by Seller or applicable governmental
authorities in connection with the prosecution of the Future
Development Application. If the Future Development Application is
approved, Buyer shall be responsible for any and all costs of
planning or constructing improvements, and all other costs in
complying with the terms of the Future Development Application as
approved. Seller may terminate its efforts to obtain approval of
the Future Development Application at any time by written notice to
Buyer. Upon such termination (or upon the occurrence of Closing)
Buyer may continue, at its sole cost, efforts to obtain approval of
the Future Development Application, and Seller agrees to fully
cooperate with Buyer, at Buyer’s sole cost, to obtain
approval of the Future Development Application. Seller shall not
materially modify or amend the Future Development Application
without the prior written consent of Buyer, provided that prior to
the expiration of the Investigation Period such consent shall not
be unreasonably withheld or delayed, and after the expiration of
the Investigation Period such consent shall be in Buyer’s
sole discretion. Seller shall keep Buyer informed as to its
progress, if any, in obtaining approval of the Future Development
Application. Provisions of this paragraph shall survive
Closing.
4.
Investigations by
Buyer . Seller previously has
delivered, or shall deliver to Buyer within five (5) business days
after the Effective Date, copies of the following items, to the
extent that such items exist on the Effective Date and are in the
possession or control of Seller (the “Due Diligence Items”
):
(a) The Leases, together
with any amendments of the Leases.
(b) A title insurance commitment
(the “ Title Commitment ”) for the Real Property issued by
Chicago Title Insurance Company (the “ Title Insurer
”).
(c) Any environmental site
assessments for the Real Property.
(d) A review copy of a survey of
the Real Property by VIKA Incorporated dated June 2006 (the
“ Survey ”).
(e) The Service
Agreements.
(f) Operating statements for
the Project for the calendar years 2004, 2005 and the first four
(4) months of 2006 (the “ Operating Statements
”). Seller shall provide to
Buyer
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copies of any subsequent monthly
operating statements for the Project that are completed by Seller
prior to Closing as such statements are completed.
In addition, at all reasonable times
prior to the Closing Date, Seller shall give Buyer reasonable
access to all books and records of Seller with respect to the
operation of the Project, shall permit Buyer to copy those
materials at its expense, and shall furnish Buyer with other
information concerning those materials in Seller’s possession
or control as Buyer may reasonably request. All such information
shall be considered part of the Due Diligence Items.
Seller agrees to cooperate with
Buyer’s accountants (at no cost or expense to Seller)
relative to the performance by said accountants of an audit of
Seller’s books and records relating to the rental income and
operating expenses for the Property. Buyer acknowledges and agrees
that if, as of the date of either Closing, all of the tenants at
the relevant portion of the Property have been paying rent for less
than five (5) months, then such audit shall not be required. Seller
agrees that, from and after Closing, Seller shall, at the request
of Buyer’s auditors, execute a representation letter relating
to matters arising prior to the Closing, addressed to such
auditors. Such representation letter shall be in form reasonably
satisfactory to Buyer and Seller.
The Due Diligence Items are being
delivered to Buyer for informational purposes, and Seller makes no
representations or warranties of any kind regarding the Due
Diligence Items, except for the representations and warranties
contained in this Agreement. The Due Diligence Items shall be kept
confidential by Buyer; provided, however, that Buyer shall be
permitted to disclose such information to its design professionals,
consultants, attorneys, accountants, agents, advisors,
representatives, lender and potential investors (collectively,
“ Representatives ”), provided such parties are
informed of the foregoing confidentiality obligation. Buyer shall
not have access to information concerning the entities that
constitute Seller and its owners and partners. Buyer shall be
permitted to make such additional disclosures as may be required by
the SEC.
Prior to the Closing Date, Buyer and
its agents and representatives shall, subject to the rights of
tenants, have the right to go on the Real Property for the purpose
of conducting phase I environmental site assessments, structural
and mechanical inspections of the Buildings, and other reasonable
investigations, and undertaking such other reasonable activities as
are appropriate to evaluating its purchase of the Project. The
results of any investigation undertaken by Buyer shall not be
disclosed to any third party or governmental entity without the
prior written consent of Seller, unless such disclosure is required
by law; provided, however, that Buyer shall be permitted to
disclose such results to its Representatives, provided such parties
are informed of the foregoing confidentiality obligation. In
undertaking such investigations, Buyer shall avoid interference
with the operations of Seller or its tenants. Notwithstanding
anything to the contrary in this Agreement, Buyer may not undertake
any Phase II environmental investigations or other sampling or
invasive investigations of the Project or any portion thereof prior
to the Closing Date without the prior written consent of
Seller.
