SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 11, 1997
JMB INCOME PROPERTIES, LTD. - XIII
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(Exact name of registrant as specified in its charter)
Illinois 0-19496 36-3426137
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(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
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(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
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RIVERTREE COURT SHOPPING CENTER
VERNON HILLS, ILLINOIS
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On July 17, 1997 (pursuant to
an agreement to purchase dated June 11, 1997), JMB Income Properties, Ltd. -
XIII (the "Partnership"), an Illinois limited partnership, sold the land and
related improvements known as Rivertree Court Shopping Center (the
"Property"), an approximate 299,000 square foot shopping center located on
approximately 40 acres in Vernon Hills (Chicago), Illinois. The purchaser,
Inland Real Estate Corporation, a Maryland corporation, is not affiliated with
the Partnership or its General Partners and the sale price was determined by
arm's-length negotiations.
The sale price of the land and improvements was $31,750,000 and net cash
proceeds received from the sale, net of closing costs and the $15,700,00
mortgage assumed by the buyer, was approximately $14,925,000. The Property
was 96% occupied at the date of sale. The Property was classified as held for
sale as of July 1, 1996 and therefore has not been subject to continued
depreciation as of that date for financial reporting purposes. Based upon the
proposed sale price, the Partnership recognized an impairment loss of
$2,500,000 in the three months ended June 30, 1997. Accordingly, the sale did
not result in a significant gain or loss to the Partnership for financial
reporting purposes. In addition, the Partnership expects to report a loss on
sale of approximately $900,000 for Federal income tax reporting purposes in
1997.
The Partnership Agreement provides that the General Partners shall be
allocated from sale proceeds (net after expenses and retained work capital)
(1) the amount necessary to provide for the amount of cash distributions
accrued to them, but deferred as provided under the Partnership Agreement (2)
up to 2% of the selling price of the property being sold and (3) that the
balance be allocated 85% to the Limited Partners and 15% to the General
Partners. However, the Limited Partners shall be allocated 100% of such net
sale proceeds until the Limited Partners (not including the Special Limited
Partner) (i) have been allocated cumulative cash distributions from the
Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed under this clause (i), equal a 6% annual
return on the Limited Partners' average capital investment (their initial
capital investment as reduced by sale or refinancing proceeds previously
distributed) for each year commencing with the third fiscal quarter of 1987,
(ii) have been allocated cash distributions of sale or refinancing proceeds in
an amount equal to the Limited Partners' aggregate initial capital investment
in the Partnership. Notwithstanding the foregoing, payment of the portion of
the sale and refinancing proceeds allocable to the General Partners pursuant
to the above is deferred until such time as the Limited Partners have received
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cash distributions of sale and refinancing proceeds and of the Partnership's
operations, in an amount equal to the Limited Partners' initial capital
investment in the Partnership plus a 9% annual return (on a non-compounded
basis) on the Limited Partners' average capital investment. Accordingly, the
General Partners are waiving their right to receive this allocation of sales
proceeds from this sale. Therefore, no portion of the proceeds of this sale
is distributable to the General Partners.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not Applicable.
(b) Pro Forma Financial Information - Narrative.
As a result of the sale of the Property, beyond the date of sale there
will be no further rental and other income, property operating expenses,
mortgage interest and depreciation recorded for the Property in the
consolidated financial statements of the Partnership, which for the
Partnership's most recent fiscal year (the year ended December 31, 1996) were
$4,409,752, $1,249,703, $1,574,710 and $537,485, respectively. Rental and
other income, property operating expenses, mortgage interest and depreciation
recorded for the Property were $1,244,265, $339,148, $393,677 and $0,
respectively, for the three months ended March 31, 1997. Also, as a result of
the sale of the Property, there are no further assets and liabilities related
to the Property, which at March 31, 1997 consisted of land and building and
improvements (net of accumulated depreciation) of approximately $31,911,000;
cash and other current assets of approximately $3,014,000; long-term debt of
approximately $15,700,000; accrued real estate taxes and other current
liabilities of approximately $1,009,000 and security deposits of approximately
$71,000. Subsequent to the sale, the Partnership's operating results will
reflect the operations and sales of the Partnership's remaining assets
(Adams/Wabash Self Park and Fountain Valley Industrial Park), both of which
have been classified as held for sale or disposition.
(c) Exhibits.
10.1 Agreement To Purchase between JMB Income Properties, Ltd. - XIII
and Inland Real Estate Corporation, dated June 11, 1997, and exhibits thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XIII
By: JMB Realty Corporation
Managing General Partner
By: GAILEN J. HULL
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Gailen J. Hull
Senior Vice President
Dated: August 1, 1997
EXHIBIT 10.1
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AGREEMENT TO PURCHASE
JMB INCOME PROPERTIES, LTD. XIII,
an Illinois limited partnership
TO
INLAND REAL ESTATE CORPORATION
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . -11-
1.1 DEFINITIONS . . . . . . . . . . . . . . . . . -1-
ARTICLE II
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . -3-
2.1 PURCHASE AND SALE . . . . . . . . . . . . . . -3-
ARTICLE III
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . -3-
3.1 PURCHASE PRICE. . . . . . . . . . . . . . . . -3-
ARTICLE IV
CLOSING MATTERS . . . . . . . . . . . . . . . . . . . . . . . -4-
4.1 SURVEY. . . . . . . . . . . . . . . . . . . . -4-
4.2 TITLE . . . . . . . . . . . . . . . . . . . . -5-
4.3 POSSESSION, PRORATIONS AND EXPENSES,
AND NEW LEASES. . . . . . . . . . . . . . . . -6-
4.4 ESCROW. . . . . . . . . . . . . . . . . . . . -9-
4.5 CLOSING . . . . . . . . . . . . . . . . . . . -10-
ARTICLE V
BROKERAGE . . . . . . . . . . . . . . . . . . . . . . . -12-
5.1 BROKERAGE . . . . . . . . . . . . . . . . . . -12-
ARTICLE VI
DESTRUCTION, DAMAGE OR CONDEMNATION . . . . . . . . . . . . . -12-
6.1 DESTRUCTION OR DAMAGE . . . . . . . . . . . . -12-
6.2 CONDEMNATION. . . . . . . . . . . . . . . . . -13-
6.3 CASUALTY AND RENT LOSS INSURANCE. . . . . . . -13-
ARTICLE VII
COVENANTS, REPRESENTATIONS, WARRANTIES. . . . . . . . . . . . -14-
7.1 AFFIRMATIVE COVENANTS OF SELLER . . . . . . . -14-
7.2 REPRESENTATIONS AND WARRANTIES OF SELLER. . . -15-
7.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER . -17-
7.4 COVENANTS OF PURCHASER. . . . . . . . . . . . -17-
ARTICLE VIII
DEFAULT, CONDITIONS PRECEDENT AND TERMINATION . . . . . . . . -19-
8.1 CONDITIONS TO PURCHASER'S OBLIGATIONS
AND DEFAULT BY SELLER . . . . . . . . . . . . -19-
8.2 CONDITIONS TO SELLER'S OBLIGATIONS
AND DEFAULT BY PURCHASER. . . . . . . . . . . -20-
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ARTICLE IX
NOTICES . . . . . . . . . . . . . . . . . . . . . . . -20-
9.1 NOTICES . . . . . . . . . . . . . . . . . . . -20-
ARTICLE X
ADDITIONAL COVENANTS. . . . . . . . . . . . . . . . . . . . . -22-
10.1 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. . . -22-
10.2 FURTHER ASSURANCES. . . . . . . . . . . . . . -22-
10.3 SURVIVAL AND BENEFIT. . . . . . . . . . . . . -22-
10.4 NO THIRD PARTY BENEFITS . . . . . . . . . . . -22-
10.5 NO RECORDING. . . . . . . . . . . . . . . . . -23-
10.6 INTERPRETATION. . . . . . . . . . . . . . . . -23-
10.7 SELLER'S EXCULPATION. . . . . . . . . . . . . -24-
10.8 EFFECTIVE DATE. . . . . . . . . . . . . . . . -24-
<PAGE>
AGREEMENT TO PURCHASE
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THIS AGREEMENT is made this 11th day of June, 1997, by and between
JMB INCOME PROPERTIES, LTD.-XIII, an Illinois limited partnership, ("Seller")
and INLAND REAL ESTATE CORPORATION, a Maryland corporation, ("Purchaser").
