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): November 14, 1997
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
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(Exact name of registrant as specified in its charter)
Illinois 0-17708 36-3467497
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(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
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(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
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<PAGE>
18 CENTRAL SHOPPING CENTER
East Brunswick, New Jersey
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. Carlyle Real Estate Limited
Partnership - XVII (the "Partnership") owned an interest in a shopping
center in East Brunswick, New Jersey known as 18 Central Shopping Center.
The shopping center contained approximately 105,800 square feet of gross
leasable area, of which the Partnership owned approximately 85,800 square
feet (the "Property"). In March 1993, the Partnership modified and
extended to December 1, 1997 the mortgage note secured by the Property
which matured in December 1992. In early 1997 the mortgage lender (Aetna
Life Insurance Company ("Aetna")) informed the Partnership that it was not
willing to further modify or extend the loan. The Partnership believes,
based on current and anticipated future market conditions, that the value
of the Property is less than the mortgage loan. Therefore, the Partnership
decided not to expend any additional funds of its own on the Property. The
Partnership negotiated to transfer to Aetna the title to the Property in
full satisfaction of the Partnership's mortgage obligation and related
accrued interest, which had a combined outstanding balance of approximately
$9,800,000. On November 14, 1997 the Partnership entered into a Deed In
Lieu Of Foreclosure Agreement (the "Agreement") and conveyed the Property
to Aetna. In 1997, tenant leases representing approximately 25,000 square
feet (approximately 29% of the gross leasable area of the Property)
expired. The Partnership had renewed approximately 15,000 square feet.
However, such renewal was at a market rent significantly lower than the
rent that the tenant was previously paying. Additionally, the rents
achieved upon re-leasing of the remaining space were expected to be at
market rates that are significantly lower than the rents previously
received for this space. As of the date of the transfer of title, the
Property was approximately 81% leased and occupied.
In connection with the March 1993 loan modification and extension,
Aetna was entitled to additional interest (as defined), subject to a
minimum amount of $250,000, and a loan extension fee of $52,500, payable at
maturity or prepayment of the loan. The loan extension fee and additional
interest were non-recourse liabilities to the Partnership and were not
required to be paid out of any cash reserves of the Partnership upon
transfer of title to Aetna. Also in connection with the March 1993 loan
modification and extension, commencing in 1994 the Partnership was required
to deposit 95% of the "net cash flow" (as defined) from the Property up to
$750,000 and 47.5% in excess of such amount in a collateral account to be
used for the payment of tenant improvement costs, leasing commissions,
other capital expenditures and operating deficits. As of the Agreement date
approximately $156,000 had been deposited and no amounts had been expended
from this account, in which Aetna had a first priority interest. The funds
in the escrow account were retained by Aetna upon transfer of title and
will be reflected as interest expense by the Partnership.
As a result of the transfer of title to the Property to Aetna, the
Partnership no longer has an ownership interest in the Property. Due to
the Partnership's 1996 provision for value impairment of $1,103,533, the
Partnership will not recognize any significant gain or loss on the transfer
of title and expects to recognize in 1997 an extraordinary gain on
forgiveness of indebtedness of approximately $1,500,000 for financial
reporting purposes. In addition, the Partnership expects to recognize a
loss of approximately $2,000,000 for Federal income tax reporting purposes
with no significant amount of distributable proceeds.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. Not applicable.
(b) Pro Forma Financial Information - Narrative.
As a result of Aetna obtaining title to the Property, after
November 14, 1997, there will be no further rental income, mortgage and
other interest, property operating expenses or amortization of deferred
expenses recorded for the Property in the Partnership's Consolidated
Financial Statements. For the year ended December 31, 1996, the
Partnership's Consolidated Financial Statements reflected rental income,
mortgage and other interest, depreciation, property operating expenses,
provision for value impairment and amortization of deferred expenses
relating to the Property of approximately $1,682,000, $849,000, $381,000,
$659,000, $1,104,000 and $107,000, respectively. Rental income, mortgage
and other interest, property operating expenses and amortization of
deferred expenses relating to the Property included for the nine months
ended September 30, 1997, in the Partnership's Consolidated Financial
Statements were approximately $1,187,000, $624,000, $324,000 and $77,000,
respectively. Such operating results reflected the classification of the
Property as held for sale or disposition as of December 31, 1996, and
therefore, not subject to continued depreciation as of such date. Also, as
a result of the disposition of the Property, there are no further assets
and liabilities related to the Property, which at September 30, 1997
consisted of land, building and improvements (net of accumulated
depreciation) of approximately $8,613,000; accrued rents receivable of
approximately $229,000; deferred expenses of approximately $129,000 and
current liabilities (including mortgage debt) of approximately $10,173,000.
(c) Exhibits
10.1. Deed in Lieu of Foreclosure Agreement between Carlyle
Real Estate Limited Partnership - XVII and Aetna Life Insurance Company,
dated November 14, 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.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII
BY: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull
Senior Vice President
Principal Accounting Officer
Date: November 26, 1997
EXHIBIT 10.1
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DEED IN LIEU OF FORECLOSURE AGREEMENT
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THIS DEED IN LIEU OF FORECLOSURE AGREEMENT (the "Agreement"), is made
and entered into to be effective as of the ____ day of November, 1997, by
and among AETNA LIFE INSURANCE COMPANY, a Connecticut corporation having a
place of business and a mailing address in care of Aetna Inc. at 151
Farmington Avenue, Real Estate Investments, RT11, Hartford, Connecticut
06156-9642 ("Lender"), and CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XVII,
an Illinois limited partnership, having a place of business and a mailing
address in care of JMB Realty Corporation Inc. at 900 North Michigan
Avenue, 19th Floor, Chicago, Illinois 60611 ("Borrower").
