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
January 29, 1997
(Date of earliest event reported)
CORNERSTONE PROPERTIES INC.
(Exact name of registrant as specified in its charter)
Nevada 0-10421 74-2170858
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
Tower 56
126 East 56th Street
New York, NY 10022
(Address of principal executive offices)
(212) 605-7100
(Registrant's telephone number,
including area code)
<PAGE>
Item 5. Other Events.
On January 29, 1997, the Board of Directors of the Company approved the
acquisition of 527 Madison Avenue in Midtown Manhattan, NY for a purchase price
of approximately $67 million. 527 Madison Avenue is a twenty-six story, 100%
leased, Class A office building with approximately 197,000 square feet of office
space, 5,000 square feet of first floor retail space and an underground parking
facility for approximately 50 vehicles.
The acquisition will be financed with the proceeds from the Company's two
offerings of Preferred Stock, completed in November 1996.
The closing on the property is expected to occur during February.
Item 7. Financial Statements and Exhibits
(a) Exhibits
2.1 AGREEMENT OF SALE AND PURCHASE BETWEEN 527 MADISON
HOLDINGS as Seller AND CORNERSTONE PROPERTIES INC. as
Purchaser PERTAINING TO 527 MADISON AVENUE, NEW YORK, NEW YORK
<PAGE>
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.
CORNERSTONE PROPERTIES INC.
(Registrant)
By: /s/ John S. Moody
John S. Moody, President and Chief Executive
Officer
Date: January 29, 1997
By: /s/ Thomas P. Loftus
Thomas P. Loftus, Vice President and Controller
(Principal Financial Officer)
Date: January 29, 1997
<PAGE>
AGREEMENT OF SALE AND PURCHASE
BETWEEN
527 MADISON HOLDINGS
as Seller
AND
CORNERSTONE PROPERTIES INC.
as Purchaser
PERTAINING TO
527 MADISON AVENUE, NEW YORK, NEW YORK
<PAGE>
PAGE
xli
i
TABLE OF CONTENTS
PAGE
I.
Sale and Purchase; Property
1.01 Sale and Purchase.............................................. 1
1.02 License of Excluded Property................................... 2
II.
Consideration
2.01 Purchase Price................................................. 3
2.02 Deposit........................................................ 3
III.
Inspection; Representations; Operating Covenants; Estoppels
3.01 Inspection..................................................... 3
3.02 Document Review................................................ 4
3.03 Inspection Obligations......................................... 5
3.04 Right of Termination........................................... 5
3.05 Property Conveyed "AS IS"...................................... 5
3.05 Seller's and Purchaser's Representations....................... 7
3.06 Interim Operating Covenants.................................... 11
3.07 Estoppel Certificates.......................................... 12
3.08 Contracts. .................................................... 12
3.09 Existing Mortgage Notes and Mortgages.......................... 12
3.10 Hokkaido Lease................................................. 13
IV.
Survey
4.01 Survey......................................................... 13
V.
Title
5.01 Title.......................................................... 13
VI.
Remedies
6.01 Seller's Remedies.............................................. 14
6.02 Purchaser's Remedies........................................... 15
6.03 Legal Fees..................................................... 15
VII.
Closing
7.01 Closing Date................................................... 15
7.02 Closing Matters................................................ 15
7.03 Closing Costs.................................................. 19
7.04 Brokerage Commissions.......................................... 20
7.05 Property Management Agreement.................................. 20
VIII.
Condemnation
8.01 Condemnation................................................... 20
IX.
Risk of Loss
9.01 Risk of Loss................................................... 21
9.02 Material Loss.................................................. 21
9.03 Nonmaterial Loss............................................... 22
9.04 Completion of Repairs.......................................... 22
9.05 Postponement of Closing........................................ 22
X.
Miscellaneous
10.01 Entire Agreement............................................... 23
10.02 Agreement Binding on Parties................................... 23
10.03 Effective Date................................................. 23
10.04 Notice......................................................... 23
10.05 Time of the Essence............................................ 24
10.06 Governing Law.................................................. 24
10.07 Section Headings............................................... 24
10.08 Business Days.................................................. 24
10.09 No Recordation................................................. 25
10.10 Multiple Counterparts.......................................... 25
10.11 Severability................................................... 25
10.12 Guaranty....................................................... 25
<PAGE>
EXHIBITS
Exhibit "A" - Legal Description
Exhibit "B" - List of Excluded Personalty
Exhibit "C" - Escrow Agreement
Exhibit "D" - Documents for Purchaser's Review
Exhibit "E" - Leasing Commissions
Exhibit "F" - Tenant Delinquencies
Exhibit "G" - Rent Roll
Exhibit "H" - Form of Tenant Estoppel
Exhibit "I" - Tax Reduction Proceedings
<PAGE>
AGREEMENT OF SALE AND PURCHASE
FOR
527 MADISON AVENUE, NEW YORK, NEW YORK
THIS AGREEMENT OF SALE AND PURCHASE ("Agreement") is made on this
22nd day of January, 1997 by and between 527 MADISON HOLDINGS, a New York
general partnership ("Seller"), and CORNERSTONE PROPERTIES INC., a Nevada
corporation ("Purchaser"), and is as follows:
WITNESSETH:
WHEREAS, Seller desires to sell and Purchaser desires to purchase
the property described in Section 1.01 below, on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
I.
Sale and Purchase; Property
1.01 Sale and Purchase. Seller agrees to sell and
convey unto Purchaser, and Purchaser agrees to purchase and accept from Seller,
for the price and subject to the terms, covenants, conditions and provisions
herein set forth, the following:
(a) All those certain plots, pieces or parcels of land (the "Land")
known as Block 1289, Lot 52 and located in the borough of Manhattan, New
York County, New York being more particularly described in Exhibit "A"
attached hereto and incorporated herein;
(b) All right, title and interest of Seller in and to all buildings
and all other structures, improvements and fixtures (collectively,
"Improvements") located in or on the Land. The Land and the Improvements
are sometimes referred to herein collectively as the "Real Property" and
includes, without limitation, any and all utility, plumbing, electrical,
heating, air-conditioning and ventilation lines, systems, and boilers, the
parking garage (the "Garage") and an office building commonly known as 527
Madison Avenue, New York, New York;
(c) All right, title and interest, of Seller, if any, and, except as
expressly provided in this Agreement, without any warranty of Seller, in
and to any land lying in the bed of any street, road or access way, opened
or proposed, in front of, at a side of or adjoining the Land to the
centerline thereof ("Property Rights");
(d) All right, title and interest of Seller, reversionary or
otherwise, in and to all easements in or upon the Land and all other
rights and appurtenances belonging or in anywise pertaining thereto, if
any ("Appurtenances");
(e) All furniture, carpeting, draperies, appliances, building
supplies, equipment, machinery, inventory tools, computers, books and
records and other items of personal property owned by Seller and presently
affixed or attached to, placed or situated upon the Real Property and used
in connection with the ownership, operation, management, leasing and
occupancy of the Real Property ("Personalty"), but specifically excluding
(i) any items of personal property owned by tenants ("Tenants") at the
Improvements and (ii) the personalty listed in Exhibit B (the "Excluded
Personalty");
(f) Seller's interest as landlord in all leases ("Leases") listed in
Exhibit D and all New Leases (as defined in Section 3.06) now or hereafter
affecting the Real Property, together with all security deposits
("Security Deposits") of Tenants held by Seller which are not and have not
been applied to amounts due under the Leases;
(g) Seller's interest in all Contracts listed in Exhibit G and
all New Contracts; and
(h) All right, title and interest of Seller, if any, in and to all
intangible and mixed property relating to the ownership or operation of
the Real Property or Personalty, in each case only to the extent
assignable, including, without limitation, licenses, permits, guaranties,
warranties, bonds, approvals, applications, plans, drawings,
specifications, surveys, maps, trade names, telephone numbers and similar
property but in each case, except as expressly provided in this Agreement,
without warranty ("Intangible Property"), but specifically excluding all
bank accounts and cash of Seller other than the Security Deposits.
The items described in (a) through (h) of this Section 1.01 are
hereinafter collectively called the "Property".
1.02 License of Excluded Property. Seller agrees that from and after
the Closing Date, Purchaser shall have a license to use the Excluded Property in
the Building for no charge; provided that (a) Purchaser shall maintain and
insure the Excluded Property in such manner and amounts as reasonably requested
by Seller and (b) either party may terminate the license at any time upon not
less than three months' prior notice delivered not earlier than March 1, 1998.
