AGREEMENT OF SALE AND PURCHASE ASP WASHINGTON, L.L.C.,

Exhibit 10.1

 

AGREEMENT OF SALE AND PURCHASE

between

 

ASP WASHINGTON, L.L.C.,

a Delaware limited liability company,

 

and

 

ASP WASHINGTON DEVELOPMENT, L.L.C.,

a Delaware limited liability company,

 

collectively,

“Seller”

 

and

COHEN COMPANIES, LLC

 

a Maryland limited liability company

“Buyer”

 

with Escrow Instructions for

New Enterprise Title Group, Inc.

Table of Contents

 

 

(i)

 

 

(ii)

AGREEMENT OF SALE AND PURCHASE

 

THIS AGREEMENT OF SALE AND PURCHASE (this “Agreement”), dated as of May          , 2001, is between ASP WASHINGTON DEVELOPMENT, L.L.C., a Delaware limited liability company (“Development”), and ASP WASHINGTON, L.L.C., a Delaware limited liability company (“Washington;” Development and Washington are sometimes hereinafter referred to collectively as “Seller”), and THE COHEN COMPANIES, LLC, a Maryland limited liability company or its permitted assigns (“Buyer”)

 

ARTICLE 1 - CERTAIN DEFINITIONS

 

Section 1.1 Definitions. The parties hereby agree that the following terms shall have the meanings hereinafter set forth, such definitions to be applicable equally to the singular and plural forms, and to the masculine and feminine forms, of such terms:

 

1.1.1 “Additional Deposit” shall have the meaning ascribed in Section 2.3.

 

1.1.2 “Affiliate” shall mean with respect to Seller, any person or entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with Seller, or with respect to Buyer, any entity established for estate planning purposes that is directly, or indirectly through one or more intermediaries, controlled by Ronald Cohen. For the purposes of this definition, “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have the meanings correlative to the foregoing.

 

1.1.3 “Assignment and Assumption of Contracts” shall have the meaning ascribed in Section 9.34.

 

1.1.4 “Assignment and Assumption of Leases” shall have the meaning ascribed in Section 9.3.3.

 

1.1.5 “Bill of Sale’ shall have the meaning ascribed in Section 9.3.2.

 

1.1.6 “Broker” shall mean Trammell Crow Company.

 

1.1.7 “Broker’s Commission” shall have the meaning ascribed in Section 9.6.

 

1.1.8 “Closing” shall have the meaning ascribed in Section 9.2.

 

1.1.9 “Closing Date” shall mean the date set forth in Section 9.2.

 

1.1.10 “Closing Statement” shall have the meaning ascribed in Section 9.5.1(a).

 

1.1.11 “Code” shall have the meaning ascribed in Section 5.4.

 

1.1.12 “Commissions” shall mean all commissions, referral fees, payments and obligations of Seller or the Property Manager to make payments to leasing agents, leasing brokers or other parties with respect to the leasing of all or any of the Property, whether such agreements are contained in a Lease or in any separate Commission Agreement.

1.1.13 “Commission Agreements” shall mean all written agreements and documents entered into by Seller or the Property Manager to pay Commissions that are not contained in a Lease, together with all amendments thereto or modifications thereof.

 

1.1.14 “Contracts” shall mean the service contracts and other contracts described in Exhibit C and all other service contracts entered into by Seller after the Effective Date with respect to the Property in accordance with Section 8.4.

 

1.1.15 “Deed” shall have the meaning ascribed in Section 9.3.1.

 

1.1.16 “Deposit” shall have the meaning ascribed in Section 2.3.

 

1.1.17 “Development Land” shall mean those certain parcels of land in Washington Business Park, Lanham, Maryland, consisting of approximately seventy-nine (79) acres, and all appurtenances thereto, as more particularly described on Exhibit A-2, including Development’s right, title and interest, if any, in and to all rights-of-way, open or proposed streets (public or private), alleys, easements, strips or gores of land adjacent thereto.

 

1.1.18 “Disclosure Items” shall have the meaning ascribed in Section 6.1.

 

1.1.19 “Due Diligence” shall have the meaning ascribed in Section 3.1.

 

1.1.20 “Due Diligence Items” shall have the meaning ascribed in Section 3.2.

 

1.1.21 “Due Diligence Period” shall mean the time period provided for in Section 3.1 of this Agreement.

 

1.1.22 “Effective Date” shall mean the date this Agreement shall have been fully executed and delivered by all parties hereto.

