Agreement Of Purchase, Sale,& Joint Escrow Instructions

AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS 2
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS


TABLE OF CONTENTS


Paragraph Number Page - --------- ----


1. Purchase and Sale........................................ 2
2. Purchase Price........................................... 2
3. Payment of Purchase Price................................ 2
4. Escrow................................................... 2
5. Condition of Title....................................... 2
6. Title Policy............................................. 3
7. Conditions to Close of Escrow............................ 3
8. Deposits by Seller....................................... 6
9. Deposits by Buyer........................................ 7
10. Costs and Expenses....................................... 7
11. Prorations............................................... 7
12. Disbursements and Other Actions by Escrow Holder......... 9
13. Covenants of Seller...................................... 9
14. Seller's Representations and Warranties.................. 10
15. Buyer's Representations and Warranties................... 13
16. Remedies................................................. 13
17. Damage or Condemnation Prior to Closing.................. 14
18. Notices.................................................. 15
19. Brokers.................................................. 16
20. Legal Fees............................................... 16
21. Assignment; Exchange..................................... 16
22. Miscellaneous............................................ 16


SIGNATURES............................................................ 18


EXHIBITS - --------


Exhibit "A" -- Legal Description of the Land Exhibit "B" -- Rent Roll Exhibit "C" -- Grant Deed Exhibit "D" -- Tenant Lease Agreement Exhibit "E" -- Assignment of Contracts and Assumption Agreement Exhibit "F" -- Bill of Sale Exhibit "G" -- Transferor's Certification of Non-Foreign Status Exhibit "H" -- General Assignment Agreement 3
AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS


TO: Chicago Title Company Escrow No: 7305124-M19
16969 Von Karman Avenue Escrow Officer: Lorri Beasley
Irvine, California 92714 Title Order No: 7305124-M19
Title Officer: Bill Rush


THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of this ____ day of __________, 199_, by and among OASIS RESIDENTIAL, INC., a Nevada corporation ("Buyer"), HUTTON DEVELOPMENT CO., INC., a California corporation ("Seller"), and NEWPORT MESA PARTNERS, a California limited partnership ("Prior Owner") with respect to the following:


R E C I T A L S:


A. Seller desires to sell and convey or cause to convey to Buyer the following:


1. That certain real property located in the City of Costa Mesa, County of Orange, State of California, commonly known as the Sea Palms Village Apartments located at 1850 Whittier Avenue, which is described on Exhibit "A" attached hereto (the "Land"), together with one hundred thirty eight (138) apartment units located thereon, containing in the aggregate approximately one hundred twenty-two thousand nine hundred (122,900) square feet of leasable space, associated parking areas, and all other improvements located thereon (the "Improvements");


2. All of Seller's interest in all rights, privileges, easements and appurtenances benefiting the Land and/or the Improvements, including, without limitation, all mineral and water rights and all easements, rights-of-way and other appurtenances used or connected with the beneficial use or enjoyment of the Land and/or the Improvements (the Land, the Improvements and all such rights, privileges, easements and appurtenances are sometimes collectively hereinafter referred to as the "Real Property");


3. All of Prior Owner's interest as lessor in all leases covering the Land and the Improvements (said leases, together with any and all amendments, modifications or supplements thereto, are hereinafter referred to collectively as the "Leases" and are identified in the "Rent Roll" [as defined in Paragraph 7(a)(ii)(G) hereof] attached hereto as Exhibit "B");


4. All personal property, equipment, supplies and fixtures (collectively, the "Personal Property") owned by Prior Owner and used or useful in the operation of the Real Property; and


5. All of Prior Owner's interest in any intangible property used or useful in connection with the foregoing, including, without limitation, all trademarks, trade names (including, without limitation, the right to use the name "Sea Palms Village Apartments"), goodwill, contract rights, warranties, guaranties, licenses, permits, entitlements, governmental approvals and certificates of occupancy which benefit the Real Property and/or the Personal Property (the "Intangible Personal Property"). The Real Property, the Personal Property, Seller's interest as lessor under the Leases and the Intangible Personal Property are sometimes collectively hereinafter referred to as the "Property."


B. Seller desires to sell the Property to Buyer and Buyer desires to purchase the Property from Seller upon the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree that the terms and conditions of this Agreement and the instructions to Chicago Title Company ("Escrow Holder") with regard to the escrow ("Escrow") created pursuant hereto are as follows:


1. Purchase and Sale. Seller hereby agrees to sell the Property to Buyer, and Buyer hereby agrees to purchase the Property from Seller, upon the terms and conditions herein set forth. 4
2. Purchase Price. The purchase price ("Purchase Price") for the Property (to be paid entirely to Seller) shall be Ten Million Nine Hundred Fifty Thousand Dollars ($10,950,000).


