EX-2 2 rexr-ex2_2014062763.htm EXHIBIT 2.1

 

AGREEMENT OF PURCHASE AND SALE

AND JOINT ESCROW INSTRUCTIONS

by and between

Westcore Cabot, L.P.,

a Delaware limited partnership;

Westcore Distribution, LLC,

a Delaware limited liability company;

Westcore Distribution II, LLC,

a Delaware limited liability company;

Westcore Hunter, LLC,

a Delaware limited liability company;

Westcore Salt Lake Avenue, LLC,

a Delaware limited liability company;

Westcore Valley, LLC,

a Delaware limited liability company; and

Westcore Alton, LLC,

a Delaware limited liability company

(each, individually, a “Seller”, and collectively, “Sellers”)

and

Rexford Industrial Realty, L.P.,

a Maryland limited partnership

(“Buyer”)

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

  

Page

 

 

 

 

 

1.

 

Sale of Properties

  

4

 

 

 

 

 

 

1.1

 

Land

  

4

 

 

 

 

 

 

1.2

 

Real Property

  

4

 

 

 

 

 

 

1.3

 

Personal Property

  

4

 

 

 

 

 

 

1.4

 

Intangible Property

  

4

 

 

 

 

 

 

1.5

 

Contracts and Leases

  

4

 

 

 

2.

 

Purchase Price

  

4

 

 

 

 

 

 

2.1

 

Deposit

  

4

 

 

 

 

 

 

2.2

 

Application of Deposit

  

4

 

 

 

 

 

 

2.3

 

Balance

  

4

 

 

 

 

 

 

2.4

 

Interest

  

5

 

 

 

 

 

 

2.5

 

Independent Consideration

  

5

 

 

 

 

 

 

2.6

 

Constituent Property Termination

  

5

 

 

 

3.

 

Escrow; Closing Conditions

  

5

 

 

 

 

 

 

3.1

 

Escrow

  

5

 

 

 

 

 

 

3.2

 

Closing Date

  

5

 

 

 

 

 

 

3.3

 

Buyer’s Conditions to Closing

  

5

 

 

 

 

 

 

 

 

 

3.3.1.

 

Inspection

  

5

 

 

 

 

 

 

 

 

 

3.3.2

 

Title Policy

  

5

 

 

 

 

 

 

 

 

 

3.3.3.

 

Due Diligence Items

  

6

 

 

 

 

 

 

 

 

 

3.3.4.

 

PLL Policy for Westcore Distribution Property

  

6

 

 

 

 

 

 

 

 

 

3.3.5

 

Estoppel Certificates and SNDAs

  

6

 

 

 

 

 

 

 

 

 

3.3.6

 

Seller Representations and Warranties

  

6

 

 

 

 

 

 

 

 

 

3.3.7

 

Covenants

  

6

 

 

 

 

 

 

3.4

 

Buyer’s Covenants

  

6

 

 

 

 

 

 

 

 

 

3.4.1

 

Buyer’s Inspection

  

6

 

 

 

 

 

 

 

 

 

3.4.2

 

Insurance

  

6

 

 

 

 

 

 

 

 

 

3.4.3

 

Indemnity

  

7

 

 

 

 

 

 

 

 

 

3.4.4

 

No Representatin or Warranty by Sellers

  

7

 

 

 

 

 

 

 

 

 

3.4.5

 

Communications with Third Parties

  

7

 

 

 

 

 

 

3.5

 

Approval Procedure

  

7

 

 

 

 

 

 

3.6

 

Termination

  

7

 

 

 

 

 

 

3.7

 

Sellers’ Conditions to Closing

  

8

i


 

 

 

 

 

 

 

 

  

Page

 

 

 

 

 

 

 

 

 

 

 

 

 

3.7.1

 

Representations and Warranties

  

8

 

 

 

 

 

 

 

 

 

3.7.2

 

Covenants

  

8

 

 

 

 

 

 

3.8

 

Title and Title Insurance

  

8

 

 

 

 

 

 

 

 

 

3.8.1

 

Deed

  

8

 

 

 

 

 

 

 

 

 

3.8.2

 

Title Review; Survey

  

8

 

 

 

 

 

 

 

 

 

3.8.3

 

Buyer’s Title Policy

  

8

 

 

 

 

 

 

 

 

 

3.8.4

 

ALTA Policy

  

8

 

 

 

 

 

 

 

 

 

3.8.5

 

Permitted Exceptions

  

9

 

 

 

 

 

 

 

 

 

3.8.6

 

Intentionally Omitted

  

9

 

 

 

 

 

 

 

 

 

3.8.7.

 

Monetary Exceptions

  

9

 

 

 

 

 

 

3.9

 

Closing Costs and Charges

  

9

 

 

 

 

 

 

 

 

 

3.9.1

 

Sellers’ Costs

  

9

 

 

 

 

 

 

 

 

 

3.9.2.

 

Buyer’s Costs

  

9

 

 

 

 

 

 

 

 

 

3.9.3

 

Other Costs

  

9

 

 

 

 

 

 

3.10

 

Deposit of Documents and Funds by Sellers

  

9

 

 

 

 

 

 

3.11

 

Deposit of Documents and Funds by Buyer

  

9

 

 

 

 

 

 

3.12

 

Delivery of Documents and Funds at Closing

  

10

 

 

 

 

 

 

 

 

 

3.12.1

 

Recorded Documents

  

10

 

 

 

 

 

 

 

 

 

3.12.2

 

Buyer’s Documents

  

10

 

 

 

 

 

 

 

 

 

3.12.3

 

Purchase Price

  

10

 

 

 

 

 

 

 

 

 

3.12.4

 

Information Reports

  

10

 

 

 

 

 

 

3.13

 

Prorations and Adjustments

  

10

 

 

 

 

 

 

 

 

 

3.13.1

 

Rents

  

10

 

 

 

 

 

 

 

 

 

3.13.2

 

Preparation of CAM Proration Statement

  

10

 

 

 

 

 

 

 

 

 

3.13.3

 

Operating Expenses

  

11

 

 

 

 

 

 

 

 

 

3.13.4

 

Taxes

  

11

 

 

 

 

 

 

 

 

 

3.13.5

 

Leasing Costs

  

11

 

 

 

 

 

 

 

 

 

3.13.6

 

Basis of Proration/Adjustments

  

11

 

 

 

 

 

 

 

 

 

3.13.7

 

Service Contracts

  

11

 

 

 

 

 

 

3.14

 

Closing Statements

  

11

 

 

 

 

 

 

3.15

 

Estoppel Certificates

  

12

 

 

 

 

 

 

3.16

 

SNDAs

  

12

 

 

 

4.

 

Improvement Assessment Liens; Subdivision and Development Bonds; Improvement Obligations

  

12

 

 

 

 

 

 

4.1

 

Assessment Liens

  

12

ii


 

 

 

 

 

 

 

 

  

Page

 

 

 

 

 

 

 

 

 

4.2

 

Subdivision and Development Bonds

  

12

 

 

 

 

 

 

4.3

 

Improvement Obligations

  

13

 

 

 

 

 

 

4.4

 

Constituent Property Specific

  

13

 

 

 

5.

 

Commissions

  

13

 

 

 

6.

 

Damage or Destruction; Condemnation

  

13

 

 

 

 

 

 

6.1

 

Uniform Act

  

13

 

 

 

 

 

 

6.2

 

Definitions

  

13

 

 

 

 

 

 

6.3

 

Notice; Credit to Buyer

  

13

 

 

 

 

 

 

6.4

 

Constituent Property Specific

  

13

 

 

 

7.

 

Sellers’ Representations and Warranties

  

13

 

 

 

 

 

 

7.1

 

Due Organization

  

14

 

 

 

 

 

 

7.2

 

Authority

  

14

 

 

 

 

 

 

7.3

 

No Breach

  

14

 

 

 

 

 

 

7.4

 

OFAC

  

14

 

 

 

 

 

 

7.5

 

Lists

  

14

 

 

 

 

 

 

7.6

 

Condemnation/Eminent Domain

  

14

 

 

 

 

 

 

7.7

 

Leases

  

14

 

 

 

 

 

 

7.8

 

No Occupancy Rights

  

14

 

 

 

 

 

 

7.9

 

No Actions

  

14

 

 

 

 

 

 

7.10

 

No Violation of Law

  

14

 

 

 

 

 

 

7.11

 

No Bankruptcy

  

14

 

 

 

 

 

 

7.12

 

Environmental

  

14

 

 

 

8.

 

Buyer’s Representations and Warranties

  

14

 

 

 

 

 

 

8.1

 

Due Organization

  

14

 

 

 

 

 

 

8.2

 

Authority

  

15

 

 

 

 

 

 

8.3

 

No Breach

  

15

 

 

 

 

 

 

8.4

 

Orders

  

15

 

 

 

 

 

 

8.5

 

Lists

  

15

 

 

 

9.

 

Condition of Properties

  

15

 

 

 

 

 

 

9.1

 

Generally

  

15

 

 

 

 

 

 

9.2

 

Interim Operations

  

15

 

 

 

 

 

 

 

 

 

9.2.1

 

Operation of Propeties

  

15

 

 

 

 

 

 

 

 

 

9.2.2

 

Approval of Agreements

  

15

 

 

 

10.

 

Disclaimers; Disclosures

  

15

 

 

 

 

 

 

10.1

 

No Side Agreements or Representations

  

15

iii


 

 

 

 

 

 

 

 

  

Page

 

 

 

 

 

 

 

 

 

10.2

 

“AS IS” CONDITION

  

15

 

 

 

 

 

 

10.3

 

SOPHISTICATION OF BUYER

  

16

 

 

 

 

 

 

10.4

 

DUE DILIGENCE MATERIALS

  

16

 

 

 

 

 

 

10.5

 

Waiver of Disclosures

  

16

 

 

 

 

 

 

10.6

 

City of San Diego Retrofit Requirements

  

16

 

 

 

11.

 

Governmental Approvals

  

17

 

 

 

12.

 

Release

  

17

 

 

 

13.

 

Intentionally Omitted

  

17

 

 

 

14.

 

Default

  

18

 

 

 

 

 

 

14.1

 

LIQUIDATED DAMAGES – DEPOSIT

  

18

 

 

 

 

 

 

14.2

 

Sellers’ Default

  

18

 

 

 

 

 

 

 

 

 

14.2.1

 

Pre-Closing Representations and Waranties

  

18

 

 

 

 

 

 

 

 

 

14.2.2

 

Covenants

  

18

 

 

 

 

 

 

 

 

 

14.2.3

 

Post-Closing Claims

  

18

 

 

 

 

 

 

14.3

 

No Contesting Liquidated Damages

  

18

 

 

 

15.

 

Miscellaneous

  

18

 

 

 

 

 

 

15.1

 

Waiver of Trial by Jury

  

18

 

 

 

 

 

 

15.2

 

Attorneys’ Fees

  

19

 

 

 

 

 

 

15.3

 

Notices; Business Days

  

19

 

 

 

 

 

 

 

 

 

15.3.1

 

Notices

  

19

 

 

 

 

 

 

 

 

 

15.3.2

 

Business Days

  

19

 

 

 

 

 

 

15.4

 

Amendment; Complete Agreement

  

19

 

 

 

 

 

 

15.5

 

Governing Law

  

19

 

 

 

 

 

 

15.6

 

Severability

  

19

 

 

 

 

 

 

15.7

 

Counterparts, Headings, and Defined Terms

  

19

 

 

 

 

 

 

15.8

 

Time of the Essence

  

19

 

 

 

 

 

 

15.9

 

Waiver

  

19

 

 

 

 

 

 

15.10

 

Third Parties

  

19

 

 

 

 

 

 

15.11

 

Additional Documents

  

19

 

 

 

 

 

 

15.12

 

Independent Counsel

  

19

 

 

 

 

 

 

15.13

 

Assignment

  

20

 

 

 

 

 

 

15.14

 

Successors and Assigns

  

20

 

 

 

 

 

 

15.15

 

Exhibits

  

20

 

 

 

 

 

 

15.16

 

Duty of Confidentiality

  

20

 

 

 

 

 

 

15.17

 

Survival

  

20

iv


 

 

 

 

 

 

 

 

  

Page

 

 

 

 

 

 

 

 

 

15.18

 

Limited Liability

  

20

 

 

 

 

 

 

15.19

 

Tax-Deferred Exchange

  

20

 

 

 

 

 

 

15.20

 

No Effect Until Mutual Execution and Delivery

  

20

 

 

 

 

 

 

15.21

 

Tax Appeal Proceedings

  

21

 

 

 

 

 

 

 

 

 

15.21.1

 

Prosecution and Settlement of Proceedings

  

21

 

 

 

 

 

 

 

 

 

15.21.2

 

Application of Refunds of Savings

  

21

 

 

 

 

 

 

 

 

 

15.21.3

 

Survival

  

21

 

 

 

 

 

 

15.22

 

Disclosure Items

  

21

 

 

 

 

 

 

15.23

 

Regulation S-X

  

21

 

 

 

 

 

 

15.24

 

Post-Closing Deliveries by Seller

  

22

 

 

 

v


 

SUMMARY OF BASIC PURCHASE AND SALE TERMS

This Summary is hereby incorporated into and made a part of the attached Agreement of Purchase and Sale and Joint Escrow Instructions (this Summary and the Agreement or Purchase and Sale and Joint Escrow Instructions to be known collectively as this “Agreement”). Each reference in the Purchase and Sale Agreement to any term of this Summary shall have the meaning as set forth in this Summary for such term. In the event of a conflict between the terms of this Summary and the Purchase and Sale Agreement, the terms of the Purchase and Sale Agreement shall prevail.

 

Agreement Date:

  

May 19, 2014

 

 

 

Sellers:

  

Westcore Cabot, L.P.,

a Delaware limited partnership
(“
Westcore Cabot”);

Westcore Distribution, LLC,

a Delaware limited liability company

(“Westcore Distribution”);

Westcore Distribution II, LLC,

a Delaware limited liability company

(“Westcore Distribution II”);

Westcore Hunter, LLC,

a Delaware limited liability company

(“Westcore Hunter”);

Westcore Salt Lake Avenue, LLC,

a Delaware limited liability company

(“Westcore Salt Lake”); and

Westcore Valley, LLC,

a Delaware limited liability company

(“Westcore Valley”)

Westcore Alton, LLC,

a Delaware limited liability company

(“Westcore Alton”)

 

c/o Westcore Properties, LLC

4435 Eastgate Mall, Suite 300

San Diego, CA 92121

Attn:         Romy Loseke,

                 General Counsel

Office:     (858) 625-4100

Fax:         (888) 420-0099

Email:      rloseke@westcore.net

  

with copy to:

 

Pircher, Nichols & Meeks

1925 Century Park East, Suite 1700

Los Angeles, CA 90067

Attn:         Real Estate Notices

                 (MES/EBS/4422.163)

Office:      (310) 201-8900

Fax:          (310) 201-8922

Email:      realestatenotices@pircher.com

                 (MES/EBS/4422.163)

 

 

 

 

 

Buyer:

 

Rexford Industrial Realty, L.P.