Buyer shall indemnify, defend and
hold harmless Seller and Faison & Associates, LLC from and
against any and all claims, damages, liens, losses, costs and
liabilities (including reasonable attorneys’ fees), and shall
repair any damage to the Project, resulting from or relating to
entry on the Project pursuant to this Paragraph. These obligations
shall survive the termination of this Agreement or
Closing.
Prior to entry upon the Project
under this Paragraph, Buyer shall obtain, and shall keep in force
during the term of this Agreement, a policy of commercial general
liability insurance issued by an insurance company licensed to do
business in the Commonwealth of Virginia covering any liability
arising out of or in connection with entry upon the Project under
this
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Paragraph, with Seller named as
additional insured, and with limits of liability of not less than
$1,000,000.00 for each occurrence (such insurance to be increased
to not less than $5,000,000.00 if Buyer undertakes and Phase II
environmental assessment work or other sampling or invasive
investigations on the Land). Buyer shall furnish a certificate of
insurance reasonably satisfactory to Seller, evidencing the
required liability insurance coverage, prior to entry on the
Project under this Paragraph.
Any and all third party reports,
recommendations, surveys, title commitments, plans or other
information that Buyer receives from its consultants, engineers,
surveyors, appraisers, geologists, agents and contractors from
investigation of the Project, but not including any documents that
constitute attorney work product or that are otherwise protected by
a legal privilege or confidentiality obligations owed to third
parties, are collectively referred to in this Agreement as the
“Buyer Due Diligence Items” . If this Agreement
is terminated by either party, other than as a result of a default
by Seller, then Buyer shall, upon request by Seller: (a) promptly
return to Seller all Due Diligence Items, together with all copies
thereof, and (b) promptly deliver to Seller true copies of all
Buyer Due Diligence Items.
5.
Inspection Period and
Closing .
(a) During the period
beginning on the Effective Date and ending on July 14, 2006
(the “Inspection Period” ), Buyer shall investigate and verify the
physical condition of the Project for its current use, the
financial feasibility of acquiring the Project, and the current net
operating income of the Project. Buyer shall be entitled to
terminate this Agreement at any time prior to the expiration of the
Inspection Period, for any reason or no reason, by delivering
notice of same to Seller and Escrow Agent prior to the expiration
of the Inspection Period. If Buyer determines in its sole
discretion that it desires to proceed with the acquisition of the
Project pursuant to this Agreement, Buyer shall deliver written
notice of same to Seller at any time prior to the expiration of the
Inspection Period. If Buyer fails to deliver the foregoing notice
of its election to proceed prior to the expiration of the
Inspection Period, then upon the expiration of the Inspection
Period, this Agreement shall automatically terminate without
further action on the part of Buyer or Seller. Upon termination
under this Paragraph 5(a), the Deposit shall immediately be
returned to Buyer and thereafter this Agreement shall be null and
void, except for the indemnification obligations of Buyer and
Seller under Paragraph 25, and the indemnification and other
obligations of Buyer under Paragraph 4 (the “
Surviving Obligations ”).
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY,
ESCROW AGENT IS HEREBY AUTHORIZED AND DIRECTED TO RELEASE THE
DEPOSIT TO BUYER IMMEDIATELY (WITHOUT FURTHER AUTHORIZATION FROM
SELLER) UPON RECEIPT BY ESCROW AGENT OF BUYER’S NOTICE OF
TERMINATION OF THE AGREEMENT ON OR PRIOR TO 5:00 P.M. (CST) ON JULY
14, 2006.
