SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) August 13, 1998
---------------
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 0-17881 04-2985890
- --------------------------------------------------------------------------------
(State or other jurisdiction) (Commission (IRS Employer
of incorporation File Number) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
--------------
(Former name or address, if changed since last report)
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
ITEM 2 - Disposition of Assets
Willow Grove Apartments - Beaverton, Oregon
Disposition Date - August 13, 1998
On August 13, 1998, Portland Pacific Associates Two, a joint venture (the
"Venture") in which Paine Webber Equity Partners Three Limited Partnership ("the
Partnership") has an interest, sold the property known as the Willow Grove
Apartments, located in Beaverton, Oregon. As previously reported, during fiscal
1998 the Partnership had been monitoring the development activity in the
Portland apartment market and exploring potential sale opportunities for the
Willow Grove Apartments. With strong local market conditions, the Partnership
believes it was an appropriate time to sell the Willow Grove property. During
the fourth quarter of fiscal 1998, the Partnership initiated discussions with
area real estate brokerage firms and solicited marketing proposals from several
of these firms. After reviewing their respective proposals and conducting
interviews, the Partnership selected a national brokerage firm that is a leading
seller of apartment properties. Sales materials were prepared, and an extensive
marketing campaign began in May 1998. As a result of those efforts, ten offers
to purchase Willow Grove were received. The prospective purchasers were then
requested to submit best and final offers. Four of the prospective buyers
submitted best and final offers. After completing an evaluation of these offers
and the relative strength of the prospective purchasers, the Partnership
selected an offer. A purchase and sale agreement was negotiated with an
unrelated third-party prospective buyer and signed on July 3, 1998. After the
prospective buyer completed its due diligence work, a sale transaction was
completed on August 13, 1998. The Willow Grove property was sold to this
unrelated third party for $7,137,000. The Partnership received net proceeds of
approximately $3,406,000 in connection with the sale after the assumption of the
outstanding mortgage loan secured by the property of approximately $3,468,000,
closing costs of approximately $168,000 and closing proration adjustments of
approximately $95,000. As a result of the sale of the Willow Grove Apartments, a
Special Distribution of $68 per original $1,000 investment will be made on
August 25, 1998 to the Limited Partners of PaineWebber Equity Partners Three
Limited Partnership of record as of August 13, 1998. This Special Capital
Distribution represents the net proceeds from the sale of Willow Grove as
rounded up to the nearest dollar per original $1,000 investment.
ITEM 7 - Financial Statements and Exhibits
(a) Financial Statements: None
(b) Exhibits:
(1) Closing Statement by and between Portland Pacific Associates Two
and Balaclava Holdings, Inc. dated August 12, 1998.
(2) Purchase and Sale Agreement by and between Portland Pacific
Associates Two and Balaclava Holdings, Inc. dated July 3, 1998.
(3) First Amendment to Purchase and Sale Agreement between Portland
Pacific Associates Two and Balaclava Holdings, Inc., dated July 30,
1998.
(4) Special Warranty Deed by and between Portland Pacific Associates Two
c/o PaineWebber Equity Partners Three Limited Partnership and
Balaclava Holdings, Inc. dated August 13, 1998.
(5) Assignment and Assumption of Contracts between Portland Pacific
Associates Two c/o PaineWebber Equity Partners Three Limited
Partnership and Balaclava Holdings, Inc. dated August 13, 1998.
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
(6) Assignment and Assumption of Leases and Tenant Deposits between
Portland Pacific Associates Two c/o PaineWebber Equity Partners
Three Limited Partnership and Balaclava Holdings, Inc. dated August
13, 1998.
(7) Bill of Sale And General Assignment by Portland Pacific Associates
Two c/o PaineWebber Equity Partners Three Limited Partnership in
favor of Balaclava Holdings, Inc. dated August 13, 1998.
<PAGE>
FORM 8-K
CURRENT REPORT
PAINEWEBBER EQUITY PARTNERS THREE LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAINEWEBBER EQUITY PARTNERS
THREE LIMITED PARTNERSHIP
-------------------------
(Registrant)
By: Third Equity Partners, Inc.
--------------------------
Managing General Partner
By:/s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
Date: August 20, 1998
<PAGE>
Closing Statement
CHICAGO TITLE INSURANCE COMPANY OF OREGON
SELLERS ESTIMATED SETTLEMENT STATEMENT
Seller: Portland Pacific Assoc. Two Escrow No.: 5000-9123-JF
Order No: 188156
BY Peter F. Sullivan, V.P. Date: 08/12/98
Buyer: Balaclava Holdings, Inc.
BY Tom Lindsay, President
Property The Willow Grove Apartments
Address: Beaverton, Oregon
Escrow Officer: Jeanne M. Fleischman Date: 08/12/98
Charges Credits
------- -------
Sales Price 7,137,000.00
Trust Deed Assumed 3,467,513.45
Total Brokers Commission 138,820.00
County taxes from 07/01/98 to 08/13/98 9,151.68
Rents from 08/13/98 to 09/01/98 50,159.39
For Rent Marze from 08/13/98 to 08/21/98 508.57
Contracts from 08/13/98 to 09/01/98 1,230.46
Pro-rata Interest from 07/15/98 to 08/13/98 26,420.55
County Transfer Tax 7,137.00
Add Recordings (EST) to CHICAGO
TITLE INSURANCE CO 38.00
Title Insurance to CHICAGO TITLE
INSURANCE CO 11,305.50
Escrow/Closing fee
to CHICAGO TITLE INSURANCE CO 1,500.00
Service Fee to CHICAGO TITLE INSURANCE 25.00
Release of Liability to Prudential
Insurance Company 8,668.78
Late fee for June to Prudential
Insurance Company 1,200.00
UCC Search
Unisearch, Inc. 108.00
Transfer of All Deposits 10,915.00
-------------- -------------
Sub-totals 3,732,962.35 7,138,739.03
Balance due to Seller 3,405,776.68
--------------
Estimated Totals 7,138,739.03 7,138,739.03
<PAGE>
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
PORTLAND PACIFIC ASSOCIATES TWO ("SELLER")
AND
BALACLAVA HOLDINGS INC.("BUYER")
THE WILLOW GROVE APARTMENTS
BEAVERTON, OREGON
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1.....................................................................1
DEFINITIONS.............................................................1
ARTICLE 2.....................................................................4
PURCHASE AND SALE.......................................................4
ARTICLE 3.....................................................................5
PURCHASE PRICE; DEPOSIT; ADJUSTMENTS....................................5
ARTICLE 4.....................................................................8
PRECLOSING OPERATION....................................................8
ARTICLE 5.....................................................................9
ACCESS, INSPECTION, DILIGENCE...........................................9
ARTICLE 6....................................................................14
TITLE AND SURVEY.......................................................14
ARTICLE 7....................................................................16
CONDITIONS PRECEDENT AND CLOSING.......................................16
ARTICLE 8....................................................................21
CASUALTY AND CONDEMNATION..............................................21
ARTICLE 9....................................................................22
BROKERAGE COMMISSIONS..................................................22
ARTICLE 10...................................................................22
DEFAULT, TERMINATION AND REMEDIES......................................22
ARTICLE 11...................................................................24
REPRESENTATIONS AND WARRANTIES.........................................24
ARTICLE 12...................................................................28
MISCELLANEOUS..........................................................28
ARTICLE 13...................................................................31
IRS FORM 1099-S DESIGNATION............................................31
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A - THE LAND
EXHIBIT B - PERSONAL PROPERTY
EXHIBIT C - PROPERTY CONTRACTS
EXHIBIT D - EARNEST MONEY ESCROW INSTRUCTIONS
EXHIBIT E - RENT ROLL
EXHIBIT F - FORM OF ESCROW CLOSING INSTRUCTIONS
EXHIBIT G - LEAD-BASED PAINT DISCLOSURE
EXHIBIT H - EXISTING LOAN DOCUMENTS
EXHIBIT I - DUE DILIGENCE DOCUMENTS
SCHEDULE D - IRS 1099-S DESIGNATION AGREEMENT
<PAGE>
PURCHASE AND SALE AGREEMENT
Willow Grove Apartments
THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is entered into as of
the 3rd day of July, 1998 by and between Seller and Buyer, upon the following
terms and conditions:
WHEREAS, Seller desires to sell and Buyer desires to purchase, the
Property (hereinafter defined) on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the mutual undertakings, covenants and
agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
References in this Agreement to the following terms shall have the
following meanings:
Buyer: Balaclava Holdings Inc., a Washington corporation
- ------
Deposit: See Section 3.1
- --------
Documents: all books, records, plans, studies, site analyses,
- --------- certificates of occupancy, property tax information,
permits, existing title insurance policies, existing
surveys, existing zoning analyses, existing
engineering reports, existing code compliance reports,
building specifications, Property Contracts, Leases,
agreements or other instruments or documents contained
in Seller's files relating to the construction,
operation and maintenance of the Property.
Environmental
Requirements: All laws, ordinances, statutes, codes, rules,
- ------------ regulations, agreements, judgments, orders and decrees
now or hereafter enacted, promulgated, or amended, of
the United States, the states, the counties, the
cities or any other political subdivisions in which
the Real Property is located and any other political
subdivision, agency or instrumentality exercising
jurisdiction over the owner of the Real Property, the
Real Property or the use of the Real Property relating
to pollution, the protection or regulation of human
health, natural resources or the environment, or the
emission, discharge, release or threatened release of
pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or waste or Hazardous
Materials into the environment (including, without
limitation, ambient air, surface water, ground water
or land or soil).
Escrowed Amount: See Section 3.1
- ---------------
Existing Loan: That certain loan in the original principal amount of
- -------------- $3,600,000.00 from Lender to Seller, evidenced by the
Note and secured by the Mortgage and the Existing Loan
Documents.
Existing Loan
Documents: That certain Promissory Note (the "Note") in the
- ------------- original principal amount of $3,600,000.00, dated as
of March 14, 1995 made by Seller in favor of Lender
secured by: (y) that certain Deed of Trust,
Assignment of Rents and Leases and Security Agreement
(the "Mortgage") dated as of even date therewith
encumbering the Real Property, and (z) any and all
other documents and instruments evidencing, security
or relating to the Existing Loan from Lender to Seller
executed in connection therewith, listed on Exhibit H
---------
attached hereto and incorporated herein by reference.
Hazardous Substances: Any substance which is or contains: (i) any
- -------------------- "hazardous substance" as now or hereafter defined in
Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.) or any
regulations promulgated under CERCLA; (ii) any
"hazardous waste" as now or hereafter defined in the
Recourse Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.) or regulations promulgated under
RCRA; (iii) any substance regulated by the Toxic
Substances Control Act (15 U.S.C. Section 2601
et. seq.); (iv) gasoline, diesel fuel or other
petroleum hydrocarbons; (v) asbestos and asbestos
containing materials, in any form, whether friable or
nonfriable; (vi) polychlorinated biphenyls;
(vii) radon gas; and (viii) any additional substances
or materials which are now or hereafter classified or
considered to be hazardous or toxic under
Environmental Requirements or the common law, or any
other applicable law related to the Property.
Hazardous Materials shall include, without limitation,
any substance, the presence of which on the Real
Property: (A) requires reporting, investigation or
remediation under Environmental Requirements;
(B) causes or threatens to cause a nuisance on the Real
Property or adjacent property or poses or threatens to
pose a hazard to the health or safety of persons on
the Real Property or adjacent property; or (C) if
emanated or migrated from the Real Property, could
constitute a trespass.