11620 Wilshire Blvd., Suite 1000

Los Angeles, CA 90025

Attn:         Howard Schwimmer

Office:      (310) 966-3804

Fax:          (310) 966-1690

Email:       howards@

                 rexfordindustrial.com

 

with copy to:

 

Greenberg Glusker Fields Claman & Machtinger LLP

1900 Avenue of the Stars, 21st Floor

Los Angeles, CA 90067

Attn:         Kenneth S. Fields, Esq.

Office:      (310) 201-7462

Fax:          (310) 201-2376

Email:       kfields@greenbergglusker.com

1


 

 

Properties:

  

Seller’s right, title and interest in:

 

 

 

 

 

 

(a)

Westcore Cabot’s entire right, title and interest in the property commonly known as Miramar Industrial located at 9340, 9404 and 9455 Cabot Drive in the City of San Diego, County of San Diego and State of California 92126;

 

 

 

 

 

 

(b)

Westcore Distribution’s entire right, title and interest in the property commonly known as 9755 Distribution Avenue located in the City of San Diego, County of San Diego and State of California 92121;

 

 

 

 

 

 

(c)

Westcore Distribution II’s entire right, title and interest in the property commonly known as 9855 Distribution Avenue in the City of San Diego, County of San Diego and State of California 92121;

 

 

 

 

 

 

(d)

Westcore Hunter’s entire right, title and interest in the property commonly known as 5235 E. Hunter Avenue located in the City of Anaheim, County of Orange and State of California 92807;

 

 

 

 

 

 

(e)

Westcore Salt Lake’s entire right, title and interest in the property commonly known as 14955-14971 E. Salt Lake Avenue located in the City of Industry, County of Los Angeles and State of California 91746;

 

 

 

 

 

 

(f)

Westcore Valley’s entire right, title and interest in the property commonly known as 3880 W. Valley Blvd. located in the City of Pomona, County of Los Angeles and State of California 91769; and

 

 

 

 

 

 

(g)

Westcore Alton’s entire right, title and interest in the property commonly known as 1601 Alton Parkway, City of Irvine, County of Orange and State of California 92606.

 

 

 

 

 

all as more particularly described in Section 1.1.

 

 

 

 

Purchase Price:

  

$89,176,047

 

 

 

Deposit:

  

$1,000,000, together with any interest accrued thereon

 

 

 

Effective Date:

  

May 19, 2014

 

 

 

Due Diligence Period:

  

From April 22, 2014 to 5:00 p.m. Pacific time on Tuesday, May 27, 2014

 

 

 

Closing Date:

  

June 10, 2014  

 

 

 

 

Broker:

  

CBRE, on behalf of Sellers and Buyer  

 

 

 

 

Escrow Holder:

  

Chicago Title Insurance Company

701 B Street, Suite 760

San Diego, CA 92101

Attn:         Renee Marshall

Office:      (619) 230-6356

Fax:          (619) 544-6229

Email:       marshallr@ctt.com

  

 

 

 

 

Title Company:

  

Chicago Title Insurance Company

725 S. Figueroa Street, Suite 200

Los Angeles, CA 90017

Attn:         Michael C. Slinger

Office:      (213) 612-4131

Fax:          (213) 612-4133

Email:      mike.slinger@ctt.com

Attn:         Jason Silva

Office:      (213) 488-4306

Fax:          (213) 612-4171

Email:       jason.silva@ctt.com

  

 

 

 

Schedule:

  

1 ALLOCATED PURCHASE PRICE

2


 

 

Exhibits:

 

A-1

 

LEGAL DESCRIPTION OF WESTCORE CABOT PROPERTY

 

 

A-2

 

LEGAL DESCRIPTION OF WESTCORE DISTRIBUTION PROPERTY

 

 

A-3

 

LEGAL DESCRIPTION OF WESTCORE DISTRIBUTION II PROPERTY

 

 

A-4

 

LEGAL DESCRIPTION OF WESTCORE HUNTER PROPERTY

 

 

A-5

 

LEGAL DESCRIPTION OF WESTCORE SALT LAKE PROPERTY

 

 

A-6

 

LEGAL DESCRIPTION OF WESTCORE VALLEY PROPERTY

 

 

A-7

 

LEGAL DESCRIPTION OF WESTCORE ALTON PROPERTY

 

 

B-1

 

DUE DILIGENCE ITEMS - WESTCORE CABOT PROPERTY

 

 

B-2

 

DUE DILIGENCE ITEMS - WESTCORE DISTRIBUTION PROPERTY

 

 

B-3

 

DUE DILIGENCE ITEMS - WESTCORE DISTRIBUTION II PROPERTY

 

 

B-4

 

DUE DILIGENCE ITEMS - WESTCORE HUNTER PROPERTY

 

 

B-5

 

DUE DILIGENCE ITEMS - WESTCORE SALT LAKE PROPERTY

 

 

B-6

 

DUE DILIGENCE ITEMS - WESTCORE VALLEY PROPERTY

 

 

B-7

 

DUE DILIGENCE ITEMS - WESTCORE ALTON PROPERTY

 

 

B-8

 

TENANT LIST

 

 

C

 

FORM OF GRANT DEED

 

 

D

 

FORM OF TENANT NOTICE

 

 

E

 

FORM OF BILL OF SALE

 

 

F

 

FORM OF GENERAL ASSIGNMENT

 

 

G

 

FORM OF CERTIFICATE OF NON-FOREIGN STATUS

 

 

H

 

EXCLUDED PERSONAL PROPERTY

 

 

I-1

 

REQUIRED TENANTS

 

 

I-2

 

FORM OF ESTOPPEL CERTIFICATE

 

 

I-3

 

FORM OF SELLER ESTOPPEL CERTIFICATE

 

 

J

 

DISCLOSURE ITEMS

 

 

K

 

FORM OF SNDA

 

 

L

 

FORM OF REPRESENTATION LETTER

 

 

 

3


 

AGREEMENT OF PURCHASE AND SALE

AND JOINT ESCROW INSTRUCTIONS

This AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (this “Agreement”) is entered into as of the Agreement Date by and between Buyer and Sellers. Sellers and Buyer hereby agree as follows:

1. Sale of Properties. Sellers shall sell to Buyer, and Buyer shall purchase from Sellers, for the Purchase Price and on the terms and conditions of this Agreement, all of the following property:

1.1 Land. All of each applicable Seller’s right, title and interest in and to the real property more particularly described on Exhibit A-1 through Exhibit A-7, inclusive, attached hereto and incorporated herein by this reference (collectively, the “Land”);

1.2 Real Property. All of each applicable Seller’s right, title and interest in all improvements and fixtures situated on the Land (collectively, the “Improvements”; and collectively with the Land, the “Real Property”);

1.3 Personal Property. All of each applicable Seller’s right, title and interest (if any) in all tangible personal property (collectively, the “Personal Property”) located on and used exclusively in connection with the Real Property and owned by such Seller, but excluding those items of personal property owned by such Seller or an affiliated entity of such Seller as listed on Exhibit H, attached hereto and incorporated herein by this reference (collectively, the “Excluded Personal Property”);

1.4 Intangible Property. All of each applicable Seller’s right, title and interest (if any) in the following property, to the extent assignable, now or hereafter owned by such Seller and exclusively used in connection with the Land, the Improvements, or the Personal Property: licenses, entitlements, permits and other governmental approvals, any guarantees and warranties, common property names (excluding the name “Westcore” and any derivations thereof) with respect to the Real Property in effect as of the Close of Escrow (collectively, the “Intangible Property”); and

1.5 Contracts and Leases. All of each applicable Seller’s right, title and interest in the leases for the Properties (collectively, “Leases”) and all of each applicable Seller’s right, title and interest in service contracts in effect as of the Close of Escrow relating to the Real Property and which service contracts Buyer elects in writing to assume prior to the expiration of the Due Diligence Period in accordance with Section 3.13.7 below (collectively, the “Contracts”).

As used herein, the “Properties” mean all of the properties listed on Exhibit A-1 through Exhibit A-7, inclusive, each representing a “Constituent Property”. The Properties includes all right, title and interest of each applicable Seller in and to the Land, the Improvements, the Personal Property (other than the Excluded Personal Property), the Intangible Property and the Contracts. However, references to a “Constituent Property”, a “Property” or the “Properties” contained in this Agreement may refer to any one or more of the Properties, as the context requires.

The Properties being sold by Sellers to Buyer are on an AS-IS, WHERE-IS basis, with only those representations and warranties to Buyer by Sellers made in this Agreement. Moreover, except for limited reasons for the removal from this transaction of specific Constituent Properties under this Agreement (if any), this is a “package deal” involving the sale of all of the Constituent Properties to Buyer.

2. Purchase Price. The Purchase Price shall be allocated among each Constituent Property as set forth on Schedule 1 attached hereto and incorporated herein by this reference. For each Constituent Property, the allocable amount on Schedule 1 is herein called the “Allocable Purchase Price” for such Constituent Property.

2.1 Deposit. Buyer shall, within two (2) business days following the date on which Buyer and Sellers have executed and delivered a copy of this Agreement, deliver to Escrow Holder the Deposit in immediately available funds. If Buyer disapproves of the results of its investigation of the Properties prior to the expiration of the Due Diligence Period and notifies Sellers in writing that it is terminating this Agreement by such date, the Deposit shall be refunded to Buyer (less the “Independent Consideration” [as hereinafter defined]).

2.2 Application of Deposit. If Buyer has not terminated this Agreement before the expiration of the Due Diligence Period, the Deposit shall (a) be non-refundable (except in the event of (i) a default by a Seller or (ii) the occurrence of a casualty or condemnation event, the failure of a condition to Closing in favor of Buyer or any other termination of this Agreement by Buyer or Sellers pursuant to this Agreement, excluding a default by Buyer in the case of a termination by Seller); (b) remain in Escrow with Escrow Holder until the Close of Escrow or earlier termination of this Agreement; and (c) be applied toward the payment of the Purchase Price on the Close of Escrow or released to Sellers as liquidated damages to the extent Sellers are entitled to such liquidated damages pursuant to this Agreement.

2.3 Balance. Buyer shall deposit into Escrow an amount (“Cash Balance”), in immediately available federal funds equal to the Purchase Price minus the Deposit and increased or decreased by the net amount of any credits due or any items chargeable to Buyer under this Agreement. Buyer shall deposit the Cash Balance into Escrow in the form of immediately available funds on or before 12:00 p.m. Pacific time on the Closing Date.

4


 

2.4 Interest. At the request of Buyer, all funds received from or for the account of Buyer shall be deposited by Escrow Holder in an interest-bearing account for the benefit of Buyer with a federally insured state or national bank located in California.

2.5 Independent Consideration. Escrow Holder shall pay a portion of the Deposit in the amount of ONE HUNDRED UNITED STATES DOLLARS ($100) (the “Independent Consideration”) to Sellers upon the earlier to occur of the Close of Escrow or the termination of this Agreement for any reason. The Independent Consideration constitutes bargained-for consideration for this Agreement and is expressly acknowledged to be adequate. The obligation of Buyer to pay the Independent Consideration to Escrow Holder, and the obligation of Escrow Holder to pay the same to Sellers, are unconditional and shall survive any termination of this Agreement.

2.6 Constituent Property Termination. If, prior to the Closing, pursuant to the provisions of this Agreement expressly granting Sellers or Buyer the right to terminate this Agreement with respect to a Constituent Property, then as of the date of such designation, (i) this Agreement shall be deemed modified to exclude the Constituent Property from this Agreement, (ii) the Purchase Price shall be reduced by the Allocated Purchase Price of such Constituent Property, and (iii) Sellers and Buyer shall have no further obligations or liabilities with respect to such Constituent Property hereunder other than those obligations and liabilities expressly stated to survive the termination of this Agreement; provided, that, in no event shall there be a corresponding reduction in the amount of the Deposit and the Deposit shall be disposed of in accordance with the terms of this Agreement.

3. Escrow; Closing Conditions.

3.1 Escrow. Upon the Effective Date, this Agreement shall constitute the joint escrow instructions of Buyer and Sellers to Escrow Holder to open an escrow (“Escrow”) for the consummation of the sale of the Properties to Buyer pursuant to the terms of this Agreement. Upon Escrow Holder’s receipt of the Deposit and Escrow Holder’s written acceptance of this Agreement, Escrow Holder is authorized to act in accordance with the terms of this Agreement. Buyer and Sellers shall execute Escrow Holder’s general escrow instructions upon request; provided, however, such general instructions shall not impose any additional and material obligation upon either Buyer or Sellers and, if there is any conflict or inconsistency between such general escrow instructions and this Agreement, this Agreement shall control. Upon the Close of Escrow, Escrow Holder shall pay any sum owed to Sellers with immediately available funds.

3.2 Closing Date. The Escrow shall close (“Close of Escrow” or “Closing”) on or before the Closing Date, provided that all express conditions to the Close of Escrow set forth in this Agreement have been satisfied or waived by the party intended to be benefited thereby. However, the Closing shall constitute a waiver of all conditions precedent. Notwithstanding anything to the contrary contained in this Agreement, any right of Buyer or Sellers to terminate this Agreement may be exercised only as to this Agreement (and as to all of the Properties) in its entirety, and in no event may a party terminate this Agreement only as to certain Constituent Properties, except as otherwise expressly provided in this Agreement. The Closing shall occur through a so-called “GAP” closing.

3.3 Buyer’s Conditions to Closing. The obligations of Buyer to consummate the transactions provided for herein are subject to and contingent upon the satisfaction of the following conditions or the waiver of same by Buyer in writing:

3.3.1 Inspection. Buyer’s approval, in its sole and absolute discretion, of the transactions contemplated by this Agreement, including without limitation the physical condition of the Properties, at Buyer’s sole cost and expense prior to the expiration of the Due Diligence Period. Buyer’s approval or disapproval of the Properties shall be as to all the real properties that comprise the Properties and Buyer shall not have the right to selectively approve or disapprove individual Constituent Properties that comprise the Properties.

