EXHIBIT 10.5
================================================================================
PURCHASE AND SALE AGREEMENT
by and among
WILSHIRE REAL ESTATE PARTNERSHIP L.P.,
a Delaware limited partnership
and
WILSHIRE PROPERTIES 1 INC.
an Oregon corporation
Dated as of April ___, 1998
================================================================================
TABLE OF CONTENTS
-----------------
RECITALS.................................................................. 1
TERMS OF AGREEMENT........................................................ 1
1. PURCHASE AND SALE AGREEMENT........................................ 1
1.1 Purchase and Sale............................................ 1
1.2 Assumption of Obligations.................................... 1
1.3 Assignment of Certain Rights................................. 1
1.4 Prorations................................................... 2
2. THE PROPERTY....................................................... 2
2.1 Land......................................................... 2
2.2 Buildings and Other Improvements............................. 2
2.3 Tangible Personal Property................................... 2
2.4 Leases....................................................... 2
2.5 Appurtenances................................................ 2
2.6 Intangible Personal Property................................. 2
3. PURCHASE PRICE..................................................... 3
3.1 Purchase Price............................................... 3
4. CLOSING............................................................ 3
4.1 Conditions to Obligations of Purchaser....................... 3
4.2 Conditions to Obligations of Seller.......................... 4
4.3 Time and Place............................................... 5
4.4 Closing Items................................................ 5
4.5 Transfer Taxes and Other Closing Costs....................... 6
4.6 Default and Remedies......................................... 6
a. Remedies................................................. 6
b. Failure to Obtain Consents............................... 6
4.7 Failure of Closing to Occur.................................. 7
5. REPRESENTATIONS AND WARRANTIES......................................... 7
5.1 Representations and Warranties of the Purchaser to the Seller 7
a. Organization............................................. 7
b. Authorization............................................ 7
c. Consents and Approvals................................... 7
d. No Violation............................................. 7
5.2 Representations, Warranties and Indemnities of Seller........ 8
a. Notice from Governmental Agencies........................ 8
b. Defects.................................................. 8
i
c. Environmental Matters.................................... 8
d. Service Contracts........................................ 8
6. COVENANTS OF SELLER.................................................... 8
7. FURTHER ASSURANCES..................................................... 9
8. MISCELLANEOUS.......................................................... 9
8.1 Integration.................................................. 9
8.2 No Assignment................................................ 9
8.3 Amendments................................................... 9
8.4 Governing Law................................................ 9
8.5 Notices...................................................... 9
8.6 Waiver....................................................... 10
8.7 Counterparts................................................. 10
8.8 Time of the Essence.......................................... 10
8.9 Expenses..................................................... 10
8.10 Headings..................................................... 10
8.11 Severability................................................. 10
8.12 Statutory Disclosure......................................... 10
EXHIBIT AND SCHEDULE LIST
Section First
Exhibits Referenced
Exhibit A Land Description Recital A
Exhibit B Permitted Exceptions Section 4.4
ii
EXHIBIT AND SCHEDULE LIST
Section First
Exhibits Referenced
Exhibit A Land Description Recital A
Exhibit B Permitted Exceptions Section 4.4
iii
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered
into as of April __, 1998 by and among Wilshire Real Estate Partnership L.P., a
Delaware limited partnership ("Purchaser"), and Wilshire Properties 1 Inc., an
Oregon corporation ("Seller").
RECITALS
A. Seller is the owner of certain land located in Portland, Oregon as more
particularly described in Exhibit A, and the buildings, structures and other
improvements situated thereon, together with all tangible personal property,
leases, appurtenances and intangible personal property, as more particularly
defined in Section 2 (collectively, the "Property").
---------
B. The Property is commonly known as 1776 SW Madison and the Taylor Street
Buildings.
C. Seller desires to sell the Property to the Purchaser, and Purchaser
desires to purchase such Property from the Seller upon the terms and conditions
set forth below.
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
TERMS OF AGREEMENT
1. PURCHASE AND SALE AGREEMENT.
1.1 Purchase and Sale. At the Closing (as hereinafter defined) and
-----------------
subject to the terms and conditions contained in this Agreement, Seller agrees
to sell to Purchaser the Property and Purchaser agrees to purchase from Seller
the Property.
1.2 Assumption of Obligations. Except as otherwise expressly provided
-------------------------
herein, upon the Closing, Purchaser shall assume the contractual obligations of
Seller under all loans, leases, contracts, and other agreements or other
obligations of Seller relating to the Property (other than debt that is non
recourse to Seller) to the extent such obligations relate to periods commencing
after the Closing Date.
1.3 Assignment of Certain Rights. Effective upon the Closing, Seller,
----------------------------
without representation or warranty, hereby assigns to Purchaser all of its
rights and interests, if any, including rights to indemnification in favor of
Seller, under the agreements pursuant to which Seller or its affiliates
initially acquired the Property transferred pursuant to this Agreement.
1.4 Prorations. On the Closing Date (as hereinafter defined), or as
----------
promptly as practicable following the Closing Date, to the extent such matters
are not the right or responsibility of a tenant or tenants of the Property,
all revenues and all charges that are customarily prorated in transactions of
this nature, including accrued rent, overpaid taxes or fees, real and personal
property taxes, utilities, interest on mortgage debt encumbering the Property,
and other similar periodic charges and operating expenses receivable or payable
with respect to the Property shall be ratably prorated between the Purchaser and
the Seller effective as of the Closing Date.
2. THE PROPERTY. The Property to be sold and purchased under this
Agreement is as follows:
2.1 Land. The Land, as is described in Exhibit A.
----
2.2 Buildings and Other Improvements. All existing buildings,
--------------------------------
structures and other improvements located upon the Land, including, without
limitation, maintenance facilities, landscaping improvements, paving, walkways,
road improvements, parking facilities, and all other improvements of whatever
kind which have previously been made, installed or erected and are now located
on any part of the Land (collectively, the "Improvements").
2.3 Tangible Personal Property. All of Seller's right, title and
--------------------------
interest in and to tangible personal property utilized in the operation of the
Land and Property, including, without limitation, all of Seller's right, title
and interest in the following tangible personal property: equipment, fixtures,
and all other tangible personal property of Seller which is used, or which has
been acquired for use, in the operation of the Land and Improvements (the
"Tangible Personal Property").
2.4 Leases. All of Seller's right, title and interest in and to the
------
leases and rental agreements, together with any modifications, extensions or
renewals thereof, affecting the Property or any part thereof (the "Leases").
2.5 Appurtenances. All of Seller's right, title and interest in and to
-------------
all appurtenances, rights, including reversionary rights, easements, covenants,
conditions, servitudes of any kind or nature and privileges belonging to or
running with the Land, including, without limitation, all of Seller's right,
title and interest in and to any and all land laying in the bed of any street,
road, cul-de-sac, alley or access way, open or closed, existing, vacated or
proposed, adjoining, adjacent to or contiguous to the Land, all awards for
damage to the Land or taking by eminent domain or the change in the grade of any
street adjoining the Land, all strips and gores of land adjoining or surrounded
by the Land, and all zoning and land use entitlement and development rights
pertaining to the Land (the "Appurtenances").
2.6 Intangible Personal Property. All intangible personal property now
----------------------------
owned by Seller, or in which Seller has any interest on the Closing Date, which
is used in, or which has been acquired for use in, the operation of the Land or
Property (the "Intangible Property"), including by way of example and not by
limitation:
2
a. All of the maintenance, service, advertising and other like
contracts and agreements (including equipment leases) with respect to the
ownership, use and operation of the Property (the "Service Contracts");
b. All licenses, entitlements, permits, certificates of occupancy
and other governmental approvals issued or granted in connection with the
Property;
c. All trade names, trademarks and logos associated with the use of
the Property; and
d. All right, title and interest of the Seller in and to all other
intangible personal property owned or held by the Seller or with respect to
which Seller has any right, title, claim, interest, or estate, in, to, under
or with respect to the Property and the other assets of the Seller
(including, without limitation, claims and choices in action) relating to the
Property.
The Intangible Property and the Tangible Personal Property are the "Personal
Property".
3. PURCHASE PRICE.
3.1 Purchase Price. The Purchase Price for the Property shall be
--------------
$4,400,000, allocated $1,800,000 to 1776 SW Madison and $2,600,000 to the Taylor
Street Buildings. The Purchase Price shall be paid as follows:
a. Purchaser will pay $886,637 in cash at closing for 1776 SW
Madison and $1,424,205 in cash at closing for the Taylor Street Buildings.
b. Purchaser shall assume at closing the existing deed of trust on
1776 SW Madison securing a promissory note in favor of Bank of America
National Trust & Savings Association with a present unpaid principal balance
of approximately $913,363 and the existing deed of trust on the Taylor Street
Buildings securing a promissory note in favor of Bank of America National
Trust & Savings Association with a present unpaid principal balance of
approximately $1,175,795. In the event the unpaid principal balance of the
notes shall be more or less than the amount above stated, the difference
shall be adjusted in the cash payment due upon the closing date.
4. CLOSING
4.1 Conditions to Obligations of Purchaser. The obligations of the
--------------------------------------
Purchaser to effect the transactions contemplated hereby shall be subject to the
following additional conditions:
a. The representations and warranties of Seller contained in this
Agreement shall have been true and correct in all material respects on the
date such representations
3
and warranties were made, and shall be true and correct in all material
respects on the Closing Date as if made at and as of such date;
b. Each of the obligations of Seller to be performed by it under
this Agreement shall have been duly performed by it in all material respects
on or before the Closing Date;
c. Concurrently with the Closing, the Seller shall have executed
and delivered, or caused to be delivered, to the Purchaser the documents
required to be delivered pursuant to Section 4.4 hereof;
d. Seller shall have obtained all necessary consents or approvals
of governmental authorities or third parties to the consummation of the
transactions contemplated hereby;
e. Seller shall not have breached any of its covenants contained
herein in any material respect;
f. No order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted,
entered, promulgated or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that prohibits the
consummation of the transactions contemplated hereby, and no litigation or
governmental proceeding seeking such an order shall be pending or threatened;
g. There shall not have occurred between the date hereof and the
Closing Date any material adverse change in the Property;
Any or all of the foregoing conditions may be waived by the Purchaser in its
sole and absolute discretion.
4.2 Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
effect the transactions contemplated hereby shall be subject to the following
additional conditions:
a. The representations and warranties of the Purchaser contained
in this Agreement shall have been true and correct in all material respects
on the dates such representations and warranties were made, and shall be true
and correct in all material respects on the Closing Date as if made at and as
of such date;
b. Each of the obligations of the Purchaser to be performed by it
under the Agreement shall have been duly performed by it in all material
respects on or before the Closing Date;
4
c. Concurrently with the Closing, the Purchaser shall have
executed and delivered to the Seller the documents required to be delivered
pursuant to Section 4.4 hereof;
d. The Purchaser shall have obtained all consents or approvals of
governmental authorities or third parties necessary for the consummation of
the transactions contemplated hereby which it is required to obtain;
e. Purchaser shall not have breached any of its covenants
contained herein in any material respect;
f. No order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been enacted,
entered, promulgated or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that prohibits the
consummation of the transactions contemplated hereby, and no litigation or
governmental proceeding seeking such an order shall be pending or threatened;
g. There shall not have occurred between the date hereof and the
Closing Date any material adverse change in the financial condition of
Purchaser.
Any or all of the foregoing conditions may be waived by any Seller in its
sole and absolute discretion.
4.3 Time and Place. The date, time and place of the transactions
--------------
contemplated hereunder shall be at 10 a.m. in the office of First American Title
Insurance Company, 200 SW Market Street, Suite 1776, Portland, Oregon 97201-5986
on or before April 6, 1998 or such other place and time as the parties may
mutually agree (the "Closing" or "Closing Date"). The transfers described in
Section 4 of this Agreement and all closing deliveries shall be deemed
concurrent for all purposes.
4.4 Closing Items. At the Closing, the parties shall make, execute,
-------------
acknowledge and deliver, or cause to be delivered, the legal documents and other
items necessary to carry out the intention of this Agreement and to convey valid
and marketable title to the Property from Seller to Purchaser, which documents
and other items shall include the following:
a. Seller shall deliver duly executed, recordable, special
warranty deeds conveying the Property to the Purchaser subject to the
permitted exceptions described in attached Exhibit B (the "Deed").
b. Seller and Purchaser shall deliver an assignment and assumption
of lessor's interest in lease duly executed by Seller and the Purchaser [, in
form and substance satisfactory to Purchaser].
c. Seller shall deliver an assignment of intangible personal
property duly executed by Seller [, in form and substance satisfactory to
Purchaser].
5
d. Seller shall deliver a bill of sale duly executed by Seller [,
in form and substance satisfactory to Purchaser].
e. Seller shall cause to be issued to the Purchaser owner's
policies of title insurance issued as of the Closing Date for the Property,
in form acceptable to Purchaser in the amount of $1,800,000 for 1776 SE
Madison and $2,600,000 for the Taylor Street Buildings (the "Title Policy").
f. Seller shall deliver possession at the Property of any books
and records relating to the Property maintained by or for the Seller,
including complete originals of all Leases, documents in tenant files, and
Service Contracts.
g. Seller shall deliver an affidavit from Seller, stating under
penalty of perjury: (i) the Seller's United States Taxpayer Identification
Number, (ii) that Seller is not a foreign person pursuant to section
1445(b)(2) of the Code, and (iii) that the transaction contemplated hereby
does not require the Purchaser to comply with any withholding or similar
requirements under the laws of the state where the Property is located.
h. Certificates of Insurance, evidencing insurance maintained for
the Properties as required by existing mortgages and loan agreements
pertaining to the Property, or as reasonably required by Purchaser.
i. Seller shall deliver to Purchaser or its nominee the deposits
under the Leases.
j. Seller shall deliver possession of any keys to the Property in
possession of Seller.
k. Each of the parties shall deliver any other documents,
instruments, agreements, actions, or items reasonably necessary and
appropriate to consummate the transactions contemplated by this Agreement.
4.5 Transfer Taxes and Other Closing Costs. Seller shall pay the
--------------------------------------
premium for the standard owner's policies of title insurance. Seller and
Purchaser shall each pay one-half of the escrow fees and any transfer tax.
Purchaser shall pay the recording fees.
4.6 Default and Remedies.
--------------------
a. Remedies. The parties shall, subject to the terms and
--------
conditions of this Agreement, each have such rights and remedies as are
available at law or in equity with respect to a breach or default by any other
party hereunder, except that no party shall be entitled to recover from another
consequential damages.
6
b. Failure to Obtain Consents. In the event that Seller shall be
--------------------------
unable to obtain any consent required to consummate the transactions
contemplated hereunder with respect to the Property, then such failure shall not
constitute a default by Seller under this Agreement so long as it used
reasonable commercial efforts to obtain such consent. In the event that despite
reasonable commercial efforts to obtain said consent, the necessary consents are
not obtained prior to 5 days before the Closing Date, the Purchaser shall have
the right to terminate this Agreement and upon such termination no party shall
have any liability or damages whatsoever to any other party hereunder.
4.7 Failure of Closing to Occur. If, for any reason, the Closing does
---------------------------
not occur on or before April 6, 1998 or such later date mutually agreed to in
writing, this Agreement will terminate, and except as otherwise provided in this
Agreement, any and all rights or obligations hereunder shall cease and no longer
be binding on the parties hereto and no party shall thereafter have any
liability or obligation hereunder to any other party arising under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Purchaser to the Seller. The
-------------------------------------------------------------
Purchaser hereby represents and warrants to the Seller that:
a. Organization. The Purchaser are duly organized, validly
------------
existing and in good standing under the laws of the respective jurisdictions
of formation. The Purchaser has all requisite power and authority to own,
lease or operate its property and to carry on its business as presently
conducted and, to the extent required under applicable law, is qualified to
do business and is in good standing in each jurisdiction in which the nature
of its business or the character of its property make such qualification
necessary.
b. Authorization. The execution, delivery and performance of this
-------------
Agreement by the Purchaser has been duly and validly authorized by all
necessary action of such party. This Agreement has been duly executed and
delivered by the Purchaser and constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with
its terms, as such enforceability may be limited by bankruptcy or the
application of equitable principles.
c. Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of any third party is required to be obtained by the Purchaser
in connection with its execution, delivery and performance of this Agreement
and the transactions contemplated hereby (other than consents to be obtained
by Seller pursuant to Section 6.2), except any of the foregoing that shall
have been satisfied or waived prior to the Closing Date.
d. No Violation. None of the execution, delivery or performance
------------
of this Agreement and the transactions contemplated hereby does or will, with
or without the giving of notice, lapse of time, or both, (i) violate,
conflict with, result in a breach of, or constitute a default under or give
to others any right of acceleration, termination or
7
cancellation of (A) the organizational documents, including articles and
bylaws, if any, of the Purchaser; (B) any material agreement, document or
instrument to which the Purchaser is a party or by which any of it or any of
its property is bound, (C) any term or provision of any judgment, order,
writ, injunction, or decree of any governmental or regulatory authority
binding on the Purchaser or by which it or any of its assets or properties
are bound or subject, or (D) any statute, rule, regulation or law applicable
to any of the Purchaser or (ii) result in the creation of any lien upon the
Property.
5.2 Representations, Warranties and Indemnities of Seller. Seller
-----------------------------------------------------
represents and warrants to and covenant with Purchaser as follows:
a. Notice from Governmental Agencies. Seller has not received nor
---------------------------------
is Seller aware of any notification from any governmental agency having
jurisdiction requiring any work to be done on or affecting the Property in order
for it to conform to applicable building codes or other statutes or regulations.
b. Defects. Seller hereby warrants that to the best of its
-------
knowledge the Property and the improvements thereon do not violate the
applicable building or zoning regulations and that it is unaware of any material
defect in the Property or the improvements thereon.
c. Environmental Matters. Seller has no current actual knowledge
---------------------
without further investigation of any hazardous materials on the Property, except
those hazardous materials normally and lawfully used in connection with the
Property.
d. Service Contracts. All Service Contracts were entered into
-----------------
in good faith in the ordinary course of business on commercially reasonable
terms.
6. COVENANTS OF SELLER
6.1 From the date hereof through the Closing, Seller shall operate and
maintain the Property in the ordinary course, consistent with past practice.
