7
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)July 17, 1998
DEAN WITTER REALTY YIELD PLUS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 0-18148 13-
3426531
(State or other jurisdiction Commission (I.R.S. Employer
of incorporation) File Number) Identification
No.)
Two World Trade Center, New York, New York 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code(212) 392-1054
(Former name or former address, if changed since
last report)
Item 2. Acquisition or Disposition of Assets
Pursuant to a Purchase and Sale Agreement dated July 17,
1998 (the "Agreement"), DW Lakeshore Associates, L.P.
("Associates"), which is owned 99% by the Partnership (as a
limited partner) and 1% by a corporation owned by the
Partnership (as a general partner), sold the land and
building which comprise the 401 East Ontario Street property
(the "Property") on the date of the Agreement to
Streeterville Development Associates, LLC ("SDA"), for a
negotiated sale price of $74.5 million. SDA is an
unaffiliated party; however, Draper and Kramer Inc., which
owns 37.5% of SDA, was the manager of the Property while it
was owned by Associates. The Partnership used a portion of
the sales proceeds to repay the mortgage note payable (which
was secured by the Property) of approximately $10.6 million.
As a result of the above transactions, on July 17, 1998, the
Partnership received sales proceeds, net of the mortgage
note repayment, closing costs and other deductions, of
approximately $62.8 million.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
(1) Pro Forma Consolidated Balance Sheet as of March
31, 1998.
(2) Pro Forma Consolidated Income Statements for the year
ended December 31, 1997 and for the three months ended March
31, 1998.
(c) Exhibit
(1) Purchase and Sale Agreement, dated July 17, 1998,
with respect to the sale of the 401 East Ontario
Street property.
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 hereunto duly
authorized.
DEAN WITTER REALTY YIELD PLUS,
L.P.
By: Dean Witter Realty Yield
Plus, Inc.
Managing General Partner
Date: July 31, 1998 By: /s/Charles M.
Charrow
Charles M. Charrow
Controller
Dean Witter Realty Yield Plus, L.P.
Pro Forma Consolidated Balance Sheet
As of March 31, 1998
The following unaudited pro forma consolidated balance sheet
has been presented as if both the sale of the 401 East
Ontario Street property and the repayment of the mortgage
note payable occurred on March 31, 1998. The pro forma
adjustments reflect a) the net cash proceeds from the sale,
b) the elimination of the net carrying value of the property
from real estate, c) the repayment of the mortgage note
payable and d) the elimination of other assets and
liabilities relating to the property sold and the mortgage
note payable.
<TABLE>
<CAPTION> Pro Forma
Historical
Adjustments Pro Forma
<S> <C> <C> <C>
ASSETS
Real estate $ 44,219,474
$(33,464,073) $ 10,755,401
Real estate held for sale 37,032,730 -
37,032,730
Investment in unconsolidated
partnership 18,899,908 -
18,899,908
Cash and cash equivalents 7,259,088
61,590,928 68,850,016
Deferred expenses, net 983,209
(28,536) 954,673
Other assets 1,258,917
(638,919) 619,998
$109,653,326 $
27,459,400 $137,112,726
LIABILITIES AND PARTNERS' CAPITAL
Mortgage note payable $ 10,566,268
$(10,566,268) $ -
Accounts payable and accrued liabilities
2,778,937 (1,810,540)
968,397
Minority interest 19,229,110 -
19,229,110
32,574,315
(12,376,808) 20,197,507
Partners' capital 77,079,011
39,836,208 116,915,219
$109,653,326 $
27,459,400 $137,112,726
</TABLE>
Dean Witter Realty Yield Plus, L.P.
Pro Forma Consolidated Income Statement
For the Year ended December 31, 1997
The following unaudited pro forma consolidated income
statement has been presented as if the 401 East Ontario
Street property was sold as of the beginning of 1997. The
pro forma adjustments reflect the elimination of rental and
other revenues, property operating expenses and depreciation
relating to the property sold. The pro forma adjustments do
not reflect the Partnership's nonrecurring gain on the sale
of the property.
<TABLE>
<CAPTION>
Pro Forma
Historical
Adjustments Pro Forma
<S> <C> <C>
<C>
Revenues:
Rental $17,559,416
$(6,761,192) $10,798,224
Gain on sale of real estate 5,242,166 -
5,242,166
Interest on participating mortgage loan
697,153 - 697,153
Equity in earnings of unconsolidated
partnership 264,862 -
264,862
Interest on short-term investments
and other 943,222
(208,694) 734,528
24,706,819
(6,969,886) 17,736,933
Expenses:
Property operating 11,241,228
(6,806,265) 4,434,963
Depreciation and amortization 4,058,531
(862,434) 3,196,097
Interest 1,476,954 -
1,476,954
General and administrative 673,852 -
673,852
17,450,565
(7,668,699) 9,781,866
Income before minority interest
and extraordinary item 7,256,254
698,813 7,955,067
Minority interest 933,828 -
933,828
Income before extraordinary item 6,322,426
698,813 7,021,239
Extraordinary item 548,395 -
548,395
Net income $ 6,870,821 $
698,813 $ 7,569,634
Per Unit of limited partnership
interest:
Income before extraordinary item $ .69 $
.07 $ .76
Extraordinary item .06 -
.06
Net income $ .75 $
.07 $ .82
</TABLE>
Dean Witter Realty Yield Plus, L.P.
Pro Forma Consolidated Income Statement
For the Three Months ended March 31, 1998
The following unaudited pro forma consolidated income
statement has been presented as if both the sale of the 401
East Ontario Street property and the repayment of the
mortgage note payable occurred at the beginning of 1998.
The pro forma adjustments reflect the elimination of rental
and other revenues, property operating expenses, interest
and depreciation relating to the property sold and mortgage
note payable. The pro forma adjustments do not reflect the
Partnership's nonrecurring gain on the sale of the property.
<TABLE>
<CAPTION> Pro Forma
Historical
Adjustments Pro Forma
<S> <C> <C>
<C>
Revenues:
Rental $4,200,008
$(2,014,718) $2,185,290
Equity in earnings of unconsolidated
partnership 48,713 -
48,713
Interest on short-term investments
and other 210,730
(94,755) 115,975
4,459,451
(2,109,473) 2,349,978
Expenses:
Property operating 387,525
378,859 766,384
Depreciation and amortization 377,656
(215,613) 162,043
Interest 186,678
(186,678) -
General and administrative 178,760 -
178,760
1,130,619
(23,432) 1,107,187
Income before minority interest
and extraordinary item 3,328,832
(2,086,041) 1,242,791
Minority interest 530,592 -
530,592
Net income $2,798,240
$(2,086,041) $ 712,199
Net income per Unit of limited
partnership interest $ 0.28 $
(0.21) $ 0.07
</TABLE>
Exhibit Index for Dean Witter Realty Yield Plus, L.P.
Exhibit
No. Description
(10) Purchase and Sale Agreement, dated July 17, 1998
with respect to the sale of the 401 East Ontario
Street property.
E-1
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is
made as of this 17th day of July, 1998 by and between DW
LAKESHORE ASSOCIATES, L.P., a Delaware limited partnership,
having an address c/o Dean Witter Realty Inc., Two World
Trade Center, 64th Floor, New York, New York, 10048
(hereinafter referred to as "Seller"), and STREETERVILLE
DEVELOPMENT ASSOCIATES, LLC, an Illinois limited liability
company, having an address c/o Draper and Kramer,
Incorporated, 33 West Monroe Street, Chicago, Illinois 60603
("Purchaser").
W I T N E S S E T H:
ARTICLE I
PURCHASE AND SALE
Section 1.1 Agreement of Purchase and Sale. Subject
to the terms and conditions hereinafter set forth, Seller
agrees to sell and convey to Purchaser, and Purchaser agrees
to purchase from Seller, any and all of Seller's right,
title and interest in and to the following:
(a) the building (the "Building") having an address of
401 East Ontario Street, Chicago, Illinois 60611 and the
land on which the Building is located and which is more
particularly described in Exhibit A annexed hereto and made
a part hereof (the "Land");
(b) any and all fixtures affixed to the Building,
excluding any fixtures owned by any tenants, licensees or
other occupants of all or any portion of the Building (the
property included in this paragraph (b) of Section 1.1 being
herein referred to collectively as the "Fixtures");
(c) any and all tangible personal property described
on Exhibit A-1 attached hereto; expressly excluding,
however:(i) any personal property owned by any tenants,
licensees or other occupants of all of any portion of the
Building; and (ii) any cash (the property included in this
paragraph (c) of Section 1.1 being herein referred to
collectively as the "Personal Property");
(d) any and all leases, licenses and occupancy
agreements covering all or any portion of the Building to
the extent they are in effect on the date of the Closing (as
such term is defined in Section 4.1 hereof) (the property
included in this paragraph (d) of Section 1.1 being herein
referred to collectively as the "Leases"), together with all
rents and other sums due under any such Leases (the "Rents")
and any and all security deposits delivered by tenants to,
or for the benefit of, Seller in connection with any such
Leases (the "Security Deposits"); and
(e) any and all (i) assignable contracts and
agreements (collectively, the "Operating Agreements") listed
and described on Exhibit B attached hereto and made a part
hereof ("Operating Agreements Exhibit"), relating to the
upkeep, repair, maintenance or operation of the Building,
the Fixtures or Personal Property; (ii) assignable existing
warranties and guaranties (express or implied) issued to,
and held in the name of, Seller in connection with the
Building, the Fixtures or the Personal Property; and (iii)
assignable existing permits, licenses, approvals and
authorizations issued by any governmental authority in favor
of Seller in connection with the Property (the property
included in this paragraph (e) of Section 1.1 being
sometimes herein referred to collectively as the
"Intangibles").
