This Real Estate Purchase and Sale Agreement involves
Title: PURCHASE AND SALE AGREEMENT-TEXAS USBP PROPERTY
Governing Law: Texas Date: 1/13/2004
Industry: Real Estate Operations Sector: Services
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
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
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
(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
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;
ii. recording costs on the deed, Buyer's mortgage and
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
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
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.
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
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
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
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
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
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
(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:
(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
(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
(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
(f) Such other documents as are reasonably necessary to consummate
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 Agreement
on behalf of Seller are duly authorized to execute, on behalf of Seller,
this Agreement, the Deed, Bill of Sale, assignments and other instruments
or documents reasonably necessary to effect the transactions contemplated
by this Agreement.
(b) Seller has full power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby, and to execute this
Agreement, the Deed, Bill of Sale, assignments and other instruments or
documents reasonably necessary to effect the transactions contemplated by
(c) This Agreement and all documents executed and delivered by
Seller are or at the time of Closing will be duly authorized, executed,
and delivered by Seller and will constitute the legal, valid, and binding
obligations of Seller, enforceable in accordance with their terms. Such
documents do not violate any provisions of any agreement, instrument or
judicial order to which Seller is a party or by which Seller or the
Property is bound including without limitation, the lease with the United
States Government Services Administration.
(d) There are no attachments, executions, assignments for the
benefit of creditors, receiverships, conservatorships or voluntary or
involuntary proceedings in bankruptcy or pursuant to any other debtor
relief laws filed by Seller or pending against Seller or Seller's interest
in the Property.
(e) Seller has no knowledge of any litigation or enforcement or
regulatory action or proceeding against or relating to the Property.
(f) Seller has no actual knowledge of any taking, condemnation or
special assessment, actual or proposed, with respect to any part of the
(g) Seller is not a party to any service contracts relating to the
Property except as delivered by Seller to Buyer during the first ten (10)
days of the due diligence period.
(h) To the best of Seller's knowledge no hazardous or toxic
material, substance, pollutant, contaminant, waste, asbestos or petroleum
product has been released by Seller or to the best of Seller's knowledge
by any of Seller's predecessors in title or tenants into the environment,
discharged, placed or disposed of at, near or on the Property. The
Property has not been used at any time by Seller or to the best of
Seller's knowledge, any person as a landfill or waste disposal site. No
claims, litigation, administrative proceedings, are pending or threatened
and no judgments or orders have been entered related to any hazardous
substance, hazardous waste, discharge, emission or other form of pollution
relating in any way to the Property. No hazardous substance or hazardous
waste, as defined by the Resource Conservation Recovery Act, as amended,
42 U.S.C. 6901, et. seq., or the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. 9601, et. seq., has
been generated, manufactured, refined, transported, treated,