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): August 6, 1999
JMB INCOME PROPERTIES, LTD - XI
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(Exact name of registrant as specified in its charter)
Illinois 0-15966 36-3254043
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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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<PAGE>
RIVERSIDE SQUARE MALL
Hackensack, New Jersey
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On August 6, 1999 (the
"Closing Date") (pursuant to a purchase agreement dated July 22, 1999 and a
side letter dated August 5, 1999), JMB Income Properties, Ltd. - XI (the
"Partnership"), an Illinois limited partnership, sold the Riverside Square
Mall (the "Property") located in Hackensack, New Jersey. The purchaser,
Shopco Advisory Corp., a New York corporation, is not affiliated with the
Partnership or its General Partners and the sale price was determined by
arm's-length negotiations.
The sale price of the Property was $59,500,000 and net cash proceeds
received from the sale, net of closing costs and the outstanding mortgage
note of $34,000,000, was approximately $24,700,000. The Property was 89%
occupied at the date of sale. The Property was classified as held for sale
as of September 30, 1997, and therefore, has not been subject to continued
depreciation as of that date for financial reporting purposes. The sale is
expected to result in a gain to the Partnership in 1999 of approximately
$8,500,000 for Federal income tax reporting purposes. Because the sale
price of the property under negotiation was projected to result in a loss
of approximately $9,800,000 for financial reporting purposes, as a matter
of prudent accounting practice, the Partnership recognized this amount as a
provision for value impairment at June 30, 1999. In addition, in
connection with the sale of this property and as is customary in such
transactions, the Partnership agreed to certain representations, warranties
and covenants with a stipulated survival period which expires July 31,
2000. Although it is not expected, the Partnership may ultimately have
some liability under such representations, warranties and covenants, which
is limited to actual damages and shall in no event exceed $1,000,000 in the
aggregate.
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership amounts equal to the cumulative deferrals of any portion of
their 10% cash distribution and 3% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, notwithstanding such allocations, the Limited Partners shall
receive 100% of such net sale proceeds until the Limited Partners (i) have
received cash distributions of sale or refinancing proceeds in an amount
equal to the Limited Partners' aggregate initial capital investment in the
Partnership, (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed, equal a 7% annual return on the Limited
Partners' average capital investment for each year (their initial capital
investment as reduced by sale or refinancing proceeds previously
distributed) commencing with the first fiscal quarter of 1985 and (iii)
have received cash distributions of sale and refinancing proceeds and of
the Partnership operations, in an amount equal to the Limited Partners'
initial capital investment in the Partnership plus a 10% annual return on
the Limited Partners' average capital investment. Since the Limited
Partners have not yet received, and are not expected to receive the amounts
stipulated in items (i), (ii) and (iii) above, the General Partners are not
expected to receive any share of any proceeds from this sale. Therefore,
no portion of the proceeds of this sale is distributable to the General
Partners.
The Riverside Square Mall was the Partnership's only remaining asset
and, due to its sale, the Partnership intends to wind up its affairs and
liquidate by year-end, with a portion of the liquidation proceeds to be
deposited in the liquidating trust as described below.
In connection with the planned liquidation and termination of the
Partnership, the Managing General Partner currently intends to cause the
formation of a liquidating trust on or before December 31, 1999, in which
all of the Partnership's remaining assets, subject to liabilities, will be
transferred. The initial trustees of the liquidating trust are expected to
be individuals who are officers of the Managing General Partner. Each
Holder of Interests in the Partnership would, upon the establishment of the
liquidating trust, be deemed to be the beneficial owner of a comparable
share of the aggregate beneficial interests in the liquidating trust. It
is anticipated that the liquidating trust would permit the realization of
substantial cost savings in administrative and other expenses until any
residual liabilities (including contingent liabilities) of the Partnership
are paid or otherwise determined to be extinguished and any remaining funds
are distributed to the beneficial owners of the liquidating trust. The
liquidating trust is expected to be in existence for approximately one
year, subject to extension under certain circumstances.
In accordance with the Purchase Agreement, the Partnership or its
successor in interest is required to (a) maintain a net worth of net less
than $1,000,000 (net of any known liabilities) or (b) establish reserves
not less than $1,000,000 in cash or reasonably liquid investments (net of
any known liabilities) as of the Closing Date for the purpose of paying any
specified liabilities (as defined) during the survival period. These
amounts are expected to be transferred to the liquidating trust upon its
formation.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not Applicable.
(b) Pro Forma Financial Information - Narrative.
As a result of the sale of the Property, beyond the date of sale there
will be no further rental and other income, property operating expenses,
mortgage interest and amortization of deferred expenses recorded for the
Property in the consolidated financial statements of the Partnership, which
for the Partnership's most recent fiscal year (the year ended December 31,
1998) were $12,819,495, $7,189,436, $2,741,140 and $716,363, respectively.
Rental and other income, property operating expenses, mortgage interest and
amortization recorded for the Property were $6,296,904, $3,460,476,
$1,131,395 and $338,468, respectively, for the six months ended June 30,
1999. Also, as a result of the sale of the Property, there are no further
assets and liabilities related to the Property, which at June 30, 1999
consisted of land and building and improvements (net of accumulated
depreciation and provision for value impairment) of approximately
$53,214,000; rents and other receivables of approximately $1,515,000;
prepaid expenses of approximately $18,000; deferred expenses of
approximately $4,047,000; long-term debt of $34,000,000; accounts payable
and other current liabilities of approximately $294,000; accrued interest
of approximately $177,000; and security deposits of approximately $83,000.
(c) Exhibits.
10.1 Purchase Agreement between JMB Income Properties,
Ltd. - XI and Shopco Advisory Corp., dated July 22,
1999.
<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.
JMB INCOME PROPERTIES, LTD. - XI
By: JMB Realty Corporation
Managing General Partner
By: GAILEN J. HULL
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Gailen J. Hull
Senior Vice President
Dated: August 20, 1999
EXHIBIT 10.1
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(JMB - XI)
PURCHASE AGREEMENT
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(Riverside Square; Hackensack, New Jersey)
THIS AGREEMENT is made and entered into as of July 22, 1999 (the
"Effective Date") by and between JMB INCOME PROPERTIES LTD.-XI, an Illinois
limited partnership (hereinafter called "Seller"), and SHOPCO ADVISORY
CORP., a New York 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 Hackensack, County of Bergen, State of New Jersey, consisting
primarily of a shopping center sometimes known as "Riverside Square".
B. Buyer desires to purchase and Seller desires to sell 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, the land (the "Land") described in Exhibit "A"
attached hereto and made a part hereof, together with all right, title and
interest of Seller in and to all improvements, structures and fixtures
located upon the Land, all right, title and interest of Seller in and to
those items of personal property used in connection with the operation of
the "Property" (as hereinafter defined), excluding any personal property
owned by the property manager of the Property, but including, without
limitation, the personal property described in Exhibit "B" attached hereto
and made a part hereof, all right, title and interest of Seller in and to
the name "Riverside Square", and, to the extent assignable, all right,
title and interest of Seller in and to all leases, the "REA" (as
hereinafter defined), contract rights, agreements, 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 Fifty Nine Million Five Hundred Thousand and
No/100 Dollars ($59,500,000.00).
3. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid to
Seller by Buyer as follows:
A. ESCROW DEPOSIT. Concurrently herewith, Buyer shall
deliver One Million and No/100 Dollars ($1,000,000.00) (together with all
interest earned thereon, the "Escrow Deposit") to First American Title
Insurance Company of New York, 228 East 45th Street, New York, New York
10017, Attention: Mr. John Tonelli (which company, in its capacity as
escrow holder hereunder, is called "Escrow Holder"). The Escrow Deposit
hereunder shall be made by Buyer to Escrow Holder pursuant to wire transfer
<PAGE>
of immediately available federal funds and the amounts so deposited 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 Deposit is being held by the Escrow Holder, the Escrow
Deposit 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
and Buyer, or (iii) such other manner as may be reasonably agreed to by
Seller and Buyer. The Escrow Deposit shall be disposed of by Escrow Holder
only as provided in this Agreement.
B. CLOSING PAYMENT. The Purchase Price, as adjusted by the
application of the Escrow Deposit 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. Seller has delivered to Buyer a
current preliminary title report (together with copies of all exceptions
listed therein, the "Preliminary Title Report") covering the Property from
First American Title Insurance Company of New York (which company, in its
capacity as title insurer hereunder, is herein called the "Title Company").
Buyer has also obtained a Preliminary Title Report from Land Title Agency,
Inc. as agent for Stewart Title Guaranty Company (which company, in its
capacity as title insurer hereunder, is herein called the "Other Title
Company"). In addition, Seller has delivered to Buyer that certain survey
of the Property dated June 14, 1999, prepared by Boswell Engineering
("Survey"). Buyer has delivered a notice to Seller (the "Initial Title
Objection Notice") setting forth those title and survey matters to which
Buyer objects, which Initial Title Objection Notice is attached hereto as
Exhibit "K".
(2) ADDITIONAL TITLE MATTERS. Approval by Buyer of any
additional exceptions to title or survey matters first disclosed after the
Effective Date shall be a condition precedent to Buyer's obligation to
purchase the Property; provided, however, such approval shall not be
unreasonably withheld. Unless Buyer gives written notice (a "Supplemental
Title Objection Notice") that it approves any such additional exceptions to
title or survey matters, stating the exceptions or matters so disapproved,
on or before the sooner to occur of five (5) days after receipt of written
notice thereof and the Closing Date, Buyer shall be deemed to have approved
said additional title or survey matters.
(3) TITLE OBJECTIONS. Seller shall have until the
sooner to occur of (a) with respect to the Initial Title Objection Notice,
five (5) business days from the Effective Date (or, with respect to a
Supplemental Title Objection Notice, five (5) business days from the date
of receipt of such Supplemental Title Objection Notice) and (b) 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; provided, however, Seller shall have no liability if
for any reason, after electing under (ii) above, such additional
disapproved matters are not removed or insured over as of the Closing Date.
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
<PAGE>
additional disapproved matters to be removed. If Seller elects not to
cause any or all such additional disapproved matters to be removed or
insured over as aforesaid, Buyer shall have until the sooner to occur of
(aa) five (5) days from receipt of written notice thereof (or from the date
of Seller's deemed election as aforesaid) and (bb) the Closing Date, within
which to notify Seller in writing either that (i) 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
(ii) Buyer terminates this Agreement (and thereupon the Escrow Deposit
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 by Buyer to proceed with the
purchase of the Property without any reduction in the Purchase Price and to
take subject to such previously disapproved matters. 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 mortgages, deeds of trust or other loan documents securing
any financing obtained, assumed or suffered to exist 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. In addition, if
Buyer seeks to obtain an extended coverage "Owner's Policy" (as defined
below), Seller shall reasonably attempt to provide Title Company and Other
Title Company at the Closing with such evidence and customary documents as
reasonably required by Title Company and Other Title Company to issue such
extended coverage (with Seller having no obligation to expend any sums in
connection therewith).
(4) TITLE POLICY. It shall be a condition precedent to
Buyer's obligation to consummate the transactions contemplated herein that
on the Closing Date, the Title Company shall issue (or irrevocably commit
to issue) an owner's title insurance policy in the standard ALTA form (the
"Owner's Policy"), in the face amount of the Purchase Price, which Owner's
Policy shows title to the Property to be vested of record in Buyer, and the
following to be the only exceptions to title (the "Permitted Exceptions"):
(a) The general printed exceptions which appear
in the standard ALTA form owner's policy of title insurance issued by Title
Company in the State of New Jersey;
(b) Real estate taxes and assessments not yet due
and payable; and
(c) Such exceptions to title or survey matters as
may be approved or deemed approved by Buyer pursuant to the provisions of
this Paragraph 4A.
Seller hereby acknowledges that Buyer desires to obtain the Owner's Policy
from Title Company and Other Title Company, with Title Company and Other
Title Company acting as co-insurers. In the event that Buyer elects to
obtain co-insurance with respect to the Owner's Policy, Seller agrees to
reasonably cooperate with Buyer to enable Buyer to obtain such co-
insurance; provided, however, that Seller shall not be required to satisfy
any additional requirements of Other Title Company (or provide Other Title
Company with any additional documentation; Seller's sole obligation with
respect to Other Title Company being to provide Other Title Company with
the same documentation that Seller is required to provide Title Company
pursuant to this Paragraph 4A), it being the intention of Buyer and Seller
that Buyer (and not Seller) shall be responsible for satisfying any and all
additional requirements of Other Title Company (and providing Other Title
Company with any required additional documentation) and Seller shall not
have any obligation to correspond with Other Title Company in connection
with the issuance of such co-insurance.
<PAGE>
B. DUE DILIGENCE REVIEWS. Buyer hereby acknowledges and
agrees that Buyer has previously completed all of Buyer's due diligence
examinations, reviews and inspections of all matters pertaining to the
purchase of the Property, including all "Tenant Leases" (as defined below),
"Service Agreements" (as defined below), reciprocal easement agreements,
and all physical, environmental and compliance matters and conditions
respecting the Property (other than title and survey matters which shall be
governed by the provisions of Paragraph 4A above). Without limitation on
the foregoing, in no event shall Buyer conduct any intrusive physical
testing (environmental, structural or otherwise) at the Property (such as
soil borings, water samplings or the like). To the extent that Buyer
desires to (a) contact any tenant of the Property, and/or (b) contact any
governmental authority having jurisdiction over the Property, Buyer shall
notify Seller of such contacts and keep Seller reasonably informed with
respect to the nature and status of all such contacts by disclosing to
Seller any material information received as a result of such contacts). At
Seller's written request, Buyer shall promptly deliver to Seller true,
accurate and complete copies of any written reports (other than appraisals)
relating to the Property prepared for or on behalf of Buyer by any third
party and in the event of any termination of this Agreement, shall return
all documents and other materials, if any, previously furnished to Buyer by
Seller. Except for confidential disclosures to Buyer's attorneys,
accountants, lenders, investors and representatives, Buyer shall keep all
information or data received or discovered in connection with any of its
inspections, reviews or examinations of the Property strictly confidential
prior to the Closing.
