PURCHASE AND SALE AGREEMENT-TEXAS USBP PROPERTY

 

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                                                                   Exhibit 10.13

 

                           PURCHASE AND SALE AGREEMENT

 

      THIS AGREEMENT, made as of the 23rd day of September 2003, is by and

between U.S.B.P., LLC, a Texas Limited Liability Company, with an address at

1014 E. HARRISON AVENUE, HARLINGEN, TX 78550 ("Seller"), and GEN-NET LEASE

INCOME TRUST, INC., a Michigan corporation with an address at 24081 WEST RIVER

ROAD, 1ST FLOOR, GROSSE ISLE, MICHIGAN 48138 ("Buyer").

 

       SECTION 1. SALE OF THE PROPERTY.

 

      1.1 On the terms and conditions contained in this Agreement, Seller agrees

to sell and Buyer agrees to purchase that certain tract or parcel of land

located in Harlingen, TX, more particularly described on EXHIBIT A attached

hereto and by this reference made a part hereof, together with the buildings and

improvements thereon and together with all appurtenant rights of way, easements,

water rights and covenants (said land, building and appurtenances hereinafter

sometimes collectively referred to as the "Property").

 

      1.2 All of Seller's right, title and interest in and to any fixtures and

items of intangible or tangible personal property attached to the improvements

on the Property and owned by Seller are included in the sale and shall be

conveyed "as is."

 

      1.3 If required by the Lease of the Premises to the General Services

Administration, Buyer will form a single asset entity of its choosing to take

title to the Property. Such entity shall be formed prior to Closing. Seller

hereby consents to the assignment of this contract to such single asset entity

at Closing.

 

SECTION 2.   PURCHASE PRICE.

 

      2.1 The purchase price for the Property (the "Purchase Price") shall be

NINETEEN MILLION ONE HUNDRED TWENTY FIVE THOUSAND DOLLARS ($19,125,000.00), and

shall be payable as follows:

 

            (a) One Hundred Thousand Dollars ($100,000) shall be paid to

      Southern Texas Title Co 1205 S 77 Sunshine Strip, Harlingen, TX 78550 (the

      "Title Company") on or before the date that is five (5) business days

      after the Effective Date (see Section 16.14 hereof) of this Agreement.

      Such amount shall be held and released by the Title Company in accordance

      with the provisions of this Agreement and the escrow provisions attached

      as EXHIBIT B. Such payments shall be non-refundable, except as expressly

      set forth herein. Such payment is referred to herein as the "Deposit".

 

            (b) The balance of the Purchase Price, subject to adjustment as

      provided herein, shall be deposited into escrow by Buyer with the Title

      Company no later than 11:00 a.m. on the date that the closing of title

      pursuant to Section 7 takes place (the "Closing Date") by wire transfer of

      good federal funds.

 

      2.2 Buyer acknowledges that negotiations are in progress to increase the

base rent being paid by Tenant as consideration for excess utilization of the

Property by United States

 

 

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Government General Services Administration ("Tenant"). If Seller is successful

in such negotiations, the excess base rent shall be applied as follows and in

the following order:

 

            (a) To reimburse Seller for excess operating costs incurred by

      Seller prior to Closing as a result of excess utilization of the Property

      by Tenant. This amount shall be identified by Tenant and Seller prior to

      Closing and subject to agreement and verification by Buyer.

 

            (b) Any amounts obtained to cover future utility overages shall be

      paid in full to Buyer. This amount shall be identified by Tenant and

      Seller prior to Closing and subject to agreement and verification by

      Buyer.

 

            (c) After due and proper payment and accounting for items (a) and

      (b), Seller shall be entitled to fifteen percent (15%) of the base rent

      increase for the remainder of the initial term of the lease as such amount

      is paid. Provided, however, that at Seller's request, Buyer and Seller

      will attempt in good faith to negotiate a lump sum payment. If such amount

      is agreed, it shall be paid at Closing in lieu of any ongoing payment

      obligations.

 

      2.3 The Deposit shall be placed in an interest-bearing escrow account. All

interest accruing on the Deposit shall be credited against the Purchase Price

payable at the closing of title pursuant to Section 7 (the "Closing"). If the

Closing does not take place, the interest accrued on the Deposit shall be paid

to the party entitled to receive the Deposit pursuant to the terms of this

Agreement. The Title Company shall serve as custodian of all documents to be

delivered into escrow pursuant to this Agreement and to handle the recordation

of all documents to be admitted to record.