Buyer shall have the right, at Buyer’s sole cost and expense, to commence Buyer’s physical inspection of the Properties as of April 25, 2014 (pursuant to that certain Access License Agreement dated April 25, 2014, which agreement shall be superseded by this Agreement upon full execution hereof), upon one (1) business day’s prior written notice to Sellers in accordance with Section 3.4.1 of this Agreement. Sellers acknowledge that they have received written evidence that Buyer has procured the insurance required by Section 3.4.2 of this Agreement.

Buyer acknowledges that, prior to the expiration of the Due Diligence Period: (a) Buyer will have conducted such surveys and inspections; and (b) Buyer will have had adequate opportunity to make such inspections of the Properties (including inspections for zoning, land use, environmental and other laws, regulations and restrictions, engineering and environmental reports, all leases, licenses agreements and service contracts, sewer/water conditions, utility service information, access information, assessments and city fees and developmental conditions and approvals) as Buyer, in its sole discretion, deems necessary or advisable as a condition precedent to Buyer’s purchase of the Properties and to determine the physical, environmental and land use characteristics of the Properties and their suitability for Buyer’s intended use.

3.3.2 Title Policy. The Title Company’s commitment to issue or the issuance of the “Buyer’s Title Policy” (as hereinafter defined) complying with the requirements of Section 3.8.3 below (or an ALTA Policy if Buyer elects to obtain an ALTA Policy as provided in Section 3.8.4) prior to the expiration of the Due Diligence Period with respect to each Constituent Property. Buyer agrees

5


 

that its receipt of the Buyer’s Title Policy will fully satisfy any express or implied warranty by Sellers as to the condition of encumbrances, covenants, reservations, restrictions, rights of way or easements, which constitute a defect in title, Buyer shall look solely to the remedies available under Buyer’s Title Policy, and Sellers shall have no responsibility or liability for any of the foregoing.

3.3.3 Due Diligence Items. Buyer shall review for approval all Due Diligence Items (as defined below) within the Due Diligence Period. Within five (5) business days following the Effective Date, Sellers shall make available to Buyer, for Buyer’s review, electronic copies of the items listed on Exhibit B attached hereto and incorporated herein by this reference (“Due Diligence Items”). Notwithstanding the foregoing, the Due Diligence Items will not include, and no Seller has any duty to provide or disclose to Buyer, the following: (a) anything that would disclose a Seller’s cost of acquisition of any Constituent Property or the cost (including soft costs) of construction of any improvements on any Constituent Property, any estimates of costs to repair, replace, remediate or maintain each Constituent Property, or any prospective capital budgets for any Constituent Property; (b) those reports, presentations, summaries and the like prepared by or for a Seller (except for such documents and materials set forth on Exhibit B-1 through B-7, inclusive) in connection with its consideration of the acquisition of any Constituent Property or construction of the improvements, including without limitation, some historical environmental reports and the property conditions inspection reports; (c) any proposals, letters of intent, draft contracts or the like prepared by or for other prospective purchasers of any Constituent Property or any part thereof; (d) a Seller’s internal memoranda, attorney-client privileged materials, and internal and external appraisals; (e) any information which is the subject of a written confidentiality agreement between a Seller and a third party; (f) organizational, financial and other documents relating to a Seller or its affiliates; or (g) any intellectual property or other proprietary information of a Seller. Upon the termination of this Agreement prior to the Close of Escrow, Buyer shall return to Sellers all Due Diligence Items relating to the Properties together with copies of any final tests or studies prepared by or on behalf of Buyer with respect to the Properties; such delivery to be without any warranty or representation on Buyer’s part; except that Buyer may retain copies for its files to the extent it is legally obligated to do so for compliance purposes.

3.3.4 PLL Policy for Westcore Distribution Property. Westcore Distribution shall use commercially reasonable efforts to cause its existing PLL policy with respect to the Distribution Property to be assigned to Buyer at Closing, jointly with any lender designated by Buyer. The actual assignment of said PLL policy to Buyer, together with Buyer’s lender if requested, will be a condition to Buyer’s obligation to proceed to the Closing and, if not satisfied, will allow Buyer to terminate this Agreement as the Westcore Distribution Property only.

3.3.5 Estoppel Certificates and SNDAs. Buyer shall have received the “Estoppel Certificates” and “SNDAs” (as each such term is hereinafter defined) satisfying the provisions of Section 3.15 and Section 3.16, respectively.

3.3.6 Seller Representations and Warranties. All representations and warranties of Sellers contained in this Agreement shall be true and correct in all material respects as of the date made and as of the Close of Escrow with the same effect as though such representations and warranties were made at and as of the Close of Escrow.

3.3.7 Covenants. Each Seller shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed by such Seller prior to or at the Close of Escrow.

3.4 Buyer’s Covenants. In connection with performing its due diligence inspections, Buyer covenants as follows:

3.4.1 Buyer’s Inspection. Buyer’s physical inspection of the Properties shall be conducted during normal business hours at times mutually acceptable to Buyer and Sellers, and Sellers have the right to accompany Buyer during its inspections. Buyer shall perform all inspections on the Properties subject to the rights of tenants under Leases and so as not to cause any damage, loss, cost, or expense to, or claims against, Sellers or the Properties. Buyer shall, at its sole cost and expense, promptly repair or cause to be repaired any damage to the Properties and restore the Properties to their prior condition, to the extent caused by the entry onto the Properties by Buyer to conduct any inspections of or testing on the Properties. No invasive testing, drilling or boring shall be performed without Sellers’ prior written approval, which approval may be granted or withheld in Sellers’ sole and absolute discretion.

3.4.2 Insurance. Prior to any entry onto or commencement of any investigative activities on the Properties and prior to allowing any architects, contractors or other parties access to the Properties, Buyer shall obtain, or cause its consultants to obtain, at Buyer’s (or its consultants’) sole cost and expense, a policy of commercial general liability insurance at least as broad as current ISO form on an “occurrence basis” covering any and all liability of Buyer and Sellers with respect to or arising out of any investigative activities. Such policy of insurance shall be kept and maintained in force during the term of this Agreement and so long thereafter as necessary to cover any claims of damages suffered by persons or property resulting from any acts or omissions of Buyer, Buyer’s employees, agents, contractors, suppliers, consultants or other related parties. Such policy of insurance shall have liability limits of not less than Two Million Dollars ($2,000,000.00) per occurrence, if policies are maintained by Buyer, and One Million Dollars ($1,000,000) per occurrence, if policies are maintained by Buyer’s vendors, in each case for bodily injury, personal injury and property damage liability and shall name each Seller as an additional insured. Buyer shall provide Sellers a certificate and all applicable endorsements evidencing such insurance prior to any entry by Buyer or any consultant onto the Properties.

6


 

3.4.3 Indemnity. Buyer shall protect, indemnify, defend and hold the Properties, Sellers and Sellers’ partners, managers, members, officers, directors, shareholders, participants, affiliates, employees, representatives, invitees, agents and contractors (collectively, “Seller Parties”) free and harmless from and against any and all claims, damages, liens, stop notices, liabilities, losses, costs and expenses, including reasonable attorneys’ fees and court costs (collectively, “Claims”), caused by Buyer’s inspection and testing of the Properties, including, without limitation, repairing any and all damage to any portion of the Properties, to the extent arising out of or related (directly or indirectly) to Buyer’s conducting such inspections, surveys, tests, and studies, except that the foregoing shall not encompass pre-existing conditions or a Seller’s negligence or willful misconduct, except to the extent exacerbated by Buyer. Buyer shall keep the Properties free and clear of any mechanics’ liens or materialmen’s liens related to Buyer’s right of inspection and related activities. Buyer’s indemnification obligations set forth herein shall survive the Close of Escrow and shall not be merged with the “Deeds” (as hereinafter defined), and shall survive the termination of this Agreement.

3.4.4 No Representation or Warranty by Sellers. It is understood by Buyer that, except as otherwise provided in Section 7 below, no Seller makes any representation or warranty, express or implied, as to the accuracy or completeness of any information contained in any Seller’s files or in the documents produced by a Seller, including, without limitation, the Due Diligence Items and any environmental audit or report or the source(s) thereof. Buyer further acknowledges that some, if not all, of the Due Diligence Items were prepared by third parties other than Sellers. Each Seller expressly disclaims any and all liability for representations or warranties, express or implied, statements of fact, and other matters contained in such information, or for omissions from the Due Diligence Items, or in any other written or oral communications transmitted or made available to Buyer. Buyer shall rely solely upon its own investigation with respect to the Properties, including, without limitation, each Constituent Property’s physical, environmental or economic condition, compliance or lack of compliance with any ordinance, order, permit or regulation or any other matter relating thereto.

3.4.5 Communications with Third Parties. Buyer (including Buyer’s employees, agents and contractors) shall not contact or have any discussions with any tenants at the Properties without first giving Sellers reasonable prior written notice and a reasonable opportunity to be present or participate by teleconference at such contact or discussion. Buyer shall not contact any City, County or any other governmental agencies without first giving Sellers reasonable prior written notice and a reasonable opportunity to be present at such contact or discussions other than ordinary contact normally associated with due diligence examinations (i.e., to confirm existing facts in respect to the Properties and to ascertain whether Buyer’s development plans for the Properties are feasible); provided, that, Buyer shall not file any application for a change to the zoning, permitting or other aspect of any Constituent Property before the Close of Escrow without Sellers’ prior written approval, which Seller may withhold in its sole and absolute discretion.

3.5 Approval Procedure. Buyer shall notify Sellers of Buyer’s disapproval, if at all, of the matters described in Sections 3.3.1, 3.3.2 or 3.3.3 by written notice delivered to Sellers by the expiration of the Due Diligence Period. Buyer’s failure to provide the “Termination Notice” (as hereinafter defined) disapproving any of the matters described in Sections 3.3.1, 3.3.2 or 3.3.3 by the expiration of the Due Diligence Period in the manner described shall be deemed Buyer’s approval of such matter and waiver of Buyer’s right to terminate this Agreement based thereon. In no event shall Buyer have the right to (a) terminate this Agreement as to one or more, but not all, of the Constituent Properties that comprise the Real Property, or (b) disapprove any such item after the expiration of the Due Diligence Period.

3.6 Termination. This Agreement shall automatically terminate if Buyer notifies Sellers in writing prior to the expiration of the Due Diligence Period that Buyer has decided not to proceed with the purchase of the Properties for any reason (“Termination Notice”). Any Termination Notice given with respect to one or more of the Constituent Properties shall be deemed to be given for all of the Constituent Properties that comprise the Real Property. Upon termination of this Agreement pursuant to this Section 3.6: (a) each party shall promptly execute and deliver to Escrow Holder such documents as Escrow Holder may reasonably require to evidence such termination; (b) Escrow Holder shall return all documents to the respective parties who delivered such documents to Escrow; (c) Escrow Holder shall return the Deposit to Buyer (less the Independent Consideration); (d) Buyer and Sellers shall each pay one-half (12) of Escrow Holder’s title and escrow cancellation fees, if any; (e) Buyer shall return to Sellers all Due Diligence Items in Buyer’s possession relating to the Properties as provided in Section 3.3.3 above, together with copies of any final tests or studies prepared by or on behalf of Buyer and in Buyer’s actual possession with respect to the Properties; and (f) the respective obligations of Buyer and Sellers under this Agreement shall terminate; provided, however, notwithstanding the foregoing, Buyer’s indemnity obligations under Sections 3.4.3 and 15.16 shall survive any such termination of this Agreement, and the termination of this Agreement shall not release any other indemnity obligations of Buyer. Buyer’s failure to provide the Termination Notice prior to the expiration of the Due Diligence Period shall be deemed Buyer’s election to proceed with the purchase of the Properties pursuant to the provisions of this Agreement and a waiver of any right to terminate or claim any breach or default or failure of condition by reason of any matters known, delivered to, or made available to Buyer (as part of the Due Diligence Items) prior to the expiration of the Due Diligence Period. For purposes of this Agreement, the phrases “known to Buyer”, “to Buyer’s knowledge”, “to the Buyer’s knowledge” or similar phrase shall mean the current actual knowledge of Howard Schwimmer or Patrick Schlehuber (as distinguished from constructive, imputed or other implied knowledge), without investigation or inquiry or a duty to investigate or inquire. In no event shall Messrs. Schwimmer or Schlehuber or any other employee, officer, manager, or member of Buyer have any personal liability with respect to this Agreement or the representations or warranties contained herein.

7


 

It is understood by Sellers that, except as otherwise provided Section 8 below, Buyer makes no representation or warranty, express or implied, as to the accuracy or completeness of any information contained in any the diligence or other materials provided by Buyer. Each Seller further acknowledges that some, if not all, of said diligence or materials were prepared by third parties other than Buyer, and that Buyer expressly disclaims any and all liability for representations or warranties, express or implied, statements of fact, and other matters contained in such information, or for omissions from same, or in any other written or oral communications transmitted or made available to Sellers. Additionally, and notwithstanding anything to the contrary contained in this Agreement, in no event will Buyer have any duty to provide or disclose to Sellers, the following: (a) those reports, presentations, summaries and the like prepared by Buyer (as opposed to by any third party) in connection with its consideration of the acquisition of any Constituent Property; (b) any proposals, letters of intent, draft contracts or the like prepared by or for other prospective purchasers of any Constituent Property or any part thereof; (c) Buyer’s internal memoranda, attorney-client privileged materials, and internal and external appraisals; (d) any information which is the subject of a written confidentiality agreement between Buyer and a third party.

3.7 Sellers’ Conditions to Closing. The obligations of Sellers to consummate the transactions provided for herein are subject to and contingent upon the satisfaction of the following conditions or the waiver of same by Sellers in writing:

3.7.1 Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects as of the date made and as of the Close of Escrow with the same effect as though such representations and warranties were made at and as of the Close of Escrow.

3.7.2 Covenants. Buyer shall have performed and satisfied in all material respects all agreements and covenants required hereby to be performed by Buyer prior to or at the Close of Escrow.

