<PAGE>
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) October 16, 1996
----------------
Lutheran Brotherhood Realty Fund I, a California limited partnership
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(Exact name of registrant as specified in its charter)
California 0-17617 94-3046442
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
625 Fourth Avenue South, Minneapolis, MN 55415
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 339-8091
------------------------
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(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On September 9, 1996, Lutheran Brotherhood Realty Fund I, a California
limited partnership (the "Registrant") and Lutheran Brotherhood, a fraternal
benefit society existing and operating under the laws of Minnesota, doing
business as Minnetonka 225, a Minnesota joint venture and Minnetonka 300 &
400, a Minnesota joint venture (the "Joint Ventures") entered into a
Purchase and Sale Agreement (the "Minnetonka Agreement") with
MINCO/Northwest Corporation, a Delaware corporation, for the sale of all the
right, title and interest of the Joint Ventures in and to three (3)
properties located at 15225 Minnetonka Boulevard, 15300 Minnetonka
Industrial Boulevard and 15400 Minnetonka Industrial Boulevard (the
"Minnetonka Properties") in Minnetonka, Minnesota. The Minnetonka
Properties comprise an office warehouse complex which the Joint Ventures
owned since September 29, 1989. The Registrant will receive one-third of
the net sales proceeds from the sale of the Minnetonka Properties.
The sale of the Minnetonka Properties closed on October 16, 1996 and the
Joint Ventures received cash consideration in the amount of $5,535,095
subject to certain adjustments and prorations set forth in the Minnetonka
Agreement. The Registrant's share of this consideration is $1,845,032.
The Registrant, as managing venturer of the Joint Ventures, listed the
Minnetonka Properties through a professional real estate brokerage firm.
The Registrant's Limited Partners approved a liquidation proposal on July 3,
1996 relating to the sale of the Registrant's owned property and properties
owned by the Joint Ventures in which the Registrant is a co-venturer. The
sale of the Minnetonka Properties is part of that liquidation process.
On September 9, 1996, the Registrant entered into a Purchase and Sale
Agreement (the "Northwest Agreement") with MINCO/ Northwest Corporation, a
Delaware corporation, for the sale by Registrant of all its right, title and
interest in and to the Northwest Distribution Center ("Northwest") in New
Hope, Minnesota. Northwest is an office warehouse complex which the
Registrant has owned since September 29 1989. The Registrant will receive
all of the net sales proceeds from this sale.
The sale of Northwest closed on October 16, 1996 and the Registrant received
cash consideration in the amount of $2,982,617 subject to certain
adjustments and prorations set forth in the Agreement. The Registrant
listed Northwest through a professional real estate brokerage firm.
The Registrant's Limited Partners approved a liquidation proposal on July 3,
1996, relating to the sale of the Registrant's owned property and properties
owned by the joint ventures in which the Registrant is a co-venturer. The
Registrant previously reported the sale of the Village at Worthington Green
as part of the liquidation process. This sale of Northwest completes that
liquidation process.
As described in the Proxy Statement provided to the limited partners to
approve the liquidation proposal, the Registrant will distribute as soon as
practicable the net cash proceeds of the sales of all of its properties
after deduction of expenses and the establishment of reserves to complete
the liquidation of the Registrant. The Registrant intends to file a
Certificate of Dissolution with the California Secretary of State and begin
the winding-up of the partnership.
<PAGE>
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Item 7. Financial Statements, Proforma Information and Exhibits.
(a) Financial statements of business acquired - not applicable.
(b) Proforma Financial Information of Lutheran Brotherhood Realty
Fund I
(i) Proforma Balance Sheet at June 30, 1996 (unaudited)
(ii) Proforma Statement of Operations for the year ended
December 31, 1995 (unaudited)
(iii) Proforma Statement of Operations for the six months
ended June 30, 1996 (unaudited)
(b) Exhibits.
(10)(a) Purchase and Sale Agreement for the Minnetonka
Properties dated September 9, 1996
(10)(b) Purchase and Sale Agreement for the Northwest
Distribution Center dated September 9, 1996.
<PAGE>
Item 7(b)(i) Proforma Financial Information
The following unaudited condensed proforma balance sheet presents the
financial position of Lutheran Brotherhood Realty Fund I on June 30, 1996,
assuming that the sale of The Village at Worthington Green, the Minnetonka
Properties, and the Northwest Distribution Center occurred on that date.
The Village at Worthington Green was sold on August 19, 1996 and the other
properties were sold on October 16, 1996.
<TABLE>
Lutheran Brotherhood Realty Fund I
Proforma Balance Sheet
June 30, 1996
(thousands)
(unaudited)
<CAPTION>
Sale of All Proforma
ASSETS June 30, 1996 Properties June 30, 1996
<S> <C> <C> <C>
Real estate investment, at cost - net $1,903 ($1,903) 0
Investments in joint ventures 2,155 (2,155) 0
Cash and cash equivalents 643 6,073 6,716
Deferred charges (net) and other assets 37 (34) 3
------ ------- -----
Total Assets $4,738 $1,981 $6,719
====== ====== ======
LIABILITIES & PARTNER'S EQUITY
Accounts payable and other liabilities $50 $50
Partners' equity 4,688 1,981 6,669
----- ----- -----
Total Liabilities & Partners' Equity $4,738 $1,981 $6,719
====== ====== ======
</TABLE>
See accompanying notes to proforma balance sheet.
<PAGE>
Lutheran Brotherhood Realty Fund I
Notes to Proforma Balance Sheet
June 30, 1996
(unaudited)
Note 1. Basis of presentation
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The unaudited condensed proforma balance sheet of Lutheran Brotherhood
Realty Fund I ("the Partnership") presents the financial position of the
Partnership on June 30, 1996, assuming that the sale of all properties
occurred on that date. The Village at Worthington Green was sold on August
19, 1996 and all other properties (Minnetonka Properties and Northwest
Distribution Center) were sold on October 16, 1996.
Note 2. Proforma adjustments
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(a) Real Estate Investment, at Cost - Net - This adjustment eliminates the
net book value of the Northwest Distribution Center property at June
30, 1996.
(b) Investment in Joint Ventures - This adjustment eliminates the
Partnership's net investment in all joint venture properties at June
30, 1996.
(c) Cash - This adjustment represents the Partnership's approximate share
of net proceeds received from the sale of all properties.
(d) Deferred Charges (Net) and Other Assets - This adjustment eliminates
other assets relating to the Northwest Distribution Center property at
June 30, 1996.
(e) Partners' Equity - This adjustment represents the net gain on sale
which would have been realized by the Partnership had all properties
been sold on June 30, 1996. The Partnership incurred a gain of
$738,000 from sale of Village at Worthington Green and a gain of
$1,243,000 from the sale of all other properties.
<PAGE>
Item 7(b)(ii) Proforma Financial Information
The following unaudited condensed proforma statement of operations presents
the results of operations of Lutheran Brotherhood Realty Fund I (the
Partnership) for the year ended December 31, 1995 assuming that the sales of
The Village at Worthington Green and the Minnetonka Properties and the
Northwest Distribution Center occurred on January 1, 1995. The Village at
Worthington Green was sold on August 19, 1996 and the other properties were
sold on October 16, 1996. The proforma statement of operations does not
present the net gain on sale of investment property which the Partnership
realized from the sales.
This statement should be read in conjunction with the other proforma
financial statements and notes thereto and the discussion of the sale of
properties contained in Item 2 included elsewhere in this Form 8-K.
<TABLE>
Lutheran Brotherhood Realty Fund I
Proforma Statement of Operations
For the Year Ended December 31, 1995
(thousands except per share amounts)
(unaudited)
<CAPTION>
Proforma
Year Ended Sale of All Year Ended
Dec. 31, 1995 Properties Dec. 31, 1995
<S> <C> <C> <C>
Revenue:
Rental $516 ($516) $0
Interest 30 0 30
Equity in joint venture capital 168 (168) 0
---- ----- -----
Total revenue 714 (684) 30
---- ----- -----
Expenses:
Property operations 267 (267) 0
Depreciation and amortization 90 (90) 0
Administrative 93 0 93
---- ----- -----
Total expenses 450 (357) 93
---- ----- -----
Net Income $264 ($327) ($63)
===== ====== =====
Net income per weighted
average number of limited
partnership units outstanding $4.14 ($5.13) ($0.99)
===== ====== =====
Distributions per weighted
average limited partnership
units outstanding $4.00 $4.00
===== ====== =====
</TABLE>
See accompanying notes to proforma statement of operations.
<PAGE>
Lutheran Brotherhood Realty Fund I
Notes to Proforma Statement of Operations
For the Year Ended December 31, 1995
(unaudited)
Note 1. Basis of presentation
- ------------------------------
The unaudited condensed proforma statement of operations of Lutheran
Brotherhood Realty Fund I ("the Partnership") presents the results of
operations for the Partnership for the year ended December 31, 1995 assuming
that the sale of all of the Partnership's properties (or properties owned by
the Joint Ventures in which the Partnership is a co-venturer) occurred on
January 1, 1995. The Village at Worthington Green was sold on August 19,
1996 and all other properties (Minnetonka Properties and Northwest
Distribution Center) were sold on October 16, 1996. The proforma statement
of operations does not present the net gain on sale of investment property
which the Partnership realized from the sales.
Note 2. Proforma adjustments
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(a) Rental Revenue - This adjustment eliminates rental revenue relating to
the Northwest Distribution Center property for the year ended December
31, 1995.
(b) Equity in joint venture capital - This adjustment eliminates net income
relating to the Partnership's interest in all joint venture properties
for the year ended December 31, 1995.
(c) Property Operations - This adjustment eliminates property operating
expenses relating to the Northwest Distribution Center property for the
year ended December 31, 1995.
(d) Depreciation and Amortization - This adjustment eliminates depreciation
and amortization expense relating to the Northwest Distribution Center
property for the year ended December 31, 1995.
<PAGE>
Item 7(b)(iii) Proforma Financial Information
The following unaudited condensed proforma statement of operations presents
the results of operations of Lutheran Brotherhood Realty Fund I (the
Partnership) for the six months ended June 30, 1996 assuming that the sales
of The Village at Worthington Green and the Minnetonka Properties and the
Northwest Distribution Center occurred on January 1, 1996. The Village at
Worthington Green was sold on August 19, 1996 and the other properties were
sold on October 16, 1996. The proforma statement of operations does not
present the net gain on sale of investment property which the Partnership
realized from the sales.
This statement should be read in conjunction with the other proforma
financial statements and notes thereto and the discussion of the sale of
properties contained in Item 2 included elsewhere in this Form 8-K.
<TABLE>
Lutheran Brotherhood Realty Fund I
Proforma Statement of Operations
For the six months ended June 30, 1996
(thousands except per share amounts)
(unaudited)
<CAPTION>
Proforma
Six Months Six Months
Ended Sale of All Ended
June 30, 1996 Properties June 30, 1996
<S> <C> <C> <C>
Revenue:
Rental $260 ($260) $0
Interest 15 0 15
Equity in joint venture capital 86 (86) 0
---- ----- -----
Total revenue 361 (346) 15
---- ----- -----
Expenses:
Property operations 99 (99) 0
Depreciation and amortization 46 (46) 0
Administrative 104 0 104
---- ----- -----
Total expenses 249 (145) 104
---- ----- -----
Net Income $112 ($201) ($89)
===== ====== =====
Net income per weighted
average number of limited
partnership units outstanding $1.76 ($3.15) ($1.39)
===== ====== ======
Distributions per weighted
average limited partnership
units outstanding $2.00 $2.00
===== ====== =====
</TABLE>
See accompanying notes to proforma statement of operations.
<PAGE>
Lutheran Brotherhood Realty Fund I
Notes to Proforma Statement of Operations
For the Six Months Ended June 30, 1996
(unaudited)
Note 1. Basis of presentation
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The unaudited condensed proforma statement of operations of Lutheran
Brotherhood Realty Fund I ("the Partnership") presents the results of
operations for the Partnership for the six months ended June 30, 1996
assuming that the sale of all of the Partnership's properties (or properties
owned by the Joint Ventures in which the Partnership is a co-venturer)
occurred on January 1, 1996. The Village at Worthington Green was sold on
August 19, 1996 and all other properties (Minnetonka Properties and
Northwest Distribution Center) were sold on October 16, 1996. The proforma
statement of operations does not present the net gain on sale of investment
property which the Partnership realized from the sales.
Note 2. Proforma adjustments
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(a) Rental Revenue - This adjustment eliminates rental revenue relating to
the Northwest Distribution Center property for the six months ended
June 30, 1996.
(b) Equity in joint venture capital - This adjustment eliminates net income
relating to the Partnership's interest in all joint venture properties
for the six months ended June 30, 1996.
(c) Property Operations - This adjustment eliminates property operating
expenses relating to the Northwest Distribution Center property for the
six months ended June 30, 1996.
(d) Depreciation and Amortization - This adjustment eliminates depreciation
and amortization expense relating to the Northwest Distribution Center
property for the six months ended June 30, 1996.
<PAGE>
SIGNATURES
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Pursuant to the requirement 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.
LUTHERAN BROTHERHOOD REALTY FUND I,
a California limited partnership
By: Lutheran Brotherhood Real Estate
Products Company,
Its General Partner
Date: By: /s/ Mitchell F. Felchle
------------------------
Mitchell F. Felchle
President
Date: By: /s/ Anita J.T. Young
--------------------
Anita J.T. Young
Treasurer
(Chief Financial Officer)
<PAGE>
INDEX TO EXHIBIT
EXHIBIT NUMBER PAGE IN
REGISTRATION
STATEMENT
10(a) Purchase and Sale Agreement for
the Minnetonka Properties dated
September 9, 1996
10(b) Purchase and Sale Agreement for
the Northwest Distribution Center
dated September 9, 1996
<PAGE>
AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS AMENDMENT TO PURCHASE AND SALE AGREEMENT is made and entered into
as of the 11th day of October, 1996, by and between LUTHERAN BROTHERHOOD
REALTY FUND I, a California limited partnership, and LUTHERAN BROTHERHOOD,
a Minnesota corporation (collectively "Seller"), and MINCO/NORTHWEST
CORPORATION, a Delaware corporation ("Purchaser").
RECITALS:
A. Seller and Purchaser have entered into that certain Purchase and
Sale Agreement dated September 10, 1996 (hereinafter "Purchase Agreement").
B. Purchaser has requested that the Seller agree to extend the
Closing Date as set forth below.
C. Seller is willing to agree to extend the Closing Date as set forth
below, but only upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein, the parties hereto state, confirm and agree as follows:
1. Paragraph 7.1 of the Purchase Agreement is hereby amended to
provide that the Closing shall take place at the office of Oppenheimer
Wolff & Donnelly on Wednesday, October 16, 1996, at 10:00 o'clock a.m.
2. Except as set forth below, Purchaser acknowledges that all of the
Purchaser's objections to title, survey, physical condition, environmental
issues, leases, rent rolls, and tenant estoppel letters have been resolved.
The following are the exceptions:
a. Receiving title policies that reflect all of the matters
included in the most recent title commitments and endorsements issued by
the title company together with the addition of a listing of all tenants on
the approved rent rolls with regard to the exception regarding unrecorded
leases.
b. Receiving and approving all of the specific items which are
required to be delivered to Purchaser by the Seller on the Closing Date
under the terms of the Purchase Agreement and this Amendment.
Seller shall be entitled to the Earnest Money in accordance with Section
11.1 of the Purchase Agreement unless Seller fails to perform Seller's
obligations set forth above.
3. Except as set forth herein, all provisions of the Purchase
Agreement shall remain in full force and effect and are not further
modified or amended.
SELLER:
By: LUTHERAN BROTHERHOOD REALTY FUND I
a California limited partnership
By: Lutheran Brotherhood Real Estate
Products Company, a Minnesota corporation
Its: General Partner
By: /s/ Clifford W. Habeck
_______________________________________
Its: Assistant Vice President
_______________________________________
By:
_______________________________________
Its:
_______________________________________
and
By: LUTHERAN BROTHERHOOD,
a Minnesota corporation
By: /s/ Clifford W. Habeck
_______________________________________
Its: Assistant Vice President
_______________________________________
COLLECTIVELY DOING BUSINESS UNDER
THE NAMES OF MINNETONKA 300 & 400,
A MINNESOTA JOINT VENTURE AND
MINNETONKA 225, A MINNESOTA JOINT
VENTURE.
Date of Execution:
October 11, 1996
PURCHASER:
MINCO/NORTHWEST CORPORATION
a Delaware corporation
By: /s/ Randy J. Sowell
_____________________________________
Its: V.P.
