United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended August 31, 1996
or
Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Transition period from ______ to ______
Commission File Number: 0-15550
AMERICAN STORAGE PROPERTIES, L.P.
Exact Name of Registrant as Specified in its Charter
Virginia 11-2741889
State or Other Jurisdiction of
Incorporation or Organization I.R.S. Employer Identification No.
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
Consolidated Balance Sheets
At August 31, At November 30,
1996 1995
Assets
Self - service storage facilities, at cost:
Land $ 0 $ 3,756,319
Buildings and improvements 0 16,061,509
------------ ------------
0 19,817,828
Less accumulated depreciation 0 (6,010,342)
------------ ------------
0 13,807,486
Property held for disposition 13,478,406 0
Cash and cash equivalents 3,067,160 2,667,352
Other assets 148,319 149,923
------------ ------------
Total Assets $ 16,693,885 $ 16,624,761
============ ============
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 218,906 $ 120,589
Due to affiliates 46,298 53,522
Security deposits 11,753 13,050
Advance rent 123,182 115,194
Distribution payable 466,228 466,228
------------ ------------
Total Liabilities 866,367 768,583
------------ ------------
Minority Interest 0 13,985
------------ ------------
Partners' Capital (Deficit):
General Partners (129,084) (125,793)
Limited Partners 15,956,602 15,967,986
------------ ------------
Total Partners' Capital 15,827,518 15,842,193
------------ ------------
Total Liabilities and Partners' Capital $ 16,693,885 $ 16,624,761
============ ============
Consolidated Statement of Partners' Capital (Deficit)
For the nine months ended August 31, 1996
Limited General
Partners Partners Total
Balance at November 30, 1995 $ 15,967,986 $ (125,793) $ 15,842,193
Net income (loss) 1,387,299 (3,291) 1,384,008
Cash distributions (1,398,683) 0 (1,398,683)
------------ ---------- ------------
Balance at August 31, 1996 $ 15,956,602 $ (129,084) $ 15,827,518
============ ========== ============
Consolidated Statements of Operations
Three months ended Nine months ended
August 31, August 31,
1996 1995 1996 1995
Income
Rental $ 945,550 $ 899,280 $ 2,755,866 $ 2,600,452
Interest 36,118 33,035 105,273 91,013
--------- --------- ----------- -----------
Total Income 981,668 932,315 2,861,139 2,691,465
--------- --------- ----------- -----------
Expenses
Property operating 279,912 297,904 848,935 853,898
Depreciation 0 164,286 329,080 492,606
General and administrative 50,693 37,829 299,116 113,574
--------- --------- ----------- -----------
Total Expenses 330,605 500,019 1,477,131 1,460,078
--------- --------- ----------- -----------
Net Income $ 651,063 $ 432,296 $ 1,384,008 $ 1,231,387
========= ========= =========== ===========
Net Income (Loss) Allocated:
To the General Partners $ 0 $ (1,643) $ (3,291) $ (4,926)
To the Limited Partners 651,063 433,939 1,387,299 1,236,313
--------- --------- ----------- -----------
$ 651,063 $ 432,296 $ 1,384,008 $ 1,231,387
========= ========= =========== ===========
Per limited partnership unit
(50,132 outstanding) $12.98 $8.65 $27.67 $24.66
--------- --------- ----------- -----------
Consolidated Statements of Cash Flows
For the nine months ended August 31, 1996 1995
Cash Flows From Operating Activities:
Net income $ 1,384,008 $ 1,231,387
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 329,080 492,606
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Other assets 1,604 (4,614)
Accounts payable and accrued expenses 98,317 54,595
Due to affiliates (7,224) (8,547)
Security deposits (1,297) (2,392)
Advance rent 7,988 7,897
Minority interest (13,985) 0
----------- -----------
Net cash provided by operating activities 1,798,491 1,770,932
----------- -----------
Cash Flows From Investing Activities:
Additions to real estate 0 (39,605)
----------- -----------
Net cash used for investing activities 0 (39,605)
----------- -----------
Cash Flows From Financing Activities:
Distributions paid - Limited Partners (1,398,683) (1,227,802)
----------- -----------
Net cash used for financing activities (1,398,683) (1,227,802)
----------- -----------
Net increase in cash and cash equivalents 399,808 503,525
Cash and cash equivalents, beginning of period 2,667,352 2,001,535
----------- -----------
Cash and cash equivalents, end of period $ 3,067,160 $ 2,505,060
=========== ===========
Notes to the Consolidated Financial Statements
The unaudited interim consolidated financial statements should be read in
conjunction with the Partnership's annual 1995 audited consolidated financial
statements within Form 10-K.
The unaudited consolidated financial statements include all adjustments which
are, in the opinion of management, necessary to present a fair statement of
financial position as of August 31, 1996 and the results of operations and cash
flows for the nine months ended August 31, 1996 and 1995 and the statement of
partners' capital (deficit) for the nine months ended August 31, 1996. Results
of operations for the period are not necessarily indicative of the results to
be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1995
which requires disclosure in this interim report per Regulation S-X, Rule
10-01, Paragraph (a)(5).
Tender Offer
- ------------
On March 1, 1996, Public Storage, Inc., a California corporation ("Public
Storage") commenced a tender offer to purchase up to 12,533 outstanding Units
at a net cash price of $419 per unit. On April 2, 1996, the tender offer
expired with Public Storage accepting for purchase 13,516 Units, or
approximately 26.97% of the outstanding Units.
Sale of Properties
- ------------------
On May 17, 1996, American Storage Properties, L.P. (the "Partnership"),
entered into three Contracts of Sale (together, the "Contracts of Sale") dated
as of May 17, 1996, one for the Virginia properties and two as general partner
of the Florida limited partnerships, with Public Storage, pursuant to which the
Partnership agreed to sell substantially all its assets to Public Storage for
an aggregate price of $27,500,000, subject to adjustment, in cash (the "Sale").
The Sale was conditioned upon, among other things, the simultaneous closing of
all three Contracts of Sale, except under certain circumstances, and the
approval of the Sale by holders of a majority of the outstanding units of
limited partnership interests of the Partnership.
To obtain approval for the Sale, a proxy solicitation describing the terms of
the Sale was mailed to Limited Partners on September 10, 1996. Limited
Partners were required to submit executed ballots ("Ballots") by
October 10, 1996.
On October 10, 1996, the Partnership announced the approval by Limited Partners
holding a majority of the outstanding Units. In accordance with Sections
16.a.(iii) and (iv) of the Amended and Restated Certificate and Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), approval
of the Sale will result in the dissolution of the Partnership.
The Sale of the Partnership's nine properties (the "Properties") was
consummated on October 11, 1996. The Properties were sold for $27,500,000 and
the transaction resulted in a gain of approximately $13,800,000, which will be
reflected in the Partnership's statement of operations for the year ended
November 30, 1996. It is currently anticipated that a special cash
distribution of approximately $540 per Unit, representing the majority of the
net proceeds from the Sale, will be distributed to the Limited Partners in the
near future. The General Partners intend to wind up the affairs of the
Partnership and subsequently liquidate the Partnership in accordance with the
terms of the Partnership Agreement. The remaining proceeds from the Sale and
cash reserves will be first used to pay the Partnership's remaining obligations
and costs of liquidation, and the balance distributed to the Partners. The
Partnership currently expects that such subsequent distribution will
approximate $25 per Unit.
Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
At August 31, 1996, the Partnership had cash and cash equivalents of $3,067,160
which were invested in money market accounts. The increase of $399,808 from
November 30, 1995 is attributable to net cash provided by operating activities
exceeding amounts used to fund cash distributions to the Limited Partners.
The Partnership acquired an interest in the Fern Park property and the Oak
Ridge property through two Limited Partnerships with affiliates of the seller
of the facilities (the "Limited Partner"). The Limited Partnership agreements
provide that net cash from operations of these two properties will be
distributed each quarter 100% to the Partnership until the Partnership has
received an amount equal to a cumulative annual 12% return ("Preferred Return")
on its capital contribution, as adjusted. The balance of any net cash from
operations will be distributed 85% to the Partnership and 15% to the Limited
Partner. The Preferred Return for Fern Park was satisfied during the third
quarter of fiscal 1995 and the balance of net cash from operations was
distributed according to the guidelines stated above. The minority share is
recorded as minority interest in the Partnership's financial statements.
Minority interest decreased to $0 at August 31, 1996 from $13,985 at
November 30, 1995, primarily due to the payment made during 1996 of the
minority share to the Limited Partner.
In response to a request from an unaffiliated third party, Public Storage,
Inc., a California corporation ("Public Storage"), to receive a list of the
Partnership's Unitholders, the Partnership entered into a letter agreement,
dated February 9, 1996, pursuant to which the Partnership furnished the list
and such third party agreed not to purchase more than 5% of the outstanding
Units in the open market or more than 25% of the outstanding Units pursuant to
a tender offer filed with the Securities and Exchange Commission. On March 1,
1996, Public Storage commenced a tender offer to purchase up to 12,533
outstanding Units at a net cash price of $419 per Unit. On April 2, 1996, the
tender offer expired with Public Storage accepting for purchase 13,516 Units,
or approximately 26.97% of the outstanding Units.
Given the improvement of the self-storage industry in recent years, combined
with the strong performance of the Partnership's nine storage facilities, the
General Partners began marketing the facilities for sale during the first
quarter of 1996. The objective has been to maximize the selling price of the
properties and distribute the net sales proceeds to Limited Partners. The
General Partners engaged in discussions with several potential buyers who
expressed an interest in acquiring one or more of the Partnership's properties.
On May 17, 1996 the Partnership entered into three substantially identical
Contracts of Sale (together, the "Contracts of Sale") with Public Storage, one
for the Virginia properties and two as general partner of the Florida limited
partnerships, pursuant to which the Partnership agreed to sell substantially
all its assets to Public Storage for an aggregate price of $27,500,000, subject
to adjustment, in cash (the "Sale"). The Sale price was the highest offer
received by the Partnership.
The Sale was conditioned upon, among other things, the simultaneous closing of
all three Contracts of Sale, except under certain circumstances, and the
approval of the Sale by holders of a majority of the outstanding Units of
limited partnership interests of the Partnership. To obtain such approval, a
proxy solicitation describing the terms of the Sale was mailed to Limited
Partners on September 10, 1996. Limited Partners were required to submit
executed ballots ("Ballots") by October 10, 1996.
On October 10, 1996 the Partnership announced the approval by Limited Partners
holding a majority of the outstanding Units. In accordance with Sections
16.a.(iii) and (iv) of the Amended and Restated Certificate and Agreement of
Limited Partnership of the Partnership (the "Partnership Agreement"), approval
of the Sale will result in the dissolution of the Partnership.
The Sale of the Partnership's nine properties was consummated on October 11,
1996. The Properties were sold for $27,500,000 and the transaction resulted in
a gain of approximately $13,800,000, which will be reflected in the
Partnership's statement of operations for the year ended November 30, 1996. It
is currently anticipated that a special cash distribution of approximately $540
per Unit, representing the majority of the net proceeds from the Sale, will be
distributed to the Limited Partners in the near future. The General Partners
intend to wind up the affairs of the Partnership and subsequently liquidate the
Partnership in accordance with the terms of the Partnership Agreement. The
remaining proceeds from the Sale and cash reserves will be first used to pay
the Partnership's remaining obligations and costs of liquidation, and the
balance distributed to the Partners. The Partnership currently expects that
such subsequent distribution will approximate $25 per Unit.
In view of the Sale, the Partnership's self-storage facilities at cost, less
accumulated depreciation at August 31, 1996, have been recorded on the
Partnership's Balance Sheet as "Property held for disposition." Property held
for disposition at August 31, 1996 was $13,478,406.
The Partnership expects sufficient cash flow to be generated from operations to
meet its current operating requirements. Net cash from operations was
distributed to the Limited Partners on a quarterly basis in proportion to the
number of units held by each Limited Partner. On or about October 15, 1996,
the Partnership will pay a distribution of net cash flow from operations of
$9.30 per unit for the quarter ended August 31, 1996. In view of the sale of
the Partnership's assets, there will be no more regular quarterly distributions
to Limited Partners.
Certain age-related repairs and capital improvements which are required at the
properties have historically been funded from the Partnership's cash reserves
and cash flow from operations. Due to the impending sale of the properties,
major repairs and capital improvements projects previously budgeted for 1996
have been deferred.
Results of Operations
Partnership operations resulted in net income of $651,063 and $1,384,008 for
the three and nine months ended August 31, 1996, respectively, compared with
$432,296 and $1,231,387 for the three and nine months ended August 31, 1995,
respectively. The higher net income for the 1996 periods is primarily
attributable to an increase in rental income and a decrease in depreciation
expense, which was partially offset by an increase in general and
administrative expenses for the 1996 periods, primarily due to the audit, legal
and professional costs incurred in connection with the Proposed Sale and
preparation of solicitation materials.
Rental income totaled $945,550 and $2,755,866 for the three and nine months
ended August 31, 1996, respectively, compared to $899,280 and $2,600,452 for
the three and nine months ended August 31, 1995, respectively. The increase in
rental income can be attributed in part to increased rental rates at several of
the Partnership's properties, as well as higher occupancy levels at certain
properties, particularly the Midlothian property. Interest income totaled
$36,118 and $105,273 for the three and nine months ended August 31, 1996,
respectively, compared to $33,035 and $91,013 for the three and nine months
ended August 31, 1995, respectively. The increase is due to higher cash
balances maintained by the Partnership during fiscal 1996.
Property operating expenses totaled $279,912 and $848,935 for the three and
nine months ended August 31, 1996, respectively, compared with $297,904 and
$853,898 for the three and nine months ended August 31, 1995, respectively. The
decrease is primarily due to lower costs for routine repairs and maintenance at
the properties during the second and third quarters of 1996.
General and administrative expenses totaled $50,693 and $299,116 for the three
and nine months ended August 31, 1996, respectively, compared with $37,829 and
$113,574 for the three and nine months ended August 31, 1995, respectively. The
increase is primarily due to an increase in legal, audit, printing and postage
and other professional fees due to the costs incurred in connection with the
Sale and preparation of solicitation materials. The increase is also due in
part to higher salary reimbursements in 1996.
The average weighted occupancy level at the Partnership's properties was 94%
at August 31, 1996, compared with 92% at August 31, 1995.
Part II Other Information
Items 1-3 Not applicable.
Item 4 Submission of matters to a vote of Unitholders
To obtain approval for the Sale, a proxy solicitation describing
the terms of the Sale was mailed to Limited Partners on
September 10, 1996. Limited Partners were required to submit
executed ballots ("Ballots") by October 10, 1996.
On October 10, 1996 the Partnership announced the approval by
Limited Partners holding a majority of the outstanding Units.
As of that date, Ballots representing 36,448 Units or 72.704%
of the outstanding Units, were received. Of this amount,
Ballots representing 35,616.905 Units or 71.046% of outstanding
Units, approved the Sale, Ballots representing 669.215 Units or
1.335% of the outstanding Units, withheld consent, and holders
of 161.880 Units, or 0.323% of the outstanding Units, abstained.
Item 5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(10.1) Contract of Sale (Virginia) dated May 17, 1996
between American Storage Properties, L.P. and
Public Storage, Inc.
(10.2) Contract of Sale (Fern Park) dated May 17, 1996
between Hutton/GSH American Storage Properties,
L.P. (Fern Park) and Public Storage, Inc.
(10.3) Contract of Sale (Oak Ridge) dated May 17, 1996
between Hutton/GSH American Storage Properties,
L.P. (Oak Ridge) and Public Storage, Inc.
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were
filed during the quarter ended August 31, 1996.
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.
AMERICAN STORAGE PROPERTIES, L.P.
BY: STORAGE SERVICES INC.
General Partner
Date: October 21, 1996
BY: /s/ Paul L. Abbott
NAME: Paul L. Abbott
TITLE: Director, President, Chief
Executive Officer and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Nov-30-1996
<PERIOD-END> Aug-31-1996
<CASH> 3,067,160
<SECURITIES> 000
<RECEIVABLES> 000
<ALLOWANCES> 000
<INVENTORY> 000
<CURRENT-ASSETS> 000
<PP&E> 13,626,725
<DEPRECIATION> 000
<TOTAL-ASSETS> 16,693,885
<CURRENT-LIABILITIES> 866,367
<BONDS> 000
<COMMON> 000
000
000
<OTHER-SE> 15,827,518
<TOTAL-LIABILITY-AND-EQUITY> 16,693,885
<SALES> 2,755,866
<TOTAL-REVENUES> 2,861,139
<CGS> 000
<TOTAL-COSTS> 848,935
<OTHER-EXPENSES> 628,196
<LOSS-PROVISION> 000
<INTEREST-EXPENSE> 000
<INCOME-PRETAX> 1,384,008
<INCOME-TAX> 000
<INCOME-CONTINUING> 1,384,008
<DISCONTINUED> 000
<EXTRAORDINARY> 000
<CHANGES> 000
<NET-INCOME> 1,384,008
<EPS-PRIMARY> 27.67
<EPS-DILUTED> 27.67
</TABLE>
CONTRACT OF SALE (Virginia)
THIS CONTRACT, made as of May 17, 1996, by and between American
Storage Properties, L.P., a Virginia limited partnership ("Seller"), and
Public Storage, Inc., a California corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Buyer desires to purchase all
of Seller's right, title and interest in the real properties listed on
Exhibit A attached hereto and made a part hereof, the improvements and any
fixtures and personalty, presently existing and located thereon and therein
and the items set forth on Exhibit A (each individually, a "Property" and
collectively, the "Properties"), all upon the terms and subject to the
conditions herein after set forth;
WHEREAS, as of the date hereof, Buyer and Seller (as general
partner of two Florida limited partnerships) have simultaneously entered into
two Contracts of Sale (the "Florida Contracts") in respect of self-service
storage facilities located in Florida (the "Florida Properties"); and
WHEREAS, following such sale, Seller intends to liquidate and
distribute its net assets (including the proceeds of such sale) to its
partners.
NOW, THEREFORE, in consideration of the foregoing, the sum of $1.00
by each party in hand paid to the other, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto, intending to be legally bound, do hereby mutually agree
as follows:
1. Agreement to Purchase and Sell.
------------------------------
Subject to the terms and conditions hereinafter set forth,
Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller,
free and clear of all liens, claims, encumbrances and other charges,
except the Permitted Exceptions (as hereinafter defined), all of Seller's
right, title and interest in and to the Properties.
2. Purchase Price.
--------------
The purchase price ("Purchase Price") for the Properties, which
Buyer agrees to pay, is the sum of $20,510,000, payable as follows:
(a) $1,500,000, as the downpayment (the "Downpay ment"), upon
the execution of this Contract by wire transfer of immediately available
funds to the account of Escrow Agent (as hereinafter defined), to be held by
the Escrow Agent in accordance with this Section 2 and subject to Section
24.
(b) The remainder of the Purchase Price at Closing (as
hereinafter defined), by wire transfer of immediately available funds to
Seller's account pursuant to Seller's instructions.
The Title Insurer (as hereinafter defined) shall act as escrow
agent (the "Escrow Agent") and shall hold the Downpayment in accordance with
the provisions of the escrow agreement annexed hereto as Exhibit B and made
a part hereof (the "Escrow Agreement"), which Escrow Agreement is being
executed simultaneously with this Contract.
Any interest earned on the Downpayment shall accrue to the benefit
of Buyer.
3. Evidence of Title.
-----------------
(a) Seller shall convey to Buyer at Closing (as hereinafter
defined) good and valid marketable fee simple title to the Properties,
subject to any covenants, conditions, rights of way, restrictions, easements
and other matters affecting title, which do not materially impair the use or
the value of the Property to which they relate (collectively, the "Permitted
Exceptions"; provided, however, that Permitted Exceptions shall expressly
exclude any Unpermitted Exceptions (as hereinafter defined)).
