Exhibit 10.50
CAPITAL AUTOMOTIVE L.P.
REAL PROPERTY PURCHASE AGREEMENT
December 31, 1997
TABLE OF CONTENTS
Page
I. PURCHASE AND SALE - 1 -
1.1 Certain Definitions - 1 -
1.2 Agreement to Purchase and Sell. - 2 -
1.3 Encumbrances. - 2 -
1.4 Purchase Price. - 2 -
1.5 Capitalized Terms - 3 -
II. OPERATION OF PROPERTY THROUGH CLOSING - 3 -
2.1 Business Practice - 3 -
2.2 No Sale or Encumbrance - 3 -
2.3 Leases, Service Contracts and Management Contracts - 3 -
2.4 Termination of Leases; New Company Leases - 4 -
2.5 Compliance - 4 -
2.6 Notice of Inaccuracy or Incompleteness - 4 -
2.7 Access - 4 -
2.8 Insurance - 4 -
2.9 Fulfillment of Obligation - 4 -
2.10 Financial Statements and Reports - 5 -
2.11 Under Construction Properties. - 5 -
III. STATUS OF TITLE TO PROPERTY - 7 -
3.1 State of Title - 7 -
3.2 Preliminary Evidence of Title - 7 -
3.3 Title Defects -10 -
IV. CLOSING PRORATIONS AND ADJUSTMENTS -10 -
4.1 Prorations and Adjustments -10 -
V. CLOSING -11 -
5.1 Closing Date -11 -
5.2 Closing Documents -12 -
5.3 Conditions to the Partnership's Obligation to Close
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5.4 Conditions to the Seller's Obligation to Close -17 -
5.5 Transaction Costs -17 -
VI. CASUALTY LOSS AND CONDEMNATION -18 -
6.1 Casualty -18 -
6.2 Condemnation or Taking -18 -
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VII. REPRESENTATIONS AND WARRANTIES OF THE SELLERS -19 -
7.1 Organization -19 -
7.2 Authority -19 -
7.3 Interest in Contributed Properties -20 -
7.4 No Defaults -20 -
7.5 No Litigation; No Condemnation -20 -
7.6 No Violation -21 -
7.7 Required Obligations -21 -
7.8 Condition of Properties -21 -
7.9 Warranties -22 -
7.10 Utilities -22 -
7.11 Zoning -22 -
7.12 Improvements -22 -
7.13 Environmental Matters -22 -
7.14 Insurance -25 -
7.15 Compliance -25 -
7.16 Leases. -25 -
7.17 Service Contracts; Management Contracts -26 -
7.18 Permits -26 -
7.19 Other Liabilities -26 -
7.20 Tax Matters -26 -
7.21 Taxes -27 -
7.22 Special Filings -27 -
7.23 Books and Records -27 -
7.24 No Brokers -27 -
7.25 All Material Information -27 -
7.26 Survival of Warranties -27 -
VIII. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PARTNERSHIP -28 -
8.1 Organization, Good Standing and Qualification -28 -
8.2 Authorization -28 -
8.3 No Violation -29 -
8.4 Tax Status -29 -
8.5 No Litigation -29 -
8.6 No Brokers -29 -
8.7 Survival -29 -
IX. COVENANTS -29 -
9.1 Covenants of the Company and the Partnership -29 -
9.2 Covenants of the Sellers and the Contributing
Entities -31 -
9.3 No Claim Against Property -32 -
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X. DUE DILIGENCE PERIOD -32 -
10.1 Due Diligence Period -32 -
10.2 Access to Properties and Materials -32 -
10.3 Adjustment Following Due Diligence -33 -
XI. DEFAULTS AND REMEDIES -33 -
11.1 Indemnification by Sellers -33 -
11.2 Remedies -34 -
11.3 Indemnification by the Company and the Partnership -35 -
11.4 Indemnification Procedures -35 -
XII. MISCELLANEOUS -38 -
12.1 Assignment -38 -
12.2 Entire Agreement -38 -
12.3 Notices -39 -
12.4 Governing Law -39 -
12.5 Litigation Costs -40 -
12.6 Counterparts -40 -
12.7 Offer and Acceptance -40 -
12.8 Arbitration -40 -
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EXHIBITS
2.4(a) Form of Company Lease
2.4(c) Guaranty and Subordination Agreement
5.2.1(m) Opinion of Seller's Counsel
5.2.2(d) Opinion of Company Counsel
SCHEDULES
I. Sellers (Names and Addresses)
1.2 Schedule of Properties; Ownership Interests in Properties and
Purchase Price
2.1 Prior Occupants
2.4(b) Guarantors
2.11(a) Construction Contracts for ▇▇▇▇▇▇▇ Toyota and Toyota West
2.11(b) Plans and Specifications for ▇▇▇▇▇▇▇ Toyota and Toyota West
7.5 Litigation
7.13.5(a) The Treatment, Storage and Disposal Locations for Substances of
Concern
7.13.5(f) Environmental Permits and Authorizations
7.14 Insurance
7.17(a) Material Contracts
9.1.4 Restrictions on Sale and/or Financing of Specified
Properties
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CAPITAL AUTOMOTIVE L.P.
REAL PROPERTY PURCHASE AGREEMENT
THIS REAL PROPERTY PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of this 31st day of December, 1997, by and among the persons
and entities named on SCHEDULE I hereto consisting of all of the owners of an
interest in any of the Properties listed on SCHEDULE 1.2 (each individually,
a "Seller" and, if more than one Seller, collectively, the "Sellers"), and
CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership (the "Partnership"),
having offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, and CAPITAL AUTOMOTIVE REIT, a Maryland real estate investment trust
(the "Company"), having offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ on its own behalf and as the general partner of the
Partnership.
RECITALS
A. The Sellers are the legal and beneficial owners of all of the
interests in fee simple title to all of the real property and improvements
set forth on such SCHEDULE 1.2 hereto (including the residual interests in
any tenant improvements thereon), which are individually referred to as a
"Property" and collectively, the "Properties." Such Properties are
identified on SCHEDULE 1.2 by street address and property tax identification
number, or if such Properties constitute more than one parcel, by the several
applicable property tax identification numbers.
B. Each Seller desires to sell all of its interest in each of the
Properties to the Partnership and the Partnership desires to purchase all of
the Sellers' interests in such Properties.
NOW THEREFORE, in consideration of and in reliance upon the above
Recitals, the terms, covenants and conditions contained in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. PURCHASE AND SALE
1.1 CERTAIN DEFINITIONS. For purposes of this Agreement:
1.1.1 "Mortgage Debt" means the aggregate amount of
mortgage indebtedness, if any, encumbering the Propteries as
set forth opposite the description of each Property on
SCHEDULE 1.2.
1.1.2 "Purchase Price" means the amount, in U.S.
dollars, that is the purchase price of each Property, as
identified on SCHEDULE 1.2 for each such Property.
1.1.3 "Affiliate" means with respect to any Person,
(i) any Person that holds direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of voting
securities or other voting interests representing at
least five percent (5%) of the outstanding voting power
of a Person or equity securities or other equity
interests representing at least five percent (5%) of
the outstanding equity securities or interests in a
Person, or (ii) any Person that directly, or indirectly
through one or more intermediaries, controls, or is
controlled by, or is under common control with such
Person.
1.1.4 A "Person" shall mean and include natural persons,
corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust
companies, land trusts, business trusts, Indian tribes
or other organizations, whether or not legal entities,
and governments and agencies and political subdivisions
thereof.
1.1.5 For purposes of this Agreement, the "knowledge" of
a Person shall mean the actual knowledge of such
Person's officers, senior executives, managing
partners, general partners, majority shareholders, key
employees or their equivalents.
1.2 AGREEMENT TO PURCHASE AND SELL. Subject to the terms and
conditions of this Agreement, at the Closing (as hereinafter defined), each
Seller shall sell, transfer and convey to the Partnership, and the
Partnership shall purchase and accept from the Sellers, all of the Sellers'
right, title and interest in and to the Properties identified on SCHEDULE
1.2, excluding items of movable personal property attached to such Properties
that relate to the business conducted on such Properties and may readily be
removed from such Properties without material damage whether or not such
items are "fixtures," ("Excluded Personal Property").
1.3 ENCUMBRANCES. The Partnership shall acquire each Property
free and clear of all liabilities, obligations and commitments of Sellers and
free and clear of all liens, options, adverse claims and encumbrances other
than Permitted Exceptions.
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1.4 PURCHASE PRICE. On the terms and subject to the conditions
of this Agreement, at the Closing Sellers shall sell, transfer, convey,
assign and deliver to the Partnership, and the Partnership shall purchase and
accept from Sellers all the right, title and interest of Sellers to and under
the Properties for an aggregate purchase price (the "Aggregate Purchase
Price") in an amount equal to:
(i) THIRTY FIVE MILLION THREE HUNDRED THOUSAND U.S. Dollars
($35,300,000)
MINUS
(ii) the amount of the Mortgage Debt as of the Closing Date.
The Aggregate Purchase Price will be adjusted pursuant to Sections 3.3,
5.2.1(k), 5.2.1(l), 6.1, 6.2, 10.3 as applicable.
1.5 CAPITALIZED TERMS. Capitalized terms used in this Agreement
that are not otherwise defined herein shall have the meanings required by
context.
2. OPERATION OF PROPERTY THROUGH CLOSING
Through the Closing Date:
1.1 BUSINESS PRACTICE. Except as otherwise provided in this
Article 2, the Sellers shall continue, or shall cause any Affiliate, tenant,
or third party managing, maintaining or occupying, as the case may be, any of
the Properties (referred to herein individually as a "Prior Occupant" and
collectively as the "Prior Occupants") to continue, to manage, to maintain
and to operate the Properties in accordance with sound and prudent business
practices and keep the Properties and the tangible personal property thereon
in good condition and repair, ordinary wear and tear excepted. The Sellers
shall instruct such Prior Occupant not to make any material change in its
management, maintenance or operation of the Properties or in its normal and
customary other practices. The Prior Occupants are identified on SCHEDULE
2.1 to this Agreement.
2.2 NO SALE OR ENCUMBRANCE. None of the Sellers shall sell,
mortgage, pledge, hypothecate or otherwise transfer or dispose of all, or any
part of any Property or any interest therein, nor shall any Seller initiate,
consent to, approve or otherwise take any action with respect to zoning or
any other governmental rules or regulations presently applicable to all or
any part of any Property, nor shall any Seller (other than Cross-Continent
Auto Retailers, Inc.) permit any new limited or general partners,
shareholders or members to be admitted to any Seller.