Section 1.2 Certain Definitions.
(i) "Contract Termination Surviving
Provisions". Shall mean, collectively, any and all
provisions contained in this Agreement which expressly
survive the Closing including, without limitation, Sections
4.4, 4.5, 5.3, 5.4, Article VI, 7.1, Article VIII, 9.2, 9.3,
9.4, 9.8, 9.11, 9.15, 9.19, 9.20, 9.21 and 9.22.
(ii) "Code". Shall mean the Internal Revenue
Code of 1986, as amended to the date hereof and from time to
time hereafter, any successor statute and any regulations or
guidance promulgated thereunder.
(iii) "Data Room Information". Shall mean any
and all matters or other information disclosed in, or
comprising a part of, the documents, agreements and
instruments made available to Purchaser and more
particularly described on Exhibit C attached hereto.
(iv) "ERISA". Shall mean the Employee
Retirement Income Security Act of 1974, as amended to the
date hereof and from time to time hereafter, any successor
statute and any applicable regulations or guidance
promulgated thereunder.
(v) "Survey". Shall mean that certain Survey
prepared by Chicago Guaranty Survey Company dated March 2,
1998 and revised July 9, 1998 and known as Order #9802003.
(vi) "Title Commitment". Shall mean that
certain title commitment issued by the Title Company dated
June 25, 1998 and identified as order # 98-01778 CHI-23715
(REV 2).
(vii) "Plan". Shall mean a "plan" as that
term is defined in Section 3(3) of ERISA or Section 4975 of
the Code.
(viii) "Property". Shall mean, collectively, the
Real Property, the Personal Property, the Fixtures, the
Leases and the Intangibles.
(ix) "Real Property". Shall mean, collectively,
the Building and the Land.
(x) "Title Company". Shall mean Lawyers Title
Insurance Corporation.
(xi) "Tutto Pronto Lease". Shall mean that
certain Lease dated December 8, 1992 by and between Seller,
as successor in interest to Lakeshore Ontario Associates
Limited Partnership, as landlord, and Kenilworth-Winnetka
Grocery and Market, Inc, as tenant, as the same may have
been amended or modified from time to time.
(xii) "Labor Contracts". Shall mean (i) that
certain Labor Agreement by and between Apartment Building
Owners and Managers Association of Illinois and Service
Employees Local No. 1 of the Service Employees International
Union AFL-CIO and (ii) that certain Agreement by and between
the Apartment Building Owners and Managers Association of
Illinois and the Elevator Operators and Security Division of
Local #25 Service Employees International Union AFL-CIO.
Section 1.3 Purchase Price. Seller is to sell, and
Purchaser is to purchase, the Property for the sum of
Seventy-Four Million Five Hundred Thousand and No/100
Dollars ($74,500,000.00) (the "Purchase Price").
Section 1.4 Payment of Purchase Price. The Purchase
Price, as increased or decreased by prorations and
adjustments as herein provided, shall be payable in full at
Closing in cash by wire transfer of immediately available
funds to a bank account designated by Seller in writing to
Purchaser prior to the Closing. Notwithstanding the
foregoing, Seller may use any portion of any payments due to
Seller under this Agreement to satisfy any lien or
encumbrance against the Real Property or for such other
purpose as Seller may determine. In order to facilitate the
satisfaction of any such liens or encumbrances and such
other purposes, Purchaser shall, on the Closing Date (as
hereinafter defined), and on behalf of Seller make separate
payments of any amounts due to Seller to such parties as may
be requested by Seller. Such separate payments shall, at
the election of Seller, be made either via wire transfer of
immediately available funds or by unendorsed certified
check(s) or bank check(s) drawn directly to the order of the
requested payee(s) and drawn on a bank satisfactory to
Seller. Any payment made by wire transfer shall not be
deemed to have been made until confirmed as received by
Seller's bank.
ARTICLE II
CONVEYANCE OF TITLE
Section 2.1 Conveyance of Title. At Closing, Seller
shall convey and transfer to Purchaser, and Purchaser shall
accept, fee simple title to the Real Property by execution
and delivery of the Deed (as hereinafter defined), subject
to the following matters, which are hereinafter referred to
collectively as the "Permitted Exceptions" and,
individually, as a "Permitted Exception":
(a) those matters subject to which Purchaser has
elected to accept the conveyance of the Property;
(b) local, state and federal laws, ordinances or
governmental regulations including but not limited to,
building and zoning laws, ordinances and regulations now or
hereafter in effect relating to the Property;
(c) the Leases, any subleases, any memoranda thereof
and any non-disturbance agreements with tenants, subtenants,
licensees or other occupants of the Building whether or not
recorded against the Real Property;
(d) the Operating Agreements;
(e) violations of laws, regulations, ordinances,
orders or requirements, if any, noted in or issued prior or
subsequent to the Closing Date by any governmental or
municipal department or authority having jurisdiction over
the Real Property and any conditions constituting such
violations, although not so noted or issued;
(f) any liens, exceptions, objections or other matters
which do not materially and adversely affect the use and
operation of the Building as the same is currently being
used and operated;
(g) any liens, exceptions, objections or other matters
which are caused or created by or on behalf of Purchaser or
any of Purchaser's agents, employees or contractors;
(h) all mechanics', materialmen's and other similar
liens, levies and charges against the Property, which is the
obligation of any of the tenants, subtenants, licensees or
occupants of the Property or a portion thereof to discharge,
whether under its respective Lease, sublease, or by law or
otherwise; and
(i) all other matters and exceptions noted on Exhibit
D annexed hereto and made a part hereof (including, without
limitation, all matters and exceptions listed or described
in the Survey and the mark- up of the Title Commitment).
ARTICLE III
REVIEW OF PROPERTY
Section 3.1 Environmental and Engineering Reports.
PURCHASER ACKNOWLEDGES THAT (1) PURCHASER HAS RECEIVED
COPIES OF THE ENVIRONMENTAL REPORTS AND ENGINEERING REPORTS
(COLLECTIVELY, "PHYSICAL REPORTS") LISTED ON EXHIBIT E
ATTACHED HERETO, (2) ANY PHYSICAL REPORTS DELIVERED BY
SELLER OR ITS AGENTS OR CONSULTANTS TO PURCHASER ARE BEING
MADE AVAILABLE SOLELY AS AN ACCOMMODATION TO PURCHASER AND
MAY NOT BE RELIED UPON BY PURCHASER IN CONNECTION WITH THE
PURCHASE OF THE PROPERTY, AND (3) SELLER MAKES NO
REPRESENTATION OR WARRANTY THAT IT HAS PROVIDED TO PURCHASER
ALL OF THE PHYSICAL REPORTS THAT MAY HAVE BEEN PREPARED WITH
RESPECT TO THE PROPERTY. PURCHASER AGREES THAT SELLER SHALL
HAVE NO LIABILITY OR OBLIGATION WHATSOEVER FOR ANY
INACCURACY IN OR OMISSION FROM ANY PHYSICAL REPORT.
PURCHASER HAS CONDUCTED ITS OWN INVESTIGATION OF THE
ENVIRONMENTAL CONDITION AND PHYSICAL CONDITION OF THE
PROPERTY TO THE EXTENT PURCHASER DEEMS SUCH AN INVESTIGATION
TO BE NECESSARY OR APPROPRIATE.
ARTICLE IV
CLOSING
Section 4.1 Time and Place. The consummation of the
transaction contemplated hereby (the "Closing") shall be
held at the offices of Sidley & Austin located at One First
National Plaza, Chicago, Illinois 60603 on July 17, 1998
("Scheduled Closing Date"). At the Closing, Seller and
Purchaser shall perform their respective obligations set
forth herein to be performed at Closing including, without
limitation, the obligations set forth in, respectively,
Section 4.2 and Section 4.3 hereof, the performance of which
obligations shall be concurrent conditions; provided that
the Deed shall not be recorded until Seller receives
confirmation that Seller has received the full amount of the
Purchase Price, adjusted by prorations and credits as
specifically set forth herein. The Closing shall be
conducted through an escrow with the Title Company acting as
escrowee and effectuated through a so-called "New York Style
Closing" with the concurrent delivery of the documents,
funds, instruments and other items required pursuant to this
Agreement. TIME IS OF THE ESSENCE as to the performance of
the obligations of Purchaser under this Agreement by the
Scheduled Closing Date. Purchaser agrees that it shall not
be entitled to any adjournment of the Closing. As used
herein, the term "Closing Date" shall mean the actual date
of Closing under this Agreement.
