AGREEMENT TO SELL AND PURCHASE REAL PROPERTY
AND ESCROW INSTRUCTIONS
THIS AGREEMENT TO SELL AND PURCHASE REAL PROPERTY AND ESCROW
INSTRUCTIONS ("Agreement"), dated as of the date specified below in the List of
Particulars, by and between Seller and Buyer is entered into with reference to
the recitals set forth below and constitutes (i) a contract of purchase and sale
between the parties, and (ii) escrow instructions to Escrow Holder. The
following terms shall have the meanings specified, when used in this Agreement.
LIST OF PARTICULARS
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Date of Agreement: September 12, 1997
Seller: CERTIFIED GROCERS OF CALIFORNIA, LTD.
a California corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxx
Phone: (000) 000-0000, ext.4281
Facsimile: (000) 000-0000
Buyer: SMART & FINAL STORES CORPORATION,
a California corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Taxpayer Identification
of Buyer: 00-0000000
Trustee: State Street Bank & Trust Co.
Property: That certain irregularly shaped parcel comprising
approximately 23.73 acres at the southwestern corner of
Eastern Avenue and Xxxxxx Street, in the City of
Commerce, as more particularly described in Exhibit "A"
attached to this Agreement and incorporated by reference,
and as depicted in the site plan attached to this
Agreement as Exhibit "B" and incorporated by reference.
Purchase Price: Ten Million Five Hundred Thousand Dollars ($10,500,000),
as may be adjusted pursuant to Article 2 herein, payable
as provided in this Agreement.
Initial Deposit: Five Hundred Thousand Dollars ($500,000)
Escrow Holder: Commerce Escrow Company
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Title Company: Old Republic Title Company
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx Xxxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Brokers: Investment Development Services, Inc.
CB Commercial Real Estate Group, Inc.
Xxxxxxx & Xxxxxxxxx of California, Inc.
Closing Date: July 1, 1998, unless advanced or extended as provided in
this Agreement.
Outside Closing Date: December 31, 1998 unless extended as provided in this
Agreement
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE
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1.1 Purchase and Sale. Subject to the terms and conditions of this
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Agreement, including the foregoing List of Particulars, Seller agrees to sell to
Buyer, and Xxxxx agrees to purchase from Seller, all of Seller's right, title
and interest in and to the Property, together with any and all of the rights,
benefits, easements and appurtenances, and all right, title and interest of
Seller in the land east of the property line to be created pursuant to the Lot
Line Adjustment (as defined below) lying in all streets, highways and rights-of-
way abutting the Property. Buyer may at any time prior to the Closing Date,
transfer its rights to acquire the Property to a special-purpose real estate
leasing facility in the form of a trust, established for Buyer by a group of
banks. For purposes of this Agreement the term "Buyer" shall be deemed to apply
to Smart & Final Stores Corporation, a California corporation, notwithstanding
the fact that title to the Property may ultimately be held in the name of
Trustee. The sale pursuant to this Agreement excludes (i) the land and
improvements (the "Western Property") west of the property line to be created
pursuant to the Lot Line Adjustment, (ii) all development rights, easements and
other rights appurtenant to the Western Property, and (iii) any credits or other
rights (collectively, the "Credits") with the SCAQMD and/or Los Angeles County
Sanitation District with respect to an emissions and sewer discharges existing
with respect to ownership and operation of the Property and/or the Western
Property prior to the Closing. At Closing, Xxxxx shall execute such documents
as Seller may reasonably request confirming that the Credits are being retained
by Seller. Seller's retention of the Credits shall be limited to the extent
that Seller's retention would prevent Buyer from obtaining a sewer connection
for discharge for the Property improved with a high-flexibility, non-mechanized
warehouse of approximately 517,000 square feet with approximately 60,000 square
feet of internal warehouse offices (the "Improvements"). Without limiting
Section 5.7.2, Buyer acknowledges that all sewer connection and operating
discharge fees for the Property and the Improvements shall be at the sole cost
and expense of Buyer.
ARTICLE 2
PURCHASE PRICE
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2.1 Purchase Price. The Purchase Price for the Property shall be paid
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by Buyer to Seller through Escrow as follows:
2.2 Initial Deposit. Buyer shall deposit with Escrow Holder the
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Initial Deposit in immediately available funds within two (2) business days of
Buyer's execution of this Agreement, but in no event later than September 19,
1997. The Initial Deposit is to be invested by Escrow Holder in an interest
bearing Federally insured account, at a financial institution acceptable to
Buyer and Seller, which designates Buyer as the account holder. Any interest
which is earned on the Initial Deposit will be held by Escrow Holder and applied
to the Purchase Price. At Buyer's option, the Initial Deposit may be divided
among mutually acceptable Federally insured financial institutions, such that no
institution is holding more than One Hundred Thousand Dollars ($100,000.00).
The Initial Deposit shall be released to Seller by Escrow Holder upon the
receipt by Escrow Holder and Seller of Buyer's approval of Buyer's Studies as
set forth in Section 3.1.2 below without further instructions to Escrow Holder.
2.3 Payment for Vacation of Warehouse Buildings. Within three (3)
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business days following delivery of notice by Seller to Buyer of Seller's
complete vacation of all of the warehouse and other buildings located on the
Property excluding (i) the 3-story office building (the "Office Building") and
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(ii) an area around the Office Building shown on Exhibit "E" as Seller's
Construction Zone (the "Construction Zone"), and provided that such date is at
least three (3) business days prior to the Closing Date, Buyer will pay to
Seller the additional sum of Seven Hundred Fifty Thousand Dollars ($750,000)
outside of Escrow. This amount received by Xxxxxx will be credited against the
Purchase Price at the Close of Escrow. As used in this Agreement, "complete
vacation" and "vacate" mean as to a specified portion of the Property that
Seller shall have permanently ceased business operations and removed or
abandoned in place its moveable personal property. Seller shall be considered
to have performed a "complete vacation" of an area even if the utility lines
shown on Exhibit "E" continue to be used to serve the areas not vacated and the
vacated areas are used for access to the areas not vacated; provided that
nothing in this Section 2.3 shall create any easement for the benefit of Seller
to maintain utilities on the Property for the benefit of the Western Property
after the Closing.
2.4 Payment for Vacation of Entire Property. Within three (3) business
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days following delivery of notice by Seller to Buyer of Seller's complete
vacation of the entire Property excluding (i) the Data Center (as defined
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below), (ii) the portions of the Office Building serving the Data Center, and
(iii) the Construction Zone (such excluded portions being sometimes referred to
herein collectively as the "Reserved Areas"), and provided that such date is at
least three (3) business days prior to the Closing Date, Buyer will pay to
Seller the additional sum of Seven Hundred Fifty Thousand Dollars ($750,000)
outside of Escrow. This amount received by Xxxxxx will be credited against the
Purchase Price at the Close of Escrow. As used herein, the term "Data Center"
means the portion of the Building described on Exhibit "F," together with all
utilities shown on Exhibit "E" necessary for the operation of Seller's business
within that portion of the Building and rights of ingress and egress through the
Building and Property between that portion of the Building and public streets
and sidewalks.
2.5 Vacancy Incentive Price Increases. Upon performance by Xxxxxx,
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Buyer will make certain incentive price increases (the "Incentive Price
Increases") at the Close of Escrow as an incentive to Seller to vacate the
Property as soon as possible. The Incentive Price Increases shall be earned by
Seller for each day prior to the Closing Date that Seller has accomplished the
complete vacation of the Property and otherwise satisfied the conditions
described in clauses (i), (iii), (iv) and (v) of Section 5.9.1, as evidenced by
delivery to Buyer of Seller's notice of vacancy as follows:
# of Days prior Maximum Incentive
to July 1, 1998 $/Day Price Increases
------------------ ------- -----------------
1-30 $ 5,000 $150,000
31-62 $ 7,500 $232,500
63-92 $10,000 $300,000
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Total Possible Incentive Price Increases $682,500
2.6 Late Delivery Penalty. So long as Buyer shall have performed all
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of its obligations under this Agreement, shall have satisfied the conditions
described in clauses (i) and (ii) of Section 5.9.2, and is otherwise ready,
willing and able to proceed with the Closing on the Closing Date, there shall be
a reduction in the Purchase Price of the sum of Ten Thousand Dollars
($10,000.00) for each such day the Closing is delayed after the Closing Date
solely by reason of Seller's inability to accomplish the complete vacation of
the Property and otherwise satisfy the conditions described in
clauses (i), (iii), (iv) and (v) of Section 5.9.1. The reduction in the Purchase
Price under this Section 2.6 shall be limited to a maximum of Five Hundred
Thousand Dollars ($500,000.00).
2.7 Cash at Closing. The balance of the Purchase Price, subject to
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adjustment pursuant to Section 5.6 hereof, shall be deposited with Escrow Holder
in immediately available funds, on or before the Close of Escrow.