3. Payment of Purchase Price. The Purchase Price for the Property shall be payable by Buyer as follows:


(a) Deposit. Within five (5) business days following the "Opening of Escrow" (as defined in Paragraph 4(a) hereof), Buyer shall deposit or cause to be deposited with Escrow Holder in cash, by a certified or bank cashier's check made payable to Escrow Holder or by a confirmed wire transfer of funds, the sum of Fifty Thousand Dollars ($50,000) (the "Deposit"). Upon Escrow Holder's receipt of the Deposit, Escrow Holder shall immediately invest it in an interest bearing account of a federally insured bank or savings and loan association acceptable to Buyer. The Deposit and all interest thereon shall be fully refundable to Buyer if the contingencies set forth in Paragraphs 7(a)(i), (ii), (iii) and (iv) hereof are not satisfied or waived by Buyer on or before the expiration of the "Contingency Period" (as defined in Paragraph 7(a)(ii) hereof). Upon satisfaction or waiver of such contingencies and the expiration of the Contingency Period, Buyer shall deposit or cause to be deposited with Escrow Holder an additional One Hundred Thousand Dollars ($100,000) which sum, along with the initial Fifty Thousand Dollar Deposit shall be referred to herein as the "Deposit." The Deposit shall be nonrefundable other than in the event the Close of Escrow fails to occur as a result of the Seller's action or inaction. The Deposit and all interest which shall accrue thereon shall be applied to the payment of the Purchase Price upon the "Close of Escrow" (as defined in Paragraph 4(b) hereof), or refunded to Buyer in the event this Agreement and the Escrow is cancelled for any reason other than a default by Buyer hereunder.


(b) Closing Funds. At least one (1) day prior to the Close of Escrow, Buyer shall deposit or cause to be deposited with Escrow Holder, in cash, by a certified or bank cashier's check made payable to Escrow Holder or by a confirmed wire transfer of funds, the balance of the Purchase Price, plus or minus Buyer's share of closing costs, prorations and charges payable pursuant to this Agreement.


4. Escrow.


(a) Opening of Escrow. For purposes of this Agreement, the Escrow shall be deemed opened on the date Escrow Holder shall have received a fully executed original or originally executed counterparts of this Agreement from Buyer, Seller and Prior Owner (such date being referred to hereinafter as the "Opening of Escrow"). Escrow Holder shall notify Buyer, Seller and Prior Owner in writing of the date Escrow is opened. Buyer, Seller and Prior Owner agree to execute, deliver and be bound by any reasonable or customary supplemental escrow instructions of Escrow Holder or other instruments as may reasonably be required by Escrow Holder in order to consummate the transaction contemplated by this Agreement. Any such supplemental instructions shall not conflict with, amend or supersede any portions of this Agreement. To the extent of any conflict or inconsistency between such supplemental instructions and this Agreement, this Agreement shall control.


(b) Close of Escrow. For purposes of this Agreement, the "Close of Escrow" shall be the date that the grant deed, the form of which is attached hereto as Exhibit "C" (the "Grant Deed"), conveying the Real Property to Buyer, is recorded in the Official Records of Orange County, California (the "Official Records"). Unless extended in writing by Buyer and Seller or unless extended pursuant to the terms and provisions of Paragraph 7(a)(ii) hereof, the Close of Escrow shall occur on or before June 3, 1997 (the "Closing Date"). Seller shall deliver possession of the Property to Buyer upon the Close of Escrow, subject only to the "Approved Condition of Title" (as defined in Paragraph 5 below), the Leases and the Contracts which are identified in Exhibit "B" and Exhibit "E" respectively.


5. Condition of Title. It shall be a condition to the Close of Escrow for Buyer's benefit that title to the Real Property be conveyed to Buyer by Seller by the Grant Deed subject only to the following approved condition of title ("Approved Condition of Title"):


(a) a lien to secure payment of real estate taxes, not delinquent;


(b) the lien of supplemental taxes assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code ("Code"), but only to the extent that such supplemental taxes are attributable to the transaction contemplated by this Agreement. Seller shall be responsible for, and shall indemnify, protect, defend (with counsel chosen by Buyer) and hold harmless Buyer and the Real Property from and against any and all supplemental taxes assessed pursuant to the Code, to the extent that such taxes relate to events (including, without limitation, any changes in ownership and/or new construction) occurring prior to the Close of Escrow.