Improvements: All buildings, structures and other improvements
- ------------- situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land.
Intangible Property: All of Seller's right, title and interest, if
- ------------------- any, in all intangible assets of any nature relating
to the Land, the Improvements or the Personal
Property, including, without limitation, all of
Seller's right, title and interest in all
(i) warranties and guaranties relating to the
Improvements or Personal Property in the possession of
Seller, (ii) all licenses, permits and approvals
relating to the Real Property, (iii) all logos and
trade names currently used by Seller exclusively in
the operation of the Land and Improvements, including
the use of the name Willow Grove, and (iv) all plans
and specifications, in each case to the extent that
Seller may legally transfer the same.
Land: All of the land described on Exhibit A attached
- ---- ---------
hereto, together with all privileges, rights,
easements, and appurtenances belonging to such land
and all right, title and interest (if any) of Seller
in and to any streets, alleys, passages, and other
rights-of-way or appurtenances included in, adjacent
to or used in connection with such land and all right,
title and interest (if any) of Seller in all mineral
and development rights appurtenant to such land.
Leases: All of Seller's rights in all leases and other
- ------- occupancy agreements covering any portion of the Land
or Improvements.
Lender: The Prudential Insurance Company of America, a New
Jersey corporation.
Personal Property: All furniture, carpeting, appliances, equipment,
- ----------------- machinery, inventories, supplies, signs and other
tangible personal property of every kind and nature,
if any, owned by Seller and installed, located at and
used in connection with the ownership, occupation and
operation of the Real Property, including, without
limitation, the Personal Property listed on Exhibit B
---------
attached hereto. Personal Property specifically
excludes: (i) any items of personal property owned by
tenants at or on the Real Property, and (ii) any items
of personal property owned by third parties and leased
to Seller.
Property: The Real Property, the Personal Property, the Leases,
- -------- the Tenant Deposits, the Intangible Property and the
Property Contracts known as Willow Grove Apartments,
located in Beaverton, Oregon.
Property Contracts: All of Seller's rights, if any, in the
- ------------------ contracts listed on Exhibit C attached hereto, being all
service, supply and equipment rental, management,
operating and leasing contracts affecting the Property,
to the extent that (i) Seller is entitled to transfer
the same to Buyer, and (ii) Buyer elects to assume them
in accordance with Section 4.3 below.
Purchase Price: $7,325,000.00
- ---------------
Real Property: The Land and the Improvements.
- --------------
Seller: Portland Pacific Associates Two, a Virginia
- ------ general partnership
Tenant Deposits: Seller's rights to unapplied security, damage and all
- ---------------- other refundable deposits under the Leases.
Title Company: Chicago Title Company
- -------------
ARTICLE 2
PURCHASE AND SALE
2.1 Seller hereby agrees to sell and convey the Property to Buyer and
Buyer hereby agrees to buy the Property from Seller for the Purchase Price and
otherwise subject to the covenants, provisions, terms and conditions contained
herein.
ARTICLE 3
PURCHASE PRICE; DEPOSIT; ADJUSTMENTS
3.1 Deposit. Contemporaneously with the execution and delivery of this
Agreement (and as a condition precedent to the effectiveness of this Agreement),
Buyer shall deposit immediately available funds with the Title Company
(hereinafter the "Escrow Agent") the sum of One Million and 00/100 Dollars
($1,000,000.00) (the "Deposit") to secure Buyer's obligations under this
Agreement. The Escrow Agent shall hold the Deposit in a segregated interest
bearing money market account with an FDIC insured bank reasonably acceptable to
Buyer and Seller. The Deposit and all interest accrued on the Deposit
(collectively, the "Escrowed Amount") shall be maintained by the Escrow Agent in
such account or accounts until the Escrow Agent is required to cause the
Escrowed Amount to be disbursed pursuant to the terms and conditions of this
Agreement and the Earnest Money Escrow Instructions attached hereto as Exhibit
D. The Escrowed Amount shall be applied to the Purchase Price if the Closing
occurs, as provided in Section 3.2(c) below.
3.2 Purchase Price. The Purchase Price, subject to adjustment as provided
herein, shall be as specified in Article 1 above and shall be paid on the
Closing Date (as hereinafter defined) the following manner:
(a) Buyer shall assume the payment of the existing principal balance
of the Existing Loan as of the Closing Date (the "Loan Principal
Balance"), and the payment of interest accruing thereon from and after the
Closing Date and shall agree to perform, assume and observe all
obligations of the Seller under the Existing Loan Documents evidencing,
relating to or securing the Existing Loan.
(b) Buyer shall pay to Seller in United States dollars by wire
transfer of federal funds, the Purchase Price less the Loan Principal
Balance (the "Cash Balance").
(c) The Escrowed Amount shall be applied towards the Cash Balance.
3.3 Tax Proration. All due and payable real estate taxes, all general and
special assessments on the Land and ad valorem taxes, if any, on the Personal
Property (based on the most recent ascertainable taxes) attributable to the
Property through the Closing Date shall be prorated and adjusted as of the
Closing Date. In no event shall Seller be charged with or be responsible for any
increase in the taxes on the Property resulting from the sale of the Property or
from any improvements made or leases entered into on or after the Closing Date.
If the tax statements for the fiscal year during which the Closing Date occurs
are not finally determined, then the tax figures for the immediately prior
fiscal year shall be used for the purposes of prorating taxes on the Closing
Date, provided that there shall be no further adjustment to be made after the
Closing Date. Any tax refunds or proceeds (including interest thereon) on
account of a favorable determination resulting from a challenge, protest, appeal
or similar proceeding relating to taxes and assessments relating to the Property
(i) for all tax periods occurring prior to the applicable tax period in which
the Closing occurs shall be retained by and paid exclusively to Seller and (ii)
for the applicable tax period in which the Closing occurs shall be prorated as
of the Closing Date after reimbursement to Seller and Buyer, as applicable, for
all fees, costs and expenses (including reasonable attorneys' and consultants'
fees) incurred by Seller or Buyer, as applicable, in connection with such
proceedings such that Seller shall retain and be paid that portion of such tax
refunds or proceeds as is applicable to the portion of the applicable tax period
prior to the Closing Date and Buyer shall retain and be paid that portion of
such tax refunds or proceeds as is applicable to the portion of the applicable
tax period from and after the Closing Date. Neither Seller nor Buyer shall
settle any tax protests or proceedings in which taxes for the tax period for
which the other party is responsible are being adjudicated without the consent
of such party, which consent shall not be unreasonably withheld, conditioned or
delayed. After the Closing, Buyer shall be responsible for and control any tax
protests or proceedings for any period for which taxes are adjusted between the
parties under this Agreement and for any later period. Buyer and Seller shall
cooperate in pursuit of any such proceedings and in responding to reasonable
requests of the other for information concerning the status of and otherwise
relating to such proceedings; provided, however, that neither party shall be
obligated to incur any out-of-pocket fees, costs or expenses in responding to
the requests of the other.
3.4 Contract Proration. To the extent Property Contracts are assigned and
assumed by Buyer pursuant to Section 4.3, prepaid or past due amounts under any
Property Contracts which are assigned to Buyer at Closing shall be prorated and
adjusted as of the Closing Date.
3.5 Utility Proration. To the extent reasonably feasible, the Seller shall
cause all meters for electricity, gas, water, sewer or other public utility
usage at the Property to be read as of the day immediately preceding the Closing
Date, and the Seller shall pay all charges for such utilities which have accrued
on or prior to the Closing Date; provided, however, that if and to the extent
such charges are paid directly by tenants, no such reading or payment shall be
required. If the utility companies are unable or refuse to read meters for which
payment by the Seller is required, all charges for such utilities to the extent
unpaid shall be prorated and adjusted as of the Closing Date based on the most
recent bills therefor and no further adjustment shall be made. The Seller shall
provide notice to the Buyer within five (5) days of the Closing Date setting
forth (i) whether utility meters will be read as of the Closing Date and (ii) a
copy of the most recent bill for any utility charges which are to be prorated
and adjusted as of the Closing Date.
3.6 Income and Expense Proration. Collected rents for the then current and
any future period, Tenant Deposits which have not been previously applied by
Seller, prepaid rentals, interest under the Existing Loan Documents, and all
expenses and other charges in connection with the operation of the Property
shall be apportioned and full value shall be adjusted as of the Closing Date,
and the net amount thereof, if in favor of Seller, shall be added to the
Purchase Price, or if in favor of Buyer, shall be deducted from the Purchase
Price. From and after Closing all Tenant Deposits credited to Buyer shall
thereafter be deemed transferred to Buyer and Buyer shall assume and be solely
responsible for the payments of security deposits to tenants in accordance with
the Leases and applicable law. Seller shall be entitled to retain or if
transferred to Buyer receive a credit for any utility deposits and any deposits
for third parties under any of the Property Contracts. Seller shall receive a
credit for the full amount of any escrows or reserves held by or on behalf of
Lender. Seller shall be entitled to attempt to collect all rents and other
charges which are past due but shall not be entitled to pursue eviction
proceedings in connection with such collection efforts.
3.7 Prorations Generally. A statement of prorations and other adjustments
shall be prepared by Escrow Agent in conformity with the provisions of this
Article 3 and submitted to Buyer for review and approval not less than two (2)
business days prior to the Closing Date. For purposes of making prorations,
Buyer shall be deemed to be in title to the Property and entitled to the income
from and responsible for the expenses thereof, on the Closing Date.
3.8 Closing Costs.
(a) Seller shall pay: (i) its legal fees and expenses related to the
negotiation and preparation of this Agreement and all documents required
to close the transaction contemplated hereby, (ii) 50% of the escrow fees
of the Escrow Agent, (iii) all of the transfer taxes associated transfer
of the Property, and (iv) all costs associated with title examination and
preparation of a title commitment as well as all charges and premiums for
the standard coverage component of an owner's title policy.
(b) Buyer shall pay: (i) 50% of the escrow fees of the Escrow Agent,
(ii) charges to record the deed, and evidence of Buyer's existence or
authority, (iii) Buyer's legal fees and expenses related to the
negotiation of this Agreement and all documents required to close the
transaction contemplated hereby, (iv) all costs related to the Buyer's
inspection and due diligence, including, without limitation, the cost of
appraisals, architectural, engineering, credit and environmental reports,
(v) (1) all costs associated with title examination and preparation of a
title commitment as well as all charges and premiums for a new lender's
policy or any required endorsements to the Lender's existing policy and
(2) the portion of any premium applicable to extended coverage component
of an owner's policy, (vi) all costs and expenses allocable to any changes
or additions to the updated survey that Seller is providing to Buyer
pursuant to Section 6.1 (such costs and expenses shall not include those
incurred by Seller as of the date of this Agreement in preparation and
delivery of the updated survey), (vii) all costs and expenses in
connection with the assumption of the Existing Loan (including, but not
limited to the application fee, the assumption fee, title costs and legal
costs), and (viii) 100% of the transfer fees associated with the
assumption of the Existing Loan Documents, if any.
(c) All other closing costs shall be paid by Seller or Buyer in
accordance with the custom in the jurisdiction where the Property is
located.
ARTICLE 4
PRECLOSING OPERATION
4.1 Leases. A rent roll (the "Rent Roll") containing a list of all
occupants of the Property pursuant to the Leases as of the date hereof is
attached hereto as Exhibit E. During the pendency of this Agreement, Seller may
enter into Leases with new tenants or modifications of Leases with existing
tenants substantially in accordance with Seller's existing leasing practices,
provided that in all events any new or modified Leases shall (i) be at market
rent as reasonably determined by Seller, (ii) be for a term of not more than one
(1) year, and (iii) on the Seller's current standard form of lease.