ARTICLE 3
APPROVALS AND CONDITIONS
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3.1 Conditions. The obligations of Buyer under this Agreement shall be
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subject to and contingent upon satisfaction of the following conditions within
the time periods specified below:
3.1.1 Approval of Title. Buyer shall have approved, been deemed to
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have approved or have waived objections to the condition of title pursuant to
Article 4 below within the time periods provided for therein.
3.1.2 Inspection of Property. Buyer may, at Buyer's sole cost and
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risk, inspect the physical condition and operations of the Property on or before
close of business on September 15, 1997 (the "Contingency Period"). During the
Contingency Period Buyer and its agents, employees, contractors and consultants
(collectively "Buyer's Representatives") shall, at their sole cost and expense,
conduct and approve such environmental, geological, feasibility, engineering and
other tests, surveys, title, appraisals and all other inspections and
investigations they deem necessary in their sole and complete discretion
(collectively "Buyer's Studies"). Buyer hereby gives notice to Seller of
Xxxxx's approval of Xxxxx's Studies. If Escrow has been opened by such date,
Buyer shall also provide Escrow Holder with notice of any approvals together
with irrevocable written instructions to release the Initial Deposit to Seller.
If Escrow has not been opened by the expiration of the Contingency Period, then
Xxxxx's approval of Xxxxx's Studies shall be accompanied by (and shall not be
effective unless and until Seller receives) payment of the Initial Deposit in
immediately available funds. Xxxxx's failure to disapprove of Xxxxx's Studies
shall be deemed an approval thereof. If Xxxxx disapproves Buyer's Studies the
Escrow shall terminate and Buyer shall receive a return of the Initial Deposit
and any other funds paid on account of the Purchase Price, in which event
neither party will have any further obligation or liability regarding the
acquisition of the Property. The Closing Date and the Outside
Closing Date shall be further extended for the period of any delay in Seller's
performance of the Lot Line Adjustment (as defined below) due to Buyer's entry
onto the Property pursuant to this Section 3.1.2.
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3.1.3 Lot Line Adjustment. Seller shall have until the Close
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of Escrow to cause a lot line adjustment (the "Lot Line Adjustment") to be
recorded in the Official Records of Los Angeles County, which adjustment is
necessary in order for the Property to be conveyed to Buyer in accordance with
all applicable subdivision laws and regulations.
3.1.4 Delivery of Property. Seller shall have delivered the
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property with the Site Work (as defined in Section 5.8) completed.
3.2 Delivery of Property No Later Than the Outside Closing Date.
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In the event that Seller is unable to deliver the Property with the Site Work
completed and close Escrow by the Outside Closing Date, Buyer shall elect either
to (i) terminate Escrow and receive a return of the Initial Deposit and any
other funds paid on account of the Purchase Price, in which event neither party
will have any further obligation or liability regarding the acquisition of the
Property, or (ii) waive any condition (other than the Lot Line Adjustment)
related to delivery or condition of the Property and proceed with the purchase
of the Property. In the event Buyer chooses to waive such conditions, Seller
shall not be required to proceed with any uncompleted Site Work; however, the
Purchase Price shall be adjusted as provided in Section 2.6 above. If Buyer
fails to give Escrow Holder and Seller notice of termination of the Escrow or
waiver of any condition related to delivery or condition of the Property within
five (5) days after the Outside Closing Date, Buyer shall be deemed to have
elected to terminate Escrow and receive a return of the Initial Deposit and any
other funds paid as provided in clause (i) of the first sentence of this Section
3.2
3.3 Consequences of Termination or Non-Termination of This Agreement.
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3.3.1 If this Agreement is terminated by Buyer pursuant to
Section 3.1 or Section 3.2 above, the following shall occur: (i) the Initial
Deposit, and any other payment made by Buyer to Escrow Holder or Seller towards
the Purchase Price, together with interest accrued thereon, deposited by Buyer
with Escrow Holder pursuant to Section 2.2, shall be refunded to Buyer; (ii) any
documents deposited with Escrow Holder by either party shall be returned to the
party depositing the same; (iii) Buyer shall return to Seller all documents
delivered by Seller to Buyer pursuant to
this Agreement, and (iv) Buyer shall pay any applicable Escrow and title
cancellation charges. Upon completion of all of the foregoing, this Agreement
shall be deemed terminated and neither party shall have any further rights
against or obligations to the other hereunder, except those obligations and
indemnifications which are expressly stated to survive the termination of this
Agreement.
3.3.2 If this Agreement is not terminated by Buyer at the end
of the Contingency Period pursuant to Section 3.1 above, the Initial Deposit
shall be released by Escrow Holder to Seller and thereafter the Initial Deposit
and the amounts paid by Buyer pursuant to Sections 2.3 and 2.4 shall be
nonrefundable to Buyer for any reason whatsoever, unless the Closing does not
occur due to a failure of Seller to satisfy any of the conditions described in
clauses (i), (iii), (iv) and (v) of Section 5.9.1.
ARTICLE 4
CONDITION OF TITLE
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4.1 Permitted Exceptions. Xxxxx agrees to accept title to the Property
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subject only to the following matters (collectively the "Permitted Exceptions"):
4.1.1 Liens for current real property taxes and any general or
special assessments or bonds that are not delinquent as of the Closing.
4.1.2 Those matters of record which Xxxxx approves, is deemed to
approve, or waives its objections as to, pursuant to Section 4.2, below.
4.1.3 Those matters shown on any survey which Buyer elects to
obtain, that are not reflected in the Title Report (as defined in Section 4.2
below).
4.1.4 The Title Company's standard printed exceptions.
4.1.5 Matters arising out of the Lot Line Adjustment.
4.1.6 Those matters affecting the title to the Property created by
or with the consent of Xxxxx.
4.2 Approval of Title. Buyer acknowledges receipt of a preliminary
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title report together with copies of all documents shown as exceptions therein
(the "Title Report") disclosing the condition of title to the Property. By
notice delivered to Seller
on September 16, 1997, Xxxxx approved and disapproved certain items in the Title
Report. Seller will have 10 days after receipt of Xxxxx's notification of any
disapproved exceptions or other objections to title in which to advise Buyer
that:
(i) Seller will cause the disapproved exceptions or other
objections to title to be removed or remedied or obtain appropriate
endorsements to the Title Policy on or before the Closing Date; or
(ii) Seller will not cause the disapproved exceptions or other
objections to title to be removed or remedied or cause appropriate
endorsements to the Title Policy to be issued.
(iii) If Seller does not notify Buyer of its election within the 10
day period, Seller will be deemed to have elected to not cause the
disapproved exceptions to be removed.
If Seller elects to not cause the disapproved exceptions or other
objections to title to be removed or remedied or cause appropriate endorsement
to the Title Policy to be issued, Buyer will have two (2) business days to
elect, as its sole remedy, to:
(i) proceed with the purchase and acquire the Property subject to
the disapproved exceptions and other objections to title without
reduction in the Purchase Price; or
(ii) cancel the Escrow and this Agreement by written notice to
Seller and Escrow Holder, in which case the Deposit and any interest
accrued thereon will be returned to Buyer and the cancellation costs,
if any, will be equally borne by Seller and by Buyer.
If Xxxxx does not give Seller notice of its election within two (2)
business days, Xxxxx will be deemed to have elected to proceed with this
transaction.
4.3 Title Policy. As a condition to the Closing, Title Company shall
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be prepared to issue a CLTA Owner's Title Insurance Policy (the "Title Policy")
to Buyer (or Trustee as applicable) on the Closing Date. Such policy shall be a
CLTA Owner's Title Insurance policy unless Buyer elects, by appropriate escrow
instructions to Escrow Holder, to cause Title Company to issue an ALTA Owner's
Title Insurance Policy in place of the CLTA Title Policy. If Buyer elects to
have an ALTA policy
issued, Buyer shall pay to Escrow Holder all costs which are in excess of the
costs and premium that would have been incurred for a CLTA policy. Buyer shall
obtain, at its sole cost, any survey or survey update required in connection
with the Title Policy and shall bear all costs associated with the issuance by
the Title Company of an ALTA extended coverage lender's policy of title
insurance insuring its lender or lenders in the amount of any financing secured
by the Property. The Title Policy shall be in the amount of the Purchase Price,
for the protection of Buyer (or Trustee as applicable) as a fee owner of the
Property, subject only to the Permitted Exceptions. Xxxxx's election to obtain
an extended coverage policy will not delay the Closing or the expiration of the
Contingency Period and Xxxxx's inability to obtain an extended coverage policy
or any such endorsements will not be deemed to be a failure of any condition to
Closing.
ARTICLE 5
CLOSING
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5.1 Closing Through Escrow. The purchase of the Property shall be
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consummated by means of an escrow established with Escrow Holder. The date on
which Escrow Holder receives Buyer's Initial Deposit shall be referred to as the
"Opening of Escrow." The parties shall close the Escrow on or before the Outside
Closing Date. Although the parties have agreed and are bound to the Outside
Closing Date, the terms "Closing" and "Close of Escrow" as used herein shall
mean that date when a grant deed conveying the Property to Buyer is recorded in
the Official Records of Los Angeles County, California (the "Official Records").
