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): December 1, 1998
JMB INCOME PROPERTIES, LTD. - IV
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(Exact name of registrant as specified in its charter)
Illinois 0-8469 36-2857658
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(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
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(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
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PARKWAY CITY MALL
Huntsville, Alabama
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On December 1, 1998,
Huntsville Mall Associates (the "Venture"), a joint venture between JMB
Income Properties, Ltd. - IV (the "Partnership") and Parkway City Partners
("Parkway"), an affiliate of the general partner, sold its interest in the
land, building and related improvements of the Parkway City Mall (the
"Property") located in Huntsville, Alabama. The buyer, CBL & Associates
Properties, Inc., a Delaware corporation, is not affiliated with the
Partnership or its General Partners; however, the buyer holds a minority
interest in Parkway. The sale price was determined by arm's-length
negotiations. The Property is an approximately 415,000 square foot
enclosed regional shopping center and, as of the date of sale, was
approximately 61% occupied.
The sale price of the land, building and related improvements was
$8,200,000. The Venture received cash proceeds from the sale of
approximately $6,200,000 (net of closing costs, prepayment premium to
lender and mortgage loan repayment of approximately $1,909,000) of which
the Partnership's share is approximately $5,370,000. The Venture expects
to recognize a gain of approximately $3,100,000 for financial reporting
purposes and $3,400,000 for Federal income tax purposes in 1998, of which
the Partnership's share is approximately $3,500,000 and $4,000,000,
respectively. Due to preference levels within the Venture agreement, the
venture partner's share is a loss of approximately ($400,000) and
($600,000), respectively. There are no representations, warranties or
covenants in connection with the sale of this property.
The Partnership Agreement provides that the General Partners are
entitled to receive from the sale proceeds (net after expenses and retained
working capital) 3/4 of 1% of the aggregate selling price of the property
being sold, and that the balance of such sale proceeds be allocated 85% to
the Limited Partners and 15% to the General Partners. However, the Limited
Partners are entitled to receive 100% of sale or refinancing proceeds until
the Limited Partners (i) have received cumulative cash distributions from
the Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed, equal a 7.75% annual return on the Limited
Partners' average capital investment commencing in 1977 and (ii) have
received cash distributions of sale or refinancing proceeds in an amount
equal to the Limited Partners' aggregate initial capital investment in the
Partnership. The Limited Partners have received cash distributions that
satisfied the requirements in (i) and (ii) above. Therefore, the sale
proceeds will be distributed first to the General Partners in an amount
equal to 3/4 of 1% of the sale price and the remaining proceeds (net after
expenses and retained working capital) will be distributed 85% to the
Limited Partners and 15% to the General Partners. In addition certain
affiliates of the General Partners will receive a portion of the proceeds
of sale through their interests in Parkway.
The Partnership's interest in the Venture was its only remaining
investment and due to its sale, the Partnership intends to wind up its
affairs and liquidate by year end.
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS
(a) Financial Statements. Not applicable
(b) Proforma financial information - Narrative
As a result of the sale of the Property by the Venture, after
December 1, 1998, there will be no further rental and other income,
mortgage and other interest, depreciation, property operating expenses,
amortization of deferred expenses and venture partner's share of venture's
operations for the Venture in the consolidated financial statements of the
Partnership, which for the Partnership's most recent fiscal year ended
December 31, 1997 were approximately $3,464,000, $264,000, $274,000,
$1,627,000, $46,000 and ($368,000), respectively. Rental and other income,
mortgage and other interest, property operating expenses, amortization of
deferred expenses and venture partner's share of venture's operations
included in the nine months ended September 30, 1998, in the Partnership's
consolidated financial statements relating to the Property were
approximately $2,651,000, $163,000, $1,166,000, $2,000 and ($416,000),
respectively. Such operating results reflect the classification of the
Property as held for sale or disposition as of September 30, 1997, and
therefore, not subject to continued depreciation as of such date.
Additionally, as a result of such sale, there will be no further assets and
liabilities related to the Venture in the Partnership's consolidated
financial statements, which at September 30, 1998 consisted of cash and
other current assets of approximately $3,170,000, property held for sale or
disposition of approximately $4,861,000, deferred expenses and other long-
term assets of approximately $199,000, current portion of long-term debt
and long-term debt of approximately $1,998,000, other current liabilities
of approximately $249,000, other long term liabilities of approximately
$839,000 and venture partner's subordinated equity in venture of approxi-
mately $1,933,000.
(c) Exhibits.
10.1 Purchase Agreement between Huntsville Mall Associates, an
Illinois general partnership, and CBL & Associates Properties, Inc., a
Delaware corporation dated October 29, 1998.
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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.
JMB INCOME PROPERTIES, LTD. - IV
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
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Gailen J. Hull
Senior Vice President
Principal Accounting Officer
Dated: December 15, 1998
EXHIBIT 10.1
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PURCHASE AGREEMENT
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(Parkway City Mall; Huntsville, Alabama)
THIS AGREEMENT (this "Agreement") is made and entered into as of
October ___, 1998 (the "Effective Date") by and between HUNTSVILLE MALL
ASSOCIATES, an Illinois general partnership (hereinafter called "Seller"),
and CBL & ASSOCIATES PROPERTIES, INC., a Delaware corporation (hereinafter
called "Buyer").
R E C I T A L S
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A. Seller is the owner of that certain real property located in
the City of Huntsville, County of Madison, State of Alabama, consisting
primarily of a shopping center sometimes known as "Parkway City Mall".
B. Buyer desires to purchase such premises on the terms and
conditions hereinafter documented.
NOW, THEREFORE, in consideration of the mutual undertakings of the
parties hereto, it is hereby agreed as follows:
1. Purchase and Sale. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, all of Seller's right, title and interest in and to
(i) the land (the "Land") described in Exhibit "A" attached hereto and made
a part hereof, together with any other land, if any, owned by Seller which
is part of the Parkway City Mall, (ii) all improvements, structures and
fixtures located upon the Land, (iii) those items of tangible personal
property described in Exhibit "B" attached hereto and made a part hereof,
(iv) the name "Parkway City Mall" (and any related trademarks, service
marks and logos), and (v) to the extent assignable, all right, title and
interest of Seller in and to all leases, reciprocal easement agreements,
contract rights, development rights, plans and specifications, warranties,
licenses, permits, tenant lists, advertising material and telephone
exchange numbers relating solely to the Property (hereinafter,
collectively, the "Property"), all upon the terms, covenants and conditions
hereinafter set forth.
2. Purchase Price.
A. The purchase price (the "Purchase Price") for the
Property shall be the sum of Eight Million Two Hundred Thousand and No/100
Dollars ($8,200,000.00).
3. Payment of Purchase Price. The Purchase Price shall be paid to
Seller by Buyer as follows:
A. Escrow Deposit. Within two (2) business days following
the Effective Date, Buyer shall deliver a $1,000,000.00 irrevocable letter
of credit (the "Deposit L/C") in form reasonably acceptable to Seller drawn
on a major bank reasonably acceptable to Seller to Fidelity National Title
Insurance Company, 200 Galleria Parkway, Suite 1695, Atlanta, Georgia
30339, Attention: Sally F. Tyler (which company, in its capacity as escrow
holder hereunder, is called "Escrow Holder"). Buyer shall at all times
keep the Deposit L/C in full force and effect. If Buyer shall fail to
renew or extend the Deposit L/C within thirty (30) days of its expiration
date (as such expiration date may be extended from time to time), which
failure shall not be cured within three (3) business days following
delivery of notice from Escrow Holder to Buyer (and in all events not later
than five (5) business days prior to its expiration date), Escrow Holder is
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irrevocably instructed (without further authorization and notwithstanding
any objections of Buyer) to draw down such Deposit L/C and to retain the
proceeds thereof in escrow hereunder. The Deposit L/C (and the proceeds
thereof, if drawn hereunder) shall be held by Escrow Holder as a deposit
against the Purchase Price in accordance with the terms and provisions of
this Agreement. At all times in which the Escrow Holder is holding the
proceeds of the Deposit L/C, such proceeds shall be invested by Escrow
Holder in the following investments ("Approved Investments"): (i) United
States Treasury obligations, (ii) United States Treasury-backed repurchase
agreements issued by a major national money center banking institution
reasonably acceptable to Seller, or (iii) such other manner as may be
reasonably agreed to by Seller and Buyer. The Deposit L/C, and any
proceeds thereof (including any interest thereon), shall be disposed of by
Escrow Holder only as provided in this Agreement.
B. Closing Payment. The Purchase Price, as adjusted by the
application, if any, of the proceeds of the Deposit L/C, if applicable
hereunder, and by the prorations and credits specified herein, shall be
paid in cash on the "Closing Date", as hereinafter defined (the amount to
be paid under this subparagraph B being herein called the "Closing
Payment").
