<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 1, 1997
-----------------------------
IRT Property Company
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 1-7859 58-1366611
- -------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
200 Galleria Parkway, Suite 1400, Atlanta, GA 30339
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 955-4406
----------------------------
N/A
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On April 16, 1997, IRT Property Company (the "Company") acquired a 73,686
square foot neighborhood and community shopping center, Market Place Shopping
Center ("Market Place"), in Norcross, Georgia. The acquisition was from a
Georgia limited partnership, and Market Place was managed by Peachtree Corners,
Inc., related to the selling entity. The total purchase price paid by the
Company was $7,069,000 cash, consisting of the initial purchase price of
$6,800,000, $250,000 of capital expenditures and approximately $19,000 of
acquisition costs. This acquisition was funded from borrowings under the
Company's $100 million unsecured revolving term loan (the "Line of Credit").
This acquisition was pursuant to an Agreement of Sale and Purchase of Property
between the selling entity and the Company dated September 12, 1996.
On May 13, 1997, the Company acquired an 82,676 square foot neighborhood
and community shopping center, Powers Ferry Plaza ("Powers Ferry"), in Marietta,
Georgia. The acquisition was from a Georgia limited partnership, and Powers
Ferry was managed by Forum Management, Inc., a partner in the selling entity.
The total purchase price paid by the Company was $6,894,000, consisting of the
initial purchase price of $6,800,000 and approximately $94,000 of acquisition
costs. This acquisition was funded by cash of $5,644,000 (primarily borrowings
under the Company's Line of Credit) and a $1,250,000 purchase-money mortgage at
an annual interest rate of 9.0% maturing January 31, 1999. The acquisition was
pursuant to a Closing Statement and Memorandum between the selling entity and
the Company dated May 13, 1997.
On July 1, 1997, the Company acquired a 134,132 square foot neighborhood
and community shopping center, Greenwood Shopping Center ("Greenwood"), in Palm
Springs, Florida. The acquisition was from a Florida limited partnership, and
Greenwood was managed by RJS/Jackson Group, Inc., an unrelated party. The total
purchase price paid by the Company was $13,006,000 cash, consisting of the
initial purchase price of $12,950,000 and approximately $56,000 of acquisition
costs. This acquisition was funded by borrowings under the Line of Credit. The
acquisition was pursuant to an Agreement of Purchase and Sale of Property
between the selling entity and the Company dated May 14, 1997.
The above agreements were negotiated at arms' length between the Company
and representatives of the respective sellers. The factors considered by the
Company in determining the price to be paid for the respective properties
included their historical and expected cash flow, nature of the tenancies and
terms of the leases in place, occupancy rates, opportunities for alternative and
new tenancies, current
2
<PAGE> 3
operating costs and taxes of the properties and anticipated changes therein
under Company ownership, prospects for financing the centers in certain cases,
the physical condition and locations of the properties, the anticipated effect
on the Company's financial results (including particularly funds from
operations), the ability to sustain and potentially increase its distributions
to shareholders, and other factors. The Company took into consideration
capitalization rates that it believes other shopping centers may have recently
sold for, but determined the price it was willing to pay for each respective
shopping center primarily on the factors discussed above relating to the
properties themselves and their fit into the Company's post- acquisition
operations. No separate independent appraisals were obtained in connection with
the acquisitions.
Information regarding the shopping centers is as follows:
<TABLE>
<CAPTION>
Market Place Powers Ferry Greenwood
------------ ------------ ---------
<S> <C> <C> <C>
Square footage 73,686 82,676 134,132
Percent leased
at acquisition 97% 93% 94%
Year completed 1976 1979 & 1983 1982 & 1994
Cost to Company $7,069,000 $6,894,000 $13,006,000
Principal tenants Regal Theaters Micro Center Publix
CVS Drugs CVS Drugs Walgreens
</TABLE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The following financial statements, pro forma financial information and
exhibits regarding the acquisitions described in Item 2 above are attached
hereto and are a part of this report.
(a) Financial Statements. Audited statements of revenues over
specific operating expenses for the year ended December 31,
1996 for the following shopping centers:
(i) Market Place Shopping Center
(ii) Powers Ferry Plaza
(iii) Greenwood Shopping Center
(b) Pro Forma Financial Information (unaudited).
(i) Pro forma combined balance sheet of the
Company as of June 30, 1997.
3
<PAGE> 4
(ii) Pro forma statements of earnings (assuming
acquisition of the aforesaid shopping
centers as of January 1, 1996) of the
Company for the year ended December 31, 1996
and the six months ended June 30, 1997.
(iii) Estimated pro forma earnings from
operations and funds from operations of
the Company.
(c) Exhibits.
---------
10.1 Agreement of Sale and Purchase of Property
dated September 12, 1996 between Market
Place Shopping Center, L.P. and the Company
(exclusive of exhibits thereto), First
Amendment to Agreement for the Sale and
Purchase of Property dated October 15, 1996
and Second Amendment to Agreement for the
Sale and Purchase of Property dated February
13, 1997.
10.2 Closing Statement and Memorandum dated May
13, 1997 between Powers Ferry Plaza, L.P.
and the Company, (exclusive of exhibits
thereto).
10.3 Agreement of Purchase and Sale of Property
dated May 14, 1997 between Rreef
MidAmerica/East-IV, Inc. and the Company
(exclusive of exhibits thereto), First
Amendment to Agreement for the Sale and
Purchase of Property dated June 12, 1997 and
Second Amendment to Agreement for the Sale
and Purchase dated June 19, 1997.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Deloitte & Touche LLP.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
IRT PROPERTY COMPANY
(Registrant)
August 6, 1997 BY: /s/ Mary M. Thomas
------------------
Mary M. Thomas
Executive Vice President and
Chief Financial Officer
5
<PAGE> 6
ITEM 7(a)(i)
MARKET PLACE SHOPPING CENTER
STATEMENTS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO APRIL 15, 1997 (UNAUDITED) AND
FOR THE YEAR ENDED DECEMBER 31, 1996
TOGETHER WITH AUDITORS' REPORT
<PAGE> 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
IRT Property Company:
We have audited the accompanying statement of revenues over specific operating
expenses of MARKET PLACE SHOPPING CENTER identified in Note 1 of the notes to
the statement of revenues over specific operating expenses for the year ended
December 31, 1996. This financial statement is the responsibility of the
management of Market Place Shopping Center. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues over specific operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Form 8-K of IRT Property
Company, as described in Note 2, and is not intended to be a complete
presentation of Market Place Shopping Center's revenues and expenses.
In our opinion, the statement of revenues over specific operating expenses
referred to above presents fairly, in all material respects, the revenues and
specific operating expenses of Market Place Shopping Center for the year ended
December 31, 1996 prepared pursuant to the rules and regulations of the
Securities and Exchange Commission in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
April 15, 1997
<PAGE> 8
MARKET PLACE SHOPPING CENTER
STATEMENTS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO APRIL 15, 1997 (UNAUDITED) AND
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Period From Year Ended
January 1, 1997 to December 31,
April 15, 1997 1996
------------------ ------------
(Unaudited)
<S> <C> <C>
REVENUES:
Base rent $235,097 $817,758
Tenant expense reimbursements and other 51,852 159,424
-------- --------
286,949 977,182
-------- --------
SPECIFIC OPERATING EXPENSES (NOTE 2):
Management fees 9,404 32,710
Other 50,494 162,150
-------- --------
59,898 194,860
-------- --------
EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES $227,051 $782,322
======== ========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 9
MARKET PLACE SHOPPING CENTER
NOTES TO STATEMENTS OF CERTAIN REVENUES AND EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO APRIL 15, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
1. GENERAL
Market Place Shopping Center ("Market Place") was owned by Market Place
Shopping Center, L.P., a Georgia limited partnership. This property was
managed by Capital Asset Management, Inc. Market Place is a 73,686 square
foot shopping center located in Norcross, Georgia.
On April 16, 1997, the Company acquired Market Place Shopping Center in
Norcross, Georgia for $7,069,000 cash, consisting of the initial purchase
price of $6,800,000, $250,000 of capital expenditures and approximately
$19,000 of acquisition costs.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statement is not representative of the actual
operations of the properties for the period presented. Certain expenses
may not be comparable to the expenses expected to be incurred by the
Company in the proposed future operations of the properties. The Company
is not aware of any material factors relating to the properties that would
cause the reported financial information not to be indicative of future
operating results. Excluded expenses consist of interest on debt not
assumed, depreciation and amortization, and other costs not directly
related to the future operations of the properties.
REVENUE RECOGNITION
Expense recoveries are based on common area maintenance, property tax, and
insurance expenses, as defined in the leases, and are accrued on a monthly
basis. Percentage rents, based on tenants' sales volumes, are recognized
as revenue when received.
MANAGEMENT FEES
Management fees are included in the statement of revenues over specific
operating expenses to the extent the charges conform to the Company's
current policy of charging 4% of base and percentage rents.
<PAGE> 10
3. FUTURE MINIMUM RENTALS
The property was leased to various tenants under operating leases that
expire at various dates. Minimum base rentals on noncancelable operating
leases for the Company as of December 31, 1996 for the next five years and
thereafter are as follows:
<TABLE>
<S> <C>
1997 $ 819,454
1998 786,935
1999 710,687
2000 668,644
2001 512,679
Thereafter 2,849,118
----------
$6,347,517
==========
</TABLE>
One tenant comprised approximately 67% of base rent revenues for the year
ended December 31, 1996 and approximately 36% of future minimum rentals as
of December 31, 1996.
<PAGE> 11
ITEM 7(a)(ii)
POWERS FERRY PLAZA
STATEMENTS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 12, 1997 (UNAUDITED) AND
FOR THE YEAR ENDED DECEMBER 31, 1996
TOGETHER WITH AUDITORS' REPORT
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
IRT Property Company:
We have audited the accompanying statement of revenues over specific operating
expenses of POWERS FERRY PLAZA identified in Note 1 of the notes to the
statement of revenues over specific operating expenses for the year ended
December 31, 1996. This financial statement is the responsibility of the
management of Powers Ferry Plaza. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues over specific operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in a Form 8-K of IRT Property
Company, as described in Note 2, and is not intended to be a complete
presentation of Powers Ferry Plaza's revenues and expenses.
In our opinion, the statement of revenues over specific operating expenses
referred to above presents fairly, in all material respects, the revenues and
specific operating expenses of Powers Ferry Plaza for the year ended December
31, 1996 prepared pursuant to the rules and regulations of the Securities and
Exchange Commission in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
May 12, 1997
<PAGE> 13
POWERS FERRY PLAZA
STATEMENTS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 12, 1997 (UNAUDITED) AND
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Period from Year Ended
January 1, 1997 December 31,
to May 12, 1997 1996
--------------- ----------
(Unaudited)
<S> <C> <C>
REVENUES:
Base rent $263,278 $ 733,295
Tenant expense reimbursements and other 68,772 110,947
-------- ---------
332,050 844,242
SPECIFIC OPERATING EXPENSES (NOTE 2): -------- ---------
Management fees 11,429 29,934
Other 50,007 163,164
-------- ---------
61,436 193,098
-------- ---------
EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES $270,614 $ 651,144
======== =========
</TABLE>
The accompanying notes are an integral part of this combined statement.
<PAGE> 14
POWERS FERRY PLAZA
NOTES TO STATEMENTS OF CERTAIN REVENUES AND EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 12, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
1. GENERAL
Powers Ferry Plaza ("Powers Ferry") was owned by Powers Ferry Partners,
L.P., a Georgia limited partnership. This property was managed by Forum
Management Group. Powers Ferry is an 82,626 square foot shopping center
located in Marietta, Georgia.
On May 13, 1997, the Company acquired Powers Ferry Plaza in Marietta,
Georgia for a total cost of $6,894,000, consisting of the initial purchase
price of $6,800,000, and approximately $94,000 of acquisition costs. This
acquisition was funded by a $1,250,000 purchase-money mortgage at an
annual interest rate of 9% maturing January 31, 1999 and cash of
$5,644,000.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statement is not representative of the actual
operations of the properties for the period presented. Certain expenses
may not be comparable to the expenses expected to be incurred by the
Company in the proposed future operations of the properties. The Company
is not aware of any material factors relating to the properties that would
cause the reported financial information not to be indicative of future
operating results. Excluded expenses consist of interest on debt not
assumed, depreciation and amortization, and other costs not directly
related to the future operations of the properties.
REVENUE RECOGNITION
Expense recoveries are based on common area maintenance, property tax, and
insurance expenses, as defined in the leases, and are accrued on a monthly
basis. Percentage rents, based on tenants' sales volumes, are recognized
as revenue when received.
MANAGEMENT FEES
Management fees are included in the statement of revenues over specific
operating expenses to the extent the charges conform to the Company's
current policy of charging 4% of base and percentage rents.
<PAGE> 15
3. FUTURE MINIMUM RENTALS
The property was leased to various tenants under operating leases that
expire at various dates. Minimum base rentals on noncancelable operating
leases for the Company as of December 31, 1996 for the next five years and
thereafter are as follows:
<TABLE>
<S> <C>
1997 $ 694,901
1998 555,793
1999 258,308
2000 84,965
2001 70,293
Thereafter 9,299
----------
$1,673,559
==========
</TABLE>
One tenant comprised approximately 32% of base rent revenues for the year
ended December 31, 1996 and three tenants individually comprised
approximately 26%, 6%, and 11% of future minimum rentals as of December
31, 1996.
<PAGE> 16
Item 7(a)(iii)
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
RREEF MidAMERICA/EAST-IV, Inc.:
We have audited the statement of revenues and certain expenses of Greenwood
Shopping Center for the year ended December 31, 1996. This financial statement
is the responsibility of Greenwood Shopping Center's management. Our
responsibility is to express an opinion on the financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K of IRT Property
Company as a result of the acquisition of this property). Material amounts,
described in Note 1 to the statement of revenues and certain expenses, that
would not be comparable to those resulting from future operations of the
acquired property are excluded, and the statement is not intended to be a
complete presentation of the acquired property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of Greenwood Shopping
Center for the year ended December 31, 1996 in conformity with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Miami, Florida
July 1, 1997
<PAGE> 17
RREEF MidAMERICA/EAST-IV, INC.
GREENWOOD SHOPPING CENTER
STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REVENUES:
<S> <C>
Rental income $1,509,523
Recoverable expenses 334,808
Other income 9,954
----------
Total revenues 1,854,285
----------
CERTAIN EXPENSES:
Property operating 178,079
Real estate taxes 232,675
Management fees 69,543
----------
Total certain expenses 480,297
----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $1,373,988
==========
</TABLE>
See notes to statement of revenues and certain expenses.
-2-
<PAGE> 18
RREEF MidAMERICA/EAST-IV, INC.
GREENWOOD SHOPPING CENTER
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Greenwood Shopping Center ("Greenwood" or the "Property"), located in West
Palm Beach, Florida, was acquired by IRT Property Company on July 1, 1997.
The statement of revenues and certain expenses includes information related
to the operations of Greenwood for the year ended December 31, 1996 as
recorded by the previous owner, RREEF MidAMERICA/EAST-IV, Inc.
The accompanying historical financial statement information is presented in
conformity with Rule 3-14 of the Securities and Exchange Commission.
Accordingly, the financial statement is not representative of the actual
operations for the year ended December 31, 1996 as certain expenses, which
may not be comparable to the expenses expected to be incurred in the future
operations of the acquired property, have been excluded. Expenses excluded
consist of interest, income taxes, depreciation and amortization, and other
costs not directly related to the future operations of the acquired
property.
Management's Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Rental Income - Rental income is recognized on a straight-line basis over
the terms of the related leases.
Property Operating Expenses - Property operating expenses consist primarily
of utilities, insurance, repairs and maintenance, security and safety,
cleaning, and other administrative expenses.
Management Fees - For the year ended December 31, 1996, the Property was
managed by RJS/Jackson Group, Inc. for a property management fee paid
monthly based on an annual rate of 3% of total rental income. In addition,
RREEF Management Company, an entity related through common ownership,
received a property management fee paid monthly based on an annual rate of
1% of total rental income.
-3-
<PAGE> 19
2. OPERATING LEASES
Revenues are principally obtained from tenant rentals under noncancelable
operating lease agreements. The future minimum rentals under noncancelable
operating lease agreements as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31 Amount
----------- ------
<S> <C>
1997 $ 1,280,034
1998 1,269,115
1999 1,206,230
2000 1,150,460
2001 1,081,314
Thereafter 7,021,257
-----------
Total $13,008,410
===========
</TABLE>
Two tenants accounted for approximately 27% and 17%, respectively, of the
Property's total rental income for the year ended December 31, 1996.
* * * * * *
-4-
<PAGE> 20
GREENWOOD SHOPPING CENTER
STATEMENT OF REVENUES AND CERTAIN EXPENSES
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
The unaudited Statement of Revenues and Certain Expenses of Greenwood
Shopping Center should be read in conjunction with the audited Statement of
Revenues and Certain Expenses included elsewhere herein. Accordingly, certain
disclosures accompanying the Statement of Revenues and Certain Expenses for the
year ended December 31, 1996 prepared in accordance with generally accepted
accounting principles are omitted. In the opinion of management, all
adjustments, consisting solely of normal recurring adjustments, necessary for
fair presentation of the Statement of Revenues and Certain Expenses have been
included. The current period's results of operations are not necessarily
indicative of results which ultimately may be achieved for the year.
{SCHEDULE ON FOLLOWING PAGE}
<PAGE> 21
GREENWOOD SHOPPING CENTER
STATEMENT OF REVENUES AND CERTAIN EXPENSES
SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<S> <C>
REVENUES:
Rental income $618,958
Recoverable expenses 294,271
Other income 71,121
--------
Total revenues 984,350
--------
CERTAIN EXPENSES
Property operating 87,267
Real estate taxes 115,381
Management fee 28,164
--------
Total certain expenses 230,812
--------
REVENUES IN EXCESS OF CERTAIN EXPENSES $753,538
========
</TABLE>
<PAGE> 22
Item 7 (b)(i)
IRT Property Company
Pro Forma Combined Balance Sheet
June 30, 1997
(Unaudited)
The following unaudited pro forma combined balance sheet sets forth, on
a pro forma basis, the effect of the acquisition by IRT Property Company (the
"Company") of the shopping centers, (the "Centers") as if the transactions had
been consummated on June 30, 1997.
This pro forma balance sheet should be read in conjunction with its
notes together with the financial statements of the Company included in its 1996
Annual Report to Shareholders and its Report on Form 10-Q for the six-month
period ended June 30, 1997.
[SCHEDULE ON FOLLOWING PAGE]
1
<PAGE> 23
<TABLE>
<CAPTION>
Pro Forma
Adjustments IRT Property
IRT PROPERTY Increase Company Pro Forma
COMPANY (Decrease) Combined
------------ -------------- -------------
<S> <C> <C> <C>
ASSETS
Real estate investments:
Rental properties $495,051,380 $26,968,537 (a) $522,019,917
Less-Accumulated depreciation (62,463,715) (62,463,715)
------------ ----------- ------------
432,587,665 26,968,537 459,556,202
------------ ----------- ------------
Net investment in direct
financing leases 4,770,180 4,770,180
Investment in joint venture 355,832 355,832
Mortgage loans, net 13,125,505 13,125,505
------------ ----------- ------------
Net real estate investments 450,839,182 26,968,537 477,807,719
Cash & cash equivalents 1,620,194 1,620,194
Interest receivable 525,473 525,473
Prepaid expenses and other assets 6,757,646 55,000 (b) 6,812,646
------------ ----------- ------------
$459,742,495 $27,023,537 $486,766,032
============ =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 87,414,024 $ 1,250,000 (c) $ 88,664,024
7.3% convertible subordinated
debentures due August 15, 2003 29,971,000 29,971,000
7.45% senior notes due April 1,
2001 49,937,450 49,937,450
Indebtedness to banks 26,700,000 25,492,917 (d) 52,192,917
Accrued interest on debentures 826,534 826,534
Accrued interest on senior notes 931,250 931,250
Accrued expenses and other
liabilities 7,180,666 280,620 (b) 7,461,286
Deferred income taxes 1,055,000 1,055,000
------------ ----------- ------------
Total liabilities 204,015,924 27,023,537 231,039,461
------------ ----------- ------------
Shareholders' Equity:
Common Stock 32,075,298 32,075,298
Preferred stock - -
Additional paid-in capital 260,659,708 260,659,708
Cumulative distributions in
excess of net earnings (37,008,435) (37,008,435)
------------ ----------- ------------
Total shareholders' equity 255,726,571 - 255,726,571
------------ ----------- ------------
$459,742,495 $27,023,537 $486,766,032
============ =========== ============
</TABLE>
2
<PAGE> 24
IRT PROPERTY COMPANY
NOTES TO PRO FORMA COMBINED BALANCE SHEET
June 30, 1997
(Unaudited)
(a) Additions to Rental Properties
The increase in real estate investments is based on the initial
purchase price plus the costs of acquisition for the following shopping
centers.
<TABLE>
<CAPTION>
Shopping Purchase Costs of Total
Center Price Acquisition Cost to Company
----------- ----------- ----------- ---------------
<S> <C> <C> <C>
Market Place $ 7,050,000 $ 18,731 $ 7,068,731
Powers Ferry 6,800,000 93,602 6,893,602
Greenwood 12,950,000 56,204 13,006,204
----------- -------- -----------
$26,800,000 $168,537 $26,968,537
=========== ======== ===========
</TABLE>
(b) Changes in Other Assets and Other Liabilities
The increase in prepaid expenses and other assets and in accrued
expenses and other liabilities reflect the normal prorations from the
sellers, including such items as tenant security deposits, prepaid
rents and receivables and real estate taxes payable paid to the Company
at closing.
(c) Additions to Mortgage Notes Payable
The increase in mortgage notes payable is due to the financing of a
portion of the purchase price of Powers Ferry in the form of a
$1,250,000 purchase-money mortgage bearing interest at 9.00%, with
principal and accrued interest due January 31, 1998 and 1999.
3
<PAGE> 25
(d) Additions to Indebtedness to Banks
The increase in indebtedness to banks is due to borrowings under the
Line of Credit to fund the Total Cost to Company, net of the
purchase-money mortgage on Powers Ferry and normal prorations,
calculated as follows:
<TABLE>
<S> <C>
Total Cost to Company $26,968,537
Purchase-money Mortgage (1,250,000)
Prorations, net (225,620)
-----------
Total borrowings $25,492,917
===========
</TABLE>
4
<PAGE> 26
Item 7 (b)(ii)
IRT PROPERTY COMPANY
PRO FORMA STATEMENTS OF EARNINGS
(Unaudited)
The following unaudited pro forma statements of earnings for the year
ended December 31, 1996 and the six-month period ended June 30, 1997 have been
prepared by combining the consolidated statements of earnings of IRT Property
Company (the "Company") with the statements of operations, as adjusted, of the
Shopping Centers for the periods indicated.
The pro forma combined statements presented below assume that the
purchases of the Shopping Centers had been consummated as of January 1, 1996.
The pro forma combined statements of earnings do not necessarily
reflect operations as they would have been if IRT had owned the Shopping Centers
during such periods and should not be deemed to be necessarily indicative of the
future results of the Company after the purchases.