_____________________________________
Date of Execution:
October 11, 1996
<PAGE>
PURCHASE
________
AND
___
SALE
____
AGREEMENT
_________
Dated as of
September 10, 1996
Between
LUTHERAN BROTHERHOOD REALTY FUND I
a California limited partnership
and
LUTHERAN BROTHERHOOD
a Minnesota corporation
and
MINCO/NORTHWEST CORPORATION
a Delaware corporation
<PAGE>
TABLE OF CONTENTS
_________________
SECTION HEADING PAGE
1. Sale and Purchase of Property 1
2. Purchase Price; Earnest Money 2
3. Seller's Warranties 2
4. Seller's Covenants 6
5. Delivery of Information. Review and Inspection by Purchaser 9
6. Related Purchase Agreements 12
7. Closing 13
8. Damage, Destruction and Eminent Domain 18
9. Tenant Bankruptcy 19
10. Miscellaneous 19
11. Default; Termination 21
EXHIBIT "A" 26
EXHIBIT "B" 27
EXHIBIT "C" 28
EXHIBIT "D" 29
EXHIBIT "E" 30
EXHIBIT "F" 31
EXHIBIT "G" 32
EXHIBIT "H" 33
<PAGE>
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and entered
into as of this 10 day of September, 1996, by and between LUTHERAN
BROTHERHOOD REALTY FUND I, a California limited partnership, and LUTHERAN
BROTHERHOOD, a Minnesota corporation, doing business as Minnesota joint
ventures under the name of Minnetonka 300 & 400 and the name Minnetonka 225
("Seller"), and MINCO/NORTHWEST CORPORATION, a Delaware corporation
("Purchaser").
1. Sale and Purchase of Property.
1.1 Seller agrees to sell and convey to Purchaser, and Purchaser
agrees to pay the Purchase Price (hereinafter defined) and to purchase and
take from Seller, subject to the terms and conditions herein contained: (i)
three parcels of real property located at 15225 Minnetonka Boulevard; 15300
Minnetonka Industrial Boulevard and 15400 Minnetonka Industrial Boulevard,
in the City of Minnetonka, County of Hennepin, State of Minnesota, legally
described on Exhibit A attached hereto and hereby made a part hereof
(hereinafter called "Land"); (ii) three office/warehouse buildings thereon,
together with all other buildings and improvements located thereon
(hereinafter collectively called "Buildings"); (iii) all appurtenances,
hereditaments, privileges and easements belonging to the Land and
Buildings; (iv) all fixtures, equipment, furnishings, appliances and other
items of tangible and intangible personal property which are owned by
Seller, are now or hereafter located in the Buildings or on the Land and
are used in connection with the maintenance or operation thereof (the
"Personal Property"); (v) all leases, licenses and other occupancy
agreements as set forth on the Rent Roll attached as Exhibit C
(collectively, the "Leases") covering space situated at or within the Land
and Buildings and any claim or right to claim against a tenant or occupant
(collectively, the "Tenants") under any Lease and all security deposits
paid or deposited by and owed to Tenants under the Leases; (vi) all of
Seller's rights in and to contractual rights and intangibles with respect
to the operation, maintenance, repair and improvement of the Land and
Buildings, including service and maintenance agreements, construction,
material and labor contracts, utility agreements and other contractual
arrangements, all to the extent designated by the provisions of this
Agreement as set forth on the list of contracts attached as Exhibit D
(collectively, the "Contracts") and (vii) all governmental permits,
licenses, certificates and approvals in connection with the ownership and
use of the Property (collectively, the "Licenses") and warranties of any
contractor, manufacturer or materialman (all the property in this Section
1.1 being hereinafter all collectively referred to as the "Property").
2. Purchase Price; Earnest Money.
2.1 Purchaser agrees to pay Five Million Seven Hundred Thousand and
No/100ths Dollars ($5,700,000.00) ("Purchase Price") for the Property which
shall be payable as follows:
2.1.1 Fifty-seven Thousand and No/100ths Dollars ($57,000.00)
earnest money (said sum, together with all interest accrued thereon, the
"Earnest Money"), which sum, shall be wired transferred to Chicago Title
Insurance Company (the "Title Insurer") as escrow agent, at its office
located at 2200 Plaza VII, 45 South Seventh Street, Minneapolis, Minnesota
55402 within two business days of the acceptance of this Agreement by
Seller and shall be immediately placed in a federally insured interest
bearing account ("Escrow Account").
2.1.2 The balance of the Purchase Price subject to credits and
adjustments required by this Agreement shall be paid to Title Insurer in
certified funds or by wire transfer of good funds on the Closing Date (as
that term is hereinafter defined) for disbursement to Seller.
2.2 All interest earned on the Escrow Money shall be retained in
the Escrow Account and shall be considered part of and follow the Earnest
Money until the Earnest Money is paid out of such account in accordance
with this Agreement.
2.3 In addition to the credits and adjustments set forth herein,
Seller agrees to credit to Purchaser at Closing the sum of Thirty-five
Thousand and No/100 Dollars ($35,000.00).
3. Seller's Warranties.
3.1 To induce Purchaser to enter into this Agreement, Seller makes
the following representations and warranties, each of which is material and
is relied upon by Purchaser. As used herein, the phrases "to the best of
Seller's knowledge," or "to its knowledge" or the like, refers only to the
actual knowledge of William P. Katter, Asset Manager of Lutheran
Brotherhood and Clifford W. Habeck, Assistant Vice President of Lutheran
Brotherhood and Assistant Vice President of Lutheran Brotherhood Real
Estate Products Company and Seller need not have conducted any
investigation.
3.1.1 To the best of Seller's knowledge, Seller has not
received any written notice from any state or local authority having
jurisdiction over the Property of any violation of any law, statute,
ordinance, code, governmental rule or regulation, or private covenant or
restriction, affecting the Property.
3.1.2 To the best of Seller's knowledge, Seller has not
received any written notice of any liabilities which affect the Property,
except ad valorem real estate taxes, special assessments and utility bills,
or notice of any litigation or threatened litigation with respect to Seller
or the Property which may effect the transaction contemplated by this
Agreement, the Property or Seller's interest in the Property, or any
pending or anticipated condemnation of any part of the Property.
3.1.3 Except as previously disclosed to Purchaser in Seller's
Braun Intertec Phase I Environmental Assessment dated June 3, 1996,
delivered to Purchaser, to the best of Seller's knowledge, Seller has not
received any notice of the existence, in, on or under the Property, of any
Hazardous Materials in violation of environmental law. "Hazardous
Materials" shall mean substance defined as "Hazardous Substances, Hazardous
Materials or Toxic Substances" in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended (12 USC Sec. 6901 et
seq.), and in any other Federal, State or local environmental law, statute,
regulation, ordinance or code including without limitation asbestos,
polychlorinated biphenyls (PCBs), petroleum products, lead based paint and
radon. Seller has fully cooperated and shall continue to cooperate during
the term of the Agreement with Purchaser and Purchaser's representatives in
investigating the history of the Property.
3.1.4 To the best of Seller's knowledge, Seller has not
received any notice of any work completed, commenced or contemplated, which
will or may result in any special assessments being levied against the
Property, other than special assessments which are levied as of the
Effective Date and disclosed in the Title Commitment (as hereinafter
defined).
3.1.5 Lutheran Brotherhood and Lutheran Brotherhood Realty
Fund I are the sole joint venturers in Seller.
3.1.6 Lutheran Brotherhood, a Minnesota corporation ("LB")
holds record title to the Property solely as nominee of the Seller pursuant
to the terms of Seller's joint venture agreement and in such capacity is
the fee owner of the Property has full and lawful power and authority, on
behalf of the Seller, to execute, deliver and perform this Agreement and
all documents which Seller is required hereby to execute, deliver and
perform, and to sell the Property on behalf of Seller.
3.1.7 To the best of Seller's knowledge, the most current
true, correct and complete Rent Roll for the property as of the date hereof
is as set forth on attached Exhibit C.
3.1.8 To the best of Seller's knowledge, the most current list
of Contracts as of the date hereof is as set forth on attached Exhibit D.
3.1.9 To the best of Seller's knowledge, the financial
operating statement(s) for the Property that have been or will be delivered
by Seller to Purchaser do not materially misstate the results of operation
of the Property for the periods reflected in such statements.
3.1.10 To the best of Seller's knowledge, the current schedule
of Personal Property, as of the date hereof, is as set forth on attached
Exhibit E.
3.1.11 Neither of the parties comprising the Seller is a
"foreign person" as such term is defined in Section 1445(f)(3) of the
Internal Revenue Code of 1986, as amended.
3.1.12 To the best of Seller's knowledge, neither of the
parties comprising the Seller is the subject of any existing, pending,
threatened or contemplated bankruptcy, solvency or other debtor's relief
proceedings.
3.1.13 To the best of Seller's knowledge, there are no
"Wells", as that term is defined in Minn. Stat. Section 103I.001, Subd.
21(1994), located on the Land, whether in use, not in use or sealed.
3.1.14 To the best of Seller's knowledge, Seller has not
received any notice from any tenant of the event of any default by Landlord
pursuant to the terms of the Leases which remains uncured.
3.1.15 To the best of Seller's knowledge, Seller has not
received notice from Seller's insurance carriers of any defects or any
requests for alterations or additions to any portion of the Property.
3.1.16 To the best of Seller's knowledge, there is no
individual sewage treatment system, as that term is defined in Minn. Stat.
Section 115.55, on or serving the Land whether in use or not in use.
3.1.17 Seller is not an 'employee benefit plan' within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (ERISA). Seller is not a 'party in interest' (as defined
in Section 3(14) of ERISA) with respect to Purchaser.
3.2 Seller shall indemnify and hold Purchaser harmless from and
against any and all claims, actions, judgments, liabilities, obligations,
liens, damages, penalties, fines, costs and expenses, asserted against,
imposed on, or suffered or incurred by Purchaser (or the Property),
directly arising out of or in connection with any breach or untruth of the
representations and warranties set forth in this Section 3 hereof. The
representations and warranties set forth in this Section 3 shall be deemed
to be updated and remade as of the Closing Date; and said representations
and warranties, as so remade, and the indemnity obligation set forth above,
shall survive the Closing for a period of twelve (12) months after the
Closing Date; provided, however, the representations set forth in Sections
3.1.6, 3.1.11 and 3.1.17 hereof shall survive the Closing Date for an
unlimited period of time. Any updated Rent Rolls delivered to Purchaser in
accordance with the terms hereof shall be, to the best of Seller's
knowledge, the most current true, correct and complete Rent Roll as of the
date of such delivery. Notwithstanding anything contained in this
Agreement to the contrary, except as set forth in Section 11.2 herein,
there shall be no liability on the part of the Seller for breaches of any
of the representations, warranties and certifications which are made by
Seller as set forth herein (collectively the "Representations"), of which
Purchaser had knowledge at Closing. If, notwithstanding Purchaser's
knowledge of such breach of Representation, Purchaser closes this
transaction, such breach of Representation shall be deemed waived.
Purchaser shall have no right to bring any lawsuit or other legal action
against Seller, as a result of the breach of the Representation prior to
Closing. If Purchaser elects not to waive such breach of Representation,
Purchaser's sole remedy is to terminate this Agreement in which event, the
Earnest Money shall be returned to Purchaser and neither party hereto shall
have any further obligations to the other party hereunder other than the
indemnity and confidentiality obligation set forth hereinafter.
EXCEPT FOR THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN
THIS SECTION 3, PURCHASER WARRANTS AND ACKNOWLEDGES TO AND AGREES WITH
SELLER THAT PURCHASER IS PURCHASING THE PROPERTY IN ITS "AS-IS, WHERE IS"
CONDITION "WITH ALL FAULTS" AS OF THE CLOSING DATE AND SPECIFICALLY AND
EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER
EXPRESS OR IMPLIED, AS TO ITS CONDITION, FITNESS FOR ANY PARTICULAR
PURPOSE, MERCHANTABILITY, OR ANY OTHER WARRANTY OF ANY KIND, NATURE OR TYPE
WHATSOEVER FROM OR ON BEHALF OF SELLER. EXCEPT FOR THE REPRESENTATIONS OF
SELLER EXPRESSLY SET FORTH IN THIS SECTION 3, SELLER SPECIFICALLY DISCLAIMS
ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT,
EXPRESS OR IMPLIED, CONCERNING (A) THE VALUE, NATURE, QUALITY OR CONDITION
OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, AND
GEOLOGY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE
SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH
PURCHASER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES FOR FUTURE
DEVELOPMENT OF THE PROPERTY; (D) THE COMPLIANCE OF OR BY THE PROPERTY OR
ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY
APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PROPERTY; (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR
MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (G) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (H) THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY
OR ANY OTHER ENVIRONMENTAL MATTER OR CONDITION OF THE PROPERTY; OR (I) ANY
OTHER MATTER WITH RESPECT TO THE PROPERTY. PURCHASER ACKNOWLEDGES AND
AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER
CONTAINED IN THIS SECTION 3, ANY INFORMATION PROVIDED BY OR ON BEHALF OF
SELLER WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES
AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION
OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY
MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF FURNISHED BY ANY REAL
ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, EXCEPT OF THE
EXPRESS REPRESENTATIONS SET FORTH IN THIS SECTION 3. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT PURCHASER IS A SOPHISTICATED AND EXPERIENCED
PURCHASER OF PROPERTIES SUCH AS THIS PROPERTY AND HAS BEEN DULY
REPRESENTED BY COUNSEL IN CONNECTION WITH THE NEGOTIATION OF THIS
AGREEMENT. EXCEPT AS OTHERWISE PROVIDED HEREIN, SELLER HAS NO AGREEMENT TO
ALTER, REPAIR OR IMPROVE ANY OF THE PROPERTY. NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS PARAGRAPH, THIS PARAGRAPH SHALL NOT BE DEEMED TO
CREATE OR IMPOSE LIABILITY UPON PURCHASER.
4. Seller's Covenants Seller agrees and covenants with Purchaser as
follows:
4.1 Between the Effective Date and the Closing Date, Seller shall
make commercially reasonable efforts to: (i) maintain and operate the
Property in at least as good condition as exists on the Effective Date,
ordinary wear and tear of normal use and damage by casualty or condemnation
excepted, (ii) comply with the terms of all Leases, (iii) to perform any
work required under any Leases or other applicable agreements and (iv) to
collect rents and other payments due from Tenants.
4.2 Between July 29, 1996 and the Closing Date, Seller shall have
the right, but not the obligation, to enter into new, renewal or expansion
leases subject to Purchaser's consent (which consent shall not be
unreasonably withheld). Notwithstanding the above, the consent of the
Purchaser shall not be required for lease options or expansion rights which
are already provided for under the terms of existing leases heretofore
delivered to Purchaser or for those leases which are set forth on Exhibit F
attached hereto which leases have been previously approved by Purchaser.
Except as set forth above, from and after the July 29, 1996 through and
including the earlier of the Closing Date or the date on which this
Agreement is terminated, Seller shall obtain a written consent from
Purchaser prior to (i) entering into any new Lease or renewal, option,
amendment or modification thereof or agreement relating thereto, and before
terminating any Lease, or (ii) consenting to any sublease or assignment,
provided that the Lease requires the consent of Seller for any such
sublease or assignment (all such Leases, renewals, options, amendments,
modifications, terminations, subleases and assignments being hereinafter
referred to as the "Lease Documents"). Seller shall submit to Purchaser a
proposal outlining the major business terms of any proposed Lease or
renewal, option, amendment, modification, termination, sublease or
assignment. Purchaser shall have three (3) business days (i.e. days other
than Saturdays, Sundays and legal holidays in the State of Minnesota) after
receipt of such proposal to approve or withhold its approval to such
proposal. If Purchaser fails to notify Seller within such three (3)
business day period, Purchaser shall be deemed to have approved such
proposal. After Seller's receipt of Purchaser's approval or deemed
approval of any such proposal, Seller may execute the applicable final
Lease Document arising from such proposal provided that, in the case of new
Leases, such documentation is prepared on the lease form currently utilized
by Seller without any material modifications and, in all cases, is
consistent with the terms of the proposal approved or deemed approved by
Purchaser. Purchaser, in the event and only in the event that Purchaser
elects to purchase the Property pursuant to the terms of this Agreement,
shall be solely responsible for all Lease Transaction Costs incurred with
respect to any agreement whether arising from either a proposal approved or
deemed approved by Purchaser or a proposal for which approval is not
required by the Purchaser in accordance with the above terms, including but
not limited to those leases set forth on Exhibit F and Purchaser shall
reimburse Seller at Closing for all Lease Transaction Costs which have been
paid by Seller prior to Closing. For purposes hereof the term "Lease
Transaction Costs" shall mean all tenant improvements and all lease
commissions, concessions and money allowances of Seller, as landlord, under
a lease. Seller shall forthwith furnish to Purchaser a complete copy of
all Lease Documents entered into by Seller between the Effective Date and
the Closing Date. For purposes hereof, to the extent that any renewal of
any existing Lease or any sublease or assignment may be effected by the
tenant without the consent of Seller pursuant to the terms of such Lease,
then such renewal, sublease or assignment shall be deemed to be a Lease
Document approved by Purchaser notwithstanding anything set forth herein to
the contrary.