This Section 1.02 shall survive this Closing.
II.
Consideration
2.01 Purchase Price. The purchase price ("Purchase Price") to be
paid by Purchaser to Seller for the sale and conveyance of the Property shall be
Sixty-Seven Million and No/100 Dollars ($67,000,000.00), which shall be payable
to Seller on the day that the closing of the transaction contemplated hereby
occurs ("Closing") by Federal Reserve wire transfer of immediately available
funds to an account or accounts which shall be designated by Seller not less
than two (2) business days before the Closing Date (hereinafter defined in
Section 7.01), plus or minus prorations and adjustments as hereinafter provided.
2.02 Deposit. Upon execution and delivery of this Agreement by
Purchaser, Purchaser shall deposit into an escrow account with Battle Fowler,
Seller's counsel, Two Million Dollars ($2,000,000) pursuant to an escrow
agreement in the form of Exhibit C annexed hereto. The total down payment
deposit together with all interest earned thereon (the "Deposit") shall be paid
to Seller at the Closing and $2,000,000 thereof shall be credited against the
Purchase Price, unless Purchaser shall have elected to terminate this Agreement
pursuant to the provisions of Section 3.04 of this Agreement or the Closing
shall not occur for any reason other than a default by Purchaser, in which
cases, the entire Deposit shall be returned to Purchaser.
III.
Inspection; Representations; Operating Covenants; Estoppels
3.01 Inspection. Subject to the provisions of this Section 3.01 and
the rights of entry in Seller (and any limitations thereon) under applicable
Leases, Seller shall and hereby does permit Purchaser and its affiliates and
their respective directors, employees, investors, lenders, agents,
representatives, advisors, consultants and contractors (collectively, "Purchaser
Related Parties") the right to enter upon the Real Property at all reasonable
times during normal business hours to inspect the Property and conduct
non-invasive tests; provided that entry into any Tenant's space shall be done
after business hours and, if requested by Seller, accompanied by a
representative of Seller. Purchaser shall conduct such entry and inspections
diligently and in good faith during the period commencing on the date hereof and
ending on the day prior to the Closing Date. Purchaser shall notify Seller, in
writing, of its intention, or the intention of the Purchaser Related Parties, to
enter the Real Property at least twenty-four (24) hours prior to such intended
entry. If Purchaser or the Purchaser Related Parties intend to conduct any
physical testing or sampling of the Property, Purchaser shall describe such
testing and sampling in its notice and shall obtain Seller's prior written
consent thereto, which may be withheld in Seller's sole discretion. Purchaser
shall bear the cost of all inspections and tests. At Seller's option, Seller or
its representatives may be present for any inspection or test.
3.02 Document Review. (a) Seller agrees to permit Purchaser and
the Purchaser Related Parties, at either the office of Seller's property manager
or at the Real Property (at Seller's option), the right to inspect the items set
forth in Exhibit "D" attached hereto and made a part hereof or such other
non-proprietary or non-confidential documents reasonably requested by Purchaser
relating to the Property (collectively, "Documents"). Purchaser at its expense
shall have the right to make photocopies of the Documents.
(b) Purchaser acknowledges that any and all of the Documents may be
proprietary and confidential in nature and have been or will be delivered to
Purchaser or a Purchaser Related Party solely to assist Purchaser in making its
decision as to the purchase of the Property. Purchaser and any Purchaser Related
Party shall not disclose the contents of the Documents, or any of the
provisions, terms or conditions thereof, or any other information that Purchaser
or any Purchaser Related Party acquires as a result of Purchaser's due diligence
or otherwise to any party other than a Purchaser Related Party. Notwithstanding
the foregoing, Purchaser or any Purchaser Related Party may disclose any such
information if (i) it is legally compelled to make such disclosure or (ii) such
information is or becomes generally available to the public from a source other
than the Purchaser Related Parties. Purchaser further agrees that as to the
Purchaser Related Parties, the Documents shall be disclosed and exhibited only
to those Purchaser Related Parties who have been notified of the necessity to
preserve the confidentiality of such information as required herein. Purchaser
further acknowledges that the Documents and other information relating to the
leasing arrangements between Seller and the Tenants or prospective tenants are
proprietary and confidential in nature. Purchaser agrees not to divulge the
contents of such Documents and other information except in strict accordance
with the confidentiality standards set forth in this Section 3.02. In permitting
the Purchaser Related Parties to review the Documents or other information to
assist Purchaser, Seller has not waived any privilege or claim of
confidentiality with respect thereto, and no third party benefits or
relationships of any kind, either express or implied, have been offered,
intended or created by Seller and any such claims are expressly rejected by
Seller and waived by Purchaser and the Purchaser Related Parties, for whom, by
its execution of this Agreement, Purchaser is acting as an agent with regard to
such waiver.
(c) Seller shall reasonably cooperate with Purchaser so that
Purchaser shall have the opportunity after February 5, 1997 (but not prior
thereto) and prior to the Scheduled Closing Date to contact and meet with any
and all Tenants at the Property as part of Purchaser's investigation of the
Property; provided, that Purchaser shall provide not less than 24 hours notice
to Seller of its intention to meet with any Tenant and provided, further, that
Seller shall have the opportunity to have its representative present at any such
meeting.
3.03 Inspection Obligations. (a) In conducting any inspections,
investigations or tests of the Property and/or Documents, Purchaser and the
Purchaser Related Parties shall: (i) not unreasonably disturb the Tenants or
interfere with their use of the Property pursuant to their respective Leases;
(ii) not unreasonably interfere with the operation and maintenance of the Real
Property; (iii) not damage any part of the Property or any personal property
owned by any Tenant or any other person or entity; (iv) not injure or otherwise
cause bodily harm to Seller, the Seller Related Parties, any Tenant or any other
person or entity; (v) maintain appropriate comprehensive general liability
(occurrence) insurance covering any accident arising in connection with the
presence of Purchaser and the Purchaser Related Parties on the Real Property;
(vi) not permit any liens to attach to the Real Property by reason of the
exercise of its rights hereunder; and (vii) fully restore the Real Property to
the condition in which the same was found before any such inspection or tests
were undertaken.
(b) Purchaser hereby agrees to indemnify, defend and hold Seller and
Seller's partners, affiliates, employees, agents and representatives
(collectively, "Seller Related Parties") harmless from and against any and all
liens, claims, causes of action, damages, liabilities, demands, suits,
obligations, losses, penalties, costs and expenses (including reasonable
attorneys' fees) arising out of Purchaser's conducting its inspections or tests
of the Property or out of any violation of the provisions of this Section 3.03.
Notwithstanding any provision of this Agreement to the contrary, neither the
Closing nor any termination hereof shall terminate Purchaser's obligations
pursuant to this Section 3.03.
3.04 Right of Termination. If, prior to February 13, 1997 (the
"Scheduled Closing Date"), Purchaser shall, for any reason, in Purchaser's sole
discretion, judgment and opinion, be dissatisfied with any aspect of the
Property or any item examined by Purchaser pursuant to Sections 3.01 and 3.02,
Purchaser shall be entitled to terminate this Agreement by giving written notice
to Seller on or before the Scheduled Closing Date, whereupon this Agreement
shall terminate, and upon such termination, neither Seller nor Purchaser shall
have any further obligation or liability to the other hereunder, except for the
provisions of this Agreement which are expressly provided to survive termination
of this Agreement (the "Termination Surviving Obligations"). If Purchaser shall
fail to timely notify Seller in writing of its option to terminate this
Agreement on or before the Scheduled Closing Date, the termination right
described in this Section 3.04 shall be null and void.
3.05 Property Conveyed "AS IS". (a) Disclaimer of
Representations and Warranties by Seller. Notwithstanding anything contained
herein to the contrary, except for the representations set forth in Sections
3.05(a) and 7.04, it is understood and agreed that Seller and the Seller Related
Parties have not made and are not now making, and they specifically disclaim,
any warranties, representations or guaranties of any kind or character, express
or implied, oral or written, past, present or future, with respect to the
Property, including, but not limited to, warranties, representations or
guaranties as to (i) matters of title, (ii) environmental matters relating to
the Property or any portion thereof, (iii) geological conditions, including,
without limitation, subsidence or subsurface conditions, (iv) zoning to which
the Property or any portion thereof may be subject, (v) the availability of any
utilities to the Property or any portion thereof including, without limitation,
water, sewage, gas and electric, (vi) usages of adjoining Property, (vii) access
to the Property or any portion thereof, (viii) the value, compliance with the
plans and specifications, size, location, age, use, design, quality,
description, suitability, structural integrity, operation or physical or
financial condition of the Property or any portion thereof, (ix) any income,
expenses, charges, liens, encumbrances, rights or claims on or affecting or
pertaining to the Property or any part thereof, (x) the presence of Hazardous
Substances (hereinafter defined) in or on, under or in the vicinity of the
Property, (xi) the condition or use of the Property or compliance of the
Property with any or all past, present or future federal, state or local
ordinances, rules, regulations or laws, building, fire or zoning ordinances,
codes or other similar laws, or (xii) the merchantability of the Property or
fitness of the Property for any particular purpose (Purchaser affirming that
Purchaser has not relied on Seller's skill or judgment to select or furnish the
Property for any particular purpose, and that Seller makes no warranty that the
Property is fit for any particular purpose).