3.8 Title and Title Insurance.

3.8.1 Deed. On the Closing Date, each Seller shall convey its interest in the applicable Constituent Property to Buyer by grant deed in the form of Exhibit C attached hereto and incorporated herein by this reference (collectively, the “Deeds”).

3.8.2 Title Review; Survey. Buyer and Sellers acknowledge that a copy of a preliminary title report with respect to each Constituent Property issued by the Title Company (each, a “Preliminary Report”) has been made available to Buyer and Sellers with hyperlinks to the underlying exceptions for each Preliminary Report. Buyer shall have until 5:00 p.m. on Wednesday, May 21 (the “Title Review Period”) to notify Sellers in writing of those exceptions in each Preliminary Report and any survey matters that Buyer disapproves with respect to each Constituent Party (“Buyer’s Title Objection Notice”). If Buyer fails to deliver such written notice of any exception or “Survey” (as hereinafter defined) matter disapproved by Buyer prior to the expiration of the Title Review Period, then such items shall be deemed approved by Buyer. If Buyer notifies Sellers of any exceptions or Survey matters it disapproves in the Buyer’s Title Objection Notice, then Sellers shall have until 5:00 p.m. on Friday, May 23 to advise Buyer in writing of any such exceptions or Survey matters that Sellers agree to remove at or prior to the Close of Escrow. Sellers’ failure to deliver a written response to Buyer’s Title Objection Notice shall be deemed to be Sellers’ determination not to remove or cure any of Buyer’s title objections. Within one (1) business day after receipt of Sellers’ response (or deemed response) that it is not removing exceptions or Survey matters disapproved by Buyer, Buyer may (a) by delivering the Termination Notice, terminate this Agreement, or (b) waive Buyer’s objections to such disapproved exceptions. Buyer’s failure to timely deliver the Termination Notice shall be deemed to be Buyer’s approval of all title matters. Buyer acknowledges that it may obtain at its sole cost and expense current 2014 surveys of the Properties complying with ALTA/ACSM Minimum Standards in respect to each Constituent Property (each, a “Survey”, and collectively, the “Surveys”). In the event the Title Company delivers written notice to Buyer after Buyer’s delivery of Buyer’s Title Objection Notice of any new title issue in connection with the Preliminary Report, Buyer shall have five (5) days after receipt of such notice (but not later than the Closing Date and in any event prior to Closing) to approve or disapprove such new title exception, in Buyer’s sole and absolute discretion, by written notice to Sellers, and the foregoing provisions of this Section 3.8.2 shall apply as if such additional title objection notice were the Buyer’s original title objection notice.

3.8.3 Buyer’s Title Policy. At the Close of Escrow, Escrow Holder shall cause the Title Company to issue to Buyer in respect to each Constituent Property an American Land Title Association (“ALTA”) Standard Coverage owner’s policy of title insurance with western regional exception, also commonly known as the CLTA Owner’s Policy of Title Insurance (each, a “Buyer’s Title Policy”) which:

(a)

shall be written with liability in the amount of the Allocated Purchase Price; and

(b)

shall insure title to the Constituent Property, to be vested in Buyer, subject only to the “Permitted Exceptions” (as hereinafter defined).

3.8.4 ALTA Policy. Buyer shall have the right, at Buyer’s sole cost and expense, to procure an ALTA Extended Coverage Owner’s Policy of Title Insurance (2006 ALTA Owner’s Policy Form) (each, an “ALTA Policy”) in respect to each Constituent Property as long as (a) Buyer obtains a written commitment with attached pro forma policy from the Title Company prior to the expiration of the Due Diligence Period for each ALTA Policy, and (b) the issuance of any ALTA Policy does not delay or extend the Closing Date.

8


 

3.8.5 Permitted Exceptions. Except as provided in the next sentence, the following are referred to as “Permitted Exceptions”: (a) all matters described in each Preliminary Report and in this Section 3.8.5 which are approved or deemed approved by Buyer under Section 3.8.2; (b) all title conditions created by Buyer or resulting from the acts of Buyer or its agents or representatives; (c) the Leases; and (d) all printed exceptions in the Buyer’s Title Policy or the ALTA Policy not objected to by Buyer by or before the expiration of the Title Review Period, as applicable. Permitted Exceptions do not include any deed of trust, judgment lien or delinquent tax or assessment lien which results solely from a Seller’s voluntary actions or omissions. Except for those items which Sellers agree to cure or remove under Section 3.8.2, the removal or elimination of any title exception reflected in the Preliminary Report shall be a matter solely between Buyer and Title Company, and after the end of the Due Diligence Period, Buyer has no right to terminate or cancel this Agreement or delay the Closing Date in order to obtain the title endorsements or elimination of exceptions that Buyer may desire.

3.8.6 Intentionally Omitted.

3.8.7 Monetary Exceptions. Notwithstanding anything to the contrary, (1) any deed of trust and other monetary lien or encumbrance which results from a recorded agreement executed by a Seller affecting any of the Constituent Properties, and (2) all real estate taxes and assessments due and payable in respect to any Constituent Property for any period prior to the Closing, whether or not timely objected to by Buyer, shall not be Permitted Exceptions and shall be removed, endorsed over or terminated, as applicable, by Sellers at Sellers’ sole cost and expense at or before Closing.

3.9 Closing Costs and Charges.

3.9.1 Sellers’ Costs. Sellers shall pay (a) one-half (12) of Escrow Holder’s fees; (b) all County and City transfer taxes payable in connection with the transfer of the each Constituent Property; (c) the cost of Buyer’s Title Policy plus the cost of any endorsements or other modifications required to effectuate any cure election expressly made by Sellers pursuant to Section 3.8.2 above; (d) Sellers’ share of prorations as determined in accordance with Section 3.13; and (e) Sellers’ legal fees and costs.

3.9.2 Buyer’s Costs. Buyer shall pay (a) one-half (12) of Escrow Holder’s fees; (b) the additional premium for obtaining an ALTA Policy and the cost of any survey or other item needed for such policy; (c) the cost of all endorsements to Buyer’s Title Policy, other than endorsements to be charged to Sellers pursuant to Section 3.9; (d) the cost for any lender’s title policy or endorsements; (e) Buyer’s share of prorations as determined in accordance with Section 3.13; (f) all document recording charges; (g) all of Buyer’s due diligence costs and expenses; and (h) Buyer’s legal fees and costs.

3.9.3 Other Costs. All other costs, if any, shall be apportioned and separately determined with respect to each Constituent Property in the customary manner for real property transactions in the County where each applicable Real Property is located.

3.10 Deposit of Documents and Funds by Sellers. Not later than one (1) business day prior to the Closing Date, Sellers shall deposit the following items into Escrow, each of which shall be duly executed and acknowledged by a Seller where appropriate:

3.10.1 A Deed relating to each Constituent Property;

3.10.2 A bill of sale in the form of Exhibit E attached hereto and incorporated herein by this reference (each, a “Bill of Sale”) relating to each Constituent Property;

3.10.3 Two (2) counterparts of an assignment and assumption relating to each Constituent Property, duly executed by each Seller, assigning to Buyer, without warranty, all of each Seller’s right, title, and interest in and to all Intangible Property and Contracts related to such Constituent Property, all to the extent transferable by such Seller, in the form of Exhibit F attached hereto and incorporated herein by this reference (each, a “General Assignment”);

3.10.4 To the extent not already delivered to Buyer by Sellers, the originals of any Estoppel Certificates and SNDAs;

3.10.5 Notices to each of the tenants under the Leases (“Tenant Notices”), duly executed by each Seller in the form of Exhibit D, addressed to each of such tenants;

3.10.6 An affidavit executed by each Seller to the effect that such Seller is not a “foreign person” within the meaning of Internal Revenue Code Section 1445 (“Certification”) in the form of Exhibit G attached hereto and incorporated herein by this reference and an executed California Real Estate Withholding Exemption Form 593-C (“Form 593”);

3.10.7 A customary gap affidavit reasonably acceptable to Escrow Holder so as to allow the Close of Escrow to occur on a gap basis; and

3.10.8 All other documents as may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement.

3.11 Deposit of Documents and Funds by Buyer. Not later than one (1) business day prior to the Closing Date, Buyer shall deposit the following items into Escrow:

3.11.1 The Cash Balance;

3.11.2 Two (2) executed counterparts of each General Assignment;

9


 

3.11.3 A duly executed preliminary change of ownership report for each Constituent Property; and

3.11.4 All other funds and documents as may reasonably be required by Escrow Holder to close the Escrow in accordance with this Agreement.

3.12 Delivery of Documents and Funds at Closing. Provided that all conditions to closing set forth in this Agreement have been satisfied or, as to any condition not satisfied, waived by the party intended to be benefited thereby, on the Closing Date Escrow Holder shall conduct the Closing by recording or distributing the following documents and funds in the following manner:

3.12.1 Recorded Documents. Record the Deeds in the Official Records of such County in which such Real Property is located;

3.12.2 Buyer’s Documents. Deliver to Buyer: (a) each Buyer’s Title Policy; (b) each original Bill of Sale; (c) the original Certification; (d) the original Form 593; (e) a fully executed original of each General Assignment; and (f) to the extent not already delivered to Buyer by Seller, the executed copies of any Estoppel Certificates;

3.12.3 Purchase Price. Deliver to Sellers the Purchase Price and such other funds, if any, as may be due to Sellers by reason of credits under this Agreement, less all items chargeable to Sellers under this Agreement, and a fully executed original of each General Assignment; and

3.12.4 Information Reports. The “Reporting Person” within the meaning of Section 1.6045-4(e)(5) of the Regulations (the “Regulations”) of the Internal Revenue Code (the “Code”), as may be amended from time to time with respect to the transactions contemplated by this Agreement shall be Escrow Holder. It is agreed that Escrow Holder is an eligible person under Section 1.6045-4(e)(5)(ii) of the Regulations. Escrow Holder hereby agrees to be responsible for complying with the reporting and other requirements of Section 6045(e) of the Code. Pursuant to the Regulations, the address for the transferor and transferee are as set forth for Sellers and Buyer in this Agreement, and the identifying information regarding the real estate transferred is the legal description for the Properties set forth in this Agreement. Escrow Holder agrees to file the form required by the Regulations between the end of the calendar year in which the Closing Date occurs and February 28 of the following calendar year. Buyer and Sellers agree to cooperate with Escrow Holder and with each other in completing any report and/or other information required to be delivered to the Internal Revenue Service pursuant to Section 6045(e) of the Code regarding the real estate sales transaction contemplated by this Agreement, including without limitation, Internal Revenue Service Form 1099-S as such may be hereafter modified or amended by the Internal Revenue Service, or as may be required pursuant to any Regulation now or hereafter promulgated by the Treasury Department with respect thereto.

3.13 Prorations and Adjustments. The following shall be prorated and adjusted between Sellers and Buyer as of the Close of Escrow except as otherwise specified:

3.13.1 Rents. Rents shall be prorated as of the Close of Escrow and Buyer’s share of such rents shall be credited to Buyer if such rents have been collected by Sellers as of the business day prior to the Close of Escrow. Sellers shall have no right to continue to pursue the collection of Sellers’ share of rents that have not been collected by the Close of Escrow, but Buyer will use commercially reasonable efforts to collect such amounts for a period of six (6) months after the Closing; provided that Buyer shall not be required to resort to litigation, declare any tenant in default or incur any material, out-of-pocket expenses in connection therewith. Any rents collected by Buyer from a tenant after the Close of Escrow will apply first to rents which accrue from that tenant after the Close of Escrow and then to the rents for that tenant which have accrued for that tenant prior to the Close of Escrow. If Buyer receives rents from a tenant after the Close of Escrow which relate to the period prior to the Close of Escrow and to which a Seller is entitled under this Section 3.13.1, Buyer shall promptly remit to Sellers all of such amounts, net of Buyer’s actual, documented and reasonable costs and expenses incurred in collection. Sellers shall promptly remit to Buyer all rents received by Sellers after the Close of Escrow, which Buyer shall thereafter allocate between Buyer and a Seller in accordance with the provisions of this Section. Rents shall be prorated based on the day of the month in which the Close of Escrow occurs and the actual number of days in that month. All refundable tenant security deposits collected or held and not applied by a Seller (“Security Deposits”) shall be credited to Buyer at Closing. As of the Closing, Buyer shall assume Sellers’ obligations related to the Security Deposits, but only to the extent they are credited to Buyer.

3.13.2 Preparation of CAM Proration Statement. Sellers shall provide a statement (the “CAM Proration Statement”) of “CAM Expenses” (as hereinafter defined) incurred for the current year and “CAM Collections” (as hereinafter defined) for the current year, together with reasonably detailed back-up consistent with Sellers’ operating procedures). The CAM Proration Statement shall show such charges and collections as of the date which is through the last full calendar month prior to the Close of Escrow (the “Statement Date”) or such other date as the parties may agree. If the CAM Expenses incurred for the current year are less than the CAM Collections for the current year, then Buyer shall receive a credit for the difference. If the CAM Expenses incurred for the current year are greater than the CAM Collections for the current year, then Sellers shall receive a credit for the difference. The CAM Proration Statement shall show the credit to Buyer or Sellers and a per diem amount which shall be applied through the Close of Escrow. Buyer shall, after the Close of Escrow, assume all responsibility for the collection of common area maintenance charges, refunds of overpayments and reconciliations as provided in the leases for the tenants for the current year. Except as provided in Section 3.13.6 the proration of CAM Expenses and CAM Collections shall not be subject to adjustment after the Close of Escrow.

10


 

(a) CAM Collections. The term “CAM Collections” shall mean those common area maintenance charges which have been actually received by a Seller from tenants for the calendar year through the month prior to the Statement Date, and which shall be shown on the CAM Proration Statement. All CAM Collections for the month in which the Statement Date occurs shall be prorated as of the Statement Date based on the actual number of days in the month in which the Statement Date occurs.

(b) CAM Expenses. The term “CAM Expenses” shall mean all payments actually made by a Seller for common area maintenance charges which are charged to or payable by tenants under applicable Leases, and which shall be shown on the CAM Proration Statement. Unpaid invoices and other amounts due for CAM Expenses shall be prorated as of the Statement Date based on a 365-day year, Sellers will not receive a credit for any CAM Expenses as to which there has not been a corresponding CAM Collection.