4.3 Between the Effective Date and the Closing Date, Seller shall
keep the Property insured against fire, lightning, theft, vandalism,
malicious mischief and all other risks and casualties covered by standard
extended coverage and "all-risk" endorsements, in an amount equal to the
replacement cost and shall also keep the existing liability insurance and
loss of rents insurance in full force and effect.
4.4 Between the Effective Date and the Closing Date, except in the
event of an emergency, Seller shall not enter into any new management
agreement or other Contract relating to the Property, nor modify any
existing Contract without Purchaser's prior written consent unless the
Contract may be terminated at any time, without cause and without penalty
to Purchaser, on not more than thirty (30) days' written notice. In the
event any existing Contract may be terminated at any time, without cause
and without penalty to Seller on not more than thirty (30) days' written
notice, Seller agrees, after expiration of the Inspection Period (as
defined herein), to give such written notice of termination upon receipt of
a written request from Purchaser.
4.5 Between the Effective Date and the Closing Date, Seller shall
immediately deliver to Purchaser any notice of a violation of any law,
statute, ordinance, code, governmental rule or regulation, or private
covenant or restriction hereafter received. If such a violation is
discovered prior to the Closing Date, including but not limited to any
violation disclosed by a code compliance audit or certificate of occupancy
inspection, Seller shall have the right, but not the obligation, to correct
the violation prior to the Closing Date. If Seller does not correct any
such violation which prohibits the continued use and operation of the
Property prior to the Closing Date, Purchaser may, at its option, either
(a) terminate this Agreement, in which event all Earnest Money shall be
paid to Purchaser, and neither party hereto shall have any further
obligation to the other party hereunder; except for the indemnity and
confidentiality obligations set forth herein or (b) elect to purchase the
Property without any reduction in the Purchase Price.
4.6 Seller shall pay, on or prior to the Closing Date, any amounts
necessary for the satisfaction and release, of record, of all documents
which secure any existing mortgage financing with respect to the Property.
4.7 Seller shall not accept prepayment of any rent under any Lease
more than one (1) month in advance after the Effective Date. Any such
prepaid rent received by Seller shall be credited to Purchaser at Closing.
4.8 At least five (5) days prior to the Closing Date, Seller, shall
cause Tenants which in the aggregate lease at least eighty-five percent
(85%) of the rented area of the Buildings on the Property (including all
tenants which lease 5,000 or more square feet of the Buildings) to furnish
to Purchaser a signed estoppel certificate (hereinafter called "Estoppel
Certificate") in form attached hereto as Exhibit G. In the event Seller
has not received such Estoppel Certificates, Seller shall give Purchaser
written notice of such non-receipt at least four (4) days prior to the
Closing Date. Purchaser shall have an additional ten (10) business days
from the Date of such notice to obtain the Estoppel Certificates directly
from Tenants ("Estoppel Extension Period"). The Closing Date shall be
extended to the date one business day after the termination of the Estoppel
Extension Period. Seller agrees to make a diligent, good faith effort to
obtain said Estoppel Certificates. If any such Estoppel Certificate is
inconsistent with the Rent Roll in any material respect, or is inconsistent
with the security deposits actually received by Seller, or if it indicates
that Seller is in default or has not performed some duty of an inducement
nature under the Lease described therein, Seller shall have the right, but
not the obligation, on or before the Closing Date, to resolve said
inconsistency, to cure said default and/or to perform said obligation. If
Seller does so resolve, cure or perform the same, Purchaser shall purchase
this Property in accordance with the terms hereof. If Seller fails to so
obtain such Estoppel Certificates, to resolve any such inconsistency, to
cure any such default or to perform any such obligation, on or before the
Closing Date, Purchaser may, by written notice to Seller, elect either (i)
to purchase the Property anyway, in accordance with the provisions hereof,
without any reduction or abatement of the Purchase Price, notwithstanding
said failure, and without any continuing obligation upon Seller to obtain,
resolve, cure or perform the same, or (ii) to, as its sole and exclusive
remedy therefor, terminate this Agreement by written notice to Seller, in
which event all Earnest Money shall be paid to Purchaser, and this
Agreement shall be deemed to be null, void, terminated and of no further
force or effect, except as herein to the contrary expressly provided. If
Purchaser fails to so elect either said option (i) or said option (ii),
Purchaser shall be deemed to have elected said option (ii).
5. Delivery of Information. Review and Inspection by Purchaser.
5.1 Seller agrees to provide Purchaser a revised and updated list
of Contracts and Personal Property and a revised and updated Rent Roll
three (3) days prior to closing. Purchaser acknowledges that Seller does
not make any representation or warranty regarding the accuracy or
completeness of any items, documents, leases and operation and financial
information ("Review Materials") provided by Seller to Purchasers except as
expressly contained in Section 3 of this Agreement.
5.2 Conditions to Performance by Purchaser. Purchaser's obligation
to perform under this Agreement is hereby made expressly contingent and
conditional upon the occurrence, fulfillment, satisfaction or performance
of the conditions set forth in Section 5.2.1 and 5.2.2 on or before
September 6, 1996 ("the Property Inspection Period Termination Date") and
the condition set forth in 5.2.3 on or before September 13, 1996 ("the
Title and Survey Inspection Period Termination Date") (such conditions
hereinafter called "Purchaser's Conditions") (hereinafter collectively
referred to as the "Inspection Period Termination Date") (the period
beginning with the Effective Date and ending with the Inspection Period
Termination Date being hereinafter referred to as the "Inspection Period").
5.2.1 Leases, Operating and Financial Information. All
existing Leases, all existing Contracts relating to the Building, which are
not terminable on thirty (30) days' or less notice, the Rent Roll, Review
Materials and all books, records and files of Seller maintained with
Seller's third party property manager relating to the operation of the
Property and the income and expenses thereof (hereinafter called
"Records"), shall be acceptable to Purchaser in its sole discretion.
Seller has and shall continue to provide access to Purchaser and to its
agents, consultants or representatives during normal business hours to the
office of Seller's property manager to review the Records relating to the
Property. Purchaser may copy the Records at Purchaser's sole cost and
expense. If Purchaser, its agents, consultants or representatives enter
upon the Property or into the offices of Seller's property manager to
review the Records or to interview Tenants of the Property, such entry
shall be made only during normal business hours, after making prior
arrangements therefor with Seller. Any such entry or inspection shall be
at the sole and entire cost, risk and expense of Purchaser.
5.2.2 Physical Condition of Property. The physical condition
of the Property, the availability of adequate utilities and services
thereto, and the conformance thereof with applicable laws, statutes,
ordinances, codes, orders, decrees, rules and regulations (hereinafter
called "Governmental Requirements"), shall be acceptable to Purchaser, in
Purchaser's sole discretion. Purchaser itself or by its agents,
consultants or representatives, may also, at any time during the Inspection
Period, after making prior arrangements therefor with Seller, enter upon
and inspect the Property during normal business hours; provided, however,
that no such entry or inspection shall interfere with the operation of the
Property by Seller or the rights of Tenants of the Property or cause any
physical damage to the Property. No boring, drilling or other physical
intrusion into the land, structures or improvements comprising the Property
shall be made on the Property without prior written approval of Seller.
Purchaser acknowledges that Purchaser has received a Phase I Environmental
Report from Braun Engineering, dated June 3, 1996 (hereinafter referred to
as the "Environmental Report") and Purchaser hereby agrees to accept the
environmental condition of the Property as set forth in the Environmental
Report. Seller shall request that Braun Engineering address the
Environmental Report to both Seller and Purchaser and deliver a copy so
addressed to Purchaser. Purchaser shall not conduct any additional
investigation of the environmental condition of the Property other than
updating the existing Environmental Report for any intervening matters.
Prior to Closing, Seller shall obtain from the Minnesota Pollution Control
Agency (the "MPCA") a "no association" letter relating solely to the act of
purchasing the Property (the "No Association Letter") containing language
in substance similar to that set forth in Exhibit I. In the event that
Seller is unable to obtain the No Association Letter prior to the Closing
Date, the Closing Date shall be extended for a period of 14 days to allow
Seller an additional period of time within which to obtain the Letter.
Purchaser shall reimburse Seller for Seller's out-of-pocket costs and
expenses incurred in obtaining the No Association Letter, including
expenses of the MPCA, fees of the environmental engineer and attorneys'
fees, provided, however, the maximum amount for which the Purchaser shall
be required to pay shall be One Thousand and 00/100 Dollars ($1,000.00)
5.2.3 Seller shall obtain and deliver, at Seller's expense, a
commitment for an owner's policy of title insurance (ALTA 1992 Form)
("Commitment") issued by Title Insurer and containing tax and special
assessment searches ("Searches") with respect to the Property and which
commitment shall show Lutheran Brotherhood as fee owner and Purchaser as
the proposed insured; shall be in the amount of the Purchase Price and
shall provide for such endorsements as set forth on Exhibit H. Purchaser
acknowledges receipt of such Commitment. Purchaser acknowledges that the
Commitment shows that the Property is subject to (a) the standard printed
exceptions which appear in ALTA Title Policy forms; (b) real estate taxes
and special assessments which are not yet delinquent; (c) the Leases; and
(d) the existing encumbrances listed on Exhibit B attached hereto and
hereby made a part hereof (hereinafter all collectively called "Existing
Encumbrances"). Seller shall also obtain and deliver at Purchaser's
expense, Uniform Commercial Code Searches of filings from both the offices
of the Minnesota Secretary of State and the applicable County Recorder, UCC
Division ("UCC Search"). The Commitment shall include a complete copy of
each document listed as an exception to title or otherwise referred to
therein. Purchaser shall obtain a survey of the Property ("Survey"),
certified as of a current date in favor of Purchaser and Title Insurer,
prepared by a registered land surveyor acceptable to Purchaser. The Survey
shall be prepared in sufficient detail to permit the Title Insurer to
delete the standard printed survey exception in the title insurance policy
and shall be otherwise acceptable to Purchaser. Purchaser shall have until
September 13, 1996 to raise, by written notice to Seller, any objections to
the title to the Property which Purchaser may have to the title. All
objections not so raised shall be deemed waived, and Purchaser agrees to
take title to the Property subject to liens, charges, encumbrances,
restrictions, conditions, reservations, easements and other matters
described in the Title Commitment and not so objected to or which are
otherwise hereafter approved by Purchaser (hereinafter all collectively
called "Permitted Encumbrances"), provided, however, that Purchaser may
make objections to title after that date, if the matters giving rise
thereto come to its attention for the first time thereafter. If Purchaser
so raises any such objections, Seller shall within 5 days of Purchaser's
written notice of such title objections have the right, but not the
obligation, to elect to cure the same on or before the Closing Date;
provided, however, that Seller shall not have any obligation to take any
action or to incur any cost or expense in connection with the cure of any
thereof. If Seller elects not to cure such objection within 5 days of the
title objection notice or if Seller fails to cure such objections on or
before the Closing Date, Purchaser may elect, by written notice to Seller,
either (i) to purchase the Property anyway, in accordance with the
provisions hereof, and without any reduction in or abatement of the
Purchase Price, subject to the matters objected to, and without any
continuing obligation upon Seller to cure the same, or (ii) to terminate
this Agreement, and this Agreement shall be deemed to be null, void,
terminated and of no further force or effect, except as herein to the
contrary expressly provided. If Purchaser fails to so elect either said
option (i) or said option (ii), Purchaser shall be deemed to have elected
said option (ii) in which event all Earnest Money shall be paid to
Purchaser and neither party hereto shall have any further obligation to the
other party hereunder, except for the indemnity and confidentiality
obligations set forth herein. If Seller does cure said objection on or
before the Closing Date, Purchaser shall purchase the Property in
accordance with the provisions hereof.
If Purchaser on or before the end of the Property Inspection
Period, delivers to Seller written notice of Purchaser's election not to
acquire the Property for any reason whatsoever or if Purchaser on or before
the end of the Title and Survey Inspection Period, delivers to Seller
written notice of Purchaser's election not to acquire the Property because
of Title or Survey objections which Seller elects not to cure, then this
Agreement will automatically terminate and the Earnest Money will be
returned to Purchaser and neither party hereto shall have any further
obligations to the other party other than the indemnity and confidentiality
obligations herein. Otherwise upon expiration of the respective Inspection
Periods, all such objections shall be deemed waived and Purchaser shall not
be entitled to a return of the Earnest Money unless there is a default by
Seller under this Agreement.
5.3 Seller agrees to cooperate with Purchaser in Purchaser's
efforts to fulfill, satisfy and/or perform Purchaser's Conditions,
provided, however, Seller shall have no obligation to cure any item which
is not acceptable to Purchaser during the course of its review of the
Property during the Inspection Period. All of the Purchaser's Conditions
are for the benefit of Purchaser and may be waived by Purchaser at any time
prior to the end of the Inspection Period.
5.4 Purchaser agrees, unless such Review Materials and other
information are in the Public Domain, to keep all Review Materials and any
other information relating to the Property provided to it by Seller or
obtained by Purchaser in the course of its review and inspection provided
for herein confidential until the Closing has occurred, provided that
Purchaser may disclose any of such information to its attorneys,
accountants, engineers and other advisors, who are involved with
Purchaser's acquisition and investigation of the Property or if required to
do so by applicable law. Purchaser shall return and deliver to Seller all
copies and information relating to the Property provided to Purchaser by
Seller or made by Purchaser in the course of said review and inspection, if
the Closing does not close for any reason other than a default by Seller.
The obligations of the Purchaser under this Section 5.4 shall survive any
termination of this Agreement.
6. Related Purchase Agreements. This Agreement is one (1) of four (4)
purchase agreements entered into by the Seller (and various affiliates of
Seller) and Purchaser (and various affiliates of Purchaser). In addition
to this Agreement, the following purchase agreements have been executed:
(i) That certain Purchase Agreement dated September 10, 1996,
between Lutheran Brotherhood, a Minnesota corporation, as Seller, and
Brooklyn Burnsville Corporation, a Delaware corporation, as Purchaser
("Brooklyn/Burnsville Purchase Agreement"); and
(ii) That certain Purchase Agreement dated September 10, 1996
between Lutheran Brotherhood, a Minnesota corporation, as Seller, and
MINCO/Northwest Corporation, a Delaware corporation, as Purchaser ("Shingle
Creek Purchase Agreement"); and
(iii) That certain Purchase Agreement dated September 10, 1996
between Lutheran Brotherhood Realty Fund I, a California limited
partnership, as Seller, and MINCO/Northwest corporation, a Delaware
corporation, as Purchaser ("Northwest Distribution Purchase Agreement");
(this Agreement and the above three (3) purchase agreements being
hereinafter referred to collectively as the "Purchase Agreements"). It is
understood and agreed that Seller is entering into this Agreement upon the
condition that the Property shall only be sold to Purchaser simultaneously
with the properties described in the Brooklyn/Burnsville Purchase Agreement
and the Northwest Distribution Purchase Agreements. Purchaser therefore
agrees that should an event of default occur under the terms of this
Agreement, the Brooklyn/Burnsville Purchase Agreement or the Northwest
Distribution Purchase Agreement (herein after being collectively referred
to as the "Related Purchase Agreements") on the part of the Purchaser or
should the Purchaser elect for any reason not to purchase any of the
properties described in the Related Purchase Agreements, including the
Property (but not including the property located at 1100 Highway 13,
Burnsville, Minnesota ("Burnsville Property") in the event that Purchaser
elects not to purchase the Burnsville Property in accordance with the terms
of the Brooklyn/Burnsville Purchase Agreement) all of the Purchase
Agreements shall terminate and be of no further force and effect. In the
event that Purchaser elects not to purchase the properties (but not
including the Burnsville Property) described in the Related Purchase
Agreements during the respective Inspection Periods described in the
Purchase Agreements, all of the Purchase Agreements shall terminate and the
Earnest Money shall be returned to Purchaser and neither party hereto shall
have any further obligations to the other party thereunder other than the
indemnity and confidentiality obligations set forth therein. In the event
that the Purchaser fails to purchase the properties (but not including the
Burnsville Property) described in the Related Purchase Agreements after the
respective Inspection Periods for any reason other than default by Seller,
all of the Purchase Agreements shall terminate and the Earnest Money
provided for in the Purchase Agreements shall be delivered to Seller and
neither party hereto shall have any further obligations to the other party
thereunder other than the indemnity and confidentiality obligations set
forth therein.
