Buyer shall be allowed to conduct the following due diligence prior to purchasing the Property ( Buyer s Due Diligence Review ):

Transcription

1 Jennifer C. Cobb of Jameson Babbitt Stites & Lombard Speaker 16: 1 CONTINGENCY CLAUSE (SELLER FORM) BUYER S DUE DILIGENCE REVIEW. As of the date of this Agreement, Seller has delivered to Buyer the following documents and instruments relating to the Property, all to the extent the same exist and are in Seller s possession or control (collectively Seller Information ): (a) leases or occupancy agreements for any portion of the Property (including any parking area) (collectively the Leases ) and any amendments or other agreements relating to the Leases; (b) environmental studies and reports; (c) operating statements for the Property for the calendar years 200 and 200 ; (d) current Rent Roll; (e) existing surveys; (f) occupancy permits and certificates of occupancy for the Improvements; (g) service and maintenance contracts which would remain in effect after Closing; (h) the most recent tax bills for the Property; and (i) pleadings, correspondence and other documentation relating to any litigation affecting the Property. Buyer shall be allowed to conduct the following due diligence prior to purchasing the Property ( Buyer s Due Diligence Review ): (a) Title and Survey. Buyer's review of title to the Property as shown on an existing preliminary title reports (the "Title Reports") from the Title Company issued with respect to the Real Property and any existing as-built surveys showing the location of all improvements and recorded easements on the Property (the "Surveys"), all of which shall be delivered by Seller with the other Due Diligence Items. Within ten (10) business days after Buyer's receipt of the Title Report and Surveys (the "Title Documents"), Buyer may approve or disapprove (in its sole and absolute discretion) the Title Documents for the Property by delivering written notice to Seller ("Buyer's Title Notice") specifying each title defect or matter for which Buyer is requesting a cure by Seller ("Title Defect") and each Title Company requirement ("Title Requirement") which Buyer is requesting Seller to satisfy in order for the Title Policy to be issued for the Property at Closing. Buyer's failure to deliver Buyer's Title Notice to Seller within the time period specified above shall be a conclusive presumption that Buyer has approved the Title Documents and this Agreement shall remain in full force and effect. Within five (5) business days after receiving Buyer's Title Notice, Seller shall deliver to Buyer written notice ("Seller's Title Notice") of those Title Defects which Seller covenants and agrees to either eliminate or cure to Buyer's satisfaction by the Closing Date and those Title Requirements which Seller agrees to satisfy by the Closing Date. Seller's failure to deliver Seller's Title Notice to Buyer within the time period specified above shall be deemed to constitute Seller's election not to eliminate or cure any such Title Defect or to satisfy any such Title Requirements. If Seller elects (or is deemed to have elected) not to eliminate or cure any Title Defects or to not satisfy any Title Requirements, the Buyer shall have the right, by written notice delivered to Seller within five (5) business days of Seller's Title Notice or within five (5) business days after the expiration of the time period during which Seller is entitled to deliver Seller's Title Notice, whichever occurs first, to either (i) waive its prior notice as to the Title Defects which Seller has elected not to cure and those Title Requirements which Seller has elected not to satisfy or (ii) terminate this Agreement as provided later in this section. Buyer's failure to deliver any written notice within such

