EXHIBIT 10.94
AGREEMENT OF SALE AND PURCHASE
THIS AGREEMENT OF SALE AND PURCHASE (“Agreement”) made this 25th day of September, 2006 by and between PHELAN REALTY ASSOCIATES L.P., a limited partnership organized under the laws of the State of California (“Phelan Realty”), 795 FOLSOM REALTY ASSOCIATES L.P., a limited partnership organized under the laws of the State of California (“Folsom Realty;”) each having an address c/o Mack-Cali Realty Corporation, 11 Commerce Drive, Cranford, New Jersey 07016 (Phelan Realty and Folsom Realty are sometimes hereinafter collectively referred to as “Seller”) and WESTCORE PROPERTIES AC, LLC, a limited liability company organized under the laws of the State of Delaware having an address at 4445 Eastgate Mall, Suite 210, San Diego, California 92121(“Purchaser”).
In consideration of the mutual promises, covenants, and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following capitalized terms have the meanings set forth in this Section 1.1:
“Additional Earnest Money Deposit” has the meaning ascribed to such term in Section 4.1(b).
“Additional Sale Consideration” has the meaning ascribed to such term in Section 10.8.
“Additional Sale Consideration Agreement” has the meaning ascribed to such term in Section 10.8 and shall be in the form attached hereto as Exhibit S.
“Assignment” has the meaning ascribed to such term in Section 10.3(e) and shall be in the form attached hereto as Exhibit A.
“Assignment of Leases” has the meaning ascribed to such term in Section 10.3(c) and shall be in the form attached hereto as Exhibit B.
“Authorities” means the various federal, state and local governmental and quasi-governmental bodies or agencies having jurisdiction over the Real Property and Improvements, or any portion thereof.
“Bill of Sale” has the meaning ascribed to such term in Section 10.3(b) and shall be in the form attached hereto as Exhibit C.
“Business Day” means any day other than a Saturday, Sunday or a day on which national banking associations are authorized or required to close.
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“Certificate as to Foreign Status” has the meaning ascribed to such term in Section 10.3(g) and shall be in the form attached as Exhibit J.
“Certifying Person” has the meaning ascribed to such term in Section 4.3(a).
“Closing” means the consummation of the purchase and sale of the Property contemplated by this Agreement, as provided for in Article X.
“Closing Date” means the date on which the Closing of the transaction contemplated hereby actually occurs.
“Closing Statement” has the meaning ascribed to such term in Section 10.4(a).
“Closing Surviving Obligations” means the rights, liabilities and obligations set forth in Sections 3.2, 5.3, 5.4, 8.2, 8.3, 9.1(b), 10.4, 10.6, 11.1, 11.2, 12.1, Article XIV, 16.1, 18.2 and 18.8, and any other provisions which pursuant to their terms survive the Closing hereunder.
“Code” has the meaning ascribed to such term in Section 4.3.
“Company California Employees” has the meaning ascribed to such term in Section 7.3.
“Confidentiality Agreement” means that certain Confidentiality Agreement dated August 28, 2006 between Purchaser and Mack-Cali Realty Corporation, the manager of the Real Property.
“Deed” has the meaning ascribed to such term in Section 10.3(a).
“Delinquent Rental” has the meaning ascribed to such term in Section 10.4(b).
“Documents” has the meaning ascribed to such term in Section 5.2(a).
“Earnest Money Deposit” has the meaning ascribed to such term in Section 4.1.
“Effective Date” means the latest date on which this Agreement has been executed and delivered by Seller or Purchaser.
“Environmental Laws” means each and every federal, state, county and municipal statute, ordinance, rule, regulation, code, order, requirement, directive, binding written interpretation and binding written policy pertaining to Hazardous Substances issued by any Authorities and in effect as of the date of this Agreement with respect to or which otherwise pertains to or affects the Real Property or the Improvements, or any portion thereof, the use, ownership, occupancy or operation of the Real Property or the Improvements, or any portion thereof, or Purchaser, and as same have been amended, modified or supplemented from time to time prior to the Effective Date, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Hazardous Substances Transportation Act (49 U.S.C. § 1802 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as amended by the Hazardous and Solid Wastes
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Amendments of 1984, the Water Pollution Control Act (33 U.S.C. § 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Clean Water Act (33 U.S.C. § 1321 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Solid Waste Disposal Act (42 U.S.C. § 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. § 11001 et seq.), the Radon Gas and Indoor Air Quality Research Act of 1986 (42 U.S.C. § 7401 et seq.), the National Environmental Policy Act (42 U.S.C. § 4321 et seq.), the Superfund Amendment Reauthorization Act of 1986 (42 U.S.C. § 9601 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) (collectively, the “Environmental Statutes”), and any and all rules and regulations which have become effective prior to the date of this Agreement under any and all of the Environmental Statutes.
“Escrow Agent” means LandAmerica Commercial Services, having an address at One Market, Spear Tower, Suite 1850, San Francisco, California, Attn: Carol Carozza.
“Existing Survey” means Seller’s existing surveys of the Real Property as listed on Exhibit H.
“Extension Deposit” has the meaning ascribed to such term in Section 10.1
“Evaluation Period” means the period ending at 5:00 p.m. Eastern time on October 23, 2006.
“Governmental Regulations” means all statutes, ordinances, rules and regulations of the Authorities applicable to Seller or the use or operation of the Real Property or the Improvements or any portion thereof.
“Hazardous Substances” means (a) asbestos, radon gas, mold and urea formaldehyde foam insulation, (b) any solid, liquid, gaseous or thermal contaminant, including smoke vapor, soot, fumes, acids, alkalis, chemicals, petroleum products or byproducts, polychlorinated biphenyls, phosphates, lead or other heavy metals and chlorine, (c) any solid or liquid waste (including, without limitation, hazardous waste), hazardous air pollutant, hazardous substance, hazardous chemical substance and mixture, toxic substance, pollutant, pollution, regulated substance and contaminant, and/or (d) any other chemical, material or substance, the use or presence of which, or exposure to the use or presence of which, is prohibited, limited or regulated by any Environmental Laws.
“Improvements” means all buildings, structures, fixtures, parking areas and other improvements located on the Real Property.