W I T N E S S E T H :
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WHEREAS, Lender is the owner and holder of that certain Second
Replacement Note from Borrower dated as of December 1, 1992, evidencing a
principal indebtedness of TEN MILLION FIVE HUNDRED THOUSAND DOLLARS
($10,500,000), which Note replaced that certain Replacement Note from the
Borrower dated July 21, 1989, evidencing an indebtedness of TEN MILLION
FIVE HUNDRED THOUSAND DOLLARS ($10,500,000.00), which Replacement Note
replaced that certain Original Note from 18 Central Associates Limited
Partnership ("18 Central") dated November 24, 1987, evidencing an
indebtedness of TEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($10,500,000.00)
(said Second Replacement Note as the same may be further amended, extended,
renewed, consolidated, or otherwise modified from time to time, together
with any and all notes that may be given in substitution or replacement
therefor, being referred to in this Agreement as the "Note"); and
WHEREAS, the indebtedness evidenced by the Note is secured by, among
other things:
(1) a mortgage lien encumbering the Property (as defined
below), as provided in and evidenced by that certain Indenture of Mortgage
and Security Agreement dated November 24, 1987, by and between 18 Central,
as mortgagor, and Lender, as mortgagee, recorded in the Office of the Clerk
of Middlesex County, New Jersey (the "Clerk's Office"), in Book 3563, at
Page 51, as modified by that certain Mortgage Modification and Assumption
Agreement dated July 26, 1989, by and between Borrower, as mortgagor, and
Lender, as mortgagee, recorded in the Clerk's Office in Book 35, at Page
328 (the "Modification and Assumption Agreement"), and as further modified
by that certain Second Mortgage Modification Agreement made as of December
1, 1992, by and between Borrower, as mortgagor, and Lender, as mortgagee,
recorded in the Clerk's Office in Book 54, at Page 742 (said mortgage, as
so modified and as the same may be further amended, extended, renewed,
consolidated, spread or otherwise modified from time to time, being
referred to in this Agreement as the "Mortgage"); and
(2) an Assignment of Rents and Leases dated November 24,
1987, by 18 Central, as assignor, to Lender, as assignee, recorded in the
Clerk's Office in Book 3563, at Page 107, as modified by the Modification
and Assumption Agreement (said Assignment of Rents and Leases, as so
modified and as the same may be further amended or otherwise modified from
time to time, being referred to in this Agreement as the "Assignment of
Rents").
<PAGE>
WHEREAS, the Note, the Mortgage, the signment of Rents, together with
any and all other documents and instruments now or hereafter evidencing,
securing, guarantying or otherwise governing the respective
responsibilities of Borrower or any guarantors or indemnitors in respect of
all or any part of the indebtedness evidenced by the Note or any security
for all or any part of such indebtedness, are collectively referred to in
this Agreement as the "Loan Documents." The indebtedness from time to time
evidenced by the Note or by any of the other Loan Documents (whether
consisting of principal, interest, late payment charges, premiums, fees,
reimbursements to Lender or other amounts whatsoever) is referred to in
this Agreement as the "Indebtedness."
WHEREAS, the Mortgage and the Assignment of Rents encumber, among
other things, certain real property therein described and the improvements
thereon (collectively, the "Mortgaged Property") including, without
limitation, that certain real property situated in Middlesex County, New
Jersey, and more particularly described in EXHIBIT A attached hereto.
WHEREAS, the Borrower is currently in default under the Loan
Documents, having failed to make the October 1, 1997, Note payment, as well
as other payments required under the Loan Documents.
WHEREAS, the Indebtedness matures on December 1, 1997 (the "Maturity
Date"), and the Borrower has acknowledged that it is neither possible nor
feasible for the Borrower to pay off in full the Indebtedness by the
Maturity Date nor is it possible or feasible for the Borrower to refinance
the Indebtedness.
WHEREAS, the value of the Mortgaged Property is less than the value
of the Indebtedness such that the Borrower has no equity in the Mortgaged
Property and, as the interest continues to accumulate on the Indebtedness,
such lack of equity continues to grow more negative.
WHEREAS, in connection with the negotiation of this Agreement and the
other documents contemplated hereby, both Borrower and Lender have been
represented by their own counsel, who have reviewed this Agreement and the
other documents contemplated hereby, and have advised Borrower and Lender
as to the legal significance and consequences of entering into the
transaction contemplated hereby.
WHEREAS, the parties have agreed that, in lieu of repayment of the
Indebtedness, Borrower shall convey all of its right, title and interest in
and to the Property to Lender, upon the terms and conditions described
herein and the payment to Borrower of the amount recited herein, allowing
Lender to avoid the time and expense and the negative effect on the
reputation of the Property that would result from a foreclosure proceeding.