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2.3 LEASES, SERVICE CONTRACTS AND MANAGEMENT CONTRACTS. Except as
provided in Section 2.4, the Sellers shall not, nor shall they cause or
permit any Prior Occupant to, terminate, modify, extend, amend or renew any
Lease (as defined in Section 4.1.3 hereof), Service Contract (as defined in
Section 7.17 hereof), or Management Contract (as defined in Section 7.17
hereof) or enter into any new Lease (other than the Company Lease pursuant to
Section 2.4 of this Agreement) or Service Contract without the prior written
consent of the Company or the Partnership; provided, however, that the
failure of the Company or the Partnership to object to any such action within
fifteen (15) days after written notice to it by Seller shall be deemed to
reflect the Company's or the Partnership's consent thereto. Notwithstanding
the foregoing, all Service Contracts and Management Contracts relating to the
respective Properties shall remain in effect after the Closing Date, except
for those Service Contracts and Management Contracts that the Partnership
requires, in writing, to be terminated as of the Closing Date.
2.4 TERMINATION OF LEASES; NEW COMPANY LEASES. Prior to the
Closing Date, the Sellers shall cause the termination of all Leases. Not
later than five (5) days before the Closing Date (as defined herafter), the
Sellers of each Property, or an Affiliate thereof, shall execute and deliver
to the Partnership an occupancy lease with the Partnership for each of the
Properties substantially in the form attached hereto as EXHIBIT 2.4(a)
(referred to hereafter individually as a "Company Lease" and collectively as
the "Company Leases"), on terms and conditions (including Rent (as defined in
such Company Lease)) acceptable to the Partnership and Sellers. The Base
Annual Rent (as defined in the Company Lease) called for under the Company
Lease for each Property shall be eleven percent (11%) of the Purchase Price
(the "Rate of Return") for such Property. The effective date of such Company
Leases shall be the Closing Date. The Company Leases shall be guaranteed as
reflected on SCHEDULE 2.4(b) using a Guaranty and Subordination Agreement
substantially in the form attached hereto as EXHIBIT 2.4(c).
2.5 COMPLIANCE. None of the Sellers shall knowingly take or fail
to take any action that will cause the Properties to fail to comply with any
federal, state, municipal and other governmental laws, ordinances,
requirements, rules, regulations, notices, codes and orders, or any
agreements, covenants, conditions, easements and restrictions currently in
effect relating to the Properties.
2.6 NOTICE OF INACCURACY OR INCOMPLETENESS. The Sellers shall
promptly give written notice to the Company before Closing of the occurrence
of any event of which Sellers have knowledge and which may adversely affect
the completeness or accuracy of any representation or warranty made or to be
made by Sellers under or pursuant to this Agreement.
2.7 ACCESS. The Sellers shall cause the Company and the
Partnership and its representatives to have reasonable access to the
Properties, subject to the prior rights, if any, of any Prior Occupant;
provided, however, that without the consent of the Seller, the
representatives of the Partnership shall not disclose to any Prior Occupant
the existence of this Agreement or the transactions contemplated hereby.
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2.8 INSURANCE. The Sellers shall cause the existing insurance
coverages on the Properties and the business of the Sellers to be maintained
in full force and effect through the Closing Date.
2.9 FULFILLMENT OF OBLIGATION. To the extent any Seller is
obligated, pursuant to any contract, agreement, covenant, lease, including
any Lease, or other understanding entered into prior to the date hereof with
any Prior Occupant, governmental subdivision or any other third party, to
effect any construction, make any improvements or take any action, the
Sellers shall cause any such construction, improvements and/or action to be
taken, completed and fully paid for by such Seller, at its expense, prior to
the Closing Date. No such obligation shall be unfulfilled, and no liability
for or payment in respect of any such obligation shall be unsatisfied as of
the Closing Date.
2.10 FINANCIAL STATEMENTS AND REPORTS. The Sellers shall
provide to the Company financial statements, agings of accounts receivable,
and other financial, operating or statistical information for each Property
upon any reasonable request of the Company, and the general partner or chief
financial officer, as the case may be, of each Seller shall certify that, to
the best of his or its knowledge, such financial statements and other reports
are true, accurate and complete in all material respects.
2.11 UNDER CONSTRUCTION PROPERTIES. Notwithstanding anything to
the contrary contained in this Agreement, the Partnership and the Company
recognize that the two properties listed in SCHEDULE 1.2 to this Agreement
as Property No. 5 and Property No. 6 (collectively, the "Under Construction
Properties") are presently being improved pursuant to the construction
contracts listed on EXHIBIT 2.11(a) hereto and the plans and specifications
listed on EXHIBIT 2.11(b) hereto. The contracts, plans and specifications so
listed are referred to herein, collectively, as the "Contract Documents."
With respect to the Under Construction Properties, the parties to this
Agreement agree as follows:
2.11.1 The Purchase Price of each such property, as stated in
SCHEDULE 1.2 to this Agreement, is based upon the assumption
that each such property will be conveyed to the Partnership
at the Closing Date identified in Section 5.1 hereto, but in
no event later than the date to which the Sellers and the
Partnership shall agree in writing:
a. with all improvements called for under the Contract
Documents complete in all respects and in conformity
with all requirements of the Contract Documents;
b. free of all liens and claims of any and all persons,
firms, companies, corporations or other entities
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supplying any labor, services, materials, supplies or
other things of value in connection with or in respect
of any construction or other improvement to the Under
Construction Properties or either of them (the
"Construction Service/Material Suppliers"); and
c. with certificates of occupancy and/or other
certificates issued by all appropriate governmental
bodies or agencies attesting to the fact of the
completion of all improvements in conformity with all
building, zoning and other applicable codes or
regulations so as to permit the immediate occupancy of
the improvements for the purposes contemplated by the
Company Lease.
2.11.2 The Seller of the Under Construction Properties agrees
that it will do all things necessary to convey the Under
Construction Properties as contemplated in Section 2.11.1
hereto.
2.11.3 If the Seller of the Under Construction Properties
shall have any dispute with any Construction
Service/Material Supplier referred to in Section 2.11.1.b
above, and that dispute prevents the delivery of the
properties or either of them free of any lien or claim, such
Seller may deliver the property so affected subject to such
lien or claim; provided however that:
a. by such Seller's "bonding off" or posting money with
the Partnership's Title Insurer, such Title Insurer
will "insure over" the lien or claim in question; and
b. such Seller diligently pursues the dispute to its
conclusion.
2.11.4 If for any reason (including the resolution of a
dispute specified in Section 2.11.3 above) the Seller is
required to pay more money (the "Excess") than is specified
in the Contract Documents as they exist on the date of this
Agreement, then if the Partnership determines that the
Excess, when added to the Purchase Price specified in this
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Agreement, results in an aggregate amount not in excess of
fair market value of the property in question, the Purchase
Price specified in this Agreement for the property in
question will be increased by the amount of the Excess and
the Base Annual Rent payable under the applicable Company
Lease will be increased by an amount equal to the amount of
the Excess times the Rate of Return.
2.11.5 The Seller of the Under Development Properties agrees
that nothing in this Section 2.11 shall lessen the Seller's
obligations under other provisions of this Agreement or
lower the requirements with respect to such Properties as
specified therein.
2.11.6 The Partnership, as purchaser of the Under Development
Properties, intends to enter into a separate construction
management agreement (the "CMA") with the Seller of such
Properties (or an Affiliate of such Seller) with respect to
the improvements specified in the Contract Documents. All
parties to this Agreement agree with respect to the CMA:
a. Nothing in the CMA shall affect this Agreement or the
obligations of the Sellers hereunder, or constitute the
acceptance of title to the Properties affected thereby,
or give any rights to any entities specified in Section
2.11.1.b above; and
b. No part of the sums paid to the Seller (or its
Affiliate) under the CMA shall be considered as part of
the Purchase Price of the Under Development Properties
or be included in the calculation of the Base Annual
Rent under the applicable Company Lease.
3. STATUS OF TITLE TO PROPERTY
3.1 STATE OF TITLE. At Closing, the Sellers shall own,
beneficially and of record, good and marketable fee simple title to the
Properties, subject only to the mortgages creating the Mortgage Debt listed
on SCHEDULE 1.2 hereto and those covenants, conditions, restrictions and
other matters affecting title as set forth in the land Title Commitments, UCC
Searches and/or Surveys to be delivered to the Partnership hereunder and
found to be acceptable to the Partnership under Section 3.3 hereto (the
"Scheduled Exceptions"). The Mortgage Debt and Scheduled Exceptions are
referred to collectively herein as the "Permitted Exceptions."
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3.2 PRELIMINARY EVIDENCE OF TITLE. Within no more than 30 days
after the date hereof, the Sellers and the Partnership shall obtain, in a
form acceptable to the Partnership, the following documents to evidence the
condition of the title to each of the Properties:
3.2.1 Commitments (the "Title Commitments") to the
Partnership for ALTA Form B (1987) Owner's Title Insurance
Policies (and for any Properties located within the State of
Texas the standard form of commitment for title insurance
promulgated by the Texas State Board of Insurance)
committing to insure, at standard rates, title to each
Property as being good and marketable (except for Properties
located within the State of Texas, in which case such title
shall be good and indefeasible), subject only to the
Permitted Exceptions, in the amount of the Purchase Price of
each such Property, issued by a title company acceptable to
the Company and the Partnership (the "Title Insurer"). The
Title Commitments shall be effective as of the Closing Date,
and shall reflect that fee simple title is held by the
respective Seller. Each Owner's Title Insurance Policy to
be issued to the Partnership at Closing pursuant to Section
7.2.2 below ("Title Insurance Policies") shall contain (to
the extent available under applicable state law) an extended
coverage endorsement over the general or standard exceptions
which are a part of the printed form of the policy and
subject only to the Permitted Exceptions. If available for a
title insurance policy under applicable laws and regulations
in the state of issuance, , each Title Insurance Policy
shall, in addition, (a) include provisions for co-insurance,
in such amounts of liability acceptable to the Partnership
and the Company; (b) not contain any survey exception, (c)
not contain any exceptions for (i) liens for labor or
material, whether or not of record, (ii) parties in
possession (other than Prior Occupants under the Leases,
solely as such Prior Occupants), (iii) unrecorded easements,
and (iv) taxes and special assessments not shown on the
public records, (d) provide for the following endorsements:
(i) an access endorsement insuring that there is direct and
unencumbered access to the land from all adjacent public
streets and roads, (ii) a survey endorsement insuring that
all foundations in place as of the date of such policy are
within the lot lines and applicable setback lines, that the
improvements do not encroach on adjoining land or any
easements, and that there are no encroachments of
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improvements from adjoining land on any or the Properties or
any part thereof, (iii) an ALTA Form 3.1 zoning endorsement
insuring that the Properties are zoned for the buildings and
the operation thereof as contemplated by the terms and
provisions of this Agreement, (iv) a non-imputation
endorsement, by which the Title Insurer waives any defense
based upon knowledge of any person or entity (other than the
knowledge of the Partnership or its designees), (v) a
statement that each Property constitutes a separate lot of
record and is separately assessed for real estate tax
purposes, (vi) an endorsement commonly referred to as a
"Fairway endorsement," providing among other things, that
the Title Insurer waives any defense based on a dissolution
or termination of the insured partnership or the formation
of a new partnership solely by reason of one or more
transfers of all or any part of the partnership interests of
any one or more of the general partners of the insured to
the Company or the Partnership and/or any one or more of the
limited partners of the insured, and/or the transfer of any
one or more of the limited partner's interests to the
current general partner, the Company or the Partnership, and
(vii) such other endorsements as the Partnership and the
Company may reasonably require.