 

1.1.23 “Environmental Laws” means all federal, state and local environmental laws, rules, statutes, directives, binding written interpretations, binding written policies, ordinances and regulations issued by any Governmental Entity and in effect as of the date of this Agreement with respect to or which otherwise pertain to or affect the Real Property or the Improvements, or any portion thereof, the use, ownership, occupancy or operation of the Real Property or the Improvements, or any portion thereof, or any owner of the Real Property, and as same have been amended, modified or supplemented from time to time prior to the date of this Agreement, including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Hazardous Substances Transportation Act (49 U.S.C. § 1802 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Water Pollution Control Act (3.3 U.S.C. § 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Solid Waste Disposal Act (42 U.S.C. § 6901 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Emergency Planning and Community Right-to-Know Act of 1986 (42 U.S.C. § 11001 et seq. ), the Radon and Indoor Air Quality Research Act (42 U.S.C. § 7401 note,

 

- 2 -

et seq.), the Superfund Amendment Reauthorization Act of 1986 (42 U.S.C. § 9601 et seq.), comparable state and local laws, and any and all rules and regulations which have become effective prior to the date of this Agreement under any and all of tine aforementioned laws.

 

1.1.24 “Escrow Agent” shall mean New Enterprise Title Group, Inc. or in the event of an occurrence as described in Section 4.2, First American Title Insurance Company.

 

1.1.25 “Estoppel Period” shall have the meaning ascribed in Section 3.7(a).

 

1.1.26 “Excluded Property Records” shall have the meaning ascribed in Section 3.2.

 

1.1.27 “Fixtures” shall mean the fixtures which are located at and affixed to any of the Improvements as of the Closing Date, but specifically excluding any trade fixtures of the Tenants under the Leases.

 

1.1.28 “Governmental Entity” means the various governmental and quasi- governmental bodies or agencies having jurisdiction over Seller, the Real Property or any portion thereof.

 

1.1.29 “Hazardous Materials” means any pollutants, contaminants, hazardous or toxic substances, materials or wastes (including petroleum, petroleum by-products, radon, asbestos and asbestos containing materials, polychlorinated biphenyls (“PCBs”), PCB-containing equipment, radioactive elements, infectious agents, and urea formaldehyde), as such terms are used in any Environmental Laws (excluding solvents, cleaning fluids and other lawful substances used in the ordinary operation and maintenance of the Real Property, to the extent in closed containers).

 

1.1.30 “Improvements” shall mean the buildings, improvements, and structures located on the Washington Land, including, but not limited to, two (2) office buildings and seven (7) flex buildings.

 

1.1.31 “Independent Consideration” shall have the meaning ascribed in Section 2.4.

 

1.1.32 “Initial Deposit” shall have the meaning ascribed in Section 2.3.

 

1.1.33 “Leases” shall mean all unexpired leases, subleases, occupancy agreements, and any other agreements, including all modifications or amendments thereto, for the use, possession, or occupancy of any portion of the Real Property as of the Closing Date, including any tenant guaranties delivered in connection with any of the foregoing.

 

1.1.34 “Leasing Parameters” shall have the meaning ascribed in Section 8.1.2.

 

1.1.35 “Licensee Parties” shall mean those authorized agents, contractors, consultants and representatives of Buyer who shall inspect, investigate, test or evaluate the Property on behalf of Buyer in accordance with this Agreement.

 

- 3 -

1.1.36 “Licenses and Permits” shall mean, collectively, to the extent assignable, all licenses, permits, approvals, certificates of occupancy, dedications, subdivision maps and entitlements now or hereafter issued, approved or granted by any Governmental Entity in connection with the Real Property, together with all renewals and modifications thereof.

 

1.1.37 “Liens” shall have the meaning ascribed in Section 4.2.

 

1.1.38 “New Leases” or “New Lease” shall mean, collectively, or singularly, any Lease for space at the Property entered into between the Effective Date and the Closing Date.

 

1.1.39 “Operating Expenses” shall have the meaning ascribed in Section 9.5.1(c).

 

1.1.40 “Permitted Exceptions” shall mean and include all of the following: (a) applicable zoning and building ordinances and land use regulations; (b) those matters revealed by the Survey (as the same may be updated by Buyer prior to the Closing Date); (c) the lien of taxes and assessments not yet due and payable (it being agreed by Buyer and Seller that if any tax or assessment is levied or assessed with respect to the Property after the date hereof and the owner of the Property has the election to pay such tax or assessment either immediately or under a payment plan with interest, Seller may elect to pay under a payment plan, which election shall be binding on Buyer); (d) any exclusions from coverage set forth in the jacket of any Owner’s Policy of Title Insurance or any standard printed exceptions; (e) any exceptions caused by Buyer, its agents, representatives or employees; (f) such other exceptions as the Title Company shall commit to insure over, without any additional cost to Buyer, whether such insurance is made available in consideration of payment, bonding, indemnity by Seller or otherwise; (g) the rights of the Tenants under the Leases; and (h) any matters deemed to constitute Permitted Exceptions under Section 4 2 hereof.