NOW, THEREFORE, in consideration of the foregoing premises, of the
covenants and agreements hereinafter stated, and for other good and
valuable consideration received to the mutual satisfaction of the parties
hereto, the undersigned hereby agree as follows:
<PAGE>
1. DEFINITIONS: The following terms as used herein shall have the
following meanings:
a. SPACE LEASES: All right, title and interest of Borrower,
or of any agent or affiliate of Borrower, in and to all leases or subleases
affecting the Mortgaged Property or any portion thereof including, without
limitation, all of those leases described on EXHIBIT B attached hereto and
incorporated herein by this reference (the "Rent Roll"), together with and
including all rents, issues, profits, royalties, income and other benefits
derived from said leases and subleases, and the Mortgaged Property, and all
cash or security deposits, advance rentals and deposits, all guaranties of
any of said leases and subleases, and any lease termination or similar fees
or payments, including any and all rights, claims and causes of action of
Borrower against tenants under any such leases or subleases (collectively,
the "Space Leases");
b. PERSONAL PROPERTY: All right, title and interest of
Borrower in, to and under all tangible and intangible personal property
located on, at or in the Mortgaged Property or used in connection therewith
and owned by Borrower, including, but not limited to the following: all
records, warranties and guaranties and all other documents or contracts
pertaining to the ownership, operation and maintenance of the Mortgaged
Property; all drawings, plans, specifications and other similar data
relating to the buildings and improvements located on the Mortgaged
Property; all of Borrower's advertising, promotional and marketing material
relating to the Mortgaged Property, and all trade names, trade marks,
insignias and service marks used in conjunction with the operation thereof;
all building materials stored on or in the Mortgaged Property; all goods,
machinery, tools, equipment (including fire sprinklers and alarm systems,
office, air conditioning, heating, refrigerating, electronic monitoring,
entertainment and recreational equipment and all equipment utilized for the
reception or transmission of television or telecommunication signals, all
window or structural cleaning rigs, maintenance equipment, equipment for
the exclusion of vermin or insects, removal of dust, refuse or garbage, all
equipment of every kind, lobby and all other furniture, wall safes,
furnishings, appliances (including dishwashers, garbage disposal units,
refrigerators, fans, heaters, stoves, water heaters and incinerators),
maintenance or operation-related inventory, fixtures, rugs, carpets and
other floor coverings, draperies and drapery rods and brackets, awnings,
window shades, venetian blinds, curtains, lamps, chandeliers and other
lighting fixtures and office maintenance and other supplies, and any and
all guaranties and warranties relevant to any of the above (collectively,
the "Personal Property");
c. PROCEEDS: All right, title, interest, claim or demand of
Borrower with respect to (i) the proceeds of insurance in effect relevant
to the Mortgaged Property, the Space Leases, and/or the Personal Property,
(ii) any and all awards made for the taking of any of the foregoing by
eminent domain or by any proceeding or purchase in lieu thereof to the
extent such proceeds or awards are payable either currently, or become
payable after the effective date of this Agreement, (iii) all cash on hand,
including any funds on deposit in any escrow account relating to the
Mortgaged Property, and (iv) any tax refunds or tax rebates relating to the
Mortgaged Property to the extent such refunds or rebates are payable either
currently, or become payable after the effective date of this Agreement
(collectively, the "Proceeds");
<PAGE>
d. PROPERTY: The Mortgaged Property, the Space Leases, the
Personal Property and the Proceeds are collectively referred to as the
"Property".
2. CONVEYANCE OF PROPERTY TO LENDER: Borrower hereby agrees to
convey the Property to Lender or Lender's designee, absolutely and
unconditionally, free and clear of any right of redemption or other right,
title or interest of Borrower or anyone claiming by, through or under
Borrower, together with all interests, estates or other claims at law or in
equity which Borrower now has or may hereafter acquire with respect to the
Property, subject, however, to (i) the rights of existing tenants of the
Mortgaged Property which are identified on EXHIBIT B, and (ii) the
exceptions to title set forth on Schedule B of that certain title
commitment issued by Lawyers Title Insurance Corporation, No. L97 - 10444,
dated August 1, 1997, attached hereto as EXHIBIT C. Lender will perform
its own inspections, studies and tests in respect of the Property as Lender
may, in its sole discretion, deem necessary, and, except as otherwise
specifically provided in this Agreement or in any document or instrument
executed and/or delivered in connection herewith, the transfer of the
Property will be made on an "AS IS, WHERE IS" basis and Borrower disclaims
any other representations or warranties in respect of the Property.
3. PAYMENT OF NET OPERATING INCOME: Borrower shall pay to Lender,
on the Closing Date (as hereinafter defined), in immediately available
funds, the amount, if any (hereinafter referred to as "Net Operating
Income"), by which (1) all gross income generated by the Property and
received by or on behalf of Borrower during the period commencing January
1, 1997, and ending on the Closing Date, exceeds (2) all expenses incurred
and actually paid by Borrower with respect to the operation, preservation,
and maintenance of the Property during said period (including, without
limitation, tenant improvement costs, leasing commissions, and capital
expenditures which are disclosed to Lender, and which are either payable to
third parties unaffiliated with Borrower or its partners, or, if paid to
any such affiliated parties, are ordinary and customary charges which do
not exceed market rates for the relevant services in the East Brunswick,
New Jersey area), LESS any payments theretofore received by Lender from
Borrower with respect to such period. For purposes of calculating Net
Operating Income, any reimbursements to Borrower or any of Borrower's
partners, with respect to their funding of debt service or operating
deficits prior to the Closing Date shall not be considered "expenses".
Lender agrees to pay those costs and expenses which have been incurred in
the ordinary course of business by Borrower within the 45 day period prior
to the Closing Date (and to which invoices have been delivered to Lender),
but remain unpaid as of the Closing Date. Borrower agrees to deliver to
Lender, prior to the Closing Date, a written accounting (the "Accounting"),
in form and substance satisfactory to Lender, of the Net Operating Income,
and, on the Closing Date, an update of the Accounting.
4. CLOSING: Subject to the conditions precedent set forth in this
Agreement, the closing of the transactions contemplated hereby (the
"Closing") shall take place on or before November __, 1997, or on such
other date as may be mutually agreed upon in writing by both Lender and
Borrower (the "Closing Date").