R E C I T A L S:
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A. Seller is the fee owner of that certain Shopping Center
("Improvements") commonly known as "Rivertree Court Shopping Center" located
at Illinois Routes 21 and 60 in the Village of Vernon Hills, County of Lake,
State of Illinois, and legally described in Exhibit "A", attached hereto (the
"Real Property").
B. Seller desires to sell and Purchaser desires to purchase, the
Property (as hereinafter defined) upon and subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser agree as follows:
ARTICLE I
DEFINITIONS
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1.1 DEFINITIONS. When used herein, the following terms shall have
the respective meanings set forth opposite each term:
AGREEMENT: This Agreement to Purchase, including the
Exhibits attached hereto which are by this reference incorporated herein and
made a part hereof.
CLOSING DATE: July 15, 1997, or as extended by the mutual
agreement of the Purchaser and Seller or subject to extension of up to thirty
(30) days pursuant to Section 4.5(b)(viii).
CLOSING: The consummation of this Agreement.
DEED: That certain recordable Special Warranty
Deed to be executed by Seller and delivered by Seller to Purchaser at the
Closing, conveying the Real Property to Purchaser (or to Purchaser's designee)
subject only to the Permitted Title Exceptions.
DEPOSIT: The sum of ONE HUNDRED FIFTY THOUSAND AND
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NO/100 DOLLARS ($150,000.00) which shall be
deposited by Purchaser with Title Insurer pursuant to the terms of a standard
Joint Order Escrow modified to conform to the terms hereof relating to
Inspection Period, within one business day after Seller's acceptance hereof,
at Title Insurer's office in Chicago, Illinois, to be held in an interest
bearing account as earnest money subject to the terms of this Agreement. All
interest earned thereon shall be included in this definition.
LEASES: Those leases for rental of retail space in
the Improvements listed on Exhibit "D" and those leases executed hereafter and
which are in existence as of the Closing Date.
LEGAL REQUIREMENTS: All laws, statutes, codes, acts ordinances,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements of all governments and
governmental authorities having jurisdiction over the Real Property and the
operation of the Improvements thereon.
NOTICE TO CANCEL: That written notice which may be given by
Purchaser to Seller pursuant to Section 8.1(a), 10.3..(i).
PERMITTED TITLE EXCEPTIONS: The Leases, those matters set forth in
Exhibit "B" attached hereto, and any other matters which Purchaser shall
approve in writing or be deemed to have approved pursuant to the terms of this
Agreement.
PERSONAL PROPERTY: Those items of personalty listed on Exhibit
"C" attached hereto and which will be conveyed to Purchaser at Closing by a
Bill of Sale (the "Bill of Sale") containing no warranties, whether express or
implied, except a warranty of title free of any lien or encumbrance.
PROPERTY: The Real Property, Personal Property,
Service Contracts and the Leases.
PURCHASE PRICE: The consideration payable by Purchaser to
Seller for the Property, as provided in Article III.
PURCHASER: Inland Real Estate Corporation or its
designee.
RENT ROLL: The list of Leases in existence as of the
date of said list,
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which list is attached hereto as Exhibit
"D".
SELLER: JMB Income Properties, Ltd.-XIII, an
Illinois limited partnership.
SERVICE CONTRACTS: Those contracts, agreements, and leases of
equipment relating to the servicing, operation, management and maintenance of
the Property which are listed on Exhibit "E" attached hereto.
SURVEY: Survey dated December 20, 1996 prepared by
Midwest Technical Consultants, Inc. Land Surveyors prepared in accordance with
minimum standards for an ALTA survey.
TITLE COMMITMENT: A commitment for an Owner's Title Insurance
Policy for the Real Property issued by the Title Insurer in the full amount of
the Purchase Price, covering title to the Real Property, dated on or after the
date hereof, showing Seller as owner of the Real Property in fee simple,
subject only to the Permitted Title Exceptions and other exceptions pertaining
to liens or encumbrances of a definite or ascertainable amount (which, in the
aggregate do not exceed the Purchase Price) which may be removed by the
payment of money at Closing and which Seller shall so remove at Closing. The
Title Commitment will have attached thereto the following endorsements
("Endorsements"): Extended Coverage, 3.1 Zoning with Parking, Contiguity and
Restrictions.
TITLE INSURER: Commonwealth Land Title Insurance Company.
ARTICLE II
PURCHASE AND SALE
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2.1 PURCHASE AND SALE. Subject to the conditions and on the
terms contained in this Agreement, Purchaser agrees to purchase and acquire
from Seller, and Seller agrees to sell and transfer to Purchaser, the Real
Property by the Deed, the Leases and Service Contracts by assignment, and the
Personal Property by the Bill of Sale.
ARTICLE III
PURCHASE PRICE
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3.1 PURCHASE PRICE. The purchase price shall be THIRTY ONE
MILLION SEVEN HUNDRED AND FIFTY THOUSAND AND NO/100 ($31,750,000.00) DOLLARS
payable
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<PAGE>
as hereinafter provided. Purchaser agrees to pay to Seller, and Seller agrees
to accept payment of the Purchase Price as follows:
(a) The Deposit shall be applied against the Purchase
Price at Closing.
(b) By taking the Property subject to the existing first
mortgage (the "First Mortgage") to Allstate Life Insurance Company
("Allstate") which First Mortgage secures a note payable to Allstate in the
original principal amount of FIFTEEN MILLION SEVEN HUNDRED THOUSAND AND NO/100
DOLLARS ($15,700,000.00)(the "First Note"). The unpaid principal balance on
the First Note as of the Closing Date (as herein defined) will be
approximately FIFTEEN MILLION SEVEN HUNDRED THOUSAND AND NO/100 DOLLARS
($15,700,000.00), and such unpaid principal balance together with any accrued
but unpaid interest on the First Note as of the Closing Date, shall be applied
against the Purchase Price. Seller shall pay all costs charged by Allstate or
any third party other than Purchaser or Purchaser's attorneys or agents in
connection with the transfer of the Property subject to the First Mortgage.
(c) Purchaser shall pay to Seller at Closing the balance
of the Purchase Price, plus or minus adjustments and prorations as hereinafter
provided, by certified, cashier's or escrowee check or bank wire transfer of
collected federal funds, as Seller requests.
ARTICLE IV
CLOSING MATTERS
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4.1 SURVEY. No later than ten (10) days following the date hereof
Seller shall deliver the Survey to Purchaser, at Seller's sole cost and
expense. The Survey shall be dated no earlier than December 20, 1996, shall
show no encroachments by or from the Real Property onto any adjacent property
and no violation of or encroachments upon any recorded building lines,
restriction, zoning set-backs, or easements affecting the Real Property. If
the Survey discloses any such unpermitted encroachment or violation or any
exceptions to title or matters indicating possible rights of third parties
other than the Permitted Title Exceptions and the same are not acceptable to
Purchaser, or if Purchaser desires to have the surveyor's certification
revised in a reasonable manner, then, within five (5) days from Purchaser's
receipt of the Survey, Purchaser must so notify Seller. If Purchaser fails to
so notify Seller within said five (5) day period, the Survey will be
conclusively deemed to be approved by Purchaser. If, within said five (5) day
period Purchaser notifies Seller that the Survey does not comply with the
terms of this Agreement (which notification must specify in what respects the
Survey does not so comply or that the certification should be revised
), Seller shall have ten (10) days from the date of delivery of
Purchaser's notice to have the Title Insurer issue its endorsements insuring
against damage caused by such encroachments, violations or unpermitted
exceptions and provide evidence thereof to Purchaser, or to have the
surveyor's certification revised, as applicable, and if Seller fails to do so,
and provide evidence thereof to Purchaser, within said ten (10) day period,
Purchaser may elect within ten (10) days after the expiration of Seller's ten
(10) day cure period to (i) terminate this Agreement and thereafter there
shall be no further liability of either party
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hereunder (in which event the Deposit shall promptly be returned to Purchaser)
or (ii) accept the Real Property subject to such encroachments, violations and
unpermitted exceptions or the unrevised surveyor's certification, as
applicable, without any diminution of the Purchase Price. Purchaser's failure
to make any election within said ten (10) day period shall be conclusively
deemed to mean that Purchaser has elected the option contained in subsection
(i) of this Section 4.1.