7. Closing
7.1 Unless changed as herein provided, or as provided in the
Related Purchase Agreements, or by mutual agreement, the Closing shall take
place at the office of Oppenheimer Wolff & Donnelly on or before September
27, 1996 ("Closing Date").
7.2 At the Closing, Seller shall cause to be executed by the
appropriate parties and delivered the following documents, to be prepared
by Seller's counsel and to be in form and substance mutually satisfactory
to Seller and Purchaser:
7.2.1 A limited warranty deed in recordable form ("Deed"),
subject only to Permitted Encumbrances and to such other exceptions which
Purchaser has accepted or is deemed to have accepted pursuant to Section
5.2.3 hereof which shall contain the legal description of the Property as
shown on the Survey.
7.2.2 A limited warranty bill of sale conveying to Purchaser
fixtures, equipment, appliances, furnishings and all Personal Property,
owned by Seller, located at and used in connection with the Property.
7.2.3 Evidence satisfactory to Purchaser and Title Insurer
that this Agreement, the Deed and all other Closing documents have been
validly authorized, executed and delivered by and on behalf of Seller, and
any affidavits or other agreements reasonably required by Title Insurer to
issue the Title Policy (as hereinafter defined).
7.2.4 The originals of all Leases and Contracts relating to
the Property.
7.2.5 To the extent possessed by Seller, copies of all site
plans, blueprints, plans, specifications and operating manuals relating to
the Property and copies of all building permits, certificates of occupancy
and other records relating to zoning, utilities and construction of the
Improvements on the Property, together with an assignment by Seller of all
of its right, title and interest therein to Purchaser.
7.2.6 All documents required to be delivered by Seller to
Purchaser pursuant to any other provisions of this Agreement.
7.2.7 Assignment of all of the Leases, of any guarantees
thereof, of the security and other deposits and all advance rental payments
collected or received by Seller which Seller is required to credit to
Purchaser hereunder. Purchaser shall join in the assignment document to
assume the continuing Landlord obligations thereunder. Seller shall
indemnify Purchaser against all loss, cost or expense, including reasonable
attorneys fees, damage and liability incurred by Purchaser as a result of
claims brought against Purchaser with respect to a breach by Seller of any
Leases, which breach shall have occurred prior to the date of Closing.
Purchaser shall indemnify Seller against all loss, cost or expense
(including reasonable attorneys fees), damage and liability incurred by
Seller as a result of claims brought against Seller with respect to a
breach by Purchaser of any Leases, which breach shall occur on or after the
date of Closing. Such indemnities shall be limited to a term of one (1)
year and shall be of no further force and effect upon the expiration of one
(1) year after the date of Closing.
7.2.8 Assignment of all Contracts; of all warranties,
guarantees, permits, Licenses and certificates applicable or relating to
the Property, to the extent assignable and not otherwise terminated in
accordance herewith. Purchaser shall join in the assignment document to
assume all of Seller's obligations after the Closing. Seller shall
indemnify Purchaser against all loss, cost or expense, including reasonable
attorneys fees, damage and liability incurred by Purchaser as a result of
claims brought against Purchaser with respect to a breach by Seller of any
Contracts which breach shall have occurred prior to the date of Closing.
Purchaser shall indemnify Seller against all loss, cost or expense
(including reasonable attorneys fees), damage and liability incurred by
Seller as a result of claims brought against Seller with respect to a
breach by Purchaser of any Contracts, which breach shall occur on or after
the date of Closing. Such indemnities shall be limited to a term of one
(1) year and shall be of no further force and effect upon the expiration of
one (1) year after the date of Closing.
7.2.9 A transferor's certification stating that neither of the
parties comprising Seller is a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in
the United States Internal Revenue Code and the Income Tax Regulations
promulgated thereunder ("Code") and setting forth such other information as
may be required by Section 1445(b)(2) of the Code.
7.2.10 A Seller's affidavit stating that there are no
outstanding, unsatisfied judgments, tax liens or bankruptcies against or
involving Seller or the Property, that there has been no skill, labor or
material furnished to the Property for which mechanics' liens could be
filed, and that there are no other unrecorded interests in the Property
(except Leases which Seller has provided to Purchaser).
7.2.11 The owner's duplicate certificate(s) of title, if the
title to the Property has been registered pursuant to Minn. State. Ch. 508
or any other documents necessary to record the deed and other recording
documents.
7.2.12 Well certificates, relating to the Land, which conforms
with Minn. Stat. Section 103I.235, Subd. 1 (1994), unless the Deeds contain
the following statement: "The Seller certifies that the Seller does not
know of any wells on the described real property".
7.2.13 The No Association Letter issued by the MPCA in
accordance with Section 5.2.2 above.
7.2.14 A certificate with respect to ERISA as set forth in
Section 3.1.17.
7.2.15 Tenant Estoppel Certificates as required by Section 4.8
herein.
7.2.16 Form Letter to tenants notifying tenants that the
Property has been sold and that payments of rent and other amounts due
under the terms of the Leases shall be payable to Purchaser or as Purchaser
shall direct.
7.2.17 1992 Form B Owner's policy of title insurance
consistent with the Commitment as approved by the Purchaser except that it
shall be free and clear of the standard printed exceptions appearing in the
commitment.
7.2.18 Any insurance certificates from tenants in Seller's
possession.
7.2.19 Seller's tax identification number and any other
information required by the Title Insurer to allow the Title Insurer to
comply with its reporting requirements.
7.3 On the Closing Date, Purchaser shall direct the Title Insurer
to pay to Seller the Purchase Price, and Seller shall deliver possession of
the Property together with all keys to the Property in Seller's possession
and all codes for any security devices on the Property to Purchaser,
subject only to Permitted Encumbrances, and to such other exceptions which
Purchaser has accepted or is deemed to have accepted pursuant to Section
5.2.3 hereof, including the rights of Tenants under Leases.
7.4 On the Closing Date, Seller and Purchaser shall execute a
closing statement to be prepared by the Title Insurer upon which the
following adjustments shall be made as of the close of business on the day
immediately preceding the Closing (the "Adjustment Date").
7.4.1 All real estate taxes and installments of special
assessments due and payable in the year during which the Closing takes
place shall be prorated between the parties on a 366-day year as of the
Adjustment Date, with the Purchaser being responsible for the portion
attributable for the period after the Adjustment Date.
7.4.2 A proration of the collected rents (including, without
limitation, payments or reimbursements for operating expenses, common area
costs and real estate taxes), vending machine revenues (if any), utilities,
and all other income and operating expenses relating to the Property (other
than expenses of real estate taxes and special assessments) shall be made
between Seller and Purchaser as of the Adjustment Closing Date on the basis
of a 366-day year, with Seller being responsible for the expenses and
entitled to the revenues accrued during or applicable to the period before
and on the Adjustment Date, and Purchaser being responsible for the
expenses and entitled to the revenues accrued during or applicable to the
period after the Adjustment Date.
7.4.3 If any rents are so collected by Purchaser after the
Closing which Seller shall be entitled to, such rents shall be paid over by
Purchaser to Seller. For the purposes of determining to which periods
rents collected by Purchaser after the Closing are applicable, any rent
payments shall be applied in the following order: (1) to unpaid rent for
the month in which the Closing Date occurs; (2) to unpaid rent for any
month after the month in which closing occurs and which is due and owing
prior to the date of collection; (3) to unpaid rent for any month prior to
the month in which the Closing Date occurs; and (4) to prepayment of any
other subsequent month's rent. Seller hereby retains the continuing right,
which shall survive the Closing, to bring an action for collection of sums
due and owing but not for possession or termination of any lease against
any Tenant for unpaid rent attributable to the period through the Closing
Date. With respect to any rents (including without limitation
reimbursement obligations for operating expenses, common area costs,
insurance or real estate taxes) for any given Tenant for the months prior
to the month in which Closing occurs, due but not paid as of the Closing
Date, Purchaser shall forward any such amounts received by Purchaser
directly to Seller.
7.4.4 Seller shall credit to Purchaser the amount of all
damage or security deposits collected or received by Seller with respect to
any Tenants of the Property, including any interest accrued thereon as of
the Adjustment Date which must be paid to such Tenants pursuant to their
Leases or any applicable statute.
7.4.5 If at any time any of the amounts to be apportioned
under Sections 7.4.2 or 7.4.3 hereof cannot be calculated with complete
precision because the amount or amounts of one (1) or more items included
in such calculation are not then known, such calculation shall be made on
the basis of reasonable estimates by Seller and Purchaser of the amount or
amounts of the item or items in question, subject to adjustment (by
additional payment by Purchaser to Seller or by refund from Seller to
Purchaser) when the actual amount or amounts of such item or items becomes
known. Promptly after the actual amount of any such item becomes known to
either party hereto, which includes year end common area expense
reconciliation, such party shall notify the other thereof and shall include
in such notice the amount of any required adjustment. If such adjustment
requires an additional payment by Purchaser to Seller, Purchaser shall make
such payment to Seller simultaneously with its giving of, or within twenty
(20) days after its receipt of, such notice, as the case may be. If such
adjustment requires a refund by Seller to Purchaser, Seller shall make such
refund simultaneously with its giving of, or within twenty (20) days after
its receipt of, such notice, as the case may be. The obligations of this
Section 7.4.5 shall survive and remain enforceable after the Closing of the
Sale of the Property.
7.5 Seller shall pay the cost of the Commitment, the Title
Documents and the Searches. Seller shall pay the state deed tax applicable
to the Deed delivered hereunder. Seller shall credit to Purchaser an
allowance up to $3,000.00 ($1,000.00 per building) for reimbursement of the
actual costs of the Survey obtained by Purchaser. Seller shall pay all
leasing commissions and tenant improvement costs incurred in connection
with any Lease executed on or before the Effective Date.
7.6 Any closing fee or escrow fee charged by the Escrow Agent or
Title Insurer shall be paid one-half by Purchaser and one-half by Seller.
7.7 Purchaser shall pay the cost of the Title Policy and any
endorsements thereto and the cost of recording the Deed. Purchaser shall
pay the cost of the UCC Search. Purchaser shall pay the costs of obtaining
the No Association Letter from the MPCA in accordance with the terms of
Section 5.2.2 above. Purchaser shall assume and reimburse Seller for any
Lease Transaction Costs for any Lease executed pursuant to Section 4.2
above.
7.8 Each party shall pay the fees of its own attorneys and
accountants incurred in connection with the negotiation, execution and
performance of this Agreement.
8. Damage, Destruction and Eminent Domain.
8.1 Risk of loss with respect to the Property shall remain upon
Seller and shall not pass to Purchaser until the completion of the closing.
8.2 If, prior to closing, the Property or any part thereof is
substantially damaged or destroyed by fire, the elements or any cause,
Seller shall forthwith notify Purchaser of said damage or destruction, in
writing. If Purchaser delivers written notice of its election to terminate
this Purchase Agreement to Seller within fifteen (15) days of Seller's
giving notice of such damage or destruction, this Purchase Agreement shall
be terminated and become null and void. Upon receipt by Seller of written
notice delivered with the applicable fifteen (15) day time period of an
election by Purchaser to so terminate this Purchase Agreement, all Earnest
Money, and all interest accrued thereon, shall be paid to Purchaser and no
party hereto shall have any further claims against the other hereunder
other than the indemnity and confidentiality provisions herein. If
Purchaser elects to proceed and to consummate the purchase despite said
substantial damage or destruction, there shall be no reduction in or
abatement of the Purchase Price, and Seller shall assign to Purchaser
Seller's right, title and interest in and to all insurance proceeds
resulting or to result from said damage or destruction and shall reimburse
Purchaser, in cash, for any deductible amounts under its insurance
policies. For the purposes of this Subsection 8.2, the words
"substantially damaged or destroyed" shall mean damage or destruction which
the Purchaser and Seller reasonably agree would cost three percent (3%) of
the Purchase Price or more to repair. In the event of any less than
substantial damage or destruction prior to the Closing Date, Seller shall
either fully and properly repair the same or restore the Property to the
condition required hereby prior to the Closing Date, or shall permit
Purchaser to deduct the cost of so repairing the same as reasonably
determined by Purchaser and Seller from the cash portion of the Purchase
Price payable at the closing, at Seller's option.
8.3 If, prior to closing, the Property or any part thereof shall be
taken by eminent domain, Seller shall forthwith notify Purchaser of said
taking, in writing. If Purchaser gives written notice of its election to
terminate this Purchase Agreement within fifteen (15) days of Seller's
giving notice of such substantial taking, this Purchase Agreement shall be
terminated and become null and void. Upon receipt by Seller of written
notice delivered within the applicable fifteen (15) day time period of an
election by Purchaser to treat this Purchase Agreement as null and void,
all Earnest Money, and all interest accrued thereon, shall be paid to
Purchaser and no party hereto shall have any further claims against the
other hereunder other than the indemnity and confidentiality provisions
herein. If Purchaser elects to proceed and to consummate the purchase
despite such a taking, there shall be no reduction in or abatement of the
Purchase Price, and Seller shall assign to Purchaser all Seller's right,
title and interest in and to any award made or to be made in the eminent
domain proceeding. Seller agrees to give Purchaser prompt written notice
of any such taking or proposed taking in the manner hereinafter provided.
9. Tenant Bankruptcy.
9.1 If, prior to closing, any tenant or tenants which in the
aggregate lease more than 10% of the rentable area of the buildings on the
Property or any tenant which leases more than 15,000 square feet of the
buildings, files a petition for relief with any bankruptcy court, with
jurisdiction or be the subject of any petition under Title 11 of the U.S.
Code, as amended, Seller shall forthwith notify Purchaser of such filing,
in writing. If Purchaser gives written notice of its election to terminate
this Purchase Agreement to Seller within fifteen (15) days of Seller's
giving notice of such bankruptcy as a result of such filing, this Purchase
Agreement shall be terminated and become null and void, and the Earnest
Money be returned to Purchaser and neither party hereto shall have any
further obligations to any other party other than the indemnity and
confidentiality obligations herein.
10. Miscellaneous.
10.1 All the terms of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the respective legal
representatives, successors and assigns of Seller and Purchaser; provided,
however, that Purchaser may not assign its rights hereunder without the
prior written consent of Seller which consent shall not be unreasonably
withheld.
10.2 Each of the parties hereto represents that such party has not
incurred and is not paying any brokerage fee or commission, finder's fee or
other selling commission or fee as a result of the transaction described
herein, except that Seller has agreed to pay a brokerage fee or commission
to United Properties in connection therewith by a separate agreement, and
each party hereto agrees to indemnify the other against, and to hold the
other harmless from, any claim for any such brokerage fee or commission,
finder's fee or other selling commission or fee incurred as a result of the
agreements or actions of the indemnifying party, and any costs and expenses
incurred in defending against any such claim, including court costs and
reasonable attorneys' fees. The representations and agreements set forth
in this Section 10.2 shall survive the Closing or earlier termination of
this Agreement.
10.3 Any notice, request or other communication required or
provided to be given under this Agreement shall be in writing signed by the
party giving the same or by its attorneys, and shall be deemed sufficiently
given when (i) delivered personally upon receipt or (ii) upon receipt when
mailed by certified or registered mail, return receipt requested, postage
prepaid, or (iii) delivered to Federal Express, UPS or other similar
overnight service courier, or addressed as follows:
To Seller: Lutheran Brotherhood
Attention: Clifford W. Habeck
625 Fourth Avenue South
Suite 1030
Minneapolis, Minnesota 55415
Fax: (612) 340-8458
To Purchaser: MINCO/Northwest Corporation
Attention: Randy J. Sowell
700 North Brand Boulevard
Suite 300
Glendale, California 91203
Fax: (818) 545-8460
Benjamin J. Randall, Esq.
Katz, Randall & Weinberg
333 West Wacker Drive, Suite 1800
Chicago, Illinois 60606
Fax: (312) 807-3903
With a courtesy copy to: Mr. Stanley Iezman
American Realty Advisors, Inc.