 

      SECTION 3. ADJUSTMENTS AND APPORTIONMENTS.

 

      3.1 The following are to be apportioned or adjusted as of the date of

Closing (the "Closing Date"):

 

            (a) Any charges, which are not paid by the UNITED STATES GOVERNMENT

      GENERAL SERVICES ADMINISTRATION ("Tenant"), including but not limited to,

      real estate taxes, water and sewer charges, electricity, fuel and other

      utility charges shall be apportioned as of the Closing Date in accordance

      with local custom for transactions of this type.

 

            (b) Any escrow fees charged by the Title Company for acting as the

      escrow agent hereunder shall be shared equally by the parties.

 

            (c) Rental payments from the Tenant shall be apportioned as of the

      Closing Date. Rental deposits, if any, shall be paid to Buyer.

 

            (d) The following closing costs shall be paid by Buyer:

 

                  i. documentary stamps, transfer and intangible taxes, if any,

            on Buyer's mortgages and notes;

 

 

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                  ii. recording costs on the deed, Buyer's mortgage and

            financing statements;

 

                  iii. one half of the cost of the Owners' (Buyer's) title

            insurance commitment and policy and the cost of the Lender's title

            insurance commitment and policy;

 

                  iv. survey update, if any;

 

                  v. Buyer's loan costs;

 

                  vi. all expenses of due diligence and all fees and expenses

            related to Buyer's financing;

 

                  vii. all other expenses incurred by Buyer including without

            limitation, all legal fees and expenses of Buyer's counsel;

 

      (e) The following closing costs shall be paid by Seller:

 

                  i. documentary stamps, transfer and intangible taxes on the

            deed;

 

                  ii. one half of the cost of the Owner's (Buyer's) title

            insurance commitment and policy;

 

                  iii. all costs associated with curative or remedial title work

            and the recording of any corrective title instruments and releases;

 

                  iv. all other expenses incurred by Seller, including without

            limitation all fees and expenses of Seller's counsel.

 

      3.2 The terms and provisions of this Section 3 shall survive the Closing

Date.

 

      SECTION 4. TITLE.

 

      4.1 Within seven (7) days following the Effective Date, Owner shall

furnish to Buyer a commitment for title insurance under an Seller's Extended

Coverage Policy of Title Insurance (TLTA or ALTA form acceptable to Buyer)

issued by Escrow Company on behalf of a title insurance company acceptable to

Buyer (the "Commitment"). Such Commitment shall commit to insure that marketable

title in fee simple will vest in Buyer at Closing subject to standard TLTA

printed policy exceptions (Schedule B, Exceptions to Coverage) and such other

exceptions as will not interfere with the contemplated use, leasing, financing,

or resale of the Property ("Permitted Exceptions"). Provided, however, that the

standard exceptions for mechanic's liens and survey shall not be deemed

Permitted Exceptions and shall be removed prior to Closing. All costs associated

with the commitment and issuance of the Seller's policy shall be paid by Seller.

Seller shall convey the Property to Buyer by General Warranty Deed in a form

reasonably acceptable to Buyer.

 

 

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      4.2 Buyer shall have ten (10) days after receipt of the commitment to

notify Seller, in writing, of any matter identified in the commitment or

otherwise known to Buyer which would render the title conveyed to Buyer other

than good, clear, record and marketable other than Permitted Exceptions ("Defect

of Title"). Failure by Buyer to give such notice within the prescribed time

period shall be deemed a waiver of any Defect of Title disclosed by the

commitment or otherwise known to Buyer which existed on the Effective Date and

such Defect of Title shall be deemed a Permitted Exception.

 

            Buyer shall notify Seller of any Defect of Title which does not

exist at the Effective Date but which arises prior to Closing. Such notice shall

be in writing and shall be given on or prior to the Closing Date.

 

            Any notice from Buyer to Seller identifying one or more Defect(s) of

Title shall be referred to herein as a "Title Objection Notice".