4.2. TITLE. No later than fourteen (14) days following the date
hereof, Seller shall deliver the Title Commitment to Purchaser, along with
copies of all documents constituting Permitted Exceptions, at Seller's sole
cost and expense. If the Title Commitment discloses exceptions to title other
than the Permitted Title Exceptions ("Unpermitted Title Exceptions") and such
Unpermitted Title Exceptions are not acceptable to Purchaser, then, within ten
(10) days from Purchaser's receipt of the Title Commitment, Purchaser must so
notify Seller. If Purchaser fails to so notify Seller within said ten (10)
day period, the Unpermitted Title Exceptions will be conclusively deemed to be
approved by Purchaser. If, within said ten (10) day period, Purchaser shall
notify Seller that all or certain of the Unpermitted Title Exceptions are not
acceptable to Purchaser (which notification must specify which Unpermitted
Title Exceptions are so unacceptable), Seller shall have ten (10) days from
the date of Purchaser's notice to have such exceptions removed from the Title
Commitment or cause the Title Insurer to insure Purchaser against same and
provide evidence thereof to Purchaser, and if Seller fails to have such
exceptions removed, or insured over, Purchaser may elect, within ten (10) days
after the expiration of Seller's ten (10) day cure period to (i) terminate
this Agreement without liability on the part of any party thereafter (in which
event the Deposit shall be promptly returned to Purchaser), or (ii) accept
title subject to such Unpermitted Title Exceptions without any diminution of
the Purchase Price. Purchaser's failure to make any election within said ten
(10) day period shall be conclusively deemed to mean that Purchaser has
elected the option contained in subsection (i) of this Section 4.2. On the
Closing Date, at the expense of Seller as set forth in Section 4.2 hereof,
Seller shall cause the Title Insurer to issue an owner's title insurance
policy or prepaid commitment therefor pursuant to and in accordance with the
Title Commitment insuring fee simple title to the Real Property in Purchaser
or its designee as of the Closing Date, subject only to the Permitted Title
Exceptions and such other exceptions as Purchaser may approve. If Seller is
unable to cause the Title Insurer to issue any of the Endorsements and
Purchaser refuses to waive the requirement therefor, then this Agreement shall
become null and void and of no further force or effect, and the Deposit will
be returned to Purchaser. Additionally, Seller will have no obligation to
obtain any of the Endorsements if the Title Insurer charges other than
standard rates for the coverage or if the Title Insurer requires security or
an indemnity from Seller in order to issue any of the Endorsements.
If Purchaser shall make objection to the Survey (as described in
Section 4.1) or the Title Commitment (as described in this Section 4.2) and
the Closing Date was to occur prior to the time each party was able to
exercise its rights under Section 4.1 or Section 4.2, as applicable, then the
Closing Date will be extended to a date which is three (3) business days
subsequent to the latest date for notice, objection and remedy permitted by
either Section 4.1 or 4.2, as applicable.
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4.3 POSSESSION, PRORATIONS AND EXPENSES, AND NEW LEASES.
(a) Sole and exclusive possession of the Property,
subject only to the rights of the tenants under the Leases, shall be delivered
to Purchaser on the Closing Date. Any vacant space will be placed into Rent
Ready Condition, which is defined to be that all walls are patched and freshly
painted, each space to be demised has a fully-fixtured and operable bathroom,
and all doors have locks and are operable, the ceiling is completed with
acoustical tile and standard fluorescent lighting and the floor is in
broom-clean condition.
(b) The parties shall commence closing the transaction
contemplated herein in what is commonly referred to as a "dry closing" on
the day prior to the Closing Date as defined herein . At such "dry
closing" all documents will be deposited into the closing escrow and all
prorations will be established effective the date of the "dry closing"
("Proration Date"). The balance of the Purchase price as determined at the end
of the "dry closing" is to be deposited in immediately available funds with
the Title Insurer by 12:00 noon on the Closing Date, as required by Section
4.5(d) hereof. If Purchaser fails to deposit the balance of the Purchase
Price by 12:00 noon on the Closing Date, as aforesaid, and if Seller does not
terminate this Contract for such default of Purchaser and the Closing occurs,
the Proration Date shall be concurrent with the Closing Date and all
prorations will be calculated as of the end of the day on the Closing Date.
(c) Fixed Rent, Percentage Rent and tenant common area
maintenance and other expense contributions to be made by tenants shall be
prorated as follows:
(i) Fixed Rent - prepaid Fixed Rent will be
prorated as of the Proration Date with Seller being entitled to Fixed Rent for
the Proration Date and Purchaser being entitled to Fixed Rent thereafter. All
other Fixed Rent which is delinquent on the Proration Date will not be
prorated. All such arrearages of Fixed Rent unpaid on the Proration Date will
remain the sole and exclusive property of Seller after Closing, provided,
however, if, after Closing, Seller shall receive any such delinquent Fixed
Rent, Seller will remit to Purchaser that portion of such delinquent Fixed
Rent that is attributable to the period after the Proration Date, if any.
Seller shall retain all right, title, power and authority to enforce payment
thereof after Closing, except that Seller will not have the right to terminate
the Lease of a delinquent tenant after Closing due to such delinquency. If,
after Closing, Purchaser or its designee shall receive any delinquent Fixed
Rents (this provision shall not relate to percentage rents) Purchaser may
first apply such payments to rent delinquencies which relate to any period
after the Proration Date, and Purchaser agrees, on its behalf and on behalf of
its designee, to immediately remit the balance to Seller.
(ii) Percentage Rent - Percentage Rent which is
due but unpaid at Closing and accrued Percentage Rent not yet payable at
Closing will not be prorated. If, after Closing, however, Purchaser receives
any payment of percentage rent which relates in any part to sales made prior
to the Proration Date, Purchaser shall immediately remit
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<PAGE>
Seller's share thereof to Seller and may not apply any portion of
such percentage rent to any post-Proration Date rent delinquencies whether
delinquent Fixed Rent or tenants' delinquent obligations to pay their pro rata
share of taxes or "Expenses" (as hereinafter defined). If, after Closing,
Seller receives any payment of Percentage Rent which relates in any part to
sales made after the Proration Date, Seller shall immediately remit
Purchaser's share thereof to Purchaser and may not apply any portion of such
Percentage Rent to any pre-Proration Date rent delinquencies.
(iii) Tenant CAM and Other Expense Contributions.
For purposes hereof, the term Expenses shall mean all common area maintenance
costs and other operating expenses of the Property, excluding real estate
taxes and other items expressly covered in other provisions of this Section
4.3. All payments by the tenant to the landlord under the Leases for Expenses
("Tenant Expense Contributions") shall be prorated between Seller and
Purchaser as follows:
(aa)Seller acknowledges the receipt of the
tenants' Tenant Expense Contributions from January 1, 1997 to Closing. Seller
shall be responsible for such tenant expenses up to Closing and Purchaser
shall be responsible for such tenant expenses from and after Closing.
(bb)At Closing, Seller shall give Purchaser
a credit for a prorated portion of the Tenant Expense Contributions paid in
advance for the month of Closing determined by multiplying the total such
Tenant Expense Contributions paid for such month by a fraction, the numerator
of which is the number of days from and including the date of Closing to and
including the last day of such month and the denominator of which is the total
number of days in such month.
(cc)No more than sixty (60) days after
Closing, Seller and Purchaser shall reprorate the Tenant Expense Contributions
based on the total amount thereof and the total actual tenant expenses from
January 1, 1997 to Closing as contemplated under Section (aa) above. If as a
result of said proration the parties determine that Seller has received from
the tenants an amount of Tenant Expense Contributions in excess of the amount
to which Seller is entitled or less than the amount that Seller is entitled
pursuant to Section (aa) above, Seller shall either pay such excess to
Purchaser or receive such shortage from Purchaser within fifteen (15) days
after the reproration is determined. In connection with the foregoing,
Purchaser and Seller agree to cooperate with each other concerning the
calculation of the reproration. Seller shall deliver to Purchaser at Closing
information concerning the tenant expenses paid and Tenant Expense
Contributions collected by Seller prior to the Closing to the extent
reasonably available to Seller at that time.
