-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UgypBka2HfBUXju7NohJkRh879UpqIWTzOp2h38W46GeiQqSAwDUNE7JHtEcQqDb 4tGX8iWkSxvLFbR3wx8VtA== 0000950134-98-004505.txt : 19980518 0000950134-98-004505.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950134-98-004505 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980323 ITEM INFORMATION: FILED AS OF DATE: 19980515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT INC CENTRAL INDEX KEY: 0000778437 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 756335572 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09016 FILM NUMBER: 98624836 BUSINESS ADDRESS: STREET 1: 6210 N BELTLINE RD STREET 2: STE 170 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 9727566000 MAIL ADDRESS: STREET 1: 6220 N BELTLINE ROAD STREET 2: SUITE 205 CITY: IRVING STATE: TX ZIP: 75063 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT DATE OF NAME CHANGE: 19931203 FORMER COMPANY: FORMER CONFORMED NAME: TRAMMELL CROW REAL ESTATE INVESTORS DATE OF NAME CHANGE: 19931203 8-K/A 1 AMENDMENT TO FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): March 23, 1998 AMERICAN INDUSTRIAL PROPERTIES REIT (Exact Name of Registrant as Specified in its Charter) TEXAS 1-9016 75-6335572 (State or Other Jurisdiction of (Commission File (I.R.S. Employer Incorporation or Organization) Number) Identification Number) 6210 NORTH BELTLINE ROAD, SUITE 170, IRVING, TEXAS 75063 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (972) 756-6000 2 The undersigned Registrant hereby amends its Current Report on Form 8-K filed March 23, 1998, to include the exhibits required by Item 7 (c). ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (c) Exhibits. *10.1 Purchase and Sale Agreement and Joint Escrow Instructions by and between CM Property Management, Inc. and American Industrial Properties REIT dated July 15, 1997. *10.2 Purchase and Sale Agreement and Escrow Instructions by and between Corporex Properties of Tampa, Inc., CPX-Westshore Corporation, and American Industrial Properties REIT. *10.3 Amendment to Purchase and Sale Agreement and Escrow Instructions by and between Corporex Properties of Tampa, Inc., CPX-Westshore Corporation, and American Industrial Properties REIT. *10.4 Purchase and Sale Agreement between the Equitable Life Assurance Society of the United States and American Industrial Properties REIT dated December 17, 1997. *10.5 Purchase and Sale Agreement between Nanook Partners, L.P. and American Industrial Properties REIT. - --------------- * Filed herewith. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN INDUSTRIAL PROPERTIES REIT By: /s/ Marc A. Simpson ------------------------------ Marc A. Simpson Chief Financial Officer Dated: May 14, 1998 4 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------ ----------- *10.1 Agreement of Purchase and Sale and Joint Escrow Instructions by and between CM Property Management, Inc. and American Industrial Properties REIT dated July 15, 1997. *10.2 Purchase and Sale Agreement and Escrow Instructions by and between Corporex Properties of Tampa, Inc., CPX-Westshore Corporation, and American Industrial Properties REIT. *10.3 Amendment to Purchase and Sale Agreement and Escrow Instructions by and between Corporex Properties of Tampa, Inc., CPX-Westshore Corporation, and American Industrial Properties REIT. *10.4 Purchase and Sale Agreement between The Equitable Life Assurance Society of the United States and American Industrial Properties REIT dated December 17, 1997. *10.5 Purchase and Sale Agreement by and between Nanook Partners, L.P. and American Industrial Properties REIT.
- --------------- * Filed herewith. EX-10.1 2 PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.1 AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS By and Between CM PROPERTY MANAGEMENT, INC., a Connecticut corporation as Seller and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust as Buyer Dated as of July 15, 1997 Re: Skyway Circle South Irving, Texas Central Park Office Tech Richardson, Texas 2 TABLE OF CONTENTS
Page ---- 1. Certain Basic Definitions.......................... 1 2. Sale of Property; Purchase Price................... 2 2.1 Sale of Property................................... 2 2.2 Purchase Price..................................... 2 2.2.1 Deposit................................... 2 2.2.2 Balance................................... 3 3. Escrow; Closing Conditions......................... 3 3.2 Closing Date....................................... 3 3.3 Buyer's Conditions to Closing...................... 3 3.3.1 Inspection................................ 4 3.3.2 Title Policy.............................. 4 3.3.3 Covenants................................. 5 3.3.4 Preliminary Report........................ 5 3.3.5 Due Diligence Items....................... 5 3.4 Approval........................................... 5 3.5 Termination........................................ 5 3.6 Seller's Conditions to Closing..................... 5 3.6.1 Representations and Warranties............ 5 3.6.2 Covenants................................. 5 3.7 Title and Title Insurance.......................... 5 3.7.1 Deed...................................... 5 3.7.2 Buyer's Title Policy...................... 6 3.7.3 ALTA Policy............................... 6 3.8 Closing Costs and Charges.......................... 6 3.8.1 Seller's Costs............................ 6 3.8.2 Buyer's Costs............................. 6 3.8.3 Other Costs............................... 6 3.9 Deposit of Documents and Funds by Seller........... 7 3.10 Deposit of Documents and Funds by Buyer............ 7 3.11 Delivery of Documents and Funds at Closing......... 7 3.11.1 Recorded Documents........................ 7 3.11.2 Buyer's Documents......................... 8 3.11.3 Purchase Price............................ 8 3.12 Prorations and Adjustments......................... 8 3.12.1 General................................... 8 3.12.2 Rentals................................... 8 3.12.3 Delinquent Rentals........................ 8 3.12.4 Additional Rentals........................ 8 3.12.5 Prepaid Rentals........................... 9 3.12.6 Taxes and Assessments..................... 9 3.12.7 Operating Expenses........................ 9
- i - 3 3.12.8 Commissions and Tenant Improvement Costs......................... 9 3.12.9 Tenant Deposits........................... 10 3.12.10 Seller Deposits........................... 10 3.12.11 Capital Expenditures...................... 10 3.12.12 Method of Proration....................... 10 4. Improvement Assessment Liens; Subdivision and Development Bonds.............................. 11 4.1 Assessment Liens................................... 11 5. Delivery and Possession............................ 11 6. Commissions........................................ 11 7. Damage or Destruction; Condemnation................ 11 8. Seller's Representations, Warranties and Covenants...................................... 12 9. Buyer's Representations and Warranties............. 12 10. Default............................................ 12 10.1 LIQUIDATED DAMAGES - DEPOSIT....................... 12 10.2 No Specific Performance............................ 13 10.3 No Contesting Liquidated Damages................... 13 11. Waiver of Trial by Jury............................ 13 12. Attorneys' Fees.................................... 13 13. Notices............................................ 14 14. Amendment; Complete Agreement...................... 14 15. Governing Law...................................... 14 16. Severability....................................... 14 17. Counterparts, Headings, and Defined Terms.......... 15 18. Time of the Essence................................ 15 19. Waiver............................................. 15 20. Third Parties...................................... 15
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21. Additional Documents............................... 15 22. Independent Counsel................................ 15 23. Condition of Property.............................. 15 24. Property "AS IS"................................... 16 24.1 Seller's Acquisition............................... 16 24.2 No Side Agreements or Representations.............. 16 24.3 AS IS CONDITION.................................... 16 25. Governmental Approvals............................. 18 26. Release............................................ 18 27. [Intentionally Deleted]............................ 19 28. Indemnification.................................... 19 29. Assignment......................................... 20 30. Successors and Assigns............................. 20 31. Exhibits........................................... 20 32. No Reservation of Property......................... 20 33. Duty of Confidentiality............................ 20 34. Survival........................................... 21
- iii - 5 AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made as of this 15th day of July, 1997, by and between CM PROPERTY MANAGEMENT, INC., a Connecticut corporation ("Seller"), and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Buyer"). R E C I T A L S: A. Seller desires to sell and Buyer desires to buy the Property (defined below), subject to satisfaction of the conditions contained herein. NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows: AGREEMENT For purposes of this Agreement, the following terms shall have the following definitions: 1. Certain Basic Definitions. 1.1 "Broker" means Richard L. Cullers of CB Commercial Real Estate Group, Inc. 1.2 "Buyer's Address" means: 6210 N. Beltline Road, Suite 170 Irving, Texas 75063-2656 Attention: Lewis D. Friedland Telephone No.: (972) 756-6000 Facsimile No.: (972) 756-0704 1.3 "Closing Date" means 10:00 a.m., Hartford, Connecticut time on the earlier of (a) the fifteenth (15) day following the end of the Due Diligence Period; or (b) September 15, 1997. 1.4 "Contracts" means all licenses, permits, contracts, and agreements in effect as of the Close of Escrow relating to the Property. - 1 - 6 1.5 "Deposit" means One Hundred Thousand and No/100 Dollars ($100,000.00), payable as follows: $50,000 upon the execution hereof and, if Buyer elects not to terminate this Agreement under Section 3.5, $50,000 on or before the end of the Due Diligence Period. 1.6 "Due Diligence Period" means the period ending at 5:00 p.m., Hartford, Connecticut time on the thirtieth (30th) day following the date hereof. 1.7 "Leases" means all leases of space in the improvements. 1.8 "Personal Property" means any tangible property owned by Seller and located on the Real Property. 1.9 "Property" means the Real Property, Leases, Contracts, and Personal Property, collectively. 1.10 "Purchase Price" means the sum of $6,400,000. Buyer has allocated the Purchase Price as follows: $__________ as to Central Park Office Tech; and $__________ as to Skyway Circle. 1.11 "Real Property" means the improved real property commonly known as Skyway Circle South and Central Park Office Tech consisting of the land located in the County of Dallas, State of Texas, and more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference, together with the improvements now or hereafter located thereon. 1.12 "Seller's Address" means: c/o Cornerstone Real Estate Advisers One Financial Plaza, 17th Floor Hartford, Connecticut 06103-2604 Attention: Mr. William T. Baird Telephone No.: (860) 509-2233 Facsimile No.: (860) 509-2223 1.13 "Title Company" means First American Title Insurance Company. 1.14 "Title Company's Address" means: c/o Republic Title of Texas, Inc. 300 Crescent Court, Suite 100 Dallas, Texas 75201 Attention: Ms. Janell Davidson Telephone No.: (214) 855-8854 Facsimile No.: (214) 855-8889 - 2 - 7 2. Sale of Property; Purchase Price. 2.1 Sale of Property. Seller shall sell the Property to Buyer, and Buyer shall purchase the Property from Seller, for the Purchase Price on the terms and conditions of this Agreement. 2.2 Purchase Price. The Purchase Price shall be payable as follows: 2.2.1 Deposit. On or prior to the execution of this Agreement by Buyer and Seller, Buyer shall deliver to the Title Company $50,000, representing 50% of the Deposit, in the form of a wire transfer or cash or cashier's check drawn on good and sufficient funds made payable to the order of Republic Title of Texas, Inc. If Buyer elects not to terminate this Agreement under Section 3.5, Buyer must deliver to the Title Company $50,000, representing the remaining 50% of the Deposit, in the form of a wire transfer of cashier's check drawn on good and sufficient funds made payable to the order of Republic Title of Texas, Inc. The Deposit shall, except as set forth below, be non-refundable and shall either be applied toward the payment of the Purchase Price on the Close of Escrow or delivered by the Title Company immediately, to Seller if the Close of Escrow does not occur. Notwithstanding the foregoing, the Deposit shall be returned to Buyer if this Agreement is terminated pursuant to Section 3.5, Section 7 or Section 10.2 or if the Close of Escrow does not occur as a result of the failure of a condition contained in Section 3.3.2 or 3.3.3. 2.2.2 Balance. Buyer shall deposit into Escrow an amount ("Cash Balance"), in immediately available federal funds equal to the Purchase Price minus the Deposit and increased by the amount of any credits due or any items chargeable to Buyer under this Agreement. Buyer shall deposit the Cash Balance into Escrow in the form of immediately available federal funds no later than one (1) business day before the Closing Date or such earlier date as may be required by the Escrow Holder under applicable law such that Escrow Holder will be in a position to disburse the cash proceeds to Seller on the Closing Date. 3. Escrow; Closing Conditions. 3.1 Escrow. Upon the execution of this Agreement by Buyer and Seller, and the acceptance of this Agreement by the Title Company in writing, this Agreement shall constitute the - 3 - 8 joint escrow instructions of Buyer and Seller to the Title Company to open an escrow ("Escrow") for the consummation of the sale of the Property to Buyer pursuant to the terms of this Agreement. Upon the Title Company's written acceptance of this Agreement, the Title Company is authorized to act in accordance with the terms of this Agreement. Buyer and Seller shall execute the Title Company's general escrow instructions upon request; provided, however, that if there is any conflict or inconsistency between such general escrow instructions and this Agreement, this Agreement shall control. Upon the Close of Escrow, the Title Company shall pay any sum owed to Seller with immediately available federal funds. 3.2 Closing Date. The Escrow shall close ("Close of Escrow") on the Closing Date, provided that all conditions to the Close of Escrow set forth in this Agreement have been satisfied or waived by the party intended to be benefited thereby. 3.3 Buyer's Conditions to Closing. The Close of Escrow is subject to and contingent on the satisfaction of the following conditions: 3.3.1 Inspection. Buyer's approval of the physical condition of the Property at Buyer's sole cost and expense prior to the expiration of the Due Diligence Period. Buyer acknowledges that prior to the expiration of the Due Diligence Period: (i) Buyer will conduct such surveys and inspections, and made such boring, percolation, geologic, environmental and soils tests and other studies of the Property; and (ii) Buyer will have adequate opportunity to make such inspection of the Property (including an inspection for zoning, land use, environmental and other laws, regulations and restrictions) as Buyer has, in Buyer's discretion, deems necessary or advisable as a condition precedent to Buyer's purchase of the Property and to determine the physical, environmental and land use characteristics of the Property (including, without limitation, its subsurface) and its suitability for Buyer's intended use. Buyer shall protect, indemnify, defend and hold the Property, Seller and Seller's officers, directors, shareholders, participants, affiliates, employees, representatives, invitees, agents and contractors free and harmless from and against any and all claims, damages, liens, stop notices, liabilities, losses, costs and expenses, including reasonable attorneys' fees and court costs, resulting from Buyer's inspection and testing of the Property, including, without limitation, repairing any and all damages to any portion of the Property, arising out of or related (directly or - 4 - 9 indirectly) to Buyer's conducting such inspections, surveys, tests, and studies. Buyer shall keep the Property free and clear of any mechanics' liens or materialmen's liens related to Buyer's right of inspection and the activities contemplated by Section 3.3.1 of this Agreement. The Buyer's indemnification obligations set forth herein shall survive the Close of Escrow and shall not be merged with the Deed, and shall survive the termination of this Agreement and Escrow prior to the Close of Escrow. It is understood by the parties that Seller does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information contained in Seller's files or in the documents produced by Seller, including, without limitation, any environmental audit or report. Buyer acknowledges that Seller and Seller's affiliates shall have no responsibility for the contents and accuracy of such disclosures, and Buyer agrees that the obligations of Seller in connection with the purchase of the Property shall be governed by this Agreement irrespective of the contents of any such disclosures or the timing or delivery thereof. 3.3.2 Title Policy. The Title Company's commitment to issue or the issuance of the Buyer's Title Policy complying with the requirements of Section 3.7.2 below. 3.3.3 Covenants. Seller having performed and satisfied all agreements and covenants required hereby to be performed by Seller prior to or at the Close of Escrow, excluding Section 3.9.5 below. 3.3.4 Preliminary Report. Buyer has received or will receive a current preliminary title report (together with all of the documents referred to therein, the "Prelim") on the Property showing the status of title to the Property as the date of the Prelim. 3.3.5 Due Diligence Items. Seller will make available to Buyer at Macfarlan Real Estate's offices for Buyer's review the documents and information ("Due Diligence Items") set forth on Exhibit "B" attached hereto and incorporated herein by this reference. Buyer shall not contact nor hold any discussions with any tenants or property managers without first notifying Seller, and giving Seller a reasonable opportunity to be present at such contacts or discussions at a time and location specified by Buyer in writing. 3.4 Approval. Buyer has approved the matters described in Sections 3.3.1, 3.3.4 and 3.3.5 on or before the end of the - 5 - 10 Due Diligence Period. The foregoing will survive the Close of Escrow and not be merged in the Deed. 3.5 Termination. Buyer has the right to terminate this Agreement, in Buyer's sole discretion, for any reason by delivery of written notice to Seller and the Title Company no later than the end of the Due Diligence Period. This is an "all or none" transaction and Buyer has no right to terminate this Agreement except in its entirety. 3.6 Seller's Conditions to Closing. The obligations of Seller to consummate the transactions provided for herein are subject to and contingent upon the satisfaction of the following conditions or the waiver of same by Seller in writing: 3.6.1 Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and correct as of the date made and as of the Close of Escrow with the same effect as though such representations and warranties were made at and as of the Close of Escrow. 3.6.2 Covenants. Buyer shall have performed and satisfied all agreements and covenants required hereby to be performed by Buyer prior to or at the Close of Escrow. 3.7 Title and Title Insurance. 3.7.1 Deed. On the Closing Date, Seller shall convey title to the Property to Buyer by deed in the form of Exhibit "C" attached hereto and incorporated herein by this reference ("Deed"). 3.7.2 Buyer's Title Policy. At the Close of Escrow, the Title Company shall issue to Buyer a Texas Standard Coverage Owner's Policy of Title Insurance ("Buyer's Title Policy") which: a. shall be written with liability in the amount of the Purchase Price; and b. shall insure title to the Property, to be vested in Buyer, subject only to the following exceptions ("Permitted Exceptions"): (i) the standard printed exceptions set forth in the Buyer's Title Policy; (ii) general and special real property taxes and assessments for the current fiscal year, a lien not yet due - 6 - 11 and payable; (iii) the exceptions reflected in the Prelim, but the exception for tenants shall be limited to rights of tenants in possession, as tenants only, under unrecorded lease agreements; and (iv) any exceptions directly or indirectly caused by Buyer. 3.7.3 Survey Coverage. Buyer shall have the right to procure survey coverage ("Survey Coverage") as long as the issuance of the Survey Coverage does not delay or extend the Closing Date. Buyer shall pay for (i) the increased cost of such Survey Coverage, (ii)the cost of any survey that the Title Company requires for issuance of Survey Coverage, and (iii) for the cost of any other increase in the amount or scope of title insurance if Buyer elects to increase the amount or scope of title insurance coverage provided in the Buyer's Title Policy. 3.8 Closing Costs and Charges. 3.8.1 Seller's Costs. Seller shall pay (a) one-half (1/2) of Title Company's escrow fees; (b) the premium for the Buyer's Title Policy (but not the increased cost of Survey Coverage, if Buyer elects to purchase same); (c) all expenses and charges incurred in connection with the discharge of delinquent taxes, if any, which may be required in order for the Title Company to issue the Buyer's Title Policy in accordance with Section 3.7.2(b) above, and (d) Seller's share of prorations as determined in accordance with Section 3.12. 3.8.2 Buyer's Costs. Buyer shall pay (a) one-half (1/2) of the Title Company's escrow fee; (b) all document recording charges; (c) the cost of the survey and any costs arising out of the Buyer's Title Policy which are described in Section 3.7.3; (d) the cost of all endorsements; (e) all documentary transfer and other taxes payable in connection with the transfer of the Property; and (f) Buyer's share of prorations as determined in accordance with Section 3.12. 3.8.3 Other Costs. All other costs, if any, shall be apportioned in the customary manner for real property transactions in the County where the Real Property is located. 3.9 Deposit of Documents and Funds by Seller. Not later than one (1) business day prior to the Closing Date, Seller shall deposit the following items into Escrow, each of which shall be duly executed and acknowledged by Seller where appropriate: 3.9.1 The Deed. - 7 - 12 3.9.2 Two (2) counterparts of a bill of sale, duly executed by Seller, conveying to Buyer, without warranty, all of Seller's right, title, and interest in and to the Personal Property, in the form of Exhibit "D" attached hereto and incorporated herein by this reference ("Bill of Sale"). 3.9.3 Two (2) counterparts of an assignment and assumption, duly executed by Seller, assigning to Buyer, without warranty, all of Seller's right, title, and interest in and to all Leases and Contracts, all to the extent transferable by Seller, in the form of Exhibit "E" attached hereto and incorporated herein by this reference ("General Assignment"). 3.9.4 Other documents pertaining to Seller's authority to record the Deed that may reasonably be required by the Title Company to close the Escrow in accordance with this Agreement. 3.9.5 Estoppel letters from tenants covering at least 75% of the currently occupied tenant space, in substantially the form attached hereto as Exhibit "F", provided that Buyer agrees that Seller, at its option, may substitute its own estoppel in the form attached hereto as Exhibit "G" in order to satisfy all or any part of such 75% requirement. Seller has no liability under any substitute estoppel upon delivery of the applicable tenant estoppel or beyond six (6) months after the Closing. 3.10 Deposit of Documents and Funds by Buyer. Not later than one (1) business day prior to the Closing Date, Buyer shall deposit the following items into Escrow: 3.10.1 The Cash Balance; 3.10.2 Two (2) counterparts of the General Assignment, duly executed by Buyer; 3.10.3 Two (2) counterparts of the Bill of Sale, duly executed by Buyer; and 3.10.4 All other funds and documents as may reasonably be required by the Title Company to close the Escrow in accordance with this Agreement. 3.11 Delivery of Documents and Funds at Closing. Provided that all conditions to closing set forth in this Agreement have been satisfied or, as to any condition not - 8 - 13 satisfied, waived by the party intended to be benefited thereby, on the Closing Date the Title Company shall conduct the closing by recording or distributing the following documents and funds in the following manner: 3.11.1 Recorded Documents. Record the Deed in the Official Records of the County in which the Real Property is located; 3.11.2 Buyer's Documents. Deliver to Buyer: (a) the original Buyer's Title Policy; (b) an original fully-executed counterpart of the Bill of Sale; and (c) an original fully-executed counterpart of the General Assignment; and 3.11.3 Purchase Price. Deliver to Seller the Purchase Price and such other funds, if any, as may be due to Seller by reason of credits under this Agreement, less all items chargeable to Seller under this Agreement, an original fully executed counterpart of the General Assignment, and an original fully executed counterpart of the Bill of Sale. 3.12 Prorations and Adjustments. 3.12.1 General. Rentals, revenues, and other income, if any, from the Property, and real property taxes and operating expenses, if any, affecting the Property shall be prorated as of midnight on the day preceding the Close of Escrow. For purposes of calculating prorations, Seller shall be deemed to be in title to the Property, and therefore entitled to the income and responsible for the expenses, for the entire day upon which the Close of Escrow occurs. 3.12.2 Rentals. Subject to the provisions of Sections 3.12.3 and 3.12.4, rentals shall be prorated as of the Close of Escrow. "Rentals" as used herein includes fixed rentals, additional rentals, percentage rentals, escalation rentals, retroactive rentals, operating cost pass-throughs and other sums and charges payable by tenants under the Leases. 3.12.3 Delinquent Rentals. Rentals are delinquent when payment thereof is more than thirty (30) days delinquent as of the Close of Escrow. Delinquent rentals shall be prorated between Buyer and Seller as of the Close of Escrow but not until they are actually collected by Buyer. Buyer shall have the sole right to collect any delinquent rentals, but shall not have the obligation to do so. Delinquent rentals collected by Buyer, net of the costs of collection (including attorneys' - 9 - 14 fees), shall be applied first against amounts currently due. Buyer agrees that any payments due to Seller as a result of collected delinquent rentals shall be payable by Buyer to Seller promptly upon receipt thereof. 3.12.4 Additional Rentals. Operating cost pass-throughs, percentage rentals, additional rentals and other retroactive rental escalations, sums or charges payable by tenants which accrue as of the Close of Escrow but are not then due and payable, shall be prorated as of the Close of Escrow. 3.12.5 Prepaid Rentals. Rentals received by Seller attributable to periods after the Close of Escrow shall be prorated and credited to Buyer and debited to Seller at the Close of Escrow. 3.12.6 Taxes and Assessments. All non-delinquent real estate taxes and current installments of assessments affecting the Property which are payable by Seller shall be prorated as of the Close of Escrow based on the actual current tax bill. All delinquent taxes and assessments, if any, affecting the Property which are payable by Seller shall be paid at the Close of Escrow from funds accruing to Seller. Any refunds of real estate taxes and assessments attributable to the period prior to the Close of Escrow shall be paid to Seller upon receipt, whether such receipt occurs before or after the Close of Escrow. Buyer acknowledges that Seller, with the assistance of its tax consultant, is currently seeking a refund of real estate taxes and assessments previously paid on account of the Property. Seller's tax consultant may, at Seller's election, and at Seller's sole cost and expense, continue to process all real estate tax and assessment refund claims which relate to the period prior to the Close of Escrow. 3.12.7 Operating Expenses. All utility service charges for electricity, heat and air conditioning service, other utilities, elevator maintenance, common area maintenance, taxes (other than real estate taxes and income taxes) such as rental taxes, and other expenses affecting the Property which are payable by Seller and any other costs incurred in the ordinary course of business or the management and operation of the Property shall be prorated on an accrual basis. Alternatively, Seller may cause any utility company to transfer billings to Buyer upon the Close of Escrow. Seller shall pay all such expenses that accrue prior to the Close of Escrow and Buyer shall pay all such expenses accruing on the Close of Escrow and thereafter. To the extent possible, Seller and Buyer shall - 10 - 15 obtain billings and meter readings as of the Close of Escrow to aid in such prorations. 3.12.8 Commissions and Tenant Improvement Costs. Seller shall pay in full all leasing commissions and documented tenant improvement costs, if any, accruing prior to the Close of Escrow and during Seller's period of ownership with respect to the Leases which were executed prior to the date of this Agreement, as shown on the proration schedule to be prepared pursuant to Section 3.12.12 below. Buyer shall pay in full all other leasing commissions and tenant improvement costs payable by the lessor and accruing after the Close of Escrow with respect to Leases, including any renewal or expansion thereof. 3.12.9 Tenant Deposits. Buyer shall be credited and Seller shall be debited with an amount equal to all tenant deposits (and any interest accrued thereon for the benefit of a tenant pursuant to Leases) actually being held by Seller under the Leases, except to the extent that as of Close of Escrow Seller transfers to Buyer control of accounts holding tenant deposits, or letters of credit, certificates of deposit, or other forms of tenant deposits held in separately maintained accounts pursuant to Leases. 3.12.10 Seller Deposits. Seller shall be credited and Buyer shall be debited with an amount equal to all refundable deposits, retentions, and holdbacks then being held by any governmental entity, any utility company, or other third party under any Contract, together with all interest then accrued thereon for the benefit of Seller, to the extent same constitute liabilities of third parties to Seller which are credited or assigned by Seller to Buyer as of the Close of Escrow. 3.12.11 Capital Expenditures. All costs and expenses payable by Seller and not reimbursable by other third parties with respect to capital work relating to the Property conducted by or on behalf of Seller shall be paid in full by Buyer (or reimbursed by Buyer to Seller, if applicable) with respect to all such capital work which has not been substantially completed as of the date of this Agreement. Buyer's responsibility under this Section shall not, however, exceed $1,000. 3.12.12 Method of Proration. The Title Company shall, with the assistance of Buyer and Seller, prepare a schedule of tentative prorations prior to the Closing Date with respect to the Property. Such prorations, if and to the extent - 11 - 16 known and agreed upon as of the Close of Escrow, shall be paid by Buyer to Seller (if the prorations result in a net credit to the Seller) or by Seller to Buyer (if the prorations result in a net credit to the Buyer) by increasing or reducing the cash to be paid by Buyer at the Close of Escrow. Any such prorations not determined or not agreed upon as of the Close of Escrow shall be paid by Buyer to Seller, or by Seller to Buyer, as the case may be, in cash as soon as practicable following the Close of Escrow. Buyer's and Seller's obligations with respect to prorations under this Agreement shall survive for a period of two (2) months after the Close of Escrow; provided, however, that such two (2) month limitation (or any other limitation) shall not apply to Buyer's obligation to deliver to Seller (a) any Rentals, Delinquent Rentals or Additional Rentals applicable to Seller's period of ownership; or (b) any tax refund received by Buyer which is attributable to the period prior to the Close of Escrow as provided in Section 3.12.6, above. A copy of the schedule of prorations as agreed upon by Buyer and Seller shall be delivered to Escrow Holder prior to the Close of Escrow. 4. Improvement Assessment Liens; Subdivision and Development Bonds. 4.1 Assessment Liens. If and to the extent there exists any improvement assessment liens or other similar assessments which encumber the Property, Buyer hereby expressly agrees and assumes the obligation to pay any and all future installments of such bonds or assessment liens affecting the Property which accrue from and after the Close of Escrow. Any bond payments or assessment liens for the current payable period shall be prorated in accordance with Section 3.12 above and any past due and unpaid installments of such bonds or assessment liens shall be paid by Seller. Seller shall have no obligation to pay the entire principal amount of any of such assessments or bonds. 5. Delivery and Possession. Seller shall deliver possession of the Property to Buyer at the Close of Escrow. 6. Commissions. Buyer and Seller each represent and warrant to the other that there are no commissions, finder's fees or brokerage fees arising out of the transactions contemplated by this Agreement other than a commission payable by Seller to Broker on the Close of Escrow only. Buyer shall indemnify and hold Seller harmless - 12 - 17 from and against any and all liabilities, claims, demands, damages, costs and expenses, including, without limitation, reasonable attorneys' fees and court costs, in connection with claims for any such commissions, finders' fees or brokerage fees arising out of Buyer's conduct or the inaccuracy of the foregoing representation and/or warranty of Buyer. Seller shall indemnify and hold Buyer harmless from and against any and all liabilities, claims, demands, costs and expenses, including, without limitation, reasonable attorneys' fees and costs in connection with claims for any such commissions, finders' fees or brokerage fees arising out of Seller's conduct or the inaccuracy of the foregoing representation and/or warranty of Seller. 7. Damage or Destruction; Condemnation. Buyer shall have the right to terminate this Agreement if all or a material part of the Property is destroyed without fault of Buyer or a material part of the Property is taken by eminent domain. Buyer shall give written notice of Buyer's election to terminate this Agreement within five (5) business days after Buyer first learns of any damage to or condemnation of the Property which entitles Buyer to terminate this Agreement. If Buyer does not give such notice, then this Agreement shall remain in full force and effect and there shall be no reduction in the Purchase Price, but Seller shall, at Close of Escrow, assign to Buyer (a) any insurance proceeds payable with respect to such damage; or (b) the entire award payable with respect to such condemnation proceeding, whichever is applicable. 8. Seller's Representations, Warranties and Covenants. 8.1 Seller represents and warrants to Buyer that as of the date of this Agreement and as of the Closing Date: (a) Seller is duly organized, validly existing, and in good standing under the laws of the state of its formation; and (b) Seller has the full power and authority to execute, deliver and perform its obligations under this Agreement. 8.2 Seller covenants and agrees as follows: (a) Following the end of the Due Diligence Period, Seller will not enter into any new Leases, modify any existing Lease or grant any additional encumbrances affecting title to the Property, without in each case, receiving Buyer's consent, not to - 13 - 18 be unreasonably withheld; (b) Seller will continue to operate the Property in accordance with Seller's current practice, but such covenant does not require Seller to incur any capital expenditures or make any alterations, repairs or improvements to the Property, except if an emergency; (c) Following the end of the Due Diligence Period, Seller will not enter into any new service contracts without Buyer's consent, not to be unreasonably withheld, unless same may be terminated, without penalty, upon no more than 30 days prior notice; (d) Seller agrees to deliver to Buyer copies of any new Leases, Lease amendments or new service contracts executed after the date of this Agreement. 9. Buyer's Representations and Warranties. Buyer represents and warrants to Seller that as of the date of this Agreement and as of the Closing Date: 9.1 Buyer is duly organized, validly existing, and in good standing under the laws of the state of its formation; and 9.2 Prior to the end of the Due Diligence Period, Buyer will have the full power and authority to execute, deliver and perform Buyer's obligations under this Agreement. 10. Default. 10.1 LIQUIDATED DAMAGES - DEPOSIT. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IF BUYER HAS NOT TERMINATED THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD AND IF THE SALE OF THE PROPERTY TO BUYER IS NOT CONSUMMATED FOR ANY REASON OTHER THAN SELLER'S DEFAULT UNDER THE AGREEMENT, SELLER SHALL BE ENTITLED TO RETAIN THE DEPOSIT AS SELLER'S LIQUIDATED DAMAGES. THE PARTIES AGREE THAT IT WOULD BE IMPRACTICABLE AND EXTREMELY DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF BUYER'S FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS AGREEMENT, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS AGREEMENT, THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENT A REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH FAILURE, PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT SELLER'S RIGHTS TO RECEIVE - 14 - 19 REIMBURSEMENT FOR ATTORNEYS' FEES, NOR WAIVE OR AFFECT SELLER'S RIGHTS AND BUYER'S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THIS AGREEMENT. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION. SELLER'S INITIALS BUYER'S INITIALS 10.2 No Specific Performance. As material consideration to Seller's entering into this Agreement with Buyer, Buyer expressly waives the remedy of specific performance on account of Seller's default under this Agreement at common law or otherwise to record or file a lis pendens or a notice of pendency of action or similar notice against all of any portion of the Property. In the event the Close of Escrow and the consummation of the transaction contemplated by this Agreement do not occur solely by reason of default by Seller, Buyer as its sole remedy will be entitled to the return of its Deposit and any interest accrued thereon plus all out-of-pocket costs incurred by Buyer in connection with this matter, up to a maximum of $15,000.00. 10.3 No Contesting Liquidated Damages. As material consideration to each party's agreement to the liquidated damages provisions stated above, each party hereby agrees to waive any and all rights whatsoever to contest the validity of the liquidated damage provisions for any reason whatsoever, including, but not limited to, that such provision was unreasonable under circumstances existing at the time this Agreement was made. 11. Waiver of Trial by Jury. Seller and Buyer, to the extent they may legally do so, hereby expressly waive any right to trial by jury of any claim, demand, action, cause of action, or proceeding arising under or with respect to this Agreement, or in any way connected with, or related to, or incidental to, the dealings of the parties hereto with respect to this Agreement or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and irrespective of whether sounding in contract, tort, or otherwise. To the extent they may legally do so, Seller and Buyer hereby agree that any such claim, demand, action, cause of action, or proceeding shall be decided by a court trial without a - 15 - 20 jury and that any party hereto may file an original counterpart or a copy of this section with any court as written evidence of the consent of the other party or parties hereto to waiver of its or their right to trial by jury. 12. Attorneys' Fees. If any action or proceeding is commenced by either party to enforce their rights under this Agreement or to collect damages as a result of the breach of any of the provisions of this Agreement, the prevailing party in such action or proceeding, including any bankruptcy, insolvency or appellate proceedings, shall be entitled to recover all reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and court costs, in addition to any other relief awarded by the court. 13. Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective upon the earlier of the following to occur: (a) when delivered to the recipient; or (b) three (3) business days after deposit in a sealed envelope in the United States mail, postage prepaid by registered or certified mail, return receipt requested, addressed to the recipient as set forth below. All notices to Seller shall be sent to Seller's Address. All notices to Buyer shall be sent to Buyer's Address. All notices to Escrow Holder shall be sent to Escrow Holder's Address. The foregoing addresses may be changed by written notice given in accordance with this Section. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday. 14. Amendment; Complete Agreement. All amendments and supplements to this Agreement must be in writing and executed by Buyer and Seller. This Agreement contains the entire agreement and understanding between Buyer and Seller concerning the subject matter of this Agreement and supersedes all prior agreements, terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Seller concerning the Property or the other matters which are the subject of this Agreement. This Agreement has been drafted through a joint effort of the parties and their counsel and, therefore, shall not be construed in favor - 16 - 21 of or against either of the parties. 15. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Texas. 16. Severability. If any provision of this Agreement or application thereof to any person or circumstance shall to any extent be invalid or unenforceable, the remainder of this Agreement (including the application of such provision to persons or circumstances other than those to which it is held invalid or unenforceable) shall not be affected thereby, and each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. 17. Counterparts, Headings, and Defined Terms. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one Agreement. The headings to sections of this Agreement are for convenient reference only and shall not be used in interpreting this Agreement. 18. Time of the Essence. Time is of the essence of this Agreement. 19. Waiver. No waiver by Buyer or Seller of any of the terms or conditions of this Agreement or any of their respective rights under this Agreement shall be effective unless such waiver is in writing and signed by the party charged with the waiver. 20. Third Parties. This Agreement is entered into for the sole benefit of Buyer and Seller and their respective permitted successors and assigns. No party other than Buyer and Seller and such permitted successors and assigns shall have any right of action under or rights or remedies by reason of this Agreement. - 17 - 22 21. Additional Documents. Each party agrees to perform any further acts and to execute and deliver such further documents which may be reasonably necessary to carry out the terms of this Agreement. 22. Independent Counsel. Buyer and Seller each acknowledge that: (i) they have been represented by independent counsel in connection with this Agreement; (ii) they have executed this Agreement with the advice of such counsel; and (iii) this Agreement is the result of negotiations between the parties hereto and the advice and assistance of their respective counsel. The fact that this Agreement was prepared by Seller's counsel as a matter of convenience shall have no import or significance. Any uncertainty or ambiguity in this Agreement shall not be construed against Seller because Seller's counsel prepared this Agreement in its final form. 23. Condition of Property. Buyer represents and warrants, which representations and warranties shall survive the Close of Escrow and not be merged with the Deed, that, as specified in Section 3.3.1 hereof, Buyer has, or shall have inspected and conducted tests and studies of the Property, and that Buyer is or will be prior to the Close of Escrow familiar with the general condition of the Property. Buyer understands and acknowledges that the Property may be subject to earthquake, fire, floods, erosion, high water table, dangerous underground soil conditions, hazardous materials and similar occurrences that may alter its condition or affect its suitability for any proposed use. Seller shall have no responsibility or liability with respect to any such occurrence or condition. Buyer represents and warrants that Buyer is acting, and will act, only upon information obtained by Buyer directly from Buyer's own inspection of the Property. Notwithstanding anything to the contrary contained in this Agreement, the suitability or lack of suitability of the Property for any proposed or intended use, or availability or lack of availability of (a) permits or approvals of governmental or regulatory authorities, or (b) easements, licenses or other rights with respect to any such proposed or intended use of the Property, shall not affect the rights or obligations of the Buyer hereunder. 24. Property "AS IS". 24.1 Seller's Acquisition. Buyer acknowledges that - 18 - 23 Seller did not develop or construct the Property. 24.2 No Side Agreements or Representations. No person acting on behalf of Seller is authorized to make, and by execution hereof, Buyer acknowledges that no person has made, any representation, agreement, statement, warranty, guarantee or promise regarding the Property or the transaction contemplated herein or the zoning, construction, physical condition or other status of the Property except as may be expressly set forth in this Agreement. No representation, warranty, agreement, statement, guarantee or promise, if any, made by any person acting on behalf of Seller which is not contained in this Agreement will be valid or binding on Seller. 24.3 AS IS CONDITION. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS SPECIFICALLY PROVIDED IN SECTION 8 HEREIN, SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO (I) VALUE; (II) THE INCOME TO BE DERIVED FROM THE PROPERTY; (III) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, INCLUDING, WITHOUT LIMITATION, THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE PROPERTY; (IV) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY; (V) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (VI) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (VII) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (VIII) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATION, ORDERS OR REQUIREMENTS, INCLUDING, WITHOUT LIMITATION, TITLE III OF THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FEDERAL WATER POLLUTION CONTROL ACT, THE FEDERAL RESOURCE CONSERVATION AND RECOVERY ACT, THE U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., PART 261, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976, THE CLEAN WATER ACT, THE SAFE DRINKING WATER ACT, THE HAZARDOUS MATERIALS TRANSPORTATION ACT, THE TOXIC SUBSTANCE CONTROL ACT, AND REGULATIONS PROMULGATED UNDER ANY OF THE FOREGOING; (X) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR - 19 - 24 ADJACENT TO THE PROPERTY; (XI) THE CONTENT, COMPLETENESS OR ACCURACY OF THE DUE DILIGENCE MATERIALS OR PRELIMINARY REPORT REGARDING TITLE; (XII) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER; (XIII) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY OF ANY UNDERSHORING; (XV) DEFICIENCY OF ANY DRAINAGE; (XVI) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; OR (XVIII) WITH RESPECT TO ANY OTHER MATTER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE PROPERTY AND REVIEW INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTY, BUYER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH INFORMATION AND DOCUMENTATION, AND NOT ON ANY INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION MADE AVAILABLE TO BUYER OR PROVIDED OR TO BE PROVIDED BY OR ON BEHALF OF SELLER WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. BUYER AGREES TO FULLY AND IRREVOCABLY RELEASE SELLER FROM ANY AND ALL CLAIMS THAT BUYER MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST SELLER FOR ANY COSTS, LOSS, LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION OR CAUSE OF ACTION ARISING FROM SUCH INFORMATION OR DOCUMENTATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN "AS IS" CONDITION AND BASIS WITH ALL FAULTS, AND THAT SELLER HAS NO OBLIGATIONS TO MAKE REPAIRS, REPLACEMENTS OR IMPROVEMENTS EXCEPT AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN. BUYER REPRESENTS, WARRANTS, AND COVENANTS TO SELLER, WHICH REPRESENTATION, WARRANTY, AND COVENANT SHALL SURVIVE THE CLOSE OF ESCROW AND NOT BE MERGED WITH THE DEED, THAT, EXCEPT FOR SELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES SPECIFIED IN THIS AGREEMENT, BUYER IS RELYING SOLELY UPON BUYER'S OWN INVESTIGATION OF THE PROPERTY. BY INITIALING BELOW, THE BUYER ACKNOWLEDGES THAT (i) THIS SECTION 24.3 HAS BEEN READ AND FULLY UNDERSTOOD, (ii) THE BUYER HAS HAD THE CHANCE TO ASK QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (iii) THE BUYER HAS ACCEPTED - 20 - 25 AND AGREED TO THE TERMS SET FORTH IN THIS SECTION 24.3. BUYER'S INITIALS 25. Governmental Approvals. Nothing contained in this Agreement shall be construed as authorizing Buyer to apply for a zoning change, variance, subdivision map, lot line adjustment or other discretionary governmental act, approval or permit with respect to the Property prior to the Close of Escrow, and Buyer agrees not to do so without Seller's prior written approval, which approval may be withheld in Seller's sole and absolute discretion. Buyer agrees not to submit any reports, studies or other documents, including, without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency, or any amendment or modification to any such instruments or documents prior to the Close of Escrow unless first approved by Seller, which approval Seller may withhold in Seller's sole discretion. Buyer's obligation to purchase the Property shall not be subject to or conditioned upon Buyer's obtaining any variances, zoning amendments, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit. 26. Release. Buyer shall rely solely upon Buyer's own knowledge of the Property based on its investigation of the Property and its own inspection of the Property in determining the Property's physical condition. Buyer and anyone claiming by, through or under Buyer hereby waives its right to recover from and fully and irrevocably releases Seller, its employees, officers, directors, representatives, agents, servants, attorneys, affiliates, parent, subsidiaries, successors and assigns, and all persons, firms, corporations and organizations in its behalf ("Released Parties") from any and all claims that it may now have or hereafter acquire against any of the Released Parties for any costs, loss, liability, damage, expenses, demand, action or cause of action arising from or related to any construction defects, errors, omissions or other physical conditions, latent or otherwise, including environmental matters, affecting the Property, or any portion thereof. The foregoing release includes claims of which Buyer is presently unaware or which Buyer does not presently suspect to exist which, if known by Buyer, would materially - 21 - 26 affect Buyer's release to Seller. In this connection and to the extent permitted by law, Buyer hereby agrees, represents and warrants, which representation and warranty shall survive the Close of Escrow and not be merged with the Deed, that Buyer realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and Buyer further agrees, represents and warrants, which representation and warranty shall survive the Close of Escrow and not be merged with the Deed, that the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit Seller from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses which might in any way be included as a material portion of the consideration given to Seller by Buyer in exchange for Seller's performance hereunder. Seller has given Buyer material concessions regarding this transaction in exchange for Buyer agreeing to the provisions of this Section 26. Seller and Buyer have each initialed this Section 26 to further indicate their awareness and acceptance of each and every provision hereof. SELLER'S INITIALS BUYER'S INITIALS 27. [Intentionally Deleted]. 28. Indemnification. Buyer shall indemnify, defend, protect and hold harmless Seller and Seller's parent company and their respective affiliates, subsidiaries, directors, officers, participants, employees, consultants and agents, from and against any and all damages, losses, liabilities, costs or expenses whatsoever (including attorneys' fees and costs) and claims therefor (collectively, "Claims"), whether direct or indirect, known or unknown, or foreseen or unforeseen, which may arise from or be related to Buyer's due diligence and other activities on or at the Property, including, but not limited to, the acts or omissions of Buyer or its employees, agents, suppliers or contractors. Buyer's obligations hereunder shall survive the Close of Escrow and shall not be merged with the Deed. - 22 - 27 29. Assignment. Buyer shall not assign this Agreement without Seller's prior written consent, which consent may be withheld in Seller's sole and absolute discretion, provided that Buyer may assign this Agreement to an entity controlled by Buyer as long as (a) Buyer notifies Seller in advance; and (b) delivers to Seller an assumption agreement which provides that Buyer will remain liable hereunder notwithstanding such assignment. Any purported assignment in violation of the terms of this Agreement shall be void. 30. Successors and Assigns. This Agreement shall be binding upon and inure to the benefits of the heirs, successors and assigns of the parties hereto. 31. Exhibits. Each reference to a Section or Exhibit in this Agreement shall mean the sections of this Agreement and the exhibits attached to this Agreement, unless the context requires otherwise. Each such exhibit is incorporated herein by this reference. 32. No Reservation of Property. The preparation and/or delivery of unsigned drafts of this Agreement shall not create any legally binding rights in the Property and/or obligations of the parties, and Buyer and Seller acknowledge that this Agreement shall be of no effect until it is duly executed by both Buyer and Seller. Buyer understands and agrees that Seller shall have the right to continue to market the Property and/or to negotiate with other potential purchasers of the Property until the expiration of the Due Diligence Period and the satisfaction or waiver in writing of all conditions to the obligations of Buyer under this Agreement. 33. Duty of Confidentiality. Buyer and Seller represent and warrant that each shall keep all information and/or reports obtained from the other, or related to or connected with the Property, the other party, or this transaction, confidential and will not disclose any such information to any person or entity without obtaining the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. - 23 - 28 34. Survival. Unless otherwise specifically set forth in this Agreement, none of the representations, warranties or indemnities set forth herein shall survive the Close of Escrow. IN WITNESS WHEREOF, Buyer and Seller do hereby execute this Agreement as of the date first written above. SELLER: CM PROPERTY MANAGEMENT, INC., a Connecticut corporation By: Cornerstone Real Estate Advisers, Inc., its Authorized Agent By: /s/ WILLIAM T. BAIRD Name: William T. Baird Title: Vice President BUYER: AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust By: /s/ LEWIS D. FRIEDLAND Name: Lewis D. Friedland Title: Vice President - 24 - 29 Acceptance by Title Company The Title Company acknowledges receipt of the foregoing Agreement and accepts the instructions contained therein. Dated: July ___, 1997 REPUBLIC TITLE OF TEXAS, INC. By: Name: Title: - 25 - 30 EXHIBIT LIST EXHIBIT "A" Legal Description EXHIBIT "B" Due Diligence Items EXHIBIT "C" Special Warranty Deed EXHIBIT "D" Bill of Sale EXHIBIT "E" General Assignment EXHIBIT "F" Form of Tenant Estoppel EXHIBIT "G" Form of Seller Estoppel - 26 - 31 EXHIBIT "A" LEGAL DESCRIPTION TRACT I: Skyway Circle South BEING a 4.000 acre tract of land situated in the B.B.B. & C.R.R. SURVEY, ABSTRACT 214 and being a tract of land known as WALNUT HILL BUSINESS PARK, SECTOR IX WEST, SIXTH INSTALLMENT as recorded by plat in Volume 79231, Page 1405, Deed Records of Dallas County, Texas, and being a tract of land out of Walnut Hill Business Park, Sector IX West, Block "D", an Addition to the City of Irving, Dallas County, Texas, by plat filed in Volume 79081, Page 0981, Deed Records of Dallas County, Texas, said 4.000 acre tract being more particularly described as follows: BEGINNING at an iron rod in the north line of a 100 foot right of way as conveyed to the Texas Power and light Company be deed filed in Volume 5521, Page 616, Deed Records of Dallas County, Texas, and in the south line of said Walnut Hill Business Park, Sector IX West a distance of 1380.66 feet from a point at the southwest corner of said Block "D" and said point also being in the east right of way line of Belt Line Road, a distance of 70 feet from the center line; and said point of Beginning being North, a distance of 100 feet and East a distance of 405 feet from the southwest corner of the B.B.B. & C.R.R. Survey, Abstract No. 214, and the southeast corner of the Francis Jones Survey, Abstract No. 1626; THENCE departing the north line of said Texas Power and Light Company right of way, and the south line of Sector IX West, North 00 degrees 50 minutes and 47 seconds West a distance of 309.72 feet to an iron rod for corner in the south line of Skyway Circle South, a 60 foot right of way; THENCE with the south line of Skyway Circle, North 89 degrees 09 minutes 13 seconds East a distance of 556.29 feet to an iron rod for corner; THENCE departing the south line of Skyway Circle, South 01 degrees 04 minutes 57 seconds East a distance of 316.00 feet to an iron rod for corner in the north line of said Texas Power and Light Company right of way and the South line of Sector IX West; THENCE with the north line of said Texas Power and Light Company Exhibit A - Page 1 of 2 32 right of way, and the south line of Sector IX West, South 89 degrees 47 minutes 55 seconds West a distance of 557.62 feet to the POINT OF BEGINNING; CONTAINING 4.000 acres of land, more or less. TRACT II: Central Park Office Tech PARCEL A - being Lot 1, Block "D", Central Park Addition, an addition to the City of Richardson, Texas, according to the Map thereof recorded in Volume 83157, Page 1954, Map Records of Dallas County, Texas; and PARCEL B - being Lot 31, Block "D", replat of Central Park Phase II, an addition to the City of Richardson, Texas, according to the Map thereof recorded in Volume 84217, Page 2898, Map Records of Dallas County, Texas; This exhibit will be modified, as appropriate, to reflect the legal description set forth on the deed into Seller. Exhibit A - Page 2 of 2 33 EXHIBIT "B" DUE DILIGENCE ITEMS Such documents that are related to the Property as are in the possession of Seller or Seller's property manager, excluding loan files and appraisals. Exhibit B - Page 1 of 2 34 EXHIBIT "C" AFTER RECORDING RETURN TO: SPECIAL WARRANTY DEED THE STATE OF TEXAS ) ) KNOW ALL MEN BY THESE PRESENTS: COUNTY OF DALLAS ) THAT, CM PROPERTY MANAGEMENT, INC., a Connecticut corporation ("Grantor"), for and in consideration of the sum of Ten and No/100 Dollars ($10.00) and other good and valuable consideration in hand paid to Grantor by ________________________ ______________________________ ("Grantee"), whose mailing address ____________________________________________________, the receipt and sufficiency of such consideration being hereby acknowledged, has GRANTED, SOLD AND CONVEYED, and by these presents does GRANT, SELL AND CONVEY unto Grantee that certain real property being more particularly described in Exhibit A attached hereto and made a part hereof for all purposes, together with all improvements, structures and, to the extent owned by Grantor, fixtures situated thereon and all and singular the tenements, hereditaments, easements, rights and appurtenances thereto in anywise belonging (collectively, the "Property"); subject, however, to those matters more particularly described in Exhibit B attached hereto and made a part hereof for all purposes (collectively, the "Permitted Exceptions"). TO HAVE AND TO HOLD the Property, unto Grantee, its successors and assigns forever, subject to the Permitted Exceptions; and Grantor does hereby bind itself and its successors to WARRANT AND FOREVER DEFEND all and singular the Property, subject to the Permitted Exceptions, unto Grantee, its successors and assigns, against every person whomsoever lawfully claiming, or claim the same, or any part thereof, by, through, or under Grantor, but not otherwise. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IT IS Exhibit C - Page 1 of 3 35 EXPRESSLY UNDERSTOOD AND AGREED THAT GRANTEE IS ACQUIRING THE PROPERTY "AS IS" AND "WHERE IS", AND WITH ALL FAULTS AND THAT, EXCEPT AS TO THE SPECIAL WARRANTY OF TITLE SET FORTH ABOVE, GRANTOR HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, IN THIS DEED WITH RESPECT TO THE QUALITY, PHYSICAL CONDITION, EXPENSES, VALUE OF THE PROPERTY OR IMPROVEMENTS THEREON, HANDICAPPED ACCESSIBILITY LAW COMPLIANCE, PRESENCE/ABSENCE OF HAZARDOUS MATERIALS, ELECTROMAGNETIC FIELD EXPOSURE LEVELS OR ANY OTHER MATTER OR THING AFFECTING OR RELATED TO THE PROPERTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, WARRANTIES OF MERCHANTABILITY AND/OR OF FITNESS FOR A PARTICULAR PURPOSE), WHICH MIGHT BE PERTINENT IN CONSIDERING THE MAKING OF THE PURCHASE OF THE PROPERTY, AND GRANTEE, BY ITS ACCEPTANCE HEREOF, DOES HEREBY RELEASE AND FOREVER DISCHARGE GRANTOR, ITS PARTNERS AND THEIR RESPECTIVE AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS FROM ANY AND ALL CLAIM, OBLIGATION AND LIABILITY (WHETHER BASED IN TORT, UNDER CONTRACT OR OTHERWISE) ATTRIBUTABLE, IN WHOLE OR IN PART, TO ANY SUCH REPRESENTATION AND/OR ALLEGED REPRESENTATION. EXCEPT FOR THE SPECIAL WARRANTIES OF TITLE SET FORTH HEREIN AND THE REPRESENTATIONS AND WARRANTIES OF GRANTOR IN SECTION 8 OF THE AGREEMENT OF PURCHASE AND SALE BETWEEN GRANTOR AND GRANTEE, GRANTEE HEREBY RELEASES, ACQUITS AND FOREVER DISCHARGES GRANTOR FROM ANY AND ALL CLAIMS, DEMANDS AND CAUSES OF ACTION THAT GRANTEE MAY HAVE AGAINST GRANTOR WITH RESPECT TO ANY COSTS, LOSSES, EXPENSES OR OTHER LIABILITIES INCURRED IN CONNECTION WITH OR RELATED IN ANY MANNER TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY RIGHT OF CONTRIBUTION OR REIMBURSEMENT PROVIDED UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980, THE RESOURCE CONSERVATION AND RECOVERY ACT, OR ANY OTHER FEDERAL, STATE OR LOCAL ENVIRONMENTAL LAW OR REGULATION. Grantee, by its acceptance hereof, hereby assumes payment of all standby charges, ad valorem real estate taxes and assessments with respect to the 1997 calendar year and subsequent calendar years not yet due and payable, each to the extent attributable to all or any portion of the Property. IN WITNESS WHEREOF, this instrument has been executed as of (but not necessarily on) this ___ day of ____________, 1997. GRANTOR: CM PROPERTY MANAGEMENT, INC. By: Cornerstone Real Estate Advisers, Inc., its authorized agent By: Name: Title: Exhibit C - Page 2 of 3 36 THE STATE OF ___________ ) ) COUNTY OF ______________ ) This instrument was acknowledged before me on _______________________, 1997, by _____________________, a _______________________ of Cornerstone Real Estate Advisers, Inc., in its capacity as authorized agent for CM Property Management, Inc., a Connecticut corporation, on behalf of such corporation. Notary Public, State of ___________ My Commission Expires: Notary's name printed: Exhibit C - Page 3 of 3 37 EXHIBIT "D" BILL OF SALE THIS BILL OF SALE is made this day of , 1997, by CM PROPERTY MANAGEMENT, INC. ("Seller") to _______________________ ("Buyer"). R E C I T A L S : A. Seller and Buyer are parties to that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated as of ______________________, 1997 (the "Purchase Agreement") for the purchase and sale of certain real property more particularly described therein (the "Real Property"). Each capitalized term not defined herein shall have the respective meaning given to that term in the Purchase Agreement. B. The Purchase Agreement provides, in part, that Seller shall transfer to Buyer all tangible personal property, if any, of every kind and character owned by Seller and attached to, appurtenant to or located in the Real Property, all of which is listed on Exhibit "A" attached hereto ("Personal Property"). NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller does hereby absolutely and unconditionally give, grant, bargain, sell, transfer, set over, assign, convey, release, confirm and deliver (collectively, "Transfer") to Buyer, and Buyer accepts, the Personal Property. 1. THE PERSONAL PROPERTY IS BEING TRANSFERRED ON AN "AS IS" BASIS, WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND WHATSOEVER BY SELLER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT SELLER EXPRESSLY DISCLAIMS AND NEGATES, AS TO ALL PROPERTY TRANSFERRED HEREBY: (A) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY; (B) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; AND (C) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR MATERIALS. 2. This Bill of Sale shall be binding upon and inure to the benefit of the respective successors, assigns, personal representatives, heirs and legatees of Buyer and Seller. Exhibit D - Page 1 of 2 38 3. If any party hereto brings any action or suit against the other party hereto by reason of any breach of any covenant, condition, agreement or provision on the part of the other party set forth in this Bill of Sale, the prevailing party shall be entitled to recover from the other party all costs and expenses of the action or suit, including reasonable attorneys' fees, charges and costs, in addition to any other relief to which it may be entitled. IN WITNESS WHEREOF, Seller has executed and delivered this Bill of Sale as of the day and year first above written. SELLER: CM PROPERTY MANAGEMENT, INC. By: Cornerstone Real Estate Advisers, Inc., its Authorized Agent By: Name: Title: BUYER: Exhibit D - Page 2 of 2 39 EXHIBIT "E" GENERAL ASSIGNMENT THIS GENERAL ASSIGNMENT ("Assignment") is made this _____ day of _________________, 1997, by and between __________ ("Assignor"), and __________ ("Assignee"). WITNESSETH: WHEREAS, Assignor and Assignee are parties to that certain Agreement of Purchase and Sale and Joint Escrow Instructions (the "Agreement") dated as of ___________, 1997, respecting the sale of certain "Property" (as described in the Agreement). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Agreement. WHEREAS, under the Agreement, Assignor is obligated to assign to Assignee, to the extent transferable by Assignor, all of Assignor's right, title and interest in and to all Leases and Contracts, including without limitation those Leases listed on Exhibit "A" and those Contracts listed on Exhibit "B" attached hereto and incorporated herein by this reference. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, except as set forth in Section 3.12 of the Agreement, Assignor hereby assigns, sells, transfers, sets over and delivers unto Assignee all of Assignor's estate, right, title and interest in and to the Leases and Contracts, and Assignee hereby accepts such assignment. By acceptance of this Assignment, Assignee hereby assumes the performance of all of the terms, covenants and conditions imposed upon Assignor under the Leases and Contracts. Assignee hereby agrees to indemnify, defend and hold harmless Assignor, its agents and its and their successors and assigns from and against any and all claims, losses, liabilities and expenses, including reasonable attorneys' fees, suffered or incurred by Assignor by reason of Exhibit E - Page 1 of 2 40 any breach by Assignee of any of its obligations under this Assignment or arising out of any obligations under the Leases and Contracts on or after the date hereof. Assignor hereby agrees to indemnify defend and hold harmless Assignee from any and all claims, losses, liabilities and expenses attributable to any breach by Assignor under the Leases and Contracts during Assignor's period of ownership, but not otherwise. In the event any party hereto institutes any action or proceeding against the other party with regard to this Assignment, the prevailing party in such action shall be entitled to recover, in addition to the cost of the suit, its actual attorneys' fees. This Assignment shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of all the respective parties hereto. This Assignment may be executed in any number of counterparts, each of which shall be an original, and all of which, together, shall constitute one and the same instrument. IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this Assignment as of the day and year first above written. ASSIGNOR: CM PROPERTY MANAGEMENT, INC. By: Cornerstone Real Estate Advisers, Inc., its Authorized Agent By: Name: Title: ASSIGNEE: Exhibit E - Page 2 of 2 41 EXHIBIT "F" FORM OF TENANT ESTOPPEL See form attached hereto Exhibit F - Page 1 of 1 42 EXHIBIT "G" FORM OF SELLER ESTOPPEL See form attached hereto Exhibit G - Page 1 of 1 EX-10.2 3 PURCHASE & SALE AGREEMENT 1 EXHIBIT 10.2 PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS THIS AGREEMENT is made and entered into as of ___ day of October, 1997 by and between CORPOREX PROPERTIES OF TAMPA, a Florida corporation ("TAMPA"), and CPX - WESTSHORE CORPORATION ("WESTSHORE"), and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("BUYER"). Tampa and Westshore are sometimes hereinafter referred to collectively as ("SELLER"). This Agreement shall be effective as of the date (the "Effective Date") which is the later of (i) the date on which Seller has executed and delivered this Agreement to Buyer, or (ii) the date on which Buyer has executed and delivered this Agreement to Seller. R E C I T A L S A. Tampa is the owner of that certain real property (the "EASTGATE LAND") and that other certain real property (the "CORPOREX PLAZA I LAND"), both located in Hillsborough County, Florida, as more particularly described in Exhibit "A" attached hereto and made a part hereof. B. Westshore is the owner of that certain real property (the "PRESIDENTS PLAZA LAND") located in Hillsborough County, Florida, as more particularly described in Exhibit "B" attached hereto and made a part hereof. (The Eastgate Land, the Corporex Plaza I Land, and the Presidents Plaza Land are sometimes hereinafter referred to collectively as the "LAND"). C. Tampa and Westshore each own the improvements, structures and fixtures located upon the portions of the Land owned by each of them (but excluding any portion of the same owned by Tenants under "Tenant Leases", if any (as defined below)) ("IMPROVEMENTS"). The Land and Improvements are sometimes referred to herein collectively as the "REAL PROPERTY". D. Buyer desires to purchase and Seller is willing to sell the "Property" (as defined below) on the terms and conditions hereinafter documented. NOW, THEREFORE, in consideration of the promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. PURCHASE AND SALE. Subject to the terms, covenants and conditions of this Agreement, Seller shall sell to Buyer, and Buyer shall purchase from Seller, (A) the Real Property, (B) all right, title and interest of Seller in and to all tangible personal property ("PERSONAL PROPERTY") located on, and/or used solely in connection with the management, maintenance or operation of the Real Property, but excluding tangible personal property owned by tenants of the Real Property under Tenant Leases, (C) all right, 2 title and interest of Seller as lessor in and to all leases ("TENANT LEASES") relating to the leasing of space in the Real Property and all of the rights, interests, benefits and privileges of the lessor thereunder, and (D) all right, title and interest of Seller in and to any contract rights and agreements (including, but not limited to, service agreements), utility commitments, utility contracts and other contracts relating to the operation of the Property ("INTANGIBLE PROPERTY"). The Real Property, the Personal Property, the Tenant Leases, and the Intangible Property are hereinafter referred to collectively as the "PROPERTY". 2. PURCHASE PRICE. The purchase price ("PURCHASE PRICE") for the Property shall be the sum of Fifteen Million One Hundred Thousand Dollars ($15,100,000.00), subject to adjustment as provided in Paragraph 6 hereof. The Purchase Price shall be allocated among the three parcels of Real Property (including the Personal Property, Tenant Leases and Intangible Property relating thereto) as follows: Eastgate Land __________________ Presidents Plaza Land __________________ Corporex Plaza I Land __________________
3. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to Seller by Buyer as follows: A. Deposit. Concurrently with the execution of this Agreement, Buyer shall deliver $150,000.00 in immediately available funds (the "DEPOSIT") to Chicago Title Insurance Company, 5426 Beaumont Center Boulevard, Suite 320, Tampa, Florida 33634, Attn: Alan S. Weissman ("TITLE COMPANY" AND "ESCROW AGENT"). The Deposit shall be held by Escrow Agent in an interest bearing trust account. All interest accrued on the Deposit shall become a part of, and shall be held and disbursed with, the Deposit. The Deposit shall be applied to the Purchase Price upon the close of escrow for the sale of the Property and shall otherwise be held or disbursed by Escrow Agent in accordance with this Agreement. Buyer's federal tax identification number is 75-6335572. B. Closing Payment. The balance of the Purchase Price, as adjusted by the expenses, prorations and credits specified herein, shall be paid to Seller by wire transfer of immediately available federal funds on the "Closing Date" (as defined below) (the amount to be paid under this subparagraph B being herein called the "CLOSING PAYMENT"). 4. TITLE AND SURVEY. A. Title Report. As soon as it can be obtained with reasonable diligence, but in no event later than the second business day after the Effective Date of this Agreement, Seller shall obtain from Title Company, and deliver to Buyer, a written -2- 3 commitment (or commitments) binding Title Company to insure title to the Real Property in Buyer by its A.L.T.A. Form B, Owner's Title Insurance Policy (the "OWNER'S POLICY"), upon recording of the deed (or deeds) to be given by Seller (the "TITLE COMMITMENT"), along with legible copies of all documents referred to therein (the Title Commitment and all such documents herein referred to as the "TITLE INFORMATION"). To the maximum extent Buyer is able based upon the Title Information and the existing surveys of the Property which by then have been made available to Buyer by Seller, but without the Surveys, Buyer shall give Seller written notice on or before the expiration of fifteen (15) business days after receipt of the Title Information and existing surveys that the condition of title as set forth in such Title Information and existing surveys is or is not satisfactory, in Buyer's sole discretion, such notice stating with specificity any matters Buyer considers unsatisfactory. Buyer shall give Seller written notice on or before the expiration of fifteen (15) business days after receipt of the Title Information and the Surveys ("TITLE OBJECTION PERIOD") that the condition of title as set forth in such Title Information and the Surveys is or is not satisfactory, in Buyer's sole discretion, such notice stating with specificity any matters Buyer considers unsatisfactory ("TITLE OBJECTION"), and in the event Buyer states that the condition of title or Surveys is not satisfactory, Seller shall have until the expiration of the Inspection Period, at its option, to eliminate or modify all such Title Objections to the sole satisfaction of Buyer. If Buyer does not notify Seller in writing of any Title Objections within the Title Objection Period, or if Buyer does not terminate this Agreement as herein provided on or before the end of the Inspection Period, Buyer shall be conclusively presumed to have waived its objections to any condition of title reflected in the Title Commitment and the Surveys. In no event shall the provisions of Paragraphs 4.A. or 4.B. operate to extend or postpone the Closing. B. Surveys. On or before the second business day after the Effective Date of this Agreement, Seller shall deliver to Buyer such existing surveys of the Real Property as are within Seller's possession or control. As soon as they can be obtained with reasonable diligence, Seller shall obtain and deliver to Buyer current staked boundary and occupation (as-built) surveys of the Real Property (the "SURVEYS") prepared by licensed Florida land surveyors in accordance with the Florida Minimum Technical Standards for surveys as set forth by the Florida Board of Professional Land Surveyors in Chapter 61G17-6 of the Florida Administrative Code. Seller shall be responsible for and shall pay the cost of said Surveys. In addition to other Title Objections raised by Buyer, if the Surveys show an encroachment on the Real Property or that improvements located on or intended to be located on the Real Property in fact encroach on lands of others, or violate any applicable restrictions, covenants, or governmental regulations, and if Buyer shall notify Seller of its objection to -3- 4 said encroachments within the Title Objection Period, the same shall be treated as a Title Objection. 