The pro forma combined statements of earnings should be read in
conjunction with their notes, together with the statements of revenues over
specific operating expenses of the shopping centers for the year ended December
31, 1996, included as exhibits herein, and the financial statements of the
Company included in its 1996 Annual Report to Shareholders and its Report on
Form 10-Q for the six-month period ended June 30, 1997.
[Schedule on Following Page]
1
<PAGE> 27
<TABLE>
<CAPTION>
IRT Property
Operations Operations Pro Forma Company
IRT Property of of Operations Adjustments Pro
Property Market Powers of Increase Forma
Company Place Ferry Greenwood (Decrease) Combined
------------- ---------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31, 1996
- ----------------------------
REVENUES
Income from rental properties $57,925,659 $977,182 $844,242 $1,854,285 $61,601,368
Interest 1,388,733 1,388,733
Interest on direct financing leases 919,030 919,030
----------- -------- -------- ---------- ----------- -----------
60,233,422 977,182 844,242 1,854,285 - 63,909,131
EXPENSES
Operating expenses of rental properties 12,113,108 194,860 193,098 480,297 12,981,363
Interest on mortgages 7,750,389 112,500 (a) 7,862,889
Interest on debentures 6,198,065 6,198,065
Interest on senior notes 2,798,433 2,798,433
Interest on indebtedness to banks 1,003,331 1,730,969 (b) 2,734,300
Depreciation 10,310,344 432,479 (c) 10,742,823
Amortization of debt costs 595,604 - (d) 595,604
General & administrative 3,862,036 3,862,036
----------- -------- -------- ---------- ----------- -----------
44,631,310 194,860 193,098 480,297 2,275,948 47,775,513
----------- -------- -------- ---------- ----------- -----------
Earnings from operations $15,602,112 $782,322 $651,144 $1,373,988 $(2,275,948) $16,133,618
=========== ======== ======== ========== =========== ===========
Per share earnings from operations $ 0.61 $ 0.63
=========== ===========
Average shares outstanding 25,749,860 25,749,860
=========== ===========
Six Months Ended June 30, 1997
- ------------------------------
REVENUES
Income from rental properties $31,541,382 $286,949 $332,050 $ 984,350 $33,144,731
Interest 722,544 722,544
Interest on direct financing leases 312,126 312,126
----------- -------- -------- ---------- ----------- -----------
32,576,052 286,949 332,050 984,350 - 34,179,401
----------- -------- -------- ---------- ----------- -----------
EXPENSES
Operating expenses of rental properties 6,516,878 59,898 61,436 230,812 6,869,024
Interest on mortgages 3,642,333 41,250 (a) 3,683,583
Interest on debentures 1,272,942 1,272,942
Interest on senior notes 1,870,840 1,870,840
Interest on indebtedness to banks 571,275 724,147 (b) 1,295,422
Depreciation 5,581,827 181,096 (c) 5,762,923
Amortization of debt costs 203,661 - (d) 203,661
General & administrative 1,799,308 1,799,308
----------- -------- -------- ---------- ----------- -----------
21,459,064 59,898 61,436 230,812 946,493 22,757,703
----------- -------- -------- ---------- ----------- -----------
Earnings from operations $11,116,988 $227,051 $270,614 $ 753,538 $ (946,493) $11,421,698
=========== ======== ======== ========== =========== ===========
Per share earnings from operations $ 0.35 $ 0.36
=========== ===========
Average shares outstanding 31,515,722 31,515,722
=========== ===========
</TABLE>
2
<PAGE> 28
IRT PROPERTY COMPANY
NOTES TO PRO FORMA COMBINED STATEMENTS OF EARNINGS
(Unaudited)
Adjustments assuming that the acquisitions of the Shopping Centers occurred at
the beginning of the period, with the acquisitions funded through borrowings
under the Company's Line of Credit and the purchase-money mortgage:
(a) Increase in interest expense on mortgage notes payable based on the
$1,250,000 purchase-money mortgage bearing interest at 9.00% for the
year ended December 31, 1996 and the period from January 1, 1997
to May 12, 1997, the date of acquisition of Powers Ferry.
(b) Increase in interest expense on bank indebtedness based on estimated
borrowings under the Line of Credit for the year ended December 31,
1996 of $25,492,917 at an effective interest rate of 7.04% and
incremental interest expense for the period January 1, 1997 to the
date of acquisition of each property at an effective interest rate of
7.25%, partially offset by lower commitment fees. Interest expense is
calculated as follows:
<TABLE>
<CAPTION>
Interest
--------
<S> <C>
Year ended December 31, 1996
----------------------------
Borrowings $25,492,917
Rate -
Interest 7.04% $1,794,701
Unused committment fee .0025% (63,732)
----------
Total Interest, net $1,730,969
Six months ended June 30, 1997
------------------------------
Borrowings -
Market Place $ 7,021,130 $ 146,434
Powers Ferry 5,601,594 146,869
Greenwood 12,870,193 462,710
----------- ----------
$25,492,917
===========
Rate -
Interest 7.25% 756,013
Unused committment fee .0025% (31,866)
----------
Total Interest, net $ 724,147
</TABLE>
3
<PAGE> 29
(c) Increase in depreciation expense for the additional operating centers
in 1996 and for the period January 1, 1997 to the date of acquisition
of each property. Depreciation is calculated on the portion of the
Total Cost to Company allocated to buildings using a 40-year life.
The cost allocation is as follows:
<TABLE>
<S> <C>
Land $ 9,669,378
Building 17,299,159
-----------
Total Cost to Company $26,968,537
===========
</TABLE>
(d) The operating expenses of rental properties for the Centers includes
management fees of $132,187 for the year ended December 31, 1996 and
$48,997 for the period January 1, 1997 to the date of acquisition
of each property. It is assumed that these fees would offset any
increase in general and administrative expenses required by an
increase in personnel and associated costs to service the acquired
shopping centers.
4
<PAGE> 30
Item 7 (b)(iii)
IRT Property Company
Estimated Pro Forma Earnings from Operations
and Funds from Operations of the Company
(Unaudited)
The following presents the estimated pro forma combined earnings from
operations and funds from operations of the Company for the year ended December
31, 1996 and the six months ended June 30, 1997, respectively, assuming that the
purchase of the Centers had been consummated as of January 1, 1996. Earnings
from operations is not taxable to the Registrant because it qualifies as a real
estate investment trust under the Internal Revenue Code. The Company defines
funds from operations, consistent with the NAREIT definition, as net earnings
before gains (losses) on real estate investments and extraordinary items plus
depreciation and amortization of capitalized leasing costs. Interest on
debentures and amortization of convertible debenture costs is added to funds
from operations when assumed conversion of the debentures is dilutive.
Conversion of the debentures is dilutive and therefore assumed for the year
ended December 31, 1996 and the six months ended June 30, 1997, respectively.
Management believes funds from operations should be considered along with, but
not as an alternative to, net income as defined by generally accepted accounting
principles as a measure of the Company's operating performance. Funds from
operations does not represent cash generated from operating activities in
accordance with generally accepted accounting principles and is not necessarily
indicative of cash available to fund cash needs. These estimated pro forma
results do not purport to present expected results of operations for these
properties in the future and were prepared on the basis described in the notes
to the pro forma financial statements which should be read in conjunction
herewith.
1
<PAGE> 31
<TABLE>
<CAPTION>
Pro Forma IRT Property
Adjustments Company
IRT Property Operations of Increase Pro Forma
Company the Centers (Decrease) Combined
------------ ------------- ----------- ------------
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Year ended December 31, 1996
- ----------------------------
Earnings from operations $15,602,112 $2,807,454 $(2,275,948) $16,133,618
Depreciation 10,310,344 432,479 10,742,823
Amortization of capitalized leasing fees 249,292 249,292
Amortization of capitalized leasing income 227,039 227,039
----------- ---------- ----------- -----------
Funds from operations 26,388,787 2,807,454 (1,843,469) 27,352,772
Interest on debentures 6,198,065 6,198,065
Amortization of convertible debentures costs 365,760 365,760
----------- ---------- ----------- -----------
Fully diluted funds from operations $32,952,612 $2,807,454 $(1,843,469) $33,916,597
=========== ========== =========== ===========
Six months ended June 30, 1997
- ------------------------------
Earnings from operations $11,116,988 $1,251,203 $ (946,493) $11,421,698
Depreciation 5,581,827 181,096 5,762,923
Amortization of capitalized leasing fees 123,890 123,890
Amortization of capitalized leasing income 55,879 55,879
----------- ---------- ----------- -----------
Funds from operations 16,878,584 1,251,203 (765,397) 17,364,390
Interest on debentures 1,272,942 1,272,942
Amortization of convertible debentures costs 75,774 75,774
----------- ---------- ----------- -----------
Fully diluted funds from operations $18,227,300 $1,251,203 $ (765,397) $18,713,106
=========== ========== =========== ===========
</TABLE>
2
<PAGE> 1
EXHIBIT 10.1
AGREEMENT FOR THE SALE AND PURCHASE OF PROPERTY
THIS AGREEMENT FOR THE SALE AND PURCHASE OF PROPERTY (the "Agreement"),
is made and entered into this 12th day of September, 1997, between MARKET PLACE
SHOPPING CENTER, L.P., a Georgia limited partnership ("Seller") and IRT PROPERTY
COMPANY, a Georgia corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
certain property more particularly described herein upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the sum of Ten and No/100 ($10.00) Dollars in hand
paid by Purchaser to Seller, and other good and valuable consideration, the
receipt, adequacy, and sufficiency of which are hereby acknowledged, the parties
hereto intending to be legally bound agree as follows:
1. Sale of Property. Seller agrees to sell to Purchaser, and Purchaser
agrees to purchase from Seller, upon the terms and conditions hereinafter set
forth, all of the right, title and interest of Seller in and to all property
described in Sections 1.1, 1.2, 1.3 and 1.4 below (collectively "the Property").
1.1 Real Property. All of those certain tracts or parcels of land
containing approximately 6.49 acres, and lying and being in Gwinnett
County, Georgia, and being described in Exhibit A attached hereto
(collectively the "Land"), together with all buildings now or hereafter
located on the Land, including, without limitation, those certain store
buildings containing approximately 75,526 square feet of leasable area;
all improvements, fixtures, and other items of real property now or
hereafter located upon the Land; all easements appurtenant to the Land
and other easements, grants of right, licenses, privileges or other
agreements for the benefit of, belonging to or appurtenant to the Land,
whether or not situate upon the Land, including without limitation,
sign rights and parking rights or agreements; all mineral, oil and gas
rights, riparian rights, water rights, sewer rights and other utility
rights allocated to the Land; all right, title and interest of the
owner of the Land in and to any roads, streets and ways, public or
private, in front of or adjoining all or any part of the Land and
serving the Land; and the reversionary interest in any parcel
encumbered by a ground lease; all whether or not specifically
referenced on Exhibit A attached hereto, and subject only to those
certain permitted title exceptions more particularly described in
Exhibit B attached hereto (the "Permitted Title Exceptions").
1.2 Tangible Personal Property. All tangible personal property used in
connection with the ownership, financing, occupation, operation, and
maintenance of the aforesaid buildings, improvements and fixtures,
located upon the Land which are now or at Closing owned by Seller (it
being agreed and understood that the tangible property to be conveyed
by Seller shall specifically exclude tangible property owned by
third-party tenants of building space located upon the Land), together
with all furniture, furnishings, fittings, signs, tools, equipment,
machinery, apparatus, building materials, supplies (consumable and
otherwise), carpeting, draperies, window treatments and other
decorations, and other personal property whether located upon or off
the Land and used in connection with the ownership, financing,
occupation, operation, and maintenance of the aforesaid buildings,
improvements and fixtures, located upon the Land and which are now or
at Closing owned by Seller, including without limitation, all boilers,
furnaces, heating, ventilating and air-conditioning systems, elevators,
escalators, building drawings, plans and specifications, building
materials and wall partitions, sprinkler
<PAGE> 2
systems, sewerage systems, electrical equipment, fire prevention and
extinguishing apparatus, engineering, maintenance and housekeeping
supplies and materials of all kinds whether used, unused or in stock
for future use in connection with the maintenance and operation of the
Property.
1.3 Intangible Personal Property. All of Seller's right, title and
interest in and to all intangible personal property not described in
Sections 1.1, 1.2 and 1.4 of this Agreement which is used in connection
with the ownership, financing, occupation, operation, and maintenance
of the aforesaid buildings, improvements, fixtures, and personal
property located upon the Land, including, without limitation, the
right to use the trade name "Market Place Shopping Center," and all of
Seller's right, title and interest in and to any and all other
tradenames, trademarks, service marks, logos, contract rights,
telephone numbers, escrow accounts, guaranties, warranties, permits,
licenses, approvals, certificates, soils reports, engineering studies,
bonds, deposits, instruments, documents of title, general intangibles
and business records, files, correspondence, tenant lists, tenant
prospect lists, brochures and advertising materials pertaining to the
aforesaid buildings, improvements, fixtures and personal property
located upon the Land, rights in and to the surrounding dedicated
streets, entitlement in and to any award made or to be made in lieu of
any of Seller's interests to be conveyed, including any award or
payment for any condemnation of the Land or any land in front of or
adjoining all or any part of the Land, and goodwill and all other
intangible property related to the Land or connected therewith and
appurtenances related to the Land. Purchaser acknowledges that Seller
makes no representation or warranty that Seller owns or has any right
to transfer any of the intangible property described in this Section
1.3; provided, however, Seller does hereby represent and warrant to
Purchaser that Seller has not previously transferred all or any portion
of its right, title and interest, if any, in and to such intangible
property to any other individual or entity.
1.4 Tenant Leases. The interest of the owner of the Land in and to all
leases, subleases, rental agreements and other occupancy agreements,
whether oral or written and whether or not of record, for the use or
occupancy of any portion of the Property, including without limitation
the leases described on Exhibit L attached hereto and made a part
hereof, together with all amendments to, modifications of, renewals and
extensions of said leases, subleases, rental agreements and other
occupancy agreements, all guaranties with respect thereto, all work
letter agreements, improvement agreements and other agreements with
lessee's or tenant's thereunder, all default notices, estoppel letters,
escalation notices and other correspondence in regard thereto, and all
accounting records in regard thereto (collectively hereinafter the
"Tenant Leases"), together with all prepaid rents, advance rentals and
lease security deposits with respect to the Tenant Leases.
Notwithstanding the foregoing, Seller shall be entitled to retain
copies of all such records and correspondence after Closing. The Tenant
Leases with Regal Theaters and Big B Drugs are sometimes hereinafter
referred to as the "Credit Tenant Leases" and the leases to all other
tenants are sometimes collectively hereinafter referred to as the
"Local Tenant Leases." The tenants or lessees under the Credit Tenant
Leases and the Local Tenant Leases are sometimes referred to herein as
the "Credit Tenants" and the "Local Tenants," respectively. The tenants
or lessees under the Tenant Leases are sometimes referred to herein as
the "Tenants."
2. Purchase Price. Subject to the adjustments and prorations hereinafter
described, the total purchase price for the Property shall be Seven
Million One Hundred Thousand and No/100 Dollars ($7,100,000.00) (the
"Purchase Price"). The Deposit (as defined in Section 12) deposited by
Purchaser
2
<PAGE> 3
in accordance with Section 12 of this Agreement shall be credited against the
Purchase Price due from Purchaser at Closing.
2.1 Method of Payment of Purchase Price. The Purchase
Price shall be paid by Purchaser to Seller on the Closing Date in cash, or by
federal wire transfer or other immediately available funds at Closing.
3. Inspection of Property. Purchaser shall have until forty-five (45)
days after the Effective Date (the "Inspection Period") to investigate and
inspect the Property and conduct any and all due diligence as Purchaser may deem
necessary. Seller shall cooperate with Purchaser to facilitate such
investigation and inspection, and in the event that Purchaser desires to meet
with any of the tenants on the Property, Purchaser shall first give Seller not
less than two (2) days advance notice (written or oral), and then a
representative of Seller shall have the opportunity to accompany Purchaser at
such meeting. Until Closing, Purchaser and any of its authorized representatives
and agents shall have access onto the Land for the determination of utility
availability, soil, environmental, engineering, and feasibility testing, and
other tests, inspections, and investigations deemed necessary by Purchaser in
its sole discretion, including without limitation, examination of all Tenant
Leases, Service Contracts (as defined in Section 6.22 hereof), tangible personal
property and intangible personal property. Purchaser agrees to indemnify and
hold Seller harmless from all liability for injury to person or property arising
out of the inspection and investigation of the Property by Purchaser or by any
of the representatives or agents of Purchaser, and Purchaser shall promptly
restore the Property in the event that Purchaser's inspections and
investigations result in any damage to the Property. At all reasonable times
prior to and after the Closing Date for a period of three (3) years, Seller
shall give Purchaser, and its counsel, accountants and representatives, full
access to all books and records with respect to ownership, management and
operation of the Property, shall permit them to copy the same and shall furnish
Purchaser with all such information concerning the same as Purchaser may
reasonably request. All such information shall be kept confidential by
Purchaser. Seller and Purchaser hereby agree, notwithstanding anything to the
contrary contained in this Agreement, that Purchaser shall have the
unconditional and absolute right to terminate this Agreement by delivery of
written notice to Seller given at any time before the close of the Inspection
Period, in which event the Deposit shall be paid to Purchaser and Purchaser
shall deliver to Seller all documents that Seller has previously provided to
Purchaser and copies of all reports that Purchaser has obtained with respect to
the Property. The indemnification provided in this Section 3 shall survive any
termination of this Agreement by Purchaser as provided above. If Purchaser shall
not terminate this Agreement prior to the expiration of the Inspection Period as
provided in this Section 3, the Deposit shall thereafter be non-refundable to
Purchaser, except in the event of a Seller default or as otherwise specifically
set forth herein and subject to performance by Seller of all of its obligations
under this Agreement.
3.1 Rejection of Service Contracts. During the Inspection
Period Purchaser shall review the Service Contracts, and in the event Purchaser
is unsatisfied with any of the Service Contracts for any reason, Purchaser shall
have the right to provide notice of rejection of such Service Contracts to
Seller prior to the end of the Inspection Period. Any Service Contracts which
are so rejected (the "Rejected Service Contracts") shall be terminated in the
manner set forth in Section 7.3.11 of this Agreement.
4. Title and Survey.
4.1 Title. Seller shall convey and transfer to Purchaser
such good, indefeasible and marketable title to the Property as will
enable Purchaser's title insurance company to issue its title policy in
the amount of the Purchase Price, subject only to the Permitted Title
3
<PAGE> 4
Exceptions, but without exception as to matters of survey or to
mechanics' or similar liens, and free and clear of any and all other
pledges, mortgages, liens, judgments, conditional sales agreements,
encumbrances, ground rents, leases, tenancies, parties in possession,
licenses, security interests, covenants, conditions, restrictions,
rights-of-way, easements, encroachments and any agreements, contracts,
rights, acts, charges or other matters of any nature affecting the
title, except to the extent the foregoing constitute Permitted Title
Exceptions. Purchaser shall have until forty-five (45) days after the
Effective Date ("Title Examination Period") by which to give notice to
Seller of any objections which Purchaser may have, including, without
limitation, objections to any matters which constitute Permitted Title
Exceptions. If Purchaser does give Seller notice of objection to any
survey or title exceptions or defects, then, for a period of fifteen
(15) days after such notice, Seller shall have the option but not the
obligation to remove and cure such defects or encumbrances; provided,
however, that Seller shall pay and satisfy any monetary lien which
encumbers all or any portion of the Property, and Seller shall remove,
cure or satisfy any such defects which arise on or after the effective
dates of the Survey and any title insurance commitment or certificate
of title Purchaser obtains during the Title Examination Period. If any
objection is not so satisfied by Seller, then regardless of whether or
not such objection constitutes a Permitted Title Exception, Purchaser
shall have the right to terminate this Agreement by notice to Seller in
which case the Deposit shall be returned to Purchaser. If Seller does
so cure or satisfy the objections, then this Agreement shall continue
in effect. Purchaser shall have the right at any time to waive any
objections that it may have made and thereby preserve this Agreement in
effect. Except as hereinafter specifically set forth, Seller agrees not
to further alter or encumber in any way Seller's title to the Property
after the date of this Agreement. Purchaser shall have the continuing
right to object to any survey or title matters first appearing after
the later of (i) the date Purchaser receives the Survey, or (ii) the
effective date of the certificate of title or title insurance
commitment Purchaser obtains with respect to the Property.
4.2 Survey. During the Inspection Period, Purchaser, at Seller's
expense, shall cause to be prepared an accurate as-built ALTA\ACSM Land
Title Survey of the Property, certified by a registered land surveyor
acceptable to Purchaser in its sole discretion, showing the boundaries
and the acreage, to the nearest 1,000th of an acre, net of roadways and
utility rights-of-way, of the Property, the location of all easements,
buildings, improvements, set back lines and encroachments, if any,
located thereon, together with a legal description of the Property (the
"Survey"). Once the Survey has been prepared, a legal description of
the Property prepared from the Survey shall be initialed by Purchaser
and Seller and attached hereto as Exhibit A-1. Subject to the
provisions of the last sentence of this Section 4.2, the legal
description in the Special Warranty Deed attached hereto as Exhibit M
to be delivered at Closing shall be the description so attached hereto
as Exhibit A-1. Seller and/or the surveyor shall execute any affidavit
reasonably required by the title insurance company providing the
owner's title insurance policy referred to in Section 7.4 to issue the
policy to Purchaser without any survey exception. At Seller's option,
the legal description on the Special Warranty Deed will be the one
attached as Exhibit A, and if Seller so elects, then it will also give
the Purchaser at Closing a quit-claim deed with the legal description
attached or to be attached hereto as Exhibit A-1.
5. Environmental Audit - Phase I. Purchaser shall have the right, at
Seller's expense, to cause to be prepared a Phase I environmental assessment
report on the Property. The report shall include (i) information relative to the
prior use history of the Property; (ii) an on-site inspection of the building
and grounds to identify the presence of asbestos, underground storage tanks, or
other hazardous materials; (iii) a neighborhood investigation and the
identification of nearby CERCLIS (Superfund
4
<PAGE> 5
sites); and (iv) an assessment regarding the likelihood of environmental
contamination and compliance with applicable environmental laws.
5
<PAGE> 6
6. Representations, Warranties, and Covenants of Seller. Seller hereby
represents, warrants, and covenants as follows:
6.1 Authority. Seller is a limited partnership duly organized and
validly existing under the laws of the State of Georgia . Seller owns
good, marketable and insurable fee simple title to the Property free
and clear of all liens, encumbrances, and other exceptions to title
except the Permitted Title Exceptions. Seller has complete and full
authority and power to (i) execute this Agreement and to convey to
Purchaser good, marketable and insurable fee simple title to the
Property, free and clear of all liens, encumbrances, and other
exceptions to title other than the Permitted Title Exceptions, (ii)
execute and deliver such other documents, instruments, agreements,
including, without limitation, affidavits and certificates necessary to
effectuate the transaction contemplated herein, and (iii) take all such
additional action necessary or appropriate to effect and facilitate the
consummation of the sale and purchase transaction contemplated herein.