Seller shall maintain the Property in substantially its present order and
condition and make all reasonably necessary repairs and replacements consistent
with a reasonably prudent maintenance and repair program followed by owners of
similar property in the vicinity of the Property (including the establishment of
reasonable budgeted items for repair, maintenance, and capital improvements),
and shall deliver the Property on the date of Closing in substantially the same
condition it was on the date of the physical inspection performed by the
Purchaser, reasonable wear and tear excepted. Without limiting the foregoing,
no fixtures, equipment or other Tangible Personal Property shall be removed from
the Property unless prior to Closing the same are replaced with similar items of
at least equal quality and value. Seller shall not:
a. Enter into any material transaction not in the ordinary course
of business with respect to the Property;
8
b. Sell or transfer any of the Property, except sales in the
ordinary course of business;
c. Mortgage, pledge or encumber (or permit to become encumbered)
any of the Property, except (x) liens for taxes not due, (y) mechanics' liens
being disputed by Seller in good faith and by appropriate proceedings;
d. Amend, modify or terminate any material agreements or other
instruments relating to the Property; or
e. Materially alter the manner of keeping its books, accounts or
records pertaining to the Property or the accounting practices therein
reflected.
6.2 Seller shall use its best efforts to obtain any approvals, waivers
or other consents of third parties required to effect the transactions
contemplated by this Agreement.
7. FURTHER ASSURANCES. Each party shall take such other actions and
execute such other documents following the Closing as may reasonably be
requested in order to effect the transactions contemplated hereby.
8. MISCELLANEOUS.
8.1 Integration. All understandings and agreements heretofore had
-----------
among Seller and Purchaser with respect to the purchase and sale of the property
by Seller to Purchaser are set forth in this Agreement and the other documents
and agreements to be delivered hereunder which fully and completely express the
agreements of the parties with respect thereto.
8.2 No Assignment. Neither this Agreement nor any interest hereunder
-------------
shall be assigned or transferred by any party hereto without the prior written
consent of all other parties hereto. Subject to the foregoing, this Agreement
shall inure to the benefit of and shall be binding upon each party hereto and
their respective successors and assigns.
8.3 Amendments. This Agreement shall not be modified or amended except
----------
in a written document signed by the parties hereto.
8.4 Governing Law. This Agreement shall be governed and interpreted in
-------------
accordance with the laws of the State of Oregon.
8.5 Notices. All notices, requests, demands or other communications
-------
required or permitted under this Agreement shall be in writing and delivered
either personally, or by certified mail, return receipt requested, postage
prepaid, or by overnight courier (such as Federal Express), or by facsimile
transmission, addressed as follows:
9
If to the Purchaser: Wilshire Real Estate Partnership, L.P.
1776 SW Madison Street
Portland, Oregon 97205
Attention: Lawrence A. Mendelsohn, President
If to Seller: 1776 SW Madison
Portland, Oregon 97205
Attention: Lawrence A. Mendelsohn, President
All notices given in accordance with the terms hereof shall be deemed delivered
when delivered personally or otherwise received. Any party hereto may change
the address for receiving notices, requests, demands or other communication by
notice sent in accordance with the terms of this Section 8.5.
8.6 Waiver. No waiver shall be effective against any party unless it is in
------
a writing signed by that party.
8.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 Time of the Essence. Time is of the essence of this Agreement.
-------------------
8.9 Expenses. Except as otherwise set forth in writing among the parties,
--------
each party shall bear its own expenses, including counsel fees, in the
performance of this Agreement.
8.10 Headings. The headings in this Agreement are intended solely for
--------
convenience of reference and shall be given no effect in construction or
interpretation of this Agreement.
8.11 Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not impair the validity or enforceability of any other
provision.
8.12 Statutory Disclosure. THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT
--------------------
BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS
SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY
NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND WHICH LIMIT LAWSUITS
AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN 0RS 30.930 IN ALL ZONES.
BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO
THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING
DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR
STRUCTURES.
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PURCHASER
WILSHIRE REAL ESTATE PARTNERSHIP L.P., a
Delaware limited partnership
By: WILSHIRE REAL ESTATE INVESTMENT TRUST INC.,
a Delaware corporation, sole general partner of
Purchaser
--------------------------------------------
Lawrence A. Mendelsohn, President
SELLER
WILSHIRE PROPERTIES 1 INC.,
an Oregon corporation
By:
---------------------------------------------
Lawrence A. Mendelsohn, President
11
EXHIBIT A
1776 SW Madison
Lots 7, 8, 9, 10 and 11, Block 2, DAVENPORT TRACT, in the City of Portland,
County of Multnomah and State of Oregon, EXCEPT that portion of Lots 7 and 8
taken for widening of S.W. 18th Avenue.
12
EXHIBIT A
Taylor Street Buildings
PARCEL 1: Lots 3 and 4, Block 328, CITY OF PORTLAND, in the City of
Portland, County of Multnomah and State of Oregon.
PARCEL 2: The East 43 feet of the South 7 feet of Lot 6 and the East 43 feet
of Lot 5, Block 328, CITY OF PORTLAND, in the City of Portland, County of
Multnomah and State of Oregon.
PARCEL 3: Lots 1 and 2, Block 329, CITY OF PORTLAND, in the City of
Portland, County of Multnomah and State of Oregon.
13
EXHIBIT B
1776 SW Madison Street
1. City Liens, if any, of the City of Portland.
2. Easement Agreement, including the terms and provisions thereof,
Dated: : January 1, 1990
Recorded : March 9, 1990 in Book 2282, page 501
Between : 1776 Madison Building Partnership, an Oregon general
partnership and Acres Investment Company, an Oregon
general partnership
3. Trust Deed, including the terms and provisions thereof, given to
secure an indebtedness of $923,500.00
Dated : October 1, 1996
Recorded : October 31, 1996 as Fee No. 96165492
Grantor : Wilshire Properties 1 Inc., an Oregon corporation
Trustee : First American Title Insurance Company
Beneficiary : Bank of America National Trust and Savings Association
[4. Unrecorded leases or periodic tenancies, if any.]
14
EXHIBIT B
Taylor Street Buildings
1. City Liens, if any, of the City of Portland.
2. Conditions and Restrictions contained in Zone Code Variance No. VZ 82-85,
Recorded : July 23, 1985 in Book 1838, page 1820
3. Conditions and Restrictions contained in Design Review File No. LUR 92-
00095 DZ,
Recorded : April 16, 1992 in Book 2530, page 1852
4. Trust Deed, including the terms and provisions thereof, given
to secure an indebtedness of $1,190,000.00
Dated : October 1, 1996
Recorded : October 11, 1996 as Fee No. 96154613
Grantor : Wilshire Properties 1 Inc., an Oregon corporation
Trustee : First American Title Insurance Company
Beneficiary : Bank of America National Trust and Savings Association
[5. Conditions and Restrictions contained in Land Use Review File
No. LUR 96-00812 DZ,
Recorded : November 27, 1996 as Fee No. 97179669]
[6. Unrecorded leases or periodic tenancies, if any.]
15
===============================================================================
PURCHASE AND SALE AGREEMENT
by and among
WILSHIRE REAL ESTATE PARTNERSHIP L.P.,
a Delaware limited partnership
and
WILSHIRE PROPERTIES 2 INC.,
an Oregon corporation
Dated as of April ___, 1998
================================================================================
TABLE OF CONTENTS
-----------------
RECITALS.................................................................... 1
TERMS OF AGREEMENT.......................................................... 1
1. PURCHASE AND SALE AGREEMENT............................................ 1
1.1 Purchase and Sale................................................ 1
1.2 Assumption of Obligations........................................ 1
1.3 Assignment of Certain Rights..................................... 1
1.4 Prorations....................................................... 2
2. THE PROPERTY........................................................... 2
2.1 Land............................................................. 2
2.2 Buildings and Other Improvements................................. 2
2.3 Tangible Personal Property....................................... 2
2.4 Leases........................................................... 2
2.5 Appurtenances.................................................... 2
2.6 Intangible Personal Property..................................... 2
3. PURCHASE PRICE......................................................... 3
3.1 Purchase Price................................................... 3
4. CLOSING................................................................ 3
4.1 Conditions to Obligations of Purchaser........................... 3
4.2 Conditions to Obligations of Seller.............................. 4
4.3 Time and Place................................................... 5
4.4 Closing Items.................................................... 5
4.5 Transfer Taxes and Other Closing Costs........................... 6
4.6 Default and Remedies............................................. 6
a. Remedies...................................................... 6
b. Failure to Obtain Consents.................................... 6
4.7 Failure of Closing to Occur...................................... 7
5. REPRESENTATIONS AND WARRANTIES......................................... 7
5.1 Representations and Warranties of the Purchaser to the Seller.... 7
a. Organization.................................................. 7
b. Authorization................................................. 7
c. Consents and Approvals........................................ 7
d. No Violation.................................................. 7
5.2 Representations, Warranties and Indemnities of Seller............ 8
a. Notice from Governmental Agencies............................. 8
b. Defects....................................................... 8
i
c. Environmental Matters......................................... 8
d. Service Contracts............................................. 8
6. COVENANTS OF SELLER.................................................... 8
7. FURTHER ASSURANCES..................................................... 9
8. MISCELLANEOUS.......................................................... 9
8.1 Integration..................................................... 9
8.2 No Assignment................................................... 9
8.3 Amendments...................................................... 9
8.4 Governing Law................................................... 9
8.5 Notices......................................................... 9
8.6 Waiver.......................................................... 10
8.7 Counterparts.................................................... 10
8.8 Time of the Essence............................................. 10
8.9 Expenses........................................................ 10
8.10 Headings........................................................ 10
8.11 Severability.................................................... 10
8.12 Statutory Disclosure............................................ 10
ii
EXHIBIT AND SCHEDULE LIST
Section First
Exhibits Referenced
Exhibit A Land Description Recital A
Exhibit B Permitted Exceptions Section 4.4
iii
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of April __, 1998 by and among Wilshire Real Estate Partnership
L.P., a Delaware limited partnership ("Purchaser"), and Wilshire Properties 2
Incorporated, an Oregon corporation ("Seller").
RECITALS
A. Seller is the owner of certain land located in Tigard, Oregon and
Eugene, Oregon as more particularly described in Exhibit A, and the buildings,
structures and other improvements situated thereon, together with all tangible
personal property, leases, appurtenances and intangible personal property, as
more particularly defined in Section 2 (collectively, the "Property").
---------
B. The Property is commonly known as Tigard Industrial Park and 2855
Prairie Road Buildings.
C. Seller desires to sell the Property to the Purchaser, and Purchaser
desires to purchase such Property from the Seller upon the terms and conditions
set forth below.
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
TERMS OF AGREEMENT
1. PURCHASE AND SALE AGREEMENT.
1.1 Purchase and Sale. At the Closing (as hereinafter defined) and subject
-----------------
to the terms and conditions contained in this Agreement, Seller agrees to sell
to Purchaser the Property and Purchaser agrees to purchase from Seller the
Property.
1.2 Assumption of Obligations. Except as otherwise expressly provided
-------------------------
herein, upon the Closing, Purchaser shall assume the contractual obligations of
Seller under all loans, leases, contracts, and other agreements or other
obligations of Seller relating to the Property (other than debt that is non
recourse to Seller) to the extent such obligations relate to periods commencing
after the Closing Date.
1.3 Assignment of Certain Rights. Effective upon the Closing, Seller,
----------------------------
without representation or warranty, hereby assigns to Purchaser all of its
rights and interests, if any, including rights to indemnification in favor of
Seller, under the agreements pursuant to which Seller or its affiliates
initially acquired the Property transferred pursuant to this Agreement.
1
1.4 Prorations. On the Closing Date (as hereinafter defined), or as
----------
promptly as practicable following the Closing Date, to the extent such matters
are not the right or responsibility of a tenant or tenants of the Property, all
revenues and all charges that are customarily prorated in transactions of this
nature, including accrued rent, overpaid taxes or fees, real and personal
property taxes, utilities, interest on mortgage debt encumbering the Property,
and other similar periodic charges and operating expenses receivable or payable
with respect to the Property shall be ratably prorated between the Purchaser and
the Seller effective as of the Closing Date.
2. THE PROPERTY. The Property to be sold and purchased under this Agreement
is as follows:
2.1 Land. The Land, as is described in Exhibit A.
----
2.2 Buildings and Other Improvements. All existing buildings, structures
--------------------------------
and other improvements located upon the Land, including, without limitation,
maintenance facilities, landscaping improvements, paving, walkways, road
improvements, parking facilities, and all other improvements of whatever kind
which have previously been made, installed or erected and are now located on any
part of the Land (collectively, the "Improvements").
2.3 Tangible Personal Property. All of Seller's right, title and interest
--------------------------
in and to tangible personal property utilized in the operation of the Land and
Property, including, without limitation, all of Seller's right, title and
interest in the following tangible personal property: equipment, fixtures, and
all other tangible personal property of Seller which is used, or which has been
acquired for use, in the operation of the Land and Improvements (the "Tangible
Personal Property").
2.4 Leases. All of Seller's right, title and interest in and to the leases
------
and rental agreements, together with any modifications, extensions or renewals
thereof, affecting the Property or any part thereof (the "Leases").
2.5 Appurtenances. All of Seller's right, title and interest in and to all
-------------
appurtenances, rights, including reversionary rights, easements, covenants,
conditions, servitudes of any kind or nature and privileges belonging to or
running with the Land, including, without limitation, all of Seller's right,
title and interest in and to any and all land laying in the bed of any street,
road, cul-de-sac, alley or access way, open or closed, existing, vacated or
proposed, adjoining, adjacent to or contiguous to the Land, all awards for
damage to the Land or taking by eminent domain or the change in the grade of any
street adjoining the Land, all strips and gores of land adjoining or surrounded
by the Land, and all zoning and land use entitlement and development rights
pertaining to the Land (the "Appurtenances").
2.6 Intangible Personal Property. All intangible personal property now
----------------------------
owned by Seller, or in which Seller has any interest on the Closing Date, which
is used in, or which has
2
been acquired for use in, the operation of the Land or Property (the "Intangible
Property"), including by way of example and not by limitation:
a. All of the maintenance, service, advertising and other like
contracts and agreements (including equipment leases) with respect to the
ownership, use and operation of the Property (the "Service Contracts");
b. All licenses, entitlements, permits, certificates of occupancy and
other governmental approvals issued or granted in connection with the
Property;
c. All trade names, trademarks and logos associated with the use of
the Property; and
d. All right, title and interest of the Seller in and to all other
intangible personal property owned or held by the Seller or with respect to
which Seller has any right, title, claim, interest, or estate, in, to,
under or with respect to the Property and the other assets of the Seller
(including, without limitation, claims and choices in action) relating to
the Property.
The Intangible Property and the Tangible Personal Property are the "Personal
Property".
3. PURCHASE PRICE.
3.1 Purchase Price. The Purchase Price for the Property shall be
--------------
$6,875,000, allocated $4,175,000 to the Tigard Industrial Park and $2,700,000 to
2855 Prairie Road. The Purchase Price shall be paid as follows:
a. Purchaser will pay $1,782,242 in cash at closing for the Tigard
Industrial Park and $1,592,517.43 in cash at closing for 2855 Prairie Road.
b. Purchaser shall assume at closing the existing deed of trust on
the Tigard Industrial Park securing a promissory note in favor of Bank of
America National Trust & Savings Association with a present unpaid
principal balance of approximately $2,392,758 and the existing deed of
trust on 2855 Prairie Road securing a promissory note in favor of Standard
Insurance Company with a present unpaid principal balance of approximately
$1,107,482.57. In the event the unpaid principal balance of the notes
shall be more or less than the amount above stated, the difference shall be
adjusted in the cash payment due upon the closing date.
4. CLOSING
4.1 Conditions to Obligations of Purchaser. The obligations of the
--------------------------------------
Purchaser to effect the transactions contemplated hereby shall be subject to the
following additional conditions:
3
a. The representations and warranties of Seller contained in this
Agreement shall have been true and correct in all material respects on the
date such representations and warranties were made, and shall be true and
correct in all material respects on the Closing Date as if made at and as
of such date;
b. Each of the obligations of Seller to be performed by it under this
Agreement shall have been duly performed by it in all material respects on
or before the Closing Date;
c. Concurrently with the Closing, the Seller shall have executed and
delivered, or caused to be delivered, to the Purchaser the documents
required to be delivered pursuant to Section 4.4 hereof;
d. Seller shall have obtained all necessary consents or approvals of
governmental authorities or third parties to the consummation of the
transactions contemplated hereby;
e. Seller shall not have breached any of its covenants contained
herein in any material respect;
f. No order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that prohibits the
consummation of the transactions contemplated hereby, and no litigation or
governmental proceeding seeking such an order shall be pending or
threatened;
g. There shall not have occurred between the date hereof and the
Closing Date any material adverse change in the Property;
Any or all of the foregoing conditions may be waived by the Purchaser in
its sole and absolute discretion.
4.2 Conditions to Obligations of Seller. The obligations of Seller to
-----------------------------------
effect the transactions contemplated hereby shall be subject to the following
additional conditions:
a. The representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct in all material respects on
the dates such representations and warranties were made, and shall be true
and correct in all material respects on the Closing Date as if made at and
as of such date;
b. Each of the obligations of the Purchaser to be performed by it
under the Agreement shall have been duly performed by it in all material
respects on or before the Closing Date;
4
c. Concurrently with the Closing, the Purchaser shall have executed
and delivered to the Seller the documents required to be delivered pursuant
to Section 4.4 hereof;
d. The Purchaser shall have obtained all consents or approvals of
governmental authorities or third parties necessary for the consummation of
the transactions contemplated hereby which it is required to obtain;
e. Purchaser shall not have breached any of its covenants contained
herein in any material respect;
f. No order, statute, rule, regulation, executive order, injunction,
stay, decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that prohibits the
consummation of the transactions contemplated hereby, and no litigation or
governmental proceeding seeking such an order shall be pending or
threatened;
g. There shall not have occurred between the date hereof and the
Closing Date any material adverse change in the financial condition of
Purchaser.
Any or all of the foregoing conditions may be waived by any Seller in its
sole and absolute discretion.
4.3 Time and Place. The date, time and place of the transactions
--------------
contemplated hereunder shall be at 10 a.m. in the office of First American Title
Insurance Company, 200 SW Market Street, Suite 1776, Portland, Oregon 97201-5786
on or before April 6, 1998 or such other place and time as the parties may
mutually agree (the "Closing" or "Closing Date"). The transfers described in
Section 4 of this Agreement and all closing deliveries shall be deemed
concurrent for all purposes.