(a) Buyer shall obtain and promptly deliver to Seller within 30
days after the date hereof (i) commitments for ALTA policies of owners title
insurance or the equivalent thereof in the applicable jurisdiction (the
"Title Commitments") issued by Chicago Title Insurance Company (the "Title
Insurer") showing fee simple title to the Properties as vested in Seller and
to be vested in Buyer, subject to the Permitted Exceptions and any standard
"preprinted" exceptions set forth in the Title Commitments and (ii) updated
surveys prepared by licensed land surveyors according to ALTA standards (or
the equivalent thereof in the applicable jurisdiction) showing the boundaries
of the Property, the location of any easements, rights-of-way, improvements
and encroach ments thereon and certifying the number of acres (to the nearest
one thousandth acre) comprising the Properties (the "Surveys").
(b) As used herein, the term "Unpermitted Exception" shall mean
with respect to any Property (provided the same is not caused by the actions
of Buyer):
(A) Any building encroachment or sign en croachment (i) on
real estate not owned by Seller, (ii) on a setback line, or (iii) in
violation of a binding easement burdening the Property, in each case
which materially impairs the use or value of the Property;
(B) Any defect in the Seller's chain of title which would
prevent Seller from being able to convey title to the Property in fee
simple at Closing under the laws of the state in which the Property is
located, unless the Title Insurer is willing to issue a policy of title
insurance which contains affirmative coverage for claims arising solely
out of such defect;
(C) Any easement which burdens the Property such that access
or use is compromised, in each case which materially impairs the use,
access or value of the Property;
(D) Any lack of access or easements necessary to operate the
Property as a self-storage facility in the manner which such Property
has been operated by Seller prior to Closing, in each case which
materially impairs the use, access or value of the Property;
(E) Any liens for the payment of money other than real estate
taxes, association assessments, special district taxes and related
charges not yet due and payable; and
(G) (i) the failure to be in material conformance with the
then applicable local zoning codes, (ii) if a Property is not in
conformance with the then applicable local zoning codes, the failure of
such Property to have the status equivalent to a "non-conforming use"
and (iii) the existence of a permanent and final order by the applicable
local jurisdiction which materially impairs the use or value of the
Property.
4. Inspections.
-----------
(a) Buyer may conduct the due diligence investigation described
below until the 30th day following the date hereof (the "Investigation
Period").
(a) Prior to the termination of the Investigation Period, Buyer
or Buyer's attorney may deliver to Seller a notice (a "Defect Notice")
setting forth a reasonable description of any Title Defects, including any
Unpermitted Exceptions, Structural Defects (as hereinafter defined),
Environmental Defects (as hereinafter defined) or Sales Package Defects (as
hereinafter defined) (collectively "Material Defects") that it has discovered
with respect to the Properties. Such description shall include copies of any
reports, studies, audits, searches and similar documentation relating to the
Material Defects discovered in connection with Buyer's investigation and
Buyer's estimate of the cost to cure any such described Material Defects.
Within 10 days of receiving such a Defect Notice, Seller shall
deliver a notice to Buyer with respect to each affected Property (i)
disputing such Material Defects, (ii) stating that some or all of the
Material Defects have been, or agreeing prior to the Closing that they will
be, cured or (iii) agreeing to grant the Buyer a credit against the Purchase
Price equal to the cost to cure such Material Defects. Notwith standing
clause (a) above or anything in the Contract to the contrary, Seller shall
not be obligated to grant Buyer a credit against the Purchase Price to cure
Material Defects (other than Environmental Defects) with respect to any or
all of the Properties so affected in excess of $500,000, subject to Section
24. If the cost to correct any Environmental Defect exceeds 10% of the
allocated value of the affected Property as set forth in Exhibit C attached
hereto and made a part hereof, Seller shall have the option to remove such
affected Property from the transaction contemplated hereby, in each case the
Purchase Price shall be reduced in accordance with Exhibit C.
If Buyer has alleged any Material Defects which Seller has disputed
or the cost to cure such Material Defects is in dispute, the parties shall
endeavor in good faith to resolve such dispute. If they do not resolve such
dispute within 10 days, the matter in dispute shall be submitted to binding
arbitration by the American Arbitration Association (the "Association") (or
any suc cessor organization) (provided that, in the event of a dispute as to
an Environmental Defect, the arbitration shall be performed by a reputable
arbitrator with at least 10 years experience in environmental matters). All
arbitration shall be finally determined in New York City and shall be
governed (except as provided above) in accor dance with the Rules for
Commercial Arbitration of the Association (or any successor thereto) and the
judgment or the award rendered may be entered in any court having
jurisdiction. Each party shall pay 50% of the fees and expenses of the
Association. The Closing Date shall be adjourned with respect to such
Property (or, at Seller's or Buyer's option, all of the Properties if the
dispute involves three or more Properties) pending resolution of the matter
in dispute.
Notwithstanding anything herein to the con trary, (i) Seller shall
have the right to adjourn the Closing Date for a reasonable period as shall
be necessary to cure any Material Defect and (ii) if Seller has committed to
curing Material Defects with respect to certain Properties, Seller shall have
the right to cause the Closing to take place with respect to the other
Properties and then cause the Closing to take place with respect to the
affected Properties within such reasonable period as shall be necessary to
cure any such Material Defects.
Notwithstanding anything herein to the contrary, the discovery of
any defects or Material Defects shall not give rise to any right of Buyer to
(i) terminate this Contract or remove any of the Properties from the
transactions contemplated hereby or (ii) except for the cost of curing
Environmental Defects, obtain credit against the Purchase Price in excess of
$500,000 to cure Material Defects with respect to any or all of the
Properties so affected, subject to Section 24.
(b) Seller shall make available to Buyer any Phase I environmental
site assessments and Phase II environmental assessments of the Properties, if
any, previously performed for Seller. Buyer may obtain additional Phase I
environmental site assessments of the Properties and otherwise inspect the
Properties to conduct its due diligence review thereof. Buyer shall conduct
all environmental due diligence in a commercially reasonable manner, and
shall use reasonable efforts to minimize any interference with or impairment
of the regular conduct of the Seller's business. If Buyer's environmental
due diligence indicates a potential material environmental liability, Buyer
may conduct a Phase II environmental assessment (the Phase I environmental
site assessment and Phase II environmental assessments, if any, shall be
collectively referred to as the "Environmental Reports") on such Property,
provided (i) Buyer has provided Seller with a copy of the Phase I
environmental site assessment describing such condition, (ii) Buyer has
provided Seller with a copy of the scope of work proposed for such Phase II
environmental assessment, (iii) Seller consented to such additional Phase II
environmental assessment, which consent shall not be unreasonably withheld or
delayed, and (iv) Seller has agreed to a reasonable extension of the
Inspection Period following the receipt of any Phase I environmental site
assessment which recommends a Phase II environmental assessment be performed
on any Property in order for Buyer to perform further environmental due
diligence with respect to such Property.
(c) Seller shall make available to Buyer upon Buyer's
reasonable request no later than 10 days following the date of full execution
of this Contract, to the extent in the possession or control of Seller and
relating to the Properties, a copy of the current Form 10-K of Seller on file
with the Securities and Exchange Commission including all exhibits thereto,
copies of the Service Contracts (as hereinafter defined), the most recent
rent rolls available to the managing general partner of Seller, and copies of
insurance policies and all other information and records pertaining to the
Properties within Seller's possession or control. Buyer acknowledges that
all non-public information contained in such documents is confidential.
Buyer shall have the right, at its sole cost and expense, to conduct its own
audit of the Properties. Buyer agrees not to disclose such information to any
person except to Buyer's officers, employee, agents and contractors for
purposes of conducting this transaction, and Buyer shall require any such
person receiving such information to protect the confidentiality thereof,
except to the extent such information is a matter of public record or becomes
a matter of public record through no fault or action of Buyer or Buyer's
officers, employee, agents or contractors.
(d) Buyer shall have the right to contact existing commercial
tenants which lease in excess of 1,000 sq. ft from Seller, as selected by
Buyer; provided that, Seller shall have the right to participate in and/or
monitor any discussions or correspondence between Buyer and such selected
existing tenants.
(e) Within five days of the execution of this Contract,
Seller shall provide Buyer with copies of all of Seller's yellow page
advertisements and contracts with respect to the properties.
(f) Other than with respect to the documents made available
by Seller pursuant to Section 4(d) and other than as specified in Section
12, all of the foregoing studies, audits and investigations by or on behalf
of Buyer, including, without limitation, Phase II environmental assessments,
shall be at Buyer's sole cost, expense and risk, and Buyer shall restore the
Properties to the condition existing prior to the performance of any such
studies, audits and investigations. Prior to commencing any such studies,
audits and investigations, Buyer shall furnish to Seller a certificate of
insurance evidencing comprehensive general public liability insurance
insuring the person or entity performing such studies, audits and
investigations and listing Seller and the general partners of Seller as
additional insureds thereunder.
(g) The term "Structural Defects" shall mean material structural
flaws to foundations, load bearing walls or roof support systems affecting
any one of the Properties, set forth in a report certified by an engineer
licensed in the applicable jurisdiction, but excluding any flaws which are
common or usual in similar assets of like age assuming reasonable repair
and maintenance has been performed to the foundations, load bearing walls
or roof support systems. Such report shall state the aggregate cost to
cure all material structural flaws with respect to any or all of the
Properties so affected.
(h) The term "Title Defects" shall mean any matter, objected
to by Buyer, encumbering the Properties other than the Permitted Exceptions
(the "Title Defects").
(i) The term "Environmental Defect" shall mean "Hazardous
Materials" (hereinafter defined) located in, on or under any one of the
Real Properties in violation of any Environmental Laws (hereinafter
defined).
(j) The term "Sales Package Defects" shall mean misstatements
in the income and expense statements and rent roll previously delivered by
Seller to Buyer and actually relied upon by Buyer in good faith, in each
case other than mistatements which do not in the aggregate have a material
adverse effect on the Properties taken as a whole.
(k) In order to establish an Environmental Defect, Buyer
shall be required to deliver to Seller on or prior to 10 days after the
earlier of (i) Buyer's receipt of the Environmental Reports or (ii) the end
of the Inspection Period, as to each Property, written notice reasonably
detailing any Environmental Defect. Buyer and Seller shall make reasonable
efforts to agree as to the existence of and the cost to cure any
Environmental Defect. If Buyer and Seller do not agree on the foregoing
within 15 days after Seller's receipt of Buyer's notice described above, then
the parties shall submit the matter to binding arbitration in accordance with
the terms hereof.
(l) As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as hereafter
amended or reauthorized, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq., the Emergency Planning and
Community Right-to-Know Act ("Right-to-Know Act"), 42 U.S.C. Section 11001 et
seq., the Clean Air Act ("CAA), 42 U.S.C. Section 7401 et seq., the Federal
Water Pollution Control Act ("Clean Water Act"), 33 U.S.C. Section 1251 et
seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C. Section 2601 et
seq., the Safe Drinking Water Act ("Safe Drinking Water Act"), 42 U.S. C.
Section 300f et seq., the Atomic Energy Act ("AEA"), 42 U.S.C. Section 2011
et seq., the Occupational Safety and Health Act ("OSHA"), 29 U.S.C. Section
651 et seq., and the Hazardous Materials Transportation Act (the
"Transportation Act"), 49 U.S.C. Section 1802 et seq. As used herein,
"Hazardous Materials" means: (1) "hazardous substances," as defined by
CERCLA; (2) "hazardous wastes," as defined by RCRA; (3) any radioactive
material including, without limitation, any source, special nuclear or by-
product material, as defined by AEA; (4) friable asbestos; (5)
polychlorinated biphenyls; and (6) any other material, substance or waste
regulated under any Environmental Laws.
5. Condition of the Properties.
---------------------------
Subject only to Seller's covenants, representations and
warranties in this Contract, Buyer shall purchase the Properties in their
"AS IS" condition at the Closing Date, subject to all latent and patent
defects (whether physical, financial or legal, including title defects),
based solely on Buyer's own inspection, analysis and evaluation of the
Properties and not in reliance on any records or other information obtained
from Seller or on Seller's behalf. Subject to Section 4(k), Buyer
acknowledges that it is not relying on any statement or representation
(other than any representations, warranties, covenants and indemnifications
contained in this Contract) that has been made or that in the future may be
made by Seller or any of Seller's employees, agents, attorneys or
representatives concerning the condition of the Properties (whether relating to
physical conditions, operation performance, title, or legal matters). Without
limiting the foregoing, any information disclosed in writing to Buyer in
connection with any investigations, inspections, tests or analyses performed
prior to Closing, shall be deemed not violative of any warranty or
representation of Seller, if Buyer proceeds to Closing hereunder.
6. Closing.
-------
Upon the terms and subject to the conditions of this Contract, the
transfer of title and possession of the Properties (the "Closing") shall be
held at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022 at 10:00 a.m., local time, on the date which
is two business days after Seller has received the Partnership Consent
(as hereinafter defined) or such other date as the parties shall
agree. The date on which the Closing occurs is herein called the "Closing
Date".
7. Conditions to Seller's and Buyer's Obligation to Close.
------------------------------------------------------
The obligations of Seller and Buyer to close under this Contract
are subject to the fulfillment, prior to or at Closing, of each of the
following:
(a) Seller shall have obtained consents to the sale of the
Properties (the "Partnership Consent") by limited partners holding a
majority in interest of the units of limited partnership interests.
(b) There shall not be in effect any statute, regulation,
order, decree or judgment of any governmental entity having jurisdiction
which renders illegal or enjoins or prevents in any material respect the
sale of the Properties to Buyer.
(c) The closing of the transactions contemplated by each of
the Florida Contracts shall have occurred, unless either closing shall have
been adjourned by Seller or either of the Florida Properties shall have been
removed by Seller, in each case, in accordance with the terms thereof.
8. Conditions to Seller's Obligation to Close.
------------------------------------------
The obligations of Seller to close under this Contract are
subject to the fulfillment, prior to or at Closing, of each of the
following:
(a) The representations and warranties of Buyer shall have
been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date, as if made at
and as of such date except as otherwise expressly provided herein.
(b) On and as of the Closing Date, Buyer shall have performed
and complied with, in all material respects, all agreements and covenants
required by this Contract to be performed or complied with prior to or on
the Closing Date.
9. Conditions to Buyer's Obligation to Close.
-----------------------------------------
The obligations of Buyer to close under this Contract
are subject to the fulfillment, prior to or at Closing, of each of the
following:
(a) The representations and warranties of Seller shall have
been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date, as if made at
and as of such date except as otherwise expressly provided herein, in each
case other than failures to be true and correct which do not in the
aggregate have a material adverse effect on the Properties taken as a whole.
(b) On and as of the Closing Date, Seller shall have
performed and complied with, in all material respects, all agreements and
covenants required by this Contract to be performed or complied with prior to
or on the Closing Date, other than failures to perform and comply which do
not in the aggregate have a material adverse effect on the Properties taken
as a whole.
10. Deliveries.
----------
(a) Seller's Deliveries. Upon the terms and subject to the
conditions of this Contract, on the Closing Date (except as expressly
provided otherwise), Seller shall convey each Property and its related
interests to Buyer by delivery of the following documents in form and
substance reasonably acceptable to both parties:
(i) quit claim deed in recordable form (provided, however that
Seller shall deliver to Buyer a special warranty deed if the Title Insurer is
unwilling to issue a policy of title insurance which is customary in the
applicable jurisdiction containing no exceptions from coverage solely out of
the delivery by Seller of a quit claim deed);
(ii) non-recourse bill of sale for each Property conveying any
fixtures and personalty owned by Seller without covenants;
(iii) non-recourse assignment of Seller's interest, as lessor,
in any leases of space at the Property (the "Leases") and security deposits
for each Property;
(iv) non-recourse assignment, to the extent assignable, of
Seller's rights under any service or maintenance contracts (including,
without limitation, yellow pages, landscaping, security and refuse removal
contracts) relating to the Property (the "Service Contracts");
(v) non-recourse assignment, to the extent assignable, of any
licenses, permits and unexpired warranties and guarantees, if any, pertaining
to the Property;
(vi) certificates and resolutions as reasonably requested by
Buyer demonstrating the authority of the persons executing documents at
Closing;
(vii) non-foreign affidavit;
(viii) originals, and/or copies, of the Leases in Seller's
possession (which deliveries may be made at the respective Properties) and a
copy of Seller's standard form of lease for the Properties;
(ix) all documents and instruments reasonably required by the
Title Insurer to issue the title policies;
(x) possession of the Properties to Buyer;
(xi) evidence of the termination of the management agreement, if
any, for each Property;
(xii) a form of notice to the tenants of each Property of the
transfer of title and assumption by Buyer of the landlord's obligations under
the Leases and the obligation to refund the security deposits;
(xiii) an updated rent roll for each Property;
(xiv) all permits (including, without limitation, certificates
of occupancy, building permits, variances and conditional use permits),
licenses (including, without limitation, business licenses) and approvals that
Seller has in its possession relating to the Properties;
(xv) an inventory of all personalty owned by Seller located
in or on the Properties;
(xvi) copies of current real property tax bills and utility
statements; and
(xvii) a certificate of each of the general partners of Seller
to the effect that all of the representations and warranties of Seller are
true and correct at Closing, in each case other than failures to be true and
correct which do not in the aggregate have a material adverse effect on the
Properties taken as a whole.
Seller shall make reasonable efforts to obtain (i) a reliance
letter for the benefit of Buyer from the environmental engineer or other
person having performed any Phase I environmental site assessments or Phase
II environmental assessments on behalf of the Seller and (ii) at least five
days prior to the Closing Date, all documents required by any applicable
telephone company, including supersedure papers, to transfer Seller's
telephone number, telephone listing and yellow page advertisements to Buyer
(in each case, only to the extent transferable); provided, however, in each
case, no such transfer shall be effective until immediately after the
Closing.
(b) Buyer's Deliveries. Upon the terms and subject to the
conditions of this Contract, on the Closing Date, Buyer shall deliver the
following:
(i) assumption of the Leases, security deposits and the
Service Contracts;
(ii) certificates and resolutions as reasonably requested by
Seller demonstrating the authority of the persons executing documents at
Closing;
(iii) a certificate of an officer of Buyer to the effect
that all of the representations and warranties of Buyer are true and correct
in all material respects at Closing;
(iv) indemnification agreement with respect to Buyer's and
its representatives' inspection of the Properties during the Inspection
Period; and
(v) balance of the Purchase Price by wire transfer.
11. Proration Items.
---------------
The following shall be apportioned and adjusted between the
parties as of mid night of the day preceding the Closing Date ("Adjustment
Date"):
(a) Real estate and other taxes, assessments and charges, and
other municipal and state charges, license and permit fees, water and sewer
rents and charges, if any, on the basis of the fiscal period for which
assessed or charged;
(b) Water, electric, gas, steam and other utility charges for
service furnished to the Properties;
(c) Fuel, if any, and all taxes thereon, on the basis of a
reading taken as close as possible to the Adjustment Date;
(d) Base rents and any other rental payments (including,
without limitation, any prepaid rent, percentage rent, escalation charges for
real estate taxes and operating expenses, cost-of-living adjustments and
parking rents) (the "Rents") paid or payable under the terms of any Lease for
the month of closing;
(e) Any amounts paid or payable under Service Contracts being
assigned to Buyer;
(f) All costs associated with telephone directory listings and
any other prepaid advertising; and
(g) Any other customary adjustments made in connection with
the sale of similar buildings.
Seller will not assign to Buyer any of the hazard insurance
policies affecting the Properties then in force. There will therefore be no
proration of insurance costs at Closing. Except as may be otherwise
provided herein, all other expenses which are attributable to the period
prior to the Closing Date shall be the obligation of Seller and those which
are attributable to the period from and after the Closing Date shall be the
obligation of Buyer.