6.2 Compliance by Seller. Neither the entering into of this Agreement
nor the consummation of the transaction contemplated hereby shall
constitute or result in a violation or breach by Seller of any
judgment, order, writ, injunction or decree issued against or imposed
upon it, or shall result in a violation of any applicable law, order,
rule or regulation of any governmental authority. Seller is not
involved as the debtor in any bankruptcy, reorganization or insolvency
proceedings. There are no actions, suits, proceedings or investigations
pending which would become a cloud on the title to the Property or any
portion thereof or which questions the validity or enforceability of
the transaction contemplated by this Agreement or any action taken
pursuant hereto in any court or before or by any federal, district,
county, or municipal department, commission, board, bureau, agency or
other governmental instrumentality. This Agreement is the valid and
legally binding obligation of Seller enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization and other similar laws affecting the rights
of creditors generally and general principles of equity.
6.3 Compliance of Property. To the best of Seller's knowledge, the
Property complies with all laws, ordinances, rules, regulations,
restrictions and requirements pertaining to the Property or which are
applicable to the use or manner of use, occupancy, ownership,
possession or operation of the Property. To the best of Seller's
knowledge, no portion of the Property violates any zoning, building,
fire, health, pollution, subdivision, environmental protection or waste
disposal ordinance, code, law or regulation applicable thereto. Seller
has received no notice of any suits, judgments, or violations which
remain uncured relating to the Property or any zoning, building, fire,
health, pollution, environmental protection, or waste disposal
ordinance, code, law or regulation relating to the Property. Seller has
received all certificates of occupancy, licenses, certificates and
permits (collectively, the "Permits") necessary for the construction,
maintenance, and operation of the Property which are required to be
issued by any applicable governmental or quasi-governmental agency or
authority or any board of fire underwriters or real estate board or
similar organization or institution. Seller hereby represents and
warrants that: (i) the Seller's current use and occupation of any
portion of the Property does not violate any of the Permits, (ii)
Seller has not received any notice of, and to the best of Seller's
knowledge there are not any additional Permits or amendments to
existing Permits that are required for the current use or operation of
the existing improvements on the Property, (iii) all of the Permits
necessary for the present maintenance and operation of the Property are
in full force and effect, and (iv) to the best of Seller's knowledge,
all of the Permits necessary for the present maintenance and operation
of the Property are transferable
6
<PAGE> 7
with the Property to the Purchaser without charge. Notwithstanding
anything contained in this Section 6.3 or elsewhere in this Agreement
to the contrary, "Permits" shall not include any permits, licenses or
certificates required to be obtained by any tenant of the Property with
respect to the operation of its business from its premises.
6.4 Litigation. Seller has no knowledge of, nor has Seller received
any notice of, any actual or threatened action, litigation, or
proceeding by any organization, entity, person, individual or
governmental agency (including governmental actions under condemnation
authority or proceedings similar thereto) against the Property or
Seller, nor has any such organization, entity, person, individual or
governmental agency communicated to Seller anything which Seller
believes to be a threat of any such action, litigation or proceeding.
6.5 Taxes. No improvements (site or area) have been constructed or
installed by any public authority, the cost of which may be assessed in
whole or in part against any part of the Property in the future. Seller
has not been notified of any possible future improvements that might
create an assessment against any part of the Property. The Property is
separately assessed for tax purposes and is not combined with any other
real property for such tax assessment purposes.
6.6 Restriction on Conveyance. Seller has not and will not sell,
encumber, convey, assign or contract to sell, encumber, convey or
assign all or any portion of the Property other than the Permitted
Title Exceptions, nor has Seller taken or shall cause to be taken any
action in conflict with this Agreement at any time during or prior to
the pendency of this Agreement. No rights-of-first refusal, options or
similar agreements to purchase all or any portion of the Property exist
in connection with the Property which would in any way interfere with
Purchaser's ability to purchase the Property as provided herein, or
which is in any way in contravention of the spirit and intent of this
Agreement.
6.7 Environmental Matters. To the best of Seller's knowledge: (i) no
toxic or hazardous substances, including without limitation, asbestos
and the group of organic compounds known as polychlorinated biphenyls,
have been generated, treated, stored or disposed of, or otherwise
deposited in or on the Land, (ii) there have been no substances or
conditions in or on the Land which may support a claim or cause of
action under RCRA, CERCLA, SARA, or any other federal, state or local
environmental statutes, regulations, ordinances or other environmental
regulatory requirements (collectively, "Environmental Laws"), and (iii)
there are no underground storage tanks or underground deposits of
hazardous waste or materials located on the Land. Seller has not used,
nor authorized, nor, to the best of Seller's knowledge, allowed the use
of the Property, and to the best of Seller's knowledge, the Property
has not been used by any space tenant or otherwise, in any manner other
than in full compliance with all Environmental Laws and, to the best of
Seller's knowledge, no portion of the Property has ever been used in
any manner other than in full compliance with all Environmental Laws.
6.8 No Flood Plains Warranty. No portion of the Land is located
within a one hundred (100) year flood plain.
6.9 No Wetlands Warranty. Seller has not received any notice that and
to the best of Seller's knowledge, no portion of the Land is located
within any wetlands as designated by any federal, state or local
governmental or quasi-governmental authority, agency or instrumentality
or the Army Corps of Engineers.
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6.10 Utilities. All water, storm and sanitary sewer, electricity,
telephone and other utilities serving the Property are installed,
operating and supplied directly to the individual tenant spaces in
accordance with plans and specifications and all utility company
criteria therefor, and the cost of all impact fees, connection charges,
reservation charges or their equivalent related to such utilities and
the Property have been fully paid. Seller has not received any
complaint or claim with respect to storm water flow from any owner of
adjacent property or otherwise. Seller covenants to pay all utility
bills for the Property through the date of Closing (it being agreed
that this covenant shall specifically survive Closing). To the extent
that such utility expense is later recouped through reimbursements by
the space tenants on the Property, the Purchaser shall pay the same to
Seller upon receipt of such amounts from tenants.
6.11 Condition of Improvements. To the best of Seller's knowledge, the
improvements located upon the Land are structurally sound and in good
structural condition and repair. Seller is not aware of any structural
maintenance or structural repairs which are currently needed or for
which Seller has deferred repairs or which would otherwise not be
easily detectable upon inspection. Seller has not received notice of
any unrepaired leaks or the necessity for maintenance or repairs from
any of the occupants of the buildings located upon the Land which
Seller has not repaired or otherwise taken necessary action.
6.12 Zoning. The Land is presently zoned "C-2" which permits the
operation of a retail shopping center and the business operations of
all of the Tenants of Market Place Shopping Center. Seller has received
no notice of any pending or contemplated changes from the current
zoning of the Land. Seller has no agreement currently in effect with
Gwinnett County, or with the State of Georgia, or any other entity,
public or private, which would be binding upon Purchaser and would
prevent or limit the use of the Land or the improvements located
thereon for any of the uses allowed by applicable zoning ordinances.
6.13 Status of Personal Property. All items of personal property
located upon the Property and used in connection with the operation of
the Property are owned by Seller (except for those owned by tenants),
free and clear of any security interests, conditional sales agreements
or title retention agreements.
6.14 No Outstanding Agreements. Except for the Permitted Title
Exceptions and the existing Tenant Leases, there are no service,
supply, utility, management, equipment lease, brokerage or other
contracts in force against the Property or binding upon Seller in any
manner affecting the Property which may not be terminated at no cost
upon thirty (30) days prior written notice.
6.15 Insurance. There are no outstanding or unfulfilled requirements
or recommendations of any insurance company insuring the Property or
board of fire underwriters regarding any repairs to or work to be
performed with respect to the Property. Seller has not received any
notice of discontinuance or non-renewal of insurance covering the
Property, nor any notice requiring or recommending any repairs or other
work be performed to the Property.
6.16 No Liens. No services, material, or work have been supplied in
connection with the Property at Seller's direction for which payment
has not been made in full. At Closing, there will be no mechanics',
materialmen's or laborers' liens against Seller's interest in the
Property; no claims for labor, services, profit or material furnished
for constructing, repairing or improving the Property which remain
unpaid and which could result in a lien against Seller's interest in
the Property; no past due or unpaid income, property, use or sales
taxes of Seller
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which constitute a lien against Seller's interest in the Property or
could with passage of time constitute such a lien; and no chattel
liens, conditional sales contracts or security interests against the
Property.
6.17 No Broker. No rental agents, brokers or finders have any rights
with regard to any of the lease agreements or other occupancy
agreements executed in connection with the Property or the rental
collected, or to be collected, thereunder. There are no leasing
commissions due or payable now or hereafter with respect to the
existing Tenant Leases or the Property.
6.18 Accuracy of Operating Statements. Seller has delivered to
Purchaser unaudited income and expense statements prepared on the cash
basis with respect to the Property (the "Operating Statements"), a copy
of said Operating Statements are attached hereto as Exhibit N and
incorporated herein by reference. The Operating Statements are true,
complete and correct in all material respects. The Operating Statements
are in accordance with the respective books and records of Seller, and
have been prepared in accordance with generally accepted accounting
principles, consistently applied, throughout the periods covered by
such statements and fairly represent the financial condition of the
Property as of their respective dates and the results of operations and
changes in financial position of the Property for the periods covered
by such statements. The Operating Statements contain no untrue
statements of any material facts nor omit any material fact required to
be stated to make the Operating Statements not misleading.
6.19 No Bankruptcy. Seller has not (a) commenced a voluntary case, or
had entered against it a petition, for relief under any federal
bankruptcy act or any similar petition, order or decree under any
federal or state law or statute relative to bankruptcy, insolvency or
other relief for debtors, (b) caused, suffered or consented to the
appointment of a receiver, trustee, administrator, conservator,
liquidator or similar official in any federal, state or foreign
judicial or non-judicial proceeding, to hold, administer and/or
liquidate all or substantially all of its assets, or (c) made an
assignment for the benefit of creditors.
6.20 No Employee Agreements or Contracts. No employment agreements or
employment contracts affecting the Property exist which have been
entered into by Seller.
6.21 Tenant Space and Tenant Leases.
(a) Attached as Exhibit L is a current rent roll for the Property
("Rent Roll") which contains a true, accurate, and complete list of all
of the Tenant Leases and which identifies as to each Tenant Lease, the
date of the Tenant Lease and of all amendments and assignments of each
Tenant Lease and certain additional information relating to each Tenant
Lease, all of which information is true, accurate and complete.
(b) Except as set forth in the Rent Roll, there have been no
agreements or understandings with any Tenant which provide for (i) any
cash inducement or payment to such Tenant other than for tenant upfit
or buildout; or (ii) any tenant buildout performed by landlord payable
after Closing; or (iii) free or partial rent for a period after
Closing.
(c) With respect to all Tenant Leases, Seller further represents,
warrants, and agrees, as follows:
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(i) That Seller is the sole owner of the landlord's
interest under the Tenant Leases and the guaranties, if any,
executed in connection with the Tenant Leases, and Seller is
the sole and exclusive entity entitled to receive the rents,
issues, profits, and security deposits, under the Tenant
Leases, and Seller has good right to sell, assign, transfer
and set over the same and to grant to and confer upon
Purchaser the rights, interests, powers, and authorities
herein granted and conferred.
(ii) That the Tenant Leases as set forth in the Rent Roll
are the only leases, licenses, subleases, or other occupancy
agreements, written or oral, affecting the Property and are in
full force and effect and have not been amended or modified in
any manner, by amendment, side letter agreement, or otherwise,
except as expressly set forth in the Rent Roll. No party other
than the Tenants identified in the Rent Roll have any right to
occupancy of any portion of the Property or the improvements
located thereon.
(iii) That the information set forth in the Rent Roll is
true, complete, and accurate in all respects.
(iv) That the Tenant Leases evidence bona fide, arm's-length
transactions.
(v) That any improvements required by the terms of the
Tenant Leases to be made by the Seller to the Property have
been completed, and any construction allowances, moving
expenses, or other rental concessions have been satisfied in
strict accordance with the terms and provisions of their
respective Tenant Leases, and such Tenants have accepted
possession of their premises located upon the Property.
(vi) That no rent under the Tenant Leases has been paid more
than thirty (30) days in advance of its due date and except as
shown on the Rent Roll, all rent to be paid by the tenants is
current.
(vii) That no Tenant is entitled to any free rent, abatement
of rent or similar concession, except as shown on the Rent
Roll.
(viii) That Seller has received no notice from, or on behalf
of, any Tenant which contests any tax, operating cost or other
escalation payments or occupancy charges, or any other amounts
payable under the Tenant Lease.
(ix) Except as specifically designated in the Rent Roll, no
Tenant Lease contains any renewal or purchase option or option
to lease additional space.
(x) That Seller has not received notice from any of the
Tenants in connection with the Tenant Leases asserting and to
the best of Seller's knowledge no Tenant has (1) a right to
off-set rent by reason of Seller's failure to perform its
obligations pursuant to any Tenant Lease, (2) a claim against
Seller for a breach or failure of Seller to perform its
obligations under any Tenant Lease, or (3) a right to abate
rent.
(xi) That, except as set forth on the Rent Roll, Seller has
received no notice of and to the best knowledge of Seller,
there are no defaults under or with respect to the Tenant
Leases on the part of the landlord thereunder, no defaults on
the part of any
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Tenant and no conditions or facts which, with the passage of
time or the giving of notice, or both, would constitute such a
default.
(xii) Seller has not waived any default, which is continuing,
under any Tenant Lease, or granted any concession to any
Tenant (where such waiver or concession is still in effect),
and all documentation relating to such waivers or concessions
are referenced in the Rent Roll.
(xiii) That Seller has neither made nor permitted to be made
any assignment of any of its rights or interest under the
Tenant Leases, or the guaranties, if any, executed in
connection therewith, to any person or entity whomsoever.
(xiv) That all leasing commissions pertaining to the Property
have been paid in full, and no leasing commissions are
enforceable against Purchaser.
(xv) That, except as specifically designated in the Rent
Roll, no notices with respect to a continuing default, or
notices to extend, renew, or terminate the term of the Tenant
Leases have been received by the Seller and all
correspondence received by Seller from any Tenant, their
agents or representatives regarding any work remaining to be
performed by Seller, or continued alleged defaults by Seller
is designated in the Rent Roll.
At Closing, Seller shall renew and reaffirm the representations and
warranties contained in this Section 6.21 and as to an updated rent roll (the
"Closing Rent Roll") pursuant to a Certification of Rent Roll and Tenant Lease
Status, in the form attached hereto as Exhibit F.
6.22 Other Contracts. There are no management, real estate, leasing
or rental commission agreements, utility, supply, service or maintenance
agreements, equipment leases, or employment, union or other contracts
of any kind or description in existence relating to the Property,
except for the existing Tenant Leases, and as set forth on Exhibit O
attached hereto and made a part hereof (the "Service Contracts").
6.23 Other Representations, Warranties, and Covenants. All of the
representations, warranties, and covenants of Seller included in the exhibits
attached hereto are incorporated herein and shall have the same force and
effect as if such representations, warranties, and covenants had been set forth
in full as part of this Section 6 of the Agreement.
6.24 Access. To Seller's best knowledge, there are no facts or
conditions which will result in the termination or modification of the
present access to and from any portion of the Property to any utility
services or to existing highways and roads or the termination or
expiration of any conditional use permits, sign permits or similar
governmental permits, and/or approvals necessary for the operation of
the Property as it is currently operated. In addition, Seller has
received no notification of, and to Seller's best knowledge, there are
no, existing, proposed or contemplated plans to widen, modify or
realign any street or highway providing access to the Property, or
which may affect the existing common areas and/or the size, use or set
backs applicable to the Property or the improvements located thereon.
6.25 Storm Water Flow. Seller has not received any complaint or
claim with respect to storm water flow from any owner of adjacent
property or otherwise.
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6.26 The Reaffirmation at Closing; Survival. All of the foregoing
representations, warranties and covenants of Seller shall be reaffirmed
by Seller in writing at Closing. The representations, warranties and
covenants set forth above shall survive Closing hereunder for a period
of one (1) year from the Closing Date and shall not be merged with the
execution and delivery of the Special Warranty Deed and other closing
documents hereunder. Notwithstanding the foregoing, if, prior to the
expiration of the survival period provided above, Purchaser discovers
any reasonable facts or evidence from which Purchaser reasonably
concludes that there was a misrepresentation or breach of any of the
foregoing representations and warranties, Purchaser shall provide
Seller with notice of such facts or evidence and the representation or
warranty in question shall survive until complete settlement of any
question of misrepresentation or breach.
6.27 Indemnification. Seller agrees to defend, protect, indemnify, and
hold harmless Purchaser and its directors, officers, shareholders,
employees, successors and assigns, from and against any and all loss,
cost, claims, liabilities, damages and expenses, including, without
limitation, reasonable attorney's fees and costs of litigation, arising
as a result of any misrepresentation or breach of any of the
representations or warranties of Seller set forth in this Agreement.
6.28 Seller's Knowledge. As used in Section 6 and elsewhere in this
Agreement, all references to the knowledge of Seller including
"Seller's knowledge", "best knowledge of Seller", "to Seller's best
knowledge" or any variation thereof shall mean the knowledge of Seller
and its respective employees and of the following individuals: Herb
Strickland, Ruth Strickland and Greg Hagen (collectively, the
Knowledgeable Parties"), all of which Knowledgeable Parties are
familiar with the Property.
7. Closing. Purchaser and Seller agree that the sale and purchase of the
Property shall be consummated as follows:
7.1 Title Transfer. Seller agrees to convey good, marketable and
insurable fee simple title to the Property to Purchaser by Special
Warranty Deed, subject only to the Permitted Title Exceptions, on or
before the close of business on the Closing Date, and, effective on the
delivery of such Special Warranty Deed by Seller to Purchaser,
beneficial ownership and the risk of loss of the Property shall pass
from Seller to Purchaser.
7.2 Closing Date. This transaction shall close (the "Closing") on or
before fifteen (15) days after the end of the Inspection Period (the
"Closing Date"), provided that Purchaser has not elected to terminate
this Agreement in accordance with the terms hereof. The exact day, time
and place of Closing shall be selected by Purchaser by written notice
to Seller not less than three (3) days prior to the date so selected.
If no such selection is timely made, the Closing shall be held at 10:00
a.m. (EST) on the last day for the Closing Date at the offices of
Purchaser, 200 Galleria Parkway, Suite 1400, Atlanta, Georgia 30339.
7.3 Documents to be Delivered. At Closing, Seller shall deliver or
cause to be delivered to Purchaser the following items (all documents
being duly executed and acknowledged where so required):
7.3.1 Special Warranty Deed. Special warranty deed in favor
of Purchaser in form set forth as Exhibit M attached
hereto.
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7.3.2 Corporate/Partnership Documentation. All
documentation reasonably required by counsel for
Purchaser and the title insurance company selected by
Purchaser evidencing the authority of Seller to sell
the Property to Purchaser upon the terms and
conditions set forth in this Agreement.
7.3.3 Owners Affidavit Regarding Liens. An affidavit with
respect to liens and title matters in substantially the
form of Exhibit C attached hereto.
7.3.4 Non-foreign Affidavit. An Affidavit in the form
prescribed by Treasury Regulation ss.1.1445-2 indicating
the taxpayer identification number of Seller and
confirming that Seller is not a foreign person within
the purview of 26 U.S.C. ss.1445 and the regulations
issued thereunder.
7.3.5 Tenant Leases. Original executed counterparts of all
Tenant Leases to the extent same are in the
possession of Seller or its property manager and, if
not, then true, correct and complete copies of said
Tenant Leases certified as such by Seller.
7.3.6 Transfer and Assignment of Tenant Leases, Tenant
Deposits, and Tenant Lease Guaranties. An assignment
by Seller to Purchaser of all Tenant Leases or other
occupancy agreements now in effect in connection with
the Property in form set forth as Exhibit D attached
hereto.
7.3.7 Memorandum of Assignment of Tenant Leases and
Guaranties. A recordable memorandum of the Assignment
of Tenant Leases and Tenant Lease Guaranties in form
set forth in Exhibit E attached hereto.
7.3.8 Certification of Rent Roll and Tenant Lease Status. A
certification by Seller of the completeness and accuracy
of the Rent Roll in form set forth as Exhibit F attached
hereto.
7.3.9 Bill of Sale and Assignment. A Bill of Sale and
Assignment of personal property and intangible
personal property in form set forth as Exhibit G
attached hereto.
7.3.10 Assignment of Warranties and Guaranties. An
assignment of all warranties and guaranties presently
in effect in connection with the Property in form set
forth as Exhibit H attached hereto.
7.3.11 Termination of Management Agreements; Survival of
Service Contracts. An instrument or instruments in form
and substance reasonably satisfactory to Purchaser
terminating (i) all existing agreements with any party
with respect to management or leasing of the Property or
any part thereof; and (ii) any other Rejected Service
Contracts which Purchaser requests Seller to terminate
prior to the expiration of the Inspection Period as set
forth in Section 3.1 hereof; all such terminations shall
be without proration or contribution from Purchaser.
Copies of said cancellation notices shall be provided to
Purchaser.
7.3.12 Certified Operating Statements. All Operating
Statements for the Property for the three (3) years
prior to Closing or such shorter period of time as the
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Shopping Center has been open for business, certified
by Seller as to accuracy and completeness in all
material respects.
7.3.13 Books and Records. All books, records, maintenance
schedules and repair records and other papers in
Seller's possession or control relating to the
Property and the operations thereof and the
improvements located thereon, including, without
limitation, all architect's drawings, blue prints and
"as-built" plans and specifications for the Property;
provided, however, that Seller may retain copies of
any such documents or instruments for reference or to
support income tax returns.
7.3.14 Estoppel Certificates. Estoppel certificates in the
form set forth as Exhibit I attached hereto inuring to
the benefit of Seller from all Tenants; provided,
however, that, to the extent that executed estoppel
certificates are not obtained from the Local Tenants at
or prior to Closing, Purchaser shall accept estoppel
certificates executed by Seller on behalf of not more
than twenty percent (20%) of the Local Tenants of the
Shopping Center. All estoppel certificates from the
Local Tenants shall be in the form attached, and shall
be dated within thirty (30) days of the scheduled
Closing Date under this Agreement. The Credit Tenants
shall execute and deliver estoppel certificates in form
and substance satisfactory to Purchaser and such Credit
Tenants, and such estoppel certificates shall be dated
within thirty (30) days of the scheduled Closing Date
under this Agreement. It shall be a condition to
Purchaser's obligations under this Agreement that Seller
obtain and deliver to Purchaser the estoppel
certificates provided for in this Section which do not
indicate any defaults or discrepancies in the
information previously made available to Purchaser; and
if Seller shall fail to do so, Purchaser may cancel this
Agreement by giving written notice to Seller at or prior
to the Closing, whereupon the Deposit shall be promptly
refunded to Purchaser.
7.3.15 Tenant Notices. Letters executed by Seller and
addressed to each Tenant of the Property in form set
forth as Exhibit J attached hereto.
7.3.16 Certification Regarding Leasing and Brokerage Fees.
An affidavit in form set forth as Exhibit K attached
hereto that no brokerage or leasing agreements exist
or are in force which are binding upon Seller and
which in any manner affect or otherwise relate to the
Property, or which entitle any broker or leasing
agent to receive any commissions, fees, a percentage
of rents or any other sums in connection with any
sale, lease or loan affecting the Property.