This Agreement shall be deposited with Escrow Holder and shall constitute escrow
instructions to Escrow Holder from Buyer and Seller, together with such
instructions and general provisions and conditions consistent with the terms of
this Agreement which Escrow Holder may reasonably request. Xxxxx and Seller
agree to execute promptly any such supplemental escrow instructions requested by
Xxxxxx Holder. In the event of any conflict or inconsistency between such
general provisions and conditions of such supplemental escrow instructions and
the provisions of this Agreement, the provisions of this Agreement shall
control.
5.2 Duties of Escrow Holder. The duties of the Escrow Holder shall
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be as follows: (i) retain and safely keep all funds, documents and instruments
deposited with it pursuant to this Agreement; (ii) disburse the Initial Deposit;
(iii) upon the Closing, deliver to the parties entitled thereto all funds,
documents and instruments to be delivered through the Escrow Holder pursuant to
this Agreement; and (iv) upon the Closing, cause the recordation of the
documents required for this transaction in the
Official Records. Escrow Holder is instructed to (v) request that the amount of
the documentary transfer tax due be shown on a separate paper and affixed to the
Grant Deed by the County Recorder after the permanent record thereof is made;
(vi) comply with the terms of this Agreement which specifically apply to the
Escrow Holder and comply with the terms of any additional instructions jointly
executed by Xxxxx and Seller; (vii) deposit all monies held by Escrow Holder in
an interest bearing account according to further written instructions signed by
Xxxxx and not in conflict with the terms of this Agreement; and (viii) upon the
Closing, cause the Title Company to issue to Buyer the Title Policy in the
amount of the Purchase Price insuring Buyer (or Trustee as applicable) as the
fee owner of the Property and, if applicable, the lender's policy of title
insurance referred to in Section 4.3 above.
5.3 Reporting. To the extent the transaction contemplated hereby
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involves a real estate transaction within the purview of Section 6045 of the
Internal Revenue Code of 1986, as amended, the Escrow Holder shall have sole
responsibility to comply with the requirements of Section 6045 of the Internal
Revenue Code (and any similar requirements imposed by state or local law), which
in part requires the Escrow Holder to report real estate transactions closing
after December 31, 1986 by, among other things, preparing and causing to be
filed Internal Revenue Service Form 1099-B and any applicable additional
statements in connection therewith. Seller's U.S. employer identification
number is 00-0000000. Escrow Holder shall hold Buyer, Seller and their counsel
free and harmless from and against any and all liability, claims, demands,
damages and costs, including reasonable attorneys' fees and other litigation
expenses, arising or resulting from the failure or refusal of the Escrow Holder
to comply with such reporting requirements.
5.4 Seller's Obligations at Closing. Prior to the Closing, Seller
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shall deliver to Escrow Holder the following documents (all duly executed and
acknowledged by Seller, where required):
5.4.1 Grant Deed. A Xxxxx Xxxx, executed and acknowledged by
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Seller and conveying the Property to Buyer or Trustee as applicable, in the form
of Exhibit "C" hereto.
5.4.2 Foreign Person. An affidavit of Seller certifying that
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Seller is not a "foreign person," as defined in the federal Foreign Investment
in Real Property Tax Act of 1980, and the 1984 Tax Reform Act, as amended, and a
properly executed Form 590 or other evidence sufficient to establish that Buyer
is not required to withhold any portion of the Purchase Price under the
California Revenue and Taxation Code.
5.4.3 Evidence of Authority. A copy of the duty adopted
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resolution of the governing body of Seller, certified as true and complete as of
Closing, authorizing the execution, delivery and performance by Seller of this
Agreement and the documents required hereby, and designating one or more persons
to execute such documents such entity's name in connection with this Agreement,
together with an incumbency certificate for each person executing documents on
behalf of Seller with specimen signatures for such persons.
5.5 Buyer's Obligations at Closing. Prior to the Closing, Buyer
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shall deliver to Escrow Holder the following (all duly executed and acknowledged
by Xxxxx, where required):
5.5.1 Purchase Price. The balance of the Purchase Price (subject
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to adjustment pursuant to Sections 2.5 and 5.6 of this Agreement) in immediately
available funds, due credit being given for the Initial Deposit and other
payments or credits made in favor of Buyer, including interest earned thereon
for funds held by Escrow Holder.
5.5.2 Evidence of Authority. A copy of the duly adopted
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resolution of the governing body of Buyer, certified as true and complete as of
Closing, authorizing the execution, delivery and performance by Xxxxx and any
permitted assignee of Buyer hereunder, of this Agreement and the documents
required hereby, and designating one or more persons to execute such documents
in each such entity's name in connection with this Agreement, together with an
incumbency certificate for each person executing documents on behalf of Buyer
with specimen signatures for such persons.
5.6 Closing Costs. Seller shall pay the following closing costs:
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all of Seller's attorneys' fees and costs; one-half (1/2) of the fees and costs
due to Escrow Holder for services rendered as escrow agent; any county transfer
taxes and recording fees payable upon recordation of the Grant Deed; one-half of
any city transfer taxes payable upon recordation of the Grant Deed and all
premiums and charges relating to the issuance of the Title Policy. Buyer shall
pay the following closing costs: all of Buyer's attorneys' fees and costs; one-
half (1/2) of the fees and costs due to Escrow Holder for services rendered as
escrow agent; one-half of any city transfer taxes payable upon recordation of
the Grant Deed any additional premium for an ALTA Owner's Policy of Title
Insurance if Buyer elects to receive same, including the cost of any survey or
survey update and the cost of any title endorsements to the Title Policy; and
premium for an ALTA Leader's Policy of Title Insurance in connection with
Xxxxx's financing; and any recording fees payable upon recordation of any
financing documents.
5.7 Proration. Real estate and personal property taxes and other
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assessments with respect to the Property (other than with respect to the
transfer thereof) for the year in which the Closing occurs, shall be prorated to
the Closing, as set forth below. The provisions of this Section 5.7 shall
survive the Closing.
5.7.1 Taxes. If the Closing shall occur before the tax rate or
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the assessed valuation of the Property are fixed for the then-current year, then
the apportionment of taxes shall be upon the basis of the tax rate for the
Property for the preceding year applied to the latest assessed valuation of the
Property. Subsequent to the Closing, when the tax rate and the assessed
valuation of the Property are fixed for the year in which the Closing occurs,
the parties agree to adjust the proration of taxes outside of Escrow and, if
necessary, to refund or repay such sums as shall be necessary to effect such
adjustment. If the Property is not assessed as a separate parcel for tax or
assessment purposes, then such taxes and assessments attributable to the
Property shall be determined by Seller with notice to and subject to Buyer's
approval (which approval shall not be unreasonably withheld) at least five (5)
business days prior to the Closing Date. If, as of the Closing, the Property is
not being treated as a separate tax parcel, then within thirty (30) days after
the Closing, Buyer shall, at its sole cost and expense, have the Property
assessed separately for tax and assessment purposes,
5.7.2 Utilities. No provision has been made for the proration of
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water charges, fuel charges or utility charges (including, without limitation,
telephone, gas and electricity) as Seller shall terminate its account with the
providers of all such services, and Buyer shall, prior to the Closing, make
application to the providers of such services for the continuation of such
services in the name of Buyer, or its designee, including the provision of any
deposits that might be required. It is anticipated that in connection with all
services referred to in the preceding sentence, the meters will be read on or
about the Closing, and Seller shall be responsible for paying the bills for such
services accruing prior to the Closing and shall be entitled to a refund of its
deposits, if any, and Buyer shall be responsible for the payment of all such
accounts accruing on or after the Closing. If at Seller's option any such
accounts are not handled in this manner, then they shall be prorated as of the
Closing.
5.7.3 Post-Closing Reconciliation. If any of the prorations
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stated above cannot be definitely calculated on the Closing, then they shall be
estimated at the Closing and definitely calculated as soon after the Closing as
feasible.
5.8 Delivery of Possession. Upon the satisfaction or waiver (if
----------------------
applicable) of any and all other conditions precedent to this Agreement, the
purchase and sale transaction contemplated in this Agreement shall be finally
consummated and Seller shall deliver possession of the Property to Buyer upon
the Close of Escrow. Seller will (i) perform demolition of existing buildings,
removal of all other on-site improvements, and preparation to a rough grade,
with existing utilities in the adjacent street, (ii) cause to be removed all
asbestos-containing materials within the improvements being demolished and
removed, (iii) cause to be removed from the Property all other hazardous
materials on or under the Property to the extent such removal is required by
applicable laws, statutes, ordinances or regulations as a condition to new
construction on the Property, and (iv) provide copies to Buyer of any
certificates, closure letters or other documentation customarily issued by
governmental authorities having jurisdiction over the removal of such asbestos
and hazardous materials in connection with that removal by Seller (collectively,
the "Site Work").
5.9 Conditions Precedent to Closing.
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5.9.1 Conditions Precedent to Xxxxx's Obligations. Buyer's
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obligations with respect to this transaction are subject to: (i) Seller's
delivery to Escrow Holder on or before the Closing of the items described in
Section 5.4, (ii) Title Company's willingness to deliver the Title Policy
subject only to the Permitted Exceptions, (iii) all of Seller's representations
and warranties as set forth in Section 10.1 being true and correct in all
material respects as of the Closing, (iv) Seller delivering the Property with
the Site Work completed, and (v) the Lot Line Adjustment having been completed.