For purposes of the foregoing apportionments and adjustments, the
following procedures shall govern:
(i) If the Closing Date shall occur before the real
estate tax rate is fixed, the apportionment of such taxes shall be made upon
the basis of the tax rate for the immediately preceding year, applied to the
latest as sessed valuation;
(ii) If there are water meters on the Properties,
Seller shall furnish meter readings to a date not more than thirty days prior
to the Adjustment Date; and the unfixed meter charges for the intervening time
to the Adjustment Date shall be apportioned on the basis of such meter
readings, and any such meter charges for the period subsequent to the
Adjustment Date shall be paid by Buyer;
(iii) The apportionment of utility charges shall be
made upon the basis of charges shown on the latest available bills for such
utilities. The charges shown on such available bills for periods prior to
the Adjustment Date shall be paid by Seller, and for the period from the
date of each such last available utility bill to the Adjust ment Date an
apportionment shall be made based on the amount charged for the period
covered by such last avail able bill;
(iv) All taxes, water and sewer charges and
assessments for public improvements which are liens upon the Properties as of
the Closing Date, will be allowed to Buyer as a credit against the Purchase
Price, subject to apportion ment as herein provided, and the existence of
any such lien shall not constitute an objection to title;
(v) If any tenants are required to pay Rents which
are collected by Buyer within sixty (60) days after the Closing Date and
which are attributable in whole or in part to any period prior to the
Closing Date, Buyer shall promptly pay to Seller, Seller's proportionate
share thereof;
(vi) If any tenants are required to pay Rents which
are collected by Seller within sixty (60) days after the Closing Date and
which are attributable in whole or in part to any period after the Closing
Date, Seller shall promptly pay to Buyer, Buyer's proportionate share
thereof;
(vii) If any tenant is in arrears in the payment of
Rents on the Closing Date, Rents received from such tenant after the Closing
Date shall be applied in the following order of priority: (a) first to any
months preceding the month in which the Closing occurred; (b) then to the
month in which the Closing occurred; and (c) then to any months following the
month in which the Closing occurred. If Rents or any portion thereof are
received by Seller or Buyer during the period which is sixty (60) days after
the Closing Date and are payable to the other party by reason of this
allocation, the appropriate sum shall be promptly paid to the other party. The
obligations of Buyer and Seller pursuant to this Section 11(vii) and the two
immediately preceding Sections shall survive the Closing for a period of
ninety (90) days after the Closing Date, during which period Buyer and Seller
shall agree on a reconciliation of the prorations described herein.
Except as expressly provided, the provisions of this Section 11
shall survive the Closing.
12. Surveys, Transfer Taxes and Other Costs.
---------------------------------------
Subject to Section 24, Buyer and Seller shall each pay for one-half
of (a) the cost of obtaining any Title Commitments, Surveys and Phase I
environmental site assessments obtained by Buyer in connection with the
Closing hereunder and reports regarding structural Defects and (b) transfer
taxes, documentary stamp taxes, recording charges and other taxes or charges
imposed by any govern mental entity in connection with the transfer of the
Properties; provided, however, if the aggregate amount set forth in clauses
(a) and (b) exceeds $200,000, Seller shall pay the amount in excess of
$200,000 and if the aggregate amount exceeds $400,000, then, Buyer and Seller
shall each pay for one-half of all remaining costs in excess of $400,000.
Buyer shall deliver to the Title Insurer at Closing certified checks or wire
transfers of immediately available funds in the respective amounts of each
premium for any title insurance, made payable as requested or required by
the Title Insurer. Other than as expressly provided herein, each of the
parties shall pay for any and all costs which it may incur in connection
with the transactions contemplated herein.
The provisions of this Section 12 shall survive the Closing.
13. Representations and Warranties of Seller.
----------------------------------------
As an inducement for Buyer to purchase the Properties from
Seller, Seller represents and warrants to Buyer the following:
(a) Title to Real Estate. Seller has good, valid, marketable
and insurable title to the Properties together with the improvements situated
thereon subject to the Permitted Exceptions.
(b) Organization and Authority.
(i) Seller is duly organized and validly existing under
the laws of the Commonwealth of Virginia, has full partnership power and
authority to carry on its business as it is now being conducted and shall
have, upon receipt of the Partnership Consent, full partnership power and
authority to consummate the transaction.
(ii) Seller has the requisite partnership power and
authority to execute, deliver and perform this Contract. The execution,
delivery and performance of this Contract and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
partnership action on the part of Seller (subject to obtaining the
Partnership Consent). This Contract is a valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(iii) Neither the execution and delivery of this
Contract nor the consummation of the transactions contem plated hereby in the
manner herein provided nor the fulfillment of or compliance with the terms
and condi tions hereof shall:
(A) contravene any material provision of the
Seller's Agreement of Limited Partnership; or
(B) violate, be in conflict with, constitute a
default under, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or mortgage, or subject any properties
or assets of Seller to any indenture, mortgage, contract, commitment, or
agreement other than this Contract to which Seller is a party or by which
Seller is bound, which in the aggregate would have a material adverse effect
on the Properties and/or Seller's ability to perform all of its obligations
hereunder.
(c) Pending Actions. No litigation actions are pending or,
to Seller's knowledge, threatened against any of the Properties or Seller
which would materially adversely affect either the Properties or the Seller
or which challenge the execution, delivery or performance of this Contract.
(d) Rent Roll. The final rent roll to be delivered by Seller
with respect to the Leases promptly after execution of this Contract will be
true, accurate and com plete; said rent roll additionally will reflect all
rent concessions and security deposits and all leasing commissions and
referral fees due or owed.
(e) Service Contracts. The schedule of Service Contracts
delivered by Seller is true, correct and complete in all material respects
and Seller has no knowledge of any defaults under any such contracts.
14. Representations and Warranties of Buyer.
---------------------------------------
As an inducement for Seller to sell the Properties to Buyer, Buyer
represents to Seller the following:
(a) Organization and Authority.
(i) Buyer is a corporation duly organized and validly
existing under the laws of the State of Delaware and has full corporate
power and authority to carry on its business as it is now being conducted.
(ii) Buyer has the requisite corporate power and
authority to execute, deliver and perform this Contract. The execution,
delivery and performance of this Contract and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corpo rate action on the part of Buyer. This Contract is a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with
its terms.
(iii) Neither the execution and delivery of this
Contract nor the consummation of the transactions contem plated hereby in the
manner herein provided nor the fulfillment of or compliance with the terms
and conditions hereof shall:
(A) contravene any material provision of the
Certificate of Incorporation or Bylaws of Buyer; or
(B) violate, be in conflict with, constitute a
default under, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or mortgage, or subject any properties
or assets of Buyer to any indenture, mortgage, contract, commitment, or
agreement to which Buyer is a party or by which Buyer is bound which, in the
aggregate, would have a material adverse effect on Buyer's ability to perform
all of its obligations hereunder.
(b) Adequate Funds. Buyer has adequate funds or available
credit resources to pay the Purchase Price at the Closing as provided
hereunder.
15. Default and Damages.
-------------------
(a) Buyer's Remedies. If Buyer shall elect to proceed with
the performance of this Contract notwithstanding the failure to be
satisfied of any conditions to Closing, Buyer shall be deemed to have
waived the requirement that those conditions which Seller is unable to
perform be satisfied. Notwithstanding anything contained herein, in no event
shall Seller, its officers, directors, partners, agents and representatives
have any personal liability under this Contract whatsoever except with
respect to those provisions of this Contract which expressly survive the
Closing, and Buyer's sole recourse for Seller's failure to consummate the
Closing in accordance with the terms of this Contract shall be to receive a
refund of the Downpayment with all accrued interest thereon upon termination of
this Contract or, if appropriate, to sue for specific performance hereunder.
In the event Seller fails to consummate the Closing in accordance
with the terms of this Contract, Buyer may terminate this Contract and shall
receive a "Termination Fee" in the amount of $750,000 which Termination Fee
shall be in addition to the return of the Downpayment plus all accrued
interest thereon plus Buyer's out-of-pocket costs and expenses relating to
the purchase of the Properties (including, without, limitation, reasonable
attorneys' fees and expenses) to be paid by Seller on demand.
Notwithstanding the foregoing, in the event Seller fails to consummate the
Closing for failure to obtain the Partnership Consent, so long as the general
partners of Seller have recommended and continue to recommend to the limited
partners of Seller the sale of the Properties to Buyer, the Termination Fee
shall consist solely of all of Buyer's out-of-pocket costs and expenses
relating to the purchase of the Properties (including, without, limitation,
reasonable attorneys' fees and expenses). Buyer's sole recourse for Seller's
failure to consummate the Closing in accordance with the terms of this
Contract shall be the receipt of the Termination Fee, as set forth above,
upon termination of this Contract, together with the return of the
Downpayment plus all accrued interest thereon, or, if appropriate, to sue for
specific performance hereunder.
(a) Seller's Remedies. If Buyer shall be unable or unwilling
to consummate the Closing hereunder in violation of the terms hereof, Seller
shall have the right (i) to terminate this Contract and retain the
Downpayment, plus Seller's out-of-pocket costs and expenses relating to the
sale of the Properties (including, without, limitation, reasonable attorneys'
fees and expenses) to be paid by Buyer on demand, as liquidated and agreed
upon damages, whereupon this Contract shall be and become null and void, and
neither Seller nor Buyer nor any of their respective Representatives shall
have any further rights or obligations hereunder or (ii) to pursue such
rights and remedies as Seller may have at law or in equity, including,
without limitation, the right to sue for specific performance hereunder.
16. Brokers.
-------
Seller and Buyer hereby represent that each has not dealt with
any advisor, broker or finder in connection with this Contract. Seller
and Buyer shall indemnify and hold each other harmless from and against
all losses, costs, damages, expenses and liabilities including, without
limitation, reasonable attorneys' fees, resulting from any claims that may
be made for a commission fee or other compensation by reason of this
Contract by any broker, finder, advisor or person with whom such party has
dealt in connection herewith.
The provisions of this Section 16 shall survive the Closing.
17. Indemnification of Seller.
-------------------------
Buyer agrees to indemnify and hold harmless Seller, its
general and limited partners, attorneys, accountants, agents and
employees and their heirs, successors and assigns, from and against any
claims or demands for any expense, obligation, loss, cost, damage or injury
arising out of the Buyer's inspection of the Properties prior to or
on the Closing Date.
The provisions of this Section 17 shall survive the
Closing.
18. Survival of Representations, Warranties and Indemnifications.
------------------------------------------------------------
Except as otherwise expressly set forth in this Contract, none of
the representations, warranties and indemnifications contained in this
Contract shall survive the Closing.
19. Conduct of Business.
-------------------
During the period from the date hereof to the Closing Date,
except as (a) Buyer shall otherwise agree or (b) necessary in connection
with the transactions contemplated herein, Seller shall operate the Properties
in the ordinary and usual course, consistent with past practice.
20. Reasonable Efforts; Public Announcements.
----------------------------------------
Each party hereto will use all reasonable efforts to perform
all acts required to consummate the transactions contemplated hereby
as promptly as practicable. Such acts shall include, without limitation, the
provision of any information to and submission of any filing with any
governmental entity having jurisdiction. The foregoing notwithstanding,
except as may be required to comply with the requirements of any applicable
laws and the rules and regulations of each stock exchange upon which the
securities of either of the parties is listed, no press release or
similar public announcement or communication shall, if prior to the
Closing, be made or caused to be made concerning the execution or
performance of this Contract, unless the parties shall have consulted in
advance with respect thereto. Seller shall provide Buyer with reasonable access
to the Properties and all information in its possession relating to the
Partnership. Buyer shall keep such information confidential, subject to
the terms and conditions of the Confidentiality Agreement dated April 4,
1996, by and between the parties (the "Confidentiality Agreement").
21. Partnership Consent.
-------------------
As soon as practicable after the date hereof but no later than
fifteen (15) days after the execution of this Contract, Seller shall
prepare and file solicitation materials relating to the transaction
contemplated hereby which materials shall take a vote of its limited
partners to consider such matters. Seller shall, subject to the fiduciary
duties of its general partner, make reasonable efforts to secure the
Partnership Consent as promptly as practicable. Buyer will supply Seller
with such information and reasonable assistance as Seller may request in
connection therewith.
22. Casualty/Condemnation to the Properties.
---------------------------------------
(a) If, prior to the Closing Date, any of the Properties is
damaged due to a casualty (a "Casualty") and the cost of repairing
such damage, in accordance with Seller's insurance claims, is less than
three percent of the Purchase Price, then Seller shall repair such
Casualty prior to the Closing Date or assign to Buyer the proceeds of
Seller's policy of casualty insurance. If the cost of repairing a
Casualty to any Property, in accordance with Seller's insurance claims,
equals or exceeds three percent of the Purchase Price, then Seller shall have
the option to either (i) repair the Casualty to such Property prior to
Closing or (ii) remove such Property from the transaction and adjust the
Purchase Price as hereinafter provided. Notwithstanding anything herein to
the contrary, (i) Seller shall have the right to adjourn the Closing Date for
such reasonable period as shall be necessary to repair any such Casualty or
(ii) Seller shall have the right, subject to the terms and conditions hereof,
to cause the Closing to take place with respect to the other Properties and
then cause the Closing to take place with respect to the affected Property
within such reasonable period as shall be necessary to repair any such
Casualty. If Seller elects to remove such Property from the transaction,
then Buyer shall have the option, within ten days written notice of Seller's
election, to accept such Property with an assignment of the applicable
insurance proceeds due to Seller.
(a) If, prior to the Closing Date, all or any portion of any
Property is condemned or taken by eminent domain, then this Contract shall
nevertheless remain in full force and effect without any abatement of the
Purchase Price. In such event, Seller shall convey such Property to Buyer at
the Closing in its then condition, and Buyer shall be entitled to receive all
net or condemnation awards otherwise payable to Seller as a result of such
loss or damage and, in full satisfaction of any claims by Buyer against
Seller, Seller shall assign to Buyer, without recourse or warranty of any
nature whatsoever, all of Seller's right, title and interest in and to any
claims Seller may have to any condemnation awards, as well as all rights or
pending claims of Seller with respect to such condemnation or taking of such
Property, and Seller shall pay to Buyer all payments theretofore made by such
condemning authorities as a result of such loss after deducting therefrom the
costs of collection thereof.
(b) Notwithstanding anything contained herein to the
contrary, if Seller delivers notice of condemnation or eminent domain
proceedings which are initiated or threatened between the date of this
Contract and the Closing Date, Buyer shall have the right to participate in
any and all settlement discussions and other conferences relating thereto.
23. Termination.
-----------
Notwithstanding anything contained herein, this Contract may be
terminated as follows:
(a) By Seller in accordance with Section 15(b) hereof.
(b) By Seller or Buyer, if a court of competent jurisdiction
issues a binding and final order permanently preventing the sale of the
Properties to Buyer.
(c) By Seller or Buyer, if the partners of Seller vote against the
Partnership Consent.
(d) By Seller or Buyer, if the Closing does not occur on or before
November 17, 1996 (other than with respect to a Property which has
been removed or the closing of which has been adjourned by Seller, in each
case, in accordance with the terms hereof), provided that the party seeking
to terminate is not in material breach of this Contract.
In the event this Contract is terminated pursuant to any of the
foregoing provisions, this Contract shall thereupon become null and void and
neither Seller nor Buyer nor any of their respective representatives shall
have any further rights or obligations hereunder.
24. Florida Contracts.
-----------------
This Contract is being signed contemporaneously with and
conditioned upon each of the Florida Contracts; accordingly (i) if the
Downpayment is payable to Buyer or Seller pursuant to the terms of this
Contract and/or either of the Florida Contracts, the aggregate amount of
the Downpayment paid to such party shall be $2,000,000, (ii) the
aggregate limitation on the amount of credit that Buyer shall be
entitled to against the Purchase Price to cure Material Defects (other than
Environmental Defects) pursuant to this Contract and/or either of the Florida
Contracts shall be $500,000, (iii) the amounts set forth in Section 12 of this
Contract and/or either of the Florida Contracts shall be on an aggregate
basis for this Contract and the Florida Contracts and (iv) if the
Termination Fee is payable to Buyer pursuant to this Contract and/or either
of the Florida Contracts, the aggregate amount of the Termination Fee paid to
Buyer shall be $750,000 in addition to the return of the Downpayment plus all
accrued interest thereon plus Buyer's out-of-pocket costs and expenses relating
to the purchase of the Properties (including, without, limitation, reasonable
attorneys' fees and expenses).
25. Notices.
-------
Any notice which may be required or may be desired to be given
pursuant to this Contract shall be in writing and shall be deemed delivered
and effective upon actual receipt at the following addresses or such
other addresses as the parties may notify each other by similar
notice:
If to Seller, to:
American Storage Properties, L.P.
3 World Financial Center
New York, New York 10285
Attn: Paul L. Abbott
With a copy to:
Skadden, Arps, Slate, Meagher &
Flom 919 Third Avenue
New York, New York 10022
Attn: Patrick J. Foye, Esq.
If to Buyer, to:
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, CA 91201-2397
Attn: Harvey Lenkin
With a copy to:
Hogan & Hartson, LLP
Columbia Square
555 Thirteenth Street, NW
Washington, D.C., 20004-1109
Attn: David B.H. Martin, Esq.
26. General.
-------
(a) Interpretation of Words. A masculine pronoun wherever used
herein shall be construed to include the feminine or neuter where
appropriate. The singular form wherever used herein shall be construed to
include the plural where appropriate.
(a) Assignment; Successors and Assigns; Third Party
Beneficiaries. (i) Neither of the parties hereto may assign its respective
rights under this Contract without the consent of the other party.
(i) Except as otherwise provided hereby, the
provisions of this Contract shall be binding upon and inure to the benefit
of the parties hereto and their respective legal representatives and
successors in interest.
(ii) This Contract is not intended, nor shall it be
construed, to confer upon any party except the parties hereto and their
heirs, successors and permitted assigns any rights or remedies under or by
reason of this Contract.
(b) Time of the Essence. Time shall be of the essence with
respect to the performance of all of the obligations hereunder.
(c) Entire Contract. Subject to the terms and conditions of
the Confidentiality Agreement, this Contract represents the entire
understanding between the parties with respect to the subject matter hereof,
superseding all prior or contemporaneous understandings or communications of
any kind, whether written or oral. This Contract may only be modified by a
written agreement signed by both parties hereto.
(d) Captions. The headings of the paragraphs herein are for
convenience only; they form no part of this Contract and shall not affect its
interpretation.
(e) Governing Law. The provisions of this Contract shall be
governed by and construed in accordance with the laws of the State of New
York applicable to agreements entered into and to be performed wholly
therein.
(f) Counterparts. This Contract may be executed in several
counterparts, each of which shall be deemed an original. Such counterparts
constitute but one and the same instrument, which may be sufficiently
evidenced by one counterpart.
(g) Further Assurances. Each of the parties hereto shall, at
the request of the other party, execute, acknowledge and deliver any further
instruments, and take such further actions, as the requesting party may
reasonably request, to carry out effectively the intent of this Contract.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as of the
day and year first above written.
AMERICAN STORAGE PROPERTIES, L.P.
By: Storage Services, Inc., its general partner
By: s/Paul L. Abbott/
Name: Paul L. Abbott
Title: President
By: Goodman Segar Hogan/American Storage
Properties Associates, L.P., its general
partner
By: s/Mark P. Mikuta/
Name: Mark P. Mikuta
Title: President
PUBLIC STORAGE, INC.
By: s/Harvey Lenkin/
Name: Harvey Lenkin
Title: President
EXHIBIT A
List of Properties*
Name Location
---- --------
Southern Boulevard 5728 Southern Boulevard
Virginia Beach, VA
S. Military Highway 1430 S. Military Highway
Chesapeake, VA
W. Pembroke Avenue 1205 W. Pembroke Avenue
Hampton, VA
Widgeon Road 880 Widgeon Road
Norfolk, VA
Bloom Lane 1717 Bloom Lane
Richmond, VA
Midlothian Turnpike 5404 Midlothian Turnpike
Richmond, VA
Peters Creek Road 2918 Peters Creek Road
Roanoke, VA
*The Properties include:
(A) All buildings and improvements located on the Properties;
(B) All rights-of-way, alleys, waters, privileges, easements, covenants
and appurtenances which are on or benefit the Properties;
(C) All right, title and interest of Seller in and to any land lying in
the bed of any public or private street, road, avenue, alley or highway,
opened, closed or proposed, in front of or adjoining the Properties to the
center line thereof;
(D) All right, title and interest of Seller to any unpaid award to
which Seller may be entitled (1) due to the taking, subsequent to the
Inspection Period, by condemnation or eminent domain of any right, title or
interest of Seller in the Properties and (2) for any damage, subsequent to
the Inspection Period, to the Properties due to the change of grade of any
street or highway;
(E) All right, title and interest of Seller to any assignable licenses,
permits, contracts, leases, sales agreements, construction agreements,
maintenance agreements, service agreements with respect to the Properties.