7.3.17 Utility Bills. Copies of all utility bills relating
to the Property for the three (3) months prior to
Closing, including, without limitation, bills for
parking lot and lawn maintenance, trash collection,
sewage, water, electricity, telephone and insurance.
7.3.18 Keys. All keys to the Property and every lock thereon
in the possession of Seller with identification as to
the lock to which each such key relates.
7.3.19 Assignment of Roof Warranties (and related consents).
Individual assignment of roof warranties with respect to
the Property (together with the
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original warranties) and any consent of the applicable
roof contractor and manufacturer if required thereby.
7.3.20 Additional Documents. Such other documents and
instruments as may be required by any other provision of
this Agreement or as may reasonably be required to
fulfill the terms and intent of this Agreement,
including, without limitation, a Closing Statement, all
documentation required to be executed and filed with the
Internal Revenue Service, and a certificate dated as of
the date of Closing confirming that all of the
representations and warranties of Seller contained
herein and the exhibits attached hereto are true,
correct, and complete as of the date of Closing.
7.4 Costs and Prorations. Seller shall be responsible for the payment
of (i) the cost of transfer tax or documentary stamps or taxes, upon
the Special Warranty Deed and Bill of Sale and Assignment, (ii) the
cost of any sales or income taxes related to the transaction
contemplated hereby, (iii) costs and expenses incurred (including
recording costs) in connection with Seller's cure of any title defects
or encumbrances subject, however, to the provisions of Section 4.1
hereof, (iv) all broker or agent commissions, fees or payments required
to be made in connection with the purchase and sale contemplated by
this Agreement, (v) its own attorney's fees, (vi) any costs, fees or
expenses assessed in connection with the transfer of any warranties and
guaranties from Seller to Purchaser, (vii) costs of the Survey obtained
pursuant to Section 4.2 hereof, (viii) costs of the Phase I
environmental assessment obtained pursuant to Section 5 hereof and (ix)
all other items specifically designated in this Agreement as Seller's
expenses. Purchaser shall be responsible for the payment of (a) its own
attorney fees, (b) title examination costs and premiums necessary for
the issuance of an ALTA Form B, 1992 Owner's Title Policy insuring the
Property in the amount of the Purchase Price, (c) the cost of a
physical condition survey of the Property, (d) recording costs except
for those incurred in connection with the cure of any title defects or
encumbrances by Seller, (e) all other items specifically designated in
this Agreement as Purchaser's expenses.
7.5 Taxes.
7.5.1 Ad Valorem Taxes and Assessments. All real estate taxes
(including ad valorem and non-ad valorem assessments) and
personal property taxes payable with respect to the Property
for the year in which the Closing Date occurs, accrued but to
be paid after the Closing Date, shall be prorated between
Seller and Purchaser as of the Closing Date on a calendar year
basis. If the actual amount of taxes and assessments is not
known on the Closing Date, the same shall be prorated on the
basis of the amount of taxes and assessments payable for the
year preceding Closing and shall be adjusted between the
parties when the actual amount of taxes and assessments
payable for the year of Closing is known to Purchaser and
Seller. To the extent that Seller's share of such taxes and
assessments is later recouped through reimbursement by the
Tenants on the Property, the Purchaser shall pay the same to
Seller promptly, but in no event later than the later to occur
of (i) ninety (90) days after the end of the calendar year in
which the Closing takes place or (ii) thirty (30) days after
Purchaser's receipt of same from Tenants. The provisions of
this Section 7.5 shall specifically survive Closing.
7.5.2 Sales Taxes. (Intentionally Omitted)
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7.6 Income and Expenses. All income and expenses of the Property
shall be prorated on a daily basis between Seller and Purchaser as of
the Closing Date. Seller shall make any and all payments of principal
and interest due under all liens or encumbrances on the Property on or
before the Closing Date as and when due, which liens or encumbrances
shall be satisfied, canceled and terminated at or prior to Closing.
Seller shall be responsible for all expenses of the Property
attributable to the period prior to the Closing Date. Seller shall be
entitled to all income from the Property attributable to the period
prior to the Closing Date. Seller agrees to pay in full on the Closing
Date its pro rata share of all expenses of the Property. Seller agrees
that all expenses, charges, bills, or trade accounts maintained or
incurred by Seller or its agents in connection with the management or
operation of the Property or otherwise accrued for the period prior to
the Closing Date shall be paid in full on the Closing Date; provided,
however, that all such expenses, charges, bills, or trade accounts
which have accrued but have not yet been billed shall be paid in full
by Seller at the time the bills are received. Seller shall have sole
responsibility for the payment of all sales taxes, excise taxes,
payroll taxes, withholding taxes or other taxes collected or payable by
Seller or its agents in connection with the management or operation of
the Property for or during the period preceding Closing. To the extent
Seller is required to pay an expense under this Section 7.6 which is
later reimbursed by any Tenants, Seller shall be entitled to receive
its proportionate share of such payment promptly, but in no event later
than the later to occur of (i) ninety (90) days after the end of the
calendar year in which Closing occurs, or (ii) thirty (30) days after
Purchaser's receipt of same from Tenants. Seller and Purchaser shall
indemnify each other against and shall hold each other harmless from
any costs, expenses, penalties or damages, including reasonable
attorneys' fees, which may result from any failure by the other to pay
or cause to be paid any of the items described in this Section 7.6,
which indemnity shall survive Closing.
Without limiting the generality of the foregoing, the following
items shall be adjusted or paid as follows as of the Closing Date:
7.6.1 Rents and Charges. All rents and charges actually
received under the Tenant Leases shall be prorated as of the
Closing Date. Rents and other charges received after Closing for
the calendar month in which the Closing Date occurs shall be
prorated upon receipt. Purchaser, for a period of four (4) full
calendar months following the Closing, shall continue to bill
tenants of the Property on a monthly basis for amounts due and
payable to Seller from such tenants on the Closing Date. Except
as set forth in the previous sentence, Purchaser shall have no
duty or obligation to collect any rents or other sums which are
outstanding as of the Closing Date, and Seller agrees to
indemnify and save Purchaser harmless from and against any
claims, costs and expenses (including but not limited to
attorney's fees and costs of collection of such arrearages) which
Purchaser may or shall incur in connection with such collection,
provided that the reasonable approval of Seller is obtained prior
to incurring any claims, cost or expense. If Purchaser receives
any payment of outstanding rent, the payment shall first be
applied by Purchaser to amounts due from that tenant from and
after the Closing Date and the excess, if any, shall be applied
to the amounts receivable by Seller and shall be paid to Seller
(exclusive of sales tax on rents) within thirty (30) days
following Purchaser's receipt thereof. Seller agrees that no
lawsuit of any kind shall be brought or threatened by Seller
after the Closing Date to collect any outstanding rent without
the prior written consent of Purchaser, provided, however that
Seller shall be permitted to take reasonable other measures
towards collection of any outstanding rent due prior to Closing.
Any checks for rental payments or other charges received after
Closing by Seller or its agents shall be promptly endorsed to
Purchaser
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by the payee thereof and promptly transmitted to Purchaser.
Purchaser shall receive a credit against the Purchase Price at
Closing for all prepaid rents, advance rentals, security
deposits (including any interest earned thereon if required by
any Tenant Lease) and other deposits then outstanding with
respect to any of the Tenant Leases.
7.6.2 Post-Closing Adjustment Payment. In the event that on
the Closing Date there shall be any rental payments under any
Tenant Lease which, although relating to a period prior to the
Closing Date, do not become due and payable until after
Closing (such as year end common area, real estate tax or
insurance expense reimbursements or percentage rent or similar
charges), then Purchaser agrees to bill tenants on behalf of
Seller for a period of four (4) months from the date of the
initial billing to tenant, and rental payments received from
such tenant shall be applied as set forth in Section 7.6.1
above.
Seller agrees, on or before sixty (60) days after the
Closing Date, to provide to Purchaser calculations of common
area maintenance, real estate tax and insurance billings to
tenants for (i) the portion of calendar year 1997 from January
1, 1997 to the Closing Date; or (ii) the tenant's lease year
which includes the Closing Date, for the period up to the
Closing Date; whichever is applicable, along with billings to
tenants, to allow Purchaser to bill said tenants for such
charges. Seller shall pay Purchaser any credits due to tenants
from Seller for such periods at the time the billings are
submitted to Purchaser; the payments shall be for all credits
to any and all tenants and shall not be offset by any amounts
due from tenants to Seller.
Seller agrees to pay Purchaser any credits due Tenants
for periods prior to the Closing Date relating to
reconciliations of Additional Rent, Percentage Rent or other
charges or relating to Tenant audits of operating expense
reimbursements.
7.6.3 Insurance Expense. Purchaser shall be responsible for
obtaining separate policies for any and all casualty,
liability, and other insurance Purchaser desires to maintain
with respect to the Property. Seller shall be entitled to any
refund of any prepaid premiums on its own insurance policies.
Seller shall provide to Purchaser prior to Closing a
calculation of credits due tenants for reimbursements of
insurance premiums for the periods from the Closing Date to
the end of the current insurance premium year of Seller.
Purchaser shall receive a credit at Closing against the
Purchase Price for said credit due tenants for insurance.
7.6.4 Utility Charges. Water and utility charges and sanitary
sewer taxes, if any, shall not be prorated at Closing but
shall be transferred to new accounts in Purchaser's name or in
the name of Purchaser's designated agent as of Closing. Seller
shall have the sole responsibility for all such utility
charges through the transfer of such accounts on the Closing
Date, and Seller shall cause the outstanding charges for all
such utilities to be determined and all meters to be read on
the day prior to the Closing Date. Any deposits prepaid by
Seller for such utilities shall be refunded to Seller or
credited to Seller at Closing. To the extent any such charges
or taxes are paid on an annual basis they will be prorated at
Closing based on the latest estimates of such charges or taxes
and reprorated upon receipt of actual billings. Any transfer
fees or additional deposits required in connection with the
transfer of the utilities to new accounts in Purchaser's name
shall be paid by Purchaser; it being agreed that any fees for
terminating the utility accounts in Seller's name shall be
paid by Seller.
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7.6.5 Other Expenses. Other operating expenses not covered
by any of the above subparagraphs.
All prorations and adjustments under this Section 7 shall be
made against the cash sum otherwise payable by Purchaser to Seller
pursuant to Section 2, unless an alternative means of payment is
expressly provided hereunder. The indemnities and obligations with
respect to post- Closing adjustments set forth in this Section 7 shall
expressly survive Closing.
8. Risk of Loss. If, after the date hereof and prior to Closing, all or
any portion of the Property is damaged by casualty, or Seller receives notice of
the commencement or threatened commencement of eminent domain against all or any
portion of the Property, Seller shall immediately notify Purchaser in writing,
and Purchaser shall elect prior to Closing, either to (i) terminate this
Agreement, in which event this Agreement shall be deemed null, void and of no
further force and effect whatsoever, or (ii) close the transaction contemplated
hereby in accordance with its terms, but, subject to such casualty settlement or
condemnation proceedings; in which event Seller shall promptly assign to
Purchaser Seller's rights in such settlement or proceedings and any payments or
awards resulting therefrom, and Purchaser shall receive a credit against the
Purchase Price payable at Closing equal to any deductible payable by Seller with
respect to such casualty loss. Notwithstanding the foregoing, in the event of a
casualty loss of less than $50,000.00 occurring after the expiration of the
Inspection Period, the rights and obligations of the parties shall be as
provided in subsection (ii) above; provided, however, that no casualty has
occurred at the Property which would permit a Tenant to terminate its lease. In
the event that such casualty or condemnation (or threat thereof) shall occur
within fifteen (15) days of the Closing Date, Purchaser shall have the right to
extend the date for Closing such that in no event shall Closing occur less than
fifteen (15) days following Purchaser's receipt of Seller's notice required
under this Section 8.
9. Seller's Covenants. Seller hereby covenants and agrees that between
the date hereof and the Closing Date:
9.1 Inspection of Property. Seller shall allow Purchaser and its
agents to inspect and audit the Property and any part thereof and all
books, records and accounts, wherever located, relating to the Property
or any of its operations, at such times and from time to time as
Purchaser may reasonably request.
9.2 Compliance with Laws, Leases, Contracts. Seller shall comply with
all laws, ordinances, regulations and orders relating to the Property
(except to the extent tenants under written leases are responsible for
such compliance) and with all the terms, conditions and provisions of
the Tenant Leases and with the requirements of all liens and
encumbrances, agreements and other contractual arrangements to which
the Property or Seller is subject and make all payments required to be
paid thereunder and suffer no default thereunder.
9.3 Standard of Operation and Maintenance. Seller shall operate,
manage and maintain the Property in the same manner as it has been
operated by Seller to the date hereof, and in accordance with such
reasonable requests as may be made by Purchaser.
9.4 Representations and Warranties. Seller shall not take (or fail to
take) any action which would make any of the warranties,
representations and covenants of Seller under this Agreement untrue or
inaccurate. Seller shall notify Purchaser promptly if prior to the
Closing Date Seller becomes aware of any fact, transaction, event or
occurrence which would make any
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<PAGE> 19
of the warranties, representations and covenants of Seller under this
Agreement not true with the same force and effect as if made on or as
of the date hereof.
9.5 Personal Property Inventory. Seller shall not remove any of the
Property, including personal property, from the Property nor use any of
the personal property prior to the Closing Date except such use thereof
as is normal and customary in the operation and maintenance of the
Property. Seller warrants that supplies and maintenance items shall be
maintained at a customary level and will be available and conveyed to
Purchaser on the Closing Date.
9.6 Transfer of Permits. Seller shall execute all applications and
instruments required in connection with the transfer of all Permits, to
the extent transferable, in order to transfer the benefits and burdens
of each such Permit to the Purchaser and, if requested by Purchaser, to
cooperate (at no expense to Seller) with Purchaser's efforts to have
all Permits required for the operation of the Property issued to and in
the name of the Purchaser on the Closing Date. Seller shall use
reasonable efforts to preserve in force all existing Permits and to
renew all those expiring prior to the Closing Date on terms acceptable
to Purchaser. If any such Permit shall be suspended or revoked, Seller
shall promptly notify Purchaser and shall diligently take all measures
reasonably necessary to cause the reinstatement of such Permit without
any additional limitation or condition. Seller shall not seek or
acquiesce to any amendment to any Permit which would alter the existing
permissible uses of the Property or any part thereof.
9.7 Cash-Out of Leasing Commissions. On or before the Closing Date,
Seller shall, at Seller's sole expense, terminate and cash out all
leasing commissions payable under each Tenant Lease and all commission
agreements relating to the Tenant Leases and all other leasing and
management agreements relating to the Property so that, at Closing,
neither the Property nor any Tenant Lease shall be subject to any past,
present or future leasing commissions or any rights thereto by any
broker or leasing agent or any commission agreements or other leasing
and management agreements.
9.8 Compliance of Property. Seller shall assist Purchaser's efforts to
obtain satisfactory evidence that all of the Property meets and
complies with all applicable governmental laws, statutes, regulations,
rules and ordinances; provided, however, that Seller shall not be
responsible for hiring or paying for any consultants. Such evidence
shall include but shall not be limited to obtaining certificates of
completion, occupancy or compliance from the agencies administering
compliance with said requirements indicating that the Property fully
complies with said requirements. The foregoing evidence shall be
subject to the approval of Purchaser in all respects. In addition, said
items shall be directed to Purchaser specifically with knowledge on the
part of the party issuing same that Purchaser will be relying upon the
same, and shall be submitted to Purchaser as soon as it is reasonably
possible to do so. All materials submitted in advance of Closing shall
be updated, if necessary in Purchaser's judgment, for the Closing.
9.9 Cooperation with Purchaser's Audit/Accounting for CAM Charges.
Seller acknowledges that Purchaser may be required by the Securities
and Exchange Commission to file audited financial statements for one to
three years with regard to the Property. Seller shall (i) cooperate
with Purchaser, its counsel, accountants, agents, and representatives,
provide them with access to Seller's books and records with respect to
the ownership, management, maintenance, and operation of the Property
for the applicable period, and permit them to copy the same, (ii)
execute a form of "rep" letter and such other documents
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<PAGE> 20
as are reasonably required by Purchaser or Purchaser's accountants in
connection with such audit, and (iii) furnish Purchaser with such
additional information concerning the same as Purchaser shall
reasonably request. Purchaser will pay the costs associated with any
such audit.
The terms of this Section 9.9 shall survive Closing.
9.10 Continued Operation of Property. Between the date hereof and
Closing, Seller shall continue to operate and maintain the Property in
good condition in accordance with Seller's current practices. Seller
agrees not to enter into any agreements which will survive the Closing
Date relating to the Property without Purchaser's prior written
consent, which consent may be granted or withheld in Purchaser's sole
discretion. In addition, Seller shall not permit the modification,
alteration, amendment, extension, renewal, termination or cancellation
of any Tenant Lease (except in accordance with the terms of such Tenant
Lease) without the prior written consent of Purchaser, which consent
may be granted or withheld in Purchaser's sole discretion.
9.11 Inducements. On or before the Closing Date all Inducements (as
hereinafter defined) relative to all Tenant Leases shall have been paid
in full or shall otherwise have lapsed or been satisfied in full such
that on the Closing Date the Tenant Leases shall require all Tenants
thereunder to pay rent and other charges required by their Tenant
Leases without reduction or abatement relative to an Inducement. As
used herein, the term Inducement shall mean free rent periods, reduced
rent periods, cash payments, Tenant buildout allowances, agreements to
perform Tenant finish or Tenant buildout at Landlord's expense, and any
other accommodations to a Tenant under a Tenant Lease of a similar
nature which reduces the rent or other charges otherwise payable under
a Tenant Lease. In the event any Inducement has not been satisfied,
paid in full or otherwise lapsed on the Closing Date, Purchaser shall
receive a credit against the Purchase Price payable at Closing.
10. Conditions to Closing. In addition to all conditions expressly set
forth in this Agreement, the obligation of the Purchaser to consummate the
Closing hereunder is further subject to the satisfaction at or prior to Closing
of the following conditions precedent:
10.1 (Intentionally Deleted)
10.2 Accuracy of Representations. All of the warranties,
representations and covenants of Seller contained in this Agreement
shall be true on the Closing Date with the same effect as if they had
been made on the Closing Date and shall be reaffirmed by Seller in
writing at Closing; Seller shall have performed all covenants to have
been performed and satisfied by Seller prior to the Closing Date.
10.3 Condition of Property. On the Closing Date, the Property shall be
in a state of repair at least as good as the state of repair thereof on
the date hereof, normal wear and tear alone excepted.
10.4 Closing Documents. Purchaser's receipt of original executed
counterparts (if applicable) of the instruments, agreements and
documents described in Section 7.3 and all other documents to be
provided by Seller in accordance with the terms of this Agreement.
10.5 Tenants and Leases.
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(a) All Tenant Leases existing as of the Effective Date shall be in
full force and effect and the tenants under the Tenant Leases as of the
Effective Date shall each be in occupancy of their respective premises
(except for new leases executed after the Effective Date or existing
Tenant Leases which provide for occupancy after the Closing Date).
(b) No Tenant existing as of the Effective Date has ceased
operations, terminated its lease with Seller, ceased making rental
payments or notified Seller of its intention to do any of the
foregoing.
(c) No Tenant has made an assignment for the benefit of creditors,
has applied, petitioned, or filed for the appointment of a custodian,
trustee, receiver or agent to take possession of any property or
chattels of such Tenant, is not generally paying its debts as such
debts become due, is "insolvent" as that term is defined in the United
States Bankruptcy Code, or has filed a petition with the United States
Bankruptcy Court under the United States Bankruptcy Code or commenced
any proceeding under any bankruptcy or reorganization statute or under
any arrangement, insolvency, readjustment of debt, dissolution or
liquidation statute of any jurisdiction.
10.6 Casualty. No casualty has occurred at the Property for which the
estimated cost of repairs exceeds $50,000.00, and no casualty has
occurred at the Property which would permit a Tenant to terminate its
lease.
10.7 Eminent Domain. No commencement or threatened commencement of
eminent domain against all or any portion of the Property as more
particularly described in Section 8.
10.8 Title Insurance. The willingness of the Title Company to issue,
upon the sole condition of the payment by Purchaser of an amount no
greater than its scheduled premium, a Title Policy insuring in the
amount of the Purchase Price title to the Property is vested in
Purchaser on the Closing Date subject only to the Permitted Title
Exceptions.
10.9 Purchaser's Waiver Right. Purchaser shall have the right at any
time to waive in writing any of the contingencies or conditions set
forth in this paragraph 10. If the conditions and/or contingencies
described in this paragraph 10 are not fully and completely satisfied
on the Closing Date, unless Purchaser elects to waive the unsatisfied
conditions and/or contingencies in writing, Purchaser shall have the
right to terminate this Agreement and receive a refund of the Deposit
by providing written notice of such termination at any time through and
including the Closing Date.
11. Miscellaneous. It is further agreed as follows:
11.1 Broker. Seller and Purchaser represent each to the other that no
broker's or real estate commissions are or shall be due with respect to
this transaction except to Shoptaw-James Investment Group, LLC, whose
commission shall be paid by Seller, by reason of any agreement made or
which may be alleged to have been made by it. In no event shall
Purchaser be liable for any commission or fee due in connection with
this transaction, unless and to the extent a commission is owed to
another broker party due solely to the acts of Purchaser. Seller agrees
to indemnify, defend and save harmless Purchaser from and against any
cost and expense (including reasonable attorney's fees) incurred by
Purchaser as a result of the untruth of the foregoing representations
by Seller. Purchaser agrees to indemnify, defend and save
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<PAGE> 22
harmless the Seller from and against any cost and expense (including
reasonable attorney's fees) incurred by Seller as a result of the
untruth of the foregoing representations by Purchaser.
11.2 Notices. All notices, demands, requests or communications
required or permitted to be given pursuant to this Agreement shall be
in writing and shall be deemed to have been properly given or served
and shall be effective upon being deposited in the United States mail,
postage prepaid and certified with return receipt requested, upon
delivery by an internationally recognized overnight delivery service,
or upon the date of receipt of a telecopy which is received any
business day on or before 5 p.m. (EST) in the location of receipt or on
the next day after receipt if received by telecopy after 5 p.m. (EST)
on any business day; provided, however, the time period in which a
response to any notice, demand or request must be given shall commence
on the next business day after such posting. Any such notice, demand,
request or communication if given to Seller shall be addressed as
follows:
To Seller: Market Place Shopping Center, L.P.
c/o Peachtree Corners, Inc.
3060 Holcomb Bridge Road, Suite F
Norcross, Georgia 30071
Attention: Ms. Ruth Strickland
Telephone: (770) 448-8222
Telecopier: (770) 729-2523
and, if given to Purchaser, shall be addressed as follows:
To Purchaser: IRT Property Company
200 Galleria Parkway, Suite 1400
Atlanta, Georgia 30339
Attention: Lee A. Harris
Telephone: (770) 955-4406
Telecopier: (770) 988-8773
To Escrow Agent: Commonwealth Land Title Insurance Company
3350 Cumberland Circle, Suite 1895
Atlanta, Georgia 30339
Attention: Sally French Tyler
Telephone: (770) 980-9440
Telecopier: (770) 980-9799
Either party may from time to time change the address to which
such notices or communications may be delivered or sent by giving the
other party written notice of such change. Notices on behalf of the
respective parties may be given by their attorneys and such notices
shall have the same effect as if in fact subscribed by the party on
whose behalf it is given.
