Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Carlyle Income Plus, L.P. - II
Commission File No.0-17705
Form 8-K
Gentlemen:
Transmitted, for the above-captioned registrant, is the
electronically filed executed copy of registrant's current report
on Form 8-K dated March 29, 1999.
Thank you.
Very truly yours,
Carlyle Income Plus, L.P. - II
By: JMB Realty Corporation
(Corporate General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
and Principal Accounting Officer
Enclosures
FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 29, 1999
CARLYLE INCOME PLUS, L.P. - II
-------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 0-17705 36-3555432
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(State of Organization) (Commission) (IRS
Employer File Number) Identification
Number)
900 N. Michigan Avenue, Chicago, Illinois 60611
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(Address of principal executive office)
Registrant's telephone number,including area code:(312) 915-1987.
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1225 CONNECTICUT AVENUE, N.W. OFFICE BUILDING
WASHINGTON D.C.
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On March 29, 1999,
Carlyle Income Plus, L.P. - II (the "Partnership"), an Illinois
limited partnership, through 1225 Investment Corporation, a
Delaware corporation, sold the land and related improvements
known as 1225 Connecticut Avenue office building (the
"Property"), an approximately 203,000 square foot office building
located in Washington D.C. 1225 Investment Corporation is a
private real estate investment trust in which the Partnership
owns approximately 43.6% of the outstanding stock. The buyer of
the Property, BRE/Connecticut L.L.C. ("BRE/Connecticut") a
Delaware limited liability company, is not affiliated with 1225
Investment Corporation, and the sale price was determined by
arm's-length negotiations.
On February 10, 1999, 1225 Investment Corporation entered
into an agreement with BRE/Connecticut to sell the Property for a
sale price of $52,960,000. 1225 Investment Corporation received
the sale price in cash at closing, net of estimated selling costs
of approximately $1,100,000 and operating prorations of
approximately $515,000 (subject to reprorations). The
Partnership's share of net proceeds from the sale (after
repayment of the first mortgage loan with a balance of $7,000,000
and prepayment penalty of approximately $247,000) is
approximately $19,420,000. The Property was 100% leased and
approximately 98.5% occupied at the date of sale. The sale
resulted in no significant gain or loss to 1225 Investment
Corporation for financial reporting purposes, primarily as a
result of value impairment provisions totaling $7,765,956
recorded by 1225 Investment Corporation in 1996 and 1998 (of
which the Partnership's share was $3,381,297). Also, the
Property was classified as held for sale or disposition as of
December 31, 1996 and therefore was not subject to continued
depreciation as of that date for financial reporting purposes.
In addition, 1225 Investment Corporation expects to recognize a
loss on sale of approximately $1,900,000 (of which the
Partnership's share would be approximately $827,000) for Federal
income tax reporting purposes in 1999.
In connection with the sale of the Property, as is customary
in such transactions, 1225 Investment Corporation agreed to
certain representations and warranties with a stipulated survival
period which expires December 10, 1999. Although it is not
expected, 1225 Investment Corporation may ultimately have some
liability under such representations and warranties which, in no
event, is to exceed $1,000,000. It is expected that the
Partnership will make its final distributions and wind up its
affairs after the expiration of the survival period for such
representations and warranties, barring unforeseen circumstances.
1225 Investment Corporation's shareholders are allocated or
distributed shares of profits and losses, and dividends from
operating cash flow and sale or refinancing proceeds according to
their respective stock ownership percentages.