4.2 Conduct of Business. At all times prior to Closing, Seller shall
continue (a) to conduct business with respect to the Property in the same manner
in which said business has been heretofore conducted, (b) to insure the Property
substantially as currently insured, and (c) maintain the Property in its current
condition, reasonable wear and tear and damage by casualty excepted, including
ordinary preparation for occupancy of residential units vacated prior to
Closing.
4.3 Property Contracts. Seller shall make copies of all Property Contracts
available for Buyer to review promptly after the date hereof. On or before the
Diligence Date (as defined below), Buyer shall provide written notice to Seller
of the Property Contracts that Buyer desires to assume, and Seller will
terminate all other Property Contracts at or before Closing, provided that such
Property Contracts may be terminated without cost or liability to Seller and if
there is cost or liability to Seller, Buyer shall be responsible for any such
liability. At Closing, Seller shall assign and Buyer shall assume the Property
Contracts, except those Property Contracts which Seller is required to terminate
pursuant to this Section 4.3. Buyer and Seller shall indemnify, defend and hold
the other harmless from and against any and all claims under the Property
Contracts which relate to its respective period of ownership. Notwithstanding
the foregoing, Seller's existing management contract and exclusive brokerage
contract for the Property shall be terminated by Seller effective as of the
Closing Date.
ARTICLE 5
ACCESS, INSPECTION, DILIGENCE
5.1 Access/Purchaser's Responsibilities/Purchaser's Indemnity.
(a) From the date hereof through the Diligence Date (hereinafter
defined), Seller agrees that Buyer and its authorized agents or
representatives shall be entitled to enter upon the Real Property during
normal business hours upon advance written notice to Seller and make such
reasonable, nondestructive investigations, studies and tests including,
without limitation, surveys and engineering studies as Buyer deems
necessary or advisable, provided, however, that Buyer shall not be
permitted to conduct physical testing without Seller's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Seller's prior written consent for physical inspections or
testing may be conditioned upon receipt of a detailed description of the
proposed physical inspection or testing, a list of contractors who will be
performing the physical inspection or testing, evidence of insurance
satisfactory to Seller, and such other information as Seller reasonably
requires in connection with such proposed inspection or testing. Seller
also agrees to make all Documents available to Buyer or Buyer's agents
during normal business hours for review and copying at Buyer's expense
upon advance written notice to Seller from the date hereof through the
Diligence Date.
(b) Buyer agrees that in conducting any inspections, investigations
or tests of the Property and/or the Documents, Buyer and its agents and
representatives shall (i) not unreasonably interfere with the operation
and maintenance of the Property, (ii) not unreasonably disturb the tenants
under the Leases or unreasonably interfere with their use of the Property
pursuant to their respective Leases, (iii) not damage any part of the
Property or any personal property owned or held by any tenant or third
party, (iv) not injure or otherwise cause bodily harm to Seller, the
property manager, or their respective guests, agents, invitees,
contractors and employees or any tenant or their guests or invitees, (v)
maintain comprehensive general liability insurance in terms and amounts
reasonably acceptable to Seller covering any accident arising in
connection with the presence of Buyer, its agents and representatives on
the Property, and deliver a certificate of insurance verifying such
coverage to Seller prior to entry upon the Property; (vi) promptly pay
when due the costs of all tests, investigations and examinations done with
regard to the Property; (vii) not permit any liens to attach to the Real
Property by reason of the exercise of Buyer's rights hereunder, (viii)
fully restore the Property to the condition in which the same was found
before any such inspection or tests were undertaken; and (ix) not reveal
or disclose any information obtained during the due diligence period
concerning the Property and the Documents to anyone outside Buyer's
organization, except in accordance with the confidentiality standards set
forth in Section 5.5 herein.
(c) Buyer will indemnify, defend, and hold Seller and its property
manager harmless from all losses, costs, liens, claims, causes of action,
liability, damages and out-of pocket expenses, including, without
limitation, reasonable attorneys' fees incurred by Seller as a result of
the entry upon or inspections, tests or investigations of the Property
conducted by or on behalf of Buyer. This indemnity obligation of Buyer
shall survive the termination of this Agreement for any reason.
(d) Buyer acknowledges and agrees that the Documents are provided to
Buyer for informational purposes only and do not constitute
representations or warranties of Seller or its agents, employees or
representatives of any kind as to the truth, accuracy or completeness of
the Documents or the source(s) thereof. Seller has not undertaken any
independent investigation as to the truth, accuracy or completeness of the
Documents, and is providing the Documents solely as an accommodation to
Buyer.
5.2 Diligence. Subject to Section 5.1, above, Buyer shall promptly
commence and actively pursue a program of due diligence which may at Buyer's
option include the following due diligence items:
(a) Review title and survey matters;
(b) Review Property Contracts;
(c) Obtain and review engineering reports;
(d) Obtain and review environmental reports on oil, hazardous waste,
and asbestos;
(e) Review applicable zoning and other land use controls, and other
permits, licenses, permissions, approvals and consents;
(f) Review all Leases affecting the Property; and
(g) Review the Existing Loan Documents.
Buyer shall complete its due diligence on or before the date which is
thirty (30) days from the date hereof (the "Diligence Date"). Notwithstanding
any other term or provision herein to the contrary, in the event that Buyer, in
Buyer's sole discretion, has not delivered a written notice to Seller on or
before the Diligence Date of Buyer's intent to proceed with this purchase (the
"Diligence Notice"), this Agreement shall automatically terminate, the Escrow
Agent shall return the Escrowed Amount to the Buyer and this Agreement shall be
null and void without recourse to either party hereto (except to the extent such
recourse arises in connection with a provision of this Agreement which is
intended to survive termination). The parties acknowledge and agree that such
Diligence Notice may be delivered to the Escrow Agent. If Buyer delivers Seller
the Diligence Notice to Seller as specified above, the Escrowed Amount shall
become nonrefundable and shall either be (a) applied to the Purchase Price as
provided in Section 3.2, or (b) in any event specifically contemplated herein,
disbursed to either Buyer or Seller according to the applicable terms hereof.
BUYER ACKNOWLEDGES THAT, PURSUANT TO THE TERMS OF THIS AGREEMENT, BUYER SHALL BE
AFFORDED A FULL OPPORTUNITY TO INSPECT THE PROPERTY, OBSERVE ITS PHYSICAL
CHARACTERISTICS AND EXISTING CONDITIONS AND CONDUCT SUCH INVESTIGATIONS AND
STUDIES ON AND OF SAID PROPERTY AS IT DEEMS NECESSARY AND THAT, UNLESS THIS
AGREEMENT IS TERMINATED PURSUANT TO THIS SECTION 5.2 BUYER SHALL BE DEEMED TO
HAVE WAIVED ON THE DILIGENCE DATE ANY AND ALL OBJECTIONS TO OR COMPLAINTS
REGARDING (INCLUDING, BUT NOT LIMITED TO, FEDERAL, STATE OR COMMON LAW BASED
ACTIONS AND ANY PRIVATE RIGHT OF ACTION UNDER STATE AND FEDERAL LAW TO WHICH THE
PROPERTY IS OR MAY BE SUBJECT, INCLUDING BUT NOT LIMITED TO, CERCLA AND RCRA)
PHYSICAL CHARACTERISTICS AND EXISTING CONDITIONS, INCLUDING, WITHOUT LIMITATION,
STRUCTURAL AND GEOLOGIC CONDITIONS, SUBSURFACE SOIL AND WATER CONDITIONS AND
SOLID AND HAZARDOUS WASTE AND HAZARDOUS SUBSTANCES ON, UNDER, ADJACENT TO OR
OTHERWISE AFFECTING THE PROPERTY. BUYER FURTHER HEREBY ASSUMES THE RISK OF
CHANGES IN APPLICABLE LAWS AND REGULATIONS RELATING TO PAST, PRESENT AND FUTURE
ENVIRONMENTAL CONDITIONS ON THE PROPERTY AND THE RISK THAT ADVERSE PHYSICAL
CHARACTERISTICS AND CONDITIONS, INCLUDING, WITHOUT LIMITATION, THE PRESENCE OF
HAZARDOUS SUBSTANCES OR OTHER CONTAMINANTS, MAY NOT HAVE BEEN REVEALED BY ITS
INVESTIGATION.
5.3 Copies of Reports/Return of Documents.
(a) As additional consideration for the transaction contemplated
herein, Buyer shall promptly deliver to Seller copies of any and all
reports, tests or studies involving structural or geologic conditions,
environmental, hazardous waste or Hazardous Substances contamination of
the Property and all other materials obtained in connection with Buyer's
diligence, which reports, tests and studies shall be addressed to both
Buyer and Seller at no cost to Seller, provided, however, that Buyer shall
have no obligation to cause any such tests or studies to be performed on
the Property. If such reports, tests or studies indicate the existence or
reasonable potential existence of any environmental, hazardous waste or
Hazardous Substance contamination of any portion of the Property, Seller
may terminate this Agreement by giving written notice to Buyer within ten
(10) business days after Buyer provides Seller with copies of such
reports, tests or studies. Upon such termination, in accordance with
paragraphs (b) and (c) below, the Escrowed Amount shall be promptly
returned to Buyer and neither Buyer nor Seller shall have any further
obligation or liability to the other hereunder, except those obligations
arising under provisions of this Agreement which are expressly intended to
survive termination.
(b) If this Agreement is terminated for any reason whatsoever, Buyer
shall promptly deliver to Seller or Broker those Documents delivered to
Buyer or Buyer's agents, representatives or designees by Seller or
Seller's agents, representatives or employees pursuant to this Agreement
as listed on Exhibit I, attached hereto, or on any supplement to Exhibit I
acknowledged by Buyer.
(c) The return of $50,000.00 of the Escrowed Amount to Buyer under
this Agreement shall be contingent upon Buyer's fulfillment of its
obligations under Section 5.3(a) and (b).
5.4 Confidentiality. Buyer acknowledges and agrees that any and all of the
Documents are proprietary and confidential in nature and will be delivered to
Buyer solely to assist Buyer in determining the feasibility of purchasing the
Property. Further, each party hereto agrees to maintain in confidence, and not
to discuss with or to disclose to any person or entity who is not a party to
this Agreement, any material term of this Agreement or any aspect of the
transactions contemplated hereby, except as provided in this Section. Seller may
publicly disclose the existence of this Agreement provided that the identity of
Buyer is not disclosed. Buyer shall not disclose to anyone other than its
partners and financiers the Documents and/or any information disclosed by Seller
to Buyer which is not generally known by the public regarding Seller's
operations and/or the Property. Each party hereto may discuss with and disclose
to its accountants, attorneys, existing or prospective lenders, investment
bankers, underwriters, rating agencies, partners, consultants and other advisors
to the extent such parties reasonably need to know such information and are
bound by a confidentiality obligation identical in all material respects to the
one created by this Section. Additionally, each party may discuss and disclose
such matters to the extent necessary to comply with any requirements of the
Securities and Exchange Commission or in order to comply with any law or
interpretation thereof or court order. This provision shall survive termination
of this Agreement but shall terminate upon the Closing. Any press release to be
made regarding any matter which is the subject of the confidentiality obligation
created in this Section shall be subject to the reasonable approval of Buyer and
the Seller, respectively both as to timing and content.