(iv) At Closing, Seller will have already paid
the first installment of the
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1996 ad valorem real estate taxes which installment represents fifty
percent (50%) of the total 1996 real estate tax bill. Seller shall allow
Purchaser a credit against the Purchase Price in an amount equal to the
second installment of the 1996 real estate tax bill in
satisfaction of Seller's obligation for the payment of the second installment
of the 1996 real estate tax bill. Purchaser shall then pay the second
installment 1996 real estate tax bill when received without contribution from
Seller. Purchaser and Seller shall prorate the 1997 ad valorem real estate
taxes to the Proration Date on the basis of one hundred three percent (103%)
of the 1996 real estate tax bill for the property. At Closing Seller and
Purchaser will reconcile the 1996 real estate tax bill against the deposits
received by the Seller from those tenants who make monthly tax deposits (the
"Monthly Tax Payors"). If Seller has received more monies from the Monthly
Tax Payors than required to pay said tenants' share of the 1996 real estate
taxes, the difference will be an additional credit to Purchaser at
Closing. If Seller has received less monies from the Monthly Tax Payors than
required to pay said tenants' share of the 1996 real estate taxes, said amount
shall be a credit to Seller at Closing. Purchaser and Seller will reconcile
the 1997 real estate tax bill based upon one hundred three percent (103%) of
the 1996 real estate tax bill for the Monthly Tax Payors in the same manner as
the 1996 real estate tax reconciliation. With regard to those tenants who pay
their share of real estate taxes upon the presentation of the real estate tax
bill (the "Sight Tax Payors"), Seller shall have the right to use whatever
reasonable enforcement methods Seller deems appropriate in collecting the 1996
real estate taxes from the Sight Tax Payors. Said reasonable efforts shall
include, but not be limited to, delivery of notices to the tenants and taking
legal action, if required, BUT NOT termination of possession or termination of
any Lease. Purchaser agrees to cooperate with Seller to aid Seller in
collecting the Tenant Sight Payors' share of the 1996 real estate taxes.
Seller shall have no obligation to Purchaser for the payment of the 1997 real
estate tax bill received by Purchaser in 1998 and all real estate tax
adjustments provided under this paragraph shall be final as of the date of
Closing.
In addition, security deposits, prepaid
expenses, utility charges and deposits, if any, and all other customarily
proratable items shall be prorated as of the Proration Date on the basis of
the most recent ascertainable amounts thereof or other reliable information in
respect to each such item of income and expense and the net credit to
Purchaser or Seller shall be paid in cash or as a credit or debit against the
Purchase Price. In no event shall Seller be charged or be responsible for any
increase in real estate taxes on the Property resulting from any improvements
made to the Property after the Proration Date.
(d) Seller shall credit Purchaser at Closing with a
special rent loss proration (the "Rent Loss Proration") in the total sum of
TWO HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00). Said special
Rent Loss Proration is to reimburse Purchaser for any rent loss caused by
current vacancies and anticipated vacancies in the premises following the
Closing. Purchaser shall not be obligated to account to Seller for the use of
the special Rent Loss Proration.
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(e) Seller shall pay all title charges required to
fulfill the obligations under Section 4.2, one-half (1/2) of the escrow
charges, all survey charges, and the cost of the State and County Transfer Tax
on the Deed. Purchaser shall pay for one-half (1/2) of the escrow charges,
the charges to record the Deed and the cost of the municipal Transfer Tax, if
any, on the Deed. The parties shall each be solely responsible for the fees
and disbursements of their respective counsel and other professional advisers.
(f) (i) Seller, until the earlier of the Closing
Date or termination of this Agreement, shall not enter into any new Leases
("New Leases") without the prior written consent of the Purchaser, which
consent shall not be unreasonably withheld. Purchaser will not be deemed to
have unreasonably withheld its consent to a proposed New Lease if the terms
thereof do not meet the Criterion for New Leases described on Exhibit H
attached hereto.
(ii) In the event Seller enters into a New Lease
after the date of this Agreement, and such New Lease requires improvements or
the payment of brokerage commissions (collectively the "New Leasing Costs") at
the expense of Seller, as landlord, Purchaser by approving the execution of
the New Lease shall, at Closing, assume the obligation to pay for all unpaid
New Leasing Costs. Any New Leasing Costs paid by Seller prior to Closing will
be reimbursed to Seller by Purchaser at Closing.
(iii) Failure of the Purchaser to consent or
object in writing within three (3) business days after a written request for
such consent to the execution of a New Lease by Seller, shall be deemed to
constitute consent.
(iv) Purchaser at Closing will indemnify and
forever defend and hold Seller, its partners, agents and employees harmless
from any loss, liability, suit, action, judgment or claim as a result of
Purchaser's nonpayment of any New Leasing Costs assumed by Purchaser at
Closing.
4.4 ESCROW. Concurrently herewith, the parties, through their
respective attorneys, shall establish a Strict Joint Order Escrow in the form
customarily used by Title Insurer under which the Deposit will be held. If
Purchaser shall not give the Notice to Cancel, then not later than seven (7)
days prior to the Closing Date, but subject in any event to Section 4.5(g),
the Strict Joint Order Escrow will be terminated, and a new escrow will be
created by the parties through their respective attorneys with the Title
Insurer at Title Insurer's office in Chicago, Illinois, through which the
Deposit will be held and invested and the transaction shall be closed. The
escrow instructions shall be in the form customarily used by the escrowee with
such special provisions added thereto as may be required to conform to the
provisions of this Agreement. Said escrow shall be auxiliary to this Agreement
and this Agreement shall not be merged into or in any manner superseded by
said escrow.
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4.5. CLOSING.
(a) The "dry closing" as defined in Section 4.3(b) shall
commence at 10:00 a.m. (CST) at the offices of the Title Insurer in Chicago,
Illinois and the Closing shall take place at noon on July 15, 1997 (the
"Closing Date") at the offices of the Title Insurer in Chicago, Illinois, or
on such other date or dates as the parties may mutually agree.
(b) Not later than the Proration Date, Seller shall
deposit in the escrow the following:
(i) The Deed;
(ii) An assignment of all of Seller's right,
title and interest in and under the Leases and Service Contracts;
(iii) The Bill of Sale;
(iv) Originals of the Leases and Service
Contracts;
(v) Letters to tenants under the Leases advising
that the Property has been sold to Purchaser and directing payment of rental
under the Leases in accordance with the directions of Purchaser;
(vi) An ALTA statement in form required by the
Title Insurer;
(vii) An executed FIRPTA Affidavit in customary
form;
(viii) Estoppel Letters in the form prescribed
in the Lease or if no form is prescribed in the Lease then substantially in
the form of Exhibit "F" attached hereto, the contents of which are reasonably
satisfactory to Purchaser, from Best Buy, Cineplex Odeon, Office Depot, T.J.
Maxx and PetsMart and from such other tenants under the Leases which when
added to the gross leasable area in the Improvements occupied by the foregoing
five (5) named tenants, aggregate not less than eighty (80%) of the total
occupied gross leasable area in the Improvements. If Seller is unable to
procure such Estoppel Letters by the Proration Date, such failure to procure
Estoppel Letters shall not constitute a default by Seller hereunder, but
Purchaser will not be required to close the transaction unless Seller obtains
the required Estoppel Letters during the thirty (30) day period describe in
(i) of the next sentence or provides the indemnification described
in (ii) of the next sentence. Seller shall have the
right to either (i) postpone the Closing Date (and thereby extend the
Proration Date) up to thirty (30) days in order to attempt to obtain the
required Estoppel Letters from said tenants or (ii) subject to the
limitations contained in Section 10.3, indemnify Purchaser against the claims
of any tenants who have not provided Estoppel Letters and which claims arose
prior to the Closing Date, and correct any matters (to Purchaser's reasonable
satisfaction) which are raised in the
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Estoppel Letters which were provided. If Seller elects to extend the
Closing Date as provided for herein and on the extended Closing Date is still
unable to deliver the required number of Estoppel Letters, Seller may then
elect to either (iii) terminate this Agreement or (iv) provide the
indemnification described in (ii) of the preceding sentence. Purchaser agrees
that requests for Estoppel Letters will be sent to all tenants no later than
July 1, 1997.
(ix) Such other documents, instruments,
certifications and confirmations as may be reasonably required to fully effect
and consummate the transaction contemplated hereby, including Releases or Stop
Orders from the Illinois Department of Revenue and the Illinois Department of
Labor with respect to State of Illinois Retailer's Occupation, Income and
Unemployment Insurance Taxes payable by Seller.
(c) Not later than the Proration Date, Purchaser shall
deposit in the escrow the following:
(i) An ALTA statement in form required by the
Title Insurer;
(ii) An assumption of the Leases (including the
obligation to return or apply the tenants' security deposits under the Leases;
but only to the extent that Purchaser has received a proration credit at
Closing from Seller for said tenant security deposit or unapplied portion
thereof) and Service Contracts; and
(iii) Such other documents, instruments,
certifications and confirmations as may be reasonably required and to fully
effect and consummate the transaction contemplated hereby.