(c) Expense Caps. If any tenant is subject to a cap on its expense reimbursement, then the CAM Proration Statement shall cap the CAM Collections from such tenant based on the prorated amount of the expense cap as provided herein. If the expense cap is a fixed dollar amount, then the cap shall be prorated as of the Statement Date based on a 365 day year. If the expense cap is a percentage, then the cap shall be prorated based on the following formula: Prorated cap percentage = [(1 + cap percentage expressed as a decimal) ^ (x/365)] –1. Where X is the number of days from January 1 to the Statement Date.

3.13.3 Operating Expenses. To the extent possible, all utilities, services and any assumed contracts shall be put into Buyer’s name as of the Close of Escrow so that no prorations are necessary for such items. To the extent that this is not possible or does not occur, then subsequent to the Close of Escrow such items shall be prorated as of the Close of Escrow based on the actual number of days in that month.

3.13.4 Taxes. All real property taxes and assessments shall be prorated as of the Close of Escrow. Personal property taxes shall not be pro-rated, but shall instead be paid in full by Sellers at or prior to the Closing (other than personal property taxes which the taxing authority bills directly to tenants under the Leases).

3.13.5 Leasing Costs. Sellers shall be responsible for any and all (i) leasing commissions and other leasing costs (including, without limitation, tenant improvement allowances and other concessions) due and payable by the landlord or otherwise accruing to the benefit of a tenant or broker with respect to Leases executed prior to the Effective Date (other than any renewal or expansion of any such Leases after the Effective Date) and (ii) free rent and other concessions owing under Leases executed prior to the Effective Date, even if such free rent and other concessions are owing after the Effective Date (other than any free rent and other concessions triggered by any renewal or expansion of any Leases after the Effective Date). Buyer shall be responsible for all leasing commissions and other leasing costs (including, without limitation, tenant improvement allowances, free rent and other concessions) attributable to any new leases entered into after the Effective Date, or the renewal or expansion of any existing Lease (a) entered after the Effective Date or (b) becomes effective by reason of a tenant’s exercise of an option or other right after the Effective Date to the extent set forth in the applicable Lease or otherwise disclosed to Buyer prior to the expiration of the Due Diligence Period, and/or, except as provided above in this Section 3.13.5, due and payable with respect to any existing Lease after the Closing; provided, however, that notwithstanding the foregoing, Buyer shall not be responsible for any such leasing commissions and/or other leasing costs for new leases, renewals or expansions entered into after the Effective Date which were not consented to (or deemed consented to) by Buyer as provided in this Agreement (in which event Seller shall be responsible for same). Any new lease and any modification or amendment to an existing Lease entered into by a Seller after the Effective Date shall be subject to the written approval of Buyer, which approval shall not be unreasonably withheld, conditioned or delayed.

3.13.6 Basis of Proration/Adjustments. For purposes of calculating prorations, Buyer shall be deemed to be vested with title to the Properties, and, therefore, entitled to the income therefrom and responsible for the expenses thereof for the entire day upon which the Close of Escrow occurs. All prorations shall be based on a 365-day year and the actual number of days in the month. All prorations set forth herein shall be subject to adjustment outside of Escrow within ninety (90) days after the Close of Escrow to the extent new information becomes available to Buyer or Sellers. The final prorations shall be determined within ninety (90) days after the Close of Escrow (or within ninety (90) days after the calendar year 2014 for CAM Collections and CAM Expenses) and this Section 3.13.6 shall survive the Close of Escrow until the later of the date (a) such prorations are finally determined, and (b) that all settlement payments consistent with such final prorations are made between the parties hereto. Prorations and adjustments under this Section shall be determined separately with respect to each Constituent Property.

3.13.7 Service Contracts. Other than any service contracts that Buyer expressly elects to assume in writing prior to the expiration of the Due Diligence Period, Sellers shall, at their sole cost and expense, terminate all service contracts at each Constituent Property. Notwithstanding the foregoing, if a service contract at such Constituent Property covers other property owned by such Seller, such contract shall not be assumed by Buyer, and such Seller shall cancel the portion of such contract affecting such Constituent Property.

3.14 Closing Statements. Prior to the Closing Date, Sellers and Buyer shall deposit with Escrow Holder executed pro forma closing statements consistent with this Agreement in the form required by Escrow Holder. At least two (2) business days prior to the Closing Date, Buyer and Sellers shall cooperate with each other and Escrow Holder to cause Escrow Holder to deliver drafts of the closing statements to Buyer and Sellers for review and comment so that the final pro forma closing statements can be executed by the Closing Date as required hereinabove.

11


 

3.15 Estoppel Certificates.

3.15.1 Sellers shall use commercially reasonable efforts to obtain and deliver to Buyer ten (10) days prior to the Closing an estoppel certificate executed by, and dated no earlier than thirty (30) days before the Closing, (i) each of the tenants (the “Required Tenants”) listed on Exhibit I-1, and (ii) a sufficient number of other tenants at the Properties so that estoppel certificates shall have been received pursuant to clauses (i) and (ii) above with respect to tenants leasing at least eighty percent (80%) of the rentable area of each Constituent Property that is actually leased as of the Effective Date. Said certificates shall be substantially in the form of the Estoppel Certificate attached hereto as Exhibit I-2, and incorporated herein by this reference, or in the form prescribed by the terms of the Leases, as applicable (each, an “Estoppel Certificate” and, collectively, the “Estoppel Certificates”). Sellers’ delivery of the Estoppel Certificates pursuant to this Section 3.15 is a condition to Buyer’s obligation to close Escrow. Sellers’ sole obligation with respect to obtaining such Estoppel Certificates is limited to each Seller exercising commercially reasonable efforts to obtain same prior to the Closing, and no Seller shall be in default or breach under this Agreement if, after exercising commercially reasonable efforts to obtain any or all the Estoppel Certificates, Sellers fail to obtain all the required Estoppel Certificates. Notwithstanding anything to the contrary, if an Estoppel Certificate is received from a tenant prior to the expiration of the Due Diligence Period and Buyer fails to deliver a Termination Notice pursuant to Section 3.6, then any such Estoppel Certificate so received shall be deemed acceptable to Buyer. As used in this Section 3.15 and Section 3.16 below, “commercially reasonable efforts” shall not include any obligation to institute or threaten legal proceedings, to declare or threaten to declare any person in default, to expend any monies or to cause any other person to do any of the same.

3.15.2 Notwithstanding anything to the contrary herein, (1) in the event a Seller is unable to obtain an Estoppel Certificate from any particular tenant (other than a Required Tenant) under any Lease, such Seller shall have the right (but not the obligation) to deliver to Buyer on the Closing Date a certificate (the “Seller Tenant Certificate”) executed by Seller, substantially in the form of the Estoppel Certificate attached hereto as Exhibit I-3, and incorporated herein by this reference (conformed to be executed by Seller, rather than the subject tenant), certifying that the information set forth therein with respect to the Lease for such tenant, to the “knowledge of Seller” (as defined in Section 7), is correct in all material respects, and in such event, for up to but no more than twenty percent (20%) of the rentable square footage of each Constituent Property, each such Seller shall be deemed to have delivered an Estoppel Certificate with respect to such tenant for purposes of satisfying the condition under this Section 3.15. Any Seller Tenant Certificate shall be subject to the limitations set forth in Section 14.2.3 of this Agreement. Sellers shall be released from any liability with respect to any Seller Tenant Certificate upon the sooner to occur of expiration of the Survival Period (as hereinafter defined) and the delivery to Buyer of an Estoppel Certificate from the tenant for which such Seller has delivered such Seller Tenant Certificate (provided that, with respect to facts or circumstances contained in a tenant executed Estoppel Certificate which differ from the Seller Tenant Certificate executed by Seller, the tenant executed Estoppel Certificate shall control).

3.15.3 Estoppel thresholds set forth above shall be determined separately with respect to each Constituent Property.

3.16 SNDAs. If required by Buyer’s lender (as evidenced by a written notice to Sellers from Buyer’s lender), Sellers shall use commercially reasonable efforts to obtain and deliver to Buyer, not later than ten (10) days prior to the Closing, a subordination, non-disturbance and attornment agreement originally executed and acknowledged (in recordable form) in the form attached hereto as Exhibit K, and incorporated herein by this reference, subject only to those modifications that are reasonably acceptable to Buyer’s lender (each, a “SNDA” and, collectively, the “SNDAs”), from (i) each of the Required Tenants, and (ii) a sufficient number of other tenants at the Properties so that Sellers shall have requested an SNDA pursuant to clauses (i) and (ii) above with respect to tenants leasing at least eighty percent (80%) of the rentable area of each Constituent Property that is actually leased as of the Effective Date. Notwithstanding anything to the contrary, Sellers’ delivery of the SNDAs pursuant to this Section 3.16 shall not be a condition to Buyer’s obligation to close Escrow. Sellers’ sole obligation with respect to obtaining such SNDAs is limited to each Seller exercising commercially reasonable efforts to obtain same prior to the Closing, and no Seller shall be in default or breach under this Agreement if, after exercising commercially reasonable efforts to obtain any or all the SNDAs, Sellers fail to obtain all the required SNDAs.

4. Improvement Assessment Liens; Subdivision and Development Bonds; Improvement Obligations.

4.1 Assessment Liens. If and to the extent there exist any improvement assessment liens, Mello Roos bond payments, or other similar assessments which encumber any Constituent Property and are shown on the secured tax roll, other public records or the Preliminary Report for the applicable Constituent Property, Buyer shall assume the obligation to pay any and all future installments of such bonds or assessment liens affecting such Constituent Property which accrue from and after the Close of Escrow. Subject to the foregoing, all such Mello Roos bond payments or similar assessment liens shall be prorated in accordance with Section 3.13 above and any past due and unpaid installments of such bonds or assessment liens shall be paid by Sellers. Sellers shall have no obligation to pay the entire principal amount of any of such assessments or bonds.

4.2 Subdivision and Development Bonds. If and to the extent there exists in favor of governmental bodies or agencies or other third parties improvement bonds (“Bonds”) which are disclosed in public records or the Preliminary Report for a particular Constituent Property and insure the completion of off-site and on-site public improvements relating to a Constituent Property, the payment of all labor and materials relating to such improvements or the performance of the parties constructing such improvements, Buyer shall provide replacement bonds for the Bonds and Buyer shall be obligated to perform as required by the Bonds and/or any replacement bonds and to perform any and all work required to be performed by the obligee(s) thereunder on or after the Close of

12


 

Escrow, and shall protect, indemnify, defend, and hold Sellers and Seller Parties harmless from and against, any claims which may be made by the obligee(s) or the bonding company for recovery of the Bonds and/or any replacement bonds or the completion of such work required to be performed on or after the Close of Escrow. Sellers shall protect, indemnify and defend and hold Buyer harmless from and against, any claims which may be made by the obligee(s) or the bonding company for recovery of the Bonds and/or any replacement bonds or the completion of work required to be performed prior to the Close of Escrow.

4.3 Improvement Obligations. In connection with the purchase of the Properties, Buyer shall assume all improvement obligations required by governmental agencies relating to the Real Property required to be performed after the Close of Escrow, but only to the extent such agreements are either of record, set forth in a Preliminary Report or disclosed by Sellers to Buyer, in writing, with respect to the Properties.

4.4 Constituent Property Specific. The obligations of Buyer and Sellers under this Section 4 shall be determined separately with respect to each Constituent Property.

5. Commissions. Buyer and Sellers each represent and warrant to the other that there are no commissions, finder’s fees or brokerage fees arising out of the transactions contemplated by this Agreement other than a commission payable to Broker by Sellers pursuant to a separate written agreement. Buyer shall protect, indemnify, defend, and hold Sellers and Seller Parties harmless from and against any and all Claims in connection with claims for any such commissions, finders’ fees or brokerage fees arising out of Buyer’s conduct or the inaccuracy of the foregoing representation and/or warranty of Buyer. Sellers shall protect, indemnify, defend, and hold Buyer harmless from and against any and all Claims in connection with claims for any such commissions, finders’ fees or brokerage fees arising out of Sellers’ conduct or the inaccuracy of the foregoing representation and/or warranty of Sellers.

6. Damage or Destruction; Condemnation.

6.1 Uniform Act. This Agreement shall be governed by the Uniform Vendor and Buyer Risk Act as set forth in Section 1662 of the California Civil Code (“Act”) as supplemented by this Section 6. For purposes of the Act: (a) a taking, pending taking or threatened taking that is noticed in writing by eminent domain of a portion of the Properties shall be deemed to affect a “Material Part” of a Constituent Property if the Estimated Value of the portion of the subject Constituent Property taken exceeds ten percent (10%) of the Allocated Purchase Price or if the subject event would allow any Required Tenant to terminate its Lease (or if a Required Tenant alleges such right), unless such Required Tenant waives such right in a writing reasonably acceptable to Buyer, and (b) any destruction shall be deemed to affect a “Material Part” if (i) the Estimated Value of repair with respect to an event that is fully covered by Seller’s casualty insurance (other than commercially reasonable deductibles not to exceed Fifty Thousand Dollars ($50,000) exceeds ten percent (10%) of the Allocated Purchase Price, (ii) the Estimated Value of repair with respect to an event that is not fully covered by Seller’s casualty insurance exceeds Fifty Thousand Dollars ($50,000) with respect to such Constituent Property, or (iii) the subject event would allow any Required Tenant to terminate its Lease, unless such Required Tenant waives such right in a writing reasonably acceptable to Buyer.

6.2 Definitions. The phrase “Estimated Value” shall mean an estimate obtained from a M.A.I. appraiser, who has at least five (5) years’ experience evaluating property located in the County where the applicable Constituent Properties are located, similar in nature and function to that of the Properties, selected by the applicable Seller and approved by Buyer, and the phrase “Estimated Cost of Repair” shall mean an estimate obtained from an independent contractor selected by the applicable Seller and approved by Buyer. Buyer shall not unreasonably withhold, condition or delay Buyer’s approval under this Section 6.