Section 4.2 Seller's Obligations at Closing. At
Closing, Seller shall:
(a) deliver to Purchaser a duly executed special
warranty deed (the "Deed") in the form attached hereto and
made a part hereof as Exhibit F, conveying fee simple title
to the Real Property and the Fixtures, subject only to the
Permitted Exceptions. Subject to the terms of this
Agreement, at Seller's option, and for convenience, Seller
may omit from the Deed the recital of any or all of the
"subject to" clauses concerning the Permitted Exceptions,
but the same shall nevertheless be deemed to be included as
part of the Deed. The terms of the immediately preceding
sentence shall survive the Closing;
(b) deliver to Purchaser a duly executed bill of sale
(the "Bill of Sale") conveying the Personal Property without
warranty of title or use and without warranty, express or
implied, as to merchantability and fitness for any purpose
and in the form attached hereto and made a part hereof as
Exhibit G;
(c) assign to Purchaser, and Purchaser shall assume,
the landlord/lessor interest in and to the Leases, Rents and
Security Deposits, and any and all obligations to pay
leasing commissions and finder's fees with respect to the
Leases and amendments, renewals and expansions thereof, to
the extent provided in Section 4.4(b) hereof, by a duly
executed assignment and assumption agreement (the
"Assignment and Assumption of Leases") in the form attached
hereto and made a part hereof as Exhibit H;
(d) to the extent assignable, assign to Purchaser, and
Purchaser shall assume, Seller's interest in the Operating
Agreements and the other Intangibles by a duly executed
assignment and assumption agreement (the "Assignment and
Assumption of Contracts") in the form attached hereto and
made a part hereof as Exhibit I;
(e) deliver to Purchaser a notice executed by, or on
behalf of, Seller (the "Tenant Notice") in the form attached
hereto and made a part hereof as Exhibit J, which Purchaser
shall send to each tenant under each of the Leases promptly
after the Closing, informing such tenant of the sale of the
Property and of the assignment to and assumption by
Purchaser of Seller's interest in, and obligations under,
the Leases (including, if applicable, any Security
Deposits), and directing that all Rent and other sums
payable after the Closing under each such Lease be paid as
set forth in the notice;
(f) deliver to Purchaser such evidence as the Title
Company may reasonably require as to the authority of the
person or persons executing documents on behalf of Seller
hereunder;
(g) join with Purchaser in the execution of an "ALTA
Statement" or such other documentation as the Title Company
may reasonably require to omit from the Owner's Title Policy
(as hereinafter defined) mechanic's liens exceptions and to
limit parties in possession to tenants under the Leases in
their capacity as tenants thereunder;
(h) deliver to the Title Company a "Gap Affidavit" or
such other documentation as the Title Company may reasonably
require in order for the Title Company to issue the Owner's
Title Policy in connection with a New York Style Closing;
(i) deliver to Purchaser a certificate in the form
attached hereto and made a part hereof as Exhibit K duly
executed by Seller stating that Seller is not a "foreign
person" as defined in the Federal Foreign Investment in Real
Property Tax Act of 1980;
(j) deliver an Owner's Policy of Title Insurance Form
B issued by the Title Company in the amount of the Purchase
Price in the form attached hereto and made a part hereof as
Exhibit L ("Owner's Title Policy"), which Owner's Title
Policy shall:(1) be subject to the Permitted Exceptions (and
any other exceptions approved or waived by Purchaser or
cured by Seller as provided herein), and (2) include
extended coverage and the Zoning 3.1 Endorsement, but
exclude any other endorsements (it being understood and
agreed that, in the event Purchaser desires such other
endorsements, Purchaser shall be responsible for obtaining
the same at Purchaser's sole cost and expense);
(k) deliver to Purchaser the original Leases and the
Operating Agreements (to the extent originals are available
and, if not, certified copies thereof); provided, that
delivery of such Leases and Operating Agreements need not be
formally made by Seller to Purchaser at Closing, but rather
shall be deemed to have been made if such Leases and
Operating Agreements are kept at a location within the
Building to which Purchaser has access upon the occurrence
of the Closing. For a period of five (5) years after the
Closing, Purchaser shall allow Seller and its agents and
representatives access without charge to all files, records
and documents delivered to Purchaser at the Closing, upon
reasonable advance notice and at all reasonable times, to
examine and make copies at Seller's expense of any and all
such files, records and documents, which right shall survive
the Closing;
(l) deliver any applicable transfer tax forms and/or
any replacement form required by law pertaining to such
taxes, which forms shall be duly executed by Seller
(collectively, the "Real Estate Tax Returns");
(m) deliver to Purchaser possession and occupancy of
the Property, subject to the Leases and any other Permitted
Exceptions;
(n) deliver a Disclosure Document (as defined herein)
in the form required under the Transfer Act (as hereinafter
defined), if and to the extent that the same is required
under the Transfer Act;
(o) deliver to Purchaser such evidence as Purchaser
may reasonably require as to the authority of the person or
persons executing documents on behalf of Seller; and
(p) deliver such additional documents as shall be
reasonably required to consummate the transaction
contemplated by this Agreement.
Section 4.3 Purchasers Obligations at Closing. At
Closing, Purchaser shall:
(a) pay to Seller the full amount of the Purchase
Price, as increased or decreased by prorations and
adjustments as herein provided, in the manner set forth in
Section 1.4 hereof;
(b) join Seller in the execution of the Assignment and
Assumption of Leases and the Assignment and Assumption of
Contracts;
(c) deliver to Seller such evidence as the Title
Company may reasonably require as to the authority of the
person or persons executing documents on behalf of
Purchaser hereunder;
(d) deliver to Seller such evidence as Seller may
reasonably require as to the authority of the person or
persons executing documents on behalf of Purchaser;
(e) deliver such additional documents as shall be
reasonably required to consummate the transaction
contemplated by this Agreement;
(f) deliver the Real Estate Tax Returns duly executed
and sworn to by Purchaser;
(g) Purchaser shall pay all recording and other fees
in connection with the recording of the Deed (and other
documents to be recorded as part of the transaction
contemplated herein) and other amounts required to be paid
by Purchaser hereunder; and
(h) join with Seller in the execution of an "ALTA
Statement" or such other documentation as the Title Company
may reasonably require to omit from the Owner's Title Policy
mechanic's liens exceptions and to limit parties in
possession to tenants under the Leases;
Section 4.4 Credits and Prorations.
(a) All apartment, garage, rental and commercial
rental income and customary expenses of the Property shall
be apportioned as of 12:01 a.m., on the day of Closing, as
if Purchaser were vested with title to the Property during
the entire day upon which Closing occurs. Such prorated
items shall include without limitation the following:
(i) all apartment, garage, rental and
commercial rental income as and when collected.
Notwithstanding the foregoing, the parties hereto
acknowledge that the non-rental income and other income
described on Schedule 4.4(a)(i) shall not be prorated;
(ii) all taxes and assessments (including
personal property taxes on the Personal Property) levied
against the Property, provided, that real estate taxes
allocable to the Real Property shall be prorated as set
forth in subsection 4.4(b) below;
(iii) salaries, wages, vacation pay and other
fringe benefits (including, without limitation, social
security, unemployment compensation, employee health, life
and disability insurance, sick pay and welfare and pension
fund contribution, payments and deposits, if any) of the
employees with respect to the Building in connection with
the management, operation or maintenance of the Building;
(iv) any charges or fees for transferable
licenses and permits for the Building;
(v) charges payable under the Operating
Agreements on the basis of the period covered by such
payments;
(vi) utility charges for which Seller is liable,
if any, such charges to be apportioned at Closing on the
basis of the most recent meter reading occurring prior to
Closing (dated not more than fifteen (15) days prior to
Closing) or, if unmetered, on the basis of a current bill
for each such utility;
(vii) interest allowable by law on tenant
Security Deposits, if any; and
(viii) any other operating expenses or other items
pertaining to the Property which are customarily prorated
between a purchaser and a seller in the county in which the
Property is located.
If, as of the Closing Date, the Real Property shall be or
shall have been affected by an assessment or assessments,
whether imposed by a municipal or governmental authority or
a special assessment(s), which are or may become payable in
installments of which the first installment is then a charge
or lien, or has been paid, then the installment for the
period in which the Closing Date occurs shall be apportioned
between Seller and Purchaser as of the Closing Date and
Purchaser shall be responsible for all subsequent
installments.