 

      4.3 Upon receipt of a Title Objection Notice, Seller shall use reasonable

good faith efforts to cure any such Defect(s) of Title. Seller shall have the

right to delay the Closing for up to 45 days to permit such remedy or cure (such

period as provided herein to Seller to cure any such Defect(s) of Title is

referred to herein as the "Title Cure Period"). As part of such cure, Seller

shall remove any consensual liens securing the payment of money. If Seller

remedies or cures such Defect(s) of Title, Seller shall notify Buyer of such

remedy or cure and if Buyer deems such remedy or cure to be satisfactory, Seller

shall have the right to set the Closing Date by giving Buyer written notice

thereof; provided that such Closing Date shall be no sooner than ten (10)

business days after such notice. If the Defect(s) of Title set forth in the

Title Objection Notice are not corrected or remedied within the Title Cure

Period, then Buyer shall elect, by written notice to Seller within five (5)

business days after the end of the Title Cure Period either (i) to accept title

to the Property subject to the uncured Defect(s) of Title without reduction of

the Purchase Price (other than Seller's obligation to pay off any consensual

liens securing the payment of money) and without any right to damages and

without any other liability on the part of Seller, or (ii) to terminate this

Agreement, whereupon all obligations of the parties hereunder shall cease and

neither party shall have any claim against the other by reason of this

Agreement, except with respect to any provision hereof that expressly survives

the termination of this Agreement. If Seller does not remedy or cure such

Defect(s) of Title within the Title Cure Period, and if Buyer elects to proceed

with the Closing, the Closing Date shall be the tenth business day after the end

of the Title Cure Period.

 

      4.4 If, on the Closing Date, there are any liens or encumbrances securing

the payment of a fixed liquidated amount of money, that Seller is obligated to

pay or discharge in order to convey good, clear, record and marketable title to

the Property to Buyer. Seller may elect to use any portion of the Purchase Price

to satisfy the same, provided Seller shall authorize the Title Company to retain

a sufficient portion of the Purchase Price to ensure the payment in full of such

liens and encumbrances and the obtaining and the recording of such

satisfactions. Buyer shall be entitled to verify the sufficiency of any amounts

retained to satisfy or discharge the obligation to which they are assigned.

Assuming due verification of the sufficiency of the amounts retained to

discharge the obligation to which they are assigned, the existence of any such

liens or encumbrances shall not be deemed objections to title if Seller shall

comply with the foregoing

 

 

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and the Title Company is willing to insure the Property without exception for

such lien or encumbrance.

 

      SECTION 5. DELIVERY OF SELLER'S DOCUMENTS.

 

      5.1 Within ten (10) business days after the Effective Date, Seller shall

deliver to Buyer, to the extent Seller has not already done so, copies of all

title policies, plans, surveys, engineering and environmental reports, operating

and financial documents, records, reports, audits, agreements, contracts for

services, leases, construction and development documents, warranties, tests,

reports, studies, notices, advisories, permits, certification for occupancy, and

anything else in its possession material to the status or condition of the

Property, to the extent the same are in the possession or control of Seller.

 

      5.2 Seller shall deliver its most current ALTA/ACSM TLTA equivalent Land

Survey of the Property within ten (10) days following the Effective Date. Seller

shall deliver an ALTA/ACSM TLTA equivalent Land Survey of the Property bearing a

creation date or recertification date at or after the Effective Date within

twenty one (21) days following the Effective Date.

 

      5.3 Buyer agrees that any and all information delivered by Seller or its

agents and representatives with respect to the Property shall be held by Buyer

in confidence and not released or shared with anyone except such employees,

lenders and professional advisors as are reasonably necessary to allow Buyer to

evaluate the Property. If for any reason this transaction does not close, any

such information and any copies that have been made by Buyer shall be promptly

returned to Seller. The provisions of this Section 5.3 shall survive the

termination of this Agreement.

 

      SECTION 6. DUE DILIGENCE.