<PAGE>
5. COVENANT NOT TO SUE UNDER LOAN DOCUMENTS: Lender hereby agrees
that it will not sue, institute or cause to be instituted, any suit or
action, or any other proceeding in any court or administrative agency
against Borrower or JMB Realty Corporation Inc. ("JMB") or any of their
respective partners, employees, agents, affiliates, shareholders,
directors, principals, attorneys or other representatives and each partner,
employee, agent, shareholder, director, principal, attorney or other
representative of any of the foregoing (collectively, the "Releasees")
charging any liability, or seeking any recovery, compensation or damages,
based on or on account of any claims, controversies, actions, suits, causes
of action, promises, demands, debts, damages, agreements, obligations,
judgments and liabilities of any kind or nature whatsoever, at law or in
equity, arising out of the Loan Documents (the foregoing agreement being
referred to herein as Lender's "Covenant Not to Sue"); PROVIDED, HOWEVER,
the foregoing Covenant Not to Sue SHALL BECOME NULL AND VOID and shall be
rendered of no further force or effect in the event that (i) this Agreement
is terminated at any time or for any reason by either Borrower or Lender,
(ii) this Agreement or the transactions contemplated hereby shall at any
time or for any reason be declared void, voidable, avoided or avoidable
within the meaning of any state or federal law relating to creditors'
rights, including, without limitation, as a fraudulent conveyance,
preference, or otherwise, or (iii) Borrower, any of its partners, its
successors or assigns (including, without limitation, any trustee or
receiver appointed pursuant to any state or federal law relating to
creditors' rights), or any one or more of them, shall at any time or for
any reason commence litigation against Lender in respect of the Claims (as
hereinafter defined); and PROVIDED, FURTHER, that such Covenant Not to Sue
shall not apply to (x) agreements, covenants or warranties made by Borrower
under this Agreement, or the documents delivered by Borrower pursuant to
and in accordance with this Agreement, or (y) the liability of Borrower for
(1) any intentional misapplication of security deposits attributable to the
Property, (2) any ls, cost, damages, or expenses suffered by Lender as a
result of any fraud or intentional misrepresentation of fact by Borrower,
and (3) the intentional misapplication of any casualty or condemnation
proceeds, it being the intent of the parties hereto that liability for the
agreements, covenants, warranties and obligations to be performed on the
part of Borrower set forth herein and in the Closing Deliveries (as
hereinafter defined) shall survive the Closing Date and the consummation of
the transactions contemplated by this Agreement, subject to the provisions
of Sections 23 and 24 of this Agreement.
6. RELEASE OF LENDER: As of the Closing Date, Borrower and JMB
hereby waive, remise, release and forever discharge, and by these presents
do for themselves, their respective successors and assigns, absolutely and
irrevocably waive, remise, release and forever discharge Lender, and
Lender's respective successors, assigns, directors, creditors, officers,
partners, employees, shareholders, affiliates, attorneys, and agents, of
and from any and all manner of action and actions, cause and causes of
action, suits, debts, dues, sums of money, accounts, reckoning, bonds,
bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims and demands whatsoever (collectively, the "Claims"), in law or in
equity, including, but not limited to, any and all Claims which are
presently unknown, unsuspected, unanticipated or undisclosed, which Claims,
Borrower or JMB or both of them ever had, now has, or which they hereafter
can, shall or may have against Lender, for, upon, or by reason of, any
matter, cause or thing whatsoever arising from, in connection with, or
relating to the Loan Documents, the loan evidenced and secured thereby, the
Property, or the transaction contemplated by this Agreement; provided
however, that in no event shall Claims include any claims, liabilities,
breaches of contract, causes of action, damages, costs, loses and expenses
which arise from this Agreement or any of documents or instruments executed
by Lender pursuant to this Agreement.
<PAGE>
7. NO MERGER:
a. On the Closing Date, Lender, in its sole discretion,
shall exercise one of the following options: (A) release the Mortgage or
(B) retain the Mortgage. If the Lender shall choose option (B) then both
Lender and Borrower acknowledge that the following shall apply: (1) it
shall be the intent of Lender and Borrower that neither this Agreement, nor
the transfers contemplated hereby, shall effect a merger of interests, and
there shall, therefore, be no merger of (i) any interest of Lender as
mortgagee under the Loan Documents with (ii) fee title to the Property; (2)
it shall not be the intent of said parties to release the liens and
obligations represented by the Loan Documents; (3) Lender and Borrower
shall intend that the liens represented by the Loan Documents shall remain
in existence and maintain their status as encumbrances upon the Property,
and that, subject to the provisions of Paragraph 5 above, all rights and
remedies of Lender under the Loan Documents (including, but not limited to,
the right to enforce the Loan Documents and to foreclose the liens created
by the Loan Documents) shall be retained by Lender; (4) Lender and Borrower
shall further expressly intend that such merger shall only be effected by
the due recordation in the Clerk's Office of a written instrument signed by
or on behalf of Lender, and indicating the intention of Lender to effect
such a merger.
b. Notwithstanding the terms of any provision contained in
this Agreement or in any document or agreement delivered pursuant hereto to
the contrary, and without limiting the terms of subparagraph 7a. above,
nothing contained herein or therein shall: (i) be deemed an assumption by
Lender of the obligations of Borrower under the Loan Documents;
(ii) effect, constitute, cause or be deemed a release of the Loan
Documents; or (iii) be deemed to have terminated or cause a termination of
any of the Space Leases.
8. INSPECTION OF PROPERTY: Lender, its agents, representatives,
employees and contractors may, between the date of the execution of this
Agreement and the Closing Date:
a. Inspect, audit, and photocopy the books and records
relating to the Property; and
b. Inspect the Property and conduct such investigations as
Lender may deem necessary or advisable, and Borrower hereby grants Lender
access to the Property for the purpose of any such inspections, and agrees
to make any locked portions of the Property available to Lender upon
Lender's request for access thereto, subject only to the rights of tenants
under the Space Leases.
9. RESTRICTIONS ON BORROWER AND OWNER: Between the date of the
execution of this Agreement and the Closing Date, Borrower:
a. shall consult with Lender and obtain Lender's prior
written consent with respect to (i) new leases of space at the Mortgaged
Property or amendments, extensions, terminations, or concessions with
respect to existing Space Leases, including any provisions with respect to
tenant improvements, and (ii) any agreements with brokers or agents with
respect to leasing commissions or other commitments relevant to any Space
Leases, or any future space leases for all or any portion of the Mortgaged
Property;
b. shall not enter into any trade, service, or other
contracts or agreements or amend or terminate any existing contracts or
agreements pertaining to the Property without first obtaining the written
consent of Lender which shall not be unreasonably withheld or delayed;
<PAGE>
c. shall not convey or remove any of the Personal Property;
and
d. notwithstanding the foregoing, prior to such termination,
any existing management agreement shall continue in full force and effect,
and the Mortgaged Property shall continue to be managed in the ordinary
course pursuant thereto consistent with Borrower's and manager's past
practices.