“Intangible Property” means all of Seller’s right, title and interest, to the extent assignable or transferable and to the extent not otherwise specifically excluded pursuant to this Agreement, in and to all other intangible rights, titles, interests, privileges and appurtenances owned by Seller and exclusively related to or used exclusively in connection with the ownership, use or operation of the Real Property or the Improvements, including, without limitation, digital property management data, digital operating statement and expense data, all rights, claims and causes of action Seller may have against governmental authorities, present and former owners of adjacent or neighboring land, former owners of the Property, present and former tenants of the
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Property, contractors and material suppliers, and architects, engineers and contractors in connection with the design or construction of the Improvements, except to the extent that any such right, claim and cause of action pertains to monies owed to Seller for the period prior to closing and except for any right, claim and cause of action that Seller may choose to assert, in its sole discretion, as a counterclaim against a claim or cause of action asserted by or in connection with services provided by any of the foregoing individuals or entities.
“Initial Earnest Money Deposit” has the meaning ascribed to such term in Section 4.1(a).
“Kiosk Lease” means all of the leases and other agreements with Kiosk Tenants with respect to the use and occupancy of the Real Property at Phelan.
“Kiosk Tenants” means those Tenants in Phelan who occupy less than 1,500 square feet of space in the building.
“Lease Schedule” means Seller’s most current lease schedule, which is attached as Exhibit F.
“Leases” means all of the leases and other agreements with Tenants with respect to the use and occupancy of the Real Property, together with all renewals and modifications thereof, if any, all guaranties thereof, if any, and any new leases and lease guaranties entered into after the Effective Date.
“Licensee Parties” has the meaning ascribed to such term in Section 5.1.
“Licenses and Permits” means, collectively, all of Seller’s right, title and interest, to the extent assignable, in and to licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps and entitlements now or hereafter issued, approved or granted by the Authorities in connection with the Real Property and the Improvements, together with all renewals and modifications thereof.
“Major Tenant” means any Tenant leasing at least 25,000 square feet of space at the Property, in the aggregate.
“New Tenant Costs” has the meaning ascribed to such term in Section 10.4(e).
“Operating Expenses” has the meaning ascribed to such term in Section 10.4(c).
“Permitted Exceptions” has the meaning ascribed to such term in Section 6.2(a).
“Permitted Outside Parties” has the meaning ascribed to such term in Section 5.2(b).
“Personal Property” means all of Seller’s right, title and interest in and to all equipment, appliances, tools, supplies, machinery, artwork, furnishings and other tangible personal property attached to, appurtenant to, located, as of the Effective Date, in and used in connection with the ownership or operation of the Improvements, and Seller’s management offices at the Real Property and situated at the Property at the time of Closing, but specifically excluding all
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personal property leased by or licensed to Seller or owned by tenants or others and software and other personal property that is proprietary or confidential in nature.
“Property” has the meaning ascribed to such term in Section 2.1.
“Proration Items” has the meaning ascribed to such term in Section 10.4(a).
“Purchase Price” has the meaning ascribed to such term in Section 3.1.
“Purchaser’s Affiliates” means any past, present or future: (i) shareholder, partner, member, manager or owner of Purchaser; (ii) entity in which Purchaser or any past, present or future shareholder, partner, member, manager or owner of Purchaser has or had an interest; (iii) entity that, directly or indirectly, controls, is controlled by or is under common control with Purchaser; and (iv) the heirs, executors, administrators, personal or legal representatives, successors and assigns of any or all of the foregoing.
“Purchaser’s Information” has the meaning ascribed to such term in Section 5.3(c).
“Real Property” means those certain parcels of real property located at 760 Market Street, San Francisco, California (“Phelan”) and 795 Folsom Street, San Francisco, California (“Folsom”), all as more particularly described in the legal descriptions attached hereto and made a part hereof as Exhibit D, together with all of Seller’s right, title and interest, if any, in and to the appurtenances pertaining thereto, including but not limited to Seller’s right, title and interest in and to the adjacent streets, alleys and right-of-ways, and any easement rights, air rights, subsurface development rights and water rights.
“Rental” has the meaning ascribed to such term in Section 10.4(b), and same are “Delinquent” in accordance with the meaning ascribed to such term in Section 10.4(b).
“Scheduled Closing Date” means the thirtieth (30th) day after expiration of the Evaluation Period, but subject to a thirty-day extension option pursuant to Section 10.1 below.
“Security Deposits” means all security deposits held by Seller, as landlord, and not previously applied to the obligations of a Tenant under its Lease, to the extent Purchaser receives a credit therefor pursuant to Section 10.4 of this Agreement.
“Seller’s Affiliates” means any past, present or future: (i) shareholder, partner, member, manager or owner of Seller; (ii) entity in which Seller or any past, present or future shareholder, partner, member, manager or owner of Seller has or had an interest; (iii) entity that, directly or indirectly, controls, is controlled by or is under common control with Seller and (iv) the heirs, executors, administrators, personal or legal representatives, successors and assigns of any or all of the foregoing.
“Seller’s Knowledge” means the present actual (as opposed to constructive or imputed) knowledge solely of Robert Drabkin (“Drabkin”), Regional Director, and Diane Murphy, (“Murphy”), Director of Property Management, Mack-Cali Realty Corporation (“MCRC”), the managing agent for Seller, without any independent investigation or inquiry whatsoever; provided that with respect to the representations and warranties set forth in Sections 8.1(a)
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through 8.1(f), inclusive, and 8.1(k) of this Agreement, “Seller’s Knowledge” means the present actual (as opposed to constructive or imputed) knowledge of Drabkin, Murphy, Mitchell E. Hersh, President and Chief Executive Officer of MCRC, Roger W. Thomas, Executive Vice President and General Counsel of MCRC and Daniel J. Wagner, Vice President and Senior Associate General Counsel of MCRC, without any independent investigation or inquiry whatsoever, but without any personal liability whatsoever.
“Service Contracts” means all of Seller’s right, title and interest, to the extent assignable, in all service agreements, maintenance contracts, equipment leasing agreements, warranties, guarantees, bonds, open purchase orders and other contracts for the provision of labor, services, materials or supplies relating solely to the Real Property, Improvements or Personal Property and under which Seller is currently paying for services rendered in connection with the Property, as listed and described on Exhibit E attached hereto, together with all renewals, supplements, amendments and modifications thereof, and any new such agreements entered into after the Effective Date, to the extent permitted by Section 7.1; provided however, “Service Contracts” shall not include contracts with Seller’s affiliates, including, without limitation, leasing, construction, management and development contracts with Seller’s affiliates.
“Significant Portion” means, for purposes of the casualty provisions set forth in Article XI hereof, damage by fire or other casualty to the Real Property and the Improvements or a portion thereof, the cost of which to repair would exceed five percent (5%) of the Purchase Price in the aggregate.
“Survey Objection” has the meaning ascribed to such term in Section 6.1.
“Tenants” means the tenants or users of the Real Property and Improvements who are parties to the Leases.