4.4 Closing Items. At the Closing, the parties shall make, execute,
-------------
acknowledge and deliver, or cause to be delivered, the legal documents and other
items necessary to carry out the intention of this Agreement and to convey valid
and marketable title to the Property from Seller to Purchaser, which documents
and other items shall include the following:
a. Seller shall deliver duly executed, recordable, special warranty
deeds conveying the Property to the Purchaser subject to the permitted
exceptions described in attached Exhibit B (the "Deed").
b. Seller and Purchaser shall deliver an assignment and assumption of
lessor's interest in lease duly executed by Seller and the Purchaser [in
form and substance satisfactory to Purchaser].
c. Seller shall deliver an assignment of intangible personal property
duly executed by Seller [in form and substance satisfactory to Purchaser].
5
d. Seller shall deliver a bill of sale duly executed by Seller [, in
form and substance satisfactory to Purchaser].
e. Seller shall cause to be issued to the Purchaser owner's policies
of title insurance issued as of the Closing Date for the Property, in form
acceptable to Purchaser in the amount of $4,175,000 for the Tigard
Industrial Park and $2,700,000 for 2855 Prairie Road (the "Title Policy").
f. Seller shall deliver possession at the Property of any books and
records relating to the Property maintained by or for the Seller, including
complete originals of all Leases, documents in tenant files, and Service
Contracts.
g. Seller shall deliver an affidavit from Seller, stating under
penalty of perjury: (i) the Seller's United States Taxpayer Identification
Number, (ii) that Seller is not a foreign person pursuant to section
1445(b)(2) of the Code, and (iii) that the transaction contemplated hereby
does not require the Purchaser to comply with any withholding or similar
requirements under the laws of the state where the Property is located.
h. Certificates of Insurance, evidencing insurance maintained for the
Properties as required by existing mortgages and loan agreements pertaining
to the Property, or as reasonably required by Purchaser.
i. Seller shall deliver to Purchaser or its nominee the deposits
under the Leases.
j. Seller shall deliver possession of any keys to the Property in
possession of Seller.
k. Each of the parties shall deliver any other documents,
instruments, agreements, actions, or items reasonably necessary and
appropriate to consummate the transactions contemplated by this Agreement.
4.5 Transfer Taxes and Other Closing Costs. Seller shall pay the premium
--------------------------------------
for the standard owner's policies of title insurance. Seller and Purchaser shall
each pay one-half of the escrow fees and any transfer tax. Purchaser shall pay
the recording fees.
4.6 Default and Remedies.
--------------------
a. Remedies. The parties shall, subject to the terms and
--------
conditions of this Agreement, each have such rights and remedies as are
available at law or in equity with respect to a breach or default by any other
party hereunder, except that no party shall be entitled to recover from another
consequential damages.
6
b. Failure to Obtain Consents. In the event that Seller shall be
--------------------------
unable to obtain any consent required to consummate the transactions
contemplated hereunder with respect to the Property, then such failure shall not
constitute a default by Seller under this Agreement so long as it used
reasonable commercial efforts to obtain such consent. In the event that despite
reasonable commercial efforts to obtain said consent, the necessary consents are
not obtained prior to 5 days before the Closing Date, the Purchaser shall have
the right to terminate this Agreement and upon such termination no party shall
have any liability or damages whatsoever to any other party hereunder.
4.7 Failure of Closing to Occur. If, for any reason, the Closing does not
---------------------------
occur on or before April 6, 1998 or such later date mutually agreed to in
writing, this Agreement will terminate, and except as otherwise provided in this
Agreement, any and all rights or obligations hereunder shall cease and no longer
be binding on the parties hereto and no party shall thereafter have any
liability or obligation hereunder to any other party arising under this
Agreement.
5. REPRESENTATIONS AND WARRANTIES.
5.1 Representations and Warranties of the Purchaser to the Seller. The
-------------------------------------------------------------
Purchaser hereby represents and warrants to the Seller that:
a. Organization. The Purchaser are duly organized, validly
------------
existing and in good standing under the laws of the respective
jurisdictions of formation. The Purchaser has all requisite power and
authority to own, lease or operate its property and to carry on its
business as presently conducted and, to the extent required under
applicable law, is qualified to do business and is in good standing in each
jurisdiction in which the nature of its business or the character of its
property make such qualification necessary.
b. Authorization. The execution, delivery and performance of this
-------------
Agreement by the Purchaser has been duly and validly authorized by all
necessary action of such party. This Agreement has been duly executed and
delivered by the Purchaser and constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with
its terms, as such enforceability may be limited by bankruptcy or the
application of equitable principles.
c. Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of any third party is required to be obtained by the
Purchaser in connection with its execution, delivery and performance of
this Agreement and the transactions contemplated hereby (other than
consents to be obtained by Seller pursuant to Section 6.2), except any of
the foregoing that shall have been satisfied or waived prior to the Closing
Date.
d. No Violation. None of the execution, delivery or performance of
------------
this Agreement and the transactions contemplated hereby does or will, with
or without the giving of notice, lapse of time, or both, (i) violate,
conflict with, result in a breach of, or constitute a default under or give
to others any right of acceleration, termination or
7
cancellation of (A) the organizational documents, including articles and
bylaws, if any, of the Purchaser; (B) any material agreement, document or
instrument to which the Purchaser is a party or by which any of it or any
of its property is bound, (C) any term or provision of any judgment, order,
writ, injunction, or decree of any governmental or regulatory authority
binding on the Purchaser or by which it or any of its assets or properties
are bound or subject, or (D) any statute, rule, regulation or law
applicable to any of the Purchaser or (ii) result in the creation of any
lien upon the Property.
5.2 Representations, Warranties and Indemnities of Seller. Seller
-----------------------------------------------------
represents and warrants to and covenant with Purchaser as follows:
a. Notice from Governmental Agencies. Seller has not received nor is
---------------------------------
Seller aware of any notification from any governmental agency having
jurisdiction requiring any work to be done on or affecting the Property in order
for it to conform to applicable building codes or other statutes or regulations.
b. Defects. Seller hereby warrants that to the best of its knowledge
-------
the Property and the improvements thereon do not violate the applicable building
or zoning regulations and that it is unaware of any material defect in the
Property or the improvements thereon.
c. Environmental Matters. Seller has no current actual knowledge
---------------------
without further investigation of any hazardous materials on the Property, except
those hazardous materials normally and lawfully used in connection with the
Property.
d. Service Contracts. All Service Contracts were entered into in
-----------------
good faith in the ordinary course of business on commercially reasonable terms.
6. COVENANTS OF SELLER
6.1 From the date hereof through the Closing, Seller shall operate and
maintain the Property in the ordinary course, consistent with past practice.
Seller shall maintain the Property in substantially its present order and
condition and make all reasonably necessary repairs and replacements consistent
with a reasonably prudent maintenance and repair program followed by owners of
similar property in the vicinity of the Property (including the establishment of
reasonable budgeted items for repair, maintenance, and capital improvements),
and shall deliver the Property on the date of Closing in substantially the same
condition it was on the date of the physical inspection performed by the
Purchaser, reasonable wear and tear excepted. Without limiting the foregoing, no
fixtures, equipment or other Tangible Personal Property shall be removed from
the Property unless prior to Closing the same are replaced with similar items of
at least equal quality and value. Seller shall not:
a. Enter into any material transaction not in the ordinary course of
business with respect to the Property;
8
b. Sell or transfer any of the Property, except sales in the ordinary
course of business;
c. Mortgage, pledge or encumber (or permit to become encumbered) any
of the Property, except (x) liens for taxes not due, (y) mechanics' liens
being disputed by Seller in good faith and by appropriate proceedings;
d. Amend, modify or terminate any material agreements or other
instruments relating to the Property; or
e. Materially alter the manner of keeping its books, accounts or
records pertaining to the Property or the accounting practices therein
reflected.
6.2 Seller shall use its best efforts to obtain any approvals, waivers or
other consents of third parties required to effect the transactions contemplated
by this Agreement.
7. FURTHER ASSURANCES. Each party shall take such other actions and execute
such other documents following the Closing as may reasonably be requested in
order to effect the transactions contemplated hereby.
8. MISCELLANEOUS.
8.1 Integration. All understandings and agreements heretofore had among
-----------
Seller and Purchaser with respect to the purchase and sale of the property by
Seller to Purchaser are set forth in this Agreement and the other documents and
agreements to be delivered hereunder which fully and completely express the
agreements of the parties with respect thereto.
8.2 No Assignment. Neither this Agreement nor any interest hereunder
-------------
shall be assigned or transferred by any party hereto without the prior written
consent of all other parties hereto. Subject to the foregoing, this Agreement
shall inure to the benefit of and shall be binding upon each party hereto and
their respective successors and assigns.
8.3 Amendments. This Agreement shall not be modified or amended except in
----------
a written document signed by the parties hereto.
8.4 Governing Law. This Agreement shall be governed and interpreted in
-------------
accordance with the laws of the State of Oregon.
8.5 Notices. All notices, requests, demands or other communications
-------
required or permitted under this Agreement shall be in writing and delivered
either personally, or by certified mail, return receipt requested, postage
prepaid, or by overnight courier (such as Federal Express), or by facsimile
transmission, addressed as follows:
9
If to the Purchaser: Wilshire Real Estate Partnership L.P.
1776 SW Madison Street
Portland, Oregon 97205
Attention: Lawrence A. Mendelsohn
If to Seller: 1776 SW Madison
Portland, Oregon 97205
Attention: Lawrence A. Mendelsohn, President
All notices given in accordance with the terms hereof shall be deemed delivered
when delivered personally or otherwise received. Any party hereto may change
the address for receiving notices, requests, demands or other communication by
notice sent in accordance with the terms of this Section 8.5.
8.6 Waiver. No waiver shall be effective against any party unless it is in
------
a writing signed by that party.
8.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 Time of the Essence. Time is of the essence of this Agreement.
-------------------
8.9 Expenses. Except as otherwise set forth in writing among the parties,
--------
each party shall bear its own expenses, including counsel fees, in the
performance of this Agreement.
8.10 Headings. The headings in this Agreement are intended solely for
--------
convenience of reference and shall be given no effect in construction or
interpretation of this Agreement.
8.11 Severability. The invalidity or unenforceability of any provision of
------------
this Agreement shall not impair the validity or enforceability of any other
provision.
8.12 Statutory Disclosure. THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY
--------------------
NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS
SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY
NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND WHICH LIMIT LAWSUITS
AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN 0RS 30.930 IN ALL ZONES.
BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO
THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING
DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR
STRUCTURES.
10
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PURCHASER
WILSHIRE REAL ESTATE PARTNERSHIP L.P., a Delaware
limited partnership
By: WILSHIRE REAL ESTATE INVESTMENT TRUST INC.,
a Delaware corporation, sole general partner of
Purchaser
____________________________________________
Lawrence A. Mendelsohn, President
SELLER
WILSHIRE PROPERTIES 2 INC.,
an Oregon corporation
By:
____________________________________________
Lawrence A. Mendelsohn, President
11
EXHIBIT A
2855 Prairie Road
Beginning at a point North 89 (degrees) 38'30" West 2879.14 feet and North 12
(degrees) 36' West 372.04 feet from the Southeast corner of the James Peek
Donation Land Claim No. 50 in Township 17 South, Range 4 West of the Willamette
Meridian; said point being on the Easterly right of way line of Prairie Road;
run thence North 12 (degrees) 36' West 720.87 feet along said Easterly right of
way line to the South line of the property described in Deed recorded October
29, 1949, in Book 404, Page 245, Lane County Oregon Deed Records; thence North
89 (degrees) 54'30" East 408.96 feet to the Northwest corner of that tract of
land conveyed to the Southern Pacific Company, recorded on Reel No. 214,
Reception No. 3699; thence South 20 (degrees) 28' East 755.05 feet along the
Westerly line of said Southern Pacific Company property; thence North 89
(degrees) 38'30" West 515.73 feet to the Point of Beginning, in Lane County,
Oregon.
EXHIBIT A
Tigard Industrial Park
PARCEL I:
- --------
Beginning at a point on the South right-of-way line of Katherine Street at a
point 8.78 feet North 89 (degrees) 23' East and 42.29 feet South 18 (degrees)
20' West from the Northwest corner of Lot 21 of NORTH TIGARDVILLE ADDITION
(Amended), a plat of record in Section 2, Township 2 South, Range 1 West,
Willamette Meridian, in the County of Washington and State of Oregon, said point
being on the East line of the Winn Tract, recorded August 4, 1945 in Book 247,
page 53, Deed Records; thence South 18 (degrees) 20' West on the Easterly line
of a two acre tract conveyed to Paul Winn, et ux, recorded August 4, 1945 in
Book 247, page 53, Deed Records, and an extension thereof 292.25 feet to a
point; thence South 71 (degrees) 40' East 148.71 feet to the Westerly right-of-
way line of County Road No. 893 (Lucas Avenue); thence North 23 (degrees) 40'
East on said Westerly right-of-way line of County Road No. 393 a distance of
304.31 feet to the Southerly right-of-way line of County Road No. 767 (Tigard
Street); thence North 64 (degrees) 40' 30" West on said Southerly line of County
Road No. 767 a distance of 108.15 feet to its intersection with the Southerly
right-of-way line of Katherine Street; thence South 89 (degrees) 23' West on
said right-of-way line and parallel with the North lines of Lots 21 and 22 of
North Tigardville Addition as amended a distance of 73.62 feet to the point of
beginning.
TOGETHER WITH that portion of S.W. Lucas Avenue which inured thereto by reason
thereof by Vacation Ordinance No. 75-17 recorded April 1, 1975 in Book 1016,
page 693.
EXCEPTING THEREFROM that portion as described in Deed to R.A. Gray Co., an
Oregon corporation, recorded August 8, 1973 in Book 939, page 364.
PARCEL II:
- ---------
TRACT A:
Beginning 8.78 feet North 89 (degrees) 23' East and 306.20 feet South 18
(degrees) 20' West from the Northwest corner of Lot 21 of NORTH TIGARDVILLE
ADDITION as amended, a plat of record in Section 2, Township 2 South, Range 1
West, Willamette Meridian, in the County of Washington and State of Oregon;
thence North 71 (degrees) 40' West 324.30 feet to a point on the West line of
Lot 22 of the above said Tigardville Addition; thence South 0 (degrees) 45' East
on the above said West line of Lot 22 a distance of 236.12 feet to an angle
point in said West line of Lot 22; thence South 11 (degrees) 12' West 9.29 feet
to a point; thence South 67 (degrees) 08' East 374.02 feet to a point on the
Westerly right of way line of County Road No. 893 (Lucas Road); thence North 23
(degrees) 40' East on said Westerly line of road 234.60 feet to a point; said
point being the Southeast corner of that tract in correction deed recorded May
15, 1972 in Book 867, page 272, Records of Washington County; thence North 71
(degrees) 40' West 148.71 feet to a point; thence North 18 (degrees) 20' East
28.34 feet to the point of beginning.
Exhibit A-Tigard Industrial Park - page 1 of 3
TOGETHER WITH that portion of S.W. Lucas Avenue which inured thereto by reason
thereof by Vacation Ordinance No. 75-17, recorded April 1, 1975 in Book 1016,
page 693.
TRACT B:
Beginning 8.78 feet North 89 (degrees) 23' East and 306.20 feet South 18
(degrees) 20' West from the Northwest corner of Lot 21 of NORTH TIGARDVILLE
ADDITION, as amended, a plat of record in Section 2, Township 2 South, Range 1
West, Willamette Meridian, in the County of Washington and State of Oregon;
thence South 18 (degrees) 20' West 23.53 feet to the true point of beginning of
the parcel described herein; thence continuing South 18 (degrees) 20' West 4.81
feet to a point; thence South 71 (degrees) 40' East, 128.49 feet to a point;
thence North 18 (degrees) 24' 57" East, 4.62 feet to a point; thence North 71
(degrees) 35' 03" West 128.50 feet to the true point of beginning.
PARCEL III:
- ----------
Beginning at the intersection of the Southerly right of way line of County Road
No. 767 (Tigard Street) and the East line of Lot 21 of NORTH TIGARDVILLE
ADDITION, as amended, a plat of record in Section 2, Township 2 South, Range 1
West, Willamette Meridian, in the County of Washington and State of Oregon;
thence South 0 (degrees) 45' East on the East line of the above said Lot 21 a
distance of 15.92 feet to a point on the Westerly line of that certain tract of
land conveyed by Deed in Book 313, page 480 of the Washington County Deed
Records; thence South 15 (degrees) 51' 39" West on said Westerly line 252.50
feet to a point; thence North 74 (degrees) 08' 20" West 256.96 feet to a point
on the Easterly right of way line of County Road No. 893 (Lucas Avenue); thence
North 23 (degrees) 40' East on above said right of way line 305.74 feet to the
Southerly right of way line of County Road No. 767 (Tigard Street); thence South
64 (degrees) 40' 30" East 213.79 feet to the point of beginning.
TOGETHER WITH that portion of S.W. Lucas Avenue which inured thereto by reason
thereof by Vacation Ordinance No. 75-17 recorded April 1, 1975 in Book 1016,
page 693.
PARCEL IV:
- ---------
Beginning at a point on the Easterly right of way line of Lucas Avenue, said
point of beginning being 305.74 feet South 23 (degrees) 40' West from the
intersection of the Easterly right of way line of Lucas Avenue and the Southerly
right of way line of County Road No. 767 (Tigard Street) in Section 2, Township
2 South, Range 1 West, Willamette Meridian, in the County of Washington and
State of Oregon; thence South 74 (degrees) 08' 20" East 256.96 feet to a point
on the Westerly line of Tract I of that certain tract of land conveyed by Deed
in Book 313, page 480 of the Washington County Deed Records; thence South 15
(degrees) 51' 39" West on above said Westerly line 182.55 feet to the Southwest
corner thereof; thence South 76 (degrees) 21' 30" East on the Southerly line of
said tract (Book 313, page 480) 50.00 feet, more or less, to the center of Fanno
Creek; thence upstream in center of creek to a point 151.96 feet Southerly from
the last described line when measured at a right angle; thence leaving said
creek North 75 (degrees) 11' West 315.00 feet, more or less, to a point on
Exhibit A-Tigard Industrial Park - page 2 of 3
the Easterly right of way line of Lucas Avenue; thence North 23 (degrees) 40'
East on said line 343.22 feet to the point of beginning.
TOGETHER WITH that portion of S.W. Lucas Avenue which inured thereto by reason
thereof by Vacation Ordinance No. 75-17 recorded April 1, 1975 in Book 1016,
page 693.