4. Conditions Precedent.
A. Title Matters.
(1) Title Report. Within two (2) business days of
the Effective Date, Seller will deliver to Buyer copies of its existing
title policy and an existing survey of the Property (to the extent any of
the foregoing is in Seller's possession). Buyer shall promptly order (and
obtain during the "Title Review Period," as hereinafter defined) a current
title report or commitment ("Title Report") covering the Property from
Fidelity National Title Insurance Company (which company, in its capacity
as title insurer hereunder, is herein called the "Title Company") and a
current ALTA survey of the Property ("Survey"). If Buyer shall fail to
deliver a "Title Objection Notice" (as hereinafter defined) setting forth
those title and survey matters to which Buyer objects on or before the date
which is thirty (30) days after the Effective Date (the "Title Review
Period"), Buyer shall be deemed to have approved the exceptions to title
shown on the Title Report and the matters disclosed on the Survey. If
Buyer shall disapprove any title or survey matters which Buyer is permitted
to disapprove hereunder, Buyer shall give written notice thereof ("Title
Objection Notice") to Seller prior to the expiration of the Title Review
Period. Upon receipt by Seller of a Title Objection Notice given in a
timely manner, then Seller shall have until the sooner to occur of (1)
three (3) business days from receipt of such Title Objection Notice and (2)
the Closing Date, within which to notify Buyer as to each properly
disapproved matter either that (i) Seller elects not to cause such
disapproved matter to be removed as of the Closing Date (or otherwise take
any action with respect thereto), or (ii) Seller intends to either (a) use
commercially reasonable efforts to cause such disapproved matter to be
removed on the Closing Date, or (b) obtain a title endorsement (if
available) insuring over such disapproved matter if the effect of such
matter can be reasonably and effectively insured over; provided, however,
Seller shall have no liability if for any reason, after electing under (ii)
above, such disapproved matters are not removed or insured over as of the
Closing Date (in which event, Buyer shall have the right to make the
election under clauses (x) or (y) below). Failure to deliver any written
notification by Seller of its election within such period shall be deemed
to be an election not to cause any such disapproved matters to be removed.
If Seller elects not to cause any or all such disapproved matters to be
removed or insured over as aforesaid, Buyer shall have until the sooner to
<PAGE>
occur of (1) two (2) business days from receipt of written notice thereof
(or from the date of Seller's deemed election as aforesaid) and (2) the
Closing Date, within which to notify Seller in writing either that (x)
Buyer revokes its disapproval and will proceed with the purchase of the
Property without any reduction in the Purchase Price and will take subject
to such matters, or (y) Buyer terminates this Agreement (and thereupon the
Deposit L/C, or any proceeds thereof (and any interest thereon) if
previously drawn upon, shall be delivered to Buyer and, except for those
provisions hereof which survive termination, this Agreement shall thereupon
terminate). Failure to deliver any written notification by Buyer of its
election within such period shall be deemed to be an election to terminate
this Agreement as set forth above. Notwithstanding anything to the
contrary contained herein, at "Closing" (as hereinafter defined) Seller
shall be obligated to cause the removal of any exceptions evidencing any
deeds of trust or other similar documents) securing financing obtained by
Seller and to cause the removal (or to obtain title insurance over) any tax
or judgment liens against Seller and any mechanic's or materialmen's liens
against the Property for work performed by or on behalf of Seller.
(2) Permitted Exceptions. All matters set forth on the
Title Report which are not timely objected to by Buyer, are herein called
the "Permitted Exceptions". The term "Permitted Exceptions" shall
additionally include (i) any title matters objected to by Buyer, which
objections are subsequently waived by Buyer, and (ii) any title matters
objected to by Buyer, which objections are removed or which are otherwise
cured to Buyer's reasonable satisfaction. Buyer shall have the option to
waive the condition precedent set forth in this Paragraph 4A by written
notice to Seller. In the event of such waiver, such condition shall be
deemed satisfied.
(3) Exceptions to Title. Buyer shall be obligated to
accept title to the Property, subject only to the following exceptions to
title:
(a) Real estate taxes and assessments not yet due
and payable;
(b) The printed exceptions which appear in the
standard ALTA form owner's policy of title insurance with extended coverage
(if requested by Buyer) issued by Title Company in the State of Alabama;
and
(c) The Permitted Exceptions.
Conclusive evidence of the availability of such title, and a condition to
Buyer's obligation to close, shall be the irrevocable commitment of Title
Company to issue to Buyer on the Closing Date an ALTA owner's title
insurance policy with extended coverage (if requested by Buyer) in the
standard form issued in the State of Alabama ("Owner's Policy"), in the
face amount of the Purchase Price, which policy shows (i) title to the
Property to be vested of record in Buyer, and (ii) the above exceptions to
be the only exceptions to title.
B. Due Diligence Reviews.
(1) Property Due Diligence. Buyer shall have until
5:00 p.m. (Central time) on the date which is fifteen (15) days after the
Effective Date (the "Due Diligence Period") within which to perform and
complete all of Buyer's due diligence examinations, reviews and inspections
of all matters pertaining to the purchase of the Property, including all
leases, service contracts, and all physical and compliance matters and
conditions respecting the Property (other than (i) title and survey matters
which shall be governed by the provisions of Paragraph 4A above and (ii)
environmental reviews which shall be governed by the provisions of
Paragraph 4B(2) below).
<PAGE>
(2) Environmental Reviews. Buyer shall have until 5:00
p.m. (Central time) on the date which is thirty (30) days after the
Effective Date (the Environmental Review Period") within which to perform
and complete all of Buyer's due diligence examinations, reviews and
inspections of all environmental matters and conditions respecting the
Property.
(3) General Due Diligence Provisions. During the Due
Diligence Period, Seller shall make available to Buyer, upon reasonable
advance notice, such leases, service contracts and other contracts and
documents (to the extent the same are not proprietary, privileged or
otherwise internal) directly relating to the Property as Buyer shall
reasonably request (to the extent the same are in Seller's possession or
control). During the Due Diligence Period (and during the Environmental
Review Period, solely as to environmental reviews), Seller shall provide
Buyer with reasonable access to the Property upon reasonably advance
notice. Buyer shall promptly commence, and shall diligently and in good
faith pursue, all of its due diligence and environmental reviews hereunder.
Buyer shall at all times conduct its due diligence and environmental
reviews, inspections and examinations in a manner so as to not cause
damage, loss, cost or expense to Seller or the Property and so as to not
interfere with or disturb any tenant at the Property, and Buyer will
indemnify, defend, and hold the Property and Seller, its constituent
partners and each of their officers, directors, employees, shareholders,
partners, members, affiliates and agents harmless from and against any such
damage, loss, cost or expense resulting from a breach of the foregoing (the
foregoing obligation surviving closing or any earlier termination of this
Agreement). Without limitation on the foregoing, in no event shall Buyer
make any intrusive physical testing (environmental, structural or
otherwise) at the Property (such as soil borings, water samplings or the
like) without Seller's express written consent (and shall in all events
promptly restore the Property to its prior condition and repair
thereafter). Seller shall have the right, at its option, to cause a
representative of Seller to be present at all inspections, reviews and
examinations conducted hereunder. Upon Seller's written request therefor
(but not otherwise), Buyer shall promptly deliver to Seller true, accurate
and complete copies of any soils, environmental and engineering reports
relating to the Property prepared for or on behalf of Buyer by any third
party. In the event of termination hereunder, Buyer shall return all
documents and other materials furnished by Seller hereunder. Buyer shall
keep all information or data received or discovered in connection with any
of the inspections, reviews or examinations strictly confidential. If, (i)
on or before the expiration of the Due Diligence Period, Buyer shall
determine that it intends to proceed with the acquisition of the Property
(subject to its title and environmental reviews), and (ii) on or before the
expiration of the Environmental Review Period, Buyer shall determine that
its environmental reviews are acceptable and that it intends to proceed
with the acquisition of the Property, then in each such event Buyer shall
promptly notify Seller and Escrow Holder of such determination in writing
(each such notice being herein called an "Approval Notice"). If, however,
(i) on or before the expiration of the Due Diligence Period, Buyer shall
determine in its sole and absolute discretion that it does not wish to
acquire the Property or, (ii) if on or before the expiration of the
Environmental Review Period, Buyer shall determine in its sole and absolute
discretion based solely on the results of its environmental reviews that it
does not wish to acquire the Property, then in each such case Buyer shall
promptly notify Seller of such determination in writing (each such notice
being herein called a "Termination Notice"), whereupon the Deposit L/C, or
the proceeds thereof (and any interest thereon) if previously drawn upon,
shall be returned to Buyer and except for those provisions hereof which
survive termination, this Agreement, shall terminate. In the event that,
on or before the expiration of the Due Diligence Period or Environmental
Review Period, Buyer shall fail to have delivered the applicable
Termination Notice to Seller, Buyer shall be deemed to have elected not to
proceed with the acquisition of the Property.