C. TENANT ESTOPPEL CERTIFICATES. Receipt of estoppel
certificates ("Tenant Estoppel Certificates") dated not earlier than June
1, 1999 from (i) all tenants of the Property with premises containing five
thousand five hundred square feet (5,500 sq. ft.) or more gross leasable
area (excluding Liz Claiborne and including Saks), which tenants are listed
on Exhibit "C-1" attached hereto and made a part hereof, and (ii) from a
sufficient number of the balance of the tenants at the Property so that
estoppel certificates shall be received under clauses (i) (excluding Saks)
and (ii) with respect to not less than seventy five percent (75%) of the
gross leased area, in the aggregate (excluding Saks and Bloomingdales),
covered by Tenant Leases in effect as of the date hereof, is a condition
precedent to Buyer's obligation to purchase the Property hereunder. The
form of estoppel certificate to be received from each tenant shall be
substantially in the form of Exhibit "C-2" attached hereto and made a part
hereof; provided, however, that so long as an estoppel certificate meets
the "Minimum Estoppel Standards", then (1) if the applicable Tenant Lease
prescribes the required form (or content) of such estoppel certificate,
then such required form (or content) shall be deemed acceptable, or (2) if
(a) the tenant under the applicable Tenant Lease is a national tenant, or
(b) the tenant estoppel certificate received with respect to a Tenant Lease
is not in the form of Exhibit "C-2" but confirms the material economic
terms of such Tenant Lease, then (c) such tenant estoppel certificate shall
be deemed acceptable. Seller's sole obligation hereunder shall be to
utilize reasonable efforts to obtain such estoppel certificates (such
reasonable efforts obligation not including any obligation to institute
legal proceedings or to expend any monies therefor, other than for minor
administrative charges, whether imposed by tenants or incurred by Seller).
Buyer shall have the option to waive the condition precedent set forth
herein by notice to Seller (whereupon such condition will be deemed
satisfied). In the event that on or before the Closing Date such condition
is not satisfied (or waived as aforesaid), the obligations of Seller to
sell, and Buyer to purchase, this Agreement shall terminate (except for
those provisions hereof which survive termination) and the Escrow Deposit
shall be returned to Buyer. Notwithstanding the foregoing to the contrary,
in the event that the condition set forth in this Paragraph 4C is satisfied
<PAGE>
(or waived by Buyer) on or before the Closing Date, but Seller has not
received Tenant Estoppel Certificates from the balance of the tenants at
the Property with respect to one hundred percent (100%) of the gross leased
area, in the aggregate, covered by Tenant Leases in effect as of the date
hereof, Seller shall deliver a certificate of Seller ("Seller Estoppel
Certificate") with respect to each Tenant Lease for which no Tenant
Estoppel Certificate is received, which Seller Estoppel Certificate shall
meet the Minimum Estoppel Standards. Any Seller Estoppel Certificate
delivered by Seller hereunder shall be in substantially the same form as
the Tenant Estoppel Certificate attached as Exhibit "C-2" hereto, with
appropriate changes to reflect that (I) such certificate is being delivered
by Seller rather than the tenant, (II) paragraphs 3, 4 and 6 are limited to
Seller's knowledge (as defined in this Agreement), (III) paragraphs 7, 8
and 10 will be deleted, and (IV) Seller's obligation under such certificate
shall be limited to the Survival Period set forth in Paragraph 7C of this
Agreement and the limitations of liability set forth in Paragraph 10B of
this Agreement. To the extent that Seller delivers a Seller Estoppel
Certificate with respect to a Tenant Lease pursuant to this Paragraph 4C,
then if Seller later receives a Tenant Estoppel Certificate with respect to
such Tenant Lease which confirms the information provided in the Seller
Estoppel Certificate with respect to such Lease (or otherwise meets the
Minimum Estoppel Standards), Seller shall have the right to deliver such
Tenant Estoppel Certificate to Buyer and upon the delivery of such Tenant
Estoppel Certificate to Buyer, Seller shall not have any liability with
respect to such Seller Estoppel Certificate previously delivered to Buyer
with respect to such Tenant Lease. As used herein, the term "Minimum
Estoppel Standards" means a Tenant Estoppel Certificate or Seller Estoppel
Certificate which (A) identifies or lists all lease documents comprising
the applicable Tenant Lease, (B) specifies to such tenant's knowledge or to
Seller's knowledge, as appropriate, landlord defaults under such Tenant
Lease, if any, (C) states the commencement date or expiration date of such
Tenant Lease, (D) acknowledges that the rent under such Tenant Lease has
not been paid to Seller more than one month in advance (or specifies the
amount of rent, if any, paid to Seller more than one month in advance), and
(E) acknowledges, to Seller's knowledge, if applicable, that there are no
offsets or defenses to the payment of rent thereunder or unfunded
allowances (or specifies the amount of any such unfunded allowances);
provided, however, that a Tenant Estoppel Certificate or Seller Estoppel
Certificate, as applicable, shall be deemed to have not met the Minimum
Estoppel Standards if such Tenant Estoppel Certificate or Seller Estoppel
Certificate, as applicable, states that Seller is in material default under
the applicable Tenant Lease or fails to confirm that the material economic
terms of such Tenant Lease are as set forth in the lease documents
comprising such Tenant Lease.
D. REA ESTOPPEL CERTIFICATES. The receipt of an estoppel
certificate substantially in the form of Exhibit "C-3" attached hereto and
made a part hereof (the "REA Estoppel Certificate") dated not earlier than
June 1, 1999 with respect to that certain Construction, Operating and
Reciprocal Easement Agreement dated June 5, 1975, by and among Federated
Stores Realty, Federated Department Stores and Saks and Company, as amended
by that certain First Amendment dated December 23, 1977, that certain
Assignment of Operating Agreement dated October 17, 1983, and that certain
Second Amendment dated February __, 1994 (as amended, the "REA") is a
condition precedent to Buyer's obligation to purchase the Property
hereunder; provided, however, that an REA Estoppel Certificate shall not be
deemed acceptable if such REA Estoppel Certificate states that Seller is in
material default under the REA or fails to confirm the matters set forth in
the form of REA Estoppel Certificate delivered to such REA Party. Buyer
hereby acknowledges that certain documents listed in the REA Estoppel
Certificate for Bloomingdales are not listed on Exhibit H-2 attached
hereto.
<PAGE>
E. 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; provided however, unless this Agreement has previously
terminated, if Seller tenders full performance on the Closing Date, and has
otherwise cured all existing defaults, if any, Buyer shall not refuse to
perform its obligations hereunder on the basis of a prior breach by Seller
hereunder. In addition, in the event that on the Closing Date, there shall
have occurred any material adverse changes in the representations or
warranties of Seller contained in Paragraph 7A below which are not
otherwise permitted or contemplated by the terms of this Agreement, then
Buyer shall have the right to terminate this Agreement and, upon any such
termination, the Escrow Deposit shall be refunded to Buyer. Buyer shall
have the option to waive the condition precedent set forth in this
Paragraph 4E by written notice to Seller. In the event of such waiver,
such condition shall be deemed satisfied.
F. 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;
provided however, unless this Agreement has previously terminated, if Buyer
tenders full performance on the Closing Date, and has otherwise cured all
existing defaults, if any, Seller shall not refuse to perform its
obligations hereunder on the basis of a prior breach by Buyer hereunder.
In addition, in the event that on the Closing Date there shall have
occurred any material adverse changes in the representations or warranties
of Buyer contained in Paragraph 7B below which are not permitted or
contemplated by the terms of this Agreement, then Seller shall have the
right to terminate this Agreement and, upon any such termination, the
Escrow Deposit shall be refunded to the party entitled thereto under the
terms and conditions of this Agreement. Seller shall have the option to
waive the condition precedent set forth in this Paragraph 5F 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 on the Closing Date through
escrow ("Escrow") pursuant to the "Escrow Instructions" (as hereinafter
defined). As used herein, "Closing Date" means August 5, 1999, or such
earlier date as may be agreed upon by Buyer and Seller.
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 deed ("Deed") in the form of Exhibit "D" 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 and Escrow Holder 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 satisfaction of
the conditions precedent to Buyer's obligation to purchase the Property set
forth in Paragraphs 4A, 4B, 4C, 4D and 4E of this Agreement, the
satisfaction of the conditions precedent to Seller's obligation to sell the
Property set forth in Paragraph 4F, the Escrow Holder's receipt of the
Deed, the Closing Payment and a notice from each of Buyer and Seller
authorizing Escrow Holder to close 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).