PARCEL V:
- --------
Tract A:
- -------
Beginning at a point on the Westerly right of way line of Lucas Avenue; said
point of beginning being 538.91 feet South 23 (degrees) 40' West from the
intersection of the Westerly right of way line of Lucas Avenue and the Southerly
right of way line of County Road No. 767 (Tigard Street) in Section 2, Township
2 South, Range 1 West, of the Willamette Meridian, in the County of Washington
and State of Oregon; thence North 67 (degrees) 08' West 374.02 feet to a point;
thence South 11 (degrees) 12' West 108.00 feet, more or less, to the center of
Fanno Creek; thence in the center of said creek and downstream to a point on the
Southern Extension of the Westerly right of way line of Lucas Avenue; thence
North 23 (degrees) 40' East 110.00 feet to the point of beginning.
TOGETHER WITH that portion of S.W. Lucas Avenue which inured thereto by reason
thereof by Vacation Ordinance No. 75-17 recorded April 1, 1975 in Book 1016,
page 693.
Tract B:
- -------
Beginning at a point on the Easterly right of way line of Lucas Avenue; said
point of beginning being 628.96 feet South 23 (degrees) 40' West from the
intersection of the Easterly right of way line of Lucas Avenue and the Southerly
right of way line of County Road No. 767 (Tigard Street) in Section 2, Township
2 South, Range 1 West, of the Willamette Meridian, in the County of Washington
and State of Oregon; thence South 21 (degrees) 20' East 28.28 feet to a point;
thence South 75 (degrees) 11' East 282.27 feet, more or less, to the center of
Fanno Creek; thence in the center of said creek and upstream in a Westerly
direction, to a point on the Southern extension of the Easterly right of way
line of Lucas Avenue; thence North 23 (degrees) 40' East 52.00 feet, more or
less, to the point of beginning.
TOGETHER WITH that portion of S.W. Lucas Avenue which inured thereto by reason
thereof by Vacation Ordinance No. 75-17 recorded April 1, 1975 in Book 1016,
page 693.
EXCEPTING THEREFROM that portion lying within Parcel IV above.
Exhibit A-Tigard Industrial Park - page 3 of 3
EXHIBIT B
Tigard Industrial Park
1. City Liens, if any, of the City of Tigard.
2. Statutory Powers and Assessments of Unified Sewerage Agency.
3. Rights of the public and of governmental bodies in and to that portion
of the premises herein described lying below the high water mark of Fanno Creek.
(Affects Parcels IV and V)
4. Any adverse claim based upon the assertion that some portion of said
land have been removed from or brought within the boundaries thereof by an
avulsive movement of the Fanno Creek or has been formed by the process of
accretion or reliction or has been created by artificial means or has accreted
to such portion so created. (Affects Parcels IV and V)
5. Easements for utilities over and across the premises formerly included
within the boundaries of S.W. Lucas Avenue, now vacated, if any such exists.
6. An easement created by instrument, including the terms and provisions
thereof;
Recorded : November 8, 1972 in Book 896, page 128
Favor of : Unified Sewerage Agency of Washington County, a municipal
corporation
For : Sewer
Affects : Reference is made to the document for the exact location
(Affects Parcels II, and IV and covers additional property)
7. An easement created by instrument, including the terms and provisions
thereof;
Recorded : October 30, 1986 as Fee No. 86050542
Recorded : October 30, 1986 as Fee No. 86050543
Recorded : October 30, 1986 as Fee No. 86050544
Favor of : City of Tigard
For : Storm drain and the maintenance thereof
Affects : Reference is made to the document for the exact location
(Affects Parcel II)
8. An easement created by instrument, including the terms and provisions
thereof;
Recorded : October 30, 1986 as Fee No. 86050548
Favor of : City of Tigard
For : Sewer line appurtenances thereto and the maintenance thereof
Affects : Reference is made to the document for the exact location
(Affects Parcels II and covers additional property)
Exhibit B-Tigard Industrial Park - page 1 of 3
9. Interest of Columbia Medical, lessee, under a lease dated October 1,
1994, including the terms and provisions thereof, disclosed by an Assignment of
the Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
10. Interest of Innovite, Inc., lessee, under a lease dated October 12,
1994, including the terms and provisions thereof, disclosed by an Assignment of
the Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
The lien of the above Lessor's Interest was subordinated to the lien of
the Trust Deed recorded March 24, 1995 as Fee No. 95019249 by agreement for
subordination, nondisturbance and attornment
Dated : March 23, 1995
Recorded : March 24, 1995 as Fee No. 95019254
11. Interest of Barrier Corporation, lessee, under a lease dated April 1,
1994 and May 19, 1994, including the terms and provisions thereof, disclosed by
an Assignment of the Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
The lien of the above Lessor's Interest was subordinated to the lien of the
Trust Deed recorded March 24, 1995 as Fee No. 95019249 by agreement for
subordination, nondisturbance and attornment
Dated : March 23, 1995
Recorded : March 24, 1995 as Fee No. 95019251 and
Recorded : March 24, 1995 as Fee No. 95019252 and
Recorded : March 24, 1995 as Fee No. 95019253 and
Recorded : March 24, 1995 as Fee No. 95019255
12. Interest of Polycast, Inc., lessee, under a lease dated October 25,
1994, including the terms and provisions thereof, disclosed by an Assignment of
the Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
13. Interest of Frye Electronics, Inc., lessee, under a lease dated March
25, 1991, including the terms and provisions thereof, disclosed by an Assignment
of the Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
The lien of the above Lessor's Interest was subordinated to the lien of the
Trust Deed recorded March 24, 1995 as Fee No. 95019249 by agreement for
subordination, nondisturbance and attornment
Dated : March 23, 1995
Recorded : March 24, 1995 as Fee No. 95019256
Exhibit B - Tigard Industrial Park page 2 0f 3
14. Interest of Proctor Sales, Inc., lessee, under a lease dated June 1,
1992, including the terms and provisions thereof, disclosed by an Assignment of
the Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
15. Interest of JTD Inc., lessee, under a lease dated December 5, 1994,
including the terms and provisions thereof, disclosed by an Assignment of the
Lessor's Interest in Leases
Recorded : March 8, 1995 as Fee No. 95015306
16. Deed of Trust with Assignment of Rents and Fixture Filing, including
the terms and provisions thereof, given to secure an indebtedness of
$2,500,000.00
Dated : March 24, 1995
Recorded : March 24, 1995 as Fee No. 95019249
Grantor : Wilshire Properties-2 Incorporated, an Oregon corporation
Trustee : First American Title Insurance Company of Oregon
Beneficiary : Bank of America Oregon, an Oregon state chartered commercial bank
Loan No. : 2098
17. An assignment of all rents, royalties, issues and profits accruing
from said land, as additional security for the payment of indebtedness secured
by the above Trust Deed
Recorded : March 24, 1995 as Fee No. 95019250
Executed by : Wilshire Properties-2 Incorporated, an Oregon corporation
To : Bank of America Oregon
[18. Unrecorded leases or periodic tenancies, if any.]
Exhibit B - Tigard Industrial Park page 3 0f 3
EXHIBIT B
2855 Prairie Road
1. Rights of the public in streets, roads and highways.
[2. Combination Landlords Waiver or Mortgagee's Agreement of Subordination,
including the terms and provisions thereof , given by Ebella Corporation to Far
West Federal Bank, recorded December 2, 1985, Reception No. 85-43414, Official
Records of Lane County, Oregon.]
3. Deed of Trust and Assignment of Rents, including the terms and
provisions thereof, given to secure an indebtedness with interest thereon and
such future advances as maybe provided therein,
Dated : August 3, 1988
Recorded : August 18, 1988
Reel No. : 1530
Reception No. : 88-34041
Official Records of Lane County, Oregon
Amount : $1,200,000.00
Grantor : Rubenstein Furniture Co., an Oregon general partnership
Trustee : Transamerica Title Insurance Company
Beneficiary : Standard Insurance Company, an Oregon corporation
Modification/Assumption Agreement, including the terms and provisions thereof,
recorded November 22, 1995, Reception No. 95-62943, Official Records of Lane
County, Oregon.
4. Collateral assignment of 95% of the beneficial interest of Standard
Insurance Company, an Oregon corporation, in and to the Trust Deed referenced
above, under Reception No. 88-34041, said assignment was
Recorded : February 19, 1997
Reception No. : 97-10845
Official Records of Lane County, Oregon
To : First Savings Bank of Washington, a state chartered
savings bank
5. The rights, if any, of the adjoining property owner to maintain an
existing drainfield along the Southwesterly boundary of the above-described
property, as disclosed by deed from Rubenstein Furniture Stores, fka Rubenstein
Furniture Co., an Oregon general partnership, to Wilshire Properties-2
Incorporated, an Oregon corporation, recorded November 2, 1995, Reception No.
95-62945, Official Records of Lane County, Oregon.
[6. Unrecorded leases, if any, and such other exceptions as may appear
necessary upon the recording thereof.]
WILSHIRE REAL ESTATE PARTNERSHIP L.P.
PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of [April] ___,
1998 by and among Wilshire Real Estate Partnership L.P., a Delaware limited
partnership ("Purchaser"), Wilshire Real Estate Investment Trust Inc., a
Maryland corporation ("WREIT") general partner of Purchaser, and Wilshire
Funding Corporation, a Delaware corporation ("WFC"), WMFC 1997-1 Inc., a
Delaware corporation ("1997-1") and Wilshire Financial Services Group Inc., a
Delaware corporation ("WFSG"), sole shareholder of WFC and parent of 1997-1
(WFSG, WFC and 1997-1 collectively, "Seller").
RECITALS
A. Seller desires to sell to Purchaser, and Purchaser desires to purchase
from Seller, on the terms and subject to the conditions set forth herein, the
Assets (as defined herein) owned by Seller.
B. Purchaser and Seller desire to enter into this Agreement to govern the
purchase by Purchaser from Seller, and sale by Seller to Purchaser, of the
Assets.
Therefore, in consideration of the mutual covenants, terms and conditions
set forth herein, the parties agree as follows:
1. Definitions. The following terms are defined as follows:
-----------
Affiliate. With respect to any specified Person, any other Person
---------
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities (including, without limitation, partnership interests), by contract
or otherwise and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Assets. The mortgage loans, real property and mortgage-backed
------
securities described on Exhibit A to this Agreement, together with all liens and
guaranties granted in connection therewith, all residual rights of Seller in
property that secure the aforesaid, all insurance policies on any of the
property or the obligor on the account, all documentation pertaining thereto and
all Asset Files.
Asset File. All information in recorded form pertaining to the Assets
----------
held by or for Seller, including without limitation, all documents, microfiche,
computer software and other media that includes correspondence, general credit
information, credit records, payment histories, internal notes or memoranda,
loan applications, appraisals, insurance guarantee
policies, property insurance policies, mortgage insurance policies, title
insurance policies, attorney opinions, and all original documents evidencing or
relating to the Assets and any collateral that secures the Assets.
Assignment Documents. As defined in Section 2.2.
--------------------
ALTA. The American Land Title Insurance Association.
----
BPO. The most recent drive-by valuation, as reasonably adjusted by the
---
Seller's in-house appraisal department (on a six-month "stabilized" rather than
"quick sale" basis) generally prepared by a duly qualified and licensed real
estate broker who has no interest, direct or indirect, in the mortgaged property
or in Seller or Purchaser, or any Affiliate of Seller or Purchaser and whose
compensation is not affected by the results of the BPO and which valuation
indicates the expected proceeds of a sale of the related mortgaged property, and
includes certain assumptions, including those as to the condition of the
interior of the applicable mortgaged property and marketing time.
Closing Date. The closing date of the initial public offering of
------------
common stock of WREIT, pursuant to Registration Statement No. 333-39035 on Form
S-11, and any amendments thereto, filed by WREIT with the Securities and
Exchange Commission.
CLTA. The California Land Title Insurance Association.
----
Cut-Off Date. February 28, 1998.
------------
IPO Closing. The closing of the initial public offering of common
-----------
stock of WREIT, pursuant to Registration Statement No.333-39035 on Form S-11,
and any amendments thereto, filed by WREIT with the Securities and Exchange
Commission.
Loan Documents. All documents, instruments or agreements executed and
--------------
delivered by Seller or the borrower in connection with a Mortgage Loan
including, without limitation, notes and security instruments.
MBS. Any Asset that is a mortgage-backed security.
---
Mortgage. Any mortgage, deed of trust or other instrument securing an
--------
Asset that creates a lien on an estate in real property securing the Asset.
Mortgage Loan. Any Asset that is secured by a Mortgage.
-------------
Person. Any legal person, including any individual, corporation,
------
partnership, association, joint-stock company, trust, limited liability company,
unincorporated organization, governmental entity or other entity of similar
nature.
Purchase Price. As defined in Section 2.1(b).
--------------
2
Qualified Insurer. As defined in Section 4.2(c).
-----------------
Survival Date. That date 6 months after the Closing Date.
-------------
2. Closing. The closing of the purchase and sale of the Assets shall be
-------
held at the offices of Gibson, Dunn & Crutcher LLP, 4 Park Plaza, Irvine,
California 92614 on the Closing Date.
2.1 The obligation of Seller to sell the Assets shall be subject to
satisfaction of each of the following conditions precedent:
(a) All of the representations and warranties of Purchaser
contained in this Agreement shall be true and correct as of the Closing
Date.
(b) On the Closing Date, upon Purchaser's receipt of the items
specified in Section 2.2, Purchaser shall wire transfer $__________ to
Seller (the "Purchase Price").
2.2 The obligation of Purchaser to purchase the Assets shall be subject to
satisfaction of each of the following conditions precedent on or before the
Closing Date. Purchaser shall receive all items in such forms as are agreed
upon and acceptable to Purchaser and WREIT, duly executed by all
signatories as required pursuant to the respective terms thereof. If
Purchaser purchases the Assets before satisfaction of any of these
conditions, Seller shall, at Purchaser's request, satisfy the conditions
after the Closing Date.
(a) Seller shall deliver the Assets, the original Asset Files and
a bill of sale for the Assets (the "Bill of Sale") in substantially the
form of Exhibit B attached hereto, together with such other documents and
instruments reasonably necessary for the individual transfer of each Asset
by Seller to Purchaser, including without limitation, the following as
applicable for each Asset (collectively, the "Assignment Documents"):
(1) Original note (or lost note affidavit and indemnity
acceptable to Purchaser) properly endorsed;
(2) Original assignment of mortgage or deed of trust and;
(3) Originals or copies of all recorded mortgages, deeds, and
assignments thereof showing a complete chain of title to Seller;
(4) Original or a copy of policy of lender's title insurance
as of origination date of each Mortgage Loan;
3
(5) For any real property, a deed, all original leases and
contracts pertaining to the property and assignments thereof to Purchaser,
and keys to the property.
(6) For any real property, an ALTA 1992 policy of title
insurance with endorsements relating to creditor's rights and arbitration
issues in form acceptable to Purchaser to the extent such endorsements are
available in the relevant jurisdiction.
(7) For any real property, original assignments of Uniform
Commercial Code financing statements in proper form for the relevant
jurisdiction.
(8) For each MBS, a stock power executed in favor of
Purchaser.
Any Seller data regarding the Assets held in computer hardware or software shall
be converted to media which will allow Purchaser to input such data into its
computer system. Any additional documents and instruments shall be subject to
the reasonable approval of counsel to Purchaser.
(b) Seller shall deliver and release to Purchaser the Assets and
all other documents required to be delivered pursuant to this Agreement.
(c) Seller shall provide releases of all interests in the Assets
held by any third party unless for a given parcel of real property the
parties have mutually agreed to transfer such real property subject to
indebtedness, in which case Seller shall provide consent to transfer such
real property subject to the indebtedness from the lender holding such
indebtedness.
(d) Seller shall instruct the trustee for each MBS to transfer
such MBS into Purchaser's name.
(e) Seller shall provide copies of the agreements pursuant to
which Seller acquired Assets that are Mortgage Loans.
(f) Seller shall be responsible for the preparation of any and
all other transfer documents reasonably necessary to evidence the transfer
of the Assets. Such transfer documents shall be in the name and form
reasonably acceptable to Purchaser. Any endorsements shall be "Payable to
the Order of Wilshire Real Estate Partnership L.P.," in blank, or as
otherwise specified by Purchaser.
(g) All representations and warranties of Seller set forth herein
are true and correct.
4
(h) For any real property, Purchaser has received adequate
assurances from the title company issuing title insurance on such real
property that a title policy will be issued that will be effective as of
the Closing Date, with such exceptions approved by the Purchaser.
2.3 The obligations of all parties under this Agreement are conditioned upon
the IPO Closing.
2.4 At Purchaser's request, the Assignment Documents promptly shall be recorded
or filed, as applicable, in the name of the Purchaser or in the name of a
person or entity designated by Purchaser in all appropriate public offices,
files and records. If any such Assignment Document is lost or returned
unrecorded or unfiled because of a defect therein, Seller promptly shall
prepare substitute Assignment Documents to cure such defects and thereafter
cause each such substitute Assignment Document to be duly recorded or
filed, as applicable. Purchaser shall pay all recording and filing fees
related to such a one-time recordation or filing, as applicable, of the
assignments.
2.5 Any Assignment Documents or Asset Files with respect to one or more of the
Assets that are in Seller's possession from and after the Closing Date
shall be retained and maintained by the Seller in trust for the benefit of
Purchaser and in a custodial capacity only, and subject in all events to
the will of the Purchaser. Seller shall segregate all of such Assignment
Documents and Asset Files from Seller's other books and records and shall
appropriately mark each of them to reflect clearly the sale of the related
Asset to Purchaser and the ownership of each Asset by Purchaser. Seller
shall release its custody of the contents of any thereof only in accordance
with written instructions from Purchaser except where such release is
required as incidental to the Seller's servicing of the Assets (if and to
the extent Seller is engaged to provide servicing with respect thereto).
2.6 Seller shall reflect the sale of each Asset sold pursuant to this Agreement
on the Seller's balance sheet and other financial statements as a sale of
assets by Seller. Seller shall be responsible for maintaining, and shall
maintain, a complete set of books and records for the Assets which shall be
clearly marked to reflect the sale of each Asset to Purchaser and the
ownership of each Asset by Purchaser.
2.7 Except as otherwise provided herein, all costs and expenses incurred by all
parties in connection with the transactions contemplated by this Agreement
shall be paid by that party.