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(c) matters affecting the Real Property created by or with the written consent of Buyer;


(d) exceptions which are disclosed by the Report described in Paragraph 7(a)(i) hereof and which are approved or deemed approved by Buyer in accordance with such Paragraph 7(a)(i); and


(e) the Leases.


Seller covenants and agrees that during the term of the Escrow, it will not cause or permit title to the Real Property to differ from the Approved Condition of Title described in this Paragraph 5. Any liens, encumbrances, encroachments, easements, restrictions, conditions, covenants, rights, right-of-way or other matters affecting the Approved Condition of Title which may appear of record or be revealed after the date of the Report described in Paragraph 7(a)(i) below shall also be subject to Buyer's approval and must be eliminated or ameliorated by Seller to Buyer's satisfaction prior to the Close of Escrow as a condition to the Close of Escrow for Buyer's benefit.


6. TITLE POLICY. Title shall be evidenced by the willingness of the "Title Company" (as defined in Paragraph 7(a)(i) hereof) to issue its ALTA Extended Coverage (Form B-1970) Owner's Policy of Title Insurance ("Title Policy") in the amount of the Purchase Price, showing title to the Real Property vested in Buyer, subject only to the Approved Condition of Title.


7. CONDITIONS TO CLOSE OF ESCROW.


(a) CONDITIONS TO BUYER'S OBLIGATIONS. The Close of Escrow and Buyer's obligation to consummate the transaction contemplated by this Agreement are subject to the satisfaction of the following conditions (or Buyer's written waiver thereof, it being agreed that Buyer may waive in writing any or all of such conditions) for Buyer's benefit on or prior to the dates designated below for the satisfaction of such conditions. In the event Buyer terminates this Agreement and the Escrow due to the nonsatisfaction of any such conditions, then Buyer shall be entitled to the immediate return of the Deposit and all interest accrued thereon:


(i) TITLE. Buyer shall have approved the legal description of the Land and any matters of title as disclosed by the following documents (collectively, the "Title Documents") which are to be prepared (other than the "Survey" described below) at Seller's sole cost and expense and to be delivered to Buyer (other than the "Survey" described below) at Seller's sole cost and expense: (A) a standard preliminary title report dated on or after the date of this Agreement issued by Chicago Title Company (the "Title Company") with respect to the Real Property, as such report may be amended or supplemented from time to time to reflect additional title matters or survey exceptions (the "Report"); (B) legible copies of all documents, whether recorded or unrecorded, referred to in the Report; (C) a color-coded map plotting all easements disclosed by the Report; and (D) an ALTA as-built survey of the Real Property prepared by a licensed engineer or surveyor (the "Survey"). Seller shall cause the Title Documents (including any existing Survey) to be delivered to Buyer within five (5) days after the Opening of Escrow.


Buyer shall have until May 14, 1997 (the "Title Approval Date") to give Seller and Escrow Holder written notice ("Buyer's Title Notice") of Buyer's disapproval or conditional approval of the legal description or any matters shown in or disclosed by the Title Documents.


The failure of Buyer to give Buyer's Title Notice on or before the Title Approval Date shall be deemed to constitute Buyer's approval of the respective matters relating hereto. If Buyer disapproves or conditionally approves any of the foregoing matters, Seller may, within five (5) days after its receipt of Buyer's Title Notice, elect to eliminate or ameliorate to Buyer's reasonable satisfaction such disapproved or conditionally approved matters. Within such five (5) day period, Seller shall give Buyer written notice (which shall hereinafter be referred to as "Seller's Title Notice") of those disapproved or conditionally approved matters, if any, which Seller covenants and agrees to either eliminate from the Title Policy as exceptions to title to the Property or to ameliorate to Buyer's reasonable satisfaction by the Closing Date as a condition to the Close of Escrow for Buyer's benefit. If Seller does not elect in Seller's Title Notice to eliminate or ameliorate any disapproved or conditionally approved matters as provided above, or if Buyer disapproves, in Buyer's reasonable discretion, Seller's Title Notice, then Buyer shall have the right, by a writing delivered to Seller and Escrow Holder prior to the Closing Date, to (A) waive its prior disapproval, in which event said disapproved matter(s) shall be deemed approved, or (B) terminate this Agreement and the Escrow created pursuant hereto, in which event the Deposit and all interest accrued thereon shall be immediately returned to the Buyer, and this Agreement, the Escrow and the rights and obligations of the parties hereunder shall terminate. If Seller fails to timely deliver Seller's Title Notice, then Seller will be deemed to have elected to eliminate or ameliorate to Buyer's satisfaction any disapproved 6 or conditionally approved matters set forth in Buyer's Title Notice on or before the Close of Escrow. Seller shall be deemed to have eliminated or ameliorated, to Buyer's reasonable satisfaction, any disapproved or conditionally approved matter by obtaining one (1) or more title endorsements reasonably satisfactory to Buyer. Seller's failure to timely deliver the Seller's title notice shall be deemed to be Seller's election not to eliminate any disapproved or conditionally approved matter. Notwithstanding anything to the contrary contained in this Agreement, Buyer hereby disapproves all liens evidencing monetary encumbrances (other than liens for non-delinquent real property taxes) and Seller agrees to cause all such liens to be eliminated at Seller's sole cost and expense (including all prepayment penalties and charges) prior to or concurrently with the Close of Escrow.