(F) All Leases and any security deposits with respect to any of the
Properties in which Seller holds an interest as a landlord for the use and
occupancy of all or any part of the Properties; and
(G) All engineering reports, surveys and architectural plans, if any.
EXHIBIT B
ESCROW AGREEMENT
Agreement made this 17 day of May, 1996 by and among Public Storage,
Inc. ("Purchaser"), American Storage Properties ("Seller"), and Chicago Title
Company, as escrow agent ("Escrow Agent").
1. The Parties hereto agree that the sum of $1,500,000 (the "Escrow
Amount"), to be held pursuant to a Contract of Sale between Seller and
Purchaser of even date herewith (the "Contract"), shall be held in escrow by
the Escrow Agent upon the terms and conditions set forth herein.
2. (a) The Escrow Agent shall deliver the Escrow Amount then in its
possession in accordance with Paragraph 3 hereof to Seller (i) upon the
Closing, as that term is used in and in accordance with the Contract or (ii)
in the event that Seller makes a written demand therefor stating that
Purchaser has failed to perform Purchaser's obligations under the Contract.
(b) Escrow Agent shall return the Escrow Amount then in its
possession and any interest earned thereon in accordance with Paragraph 3
hereof to Purchaser in the event that Purchaser makes a written demand
therefor stating (i) that Seller has failed to perform Seller's
obligations under the Contract or (ii) that Purchaser is otherwise entitled
to the return of the Escrow Amount in accordance with the terms of the
Contract.
(c) In the event that Escrow Agent intends to release the Escrow
Amount in accordance with Paragraph 3 hereof to either party pursuant to
Paragraph 2(a)(ii) or 2(b) hereof, then Escrow Agent shall give to the
other party not less than ten days prior written notice of such fact
and, if Escrow Agent actually receives written notice during such ten
day period that such other party objects to the release, then Escrow
Agent shall not release the Escrow Amount and any such dispute shall be
resolved as provided herein.
(d) In the event that a dispute shall arise as to the disposition
of the Escrow Amount or any other funds held hereunder in escrow, Escrow
Agent shall have the right, at its option, to either hold the same or
deposit the same with a court of competent jurisdiction pending decision
of such court, and Escrow Agent shall be entitled to rely upon the
decision of such court.
(e) Escrow Agent may commingle the Escrow Amount with other
funds held in its "trustees account."
(f) Escrow Agent shall hold the Escrow Amount in a savings bank
account or a liquid assets account bearing interest at such rate as may
from time to time be paid or invest the Escrow Amount in U.S. Treasury
Bills or other securities guaranteed by the Government of the United
States of America. The rate of interest or yield need not be the
maximum available and deposits, withdrawals, purchases and sales shall
be made in the sole discretion of Escrow Agent, which shall have no
liability whatsoever therefor except for its gross negligence or willful
misconduct. Discounts earned shall be deemed interest for the purposes
hereof.
(g) Escrow Agent shall have no liability whatsoever arising out
of or in connection with its activity as Escrow Agent except for its
gross negligence or willful misconduct. Seller and Purchaser jointly and
severally agree to indemnify and hold harmless Escrow Agent from and
against any and all loss, cost, claim, cause of action, damage, liability
and expense (including attorneys' fees and court costs) which may be
incurred by reason of its acting as Escrow Agent.
(h) Escrow Agent shall be entitled to rely upon any judgment,
certification, demand or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of any
fact stated therein, the propriety or validity thereof, or the
jurisdiction of a court issuing any such judgment. Escrow Agent may act
in reliance upon (i) any instrument or signature believed to be genuine
and duly authorized, and (ii) advice of counsel in reference to any
matter or matters connected herewith.
(i) Any notice, demand or other communication to Escrow Agent
hereunder shall be in writing and delivered in person or sent by
certified mail, return receipt requested, postage prepaid, addressed to
Escrow Agent as follows:
Chicago Title Company
388 Market Street, Suite 1300
San Fancisco, CA 94111
Attention: Ms. Michelle Viguie
The same shall be deemed given on the date delivered, if delivered in person,
or on the third business day fol lowing the date of mailing the same, if
mailed.
(3) The interest, if any, earned on the Escrow Amount shall be for the
account of Purchaser.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
AMERICAN STORAGE PROPERTIES, L.P.
By: Storage Services, Inc., its general partner
By: s/Paul L. Abbott/
Name: Paul L. Abbott
Title: President
By: Goodman Segar Hogan/American Storage
Properties Associates, L.P., its general
partner
By: s/Mark P. Mikuta/
Name: Mark P. Mikuta
Title: President
PUBLIC STORAGE, INC.
By: s/Harvey Lenkin/
Name: Harvey Lenkin
Title: President
CHICAGO TITLE COMPANY, as Escrow Agent
By:_____________________________
Name:
Title:
EXHIBIT C
Allocations of Property Value
Property Purchase Price
- -------- --------------
Southern Boulevard $ 940,000
S. Military Highway $ 3,040,000
W. Pembroke Avenue $ 3,600,000
Widgeon Road $ 3,700,000
Bloom Lane $ 3,960,000
Midlothian Turnpike $ 2,540,000
Peters Creek Road $ 2,730,000
TOTAL: $20,510,000
CONTRACT OF SALE (Fern Park)
THIS CONTRACT, made as of May 17, 1996, by and between
Hutton/GSH American Storage Properties (Fern Park), L.P., a Florida limited
partnership ("Seller"), and Public Storage, Inc., a California corporation
("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Buyer desires to purchase
all of Seller's right, title and interest in the real property listed
on Exhibit A attached hereto and made a part hereof, the improvements and
any fixtures and personalty, presently existing and located thereon and
therein and the items set forth on Exhibit A (the "Property"), all upon
the terms and subject to the conditions hereinafter set forth;
WHEREAS, as of the date hereof, Buyer and Seller have
simultaneously entered into a Contract of Sale (Virginia) (the
"Virginia Contract") in respect of seven self-service storage facilities
located in Virginia (the "Virginia Properties") and a Contract of Sale
(Oakridge) (the "Oakridge Contract") in respect of one self-service
storage facility located in Florida (the "Oakridge Property"); and
WHEREAS, following such sale, Seller intends to liquidate and
distribute its net assets (including the proceeds of such sale) to its
partners.
NOW, THEREFORE, in consideration of the foregoing, the sum of
$1.00 by each party in hand paid to the other, and other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, do
hereby mutually agree as follows:
1. Agreement to Purchase and Sell.
------------------------------
Subject to the terms and conditions hereinafter set forth,
Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller,
free and clear of all liens, claims, encumbrances and other charges,
except the Permitted Exceptions (as hereinafter defined), all of Seller's
right, title and interest in and to the Property.
2. Purchase Price.
--------------
The purchase price ("Purchase Price") for the Property, which
Buyer agrees to pay, is the sum of $3,900,000, payable as follows:
(a) $250,000, as the downpayment (the "Downpayment"), upon
the execution of this Contract by wire transfer of immediately available
funds to the account of Escrow Agent (as hereinafter defined), to be held
by the Escrow Agent in accordance with this Section 2 and subject to
Section 24.
(b) The remainder of the Purchase Price at Closing (as
hereinafter defined), by wire transfer of immediately available funds to
Seller's account pursuant to Seller's instructions.
The Title Insurer (as hereinafter defined) shall act as escrow
agent (the "Escrow Agent") and shall hold the Downpayment in accordance
with the provisions of the escrow agreement annexed hereto as Exhibit B and
made a part hereof (the "Escrow Agreement"), which Escrow Agreement is
being executed simultaneously with this Contract.
Any interest earned on the Downpayment shall accrue to the
benefit of Buyer.
3. Evidence of Title.
-----------------
(a) Seller shall convey to Buyer at Closing (as hereinafter
defined) good and valid marketable fee simple title to the Property, subject
to any covenants, conditions, rights of way, restrictions, easements and
other matters affecting title, which do not materially impair the use or the
value of the Property (collectively, the "Permitted Exceptions"; provided,
however, that Permitted Exceptions shall expressly exclude any Unpermitted
Exceptions (as hereinafter defined)).
(a) Buyer shall obtain and promptly deliver to Seller within 30
days after the date hereof (i) commitments for ALTA policies of owners title
insurance or the equivalent thereof in the applicable jurisdiction (the
"Title Commitments") issued by Chicago Title Insurance Company (the "Title
Insurer") showing fee simple title to the Property as vested in Seller and
to be vested in Buyer, subject to the Permitted Exceptions and any
standard "preprinted" exceptions set forth in the Title Commitments
and (ii) updated surveys prepared by licensed land surveyors according to
ALTA standards (or the equivalent thereof in the applicable
jurisdiction) showing the boundaries of the Property, the location of any
easements, rights-of-way, improvements and encroach ments thereon and
certifying the number of acres (to the nearest one thousandth acre)
comprising the Property (the "Surveys").
(b) As used herein, the term "Unpermitted Exception" shall mean
with respect to the Property (provided the same is not caused by the actions
of Buyer):
(A) Any building encroachment or sign en croachment (i) on
real estate not owned by Seller, (ii) on a setback line, or (iii) in
violation of a binding easement burdening the Property, in each case
which materially impairs the use or value of the Property;
(B) Any defect in the Seller's chain of title which would
prevent Seller from being able to convey title to the Property in fee
simple at Closing under the laws of the state in which the Property
is located, unless the Title Insurer is willing to issue a policy of
title insurance which contains affirmative coverage for claims arising
solely out of such defect;
(C) Any easement which burdens the Property such that
access or use is compromised, in each case which materially impairs the
use, access or value of the Property;
(D) Any lack of access or easements necessary to operate
the Property as a self-storage facility in the manner which such
Property has been operated by Seller prior to Closing, in each case
which materially impairs the use, access or value of the Property;
(E) Any liens for the payment of money other than real
estate taxes, association assessments, special district taxes and
related charges not yet due and payable; and
(G) (i) the failure to be in material conformance with the
then applicable local zoning codes, (ii) if the Property is not in
conformance with the then applicable local zoning codes, the failure
of the Property to have the status equivalent to a "non-conforming
use" and (iii) the existence of a permanent and final order by the
applicable local jurisdiction which materially impairs the use or
value of the Property.
4. Inspections.
-----------
(a) Buyer may conduct the due diligence investigation described
below until the 30th day following the date hereof (the "Investigation
Period").
(a) Prior to the termination of the Investigation Period,
Buyer or Buyer's attorney may deliver to Seller a notice (a "Defect
Notice") setting forth a reasonable description of any Title Defects,
including any Unpermitted Exceptions, Structural Defects (as hereinafter
defined), Environmental Defects (as hereinafter defined) or Sales
Package Defects (as hereinafter defined) (collectively "Material
Defects") that it has discovered with respect to the Property. Such
description shall include copies of any reports, studies, audits,
searches and similar documentation relating to the Material Defects
discovered in connection with Buyer's investigation and Buyer's estimate
of the cost to cure any such described Material Defects.
Within 10 days of receiving such a Defect Notice, Seller shall
deliver a notice to Buyer with respect to each affected Property (i)
disputing such Material Defects, (ii) stating that some or all of the
Material Defects have been, or agreeing prior to the Closing that they
will be, cured or (iii) agreeing to grant the Buyer a credit against the
Purchase Price equal to the cost to cure such Material Defects.
Notwith standing clause (a) above or anything in the Contract to the
contrary, Seller shall not be obligated to grant Buyer a credit against
the Purchase Price to cure Material Defects (other than Environmental
Defects) with respect to the Property in excess of $500,000, subject to
Section 24. If the cost to correct any Environmental Defect exceeds 10%
of the value of the Property as set forth in Exhibit C attached hereto
and made a part hereof, Seller shall have the option to remove such
affected Property from the transaction contemplated hereby, in each
case the Purchase Price shall be reduced in accordance with Exhibit C.
If Buyer has alleged any Material Defects which Seller has
disputed or the cost to cure such Material Defects is in dispute, the
parties shall endeavor in good faith to resolve such dispute. If they do
not resolve such dispute within 10 days, the matter in dispute shall be
submitted to binding arbitration by the American Arbitration Association
(the "Association") (or any suc cessor organization) (provided that, in the
event of a dispute as to an Environmental Defect, the arbitration shall
be performed by a reputable arbitrator with at least 10 years experience
in environmental matters). All arbitration shall be finally determined in
New York City and shall be governed (except as provided above) in accor
dance with the Rules for Commercial Arbitration of the Association (or
any successor thereto) and the judgment or the award rendered may be entered
in any court having jurisdiction. Each party shall pay 50% of the fees and
expenses of the Association. The Closing Date shall be adjourned with
respect to the Property pending resolution of the matter in dispute.
Notwithstanding anything herein to the con trary, Seller shall
have the right to adjourn the Closing Date for a reasonable period as
shall be necessary to cure any Material Defect.
Notwithstanding anything herein to the contrary, the
discovery of any defects or Material Defects shall not give rise to any
right of Buyer to (i) terminate this Contract or remove the Property from
the transaction contemplated hereby or (ii) except for the cost of
curing Environmental Defects, obtain credit against the Purchase Price in
excess of $500,000 to cure Material Defects, subject to Section 24.
(b) Seller shall make available to Buyer any Phase I
environmental site assessments and Phase II environmental assessments of
the Property, if any, previously performed for Seller. Buyer may obtain
additional Phase I environmental site assessments of the Property and
otherwise inspect the Property to conduct its due diligence review thereof.
Buyer shall conduct all environmental due diligence in a commercially
reasonable manner, and shall use reasonable efforts to minimize any
interference with or impairment of the regular conduct of the Seller's
business. If Buyer's environmental due diligence indicates a
potential material environmental liability, Buyer may conduct a Phase II
environmental assessment (the Phase I environmental site assessment and
Phase II environmental assessments, if any, shall be collectively referred
to as the "Environmental Reports") on the Property, provided (i) Buyer
has provided Seller with a copy of the Phase I environmental site
assessment describing such condition, (ii) Buyer has provided Seller with a
copy of the scope of work proposed for such Phase II environmental
assessment, (iii) Seller consented to such additional Phase II
environmental assessment, which consent shall not be unreasonably withheld
or delayed, and (iv) Seller has agreed to a reasonable extension of the
Inspection Period following the receipt of any Phase I environmental site
assessment which recommends a Phase II environmental assessment be performed
on the Property in order for Buyer to perform further environmental due
diligence with respect to the Property.
(c) Seller shall make available to Buyer upon Buyer's
reasonable request no later than 10 days following the date of full
execution of this Contract, to the extent in the possession or control of
Seller and relating to the Property, a copy of the current Form 10-K of
Seller on file with the Securities and Exchange Commission
including all exhibits thereto, copies of the Service Contracts (as
hereinafter defined), the most recent rent rolls available to the
managing general partner of Seller, and copies of insurance policies and
all other information and records pertaining to the Property within Seller's
possession or control. Buyer acknowledges that all non-public information
contained in such documents is confidential. Buyer shall have the right, at
its sole cost and expense, to conduct its own audit of the Property.
Buyer agrees not to disclose such information to any person except to
Buyer's officers, employee, agents and contractors for purposes of
conducting this transaction, and Buyer shall require any such person
receiving such information to protect the confidentiality thereof, except
to the extent such information is a matter of public record or becomes
a matter of public record through no fault or action of Buyer or Buyer's
officers, employee, agents or contractors.
(d) Buyer shall have the right to contact existing commercial
tenants which lease in excess of 1,000 sq. ft from Seller, as selected by
Buyer; provided that, Seller shall have the right to participate in and/or
monitor any discussions or correspondence between Buyer and such
selected existing tenants.
(e) Within five days of the execution of this Contract,
Seller shall provide Buyer with copies of all of Seller's yellow page
advertisements and contracts with respect to the Property.
(f) Other than with respect to the documents made available
by Seller pursuant to Section 4(d) and other than as specified in Section
12, all of the foregoing studies, audits and investigations by or on
behalf of Buyer, including, without limitation, Phase II environmental
assessments, shall be at Buyer's sole cost, expense and risk, and Buyer
shall restore the Property to the condition existing prior to the
performance of any such studies, audits and investigations. Prior to
commencing any such studies, audits and investigations, Buyer shall furnish
to Seller a certificate of insurance evidencing comprehensive general public
liability insurance insuring the person or entity performing such studies,
audits and investigations and listing Seller and the general partners
of Seller as additional insureds thereunder.
(g) The term "Structural Defects" shall mean material
structural flaws to foundations, load bearing walls or roof support
systems affecting the Property, set forth in a report certified by an
engineer licensed in the applicable jurisdiction, but excluding any flaws
which are common or usual in similar assets of like age assuming
reasonable repair and maintenance has been performed to the foundations,
load bearing walls or roof support systems. Such report shall state the
aggregate cost to cure all material structural flaws with respect to the
Property.
(h) The term "Title Defects" shall mean any matter, objected
to by Buyer, encumbering the Property other than the Permitted Exceptions
(the "Title Defects").
(i) The term "Environmental Defect" shall mean "Hazardous
Materials" (hereinafter defined) located in, on or under the Property in
violation of any Environmental Laws (hereinafter defined).
(j) The term "Sales Package Defects" shall mean misstatements
in the income and expense statements and rent roll previously delivered
by Seller to Buyer and actually relied upon by Buyer in good faith, in each
case other than misstatements which do not in the aggregate have a
material adverse effect on the Property.
(k) In order to establish an Environmental Defect, Buyer
shall be required to deliver to Seller on or prior to 10 days after the
earlier of (i) Buyer's receipt of the Environmental Reports or (ii)
the end of the Inspection Period, as to each Property, written notice
reasonably detailing any Environmental Defect. Buyer and Seller shall make
reasonable efforts to agree as to the existence of and the cost to cure
any Environmental Defect. If Buyer and Seller do not agree on the
foregoing within 15 days after Seller's receipt of Buyer's notice
described above, then the parties shall submit the matter to binding
arbitration in accordance with the terms hereof.
(l) As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment or
worker health or safety, all as amended or reauthorized, or as
hereafter amended or reauthorized, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq., the
Emergency Planning and Community Right-to-Know Act ("Right-to-Know Act"), 42
U.S.C. Section 11001 et seq., the Clean Air Act ("CAA), 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act ("Clean Water Act"),
33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act ("TSCA"),
15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe
Drinking Water Act"), 42 U.S. C. Section 300f et seq., the Atomic Energy
Act ("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational Safety and
Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the Hazardous
Materials Transportation Act (the "Transportation Act"), 49 U.S.C. Section
1802 et seq. As used herein, "Hazardous Materials" means: (1) "hazardous
substances," as defined by CERCLA; (2) "hazardous wastes," as defined
by RCRA; (3) any radioactive material including, without limitation, any
source, special nuclear or by-product material, as defined by AEA; (4)
friable asbestos; (5) polychlorinated biphenyls; and (6) any other
material, substance or waste regulated under any Environmental Laws.
5. Condition of the Property.
-------------------------
Subject only to Seller's covenants, representations and
warranties in this Contract, Buyer shall purchase the Property in its "AS
IS" condition at the Closing Date, subject to all latent and patent defects
(whether physical, financial or legal, including title defects), based
solely on Buyer's own inspection, analysis and evaluation of the Property
and not in reliance on any records or other information obtained from
Seller or on Seller's behalf. Subject to Section 4(k), Buyer acknowledges
that it is not relying on any statement or representation (other than any
representations, warranties, covenants and indemnifications contained in
this Contract) that has been made or that in the future may be made by
Seller or any of Seller's employees, agents, attorneys or representatives
concerning the condition of the Property (whether relating to physical
conditions, operation performance, title, or legal matters). Without
limiting the foregoing, any information disclosed in writing to Buyer in
connection with any investigations, inspections, tests or analyses performed
prior to Closing, shall be deemed not violative of any warranty or
representation of Seller, if Buyer proceeds to Closing hereunder.
