AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
(The REP Fund Portfolio)
THIS AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS (this
"Agreement") is made as of September 25, 1998, by and between REAL-EQUITY
PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP ("Seller"), as seller, and JH REAL
ESTATE PARTNERS, INC., a California corporation, and AMERICAN APARTMENT
COMMUNITIES III, L.P., a Delaware limited partnership, (collectively, the
"Buyer"), collectively as buyer.
RECITALS
A. Seller owns an interest in the Properties (as defined below).
B. Buyer desires to purchase, and Seller is willing to sell, all of
Seller's right, title and interest in the Properties on the terms and conditions
of this Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Buyer and Seller agree as follows:
AGREEMENT
1. Certain Basic Definitions. For purposes of this Agreement, the following
terms shall have the following definitions:
1.1 "Buyer's Address" means:
JH Real Estate Partners, Inc.
600 City Parkway West, Suite 730
Orange, California 92868
Tel: (714) 712-9400
Fax: (714) 712-9404
Attention: Hugo F. Aviles
and
American Apartment Communities, III, L.P.
c/o American Apartment Communities III, Inc.
21 W. Broad Street, 11th Floor
Columbus, Ohio 43215
Attention: Legal/Executive Department
753900.8
Tel: (614) 220-8900
Fax: (614) 220-8912
1.2 "Closing Date" means November 15, 1998, subject to extension
pursuant to Section 3.2.1, or, once so extended, any earlier date to which Buyer
and Seller mutually agree.
1.3 "Deposit" means the amount of Two Million and No/100 Dollars
($2,000,000.00) and all interest accrued thereon.
1.4 "Escrow Holder" means First American Title Company of Los Angeles.
1.5 "Escrow Holder's Address" means:
First American Title Company of Los Angeles
520 North Central Avenue
Glendale, California 91203
Attention: Ms. Tricia Pewthers
Tel: (818) 242-5800
Fax: (818) 244-8832
1.6 "Purchase Price" means the sum of THIRTY-ONE MILLION NINE HUNDRED
THOUSAND AND NO/100 DOLLARS ($31,900,000.00).
1.7 "Seller's Address" means:
REAL-Equity Partners
c/o National Partnership Investment Corp.
9090 Wilshire Boulevard, 2nd Floor
Beverly Hills, California 90212
Attention: Henry Casden
Tel: (310) 278-2191
Fax: (310) 278-6835
1.8 "Title Company" means First American Title Company of Los Angeles.
2. Sale of Properties: Purchase Price.
2.1 Sale of Properties. Subject to the terms, covenants and conditions
of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from
Seller, all of Seller's right, title and interest in and to the following:
(a) the following five (5) parcels of real property, (i) three
(3) of which are located at, respectively, (X) 3610 S. Nogales, West Covina,
California, (Y) 8609 DeSoto Ave., Canoga Park, California, and (Z) 4050 Baker
Lane, Reno, Nevada, and (ii) two (2) of which are located at 21616 Califa St.,
Woodland Hills, California, and all of which are more
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particularly and collectively described on Exhibit "A" attached hereto (each, a
"Parcel" and collectively, the "Parcels");
(b) all buildings and other improvements located on,
respectively, each such Parcel, including, without limitation, the rental
apartment complex located on each such Parcel (collectively, the
"Improvements");
(c) all right, title and interest of Seller in and to any
equipment, machinery or other property which is affixed to the Improvements that
are located on the each Parcel so as to constitute fixtures under California law
(each individual Parcel, together with the Improvements and fixtures that are
located thereon, is collectively referred to herein as the "Parcel Real
Property");
(d) all right, title and interest of Seller in and to all
furniture, furnishings, decorations and other tangible personal property now
existing and located upon each Parcel, but excluding tangible personal property
owned by tenants of each such Parcel under the Tenant Leases (as defined below)
that are applicable thereto (collectively, the "Personal Property") (with
respect to each Parcel, the Parcel Real Property and the Personal Property that
is located thereon, are collectively referred to herein as the "Parcel Property"
and the Parcel Property of all five (5) Parcels are collectively referred to
herein as the "Properties" and, without limiting the foregoing, all references
herein to the "Properties" shall be deemed also to include a reference to each
Parcel Property, regardless of whether or not specified); and
(e) all right, title and interest of Seller in and to (a) the
leases that (i) with respect to each Parcel, relate to the rent roll to be
attached as Schedule 1 to the various General Assignments (as defined in Section
3.8.2) relating to each such Parcel, and (ii) hereafter entered into by Seller
pursuant to Section 4 (all such leases are collectively referred to herein as
the "Tenant Leases"), (b) the Security Deposits and the Contracts and Documents
(each as defined in the form of the General Assignments attached hereto as
Exhibit "C").
2.2 Purchase Price. The Purchase Price shall be payable as follows:
2.2.1 Deposit. Buyer shall deliver the Deposit to Escrow Holder
concurrently with the execution hereof by Buyer, and the Deposit shall be deemed
to be an earnest money deposit of Buyer. If (i) this Agreement is terminated
pursuant to and in accordance with Section 7, (ii) the Close of Escrow does not
occur as a result of the failure of a condition contained in Section 3.3 which
is not due, in whole or in part, to the fault, negligence or wilful misconduct
of Buyer, or (iii) Buyer terminates this Agreement pursuant to Section 10.2,
Escrow Holder shall deliver the Deposit to Buyer. If this Agreement is
terminated for any other reason other than as set forth in the preceding
sentence, Escrow Holder shall deliver the Deposit to Seller pursuant to Section
10.1.
2.2.2 Balance. Buyer shall deposit into Escrow an amount ("Cash
Balance"), in immediately available federal funds equal to the Purchase Price,
minus the Deposit,
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and plus the 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 federal funds no later than one (1) business day before
the Closing Date or such earlier date as Escrow Holder may reasonably require
under applicable law such that Escrow Holder will be in a position to disburse
the cash proceeds to Seller on the Closing Date.
3. Escrow; Closing Conditions.
3.1 Escrow.
3.1.1 Opening of Escrow. Upon the execution of this Agreement by
Buyer and Seller, and the acceptance of this Agreement by Escrow Holder in
writing, this Agreement shall constitute the joint escrow instructions of Buyer
and Seller to Escrow Holder to open an escrow ("Escrow") for the consummation of
the sale of Seller's interest in 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 Seller shall
execute Escrow Holder's general escrow instructions upon request; provided,
however, that if there is any conflict or inconsistency between such general
escrow instructions and this Agreement, this Agreement shall control.
3.1.2 Investment of Deposit. Escrow Holder shall invest the
Deposit in insured money market accounts, certificates of deposit, United States
Treasury Bills or such other instruments as Buyer and Seller may mutually and
reasonably instruct Escrow Holder from time to time; provided, however, that all
such investments shall be federally insured or insured and maintained in an
account at an institution with offices in Los Angeles County, California, where
such account or accounts will be maintained. At the Closing, the Deposit shall
be credited against the Purchase Price. In the event that the sale of all of the
Properties is not consummated for any reason, then the Deposit shall be held and
disbursed in accordance with this Agreement.
3.2 Closing Date. The Escrow shall close (the "Closing" or the "Close
of Escrow") on the Closing Date, provided that all conditions to the Close of
Escrow set forth in this Agreement have been satisfied or waived in writing by
the party intended to be benefitted thereby.