3.2.2 Written results of searches reflecting any liens,
judgements, tax liens, bankruptcies, and open dockets (the
"UCC Searches"), conducted by a company reasonably
acceptable to the Partnership. The UCC Searches shall name
each Seller, Prior Occupant, and Property, and shall search
the appropriate land records and central filing office for
Uniform Commercial Code financing statements.
3.2.3 Legible copies of all documents of record referred
to in any Title Commitment or disclosed by the UCC Searches,
and all other documents evidencing or, to the extent in the
possession or control of the Sellers, relating to, matters
reflected in any Title Commitment or the UCC Searches.
3.2.4 Current ALTA/ACSM land title surveys (if available
in the jurisdiction or their equivalent if not available in
such jurisdiction) of each of the Properties (the "Surveys")
dated on or after the date of this Agreement, certified to
the Partnership and the Title Insurer (and such other
persons or entities as the Partnership may designate) by a
surveyor
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registered in the State where the Property is located. Each
Survey shall be in form and substance acceptable to the
Partnership and the Title Insurer, provided that the
Partnership shall accept a recertified Survey on any
Property if the Survey conforms with ALTA/ACSM standards
and is acceptable to the Title Insurer.
3.3 TITLE DEFECTS. The Partnership shall have the right to
review the Title Commitments, UCC Searches or Surveys (or any revision or
update of any of them) and to require the Seller to remove, correct, and cure
any defects in the title or other such matters relating to the title that the
Partnership determines, in its sole discretion, are unacceptable. The
Partnership shall notify the Sellers in writing within ten (10) business days
after the Partnership receives the Title Commitments, UCC Searches or
Surveys, as the case may be, of any such defects or matters that the
Partnership finds to be unacceptable, and, within sixty (60) days from the
receipt of notice, such Sellers shall, (i) as to any such exception or other
matter of a nonmonetary nature, use reasonable efforts to remove, correct and
cure such defects or such other matters, and (ii) as to any such defect or
other matter of a monetary nature, cause such lien or encumbrance or other
matter to be discharged and released, in each case to the reasonable
satisfaction of the Partnership. If such Seller fails to remove, correct and
cure such defects or such other matters, the Partnership may, at its option
and as its exclusive remedy, (x) terminate this Agreement, in which event
this Agreement, without further action of the parties, shall become null and
void and neither party shall have any further rights or obligations under
this Agreement, (y) terminate this Agreement with respect to such Property
and reduce the Aggregate Purchase Price by the Purchase Price for such
Property with respect to which the Seller fails to correct and cure such
defects or other such matters, or (z) elect to accept title to such Property
and discharge or release any liens, encumbrances or other matters of a
monetary nature and reduce the Aggregate Purchase Price by the amount
necessary to correct or cure such monetary liens, encumbrances or other
matters. If the Partnership fails to make any such election, the Partnership
shall be deemed to have elected the option contained in clause (y).
4. CLOSING PRORATIONS AND ADJUSTMENTS
4.1 PRORATIONS AND ADJUSTMENTS. All prorations and adjustments
(the "Prorations") with respect to each Property, for the period up to and
through the Closing Date, shall be the responsibility of or belong to the
Sellers and all Prorations for the period after the Closing Date shall be the
responsibility of or belong to the tenant under the applicable Company Lease.
The Company and the Partnership shall have no responsibility for, and will
receive no benefit from, the Prorations, and the Seller shall have liability
for such Prorations. Such Prorations shall include, but not be limited to,
the following:
4.1.1 real estate and personal property taxes and
assessments;
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4.1.2 common area maintenance fees and reimbursements
for prior years property taxes payable by Prior Occupants;
4.1.3 the rent payable by Prior Occupants under leases
in effect immediately prior to the Closing Date (the
"Leases") as set forth on SCHEDULE 2.1 hereto;
4.1.4 the full amount of security deposits paid under
the Leases, together with interest thereon if required by
law or otherwise;
4.1.5 water, electric, telephone and all other utility
and fuel charges (those that are meter read will be read by
the appropriate utility and service transferred as of the
Closing Date);
4.1.6 amounts due and prepayments under the Service
Contracts;
4.1.7 assignable license and permit fees;
4.1.8 other expenses of operation and similar items; and
4.1.9 all or any other disbursements, payments, and
obligations relating to the Property.
4.1.10 notwithstanding the foregoing, any refunds of real
or personal property taxes for tax years beginning prior to
the Closing Date shall belong to Sellers, and if paid to the
Partnership shall be promptly refunded by the Partnership to
Sellers in cash.
4.1.11 with respect to Mortgage Debt, at the time of
Closing, all obligations accrued up to the Closing Date,
whether the same shall constitute principal, interest, or
other payments, shall be paid by the Seller by way of a
reduction to the Purchase Price for each Property in the
amount of such obligations according to Section 1.4 hereof.
5. CLOSING
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5.1 CLOSING DATE. Provided that all conditions to closing have
been satisfied or waived, the Closing of the transactions contemplated by
this Agreement (each of the following being a "Closing") for (i) the
acquisition of the Properties other than the Under Construction Properties
shall occur on February 15, 1998, or such other time or place following the
closing of the initial public offering of Initial Shares of the Company
pursuant to the Registration Statement as the Sellers and the Partnership
shall agree in writing, and for (ii) the acquisition of the Under
Construction Properties shall occur within fifteen (15) business days of the
completion of construction under the Contract Documents, or at such other
time and place as the Sellers and the Company shall agree in writing. The
Closing shall occur at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇, at 10:00 a.m. on the scheduled date
of the Closing (the "Closing Date"). Notwithstanding the foregoing, the
Partnership may reschedule the Closing Date (x) until ten (10) business days
following the completion of any Seller's cure of any title defects pursuant
to Section 3.3 hereto, and (y) up to an additional thirty (30) days if the
Closing Date under this Agreement would conflict with the timing and
completion of any other closing under any other agreement entered into by the
Partnership to acquire properties.
5.2 CLOSING DOCUMENTS
5.2.1 SELLERS. Not later than five (5) business days
prior to the Closing Date, the Sellers shall deliver to the
Company and the Partnership, to be held in escrow pending
closing, the following:
a. special warranty deeds and assignments for the
Properties;
b. executed copies of all Company Leases, effective at
Closing;
c. any affidavits, certificates and other documents
(including without limitation non-imputation affidavits
and/or certificates) that are reasonably necessary for
the Title Insurer to issue the Owner's Title Insurance
Policies in the form and condition required by this
Agreement;
d. evidence satisfactory to the Partnership that all
mortgages and other indebtedness secured by the
Properties that are not being specifically assumed or
paid off by the Partnership on the Closing Date have
been paid in full;
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e. for each Seller that is a corporation, a corporate
resolution authorizing the transactions contemplated by
this Agreement, a certificate of good standing, a
certified copy of its articles or certificate of
incorporation and bylaws, and a certificate of
incumbency certifying the titles and signatures of the
corporate officers authorized to consummate the
transactions contemplated hereunder on behalf of Seller
and such other evidence of such Seller's power and
authority as the Company or Partnership reasonably
requests;
f. for each Seller that is a partnership or a limited
liability company, a partnership resolution authorizing
the transactions contemplated by this Agreement, a
certificate of good standing, a certified copy of the
partnership or operating agreement governing such
Seller, and a certificate of incumbency certifying the
titles and signatures of the general partners or
members authorized to consummate the transactions
contemplated hereunder on behalf of such Seller and
such other evidence of power and authority of such
Seller as the Company or Partnership reasonably
requests;
g. for each Seller, an affidavit stating, under penalty of
perjury, its U.S. taxpayer identification number and
that it is not a foreign person within the meaning of
Section 1445 of the Internal Revenue Code of 1986, as
amended (the "Code");
h. agreements from each Prior Occupant who leases any
Property terminating its Leases with Sellers and an
estoppel certificate from such Prior Occupant stating
that it has no claims under the Lease;
i. all of the original Leases, and copies, certified and
warranted by Seller to be correct and accurate in all
respects to the best of each Seller's knowledge, of any
written Service Contracts and Management Contracts and
any and all building plans, surveys, site plans,
engineering plans and studies, utility plans,
landscaping plans, development plans,
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specifications drawings, marketing artwork,
construction drawings, soil tests, complete warranty
book including all contractors and subcontractors and
other documentation concerning all or any part of each
Property to the extent that any of the foregoing
documents are in the possession or control of Sellers;
j. any bonds, warranties or guaranties which are in any
way applicable to any Property or any part thereof to
the extent any of the foregoing are in the possession
or control of Sellers;
k. If the Company or Partnership shall so request, each
Seller shall deliver to the Company a letter (an
"Estoppel Letter") in a form acceptable to the Company,
dated not more than thirty (30) days prior to the
Closing Date, from each Prior Occupant under each
Lease. The Estoppel Letter shall be fully completed in
a manner reasonably satisfactory to the Company, and
with no modifications other than those reasonably
acceptable to the Company. In the event Estoppel
Letters in form and content reasonably satisfactory to
the Company are not received by the Company and the
Partnership within the time prescribed herein, then the
Partnership and the Company, at their option and as a
non-exclusive remedy, upon notice to the Sellers, may
immediately terminate this Agreement, or may terminate
this Agreement with respect to the relevant Property,
in which case the Aggregate Purchase Price shall be
reduced by the Purchase Price of such Property.
l. [Intentionally Omitted]
m. an opinion of Seller's counsel substantially in the
form attached hereto as EXHIBIT 5.2.1(m); and
n. all other documents reasonably required by the
Partnership or the Company in connection with the
transactions contemplated by this Agreement.
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5.2.2 PARTNERSHIP. At the Closing, the Partnership shall
deliver the following:
a. an executed counterpart of the Partnership Agreement
executed by the Company, as the General Partner of the
Partnership;
b. for the Company, a resolution of its Board of Trustees
authorizing the transactions contemplated hereby and a
certificate of good standing from the State Department
of Assessments and Taxation of the State of Maryland;
c. for the Partnership, evidence of the Partnership's
authorization of the transactions contemplated hereby
and a certified copy of the Partnership Agreement and a
Certificate of Limited Partnership certified by the
Secretary of State of Delaware; and
d. an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, substantially
in the form attached hereto as EXHIBIT 5.2.2(d).
5.3 CONDITIONS TO THE PARTNERSHIP'S OBLIGATION TO CLOSE. At the
option of the Partnership, the obligations of the Company and the Partnership
under this Agreement are subject to the satisfaction of the following
conditions (unless explicitly waived in writing):
5.3.1 Each Seller shall have terminated such existing
Management Contracts that Partnership has required, in
writing, to be terminated prior to the Closing Date.
5.3.2 Each Seller shall have terminated all Leases prior
to the Closing Date.
5.3.3 Each Seller shall have terminated such existing
Service Contracts that the Partnership has required, in
writing, to be terminated prior to the Closing Date.