700 North Brand Boulevard, Suite 300
Glendale, California 91203
Fax: (818) 545-8460
or to such other party or such other address in the United States of
America as such party, by notice given as herein provided at least ten (10)
days prior to the effective date of said change or addition of address,
shall designate; provided, however, that no party hereto may require notice
to be sent to more than two (2) addresses. Any notice given in any other
manner shall be effective only upon receipt by the addressee.
10.4 This Agreement constitutes the entire and complete agreement
of the parties hereto with respect to the Property, shall supersede all
prior agreements (including any letter of intent) (but not including that
certain Letter Agreement dated July 25, 1996 providing for Early Access and
Indemnity for Due Diligence Investigations by and between Seller and
American Realty Advisors, Inc.) with respect thereto, and may be modified
only in writing. If any term or provision of this Agreement or any
application thereof shall be invalid or unenforceable, the remainder of
this Agreement and any other application of such term or provision shall
not be affected thereby. This Agreement shall be construed and interpreted
under and governed by the laws of the State of Minnesota. This Agreement
or any memorandum of this Agreement shall not be recorded in any public
record relating to the Property.
10.5 The Section headings or captions appearing herein are for
convenience only, are not a part of this Agreement and are not to be
considered in interpreting this Agreement.
11. Default; Termination.
11.1 If Closing does not occur as and when provided in this
Agreement because of a default by Purchaser, then Seller shall be entitled,
as its sole and exclusive remedy, to receive the Earnest Money together
with the Earnest money which shall be deposited in accordance with the
terms of the three Purchase Agreements as described in Section 6 hereof,
and all interest thereon as liquidated damages and to terminate this
Agreement and the Purchase Agreements by notice to Purchaser and upon such
termination neither party shall have any further claims against, obligation
to or rights against the other hereunder except for the indemnity and
confidentiality obligations set forth herein.
11.2 If Closing does not occur as and when provided in this
Agreement because of a default by Seller, then Purchaser shall be entitled
as its sole and mutually exclusive remedies:
11.2.1 If Seller's default is within its sole and exclusive
control, then Purchaser shall have the right to obtain specific performance
of Seller's obligations with respect to the Closing as set forth in Section
7.2 hereof to the extent that such obligations are in the sole and
exclusive control of Seller.
Any cause of action seeking specific performance must
be commenced within three (3) months after the Closing Date. In the event
Purchaser elects to commence an action seeking specific performance, such
commencement shall be deemed to be an election of remedies and Purchaser
shall have no further right to terminate this Agreement to commence any
other action or to recover damages or certain out of pocket expenses as set
forth below. In the event Purchaser commences an action seeking specific
performance and such action is dismissed or otherwise eliminated without
entry of an order against Seller granting Purchaser the right of specific
performance, then Seller is entitled to recover from Purchaser its costs
and expenses incurred in such action, including reasonable attorneys fees.
If Purchaser obtains the entry of an order against Seller granting
Purchaser the right of specific performance then Purchaser is entitled to
recover from Seller its costs and expenses incurred in such action,
including reasonable attorneys fees.
11.2.2 Terminate this Agreement by notice to Seller and upon
such termination, receive the Earnest Money and all interest thereon and
neither party shall have any further claims against, obligations to or
rights against the other hereunder except the indemnity and confidentiality
provisions herein. Except as set forth in Section 3.2 and 10.2 hereof,
Purchaser hereby waives any right to recover damages from Seller for any
default by Seller hereunder, except for the right to reimbursement of
certain out-of-pocket expenses under the circumstances provided for below.
In the event that Purchaser has not exercised its
option to terminate this Agreement during the Inspection Period and is
ready, willing and able to proceed to Closing but Seller has intentionally
caused at any time after the Inspection Period Termination Date one of the
following events to occur for the purpose of preventing Purchaser from
being able to purchase the Property (i) creation of a new title exception
with respect to the Property which has a material adverse effect thereon,
(ii) creation of a lease default on the part of the landlord under a Lease
which allows the tenant thereunder to legally terminate such Lease, (iii)
creation of circumstances which make the Property untenantable, or (iv)
commission of fraud or material misrepresentation with respect to the
current status of any of the representations set forth in Section 3 above,
then Seller shall, in addition to returning the Earnest Money, reimburse
Purchaser for its actual out of pocket expenses of Purchaser's third party
consultants as evidenced by paid written invoices (which cumulative total
reimbursement amount with respect to this Agreement and the Purchase
Agreements described in Section 6 shall not exceed the total sum of One
Hundred Ten Thousand and No/100ths Dollars ($110,000.00) and in no event
shall exceed the sum of $12,222.22 per building). Reimbursement for the
out of pocket expenses of Purchaser shall be conditioned upon Seller
receiving full and complete copies of all environmental, ADA, engineering,
survey and any other third party reports completed by Purchaser and an
assignment of all rights to use such information and/or reports. Seller
shall separately pay any reasonable recertification fees required by any
third party consultants to certify said reports to Seller. Nothing
contained herein shall be construed to require Seller to cure any condition
raised by Purchaser either before or after the Inspection Period or to
reimburse Purchaser for its out-of-pocket expenses upon the termination of
this Agreement as a result thereof unless such condition was intentionally
caused by Seller for the purpose of preventing Purchaser from being able to
purchase the Property as specifically set forth above. The above
obligation to reimburse Purchaser for its out-of-pocket expenses shall not
arise as a result of (a) tenants terminating their leases or failing to
enter into leases for any reason other than as the result of Seller's
intentional creation of circumstances which would allow tenant to legally
terminate its Lease; or (b) the deteriorating condition of any aspect of
the Property for any reason other than as a result of Seller's intentional
creation of circumstances which would make the Property untenantable. In
the event that the Seller is obligated to reimburse the Purchaser for its
out-of-pocket expenses as provided for herein, Seller shall so reimburse
Purchaser no later than ten (10) days after receipt of satisfactory
invoices as set forth above, which claim by Purchaser shall survive the
termination of and be independent of this Agreement which shall terminate
immediately as of the Closing Date or such earlier date as Purchaser elects
not to purchase the Property.
11.3 In the event either party defaults with respect to any
obligations arising after Closing, and fails to cure such default within
thirty (30) days after the date on which such defaulting party receives
written notice of such default from such other party, the non-defaulting
party shall have all legal rights and remedies available at law or in
equity.
11.4 Time is of the essence with respect to the Purchaser's
Inspection Periods, the Closing Date, and all other dates set forth or
provided for herein.
11.5 The Effective Date of this Agreement shall be the date of the
day immediately after the day Seller executes all counterpart originals of
this Agreement so long as Seller forwards a counterpart original of the
Agreement to Purchaser by Federal Express or other similar overnight
courier service on the day of execution. Seller shall fill in the date of
this Agreement on page 1 hereof as of the Effective Date.
SELLER:
By: LUTHERAN BROTHERHOOD REALTY FUND I
LIMITED PARTNERSHIP,
a California limited partnership
By: Lutheran Brotherhood Real Estate
Products Company, a Minnesota corporation
Its: General Partner
By: /s/ Gary J. Kallsen
_____________________________________
Its: Vice President
_____________________________________
By: /s/ Otis F. Hilbert
_____________________________________
Its: Vice President
_____________________________________
and
By: LUTHERAN BROTHERHOOD,
a Minnesota corporation
By: /s/ Gary J. Kallsen
____________________________________
Its: Vice President
____________________________________
COLLECTIVELY DOING BUSINESS UNDER
THE NAMES OF MINNETONKA 300 & 400,
A MINNESOTA JOINT VENTURE AND
MINNETONKA 225, A MINNESOTA JOINT
VENTURE.
Date of Execution:
September 9, 1996
PURCHASER:
MINCO/NORTHWEST CORPORATION
a Delaware corporation
By: /s/ Stanley Iezman
____________________________________
Its: President
____________________________________
Date of Execution:
September 5, 1996
26
<PAGE>
AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS AMENDMENT TO PURCHASE AND SALE AGREEMENT is made and entered into
as of the 11th day of October, 1996, by and between LUTHERAN BROTHERHOOD
REALTY FUND I, a California limited partnership (collectively "Seller"),
and MINCO/NORTHWEST CORPORATION, a Delaware corporation ("Purchaser").
RECITALS:
A. Seller and Purchaser have entered into that certain Purchase and
Sale Agreement dated September 10, 1996 (hereinafter "Purchase Agreement").
B. Purchaser has requested that the Seller agree to extend the
Closing Date as set forth below.
C. Seller is willing to agree to extend the Closing Date as set forth
below, but only upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein, the parties hereto state, confirm and agree as follows:
1. Paragraph 7.1 of the Purchase Agreement is hereby amended to
provide that the Closing shall take place at the office of Oppenheimer
Wolff & Donnelly on Wednesday, October 16, 1996, at 10:00 o'clock a.m.
2. Except as set forth below, Purchaser acknowledges that all of the
Purchaser's objections to title, survey, physical condition, environmental
issues, leases, rent rolls, and tenant estoppel letters have been resolved.
The following are the exceptions:
a. Receiving title policies that reflect all of the matters
included in the most recent title commitments and endorsements issued by
the title company together with the addition of a listing of all tenants on
the approved rent rolls with regard to the exception regarding unrecorded
leases.
b. Receiving and approving all of the specific items which are
required to be delivered to Purchaser by the Seller on the Closing Date
under the terms of the Purchase Agreement and this Amendment.
Seller shall be entitled to the Earnest Money in accordance with Section
11.1 of the Purchase Agreement unless Seller fails to perform Seller's
obligations set forth above.
3. Except as set forth herein, all provisions of the Purchase
Agreement shall remain in full force and effect and are not further
modified or amended.
SELLER: LUTHERAN BROTHERHOOD REALTY FUND I
a California limited partnership
By: LUTHERAN BROTHERHOOD REAL ESTATE
PRODUCTS COMPANY
a Minnesota Corporation
Its: General Partner
By: /s/ Clifford W. Habeck
__________________________
Its: Assistant Vice President
__________________________
Date of Execution:
October 11, 1996
PURCHASER:
MINCO/NORTHWEST CORPORATION
a Delaware corporation
By: /s/ Randy J. Sowell
__________________________
Its: V.P.
__________________________
Date of Execution:
October 11, 1996
<PAGE>
PURCHASE
________
AND
___
SALE
____
AGREEMENT
_________
Dated as of
September 10, 1996
Between
LUTHERAN BROTHERHOOD REALTY FUND I
a California limited partnership
and
MINCO/NORTHWEST CORPORATION
a Delaware corporation
<PAGE>
TABLE OF CONTENTS
_________________
SECTION HEADING PAGE
1. Sale and Purchase of Property 1
2. Purchase Price; Earnest Money 1
3. Seller's Warranties 2
4. Seller's Covenants 6
5. Delivery of Information. Review and Inspection by Purchaser 9
6. Related Purchase Agreements 12
7. Closing 13
8. Damage, Destruction and Eminent Domain 17
9. Tenant Bankruptcy 18
10. Miscellaneous 19
11. Default; Termination 20
EXHIBIT "A" 25
EXHIBIT "B" 26
EXHIBIT "C" 27
EXHIBIT "D" 28
EXHIBIT "E" 29
EXHIBIT "F" 30
EXHIBIT "G" 31
EXHIBIT "H" 32
<PAGE>
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and entered
into this 10 day of September, 1996, by and between LUTHERAN BROTHERHOOD
REALTY FUND I, a California limited partnership ("Seller"), and
MINCO/NORTHWEST CORPORATION, a Delaware corporation ("Purchaser").
1. Sale and Purchase of Property.
1.1 Seller agrees to sell and convey to Purchaser, and Purchaser
agrees to pay the Purchase Price (hereinafter defined) and to purchase and
take from Seller, subject to the terms and conditions herein contained: (i)
one parcel of real property located at 4948 Winnetka Avenue North, in the
City of New Hope, County of Hennepin, State of Minnesota, legally described
on Exhibit A attached hereto and hereby made a part hereof (hereinafter
called "Land"); (ii) one office/warehouse building thereon, together with
all other buildings and improvements located thereon (hereinafter
collectively called "Buildings"); (iii) all appurtenances, hereditaments,
privileges and easements belonging to the Land and Buildings; (iv) all
fixtures, equipment, furnishings, appliances and other items of tangible
and intangible personal property which are owned by Seller, are now or
hereafter located in the Buildings or on the Land and are used in
connection with the maintenance or operation thereof (the "Personal
Property"); (v) all leases, licenses and other occupancy agreements as set
forth on the Rent Roll attached as Exhibit C (collectively, the "Leases")
covering space situated at or within the Land and Buildings and any claim
or right to claim against a tenant or occupant (collectively, the
"Tenants") under any Lease and all security deposits paid or deposited by
and owed to Tenants under the Leases; (vi) all of Seller's rights in and to
contractual rights and intangibles with respect to the operation,
maintenance, repair and improvement of the Land and Buildings, including
service and maintenance agreements, construction, material and labor
contracts, utility agreements and other contractual arrangements, all to
the extent designated by the provisions of this Agreement as set forth on
the list of contracts attached as Exhibit D (collectively, the "Contracts")
and (vii) all governmental permits, licenses, certificates and approvals in
connection with the ownership and use of the Property (collectively, the
"Licenses") and warranties of any contractor, manufacturer or materialman
(all the property in this Section 1.1 being hereinafter all collectively
referred to as the "Property").
2. Purchase Price; Earnest Money.
2.1 Purchaser agrees to pay Three Million One Hundred Thousand and
No/100ths Dollars ($3,100,000.00) ("Purchase Price") for the Property which
shall be payable as follows:
2.1.1 Thirty-one Thousand and No/100ths Dollars ($31,000.00)
earnest money (said sum, together with all interest accrued thereon, the
"Earnest Money"), which sum, shall be wired transferred to Chicago Title
Insurance Company (the "Title Insurer") as escrow agent, at its office
located at 2200 Plaza VII, 45 South Seventh Street, Minneapolis, Minnesota
55402 within two business days of the acceptance of this Agreement by
Seller and shall be immediately placed in a federally insured interest
bearing account ("Escrow Account").
2.1.2 The balance of the Purchase Price subject to credits and
adjustments required by this Agreement shall be paid to Title Insurer in
certified funds or by wire transfer of good funds on the Closing Date (as
that term is hereinafter defined) for disbursement to Seller.
2.2 All interest earned on the Escrow Money shall be retained in
the Escrow Account and shall be considered part of and follow the Earnest
Money until the Earnest Money is paid out of such account in accordance
with this Agreement.
3. Seller's Warranties.
3.1 To induce Purchaser to enter into this Agreement, Seller makes
the following representations and warranties, each of which is material and
is relied upon by Purchaser. As used herein, the phrases "to the best of
Seller's knowledge," or "to its knowledge" or the like, refers only to the
actual knowledge of William P. Katter, Asset Manager of Lutheran
Brotherhood Real Estate Products Company and Clifford W. Habeck, Assistant
Vice President of Lutheran Brotherhood Real Estate Products Company and
Seller need not have conducted any investigation.
3.1.1 To the best of Seller's knowledge, Seller has not
received any written notice from any state or local authority having
jurisdiction over the Property of any violation of any law, statute,
ordinance, code, governmental rule or regulation, or private covenant or
restriction, affecting the Property.
3.1.2 To the best of Seller's knowledge, Seller has not
received any written notice of any liabilities which affect the Property,
except ad valorem real estate taxes, special assessments and utility bills,
or notice of any litigation or threatened litigation with respect to Seller
or the Property which may effect the transaction contemplated by this
Agreement, the Property or Seller's interest in the Property, or any
pending or anticipated condemnation of any part of the Property.
3.1.3 To the best of Seller's knowledge, Seller has not
received any notice of the existence, in, on or under the Property, of any
Hazardous Materials in violation of environmental law. "Hazardous
Materials" shall mean substance defined as "Hazardous Substances, Hazardous
Materials or Toxic Substances" in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended (12 USC Sec. 6901 et
seq.), and in any other Federal, State or local environmental law, statute,
regulation, ordinance or code including without limitation asbestos,
polychlorinated biphenyls (PCBs), petroleum products, lead based paint and
radon. Seller has fully cooperated and shall continue to cooperate during
the term of the Agreement with Purchaser and Purchaser's representatives in
investigating the history of the Property.
3.1.4 To the best of Seller's knowledge, Seller has not
received any notice of any work completed, commenced or contemplated, which
will or may result in any special assessments being levied against the
Property, other than special assessments which are levied as of the
Effective Date and disclosed in the Title Commitment (as hereinafter
defined).