 

      6.1 Unless extended by written agreement of Seller and Buyer, Buyer shall

have a period of forty-five (45) days from the Effective Date to conduct an

inspection of the Property. Such period shall hereinafter be referred to as the

"Due Diligence Period". During the Due Diligence Period during normal business

hours and after reasonable notice to Seller or its designated agents, Buyer, or

its engineers, architects, building consultants, environmental investigators, or

other representatives, at Buyer's sole cost and expense, may inspect and test

the Property. Seller shall reasonably cooperate by allowing Buyer's

representatives reasonable access to the Property. Buyer's right of inspection

shall include entry upon the Property with its agents and their equipment for

the purpose of making such environmental tests as Buyer deems appropriate,

including without limitation soil borings, provided that Buyer shall be

responsible for the prompt restoration of the Property to its condition prior to

making such tests. The obligation to return the Property to its prior condition

shall survive the termination of this Agreement. Buyer shall comply with all

laws, rules and regulations of any governmental authority and obtain all

licenses and permits required in connection with such activities. Buyer agrees

to indemnify and hold Seller harmless from and against any property damage or

personal injury or claim or lien against the Property resulting from any such

access or inspection by Buyer or its representatives. Such indemnification shall

survive the Closing or earlier termination of this Agreement. Buyer shall also

have the right during such Due Diligence Period to examine

 

 

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and review environmental conditions of the Property, zoning and land use

regulations, governmental entitlements, governmental approvals and any

restrictions, agreements, obligations and liabilities affecting the Property. If

Seller fails to provide the documentation identified in Section 5 hereof within

the prescribed 10-day period, the Due Diligence Period will be extended one (1)

day for each day or partial day delay in the delivery of such documentation.

 

      6.2 Buyer shall have the right to terminate this Agreement at any time

during the Due Diligence Period in its sole and absolute discretion for any

reason or no reason by giving written notice to Seller on or before the last day

of the Due Diligence Period. If Buyer timely gives notice of termination under

this Section, all obligations of the parties hereunder shall cease and neither

party shall have any claim against the other by reason of this Agreement, except

with respect to any provision hereof that expressly survives the termination of

this Agreement. Upon restoration of the Property as provided in Section 6.1, the

Deposit shall be returned to the Buyer. If Buyer fails to give such written

notice of termination on or before the last day of the Due Diligence Period,

Buyer shall be deemed to have waived its right to terminate this Agreement

pursuant to this Section.

 

      6.3 If Buyer terminates this Agreement in accordance with Section 6.2

above, Buyer shall return to Seller all documents provided to Buyer by Seller,

and any copies thereof made by Buyer and shall provide Seller with copies of all

reports, surveys, plans, studies and analysis prepared by or for Buyer with

respect to the Property. Buyer agrees that any and all information obtained by

it or its agents and representatives with respect to the Property, including

without limitation all reports, surveys, plans, studies and analysis prepared by

or for Buyer with respect to the Property, shall be held by Buyer in confidence

and not released or shared with anyone other than Seller, except for such

employees, lenders and professional advisors as are reasonably necessary to

allow Buyer to evaluate the Property. The provisions of this Section 6.3 shall

survive the termination of this Agreement. If Buyer waives its right to

terminate as provided above, Buyer shall be deemed to have accepted the Property

in an "as is" condition, without any representations or warranties, except as

specifically provided herein, and without abatement or reduction of the Purchase

Price.

 

      SECTION 7. CLOSING AND ESCROW.

 

      7.1 Upon execution of this Agreement, the parties shall deliver an

executed counterpart of this Agreement to the Title Company. This Agreement

shall serve as the instructions to the Title Company as the escrow holder for

consummation of the purchase and sale contemplated hereby. Seller shall promptly

notify the Title Company and Buyer in writing as to the Effective Date and the

date that the Due Diligence Period ends, which dates shall be controlling unless

Buyer objects in writing within three (3) business days after receipt of such

notice or unless the parties otherwise agree. Seller and Buyer agree to execute

such additional and supplementary escrow instructions as may be appropriate to

enable the escrow holder to comply with the terms of this Agreement; provided,

however, that in the event of any conflict between the provisions of this

Agreement and any supplementary escrow instructions, the terms of this Agreement

shall control.

 

      7.2 The consummation of the transactions contemplated hereby shall be held

and delivery of all items to be made at the Closing under the terms of this

Agreement shall be made

 

 

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at the office of the Title Company, on a date which is fifteen (15) days

following the end of the Due Diligence Period, or such later date as provided in

Section 4.3 or as may be agreed by the parties in writing.