 

1.1.41 “Permitted Outside Parties” shall have the meaning ascribed in Section 3.5.

 

1.1.42 “Personal Property” shall mean all of the right, title, and interest of Seller in and to the tangible personal property, which is located at and used in connection with any of the Improvements as of the Closing Date, but specifically excluding (a) any personal property owned, financed or leased by the Tenants under the Leases, (b) any computer software which either is licensed to Seller, or Seller deems proprietary, (c) any tangible personal property used, whether owned or leased, by any affiliated or unaffiliated on-site property manager and (d) any warrants, stock options or other equity securities related to the Property Personal Property shall not include any appraisals, budgets, strategic plans for the Real Property, internal analyses, marketing information, submissions relating to Seller’s obtaining of corporate authorization, attorney and accountant work product, attorney-client privileged documents, or other information in the possession or control of Seller or Seller’s Property Manager which Seller deems proprietary.

 

1.1.43 “Pre-Effective Date Leases” or “Pre-Effective Date Lease” shall mean, collectively, or singularly, any Lease for space at the Property in effect as of the Effective Date.

 

1.1.44 “Property” shall mean the Real Property, the Personal Property, the Leases, the Contracts, and to the extent transferable, all of Seller’s right, title and interest in and

 

- 4 -

to all tangible and intangible assets of any nature relating to the Property, including without limitation, (a) all warranties upon the Improvements or the Personal Property, (b) rights to any plans, specifications, engineering studies, reports, drawings, and prints relating to the construction, reconstruction, modification, and alteration of Improvements, (c) all works of art, graphic designs, and other intellectual or intangible property owned and used by Seller in connection with the Property, including any trade name associated with the Improvements, (d) all claims and causes of action arising out of or in connection with the Property after the Closing Date, and (e) the Licenses and Permits.

 

1.1.45 “Property Manager” shall mean those individuals or entities which manage the Property.

 

1.1.46 “Proration Items” shall have the meaning ascribed in Section 9.5.1(a).

 

1.1.47 “Proration Time” shall have the meaning ascribed in Section 9.5.1(a).

 

1.1.48 “Purchase Price” shall have the meaning ascribed in Section 2.2.

 

1.1.49 “Real Property” shall mean the Development Land, the Washington Land, the improvements, and the Fixtures.

 

1.1.50 “Reimbursable Capital Expenses” shall mean costs or expenses for any capital expenditures or improvements made by Seller after the Effective Date hereof but before Closing or as otherwise listed on Exhibit 4 hereto.

 

1.1.51 “Reimbursable Lease Expenses” shall mean, collectively, any and all fees paid by Seller prior to Closing or costs and expenses paid or incurred by Seller prior to Closing arising out of or in connection with any extensions, renewals or expansions under any Lease for space at the Property exercised or granted between the Effective Date and the Closing Date, and any New Lease. Reimbursable Lease Expenses shall include, without limitation, (a) brokerage commissions and fees payable pursuant to a Commission Agreement or a Lease or New Lease to effect any such leasing transaction (including, without limitation, any fees owed to the Property Manager), (b) expenses incurred for repairs, improvements, equipment, painting, decorating, partitioning and other items to satisfy the tenant’s requirements with regard to such leasing transaction, (c) legal fees for services in connection with the preparation of documents and other services rendered in connection with the effectuation of the leasing transaction, (d) if there are any rent concessions covering any period that the tenant has the right to be in possession of the demised space, the rents that would have accrued during the period of such concession prior to the Closing Date as if such concession were amortized over (i) with respect to any extension or renewal, the term of such extension or renewal, (ii) with respect to any expansion, that portion of the term remaining under the subject Lease after the date of any expansion, or (iii) with respect to any New Lease. the entire initial term of any such New Lease, and (e) expenses incurred for the purpose of satisfying or terminating the obligations of a tenant under a New Lease to the landlord under another lease (whether or not such other lease covers space in the Property).

 

1.1.52 “Rent Roll” shall have the meaning ascribed in Section 3.2(a).

 

- 5 -

1.1.53 “Rent” or “Rents” shall mean and include fixed monthly rentals, additional rentals, percentage rentals, escalation rentals (which include each Tenant’s proration share of building operation and maintenance costs and expenses as provided for under the applicable Lease, to the extent the same exceeds any expense stop specified in such Lease), retroactive rentals, all administrative charges, utility charges, tenant or real property association dues, storage rentals, special event proceeds, temporary rents, telephone receipts, locker rentals, vending machine receipts and other sums and charges payable by tenants under the Leases or from other occupants or users of the Property, but excluding amounts received for Operating Expenses.