(b) Sale "As Is". Except for the limited representations set forth
in Sections 3.05(a) and 7.04, Purchaser has not relied upon and will not rely
upon, either directly or indirectly, any representation or warranty of Seller or
the Seller Related Parties and acknowledges that no such representations or
warranties have been made. Purchaser represents that it is a knowledgeable,
experienced and sophisticated purchaser of real estate and that it is relying
solely on its own expertise and that of the Purchaser Related Parties in
purchasing the Property. Purchaser will conduct such inspections and
investigations of the Property as Purchaser deems necessary, including, but not
limited to, the physical and environmental conditions thereof, and shall rely
upon same. Upon Closing, except for the limited representations set forth in
Sections 3.05(a) and 7.04, Purchaser shall assume the risk that adverse matters
including, but not limited to, adverse physical and environmental conditions,
may not have been revealed by Purchaser's inspections and investigations.
Purchaser acknowledges and agrees that except for the limited representations
set forth in Sections 3.05(a) and 7.04, upon Closing, Seller shall sell and
convey to Purchaser and Purchaser shall accept the Property "AS IS, WHERE IS,"
with all faults. The terms and conditions of this Section 3.05 shall expressly
survive the Closing and not merge with the provisions of any closing documents.
(c) "Hazardous Substances" Defined. For purposes hereof, "Hazardous
Substances" means any hazardous, toxic or dangerous waste, substance or
material, pollutant or contaminant, as defined for purposes of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Sections 9601 et seq.), as amended ("CERCLA"), or the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.), as amended ("RCRA"), or any
other federal, state or local law, ordinance, rule or regulation applicable to
the Property, or any substance which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous, or any
substance which contains gasoline, diesel fuel or other petroleum, hydrocarbons,
polychlorinated biphenyls (pcbs), radon gas, urea formaldehyde, asbestos, lead
or electromagnetic waves.
3.05 Seller's and Purchaser's Representations. (a) The
representations set forth in this Section 3.05(a) and in Section 7.04 constitute
the only representations of Seller to Purchaser in connection with the sale of
the Property. Seller represents to Purchaser as of the date hereof as follows:
(i) Seller is a New York general partnership, duly formed and
validly existing and in good standing under the laws of the State of New
York.
(ii) Seller has the authorization and power to execute and deliver
this Agreement and to consummate the Closing contemplated hereby. Any
required consents from third parties to Seller's execution and delivery of
this Agreement have been obtained, except for the consent of General
Electric Capital Corporation to the release of the Mortgage (as defined in
Section 3.09) from the Property which Seller agrees to use reasonable
efforts to obtain, and if Seller is unable to obtain such consent prior to
the Closing Date, Purchaser or Seller may terminate this Agreement and
Seller shall reimburse Purchaser for its reasonable, actual third-party
out-of-pocket costs and expenses in conducting its due diligence but in no
event to exceed $250,000 in the aggregate. Except as provided in the
foregoing sentence, the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein by Seller will not
violate Seller's documents of formation or any other agreement, judicial
decree, statute or regulation to which Seller is a party or by which it is
bound.
(iii) Seller is neither insolvent nor has it made an assignment for
the benefit of its creditors, nor has it filed or had filed against it,
any petition for bankruptcy or reorganization.
(iv) The documents listed in Exhibit D include all Leases of the
Property which are in effect on the date hereof. Seller has delivered to
Purchaser copies of all such Leases and such copies are true, accurate and
complete. The documents listed in Exhibit D include all Contracts relating
to the Property in effect on the date hereof. Seller has delivered to
Purchaser copies of all such Contracts and such copies are true, accurate
and complete.
(v) On the Closing Date, there will be no Contracts affecting the
Property except (A) the Contracts listed in Exhibit D and any New
Contracts, (B) the Leases listed in Exhibit D and any New Leases, and (C)
any agreements delivered by Seller to Purchaser prior to the Closing Date
which have been approved in writing by Purchaser.
(vi) Seller has not received any written notice or citation (a
"Notice"):
(A) From any federal, state, county or municipal authority
alleging a violation of any fire, health, safety, building
pollution, environmental (including, without limitation, relating to
any Hazardous Substances), zoning law, regulation, permit, order or
directive in respect of the Property or any part thereof, which
relates to a violation which would cost more than $5,000 to correct
which has not been corrected;
(B) From any insurance company of any material defects or
inadequacies in the Property or any part thereof, which would
materially, adversely affect the insurability of the same or of any
termination or threatened termination of any policy of insurance; or
(C) From any governmental authority with respect to a proposed
eminent domain taking of all or any portion of the Property.
If any such Notice is received by Seller prior to Closing,
Seller shall notify Purchaser promptly thereof and provide a copy of such
Notice to Purchaser.
(vii) Seller has not received any notice of the pendency of any
litigation or judicial or administrative proceeding affecting Seller or
the Property which is not covered by insurance and which claims damages in
excess of $100,000. Seller has not with respect to the Property suffered
or confessed any judgment in or before any such court, commission, agency
or other administrative authority against which remains unsatisfied.
(viii) Seller does not directly employ any employees who
work at the Property.
(ix) Except as set forth in Exhibit "E" hereto, Seller has not
granted to any person the right to receive any leasing commission in
connection with the extension or renewal of any Lease or in connection
with the exercise by any Tenant of any expansion or extension option
contained in any Lease. Neither Seller nor the Property is subject to any
"protection list" or similar obligation with respect to the future leasing
of the property. Except as set forth in Exhibit "F" hereto, no Tenant is
delinquent in payment of any rent owed under its Lease for more than
thirty (30) days.
(x) Seller is not a party to any construction contracts for material
tenant improvements to the Property or any portion thereof other than
Contracts included in Exhibit D annexed hereto, and not more than $500,000
in the aggregate remains unpaid under said Contracts.
(xi) No portion of the Property is subject to any real property or
other tax abatement, reduction or phase-in program or agreement. There are
no tax certiorari or tax reduction proceedings currently pending in
respect of the Property except as set forth in Exhibit I.
(xii) Attached hereto as Exhibit G is a rent roll of the Property
which is true and complete in all material respects as of the date
thereof. Except as set forth on Exhibit G hereto, (a) no rent has been
paid by any Tenant more than thirty (30) days in advance, (b) to the best
of Seller's knowledge, neither any Tenant nor Seller is in default in the
performance of any material covenant, agreement or condition contained in
any of the Leases, (c) Seller has not received written notice from any
Tenant regarding pending or threatened offsets against rent or for any
other monetary or material claim against Seller which has not been cured
and no future rent concessions have been created which are not disclosed
in the Leases; (d) to the best of Seller's knowledge, except as provided
in this Agreement with respect to any New Lease, any and all construction
or improvements that were required to be performed by Seller under any
Lease prior to the date hereof have been fully completed and accepted by
each Tenant and all leasing commissions payable on account of any of the
Leases have been fully paid, except those which may become due in
connection with the exercise by any Tenant of any expansion or extension
option contained in any of the Leases.
(xiii) To the best of Seller's knowledge, all governmental approvals
required for the current use of the Property have been issued and are
currently in effect without violation, the Property is not under
investigation for failure to comply in any material respect with any
statutes, laws, ordinances, rules, regulations, orders or directives of
any and all governmental agencies pertaining to the use or occupancy of
the Property, and the Property is in material compliance with, and not in
violation of, any applicable statutes, laws, ordinances, rules,
regulations, orders or directives; provided however, that Seller makes no
representation herein with respect to compliance with the Americans with
Disabilities Act or any rule, regulation or interpretation promulgated
thereunder.