 

      7.3 At least one business day prior to the Closing Date, Seller shall

deliver the following into escrow with the Title Company (all in form reasonably

acceptable to the Title Company and Buyer's counsel):

 

            (a) A duly executed and acknowledged General Warranty Deed (herein

      referred to as the "Deed") in recordable form conveying the Property to

      Buyer as grantee therein, subject only to Permitted Exceptions.

 

            (b) A duly executed bill of sale ("Bill of Sale") transferring all

      of Seller's right, title and interest in and to the fixtures and personal

      property described in Section 1.2.

 

            (c) An affidavit dated as of the date of Closing, duly executed,

      certifying that Seller is not a foreign person within the meaning of the

      Internal Revenue Code and its regulations.

 

            (d) Such customary affidavits or certificates, duly executed, as

      shall be reasonably required by the Title Insurance Company for the

      purpose of issuing an Seller's title insurance policy without exception

      for parties in possession or mechanics and materialmens liens claiming by,

      through or under any contract, agreement or understanding with Seller or

      any entity affiliated with Seller.

 

            (e) A certificate, duly executed, updating the representations and

      warranties of Seller set forth in this Agreement through Closing, which

      certificate shall state that there has been no material change in such

      representations and warranties, or if so, what changes have taken place.

 

            (f) A duly executed Closing Statement setting forth the Purchase

      Price and the various adjustments and prorations set forth herein,

      identical to the Closing Statement signed by Buyer pursuant to Section

      7.4.

 

            (g) A duly executed 1099-S Designation Form.

 

            (h) Such other documents as are reasonably necessary to consummate

      this Agreement including, without limitation, such events as may be

      required by Lease with the General Services Administration ("Tenant").

 

Buyer may waive compliance on Seller's part under any of the foregoing items by

an instrument in writing.

 

      7.4 Buyer shall deliver the following into escrow with the Title Company,

at least one business day prior to the Closing Date, unless otherwise specified:

 

 

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            (a) The balance of the Purchase Price as required by Section 2.1(b),

      which will be wired to the Title Company no later than 11:00 a.m. on the

      Closing Date.

 

            (b) A duly executed certificate updating the representations and

      warranties of Buyer set forth in this Agreement through such Closing Date,

      which certificate shall state that there has been no material change in

      said representations and warranties, or if so, what changes have taken

      place.

 

            (c) A certificate from the Michigan Secretary of State dated no more

      than sixty (60) days prior to the Closing, confirming that Buyer is duly

      formed and in good standing under the laws of such state.

 

            (d) Such resolutions, authorizations, bylaws or other documents

      relating to Buyer as shall be reasonably requested to evidence the

      authority of Buyer to enter into and consummate the transactions

      contemplated by this Agreement.

 

            (e) A duly executed Closing Statement setting forth the Purchase

      Price and the various adjustments and prorations set forth herein,

      identical to the Closing Statement signed by Seller pursuant to Section

      7.3.

 

            (f) Such other documents as are reasonably necessary to consummate

      this Agreement.

 

Seller may waive compliance on Buyer's part under any of the foregoing items by

an instrument in writing.

 

      7.5 Upon receipt of all the funds and documents described in Sections 7.3

and 7.4, above, the Title Company shall, in accordance with escrow instructions

reasonably agreed upon by Seller and Buyer, (a) record the Deed and deliver the

documents delivered into escrow by Seller to Buyer, and (b) disburse the

Purchase Price, as adjusted, in accordance with the closing statement and in

accordance with wiring instructions provided by Seller (provided that if Seller

assigns this Agreement to a qualified intermediary in accordance with the

provisions of Section 16.5, funds due Seller on account of the Purchase Price

shall instead be delivered to such qualified intermediary), and deliver the

documents from escrow to the party entitled to receive the same.

 

      SECTION 8. REPRESENTATIONS AND WARRANTIES.

 

      8.1 Seller hereby represents and warrants to Buyer, and acknowledges that

Buyer is relying on each of the following statements in entering into this

Agreement, as follows:

 

            (a) Seller is a limited liability company duly formed, validly

      existing and in good standing under the laws of the State of Texas and has

      full power and authority to enter into this Agreement and to carry out the

      transactions contemplated hereby, and the persons executing this Agre