5.9.2 Conditions Precedent to Seller's Obligations. Seller's
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obligations with respect to this transaction are subject to: (i) Buyers delivery
to Escrow Holder on or before the Closing of the items described in Section 5.5,
(ii) Buyer's representations and warranties as set forth in Section 10.2 being
true and correct in all material respects as of the Closing, and (iii) the Lot
Line Adjustment having been completed.
5.9.3 Simultaneous Delivery; Conditions Concurrent. All documents
--------------------------------------------
and other items to be delivered on the Closing shall be deemed to have been
delivered simultaneously, and no individual delivery shall be effective until
all such items have been delivered.
5.9.4 Pre-Closing Covenants of Seller. Seller covenants that
-------------------------------
until the Closing it will cause the Property to be insured under policies of
liability
insurance customary for properties such as the Property, and that it will not
enter into any material contract with respect to the Property which would be
binding on Buyer after the Closing without Buyer's consent, which shall not be
unreasonably withheld.
ARTICLE 6
RISK OF LOSS
------------
6.1 Casualty. Since Buyer is acquiring the Property in any
--------
unimproved condition, damage to or injury occurring to the Property by fire,
storm, accident or any other casualty or cause shall not affect the obligations
of the parties under this Agreement.
6.2 Condemnation. Buyer shall determine the risk of potential
------------
condemnation of the Property. If any condemnation occurs prior to the Closing
this transaction shall be consummated as provided in this Agreement and Seller
shall be entitled to retain all awards made by the condemning authority in
respect of such condemnation except that Seller shall assign to Buyer at the
Closing the amount of the award attributable solely to the Property as
unimproved land. Any award for any improvements on the Property or for
relocation expenses or otherwise with regard to other than the Property as
unimproved land shall be the sole property of Seller.
ARTICLE 7
DESIGN AND CONSTRUCTION OF IMPROVEMENTS
---------------------------------------
7.1 Warehouse Design and Construction. As soon as is practicable
---------------------------------
following the Close of Escrow, Buyer intends to construct a high-flexibility,
non-mechanized warehouse of approximately 517,000 square feet with integral
warehouse offices (the "Improvements"), in a design to be determined. Seller
will have the right to approve the final design plan prior to the Closing, which
approval will not be unreasonably withheld. A general contractor will be
selected who is mutually acceptable to both parties. Investment Development
Services (IDS) will act as a development and construction manager for the
Improvements, in a compensated role to be defined in a separate agreement
between IDS and Buyer, which shall be diligently negotiated by IDS and Buyer.
Seller acknowledges that IDS has, through its past activities with Seller,
information and knowledge regarding Seller and the Property which is of a
confidential nature. Seller hereby consents to the disclosure of such
confidential information to Buyer by IDS; provided that Xxxxx holds such
information in confidence.
7.2 Acquisition of Adjacent Parcels. Buyer has informed Seller that
-------------------------------
Buyer is considering the acquisition of those parcels adjacent to north of the
Property on Xxxxxx Street from Eastern Avenue to Xxxxxxxxxx Avenue, and north to
Washington Boulevard, as set forth in Exhibit "D" attached to this Agreement.
Buyer's obligations to close Escrow are not contingent upon the acquisition of
any of the adjacent parcels. If, at any time after the Close of Escrow, Buyer
applies with applicable governmental authorities for the vacation of the alley
running parallel and north of Xxxxxx Street, between Xxxxxxxxxx Avenue and
Eastern Avenue, Seller agrees not to object to such application, and further
agrees to provide Buyer will all necessary and reasonable cooperation in making
such application at no cost or expense to Seller; provided Seller shall not be
required to limit or restrict the development or operation of any other
properties or businesses owned by Seller.
ARTICLE 8
POST-CLOSING MATTERS
--------------------
8.1 Ownership and Financing of Property.
-----------------------------------
8.1.1 Lease Agreement. Buyer has informed Seller that in the
---------------
event that Buyer transfers its rights to acquire the Property to a trust for
purposes of furthering its financing arrangements as set forth in Section 1.1
above, such trust will become the lessor ("Lessor") of the Property and the
Improvements and Buyer shall be the Lessee pursuant to a Lease Agreement with a
maximum term of thirty-five (35) years (the "Lease Term") from the Close of
Escrow. Pursuant to such Lease Agreement, Buyer may at any point during the
Lease Term freely exercise options to renew and continue the Lease Agreement as
provided by its terms and conditions, or substitute another financing structure
of similar type, so long as the final maturity date of the financing does not
exceed the thirty-five (35) year period. In the alternative, Buyer may,
pursuant to the Lease Agreement, purchase the Property from Lessor for the
"Termination Value" as defined below, and if desired, enter into another type of
financing so long as the final maturity date of any such financing does not
exceed the overall thirty-five (35) year period. Buyer shall provide Seller
with quarterly certificates as to the status of the Lease Agreement and related
financing documents (and any replacement thereof or substitute therefor)
confirming that Buyer is not in default thereunder and the status of
construction of the Project (as defined below) and
the amount of Project Expenses (as defined below), in form and content
reasonably satisfactory to Seller. As used in this Article 8, the following
terms shall have the following meanings:
"Project" means an approximately 517,000 square foot warehouse on
the Property constructed with standard materials and containing mezzanine
offices not to exceed 85,000 square feet, together with on-site parking to
accommodate approximately 134 truck trailers and code required automobile
parking, and site improvements to the Property for utilities, ingress and
egress, safety and security.
"Project Expenses" means the costs incurred by Buyer for the
following with respect to the initial construction of the Project: (a) the
acquisition of the Property, (b) demolition, remediation and site
preparation, (c) construction of the Project, (d) Buyer's lender and
appraiser fees and expenses, (e) developer and builder fees and expenses,
(f) permit and governmental fees, (g) architectural and engineering fees
and expenses, and (h) interest on funds borrowed to pay Project Expenses.
Project Expenses exclude costs of interior furniture and fixtures,
warehouse racking, warehouse equipment, and any costs incurred after a
certificate of occupancy or comparable evidence of the completion of the
initial construction of the Project is issued.
"Default Costs" means interest and expenses which by the terms of
Xxxxx's financing documents are added to the cost Buyer must pay to
repurchase or otherwise redeem the Property from Buyer's lenders.
"Termination Value" means the sum of Project Expenses and Default
Costs.
8.1.2 Right of First Refusal. In the event that Buyer wishes to
----------------------
sublease 50,000 or more square feet (the "First Refusal Space") of the Property
to an unaffiliated entity, Seller shall have a right of first refusal to
sublease such First Refusal Space as provided herein. Prior to commencing
negotiations for a lease of the First Refusal Space with an unaffiliated entity,
Buyer shall give Seller written notice that it intends to commence those
negotiations (the "Negotiation Notice"). Prior to entering into a binding
agreement for the lease of the First Refusal Space on the Property to an
unaffiliated entity, Xxxxx shall deliver to Seller a copy of the term sheet or
letter of intent which has been signed by the proposed subtenant and Buyer
("Signed Proposal") setting forth the basic terms for the proposed sublease
transaction. If Seller
wishes to enter into a sublease on the terms and conditions set forth in the
Signed Proposal, Seller shall deliver to Buyer by 5:00 p.m. Los Angeles time on
the date (the "Response Deadline") that is the later of (a) twenty (20) business
days after Seller's receipt of the Negotiation Notice, and (b) five (5) business
days after Xxxxx's delivery of the Signed Proposal, written notice to Buyer
confirming that it wishes to lease such space on the terms specified. If Seller
fails to respond by the Response Deadline, Buyer may proceed to finalize its
sublease transaction with the unaffiliated entity within six (6) months after
delivery of the Signed Proposal to Seller, and Seller shall have no further
right to sublease such space on the Property unless (i) no lease transaction is
entered into with the specified unaffiliated entity, or the term of the sublease
to the unaffiliated entity expires or is otherwise terminated or (ii) the terms
of the proposed sublease transaction are modified, as referenced below. If the
terms of the proposed sublease are modified such that the net present value
(using a 10% interest rate) of the economic terms benefitting Buyer are reduced
by more than 2% from the terms presented to Seller in the Signed Proposal, Buyer
shall once again submit a Signed Proposal to Seller and Seller must respond by
the Response Deadline as noted above if it wishes to sublease the space on the
terms set forth in the new signed proposal. It is understood and agreed that if
Seller wishes to sublease space identified in a term sheet submitted by Buyer,
it must lease the entire amount of the space identified in such letter, on terms
and conditions identical to those specified in such letter or term sheet,
including, without limitation, approval of such sublease by Xxxxx's lender.