<PAGE>
C. Performance by Seller. The performance and observance,
in all material respects, by Seller of all covenants and agreements of this
Agreement to be performed or observed by Seller prior to or on the Closing
Date shall be a condition precedent to Buyer's obligation to purchase the
Property. In addition, in the event that on the Closing Date, the
representations or warranties of Seller contained in Paragraph 7B below
shall be inaccurate in a materially adverse manner, then Buyer shall have
the right to terminate this Agreement. Buyer shall have the option to
waive the condition precedent set forth in this Paragraph 4C by written
notice to Seller. In the event of such waiver, such condition shall be
deemed satisfied.
D. Performance by Buyer. The performance and observance, in
all material respects, by Buyer of all covenants and agreements of this
Agreement to be performed or observed by it prior to or on the Closing Date
shall be a condition precedent to Seller's obligation to sell the Property.
In addition, in the event that, on the Closing Date, the representations or
warranties of Buyer contained in Paragraph 7C below shall be inaccurate in
a materially adverse manner, then Seller shall have the right to terminate
this Agreement. Seller shall have the option to waive the condition
precedent set forth in this Paragraph 4D by written notice to Buyer. In
the event of such waiver, such condition shall be deemed satisfied.
5. Closing Procedure. The closing ("Closing") of sale and
purchase herein provided shall be consummated through escrow ("Escrow")
with Escrow Holder. As used herein, "Closing Date" means the sooner to
occur of (i) November 30, 1998, or (ii) the date which is five (5) days
after the expiration of the Environmental Review Period, or such earlier
date as may be agreed upon by Buyer and Seller; provided, however, Seller
shall have the right, at its sole option, to extend the Closing Date for up
to thirty (30) days by giving written notice thereof to Buyer prior to the
Closing Date.
A. Escrow. On or before the Closing Date, the parties shall
deliver to Escrow Holder the following: (1) by Seller, a duly executed and
acknowledged original special warranty deed ("Deed") in the form of Exhibit
"C" attached hereto and made a part hereof, and (2) by Buyer, the Closing
Payment in immediately available federal funds. Such deliveries shall be
made through Escrow pursuant to escrow instructions ("Escrow Instructions")
to be executed among Buyer, Seller, Escrow Holder and Title Company in form
reasonably acceptable to such parties in order to effectuate the intent
hereof. The conditions to the Closing of such escrow shall include the
Escrow Holder's receipt of the Deed, the Closing Payment and a notice from
each of Buyer and Seller authorizing the closing of the transactions as
contemplated herein (each of Buyer and Seller being obligated to deliver
such authorization notice as soon as it is reasonably satisfied that the
other party is in a position to deliver the items to be delivered by such
other party under subparagraph B below).
B. Delivery to Parties. Upon the satisfaction of the
conditions set forth in the Escrow Instructions, then (x) the Deed shall be
delivered to Buyer by the same being deposited for recordation, and the
Deposit L/C shall be returned to Buyer (if not previously drawn upon
hereunder), (y) the Closing Payment (and the proceeds of the Deposit L/C,
and any interest thereon, if previously drawn upon) shall be delivered by
Escrow Holder to Seller by no later than 12:00 p.m. (noon) on the Closing
Date and (z) at the Closing Conference, the following items shall be
delivered:
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(1) Seller Deliveries. Seller shall deliver the
following to Buyer, either directly or through Escrow hereunder:
(a) A duly executed and acknowledged bill of
sale, assignment and assumption agreement ("Assignment and Assumption
Agreement") in the form of Exhibit "D" attached hereto and made a part
hereof;
(b) A certificate of Seller ("Seller Closing
Certificate") certifying that, subject to the limitations contained in this
Agreement, the representations and warranties of Seller contained in
Paragraph 7B hereof are true and correct in all material respects as of the
Closing Date (or noting any changes therein) as if made on and effective as
of the Closing Date;
(c) Duly executed and acknowledged certificates
regarding the "non-foreign" status of Seller;
(d) Evidence reasonably satisfactory to Buyer and
Title Company respecting the due organization of Seller and the due
authorization and execution of this Agreement and the documents required to
be delivered hereunder; and
(e) Such additional documents as may be
reasonably required by Buyer and Title Company in order to consummate the
transactions hereunder (provided the same do not materially increase the
costs to, or liability or obligations of, Seller in a manner not otherwise
provided for herein).
(2) Buyer Deliveries. Buyer shall deliver the
following to Seller either directly or through Escrow hereunder:
(a) A duly executed and acknowledged Assignment
and Assumption Agreement;
(b) A certificate of Buyer ("Buyer Closing
Certificate") certifying that, subject to the limitations contained in this
Agreement, the representations and warranties of Buyer contained in
Paragraph 7C hereof are true and correct in all material respects as of the
Closing Date (or noting any changes thereto);
(c) Evidence reasonably satisfactory to Seller
and Title Company respecting the due organization of Buyer and the due
authorization and execution of this Agreement and the documents required to
be delivered hereunder; and
(d) Such additional documents as may be
reasonably required by Seller and Escrow Holder in or to consummate the
transactions hereunder (provided the same do not materially increase the
costs to, or liability or obligations of, Buyer in a manner not otherwise
provided for herein).
C. Closing Costs. Seller shall pay at Closing one-half
(1/2) of (i) any transfer tax attributable to the Deed, (ii) the title
insurance premium for the Owner's Policy at a rate not in excess of
standard issue rates (the "Prorated Premium"), (iii) the recording costs of
the Deed, and (iv) one-half of any escrow or closing charges of the Title
Company. Buyer shall pay at Closing one-half (1/2) of (i) any transfer tax
attributable to the Deed, (ii) the Prorated Premium, (iii) the recording
costs of the Deed, and (iv) any escrow or closing charges of the Title
Company. Buyer shall be solely responsible for the payment of (i) all
premiums and costs for any "extended coverage" or endorsements to the
Owner's Policy, together with the cost of any other title insurance
coverage (such as lender's title insurance policies) and any update of the
<PAGE>
Survey, (ii) only mortgage tax, (iii) any other recording costs, and (iv)
all fees, costs or expenses incurred by Buyer in connection with Buyer's
due diligence reviews hereunder. Each of Seller and Buyer shall pay its
own attorneys' fees and its respective share of prorations as hereinafter
provided. Notwithstanding the foregoing, in the event the sale
contemplated hereby does not close on the Closing Date, then each party
shall pay all costs incurred by it.
D. Prorations.
(1) Items to be Prorated. The following shall be
prorated between Seller and Buyer as of the Closing Date (with Buyer being
debited or credited, as appropriate, for the Closing Date itself):
(a) Taxes and Assessments. All real estate taxes
and assessments on the Property payable in respect to the current fiscal
year of the applicable taxing authority in which the Closing Date occurs
(the "Current Tax Year"). Such real estate taxes and assessments shall be
prorated on a per diem basis based upon the number of days in the Current
Tax Year prior to the Closing Date (which shall be allocated to Seller) and
the number of days in the Current Tax Year on and after the Closing Date
(which shall be allocated to Buyer). Upon the Closing Date and subject to
the adjustment provided for above, Buyer shall be responsible for real
estate taxes and assessments on the Property payable in respect to the
Current Tax Year and al periods after the Current Tax Year. In the event
that any assessments on the Property are payable in installments, then the
installment for the Current Tax Year shall be prorated in the manner set
forth above (with Buyer assuming the obligation to pay any installments due
after the Closing Date). With respect to the Current Tax Year and all
prior periods, Seller hereby reserves the right to institute or continue
any proceeding or proceedings for the reduction of the assessed valuation
of the Property, and, in its sole discretion, to settle the same. Seller
shall have sole authority to control the progress of, and to make all
decisions with respect to, such proceedings. All net tax refunds and
credits attributable to any period prior to the Current Tax Year shall
belong to and be the property of Seller. All net tax refunds and credits
attributable to any period subsequent to the Current Tax Year shall belong
to and be the property of Buyer. All net tax refunds and credits
attributable to the Current Tax Year shall be apportioned in the same
manner as provided above for taxes and assessments for such Current Tax
Year, after deducting all expenses, including attorneys' and consultants'
fees and costs and disbursements, incurred in obtaining such refund, and if
applicable, all amounts payable in connection therewith to tenants pursuant
to tenant leases. Buyer agrees to reasonably cooperate with Seller in
connection with the prosecution of any such proceedings.