<PAGE>
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 Escrow Holder's depositing the same for recordation,
(y) the Closing Payment (and the Escrow Deposit) shall be delivered by
Escrow Holder to Seller and (z) at the Closing, the following items shall
be delivered:
(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 "E" attached hereto and made a part
hereof;
(b) A certificate of Seller ("Seller Closing
Certificate") updating the representations and warranties contained in
Paragraph 7A hereof to the Closing Date and noting any changes thereto;
(c) A notice to the tenants ("Tenant Notice")
signed by Seller advising them of the sale in form reasonably satisfactory
to Seller and Buyer;
(d) A notice to the parties to the Service
Agreements ("Service Provider Notice") signed by Seller advising them of
the sale in form reasonably satisfactory to Seller and Buyer;
(e) Duly executed and acknowledged certificates
regarding the "non-foreign" status of Seller ("Certificate of Non-Foreign
Status") in the form of Exhibit "F" attached hereto and made a part hereof;
(f) Duly executed and acknowledged transfer
declarations or other similar documents satisfying state law requirements,
if applicable ("Transfer Declarations");
(g) To the extent not previously delivered to
Buyer, copies of all Tenant Estoppel Certificates, Seller Estoppel
Certificates and REA Estoppel Certificates in Seller's possession.
(h) 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
(i) Such additional documents as may be
reasonably required by Buyer and Title Company and the Other Title Company
(subject to the terms hereof) 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).
(j) To the extent in Seller's possession or
control, originals of all Tenant Leases, Service Agreements, the balance of
any tenant advertising, merchandising, promotional funds or other similar
accounts, all non-cash security deposits under Tenant Leases, if any, plans
and specifications, tenant files, invoices, billings and other similar
books and records necessary for the continued operation of the Property,
licenses, permits, certificates of occupancy, certificates of insurance
from any tenants, and keys tagged for identification, to the extent the
foregoing relate to the Property (such delivery being made by causing such
items to be retained at the Property). To the extent that any of the
foregoing items are in the possession and control of Seller or its property
<PAGE>
manager, but are not located at the Property, Seller will cause such items
to be delivered at the Property (or, in the case of any original Tenant
Leases or Service Agreements in the possession and control of Seller or its
property manager but not located at the Property, at Buyer's offices at the
address set forth in Paragraph 9H below), and to the extent that any of the
foregoing items are in the possession and control of Seller or its property
manager and are located at the Property, Seller will cause such items to be
retained at the Property, and except for keys tagged for identification,
Seller and its property manager shall be entitled to retain duplicate
copies of any and all such items.
(k) To the extent applicable to the Property, as
reasonably determined by Seller, a Letter of Non-Applicability or a De
Minimus Quantity Exemption, in form reasonably acceptable to Buyer, under
the New Jersey Industrial State Recovery Act, N.J.S.A. 13:1k-6 et seq.
(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") updating the representations and warranties contained in
Paragraph 7B hereof to the Closing Date and noting any changes thereto;
(c) A Tenant Notice signed by Buyer;
(d) A Service Provider Notice signed by Buyer;
(e) Duly executed and acknowledged Transfer
Declarations, if applicable;
(f) 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
(g) Such additional documents as may be
reasonably required by Seller and Title Company 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 (i) any
transfer tax attributable to the Deed and any sales tax attributable to the
sale of the Personal Property, (ii) one-half of the title insurance premium
for the Owner's Policy attributable to standard ALTA coverage (at a rate
not in excess of standard issue rates), (iii) the costs of the Survey, (iv)
the recording costs of the Deed, and (v) one-half of any escrow or closing
charges of the Title Company and, if applicable, the Other Title Company.
Buyer shall pay at Closing (i) one-half of the title insurance premium for
the Owner's Policy attributable to standard ALTA coverage (at a rate not in
excess of standard issue rates), (ii) 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), (iii) any other recording costs, and (iv) one-half of
any escrow or closing charges of the Title Company and, if applicable, the
Other Title Company. 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.
<PAGE>
D. PRORATIONS.
(1) ITEMS TO BE PRORATED. The following shall be
prorated between Seller and Buyer as of the Closing Date:
(a) TAXES. The real estate taxes and assessments
on the Property are assessed on the basis of a fiscal year commencing on
July 1st and ending on June 30th. In the event that the Closing Date
occurs on or before June 30, 1999, all real estate taxes and assessments on
the Property for the current fiscal year (i.e., the period from July 1,
1998 through June 30, 1999) shall be prorated on a per diem basis;
provided, however, that in the event that the Closing Date occurs after
June 30, 1999, all real estate taxes and assessments on the Property for
the new fiscal year (i.e., the period from July 1, 1999 through June 30,
2000) shall be prorated on a per diem basis. Notwithstanding anything in
the foregoing to the contrary, (i) Seller shall be entitled to receive any
and all property tax refunds applicable to period(s) prior to the Closing
Date, (ii) to the extent that the Tax Court of Bergen County (or any other
applicable governmental authority) makes (or otherwise authorizes) a refund
of any property taxes paid for any period(s) prior to the Closing Date,
Seller shall be entitled to collect and receive any and all such property
tax refunds (and if Buyer (or its successors and assigns with respect to
the Property) receives or is credited with a refund of any property taxes
paid for any period(s) prior to the Closing Date by the Tax Court of Bergen
County (or any other applicable governmental authority), Buyer (or its
successors and assigns with respect to the Property) shall promptly pay
over to Seller an amount equal to the amount of such property tax refund or
credit), and (iii) to the extent that the Property (or the owner thereof)
receives any payment of such property tax refunds for any period(s) prior
to the Closing Date, then if Buyer (or its successors and assigns with
respect to the Property) has not previously paid to Seller an amount equal
to the amount of all such property tax refunds, Buyer (or its successors
and assigns with respect to the Property) shall (and hereby agrees) to
promptly pay to Seller any and all such property tax refunds (or other
property tax credits); provided, however, that (1) Seller shall be solely
responsible for making any refunds or reimbursements to the tenants of the
Property on account of such property tax refunds pursuant to the terms of
the Tenant Leases and upon Seller's receipt of such property tax refunds,
Seller shall indemnify Buyer against any claims by tenants pursuant to the
terms of the Tenant Leases on account of Seller's failure to make any
required refunds or reimbursements to such tenants, (2) Buyer shall
reasonably cooperate with Seller in connection with any refunds or
reimbursements to the tenants of the Property resulting from such property
tax refunds, and (3) except as expressly provided herein, Buyer shall have
no liability to the tenants of the Property on account of such property tax
refunds. In no event shall Seller be charged with or be responsible for
any increase in the taxes on the Property resulting from the sale of the
Property or from any improvements made or leases entered into on or after
the Closing Date. If any assessments on the Property are payable in
installments, then the installments for the new fiscal year shall be the
responsibility of Buyer (with Buyer assuming the obligation to pay any
installments due after the Closing Date).
(b) FIXED RENT. All fixed, minimum or base
rentals (other than percentage rent and expense reimbursement amounts) and
other tenant charges received in respect to the month in which the Closing
Date occurs (the "Current Month") shall be prorated. Such fixed rents for
the Current Month which have been received as of the Closing Date shall be
prorated on a per diem basis based upon the number of days in the Current
Month prior to the Closing Date (which shall be allocated to Seller) and
the number of days in the Current Month including and after the Closing
Date (which shall be allocated to Buyer). Seller shall deliver or provide
<PAGE>
a credit in an amount equal to all prepaid rentals for periods after the
Current Month (to the extent held by Seller) to Buyer on the Closing Date.