“Tenant Notice Letters” has the meaning ascribed to such term in Section 10.2(e), and are to be delivered by Purchaser to Tenants pursuant to Section 10.6.
“Termination Surviving Obligations” means the rights, liabilities and obligations set forth in Sections 5.2, 5.3, 5.4, 12.1, Articles XIII and XIV, 16.1, 18.2 and 18.8, and any other provisions which pursuant to their terms survive any termination of this Agreement.
“Title Commitment” has the meaning ascribed to such term in Section 6.2(a).
“Title Company” means Lawyers Title Insurance Corporation.
“Title Objections” has the meaning ascribed to such term in Section 6.2(a).
“Title Policy” has the meaning ascribed to such term in Section 6.2(a).
“Updated Survey” has the meaning ascribed to such term in Section 6.1.
Section 1.2 References: Exhibits and Schedules. Except as otherwise specifically indicated, all references in this Agreement to Articles or Sections refer to Articles or Sections of this Agreement, and all references to Exhibits or Schedules refer to Exhibits or Schedules
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attached hereto, all of which Exhibits and Schedules are incorporated into, and made a part of, this Agreement by reference. The words “herein,” “hereof,” “hereinafter” and words and phrases of similar import refer to this Agreement as a whole and not to any particular Section or Article.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
Section 2.1 Agreement. Seller hereby agrees to sell, convey and assign to Purchaser, and Purchaser hereby agrees to purchase and accept from Seller, on the Closing Date and subject to the terms and conditions of this Agreement, all of the following (individually and collectively, the “Property”):
(a) the Real Property;
(b) the Improvements;
(c) the Personal Property;
(d) the Intangible Property;
(e) all of Seller’s right, title and interest as lessor in and to the Leases and, subject to the terms of the respective applicable Leases, the Security Deposits; and
(f) to the extent assignable, the Service Contracts and the Licenses and Permits. All right, title and interest in and to the names, trademarks and servicemarks of Seller and MCRC, including but not limited to the right to use the name “Mack-Cali”, are excluded from the Property.
Section 2.2 Indivisible Economic Package. Purchaser has no right to purchase, and Seller has no obligation to sell, less than all of the Property, it being the express agreement and understanding of Purchaser and Seller that, as a material inducement to Seller and Purchaser to enter into this Agreement, Purchaser has agreed to purchase, and Seller has agreed to sell, all of the Property, subject to and in accordance with the terms and conditions hereof.
ARTICLE III
CONSIDERATION
Section 3.1 Purchase Price. The purchase price for the Property (the “Purchase Price”) shall be One Hundred Twenty-Six Million Dollars ($126,000,000) in lawful currency of the United States of America, payable as provided in Section 3.3. The Purchase Price shall be allocated among the Real Property and Improvements in accordance with the column identified as “Purchase Price Allocation” on Exhibit K. No portion of the Purchase Price shall be allocated to the Personal Property unless otherwise agreed by Seller and Purchaser.
Section 3.2 Assumption of Obligations; Additional Purchase Price Consideration. As additional consideration for the purchase and sale of the Property, at Closing Purchaser will (i) assume the covenants and obligations of Seller pursuant to the Leases, Service Contracts and Licenses and Permits, subject to certain limitations as more fully set forth in this Agreement,
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including without limitation, the exhibits hereto and (ii) offer to hire the Company California Employees at the same base salary and bonus compensation (other than stock) as are in existence prior to Closing as more fully set forth in Section 7.3 below. In addition, should Purchaser, its assigns or affiliates, initiate the conversion of Phelan into a residential condominium at any time within the three (3) year period following the Closing, then Purchaser or such assignee or affiliate, as the case may be, shall pay to Seller as additional purchase price consideration with respect to Phelan an amount equal to the lesser of ten percent (10%) of the net profits realized as a result of such conversion and Five Million Dollars ($5,000,000), as more fully set forth in Section 10.8 below.
Section 3.3 Method of Payment of Purchase Price. No later than 2:00 p.m. Eastern Time on the Closing Date, Purchaser shall pay the Purchase Price (less the Earnest Money Deposit), together with all other costs and amounts to be paid by Purchaser at the Closing pursuant to the terms of this Agreement (“Purchaser’s Costs”), by Federal Reserve wire transfer of immediately available funds to the account of Escrow Agent. Escrow Agent, following authorization by the parties at Closing, shall, prior to 3:00 p.m. Eastern Time (i) pay to Seller by Federal Reserve wire transfer of immediately available funds to an account designated by Seller, the Purchase Price, less any costs or other amounts to be paid by Seller at Closing pursuant to the terms of the Closing Statement executed by Seller and Purchaser, (ii) pay to the appropriate payees out of the proceeds of Closing payable to Seller all costs and amounts to be paid by Seller at Closing pursuant to the terms of the executed Closing Statement, and (iii) pay Purchaser’s Costs to the appropriate payees at Closing pursuant to the terms of the executed Closing Statement.
ARTICLE IV
EARNEST MONEY DEPOSIT
AND ESCROW INSTRUCTIONS
Section 4.1 The Earnest Money Deposit and Independent Contract Consideration.
(a) On or before one (1) Business Day after the Effective Date, Purchaser shall deposit with the Escrow Agent, by Federal Reserve wire transfer of immediately available funds, the sum of Five Hundred Thousand Dollars ($500,000.00) as the earnest money deposit on account of the Purchase Price (the “Initial Earnest Money Deposit”). TIME IS OF THE ESSENCE with respect to the deposit of the Initial Earnest Money Deposit. The Initial Earnest Money Deposit shall be held by the Escrow Agent in a sole order escrow account in the Purchaser’s name as a deposit against the Purchase Price in accordance with the terms and provisions of this Agreement. In furtherance of the foregoing, in the event Purchaser so instructs Escrow Agent on or prior to the expiration of the Evaluation Period, Escrow Agent agrees that it shall not be permitted to, and shall not, follow any conflicting instructions given by Seller or any third party as to the disposition of the Initial Earnest Money Deposit but shall instead follow only the instructions of Purchaser in connection therewith. Seller agrees in such instance not to deliver any conflicting instructions to Escrow Agent for any reason. If the Agreement is not terminated on or prior to the expiration of the Evaluation Period, the Initial Earnest Money Deposit shall be transferred by the Escrow Agent to a joint escrow account for the benefit of Purchaser and Seller.