5.3.4 Each and every representation and warranty of the
Sellers contained in this Agreement is true, correct and
complete in all material respects as of the date hereof and
at all times through the Closing Date.
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5.3.5 The Sellers shall have fully performed and
satisfied each and every material obligation, term and
condition to be performed and satisfied by them under this
Agreement.
5.3.6 All consents, authorizations, certificates,
Estoppel Letters, and approvals required to be obtained by
the Sellers in connection with the Agreement shall have been
obtained, including but not limited to all consents,
approvals and authorizations (without any conditions or
requirements) required to be obtained under any Mortgage,
deed of trust or other instrument relating to any of the
Properties or pursuant to which any of the Sellers are bound
in order to complete the transactions contemplated under
this Agreement.
5.3.7 The Company shall have completed the Company's
initial public offering.
5.3.8 The Sellers shall have paid in full, other than
the Mortgage Debt, which shall be paid off at Closing with
purchase proceeds, all indebtedness secured by the
Properties as required by the Company and Partnership and
shall have provided the Company and Partnership with
satisfactory evidence thereof, and to the extent that such
Mortgage Debt is to be paid off following Closing, the
mortgagee shall deliver pay-off letters to the Company and
the Partnership no later than five (5) days prior to the
Closing Date.
5.3.9 The condition of the Property shall not have
materially changed.
5.3.10 The Partnership shall have received an Owner's
Title Insurance Policy (or marked-up commitment therefor)
for each Property insuring fee simple title to such Property
in the amount of the Purchase Price of such Property subject
only to Permitted Exceptions, and otherwise in the form and
condition required by this Agreement;
5.3.11 If the Sellers do not deliver completed SCHEDULES
to the Company and Partnership at the time of the execution
of this Agreement, the Sellers shall deliver to the Company
and Partnership, in substantially completed form, all
SCHEDULES required by this Agreement within fifteen (15)
business days after the date of the execution of this
Agreement.
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5.3.12 The Sellers shall have delivered to the Company
all closing documents required by Section 5.2.1 hereof.
5.3.13 The Partnership shall enter into a Company Lease
for each Property with each Seller or Seller's Affiliate.
5.3.14 Quality Nissan, Inc. shall have exercised its
option to and shall have closed the acquisition (in fee
simple title) of the parcel of the Quality Nissan, Inc.
Property currently subject to the ground lease by and
between Quality Nissan, Inc. (tenant) and ▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Trust,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(landlords) dated March 1, 1994.
5.4 CONDITIONS TO THE SELLER'S OBLIGATION TO CLOSE. The obligations
of the Seller under this Agreement are subject to the satisfaction of the
following conditions (unless explicitly waived in writing):
5.4.1 Each of the representations and warranties of the
Partnership contained in this Agreement is true, correct and
complete as of the date hereof and at all times through the
Closing Date.
5.4.2 The Partnership and the Company shall have fully
performed and satisfied each and every obligation, term and
condition to be performed and satisfied by them under this
Agreement.
5.4.3 The Company shall have completed its initial
public offering pursuant to the Registration Statement.
5.4.4 All consents, authorizations and approvals
required to have been obtained by the Company and the
Partnership in connection with this Agreement shall have
been obtained.
5.4.5 The Sellers shall have obtained approvals to the
purchase and sale of the Properties under this Agreement, if
any are required, from any third party, including (i)
franchisors under the franchise agreements between any
Seller and any automobile manufacturer (the "Franchise
Agreements") and (ii) Texas Commerce Bank, N.A.
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("TCB"), under the revolving credit agreement dated June 26,
1997, by and between Cross-Continent Auto Retailers, Inc.
and TCB.
5.4.6 The Sellers and the Partnership shall have entered
into the CMA referred to in Section 2.11.6 hereof.
5.4.7 The Partnership shall enter into a Company Lease
for each Property with each Seller or Seller's Affiliate.
5.5 TRANSACTION COSTS.
5.5.1 The Sellers shall pay all costs (including, but not
limited to, any recordation and transfer taxes, surveys,
title insurance (including all special endorsements (except
that the Company or the Partnership shall pay for the survey
endorsement, if requested pursuant to Section 3.2.1(d)(ii)
hereof, for each of such Properties located within the State
of Texas, and the Company or Partnership shall pay for the
zoning endorsement and the survey endorsement, if requested,
for the Property located in Colorado)), searches made
pursuant to Section 3.2.2 hereof, fees and expenses of going
to record) in connection with the transfer by the Sellers of
the Properties (collectively referred to as the "Closing
Costs"). The Company and the Partnership shall bear the
cost of their due diligence activities.
5.5.2 The Sellers shall pay all prepayment penalties,
premiums, lender's consent fees or other such charges
("Consent Fees") imposed in connection with the transactions
contemplated hereby.
5.5.3 Except as specified above and elsewhere in this
Agreement, each party shall bear and pay its expenses in
connection with this Agreement and the transactions
contemplated herein, including the fees of their respective
professional advisors.
6. CASUALTY LOSS AND CONDEMNATION
6.1 CASUALTY. Prior to Closing, all risk of loss shall belong to
the Sellers. If, prior to Closing, the Properties or any part thereof shall
be destroyed or materially damaged by fire or other casualty, the Seller of
such Property shall repair such damage prior to Closing to the
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reasonable satisfaction of the Partnership, at no cost or expense to the
Company or the Partnership, in which event the proceeds of any insurance
applicable thereto shall be paid to the Seller. Seller shall, at Closing and
thereafter, execute and deliver to the Partnership all required proofs of
loss, assignments of claims and other similar items. Notwithstanding
anything herein to the contrary, in the event such loss or casualty shall
constitute a total or substantial loss or casualty or, in the opinion of the
Company, in its reasonable discretion, shall render the Property unsuitable
for its intended purpose for a period of one hundred twenty (120) days or
longer, then the Company and the Partnership, at their option, may terminate
this Agreement with respect to such Property upon notice to the Seller, and
reduce the Aggregate Purchase Price by the Purchase Price of such Property.
6.2 CONDEMNATION OR TAKING. If, prior to Closing, any Property or
any part thereof shall be condemned or taken and such condemnation or taking
materially interferes with the existing business use of the Property, the
Company and the Partnership may (i) terminate this Agreement either as to all
the Properties or solely as to such Property, in the discretion of the
Partnership and the Company, or (ii) complete the transactions contemplated
by this Agreement notwithstanding such condemnation. If the Company and the
Partnership elect to complete the transactions contemplated hereby, the
Partnership shall be entitled to receive the condemnation proceeds and the
appropriate Seller shall, at Closing and thereafter, execute and deliver to
the Partnership and the Company all required assignments of claims and other
similar items. If the Partnership and the Company elect to terminate this
Agreement, then upon written notice to the Sellers and without further action
of the parties, this Agreement shall become null and void and no party shall
have any rights or obligations under this Agreement. If the Partnership and
the Company elect to terminate this Agreement solely with respect to the
affected Property, the Aggregate Purchase Price shall be reduced by the
Purchase Price of such Property.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, jointly and severally, represent and warrant to the
Company and the Partnership that, except as described on the SCHEDULES
attached hereto and incorporated by reference herein, the following are true,
complete and correct as of the date of this Agreement and as of the Closing
Date:
7.1 ORGANIZATION. Each Seller is duly organized and validly
existing and in good standing under the laws of the state of its
organization, and has all requisite power and authority to own or lease and
operate its properties (including the Properties) and assets and conduct its
business in the manner in which they are being owned or leased and operated
and conducted, as the case may be. Each Seller is duly qualified and
authorized and is in good standing in all jurisdictions where its ownership,
lease or operation of assets and properties (including the Properties) or the
conduct of its business requires such qualification or authorization.
7.2 AUTHORITY. The execution and delivery of this Agreement
and all agreements, documents and instruments contemplated hereby and the
performance of all transactions
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contemplated herein or therein, have been duly and validly authorized by all
requisite partnership, corporate or trust action, as the case may be, and by
the requisite general partners, the board of directors, stockholders, or
trustees of each Seller, as the case may be. This Agreement and the
agreements, documents and instruments executed and delivered in connection
herewith constitute the legal, valid and binding obligations of the Sellers,
enforceable in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and sale and purchase under or
contemplated by this Agreement or such other agreements may be limited by
federal or state securities laws or public policy relating thereto. To the
knowledge of the Sellers, none of the Sellers are required to obtain any
consent, authorization, approval or waiver from any governmental agency or
authority or from any third party in connection with the execution and
delivery of, and the performance of the obligations to be performed under,
this Agreement and the documents and instruments executed and delivered in
connection herewith, or if any of the foregoing is required, it has been
obtained; except for any approval of a holder of the Mortgage Debt, of TCB
under the revolving credit agreement, or of a franchisor under any Franchise
Agreement, which approval Seller shall use its best efforts to obtain prior
to Closing.
7.3 INTEREST IN CONTRIBUTED PROPERTIES. Each Seller is the
record and beneficial owner of, and has good and marketable and insurable fee
simple title (except with respect to that portion of the Quality Nissan, Inc.
Property in Amarillo, Texas which is currently subject to a ground lease by
and between Quality Nissan, Inc. (tenant) and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Trust, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (landlords) dated March 1, 1994, which parcel
is to be acquired in fee simple title by Quality Nissan, Inc. from such
landlords prior to the Closing Date hereof) to, the interests in the
Properties set forth opposite such Seller's name on SCHEDULE 1.2, free and
clear of all liens, options, adverse claims or encumbrances, except the
Permitted Exceptions, and SCHEDULE 1.2 is true, accurate and complete in all
material respects as to each seller. Between the date hereof and the Closing
Date, no liens, claims or encumbrances will be created or permitted to be
created on any Property other than the Permitted Exceptions. Prior to or at
the Closing all monetary encumbrances on any Property, other than the
Permitted Exceptions, shall be duly canceled, removed and discharged of
record, and proof thereof satisfactory to the Title Insurer, the Company and
the Partnership shall be delivered to the Company and the Partnership.
Except for Prior Occupants, there are no parties in possession of any part
of the Properties as of the Closing Date, and there are no other rights of
possession, or agreements providing for the sale, assignment or transfer of
title to any Property or portion thereof (other than this Agreement), which
have been granted to any third parties. Such Seller has the full power,
capacity and authority to sell, transfer and assign the legal and equitable
ownership of his/her or its interest to the Partnership as provided in this
Agreement, and the Sellers have not entered into any agreement and have no
knowledge of any agreement or understanding to issue any additional interests
in any Seller (other than Cross-Continent Auto-Retailers, Inc.) to any other
person or entity.
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7.4 NO DEFAULTS. No Seller, or party thereto, is in default of
any of its material obligations under any agreement, franchise, license,
contract, deed, mortgage, lease, instrument, certificate, affidavit or
covenant affecting title to the Properties, whether or not listed on SCHEDULE
7.17(a) hereto; (b) no Seller, or party thereto, is in material default or
breach under any Service Contract; (c) no Seller, or party thereto, is in
material default or breach under any Management Contract; and (d) except as
disclosed on Schedule 7.5, there are no judgments, orders, decrees or
settlement agreements to which any Seller is a party or by which any Property
is bound or will be bound after the Closing.