Fixed rents that are delinquent as of the Closing Date shall not be
prorated on the Closing Date. Buyer shall include such delinquencies in
its normal billings through the Survival Period and shall treat such
delinquencies in the same manner as Buyer's delinquencies through the
Survival Period provided Buyer shall not be required to commence litigation
or refer Seller's delinquencies to counsel for collection and without the
requirement of the expenditure of any funds other than the costs associated
with normal billings. All fixed rents received by Buyer from a tenant
after the Closing Date shall first be applied to the outstanding
obligations of such tenant accrued after the Closing Date. After
application as set forth above, Buyer shall promptly remit to Seller that
portion of fixed rents received after the Closing Date attributable to
periods prior to the Current Month. Buyer may not waive any delinquent
rents nor modify a tenant lease at the Property (individually, a "Tenant
Lease" and collectively "Tenant Leases") so as to reduce or otherwise
affect amounts owed thereunder for any period in which Seller is entitled
hereunder to receive a share of charges or amounts without first obtaining
Seller's written consent. Seller hereby reserves the right to pursue an
action against any tenant owing delinquent rents and any other amounts to
Seller to collect such amounts, together with damages and the like as a
result thereof (but in no event shall Seller have any right to institute
eviction proceedings with respect thereto). Buyer shall reasonably
cooperate with Seller in any collection efforts hereunder (but shall not be
required to litigate or declare a default in any Tenant Lease). With
respect to delinquent rents and any other amounts or other rights of any
kind respecting tenants who are no longer tenants of the Property as of the
Closing Date, Seller shall retain all rights relating thereto.
(c) PERCENTAGE RENT; OTHER CONTRIBUTIONS.
(i) PERCENTAGE RENT; NON-PERCENTAGE RENT
ONLY TENANTS. Certain tenants under Tenant Leases pay rent based upon a
percentage of their sales at the Property ("Percentage Rent") but do not
pay any fixed, minimum or base rentals (other than such Percentage Rent and
expense reimbursement amounts) (the "Percentage Rent Only Tenants"). Any
Percentage Rent payable by tenants under the Tenant Leases who are not
Percentage Rent Only Tenants (the "Non-Percentage Rent Only Tenants") shall
be allocated as set forth in this paragraph. Seller shall receive a
proration credit at Closing from Buyer in the amount of One Hundred Forty
Thousand Dollars ($140,000) on account of Percentage Rent payments by Non
Percentage Rent Only Tenants for periods on or before the Closing Date for
calendar year 1999. Accordingly, subject to the proration credit provided
to Seller in the preceding sentence, all Percentage Rent received by Seller
from Non Percentage Rent Only Tenants on or before the Closing Date for
calendar year 1999, if any, shall be credited to Buyer and shall not be
prorated, and all Percentage Rent received by Buyer from Non Percentage
Rent Only Tenants for calendar year 1999 and periods after the Closing Date
shall be retained by Buyer and shall not be prorated. With respect to
delinquent Percentage Rents of any kind respecting tenants who are no
longer tenants of the Property as of the period prior to calendar year
1999, Seller shall retain all rights relating thereto.
(ii) PERCENTAGE RENT; PERCENTAGE RENT ONLY
TENANTS. The Percentage Rent Only Tenants pay Percentage Rent on a monthly
basis in arrears ("Monthly Percentage Rent"). Any Monthly Percentage Rent
payable by Percentage Rent Only Tenants for the Current Month shall be
prorated as set forth in this paragraph. All Monthly Percentage Rent to be
received for the Current Month (as reasonably estimated by Seller) shall be
prorated on the Closing Date and Seller shall be entitled to its "allocable
<PAGE>
share" of such amount. As used herein with respect to Monthly Percentage
Rent, Seller's "allocable share" with respect to Monthly Percentage Rent
with respect to a Tenant Lease means a fraction, the numerator of which is
the number of days in the Current Month in which such Tenant Lease is in
effect prior to the Closing Date and the denominator of which is the
aggregate number of days in which such Tenant Lease is in effect during the
Current Month. Seller shall deliver or provide a credit in an amount equal
to all Monthly Percentage Rent for periods after the Current Month (to the
extent held by Seller) to Buyer on the Closing Date, if any. Monthly
Percentage Rent payments from Percentage Rent Only Tenants which are
delinquent as of the Closing Date shall not be prorated on the Closing
Date. Buyer shall include such delinquencies in its normal billings
through the Survival Period and shall treat such delinquencies in the same
manner as Buyer's delinquencies through the Survival Period provided Buyer
shall not be required to commence litigation or refer Seller's
delinquencies to counsel for collection and without the requirement of the
expenditure of any funds other than the costs associated with normal
billings. All Monthly Percentage Rent payments received by Buyer from
Percentage Rent Only Tenants after the Closing Date shall first be applied
to the outstanding obligations of such tenant accrued after the Closing
Date. After application as set forth above, Buyer shall promptly remit to
Seller that portion of delinquent Monthly Percentage Rents received from
Percentage Rent Only Tenants after the Closing Date attributable to periods
prior to the Closing Date. Buyer may not waive any delinquent Monthly
Percentage Rents nor modify a Tenant Lease so as to reduce or otherwise
affect amounts owed thereunder for any period in which Seller is entitled
hereunder to receive delinquent Monthly Percentage Rents without first
obtaining Seller's written consent. Seller hereby reserves the right to
pursue an action against any Percentage Rent Only Tenant owing delinquent
Monthly Percentage Rents and any other amounts to Seller to collect such
amounts, together with damages and the like as a result thereof (but in no
event shall Seller have any right to institute eviction proceedings with
respect thereto). Buyer shall reasonably cooperate with Seller in any
collection efforts hereunder (but shall not be required to litigate or
declare a default in any Tenant Lease). With respect to delinquent Monthly
Percentage Rents and any other amounts or other rights of any kind
respecting Percentage Rent Only Tenants who are no longer tenants of the
Property as of the Closing Date, Seller shall retain all rights relating
thereto.
(iii) OTHER CONTRIBUTIONS. Pursuant to
Paragraph 5B(1)(j) the balance of any merchandising fund contributions,
advertising fund contributions or promotional fund contributions payable
under Tenant Leases ("Other Contributions") as of the Closing Date shall be
delivered to Buyer.