8.1.3 Option to Repurchase. Upon the Close of Escrow, Buyer shall
--------------------
convey to Seller a one-time option whereby Seller will have the right, but not
the obligation, to (a) be the assignee of Buyer's option to acquire the Property
(including improvements thereupon), pursuant to the Lease Agreement, for a price
equal to the Termination Value, or (b) if the Lease Agreement is no longer in
effect, to acquire the Property (including all improvements thereupon) from
Buyer for a price (the "Option Price") equal to the Project Expenses, on the
terms and conditions contained in this Section 8.1.3. Upon the occurrence of an
Option Trigger Date (as defined below) Buyer shall give Seller a notice ("Option
Notice") that an Option Trigger Date has occurred. Within ten (10) business
days after receiving an Option Notice, Seller have the right, but not the
obligation, to elect to acquire the Property (including improvements thereupon)
as follows:
(i) If the Option Notice is given after an Option Trigger Date
described in clause (iii) below, Seller may instruct Buyer to purchase
---
the Property for the Termination Value on its behalf pursuant to the
Lease Agreement by depositing into an escrow account a sum equal to
the
Termination Value. Any amounts in excess of the Termination Value
required to purchase the Property (including all improvements
thereupon) pursuant to the Lease Agreement shall be paid by Buyer.
Any funds deposited in that escrow by Seller shall remain Seller's
funds, and under Seller's control, until the closing of the purchase
pursuant to the Lease Agreement.
(ii) If the Option Notice is given after an Option Trigger Date
other than that described in clause (iii) below, Seller may purchase
---
the Property (including all improvements thereupon) for a price equal
to the Option Price.
As used herein, the term "Option Trigger Date" means:
(iii) So long as the Lease Agreement is in effect, the date that
is one hundred eighty (180) days prior to the date upon which Buyer
intends to terminate the Lease Agreement, if Buyer then no longer
occupies, or as of the termination of the Lease Agreement will cease
to occupy, the Property.
(iv) If the Lease Agreement is not in effect, and no prior Option
Notice has been given, the date that is one hundred eighty (180) days
prior to the date upon which Buyer intends to cease to occupy the
Property.
(v) If the Lease Agreement is not in effect, and no prior Option
Notice has been given, the date upon which Buyer ceases to occupy the
Property.
(vi) If no prior Option Notice has been given, the date that is
thirty-five (35) years after the Closing.
In the event that Xxxxxx wishes to transfer such option to a third party, Xxxxx
will have the right of first refusal to acquire such option, upon the terms and
conditions agreed upon between Seller and the third party. Upon any exercise of
the option provided for in this Section 8.1.3, Buyer shall be obligated to
convey title to Seller in the same condition that it existed on the Closing,
subject to no (a) monetary liens or encumbrances, or (b) leases including
without limitation the Lease Agreement. Seller's option rights shall be
contained in an option agreement to be recorded at Closing. If any Option
Trigger Date shall occur and Buyer fails to give an Option Notice, Seller
may at any time after the Option Trigger Date give Buyer an Option Notice, which
will have the same effect as if that Option Notice were given by Buyer to
Seller. The closing of Seller's acquisition of the Property shall take place
through escrow and shall close within one hundred eighty (180) days after the
Option Notice unless a different closing date is required pursuant to the Lease
Agreement.
ARTICLE 9
DEFAULT AND REMEDIES
--------------------
9.1 Default by Buyer.
----------------
9.1.1 Buyer's Breach. In the event (a) Buyer fails to make timely
--------------
payment of any of the amounts described in Sections 2.2, 2.3 or 2.4, (b) Buyer
notifies Seller that Buyer does not intend to proceed with the Closing or (c)
provided that Seller has performed all of its obligations under this Agreement,
the Close of Escrow and the consummation of the transactions herein contemplated
do not occur by reason of any default by Buyer (each of (a), (b) and (c) being
referred to in this Article 9 as a "Buyer's Breach"), Seller shall be entitled,
subject to the conditions enumerated below, to recover from Buyer its Actual
Damages (as defined below) attributable to Buyer's Breach of its obligations
under this Agreement.
9.1.2 Actual Damages. Actual Damages is defined as the sum of the
--------------
amounts described in clauses (i), (ii) and (iii) below, plus Seller's reasonable
attorneys' fees and costs in connection with or arising out of Buyer's Breach.
(i) An amount representing the excess of the sum of $10,500,000
over the value of the Property on the date of Buyer's breach, such
value to be determined by an appraisal as described below;
(ii) An additional sum which represents Seller's actual cost of
demolition on the Property; and
(iii) An additional sum which represents the costs of relocation
incurred by Seller. This additional sum is understood to include
without limitation additional facilities costs for their minimum
period of commitment by Seller. Relocation costs shall be reduced by
the economic value of betterments in equipment (including software)
and related improvements, attributable to the relocation activity. As
used
herein, the term "betterment" means an increase in capacity or
utility of an item over that existing prior to its relocation that
does not arise merely because the relocated item is replaced with a
new item or has a different location. For example, a software upgrade
would be a betterment. The replacement of a piece of furniture that
serves the same function in the relocated space as in the existing
space would not be a betterment so long as it is comparable in
utility.
Actual Damages are agreed by the parties not to include any claim by
---
Seller for punitive damages or like elements. If the appraised value of the
Property as established by the appraisal as described herein exceeds
$10,500,000, the excess amount will further reduce Actual Damages as calculated
under this Section.
9.1.3 Appraisal. The appraisal for purposes of Section 9.1.2(i)
---------
above shall be prepared by an MAI certified appraiser with demonstrated
experience in industrial land appraisals within Los Angeles County, and as
agreed upon by Seller and Buyer. The appraiser shall determine the value of the
Property in a condition assuming all of the Site Work had been completed
(whether or not the case) and that the Property can be used for a use consistent
with the Improvements, and shall be determined as of the date of Buyer's Breach.
9.4.1 Certain Conditions to Recovery. The following conditions
------------------------------
precedent shall each have been satisfied prior to any recovery by Seller of
Actual Damages:
(i) Seller shall have delivered a written notice to both Buyer
and to Escrow Holder that Seller has performed each of its obligations
under this Agreement, including, but not limited to, those obligations
of Seller set forth in Articles 3 and 5 of this Agreement required to
be performed by Seller as of the time of Buyer's Breach. Seller's
notice shall further state that Seller wishes to have its claim of
Xxxxx's breach and its claim for damages associated with that breach
submitted to and adjudicated by an arbitrator under the rules and
auspices of the American Arbitration Association ("AAA").
9.1.5 Arbitration of Xxxxx's Breach and Actual Damages.
------------------------------------------------
(i) Within five (5) business days of the date of Seller's notice,
each party shall propose a list of no less than two (2) and no more
than five (5) arbitrators each of whom is an approved panel member of
AAA
familiar with handling commercial real property disputes. The
first name listed on both lists shall be chosen as the arbitrator to
hear Xxxxxx's claim. Each list shall also designate the name of one
(1) arbitrator who, if the parties' lists do not contain any common
names, shall appoint one (1) arbitrator from its list who together,
within five (5) business days of notification by Seller will propose
the name of a third arbitrator who shall be qualified under the same
criteria. The chosen arbitrator shall hear Xxxxxx's claim within
sixty (60) days after completion of the appraisal described in Section
9.1.3 above or as soon as practicable in the discretion of arbitrator.
The decision of the arbitrator shall be binding upon both Seller and
Xxxxx and may be entered in any court of competent jurisdiction.
(ii) The determination of the arbitrator shall be limited to the
sole issues of Seller's claim for Actual Damages caused by Xxxxx's
Breach and any dispute as to the existence of Xxxxx's Breach.
(iii) The arbitrator shall prepare and provide to the parties a
written decision on all matters subject to the arbitration, including
factual findings and the reasons that form the basis of the
arbitrator's decision. The arbitrator shall not have the power to
commit errors of law or legal reasoning, and the award of the
arbitrator shall be subject to vacation or correction for any such
error or any other grounds specified in Code of Civil Procedure
Section 1286.2 or Section 1286.6. The award of the arbitrator shall
be mailed to the parties no later than thirty (30) days after the
close of the arbitration hearing or as soon as practicable in the
discretion of arbitrator. The arbitration proceeding shall be
reported by a certified shorthand court reporter. Written transcripts
of the proceedings shall be prepared and made available to the
parties.
(iv) The provisions of the California Evidence Code shall apply
to the arbitration hearing.
(v) The costs of arbitration and the appraisal shall be borne by
the non-prevailing party unless the arbitrator determines otherwise.
Any Deposit which shall have been nonrefundable at the time of the
alleged breach shall be applicable to any Actual Damages to be paid by
Buyer to Seller under this Section 9.1.
(vi) NOTICE: BY INITIALING IN THE SPACE BELOW, EACH PARTY IS
AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN
THIS SECTION 9.1 DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND IS GIVING UP ANY RIGHTS IT MIGHT POSSESS TO HAVE
THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE
SPACE BELOW, EACH PARTY IS GIVING UP ITS JUDICIAL RIGHTS TO DISCOVERY
AND APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THIS
SECTION 9.1. IF EITHER PARTY REFUSES TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS SECTION 9.1, IT MAY BE COMPELLED TO ARBITRATE UNDER
THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. THE PARTIES'
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY.