(b) Provided this Agreement is not
terminated as provided in Paragraph 5(a), Buyer shall pay to Escrow
Agent, in immediately available funds, an additional earnest money
deposit of $1,000,000.00 within one (1) business day after the
expiration of the Inspection Period, and such additional earnest
money deposit shall supplement and be part of the Deposit (
i.e. , the total Deposit shall be $2,000,000.00). Provided
this Agreement is not terminated as provided in Paragraph 5(a), the
Deposit shall be non-refundable except (i) upon breach of this
Agreement by Seller as provided in Paragraph 15 below, (ii) upon
casualty or condemnation as provided in Paragraph 16 below, or
(iii) as may otherwise be expressly provided herein
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(c) The closing (
“Closing” ) of the
purchase and sale of the Project shall occur on July 18, 2006, or
on an earlier date selected by Buyer by not less than seven (7)
days prior written notice to Seller (the “ Closing
Date ”).
6.
Closing Documents
. At the Closing,
Seller shall execute, where necessary, and deliver to Buyer the
following, in the form specified below (or if no form is specified
below, in form and substance reasonably acceptable to Seller and
Buyer):
(a) A special warranty deed
(the “Deed” )
in the form attached hereto as Exhibit D conveying fee simple title to the Real
Property to Buyer, free and clear of all liens, charges and
encumbrances, except for: (i) the lien of ad valorem taxes not yet
delinquent as of the Closing Date, (ii) assessments not yet
delinquent as of the Closing Date, (iii) zoning and subdivision
ordinances, building codes and other legal requirements applicable
to the Project, (iv) public rights-of-way, (v) rights of tenants
under the Leases, as tenants only with no rights of first refusal
or options to purchase, (vi) all matters disclosed by the Title
Commitment or Survey, and any update or revision of the Title
Commitment or Survey obtained by Buyer, other than Curable Liens,
as defined in Paragraph 9 below, and (vii) all other matters
approved (or deemed approved) by Buyer, or otherwise permitted, as
provided in Paragraph 9, in each case other than any Buyer
objection that Seller agrees to cure in a Seller Response, as
defined in Paragraph 9 below (collectively, the
“Permitted Exceptions” ).
Seller acknowledges that Buyer has
not yet approved the Permitted Exceptions, and shall be entitled to
make objections and/or terminate this Agreement as provided in
Paragraph 9 below. In connection with Closing, Buyer and Seller
shall cooperate to give any and all notices required under the
Permitted Exceptions.
(b) A non-warranty bill of sale
conveying to Buyer the Personal Property in the form attached
hereto as Exhibit E (the “ Blanket Bill of Sale and
Assignment ”).
(c) An assignment to Buyer
of all assignable warranties or guaranties that Seller has received
from its contractors and/or suppliers in connection with the
Improvements or the Personal Property, together with Seller’s
interest in the Plans, Permits (provided that Buyer pays any
applicable transfer fees) and non-exclusive right to use the Trade
Names, by the Blanket Bill of Sale and Assignment. Without limiting
the foregoing, Seller agrees to use commercially reasonable efforts
to cause the roof warranty for the Improvements to be assigned to
Buyer even though such warranty is not assignable by its terms,
provided that Seller shall pay any out-of-pocket costs incurred by
Seller in seeking or effecting such assignment to the maximum sum
of $5,000.00 (Seller and Buyer hereby agree to conduct a conference
call with the roof warranty company prior to the expiration of the
due diligence period for the purpose of determining the
assignability of the warranty and the cost thereof). The agreements
of Buyer and Seller under this subparagraph (c) shall survive
Closing.
(d) An assignment to Buyer of
Seller’s interest in the Leases and the Service Agreements
(to the extent Buyer elects to assume or is required to assume the
Service Agreements) by the Blanket Bill of Sale and Assignment,
pursuant to which Seller assigns to Buyer, and Buyer assumes, the
Leases and such Service Agreements. If any changes are made in the
Leases described on Exhibit B attached hereto between the Effective Date and
the Closing Date (including without limitation any New Lease) in
accordance with the terms of Paragraph 11, Seller shall (as part of
the statement in subparagraph (i) below) deliver to Buyer an
updated Lease Schedule, which shall be deemed substituted as
Exhibit B to this
Agreement. Seller shall also deliver to Buyer original signed
copies of the Service
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Agreements that Buyer assumes and
the Leases, to the extent in Seller’s possession or
control.