2 Jennifer C. Cobb of Jameson Babbitt Stites & Lombard Speaker 16: 2 five (5) business day period shall be a conclusive presumption that Buyer has approved the Title Documents and this Agreement shall remain in full force and effect. (b) Review of Seller Information. Buyer's review of the Seller Information provided to Buyer as set forth above. (c) Physical Review of Property Buyer's review of the physical and environmental characteristics and condition of the Property. Seller agrees to provide Buyer access to the Property following the Agreement Date for the purpose of performing, at Buyer's sole cost and expense, studies, physical inspections, investigations and tests on the Property (the "Studies"); provided that no such tests shall be conducted without at least two (2) business days prior written notice to Seller and Seller's prior approval of such Studies, which approval shall not be unreasonably withheld. Buyer's access is further conditioned on Buyer providing Seller with certificates of insurance listing Seller as an additional insured on all insurance policies evidencing that Buyer's agents or contractors performing said Studies have insurance in types and amounts satisfactory to Seller as determined by Seller in its reasonable discretion. Buyer shall be required to conduct such Studies in a manner as to not disturb or interfere with the current use of the Property and upon completion of such Studies, Buyer agrees at its sole cost to restore the Property to the condition it was in immediately prior to such Studies, including, but not limited to the immediate removal of anything placed on the Property in connection with such Studies. Copies of any reports, letters or other written information generated as a result of such Studies shall be provided to Seller if the sale contemplated by this Agreement does not close for any reason. Buyer shall indemnify, defend (with counsel reasonably satisfactory to Seller), protect, and hold Seller harmless from and against any and all liability, loss, cost, damage, or expense (including, without limitation, attorney's fees and costs) which Seller may sustain or incur by reason of or in connection with any Studies made by Buyer or Buyer's agents or contractors relating to or in connection with the Property, or entries by Buyer or its agents or contractors onto the Property. Notwithstanding any provision to the contrary in this Agreement, the indemnity obligations of Buyer under this Agreement shall survive any termination of this Agreement or the delivery of the deed and the transfer of title pursuant to this Agreement. (e) Lease Estoppels. Seller shall use its good faith efforts to obtain from all tenants of the Property, estoppel certificates in the form attached hereto as Exhibit or on such other form as attached as an exhibit to each applicable Lease, and to deliver same to Buyer prior to the Approval Date. Buyer s Due Diligence Review shall include Buyer s review and satisfaction with the form and content of such estoppels. If on or before 5:00 p.m. Pacific time on, 200 (the "Approval Date"), Buyer notifies Seller in writing of Buyer s satisfaction with the results of Buyer s Due Diligence Review (the "Approval Notice"), then this Agreement shall remain in full force and effect and the Deposit shall become nonrefundable and shall be credited to the Purchase Price at Closing as provided herein. In the event Buyer fails to notify Seller in writing of Buyer s satisfaction with the results of Buyer s Due Diligence Review or in the

3 Jennifer C. Cobb of Jameson Babbitt Stites & Lombard Speaker 16: 3 event Buyer notifies Seller that it disapproves any aspect of its Due Diligence Review, on or before 5:00 p.m. Pacific time on the Approval Date, then this Agreement shall terminate without any liability on the part of either party, except for Buyer's indemnity obligations set forth in paragraph above. In the event of such termination, the Deposit shall be returned to Buyer. CONTINGENCY CLAUSE (BUYER FORM) BUYER S INSPECTIONS, STUDIES AND FEASIBILITY REVIEW. During the ( ) day period commencing on the Execution Date (the Contingency Period, the last day of which is the Contingency Date ), Buyer shall have the right to inspect and approve or disapprove, in Buyer s sole discretion, all aspects of the Property and the proposed transaction, including without limitation the following: (a) all physical, mechanical, architectural, structural, seismic, environmental and all other aspects of the Property, (b) the condition of Seller s title to the Property, (c) the zoning applicable to the Property, the land use entitlements required to develop the Property (if applicable) as Buyer desires, the availability of power, water, gas, and other utilities and of streets, roads, access, and the suitability of the Property generally for Buyer s intended purpose, and (d) all material books, records and files regarding the Property. Notwithstanding the above, the Contingency Period shall be extended one (1) day for each day of delay in Seller s providing to Buyer the documentation to be provided by Seller pursuant to Subsections below, beyond the deadline set forth in such subsections. If Buyer gives Seller notice in writing on or before the Contingency Date that the Property is acceptable to Buyer (an Acceptance Notice ), Buyer shall, prior to or simultaneously with such Acceptance Notice, pay the Deposit, and the Parties shall proceed to close the purchase and sale of the Property pursuant to the terms and conditions of this Agreement. Unless Buyer gives an Acceptance Notice to Seller and, prior to or simultaneously with such Acceptance Notice, deposits the Deposit with Escrow Holder on or before the Contingency Date, Buyer shall be deemed to have rejected the Property and the agreement of the Parties with respect to the purchase and sale of the Property will terminate (other than obligations which survive such termination) and the Escrow Agent shall return the Promissory Note to Buyer.