6. Closing.
-------
Upon the terms and subject to the conditions of this Contract,
the transfer of title and possession of the Property (the "Closing") shall be
held at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022 at 10:00 a.m., local time, on the date
which is two business days after Seller has received the Partnership Consent
(as hereinafter defined) or such other date as the parties shall agree.
The date on which the Closing occurs is herein called the "Closing Date".
7. Conditions to Seller's and Buyer's Obligation to Close.
------------------------------------------------------
The obligations of Seller and Buyer to close under this Contract
are subject to the fulfillment, prior to or at Closing, of each of the
following:
(a) Seller shall have obtained consents to the sale of the
Property (the "Partnership Consent") by limited partners holding a
majority in interest of the units of limited partnership interests.
(b) There shall not be in effect any statute, regulation,
order, decree or judgment of any governmental entity having jurisdiction
which renders illegal or enjoins or prevents in any material respect the
sale of the Property to Buyer.
(c) The closings of the transactions contemplated by the
Virginia Contract and the Oakridge Contract shall have occurred, unless
either closing shall have been adjourned by Seller or any of the Virginia
Properties or the Oakridge Property shall have been removed by Seller, in
each case, in accordance with the terms thereof .
8. Conditions to Seller's Obligation to Close.
------------------------------------------
The obligations of Seller to close under this Contract are
subject to the fulfillment, prior to or at Closing, of each of the
following:
(a) The representations and warranties of Buyer shall have
been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Closing Date, as if
made at and as of such date except as otherwise expressly provided herein.
(b) On and as of the Closing Date, Buyer shall have performed
and complied with, in all material respects, all agreements and covenants
required by this Contract to be performed or complied with prior to or on
the Closing Date.
9. Conditions to Buyer's Obligation to Close.
-----------------------------------------
The obligations of Buyer to close under this Contract are
subject to the fulfillment, prior to or at Closing, of each of the
following:
(a) The representations and warranties of Seller shall have
been true and correct in all material respects when made and shall be
true and correct in all material respects as of the Closing Date, as if
made at and as of such date except as otherwise expressly provided herein,
in each case other than failures to be true and correct which do not in the
aggregate have a material adverse effect on the Property.
(b) On and as of the Closing Date, Seller shall have
performed and complied with, in all material respects, all agreements and
covenants required by this Contract to be performed or complied with prior
to or on the Closing Date, other than failures to perform and comply which
do not in the aggregate have a material adverse effect on the Property.
10. Deliveries.
----------
(a) Seller's Deliveries. Upon the terms and subject to the
conditions of this Contract, on the Closing Date (except as expressly
provided otherwise), Seller shall convey the Property and its related
interests to Buyer by delivery of the following documents in form and
substance reasonably acceptable to both parties:
(i) quit claim deed in recordable form (provided, however
that Seller shall deliver to Buyer a special warranty deed if the Title
Insurer is unwilling to issue a policy of title insurance which is
customary in the applicable jurisdiction containing no exceptions from
coverage solely out of the delivery by Seller of a quit claim deed);
(ii) non-recourse bill of sale for the Property conveying
any fixtures and personalty owned by Seller without covenants;
(iii) non-recourse assignment of Seller's interest, as
lessor, in any leases of space at the Property (the "Leases") and security
deposits for the Property;
(iv) non-recourse assignment, to the extent assignable, of
Seller's rights under any service or maintenance con tracts (including,
without limitation, yellow pages, landscaping, security and refuse removal
contracts) relating to the Property (the "Service Contracts");
(v) non-recourse assignment, to the extent assignable, of
any licenses, permits and unexpired warranties and guarantees, if any,
pertaining to the Property;
(vi) certificates and resolutions as reasonably requested
by Buyer demonstrating the authority of the persons executing documents at
Closing;
(vii) non-foreign affidavit;
(viii) originals, and/or copies, of the Leases in Seller's
possession (which deliveries may be made at the Property) and a copy of
Seller's standard form of lease for the Property;
(ix) all documents and instruments reasonably required by
the Title Insurer to issue the title policies;
(x) possession of the Property to Buyer;
(xi) evidence of the termination of the management
agreement, if any, for the Property;
(xii) a form of notice to the tenants of the Property of the
transfer of title and assumption by Buyer of the landlord's obligations
under the Leases and the obligation to refund the security deposits;
(xiii) an updated rent roll for the Property;
(xiv) all permits (including, without limitation,
certificates of occupancy, building permits, variances and conditional use
permits), licenses (including, without limitation, business licenses) and
approvals that Seller has in its possession relating to the Property;
(xv) an inventory of all personalty owned by Seller located
in or on the Property;
(xvi) copies of current real property tax bills and utility
statements; and
(xvii) a certificate of each of the general partners of
Seller to the effect that all of the representations and warranties of Seller
are true and correct at Closing, in each case other than failures to be true
and correct which do not in the aggregate have a material adverse effect
on the Property.
Seller shall make reasonable efforts to obtain (i) a reliance
letter for the benefit of Buyer from the environmental engineer or other
person having performed any Phase I environmental site assessments or Phase
II environmental assessments on behalf of the Seller and (ii) at least
five days prior to the Closing Date, all documents required by any
applicable telephone company, including supersedure papers, to transfer
Seller's telephone number, telephone listing and yellow page
advertisements to Buyer (in each case, only to the extent transferable);
provided, however, in each case, no such transfer shall be effective until
immediately after the Closing.
(b) Buyer's Deliveries. Upon the terms and subject to the
conditions of this Contract, on the Closing Date, Buyer shall deliver the
following:
(i) assumption of the Leases, security deposits and the
Service Contracts;
(ii) certificates and resolutions as reasonably requested
by Seller demonstrating the authority of the persons executing documents at
Closing;
(iii) a certificate of an officer of Buyer to the effect
that all of the representations and warranties of Buyer are true and
correct in all material respects at Closing;
(iv) indemnification agreement with respect to Buyer's and
its representatives' inspection of the Property during the Inspection
Period; and
(v) balance of the Purchase Price by wire transfer.
11. Proration Items.
---------------
The following shall be apportioned and adjusted between the parties
as of mid night of the day preceding the Closing Date ("Adjustment Date"):
(a) Real estate and other taxes, assessments and charges, and
other municipal and state charges, license and permit fees, water and
sewer rents and charges, if any, on the basis of the fiscal period for which
assessed or charged;
(b) Water, electric, gas, steam and other utility charges for
service furnished to the Property;
(c) Fuel, if any, and all taxes thereon, on the basis of a reading
taken as close as possible to the Adjustment Date;
(d) Base rents and any other rental payments (including, without
limitation, any prepaid rent, percentage rent, escalation charges for
real estate taxes and operating expenses, cost-of-living adjustments and
parking rents) (the "Rents") paid or payable under the terms of any Lease for
the month of closing;
(e) Any amounts paid or payable under Service Contracts being
assigned to Buyer;
(f) All costs associated with telephone directory listings and any
other prepaid advertising; and
(g) Any other customary adjustments made in connection with the
sale of similar buildings.
Seller will not assign to Buyer any of the hazard insurance
policies affecting the Property then in force. There will therefore be no
proration of insurance costs at Closing. Except as may be otherwise
provided herein, all other expenses which are attributable to the period
prior to the Closing Date shall be the obligation of Seller and those which
are attributable to the period from and after the Closing Date shall be the
obligation of Buyer.
For purposes of the foregoing apportionments and adjustments, the
following procedures shall govern:
(i) If the Closing Date shall occur before the real
estate tax rate is fixed, the apportionment of such taxes shall be made
upon the basis of the tax rate for the immediately preceding year,
applied to the latest as sessed valuation;
(ii) If there are water meters on the Property, Seller
shall furnish meter readings to a date not more than thirty days prior
to the Adjustment Date; and the unfixed meter charges for the intervening
time to the Adjustment Date shall be apportioned on the basis of such
meter readings, and any such meter charges for the period subsequent to
the Adjustment Date shall be paid by Buyer;
(iii) The apportionment of utility charges shall be
made upon the basis of charges shown on the latest available bills for such
utilities. The charges shown on such available bills for periods prior to
the Adjustment Date shall be paid by Seller, and for the period from the
date of each such last available utility bill to the Adjustment Date an
apportionment shall be made based on the amount charged for the period
covered by such last available bill;
(iv) All taxes, water and sewer charges and assessments
for public improvements which are liens upon the Property as of the Closing
Date, will be allowed to Buyer as a credit against the Purchase Price,
subject to apportionment as herein provided, and the existence of any
such lien shall not constitute an objection to title;
(v) If any tenants are required to pay Rents which
are collected by Buyer within sixty (60) days after the Closing Date and
which are attributable in whole or in part to any period prior to the
Closing Date, Buyer shall promptly pay to Seller, Seller's proportionate
share thereof;
(vi) If any tenants are required to pay Rents which
are collected by Seller within sixty (60) days after the Closing Date and
which are attributable in whole or in part to any period after the Closing
Date, Seller shall promptly pay to Buyer, Buyer's proportionate share
thereof;
(vii) If any tenant is in arrears in the payment
of Rents on the Closing Date, Rents received from such tenant after the
Closing Date shall be applied in the following order of priority: (a)
first to any months preceding the month in which the Closing occurred;
(b) then to the month in which the Closing occurred; and (c) then to any
months following the month in which the Closing occurred. If Rents or any
portion thereof are received by Seller or Buyer during the period which
is sixty (60) days after the Closing Date and are payable to the other
party by reason of this allocation, the appropriate sum shall be
promptly paid to the other party. The obligations of Buyer and Seller
pursuant to this Section 11(vii) and the two immediately preceding
Sections shall survive the Closing for a period of ninety (90) days after
the Closing Date, during which period Buyer and Seller shall agree on a
reconciliation of the prorations described herein.
Except as expressly provided, the provisions of this Section 11
shall survive the Closing.
12. Surveys, Transfer Taxes and Other Costs.
---------------------------------------
Subject to Section 24, Buyer and Seller shall each pay for one-
half of (a) the cost of obtaining any Title Commitments, Surveys and Phase
I environmental site assessments obtained by Buyer in connection with
the Closing hereunder and reports regarding structural Defects and (b)
transfer taxes, documentary stamp taxes, recording charges and other taxes
or charges imposed by any governmental entity in connection with the
transfer of the Property; provided, however, if the aggregate amount set
forth in clauses (a) and (b) exceeds $200,000, Seller shall pay the
amount in excess of $200,000 and if the aggregate amount exceeds $400,000,
then, Buyer and Seller shall each pay for one-half of all remaining costs
in excess of $400,000. Buyer shall deliver to the Title Insurer at
Closing certified checks or wire transfers of immediately available funds in
the respective amounts of each premium for any title insurance, made payable
as requested or required by the Title Insurer. Other than as expressly
provided herein, each of the parties shall pay for any and all costs which
it may incur in connection with the transactions contemplated herein.
The provisions of this Section 12 shall survive the Closing.
13. Representations and Warranties of Seller.
----------------------------------------
As an inducement for Buyer to purchase the Property from Seller,
Seller represents and warrants to Buyer the following:
(a) Title to Real Estate. Seller has good, valid, marketable
and insurable title to the Property together with the improvements
situated thereon subject to the Permitted Exceptions.
(b) Organization and Authority.
(i) Seller is duly organized and validly existing under
the laws of the State of Florida, has full partnership power and
authority to carry on its business as it is now being conducted and shall
have, upon receipt of the Partnership Consent, full partnership power and
authority to consummate the transaction.
(ii) Seller has the requisite partnership power and
authority to execute, deliver and perform this Contract. The execution,
delivery and performance of this Contract and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
partnership action on the part of Seller (subject to obtaining the Partnership
Consent). This Contract is a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
(iii) Neither the execution and delivery of this Contract
nor the consummation of the transactions contemplated hereby in the manner
herein provided nor the fulfillment of or compliance with the
terms and conditions hereof shall:
(A) contravene any material provision of the
Seller's Agreement of Limited Partnership; or
(B) violate, be in conflict with, constitute a
default under, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or mortgage, or subject any
properties or assets of Seller to any indenture, mortgage, contract,
commitment, or agreement other than this Contract to which Seller is
a party or by which Seller is bound, which in the aggregate would have a
material adverse effect on the Property and/or Seller's ability to
perform all of its obligations hereunder.
(c) Pending Actions. No litigation actions are pending or, to
Seller's knowledge, threatened against the Property or Seller which
would materially adversely affect either the Property or the Seller
or which challenge the execution, delivery or performance of this Contract.
(d) Rent Roll. The final rent roll to be delivered by Seller
with respect to the Leases promptly after execution of this Contract
will be true, accurate and complete; said rent roll additionally will reflect
all rent concessions and security deposits and all leasing commissions
and referral fees due or owed.
(e) Service Contracts. The schedule of Service Contracts
delivered by Seller is true, correct and complete in all material respects
and Seller has no knowledge of any defaults under any such contracts.
14. Representations and Warranties of Buyer.
---------------------------------------
As an inducement for Seller to sell the Property to Buyer,
Buyer represents to Seller the following:
(a) Organization and Authority.
(i) Buyer is a corporation duly organized and validly
existing under the laws of the State of Delaware and has full corporate
power and authority to carry on its business as it is now being conducted.
(ii) Buyer has the requisite corporate power and authority
to execute, deliver and perform this Contract. The execution, delivery and
performance of this Contract and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Buyer. This Contract is a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms.
(iii) Neither the execution and delivery of this Contract
nor the consummation of the transactions contemplated hereby in the manner
herein provided nor the fulfillment of or compliance with the terms and
conditions hereof shall:
(A) contravene any material provision of the
Certificate of Incorporation or Bylaws of Buyer; or
(B) violate, be in conflict with, constitute a
default under, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or mortgage, or subject any
properties or assets of Buyer to any indenture, mortgage, contract,
commitment, or agreement to which Buyer is a party or by which Buyer is
bound which, in the aggregate, would have a material adverse effect on
Buyer's ability to perform all of its obligations hereunder.
(b) Adequate Funds. Buyer has adequate funds or available
credit resources to pay the Purchase Price at the Closing as provided
hereunder.
15. Default and Damages.
-------------------
(a) Buyer's Remedies. If Buyer shall elect to proceed with the
performance of this Contract notwithstanding the failure to be satisfied
of any conditions to Closing, Buyer shall be deemed to have waived the
requirement that those conditions which Seller is unable to perform be
satisfied. Notwithstanding anything contained herein, in no event shall
Seller, its officers, directors, partners, agents and representatives have
any personal liability under this Contract whatsoever except with respect
to those provisions of this Contract which expressly survive the Closing,
and Buyer's sole recourse for Seller's failure to consummate the Closing
in accordance with the terms of this Contract shall be to receive a refund
of the Downpayment with all accrued interest thereon upon termination of
this Contract or, if appropriate, to sue for specific performance hereunder.
In the event Seller fails to consummate the Closing in
accordance with the terms of this Contract, Buyer may terminate this
Contract and shall receive a "Termination Fee" in the amount of
$750,000, which Termination Fee shall be in addition to the return of the
Downpayment plus all accrued interest thereon plus Buyer's out of
pocket costs and expenses relating to the purchase of the Property
(including, without, limitation, reasonable attorneys' fees and expenses) to
be paid by Seller on demand. Notwithstanding the foregoing, in the event
Seller fails to consummate the Closing for failure to obtain the Partnership
Consent, so long as the general partners of Seller have recommended and
continue to recommend to the limited partners of Seller the sale of the
Property to Buyer, the Termination Fee shall consist solely of all of Buyer's
out-of-pocket costs and expenses relating to the purchase of the Property
(including, without, limitation, reasonable attorneys' fees and
expenses). Buyer's sole recourse for Seller's failure to consummate the
Closing in accordance with the terms of this Contract shall be the
receipt of the Termination Fee, as set forth above, upon termination
of this Contract, together with the return of the Downpayment plus all
accrued interest thereon, or, if appropriate, to sue for specific performance
hereunder.
(a) Seller's Remedies. If Buyer shall be unable or unwilling
to consummate the Closing hereunder in violation of the terms
hereof, Seller shall have the right (i) to terminate this Contract and
retain the Downpayment, plus Seller's out of pocket costs and expenses
relating to the sale of the Properties (including, without,
limitation, reasonable attorneys' fees and expenses) to be paid by Buyer
on demand, as liquidated and agreed upon damages, whereupon this Contract
shall be and become null and void, and neither Seller nor Buyer nor any
of their respective Representatives shall have any further rights or
obligations hereunder or (ii) to pursue such rights and remedies as Seller
may have at law or in equity, including, without limitation, the
right to sue for specific performance hereunder.
16. Brokers.
-------
Seller and Buyer hereby represent that each has not dealt with
any advisor, broker or finder in connection with this Contract.
Seller and Buyer shall indemnify and hold each other harmless from and
against all losses, costs, damages, expenses and liabilities including,
without limitation, reasonable attorneys' fees, resulting from any claims
that may be made for a commission fee or other compensation by reason of
this Contract by any broker, finder, advisor or person with whom such
party has dealt in connection herewith.
The provisions of this Section 16 shall survive the Closing.
17. Indemnification of Seller.
-------------------------
Buyer agrees to indemnify and hold harmless Seller, its general
and limited partners, attorneys, accountants, agents and employees and
their heirs, successors and assigns, from and against any claims or
demands for any expense, obligation, loss, cost, damage or injury arising
out of the Buyer's inspection of the Property prior to or on the Closing Date.
The provisions of this Section 17 shall survive the Closing.
18. Survival of Representations, Warranties and Indemnifications.
------------------------------------------------------------
Except as otherwise expressly set forth in this Contract,
none of the representations, warranties and indemnifications contained in
this Contract shall survive the Closing.
19. Conduct of Business.
-------------------
During the period from the date hereof to the Closing Date, except
as (a) Buyer shall otherwise agree or (b) necessary in connection with the
transactions contemplated herein, Seller shall operate the Property in
the ordinary and usual course, consistent with past practice.
20. Reasonable Efforts; Public Announcements.
----------------------------------------
Each party hereto will use all reasonable efforts to perform all
acts required to consummate the transactions contemplated hereby as
promptly as practicable. Such acts shall include, without limitation, the
provision of any information to and submission of any filing with any
governmental entity having jurisdiction. The foregoing notwithstanding,
except as may be required to comply with the requirements of any applicable
laws and the rules and regulations of each stock exchange upon which
the securities of either of the parties is listed, no press release or
similar public announcement or communication shall, if prior to the Closing,
be made or caused to be made concerning the execution or performance of
this Contract, unless the parties shall have consulted in advance with
respect thereto. Seller shall provide Buyer with reasonable access to
the Property and all information in its possession relating to the
Partnership. Buyer shall keep such information confidential, subject to
the terms and conditions of the Confidentiality Agreement dated April 4,
1996, by and between the parties (the "Confidentiality Agreement").
21. Partnership Consent.
-------------------
As soon as practicable after the date hereof but no later than
fifteen (15) days after the execution of this Contract, Seller shall prepare
and file solicitation materials relating to the transaction contemplated
hereby which materials shall take a vote of its limited partners to
consider such matters. Seller shall, subject to the fiduciary duties of
its general partner, make reasonable efforts to secure the Partnership
Consent as promptly as practicable. Buyer will supply Seller with such
information and reasonable assistance as Seller may request in connection
therewith.
22. Casualty/Condemnation to the Property.
-------------------------------------
(a) If, prior to the Closing Date, any of the Property is damaged
due to a casualty (a "Casualty") and the cost of repairing such
damage, in accordance with Seller's insurance claims, is less than
three percent of the Purchase Price, then Seller shall repair such
Casualty prior to the Closing Date or assign to Buyer the proceeds of
Seller's policy of casualty insurance. If the cost of repairing a Casualty
to any Property, in accordance with Seller's insurance claims, equals or
exceeds three percent of the Purchase Price, then Seller shall have the
option to either (i) repair the Casualty to the Property prior to Closing
or (ii) remove the Property from the transaction and terminate this
Agreement. Notwith standing anything herein to the contrary, Seller shall
have the right to adjourn the Closing Date for such reasonable period
as shall be necessary to repair any such Casualty. If Seller elects to
remove such Property from the transaction, then Buyer shall have the option,
within ten days written notice of Seller's election, to accept such Property
with an assignment of the applicable insurance proceeds due to Seller.