(e) An assignment by the
Blanket Bill of Sale and Assignment of the lease commission
agreements referenced in Exhibit G attached hereto, pursuant to which Seller
assigns to Buyer, and Buyer assumes the commission obligations
arising under, such commission agreements (but only to the extent
of renewal periods, extension periods and expansions under options
or expansion rights exercised after the Effective Date, other
expansions, extensions, renewals or amendments to the Leases
covered by such commission agreements after the Effective Date in
accordance with this Agreement, and new leases, expansions,
extensions, renewals and amendments to leases with the tenants
covered by such commission agreements after Closing).
(f) An affidavit stating
that Seller is not a “foreign person” within the
meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
and information sufficient for the closing agent to complete an IRS
Form 1099.
(g) An affidavit to Title Insurer
from Seller, in form reasonably satisfactory to Title Insurer, and
reflecting the forms of affidavits typically provided by sellers in
connection with issuance of title insurance to remove standard
exceptions for mechanic liens, the gap period from the latest
update of Buyer’s title insurance commitment and parties in
possession (other than under the Leases).
(h) A resolution or other evidence
reasonably satisfactory to Title Insurer of the approval of this
transaction by Seller, and Seller’s authority to execute and
deliver the Closing documents.
(i) A statement
certifying that the representations and warranties of Seller
contained in Paragraph 12 are true and correct as of the Closing
Date (or making necessary corrections thereto if not true and
correct), which statement shall survive Closing for a period of six
(6) months, as provided in Paragraph 12. Seller’s ability to
update the aforesaid statement shall not impact Buyer’s
ability to terminate this Agreement to the extent permitted under
Paragraph 12 due to a change in a representation or warranty of
Seller from the Effective Date to the Closing Date.
(j) Executed written
notices of the sale (the “ Notices of Sale
”) prepared by Seller
addressed and directed to each tenant of the Project, giving each
tenant notice of the sale, directing each tenant to pay all rent
due under the terms of its Lease to such person and at such place
as Buyer shall direct, informing each tenant with a Security
Deposit (if any) that such Security Deposit has been transferred by
Seller to Buyer, and informing each tenant with a Non-Cash Security
Deposit that is transferred, assigned, endorsed or re-issued to
Buyer (if any) that such Non-Cash Security Deposit has been so
transferred, assigned, endorsed or re-issued.
(k) A closing statement
reflecting the Purchase Price and all adjustments, prorations and
credits thereto, and such disbursements as the parties wish to
reflect thereon in connection with the transaction contemplated
hereby (the “Closing Statement” ).
(l) An assignment to
Buyer of any Appurtenances and any other rights and obligations of
Seller under the Permitted Exceptions that do not run to Buyer by
the terms of the Permitted Exceptions, pursuant to which Seller
assigns to Buyer, and Buyer assumes, all rights and obligations in
connection with such Appurtenances and other Permitted Exceptions,
by the Blanket Bill of Sale and Assignment.
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(m) Originals of any Non-Cash
Security Deposits (except to the extent Seller needs the originals
to have the Non-Cash Security Deposits transferred or assigned to,
endorsed over to, or re-issued in the name of Buyer).
(n) The original documents
assigned to Buyer pursuant to the Blanket Bill of Sale and
Assignment, to the extent in Seller’s possession or control,
as well as complete copies or originals of Seller’s Project
books and records, keys and other items pertaining to the Project
that are located in the management office of the Project as of the
Effective Date (excluding the books, records and property of
Seller’s Project manager).
At the Closing, Buyer shall execute,
where necessary, and deliver to Seller the following:
(a)
The Blanket Bill of Sale and Assignment.
(b)
A resolution or other evidence reasonably satisfactory to Seller
and the Escrow Agent of the approval of this transaction by Buyer,
and Buyer’s authority to execute and deliver the Closing
documents.
(c)
The Notices of Sale.
(d)
The Closing Statement.
The sale of the Project will be
closed through an escrow closing with the Escrow Agent. Any escrow
fee charged by the Escrow Agent shall be divided equally and paid
by Buyer and Seller. The Seller and Buyer shall execute and deliver
such escrow instructions and other escrow-related documents as may
reasonably be necessary in connection with Closing. Seller shall
pay the cost of the grantor tax imposed by Virginia Code Section
58.1-802, and Buyer shall pay fees (other than the grantor tax
which is the Seller’s responsibility as provided above) for
recording the Deed and the cost of recording taxes imposed by
Virginia Code Section 58.1-801 and 58.1-814 (collectively the
“ Grantee Tax ”), provided that Buyer shall not be
responsible with any fees connected with the payment or release of
the Curable Liens. The premium for Buyer’s policy of title
insurance and all title examination fees will be paid by Buyer.