3.2.1 Extension of Closing Date. If Seller does not receive, on
or prior to November 15, 1998, evidence that is reasonably sufficient to confirm
that Seller has obtained the Limited Partner Approval (as defined in Section
3.3.3), then the Closing Date shall be extended from day to day until the date
which is three (3) business days after the date on which Seller obtains the
Limited Partner Approval and delivers to Buyer and to Escrow Holder written
notice thereof; provided, however, that if Seller does not obtain the Limited
Partner Approval on or prior to December 15, 1998, Seller shall have the right
to terminate this Agreement by delivering to Buyer and to Escrow Holder written
notice of such election to terminate by Seller, except that, if the review,
comment and revision period applicable to the review by the Securities and
Exchange Commission (the "SEC") of Seller's consent solicitation statement and
materials
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exceeds ten (10) days, said December 15, 1998 date shall be extended
automatically by such number of days in excess of ten (10) required to obtain
SEC clearance; provided further, however, in no event shall said December 15,
1998 date be extended beyond December 31, 1998 or shall Seller extend this
Agreement beyond December 31, 1998. Without limiting the foregoing and
commencing upon execution and delivery of this Agreement, Seller agrees to use
prompt and good faith efforts to file with the SEC a consent solicitation
statement relating to the sale of the Properties as contemplated by this
Agreement, and in any event to make such filing within thirty (30) days of such
execution and delivery. If the SEC clears such consent solicitation statement,
Seller shall, within ten (10) days of Seller's receipt of such SEC clearance,
deliver such cleared consent solicitation statement to the limited partners of
Seller.
3.3 Buyer's Conditions to Closing. The Close of Escrow is subject to
and contingent on the satisfaction of the following conditions or the waiver of
the same by Buyer in writing:
3.3.1 Title Commitment. The Title Company's commitment to issue
the Buyer's Title Policies complying with the requirements of Section 3.8.4
below.
3.3.2 Seller's Representations and Warranties. All
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects.
3.3.3 Limited Partner Approval. Seller shall have obtained the
approval of a majority-in-interest of the limited partners of Seller to the sale
contemplated hereby and any waiting period required for such approval to become
final shall have expired (the "Limited Partner Approval").
3.4 Property Records and Condition. Each of Buyer and Seller hereby
acknowledges and agrees that Seller does not make any representation or
warranty, express or implied, as to the accuracy or completeness of any
information delivered by Seller to Buyer or any of Buyer's representatives or
otherwise contained in Seller's files, including, without limitation, any
environmental audit or report, and that Seller has provided all such materials
as a courtesy to Buyer and without any obligation of Seller whatsoever. Buyer
acknowledges that Seller and Seller's affiliates and other representatives shall
have no responsibility for the contents and accuracy of the disclosures or other
information included in such materials and Buyer agrees that the obligations of
Seller in connection with Buyer's purchase of the Properties shall be governed
by this Agreement irrespective of the contents of any such disclosures or the
timing or delivery thereof. Buyer shall have no right to terminate this
Agreement for any matter which Buyer has heretofore or may hereafter discover in
connection with any of the Properties, including any tests, studies,
investigations, or inspections with respect thereto or any documents provided by
Seller.
3.5 Termination. This Agreement shall automatically terminate if the
Close of Escrow has not occurred by the Closing Date. Notwithstanding anything
in this Agreement to the contrary, if Seller does not obtain the Limited Partner
Approval (as defined in Section 3.3.3)on
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or prior to the date that is thirty (30) days after the date on which Seller
commences the solicitation of its limited partners with respect thereto, Seller
shall have the right, but not the obligation, to terminate this Agreement by
delivering to the Buyer and to the Escrow Holder written notice of its election
to do so and Escrow Holder shall, upon its receipt of such written notice,
deliver the Deposit to the Buyer. Upon termination of this Agreement pursuant to
this Section 3.5 or pursuant to Section 7: (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 the party entitled thereto pursuant to
the terms of this Agreement; (d) Buyer and Seller shall each pay one half (1/2)
of the Escrow Holder's fees and escrow cancellation fees, if any; (e) Buyer
shall return to Seller all Due Diligence Materials in Buyer's possession
relating to the Properties; and (f) the respective obligations of Buyer and
Seller under this Agreement shall terminate.
3.6 Due Diligence.
3.6.1 Preliminary Title Commitment. In connection with the
Properties, Buyer has received and reviewed each of the four (4) following title
commitments, copies of which are attached hereto as Exhibit "F," each issued by
the Title Company, and a copy of all of the underlying documents referenced
therein (collectively, the "Commitments"): (i) dated August 25, 1998 (Commitment
No. 198379RB), (ii) dated September 3, 1998 (Commitment No. 9827135-53), (iii)
dated September 3, 1998 (Commitment No. 9827136-53), and (iv) dated September 3,
1998 (Commitment No. 98277137-53). Buyer hereby approves the exceptions to title
that are shown on each of the Commitments attached hereto as Exhibit "F" but
have not been crossed-out in the attached mark-ups of the Commitments; provided,
however, that notwithstanding (a) the tax exceptions set forth in item number 1
of Schedule B, Section 1 of each of Commitment Nos. 9827135-53, 9827136-53 and
98277137-53, and item number 5 of Commitment No. 198379RB, taxes shall be
pro-rated between Buyer and Seller in accordance with Section 3.13.1, and (b)
the delinquent sewer service charges set forth in item number 6 of Commitment
No. 198379RB, sewer charges shall be pro-rated between Buyer and Seller in
accordance with Section 3.13.4.
3.6.2 Inspection. Buyer hereby acknowledges and agrees that Buyer
has, prior to the date of this Agreement, inspected the physical, legal,
environmental, land use, zoning, title and other conditions of the Properties,
and all records, documents, instruments and other information relating thereto,
as Buyer deems and has deemed necessary, appropriate and/or advisable in
connection therewith, and hereby approves and accepts the same. Buyer
acknowledges that: (i) Buyer has conducted such surveys, tests, studies,
investigations and inspections, and made such boring, percolation, geologic,
environmental and soils tests and other studies of the Properties as Buyer deems
necessary, appropriate and/or advisable; and (ii) Seller has provided Buyer with
adequate opportunity to make such surveys, tests, studies, investigations and
inspections of the Properties (including an inspection for zoning, land use,
environmental and other laws, regulations and restrictions) as Buyer has, in
Buyer's discretion, deemed necessary, appropriate and/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
(including,
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without limitation, its subsurface) and its suitability for Buyer's intended
use. Buyer has reviewed and hereby approves all matters relating to the
Properties including, without limitation, the following due diligence items
(collectively, the "Due Diligence Materials"): (a) a rent roll relating to the
Tenant Leases will be attached as Schedule 1 to the various General Assignments;
(b) all agreements, documents and other information that bind the Properties or
otherwise affect the operation or use of the Properties, and (c) all plans,
documents, agreements and other records of any governmental entities, districts
and utilities regarding the Properties or otherwise impacting, restricting, or
affecting the use of the Properties.
3.7 Seller's Conditions to Closing. The obligations of Seller 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
Seller in writing:
3.7.1 Buyer's 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
each such representation and warranty having the same effect as though such
representation and warranty was made by Buyer as of the date hereof and as of
the Close of Escrow.
3.7.2 Covenants. Buyer shall have substantially performed and
satisfied all agreements and covenants required hereby to be performed by Buyer
prior to or at the Close of Escrow.
3.7.3 Limited Partner Approval. Seller shall have obtained the
Limited Partner Approval.
3.8 Title and Title Insurance.
3.8.1 Deeds. Seller shall, pursuant to a separate grant deed for
each Parcel Real Property in the form of Exhibit "B" (collectively, the
"Deeds"), convey its interest in each Parcel Real Property to Buyer.