(d) EXPENSE REIMBURSEMENTS. The common area
charges, taxes, operating expense and other expense reimbursement
obligations of the tenants under the Tenant Leases ("Expense
Reimbursements") for calendar year 1999 are paid on an estimated basis in
monthly installments in advance. All Expense Reimbursements received in
respect to the Current Month (and all required contributions of the
landlord under Tenant Leases or the REA documents with respect to any
merchandising fund, advertising fund or promotional fund) shall be prorated
as set forth in this paragraph. Such Expense Reimbursements for the
Current Month which have been received as of the Closing Date (and all
required contributions of the landlord under Tenant Leases or the REA
documents with respect to any merchandising fund, advertising fund or
promotional fund which have been paid as of the Closing Date) shall be
prorated on a per diem basis based upon the number of days in the Current
Month prior to the Closing Date (which shall be allocated to Seller) and
the number of days in the Current Month including and after the Closing
Date (which shall be allocated to Buyer). Seller shall deliver or provide
a credit to Buyer on the Closing Date in an amount equal to all required
contributions of the landlord under Tenant Leases or the REA documents with
<PAGE>
respect to any merchandising fund, advertising fund or promotional fund
which have not been paid as of the Closing Date for periods prior to the
Current Month and Seller shall deliver or provide a credit in an amount
equal to all Expense Reimbursements for periods after the Current Month (to
the extent held by Seller) to Buyer on the Closing Date (and Buyer shall
provide a credit to Seller in an amount equal to all required contributions
of the landlord under Tenant Leases with respect to any merchandising fund,
advertising fund or promotional fund which have been paid as of the Closing
Date and are attributable to periods after the Current Month). Expense
Reimbursements that are delinquent as of the Closing Date shall not be
prorated on the Closing Date. Buyer shall include such delinquencies in
its normal billings through the Survival Period and shall treat such
delinquencies in the same manner as Buyer's delinquencies through the
Survival Period provided Buyer shall not be required to commence litigation
or refer Seller's delinquencies to counsel for collection and without the
requirement of the expenditure of any funds other than the costs associated
with normal billings. All Expense Reimbursements received by Buyer from a
tenant after the Closing Date shall first be applied to the outstanding
obligations of such tenant accrued after the Closing Date. After
application as set forth above, Buyer shall promptly remit to Seller that
portion of Expense Reimbursements received after the Closing Date
attributable to periods prior to the Current Month. Seller hereby reserves
the right to pursue an action against any tenant owing delinquent Expense
Reimbursements to Seller to collect such amounts, together with damages and
the like as a result thereof (but in no event shall Seller have any right
to institute eviction proceedings with respect thereto). Buyer shall
reasonably cooperate with Seller in any collection efforts hereunder (but
shall not be required to litigate or declare a default in any Tenant
Lease). With respect to delinquent Expense Reimbursements respecting
tenants who are no longer tenants of the Property as of the Closing Date,
Seller shall retain all rights relating thereto. Except for Buyer's and
Seller's respective obligations under Paragraph 5.D(1)(a) above, Buyer
shall be solely responsible for and entitled to any amounts owed to Tenants
or payable by such Tenants, respectively, with respect to Expense
Reimbursements for calendar year 1999.
(e) 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 shall be
prorated.
(f) SECURITY DEPOSITS. Seller shall deliver or
provide a credit in an amount equal to all prepaid rentals for periods
after the Closing Date and all refundable security deposits (to the extent
the foregoing are held by Seller and are not applied or forfeited prior to
the Closing Date) to Buyer on the Closing Date.
(g) LEASE COMMISSIONS. Buyer shall assume the
payment of all leasing and brokerage commissions which may hereafter become
due with respect to any Tenant Leases hereinafter executed prior to the
Closing Date with Buyer's written consent.
(h) TENANT IMPROVEMENT ALLOWANCES. On or before
the Closing Date, Seller shall pay or cause to be paid (or there shall be
escrowed for payment at Closing) all tenant improvement allowances which
are payable with respect to Tenant Leases executed prior to the date
hereof, whether the same are due on or prior to the Closing Date or payable
in installments subsequent thereto and including any portion thereof due
upon any renewals of any such Tenant Lease or options to lease additional
space but only if such renewal or additional space option commences prior
to the date of this Agreement. Buyer shall assume the payment of all
tenant improvement allowances which may hereafter become due with respect
to (i) any renewals of any Tenant Leases or options to lease additional
space under any Tenant Leases if such renewals or additional space options
are exercised and commence or arise after the date of this Agreement, and
(ii) any Tenant Leases hereafter executed prior to the Closing Date with
Buyer's written consent.
<PAGE>
(i) LOANS TO RANCH 1. Seller or Buyer, as
applicable, shall receive a proration credit at Closing, so that each party
will be responsible for Fifty Thousand Dollars ($50,000) of the One Hundred
Thousand Dollar ($100,000) loan to Ranch 1 (the "Ranch 1 Loan"), it being
intended that Buyer will fund any unfunded portion of the Ranch 1 Loan as
of the Closing Date to Ranch 1 when due. In this connection, Seller shall
remain responsible for the payment of all advances under the Ranch 1 Loan
to the extent that any such advances have not yet been made and Buyer shall
be entitled to receive any and all repayments of the Ranch 1 Loan.
(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 Paragraph
5D(1) above 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 on or before
November 15, 1999, and 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 in any event not later than November 30, 1999.
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 promptly notify Buyer of such fact, but 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 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; and further provided,
however, that until the Closing Date or the sooner termination of this
Agreement, Seller shall not adjust, settle, compromise or litigate any
condemnation claim or any casualty insurance claim without Buyer's prior
written consent (such consent not to be unreasonably withheld or delayed).
In connection with any assignment of insurance proceeds hereunder, Seller
shall credit Buyer with an amount equal to the applicable deductible amount
under Seller's insurance and an amount equal to fifty percent (50%) of any
uninsured casualty. At all times from the Effective Date through the
Closing Date, Seller shall, at its expense, maintain its existing casualty
insurance and rental income loss insurance with respect to the Property.
In the event the cost of repair of damage to the Property on account of a
casualty shall exceed $1,000,000 (as determined by the insurance advisor
selected by the existing casualty insurer), or in the event the cost of
repair of damage to the Property on account of an uninsured casualty shall
exceed $1,000,000 (as reasonably determined by Seller), or in the event
there shall be a "material taking", Buyer may, at its option, terminate
this Agreement by notice to Seller, given on or before the Closing Date
(whereupon the Escrow Deposit shall be returned to Buyer and, except for
those provisions hereof which survive termination, this Agreement shall
terminate). In the event the cost of repair of damage to the Property on
account of an uninsured casualty shall exceed $1,000,000 (as reasonably
determined by Seller), Seller may, at its option, terminate this Agreement
<PAGE>
by notice to Buyer, given on or before the Closing Date (whereupon the
Escrow Deposit shall be returned to Buyer and, except for those provisions
hereof which survive termination, this Agreement shall terminate);
provided, however, that in the event that Seller exercises its option to
terminate this Agreement because the cost of repair of damage to the
Property on account of an uninsured casualty shall exceed $1,000,000, Buyer
shall have the right to reinstate this Agreement by notice to Seller, given
on or before the date which is three (3) days after Buyer's receipt of
Seller's notice of termination, by waiving in writing any obligation of
Seller to credit to Buyer fifty percent (50%) of the portion of such
uninsured casualty in excess of $1,000,000. As used herein, the term
"material taking" means any condemnation where (i) the fair market value of
the portion of the Property taken or condemned shall exceed $1,000,000, or
(ii) the remaining portion of the Property after such taking or
condemnation is in violation of applicable laws, Tenant Leases or the REA
documents with respect to parking.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
(1) GENERAL DISCLAIMER. Except as specifically set
forth in Paragraph 7A(2) below, the sale of the Property hereunder is and
will be made on an "as is" basis, without representations and warranties of
any kind or nature, express, implied or otherwise, including, but not
limited to, any representation or warranty concerning title to the
Property, the physical condition of the Property (including, but not
limited to, the condition of the soil or the Improvements), the
environmental condition of the Property (including, but not limited to, the
presence or absence of hazardous substances on or respecting the Property),
the compliance of the Property with applicable laws and regulations
(including, but not limited to, zoning and building codes or the status of
development or use rights respecting the Property), the financial condition
of the Property or any other representation or warranty respecting any
income, expenses, charges, liens or encumbrances, rights or claims on,
affecting or pertaining to the Property or any part thereof. Buyer
acknowledges that Buyer has examined, reviewed and inspected all matters
which in Buyer's judgment bear upon the Property and its value and
suitability for Buyer's purposes. Except as to matters specifically set
forth in Paragraph 7A(2) below, Buyer will acquire the Property solely on
the basis of its own physical and financial examinations, reviews and
inspections and the title insurance protection afforded by the Owner's
Policy. WITHOUT LIMITATION THEREON, BUYER HEREBY WAIVES AND DISCLAIMS
(1) ANY WARRANTY, EXPRESS, IMPLIED OR ARISING BY OPERATION OF LAW,
INCLUDING ANY WARRANTY OF HABITABILITY, MERCHANTABILITY, SUITABILITY
OR FITNESS FOR A PARTICULAR USE OR PURPOSE AND (2) ANY AND ALL RIGHTS
OF CONTRIBUTION OR OTHER RIGHTS OR REMEDIES AGAINST SELLER UNDER THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT
OF 1980 (AS AMENDED) OR ANY OTHER APPLICABLE ENVIRONMENTAL LAWS, RULES
OR REGULATIONS, WHETHER FEDERAL, STATE OR LOCAL.
