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PURCHASE AND SALE
AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (this “ Agreement ”)
is entered into as of the 29 th day of November, 2007
(the “ Effective Date ”), by and between BRCP
HIGHLANDS RANCH, LLC, a Delaware limited liability company (“
Seller ”), and TRIPLE NET PROPERTIES, LLC, a Virginia
limited liability company (“ Purchaser ”).
RECITALS
:
A. Seller is the owner of the real property, commonly known as
Highlands Ranch Healthcare Plaza, located at 200 & 206 West
County Line Road in the City of Highlands Ranch, County of Douglas,
State of Colorado, as more particularly described in Exhibit
“A” attached hereto and made a part hereof (the
“ Real Property ”); and
B. Seller desires to sell, and Purchaser desires to purchase,
the Property (as defined below) upon and subject to the terms and
conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Purchaser
and Seller hereby agree, and instruct Escrow Agent (as defined
below), as follows:
AGREEMENT
:
ARTICLE 1
PURCHASE AND
SALE
1.1
Agreement of Purchase and Sale . Subject to
and on the terms and conditions set forth in this Agreement, Seller
agrees to sell to Purchaser, and Purchaser agrees to purchase from
Seller, all of Seller’s right, title and interest in and to
the property, assets, rights and interests set forth in this
Section 1.1 , (collectively, the “
Property ”):
(a)
The Real Property . The Real Property, together with all
rights and interests appurtenant to the Real Property, including
all of Seller’s right, title, and interest in and to adjacent
streets, alleys, rights of way, and any adjacent strips and gores
of real estate, and all rights, titles and interests of Seller
appurtenant to the Real Property.
(b)
Improvements . All buildings and other improvements
(collectively, the “ Improvements ”) located on
the Real Property (such Real Property and Improvements being
referred to herein, collectively, as the “ Premises
”).
(c)
Personal Property . All fixtures, furniture, furnishings,
fittings, equipment, machinery, apparatus, appliances and other
articles of tangible personal property located on the Premises as
of the Effective Date and used or usable in connection with the
occupation or operation of all or any part of the Property, but
only to the extent transferable (collectively, “ Personal
Property ”), excluding , however ,
(i) equipment leased by Seller and the interest of Seller in
any equipment provided to the Property for use, but not owned or
leased by Seller, (ii) property owned or leased by any
Tenant (as defined below) or guest, employee or other person
furnishing goods or services to the Property, (iii) property
and equipment owned by Seller which in the ordinary course of
business of the Property is not used exclusively for the business,
operation or management of the Property, and (iv) the
property and equipment, if any, expressly identified on
Schedule 1.1 attached hereto.
(d)
Leases . Each lease and other agreement for the present or
future use or occupancy of any space in the Property in respect of
which Seller holds the interest of the lessor (each such agreement,
a “ Lease ”, and, collectively, the “
Leases ”) that are in effect on the Closing Date (as
defined below).
(e)
Contracts . All equipment leases, contracts and agreements
relating to the upkeep, repair, maintenance or operation of the
Premises (specifically excluding the Terminated Contracts (as
defined below) and any existing management agreements and
employment agreements which are hereby deemed to be Terminated
Contracts) which will extend beyond the Closing Date and that
Purchaser elects, or is deemed to have elected, to assume pursuant
to Section 2.6 below (collectively, the “
Contracts ”).
(f)
Tradename . All of Seller’s right, title and interest,
if any, in the name “Highlands Ranch Healthcare Plaza”
(the “ Tradename ”).
(g)
Licenses . Transferable consents, authorizations, variances
or waivers, licenses, permits and approvals from any governmental
or quasi governmental entity in connection with the Real Property
or the Improvements, including, without limitation, those with
respect to occupancy, foundation, use, utilities, building, fire,
life safety, traffic and zoning held by or granted to Seller with
respect to the Premises (collectively, the “ Licenses
”).
(h)
Inventories . All inventories of supplies used or useful in
connection with the operation of the Premises (collectively, the
“ Inventories ”), excluding ,
however , inventories or supplies owned or leased by any
Tenant or guest, employee or other person furnishing goods or
services to the Property.
(i)
Records . All books, records (except employment records),
files, maintenance records, rental records, and other records used
or useful by Seller in connection with the ownership, operation or
maintenance of the Premises (collectively, the “
Records ’), excluding , however ,
(i) any and all original records relating to accounting or
financial reporting, on the condition that Seller supplies
Purchaser with true and complete copies thereof and (ii)
Seller’s income tax records.
(j)
Documents . Any and all original and supplemental
blueprints, plans, specifications, working drawings, site plans,
elevations, surveys, advertising booklets or materials, brochures,
indicia of title, warranties and guarantees, environmental reports,
ADA reports, structural reports, and similar materials of any kind,
character or description, used or useful in connection with the
Premises and\or the ownership, operation or maintenance thereof or
otherwise relating thereto, to the extent such items are assignable
and in the possession or reasonable control of Seller or its agents
(collectively, the “ Documents ”).