5.5 Buyer's Acknowledgment. BUYER ACKNOWLEDGES THAT AS OF THE DILIGENCE
DATE IT HAS HAD AN OPPORTUNITY TO CONDUCT DILIGENCE ON THE PROPERTY AND IS
ACQUIRING THE PROPERTY IN ITS CURRENT CONDITION BASED ON ITS DILIGENCE. BUYER
FURTHER ACKNOWLEDGES THAT NEITHER SELLER NOR ITS EMPLOYEES, AGENTS OR
REPRESENTATIVES HAVE MADE ANY REPRESENTATION OR WARRANTY AS TO THE CONDITION OF
THE PROPERTY OR THE PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS ON, IN, UNDER
OR WITHIN THE PROPERTY OR A PORTION THEREOF WHICH SURVIVE CLOSING HEREUNDER. THE
BUYER ACKNOWLEDGES AND AGREES THAT THE PROPERTY IS TO BE CONVEYED BY THE SELLER
TO THE BUYER "AS IS," "WITH ALL FAULTS," AND SUBSTANTIALLY IN ITS CURRENT
CONDITION. THE BUYER FURTHER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY
CONTAINED HEREIN, NEITHER THE SELLER NOR ANY AGENT, EMPLOYEE OR OTHER
REPRESENTATIVE OF THE SELLER (OR PURPORTED AGENT, EMPLOYEE OR OTHER
REPRESENTATIVE OF THE SELLER) HAS MADE ANY GUARANTEE, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED (AND THE SELLER SHALL NOT HAVE ANY LIABILITY
WHATSOEVER) AS TO THE VALUE, USES, HABITABILITY, CONDITION, DESIGN, OPERATION,
FINANCIAL CONDITION OR PROSPECTS, OR FITNESS FOR PURPOSE OR USE OF THE PROPERTY
(OR ANY PART THEREOF) OR ANY OTHER GUARANTEE, REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY (OR ANY PART
THEREOF) OR INFORMATION SUPPLIED TO BUYER WITH RESPECT THERETO. FURTHER, THE
SELLER SHALL HAVE NO LIABILITY FOR ANY LATENT, HIDDEN, OR PATENT DEFECT AS TO
THE PROPERTY OR THE FAILURE OF THE PROPERTY, OR ANY PART THEREOF, TO COMPLY WITH
ANY APPLICABLE LAWS AND REGULATIONS. IN PARTICULAR, THE BUYER ACKNOWLEDGES AND
AGREES THAT ANY INFORMATION PROVIDED TO BUYER BY SELLER WITH RESPECT TO THE
PROPERTY UNDER THIS AGREEMENT (AND ANY OTHER INFORMATION THE BUYER MAY HAVE
OBTAINED REGARDING IN ANY WAY ANY OF THE PROPERTY, INCLUDING WITHOUT LIMITATION,
ITS OPERATIONS OR ITS FINANCIAL HISTORY OR PROSPECTS FROM THE SELLER OR ITS
AGENTS, EMPLOYEES OR OTHER REPRESENTATIVES) IS DELIVERED TO THE BUYER AS A
COURTESY, WITHOUT REPRESENTATION OR WARRANTY AS TO ITS ACCURACY OR COMPLETENESS,
AND NOT AS AN INDUCEMENT TO ACQUIRE THE PROPERTY; THAT NOTHING CONTAINED IN SUCH
DELIVERIES SHALL CONSTITUTE OR BE DEEMED TO BE A GUARANTEE, REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, IN ANY REGARD AS TO ANY OF THE PROPERTY (EXCEPT AS
EXPRESSLY PROVIDED HEREIN); AND THAT THE BUYER IS RELYING ONLY UPON THE
PROVISIONS OF THIS AGREEMENT AND ITS OWN INDEPENDENT ASSESSMENT OF THE PROPERTY
AND ITS PROSPECTS IN DETERMINING WHETHER TO ACQUIRE THE PROPERTY. THE PROVISIONS
OF THIS PARAGRAPH SHALL SURVIVE CLOSING.
5.6 Buyer' Release of Seller. SELLER AND ITS PROPERTY MANAGER ARE HEREBY
RELEASED FROM ALL RESPONSIBILITY AND LIABILITY REGARDING THE CONDITION
(INCLUDING THE PRESENCE IN THE SOIL, AIR, STRUCTURES AND SURFACE AND SUBSURFACE
WATERS, OF MATERIALS OR SUBSTANCES THAT HAVE BEEN OR MAY BE IN THE FUTURE
DETERMINED TO BE TOXIC, HAZARDOUS, UNDESIRABLE OR SUBJECT TO REGULATION AND THAT
MAY NEED TO BE SPECIALLY TREATED, HANDLED AND/OR REMOVED FROM THE PROPERTY UNDER
CURRENT OR FUTURE FEDERAL, STATE AND LOCAL LAWS, REGULATIONS OR GUIDELINES),
VALUATION, SALABILITY OR UTILITY OF THE PROPERTY, OR ITS SUITABILITY FOR ANY
PURPOSE WHATSOEVER. BUYER ACKNOWLEDGES THAT ANY INFORMATION OF ANY TYPE WHICH
BUYER HAS RECEIVED OR MAY RECEIVE FROM SELLER, ITS PROPERTY MANAGER OR THEIR
RESPECTIVE AGENTS, INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL REPORTS AND
SURVEYS, IS FURNISHED ON THE EXPRESS CONDITION THAT BUYER SHALL MAKE AN
INDEPENDENT VERIFICATION OF THE ACCURACY OF SUCH INFORMATION, ALL SUCH
INFORMATION BEING FURNISHED WITHOUT ANY WARRANTY WHATSOEVER.
ARTICLE 6
TITLE AND SURVEY
6.1 Title and Survey. Promptly following the execution of this Agreement,
Buyer shall obtain a commitment for an ALTA Owner's Policy of Title Insurance
from the Escrow Agent (the "Title Commitment"). Buyer shall cause a copy of the
completed Title Commitment to be forwarded to Seller. Seller shall deliver to
Buyer an update of Seller's survey (the "Survey") upon execution of this
Agreement.
If the Survey or matters listed as exceptions in the Title Commitment are
not satisfactory to Buyer, Buyer shall, ten (10) business days before the
Diligence Date, provide Seller with written notice of such objections (the
"Title Objections"). Seller, at its sole cost and expense shall have the right,
but not the obligation, to cure or remove any Title Objections and shall give
Buyer written notice on or before five (5) business days prior to the Diligence
Date, identifying those Title Objections, if any, that Seller agrees to use
reasonable efforts to cure; provided, however, that Seller shall not be
obligated to incur any costs or expenses in excess of $10,000 in connection with
any such cure undertaken by Seller. If there are Title Objections which Seller
is unable or unwilling to cure by the Diligence Date, Buyer may terminate this
Agreement as provided in Section 5.2, above or waive such objections which
Seller is not willing or able to cure and proceed to closing. Those exceptions
or title deficiencies which (i) Buyer does not object to pursuant to this
Section 6.1 or (ii) are waived because Seller is unwilling or unable to cure
shall be the "Permitted Exceptions."
6.2 Deed. On the Closing Date, Seller shall convey by good and sufficient
statutory warranty deed to Buyer good and clear record and marketable fee simple
title to all of the Real Property free and clear of all liens, encumbrances,
conditions, easements, assessments, restrictions and other conditions, except
for the following:
(a) All Leases;
(b) All zoning, building and other laws applicable to the Property;
(c) All matters which arise after the Diligence Date which are
agreed upon or consented to by Buyer in writing;
(d) The lien, if any, for real estate taxes for current year not due
and payable prior to the Closing Date (subject to proration in accordance
with Section 3.3 herein);
(e) All matters shown of public record as of the effective date of
the Title Commitment;
(f) The Permitted Exceptions;
(g) Any matters shown on the Survey;
(h) All matters, whether or not of record, to the extent caused by
Buyer or its agents, representatives or contractors; and
(i) The Existing Loan Documents.
6.3 Lease Assignment. At the Closing, Seller shall assign the Leases to
Buyer and Buyer shall assume Seller's obligations thereunder and Seller
shall convey the Personal Property to Buyer by quitclaim bill of sale.
6.4 Existing Loan.
(a) The obligations of Seller under this Agreement are contingent
and conditioned upon the following:
i. Lender's approval of the assignment to Buyer of the
Existing Loan; and
ii. Receipt by Seller from Lender at Closing of a release of
all of its obligations as borrower under the Loan
Documents, including, without limitation, a release by
Lender of Seller from its obligations under the
Hazardous Substances Remediation and Indemnification
Agreement listed on Exhibit H.
(b) Within three (3) days of the date hereof, Seller shall provide
Buyer with a true, correct and complete copy of all Loan Documents
executed in connection with the Existing Loan, which documents are listed
on Exhibit H attached hereto.
(c) Buyer and Seller agree to diligently pursue an application to
the Lender for its consent to the assignment and assumption of the
Existing Loan to Buyer and the full release of Seller under the Existing
Loan until Lender grants its approval of the assignment and assumption of
the Existing Loan to Buyer, including, but not limited to, timely
submission of all materials requested by Lender and/or those documents
required to be submitted to Lender pursuant to the applicable provisions
of the Loan Documents.
(d) Buyer shall pay all fees and costs, if any, charged by the
Lender relating to the assignment and assumption of the Existing Loan.
(e) Buyer and Seller agree to cooperate with Buyer's efforts to
obtain Lender's consent. Subject to the other provisions of this
Agreement, Buyer and Seller each agree to execute and deliver any and all
documents or instruments or take such other action as may be necessary or
proper to effectuate, confirm, perform or carry out the assignment and
assumption of the Existing Loan.
ARTICLE 7
CONDITIONS PRECEDENT AND CLOSING
7.1 Buyer's Conditions Precedent. In addition to any other conditions
precedent in favor of Buyer as may be set forth elsewhere in this Agreement,
Buyer's obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.1 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may be
waived in whole or in part only by written notice of such waiver from Buyer to
Seller.
(a) Seller performing and complying in all material respects with
all of the terms of this Agreement to be performed and complied with by
Seller prior to or at the Closing; and
(b) Satisfaction in full of the requirements of Section 6.4 with
respect to the Existing Loan.
Notwithstanding the foregoing, if the conditions set forth in Section
7.1(b) shall not have been fulfilled on or before the Closing Date, Buyer shall
have the right (in its sole discretion), exercisable by written notice to Seller
at or before the Closing, to extend the Diligence Date and the Closing Date for
a period of up to ten (10) business days to provide additional time for the
fulfillment of the conditions in Section 7.1(b). Upon any such extension, the
term "Closing Date" as used herein shall mean the date set forth in such written
notice from Seller. If Buyer's conditions as set forth in this Section 7.1 have
not been met as of the Closing Date (as the same may be extended as aforesaid)
then Buyer shall have the right to terminate this Agreement by written notice to
Seller, and upon receipt of such notice Seller shall direct the Escrow Agent to
return the Escrowed Amount to Buyer and this Agreement shall thereupon terminate
and be of no further force or effect.
7.2 Seller's Conditions Precedent. In addition to any other conditions
precedent in favor of Seller as may be set forth elsewhere in this Agreement,
Seller's obligations under this Agreement are expressly subject to the timely
fulfillment of the conditions set forth in this Section 7.2 on or before the
Closing Date, or such earlier date as is set forth below. Each condition may be
waived in whole or part only by written notice of such waiver from Seller to
Buyer.