3.8.2 General Assignment. Seller shall, pursuant to a separate
assignment for each Parcel Property in the form of Exhibit "C" (collectively,
the "General Assignments"), assign to Buyer, without recourse of any kind,
Seller's right, title and interest, if any, in and to (a) any plans,
specifications, licenses, permits, entitlements, surveys, maps, agreements and
contracts relating to each Parcel Property, subject to any rights of consent as
provided therein (provided, however, that Seller shall, prior to any such
assignment and upon the written instruction of Buyer, terminate any contracts
that (i) bind any of the Properties (or otherwise would bind Buyer after the
Closing) and (ii) have been entered into by Seller or an affiliate of Seller,
but not including any contract that relates to cable television access rights,
the rights under which Seller and its affiliates have assigned to third parties
unaffiliated with Seller), (b) the Tenant Leases, and (c) the Security Deposits,
each as they relate to such Parcel Property.
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3.8.3 Bill of Sale. Seller shall, pursuant to a separate Bill of
Sale for each Parcel Property in the form of Exhibit "D" (collectively, the
"Bills of Sale"), quitclaim, without recourse, all of Seller's right, title and
interest, if any, in and to the Personal Property owned by Seller and used in
the operation of such Parcel Property.
3.8.4 Buyer's Title Policies. At the Close of Escrow, Escrow
Holder shall cause the Title Company to issue to Buyer, with respect to each
Parcel Real Property, a CLTA standard-coverage owner's policy of title insurance
(collectively, the "Buyer's Title Policies") which:
(a) shall be written with liability in the amount of the
Purchase Price; and
(b) shall insure title to each such Parcel Real Property, to
be vested in Buyer, subject only to the following exceptions ("Permitted
Exceptions"): (i) the standard printed exceptions set forth in the Title
Company's form of title policy; (ii) general and special real property taxes and
assessments for the current fiscal year which are not yet delinquent; (iii) the
exceptions approved by Buyer pursuant to Section 3.6.1 above; (iv) any covenant,
condition, restriction, right, right of way, easement of record, or encroachment
that does not materially and adversely affect the value of such Parcel Real
Property as of the date of this Agreement or the continued use of such Parcel
Property for the purpose for which it is being used as of the date of this
Agreement; (v) applicable zoning and use regulations of any applicable
governmental authority; (vi) rights of tenants under Tenant Leases, as tenants
only, without any option to purchase or right of first refusal for all or any
portion of such Parcel Property; (vii) any mechanic's or other liens to the
extent arising out of Buyer's entry upon the Parcel Property; and (viii) any
matters or encroachments that would be revealed by a survey or inspection of
Parcel Property.
3.8.5 Termination of Collateral Security Agreement. Seller shall
obtain and deposit with Escrow Holder a quitclaim release or a quitclaim
termination statement applicable to the "Memorandum of Collateral Security
Assignment" and any document described therein, which is shown as item 9 in
Commitment No. 9827137.
3.9 Closing Costs and Charges.
3.9.1 Seller's Costs. Seller shall pay all documentary transfer,
stamp, sales, and other taxes and recording fees relating to the transfer of
each Parcel Property.
3.9.2 Buyer's Costs. Except with respect to the costs to be paid
by Seller as set forth in Section 3.9.1, Buyer shall pay all costs relating to
Buyer's purchase of each Parcel Property pursuant to this Agreement, including
(a) all of the Escrow Holder's fee and other costs of the Escrow; (b) all costs
relating to or arising out of any of the four (4) Buyer's Title Policies, and
(c) all costs and expenses incurred by Buyer in connection with its due
diligence investigation and inspection of each Parcel Property.
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3.10 Deposit of Documents and Funds by Seller. Not later than two (2)
business days prior to the Closing Date, Seller shall deposit the following
items into Escrow, each of which shall be duly executed and, where appropriate,
acknowledged by Seller:
3.10.1 Five (5) Deeds, each relating to one (1) of the Real
Property Parcels;
3.10.2 The Certification of Non-Foreign Status in the form of
Exhibit "E" ("Certification");
3.10.3 A counterpart of each of the five (5) General Assignments,
each relating to one (1) Property Parcel;
3.10.4 Five (5) Bills of Sale, each relating to one (1) Property
Parcel; and
3.10.5 Other documents that 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 Five (5) executed counterparts of the General Assignments,
each relating to one (1) Property Parcel; and
3.11.3 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 benefitted
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 each of the Deeds in the
Official Records of the County in which the Parcel described therein is located;
3.12.2 Buyer's Documents. Deliver to Buyer: (a) the four (4)
original Buyer's Title Policies, each relating to a different Parcel Real
Property; (b) the original Certification executed by Seller; (c) the five (5)
original counterparts of the General Assignments executed by Seller, each
relating to one (1) Parcel Property; and (d) the five (5) original Bills of Sale
executed by Seller, each relating to one (1) Parcel Property;
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3.12.3 Seller's Documents. Deliver to Seller an executed original
counterpart of the five (5) General Assignments, each relating to one (1) Parcel
Property, and a copy of every document delivered to Buyer; and
3.12.4 Purchase Price. Deliver to Seller the Purchase Price and
such other funds, if any, as may be due to Seller by reason of credits under
this Agreement, less all items chargeable to Seller under this Agreement.
3.13 Prorations and Adjustments.
3.13.1 Taxes. Escrow Holder shall prorate all non-delinquent real
property taxes, and all current installments of assessments on each Parcel, as
of the Close of Escrow for the current fiscal year based on the most current
official real property tax information available from the County Assessor's
office where the Parcel is located or other assessing authorities. If real
property tax and assessment figures for the current fiscal year are not
available, real property taxes shall be prorated based on the real property
taxes for the previous fiscal year. Seller shall pay any real property taxes
attributable to the period of Seller's ownership of such Parcel. Seller reserves
the right to meet with governmental officials and to contest any reassessment
concerning or affecting Seller's obligations under this Section 3.13.1.
3.13.2 Rent. Escrow Holder shall prorate rental income and all
other amounts paid by tenants under the Tenant Leases. Delinquent rents shall
not be prorated; provided, however, that if Buyer receives any rental payment
after the Closing which represents rent that was delinquent as of the Closing,
Buyer shall pay such delinquent rent to Seller within ten (10) days after
receipt thereof.
3.13.3 Security Deposits. Buyer shall receive a credit against
the Purchase Price in an amount equal to the amount of all unapplied and
unrefunded tenant security deposits received by Seller in connection with the
Tenant Leases (the "Security Deposits").
3.13.4 Utilities and Other Expenses. Seller shall notify all
water, sewer, gas, electric and other utility companies servicing the Properties
(collectively, "Utility Companies") of the sale of the Properties to Buyer and
shall request that all Utility Companies send Seller a final bill for the period
ending on the last day prior to the Close of Escrow. Buyer shall notify all
Utility Companies servicing the Properties that as of the Close of Escrow, Buyer
shall own the Properties and that all utility bills for the period commencing on
the Close of Escrow are to be sent to Buyer. If any of the Utility Companies
sends Seller or Buyer a bill for a period in which the Close of Escrow occurs,
Buyer and Seller shall prorate such bills outside the Escrow. In connection with
such proration, it shall be presumed that utility charges were uniformly
incurred during the billing period.
3.13.5 Prorations. All prorations shall be made as of the Close
of Escrow on the basis of the actual days of the month in which the Close of
Escrow occurs.
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4. Leasing and Operation. From the date of this Agreement through the
Closing Date, Seller shall (i) have the right to enter into leases affecting the
Properties in the ordinary course of its business and upon terms that are
substantially consistent with the past leasing practices of Seller and (ii)
operate the Properties in a manner that is consistent with its past operation of
the Properties.