(d) No later than 12:00 noon (CST) on the Closing Date,
Purchaser shall deposit the balance of the Purchase Price as provided in
Section 3.l with the Title Insurer.
(e) Not later than the Proration Date, Seller and
Purchaser shall jointly deposit in the escrow an agreed proration statement
and declarations complying with the provision of state, county and local law
applicable to the determination of documentary and transfer taxes.
(f) All documents or other deliveries required to be
made by Purchaser or Seller on or prior to the Proration Date and all deposits
and transactions required to be consummated concurrently with Closing, shall
be deemed to have been delivered and to have been consummated simultaneously
with all other transactions and all other deliveries, and no delivery shall be
deemed to have been made, and no transaction shall be deemed to have been
consummated until all deliveries required by Purchaser, or its designee, and
Seller shall have been made, and all concurrent or other transactions shall
have been consummated.
(g) At the request of either party, the transaction
shall be closed by means of a so-called "New York Style Closing," with the
concurrent delivery of the documents of title, transfer of interests, delivery
of the title policy described in Section 4.2 and the payment of the
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Purchase Price. The Seller shall provide and pay for any necessary undertaking
(the "Gap Undertaking") to the Title Insurer. The charges of the Title
Insurer for such New York Style Closing shall be paid equally by the parties
hereto.
(h) In any event, whether the Closing occurs through
escrow or by way of a New York Style Closing, the parties and their respective
attorneys shall meet with the Title Insurer on or before the Proration Date
(as they shall mutually agree) to make their respective deposits (except for
the balance of the Purchase Price which will be deposited by Purchaser on the
Closing Date, as aforesaid) and approve the proration statement, all as
described in this Section 4.5, to enable the Closing to occur in a prompt
fashion on the Closing Date.
ARTICLE V
BROKERAGE
---------
5.1 BROKERAGE. Seller hereby represents and warrants to
Purchaser that Seller has not dealt with any broker or finder with respect to
the transaction contemplated hereby except for Richard Ellis, L.L.C
("Brokers") whose commission shall be paid by Seller at Closing; and Seller
hereby agrees to indemnify Purchaser for any claim for brokerage commission or
finder's fee asserted by Brokers or any other person, firm or corporation
claiming to have been engaged by Seller. Purchaser hereby represents and
warrants to Seller that Purchaser has not dealt with any broker or finder in
respect to the transaction contemplated hereby except for the Brokers and
Purchaser hereby agrees to indemnify Seller for any claim for brokerage
commission or finder's fee asserted by a person, firm or corporation other
than the Brokers claiming to have been engaged by Purchaser.
ARTICLE VI
DESTRUCTION, DAMAGE OR CONDEMNATION
-----------------------------------
6.1 DESTRUCTION OR DAMAGE. In the event that prior to the Closing
Date any portion of the Improvements shall be damaged or destroyed by fire or
other casualty, Seller shall immediately give Purchaser notice of such
occurrence. If the amount of damage caused by such fire or casualty shall
exceed $350,000.00 (as determined by an insurance adjuster selected by Seller)
Purchaser may, within fifteen (15) days after receipt of such notice, elect to
(a) terminate this Agreement, in which event the Deposit shall be returned
promptly to Purchaser, all obligations of the parties hereunder shall cease
and this Agreement shall have no further force and effect, or (b) close the
transaction contemplated hereby as scheduled (except that if the Closing Date
is less than fifteen (15) days following Purchaser's receipt of such notice,
Closing shall be delayed until after Purchaser makes such election), and
Seller shall assign to Purchaser at Closing all rights under Seller's
insurance policy to collect insurance proceeds for such destruction or damage
and loss of rents, and Purchaser shall receive a credit against the Purchase
Price equal to the amount of any deductible under such policy. Failure to give
such notice within such time shall be conclusive evidence that Purchaser has
elected the option contained in subsection (b) of this Section 6.1.
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In the event that the amount of damage caused by such fire or
casualty is less than $350,000.00 (as determined by an insurance adjuster
selected by Seller), Purchaser may not elect to terminate this Agreement and
shall close the transaction contemplated hereby as scheduled, and Seller shall
assign to Purchaser at Closing all rights under Seller's insurance policy to
collect insurance proceeds for such destruction or damage and loss of rents,
and Purchaser shall receive a credit against the Purchase Price equal to the
amount of any deductible under such policy.
6.2 CONDEMNATION. If, subsequent to the date hereof and prior to
the Closing Date, any proceeding, which shall relate to the proposed taking of
any "material" portion of the Real Property or Improvements by condemnation or
eminent domain or any action in the nature of eminent domain is instituted or
commenced, Purchaser shall have the right and option to terminate this
Agreement by giving Seller written notice to such effect within fifteen (15)
days after actual receipt of written notification of any such occurrence.
Failure to give such notice within such time shall be conclusive evidence that
Purchaser has waived the option to terminate by reason of the occurrence of
which it has received notice. If any such action is instituted or commenced
and Purchaser elects or is deemed to elect not to terminate this Agreement, at
Closing, Purchaser shall be assigned all of Seller's right to any proceeds
therefrom. Seller agrees to furnish Purchaser written notification with
respect to any such proceedings within forty-eight hours of Seller's receipt
of any such notification or learning of the institution of such proceedings.
Should Purchaser elect to so terminate this Agreement, the Deposit shall be
returned promptly to Purchaser and thereupon the parties hereto shall be
released from any and all other obligations hereunder. If the Closing Date is
less than fifteen (15) days following the last day on which Purchaser is
entitled to elect to terminate this Agreement, the closing shall be delayed
until after Purchaser makes such election.
The term "material" for purposes of this Section 6.2 shall mean any
taking of any portion of the Improvements or any taking of more than ten (10%)
percent of the land area of the Real Estate.
6.3 CASUALTY AND RENT LOSS INSURANCE. If, under the terms of
Section 6.1, Seller is obligated at Closing to assign to Purchaser all rights
under Seller's insurance policy to collect insurance proceeds for the repair
of any pre-Closing destruction or damage, Seller shall, at Closing, make
Purchaser a loss payee under such insurance policy in order to effectuate such
assignment obligation of Seller and in addition shall make Purchaser a loss
payee for any Loss of Rents insurance coverage that Seller may have relating
to any rental loss arising from said destruction or damage, but relating
solely to the period commencing on the Proration Date and thereafter while
such coverage may be in effect and the rent is abated under any of the Leases
as a result of such destruction or damage.
In the event Seller is obligated to make Purchaser a loss payee for
any Loss of Rents insurance coverage pursuant to the preceding paragraph and
Seller's insurance to cover such loss of rents for a period of twelve (12)
months from the date of any fire or casualty is not in effect at the time of
Closing, Purchaser, at its election (to be exercised at or prior to Closing by
written notice to Seller) may terminate this Agreement, obtain a return of its
Deposit and
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thereupon the parties hereto shall be released from any and all further
obligations hereunder.
ARTICLE VII
COVENANTS, REPRESENTATIONS, WARRANTIES
--------------------------------------
7.1 AFFIRMATIVE COVENANTS OF SELLER.
(a) Seller, at Seller's sole cost and expense, shall
until the earlier of the Closing Date or termination of this Agreement, keep
and perform or cause to be performed in all material respects: (i) all
obligations of the lessor under the Leases, and (ii) all obligations of Seller
under the Legal Requirements if Seller's failure to perform any of such Legal
Requirements would adversely affect Seller's ability to consummate this
Agreement.
(b) From the date of Seller's acceptance hereof to the
earlier of the Closing Date or termination of this Agreement, Seller shall not
do, suffer or permit or agree to do any of the following:
(i) Enter into any transaction in respect to or
affecting the Property out of the ordinary course of business;
(ii) Except for Seller's execution of new Leases,
as provided in Section 4.3(e), sell, encumber, or grant any interest in the
Property in any form or manner whatsoever, or otherwise perform or permit any
act which will diminish or otherwise affect Purchaser's interest under this
Agreement or in the Property, or which will prevent Seller's full performance
of its obligation hereunder.