(k)
Miscellaneous Property Assets . The Contracts, the
Tradename, the Licenses, the Inventories, the Records and the
Documents are collectively referred to herein as the “
Miscellaneous Property Assets ”; provided ,
however , in no event shall the Miscellaneous Property
Assets include (i) receivables, (ii) cash or other
funds, whether in petty cash or house “banks,” or on
deposit in bank accounts or in transit for deposit, (iii)
refunds, rebates or other claims, or any interest thereon, for
periods or events occurring prior to the Closing Date, (iv)
utility and similar deposits, (v) insurance or other prepaid
items and (vi) Seller’s proprietary books and
records.
1.2
Purchase Price . The purchase price for the
Property (the “ Purchase Price ”) shall be
Fourteen Million Five Hundred Thousand and No/100 Dollars
($14,500,000.00), subject to proration and adjustment as provided
in this Agreement. The Purchase Price shall be payable at the times
and in the manner set forth in this Section 1.2 .
(a)
The Deposit . On or before the date which is two
(2) Business Days (as defined below) after the Effective Date,
Purchaser shall deliver to LandAmerica Commercial Services, 915
Wilshire Blvd, Suite 2100, Los Angeles, CA 90017, Attn: Lois
McCauley, Reference No. 09401702-904-L.A. (“ Escrow
Agent ” or “ Title Insurer ”) a
deposit (the “ Deposit ”) of $750,000.00 by wire
transfer of immediately available funds (“ Good Funds
”). The Deposit shall be held and disbursed in accordance
with the escrow provisions set forth in Section 1.3
below. At the Closing (as defined below), the Deposit shall be paid
to Seller and credited against the Purchase Price.
(b)
Cash at Closing . No later than 12:00 p.m. (Mountain
Time) on the Closing Date, Purchaser shall deliver the balance of
the Purchase Price to Escrow Agent by wire transfer of Good
Funds.
1.3
Escrow Provisions Regarding Deposit .
(a) Escrow Agent shall hold the Deposit and make delivery of
the Deposit to the party entitled thereto under the terms of this
Agreement. Escrow Agent shall invest the Deposit in a federally
insured or federally backed investment approved by Purchaser and
Seller, and all interest and income thereon shall become part of
the Deposit and shall be remitted to the party entitled to the
Deposit pursuant to this Agreement. The tax identification numbers
of the parties shall be furnished to Escrow Agent upon request.
(b) Escrow Agent shall hold the Deposit until the earlier
occurrence of (i) the Closing Date, at which time the
Deposit shall be applied against the Purchase Price, or (ii)
the date on which Escrow Agent shall be authorized to disburse the
Deposit as set forth in Section 1.3(c) below.
(c) If the Deposit has not been released earlier in accordance
with Section 1.3(b) , and either party makes a written
demand upon Escrow Agent for payment of the Deposit, Escrow Agent
shall give written notice to the other party of such demand. If
Escrow Agent does not receive a written objection from the other
party to the proposed payment within five (5) Business Days
after the giving of such notice, Escrow Agent is hereby authorized
to make such payment (subject to Purchaser’s obligation under
Section 2.5(b) below to return or certify the
destruction of all Third-Party Reports (as defined below) and
information and Materials (as defined below) provided to Purchaser
as a pre-condition to the return of the Deposit to Purchaser). If
Escrow Agent does receive such written objection within such
5-Business Day period, Escrow Agent shall continue to hold such
amount until otherwise directed by written instructions from the
parties to this Agreement or a final judgment or arbitrator’s
decision. However, Escrow Agent shall have the right at any time to
deposit the Deposit and interest thereon, if any, with a court of
competent jurisdiction in the state in which the Property is
located. Escrow Agent shall give written notice of such deposit to
Seller and Purchaser. Upon such deposit, Escrow Agent shall be
relieved and discharged of all further obligations and
responsibilities hereunder.
(d) The parties acknowledge that Escrow Agent is acting solely
as a stakeholder at their request and for their convenience, and
that Escrow Agent shall not be deemed to be the agent of either of
the parties for any act or omission on its part unless taken or
suffered in bad faith in willful disregard of this Agreement or
involving gross negligence. Seller and Purchaser jointly and
severally shall indemnify and hold Escrow Agent harmless from and
against all costs, claims and expenses, including reasonable
attorney’s fees, incurred in connection with the performance
of Escrow Agent’s duties hereunder, except with respect to
actions or omissions taken or suffered by Escrow Agent in bad
faith, in willful disregard of this Agreement or involving gross
negligence on the part of Escrow Agent.
(e) The parties shall deliver to Escrow Agent an executed copy
of this Agreement, which shall constitute the sole instructions to
Escrow Agent. Escrow Agent shall execute the signature page for
Escrow Agent attached hereto with respect to the provisions of this
Section 1.3 ; provided , however , that
(i) Escrow Agent’s signature hereon shall not be a
prerequisite to the binding nature of this Agreement on Purchaser
and Seller, and the same shall become fully effective upon
execution by Purchaser and Seller, and (ii) the signature of
Escrow Agent will not be necessary to amend any provision of this
Agreement other than this Section 1.3 .