(b) Notwithstanding anything contained in Section
4.4(a) hereof:
(i) At Closing,
(A) Seller shall, at Seller's option,
either deliver to Purchaser any Security Deposits delivered
by tenants to, or for the benefit of, Seller pursuant to the
Leases or credit to the account of Purchaser the amount of
such Security Deposits (to the extent such Security Deposits
have not been applied against delinquent Rents or otherwise
as provided in the Leases); and
(B) Purchaser shall credit to the account
of Seller all refundable cash or other deposits posted with
utility companies serving the Property, or, at Sellers
option, Seller shall be entitled to receive and retain such
refundable cash and deposits;
(ii) At Closing,
(A) With respect to the second installment
of 1997 real estate taxes not yet due and payable allocable
to the Real Property ("1997 Real Estate Taxes"), Seller
shall provide a credit to Purchaser in an amount equal to
$950,728, which amount is the difference of (1) the product
of $7,841,843 (the "1997 Assessment") allocable to the Real
Property multiplied by 20.34% (the "1996 Equalized Tax
Rate") (which product is hereinafter referred to as the
"1997 Estimated Real Estate Taxes"), minus (2) the amount of
the first (1st) installment of the 1997 Real Estate Taxes.
To the extent that the actual amount due and payable for the
1997 Real Estate Taxes differs from the 1997 Estimated Real
Estate Taxes"), the parties shall make all necessary
adjustments by appropriate payments between themselves
within thirty (30) days after the actual amount is
determined following the Closing, subject to the provisions
of Section 4.4(d) hereof;
(B) With respect to the 1998 real estate
taxes allocable to the Real Property ("1998 Real Estate
Taxes"), Seller shall provide a credit to Purchaser in an
amount equal to $891,011, which amount is equal to one
hundred three and one-half percent (103.5%) of the (a) the
1997 Estimated Real Estate Taxes, multiplied by (b) a
fraction, the numerator of which is one hundred ninety-seven
(197) and the denominator of which is three hundred sixty-
five (365). With respect to the credit for the 1998 Real
Estate Taxes, in the event that the 1996 Equalized Tax Rate
differs from the 1997 equalized tax rate allocable to the
Real Property, the parties shall reprorate the credit
provided to Purchaser for the 1998 Real Estate Taxes by
substituting the 1997 equalized tax rate for the 1996
equalized rate and applying the formula above and shall make
all necessary adjustments by appropriate payments between
themselves within thirty (30) days after the actual amount
is determined following the Closing, subject to the
provisions of Section 4.4(d) hereof. Notwithstanding the
foregoing, the credit provided to Purchaser by Seller at
Closing for the 1998 Real Estate Taxes allocable to the Real
Property and the credit, if any, provided in connection with
the reproration of the 1998 Real Estate Taxes allocable to
the Real Property shall be final and shall not be subject to
further reproration, reallocation or readjustment of any
kind
(C) Notwithstanding the foregoing,
Purchaser shall not be entitled to receive a credit for
taxes or assessments which are payable by any tenant,
licensee or other occupant of the Building under the terms
of their respective Leases;
(iii) Charges referred to in Section 4.4(a)
hereof which are payable by any tenant, licensee or other
occupant of the Building to a third party shall not be
apportioned hereunder, and Purchaser shall accept title
subject to any of such charges unpaid and Purchaser shall
look solely to the tenant, licensee or other occupant of the
Building responsible therefor for the payment of the same.
If Seller shall have paid any of such charges on behalf of
any tenant, licensee or other occupant of the Building, and
shall not have been reimbursed therefor by the time of
Closing, Purchaser shall credit to Seller an amount equal to
all such charges so paid by Seller;
(iv) As to utility charges referred to in
Section 4.4(a)(vi) hereof, Seller may on notice to Purchaser
elect to pay one or more of all of said items accrued to the
date hereinabove fixed for apportionment directly to the
person or entity entitled thereto, and to the extent Seller
so elects, such item shall not be apportioned hereunder, and
Seller's obligation to pay such item directly in such case
shall survive the Closing;
(v) Purchaser shall be responsible for the
payment of all Tenant Inducement Costs (as hereinafter
defined), attorneys' fees and leasing commissions which
become due and payable after the Closing Date as a result of
the Leases and any renewals, amendments or expansions of
existing Leases (whether or not entered into pursuant to an
option contained in the Lease), entered into prior to or
after the date of Closing. If, as of the date of Closing,
Seller shall have paid for Tenant Inducement Costs or
leasing commissions for which Purchaser is responsible
pursuant to the foregoing provisions, Purchaser shall
reimburse Seller therefor at Closing. For purposes hereof,
the term "Tenant Inducement Costs" shall mean any payments
or allowances required under any Lease to be paid by the
landlord thereunder to or for the benefit of the tenant
thereunder which is in the nature of a tenant inducement,
including specifically, without limitation, tenant
improvement costs, lease buyout costs, and moving, design
and, refurbishment allowances. The term "Tenant Inducement
Costs" shall not include loss of income resulting from any
free rental period, it being agreed that Seller shall bear
the loss resulting from any free rental period until the
date of Closing and that Purchaser shall bear such loss from
and after the date of Closing.
(vi) Unpaid and delinquent Rent collected by
Seller and Purchaser after the date of Closing shall be
delivered as follows: (a) if Seller collects any unpaid or
delinquent Rent for the Property, Seller shall, within
thirty (30) days after the receipt thereof, deliver to
Purchaser any such Rent which Purchaser is entitled to
hereunder relating to the date of Closing and any period
thereafter, and (b) if Purchaser collects any unpaid or
delinquent Rent from the Property, Purchaser shall, within
thirty (30) days after the receipt thereof, deliver to
Seller any such Rent which Seller is entitled to hereunder
relating to the period prior to the date of Closing. Seller
and Purchaser agree that all Rent received by Seller or
Purchaser after the date of Closing shall be applied in the
following order: (i) first, to Rent due and payable in the
month in which such Rent payment is made, (ii) second, to
Rent due and payable in the month in which the Closing
occurred, (iii) third, to Rent due and payable in all months
prior to the month in which the Closing occurred, and (iv)
finally, to Rent due and payable in all months after the
month in which the Closing occurred. Seller shall have the
right from time to time following the Closing, on reasonable
prior notice to Purchaser, to review Purchaser's rental and
lease records with respect to the Building to insure
compliance by Purchaser of Purchaser's obligation to account
to Seller for Rents collected by Purchaser and required to
be paid to Seller hereunder. Purchaser will make a good
faith effort after Closing to collect all Rents in the usual
course of Purchaser's operation of the Property, but
Purchaser will not be obligated to institute any lawsuit or
other collection procedures to collect delinquent Rents.
Seller may attempt to collect any delinquent Rents owed
Seller and may institute any lawsuit or collection
procedures (other than eviction proceedings). In the event
that there shall be any Rents or other charges under any
Leases which, although relating to a period prior to
Closing, do not become due and payable until after Closing
or are paid prior to Closing but are subject to adjustment
after Closing (such as year end operating expense and tax
reimbursements and the like), then any Rents or charges of
such type received by Purchaser or its representatives or
Seller or its representatives subsequent to Closing shall,
to the extent applicable to a period prior to, or extending
through, the Closing, be prorated between Seller and
Purchaser as of Closing and Seller's portion thereof shall
be remitted promptly to Seller by Purchaser.
(c) (i) Pre-1998 Tax Protests. If there shall be any
tax certiorari proceedings or tax protest proceeding with
respect to taxes assessed with respect to any calendar year
prior to 1998 allocable to the Real Property ("Pre-1998
Taxes"), Seller may continue the prosecution of such appeals
and take related action which Seller deems appropriate in
connection therewith. With respect to Pre-1998 Taxes,
Purchaser shall have the right, at its sole cost and
expense, to be present at any hearings in connection with
such proceedings, and Purchaser shall cooperate with Seller
in connection with such proceedings and appeals and
collection of a refund of real property taxes paid. With
respect to Pre-1998 Taxes, Seller owns and holds all right,
title and interest in and to such tax assessment appeals and
refunds, and all amounts payable in connection therewith
shall be paid directly to Seller by the applicable
authorities. With respect to Pre-1998 Taxes, if such refund
or any part thereof is received by Purchaser, the Purchaser
shall promptly pay such amount to Seller. Any refund
received by Seller with respect to Pre-1998 Taxes shall be
distributed by Seller as follows: first to reimburse Seller
for all costs incurred in connection with the appeal or
proceeding; second, with respect to refunds payable to
tenants, licensees or other occupants of the Building
pursuant to the Leases, to such tenants, licensees or other
occupants in accordance with the terms of their respective
Leases; and third, to Seller. Seller shall make reasonable
efforts to keep Purchaser apprised of the status of any tax
certiorari or protest proceeding relating to Pre-1998 Taxes.
(ii) 1998 Taxes and Future Tax Protests.
Purchaser shall own and hold all right, title and interest
in and to, and shall control, all tax proceedings for the
calendar year 1998 taxes assessed against the Real Property
("1998 Taxes") and taxes assessed against the Real Property
with respect to calendar years after 1998 ("Future Taxes").