 

1.1.54 “Reporting Person” shall have the meaning ascribed in Section 5.4(a).

 

1.1.55 “SNDA’s” shall have the meaning ascribed in Section 3.8.

 

1.1.56 “Survey” shall mean, collectively, those certain existing ALTA surveys of the Development Land and the Washington Land and the Improvements more particularly described on Exhibit I attached hereto.

 

1.1.57 “Tenant Deposit” means all advance rents and security deposits (whether cash or noncash) paid or deposited by a Tenant to Seller, as landlord, or any other person on Seller’s behalf pursuant to a Lease (together with any interest which has accrued thereon as required by the terms of such Lease, but only to the extent such interest has accrued for the account of the respective Tenant or as required by law).

 

1.1.58 “Tenant” or “Tenants” shall mean all persons or entities occupying or entitled to possession of any portion of the Real Property pursuant to the Leases, including tenants, subtenants, and licensees.

 

1.1.59 “Title Commitment” shall have the meaning ascribed in Section 4.1.

 

1.1.60 “Title Company” shall mean Stewart Title Guaranty Company, or in the event of an occurrence as described in Section 4.2, First American Title Insurance Company.

 

1.1.61 “Title Documents” shall have the meaning ascribed in Section 4.1.

 

1.1.62 “Title Objections” shall have the meaning ascribed in Section 4.2.

 

1.1.63 “Title Policy” shall have the meaning ascribed in Section 4.3.

 

1.1.64 “Washington Land” shall mean those certain parcels of land in Washington Business Park, Lanham, Maryland, commonly known as (i) 4640 Forbes Boulevard, (ii) 4601 Forbes Boulevard, (iii) 5001 Forbes Boulevard, (iv) 5200 Philadelphia Way, (v) 5000 Philadelphia Way, (vi) 9201 Philadelphia Court (vii) 9901 Business Parkway, (viii) 4819-4881 Walden Lane, and (ix) 4850 Forbes Boulevard, and all appurtenances thereto, as more particularly described on Exhibit A-2, including Development’s right, title and interest, if any, in and to all rights-of-way, open or proposed streets (public or private), alleys, easements, strips or gores of land adjacent thereto.

 

- 6 -

Section 1.2 Rules of Construction. Article and Section captions used in this Agreement are for convenience only and shall not affect the construction of this Agreement. All references to “Article” or “Sections” without reference to a document other than this Agreement, are intended to designate articles and sections of this Agreement, and the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Agreement as a whole and not to any particular Article or Section, unless specifically designated otherwise. The use of the term “including” shall mean in all cases “including but not limited to,” unless specifically designated otherwise. No rules of construction against the drafter of this Agreement shall apply in any interpretation or enforcement of this Agreement, any documents or certificates executed pursuant hereto, or any provisions of any of the foregoing.

 

ARTICLE 2 - AGREEMENT OF PURCHASE AND SALE; PURCHASE PRICE

 

Section 2.1 Agreement of Purchase and Sale. Seller agrees to sell, transfer, assign and convey to Buyer, and Buyer agrees to purchase, accept and assume subject to the terms and conditions stated herein, all of Seller’s right, title and interest in and to the Property.

 

Section 2.2 Purchase Price. Buyer shall pay Seller the purchase price of Fifty-Six Million Five Hundred Thousand and N01100 Dollars ($56,500,000.00) (the “Purchase Price”) at Closing. The Purchase Price and such other funds as may be necessary to pay Buyer’s expenses hereunder, subject to closing adjustments, shall be deposited with the Escrow Agent on or before the Closing Date in accordance with this Agreement and paid to Seller upon satisfaction of all conditions precedent to the Closing as described herein.

 

Section 2.3 Deposit. Within three (3) business days after this Agreement is executed by Buyer and Seller, Buyer shall deposit via wire transfer the sum of Two Hundred Thousand and N0/100 Dollars ($200,000.00) in immediately available funds as a deposit (the “Initial Deposit”) with Escrow Agent whose address is as indicated in Section 10.3. Buyer shall deposit via wire transfer an additional Five Hundred Thousand and N0/100 Dollars ($500,000.00) (the “Additional Deposit”, the Initial Deposit and the Additional Deposit, collectively, the “Deposit”) in immediately available funds with Escrow Agent by 5:00 p.m. Eastern Time on the last day of the Estoppel Period (as the same may have been extended pursuant Section 3.7(a) hereof). The Deposit shall be non-refundable except as provided in Sections 3.6, 3.7, 4.2, 5.1, 8.1 and 10.2 and shall be held and delivered by Escrow Agent in accordance with the provisions of Article 5, or shall be held and delivered by Seller as hereinafter provided. Interest earned on the Deposit shall be considered part of the Deposit and shall be deemed to have been earned by, and constitute income of, Buyer. Except as otherwise expressly set forth herein, the Deposit shall be applied against the Purchase Price on the Closing Date.