7.5 NO LITIGATION; NO CONDEMNATION. Except as set out on
SCHEDULE 7.5, there are no actions, suits, proceedings or claims pending, or
to the knowledge of any Seller, threatened or contemplated, with respect to
or in any manner affecting the Properties, or any Seller's interest therein;
or the ability of any Sellers to complete the transactions contemplated by
this Agreement or which could prevent any Seller from satisfying its
obligations under this Agreement. No Seller has received notice of any
pending or threatened condemnation or similar proceedings or special
assessments affecting the Properties, or any part thereof.
7.6 NO VIOLATION. Except for the required approval of the
holder of the Mortgage Debt, TCB under the revolving credit agreement, and
the respective franchisor of each Seller to any Seller's performance under
this Agreement, the execution and delivery of this Agreement and the
agreements, documents and instruments executed and delivered in connection
herewith, the consummation of the transactions contemplated hereby or
thereby, and the operation of any Property shall not: (a) conflict with, or
result in a breach of, the terms, conditions or provisions of, or constitute
a default under, any agreement, contract, mortgage, deed, lease, license,
franchise or instrument to which any Seller is a party or is subject or to
which any Property is subject; (b) to Sellers' knowledge, violate any
agreement, contract, mortgage, deed, lease, license, franchise, restriction,
easement, restrictive covenant, or instrument to which any Seller or any
Property is subject; (c) to Sellers' knowledge, constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order; (d) with respect to each Seller that is an entity,
violate any provision of its charter, bylaws or other organizational
document; (e) except as to any indebtedness in respect of which the consent
of the lender shall have been obtained prior to the Closing Date, result in
the acceleration of any indebtedness or any encumbrance pertaining to any
Seller or any Property, or the cancellation of any contract, agreement,
franchise, license, instrument or lease pertaining to any Property (other
than as specifically requested by the Company or the Partnership pursuant to
this Agreement); except that, if any Seller discovers during the Due
Diligence period that an approval to Seller's execution, delivery, or
performance of this Agreement is required from any third party, such Seller
shall have a period of fifteen (15) business days or until five (5) days
before the Closing Date, which ever period is shorter, to obtain such
approval; or (f) except as to any Permitted Exceptions, result in the
creation of any lien, encumbrance or security interest upon any Property.
Except as set out on SCHEDULE 7.5, none of the Sellers have received any
written notice of any violation (both as to condition of the Property and
use) of any applicable laws, statutes, ordinances, codes (including, but not
limited to, zoning,
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building, subdivision, pollution, environmental protection, water disposal,
health, fire and safety engineering codes, and laws and regulations with
respect to the submetering of any utilities serving any Property), and the
rules and regulations of, by governmental authority having jurisdiction over
the Properties.
7.7 REQUIRED OBLIGATIONS. The Sellers have paid and performed
all material obligations relating to the Properties required to have been
paid or performed prior to the date hereof and prior to the Closing Date,
including but not limited to all principal installments, interest payments,
taxes, penalties and other charges in connection with all indebtedness
relating to or secured by any of the Properties or an interest in any of the
Properties.
7.8 CONDITION OF PROPERTIES. No Seller has been notified that
the structural, mechanical, electrical, plumbing, roofing and other major
systems on any Property and items of equipment and components located
thereon, require to be replaced or are in need of material repair.
7.9 WARRANTIES. The Sellers have not released or modified any
warranties of builders, contractors, manufacturers or other tradespersons
that have been given to any Seller without the consent of the Company or the
Partnership.
7.10 UTILITIES. Usable sanitary and storm sewers and public
water, and electrical utilities (collectively, the "Utilities") of adequate
capacity required for the operation of the Properties, are installed in, and
are duly connected to, the Properties and can be used without any charge
except the normal user charges for sanitary sewers and the normal and usual
charges imposed for public water, gas and electric utilities.
7.11 ZONING. Each Property is currently located in the areas
zoned for its current use which classification permits the development, use
and operation of the improvements on such Property as such improvements
currently are being used without special exception or permit. The Sellers
have no knowledge of any threat of, and have not received written notice of,
any proceeding to change adversely or down-zone the existing zoning
classification as to any portion of any Property.
7.12 IMPROVEMENTS. To Sellers' knowledge, all improvements on
the Properties have been constructed in accordance with, and substantially
comply with, all requirements of all applicable laws, ordinances, regulations
and orders, including without limitation applicable zoning, building and fire
safety codes and all restrictive covenants, if any, and other easements,
encumbrances or agreements affecting title to any Properties or improvements.
For purposes of this Section 7.12, "substantially" means that Sellers shall
not be permitted to engage in even de minimis non-compliance with applicable
laws, ordinance, regulations and orders if such de minimis non-compliance
could result in any governmental, administrative or other authority executing
any penalty, fine, remedy or other disciplinary action against such Seller or
such Seller's Business (as defined in the Company Lease).
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7.13 ENVIRONMENTAL MATTERS.
7.13.1 For purposes of this Agreement:
a. "Environmental Claim" means any claim, action, cause of
action, investigation, or notice (written or oral) by
any person or entity alleging potential liability
(including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental
response costs, natural resource damages, property
damages, personal injuries, or civil or criminal
penalties) arising out of or resulting from (i) the
actual or alleged presence or release into the
environment of any Substance of Concern at any
location, whether or not owned or operated by the
Seller, or (ii) circumstances forming the basis of any
actual or alleged violation of any Environmental Law.
b. "Environmental Laws" means all federal, state, local,
and foreign laws and regulations relating to pollution
or protection of human health or the environment
(including, without limitation, ambient air, surface
water, ground water, wetlands, land surface, subsurface
strata, and indoor and outdoor workplace), including,
without limitation, (i) laws and regulations relating
to emissions, discharges, releases, or threatened
releases of Substances of Concern, and (ii) common law
principles of tort liability.
c. "Substances of Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous
substances, radioactive materials or genetically
modified organisms, which are, have been or become
regulated by any federal, state or local government
authority including, without limitation, (i) petroleum
or any fraction thereof, (ii) asbestos, (iii) any
substance or material defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act
(42 U.S.C. Section
-23-
9601), or (iv) any substance or material defined as
a "hazardous chemical" pursuant to the federal Hazard
Communication Standard (29 C.F.R. Section 1910.1200).
7.13.2 To the Sellers' knowledge, each Seller and
Property are in full compliance with all applicable
Environmental Laws, which compliance includes, but is not
limited to, possession by each Seller of all permits and
other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and
conditions thereof. No Seller has received any
communication (written or oral), whether from a governmental
authority, citizens group, employee or otherwise, that
alleges that such Seller or Property is not in full
compliance with the Environmental Laws, and, to the Sellers'
best knowledge after due inquiry, there are no circumstances
that may prevent or interfere with such full compliance in
the future.
7.13.3 There is no Environmental Claim pending (or to any
Sellers' knowledge threatened) against any Seller or, to
each Seller's best knowledge after due inquiry, against any
person or entity whose liability for any Environmental Claim
any Seller has retained or assumed either contractually or
by operation of law.
7.13.4 To the Sellers' knowledge, there are no past or
present actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the
release, emission, discharge, presence, or disposal of any
Substance of Concern, at or relating to any of the
Properties that could form the basis of any Environmental
Claim against any Seller or, to each Seller's best knowledge
after due inquiry, against any person or entity whose
liability for any Environmental Claim any Seller has
retained or assumed either contractually or by operation of
law.
7.13.5 Without in any way limiting the generality of the
foregoing, to the best of any Seller's knowledge, (a) all
on-site and off-site locations where any Seller has treated,
disposed, or arranged for the disposal of Substances of
Concern or stored hazardous wastes (as defined under the
Resource
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Conservation and Recovery Act or analogous state
laws) are identified in SCHEDULE 7.13.5(a); (b) no Property
has any underground or aboveground storage tanks, whether or
not currently in use, and, no underground or above ground
storage tank that has been removed from any Property has
leaked; (c) there is no asbestos contained in or forming
part of any building, building component, structure or
office space on any Property; (d) no polychlorinated
biphenyls (PCBs) are used or stored on any Property; (e) the
Sellers have previously provided to the Company copies of
all environmental audit reports, Phase I and Phase II
investigation reports, technical reports regarding
environmental sampling results, and similar environmental
reports in the possession of the Sellers or their
contractors or agents relating to any Property; and (f) all
permits and other governmental authorizations currently held
by any Seller for any Property pursuant to the Environmental
Laws are identified in SCHEDULE 7.13.5(f).
7.14 INSURANCE. SCHEDULE 7.14 contains a complete and correct
description of all policies of insurance presently maintained by the Sellers
with respect to all Properties and the operations thereof. To the knowledge
of the Sellers, each Seller and Property is in compliance with the
requirements of each such policy, there is no violation of any of the
provisions thereof, and each such policy is in full force and effect. No
Seller has received from any insurance company which carries underwriters
insurance on any Property, or any Board of Fire Underwriters, any notice of
any defect or inadequacy in connection with any Property or its operation
which, since the date of such notice, has not been corrected.
7.15 COMPLIANCE. To each Seller's knowledge, each Seller has
complied in all material respects with all laws, ordinances, rules,
regulations and orders of all governmental authorities applicable to the
ownership, management, operation, construction, maintenance and repair of any
Property.
7.16 LEASES.
7.16.1 Copies of all Leases for each of the Properties
and all parts thereof, as amended through the date hereof
have been made available to the Company and the Partnership;
such copies are and shall be, in all material respects,
true, accurate and complete records of all agreements and
understandings with respect to the use or lease of all or
any portion of any of the Properties or otherwise
constituting Leases that are currently outstanding including
all amendments and modifications thereto.
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7.16.2 SCHEDULE 2.1 contains a true, complete and correct
list of all current Leases for the Properties or any part
thereof.
7.16.3 No Prior Occupant has an option or right of
refusal to purchase any Property or any part thereof.
7.16.4 Except as specified in the Estoppel Letter
approved by the Company and sent to a Prior Occupant, no
Prior Occupant is entitled to any rebate, concession,
deduction or offset.
7.16.5 Except as specified in the Estoppel Letter
approved by the Company and sent to a Prior Occupant, no
Prior Occupant has paid any rent, additional rent or other
charge of any nature for a period of more than thirty (30)
days in advance.
7.16.6 No Prior Occupant has any claim or basis for any
claim for reduction, deduction or set-off against the
landlord or the rent under such Lease.
7.16.7 No Seller or Affiliate has refused to execute and
deliver the Company Lease at Closing, or no Prior Occupant
has refused to vacate its premises or such Property, or
otherwise to cease occupancy of its premises or such
Property.
7.16.8 Except as set forth on SCHEDULE 2.1, the Seller is
the landlord under the Leases.