2.8 For any Asset which is real property, Seller shall pay all costs and
expenses related to obtaining title insurance for any Asset, Seller and
Purchaser shall each pay one-half of any escrow fees and transfer taxes,
and Purchaser shall pay any recording fees.
5
3. Transfer of Servicing.
---------------------
3.1 The Assets shall be sold and conveyed to Purchaser on a servicing released
basis. As of the Closing Date all rights regarding the servicing of Assets
shall pass to Purchaser.
3.2 Seller shall provide Purchaser with a letter to be sent to all obligors on
the Assets which are Mortgage Loans advising the obligors that the Assets
have been sold and that all payments should be paid to Purchaser.
3.3 Seller shall provide Purchaser with a letter to be sent to all tenants in
the Assets which are real property advising the tenants that the Assets
have been sold and that all payments should be paid to Purchaser and that
the tenants must change the loss payee endorsements on the insurance
required under the applicable to lease to name Purchaser rather than
Seller.
3.4 Purchaser shall be entitled to all payments received after the Cut-Off Date
and Seller shall forward such payments to Purchaser within five days of
receipt thereof.
3.5 Seller shall be responsible for payment of all expenses of servicing and
payment of all third-party obligations of the borrower required to be paid
under the Assets (including without limitation, tax and insurance
payments), attributable to the time period prior to the Cut-Off Date. If
funds are not available from borrower's impound account for such third-
party obligations, Seller shall obtain Purchaser's prior approval before
advancing such funds and adding the amount thereof to the borrower's
balance.
3.6 After the Cut-Off Date, Seller shall not have any right to participate for
its own account in pending litigation relating to any Asset sold to
Purchaser. Seller agrees to make its employees available to Purchaser when
reasonably required after the Closing Date to assist Purchaser in obtaining
missing documents, missing information, or in litigation provided that
Purchaser provides Seller reasonable advance notice and pays a reasonable
fee for the employees' time and costs.
3.7 Seller shall deliver to Purchaser all security deposits held by Seller from
tenants in the Assets which are real property.
3.8 Seller shall assign to Purchaser, in such form approved by Purchaser, all
contracts relating to the operation and maintenance of the Assets which are
real property and shall provide notice to the persons party to such
contracts that the contracts are being assigned to Purchaser.
4. Representations and Warranties of Seller.
----------------------------------------
4.1 This Agreement. Each Seller represents and warrants to Purchaser and WREIT
--------------
that as of the date of this Agreement and as of the Closing Date:
6
(a) Each Seller is duly organized and validly existing under the
laws of its state of organization. Each Seller has full power and authority
to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement and has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement.
(b) The sale and delivery of any Asset to Purchaser, the
execution of this Agreement, and the performance of the transaction
contemplated under this Agreement will not result in a breach of any
provision of the charter or bylaws of each Seller or result in a material
breach of any legal restriction or any agreement to which each Seller is
now a party or by which it is bound, or result in a violation of any law,
rule, regulation, order, judgment or decree to which such Seller or its
property is subject.
(c) Except as noted on Schedule 4.1(c) Seller is the owner of the
Assets, free of any liens or encumbrances, and has the full right, title
and interest to sell and assign the Assets to Purchaser and except (A) for
Assets that are real property (i) liens for real property taxes and
assessments not due and payable on the Closing Date, (ii) covenants,
conditions and restrictions, rights-of-way, easements and other matters of
public record as of the Closing Date generally acceptable to institutional
investors in the area, (iii) such other matters to which like properties
are commonly subject which do not, individually or in the aggregate,
materially interfere with the practical realization of the benefits of
ownership of such real property or with the current use thereof, (iv)
ground leases described in written schedules previously provided to
Purchaser, and (v) rights of tenants under leases and (B) for Assets that
are junior Mortgage Loans, the senior Mortgages which have been disclosed
to Purchaser.
(d) Each Seller has obtained all consents, approvals or
authorizations required in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
(e) Each Seller has complied with all rules, regulations and
statutes required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transaction
contemplated by this Agreement.
(f) There is no action, suit, proceeding, investigation or
litigation pending or, to each Seller's knowledge, threatened, which either
in any one instance or in the aggregate, if determined adversely to such
Seller, would adversely effect the sale of the Assets to Purchaser, or such
Seller's ability to perform its obligations under this Agreement.
(g) Each Seller is solvent and is generally paying its debts as
such become due and the execution and consummation of this Agreement will
not render such Seller insolvent. There are no proceedings for
reorganization, arrangement, liquidation or dissolution pending, or to each
Seller's knowledge, threatened or contemplated under any federal, state or
local law against such Seller.
7
(h) There are no brokers or other persons who are entitled to any
payment arising from this Agreement or the sale of any Asset except as
noted on Schedule 4.1(h).
(i) No certificate of an officer furnished pursuant hereto in
writing to the Purchaser or the trustee of any Asset that is MBS by the
Seller contains any untrue statement of a material fact, or omits a
material fact necessary to make the certificate not misleading.
(j) No default exists on the part of the Seller, and no event has
occurred which, with notice, lapse of time or both, would constitute a
default on the part of the Seller in the due performance and observance of
any term, covenant or condition of any agreement to which the Seller is a
party or by which it is bound, which default would have a materially
adverse effect on the Seller's performance of this Agreement.
(k) The Seller's principal place of business and chief executive
office are located in Oregon.
(l) The Seller is not a "benefit plan investor" described in or
subject to the Department of Labor Regulations set forth in 29 C.F.R.
section 2510.3-101.
(m) Upon execution and delivery of this Agreement, it shall be a
valid and binding obligation of Seller, and enforceable against Seller in
accordance with its terms.
(n) The Seller acquired the Assets in the ordinary course of its
business, in good faith, and for value.
(o) The Seller does not have any actual knowledge or notice of
any interest in the Assets that upon sale to the Purchaser and transfer in
accordance herewith will be contrary to the interest of the Purchaser.
(p) The transfer, assignment and conveyance of the Assets by the
Seller pursuant to this Agreement is not subject to bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(q) The Seller intends to relinquish all ownership rights in the
Assets sold pursuant to this Agreement; after the Closing Date, the Seller
will have no right to the Assets.
4.2 Mortgage Loans. Seller shall assign to Purchaser all representations and
--------------
warranties pertaining to each Mortgage Loan received by Seller when Seller
acquired each such Mortgage Loan to the extent that such representations
and warranties may be transferred. In addition, Seller represents and
warrants to Purchaser that with regard to each Asset sold hereunder that is
a Mortgage Loan that, as of the Closing Date:
8
(a) Except as specified in the computer tape provided to
Purchaser on or about ____________, 1998, to Seller's knowledge there are
no delinquent taxes, ground rents, water charges, sewer rents, assessments,
insurance premiums, leasehold payments, including assessments payable in
future installments, or other outstanding charges affecting the related
mortgaged property that have arisen subsequent to the date that Seller
acquired each such Mortgage Loan.
(b) All escrow payments are in possession of Seller and have been
collected in substantial compliance with all applicable federal, state and
local laws and regulations and the loan documents subsequent to the date
that Seller acquired each such Mortgage Loan. All escrows held and account
records reflecting amounts held in escrow will be delivered to Purchaser at
the Closing.
(c) To Seller's knowledge all buildings upon the mortgaged
property are insured by a Qualified Insurer against loss by fire, hazards
of extended coverage and such other hazards as are customary in the area
where the mortgaged property is located. All such policies contain a
standard mortgage clause naming Seller, its successors and assigns as
mortgagee and all premiums thereon have been paid. All such hazard
insurance policies contain a standard mortgagee clause for the benefit of
the holder of the related Mortgage, its successors and assigns, as
mortgagee, are not terminable, the amount of coverage provided thereunder
may not be reduced without ten (10) days prior written notice to the
mortgagee, and there are no delinquent payments with regard to premiums
payable thereunder. To Seller's knowledge each mortgaged property is also
covered by commercial general liability insurance in an amount at least
equal to One Million Dollars ($1,000,000) per occurrence. No notice of
termination, cancellation or reduction has been received by the Seller with
respect to any such hazard or liability insurance policy. All premiums
thereon have been paid. To Seller's knowledge, no person has engaged in any
act or omission that would impair the coverage of such policy or the
benefits of the mortgagee's endorsement. Such hazard insurance policy is
the valid and binding obligation of the insurer and is in full force and
effect. The related Mortgage obligates the obligor to maintain all such
insurance at its cost and expense, and on the obligor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance and to
obtain reimbursement therefor from the obligor. "Qualified Insurer" means
an insurance company duly qualified as such under the laws of the state in
which the mortgaged property is located, duly authorized and licensed in
such state to transact the applicable insurance business and to write the
insurance provided.
(d) To Seller's knowledge, the Mortgage is a valid, existing and
enforceable lien on the mortgaged property, including all improvements on
the mortgaged property, subject only to (i) the lien of current real
property taxes and assessments not yet due and payable, (ii) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording being acceptable to mortgage
lending institutions generally and specifically referred to in the title
insurance policy delivered to the originator of the Mortgage Loan and which
do not adversely affect the appraised value of the mortgaged property,
(iii) senior mortgage liens if the Asset is described as a junior mortgage
in Exhibit A, and (iv) rights of tenants under leases or other rights of
tenants.
9
(e) Each Mortgage contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate
for the realization against the mortgaged property of the benefits of the
security provided thereby, including; (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (ii) otherwise by
judicial foreclosure.
(f) The Mortgage contains an enforceable provision for the
acceleration of the payment of the unpaid principal balance of the Mortgage
Loan if the mortgaged property is sold or transferred without the prior
written consent of the mortgagee thereunder.
(g) The lien of the Mortgage is insured by ALTA or CLTA lender's
title insurance policy, issued by a title issuer acceptable to
institutional mortgage lenders and qualified to do business in the
jurisdiction where the mortgaged property is located, insuring the
originator of the Mortgage Loan, its successors and assigns as to the lien
of the Mortgage in the original principal amount of the Mortgage Loan after
all advances of principal. Such title insurance policy is in full force and
effect and will be in full force and effect and inure to the benefit of
Purchaser upon the consummation of the transactions contemplated by this
Purchase Agreement with respect to such mortgage loan. Full premiums for
such policy, including all endorsements and special endorsements, have been
paid. To the best of Seller's knowledge, no claims have been made under
such lender's title insurance policy, and Seller has not, by act or
omission, done anything which would impair the coverage of such lender's
title insurance policy. The originator of the Mortgage Loan is the sole
insured under such lender's title insurance policy and such policy is
assignable to Purchaser without the consent of or any notification to the
insurer.
(h) Seller has no knowledge that the mortgaged property has any
material damage or waste or of any proceeding pending for the total or
partial condemnation thereof.
(i) Seller has no knowledge of any contamination from hazardous
substances nor that any hazardous substances have been disposed of or
identified on, under or at any mortgaged property in violation of any
federal, state, or municipal law, regulation or standard.
(j) Seller has no actual knowledge, as of the date hereof, that
the mortgaged property is not in compliance with any applicable zoning or
building law or regulation or that all inspections, licenses and
certificates required by law, regulation or insurance standards to be made
or issued with respect to the mortgaged property and with respect to the
use and occupancy of the same, have not been made or issued by the
appropriate authority.
(k) The Asset File contains an appraisal or BPO of the related
mortgaged property that was made and signed, prior to the approval of the
mortgage loan
10
application or at the time of purchase of the Asset by Seller, by a person,
(1) who had no interest, direct or indirect, in the mortgaged property or
the obligor or in any loan made by the approval or disapproval of the
Mortgage Loan and (2) who was state-licensed or state-certified, if
required under the laws of the state in which the related mortgaged
property is located, at the time the appraisal or BPO was conducted and
signed.
(l) To Seller's actual knowledge, each Loan Document is the
legal, valid and binding obligation of the parties thereto (subject to any
non-recourse provisions therein), enforceable in accordance with its terms,
execute as such enforceability may be limited by anti-deficiency laws or
bankruptcy, reorganization or other similar laws affecting the enforcement
of creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in
equity or at law), and except that certain provisions of such Loan
Documents are or may be unenforceable in whole or in part under applicable
federal or state laws, but the inclusion of such provisions does not render
any of the Loan Documents invalid as a whole, and such Loan Documents taken
as a whole are enforceable to the extent necessary and customary for the
practical realization of the rights and benefits afforded thereby and,
subject to the foregoing qualifications, there is no offset, defense,
counterclaim or right of rescission with respect to any of such Loan
Documents.
(m) The servicing of each Mortgage Loan purchased hereunder from
the date of Seller's ownership thereof has been and as of the Closing Date
will be in full compliance with all federal and state laws and regulations.
(n) To Seller's actual knowledge, the related borrower is not a
party to any bankruptcy, reorganization, insolvency or similar proceeding.
(o) Except as disclosed in the Schedule 4.2(o), Seller has no
actual knowledge that any Mortgage Loan is cross-defaulted with any loan
(other than a Mortgage Loan), and no Loan is secured by any property that
secures another loan (other than a Mortgage Loan).
(p) To Seller's actual knowledge, except as set forth on Schedule
4.1(c), each such Mortgage, together with any separate security agreements
and related documents, establishes a perfected first priority security
interest in favor of the Seller in all the related borrower's fixtures and
personal property used in, and reasonably necessary to operate, the real
property underlying each Mortgage and, to the extent a security interest
may be created therein, the proceeds arising from the real property
underlying each Mortgage and any other collateral securing such Mortgage,
subject only to certain encumbrances described in Schedule 4.1(c) annexed
hereto and other encumbrances previously disclosed to Purchaser, if any.
(q) Seller has no actual knowledge of mechanics' or other similar
liens which have been filed for work, labor or materials (nor, to Seller's
knowledge, are any rights outstanding that under applicable law could give
rise to any such lien) affecting any real
11
property securing a Mortgage Loan which are or may be prior or equal to the
lien of the related Mortgage, except those insured against pursuant to the
applicable title insurance policy.
(r) Each Assignment Document to be executed and delivered by or
on behalf of Seller pursuant hereto is and will be in recordable for and
legal, valid and binding.
(s) Seller's endorsement of the note evidencing each Mortgage
Loan, which note is secured by the related Mortgage, will constitute the
legal and binding assignment of such note and together with an assignment
of Mortgage Loan, assignment of the assignment of leases and rents, and
Assignment of any UCC financing statement, legally and validly will convey
all right, title and interest in such Mortgage Loan to Purchaser.
(t) Seller has no actual knowledge that the principal amount of
each Mortgage Loan stated on the related note has not been fully disbursed
as of the origination date specified therein, there are no future advances
required to be made by the lender under any of the related Loan Documents,
all requirements under the related Loan Documents, if any, for
disbursements of additional loan proceeds have been satisfied fully, and
any construction of improvements on the related real property underlying a
given Mortgage that has not been completed will not impair the value of
that real property underlying the Mortgage relative to the value reflected
in the most recent appraisal thereof.
(u) Other than as set forth in the Loan Table, no Mortgage Loan
is as of the date hereof, or will be as of the Closing Date, more than 30
days delinquent in payments of principal or interest.
(v) Seller has not modified, and shall not on or prior to the
Closing Date modify, the terms of any Mortgage Loan and none of the Loan
Documents have been modified or waived, or shall be modified or waived on
or prior to the Closing Date, in each case in any material respect except
as previously disclosed by Seller to Purchaser; with respect to each
Mortgage Loan, the applicable interest rate and the related monthly payment
have been calculated correctly (or have been recalculated correctly, in the
case of certain Mortgage Loans for which one or both of such amounts
previously was calculated incorrectly, each of which incorrect calculations
previously has been disclosed to Purchaser in writing) pursuant to the
terms of the applicable Loan Documents for all purposes; and all
information set forth in the Loan Table with respect to each Mortgage Loan,
including without limitation the outstanding principal balance, is true and
correct in all material respects.
(w) No Mortgage Loan is an interest-only loan the documents
governing which provide only for interest on that Mortgage Loan to be paid
on a periodic basis, with no periodic payment on account of amortization of
principal.
(x) No Mortgage Loan has been, and as of the Closing Date no
Mortgage Loan shall be, satisfied, canceled, subordinated, released or
rescinded, in whole or
12
in part, and the related mortgagor has not been and shall not be released
by Seller from any of such mortgagor's obligations under any Loan
Documents.
(y) Seller has no actual knowledge that any of the Loan
Documents is or, on or prior to the Closing Date, will be subject to any
right of rescission, set-off, valid counterclaim or defense, or that any
exercise of any of the rights and remedies under the Loan Documents and in
accordance with procedures permitted under applicable law will render any
of such Loan Documents subject to any right of rescission, set-off, valid
counterclaim or defense, and that any right of rescission, set-off, valid
counterclaim or defense has been asserted with respect to any Mortgage
Loan.
(z) Seller has no actual knowledge that any real property
securing a Mortgage Loan being or to be sold by Seller pursuant to this
Agreement is not, and as of the Closing Date will not be, in all material
respects, in compliance with, and is used and occupied in accordance with,
all applicable statutes, rules, laws, regulations and ordinances and all
restrictive covenants of record applicable to such real property; nor that
all inspections, licenses and certificates of occupancy required by any of
such statutes, rules, laws, regulations and ordinances to be made or issued
with regard to such real property have not been obtained and are not in
full force and effect (except to the extent the failure to obtain and
maintain any thereof do not materially impair the current use of such real
property or the rights of a holder of the related Mortgage Loan.)
(aa) Seller did not engage in an adverse selection process in
selecting the Mortgage Loans for sale, assignment and transfer to
Purchaser.
(bb) No more than 5% of the aggregate outstanding principal
amount of the Mortgage Loans have the same borrower or, to Seller's best
knowledge, are to borrowers, which are affiliates of each other.
(cc) Except as set forth on Schedule 4.2(cc) hereto, each
Mortgage prohibits any further pledge or lien on the real property securing
each Mortgage, whether of equal or subordinate priority to the lien of the
Mortgage, unless the prior written consent of the holder is obtained or
certain conditions set forth in the Mortgage are satisfied.
(dd) Seller has no actual knowledge of any circumstances or
conditions with respect to the real property securing any Mortgage, that
would constitute or result in a material violation of any environmental
laws or require any expenditure material in relation to the principal
balance of such Mortgage Loan to achieve or maintain compliance in all
material respects with any and all environmental laws.
(ee) Seller has no actual knowledge that all amounts required to
be deposited by the borrower with respect to each Mortgage Loan at the
origination of such Mortgage Loan were not deposited or that there are any
deficiencies with regard thereto.