WE HAVE READ AND UNDERSTOOD THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THIS SECTION 9.1 TO NEUTRAL AND BINDING ARBITRATION.
__________________________________________
Buyer's Initials Seller's Initials
9.2 Default by Seller. SUBJECT TO PARAGRAPH 3.2, IN THE EVENT THE
-----------------
CLOSE OF ESCROW AND THE CONSUMMATION OF THE TRANSACTIONS HEREIN CONTEMPLATED DO
NOT OCCUR BY REASON OF ANY DEFAULT BY SELLER, BUYER SHALL BE ENTITLED TO EITHER
(i) TERMINATE THIS AGREEMENT AND THE ESCROW AND RECOVER FROM SELLER THE DEPOSIT
AND ITS OUT-OF-POCKET COSTS FOR BUYER'S STUDIES IN AN AMOUNT NOT TO EXCEED
$100,000.00, OR (ii) SEEK THE SPECIFIC PERFORMANCE HEREOF.
9.3 Waiver of Right to Record Lis Pendens. AS PARTIAL CONSIDERATION
-------------------------------------
FOR SELLER ENTERING INTO THIS AGREEMENT, BUYER EXPRESSLY WAIVES ANY RIGHT (AT
COMMON LAW OR OTHERWISE) TO RECORD OR FILE A LIS PENDENS OR A NOTICE OF PENDENCY
OF ACTION OR SIMILAR NOTICE AGAINST ALL OR ANY PORTION OF THE PROPERTY IN
CONNECTION WITH ANY ALLEGED DEFAULT BY SELLER HEREUNDER. UNLESS IT SATISFIES
THE FOLLOWING CONDITIONS PRECEDENT, (1) THE OUTSIDE CLOSING DATE SHALL HAVE
OCCURRED, AND (2) WITHIN SIXTY
(60) DAYS AFTER THE OUTSIDE CLOSING DATE, BUYER SHALL (A) NOTIFY THE ESCROW
HOLDER AND SELLER IN WRITING OF ITS ELECTION TO SEEK SPECIFIC PERFORMANCE AND
(B) DEPOSIT WITH ESCROW HOLDER THE PURCHASE PRICE IN IMMEDIATELY AVAILABLE FUNDS
WITHOUT ANY ADJUSTMENTS EXCEPT FOR PRORATIONS. SUCH ELECTION NOTICE SHALL: (i)
REPRESENT TO ESCROW HOLDER AND SELLER THAT BUYER IS READY, WILLING AND ABLE TO
PERFORM ALL OF BUYER'S OTHER OBLIGATIONS THAT WERE PERFORMABLE ON THE OUTSIDE
CLOSING DATE; AND (ii) IRREVOCABLY INSTRUCT ESCROW HOLDER TO DELIVER THE
PURCHASE PRICE TO SELLER IMMEDIATELY UPON SELLER'S DEPOSIT OF THE EXECUTED XXXXX
DEED AND FIRPTA CERTIFICATE WITH ESCROW HOLDER.
___________________ __________________
Buyer's Initials Seller's Initials
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
------------------------------
10.1 Representations and Warranties of Seller. Seller represents and
----------------------------------------
warrants to Buyer all of the following, as of the date hereof and as of the
Closing:
10.1.1 Authority. Seller has the full power and authority to enter
---------
into and comply with the terms of this Agreement. The execution, delivery and
performance of this Agreement by Seller have been duly authorized and approved
by all requisite action, and no other authorizations or approvals (other than
the Lot Line Adjustment), whether of governmental bodies or otherwise, will be
necessary in order to enable Seller to enter into or to comply with the terms of
this Agreement.
10.1.2 Binding Effect of Documents. This Agreement and all other
---------------------------
documents and certificates executed and delivered by Seller in connection with
the transactions contemplated by this Agreement constitute legal, valid and
binding obligations of Seller, enforceable against Seller in accordance with
their respective terms. Neither this Agreement nor anything provided to be done
under this Agreement violates or shall violate any contract, document,
understanding, agreement or instrument to which Seller is a party or by which it
is bound.
10.1.3 Absence of Litigation. Except as disclosed to Buyer, to
---------------------
Seller's knowledge, Seller has not been served with, or received a copy of, a
complaint in litigation which will affect the Property.
10.1.4 Absence of Material Change. Except as disclosed to Buyer,
--------------------------
to Seller's knowledge, Seller has not received any written notice from a
governmental agency of (i) any pending widening, modification or realignment of
the streets abutting the Property, or (ii) any proposed eminent domain action;
or (iii) any uncured violation of any law, ordinance or regulation (including
but not limited to zoning, building, fire, health and safety) with respect to
portions of the Property other than improvements.
10.1.5 Absence of Hazardous Materials. To Seller's knowledge, and
------------------------------
except as otherwise disclosed to Buyer in writing (including without limitation
the reports described in Schedule 12.2): (i) there are no Hazardous Materials
installed or stored in or otherwise existing at, on, in or under the Property
which are in violation of any Environmental Laws or which are or have been at
any time in amounts or concentrations sufficient to require the reporting of
such materials to any governmental authority, and (ii) no Hazardous Materials
were previously installed, stored or existed at the Property in violation of any
Environmental Laws.
As used herein, the term "Hazardous Materials" shall mean any
hazardous or toxic materials, substances or wastes, pollutants or contaminants
defined, listed or regulated by the Environmental Laws (defined below) or any
other federal, state, county, or local law, regulation, order or common law
decision, including but not limited to (i) any petroleum products and/or by-
products (including any fraction thereof), flammable substances, explosives,
radioactive materials, hazardous or toxic wastes, substances or materials, known
carcinogens or any other materials, contaminants or pollutants which pose a
hazard to the Property or to persons on or about the Property or cause the
Property to be in violation of any Environmental Laws, (ii) asbestos in any form
which is friable, (iii) urea formaldehyde in form insulation or any other form,
(iv) transformers or other equipment which contain dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty (50) parts per million or
any other more restrictive standard then prevailing, (v) medical wastes and
biohazards, (vi) radon gas, and (vii) any other chemical, material or substance
exposure to which is prohibited, limited or regulated by any governmental
authority or may or could pose a hazard to the health and safety of the
occupants of the Property or the owners and/or occupants of property adjacent to
or surrounding the Property.
As used herein, the term "Environmental Laws" means and includes any
law, ordinance, regulation or requirement now or hereinafter in effect relating
to land use, soil, surface water, groundwater (including the protection,
cleanup, removal, remediation or damage thereof), human health and safety or any
other environmental matter, including, without limitation, the following laws as
the same may be amended from time to time: the Comprehensive Environmental
Response Compensation and Liability Conservation and Recovery Act (42 U.S.C.
(S)(S) 9601, et seq.), the Solid Waste Disposal Act, as amended by the Resource
-------
Conservation and Recovery Act (42 U.S.C. (S)(S) 6901 et seq.), the Emergency
-------
Planning and Community Right to Know Act (42 U.S.C. (S)(S) 11001 et seq.), the
-------
Clean Air Act (42 U.S.C. (S)(S) 7401 et seq.), the Clean Water Act (33 U.S.C.
-------
(S)(S) 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. (S)(S) 2601 et
------- --
seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S)(S) 1801 et
---- --
seq.), the Occupational Safety and Health Act (29 U.S.C. (S)(S) 651 et seq.),
-------
the Federal Insecticide Fungicide and Rodenticide Act (7 U.S.C. (S)(S) 136 et
--
seq.), and the Safe Drinking water Act (42 U.S.C. (S)(S) 300f et seq.), as any
---- -------
of the same may be amended from time to time, and any state or local law dealing
with environmental matters, and any regulations, orders, rules, procedures,
guidelines and the like promulgated in connection therewith, regardless of
whether the same are in existence on the date of this Agreement.
10.1.6 Limitations on Seller's Warranties.
----------------------------------
As used in this Agreement, the words "Seller's knowledge" or
words of similar import shall be deemed to mean, and shall be limited
to, the actual (as distinguished from implied, imputed or
constructive) knowledge of Xxxxxx Xxxx, Xxxxx Xxxxxxxx or Xxxxxx Xxxx
without any duty of inquiry or investigation.