Purchaser will prosecute such appeals and proceedings and
take related action which is consistent with that of a
prudent owner of a building similar to the Building and
Seller shall have the right, at its sole cost and expense,
to be present at any hearings in connection with said
appeals and proceedings. With respect to 1998 Taxes, Seller
shall reasonably cooperate with Purchaser in connection with
such proceedings and appeals, and all amounts payable in
connection therewith shall be paid directly to Purchaser.
Any refund received by Purchaser with respect to 1998 Taxes
shall be distributed as follows: first to reimburse
Purchaser for all costs incurred in connection with the
appeal or proceeding in connection with which such refund
was received; second, with respect to refunds payable to
tenants, licensees or other occupants of the Building
pursuant to the Leases, to such tenants, licensees or other
occupants in accordance with the terms of their respective
Leases; and third, to Seller to the extent that such refund
covers the period prior to Closing, and to Purchaser to the
extent such refund covers the period as of the Closing and
thereafter. Purchaser shall make reasonable efforts to keep
Seller apprised of the status of any tax certiorari or
protest proceeding relating to 1998 Taxes.
(d) Except as specifically set forth herein, if any of
the items subject to apportionment under the foregoing
provisions of this Section 4.4 cannot be apportioned at the
Closing because of the unavailability of the information
necessary to compute such apportionment, or if any errors or
omissions in computing apportionments at the Closing are
discovered subsequent to the Closing, then such item shall
be reapportioned and such errors and omissions corrected
after the Closing Date and the proper party reimbursed,
which obligation shall survive the Closing until December 1,
1998. Neither party hereto shall have the right to require
a recomputation of a Closing apportionment or a correction
of an error or omission in a Closing apportionment unless by
December 1, 1998 one of the parties hereto:(i) has obtained
the previously unavailable information or has discovered the
error or omission, and (ii) has given notice thereof to the
other party, together with a copy of its good faith
recomputation of the apportionment and copies of all
substantiating information used in such recomputation. The
failure of a party to obtain any previously unavailable
information or discover an error or omission with respect to
an item subject to apportionment hereunder and to give
notice thereof as provided above within one year after the
Closing Date shall be deemed a waiver of its right to cause
a recomputation or a correction of an error or omission with
respect to such item after the Closing Date.
(e) The provisions of this Section 4.4 shall survive
Closing.
Section 4.5 Transaction Taxes and Closing Costs.
(a) Seller shall pay the fees of any counsel
representing Seller in connection with this transaction.
Seller shall also pay the following costs and expenses:
(i) any and all transfer taxes imposed by the
State of Illinois or County of Cook which become payable by
reason of the transactions contemplated herein;
(ii) the fee charged by the Title Company for
the Title Commitment and the premium for the Owner's Title
Policy and the Zoning 3.1 Endorsement to the Owner's Title
Policy (if any), excluding any fee or premium for extended
coverage or any endorsements (other than the Zoning 3.1
Endorsement) requested by Purchaser;
(iii) the cost of the Survey of the Real Property
to be delivered by Seller to Purchaser hereunder; and
(iv) one half of the escrow fees charged by the
Title Company for any and all escrows established between
Purchaser and Seller hereunder.
(b) Purchaser shall pay the fees of any counsel
representing Purchaser in connection with this transaction.
Purchaser shall also pay the following costs and expenses:
(i) any and all transfer taxes imposed by the
City of Chicago which become payable by reason of the
transactions contemplated herein;
(ii) the fee charged by, and/or any premiums
payable to, the Title Company for any endorsements (other
than a Zoning 3.1 Endorsement) or extended coverage
requested by Purchaser to the Owner's Title Policy and for
any loan policy;
(iii) one half of the escrow fees changed by the
Title Company for any and all escrows established hereunder;
and
(iv) the fees for recording the Deed (and any
other documents to be recorded as part of the transaction
contemplated herein).
(c) Purchaser acknowledges and agrees that other than
expressly provided herein, Seller makes no representation in
connection with the Fixtures and Personal Property and
Seller expressly disclaims any implied warranties of
merchantability or fitness for a particular purpose. The
provisions of this paragraph (c) shall survive the delivery
of the deed hereunder.
(d) The provisions of this Section 4.5 shall survive
the Closing.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of
Seller. Seller hereby makes the following representations
and warranties to Purchaser as of the Closing Date:
(a) Organization and Authority. Seller has been duly
organized and is validly existing under the laws of the
State of Delaware. Seller has the full right and authority
to enter into this Agreement and to transfer all of the
Property and to consummate or cause to be consummated the
transaction contemplated by this Agreement. The person
signing this Agreement on behalf of Seller is authorized to
do so;
(b) Pending Actions. To Seller's knowledge, Seller
has not received written notice of any: (i) action, suit,
arbitration, unsatisfied order or judgment, government
investigation or proceeding pending against Seller, or (ii)
pending or threatened assessment or condemnation
proceedings, which, in each case, if adversely determined,
could individually or in the aggregate materially interfere
with the ability of Seller to consummate the transactions
contemplated by this Agreement;
(c) Operating Agreements. To Seller's knowledge, the
Operating Agreements listed on the Operating Agreements
Exhibit are all of the agreements concerning the operation
and maintenance of the Property entered into by Seller and
affecting the Property, except those Operating Agreements
that are not assignable or are to be terminated by Seller
within forty-five (45) days after the Closing. Seller does
not undertake or guarantee that any Operating Agreement will
be in force or effect on the Closing Date and Purchaser
agrees that the existence of any such Operating Agreement
shall not give rise to any reduction in or abatement of the
Purchase Price hereunder or other claim on the part of
Purchaser against Seller.
(d) Leases. Annexed hereto as Schedule 5.1(d) (the
"Rent Roll") is a schedule of the tenants to the Leases
(excluding subleases and subtenancies) affecting the
Building. Seller makes no representation or warranty
concerning the Leases or the accuracy of the information on
the Rent Roll except as set forth below in this paragraph
(d).
(i) There are no Leases other than as set forth
in the Rent Roll or the Data Room Information (and other
than subleases and subtenancies);
(ii) The Rent Roll contains a schedule of
Security Deposits under the Leases and the Security Deposits
are in the control of Seller; and
(iii) To Seller's knowledge, Seller is not in
material default under any Lease and all Leases are in full
force and effect.
(iv) To Seller's knowledge, except as set forth
in the Data Room Information, there are no brokerage
agreements providing for commissions which become due and
payable after the Closing Date with respect to the
Commercial Leases (as defined herein). The term "Commercial
Leases" as used herein shall mean those Leases set forth on
Schedule 5.1(d)(iv) hereof.
Purchaser acknowledges that it has reviewed and is
familiar with each of the Leases. If there are any
inconsistencies or discrepancies between the information set
forth in the Rent Roll and the provisions of the Leases,
then the provisions of the Leases shall prevail and the Rent
Roll shall be deemed amended accordingly.
(e) Personal Property. To Seller's knowledge, the
Personal Property is free and clear of all liens, charges
and encumbrances other than the Permitted Exceptions.
(f) Compliance With Governmental Authorities. To
Seller's knowledge, Seller has received no written notice(s)
from any governmental authorities stating that the Property
does not comply with applicable laws, ordinances and codes
which non-compliance would have a material and adverse
effect on the use and operation of the Property.
(g) Option to Purchase. To Seller's knowledge, no
party (other than Purchaser) has an option to purchase the
Property.
Section 5.2 Knowledge Defined. References to the
"knowledge" of Seller shall refer only to the current actual
knowledge of Jay Cassell, and shall not be construed, by
imputation or otherwise, to refer to the knowledge of Seller
or any affiliate of Seller or to any other officer, agent,
manager, representative or employee of Seller or any
affiliate thereof or to impose upon Jay Cassell any duty to
investigate the matter to which such actual knowledge, or
the absence thereof, pertains.
Section 5.3 Survival of Seller's Representations and
Warranties. The representations and warranties of Seller
set forth in Section 5.1 hereof, shall survive until
December 1, 1998. Notwithstanding anything to the contrary
contained herein, no claim for a breach of any
representation or warranty of Seller shall be actionable or
payable if the breach in question results from or is based
on a condition, state of facts or other matter which was
known to Purchaser prior to Closing including, without
limitation, any Data Room Information. Without in any way
limiting the foregoing, Purchaser acknowledges and agrees
that it is deemed to have knowledge of all the Data Room
Information (including, without limitation, the documents
and instruments described therein). Seller shall have no
liability to Purchaser for a breach of any representation or
warranty unless (a) the valid claims for all such breaches
collectively aggregate more than $100,000.00, in which event
the full amount of such valid claims shall be actionable, up
to the Cap (as defined in this Section 5.3), and (b) unless
written notice containing a description of the specific
nature of such breach shall have been given by Purchaser to
Seller prior to December 1, 1998 and an action shall have
been commenced by Purchaser against Seller within thirty
(30) days after such date. Notwithstanding anything to the
contrary contained herein, in no event shall the liability
of Seller for breach of any and all representations and
warranties exceed, in the aggregate, the Cap. As used
herein, the term "Cap" shall mean the total aggregate amount
of $1,750,000.00.