(ii) REVIEW AND APPROVAL OF DOCUMENTS AND MATERIALS. Seller has caused to be delivered to Buyer previous to execution of this Agreement, the documents and materials respecting the Property set forth below (the "Documents and Materials"). From the Opening of Escrow until 5 p.m. Pacific Time on May 14, 1997 (the "Contingency Period"), Buyer shall have the right to review and approve or disapprove, in its sole and absolute discretion, any or all of the Documents and Materials. The failure of Buyer to disapprove any of the Documents and Materials on or before the expiration of the Contingency Period shall be deemed to constitute Buyer's approval thereof. Buyer shall treat all Documents and Materials as confidential and Buyer shall not reproduce or disclose the Documents and Materials to any third party except Buyer's lender and/or any authorized agents.


(A) ZONING COMPLIANCE; PERMITS. Evidence that the Property complies with any and all applicable governmental ordinances, rules and regulations, including, but not limited to, zoning and building regulations, and any and all other governmental approvals (such as approved building permits, building inspection approvals and certificates of occupancy) and/or authorizations pertaining to the Property;


(B) IMPROVEMENT PLANS. Complete "as-built" plans, drawing and specifications relating to all of the Improvements;


(C) AGREEMENTS. Legible copies of any and all insurance policies, broker listing agreements, construction contracts, management contracts, maintenance contracts, service contracts, reciprocal easement agreements, if any, utility will-serve letters and any other contracts or agreements affecting or relating to the leasing, ownership, operation, maintenance, construction or development of the Property, including, without limitation, copies of all warranties with respect thereto (collectively, the "Contracts");


(D) PERSONAL PROPERTY LIST. A detailed list ("Personal Property Schedule") of all personal property, including, without limitation, any and all fixtures, equipment and tools owned by Seller and used on or in connection with the Property, which are to be conveyed to Buyer at Close of Escrow pursuant to the Bill of Sale described in paragraph 8(f) below, together with a copy of all warranties and guaranties applicable thereto. Said list shall reflect any and all security interests in said personal property, and Seller shall cause, at Seller's sole cost and expense, said personal property to be released from any such security interests at the Close of Escrow;


(E) TAX STATEMENTS. Legible copies of the most recently issued bills for all real property taxes and all personal property taxes payable with respect to the Real Property, or any portion thereof;


(F) LEASES. True, correct and complete copies of any and all Leases and all amendments thereto, and copies of any and all documents, agreements and other writings referenced therein affecting the Leases (including, without limitation, lease guaranties and tenant improvement contracts), as well as copies of any letters of intent or other correspondence, pending lease agreements, or the like, which relate to any potential leases with respect to the Real Property. Seller shall also deliver to Buyer any and all financial information concerning the lessees under the Leases which are in Seller's possession or control or which can otherwise be readily obtained by Seller from said lessees or any other person or entity;


(G) RENT ROLL. A current schedule ("Rent Roll") prepared and delivered by Seller to Buyer, which shall reflect:


(1) the name of each of the lessees ("Lessees") under the Leases and the space occupied by each of the Lessees;


(2) the amount of any security deposits and rental concessions, nonrefundable deposits and prepaid rent from each Lessee, the amount of monthly rent, the rental rate per square foot per month, the amount of additional rent, the amount of taxes, insurance and 7 reimbursable expenses paid and to be paid by each Lessee (including common area maintenance charges) and any and all applicable increases thereto (CPI increase and the like);