13
(ff) To Seller's actual knowledge, all significant leases with
respect to each real property securing a Mortgage Loan are and as of the
Closing Date will be in full force and effect, there has been and as of the
Closing Date will be no material default under the lease by the related
borrower or, to Seller's knowledge, except as disclosed on Schedule
4.2(ff), the lessee, and no person or entity other than the related
borrower owns any interest in any payments due or to become due under the
related leases.
(gg) To Seller's actual knowledge, there are and as of the
Closing Date will be no pending or threatened actions, suits or proceedings
by or before any court or other governmental authority against or affecting
the related borrower under each Mortgage Loan or the real property securing
such Mortgage Loan which, if determined against such mortgagor or real
property, would materially and adversely affect the value of such real
property or the ability of the borrower to pay principal, interest and
other amounts due under such Mortgage Loan.
(hh) Each Asset File contains an original or a copy of lender's
title insurance as of the origination date of each Mortgage Loan.
4.3 Real Property. Seller represents and warrants to Purchaser that with
-------------
regard to each real property sold hereunder that, as of the Closing Date:
(a) The Asset Files contain all material documents, or copies
thereof, relating to each real property.
(b) Seller is the sole owner and holder of the real property and
has the full right to sell the real property pursuant hereto.
(c) A valid and enforceable ALTA policy of title insurance, or
equivalent coverage customarily approved by institutional investors in the
jurisdiction in which the real property is located, has been obtained by
Seller in an amount not less than the purchase price of such real property
and insuring that the real property is owned by Purchaser, subject to (i)
liens for real property taxes and assessments not due and payable on the
Closing Date, (ii) covenants, conditions and restrictions, rights-of-way,
easements and other matters of public record as of the Closing Date
generally acceptable to institutional investors in the area, (iii) such
other matters to which like properties are commonly subject which do not,
individually or in the aggregate, materially interfere with the practical
realization of the benefits of ownership of such real property or with the
current use thereof, (iv) ground leases described in written schedules
previously provided to Purchaser, and (v) rights of tenants under leases.
(d) The real property is free and clear of all mechanics' and
materialmen's liens or liens in the nature thereof.
(e) Seller has no knowledge of any pending or threatened
condemnation proceeding or similar proceedings, affecting the real property
or any part thereof
14
which could have a material adverse effect upon the use of the real
property for its current uses.
(f) Except to the extent they do not materially and adversely
affect the present use of the real property, all of the improvements that
were included for the purpose of determining the valuation of the real
property lie substantially within the boundaries and building restriction
lines of such real property, and no improvements on adjoining properties
encroach in any material respect upon such real property.
(g) To Seller's knowledge, all public utility connections
located at or on the real property have been paid for and all sewer, water
and other utilities required for the operation of the real property enter
through adjoining public streets or through valid recorded easements across
adjoining private lands.
(h) Seller has no knowledge of any contamination from hazardous
substances and nor that any hazardous substances have been disposed of or
identified on, under or at any real property in violation of any federal,
state, or municipal law, regulation or standard.
(i) There is maintained a hazard insurance policy on the real
property. Seller has not received from any insurance company which carries
insurance on the real property any notice of any defect or inadequacy in
connection with the real property or its operation which has not been
cured.
(j) If the real property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards (and the flood insurance described below is available), a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administrator is in effect or could be obtained with a
reputable insurance carrier, in an amount representing coverage not less
than the lesser of (i) the full insurable value of the related real
property, or (ii) the maximum amount of insurance which is available under
the Flood Disaster Protection Act of 1973.
(k) Except as previously disclosed to Purchaser in the Asset
Files, Seller has no knowledge that the real property, normal wear and tear
excepted, is not in good condition and repair or that it has been damaged
by waste, fire, earthquake or earth movement, windstorm, flood, tornado, or
other casualty, so as to affect adversely the value of the real property or
the use for which the premises were intended.
(l) Seller has performed or will perform all of Seller's
obligations under any leases relating to the real property that are or will
be required to be performed prior to the Closing Date. No brokerage
commission or other compensation is or will be due or payable to any person
with respect to or on account of any of such leases, or any renewal
thereof, that could be a lien against the real property or a claim against
Purchaser.
15
(m) Except as previously disclosed to Purchaser in the Asset
Files, Seller has no knowledge of any litigation pending, or of any order,
injunction or decree outstanding, existing or relating to the real
property, that could reasonably be expected to have a material adverse
effect on the real property or title thereto. Seller has no knowledge of
any illegal activity being conducted on the real property which could serve
as the basis for a claim or prosecution of any action or proceeding seeking
to impose civil or criminal liability on Purchaser as the owner.
(n) Except as disclosed on Schedule 4.3, there are no delinquent
taxes, ground rents, water charges, sewer rents, assessments or other
outstanding charges affecting the real property.
(o) To Seller's knowledge any rent rolls and leases provided by
the Seller to Purchaser are complete, true, and accurate, and are presented
in a manner that is not misleading. All leases are in full force and effect
with rents paid currently (except as indicated in the rent roll). With
regard to the tenant leases, the Seller knows of no default by it or by any
of the tenants, and there have been no verbal changes and no concessions
granted by Seller with respect to the leases or tenants under the leases,
except as indicated in the rent roll.
(p) All information pertaining to the real property on any
exhibits or schedules is true and correct in all material respects.
4.4 MBS. Seller represents and warrants to Purchaser that with regard to each
---
MBS sold hereunder that, as of the Closing Date:
(a) Seller acquired each MBS in the ordinary course of business,
in good faith, for value and without notice of any claim against or claim
to any of the MBS on the part of any person.
(b) Seller does not have any actual or constructive knowledge or
notice of any interest in the MBS that upon sale to the Purchaser and
transfer in accordance herewith will be contrary to the interest of the
Purchaser.
(c) All conditions precedent and any restrictions upon the
transfer of any MBS provided for in the pooling and servicing agreement
relating to any given MBS have been satisfied (other than conditions
precedent to be satisfied by Purchaser) and the transfer of each MBS to the
Purchaser will be complete upon the execution and delivery of this
Agreement by the parties hereto and the execution and delivery of the Bill
of Sale and duly executed stock powers by Seller (provided that the
transfer of registered ownership will only be complete after the trustee
for each respective MBS has issued a new certificate, representing the MBS
being transferred, registered in the name of the Purchaser).
16
5. Representations and Warranties of Purchaser. Purchaser represents and
-------------------------------------------
warrants to Seller that, as of the Closing Date:
(a) Purchaser is duly organized and validly existing under the
laws of its state of organization. Purchaser has the full right, power and
authority to make, execute, deliver and perform this Agreement and the
transaction contemplated under this Agreement and has taken all necessary
action to authorize the execution, delivery and performance of this
Agreement.
(b) Purchaser has obtained all consents, approvals or
authorizations required in connection with the execution, delivery or
performance of this Agreement or the consummation of the transaction
contemplated by this Agreement.
(c) Purchaser has complied with all rules, regulations and
statutes required in connection with the execution, delivery and
performance of this Agreement or the consummation of the transaction
contemplated by this Agreement.
(d) Purchaser has complied with all conditions precedent to be
performed by a transferee provided for in each pooling and servicing
agreement relating to any Asset that is an MBS.
6. Representations and Warranties of WREIT. WREIT represents and warrants
---------------------------------------
to Seller that, as of the Closing Date:
(a) WREIT is duly organized and validly existing under the laws
of its state of organization. WREIT has the full right, power and authority
to make, execute, deliver and perform this Agreement and the transaction
contemplated under this Agreement and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement.
(b) The execution of this Agreement, and the performance of the
transaction contemplated under this Agreement will not result in a breach
of any provision of the charter or bylaws of WREIT or result in a material
breach of any legal restriction or any agreement to which WREIT is now a
party or by which it is bound, or result in a violation of any law, rule,
regulation, order, judgment or decree to which WREIT or its property is
subject.
(c) WREIT has obtained all consents, approvals or authorizations
required in connection with the execution, delivery or performance of this
Agreement or the consummation of the transaction contemplated by this
Agreement.
(d) WREIT has complied with all rules, regulations and statutes
required in connection with the execution, delivery and performance of this
Agreement or the consummation of the transaction contemplated by this
Agreement.
17
7. Indemnification.
---------------
(a) Subject to provisions of this Section 7, Seller shall
indemnify and hold Purchaser harmless for any third party claims or losses
arising out of the acts or omissions of Seller with regard to the Assets
prior to the Closing Date and, subject to provisions of this Section 7,
Purchaser shall indemnify and hold Seller harmless for any third party
claims or losses arising out of the acts or omissions of Purchaser with
regard to the Assets after the Closing Date.
(b) Neither party shall be entitled to indemnification under
Section 7(a) hereof unless a Notice of Breach has been delivered by the
party seeking indemnification on or before the Survival Date.
(c) Neither party shall be liable under Section 7(a) hereof
unless the total amount recoverable under Section 7(a) hereof exceeds, in
the aggregate, $100,000; provided, however, that if the indemnifying
party's obligation under Section 7(a) hereof exceeds $100,000 in the
aggregate, the indemnifying party's obligation under Section 7(a) hereof
shall be for the full amount of such obligation less $100,000.
8. Proration. For real properties, rental revenues and other income, and
---------
taxes, assessments, utility charges and other expenses affecting the property
shall be prorated between Seller and Purchaser as of the Cut-Off Date, with the
Seller to receive all income and be responsible for all expenses which accrued
prior to the Cut-Off Date and the Purchaser to receive all income and be
responsible for all expenses which accrued on or after the Cut-Off Date.
9. MBS Payments. For MBS, Seller shall receive all payments, including,
------------
without limitation, all principal and interest payments, relating to the MBS
which are made prior to the Cut-Off Date and Purchaser shall receive all
payments, including, without limitation, all principal and interest payments,
relating to the MBS which are made on or after the Cut-Off Date.
10. Amendment. This Agreement may be amended only by written agreement
---------
signed by Seller, WREIT and Purchaser.
11. Counterparts. This Agreement may be executed in counterparts.
------------
12. Notices. Any notice hereunder shall be in writing and either shall be
-------
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or, in the case of facsimile
transmission, when received and telephonically confirmed, in each case as
follows:
18
If to the Seller at: c/o Wilshire Financial Services Group Inc.
1776 SW Madison Street
Portland, OR 97205
Telephone: (503) 223-5600
Attention: Andrew Wiederhorn, CEO
With a Copy to: Mark H. Peterman
Stoel Rives LLP
900 SW Fifth Avenue, Suite 2300
Portland, OR 97204-1268
Telephone: (503) 294-9536
If to Purchaser at: Wilshire Real Estate Partnership L.P.
1776 SW Madison Street
Portland, OR 97205
Telephone: (503) 223-5600
Attention: Lawrence Mendelsohn
With a Copy to: James Waddington
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Telephone: (212) 969-3110
If to WREIT at: Wilshire Real Estate Partnership L.P.
1776 SW Madison Street
Portland, OR 97205
Telephone: (503) 223-5600
Attention: Lawrence Mendelsohn
With a Copy to: James Waddington
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Telephone: (212) 969-3110
13. No Partnership. Nothing herein contained shall be deemed or construed
--------------
to create a partnership or joint venture between the parties hereto; the parties
shall have the status of and act in all matters hereunder as independent
contractors. Seller is not an agent of Purchaser and has no authority, and is
not intended to have the power to create, extinguish or modify any right,
obligation or liability of Purchaser to any person or entity whatsoever,
including without limitation, any Asset obligor.
14. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon Seller, WREIT and Purchaser and their respective successors
and assigns, as may
19
be permitted hereunder. Purchaser may assign this Agreement or any Asset
hereunder, together with all rights under this Agreement with regard to such
Asset.
15. Severability. Each part of this Agreement is intended to be
------------
severable. If any provision of this Agreement is invalid or unenforceable, such
invalidity or unenforceability shall not affect the remaining provisions of this
Agreement, which shall remain in full force and effect and shall be binding upon
the parties.
16. Law Governing. This Agreement shall be construed in accordance with,
-------------
and governed by, the laws of the State of Oregon without reference to the law
therein regarding choice of law.
17. Survival; Repurchase and Damages.
--------------------------------
(a) The covenants, warranties and representations of the parties
shall survive the Closing Date; provided, however, that no claim or action
for a breach of any representation or warranty contained in this Agreement
may be maintained by any Party unless such party shall have delivered a
Notice of Breach specifying the details of such breach (including, to the
extent practicable, a quantification of the damages arising from such
alleged breach) to the other party on or before the Survival Date. The
foregoing limitation shall not apply to covenants. A Notice of Breach shall
only be sufficient to preserve a claim or action with respect to an alleged
breach to the extent the Notice of Breach sets forth sufficient details
identifying the specific breach and a quantification, to the extent
practicable, of the damages arising therefrom.
(b) In the event of a breach of any representation or warranty
set forth in Section 4, Seller shall have a period of [180] days from its
receipt of Notice of any such breach within which to cure such breach in
all material respects. Prior to enforcing its remedies against Seller,
Purchaser shall make a claim on any title or property insurance policy, if
any, to the extent that payment thereunder could reasonably be expected to
reduce Seller's liability or to bring about a cure on account of such
breach. If such breach by Seller shall not have been cured in all material
respects within such [180] day period, Seller shall be required to
repurchase the Asset pursuant to Section 7(c).
(c) Seller shall be required to repurchase any Asset pursuant to
this paragraph if prior to the Survival Date, Purchaser has notified Seller
of a material breach of any representation and warranty set forth in
Section 4 and such breach is not cured in all material respects within a
[180]-day cure period. Seller shall be obligated, within 10 days following
receipt of written demand by the Purchaser, to repurchase the related
Asset. Seller shall repurchase any affected Asset hereunder at the Purchase
Price of such Asset, plus the amount of any servicing advances made by
Purchaser in respect of the related Asset, and minus any principal payments
received by Purchaser arising from the Asset after the Cut-Off Date. In
connection with any repurchase of an Asset hereunder by Seller, Purchaser
shall tender to Seller all portions of the Asset File with respect to such
Asset previously delivered to Purchaser and any additional documents
related thereto in Purchaser's possession, and each
20
document therein which was endorsed or assigned to Purchaser as required by
this Agreement, shall be endorsed and assigned to Seller in the same manner
as provided therein. Notwithstanding anything to the contrary contained
herein, Seller's obligation to repurchase any Asset shall terminate unless
Purchaser shall have provided written notice to Seller of the breach on or
before the Survival Date.
18. Further Assurances. The parties agree that they will execute and
------------------
deliver such further instruments and take such other action as any of them
reasonably may require in order to more effectively to carry out the intent and
purposes of this Agreement.
19. Attorney Fees. In the event there is any dispute arising out of this
-------------
Agreement, the prevailing party shall be entitled to recover from the other all
reasonable attorney fees and costs, whether or not at trial, on appeal, or in
bankruptcy.
20. Jurisdiction and Venue. Any dispute arising out of this Agreement
----------------------
shall be resolved by the applicable courts in Oregon, and Seller and Purchaser
consent to personal jurisdiction and venue therein.
21. Waivers. The failure of Purchaser or WREIT to enforce any provision
-------
of this Agreement shall not be deemed a waiver of that provision or any other
provision with respect to that transaction or any other transaction with Seller.
22. Entire Agreement. This Agreement, including any exhibits and
----------------
schedules referred to herein, the Offering Memorandum and all prior written and
computer information regarding the Assets provided by Seller to Purchaser
constitute the entire agreement between the parties pertaining to the subject
matter hereof and supersedes any and all prior agreements, representations and
understandings of the parties. The representations and terms of this
21
Agreement shall supersede any inconsistent representations or terms in the prior
written and computer information provided by Seller to Purchaser.
Wilshire Financial Services Group Inc.
By:
--------------------------------------
Title:
-----------------------------------
Wilshire Funding Corporation
By:
--------------------------------------
Title:
-----------------------------------
WMFC 1997-1 Inc.
By:
--------------------------------------
Title:
-----------------------------------
Wilshire Real Estate Investment Trust Inc.
By:
--------------------------------------
Title:
-----------------------------------
Wilshire Real Estate Partnership L.P., by
Wilshire Real Estate Investment Trust Inc.,
its General Partner
By:
--------------------------------------
Title:
-----------------------------------
22
EXHIBIT A
DESCRIPTION OF ASSETS
EXHIBIT B
BILL OF SALE
In accordance with the Asset Purchase Agreement (the "Agreement") dated as
of ___________, 199___ between _______________________________ ("Seller"), and
Wilshire Real Estate Partnership L.P. ("Purchaser"), Seller hereby transfers,
assigns, sets over and otherwise conveys to Purchaser, (i) all right, title and
interest in the Assets and any and all payments received from and after the Cut-
Off Date, (ii) all right, title and interest in those representations and
warranties which were received by Seller in relation to those Assets which are
Mortgage Loans and that may be assigned, and (iii) all documents contained in
the Asset Files.
Capitalized terms used herein have the meanings given them in the
Agreement.
This Bill of Sale is made pursuant to and upon the representations and
warranties on the part of the undersigned contained in the Agreement and such
representations and warranties are not merged in this Bill of Sale. Other than
such representations, the Assets are sold AS IS, without any other warranties,
------------------------------------
including without limitation any warranties of merchantability or fitness for a
- -------------------------------------------------------------------------------
particular purpose.
- -------------------
DATED this ____ day of ___________, 199___.
By:
---------------------------
Title:
------------------------
LOAN TABLE
SCHEDULE 4.1(c)
ENCUMBRANCES
SCHEDULE 4.1(h)
BROKER'S FEES
SCHEDULE 4.2(o)
CROSS DEFAULTS
SCHEDULE 4.2(cc)
MORTGAGE LOANS PERMITTING FURTHER LIENS
SCHEDULE 4.3
OUTSTANDING CHARGES
WILSHIRE REAL ESTATE PARTNERSHIP L.P.
PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of ___________1998 by
and among Wilshire Real Estate Partnership L.P., a Delaware limited partnership
("Purchaser"), Wilshire Real Estate Investment Trust Inc., a Maryland
corporation ("WREIT") general partner of Purchaser and Wilshire Funding Company
UK Limited, an English corporation ("WFC UK") ("Seller").
RECITALS
A. Seller desires to sell to Purchaser and Purchaser desires to purchase from
Seller, on the terms and subject to the conditions set forth herein, the
Assets (as defined herein) owned by Seller.