5. DUE DILIGENCE. A. Due Diligence Investigations. Buyer shall have until 5:00 p.m. (C.S.T.) on the date which is forty (40) days after the Effective Date (the "INSPECTION PERIOD") at its expense to perform such inspections and testing, and to conduct such other studies, as Buyer deems necessary or advisable in order to determine the feasibility of Buyer's purchase of the Property. Commencing on or before the Effective Date, Buyer shall, at Buyer's sole expense, (i) commission a comprehensive engineering study of the Property (including specifications of all fireproofing) and an appropriate environmental survey and audit of the Property, and (ii) commence a comprehensive legal and accounting review of the Property and all leases and other documents pertinent thereto; and Buyer shall exercise reasonable diligence to cause such studies to be diligently, continuously and expeditiously prosecuted to completion. In the event Buyer determines that the purchase of the Property by Buyer is not feasible, Buyer shall so notify Seller in writing within said Inspection Period, whereupon the Deposit shall be returned to Buyer and this Agreement shall be terminated. If Buyer does not terminate this Agreement by written notice to Seller before the expiration of the Inspection Period, as hereinabove provided, then Buyer shall be conclusively presumed to have waived its right to terminate this Agreement as provided in this paragraph 5. Buyer and its agents and representatives shall have a non-exclusive right to enter upon the Property during the Inspection Period for inspection, surveys, soil tests, hazardous substances/environmental studies, engineering and feasibility studies, zoning, and land-use plan analysis; provided that Buyer shall provide to Seller reasonable advance notice of any activities of Buyer or any agent, representative or contractor of Buyer on the Property, and further provided that Seller shall be afforded the opportunity to have a representative of Seller accompany and observe the activities of Buyer or any such agent, representative or contractor of Buyer on the Property. B. Documents to Buyer Before Closing. Prior to or as soon as reasonably possible after the Effective Date of this Agreement, Seller shall deliver to Buyer all of the items identified in Exhibit "C" attached hereto as are in Seller's possession. Seller shall exercise diligent efforts to deliver to Buyer originals or copies of all amendments or supplements to the items identified on Exhibit "C" which come into Seller's possession. C. Estoppel Certificates. Seller shall exercise diligent efforts to obtain and deliver to Buyer, as soon as reasonably possible but in no event later than the Closing Date, duly executed originals of a certificate ("ESTOPPEL CERTIFICATE") -4- 5 in the form attached hereto as Exhibit "D" or in the form specified in the respective leases, if any, or in such other form as Seller is able to obtain said Estoppel Certificates as long as neither Buyer nor Buyer's lender has any reasonable objection to such other form, executed by tenants leasing space in the Property and by each of their respective Guarantors, if any. If prior to Closing all of the Estoppel Certificates and consents have not been delivered to Buyer in the required form, or in another form to which neither Buyer nor Buyer's lender has any reasonable objection, Buyer may terminate this Agreement pursuant to the provisions of paragraph 5.A. above. D. Inspection of Books and Records. At reasonable times following reasonable notice, Buyer, its accountants, architects, attorneys, engineers, contractors and other representatives shall be afforded reasonable access (1) to the Property to inspect, measure, appraise, test and make surveys of the Property and (2) to all books, records and files relating to the Property. Buyer shall have the right, at Buyer's expense, to make copies of all such books and records, including, without limitation, all books and records relating to increases in real estate taxes, building and operations maintenance costs allocable to tenants and all information reasonably necessary for Buyer to audit the income and expenses of the Property; provided, however, that Buyer shall return all copies of such books and records if Closing does not occur under this Agreement. E. No Interference. During the pendency of this Agreement neither Buyer nor its agents will unreasonably interfere with the activity of tenants or persons providing service in the Property. Buyer shall cause its agents, representatives, employees and contractors performing or conducting any inspections, testing or other activities on the Property to conduct such inspections, testing and other activities in such a manner as to minimize damage to the Property and interference with the activities of Seller and Seller's tenants and invitees on the Property. Buyer agrees to indemnify and defend Seller against any and all cost, claim, loss, expense, liability or actual damage Seller may incur or be subject to arising from or relating to any claim of personal injury or property damage that may arise against the Property or the Seller as a result of or in connection with the activities of Buyer or its employees, agents, contractors or representatives, or any claims of lien filed at any time relating to any work or activities performed by or for Buyer or any employee, agent or contractor of Buyer on or relating to the Property. Buyer shall promptly repair any damage to the Property caused by Buyer's agents, representatives, employees or contractors and which results in an unsafe or unlawful condition on the Property. Upon termination of this Agreement, Buyer shall repair any damage to the Property caused by Buyer's agents, representatives, employees or contractors promptly upon receipt of notice from Seller specifying the repairs required. If Buyer fails to complete any repairs Buyer is obligated to make -5- 6 under this paragraph 5.E. within a reasonable time, Seller may, but shall not be obligated to, make such repairs on Buyer's behalf, and if Seller makes such repairs on Buyer's behalf, Buyer shall, within ten (10) days after demand therefor, reimburse Seller for Seller's actual expenses incurred in completing such repairs. Buyer's indemnification, duty to defend and hold harmless, and duty to repair under this paragraph 5.E. shall survive Closing or termination of this Agreement. F. Due Diligence Information. Prior to entry upon the Property by any agent or contractor engaged by Buyer to perform inspections, investigations and/or testing, or otherwise to assist in Buyer's due diligence investigation of the Property, Buyer shall notify Seller in writing of the name, address, contact person, and scope of work such agent or contractor has been engaged to perform; and Buyer hereby authorizes each such agent or contractor (and upon Seller's request Buyer will confirm such authorization by written notice to such agent or contractor, with a copy to Seller) to provide to Seller, upon Seller's request, copies of any and all reports, studies, audits, or other information developed or discovered by said contractor or agent, provided Seller shall be responsible for payment to said contractor or agent of charges for copying and delivery of and any other fees charged by said agent or contractor in connection with providing to Seller copies of any such documents requested by Seller. G. Independent Audit. Promptly following the execution of this Agreement, Seller shall provide to Buyer's representatives and independent accounting firm access to all financial and other information relating to the Property which would be sufficient to enable Buyer's representatives and independent accounting firm to prepare audited financial statements for the property for 1995, 1996 and 1997 year-to-date in conformity with generally accepted accounting principles and to enable them to prepare such statements, reports or disclosures as Buyer may deem necessary or advisable. Seller shall reasonably cooperate with Buyer's representatives and independent accounting firm in connection with the aforementioned financial analysis and shall provide any additional information necessary to allow buyer to make disclosures required by and otherwise comply with the financial accounting requirements of Regulation S-X promulgated by the Securities and Exchange Commission. Seller shall provide Buyer's independent accounting firm a signed representation letter which will be sufficient to enable an independent public accountant to render an opinion on the financial statements related to the Property. Seller shall authorize any attorneys who have represented Seller in any material litigation pertaining to or affecting the Property to respond, at Buyer's expense, to inquiries from Buyer's representatives and independent accounting firm. If and to the extent Seller's financial statements pertaining to the Property for -6- 7 any periods during the years 1995, 1996 or 1997 year-to-date have been audited, promptly after the execution of this Agreement, Seller shall provide Buyer with copies of such audited financial statements and shall cooperate with Buyer's representatives and independent public accountants to enable them to contact the auditors who prepared such audited financial statements and to obtain, at Buyer's expense, a reissuance of such audited financial statements. If this Agreement terminates prior to the Closing, other than by reason of a default of Seller, Buyer shall deliver to Seller copies of any audited financial statements of the Property prepared for Buyer and assign to Seller without warranty all of Buyer's right thereto. 6. CLOSING. The closing of the sale and purchase herein provided ("CLOSING") shall be consummated at the offices of Escrow Agent in Tampa, Florida, by delivery of the necessary funds and documents to Escrow Agent in order to enable the Escrow Agent to close the transaction contemplated by this Agreement on or before the date which is ten (10) days after the expiration of the Inspection Period ("CLOSING DATE"). Notwithstanding the foregoing, Buyer shall exercise its best efforts to close the transaction contemplated by this Agreement on or before December 15, 1997. In the event the Closing is delayed beyond December 15, 1997, and such delay is caused solely by the action or inaction of Buyer, or solely by Buyer's failure to exercise its best efforts to close on or before December 15, 1997, then the Purchase Price shall be increased by $10,000.00 per day for each day after December 15, 1997, until and including the day on which the Closing actually is completed. A. Escrow. On or before the Closing Date, the parties shall deliver to Escrow Agent the following: (1) By Seller. Each of the Sellers, with respect to the portion of the Property owned by each such party, shall deliver (i) a duly executed and acknowledged original Special Warranty Deed (the "DEED") in favor of Buyer, conveying the Real Property to Buyer subject only to those exceptions to title approved by Buyer or to which Buyer has waived objection pursuant to Paragraph 4 hereof; (ii) a duly executed and acknowledged counterpart of a Bill of Sale, Assignment and Assumption in the form of Exhibit "E" attached hereto and made a part hereof ("BILL OF SALE, ASSIGNMENT AND ASSUMPTION"), covering the interest of Seller in the Personal Property, the Tenant Leases and the Intangible Property to be conveyed to Buyer hereunder; (iii) a certificate of Seller respecting the "non-foreign" status of Seller in the form required by the Title Company; (iv) a closing affidavit in form sufficient to enable the Title Company to insure the gap and to delete from the Owner's Policy the exception for mechanics liens and the other standard exceptions which are customarily deleted based upon an affidavit of the seller; (v) a duly executed -7- 8 Closing Statement; (vi) a duly executed counterpart of a notice to each tenant of the Property informing each tenant of the Property of the transaction contemplated hereby ("NOTICES TO TENANTS"); (vii) a current list of all leases and lease amendments relating to the Property, certified by Seller to be true, correct and complete in all material respects and showing no changes to the List of Leases delivered to Buyer under paragraph 8.B. below, except for additional Tenant Leases and other changes approved by Buyer in writing or otherwise permitted pursuant to the terms hereof; (viii) evidence acceptable to the Title Company and reasonably acceptable to Buyer authorizing the consummation by each Seller of the transaction contemplated hereby; (ix) the original Tenant Leases (including all amendments thereto); and (x) the certificate described in Paragraph 11.B.(1) below. (2) By Buyer. Buyer shall deliver (i) the Closing Payment by wire transfer of immediately available federal funds, (ii) a duly executed Florida Department of Revenue Form DR-219 Return For Transfers of Interest in Florida Real Property, (iii) duly executed Closing Statements, (iv) duly executed and acknowledged counterparts of the Bill of Sale, Assignment and Assumption, and (v) the certificate described in Paragraph 11.A.(1) hereof. In addition, Buyer shall (x) duly execute the Notices to Tenants and shall be responsible for the prompt delivery of the same to the tenants of the Property, and (y) duly execute and deliver a management agreement with Corporex Development Services of Florida, Inc. ("CORPOREX"), as manager, in form as provided in Paragraph 11.C. of this Agreement. (3) Additional Documents. In addition, each party shall promptly execute and deliver to Escrow Agent such other documents as are reasonably requested to effectuate the closing of the transaction contemplated by this Agreement. The foregoing deliveries shall be made pursuant to this Agreement and any standard form of escrow instructions ("ESCROW INSTRUCTIONS") to be executed among Buyer, Seller and Escrow Agent, as required by the Title Company. The conditions to the closing of such escrow shall include Escrow Agent's receipt of the Closing Payment and all of the items referred to in this paragraph 6.A. B. Delivery to Parties. Upon the satisfaction of the conditions set forth in this Agreement and the Escrow Instructions, then (1) the Deeds shall be delivered to Buyer by Escrow Agent causing same to be recorded in the appropriate public records in the counties where the Real Property is located, (2) the Closing Payment and the Deposit shall be delivered to Seller by wire transfer, and (3) the Bill of Sale, Assignment and Assumptions signed by each party shall be delivered to the other party. C. Closing Costs. Buyer shall pay (1) all filing and recording fees in connection with the recording and filing of any -8- 9 instrument or document provided herein to be recorded or filed, (2) all costs and expenses of the issuance of the policies of title insurance herein provided, including, but not limited to, title insurance premiums (including the costs of any endorsements) and the costs of any preliminary title reports or title searches required in connection with the same, (3) one-half of the cost of escrow arrangements, (4) one-half of all applicable documentary stamp taxes or other transfer taxes, if any, due in connection with the closing contemplated by this Agreement or the recording of any instrument or document provided herein to be recorded or filed, and (5) the costs of its examinations and inspections and audits of the Property, including, but not limited to, the costs of any environmental or financial audits. Seller shall pay (1) one-half of the cost of escrow arrangements, (2) one-half of all applicable documentary stamp taxes or other transfer taxes, if any, due in connection with the closing contemplated by this Agreement or the recording of any instrument or document provided herein to be recorded or filed, and (3) the cost of the Surveys. Buyer shall pay all costs and expenses relating to any financing of the purchase of the Property by Buyer. The cost of obtaining the Surveys shall be paid as provided in Paragraph 4.B. hereof. Seller and Buyer shall each pay their respective (i) legal fees and expenses and (ii) share of prorations (as provided below). D. Prorations. (1) Items to be Prorated. The following shall be prorated between Seller and Buyer as of the Closing Date (with all income and expenses for the Closing Date being allocated to Seller): (i) All real estate and personal property ad valorem taxes on the Property for the current year. In the event the amount of said ad valorem taxes for the year during which Closing occurs can not be ascertained on the Closing Date, such taxes shall be prorated based upon the amounts due for the year preceding the year during which Closing occurs, and such proration of taxes shall be adjusted between Seller and Buyer after the tax bills for the Property for the year during which Closing occurs are issued. (ii) All rentals and other tenant charges collected on or before the Closing Date. All rentals due on or before the Closing Date which are collected by Buyer or Seller after the Closing shall be prorated as of the Closing Date as and when such rentals are collected. (iii) All operating expenses. (2) Operating Costs Pass-throughs. Not later than April 1, 1998, Buyer shall reconcile with tenants of the Property the amounts paid or payable on account of operating expenses -9- 10 incurred during calendar year 1997 and adjustments therefor due from or to tenants of the Property on account thereof in accordance with the terms of the Leases. Before Buyer delivers such reconciliation of operating costs pass-throughs to tenants of the Property, Buyer shall deliver to Seller copies of said proposed reconciliation statements for Seller's reasonable review and approval. Within a reasonable time (or times) after such year-end reconciliation of operating costs pass-throughs, Buyer and Seller agree to adjust between themselves any amounts which may due from one of them to the other as a result of the proration of amounts due to or from tenants in connection with the reconciliation of operating costs pass-throughs under the Leases for calendar year 1997. After Closing, Buyer shall exercise commercially reasonable efforts to collect all sums due from tenants of the Property under the terms of the Leases (including but not limited to amounts due in connection with reconciliation of operating costs pass-throughs) relating to periods prior to Closing, and Buyer shall deliver to Seller such amounts as are due relating to periods prior to Closing within a reasonable time after Buyer's receipt thereof; provided, however, that amounts collected by Buyer from tenants owing rents which as of the Closing Date are delinquent ("DELINQUENT RENTS") shall be applied to the amounts of rents owed by such tenant which are not Delinquent Rents, in the order such non-Delinquent Rents became due, and then to Delinquent Rents. The provisions of this paragraph 6.D. shall survive Closing. (3) Security Deposits. Security deposits under Tenant Leases (if and to the extent that such deposits are in Seller's actual possession and have not been lawfully applied by Seller to any other obligations of any lessee under the Tenant Leases) shall be credited against the Purchase Price at Closing. With respect to any such security deposits credited against the Purchase Price, Buyer agrees to hold and disburse said security deposits in compliance with the provisions of applicable leases and all applicable laws. After Closing, Buyer shall indemnify Seller from and against any and all claims and liabilities arising from or relating to any such security deposits credited to Buyer at or after Closing. (4) Calculation. The prorations and payments shall be made on the basis of a written statement submitted to Buyer by Seller not less than two (2) business days prior to Closing and approved by Buyer and Seller. In the event any prorations or apportionments made under this subparagraph D shall prove to be incorrect for any reason (even if previously approved by Buyer and/or Seller), then any party shall be entitled to an adjustment to correct the same upon written request to the other party on or before December 31, 1998. Any item which cannot be finally prorated because of the unavailability of information shall be tentatively prorated on the basis of the best data then available and reprorated when the information is available. -10- 11 7. DESTRUCTION/CONDEMNATION OF PROPERTY. In the event any of the Real Property is damaged or destroyed by any casualty or by a partial taking or condemnation under the provisions of applicable eminent domain law after the Effective Date hereof but prior to the Closing Date, Seller shall have no obligation to repair or replace any such damage or destruction. In the event of any such damage or destruction to any portion of the Real Property by any casualty which casualty damage or destruction would cost more than the "Materiality Threshold" (as hereinafter defined) to repair, or in the event of a material partial taking which causes a reduction in the value of the Real Property by more than the Materiality Threshold, Seller may, by written notice to Seller, terminate this Agreement. If Buyer elects not to terminate this Agreement, or if Buyer has no right to terminate this Agreement, then upon consummation of the transaction herein provided, Seller shall (i) assign to Buyer all claims of Seller under or pursuant to any applicable casualty insurance coverage or under the provisions applicable eminent domain law relating to the Property, (ii) assign to Buyer all proceeds from any casualty insurance received by Seller on account of any such casualty and allow to Buyer at Closing a credit equal to the lesser of the cost to repair such casualty damage or the amount of the deductible under such casualty insurance, the damage from which casualty shall not have been repaired by Seller prior to the Closing Date, and (iii) assign to Buyer all condemnation awards from any such condemnation; (and in any such event there shall be no reduction of the Purchase Price). The "MATERIALITY THRESHOLD" shall mean $500,000.00. -11- 12 8. REPRESENTATIONS AND WARRANTIES. A. Representations and Warranties of Seller. Buyer acknowledges and agrees that the sale of the Property is made on an "As-is, where-is" basis, without any representations or warranties of any kind or character whatsoever, whether express or implied, except as specifically stated in this Agreement. Notwithstanding the warranties and representations contained in this Agreement, Buyer agrees to rely on its own due diligence investigation of the Property, as described in paragraph 5 above, with respect to all matters relating to the Property which Buyer could discover by fully and diligently pursuing its due diligence investigations regarding the Property and related matters, with the assistance of such qualified and knowledgeable counsel, engineers and consultants as a reasonable purchaser would employ to assist in such due diligence investigations. For purposes of this Agreement the phrase "Seller's actual knowledge" shall be deemed to mean the actual knowledge of J. William Blackham and Drew Smith, who are officers of the Seller. The representations and warranties of Seller contained in this Agreement shall survive for one (1) year after Closing. As an inducement to Buyer to enter into this Agreement, Tampa and Westshore each hereby represents and warrants to Buyer, each with respect to only itself and the portion of the Property hereinabove stated to be owned by each of said entities, that: (1) Tampa is a corporation duly organized and validly existing under the laws of the State of Florida, and has the power and authority to enter into this Agreement and to consummate the transactions herein contemplated, and the execution and delivery hereof and the performance by Seller of its obligations hereunder will not violate or constitute an event of default under the terms or provisions of any agreement, document or other instrument to which Tampa is a party or by which it or the Eastgate Land or the Corporex Plaza I Land is bound; (2) Westshore is a corporation duly organized and validly existing under the laws of the State of Florida, and has the power and authority to enter into this Agreement and to consummate the transactions herein contemplated, and the execution and delivery hereof and the performance by Seller of its obligations hereunder will not violate or constitute an event of default under the terms or provisions of any agreement, document or other instrument to which Westshore is a party or by which it or the Presidents Plaza Land is bound; (3) The execution, delivery and performance of this Agreement by Seller and the consummation of the transactions contemplated hereby in the manner contemplated herein will not violate any provision of law, statute, rule or regulation to which Seller or the Property is subject or violate any judgment, order, -12- 13 writ, injunction or decree of any court applicable to Seller or the Property; (4) Seller has not entered into any agreement (written or oral) granting any rights of possession to any third party except pursuant to the Tenant Leases, and Seller has not executed any other agreement of sale, option agreement or right of first refusal with respect to the Property; (5) All proceedings required to be taken by or on behalf of Seller to authorize it to make, deliver and carry out the terms of this Agreement have been or will be duly and properly taken (including proceedings of its members) and this Agreement is the legal, valid and binding obligation of Seller enforceable in accordance with its terms; (6) There are no proceedings at law or in equity before any court, grand jury, administrative agency or other investigative agency, bureau or instrumentality of any kind pending or, to the best of Seller's knowledge, threatened, against or affecting Seller or the Property that (i) involve the validity or enforceability of this Agreement or any other instrument or document to be delivered by Seller pursuant hereto, (ii) enjoin or prevent or threaten to enjoin or prevent the performance of Seller's obligations hereunder or (iii) relate specifically to the Property or title thereto, except for personal injury suits which are covered by insurance, if any; (7) No consent, authorization, license, permit, registration or approval of, or exemption or other action by, any governmental or public body, commission or authority is required in connection with the execution, delivery and performance by Seller of this Agreement; (8) To Seller's actual knowledge,: (i) there are no hazardous substances or wastes as such term is defined in any federal, state or local law, rule, regulation or order, on, in or beneath the Land or the Improvements in excess of permitted governmental tolerances, (ii) there has been no discharge or release of any hazardous substances or wastes on the Land or the Improvements, (iii) no landfill has ever been operated on the Land, and (iv) no portion of the Land or the Improvements has been used to refine, produce, store, handle, transfer, process or transport any such hazardous substances or wastes; (9) Seller is not a "foreign person" under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") and upon consummation of the transaction contemplated hereby, Buyer will not be required to withhold from the Price any withholding tax because of Seller; -13- 14 (10) The Tenant Leases are the only leases currently affecting or relating to the Land and the Improvements; the copies of the Tenant Leases previously furnished to Buyer are true, correct an complete copies thereof and except as indicated on Exhibit "G", such Tenant Leases are in full force and effect; the security deposits listed on Exhibit "G" (the "SECURITY DEPOSITS") are the only security deposits held by Seller in connection with the Tenant Leases; no rent or additional rent has been paid thereunder in advance of the due date; to Seller's actual knowledge, there is no default by Landlord or tenant in the keeping, observance or performance of any covenant, agreement, term, provision or condition contained in the Tenant Leases; and there is no option to purchase, right of first offer, right of first refusal or other provision granting to any such tenant the right to acquire fee title to the Land or Improvements or any portion thereof; (11) The agreements identified on Exhibit "F" attached hereto (collectively the "AGREEMENTS") are all of the management, leasing, service and maintenance contracts relating to the Property; (12) Seller has not received written notice from any governmental authority having jurisdiction over the Property that the Property does not comply with any applicable federal, state, county and municipal laws ordinances, rules and regulations; (13) Seller is not in the hands of a receiver nor is an application for the appointment of a receiver pending; Seller has not made an assignment for the benefit of creditors, nor has Seller filed, or had filed against it, any petition in bankruptcy; (14) Seller has not received written notice from any governmental authority that (i) there are any violations of the certificate of occupancy for the Improvements or any space located therein, or (ii) certificates of occupancy for the Improvements and the space located therein are not in full force and effect; (15) Seller has not received written notice from any governmental authority that the Premises is or will be affected by any special assessments; (16) Except for brokerage or leasing commissions which may be due in connection with the exercise by the tenant under any of the Leases of any option contained in such Lease to expand the premises leased thereunder or extend the term of the Lease, and except for commissions due in connection with the New Leases described in Paragraph 11.B.(3) (which commissions will be paid by Seller), (i) no brokerage or leasing commission, fee or other compensation is payable (or will, with the passage of time or occurrence of any event or both, be payable), with respect to the -14- 15 Tenant Leases; or (ii) there does not currently exist any exclusive or continuing brokerage agreements as to any of the Property. B. Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller that: (1) Authority. Subject to the provisions of Paragraph 11.B.(5) hereof, Buyer has all requisite corporate power and authority to execute and deliver, and to perform all its obligations under this Agreement; (2) Due Execution. Upon the satisfaction of the condition set forth in Paragraph 11.B.(5) hereof, the execution, delivery and performance of this Agreement will have been duly authorized by all necessary corporate action on the part of Buyer and will not (i) require any consent or approval of any other party or individuals that have not been obtained or (ii) violate any provision of Buyer's formation or governing documents; (3) Enforceability. This Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and general equitable principles; (4) Intention. Buyer is acquiring the Property for its own account and not with a view to any public sale or distribution thereof and Buyer does not intend to sell, offer for sale or syndicate securities or fractional interests in Buyer in connection with the purchase of the Property, provided however, nothing herein shall be construed or applied to prohibit or otherwise limit Buyer's right to dispose of all or any portion of Buyer's interest in the Property in compliance with all applicable law; (5) Expertise. Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks relating to its purchase of the Property and making an informed purchase and investment decision in connection therewith; (6) Lack of Liquidity. Buyer acknowledges that the Property will have limited liquidity and Buyer has the financial wherewithal to hold the Property for an indefinite period of time and to bear the economic risk of an outright purchase of the Property; (7) Due Diligence. Buyer has or will have made such examination, review and investigation of the facts and circumstances necessary to evaluate the Property as it has deemed -15- 16 necessary or appropriate to form a basis for its evaluation of a purchase of the Property; and (8) No Bankruptcy/Dissolution Event. No "Bankruptcy/Dissolution Event" (as defined below) has occurred with respect to Buyer. Buyer has sufficient capital or net worth to meet its obligations, including payment of the Purchase Price, under this Agreement. C. Material Changes in Representations and Warranties. (1) If before the Closing Seller acquires knowledge of any condition which constitutes a material change in any of the representations and warranties set forth in Paragraph 8.A., Seller shall have the right to cure such condition before the Closing, and the existence of such condition shall not be grounds for Buyer to terminate this Agreement, provided that (i) Seller, promptly after discovering the condition, covenants with Buyer in writing that Seller will cure such condition prior to Closing, and (ii) Seller acts diligently to cure the condition and completes such cure prior to the Closing Date. (2) Seller shall promptly inform Buyer of any material change in any representation or warranty made by Seller in this Agreement. Subject to the provisions of Paragraph 8.C.(1), provided such material change is not the result of the willful conduct of Seller, Buyer's exclusive remedy upon being advised of any material change in the representations and warranties shall be the termination of this Agreement by written notice to Seller within ten (10) business days after receipt of notice from Seller advising of such change, whereupon, except as otherwise provided herein, this Agreement and all rights and obligations of the respective parties hereunder shall be terminated. 9. INDEMNIFICATION. A. Indemnity for Breach by Seller. Subject to the other provisions hereof, Seller shall indemnify Buyer and Buyer's Permitted Assignee, but no other successors and assigns of Buyer or Buyer's Permitted Assignee, against and shall defend and hold Buyer and Buyer's Permitted Assignee (but no other successors or assigns), harmless from, any and all costs, expenses, or actual damages, including reasonable attorneys' fees, which Buyer or Buyer's Permitted Assignee may incur because of any breach of any of the representations, warranties or covenants of Seller herein contained, whether prior to or after the Closing; provided, that if a claim for any such breach is not asserted within one (1) year after the Closing Date, it shall be deemed waived. Notwithstanding the foregoing, if Buyer or Buyer's Permitted Assignee has actual knowledge of any such breach prior to Closing and nonetheless proceeds with the Closing, then in such event any such breach shall be deemed waived by Buyer and Buyer's Permitted Assignee. -16- 17 B. Indemnity for Breach by Buyer. Subject to the other provisions hereof, Buyer shall indemnify Seller, its successors and assigns, against, and shall hold Seller, its successors and assigns, harmless from, any costs, expenses, or actual damages, including reasonable attorneys' fees, which Seller may incur because of any breach of the representations, warranties or covenants of Buyer herein contained, whether prior to or after the Closing; provided, that if a claim for any such breach is not asserted within one (1) year after the Closing Date, it shall be deemed waived. Notwithstanding the foregoing, if Seller has actual knowledge of any such breach prior to Closing and nonetheless proceeds with the Closing, then in such event any such breach shall be deemed waived by Seller. 10. DISPOSITION OF DEPOSIT. If the transaction herein provided shall not be closed by reason of Seller's default under this Agreement or the failure of satisfaction of the conditions described in paragraph 11.B. hereof, and Buyer shall not have defaulted under this Agreement, then upon Buyer's demand, Escrow Agent shall return to Buyer the Deposit after providing notice to Seller, and in the event of conflicting instructions from Seller, Escrow Agent shall interplead the Deposit. Upon Buyer's receipt of the Deposit, neither party shall have any further obligation or liability to the other; except that if the transaction shall not be closed by reason of Seller's default under this Agreement, Buyer's sole remedies for any such default shall be either (i) to terminate this Agreement and receive a return of the Deposit, or (ii) to seek specific performance of this Agreement; and this shall be Buyer's sole remedy for Seller's default hereunder. In the event the transaction herein provided shall not close for any reason other than the failure of satisfaction of the conditions described in paragraph 11.B. hereof or the default of Seller, then Escrow Agent shall deliver the Deposit to Seller as full compensation and liquidated damages under and in connection with this Agreement after providing notice to Buyer, and in the event of conflicting instructions from Buyer, Escrow Agent shall interplead the Deposit. In the event the transaction herein provided shall close, Escrow Agent shall apply the Deposit as a partial payment of the Purchase Price, or return the Deposit to Buyer, at Buyer's option. In connection with the foregoing, the parties recognize that Seller will incur expenses in connection with the transaction contemplated by this Agreement and that the property will be removed from the market; further, that it is extremely difficult and impracticable to ascertain the extent of detriment to Seller caused by the breach by Buyer under this Agreement and the failure of the consummation of the transaction contemplated by this Agreement or the amount of compensation Seller should receive as a result of Buyer's breach or default; and Buyer and Seller agree that the amount of the Deposit is a reasonable estimate of Seller's damages in the event of Buyer's breach or default and that such amount will not constitute a penalty or forfeiture in the event the Deposit is disbursed to Seller upon Buyer's breach or default hereof. -17- 18 11. CONDITIONS TO CLOSING. A. Seller's Conditions to Closing. In addition to the conditions provided in other provisions of this Agreement, Seller's obligations to perform its undertakings provided in this Agreement (including its obligation to sell the Property) are conditioned on the following: (1) Performance by Buyer. The due performance by Buyer of each and every undertaking and agreement to be performed by it hereunder (including the delivery to Seller of the items specified to be delivered by Buyer in paragraph 6 hereof) and the material truth of each representation and warranty made by Buyer in this Agreement at the time as of which the same is made and as of the Closing Date as if made on and as of the Closing Date and Buyer has delivered to Seller a certificate duly executed by Buyer reaffirming the same as of the Closing Date. (2) No Bankruptcy or Dissolution. That at no time on or before the Closing Date shall any of the following ("BANKRUPTCY/DISSOLUTION EVENT") have occurred with respect to Buyer: (i) the commencement of a case under Title 11 of the U.S. Code, as now constituted or hereafter amended, or under any other applicable federal or state bankruptcy law or other similar law; (ii) the appointment of a trustee or receiver of any property interest; (iii) an assignment for the benefit of creditors; (iv) an attachment, execution or other judicial seizure of a-substantial property interest; (v) the taking of, failure to take, or submission to any action indicating an inability to meet its financial obligations as they accrue; or (vi) a dissolution or liquidation, death or incapacity. B. Buyer's Conditions to Closing. In addition to the conditions provided in other provisions of this Agreement, Buyer's obligations to perform its undertakings provided in this Agreement (including its obligation to purchase the Property) are conditioned on the following: (1) Performance by Seller. The due performance by Seller of each and every undertaking and agreement to be performed by it hereunder (including the delivery to Buyer of the items specified to be delivered by Seller in paragraph 6) and the material truth of each representation and warranty made by Seller in this Agreement at the time as of which the same is made and as of the Closing Date as if made on and as of the Closing Date and Seller has delivered to Buyer a certificate duly executed by Seller reaffirming the same as of the Closing Date. (2) No Bankruptcy or Dissolution. That at no time on or before the Closing Date shall a Bankruptcy/Dissolution Event have been done by, against or with respect to Seller or any of the general partners of Seller. -18- 19 (3) New Leases. That the following leases (the "New Leases") will be executed and that the tenants will have taken occupancy under said New Leases prior to Closing, except as otherwise hereinafter provided: (i) lease by Crystal Plastics of 2,430 square feet in Corporex Plaza I at $5.17 per square foot per year, (ii) lease by Aqua Pure of 2,430 square feet to Corporex Plaza I, (iii) lease by Mark VII of 4,800 square feet in Eastgate at $3.95 per square foot per year, and (iv) lease by American Paging of 2,240 square feet in Presidents Plaza at $10.15 per square foot per year; American Paging need not be in occupancy of this leased space prior to Closing if its estoppel certificate is satisfactorily executed prior to Closing. Seller shall be responsible for all costs associated with completing the New Leases, including but not limited to all tenant improvements, governmental licenses, permits and approvals, and commissions in connection therewith; if all tenant improvements relating to the New Leases have not been completed and paid for prior to Closing, or if any tenant improvement other costs relating to the New Leases for which Seller is responsible are not paid prior to Closing, then sufficient funds shall be escrowed from Seller's proceeds at Closing to insure completion after Closing of Seller's obligations relating to the New Leases. (4) Space in Corporex Plaza in Shell Condition. That the following spaces in Corporex Plaza are in shell condition: 2,730 square feet in Building A, 5,400 square feet in Building B, and 5,880 square feet in Building C. (5) Due Execution and Authority. That Buyer has completed all corporate action on the part of Buyer, and obtained any and all consent, required to authorize the execution, delivery and performance of this Agreement by Buyer. Buyer agrees to exercise diligent efforts to complete all necessary corporate action on the part of Buyer, and to obtain any and all consent, required to authorize the execution, delivery and performance of this Agreement by Buyer on or before October 30, 1997. If Buyer fails to complete such necessary corporate action or to obtain such consent on or before October 30, 1997, Buyer may, by written notice to Seller on October 30, 1997, terminate this Agreement. In the event Buyer fails to terminate this Agreement as provided in the immediately preceding sentence on October 30, 1997, Buyer shall be conclusively presumed to have waived, and Buyer shall have thereby waived, the conditions set forth in this Paragraph 11.B.(5). C. Management Agreement. In addition to the conditions set forth in other provisions of this Agreement, Seller's and Buyer's obligations to perform their undertakings provided in this Agreement are conditioned upon Buyer and Seller agreeing on the final form of the management agreement for the management of the Property by Corporex after Closing. Buyer and Seller shall negotiate diligently and in good faith to attempt to reach agreement as to the form and content of said management agreement -19- 20 on or before October 30, 1997. If Buyer and Seller do not agree upon the form and content of said management agreement on or before October 30, 1997, (i) Buyer and Seller thereafter shall continue to negotiate diligently and in good faith to attempt to reach agreement as to the form and content of said management agreement until such agreement is finally obtained or this Agreement is terminated, and (ii) either Buyer or Seller may, by written notice to the other before agreement as to the form and content of said management agreement is obtained, terminate this Agreement. If this Agreement is terminated as provided in the immediately preceding sentence, Buyer shall be entitled to receive the return of the Deposit. 