(xiv) To the best of Seller's knowledge, there are no Hazardous
Substances at the Property except for ordinary cleaning, landscaping,
maintenance, and office supplies which are used and stored in compliance
with applicable laws, and Seller has not previously used, manufactured,
generated, treated, stored, disposed of, or released any Hazardous
Substances on or under the Property or transported any Hazardous
Substances over the Property.
(xv) There has been no sale by Seller of any of the development
rights or air rights relating to or forming a part of the Property.
(b) Purchaser represents and warrants that:
(i) Purchaser is a corporation, duly formed, validly existing and in
good standing under the laws of the State of Nevada.
(ii) Purchaser has the authorization and power to execute and
deliver this Agreement and will on the Closing Date have the authorization
and power to consummate the Closing. Any required consents from third
parties to Purchaser's execution and delivery of this Agreement have been
obtained. The execution and delivery of this Agreement does not, and,
assuming due authorization of Purchaser, the consummation of the
transactions contemplated herein by Purchaser will not, violate
Purchaser's documents of formation or any other agreement, judicial
decree, statute or regulation to which Purchaser is a party or by which it
is bound.
(iii) Purchaser is neither insolvent nor has it made an assignment
for the benefit of its creditors, nor has it filed or had filed against
it, any petition for bankruptcy or reorganization.
(c) Conditions for Bringing a Claim for Breach of a Representation
or Warranty. Where representations and warranties are made in this Agreement to
the "best of Seller's knowledge", such phrase shall mean and be limited to the
actual knowledge of Jeffrey Sussman, Rolland Baribeau or David Shepherd. In no
event will either party be entitled to recover damages for any breach of the
above representations unless such party files a lawsuit in a court of competent
jurisdiction on or prior to the date which is twelve (12) months following the
Closing Date. Neither party may assert a claim against the other party for
breach of one or more representations or warranties unless the aggregate loss
sustained by the claiming party as a result of such breach or breaches equals or
exceeds $50,000. Purchaser shall not have the right to make any claim against
Seller for breach of any representation or warranty by Seller if Purchaser had
actual knowledge of the facts and circumstances giving rise to such breach prior
to the Closing. As used herein with respect to Purchaser, the term "actual
knowledge" shall mean the actual, and not constructive, knowledge of either John
Moody or Francis Shields.
(d) Changed Conditions. It shall be a condition precedent to
Purchaser's obligations hereunder that the representations set forth in Section
3.06(a) be remade as of the Closing Date. If Seller shall become aware of any
fact or circumstance that makes any representation of Seller untrue in any
material and adverse respect, it shall disclose the same to Purchaser and, if
such changed condition is material, Purchaser may, as its sole and exclusive
remedy therefor, elect to terminate this Agreement and receive a return of the
Deposit on or before the earlier to occur of five (5) days after Seller's notice
thereof, or the Closing Date, or accept the Property and close without
adjustment to the Purchase Price, in which event the applicable representation
shall be deemed modified by such changed condition.
3.06 Interim Operating Covenants. (a) Seller covenants to
Purchaser that, from the date hereof until Closing, Seller shall:
(i) Operate the Property in substantially the manner that it is
presently being operated in the ordinary course of Seller's business
(which shall not include any major capital improvements or repairs and
shall be subject to casualty and the occurrence of force majeure events).
(ii) Maintain its existing insurance for the Property and, subject
to Articles VIII and IX hereof, keep and maintain the Property in its
current condition, reasonable wear and tear excepted.
(iii) Not enter into or record any easement, lien, covenant, or any
license, permit agreement or other instrument affecting the Property or
any portion thereof that would materially adversely affect the value of
the Property without Purchaser's approval, not to be unreasonably
withheld, and Seller shall provide Purchaser with true and complete copies
thereof within two (2) business days after execution.
(iv) Not remove any of the Personalty owned by Seller from the
Property unless such removal is due to obsolescence or for the purpose of
repair.
(v) Seller shall deliver notice to Purchaser within two (2) business
days after execution thereof, but in no event later than February 10,
1997, if Seller shall enter into (A) any new lease or any amendment,
modification, assignment or sublease to or of any Lease (any of the
foregoing of which notice has been given to Purchaser in the manner herein
required, a "New Lease") or any termination of any Lease or (B) any
material extension, modification or amendment of any Contract or any
material new service, maintenance or operating agreement (any of the
foregoing of which notice has been given to Purchaser in the manner herein
required, a "New Contract"). In the event that Seller enters into a New
Contract or New Lease and Purchaser delivers notice to Seller within two
(2) business days after receipt of Seller's notice of such New Contract or
New Lease that Purchaser (i) objects to the terms of such New Contract or
New Lease (and Purchaser shall be entitled to make only reasonable
objections) and (ii) desires to terminate this Agreement pursuant to
Section 3.04 as a result thereof, unless Seller shall terminate such New
Lease or New Contract within five (5) business days thereafter, Seller
shall be obligated to reimburse Purchaser for its reasonable actual third
party, out-of-pocket costs and expenses incurred in conducting its due
diligence to the date of termination of this Agreement, but in no event to
exceed $250,000 in the aggregate. Seller is expressly authorized, without
Purchaser's consent, to enforce all Lease obligations, including
collection of rents, and is authorized, without Purchaser's consent, to
compromise and settle amounts owing to Seller for periods prior to Closing
and to accept the surrender or termination of a lease at the scheduled
expiration of its term.
(b) It shall be a condition precedent to Purchaser's obligations
hereunder that Seller not have breached in any material respect any of the
covenants set forth in Section 3.06(a).
3.07 Estoppel Certificates. Purchaser's obligation to purchase
the Property shall be subject to the receipt, by the Closing Date, of estoppel
certificates in the form of Exhibit H annexed hereto and indicating no
materially adverse circumstances (such as landlord defaults or Tenant options to
purchase the Property) from (A) Sumitomo Trust & Banking, W.P. Stewart Co.,
Inc., Hill Samuel New York, Inc., Saudi Petroleum International and the Gap,
Inc., (B) any combination of Tenants whose Leases, together with the Leases in
Clause (A), cover seventy-five percent (75%) of the net rentable area of the
Property (exclusive of the Garage) and (C) the operator of the Garage (the
"Tenant Estoppels").
3.08 Contracts. Prior to the date of this Agreement, Seller
delivered to Purchaser copies of each contract and agreement relating to the
Property (including, without limitation, all service and maintenance contracts,
brokerage and listing agreements, construction contracts and management
agreements) (other than Leases, each, a "Contract") listed in Exhibit "D". On
the Closing Date, Purchaser shall assume all Contracts on Exhibit D and all New
Contracts; provided that, except as provided in Section 7.05, all management and
leasing agreements for the Property shall be terminated by the Closing Date.
Seller shall either terminate prior to the Closing any Contract not included in
Exhibit D or which is not a New Contract, or otherwise be solely responsible for
the payment of any sums due or that become due under such Contracts.
3.09 Existing Mortgage Notes and Mortgages. Seller shall
cooperate with Buyer in causing the assignment on the date of Closing to
Purchaser or any lender designated by Purchaser (the "Assignee"), in
consideration of $10.00 to be paid by Purchaser, of the $35,000,000 existing
note and mortgage (the "Mortgage") encumbering the Property held by Property
Equity Corp., a corporation the stock of which is owned by affiliates of Seller
and General Electric Capital Corporation ("Assignor"), without any cost or
expense to Seller or any residual risk of liability to Seller. Seller shall be
entitled to receive from Purchaser twenty five percent (25%) of the amount, if
any, of mortgage recording tax savings resulting from such assignment of the
Mortgage if, as and when such savings are realized; provided that (i) savings
shall be determined net of Purchaser's out-of-pocket costs and expenses
(including reasonable legal fees) incurred in obtaining such savings, not to
exceed $75,000 in the aggregate, (ii) such savings may only be realized, if at
all, upon the first assignment, conversion or amendment of the Mortgage
following the assignment of the Mortgage to Assignee on the Closing Date, to a
lender which is not affiliated with Purchaser and (iii) if at any time after
payment to Seller of its share of any savings, Purchaser is required or elects
to pay, and actually pays, the mortgage recording tax which may be payable in
respect of the Mortgage, then Seller shall promptly refund to Purchaser the
entire payment made by Purchaser to Seller hereunder. Purchaser shall keep
Seller generally apprised of its undertakings under the foregoing provisions.
The provisions of this Section 3.09 shall survive the Closing for a period of
ten years.