Section 5.4 Covenant of Seller. From the Closing
Date until December 1, 1998, Seller hereby covenants to
maintain a net worth of at least $1,750,000.00.
Notwithstanding the foregoing, in the event that the
Purchaser has delivered written notice of a claim for breach
of any representation or warranty of Seller, in each case
pursuant to, and in accordance with, the terms and
provisions of Section 5.3, Seller shall continue beyond
December 1, 1998 to maintain a net worth equal to the lesser
of: (a) the amount Seller would be liable for pursuant to
this Agreement if Purchaser were to be successful in its
claim against Seller, and (b) $1,750,000.00, until the
earlier of the date on which: (i) a final non-appealable
judgement has been entered and satisfied with respect to
such claim, or (ii) a settlement has been agreed to and
satisfied among the parties with respect to each such claim.
The provisions of this Section 5.4 shall survive the
Closing.
Section 5.5 Representations and Warranties of
Purchaser. Purchaser hereby makes the following
representations and warranties to Seller as of the Closing
Date:
(a) Organization and Authority. Purchaser has been
duly organized and is validly existing under the laws of
Illinois. Purchaser has the full right and authority to
enter into this Agreement and to consummate or cause to be
consummated the transaction contemplated by this Agreement.
The persons signing this Agreement on behalf of Purchaser
are authorized to do so.
(b) Pending Actions. To Purchaser's knowledge, there
is no action, suit, arbitration, unsatisfied order or
judgment, government investigation or proceeding pending
against Purchaser which, if adversely determined, could
individually or in the aggregate materially interfere with
the consummation of the transaction contemplated by this
Agreement.
(c) ERISA. Neither (i) the assets of Purchaser, nor
(ii) any other funds to be used by Purchaser with respect to
the transactions contemplated pursuant to this Agreement are
pursuant to ERISA or the Code considered for any purpose of
ERISA or Section 4975 of the Code to be assets of a Plan.
Purchaser is not executing this Agreement and will not be
performing its obligations under the Agreement on behalf of
or for the benefit of any Plan. Neither the execution or
delivery of this Agreement by Purchaser, nor the performance
by Purchaser of its obligations under this Agreement, nor
any transaction contemplated under this Agreement, nor the
exercise by Seller of any of its rights or remedies under
this Agreement is or will be "a prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975
of the Code.
Section 5.6 Survival of Purchaser's Representations
and Warranties. The representations and warranties of
Purchaser set forth in Section 5.5 hereof, shall survive
until December 1, 1998; provided, however, that the
representation and warranty of Purchaser set forth in
Section 5.5(c) above shall survive the Closing indefinitely.
Purchaser shall have no liability to Seller for a breach of
any representation or warranty unless written notice
containing a description of the specific nature of such
breach shall have been given by Seller to Purchaser prior to
December 1, 1998 and an action shall have been commenced by
Seller against Purchaser within thirty (30) days after such
date; provided, however, that the foregoing limitations
shall not apply to the representation and warranty of
Purchaser set forth in Section 5.5(c) above.
ARTICLE VI
DEFAULT
Section 6.1 Default by Purchaser. In the event of
Purchaser's default hereunder or under any other documents
executed and delivered by Purchaser pursuant to the terms
hereof, Seller shall be entitled to any and all rights and
remedies available to Seller at law or in equity.
Section 6.2 Default by Seller. In the event of
Seller's default hereunder or under any other documents
executed and delivered by Seller pursuant to the terms
hereof ("Seller Related Documents"), Purchaser shall be
entitled to bring an action at law for any direct and actual
damages suffered or incurred by Purchaser as a result of
Seller's default; provided, however, with respect to this
Section 6.2, in no event shall Purchaser be entitled to: (i)
any consequential damages including, without limitation, any
claim for damages as a result of lost profit, or (ii) actual
damages, in the aggregate, in excess of the Cap.
THE PURCHASER HEREBY EXPRESSLY ACKNOWLEDGES THAT, EXCEPT AS
EXPRESSLY PROVIDED HEREIN, IN NO EVENT SHALL SELLER'S
LIABILITY UNDER THIS AGREEMENT AND/OR ANY SELLER RELATED
DOCUMENT (INCLUDING, WITHOUT LIMITATION, ANY AND ALL
LIABILITY RESULTING FROM, CONNECTED WITH OR ARISING OUT OF:
(i) ANY BREACH OR VIOLATION BY SELLER OF ANY REPRESENTATION,
WARRANTY, COVENANT, AGREEMENT OR PROMISE OF SELLER SET FORTH
IN THIS AGREEMENT OR ANY SELLER RELATED DOCUMENT, (ii)
SELLER'S FAILURE TO COMPLY WITH ANY DUTY, RESPONSIBILITY OR
OBLIGATION OF SELLER SET FORTH IN THIS AGREEMENT OR ANY
SELLER RELATED DOCUMENT, AND/OR (iii) ANY INDEMNIFICATION
OBLIGATIONS OF SELLER SET FORTH IN THIS AGREEMENT OR ANY
SELLER RELATED DOCUMENT) EXCEED, IN THE AGGREGATE, THE
AMOUNT OF THE CAP.
ARTICLE VII
COMMISSIONS
Section 7.1 Brokerage Commissions. With respect to
the transaction contemplated by this Agreement, Seller and
Purchaser each represent to the other that no broker,
licensed or otherwise, other than CB Richard Ellis, Inc.
("Seller's Broker") brought about this transaction.
Purchaser represents to Seller that no broker other than
Seller's Broker brought the Property to the attention of
Purchaser or had any communication with Purchaser in regard
to the same. Each party hereto agrees that if any person or
entity, other than the Seller's Broker, makes a claim for
brokerage commissions or finders fees related to the sale of
the Property by Seller to Purchaser, and such claim is made
by, through or on account of any acts or alleged acts of
said party or its representatives, said party will protect,
indemnify, defend and hold the other party free and harmless
from and against any and all loss, liability, cost, damage
and expense (including reasonable attorneys' fees) in
connection therewith. Seller agrees to pay the commission
due to Seller's Broker pursuant to a separate written
agreement between Seller and Seller's Broker. The
provisions of this Section 7.1 shall survive Closing.
ARTICLE VIII
DISCLAIMERS AND WAIVERS
Section 8.1 No Reliance on Documents. Except as
expressly stated herein, Seller makes no representation or
warranty as to the truth, accuracy or completeness of any
materials, data or information delivered or given by Seller
or its brokers, agents or representatives to Purchaser in
connection with the transaction contemplated hereby
including, without limitation, the Data Room Information.
Purchaser acknowledges and agrees that all materials, data
and information delivered or given by Seller to Purchaser in
connection with the transaction contemplated hereby are
provided to Purchaser as a convenience only and that any
reliance on or use of such materials, data or information by
Purchaser shall be at the sole risk of Purchaser, except as
otherwise expressly stated herein. Neither Seller, nor any
affiliate of Seller, nor the person or entity which prepared
any report or reports delivered by Seller to Purchaser shall
have any liability to Purchaser for any inaccuracy in or
omission from any such reports.
Section 8.2 AS-IS SALE; DISCLAIMERS. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND
AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME
MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR
CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTY,
INCLUDING, BUT NOT LIMITED TO ANY WARRANTIES OR
REPRESENTATIONS AS TO:
(a) the habitability, merchantability or fitness for a
particular purpose or as to the current or future physical
or structural condition or value of the Real Property or its
suitability for rehabilitation or renovation;
(b) the current or future condition and operating
state of any and all machinery,
equipment, Personal Property or Fixtures in or comprising
part of the Real Property;
(c) the income, expenses, Leases, tenants, licensees,
occupants, use, operation or any other matter or thing
affecting or relating to the Property or title thereto or
the transactions contemplated hereby;
(d) the current or future real estate tax liability,
assessment or valuation of the Property;
(e) the potential qualification of the Property for
any and all benefits conferred by federal, state or
municipal laws, whether for subsidies, special real estate
tax treatment, insurance, mortgages, or any other benefits,
whether similar or dissimilar to those enumerated;
(f) the compliance of the Property, in its current or
any future state with local, state and federal laws,
ordinances or governmental regulations including but not
limited to, building and zoning laws, ordinances and
regulations now or hereafter in effect relating to the
Property, the ability to obtain a variance in respect to any
non-compliance, if any, with zoning ordinances or the
presence or absence of any noted or issued violations with
respect to any of such laws, ordinances or governmental
regulations;
(g) the environmental condition of the Property or the
compliance of the Property with Environmental Laws (as
hereinafter defined) or the presence or absence of Hazardous
Materials (hereinafter defined) in, on, above or beneath the
Real Property;
(h) the availability of any financing for the
purchase, alteration, rehabilitation or operation of the
Property from any source, including but not limited to the
state, city or federal government or any institutional
lender;
(i) the state of title to the Property; or
(j) the presence or absence of a certificate of
occupancy with respect to the Real Property or related
appurtenances or the compliance of the Real Property or such
other appurtenances with any issued certificate of
occupancy.