(f) Escrow Agent, as the person responsible for closing the
transaction within the meaning of Section 6045(e)(2)(A) of the
Internal Revenue Code of 1986, as amended (the “ Code
”), shall file all necessary information, reports, returns,
and statements regarding the transaction required by the Code
including, but not limited to, the tax reports required pursuant to
Section 6045 of the Code. Further, Escrow Agent agrees to
indemnify and hold Purchaser, Seller, and their respective
attorneys and brokers harmless from and against any Losses (as
defined below) resulting from Escrow Agent’s failure to file
the reports Escrow Agent is required to file pursuant to this
section.
(g) The provisions of this Section 1.3 shall
survive the termination of this Agreement, and, if not so
terminated, the Closing and delivery of the Deed (as defined below)
to Purchaser.
ARTICLE 2
DUE DILIGENCE
2.1
Feasibility Period . Subject to the terms of
Article 2 and the rights of any person or entity
entitled to occupy any portion of the Property under a Lease (each,
a “ Tenant ” and, collectively, “
Tenants ”), from the Effective Date to and including
November 19, 2007 (the “ Feasibility Period
”), Purchaser, and its agents, contractors, engineers,
surveyors, attorneys, and employees (collectively, “
Consultants ”) have had the right from time to time to
enter onto the Property, at Purchaser’s sole cost and
expense, to:
(a) conduct and make any and all customary studies, tests,
examinations, inquiries, inspections and investigations
(collectively, the “ Inspections ”) of or
concerning the Property (including, without limitation, engineering
and feasibility studies, evaluation of drainage and flood plain,
soil tests for bearing capacity and percolation and surveys,
including topographical surveys);
(b) confirm any and all matters which Purchaser may reasonably
desire to confirm with respect to the Property;
(c) ascertain and confirm the suitability of the property for
Purchaser’s intended use of the Property; and
(d) review the Materials.
2.2
Expiration of Feasibility Period; Approval of the
Property . Purchaser acknowledges and agrees that, prior to
the Effective Date, Purchaser has completed its review of the
Property and hereby waives its right to object to any matter
concerning the physical condition of the Property, the Property
Contracts, the Leases or the Miscellaneous Property Assets.
Accordingly, (a) the Deposit shall be non-refundable (except
in the case of a Termination Event, as defined below), and
(b) Purchaser’s obligation to purchase the Property
shall be non-contingent and unconditional except in the event
(i) Seller defaults pursuant to Section 9.2
below, (ii) Seller fails to satisfy any of Purchaser’s
Closing Conditions (as defined below), or (iii) Purchaser
validly terminates this Agreement pursuant to an express right to
so terminate set forth in this Agreement (collectively, a “
Termination Event ”).
2.3
Conduct of Investigation; Insurance .
(a) Purchaser shall not permit any mechanic’s or
materialmen’s liens or any other liens to attach to the
Property by reason of the performance of any work or the purchase
of any materials by Purchaser or any other party in connection with
any Inspections conducted by or for Purchaser. Purchaser shall give
notice to Seller a reasonable time prior to entry onto the Property
and shall permit Seller to have a representative present during all
Inspections conducted at the Property. Purchaser shall take all
reasonable actions and implement all protections necessary to
ensure that all actions taken in connection with the investigations
and Inspections of the Property, and all equipment, materials and
substances generated, used or brought onto the Property pose no
material threat to the safety of persons or the environment and
cause no damage to the Property or other property of Seller or
other persons (including, without limitation, Tenants). All
information made available by Seller to Purchaser in accordance
with this Agreement or obtained by Purchaser in the course of its
Inspections shall be treated as confidential information by
Purchaser, and, prior to the purchase of the Property by Purchaser,
Purchaser shall use commercially reasonable efforts to prevent its
Consultants from divulging such information to any unrelated third
parties except as reasonably necessary to third parties engaged by
Purchaser for the limited purpose of analyzing and investigating
such information for the purpose of consummating the transaction
contemplated by this Agreement.
(b) Notwithstanding anything in this Agreement to the
contrary, Purchaser shall not be permitted to perform any invasive
tests on the Property without Seller’s prior written consent,
which consent may not be unreasonably withheld, conditioned or
delayed. Further, Seller shall have the right, without limitation,
to disapprove any and all entries, surveys, tests (including,
without limitation, a Phase II environmental study of the
Property), investigations and other matters that in Seller’s
reasonable judgment could result in any injury to the Property or
breach of any contract, or expose Seller to any Losses or violation
of applicable law, or otherwise adversely affect the Property or
Seller’s interest therein.
(c) Purchaser shall use commercially reasonable efforts to
minimize disruption to Tenants in connection with Purchaser’s
or its Consultants’ activities pursuant to this
Article 2 . No consent by Seller to any such activity
shall be deemed to constitute a waiver by Seller or assumption of
liability or risk by Seller.
(d) To the extent that there is any damage to the Property
caused by Purchasers Inspections, Purchaser hereby agrees to
restore, at Purchaser’s sole cost and expense, the Property
to the same condition existing immediately prior to
Purchaser’s exercise of its rights pursuant to this
Article 2 .