11.3 Default and Remedies. If Purchaser fails or refuses to perform
its obligations under this Agreement, and such failure or refusal is
not cured within five (5) days after written notice from Seller, then
Seller may as its sole and exclusive remedy be entitled to terminate
this Agreement and receive the Deposit as liquidated damages. Purchaser
and Seller hereby
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acknowledge the difficulty of ascertaining Seller's actual damages in
such circumstance and agree that the liquidated damages shall not be a
penalty, but rather shall constitute full liquidated damages and that
such amount represents a good faith resolution of Seller's actual
damages. Seller hereby waives any right to sue Purchaser for damages or
to pursue any other right or remedy, either at law or in equity, in the
event of a breach of this Agreement by Purchaser. If Seller fails or
refuses to convey the Property in accordance with the terms of this
Agreement or otherwise perform its obligations hereunder, and such
failure or refusal is not cured within five (5) days after written
notice from Purchaser, then (a) Escrow Agent shall promptly refund the
Earnest Money to Purchaser and (b) Purchaser shall have the right to
recover from Seller an amount equal to the Deposit as liquidated
damages, or compel specific performance of the terms of this Agreement.
11.4 Waiver. Failure of either Purchaser or Seller to exercise any
right given hereunder or to insist upon strict compliance with regard
to any term, condition or covenant specified herein, shall not
constitute a waiver of the right of Purchaser or Seller to exercise
such right or to demand strict compliance with any term, condition, or
covenant under this Agreement.
11.5 Counterparts. This Agreement may be executed in several
counterparts, each of which may be deemed an original, and all of such
counterparts together shall constitute one and the same Agreement.
11.6 Captions. All captions, headings, paragraph and subparagraph
numbers and letters are solely for reference purposes and shall not be
deemed to be supplementing, limiting, or otherwise varying the text of
this Agreement.
11.7 Severability. The invalidity or unenforceability of a particular
provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
11.8 Entire Agreement. Time is of the essence of this Agreement.
This Agreement constitutes the sole and entire agreement of the parties
and is binding upon and shall inure to the benefit of Seller and
Purchaser, their heirs, successors, legal representatives and assigns.
11.9 Amendments. No addition to, or modification of, any terms or
provisions of this Agreement shall be effective unless set forth in
writing and signed by both Purchaser and Seller.
11.10 Attorney's Fees. In the event either party to this Agreement
brings an action or proceeding for the breach, enforcement or
interpretation of this Agreement, the prevailing party in such action
or proceeding shall be entitled to recover as an element of its costs,
and not as damages, such reasonable attorney's fees as may be awarded
in the action or proceeding.
11.11 No Negotiation with other Persons. Upon Seller's execution of
this Agreement, Seller represents, warrants, and covenants that Seller
shall not hereafter execute any letter of understanding, letter of
intent or other agreement (binding or not binding) on behalf of Seller
with any other potential purchaser of or for the Property (or any
portion thereof) unless and until this Agreement has been terminated in
accordance with the terms of this Agreement.
11.12 Survival of Representations. Except as otherwise set forth
herein to the contrary, all representations, warranties, and covenants,
made or incorporated herein shall not be impaired
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by any investigation, inspection, or other act by Purchaser, and shall
specifically survive Closing and shall not be merged into the Special
Warranty Deed or any of the other instruments executed and delivered at
Closing.
11.13 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
Georgia.
11.14 Effective Date. This Agreement shall be deemed effective (the
"Effective Date") as of the date hereinabove first written.
11.15 Exhibits. All exhibits attached hereto are by this reference
made a part hereof.
11.16 Representations and Warranties of Purchaser. As of the Closing
Date, the Purchaser shall be duly organized, or duly qualified and
authorized, validly existing and in good standing under the laws of the
State of Georgia. This Agreement has been, or at the time of Closing
shall be, duly authorized, executed and delivered by the Purchaser and
all consents required under the Purchaser's organizational documents
have been or at the time of Closing will have been obtained. All
documents that are to be executed by the Purchaser and delivered to the
Seller at Closing have been, or at the time of Closing shall be, duly
executed, authorized and delivered by the Purchaser.
11.17 Interpretation. All references to "days" means calendar days
unless expressly provided otherwise. If any notice period or due date
contained in this Agreement falls on a Saturday, Sunday or legal
holiday, then such notice or due date shall be deemed timely if given
on the first business day following such Saturday, Sunday or legal
holiday.
11.18 Further Assurances. Seller and Purchaser agree to execute and
deliver to each other such further documents or instruments as may be
reasonable and necessary in furtherance of the performance of the
terms, covenants and conditions of the within Agreement. This covenant
shall survive the Closing.
11.19 Assignability of Agreement. Purchaser's rights under this
Agreement shall be transferable and assignable by Purchaser, either in
full or in part, to any entity affiliated with, owned by or under
common control with Purchaser or to any partnership having Purchaser as
a general partner. In the event of any such permitted transfer or
assignment, Seller shall look solely to such transferee or assignee for
the performance of all obligations, covenants, conditions and
agreements imposed upon Purchaser pursuant to the terms of this
Agreement.
12. Deposit. Purchaser shall deposit with Commonwealth Land Title Insurance
Company ("Escrow Agent") the sum of Seventy-One Thousand and No/100 Dollars
($71,000.00) by check as earnest money, payable within five (5) business days
after the Effective Date. Such sum, together with any interest earned thereon,
is hereinafter referred to as the "Deposit". If requested by Purchaser, the
Escrow Agent shall, if possible, invest such sum in an interest bearing
obligation of a national bank in the area in which the Property or Escrow Agent
is located. The Deposit shall be retained or refunded, as the case may be, in
accordance with the terms of this Agreement and shall be delivered to Seller and
applied as a credit against the Purchase Price at Closing. In performing any of
its duties hereunder, the Escrow Agent shall not incur any liability to anyone
for any damages, losses or expenses, except for willful default or breach of
trust, and it shall accordingly not incur any such liability with respect (i) to
any action taken or omitted in good faith upon advice of its counsel or (ii) to
any action taken or omitted in reliance upon any instrument, including any
written notice or instruction provided for in this
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Agreement, not only as to its due execution and the validity and effectiveness
of its provisions but also as to the truth and accuracy of any information
contained therein, which the Escrow Agent shall in good faith believe to be
genuine, to have been signed or presented by a proper person or persons and to
conform with the provisions of this Agreement. The Escrow Agent is hereby
specifically authorized to refuse to act except upon the written consent of
Seller and Purchaser. Seller and Purchaser hereby agree to indemnify and hold
harmless the Escrow Agent against any and all losses, claims, damages,
liabilities and expenses, including reasonable costs of investigation and
counsel fees and disbursements, which may be imposed upon the Escrow Agent or
incurred by the Escrow Agent in connection with its acceptance or the
performance of its duties hereunder, including any litigation arising from this
Agreement or involving the subject matter hereof. In the event of a dispute
between Seller and Purchaser sufficient in the discretion of the Escrow Agent to
justify its doing so, the Escrow Agent shall be entitled to tender into the
registry or custody of any court of competent jurisdiction all money or property
in its hands under this Agreement, together with such legal pleadings as it
deems appropriate, and thereupon be discharged from all further duties and
liabilities under this Agreement. Any such legal action may be brought in such
court as the Escrow Agent shall determine to have jurisdiction thereof. Seller
and Purchaser shall bear all costs and expenses of any such legal proceedings.
Purchaser and Seller agree to make such changes to this Agreement as may
reasonably be required by Escrow Agent and also to execute and deliver to Escrow
Agent such documentation as Escrow Agent may reasonably require in connection
with its holding of the Deposit hereunder and serving in its capacity as Escrow
Agent, such as IRS and bank account forms and reports, and for such purposes the
Deposit shall be considered the property of Purchaser until such time as Escrow
Agent disburses the Deposit to any party other than Purchaser. The preceding
sentence shall not change in any way the other provisions in this Agreement
concerning Escrow Agent's holding and disbursing the Deposit. In the event that
Purchaser terminates this Agreement for any reason in accordance with the terms
of this Agreement, Escrow Agent is hereby directed by Purchaser and Seller to
promptly refund the Deposit to Purchaser.
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IN WITNESS WHEREOF, the duly authorized representatives of the
undersigned have executed this Agreement under seal the day and year hereinabove
first written.
SELLER:
-------
MARKET PLACE SHOPPING CENTER, L.P., a Georgia limited
partnership
By: Peachtree Corners, Inc., a Georgia corporation,
its General Partner
By:/s/Paul A. Duke
--------------------------------
Name:Paul A. Duke
------------------------------
Title:Chairman
-----------------------------
PURCHASER:
----------
IRT PROPERTY COMPANY, a Georgia corporation
By:/s/Lee A. Harris
--------------------------------
Name:Lee A. Harris
------------------------------
Title:Senior Vice President
-----------------------------
ESCROW AGENT:
-------------
COMMONWEALTH LAND TITLE INSURANCE COMPANY, a
Pennsylvania corporation
By:/s/Margaret Kirbabas
--------------------------------
Name:Margaret Kirbabas
------------------------------
Title:
-----------------------------
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FIRST AMENDMENT TO THE
AGREEMENT FOR THE AND PURCHASE OF PROPERTY
THIS FIRST AMENDMENT TO THE AGREEMENT FOR THE SALE AND PURCHASE OF PROPERTY
(the "First Amendment"), is made and entered into this 15 day of October 1996 by
and between MARKET PLACE SHOPPING CENTER, L.P., a Georgia limited partnership
("Seller"), ART PROPERTY COMPANY, a Georgia corporation ("Purchaser") and
COMMONWEALTH LAND TITLE INSURANCE COMPANY, a Pennsylvania corporation ("Escrow
Agent").
WITNESSETH:
WHEREAS, Purchaser, Seller and Escrow Agent entered into that certain
Agreement for the Sale and Purchase of Property dated September 12, 1996
("Agreement") pursuant to which Seller agreed to sell and Purchaser agreed to
purchase the Property as more particularly described therein; and
WHEREAS, Purchase and Seller desire to amend the Agreement as more
particularly hereinafter set forth.
NOW, THEREFORE, for and in consideration of the Purchase Price, the mutual
covenants and agreements contained herein, the sum of Ten and No/100 Dollars
($10.00) and good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by Purchaser, Seller and Escrow
Agent, Purchaser, Seller and Escrow Agent intending to be legally bound agree as
follows:
1. Inspection of Property. The first sentence of Section 3 of the Agreement
shall be deleted in its entirety and the following inserted in its place:
Purchaser shall have until one hundred and fifty-five (155) days after the
Effective Date (the "(Inspection Period") to investigate and inspect the
Property and conduct any and all due diligence as Purchaser may deem necessary.
2. Title and Survey. The second sentence of Section 4.1 shall be deleted in
its entirety and the following inserted in its place:
Purchaser shall have until one hundred and fifty-five (155) days after the
Effective Date ("Title Examination Period") by which to give notice to Seller of
any objections which Purchaser may have, including, without limitation,
objections to any matters which constitute Permitted Title Exceptions.
3. Parking Lot. Pursuant to the terms of Section 13 of the Agreement,
Purchaser elects, under subsection (iii) not to receive an assignment of the
Proposal and any contract associated therewith, and Purchaser shall receive a
credit against the Purchase Price in the amount of $62,190 payable at Closing.
<PAGE> 28
4. Closing Date: Notwithstanding anything to the contrary contained in
Section 7.2 of the Agreement, in the event Purchaser becomes satisfied with the
results of any and all due diligence conducted with respect to the Property at
any time prior to the expiration of the Inspection Period, Purchaser may notify
Seller in writing that it waives the right to terminate the Agreement and in
such event the parties hereto agree that the Closing Date shall be amended to
the date which is fifteen (15) days after Seller's receipt of written notice
from Purchaser.
5. Reaffirmation. Except as hereinabove modified, the terms and provisions
of the Agreement remain in full force and effect, the same being republished and
confirmed hereby.
6. Counterpart Execution. This First Amendment may be executed in several
counterparts, each of which shall be deemed an original, and with all of such
counterparts together constituting one and the same agreement.
7. Facsimile Signature. The parties hereto agree that this First Amendment
may be executed by facsimile signature.
8. Capitalized Terms. The capitalized terms used in this First Amendment
shall have the meaning attributed to them in the Agreement unless otherwise set
forth herein.
<PAGE> 29
IN WITNESS WHEREOF, the duly authorized representatives of the undersigned
have executed this First Amendment under seal the day and year first above
written.
SELLER:
MARKET PLACE SHOPPING CENTER, L.P., a Georgia
limited partnership
By: Peachtree Corners, Inc., a Georgia
corporation, its General Partner
By: /s/ B. Ruth Strickland
---------------------------------
Name: B. Ruth Strickland
-------------------------------
Title: President
------------------------------
(CORPORATE SEAL)
PURCHASER:
IRT PROPERTY COMPANY, a Georgia corporation
By: /s/ W. Benjamin Jones
-----------------------------------
Name: W. Benjamin Jones III
-------------------------------
Title: Exec. V.P.
------------------------------
(CORPORATE SEAL)
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE
COMPANY, a Pennsylvania corporation
By: /s/ Margaret Kirbabas
---------------------------------
Name: Margaret Kirbabas
-------------------------------
Title:
------------------------------
(CORPORATE SEAL)
<PAGE> 30
SECOND AMENDMENT TO
AGREEMENT FOR THE SALE AND PURCHASE OF PROPERTY
THIS SECOND AMENDMENT TO AGREEMENT FOR THE SALE AND PURCHASE OF PROPERTY
(the "Second Amendment"), is made and entered into this 13 day of February,
1997, by and between MARKET PLACE SHOPPING CENTER, L.P., a Georgia limited
partnership ("Seller"), IRT PROPERTY COMPANY, a Georgia corporation
("Purchaser") and COMMONWEALTH LAND TITLE INSURANCE COMPANY, a Pennsylvania
corporation ("Escrow Agent").
WITNESSETH:
WHEREAS, Purchaser, Seller and Escrow Agent entered into that certain
Agreement for the Sale and Purchase of Property dated September 12, 1996,
pursuant to which Seller agreed to sell and Purchaser agreed to purchase the
Property as more particularly described therein, and which Agreement was amended
and modified by that certain First Amendment to the Agreement for the Sale and
Purchase of Property dated October 15, 1996 (collectively said Agreement and
First Amendment are herein referred to as the "Agreement"); and
WHEREAS, Purchaser and Seller now desire to further amend the Agreement as
more particularly set forth herein.
NOW THEREFORE, for and in consideration of the Purchase Price, the mutual
covenants and agreements contained herein, the sum of Ten and No/100 Dollars
($10.00) and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by Purchaser and Seller, Purchaser
and Seller, intending to be legally bound hereby, agree as follows:
1. Property. Section 1.1 of the Agreement, entitled Real Property, is
hereby amended to exclude from the purchase and sale that certain area outlined
on the partial site plan attached hereto as "Exhibit 1" and by this reference
incorporated herein (the "Excluded Parcel"). Prior to the Closing Date, Seller
shall at its expense cause the Excluded Parcel to be surveyed according to the
requirements set forth in Section 4.2 of the Agreement and shall further cause
new legal descriptions of the Excluded Parcel and the Property (without the
Excluded Parcel) to be prepared. The new legal description of the Property will
be substituted for Exhibit A-1 to the Agreement (to be added to the Agreement
pursuant to Section 4.2 thereof) and the new legal description of the Excluded
Parcel shall be added to the Agreement as Exhibit A-2 thereto. In addition, the
provisions of Section 4.2 of the Agreement are deemed amended to the extent
necessary to conform to the above agreements.
2. Purchase Price. The Purchase Price for the Property is hereby amended
and set at the sum of Six Million Eight Hundred Thousand and NO/100 Dollars
($6,800,000.00). It is agreed and understood that the above price adjustment
includes adjustments regarding both the exclusion of the Excluded Parcel and
various physical conditions, including the parking lot, and that the credit of
$62,190 referenced in Section 3 of the First Amendment to the Agreement is no
longer operative.
<PAGE> 31
3. Easement/Other Agreements. Seller and Purchaser agree that they shall
enter into an Agreement Regarding Easements, Covenants and Restrictions (the
"ECR"), to be reasonably negotiated by Seller and Purchaser, which ECR shall,
without limitation:
A. Grant to each of Seller and Purchaser, their customers, invitees,
agents, employees, representatives, successors and assigns:
1. The right of pedestrian and vehicular access to and across and
parking on the Property and the Excluded Parcel;
2. Such easements as are necessary for the proper use and
maintenance of utility services to the respective premises;
3. Such other rights as the parties may reasonably agree.
B. Provide for the maintenance of the common areas of the Property, and
the Excluded Parcel and an equitable sharing of the costs thereof.
C. Provide such restrictions on use as are required by the tenant leases
for the Property and the Excluded Parcel and as may be further agreed upon by
Purchaser and Seller.
The ECR shall be executed in recordable form, shall be recorded upon Closing and
shall run with the land comprising the Property and the Excluded Parcel.
In addition to the ECR, Purchaser and Seller shall enter into such other
agreements as may be reasonably necessary or appropriate in order to fully
define the rights and obligations of each party in connection with the continued
ownership, maintenance and operation of the Property and the Excluded Parcel
(i.e. party wall agreements, etc.).
4. Environmental Insurance. At Closing, Seller shall provide at its expense
and for the benefit of Purchaser and the Property a policy of insurance insuring
Purchaser, its successors and assigns, against liability for government-required
environmental clean-up costs, for personal injury or damage to property
(including liability for diminished value claims of adjoining property owners)
incurred in connection with the ownership and management of the Property. Such
insurance coverage shall be for a period of five (5) years from Closing, shall
be for a total amount of $2,000,000, with a deductible of not greater than
$50,000. Purchaser has obtained a preliminary quote for such insurance
estimating the premium therefor of $24,400. In the event such premium exceeds
$25,000, Seller shall not be required to contribute more than $25,000 for such
premium, and Purchaser shall elect either (a) to pay such premium in excess of
the amount paid by Seller, or (b) to terminate this Agreement and receive a
return of the Deposit.
5. Reaffirmation. Except as hereinabove modified, the terms and provisions
of the Agreement remain in full force and effect, the same being republished and
confirmed hereby.
2
<PAGE> 32
6. Counterpart Execution. This Second Amendment may be executed in several
counterparts, each of which shall be deemed an original, and with all such
counterpart together constituting one and the same agreement.
7. Facsimile Signature. The parties hereto agree that this Second Amendment
may be executed by facsimile signature.
8. Capitalized Terms. The capitalized used in this Second Amendment shall
have the meaning attributed to them in the Agreement unless otherwise set forth
herein.
IN WITNESS WHEREOF, the duly authorized representatives of the undersigned
have executed this Second Amendment under seal the day and year first above
written.
SELLER:
MARKET PLACE SHOPPING CENTER, L.P., a
Georgia limited partnership
By: Peachtree Corners, Inc., a Georgia
corporation, its General Partner
By: /s/ B. Ruth Strickland
---------------------------------
Name: B. Ruth Strickland
-------------------------------
Title: President
------------------------------
(CORPORATE SEAL)
PURCHASER:
IRT PROPERTY COMPANY, a Georgia corporation
By:/s/ W. Benjamin Jones
------------------------------------
Name: W. Benjamin Jones III
-----------------------------------
Title: Exec. V.P.
---------------------------------
(CORPORATE SEAL)
3
<PAGE> 33
ESCROW AGENT:
COMMONWEALTH LAND TITLE INSURANCE
COMPANY a Pennsylvania corporation
By: /s/ Sally French Tyler
---------------------------------
Name: Sally French Tyler
-------------------------------
Title: AVP/ATLANTA NTS
------------------------------
(CORPORATE SEAL)
4
<PAGE> 1
CLOSING STATEMENT AND MEMORANDUM
DATE: May 13, 1997
SELLER: Powers Ferry Plaza, L.P.
c/o D. Barr, Inc.
1010 Quake Ridge
Duluth, Georgia 30136
PURCHASER: IRT Property Company
200 Galleria Parkway, Suite 1400
Atlanta Georgia 30339
TITLE COMPANY: Commonwealth Land Title Insurance Company
3350 Cumberland Circle, Suite 1895
Suite 200
Atlanta Georgia 30339
PROPERTY: Certain real property located in Cobb County Georgia more
particularly described on Exhibit "A" attached hereto and by
this reference made a part hereof
I. SALE DOCUMENTATION
A. Limited Warranty Deed
B. State of Georgia Real Estate Transfer Tax Declaration
C. Seller's Affidavit
D. Certificate and Affidavit of Non-Foreign Status
E. Affidavit of Seller's Residence-Seller's Certificate of Exemption
F. 1099S Real Estate Transaction Form
G. Bill of Sale and Assignment
H. Purchase Money Promissory Note
I. Declaration of Joint and Reciprocal Easements
J. Commonwealth Land Title Insurance Company Owner's Title Commitment
Number 300042/NTS#97-01-0173
K. Closing Statement and Memorandum
II. PURCHASER PRICE AND ADJUSTMENT
A. Purchase Price $6,800,000.00
B. Less: Purchase Money Promissory Note 1,250,000.00
C. Less Seller's share of 1997 Cobb County, Georgia
ad valorem taxes 30,176.52
D. Less: Security deposits 3,931.66
E. Less: Pre-paid rents 7,835.50
F. Less: Purchaser's share of May, 1997 monthly base
rents 39,749.97
G. Gross Cash Amount Due Seller $5,468,306.50
=============
<PAGE> 2
III. DISBURSEMENT OF GROSS CASH AMOUNT DUE SELLER
A. To Clerk of Superior Court, Cobb County
for real estate transfer tax $ 6,800.00
B. To The Union Central Life Insurance Company
for loan payoff 4,480,147.68
C. To John R. Hoats for real estate brokerage commission 93,200.00
D. To The Forum Management Group, Inc. for real estate
brokerage commission 200,000.00
E. To Cobb County Tax Commissioner for payment of
remaining 1996 real estate taxes 8,898.66
F. To Seller for net cash proceeds 679,260.16
G. Total Disbursements $5,468,306.50
=============
IV. CLOSING FUNDS REQUIRE OF PURCHASER
A. To Seller for Gross, Cash Amount Due Seller $5,468,306.50
B. To The Form Management Group, Inc. for real estate
brokerage Commission 19,200.00
C. To Clerk of Superior Court of Cobb County, Georgia
for recording of deed 100.00
D. Total Funds Required of Purchaser $5,487,606.50
=============
V. MISCELLANEOUS
A. Seller and Purchaser agree to pro rate the 1997 Cobb County, Georgia ad
valorem real property taxes as of May 13, 1997. The proration of 1997 Cobb
County, Georgia ad valorem real property taxes is based upon a pro rata amount
of the 1996 Cobb County, Georgia taxes in the mount of $83,440.76. Accordingly,
Seller has been charged with the 132 days of calendar year 1997 at the rate of
$228.61 per day, for a total of $30,176.52. Purchaser agrees to pay the 1997
Cobb County, Georgia ad valorem real property taxes with respect to the
Property. In the event the above proration is not accurate, the parties agree to
adjust the proration based on the final tax bill.