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(b) If Purchaser does not terminate this Agreement pursuant to Section 5.3(c) below, then on or before one (1) Business Day after the expiration of the Evaluation Period, Purchaser shall, in addition to the Earnest Money Deposit, deposit with Escrow Agent, by Federal Reserve wire transfer of immediately available funds, Two Million Dollars ($2,000,000.00) as an additional earnest money deposit on account of the Purchase Price (the “Additional Earnest Money Deposit”). TIME IS OF THE ESSENCE WITH RESPECT TO THE PAYMENT OF THE ADDITIONAL EARNEST MONEY DEPOSIT. The Initial Earnest Money Deposit and Additional Earnest Money Deposit are hereinafter referred to individually and collectively as the “Earnest Money Deposit”.
Section 4.2 Escrow Instructions. The Earnest Money Deposit shall be held in escrow by the Escrow Agent in an interest-bearing account, in accordance with the provisions of Section 4.1 and Article XVII. In the event this Agreement is not terminated by Purchaser pursuant to the terms hereof by the end of the Evaluation Period in accordance with the provisions of Section 5.3(c) herein, the Earnest Money Deposit and the interest earned thereon shall become non-refundable to Purchaser except in those instances expressly set forth in this Agreement. In the event this Agreement is terminated by Purchaser prior to the expiration of the Evaluation Period, the Earnest Money Deposit, together with all interest earned thereon, shall be refunded to Purchaser.
Section 4.3 Designation of Certifying Person. In order to assure compliance with the requirements of Section 6045 of the Internal Revenue Code of 1986, as amended (the “Code”), and any related reporting requirements of the Code, the parties hereto agree as follows:
(a) Provided the Escrow Agent shall execute a statement in writing (in form and substance reasonably acceptable to the parties hereunder) pursuant to which it agrees to assume all responsibilities for information reporting required under Section 6045(e) of the Code, Seller and Purchaser shall designate the Escrow Agent as the person to be responsible for all information reporting under Section 6045(e) of the Code (the “Certifying Person”). If the Escrow Agent refuses to execute a statement pursuant to which it agrees to be the Certifying Person, Seller and Purchaser shall agree to appoint another third party as the Certifying Person.
(b) Seller and Purchaser each hereby agree:
(i) to provide to the Certifying Person all information and certifications regarding such party, as reasonably requested by the Certifying Person or otherwise required to be provided by a party to the transaction described herein under Section 6045 of the Code; and
(ii) to provide to the Certifying Person such party’s taxpayer identification number and a statement (on Internal Revenue Service Form W-9 or an acceptable substitute form, or on any other form the applicable current or future Code sections and regulations might require and/or any form requested by the Certifying Person), signed under penalties of perjury, stating that the taxpayer identification number supplied by such party to the Certifying Person is correct.
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ARTICLE V
INSPECTION OF PROPERTY
Section 5.1 Inspection Period. From and after the date of this Agreement, Purchaser and its authorized agents and representatives (for purposes of this Article V, the “Licensee Parties”) shall have the right, subject to the right of the Tenants, to enter upon the Real Property at all reasonable times during normal business hours to perform an inspection of the Property. Purchaser will provide to Seller notice of the intention of Purchaser or the other Licensee Parties to enter the Real Property at least 24 hours prior to such intended entry and specify the intended purpose therefor and the inspections and examinations contemplated to be made and with whom any Licensee Party will communicate. At Seller’s option, Seller may be present for any such entry and inspection. Purchaser shall not communicate with or contact any of the Tenants or any of the Authorities without the prior written consent of Seller, not to be unreasonably withheld. Notwithstanding anything to the contrary contained herein, no physical testing or sampling shall be conducted during any such entry by Purchaser or any Licensee Party upon the Real Property without Seller’s specific prior written consent, such consent not to be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Purchaser shall have the right to communicate with the Authorities in order to confirm the zoning requirements applicable to the Property and to verify whether there are any violations of record with respect to the Property; provided, however, that, without Seller’s consent, Purchaser shall not authorize or request any inspection or make any inquiries that would require an inspection of the Property by any of the Authorities. TIME IS OF THE ESSENCE with respect to the provisions of this Section 5.1.
Section 5.2 Document Review.
(a) During the Evaluation Period, Purchaser and the Licensee Parties shall have the right to review and inspect, at Purchaser’s sole cost and expense, copies of all of the following to the extent that, to Seller’s Knowledge, such items are in Seller’s possession or control (collectively, the “Documents”): all existing environmental and engineering reports and studies prepared for Seller with respect to the Property, real estate tax bills, together with assessments (special or otherwise), ad valorem and personal property tax bills covering the period of Seller’s ownership of the Property; current operating statements and historical operating information related to the Property for the past three years confirming collected income, operating expenses, capital expenditures, commissions and fees, together with related correspondence, notices, existing audits, real estate and personal property tax filings and real estate tax appeal files (which may be made available by Seller for review at the offices of Seller’s tax appeal consultant in California), contracts, and associated books and records; tenant ledgers, year-to-date operating statements, operating and other expense reconciliations and written communications with tenants regarding same; evidence of Seller’s property insurance; documentation pertaining to the registration of storage tanks and inventory records with respect to such tanks; an inventory list of the Personal Property; the Leases, lease files, Service Contracts, Licenses and Permits; assessment district information; any governmental or quasi-governmental correspondence or other documentation and notices related to use, zoning, building code or any other regulatory matter; construction plans and specifications; and site plans and all associated drawings, modifications, and additions for the Property; and copies of permits and soils reports, hazardous materials permits, fire sprinkler ratings, and electrical ratings; contracts and plans relating to the work described on Exhibit R and any other documents reasonably requested by Purchaser to the extent in Seller’s possession or control . Such inspections shall occur at a location or locations selected by Seller, which may be at Seller’s offices in San Francisco, California, in MCRC’s office in Denver, Colorado, at the Real Property or Purchaser’s
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office in San Diego, California to the extent Seller delivers any such Documents to Purchaser physically or electronically, or a combination of the foregoing locations. Purchaser shall not have the right to review or inspect materials not directly related to the leasing, maintenance and/or management of the Property, including, without limitation, all of Seller’s internal memoranda, financial projections, budgets, appraisals, proposals for work not actually undertaken, accounting and tax records and similar proprietary, elective or confidential information.