If at or prior to the Closing, (A) Buyer shall become aware
(whether through its own efforts, by notice from Seller or otherwise)
that any of the representations or warranties made herein by Seller,
are untrue, inaccurate or incorrect and shall give Seller notice
thereof at or prior to the Closing, or (B) Seller shall notify Buyer
that a representation or warranty made herein by Seller, is untrue,
inaccurate or incorrect, then Seller may, in its sole discretion,
elect by notice to Buyer to adjourn the Closing one or more times for
up to thirty (30) days in the aggregate in order to cure or correct
such untrue, inaccurate or incorrect representation or warranty. If
any such representation or warranty is either (1) immaterial or (2)
material but not materially untrue, inaccurate or incorrect, and is
not cured or corrected by Seller, on or before the
Outside Closing Date (whether or not the Closing is adjourned as
provided above), Buyer shall nevertheless be deemed to, and shall,
waive such misrepresentation or breach of warranty and shall
consummate the transactions contemplated hereby without any reduction
of or credit against the Purchase Price. If any such representation or
warranty is both (1) material and (2) materially untrue, inaccurate or
incorrect, and is not cured or corrected by Seller, on or before the
Closing Date (whether or not the Closing is adjourned as provided
above), then Buyer, as its sole remedy for any and all such materially
untrue, inaccurate or incorrect material representations or
warranties, shall elect either (x) to waive such misrepresentations or
breaches of warranties and consummate the transactions contemplated
hereby without any reduction of or credit against the Purchase Price,
or (y) to terminate this Agreement by notice given to Seller on the
Outside Closing Date, in which event, this Agreement shall be
terminated and neither party shall have any further rights,
obligations or liabilities hereunder, except for the Surviving
Obligations, and except that Buyer shall be entitled to a return of
the Deposit provided Buyer is not otherwise in default hereunder.
Buyer acknowledges and agrees that (x) at or prior to the Closing,
Buyer's rights and remedies in the event any of Seller's
representations or warranties made in this Agreement are untrue,
inaccurate or incorrect shall be only as provided in this Section
10.1.6(ii), and (y) if the Closing does not occur, Buyer hereby
expressly waives, relinquishes and releases all other rights or
remedies available to it at law, in equity or otherwise (including,
without limitation, the right to seek damages from Seller) as a result
of any of Seller's representations or warranties made in this
Agreement being untrue, inaccurate or incorrect.
In the event the Closing occurs, notwithstanding anything
contained in Section 10.1.6(ii) or elsewhere in this Agreement to the
contrary, Buyer hereby expressly waives, relinquishes and releases any
right or remedy available to it at law, in equity or under this
Agreement to make a claim against Seller for damages that Buyer may
incur, or to rescind this Agreement and the transactions contemplated
hereby, as the result of any of Seller's representations or warranties
being untrue, inaccurate or incorrect if Buyer knew, should have known
or is deemed to have known that such representation or warranty was
untrue, inaccurate or incorrect at the time of the Closing and Buyer
nevertheless closes title hereunder. For example, Purchaser shall be
"deemed to have known" that a representation or warranty was untrue,
inaccurate or
incorrect at the time of the Closing to the extent that the Property
information furnished or made available to or otherwise obtained by
Buyer contains information which is inconsistent with such
representation or warranty. The provisions of this Section 10.1.6(iii)
shall survive the Closing.
10.2 Representations and Warranties of Buyer. Buyer represents and
---------------------------------------
warrants to Seller all of the following, as of the date hereof and as of the
Closing:
10.2.1 Authority. Buyer is a duly qualified and registered
---------
corporation in the State of California, and has the full power and authority to
enter into and comply with the terms of this Agreement. The execution, delivery
and performance of this Agreement by Buyer have been duly authorized and
approved by all requisite action, and no other authorizations or approvals,
whether of governmental bodies or otherwise, will be necessary in order to
enable Buyer to enter into or to comply with the terms of this Agreement.
10.2.2 Binding Effect of Documents. This Agreement and all other
---------------------------
documents and certificates executed and delivered by Buyer in connection with
the transactions contemplated by this Agreement constitute legal, valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms. Neither this Agreement nor anything provided to be done under
this Agreement violates or shall violate any contract, document, understanding,
agreement or instrument to which Buyer is a party or by which it is bound.
10.3 Breach of Representations and Warranties. If Seller or Buyer
----------------------------------------
believes that the other party is in breach of the representations and warranties
set forth in Sections 10.1 or 10.2 above, then such party shall provide express
written notice of any claim of breach or default to the alleged breaching or
defaulting party, and such alleged breaching or defaulting party shall have five
(5) business days in which to cure such alleged default; provided, however, that
no such cure period may extend beyond the Closing.
10.4 Accuracy and Survival of Representations and Warranties. Each of
-------------------------------------------------------
the representations and warranties of Seller and Buyer contained in this
Agreement and in any document or certificate delivered in connection herewith is
at the date hereof and as of the Closing shall be true and correct in all
material respects. The representations and warranties set forth in or made
pursuant to Sections 10.1 and 10.2 shall remain operative and shall survive the
Closing for a period of six (6) months.
ARTICLE 11
BROKERS' COMMISSIONS
--------------------
11.1 Brokers' Commissions. Seller and Buyer each represent and
--------------------
warrant to the other that neither has employed, retained or consulted any
broker, agent or other finder with respect to the Property except as provided in
the List of Particulars, and Seller and Buyer shall each indemnify, defend and
hold the other harmless from and against any and all claims, demands, causes of
action, debts, liabilities, judgments and damages, including, without
limitation, costs and reasonable attorneys' fees incurred in connection with the
foregoing, which may be asserted or recovered against the other on account of
any brokerage fee, commission of other compensation arising in breach of this
representation and warranty. Seller shall pay Brokers a commission for such
services pursuant to separate agreements delivered to and approved by Seller in
writing prior to the date hereof. Buyer has no obligation to pay Brokers.
Seller shall have no obligation to pay Brokers a commission or any other
compensation for their services if Buyer does not consummate its purchase of the
Property and pay the Purchase Price, except to the extent the Brokers are
entitled to compensation under their separate agreements in the event the
Closing does not occur due to a Seller Default under this Agreement. Neither
Seller nor Buyer shall have any obligation to pay any commission or fee to any
agent or broker other than Brokers who may have introduced Brokers to Buyer or
have provided any other assistance to Brokers or Buyer. The agreements of
Seller and Buyer set forth in this Article 11 shall survive the Closing and any
termination of this Agreement.
ARTICLE 12
ACCESS
------
12.1 Access to Property. From the date hereof until the Closing,
------------------
after reasonable prior notice from Buyer to Seller or IDS, Seller shall provide
Buyer and Buyer's agents with access to the Property. Xxxxx's inspection of the
Property shall not unreasonably disrupt the business operations or quiet
enjoyment of any tenants of the Property. Buyer shall be liable for any damage
or injury to any person or property occasioned by the acts of Buyer, Buyers
employees, agents or representatives during any such inspection, and Buyer
shall, and does hereby, indemnify, defend and hold harmless Seller and its
officers, directors, agents and employees from any and all liens, claims,
demands or liability resulting therefrom. Prior to entry onto the Property by
Buyer or any of Buyer's employees, agents or representatives, Buyer shall
deliver to Seller evidence reasonably satisfactory to Seller that Buyer
maintains: (i) comprehensive general liability insurance covering Buyer's
operations in the minimum amount of Two Million Dollars ($2,000,000) per
occurrence, and (ii) workers' compensation insurance covering Buyers employees.
The indemnification by Xxxxx contained in this Section shall survive the Closing
and any termination of this Agreement, as the case may be.
12.2 Access to Operating Information. Upon the opening of Escrow,
-------------------------------
Seller shall provide Buyer and Buyer's agents with copies of the engineering and
environmental studies, surveys, title reports, permits and books and records
covering and relating to the operation of the Property, to the extent that these
documents are available or under Seller's control and relate directly to the
demolition of the existing improvements on the Property, the environmental
condition of the Property and other construction issues, except appraisals and
information which is privileged, confidential or proprietary. Xxxxx expressly
agrees that Seller shall furnish copies of such documents and information to
Buyer for informational purposes only and without representation or warranty as
to the accuracy or completeness of the contents of such materials. Buyer
covenants and agrees that Xxxxx will not rely on such documents and information
and will conduct its own due diligence on the matters contained in such
documents and information. All books and records provided to Buyer in
connection with Xxxxx's inspection of the Property will be held by Buyer in
strict confidence and solely for the purpose of enabling Xxxxx to evaluate
Buyer's purchase of the Property pursuant to this Agreement. Xxxxx acknowledges
receipt of the due diligence materials described on Schedule 12.2.
ARTICLE 13
MISCELLANEOUS MATTERS
---------------------
13.1 Notices. All notices, demands or requests required or permitted
-------
to be given pursuant to this Agreement shall be in writing. If not otherwise
provided hereunder, all notices, demands or requests to be sent to any party
hereto shall be deemed to have been properly given or served by delivering the
same personally to each party, by sending the same through a nationally
recognized, overnight courier service, by depositing the same in the United
States mail, addressed to such party, postage prepaid, and registered or
certified with return receipt requested, or by telecopy with an original to
follow by United States mail at the addresses for such parties indicated on the
List of Particulars. All notices, demands and requests shall be
effective when personally delivered to the addressee, a hard copy
electronically-generated confirmation of facsimile transmission is received by
the sender or received by overnight courier, or upon the third day after being
deposited in the United States mail in accordance with the foregoing.
13.2 Time. Time is of the essence in this Agreement and each and
----
every provision of this Agreement.
13.3 Binding Effect. This Agreement shall bind and inure to the
--------------
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
13.4 Merger of Agreement. Unless otherwise specified in this
-------------------
Agreement, all the terms and conditions of this Agreement shall not survive the
Closing and shall be merged into the Grant Deed and Bill of Sale from Seller to
Buyer.