B. Purchaser acknowledges that Seller is paying the remaining 1996 real
estate taxes (Item III.E. above) even though the assessment of the Properly is
currently under appeal. Purchaser agrees that Seller shall be entitled to any
refund with respect to 1996 and prior year ad valorem real property taxes.
C. Except for the brokerage commissions described in Items III.C. and D.
and Item IV.B. above, Seller and Purchaser each hereby represent and warrant one
to the other that no broker's, agent's or finder's fees, commissions or the like
are due and payable by the non-warranting party to any party whomsoever or
whatsoever in connection with the transaction evidenced by this Closing
Statement and Memorandum which arise by, through or under the act of the
warranting party. Seller and Purchaser each hereby indemnity the other against
and agree to hold the other harmless from and against any and all claims,
judgments, demands, suits, losses and
-2-
<PAGE> 3
expenses (including, without limitation, attorneys' fees and court costs)
arising out of or connected with any breach of the representations and
warranties contained in this Paragraph D.
D. Subject to the accuracy of the payoff letter delivered to Title Company,
Title Company agrees to immediately make the loan payoff to The Union Central
Life Insurance Company (Item III.B. above) and to cause any and all security
instruments and documents in favor of The Union Central Life Insurance Company
("Lender") to be satisfied, released and terminated of record, including,
without limitation, any security deed, assignment of rents and 1eases and
financing statements. Any costs, fees and expenses not included in the payoff
amount delivered to Lender shall be immediately paid by Seller. Title Company
agrees to immediately file of record the Declaration of Joint and Reciprocal
Easements and the Limited Warranty Deed. Purchaser acknowledges that it is
responsible for all recording costs of the documents and instruments to be
recorded in connection with this transaction and acknowledges and agrees that
the recording fees set forth Item IV.C. above are an estimate. In the event
that the actual recording fees exceed the estimate, Purchaser acknowledges and
agrees that it will be responsible for such excess.
E. Seller agrees that it shall be responsible for any amounts owed to Micro
Electronics, Inc. ("MEI") under the terms of its lease attributable to periods
prior to the date hereof. In the event (a) Seller fails to pay MEI amounts due
MEI under the terms of its lease attributable to periods prior to the date
hereof (the "Delinquent Sum") within thirty (30) days of written demand
therefor by MEI, (b) MEI offsets all or any portion of the Delinquent Sum
against rent due and owing to Purchaser (as landlord under the MEI lease) or
makes a claim for the Delinquent Sum and (c) Purchaser gives written notice of
such offset or claim to Seller, then Purchaser may offset against amounts due
Seller under the terms of the Purchase Money Promissory Note of even date
hereof (the ("Note") an amount equal to that portion of the Delinquent Sum
claimed or offset against rent due and owing to Purchaser (as landlord under
the MEI lease) (the "Offset"), provided, however, the Offset may only be
applied at the time a regularly scheduled payment of principal and/or interest
is due under the Note. Purchaser agrees that it shall not notify MEI or
otherwise advise MEI that any Delinquent Sum is outstanding; provided, however,
nothing herein shall prevent Purchaser from billing MEI for sums due under the
MEI Lease in accordance with Purchaser's interpretation of said lease. Nothing
herein shall be construed as an admission on the part of Seller that any
Delinquent Sum is outstanding (Seller hereby expressly denies that any
Delinquent Sum is outstanding). Except as set forth in this paragraph,
Purchaser shall have no other right to offset, setoff or recoup amounts
actually or alleged to be owing to Purchaser by Seller against or from the
amounts due under the Note.
F. Seller shall be responsible for all expenses of the Property
attributable to the period prior to the date hereof. Purchaser shall be
responsible for all expenses of the Property attributable to the period from and
after the date hereof. Seller represents and warrants to Purchaser that all
expenses, charges, bills, or trade accounts maintained or incurred by Seller or
its agents in connection with the management or operation of the Property or
otherwise accrued for the period prior to the date hereof shall be paid in full
on the date hereof; provided, however, that all such expenses, charges, bills,
or trade accounts which have accrued but have not yet been billed shall be paid
in full by Seller at the time the bills are received. To the extent Seller is
required to pay an expense under this paragraph which is later reimbursed by the
space tenants, Seller shall be entitled to receive its proportionate share of
such payment, subject to the provisions of paragraph F-l hereunder. Seller and
Purchaser shall indemnify each other against and shall hold each other harmless
from any costs, expenses, penalties or damages, including reasonable attorneys'
fees, which may result from any failure by the other to pay or cause to be paid
any of the items described in this paragraph.
With respect to the base rent for May, 1997, Purchaser acknowledges that it
has received a credit for its pro rata share (i.e. 18 days) of said rent
notwithstanding that all of such rent has not been paid in full as of the date
hereof. Accordingly, all payments representing, base rent for May, 1997 shall
belong entirely to Seller and any checks for such payments received after the
date hereof by Purchaser or its agents shall be promptly endorsed to Seller by
the payee thereof and promptly
-3 -
<PAGE> 4
transmitted to Seller, subject to the provisions of paragraph F-1 hereunder.
Except as hereinafter set forth, Seller shall be entitled to all income from
the Property at attributable to the period prior to the date hereof. Purchaser
shall have no duty or obligation to collect any rents or other sums derived from
operation of the Property which are outstanding as of the date hereof.
F-1. If Purchaser receives any payment of outstanding rent (other than base
rent for May, 1977), the payment shall first be applied by Purchaser to amounts
due to Purchaser from that tenant and the excess, if any, shall be promptly paid
over to Seller to the extent owed to Seller as set forth on Exhibit "E" to the
Bill of Sale and Assignment of even date hereof. Seller agrees that no lawsuit
of any kind shall be brought or threatened after the date hereof to collect any
outstanding rent without the prior written consent of Purchaser such consent may
be withheld in Purchaser's sole discretion. Any checks for rental payments or
other charges received after the date hereof by Seller or its agents (other than
base rent for May, 1977) shall be promptly endorsed to Purchaser by the payee
thereof and promptly transmitted to Purchaser.
All gross receipts derived from annual reimbursements of common area
maintenance expenses and costs, taxes and insurance received for the period in
which the date hereof occurs shall be prorated as of the date hereof upon
receipt. Within 60 days of the date hereof, Seller shall provide Purchaser with
a calculation of billings along with copies of tenant billings and invoices or
paid bills if any, upon which are based common area maintenance and other
charges to tenants for the period January 1 through May 13, 1997 sufficient to
enable Purchaser to accurately bill tenants for such charges. Seller shall pay
Purchaser any credits due to tenants from Seller for such period at the time the
billings are submitted to Purchaser; the payments shall be for all credits to
any and all tenants and shall not be offset by any amounts due from tenants to
Seller. Purchaser shall provide tenants with year-end adjustment statements for
CAM, taxes and insurance for 1997. Purchaser shall bill tenants and pay to
Seller Seller's pro rata portion of any additional amounts from tenants in
accordance with the above. Notwithstanding anything contained herein to the
contrary, Seller shall not be entitled to any percentage rentals with respect to
sales of tenants for calendar year 1997.
Purchaser agrees to promptly establish new accounts in Purchaser's name
or in the name of Purchaser's designated agent with respect to the utilities
required to operate the Property, including, without limitation, water, gas and
electric service. Upon receipt of final utility bills by Seller, Purchaser shall
promptly pay to Seller the Amount of utility charges incurred from and after the
date hereof. All deposits with utility providers as of the date hereof shall
remain the property of Seller.
G. PURCHASER ACKNOWLEDGES AND AGREES THAT THE SALE OF THE PROPERTY IS MADE
ON AN "AS-IS" CONDITION AND BASIS WITH ALL FAULTS. IT IS UNDERSTOOD AND AGREED
THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR NEGOTIATION TO REFLECT THAT
THE PROPERTY IS SOLD BY SELLER AND PURCHASED BY PURCHASER SUBJECT TO THE
FOREGOING.
H. Seller acknowledges and agrees that as of the date hereof a portion of
the Property is leased to Danny Campbell d/b/a/ Goodyear for parking and that
such lease for parking is not violation of the restriction described in
Exhibit "B" to the Limited Warranty Deed nor will any future lease of similar
substance whether to the above tenant or any substitute user or owner of the
same property be a violation of such restriction
I. Seller represents and warrants to Purchaser that there are no employees
of Seller or Seller's management company to whom Purchaser shall, at or after
the date hereof, have any obligation or liability whatsoever and there are no
management, service or other contracts in effect as of the date hereof regarding
the operation of the Property for which Purchaser shall, at or after the date
hereof, have any obligation or liability whatsoever.
-4-
<PAGE> 5
J. This Closing Statement and Memorandum and the terms, conditions, duties
and obligations contained herein shall inure to the benefit of, and shall be
binding upon, Seller, Purchaser and Title Company and their respective
successors, legal representatives and assigns. This Closing Statement and
Memorandum shall survive the closing of the purchase and sale of the Property
and shall not merge into or with the limited warranty deed or other
conveyancing documents.
K. Seller, Purchaser and Title Company may rely on facsimile signatures on
counterparts of this Closing Statement and Memorandum as original signatures.
This Closing Statement and Memorandum may be executed in any number of
counterparts all of which taken together shall constitute one in the same
instrument.
L. Purchaser shall pay the Title Company for its premium outside of
closing.
M. Seller agrees to provide to Purchase within thirty (30) days of the date
hereof, operating statements for the Property for the period January 1, 1997
through the date hereof.
N. Seller represents and warrants to Purchaser that neither Kim's Karate
nor Danda Productions exercised any options or rights to extend their respective
leases beyond their April 1997 expiration dates.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
-5-
<PAGE> 6
SELLER: PURCHASER:
POWERS FERRY PLAZA, L.P. a Georgia IRT PROPERTY COMPANY, a Georgia
limited partnership corporation
By: Barr PFP, Inc., a Georgia corporation By: /s/ W. Benjamin Jones
General Partner ------------------------------
Name: W. Benjamin Jones
By: /s/ David Barr ----------------------------
----------------------------------- Executive Vice President
David Barr, President
TITLE COMPANY:
COMMONWEALTH LAND TITLE
INSURANCE COMPANY
By: /s/ John A. White, Jr.
----------------------------------------
Name: John A. White Jr.
--------------------------------------
Title: Agent
-------------------------------------
-6-
<PAGE> 1
EXHIBIT 10.3
AGREEMENT OF PURCHASE AND SALE
IRT PROPERTY COMPANY, hereinafter referred to as "Purchaser," agrees to
purchase, and RREEF MidAMERICA/EAST-IV, INC., a Delaware corporation,
hereinafter referred to as "Seller," agrees to sell, that certain improved real
property, hereinafter referred to as the "Property," situated in the City and
County of West Palm Beach, State of Florida, legally described on Exhibit A
attached hereto and made a part hereof, commonly known as Greenwood Shopping
Center, consisting of a shopping center containing approximately 134,132
rentable square feet, on land aggregating approximately 13.12 acres, together
with all rights, privileges, easements and appurtenances thereto, including any
and all mineral rights, development rights, air rights, and the like; all
personal property owned by the Seller and located on or used in conjunction with
the Property; any and all intangible personal property owned and used in the
operation of the Property, including the right to use the name of the property
(but not the name "RREEF"), to the extent assignable; contract rights, lease
rights, all licenses, permits and other written authorizations necessary for the
use, operation and ownership of the Property, records, security deposits and
prepaid rent, if any, and the benefit of any guaranties of the leases.
1. Purchase Price. The purchase price for the Property ("Purchase
Price") is Thirteen Million Dollars ($13,000,000.00), payable by wire transfer
of funds at Closing as defined in Paragraph 7.1.
2. Deposit.
2.1 Within three (3) business days after the Effective Date as
defined in Paragraph 8.21, Purchaser will deposit the amount of $150,000.00 (the
"Deposit") with Commonwealth Land Title Insurance Company ("Escrow Holder") as
earnest money to secure Purchaser's performance hereunder. The Deposit may be
invested at the direction of Purchaser with the approval of Seller. All
investment income earned from the investment of the Deposit, less investment
fees, if any, will be added to and become a part of the Deposit and will be
applied toward the Purchase Price if Closing is completed in accordance with
this Agreement; otherwise all interest shall be paid to the party entitled to
the Deposit. The escrow instructions to Escrow Holder will be in the form of
Schedule 2.1 attached hereto.
3. Review of the Property.
3.1 Upon its execution of this Agreement, Seller agrees:
subject to the provisions of Paragraph 8.17 hereof, to provide Purchaser and its
agents or consultants with access to the Property to inspect each and every part
thereof to determine its present condition and to conduct such physical and
environmental studies (including a mechanical and roof study) as it deems
appropriate.
3.2 Within three (3) business days after the Effective Date,
Seller will deliver to Purchaser, all to the extent in the possession of Seller
or its managing agent:
<PAGE> 2
3.2.1 a copy of any existing occupancy and equipment
leases, service contracts and maintenance or other contracts pertaining to the
operations of the Project other than management contracts which will not survive
Closing (as hereinafter defined), copies of all real estate tax bills for 1994,
1995, and 1996, and unaudited financial statements for the Property for the
years 1994-1996 and 1997 year to date.
3.2.2 copy of any environmental reports prepared by third
party consultants or otherwise relating to the Project since January 1, 1994.
Purchaser may review any earlier reports at Seller's management office which is
located at the Mall of the Americas, 7827-B W. Flagler Street, Miami, FL 33144,
or at Purchaser's request and cost, Seller agrees to make and send Purchaser
copies of any such earlier reports.
3.2.3 a copy of all current franchises, business or other
licenses, bonds, permits, certificates, authorizations and other evidences of
consent, approval, authorization or permission relating to or affecting the
Project of or from any person, including any governmental authority, held by
Seller or its managing agent, including any pending applications.
3.2.4 a copy of all third party warranties and guaranties,
if any, in the possession of Seller or its management company, which are in
effect with respect to the Project.
3.3 Purchaser has until the close of business on the day which
is thirty days after the Effective Date (the "Review Period"), to determine in
its sole discretion whether all matters relating to the Property are acceptable.
If Purchaser concludes that any matter relating to the Property is not
acceptable, Purchaser will so notify Seller (the "Termination Notice") prior to
the expiration of the Review Period (which notice shall contain a copy of
Purchaser's roof/structural report and other reports or studies obtained in
connection with Purchaser's due diligence). However, the foregoing will not be
construed to limit or qualify Purchaser's absolute right to terminate this
Agreement for no reason by the end of the Review Period. Upon timely delivery of
the Termination Notice, this Agreement will terminate without liability on the
part of Seller or Purchaser, other than Purchaser's indemnity contained in
Paragraph 8.17 hereof and the obligation to deliver to Seller a copy of any
environmental report obtained by Purchaser if requested by Seller within ten
(10) days after receipt of the Termination Notice, and the Deposit, less $100.00
to be paid to Seller, will be returned to Purchaser. In the event that Purchaser
does not timely so notify Seller, Purchaser will be deemed to have concluded
that all matters relating to the Property are acceptable and to have elected to
proceed with the transaction upon the terms and conditions contained herein.
3.4 Purchaser agrees that any information obtained by Purchaser
or its authorized agents in the conduct of its due diligence will be treated as
confidential pursuant to Paragraph 8.19.
-2-
<PAGE> 3
3.5 To the extent not already delivered to Purchaser, Seller
shall, within three (3) days after the Effective Date, deliver to Purchaser
copies of all the documentation set forth on Schedule 3.5 attached hereto, to
the extent in Seller's control.
4. Title and Survey. Seller shall convey good marketable and
insurable fee simple title to the Property to Purchaser, by execution and
delivery of the Deed (as hereinafter defined), free and clear of all liens and
encumbrances, subject only to the Permitted Title Exceptions, as defined herein,
the leases and any other matter of title which Purchaser shall approve or waive
in accordance with this Agreement. "Good, marketable and insurable fee simple
title" shall mean such title as is insurable by the Escrow Holder at standard
rates on its ALTA Form 1992 owner's policy without exception, except for the
leases and the Permitted Title Exceptions (the "Title Commitment"). Seller
agrees to order (and upon receipt, to promptly deliver to Purchaser) an
"as-built" survey of the Property, which shall be prepared in accordance with
the requirements set forth on Schedule 4 attached hereto (the "Survey"). Within
ten (10) business days following Purchaser's receipt of the later of the Title
Commitment and Survey, Purchaser shall notify Seller of any reasonable
objections Purchaser may have to any exception shown on the Title Commitment or
Survey. If Purchaser fails to give any notice to Seller, Purchaser shall be
deemed to have waived such right to object to any title exceptions shown on the
Title Commitment or matters shown on the Survey, and the matters shown on the
Title Commitment and disclosed on the Survey shall be the "Permitted Title
Exceptions." In the event that the legal description of the Property as
determined by the Survey differs from the legal description by which the
Property was conveyed to Seller, then, at the request of Purchaser, Seller shall
also execute and deliver at Closing a quitclaim deed in favor of Purchaser
containing the legal description as determined by the Survey. Seller shall
remove any monetary liens (except property taxes not yet due and payable),
judgments, all assessments levied and payable at the time of Closing or other
monetary encumbrances encumbering title to the Property and held by persons
claiming through or under Seller at or before Closing (collectively, "Seller
Defects"). If Seller fails to do so, Purchaser shall have the right at Closing
to satisfy any Seller Defects by withholding the required amount from the
Purchase Price and paying and discharging the Seller Defects. If Purchaser does
give Seller timely notice of objection to any title exception or matters of
survey, Seller shall then have the right, but not the obligation, except as
herein expressly provided, for a period of ten (10) days after such notice, to
cure or satisfy or undertake to cure or satisfy such objection by the Closing.
All title exceptions and matters of survey not objected to are Permitted Title
Exceptions. If such objection is not so timely cured or satisfied or undertaken
to be cured or satisfied by Seller, then Purchaser shall, within (5) days after
receipt by Purchaser of notice of Seller's election to undertake a cure or not
and as its only remedy, elect, by written notice to be delivered to Seller on or
before such fifth (5th) day, either to (a) terminate this Agreement, in which
case the Deposit, less $100.00 to be paid to Seller, shall be returned to
Purchaser by Escrow Holder, and the parties shall have no further rights or
obligations hereunder, except for those which expressly survive any such
termination, or (b) waive its objection hereunder and proceed with the
transaction pursuant to the remaining terms and conditions of this Agreement. If
Seller does so cure or satisfy, or undertake to cure or satisfy, such
objections, then this Agreement shall continue in full force and effect.
Purchaser shall have
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the right at any time prior to termination to waive any objections that it may
have made and, thereby, to preserve this Agreement in full force and effect.
Except as otherwise expressly permitted herein with respect to leasing, Seller
agrees not to further alter or encumber in any way Seller's title to the
Property after the execution hereof without Purchaser's prior written consent.
Purchaser shall have the right to object to any change in title occurring after
the effective date of the Title Commitment and prior to the Closing, and if
Seller cannot or will not cure or satisfy any such objection (or any objection
which Seller has previously undertaken to cure or satisfy) by the Closing, Buyer
may exercise the option set forth in clause (a) or (b) above. The Closing Date
shall be automatically extended to permit all time periods in this Paragraph 4
to run fully. Failure of Purchaser to elect either option (a) or option (b) when
available, shall be deemed to be an election of option (a).
5. Representations and Warranties.
5.1 Representations and Warranties of Seller. As used in this
Paragraph 5.1 and elsewhere in this Agreement, the phrase "to the knowledge of
Seller" or phrases of similar import means and is limited to the actual
knowledge of Seller's portfolio manager (Peter F. Feinberg) and Seller's local
manager having ongoing management responsibility with respect to the Property
(Al Diaz), and not to any constructive knowledge of any of the foregoing
individuals or of Seller or any investment advisor to Seller, any entity that is
a partner in such investment advisor, or any affiliates of any thereof, or to
any officer, agent, representative, or employee of Seller or such investment
advisor, any such constituent partner, or any such affiliate. Whenever the
phrase "Seller has received no written notice" is used herein, it means that
Messrs. Feinberg and Diaz have not received any written notice. Seller hereby
warrants and represents to Purchaser (with such representations and warranties
to be re-made as of Closing pursuant to Paragraph 7.6.10) as follows:
5.1.1 Pending Proceedings. With the exception of the
items set forth on Schedule 5.1.1, to the knowledge of Seller, Seller has
received no written notice of and Seller has no knowledge of any special
assessments, condemnation, environmental, zoning or other land use regulation
proceedings either pending or planned to be instituted with respect to the
Property or any part thereof.
5.1.2 Status of Seller and Closing Documents. Subject
to Paragraph 8.15, that this Agreement has been, and all the documents to be
delivered by Seller to Purchaser at Closing are or will be, duly authorized,
executed, and delivered by Seller, will be sufficient to convey good, marketable
and insurable title fee simple and are legal, valid, and binding oblig ations of
Seller, are enforceable in accordance with their respective terms, and do not
violate any provisions of any agreement to which Seller or the Property is
subject.
5.1.3 Non-Foreign Status. Seller is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended, and that Seller
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will furnish to Purchaser, prior to Closing, an affidavit in form satisfactory
to Purchaser confirming the same.
5.1.4 Service Contracts. With the exception of
the items set forth on Schedule 5.1.4, there are no agreements or contracts
affecting the Property (including, without limitation, any management, leasing,
services or maintenance agreements) which are not terminable at will by Seller
without further liability, upon not more than 30 days' prior written notice.
5.1.5 No Default. The execution and delivery of
this Agreement, and consummation of the transaction described in this Agreement,
does not and will not constitute a default under any contract, lease, or
agreement to which Seller is a party.
5.1.6 No Suits. To Seller's knowledge, there is
no action, suit or proceeding pending or threatened against or affecting the
Property or any portion thereof, or relating to or arising out of the ownership,
management or operation of the Property, in any court or before or by any
federal, state, or municipal department, commission, board, bureau or agency or
other governmental instrumentality.
5.1.7 Environmental Condition. Each of the
following representations contained in this Paragraph 5.1.7 is wholly qualified
and limited by (a) any matters disclosed in any materials made available or
delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b)
any matters disclosed in any environmental reports or studies obtained by
Purchaser, and (c) any other matters of which Purchaser has actual knowledge.
Subject to the foregoing, Seller represents:
5.1.7.1 With the exception of items listed
on Schedule 5.1.7.1, to Seller's knowledge no releasing, generating or handling
of Hazardous Materials has occurred on the Property by Seller, and Seller does
not know of any releasing, generating or handling of Hazardous Materials on the
Property by any tenants or the incorporation of Hazardous Materials by the
tenants in any improvements on the Property during the time Seller owned the
Property, except in either instance in minimal amounts customarily found in
office uses and in compliance with applicable law or as is otherwise allowed in
compliance with applicable law. For the purposes hereof, "Hazardous Material"
means any substance, chemical, waste or other material which is listed, defined
or otherwise identified as "hazardous" or "toxic" under any federal, state,
local or administrative agency ordinance or law, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.ss. 9601 et seq. and the Resource Conservation and Recovery Act, 42
U.S.C. ss.ss. 6901 et seq., or any regulation, order, rule or requirement
adopted hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls,
petroleum, petroleum product or by-product, crude oil, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture
thereof, radon, asbestos, and "source," "special nuclear" and "by-product"
material as defined in the Atomic Energy Act of 1985, 42 U.S.C. ss.ss. 3011 et
seq.