(b) Purchaser acknowledges that any and all of the Documents may be proprietary and confidential in nature and have been provided to Purchaser solely to assist Purchaser in determining the desirability of purchasing the Property. Subject only to the provisions of Article XII, Purchaser agrees not to disclose the contents of the Documents or any of the provisions, terms or conditions contained therein to any party outside of Purchaser’s organization other than its attorneys, existing and prospective partners, accountants, existing and prospective lenders, investors or the Licensee Parties (collectively, for purposes of this Section 5.2(b), the “Permitted Outside Parties”). Purchaser further agrees that within its organization, or as to the Permitted Outside Parties, the Documents will be disclosed and exhibited only to those persons within Purchaser’s organization or to those Permitted Outside Parties who are responsible for determining the desirability of Purchaser’s acquisition of the Property. Purchaser further acknowledges that the Documents and other information relating to the leasing arrangements between Seller and Tenants are proprietary and confidential in nature. Purchaser agrees not to divulge the contents of such Documents and other information except in strict accordance with the confidentiality standards set forth in this Section 5.2 and Article XII. In permitting Purchaser and the Permitted Outside Parties to review the Documents and other information to assist Purchaser, Seller has not waived any privilege or claim of confidentiality with respect thereto, and no third party benefits or relationships of any kind, either express or implied, have been offered, intended or created by Seller, and any such claims are expressly rejected by Seller and waived by Purchaser and the Permitted Outside Parties, for whom, by its execution of this Agreement, Purchaser is acting as an agent with regard to such waiver.
(c) Purchaser acknowledges that some of the Documents may have been prepared by third parties and may have been prepared prior to Seller’s ownership of the Property. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE DOCUMENTS REQUIRED TO BE DELIVERED BY SELLER UNDER SECTION 10 HEREOF (THE “CLOSING DOCUMENTS”), PURCHASER HEREBY ACKNOWLEDGES THAT SELLER HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS OR THE SOURCES THEREOF. SELLER HAS NOT UNDERTAKEN ANY INDEPENDENT INVESTIGATION AS TO THE TRUTH, ACCURACY OR COMPLETENESS OF THE DOCUMENTS AND IS PROVIDING THE DOCUMENTS SOLELY AS AN ACCOMMODATION TO PURCHASER.
Section 5.3 Entry and Inspection Obligations; Termination of Agreement.
(a) Purchaser agrees that in entering upon and inspecting or examining the Property, Purchaser and the other Licensee Parties will not unreasonably disturb the Tenants or interfere with the use of the Property pursuant to the Leases; interfere with the operation and
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maintenance of the Real Property or Improvements; damage any part of the Property or any personal property owned or held by Tenants or any other person or entity; injure or otherwise cause bodily harm to Seller or any Tenant, or to any of their respective agents, guests, invitees, contractors and employees, or to any other person or entity; permit any liens to attach to the Real Property by reason of the exercise of Purchaser’s rights under this Article V; or reveal or disclose any information obtained concerning the Property and the Documents to anyone outside Purchaser’s organization, except in accordance with the confidentiality standards set forth in Section 5.2(b) and Article XII. Purchaser will (i) maintain comprehensive general liability (occurrence) insurance on terms and in amounts satisfactory to Seller and Workers’ Compensation insurance in statutory limits, and, if Purchaser or any Licensee Party performs any physical inspection or sampling at the Real Property, in accordance with Section 5.1, such Licensee Party performing such physical inspection or sampling shall maintain errors and omissions insurance and contractor’s pollution liability insurance on terms and in amounts acceptable to Seller, and insuring Seller, Purchaser and such other parties as Seller shall request, covering any accident or event arising in connection with the presence of Purchaser or the other Licensee Parties on the Real Property or Improvements, and deliver evidence of insurance verifying such coverage to Seller prior to entry upon the Real Property or Improvements; (ii) promptly pay when due the costs of all entry and inspections and examinations done with regard to the Property; (iii) cause any inspection to be conducted in accordance with standards customarily employed in the industry and in compliance with all Governmental Regulations; (iv) at Seller’s request, furnish to Seller any studies, reports or test results received by Purchaser regarding the Property, promptly after such receipt, in connection with such inspection; and (v) restore the Real Property and Improvements to the condition in which the same were found before any such entry upon the Real Property and inspection or examination was undertaken.
(b) Purchaser hereby indemnifies, defends and holds Seller and its partners, agents, directors, officers, employees, successors and assigns harmless from and against any and all liens, claims, causes of action, damages, liabilities, demands, suits, and obligations to third parties, together with all losses, penalties, costs and expenses relating to any of the foregoing (including but not limited to court costs and reasonable attorneys’ fees) for personal injury, wrongful acts, torts claims and property damage, arising out of Purchaser’s and the other Licensee Parties’ entry onto the Property and/or any inspections, investigations, examinations, sampling or tests conducted by Purchaser or any of the Licensee Parties, whether prior to or after the date hereof, with respect to the Property or arising out of any violation of the provisions of this Article V; provided that the foregoing indemnity shall not relate to any liability, cost, loss, damage or expense to the extent attributable to (i) conditions in existence on or about the Property on the date of this Agreement, except to the extent exacerbated by Purchaser (provided that Purchaser’s mere discovery or legally required disclosure of a pre-existing condition on the Property shall not be deemed to be an exacerbation of a pre-existing condition), (ii) any acts or omissions of Seller or any of Seller’s agents, contractors, or employees, or (iii) claims based on disclosures required pursuant to Governmental Regulations.
(c) In the event that Purchaser determines, after its inspection of the Documents and Real Property and Improvements, that it does not want to proceed with the transaction as set forth in this Agreement, Purchaser shall have the right to terminate this Agreement by providing written notice to Seller prior to the expiration of the Evaluation Period, WITH TIME BEING OF THE ESSENCE WITH RESPECT THERETO. In the event Purchaser
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terminates this Agreement in accordance with this Section 5.3(c), Purchaser shall have the right to receive a refund of the Earnest Money Deposit, together with all interest which has accrued thereon, and except with respect to the Termination Surviving Obligations, this Agreement shall be null and void and the parties shall have no further obligation to each other. In the event this Agreement is terminated, Purchaser shall return to Seller all Documents and copies Purchaser has made of the Documents and all copies of any studies, reports or test results regarding any part of the Property obtained by Purchaser, before or after the execution of this Agreement (collectively, “Purchaser’s Information”) promptly following the time this Agreement is terminated for any reason.
Section 5.4 Sale “As Is” THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT HAS BEEN NEGOTIATED BETWEEN SELLER AND PURCHASER. THIS AGREEMENT REFLECTS THE MUTUAL AGREEMENT OF SELLER AND PURCHASER, AND PURCHASER HAS THE RIGHT TO CONDUCT ITS OWN INDEPENDENT EXAMINATION OF THE PROPERTY. OTHER THAN THE MATTERS EXPRESSLY REPRESENTED IN SECTION 8.1 HEREOF AND THE CLOSING DOCUMENTS OR ANY ESTOPPEL DELIVERED BY SELLER TO PURCHASER, BY WHICH ALL OF THE FOLLOWING PROVISIONS OF THIS SECTION 5.4 ARE LIMITED, PURCHASER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ANY OF SELLER’S AGENTS OR REPRESENTATIVES, AND PURCHASER HEREBY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS OR WARRANTIES HAVE BEEN MADE.