The Partnership Agreement provides that distributions of
sale proceeds are to be initially allocated 99% to the Holders of
Interests (as defined) and 1% to the General Partners. However,
upon the completion of the liquidation of the Partnership and
final distribution of all Partnership funds, all previous
distributions of sale proceeds to the General Partners are to be
repaid to the Partnership to the extent that the Holders of
Interests have not received sale proceeds equal to their initial
capital contribution plus any deficiency in a 6% return on their
average adjusted capital contribution (as defined). Upon receipt
by the Holders of Interests of such preferred return, further
distributions, if any, of sale proceeds are to be allocated to
the General Partners until the General Partners have received
distributions in an amount equal to 3% of the aggregate selling
prices of all properties sold, with the remaining balance to be
distributed 85% to the Holders of Interests and 15% to the
General Partners; provided, however, that such 3% and 15% of sale
proceeds distributable to the General Partners are subordinate to
the Holders of Interests' receipt of any deficiency in a 9%
return on their average adjusted capital contribution. Since the
Holders of Interests will not receive an amount equal to their
initial capital contribution from the aggregate sale proceeds of
all of the Partnership's investment properties, the General
Partners will not share in any distributable proceeds from this
or any previous property sales.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements. Not Applicable
(b) Pro Forma Financial Information - Narrative.
The operations of the Property and 1225 Investment
Corporation were reflected by the Partnership on the equity basis
of accounting. Accordingly, as a result of the sale of the
Property, beyond the date of sale there will be no further
significant equity in the operations of the Property and 1225
Investment Corporation in the financial statements of the
Partnership, which for the Partnership's most recent reported
fiscal year (the year ended December 31, 1998) was $1,651,955.
Also, as a result of the sale of the Property, there will be no
further significant assets and liabilities related to the
Property and 1225 Investment Corporation, which at December 31,
1998 consisted of investment in unconsolidated affiliated
corporation of $20,207,295. The remaining operations of the
Partnership will consist primarily of the Partnership's
collection of interest income on invested sale proceeds that are
to be received in dividends from 1225 Investment Corporation and
other cash equivalents, the payment of administrative expenses,
and cash distributions to the Partners until the expiration of
the aforementioned representations and warranties in connection
with the sale of the Property and the expected liquidation of the
Partnership in December 1999.
(c) Exhibits.
10.1 Real Property Purchase Agreement between 1225
Investment Corporation and BRE/Connecticut L.L.C., dated February
10, 1999.
10.2 Letter Agreement between 1225 Investment
Corporation and BRE/Connecticut L.L.C., dated March 4, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
CARLYLE INCOME PLUS, L.P. - II
By: JMB Realty Corporation
Corporate General partner
By: __________________________________
GAILEN J. HULL
Gailen J. Hull
Senior Vice President and
Principal Accounting Officer
Date: April 8, 1999
3
PURCHASE AGREEMENT
(1225 Connecticut Avenue; Washington, D.C.)
THIS AGREEMENT is made and entered into as of February
10, 1999 (the "Effective Date") by and between 1225 INVESTMENT
CORPORATION, a Delaware corporation (hereinafter called
"Seller"), and BRE/CONNECTICUT L.L.C., a Delaware limited
liability company (hereinafter called "Buyer").
R E C I T A L S
A. Seller is the fee owner of the "Land" (as
hereinafter defined) on which real property is situated an
office complex and related improvements (the "Complex")
located at 1225 Connecticut Avenue, Washington, the District
of Columbia, as more particularly described herein.
B. Buyer desires to purchase, and Seller desires to
sell, the interest of Seller in and to such premises, together
with certain other rights described herein, all on the terms
and conditions hereinafter documented.
NOW, THEREFORE, in consideration of the mutual
undertakings of the parties hereto, it is hereby agreed as
follows:
1. Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"Land" means that certain real property located in
Washington, the District of Columbia, as more particularly
described in Exhibit "A" attached hereto and made a part
hereof, together with all right, title and interest of Seller
in and to any easements, rights of way, and appurtenances
thereto.