(c) From the date of Seller's acceptance hereof to the
earlier of the Closing Date or termination of this Agreement, upon reasonable
advance notice from Purchaser (which notice shall be not less than one
business day in advance and shall be two (2) business days in advance if
Purchaser desires to inspect any occupied portions of the Improvements) Seller
shall permit representatives, accountants, agents, employees, lenders,
contractors, appraisers, architects and engineers designated by Purchaser
(collectively "Permittees") access to and entry upon the Property to examine,
inspect, measure and test the Property and access to the office of Seller to
review Seller's books and records relating to the operation thereof. Seller
shall have the right to require that a representative of Seller accompany any
or all of the Permittees.
In no event shall Purchaser make any intrusive physical testing
(environmental, structural or otherwise) at the Property (such as soil
borings, water samplings or the like) without Seller's prior written consent
(and shall in all events promptly return the Property to its prior condition
and repair thereafter). Purchaser agrees that Seller may have a
representative present at any inspection, sampling or testing, including, but
not limited to, an environmental engineer or consultant designated by Seller
in connection with any environmental sampling or testing conducted by
Purchaser in accordance win this Section 7(c). At Seller's request, any
sampling or testing by Purchaser's environmental consultant shall be conducted
in a manner so as to
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provide "split" samples or data to Seller's environmental consultant.
Purchaser does hereby indemnify and forever defend and hold Seller,
its partners, agents, tenants and employees ("Indemnified Parties") harmless
from any expense, loss, liability, suit, action, judgment, or claim
(including, without limitation, any mechanics' lien which may be filed against
the Property) which any of the Indemnified Parties may incur, suffer or
sustain as a result of the exercise by Purchaser of its rights (and that of
its Permittees) to enter upon the Property or the office of Seller pursuant to
this Section 7.1(c). Prior to any such entry, Purchaser (or its Permittees)
shall deliver to Seller a certificate of Commercial General Liability
insurance naming Seller and its partners as additional insured thereunder in
coverage amounts of not less than $1,000,000.00 per occurrence. If the Closing
does not occur for any reason, Purchaser will restore (or cause to be
restored) the Property to its former condition to the extent Purchaser or its
Permittees have altered or damaged the Property in any manner.
(d) Seller shall notify Purchaser promptly if Seller
becomes aware of any transaction or occurrence prior to the Closing Date which
would make any of the representations or warranties of Seller contained in
Section 7.2 hereof not true in any material respect.
(e) Any vacant rentable space in the Real Property will
be placed into Rent Ready Condition, which is defined to be that all walls are
patched and freshly painted, each space to be demised has a fully fixtured and
operable bathroom, and all doors have locks and are operable, the ceiling is
completed with acoustical tile and standard fluorescent lighting and the floor
is in broom-clean condition.
(f) Seller agrees to cooperate with Purchaser's
accountants (at no cost or expense to Seller) relative to the performance by
said accountants of an audit of Seller's books and records relating solely to
the Property. If Purchaser's auditors shall request Seller to execute a
representation letter addressed to the auditors and Seller and the auditors
cannot agree on the content thereof, Purchaser may terminate this Agreement at
any time prior to the Closing Date by written notice to Seller, whereupon
Purchaser shall obtain a return of the Deposit.
(g) Seller shall keep the First Note and First
Mortgage current and free from default from and after the execution of this
Agreement to Closing .
7.2 REPRESENTATIONS AND WARRANTIES OF SELLER. To induce
Purchaser to execute, deliver and perform this Agreement, Seller hereby
represents and warrants to Purchaser on and as of the date hereof and on and
as of the Closing Date (except as set forth in any written communication from
Seller to Purchaser given on or prior to the Closing Date and setting forth
any changes in such representations or warranties) as follows:
(a) Seller is an Illinois limited partnership in good
standing with the Secretary of State of Illinois and this contract and the
obligations of Seller have been duly authorized by all necessary acts of the
General Partner.
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(b) Seller owns fee simple title to the Real Property.
(c) Exhibit "D" hereto attached contains a list of all
Leases presently in existence and lists all modifications or amendments to the
Leases known to Seller. The interest of Seller in the Leases and Service
Agreements is free and clear of all liens and encumbrances and has not been
assigned to any other person.
(d) Except for Seller and tenants under the Leases, to
Seller's actual knowledge, there are no persons in possession or occupancy of
the Real Property or Improvements or any part thereof, nor are there any
persons who have possessory rights in respect to the Real Property or
Improvements or any part thereof. Except as may be set forth in the Leases,
there are no rights of first refusal to purchase or options to purchase the
Property in favor of any tenant under the Leases or any other party.
(e) Seller has full capacity, right, power and authority
to execute, deliver and perform this Agreement and all documents to be
executed by Seller pursuant hereto, and all required action and approvals
therefor have been duly taken and obtained. This Agreement and all documents
to be executed pursuant hereto by Seller are, and shall be, binding upon
Seller.
(f) To Seller's actual knowledge, there are no causes of
action or other litigation pending in respect to the ownership of the Property
or any part thereof or the ownership, enforcement or validity of the Leases
except matters covered by insurance and except for any matters listed on
Exhibit "G" hereto attached.
(g) To Seller's actual knowledge, there are no existing
condemnation proceedings of any part of the Real Property, and Seller has not
received written notice from a condemning authority of its intent to condemn
any portion of the Real Property.
(h) To Seller's actual knowledge, Seller has not
received written notice from any governmental authority that the Property is
in violation of any Legal Requirements which have not previously been
corrected, or that any special assessment lien has been or will be spread of
record.
(i) To Seller's actual knowledge, Seller owes no sums to
the Illinois Department of Revenue.
(j) To Seller's actual knowledge, the Financial
Statements provided by Seller to Purchaser relating to the operation of the
Improvements are each true, accurate and complete in all material respects.
For purposes of this Agreement, the expression "Seller's actual
knowledge" shall mean the actual knowledge only of James Hansen, the property
manager of the Property, and Andrea Backman, the portfolio manager
(collectively the "Managers") and no knowledge of any employee, agent, or
independent contractor of Seller or Managers shall be imputed to the
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Managers, nor shall the Managers be bound to, or obligated to make or cause to
be made any independent inquiry or investigation relating to the subject
matter of any representation or warranty made to "Seller's actual knowledge".
7.3 REPRESENTATIONS AND WARRANTIES OF PURCHASER. To induce
Seller to execute, deliver and perform this Agreement, Purchaser hereby
represents and warrants to Seller on and as of the date hereof and on and as
of the Closing Date as follows:
(a) All representations and warranties of Purchaser
appearing in other Sections of this Agreement are true and correct.
(b) Purchaser has full capacity, right, power and
authority to execute and deliver this Agreement. At Closing, Purchaser's
designee, if any, will have full capacity, right, power, and authority to
perform this Agreement and all documents to be executed by Purchaser pursuant
hereto. This Agreement and all documents to be executed pursuant hereto by
Purchaser are and shall be binding upon Purchaser in accordance with their
respective terms.
(c) Purchaser certifies and warrants to Seller that the
purchase of the Property by Purchaser or its designee will not result in a
prohibited transaction under Section 406 of the Employee Retirement Income
Security Act of 1974, Section 4975 of the Internal Revenue Code of 1986, or
any similar state law applicable to governmental plans. Purchaser shall
indemnify and hold Seller harmless from all loss (including reasonable
attorneys' fees and costs) arising out of a breach of the foregoing
certification and warranty. The terms of this Section 7.3(c) shall survive the
Closing.
7.4 COVENANTS OF PURCHASER.
(a) Purchaser shall notify Seller promptly if Purchaser
becomes aware of any transactions or occurrence prior to the Closing Date
which would make any of the representations or warranties of Seller contained
in this Agreement untrue in any material respect.
Purchaser's failure to so notify Seller shall constitute a waiver by
Purchaser of any liability of Seller to Purchaser or its designee arising from
the untruth of any such representations or warranties of Seller known to
Purchaser prior to Closing, it being agreed by the parties hereto that such
representations and warranties known by Purchaser to be untrue at or prior to
Closing shall not survive Closing.