(b) Rents. All fixed and percentage rentals, and
other tenant charges and reimbursements received in connection with the
Property (collectively, the "Rents"). The method of prorating such Rents
shall be subject to the agreement of the parties during the Due Diligence
Period but the parties acknowledge that they intend to cause a final
schedule of adjustments to be prepared (based on reasonable estimates and
reconciliations where appropriate) so as to finalize such rent prorations
(with only limited reproration as provided in Paragraph 5D(2) below). If
the parties are unable to agree upon the method of prorating Rents on or
before the Due Diligence Period, either party may give notice of its
intention to terminate this Agreement by giving written notice thereof
within five (5) business days thereafter (and, except for matters which
survive termination, this Agreement shall terminate three (3) business days
thereafter unless the other party shall agree to such terminating party's
Rent proration computations prior to such termination).
(c) Operating Expenses. All items of income or
expense under any of the "Service Agreements", as hereinafter defined,
together with all other normal and customary operating expenses.
<PAGE>
(2) Calculation. The prorations and payments shall be
made on the basis of a written statement submitted to Buyer and Seller by
Escrow Holder prior to the Close of Escrow and approved by Buyer and
Seller. In the event any prorations or apportionments made under this
subparagraph D shall prove to be incorrect for any reason, then any party
shall be entitled to an adjustment to correct the same provided written
notice of such inaccuracy and request for correction is given not later
than November 30, 1998. Any item which cannot be finally prorated because
of the unavailability of information shall be tentatively prorated on the
basis of the best data then available and reprorated when the information
is available, but not later than November 30, 1998.
6. Condemnation or Destruction of Property. In the event that,
after the date hereof but prior to the Closing Date, either any portion of
the Property is taken pursuant to eminent domain proceedings or any of the
improvements on the Property are damaged or destroyed by any casualty,
Seller shall have no obligation to repair or replace any such damage or
destruction. Seller shall, upon consummation of the transaction herein
provided, assign to Buyer all claims of Seller respecting any condemnation
or casualty insurance coverage, as applicable (and pay any applicable
deductible amount thereunder, and all condemnation proceeds or proceeds
from any such casualty insurance received by Seller on account of any
casualty (the damage from which shall not have been repaired by Seller
prior to the Closing Date), as applicable; provided, however, that Seller
shall retain any proceeds received (and the right to receive any proceeds)
of rental income insurance or a temporary taking award that are
attributable to a period prior to the Closing Date. Notwithstanding the
foregoing, in the event of a condemnation of all or any portion of the
Property, if the condemnation award with respect thereto shall exceed
$250,000, Buyer may, at its option, terminate this Agreement by notice to
Seller, given on or before the Closing Date (whereupon the Deposit L/C, or
any proceeds thereof [and interest thereon] if previously drawn upon, shall
be returned to Buyer and, except for those provisions hereof which survive
termination, this Agreement shall terminate).
7. Limited Representations, Warranties and Covenants.
A. DISCLAIMER RELEASE AND ASSUMPTION. AS AN ESSENTIAL INDUCEMENT
TO SELLER TO ENTER INTO THIS AGREEMENT, BUYER ACKNOWLEDGES, UNDERSTANDS AND
AGREES AS FOLLOWS, BOTH AS OF THE DATE HEREOF AND AS OF THE CLOSING DATE,
AND EXCEPT AS SET FORTH IN PARAGRAPH 7(B) BELOW:
(1) DISCLAIMER.
(a) AS-IS NATURE OF TRANSACTION. THE SALE OF THE PROPERTY
HEREUNDER IS AND WILL BE MADE ON AN "AS IS, WHERE IS, WITH ALL FAULTS"
BASIS AND THAT, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, SELLER
HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY
REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR
FUTURE OF, AS TO, CONCERNING OR WITH RESPECT TO THE PROPERTY OR ANY OTHER
MATTER WHATSOEVER.
(b) SOPHISTICATION OF BUYER. BUYER IS A SOPHISTICATED PURCHASER
WHO IS FAMILIAR WITH THE OWNERSHIP, DEVELOPMENT AND OPERATION OF REAL
ESTATE PROJECTS SIMILAR TO THE PROPERTY AND THAT BUYER HAS OR WILL HAVE
ADEQUATE OPPORTUNITY TO COMPLETE ALL PHYSICAL AND FINANCIAL EXAMINATIONS
RELATING TO THE ACQUISITION OF THE PROPERTY HEREUNDER IT DEEMS NECESSARY,
AND WILL ACQUIRE THE SAME SOLELY ON THE BASIS OF SUCH EXAMINATIONS AND THE
TITLE INSURANCE PROTECTION AFFORDED BY THE OWNER'S POLICY AND NOT ON ANY
INFORMATION PROVIDED OR TO BE PROVIDED BY SELLER.
<PAGE>
(c) DUE DILIGENCE MATERIALS. ANY INFORMATION PROVIDED OR TO BE
PROVIDED WITH RESPECT TO THE PROPERTY IS SOLELY FOR BUYER'S CONVENIENCE AND
WAS OR WILL BE OBTAINED FROM A VARIETY OF SOURCES AND THAT SELLER HAS NOT
MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION AND
MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION. SELLER SHALL NOT BE LIABLE FOR ANY MISREPRESENTATION OF ANY
KIND OR ANY FAILURE TO INVESTIGATE THE PROPERTY NOR SHALL SELLER BE BOUND
IN ANY MANNER BY ANY VERBAL OR WRITTEN STATEMENTS, REPRESENTATIONS,
APPRAISALS, ENVIRONMENTAL ASSESSMENT REPORTS, OR OTHER INFORMATION
PERTAINING TO THE PROPERTY OR THE OPERATION THEREOF, FURNISHED BY SELLER,
MANAGER, OR BY ANY REAL ESTATE BROKER, AGENT, REPRESENTATIVE, AFFILIATE,
EMPLOYEE, SERVANT OR OTHER PERSON OR ENTITY ACTING ON SELLER'S BEHALF
(COLLECTIVELY, "SELLER RELATED PARTIES").
(d) RELEASE. BUYER RELEASES SELLER AND ALL SELLER RELATED PARTIES
FROM ALL CLAIMS WHICH ANY BUYER OR ANY PARTY RELATED TO, AFFILIATED WITH,
OR CLAIMING BY, THROUGH OR UNDER BUYER (A "BUYER RELATED PARTY") HAS OR MAY
HAVE ARISING FROM OR RELATED TO ANY MATTER OR THING RELATED TO OR IN
CONNECTION WITH THE PROPERTY (INCLUDING THE DOCUMENTS AND INFORMATION
REFERRED TO HEREIN, ANY DEFECTS, ERRORS OR OMISSIONS RESPECTING THE
PHYSICAL CONDITION OF THE PROPERTY, ANY DEVELOPMENT RIGHTS OR POTENTIAL
WITH RESPECT TO THE PROPERTY, AND ANY ENVIRONMENTAL CONDITIONS AFFECTING
THE PROPERTY) AND BUYER SHALL NOT LOOK TO ANY SELLER RELATED PARTIES IN
CONNECTION WITH THE FOREGOING FOR ANY REDRESS OR RELIEF. THIS RELEASE
SHALL BE GIVEN FULL FORCE AND EFFECT ACCORDING TO EACH OF ITS EXPRESSED
TERMS AND PROVISIONS, INCLUDING THOSE RELATING TO UNKNOWN AND UNSUSPECTED
CLAIMS, DAMAGES AND CAUSES OF ACTION.
BUYER ACKNOWLEDGES THAT THE FOREGOING WAIVER INCLUDES CLAIMS UNDER THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE COMPENSATION LIABILITY ACT ("CERCLA"),
AND ANY OTHER FEDERAL, STATE AND LOCAL ENVIRONMENTAL LAWS. IN THAT
CONNECTION, BUYER FURTHER ACKNOWLEDGES THAT BUYER MAY HAVE NO REMEDY
AGAINST SELLER'S PREDECESSORS (IF ANY) WITH RESPECT TO MATTERS RELATING TO
THE PROPERTY.
(e) ASSUMPTION. EFFECTIVE AS OF THE CLOSING DATE, BUYER HEREBY
ASSUMES ALL OF SELLER'S LIABILITIES AND OBLIGATIONS WITH RESPECT TO THE
PROPERTY ARISING FROM AND AFTER THE DATE OF CLOSING AND SHALL INDEMNIFY,
DEFEND AND HOLD SELLER AND ALL SELLER RELATED PARTIES HARMLESS FROM AND
AGAINST ALL CLAIMS ASSERTED AGAINST SELLER OR ANY SELLER RELATED PARTY WITH
RESPECT TO SUCH LIABILITIES AND OBLIGATIONS.
(f) SURVIVAL. THIS PARAGRAPH 7A SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT OR THE CLOSING DATE AND SHALL NOT BE DEEMED TO HAVE MERGED
INTO ANY OF THE DOCUMENTS EXECUTED OR DELIVERED AT CLOSING.