3.10 Hokkaido Lease. Seller represents to Purchaser that the
certain Lease (the "Hokkaido Lease"), dated November 25, 1987 between Seller and
The Hokkaido Bank ("Hokkaido") has been terminated prior to the date hereof and
that neither party thereto has any surviving rights or obligations with respect
thereto. Notwithstanding the foregoing, from and after the Closing Date, Seller
shall pay to Purchaser all base rent and tax and operating expense escalation
payments which would have been due by Hokkaido to Purchaser under the Hokkaido
Lease had the Hokkaido Lease not been terminated prior to its stated expiration
on November 24, 1997, as and when such payments would have been due under the
Hokkaido Lease. In addition to the foregoing, the pro-ration of rents to be made
pursuant to Section 7.01(d) shall be made as if the base rent on tax and
operating expense escalation payment due under the Hokkaido Lease for the month
in which the Closing occurs had been paid to Seller. In the event that Purchaser
executes a lease with a tenant for all or any portion of the premises demised
under the Hokkaido Lease and such tenant commences paying rent for such space
prior to November 24, 1997, then Seller shall receive a credit against its
obligation to make payments to Purchaser under this Section 3.10 on a
dollar-for-dollar basis for the amount of base rental and operating expense
escalation payments, collected by Purchaser from the new tenant for the period
up to November 24, 1997. The obligations of Seller under this Section 3.10 shall
survive the Closing.
3.11 Audits. Seller has informed Purchaser that Seller has retained
Ernst & Young LLP (the "Accountant") to audit Seller's 1996 financial statements
(the "First Audit"). Seller shall use reasonable efforts to ensure that the
Accountant completes such audit in a timely manner. Purchaser has informed
Seller that Purchaser intends to engage the Accountant to audit for Purchaser's
benefit, in connection with the preparation of Purchaser's regulatory filings,
certain financial statements of the Property for 1996 prepared by Purchaser (the
"Second Audit"). Upon request of Purchaser, in connection with the Second Audit,
Seller agrees to execute and deliver a letter to the Accountant which (i)
permits the Accountant to use information and data obtained from Seller in
connection with the First Audit for the purpose of conducting the Second Audit
and (ii) contains Seller's representations as to the accuracy and completeness
of all such information and data and such other representations as are
customarily delivered to accountants in connection with the auditing of
financial statements. Seller shall otherwise cooperate with Purchaser and the
Accountant (or any other reputable accountant retained by Purchaser) as may be
reasonably requested by Purchaser in connection with the Second Audit.
IV.
Survey
4.01 Survey. If Purchaser desires to obtain an update,
revision or recertification of any existing survey of the Property or to obtain
a new survey thereof it may do so at its sole cost and expense, but in no event
will a revised or new survey be deemed to be or constitute a condition precedent
to Purchaser's Performance hereunder.
V.
Title
5.01 Title. (a) Purchaser shall obtain such information
concerning title to the Property and a title insurance policy commitment as it
shall desire at its sole cost and expense. Purchaser shall provide to Seller a
copy of any title commitment which it obtains. Prior to 5:00 p.m. (New York City
time) on the date seven (7) business days prior to the Closing Date, Purchaser
shall advise Seller of any good faith objection to any matter affecting title to
the Property or shown on any survey of the Property ("Title Objection"). Seller
may, but shall not be obligated to, cure such Title Objection which has been
timely made; provided, however, that Seller shall be obligated to obtain a
release of any mortgage which encumbers the Property and any lien created by
Seller (each, a "Required Cure Matter"). Within five (5) business days after
receipt of any Title Objection that it is not obligated to cure, Seller shall
notify Purchaser either that Seller shall attempt to cure such Title Objection
or that Seller is unable or unwilling to do so. If Seller elects not to cure
such Title Objection, Purchaser shall be deemed to have waived all Title
Objections unless on or prior to the Closing Date, Purchaser delivers to Seller
written notice terminating this Agreement. If Seller shall have notified
Purchaser within said five (5) business day period that it shall attempt to cure
such Title Objection, then Seller shall have an additional fifteen (15) days in
which to complete such cure and the Closing Date shall be extended accordingly.
If Seller is unable to complete such cure during such additional fifteen (15)
day period, then at the end of such period Purchaser shall either waive such
Title Objection and complete the Closing within five (5) business days
thereafter or Purchaser shall notify Seller of the termination of this
Agreement. Seller shall not be liable to Purchaser in the event Seller attempts
but is unable to cure such Title Objection. (Those matters which Purchaser is
required to take title subject to in accordance with this Agreement, "Permitted
Exceptions").
(b) It shall be a condition to Purchaser's obligation to purchase
the Property and consummate the Closing that the Deed convey to Purchaser good
and marketable fee simple title to the Property, subject only to Permitted
Exceptions and the rights of Tenants, which is insurable at standard rates by a
reputable title insurance company licensed to do business in New York.
(c) In the event of termination of this Agreement pursuant to
Section 5.01(a), the Deposit shall be returned to Purchaser, and thereafter
neither party shall have any further rights or obligations hereunder, except for
the Termination Surviving Obligations.
VI.
Remedies
6.01 Seller's Remedies. In the event Purchaser fails to perform
its obligations pursuant to this Agreement for any reason except the failure by
Seller to perform hereunder or the failure of any condition precedent to
Purchaser's obligations hereunder or Purchaser fails to terminate this Agreement
in accordance with Section 3.01, Seller shall be entitled as its sole and
exclusive remedy, to terminate this Agreement and recover the Deposit as
liquidated damages and not as a penalty, in full satisfaction of all claims
against Purchaser hereunder (excluding any claim for breach of a Termination
Surviving Obligation). Seller and Purchaser agree that Seller's damages
resulting from Purchaser's default are difficult, if not impossible, to
determine and the Deposit is a fair estimate of those damages which has been
agreed to in an effort to cause the amount of said damages to be certain.
6.02 Purchaser's Remedies. In the event (A)Seller fails to
perform its obligations pursuant to this Agreement for any reason except the
failure by Purchaser to perform hereunder, or (B) of a failure of any condition
precedent to Purchaser's obligation to consummate the Closing, Purchaser shall
elect, as its sole and exclusive remedy, either to (i) terminate this Agreement
by giving Seller timely written notice of such election prior to or at Closing
and recover the Deposit or (ii) enforce specific performance of this Agreement.
In the event that Seller willfully and in bad faith defaults in the performance
of its obligations under this Agreement, and Purchaser is otherwise ready,
willing and able to consummate the Closing, Purchaser shall, as a sole addition
to its rights under clauses (i) and (ii) of the first sentence of this Section
6.02, be entitled to recover from Seller its reasonable actual third-party
out-of-pocket costs and expenses; provided, however, in no event shall Purchaser
be entitled to recover from Seller any amount in excess of $250,000.
6.03 Legal Fees. In the event either party hereto employs attorneys
to enforce any provisions hereof or in the event any litigation arises out of
this Agreement between the parties hereto, the non-prevailing party shall pay
all reasonable legal fees and costs of the prevailing party incurred in
connection therewith.
VII.
Closing
7.01 Closing Date. The Closing shall be held in the offices of
counsel to Seller in New York City (or such other location as may be mutually
agreed upon by Seller and Purchaser) at 10:00 A.M. on the Scheduled Closing Date
(the date on which the Closing occurs being the "Closing Date"), time being of
the essence.