10. SURRENDER OF PREMISES: On the Closing Date, Borrower agrees to
quit, surrender and release possession of the Property and any and all
claims in or to the Property unto Lender, and Lender agrees to accept such
surrender. Without limiting the generality of the foregoing, Borrower
hereby acknowledges and agrees that, upon delivery of the deed on the
Closing Date as required pursuant to Paragraph 13 below, it shall not have
any continuing right, title or interest in or to the Property, the
Mortgaged Property, the Personal Property, or the Space Leases, and that
all such rights shall then have vested in Lender, free from any right of
redemption or right of reinstatement in or for the benefit of Borrower.
11. BORROWER'S REPRESENTATIONS AND WARRANTIES: Borrower hereby
covenants, represents and warrants to Lender, and agrees with Lender as
follows:
a. LEASING COMMISSIONS: To the best of Borrower's
knowledge, Borrower has not incurred any liability or obligation for
leasing commissions, finder's fees, or any similar compensation to any
broker, realtor agent or other party or person in connection with the
making of leases or subleases affecting all or any part of the Property
which shall be binding upon and/or enforceable against Lender, except as
set forth on EXHIBIT D.
b. BORROWER'S OBLIGATIONS UNDER SPACE LEASES: To the best
of Borrower's knowledge, except as set forth on EXHIBIT E, Borrower has
performed all obligations for tenant improvements and capital improvements
required of Borrower, either as lessor under any of the leases or subleases
affecting all or any part of the Property. To the best of Borrower's
knowledge, Borrower has neither given nor received any notice of a material
breach of the Reciprocal Easement Agreement.
c. RENT ROLL: To the best of Borrower's knowledge, the Rent
Roll contains a true, correct and complete listing of (i) all Space Leases
affecting all or any portion of the Property; (ii) the square footage of
space occupied under each Space Lease; (iii) the term of each Space Lease;
and (iv) the security deposits pertaining to each respective Space Lease
held or collected by or on behalf of Borrower, the return of which the
landlord under each such Space Lease may be liable, as well as the
aggregate sum of all such security deposits, which sum is Zero Dollars
($0.00).
d. RECORD; FINANCIAL STATEMENTS: Borrower has provided to
Lender a true and correct copy of an operating statement showing in
reasonable detail all income and expenses with respect to the Property from
January 1, 1997, through and including the Closing Date.
<PAGE>
e. COOPERATION: Borrower agrees to fully and completely
cooperate and to cause each of its agents and employees to cooperate with
Lender and Lender's agents, representatives, contractors, and employees in
all reasonable respects with regard to the disclosure of details and
records concerning the leasing and condition of the Property. Such
cooperation shall include, without limitation, furnishing Lender and its
agents, representatives, and employees with all applicable files, records
and original documents (if available), and consulting with Lender and its
agents, representatives, and employees concerning the terms and status of
the Space Leases.
f. TITLE TO PROPERTY: Borrower agrees, acknowledges and
represents that, upon execution of this Agreement and the Closing
Deliveries, Borrower shall have no further right, title or interest in or
to the Property, or any portion thereof.
g. TENANT NOTICES: Borrower shall, within five (5) days of
the Closing Date, execute and deliver a joint notice from Borrower and
Lender to all tenants and subtenants of the Property, in substantially the
form attached hereto as EXHIBIT G, acknowledging the transfer of ownership
of the Property contemplated hereby, and directing all future rental
payments to be made as therein provided, commencing with the rental
payments becoming due after the Closing Date. Borrower agrees that it
shall remit promptly to Lender any and all rental payments received by
Borrower at any time after the Closing Date.
h. LEASES: To the best of Borrower's knowledge, Borrower
has provided Lender with copies of all of the Space Leases, amendments and
other agreements that modify or amend any material term or provision of any
of the Space Leases.
i. EQUITY: As of the date hereof, Borrower does not have
nor does Borrower claim to have any equity in the Property over and above
the Indebtedness.
j. AUTHORIZATION: The execution and delivery of this
Agreement and all other instruments and agreements executed in connection
herewith or relating hereto have been duly authorized by all necessary
general and limited partners of Borrower. This Agreement and all other
documents delivered by Borrower pursuant to this Agreement constitute
legal, valid and binding obligations, enforceable against Borrower in
accordance with their respective terms.
k. NO PREFERENCE: The execution and delivery of this
Agreement, and the consummation of the transaction contemplated hereby, is
not intended as a preferential transfer within the meaning of 11 U.S.C.
Section 547, and is not entered into in anticipation of, or in preparation
for, the filing by any party hereto of any petition for relief pursuant to
11 U.S.C. Section 101, et. seq.
l. VOLUNTARY AGREEMENT: Borrower represents and
acknowledges that in connection with the negotiation of this Agreement and
the other documents contemplated hereby, Borrower has been represented by
its own counsel, who has reviewed this Agreement and the other documents
contemplated hereby, and advised Borrower as to the legal significance and
consequences of entering into the transaction contemplated hereby.
<PAGE>
m. EXISTENCE: Borrower is a duly organized and validly
existing Illinois limited partnership. Borrower has all requisite power
and authority to enter into and consummate the transactions contemplated by
this Agreement.
n. NO THIRD PARTY CONSENT: Except for consents that have
been obtained, no consent of any third party is required in order to enable
Borrower to duly and validly execute, deliver, or perform each and all of
its obligations under this Agreement and any other document, instrument or
agreement contemplated hereby.
o. NO BREACH OR DEFAULT: The execution, delivery and
performance of this Agreement will not result in a breach of or default
under any agreement or other instrument to which Borrower is a party or by
which Borrower is bound or violate any applicable law, regulation,
judgment, or order of, or require approval by, any government, government
instrumentality, or court having jurisdiction over Borrower.
p. RESTATED AS OF CLOSING: All of the foregoing
representations and warranties shall be true, correct and complete and
shall be deemed to have been restated at and as of the Closing.
Reference to the "knowledge" of Borrower or "best of Borrower's
knowledge" shall refer only to the actual knowledge (as opposed to
constructive, deemed or imputed knowledge) of Brian Ellison. The term
"Borrower's knowledge" shall not be construed, by imputation or otherwise,
to refer to the knowledge of any other officer, agent, manager,
representative or employee of Borrower or any affiliate thereof, or to
impose upon Brian Ellison any duty to investigate the mattes to which such
actual knowledge, or the absence thereof, pertains.