(B) Limited Representations and Warranties of Seller. Seller
hereby represents and warrants that, except as set forth in Exhibit "E"
attached hereto and made a part hereof, Seller has no knowledge that any of
the following statements is untrue (and, for purposes of this Agreement,
Seller's knowledge shall mean only the present actual knowledge of Glenn
Emig and Andrea Backman, after having Seller's third party property
manager, review the representations and warranties contained herein, but
otherwise without any duty to investigate and with any imputed or
constructive knowledge being excluded):
<PAGE>
(1) Litigation. There is no pending action, litigation,
condemnation or other proceeding against the Property or against Seller
with respect to the Property.
(2) Service Agreements. Other than those which are
cancelable on not more than 90 days' notice, Seller has not entered into
any service agreements or contracts ("Service Agreements") or other
agreements (other than as set forth in this Agreement) relating to the
Property which will be in force on the Closing Date, except as described in
Exhibit "F" attached hereto.
(3) Due Authority. This Agreement and all agreements,
instruments and documents herein provided to be executed or to be caused to
be executed by Seller are and on the Closing Date will be duly authorized,
executed and delivered by and are binding upon Seller. Seller is a general
partnership, duly organized and validly existing and in good standing under
the laws of the State of Illinois, and is duly authorized and qualified to
do all things required of it under this Agreement. Seller has the capacity
and authority to enter into this Agreement and consummate the transactions
herein provided.
(4) Environmental Matters. Except for asbestos at the
Property, the underground storage tanks respecting the former Montgomery
Wards property or as otherwise set forth in the reports described in
Exhibit "G" attached hereto and made a part hereof (the "Environmental
Reports"), Seller has received no written notice of the existence, deposit,
storage, removal, burial or discharge of any material known to Seller to be
a "Hazardous Material" at, upon, under, within or adjacent to the Property,
in an amount which, in Seller's reasonable judgment, would, as of the date
hereof, give rise to an "Environmental Compliance Cost". The term
"Hazardous Material" shall mean (i) asbestos and any chemicals, flammable
substances or explosives, any radioactive materials (including radon), any
hazardous wastes or substances which have, as of the date hereof, been
determined by any applicable Federal, State or local government law to be
hazardous, toxic or waste by the U.S. Environmental Protection Agency, the
U.S. Department of Transportation, and/or any instrumentality now or
hereafter authorized to regulate materials and substances in the
environment which has jurisdiction over the Property ("Environmental
Agency"), and (ii) any oil, petroleum or petroleum derived substance, any
drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, which materials listed
under items (i) and (ii) above cause the Property (or any part thereof) to
be in material violation of any applicable environmental laws or the
regulations of any Environmental Agency; provided, however, that the term
"Hazardous Material" shall not include motor oil and gasoline contained in
or discharged from vehicles not used primarily for the transport of motor
oil or gasoline. The term "Environmental Compliance Cost" means any
reasonable out-of-pocket cost, fee or expense incurred directly to satisfy
any requirement imposed by an Environmental Agency to bring the Property
into compliance with applicable Federal, State and local laws and
regulations directly relating to the existence on the Property of any
Hazardous Material. Seller has not entered into any contract or agreement
whereby Seller has released any prior owner or lessee of the Property, any
present lessee, or any adjacent property owner, from liability arising as a
result of Hazardous Materials existing on, under or from the Property at
any time.
(5) List of Leases. Attached as Exhibit "H" and made a part
hereof is a true, complete and accurate list, as of the date thereof, of
all tenant leases (including all modifications and amendment thereto)
respecting the Property.
(6) Compliance. Seller has received no written notice from
any governmental authority having jurisdiction over the Property to the
effect that the Property is not in compliance with applicable laws and
ordinances.
<PAGE>
C. Representations and Warranties of Buyer. Buyer hereby
represents and warrants that this Agreement and all agreements, instruments
and documents herein provided to be executed or to be caused to be executed
by Buyer are and on the Closing Date will be duly authorized, executed and
delivered by and are binding upon Buyer; Buyer is a corporation, duly
organized and validly existing and in good standing under the laws of the
State of Delaware, and is duly authorized and qualified to do all things
required of it under this Agreement; and Buyer has the capacity and
authority to enter into this Agreement and consummate the transactions
herein provided.
D. Survival. Any cause of action of a party for a breach of the
representations and warranties contained herein or in any document executed
or delivered at Closing shall survive until November 30, 1998 (the
"Survival Period"), at which time such representations and warranties (and
any cause of action resulting from a breach thereof not then in litigation)
shall terminate. Notwithstanding the foregoing, if Buyer shall have actual
knowledge as of the Closing Date that any of the representations or
warranties of Seller contained herein are false or inaccurate or that
Seller is in breach or default of any of its obligations under this
Agreement, and Buyer nonetheless closes the transactions hereunder and
acquires the Property, then Seller shall have no liability or obligation
respecting such false or inaccurate representations or warranties or other
breach or default (and any cause of action resulting therefrom shall
terminate upon such closing hereunder).
E. Interim Covenants of Seller. Until the Closing Date or the
sooner termination of this Agreement:
(1) Seller shall maintain the Property in the same
manner as prior hereto pursuant to its normal course of business (such
maintenance obligations not including extraordinary capital expenditures or
expenditures not incurred in such normal course of business), subject to
reasonable wear and tear and further subject to destruction by casualty or
other events beyond the control of Seller.
(2) Seller shall not enter into any additional service
contracts or other similar agreements without the prior consent of Buyer,
except those deemed reasonably necessary by Seller and which are cancelable
on 90 days' notice.
(3) Seller shall not enter into any new tenant leases
or material modifications (including but not limited to any lease
terminations) of any existing tenant leases with respect to the Property,
without Buyer's consent (which consent will not be unreasonably withheld
and will be deemed given if not disapproved in writing within five (5) days
of written request for approval from Seller); provided, however, Buyer
shall pay, or reimburse Seller, for any and all tenant improvement costs,
leasing commissions or other expenses in connection with any such new
leases or modifications of existing leases entered into after the date
hereof.
8. DISPOSITION OF DEPOSIT. IF THE TRANSACTION HEREIN PROVIDED
SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT UNDER THIS AGREEMENT OR
THE FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED IN PARAGRAPH 4
HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6
HEREOF, AND BUYER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE
DEPOSIT L/C OR ANY PROCEEDS THEREOF (AND INTEREST THEREON) IF PREVIOUSLY
DRAWN UPON, SHALL BE RETURNED TO BUYER, AND NEITHER PARTY SHALL HAVE ANY
FURTHER OBLIGATION OR LIABILITY TO THE OTHER; PROVIDED, HOWEVER, IF THE
TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE SOLELY BY REASON OF SELLER'S
DEFAULT, AND BUYER SHALL HAVE FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND
<PAGE>
SHALL BE READY, WILLING AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO
SPECIFICALLY ENFORCE THIS AGREEMENT (BUT NO OTHER ACTION, FOR DAMAGES OR
OTHERWISE, SHALL BE PERMITTED). IN THE EVENT THE TRANSACTION HEREIN
PROVIDED SHALL NOT CLOSE FOR ANY REASON OTHER THAN THE FAILURE OF
SATISFACTION OF THE CONDITIONS DESCRIBED IN PARAGRAPH 4 HEREOF OR THE
TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6 HEREOF OR THE
DEFAULT OF SELLER, THEN THE DEPOSIT L/C SHALL PROMPTLY BE DRAWN UPON BY
ESCROW HOLDER (IF NOT PREVIOUSLY DRAWN UPON BY ESCROW HOLDER) AND THE
PROCEEDS THEREOF (AND ANY INTEREST THEREON) SHALL BE DELIVERED TO SELLER AS
FULL COMPENSATION AND LIQUIDATED DAMAGES UNDER AND IN CONNECTION WITH THIS
AGREEMENT. IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL CLOSE, THE
DEPOSIT L/C SHALL BE RETURNED TO BUYER IF NOT PREVIOUSLY DRAWN UPON OR, IF
SO DRAWN UPON, THE PROCEEDS OF THE DEPOSIT L/C SHALL BE APPLIED AS A
PARTIAL PAYMENT OF THE PURCHASE PRICE. IN CONNECTION WITH THE FOREGOING,
THE PARTIES RECOGNIZE THAT SELLER WILL INCUR EXPENSE IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THAT THE PROPERTY WILL BE
REMOVED FROM THE MARKET; FURTHER, THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER CAUSED BY THE
BREACH BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OF THE CONSUMMATION OF
THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE AMOUNT OF
COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER'S BREACH OR
DEFAULT. IN THE EVENT THE SALE OF THE PROPERTY SHALL NOT BE CONSUMMATED ON
ACCOUNT OF BUYER'S DEFAULT, THEN THE RETENTION OF THE PROCEEDS OF THE
DEPOSIT L/C, AND ANY INTEREST THEREON, SHALL BE SELLER'S SOLE AND EXCLUSIVE
REMEDY UNDER THIS AGREEMENT BY REASON OF SUCH DEFAULT, SUBJECT TO THE
PROVISIONS OF PARAGRAPH 9 HEREOF.