7.17 SERVICE CONTRACTS; MANAGEMENT CONTRACTS. SCHEDULE 7.17(a)
is a list of all contracts affecting or pertaining to the Properties or
Sellers' Business that have a monetary obligation of at least $25,000 per
year and are not cancellable without penalty by Sellers upon notice of one
year or less, including all employment, union, purchase, service and
maintenance agreements, leasing agreements, listing agreements, equipment
leases, utility contracts, licensing or leasing contracts for personal
property, and any other agreements, contracts, licenses and permits of any
kind affecting or pertaining to the Properties or any part thereof (the
"Service Contracts"), and including a list of all management contracts
relating to the Properties (the "Management Contracts"). There will be no
contract or agreement in effect, between Seller and any third party for the
management or leasing of any Property other than the Management Contracts and
no leasing commission is due and owing. Each of the Service Contracts is in
full force and effect and constitutes the legal, valid and binding obligation
of the respective parties thereto, enforceable in accordance with its terms,
and
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has not been modified, amended or extended. Each of the Management Contracts
is in full force and effect and constitutes the legal, valid and binding
obligation of the respective parties thereto, enforceable in accordance with
its terms, and has not been modified, amended or extended.
7.18 PERMITS. All permits, licenses, inspections and other
approvals from all applicable governmental authorities having jurisdiction
over each Seller and Property that are necessary in connection with the
operation of the use, ownership and operation of each Property as it is
currently used, have been obtained and are in full force and effect.
7.19 OTHER LIABILITIES. Other than the Mortgage Debt, there are
no debts, liabilities or obligations (whether known or unknown, disputed or
undisputed, fixed, contingent or otherwise) associated with or relating to
any of the Properties, or secured by any of the Properties.
7.20 TAX MATTERS. The Sellers or their Designees have relied
solely on their own counsel for advice on any and all federal, state and
local tax matters relating to this Agreement and the transactions
contemplated herein and have not relied on any advice or representations of
the Company, the Partnership, or their counsel with respect to any federal,
state and local tax matters relating to this Agreement or the transactions
contemplated herein.
7.21 TAXES. The Sellers have filed all federal, state and local
tax returns required to be filed by the Sellers. With respect to any periods
prior to the Closing Date, each Seller (i) has no knowledge of any unpaid
taxes that would create a lien on any Property, and (ii) has paid in full all
taxes and assessments payable or is diligently pursing with the appropriate
authority any dispute such Seller has regarding any unpaid taxes or
assessments as of the Closing Date.
7.22 SPECIAL FILINGS. No Seller is required to submit any
notice, report or other filing to any governmental or regulatory authority in
connection with the execution, delivery or performance of this Agreement or
any document or instrument executed and delivered in connection herewith or
the consummation of the transactions contemplated hereby other than the
filing of the tax returns required by the terms of this Agreement and the
filing of an 8-K notice with the Securities and Exchange Commission.
7.23 BOOKS AND RECORDS. The books and records of each Seller
with respect to each Property, all of which have been or will be made
available to the Company and the Partnership, are, and will be at all times
until Closing, complete and correct in all material respects. All of such
books and records shall be made available to the Company for examination
prior to the Closing.
7.24 NO BROKERS. No Seller has dealt with any agent, broker or
other person acting pursuant to express or implied authority of any Seller
(each a "Broker"), and no person or entity is entitled to a commission or
finder's fee in connection with the sale and purchase described by this
Agreement or will be entitled to make any claim against the Company, or the
Partnership for a commission or finder's fee by reason of any Seller having
engaged such Broker.
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7.25 ALL MATERIAL INFORMATION. With respect to all information,
statements, representations and warranties made herein, any agreements or
documents contemplated hereby, any schedules or exhibits hereto, and any
certificates or instruments delivered in connection herewith, the Sellers
hereby represent and warrant that no information, statement, representation
or warranty herein or therein contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in
which made, not misleading; or necessary in order to provide the Partnership
or the Company with true, accurate and complete information. No Seller has
knowledge or information of any facts, circumstances or conditions which do
or could (whether by the passage of time or the giving of notice or both)
materially and adversely affect any Property or the operation or intended use
of the same.
7.26 SURVIVAL OF WARRANTIES, REPRESENTATIONS AND COVENANTS. The
foregoing representations and warranties shall not be affected by any
investigation or verification made by or on behalf of the Company or the
Partnership. The representations, warranties and covenants of Sellers made in
this Agreement shall survive the Closing and consummation of the transactions
contemplated hereby, and shall remain in full force and effect so long as the
Company or the Partnership provides the Sellers with written notice of any
breach, violation or right to indemnification thereunder within a period
ending 24 months from the date of this Agreement, except that in the case of
any claim arising out of the representations or warranties herein relating to
Section 7.13 (Environmental Matters) and Section 7.21 (Taxes), such
representations and warranties shall survive in each case until the
applicable statute of limitations has run. After Closing, neither the
Company nor the Partnership shall prosecute any claim against any Seller for
a breach of the foregoing representations and warranties if the Company or
the Partnership have obtained knowledge of such breach prior to Closing.
8. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PARTNERSHIP
The Partnership and the Company, jointly and severally, represent and
warrant to the Seller that the following are true, complete and correct as of
the date of this Agreement and as of the Closing:
8.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the
Company and the Partnership (i) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has all requisite power and authority to carry on its business and own
or lease and operate its assets and properties in the manner in which it is
being conducted and owned or leased and operated, as the case may be, and
(ii) is duly qualified and authorized to transact business and is in good
standing in all jurisdictions where its ownership, lease or operation of its
properties or assets or the conduct of its business requires such
qualification or authorization.
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8.2 AUTHORIZATION. The execution and delivery of this Agreement
and all agreements, documents and instruments contemplated hereby and the
performance of all transactions contemplated herein or therein, have been
duly and validly authorized by all requisite action by the Company and its
board of trustees; and by all requisite action of the Partnership. This
Agreement and the agreements, documents and instruments executed and
delivered in connection herewith constitute the legal, valid and binding
obligation of each of the Company and the Partnership, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to the
extent that rights to indemnification and sale and purchase under or
contemplated by this Agreement or such other agreements may be limited by
federal or state securities laws or public policy relating thereto. To the
knowledge of the Partnership, the Partnership is not required to obtain any
consent, authorization, approval or waiver from any governmental agency or
authority or from any third party in connection with the execution and
delivery of, and the performance of the obligations to be performed under,
this Agreement and the documents and instruments executed and delivered in
connection herewith, or if any of the foregoing is required, it has been
obtained.
8.3 NO VIOLATION. The execution and delivery of this Agreement
and the agreements, documents and instruments executed and delivered in
connection herewith, the consummation of the transactions hereby or thereby,
and the operation of any Property shall not: (i) conflict with, violate, or
result in a breach of, the terms, conditions or provisions of, or constitute
a default under, any agreement, contract, Mortgage, deed, lease, license,
franchise or instrument to which the Company or the Partnership is a party or
is subject; (ii) constitute a violation of any applicable code, resolution,
law, statute, regulation, ordinance, rule, judgment, decree or order to the
Company or the Partnership; or (iii) violate any provision of the
organizational documents of the Company or the Partnership.
8.4 TAX STATUS. As of the Closing, the Partnership will be
qualified as a partnership for Federal income tax purposes, and the Company
will be qualified as a real estate investment trust organized under the laws
of the State of Maryland.
8.5 NO LITIGATION. Neither the Partnership nor the Company is
involved in any pending or, to its knowledge, threatened litigation that
would materially or adversely effect its operations or financial condition or
the ability to perform under this Agreement or the Partnership Agreement.
8.6 NO BROKERS. Neither the Partnership nor the Company has
dealt with any agent, broker or other person acting pursuant to express or
implied authority of either such party, and no person or entity is entitled
to a commission or finder's fee in connection with the transactions
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contemplated by this Agreement or will be entitled to make any claim against
any Seller for a commission or finder's fee by reason of the Company or the
Partnership having engaged him/her/it.
8.7 SURVIVAL. The representations and warranties of the Company
and the Partnership made in this Section 11 shall survive the Closing and
consummation of the transactions contemplated hereby, and shall remain in
full force and effect so long as the Seller provides the Company or the
Partnership with written notice of any breach, violation or right to
indemnification thereunder within a period ending twenty-four (24) months
from the date of this Agreement. After Closing, the Seller shall not
prosecute any claim against the Company or the Partnership for a breach of
the foregoing representations and warranties if the Seller obtained knowledge
of such breach prior to Closing.
9. COVENANTS
9.1 COVENANTS OF THE COMPANY AND THE PARTNERSHIP. Each of the
Company and the Partnership hereby covenants as follows:
9.1.1 If this Agreement is terminated for any reason,
(a) the Partnership and the Company shall promptly return to
Sellers all materials furnished by Sellers to the
Partnership and the Company pursuant to this Agreement, and
(b) the Partnership and the Company shall promptly restore
the Properties to substantially the same condition in which
they existed immediately before any physical tests conducted
by or on behalf of the Partnership and the Company pursuant
to the purposes of this Agreement.
9.1.2 Prior to the Closing Date, except as may be
required to be disclosed by law (including federal and state
securities laws, and the rules and regulations thereunder),
regulation or legal process, or unless otherwise consented
to in writing by the Sellers, which consent shall not be
unreasonably withheld, the Partnership and the Company shall
keep all information learned by the Partnership and the
Company in connection with the Properties or any operation
thereof confidential.
9.1.3 In connection with inspection of the Properties,
the Partnership and the Company shall not unreasonably
interfere with any Prior Occupants or any Seller's business
operations.
9.1.4 The Partnership shall not sell, repay Mortgage
Debt, finance, refinance or otherwise take any actions that
are
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prohibited with respect to any specified Properties to
the extent described on SCHEDULE 9.1.4. Notwithstanding the
provisions of this Section, the Partnership may (A) at any
time, sell or exchange one or more of the Properties in a
"like kind exchange" under Section 1031 the Code (or any
successor or similar section) in which no gain is recognized
by the Partnership and reasonable provisions are made (such
as by substituted debt) to avoid triggering gain to the
Seller. Notwithstanding the provisions of this Section, the
Company may sell the Properties which relate to the: (1)
closure of the Dealership on such Property due to
termination of the Franchise Agreement, (2) sale of the
Dealership on such Property, or (3) closure of the
Dealership on such Property for any reason if a new
Dealership does not open on such Property with 24 months,
unless expressly waived by the Company.
9.1.5 [Intentionally Omitted]
9.1.6 The parties acknowledge and agree that the Sellers
and their affiliates are required under this Agreement and
the Company Leases to provide to the Company certain
confidential financial information (the "Confidential
Information") with respect to the business conducted on the
Leased Properties. The Company agrees to use the
Confidential Information solely for the purposes of
monitoring compliance with the terms of this Agreement and
the Company Leases, and the Confidential Information shall
be disclosed only to those of the Company's employees,
advisors and consultants to whom it is necessary for such
purposes. Moreover, the Company will use its best efforts
to implement policies and procedures at the Board of
Trustees level so as to minimize the disclosure of
Confidential Information to Trustees having interest in
businesses that compete with the Sellers and their
affiliates.