(b) Purchaser acknowledges and agrees that the sale of
the Property is made on an "AS IS, WHERE-IS, WITH ALL FAULTS" basis and,
except as specifically set forth in Section 7.2, without representations or
warranties of any kind or nature, express, implied or otherwise, including,
but not limited to, any representation or warranty made by the Brokers or any
representation or warranty concerning zoning, financial, environmental, or
physical condition of the Property, or any income, expenses, charges, liens,
encumbrances, rights, claims
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on or affecting or pertaining to the Property. Purchaser acknowledges that if
it elects to purchase the Property it will be doing so predicated upon its own
independent investigations, the investigation of its Permittees and the
representations and warranties of the Sellers expressly made herein or in any
other document executed and delivered by Seller to Purchaser at Closing as
described in Section 4.5(b). Purchaser waives, releases, covenants not to sue
and forever discharges Seller, its partners, officers, directors, contractors,
employees and agents and other persons acting on behalf of Seller, of and from
any and all claims, actions, causes of action, demands, rights, damages,
costs, expenses, or compensation whatsoever, direct or indirect, known or
unknown, foreseen or unforeseen, which Purchaser now has or which may arise in
the future on account of or growing out of or in connection with any physical
characteristics or existing condition including, without limitation,
subsurface conditions, solid and hazardous wastes, and Hazardous Materials on,
under, or related to the Property, or any applicable law or regulation.
Purchaser acknowledges that (i) Seller has afforded Purchaser the opportunity
for a full and complete investigation, examination and inspection of the
Property and (ii) the purchase price reflects the agreement of Purchaser not
to pursue or assert any claims against Seller arising out of environmental
matters. Purchaser acknowledges that this clause is a negotiated part of this
Agreement and serves as an essential component of consideration for the
Property. The release contained under this clause includes, but is not
limited to, the release by Purchaser of Seller from all claims, rights of
contribution or other rights or remedies against Seller pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended. Purchaser hereby does not waive its claims which arise as a direct
result of a default of this Agreement by Seller, in which event, Purchaser's
exclusive remedies shall be limited for any such default prior to Closing to
the provisions of Section 8.1(b) and for any default discovered after Closing
to the provisions of Section 10.3. Other than as provided for herein,
Purchaser hereby waives any and all claims, rights, remedies or otherwise
arising out of or in connection with this sale at law or in equity.
(c) Purchaser acknowledges and agrees that except as
provided in Section 4.3(d), nothing in this Agreement shall be deemed to
preclude or prohibit Seller from operating, managing, leasing (including
terminating any Lease for breach by the tenant) and repairing the Property in
the same manner as the same was operated, managed, leased, and repaired prior
to execution hereof. Seller will not voluntarily terminate any of the Leases
prior to their expiration date without Purchaser's written approval, which
will not be unreasonably withheld or unduly delayed.
(d) Purchaser agrees that it will not attempt to contact
any of the tenants of the Property (whether by telephone, correspondence, or
in person) until such time, if ever, as the Inspection Period shall have
expired and Purchaser has not given Seller a Notice to Cancel. Thereafter,
Purchaser may contact any of the tenants so long as it shall first notify
Seller and give Seller the opportunity to review any written communication
with any of the tenants and to be present at any personal meeting with the
tenants, as applicable. Notwithstanding the foregoing, nothing herein shall
be deemed to prohibit or restrict Purchaser from contacting a Tenant if such
Tenant is an occupant/tenant of any other shopping center owned by Purchaser.
With regard to any such contact, Purchaser agrees that they will not have a
substantial
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conversation regarding Rivertree Court with any such Tenants without notifying
Seller and obtaining Seller's prior written agreement.
ARTICLE VIII
DEFAULT, CONDITIONS PRECEDENT AND TERMINATION
---------------------------------------------
8.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AND DEFAULT BY SELLER.
(a) The obligation of Purchaser to close the transaction
contemplated hereby is, at Purchaser's option, subject to Purchaser's review
and approval of: the Leases, Service Contracts, the environmental and
structural condition of the Property, the Title Commitment, the First Note and
First Mortgage and such market research, inspections of the Property,
determinations as to the Property's compliance with the Legal Requirements and
review of financial statements relating to the Property, as Purchaser deems
necessary to make its final determination to acquire the Property. Purchaser
shall have until 5:00 p.m. (CST) June 30, 1997 ("Inspection Period") to make
such reviews and approve the same. If, by the conclusion of the Inspection
Period, Purchaser has not given Seller written notice ("Notice to Cancel")
that it intends to cancel this Agreement it will be conclusively presumed that
Purchaser has approved the matters described in this Section 8.l(a) and has
determined to acquire the Property. Purchaser will then have a period of
seven (7) days after the expiration of the Inspection Period within which to
obtain the approval by its Board of Directors of the acquisition of the
Property pursuant to the terms hereof. If on or before the conclusion of the
Inspection Period Purchaser has given the Notice To Cancel, or if it has not
given the Notice to Cancel but notifies Seller within seven (7) days after the
expiration of the Inspection Period that it did not obtain Board of Directors'
approval, the Deposit will be paid to Purchaser and this Agreement will be
terminated and become null and void except for Purchaser's obligations under
Section 7.1(c) which will survive such termination.
If Purchaser shall not have given a Notice to Cancel within the time
aforesaid, the Deposit shall be non-refundable except as set forth in Sections
8.1(b), 6.1 and 6.2.
(b) The obligation of Purchaser to close the transaction
contemplated hereby is, at Purchaser's option, further subject to all material
representations and warranties of Seller contained in this Agreement being
true and correct in every material respect at and as of the Closing Date and
all material obligations of Seller to have been performed on or before the
Closing Date having been timely and duly performed. If the conditions
precedent to Purchaser's obligation to Close as described in Sections 4.1,
4.2, and 4.5(b)(viii) have not occurred on or prior to the times required
therein (subject to Seller's extension rights under Section 4.5(b)(viii)),
Purchaser shall have only the following options to be exercised by written
notice to Seller prior to the Closing Date: (i) to terminate this Agreement,
obtain a refund of the Deposit and thereafter this Agreement shall be null and
void, or (ii) to waive such conditions and close this Agreement on the Closing
Date without diminution of the Purchase Price. If Seller shall be in default
of its obligation under this Agreement (in contrast to Seller's inability to
perform any of the conditions precedent described above and elsewhere in this
Agreement which shall not
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constitute a default), Purchaser shall have only the following options as its
sole and exclusive remedy for said default, to be exercised by written notice
to Seller on or prior to Closing Date: (aa) to terminate this Agreement and
obtain a return of the Deposit, whereupon this Agreement shall become null and
void and of no further force or effect, except that if the default of Seller
shall be of such a nature as to be willful and wanton in conduct, then
Purchaser also shall be entitled to receive from Seller the sum of $75,000 as
and for full, final and agreed upon liquidated damages (the parties hereto
hereby acknowledge that the amount of such damages are otherwise incapable of
ascertainment) or (bb) to obtain a return of the Deposit and seek specific
performance of this Agreement. If Purchaser does not file suit for Specific
Performance within six (6) months of Seller's alleged default, it will be
conclusively presumed that Purchaser has elected the option set forth in
Section 8.1(b)(aa). Purchaser's failure to give such written notice on or
prior to the time described above, shall be conclusive evidence that all such
conditions precedent to Purchaser's obligations to close have been satisfied.
If this Agreement is terminated pursuant to this Section 8.1(b), the Deposit
shall promptly be returned to Purchaser, and all other funds and documents
theretofore delivered hereunder or deposited in escrow by either party shall
be promptly returned to such party. The rights and remedies granted to the
Purchaser in this Section 8.1(b) are the sole rights and remedies available to
the Purchaser in the event of Seller's default of its obligations under this
Agreement and Purchaser hereby waives any other rights it may have at law
(including claims for any tortious conduct it may allege against Seller) or in
equity.
8.2 CONDITIONS TO SELLER'S OBLIGATIONS AND DEFAULT BY PURCHASER.
The obligation of Seller to close the transaction contemplated hereby is, at
Seller's option, conditioned upon Purchaser's representations and warranties
contained in this Agreement being true and correct in every material respect
at and as of the Closing Date, and upon fulfillment by Purchaser of all
obligations of Purchaser which were to have been performed on or before the
Closing Date having been timely and duly performed. If any condition
precedent to Closing of Seller as set forth in this Section 8.2 has not been
fulfilled and satisfied on or before the Closing Date, Seller may, by notice
to Purchaser, elect at any time thereafter to terminate this Agreement, and if
such termination is due to Purchaser's fault, Seller shall be entitled to
retain the Deposit as full and complete liquidated damages (and not as a
penalty or forfeiture) in lieu of any and all other legal and equitable rights
which Seller may have hereunder, and all other funds and documents theretofore
delivered hereunder or deposited in escrow by either party shall be promptly
returned to such party. Upon such termination and retention of the Deposit by
Seller, except as set forth in the last sentence of the first grammatical
paragraph of Section 10.3 hereof, this Agreement shall become null and void
and of no further force or effect.