(3) the amount of all actual collections and scheduled rent; and


(4) the commencement date, the termination date and the term (in months) for each of the Leases, and a description of any extension or renewal options therein;


(H) MONTHLY OPERATING STATEMENTS. Copies of all monthly operating statements for the prior twenty-four (24) months;


(I) SOILS AND ENGINEERING REPORTS. All existing and available soils, environmental and building reports and engineering data pertaining to the Real Property or any portion thereof and any and all architectural studies, grading plans, topographical maps and similar data respecting the Real Property;


(J) MAPS. Any and all tentative, parcel and/or final maps and any other governmentally approved or processed documents relative to the subdivision of the Land ("Maps");


(K) DELINQUENCY REPORTS. Complete copies of all aged delinquency reports for the prior twenty-four (24) months, which sets forth the names of all Lessees that were delinquent during such time period in the payment of any amounts owing pursuant to any of the Leases, together with the amounts and the period of such delinquencies;


(L) UTILITY BILLS. Copies of all utility bills for the prior six (6) months; and


(M) QUALIFICATION GUIDELINES. The standard tenant qualification guidelines governing all new tenants.


(iii) INSPECTIONS AND STUDIES. On or before the expiration of the Contingency Period, Buyer shall have the right to approve or disapprove, in Buyer's sole and absolute discretion, the results of any and all inspections, investigations, tests and studies, including, without limitation, investigations with regard to zoning, building codes and other governmental regulations, architectural inspections, engineering tests, economic feasibility studies and soils, seismic and geologic reports, as well as toxic and environmental reports with respect to the Property, inspections of all or any portion of the Improvements (including, without limitation, structural, mechanical and electrical systems, roofs, pavement, landscaping and public utilities), and any other physical inspections and/or investigations as Buyer may elect to make or obtain. The failure of Buyer to disapprove said results on or prior to the expiration of the Contingency Period shall be deemed to constitute Buyer's approval thereof.


During the term of this Escrow, Buyer, its agents, consultants, contractors and subcontractors shall have the right to enter upon the Property (subject to the Leases) to conduct or make any and all inspections and tests (including, without limitation, environmental assessments of the Real Property) as may be necessary or desirable in Buyer's sole and absolute discretion. Buyer hereby indemnifies and holds Seller and the Property harmless from and against any and all costs, losses, damages or expenses arising out of or resulting from such entry by Buyer.


In the event this Agreement is cancelled for any reason except Seller's default, Buyer shall promptly deliver to Seller (at no cost to Seller) photocopies of all reports, tests, investigations and studies undertaken by buyer during the Contingency Period.


(iv) MARKET STUDY. On or before the expiration of the Contingency Period, Buyer shall have the right to approve or disapprove, in Buyer's sole, absolute and subjective discretion, the results of any market study of the Property prepared by or for Buyer. Said market study may include, without limitation, comparisons of the Leases to leases in other projects in the area in which the Property is located, current market vacancies, buildings under construction or planned, historical demand for lease space, and any other market information that Buyer deems necessary, in buyer's sole, absolute and subjective discretion. The cost of any market study of the Property prepared by Buyer or at Buyer's direction shall be borne by Buyer.


(v) REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. Seller shall have duly performed each and every covenant and agreement to be performed by Seller pursuant to this


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Agreement and Seller's representations, warranties and covenants set forth in Paragraph 14 hereof shall be true and correct as of the Closing Date.


(vi) NO MATERIAL CHANGES. At the Closing Date, there shall have been no material adverse changes in the physical or financial condition of the Property from and after the Opening of Escrow. For purposes of this Agreement, there shall be deemed to have occurred a material adverse change in the physical or financial condition of the Property in the event a loss or circumstance occurs which reduces the value of the Property in an amount in excess of Fifty Thousand Dollars ($50,000).


(vii) RENT ROLL. The Rent Roll, as updated to the Closing Date, certified as to its accuracy and executed by Seller, does not materially differ from the Rent Roll delivered by Seller to Buyer pursuant to Paragraph 7(a)(ii) hereof.


(viii) DEPOSITS. Seller shall have made all deposits with Escrow Holder required of Seller pursuant to the provisions of Paragraph 8 of this Agreement.


(ix) LEASES. As of the Close of Escrow, all of the Leases approved by Buyer pursuant to Paragraph 7(a)(ii) hereof shall be in full force and effect and shall not have been modified or amended except in the normal course of business and any modification or amendment not in the normal course of business will be subject to Buyer's consent.


(b) CONDITIONS TO SELLER'S OBLIGATIONS. For the benefit of Seller, ...