-------------------- --------------------
Seller's Initials Buyer's Initials
9. Miscellaneous.
A. Brokers.
(1) Except as provided in subparagraph (2) below,
Seller represents and warrants to Buyer, and Buyer represents and warrants
to Seller, that no broker or finder has been engaged by it, respectively,
in connection with any of the transactions contemplated by this Agreement
or to its knowledge is in any way connected with any of such transactions.
In the event of a claim for broker's or finder's fee or commissions in
connection herewith, then Seller shall indemnify and defend Buyer from the
same if it shall be based upon any statement or agreement alleged to have
been made by Seller, and Buyer shall indemnify and defend Seller from the
same if it shall be based upon any statement or agreement alleged to have
been made by Buyer. The indemnification obligations under this Paragraph
9A(1) shall survive the closing of the transactions hereunder or the
earlier termination of this Agreement.
(2) If and only if the sale contemplated herein closes,
Seller agrees to pay a brokerage commission to Hamptons International
("Broker") pursuant to a separate written agreement with Broker.
B. Limitation of Liability.
(1) Notwithstanding anything to the contrary contained
herein, if the closing of the transactions hereunder shall have occurred
(and Buyer shall not have waived, relinquished or released any applicable
rights in further limitation), the aggregate liability of Seller arising
pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express or
implied) of Seller under this Agreement (or any document executed or
delivered in connection herewith) shall not exceed $500,000.
<PAGE>
(2) In no event shall Seller have any liability
pursuant to or in connection with the representations, warranties,
indemnifications, covenants or other obligations (whether express or
implied under this Agreement or any document executed or delivered in
connection therewith), if any, unless and until such liabilities shall
exceed $10,000 in the aggregate; provided, however, nothing contained in
the foregoing shall limit Seller's liability for any proration amounts
provided for in this Agreement.
(3) No constituent partner in or agent of Seller, nor
any partner, member, trustee, director, officer, employee, beneficiary,
shareholder, participant, representative, advisor or agent of any entity
that is or becomes a constituent partner in Seller shall have any personal
liability, directly or indirectly, under or in connection with this
Agreement or any agreement made or entered into under or pursuant to the
provisions of this Agreement, or any amendment or amendments to any of the
foregoing made at any time or times, heretofore or hereafter, and Buyer and
its successors and assigns and, without limitation, all other persons and
entities, shall look solely to Seller's assets for the payment of any claim
or for any performance, and Buyer, on behalf of itself and its successors
and assigns, hereby waives any and all such personal liability.
Notwithstanding anything to the contrary contained in this Agreement,
neither the negative capital account of any constituent partner in Seller
(or in any other constituent partner of Seller), nor any obligation of any
constituent partner in Seller (or in any other constituent partner of
Seller) to restore a negative capital account or to contribute capital to
Seller (or to any other constituent partner of Seller), shall at any time
be deemed to be the property or an asset of Seller or any such other
constituent partner (and neither Buyer nor any of its successors or assigns
shall have any right to collect, enforce or proceed against or with respect
to any such negative capital account of partner's obligation to restore or
contribute).
(4) To the extent that, after Closing, Seller receives
insurance proceeds regarding any pre-Closing personal injury or property
damage for which Buyer has been sued by a third party, Seller agrees to
turn over, or cause to be turned over, such amounts of such insurance
proceeds as shall finally be determined to be due any such third party
claimant.
C. Entire Agreement. This Agreement contains the entire
agreement between the parties respecting the matters herein set forth and
supersedes all prior agreements between the parties hereto respecting such
matters. This Agreement may not be modified or amended except by written
agreement signed by both parties.
D. Time of the Essence. Time is of the essence of this
Agreement.
E. Interpretation. Paragraph headings shall not be used in
construing this Agreement. Each party acknowledges that such party and its
counsel, after negotiation and consultation, have reviewed and revised this
Agreement. As such, the terms of this Agreement shall be fairly construed
and the usual rule of construction, to the effect that any ambiguities
herein should be resolved against the drafting party, shall not be employed
in the interpretation of this Agreement or any amendments, modifications or
exhibits hereto or thereto.
F. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Alabama.
<PAGE>
G. Successors and Assigns. Buyer may not assign or transfer
its rights or obligations under this Agreement without the prior written
consent of Seller (in which event such transferee shall assume in writing
all of the transferor's obligations hereunder, but such transferor shall
not be released from its obligations hereunder); provided, however, Buyer
may assign its interest in this Agreement to a limited partnership or
limited liability company in which Buyer is the managing general partner or
managing member, as applicable, and has not less than a 51% interest in
capital and profits in such entity or to another affiliate controlled by,
controlling or under common control with Buyer. No consent given by Seller
to any transfer or assignment of Buyer's rights or obligations hereunder
shall be construed as a consent to any other transfer or assignment of
Buyer's rights or obligations hereunder. No transfer or assignment in
violation of the provisions hereof shall be valid or enforceable. Subject
to the foregoing, this Agreement and the terms and provisions hereof shall
inure to the benefit of and be binding upon the successors and assigns of
the parties.
H. Notices. Any notice which a party is required or may
desire to give the other shall be in writing and shall be sent by personal
delivery or by mail (either [i] by United States registered or certified
mail, return receipt requested, postage prepaid, or [ii] by Federal Express
or similar generally recognized overnight carrier regularly providing proof
of delivery), addressed as follows (subject to the right of a party to
designate a different address for itself by notice similarly given):
To Buyer:
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway, Suite 300
Chattanooga, Tennessee 37421-6511
Attention: President
Facsimile: (423) 490-8662
Telephone: (423) 855-0001
With Copy To:
CBL & Associates Properties, Inc.
One Park Place
6148 Lee Highway, Suite 300
Chattanooga, Tennessee 37421-6511
Attention: Ms. Mary Ann Sinnott
Facsimile: (423) 490-8662
Telephone: (423) 855-0001
To Seller:
c/o JMB Realty Corporation
900 North Michigan Avenue
12th Floor
Chicago, Illinois 60611
Attention: Mr. Glenn Emig
Facsimile: (312) 915-1023
Telephone: (312) 915-2350
With Copy To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML)
Facsimile: (310) 201-8922
Telephone: (310) 201-8900
<PAGE>
Any notice so given by mail shall be deemed to have been given as of the
date of delivery (whether accepted or refused) established by U.S. Post
Office return receipt or the overnight carrier's proof of delivery, as the
case may be. Any such notice not so given shall be deemed given upon
receipt of the same by the party to whom the same is to be given. Notice
may be given by facsimile transmission and shall be deemed given upon
actual receipt of the same by the party to whom the same is to be given (as
evidenced by electronic confirmation thereof), provided a copy of such
facsimile notice shall also be sent on the same day by mail or overnight
courier as hereinabove provided.
I. Legal Costs. The parties hereto agree that they shall
pay directly any and all legal costs which they have incurred on their own
behalf in the preparation of this Agreement, all deeds and other agreements
pertaining to this transaction and that such legal costs shall not be part
of the closing costs. In addition, if either Buyer or Seller brings any
suit or other proceeding with respect to the subject matter or the
enforcement of this Agreement, the prevailing party (as determined by the
court, agency or other authority before which such suit or proceeding is
commenced), in addition to such other relief as may be awarded, shall be
entitled to recover reasonable attorneys' fees, expenses and costs of
investigation actually incurred. The foregoing includes, but is not
limited to, attorneys' fees, expenses and costs of investigation
(including, without limitation, those incurred in appellate proceedings),
costs incurred in establishing the right to indemnification, or in any
action or participation in, or in connection with, any case or proceeding
under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code
Sections 101 et seq.), or any successor statutes.
J. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same document.
K. Incorporation of Exhibits. All exhibits attached and
referred to in this Agreement are hereby incorporated herein as fully set
forth in (and shall be deemed to be a part of) this Agreement. The parties
agree that, as to any exhibits which are noted as "To Be Attached",
exhibits acceptable to Seller and Buyer shall be agreed upon by the parties
within three (3) business days of the Effective Date (or this Agreement,
and the obligations of the parties, shall thereupon terminate [except for
those matters which survive termination hereunder]).