(a) Buyer performing and complying in all material respects with all
of the terms of this Agreement to be performed and complied with by Buyer
prior to or at the Closing, including, without limitation, payment by the
Buyer of the Purchase Price (as adjusted as otherwise provided herein).
(b) On the Closing Date, all of the representations of Buyer set
forth in this Agreement shall continue to be true, accurate and complete.
(c) Satisfaction of the requirements of Section 6.4 with respect to
the Existing Loan.
(d) The release by Lender of Seller from any and all obligations and
liability under the Existing Loan Documents and the form of the assumption
and release documents being satisfactory to Seller in its sole, but
reasonable discretion.
Notwithstanding the foregoing, if the conditions set forth in Sections
7.2(c) or 7.2(d) shall not have been fulfilled on or before the Closing Date,
Seller shall have the right (in its sole discretion), exercisable by written
notice to Buyer at or before the Closing, to extend the Diligence Date and the
Closing Date for a period of up to ten (10) days to provide additional time for
the fulfillment of the conditions in Section 7.2(c) or 7.2(d). Upon any such
extension, the term "Closing Date" as used herein shall mean the date set forth
in such written notice from Seller. If Seller's conditions as set forth in
Sections 7.2 have not been met as of the Closing Date (as the same may be
extended as aforesaid) then Seller shall have the right to terminate this
Agreement by written notice to Buyer, and shall direct the Escrow Agent to
return the Escrowed Amount to Buyer and this Agreement shall thereupon terminate
and be of no further force or effect.
7.3 Closing Date. Subject to Seller's and Buyer's right to extend the
Closing Date as provided in Section 7.1 and Section 7.2, the consummation of the
purchase and sale contemplated in this Agreement (the "Closing") shall occur
through an escrow closing arrangement as substantially described in Exhibit F
attached hereto on the Diligence Date (the "Closing Date"), at the office of the
Escrow Agent or through the escrow closing arrangements set forth in the Form of
Escrow Closing Instructions attached hereto as Exhibit F. The parties agree that
they will make such amendments or supplements to the Closing Escrow Instructions
by mutual agreement as may be reasonably requested by either party's counsel. It
is agreed that time is of the essence in this Agreement.
7.4 Closing Deliveries. On the Closing Date, Seller shall deliver or
cause to be delivered:
(a) A duly executed and acknowledged statutory warranty deed
conveying the Land and the Improvements to Buyer;
(b) A duly executed quitclaim bill of sale and general assignment
conveying the Personal Property and the Intangible Property to Buyer;
(c) A duly executed assignment and assumption of the Leases and
Tenant Deposits (the "Assignment of Leases");
(d) A duly executed assignment and assumption of Property Contracts
being assumed (the "Assignment of Contracts");
(e) A certificate or certificates of non-foreign status from Seller;
(f) Customary affidavits sufficient for the Escrow Agent to delete
any exceptions for mechanic's or materialmen's liens and parties in
possession from Buyer's title policy and such other affidavits relating to
such title policy as the Escrow Agent may reasonably request;
(g) An updated Rent Roll (including a list of all delinquent and
prepaid rents) certified by the Seller as true and correct as of the
Closing Date;
(h) Such other instruments as Buyer, Lender or the Escrow Agent may
reasonably request to effectuate the transactions contemplated by this
Agreement;
(i) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of the Purchase Price as adjusted;
(j) Evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Seller to sell the
Property and the authority of the person or persons executing the various
documents on behalf of Seller in connection with the sale of the Property;
(k) Originals, or where unavailable, copies of all Property
Contracts, Leases (with all amendments and modifications thereto),
operating information, permits, warranties and financial information about
the Property in Seller's possession or control relating to the Property;
(l) All keys to all locks on the Property and similar items, to the
extent in Seller's possession; and
(m) An indemnity pursuant to Section 4.3 with respect to each
Property Contract; and
(n) The following documents with respect to the assignment and
assumption of the Existing Loan to the extent such documents require
Seller's execution:
(i) Assignment and Assumption of the Mortgage;
(ii) Assignment of Assignment of Leases and Rents;
(iii) UCC-3 Assignments of Financing Statements; and
(iv) Written approval of Lender to the assignment to Buyer of
the Existing Loan to Buyer.
7.5 Buyer's Deliveries. On the Closing Date, Buyer shall deliver or cause
to be delivered at its expense each of the following:
(a) The Purchase Price for the Property, as such Purchase Price may
have been adjusted pursuant to the provisions of this Agreement and
credited for any portion of the Escrowed Amount paid to Seller, in the
manner provided for in Article 3;
(b) Evidence in form and substance reasonably satisfactory to Escrow
Agent and Seller of Buyer's authority to purchase the Property;
(c) The Assignment of Leases;
(d) The Assignment of Contracts;
(e) Duly executed assumption agreement regarding the Existing Loan
Documents and such other instruments as Lender may require in connection
with and to evidence the assumption of the Existing Loan Documents by
Buyer;
(f) Such other instruments as Seller or Escrow Agent may reasonably
request to effectuate the transactions contemplated by this Agreement;
(g) A duly executed counterpart original of the closing statement
setting forth the Purchase Price, the closing adjustments and the
application of such amounts;
(h) Such evidence or documents as may reasonably be required by the
Escrow Agent evidencing the status and capacity of Buyer and the authority
of the person or persons who are executing the various documents on behalf
of Buyer in connection with the purchase of the Property;
(i) Acknowledgment by Buyer of Buyer's receipt from Seller of the
Tenant Deposits;
(j) An indemnity pursuant to Section 4.3 of this Agreement with
respect to each Property Contract;
(k) The following documents with respect to the assignment and
assumption of the Existing Loan to the extent such documents require
Buyer's execution:
(i) Written approval of Lender to the assignment to Buyer
of the Existing Loan;
(ii) Assignment and Assumption of the Mortgage;
(iii) Assignment of Assignment of Leases and Rents;
(iv) UCC-3 Assignments of Financing Statements; and
(v) Release of Seller's obligations under the Loan Documents
(hereinafter defined), including, without limitation, a release of
Seller from its obligations pursuant to the Hazardous Substance
Remediation and Indemnification Agreement executed in connection
with the Existing Loan, all in forms reasonably satisfactory to
Seller and Buyer; and
(vi) Such other documents as may be reasonably requested by
Lender in connection with the assignment of the Existing Loan to
Purchaser and the assumption of the obligations under the Existing
Loan by Purchaser, including, without limitation, an Environmental
Indemnity Agreement; and
(l) Executed counterparts of any other documents listed in Section
7.4 required to be signed by Buyer;
7.6 Possession. Possession of the Property shall be delivered to Buyer by
Seller at the Closing, subject only to those items listed in Section 6.2 of this
Agreement and rights arising under any Property Contracts assumed by Buyer
pursuant to Section 4.3. Seller and Buyer covenant and agree to execute, at
Closing, a written notice of the acquisition of the Property by Buyer, for
duplication and transmittal to all tenants affected by the sale and purchase of
the Property (or otherwise in such manner as will comply with applicable law
respecting notification of tenants). Such notice shall be prepared by Buyer and
approved by Seller, shall notify the tenants of the sale and transfer and shall
contain appropriate instructions relating to the payment of future rentals, the
giving of future notices, and other matters reasonably required by Buyer or
required by law. Unless a different procedure is required by applicable law, in
which event such laws shall be controlling, Buyer agrees to transmit or
otherwise deliver such letters to the tenants promptly after the Closing.
ARTICLE 8
CASUALTY AND CONDEMNATION
8.1 Casualty. If the Improvements are materially damaged by fire or any
other casualty and are not substantially restored to the condition immediately
prior to such casualty before the Closing Date, Buyer shall have the following
elections:
(a) to purchase the Property in its then condition and pay the
Purchase Price, in which event Seller shall pay over or assign to Buyer as
the case may be, on the Closing Date, amounts recovered or recoverable by
Seller on account of any insurance as a result of such casualty up to the
amount of the Purchase Price, less any amounts reasonably expended by
Seller for partial restoration; or
(b) if any portion of the Improvements suffers damage in excess of
$300,000 from fire or any other casualty which Seller, in its sole option,
elects not to repair, to terminate this Agreement by giving notice of
termination to Seller on or before that date which is thirty (30) days
after the occurrence of the fire or other casualty or on the Closing Date,
whichever occurs first, in which event the Escrow Agent shall return the
Escrowed Amount to Buyer, this Agreement shall terminate and neither
Seller nor Buyer shall have any recourse against the other (except to the
extent such recourse arises in connection with a provision of this
Agreement which is intended to survive termination).
8.2 Condemnation. If any substantial portion of or interest in the
Property shall be taken or is in the process of being taken by exercise of the
power of eminent domain or if any governmental authority notifies Seller prior
to the Closing Date of its intent to take or acquire any portion of or interest
in the Property (each an "Eminent Domain Taking"), Seller shall give notice
promptly to Buyer of such event and Buyer shall have the option to terminate
this Agreement by providing notice to Seller to such effect on or before the
date which is ten (10) days from Seller's notice to Buyer of such Eminent Domain
Taking or on the Closing Date, whichever occurs first, in which event the Escrow
Agent shall return the Escrowed Amount to Buyer, this Agreement shall terminate,
and neither Seller nor Buyer shall have any recourse against the other (except
to the extent such recourse arises in connection with a provision of this
Agreement which is intended to survive termination). If Buyer does not timely
notify Seller of its election to terminate this Agreement, Buyer shall purchase
the Property and pay the Purchase Price, and Seller shall pay over or assign to
Buyer on delivery of the deed awards recovered or recoverable by Seller on
account of such Eminent Domain Taking up to the amount of the Purchase Price,
less any amounts reasonably expended by Seller in obtaining such award.
ARTICLE 9
BROKERAGE COMMISSIONS
Seller and Buyer each mutually represent and warrant to the other that
they have not dealt with, and are not obligated to pay, any fees or commissions
to any broker in connection with the transaction contemplated by this Agreement
other than Marcus & Millichap Real Estate Investment Brokerage Company (the
"Broker"). Seller agrees to pay all commissions, payments and fees due to the
Broker at the Closing. Buyer agrees to indemnify, defend and hold Seller
harmless from and against all loss, liabilities, costs, damages and expenses
(including reasonable attorneys' fees) arising from any claims for brokerage or
finder's fees, commissions or other similar fees in connection with the
transaction covered by this Agreement insofar as such claims shall be based upon
alleged arrangements or agreements made by Buyer or on Buyer's behalf. Seller
hereby agrees to indemnify, defend and hold Buyer harmless from and against all
loss, liabilities, costs, damages and expenses (including reasonable attorneys'
fees) arising from any claims for brokerage or finders' fees, commissions or
other similar fees, including any claim made by the Broker, in connection with
the transaction covered by this Agreement as such claims shall be based upon
alleged arrangements or agreements made by Seller or on Seller's behalf. The
covenants and agreements contained in this Article shall survive the termination
of this Agreement or the Closing of the transaction contemplated hereunder.