(a) If, prior to the Closing Date, all or any portion of the
Property is condemned or taken by eminent domain, then this Contract shall
nevertheless remain in full force and effect without any abatement of
the Purchase Price. In such event, Seller shall convey the Property to
Buyer at the Closing in its then condition, and Buyer shall be entitled to
receive all net or condemnation awards otherwise payable to Seller as a
result of such loss or damage and, in full satisfaction of any claims by
Buyer against Seller, Seller shall assign to Buyer, without recourse
or warranty of any nature whatsoever, all of Seller's right, title and
interest in and to any claims Seller may have to any condemnation awards,
as well as all rights or pending claims of Seller with respect to such
condemnation or taking of the Property, and Seller shall pay to Buyer all
payments theretofore made by such condemning authorities as a result of
such loss after deducting therefrom the costs of collection thereof.
(b) Notwithstanding anything contained herein to the contrary, if
Seller delivers notice of condemnation or eminent domain proceedings
which are initiated or threatened between the date of this Contract and
the Closing Date, Buyer shall have the right to participate in any and
all settlement discussions and other conferences relating thereto.
23. Termination.
-----------
Notwithstanding anything con tained herein, this Contract may be
terminated as follows:
(a) By Seller in accordance with Sections 15(b) and 22(a) hereof.
(b) By Seller or Buyer, if a court of competent jurisdiction
issues a binding and final order permanently preventing the sale of the
Property to Buyer.
(c) By Seller or Buyer, if the partners of Seller vote against the
Partnership Consent.
(d) By Seller or Buyer, if the Closing does not occur on or
before November 17, 1996, provided that the party seeking to terminate is
not in material breach of this Contract.
In the event this Contract is terminated pursuant to any of the
foregoing provisions, this Contract shall thereupon become null and void
and neither Seller nor Buyer nor any of their respective representatives
shall have any further rights or obligations hereunder.
24. Virginia Contract and Oakridge Contract.
---------------------------------------
This Contract is being signed contemporaneously with and
conditioned upon each of the Virginia Contract and the Oakridge Contract;
accordingly (i) if the Downpayment is payable to Buyer or Seller pursuant
to the terms of this Contract and/or either of the Virginia Contract and
the Oakridge Contract, the aggregate amount of the Downpayment paid
to such party shall be $2,000,000, (ii) the aggregate limitation on the
amount of credit that Buyer shall be entitled to against the Purchase Price
to cure Material Defects (other than Environmental Defects) pursuant to this
Contract and/or either of the Virginia Contract and the Oakridge Contract
shall be $500,000, (iii) the amounts set forth in Section 12 of this
Contract and/or either of the Virginia Contract and the Oakridge Contract
shall be on an aggregate basis for this Contract, the Virginia Contract and
the Oakridge Contract and (iv) if the Termination Fee is payable to
Buyer pursuant to this Contract and/or either of the Virginia Contract and
the Oakridge Contract, the aggregate amount of the Termination Fee paid to
Buyer shall be $750,000 in addition to the return of the Downpayment
plus all accrued interest thereon plus Buyer's out of pocket costs and
expenses relating to the purchase of the Property (including, without,
limitation, reasonable attorneys' fees and expenses).
25. Notices.
-------
Any notice which may be required or may be desired to be given
pursuant to this Contract shall be in writing and shall be deemed
delivered and effective upon actual receipt at the following addresses
or such other addresses as the parties may notify each other by similar
notice:
If to Seller, to:
American Storage Properties, L.P.
3 World Financial Center
New York, New York 10285
Attn: Paul L. Abbott
With a copy to:
Skadden, Arps, Slate, Meagher &
Flom 919 Third Avenue
New York, New York 10022
Attn: Patrick J. Foye, Esq.
If to Buyer, to:
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, CA 91201-2397
Attn: Harvey Lenkin
With a copy to:
Hogan & Hartson, LLP
Columbia Square
555 Thirteenth Street, NW
Washington, D.C., 20004-1109
Attn: David B.H. Martin, Esq.
26. General.
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(a) Interpretation of Words. A masculine pronoun wherever used
herein shall be construed to include the feminine or neuter where
appropriate. The singular form wherever used herein shall be construed to
include the plural where appropriate.
(a) Assignment; Successors and Assigns; Third Party
Beneficiaries. (i) Neither of the parties hereto may assign its
respective rights under this Contract without the consent of the other
party.
(i) Except as otherwise provided hereby, the provisions
of this Contract shall be binding upon and inure to the benefit of the
parties hereto and their respective legal representatives and successors
in interest.
(ii) This Contract is not intended, nor shall it be
construed, to confer upon any party except the parties hereto and their
heirs, successors and permitted assigns any rights or remedies under or by
reason of this Contract.
(b) Time of the Essence. Time shall be of the essence with
respect to the performance of all of the obligations hereunder.
(c) Entire Contract. Subject to the terms and conditions of
the Confidentiality Agreement, this Contract represents the entire
understanding between the parties with respect to the subject matter
hereof, superseding all prior or contemporaneous understandings or
communications of any kind, whether written or oral. This Contract may
only be modified by a written agreement signed by both parties hereto.
(d) Captions. The headings of the paragraphs herein are for
convenience only; they form no part of this Contr act and shall not affect
its interpretation.
(e) Governing Law. The provisions of this Contract shall be
governed by and construed in accordance with the laws of the State of New
York applicable to agreements entered into and to be performed wholly
therein.
(f) Counterparts. This Contract may be executed in several
counterparts, each of which shall be deemed an original. Such counterparts
constitute but one and the same instrument, which may be sufficiently
evidenced by one counterpart.
(g) Further Assurances. Each of the parties hereto shall, at
the request of the other party, execute, acknowledge and deliver any
further instruments, and take such further actions, as the requesting
party may reasonably request, to carry out effectively the intent of this
Contract.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of the day and year first above written.
HUTTON/GSH AMERICAN STORAGE PROPERTIES
(FERN PARK), L.P.
By: American Storage Properties, L.P.,
its general partner
By: Storage Services, Inc.,
its general partner
By: s/Paul L. Abbott/
-----------------
Name: Paul L. Abbott
Title: President
By: Goodman Segar Hogan/American Storage
Properties Associates, L.P., its general
partner
By: s/Mark P. Mikuta/
----------------
Name: Mark P. Mikuta
Title: President
PUBLIC STORAGE, INC.
By: s/Harvey Lenkin/
---------------
Name: Harvey Lenkin
Title: President
EXHIBIT A
Property*
Name Location
---- --------
South 17-92 8226 South 17-92
Orlando, FL
*The Property includes:
(A) All buildings and improvements located on the Property;
(B) All rights-of-way, alleys, waters, privileges, easements,
covenants and appurtenances which are on or benefit the Property;
(C) All right, title and interest of Seller in and to any
land lying in the bed of any public or private street, road, avenue, alley or
highway, opened, closed or proposed, in front of or adjoining the Property
to the center line thereof;
(D) All right, title and interest of Seller to any unpaid award to
which Seller may be entitled (1) due to the taking, subsequent to the
Inspection Period, by condemnation or eminent domain of any right, title or
interest of Seller in the Property and (2) for any damage, subsequent to the
Inspection Period, to the Property due to the change of grade of any street
or highway;
(E) All right, title and interest of Seller to any assignable
licenses, permits, contracts, leases, sales agreements, construction
agreements, maintenance agreements, service agreements with respect to the
Property.
(F) All Leases and any security deposits with respect to the
Property in which Seller holds an interest as a landlord for the use and
occupancy of all or any part of the Property; and
(G) All engineering reports, surveys and architectural plans, if
any.
EXHIBIT B
ESCROW AGREEMENT
Agreement made this 17 day of May, 1996 by and among Public Storage,
Inc. ("Purchaser"), American Storage Properties (Fern Park), L.P. ("Seller"),
and Chicago Title Company, as escrow agent ("Escrow Agent").
1. The Parties hereto agree that the sum of $250,000 (the "Escrow
Amount"), to be held pursuant to a Contract of Sale between Seller and
Purchaser of even date herewith (the "Contract"), shall be held in escrow by
the Escrow Agent upon the terms and conditions set forth herein.
2. (a) The Escrow Agent shall deliver the Escrow Amount then in its
possession in accordance with Paragraph 3 hereof to Seller (i) upon the
Closing, as that term is used in and in accordance with the Contract or (ii)
in the event that Seller makes a written demand therefor stating that
Purchaser has failed to perform Purchaser's obligations under the Contract.
(b) Escrow Agent shall return the Escrow Amount then in its
possession and any interest earned thereon in accordance with Paragraph 3
hereof to Purchaser in the event that Purchaser makes a written demand
therefor stating (i) that Seller has failed to perform Seller's obligations
under the Contract or (ii) that Purchaser is otherwise entitled to the return
of the Escrow Amount in accordance with the terms of the Contract.
(c) In the event that Escrow Agent intends to release the Escrow
Amount in accordance with Paragraph 3 hereof to either party pursuant to
Paragraph 2(a)(ii) or 2(b) hereof, then Escrow Agent shall give to the other
party not less than ten days prior written notice of such fact and, if Escrow
Agent actually receives written notice during such ten day period that such
other party objects to the release, then Escrow Agent shall not release the
Escrow Amount and any such dispute shall be resolved as provided herein.
(d) In the event that a dispute shall arise as to the disposition
of the Escrow Amount or any other funds held hereunder in escrow, Escrow
Agent shall have the right, at its option, to either hold the same or
deposit the same with a court of competent jurisdiction pending decision
of such court, and Escrow Agent shall be entitled to rely upon the
decision of such court.
(e) Escrow Agent may commingle the Escrow Amount with other
funds held in its "trustees account."
(f) Escrow Agent shall hold the Escrow Amount in a savings bank
account or a liquid assets account bearing interest at such rate as may
from time to time be paid or invest the Escrow Amount in U.S. Treasury
Bills or other securities guaranteed by the Government of the United States
of America. The rate of interest or yield need not be the maximum
available and deposits, withdrawals, purchases and sales shall be made in the
sole discretion of Escrow Agent, which shall have no liability whatsoever
therefor except for its gross negligence or willful misconduct. Discounts
earned shall be deemed interest for the purposes hereof.
(g) Escrow Agent shall have no liability whatsoever arising out of
or in connection with its activity as Escrow Agent except for its gross
negligence or willful misconduct. Seller and Purchaser jointly and severally
agree to indemnify and hold harmless Escrow Agent from and against any and
all loss, cost, claim, cause of action, damage, liability and expense
(including attorneys' fees and court costs) which may be incurred by reason
of its acting as Escrow Agent.
(h) Escrow Agent shall be entitled to rely upon any judgment,
certification, demand or other writing delivered to it hereunder without
being required to determine the authenticity or the correctness of any fact
stated therein, the propriety or validity thereof, or the jurisdiction of a
court issuing any such judgment. Escrow Agent may act in reliance upon
(i) any instrument or signature believed to be genuine and duly
authorized, and (ii) advice of counsel in reference to any matter or
matters connected herewith.
(i) Any notice, demand or other communication to Escrow Agent
hereunder shall be in writing and delivered in person or sent by
certified mail, return receipt requested, postage prepaid, addressed to
Escrow Agent as follows:
Chicago Title Company
388 Market Street, Suite 1300
San Fancisco, CA 94111
Attention: Ms. Michelle Viguie
The same shall be deemed given on the date delivered, if delivered in
person, or on the third business day following the date of mailing the
same, if mailed.
(3) The interest, if any, earned on the Escrow Amount shall be for
the account of Purchaser.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of the day and year first above written.
HUTTON/GSH AMERICAN STORAGE PROPERTIES
(FERN PARK), L.P.
By: American Storage Properties, L.P.,
its general partner
By: Storage Services, Inc.,
its general partner
By: s/Paul L. Abbott/
----------------
Name: Paul L. Abbott
Title: President
By: Goodman Segar Hogan/American Storage
Properties Associates, L.P., its general
partner
By: s/Mark P. Mikuta/
----------------
Name: Mark P. Mikuta
Title: President
PUBLIC STORAGE, INC.
By: s/Harvey Lenkin/
---------------
Name: Harvey Lenkin
Title: President
CHICAGO TITLE COMPANY, as Escrow Agent
By:_____________________________
Name:
Title:
EXHIBIT C
Allocations of Property Value
Property Purchase Price
- -------- --------------
South 17-92 $ 3,900,000
CONTRACT OF SALE (Oakridge)
THIS CONTRACT, made as of May 17, 1996, by and between Hutton/GSH
American Storage Properties (Oakridge), L.P., a Florida limited partnership
("Seller"), and Public Storage, Inc., a California corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Buyer desires to purchase all
of Seller's right, title and interest in the real property listed on Exhibit
A attached hereto and made a part hereof, the improvements and any fixtures
and personalty, presently existing and located thereon and therein and the
items set forth on Exhibit A (the "Property"), all upon the terms and
subject to the conditions hereinafter set forth;
WHEREAS, as of the date hereof, Buyer and Seller have
simultaneously entered into a Contract of Sale (Virginia) (the "Virginia
Contract") in respect of seven self-service storage facilities located in
Virginia (the "Virginia Properties") and a Contract of Sale (Fern Park) (the
"Fern Park Contract") in respect of one self- service storage facility
located in Florida (the "Fern Park Property"); and
WHEREAS, following such sale, Seller intends to liquidate and
distribute its net assets (including the proceeds of such sale) to its
partners.
NOW, THEREFORE, in consideration of the foregoing, the sum of
$1.00 by each party in hand paid to the other, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto, intending to be legally bound, do hereby mutually agree
as follows:
1. Agreement to Purchase and Sell. Subject to the terms and
conditions hereinafter set forth, Seller agrees to sell to Buyer and Buyer
agrees to purchase from Seller, free and clear of all liens, claims,
encumbrances and other charges, except the Permitted Exceptions (as
hereinafter defined), all of Seller's right, title and interest in and to the
Property.
2. Purchase Price. The purchase price ("Purchase Price") for
the Property, which Buyer agrees to pay, is the sum of $3,090,000, payable as
follows:
(a) $250,000, as the downpayment (the "Downpayment"), upon
the execution of this Contract by wire transfer of immediately available
funds to the account of Escrow Agent (as hereinafter defined), to be held by
the Escrow Agent in accordance with this Section 2 and subject to Section 24.
(b) The remainder of the Purchase Price at Closing (as
hereinafter defined), by wire transfer of immediately available funds to
Seller's account pursuant to Seller's instructions.
The Title Insurer (as hereinafter defined) shall act as escrow
agent (the "Escrow Agent") and shall hold the Downpayment in accordance with
the provisions of the escrow agreement annexed hereto as Exhibit B and made a
part hereof (the "Escrow Agreement"), which Escrow Agreement is being
executed simultaneously with this Contract.
Any interest earned on the Downpayment shall accrue to the benefit
of Buyer.
3. Evidence of Title. (a) Seller shall convey to Buyer at
Closing (as hereinafter defined) good and valid marketable fee simple title
to the Property, subject to any covenants, conditions, rights of way,
restrictions, easements and other matters affecting title, which do not
materially impair the use or the value of the Property (collectively, the
"Permitted Exceptions"; provided, however, that Permitted Exceptions shall
expressly exclude any Unpermitted Exceptions (as hereinafter defined)).
(a) Buyer shall obtain and promptly deliver to Seller within 30
days after the date hereof (i) commitments for ALTA policies of owners title
insurance or the equivalent thereof in the applicable jurisdiction (the
"Title Commitments") issued by Chicago Title Insurance Company (the "Title
Insurer") showing fee simple title to the Property as vested in Seller and
to be vested in Buyer, subject to the Permitted Exceptions and any standard
"preprinted" exceptions set forth in the Title Commitments and (ii) updated
surveys prepared by licensed land surveyors according to ALTA standards (or
the equivalent thereof in the applicable jurisdiction) showing the
boundaries of the Property, the location of any easements, rights-of-way,
improvements and encroach ments thereon and certifying the number of acres
(to the nearest one thousandth acre) comprising the Property (the "Surveys").
(b) As used herein, the term "Unpermitted Exception" shall
mean with respect to the Property (provided the same is not caused
by the actions of Buyer):
(A) Any building encroachment or sign en croachment (i) on
real estate not owned by Seller, (ii) on a setback line, or (iii) in
violation of a binding easement burdening the Property, in each
case which materially impairs the use or value of the Property;
(B) Any defect in the Seller's chain of title which would
prevent Seller from being able to convey title to the Property in
fee simple at Closing under the laws of the state in which the
Property is located, unless the Title Insurer is willing to issue a
policy of title insurance which contains affirmative coverage for
claims arising solely out of such defect;
(C) Any easement which burdens the Property such that
access or use is compromised, in each case which materially impairs
the use, access or value of the Property;
(D) Any lack of access or easements necessary to
operate the Property as a self-storage facility in the manner which such
Property has been operated by Seller prior to Closing, in each case
which materially impairs the use, access or value of the Property;
(E) Any liens for the payment of money other than
real estate taxes, association assessments, special district
taxes and related charges not yet due and payable; and
(G) (i) the failure to be in material conformance with
the then applicable local zoning codes, (ii) if the Property is not
in conformance with the then applicable local zoning codes, the
failure of the Property to have the status equivalent to a "non-
conforming use" and (iii) the existence of a permanent and final
order by the applicable local jurisdiction which materially impairs the
use or value of the Property.
4. Inspections. (a) Buyer may conduct the due diligence
investigation described below until the 30th day following the date hereof
(the "Investigation Period").
(a) Prior to the termination of the Investigation
Period, Buyer or Buyer's attorney may deliver to Seller a notice (a
"Defect Notice") setting forth a reasonable description of any Title
Defects, including any Unpermitted Exceptions, Structural Defects (as
hereinafter defined), Environmental Defects (as hereinafter defined)
or Sales Package Defects (as hereinafter defined) (collectively
"Material Defects") that it has discovered with respect to the Property.
Such description shall include copies of any reports, studies, audits,
searches and similar documentation relating to the Material Defects
discovered in connection with Buyer's investigation and Buyer's estimate of
the cost to cure any such described Material Defects.
Within 10 days of receiving such a Defect Notice, Seller
shall deliver a notice to Buyer with respect to each affected Property
(i) disputing such Material Defects, (ii) stating that some or all of the
Material Defects have been, or agreeing prior to the Closing that they
will be, cured or (iii) agreeing to grant the Buyer a credit against the
Purchase Price equal to the cost to cure such Material Defects. Notwith
standing clause (a) above or anything in the Contract to the contrary,
Seller shall not be obligated to grant Buyer a credit against the
Purchase Price to cure Material Defects (other than Environmental Defects)
with respect to the Property in excess of $500,000, subject to Section 24.
If the cost to correct any Environmental Defect exceeds 10% of the value of
the Property as set forth in Exhibit C attached hereto and made a part
hereof, Seller shall have the option to remove such affected Property
from the transaction contemplated hereby, in each case the Purchase Price
shall be reduced in accordance with Exhibit C.
If Buyer has alleged any Material Defects which Seller has
disputed or the cost to cure such Material Defects is in dispute, the
parties shall endeavor in good faith to resolve such dispute. If they do
not resolve such dispute within 10 days, the matter in dispute shall be
submitted to binding arbitration by the American Arbitration Association
(the "Association") (or any suc cessor organization) (provided that, in the
event of a dispute as to an Environmental Defect, the arbitration shall
be performed by a reputable arbitrator with at least 10 years experience
in environmental matters). All arbitration shall be finally determined in
New York City and shall be governed (except as provided above) in accor dance
with the Rules for Commercial Arbitration of the Association (or any
successor thereto) and the judgment or the award rendered may be entered in
any court having jurisdiction. Each party shall pay 50% of the fees and
expenses of the Association. The Closing Date shall be adjourned with
respect to the Property pending resolution of the matter in dispute.