5. Delivery and Possession. Seller shall deliver possession of the
Properties to Buyer at the Close of Escrow, subject to the Permitted Exceptions
and rights of tenants under the Tenant Leases.
6. Commissions. Buyer and Seller 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. Buyer shall indemnify and hold
Seller harmless from and against any and all liabilities, claims, demands,
damages, costs and expenses, including, without limitation, reasonable
attorneys' fees and court costs, 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. Seller
shall indemnify and hold Buyer harmless from and against any and all
liabilities, claims, demands, costs and expenses, including, without limitation,
reasonable attorneys' fees and costs in connection with claims for any such
commissions, finders' fees or brokerage fees arising out of Seller's conduct or
the inaccuracy of the foregoing representation and/or warranty of Seller. The
obligations of Buyer and Seller under this Section 6 shall survive the Close of
Escrow or earlier termination of this Agreement.
7. Damage or Destruction: Condemnation.
7.1 Damage or Destruction. At all times after the date of this
Agreement (the "Execution Date") and prior to the Closing, and notwithstanding
the pendency of this Agreement, the entire risk of loss or damage by earthquake,
flood, landslide, fire, hurricane, tornado or other casualty to the Properties
shall be borne and assumed by Seller. If, at any time after the Execution Date
and prior to the Closing, any material part of the Properties is damaged or
destroyed by earthquake, flood, landslide, fire, hurricane, tornado or other
casualty, Seller shall notify Buyer in writing of such fact. In such event,
Buyer shall have the option to terminate this Agreement upon written notice to
Seller given not later than ten (10) business days after Buyer's receipt of such
notice from Seller. Upon such termination, the Deposit shall be returned to
Buyer, the parties shall equally share the cancellation charges of Escrow Holder
and Title Company, and neither party shall have any further rights or
obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement. Buyer shall have no right
to terminate this Agreement as a result of any nonmaterial damage or destruction
of the Properties. If Buyer does not elect or has no right to terminate this
Agreement, Seller shall assign and turn over to Buyer at the Closing, and Buyer
shall be entitled to receive and keep, all insurance proceeds payable with
respect to such damage or destruction (which shall then be repaired or not at
Buyer's option and cost).
7.2 Condemnation. If, after the Execution Date and prior to the
Closing, all or any material portion of the Properties is taken by condemnation
or eminent domain (or is the
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subject of a pending or contemplated taking which has not been consummated),
Seller shall notify Buyer of such fact in writing. In such event, Buyer shall
have the option to terminate this Agreement upon written notice to Seller given
not later than ten (10) business days after Buyer's receipt of such notice from
Seller. Upon such termination, the Deposit shall be returned to Buyer, the
parties shall equally share the cancellation charges of Escrow Holder and Title
Company, and neither party shall have any further rights or obligations
hereunder, other than pursuant to any provision hereof which expressly survives
the termination of this Agreement. Buyer shall have no right to terminate this
Agreement as a result of any nonmaterial taking of any portion of the
Properties. If Buyer does not elect or has no right to terminate this Agreement,
Seller shall assign and turn over to Buyer at the Closing, and Buyer shall be
entitled to receive and keep, all awards for the taking by condemnation and
Buyer shall be deemed to have accepted the Properties subject to the taking
without reduction in the Purchase Price.
7.3 Materiality. For the purposes of this Section 7, (a) a damage or
destruction shall be deemed to be material if the total cost to repair such
damage or destruction (the "Damage Amount"), and (b) any condemnation shall be
deemed to be material if (i) the value of the Properties following the
condemnation is diminished by more than One Million Dollars ($1,000,000) (as
reasonably determined by Seller's appraiser or the condemning authority).
8. Seller's Representations and Warranties. It is expressly understood and
agreed that all liability of Seller for breach of the representations and
warranties contained in this Section 8 shall terminate if no written claim of
breach, specifying the representation or warranty allegedly breached and the
supporting evidence for the alleged breach, shall be delivered to Seller on or
prior to the date which is sixty (60) days following the Closing Date. Seller
represents and warrants to Buyer that as of the date of this Agreement and as of
the Closing Date:
8.1 Seller is duly organized, validly existing, and in good standing
under the laws of the state of its formation;
8.2 Subject to Seller obtaining the Limited Partner Approval, Seller
and National Partnership Investments Corp., a California corporation, acting
alone on behalf of Seller, has the full power and authority to execute, deliver
and perform its obligations under this Agreement; and
8.3 This Agreement and all agreements, instruments and documents
herein provided to be executed by Seller are, and as of the Closing shall be,
duly authorized, executed and delivered by Seller and binding upon Seller.
9. Buyer's Representations and Warranties. Buyer represents and warrants
the following to Seller, both as of the date of this Agreement and as of the
Closing Date:
9.1 Buyer is duly organized, validly existing, and in good standing
under the laws of the state of its formation;
753900.8 -12-
9.2 Buyer has the full power and authority to execute, deliver and
perform Buyer's obligations under this Agreement;
9.3 This Agreement and all agreements, instruments and documents
herein provided to be executed by Buyer are, and as of the Closing shall be,
duly authorized, executed and delivered by, and are and shall be binding upon,
Buyer; and
9.4 Buyer hereby represents that Buyer, and each constituent member of
Buyer, are sophisticated real estate investors and have had a sufficient
opportunity to conduct a satisfactory and appropriate due diligence
investigation.
10. Default.
10.1 LIQUIDATED DAMAGES - DEPOSIT. IN THE EVENT THAT THE CLOSING FAILS
TO OCCUR AS A RESULT OF A DEFAULT BY BUYER IN THE PERFORMANCE OF ITS OBLIGATIONS
UNDER THIS AGREEMENT, BUYER AND SELLER AGREE THAT SELLER'S ACTUAL DAMAGES WOULD
BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO ASCERTAIN. THE PARTIES THEREFORE
AGREE THAT IN THE EVENT THAT THE CLOSING FAILS TO OCCUR AS A RESULT OF THE
DEFAULT BY BUYER IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, SELLER, AS
SELLER'S SOLE AND EXCLUSIVE REMEDY, IS ENTITLED TO LIQUIDATED DAMAGES IN THE
AMOUNT OF ALL OF THE DEPOSIT. IN THE EVENT THAT THE CLOSING FAILS TO OCCUR AS A
RESULT OF BUYER'S DEFAULT, THEN, UPON NOTICE BY SELLER TO BUYER AND ESCROW
HOLDER TO THAT EFFECT, (A) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
BUYER AND SELLER HEREUNDER AND THE ESCROW CREATED HEREBY SHALL TERMINATE, (B)
ESCROW HOLDER SHALL, AND IS HEREBY AUTHORIZED AND INSTRUCTED TO, RETURN PROMPTLY
TO BUYER AND SELLER ALL DOCUMENTS AND INSTRUMENTS TO THE PARTIES WHO DEPOSITED
THE SAME, (C) ESCROW HOLDER SHALL DELIVER TO SELLER, PURSUANT TO SELLER'S
INSTRUCTIONS, THE DEPOSIT, AND THE SAME SHALL BE THE FULL, AGREED AND LIQUIDATED
DAMAGES, AND (D) ALL TITLE AND ESCROW CANCELLATION CHARGES SHALL BE CHARGED TO
BUYER; PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT LIMIT SELLER'S RIGHTS OR
REMEDIES (1) WITH RESPECT TO THE OBLIGATIONS OF BUYER UNDER SECTIONS 6, 12, 25,
AND 29 HEREOF, (2) WITH RESPECT TO THOSE RIGHTS AND OBLIGATIONS THAT, BY THEIR
TERMS, SURVIVE THE TERMINATION OF THIS AGREEMENT, AND (3) TO RECOVER ATTORNEYS'
FEES INCURRED BY SELLER IN THE EVENT THAT BUYER DISPUTES ANY TERMINATION BY
SELLER HEREUNDER, OR DISPUTES OR INTERFERES WITH ANY ATTEMPT BY SELLER TO CAUSE
ESCROW HOLDER TO RELEASE THE DEPOSIT TO SELLER, AND IT IS SUBSEQUENTLY
DETERMINED THAT, AS APPLICABLE, SELLER IS RIGHTFULLY ENTITLED TO TERMINATE THIS
AGREEMENT OR ENTITLED TO RECEIVE SUCH DEPOSIT.