ARTICLE 10
DEFAULT, TERMINATION AND REMEDIES
10.1 Seller's Default. In the event that Seller shall have failed in any
material respect adverse to Buyer as of the Closing Date to have performed any
of the covenants and agreements contained in this Agreement which are to be
performed by Seller on or before the Closing Date or Seller defaults in its
obligations to close hereunder, Buyer shall have the right to terminate this
Agreement and receive (a) the Escrowed Amount and (b) reimbursement for actual
costs incurred by Buyer in conducting its due diligence pursuant to this
Agreement in a total amount not to exceed $35,000.00, whereupon this Agreement
shall terminate without further recourse. Buyer hereby waives and relinquishes
any right to sue Seller for any reason whatsoever, and agrees that Seller shall
not be liable to Buyer for any actual, punitive, speculative, consequential or
other damages for breach by Seller prior to the Closing, except for payment of
the Escrowed Amount and reimbursement as specified above. IN NO EVENT SHALL
SELLER, ITS DIRECT OR INDIRECT PARTNERS, SHAREHOLDERS, OWNERS OR AFFILIATES, ANY
OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF THE FOREGOING, OR ANY AFFILIATE OR
CONTROLLING PERSON THEREOF, HAVE ANY LIABILITY BEYOND ITS INTEREST IN THE
PROPERTY FOR ANY CLAIM, CAUSE OF ACTION OR OTHER LIABILITY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE PROPERTY, WHETHER BASED ON COMMON LAW,
CONTRACT, STATUTE, EQUITY OR OTHERWISE.
10.2 Buyer's Default. In the event that Buyer shall have failed in any
material respect adverse to Seller as of the Closing Date to have performed any
of the covenants and agreements contained in this Agreement which are to be
performed by Buyer on or before the Closing Date, or if Buyer defaults in its
obligation to close hereunder, Seller shall be entitled to receive the Escrowed
Amount as liquidated damages, in lieu of all other remedies available to Seller
at law or in equity for such default, and Buyer shall direct the Escrow Agent to
release the Escrowed Amount to Seller. Seller and Buyer agree that the damages
resulting to Seller as a result of such default by Buyer as of the date of this
Agreement are difficult or impossible to ascertain and the liquidated damages
set forth in the preceding sentence constitute Buyer's and Seller's reasonable
estimate of such damages. Notwithstanding the foregoing, in the event of Buyer's
default or a termination of this Agreement, Seller shall have all remedies
available at law or in equity in the event Buyer or any party related to or
affiliated with Buyer asserts any claims or rights to the Property that would
otherwise delay or prevent Seller from having clear, indefeasible and marketable
title to the Property.
10.3 Indemnity. Buyer agrees to indemnify, hold harmless and defend Seller
from and against any and all claims, demands, causes of action, loss,
liabilities, damages, costs and expenses (including reasonable attorneys' fees
and court costs) of every kind and character asserted against or incurred by
Seller at any time and from time to time by reason of or arising as a result of
the ownership, occupancy, operation, use, and/or maintenance of the Property by
Buyer for the period from and after the Closing Date. Seller agrees to
indemnify, hold harmless and defend Buyer from and against any and all claims,
demands, causes of action, loss, liabilities, damages, costs and expenses
(including reasonable attorneys' fees and court costs) of every kind and
character asserted against or incurred by Buyer at any time and from time to
time by reason of or arising as a result of the ownership, occupancy, operation,
use, and/or maintenance of the Property by Seller for the period prior to the
Closing Date. The provisions of this Section 10.3 shall survive the Closing.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 Buyer's Representations and Warranties. Buyer represents and warrants
to Seller that:
(a) Buyer is a corporation, duly organized and in good standing
under the laws of the State of Washington, is qualified to do business in
the State of Oregon and has the power and authority to enter into this
Agreement and to execute and deliver this Agreement and to perform all
duties and obligations imposed upon it hereunder. As of the date of this
Agreement, Buyer has obtained all necessary corporate authorizations
required in connection with the execution and delivery of this Agreement.
Each of the individuals executing this Agreement on Buyer's behalf is
authorized to do so. Buyer has the financial ability to pay the Purchase
Price by (i) tendering the Cash Balance, (ii) assuming the Existing Loan,
and to perform the other covenants of Buyer set forth in this Agreement.
(b) Neither the execution nor the delivery of this Agreement, nor
the consummation of the purchase and sale transaction contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement conflict with or will result in the breach of any of the terms,
conditions or provisions of any agreement or instrument to which Buyer is
a party or by which Buyer or any of Buyer's assets is bound;
(c) Buyer is not in any way affiliated with Seller;
(d) Except for the approval by Lender of Buyer's assumption of the
Existing Loan as described in Section 6.4, no approval, consent, order or
authorization of, or designation, registration or declaration with, any of
the United States, the States of Washington or Oregon, any department,
board, agency, office, commission or other subdivisions thereof, or any
official thereof or any third party is required in connection with the
valid execution and delivery of, and performance of the covenants of, this
Agreement by Buyer.
(e) There are no actions, suits or proceedings pending or, to the
knowledge of Buyer, threatened, against or affecting Buyer which, if
determined adversely to Buyer, would adversely affect its ability to
perform its obligations hereunder.
As a condition precedent to Seller's obligation to close the purchase and
sale transaction contemplated in this Agreement, Buyer's representations and
warranties contained herein must remain and be true and correct as of the
Closing Date. Prior to the Closing Date, Buyer shall notify Seller in writing of
any facts, conditions or circumstances which render any of the representations
and warranties set forth in this Section 11.1 in any way inaccurate, incomplete,
incorrect or misleading.
11.2 Seller's Representations and Warranties. Seller is a general
partnership existing under the laws of the State of California.
(a) Seller has full right, power and authority and is duly
authorized to enter into this Agreement, to perform each of the covenants
on its part to be performed hereunder and to execute and deliver, and to
perform its obligations under all documents required to be executed and
delivered by it pursuant to this Agreement and this Agreement constitutes
the valid and binding obligation of Seller enforceable in accordance with
its terms.
(b) A list of all notes, mortgages loan agreements and other
financing documents relating to the Existing Loan is attached to this
Agreement as Exhibit H. To Seller's knowledge, no default exists or is
claimed to exist on the part of the borrower under the Existing Loan, and
to Seller' knowledge, no event or condition exists which, with the giving
of notice, passage of time or both could constitute such a default.
(c) Seller has directed its manager to deliver or to make available
to Buyer (i) complete copies of all Leases and (ii) the Rent Roll.
(d) Seller has caused its property manager to deliver or to make
available copies of all Property Contracts.
(e) Seller has not been served with notice of any actions, suits, or
proceedings against or affecting the Seller or the Property that either
(i) are not covered by applicable insurance or (ii) if determined
adversely to Seller would materially affect the ownership or operation of
the Property or Seller's ability to perform its obligations under this
Agreement.
Seller reserves the right to update the representations and warranties
made by it herein. All of Seller's representations and warranties shall be
deemed to be updated by information disclosed to or obtained by Purchaser in
connection with its due diligence investigations.
11.3 Seller; Seller's Knowledge. Whenever a representation is made to
"Seller's knowledge", or a term of similar import, the accuracy of such
representation shall be based solely on the actual knowledge of Peter F.
Sullivan ("Sullivan"), without independent investigation or inquiry except for
inquiry of Seller's property manager for the Property. Sullivan is the employee
of a general partner of Seller who has had primary responsibility for the sale
of the Property to Buyer. Notwithstanding the foregoing, if, prior to the
Closing, Buyer obtains actual knowledge that any representation or warranty of
Seller is inaccurate and Buyer nonetheless proceeds with the Closing, Seller
shall have no liability for any such matter regarding which Buyer had actual
knowledge prior to Closing.
11.4 Property Conveyed "AS IS". (a) NOTWITHSTANDING ANYTHING CONTAINED
HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT, EXCEPT AS EXPRESSLY
SET FORTH HEREIN, SELLER AND ITS PROPERTY MANAGER HAVE NOT MADE AND ARE NOT NOW
MAKING, AND THEY SPECIFICALLY DISCLAIM, ANY OTHER WARRANTIES, REPRESENTATIONS OR
GUARANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST,
PRESENT OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF TITLE (OTHER THAN
SELLER'S WARRANTY OF TITLE SET FORTH IN THE DEED (HEREINAFTER DEFINED) TO BE
DELIVERED AT CLOSING), (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR
ANY PORTION THEREOF, (III) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION,
SUBSIDENCE, SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER RESERVOIRS,
LIMITATIONS REGARDING THE WITHDRAWAL OF WATER, AND EARTHQUAKE FAULTS AND THE
RESULTING DAMAGE OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND TO THE
EXTENT TO WHICH THE PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM
(SURFACE OR UNDERGROUND), BODY OF WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY
OR SPECIAL FLOOD HAZARD, (V) DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE
EXISTENCE OF INSTABILITY, PAST SOLID REPAIRS, SOIL ADDITIONS OR CONDITIONS OF
SOIL FILL, OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY
UNDERSHORING, (VII) ZONING TO WHICH THE PROPERTY OR ANY PORTION THEREOF MAY BE
SUBJECT, (VIII) THE AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION
THEREOF INCLUDING, WITHOUT LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (IX)
USAGES OF ADJOINING PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF,
(XI) THE VALUE, COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION,
AGE, USE, DESIGN, QUALITY, DESCRIPTION, SUITABILITY, STRUCTURAL INTEGRITY,
OPERATION, TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY
PORTION THEREOF, OR ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS
OR CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, OR
ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR
AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, (XII) THE PRESENCE
OF HAZARDOUS SUBSTANCES (HEREINAFTER DEFINED) IN OR ON, UNDER OR IN THE VICINITY
OF THE PROPERTY, (XIII) THE CONDITION OR USE OF THE PROPERTY OR COMPLIANCE OF
THE PROPERTY WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR LOCAL
ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES,
CODES OR OTHER SIMILAR LAWS, (XIV) THE EXISTENCE OR NON-EXISTENCE OF UNDERGROUND
STORAGE TANKS, (XV) ANY OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE
REAL PROPERTY, (XVI) THE POTENTIAL FOR FURTHER DEVELOPMENT OF THE PROPERTY,
(XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS
AFFECTING THE PROPERTY, (XVIII) THE MERCHANTABILITY OF THE PROPERTY OR FITNESS
OF THAT PROPERTY FOR ANY PARTICULAR PURPOSE (BUYER AFFIRMING THAT BUYER HAS NOT
RELIED ON SELLER'S OR ITS PROPERTY MANAGER'S SKILL OR JUDGMENT TO SELECT OR
FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT SELLER MAKES NO
WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE), OR (XIX) TAX
CONSEQUENCES.
(b) BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON, EITHER
DIRECTLY OR INDIRECTLY, ANY REPRESENTATION OR WARRANTY OF SELLER OR ITS PROPERTY
MANAGER OR ANY OF THEIR RESPECTIVE AGENTS, EXCEPT AS EXPRESSLY SET FORTH HEREIN,
AND ACKNOWLEDGES THAT NO OTHER SUCH REPRESENTATIONS HAVE BEEN MADE. BUYER
REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF
REAL ESTATE AND THAT IT IS RELYING SOLELY ON ITS OWN EXPERTISE AND THAT OF
BUYER'S CONSULTANTS IN PURCHASING THE PROPERTY. BUYER WILL CONDUCT SUCH
INSPECTIONS AND INVESTIGATIONS OF THE PROPERTY AS BUYER DEEMS NECESSARY,
INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS
THEREOF, AND SHALL RELY UPON SAME. UPON CLOSING, BUYER SHALL ASSUME THE RISK
THAT ADVERSE MATTERS, INCLUDING, BUT NOT LIMITED TO, ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER'S INSPECTIONS AND
INVESTIGATIONS. BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING, SELLER SHALL
SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS",
WITH ALL FAULTS. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT THERE ARE NO ORAL
AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE
PROPERTY BY SELLER, ANY AGENT OF SELLER OR ANY THIRD PARTY. THE TERMS AND
CONDITIONS OF THIS SECTION 11.4(B) SHALL EXPRESSLY SURVIVE THE CLOSING, NOT
MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS AND SHALL BE INCORPORATED
INTO THE DEED. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR
WRITTEN STATEMENTS, REPRESENTATIONS, OR INFORMATION PERTAINING TO THE PROPERTY
FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON,
UNLESS THE SAME ARE SPECIFICALLY SET FORTH OR REFERRED TO HEREIN. BUYER
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE "AS IS" NATURE OF THIS SALE
AND ANY FAULTS, LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE
ASSOCIATED WITH THE PROPERTY. BUYER HAS FULLY REVIEWED THE DISCLAIMERS AND
WAIVERS SET FORTH IN THIS AGREEMENT WITH ITS COUNSEL AND UNDERSTANDS THE
SIGNIFICANCE AND EFFECT THEREOF.