6.3 Notice; Credit to Buyer. Sellers shall promptly notify Buyer, in writing, if any portion of a Constituent Property is damaged or destroyed or if all or any portion of the Properties is taken (or a pending taking that is noticed in writing) by eminent domain (in each case regardless of whether the effected part constitutes a Material Part). Buyer shall have the right to terminate this Agreement and receive a refund of the Deposit (less the Independent Consideration) if all or a Material Part of the Properties is destroyed or a Material Part of the Properties is taken by eminent domain. Buyer shall give written notice of Buyer’s election to terminate this Agreement under the Act within five (5) business days after the applicable Seller delivers written notice to Buyer of any damage to or condemnation of the Properties which entitles Buyer to terminate this Agreement. If Buyer does not give such notice, then this Agreement shall remain in full force and effect and there shall be no reduction in the Purchase Price, but the applicable Seller shall, at Close of Escrow, assign to Buyer (a) any insurance proceeds (including, without limitation, rental loss insurance attributable to the period including and after the Close of Escrow) payable with respect to such damage or (b) the entire award payable with respect to such condemnation proceeding, whichever is applicable. Notwithstanding anything to the contrary, in no event shall any Seller have any obligation to repair or replace any such damage or destruction. Notwithstanding the fact that this Agreement is generally an “all Properties or none” deal, Buyer shall have the right to terminate this Agreement as to only the subject Constituent Property to the extent a Material Part of such Constituent Property is destroyed or taken by eminent domain.

6.4 Constituent Property Specific. Casualty and condemnation thresholds, and other determinations under this Section 6, shall be determined separately with respect to each Constituent Property.

7. Sellers’ Representations and Warranties. Each Seller makes the following representations and warranties which shall be true and correct as of the Close of Escrow and which shall survive the Close of Escrow for the “Survival Period”. If prior to the Close of Escrow, a Seller gives Buyer written notice of any facts or circumstances beyond the reasonable control of such Seller which would

13


 

render any such representations or warranties untrue as of the Close of Escrow, Buyer’s sole right shall be to waive such representation and warranty and proceed with the Close of Escrow or terminate this Agreement and cancel the Escrow, in which case Escrow cancellation fees shall be paid by Sellers and the Deposit shall be returned to Buyer (less the Independent Consideration). Such termination right shall be exercised, if at all, no later than the earlier of two (2) business days after Buyer receives such written notice or the Closing Date (and in any event prior to Closing). For purposes of this Section 7, the phrases “to such Seller’s knowledge”, “to the Sellers’ knowledge” or similar phrase shall mean the current actual knowledge of Hack Adams, Senior Vice President, and Matthew Bateman, Managing Director (as distinguished from constructive, imputed or other implied knowledge), without investigation or inquiry or a duty to investigate or inquire. In no event shall Hack Adams, Matthew Bateman, or any other employee, officer, manager, or member of Sellers have any personal liability with respect to this Agreement or the representations or warranties contained herein.

7.1 Due Organization. Such Seller is duly organized, validly existing, and in good standing under the laws of the state of its formation, and is registered and in good standing to do business in the State of California; and

7.2 Authority. Such Seller has the full power and authority to execute, deliver and perform its obligations under this Agreement.

7.3 No Breach. Neither the execution nor delivery of this Agreement, nor the consummation of the transaction contemplated herein, will conflict with, or constitute or result in a breach of, any contract, license, undertaking, judgment or ruling to which such Seller is a party or by which its assets are bound, or result in the creation of any lien or encumbrance upon its assets.

7.4 OFAC. To such Seller’s knowledge, it is in compliance with the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 23, 2001) (the “Order”) and other similar requirements contained in the rules and regulations of the office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in any enabling legislation or other Executive Orders or regulations in respect thereof (the Order and such other rules, regulations, legislation, or orders are collectively called the “Orders”.

7.5 Lists. Neither it nor, to such Seller’s knowledge, any beneficial owner of such Seller (a) is listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the “Lists”) or (b) is a person who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (c) is owned or controlled by, or acts for or on behalf of, any person on the Lists or any other person who has been determined by competent authority to be subject to the prohibitions contained in the Orders.

7.6 Condemnation/Eminent Domain. Such Seller has not received written notice of any condemnation or eminent domain proceedings pending with respect to its Constituent Property. To such Seller’s knowledge, (i) there are no threatened (in writing) condemnation or eminent domain proceedings pending with respect to its Constituent Property, and (ii) there are no facts or circumstances with respect to such Constituent Property which might give rise to such action or proceeding.

7.7 Leases. To such Seller’s knowledge, all leases listed on Exhibit B hereto with respect to its Constituent Property constitute every lease in effect with respect to such Constituent Property as of the Agreement Date to which such Seller is a party (collectively, the “Leases”).

7.8 No Occupancy Rights. To such Seller’s knowledge, there are no occupancy agreements or other similar written agreements regarding occupancy of its Constituent Property, or any portion of it, other than the Leases or as otherwise set forth in any Preliminary Report.

7.9 No Actions. To such Seller’s knowledge and except as otherwise set forth in Exhibit J attached hereto and incorporated herein by this reference, such Seller has received no direct written notice of any action, suit or proceeding (including any condemnation action) which is pending or threatened against or otherwise relating to the Real Property or such Seller with respect to its interest in or operation of the Real Property.

7.10 No Violation of Law. Except as may be disclosed in the reports delivered to Buyer pursuant to Section 3.3.5 hereof and except as otherwise set forth in Exhibit J hereto or in the Due Diligence Items, to such Seller’s knowledge, such Seller has received any direct written notice from any governmental agency that such Seller or the Real Property violates, in any material respect, any laws, ordinances, rules, regulations, or court or administrative orders, including, without limitation, environmental laws, zoning laws and ordinances and building laws.

7.11 No Bankruptcy. Such Seller has not (i) made a general assignment for the benefit of creditors, filed any voluntary petition in bankruptcy, or (ii) to such Seller’s knowledge, suffered the filing of an involuntary petition by such Seller’s creditors, suffered the appointment of a receiver to take possession of all, or substantially all, of such Seller’s assets, suffered the attachment or other judicial seizure of all, or substantially all, of such Seller’s assets.

7.12 Environmental. To such Seller’s knowledge, Seller has not received written notice of any violation of environmental laws not disclosed in the Due Diligence Items or referenced therein.

14


 

8. Buyer’s Representations and Warranties. Buyer makes the following representations and warranties which shall be true and correct at the Close of Escrow and shall survive the Close of Escrow.

8.1 Due Organization. Buyer is duly organized, validly existing, and in good standing under the laws of the state of its formation and Buyer has the full right, power and authority and has obtained any and all consents required to enter into this Agreement and to consummate or cause to be consummated the transactions contemplated hereby.

8.2 Authority. This Agreement has been, and all of the documents to be delivered by Buyer at the Closing will be, authorized and properly executed and constitute, or will constitute, as appropriate, the valid and binding obligation of Buyer, enforceable in accordance with their terms. There is no action or proceeding pending or threatened against Buyer which challenges or impairs (or could challenge or impair) Buyer’s ability to execute or perform its obligations under this Agreement.

8.3 No Breach. Neither the execution nor delivery of this Agreement, nor the consummation of the transaction contemplated herein, will conflict with, or constitute or result in a breach of, any contract, license or undertaking to which Buyer is a party or by which its assets are bound or results in the creation of any lien or encumbrance upon its assets.

8.4 Orders. Buyer hereby represents and warrants that to Buyer’s knowledge, it is in compliance with the Orders.

8.5 Lists. Buyer hereby represents and warrants that neither Buyer nor, to Buyer’s knowledge, any beneficial owner of Buyer (a) is listed on the Lists or (b) is a person who has been determined by competent authority to be subject to the prohibitions contained in the Orders; or (c) is owned or controlled by, or acts for or on behalf of, any person on the Lists or any other person who has been determined by competent authority to be subject to the prohibitions contained in the Orders.

9. Condition of Properties.

9.1 Generally. Buyer represents and warrants, which representations and warranties shall survive the Close of Escrow and shall not be merged with the Deeds, that, Buyer has, or shall have inspected and conducted tests and studies of the Properties and that Buyer is or will be prior to the Close of Escrow familiar with the general condition of the Properties. Buyer understands and acknowledges that the Properties may be subject to earthquake, fire, floods, erosion, high water table, dangerous underground soil conditions, hazardous materials and other occurrences that may alter its condition or affect its suitability for any proposed use. Except as provided in Section 7 hereof, no Seller shall have any responsibility or liability with respect to any such occurrence or condition. Buyer represents and warrants that, except as provided in Section 7 of this Agreement, Buyer is acting, and will act only, upon information obtained by Buyer directly from Buyer’s own inspection of the Properties. Once Buyer has approved the Properties in its sole discretion pursuant to Section 3 of this Agreement, the suitability or lack of suitability of the Properties for any proposed or intended use, or availability or lack of availability of (a) permits or approvals of governmental or regulatory authorities, or (b) easements, licenses or other rights with respect to any such proposed or intended use of the Properties, shall not affect the rights or obligations of the Buyer hereunder.

9.2 Interim Operations. From and after the Effective Date until the Closing or the earlier termination of this Agreement, each Seller hereby agrees as follows:

9.2.1 Operation of Properties. To operate and maintain the Properties in good working order and condition and in a manner consistent with Seller’s current practices and, in connection with the same, no Seller shall (a) cancel or permit cancellation of any casualty or liability insurance carried with respect to any Constituent Property without replacing the same, or (b) remove from any Constituent Property any Personal Property, unless such item is replaced by an item of similar condition, utility and value.

9.2.2 Approval of Agreements. Not to enter into, modify, amend or terminate any Lease or any Contract (unless terminable on not more than thirty (30) days prior written notice without penalty), or any other agreement with respect to any Constituent Property, which would encumber or be binding upon any Constituent Property from and after the Closing Date, without in each instance obtaining the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed prior to the expiration of the Due Diligence Period, but may be withheld in Buyer’s sole discretion thereafter.

10. Disclaimers; Disclosures.

10.1 No Side Agreements or Representations. No person acting on behalf of Sellers is authorized to make, and by execution hereof, Buyer acknowledges that no person has made, any representation, agreement, statement, warranty, guarantee or promise regarding the Properties or the transaction contemplated herein or the zoning, construction, physical condition or other status of the Properties, except as may be expressly set forth in this Agreement or any amendments hereto. No representation, warranty, agreement, statement, guarantee or promise, if any, made by any person acting on behalf of Sellers which is not contained in this Agreement, or any amendment hereto will be valid or binding on Sellers.

10.2 “AS IS” CONDITION. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 7 HEREIN, SELLERS HAVE NOT MADE, DO NOT MAKE, AND SPECIFICALLY NEGATE AND DISCLAIM ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO THE PROPERTIES, THE PHYSICAL CONDITION OF AND

15


 

PHYSICAL IMPROVEMENTS, LAND IMPROVEMENTS OR UTILITY INSTALLATIONS ON AND TO THE PROPERTIES, title to the PropertIES, the environmental condition of the PropertIES (including the presence or absence of hazardous substances OR POLLUTION), the compliance of the PropertIES with applicable laws and regulations (including zoning, building codes or development or LAND use rights), the financial condition of the PropertIES or any other representation or warranty respecting any income, expenses, rights or claims on, affecting, or pertaining to the PropertIES or any part thereof OR ANY MATTER RELATED THERETO, INCLUDING, WITHOUT LIMITATION, THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTIES. EXCEPT AS PROVIDED IN SECTION 7 OF THIS AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT, TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTIES AS PROVIDED FOR HEREIN IS MADE ON AN “AS IS” CONDITION AND BASIS WITH ALL FAULTS, AND THAT SELLERS HAVE NO OBLIGATIONS TO MAKE REPAIRS, REPLACEMENTS OR IMPROVEMENTS EXCEPT AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN.

10.3 SOPHISTICATION OF BUYER. BUYER IS A SOPHISTICATED BUYER WHO IS FAMILIAR WITH THE OWNERSHIP AND OPERATION OF REAL ESTATE PROJECTS SIMILAR TO THE PROPERTIES, AND BUYER HAS HAD ADEQUATE OPPORTUNITY OR WILL HAVE ADEQUATE OPPORTUNITY PRIOR TO CLOSING (BUYER’S FAILURE TO SEND A TERMINATION NOTICE PURSUANT TO SECTION 3 SHALL CONSTITUTE AN ACKNOWLEDGMENT BY BUYER THAT IT HAS HAD SUCH AN OPPORTUNITY) TO COMPLETE ALL PHYSICAL AND FINANCIAL EXAMINATIONS RELATING TO THE ACQUISITION OF THE PROPERTIES HEREUNDER IT DEEMS NECESSARY, AND WILL ACQUIRE THE SAME SOLELY ON THE BASIS OF AND IN RELIANCE UPON SUCH EXAMINATIONS AND THE TITLE INSURANCE PROTECTION AFFORDED BY BUYER’S TITLE INSURANCE POLICIES AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLERS, OTHER THAN THE REPRESENTATIONS AND WARRANTIES MADE BY SELLERS IN SECTION 7 ABOVE.

10.4 DUE DILIGENCE MATERIALS. WITHOUT LIMITATION ON SELLERS’ REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 7, (1) ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PROPERTIES PREPARED BY THIRD PARTIES IS SOLELY FOR BUYER’S CONVENIENCE AND WAS OR WILL BE OBTAINED FROM A VARIETY OF SOURCES, AND (2) SELLERS HAVE NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKE NO (AND EXPRESSLY DISCLAIM ALL) REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. SELLERS SHALL NOT BE LIABLE FOR ANY MISTAKES, OMISSIONS, MISREPRESENTATION OR ANY FAILURE TO INVESTIGATE THE PROPERTIES NOR SHALL SELLERS BE BOUND IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS, APPRAISALS, ENVIRONMENTAL ASSESSMENT REPORTS, OR OTHER INFORMATION PERTAINING TO THE PROPERTIES OR THE OPERATION THEREOF, FURNISHED BY ANY SELLER OR BY ANY MANAGER, MEMBER OR PARTNER OF ANY SELLER, OR ANY “RELEASED PARTIES” (AS HEREINAFTER DEFINED).

BY INITIALING BELOW, BUYER ACKNOWLEDGES THAT (A) THIS SECTION 10 HAS BEEN READ AND FULLY UNDERSTOOD, (B) BUYER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (C) BUYER HAS ACCEPTED AND AGREED TO THE TERMS SET FORTH IN THIS SECTION 10.

 

 

BUYER’S INITIALS

 

10.5 Waiver of Disclosures. Buyer hereby knowingly, voluntarily and intentionally waives the right to the disclosures set forth in: (a) California Government Code Section 8589.4; (b) California Government Code Section 51183.4 (fire hazard severity zone); (c) California Public Resource Code Section 2621.9 (earthquake fault zone); (d) California Public Resource Code Section 2694 (seismic hazard zone); (e) California Public Resource Code Section 4136 (wild land area), and (f) California Public Resource Code Section 25402.10 and its implementing regulations (energy use disclosures). Nonetheless, Buyer acknowledges receipt of a Natural Hazard Disclosure Statement and “Commercial Property Owner’s Guide to Earthquake Safety (2006),” both prepared by a third party which provides the disclosures referred to in this Section 10.3 in satisfaction of any such obligation to Buyer. No Seller shall have any liability for the contents, or accuracy of such report.