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5.1.7.2 With the exception of items listed
on Schedule 5.1.7.2, Seller has not received any summons, citation, directive,
letter or other communication, written or oral, from the United States
Environmental Protection Agency or the Florida Department of Environmental
Protection with respect to the Property.
5.1.8 Construction Contracts/Tenants Improvements.
Except as specified in Schedule 5.1.8, Seller has entered into no outstanding
written or oral contracts with regard to construction of improvements on the
Property, and has no obligations with respect to tenant improvements, which have
not been fully paid for or which will not be fully paid for as of Closing.
5.1.9 Options. Seller has granted no options or
rights of first refusal to acquire any interest in the Property not set forth in
the tenant leases delivered to Purchaser or in documents of record disclosed in
the Title Commitment.
5.1.10 Rent Roll. The information set forth on the
rent roll attached hereto as Schedule 5.1.10 is true and accurate in all
material respects.
5.1.11 Tenant Rights. There are no termination,
extension, cancellation, or expansion rights under the leases except as
contained in the leases.
5.1.12 Leasing Commissions. All leasing
commissions due and payable as of the date hereof by Landlord have been paid or
will have been paid on or before Closing. Except as set forth in the leases,
Seller has no knowledge of leasing commissions with respect to leases in effect
as of the Execution Date which may become due after Closing by reason of post-
Closing actions or occurrences.
5.1.13 Bankruptcy. Seller is not party to any
voluntary or involuntary proceedings in bankruptcy, reorganization or similar
proceedings under the Federal bankruptcy laws or under state laws relating to
the protection of debtors, or subject to any general assignment for the benefit
of the creditors, and, to Seller's knowledge, no such action has been
threatened.
5.1.14 Undisclosed Agreements. To Seller's
knowledge and other than as expressly set forth in this Agreement or otherwise
disclosed in writing to Buyer pursuant to this Agreement, there are no
undisclosed agreements affecting the Property.
5.1.15 No Employee Agreements or Contracts. No
agreements or employment contracts exist which would prevent Seller from
dismissing, on one week's notice without payment of severance, sick leave,
vacation pay or bonus, any employee now employed to work on or with the
Property. Seller has not, and will not, represent to its employees, that the
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Purchaser or its independent contract manager, will hire Seller's employees on
or after the Closing Date.
5.1.16 CCR's. Seller has received no notice of any
uncured default under any restriction burdening the Property.
5.2 Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller that (i) this Agreement has
been, and all the documents to be delivered by Purchaser to Seller will be, duly
authorized, executed, and are or will be legal, valid, and binding obligations
of Purchaser, are or will be enforceable in accordance with their respective
terms, and do not and will not at Closing violate any provisions of any
agreement to which Purchaser is subject and (ii) Purchaser is a publicly traded
Real Estate Investment Trust.
5.3 Continuation. The continued accuracy in all material
respects of the aforesaid representations and warranties is a condition
precedent to the parties' obligation to close. If the warranty and
representation of Purchaser in clause (ii) of Paragraph 5.2 is not correct when
made, or when remade at Closing, or if such warranty and representation is
inaccurate when made or becomes inaccurate in any material respect on or prior
to Closing, then, unless Seller is satisfied in its sole discretion that the
transaction contemplated hereby will not constitute a sale to a
"party-in-interest" within the meaning of Section 3(14) of the Employee
Retirement Security Act of 1974 as amended, with respect to any investor in
Seller, this Agreement shall terminate, the Deposit shall be returned to
Purchaser, less $100.00 to be paid to Seller, and neither party will have any
further rights or obligations hereunder except as provided in Paragraph 8.17. If
any of Seller's representations and warranties is not correct in all material
respects at the time the same is made, or when remade at Closing, or if such
warranty or representation is inaccurate when made or becomes inaccurate in any
material respect on or prior to Closing, Purchaser may, upon being notified of
such occurrence either (a) terminate this Agreement, in which event the Deposit
will be returned to Purchaser, and neither party will have any further rights or
obligations hereunder except as provided in Paragraph 8.17, or (b) waive such
matter and proceed to Closing, by notice to Seller given within ten (10) days
after Purchaser receives notice from Seller, or otherwise obtains actual
knowledge, of such occurrence, but in no event later than Closing. If Purchaser
fails to give any notice within the required time period, Purchaser will be
deemed to have elected to waive such matter and proceed to Closing. However, and
in any event, if Purchaser closes this transaction after being notified or
otherwise having actual knowledge of the breach or inaccuracy of any
representation or warranty hereunder, whether or not knowing and intentional and
whether or not occurring by reason of, Seller's default, Purchaser will be
conclusively deemed to have waived such matter and will be barred from asserting
any claim with respect thereto. Subject to the preceding sentence and to the
time limitation of Paragraph 8.12, nothing herein prohibits Purchaser from
seeking actual (but not special, consequential, exemplary or punitive, all of
which are hereby excluded) damages proximately caused by the breach, discovered
after Closing, of any of Seller's representations and warranties contained
herein.
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5.4 Condition of Property. EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, (I) SELLER HAS NOT MADE AND DOES NOT HEREBY MAKE ANY
REPRESENTATIONS, WARRANTIES OR OTHER STATEMENTS AS TO THE CONDITION OF THE
PROPERTY AND (II) PURCHASER ACKNOWLEDGES THAT AT CLOSING IT IS PURCHASING THE
PROPERTY ON AN "AS IS, WHERE IS" BASIS AND WITHOUT RELYING ON ANY
REPRESENTATIONS AND WARRANTIES OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, FROM
SELLER, ITS AGENTS OR BROKERS AS TO ANY MATTERS CONCERNING THE PROPERTY. EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES HAVE
BEEN MADE OR ARE MADE AND NO RESPONSIBILITY HAS BEEN OR IS ASSUMED BY SELLER OR
BY ANY PARTNER, OFFICER, PERSON, FIRM, AGENT OR REPRESENTATIVE ACTING OR
PURPORTING TO ACT ON BEHALF OF SELLER AS TO THE CONDITION OR REPAIR OF THE
PROPERTY OR THE VALUE, EXPENSE OF OPERATION, OR INCOME POTENTIAL THEREOF OR AS
TO ANY OTHER FACT OR CONDITION WHICH HAS OR MIGHT AFFECT THE PROPERTY OR THE
CONDITION, REPAIR, VALUE, EXPENSE OF OPERATION OR INCOME POTENTIAL OF THE
PROPERTY OR ANY PORTION THEREOF. THE PARTIES AGREE THAT ALL UNDERSTANDINGS AND
AGREEMENTS HERETOFORE MADE BETWEEN THEM OR THEIR RESPECTIVE AGENTS OR
REPRESENTATIVES ARE MERGED IN THIS AGREEMENT AND THE SCHEDULES AND EXHIBITS
HERETO ANNEXED, WHICH ALONE FULLY AND COMPLETELY EXPRESS THEIR AGREEMENT, AND
THAT THIS AGREEMENT HAS BEEN ENTERED INTO AFTER FULL INVESTIGATION, OR WITH THE
PARTIES SATISFIED WITH THE OPPORTUNITY AFFORDED FOR INVESTIGATION, NEITHER PARTY
RELYING UPON ANY STATEMENT OR REPRESENTATION BY THE OTHER UNLESS SUCH STATEMENT
OR REPRESENTATION IS SPECIFICALLY EMBODIED IN THIS AGREEMENT OR THE EXHIBITS
ANNEXED HERETO. PURCHASER ACKNOWLEDGES THAT SELLER HAS REQUESTED PURCHASER TO
INSPECT FULLY THE PROPERTY AND INVESTIGATE ALL MATTERS RELEVANT THERETO AND TO
RELY SOLELY UPON THE RESULTS OF PURCHASER'S OWN INSPECTIONS OR OTHER INFORMATION
OBTAINED OR OTHERWISE AVAILABLE TO PURCHASER, RATHER THAN ANY INFORMATION THAT
MAY HAVE BEEN PROVIDED BY SELLER TO PURCHASER. NOTHING CONTAINED IN THIS
PARAGRAPH IS INTENDED TO AFFECT PURCHASER'S RIGHTS SPECIFICALLY SET FORTH
ELSEWHERE IN THIS AGREEMENT.
6. Closing Conditions. Purchaser's obligation to proceed to
Closing is conditioned upon Seller's performance of the following obligations
and satisfaction of the following conditions, in addition to all of its other
obligations and conditions contained in this Agreement, provided that Purchaser
may in its sole discretion elect to waive failure by Seller to perform any
particular obligation.
6.1 The Escrow Holder is prepared to issue a policy of title
insurance insuring good, marketable and fee simple title in the Property to
Purchaser, subject only to exceptions approved pursuant to Paragraph 4.
6.2 Seller has delivered to Purchaser not later than three
(3) days prior to Closing, estoppel letters prepared by Seller and addressed to
Purchaser, from all of the Major Tenants (defined as NationsBank and all tenants
occupying at least 10,000 square feet) and from at least 75% of the tenants of
the Property (excluding the Major Tenants), measured by square footage (the
remaining tenants, for which Seller is not required to provide tenant executed
estoppel certificates, are referred to as the "Unconfirmed Tenants"). All
estoppel letters must be dated not more than thirty-five (35) days prior to the
date of Closing. The estoppel letters from
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the Major Tenants may be in such Major Tenants' customary form. All other
estoppel letters must be substantially in the form of Schedule 6.2 or in a form
otherwise reasonably acceptable to Purchaser.
6.2.1 Seller will deliver the Required Estoppel Form
with respect to Unconfirmed Tenants (the "Substituted Estoppel Certificates"),
warranted and represented by Seller. Seller's representations and warranties in
the Substituted Estoppel Certificates will survive the Closing for a period of
twelve (12) months, the limitations of Paragraph 8.12 herein to the contrary
notwithstanding. In the event that, following the Closing Date as defined in
Paragraph 7.1, Seller obtains a tenant executed estoppel letter with respect to
any lease for which Seller delivered a Substituted Estoppel Certificate pursuant
to this Paragraph or Paragraph 6.2.2, Seller will deliver such tenant executed
estoppel letter to Purchaser and, upon such delivery, Seller will be
automatically released from any liability or obligation under the Substituted
Estoppel Certificate previously delivered by Seller with respect to such lease
to the extent the tenant executed estoppel certificate from an Unconfirmed
Tenant confirms information contained on the Substituted Estoppel Certificate.
6.2.2 If Seller is unable to obtain and deliver
sufficient tenant estoppel certificates as required under Paragraph 6.2, or if
the letters received under Paragraph 6.2 or substituted estoppels permitted
under Paragraph 6.2.1 contain information or omissions unacceptable to Purchaser
in its reasonable discretion, then Seller will not be in default by reason
thereof, but Purchaser may, by notice given to Seller before the Closing, elect
(a) to waive said conditions and proceed with the Closing, in which event Seller
shall provide a Substituted Estoppel Certificate for all tenants for whom Seller
did not furnish tenant executed estoppel certificates, or (b) to terminate this
Agreement and receive a refund of the Deposit. If Purchaser elects to terminate
this Agreement. neither party will have any further rights or obligations
hereunder except as provided in Paragraph 8.17.
6.3 All of Seller's representations and warranties made
pursuant to Paragraph 5.1 remain materially true and correct.
6.4 Seller has delivered all of the documents and other
items required pursuant to Paragraph 7.6 and has performed all other covenants,
undertakings and obligations required by this Agreement, to be performed or
complied with by Seller at or prior to Closing.
7. Closing.
7.1 Closing of Sale. The purchase and sale contemplated
herein shall close (herein referred to as the "Closing") at the office of the
Escrow Holder, or as otherwise mutually agreed, not later than the date (the
"Closing Date") which is fifteen (15) days after the expiration of the Review
Period, time being of the essence. At Closing, Seller will deliver to Purchaser
a Special Warranty Deed ("Deed") in the form of Schedule 7.6.1 and other closing
documents required hereunder and Purchaser will cause payment of the Purchase
Price to be made to Seller
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by wire transfer. The sale (payment of the Purchase Price and delivery of the
Deed) may, at Purchaser's option to be exercised by notice to Seller at least
five (5) days prior to the Closing Date, be closed through escrow with the
Escrow Holder in accordance with the general provisions of the usual form of
escrow agreement used in similar transactions by such Escrow Holder special
provisions inserted as may be required to conform with this Agreement.
7.2 Prorations; Adjustments. The parties will prorate taxes,
rental (including, without limitation, percentage rental, if any), and other
income, and operating or other expenses of the Property as of 12:01 a.m. on the
date after Closing (i.e., Seller is entitled to the income and responsible for
the expenses of the day of Closing). Any taxes or other expenses of the Property
for the period prior to Closing which are payable by the Major Tenants of the
Property, which are not collected or not delinquent as of the Closing, will
reduce the credit to Purchaser for such items (i.e., no credit for pass-through
items). Seller shall credit Purchaser with all amounts collected from the
tenants on account of 1997 common area maintenance expenses in excess of amounts
paid by Seller on account of such expenses. To the extent that the taxes to be
prorated are not known with certainty, such proration will be based upon the
most recent tax bill or county estimate, to be re-prorated upon issuance of
final bills. Any percentage rental for the rental periods including Closing
shall be prorated upon receipt, based upon the tenant's sales for the portions
of such periods allocable to Seller and Purchaser, respectively, either as
provided in the applicable lease or, if not, based on the calendar year. Seller
also agrees to give Purchaser a credit against the Purchase Price for all
security deposits for which Seller is liable pursuant to the leases and the
estoppel certificates and all interest due thereon and shall assign to Purchaser
any other tenant deposits held by Seller. For a period of one year following
Closing, Purchaser will pay amounts received by it from tenants constituting
base rent, capital reimbursements or other income due from tenants and
attributable to Seller's period of ownership, but not collected as of the date
of Closing, to Seller promptly upon receipt; provided that amounts received from
tenants by Purchaser will be first applied to charges due Purchaser, and the
balance will be applied to payments due to Seller. Seller agrees to credit
Purchaser with the amount, if any, of leasing commissions earned with respect to
leases in existence on the Effective Date but not due or payable until after
Closing. In addition, Seller agrees to credit Purchaser with the amount of
minimum rent forgiveness to which Lady of America Fitness Center and C.R. Chicks
are due under their respective leases from the day after Closing to August 31,
1997 and October 31, 1997, respectively, prorated for the month in which the
Closing occurs. Subject to the provisions of Section 5 and of paragraph 6.2
herein, on or after the Closing, Seller will have no further obligations with
respect to any leases or other agreements affecting the Property, including,
without limitation, tenant improvement work, leasing commissions, and free rent,
Purchaser will deliver the Purchase Price to Seller in good funds by 2:00 p.m.
Chicago time on the day of Closing. If Seller does not receive the funds by such
time, prorations will be made as of the next business day.
7.2.1 Seller and Purchaser hereby agree to use their
reasonable efforts to calculate prorations (including real estate tax
prorations) so as to permit settlement thereof on the Closing Date, provided,
however, that if any of such prorations cannot be calculated accurately
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on the Closing Date, then the same will be calculated as soon as reasonably
practicable after the Closing Date, but in no event later than the later to
occur of (i) thirty (30) days after Seller receives its final audited cost
certification for the year in which Closing occurs, or (ii) March 31 of the year
following the year in which Closing occurs, and either party owing the other
party a sum of money based on such subsequent proration(s) shall promptly pay
said sum to the other party, together with interest thereon at the rate of two
percent (2%) per annum over the "prime rate" (as announced from time to time in
the Wall Street Journal) from the Closing Date to the date of payment if payment
is not made within thirty (30) days after delivery of a bill therefor together
with reasonable back-up documentation. This obligation of the parties will
survive Closing.
7.3 Proration of Service Charges. To the extent Seller, as
opposed to tenants, is responsible for payment of utility charges, Seller will
attempt to have utility meters read as of the Closing Date. To the extent that
this is not possible and to the extent that any other obligation for continuing
services is incurred, and statements are rendered for such services covering
periods both before and after the Closing Date, the amount will be adjusted
between the parties as of the Closing Date on a per-diem basis. Seller will
forward any such statements which it receives to Purchaser together with a check
payable to the utility in the amount of Seller's share of such statement, and
Purchaser will pay the same in full. Seller will remit to Purchaser its
proportionate share immediately upon demand.
7.4 Closing Costs. Purchaser agrees to pay (i) 1/2 the
Escrow Holder's escrow and/or closing fees (including any payment to the closing
officer of the Escrow Holder as may be the local custom at the Closing), (ii)
the cost of the Title Commitment and policy and the cost of any endorsements to
the title policy required by Purchaser, including extended coverage, (iii) all
recording fees with respect to the Deed, and (iv) all costs of Purchaser's
physical inspections of the Property (environmental, engineering) and other due
diligence activities. Seller agrees to pay (i) 1/2 the Escrow Holder's escrow
and/or closing fees (including any payment to the closing officer of the Escrow
Holder as may be the local custom at the closing), (ii) the cost of the Survey,
(iii) all recording fees with respect to clearing Seller's title, and (iv) all
conveyance taxes and/or documentary stamp taxes payable in connection with the
transaction contemplated hereby. Except as otherwise provided in Paragraph 8.9,
each party is responsible for its own attorneys' and other professional fees.
All other closing costs shall be allocated in accordance with the prevailing
local custom.
7.5 Possession. Subject to the rights of tenants pursuant to
leases of the Property delivered to Purchaser, Seller will deliver possession of
the Property and of any conveyed personal property to the Purchaser on the date
of Closing and Seller will thereupon deliver to Purchaser the originals of all
leases for tenants of the Property, all guaranties with respect to the leases,
all correspondence with tenants, tenant/lease files, operating statements, plans
and specifications, supplies and advertising materials, booklets, keys, and
other items used in connection with operation of the Property.
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7.6 Seller's Closing Documents. As part of the Closing,
Seller will deliver to Purchaser:
7.6.1 the Deed, in the form of Schedule 7.6.1
7.6.2 an affidavit in customary form that Seller is
not a "foreign person" within the meaning of Section 1445(e) of the Internal
Revenue Code of 1986, in the form of Schedule 7.6.2;
7.6.3 such affidavits as are customarily required by
Escrow Holder in connection with issuance of the owner's title insurance policy,
including a mechanics' lien and judgment affidavit;
7.6.4 executed counterpart of an assignment of leases
in the form of Schedule 7.6.4 ("Lease Assignment");
7.6.5 executed counterpart of an assignment of
contracts and warranties in the form of Schedule 7.6.5 ("Contracts Assignment");
7.6.6 executed counterpart of an assignment of
intangibles in the form of Schedule 7.6.6 ("Intangibles Assignment");
7.6.7 letters, in form to be supplied by Purchaser,
to the tenants at the Property, instructing the tenants to pay rent to Purchaser
and to recognize Purchaser as landlord under their leases;
7.6.8 a bill of sale conveying all personal property
of Seller, if any, located at the Property and used in connection with the
maintenance or operation thereof, in the form of Schedule 7.6.8;
7.6.9 a rent roll, certified to be materially true
and correct as of the Closing Date, in the form previously delivered to
Purchaser;
7.6.10 a "bring down certificate" stating that
Seller's representations and warranties are true and correct as of the Closing
Date, in the form of Schedule 7.6.10;
7.6.11 estoppel certificates as required by Paragraph
6.2 herein;
7.6.12 evidence of Seller's authority to enter into
and consummate all of the transactions contemplated in this Agreement
satisfactory to the Escrow Holder and to the Purchaser;
7.6.13 a schedule certified by the Seller of the
rents due from Tenants which are in arrears as of the Closing Date;
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<PAGE> 13
7.6.14 an estoppel certificate of no default from the
beneficiary of any restriction burdening the Property; and
7.6.15 all other documents, instruments or writings
which may be reasonably required to consummate the transactions contemplated
herein.
7.7 Purchaser's Closing Documents. As part of the Closing,
Purchaser will deliver to Seller:
7.7.1 good federal funds in an amount equal to the
Purchase Price, less the Deposit and interest thereon and plus or minus
prorations as provided herein;
7.7.2 such affidavits as are customarily required by
Escrow Holder in connection with issuance of the owner's title insurance policy;
7.7.3 executed counterpart of the Lease Assignment;
7.7.4 executed counterpart of the Contracts
Assignment;
7.7.5 executed counterpart of the Intangibles
Assignment;
7.7.6 all other documents, instruments or writings
which may be reasonably required to consummate the transactions contemplated
herein.
7.8 Joint Deliveries. At the Closing, Seller and Purchaser
will execute and deliver to each other the following documents in proper form:
7.8.1 Closing Statement;
7.8.2 City, county and state transfer tax
declarations or similar instruments; and
7.8.3 All other documents, instruments or writings
which may be reasonably required to consummate the transactions contemplated
herein.
8. Miscellaneous.
8.1 Modifications. This Agreement can be amended only in
writing and supersedes any and all agreements between the parties hereto
regarding the Property which are prior in time to this Agreement.
-13-
<PAGE> 14
8.2 Casualty and Condemnation. (A) Seller shall assume the
risk of loss or damage to the Property prior to the Closing and agrees to keep
its customary replacement cost insurance covering the Property in effect until
the Closing. If, between the date of execution hereof by Purchaser and the
Closing, the improvements on the Property are destroyed or damaged to the extent
that repairs cost in excess of $200,000.00, or if condemnation proceedings are
commenced against the Property, Purchaser may terminate this Agreement. If
Purchaser elects to accept the Property in its then condition, Seller will pay
or assign to Purchase at Closing all proceeds of insurance (plus the applicable
deductible) or condemnation awards payable to Seller by reason of such damage or
condemnation. In the event of any other damage to the Property not giving
Purchaser the right to terminate as aforesaid ("Other Damage"), Purchaser agrees
to advise Seller within forty-eight hours after being requested by Seller to do
so whether Purchaser elects to (i) accept the Property in its then condition and
accept a reduction in the Purchase Price equal to the cost of repairing such
damage, as certified by an independent contractor selected by the parties or
(ii) have Seller repair the Other Damage. In the event Purchaser fails to
respond in a timely manner, than Seller may select either alternative for
Purchaser and promptly notify Purchaser of same. In the event of Other Damage
where Seller is required to or elects to repair such damage as provided herein,
the Closing Date shall be delayed for the number of days required to repair the
damage.
(B) If, between the end of the Review Period and the Closing, there has been a
material detrimental change in the environmental condition of the Property,
Seller shall elect within seventy-two hours after being notified of same whether
to remediate in full compliance with all applicable laws or not to remediate the
change. If Seller fails to make either election, Seller shall be deemed to have
elected not to remediate. If Seller elects to remediate, the Closing Date shall
be delayed for the number of days required to remediate. If Seller elects, or is
deemed to have elected, not to remediate, Purchaser shall have an additional
seventy-two hours after expiration of the first seventy-two hour period to
determine whether to terminate this Agreement or to proceed to close without
deduction or credit on account of the detrimental change in the environmental
condition of the Property. In the event Purchaser fails to make either election
on or prior to the expiration of the second seventy-two hour period, Purchaser
will be deemed to have elected to terminate this Agreement. In the event this
Agreement is not terminated pursuant to the provisions of this Paragraph 8.2B,
the Closing Date shall be delayed a sufficient number of days to accommodate the
procedures provided for herein.