753900.8 -13-
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THIS SECTION 10.1, AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE
TO BE BOUND BY ITS TERMS.
- - - -------------------------- ------------------------
SELLER'S INITIALS BUYER'S INITIALS
10.2 Buyer's Pre-Closing Remedies. In the event Seller fails to
perform any act required to be performed by Seller pursuant to this Agreement on
or before the Closing, then Buyer shall execute and deliver to Seller written
notice of such breach, which notice shall set forth complete information about
the nature of the breach. Seller shall have a period of ten (10) business days
to cure such breach. If such breach remains uncured beyond the ten (10) business
day period described above, then Buyer's sole and exclusive remedy shall be
either: (a) to cancel this Agreement, in which event Escrow Holder shall return
the Deposit to Buyer, or (b) to specifically enforce the provisions of this
Agreement; provided, however, that at the time of filing the complaint, Buyer
shall deposit with the Escrow Holder the amount of the Purchase Price inclusive
of the Deposit.
10.3 No Contesting Liquidated Damages. As material consideration to
each party's agreement to the liquidated damages provisions stated above, each
party 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.
10.4 Post-Closing Remedies of Seller. If after the Closing Buyer fails
to perform its obligations which expressly survive the Closing pursuant to this
Agreement, then Seller may exercise any remedies available to it at law or in
equity, in any order it deems appropriate in its sole and absolute discretion,
including, but not limited to, seeking specific performance or damages. In such
event, the liquidated damages provisions contained in Section 10.1 shall not
limit Seller's damages.
11. Waiver of Trial by Jury. Seller 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 the extent they may legally do so, Seller 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 Agreement, including 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, whether pursuant to
Section 631 of the California Code of Civil Procedure or otherwise.
753900.8 -14-
12. Attorney's 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.
13. Notices. All notices, demands, approvals, and other communications
provided for in this Agreement shall be in writing and shall be effective upon
the earliest of the following to occur: (a) when hand delivered to the
recipient; (b) one (1) business day after deposit with a nationally recognized
overnight-guaranteed delivery service; or (c) three (3) business days after
deposit in a sealed envelope in the United States mail, postage prepaid by
registered or certified mail, return receipt requested, addressed to the
recipient as set forth in Section 1 above. All notices to Buyer shall be sent to
Buyer's address with a copy to Arnold & Porter, 777 South Figueroa, 44th Floor,
Los Angeles, California, (Fax: 213/243-4199), Attn: Richard C. Smith, Esq. All
notices to Seller shall be sent to Seller's Address, with a copy to Battle
Fowler LLP, 2049 Century Park East, Suite 2350, Los Angeles, California 90067
(Fax: 310/277-0336), Attn: Bruce C. Geyer, Esq. All notices to Escrow Holder
shall be sent to Escrow Holder's Address. If the date on which any notice to be
given 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. The foregoing addresses may be changed
by written notice given in accordance with this Section.
14. Amendment; Complete Agreement. All amendments and supplements to this
Agreement must be in writing and executed by Buyer and Seller. This Agreement
contains the entire agreement and understanding between Buyer and Seller
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 Seller concerning the Properties, and
all other matters which are the subject of this Agreement. This Agreement has
been drafted through a joint effort of the parties and their counsel and,
therefore, shall not be construed in favor of or against either of the parties.
15. Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.
16. 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.
17. 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.
753900.8 -15-
18. Time of the Essence. Time is of the essence of this Agreement.
19. Waiver. No waiver by Buyer or Seller 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.
20. Third Parties. This Agreement is entered into for the sole benefit of
Buyer and Seller and their respective permitted successors and assigns. No party
other than Buyer and Seller and such permitted successors and assigns shall have
any right of action under or rights or remedies by reason of this Agreement.
21. 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.
22. Condition of Properties. Buyer represents and warrants that, as
specified in Section 3.6.2 hereof, Buyer has inspected and conducted tests and
studies of the Properties, and that Buyer is 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 similar occurrences that
may alter its condition or affect its suitability for any proposed use. Seller
shall have no responsibility or liability with respect to any such occurrence.
Buyer represents and warrants that Buyer is acting, and will act, only upon
information obtained by Buyer directly from Buyer's own inspection of the
Properties. Notwithstanding anything to the contrary contained in 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.
23. Properties "AS IS".
23.1 No Side Agreements or Representations. No person acting on behalf
of Seller 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. No
representation, warranty, agreement, statement, guarantee or promise, if any,
made by any person acting on behalf of Seller which is not contained in this
Agreement will be valid or binding on Seller.
23.2 "AS IS" CONDITION. BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS
NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS 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,
753900.8 -16-
OF, AS TO, CONCERNING OR WITH RESPECT TO (I) VALUE; (II) THE INCOME TO BE
DERIVED FROM THE PROPERTIES; (III) THE SUITABILITY OF THE PROPERTIES FOR ANY AND
ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, INCLUDING THE
POSSIBILITIES FOR FUTURE DEVELOPMENT AND OPERATION OF THE PROPERTIES; (IV) THE
HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PROPERTIES; (V) THE MANNER, QUALITY, STATE OF REPAIR
OR LACK OF REPAIR OF THE PROPERTIES; (VI) THE NATURE, QUALITY OR CONDITION OF
THE PROPERTIES, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY;
(VII) THE COMPLIANCE OF OR BY THE PROPERTIES OR ITS OPERATION WITH ANY LAWS,
RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR
BODY; (VIII) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTIES; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATION, ORDERS OR
REQUIREMENTS; (X) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER,
OR ADJACENT TO THE PROPERTIES; (XI) THE CONTENT, COMPLETENESS OR ACCURACY OF THE
DUE DILIGENCE MATERIALS OR COMMITMENTS REGARDING TITLE; (XII) THE CONFORMITY OF
ANY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTIES,
INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO
BUYER BY SELLER OR OTHERWISE; (XIII) THE CONFORMITY OF THE PROPERTIES TO PAST,
CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY
OF ANY UNDERSHORING; (XV) DEFICIENCY OF ANY DRAINAGE; (XVI) THE FACT THAT ALL OR
A PORTION OF THE PROPERTIES MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE;
(XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS
AFFECTING THE PROPERTIES; OR (XVIII) WITH RESPECT TO ANY OTHER MATTER. BUYER
FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO
INSPECT THE PROPERTIES AND REVIEW INFORMATION AND DOCUMENTATION AFFECTING THE
PROPERTIES, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTIES
AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION, AND NOT ON ANY INFORMATION
PROVIDED OR TO BE PROVIDED BY SELLER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT
ANY INFORMATION MADE AVAILABLE TO BUYER OR PROVIDED OR TO BE PROVIDED BY OR ON
BEHALF OF SELLER WITH RESPECT TO THE PROPERTIES WAS OBTAINED FROM A VARIETY OF
SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY
OR COMPLETENESS OF SUCH INFORMATION. ANY SUCH INFORMATION PROVIDED BY SELLER IS
AS A COURTESY TO BUYER. BUYER DOES, AND HEREBY AGREES TO, FULLY AND IRREVOCABLY
RELEASE SELLER AND ITS AFFILIATES AND ALL OTHER SOURCES OF INFORMATION AND
PREPARERS OF INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTIES WHICH WERE
RETAINED BY SELLER, FROM ANY AND ALL CLAIMS
753900.8 -17-
THAT BUYER OR ANY OF ITS AFFILIATES MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST
SELLER, ANY SUCH AFFILIATE, AND/OR ANY SUCH SOURCES OR PREPARERS OF INFORMATION
FOR ANY COSTS, LOSS, LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION OR CAUSE OF
ACTION ARISING FROM SUCH INFORMATION OR DOCUMENTATION. SELLER IS NOT LIABLE OR
BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE PROPERTIES, OR THE OPERATION THEREOF, FURNISHED BY
ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. BUYER FURTHER
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 SELLER HAS NO OBLIGATIONS TO MAKE REPAIRS,
REPLACEMENTS OR IMPROVEMENTS EXCEPT AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN.