7.02 Closing Matters. (a) At Closing, Seller shall:
(i) Deliver originals or certified copies of the Leases and all
Contracts affecting the Real Property either at the place of Closing or by
making same available at the Property;
(ii) Deliver possession of the Property, subject only to the
Permitted Exceptions and the rights of Tenants;
(iii) To the extent available and in Seller's possession, deliver
copies of all permits issued by appropriate governmental authorities and
utility companies relating to the Property and other items of Intangible
Property, any plans and specifications, guaranties, warranties, manuals,
keys and similar items;
(iv) Execute, acknowledge and deliver a quit claim deed ("Deed")
of the Real Property;
(v) Execute, acknowledge and deliver a bill of sale ("Bill of Sale")
conveying without representation or warranty the Personalty and an
instrument of assignment ("Assignment") assigning without representation
or warranty, except as expressly provided herein, Seller's interest in the
Leases included in Exhibit D, any New Leases, the Intangible Property, the
Security Deposits, the Contracts included in Exhibit D and any New
Contracts and providing that Purchaser assumes all obligations under such
Leases and Contracts accruing after the Closing and that each party shall
indemnify the other for losses arising out of claims based on
circumstances prevailing during their respective periods of ownership of
the Property;
(vi) Deliver evidence reasonably satisfactory to Purchaser's
title company of its authority to execute the Deed;
(vii) Deliver a non-foreign entity certification;
(viii) Deliver a notice letter to each Tenant acknowledging that
Seller has conveyed its interest in the Property and Leases to Purchaser;
(ix) Deliver evidence of the termination of the existing
property management agreement and leasing agreement for the Property
together with any prospect list prepared by the leasing agent in
connection with such termination;
(x) Deliver originals of all Estoppel Certificates received by
Seller which were not previously furnished to Purchaser;
(xi) Deliver transfer tax affidavits, resolutions of Seller's board
of trustees authorizing the sale of the Property in accordance with this
Agreement and designating those persons authorized to execute and deliver
all necessary documents at Closing and an affidavit in favor of such title
company in form and substance customarily delivered in connection with
commercial transactions in New York City to omit from any title insurance
policy issued to Purchaser or Purchaser's mortgagee exceptions for (x)
parties in possession (other than with respect to Tenants under the Leases
or New Leases), (y) mechanic's liens created by or through Seller and (z)
and the so-called "recordation gap";
(xii) Deliver all Security Deposits including any interest earned
thereon to the extent required to be returned to any Tenant under any
Lease or New Lease. If any Security Deposit is in the form of a letter of
credit, Seller shall use reasonable efforts to obtain and deliver at the
Closing an amendment thereto or a replacement thereof naming Purchaser as
beneficiary. If any such letter of credit has not been so amended or
replaced as of the Closing, at Closing Seller shall enter into an agency
agreement with Purchaser reasonably acceptable to both parties pursuant to
which Seller shall acknowledge that any such letter of credit is in the
name of Seller as agent for Purchaser, and that Seller will, as agent for
Purchaser and at Purchaser's expense, present and draw upon such letter of
credit upon demand by Purchaser. The obligations of Seller with respect to
such letter of credit Security Deposit shall survive the Closing;
(xiii) Execute and deliver a management agreement pursuant to
Section 7.05;
(xiv) Execute and deliver a current rent roll for the Property,
certified as true, correct and complete by Seller; and
(xv) Execute and deliver the New York State Real Estate Transfer
Tax and New York City Real Property Transfer Tax forms.
(b) At Closing, Purchaser shall:
(i) Deliver the Purchase Price (less $2,000,000 and any
adjustments provided herein) by wire transfer to Seller on the Closing
Date;
(ii) Execute and deliver a management agreement pursuant to
Section 7.05;
(iii) Execute and deliver the New York State Real Estate Transfer
Tax and New York City Real Property Transfer Tax forms;
(iv) Execute and deliver such other documents as may be reasonably
required by Seller or the title company including, but not limited to, a
certified copy of a resolution of the board of directors, general partners
or managers of Purchaser authorizing Purchaser to consummate the purchase
of the Property in accordance with this Agreement and designating those
persons authorized to execute and deliver all necessary documents at
Closing;
(v) Execute and deliver the Bill of Sale and the Assignment;
(vi) Execute and deliver the notice letters to each Tenant
acknowledging that Purchaser has received and is responsible for the
Security Deposits; and
(c) At Closing, Purchaser and Seller shall execute and deliver a
Closing Statement setting forth the Purchase Price and all prorations,
adjustments and credits thereto, and, if necessary, a post-closing agreement
with respect to any adjustments based on estimates that are to be re-adjusted
after Closing.
(d) At Closing, the following items shall be prorated as of the
Closing Date with all items of income and expense for the Property being borne
by Purchaser for the Closing Date: rents (including base rent, operating expense
and tax escalations and other additional rent); prepaid and accrued expenses
(including, without limitation, utility charges, water and sewer charges, fees
for licenses and permits, and the cost of fuel) and obligations under Contracts
listed in Exhibit D and any New Contracts; and real and personal ad valorem and
other taxes and assessments against the Property ("Ad Valorem Taxes"); provided
that:
(i) If the Ad Valorem Taxes for the 1996-1997 tax year are not known
or cannot be reasonably estimated, they shall be adjusted based on an
estimate obtained using the then current assessed value of the Property as
of the Closing and the tax rate and multiplier reflected by the Ad Valorem
Taxes due and payable in the 1995-1996 tax year. After the Ad Valorem
Taxes for the year of Closing are known, adjustments will be made between
the parties. The provisions of this Section 7.02(d)(i) shall survive
Closing.
(ii) From and after the Closing Date, Purchaser shall have the right
to control all tax certiorari and tax reduction proceedings relating to
the Property, whether for tax years prior to, on or after the Closing
Date. Any tax refund or credit obtained by Purchaser (net of any costs of
obtaining such refund) attributable to the period prior to the Closing
Date shall be paid, first, to any Tenants entitled thereto and the
balance, if any, to Seller (and with respect to any credit, the balance
shall be paid to Seller when Purchaser realizes the benefit of such
credit).
(iii) Purchaser shall take all steps necessary to effectuate the
transfer of all utilities to Purchaser's name as of the Closing Date, and
where necessary, Purchaser shall post deposits with the utility companies.
Seller shall ensure that all utility meters are read as of the Closing
Date. Seller shall pay all utility charges accruing up to the Closing Date
and all utilities thereafter shall be paid for by Purchaser. Seller shall
be entitled to recover any and all deposits held by any utility company as
of the date of Closing. To the extent Purchaser fails to provide, where
required, deposits to any such utility company(s) (or to provide any other
deposits with service providers) so as to prevent the timely release of
Seller's deposit(s) by the utility company(s) (or such other service
providers) on the Closing Date, the amount of such deposit(s) shall be
credited to Seller and the Purchase Price shall be adjusted accordingly.
In such event, the Seller's deposit(s) will be assigned to Purchaser who
shall have rights to have the deposit(s) released to it upon satisfaction
of the conditions imposed by the utility company (or such other service
providers).
(iv) Seller shall at Closing provide to Purchaser a credit for the
amount of any rents paid to Seller by the Tenants for the Closing Date and
periods subsequent to the Closing Date. No proration shall be made for
rents delinquent as of the Closing Date (the "Delinquent Rents"). All
Delinquent Rents collected on or after the Closing Date shall be
allocated, first, to the then current month, next to the month in which
the Closing occurs, next to any other delinquency after the Closing Date,
and finally to any other delinquency prior to the Closing Date. Any
Delinquent Rents collected by Purchaser after Closing shall be held in
trust and forthwith paid by Purchaser to Seller subject to and in
accordance with the foregoing allocation provision. Purchaser shall use
reasonable efforts to collect such Delinquent Rents, but in no event shall
Purchaser be obligated to commence legal proceedings for collection
against any Tenant. All rights to pursue collection of Delinquent Rents
shall vest solely in Purchaser. Purchaser shall settle all common area
maintenance charges, tax reimbursements and any percentage rents based on
sales for 1997 with the Tenants and (1) to the extent the Tenants are
required to pay additional amounts for 1997, Purchaser shall pay to Seller
its pro rata share thereof as and when received, or (2) to the extent the
landlord is required to refund or credit amounts for common area
maintenance charges or tax reimbursements to the Tenants, Seller shall pay
to Purchaser its pro rata share thereof promptly following a request
therefor (which request shall be supported by appropriate financial
information). Purchaser shall provide to Seller such financial information
as shall be reasonably requested by Seller to verify the items described
in clauses (1) and (2) above.
(v) The costs incurred or agreed to by Seller in securing Leases
executed after the date hereof, including, without limitation, brokerage
commissions (including in respect of renewals and expansions), work letter
or tenant installation costs or allowances, lease takeover costs,
reasonable attorneys' fees and disbursements, advertising expenses and any
other tenant inducement costs (collectively, "Leasing Costs") shall be the
responsibility of Purchaser. To the extent such Leasing Costs relate to
Leases executed prior to the date hereof, such costs shall remain the
obligation of Seller, except that Purchaser will be responsible for all
leasing commissions due with respect to renewals and extensions of
existing Leases first exercised after the date hereof.
(vi) The terms of Section 7.02(d) of this Agreement shall survive
the Closing.
7.03 Closing Costs. Purchaser shall pay any title examination
fees, costs of any title commitment and title policy (including any endorsements
or amendments thereto or any title company inspection fees or mortgage title
policy costs) and any other charge relating to title as well as any survey of
the Property. Seller shall pay all transfer taxes associated with filing the
Deed. Purchaser shall pay any recording fees, mortgage taxes or other similar
taxes, fees or assessments, and all costs relating to inspections or tests it
authorizes or conducts. Except as otherwise provided in Section 6.03 and 7.04,
each party shall be responsible for the payment of its own attorneys' fees
incurred in connection with the transaction that is the subject of this
Agreement.