(e) Purchaser shall maintain and cause its Consultants to
maintain (i) casualty insurance and commercial general
liability insurance with coverages of not less than $1,000,000.00
for injury or death to any one person and $3,000,000.00 for injury
or death to more than one person and $1,000,000.00 with respect to
property damage, and (ii) worker’s compensation
insurance for all of their respective employees in accordance with
the law of the state in which the Property is located. Purchaser
shall deliver proof of the insurance coverage required pursuant to
this Section 2.3 to Seller (in the form of a
certificate of insurance) prior to Purchaser’s or
Purchaser’s Consultants’ entry onto the Property.
(f) The provisions of this Section 2.3 shall
survive the termination of this Agreement, and, if not so
terminated, shall survive (except for the confidentiality
provisions of this Section 2.3 ) the Closing and
delivery of the Deed to Purchaser.
2.4
Purchaser Indemnification . Purchaser shall
indemnify, hold harmless and, if requested by Seller (in
Seller’s sole discretion), defend (with counsel approved by
Seller) Seller, the Property’s property manager, the
Property’s mortgagee and each of their respective parent and
subsidiary entities, officers, directors, members, managers,
partners, affiliates, employees, agents and representatives and
each of their successors and assigns (together with Seller,
collectively, “ Seller’s Indemnified Parties
”), from and against any and all damages, mechanics’
liens, liabilities, losses, demands, actions, causes of action,
claims, costs and expenses (including reasonable attorneys’
fees) (collectively, “ Losses ”) caused by
Purchaser’s or its Consultants’ entry onto the
Property, and any Inspections or other matters performed by
Purchaser with respect to the Property during the Feasibility
Period or otherwise, except for any Losses against Seller or
Seller’s Indemnified Parties based upon obligations and
liabilities of Seller, and any pre-existing liabilities, for
matters merely discovered by Purchaser (i.e. latent environmental
contamination).
2.5
Property Materials .
(a) Purchaser acknowledges and agrees that Seller has, prior
to the Effective Date, made the documents set forth on
Schedule 2.5 attached hereto (collectively, the
“ Materials ”) available to Purchaser for review
and copying by Purchaser at Purchaser’s sole cost and
expense. To the extent that Purchaser determines that any of the
Materials have not been made available or delivered to Purchaser
pursuant to this Section 2.5(a) , Purchaser shall
notify Seller and Seller shall use commercially reasonable efforts
to deliver the same to Purchaser within one (1) Business Day after
such notification is received by Seller; provided ,
however , that under no circumstances will the Feasibility
Period be extended.
(b) In providing such information and Materials to Purchaser,
other than Seller’s Representations (as defined below),
Seller makes no representation or warranty, express, written, oral,
statutory, or implied, and all such representations and warranties
are hereby expressly excluded and disclaimed. Any information and
Materials provided by Seller to Purchaser under the terms of this
Agreement are for informational purposes only and, together with
all reports, studies or other information prepared or compiled for
Purchaser by any Consultant or other third-party in connection with
Purchaser’s investigation of the Property (collectively,
“ Third-Party Reports ”), shall be returned by
Purchaser to Seller (or the destruction thereof shall be certified
in writing by Purchaser to Seller) as a condition to the return of
the Deposit to Purchaser (if Purchaser is otherwise entitled to
such Deposit pursuant to the terms of this Agreement) if this
Agreement is terminated for any reason. Purchaser shall not in any
way be entitled to rely upon the accuracy of such information and
Materials. Purchaser recognizes and agrees that the Materials and
other documents and information delivered or made available by
Seller pursuant to this Agreement may not be complete or constitute
all of such documents which are in Seller’s possession or
control, but are those that are readily available to Seller after
reasonable inquiry to ascertain their availability. Purchaser
understands that, although Seller will use commercially reasonable
efforts to locate and make available the Materials and other
documents required to be delivered or made available by Seller
pursuant to this Agreement, Purchaser will not rely on such
Materials or other documents as being a complete and accurate
source of information with respect to the Property, and will
instead in all instances rely exclusively on its own Inspections
and Consultants with respect to all matters which it deems relevant
to its decision to acquire, own and operate the Property.
(c) The provisions of this Section 2.5 shall
survive the Closing and delivery of the Deed to Purchaser.
2.6
Contracts . On or before November 30, 2007,
Purchaser may deliver written notice to Seller (the “
Property Contracts Notice ”) specifying any Contracts
which Purchaser desires to terminate at the Closing (each, a
“ Terminated Contract, ” and, collectively, the
“ Terminated Contracts ”); provided ,
however , that (a) the effective date of such
termination after Closing shall be subject to the express terms of
such Terminated Contract (and, to the extent that the effective
date of termination of any Terminated Contract is after the Closing
Date, Purchaser shall not be deemed to have assumed any of
Seller’s obligations under such Terminated Contract as of the
Closing Date), and (b) to the extent that any such Terminated
Contract requires payment of a penalty or premium for cancellation,
Seller shall be solely responsible for the payment of any such
cancellation fees or penalties. If Purchaser fails to deliver the
Property Contracts Notice on or before November 30, 2007,
there shall be no Terminated Contracts and Purchaser shall assume
all Contracts at the Closing.