4 Jennifer C. Cobb of Jameson Babbitt Stites & Lombard Speaker 16: 4 CONDITIONS TO CLOSING (BUYER CLAUSE) a. Purchaser's Conditions. Purchaser's obligation to close this transaction is subject to the satisfaction of all of the following conditions in all material respects: (1) Purchaser's Review. Purchaser's satisfaction or waiver within the time periods prescribed under Section above, of all conditions contained in Purchaser's Contingency under Section above; (2) Seller's Compliance. Seller's fulfillment of each of its obligations under this Agreement in all material respects; (3) Seller's Representations. The continuing accuracy of all of Seller's representations in this Agreement in all material respects; (4) Status of Rent Payable. The absence of a decrease in the gross rents payable from all of the Leases below the rents shown on the last Rent Roll provided to Purchaser prior to the expiration of the Contingency Period and the absence of any other substantial or significant deviation of the information contained in the Rent Roll. (5) Estoppels. Purchaser's receipt, not less than five (5) business days prior to the scheduled Closing, of estoppel certificates from all tenants leasing rentable area of the Improvements in form and substance reasonably acceptable to Purchaser. (6) Status of Title. The absence of any monetary lien which will not be paid in full or otherwise eliminated from title upon the close of escrow, or other material defect in title to the Property which was not permitted by this Agreement or approved by Purchaser and the Title Company is irrevocably committed to issue the Title Policy pursuant to Section below; (7) Permitted Uses. The absence of any material violation of any applicable statute, law or regulation regarding the physical condition of the Property or Seller's use thereof or of any material change in any laws or statutes which materially affect the Purchaser's ability to use the Property for its current purposes; (8) Condemnation. The absence of any condemnation or the institution or threat of institution of condemnation proceedings which result in the taking of any of the Property. If this transaction closes, Seller shall assign to Purchaser on the Closing Date all condemnation awards and rights to awards which were not used by Seller to pay the costs of any restorations of the Land or Improvements necessitated by the condemnation. (9) Casualty. The absence of any damage by casualty to the Improvements which (a) has not been repaired by the Closing Date, and (b) has a reasonable estimated cost of repair in excess of $20, If the Improvements suffer any damage by casualty which is not repaired by the Closing Date, Purchaser shall have the right and option

5 Jennifer C. Cobb of Jameson Babbitt Stites & Lombard Speaker 16: 5 to terminate this Agreement within thirty (30) days after the date of the casualty or by the Closing Date, whichever first occurs. If Purchaser does not elect to terminate this Agreement by such date, this transaction shall close without increase or decrease in the purchase price, Seller shall proceed to effect such repairs as are reasonably possible prior to closing unless otherwise agreed to in writing by Purchaser and Purchaser shall be entitled to all insurance proceeds which are not used to pay the costs of such repairs. To the extent Seller has not incurred and paid for costs of repair equal to its deductible under its insurance policy prior to the Closing Date, Seller shall credit to Purchaser at Closing the amount of Seller's deductible for which Seller has not incurred and paid the costs of such repair. b. In the event any of the conditions set forth in Section above have not been satisfied within the time period set forth with respect to such condition, Purchaser may elect to terminate this Agreement by written notice to the Seller, or, in the event any such failure constitutes a default by Seller, may pursue Purchaser s remedies pursuant to Section below. In the event this Agreement is terminated for failure of any such condition, this Agreement shall terminate, Purchaser shall receive a refund of its Earnest Money Deposit and neither party shall have any further rights or obligations under this Agreement (except to the extent the failure of any such condition constitutes a breach by a party of its obligations under this Agreement).