SELLER SPECIFICALLY DISCLAIMS, AND NEITHER SELLER NOR ANY OF SELLER’S AFFILIATES NOR ANY OTHER PERSON IS MAKING, ANY REPRESENTATION, WARRANTY OR ASSURANCE WHATSOEVER TO PURCHASER, AND NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EITHER EXPRESS OR IMPLIED, ARE MADE BY SELLER OR RELIED UPON BY PURCHASER WITH RESPECT TO THE STATUS OF TITLE TO OR THE MAINTENANCE, REPAIR, CONDITION, DESIGN, DEVELOPMENT POTENTIAL OR MARKETABILITY OF THE PROPERTY, OR ANY PORTION THEREOF, INCLUDING BUT NOT LIMITED TO (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (e) ANY CLAIM BY PURCHASER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO THE REAL PROPERTY, IMPROVEMENTS OR PERSONAL PROPERTY, (f) THE FINANCIAL CONDITION OR PROSPECTS OF THE PROPERTY OR ANY TENANT AND (g) THE COMPLIANCE OR LACK THEREOF OF THE REAL PROPERTY OR THE IMPROVEMENTS WITH GOVERNMENTAL REGULATIONS, INCLUDING WITHOUT LIMITATION ENVIRONMENTAL LAWS, NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED, IT BEING THE EXPRESS INTENTION OF SELLER AND PURCHASER THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PROPERTY WILL BE
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CONVEYED AND TRANSFERRED TO PURCHASER IN ITS PRESENT CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS,” WITH ALL FAULTS. PURCHASER REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED PURCHASER OF REAL ESTATE, AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF PURCHASER’S CONSULTANTS IN PURCHASING THE PROPERTY. PURCHASER HAS BEEN GIVEN A SUFFICIENT OPPORTUNITY HEREIN TO CONDUCT AND HAS CONDUCTED OR WILL CONDUCT SUCH INSPECTIONS, INVESTIGATIONS AND OTHER INDEPENDENT EXAMINATIONS OF THE PROPERTY AND RELATED MATTERS AS PURCHASER DEEMS NECESSARY, INCLUDING BUT NOT LIMITED TO THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AND WILL RELY UPON SAME AND NOT UPON ANY STATEMENTS OF SELLER (EXCLUDING THE LIMITED MATTERS EXPRESSLY REPRESENTED BY SELLER IN SECTION 8.1 HEREOF OR THE CLOSING DOCUMENTS) NOR OF ANY PARTNER, OFFICER, DIRECTOR, EMPLOYEE, AGENT OR ATTORNEY OF SELLER OR ITS GENERAL PARTNER. PURCHASER ACKNOWLEDGES THAT ALL INFORMATION PROVIDED TO PURCHASER WAS OBTAINED FROM A VARIETY OF SOURCES, AND SELLER WILL NOT BE DEEMED TO HAVE REPRESENTED OR WARRANTED THE COMPLETENESS, TRUTH OR ACCURACY OF ANY OF THE DOCUMENTS OR OTHER SUCH INFORMATION HERETOFORE OR HEREAFTER FURNISHED TO PURCHASER. UPON CLOSING, PURCHASER WILL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER’S INSPECTIONS AND INVESTIGATIONS. PURCHASER ACKNOWLEDGES AND AGREES THAT, UPON CLOSING, SELLER WILL SELL AND CONVEY TO PURCHASER, AND PURCHASER WILL ACCEPT THE PROPERTY, “AS IS, WHERE IS,” WITH ALL FAULTS. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS IN CONNECTION WITH THE PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE OR OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. PURCHASER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE “AS IS, WHERE IS” NATURE OF THIS SALE AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED WITH THE PROPERTY. PURCHASER, WITH PURCHASER’S COUNSEL, HAS FULLY REVIEWED THE DISCLAIMERS AND WAIVERS SET FORTH IN THIS AGREEMENT AND UNDERSTANDS THEIR SIGNIFICANCE AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH HEREIN ARE AN INTEGRAL PART OF THIS AGREEMENT, AND THAT SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO PURCHASER FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS AGREEMENT.
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PURCHASER AND PURCHASER’S AFFILIATES FURTHER COVENANT AND AGREE NOT TO SUE SELLER AND SELLER’S AFFILIATES AND RELEASE SELLER AND SELLER’S AFFILIATES OF AND FROM AND WAIVE ANY CLAIM OR CAUSE OF ACTION, INCLUDING WITHOUT LIMITATION ANY STRICT LIABILITY OR CONTRIBUTION CLAIM OR CAUSE OF ACTION, THAT PURCHASER OR PURCHASER’S AFFILIATES MAY HAVE AGAINST SELLER OR SELLER’S AFFILIATES UNDER ANY ENVIRONMENTAL LAW, NOW EXISTING OR HEREAFTER ENACTED OR PROMULGATED, RELATING TO ENVIRONMENTAL MATTERS OR ENVIRONMENTAL CONDITIONS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT, OR BY VIRTUE OF ANY COMMON LAW RIGHT, NOW EXISTING OR HEREAFTER CREATED, RELATED TO ENVIRONMENTAL CONDITIONS OR ENVIRONMENTAL MATTERS IN, ON, UNDER, ABOUT OR MIGRATING FROM OR ONTO THE PROPERTY. THE TERMS AND CONDITIONS OF THIS SECTION 5.4 WILL EXPRESSLY SURVIVE THE TERMINATION OF THIS AGREEMENT OR THE CLOSING, AS THE CASE MAY BE, AND WILL NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND ARE HEREBY DEEMED INCORPORATED INTO THE DEED AS FULLY AS IF SET FORTH AT LENGTH THEREIN.