12. OPERATION OF THE PROPERTY PRIOR TO CLOSING. Prior to Closing: A. Ongoing Management. The Property shall be operated, managed and maintained in a reasonable, professional and prudent manner, and kept in reasonably good condition at all times. Without expense to Buyer, all repairs and replacements, structural and non-structural, ordinary and extraordinary, shall be made which are required to maintain the Property in its present condition, reasonable wear and tear excepted. B. Compliance with Leases. Seller shall comply with all of its obligations under the Leases and all other agreements and contractual arrangements affecting the Property by which Seller is bound. C. Notice of Default. Seller promptly shall notify Buyer of Seller's receipt of any notice from any party alleging that Seller is in default of its obligations under any of the Leases or any permit or agreement affecting the Property, or any portion or portions thereof. D. Contract Negotiations. No contract for or on behalf of or affecting the Property shall be negotiated or entered into which cannot be terminated by Seller prior to Closing without charge, cost, penalty or premium to Buyer. Seller agrees to keep Buyer timely informed with respect to all material actions taken by Seller related to the Property. E. New Leases. Seller shall not enter into any new leases, extensions, renewals or other modifications of leases, for any portion of the Property without the prior written approval of Buyer, which approval of Buyer shall not be unreasonably withheld or delayed. In the event Buyer approves any new leases, Seller shall deliver to Buyer an Estoppel Certificate from the tenant(s) and guarantor(s) thereunder as required hereunder for the Leases and otherwise shall comply, as to such new leases and new guaranties, with the terms of this Agreement relating to the Leases and the Guaranties. Further, except with the prior written consent -20- 21 of Buyer, which consent of Buyer shall not be unreasonably withheld or delayed, Seller shall not amend, extend, terminate, accept surrender of, or permit any assignments or subleases of, any of the Leases nor accept any rental more than one (1) month in advance nor accelerate the rent due to any tenant default under any of the Leases. Buyer shall not be responsible for any brokerage or leasing commissions, tenant improvement costs or other compensation or fees to any persons, firm, corporation or other entity with respect to any new lease, lease amendment, or other action as described hereunder except as specifically approved by Buyer in writing. Buyer agrees to notify Seller of its approval or disapproval of any new lease, lease amendment or other action as described hereunder within five (5) business days after receipt of such a written proposal from Seller; in the event Seller requests Buyer's approval of any new lease, lease amendment, or other action as described hereunder and Buyer does not respond within said five (5) business day period, Buyer shall be deemed to have approved such new lease, lease amendment, or other action. In the event Seller enters into any transaction prohibited by the provisions of this Paragraph 12.E. after Buyer has specifically rejected such transaction, Buyer may, within ten (10) days after Seller notifies Buyer in writing of said transaction, terminate this Agreement and receive the return of the Deposit; if Buyer does not so terminate this Agreement within said ten (10) day period, Buyer shall have waived its right to terminate this Agreement pursuant to the provisions of this Paragraph 12.E. 13. TERMINATION OF SERVICE CONTRACTS. At Buyer's written request on or before December 1, 1997, Seller shall arrange for the termination of any existing management, leasing and service contracts (the "SERVICE CONTRACTS") effective as of Closing or as soon thereafter as permitted pursuant to the terms of each such contract so that Buyer can effectively assume management and control of the Property at Closing. Seller shall be responsible for any and all payments that become due after Closing under those Service Contracts that Buyer requests Seller to terminate pursuant to the provisions of this paragraph, except for those Service Contracts for services which Buyer uses or obtains the benefit of after Closing. At Closing, Buyer shall assume the Service Contracts which Buyer has not requested Seller to terminate as hereinabove provided and those Service Contracts for services which Buyer uses or obtains the benefit of after Closing. 14. DUTIES OF ESCROW AGENT. Escrow Agent agrees to hold and disburse the Deposit in accordance with the provisions of this Agreement, or in accordance with written instructions given jointly by Buyer and Seller. All parties agree that Escrow Agent shall not be liable to any party or person whomsoever for misdelivery to Buyer or Seller of monies subject to this escrow, unless such misdelivery shall be due to willful breach of this Agreement or gross negligence on the part of Escrow Agent. In the event of doubt as to its duties or liabilities under the provisions of this -21- 22 Agreement or in the event Escrow Agent receives conflicting instructions or claims relating to the Deposit, Escrow Agent may, in its sole discretion, continue to hold the Deposit which is the subject of escrow until the parties mutually agree to the disbursement thereof, or until a judgment of a court of competent jurisdiction shall determine the rights of the parties thereto, or Escrow Agent may deposit or interplead all monies then held pursuant to this Agreement with the Clerk of the Circuit Court for Hillsborough County, Florida, at its option, without further liability or responsibility on its part. Upon notifying Buyer and Seller of such course of action, all liability on the part of Escrow Agent shall fully terminate. In the event of any suit between Buyer and Seller wherein Escrow Agent is made a party by virtue of acting as such Escrow Agent hereunder, or in the event of any suit wherein Escrow Agent interpleads the subject matter of this escrow, Escrow Agent shall be entitled to recover reasonable attorney's fees and costs incurred by Escrow Agent, said fees and costs to be charged and assessed as court costs in favor of the prevailing party. Escrow Agent joins in the execution of this Agreement for the sole purpose of agreeing to be bound by the provisions set forth in this Agreement with respect to the investment, disbursement and delivery of the Deposit. Buyer and Seller hereby authorize the investment, payment and delivery of the Deposit by the Escrow Agent in accordance with the terms and provisions set forth in this Agreement. If required by Escrow Agent, Buyer and Seller agree to enter into Escrow Agent's normal form of escrow agreement, subject to such reasonable modifications requested by Buyer and Seller as are acceptable to Escrow Agent. Buyer shall be responsible for any reasonable escrow charges of Escrow Agent. 15. MISCELLANEOUS. A. Brokers. Seller represents and warrants to Buyer, and Buyer represents and warrants to Seller, that no broker or finder other than Ryon & Associates ("Broker") has been engaged by it, respectively, in connection with any of the transactions contemplated by this Agreement or to its knowledge is in any way connected with any of such transactions. In the event of a claim by any broker, finder or other party other than Broker for broker's or finder's fee or commissions in connection herewith, then Seller shall indemnify, protect, defend and hold Buyer harmless from and against the same if it shall be based upon any statement, action or agreement alleged to have been made by Seller, and Buyer shall indemnify, protect, defend and hold Seller harmless from and against the same if it shall be based upon any statement, action or agreement alleged to have been made by Buyer. The parties' respective indemnification obligations under this paragraph shall survive the Closing of the transaction contemplated hereunder or the earlier termination of this Agreement. Seller agrees to pay a -22- 23 commission to Broker at Closing pursuant to a separate written agreement between Seller and Broker. B. Limitation of Liability. No present or future partner, director, officer, shareholder, employee, advisor or agent of or in Seller shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or in connection with the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Buyer and its successors and assigns and, without limitation, all other persons and entities, shall look solely to Seller's assets for the payment of any claim or for any performance, and Buyer hereby waives any and all such personal liability. No present or future partner, director, officer, shareholder, employee, advisor or agent of or in Buyer shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered into under or in connection with the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Seller and its successors and assigns and, without limitation, all other persons and entities, shall look solely to Buyer's assets for the payment of any claim or for any performance, and Seller hereby waives any and all such personal liability. The limitations of liability contained in this paragraph are in addition to, and not in limitation of, any limitation on liability applicable to Seller and Buyer provided in this Agreement or by law or by any other contract, agreement or instrument. C. Successors and Assigns. Buyer may not assign or transfer its rights or obligations under this Agreement without the prior written consent of Seller (in which event such transferee shall assume in writing all of the transferor's obligations hereunder, but such transferor shall not be released from its obligations hereunder); provided, however, that Seller shall not unreasonably withhold such consent. No consent given by Seller to any transfer or assignment of Buyer's rights or obligations hereunder shall be construed as a consent to any other transfer or assignment of Buyer's rights or obligations hereunder. No transfer or assignment in violation of the provisions hereof shall be valid or enforceable. Subject to the foregoing, this Agreement and the terms and provisions hereof shall inure to the benefit of and be binding upon the successors and assigns of the parties. D. Notices. Any notice which a party is required or may desire to give the other shall be in writing and shall be sent by personal delivery or by mail (either (i) by United States registered or certified mail, return receipt requested, postage prepaid, or (ii) by Federal Express or similar generally recognized overnight carrier regularly providing proof of delivery), addressed -23- 24 as follows (subject to the right of a party to designate a different address for itself by notice similarly given): To Buyer: American Industrial Properties REIT 6210 North Beltline, Suite 170 Irving, Texas 75063-2656 Attention: Lewis D. Friedland With Copy To: Liddell, Sapp, Zivley, Hill & Laboon, L.L.P. 2200 Ross Avenue, Suite 900 Dallas, Texas 75201 Attention: Brad B. Hawley, Esq. To Seller: Corporex Companies, Inc. 655 Eden Park Drive Cincinnati, Ohio 45202 Attention: J. William Blackham With a copy to: Lawrence J. Bailin, Esq. Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. 401 East Jackson Street, Suite 2200 Tampa, Florida 33602 Any notice so given by mail shall be deemed to have been given as of the date of delivery (whether accepted or refused) established by U.S. Post Office return receipt or the overnight carrier's proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon receipt of the same by the party to whom the same is to be given. E. Legal Costs. The parties hereto agree that they shall pay directly any and all legal costs which they have incurred on their own behalf in the preparation of all deeds and other agreements pertaining to this transaction and that such legal costs shall not be part of the closing costs. If either party is found in default of this Agreement and judgment is issued against said party for its default, then said party in default agrees to pay any and all costs arising as a result of said default, including reasonable attorneys' fees and costs (including paralegal's or legal assistant's fees), before, during and after trial and appellate proceedings and in any bankruptcy or creditors' rights or reorganization proceedings. -24- 25 F. Confidentiality. The terms of the transfers contemplated in this Agreement, including, without limitation, the Purchase Price and all other financial terms, shall remain confidential and shall not be disclosed by either party hereto without the written consent of the other except (1) to such party's directors, officers, partners, employees, legal counsel, accountants, engineers, architects, financial advisors and similar professionals and consultants to the extent such party deems it necessary or appropriate in connection with the transaction contemplated hereunder (and such party shall inform each of the foregoing parties of such party's obligations under this paragraph and shall secure the agreement of such parties to be bound by the terms hereof) or (2) as otherwise required by law or regulation. G. Jurisdiction and Venue. Buyer hereby consents to the jurisdiction of any state court located within any of the counties in which the Land is located and any federal court within the Middle District of Florida. In addition, Buyer consents and agrees that venue of any action instituted under this Agreement shall be proper in Hillsborough County, Florida and in any federal court within the Middle District of Florida, and hereby waives any objection to venue. H. Further Instruments. Each party will, whenever and as often as it shall be requested so to do by the other, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement. I. Matters of Construction. (1) Incorporation of Exhibits. All exhibits attached and referred to in this Agreement are hereby incorporated herein as fully set forth in (and shall be deemed to be a part of) this Agreement. (2) Entire Agreement. This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters. (3) Time of the Essence. Subject to subparagraph (4) below, time is of the essence of this Agreement. (4) Non-Business Days. Whenever action must be taken (including the giving of notice or the delivery of documents) under this Agreement during a certain period of time (or by a particular date) that ends (or occurs) on a non-business day, then such period (or date) shall be extended until the immediately following business day. As used herein, "BUSINESS DAY" means any day other than a Saturday, Sunday or federal holiday. -25- 26 (5) Severability. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. (6) Captions. The captions and paragraph headings in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof. (7) Cumulative Remedies. No remedy conferred upon a party in this Agreement is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or by statute (except as otherwise expressly herein provided). (8) No Waiver. No waiver by a party of any breach of this Agreement or of any warranty or representation hereunder by the other party shall be deemed to be a waiver of any other breach by such other party (whether preceding or succeeding and whether or not of the same or similar nature), and no acceptance of payment or performance by a party after any breach by the other party shall be deemed to be a waiver of any breach of this Agreement or of any representation or warranty hereunder by such other party, whether or not the first party knows of such breach at the time it accepts such payment or performance. No failure or delay by a party to exercise any right it may have by reason of the default of the other party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right by the first party while the other party continues to be so in default. (9) Consents and Approvals. Except as otherwise expressly provided herein, any approval or consent provided to be given by a party hereunder may be given or withheld in the absolute discretion of such party. (10) Governing Law. This Agreement shall be construed and enforced in accordance with the internal laws of the State of Florida without regard to conflicts of law. (11) Third Party Beneficiaries. Nothing in this Agreement, expressed or implied, is intended to confer any rights or remedies upon any person, other than the parties hereto and, subject to the restrictions on assignment herein contained, their respective successors and assigns. -26- 27 (12) Amendments. This Agreement may be amended by written agreement of amendment executed by all parties, but not otherwise. (13) Survival of Representations. Except as otherwise expressly provided in this Agreement, the representations and warranties herein shall not survive Closing or termination of this Agreement. The express representations and warranties of Buyer and Seller contained in this Agreement and in the Warranty Documents shall survive for one year after Closing. (14) Joint Preparation. Both parties to this Agreement having participated fully and equally in the negotiation and preparation hereof, this Agreement shall not be more strictly construed, or any ambiguities within this Agreement resolved, against either party hereto. J. Counterparts. This Agreement may be executed in any number of counterparts, provided each of the parties hereto executes at least one counterpart; each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Agreement shall be deemed to have been duly executed and delivered by any party upon the delivery to the other party hereto by telecopy of a facsimile of this Agreement reflecting full execution of the Agreement by said delivering party. K. Radon Notice. The following notice is given to comply with Section 404.056(8), Florida Statutes: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. -27- 28 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. WITNESSES: "SELLER" CORPOREX PROPERTIES OF TAMPA, INC., a Florida corporation /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE] - -------------------------------- -------------------------------- Print Name: [ILLEGIBLE] Print Name: [ILLEGIBLE] --------------------- --------------------- /s/ [ILLEGIBLE] As Its: [ILLEGIBLE] - -------------------------------- ------------------------- Print Name: [ILLEGIBLE] --------------------- CPX - WESTSHORE CORPORATION, a Florida corporation /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE] - -------------------------------- -------------------------------- Print Name: [ILLEGIBLE] Print Name: [ILLEGIBLE] --------------------- --------------------- /s/ [ILLEGIBLE] As Its: [ILLEGIBLE] - -------------------------------- ------------------------- Print Name: [ILLEGIBLE] --------------------- "BUYER" AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE] - -------------------------------- -------------------------------- Print Name: [ILLEGIBLE] Print Name: --------------------- --------------------- /s/ [ILLEGIBLE] As Its: - -------------------------------- ------------------------- Print Name: [ILLEGIBLE] --------------------- -28- 29 JOINDER OF ESCROW AGENT The undersigned, Chicago Title Insurance Company joins in the execution hereof for the purposes of agreeing to act as Escrow Agent hereunder. CHICAGO TITLE INSURANCE COMPANY By: -------------------------------- Date Executed: --------------------- -29- 30 EXHIBIT "A" Legal Description of Eastgate Land Legal Description of Corporex Plaza I Land -30- 31 EXHIBIT "B" Legal Description of Presidents Plaza Land -31- 32 EXHIBIT "C" Seller's Documents 1. Updated Title Commitment and Exception Documents; 2. Three years of operating expense information including tax bills; 3. Complete copies of leases and lease files; 4. Leasing commission agreements, if any; 5. Updated Surveys; 6. Plans and Specifications; 7. Any existing environmental reports; 8. ADA reports, or engineering reports regarding roofs and structure; 9. Copies of service contracts; and 10. All governmental licenses, permits and approvals (including certificates of occupancy). -32- 33 EXHIBIT "D" [Insert form of Tenant Estoppel provided by Buyer] -33- 34 EXHIBIT "E" BILL OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT FOR VALUABLE CONSIDERATION, the receipt and adequacy of which is hereby acknowledged, the undersigned, _________________________________________, a _______________________________ ("ASSIGNOR"), hereby sells, transfers, assigns and conveys to ________________________________________________________, a ________________________ ("ASSIGNEE"), the following: 1. All right, title and interest of Assignor in and to all tangible personal property ("PERSONAL PROPERTY") located on, and used solely in connection with the management, maintenance or operation of that certain land and improvements commonly known as "___________________________", located at ________________________________________ and legally described on Exhibit "A" attached hereto and incorporated herein (the "REAL PROPERTY"), but excluding tangible personal property owned by tenants of the Real Property under Tenant Leases (as defined below) and any other tangible personal property which is not owned by Assignor. 2. All right, title and interest of Assignor as lessor in and to all leases ("TENANT LEASES") relating to the leasing of space in the Real Property and all of the rights, interests, benefits and privileges of the lessor thereunder. 3. To the extent assignable without the consent of third parties, all right, title and interest of Assignor in and to all intangible property ("INTANGIBLE PROPERTY") owned and held solely for use in connection with the Real Property. This Bill of Sale, Assignment and Assumption is given pursuant to that certain Purchase and Sale Agreement and Escrow Instructions dated as of October __, 1997 by and between Assignor and Assignee (and others) (the "PURCHASE AGREEMENT"). The covenants, agreements, representations, warranties, indemnities and limitations provided in the Purchase Agreement with respect to the property conveyed hereunder (including, without limitation, the limitations of liability as provided in the Purchase Agreement), are hereby incorporated herein by this reference as if herein set out in full and shall inure to the benefit of and shall be binding upon Assignee and Assignor and their respective successors and assigns. As set forth in paragraph 8.A. of the Purchase Agreement, which is hereby incorporated by this reference as if herein set out in full, the property conveyed hereunder is conveyed by Assignor and accepted by Assignee AS IS, WHERE IS, AND WITHOUT ANY WARRANTIES OF WHATSOEVER NATURE, EXPRESS OR IMPLIED, IT BEING THE -1- 35 INTENTION OF ASSIGNOR AND ASSIGNEE EXPRESSLY TO NEGATE AND EXCLUDE ALL WARRANTIES, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTY OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WARRANTIES CREATED BY ANY AFFIRMATION OF FACT OR PROMISE OR BY ANY DESCRIPTION OF THE PROPERTY CONVEYED HEREUNDER, OR BY ANY SAMPLE OR MODEL THEREOF, AND ALL OTHER WARRANTIES WHATSOEVER CONTAINED IN OR CREATED BY THE FLORIDA UNIFORM COMMERCIAL CODE. This Bill of Sale, Assignment and Assumption may be executed in one or more identical counterparts, each of which counterpart shall be deemed an original for all purposes and all such counterparts collectively consisting of one such Bill of Sale, Assignment and Assumption. IN WITNESS WHEREOF, Assignor has executed this Bill of Sale, Assignment and Assumption as of _____________, 1997. ----------------------------------- By: - -------------------------------- -------------------------------- Print Name: Print Name: --------------------- --------------------- As Its: - -------------------------------- ------------------------- Print Name: --------------------- -2- 36 ASSUMPTION As of the date above written, Assignee hereby accepts the foregoing Bill of Sale, Assignment and Assumption and hereby agrees to assume and discharge, in accordance with the terms hereof, all of the burdens and obligations of Assignor relating to the Personal Property, the Tenant Leases and the Intangible Property first arising and accruing on and after the effective date of the foregoing Bill of Sale, Assignment and Assumption; subject, however, to any provisions in the Tenant Leases which limit the liability of lessor thereunder. -------------------------------- a ------------------------------- By: - ------------------------------ ----------------------------- Name: Its: ------------------------- ------------------------- - ------------------------------ Name: ------------------------- By: - ------------------------------ ----------------------------- Name: Its: ------------------------- ------------------------- - ------------------------------ Name: ------------------------- -3- 37 EXHIBIT "A" Legal Description -4- 38 EXHIBIT "F" Other Agreements -5- 39 EXHIBIT "G" List of Leases -6- EX-10.3 4 AMENDMENT TO PURCHASE & SALE AGREEMENT 1 EXHIBIT 10.3 AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS AMENDMENT TO PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS ("Amendment") is made and entered into as of ___ day of December, 1997 by and between CORPOREX PROPERTIES OF TAMPA, INC., a Florida corporation ("TAMPA"), and CPX - WESTSHORE CORPORATION ("WESTSHORE"), and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("BUYER"). Tampa and Westshore are sometimes hereinafter referred to collectively as ("SELLER"). WHEREAS, on or about October 28, 1997, Seller and Buyer entered into a Purchase and Sale Agreement and Escrow Instructions (the "Agreement") regarding three (3) separate parcels of real property located in Hillsborough County, Florida, as defined in the Agreement and as referred to herein and in the Agreement as the "Eastgate Land", the "Corporex Plaza I Land" and the "Presidents Plaza Land"; and WHEREAS, Buyer intended to purchase from Seller, and Seller intended to sell to Buyer, all three of said parcels of real property pursuant to the provisions of the Agreement; and WHEREAS, because Hi-Grade Food Specialties of Tampa, Inc. ("Hi-Grade"), which is one of the tenants of the Eastgate Land, has refused to execute and deliver an estoppel certificate as requested by Seller and subsequently failed to pay its rent for December, 1997, and because of other actions taken and statements made by Hi-Grade indicating its intent to refuse to comply with its obligations under its lease of space in the Eastgate Land, Buyer is not willing to proceed with the purchase of the Eastgate Land pursuant to the terms of the Agreement; and WHEREAS, Buyer and Seller desire to proceed with the purchase and sale of the Corporex Plaza I Land and the Presidents Plaza Land pursuant to the provisions of the Agreement; NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller and Purchaser agree as follows: 1. Buyer and Seller will close the purchase and sale of the Corporex Plaza I Land and the Presidents Plaza Land in accordance with the provisions of the Agreement beginning at 11:00 a.m. on December 22, 1997, (and funding no later than December 23, 1997) in the offices of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. in Tampa, Florida. 2 2. Buyer shall not be obligated to purchase, and Seller shall not be obligated to sell, the Eastgate Land, except as expressly provided in this Amendment, and all provisions of the Agreement relating to purchase and sale of the Eastgate Land shall be terminated, except for those provisions of the Agreement which are intended to survive the closing or termination of the Agreement. 3. In the event Tampa elects to sell the Eastgate Land on or before June 19, 1998, Tampa shall first provide to Buyer written notice (the "Sale Notice") of its decision to sell the Eastgate Land, together with an updated rent roll for the Eastgate Land. Within seven (7) days after Buyer receives the Sale Notice, Buyer shall notify Tampa in writing whether Buyer is interested in attempting to purchase the Eastgate Land; if within seven (7) days after Buyer receives the Sale Notice Buyer does not notify Tampa in writing that Buyer is interested in attempting to purchase the Eastgate Land, all rights of Buyer and all obligations of Tampa under this paragraph 4 shall terminate and be of no further effect. If within seven (7) days after Buyer receives the Sale Notice Buyer does notify Tampa in writing that Buyer is interested in attempting to purchase the Eastgate Land, then Buyer and Tampa shall thereafter attempt to negotiate, execute and deliver to one another a Letter of Intent for the purchase and sale of the Eastgate Land in form and substance acceptable to Buyer, in its sole discretion, and to Tampa, in its sole discretion; if Buyer and Tampa fail to execute and deliver to each other a mutually acceptable Letter of Intent for the purchase and sale of the Eastgate Land within twenty-one (21) days after Buyer receives the Sale Notice, Buyer may, within twenty-one (21) days after Buyer receives the Sale Notice, execute and deliver to Tampa a Final Letter of Intent ("Buyer's Best Offer") indicating Buyer's highest and best offer for the Eastgate Land, and providing for the execution of a new contract for the purchase and sale of the Eastgate Land, which new contract shall be substantially the same as the Agreement, except modified to apply to only the Eastgate Land, and providing for a due diligence period of not more than thirty (30) days from the date of execution of the new contract, and requiring closing to occur not more than ten (10) days after the expiration of the due diligence period. If within twenty-one (21) days after Buyer -2- 3 receives the Sale Notice, (i) Buyer and Tampa fail to execute and deliver to each other a mutually acceptable Letter of Intent for the purchase and sale of the Eastgate Land, and (ii) Buyer fails to deliver to Tampa Buyer's Best Offer, then all rights of Buyer and all obligations of Tampa under this paragraph 4 shall automatically terminate and be of no further effect. If within twenty-one (21) days after Buyer receives the Sale Notice, (i) Buyer and Tampa fail to execute and deliver to each other a mutually acceptable Letter of Intent for the purchase and sale of the Eastgate Land, and (ii) Buyer does deliver to Tampa Buyer's Best Offer, and if Buyer's Best Offer is not accepted by Tampa, then Tampa may sell the Eastgate Land to any third party, except that Tampa may not, within one hundred twenty (120) days after Tampa receives Buyer's Best Offer, enter into a contract to sell the Eastgate Land to any third party for a purchase price, before closing adjustments, equal to or less than the purchase price provided in Buyer's Best Offer. 4. Except as expressly amended hereby, the Agreement is hereby ratified by the parties and remains in full force and effect. All capitalized terms in this Amendment shall have the same meanings as those terms have in the Agreement, except as otherwise defined herein. 5. The parties agree that this Amendment may be executed in multiple counterparts, each of which shall constitute an original and all of which shall be considered one document, and that delivery via telecopy of a copy of this Amendment reflecting execution thereof by any party shall constitute delivery of an executed original of this Amendment. -3- 4 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written. WITNESSES: "SELLER" CORPOREX PROPERTIES OF TAMPA, INC., a Florida corporation /s/ TRACI L. NAGELEISEN By: /s/ [ILLEGIBLE] - -------------------------------- -------------------------------- Print Name: Traci L. Nageleisen Print Name: [ILLEGIBLE] --------------------- --------------------- /s/ [ILLEGIBLE] As Its: [ILLEGIBLE] - -------------------------------- ------------------------- Print Name: [ILLEGIBLE] --------------------- CPX - WESTSHORE CORPORATION, a Florida corporation /s/ TRACI L. NAGELEISEN By: /s/ [ILLEGIBLE] - -------------------------------- -------------------------------- Print Name: Traci L. Nageleisen Print Name: [ILLEGIBLE] --------------------- --------------------- /s/ [ILLEGIBLE] As Its: [ILLEGIBLE] - -------------------------------- ------------------------- Print Name: [ILLEGIBLE] --------------------- "BUYER" AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust By: - -------------------------------- -------------------------------- Print Name: Print Name: --------------------- --------------------- As Its: - -------------------------------- ------------------------- Print Name: --------------------- -4- 5 TABLE OF CONTENTS
PAGE ---- 1. PURCHASE AND SALE ................................................ -1- 2. PURCHASE PRICE ................................................... -2- 3. PAYMENT OF PURCHASE PRICE ........................................ -2- A. Deposit ...................................................... -2- B. Closing Payment .............................................. -2- 4. TITLE AND SURVEY ................................................. -3- A. Title Report ................................................. -3- B. Surveys ...................................................... -3- 5. DUE DILIGENCE .................................................... -4- A. Due Diligence Investigations ................................. -4- B. Documents to Buyer Before Closing ............................ -4- C. Estoppel Certificates ........................................ -5- D. Inspection of Books and Records .............................. -5- E. No Interference .............................................. -5- F. Due Diligence Information .................................... -6- G ........................................................... -6- 6. CLOSING .......................................................... -7- A. Escrow ....................................................... -7- B. Delivery to Parties .......................................... -9- C. Closing Costs ................................................ -9- D. Prorations ................................................... -9- 7. DESTRUCTION/CONDEMNATION OF PROPERTY ............................. -11- 8. REPRESENTATIONS AND WARRANTIES ................................... -12- A. Representations and Warranties of Seller ..................... -12- B. Representations and Warranties of Buyer ...................... -15- C. Material Changes in Representations and Warranties ........... -16- 9. INDEMNIFICATION .................................................. -16- A. Indemnity for Breach by Seller ............................... -16- B. Indemnity for Breach by Buyer ................................ -17- 10. DISPOSITION OF DEPOSIT ........................................... -17- 11. CONDITIONS TO CLOSING ............................................ -18- A. Seller's Conditions to Closing ............................... -18- B. Buyer's Conditions to Closing ................................ -18- C. Management Agreement ......................................... -20-
i 6 12. OPERATION OF THE PROPERTY PRIOR TO CLOSING ....................... -20- A. Ongoing Management ........................................... -20- B. Compliance with Leases ....................................... -20- C. Notice of Default ............................................ -20- D. Contract Negotiations ........................................ -20- E. New Leases ................................................... -21- 13. TERMINATION OF SERVICE CONTRACTS ................................. -21- 14. DUTIES OF ESCROW AGENT ........................................... -22- 15. MISCELLANEOUS .................................................... -22- A. Brokers ...................................................... -22- B. Limitation of Liability ...................................... -23- C. Successors and Assigns ....................................... -23- D. Notices ...................................................... -24- E. Legal Costs .................................................. -25- F. Confidentiality .............................................. -25- G. Jurisdiction and Venue ....................................... -25- H. Further Instruments .......................................... -25- I. Matters of Construction ...................................... -25- J. Counterparts ................................................. -27- K. Radon Notice ................................................. -27-