ARTICLE 3
TITLE
3.1
Title Documents . Purchaser acknowledges and agrees
that Seller has, prior to the Effective Date, caused to be
delivered to Purchaser a standard form commitment for title
insurance dated November 2, 2007 (the “ Title
Commitment ”) for the Property in an amount equal to the
Purchase Price from Title Insurer for an owner’s title
insurance policy (the “ Title Policy ”) on a
standard American Land Title Association form with the standard
pre-printed exceptions (collectively, the “ Standard
Exceptions ”) deleted, together with copies of all
instruments identified as exceptions therein (together with the
Title Commitment, collectively, the “ Title Documents
”); provided , however , Seller’s
obligation to cause the Standard Exceptions to be deleted is
expressly conditioned upon Purchaser obtaining, at
Purchaser’s sole cost and expense, a new survey of the
Property sufficient to enable Title Insurer to commit to delete the
Standard Exceptions. Seller shall be responsible only for payment
of the basic premium for the Title Policy, the cost of any
endorsements to cause removal of the Standard Exceptions and the
cost of any endorsements which Seller has expressly agreed, in
writing, to provide in order to cure an Objection (as defined
below). Purchaser shall be solely responsible for payment of all
other costs relating to procurement of the Title Commitment, the
Title Policy (less the payment of the basic premium for the Title
Policy), and any requested endorsements.
3.2
Survey . Purchaser acknowledges and agrees that
Seller has, prior to the Effective Date, delivered to Purchaser all
existing surveys of the Property (if any, the “ Existing
Survey ”) which to Seller’s knowledge are in
Seller’s possession or reasonable control. To the extent that
Purchaser desires that a new survey of the Property be prepared or
that the Existing Survey be updated (the “ New Survey
”), Purchaser shall be solely responsible for the same, all
at Purchaser’s sole cost and expense.
3.3
Objection and Response Process . On or before
November 30, 2007 (the “ Objection Deadline
”), Purchaser shall give written notice (the “
Objection Notice ”) to the attorneys for Seller of any
matter set forth in the Title Documents or the Existing Survey to
which Purchaser objects (the “ Objections ”) and
all items not objected to by Purchaser shall be deemed approved. If
Purchaser fails to tender an Objection Notice on or before the
Objection Deadline, Purchaser shall be deemed to have approved and
irrevocably waived any objections to any matters covered by the
Title Documents and the Existing Survey. On or before
December 3, 2007 (the “ Response Deadline
”), Seller may, in Seller’s sole discretion, give
Purchaser notice (the “ Response Notice ”) of
those Objections which Seller is willing to cure, if any. If Seller
fails to deliver a Response Notice by the Response Deadline, Seller
shall be deemed to have elected not to cure or otherwise resolve
any matter set forth in the Objection Notice. If Purchaser is
dissatisfied with the Response Notice, Purchaser may, as its
exclusive remedy, elect by written notice given to Seller on or
before December 6, 2007 (the “ Final Response
Deadline ”) or if Seller elects to cure any Objections
and fails prior to one (1) Business Day before Closing to cure
such Objection, then Purchaser, as its exclusive remedy, may elect
by written notice given to Seller on or before the Closing, either
(a) to accept the Title Documents and Existing Survey with
resolution, if any, of the Objections as set forth in the Response
Notice (or if no Response Notice is tendered, without any
resolution of the Objections) and without any reduction or
abatement of the Purchase Price and Purchaser shall be deemed to
have approved such objections, or (b) to terminate this
Agreement, in which event the Deposit shall be returned to
Purchaser. If Purchaser fails to give notice to terminate this
Agreement on or before the Final Response Deadline, Purchaser shall
be deemed to have elected to approve and irrevocably waived any
objections to any matters covered by the Title Documents or the
Existing Survey, subject only to resolution, if any, of the
Objections as set forth in the Response Notice (or if no Response
Notice is tendered, without any resolution of the Objections).
3.4
Permitted Exceptions . The Deed delivered pursuant to
this Agreement shall be subject to the following, all of which,
with the exception of the Pre-Disapproved Exceptions (as defined
below), shall be deemed “ Permitted Exceptions
”:
(a) All matters shown in the Title Documents (including any
updates thereto), the Existing Survey and the New Survey, other
than (i) those Objections made by Purchaser under
Sections 3.3 or 3.5 (except to the extent cured by
Seller or otherwise accepted by Purchaser), (ii) labor,
mechanics’ and materialmen’s liens and taxes accrued,
due and/or payable with respect to the period preceding Closing
(except to the extent arising by, through or under Purchaser),
(iii) all mortgages, deeds of trust, or other monetary
encumbrances and/or indebtedness (except to the extent arising by,
through or under Purchaser), (iv) the standard exception
regarding rights of parties in possession (except to the extent
limited to Tenants pursuant to the Leases as tenant’s only,
with no rights of first refusal or any options to purchase all or
any portion of the insured property), and (v) the standard
exception pertaining to taxes and assessments (except to the extent
limited to real property taxes and assessments that have not
accrued and are a lien not yet due and payable) (items (i)
through (v) shall be known, collectively, as “
Pre-Disapproved Exceptions ” and Seller covenants to
cause such Pre-Disapproved Exceptions to be released and reconvened
from the Property and to remove as exceptions to title prior to
Closing);
(b) All Tenants, as tenants only, with no rights of first
refusal or any options to purchase all or any portion of the
insured property;
(c) Applicable zoning and governmental regulations and
ordinances; and
(d) Any defects in or objections to title to the Property, or
title exceptions or encumbrances, arising by, through or under
Purchaser.