THE SUBMISSION OF THIS AGREEMENT FOR EXAMINATION IS NOT INTENDED TO
NOR SHALL CONSTITUTE AN OFFER TO SELL, OR A RESERVATION OF, OR OPTION OR
PROPOSAL OF ANY KIND FOR THE PURCHASE OF THE PROPERTY. IN NO EVENT SHALL
ANY DRAFT OF THIS AGREEMENT CREATE ANY OBLIGATION OR LIABILITY, IT BEING
UNDERSTOOD THAT THIS AGREEMENT SHALL BE EFFECTIVE AND BINDING ONLY WHEN A
COUNTERPART HEREOF HAS BEEN EXECUTED AND DELIVERED BY EACH PARTY HERETO TO
ESCROW HOLDER. ESCROW HOLDER SHALL DATE THIS AGREEMENT WITH THE DATE ON
WHICH ESCROW HOLDER SHALL HAVE RECEIVED THIS AGREEMENT EXECUTED BY
BOTH BUYER AND SELLER (AND SUCH DATE SHALL BE THE "EFFECTIVE DATE" FOR
PURPOSES HEREOF).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the Effective Date.
SELLER:
HUNTSVILLE MALL ASSOCIATES,
an Illinois general partnership
By: JMB INCOME PROPERTIES, LTD-IV,
an Illinois limited partnership,
General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name:
Title:
BUYER:
CBL & ASSOCIATES PROPERTIES, INC.,
a Delaware corporation
By:
Name:
Title:
<PAGE>
ESCROW HOLDER'S ACKNOWLEDGEMENT
The undersigned hereby executes this Agreement to evidence its
agreement to act as Escrow Holder in accordance with the terms of this
Agreement.
Effective Date: _______, 1998FIDELITY NATIONAL TITLE INSURANCE COMPANY
By:
Name:
Title:
"Escrow Holder"
<PAGE>
EXHIBIT LIST
"A" - Property Description
"B" - Personal Property
"C" - Deed
"D" - Bill of Sale, Assignment and Assumption Agreement
"E" - Exceptions to Seller's Representations
and Warranties
"F" - Service Agreements
"G" - Environmental Reports
"H" - List of Leases
<PAGE>
EXHIBIT "A"
Property Description
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF ALABAMA, COUNTY OF
MADISON, DESCRIBED AS FOLLOWS:
<PAGE>
EXHIBIT "B"
Personal Property
<PAGE>
PERSONAL PROPERTY
QUANTITY ITEM
3 Microwave Oven
1 Instant Camera
2 Refrigerator (Full Size)
3 Refrigerator (Mini)
2 Weather Radios
19 Two-Way Radios
19 Two-Way Radio Chargers
2 Two-Way Radio Repeaters
1 1995 Pick-up Truck
1 1992 Sweeper Truck
2 Floor Buffers
5 Vacuums
1 24 Volt Chargers
1 36 Volt Chargers
1 Floor Scrubber
1 Lawn Tractor
1 Scaffold
Various Floor Tile
Various Fluorescent Bulbs
Various Used uniforms
5 Ladders
2 Box Fans
Various Office Furniture
Various Hand Tools
1 Gateway Computer System
1 IBM Clone Computer System
3 Computer Work Station
5 Desks
` 1 Typewriter
1 Coffee Maker
2 Mirrors
1 Two Drawer Filing Cabinet (Metal)
7 Two Drawer Filing Cabinet (Wood)
1 Conference Table
6 Conference Chairs
1 TV-VCR Combo Set
19 Matted and Framed Prints
8 Upholstered Office Chairs
3 Executive Chairs
3 Typing Chairs
2 Stenographer Chairs
1 Floor Lamp
2 Bookcases
4 Table Lamps
1 Paper Cutter
1 Paper Shredder
1 Industrial Stapler
1 Postage Scale
2 Plant Tables
1 Credenza
1 At&T Phone
2 Space Heaters
4 HP Computers
6 HP Printers
1 Television Cart
1 Message Board
1 ADT System
5 Motion Detectors
1 Digital Alarm Keypad
1 Check Machine
1 Answering Machine
1 Magazine Table
3 Time Clocks
1 Cash Register
1 Credit Card/Check Verifier Machine
1 Fax Machine
5 Power Strips
3 Electric Pencil Sharpener
4 Wheelchairs
3 Character Stroller
1 Infant Stroller
3 Brass Planters
1 Ribbon Holder
1 Gift Wrap Stand
4 Gift Wrap Holders
1 Farmhouse Dinette Set (1 Table, 4 Chairs)
1 Leather Sofa
1 Leather Love Seat
2 Side Chairs
2 End Tables
1 Coffee Table
1 Copier
1 Coin Operated Mechanism For Copier
1 Copier Cart
1 Drop Safe
7 Ten-Key Printing Calculators
1 Norstar Phone System
8 Norstar Phones
1 Battery Backup
1 Easter Set
1 Christmas Set
48 Christmas Chambeaus
Various Metal Fencing
30 Folding Chairs
10 6' Folding Tables
Various Props and Decorations
Various Marquee Letters
1 Podium
1 Stage Set
1 Sound System
2 Speakers
6 Sign Holders
1 Oscillating Fan
42 Concrete Exterior Planters
60 Interior Planters
1 Bicycle Rack
4 Outside Trash Cans
40 Common Area Trash Cans
33 Common Area Park Benches
20 Office Wastebaskets
1 Gas Powered Generator
<PAGE>
EXHIBIT "C"
Deed
<PAGE>
SPECIAL WARRANTY DEED
(Parkway City Mall; Huntsville, Alabama)
KNOW ALL MEN BY THESE PRESENTS, that HUNTSVILLE MALL ASSOCIATES, an
Illinois general partnership ("Seller"), having an office at 900 North
Michigan, Chicago, Illinois 60611, for and in consideration of the sum of
Ten Dollars ($10) and other good and valuable consideration, in hand paid
by _______________, a ______________ ("Buyer") having an office at
________________, ____________, _____________, the receipt whereof Seller
hereby acknowledges, does hereby grant, bargain and sell unto said Buyer,
all of Seller's rights, title and interest in and to the real property
described on Exhibit "A" attached hereto and made a part hereof.
SUBJECT TO: (a) all liens, encumbrances, easements, covenants,
conditions and restrictions of record; (b) all matters which would be
revealed or disclosed in an accurate survey; (c) all matters that would be
revealed or disclosed by a physical inspection; (d) interests of tenants in
possession; (e) a lien for taxes for real property and personal property,
and any general or special assessments, to the extent not yet delinquent;
and (f) zoning ordinances and regulations and any other applicable laws,
ordinances, or governmental regulations.
TO HAVE AND TO HOLD the aforegranted premises, buildings and
improvements as aforesaid, to said Buyer and its successors and assigns
forever.
AND Seller does hereby covenant with the Buyer that, subject to the
foregoing matters: Seller is lawfully seized in fee of the aforegranted
premises; the same are free of all encumbrances; Seller has good right to
sell and convey the same; and Seller shall warrant
<PAGE>
and defend the said premises to the said Buyer, its successors and assigns
forever against the lawful claims and demands of persons claiming by,
through or under Seller, but not otherwise.
IN WITNESS WHEREOF, Seller has caused this instrument to be signed,
sealed and delivered as of __________________, 1998.
HUNTSVILLE MALL ASSOCIATES,
an Illinois general partnership
By: JMB INCOME PROPERTIES, LTD-IV,
an Illinois limited partnership,
General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name:
Title:
<PAGE>
EXHIBIT "D"
Bill of Sale, Assignment and Assumption Agreement
<PAGE>
BILL OF SALE, ASSIGNMENT AND ASSUMPTION
(Parkway City Mall; Huntsville, Alabama)
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
the undersigned, HUNTSVILLE MALL ASSOCIATES, an Illinois general
partnership ("Seller"), hereby sells, transfers, assigns and conveys to
_______________________________ __________________________ ("Buyer"), the
following:
1. Personal Property. All right, title and interest of Seller in
and to those items of tangible personal property ("Personal Property")
described in Exhibit "A" attached hereto and made a part hereof and
relating to the "Property", as hereinafter defined.
2. Leases. All right, title and interest of Seller in and to all
leases ("Leases") relating to the Property, including, without limitation,
those described in Exhibit "B" attached.
3. Service Agreements. All right, title and interest of Seller in
and to all contracts, service agreements and other operating agreements
("Service Agreements") relating to the Property including, without
limitation, those described in Exhibit "C" attached hereto.
4. Intangible Property. All right, title and interest of Seller,
to the extent assignable, in and to all contract rights, agreements, tenant
lists, governmental permits, licenses and approvals, advertising material,
telephone exchange numbers and the name "Parkway City Mall" (collectively,
the "Intangible Property") directly relating to the Property.