B. Purchaser and Seller desire to enter into this Agreement to govern the
purchase by Purchaser from Seller, and sale by Seller to Purchaser, of the
Assets.
Therefore, in consideration of the mutual covenants, terms and conditions
set forth herein, the parties agree as follows:
1. Definitions
-----------
The following terms are defined as follows:
"Affiliate" With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities (including, without limitation, partnership
interests), by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
1
"Assets" The mortgage loans, real property and mortgage-backed securities
described in Schedule One to this Agreement, together with all liens and
guaranties granted in connection therewith, all residual rights of Seller in
property that secure the aforesaid, all insurance policies on any of the
property or the obligor on the account, all documentation pertaining therto
and all Asset Files.
"Asset File" All information in recorded form pertaining to the Assets
held by or for Seller, including without limitation, all documents,
microfiche, computer software and other media that includes correspondence,
general credit information, credit records, payment histories, internal
notes or memoranda, loan applications, appraisals, insurance guarantee
policies, property insurance policies, mortgage insurance policies, title
insurance policies, attorney opinions, and all original documents evidencing
or relating to the Assets and any collateral that secures the Assets.
"Assignment Documents" As defined in Section 2.2.
"Borrower" In relation to each Mortgage the person or persons specified
as such in the Mortgage.
"BPO" The most recent drive-by valuation, as reasonably adjusted by the
Seller's in-house appraisal department (on a six month "stabilised" rather
than "quick sale" basis) generally prepared by a duly qualified and licensed
real estate broker who has no interest, direct or indirect, in the mortgaged
property or in Seller or Purchaser, or any Affiliate of Seller or Purchaser
and whose compensation is not affected by the results of the BPO and which
valuation indicates the expected proceeds of a sale of the related mortgaged
property, and includes certain assumptions, including those as to the
condition of the interior of the applicable mortgaged property and marketing
time.
"Closing Date" The closing date of the initial public offering of common
stock of WREIT, pursuant to Registration Statement No. 333-39035 on Form S-
11, and any amendments thereto, filed by WREIT with the Securities and
Exchange Commission.
"Cut-Off Date" _______________ 1998.
2
"IPO Closing" The closing of the initial public offering of common stock
of WREIT, pursuant to Registration Statement No. 333-39035 on Form S-11, and
any amendments thereto, filed by WREIT with the Securities and Exchange
Commission.
"MBS" Any Asset that is a mortgage-backed security.
"Mortgage" any mortgage, floating charge, deed of trust or other
instrument securing an Asset that creates a lien on an estate in real
property securing the Asset.
"Mortgage Loan" Any Asset that is secured by a Mortgage.
"Person" Any legal person, including any individual, corporation,
partnership, association, joint-stock company, trust, limited liability
company, unincorporated organisation, governmental entity or other entity of
similar nature.
"Property" In relation to a Mortgage Loan the freehold or leasehold
property upon which the repayment of the Mortgage Loan is secured.
"Purchase Price" As defined in Section 2.1(b).
"Related Security" The debentures guarantees charges over cash deposits,
charges over Keyman Life policies, memoranda of deposit and/or charges over
shares, deeds of priority, deeds of postponement, irrevocable letters held
by Seller as security for the obligations of the Borrower.
"Securities Act" The Securities Act of 1933, as amended.
"Survival Date" That date [6 months] after the Closing Date.
"Transfer" The form of transfer at Schedule Two.
2. Closing
-------
The closing of the purchase and sale of the Assets shall be held at the
offices of ____________ on the Closing Date.
3
2.1 The obligation of Seller to sell the Assets shall be subject to
satisfaction of each of the following conditions precedent:
(a) All of the representations and warranties of Purchaser contained
in this Agreement shall be true and correct as of the Closing
Date.
(b) On the Closing Date, upon Purchaser's receipt of the items
specified in Section 2.2, Purchaser shall wire transfer
$/(Pounds)___________ to Seller (the "Purchase Price").
2.2 The obligation of Purchaser to purchase the Assets shall be subject to
satisfaction of each of the following conditions precedent on or
before the Closing Date. Purchaser shall receive all items in such
forms as are agreed upon and acceptable to Purchaser and WREIT, duly
executed by all signatories as required pursuant to the respective
terms thereof. If Purchaser purchases the Assets before satisfaction
of any of these conditions, Seller shall, at Purchaser's request,
satisfy the conditions after the Closing Date.
(a) Seller shall deliver the Assets, the original Asset Files
together with such other documents and instruments reasonably
necessary for the individual transfer of each Asset by Seller to
Purchaser, including without limitation, the following as
applicable for each Asset (collectively, the "Assignment
Documents"):
(i) Original title deeds for each Property;
(ii) Duly executed Transfers of each Mortgage Loan;
(iii) Duly executed assignments of any Related Security;
(iv) Notice to Borrower in the form of Schedule Three duly
signed on behalf of Seller;
(v) All Related Securities.
(b) Seller shall deliver and release to Purchaser the Assets and all
other documents required to be delivered pursuant to this
Agreement.
(c) Seller shall provide releases of all interests in the Assets held
by any third party unless for any Property the parties have
mutually agreed to transfer such Property subject to
indebtedness, in which case Seller
4
shall provide consent to transfer such Property subject to the
indebtedness from the lender holding such indebtedness.
(d) Seller shall instruct the trustee for each MBS to transfer such
MBS into Purchaser's name.
(e) Seller shall provide copies of the agreements pursuant to which
Seller acquired Assets that are Mortgage Loans.
(f) Seller shall be responsible for the preparation of any and all
other transfer documents reasonably necessary to evidence the
transfer of the Assets. Such transfer documents shall be in the
name and form reasonably acceptable to Purchaser.
(g) Except as otherwise provided herein, Seller shall have delivered
to the Purchaser, in escrow, all documents required to be
delivered hereunder.
(h) All representations and warranties of Seller set forth herein are
true and correct.
2.3 The obligations of all parties under this Agreement are conditioned
upon the IPO Closing.
2.4 At Purchaser's request, the Assignment Documents promptly shall be
recorded or filed, as applicable, in the name of the Purchaser or in
the name of a person or entity designated by Purchaser in all
appropriate public offices, files and records. If any such Assignment
Document is lost or returned unrecorded or unfiled because of a defect
therein, Seller promptly shall prepare substitute Assignment Documents
to cure such defects and thereafter cause each such substitute
Assignment Document to be duly recorded or filed, as applicable.
Purchaser shall pay all recording and filing fees related to one-time
recordation or filing, as applicable, of the assignments.
2.5 Any Assignment Documents or Asset Files with respect to one or more of
the Assets that are in Seller's possession from and after the closing
Date shall be retained and maintained by the Seller in trust for the
benefit of Purchaser and
5
in a custodial capacity only, and subject in all events to the will of
the Purchaser. Seller shall segregate all of such Assignment Documents
and Asset Files from Seller's other books and records and shall
appropriately mark each of them to reflect clearly the sale of the
related Asset to Purchaser and the ownership of each Asset by
Purchaser. Seller shall release its custody of the contents of any
thereof only in accordance with written instructions from Purchaser
except where such release is required as incidental to the Seller's
servicing of the Assets (if and to the extent Seller is engaged to
provide servicing with respect thereto).
2.6 Seller shall reflect the sale of each Asset sold pursuant to this
Agreement on the Seller's balance sheet and other financial statements
as a sale of assets by Seller. Seller shall be responsible for
maintaining, and shall maintain, a complete set of books and records
for the Assets which shall be clearly marked to reflect the sale of
each Asset to Purchaser and the ownership of each Asset by Purchaser.
2.7 Except as otherwise provided herein, all costs and expenses incurred
by all parties in connection with the transactions contemplated by
this Agreement shall be paid by that party.
3. Transfer of Servicing
---------------------
3.1 The Assets shall be sold and conveyed to Purchaser on a servicing
released basis. As of the Closing Date all rights regarding the
servicing of Assets shall pass to Purchaser.
3.2 Seller shall provide Purchaser with a letter to be sent to all
Borrowers on the Assets which are Mortgage Loans advising the
Borrowers that the Assets have been sold and that all payments should
be paid to Purchaser.
3.3 Purchaser shall be entitled to all payments received after the Cut-Off
Date and Seller shall forward such payments to Purchaser within five
days of receipt thereof.
6
3.4 Seller shall be responsible for payment of all expenses of servicing
and payment of all third-party obligations of the Borrower required to
be paid under the Assets (including without limitation, tax and
insurance payments), attributable to the time period prior to the Cut-
Off Date. If funds are not available from Borrower's account for such
third-party obligations, Seller shall obtain Purchaser's prior
approval before advancing such funds and adding the amount therof to
the Borrower's balance.
3.5 After the Cut-Off Date, Seller shall not have any right to participate
for its own account in pending litigation relating to any Asset sold
to Purchaser. Seller agrees to make its employees available to
Purchaser when reasonably required after the Closing Date to assist
Purchaser in obtaining missing documents, missing information, or in
litigation provided that Purchaser provides Seller reasonable advance
notice and pays a reasonable fee for the employees' time and costs.
3.6 Seller shall assign to Purchaser all contracts (if any) relating to
the operation and maintenance of the Assets which are real property
and shall provide notice to the persons party to such contracts that
the contracts are being assigned to Purchaser.
4. Representations and Warranties of Seller
----------------------------------------
4.1 This Agreement. Seller represents and warrants to Purchaser and WREIT
--------------
that as of the date of this Agreement and as of the Closing Date:
(a) Seller is duly organised and validly existing under the laws of
England. Seller has full power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under this Agreement and has taken all necessary
action to authorise the execution, delivery and performance of
this Agreement.
(b) The sale and delivery of any Asset to Purchaser, the execution of
this Agreement, and the performance of the transaction
contemplated under this Agreement will not result in a breach of
any provision of the memorandum and articles of association of
Seller or result in a
7
material breach of any legal restriction or any agreement to
which Seller is now a party or by which it is bound, or result in
a violation of any law, rule, regulation, order, judgment or
decree to which such Seller or its property is subject.
(c) Except as set out in Schedule Four Seller is the owner of the
Assets, free of any liens or encumbrances (collectively
"Encumbrances"), and has the full right, title and interest to
sell and assign the Assets to Purchaser and except (A) for Assets
that are real property (i) liens for real property taxes and
assessments not due and payable on the Closing Date, (ii)
covenants, conditions and restrictions, rights-of-way, easements
and other matters of public record as of the Closing Date
generally acceptable to institutional investors in the area,
(iii) such other matters to which like properties are commonly
subject which do not, individually or in the aggregate,
materially interfere with the practical realisation of the
benefits of ownership of such real property or with the current
use thereof, (iv) leases described in written schedules
previously provided to Purchaser, and (v) rights of tenants under
leases and (B) for Assets that are second charges where the first
charges have been disclosed to Purchaser.
(d) Seller has obtained all consents, approvals or authorisations
required in connection with the execution, delivery or
performance of this Agreement or the consummation of the
transactions contemplated by this Agreement.
(e) Seller has complied with all rules, regulations and statutes
required in connection with the execution, delivery and
performance of this Agreement or the consummation of the
transaction contemplated by this Agreement.
(f) There is no action, suit, proceeding, investigation or litigation
pending or, to Seller's knowledge, threatened, which either in
any one instance or in the aggregate, if determined adversely to
Seller, would adversely effect the sale of the Assets to
Purchaser, or Seller's ability to perform its obligations under
this Agreement.
8
(g) Seller is solvent and is generally paying its debts as such
become due and the execution and consummation of this Agreement
will not render Seller insolvent. There are no proceedings for
reorganisation, arrangement, liquidation or dissolution pending,
or to Seller's knowledge, threatened or contemplated against
Seller.
4.2 Representations and Warranties. Seller shall assign to Purchaser all
------------------------------
representations and warranties pertaining to each UK Mortgage Loan
received by Seller when Seller acquired each such UK Mortgage Loan to
the extent that such representations and warranties may be
transferred. In addition, Seller represents and warrants to Purchaser
that with regard to each Asset sold hereunder that is a UK Mortgage
Loan that, as of the Closing Date:
4.2.1 The particulars of each Mortgage set out in the relevant
schedule to the Transfers are in all material respects
complete, true and accurate.
4.2.2 Each Property is situated in England, Wales or Scotland.
4.2.3 Each Property constitutes investment property let predominantly
for office, industrial, retail, warehouse or, residential
purposes and is either freehold or leasehold.
4.2.4 No Property is owner occupied nor constitutes a dwelling except
for:
(i) any Property which is a holiday home, hotel or public
house; and
(ii) any Property, part of which is let or is capable of being
let on the basis of an assured shorthold tenancy, an
assured tenancy or a protected tenancy; which residential
aspect and tenancy was taken into account in the
valuation of that Property referred to in paragraph
4.2.7(i) below.
4.2.5 (i) In relation to each Mortgage, the Borrower had, as at the
date of that Mortgage, a good and marketable title to the
fee simple absolute in possession or a term of years
absolute in the
9
relevant Property and if the Property is registered,
the title has been registered or is in the course of
registration with title absolute in the case of
freehold property or absolute or good leasehold title
(where the freehold title has been deduced) in the case
of leasehold property and each Property was, as at the
date of that Mortgage, held by the Borrower free (save
for the Mortgage and its Related Security and save for
any Encumbrance which either (i) is postponed to and
ranks in priority behind the Mortgage by virtue of a
deed of priority or postponement which in the case of
registered land, has been registered, or is in the
course of registration, at HM Land Registry or (ii) as
created, ranked in point of priority behind the
Mortgage) from any Encumbrance which would materially
and adversely affect such title or the value for
mortgage purposes set out in the valuation referred to
in paragraph 4.2.7(i) below.
(ii) In relation to each Property, title to which is
unregistered, where such unregistered property is
subject to first registration, an application for
registration of the Borrower's title and of the
Mortgage has been delivered to HM Land Registry within
two months from the date of dealing giving rise to
first registration.
(iii) In relation to any Mortgage where registration is
pending at HM Land Registry, Seller has an absolute
right to be registered as proprietor of the Mortgage as
first mortgage of the interest in the relevant Property
which is subject to that Mortgage.
4.2.6 All joint owners of the legal estate which is the subject of
each Mortgage have joined as parties to the relevant
Mortgage.
4.2.7
(i) In the case of each Mortgage, before the date on which
the initial amount secured by that Mortgage was
advanced, the Property charged as security therefor was
valued by an independent qualified surveyor or valuer
(being a fellow or associate of The Royal Institute of
Chartered Surveyors of the
10
Incorporated Society of Valuers and Auctioneers) in
accordance with usual valuation principles.
(a) In the case of each Mortgage which comprises an initial
advance and one or more further advances, before the
date on which the last such further advance was
advanced, the Property charged as security therefor was
valued by an independent qualified surveyor or valuer
(being a fellow or associate of The Royal Institute of
Chartered Surveyors or the Incorporated Society of
Valuers and Auctioneers) on a desktop basis but
otherwise in accordance with usual valuation
principles.
4.2.8
(i) Each Mortgage constitutes a valid and binding obligation
of, and is enforceable against, the relevant Borrower,
subject only, in the case of Mortgages required to be
registered at HM Land Registry, to such registration;
(ii) save as set out in Schedule Four each Mortgage is a valid
and subsisting first fixed charge by way of legal mortgage
on the Property to which such Mortgage relates;
(iii) subject as set out in (i) above, Seller has a good title
to each Mortgage at law and all things necessary to
complete Seller title to each Mortgage (including an
application for registration at HM Land Registry where
necessary) have been duly done at the appropriate time or
are in the process of being done without undue delay and
within the relevant priority period conferred by an
official search at the Central Land Charges Registry (in
the case of unregistered land) or against the relevant
title at HM Land Registry (in the case of registered land)
or within two months after the conveyance to the relevant
borrower (in the case of Property which comprises
unregistered land title to which is required to be
registered at HM Land Registry in order to transfer a legal
estate in land); and
11
(iv) Seller is the legal and beneficial owner of each Mortgage,
free and clear of all Encumbrances, overriding interests
(other than those to which the Property is subject), claims
and equities (including without limitation, rights of set-
off or counterclaim) and there were at the time of
completion of the relevant Mortgage and any further advances
secured by that Mortgage no adverse entries of Encumbrances
or applications for adverse entries of Encumbrances against
any title at HM Land Registry to any relevant Property which
entries would rank prior to the interests of Seller in such
Mortgages.
4.2.9 An investigation as to the title of the Borrower to the
relevant Property was, in accordance with good law and practice
made prior to the completion of each relevant mortgage.
4.2.10 Since the date of each Mortgage, Seller has not received any
written notice of any Encumbrance materially and adversely
affecting its title to the relevant Mortgage nor any written
notice of any occupational or similar equitable interest in the
relevant Property other than those (if any) to which Seller has
or should have given its written consent acting as a reasonably
prudent lender of money secured on commercial property.
4.2.11
(i) At the date hereof either:
(a) each Property is covered by buildings insurance
maintained by the Borrower or another person with an
interest in the relevant Property in an amount which is
equal to or greater than the amount which a qualified
surveyor or valuer engaged by Seller estimated to be
equal to such Property's reinstatement value at the
time of the original advance and Seller is or is in the
course of being added as a joint-insured(s) thereunder,
or its interest has been noted or is in the course of
being noted on each policy or otherwise included by the
insurer
12
under a "general interest noted" provision in
the relevant policy; or
(b) the relevant tenant of the Property is a department,
agency or organisation of, or which is supported by, HM
Government which a reasonably prudent lender of money
secured on commercial property would allow to self
insure.
(ii) As at the date of each Mortgage, each Property covered by a
policy of buildings insurance was covered against those
risks usually covered by a reasonably prudent mortgagee of a
property of the same nature and in a comparable location.
4.2.12
(i) None of the provisions of the Mortgage at the time it was
entered into or since has been waived, altered or modified
in any material respect and for this purpose none of the
following shall be regarded as material:
(a) any release of any one or more guarantors or any one or
more joint Borrowers provided that there is at least
one Borrower under each Mortgage;
(b) any change of a mortgage payment date;
(c) any agreement or waiver by Seller for the interest of
Seller to be noted on the buildings insurance
maintained from time to time in respect of the relevant
Property rather than for that insurance to be in the
joint names of Seller and the Borrower;
(d) any substitution of a property with another Property
having a value equal to or greater than the value of
the original property at the time of the Mortgage.