3.1.5 Seller will be at the time of closing the fee owner of
the Property and has full and lawful power and authority to execute,
deliver and perform this Agreement and all documents which Seller is
required hereby to execute, deliver and perform, and to sell the Property.
3.1.6 To the best of Seller's knowledge, the most current Rent
Roll for the property as of the date hereof is as set forth on attached
Exhibit C.
3.1.7 To the best of Seller's knowledge, the most current
true, correct and complete list of Contracts as of the date hereof is as
set forth on attached Exhibit D.
3.1.8 To the best of Seller's knowledge, the financial
operating statement(s) for the Property that have been or will be delivered
by Seller to Purchaser do not materially misstate the results of operation
of the Property for the periods reflected in such statements.
3.1.9 To the best of Seller's knowledge, the current schedule
of Personal Property, as of the date hereof, is as set forth on attached
Exhibit E.
3.1.10 The Seller is not a "foreign person" as such term is
defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended.
3.1.11 To the best of Seller's knowledge, Neither Seller nor
its general partner is the subject of any existing, pending, threatened or
contemplated bankruptcy, solvency or other debtor's relief proceedings.
3.1.12 To the best of Seller's knowledge, there are no
"Wells", as that term is defined in Minn. Stat. Section 103I.001, Subd.
21(1994), located on the Land, whether in use, not in use or sealed.
3.1.13 To the best of Seller's knowledge, Seller has not
received any notice from any tenant of the event of any default by Landlord
pursuant to the terms of the Leases which remains uncured.
3.1.14 To the best of Seller's knowledge, Seller has not
received notice from Seller's insurance carriers of any defects or any
requests for alterations or additions to any portion of the Property.
3.1.15 To the best of Seller's knowledge, there is no
individual sewage treatment system, as that term is defined in Minn. Stat.
Section 115.55, on or serving the Land whether in use or not in use.
3.1.16 Seller is not an 'employee benefit plan' within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended (ERISA). Seller is not a 'party in interest' (as defined
in Section 3(14) of ERISA) with respect to Purchaser.
3.2 Seller shall indemnify and hold Purchaser harmless from and
against any and all claims, actions, judgments, liabilities, obligations,
liens, damages, penalties, fines, costs and expenses, asserted against,
imposed on, or suffered or incurred by Purchaser (or the Property),
directly arising out of or in connection with any breach or untruth of the
representations and warranties set forth in this Section 3 hereof. The
representations and warranties set forth in this Section 3 shall be deemed
to be updated and remade as of the Closing Date; and said representations
and warranties, as so remade, and the indemnity obligation set forth above,
shall survive the Closing for a period of twelve (12) months after the
Closing Date; provided, however, the representations set forth in Sections
3.1.5, 3.1.10 and 3.1.16 hereof shall survive the Closing Date for an
unlimited period of time. Any updated Rent Rolls delivered to Purchaser in
accordance with the terms hereof shall be, to the best of Seller's
knowledge, the most current true, correct and complete Rent Roll as of the
date of such delivery. Notwithstanding anything contained in this
Agreement to the contrary, except as set forth in Section 11.2 herein,
there shall be no liability on the part of the Seller for breaches of any
of the representations, warranties and certifications which are made by
Seller as set forth herein (collectively the "Representations"), of which
Purchaser had knowledge at Closing. If, notwithstanding Purchaser's
knowledge of such breach of Representation, Purchaser closes this
transaction, such breach of Representation shall be deemed waived.
Purchaser shall have no right to bring any lawsuit or other legal action
against Seller, as a result of the breach of the Representation prior to
Closing. If Purchaser elects not to waive such breach of Representation,
Purchaser's sole remedy is to terminate this Agreement in which event, the
Earnest Money shall be returned to Purchaser and neither party hereto shall
have any further obligations to the other party hereunder other than the
indemnity and confidentiality obligation set forth hereinafter.
EXCEPT FOR THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN
THIS SECTION 3, PURCHASER WARRANTS AND ACKNOWLEDGES TO AND AGREES WITH
SELLER THAT PURCHASER IS PURCHASING THE PROPERTY IN ITS "AS-IS, WHERE IS"
CONDITION "WITH ALL FAULTS" AS OF THE CLOSING DATE AND SPECIFICALLY AND
EXPRESSLY WITHOUT ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER
EXPRESS OR IMPLIED, AS TO ITS CONDITION, FITNESS FOR ANY PARTICULAR
PURPOSE, MERCHANTABILITY, OR ANY OTHER WARRANTY OF ANY KIND, NATURE OR TYPE
WHATSOEVER FROM OR ON BEHALF OF SELLER. EXCEPT FOR THE REPRESENTATIONS OF
SELLER EXPRESSLY SET FORTH IN THIS SECTION 3, SELLER SPECIFICALLY DISCLAIMS
ANY WARRANTY, GUARANTY OR REPRESENTATION, ORAL OR WRITTEN, PAST OR PRESENT,
EXPRESS OR IMPLIED, CONCERNING (A) THE VALUE, NATURE, QUALITY OR CONDITION
OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL, AND
GEOLOGY; (B) THE INCOME TO BE DERIVED FROM THE PROPERTY; (C) THE
SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH
PURCHASER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES FOR FUTURE
DEVELOPMENT OF THE PROPERTY; (D) THE COMPLIANCE OF OR BY THE PROPERTY OR
ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY
APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PROPERTY; (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR
MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (G) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (H) THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY
OR ANY OTHER ENVIRONMENTAL MATTER OR CONDITION OF THE PROPERTY; OR (I) ANY
OTHER MATTER WITH RESPECT TO THE PROPERTY. PURCHASER ACKNOWLEDGES AND
AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER
CONTAINED IN THIS SECTION 3, ANY INFORMATION PROVIDED BY OR ON BEHALF OF
SELLER WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES
AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION
OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY
MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION
PERTAINING TO THE PROPERTY, OR THE OPERATION THEREOF FURNISHED BY ANY REAL
ESTATE BROKER, AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, EXCEPT OF THE
EXPRESS REPRESENTATIONS SET FORTH IN THIS SECTION 3. PURCHASER FURTHER
ACKNOWLEDGES AND AGREES THAT PURCHASER IS A SOPHISTICATED AND EXPERIENCED
PURCHASER OF PROPERTIES SUCH AS THIS PROPERTY AND HAS BEEN DULY
REPRESENTED BY COUNSEL IN CONNECTION WITH THE NEGOTIATION OF THIS
AGREEMENT. EXCEPT AS OTHERWISE PROVIDED HEREIN, SELLER HAS NO AGREEMENT TO
ALTER, REPAIR OR IMPROVE ANY OF THE PROPERTY. NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS PARAGRAPH, THIS PARAGRAPH SHALL NOT BE DEEMED TO
CREATE OR IMPOSE LIABILITY UPON PURCHASER.
4. Seller's Covenants. Seller agrees and covenants with Purchaser as
follows:
4.1 Between the Effective Date and the Closing Date, Seller shall
make commercially reasonable efforts to: (i) maintain and operate the
Property in at least as good condition as exists on the Effective Date,
ordinary wear and tear of normal use and damage by casualty or condemnation
excepted, (ii) comply with the terms of all Leases, (iii) to perform any
work required under any Leases or other applicable agreements and (iv) to
collect rents and other payments due from Tenants.
4.2 Between July 29, 1996 and the Closing Date, Seller shall have
the right, but not the obligation, to enter into new, renewal or expansion
leases subject to Purchaser's consent (which consent shall not be
unreasonably withheld). Notwithstanding the above, the consent of the
Purchaser shall not be required for lease options or expansion rights which
are already provided for under the terms of existing leases heretofore
delivered to Purchaser or for those leases which are set forth on Exhibit F
attached hereto which leases have been previously approved by Purchaser.
Except as set forth above, from and after July 29, 1996 through and
including the earlier of the Closing Date or the date on which this
Agreement is terminated, Seller shall obtain a written consent from
Purchaser prior to (i) entering into any new Lease or renewal, option,
amendment or modification thereof or agreement relating thereto, and before
terminating any Lease, or (ii) consenting to any sublease or assignment,
provided that the Lease requires the consent of Seller for any such
sublease or assignment (all such Leases, renewals, options, amendments,
modifications, terminations, subleases and assignments being hereinafter
referred to as the "Lease Documents"). Seller shall submit to Purchaser a
proposal outlining the major business terms of any proposed Lease or
renewal, option, amendment, modification, termination, sublease or
assignment. Purchaser shall have three (3) business days (i.e. days other
than Saturdays, Sundays and legal holidays in the State of Minnesota) after
receipt of such proposal to approve or withhold its approval to such
proposal. If Purchaser fails to notify Seller within such three (3)
business day period, Purchaser shall be deemed to have approved such
proposal. After Seller's receipt of Purchaser's approval or deemed
approval of any such proposal, Seller may execute the applicable final
Lease Document arising from such proposal provided that, in the case of new
Leases, such documentation is prepared on the lease form currently utilized
by Seller without any material modifications and, in all cases, is
consistent with the terms of the proposal approved or deemed approved by
Purchaser. Purchaser, in the event and only in the event that Purchaser
elects to purchase the Property pursuant to the terms of this Agreement,
shall be solely responsible for all Lease Transaction Costs incurred with
respect to any agreement whether arising from either a proposal approved or
deemed approved by Purchaser or a proposal for which approval is not
required by the Purchaser in accordance with the above terms, including but
not limited to those leases set forth on Exhibit F and Purchaser shall
reimburse Seller at Closing for all Lease Transaction Costs which have been
paid by Seller prior to Closing. For purposes hereof the term "Lease
Transaction Costs" shall mean all tenant improvements and all lease
commissions, concessions and money allowances of Seller, as landlord, under
a lease. Seller shall forthwith furnish to Purchaser a complete copy of
all Lease Documents entered into by Seller between the Effective Date and
the Closing Date. For purposes hereof, to the extent that any renewal of
any existing Lease or any sublease or assignment may be effected by the
tenant without the consent of Seller pursuant to the terms of such Lease,
then such renewal, sublease or assignment shall be deemed to be a Lease
Document approved by Purchaser notwithstanding anything set forth herein to
the contrary.
4.3 Between the Effective Date and the Closing Date, Seller shall
keep the Property insured against fire, lightning, theft, vandalism,
malicious mischief and all other risks and casualties covered by standard
extended coverage and "all-risk" endorsements, in an amount equal to the
replacement cost and shall also keep the existing liability insurance and
loss of rents insurance in full force and effect.
4.4 Between the Effective Date and the Closing Date, except in the
event of an emergency, Seller shall not enter into any new management
agreement or other Contract relating to the Property, nor modify any
existing Contract without Purchaser's prior written consent unless the
Contract may be terminated at any time, without cause and without penalty
to Purchaser, on not more than thirty (30) days' written notice. In the
event any existing Contract may be terminated at any time, without cause
and without penalty to Seller on not more than thirty (30) days' written
notice, Seller agrees, after expiration of the Inspection Period (as
defined herein), to give such written notice of termination upon receipt of
a written request from Purchaser.
4.5 Between the Effective Date and the Closing Date, Seller shall
immediately deliver to Purchaser any notice of a violation of any law,
statute, ordinance, code, governmental rule or regulation, or private
covenant or restriction hereafter received. If such a violation is
discovered prior to the Closing Date, including but not limited to any
violation disclosed by a code compliance audit or certificate of occupancy
inspection, Seller shall have the right, but not the obligation, to correct
the violation prior to the Closing Date. If Seller does not correct any
such violation which prohibits the continued use and operation of the
Property prior to the Closing Date, Purchaser may, at its option, either
(a) terminate this Agreement, in which event all Earnest Money shall be
paid to Purchaser, and neither party hereto shall have any further
obligation to the other party hereunder; except for the indemnity and
confidentiality obligations set forth herein or (b) elect to purchase the
Property without any reduction in the Purchase Price.
4.6 Seller shall pay, on or prior to the Closing Date, any amounts
necessary for the satisfaction and release, of record, of all documents
which secure any existing mortgage financing with respect to the Property.
4.7 Seller shall not accept prepayment of any rent under any Lease
more than one (1) month in advance after the Effective Date. Any such
prepaid rent received by Seller shall be credited to Purchaser at Closing.
4.8 At least five (5) days prior to the Closing Date, Seller, shall
cause Tenants which in the aggregate lease at least eighty-five percent
(85%) of the rented area of the Buildings on the Property (including all
tenants which lease 5,000 or more square feet of the Buildings) to furnish
to Purchaser a signed estoppel certificate (hereinafter called "Estoppel
Certificate") in form attached hereto as Exhibit G. In the event Seller
has not received such Estoppel Certificates, Seller shall give Purchaser
written notice of such non-receipt at least four (4) days prior to the
Closing Date. Purchaser shall have an additional ten (10) business days
from the Date of such notice to obtain the Estoppel Certificates directly
from Tenants ("Estoppel Extension Period"). The Closing Date shall be
extended to the date one business day after the termination of the Estoppel
Extension Period. Seller agrees to make a diligent, good faith effort to
obtain said Estoppel Certificates. If any such Estoppel Certificate is
inconsistent with the Rent Roll in any material respect, or is inconsistent
with the security deposits actually received by Seller, or if it indicates
that Seller is in default or has not performed some duty of an inducement
nature under the Lease described therein, Seller shall have the right, but
not the obligation, on or before the Closing Date, to resolve said
inconsistency, to cure said default and/or to perform said obligation. If
Seller does so resolve, cure or perform the same, Purchaser shall purchase
this Property in accordance with the terms hereof. If Seller fails to so
obtain such Estoppel Certificates, to resolve any such inconsistency, to
cure any such default or to perform any such obligation, on or before the
Closing Date, Purchaser may, by written notice to Seller, elect either (i)
to purchase the Property anyway, in accordance with the provisions hereof,
without any reduction or abatement of the Purchase Price, notwithstanding
said failure, and without any continuing obligation upon Seller to obtain,
resolve, cure or perform the same, or (ii) to, as its sole and exclusive
remedy therefor, terminate this Agreement by written notice to Seller, in
which event all Earnest Money shall be paid to Purchaser, and this
Agreement shall be deemed to be null, void, terminated and of no further
force or effect, except as herein to the contrary expressly provided. If
Purchaser fails to so elect either said option (i) or said option (ii),
Purchaser shall be deemed to have elected said option (ii).
5. Delivery of Information. Review and Inspection by Purchaser.
5.1 Seller agrees to provide Purchaser a revised and updated list
of Contracts and Personal Property and a revised and updated Rent Roll
three (3) days prior to closing. Purchaser acknowledges that Seller does
not make any representation or warranty regarding the accuracy or
completeness of any items, documents, leases and operation and financial
information ("Review Materials") provided by Seller to Purchasers except as
expressly contained in Section 3 of this Agreement.
5.2 Conditions to Performance by Purchaser. Purchaser's obligation
to perform under this Agreement is hereby made expressly contingent and
conditional upon the occurrence, fulfillment, satisfaction or performance
of the conditions set forth in Section 5.2.1 and 5.2.2 on or before
September 6, 1996 ("the Property Inspection Period Termination Date") the
condition set forth in Section 5.2.3 on or before September 13, 1996, (the
"Environmental Inspection Period Termination Date") and the condition set
forth in 5.2.4 on or before September 13, 1996 ("the Title and Survey
Inspection Period Termination Date") (such conditions hereinafter called
"Purchaser's Conditions") (hereinafter collectively referred to as the
"Inspection Period Termination Date") (the period beginning with the
Effective Date and ending with the Inspection Period Termination Date being
hereinafter referred to as the "Inspection Period").
5.2.1 Leases, Operating and Financial Information. All
existing Leases, all existing Contracts relating to the Building, which are
not terminable on thirty (30) days' or less notice, the Rent Roll, Review
Materials and all books, records and files of Seller maintained with
Seller's third party property manager relating to the operation of the
Property and the income and expenses thereof (hereinafter called
"Records"), shall be acceptable to Purchaser in its sole discretion.
Seller has and shall continue to provide access to Purchaser and to its
agents, consultants or representatives during normal business hours to the
office of Seller's property manager to review the Records relating to the
Property. Purchaser may copy the Records at Purchaser's sole cost and
expense. If Purchaser, its agents, consultants or representatives enter
upon the Property or into the offices of Seller or its property manager to
review the Records or to interview Tenants of the Property, such entry
shall be made only during normal business hours, after making prior
arrangements therefor with Seller. Any such entry or inspection shall be
at the sole and entire cost, risk and expense of Purchaser.