(2) LIMITED REPRESENTATIONS AND WARRANTIES OF SELLER.
Subject to the provisions of Paragraph 7A(1) above, Seller hereby
represents and warrants that, except as set forth in Exhibit "G" attached
hereto and made a part hereof, and except with respect to the
representation in subparagraph (g) below, which representation is not
limited to Seller's knowledge, Seller has no knowledge that any of the
following statements is untrue (and, for this purpose, Seller's knowledge
shall mean only the present actual knowledge of Andrea Pauls Backman, after
having Seller's third party property manager review (and provide Seller
with comments as to their accuracy) the representations and warranties
contained herein, but otherwise without any duty to investigate and with
any imputed or constructive knowledge being excluded):
<PAGE>
(a) LIST OF TENANT LEASES; LIST OF REA DOCUMENTS.
Attached as Exhibit "H-1" and made a part hereof is a true, complete and
accurate list, as of the date hereof, of all Tenant Leases respecting the
Property. Except as set forth in Exhibit "G", neither Seller nor any
tenant under a Tenant Lease is in monetary default or material non-monetary
default under any of such Tenant Lease that remains uncured. Attached as
Exhibit "H-2" and made a part hereof is a true, complete and accurate list,
as of the date hereof, of all REA documents respecting the Property.
Except as set forth in Exhibit "G", neither Seller nor any other party to
the REA documents is in monetary default or material non-monetary default
under any of such REA documents that remains uncured.
(b) RIGHTS TO PURCHASE. Seller has not granted
any tenants under Tenant Leases or any other third party a right to
purchase the Property.
(c) EMPLOYEES. Seller has no employees at the
Property.
(d) LITIGATION. Except as set forth in
Exhibit "G", (i) there is no pending action, litigation, condemnation or
other proceeding against the Property or against Seller with respect to the
Property, and (ii) there are no pending insurance claims against the
Property or against Seller with respect to the Property.
(e) 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, including, all applicable zoning and land
use laws and ordinances.
(f) SERVICE AGREEMENTS. 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 "I" attached hereto, and Seller has not received any written notice
of any material default thereunder that remains uncured. Upon the
consummation of the transactions contemplated by this Agreement, (i) Seller
will terminate all Service Agreements that Buyer requests Seller to so
terminate provided that any such Service Agreement may be terminated by
Seller as of the Closing without the payment of any additional fees, costs,
penalties or premiums, and (ii) Seller will terminate the property
management agreement for the Property between Seller and Urban Retail
Properties.
(g) 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 and will be binding upon
Seller and will be enforceable in accordance with its terms (subject to
bankruptcy, insolvency and other laws affecting creditors' rights
generally) and do not and will not conflict with any provision contained in
any other agreement to which Seller is a party nor will it cause Seller to
be in default under any such agreement. Seller is a limited partnership,
duly organized, 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.
<PAGE>
(h) ENVIRONMENTAL MATTERS. Except as set forth
in the reports described in Exhibit "J" 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 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
other hazardous wastes or substances which have, as of the date hereof,
been determined under 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"), (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, (iii) PCBs, (iv) lead,
and (v) infectious materials, which materials listed under items (i), (ii),
(iii), (iv) and (v) 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 in excess of $25,000 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.
(i) COLLECTIVE BARGAINING AGREEMENTS. Seller is
not bound by any collective bargaining agreements with any labor
organization applicable to the operation and/or management of the Property.
B. 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 New York, 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.
C. 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 March 31, 2000 (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). For the purposes of this Paragraph
7B, Buyer's "actual knowledge" shall mean only the knowledge of any one or
more of Marc Yassky, James Konsky, Joseph Speranza and Roy Praver (after
having reviewed all matters of public record and all due diligence
materials provided to Buyer by Seller and after having made inquiry of its
attorneys and third party consultants with respect to Buyer's due diligence
reports and investigations).
<PAGE>
D. 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 shall not include 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
Agreements or other similar agreements without the prior consent of Buyer,
except those deemed reasonably necessary by Seller which are cancelable on
30 days' notice without the payment of any additional fees, costs,
penalties or premiums.
(3) Seller shall continue to offer the Property for
lease in the same manner as prior hereto pursuant to its normal course of
business and shall keep Buyer reasonably informed as to the status of
leasing prior to the Closing Date. Notwithstanding the foregoing, Seller
shall not enter into any new Tenant Leases or modifications of any existing
Tenant Leases nor terminate or renew any Tenant Leases with respect to the
Property, without Buyer's prior written consent (which prior written
consent will not be unreasonably withheld and which prior written consent
shall be deemed to be given if notice of disapproval is not received by
Seller within five (5) days of Buyer's receipt of such request for approval
together with a copy of the proposed lease or modification thereof and a
summary of all leasing commissions and tenant improvement costs payable in
connection therewith); provided, however, Buyer shall pay, or reimburse
Seller, for any and all tenant improvement costs, leasing commissions,
landlord costs or other expenses in connection therewith; provided further,
however, that the exercise of any renewal or extension options by tenants
under Tenant Leases shall not be deemed to be a violation on the part of
Seller of its obligation under this subparagraph.
(4) Except in the case of an emergency, Seller shall
not make any material structural alterations to the Property (including,
without limitation, any material reduction in the gross leasable area of
the Property) without the prior written consent of Buyer (which consent
will not be unreasonably withheld).
(5) Seller shall not apply for any zoning or land-use
change without the prior written consent of Buyer.
(6) Seller shall have the right to actively market the
Property to third parties for sale and receive back-up purchase offers from
such third parties (and enter into negotiations with such third parties in
connection therewith).
(7) Seller shall maintain its existing insurance (or
substantially equivalent coverage) through Closing.
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 PRECEDENT DESCRIBED IN
PARAGRAPH 4 HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE
WITH PARAGRAPH 6 HEREOF, THEN THE ESCROW DEPOSIT 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
<PAGE>
BY REASON OF SELLER'S DEFAULT, AND BUYER SHALL HAVE FULLY PERFORMED ITS
OBLIGATIONS HEREUNDER AND 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 ESCROW
DEPOSIT 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 ESCROW
DEPOSIT 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 ESCROW DEPOSIT SHALL BE
SELLER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS AGREEMENT BY REASON OF
SUCH DEFAULT, SUBJECT TO THE PROVISIONS OF PARAGRAPH 10I HEREOF.