3.5
New Title Defects . If any matter reported on any
update of the Title Commitment or the New Survey discloses any
(a) material (as determined by Purchaser in Purchaser’s
good faith business judgment) encumbrance not disclosed as an
exception in the original Title Commitment, (b) material (as
determined by Purchaser in Purchaser’s good faith business
judgment) encroachment, change in the boundary of the Property or
other survey defect, in either case that is not a Permitted
Exception, or (c) any other matter which materially and
adversely (as determined by Purchaser in Purchaser’s good
faith business judgment) impairs the use, occupancy, operation or
leasing of the Property (in each case, a “ New Title
Defect ”), then Purchaser will have the right to object
in writing to such New Title Defect so long as it delivers notice
to Seller within three (3) Business Days after Purchaser first
receives an updated Commitment or the New Survey or such lesser
time as remains between such receipt and the Closing Date, and the
process described in Section 3.3 shall apply thereto;
provided , however , that if there is not enough time
for the process described in Section 3.3 to be carried
out, then Seller shall immediately respond to Purchaser’s
notice and Purchaser shall have the right to either accept the New
Defects or terminate this Agreement pursuant to
Section 3.3 at anytime prior to the Closing Date.
Unless Purchaser notifies Seller in writing that it objects to a
New Title Defect within the foregoing time period, each such New
Title Defect automatically will constitute an additional Permitted
Exception.
ARTICLE 4
[INTENTIONALLY
OMITTED]
ARTICLE 5
CLOSING
5.1
The Closing . The consummation of the purchase
and sale and related transactions contemplated by this Agreement
(the “ Closing ”) shall occur on
December 19, 2007 (the “ Closing Date ”)
through an escrow with Escrow Agent, whereby Seller, Purchaser and
their attorneys need not be physically present at the Closing and
may deliver documents by overnight air courier or other means.
5.2
Seller Closing Deliveries . No later than one
(1) Business Day prior to the Closing Date (unless another
date is specifically prescribed by this Section 5.2 ),
Seller shall deliver to Escrow Agent, each of the following
items:
(a) One (1) original Special Warranty Deed (the “
Deed ”), in the form attached hereto as Exhibit
“B” , subject to the Permitted Exceptions and
excluding all Pre-Disapproved Exceptions, executed by Seller.
(b) Two (2) originals of the Bill of Sale, in the form
attached hereto as Exhibit “C” , executed
by Seller.
(c) Two (2) originals of the General Assignment, in the
form attached hereto as Exhibit “D” (the
“ General Assignment ”), executed by Seller.
(d) Two (2) originals of the Assignment of Leases and
Security Deposits, in the form attached hereto as Exhibit
“E” (the “ Leases Assignment
”), executed by Seller.
(e) A
notification letter to the Tenants prepared and executed by Seller
in the form attached hereto as Exhibit
“F” (the “ Tenant Notification
Letter ”), executed by Seller.
(f) A
closing statement executed by Seller.
(g) Any other documents or agreements customarily required of
a seller by the Title Company to issue the Title Policy (with the
arbitration provision, the creditor’s rights exclusion and
general exceptions deleted, including, without limitations any
affidavit to the non-existence of parties in possession (other than
Tenants under Leases disclosed on the most recent certified Rent
Roll, as tenants only with no right of first refusal or any options
to purchase all or any portion of the Property, and mechanics lien
and any “gap” indemnity required by the Title
Company).
(h) A
certification of Seller’s non-foreign status pursuant to
Section 1445 of the Internal Revenue Code of 1986, as
amended.
(i) Resolutions, certificates of good standing and such other
organizational documents as Title Insurer shall reasonably require
evidencing Seller’s authority to consummate this
transaction.
(j) An updated certified Rent Roll.
(k) Evidence of the termination (without penalty or liability
to Purchaser) of all Terminated Contracts, no later than two
(2) Business Days prior to the Closing.
(l) A
closing statement executed by Seller pursuant to the terms of
Section 5.4 below.
(m) Any other documents as may be required by this Agreement
or as may reasonably be required to carry out the terms and intent
of this Agreement, provided that such documents do not increase
Seller’s liability or result in a material expense to
Seller.
5.3
Purchaser Closing Deliveries . No later than
one (1) Business Day prior to the Closing Date (except for the
balance of the Purchase Price which is to be delivered at the time
specified in Section 1.2(d) ), Purchaser shall deliver
to Escrow Agent (for disbursement to Seller upon the Closing) the
following items with respect to the Property being conveyed at the
Closing:
(a) The full Purchase Price (with credit for the Deposit),
plus or minus the adjustments or prorations required by this
Agreement.