As used herein, the term "Environmental Laws" shall
mean: all federal, state, and local laws, statutes,
ordinances and regulations, now or hereafter in effect,
related to the regulation and protection of human health,
safety, the environment and natural resources, including,
without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. Sections 9601, et. seq.), the Hazardous Material
Transportation Act, as amended (49 U.S.C. Sections 1801, et.
seq.), the Federal Insecticide, Fungicide and Rodenticide
Act, as amended (7 U.S.C. Sections 136, et. seq.), the
Resource Conservation and Recovery Act, as amended (42
U.S.C. Sections 6901, et. seq.), the Toxic Substance Control
Act, as amended (42 U.S.C. Sections 7401, et seq.), the
Clean Air Act, as amended (42 U.S.C. Sections 7401, et
seq.), the Federal Water Pollution Control Act, as amended
(33 U.S.C. Section 1251 et. seq.), the Occupational Safety
and Health Act, as amended (29 U.S.C. Sections 651, et
seq.), the Safe Drinking Water Act, as amended (42 U.S.C.
Sections 300f, et seq.), Illinois Responsible Property
Transfer Act of 1988, 765 ILCS 90/1, et. seq., any state or
local counterpart or equivalent of any of the foregoing and
any Federal, state or local transfer of ownership
notification or approval statutes. As used herein, the term
"Hazardous Materials" shall mean those substances included
within the definitions of any one or more of the terms
"hazardous materials," "hazardous wastes," "hazardous
substances," "industrial wastes," and "toxic pollutants," as
such terms are defined under the Environmental Laws or any
of them.
PURCHASER ACKNOWLEDGES AND AGREES THAT UPON CLOSING
SELLER SHALL SELL AND CONVEY TO PURCHASER AND PURCHASER
SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH ALL
FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE
IN THIS AGREEMENT. PURCHASER HAS NOT RELIED AND WILL NOT
RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY
EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS,
REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR
RELATING THERETO (INCLUDING SPECIFICALLY WITHOUT LIMITATION,
ANY OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE
PROPERTY AND THE DATA ROOM INFORMATION) MADE OR FURNISHED BY
SELLER OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN,
DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS
SPECIFICALLY SET FORTH IN THIS AGREEMENT. PURCHASER ALSO
ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS AND TAKES INTO
ACCOUNT THAT THE PROPERTY IS BEING SOLD "AS-IS."
PURCHASER REPRESENTS TO SELLER THAT PURCHASER HAS
CONDUCTED PRIOR TO CLOSING SUCH INVESTIGATIONS OF THE
PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS PURCHASER DEEMS
NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE CONDITION
OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR
CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR
TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND
WILL RELY SOLELY UPON THE SAME AND NOT UPON ANY INFORMATION
PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS, EMPLOYEES
OR REPRESENTATIVES WITH RESPECT THERETO, OTHER THAN SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING,
PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,
INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND
ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS MAY NOT HAVE
BEEN REVEALED BY PURCHASER'S INVESTIGATIONS AND PURCHASER,
UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED
AND RELEASED SELLER (AND SELLER'S AFFILIATES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS,
EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN
TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) OF ANY AND EVERY KIND
OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE
ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER'S AFFILIATES
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS,
PARTNERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR
ARISING OUT OF THE PHYSICAL CONDITION OF THE PROPERTY, ANY
LATENT OR PATENT CONSTRUCTION DEFECTS, VIOLATIONS OF ANY
APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS,
EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY.
Section 8.3 Survival of Disclaimers. The provisions
of this Article VIII shall survive Closing.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Acceptance of Deed. The acceptance of
the Deed by Purchaser shall be deemed full compliance by
Seller of all of the Seller's obligations under this
Agreement except for those obligations of Seller, if any,
which are specifically stated to survive the delivery of the
Deed hereunder.
Section 9.2 Confidentiality. (a) Seller shall hold
the material terms and provisions of this Agreement in
confidence, except (i) to the extent required by law, (ii)
to the extent such information is requested or required by
any regulatory body or agency, (iii) to the extent the same
are generally known to the public, (iv) to the extent
necessary in connection with the ordinary conduct of its
business, (v) to its partners, employees, attorneys,
accountants, or other consultants, or (vi) to the extent
required in connection with the Construction Litigation or
any discovery request or proceeding related thereto (as
hereinafter defined).
(b) Purchaser shall hold all information related to
the Construction Litigation in confidence, except (i) to the
extent required by law, (ii) to the extent such information
is requested or required by any regulatory body or agency,
(iii) to the extent the same are generally known to the
public, (iv) to the extent necessary in connection with the
ordinary conduct of its business, (v) to its partners,
employees, attorneys, accountants, or other consultants, or
(vi) to the extent required in connection with the
Construction Litigation or any discovery request or
proceeding related thereto.
(c) The provisions of this Section 9.2 shall survive
the Closing.
Section 9.3 Public Disclosure. After the Closing,
any press release or other public announcement of
information with respect to the sale contemplated herein or
any matters set forth in this Agreement will be made only in
the form approved by Purchaser and Seller. The provisions
of this Section 9.3 shall survive the Closing.
Section 9.4 Assignment. Subject to the provisions
of this Section 9.4, the terms and provisions of this
Agreement are to apply to and bind the permitted successors
and assigns of the parties hereto. Purchaser may not assign
its rights under this Agreement without first obtaining
Seller's written approval, which approval may be given or
withheld in Seller's sole discretion, and any such attempted
assignment without Sellers' prior written approval shall be
null and void. In the event Purchaser intends to assign its
rights hereunder, (a) Purchaser shall send Seller written
notice of its request at least ten (10) business days prior
to the proposed assignment, which request shall include the
legal name and structure of the proposed assignee, as well
as any other information that Seller may reasonably request,
(b) Purchaser and the proposed assignee shall execute an
assignment and assumption of this Agreement in form and
substance satisfactory to Seller, and (c) in no event shall
any assignment of this Agreement release or discharge
Purchaser from any liability or obligation hereunder. Any
transfer, directly or indirectly, of any stock, partnership
interest or other ownership interest in Purchaser shall
constitute an assignment of this Agreement. The provisions
of this Section 9.4 shall survive the Closing.
Section 9.5 Notices. Any notice pursuant to this
Agreement shall be given in writing by (a) personal
delivery, (b) reputable overnight delivery service with
proof of delivery, (c) United States Mail, postage prepaid,
registered or certified mail, return receipt requested, or
(d) legible facsimile transmission, sent to the intended
addressee at the address set forth below, or to such other
address or to the attention of such other person as the
addressee shall have designated by written notice sent in
accordance herewith, and shall be deemed to have been given
upon receipt or refusal to accept delivery, or, in the case
of facsimile transmission, as of the date of the facsimile
transmission provided that an original of such facsimile is
also sent to the intended addressee by means described in
clauses (a), (b) or (c) above. Unless changed in accordance
with the preceding sentence, the addresses for notices given
pursuant to this Agreement shall be as follows:
If to Seller: DW Lakeshore Associates, L.P.
c/o Dean Witter Realty Inc.
Two World Trade Center, 64th Floor
New York, New York 10048
Attn.: Asset Management Group
Telephone No. (212) 392-6888
Telecopy No. (212) 392-3123
with a copy to: Dean Witter Realty Inc.
P.O. Box 6222
110 Pioneer Road
Ketchum, ID 83340
Attn.: Mr. Jay Cassell
Telephone No. (208) 788-1323
Telecopy No. (208) 788-5127
with a copy to: Sidley & Austin
One First National Plaza
Suite 4600
Chicago, Illinois 60603
Attention: Anthony J. Aiello, Esq.
Telephone No. (312) 853-7128
Telecopy No. (312) 853-7036
If to Purchaser: Streeterville Development Associates,
LLC
33 West Monroe Street
Chicago, Illinois 60603
Attention: Forrest D. Bailey
Telephone No. (312) 580-6537
Telecopy No. (312) 346-2177
with a copy to: Draper and Kramer Incorporated
33 West Monroe Street
Chicago, Illinois 60603
Attention: Forrest D. Bailey
Telephone No. (312) 580-6537
Telecopy No. (312) 346-2177
and to: Equity Marketing Services, Inc.
211 E. Ontario St.
Suite 500
Chicago, Illinois 60611
Attention: Herbert P. Emmerman
Telephone No. (312) 642-6272
Telecopy No. (312) 642-9282
and to: Bell, Boyd & Lloyd
Three First National Plaza
Chicago, Illinois 60602
Attention: Lawrence M. Mages
Telephone No. (312) 372-1121
Telecopy No. (312) 372-2098
Section 9.6 Modifications. This Agreement cannot be
changed orally, and no executory agreement shall be
effective to waive, change, modify or discharge it in whole
or in part unless such executory agreement is in writing and
is signed by the parties against whom enforcement of any
waiver, change, modification or discharge is sought.