9.1.7 Between the date of this Agreement and the Closing
Date, the Partnership and the Company will use their best
efforts to cause the conditions in this Agreement to be
satisfied.
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9.1.8 Except as otherwise required under this Agreement,
the Partnership shall pay-off the Mortgage Debt at Closing
and obtain and record full releases of such Mortgage Debt.
9.2 COVENANTS OF THE SELLERS AND THE CONTRIBUTING ENTITIES. The
Sellers hereby covenant and agree as follows:
9.2.1 If this Agreement is terminated as to all
Properties for any reason, the Sellers shall promptly return
to the Company or the Partnership, as the case may be, all
materials furnished by the Company or the Partnership, to
such Sellers pursuant to this Agreement.
9.2.2 Each Seller shall keep all information relating to
the Partnership or the Company or any operation thereof
confidential.
9.2.3 In the event that facts or circumstances are
discovered or develop that could form the basis of an
Environmental Claim with respect to a specific Property or
Properties, the Seller(s) of such Property or Properties
shall take all actions necessary to fully address such
circumstances, including, without limitation, providing
notice to appropriate governmental authorities; conducting
environmental studies, sampling and testing procedures;
taking remedial action; and modifying operations or physical
facilities to otherwise eliminate potential liability and
ensure full compliance with the Environmental Laws. Without
limiting the foregoing, each Seller shall ensure that it has
identified any underground storage tanks ("USTs") used in
conjunction with its operations and that all registration,
investigation, remedial action and technical upgrade
requirements have been complied with fully in respect of
each such UST.
9.2.4 Between the date of this Agreement and the Closing
Date, Sellers shall use their best efforts to cause the
conditions in this Agreement to be satisfied.
9.3 NO CLAIM AGAINST PROPERTY. Each Seller hereby represents,
warrants, covenants and agrees that, as of the Closing Date, each Seller: (i)
will have no claim of any kind or nature against any Property by reason of
the execution of this Agreement; and (ii) hereby waives, releases and
discharges any claim any Seller has or may have with respect thereto.
Notwithstanding
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Section 7.26, this representation, warranty, covenant and agreement shall
survive the closing of the transactions contemplated hereby and shall
continue in effect.
10. DUE DILIGENCE PERIOD
10.1 DUE DILIGENCE PERIOD. The period from the date hereof until
the Closing Date is referred to herein as the "Due Diligence Period."
10.2 ACCESS TO PROPERTIES AND MATERIALS. During the Due Diligence
Period and upon twenty-four (24) hours prior notice, the Company and the
Partnership and their agents, engineers, surveyors, appraisers, auditors,
counsel and other representatives shall have the right to enter upon the
Properties to inspect, examine, survey, obtain engineering inspections and
environmental studies, appraise, and otherwise do that which, in the opinion
of the Partnership and the Company, is necessary to determine the boundaries,
acreage and condition of the Properties and to determine the suitability of
the Properties for the uses intended by the Partnership (including, without
limitation, inspect, review and copy any and all documents in the possession
or control of Sellers, or their respective agents, contractors or employees,
and which pertain to the construction, ownership, title, use, occupancy or
operation of the Properties or any part thereof). During the Due Diligence
Period, the Sellers, at their expense and at such times as will not
unreasonably interfere with the business being conducted on the Property or
hinder the Partnership's due diligence review, shall make available to the
Company and the Partnership copies or originals of all of their respective
books, files and records relating in any way to the Properties, complete
copies (or originals when requested) of all title information and title
insurance policies, easements, leases, brokerage agreements, licenses,
permits, surveys, zoning information, environmental reports, structural
reports, violation or default notices, contracts, tax bills and assessments,
information regarding pending or threatened claims, suits or proceedings, and
all consents and other documents required to be obtained for the completion
of the transactions contemplated hereunder.
10.3 ADJUSTMENT FOLLOWING DUE DILIGENCE. If the Company or
Partnership determines that one or more representations or warranties or any
information included on any SCHEDULE relating to any Property is incomplete
or inaccurate in any material respect (the "Non-Conforming Property"), the
Company shall have the option to: (a) proceed with the transactions
contemplated hereby, (b) declare this Agreement null and void in which case
no party shall have any rights or obligations under this Agreement, or (c)
terminate this Agreement with respect to such Non-Conforming Property and
proceed with the transactions hereby with respect to the other Properties, in
which case the Aggregate Purchase Price shall be reduced by the Purchase
Price of such Non-Conforming Property. Notwithstanding anything herein to the
contrary, if the Partnership excercises its rights under Section 10.3(c)
above with respect to any Non-Conforming Property other than due to a title
defect (pursuant to Section 3.3) or a misrepresentation or breach of any
environmental representation, warranty or covenant (as set forth in Section
7.13), then the Sellers shall have the option of declaring this Agreement
null and void with respect to all Properties.
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11. DEFAULTS AND REMEDIES
11.1 INDEMNIFICATION BY SELLERS. The Sellers, jointly and
severally (each, for purposes of Sections 11.1 and 11.2, a "Seller
Indemnifying Party"), shall indemnify, defend and hold harmless the
Partnership, the Company and their respective shareholders, partners,
trustees, officers, agents, representatives, employees, Affiliates,
successors and assigns (collectively, for purposes of this paragraph, the
"Company Indemnified Parties") from and against any and all losses, damages,
claims, liabilities, actions, suits, proceedings and reasonable costs and
expenses of investigation or defense thereof, including reasonable attorneys'
fees payable as incurred, arising out of or relating to any (a)
misrepresentation or breach of warranty by any Seller or nonfulfillment of
any covenant or agreement to be performed or complied with by such Seller
under this Agreement and any agreement, document, instrument, certificate,
schedule or exhibit contemplated hereby; (b) untrue or incomplete statement
of a material fact contained in any statement or information provided by any
Seller or based on any omission to state therein a material fact required to
be stated therein or other information necessary to make the statements
therein not misleading, to the extent such alleged untrue or incomplete
statement or omission was made with any Seller's knowledge that the statement
was untrue or incomplete or omitted to state a material fact; (c) any debts,
liabilities or obligations (whether known or unknown, disputed or undisputed,
fixed, contingent or otherwise) associated with or relating to any of the
Sellers, their officers, directors, partners, trustees or Affiliates or the
Properties, or secured by any of the Sellers, or by any of the Properties,
including any obligations under any of the Leases, Service Contracts and
Management Contracts, to the extent any such obligation was to be performed
prior to the Closing Date, or was to be performed after the Closing Date as a
result of a breach or default under any of the Leases or Service Contracts by
any Seller or its Affiliates prior to the Closing Date; (d) any action taken,
or any failure to act, by any Seller in connection with this transaction and
the transactions contemplated herein constituting a breach of this Agreement
or any agreement, document or instrument contemplated hereby or a breach of a
duty owed to any person, including, without limitation, any action taken to
redeem or otherwise liquidate the interest of certain holders in anticipation
of the transactions contemplated herein, to the extent such action or failure
to act results in a violation (or alleged violation) of applicable laws or of
the fiduciary duties owed to such holders; (e) pollution or threat to human
health or the environment, or any Environmental Claim against any person or
entity whose liability for such Environmental Claim any Seller has assumed or
retained either contractually or by operation of law, that is related in any
way to any of the Properties, including, without limitation, all on-site and
off-site activities relating to any of the Properties involving Substances of
Concern, and that occurred, existed, arises out of conditions or
circumstances that occurred or existed, or was caused, in whole or in part,
on or before the Closing Date, whether or not the pollution or threat to
human health or the environment, or the existence of any Environmental Claim,
is known to any Seller; (f) regardless of whether it arises as a breach of
any representation or warranty, any debts, liabilities or obligations of any
Seller (whether known or unknown, disputed or undisputed, fixed, contingent
or otherwise) of, associated with or relating to any asset or property other
than the Properties; and (g) any and all damages and expenses incident to any
of the foregoing or to the enforcement of this Section 11.1.
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11.2 REMEDIES.
11.2.1 [Intentionally Omitted]
11.2.2 Each Seller Indemnifying Party shall be fully
responsible and jointly and severally liable for any of the
following and any and all losses, damages, claims,
liabilities, actions, suits, proceedings and reasonable
costs and expenses of defense thereof, including reasonable
attorneys' fees payable as incurred, arising out of or
relating to: (a) each representation and warranty made by
each Seller hereunder relating to or associated with title
such Seller's interest in any Property and such Seller's
ability to convey such Seller's interest as contemplated by
this Agreement; (b) regardless of whether it arises as a
breach of any representation or warranty, any debts,
liabilities or obligations (whether known or unknown,
disputed or undisputed, fixed, contingent or otherwise) of,
associated with or relating to any of the Sellers, or the
Properties, or secured by any of the Sellers or by any of
the Properties, and (c) regardless of whether it arises as a
breach of any representation or warranty, any debts,
liabilities or obligations of the Sellers (whether known or
unknown, disputed or undisputed, fixed, contingent or
otherwise) of, associated with or relating to any other
asset or property other than the Properties.
11.2.3 Each Seller hereby represents, warrants, covenants
and agrees that he/she/it presently has, a tangible net
worth (such term meaning net worth exclusive of the value
(if any) of goodwill, going concern value and similar
assets, but inclusive of the value of shares of stock,
interests in partnerships and other business enterprises and
similar assets) of not less than the Aggregate Purchase
Price, minus all Mortgage Debt for all Properties being
acquired by the Partnership pursuant to this Agreement.
11.3 INDEMNIFICATION BY THE COMPANY AND THE PARTNERSHIP. The Company
and the Partnership (each, for purposes of this Section 11.3, a "Company
Indemnifying Party") shall indemnify, defend and hold harmless each Seller and
their respective shareholders, partners, directors, officers, partners, agents,
employees, Affiliates, successors and assigns (collectively, for purposes of
this paragraph, "Seller Indemnified Parties") from and against any and all
losses,
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damages, claims, liabilities, actions, suits, proceeds and costs and expenses
of defense therefore, including attorneys' fees payable as incurred, arising
out of or relating to any (a) misrepresentation or breach of warranty by such
Company Indemnifying Party or nonfulfillment of any covenant or agreement to
be performed or complied with by such Company Indemnifying Party under this
Agreement; (b) untrue or incomplete statement (or allegation by a third party
of an untrue or incomplete statement) of a material fact contained in any
statement or information provided by such Company Indemnifying Party or based
on any omission (or allegation by a third party of an untrue or incomplete
statement) to state therein a material fact required to be stated therein or
other information necessary to make the statements therein not misleading, to
the extent such alleged untrue or incomplete statement or omission was made
with the Company's or the Partnership's knowledge that the statement was
untrue or incomplete or omitted to state a material fact; (c) any Service
Contracts that survive the Closing Date, to the extent any such obligation is
to be performed after the Closing Date, except to the extent any such
obligation is to be performed after the Closing Date as a result of a breach
or default under any of the Leases or Service Contracts by the Seller prior
to the Closing Date; (d) any damage caused to the Property or incurred by any
third party as a result of the Partnership's environmental review or due
diligence investigation; and (e) any and all damages and expenses incident to
any of the foregoing or to the enforcement of this Section 11.3.