“IN CONNECTION WITH THE RELEASES HEREIN SET FORTH, PURCHASER EXPRESSLY WAIVES ALL RIGHTS UNDER CALIFORNIA CIVIL CODE SECTION 1542, AS AMENDED OR MODIFIED, WHICH PROVIDES THAT:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”
Section 5.5 Natural Hazard Disclosure Requirement Compliance. Purchaser and Seller acknowledge that Seller may be required to disclose whether the Property lies within the following natural hazard areas or zones: (i) a special flood hazard area designated by the Federal Emergency Management Agency (California Government Code Section 8589.3); (ii) an area of potential flooding (California Government Code Section 8589.4); (iii) a very high fire hazard severity zone (California Government Code Section 51178 et seq.); (iv) a wildland area that may contain substantial forest fire risks and hazards (Public Resources Code Section 4136); (v) an earthquake fault zone (Public Resources Code Section 2621.9); or (vi) a seismic hazard zone (Public Resources Code Section 2694) (sometimes all of the preceding are herein collectively called the “Natural Hazard Matters”). Seller has engaged or will cause the Title Company to engage the services of a natural hazard disclosure expert (the “Natural Hazard Expert”), to examine the maps and other information specifically made available to the public by government agencies for the purposes of enabling Seller to fulfill its disclosure obligations, if and to the extent such obligations exist, and to report the result of its examination to Purchaser and Seller in writing. The written report prepared by the Natural Hazard Expert (the “Natural Hazard
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Report”) regarding the results of its examination will fully and completely discharge Seller from its disclosure obligations referred to in this Agreement or in the Natural Hazard Report, if and to the extent any such obligations exist. Purchaser acknowledges that Seller has delivered to Purchaser the Commercial Property Owner’s Guide to Earthquake Safety, published by the State of California Seismic Safety Commission, which informs property owners generally of the risks attendant to earthquakes and the effect earthquakes could have on the their property. Purchaser agrees to provide Seller with a written acknowledgment of its receipt of the Natural Hazard Report. Purchaser’s failure to terminate this Agreement pursuant to section 5.3(c) above shall be deemed to be Purchaser’s acceptance of all Natural Hazard Matters.
Section 5.6 Pre 1975 Construction Disclosure. Seller hereby informs Purchaser that the Real Property may have been constructed during or prior to 1975, and the construction method may have been that of pre-cast tilt-up concrete. In accordance with California law, attached hereto as Exhibit “T” is a copy of the Commercial Property Owner’s Guide to Earthquake Safety published by the State of California Seismic Safety Commission (the “Guide”). In connection with the Commercial Property Earthquake Weakness Disclosure Report (the “Disclosure Report”) which is made a part of the Guide, Seller hereby notifies Purchaser that with respect to Question Nos. 1 through 4 in such Disclosure Report, Seller does not know the answers to such questions and that, by the execution of this Agreement by Seller, Seller shall have been deemed to have executed and delivered the Disclosure Report and shall be deemed to have checked the “Don’t Know” box following each such questions.
ARTICLE VI
TITLE AND SURVEY MATTERS
Section 6.1 Survey. Purchaser acknowledges receipt of the Existing Survey. Any modification, update or recertification of the Existing Survey shall be at Purchaser’s election and sole cost and expense. The Existing Survey together with any update Purchaser has elected to obtain, if any, is herein referred to as the “Updated Survey.” Any matters that are objected to by Purchaser in a written notice to Seller prior to the expiration of the Evaluation Period shall constitute a “Survey Objection” under this Agreement.
Section 6.2 Title Commitment.
(a) Purchaser acknowledges receipt of those certain title insurance commitments issued by the Title Company under Commitment Nos. NYN06-002152-L and NYN06-002151-L (the “Title Commitment”), together with copies of the title exceptions listed thereon. Purchaser shall have until the expiration of the Evaluation Period to provide written notice to Seller of Purchaser’s objection to any exception or other matter set forth in the Title Commitment that Purchaser deems unacceptable (a “Title Objection”). Purchaser shall be deemed to have accepted all exceptions and other matters in the Title Commitment not objected to in writing by Purchaser prior to the expiration of the Evaluation Period. By the date (the “New Objection Date”) which is five (5) Business Days after Purchaser’s counsel receives notice of any new exception to the title to the Real Property raised by the Title Company after the effective date of the Title Commitment and prior to the Closing (or as promptly as possible prior to the
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Closing if such notice is received with less than five (5) Business Days prior to the Closing [but in no event less than one (1) Business Day] and the Closing Date shall be extended to permit time for Seller to respond to such objection), Purchaser shall provide Seller with written notice of its objection to such new exception if Purchaser deems same unacceptable (“New Title Objections”). In the event Seller does not receive the New Title Objections by the New Objection Date, Purchaser will be deemed to have accepted the exceptions to title set forth on any updates to the Title Commitment as Permitted Exceptions. Pursuant to the Title Commitment, the Title Company shall be committed to issue to Purchaser at Closing, an ALTA Form, amended 10-17-70 (with no added exception for creditors’ rights) extended coverage owner’s policy of title insurance, dated as of each Property as of the date and time of recordation of the Deed for such Property in the amount of the Purchase Price insuring Purchaser’s fee simple title to the Real Property subject to the standard preprinted exceptions except those that the Title Company agrees to omit or modify during the Evaluation Period and with such endorsements as the Title Company has agreed to issue on or before the expiration of the Evaluation Period, subject only to the Permitted Exceptions (the “Title Policy”). “Permitted Exceptions” means the following: (1) the lien of any current real estate taxes and assessments and subsequent periods, provided that the same are prorated in accordance with this Agreement; and (2) such other matters set forth in the Title Commitment or Survey which are approved or deemed approved by Purchaser during the Evaluation Period or thereafter in accordance with this Agreement.
(b) All taxes, water rates or charges, sewer rents and assessments, plus interest and penalties thereon, which on the Closing Date shall have accrued and are liens against the Real Property will be credited against the Purchase Price (subject to the provision for apportionment of taxes, water rates and sewer rents herein contained).
(c) If on the Closing Date the Real Property shall be affected by any lien which, pursuant to the provisions of this Agreement, is required to be discharged or satisfied by Seller, Seller shall not be required to discharge or satisfy the same of record provided the money necessary to satisfy the lien is retained by the Title Company at Closing or the Title Company receives an indemnity from Seller satisfactory to the Title Company, and the Title Company omits the lien as an exception from the Title Policy, and a credit is given to Purchaser for the recording charges for a satisfaction or discharge of such lien.
(d) No franchise, transfer, inheritance, income, corporate or other tax open, levied or imposed against Seller or any former owner of the Property, that may be a lien against the Property on the Closing Date, shall be an objection to title if the Title Company insures against collection thereof from or out of the Real Property and/or the Improvements, and provided further that Seller deposits with the Title Company a sum reasonably sufficient to secure a release of the Property from the lien thereof or the Title Company receives an indemnity from Seller satisfactory to the Title Company, and, in any event, any such tax is omitted as an exception to the Title Policy. If a search of title discloses judgments, bankruptcies, or other returns against other persons having names the same as or similar to that of Seller, Seller will deliver to the Title Company an affidavit stating that such judgments, bankruptcies or other returns do not apply to Seller, and such search results shall not be deemed Title Objections.