Notwithstanding anything herein to the contrary, Seller shall have
the right to adjourn the Closing Date for a reasonable period as shall be
necessary to cure any Material Defect.
Notwithstanding anything herein to the contrary, the
discovery of any defects or Material Defects shall not give rise to any
right of Buyer to (i) terminate this Contract or remove the Property from
the transaction contemplated hereby or (ii) except for the cost of
curing Environmental Defects, obtain credit against the Purchase Price
in excess of $500,000 to cure Material Defects, subject to Section 24.
(b) Seller shall make available to Buyer any Phase I
environmental site assessments and Phase II environmental assessments
of the Property, if any, previously performed for Seller. Buyer
may obtain additional Phase I environmental site assessments of the
Property and otherwise inspect the Property to conduct its due diligence
review thereof.
Buyer shall conduct all environmental due diligence in a commercially
reasonable manner, and shall use reasonable efforts to minimize any
interference with or impairment of the regular conduct of the Seller's
business. If Buyer's environmental due diligence indicates a potential
material environmental liability, Buyer may conduct a Phase II
environmental assessment (the Phase I environmental site assessment and
Phase II environmental assessments, if any, shall be collectively referred to
as the"Environmental Reports") on the Property, provided (i) Buyer has provided
Seller with a copy of the Phase I environmental site assessment describing
such condition, (ii) Buyer has provided Seller with a copy of the scope of
work proposed for such Phase II environmental assessment, (iii)
Seller consented to such additional Phase II environmental assessment,
which consent shall not be unreasonably withheld or delayed, and (iv) Seller
has agreed to a reasonable extension of the Inspection Period following the
receipt of any Phase I environmental site assessment which recommends a Phase
II environmental assessment be performed on the Property in order for
Buyer to perform further environmental due diligence with respect to the
Property.
(c) Seller shall make available to Buyer upon Buyer's reasonable
request no later than 10 days following the date of full execution of this
Contract, to the extent in the possession or control of Seller and
relating to the Property, a copy of the current Form 10-K of Seller on file
with the Securities and Exchange Commission including all exhibits thereto,
copies of the Service Contracts (as hereinafter defined), the most recent
rent rolls available to the managing general partner of Seller, and
copies of insurance policies and all other information and records
pertaining to the Property within Seller's possession or control. Buyer
acknowledges that all non-public information contained in such documents is
confidential. Buyer shall have the right, at its sole cost and expense,
to conduct its own audit of the Property. Buyer agrees not to disclose such
information to any person except to Buyer's officers, employee, agents
and contractors for purposes of conducting this transaction, and Buyer
shall require any such person receiving such information to protect the
confidentiality thereof, except to the extent such information is a
matter of public record or becomes a matter of public record through no
fault or action of Buyer or Buyer's officers, employee, agents or
contractors.
(d) Buyer shall have the right to contact existing
commercial tenants which lease in excess of 1,000 sq. ft from Seller, as
selected by Buyer; provided that, Seller shall have the right to participate
in and/or monitor any discussions or correspondence between Buyer and
such selected existing tenants.
(e) Within five days of the execution of this Contract, Seller shall
provide Buyer with copies of all of Seller's yellow page advertisements and
contracts with respect to the Property.
(f) Other than with respect to the documents made available
by Seller pursuant to Section 4 (d) and other than as specified in Section 12,
all of the foregoing studies, audits and investigations by or on behalf
of Buyer, including, without limitation, Phase II environmental assessments,
shall be at Buyer's sole cost, expense and risk, and Buyer shall restore
the Property to the condition existing prior to the performance of any such
studies, audits and investigations. Prior to commencing any such
studies, audits and investigations, Buyer shall furnish to Seller a
certificate of insurance evidencing comprehensive general public
liability insurance insuring the person or entity performing such studies,
audits and investigations and listing Seller and the general partners of
Seller as additional insureds thereunder.
(g) The term "Structural Defects" shall mean material structural
flaws to foundations, load bearing walls or roof support systems
affecting the Property, set forth in a report certified by an engineer licensed
in the applicable jurisdiction, but excluding any flaws which are common or
usual in similar assets of like age assuming reasonable repair and maintenance
has been performed to the foundations, load bearing walls or roof support
systems. Such report shall state the aggregate cost to cure all material
structural flaws with respect to the Property.
(h) The term "Title Defects" shall mean any matter, objected to
by Buyer, encumbering the Property other than the Permitted Exceptions (the
"Title Defects").
(i) The term "Environmental Defect" shall mean "Hazardous
Materials" (hereinafter defined) located in, on or under the Property in
violation of any Environmental Laws (hereinafter defined).
(j) The term "Sales Package Defects" shall mean
misstatements in the income and expense statements and rent roll
previously delivered by Seller to Buyer and actually relied upon by Buyer in
good faith, in each case other than misstatements which do not in the
aggregate have a material adverse effect on the Property.
(k) In order to establish an Environmental Defect, Buyer
shall be required to deliver to Seller on or prior to 10 days after the
earlier of (i) Buyer's receipt of the Environmental Reports or (ii) the end
of the Inspection Period, as to each Property, written notice reasonably
detailing any Environmental Defect. Buyer and Seller shall make reasonable
efforts to agree as to the existence of and the cost to cure any
Environmental Defect. If Buyer and Seller do not agree on the foregoing
within 15 days after Seller's receipt of Buyer's notice described above, then
the parties shall submit the matter to binding arbitration in accordance with
the terms hereof.
(l) As used herein, "Environmental Laws" means all federal,
state and local statutes, codes, regulations, rules, ordinances, orders,
standards, permits, licenses, policies and requirements (including consent
decrees, judicial decisions and administrative orders) relating to the
protection, preservation, remediation or conservation of the environment
or worker health or safety, all as amended or reauthorized, or as
hereafter amended or reauthorized, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U. S. C. Section 9601 et seq., the Resource Conservation
and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq., the
Emergency Planning and Community Right-to- Know Act ("Right-to-Know Act"), 42
U. S. C. Section 11001 et seq., the Clean Air Act ("CAA), 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act ("Clean Water Act"),
33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act ("TSCA"),
15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe
Drinking Water Act"), 42 U.S.C. Section 300f et seq., the Atomic Energy Act
("AEA"), 42 U.S.C. Section 2011 et seq., the Occupational Safety and
Health Act ("OSHA"), 29 U.S.C. Section 651 et seq., and the Hazardous
Materials Transportation Act (the "Transportation Act"), 49 U.S.C. Section
1802 et seq. As used herein, "Hazardous Materials" means: (1) "hazardous
substances," as defined by CERCLA; (2) "hazardous wastes," as defined by
RCRA; (3) any radioactive material including, without limitation, any
source, special nuclear or by-product material, as defined by AEA; (4)
friable asbestos; (5) polychlorinated biphenyls; and (6) any other
material, substance or waste regulated under any Environmental Laws.
5. Condition of the Property. Subject only to Seller's
covenants, representations and warranties in this Contract, Buyer shall
purchase the Property in its "AS IS" condition at the Closing Date,
subject to all latent and patent defects (whether physical, financial or
legal, including title defects), based solely on Buyer's own inspection,
analysis and evaluation of the Property and not in reliance on any
records or other information obtained from Seller or on Seller's behalf.
Subject to Section 4(k), Buyer acknowledges that it is not relying on any
statement or representation (other than any representations,
warranties, covenants and indemnifi cations contained in this Contract)
that has been made or that in the future may be made by Seller or any
of Seller's employees, agents, attorneys or representatives concerning
the condition of the Property (whether relating to physical
conditions, operation performance, title, or legal matters). Without
limiting the forego ing, any information disclosed in writing to Buyer
in connection with any investigations, inspections, tests or analyses
performed prior to Closing, shall be deemed not violative of any warranty
or representation of Seller, if Buyer proceeds to Closing hereunder.
6. Closing. Upon the terms and subject to the conditions
of this Contract, the transfer of title and possession of the Property (the
"Closing") shall be held at the offices of Skadden, Arps, Slate, Meagher &
Flom, 919 Third Avenue, New York, New York 10022 at 10:00 a.m., local time,
on the date which is two business days after Seller has received the
Partnership Consent (as hereinafter defined) or such other date as the
parties shall agree. The date on which the Closing occurs is herein
called the "Closing Date".
7. Conditions to Seller's and Buyer's Obligation to Close. The
obligations of Seller and Buyer to close under this Contract are subject to
the fulfillment, prior to or at Closing, of each of the following:
(a) Seller shall have obtained consents to the sale of the
Property (the "Partnership Consent") by limited partners holding a majority
in interest of the units of limited partnership interests.
(b) There shall not be in effect any statute, regulation,
order, decree or judgment of any governmental entity having jurisdiction
which renders illegal or enjoins or prevents in any material respect the sale
of the Property to Buyer.
(c) The closings of the transactions contemplated by the
Virginia Contract and the Fern Park Contract shall have occurred, unless
either closing shall have been adjourned by Seller or any of the Virginia
Properties or the Fern Park Property shall have been removed by Seller, in
each case, in accordance with the terms thereof.
8. Conditions to Seller' s Obligation to Close. The
obligations of Seller to close under this Contract are subject to the
fulfillment, prior to or at Closing, of each of the following:
(a) The representations and warranties of Buyer shall have
been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date, as if made at
and as of such date except as otherwise expressly provided herein.
(b) On and as of the Closing Date, Buyer shall have
performed and complied with, in all material respects, all agreements and
covenants required by this Contract to be performed or complied with prior to
or on the Closing Date.
9. Conditions to Buyer's Obligation to Close. The obligations of
Buyer to close under this Contract are subject to the fulfillment, prior to
or at Closing, of each of the following:
(a) The representations and warranties of Seller shall have
been true and correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date, as if made at
and as of such date except as otherwise expressly provided herein, in each
case other than failures to be true and correct which do not in the aggregate
have a material adverse effect on the Property.
(b) On and as of the Closing Date, Seller shall have
performed and complied with, in all material respects, all agreements and
covenants required by this Contract to be performed or complied with prior to
or on the Closing Date, other than failures to perform and comply which do
not in the aggregate have a material adverse effect on the Property.
10. Deliveries.
(a) Seller's Deliveries. Upon the terms and subject to the
conditions of this Contract, on the Closing Date (except as expressly
provided otherwise), Seller shall convey the Property and its related
interests to Buyer by delivery of the following documents in form and
substance reasonably acceptable to both parties:
(i) quit claim deed in recordable form (provided, however that
Seller shall deliver to Buyer a special warranty deed if the Title Insurer is
unwilling to issue a policy of title insurance which is customary in the
applicable jurisdiction containing no exceptions from coverage solely out of
the delivery by Seller of a quit claim deed);
(ii) non-recourse bill of sale for the Property conveying any
fixtures and personalty owned by Seller without covenants;
(iii) non-recourse assignment of Seller's interest, as lessor, in
any leases of space at the Property (the "Leases") and security deposits for
the Property;
(iv) non-recourse assignment, to the extent assignable, of
Seller's rights under any service or maintenance contracts (including, without
limitation, yellow pages, landscaping, security and refuse removal contracts)
relating to the Property (the "Service Contracts");
(v) non-recourse assignment, to the extent assignable, of any
licenses, permits and unexpired warranties and guarantees, if any, pertaining
to the Property;
(vi) certificates and resolutions as reasonably requested by Buyer
demonstrating the authority of the persons executing documents at Closing;
(vii) non-foreign affidavit;
(viii) originals, and/or copies, of the Leases in Seller's
possession (which deliveries may be made at the Property) and a copy of
Seller's standard form of lease for the Property;
(ix) all documents and instruments reasonably required by the
Title Insurer to issue the title policies;
(x) possession of the Property to Buyer;
(xi) evidence of the termination of the management agreement,
if any, for the Property;
(xii) a form of notice to the tenants of the Property of the
transfer of title and assumption by Buyer of the landlord's obligations
under the Leases and the obligation to refund the security deposits;
(xiii) an updated rent roll for the Property;
(xiv) all permits (including, without limitation, certificates of
occupancy, building permits, variances and conditional use permits), licenses
(including, without limitation, business licenses) and approvals that Seller
has in its possession relating to the Property;
(xv) an inventory of all personalty owned by Seller located in or
on the Property;
(xvi) copies of current real property tax bills and utility
statements; and
(xvii) a certificate of each of the general partners of Seller
to the effect that all of the representations and warranties of Seller are
true and correct at Closing, in each case other than failures to be true and
correct which do not in the aggregate have a material adverse effect on the
Property.
Seller shall make reasonable efforts to obtain (i) a reliance
letter for the benefit of Buyer from the environmental engineer or other
person having performed any Phase I environmental site assessments or Phase
II environmental assessments on behalf of the Seller and (ii) at least
five days prior to the Closing Date, all documents required by any
applicable telephone company, including supersedure papers, to transfer
Seller's telephone number, telephone listing and yellow page
advertisements to Buyer (in each case, only to the extent transferable);
provided, however, in each case, no such transfer shall be effective until
immediately after the Closing. (b) Buyer's Deliveries. Upon the terms
and subject to the conditions of this Contract, on the Closing Date,
Buyer shall deliver the following:
(i) assumption of the Leases, security deposits and the
Service Contracts;
(ii) certificates and resolutions as reasonably requested by
Seller demonstrating the authority of the persons executing documents at
Closing;
(iii) a certificate of an officer of Buyer to the effect
that all of the representations and warranties of Buyer are true and correct
in all material respects at Closing;
(iv) indemnification agreement with respect to Buyer's and
its representatives' inspection of the Property during the Inspection Period;
and
(v) balance of the Purchase Price by wire transfer.
11. Proration Items. The following shall be apportioned and
adjusted between the parties as of midnight of the day preceding the Closing
Date ("Adjustment Date"):
(a) Real estate and other taxes, assessments and charges, and
other municipal and state charges, license and permit fees, water and sewer
rents and charges, if any, on the basis of the fiscal period for which
assessed or charged;
(b) Water, electric, gas, steam and other utility charges for
service furnished to the Property;
(c) Fuel, if any, and all taxes thereon, on the basis of a
reading taken as close as possible to the Adjustment Date;
(d) Base rents and any other rental payments (including, without
limitation, any prepaid rent, percentage rent, escalation charges for real
estate taxes and operating expenses, cost-of-living adjustments and parking
rents) (the "Rents") paid or payable under the terms of any Lease for the
month of closing;
(e) Any amounts paid or payable under Service Contracts
being assigned to Buyer;
(f) All costs associated with telephone directory listings
and any other prepaid advertising; and
(g) Any other customary adjustments made in connection with the
sale of similar buildings.
Seller will not assign to Buyer any of the hazard insurance
policies affecting the Property then in force. There will therefore be no
proration of insurance costs at Closing. Except as may be otherwise
provided herein, all other expenses which are attributable to the period
prior to the Closing Date shall be the obligation of Seller and those which
are attributable to the period from and after the Closing Date shall be the
obligation of Buyer.
For purposes of the foregoing apportionments and adjustments,
the following procedures shall govern:
(i) If the Closing Date shall occur before the real
estate tax rate is fixed, the apportionment of such taxes shall be
made upon the basis of the tax rate for the immediately preceding year,
applied to the latest assessed valuation;
(ii) If there are water meters on the Property,
Seller shall furnish meter readings to a date not more than thirty
days prior to the Adjustment Date; and the unfixed meter charges for the
intervening time to the Adjustment Date shall be apportioned on
the basis of such meter readings, and any such meter charges for the
period subsequent to the Adjustment Date shall be paid by Buyer;
(iii) The apportionment of utility charges shall
be made upon the basis of charges shown on the latest available bills
for such utilities. The charges shown on such available bills for
periods prior to the Adjustment Date shall be paid by Seller, and for
the period from the date of each such last available utility bill
to the Adjustment Date an apportionment shall be made based on the amount
charged for the period covered by such last available bill;
(iv) All taxes, water and sewer charges and
assessments for public improvements which are liens upon the Property as
of the Closing Date, will be allowed to Buyer as a credit against the
Purchase Price, subject to apportionment as herein provided, and the
existence of any such lien shall not constitute an objection to title;
(v) If any tenants are required to pay Rents which are
collected by Buyer within sixty (60) days after the Closing Date and
which are attributable in whole or in part to any period prior to the
Closing Date, Buyer shall promptly pay to Seller, Seller's
proportionate share thereof;
(vi) If any tenants are required to pay Rents which are
collected by Seller within sixty (60) days after the Closing Date and which
are attributable in whole or in part to any period after the Closing
Date, Seller shall promptly pay to Buyer, Buyer's proportionate share
thereof;
(vii) If any tenant is in arrears in the payment of
Rents on the Closing Date, Rents received from such tenant after the
Closing Date shall be applied in the following order of priority: (a)
first to any months preceding the month in which the Closing occurred; (b)
then to the month in which the Closing occurred; and (c) then to any
months following the month in which the Closing occurred. If Rents or
any portion thereof are received by Seller or Buyer during the period
which is sixty (60) days after the Closing Date and are payable to the
other party by reason of this allocation, the appropriate sum shall
be promptly paid to the other party. The obligations of Buyer and Seller
pursuant to this Section 11(vii) and the two immediately preceding
Sections shall survive the Closing for a period of ninety(90) days after the
Closing Date, during which period Buyer and Seller shall agree on a
reconciliation of the prorations described herein.
Except as expressly provided, the provisions of this Section 11
shall survive the Closing.
12. Surveys, Transfer Taxes and Other Costs. Subject to
Section 24, Buyer and Seller shall each pay for one-half of (a) the cost
of obtaining any Title Commitments, Surveys and Phase I environmental site
assessments obtained by Buyer in connection with the Closing hereunder
and reports regarding structural Defects and (b) transfer taxes,
documentary stamp taxes, recording charges and other taxes or charges
imposed by any governmental entity in connection with the transfer of the
Property; provided, however, if the aggregate amount set forth in clauses
(a) and (b) exceeds $200,000, Seller shall pay the amount in excess of
$200,000 and if the aggregate amount exceeds $400,000, then, Buyer and
Seller shall each pay for one-half of all remaining costs in excess of
$400,000. Buyer shall deliver to the Title Insurer at Closing certified
checks or wire transfers of immediately available funds in the respective
amounts of each premium for any title insurance, made payable as re quested
or required by the Title Insurer. Other than as expressly provided herein,
each of the parties shall pay for any and all costs which it may incur in
connection with the transactions contemplated herein. The provisions of this
Section 12 shall survive the Closing.
13. Representations and Warranties of Seller. As an inducement
for Buyer to purchase the Property from Seller, Seller represents
and warrants to Buyer the following:
(a) Title to Real Estate. Seller has good, valid,
marketable and insurable title to the Property together with the
improvements situated thereon subject to the Permitted Exceptions.
(b) Organization and Authority.
(i) Seller is duly organized and validly
existing under the laws of the State of Florida, has full
partnership power and authority to carry on its business as it is now
being conducted and shall have, upon receipt of the Partnership
Consent, full partnership power and authority to consummate the
transaction.
(ii) Seller has the requisite partnership
power and authority to execute, deliver and perform this Contract.
The execution, delivery and performance of this Contract and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary partnership action on the part of Seller
(subject to obtaining the Partnership Consent). This Contract is
a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms.
(iii) Neither the execution and delivery of this
Contract nor the consummation of the transactions contemplated hereby in
the manner herein provided nor the fulfillment of or compliance with the
terms and conditions hereof shall:
(A) contravene any material provision of
the Seller's Agreement of Limited Partnership; or
(B) violate, be in conflict with, constitute a
default under, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or mortgage, or subject any
properties or assets of Seller to any indenture, mortgage, contract,
commitment, or agreement other than this Contract to which Seller is a
party or by which Seller is bound, which in the aggregate would have a
material adverse effect on the Property and/or Seller's ability to perform
all of its obligations hereunder.