EXHIBIT "A" - Legal Description of Eastgate Land Legal Description of Corporex Plaza I Land EXHIBIT "B" - Legal Description of Presidents Plaza Land EXHIBIT "C" - Seller's Documents EXHIBIT "D" - Estoppel Certificate EXHIBIT "E" - Bill of Sale, Assignment and Assumption Agreement EXHIBIT "F" - Other Agreements EXHIBIT "G" - List of Leases and Security Deposits -ii- EX-10.4 5 PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.4 109/111 INVERNESS DRIVE EAST ENGLEWOOD, COLORADO PURCHASE AND SALE AGREEMENT BETWEEN THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a New York corporation AS SELLER AND AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas Real Estate Investment Trust AS PURCHASER As of December 17, 1997 (Effective Date) 2 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made to be effective as of the Effective Date (as hereinafter defined) by and between THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a New York corporation ("Seller"), having its home office at 1290 Avenue of the Americas, 12th Floor, New York, New York 10104, and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas Real Estate Investment Trust ("Purchaser"), having an office at 6210 North Beltline Road, #170, Irving, Texas 75063-2656. W I T N E S S E T H: ARTICLE I PURCHASE AND SALE 1.1 Agreement of Purchase and Sale. Subject to the terms and conditions hereinafter set forth, Seller agrees to sell and convey and Purchaser agrees to purchase the following: (a) that certain tract or parcel of land situated in Arapahoe County, Colorado, more particularly described on Exhibit A attached hereto and made a part hereof, together with all and singular the rights and appurtenances pertaining to such property, including any right, title and interest of Seller in and to adjacent streets, alleys or rights-of-way (the property described in clause (a) of this Section 1.1 being herein referred to collectively as the "Land"); (b) the buildings and other improvements on the Land, including specifically, without limitation, those certain two (2) office buildings, aggregating approximately 96,386 square feet, located thereon having a street address of 109 and 111 Inverness Drive East, Englewood, Colorado (the property described in clause (b) of this Section 1.1 being herein referred to collectively as the "Improvements"); (c) the personal property owned by Seller upon the Land or within the Improvements, including specifically, without limitation, heating, ventilation and air conditioning systems and equipment, appliances, furniture, carpeting, draperies and curtains, tools and supplies, and other items of personal property (excluding cash) used in connection with the operation of the Land and the Improvements (the property described in clause (c) of this Section 1.1 being herein referred to collectively as the "Personal Property"); 1 3 (d) all of Seller's right, title and interest in all oral or written agreements pursuant to which any portion of the Land or Improvements is used or occupied by anyone other than Seller (the property described in clause (d) of this Section 1.1 being herein referred to collectively as the "Leases"); and (e) all of Seller's right, title and interest in and to (i) all assignable contracts and agreements relating to the upkeep, repair, maintenance or operation of the Land, Improvements or Personal Property which will extend beyond the date of Closing (as such term is defined in Section 4.1 hereof), including specifically, without limitation, all assignable equipment leases (collectively, the "Operating Agreements"), and (ii) all assignable warranties and guaranties (express or implied) issued to Seller in connection with the Improvements or the Personal Property (the property described in this Section 1.1(e) being sometimes herein referred to collectively as the "Intangibles"). 1.2 Property Defined. The Land, the Improvements, the Personal Property, the Leases and the Intangibles are hereinafter sometimes referred to collectively as the "Property." 1.3. Permitted Exceptions. The Property shall be conveyed subject to the matters which are deemed to be Permitted Exceptions pursuant to Section 2.3 hereof and subject to the matters described in Section 2.5 hereof (herein referred to collectively as the "Permitted Exceptions"). 1.4 Purchase Price. Seller is to sell and Purchaser is to purchase the Property for a total of Seven Million Five Hundred Fifty Thousand and No/100 Dollars ($7,550,000.00) (the "Purchase Price"). 1.5 Payment of Purchase Price. The Purchase Price shall be payable in full at Closing (as hereinafter defined) in cash or immediately available wire transferred funds. 1.6 Earnest Money. Within one (1) business day after the Effective Date hereof, Purchaser shall deposit with Transnation Title Insurance Company (the "Title Company"), having its office at 1800 Lawrence Street, Denver, Colorado 80202, Attention: Margaret Newton, the sum of One Hundred Thousand and No/100 Dollars ($100,000.00) (the "Earnest Money") in cash or immediately available funds. The Title Company is hereby instructed to hold the Earnest Money in an interest bearing account. The Title 2 4 Company shall hold and disburse the Earnest Money in accordance with the provisions of this Agreement. All interest accruing on such sum shall become a part of the Earnest Money and shall be distributed as Earnest Money in accordance with the terms of this Agreement. In the event that Purchaser fails to deliver the Earnest Money to the Title Company within the time period provided in this Section 1.6, then Seller shall have the sole option to terminate this Agreement by sending written notice to Purchaser. ARTICLE II TITLE AND SURVEY 2.1 Commitment for Title Insurance. Within five (5) days after the Effective Date hereof, Seller shall obtain from the Title Company specified in Section 1.6 hereof, at Seller's expense, a title insurance commitment (the "Title Commitment") covering the Property, showing all matters affecting title to the Property and binding the Title Company to issue at Closing an Owner's Policy of Title Insurance in the full amount of the Purchase Price pursuant to Section 2.4 hereof. Purchaser shall instruct the Title Company to deliver to Purchaser, Seller and the surveyor described in Section 2.2 below copies of the Title Commitment and copies of all instruments referenced in Schedule B thereof. 2.2 Survey. Seller shall, at Seller's expense, employ a reputable surveyor or surveying firm, licensed in Colorado, to survey the Property and prepare and deliver to Purchaser and the Title Company a survey thereof (the "Survey") within five (5) days after the surveyor's receipt of the Title Commitment. 2.3 Title Review Period. Purchaser shall have ten (10) days (the "Title Review Period") after the receipt of the Title Commitment, legible copies of all instruments referred to in Schedule B thereof, and the Survey to notify Seller, in writing, of such objections as Purchaser may have to anything contained in the Title Commitment or the Survey; provided, however, that Purchaser shall not be entitled to object to any Permitted Exceptions described in Section 2.5 hereof. Any item contained in the Title Commitment or the Survey to which Purchaser does not object during the Title Review Period shall be deemed a Permitted Exception. In the event Purchaser shall notify Seller of objections to title or the Survey prior to the expiration of the Title Review Period, Seller shall have ten (10) days after receipt of notification of such objections (the "Cure Period") within which Seller may (but shall not be required to) cure or remove such objection. If Seller fails either to cure or remove such objection to the reasonable satisfaction of the Title Company prior to the expiration of the Cure Period, and 3 5 if by reason of such objection the Title Company refuses to issue an Owner's Policy of Title Insurance as provided in Section 2.4 below, Purchaser may either terminate this Agreement by written notice to Seller or waive such objection and accept such title as Seller is able to convey without any reduction in the Purchase Price. Failure of Purchaser to send written notice of the election available to it pursuant to the preceding sentence within five (5) days after the expiration of the Cure Period shall be deemed an election by Purchaser to elect to terminate this Agreement pursuant to Section 3.3. 2.4 Owner's Policy of Title Insurance. At Closing, Seller shall convey and transfer to Purchaser by Special Warranty Deed such title to the Property as will enable the Title Company to issue to Purchaser, at Seller's expense, a standard coverage (similar to an ALTA policy) Owner's Policy of Title Insurance (the "Title Policy") covering the Property, in the full amount of the Purchase Price. The Title Policy may contain as exceptions the standard printed exceptions and the Permitted Exceptions. Any endorsements or extended coverage beyond the standard coverage shall be at Purchaser's option and expense. 2.5 Title Conveyed Subject to Certain Matters. Notwithstanding anything contained herein to the contrary, the Property shall be conveyed subject to the following matters, which shall be deemed to be Permitted Exceptions: (a) building restrictions and zoning regulations heretofore or hereafter adopted by any municipal or other public authority relating to the Property, and rent or other regulations or laws, if any, now or hereafter in effect with respect to the Property; (b) all notes or notices of violation of law or municipal ordinances, orders or requirements noted in or issued by any state or municipal department or public authority having jurisdiction, against or affecting the Property at the time of Closing; (c) any and all assessments becoming liens subsequent to the date hereof, and in addition if at the date hereof the Property or any part thereof shall be or shall have been affected by any assessment or assessments which are payable in installments or may be paid in installments without penalty (other than interest), Purchaser shall pay all such installments which shall become due and payable or which may be paid without penalty (other than interest) after the date hereof, except that any installment relating to the current fiscal year (with any interest thereon) shall be apportioned between the parties at Closing; 4 6 (d) all liens for real estate taxes on the Property for the current year which are not yet due and payable at the time of Closing; (e) all exceptions of record shown on the Title Commitment as approved by Purchaser pursuant to Section 2.3; and (f) all Leases affecting the Property. ARTICLE III INSPECTION PERIOD 3.1 Right of Inspection. During the period beginning upon the Effective Date and ending on December 15, 1997 (hereinafter referred to as the "Inspection Period"), subject to the rights of existing tenants of the Property, Purchaser shall have the right to make a physical inspection of the Property and to examine any books and records maintained by Seller relating to the Property at such place or places as said books and records may be located either at the site or at the Denver office of the Property Manager (excluding, however, internal memoranda, financial projections, appraisals and budgets). Purchaser understands and agrees that any on-site inspections of the Property shall be conducted upon at least twenty-four (24) hours prior written notice to Seller and in the presence of Seller or its representative. Purchaser agrees to indemnify and hold Seller harmless of and from any claim for damages or injuries arising from Purchaser's inspection of the Property, and notwithstanding anything to the contrary in this Agreement, such obligation to indemnify shall survive Closing or any termination of this Agreement. All inspections shall occur at reasonable times agreed upon by Seller and Purchaser and shall be conducted so as not to unreasonably interfere with use of the Property by Seller or its tenants. Purchaser, at is sole cost and expense and election, may obtain an ADA survey of the Property, prepared by an engineer acceptable to Purchaser. Seller shall not be responsible to make or pay for any improvements to the Property required by the ADA. 3.2 Independent Audit. Promptly following the execution of this Agreement, Seller shall provide to Purchaser's representatives and independent accounting firms access to all financial and other information relating to the Property pursuant to Section 3.1 above, to enable Purchaser's representatives and independent accounting firms to prepare audited financial statements for 1995, 1996, and 1997 year-to-date in conformity with generally accepted accounting 5 7 principles. Seller shall reasonably cooperate with Purchaser's representatives and independent accounting firms in connection with the aforementioned financial analysis. If this Agreement terminates prior to the Closing, other than by reason of a default by Seller, Purchaser shall deliver to Seller copies of any audited financial statements of the Property prepared for Purchaser and assign to Seller without warranty all of Purchaser's rights thereto. 3.3 Right of Termination. Seller agrees that in the event Purchaser determines (such determination to be made in Purchaser's sole discretion) that the Property is not suitable for its purposes, Purchaser shall have the right to terminate this Agreement by sending written notice thereof (hereinafter referred to as the "Notice of Termination") to Seller prior to the expiration of the Inspection Period. Upon delivery by Purchaser of such Notice of Termination within the Inspection Period, this Agreement shall terminate and the Earnest Money shall be returned to Purchaser. If Purchaser fails to send Seller a Notice of Termination prior to the expiration of the Inspection Period, Purchaser shall no longer have any right to terminate this Agreement under this Section 3.2 and shall be bound to proceed to Closing and consummate the transaction contemplated hereby pursuant to the terms of this Agreement. 3.4 Confidentiality. Unless and until Closing, Purchaser shall keep all information regarding the Property confidential, except to the extent necessary to comply with applicable laws and regulations; provided, however, that it is understood and agreed that Purchaser may disclose such data and information to its employees, consultants, accountants and attorneys, provided that such persons agree in writing to treat such data and information confidentially or as otherwise required by applicable law. If, for any reason, Closing does not occur, Purchaser shall provide copies of all third party reports obtained by Purchaser relating to the Property to Seller at no expense to Seller, and shall return all documents and copies of documents which have been delivered by Seller to Purchaser back to Seller. ARTICLE IV CLOSING 4.1 Time and Place. Closing of the transaction contemplated hereby ("Closing") shall be held at the offices of Transnational Title Insurance Company, 1800 Lawrence Street, Denver, Colorado, at 10:00 a.m. on or before December 31, 1997. At Closing, Seller and Purchaser shall perform the obligations set forth in, respectively, 6 8 Section 4.2 and Section 4.3, the performance of which obligations shall be concurrent conditions. 4.2 Seller's Obligations at Closing. At Closing, Seller shall: (a) deliver to Purchaser a Special Warranty Deed (the "Deed") in the form of Exhibit B attached hereto and made a part hereof, executed and acknowledged by Seller and in recordable form, conveying the Land and Improvements to Purchaser, subject only to the Permitted Exceptions; (b) join with Purchaser in the execution and acknowledgment of a Bill of Sale and Assignment (the "Bill of Sale") in the form of Exhibit C attached hereto and made a part hereof with respect to the Property; (c) join with Purchaser in the execution and acknowledgment of an Assignment and Assumption of Contracts (the "Assignment of Contracts") in the form of Exhibit D attached hereto and made a part hereof with respect to the Property; (d) join with Purchaser in the execution of a Closing Memorandum and Indemnification Agreement (the "Closing Memorandum") in the form of Exhibit E attached hereto and made a part hereof with respect to the Property; (e) join with Purchaser in the execution of a letter to each tenant of the Property in the form of Exhibit F attached hereto and made a part hereof; (f) deliver to Purchaser a FIRPTA Affidavit in the form of Exhibit G attached hereto and made a part hereof, duly executed by Seller, stating that Seller is not a "foreign person" as defined in the federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act, and in the event Seller is unable or unwilling to deliver the FIRPTA Affidavit, in lieu thereof the funds payable to Seller shall be adjusted in such a manner as to comply with the withholding provisions of such statutes; (g) deliver to Purchaser the Tenant Estoppels (as hereinafter defined) required by this Agreement; (h) deliver to Purchaser such evidence as Purchaser's counsel and/or the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Seller; 7 9 (i) deliver to Purchaser possession and occupancy of the Property, subject to the Permitted Exceptions; (j) deliver to Purchaser all available keys to the Property in Seller's possession; and (k) originals of all leases, permits, certificates of occupancy, and evidence of termination of all service contracts Purchaser has elected to not assume prior to the expiration of the inspection period. 4.3 Purchaser's Obligations at Closing. At Closing, Purchaser shall: (a) pay to Seller the full amount of the Purchase Price in cash or immediately available wire transferred funds pursuant to Section 1.5 above, it being agreed that at Closing the Earnest Money shall be delivered to Seller and applied towards payment of the Purchase Price; (b) join Seller in execution of the instruments described in Sections 4.2(b), 4.2(c), 4.2(d) and 4.2(e) above; (c) deliver to Seller a Certificate Regarding Disclaimers in the form of Exhibit H attached hereto and made a part hereof, executed by Purchaser and its counsel; (d) deliver to Seller a separate letter in the form of Exhibit I attached hereto and made a part hereof, duly executed by Purchaser, confirming that Purchaser is not acquiring the Property with the assets of an employee benefit plan as defined by Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), and, in the event Purchaser is unable or unwilling to make such a representation, Purchaser shall be deemed to be in default hereunder, and Seller shall have the right to terminate this Agreement and to receive and retain the Earnest Money; and (e) deliver to Seller such evidence as Seller's counsel and/or the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Purchaser. 4.4 Credits and Prorations. (a) The following shall be apportioned with respect to the Property as of 12:01 a.m., on the day of Closing, as if Purchaser were vested with title to the Property during the entire day upon which Closing occurs: 8 10 (i) rentals and prepaid rentals (collectively "Rents") shall be prorated on the basis that Purchaser shall receive a credit for all Rent which Seller has actually received before the Closing which is allocable to the period after the Closing; any Rent collected by Purchaser subsequent to the Closing for Rent due prior to Closing shall be paid from Purchaser to Seller; (ii) taxes (including personal property taxes on the Personal Property); (iii) any assessments to the extent specified in Section 2.5(d) hereof; (iv) payments under the Operating Agreements or other agreements affecting the Property; (v) gas, electricity and other utility charges for which Seller is liable, if any, such charges to be apportioned at Closing on the basis of the meter reading occurring on the date of Closing; and (vi) any other operating expenses of the Property incurred during the month in which Closing occurs. (b) Notwithstanding anything contained in the foregoing provisions: (i) At Closing, (A) Seller shall, at Seller's option, either deliver to Purchaser any security deposits provided in the Leases or credit to the account of Purchaser the amount of such security deposits (to the extent such security deposits are not applied against delinquent rents), and (B) Purchaser shall credit to the account of Seller all refundable cash or other deposits posted with utility companies serving the Property, or, at Seller's option, Seller shall be entitled to receive and retain such refundable cash and deposits. (ii) Any taxes paid at Closing shall be prorated based upon the amounts actually paid. (iii) Charges referred to in Section 4.4(a) above (other than those referred to in Section 4.4(a)(i)) which are payable by any tenant to a third party shall not be apportioned hereunder, and Purchaser shall accept title subject to any of such charges unpaid and Purchaser 9 11 shall look solely to the tenant responsible therefor for the payment of the same. If Seller shall have paid any of such charges on behalf of any tenant, and shall not have been reimbursed therefor by the time of Closing, Purchaser shall credit to Seller an amount equal to all such charges so paid by Seller. (iv) Seller shall receive the entire advantage of any discounts for the prepayment by it of any taxes, water rates or sewer rents. (v) As to gas, electricity and other utility charges referred to in Section 4.4(a)(v) above, Seller may on notice to Purchaser elect to pay one or more of all of said items accrued to the date hereinabove fixed for apportionment directly to the person or entity entitled thereto, and to the extent Seller so elects, such item shall not be apportioned hereunder, and Seller's obligation to pay such item directly in such case shall survive the Closing. (vi) Purchaser shall be responsible for the payment of (A) all Tenant Inducement Costs (as hereinafter defined) and leasing commissions which become due and payable (whether before or after Closing) (1) as a result of any renewals or expansions of existing Leases which occur between the Effective Date and the date of Closing by the express terms of the leases or as otherwise approved by Purchaser, and (2) under any new Leases entered into between the Effective Date and the date of Closing which have been approved by Purchaser; and (B) all Tenant Inducement Costs and leasing commissions which become due and payable from and after the date of Closing. If as of the date of Closing Seller shall have paid any Tenant Inducement Costs or leasing commissions for which Purchaser is responsible pursuant to the foregoing provisions, Purchaser shall reimburse Seller therefor at Closing. For purposes hereof, the term "Tenant Inducement Costs" shall mean any out-of-pocket payments required under a Lease to be paid by the landlord thereunder to or for the benefit of the tenant thereunder which is in the nature of a tenant inducement, including specifically, without limitation, tenant improvement costs, lease buyout costs, and moving, design, refurbishment and club membership allowances. The term "Tenant Inducement Costs" shall not include loss of income resulting from any free rental period, it being agreed that Seller shall bear the loss resulting from any 10 12 free rental period until the date of Closing and that Purchaser shall bear such loss from and after the date of Closing. (c) All other matters with respect to apportionment shall be governed by the Closing Memorandum. All prorations and adjustments described in this Section 4.4 and in the Closing Memorandum shall be effected by increasing or decreasing, as appropriate, the amount of cash to be paid by Purchaser to Seller at Closing. The provisions of this Section 4.4 shall survive Closing. 4.5 Closing Costs. Seller shall pay the fees of any counsel representing it in connection with this transaction; one-half (1/2) of any escrow fee which may be charged by the Title Company; the premium for the Owner's Policy of Title Insurance to be issued to Purchaser by the Title Company at Closing; and the cost of the Survey. Purchaser shall pay the fees of any counsel representing Purchaser in connection with this transaction; the fees for recording the deed conveying the Property to Purchaser; any transfer tax, documentary stamp tax or similar tax which becomes payable by reason of the transfer of the Property; any title insurance fees or premiums in connection with any endorsements for extended coverage; and one-half (1/2) of any escrow fees charged by the Title Company. All other costs and expenses incident to this transaction and the closing thereof shall be paid by the party incurring same. ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS 5.1 Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser as follows: (a) Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition by Seller's creditors, (iii) suffered the appointment of a receiver to take possession of the Property or all, or substantially all, of Seller's other assets, (iv) suffered the attachment or other judicial seizure of the Property or all, or substantially all, of Seller's other assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or composition to its creditors generally. (b) Seller is not a "foreign person" as defined in Section 1445 of the Internal Revenue Code of 1986, as amended and any related regulations. 11 13 (c) The Purchase and Sale Agreement (i) has been duly authorized, executed and delivered by Seller, and (ii) does not violate any provision of any agreement or judicial order to which Seller is a party or to which Seller or the Property is subject. (d) Seller has full and complete power and authority to enter into the Purchase and Sale Agreement and to perform its obligations hereunder. (e) Seller is the lessor or landlord or the successor lessor or landlord under the leases. Except as otherwise set forth in the leases, to Seller's knowledge no presently effective rent concessions have been given to any tenants and no rent has been paid in advance by any tenants respecting a period subsequent to the Closing. To Seller's knowledge, no tenants have asserted in writing any claims, defenses or offsets to rent accruing from and after the date of Closing. To Seller's knowledge, except as disclosed to Purchaser, no material default, delinquency or breach exists on the part of any tenant. There are no material defaults or breaches on the part of the landlord under any lease. In the event that any Tenant Estoppel delivered to Purchaser with respect to any lease shall contain any statement of fact, information or other matter which is inconsistent with the matters stated in Seller's representations, the Tenant Estoppel shall control and Seller shall have no liability for any claim based upon a breach of representation regarding such statement of fact, information or other matter contained in the Tenant Estoppel. (f) To Seller's knowledge, there is no litigation, arbitration or governmental proceeding pending or threatened with respect to the Property or any unsatisfied judgment which could individually or in the aggregate have a material adverse effect on title to the Property or the consummation of the transaction. (g) No condemnation proceedings relating to the Property are pending or, to Seller's knowledge, threatened. (h) To Seller's knowledge, Seller has not received any written notice of any violation of applicable laws or codes concerning the Property. (i) Except as set forth in any environmental assessment reports in Seller's possession and disclosed to Purchaser or as otherwise disclosed to Purchaser in writing by Seller, to Seller's knowledge, Seller has received no written notification, complaint or request for information that any governmental or quasi- 12 14 governmental authority, tenant or other third party has alleged or determined that there are any violations of environmental statutes, ordinances or regulations affecting the Property. 5.2 Covenants of Seller. Seller hereby covenants with Purchaser as follows: (a) From the Effective Date hereof until the Closing or earlier termination of this Agreement, Seller shall use reasonable efforts to operate and maintain the Property in the manner Seller has operated and maintained the Property prior to the date hereof. (b) Seller shall obtain and deliver to Purchaser prior to Closing, a written estoppel certificate in the form of Exhibit J attached hereto and made a part hereof signed by tenants of the Property representing Eighty Percent (80%) of the total gross revenue of the Property. The signed certificates are referred to herein as the "Tenant Estoppels". (c) A copy of each Lease presented to Seller between the Effective Date and the date of Closing for its approval and execution will be submitted to Purchaser prior to execution by Seller. Purchaser agrees to notify Seller in writing within five (5) business days after its receipt of each such Lease of either its approval or disapproval thereof, including all Tenant Inducement Costs and leasing commissions to be incurred in connection therewith. In the event Purchaser fails to notify Seller in writing of its approval or disapproval of any such Lease within the five (5) day time period for such purpose set forth above, such failure shall be deemed the disapproval by Purchaser of such Lease. At Closing, Purchaser shall reimburse Seller for any Tenant Inducement Costs or leasing commissions incurred by Seller pursuant to a new Lease approved (or deemed approved) by Purchaser. 5.3 Actual Knowledge Defined. References in Sections 5.1 and 5.2 above to the "actual knowledge" of Seller shall refer only to the actual knowledge of Daniel Arrowood, Vice President of ERE Yarmouth, and shall not be construed to refer to the knowledge of any other officer, agent or employee of Seller or ERE Yarmouth or Compass Management & Leasing, Inc. or any affiliate thereof or to impose upon him any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains. No claim for a breach of any representation or warranty of Seller shall be actionable or payable (a) if the breach in question results from or is based on a condition, state of fact or other matter which was known to Purchaser prior to Closing and (b) written notice of the specific nature of the breach is not given to Seller prior to the expiration of ninety (90) days after the Closing (the "Notice 13 15 Deadline") and an action has not been commenced against Seller within sixty (60) days after the Notice Deadline. Seller's maximum liability for a breach of any representation or warranty shall be limited to One Million Dollars ($1,000,000.00). 5.4 Representations and Warranties of Purchaser. Purchaser hereby represents and warrants to Seller: (a) Purchaser is not acquiring the Property with the assets of an employee benefit plan as defined in Section 3(3) of ERISA. (b) Purchaser has the full right, power and authority to purchase the Property as provided in this Agreement and to carry out Purchaser's obligations hereunder, and all requisite action necessary to authorize Purchaser to enter into this Agreement and to carry out its obligations hereunder have been, or by the Closing will have been taken. 5.5 Covenants of Purchaser. (a) Purchaser hereby covenants with Seller that Purchaser shall, in connection with its investigation of the Property during the Inspection Period, inspect the Property for the presence of asbestos, polychlorinated biphenyl emissions or other hazardous substances, materials and wastes (as those terms may be defined by applicable federal or state law, rule or regulation), and shall furnish to Seller at Closing copies of any reports received by Purchaser in connection with any such inspection. Purchaser hereby assumes full responsibility for such inspections and irrevocably waives any claim against Seller arising from the presence of such materials on the Property. Purchaser shall also furnish to Seller at Closing copies of any other reports received by Purchaser relating to any other inspections of the Property conducted on Purchaser's behalf, if any (including, specifically, without limitation, any reports analyzing compliance of the Property with the provisions of the Americans with Disabilities Act ("ADA"), 42 U.S.C. Section 12101, et seq., if applicable). (b) Upon the acquisition of the Property by Purchaser, Compass Management and Leasing, Inc. ("Compass"), the current manager of the Property, shall have the same right to register prospective tenants of the Property with Purchaser as exists under the current management agreement affecting the Property, and in the event a lease with any tenant so registered is consummated within sixty (60) days after Closing, Purchaser shall pay Compass a leasing commission in accordance with said management agreement. 14 16 ARTICLE VI DEFAULT 6.1 Default by Purchaser. In the event that the Earnest Money is delivered to the Title Company as herein provided and Purchaser fails to consummate this Agreement for any reason, except Seller's default or the permitted termination of this Agreement by either Seller or Purchaser as herein expressly provided, Seller shall be entitled, as its sole remedy, to terminate this Agreement and receive the Earnest Money as liquidated damages for the breach of this Agreement, it being agreed between the parties hereto that the actual damages to Seller in the event of such breach are impractical to ascertain and the amount of the Earnest Money is a reasonable estimate thereof. Notwithstanding anything to the contrary contained in this Section 6.1, if Purchaser or any affiliate of Purchaser asserts a claim to the Property which clouds Seller's title thereto, and if such claim is found by a court of competent jurisdiction to be without merit, then Seller shall have all remedies available at law or in equity against Purchaser. 6.2 Default by Seller. In the event that Seller fails to consummate this Agreement for any reason, except Purchaser's default or the permitted termination of this Agreement by Seller or Purchaser as herein expressly provided, Purchaser shall be entitled, as its sole remedy, either (a) to receive the return of the Earnest Money, which return shall operate to terminate this Agreement and release Seller from any and all liability hereunder, or (b) to enforce specific performance of Seller's obligation to execute the documents required to convey the Property to Purchaser, it being understood and agreed that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder. Purchaser expressly waives its rights to seek damages in the event of Seller's default hereunder. Purchaser shall be deemed to have elected to terminate this Agreement and receive back the Earnest Money if Purchaser fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before sixty (60) days following the date upon which Closing was to have occurred. 15 17 ARTICLE VII RISK OF LOSS 7.1 Minor Damage. In the event of loss or damage to the Property or any portion thereof (the "premises in question") which is not "major" (as hereinafter defined), this Agreement shall remain in full force and effect provided Seller performs any necessary repairs or, at Seller's option, reduces the cash portion of the Purchase Price in an amount equal to the cost of such repairs, Seller thereby retaining all of Seller's right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation awards relating to the premises in question. In the event that Seller elects to perform repairs upon the Property, Seller shall use reasonable efforts to complete such repairs promptly and the date of Closing shall be extended a reasonable time in order to allow for the completion of such repairs. 7.2 Major Damage. In the event of a "major" loss or damage, either Seller or Purchaser may terminate this Agreement by written notice to the other party, in which event the Earnest Money shall be returned to Purchaser. If neither Seller nor Purchaser elects to terminate this Agreement within ten (10) days after Seller sends Purchaser written notice of the occurrence of major loss or damage, then Seller and Purchaser shall be deemed to have elected to proceed with Closing, in which event Seller shall, at Seller's option, either (a) perform any necessary repairs, or (b) assign to Purchaser all of Seller's right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation awards relating to the premises in question. In the event that Seller elects to perform repairs upon the Property, Seller shall use reasonable efforts to complete such repairs promptly and the date of Closing shall be extended a reasonable time in order to allow for the completion of such repairs. Upon Closing, full risk of loss with respect to the Property shall pass to Purchaser. For purposes of Sections 7.1 and 7.2, "major" loss or damage refers to the following: (i) loss or damage to the Property or any portion thereof such that the cost of repairing or restoring the premises in question to a condition substantially identical to that of the premises in question prior to the event of damage would be, in the certified opinion of a mutually acceptable architect, equal to or greater than One Hundred Thousand and No/100 Dollars ($100,000.00), and (ii) any loss due to a condemnation which permanently and materially impairs the current use of the Property. 16 18 ARTICLE VIII COMMISSIONS 8.1 Brokerage Commissions. Seller agrees to pay to CB Commercial Real Estate Group, Inc. (the "Broker") a brokerage commission pursuant to a separate agreement in the event the transaction contemplated by this Agreement is consummated, but not otherwise. Each party agrees that should any claim be made for brokerage commissions or finder's fees by any broker or finder other than the Broker by, through or on account of any acts of said party or its representatives, said party will hold the other party free and harmless from and against any and all loss, liability, cost, damage and expense in connection therewith. By its signature hereto, the Broker represents to Seller and Purchaser (a) that the Broker is a duly licensed real estate broker under the laws of the state in which the Property is located and (b) that the Broker has not entered into any arrangement with any other party whereby such other party is entitled to any commission or finder's fee in connection with this transaction, and the Broker agrees that should any claim be made for brokerage commissions or finder's fees by any other party by, through or on account of any acts of the Broker or its representatives, the Broker shall hold Purchaser and Seller free and harmless from and against any and all loss, cost, damage and expense in connection therewith. In the event the transaction envisioned hereby fails to close for any reason, Seller shall have no obligation for the payment of any commission or similar type fee hereunder. The provisions of this paragraph shall survive Closing. ARTICLE IX DISCLAIMERS AND WAIVERS 9.1 No Reliance on Documents. Except as expressly stated herein, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Seller to Purchaser in connection with the transaction contemplated hereby. Purchaser acknowledges and agrees that all materials, data and information delivered by Seller to Purchaser in connection with the transaction contemplated hereby are provided to Purchaser as a convenience only and that any reliance on or use of such materials, data or information by Purchaser shall be at the sole risk of Purchaser, except as otherwise expressly stated herein. Without limiting the generality of the foregoing provisions, Purchaser acknowledges and agrees that (a) any environmental or other report with respect to the Property which is delivered by Seller to Purchaser shall be for general informational purposes only, (b) Purchaser shall not have any right to rely on any such report delivered by Seller to Purchaser, but rather will rely on its own inspections and investigations of the Property and any reports commissioned by Purchaser with respect thereto, and (c) neither Seller, any affiliate of Seller nor the person or entity which prepared any such report delivered by Seller to Purchaser 17 19 shall have any liability to Purchaser for any inaccuracy in or omission from any such report. 9.2 Disclaimers. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER THAN SELLER'S WARRANTY OF TITLE TO BE SET FORTH IN THE DEED), ZONING, TAX CONSEQUENCES, PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO MADE OR FURNISHED BY SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, VERBALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT. PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY PURCHASER'S INVESTIGATIONS, AND PURCHASER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED 18 20 OR ALLEGED AGAINST SELLER AT ANY TIME BY REASON OF OR ARISING OUT OF ANY CONSTRUCTION DEFECTS, PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. PURCHASER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF PURCHASER. 9.3 Effect and Survival of Disclaimers. Seller and Purchaser agree that the provisions of this Article IX shall survive Closing. ARTICLE X MISCELLANEOUS 10.1 Confidentiality. Purchaser and its representatives shall hold in strictest confidence all data and information obtained with respect to Seller or its business, whether obtained before or after the execution and delivery of this Agreement, and shall not disclose the same to others, except as required by applicable laws or regulations; provided, however, that it is understood and agreed that Purchaser may disclose such data and information to the employees, consultants, accountants and attorneys of Purchaser and any person or entity which Purchaser anticipates will invest in the Property. In the event this Agreement is terminated or Purchaser fails to perform hereunder, Purchaser shall promptly return to Seller any statements, documents, schedules, exhibits or other written information obtained from Seller in connection with this Agreement or the transaction contemplated herein. It is understood and agreed that, with respect to any provision of this Agreement which refers to the termination of this Agreement and the return of the Earnest Money to Purchaser, such Earnest Money shall not be returned to Purchaser unless and until Purchaser has fulfilled its obligation to return to Seller the materials described in the preceding sentence. In the event of a breach or threatened breach by Purchaser or its agents or representatives of this Section 10.1, Seller shall be entitled to an injunction restraining Purchaser or its agents or representatives from disclosing, in whole or in part, such confidential information. Nothing herein shall be construed as prohibiting Seller from pursuing any other available remedy at law or in equity for such breach or threatened breach. 10.2 Public Disclosure. Prior to Closing, any release to the public of information with respect to the matters set forth in this Agreement will be made only in the form approved by Purchaser and 19 21 Seller and their respective counsel, or as otherwise required by applicable laws or regulations. 10.3 Discharge of Obligations. The acceptance of the Deed by Purchaser shall be deemed to be a full performance and discharge of every representation and warranty made by Seller herein and every agreement and obligation on the part of Seller to be performed pursuant to the provisions of this Agreement, except those, if any, which are herein specifically stated to survive Closing. 10.4 Assignment. Purchaser may not assign its rights under this Agreement without first obtaining Seller's written approval, which approval shall not be unreasonably withheld or delayed by Seller. 10.5 Notices. Any notice pursuant to this Agreement shall be given in writing by (a) personal delivery, or (b) expedited delivery service with proof of delivery, or (c) United States Mail, postage prepaid, registered or certified mail, return receipt requested, or (d) prepaid telegram, telex or telecopy (provided that such telegram, telex or telecopy is confirmed by expedited delivery service or by mail in the manner previously described), sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given either at the time of personal delivery, or, in the case of expedited delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of telegram, telex or telecopy upon receipt. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows: If to Seller: The Equitable Life Assurance Society of the United States c/o ERE Yarmouth ATTN: Daniel Arrowood Post Office Box 19780 19800 MacArthur Boulevard, #1000 Irvine, California 92612 TELECOPY: (714) 476-9390 TELEPHONE: (714) 263-9513 20 22 with a copy to: Donald L. Cook, Esq. Wood, Ris & Hames, P.C. 1775 Sherman Street, #1600 Denver, Colorado 80203 TELECOPY: (303) 830-8772 TELEPHONE: (303) 863-7700 If to Purchaser: American Industrial Properties REIT Attn: Lewis D. Friedland 6210 N. Beltline Road, Suite 170 Irving, Texas 75063-2656 TELECOPY: (972) 756-0704 TELEPHONE: (972) 756-6000 with a copy to: [Purchaser's Counsel] Brad B. Hawley, Esq. Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. 