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Section 6.3 Title Defect.
(a) In the event Seller receives any Survey Objection, Title Objection or New Title Objection (collectively and individually, a “Title Defect”) within the time periods required under Sections 6.1 and 6.2 above, Seller may elect (but shall not be obligated) by written notice to Purchaser to attempt to remove, or cause to be removed at its expense, any such Title Defect, and shall provide Purchaser with written notice, within seven (7) days of its receipt of any such objection, of its intention to attempt to cure any such Title Defect and/or extend the Closing Date for such purpose. If Seller elects to attempt to cure any Title Defect, the Scheduled Closing Date shall be extended, for a period not to exceed sixty (60) days, for the purpose of such removal if Seller provides written notice to Purchaser of such extension at least ten (10) Business Days prior to the Scheduled Closing Date. If Seller elects to extend the Scheduled Closing Date as aforesaid, but successfully effects such cure more than ten (10) Business Days before the expiration of the extension period set forth in Seller’s extension notice, then Seller may shorten the extension period by sending Purchaser written notice at least ten (10) Business Days prior to the new Scheduled Closing Date. In the event that (i) Seller elects not to attempt to cure any such Title Defect, or (ii) Seller is unable to cure any such Title Defect for any period elected by Seller but not to exceed sixty (60) days from the Scheduled Closing Date, Seller shall so advise Purchaser and Purchaser shall have the right to terminate this Agreement and receive a refund of the Earnest Money Deposit, together with all interest which has accrued thereon, or to waive such Title Defect and proceed to the Closing. Purchaser shall make such election within ten (10) days after receipt of Seller’s notice. If Purchaser elects to proceed to the Closing, any Title Defects waived by Purchaser shall be deemed Permitted Exceptions. In any such event of termination, Purchaser shall promptly return Purchaser’s Information to Seller, after which neither party shall have any further obligation to the other under this Agreement except for the Termination Surviving Obligations.
(b) Notwithstanding any provision of this Article VI to the contrary, Seller will be obligated to cure exceptions to title to the Property, in the manner described in Section 6.2(c) above, relating to liens and security interests securing any financings to Seller, and any mechanic’s liens resulting from work at the Property directly contracted for by Seller, provided that Seller shall remove other monetary liens created or permitted by Seller, any new matters appearing after the date of the Agreement which were voluntarily created by Seller and not consented to, approved or deemed approved by Purchaser hereunder, delinquent property tax liens, any income tax lien or any judgment lien as a result of Seller’s actions.
ARTICLE VII
INTERIM OPERATING COVENANTS, ESTOPPELS AND POST-CLOSING EMPLOYMENT
Section 7.1 Interim Operating Covenants. Seller covenants to Purchaser that Seller will:
(a) Operations. From the Effective Date until Closing, continue to operate, manage and maintain the Improvements in the ordinary course of Seller’s business and substantially in accordance with Seller’s present practice, subject to ordinary wear and tear and further subject to Article XI of this Agreement. From the Effective Date through the expiration of the Evaluation Period, Seller will consult with Purchaser regarding any proposed new Leases or amendments or terminations to existing Leases and provide copies thereof to Purchaser for
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review, including, without limitation, disclose to Purchaser by written notice any and all material terms regarding any proposed new Leases or amendments to or terminations of existing Leases, including, without limitation, any New Tenant Costs associated with any proposed new Leases or amendment to any existing Lease, and will consult with Purchaser regarding the initiation or settlement of any real estate tax appeals during such period; provided, however, that Seller shall not be required to obtain Purchaser’s consent before entering into any new Leases or amendments to or terminations of existing Leases and/or initiating or settling any tax appeals. After the expiration of the Evaluation Period, Seller shall not amend any existing Lease, accept any termination of any existing Lease or enter into any new Lease, or initiate or settle any tax appeal, without Purchaser’s prior written consent in Purchaser’s sole and absolute discretion; provided, however, in the event that Purchaser withholds or conditions its consent to any amendment or termination of an existing Lease or to any new Lease, then the provisions of Section 9.1(b) shall be null and void and of no further force and effect and Purchaser shall assume the risk of any and all loses of operation income at the Property between the expiration of the Evaluation Period and Closing. Notwithstanding any provision contained herein or in that certain Agreement of Sale and Purchase, dated August 3, 2006, as subsequently amended, between Purchaser and Mack-Cali Realty, L.P., an Affiliate of Seller (the “Colorado Contract”), upon the closing of the Colorado Contract, Purchaser shall make Robert Drabkin (“Drabkin”) available as reasonably necessary to supervise the Company California Employees and oversee the management, leasing and operation of the Property as directed by Seller until the earlier to occur of Closing or termination of this Agreement (such period is hereinafter referred to as the “Pending Closing Period”.) During the Pending Closing Period, Drabkin will oversee the Company California Employees and manage the Property in such a manner to insure the continued operation of the Property as required under this Article VII and during this period consult with Seller on a periodic basis as may be reasonably necessary or as reasonably requested by Seller. Drabkin shall provide the foregoing services without fee to Seller, provided that Seller shall promptly reimburse Purchaser for all expenses reasonably incurred by Drabkin in connection therewith. Seller will indemnify, defend and hold Purchaser and Drabkin harmless from and against any and all costs and expenses, including reasonable legal fees and court costs, relating to any claim, action or demand arising out of any action taken or not taken by Drabkin during the Pending Closing Period in overseeing and managing the Company California Employees as directed by Seller and without any gross negligence or willful misconduct on the part of Drabkin, and Seller shall name Purchaser’s affiliate that will be Drabkin’s employer and Drabkin as additional insureds on Seller’s comprehensive general liability insurance policy during the Pending Closing Period.
(b) Service Contracts. During the Evaluation Period, consult with Purchaser before entering into any Service Contract unless such Service Contract is terminable on thirty (30) days notice without payment of a termination penalty, fee or premium; provided, however, that Seller shall be under no obligation to obtain Purchaser’s consent prior to entering into any Service Contract. From the expiration of the Evaluation Period until Closing, not enter into any Service Contracts, unless such Service Contracts are terminable on thirty (30) days notice without paying any termination penalty, fee or premium or unless Purchaser consents thereto in writing in Purchaser’s sole and absolute discretion. At Closing, Seller shall terminate any property management agreements and any other agreements with affiliates of Seller in connection with the Property.
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