BUYER REPRESENTS, WARRANTS AND COVENANTS TO SELLER THAT, EXCEPT FOR SELLER'S
EXPRESS REPRESENTATIONS AND WARRANTIES SPECIFIED IN THIS AGREEMENT, BUYER IS
RELYING SOLELY UPON BUYER'S OWN INVESTIGATION OF THE PROPERTIES.
- - - -------------------------- ------------------------
SELLER'S INITIALS BUYER'S INITIALS
24. Release. Buyer hereby acknowledges that it shall, and hereby does, rely
solely upon Buyer's own knowledge of the Properties based on its investigation
and inspection thereof in determining the Property's physical condition. Buyer
and anyone claiming by, through or under Buyer hereby waives its right to
recover from and fully and irrevocably releases Seller, its partners, employees,
officers, directors, representatives, agents, servants, attorneys, affiliates,
parent, subsidiaries, successors and assigns, and all persons, firms,
corporations and organizations in its behalf ("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 construction defects, errors,
omissions or other conditions, latent or otherwise, including environmental
matters and hazardous substances, affecting the Properties or any portion
thereof. This release includes 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 Seller pursuant to this Agreement.
WITH RESPECT TO THE FOREGOING, AND THE RELEASES SET FORTH IN SECTION
23, BUYER SPECIFICALLY ACKNOWLEDGES THAT IT IS AWARE OF AND FAMILIAR WITH THE
PROVISIONS 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 SUSPECT
TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED THIS SETTLEMENT WITH THE DEBTOR."
753900.8 -18-
EACH OF THE UNDERSIGNED BUYER, BEING AWARE OF THE FOREGOING, HEREBY EXPRESSLY
WAIVES AND RELINQUISHES ALL RIGHTS AND BENEFITS IT MAY HAVE THEREUNDER AS WELL
AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
- - - -------------------------- ------------------------
SELLER'S INITIALS BUYER'S INITIALS
25. Indemnification. Buyer shall indemnify, defend, protect and hold
harmless Seller and Seller's partners, and each of their respective partners,
affiliates, subsidiaries, directors, officers, participants, attorneys,
employees, consultants and agents, from and against any and all damages,
demands, losses, liabilities, costs or expenses whatsoever (including attorneys'
fees and costs) and claims therefor, including, without limitation, any claims
by third party, including, without limitation, investigatory expenses or
clean-up environmental costs (collectively, "Claims"), whether direct or
indirect, known or unknown, or foreseen or unforeseen, which may arise from or
be related to or in any way connected with (a) any inaccuracy in any
representation or warranty made by Buyer in this Agreement, (b) Buyer's breach
of any covenant or agreement contained in this Agreement, (c) Buyer's activities
on or ownership of the Properties after the Close of Escrow, (d) the physical
condition of the Properties or any other aspect of the Properties, no matter
whether earlier discoverable or not and any effort of Buyer and/or Buyer's
contractors to correct the same, regardless of how such Claim arises, including,
but not limited to, the acts or omissions of Buyer or its employees, agents,
suppliers or contractors; provided, however, that Buyer's obligation of
indemnity pursuant to this subsection (d) of this Section 25 shall not be
operable to the extent that any such Claims arise due to the actions of Seller
or affiliates of Seller. Buyer's obligation of indemnity under this Section 25
shall survive the Close of Escrow and shall not be merged with any of the
respective Deeds.
26. Assignment. Except as permitted pursuant to this Section 26, (a) Buyer
shall neither assign its rights nor delegate its obligations hereunder without
obtaining Seller's prior written consent, which may be withheld in Seller's sole
discretion, (b) in no event shall any assignment relieve Buyer from its
obligations under this Agreement, and (c) any purported or attempted assignment
in violation of this Section 26 shall be void and of no effect. Notwithstanding
the foregoing sentence, Buyer may, without Seller's consent, assign its rights
under this Agreement to any entity controlled by, or that controls, Buyer or an
affiliate of Buyer, subject to such assignee's assumption in writing of all
Buyer's obligations under this Agreement; provided, however, that no such
assignment, whether with or without Seller's consent, shall operate to release
Buyer or alter Buyer's primary liability to perform the obligations of Buyer
under this Agreement.
27. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the heirs, successors and permitted assigns of the parties
hereto. In no event shall Buyer have any right to delay or postpone the Close of
Escrow to create a partnership,
753900.8 -19-
corporation or other form of business association or to obtain financing to
acquire title to the Properties or for any other reason not specified in this
Agreement.
28. Exhibits. Each reference to a Section or an Exhibit in this Agreement
shall mean the sections of this Agreement and the exhibits that are attached to
this Agreement, unless the context requires otherwise. Each such exhibit hereby
is incorporated herein by this reference.
29. Duty of Confidentiality. Each of Buyer and Seller represents and
warrants to the other that it shall keep all information and/or reports obtained
from the other, or related to or connected with the Properties, or any portion
thereof, the other party, or the transaction described in this Agreement,
confidential and will not disclose any such information to any person or entity
without obtaining the prior written consent of the other party, which consent
shall not be unreasonably withheld, conditioned or delayed; provided, however,
that the foregoing shall not limit such party from disclosing any such
information to (i) its respective consultants, counsel, advisors, financiers, or
accountants, or any of the parties, and their respective counsel, that Buyer
and/or Seller must communicate with in connection with Buyer's acquisition of
the Properties; provided, however, that such party shall inform the recipient of
such information of its confidential nature, (ii) Seller's limited partners for
the purpose of soliciting their consent to the sale of the Properties, as
contemplated by this Agreement, and/or (iii) such persons as such party
reasonably deems necessary or advisable to comply with applicable laws and/or
court orders or to obtain necessary governmental licenses or permits.
30. Business Day. If the Closing Date or the day for performance of any act
required under this Agreement falls on a Saturday, Sunday or legal holiday, then
the Closing Date or the day for such performance, as the case may be, shall be
the next following regular business day.
31. Recording. This Agreement shall not be recorded and the act of
recording by Buyer shall be an act of default hereunder by Buyer.
32. Limitation of Liability of Seller and its Affiliates. Notwithstanding
Section 3.3.3, Seller shall have no liability whatsoever to Buyer or otherwise
if the Limited Partner Approval is not obtained and Buyer's only remedy with
respect thereto shall be to receive the Deposit pursuant to Section 2.2.1.