 

Section 2.4 Independent Consideration. Contemporaneously with the execution and delivery of this Agreement, Buyer has paid to Seller as further consideration for this Agreement, in cash, the sum of One Hundred Dollars ($100.00) (the “Independent Consideration”), in addition to the Deposit and the Purchase Price and independent of any other consideration provided hereunder, which Independent Consideration is fully earned by Seller and is non-refundable under any circumstances.

 

- 7 -

Section 2.5 Indivisible Economic Package. Buyer has no right to purchase, and Seller has no obligation to sell, less than all of the Property, it being the express agreement and understanding of Buyer and Seller that, as a material inducement to Seller and Buyer to enter into this Agreement, Buyer has agreed to purchase, and Seller has agreed to sell, all of the Property, subject to and in accordance with the terms and conditions hereof.

 

Section 2.6 Assumption of Obligations. As additional consideration for the purchase and sale of the Property, at Closing Buyer will: (a) assume and perform (i) all of the covenants and obligations of Seller, Seller’s predecessors in title and Seller’s Affiliates pursuant to the Leases and Contracts (including, without limitation, those relating to any tenant deposits) which arise on or after the Closing Date and (ii) all obligations under the Leases and Contracts relating to the physical and environmental condition of the Property regardless of whether such obligations arise before, on or after the Closing Date; (b) assume and agree to discharge, perform and comply with each and every liability, duty, covenant, debt or obligation of Seller or any of its Affiliates (i) resulting front, arising out of, or in any way related to the Disclosure Items set forth in Exhibit B, past, present or future, known or unknown, and (ii) resulting from, arising out of, or in any way related to any Licenses and Permits and arising on or after the Closing Date; and (c) assume Seller’s obligations to pay, when due (whether on a stated due date or accelerated) any Reimbursable Lease Expenses in accordance with Section 8.2 of this Agreement or any Reimbursable Capital Expenses that are unpaid as of the Closing Date. Buyer hereby indemnifies and holds Seller harmless from and against any and all claims, liens, damages, demands, causes of action, liabilities, lawsuits, judgments, losses, costs and expenses (including but not limited to attorneys’ fees and expenses) asserted against or incurred by Seller and arising out of the failure of Buyer to perform its obligations pursuant to this Section 2.6. The provisions of this Section 2.6 shall survive the Closing without limitation.

 

ARTICLE 3 - BUYER’S DUE DILIGENCE/CONDITION OF THE PROPERTY

 

Section 3.1 Buyer’s Inspections and Due Diligence. Buyer acknowledges that commencing on the Effective Date and continuing for a period which will expire at 5:00 p.m. Eastern Time on the thirtieth (30th) day, after the Effective Date (the “Due Diligence Period”), Buyer shall conduct its examinations, inspections, testing, studies and investigations of the Property, information regarding the Property and such documents applicable to the Property, including, without limitation, the documents that Seller delivers or makes available, as set forth in Section 3.2 below (collectively, the “Due Diligence”). Except for any limitations as may be imposed by Section 3.3 below, Buyer may conduct such due diligence activities, inspections, and studies of the Property as it deems necessary or appropriate, and examine and investigate to its full satisfaction all facts, circumstances, and matters relating to the Property (including the physical condition and use, availability and adequacy of utilities, access, zoning, compliance with applicable laws, environmental conditions, engineering and structural matters), title and survey matters, and any other matters it deems necessary or appropriate for purposes of consummating this transaction. The Due Diligence shall be at Buyer’s sole cost and expense.

 

Section 3.2 Due Diligence Items; Delivery Period.

 

(a) On or before five (5) business days after the Effective Date, Seller shall deliver to Buyer, or make available to Buyer for inspection at the Property or at the office of the

 

- 8 -

Property Manager, the following: (i) the most recent rent roll statement (the “Rent Roll”) with respect to the Property prepared by Seller, in the form and containing such information as maintained by Seller from time to time, together with copies of all Leases referenced on the Rent Roll and copies of any subleases or amendments relating thereto and Tenant correspondence in Seller’s possession and a listing of all refundable Tenant Deposits in the actual possession of Seller or the Property Manager as of the last day of the calendar month prior to the Effective Date; (ii) the Survey; (iii) copies of all Contracts (including any Commission Agreements); (iv) copies of any of the following items pertaining to the Property to the extent they exist and are in Seller’s possession or, control: monthly cashflow reports for the current year to date; operating statements for the Property for calendar years (or partial years if applicable) 1998, 1999 and 2000; the 2001 budget for Operating Expenses; copies of existing engineering studies and existing environmental audits prepared by third parties in connection with the Property; the Licenses and Permits; and any lists of material items of personal property owned by Seller and located on the Real Property; (v) a copy of any title insurance commitments and Seller’s existing policy(ies) of title insurance; (vi) copies of the last two real property tax bills and the most recent assessment notice (collectively, the “Due Diligence Items”).