10.6 City of San Diego Retrofit Requirements. Buyer and Sellers agree that, with reference to those Constituent Properties located in the City of San Diego and in accordance with San Diego Municipal Code (the “San Diego Code”), Sellers shall transfer responsibility and Buyer shall assume responsibility for complying with the San Diego Code, including but not limited to, Article 7, Division 4, Section 147.0404(b) (the “Retrofit Section”) and Section 147.0408(b) (the “Verification Section”) thereof. As required by the San Diego Code, on or before ninety (90) days after the Closing, Buyer shall comply with the requirements of the Retrofit Section. In accordance with Section 147.0408(b) of the San Diego Code, prior to Closing, Buyer and applicable Sellers shall sign a

16


 

Transfer of Responsibility to Retrofit Certificate in the form required by the City (the “Retrofit Certificate”), certifying that Buyer has assumed responsibility for the requirements under the San Diego Code. Upon the Closing, applicable Sellers shall file the Retrofit Certificate(s) with the City of San Diego Public Utilities Department. Buyer shall defend, indemnify and hold harmless Sellers and the Seller Parties from and against any and all Claims asserted against or incurred by Sellers or the Seller Parties as a result of any acts or omissions, from and after the Closing, in connection with the Retrofit and requirements of the Retrofit Section. The provisions of this Section shall survive the Closing.

11. Governmental Approvals. Nothing contained in this Agreement shall be construed as authorizing Buyer to apply for a zone change, variance, subdivision maps, lot line adjustment or other discretionary governmental act, approval or permit with respect to the Properties prior to the Close of Escrow, and Buyer agrees not to do so without Sellers’ prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed so long as such action will not: (a) delay in any manner the Close of Escrow; (b) result in any cost or liability to Sellers; or (c) become binding on Sellers or bind the Properties until after the Close of Escrow. Buyer agrees not to submit any reports, studies or other documents, including, without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency, or any amendment or modification to any such instruments or documents prior to the Close of Escrow unless first approved by Sellers in writing, which approval shall not be unreasonably withheld, conditioned or delayed so long as such action will not: (x) delay in any manner the Close of Escrow; (y) result in any cost or liability to Sellers; or (z) become binding on Sellers or bind the Properties until after the Close of Escrow. Once Buyer has approved the Properties in its sole discretion pursuant to Section 3 of this Agreement, Buyer’s obtaining any variances, zoning amendments, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit will not be a condition precedent to its obligations under this Agreement.

12. Release. Except as expressly set forth in this Section 12, and except for (a) intentional, active fraud, (b) intentional, material and express misrepresentations made by Sellers in Section 7 of this Agreement for the Survival Period specified herein and (c) Seller’s post-Closing obligations expressly provided in this Agreement (individually and collectively, the “Reserved Claims”), Buyer and anyone claiming by, through or under Buyer hereby waives its right to recover from and fully and irrevocably releases Sellers and Seller Parties (collectively, “Released Parties”) from any and all claims that it may now have or hereafter acquire against any of the Released Parties for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to any matters affecting the Properties, or any portion thereof; including without limitation any claims under CERCLA, RCRA or any other applicable statute that pertains to environmental matters. This release includes claims (other than the Reserved Claims) of which Buyer is presently unaware or which Buyer does not presently suspect to exist which, if known by Buyer, would materially affect Buyer’s release to Sellers. Buyer specifically waives the provision of California Civil Code Section 1542, which provides as follows:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM OR HER MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE DEBTOR.”

In this connection and to the extent permitted by law, Buyer hereby agrees, represents and warrants, which representation and warranty shall survive the Close of Escrow and not be merged with the Deeds, that Buyer realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrants, which representation and warranty shall survive the Close of Escrow and not be merged with the Deeds, that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit Sellers from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which might in any way be included as a material portion of the consideration given to Sellers by Buyer in exchange for Sellers’ performance hereunder. From and after the lapse of six (6) months following the Close of Escrow (the “Survival Period”), Buyer hereby agrees that the release contained herein shall then also extend to and include any claim or action against any Released Party for any breach by Sellers of the representations and warranties made in Section 7 hereof and any covenants under this Agreement. The foregoing release shall not apply to the enforcement of any of the provisions expressly contained in this Agreement.

Sellers have given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section 12. Sellers and Buyer have each initialed this Section 12 to further indicate their awareness and acceptance of each and every provision hereof.

 

 

 

SELLERS’ INITIALS

    

BUYER’S INITIALS

  

 

13. Intentionally Omitted.

17


 

14. Default.

14.1 LIQUIDATED DAMAGES – DEPOSIT. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD AND IF THE SALE OF THE PROPERTIES TO BUYER IS NOT CONSUMMATED DUE TO A DEFAULT BY BUYER, SELLERS SHALL BE ENTITLED TO RETAIN THE DEPOSIT AS SELLERS’ LIQUIDATED DAMAGES AND TO TERMINATE THIS AGREEMENT. THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLERS AS A RESULT OF BUYER’S FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTIES PURSUANT TO THIS AGREEMENT AND THAT, UNDER THE CIRCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE, THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLERS WILL INCUR AS A RESULT OF SUCH FAILURE AND THAT SUCH REMEDY SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY; PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT SELLERS’ RIGHTS TO RECEIVE REIMBURSEMENT FOR ATTORNEYS’ FEES, NOR WAIVE OR AFFECT SELLERS’ RIGHTS AND BUYER’S INDEMNITY OBLIGATIONS EXPRESSLY SET FORTH IN OTHER SECTIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLERS PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676, AND 1677. THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION.

 

 

 

SELLERS’ INITIALS

    

BUYER’S INITIALS

  

 

14.2 Sellers’ Default.

14.2.1 Pre-Closing Representations and Warranties. If Buyer obtains knowledge that any of Sellers’ representations and warranties contained herein are not materially true and correct prior to the Close of Escrow then Buyer’s sole remedy shall be to either (a) terminate this Agreement by written notice to Sellers (which must be given, if at all, no later than two (2) business days after Buyer becomes aware of such information and in all events prior Closing), in which event the Deposit shall be returned to Buyer by Escrow Holder (less the Independent Consideration) and Sellers shall reimburse Buyer for its actual and direct documented out-of-pocket, third-party transaction costs in an amount not to exceed, in the aggregate, One Hundred Fifty Thousand Dollars ($150,000), or (b) waive any claim related to the representation and warranty and proceed to the Closing.

14.2.2 Covenants. If Sellers shall have materially failed to perform any of Sellers’ covenants within the time specified herein, Buyer may as its sole remedy either (a) terminate Buyer’s obligations under this Agreement by written notice to Sellers, in which event the Deposit shall be returned to Buyer by Escrow Holder (less the Independent Consideration) ) and Sellers shall reimburse Buyer for its actual and direct documented out-of-pocket, third-party transaction costs in an amount not to exceed, in the aggregate, One Hundred Fifty Thousand Dollars ($150,000), or (b) obtain specific performance of this Agreement, provided that (i) Buyer is ready, willing and able to purchase the Properties on the Close of Escrow., and (ii) Buyer commences such action for specific performance within thirty (30) days after the scheduled Closing Date.

14.2.3 Post-Closing Claims. Any claim by Buyer for any breach of any representation or warranty after the Close of Escrow, or any other claim for breach of this Agreement (including the closing documents) shall be subject to the following with respect to each Constituent Property: (a) no such claim shall be made until the damages from such claim are at least Fifty Thousand Dollars ($50,000.00) in the aggregate with respect to such Constituent Property, (b) any such claim must be made within the Survival Period, and (c) Buyer shall be limited to its actual compensatory damages, (but not punitive, special, or consequential damages), in any case not to exceed two percent (2%) of the Allocable Purchase Price with respect to such Constituent Property in the aggregate from all claims with respect to such Constituent Property.

14.3 No Contesting Liquidated Damages. As material consideration to each party’s agreement to the liquidated damages provisions stated above, each of Buyer and Sellers hereby agrees to waive any and all rights whatsoever to contest the validity of the liquidated damage provisions for any reason whatsoever, including, but not limited to, that such provision was unreasonable under circumstances existing at the time this Agreement was made.

15. Miscellaneous.

15.1 Waiver of Trial by Jury. SELLERS AND BUYER, TO THE EXTENT THEY MAY LEGALLY DO SO, HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS AGREEMENT, OR IN ANY WAY CONNECTED WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE. TO

18


 

THE EXTENT THEY MAY LEGALLY DO SO, SELLERS AND BUYER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

15.2 Attorneys’ Fees. If any action or proceeding is commenced by either party to enforce their rights under this Agreement or to collect damages as a result of the breach of any of the provisions of this Agreement, the prevailing party in such action or proceeding, including any bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all reasonable costs and expenses, including, without limitation, reasonable attorneys’ fees and court costs, in addition to any other relief awarded by the court.

15.3 Notices; Business Days.

15.3.1 Notices. All notices or other communications required under this Agreement shall be in writing and shall be personally delivered or sent by registered or certified mail, postage prepaid, return receipt requested, delivered or sent via an overnight courier service with charges prepaid or by e-mail or facsimile so long as the items are concurrently sent via overnight courier. Notices shall be deemed received upon the earlier of: (a) if delivered personally or via overnight courier, the date of delivery; or (b) if mailed, upon the date of receipt as disclosed on the return receipt or (c) if sent by e-mail or facsimile, the date of transmission (so long as concurrently sent by overnight courier). All notices to Sellers, Buyer and Escrow Holder shall be sent to such party’s address as set forth in the Summary. The foregoing addresses may be changed by written notice given in accordance with this Section. Any notice delivered by Buyer to any one or more of the parties comprising the Sellers shall be deemed to constitute a notice given to all of the parties comprising Sellers.

15.3.2 Business Days. If the date on which any notice to be given hereunder or the performance of an obligation hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday, unless the particular date is the Closing Date, in which case the Closing Date shall be extended to the second business day following such Saturday, Sunday or legal holiday.

15.4 Amendment; Complete Agreement. All amendments and supplements to this Agreement must be in writing and executed by Buyer and Sellers. This Agreement contains the entire agreement and understanding between Buyer and Sellers concerning the subject matter of this Agreement and supersedes all prior agreements, terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Sellers concerning the Properties or the other matters which are the subject of this Agreement.

15.5 Governing Law; Venue. This Agreement shall be enforced, governed by, and interpreted in accordance with the laws of the State of California. Venue for any dispute hereunder shall lie in the State Courts in the County of San Diego.

15.6 Severability. If any provision of this Agreement or application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement (including the application of such provision to persons or circumstances other than those to which it is held invalid or unenforceable) shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

15.7 Counterparts, Headings, and Defined Terms. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one agreement. The headings to sections of this Agreement are for convenient reference only and shall not be used in interpreting this Agreement.

15.8 Time of the Essence. Except as provided in Section 15.3.2, time is of the essence of this Agreement.

15.9 Waiver. No waiver by Buyer or Sellers of any of the terms or conditions of this Agreement or any of their respective rights under this Agreement shall be effective unless such waiver is in writing and signed by the party charged with the waiver.

15.10 Third Parties. This Agreement is entered into for the sole benefit of Buyer and Sellers and their respective permitted successors and assigns. No party other than Buyer and Sellers and such permitted successors and assigns shall have any right of action under or rights or remedies by reason of this Agreement.

15.11 Additional Documents. Each party agrees to perform any further acts and to execute and deliver such further documents which may be reasonably necessary to carry out the terms of this Agreement (provided the same do not increase in any material respect the cost to, or liability or obligations of, such party in a manner not otherwise provided for herein).

15.12 Independent Counsel. Buyer and Sellers each acknowledge that: (a) they have been represented by independent counsel in connection with this Agreement; (b) they have executed this Agreement with the advice of such counsel; and (c) this Agreement is the result of negotiations between the parties hereto and the advice and assistance of their respective counsel. The fact that the initial draft of this Agreement was prepared by Sellers’ counsel as a matter of convenience shall have no import or significance. Any uncertainty or ambiguity in this Agreement shall not be construed against Sellers because Sellers’ counsel prepared this Agreement in its final form.

19


 

15.13 Assignment. Buyer shall not assign this Agreement without Sellers’ prior written consent, which consent may be withheld in Sellers’ sole and absolute discretion. Any purported assignment in violation of the terms of this Agreement shall be void. Notwithstanding the foregoing, Buyer may assign this Agreement without Sellers’ consent to one or more entities which are wholly owned or controlled, directly or indirectly, by Buyer provided that Buyer provides written notice of such assignment to Sellers together with an assignment and assumption agreement in form reasonably satisfactory to Sellers no later than five (5) business days prior to the Close of Escrow so that all closing documents can be modified to reflect such assignment. In the event of an approved (or deemed approved) assignment by Buyer of this Agreement, Buyer’s assignee shall assume in writing all of Buyer’s obligations under this Agreement, but Buyer shall not be released from its obligations hereunder. If Buyer assigns its rights under this Agreement to more than one entity as set forth above, then the Closing documents shall be separately prepared with respect to the Constituent Property or Constituent Properties being acquired by each such entity.

15.14 Successors and Assigns. Subject to the provisions of Section 15.13, this Agreement shall be binding upon and inure to the benefits of the heirs, successors and assigns of the parties hereto.

15.15 Exhibits. Each reference to a Section or Exhibit in this Agreement shall mean the sections of this Agreement and the exhibits attached to this Agreement, unless the context requires otherwise. Each such exhibit is incorporated herein by this reference.

15.16 Duty of Confidentiality. Buyer and Sellers represent and warrant that each shall keep the terms of the transaction contemplated in this Agreement, including, without limitation, the Purchase Price (and each Allocable Purchase Price) and all other information, documents and/or reports obtained from the other, or related to or connected with the Properties, the other party, or this transaction, confidential and will not disclose any such information to any person or entity, with the exception of the managers, members, officers, directors, employees, partners, agents, consultants or lenders of such party who have a need to know such information and who are instructed to maintain the confidentiality obligations of the parties set forth herein or as may otherwise be required by law, without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. The provisions of this Section 15.16 shall survive any termination of this Agreement or the Closing (as applicable), except that Buyer may publish tombstone or similar notices following the Closing without Seller’s prior written consent; provided that such tombstone or similar notices shall not disclose the Purchase Price or the Allocated Purchase Prices and shall be reasonably approved by Sellers in writing, which approval shall not be unreasonably withheld, conditioned or delayed.