13.5 Severability. If all or any portion of any of the provisions of
------------
this Agreement shall be declared invalid, illegal or unenforceable bylaws
applicable thereto, then such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement,
13.6 Captions. The titles or captions of the provisions of this
--------
Agreement are merely for convenience of reference and are not representations of
matters included or excluded from such provisions.
13.7 Entire Agreement. The parties hereto expressly acknowledge and
----------------
agree that, with regard to the subject matter of this Agreement and the
transactions contemplated herein, there are no oral agreements between the
parties hereto and this Agreement, including the defined terms and all exhibits
and addenda, if any, attached hereto, embodies the final and complete agreement
between the parties, supersedes all prior and contemporaneous negotiations,
offers, proposals, agreements, commitments, promises, acts, conduct, course of
dealing, representations, statements, assurances and understandings, whether
oral or written, and may not be varied or contradicted by evidence of any such
prior or contemporaneous matter or by evidence of any subsequent oral agreement
of the parties hereto.
13.8 No Modifications Except in Writing. No modification hereof shall
----------------------------------
be binding unless so forth in writing and signed by the party or patties to be
bound by the modification.
13.9 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of California.
13.10 Interpretation. The doctrine that any ambiguity contained in a
--------------
contract shall be construed against the party whose counsel has drafted the
contract is expressly waived by each of the parties hereto with respect to this
Agreement.
13.11 Further Assurances. In addition to the acts and deeds recited
------------------
herein and contemplated to be performed, executed and/or delivered by either
Seller or Buyer, Seller and Buyer shall perform, execute and/or deliver or cause
to be performed, executed and/or delivered on the Closing, or if necessary,
after the Closing, any and all further acts, deeds and assurances as may, from
time to time, be reasonably required to consummate the transactions contemplated
in this Agreement.
13.12 Agreement Not to Be Recorded; Confidentiality. Seller and
---------------------------------------------
Buyer acknowledge and agree that neither this Agreement nor any memorandum or
summary hereof shall be recorded or filed in any public records or files and any
such recording or filing by any person, whether or not a party to this
Agreement, shall be a violation of this Agreement and shall be considered null
and void. Seller and Xxxxx further acknowledge and agree that, prior to the
Closing, neither Seller nor Buyer shall disclose any material term of this
Agreement to any party not affiliated with or advising Seller or Buyer, without
the prior written consent of the other party hereto. Seller and Xxxxx further
acknowledge that either party may enforce any breach of such confidentiality by
seeking injunctive relief, or by suit for damages, or both, or by any other
legal means. This provision shall survive the Closing or the termination of
this Agreement.
13.13 Attorney's Fees and Expenses. If either party to this
----------------------------
Agreement brings suit to enforce this Agreement, then the prevailing party shall
be entitled to recover from the other party reasonable attorneys' fees and costs
incurred by the prevailing party and to receive an award therefor from a court
of competent jurisdiction.
13.14 Assignment. Buyer shall not assign this Agreement without
----------
obtaining Seller's's prior written consent, which consent shall not be
unreasonably withheld; provided further, however, that Buyer may assign this
Agreement at Closing without Seller's prior written consent to the Trustee or
another trustee acting in a similar capacity to Trustee for purposes of Buyer's
financing arrangements. No such assignment shall release Buyer from any
obligations under this Agreement.
13.15 Days. Except where specified as "business" days, the term
----
"days" means calendar days. The term "business days" means calendar days other
than Saturday or Sunday when national banks are open for business in Los
Angeles, California.
ARTICLE 14
PROPERTY "AS-IS"
----------------
14.1 No Side Agreements or Representations; As-is Purchase. Buyer
-----------------------------------------------------
represents, warrants and covenants to Seller that Buyer will, during the
Contingency Period, independently and personally inspect the Property and
Improvements, if any, and that Buyer has entered into this Agreement based upon
its rights and intentions to make such personal examination and inspection.
Xxxxx agrees that Buyer will accept the Property, in its then condition AS-IS
AND WITH ALL ITS FAULTS, including without limitation, any faults and conditions
specifically referenced in this Agreement. No person acting on behalf of Seller
is authorized to make, and by execution hereof, Xxxxx acknowledges and agrees
that, except as specifically provided in Section 10.1 of this Agreement, Seller
has not made, does not make and specifically negates and disclaims any
representations, warranties, promises, covenants, agreements or guaranties of
any kind or character whatsoever, whether express or implied, oral or written,
past, present or future, of, as to, concerning or with respect to the Property.
Xxxxx further acknowledges and agrees that having been given the
opportunity to inspect the Property and review information and documentation
affecting the Property, Buyer is relying solely on its own investigation of the
Property and review of such information and documentation, and not on any
information provided or to be provided by Seller. Xxxxx further acknowledges
and agrees that any information made available to Buyer or provided or to be
provided by or on behalf of Seller with respect to the Property was obtained
from a variety of sources and that Seller has not made any independent
investigation or verification of such information and makes no representations
as to the accuracy or completeness of such information except as may otherwise
be provided herein. Buyer agrees to fully and irrevocably release all such
sources of information and preparers of information and documentation to the
extent such sources or preparers are Seller or Seller's employees, officers,
directors, representatives, agents, servants, attorneys, affiliates, parent
companies, subsidiaries, successors or assigns from any and all claims that they
may now have or hereafter acquire against such sources and preparers of
information for any costs, loss, liability, damage, expense, demand, action or
cause of action arising from such information or documentation. Seller is not
liable or bound in any manner by any oral or
or written statements, representations or information pertaining to the
Property, or the operation thereof, furnished by any of the foregoing entities
and individuals or any other individual or entity. Xxxxx further acknowledges
and agrees that to the maximum extent permitted by law, the sale of the Property
as provided for herein is made on an "AS-IS" condition and basis with all
-----
faults, and that Seller has no obligations to make repairs, replacements or
improvements except for the Site Work.
14.2 Release. Except as expressly provided in this Agreement,
-------
including with respect to Seller's obligation to perform the Site Work, Buyer
and anyone claiming by, through or under Buyer hereby fully and irrevocably
releases Seller and each of its employees, officers, directors, representatives,
agents, servants, attorneys, affiliates, parent companies, subsidiaries,
successors and assigns, and all persons, firms, corporations and organizations
acting on their behalf, from any and all claims that it may now have or
hereafter acquire against Seller or any of its employees, officers, directors,
representatives, agents, servants, attorneys, affiliates, parent companies,
subsidiaries, successors and assigns, and all persons, firms, corporations and
organizations acting on their behalf for any costs, loss, liability, damage,
expenses, demand, action or cause of action arising from or related to any
construction defects, errors, omissions or other conditions, latent or
otherwise, geotechnical and seismic, affecting the Property or any portion
thereof including, without limitation, (1) environmental matters (other than
those matters included within the Site Work) which were:
(i) Described or referred to in any environmental audit obtained
by Buyer; or
(ii) Reasonably discoverable by prudent investigation during the
Contingency Period; or
(iii) Otherwise disclosed by Seller to Buyer or discovered by
Xxxxx at any time prior to the Closing;
And (2) the items described in Section 14.1 above.
This release includes claims of which Buyer is presently unaware or
which Buyer does not presently suspect to exist which, if known by Buyer, would
materially affect Buyer's release to Seller. Buyer specifically waives the
provision of California Civil Code Section 1542, which provides as follows:
"A general release does not extend to claims which the creditor does not
know or expect to exist in his favor at the
time of executing the release, which if known to him must have materially
affected the settlement with the debtor."
It is understood and agreed that the Purchase Price has been adjusted
by prior negotiations to reflect that all of the Property is sold by Seller and
purchased by Buyer subject to the foregoing. It is not contemplated that the
Purchase Price will be increased if costs to Buyer associated with the Property
prove to be less than expected nor will the Purchase Price be reduced if the
Buyer's plan for the Property leads to higher cost projections. The sole remedy
of the Buyer will be to terminate this agreement as provided herein prior to the
end of the Contingency Period.
_________________________ ___________________________
Buyer's initials Seller's initials
IN WITNESS WHEREOF, the parties hereto have executed this Purchase and
Sale Agreement and Joint Escrow Instructions to become effective as of the date
first written above.
SELLER:
CERTIFIED GROCERS OF CALIFORNIA, LTD.
a California corporation
By: /s/ Xxxxxx X. Xxxx, Xx.
-----------------------
Name: Xxxxxx X. Xxxx, Xx.
-------------------
Title: Vice President & General Counsel
--------------------------------
BUYER:
SMART & FINAL STORES CORPORATION,
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------
Name: Xxxxxx X. Xxxxxxxx
------------------
Title: Sr. VP Law/Development
----------------------
By: /s/ Xxxxxx Xxxx
---------------
Name: Xxxxxx Xxxx
-----------
Title: Vice President
--------------
The undersigned, a duly authorized
representative of Escrow Holder, hereby
accepts this Agreement and agrees to act as
Xxxxxx Holder in accordance herewith.
COMMERCE ESCROW COMPANY
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