--------------
Buyer's Initials
ARTICLE 12
MISCELLANEOUS
12.1 Successors and Assigns. Without the prior written consent of Seller,
Buyer shall not, directly or indirectly, assign this Agreement or any of its
rights hereunder. Any attempted assignment in violation hereof shall, at the
election of Seller in its sole discretion, be of no force or effect and shall
constitute a default by Buyer. Notwithstanding the foregoing and so long as it
will not affect the Lender's consent to or the timing of the Closing Buyer may
elect to have a nominee entity accept title to the Property at Closing, provided
that any such nominee must be an affiliated entity controlled by or under common
control with Buyer, and Buyer shall give written notice of such nominee to
Seller, together with any reasonable evidence of affiliation requested by
Seller, a minimum of fifteen (15) days prior to Closing. No designation of a
nominee to receive title shall release Buyer from its obligations under this
Agreement.
12.2 Notices. Except as otherwise specifically provided herein, any notice
required or permitted to be delivered under this Agreement shall be in writing
and shall be deemed given (i) when delivered or refused if sent by hand during
regular business hours, or (ii) on the next business day when sent by a
reputable overnight express mail service that provides tracing and proof of
receipt or refusal of items mailed, addressed to Seller or Buyer, as the case
may be, at the address or addresses set forth below or such other addresses as
the parties may designate in a notice similarly sent. Any notice given by a
party to Escrow Agent shall be simultaneously given to the other party. Any
notice given by a party to the other party relating to its entitlement to the
Escrowed Amount shall be simultaneously given to the Escrow Agent.
(1) If to Seller:
c/o Paine Webber Properties Incorporated
265 Franklin Street - 15th Floor
Boston, MA 02110
Attn: Mr. Peter F. Sullivan
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attn: Andrew C. Sucoff, Esq.
(2) If to Buyer:
Balaclava Holdings Inc.
1550-355 Burrard Street
Vancouver, British Columbia
V6C 2G8
CANADA
Attn: Ms. Vickie McDonnell and Mr. F. Randolph Smith
with a copy to:
Bogle & Gates
Two Union Square
601 Union Street
Seattle, Washington 98104-2346
Attn: Timothy R. Osborn, Esq.
(3) If to the Escrow Agent:
Chicago Title Company
1800 Columbia Center
701 Fifth Avenue
Seattle, WA 98104
Attn: Scott Smouse
12.3 Construction. Words of any gender used in this Agreement shall be
held and construed to include any other gender, and words of a singular number
shall be held to include the plural and vice versa, unless the context requires
otherwise.
12.4 Captions. The captions used in connection with the Articles of this
Agreement are for convenience only and shall not be deemed to extend, limit or
otherwise define or construe the meaning of the language of this Agreement.
12.5 No Other Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
12.6 Amendments. This Agreement may be amended only by a written
instrument executed by Seller and Buyer (or Buyer's assignee or transferee).
12.7 Severability. If any provision of this Agreement or application to
any party or circumstance shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law.
12.8 Applicable Law. This Agreement shall be construed under and in
accordance with the laws of state in which the Property is located.
12.9 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be an original but such counterparts together
shall constitute one and the same instrument notwithstanding that both Buyer and
Seller are not signatory to the same counterpart.
12.10 Time of the Essence. Time is expressly declared to be of the essence
of this Agreement, provided, however that in the event any date hereunder falls
on a Saturday, Sunday or legal holiday in British Columbia, Canada, Washington,
Oregon and Massachussets, the date applicable shall be the next business day.
12.11 No Personal Liability. The obligations of Seller hereunder shall be
binding only on the Property and neither Buyer nor anyone claiming by, through
or under Buyer shall be entitled to obtain any judgment extending liability
beyond the Property or creating personal liability on the part of the partners
of the Seller or of the officers, directors, shareholders, advisors or agents of
Seller or Seller's partners or any of their successors.
12.12 No Recordation. Without the prior written consent of Seller, there
shall be no recordation of either this Agreement or any memorandum hereof, or
any affidavit pertaining hereto, and any such recordation of this Agreement or
memorandum hereto by Purchaser without the prior written consent of Seller shall
constitute a default hereunder by Buyer, whereupon this Agreement shall, at the
option of Seller, terminate and be of no further force and effect. Upon
termination, the Escrowed Amount shall be immediately delivered to Seller,
whereupon the parties shall have no further duties or obligations to one another
except as otherwise specifically provided herein.
12.13 Waiver. The excuse or waiver of the performance by a party of any
obligation of the other party under this Agreement shall only be effective if
evidenced by a written statement signed by the party so excusing or waiving. No
delay in exercising any right or remedy shall constitute a waiver thereof, and
no waiver by Seller or Buyer of the breach of any covenant of this Agreement
shall be construed as a waiver of any preceding or succeeding breach of the same
or any other covenant or condition of this Agreement.
12.14 Binding On Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
12.15 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. All Exhibits and Schedules attached hereto are a part of this
Agreement and are incorporated herein by reference.
12.16 Construction of Agreement. This Agreement shall not be construed
more strictly against one party than against the other merely by virtue of the
fact that it may have been prepared primarily by counsel for one of the parties,
it being recognized that both Buyer and Seller have contributed substantially
and materially to the preparation of this Agreement.
12.17 Further Instruments. Each party, promptly upon the request of the
other, shall execute and have acknowledged and delivered to the other or to
Escrow Agent, as may be appropriate, any and all further instruments reasonably
requested or appropriate to evidence or give effect to the provisions of this
Agreement and which are consistent with the provisions of this Agreement.
12.18 Buyer Represented by Counsel. Buyer hereby represents and warrants
to Seller that (i) Buyer is not in a significantly disparate bargaining position
in relation to Seller, (ii) Buyer is represented by legal counsel in connection
with the transaction contemplated by this Agreement, and (iii) Buyer is buying
the Property for business, commercial, investment or other similar purpose and
not for use as Buyer's residence.
12.19 Preparation of Documents. All of the documents to be executed at the
Closing shall be in the form prepared to the reasonable satisfaction of Seller's
and Buyer's counsel and delivered to Buyer on or before five (5) days prior to
the Closing Date, provided that the failure to timely deliver such documents
shall not constitute a default by Seller hereunder.
ARTICLE 13
IRS FORM 1099-S DESIGNATION
In order to comply with information reporting requirements of Section
6045(e) of the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations thereunder, the parties agree (1) to execute an IRS Form 1099-S
Designation Agreement in the form attached hereto as Schedule D at or prior to
the Closing to designate the Escrow Agent (the "Designee") as the party who
shall be responsible for reporting the contemplated sale of the Property to the
Internal Revenue Service (the "IRS") on IRS Form 1099-S; (2) to provide the
Designee with the information necessary to complete Form 1099-S; (3) that the
Designee shall not be liable for the actions taken under this Agreement, or for
the consequences of those actions, except as they may be the result of gross
negligence or willful misconduct on the part of the Designee; and (4) that the
Designee shall be indemnified by the parties for any costs or expenses incurred
as a result of the actions taken hereunder, except as they may be the result of
gross negligence or willful misconduct on the part of the Designee. The Designee
shall provide all parties to this transaction with copies of the IRS Forms
1099-S filed with the IRS and with any other documents used to complete IRS Form
1099-S.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first set forth above.
SELLER:
PORTLAND PACIFIC ASSOCIATES TWO, a Virginia
general partnership
By: PaineWebber Equity Partnership Three Limited
Partnership, a Virginia limited partnership,
its general partner
By: Third Equity Partners, Inc., a
Delaware corporation, its Managing
General Partner
By:/s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
BUYER:
BALACLAVA HOLDINGS INC.
By: /s/ Tom Lindsay
---------------
Name: Tom Lindsay
Title: President
<PAGE>
FIRST AMENDMENT
TO
PURCHASE AND SALE
This FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (this "Amendment") is
entered into between PORTLAND PACIFIC ASSOCIATES TWO, a Virginia general
partnership ("Seller"), and BALACLAVA HOLDINGS INC., a Washington corporation
("Buyer"), effective as of July 30, 1998.
WHEREAS, Seller and Buyer entered into that certain Purchase and Sale
Agreement executed by Buyer and Seller effective as of July 3, 1998 (the
"Agreement") for that certain property known as The Willow Grove Apartments,
Beaverton, Oregon (the "Premises");
WHEREAS, Seller and Buyer have agreed to lower the Purchase Price to
resolve certain repair issues Buyer raised in connection with its due diligence
review (see attached Exhibit A) and allocated the Purchase Price;
NOW, THEREFORE, for and in consideration of the foregoing premises and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged and confessed, Seller and Buyer hereby agree as follows:
1. Seller and Buyer each confirms the truth and accuracy of the recitals,
each of which are made part of this Amendment.
2. All initial capitalized terms not defined herein shall have the
meaning ascribed to such terms in the Agreement.
3. Article 1 of the Agreement is hereby modified as follows: The definition
of Purchase Price shall be changed to $7,137,000.00.
4. The Purchase Price shall be allocated as follows:
Land $ 1,070,550
Building 5,566,860
Land Improvements 356,850
Personal Property 142,740
------------
TOTAL $ 7,137,000
5. Except as modified hereby, the terms and conditions of the Agreement shall
continue in full force and effect. This Amendment may be executed in
multiple counterparts, each of which shall be an original and all of which
together shall constitute one agreement. In order to expedite the
execution of this Amendment, a facsimile signature shall be binding and
have the same effect as an original signature.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first said above.
PORTLAND PACIFIC ASSOCIATES TWO, a
Virginia general partnership
By: PaineWebber Equity Partners Three
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Third Equity Partners, Inc.,
a Delaware corporation, its
managing general partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
By: Third Equity Partners, Inc., a
Delaware corporation, its general
partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
BUYER:
BALACLAVA HOLDINGS INC.,
a Washington corporation
By: /s/ Tom Lindsay
---------------
Name: Tom Lindsay
Title: President
<PAGE>
Recorded at the Request of:
Timothy R. Osborn, Esq.
Bogle & Gates P.L.L.C.
Two Union Square
601 Union Street, Suite 4700
Seattle, Washington 98101-2346
STATUTORY WARRANTY DEED
PORTLAND PACIFIC ASSOCIATES TWO, a Virginia general partnership, who
acquired title as a California general partnership, with an address c/o
PaineWebber Equity Partners Three Limited Partnership, 265 Franklin Street,
Boston, Massachusetts 02110, as Grantor conveys and warrants to BALACLAVA
HOLDINGS INC., a Washington corporation with an address of 1550-355 Burrard
Street, Vancouver, BC V6C 2G8 CANADA, as Grantee the following described real
property, free and clear of encumbrances except as specifically set forth herein
on Exhibit B, situated in the County of Washington, State of Oregon, as more
particularly described on Exhibit A attached hereto.
THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY DESCRIBED IN THIS
INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND REGULATIONS. 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 TO DETERMINE ANY LIMITS ON LAWSUITS AGAINST FARMING OR
FOREST PRACTICES AS DEFINED IN ORS 30.930.
The true and actual consideration for this conveyance is $7,137,000.00.
Dated this 13th day of August, 1998.
[Signatures on next page.]
<PAGE>
GRANTOR:
PORTLAND PACIFIC ASSOCIATES TWO, a
Virginia general partnership
By: PaineWebber Equity Partners Three
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Third Equity Partners, Inc.,
a Delaware corporation, its
managing general partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
By: Third Equity Partners, Inc., a
Delaware corporation, its general
partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK
The foregoing instrument was acknowledged before me this 13th day of August,
1998, by Peter F. Sullivan, as Vice President of Third Equity Partners, Inc., in
its capacity as general partner of Portland Pacific Associates Two and as
managing general partner of PaineWebber Equity Partners Three Limited
Partnership, general partner of Portland Pacific Associates Two.
/s/ Linda Z. MacDonald
------------------
Notary Public: Linda Z. MacDonald
[AFFIX NOTARIAL SEAL] My commission expires: November 12, 1999
<PAGE>
WILLOW GROVE APARTMENTS
BEAVERTON, OREGON
ASSIGNMENT AND ASSUMPTION
OF CONTRACTS
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS (this "Assignment") is entered
into as of the 13th day of August, 1998, between Portland Pacific Associates
Two, a Virginia general partnership, ("Assignor"), with an address c/o
PaineWebber Equity Partners Three Limited Partnership, 265 Franklin Street,
Boston, Massachusetts 02110 and Balaclava Holdings Inc. ("Assignee"), a
Washington corporation, with an address of 1550-355 Burrard Street, Vancouver BC
V6C 2G8 CANADA.
1. Real Property. The "Real Property" shall mean the Land and
Improvements.
2. Land. The "Land" shall mean all of the land described on Exhibit A
attached hereto, together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title and interest (if any)
of Seller in and to any streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in connection with such land and
all right, title and interest (if any) of Seller in all mineral and development
rights appurtenant to such land.
3. Improvements. The "Improvements" shall mean all buildings, structures
and other improvements situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land.
4. Contracts. "Contracts" shall mean all of Assignor's rights, if any, in
the contracts listed on Exhibit B attached hereto, being all service, supply and
equipment rental, management, operating and leasing contracts affecting the Real
Property, to the extent that (i) Seller is entitled to transfer the same to
Buyer, and (ii) Buyer elects to assume them.
5. Assignment. For good and valuable consideration received by Assignor
the receipt and sufficiency of which is hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee the entire right, title and interest
of Assignor in and to the Contracts.
6. Assumption. Assignee hereby assumes the covenants, agreements and
obligations of Assignor under the Contracts which are applicable to the period
and required to be performed from and after the date of this Assignment, but not
otherwise. Assignor shall remain liable for the covenants, agreements and
obligations of Assignor under the Contracts which are applicable to the period
and required to be performed prior to the date of this Assignment.
7. Indemnity. Buyer and Seller shall indemnify, defend and hold the other
harmless from and against any and all claims under the Contracts which relate to
its period of ownership.
8. Attorneys' Fees. If either Assignee or Assignor or their respective
successors or assigns, file suit to enforce the obligations of the other party
under this Assignment, the prevailing party shall be entitled to recover the
reasonable fees and expenses of its attorneys.
9. Successors and Assigns. This Assignment shall be binding upon and inure
to the benefit of Assignor and Assignee and their respective successors and
assigns.
10. Counterparts. This Assignment may be executed in multiple
counterparts, any or all of which may contain the signatures of fewer than all
of the parties, but all of which shall constitute a single instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this
Assignment the day and year first above written.
SELLER:
PORTLAND PACIFIC ASSOCIATES TWO, a
Virginia general partnership
By: PaineWebber Equity Partners Three
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Third Equity Partners, Inc.,
a Delaware corporation, its
managing general partner
By: /s/ Peter F. Sullivan
---------------------
Name: Peter F. Sullivan
Title: Vice President
By: Third Equity Partners, Inc., a
Delaware corporation, its general
partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
PURCHASER:
BALACLAVA HOLDINGS INC., a Washington
corporation
By: /s/ Tom Lindsay
---------------
Name: Tom Lindsay
Title: President
<PAGE>
WILLOW GROVE APARTMENTS
BEAVERTON, OREGON
ASSIGNMENT AND ASSUMPTION
OF LEASES AND TENANT DEPOSITS
THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND TENANT DEPOSITS (this
"Assignment") is entered into as of the 13th of August, 1998, between Portland
Pacific Associates Two ("Assignor"), a Virginia general partnership with an
address c/o PaineWebber Equity Partners Three Limited Partnership, 265 Franklin
Street, Boston, Massachusetts and Balaclava Holdings Inc., ("Assignee"), a
Washington corporation, with an address of 1550-355 Burrard Street, Vancouver,
BC V6C 2G8 CANADA.
1. Real Property. The "Real Property: shall mean the Land and
Improvements.
2. Land. The "Land" shall mean all of the land described on Exhibit A
attached hereto, together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title and interest (if any)
of Seller in and to any streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in connection with such land and
all right, title and interest (if any) of Seller in all mineral and development
rights appurtenant to such land.
3. Improvements. The "Improvements" shall mean all buildings, structures
and other improvements situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land.
4. Leases. The "Leases" means all leases and other occupancy agreements
covering any portion of the Land or Improvements and which are described in
Exhibit B attached to this Assignment.
5. Tenant Deposits. "Tenant Deposits" means those security, damage and all
other refundable deposits held by or for Assignor on account of tenants under
the Leases as such deposits and with respect to which Assignee received a credit
at the closing of the transaction with respect to which this Assignment has been
executed and delivered. The Tenant Deposits are set forth on attached Exhibit B.
6. Assignment. For good and valuable consideration received by Assignor,
the receipt and sufficiency of which are hereby acknowledged, Assignor hereby
grants, transfers and assigns to Assignee the entire right, title and interest
of Assignor in and to the Leases and the Tenant Deposits.
7. Assumption. Assignee hereby assumes the covenants, agreements and
obligations of Assignor as landlord or lessor under the Leases which are
applicable to the period and required to be performed from and after the date of
this Assignment, but not otherwise, and Assignee further assumes all liability
of Assignor for the proper refund or return of the Tenant Deposits if, when and
as required by the Leases, arising after the date hereof.
8. Attorneys' Fees. If either Assignee or Assignor, or their respective
successors or assigns, file suit to enforce the obligations of the other party
under this Assignment, the prevailing party shall be entitled to recover the
reasonable fees and expenses of its attorneys.
9. Successors and Assigns. This Assignment shall be binding upon and inure
to the benefit of Assignor and Assignee and their respective successors and
assigns.
10. Counterparts. This Assignment may be executed in multiple
counterparts, any or all of which may contain the signatures of fewer than all
of the parties, but all of which shall constitute a single instrument.
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this
Assignment the day and year first above written.
SELLER:
PORTLAND PACIFIC ASSOCIATES TWO, a
Virginia general partnership
By: PaineWebber Equity Partners Three
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Third Equity Partners, Inc.,
a Delaware corporation, its
managing general partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
By: Third Equity Partners, Inc., a
Delaware corporation, its general
partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
<PAGE>
PURCHASER:
BALACLAVA HOLDINGS INC., a Washington
corporation
By: /s/ Tom Lindsay
---------------
Name: Tom Lindsay
Title: President
<PAGE>
WILLOW GROVE APARTMENTS
BEAVERTON, OREGON
BILL OF SALE AND GENERAL ASSIGNMENT
THIS BILL OF SALE (this "Bill of Sale") is executed as of the 13th day of
August, 1998, by Portland Pacific Associates Two ("Seller"), a Virginia general
partnership having an address c/o PaineWebber Equity Partners Three Limited
Partnership, 265 Franklin Street, Boston, Massachusetts 02110, in favor of
Balaclava Holdings Inc. ("Purchaser"), a Washington corporation, having an
office at 1550-355 Burrard Street, Vancouver, BC V6C 2G8 CANADA.
1. Real Property. The "Real Property" shall mean the Land and
Improvements.
2. Land. The "Land" shall mean all of the land described on Exhibit A
attached hereto, together with all privileges, rights, easements, and
appurtenances belonging to such land and all right, title and interest (if any)
of Seller in and to any streets, alleys, passages, and other rights-of-way or
appurtenances included in, adjacent to or used in connection with such land and
all right, title and interest (if any) of Seller in all mineral and development
rights appurtenant to such land.
3. Improvements. The "Improvements" shall mean all buildings, structures
and other improvements situated upon the Land and all fixtures, systems and
facilities owned by Seller and located on the Land.
4. Personal Property. The "Personal Property" shall mean all furniture,
carpeting, appliances, equipment, machinery, inventories, supplies, signs and
other tangible personal property of every kind and nature, if any, owned by
Seller and installed, located at and used in connection with the ownership,
occupation and operation of the Real Property, including, without limitation,
the Personal Property listed on Exhibit B attached hereto. Personal Property
specifically excludes: (i) any items of personal property owned by tenants at or
on the Real Property, and (ii) any items of personal property owned by third
parties and leased to Seller.
5. Intangible Property. The "Intangible Property" shall mean all of
Seller's right, title and interest, if any, in all intangible assets of any
nature relating to the Land, the Improvements or the Personal Property,
including, without limitation, all of Seller's right, title and interest in all
(i) warranties and guaranties relating to the Improvements or Personal Property
in the possession of Seller, (ii) all licenses, permits and approvals relating
to the Real Property, (iii) all logos and trade names currently used by Seller
exclusively in the operation of the Land and Improvements, including the use of
the name Willow Grove, and (iv) all plans and specifications, in each case to
the extent that Seller may legally transfer the same.
6. Sale. For good and valuable consideration received by Seller, the
receipt and sufficiency of which are hereby acknowledged, Seller hereby sells,
assigns and transfers the Personal Property and Intangible Property to
Purchaser.
7. As Is. The Personal Property and Intangible Property are sold,
transferred and delivered by Seller and hereby accepted by Purchaser in their
current "as is" condition, without any warranties, covenants or representations
by Seller. Without limiting the generality of the foregoing, the Personal
Property and Intangible Property are transferred, sold and delivered without any
express or implied warranty of merchantability or fitness.
8. Counterparts. This Bill of Sale may be executed in multiple
counterparts, any or all of which may contain the signatures of fewer than all
of the parties, but all of which shall constitute a single instrument.
<PAGE>
IN WITNESS WHEREOF, Seller has executed this Bill of Sale the day and year
first above written.
SELLER:
PORTLAND PACIFIC ASSOCIATES TWO, a
Virginia general partnership
By: PaineWebber Equity Partners Three
Limited Partnership, a Virginia
limited partnership, a general
partner
By: Third Equity Partners, Inc.,
a Delaware corporation, its
managing general partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
By: Third Equity Partners, Inc., a
Delaware corporation, its general
partner
By: /s/ Peter F. Sullivan
----------------------
Name: Peter F. Sullivan
Title: Vice President