7.04 Brokerage Commissions. Purchaser agrees to pay to Edward S.
Gordon Company ("Purchaser's Broker") a brokerage commission at Closing pursuant
to a separate agreement between Purchaser and Purchaser's Broker. Other than
Purchaser's Broker, Seller and Purchaser each represent and warrant to the other
that it has not dealt with any broker in connection with the transaction
contemplated hereby, and each agrees to and does hereby indemnify and hold the
other harmless against the payment of any commission to any person or entity
claiming by, through or under Seller or Purchaser, as applicable. This
indemnification shall extend to any and all claims, liabilities, costs and
expenses (including reasonable attorneys' fees and litigation costs) arising as
a result of such claims and shall survive the Closing. Purchaser shall indemnify
and hold Seller harmless against the payment of the commissions due to
Purchaser's Broker.
7.05 Property Management Agreement. At the Closing, Seller and
Purchaser will enter into a management agreement pursuant to which Seller or an
affiliate of Seller will be designated as the property manager and leasing agent
for the property. The management agreement will be cancellable by either party
with or without cause on 30 days prior notice; provided that Purchaser shall not
exercise its right to cancel the agreement without cause at any time prior to
120 days after the Closing Date. The management agreement shall be based on
Purchaser's standard form thereof (provided same is generally on market terms
and in customary form) and shall otherwise be on market terms and subject to
market conditions.
VIII.
Condemnation
8.01 Condemnation. If, prior to Closing, any governmental
authority or other entity having condemnation authority shall institute an
eminent domain proceeding with regard to all or any material portion of the Real
Property, Seller shall give prompt notice of same to Purchaser. If such
proceedings are not dismissed on or before ten (10) business days prior to
Closing, Purchaser shall be entitled, as its sole and exclusive remedy, to
terminate this Agreement upon written notice to Seller on or before the Closing
Date. In the event Purchaser does not terminate this Agreement pursuant to the
preceding sentence, Purchaser shall be conclusively deemed to have elected to
accept such condemnation and waives any right to terminate this Agreement as a
result thereof. Notwithstanding anything to the contrary herein, if any eminent
domain proceeding is instituted solely for the taking of any subsurface rights
for utility easements or for any right-of-way easement, and the surface may,
after such taking, be used in substantially the same manner as though such
rights had not been taken, Purchaser shall not be entitled to terminate this
Agreement as to any part of the Real Property, but any award resulting therefrom
shall be assigned to Purchaser at Closing and shall be the exclusive property of
Purchaser upon Closing. In the event Purchaser elects to terminate this
Agreement under this Section 8.01, the Deposit shall be returned to Purchaser in
accordance with Section 6.04 and neither party to this Agreement shall
thereafter have any further rights or obligations hereunder, except the
Termination Surviving Obligations. If Purchaser waives (or is deemed to have
waived) the right to terminate this Agreement as a result of such a
condemnation, despite such condemnation Seller and Purchaser shall close this
Agreement in accordance with the terms hereof with no reduction in the Purchase
Price, and Seller shall assign to Purchaser at Closing all of Seller's right,
title and interest in and to all proceeds resulting or to result from said
condemnation.
IX.
Risk of Loss
9.01 Risk of Loss. If, prior to the Closing, any of the Improvements
shall be damaged by a fire or other casualty ("Casualty"), Seller shall deliver
to Purchaser written notice ("Casualty Loss Notice") of such Casualty promptly
after it has made its termination determination provided for in Section 9.02
hereof.
9.02 Material Loss. For the purposes of this Section 9.02,
"Material Damage" shall mean damage to the Improvements of such nature that the
cost of restoring the same to their condition prior to the Casualty will, in
Seller's reasonable determination, equal or exceed $1,000,000. If, in Seller's
reasonable determination, which determination shall be made as promptly as is
practicable, the Improvements have sustained Material Damage by a Casualty,
Seller may, at its option, terminate this Agreement by delivering written notice
to Purchaser on or before Closing, and neither party hereto shall have any
further rights or obligations hereunder except the Termination Surviving
Obligations. In the event Seller does not so terminate this Agreement, Purchaser
may, as its sole option, within fifteen (15) days after delivery of the Casualty
Loss Notice, either (a) terminate this Agreement by delivering written notice of
same to Seller or (b) waive its right of termination and elect to proceed to
close this transaction in accordance with the terms hereof ("Waiver Option").
Failure of Purchaser to deliver written notice of termination within
said fifteen (15) day period shall be conclusively deemed to be an election by
Purchaser of the Waiver Option. In the event Seller or Purchaser elects to
terminate this Agreement under this Section 9.02, the Deposit shall be returned
to Purchaser in accordance with Section 6.04 and thereafter neither party to
this Agreement shall thereafter have any further rights or obligations
hereunder, except the Termination Surviving Obligations.
If Purchaser elects the Waiver Option, then, at its option, Seller
shall (a) repair the Improvements to substantially their condition prior to such
damage, if and to the extent Seller reasonably determines that repairs cannot be
delayed until Closing, subject to Section 9.04 or (b) deliver to Purchaser at
Closing an amount equal to the insurance deductible and assign to Purchaser all
of its rights in the resulting casualty insurance proceeds (but the amount of
such deductible plus insurance proceeds shall not exceed the lesser of (i) the
cost of repair or (ii) the Purchase Price). In the event Seller assigns
insurance proceeds, (A) Purchaser may notify all appropriate insurance companies
of its interest in the insurance proceeds, and (B) all casualty insurance
proceeds payable as a result of the loss (subject to the limitation herein
described) shall be assigned to Purchaser at Closing.
9.03 Nonmaterial Loss. In the event, in Seller's reasonable
determination, the cost of restoration following a Casualty is less than
$250,000.00, the rights and obligations of the parties shall not be affected
thereby and at its option Seller shall (a) repair the Improvements (subject to
Section 9.04) to substantially their condition prior to such damage, if and to
the extent Seller reasonably determines that repairs cannot be delayed until
Closing, or (b) deliver to Purchaser at Closing an amount equal to the insurance
deductible and assign to Purchaser all of its rights in the resulting casualty
insurance proceeds (but the amount of such deductible plus insurance proceeds
shall not exceed the lesser of (i) the cost of repair or (ii) the Purchase
Price). In the event Seller assigns insurance proceeds, (A) Purchaser may notify
all appropriate insurance companies of its interest in the insurance proceeds,
and (B) all casualty insurance proceeds payable as a result of the loss (subject
to the limitation herein described) shall be assigned to Purchaser at Closing.
9.04 Completion of Repairs. If and to the extent Seller
reasonably determines that repairs cannot be delayed until Closing, Seller shall
cause such repairs to be performed as promptly as practicable, in a good and
workman-like manner and in compliance with applicable laws. Subject to Section
3.04, if Seller is repairing the Property and the repairs cannot be completed by
the Closing Date, (i) this transaction shall close on the Closing Date and
Seller shall complete the repairs within a reasonable period after Closing, (ii)
Seller shall assign the applicable construction contracts and agreements to
Purchaser, pay to Purchaser an amount equal to the deductible and assign to
Purchaser all of its rights in the resulting casualty insurance proceeds (less
amounts expended to date) and cooperate with Purchaser in the transfer of the
repair process to Purchaser at Closing and (iii) Purchaser shall release Seller
from liability with respect to any repair or replacement activities undertaken
by Seller prior to Closing.
9.05 Postponement of Closing. If, as a result of a Casualty, any
determination, election or agreement required by the terms of this Article IX is
not made by the Closing Date, the Closing Date shall be extended until ten (10)
business days after said determination, election or agreement is made,
notwithstanding anything in this Agreement to the contrary.
X.
Miscellaneous
10.01 Entire Agreement. This Agreement contains the entire agreement
of the parties hereto. There are no other agreements, oral or written, and this
Agreement can be amended only by written agreement signed by the parties hereto,
and by reference, made a part hereof.
10.02 Agreement Binding on Parties. This Agreement, and the terms,
covenants, and conditions herein contained, shall inure to the benefit of and be
binding upon the successors and assigns of each of the parties hereto. Purchaser
may not assign its rights hereunder without the prior written consent of Seller
other than to a wholly-owned subsidiary of Purchaser; provided, however, such
assignment shall not relieve Purchaser of its obligations hereunder.
10.03 Effective Date. The effective date of this Agreement shall
be the date first above written.