(ii) No representations or warranties have been made to any
Borrowers by Seller, and there are no other terms and
13
conditions applicable to any Mortgage, other than in each
case, those set out or referred to in the relevant Mortgage
(so far as applicable) in effect at the relevant time and
subject to such amendments, waivers, alterations and
modifications as are permitted by, or regarded as immaterial
for the purposes of, paragraph 4.2.12(i) above.
(iii) The representations and warranties in this section 4.2
apply to each Property substituted for any other property
which was originally secured by the relevant Mortgage as
contemplated by paragraph 4.2.12(i)(d) above with each
reference to the date of the Mortgage being construed as a
reference to the date the Property was so substituted.
4.2.13 Seller has, since the creation of each relevant Mortgage, kept full
and proper accounts, books and records showing clearly all
transactions, payments, receipts and proceedings relating to the
relevant Mortgage which are complete and accurate in all material
respects. All such accounts, books and records are up to date and
are held by, or to the order of Seller.
4.2.14 Each Mortgage arose from the ordinary course of Seller's
commercial secured lending activities.
4.2.15 No agreement for any Mortgage is a regulated consumer credit
agreement (as defined in Section 8 of the Consumer Credit Act 1974)
or constitutes any other agreement regulated by the Consumer Credit
Act 1974 or any modifications or re-enactment thereof.
4.2.16 Seller had, save as set out in Schedule Four immediately prior
to the date hereof, a full first fixed charge by way of legal
mortgage over the interest in the Property owned by each Borrower
for the full amount secured by the relevant Mortgage.
4.2.17 No Mortgage is over any property which is the subject of the
right to buy provisions of the Housing Act 1985.
14
4.2.18 Seller is not aware of any litigation or claim calling into
question in any adverse way its title to any Mortgage.
4.2.19 Subject to completion of any registration which may be pending
at HM Land Registry, all title deeds to the Properties and the
deeds constituting the Mortgages and the files relating to
each Mortgage are held by, or to the order of, Seller.
4.2.20 No Mortgage is subject to the Mortgage Interest Relief at
Source Scheme provided for in sections 369 to 379 of the
Income and Corporation Taxes Act 1988, as from time to time
amended, or any predecessor thereof or replacement therefor.
4.2.21 Prior to entering into each Mortgage, all investigations,
searches, and other actions and such enquiries as to the
Borrower's ability to repay the relevant Mortgage were made
and as to title of the Borrower to the relevant Property as
would a reasonably prudent lender of money secured on
commercial property make. Nothing was disclosed by such
investigations, searches and enquiries which would have led
such a reasonably prudent lender either initially or after
further investigation to decline to proceed with the relevant
Mortgage.
4.2.22 Each Mortgage is governed by English law.
4.2.23 In each case when the Borrower is a company, particulars of
the Mortgage were delivered to the Companies Registry for
registration within 21 days of the completion of the Mortgage
pursuant to sections 395 or 410 of the Companies Act 1985.
4.2.24 Seller is not aware of any material default, material breach
or material violation under a Mortgage which has not been
remedied, cured or waived (but only in a case where a
reasonably prudent lender of money secured on commercial
property would grant such a waiver) or of outstanding material
default, material breach or material violation by a Borrower
under any Mortgage or of any outstanding event which with the
giving of notice and/or the expiration of any applicable grace
15
period and/or making of any determination, would constitute
such a default, breach or violation.
4.2.25 Seller has performed in all material respects all its
obligations under or in connection with each Mortgage and so
far as Seller is aware no Borrower has taken or has threatened
to take any action against Seller for any material failure on
the party of Seller to perform any such obligations.
4.2.26 No litigation is subsisting to which Seller and a Borrower are
party and to the best of the knowledge and belief of Seller no
other dispute or complaint to which Seller and a Borrower are
party is subsisting, threatened or pending, which (in either
case and if adversely determined) would be reasonably likely
to affect materially and adversely any Mortgage.
4.2.27 If the Property subject to any Mortgage is leasehold, any
requisite consent of the landlord to, or notice to the
landlord of, the creation of such Mortgage has been obtained
or given and placed with the title deeds and the relevant
lease contains no provision whereby it may be forfeited on the
bankruptcy or liquidation of the lessee.
4.2.28 In the case of each Property the title to which is registered
or for which application for first registration has been made
or caused to be made to the Chief Land Registrar, an
application has been made for the registration against the
registered title in question of a restriction to the effect
that (except under order of the Registrar) no subsequent
charge by the registered proprietor of such Property shall be
registered without the written consent of Seller.
4.2.29
(i) No express recommendation was received by Seller from an
independent qualified surveyor or valuer to carry out any
environmental audit, survey or report which was not
pursued; and
16
(ii) the results of any environmental audit, survey or report
which have been procured by Seller would, as at that date,
have been acceptable to a reasonably prudent lender of money
secured on commercial property and have been taken into
account in the relevant valuation.
4.2.30 No Mortgage has been discharged, terminated, redeemed,
cancelled, rescinded or repudiated and neither Seller nor any
Borrower has given any written intention to do so.
4.2.31 Seller acted as a reasonably prudent lender of money secured
on commercial property in giving any consent which allowed any
Borrower to:
(i) grant or agree to grant or surrender any lease or tenancy
of the relevant Property;
(ii) allow any person any licence or other right to occupy or
share occupation of that Property;
(iii) give any consent, licence or agreement to any lease or
tenancy of the Property or any sub-lease or sub-tenancy
thereof or to the assignment of any lease or tenancy of the
Property or of any sub-lease or sub-tenancy thereof; or
(iv) make any alteration or addition to the Property or any
development or change of use thereof.
4.2.32 No litigation, dispute or complaint to which Seller is a party
is subsisting or, to its knowledge, threatened or pending which
(in either case and if adversely determined) would be reasonably
likely to affect materially the buildings insurance and no claim
of a material nature has been made under any buildings insurance
by Seller in relation to any Mortgage which is still outstanding.
4.2.33 As at the date hereof, the commercial loan managers at Seller
who are responsible for the Mortgages:
17
(i) do not have any actual knowledge of any claim against a
Borrower under:
(a) the Clean Air Acts 1956, 1968 and 1993;
(b) the Radioactive Substances Acts 1960 and 1993;
(c) the Control of Pollution Act 1974;
(d) the Food and Environmental Protection Act 1985;
(e) the Water Resource Act 1991;
(f) the Water Industry Act 1991;
(g) the Planning (Hazardous Substances) Act 1990;
(h) the Environmental Protection Act 1990 and the
Environment Act 1995;
(i) the Public Health Acts; or
(j) the rule in Rylands v Fletcher or in nuisance;
in relation to any Property which would, if adversely
determined, materially and adversely affect the valuation of
the relevant Property in the context of the loan to value
calculation applied to the relevant Mortgage at or prior to
its completion;
(ii) have not received written notice of any matter likely in the
opinion of that commercial loan manager to give rise to
environmental liability for the Borrower in the foreseeable
future of such materiality that it would materially and
adversely affect the valuation of the relevant Property in
the context of the loan to value calculation applied to the
relevant Mortgage at or prior to its completion provided
always that this paragraph (b) shall only apply to written
notice of matters which under English environmental laws or
regulations in force at today's date could give rise to a
requirement to clean or to reinstate the relevant Property
or to a claim against the Borrower; and
(iii) have not received written notice of any default,
forfeiture or variation of any occupational lease granted by
a Borrower in respect of a Property or of the insolvency of
any tenant of a
18
Property which would, in any case, render the relevant
Property unacceptable as security for the advances secured
by the Mortgage of that Property.
4.5 MBS. Seller represents and warrants to Purchaser that with regard to
---
each MBS sold hereunder that, as of the Closing Date:
(a) Seller acquired each MBS in the ordinary course of business, in
good faith, for value and without notice of any claim against or
claim to any of the MBS on the part of any person.
(b) Seller does not have any actual or constructive knowledge or
notice of any interest in the MBS that upon sale to the Purchaser
and transfer in accordance herewith will be contrary to the
interest of the Purchaser.
(c) All conditions precedent and any restrictions upon the transfer of
any MBS provided for in the pooling and servicing agreement
relating to any given MBS have been satisfied (other than
conditions precedent to be satisfied by Purchaser) and the
transfer of each MBS to the Purchaser will be complete upon the
execution and delivery of this Agreement by the parties hereto
(provided that the transfer of registered ownership will only be
complete after the trustee for each respective MBS has issued a
new certificate, representing the MBS being transferred,
registered in the name of the Purchaser).
5. Representations and Warranties of Purchaser. Purchaser represents and
-------------------------------------------
warrants to Seller that, as of the Closing Date:
(e) Purchaser is duly organized and validly existing under the laws of
its state of organization. Purchaser has the full right, power and
authority to make, execute, deliver and perform this Agreement and the
transaction contemplated under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance
of this Agreement.
(f) Purchaser has obtained all consents, approvals or authorizations
required in connection with the execution, delivery or performance of
this Agreement or the consummation of the transaction contemplated by
this Agreement.
19
(g) Purchaser has complied with all rules, regulations and statutes
required in connection with the execution, delivery and performance of
this Agreement or the consummation of the transaction contemplated by
this Agreement.
(h) Purchaser has complied with all conditions precedent to be performed by
a transferee provided for in each pooling and servicing agreement
relating to any Asset that is an MBS.
6. Representations and Warranties of WREIT. WREIT represents and warrants to
---------------------------------------
Seller that, as of the Closing Date:
(a) WREIT is duly organized and validly existing under the laws of its
state of organization. WREIT has the full right, power and authority
to make, execute, deliver and perform this Agreement and the
transaction contemplated under this Agreement and has taken all
necessary action to authorize the execution, delivery and performance
of this Agreement.
(b) The execution of this Agreement, and the performance of the transaction
contemplated under this Agreement will not result in a breach of any
provision of the charter or bylaws or WREIT or result in a material
breach of any legal restriction or any agreement to which WREIT is now
a party or by which it is bound, or result in a violation of any law,
rule, regulation, order, judgement or decree to which WREIT or its
property is subject.
(c) WREIT has obtained all consents, approvals or authorizations required
in connection with the execution, delivery or performance of this
Agreement or the consummation of the transaction contemplated by this
Agreement.
(d) WREIT has complied with all rules, regulations and statues required in
connection with the execution, delivery and performance of this
Agreement or the consummation of the transaction contemplated by this
Agreement.
7. Indemnification
---------------
(a) Subject to provisions of this Section 7, Seller shall indemnify and
hold Purchaser harmless for any third party claims or losses arising
out of the acts or omissions of Seller with regard to the Assets
prior to the Closing Date and, subject to provisions of this Section
7, Purchaser shall indemnify and hold
20
Seller harmless for any third party claims or losses arising out of
the acts or omissions of Purchaser with regard to the Assets after
the Closing Date.
(b) Neither party shall be entitled to indemnification under Section 7(a)
hereof unless a Notice of Breach has been delivered by the party
seeking indemnification on or before the Survival Date.
(c) Neither party shall be liable under Section 7(a) hereof unless the
total amount recoverable under Section 7(a) hereof exceeds, in the
aggregate, $[ ]; provided, however, that if the indemnifying party's
obligation under Section 7(a) hereof exceeds $[ ] in the
aggregate, the indemnifying party's obligation under Section 7(a)
hereof shall be for the full amount of such obligation less $[ ].
8. Proration
---------
For real properties, rental revenues and other income, and taxes,
assessments, utility charges and other expenses affecting the property shall
be prorated between Seller and Purchaser as of the Cut-Off Date, with the
Seller to receive all income and be responsible for all expenses which
accrued prior to the Cut-Off Date and the Purchaser to receive all income
and be responsible for all expenses which accrued on or after the Cut-Off
Date.
9. MBS Payments
------------
For MBS, Seller shall receive all principal and interest payments relating
to the MBS which are made prior to the Cut-Off Date and the Purchaser shall
receive all principal and interest payments relating to the MBS which are
made on or after the Cut-Off Date.
10. Amendment
---------
This Agreement may be amended only by written agreement signed by Seller,
WREIT and Purchaser.
11. Counterparts
------------
This Agreement may be executed in counterparts.
21
12. Notices
-------
Any notice hereunder shall be in writing and either shall be delivered in
person with receipt acknowledged or by registered or certified mail, return
receipt requested, postage pre-paid, or, in the case of facsimile
transmission, when received and telephonically confirmed, in each case as
follows:
If to the Seller at: 4 St Paul's Churchyard
London EC4M 8AY
England
Attention: Managing Director
With a Copy to: [Jill Forsyth]
Wilshire Servicing Company UK Ltd
Wilshire House
19/21 Woolmead
Farnham, Surrey
England
Telephone: 01252 723779
If to Purchaser at: Wilshire Real Estate Partnership L.P.
1776 SW Madison Street
Portland, OR 97205
Telephone: (503) 223 5600
Attention: Lawrence Mendelsohn
With a Copy to: James Waddington
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Telephone: (212) 969 3110
If to WREIT at: Wilshire Real Estate Partnership L.P.
1776 SW Madison Street
Portland, OR 97205
Telephone: (503) 223 5600
Attention: Lawrence Mendelsohn
With a Copy to: James Waddington
Proskauer Rose LLP
22
1585 Broadway
New York, NY 10036-8299
Telephone: (212) 969 3110
13. No Partnership
--------------
Nothing herein contained shall be deemed or construed to create a
partnership or joint venture between the parties hereto; the parties shall
have the status of and act in all matters hereunder as independent
contractors. Seller is not an agent of Purchaser and has no authority, and
is not intended to have the power to create, extinguish or modify any right,
obligation or liability of Purchaser to any person or entity whatsoever,
including without limitation, any Asset obligor.
14. Successors and Assigns
----------------------
This Agreement shall inure to the benefit of and be binding upon Seller,
WREIT and Purchaser and their respective successors and assigns, as may be
permitted hereunder. Purchaser may assign this Agreement or any Asset
hereunder, together with all rights under this Agreement with regard to such
Asset.
15. Severability
------------
Each part of this Agreement is intended to be severable. If any provision of
this Agreement is invalid or unenforceable, such invalidity or
unenforceability shall not affect the remaining provisions of this
Agreement, which shall remain in full force and effect and shall be binding
upon the parties.
16. Law Governing
-------------
This Agreement shall be construed in accordance with, and governed by, the
laws of England.
17. Survival: Repurchase and Damages
--------------------------------
(a) The covenants, warranties and representations of the parties shall
survive the Closing Date; provided, however, that no claim or action
for a breach of any representation or warranty contained in this
Agreement may be maintained by any Party unless such party shall have
delivered a notice of breach specifying the details of such breach
(including, to the extent practicable, a quantification of the
23
damages arising from such alleged breach) to the other party on or
before the Survival Date ("Notice of Breach"). A Notice of Breach shall
only be sufficient to preserve a claim or action with respect to an
alleged breach to the extent the Notice of Breach sets forth sufficient
details identifying the specific breach and a quantification, to the
extent practicable, of the damages arising therefrom.
(b) In the event of a breach of any representation or warranty set forth in
Section 4, Seller shall have a period of 120 days from its receipt of
Notice of any such breach within which to cure such breach in all
material respects. Prior to enforcing its remedies against Seller,
Purchaser shall make a claim on any title or property insurance policy,
if any, to the extent that payment thereunder could reasonably be
expected to reduce Seller's liability or to bring about a cure on account
of such breach. If such breach by Seller shall not have been cured in
all material respects within such 120 day period, Seller shall be
required to repurchase the Asset pursuant to Section 17(c).
(c) Seller shall be required to repurchase any Asset pursuant to this
paragraph if prior to the Survival Date, Purchaser has notified Seller of
a material breach of any representation and warranty set forth in Section
4 and such breach is not cured in all material respects within 120 day
cure period. Seller shall be obligated, within 10 days following receipt
of written demand by the Purchaser, to repurchase the related Asset.
Seller shall repurchase any affected Asset hereunder at the Purchase
Price of such Asset, plus the amount of any servicing advances made by
Purchaser in respect of the related Asset, and minus any amounts received
by Purchaser arising from the Asset after the Cut-Off Date. In
connection with any repurchase of an Asset hereunder by Seller, Purchaser
shall tender to Seller all portions of the Asset File with respect to
such Asset previously delivered to Purchaser and any additional documents
related thereto in Purchaser's possession, and each document therein
which was endorsed or assigned to Purchaser as required by this
Agreement, shall be endorsed or assigned to Purchaser as required by this
Agreement, shall be endorsed and assigned to Seller in the same manner as
provided therein. Notwithstanding anything to the contrary contained
herein, Seller's obligation to repurchase any Asset shall terminate
unless Purchaser shall have provided written notice to Seller of the
breach on or before the Survival Date.
24
18. Further Assurances
------------------
The parties agree that they will execute and deliver such further
instruments and take such other action as any of them reasonably may require
in order to more effectively to carry out the intent and purposes of this
Agreement.
19. Attorney Fees
-------------
In the event there is any dispute arising out of this Agreement, the
prevailing party shall be entitled to recover from the other all reasonable
attorney fees and costs, whether or not at trial, on appeal, or in
bankruptcy.
20. Jurisdiction and Venue
----------------------
Any dispute arising out of this Agreement shall be resolved by the
applicable courts in England, and Seller and Purchaser consent to personal
jurisdiction and venue therein.
21. Waivers
-------
The failure of Purchaser or WREIT to enforce any provision of this Agreement
shall not be deemed a waiver of that provision or any other provision with
respect to that transaction or any other transaction with Seller.
22. Entire Agreement
----------------
This Agreement, including any exhibits and schedules referred to herein, the
Offering Memorandum and all prior written and computer information regarding
the Assets provided by Seller to Purchaser constitute the entire agreement
between the parties pertaining to the subject matter hereof and supersedes
any and all prior agreements, representations and understandings of the
parties. The representations and terms of this Agreement shall supersede
any inconsistent representations or terms in the prior written and computer
information provided by Seller to Purchaser.
EXECUTED AS A DEED the day and year first above written
Signed as a Deed by )
Wilshire Funding Company UK Limited )
acting by a director and its secretary )
25
Wilshire Real Estate Investment Trust Inc )
By: _____________________________________ )
Title: __________________________________ )
Wilshire Real Estate Partnership LP )
by Wilshire Real Estate Investment Trust Inc )
its General Partner )
By: _____________________________________ )
Title: __________________________________ )
26
SCHEDULE ONE
DESCRIPTION OF ASSETS
27
SCHEDULE TWO
FORM OF TRANSFER
28
SCHEDULE THREE
NOTICE TO BORROWER
29
SCHEDULE FOUR
ENCUMBRANCES
30