Buyer shall have the right to obtain title insurance from a title
company or a title insurance agency other than the title company
and agency that issued the Title Commitment, but if Buyer elects to
obtain title insurance from another title company or agency, it
shall pay at or prior to Closing all costs, fees, penalties and
other charges for the Title Commitment (and cancellation thereof).
Seller shall pay the cost of the Survey, provided that Buyer shall
pay the cost of any updates or revisions desired by Buyer. Buyer
shall pay the cost of all other investigations of the Project
performed by or on behalf of Buyer. Each party shall pay its own
attorneys’ fees.
7.
Taxes . All real estate taxes,
assessments and personal property taxes payable by Seller with
respect to the Project for the calendar or fiscal year, as the case
may be, in which the Closing Date occurs shall be prorated between
Seller and Buyer as of 11:59 p.m. on the day preceding the Closing
Date (the “Proration
Time” ), and paid by Buyer when
due. Any such taxes or assessments that are due and payable
entirely with respect to any period ending prior to the Closing
Date shall be paid by Seller at or prior to Closing. If the current
property tax assessments and tax rates are not available at
Closing, then the proration shall be based on the amounts for the
prior tax year, and shall be re-calculated and adjusted between the
parties when the actual amount of taxes and assessments payable in
the year of Closing is known to Buyer and Seller. If any special
assessments exist or are levied on the Real Property prior to the
Closing Date, Seller shall cause such assessments to be paid in
full at Closing; provided, however, that if the assessments may be
paid in installments, only the installments coming due on or before
the
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Closing Date need
be paid by Seller, and Buyer shall pay the remaining installments.
The provisions of this Paragraph shall survive the
Closing.
Notwithstanding
the foregoing, to the extent that any tenant under a Lease is
required to pay property taxes directly to the taxing authority, or
to reimburse the landlord for property tax payments at the end of
the year, and such taxes are not delinquent, the parties agree that
the property taxes payable by such tenant(s) shall not be prorated
at Closing, but Buyer shall receive a credit for any amounts
collected from such tenant(s) that have not been used to make any
property tax payment.
8.
Income and Expenses
. All income and
expenses of the Project payable by Seller, other than taxes and
assessments prorated under Paragraph 7 above or Service Contracts
not being assumed by Buyer, shall be prorated on a daily basis
between Seller and Buyer as of the Proration Time. Seller shall be
responsible for all such expenses of the Project, and shall be
entitled to all income from the Project, attributable to the period
ending at the Proration Time. Buyer shall be responsible for all
expenses of the Project and shall be entitled to all income from
the Project, attributable to the period from and after the
Proration Time. Seller agrees that all expenses, charges, bills, or
trade accounts incurred by Seller or its agents in connection with
its ownership or operation of the Project relating exclusively to
periods ending on or before the Proration Time, including any
unpaid tenant improvement costs and leasing commissions that are
the landlord’s responsibility with respect to Existing Leases
for which Seller is responsible under Paragraph 11, shall be paid
in full on the Closing Date; provided, however, that (i) if any
such expenses, charges, bills, or trade accounts have accrued but
have not yet been billed as of the Closing Date, they shall be paid
in full by Seller at the time the bills are received, and (ii) if
any tenant improvement allowances or leasing commissions for which
Seller is responsible as provided herein are not yet due and
payable as of the Closing Date, Seller may fund an escrow account
from the sale proceeds with Escrow Agent at Closing to pay such
amounts when they become due and payable rather than paying such
amounts at or prior to Closing. In addition, with respect to any
tenant improvement work under the Existing Leases for which Seller
is responsible under this Agreement that is in progress as of the
Closing Date, Buyer shall cooperate with Seller in allowing Seller
to complete such work, including without limitation by providing
access to the Project for such work. If Seller accesses the Project
to conduct any such work after Closing, Seller shall indemnify,
defend and hold harmless Buyer from and against any and all claims,
damages, liens, losses, costs and liabilities (including
reasonable
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