10.04 Notice. Any notice, communication, request, reply or advice
(collectively, "Notice") provided for or permitted by this Agreement to be made
or accepted by either party must be in writing. Notice may, unless otherwise
provided herein, be given or served by (i) depositing the same in the United
States mail, postage paid, certified, and addressed to the party to be notified,
with return receipt requested, (ii) by depositing the same into custody of a
nationally recognized overnight delivery service such as Federal Express
Corporation, Airborne Express, UPS, Emery or Purolator or (iii) by telecopier
with a hard copy to follow. Notice deposited in the mail in the manner described
in (i) above shall be effective on the third (3rd) business day after such
deposit. Notice delivered pursuant to clause (ii) shall be effective on the
first business day after mailing. Notice given by telecopier shall be effective
when sent by the notifying party between the hours of 8:00 A.M. and 5:00 P.M.
(EST) of any business day with delivery made after such hours to be deemed
received the following business day. For the purposes of notice, the addresses
of the parties shall, until changed as hereinafter provided, be as follows:
Seller: 527 Madison Holdings
c/o Louis Dreyfus Property Group, Inc.
405 Lexington Avenue
57th Floor
New York, New York 10174
Attention: Jeffrey I. Sussman
Phone: (212) 490-2626
Facsimile: (212) 490-1060
with a copy to: BATTLE FOWLER
75 East 55th Street
New York, New York 10022
Attention: Martin L. Edelman, Esq.
Phone: (212) 856-7000
Facsimile: (212) 856-7813
Purchaser: CORNERSTONE PROPERTIES INC.
126 East 56th Street
New York, New York 10022
Attention: President
Phone: (212) 605-7100
Facsimile: (212) 605-7199
with copy to: Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Timothy G. Little, Esq.
Phone: (212) 848-7720
Facsimile: (212) 848-7179
The parties hereto shall have the right from time to time to change their
respective addresses, and each shall have the right to specify as its address
any other address within the United States of America by at least five (5) days'
written notice to the other party.
10.05 Time of the Essence. Time is of the essence in all things
pertaining to this Agreement, including all times and dates specified herein for
performance by either party.
10.06 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York.
10.07 Section Headings. The section headings contained in this
Agreement are for convenience only and shall in no way enlarge or limit the
scope or meaning of the various and several sections hereof.
10.08 Business Days. In the event that any date or any period
provided for in this Agreement shall end on a Saturday, Sunday or legal holiday,
the applicable date or period shall be extended to the first business day
following such Saturday, Sunday or legal holiday.
10.09 No Recordation. There shall be no recordation of either this
Agreement or any memorandum hereof, or any affidavit pertaining hereto and any
such recordation of this Agreement or memorandum hereof without the prior
written consent of Seller shall constitute a willful default hereunder by
Purchaser, whereupon this Agreement shall, at the option of Seller, terminate
and be of no further force and effect and Seller shall be entitled to pursue all
of its rights at law or in equity.
10.10 Multiple Counterparts. This Agreement may be executed in
multiple counterparts (each of which is to be deemed an original for all
purposes).
10.11 Severability. If any provision of this Agreement or
application to any party or circumstance shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent, the
remainder of this Agreement or the application of such provision to such person
or circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law.
10.12 Guaranty. From and after the Closing Date, The Louis Dreyfus
Property Group, Inc., a Delaware corporation, shall be liable for and hereby
guarantees the full and punctual payment of any monetary obligations of Seller
hereunder. The provisions of this Section 10.12 shall survive the Closing.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day and year first above written.
"SELLER"
527 MADISON HOLDINGS, a New York general
partnership
By: 527 Madison Avenue Holdings, Inc.,
general partner
By: /s/ Jeffrey I. Sussman
Name: Jeffrey I. Sussman
Title: President
"PURCHASER"
CORNERSTONE PROPERTIES INC., a Nevada
corporation
By: /s/ John S. Moody
Name: John S. Moody
Title: President & CEO
By: /s/ Rodney C. Dimock
Name: Rodney C. Dimock
Title: Executive Vice President
<PAGE>
The undersigned, The Louis Dreyfus Property Group, Inc., a Delaware
corporation, joins in the foregoing Agreement for the limited purpose of
agreeing to the provisions of Section 10.12 thereof, and agrees that, from and
after the Closing Date, Purchaser may assert claims against The Louis Dreyfus
Property Group, Inc. as though it were "Seller" under the Agreement.
THE LOUIS DREYFUS PROPERTY
GROUP, INC.
By: /s/ Jeffrey I. Sussman
Name: Jeffrey I. Sussman
Authorized Signatory
<PAGE>
EXHIBIT "A"
Legal Description
<PAGE>
EXHIBIT "B"
List of Excluded Personalty
<PAGE>
EXHIBIT "C"
Escrow Agreement
<PAGE>
EXHIBIT "D"
Documents for Purchaser's Review
<PAGE>
EXHIBIT "E"
Leasing Commissions
<PAGE>
EXHIBIT "F"
Tenant Delinquencies
<PAGE>
"Exhibit G"
Rent Roll
<PAGE>
"Exhibit H"
Form of Tenant Estoppel
To: Cornerstone Properties Inc. ("Buyer")
and
The Louis Dreyfus Property Group
("Landlord")
Re: 527 Madison Avenue (the "Property")
New York, New York
The undersigned _______________, a _______________ ("Tenant") is the
tenant under that certain lease dated _____________ (the "Lease"), which Lease
shall include the amendments, if any, referred to below, by and between Tenant
and Landlord, covering premises commonly known as Suite ____ in the Property
(the "Leased Premises"). Tenant hereby certifies to the following as of the date
hereof:
1. Tenant is the tenant under the Lease demising the Leased
Premises. The term of the Lease commenced on _______________ and will expire
on _______________.
2. Tenant certifies to Buyer that:
a. the Lease is in full force and effect and has not been cancelled,
modified, assigned, extended or amended except as follows:
;
b. Tenant is not aware of any renewal, extension or expansion option,
right of first offer or right of first refusal or other similar right to renew
or extend the term of the Lease or expand the property demised thereunder except
as may be expressly set forth herein or in the Lease;
c. the current monthly rent for the Leased Premises as of
_____________ is $_______ and has been paid through
---------------;
d. the total current additional/escalation rent for common area
maintenance, real estate taxes, insurance and the like (all
charges other than fixed rent) as of ______________ is $_______
and is payable monthly;
f. Tenant is not in arrears on any rent or other material charges
payable by Tenant under the Lease;
g. Tenant has accepted and is occupying the Leased Premises, and the
Leased Premises have been completed by Landlord as required by
the Lease without defect;
h. the Lease has been neither assigned nor any portion of the Leased
Premises subleased by Tenant except as follows:
;
i. (i) Landlord has performed all of Landlord's obligations under the
Lease to be performed by Landlord as of the date hereof, (ii)
Landlord is not in default under the Lease, and (iii) no event has
occurred which, with the giving of notice or the passage of time,
or both, could result in a default by Landlord;
j. Tenant has no existing defenses, offsets, deductions, liens, claims
or credits against the rentals under the Lease or against the
enforcement of the Lease by Landlord;
k. there exists no default on the part of Tenant nor state of facts
which, with the giving of notice or the passage of time, or both,
could result in a default by Tenant;
l. All contributions, if any, required to be paid by Landlord under the
Lease to date for improvements to the Leased Premises have been
paid;
m. Tenant has paid a security deposit in the amount of $____________,
on which no interest is payable;
n. Tenant has been given the right to utilize ______ parking spaces
in the parking garage on the Property and is paying for such
spaces at the monthly rate of $_________; and
o. Tenant has no option or right to purchase all or any part of the
Leased Premises or the Property.
3. This certification is made to induce Buyer to acquire the Property of
which the Leased Promises are part. Tenant further acknowledges and agrees that
the addressees hereof and their respective successors and assigns and the holder
of any mortgage at any time encumbering the Property from and after the date of
this Tenant Estoppel Certificate shall have the right to rely on this Tenant
Estoppel Certificate.
4. Tenant acknowledges that in connection with the sale of the Property by
Landlord to Buyer all of the interest of the Landlord in and to the Lease will
be duly assigned to Buyer and that, after notice from Landlord and Buyer, all
rent payments under the Lease shall be paid to Buyer or its authorized agent,
from and after the date of sale.
5. The undersigned is authorized to execute this Tenant Estoppel
Certificate on behalf of Tenant.
Dated this ____ day of ___________, 1996.
By:
Name:
Title:
<PAGE>
EXHIBIT I
Tax Reduction Proceedings
<PAGE>