 

(b) All documents, materials, and information furnished to or made available to Buyer pursuant to this Section 3.2 are being furnished or made available to Buyer for information purposes only and without any representation or warranty by Seller with respect thereto, express or implied, except as may otherwise be expressly set forth in Sections 6.1 and 6.2 below and as limited by Sections 6.3 and 7.2 below, and all such documents, materials, and information are expressly understood by Buyer to be subject to the confidentiality provisions of Section 3.5 below.

 

Notwithstanding any terms to the contrary in this Agreement, (a) Seller shall not be obligated or otherwise required to furnish or make available to Buyer any of the following (collectively, “Excluded Property Records”): (i) any appraisals or other economic evaluations of, or projections with respect to, all or any portion of the Property prepared by or on behalf of Seller or any Affiliate of Seller, (ii) any documents, materials or information which are subject to attorney/client, work product or similar privilege, which constitute attorney communications with respect to the purchase of the Property by Seller, or which are subject to a confidentiality agreement, and (iii) those documents listed on Schedule 3.2 attached hereto; (b) Due Diligence Items shall not include any Excluded Property Records; and (c) Seller shall have no obligation or liability of any kind to Buyer as a result of Seller not furnishing or making available to Buyer the Excluded Property Records.

 

Section 3.3 Site Visits. Buyer and its Licensee Parties shall have reasonable access to the Real Property at agreed upon times for agreed upon purposes on at least one (1) business day prior notice to Seller. Such notice shall describe the scope of the Due Diligence Buyer intends to conduct during Buyer’s access to the Real Property. Seller shall make reasonable efforts to have an agent available to accompany Buyer or any Licensee Parties, and in all events Seller shall have the right to have a representative present during any visits to or inspections of any Real Property or any meetings or discussions with any Tenant by Buyer or any Licensee Parties. Buyer will conduct its Due Diligence in a manner so as to minimize, to the extent reasonably possible to do so, any interference with the operations and occupancy of the Property and to minimize, to the extent reasonably possible to do so, any disturbance to Tenants. Buyer will not

 

- 9 -

enter the Real Property or contact any leasing agents for the Real Property or the Property Manager of the Real Property or any Governmental Entity without Seller’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed; provided that Buyer may contact any independent leasing agents without Seller’s prior written consent. Neither Buyer nor any Licensee Parties may contact any Tenants at the Real Property or make any inquiries of such Tenants which in any way relate to the Real Property, any of the tenant estoppel certificates, or to Seller without Seller’s prior written consent. In the event Buyer desires to conduct any physically intrusive Due Diligence, such as sampling of soils, other media, building materials, or the like, Buyer will identify in writing exactly what procedures Buyer desires to perform and request Seller’s express written consent. Seller may withhold or condition consent to any physically intrusive Due Diligence in Seller’s sole and absolute discretion (other than with respect to core samples of roofs and asphalt on parking lots for which Seller’s consent shall not be unreasonably withheld or delayed). Seller’s consent to samples of roofs and asphalt parking lots shall be deemed to have been given if Seller does not disapprove such sampling on or prior to two (2) business days after Seller’s receipt of Buyer’s reasonably detailed sampling plan therefor. Upon receipt of Seller’s written consent, Buyer and all Licensee Parties shall, in performing such Due Diligence, comply with the agreed upon procedures and with any and all laws, ordinances, rules, and regulations applicable to the Property and will not engage in any activities which would violate any permit, license, or environmental law or regulation. Buyer and any Licensee Parties will: (a) maintain comprehensive general liability (occurrence) insurance in an amount of not less than $5,000,000 covering any accident arising in connection with the presence of Buyer or the other Licensee Parties on the Real Property or Improvements, and deliver a certificate of insurance, which names the Seller and the Property Manager as additional insureds thereunder verifying such coverage to Seller prior to entry upon the Real Property or Improvements; (b) promptly pay when due the costs of all entry and inspections and examinations done with regard to the Property; and (c) restore the Real Property and Improvements to the condition in which the same were found before any such entry upon the Real Property and inspection or examination was undertaken.