-------------------- --------------------
Seller's Initials Buyer's Initials
9. MISCELLANEOUS.
A. BROKERS.
(1) Except as expressly 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 10A(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. In the
event that Broker makes a claim for broker's or finder's fee or commissions
in connection with any of the transactions contemplated by this Agreement
(regardless of whether or not the transactions contemplated by this
Agreement close), Seller shall indemnify and defend Buyer from the same if
such claim shall be based upon any statement or agreement alleged to have
been made by Seller.
<PAGE>
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 $1,000,000; provided,
however, that (a) the limitation of liability contained herein shall not
apply to Seller's indemnification obligations under Paragraph 9.A(2) with
respect to claims for the payment of a brokerage commission by Broker, (b)
solely with respect to the representations, warranties, indemnifications,
covenants or other obligations of Seller directly relating to the Tenant
Lease for Liz Claiborne, the limitation of liability contained herein shall
be increased by an amount not to exceed $300,000, and (c) solely with
respect to the representations, warranties, indemnifications, covenants or
other obligations of Seller directly relating to the Tenant Lease for
British American House, the limitation of liability contained herein shall
be increased by an amount not to exceed $200,000, it being intended by the
parties that the maximum 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 (including any obligations of Seller under the foregoing (b)
and (c), but excluding any obligations of Seller under the foregoing (a))
shall not exceed $1,500,000; provided, further however, that (i) in the
event that Buyer or Seller obtains, on or before the expiration of the
Survival Period, a Tenant Estoppel Certificate with respect to the Tenant
Lease for Liz Claiborne and such Tenant Estoppel Certificate meets the
Minimum Estoppel Standards, the limitation of liability contained herein
shall be reduced by an amount equal to $300,000, and (ii) in the event that
Buyer or Seller obtains, on or before the expiration of the Survival
Period, a Tenant Estoppel Certificate with respect to the Tenant Lease for
British American House and such Tenant Estoppel Certificate meets the
Minimum Estoppel Standards, the limitation of liability contained herein
shall be reduced by an amount equal to $200,000, it being intended by the
parties that, to the extent that Buyer or Seller obtains, on or before the
expiration of the Survival Period, Tenant Estoppel Certificates with
respect to the Tenant Leases for each of Liz Claiborne and British American
House and such Tenant Estoppel Certificates meet the Minimum Estoppel
Standards, the maximum 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 (excluding Seller's indemnification obligations under
Paragraph 9.A(2) with respect to claims for the payment of a brokerage
commission by Broker) shall not exceed $1,000,000. In this connection, in
the event that upon the consummation of the transactions contemplated by
this Agreement, Seller has not obtained a Tenant Estoppel Certificate from
one or more tenants of the Property, Buyer shall reasonably cooperate with
Seller's efforts to obtain a Tenant Estoppel Certificate from such
tenant(s).
(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 $25,000 in the aggregate; provided, however, nothing contained in
the foregoing shall limit Seller's liability for any proration amounts
provided for in this Agreement.
<PAGE>
(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) Notwithstanding the foregoing, Seller or its
successor in interest shall either (a) maintain a net worth on a current
value basis of not less than $1,500,000 (net of any known liabilities) for
the Survival Period (or if a timely claim is made by Buyer hereunder, until
such claim is finally resolved), or (b) establish reserves of at least
$1,500,000 in cash or reasonably liquid investments (net of any known
liabilities) as of the Closing Date for the purpose of paying during the
Survival Period any claims, expenses, liabilities or attorneys' fees of
Seller or such successor-in-interest (including any amounts incurred in
connection with resolving or defending any claim of liability hereunder)
with respect to a breach or alleged breach of 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), with respect to the
Property; provided, however, that (i) in the event that Buyer or Seller
obtains, on or before the expiration of the Survival Period, a Tenant
Estoppel Certificate with respect to the Tenant Lease for Liz Claiborne and
such Tenant Estoppel Certificate meets the Minimum Estoppel Standards,
Seller or its successor in interest shall have the right to reduce its net
worth on a current value basis (or the amount of the reserves required
hereunder) by an amount not to exceed $300,000, and (ii) in the event that
Buyer or Seller obtains, on or before the expiration of the Survival
Period, a Tenant Estoppel Certificate with respect to the Tenant Lease for
British American House and such Tenant Estoppel Certificate meets the
Minimum Estoppel Standards, Seller or its successor in interest shall have
the right to reduce its net worth on a current value basis (or the amount
of the reserves required hereunder) by an amount not to exceed $200,000.
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.
<PAGE>
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 New Jersey.
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; provided further, however, that Buyer
may assign this Agreement to any entity in which Buyer, Lehman Brothers
Holdings, Inc. ("Lehman") or a combination thereof has not less than a 51%
interest in capital and profits in such entity. 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. Seller hereby acknowledges that the Escrow Deposit has been
funded by a loan from Lehman, that Buyer has assigned its interest in this
Agreement to Lehman as collateral for such loan; and that Buyer may not
modify this Agreement or waive any provision herein without the consent of
Lehman. Buyer hereby acknowledges and agrees that Seller shall be entitled
to rely upon any written notice received from Lehman with respect to this
Agreement, that Seller shall not be obligated to accept any performance
hereunder from Lehman on the behalf of Buyer unless and until Seller
receives written a written notice from Lehman stating that Lehman is
tendering such performance on the behalf of Buyer, and that except for
Seller's obligations hereunder as expressly provided in this Agreement,
Seller shall not have any liability to Buyer or Lehman with respect to the
transactions between Buyer and Lehman.
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:
--------
Shopco Advisory Corp.
1250 Broadway
New York, New York 10001
Attention: Mr. Roy Praver
Facsimile: (212) 594-9400 ext. 491
Telephone: (212) 594-9425
<PAGE>
WITH COPY TO:
------------
O'Melveny & Myers LLP
Citicorp Center
153 East 53rd Street
New York, New York 10022-4611
Attention: Ken Friedman, Esq.
Facsimile: (212) 326-2061
Telephone: (212) 326-2870
WITH COPY TO:
------------
Lehman Brothers Holding, Inc.
3 World Financial Center
New York, New York 10285
Attention: Mr. Carmine A. Visone
Facsimile: (212) 526-1415
Telephone: (212) 526-1796
TO SELLER:
---------
c/o JMB Realty Corporation
900 North Michigan Avenue
9th Floor
Chicago, Illinois 60611
Attention: Ms. Andrea Pauls Backman
Facsimile: (312) 915-2502
Telephone: (312) 915-2367
WITH COPY TO:
------------
Hamptons International
55 West Monroe
Suite 3200 West
Chicago, Illinois 60603
Attention: Ms. Anne Brettingen
Facsimile: (312) 899-0923
Telephone: (312) 899-7720
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).
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.
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:
------
JMB INCOME PROPERTIES, LTD.-XI,
an Illinois limited partnership
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
BUYER:
-----
SHOPCO ADVISORY CORP.,
a New York 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: June __, 1999
FIRST AMERICAN TITLE INSURANCE COMPANY OF NEW YORK
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
"Escrow Holder"
<PAGE>
EXHIBIT LIST
------------
"A" - Property Description
"B" - Personal Property
"C-1" - Required Tenants
"C-2" - Form of Tenant Estoppel Certificate
"C-3" - Form of REA Estoppel Certificate
"D" - Deed
"E" - Bill of Sale, Assignment and Assumption Agreement
"F" - Certificate of Non-Foreign Status
"G" - Exceptions to Seller's Representations
and Warranties
"H-1" - List of Tenant Leases
"H-2" - List of REA Documents
"I" - Service Agreements
"J" - Environmental Reports
"K" - Initial Title Objection Notice