2200 Ross Avenue, Suite 900 Dallas, Texas 75201 TELECOPY: (214) 220-4899 TELEPHONE: (214) 220-4888 10.6 Binding Effect. This Agreement shall not be binding in any way upon Seller unless and until (a) Seller shall execute and deliver the same to Purchaser, (b) each stage of Seller's investment approval process has approved this transaction, and (c) Seller's Investment Committee has thereafter given its written approval thereof. If Seller has not sent Purchaser written notice (the "Approval Notice") of such approvals within twenty (20) calendar days after the Effective Date (the "Approval Deadline"), or if prior to the Approval Deadline Seller notifies Purchaser in writing that this Agreement has been disapproved by the persons or entities referred to in clauses (b) or (c) of the preceding sentence, then this Agreement shall be deemed terminated and Purchaser shall be entitled to the return of the Earnest Money. It is understood and agreed that at each stage of Seller's investment approval process, Seller or its investment advisor, Equitable Real Estate Investment Management Inc., shall each have the right, in its unfettered discretion, to disapprove the transaction contemplated by this Agreement, without obligation thereafter to proceed to the next stage of Seller's investment approval process. Seller's approval of this Agreement shall be evidenced only by both Seller's execution of this Agreement and Seller's sending of the Approval Notice to Purchaser prior to the Approval Deadline and, accordingly, Purchaser acknowledges and agrees that Purchaser cannot and will not rely upon any other statement or action of 21 23 Seller or its representatives as evidence of Seller's approval of this Agreement or the subject matter hereof. 10.7 Modifications. This Agreement cannot be changed orally, and no executory agreement shall be effective to waive, change, modify or discharge it in whole or in part unless such executory agreement is in writing and is signed by the parties against whom enforcement of any waiver, change, modification or discharge is sought. 10.8 Tenant Notification Letters. Seller shall prepare and Purchaser shall deliver to each and every tenant of the Property under a lease thereof a signed statement acknowledging Purchaser's receipt and responsibility for each tenant's security deposit (to the extent delivered by Seller to Purchaser at Closing), if any, all in compliance with and pursuant to the applicable provisions of applicable law. The provisions of this paragraph shall survive Closing. 10.9 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday under the laws of the State in which the Property is located, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday. The final day of any such period shall be deemed to end at 5 p.m., local time. 10.10 Time of Essence. Seller and Purchaser agree that time is of the essence of this Agreement. 10.11 Successors and Assigns. The terms and provisions of this Agreement are to apply to and bind the permitted successors and assigns of the parties hereto. 10.12 Entire Agreement. This Agreement, including the Exhibits, contains the entire agreement between the parties pertaining to the subject matter hereof and fully supersedes all prior agreements and understandings between the parties pertaining to such subject matter. 10.13 Further Assurances. Each party agrees that it will without further consideration execute and deliver such other documents and take such other action, whether prior or subsequent to Closing, as may be reasonably requested by the other party to consummate more effectively the purposes or subject matter of this 22 24 Agreement. Without limiting the generality of the foregoing, Purchaser shall, if requested by Seller, execute acknowledgments of receipt with respect to any materials delivered by Seller to Purchaser with respect to the Property. 10.14 Attorneys' Fees. In the event of any controversy, claim or dispute between the parties affecting or relating to the subject matter or performance of this Agreement, the prevailing party shall be entitled to recover from the non-prevailing party all of its reasonable expenses, including reasonable attorneys' and accountants' fees. 10.15 Counterparts. This Agreement may be executed in several counterparts, and all such executed counterparts shall constitute the same agreement. It shall be necessary to account for only one such counterpart in proving this Agreement. 10.16 Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect. 10.17 Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE IN WHICH THE PROPERTY IS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF SUCH STATE. SELLER AND PURCHASER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN, THE STATE IN WHICH THE PROPERTY IS LOCATED IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN A STATE OR FEDERAL COURT SITTING IN THE STATE IN WHICH THE PROPERTY IS LOCATED. PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 10.17 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT. 10.18 Limited Liability. The obligations of Seller arising by virtue of this Agreement shall be limited to the interest of Seller in the Property and resort shall not be had to any other assets of Seller. 10.19 No Third Party Beneficiary. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing. 23 25 10.20 Exhibits and Schedules. The following schedules or exhibits attached hereto shall be deemed to be an integral part of this Agreement: (a) Exhibit A - Legal description of the Land (b) Exhibit B - Form of Special Warranty Deed (c) Exhibit C - Form of Bill of Sale and Assignment (d) Exhibit D - Form of Assignment and Assumption of Contracts (e) Exhibit E - Form of Closing Memorandum and Indemnification Agreement (f) Exhibit F- Form of Tenant Notification Letter (g) Exhibit G - Form of FIRPTA Affidavit (h) Exhibit H - Form of Certificate Regarding Disclaimers (i) Exhibit I - Form of ERISA Statement (j) Exhibit J - Form of Tenant Estoppel (k) Exhibit K - November 10, 1997 letter - Underground Storage Tank 10.21 Captions. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof. 10.22 Construction. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto. 10.23 Termination of Agreement. It is understood and agreed that if either Purchaser or Seller terminates this Agreement pursuant to a right of termination granted hereunder, such termination shall operate to relieve Seller and Purchaser from all 24 26 obligations under this Agreement, except for such obligations as are specifically stated herein to survive the termination of this Agreement (such as the indemnification obligation of Purchaser set forth in Section 3.1). 10.24 Municipal Utility District Notices. Purchaser agrees that if the Property or any portion thereof is located in a municipal utility district, Purchaser will, within five (5) days after request by Seller, execute any and all notices which, in the opinion of counsel for Seller, are required by law to be given to Purchaser with respect to the Property. 10.25 Underground Storage Tank. Seller shall, within thirty (30) days after Closing, cause the existing underground storage tank to be removed pursuant to the procedure set forth in Exhibit K attached hereto and incorporated herein and in accordance with applicable state and federal laws. Seller shall be responsible for any claims arising from the existence and/or removal of such tank. 10.26 Centura Health Corporation Tenant Improvement Allowance. At Closing, Purchaser shall receive a credit for any undisbursed tenant improvement allowance under the lease with Centura Health Corporation, in an amount up to Four Hundred Twenty-Two Thousand Seventy-Four and 50/100 Dollars ($422,074.50). As of the date hereof, none of the tenant improvement allowance has been disbursed and none will be disbursed without Purchaser's prior written consent, which consent will not be unreasonably withheld nor delayed. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be effective as of the Effective Date. SELLER: Executed by Seller THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, a New York corporation, this _________ day of ______________, 1997. By: /s/ SUSAN HAWKEN ------------------------------- Name: Susan Hawken ----------------------------- Title: Investment Officer ---------------------------- PURCHASER: Executed by Purchaser AMERICAN INDUSTRIAL PROPERTIES REIT this ______ day of _______________, 1997. By: /s/ LEWIS D. FRIEDLAND ------------------------------- Name: Lewis D. Friedland ----------------------------- Title: Vice President ---------------------------- 25 27 ACKNOWLEDGMENT BY TITLE COMPANY The Title Company, Transnation Title Insurance Company, hereby agrees to perform its obligations under this Agreement and acknowledges receipt of a fully executed counterpart of this Agreement on the ______ day of ______________, 1997. TRANSNATION TITLE INSURANCE COMPANY By:________________________________ Name:______________________________ Title:_____________________________ 26 EX-10.5 6 PURCHASE & SALE AGREEMENT 1 EXHIBIT 10.5 PURCHASE AND SALE AGREEMENT BY AND BETWEEN NANOOK PARTNERS, L.P. AND AMERICAN INDUSTRIAL PROPERTIES REIT 2 TABLE OF CONTENTS
Page(s) ------- 1. Property Included in Sale..............................................................................(1) 2. Purchase Price; Earnest Money..........................................................................(2) 3. Title to the Property..................................................................................(3) 4. Due Diligence Documents................................................................................(3) 5. Due Diligence Review...................................................................................(7) 6. Conditions Precedent to Closing........................................................................(8) 7. Remedies...............................................................................................(9) 8. Closing and Escrow.....................................................................................(9) 9. Representations, Warranties and Covenants of Seller...................................................(14) 11. Representations and Warranties of Buyer...............................................................(17) 12. Continuation and Survival.............................................................................(18) 13. Indemnity.............................................................................................(18) 14. Risk of Loss..........................................................................................(18) 15. Possession............................................................................................(19) 16. Maintenance of the Property and Property Personnel....................................................(19) 17. Leasing; Buyer's Consent to New Contracts Affecting the Property; Termination of Existing Contracts....................................................................................(20) 18. Insurance.............................................................................................(20) 19. Brokers and Finders...................................................................................(20) 20. Marketing.............................................................................................(21)
(i) 3 21. Publicity and Confidentiality.........................................................................(21) 22. Exculpation...........................................................................................(21) 23. Miscellaneous.........................................................................................(21)
(ii) 4 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is dated as of December __, 1997, (the "Effective Date") by and between NANOOK PARTNERS, L.P., a Texas limited partnership("Seller"), and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Buyer"). IN CONSIDERATION of the respective agreements hereinafter set forth, Seller and Buyer agree as follows: 1. Property Included in Sale. Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase from Seller, subject to the terms and conditions set forth herein, the following: (a) that certain real property located in Carrollton, Texas, and being more particularly described in Exhibit A attached hereto (the "Land"); (b) any and all rights, privileges and easements appurtenant to the Land, including, without limitation, all minerals, oil, gas and other hydrocarbon substances on and under and that may be produced from the Land, as well as all development rights, land use entitlements, including without limitation building permits, licenses, permits and certificates, utilities commitments, air rights, water, water rights, riparian rights, and water stock relating to the Land and any rights-of-way or other appurtenances used in connection with the beneficial use and enjoyment of the Land and all of Seller's right, title and interest in and to all roads, easements, rights of way and alleys adjoining, serving or servicing the Land (collectively, the "Appurtenances"); (c) all improvements and fixtures located on the Land and appurtenances, including, without limitation, building(s) located on the Land containing approximately 69,694 square feet of net rentable area (Seller making no representation or warranty as to such square footage), and all apparatus, and equipment located on the Land used in connection with the operation or occupancy of the Land and appurtenances, such as heating and air conditioning systems and facilities used to provide any utility, refrigeration, ventilation, garbage disposal or other services on the Land and appurtenances, and along with all on-site parking facilities (collectively, the "Improvements", and together with the Land and Appurtenances, the "Real Property"); (d) Seller's right, title and interest to any and all tangible personal property owned by Seller located on or in and used in connection with the Real Property as of the date hereof and as of the "Closing Date" (as defined in Paragraph 8(b) below) including, without limitation, those items, if any, described in the Personal Property Inventory attached hereto as Exhibit B attached hereto (collectively, the "Tangible Personal Property"); and (e) Seller's right, title and interest to any and all intangible personal property now or hereafter owned by Seller and used in the ownership, use or operation or development of the Real Property and Tangible Personal Property, including, without limitation, any right, title and interest of Seller in the right to use the name "Avion Business Center" and any other 5 trade name now used in connection with the Real Property, and any contract or lease rights (including, without limitation, the lessor's interest in and to all tenant leases, rental agreements, subleases and tenancies, including all amendments, modifications, agreements, records, and other documents relating in any way to a right to occupy any portion of the Real Property (individually and collectively, the "Leases"), and Seller's interest in all security deposits and prepaid rent, if any, under the Leases covering any period of time after the Closing and any and all guaranties of the Leases, utility contracts, warranties or other agreements or rights relating to the ownership, use and operation of the Real Property or Tangible Personal Property (collectively, the "Intangible Property", and together with the Tangible Personal Property, the "Personal Property"). All of the items referred to in Subparagraphs (a), (b), (c), (d) and (e) above are collectively referred to as the "Property." 2. Purchase Price; Earnest Money. (a) The purchase price of the Property is Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000.00), subject to adjustments as provided in this Agreement (the "Purchase Price"). (b) The Purchase Price less any adjustments to the Purchase Price provided this Agreement, shall be delivered in immediately available funds at the closing of the purchase and sale contemplated hereunder (the "Closing") to Chicago Title Insurance Company, whose address is 350 North St. Paul Street, Suite 250, Dallas, Texas 75201, Attn: Ms. Majorie Cox ("Escrow Holder"). Buyer shall be deemed to have satisfied in full its obligation to deliver the Purchase Price at such time as the same has been received at the Closing by the Escrow Holder at the financial institution designated by Escrow Holder. (c) Within three (3) days after the Effective Date, Buyer shall deliver to the Escrow Holder a copy of this Agreement together with a check or wired funds in the amount of $25,000.00 (the "Earnest Money"), which Earnest Money shall be held in escrow by the Escrow Holder and delivered to the party entitled thereto in accordance with the provisions of this Agreement. The Earnest Money shall be invested by the Escrow Holder in an interest-bearing escrow account in a bank or other financial institution acceptable to Buyer. All interest earned on the Earnest Money shall be considered a part of the Earnest Money. (d) A portion of the Earnest Money in the amount of One Hundred and No/100 Dollars ($100.00) (the "Independent Contract Consideration") shall be deemed independent consideration for Seller's execution and delivery of this Contract. If the Closing occurs, the Independent Contract Consideration shall be applied as a credit towards the Purchase Price. However, if the Closing does not occur, for any reason, the Independent Contract Consideration shall be paid by the Escrow Holder to Seller. (2) 6 3. Title to the Property. (a) At the Closing, Seller shall convey to Buyer indefeasible and insurable fee simple title to the Real Property and Improvements, by duly executed and acknowledged special warranty deed substantially in the form attached hereto as Exhibit C (the "Deed"). Evidence of delivery of indefeasible and insurable fee simple title shall be the issuance by Chicago Title Insurance Company (the "Title Company") to Buyer at the Closing of an Owner's Policy of Title Insurance in the form promulgated by the Texas State Board of Insurance in the amount of the Purchase Price, insuring fee simple title to the Real Property in Buyer, subject only to such exceptions as Buyer shall approve or shall be deemed to have approved pursuant to Paragraph 5, below (the "Title Policy"). The Title Policy shall provide full coverage against mechanics' and materialmen's liens, the printed form survey exception shall be limited to "shortages in area" at Buyer's expense and the standard exception for taxes shall read: "standby fees and taxes for the year 1997 and subsequent years, and subsequent assessments for prior years due to change in land usage or ownership" and shall contain such special endorsements as Buyer may, at Buyer's expense, require, including, without limitation, any endorsements required as a condition to Buyer's approval of any title exceptions pursuant to Paragraph 5, below (the "Endorsements"). (b) At the Closing, Seller shall transfer all of Seller's right, title and interest in and to the Tangible Personal Property by a bill of sale in the form attached hereto as Exhibit D (the "Bill of Sale"). (c) At the Closing, Seller shall transfer all of Seller's right, title and interest in and to the Intangible Property, the "Assumed Contracts" (as hereinafter defined), the "Permits" (as hereinafter defined), and the "Warranties and Guaranties" (as hereafter defined) by an assignment of intangible property in the form attached hereto as Exhibit E (the "Assignment of Intangible Property"), and shall assign the Leases by an assignment of leases in the form attached hereto as Exhibit F (the "Assignment of Leases"). (d) Anything contained herein to the contrary notwithstanding and notwithstanding any approval or consent given by Buyer hereunder, Seller shall cause all monetary encumbrances caused by Seller, including without limitation all mechanics' liens to be released (or insured around to Buyer's satisfaction) from the Property on or prior to the Closing and shall cause the Title Company to insure title to the Property as vested in Buyer without any exception for such matters. 4. Due Diligence Documents. (a) Seller has provided, at Seller's expense, the documents hereinafter described (collectively, the "Preliminary Documents") to Buyer prior to the Effective Date hereof. The Preliminary Documents consist of the following: (i) Title Commitment. A current title commitment (the "Title Commitment") for an Owner's Policy of Title Insurance, covering the Real Property (3) 7 and issued by the Title Company, together with a legible copy of each document, map and survey referred to in the Title Commitment; (ii) Survey. An as-built survey of the Property dated within thirty (30) days of the Effective Date (the "Survey") prepared by a registered public surveyor, in accordance with the most recent Texas Surveyor's Association standards for a Category A1, Condition II Survey, certified by such surveyor to Buyer and the Title Company in the form attached hereto as Exhibit G and acceptable to the Title Company for the purpose of limiting the standard printed exception for survey matters to "shortages in area" in the Title Policy. The Survey at a minimum shall (a) set forth the legal description and street address of the Real Property, (b) show the location of all of the Improvements, all recorded restrictions, easements, rights-of-way, ingress and egress, all building restriction lines or applicable yard or setback requirements, all curb cuts, all utility lines and facilities, all visible restrictions, easements, rights-of-way, party walls and encroachments (either onto the Land from adjacent property or onto adjacent property from the Land) affecting the Real Property, and (c) locate all improvements on adjoining property which are within five feet of the property lines of the Land; (iii) Agreements. Copies of written easements, covenants, restrictions, agreements and contracts, which (a) affect the Property and (b) are not disclosed by the Title Commitment, including without limitation any agreements relating to the service, operation, repair, supply, advertising, promotion, sale, leasing or management of the Property or the use of common facilities (collectively, "Service Contracts"). A list of all Service Contracts that Seller shall assign to Buyer and that Buyer shall assume as of the Closing Date (which contracts to be assumed by Buyer are referred to herein as "Assumed Contracts") is attached hereto as Addendum I; (iv) Plans. To the extent existing and in Seller's possession or control, copies of all as-built plans and specifications for the Improvements, including without limitation the plans and specifications for and a complete description of all existing renovations and improvements to the Real Property and all rentable space therein, and as-built drawings for all underground utilities (collectively, the "Plans"); (v) Warranties. To the extent existing and in Seller's possession or control, copies of any and all guarantees or warranties and other rights given to Seller in connection with the construction of the Improvements or the purchase of any of the Personal Property, if any (collectively the "Warranties and Guaranties"); (vi) Reports. Any and all reports in Seller's possession or control relating to the Property including reports relating to the (i) environmental condition of the Property, including without limitation, environmental reports, environmental audits and the like (which reports are listed on Exhibit H); (ii) soil, seismological, geological and drainage conditions, and the flood and wind characteristics of the Property; (iii) design of the Improvements and its compliance with guidelines (4) 8 established by the Uniform Building Code in effect at the time the Improvements were constructed; " (vii) Rent Roll. A rent roll, dated no earlier than ten (10) days prior to the Effective Date, and certified by Seller, to Seller's knowledge, to be accurate and complete, showing: 1) the name of each tenant of the Improvements; 2) the rentable square footage for each tenant; 3) the commencement and expiration date of each tenant's Lease; 4) the monthly rental payable by each tenant; and 6) the amount of any security deposit (collectively, the "Rent Roll"). The Rent Roll is attached as Exhibit I. Seller shall deliver to Buyer at the Closing, an updated Rent Roll dated not earlier than ten (10) days prior to the Closing Date and certified by Seller to, Seller's knowledge, to be accurate and complete (the "Updated Rent Roll"). (viii) Leases. Copies of all Leases with all tenants of the Improvements, and access to copies of all correspondence to or from such tenants. Seller may comply with its obligation to deliver copies of Leases by providing Buyer and its agents with full access to its lease files; (ix) Operating Statements. Copies of operating statements for the Property for the prior three (3) calendar years and the current year to date, each certified by Seller (or audited, if audited statements are available), to Seller's knowledge, to be accurate and complete, which shall cover the monthly periods for 1997 from January to date. (x) Licenses, Etc. To the extent in Seller's possession or control, copies of any licenses, permits or certificates required by governmental authorities in connection with construction or occupancy of the Improvements, including, without limitation, building permits, certificates of completion, certificates of occupancy, environmental permits and licenses, and swimming pool and sign permits; (xi) Insurance Policies. Copies of all liability, fire and casualty insurance policies carried by Seller and an insurance claims history for the most recent calendar year prior to Closing; (xii) Commission Agreements and Proposed Leases. A complete list, and copies, of all agreements for leasing commissions and/or locator fees payable on prior leases, existing leases and renewals or options affecting the Property. Any fee or commission which would be due or payable after the Effective Date relating to leasing activity occurring before the Effective Date (including any commissions relating to the exercise of any renewal, extension, expansion or right of first refusal (5) 9 option under any Lease occurring before the Effective Date) shall be paid by Seller and such obligation of Seller shall survive the Closing. Conversely, provided the transaction contemplated by this Agreement is consummated, any such fee or commission relating to such leasing activity on and after the Effective Date (including any commissions relating to the exercise of any renewal, extension, expansion or right of first refusal option under any Lease occurring on and after the Effective Date) shall be paid by Buyer and such obligation of Buyer shall survive the Closing. At Closing, Seller shall provide to Buyer an executed release from the broker or finder releasing Buyer and its successors and assigns from any obligation to pay a commission or locator fee which is the responsibility of Seller under this paragraph and agreeing to look solely to Seller for payment of such commission or fee (the "Commission Releases"). This Section 4(a)(xii) shall govern any contrary provisions contained in this Agreement with respect to leasing commissions or locator fees. (xiii) Other Documents. Current property tax bills, and all data, correspondence, documents, agreements, waivers, notices, applications and other records with respect to the Property relating to transactions with taxing authorities, governmental agencies, utilities, vendors, tenants and others with whom Buyer may be dealing from and after the Closing Date. Seller may satisfy this requirement by making its files available to Buyer at Seller's management company's offices. (b) Independent Audit. Promptly following the execution of this Agreement and to the extent not already provided pursuant to the terms of Paragraph 4(a), above, Seller shall provide to Buyer's representatives and independent accounting firm access to all financial and other information relating to the Property which would be sufficient to enable Buyer's representatives and independent accounting firm to prepare, at Buyer's sole cost and expense, audited financial statements for 1995, 1996 and 1997 year-to-date in conformity with generally accepted accounting principles and to enable them to prepare such statements, reports or disclosures as Buyer may deem necessary or advisable. Seller shall reasonably cooperate with Buyer's representatives and independent accounting firm in connection with the aforementioned financial analysis and shall provide any additional information necessary to allow Buyer to make disclosures required by and otherwise comply with the financial accounting requirements of Regulation S-X promulgated by the Securities and Exchange Commission. Seller shall provide Buyer's independent accounting firm a signed representation letter which will be sufficient to enable an independent public accountant to render an opinion on the financial statements related to the Property. Seller shall authorize any attorneys who have represented Seller in any material litigation pertaining to or affecting the Property to respond, at Buyer's expense, to inquiries from Buyer's representatives and independent accounting firm. If and to the extent Seller's financial statements pertaining to the Property for any periods during the years 1995, 1996 or 1997 year-to-date have been audited, promptly after the execution of this Agreement, Seller shall provide Buyer with copies of such audited financial statements and shall cooperate with Buyer's representatives and independent public accountants to enable them to contact the auditors who prepared such audited financial statements and to obtain, at Buyers expense, a reissuance of such audited (6) 10 financial statements. If this Agreement terminates prior to the Closing, other than by reason of a default of Seller, Buyer shall deliver to Seller copies of any audited financial statements of the Property prepared for Buyer and assign to Seller without warranty all of Buyer's rights thereto. 5. Due Diligence Review. Buyer's obligation to consummate the transactions contemplated in this Agreement is expressly conditioned upon the satisfaction of each of the conditions set forth in this section prior to the expiration of the Due Diligence Period (defined below). (a) Approval of Preliminary Documents and Physical Condition. Buyer shall review each of the Preliminary Documents, and the physical condition of the Property, and such other items as Buyer deems necessary and shall advise Seller in writing of its approval of the foregoing or of any objectionable condition revealed in its review by written notice to Seller on or before December 22, 1997 (the "Due Diligence Period"). If Buyer notifies Seller in writing within the Due Diligence Period that Buyer approves each of the Preliminary Documents and the physical condition of the Property (the "Approval Notice"), then, subject to the first sentence of Section 5(b) hereof, Buyer shall have waived all objections to the Preliminary Documents and the condition of the Property and the conditions of this Section 5 shall be deemed satisfied. If Buyer fails to give Seller the Approval Notice and does not give specific written disapproval of any of the Preliminary Documents or the physical condition of the Property within the Due Diligence Period, then such Preliminary Document(s) or physical condition shall be deemed disapproved by Buyer, this Agreement shall terminate, and the Earnest Money shall be immediately returned to Buyer. If Buyer gives Seller specific written notice of disapproval of any Preliminary Document(s) or of any condition of the Property (the "Disapproval Notice") within the Due Diligence Period, Seller shall have one (1) business day to notify Buyer in writing that either (1) Seller shall cause all of the objections set forth in the Disapproval Notice to be cured, removed or terminated, as the case may be, prior to the Closing Date, or (2) Seller shall not cause all of the objections set forth in the Disapproval Notice or condition to be cured, removed or terminated. If Seller fails to so notify Buyer within the one (1) business day period, then Seller shall be deemed to have elected the option in clause (2) above. If Seller elects, or is deemed to have elected, the option in clause (2) above, then, this Agreement shall terminate and the Earnest Money shall be immediately returned to Buyer. If Seller gives notice pursuant to clause (l), above, then the parties shall proceed to Closing and all conditions of this Section 5 shall be deemed satisfied except for the obligations which are the subject of the Disapproval Notice; provided, however, if Seller fails to remove or otherwise satisfy all of the objectionable conditions set forth in the Disapproval Notice on or before Closing, and Buyer is unwilling to waive such condition(s), Seller shall be in default and Buyer shall have the rights and remedies set forth in Paragraph 7, below. (b) Termination of Agreement . Notwithstanding anything in this Agreement to the contrary, Buyer shall have the right to terminate this Agreement by written notice to Seller at any time during the Due Diligence Period. In the event this Agreement is terminated (7) 11 pursuant to this Section 5, then, the Earnest Money shall be returned to Buyer and all obligations of Buyer and Seller hereunder (except the provisions of this Agreement which recite that they survive termination) shall terminate and be of no further force or effect. The provisions of this Subparagraph shall survive termination of this Agreement. 6. Conditions Precedent to Closing. The following are conditions precedent to Buyer's obligation to purchase the Property (the "Conditions Precedent"). The Conditions Precedent are intended solely for the benefit of Buyer and may be waived only by Buyer in writing or by the occurrence of Closing. In the event any condition precedent is not satisfied or waived by Buyer, Buyer may, in its sole and absolute discretion, terminate this Agreement at which point the Earnest Money shall be returned to Buyer and, subject to the provisions of Paragraph 7, all obligations of Buyer and Seller hereunder (except provisions of this agreement which recite that they survive termination) shall terminate and be of no further force or effect. (a) All of Seller's representations and warranties contained in this Agreement shall have been true and correct when made and shall be true and correct as of the Closing Date. (b) The physical condition of the Property shall be substantially the same on the Closing Date as on the date of Buyer's execution of this Agreement, except for reasonable wear and tear and loss by casualty (subject to the provisions of Paragraph 13, below), condemnation and repairs, replacements and improvements made with Buyer's written approval or those required by any Lease. (c) As of the Closing Date, there shall be no litigation or administrative agency or other governmental proceeding of any kind whatsoever, pending or threatened, which was not disclosed in writing to Buyer during the Due Diligence Period and no proceedings shall be pending or threatened which could or would cause the redesignation or other modification of the zoning classification of the Property. (d) Seller shall terminate at or prior to the Closing Date, at no cost or expense to Buyer, any and all Service Contracts or other agreements affecting the Property that are not Assumed Contracts. (e) Seller shall have substantially complied with all of Seller's duties and obligations contained in this Agreement. (f) There shall have been no material adverse change, in the Preliminary Documents reviewed and approved by Buyer during the Due Diligence Period. (g) Seller shall have delivered to Buyer tenant certificates ("Tenant Certificates") within thirty (30) days of the Closing Date in a form substantially similar to Exhibit "L" attached hereto from tenants under Leases accounting for eighty percent (80%) of the gross revenue being currently generated by the Property. (8) 12 7. Remedies. (a) In the event the sale of the Property is not consummated solely because of a breach or default under this Agreement on the part of Buyer, the Earnest Money shall be paid to and retained by Seller as liquidated damages. The parties have agreed that Seller's actual damages, in the event of a default by Buyer, would be extremely difficult or impracticable to determine. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT TWENTY-FIVE THOUSAND DOLLARS ($25,000.00) PLUS APPLICABLE INTEREST HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT ON THE PART OF BUYER. INITIALS: Seller __________ Buyer __________ (b) In the event the sale of the Property is not consummated solely because of a breach or default under or breach of this Agreement on the part of Seller or if a Condition Precedent cannot be fulfilled because of Seller's breach or if Seller fails to remove or otherwise satisfy all of the objectionable conditions set forth in Buyer's Disclosure Notice after Seller has given notice pursuant to clause (1) of Section 5(a) hereof, Buyer shall, as its sole and exclusive remedies, either terminate this Agreement and receive a return of the Earnest Money or have the option of continuing this Agreement pending Buyer's action for specific performance; provided, however, Buyer shall not have the remedy of specific performance with respect to (i) a failure by Seller to satisfy the Condition Precedent set forth in Section 6(g) of this Agreement or (ii) a failure of Seller to effect the cure referred to in the last sentence of Section 5(a) of this Agreement, and in either of such events, Buyer's sole and exclusive remedy shall be to terminate this Agreement and receive a return of the Earnest Money. 