5.2.2 Physical Condition of Property. The physical condition
of the Property (but not including the environmental condition of the
Property which shall be addressed in Section 5.2.3 hereof), the
availability of adequate utilities and services thereto, and the
conformance thereof with applicable laws, statutes, ordinances, codes,
orders, decrees, rules and regulations (hereinafter called "Governmental
Requirements"), shall be acceptable to Purchaser, in Purchaser's sole
discretion. Purchaser itself or by its agents, consultants or
representatives, may also, at any time during the applicable Inspection
Period, after making prior arrangements therefor with Seller, enter upon
and inspect the Property during normal business hours; provided, however,
that no such entry or inspection shall interfere with the operation of the
Property by Seller or the rights of Tenants of the Property or cause any
physical damage to the Property. No boring, drilling or other physical
intrusion into the land, structures or improvements comprising the Property
shall be made on the Property without prior written approval of Seller.
Any such entry shall be at the sole and entire cost, risk and expense of
Purchaser.
5.2.3 Environmental Condition of the Property. The
environmental condition of the Property and the conformance thereof with
applicable laws, statutes, ordinances, codes, orders, decrees, rules and
regulations (hereinafter "Environmental Requirements"), shall be acceptable
to Purchaser, in Purchaser's sole discretion, Purchaser, itself or by its
agents, consultants or representatives, may also, at any time during the
Environmental Inspection Period, after making prior arrangements therefor
with Seller, enter upon and inspect the Property during normal business
hours; provided, however that no such entry or inspection shall interfere
with the operation of the Property by Seller, the rights of tenants of the
Property, cause any physical damage to the Property. No boring, drilling
or other physical intrusion into the land, structures or improvements
comprising the Property shall be made on the Property without prior written
approval of Seller. Any such entry shall be at the sole and entire cost,
risk and expense of Purchaser.
5.2.4 Seller shall obtain and deliver, at Seller's expense, a
commitment for an owner's policy of title insurance (ALTA 1992 Form)
("Commitment") issued by Title Insurer and containing tax and special
assessment searches ("Searches") with respect to the Property and which
commitment shall show Lutheran Brotherhood as fee owner and Purchaser as
the proposed insured; shall be in the amount of the Purchase Price and
shall provide for such endorsements as set forth on Exhibit H. Purchaser
acknowledges receipt of such Commitment. Purchaser acknowledges that the
Commitment shows that the Property is subject to (a) the standard printed
exceptions which appear in ALTA Title Policy forms; (b) real estate taxes
and special assessments which are not yet delinquent; (c) the Leases; and
(a) the existing encumbrances listed on Exhibit B attached hereto and
hereby made a part hereof (hereinafter all collectively called "Existing
Encumbrances"). Seller shall also obtain and deliver at Purchaser's
expense, Uniform Commercial Code Searches of filings from both the offices
of the Minnesota Secretary of State and the applicable County Recorder, UCC
Division ("UCC Search"). The Commitment shall include a complete copy of
each document listed as an exception to title or otherwise referred to
therein. Purchaser shall obtain a survey of the Property ("Survey"),
certified as of a current date in favor of Purchaser and Title Insurer,
prepared by a registered land surveyor acceptable to Purchaser. The Survey
shall be prepared in sufficient detail to permit the Title Insurer to
delete the standard printed survey exception in the title insurance policy
and shall be otherwise acceptable to Purchaser. Purchaser shall have until
September 13, 1996 to raise, by written notice to Seller, any objections to
the title to the Property which Purchaser may have to the title. All
objections not so raised shall be deemed waived, and Purchaser agrees to
take title to the Property liens, charges, encumbrances, restrictions,
conditions, reservations, easements and other matters described in the
Title Commitment and not so objected to or which are otherwise hereafter
approved by Purchaser (hereinafter all collectively called "Permitted
Encumbrances"), provided, however, that Purchaser may make objections to
title after that date, if the matters giving rise thereto come to its
attention for the first time thereafter. If Purchaser so raises any such
objections, Seller shall within 5 days of Purchaser's written notice of
such title objections have the right, but not the obligation, to elect to
cure the same on or before the Closing Date; provided, however, that Seller
shall not have any obligation to take any action or to incur any cost or
expense in connection with the cure of any thereof. If Seller elects not
to cure such objection within 5 days of the title objection notice or if
Seller fails to cure such objections on or before the Closing Date,
Purchaser may elect, by written notice to Seller, either (i) to purchase
the Property anyway, in accordance with the provisions hereof, and without
any reduction in or abatement of the Purchase Price, subject to the matters
objected to, and without any continuing obligation upon Seller to cure the
same, or (ii) to terminate this Agreement, and this Agreement shall be
deemed to be null, void, terminated and of no further force or effect,
except as herein to the contrary expressly provided. If Purchaser fails to
so elect either said option (i) or said option (ii), Purchaser shall be
deemed to have elected said option (ii) in which event all Earnest Money
shall be paid to Purchaser and neither party hereto shall have any further
obligation to the other party hereunder, except for the indemnity and
confidentiality obligations set forth herein. If Seller does cure said
objection on or before the Closing Date, Purchaser shall purchase the
Property in accordance with the provisions hereof.
If Purchaser on or before the end of the Property Inspection
Period, delivers to Seller written notice of Purchaser's election not to
acquire the Property for any reason whatsoever, or if Purchaser on or
before the end of the Environmental Inspection Period delivers to Seller
written notice of Purchaser's election not to acquire the Property because
of Environmental Objections, or if Purchaser on or before the end of the
Title and Survey Inspection Period, delivers to Seller written notice of
Purchaser's election not to acquire the Property because of Title or Survey
objections which Seller elects not to cure, then this Agreement will
automatically terminate and the Earnest Money will be returned to Purchaser
and neither party hereto shall have any further obligations to the other
party other than the indemnity and confidentiality obligations herein.
Otherwise upon expiration of the respective Inspection Periods, all such
objections shall be deemed waived and Purchaser shall not be entitled to a
return of the Earnest Money unless there is a default by Seller under this
Agreement.
5.3 Seller agrees to cooperate with Purchaser in Purchaser's
efforts to fulfill, satisfy and/or perform Purchaser's Conditions,
provided, however, Seller shall have no obligation to cure any item which
is not acceptable to Purchaser during the course of its review of the
Property during the Inspection Period. All of the Purchaser's Conditions
are for the benefit of Purchaser and may be waived by Purchaser at any time
prior to the end of the Inspection Period.
5.4 Purchaser agrees, unless such Review Materials and other
information are in the Public Domain, to keep all Review Materials and any
other information relating to the Property provided to it by Seller or
obtained by Purchaser in the course of its review and inspection provided
for herein confidential until the Closing has occurred, provided that
Purchaser may disclose any of such information to its attorneys,
accountants, engineers and other advisors, who are involved with
Purchaser's acquisition and investigation of the Property or if required to
do so by applicable law. Purchaser shall return and deliver to Seller all
copies and information relating to the Property provided to Purchaser by
Seller or made by Purchaser in the course of said review and inspection, if
the Closing does not close for any reason other than a default by Seller.
The obligations of the Purchaser under this Section 5.4 shall survive any
termination of this Agreement.
6. Related Purchase Agreements. This Agreement is one (1) of four (4)
purchase agreements entered into by the Seller (and various affiliates of
Seller) and Purchaser (and various affiliates of Purchaser). In addition
to this Agreement, the following purchase agreements have been executed:
(i) That certain Purchase Agreement dated September 10, 1996, by
and between Lutheran Brotherhood Realty Fund I, a California limited
partnership, and Lutheran Brotherhood, a Minnesota corporation, doing
business as Minnesota Joint ventures under the name of Minnetonka 300 & 400
and the name Minnetonka 225, as Seller, and MINCO/Northwest Corporation, a
Delaware corporation, as Purchaser ("Minnetonka Purchase Agreement");
(ii) That certain Purchase Agreement dated September 10, 1996,
between Lutheran Brotherhood, a Minnesota corporation, as Seller, and
Brooklyn Burnsville Corporation, a Delaware corporation, as Purchaser
("Brooklyn/Burnsville Purchase Agreement");
(iii) That certain Purchase Agreement dated September 10, 1996
between Lutheran Brotherhood, a Minnesota corporation, as Seller, and
MINCO/Northwest Corporation, a Delaware corporation, as Purchaser ("Shingle
Creek Purchase Agreement"); and
(this Agreement and the above three (3) purchase agreements being
hereinafter referred to collectively as the "Purchase Agreements"). It is
understood and agreed that Seller is entering into this Agreement upon the
condition that the Property shall only be sold to Purchaser simultaneously
with the properties described in the Brooklyn/Burnsville Purchase Agreement
and the Minnetonka Purchase Agreement. Purchaser therefore agrees that
should an event of default occur under the terms of this Agreement, the
Brooklyn/Burnsville Purchase Agreement or the Minnetonka Purchase Agreement
(hereinafter being collectively referred to as the "Related Purchase
Agreements") on the part of the Purchaser or should the Purchaser elect for
any reason not to purchase the properties described in the Related Purchase
Agreements, including the Property (but not including the property located
at 1100 Highway 13, Burnsville, Minnesota ("Burnsville Property" in the
event that Purchaser elects not to purchase the Burnsville Property in
accordance with the terms of the Brooklyn/Burnsville Purchase Agreement),
all of the Purchase Agreements shall terminate and be of no further force
and effect. In the event that Purchaser elects not to purchase any
properties (but not including the Burnsville Property) described in the
Related Purchase Agreements during the respective Inspection Periods
described in the Related Purchase Agreements, all of the Purchase
Agreements shall terminate and the Earnest Money shall be returned to
Purchaser and neither party hereto shall have any further obligations to
the other party thereunder other than the indemnity and confidentiality
obligations set forth therein. In the event that the Purchaser fails to
purchase the properties (but not including the Burnsville Property)
described in the Related Purchase Agreements after the respective
Inspection Periods for any reason other than default by Seller all of the
Purchase Agreements shall terminate and the Earnest Money provided for in
the Purchase Agreements shall be delivered to Seller and neither party
hereto shall have any further obligations to the other party thereunder
other than the indemnity and confidentiality obligations set forth therein.
7. Closing
7.1 Unless changed as herein provided, or as provided in the
Related Purchase Agreements or by mutual agreement, the Closing shall take
place at the office of Oppenheimer Wolff & Donnelly on or before September
27, 1996 ("Closing Date").
7.2 At the Closing, Seller shall cause to be executed by the
appropriate parties and delivered the following documents, to be prepared
by Seller's counsel and to be in form and substance mutually satisfactory
to Seller and Purchaser:
7.2.1 A limited warranty deed in recordable form ("Deed"),
subject only to Permitted Encumbrances and to such other exceptions which
Purchaser has accepted or is deemed to have accepted pursuant to Section
5.2.4 hereof which shall contain the legal description of the Property as
shown on the Survey.
7.2.2 A limited warranty bill of sale conveying to Purchaser
fixtures, equipment, appliances, furnishings and all Personal Property,
owned by Seller, located at and used in connection with the Property.
7.2.3 Evidence satisfactory to Purchaser and Title Insurer
that this Agreement, the Deed and all other Closing documents have been
validly authorized, executed and delivered by and on behalf of Seller, and
any affidavits or other agreements reasonably required by Title Insurer to
issue the Title Policy (as hereinafter defined).
7.2.4 The originals of all Leases and Contracts relating to
the Property.
7.2.5 To the extent possessed by Seller, copies of all site
plans, blueprints, plans, specifications and operating manuals relating to
the Property and copies of all building permits, certificates of occupancy
and other records relating to zoning, utilities and construction of the
Improvements on the Property, together with an assignment by Seller of all
of its right, title and interest therein to Purchaser.
7.2.6 All documents required to be delivered by Seller to
Purchaser pursuant to any other provisions of this Agreement.
7.2.7 Assignment of all of the Leases, of any guarantees
thereof, of the security and other deposits and all advance rental payments
collected or received by Seller which Seller is required to credit to
Purchaser hereunder. Purchaser shall join in the assignment document to
assume the continuing Landlord obligations thereunder. Seller shall
indemnify Purchaser against all loss, cost or expense, including reasonable
attorneys fees, damage and liability incurred by Purchaser as a result of
claims brought against Purchaser with respect to a breach by Seller of any
Leases, which breach shall have occurred prior to the date of Closing.
Purchaser shall indemnify Seller against all loss, cost or expense
(including reasonable attorneys fees), damage and liability incurred by
Seller as a result of claims brought against Seller with respect to a
breach by Purchaser of any Leases, which breach shall occur on or after the
date of Closing. Such indemnities shall be limited to a term of one (1)
year and shall be of no further force and effect upon the expiration of one
(1) year after the date of Closing.
7.2.8 Assignment of all Contracts; of all warranties,
guarantees, permits, Licenses and certificates applicable or relating to
the Property, to the extent assignable and not otherwise terminated in
accordance herewith. Purchaser shall join in the assignment document to
assume all of Seller's obligations after the Closing. Seller shall
indemnify Purchaser against all loss, cost or expense, including reasonable
attorneys fees, damage and liability incurred by Purchaser as a result of
claims brought against Purchaser with respect to a breach by Seller of any
Contracts which breach shall have occurred prior to the date of Closing.
Purchaser shall indemnify Seller against all loss, cost or expense
(including reasonable attorneys fees), damage and liability incurred by
Seller as a result of claims brought against Seller with respect to a
breach by Purchaser of any Contracts, which breach shall occur on or after
the date of Closing. Such indemnities shall be limited to a term of one
(1) year and shall be of no further force and effect upon the expiration of
one (1) year after the date of Closing.
7.2.9 A transferor's certification stating that Seller is not
a foreign person, foreign corporation, foreign partnership, foreign trust
or foreign estate (as those terms are defined in the United States Internal
Revenue Code and the Income Tax Regulations promulgated thereunder ("Code")
and setting forth such other information as may be required by Section
1445(b)(2) of the Code.
7.2.10 A Seller's affidavit stating that there are no
outstanding, unsatisfied judgments, tax liens or bankruptcies against or
involving Seller or the Property, that there has been no skill, labor or
material furnished to the Property for which mechanics' liens could be
filed, and that there are no other unrecorded interests in the Property
(except Leases which Seller has provided to Purchaser).
7.2.11 The owner's duplicate certificate(s) of title, if the
title to the Property has been registered pursuant to Minn. State. Ch. 508
or any other documents necessary to record the deed and other recording
documents.
7.2.12 Well certificates, relating to the Land, which conforms
with Minn. Stat. Section 103I.235, Subd. 1 (1994), unless the Deeds contain
the following statement: "The Seller certifies that the Seller does not
know of any wells on the described real property".
7.2.13 A certificate with respect to ERISA as set forth in
Section 3.1.16.
7.2.14 Tenant Estoppel Certificates as required by Section 4.8
herein.
7.2.15 Form Letter to tenants notifying tenants that the
Property has been sold and that payments of rent and other amounts due
under the terms of the Leases shall be payable to Purchaser or as Purchaser
shall direct.
7.2.16 1992 Form B Owner's policy of title insurance
consistent with the Commitment as approved by the Purchaser except that it
shall be free and clear of the standard printed exceptions appearing in the
commitment.
7.2.17 Any insurance certificates from tenants in Seller's
possession.
7.2.18 Seller's tax identification number and any other
information required by the Title Insurer to allow the Title Insurer to
comply with its reporting requirements.
7.3 On the Closing Date, Purchaser shall direct the Title Insurer
to pay to Seller the Purchase Price, and Seller shall deliver possession of
the Property together with all keys to the Property in Seller's possession
and all codes for any security devices on the Property to Purchaser,
subject only to Permitted Encumbrances, and to such other exceptions which
Purchaser has accepted or is deemed to have accepted pursuant to Section
5.2.4 hereof, including the rights of Tenants under Leases.
7.4 On the Closing Date, Seller and Purchaser shall execute a
closing statement to be prepared by the Title Insurer upon which the
following adjustments shall be made as of the close of business on the day
immediately preceding the Closing (the "Adjustment Date").
7.4.1 All real estate taxes and installments of special
assessments due and payable in the year during which the Closing takes
place shall be prorated between the parties on a 366-day year as of the
Adjustment Date, with the Purchaser being responsible for the portion
attributable for the period after the Adjustment Date.
7.4.2 A proration of the collected rents (including, without
limitation, payments or reimbursements for operating expenses, common area
costs and real estate taxes), vending machine revenues (if any), utilities,
and all other income and operating expenses relating to the Property (other
than expenses of real estate taxes and special assessments) shall be made
between Seller and Purchaser as of the Adjustment Closing Date on the basis
of a 366-day year, with Seller being responsible for the expenses and
entitled to the revenues accrued during or applicable to the period before
and on the Adjustment Date, and Purchaser being responsible for the
expenses and entitled to the revenues accrued during or applicable to the
period after the Adjustment Date.