(b) Any other documents or agreements customarily required of
a purchaser by the Title Company to issue the Title Policy (with
the arbitration provision, the creditor’s rights exclusion
and general exceptions deleted, including, without limitations any
affidavit to the non-existence of parties in possession (other than
Tenants under Leases disclosed on the most recent certified Rent
Roll, as tenants only with no right of first refusal or any options
to purchase all or any portion of the Property, and mechanics lien
and any “gap” indemnity required by the Title
Company).
(c) Any declaration or other statement which may be required
to be submitted to the local assessor with respect to the terms of
the sale of the Property.
(d) Resolutions, certificates of good standing and such other
organizational documents as Title Insurer shall reasonably require
evidencing Purchaser’s authority to consummate this
transaction.
(e) A
closing statement executed by Purchaser pursuant to the terms of
Section 5.4 below.
(f) Two (2) original countersigned counterparts of the
General Assignment, executed by Purchaser.
(g) Two (2) original countersigned counterparts of the
Leases Assignment, executed by Purchaser.
(h) Any other documents as may be required by this Agreement
or as may reasonably be required to carry out the terms and intent
of this Agreement, provided that such documents do not increase
Purchaser’s liability or result in a material expense to
Purchaser.
5.4
Closing Prorations and Adjustments .
(a)
General . All normal and customarily proratable items,
including, without limitation, collected rents, operating expenses,
personal property taxes, and other operating expenses and fees,
shall be prorated as of the Closing Date, Seller being charged or
credited, as appropriate, for all of the same attributable to the
period up to the Closing Date (and credited for any amounts paid by
Seller attributable to the period on or after the Closing Date, if
assumed by Purchaser) and Purchaser being responsible for, and
credited or charged, as the case may be, for all of the same
attributable to the period on and after the Closing Date. Seller
shall prepare, or shall cause Escrow Agent to prepare, a proration
schedule (the “ Proration Schedule ”) of the
adjustments described in this Section 5.4 two
(2) Business Days prior to Closing and Seller and Purchaser
shall mutually agree upon and execute a closing statement on or
before one (1) Business Day prior to the Closing. Such adjustments
shall be paid by Purchaser to Seller (if the prorations result in a
net credit to Seller) or by Seller to Purchaser (if the prorations
result in a net credit to Purchaser), by increasing or reducing the
cash to be paid by Purchaser at Closing.
(b)
Operating Expenses . All of the operating, maintenance,
taxes (other than real estate taxes, such as rental taxes) and
other expenses incurred in operating the Property that Seller
customarily pays, and any other costs incurred in the ordinary
course of business for the management and operation of the
Property, shall be prorated on an accrual basis. Seller shall pay
all such expenses that accrue prior to Closing and Purchaser shall
pay all such expenses that accrue from and after the Closing
Date.
(c)
Utilities . The final readings and final billings for
utilities will be made if possible as of the Closing Date, in which
case Seller shall pay all such bills as of the Closing Date and no
proration shall be made at the Closing with respect to utility
bills. Otherwise, a proration shall be made based upon the
parties’ reasonable good faith estimate and a readjustment
made within 60 days after the Closing, if necessary. Seller
shall be entitled to the return of any deposit(s) posted by it with
any utility company, and Seller shall notify each utility company
serving the Property to terminate Seller’s account, effective
as of noon on the Closing Date.
(d)
Real Estate Taxes . All non-delinquent real estate ad
valorem or similar taxes for the Property for the year of
Closing, shall be prorated to the date of Closing, based upon
actual days involved. The proration of real property taxes shall be
based upon the assessed valuation and tax rate figures (assuming
payment at the earliest time to allow for the maximum possible
discount) for the year in which the Closing occurs to the extent
the same are available. In the event that actual figures (whether
for the assessed value of the Property or for the tax rate) for the
year of Closing are not available at the Closing Date, the
proration shall be made using figures from the preceding year
(assuming payment at the earliest time to allow for the maximum
possible discount) and the proration of real property taxes shall
be subject to re-adjustment after Closing and Seller and Purchaser
shall promptly pay to the other any amount required as a result of
such adjustments. In the event supplemental taxes for the year of
Closing are assessed, such taxes shall also be subject to proration
and re-adjustment after Closing. With respect to any property tax
appeals or reassessments filed by Seller for tax years prior to the
year in which the Closing occurs, Seller shall be entitled to the
full amount of any refund or rebate resulting therefrom (subject to
any requirement under any Leases to pay to the tenants thereunder a
share of any such refund or rebate, which Seller shall promptly pay
to Purchaser for refunding to such tenants), and with respect to
any property tax appeals or reassessments filed by Seller for the
taxes that accrued during the year in which the Closing occurs,
Seller and Purchaser shall share the amount of any rebate or refund
resulting therefrom (after first paying to Seller reasonable costs
and expenses incurred by Seller in pursuing such appeal or
reassessment) in proportion to their respective periods of
ownership of the Property for such taxes (subject to any
requirement under the Leases to pay to the tenants thereunder a
share of any such refund or rebate, which Seller shall promptly pay
to Purchaser for refunding to such tenants).
(e)
Leases .