 

Section 3.4 Due Diligence Indemnity. Buyer shall defend, indemnify, and hold harmless Seller, Seller’s partners, shareholders or members, as applicable, and the Property Manager from and against all losses, costs, damages, claims, and liabilities (whether arising out of injury or death to persons or damage to the Property or otherwise) including, but not limited to, costs of remediation, restoration and other similar activities, mechanic’s and materialmen’s liens and attorneys’ fees, arising out of or in connection with Buyer’s Due Diligence, Buyer’s breach of its obligations under Section 3.5 or Buyer’s or any Licensee Parties’ entry upon the Real Property, unless any of the same are caused by the gross negligence or willful misconduct of Seller, Seller’s partners, shareholders or members, as applicable, and/or the Property Manager. The provisions of this Section 3.4 shall survive the Closing or, if the purchase and sale is not consummated, any termination of this Agreement, and shall not be subject to the twelve month limitation set forth in Section 6.3.

 

Section 3.5 Confidentiality. Buyer agrees that any information obtained by Buyer or its Licensee Parties, attorneys, partners, accountants, lenders or investors (collectively, for purposes of this Section 3.5, the “Permitted Outside Parties”) in the conduct of its Due Diligence shall be treated as confidential pursuant to Section 10.11 of this Agreement and shall be used only to evaluate the acquisition of the Property from Seller. Buyer further agrees that within its

 

- 10 -

organization, or as to the Permitted Outside Parties, the Due Diligence Items will be disclosed and exhibited only to those persons within Buyer’s organization or to those Permitted Outside Parties who are involved in determining the feasibility of Buyer’s acquisition of the Property. Buyer farther acknowledges that the Due Diligence Items and other information relating to the leasing arrangements between Seller and any tenants or prospective tenants are proprietary and confidential in nature. Buyer agrees not to divulge the contents of such Due Diligence Items or any other information except in strict accordance with Sections 3.5 and 10.11 of this Agreement In permitting Buyer and the Permitted Outside Parties to review the Due Diligence Items and other information to assist Buyer, Seller has not waived any privilege or claim of confidentiality with respect thereto, and no third party benefits or relationships of any kind, either express or implied, have been offered, intended or created by Seller and any such claims are expressly rejected by Seller and waived by Buyer and the Permitted Outside Parties, for whom, by its execution of this Agreement, Buyer is acting as an agent with regard to such waiver. The provisions of this Section 3.5 shall survive the Closing without limitation.

 

Section 3.6 Due Diligence Period. Buyer, by giving Seller and Escrow Agent written notice on or before the end of the Due Diligence Period, may terminate its obligations hereunder without further liability except as described in this Section 3.6 and in Sections 3.4, 3.5, 9.6, and 10.11. If before the end of the Due Diligence Period, Buyer fails to give Seller such written notice, then Buyer shall be deemed to have elected to waive its rights to terminate this Agreement and to have approved all of the matters described in Sections 3.1 and 3.2. If Buyer timely elects to terminate its obligations hereunder as described above, Buyer shall provide to Seller, promptly after receipt of a request from Seller, originals of all third party reports, studies and appraisals relating to the Property in its possession, without representation or warranty and at no cost to Seller. The foregoing obligation shall survive any termination of this Agreement. On the final day of the Due Diligence Period unless Buyer has elected to terminate this Agreement as provided herein, Buyer shall deliver to Seller invoices from third parties for examinations, tests, inspections, studies or investigations performed in connection with Seller’s Due Diligence (including, without limitation, environmental studies), and a copy of an executed commitment letter and evidence of payment of a commitment fee with respect to Buyer’s financing for the Property. Subject to the terms of this Agreement, Buyer, after the expiration of the Due Diligence Period, may continue to conduct further physical Due Diligence or other examinations, inspections, tests, studies and investigations regarding the Property; provided, however, that except as otherwise expressly provided in Sections 5.1 and 10.2.2, in no event shall Buyer have any right to terminate or otherwise modify its obligations hereunder after the end of the Due Diligence Period as a result of any such further physical Due Diligence or other examinations, inspections, tests, studies or investigations regarding the Property, and the provisions of this Article 3, including, without limitation, the indemnification provisions, shall continue to apply.

 

Section 3.7 Estoppel Certificates.