Without limiting the foregoing, no limited partner of Seller, nor any of its
respective beneficiaries, shareholders, partners, officers, agents, employees,
heirs, successors or assigns shall have any personal liability of any kind or
nature for or by reason of any matter or thing whatsoever under, in connection
with, arising out of or in any way related to this Agreement and the
transactions contemplated herein, and Buyer hereby waives for itself and anyone
who may claim by, through or under Buyer any and all rights to sue or recover on
account of any such alleged personal liability.
33. Joint and Several Liability of Buyer. The obligations of Buyer
hereunder shall be joint and several.
34. Pay-Off of Existing Indebtedness. Notwithstanding anything in this
Agreement to the contrary, Buyer shall, on or prior to the Closing Date, take
all actions, and
753900.8 -20-
obtain all consents, if any, that may be necessary or appropriate to enable
Buyer to take title to any of the Properties, including, to the extent required
but without limitation, any consents required or reasonably necessary pursuant
to the terms of that certain Regulatory Agreement For Multi-Family Housing
Projects recorded on November 24, 1971 in Book 595, Page 115, as Document No.
226777 in the Official Records of the County Recorder of Washoe County, State of
Nevada, as described at item number 10 of Commitment No. 198379RB. Each of Buyer
and Seller shall pay any and all costs, fees and expenses incurred by it in
connection with the foregoing and no such costs, fees or expenses shall be
credited against the Purchase Price; provided, however, that (i) Seller shall be
obligated to obtain, concurrent with the Closing, a release and reconveyance of
each of the deeds of trust that are crossed-out in the Commitments that are
attached hereto as Exhibit "F" (collectively, the "Deeds of Trust"), except that
Buyer agrees to assume or, if not assumable, to take title subject to the loan
and deed of trust in favor of Chase Manhattan Bank, in the original principal
amount of $5,600,000, which encumbers the Arbor Glen Apartment project in West
Covina, California, (ii) Seller shall pay any and all prepayment penalties
imposed by any lender as a result of the pay-off of any liens secured by any of
the Deeds of Trust, except the Chase Manhattan Bank loan described in (i) of
this Section 34, (iii) Seller shall use reasonable efforts in assisting Buyer in
obtaining all consents necessary or appropriate to enable Seller to transfer the
Properties to Buyer pursuant to the terms of this Agreement, and (iv) if Buyer
fails or is unable to deliver the balance of the Purchase Price to Escrow Holder
on or before the Closing Date, Buyer shall have no right to terminate this
Agreement and such failure or inability shall constitute a default hereunder.
35. Facsimile Execution. A party to this Agreement may execute and deliver
this Agreement by executing a counterpart of the signature pages hereto and
sending a copy thereof to the other parties to this Agreement by facsimile
transmission at the facsimile number described in Section 1 for such party. Any
party who executes and delivers this Agreement by facsimile transmission shall
deliver four (4) manually executed copies of such signature page to each other
party to this Agreement within three (3) Business Days after such facsimile
transmission (but failure to do so shall not affect the validity of such party's
execution and delivery by facsimile transmission). This Agreement shall not be
effective or binding on any party to this Agreement for any purpose unless and
until such party has executed and delivered a counterpart signature page to this
Agreement to the other parties to this Agreement.
753900.8 -21-
IN WITNESS WHEREOF, Buyer and Seller do hereby execute this Agreement
as of the date first written above.
SELLER: REAL-EQUITY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: National Partnership Investments Corp.,
its general partner
By: _____________________________
Name: _______________________
Title: ______________________
BUYER: JH REAL ESTATE PARTNERS, INC.,
a California corporation
By: _____________________________
Name: _______________________
Title: ______________________
AMERICAN APARTMENT COMMUNITIES III, L.P.,
a Delaware limited partnership
By: American Apartment Communities III, Inc.,
a Maryland corporation
its general partner
By: _____________________________
Name:________________________
Title:_______________________
[signatures continued on following page]
753900.8 -22-
ACCEPTANCE BY ESCROW HOLDER
ESCROW HOLDER ACKNOWLEDGES RECEIPT
OF THE FOREGOING AGREEMENT AND
ACCEPTS THE INSTRUCTIONS CONTAINED THEREIN:
Dated: ___________ ___, 1998
FIRST AMERICAN TITLE COMPANY OF LOS ANGELES
By: ____________________________
Name: ______________________
Title:______________________
[end of signatures]
753900.8 -23-
EXHIBIT LIST
EXHIBIT "A" - Legal Description Of Each Parcel
EXHIBIT "B" - Form of Deed
EXHIBIT "C" - Form of General Assignment
EXHIBIT "D" - Form of Bill of Sale
EXHIBIT "E" - Non-Foreign Certificate
EXHIBIT "F" - Copies of Marked-Up Commitments
753900.8
EXHIBIT "A"
LEGAL DESCRIPTION OF EACH PARCEL
1. 3610 S. Nogales, West Covina, California.
2. 8609 DeSoto Ave., Canoga Park, California.
3. 4050 Baker Lane, Reno, Nevada.
4. 2616 Califa St., Woodland Hills, California (Parcel 1 of 2).
5. 2616 Califa St., Woodland Hills, California (Parcel 2 of 2).
753900.8
EXHIBIT "B"
FORM OF DEED
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Battle Fowler LLP
2049 Century Park East, Suite 2350
Los Angeles, California 90067
Attention: Bruce C. Geyer, Esq.
Parcel Description: _________________
(Space Above This Line For Recorder's Use)
- - - --------------------------------------------------------------------------------
GRANT DEED
A.P.N. ______________
The undersigned Grantor declares:
Documentary transfer tax is: ___________________________
( ) Computed on full value of property conveyed, or
( ) Computed on full value less value of liens and encumbrances remaining
at time of sale. ( ) Unincorporated area.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
REAL-EQUITY PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP ("Grantor"), has granted,
sold and conveyed, and by these presents does hereby grant, sell, and convey,
unto ________________, a ________________ ("Grantee"), that certain real
property located in the City of ______________, County of _______________, State
of ____________, as more particularly described in Exhibit "A" attached hereto
and incorporated herein by this reference (the "Land"), together with all right,
title and interest of Grantor in and to all buildings, improvements and
appurtenances now located or hereafter constructed on the Land.
Grantor hereby further grants to Grantee all of Grantor's right, title
and interest in and to all easements, privileges and rights appurtenant to the
Land and pertaining or held and enjoyed in connection therewith and all of
Grantor's right, title and interest in and to any land lying in the bed, if any,
of any street, alley, road or avenue to the centerline thereof in front of, or
adjoining the Land. The grants herein are all subject to non-delinquent taxes
and assessments and all other matters of record or evident from an inspection or
survey of the Land.
753900.8
IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of
____________ __, 1998.
GRANTOR: REAL-EQUITY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: National Partnership Investments Corp.,
its general partner
By: _____________________________
Name: _______________________
Title: ______________________
753900.8 -2-
STATE OF CALIFORNIA )
COUNTY OF ____________ )
On the __ day of ___________ __, 1998, before me, _______________, a
notary public in and for the State, personally appeared ___________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
______________________________
Notary Signature
(Seal)
753900.8 -3-
EXHIBIT "A"
LEGAL DESCRIPTION
753900.8 -4-
EXHIBIT "C"
FORM OF GENERAL ASSIGNMENT
GENERAL ASSIGNMENT
(Parcel: ___________)
THIS GENERAL ASSIGNMENT (this "Assignment") is dated as of ___________
__, 1998 and is executed by REAL-EQUITY PARTNERS, A CALIFORNIA LIMITED
PARTNERSHIP ("Seller"), in favor of __________________, a _________________
("Buyer"), with reference to the following facts:
A. Seller, as seller, and JH Real Estate Partners, Inc. and American
Apartment Communities III, L.P., a Delaware limited partnership (collectively,
"Buyer"), collectively as buyer, are parties to that certain Agreement of
Purchase and Sale and Escrow Instructions dated as of September 25, 1998 (the
"Purchase Agreement"), in which Seller has agreed to sell the real property
described in Exhibit "A" attached thereto and the improvements located thereon
(collectively, the "Property").