11.4 INDEMNIFICATION PROCEDURES. All claims for indemnification
under this Article 14 shall be asserted and resolved as follows:
11.4.1 In the event that any Seller Indemnified Party or
Company Indemnified Party (the "Indemnified Party") has a
Claim against any Seller Indemnifying Party or Company
Indemnifying Party obligated to provide indemnification
pursuant to Sections 11.1 or 11.2 hereof, on the one hand,
or Section 11.3 hereof, on the other hand (the
"Indemnifying Party"), which does not involve a claim being
asserted against or sought to be collected by a third party,
the Indemnified Party shall with reasonable promptness send
a written notice (the "Claim Notice") with respect to such
claim to the Indemnifying Party. If the Indemnifying Party
does not notify the Indemnified Party within the thirty (30)
days thereafter (the "Notice Period") that the Indemnifying
Party disputes such claim, the amount of such claim shall be
conclusively deemed a liability of the Indemnifying Party
hereunder. In case an objection is made in writing in
accordance with this Section 11.4.1, the Indemnified Party
shall have thirty (30) days to respond in a written
statement to the objection. If after such thirty (30) day
period there remains a dispute as to any claims, the parties
shall attempt in good faith for sixty (60) days to agree
upon the rights of the respective parties with respect to
each of such claims. If the
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parties should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties.
11.4.2 In the event that any claim for which the
Indemnifying Party would be liable to an Indemnified Party
hereunder is asserted, or any action or proceeding
commenced, against an Indemnified Party by a third party,
the Indemnified Party shall with reasonable promptness
notify the Indemnifying Party of such claim, specifying the
nature of such claim and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such Claim) (the
"Third Party Claim Notice"). The Indemnifying Party shall
have 30 days from the receipt of the Claim Notice (the
"Third Party Notice Period") to notify the Indemnified Party
(a) whether or not such party disputes the liability to the
Indemnified Party hereunder with respect to such claim and
(b) if such party does not dispute such liability, whether
or not the Indemnifying Party desires, at the sole cost and
expense of the Indemnifying Party, to defend against such
claim, provided that such party is hereby authorized (but
not obligated) prior to and during the Third Party Notice
Period to file any motion, answer or other pleading and to
take any other action which the Indemnifying Party shall
deem necessary or appropriate to protect the Indemnifying
Party's interests. In the event that the Indemnifying Party
notifies the Indemnified Party within the Third Party Notice
Period that the Indemnifying Party does not dispute the
Indemnifying Party's obligation to indemnify hereunder and
desires to defend the Indemnified Party against such claim,
except as hereinafter provided, such party shall have the
right to defend by appropriate proceedings. No non-monetary
settlement of any such matter shall be entered into without
the written consent of the Indemnified Party, which consent
shall not be unreasonably withheld; provided that, unless
the Indemnified Party otherwise agrees in writing, such
party may not settle any matter (in whole or in part) unless
such settlement includes a complete and unconditional
release of the Indemnified Party. If the Indemnified Party
desires to participate in, but not control, any such defense
or settlement the Indemnified Party may do so at its sole
cost and expense. If the Indemnifying Party elects not to
defend the
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Indemnified Party against such claim, whether by
failure of such party to give the Indemnified Party timely
notice as provided above or otherwise, then the Indemnified
Party, without waiving any rights against such party, may
settle or defend against any such claim in the Indemnified
Party's sole discretion and the Indemnified Party shall be
entitled to recover from the Indemnifying Party the amount
of any settlement or judgment to the extent the Indemnified
Party is entitled to indemnification and, on an ongoing
basis, all indemnifiable costs and expenses of the
Indemnified Party with respect thereto, including interest
from the date such costs and expenses were incurred.
11.4.3 If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in writing
to the Indemnifying Party, any such claim seeks material
prospective or other relief which could have a materially
adverse effect on the assets, liabilities, financial
condition, results of operations or business prospects of
any Indemnified Party or in the reasonable opinion of
counsel for the Indemnified Party a conflict exists, the
Indemnified Party shall have the right to control or assume
(as the case may be) the defense of any such claim and the
amount of any judgment or settlement and the reasonable
costs and expenses of defense shall be included as part of
the indemnification obligations of the Indemnifying Party
hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the
right to participate in, but not control, the defense of
such claim or demand at the sole cost and expense of the
Indemnifying Party.
11.4.4 Nothing herein shall be deemed to prevent the
Indemnified Party from making a claim, and an Indemnified
Party may make a claim hereunder, for potential or
contingent claims or demands provided the Claim Notice or
Third Party Claim Notice, as the case may be, sets forth the
specific basis for any such potential or contingent claim or
demand to the extent then feasible and the Indemnified Party
has reasonable grounds to believe that such a claim or
demand may be made.
11.4.5 The Indemnified Party's failure to give reasonably
prompt notice as required by this Section 11.4 of any
actual, threatened or possible claim, demand, action or
proceeding
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which may give rise to a right of indemnification
hereunder shall not relieve the Indemnifying Party of any
liability which the Indemnifying Party may have to the
Indemnified Party unless the failure to give such notice
materially and adversely prejudiced the Indemnifying Party
or increases the amount of indemnification which the
Indemnifying Party is obligated to pay hereunder. In any
such event, the amount of indemnification which the
Indemnified Party will be entitled to receive hereunder
shall be reduced to an amount which the Indemnified Party
would have been entitled to receive had such notice been
timely.
12. MISCELLANEOUS
12.1 ASSIGNMENT. Neither this Agreement nor any interest
hereunder may be assigned or transferred by any Seller without the prior
written consent of the Company or the Partnership. As of the Closing Date,
theCompany or the Partnership may assign, transfer or demise any or all of
its interest in any Property to any Affiliate (the "Permitted Transferees")
without the prior consent of the Sellers.
12.2 ENTIRE AGREEMENT. Any prior agreement or understanding
among the parties concerning the subject matter hereof is hereby superseded.
This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and the transactions contemplated herein
and shall not be modified or amended except in a written document signed by
all of the parties hereto.
12.3 NOTICES. All notices or other communications required or
permitted under this Agreement shall be in writing and delivered personally
or by registered or certified mail, return receipt requested, postage
prepaid, or by a nationally recognized overnight courier (such as Federal
Express) with receipted delivery. Notices to the parties shall be addressed
as follows:
If to the Sellers to the addresses contained in SCHEDULE I;
with a copy to:
Sprouse, Mozola, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
If to the Partnership or to the Company:
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Capital Automotive REIT
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and Chief Executive Officer
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
All notices given in accordance with the terms hereof shall be deemed
effective (a) if delivered in person or by overnight courier, on the business
day it is delivered, and (b if sent by registered or certified mail, three
(3) business days after deposit with the U.S. mail. Any party hereto may
change its address by written notice to all parties hereto sent in accordance
with the terms of this Section and any such Notice of change of address shall
be effective five (5) days after delivery.
12.4 GOVERNING LAW. This Agreement shall be governed and
interpreted in accordance with the laws of the Commonwealth of Virginia
without regard to its principles of conflicts of laws, and any action brought
under or arising out of this Agreement or the matters relating hereto shall
be submitted to the jurisdiction of the United States District Court for the
Eastern District of Virginia. Each party acknowledges and agrees to such
jurisdiction.
12.5 LITIGATION COSTS. If there is any legal action or
proceeding between the parties hereto arising from or based upon this
Agreement, the unsuccessful party to such action or proceeding shall pay to
the prevailing party all litigation costs and expenses, including reasonable
attorneys' fees, incurred by such prevailing party in such action or
proceeding and in any appeal in connection therewith, and if such prevailing
party recovers a judgment in any such action, proceeding or appeal, such
costs, expenses and attorneys' fees shall be included in as part of such
judgment.
12.6 COUNTERPARTS. This Agreement may be executed in any
number of identical counterparts, any or all of which may contain the
signatures of fewer than all of the parties but all of which shall be taken
together as a single instrument.
12.7 OFFER AND ACCEPTANCE. This Agreement constitutes an offer
by the Company and the Partnership which must be accepted, by delivery to the
Company of a duly signed and completed signature page hereof, by all of the
Sellers within five (5) days after the date this Agreement is signed by the
Company and the Partnership. If, within such time period, less than all of
the persons owning any interest in a Seller shall have signed this Agreement,
then the Seller and the Property owned by such Seller shall, at the sole
option of the Company, be excluded from the
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sale and purchase hereunder, this Agreement shall remain in full force and
effect as to the other Sellers and Properties, and an appropriate adjustment
shall be made with respect to the relevant Property, in which case the
Aggregate Purchase Price shall be reduced by the Purchase Price of such
Property as provided in this Agreement; if after the expiration of such time
period all of the Sellers execute this Agreement, the Company, at its sole
option, may elect to re-include, or may continue to exclude, any such Seller
and Property.
12.8 ARBITRATION. In the event a dispute arises between the
parties as to any of the requirements of this Agreement or the performance
under this Agreement, which the parties are unable to resolve, the parties
agree to waive the remedy of litigation (except for extraordinary relief in
an emergency situation) and agree that such dispute or disputes shall be
determined by arbitration. Notwithstanding the foregoing, the parties
acknowledge and agree that this Section 12.8 is not intended to create new
rights.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal, with the intention that it be a sea ed instrument, as of the date
set forth above.
WITNESS CAPITAL AUTOMOTIVE REIT
By: /s/ ____________________________ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
Name: ____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: ____________________________ Title: President and Chief Executive
Officer
CAPITAL AUTOMOTIVE L.P.
WITNESS By: Capital Automotive REIT, as General
Partner
By: ____________________________ By: ____________________________ (SEAL)
Name: ____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: ____________________________ Title: President and Chief Executive
Officer
WITNESS SELLER: PLAINS CHEVROLET, INC.,
a Texas corporation
By: ____________________________ By: ____________________________ (SEAL)
Name: ____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: ____________________________ Title: Vice President
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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WITNESS SELLER: MIDWAY CHEVROLET, INC.
(formerly ▇▇▇▇▇▇▇▇▇ Chevrolet,
Inc.), a Texas corporation
By: ____________________________ By: ____________________________ (SEAL)
Name:____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:___________________________ Title: Vice President
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
WITNESS SELLER: WESTGATE CHEVROLET, INC.,
a Texas corporation
By: ____________________________ By: ____________________________ (SEAL)
Name:____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:___________________________ Title: Vice President
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
WITNESS SELLER: QUALITY NISSAN, INC.,
a Texas corporation
By: ____________________________ By: ____________________________ (SEAL)
Name:____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:___________________________ Title: Vice President
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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WITNESS SELLER: CROSS-CONTINENT AUTO
RETAILERS, INC.
a Delaware corporation
By: ____________________________ By: ____________________________ (SEAL)
Name:____________________________ Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title:___________________________ Title: Vice Chairman
Address: ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone #: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile #: (▇▇▇) ▇▇▇-▇▇▇▇
Social Security # or TIN: ▇▇-▇▇▇▇▇▇▇
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