Section 9.7 Entire Agreement This Agreement,
including the exhibits and schedules hereto, contains the
entire agreement between the parties hereto pertaining to
the subject matter hereof and fully supersedes all prior
written or oral agreements and understandings between the
parties pertaining to such subject matter, other than the
Access Agreement dated June 19, 1998 between Seller, as
owner, Draper and Kramer Incorporated and Equity Marketing
Services, Inc., as prospective purchaser, and Morgan
Guaranty Trust Company of New York, as prospective lender.
Section 9.8 Further Assurances. Each party agrees
that it will execute and deliver such other documents and
take such other action, whether prior or subsequent to
Closing, as may be reasonably requested by the other party
to consummate the transaction contemplated by this
Agreement. The provisions of this Section 9.8 shall survive
Closing.
Section 9.9 Counterparts. This Agreement may be
executed in counterparts, all such executed counterparts
shall constitute the same agreement, and the signature of
any party to any counterpart shall be deemed a signature to,
and may be appended to, any other counterpart.
Section 9.10 Severability. If any provision of this
Agreement is determined by a court of competent jurisdiction
to be invalid or unenforceable, the remainder of this
Agreement shall nonetheless remain in full force and effect;
provided that the invalidity or unenforceability of such
provision does not materially adversely affect the benefits
accruing to any party hereunder.
Section 9.11 Applicable Law. This Agreement shall be
governed by and construed in accordance with the internal
laws of the State of Illinois without regard to conflicts of
law principles. In any legal proceeding involving,
directly or indirectly, any matter arising out of or related
to this Agreement, Purchaser and Seller hereby irrevocably
submit to the nonexclusive jurisdiction of any state or
federal court located in Cook County, Illinois and agree not
to raise any objection to such jurisdiction in such county.
Purchaser and Seller agree that the provisions of this
Section 9.11 shall survive the Closing.
Section 9.12 No Third-Party Beneficiary The
provisions of this Agreement and of the documents to be
executed and delivered at Closing are and will be for the
benefit of Seller and Purchaser only and are not for the
benefit of any third party, and accordingly, no third party
shall have the right to enforce the provisions of this
Agreement or of the documents to be executed and delivered
at Closing.
Section 9.13 Captions. The section headings
appearing in this Agreement are for convenience of reference
only and are not intended, to any extent and for any
purpose, to limit or define the text of any section or any
subsection hereof.
Section 9.14 Construction. The parties acknowledge
that the parties and their counsel have reviewed and revised
this Agreement and that any rule of construction to the
effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation
of this Agreement or any exhibits or amendments hereto.
Section 9.15 Recordation. Neither this Agreement nor
any memorandum or notice of this Agreement may be recorded
by any party hereto without the prior written consent of the
other party hereto. The provisions of this Section 9.15
shall survive the Closing.
Section 9.16 lnternal Revenue Service Reporting
Requirement. Each party shall execute, acknowledge and
deliver to the other party such instruments, and take such
other actions, as such other party may reasonably request in
order to comply with IRC 6045(e), as amended, or any
successor provision or any regulations promulgated pursuant
thereto, insofar as the same requires reporting of
information in respect of real estate transactions. The
provisions of this Section 9.16 shall survive the delivery
of the deed hereunder.
Section 9.17 Waiver of Jury Trial. Seller and
Purchaser hereby waive trial by jury in any action ,
proceeding or counterclaim brought by any party against
another party on any matter arising out of or in any way
connected with this Agreement.
Section 9.18 IRPTA. If applicable, Seller shall
comply with the requirements of the Illinois Responsible
Property Transfer Act of 1988, 765 ILCS 90/1, et. seq. (the
"Transfer Act") including delivering a disclosure document
("Disclosure Document") as specified therein. The parties
hereto agree to file said Disclosure Document if, and to the
extent, required under the Transfer Act. Purchaser hereby
represents and warrants, in addition to its representations
and warranties set forth in Section 5.5 above, that it is
aware of the purpose and intent of the Disclosure Document
and hereby waives the time period specified in Section 4(a)
of the Transfer Act.
Section 9.19 Tutto Pronto Lease. Seller and Purchaser
hereby acknowledge and agree that the tenant under the Tutto
Pronto Lease is delinquent in the payment of rent due
thereunder as of July 17, 1998 in the approximate amount of
$40,200.00 ("Tutto Delinquent Rent"). Purchaser
acknowledges and agrees that it is assuming the Tutto
Pronto Lease subject to the Tutto Delinquent Rent and agrees
not to make any claim against Seller with respect thereto.
From and after the Closing Date, Purchaser shall own and
hold all right, title and interest in and to any and all
Tutto Delinquent Rent which may be collected by Seller after
the Closing. The provisions of this Section 9.19 shall
survive the Closing.
Section 9.20 Construction Litigation. Purchaser and
Seller acknowledge that there is currently pending in the
Circuit Court of Cook County, Illinois, a lawsuit entitled
DW Lakeshore Associates Limited Partnership v. E.W. Corrigan
Construction Co., et al., No. 952-0826 (the "Construction
Litigation"). Purchaser and Seller acknowledge and agree
that, notwithstanding anything in this Agreement to the
contrary, Seller is not conveying to Purchaser any interest
in the claims that have been made by the Seller in the
Construction Litigation, which are described in the Third
Amended Verified Complaint filed on January 7, 1997, in the
Construction Litigation. Purchaser expressly acknowledges
and agrees that any such claims and all rights, benefits,
judgements and awards in and to the Construction Litigation
shall remain with Seller. Seller agrees to defend,
indemnify and hold Purchaser harmless against any claims
that may be made against Purchaser by any defendant or third-
party defendant in the Construction Litigation that are
based on or arise out of the claims made by the Seller in
the Construction Litigation ("Construction Litigation
Indemnity"). Notwithstanding anything to the contrary
contained herein, Seller acknowledges and agrees that the
Cap shall not be applicable with respect to any amount
Purchaser is entitled to receive from Seller pursuant to,
and in accordance with, the terms and provisions of this
Construction Litigation Indemnity. Purchaser agrees to
allow Seller, its attorneys, and its consultants, and any
other parties to the Construction Litigation and their
respective attorneys and consultants reasonable access to
the Building and the Real Property as may be necessary for
purposes of the Construction Litigation. The provisions of
this Section 9.20 shall survive the Closing.
Section 9.21 Illinois Bulk Sales Act. Seller hereby
indemnifies Purchaser from any loss, cost or damage suffered
by Purchaser as a result of any liability of Seller under
the Illinois Bulk Sales Act (35 ILCS 5/902(d)) by reason of
this Agreement. This indemnity shall survive the Closing,
provided, however, that the foregoing indemnity shall
terminate and be of no further force and effect on such date
Seller delivers to Purchaser a waiver and release from the
Illinois Department of Revenue of any claim that Seller is
liable under the aforesaid Illinois Bulk Sales Act as a
result of the transactions contemplated herein. Purchaser
hereby agrees to cooperate with Seller in connection with
Seller procuring such waiver and release. Notwithstanding
anything contained herein to the contrary, Seller
acknowledges and agrees that the Cap shall not be applicable
to the indemnity contained in this Section 9.21.
Section 9.22 Withdrawal Liability. Seller hereby
indemnifies Purchaser from any loss, cost or damage suffered
by Purchaser to the extent that, as a result of the
transactions contemplated herein, Purchaser becomes liable
for withdrawal liability, if any, of Seller which accrued
prior to the Closing under the multiemployer pension plans
to which Seller is required to contribute pursuant to the
terms of the Labor Contracts ("the Multiemployer Plans").
This indemnity shall survive the Closing; provided, however,
that the foregoing indemnity shall terminate and be of no
further force and effect on such date, and to the extent,
Seller delivers to Purchaser a notice from each
Multiemployer Plan certifying that Seller does not have any
withdrawal liability under such plan for the period prior
to Closing.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of July 17, 1998.
SELLER:
DW Lakeshore Associates, L.P., a
Delaware
limited partnership
By: DW Lakeshore, Inc.
By: /s/Jay Cassell Name:
Jay Cassell Its: Vice President
Name: Jay Cassell
Its: Vice President
PURCHASER:
Streeterville Development
Associates, LLC, an Illinois
limited liability company
By: DK Investors, LLC, as manager
By: Draper and
Kramer, Incorporated, an Illinois limited
company, as sole manager
By: /s/Forrest D.
Bailey___
Name: Forrest D.
Bailey
Its: President
By: EMS Associates,
L.L.C., an llinois limited liability company,
as manager
By: /s/Herbert P.
Emmerman Name: Jay Cassell Its: Vice
President
Name: Herbert P.
Emmerman
Its: Member
By: /s/Cheryl A.
Bancroft Name: Jay Cassell Its: Vice
President
Name: Cheryl A.
Bancroft
Its: Member