(c) Pending Actions. No litigation actions are pending or,
to Seller's knowledge, threatened against the Property or Seller which would
materially adversely affect either the Property or the Seller or which
challenge the execution, delivery or performance of this Contract.
(d) Rent Roll. The final rent roll to be delivered by
Seller with respect to the Leases promptly after execution of this Contract
will be true, accurate and complete; said rent roll additionally will
reflect all rent concessions and security deposits and all leasing
commissions and referral fees due or owed.
(e) Service Contracts. The schedule of Service Contracts
delivered by Seller is true, correct and complete in all material respects
and Seller has no knowledge of any defaults under any such contracts.
14. Representations and Warranties of Buyer. As an inducement for
Seller to sell the Property to Buyer, Buyer represents to Seller the
following:
(a) Organization and Authority.
(i) Buyer is a corporation duly organized and validly
existing under the laws of the State of Delaware and has full corporate
power and authority to carry on its business as it is now being conducted.
(ii) Buyer has the requisite corporate power and
authority to execute, deliver and perform this Contract. The execution,
delivery and performance of this Contract and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Contract is a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
(iii) Neither the execution and delivery of this Contract
nor the consummation of the transactions contemplated hereby in the manner
herein provided nor the fulfillment of or compliance with the terms and
conditions hereof shall:
(A) contravene any material provision of the
Certificate of Incorporation or Bylaws of Buyer; or
(B) violate, be in conflict with, constitute a
default under, cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity, or effectiveness of any
agreement, contract, indenture, lease, or mortgage, or subject any
properties or assets of Buyer to any indenture, mortgage, contract,
commitment, or agreement to which Buyer is a party or by which Buyer is
bound which, in the aggregate, would have a material adverse effect on
Buyer's ability to perform all of its obligations hereunder.
(b) Adequate Funds. Buyer has adequate funds or available
credit resources to pay the Purchase Price at the Closing as provided
hereunder.
15. Default and Damages.
(a) Buyer's Remedies. If Buyer shall elect to proceed with
the performance of this Contract notwithstanding the failure to be
satisfied of any conditions to Closing, Buyer shall be deemed to have
waived the requirement that those conditions which Seller is unable
to perform be satisfied. Not withstanding anything contained herein, in no
event shall Seller, its officers, directors, partners, agents and
representatives have any personal liability under this Contract whatsoever
except with respect to those provisions of this Contract which expressly
survive the Closing, and Buyer's sole recourse for Seller's failure to
consummate the Closing in accordance with the terms of this Contract shall be
to receive a refund of the Downpayment with all accrued interest thereon upon
termination of this Contract or, if appropriate, to sue for specific
performance hereunder.
In the event Seller fails to consummate the Closing in accordance with
the terms of this Contract, Buyer may terminate this Contract and shall
receive a "Termination Fee" in the amount of $750,000, which Termination Fee
shall be in addition to the return of the Downpayment plus all accrued
interest thereon plus Buyer's out of pocket costs and expenses relating to
the purchase of the Property (including, without, limitation, reasonable
attorneys' fees and expenses) to be paid by Seller on demand.
Notwithstanding the foregoing, in the event Seller fails to consummate the
Closing for failure to obtain the Partnership Consent, so long as the general
partners of Seller have recommended and continue to recommend to the limited
partners of Seller the sale of the Property to Buyer, the Termination Fee
shall consist solely of all of Buyer's out-of-pocket costs and expenses
relating to the purchase of the Property (including, without, limitation,
reasonable attorneys' fees and expenses). Buyer's sole recourse for Seller's
failure to consummate the Closing in accordance with the terms of this
Contract shall be the receipt of the Termination Fee, as set forth above,
upon termination of this Contract, together with the return of the
Downpayment plus all accrued interest thereon, or, if appropriate, to sue for
specific performance hereunder.
(a) Seller's Remedies. If Buyer shall be unable or unwilling to
consummate the Closing hereunder in violation of the terms hereof, Seller
shall have the right (i) to terminate this Contract and retain the
Downpayment, plus Seller's out of pocket costs and expenses relating to the
sale of the Properties (including, without, limitation, reasonable attorneys'
fees and expenses) to be paid by Buyer on demand, as liquidated and agreed
upon damages, whereupon this Contract shall be and become null and void, and
neither Seller nor Buyer nor any of their respective Representatives shall
have any further rights or obligations hereunder or (ii) to pursue such
rights and remedies as Seller may have at law or in equity, including,
without limitation, the right to sue for specific performance hereunder.
16. Brokers. Seller and Buyer hereby represent that each has not dealt
with any advisor, broker or finder in connection with this Contract. Seller
and Buyer shall indemnify and hold each other harmless from and against all
losses, costs, damages, expenses and liabilities including, without
limitation, reasonable attorneys' fees, resulting from any claims that may be
made for a commission fee or other compensation by reason of this Contract by
any broker, finder, advisor or person with whom such party has dealt in
connection herewith. The provisions of this Section 16 shall survive the
Closing.
17. Indemnification of Seller. Buyer agrees to indemnify and hold
harmless Seller, its general and limited partners, attorneys, accountants,
agents and employees and their heirs, successors and assigns, from and
against any claims or demands for any expense, obligation, loss, cost, damage
or injury arising out of the Buyer's inspection of the Property prior to or
on the Closing Date. The provisions of this Section 17 shall survive the
Closing.
18. Survival of Representations, Warranties and Indemnifications.
Except as otherwise expressly set forth in this Contract, none of the
representations, warranties and indemnifications contained in this
Contract shall survive the Closing.
19. Conduct of Business. During the period from the date hereof to the
Closing Date, except as (a) Buyer shall otherwise agree or (b) necessary in
connection with the transactions contemplated herein, Seller shall operate
the Property in the ordinary and usual course, consistent with past practice.
20. Reasonable Efforts; Public Announcements. Each party hereto
will use all reasonable efforts to perform all acts required to consummate the
transactions contemplated hereby as promptly as practicable. Such acts shall
include, without limitation, the provision of any information to and
submission of any filing with any governmental entity having jurisdiction.
The foregoing notwithstanding, except as may be required to comply with the
requirements of any applicable laws and the rules and regulations of each
stock exchange upon which the securities of either of the parties is listed,
no press release or similar public announcement or communication shall, if
prior to the Closing, be made or caused to be made concerning the execution
or performance of this Contract, unless the parties shall have consulted in
advance with respect thereto. Seller shall provide Buyer with reasonable
access to the Property and all information in its possession relating to the
Partnership. Buyer shall keep such information confidential, subject to the
terms and conditions of the Confidentiality Agreement dated April 4, 1996, by
and between the parties (the "Confidentiality Agreement").
21. Partnership Consent. As soon as practicable after the date
hereof but no later than fifteen (15) days after the execution of this
Contract, Seller shall prepare and file solicitation materials relating to
the transaction contemplated hereby which materials shall take a vote of its
limited partners to consider such matters. Seller shall, subject to the
fiduciary duties of its general partner, make reasonable efforts to secure
the Partnership Consent as promptly as practicable. Buyer will supply Seller
with such information and reasonable assistance as Seller may request in
connection therewith.
22. Casualty/Condemnation to the Property. (a) If, prior to
the Closing Date, any of the Property is damaged due to a casualty (a
"Casualty") and the cost of repairing such damage, in accordance with
Seller's insurance claims, is less than three percent of the Purchase Price,
then Seller shall repair such Casualty prior to the Closing Date or assign to
Buyer the proceeds of Seller's policy of casualty insurance. If the cost of
repairing a Casualty to any Property, in accordance with Seller's insurance
claims, equals or exceeds three percent of the Purchase Price, then Seller
shall have the option to either (i) repair the Casualty to the Property prior
to Closing or (ii) remove the Property from the transaction and terminate this
Agreement.
Notwithstanding anything herein to the contrary, Seller shall have the
right to adjourn the Closing Date for such reasonable period as shall be
necessary to repair any such Casualty. If Seller elects to remove such
Property from the transaction, then Buyer shall have the option, within ten
days written notice of Seller's election, to accept such Property with an
assignment of the applicable insurance proceeds due to Seller.
(a) If, prior to the Closing Date, all or any portion of the Property is
condemned or taken by eminent domain, then this Contract shall nevertheless
remain in full force and effect without any abatement of the Purchase
Price. In such event, Seller shall convey the Property to Buyer at the
Closing in its then condition, and Buyer shall be entitled to receive all
net or condemnation awards otherwise payable to Seller as a result of
such loss or damage and, in full satisfaction of any claims by Buyer against
Seller, Seller shall assign to Buyer, without recourse or warranty of
any nature whatsoever, all of Seller's right, title and interest in and to
any claims Seller may have to any condemnation awards, as well as all
rights or pending claims of Seller with respect to such condemnation or
taking of the Property, and Seller shall pay to Buyer all payments
theretofore made by such condemning authorities as a result of such loss
after deducting therefrom the costs of collection thereof.
(b) Notwithstanding anything contained herein to the contrary, if
Seller delivers notice of condemnation or eminent domain proceedings which
are initiated or threatened between the date of this Contract and the
Closing Date, Buyer shall have the right to participate in any and all
settlement discussions and other conferences relating thereto.
23. Termination. Notwithstanding anything contained herein,
this Contract may be terminated as follows:
(a) By Seller in accordance with Sections 15(b) and 22(a) hereof.
(b) By Seller or Buyer, if a court of competent jurisdiction issues a
binding and final order permanently preventing the sale of the Property to
Buyer.
(c) By Seller or Buyer, if the partners of Seller vote against the
Partnership Consent.
(d) By Seller or Buyer, if the Closing does not occur on or before
November 17, 1996, provided that the party seeking to terminate is not in
material breach of this Contract.
In the event this Contract is terminated pursu ant to any of
the foregoing provisions, this Contract shall thereupon become null and
void and neither Seller nor Buyer nor any of their respective
representatives shall have any further rights or obligations hereunder.
24. Virginia Contract and Fern Park Contract. This Contract is
being signed contemporaneously with and conditioned upon each of the Virginia
Contract and the Fern Park Contract; accordingly (i) if the Downpayment is
payable to Buyer or Seller pursuant to the terms of this Contract and/or
either of the Virginia Contract and the Fern Park Contract, the
aggregate amount of the Downpayment paid to such party shall be
$2,000,000, (ii) the aggregate limitation on the amount of credit that
Buyer shall be entitled to against the Purchase Price to cure Material
Defects (other than Environmental Defects) pursuant to this Contract and/or
either of the Virginia Contract and the Fern Park Contract shall be $500,000,
(iii) the amounts set forth in Section 12 of this Contract and/or either
of the Virginia Contract and the Fern Park Contract shall be on an
aggregate basis for this Contract, the Virginia Contract and the Fern Park
Contract and (iv) if the Termination Fee is payable to Buyer pursuant to
this Contract and/or either of the Virginia Contract and the Fern Park
Contract, the aggregate amount of the Termination Fee paid to Buyer shall
be $750,000 in addition to thereturn of the Downpayment plus all accrued
interest thereon plus Buyer's out of pocket costs and expenses relating to the
purchase of the Property (including, without, limitation, reasonable attorneys'
fees and expenses).
25. Notices. Any notice which may be required or may be desired
to be given pursuant to this Contract shall be in writing and shall be
deemed delivered and effective upon actual receipt at the following
addresses or such other addresses as the parties may notify each other by
similar notice:
If to Seller, to:
American Storage Properties, L.P.
3 World Financial Center
New York, New York 10285 Attn: Paul L. Abbott
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Patrick J. Foye, Esq.
If to Buyer, to:
Public Storage, Inc.
701 Western Avenue, Suite 200
Glendale, CA 91201-2397
Attn: Harvey Lenkin
With a copy to:
Hogan & Hartson, LLP
Columbia Square
555 Thirteenth Street, NW
Washington, D.C., 20004-1109
Attn: David B.H. Martin, Esq.
26. General. (a) Interpretation of Words. A masculine pronoun
wherever used herein shall be construed to include the feminine or neuter
where appropriate. The singular form wherever used herein shall be construed
to include the plural where appropriate.
(a) Assignment; Successors and Assigns; Third Party Beneficiaries. (i)
Neither of the parties hereto may assign its respective rights under this
Contract without the consent of the other party.
(i) Except as otherwise provided hereby, the provi sions of this Contract
shall be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives and successors in interest.
(ii) This Contract is not intended, nor shall it be construed, to confer
upon any party except the parties hereto and their heirs, successors and
permitted assigns any rights or remedies under or by reason of this
Contract.
(b) Time of the Essence. Time shall be of the essence with respect to the
performance of all of the obligations hereunder.
(c) Entire Contract. Subject to the terms and conditions of the
Confidentiality Agreement, this Contract represents the entire
understanding between the parties with respect to the subject matter hereof,
super seding all prior or contemporaneous understandings or communications
of any kind, whether written or oral. This Contract may only be modified
by a written agreement signed by both parties hereto.
(d) Captions. The headings of the paragraphs herein are for convenience
only; they form no part of this Contr act and shall not affect its
interpretation.
(e) Governing Law. The provisions of this Contract shall be governed by
and construed in accordance with the laws of the State of New York applicable
to agreements entered into and to be performed wholly therein.
(f) Counterparts. This Contract may be executed in several counterparts,
each of which shall be deemed an original. Such counterparts constitute
but one and the same instrument, which may be sufficiently evidenced by
one counterpart.
(g) Further Assurances. Each of the parties hereto shall, at the request
of the other party, execute, acknowledge and deliver any further instruments,
and take such further actions, as the requesting party may reasonably
request, to carry out effectively the intent of this Contract.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as of the
day and year first above written.
HUTTON/GSH AMERICAN STORAGE PROPERTIES (OAKRIDGE), L.P.
By: American Storage Properties, L.P.,
its general partner
By: Storage Services,Inc.,
its general partner
By: s/Paul L. Abbot/
----------------
Name: Paul L. Abbot
Title: President
By: Goodman Segar Hogan/American
Storage Properties Associates,
L.P., its general partner
By: s/Mark P. Mikuta/
-----------------
Name: Mark P. Mikuta
Title: President
PUBLIC STORAGE, INC.
By: s/Harvey Lenkin/
----------------
Name: Harvey Lenkin
Title: President
EXHIBIT A
*Property
Name Location
- ---- --------
E. Oakridge Road 235 E. Oakridge Road
Orlando, FL
*The Property includes:
(A) All buildings and improvements located on the Property;
(B) All rights-of-way, alleys, waters, privileges, easements,
covenants and appurtenances which are on or benefit the Property;
(C) All right, title and interest of Seller in and to any land lying
in the bed of any public or private street, road, avenue, alley or
highway, opened, closed or proposed, in front of or adjoining the
Property to the center line thereof;
(D) All right, title and interest of Seller to any unpaid award to which
Seller may be entitled (1) due to the taking, subsequent to the Inspection
Period, by condemnation or eminent domain of any right, title or interest
of Seller in the Property and (2) for any damage, subsequent to the
Inspection Period, to the Property due to the change of grade of any street
or highway;
(E) All right, title and interest of Seller to any assignable licenses,
permits, contracts, leases, sales agreements, construction agreements,
maintenance agreements, service agreements with respect to the Property.
(F) All Leases and any security deposits with respect to the Property in
which Seller holds an interest as a landlord for the use and occupancy of
all or any part of the Property; and
(G) All engineering reports, surveys and architectural plans, if any.
EXHIBIT B
ESCROW AGREEMENT
Agreement made this 17 day of May, 1996 by and among Public Storage,
Inc. ("Purchaser"), American Storage Properties (Oakridge), L.P. ("Seller"),
and Chicago Title Company, as escrow agent ("Escrow Agent").
1. The Parties hereto agree that the sum of $250,000 (the "Escrow
Amount"), to be held pursuant to a Contract of Sale between Seller and
Purchaser of even date herewith (the "Contract"), shall be held in escrow by
the Escrow Agent upon the terms and conditions set forth herein.
2. (a) The Escrow Agent shall deliver the Escrow Amount then in its
possession in accordance with Paragraph 3 hereof to Seller (i) upon the
Closing, as that term is used in and in accordance with the Contract or (ii)
in the event that Seller makes a written demand therefor stating that
Purchaser has failed to perform Purchaser's obligations under the Contract.
(b) Escrow Agent shall return the Escrow Amount then in its
possession and any interest earned thereon in accordance with Paragraph
3 hereof to Purchaser in the event that Purchaser makes a written
demand therefor stating (i) that Seller has failed to perform Seller's
obligations under the Contract or (ii) that Purchaser is otherwise en
titled to the return of the Escrow Amount in accordance with the terms
of the Contract.
(c) In the event that Escrow Agent intends to release the Escrow
Amount in accordance with Paragraph 3 hereof to either party pursuant
to Paragraph 2(a)(ii) or 2(b) hereof, then Escrow Agent shall give to
the other party not less than ten days prior written notice of such
fact and, if Escrow Agent actually receives written notice during such
ten day period that such other party objects to the release, then
Escrow Agent shall not release the Escrow Amount and any such dispute
shall be resolved as provided herein.
(d) In the event that a dispute shall arise as to the disposition
of the Escrow Amount or any other funds held hereunder in escrow,
Escrow Agent shall have the right, at its option, to either hold the
same or deposit the same with a court of competent jurisdiction pending
decision of such court, and Escrow Agent shall be entitled to rely
upon the decision of such court.
(e) Escrow Agent may commingle the Escrow Amount with other
funds held in its "trustees account."
(f) Escrow Agent shall hold the Escrow Amount in a savings bank
account or a liquid assets account bearing interest at such rate as
may from time to time be paid or invest the Escrow Amount in U.S.
Treasury Bills or other securities guaranteed by the Government of the
United States of America. The rate of interest or yield need not be
the maximum available and deposits, withdrawals, purchases and sales
shall be made in the sole discretion of Escrow Agent, which shall have
no liability whatsoever therefor except for its gross negligence or
willful misconduct. Discounts earned shall be deemed interest for the
purposes hereof.
(g) Escrow Agent shall have no liability whatsoever arising out
of or in connection with its activity as Escrow Agent except for its
gross negligence or willful misconduct. Seller and Purchaser jointly
and severally agree to indemnify and hold harmless Escrow Agent from
and against any and all loss, cost, claim, cause of action, damage,
liability and expense (including attorneys' fees and court costs)
which may be incurred by reason of its acting as Escrow Agent.
(h) Escrow Agent shall be entitled to rely upon any judgment,
certification, demand or other writing delivered to it hereunder
without being required to determine the authenticity or the
correctness of any fact stated therein, the propriety or validity
thereof, or the jurisdiction of a court issuing any such judgment.
Escrow Agent may act in reliance upon (i) any instrument or signature
believed to be genuine and duly authorized, and (ii) advice of counsel
in reference to any matter or matters connected herewith.
(i) Any notice, demand or other communication to Escrow Agent
hereunder shall be in writing and delivered in person or sent by
certified mail, return receipt requested, postage prepaid, addressed
to Escrow Agent as follows:
Chicago Title Company
388 Market Street, Suite 1300
San Fancisco, CA 94111
Attention: Ms. Michelle Viguie
The same shall be deemed given on the date delivered, if delivered in
person, or on the third business day following the date of mailing the same,
if mailed.
(3) The interest, if any, earned on the Escrow Amount shall be
for the account of Purchaser.
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
HUTTON/GSH AMERICAN STORAGE PROPERTIES
(OAKRIDGE), L.P.
By: American Storage Properties,L.P.,
its general partner
By: Storage Services, Inc.,
its general partner
By: s/Paul L. Abbott/
-----------------
Name: Paul L. Abbott
Title: President
By: Goodman Segar Hogan/American
Storage Properties
Associates, L.P.,
its general partner
By: s/Mark P. Mikuta
----------------
Name: Mark P. Mikuta
Title: President
PUBLIC STORAGE, INC.
By: s/Harvey Lenkin/
----------------
Name: Harvey Lenkin
Title: President
CHICAGO TITLE COMPANY, as Escrow Agent
By:_____________________________
Name:
Title:
EXHIBIT C
Allocations of Property Value
Property Purchase Price
- -------- --------------
E. Oakridge Road $ 3,090,000