This Bill of Sale, Assignment and Assumption is given pursuant to that
certain Purchase Agreement ("Agreement") dated as of __________, 1998,
between the Seller and Buyer, respecting the purchase and sale of that
certain shopping center commonly known as "Parkway City Mall" located in
the Huntsville, Alabama, (the "Property"). The Agreement provides for,
among other things, the assignment provided for herein. The covenants,
agreements, and limitations (including, but not limited to, the limitations
of liability provided in paragraph 9B of the Agreement) provided in the
Agreement with respect to the property conveyed hereunder are hereby
incorporated herein by this reference as if herein set out in full and
shall inure to the benefit of and shall be binding upon Seller and Buyer,
and their respective successors and
<PAGE>
assigns. The property and rights conveyed hereunder are is conveyed "as
is", without warranty or representation, except as expressly provided in
(and subject to the limitations of) the Agreement.
DATED: As of _______________, 199__.
HUNTSVILLE MALL ASSOCIATES,
an Illinois general partnership
By: JMB INCOME PROPERTIES, LTD-IV,
an Illinois limited partnership,
General Partner
By: JMB REALTY CORPORATION,
a Delaware corporation,
General Partner
By:
Name:
Title:
As of this ____ day of _______________, 199__, Buyer hereby accepts
the foregoing assignment of Leases, Service Agreements and other contracts
and agreements assigned hereby and agrees to assume and discharge, in
accordance with the terms thereof, all of the burdens and obligations of
Seller thereunder, to the extent the same arise from and after the date
hereof.
By:
Name:
Title:
"Buyer"
<PAGE>
EXHIBIT "E"
Exceptions to Seller's Representations and Warranties
None, except the following Litigation Matters:
<PAGE>
EXHIBIT "F"
Service Agreements
Cherry Hill Santa & Easter Photo
Huntsville Home Gallery Advertising
Huntsville Times Advertising
Outdoor Communication Inc. Billboard
Botanical Design Interior Landscaping
North Alabama Lawn Care Exterior Landscaping
Cook's Pest Control Pest Control
Grinnel Fire Protection Sprinkler System
ADT Fire Alarm Monitoring
BFI Waste Removal
Hall's Heating & Air HVAC Preventative Maint.
Sprint Long Distance
Sprint Data-Computer Network
Pitney Bowes Fax Lease
Pitney Bowes Postage Meter Lease
Xerox Copier Lease
Professional Window Service Transom Window Cleaning
Muzak Lease of Equip. & Monthly Music Fee
Metrocall Pagers - Property, Security,
Maintenance Managers
Bell South Mobility Mobile Phone - Property Manager
GMAC Lease 1998 Chevrolet Pick Up Truck
Infinitel Pay Phones Common Area Public Pay Phones
Advanced Alarm Company Management Office Burglar Alarm
<PAGE>
EXHIBIT "G"
Environmental Reports
Asbestos Survey Report, dated May 1998, prepared by Mid-South Testing, Inc.
Limited Phase I Environmental Site Assessment, dated May 15, 1998, prepared
by Mid-South Testing, Inc.
Report of Asbestos Survey, Montgomery Ward Buildings, dated October 13,
1997, prepared by law Engineering and Environmental Services, Inc. for
Proffitt's, Inc.
Phase I Environmental Site Assessment, Montgomery Ward, dated October 23,
1997, prepared by Law Engineering and Environmental Services Inc. for
Proffitt's, Inc.
No Further Action Letter, dated December 31, 1992, from the Alabama
Department Environmental Management re: Montgomery Ward Site/UST
Montgomery Ward UST Closure Report to Groundwater Section Water Division,
Alabama Department of Environmental Management, dated October 3, 1989,
prepared by Environmental Testing Services, Inc.
<PAGE>
EXHIBIT "H"
List of Leases
<PAGE>
LEASES
Anchors
McRae's
Lease Summary dated January 4, 1963
First Amendment dated October 21, 1963
Lease Modification Agreement dated November 8, 1963
Lease Modification Agreement #2 dated April 23, 1975
Lease Modification Agreement #3 dated January 19, 1976
Lease Modification Agreement #4 dated August 5, 1976
Lease Modification Agreement #5 dated March 19, 1982
Lease Modification Agreement #6 dated May 18, 1987
Lease Modification Agreement #7 dated May 29, 1987
Lease Modification Agreement #8 January 26, 1994
Parisian
Lease Summary dated March 28, 1975
Lease Modification Agreement #1 dated July 11, 1975
Lease Modification Agreement #2 dated October 29, 1975
Lease Modification Agreement #3 dated December 26, 1985
Lease Modification Agreement #4 dated August 16, 1994
Proffitt's
Lease Summary dated June 2, 1958
Supplemental Agreement dated April 21, 1959
Supplemental Agreement dated August 17, 1962
Supplemental Agreement dated August 27, 1976
Letter dated October 1, 1974
Letter dated January 24, 1978
Supplemental Agreement dated July 28, 1993
Assignment Agreement dated February 5, 1998
Mall Shops
Argosy
Lease Agreement dated March 23, 1989
Bragg Gallery
Short Term Lease dated January 20, 1998
Burch & Hatfield Formal Wear
Lease Agreement dated March 12, 1990
Cellular Sales
Short Term Lease dated December 18, 1997
The Castner-Knott Dry Goods Company
Lease Agreement dated April 23, 1997
Chick-Fil-A
Lease Agreement dated May 31, 1991
Claire's Boutiques, Inc.
Lease Agreement dated October 25, 1989
The Great American Cookie Company
Lease dated December 23, 1979
Lease Extension Agreement dated November 29, 1995
Lease Extension Agreement dated December 21, 1997
County Seat
Lease Agreement dated March 8, 1991
Attachment dated March 8, 1991
Crown Jewelers
Short Term Lease dated January 27, 1998
Dollar Tree
Lease Agreement dated December 15, 1994
The Electronics Boutique, Inc.
Lease Agreement dated September 27, 1991
First Commercial Bank
Lease Dated October 27, 1978
Lease Modification Agreement dated January 11, 1977
Lease Extension Agreement dated September 3, 1996
Foot Locker
Lease Agreement dated February 1, 1994
General Nutrition Center
Lease Agreement dated September 6, 1990
Gold Factory
Short Term Lease dated December 18, 1997
Great Panda
Lease Agreement dated February 24, 1992
Henig Furs
Short Term Lease dated May 10, 1996
Amendment No. One to Lease dated May 22, 1997
Hibbett Sporting Goods, Inc.
Lease Agreement dated October 1, 1987
Lease Termination Agreement dated October 1, 1987
Lease Extension Agreement dated January 31, 1998
Huntsville Art League Gallery
Short Term Lease dated April 17, 1997
I Cant Believe It's Yogurt
Short Term Lease dated December 18, 1997
Lane Bryant
Lease Agreement dated October 14, 1986
Lerner New York
Lease Dated March 14, 1983
First Amendment to Lease dated February 1, 1996
Lynn's Hallmark
Lease Agreement dated April 1, 1991
Lease Extension Agreement dated January 11, 1996
Lease Extension Agreement dated December 21, 1997
Marks & Morgan Jewelers, Inc. dba Freidman's Jewelers
Lease Agreement dated March 12, 1990
Merle Norman
Lease Agreement dated July 26, 1995
Naturalizer/Buster Brown
Lease Agreement dated February 15, 1994
Options Gifts
Short Term Lease dated January 15, 1998
Orange Julius
Short Term Lease dated December 18, 1997
Photo Pronto
Short Term Lease dated February 6, 1998
Piccadilly Cafeterias, Inc.
Lease Agreement dated May 10, 1994
Pearle Vision
Lease Agreement dated March 10, 1997
Lease Extension Agreement dated January 31, 1998
Rack Room Shoes, Inc.
Lease Agreement dated February 8, 1995
Radio Shack
Lease Agreement dated May 31, 1995
Red's Ice Cream
Short Term Lease dated December 18, 1997
Regency Jewelers
Lease Agreement dated January 17, 1995
Lease Extension Agreement dated May 23, 1997
Regis Hairstylist
Lease Agreement dated August 21, 1975
Lease Modification No. 1 dated March 30, 1976
Sbarro
Lease Agreement dated April 3, 1987
Lease Amendment dated May 21, 1992
Lease Amendment dated February 17, 1994
Partial Rent Abatement Agreement dated July 24, 1996
Shoe Doctor
Lease Agreement dated July 25, 1994
Lease Amendment dated September 12, 1995
String Shop, Inc.
Short Term dated December 18, 1997
T & S Jewelers
Short Term dated December 16, 1996
Things Remembered
Lease Agreement dated July 1, 1995
Tropik Sun Fruit & Nut
Short Term Lease dated December 18, 1997
Turtle Creek
Short Term Lease dated December 18, 1997
Walden Books
Lease Agreement between dated June 10, 1986
Amendment No. One to Lease dated January 27, 1997
Lease Extension dated January 31, 1998