In no event shall Borrower's aggregate liability with respect to all
claims for breach of the representations and warranties contained in this
Section 11 exceed $100,000.
12. LENDER'S REPRESENTATIONS AND WARRANTIES: Lender hereby
covenants, represents and warrants to Borrower, and agrees with Borrower as
follows:
a. PROPERTY-RELATED MATTERS: Lender acknowledges that it
has inspected the physical condition of the Property, and is accepting it
in its "as is" condition.
b. EXISTENCE: Lender is a duly organized and validly
existing Connecticut corporation. Lender has all requisite power and
authority to enter into and consummate the transactions contemplated by
this Agreement.
c. NO THIRD PARTY CONSENT: No consent of any third party is
required in order to enable Lender to duly and validly execute, deliver, or
perform each and all of its obligations under this Agreement and any other
document, instrument or agreement contemplated hereby.
d. AUTHORIZATION: This Agreement and all other documents
delivered by Lender pursuant to this Agreement have been duly authorized,
executed and delivered by Lender, and constitute legal, valid and binding
obligations, enforceable against Lender in accordance with their respective
terms.
<PAGE>
e. NO BREACH OR DEFAULT: The execution, delivery and
performance of this Agreement will not result in a breach of or default
under any agreement or other instrument to which Lender is a party or by
which Lender is bound or violate any applicable law, regulation, judgment,
or order of, or require approval by, any government, government
instrumentality, or court having jurisdiction over Lender.
f. RESTATED AS OF CLOSING: All of the foregoing
representations and warranties shall be true, correct and complete and
shall be deemed to have been restated at and as of the Closing.
13. CLOSING DELIVERIES: The following documents shall be
executed, witnessed, and acknowledged, as appropriate, and delivered to
Lender or its designee, and the following actions shall be performed by
Borrower or Lender, as the case may be (collectively the "Closing
Deliveries"), on or before the Closing Date, except as noted otherwise:
a. A Bargain and Sale Deed with Covenant Against Grantor's
Acts conveying title to the Mortgaged Property to Lender or Lender's
designee, in the form attached hereto as EXHIBIT H.
b. An Assignment of Space Leases to Lender or Lender's
designee in the form attached hereto as EXHIBIT I.
c. A Bill of Sale conveying title to the Personal Property
to Lender or Lender's designee, in the form attached hereto as EXHIBIT J.
d. The Accounting, and the update thereof, and copies of all
invoices required by Paragraph 3 above.
e. Payment by Borrower to Lender, by wire transfer of
immediately available funds, a sum equal to the amount of Net Operating
Income confirmed on the Accounting (as updated to the Closing Date).
f. Payment by Lender to Borrower on the Closing Date by wire
transfer of immediately available funds, the sum of ONE HUNDRED THOUSAND
DOLLARS ($100,000.00), PROVIDED, HOWEVER, that all Closing Deliveries to be
performed by Borrower have been performed.
g. Payment by Borrower to Lender, by wire transfer of
immediately available funds, a sum equal to the aggregate security deposits
pertaining to the Space Leases held or collected by or on behalf of
Borrower or Owner.
h. To Lender, all of the original ink-signed Space Leases,
or certified copies of such Space Leases if an original is unavailable,
together with all correspondence, if any, from all of the tenants of the
Space Leases alleging or concerning any allegation of a default under any
of the Space Leases.
i. Joint notices to space tenants signed by Lender and
either Borrower or the Property manager, in the form attached hereto as
EXHIBIT G.
j. A Non-Foreign Affidavit in the form attached hereto as
EXHIBIT K.
<PAGE>
k. All conveyance tax forms required under New Jersey law.
l. Certified copies of (i) Borrower's limited partnership
agreement, (ii) Borrower's limited partnership certificate evidencing its
formation and existence, and (iii) the articles of incorporation of
Borrower's general partner.
m. Evidence of all requisite consents and authorizations
regarding the authority of Borrower to execute and deliver this Agreement
and the Closing Deliveries, and to consummate the transactions contemplated
hereby.
n. All keys necessary to obtain full access to the Property,
and all instruments and information necessary to operate such security
systems as may be on or in the Property.
o. All of the original plans (if available, or copies),
specifications, permits, and surveys with respect to the Mortgaged Property
if in the possession or control of Borrower.
p. An affidavit or indemnity relevant to mechanic's liens,
parties in possession, and such other matters as may be customary in form
and substance satisfactory to Lender's title insurer.
q. All of the original contracts and agreements pertaining
to the ownership, operation, servicing, and maintenance of the Mortgaged
Property to the extent that the same are still in full force and effect,
including without limitation, management contracts, and existing trade and
service contracts.
r. A termination of the existing management agreement.
s. All books and records at the Property held by or for the
account of Borrower; provided, however, that Borrower shall not be required
to deliver copies or originals of any statements or other business records
relating exclusively to internal partnership matters arising solely between
the constituent partners of Borrower.
t. An Assignment Agreement, similar in form and substance to
the Assignment Agreement dated June 6, 1997, between Borrower and Lender,
assigning to Lender all of Borrower's right to any claims Borrower may have
in connection with any problems that have arisen with respect to any of the
roofs of any of the buildings on the Property.
u. A legal opinion executed by Borrower's counsel in
substantially the same form as that attached as EXHIBIT L.
14. ABSOLUTE CONVEYANCE: Borrower acknowledges and agrees that
(a) the conveyance of the Property to Lender according to the terms of this
Agreement is intended to be an absolute conveyance of all of Borrower's
right, title and interest in and to the Property, in fact, as well as form,
and is not intended as a mortgage, trust conveyance, deed of trust or
security instrument of any kind, and (b) the consideration for such
conveyance is as recited herein, and is fair, adequate and reasonable.