8. Closing and Escrow. (a) Upon mutual execution of this Agreement, the parties hereto shall deposit an executed counterpart of this Agreement with Escrow Holder and this Agreement shall serve as instructions to Escrow Holder for consummation of the purchase and sale contemplated hereby. (b) The parties shall conduct the Closing on or before December 31, 1997, or on such other date mutually agreed upon between Buyer and Seller in writing (the "Closing Date"). In the event the Closing does not occur on or before the Closing Date, Escrow Holder shall, unless it is notified by both parties to the contrary within five (5) days after the Closing Date, return to the depositor thereof items which were deposited hereunder. Any such return shall not, however, relieve either party of any liability it may have for its wrongful failure to Close. (c) At or before the Closing, Seller shall deliver to Escrow Holder or Buyer the following: (9) 13 (i) a duly executed and acknowledged Deed; (ii) a duly executed Bill of Sale; (iii) to the extent in Seller's possession or control, originals of all Leases and a duly executed and acknowledged Assignment of Leases; (iv) originals of the Assumed Contracts not previously delivered to Buyer (to the extent originals are available; provided if originals are not available Seller shall provide Buyer with complete copies of what is in Seller's possession or control); (v) a duly executed Assignment of Intangible Property; (vi) to the extent in Seller's possession or control, originals of the building permits and certificates of occupancy for the Improvements and all tenant-occupied space included within the Improvements and all Warranties and Guaranties not previously delivered to Buyer; (vii) notices to the Tenants, each prepared and completed by Seller for each Tenant, in the form attached as Exhibit J, each duly executed by Seller; (viii) Tenant Certificates meeting the requirements of Paragraph 6(g); (ix) a duly executed affidavit that Seller is not a "foreign person" within the meaning of Section 1445(e)(3) of the Internal Revenue Code of 1986 (the "Code") in the form attached as Exhibit K; (x) such resolutions, authorizations, bylaws or other corporate and/or partnership documents or agreements relating to Seller and its partners as shall be reasonably required by the Title Company to evidence authority to convey; (xi) a full release of all monetary encumbrances affecting the Property caused by Seller, including without limitation any mechanics' liens and such bond, indemnity or other arrangements as shall be necessary to cause the Title Company to insure title to the Property as vested in Buyer without any exception for such matters; (xii) a closing statement prepared by the Title Company (the "Closing Statement") duly executed by Seller; (xiii) all keys to the Property (except for keys in the possession of the tenants); (xiv) evidence of termination of any Service Contracts and other agreements affecting the Property that are not Assumed Contracts; and (10) 14 (xv) any documents or agreements reasonably required by the Title Company to issue the Title Policy. Buyer may waive compliance on Seller's part under any of the foregoing items by an instrument in writing or by the occurrence of Closing. (d) At or before the Closing, Buyer shall deliver to Escrow Holder or Seller the following: (i) a duly executed Assignment of Leases; (ii) a duly executed Assignment of Intangible Property; (iii) the Closing Statement, duly executed by Buyer; (iv) the Purchase Price in immediately available and good funds less any holdbacks and proration credits provided for this Agreement; and (v) a Certificate of Buyer in the form attached hereto as Exhibit M. (e) Seller and Buyer shall each deposit such other instruments as are reasonably required by Escrow Holder or Title Company or otherwise required to close the escrow and consummate the purchase of the Property in accordance with the terms hereof. (f) Prorations, Closing Costs and Adjustments. (1) The following are to be apportioned as of 12:01 AM on the Closing Date, as follows: (i) Rent. Rent under the Leases shall be apportioned as of the Closing Date. With respect to any rent arrearages arising under the Leases, after Closing, Buyer shall pay to Seller any rent actually collected which is applicable to the period preceding the Closing Date; provided, however, that all rent collected by Buyer shall be applied first to all unpaid rent accruing after the Closing Date, and then to unpaid rent accruing prior to the Closing Date. Buyer shall not be obligated to take any steps to recover any rent arrearages. Seller shall be permitted to pursue its remedy for collection of any rent arrearages applicable to the period prior to the Closing Date, provided that Buyer shall incur no cost, expense or liability in connection therewith, but Seller shall not be permitted to enforce any other legal or equitable remedies specifically including commencing eviction procedures. (ii) Leasing Costs. Seller shall pay as of the Closing all leasing commission costs required to be paid by Seller pursuant to Section 4(a)(xii) of this Agreement and tenant improvement costs, if any, in connection with (11) 15 any Lease executed on or before the Effective Date that are or will become due and payable as of the Closing. To the extent not paid by Seller, Buyer shall be entitled to a credit against the Purchase Price for any such commissions or costs. (iii) Security Deposits. Buyer shall be entitled to a credit against the Purchase Price for the total sum of all security deposits paid to Seller by tenants under any Leases, and any interest earned thereon which, by law or the terms of such Leases, is payable to such tenants. (iv) Unexpired Concessions. Buyer shall be entitled to a credit against the Purchase Price for any free rent, abatements, or other unexpired concessions under any Leases to the extent they apply to any period after the Closing. (v) Tenant Charges. Where the Leases contain tenant obligations for taxes, common area expenses, operating expenses or additional charges of any other nature, and where Seller has collected any portion thereof in excess of amounts owed by tenants for such items for the period prior to the Closing Date, then there shall be an adjustment and credit given to Buyer on the Closing Date for such excess amounts collected. Buyer shall apply all such excess amounts to the charges owed by tenants for such items for the period after the Closing Date and, if required by the Leases, shall rebate or credit tenants with any remainder. If it is determined that the amount collected during Seller's ownership period exceeded the tenants' obligation to pay for such expenses incurred during the same period by more than the amount previously credited to Buyer at Closing, then Seller shall promptly pay to Buyer the deficiency upon demand after the Closing. (vi) Utility Charges. Seller shall use reasonable efforts to cause all the utility meters to be read on the Closing Date, and whether such meters can be read or not, will be responsible for the cost of all utilities used prior to the Closing Date, except to the extent such utility charges are billed to and paid by tenants directly. (vii) Real Estate Taxes and Special Assessments. General real estate taxes payable for the 1997 calendar year and all prior years shall be paid by Seller. General real estate taxes payable for the 1997 calendar year shall be prorated between Seller and Buyer as of the Closing Date. Seller shall pay on or before Closing the full amount of any installment due and owing on any bonds or assessments against the Property including interest payable therewith, including any installment on bonds or assessments that may be payable after the Closing Date as a result of or in relation to the construction or operation of any Improvements or any public improvements that took place or for which any assessment was levied prior to the Closing Date. Buyer shall (12) 16 pay the full amount of any bonds or assessments incurred after the Closing Date that are not subject to the immediately preceding sentence. (viii) Other Apportionments. Amounts payable under the Assumed Contracts, annual or periodic permit and/or inspection fees (calculated on the basis of the period covered), and liability for other Property operation and maintenance expenses and other recurring costs shall be apportioned as of the Closing Date. (ix) Preliminary Closing Adjustment. Seller and Buyer shall jointly prepare and approve a preliminary Closing adjustment on the basis of the Leases and other sources of income and expenses, and shall deliver such computation to Escrow Holder prior to Closing. (x) Post-Closing Reconciliation. Subject to the provisions of Subparagraph vii above, if any of the aforesaid prorations cannot be definitely calculated on the Closing Date, then they shall be estimated at the Closing and definitely calculated as soon after the Closing Date as feasible, but in any event within sixty (60) days after the Closing Date. As soon as the necessary information is available, Buyer shall conduct a post-Closing audit to determine the accuracy of all prorations made to the Purchase Price (the "Post-Closing Audit"). Either party owing the other party a sum of money based on such subsequent proration(s) or the Post-Closing Audit shall promptly pay said sum to the other party, and, if not paid within thirty (30) days after written demand, then together with interest thereon at the rate of two percent (2%) over the "prime rate" (as announced from time to time in the Wall Street Journal) per annum from the Closing Date to the date of payment if payment is not made within ten (10) days after delivery of a bill therefor. (2) Closing Costs. Seller shall pay for the Survey, the Title Commitment and the premium for the Title Policy, excluding the charge for the survey deletion, the cost of any Endorsements, search any escrow fees or costs and sales tax (if any). Seller shall pay the cost of any transfer taxes applicable to the sale. Recording fees, shall be paid by Buyer. Seller shall be responsible for all costs incurred in connection with the prepayment or satisfaction of any loan or bond secured by the Property including, without limitation, any prepayment fees, penalties or charges. All other costs and charges of the escrow for the sale not otherwise provided for in this Agreement shall be allocated in accordance with the closing customs for Dallas County. Buyer and Seller shall each be responsible for their respective legal fees to negotiate and execute this Agreement. In the event this Agreement is terminated or Closing occurs, the foregoing allocation of costs shall survive such termination or Closing. (13) 17 (3) Survival. The provisions of this Subparagraph (f) shall survive the Closing. 9. Representations, Warranties and Covenants of Seller. As of the date hereof and again as of Closing, Seller represents and warrants to, and covenants with, Buyer as follows: (a) To Seller's knowledge, Seller has not received any notice of any material physical or mechanical defects of the Property, including, without limitation, the structural and load-bearing components of the Property, the parking lots, the plumbing, heating, air conditioning and electrical and life safety systems, and has not received any notice that the roofs have not been constructed and installed in compliance with all manufacturer requirements or that all manufacturer warranties and guaranties are not in full force and effect. To Seller's knowledge, Seller has not received any notice that the items described in (i) and (ii), above, are not in compliance with applicable building codes, environmental, zoning, life safety, laws, rules and regulations related to handicapped or disabled (including, without limitation, ADA and the Fair Housing Amendments Act of 1988) and land use laws and regulations, and other applicable local, state and federal laws and regulations (collectively, "Laws"). (b) To Seller's knowledge, Seller has not received any notice that the use and operation of the Property is not in compliance with all Laws. Seller shall not commit or knowingly permit to occur, any action which will result in such a violation between the date hereof and the Closing. (c) All documents delivered by Seller to Buyer, or made available to Buyer for review in connection with the transactions contemplated hereunder, including without limitation, all documents described in Paragraph 4, above, are and at the time of Closing will be complete copies of all such documents in Seller's possession and/or control. To Seller's knowledge, all of Seller's files in connection with the Property, and all other matters described in Paragraph 4, above, in Seller's possession and/or control have been delivered to or made available to Buyer for Buyer's review. (d) To Seller's knowledge, there are no condemnation, environmental, zoning or other land-use regulation proceedings, either instituted or threatened, which would detrimentally affect the use or operation of the Property, nor has Seller received written notice of any special assessment proceedings affecting the Property (other than as set forth in the Title Commitment). Seller shall notify Buyer promptly of any such proceedings of which Seller becomes aware. (e) Seller has not been served with, Seller has no knowledge of any pending, and Seller has received no written notice of any threatened litigation against Seller or any basis therefor that arises out of the ownership of the Property or the ability of Seller to perform its obligations under this Agreement. Seller shall notify Buyer promptly of any such litigation of which Seller becomes aware. (14) 18 (f) Except for Leases executed after the Effective Date and approved by Buyer, at the time of Closing there will be no outstanding written or oral contracts made by Seller for any improvements to the Property which have not been fully paid for and Seller shall cause to be discharged all mechanics' and materialmen's liens arising from any labor or materials furnished to the Property in connection with such Leases prior to the time of Closing. (g) Seller has not received any notice that Seller and the Property and any real estate in the vicinity of the Property are not in compliance in all material respects with all Environmental Laws; or (ii) Seller has not received any notice, order, directive, complaint or other communication, written or oral, from any governmental agency or other person or entity alleging the occurrence of any violation of any Environmental Laws at the Property. For the purposes of this subparagraph, the following words shall have the following meanings: (1) "Environmental Law" means federal, state and local laws, statutes, ordinances, rules, regulations (including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time (42 U.S.C. ss.ss. 9601 et seq.) ("CERCLA"), the Federal Insecticide Fungicide and Rodenticide Act of 1976 (7 U.S.C. ss.ss. 136, et. seq. ("FIFRA") and the applicable provisions of the Texas Health and Safety Code, and Texas Water Code, as amended from time to time (the "Texas Codes") and rules and regulations promulgated thereunder), authorizations, judgments, decrees, administrative orders, concessions, grants, franchises, agreements and other governmental restrictions and requirements relating to the environment or to any Hazardous Material. (2) "Hazardous Material" means, at any time, (a) any substance, product, chemical, compound, material, mixture, waste or other material of any nature whatsoever (i) which is now or hereafter listed, defined or otherwise classified pursuant to any Environmental Laws as a "hazardous substance", "hazardous waste", "infectious waste", "hazardous material", "extremely hazardous waste", "toxic substance", "toxic pollutant" or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity or reproductive toxicity; (ii) which is now or hereafter regulated or listed by any local, state or federal governmental authority, entity or agency pursuant to any Environmental Laws; or (iii) which may give rise to any liability under any Environmental Laws or under any statutory or common law theory based on negligence, trespass, intentional tort, nuisance or strict liability or under any reported decisions of state or federal court; (b) asbestos and asbestos-containing materials; and (c) radon; (d) PCB's, petroleum and petroleum products or fractions thereof, including without limitation, crude oil, and any fraction thereof, natural gas, natural gas liquids, liquefied natural gas or synthetic gas usable for fuel or any mixture thereof. (15) 19 (h) As of the Closing Date, to Seller's knowledge, Seller shall have (i) completed all original building and tenant construction and punch list items, (ii) completed all obligations with respect to any remodeling or renovating to be completed by Seller as landlord under the Leases existing as of the Effective Date; and (iii) paid all obligations of the landlord pursuant to the Leases existing as of the Effective Date; including, without limitation, tenant improvement, remodeling or renovating costs, leasing commissions, locator fees and other concessions except those which will accrue upon exercise of any renewal, extension, expansion or right of first refusal option provided in any Lease. (i) Seller has not filed or been the subject of any filing of a petition under the Federal Bankruptcy Law or any federal or state insolvency laws or laws for composition of indebtedness or for the reorganization of debtors. (j) To Seller's knowledge, no portion of the Property is currently affected by or subject to any special assessment or special use or tax abatement recognized or permitted by any taxing authority including, but not limited to, any agricultural use exemption or other tax exemption, and no penalty, special assessment, or back taxes from any special assessment or exemption shall be due upon transfer of title to the Property to Buyer or upon any change of use of the Property by Buyer. (k) To Seller's knowledge, there are no free rent, abatements, incomplete tenant improvements, rebates, allowances, or other unexpired concessions (collectively referred to as "Offsets") or rights under any existing or pending Leases that will be outstanding after the Closing Date and Seller has paid in full any of landlord's leasing costs or obligations which Seller is required to pay under this Agreement. (l) No brokerage, finders fee or commission, locator fee or similar fee or commission which is required to be paid by Seller pursuant to Section 4(a)(xii) of this Agreement is due and unpaid by Seller. (m) Except as disclosed by Seller to Buyer in writing, to Seller's knowledge, there exist no defaults or events which, with the giving of notice or passage of time, or both, would constitute a default by Seller as landlord under the Leases listed thereon. To Seller's knowledge, there exist no defaults and no events which, with the giving of notice or passage of time, or both, would constitute a default by any tenants thereon. (n) Seller is a limited partnership, duly organized and validly existing and in good standing under the laws of the State of Texas; this Agreement and all documents executed by Seller which are to be delivered to Buyer at the Closing are and at the time of Closing will be duly authorized, executed and delivered by Seller, are and at the time of Closing will be legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, are and at the time of Closing will be sufficient to convey title (as provided in this Agreement and if they purport to do so), and do not and at the time of Closing will not violate any provision of any agreement or judicial order to which Seller or the Property is subject. Seller has obtained all necessary authorizations, approvals and (16) 20 consents to the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. (o) Seller is not a "foreign person" within the meaning of Section 1445(f)(3) of the Code. (p) Seller has not granted any option or right of first refusal or first opportunity to any party to acquire any interest in any of the Property. For purposes of this Agreement, whenever the phrase "to Seller's knowledge" or words of similar import are used, they shall be deemed to refer to the actual knowledge after due and diligent inquiry by F. Terry Shumate, Vice President of Davister Corp., the managing general partner of Seller. 10. CONDITION OF PROPERTY. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR ANY REPRESENTATIONS OR WARRANTIES PROVIDED IN THIS AGREEMENT, IT IS PURCHASING THE PROPERTY IN AN "AS IS, WHERE IS" CONDITION, WITHOUT RELYING UPON ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND, HEREBY WAIVING AND RELINQUISHING ALL CLAIMS WITH RESPECT TO ANY IMPLIED WARRANTIES. WITHOUT LIMITING THE ABOVE, BUYER ACKNOWLEDGES THAT NEITHER SELLER, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE DEED, NOR ANY OTHER PARTY THAT IS AN AGENT, EMPLOYEE OR CONTRACTOR OF SELLER HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, ON WHICH BUYER IS RELYING AS TO ANY MATTERS, DIRECTLY OR INDIRECTLY, CONCERNING THE PROPERTY INCLUDING, BUT NOT LIMITED TO, THE LAND, THE SQUARE FOOTAGE OF THE PROPERTY, IMPROVEMENTS, DEVELOPMENT RIGHTS, TAXES, ASSESSMENTS, BONDS, PERMISSIBLE USES, TITLE EXCEPTIONS, WATER OR WATER RIGHTS, TOPOGRAPHY, UTILITIES, ZONING OF THE PROPERTY, SOIL, SUBSOIL, THE PURPOSES FOR WHICH THE PROPERTY IS TO BE USED, DRAINAGE, ENVIRONMENTAL OR BUILDING LAWS, RULES AND REGULATIONS, TOXIC WASTE OR HAZARDOUS MATERIALS OR ANY OTHER MATTERS AFFECTING OR RELATING TO THE PROPERTY. BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS HAVE BEEN MADE. 11. Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller that Buyer is a real estate investment trust organized under the laws of the State of Texas; this Agreement and all documents executed by Buyer which are to be delivered to Seller at the Closing are or at the time of Closing will be duly authorized, executed and delivered by Buyer, and are or at the Closing will be legal, valid and binding obligations of Buyer, and do not and at the time of Closing will not violate any provisions of any agreement or judicial order to which Buyer is subject. Buyer has obtained all necessary authorizations, approvals and consents to the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. (17) 21 12. Continuation and Survival. All representations, warranties and covenants by the respective parties contained herein or made in writing pursuant to this Agreement are intended to and shall be deemed made as of the date of, this Agreement or such writing and again-at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive and shall survive the execution and delivery of this Agreement and the Closing until the first (1st) anniversary of the Closing Date and shall terminate upon such date except as to any claim asserted by Buyer to Seller by notice given before such date. 13. Indemnity. (a) Seller shall hold harmless, indemnify and defend Buyer, its successors and assigns and their respective agents, employees, officers, trustees, members and retirants from and against any and all obligations, liabilities, claims, liens or encumbrances, demands, losses, damages, causes of action, judgments, costs and expenses (including attorneys' fees), whether direct, contingent or consequential and no matter how arising ("Losses and Liabilities") in any way related to the Property and arising or accruing during the time Seller owned or had any interest in the Property prior to the Closing. (b) Except for Losses and Liabilities arising directly or indirectly from or out of a circumstance resulting from a breach of any of Seller's representations or warranties, or which shall have arisen out of any aspect of the Property, its management or operations prior to Closing, Buyer shall hold harmless, indemnify and defend Seller, its successors and assigns and their respective agents, employees, officers and partners, from and against any and all Losses and Liabilities in any way related to the Property and arising or accruing during the time that Buyer owns or has any interest in the Property. 14. Risk of Loss. In the event any of the Property is damaged or destroyed prior to the Closing Date, and such damage or destruction (a) is fully covered by Seller's insurance, except for the deductible amounts and any coinsurance contribution due from Seller thereunder, and the insurer agrees to timely pay for the entire cost of such repair less such deductible and coinsurance, and (b) would cost less than One Hundred Thousand Dollars ($100,000.00) to repair or restore, then this Agreement shall remain in full force and effect and Buyer shall acquire the Property upon the terms and conditions set forth herein. In such event, Buyer shall receive a credit against the Purchase Price equal to such deductible and coinsurance amounts, and Seller shall assign to Buyer all of Seller's right, title and interest in and to all proceeds of insurance on account of such damage or destruction. In the event any of the Property is damaged or destroyed prior to the Closing Date, and such damage or destruction (c) is not fully covered by Seller's insurance, other than the deductible and coinsurance amounts, and (d) would cost less than One Hundred Thousand Dollars ($100,000.00) to repair or restore, then the transaction contemplated by this Agreement shall be consummated with Buyer receiving a credit against the Purchase Price at the Closing in an amount reasonably determined by Seller and Buyer (after consultation with unaffiliated experts) to be the cost of repairing such damage or destruction, but in no event more than One Hundred Thousand Dollars ($100,000.00). In the event (e) any of the Property is damaged or destroyed prior to the Closing and the cost of repair would exceed One Hundred Thousand Dollars ($100,000.00), or (f) if condemnation proceedings are commenced against any of the Property, then, notwithstanding anything to the contrary set forth (18) 22 in this Paragraph, Buyer shall have the right, at its election, either to terminate this Agreement in its entirety, or only as to that portion of the Property subject to condemnation proceedings (in which case there shall be an adjustment to the Purchase Price equal to the proceeds Seller receives from the condemning authority for the portion taken), or to not terminate this Agreement and purchase the Property. Buyer shall have thirty (30) days after Seller notifies Buyer that any portion of the Property is subject to condemnation proceedings to make such election by delivery to Seller of an election notice (the "Election Notice"). Buyer's failure to deliver the Election Notice within such thirty (30) day period shall be deemed an election to terminate this Agreement in its entirety. In the event this Agreement is terminated in its entirety or in part pursuant to this Paragraph, by delivery of notice of termination to Seller, Buyer and Seller shall each be released from all obligations hereunder pertaining to that portion of the Property affected by such termination. In the event Buyer elects not to terminate this Agreement, Seller shall notify Buyer that Buyer shall receive a credit against the Purchase Price at the Closing in the amount equal to the value (i.e., the amount Seller receives for the portion taken) of any Property taken as a result of such proceeding, in which case this Agreement shall otherwise remain in full force and effect, and Seller shall be entitled to any condemnation awards. Any repairs elected to be made by Seller pursuant to this Paragraph shall be made within one hundred and eighty (180) days following such damage or destruction and the Closing shall be extended until the repairs are substantially completed. 15. Possession. Possession of the Property shall be delivered to Buyer on the Closing Date (subject to the rights of the tenants in possession under Leases), provided, however, that prior to the Closing Date Seller shall afford authorized representatives of Buyer reasonable access to the Property, subject to the rights of tenants under the Leases, for purposes of satisfying Buyer with respect to the representations, warranties and covenants of Seller contained herein and with respect to satisfaction of any Conditions Precedent to the Closing contained herein, including, without limitation, a Phase I environmental investigation. Buyer shall be required to obtain Seller's prior written consent to any investigation affecting the physical nature of the Property, and covenants and agrees that Buyer and its agents and consultants will maintain adequate liability insurance coverage relating to such inspection activities. In the event this Agreement is terminated, Buyer shall restore the Property to substantially the condition in which it was found. Buyer hereby agrees to indemnify and hold Seller harmless from any damage or injury to persons or property caused by Buyer or its authorized representatives during their entry and investigations prior to the Closing. The indemnity contained in the preceding sentence shall survive the termination of this Agreement or the Closing, as applicable, provided that Buyer shall have no liability under such indemnity unless Seller gives Buyer written notice of any claim it may have against Buyer under such indemnity within twelve (12) months of such termination or the Closing Date, as applicable. 16. Maintenance of the Property and Property Personnel. Between Seller's execution of this Agreement and the Closing, Seller shall maintain the Property in the same condition of repair, reasonable wear and tear excepted, shall perform all work required to be performed by the landlord under the terms of any Lease, and shall make all repairs, maintenance and replacements of the Improvements and any Tangible Personal Property and otherwise operate the Property in the same manner as before the making of this Agreement, as if Seller were retaining the Property. After full execution of this Agreement and until the Closing, Seller shall maintain all existing personnel on the Property, if any, in their current employment positions at their current (or an increased) rate of (19) 23 compensation. Any changes in such personnel, other than in the ordinary course of business which would not result in a reduction in the level of management attention or service to the Property, shall be subject to Buyer's reasonable approval. 17. Leasing; Buyer's Consent to New Contracts Affecting the Property; Termination of Existing Contracts. Seller shall use commercially reasonable efforts until Closing to lease any vacant space in the Improvements to tenants pursuant to Leases in form and content acceptable to Buyer. Seller shall not, after the date of Seller's execution of this Agreement, enter into any Lease or contract affecting the Property, or any amendment thereof, or permit any tenant to enter into any sublease, assignment or agreement pertaining to the Property, or waive, compromise or settle any rights of Seller under any contract or Lease, or agree to return any security deposit, or modify, amend, or terminate any Assumed Contract, without in each case obtaining Buyer's prior written consent thereto, which consent shall not be unreasonably withheld or delayed. Buyer shall be deemed to have disapproved any request for consent made by Seller pursuant to this paragraph if Buyer fails to respond to Seller with Buyer's approval or disapproval within five (5) business days of Seller's request for Buyer's approval. Seller shall terminate prior to the Closing, at no cost or expense to Buyer, any and all management agreements or contracts affecting the Property that are not listed on the Schedule of Agreements. 18. Insurance. Through the Closing Date, Seller shall maintain or cause to be maintained, at Seller's sole cost and expense: (a) a policy or policies of insurance in amounts equal to the full replacement value of the Improvements and the Tangible Personal Property, insuring against all insurable risks, including, without limitation, fire, vandalism, malicious mischief, lightning, windstorm, water, earthquake and other perils customarily covered by casualty insurance and the costs of demolition and debris removal; and 19. Brokers and Finders. Pursuant to separate agreement, Seller shall pay The Fults Companies/Oncor International and Ensearch Realty Services a brokerage commission for their services in this transaction. Except as provided in the foregoing sentence, neither party has had any contact or dealings regarding the Property, or any communication in connection with the subject matter of this transaction, through any real estate broker or other person who can claim a right to a commission or finder's fee in connection with the sale contemplated herein. In the event that any other broker or finder claims a commission or finder's fee based upon any contact, dealings or communication, the party through whom the broker or finder makes its claim shall be responsible for said commission or fee and all costs and expenses (including reasonable attorneys' fees) incurred by the other party in defending against the same. The party through whom any other broker or finder makes a claim shall hold harmless, indemnify and defend the other party hereto, its successors and assigns, agents, employees, officers, trustees, members and retirants and the Property from and against any and all obligations, liabilities, claims, demands, liens, encumbrances and losses (including attorneys' fees), whether direct, contingent or consequential, arising out of, based on, or incurred as a result of such claim. The provisions of this Paragraph shall survive the Closing or termination of this Agreement. (20) 24 20. Marketing. Seller agrees not to market or show the Property to any other prospective purchasers during the term of this Agreement. 21. Publicity and Confidentiality. The parties shall at all times keep this transaction and any documents received from each other confidential, except to the extent necessary to (a) comply with applicable laws and regulations, or (b) carry out the obligations set forth in this Agreement. Any such disclosure to third parties shall indicate that the information is confidential and should be so treated by the third party. No press release or other public disclosure may be made by either party or any of their respective agents concerning this transaction without the prior written consent of the other party unless otherwise required by applicable laws or regulations. 22. Exculpation. Seller acknowledges and agrees that all persons dealing with Buyer must look solely to the amount of liquidated damages provided in Paragraph 7 for the enforcement of any claims against or liability of Buyer. No present or future officer, director, employee, trust manager, shareholder or agent of Buyer or Seller shall have any personal liability, directly or indirectly, and recourse shall not be had against any such officer, director, employee, trust manager, shareholder or agent, under or in connection with this Agreement or any other document or instrument heretofore or hereafter executed in connection with this Agreement. Seller and Buyer each hereby waives and releases any and all such personal liability and recourse. 23. Miscellaneous. (a) Notices. Any notice, consent or approval required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given upon (i) hand delivery, (ii) one (1) business day after being deposited with Federal Express or another reliable overnight courier service or next day delivery, (iii) being transmitted by facsimile telecopy, or (iv) two (2) business days after being deposited in the United States mail, registered or certified mail, postage prepaid, return receipt required, and addressed as follows: If to Seller: Nanook Partners, L.P. 10670 N. Central Expressway Suite 410 Dallas, Texas 75231 Attn: Mr. F. Terry Shumate Fax No.: (214) 361-0964 Telephone No.: (214) 750-5800 And a copy to: Ginsberg & Brusilow, P.C. 750 Signature Place 14785 Preston Road Dallas, Texas 75240 Attn: Michael H. Saks, Esq. Fax No.: (972) 702-0662 Telephone No.: (972) 788-1600 (21) 25 If to Seller: American Industrial Properties REIT 6210 North Beltline, Suite 170 Irving, Texas 75063-2656 Attn: Mr. Lewis D. Friedland and Mr. Bob G. Baker Fax No.: (972) 756-6000 Telephone No.: (972) 756-0704 And a copy to: Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. 2001 Ross Avenue, Suite 3000 Dallas, Texas 75201-8001 Attn: Brad B. Hawley, Esq. Fax No.: (214) 849-5599 Telephone No.: (214) 849-5500 or such other address as either party may from time to time specify in writing to the other. (b) Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, heirs, administrators and assigns. Neither Buyer nor Seller shall assign its right, title and interest in and to this Agreement without the other party's prior written consent unless any such assignment is to an affiliate of Buyer or Seller, as the case may be, in which event no such consent shall be required. (c) Amendments. Except as otherwise provided herein, this Agreement may be amended or modified only by a written instrument executed by Seller and Buyer. (d) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas. (e) Merger of Prior Agreements. This Agreement and the exhibits hereto constitute the entire agreement between the parties and supersede all prior agreements and understandings between the parties relating to the subject matter hereof, including without limitation, that certain Letter of Intent dated October 27, 1997, executed by Buyer and Seller (the "Letter of Intent"), as the same may have been amended, which shall be of no further force or effect upon execution of this Agreement by Buyer and Seller. (f) Enforcement. In the event a dispute arises concerning the performance, meaning or interpretation of any provision of this Agreement, the party not prevailing in such dispute shall pay any and all costs and expenses incurred by the other party in enforcing or establishing its rights hereunder, including, without limitation, court costs and attorneys' fees. In addition to the foregoing award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to its attorneys' fees incurred in any post judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Agreement into any judgment on this Agreement. (22) 26 (g) Time of the Essence. Time is of the essence of this Agreement. (h) Severability. If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect. (i) Exhibits. All exhibits attached hereto are incorporated herein as though fully set forth herein. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] (23) 27 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. Buyer: [BUYER TO INITIAL AMERICAN INDUSTRIAL PROPERTIES REIT SUBPARAGRAPH 7(a)] By: /s/ LEWIS D. FRIEDLAND ------------------------------------- Name: Lewis D. Friedland ----------------------------------- Title: Vice President ---------------------------------- Seller: [SELLER TO INITIAL NANOOK PARTNERS, L.P. SUBPARAGRAPH 7(a)] By: Davister Corp. General Partner By: /s/ [ILLEGIBLE] -------------------------------- Name: [ILLEGIBLE] ------------------------------ Title: [ILLEGIBLE] ----------------------------- Chicago Title Insurance Company agrees to act as Escrow Holder and disburse and/or apply the Earnest Money in accordance with the terms of this Agreement and to comply with the terms and provisions of Paragraph 20 of this Agreement. Chicago Title Insurance Company agrees to comply with all reporting requirements of Section 6045 of the United States Internal Revenue Code and the regulations promulgated thereunder. CHICAGO TITLE INSURANCE COMPANY By: ----------------------------------- Its: ---------------------------------- Dated: -------------------------------- (24) 28 LIST OF EXHIBITS
Section Reference ----------------- Exhibit A - Description of Land l(a) Exhibit B - Inventory of Tangible Personal Property l(d) Exhibit C - Deed 3(a) Exhibit D - Bill of Sale 3(b) Exhibit E - Assignment and Assumption of Intangible Property 3(c) Exhibit F - Assignment of Leases 3(c) Exhibit G - Surveyor's Certificate 4(a)(ii) Exhibit H - Environmental Reports 4(a)(vi) Exhibit I - Rent Roll 4(a)(vii) Exhibit J - Notice of Lease Assignment 8(c)(vii) Exhibit K - Transferor's Certification of 8(c)(ix) Non-Foreign Status Exhibit L - Tenant Certificate 6(g) Exhibit M - Certificate of Buyer 8(d)(v) Addendum I - Service Contracts 4(a)(iii)