(i) All collected rent (whether fixed monthly rentals,
additional rentals, escalation rentals, retroactive rentals,
operating cost pass-throughs or other sums and charges payable by
Tenants under the Leases), and other income and expenses from any
portion of the Property shall be prorated as of the Closing Date
(prorated for any partial month). Purchaser shall receive all
collected rent and income attributable to dates from and after the
Closing Date. Seller shall receive all collected rent and income
attributable to dates prior to the Closing Date. Notwithstanding
the foregoing, no prorations shall be made in relation to either
(A) non-delinquent rents which have not been collected as of
the Closing Date, or (B) delinquent rents existing, if any, as
of the Closing Date (the foregoing (A) and (B) referred
to herein as the “ Uncollected Rents ”). In
adjusting for Uncollected Rents, no adjustments shall be made in
Seller’s favor for rents which have accrued and are unpaid as
of the Closing. Purchaser agrees to bill tenants of the Property
for all Uncollected Rents and to take commercially reasonable
actions to collect Uncollected Rents; provided ,
however , that Purchaser shall have no obligation to
institute any legal or equitable proceedings, including an action
for unlawful detainer, eviction or other proceeding against a
Tenant owing Uncollected Rents). Notwithstanding anything in this
Section 5.4(e)(i) to the contrary, Purchaser’s
obligation to use commercially reasonable efforts to collect
Uncollected Rents shall be limited to Uncollected Rents of not more
than 60 days past due. Any rents collected from a Tenant after
the Closing Date who owes Uncollected Rents as of the Closing Date
shall be applied, first, to Purchaser’s actual third-party
costs of collection incurred with respect to such Uncollected
Rents, second, to any arrearage owed by such Tenant as of the
Closing Date not exceeding sixty (60) days, third, to any
rents payable by such Tenant after the Closing Date and thereafter
to any arrearage owed by such Tenant as of the Closing Date in the
inverse order of maturity. Any such rents collected by Purchaser
which are, pursuant to the preceding sentence, to be applied to
periods prior to the Closing Date shall promptly be paid by
Purchaser to Seller. After the Closing, Seller shall continue to
have the right, but not the obligation, in its own name, to demand
payment of and to collect Uncollected Rents owed to Seller by any
Tenant, provided that Purchaser shall not incur any, and Seller
shall indemnify, defend and hold Purchaser harmless against all
Losses in connection therewith, and provided further that Seller
shall not commence any legal or equitable proceedings in the nature
of an unlawful detainer, eviction or other proceeding which would
have the effect of interfering with any Tenant’s quiet
enjoyment of its leased premises or result in a lien or encumbrance
on such leased premises. Notwithstanding anything to the contrary,
Purchaser shall receive a credit for all tenant improvement
allowances, leasing commissions, and all amounts attributable to
any free-rent periods, abatements or other unexpired concessions
under all leases and occupancy agreements that extend beyond the
Closing Date to the extent that any such leases or occupancy
agreements were not disclosed to Purchaser in the Materials during
the Feasibility Period, excluding any New Leases approved by
Purchaser.
(ii) At Closing, Purchaser shall assign to Purchaser
all received and unapplied balance of all cash (or cash equivalent)
Tenant deposits, including, but not limited to, security, damage or
other refundable deposits or required to be paid by any of the
Tenants to secure their respective obligations under the Leases,
together, in all cases, with any interest payable to the Tenants
thereunder as may be required by their respective Lease or state
law (the “ Tenant Security Deposit Balance ”)
and transfer such amounts to Purchaser in the form of a credit
against the Purchase Price, but the obligation with respect to the
Tenant Security Deposit Balance nonetheless shall be assumed by
Purchaser pursuant to the Leases Assignment. The Tenant Security
Deposit Balance shall not include any non-refundable deposits or
fees paid by Tenants to Seller, either pursuant to the Leases which
relate solely to the period prior to the Closing Date.
(iii) In the event that any security deposits are in a
form other than cash (the instrument constituting such security
deposits shall be known as, the “ Non-Cash Security
Deposits ”), Seller will, at Closing cause Purchaser to
be named as the beneficiary under the Non-Cash Security Deposits.
Purchaser will not receive a credit against the Purchase Price for
such security deposits. In the event that Purchaser cannot be named
the beneficiary under the Non-Cash Security Deposits as of the
Closing Date, a cash escrow equal to the amount of the Non-Cash
Security Deposit will be established at the Closing until the
Non-Cash Security Deposits are reissued in Purchaser’s name.
Prior to such time of reissue, Purchaser shall be entitled to draw
from such cash escrow in the event the terms of the relevant lease
entitle the Purchaser, as landlord, to draw on the Non-Cash
Security Deposit. Seller and Purchaser shall share equally in the
costs of the escrow established pursuant to this
Section 5.4(e)(iii) .
(iv) With respect to operating expenses, taxes,
utility charges, other operating cost pass-throughs, retroactive
rental escalations, sums or charges payable by Tenants under the
Leases, to the extent that Seller has received as of the Closing
payments allocable to periods subsequent to Closing, the same shall
be properly prorated with an adjustment in favor of Purchaser, and
Purchaser shall receive a cr
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