15. FURTHER ASSURANCES: Borrower agrees to take such further
action and execute and deliver to Lender such additional documents as
Lender or its title insurer may hereafter reasonably request in order to
fully effect the transactions contemplated by this Agreement.
<PAGE>
16. INTEGRATION: This Agreement fully integrates and supersedes
all prior negotiations and drafts and other oral communications between the
parties. Borrower acknowledges and agrees that the parties intend the
literal words of this Agreement to govern, and for all prior negotiations,
drafts and other extrinsic communications to have no significance or
evidentiary effect.
17. MISCELLANEOUS: This Agreement shall be construed in accordance
with the laws of the State of New Jersey. The headings that have been used
to designate the various paragraphs of this Agreement are solely for ease
of reference and shall not be construed in any event or manner as
interpretative or limiting of this Agreement. This Agreement shall be
binding upon, and shall inure to the benefit of the parties hereto and
their respective heirs, executors, legal representatives, successors and
assigns.
18. OBLIGATIONS OF LENDER TO THIRD PARTIES: Except as expressly
set forth in this Agreement to the contrary, or pursuant to an express
written assumption by Lender, Borrower acknowledges and agrees that the
acceptance by Lender of the Property pursuant to the terms of this
Agreement shall not create any obligations on the part of Lender to third
parties that have claims of any kind whatsoever against Borrower with
respect to the Property or any portion thereof. No person not a party to
this Agreement shall be a "third-party beneficiary" to this Agreement, or
have any rights hereunder.
19. COUNTERPARTS: This Agreement may be executed in any number of
identical counterparts, each of which for all purposes shall be deemed to
be an original, and all of which shall collectively constitute but one
Agreement, fully binding upon, and enforceable against the parties hereto.
20. REMEDIES: If Borrower fails or refuses to consummate the
transfer of the Property pursuant to this Agreement on the Closing Date or
fails to perform the Borrower's other obligations hereunder either prior to
or at the Closing Date for any reason, then Lender, as Lender's sole and
exclusive remedy, shall have the right to terminate this Agreement by
giving written notice thereof to Borrower prior to or at the Closing Date,
and Lender and Borrower shall have no further rights or obligations to each
other under this Agreement.
If Lender fails or refuses to consummate the transfer of the Property
pursuant to this Agreement on the Closing Date or fails to perform any of
Lender's other obligations hereunder either prior to or on the Closing Date
for any reason, then Borrower, as Borrower's sole and exclusive remedy,
shall have the right to terminate this Agreement by giving written notice
thereof to Lender prior to or at the Closing Date, and Lender and Borrower
shall have no further rights or obligations to each other under this
Agreement.
Lender and Borrower hereby acknowledge that, subject to the
provisions of Section 7a., the Loan Documents are and shall remain in full
force and effect until the Closing Date. In the event that this Agreement
is terminated either by Lender or Borrower, both Lender and Borrower shall
retain all of their respective rights and all of their respective remedies
under and pursuant to the Loan Documents.
21. BROKERAGE COMMISSIONS: Each party hereto represents to the
other that it has had no dealings, negotiations, or consultations with any
broker, representative, employee, agent or other intermediary in connection
with this Agreement, or the transaction contemplated by this Agreement.
Borrower and Lender agree that each will indemnify, defend and hold the
other free and harmless from and against the claims of any broker(s),
representative(s), employee(s), agent(s) or other intermediary(ies)
claiming to have represented Borrower or Lender, respectively, or otherwise
to be entitled to compensation in connection with this Agreement or in
connection with the transaction contemplated by this Agreement.
<PAGE>
22. NOTICES: Any notice, report, demand, request, certification or
other instrument or communication which Borrower or Lender may be required
or may desire to give or deliver under or in connection with this Agreement
shall be in writing and shall be deemed to have been properly given or
delivered if addressed to the party intended to receive the same at the
address of such party set forth below, a. when delivered at such address by
hand or by overnight courier or delivery service, b. on the second business
day after the day on which the same shall have been deposited in the United
States Mail as first class registered or certified mail, postage prepaid,
return receipt requested, whether or not the same actually shall have been
received by such party, or c. upon confirmation of actual receipt by the
addressee thereof by facsimile transmission or electronic mail:
If to Lender:
c/o Aetna Inc.
151 Farmington Avenue, RT11
Hartford, Connecticut 06156-9642
Attn: Real Estate Investments
with a copy to:
Hebb & Gitlin
A Professional Corporation
One State Street
Hartford, Connecticut 06103
Attn: R. Jeffrey Smith, Esq.
If to Borrower:
c/o JMB Realty Corporation
900 North Michigan Avenue
12th Floor
Chicago, Illinois 60611-1575
Attn: Mr. Brian Ellison
with a copy to:
Pricher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90067
Attn: Real Estate Notices (EJML)
Any party may change the address to which any such notice, report, demand,
request, certification or other instrument or communication intended to be
received by such party is to be delivered or mailed, by giving written
notice of such change to the other parties, but no such notice of change
shall be effective against any party unless and until such notice of change
shall have been received by such party.
23. SURVIVAL: The representations and warranties of Borrower and
Lender set forth herein shall survive the Closing until June 30, 1998.
24. NON-RECOURSE: Notwithstanding anything to the contrary
contained in this Agreement, the obligations and liabilities of Borrower
and the partners in Borrower hereunder shall be subject to the provisions
contained in Section 9 of the Second Mortgage Modification Agreement, which
provisions are incorporated herein by reference as if fully set forth
herein.
<PAGE>
25. CLOSING COSTS: Lender shall pay any and all documentary
transfer tax, escrow fees, title insurance premiums and recording fees
relating to the transactions contemplated by this Agreement. Borrower
shall be responsible for its own fees, costs and expenses, including its
attorneys' fees.
26. EXECUTION BY JMB: JMB is joining in executing this Agreement
solely for the purpose of incurring the obligations set forth in Section 6
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed to be effective as of the day and year first above written.
AETNA LIFE INSURANCE COMPANY
By___________________________________
Name:
Title:
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP - XVII
By: JMB Realty Corporation Inc.,
its corporate General Partner
By:__________________________
Name:
Title:
JMB REALTY CORPORATION INC.