7.4.3 If any rents are so collected by Purchaser after the
Closing which Seller shall be entitled to, such rents shall be paid over by
Purchaser to Seller. For the purposes of determining to which periods
rents collected by Purchaser after the Closing are applicable, any rent
payments shall be applied in the following order: (1) to unpaid rent for
the month in which the Closing Date occurs; (2) to unpaid rent for any
month after the month in which closing occurs and which is due and owing
prior to the date of collection; (3) to unpaid rent for any month prior to
the month in which the Closing Date occurs; and (4) to prepayment of any
other subsequent month's rent. Seller hereby retains the continuing right,
which shall survive the Closing, to bring an action for collection of sums
due and owing but not for possession or termination of any lease against
any Tenant for unpaid rent attributable to the period through the Closing
Date. With respect to any rents (including without limitation
reimbursement obligations for operating expenses, common area costs,
insurance or real estate taxes) for any given Tenant for the months prior
to the month in which Closing occurs, due but not paid as of the Closing
Date, Purchaser shall forward any such amounts received by Purchaser
directly to Seller.
7.4.4 Seller shall credit to Purchaser the amount of all
damage or security deposits collected or received by Seller with respect to
any Tenants of the Property, including any interest accrued thereon as of
the Adjustment Date which must be paid to such Tenants pursuant to their
Leases or any applicable statute.
7.4.5 If at any time any of the amounts to be apportioned
under Sections 7.4.2 or 7.4.3 hereof cannot be calculated with complete
precision because the amount or amounts of one (1) or more items included
in such calculation are not then known, such calculation shall be made on
the basis of reasonable estimates by Seller and Purchaser of the amount or
amounts of the item or items in question, subject to adjustment (by
additional payment by Purchaser to Seller or by refund from Seller to
Purchaser) when the actual amount or amounts of such item or items becomes
known. Promptly after the actual amount of any such item becomes known to
either party hereto, which includes year end common area expense
reconciliation, such party shall notify the other thereof and shall include
in such notice the amount of any required adjustment. If such adjustment
requires an additional payment by Purchaser to Seller, Purchaser shall make
such payment to Seller simultaneously with its giving of, or within twenty
(20) days after its receipt of, such notice, as the case may be. If such
adjustment requires a refund by Seller to Purchaser, Seller shall make such
refund simultaneously with its giving of, or within twenty (20) days after
its receipt of, such notice, as the case may be. The obligations of this
Section 7.4.5 shall survive and remain enforceable after the Closing of the
Sale of the Property.
7.5 Seller shall pay the cost of the Commitment, the Title
Documents and the Searches. Seller shall pay the state deed tax applicable
to the Deed delivered hereunder. Seller shall credit to Purchaser an
allowance up to $1,000.00 for reimbursement of the actual costs of the
Survey obtained by Purchaser. Seller shall pay all leasing commissions and
tenant improvement costs incurred in connection with any Lease executed on
or before the Effective Date.
7.6 Any closing fee or escrow fee charged by the Escrow Agent or
Title Insurer shall be paid one-half by Purchaser and one-half by Seller.
7.7 Purchaser shall pay the cost of the Title Policy and any
endorsements thereto and the cost of recording the Deed. Purchaser shall
pay the cost of the UCC Search. Purchaser shall assume and reimburse
Seller for any Lease Transaction Costs for any Lease executed pursuant to
Section 4.2 above.
7.8 Each party shall pay the fees of its own attorneys and
accountants incurred in connection with the negotiation, execution and
performance of this Agreement.
8. Damage, Destruction and Eminent Domain.
8.1 Risk of loss with respect to the Property shall remain upon
Seller and shall not pass to Purchaser until the completion of the closing.
8.2 If, prior to closing, the Property or any part thereof is
substantially damaged or destroyed by fire, the elements or any cause,
Seller shall forthwith notify Purchaser of said damage or destruction, in
writing. If Purchaser delivers written notice of its election to terminate
this Purchase Agreement to Seller within fifteen (15) days of Seller's
giving notice of such damage or destruction, this Purchase Agreement shall
be terminated and become null and void. Upon receipt by Seller of written
notice delivered with the applicable fifteen (15) day time period of an
election by Purchaser to so terminate this Purchase Agreement, all Earnest
Money, and all interest accrued thereon, shall be paid to Purchaser and no
party hereto shall have any further claims against the other hereunder
other than the indemnity and confidentiality provisions herein. If
Purchaser elects to proceed and to consummate the purchase despite said
substantial damage or destruction, there shall be no reduction in or
abatement of the Purchase Price, and Seller shall assign to Purchaser
Seller's right, title and interest in and to all insurance proceeds
resulting or to result from said damage or destruction and shall reimburse
Purchaser, in cash, for any deductible amounts under its insurance
policies. For the purposes of this Subsection 8.2, the words "substantial-
ly damaged or destroyed" shall mean damage or destruction which the
Purchaser and Seller reasonably agree would cost three (3%) of the Purchase
Price or more to repair. In the event of any less than substantial damage
or destruction prior to the Closing Date, Seller shall either fully and
properly repair the same or restore the Property to the condition required
hereby prior to the Closing Date, or shall permit Purchaser to deduct the
cost of so repairing the same as reasonably determined by Purchaser and
Seller from the cash portion of the Purchase Price payable at the closing,
at Seller's option.
8.3 If, prior to closing, the Property or any part thereof shall be
taken by eminent domain, Seller shall forthwith notify Purchaser of said
taking, in writing. If Purchaser gives written notice of its election to
terminate this Purchase Agreement within fifteen (15) days of Seller's
giving notice of such substantial taking, this Purchase Agreement shall be
terminated and become null and void. Upon receipt by Seller of written
notice delivered within the applicable fifteen (15) day time period of an
election by Purchaser to treat this Purchase Agreement as null and void,
all Earnest Money, and all interest accrued thereon, shall be paid to
Purchaser and no party hereto shall have any further claims against the
other hereunder other than the indemnity and confidentiality provisions
herein. If Purchaser elects to proceed and to consummate the purchase
despite such a taking, there shall be no reduction in or abatement of the
Purchase Price, and Seller shall assign to Purchaser all Seller's right,
title and interest in and to any award made or to be made in the eminent
domain proceeding. Seller agrees to give Purchaser prompt written notice
of any such taking or proposed taking in the manner hereinafter provided.
9. Tenant Bankruptcy.
9.1 If, prior to closing, any tenant or tenants which in the
aggregate lease more than 10% of the rentable area of the buildings on the
Property or any tenant which leases more than 15,000 square feet of the
buildings, files a petition for relief with any bankruptcy court, with
jurisdiction or be the subject of any petition under Title 11 of the U.S.
Code, as amended, Seller shall forthwith notify Purchaser of such filing,
in writing. If Purchaser gives written notice of its election to terminate
this Purchase Agreement to Seller within fifteen (15) days of Seller's
giving notice of such bankruptcy as a result of such filing, this Purchase
Agreement shall be terminated and become null and void and the Earnest
Money be returned to Purchaser and neither party hereto shall have any
further obligations to any other party other than the indemnity and
confidentiality obligations herein.
10. Miscellaneous.
10.1 All the terms of this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by, the respective legal
representatives, successors and assigns of Seller and Purchaser; provided,
however, that Purchaser may not assign its rights hereunder without the
prior written consent of Seller which consent shall not be unreasonably
withheld.
10.2 Each of the parties hereto represents that such party has not
incurred and is not paying any brokerage fee or commission, finder's fee or
other selling commission or fee as a result of the transaction described
herein, except that Seller has agreed to pay a brokerage fee or commission
to CB Commercial in connection therewith by a separate agreement, and each
party hereto agrees to indemnify the other against, and to hold the other
harmless from, any claim for any such brokerage fee or commission, finder's
fee or other selling commission or fee incurred as a result of the
agreements or actions of the indemnifying party, and any costs and expenses
incurred in defending against any such claim, including court costs and
reasonable attorneys' fees. The representations and agreements set forth
in this Section 10.2 shall survive the Closing or earlier termination of
this Agreement.
10.3 Any notice, request or other communication required or
provided to be given under this Agreement shall be in writing signed by the
party giving the same or by its attorneys, and shall be deemed sufficiently
given when (i) delivered personally upon receipt or (ii) upon receipt when
mailed by certified or registered mail, return receipt requested, postage
prepaid, or (iii) delivered to Federal Express, UPS or other similar
overnight service courier, addressed as follows:
To Seller: Lutheran Brotherhood Realty Fund I
Attention: Clifford W. Habeck
625 Fourth Avenue South
Suite 1030
Minneapolis, Minnesota 55415
Fax: (612) 340-8458
To Purchaser: MINCO/Northwest Corporation
Attention: Randy J. Sowell
700 North Brand Boulevard
Suite 300
Glendale, California 91203
Fax: (818) 545-8460
Benjamin J. Randall, Esq.
Katz, Randall & Weinberg
333 West Wacker Drive, Suite 1800
Chicago, Illinois 60606
Fax: (312) 807-3903
With a courtesy copy to: Mr. Stanley Iezman
American Realty Advisors, Inc.
700 North Brand Boulevard, Suite 300
Glendale, California 91203
Fax: (818) 545-8460
or to such other party or such other address in the United States of
America as such party, by notice given as herein provided at least ten (10)
days prior to the effective date of said change or addition of address,
shall designate; provided, however, that no party hereto may require notice
to be sent to more than two (2) addresses. Any notice given in any other
manner shall be effective only upon receipt by the addressee.
10.4 This Agreement constitutes the entire and complete agreement
of the parties hereto with respect to the Property, shall supersede all
prior agreements (including any letter of intent) (but not including that
certain Letter Agreement dated July 25, 1996 providing for Early Access and
Indemnity for Due Diligence Investigations by and between Seller and
American Realty Advisors, Inc.) with respect thereto, and may be modified
only in writing. If any term or provision of this Agreement or any
application thereof shall be invalid or unenforceable, the remainder of
this Agreement and any other application of such term or provision shall
not be affected thereby. This Agreement shall be construed and interpreted
under and governed by the laws of the State of Minnesota. This Agreement
or any memorandum of this Agreement shall not be recorded in any public
record relating to the Property.
10.5 The Section headings or captions appearing herein are for
convenience only, are not a part of this Agreement and are not to be
considered in interpreting this Agreement.
11. Default; Termination.
11.1 If Closing does not occur as and when provided in this
Agreement because of a default by Purchaser, then Seller shall be entitled,
as its sole and exclusive remedy, to receive the Earnest Money together
with the Earnest money which shall be deposited in accordance with the
terms of the three Purchase Agreements as described in Section 6 hereof,
and all interest thereon as liquidated damages and to terminate this
Agreement and the Purchase Agreements by notice to Purchaser and upon such
termination neither party shall have any further claims against, obligation
to or rights against the other hereunder except for the indemnity and
confidentiality obligations set forth herein.
11.2 If Closing does not occur as and when provided in this
Agreement because of a default by Seller, then Purchaser shall be entitled
as its sole and mutually exclusive remedies:
11.2.1 If Seller's default is within its sole and exclusive
control, then Purchaser shall have the right to obtain specific performance
of Seller's obligations with respect to the Closing as set forth in Section
7.2 hereof to the extent that such obligations are in the sole and
exclusive control of Seller.
Any cause of action seeking specific performance must
be commenced within three (3) months after the Closing Date. In the event
Purchaser elects to commence an action seeking specific performance, such
commencement shall be deemed to be an election of remedies and Purchaser
shall have no further right to terminate this Agreement to commence any
other action or to recover damages or certain out of pocket expenses as set
forth below. In the event Purchaser commences an action seeking specific
performance and such action is dismissed or otherwise eliminated without
entry of an order against Seller granting Purchaser the right of specific
performance, then Seller is entitled to recover from Purchaser its costs
and expenses incurred in such action, including reasonable attorneys fees.
If Purchaser obtains the entry of an order against Seller granting
Purchaser the right of specific performance then Purchaser is entitled to
recover from Seller its costs and expenses incurred in such action,
including reasonable attorneys fees.
11.2.2 Terminate this Agreement by notice to Seller and upon
such termination, receive the Earnest Money and all interest thereon and
neither party shall have any further claims against, obligations to or
rights against the other hereunder except the indemnity and confidentiality
provisions herein. Except as set forth in Section 3.2 and 10.2 hereof,
Purchaser hereby waives any right to recover damages from Seller for any
default by Seller hereunder, except for the right to reimbursement of
certain out-of-pocket expenses under the circumstances provided for below.
In the event that Purchaser has not exercised its
option to terminate this Agreement during the Inspection Period and is
ready, willing and able to proceed to Closing but Seller has intentionally
caused at any time after the Inspection Period Termination Date one of the
following events to occur for the purpose of preventing Purchaser from
being able to purchase the Property (i) creation of a new title exception
with respect to the Property which has a material adverse effect thereon,
(ii) creation of a lease default on the part of the landlord under a Lease
which allows the tenant thereunder to legally terminate such Lease, (iii)
creation of circumstances which make the Property untenantable, or (iv)
commission of fraud or material misrepresentation with respect to the
current status of any of the representations set forth in Section 3 above,
then Seller shall, in addition to returning the Earnest Money, reimburse
Purchaser for its actual out of pocket expenses of Purchaser's third party
consultants as evidenced by paid written invoices (which cumulative total
reimbursement amount with respect to this Agreement and the Purchase
Agreements described in Section 6 shall not exceed the total sum of One
Hundred Ten Thousand and No/100ths Dollars ($110,000.00) and in no event
shall exceed the sum of $12,222.22 per building). Reimbursement for the
out of pocket expenses of Purchaser shall be conditioned upon Seller
receiving full and complete copies of all environmental, ADA, engineering,
survey and any other third party reports completed by Purchaser and an
assignment of all rights to use such information and/or reports. Seller
shall separately pay any reasonable recertification fees required by any
third party consultants to certify said reports to Seller. Nothing
contained herein shall be construed to require Seller to cure any condition
raised by Purchaser either before or after the Inspection Period or to
reimburse Purchaser for its out-of-pocket expenses upon the termination of
this Agreement as a result thereof unless such condition was intentionally
caused by Seller for the purpose of preventing Purchaser from being able to
purchase the Property as specifically set forth above. The above
obligation to reimburse Purchaser for its out-of-pocket expenses shall not
arise as a result of (a) tenants terminating their leases or failing to
enter into leases for any reason other than as the result of Seller's
intentional creation of circumstances which would allow tenant to legally
terminate its Lease; or (b) the deteriorating condition of any aspect of
the Property for any reason other than as a result of Seller's intentional
creation of circumstances which would make the Property untenantable. In
the event that the Seller is obligated to reimburse the Purchaser for its
out-of-pocket expenses as provided for herein, Seller shall so reimburse
Purchaser no later than ten (10) days after receipt of satisfactory
invoices as set forth above, which claim by Purchaser shall survive the
termination of and be independent of this Agreement which shall terminate
immediately as of the Closing Date or such earlier date as Purchaser elects
not to purchase the Property.
11.3 In the event either party defaults with respect to any
obligations arising after Closing, and fails to cure such default within
thirty (30) days after the date on which such defaulting party receives
written notice of such default from such other party, the non-defaulting
party shall have all legal rights and remedies available at law or in
equity.
11.4 Time is of the essence with respect to the Purchaser's
Inspection Periods, the Closing Date, and all other dates set forth or
provided for herein.
11.5 The Effective Date of this Agreement shall be the date of
the day immediately after the day Seller executes all counterpart originals
of this Agreement so long as Seller forwards a counterpart original of the
Agreement to Purchaser by Federal Express or other similar overnight
courier service on the day of execution. Seller shall fill in the date of
this Agreement on page 1 hereof as of the Effective Date.
SELLER:
LUTHERAN BROTHERHOOD REALTY FUND I
LIMITED PARTNERSHIP,
a California limited partnership
By: Lutheran Brotherhood Real Estate
Products Company, a Minnesota corporation
Its: General Partner
By: /s/ Gary J. Kallsen
_______________________________________
Its: Vice President
_______________________________________
By: /s/ Otis F. Hilbert
_______________________________________
Its: Vice President
_______________________________________
Date of Execution:
September 9, 1996
PURCHASER:
MINCO/NORTHWEST CORPORATION
a Delaware corporation
By: /s/ Stanley Iezman
_______________________________________
Its: President
_______________________________________
Date of Execution:
September 5, 1996
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