 

(a) As a condition to Buyer’s obligation to close the transaction contemplated by this Agreement, Seller shall, within thirty (30) days of the Effective Date (the “Estoppel Period”), obtain estoppel certificates from those Tenants, who, in the aggregate, as of the Effective Date, occupy or lease at least eighty-five percent (85%) of the total square footage of the Improvements. Such certificates shall be substantially in a form mutually agreed upon within two (2) business days of the Effective Date or, if Buyer and Seller have not agreed upon a form

 

- 11 -

within such two (2) business day period, then in the form of Exhibit H attached hereto. A copy of each estoppel certificate received by Seller from a Tenant shall be delivered by Seller to Buyer promptly after Seller receives such certificate from the Tenant. In the event that Seller has not delivered the requisite number of estoppel certificates within the time period provided herein, then, either Seller or Buyer may, by written notice to the other party, extend the Estoppel Period for an additional ten (10) days to satisfy such condition.

 

(b) In the event that Buyer has not received the required estoppel certificates within the Estoppel Period, (as the same may have been extended pursuant to Section 3.7(a) hereof), then Buyer may, by giving Seller and Escrow Agent written notice on or before the expiration of the Estoppel Period, terminate its obligations hereunder without further liability except as described in Sections 3.4, 3.5, 3.6, 9.6 and 10.11, and Escrow Agent shall promptly thereafter return the Deposit to Buyer. If, before the end of the Estoppel Period, Buyer fails to give Seller such written notice, then Buyer shall be deemed to have elected to waive its right to terminate this Agreement pursuant to this Section 3.7(b). After the expiration of the Estoppel Period, provided Buyer has not terminated this Agreement, Seller shall continue to use reasonable efforts to obtain and deliver to Buyer estoppel certificates from the Tenants of the Property whose Leases will continue after the Closing to the extent Seller has not previously delivered to Buyer estoppel certificates from such Tenants; provided, however, in no event shall Buyer have any right to terminate its obligations hereunder after the end of the Estoppel Period as a result of any estoppel certificates received or not received by Buyer after the end of the Estoppel Period.

 

Section 3.8 SNDA’s. Upon Buyer’s request, Seller will use reasonable efforts to obtain from each Tenant a subordination, non-disturbance and attornment agreement in such form as the lender providing financing to Buyer may request (the “SNDA’s”). Buyer acknowledges that Seller shall have exercised reasonable efforts by delivering the form of SNDA to the Tenants. Obtaining any such SNDA’s shall not, however, be a condition to the Closing, nor shall Seller incur any liability in connection with failing to obtain any such SNDA’s. Seller will deliver an original of each SNDA to Buyer promptly following Seller’s receipt of the same.

 

ARTICLE 4 - TITLE AND SURVEY

 

Section 4.1 Title to Real Property. Seller shall make available to Buyer not later than five (5) business days after the Effective Date (a) a commitment to issue an owner’s policy of title insurance with respect to the Property issued by the Title Company (the “Title Commitment”), (b) copies of all recorded documents referred to on Schedule B of the Title Commitment as exceptions to coverage (the “Title Documents”), and (c) the Survey.

 

Section 4.2 Certain Exceptions to Title. Buyer shall have the right to object in writing to any title matters that are not Permitted Exceptions and that materially adversely affect Buyer’s title to the Real Property which are disclosed in the Title Commitment or Survey (herein collectively called “Liens”) within fifteen (15) days after receipt of the Title Commitment and Survey. Unless Buyer shall timely object to the Liens, all such Liens and any other encumbrances which do not materially adversely affect Buyer’s title to the Real Property which are set forth in the Title Commitment and any such supplemental reports or updates shall be deemed to constitute additional Permitted Exceptions. Any exceptions which are timely objected

 

- 12 -

to by Buyer shall be herein collectively called the “Title Objections.” Seller may elect (but shall not be obligated) to remove or cause to be removed, or insured over, at its expense, any Title Objections, and shall be entitled to a reasonable adjournment of the Closing (not to exceed ninety (90) days) for the purpose of such removal, which removal will be deemed effected by the issuance of title insurance eliminating or insuring against the effect of the Title Objections. Seller shall notify Buyer in writing within ten (10) days after receipt of Buyer’s notice of Title Objections whether Seller elects to remove the same. Notwithstanding anything to the contrary contained herein, in the event that any Title Objection exists which the Title Company will not remove or endorse over but which First American Title Insurance Company has agreed to remove or endorse over, Seller, by written notice thereof to Buyer and the Title Company, may elect to use First American Title Insurance Company as the Title Company and Escrow Agent, in which case, the original Escrow Agent shall, within three (3) business days of such notice, transfer any funds and/or documents held by it with respect to the transaction contemplated by this Agreement to First American Title Insurance Company, who will supercede and replace Stewart Title Guaranty Company as the Title Company and New Enterprise Title Group, Inc. as Escrow Agent. If Seller is unable to remove or endorse over any Title Objections prior to the Closing, or if Seller elects not to remove one or more Title Objections, Buyer may elect, as its sole and exclusive remedy therefore, to