(25) 29 EXHIBIT A REAL PROPERTY 30 EXHIBIT B PERSONAL PROPERTY INVENTORY NONE 31 EXHIBIT C SPECIAL WARRANTY DEED RECORDING REQUESTED BY: WHEN RECORDED MAIL TO: - ----------------------------- - ----------------------------- - ----------------------------- - ----------------------------- - ----------------------------- - ----------------------------- MAIL TAX STATEMENT TO: American Industrial Properties REIT 6210 North Beltline Road Suite 170 Irving, Texas 75063-2656 Attn: Mr. Marc Simpson - -------------------------------------------------------------------------------- (Space Above Line for Reorder's Use Only) SPECIAL WARRANTY DEED THE STATE OF TEXAS ) ) KNOW ALL MEN BY THESE PRESENTS: COUNTY OF ________ ) _________________________________, a ______________________________ ("Grantor"), and for and in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration to it in hand paid by AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Grantee"), whose address is 6210 North Beltline Road, Suite 170, Irving, Texas 75063-2656 the receipt and sufficiency of which is hereby acknowledged and confessed, has GRANTED, BARGAINED, SOLD, ASSIGNED and CONVEYED, and by these presents does GRANT, BARGAIN, SELL, ASSIGN and CONVEY, unto Grantee: A. The fee simple title to all of that certain real property located in _____________ County, Texas and more particularly described in Exhibit A hereto attached and made a part hereof for all purposes and any and all structures, fixtures, buildings and improvements situated thereon (collectively, the "Land"); together with (i) any and all rights to present or future use of (and other 32 rights, titles and interests in and to) waste water, waste water capacity, drainage, water, water rights or other utility facilities or capacity to the extent same pertain to or benefit the Land, including without limitation all reservations of, or commitments or letters covering, any such use now or in the future, whether now owned or hereafter acquired, (ii) any and all deposits, reimbursements and reimbursement rights and tax refunds relating to periods occurring after the date hereof and any and all contracts, licenses and zoning or other permits, whether executed, granted or issued by a private person or entity or a governmental or quasi-governmental agency or body, which are directly or indirectly related to or connected with the Land or the development or use of the Land, whether now or at any time hereafter existing; (iii) any and all oil, gas, and other minerals in, on, or under the Land or which may be produced from the Land as well as any other mineral rights and interests relating to the Land (present or reversionary); (iv) any and all leases covering or affecting all or any portion of the Land; (v) any and all roads, streets, alleys, strips, gores, pieces of property and other ways (open or proposed) adjacent or contiguous to or abutting, affecting, crossing, fronting or bounding the Land, including without limitation any awards to be made after the date hereof relating thereto (including without limitation any unpaid awards or damages payable by reason of damages thereto or by reason of a widening or changing of the grade with respect thereto); (vi) all and singular, the benefits, privileges, easements, rights of ingress and egress to and from, air rights, tenements, hereditaments and appurtenances thereon or in anywise thereto appertaining, and (vii) any and all reversionary interests in and to, and all of Grantor's rights to use, any of the foregoing (clauses (i) through (vii) above being herein collectively called the "Rights and Appurtenances") and the Land and the Rights and Appurtenances being herein collectively called the ("Property"). TO HAVE AND TO HOLD the Property, together with all and singular any other rights and appurtenances thereto in anywise belonging, unto Grantee, its legal representatives, successors and assigns, FOREVER, subject to those restrictions and encumbrances listed on Exhibit B, attached hereto and incorporated herein by reference for all purposes, to the extent (but no further) that same are valid and subsisting as of the date hereof and affect title to the Property (collectively, the "Encumbrances"); and Grantor does hereby bind itself, its legal representatives, successors and assigns, to WARRANT AND FOREVER DEFEND all and singular the Property unto Grantee, its legal representatives, successors and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof, by, through or under Grantor, but not otherwise, subject, however, to the Encumbrances. Grantee assumes the obligations to pay ad valorem taxes and assessments as they become due and payable subsequent to December 31, 1997. Grantor warrants and represents that all ad valorem taxes and assessments and all maintenance fees for the Conveyed Property for 1997 and all prior years have been fully paid. If the proration as of the date hereof is based upon an estimate of ad valorem taxes and assessments and maintenance fees for the current year, then upon demand by either party hereto, the parties shall, if necessary, promptly and equitably adjust all such ad valorem taxes and assessments and maintenance fees as soon as reasonably practical after the date actual figures for such items for the current year are available. 33 IN TESTIMONY WHEREOF, this instrument is executed effective as of the ____ day of ___________________, 199__. ---------------------------------------- By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- Exhibit A - Land Exhibit B - Encumbrances 34 STATE OF TEXAS ) ) COUNTY OF DALLAS ) This instrument was acknowledged before me on _____, 199__, by ______________________, _______________________ of ___________________, a ______________________________, on behalf of said _____________________. --------------------------------- Notary Public in and for the State of Texas My Commission Expires: --------------------------------- STATE OF TEXAS ) ) COUNTY OF DALLAS ) This instrument was acknowledged before me on _______, 199__, by ______________________, _______________________ of ___________________, a ______________________________, on behalf of said _____________________. --------------------------------- Notary Public in and for the State of Texas My Commission Expires: --------------------------------- Exhibit A - Land Exhibit B - Existing Encumbrances 35 EXHIBIT A to Exhibit C LEGAL DESCRIPTION 36 EXHIBIT B to EXHIBIT C ENCUMBRANCES 37 EXHIBIT D BILL OF SALE FOR VALUE RECEIVED, the undersigned ("Seller") hereby sells and assigns to AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Buyer"), all of the undersigned's right, title and interest in and to all equipment, fixtures, inventory and other tangible personal property of any kind and nature owned by Grantor and attached to or located on the real property described on Exhibit A attached hereto ("Real Property"), including without limitation all furniture, furnishings, floor coverings; office equipment and supplies; heating, lighting, refrigeration, plumbing, ventilating, incinerating, communication, electrical, air conditioning fixtures, systems and equipment; disposals; window screens; storm windows; sprinklers; hoses; tools; lawn equipment; elevators and escalators; compressors; engines; boilers, and all other related machinery, equipment, fixtures, supplies, replacement parts and other tangible personal property whatsoever, including, without limitation, the personal property described in Schedule 1 which is attached hereto and incorporated herein. IN WITNESS WHEREOF, the undersigned has executed this Bill of Sale on this ____ day of ________________, 19__. ---------------------------------- By: ------------------------------- Name: ----------------------------- Title: ---------------------------- 38 Schedule 1 PERSONAL PROPERTY NONE 39 EXHIBIT E ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, WARRANTIES, GUARANTIES, PERMITS AND OTHER INTANGIBLE PROPERTY THIS ASSIGNMENT AND ASSUMPTION OF SERVICE CONTRACTS, WARRANTIES, GUARANTIES AND OTHER INTANGIBLE PROPERTY (this "Assignment") is made and entered into as of the ____ day of __________, 199__, by ________________, a ______________________ ("Assignor"), to _____________________, a _________________ ("Assignee"). WITNESSETH: WHEREAS, Assignor is contemporaneously herewith selling pursuant to that certain Purchase and Sale Agreement dated _____ by and between Assignor and Assignee (the "Purchase Agreement") that certain real property and improvements thereon located in the City of Carrollton, County of Dallas, State of Texas, the real property which is more particularly described on Schedule 1 attached hereto and incorporated herein by this reference ("Real Property"). Terms used in this Agreement and not otherwise defined shall be given the meanings defined in the Purchase Agreement. WHEREAS, Assignor desires to assign its interest in and to the following to Assignee as of the date on which title to the Real Property is vested in Assignee (the "Transfer Date"), to the extent any of the following exist, and Assignee desires to accept the assignment thereof and assume Assignor's obligations thereunder from and after the Transfer Date: (a) Any and all service contracts described in Schedule 2 attached hereto and incorporated herein by this reference (the "Contracts"); (b) Any and all Warranties and Guaranties (the "Warranties and Guaranties", hereafter defined); (c) Any and all Names and Marks (the "Names and Marks", hereafter defined); (d) Any and all Intangible Property (the "Intangible Property", hereafter defined); and (e) Any and all Permits (the "Permits", hereafter defined). NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 40 1. As of the Transfer Date, Assignor hereby assigns and transfers unto Assignee all of its right, title, claim and interest in, to and under the (a) Contracts; (b) Warranties and Guarantees; (c) Names and Marks; (d) Intangible Property and (e) Permits (collectively the "Assigned Interests"). Assignor hereby agrees to indemnify, defend and hold harmless Assignee from and against any and all cost, liability, loss, damage or expense, including, without limitation, reasonable attorneys' fees and expenses (collectively, "Losses and Liabilities"), arising out of or in any way related to the Assigned Interests prior to or on the Transfer Date or which arise out of or are in any way related to the Assigned Interests after the Transfer Date on account of any event occurring or liability accruing on or prior to the Transfer Date. 2. Assignee, as of the Transfer Date, hereby accepts the foregoing assignment and assumes all of the Assignor's obligations under the Assigned Interests which arise or relate to the period after the Transfer Date. Assignee hereby agrees to indemnify, defend and hold harmless Assignor from and against any and all Losses and Liabilities arising out of or in any way related to the Assigned Interests after the Transfer Date, except for Losses and Liabilities which arise out of or are in any way related to the Assigned Interests after the Transfer Date on account of any event occurring or liability accruing on or prior to the Transfer Date. 3. The following terms shall have the following meanings: (a) The term "Warranties and Guaranties" as used herein shall mean and include all warranties and guarantees to the extent assignable, whether or not written, for all or any portion of the Property, including, without limitation, the Improvements and the tangible Personal Property, including, without limitation, construction warranties from contractors and subcontractors. (b) The term "Names and Marks" as used herein shall mean and include all patents, licenses, trademarks, tradenames, telephone numbers, identifying material, service marks and names used in connection with the operation of the Property, and all symbols, emblems with the operation of the Property, and all symbols, emblems and logos used in connection with the ownership or operation of the Property, whether in black and white or in color, and irrespective of size, and all of Assignor's right, title and interest in and to all goodwill associated therewith, including, without limitation the name "Avion Business Center". Seller makes no representation or warranty with respect to Names and Marks or rights thereto and expressly states that it has not registered any Names or Marks, including "Avion Business Center." (c) The term "Intangible Property" as used herein shall mean and include all intangible property exclusively relating to or used in connection with the Property, including without limitation, all of the Real Property which is held or deemed to constitute intangible personal property; to the extent assignable, all plans and specifications, working drawings, site elevation and as-built surveys, soil and substrata studies, architectural plans, engineering plans and studies, floor plans, landscape plans, and other technical reports of any kind, character or description; to the extent assignable, all promotional material, market studies, tenant data and other related material of any kind; all claims, demands or causes of action 41 related to injury or damage to the Property or the condition thereof, including without limitation, any arising out of or relating to or caused by any defects in design or construction; and all rights under any restrictive or protective covenants or declarations or other matters affecting title to any of the property herein conveyed. Intangible Property shall not include Assignor's books and records, internal reports and memoranda and appraisals of the Real Property. (d) The term "Permits" as used herein shall mean and include all environmental, air pollution control, waste water, building, occupancy, governmental permits and approvals of every kind and nature relating to the construction, operation, use or occupancy of the Property in Seller's possession. 4. In the event of any litigation between Assignor and Assignee arising out of the obligations of the parties under this Assignment or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party's costs and expenses of such litigation, including, without limitation, reasonable attorneys' fees and expenses. In addition to the foregoing award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to its reasonable attorneys' fees incurred in any post judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Assignment into any judgment on this Assignment. 5. This Assignment shall be binding on and inure to the benefit of the parties herein, their heirs, executors, administrators, successors-in-interest and assigns. 6. This Assignment shall be governed by and construed in accordance with the laws of the State of Texas. 7. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same agreement. ---------------------------------------- ASSIGNOR: By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- By: --------------------------- 42 ---------------------------------------- ASSIGNEE: By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 43 Schedule 1 LEGAL DESCRIPTION OF REAL PROPERTY 44 Schedule 2 DESCRIPTION OF THE CONTRACTS 45 EXHIBIT F ASSIGNMENT AND ASSUMPTION OF LEASES THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this "Assignment") dated as of the day of ___________________, 199__,is made and entered into by and between _______________________________, a ____________________________ ("Assignor"), and _____________________________________, a _____________________________ ("Assignee"). WITNESSETH: WHEREAS, Assignor is the lessor under certain leases executed with respect to that certain real property located in the City of Carrollton, County of Dallas, State of Texas, incorporated herein by this reference (the "Property") more particularly described on Schedule 1, attached hereto and incorporated herein by this reference, which leases are described in Schedule 2 attached hereto and incorporated herein by this reference (the "Leases"). WHEREAS, Assignor is contemporaneously herewith selling the Property to Assignee pursuant to that certain Purchase and Sale Agreement dated by and between Assignor and Assignee (the "Purchase Agreement"). WHEREAS, Assignor desires to assign its interest in and to the Leases to Assignee as of the date on which title to the Property is vested in Assignee (the "Transfer Date"), and Assignee desires to accept the assignment thereof and assume Assignor's obligations thereunder from and after the Transfer Date. NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties hereby agree as follows: 1. As of the Transfer Date, Assignor hereby assigns to Assignee all of its right, title and interest in and to the Leases. On the Transfer Date, Assignor has transferred those security deposits in the amounts and under the Leases listed on Schedule 3 attached hereto to Assignee (the "Transferred Security Deposits"). 2. Assignor hereby agrees to indemnify, defend and hold harmless Assignee from and against any and all cost, liability, loss, damage or expense, including, without limitation, reasonable attorneys' fees and expenses (collectively, "Losses and Liabilities"), arising out of or in any way related to the lessor's obligations under the Leases described in Schedule 2 and related to the period prior to or on the Transfer Date or which arise out of or are in any way related to the lessor's obligations under said Leases after the Transfer Date on account of any event occurring or liability accruing on or prior to the Transfer Date. 3. Assignee, as of the Transfer Date, hereby accepts the foregoing assignment and assumes all of the lessor's obligations under the Leases described in Schedule 2 relating to the period from and after the Transfer Date, including the obligation to return the Transferred Security Deposits 46 in accordance with the terms of the Leases. Assignee hereby agrees to indemnify, defend and hold harmless Assignor from and against any and all Losses and Liabilities arising out of Lessor's obligations under the Leases described in Schedule 2 and related to the period after the Transfer Date, except for Losses and Liabilities on account of any event occurring or liability accruing on or prior to the Transfer Date. 4. In the event of any litigation between Assignor and Assignee arising out of the obligations of the parties under this Assignment or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party's costs and expenses in such litigation, including, without limitation, reasonable attorneys' fees and expenses. In addition to the foregoing award of attorneys' fees to the prevailing party, the prevailing party in any lawsuit on this Agreement shall be entitled to its reasonable attorneys' fees incurred in any post judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this Assignment into any judgment on this Assignment. 5. This Assignment shall be binding on and inure to the benefit of the parties herein, their heirs, executors, administrators, successors-in-interest and assigns. 6. This Assignment may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall constitute one and the same agreement. 47 IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment the date and year first above written. ---------------------------------------- ASSIGNOR: By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- ---------------------------------------- ASSIGNEE: By: ------------------------------------- Name: ----------------------------------- Title: ---------------------------------- 48 Schedule 1 LEGAL DESCRIPTION OF REAL PROPERTY 49 Schedule 2 DESCRIPTION OF THE LEASES 50 Schedule 3 TRANSFERRED SECURITY DEPOSITS 51 EXHIBIT G SURVEYOR'S CERTIFICATE I hereby certify that on the ____ day of ________________, 199__: (a) this survey was made on the ground as per the field notes shown on this survey and correctly shows (i) the boundaries and areas of the subject property and the size, location and type of buildings and improvements thereon (if any) and the distance therefrom to the nearest facing exterior property lines of the subject property (ii) the location of all rights-of-way, easements and any other matters of record (or of which are visible or of which I have knowledge or have been advised, whether or not of record) affecting the subject property including, without limitation, those described on the Commitment); (iii) the location of the parking areas on the subject property showing the number of parking spaces provided thereby; (iv) all abutting dedicated public streets providing access to the subject property together with the width and name thereof; and (v) all other significant items on the subject property; (b) except as shown on the survey, there are no (i) encroachments upon the subject property by improvements on adjacent property; (ii) encroachments on adjacent property, streets or alleys by any improvements on the subject property; (iii) party walls, or (iv) conflicts or protrusions; (c) adequate ingress to and egress from the subject property is provided by (name of street), the same being paved, dedicated public right(s)-of-way maintained by (name of maintaining authority); (d) all required building setback lines on the subject property are located as shown hereon; (e) no part of the subject property lies within a flood plain or flood prone area or flood way of any body of water (or note otherwise); (f) this survey conforms to the current Texas Society of Professional Surveyors Standards and Specifications for a Category 1 A, Condition II Survey; (g) The description of the property shown hereon corresponds to the boundaries of the property shown on the Title Commitment, and such description closes by engineering calculation. 52 (h) No covenants, restriction or easements that are of record appear to me to have been violated in any respect except as follows: ___________________________ (if none, so state). --------------------------------------------------- (Signature of Surveyor) Registered Public Surveyor Registration No. ----------------------------------- (Name, address, telephone number and job number of Surveyor) 53 EXHIBIT H ENVIRONMENTAL REPORTS NONE 54 EXHIBIT I RENT ROLL 55 EXHIBIT J NOTICE OF LEASE ASSIGNMENT ________________, 199___ To: [Tenant] - ------------------------- - ------------------------- - ------------------------- - ------------------------- Re: [Property name][Property address] Gentlemen: Please be advised that the undersigned Seller, as Landlord under your Lease at the above location (as said Lease may have been amended, the "Lease") has transferred and conveyed all of its interest in the lease to American Industrial Properties REIT ("Buyer") effective as of the date hereof, and Buyer has assumed the obligations of the Landlord under the Lease. Therefore, effective immediately, all correspondence, communications and rent and/or other charges due under the Lease (including past rent due, if any) should be directed as follows: American Industrial Properties REIT c/o -------------------------------- -------------------------------- -------------------------------- Attn: ------------------------------ Phone: ----------------------------- You security deposit in connection with the Lease in the amount of $____________ has been transferred to the Buyer. Buyer acknowledges receipt of the deposit and responsibility for the return of any such security deposit subject to the terms of the Lease. SELLER: BUYER: , AMERICAN INDUSTRIAL PROPERTIES - ------------------------------ a REIT ---------------------------- By: ----------------------------------- By: Name: ------------------------------ --------------------------------- Name: Title: ---------------------------- -------------------------------- Title: --------------------------- 56 EXHIBIT K TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS To inform _____________________________________, a _______________________ ("Transferee"), that withholding of tax under Section 1445 of the Internal Revenue Code of 1954, as amended ("Code"), will not be required upon the transfer of certain real property to the Transferee by __________________________________________, a _____________________ ("Transferor"), the undersigned hereby certifies the following on behalf of the Transferor: 1. The Transferor is not a foreign corporation, foreign partnership, foreign trust, foreign estate or foreign person (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. The Transferor's U.S. employer or tax (social security) identification number is __________________________; 3. The Transferor understands that this Certification may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both. 4. The Transferor understands that the Transferee is relying on this Certification in determining whether withholding is required upon said transfer. 5. The Transferor hereby agrees to indemnify, defend and hold the Transferee harmless from and against any and all obligations, liabilities, claims, losses, actions, causes of action, rights, demands, damages, costs and expenses of every kind, nature or character whatsoever (including, without limitation, reasonable attorneys' fees and court costs) incurred by the Transferee as a result of: (i) the Transferor's failure to pay U.S. Federal income tax which the Transferor is required to pay under applicable U.S. law; or (ii) any false or misleading statement contained herein. 6. Under penalty of perjury I declare that I have examined this Certification and to the best of my knowledge and belief it is true and correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor. Date: , 199 --------------------- --- -------------------------------------- By: ----------------------------------- Name: --------------------------------- Title: -------------------------------- 57 EXHIBIT L TENANT CERTIFICATE American Industrial Properties REIT 6210 North Beltline, Suite 170 Irving, Texas 75063-2656 "Buyer" _________________________ _________________________ _________________________ _________________________ "Landlord" Ladies and Gentlemen: Landlord, as owner of the property (the "Property") of which the leased premises are a part, intends to sell the Property to American Industrial Properties REIT or an affiliate thereof ("Buyer") who, as a condition to the purchase of the Property and to satisfy the requirements of Lender, has required this Tenant Certificate. Buyer is about to make, execute and deliver its Promissory Note ("Note") to a financial institution ("Lender") which Note shall be secured by, among other security, a lien encumbering the Property pursuant to a Deed of Trust, Security Agreement and Assignment of Leases and Rents (as thereafter amended and modified, the "Mortgage"). The Mortgage and all other instruments securing the Note are herein collectively called the "Security Documents". In consideration of Buyer's agreement to purchase the Property, Tenant agrees and certifies to Landlord, Buyer and Lender as follows: ACKNOWLEDGMENT OF LEASE 1. Tenant is the tenant under that certain lease dated _______ (the "Lease"), the undersigned ("Tenant") has leased from Landlord, or its predecessors in interest the leased premises consisting of approximately _____ rentable square feet located at as more particularly described in the Lease. A true and correct copy of the Lease together with all amendments, modifications and/or renewals is attached as Exhibit "A". 2. The leased premises and possession thereof are accepted by Tenant and Tenant is in actual occupancy of the leased premises; the lease is in full force and effect; the term of the Lease commenced as of _______ and the expiration date of the Lease is _________. 3. Rental at the rate provided by the Lease is payable in accordance with its terms, all minimum rent and additional rent have been paid through ______ and is not paid and will not be paid more than one month in advance of the due date set forth in the Lease. Minimum monthly base rent of $________ plus monthly estimated operating expenses of $__________ (with the tenant responsible for taxes, insurance and common area operating expenses in excess of $__________) are due on the ________ of each month. 4. Landlord is holding a security deposit in the amount of $_________ as of the date hereof. Tenant is not entitled to any interest on the security deposit except as follows:_____________________________________ ______________________________________________________. 5. Tenant claims no present charge, lien or claim of offset against rent. 6. Tenant has no option to extend the lease except as follows: ______________________________________________________________________________. 58 7. Tenant has not subleased nor assigned all or any portion of the Leased premises, except as follows: _________________________________________________________________. 8. Tenant is not in default in the performance of any covenant, agreement or condition contained in the Lease and no circumstances exist which, with the passage of time, would result in Tenant being in default in the performance of any covenant, agreement or condition contained in the Lease. 9. Except for de minimis quantities that are used in connection with the ordinary course of Tenant's business, and then only in strict compliance with all applicable laws, rules and regulations, Tenant does not and will not engage in any activity, which would involve the use of the leased premises for the storage, generation, use, treatment, transportation or disposal of any chemical, material or substance which is regulated as toxic or hazardous or exposure to which is prohibited, limited or regulated by any federal, state, county, regional, local or other governmental authority or which, even if not so regulated, may or could pose a hazard to the health and safety of the other tenants and occupants of Landlord's property. 10. Tenant does not have any rights or options to purchase the Property. 11. Tenant's interest in the Lease is not subject to any mortgage, liens or other encumbrances except as follows: ___________________. 12. There are no existing defaults under the Lease by reason of any act or omission of the Landlord and to Tenant's knowledge no circumstances exist which, with the passage of time, would place Landlord in default under the Lease, except as follows: ___________________. 13. There are no outstanding unsatisfied obligations of Landlord under the Lease except as follows: ________________________. 14. The following is (are) guarantor(s) or Tenant's obligations under the lease:__________________________________ , ___________ and [its] [his] [her] [their] current address(es) [is] [are] as follows:______________________________ ________________________________________________________________________________ ________________________________________________________________________________ SUBORDINATION The Lease and all right, title and interest in the Property created thereby (including without limitation any purchase options, rights of first refusal, lease renewal rights, etc.) are, shall be and shall at all times remain and continue to be subject and subordinate in all respects to the liens, terms, covenants, provisions and conditions of the Security Documents. NON-DISTURBANCE So long as the Lease is in full force and effect and Tenant is not in default under the Lease (beyond any period given to Tenant in the Lease to cure such default) or under this Agreement: (a) Tenant's possession of the Property and Tenant's rights and privileges under the Lease shall not be diminished or interfered with by Lender, and Tenant's occupancy of the Premises shall not be disturbed by Lender for any reason whatsoever during the term of the Lease or any extensions or renewals thereof; and (b) Lender will not join Tenant as a party defendant in any action or proceeding to foreclose the Mortgage or to enforce any rights or remedies of Lender under the Mortgage which would cut-off, destroy, terminate or extinguish the Lease or Tenant's interest and estate under the Lease. Notwithstanding the foregoing provisions of the paragraph, if it would be procedurally disadvantageous for Lender not to name or join Tenant as a party in a foreclosure proceeding with respect to the Mortgage, Lender may so name or join Tenant without terminating or in any way diminishing or otherwise affecting the rights and privileges granted to, or inuring to the benefits of, Tenant under the lease and this Agreement. 59 ATTORNMENT (a) After notice is given by Lender that a default has occurred under the Mortgage and that the rentals and all other payments to be made by Tenant under the Lease should be paid to Lender, Tenant will attorn to Lender and pay to Lender, or in accordance with the directions of Lender, all rentals and other monies due and to become due to Current Landlord (as hereinafter defined) under the Lease or otherwise in respect to the Property, such payments will be made regardless of any right of set-off, counterclaim or other defense which Tenant may have against Current Landlord, whether as tenant under the Lease or otherwise; and (b) in addition, if Lender (or its nominee or designee) shall succeed to the rights of Current Landlord under the Lease through possession or foreclosure action and thereafter assume obligations of Current Landlord accruing after any foreclosure action, delivery of a deed or otherwise or another person purchases the Property upon or following foreclosure of the Mortgage, then at the request of Lender (or its nominee or designee) or such purchaser (Lender, its nominees and designees, and such purchaser, each being a "Successor-Landlord"), Tenant shall attorn to and recognize Successor-Landlord as Tenant's landlord under the Lease and shall promptly execute and deliver any instrument that Successor-Landlord may reasonably request to evidence such attornment. Upon such attornment, the lease shall continue in full force and effect as, or as if it were, a direct lease between Successor-Landlord and Tenant upon all terms, conditions and covenants as are set forth in the Lease, except that Successor-Landlord shall not: i) be liable for any previous act or omission of Current Landlord under the Lease; ii) be subject to any off-set, defense or counterclaim which shall have previously accrued to Tenant against Current Landlord; iii) be bound by any modification of the Lease or by any previous prepayment of rent or additional rent for more than one month which Tenant might have paid to Current Landlord, unless such modification or prepayment shall have been expressly approved in writing by Lender; or iv) be liable for any security deposited under the Lease unless such security has been physically delivered to Lender. LEASE MODIFICATION Tenant agrees that without the prior written consent of Lender, it shall not: (a) amend, modify, terminate or cancel the Lease or any extensions or renewals thereof; (b) tender a surrender of the Lease or make a prepayment of any rent or additional rent in excess of one (1) month; or (c) subordinate or permit the subordination of the Lease to any lien subordinate to the Mortgage. Any such purported action without such consent shall be void as against the holder of the Mortgage. NOTICE OF DEFAULT; OPPORTUNITY TO CURE a) Any notice required or permitted to be given by Tenant to Current Landlord shall be simultaneously given also to Lender, and any right of Tenant dependent upon notice shall take effect only after such notice to Lender is so given. Performance by Lender shall satisfy any conditions of the Lease requiring performance by Current Landlord, and Lender shall have a reasonable time to complete such performance as provided in section (b) below. b) Without limiting the generality of the foregoing, Tenant shall promptly notify Lender of any default, act or omission of Current Landlord which would give Tenant the right, immediately or after the lapse of a period of time, to cancel or terminate the Lease or to claim a partial or total eviction (a "Landlord Default"). In the event of a Landlord Default, Tenant shall not exercise any rights available to it: (i) until it has given written notice of such Landlord Default to Lender; and (ii) unless Lender has failed, within thirty (30) days after Lender receives such notice, to cure or remedy the Landlord Default or, if the same is not reasonably capable of being remedied by Lender within such thirty (30) day period, until a reasonable period for remedying such Landlord Default has elapsed following the giving of such notice and following the time when Lender shall have become entitled under the Security Documents to remedy the same (which reasonable period shall in no event be less than the period to which Current Landlord would be entitled under the Lease or otherwise, after similar notice, to effect such remedy); provided that Lender shall with due diligence commence and prosecute a remedy for such Landlord Default. 60 NOTICE OF LIEN To the extent that the Lease entitles Tenant to notice of the existence of any mortgage and the identity of any lender, this Agreement shall constitute such notice to Tenant with respect to the Mortgage. REMEDIES Upon and after the occurrence of a default under the Mortgage, Lender shall be entitled, but not obligated, to exercise the claims, rights, powers, privileges and remedies of Current Landlord under the Lease and shall be further entitled to the benefits of, and to receive and enforce performance of, all of the covenants to be performed by Tenant under the Lease as though Lender were named therein as Current Landlord. LIMITATION OF LIABILITY Except as specifically provided in this Agreement, Lender shall not, by virtue of this Agreement, the Mortgage or any other instrument to which Lender may be a party, be or become subject to any liability or obligation to Tenant under the Lease or otherwise. PRIORITY (a) Tenant acknowledges and agrees that this Agreement supersedes (but only to the extent inconsistent with) any provisions of the Lease relating to the priority or subordination of the Lease and the interests or estates created thereby to the Mortgage. (b) Tenant agrees to enter into a subordination, non-disturbance and attornment agreement with any entity which shall succeed Lender with respect to the Property, or any portion thereof, provided such agreement is substantially similar to this Agreement. NOTICES Any notice, consent, request or other communication required or permitted to be given hereunder shall be in writing and shall be: (a) personally delivered; (b) delivered by Federal Express or other comparable overnight delivery service; or (c) transmitted by postage prepaid registered or certified mail, return receipt requested. All such notices, consents, requests or other communications shall be addressed to Tenant or Lender at the address for such party previously set forth in this Agreement, or to such other address as Tenant or Lender shall in like manner designate in writing. All notices and other communications shall be deemed to have been duly given on the first to occur of actual receipt of the same or; (i) the date of delivery if personally delivered; (ii) one (1) business day after depositing the same with the delivery service if by overnight delivery service; and (iii) three (3) days following posting if transmitted by mail. Any party may change its address for purposes hereof by notice to the other parties given in accordance with the provisions hereof. GENERAL This Agreement may not be modified or terminated orally. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their successors and assigns. The term "Lender" shall include the then holder of any interest in the Mortgage. The term "Current Landlord" shall mean the then holder of the lessor's interest in the Lease. The term "person" shall mean any individual, joint venture, corporation, partnership, trust, unincorporated association or other entity. All references herein to the Lease shall mean the Lease as modified by this Agreement and any amendments or modifications to the Lease which are consented to in writing by the Lender. Any inconsistency between the Lease and the provisions of this Agreement shall be resolved in favor of this Agreement. This Tenant Certificate is being executed and delivered by Tenant to induce Lender to make the Loan which is to be secured in part by an assignment to Lender of Landlord's interest in the Lease and with the intent and understanding that the above statements will be relied upon by Lender. This Tenant Certificate shall inure to the benefit of and be binding upon the parties hereto, their successors and permitted assigns, and any purchaser or purchasers at foreclosure of the Property, and their respective heirs, personal representatives, successors and assigns. 61 GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the State in which the Property is located. IN WITNESS WHEREOF, the parties hereto have executed this Tenant Certificate to be effective as of the day and year first stated above. "LENDER" ------------------------------------------ a ----------------------------------------- By: --------------------------------------- Printed Name: ----------------------------- Title: ------------------------------------ "TENANT" ------------------------------------------ a ----------------------------------------- By: --------------------------------------- Printed Name: ----------------------------- Title: ------------------------------------ AGREED AND CONSENTED TO: "BUYER" American Industrial Properties REIT, a Texas real estate investment trust By: --------------------------------------- Printed Name: ----------------------------- Title: ------------------------------------ Date: ------------------------------------- 62 ACKNOWLEDGMENTS STATE OF __________________ ) ) COUNTY OF ________________ ) BEFORE ME, the undersigned authority on this day personally appeared ________________________, the ______________ of ____________________________________, a ________________, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, and as the act and deed of said _______________________, and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, in this ____ day of __________, 199__. -------------------------------------------- NOTARY PUBLIC, State of --------------------- 63 ACKNOWLEDGMENTS STATE OF __________________ ) ) COUNTY OF ________________ ) BEFORE ME, the undersigned authority on this day personally appeared ________________________, the ______________ of ____________________________________, a ________________, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, and as the act and deed of said _______________________, and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, in this ____ day of __________, 199__. ------------------------------------------ NOTARY PUBLIC, State of Texas 64 ACKNOWLEDGMENTS STATE OF TEXAS ) ) COUNTY OF ) BEFORE ME, the undersigned authority on this day personally appeared ________________________, the ______________ of American Industrial Properties REIT, a Texas real estate investment trust, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he executed the same for the purposes and consideration therein expressed, and as the act and deed of said real estate investment trust [and ______________________], and in the capacity therein stated. GIVEN UNDER MY HAND AND SEAL OF OFFICE, in this ____ day of __________, 199__. ----------------------------------- NOTARY PUBLIC, State of ----------- 65 EXHIBIT A Lease 66 EXHIBIT M CERTIFICATE OF BUYER The undersigned, AMERICAN INDUSTRIAL PROPERTIES REIT ("Buyer"), has this day purchased from NANOOK PARTNERS, L.P. ("Seller") that certain real property described on Exhibit A and all of Seller's right, title, claim and interest in and to any improvements situated thereon (such real property and improvements being herein called the "Property") under and pursuant to the terms of that certain Purchase and Sale Agreement dated _______________ (the "Agreement") between Buyer and Seller. The Buyer executes this Certificate to confirm and acknowledge that Buyer has purchased the Property in its AS IS, WHERE IS condition, with all faults. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR ANY REPRESENTATIONS OR WARRANTIES PROVIDED IN THE AGREEMENT, IT HAS PURCHASED THE PROPERTY IN AN "AS IS, WHERE IS" CONDITION, WITHOUT RELYING UPON ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, OF ANY KIND, HEREBY WAIVING AND RELINQUISHING ALL CLAIMS WITH RESPECT TO ANY IMPLIED WARRANTIES. WITHOUT LIMITING THE ABOVE, BUYER ACKNOWLEDGES THAT NEITHER SELLER, EXCEPT AS EXPRESSLY SET FORTH IN THE AGREEMENT OR IN THE DEED, NOR ANY OTHER PARTY THAT IS AN AGENT, EMPLOYEE OR CONTRACTOR OF SELLER HAS MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, ON WHICH BUYER IS RELYING OR HAS RELIED AS TO ANY MATTERS, DIRECTLY OR INDIRECTLY, CONCERNING THE PROPERTY INCLUDING, BUT NOT LIMITED TO, THE LAND, THE SQUARE FOOTAGE OF THE PROPERTY, IMPROVEMENTS, DEVELOPMENT RIGHTS, TAXES, ASSESSMENTS, BONDS, PERMISSIBLE USES, TITLE EXCEPTIONS, WATER OR WATER RIGHTS, TOPOGRAPHY, UTILITIES, ZONING OF THE PROPERTY, SOIL, SUBSOIL, THE PURPOSES FOR WHICH THE PROPERTY IS TO BE USED, DRAINAGE, ENVIRONMENTAL OR BUILDING LAWS, RULES AND REGULATIONS, TOXIC WASTE OR HAZARDOUS MATERIALS OR ANY OTHER MATTERS AFFECTING OR RELATING TO THE PROPERTY. BUYER HEREBY EXPRESSLY ACKNOWLEDGES THAT NO SUCH REPRESENTATIONS HAVE BEEN MADE. Executed this day of , 1997. --------- ------------- AMERICAN INDUSTRIAL PROPERTIES REIT By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Exhibit A - Description of the Property 67 ADDENDUM I SERVICE CONTRACTS 1. Landscape Maintenance Contract by and between Landscape Resources, Inc. ("Contractor") and Carmel Property Management as Agent for Nanook Partners, L.P. ("Purchaser) dated July 10, 1997, for the period beginning July 1, 1997 through and including June 30, 1998. 2. Sweeping Service Contract with DFW Sweeping Company ("Contractor") dated January 27, 1997. -----END PRIVACY-ENHANCED MESSAGE-----