15.17 Survival. Except as specifically set forth in this Agreement, the representations, warranties, indemnities and covenants set forth herein and made by Sellers shall survive the Close of Escrow for the Survival Period. The representations, warranties and indemnities made by Buyer herein or in any closing documents shall survive for a period of two (2) years following the Close of Escrow.

15.18 Limited Liability.

15.18.1 Notwithstanding anything to the contrary contained in this Agreement or any document executed in connection herewith, Buyer understands that each Seller (a) has an interest in only a Constituent Property (and not all Properties), and (b) shall be severally (but not (i) jointly or (ii) jointly and severally) liable to Buyer under or in connection with this Agreement or any document executed in connection herewith only to the extent that the representations, warranties, covenants and other provisions contained in this Agreement or such other documents relate to the Constituent Property owned by such Seller (and shall not be liable to the extent that any such representations, warranties, covenants or other provisions relate to any other Constituent Property). Without limitation on the foregoing, (1) the representations and warranties in Section 7 shall apply to each Seller separately and then only to the Constituent Property owned by it, and (2) the prorations and credits provided for in Section 3.13 shall be allocated separately among Sellers, with each bearing the economic burden or receiving the economic benefit only with respect to the Constituent Property owned by such Seller.

15.18.2 No constituent partner or member in or agent of any Seller, nor any manager, advisor, trustee, director, officer, employee, beneficiary, shareholder, member, partner, participant, representative or agent of any partnership, limited liability company, corporation, trust or other entity that has or acquires a direct or indirect interest in any Seller, shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Buyer, its successors and assigns and, without limitation, all other persons shall look solely to each Seller’s respective interest in the Properties for payment of any claim or for any performance, and Buyer, on behalf of itself and its successors and assigns, hereby waives any and all such personal liability.

15.19 Tax-Deferred Exchange. Either party shall be permitted to assign its obligations under this Agreement to an intermediary for the purpose of effectuating a tax-deferred exchange, so long as such assignment shall not (a) delay or extend the Closing Date, or (b) require the other party to assume any additional obligations, incur any out-of-pocket expenses, or take title to any other property. Neither party shall be in any way responsible or liable for the tax or other consequences of the tax-deferred exchange (or attempted tax-deferred exchange) effected by the other party.

20


 

15.20 No Effect Until Mutual Execution and Delivery. The preparation and/or delivery of unsigned drafts of this Agreement shall not create any legally binding rights in the Properties and/or obligations of the parties, and Buyer and Sellers acknowledge that this Agreement shall be of no effect until it is duly executed and delivered by both Buyer and Sellers.

15.21 Tax Appeal Proceedings.

15.21.1 Prosecution and Settlement of Proceedings. If any tax reduction proceedings in respect of any Property, relating to any fiscal years ending prior to the fiscal year in which the Closing occurs, are pending at the time of the Closing, each Seller reserves and shall have the right to continue to prosecute and/or settle the same. If any tax reduction proceedings in respect of any Property, relating to the fiscal year in which the Closing occurs, are pending at the time of Closing, then the applicable Seller reserves and shall have the right to continue to prosecute and settle the same; provided, however, that such Seller shall not settle any such proceeding without Buyer’s prior written consent, which consent shall not be unreasonably withheld or delayed. Buyer, at no material cost to Buyer, shall reasonably cooperate with each Seller in connection with the prosecution of any such tax reduction proceedings.

15.21.2 Application of Refunds or Savings. Any refunds or savings in the payment of taxes resulting from such tax reduction proceedings applicable to taxes applicable to the period prior to the date of the Closing shall belong to and be the property of the applicable Seller, and any refunds or savings in the payment of taxes applicable to taxes payable from and after the date of the Closing shall belong to and be the property of Buyer; provided, however, that if any such refund creates an obligation to reimburse any tenants under any Lease for any rents or additional rents paid or to be paid, that portion of such refund equal to the amount of such required reimbursement (after deduction of allocable expenses as may be provided in such Lease to such tenant) shall be paid to Buyer and Buyer shall disburse the same to such tenants. All reasonably outside counsel attorneys’ fees and other third party expenses incurred in obtaining such refunds or savings shall be apportioned between Sellers and Buyer in proportion to the gross amount of such refunds or savings payable to the applicable Seller and Buyer, respectively (without regard to any amounts reimbursable to tenants); provided, however, that neither any Seller nor Buyer shall have any liability for any such fees or expenses in excess of the refund or savings paid to such party unless such party initiated such proceeding.

15.21.3 Survival. The provisions of this Section 15.21 shall survive the Closing.

15.22 Disclosure Items. Buyer acknowledges that, prior to and after the Effective Date, information and matters have been or will be disclosed to Buyer by virtue of either the delivery to Buyer of a copy of the Due Diligence Items or a brief summary of Sellers’ understanding and knowledge of certain matters and things with respect to the Properties as set forth in Exhibit J hereto (collectively, the “Disclosure Items”). Buyer hereby expressly acknowledges and unequivocally agrees that, if Buyer elects to proceed with the Close of Escrow (or is deemed to have approved its contingencies), then Buyer is acquiring the Properties subject to any and all deficiencies, defects and other matters referred to or otherwise set forth in the Disclosure Items and the Due Diligence Items. Notwithstanding anything to the contrary contained herein, no Seller makes any representations or warranties with respect to the thoroughness, adequacy or accuracy of any report, study or other information prepared by a third party for or on behalf of Sellers and included as part of the Due Diligence Items, including without limitation, the Disclosure Items and any environmental reports delivered to Buyer. Buyer expressly covenants, represents and warrants to Sellers that Buyer will not disseminate, re-use or rely upon any environmental reports or any part thereof so delivered to Buyer by the Sellers, especially in light of the prohibition against reliance thereon as required by the preparer of said reports and as required by applicable law. Subject to the provisions of Section 14.2.3 above, except for any material breach by Sellers of the express representations made by Sellers in Section 7 of this Agreement (with respect to which a Claim is brought by Buyer during the Survival Period), no Seller shall have any liability with respect to any matters disclosed or contained in the Due Diligence Items or the Disclosure Items. For purposes of this Agreement, Buyer shall be deemed to have actual knowledge of the contents of the Due Diligence Items made available to Buyer for copying and/or inspection.

15.23 Regulation S-X. FOR THE PERIOD OF TIME COMMENCING ON THE EFFECTIVE DATE AND CONTINUING THROUGH THE FIRST (1ST) ANNIVERSARY OF THE CLOSING DATE, SELLERS SHALL, FROM TIME TO TIME, UPON REASONABLE ADVANCE NOTICE FROM BUYER, PROVIDE (A) BUYER AND ITS REPRESENTATIVES, AGENTS AND EMPLOYEES WITH REASONABLE ACCESS TO ALL FINANCIAL AND OTHER INFORMATION RELATING TO THE PROPERTIES PERTAINING TO THE PERIOD OF SELLERS’ OWNERSHIP AND OPERATION OF THE PROPERTY, WHICH INFORMATION IS RELEVANT AND REASONABLY NECESSARY, TO ENABLE BUYER AND BUYER’S OUTSIDE, THIRD PARTY ACCOUNTANTS (THE “ACCOUNTANTS”) TO PREPARE FINANCIAL STATEMENTS IN COMPLIANCE WITH ANY OR ALL OF (COLLECTIVELY, THE “S-X REGULATION”) (I) RULE 3-14 OF REGULATION S-X OF THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”), (II) ANY OTHER RULE ISSUED BY THE COMMISSION AND APPLICABLE TO BUYER OR ITS AFFILIATES, AND (III) ANY REGISTRATION STATEMENT, REPORT OR DISCLOSURE STATEMENT FILED WITH THE COMMISSION BY, OR ON BEHALF OF BUYER OR ITS AFFILIATES, AND (B) REASONABLE ASSISTANCE TO BUYER AND THE ACCOUNTANTS IN COMPLETING AN AUDIT OF SUCH FINANCIAL STATEMENTS; PROVIDED, HOWEVER, THAT IN ANY SUCH EVENT(S), BUYER SHALL REIMBURSE SELLERS FOR ANY ACTUAL AND DIRECT DOCUMENTED THIRD PARTY OUT-OF-POCKET COSTS AND EXPENSES THAT ANY SELLER INCURS IN CONNECTION WITH FULFILLING SELLERS’ OBLIGATIONS UNDER THIS SECTION 15.23. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IF REQUESTED BY BUYER, SELLER

21


 

SHALL DELIVER A REPRESENTATION LETTER IN SUCH FORM ATTACHED HERETO AS EXHIBIT “L”, SIGNED BY THE INDIVIDUAL(S) RESPONSIBLE FOR SELLER’S FINANCIAL REPORTING, AS PRESCRIBED BY GENERALLY ACCEPTED AUDITING STANDARDS PROMULGATED BY THE AUDITING STANDARDS DIVISION OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, WHICH REPRESENTATION LETTER MAY BE REQUIRED TO ASSIST THE ACCOUNTANTS IN RENDERING AN OPINION ON SUCH FINANCIAL STATEMENTS IN ORDER TO COMPLY WITH CLAUSES (A)(I), (II) AND (III) ABOVE. SELLERS’ OBLIGATIONS UNDER THIS SECTION 15.23 SHALL SURVIVE FOR A PERIOD OF ONE (1) YEAR AFTER THE CLOSING.

15.24 Post-Closing Deliveries by Sellers. Within five (5) business day following the Closing Date (and without limiting Sellers’ other delivery obligations under the Agreement), Sellers shall deliver originals (or copies, to the extent originals are not in Sellers’ possession or control) of all of the following to Buyer, to the extent the same are in Sellers’ possession or control and have not previously been delivered to Buyer:

15.24.1 The Existing Leases and Other Agreements;

15.24.2 Leasing files, including all correspondence with tenants;

15.24.3 Receipts for deposits, including without limitation, utility deposits and security deposits received by tenants and other documents which pertain to the Property;

15.24.4 Unexpired warranties and guarantees, if any, which Sellers have received in connection with any work or services performed with respect to, or equipment installed in, the improvements on the Property;

15.24.5 All keys and security codes for all improvements on the Property;

15.24.6 Original “as-built” plans and specifications and other available plans and specifications; and

15.24.7 All documents and records reasonably required for the on-going operations and maintenance of the Property.

Seller’s obligations under this Section 15.24 shall survive the Closing.

[The next page is the signature page.]

 

 

 

22


 

IN WITNESS WHEREOF, Sellers and Buyer have executed this Agreement as of the date first above written.

 

SELLERS:

 

WESTCORE CABOT, L.P.,

a Delaware limited partnership

 

 

By:

 

Cabot Acquisition, GP, LLC

 

 

a Delaware limited liability company

its General Partner

 

 

 

 

 

By:

 

Westcore Investments I, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

By:

 

Westcore Properties, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

 

 

 

By:

 

/s/ Marc R. Brutten 

 

 

 

 

Name:

 

Marc R. Brutten

 

 

 

 

Title:

 

Authorized Officer

 

 

 

 

 

 

 

 

By:

 

/s/ Donald H. Ankeny 

 

 

 

 

Name:

 

Donald H. Ankeny

 

 

 

 

Title:

 

Authorized Officer

 

WESTCORE DISTRIBUTION, LLC,

a Delaware limited liability company

 

 

By:

 

Westcore Investments I, LLC

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

By:

 

Westcore Properties, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

 

 

 

By:

 

/s/ Marc R. Brutten 

 

 

 

 

Name:

 

Marc R. Brutten

 

 

 

 

Title:

 

Authorized Officer

 

 

 

 

 

 

 

 

By:

 

/s/ Donald H. Ankeny 

 

 

 

 

Name:

 

Donald H. Ankeny

 

 

 

 

Title:

 

Authorized Officer

23


 

 

WESTCORE DISTRIBUTION II, LLC,

a Delaware limited liability company

 

 

By:

 

Westcore Investments I, LLC

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

By:

 

Westcore Properties, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

 

 

 

By:

 

/s/ Marc R. Brutten 

 

 

 

 

Name:

 

Marc R. Brutten

 

 

 

 

Title:

 

Authorized Officer

 

 

 

 

 

 

 

 

By:

 

/s/ Donald H. Ankeny 

 

 

 

 

Name:

 

Donald H. Ankeny

 

 

 

 

Title:

 

Authorized Officer

 

WESTCORE HUNTER, LLC,

a Delaware limited liability company

 

 

By:

 

Westcore Investments I, LLC

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

By:

 

Westcore Properties, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

 

 

 

By:

 

/s/ Marc R. Brutten 

 

 

 

 

Name:

 

Marc R. Brutten

 

 

 

 

Title:

 

Authorized Officer

 

 

 

 

 

 

 

 

By:

 

/s/ Donald H. Ankeny 

 

 

 

 

Name:

 

Donald H. Ankeny

 

 

 

 

Title:

 

Authorized Officer

 

WESTCORE SALT LAKE AVENUE, LLC,

a Delaware limited liability company

 

 

By:

 

Westcore Investments I, LLC

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

By:

 

Westcore Properties, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

 

 

 

By:

 

/s/ Marc R. Brutten 

 

 

 

 

Name:

 

Marc R. Brutten

 

 

 

 

Title:

 

Authorized Officer

24


 

 

 

 

 

 

 

 

 

By:

 

/s/ Donald H. Ankeny 

 

 

 

 

Name:

 

Donald H. Ankeny

 

 

 

 

Title:

 

Authorized Officer

 

WESTCORE VALLEY, LLC,

a Delaware limited liability company

 

 

By:

 

Westcore Investments I, LLC

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

By:

 

Westcore Properties, LLC

 

 

 

 

a Delaware limited liability company

its Sole Member

 

 

 

 

 

 

 

 

By:

 

/s/ Marc R. Brutten 

 

 

 

 

Name:

 

Marc R. Brutten

 

 

 

 

Title:

 

Authorized Officer

 

 

 

 

 

 

 

 

By:

 

/s/ Donald H. Ankeny 

 

 

 

 

Name:

 

Donald H. Ankeny