B. Pursuant to the Purchase Agreement, Seller has agreed to assign,
without recourse, to __________, a _______________ (which entity Buyer has
informed Seller is Buyer's assignee under the Purchase Agreement), all of
Seller's right, title and interest if any, in and to (i) any plans,
specifications, reports, licenses, permits, entitlements, surveys, maps,
agreements and contracts relating to the Property in Seller's possession
(collectively, the "Contracts and Documents") subject to any rights of consent
as provided therein, (ii) all leases and occupancy agreements affecting the
Property and any amendments or modifications thereto, including the leases that
relate to the rent roll set forth on Schedule 1 attached hereto (collectively,
the "Leases"), and (iii) all unrefunded and unapplied security deposits made
under the Leases, also as set forth in Schedule 1 attached hereto (the "Security
Deposits").
THEREFORE, for valuable consideration, Seller and Buyer agree as
follows:
1. Assignment. Seller hereby assigns, sells and transfers to
Buyer, without recourse and without representation or warranty (except for the
express representations and warranties contained in the Purchase Agreement,
which shall remain in effect until and to the extent provided in the Purchase
Agreement), all of Seller's right, title and interest, if any, in and to the
Contracts and Documents, subject to any rights of consent as provided therein,
the Leases, and the Security Deposits.
2. Assumption. Buyer hereby assumes all of the benefits and
burdens of the Leases, the Security Deposits and the Contracts and Documents and
agrees to perform all of the covenants and obligations of lessor under the
Leases and any obligations of Seller under such Contracts and Documents. Buyer
further agrees to indemnify, defend and hold Seller harmless from and against
any and all cost, loss, harm or damage which may arise under the Leases,
Security Deposits and the Contracts and Documents after the date hereof.
753900.8 -2-
3. Counterparts. This Assignment may be executed in counterparts,
each of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
4. Miscellaneous. This Assignment shall be binding on the parties
and their respective successors and assigns. The headings to paragraphs of this
Assignment are for convenient reference only and shall not be used in
interpreting this Assignment.
5. California Law. This Assignment shall be governed by and
interpreted in accordance with the laws of the State of California.
SELLER: REAL-EQUITY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: National Partnership Investments Corp.,
its general partner
By: _____________________________
Name: _______________________
Title: ______________________
BUYER: _________________________________________,
_________________________________________
By: ________________________________
Name:__________________________
Title:_________________________
[end of signatures]
SCHEDULE TO GENERAL ASSIGNMENT
Schedule 1: Rent Roll, including Security Deposits
-3-
EXHIBIT "D"
FORM OF BILL OF SALE
BILL OF SALE
(Parcel _____________)
Reference is made to that certain Agreement of Purchase and Sale and
Escrow Instructions ("Purchase Agreement"), dated as of September 25, 1998 by
and among JH Real Estate Partners, Inc. and American Apartment Communities III,
L.P., a Delaware limited partnership ("Buyer"), collectively as buyer, and
REAL-Equity Partners, A California Limited Partnership, as seller.
For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, REAL-EQUITY PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
("Seller"), in connection with the sale pursuant to the Purchase Agreement of
certain real property located in the City of ______________, County of
______________, State of ______________, as more particularly described in
Exhibit "A" attached hereto, hereby quitclaims and transfers to
________________, a ________________, which Buyer has informed Seller is the
assignee of Buyer under the Purchase Agreement, without recourse to Seller and
without any representation or warranty whatsoever (except for the express
representations and warranties contained in the Purchase Agreement that shall
remain in effect until and to the extent provided in the Purchase Agreement),
all of Seller's right, title and interest, if any, in and to the personal
property ("Personal Property") described on Exhibit "B" attached hereto and by
this reference incorporated herein.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
________ __, 1998.
SELLER: REAL-EQUITY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: National Partnership Investments Corp.,
its general partner
By: _____________________________
Name: _______________________
Title: _______________________
[end of signatures]
-1-
SCHEDULE OF EXHIBITS TO BILL OF SALE
Exhibit "A" Legal description
Exhibit "B" Schedule of Personal Property
-2-
EXHIBIT "E"
NON-FOREIGN CERTIFICATE
1. Section 1445 of the Internal Revenue Code of 1986, as amended (the
"IRC"), provides that a transferee of a United States real property interest
must withhold tax if the transferor is a foreign person. Section 18662 of the
California Revenue and Taxation Code provides that a transferee of an interest
in California real property must withhold tax if the transferor is not a
California resident.
2. To inform __________________, a ____________ ("Transferee"), as
assignee of JH Real Estate Partners, Inc. and American Apartment Communities
III, L.P., a Delaware limited partnership (collectively, "Buyer"), collectively
as buyer, under that certain Agreement of Purchase and Sale and Escrow
Instructions ("Purchase Agreement"), dated as of September 25, 1998 by and among
Buyer, as buyer, and REAL-Equity Partners, A California Limited Partnership
("Transferor"), as seller, that withholding of tax is not required upon the
disposition by Transferor of five (5) separate parcels of real property located
at, respectively, (i) 3610 S. Nogales, West Covina, California, (ii) 8609 DeSoto
Ave., Canoga Park, California, (iii) 4050 Baker Lane, Reno, Nevada, (iv) and two
(2) parcels located at 2616 Califa St., Woodland Hills, California, each as more
particularly described in Exhibit "A" attached hereto (collectively, the
"Property"), the undersigned Transferor hereby swears, affirms, certifies and
declares the following:
A. Transferor is not a foreign person, foreign corporation,
foreign partnership, foreign trust, or foreign estate (as those terms are
defined in the IRC and Income Tax Regulations).
B. Transferor's federal taxpayer identification number is
95-3881219.
C. Transferor is a limited partnership.
D. Transferor's office address is:
REAL-Equity Partners
c/o National Partnership Investment Corp.
9090 Wilshire Boulevard, 2nd Floor
Beverly Hills, California 90212
Attention: Henry Casden
Fax: (310) 278-6835
[remainder of page intentionally left blank]
3. Transferor understands that this certification may be
disclosed to the Internal Revenue Service and/or the California Franchise Board
by Transferee and that any false statement contained herein could be punished by
fine, imprisonment, or both.
-1-
Executed as of _____________ __, 1998
TRANSFEROR: REAL-EQUITY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP
By: National Partnership Investments Corp.,
its general partner
By: _____________________________
Name: _______________________
Title: _______________________
[end of signatures]
-2-
EXHIBIT "A"
LEGAL DESCRIPTION
1. 3610 S. Nogales, West Covina, California.
2. 8609 DeSoto Ave., Canoga Park, California.
3. 4050 Baker Lane, Reno, Nevada.
4. 2616 Califa St., Woodland Hills, California (Parcel 1 of 2).
5. 2616 Califa St., Woodland Hills, California (Parcel 2 of 2).
-1-
EXHIBIT "F"
COPIES OF MARKED-UP COMMITMENTS
-1-
AGREEMENT OF PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
By and Between
REAL-EQUITY PARTNERS,
A CALIFORNIA LIMITED PARTNERSHIP,
as Seller
and
JH REAL ESTATE PARTNERS, INC.,
a California corporation
and
AMERICAN APARTMENT COMMUNITIES III, L.P.,
a Delaware limited partnership,
collectively as Buyer
Dated as of September 25, 1998