By:____________________________
Name:
Title:
<PAGE>
EXHIBIT A
ALL that tract or parcel of land situate, lying and being in the Township
of East Brunswick, County of Middlesex and State of New Jersey, more
particularly described as follows:
Beginning at a point in the northerly side line of Lake Avenue, said point
being distant westerly 389.43 feet from the point of curvature of the
northerly side line of Lake Avenue and the southwesterly side line of N.J.
State Highway No. 18, and running: thence
1. South 87 degrees 57 minutes 58 seconds West, 264.61 feet; thence
2. North 05 degrees 47 minutes 02 seconds West, 244.94 feet; thence
3. South 83 degrees 00 minutes 00 seconds West, 345.18 feet; thence
4. North 25 degrees 17 minutes 15 seconds East, 562.08 feet; thence
5. North 82 degrees 41 minutes 25 seconds East, 510.62 feet to a point
in the southwesterly side line of N.J. State Highway No. 18; thence
6. On a curve to the right having a radius of 5669.65, a distance of
74.31 feet; thence
7. Along the same, South 21 degrees 27 minutes 25 seconds East, 186.69
feet to a point; thence
8. South 82 degrees 59 minutes 25 seconds West, 272.97 feet; thence
9. South 07 degrees 00 minutes 35 seconds East, 493.06 feet to a point
in the northerly side line of Lake Avenue, the point and place of
Beginning.
Note: Being formerly known as a portion of Lots 2, 5 & 7 in Block 26.01 on
the Tax Map of the Township of East Brunswick.
Note: Being known and designated as Lot 12 in Block 26.01, Tax Map of the
Township of East Brunswick.
Subject to and together with Reciprocal Easement and Operating Agreement
between TOYS "R" US - N.J., INC., a Delaware corporation and 18 CENTRAL
ASSOCIATES LIMITED PARTNERSHIP, a New Jersey limited partnership, dated
June 9, 1986 and recorded October 21, 1986 in Deed Book 3562, page 445.
Together with the terms and conditions of a certain Easement Agreement
between the Township of East Brunswick and 18 Central Associates Limited
Partnership, dated November 9, 1987 and recorded immediately prior hereto
in the Middlesex County Clerk's Office.
Said premises being more fully described in accordance with a survey
prepared by Edward J. Dragun & Associates (Edward J. Dragun), dated October
26, 1987.
<PAGE>
EXHIBIT B
[Rent Roll]
<PAGE>
EXHIBIT C
[Title Commitment]
<PAGE>
EXHIBIT D
[Leasing Commissions]
<PAGE>
EXHIBIT E
[Unperformed Borrower's Obligations under Space Leases]
<PAGE>
EXHIBIT F
Intentionally Omitted.
<PAGE>
EXHIBIT G
Form of Joint Notice from Borrower and Lender to Tenants
[AETNA LETTERHEAD]
November __ , 1997
VIA _________________________
[Tenant Address]
Re: 18 Central Shopping Plaza, New Brunswick, New Jersey (the
"Property")
Dear Sir or Madam:
We are pleased to announce that Aetna Life Insurance Company
("Aetna") has purchased the Property from Carlyle Real Estate Limited
Partnership - XVII ("Carlyle"), and has assumed Carlyle's interest as
landlord under your lease of space at the Property (the "Lease").
Please note that commencing with December rents all future rental
payments and other amounts due under the terms of the Lease should be made
payable to the order of Aetna Life Insurance Company and delivered to
_____________ at the following address: ___________________________.
Very truly yours,
AETNA LIFE INSURANCE COMPANY
By___________________________________
Name:
Title:
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP - XVII,
an Illinois limited partnership,
By: JMB Realty Corporation Inc.,
a Delaware corporation,
its corporate General Partner
By:___________________________
Name:
Title:
<PAGE>
EXHIBIT H
[Deed]
<PAGE>
EXHIBIT I
[Assignment and Assumption of Space Leases]
<PAGE>
EXHIBIT J
[Bill of Sale]
<PAGE>
EXHIBIT K
NON-FOREIGN AFFIDAVIT AND CERTIFICATION
---------------------------------------
Date: November _____, 1997
Carlyle Real Estate Limited Partnership - XVII (the
"Seller")
900 N. Michigan Avenue, 19th Floor
Chicago, Illinois 60611
Attention: Brian Ellison
Aetna Life Insurance Company (the "Buyer")
151 Farmington Avenue RT11
Hartford, Connecticut 06156-9642
Attention: Real Estate Investments
Real Property
Interest Conveyed: 18 Central Shopping Center,
New Brunswick, New Jersey
Section 1445 of the Internal Revenue Code provides that a buyer of a
U.S. real property interest must withhold tax if the seller is a foreign
person. To inform the Buyer that withholding of tax is not required upon
the disposition of a U. S. real property interest by the Seller, the Seller
hereby certifies the following:
(1) That, on November _____, 1997, the Seller transferred/will
transfer the above-described property to the Buyer.
(2) That the U. S. employer identification number of the Seller is:
______________.
(3) That the Seller is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in
the Internal Revenue Code and Income Tax Regulations).
(4) Seller's office address is Carlyle Real Estate Limited
Partnership - XVII, 900 N. Michigan Avenue, 19th Floor, Chicago, Illinois
60611, Attention: Brian Ellison.
Seller understands that this affidavit and certification may be
disclosed to the Internal Revenue Service by the Buyer and that any false
statement contained herein could be punished by fine, imprisonment, or
both.
<PAGE>
Under penalties of perjury, I declare that I have examined this
affidavit and certification and to the best of my knowledge and belief, it
is true, correct and complete, and I further declare that I have authority
to sign this document on behalf of Seller.
SELLER:
CARLYLE REAL ESTATE LIMITED
PARTNERSHIP - XVII
By:
JMB Realty Corporation Inc.,
its corporate General Partner
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT L
[Form of Legal Opinion]