(C) In the event of termination of this Agreement as provided in this Paragraph,
the Deposit (less $100.00 to be paid to Seller) will be returned to Purchaser,
but Purchaser shall remain liable for the indemnity contained in Paragraph 8.17
hereof.
8.3 Time of Essence. Time (including, without limitation,
the date specified as the Closing Date) is of the essence of this Agreement.
8.4 Notices. All notices required or permitted hereunder
must be in writing and shall be served on the parties at the following address:
-14-
<PAGE> 15
If to Purchaser: IRT Property Company
200 Galleria Parkway
Suite 1400
Atlanta, Georgia 30339
Attn: W. Benjamin Jones III
Telephone: (770) 955-4406
Facsimile: (770) 988-8773
with a copy to: Scoggins & Goodman, P.C.
2800 Marquis One Tower
245 Peachtree Center Avenue, N.E.
Atlanta, Georgia 30303-1227
Attn: Suzan E. Roth, Esq.
Telephone: (404) 420-5719
Facsimile: (404) 659-3021
If to Seller: RREEF MidAMERICA/East-IV, Inc.
c/o The RREEF Funds
55 East 52nd Street
31st Floor
New York, New York 10055
Attn: Mr. Peter F. Feinberg
Telephone: (212) 688-3900
Facsimile: (212) 832-2616
with a copy to: D'Ancona & Pflaum
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Attn: Michael J. Quinn
Telephone: (312) 580-2068
Facsimile: (312) 580-0923
Any such notices may be sent by (a) certified mail, return receipt requested, in
which case notice will be deemed delivered five (5) business days after deposit,
postage prepaid in the U.S. mail or (b) a nationally recognized overnight
courier, in which case notice will be deemed delivered one business day after
deposit with such courier or (c) facsimile transmission, in which case notice
will be deemed delivered upon electronic verification that transmission to
recipient was completed or (d) personal delivery. The above addresses and
facsimile numbers may be changed by notice to the other party; provided that no
notice of a change of address or facsimile number will be effective until actual
receipt of such notice.
-15-
<PAGE> 16
8.5 Successors and Assigns. This Agreement is binding upon
and inures to the benefit of the heirs, successors, and assigns of the parties
hereto, provided Purchaser may not assign its rights or obligations hereunder
without the prior written consent of Seller, except to an entity owned or
controlled by Purchaser, an entity which owns or controls Purchaser or an entity
which is under common ownership or control with Purchaser, provided, however,
that such assignee cannot be a party which is a "party-in-interest" as described
in Paragraph 8.16.
8.6 Governing Law. The performance and interpretation of
this Agreement is controlled by the law of the State in which the Property is
located.
8.7 Continuation Until Closing; Leasing.
8.7.1 Between the Effective Date and the Closing,
Seller agrees to keep and perform all of the obligations to be performed by
landlord under any leases or applicable laws. Seller agrees to maintain or cause
the tenants to maintain the Property and personal property in condition at least
as good as at the time of this Agreement and will otherwise operate the Property
in the same manner as before the making of this Agreement, the same as though
Seller were retaining the Property.
8.7.2 Seller agrees not to permit or consent to any new
leases, amendments, extensions, renewals (other than pursuant to tenant renewal
options, if any), subleases or assignments (collectively, the "Lease
Modifications") within three business days prior to the expiration of the Review
Period or thereafter, without first submitting them (together with an
itemization or estimation of the costs to be borne by Purchaser pursuant to the
provisions of Paragraph 8.7.3) to Purchaser for Purchaser's approval, which
approval Purchaser agrees not to unreasonably withhold. Purchaser will have two
(2) business days to notify Seller of its approval of such Lease Modifications,
and in the event that Purchaser does not so notify Seller, the Lease
Modification will be deemed approved. In the event Seller enters into any Lease
Modifications after the Effective Date and before three business days prior to
the expiration of the Review Period, Seller shall notify Purchaser within one
(1) business day thereafter, together with an itemization or estimation of the
costs to be borne by the Purchaser pursuant to the provisions of Paragraph
8.7.3, but Purchaser shall have no approval rights with respect thereto.
8.7.3 With respect to any Lease Modification entered
into by Seller between the Effective Date and Closing, which, if required by the
terms of Paragraph 8.7.2 above, has been approved by Purchaser, if Seller
performs or pays or contracts for any tenant improvement work or additional
landlord work required pursuant to such Lease Modifications, or pays or
contracts for any leasing commissions or grants any free rent period or other
financial concessions, then such expenses and/or free rent or other concessions,
and all other third-party costs incurred (including attorneys' fees) in
connection with such Lease Modifications, will be a credit to Seller at Closing.
Except as provided in the Lease Assignment executed and delivered at Closing
pursuant to the terms of this Agreement, after the Closing Date, Seller will
have no further obligations with respect to any such new leases or other
occupancy agreements entered
-16-
<PAGE> 17
into between the date of this Agreement and the Closing Date, including, without
limitation, tenant improvement work, leasing commissions, and free rent or other
concessions and Purchaser will assume all such obligations.
8.8 Brokers. Seller and Purchaser each (a) represents and
warrants to the other that it has not dealt with any broker or finder in
connection with the transaction contemplated by this Agreement other than the
parties, if any, to be paid a commission as specified in Paragraph 8.11, and (b)
agrees to defend, indemnify and hold the other harmless from and against any
losses, damages, costs, or expenses (including attorneys' fees) incurred by such
other party due to a breach of the foregoing warranty by the indemnifying party.
8.9 Attorneys' Fees. If any action is brought by either
party against the other party, on account of the interpretation or enforcement
of the terms hereof, the party in whose favor final judgment is entered will be
entitled to recover court costs incurred and reasonable attorneys' fees at
trial, upon appeal and on any petition for review.
8.10 Remedies for Non-Performance. If Seller defaults
hereunder and Purchaser has knowledge of such default prior to Closing,
Purchaser may, as its sole and exclusive remedy, either terminate this Agreement
and obtain the return of the Deposit and all interest thereon, or enforce
specific performance of this Agreement. Purchaser's remedies regarding knowing
and intentional breach of warranty or representation by Seller is governed by
Paragraph 5.3. With respect to Seller defaults of which Purchaser first obtains
knowledge after Closing, Purchaser's sole remedy is the damage remedy as
described and limited in Paragraph 5.3. If said sale is not consummated because
of a default under this Agreement on the part of Purchaser, the Deposit will be
paid to and retained by Seller as liquidated damages and as Seller's sole and
exclusive remedy.
8.11 Brokers Commission. Seller shall pay a brokerage
commission to RJS/Jackson Group pursuant to a separate agreement.
8.12 Survival of Representations and Warranties. Seller's
representations and warranties contained herein and claims, damages or injury
for the breach thereof will survive the Closing for a period of six (6) months.
Purchaser must give Seller notice of any claim it may have against Seller for a
any breach within six (6) months after the date of Closing. Any claim which
Purchaser may have which is not asserted within the six (6) month period will
not be valid or effective and Seller will have no liability with respect
thereto.
8.13 Merger of Prior Agreements. This Agreement constitutes
the entire agreement between the parties with respect to the purchase and sale
of the Property and supersedes all prior agreements and understandings between
the parties hereto relating to the subject matter of this Agreement.
-17-
<PAGE> 18
8.14 Invalidity of Provisions. In the event any provisions of
this Agreement are declared invalid or are unenforceable for any reason, such
provisions shall be deleted from such document and shall not invalidate any
other provision.
8.15 Intentionally Deleted.
8.16 Intentionally Deleted.
8.17 Entry and Indemnity. In connection with any entry by
Purchaser, or its agents, employees or contractors onto the Property, Purchaser
shall give Seller reasonable advance notice of such entry and shall conduct such
entry and any inspections in connection therewith so as to minimize, to the
greatest extent possible, interference with Seller's business and the business
of Seller's tenants and otherwise in a manner reasonably acceptable to Seller.
Without limiting the foregoing, prior to any entry to perform any on-site
testing, Purchaser shall give Seller notice thereof, including the identity of
the company or persons who will perform such testing and the proposed scope of
the testing. Seller shall approve or disapprove the scope and methodology of
such proposed testing within one (1) business day after receipt of such notice
(three (3) business days if such notice proposes invasive or intrusive testing),
such approval to be within the sole and unfettered discretion of Seller;
Seller's failure to notify Purchaser of its approval or disapproval shall be
deemed to be Seller's disapproval thereof. If Purchaser or its agents, employees
or contractors take any sample from the Property in connection with any such
approved testing, upon Seller's request, Purchaser shall provide to Seller a
portion of such sample being tested to allow Seller, if it so chooses, to
perform its own testing. Seller or its representative may be present to observe
any testing or other inspection performed on the Property. Upon Seller's
request, Purchaser shall promptly deliver to Seller copies of any reports
relating to any testing or other inspection of the Property performed by
Purchaser or its agents, employees or contractors. Purchaser shall maintain, and
shall assure that its contractors maintain, public liability and property damage
insurance in amounts and in form and substance adequate to insure against all
liability of Purchaser, its agents, employees or contractors, arising out of any
entry or inspections of the Property pursuant to the provisions hereof, and
Purchaser shall provide Seller with evidence of such insurance coverage upon
request by Seller. Purchaser shall indemnify, defend and hold Seller harmless
from and against any costs, damages, liabilities, losses, expenses, liens or
claims (including, without limitation, reasonable attorney's fees) arising out
of or relating to any entry on the Property by Purchaser, its agents, employees
or contractors in the course of performing the inspections, testings or
inquiries provided for in this Agreement, including without limitation damage to
the Property or release of hazardous substances or materials onto the Property,
excluding, however, any costs incurred by Seller in supervising Purchaser's
testing. The foregoing indemnity shall survive beyond the Closing, or if the
sale is not consummated, beyond the termination of this Agreement. Nothing in
this Paragraph 8.17 shall be construed to limit or impair Purchaser's absolute
right to terminate under Paragraph 3.
-18-
<PAGE> 19
8.18 Release. Purchaser, on behalf of itself and its
successors and assigns, waives its right to recover from, and forever releases
and discharges, Seller, Seller's affiliates, Seller's investment manager, the
partners, trustees, shareholders, directors, officers, employees and agents of
each of them, and their respective heirs, successors, personal representatives
and assigns (collectively, the "Seller Related Parties"), from any and all
demands, claims, legal or administrative proceedings, losses, liabilities,
damages, penalties, fines, liens, judgments, costs or expenses whatsoever
(including, without limitation, attorneys' fees and costs), whether direct or
indirect, actually known to Purchaser as of Closing, which may arise on account
of or in any way be connected with the physical condition of the Property or any
law or regulation applicable thereto, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Sections 9601 et seq.), the Resources Conservation and
Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), the Clean Water Act (33
U.S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U.S.C. Sections
1401-1450), the Hazardous Materials Transportation Act (49 U.S.C. Section 1801
et seq.), and the Toxic Substance Control Act (15 U.S.C. Sections 2601-2629)
8.19 Confidential Information. The parties acknowledge that
the transaction described herein is of a confidential nature and shall not be
disclosed except to consultants, investors, advisors, and affiliates, or as
required by law. No party will make any public disclosure of the specific terms
of this Agreement, except as required by law. In connection with the negotiation
of this Agreement and the preparation for the consummation of the transactions
contemplated hereby, each party acknowledges that it will have access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof, and not
duplicate or use such information, except to advisors, consultants, investors
and affiliates in connection with the transactions contemplated hereby. In the
event of the termination of this Agreement for any reason whatsoever, Purchaser
will return to Seller, at Seller's request, all documents, work papers, and
other material (including all copies thereof) obtained from Seller in connection
with the transactions contemplated hereby, and each party shall use its best
efforts, including instructing its employees and others who have had access to
such information, to keep confidential and not to use any such information. The
provisions of this Paragraph 8.19 will survive the Closing or, if the purchase
and sale is not consummated, any termination of this Agreement, and will not be
subject to the limitation set forth in Paragraph 8.12.
8.20 Calculation of Time Periods. Unless otherwise specified,
in computing any period of time described herein, the day of the act or event,
after which the designated period of time begins to run, is not to be included
and the last day of the period so computed is to be included, unless such last
day is a Saturday, Sunday or legal holiday, in which event the period shall run
until the end of the next day which is neither a Saturday, Sunday, or legal
holiday (i.e., a day on which federally chartered banks are not open for
business in Chicago, Illinois). The last day of any period of time described
herein shall be deemed to end at 5 p.m. Chicago, Illinois time on the last day
of such period of time. All days other than Saturdays, Sundays and legal
holidays are business days hereunder.
-19-
<PAGE> 20
8.21 Offer. Execution and delivery of this Agreement by
Seller constitutes an offer to sell the Property on the terms contained herein.
The offer will be irrevocable until 6:00 p.m. Chicago time, May ___, 1997 (the
"Expiration Date"). In the event Purchaser has not countersigned and delivered
this Agreement to Seller on or before the Expiration Date, this Agreement will
be null and void without further action of the parties. Delivery by Purchaser of
a copy of the fully executed Agreement by facsimile transmission on or before
the Expiration Date, followed by a manually signed copy thereof delivered the
next business day after transmission of such copy, shall constitute acceptance
by Purchaser as of the date of the facsimile transmission. The date on which
Purchaser delivers a fully executed copy of this Agreement to Seller, or
delivers a copy by facsimile transmission followed by a manually signed copy as
provided in the preceding sentence is referred to herein as the Effective Date.
8.22 Radon Gas. Radon is a naturally occurring radioactive
gas that, when it has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over time. Levels of radon
that exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may be
obtained from your county public health unit.
8.23 Audit. Seller agrees to provide Purchaser with copies
of, or access to, such factual information in the possession or control of
Seller as may be reasonably requested by Purchaser, within six (6) months
following Closing, to enable Purchaser to file Form 8-K with the Securities and
Exchange Commission. At Purchaser's sole cost and expense not to exceed $8,000
(which Purchaser agrees to pay to Seller at Closing with Seller to account for
any overpayment upon completion of the audit), Seller agrees to cause its
auditors to conduct an audit of the operating statements for the Property for
1996 and to deliver same to Purchaser on or before nine (9) months following
Closing.
8.24 Exculpation Clause. The obligations of Seller contained
herein are intended to be binding only on the Property and the proceeds thereof
and no resort shall be had to
-20-
<PAGE> 21
any other assets of Seller nor to Seller's investment advisor or its assets. All
documents to be executed by Seller shall also contain the foregoing exculpation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the dates set forth below.
<TABLE>
<CAPTION>
SELLER: PURCHASER:
<S> <C>
RREEF MidAMERICA/EAST-IV, INC., IRT PROPERTY COMPANY,
a Delaware corporation, a Georgia corporation
By: /s/Peter F. Feinberg,Vice President By: /s/W. Benjamin Jones
----------------------------------- --------------------
Peter F. Feinberg, Vice-President Title: Executive Vice President
Dated: May 13, 1997 Dated: May 14, 1997
</TABLE>
-21-
<PAGE> 22
FIRST AMENDMENT TO AGREEMENT FOR
THE SALE AND PURCHASE OF PROPERTY
THIS FIRST AMENDMENT TO AGREEMENT FOR THE SALE AND PURCHASE OF PROPERTY
("Amendment") is made and entered into as of this 12th day of June, 1997, by and
among RREEF MidAMERICA/EAST - IV, INC., a Delaware corporation ("Seller"); IRT
PROPERTY COMPANY, a Georgia corporation ("Purchaser"); and COMMONWEALTH LAND
TITLE INSURANCE COMPANY, a Pennsylvania corporation ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Purchaser, Seller and Escrow Agent entered into that certain
Agreement for the Sale and Purchase of Property with an Effective Date of May
14, 1997, (collectively, the "Contract"), pursuant to which Seller agreed to
sell and Purchaser agreed to purchase the Property as more particularly
described therein;
WHEREAS, Purchase and Seller desire to amend the Contract as more
particularly hereinafter set forth.
NOW, THEREFORE, for and in consideration of the Purchase Price, the
mutual covenants and agreements contained herein, the sum of Ten and No/100
($10.00) and good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by Purchaser, Seller and Escrow
Agent, Purchaser, Seller and Escrow Agent intending to be legally bound agree as
follows:
1. Purchase Price. The first sentence of Section 1 shall be deleted
in its entirety and the following inserted in its place:
The purchase price for the Property shall be Twelve Million Nine
Hundred Fifty Thousand and No/100 Dollars ($12,950,000.00) (the
"Purchase Price"), payable by wire transfer of funds at Closing..
2. Prior to Closing, Seller shall inspect and repair the irrigation
system located on the Property as needed.
3. Prior to Closing, Seller shall repair, apply rust inhibitor and
repaint those exterior doors located at the rear of the tenant spaces of the
Property that are in need of repair. Seller's total aggregate costs of
inspection and repairs for Sections 2 & 3 shall be limited to Five Thousand and
No/100 Dollars ($5,000.00).
4. Reaffirmation. Except as hereinabove modified, the terms and
provisions of the Contract remain in full force and effect, the same being
republished and confirmed hereby.
<PAGE> 23
5. Counterpart Execution. This Amendment may be executed in several
counterparts, each of which shall be deemed an original, and with all of such
counterparts together constituting one and the same agreement.
6. Facsimile Signature. The parties hereto agree that this Amendment
may be executed by facsimile signature.
7. Capitalized Terms. The capitalized terms used in this Amendment
shall have the meaning attributed to them in the Contract unless otherwise set
forth herein.
[Signatures contained on following page]
2
<PAGE> 24
IN WITNESS WHEREOF, the duly authorized representatives of the
undersigned have executed this Second Amendment under seal the day and year
first above written.
SELLER:
-------
RREEF midAMERICA/EAST - IV, INC., a Delaware limited
partnership
By: /s/Peter F. Feinberg
------------------------
Name:Peter F. Feinberg
-----------------------
Title:Vice-President
----------------------
PURCHASER:
----------
IRT PROPERTY COMPANY, a Georgia corporation
By: /s/W. Benjamin Jones
--------------------------------
Name:W. Benjamin Jones
-------------------------------
Title:Executive Vice President
------------------------------
ESCROW AGENT:
-------------
COMMONWEALTH LAND TITLE INSURANCE COMPANY,
a Pennsylvania corporation
By: /s/Sally French Tyler
--------------------------------
Name:Sally French Tyler
-------------------------------
Title:Assistant Vice President NTS
------------------------------
3
<PAGE> 25
SECOND AMENDMENT TO AGREEMENT FOR
THE SALE AND PURCHASE OF PROPERTY
THIS SECOND AMENDMENT TO AGREEMENT FOR THE SALE AND PURCHASE OF
PROPERTY ("Amendment") is made and entered into as of this 19th day of June,
1997, by and among RREEF MidAMERICA/EAST - IV, INC., a Delaware corporation
("Seller"); IRT PROPERTY COMPANY, a Georgia corporation ("Purchaser"); and
COMMONWEALTH LAND TITLE INSURANCE COMPANY, a Pennsylvania corporation ("Escrow
Agent").
W I T N E S S E T H:
WHEREAS, Purchaser, Seller and Escrow Agent entered into that certain
Agreement for the Sale and Purchase of Property with an Effective Date of May
14, 1997, and amended by that certain First Amendment to Agreement for The Sale
and Purchase of Property dated June 12, 1997, (collectively, the "Contract"),
pursuant to which Seller agreed to sell and Purchaser agreed to purchase the
Property as more particularly described therein;
WHEREAS, Purchase and Seller desire to further amend the Contract as
more particularly hereinafter set forth.
NOW, THEREFORE, for and in consideration of the Purchase Price, the
mutual covenants and agreements contained herein, the sum of Ten and No/100
($10.00) and good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged by Purchaser, Seller and Escrow
Agent, Purchaser, Seller and Escrow Agent intending to be legally bound agree as
follows:
1. Audit: Section 8.23 is hereby deleted in its entirety. In its place
will be the following: "Seller agrees to provide Purchaser with copies of, or
access to, such factual information in the possession or control of Seller, as
may be reasonably requested by Purchaser, within fifteen (15) days following
Closing, to enable Purchaser to file a Form 8-K with the Securities and Exchange
Commission. At Purchaser's sole cost and expense not to exceed $8,000.00 (which
Purchaser agrees to pay to Seller either at Closing, or in the event that the
transaction does not Close, Purchaser will assume cost of said audit upon
termination of the Contract), Seller agrees to cause its auditors to conduct an
audit of the operating statements for the Property for 1996 and to deliver same
to Purchaser on or before fifteen (15) days following Closing, provided the
Closing Date is no earlier than June 24, 1997. In the event Seller shall fail to
deliver such audit to Purchaser as required herein, Purchaser's sole remedy
shall be to recover from Seller the amount of loss occasioned thereby, but in no
event to exceed the cost of the audit".
2. Reaffirmation. Except as hereinabove modified, the terms and
provisions of the Contract remain in full force and effect, the same being
republished and confirmed hereby.
<PAGE> 26
3. Counterpart Execution. This Amendment may be executed in several
counterparts, each of which shall be deemed an original, and with all of such
counterparts together constituting one and the same agreement.
4. Facsimile Signature. The parties hereto agree that this Amendment
may be executed by facsimile signature.
5. Capitalized Terms. The capitalized terms used in this Amendment
shall have the meaning attributed to them in the Contract unless otherwise set
forth herein.
[Signatures contained on following page]
2
<PAGE> 27
IN WITNESS WHEREOF, the duly authorized representatives of the
undersigned have executed this Second Amendment under seal the day and year
first above written.
SELLER:
-------
RREEF midAMERICA/EAST - IV, INC., a Delaware limited
partnership
By: /s/Peter F. Feinberg
--------------------------
Name: Peter F. Feinberg
------------------------
Title: Vice-President
-----------------------
PURCHASER:
----------
IRT PROPERTY COMPANY, a Georgia corporation
By: /s/W. Benjamin Jones
----------------------------------
Name: W. Benjamin Jones
--------------------------------
Title: Executive Vice President
-------------------------------
ESCROW AGENT:
-------------
COMMONWEALTH LAND TITLE INSURANCE COMPANY,
a Pennsylvania corporation
By: /s/Sally French-Tyler
----------------------------------
Name: Sally French-Tyler
--------------------------------
Title: Assistant Vice President NTS
-------------------------------
3
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 8-K, into the Company's previously filed
Registration Statements File Nos. 33-65604, 33-66780, 33-51238, 33-59938,
33-64628, 33-64741, and 33-63523.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
August 5, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statements
File Nos. 33-65604, 33-66780, 33-51238, 33-59938, 33-64628, 33-64741 and
33-63523 of IRT Property Company on Form S-3 of our report dated July 1, 1997
relating to the statement of revenues and certain expenses of Greenwood Shopping
Center for the year ended December 31, 1996 appearing in the Report on Form 8-K
of IRT Property Company dated July 1, 1997.
DELOITTE & TOUCHE LLP
Miami, Florida
August 5, 1997