ARTICLE IX
NOTICES
----------
9.1 NOTICES. Any notice, request, demand, instrument or other
document to be given or served hereunder shall be in writing and shall be
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or by overnight express courier, or by facsimile
transmission and addressed to the parties at their respective addresses set
forth
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below, and the same shall be effective upon receipt if delivered personally or
two (2) business days after deposit in the mail, if mailed, or upon receipt if
deposited with an overnight express courier or sent by facsimile transmission.
A party may change its address or facsimile transmission number for receipt of
notices by service of a notice of such change in accordance herewith.
If to Seller:
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, Illinois 60611-1575
Attention: Andrea M. Backman
Facsimile Number: (312) 915.2502
with copies to:
Richard Ellis, L.L.C.
Attention: Stanley Warnick and
Anne Brettingen
Three First National Plaza
Chicago, Illinois 60602
Facsimile Number: (312) 899.0923
and to:
Kenneth H. Denberg, Esq.
Schwartz & Freeman
401 N. Michigan Ave., Ste. 1900
Chicago, Illinois 60611
Facsimile Number: (312) 222.0818
If to Purchaser:
Inland Real Estate Corporation
2901 Butterfield Road
Oak Brook, Illinois 60521
Attention: Robert D. Parks, President
Facsimile Number: (630) 218.4935
with a copy to:
The Inland Group, Inc.
2901 Butterfield Road
Oak Brook, Illinois 60521
Attention: Sam Orticelli, Esq.
Facsimile Number: (630) 218.4900
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ARTICLE X
ADDITIONAL COVENANTS
--------------------
10.1 ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS. This Agreement
contains the entire agreement and understanding of the parties with respect to
the subject matter hereof, and the same may not be amended, modified or
discharged nor may any of its terms be waived except by an instrument in
writing signed by the party to be bound hereby.
10.2 FURTHER ASSURANCES. The parties each agree to do, execute,
acknowledge and deliver all such further acts, instruments and assurances and
to take all such further action before or after the Closing as shall be
necessary or desirable to fully carry out this Agreement and to fully
consummate and effect the transaction contemplated hereby.
10.3 SURVIVAL AND BENEFIT. Only those agreements, covenants,
indemnifications and obligations of the parties hereunder set forth in
Sections 4.3(b), 5.1, 7.1(c), 7.1(d), 7.4(b), and the representations and
warranties of Purchaser set forth in Section 7.3 shall survive the Closing and
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. The indemnifications set forth in Sections 5.1 and
7.1(c) shall survive termination of this Agreement prior to Closing.
Subject to the provisions of the second paragraph of Section
7.4(a) (i) the representations and warranties of Seller contained in
this Agreement shall survive the Closing only as hereinafter set forth and
(ii) any liability of Seller to Purchaser based on any inaccuracy of Seller's
representations and warranties contained in this Agreement shall expire
without notice from or to any party hereto (including Purchaser's designee)
unless:
(i) Purchaser (or its designee) shall give
written notice to Seller within three (3) months after the Closing Date that
any of such representations and warranties were inaccurate in any material
respect, specifying in detail the nature of any such inaccuracy and certifying
to Seller that Purchaser and its designee and Permittees were not aware of
such inaccuracy at the time of the Closing; and
(ii) Purchaser (or its designee) shall commence
legal proceedings against Seller for damages suffered as a result of the
inaccuracy specified in such notice given to Seller (pursuant to
10.3(i) above) no later than December 1, 1997.
Notwithstanding anything herein to the contrary, and subject to the
provisions of Section 10.7 hereof, the maximum amount of liability of Seller
for any agreements, indemnification, obligations, representations, and
warranties which shall survive the Closing shall be $400,000.00, including any
costs of litigation which Purchaser or its designee may incur to enforce such
post-closing obligations or liabilities of Seller.
10.4 NO THIRD PARTY BENEFITS. This Agreement may not be assigned
by Purchaser. However, not earlier than two (2) days prior to the Proration
Date, Purchaser may nominate in
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writing a land trust as to which Purchaser is the sole beneficiary to accept
title to the Property.
Such nomination by Purchaser will not absolve or release Purchaser
from liability under this Agreement whether prior to or subsequent to Closing.
This Agreement is for the sole and exclusive benefit of the parties hereto and
the designee of Purchaser and no third party is intended to or shall have any
rights hereunder.
10.5 NO RECORDING. The Purchaser agrees not to record this
Agreement or any short form, memorandum, or notice thereof in any public or
governmental office.
10.6 INTERPRETATION.
(a) The headings and captions herein are inserted for
convenient reference only and the same shall not limit or construe the
paragraphs or Sections to which they apply or otherwise affect the
interpretation thereof.
(b) The terms hereby, "hereof," "hereto, "herein,"
"hereunder" and any similar terms shall refer to this Agreement, and the term
"hereafter" shall mean after and the term "heretofore" shall mean before, the
date of this Agreement.
(c) Words of the masculine, feminine or neuter gender
shall mean and include the correlative words of other genders and words
importing the singular number shall mean and include the plural number and
vice versa.
(d) Words importing persons shall include firms,
associations, partnerships (including limited partnerships), trusts,
corporations and other legal entities, including public bodies, as well as
natural persons.
(e) The terms "include", "including" and similar terms
shall be construed as if followed by the phrase "without being limited to".
(f) Whenever under the terms of this Agreement the time
for performance of a covenant or condition or the last day to give notice
falls upon a Saturday, Sunday or holiday (whether in the United States or
Canada), such time for performance shall be extended to the next business day.
Otherwise all references herein to "day" shall mean calendar days.
(g) This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
(h) In any action to enforce any of the terms of this
Agreement, the prevailing party shall be entitled to recover its expenses,
including reasonable attorneys fees and costs of litigation, including those
in any appellate proceedings.
(i) Time is of the essence of this Agreement.
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(j) This Agreement and any document or instrument
executed pursuant hereto may be executed in any number of counterparts each of
which shall be deemed an original, but all of which together shall constitute
the same instrument.
10.7 SELLER'S EXCULPATION. Notwithstanding anything herein to the
contrary, in the event of a default hereunder by Seller prior to or at
Closing, neither Seller nor any direct or indirect partner (whether general or
limited) of Seller, nor any shareholder of any partner, nor any director,
officer, employee, agent, shareholder, trustee or beneficiary of any of them
shall have any liability hereunder or in connection therewith, and Purchaser's
sole and exclusive remedies are as set forth in Sections 8.1(b) and 10.3
hereof. In the event that Purchaser (or its designee) discovers, after
Closing, that Seller has breached any of the representations and warranties
made by Seller in this Agreement, they shall be limited to resort against the
assets of Seller only under Section 10.3 hereof and no direct or indirect
partner (whether general or limited) of Seller, nor any shareholder of any
partner, nor any director, officer, employee, agent, shareholder, trustee, or
beneficiary of any of them shall be liable to Purchaser or its designee in
connection with such claimed breach of representation or warranty. For
purposes of the foregoing, neither the negative capital account of any partner
of Seller nor any obligation of any partner of Seller to restore a negative
capital account or to contribute capital to Seller or to any partner of
Seller, shall at any tune be deemed to be the property or an asset of Seller
or any partner of Seller (and neither Purchaser nor any of its successors or
assigns shall have any right to collect, enforce or proceed against or with
respect to any such negative account or a partner's obligation to restore the
same or contribute capital to Seller or a partner of Seller).
10.8 EFFECTIVE DATE. Wherever herein contained the expression
"date hereof" is used it shall be deemed to mean the date that Seller has
accepted this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
Seller and Purchaser on the respective dates set forth beneath each of their
signatures and is intended to be effective as of the latest such date.
PURCHASER:
INLAND REAL ESTATE CORPORATION
By: /s/ STEVEN D. SAND
------------------------------
Steven D. Sand
Its:Agent
Dated: June 11th, 1997
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SELLER:
JMB INCOME PROPERTIES, LTD.-XIII
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation,
Managing General Partner
By: /s/ ANDREA Backman
------------------------------
Andrea Backman
Its:Vice President
Date of Seller's Acceptance:
______________________________, 1997
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LIST OF EXHIBITS
----------------
Exhibit A Real Property
Exhibit B Permitted Exceptions and Leases
Exhibit C Personalty
Exhibit D List of Leases and Amendments
Exhibit E Service Contracts
Exhibit F Tenant Estoppel Letter
Exhibit G Cause(s) of Action List
Exhibit H New Leases