"Property" means the Land, together with (a) all
right, title and interest of Seller in and to all
improvements, structures and fixtures located upon the Land
(the "Improvements"), (b) all right, title and interest of
Seller in and to those items of personal property described in
Exhibit "B" attached hereto and made a part hereof (the
"Listed Personal Property"), together with all right, title of
Seller in and to any other items of personal property located
at the Property and utilized in the operation or maintenance
thereof (such items, if any being herein called the "Remaining
Personal Property", and, together with the Listed Personal
Property, is herein collectively called the "Personal
Property"), (c) all right, title and interest of Seller in and
to all leases, licenses and other occupancy agreements of
space in the Improvements, and all modifications and
amendments thereto, as set forth on Exhibit "C" attached
hereto (the "Leases"), (d) to the extent assignable, all
right, title and interest of Seller in and to all other
written contracts and agreements pertaining to the Property
which are set forth on Exhibit "D" attached hereto (the
"Service Agreements"), (e) to the extent assignable, all
Leases in which Seller is the lessee, if any, of equipment
used in the operation or maintenance of the Land or
Improvements which are set forth on Exhibit "E" attached
hereto (the "Equipment Leases"), and (f) to the extent
assignable, all right, title and interest of Seller in and to
all tenant lists, advertising material, telephone exchange
numbers, development rights, plans and specifications,
licenses, permits, third party engineering plans and studies,
floor plans and landscape plans relating solely to the
Complex.
2. Purchase and Sale. At "Closing" (as hereinafter
defined), Seller shall sell, assign and transfer to Buyer, and
Buyer shall purchase from Seller the Property, all upon the
terms, covenants and conditions hereinafter set forth.
3. Purchase Price. The purchase price (the "Purchase
Price") for the Property shall be the sum of Fifty Two Million
Nine Hundred Sixty Thousand and No/100 Dollars
($52,960,000.00), subject to adjustment for the prorations and
credits specified herein.
4. Payment of Purchase Price. The Purchase Price shall
be paid to Seller by Buyer as follows:
A. Escrow Deposit. Within two (2) business days
of the Effective Date, Buyer shall deliver $250,000 (together
with all interest thereon, the "Escrow Deposit") to First
American Title Insurance Company, 228 East 45th Street, New
York, New York 10017, Attention: Mr. John Tonelli ("Title
Company"). The deposit to be made hereunder shall be made by
wire transfer to Title Company of immediately available
federal funds (or by other delivery of good funds reasonably
acceptable to Seller), and the amounts so delivered shall be
held by Title Company as a deposit against the Purchase Price
in accordance with the terms and provisions of this Agreement.
At all times in which the Escrow Deposit is being held by the
Title Company, the Escrow Deposit shall be invested by the
Title Company in any of the following investments ("Approved
Investments"): (i) United States Treasury obligations,
(ii) United States Treasury-backed repurchase agreements
issued by a major national money center banking institution
reasonably acceptable to Seller (an "Approved Bank"), (iii) a
federally insured account at an Approved Bank, or (iv) such
other manner as may be reasonably agreed to by Seller and
Buyer. The Escrow Deposit shall be disposed of only as
provided in this Agreement. Buyer, Seller and the Title
Company shall each execute a Strict Joint Order Escrow in the
form of Exhibit "F-1" hereto in conjunction with the Title
Company's holding of the Escrow Deposit hereunder.
B. Closing Payment. The Purchase Price, as
adjusted by the application of the Escrow Deposit and by the
prorations and credits specified herein, shall be paid by wire
transfer of immediately available federal funds not later than
12:00 p.m.(noon), Chicago time on the "Closing Date", as
hereinafter defined (the amount to be paid under this
subparagraph B being herein called the "Closing Payment").
5. Conditions Precedent.
A. Title Matters.
(1) Title Report. Seller has delivered that
certain Commitment for Title Insurance Number 9884-11606
(N80-13610) dated June 24, 1998 (the "Commitment") covering
the fee interest of Seller in the Land from Near North
National Title Insurance Company. In addition, Seller has
delivered to Buyer an updated survey of the Property dated
December 9, 1998, prepared by Delashmutt Associates, Ltd.
("Survey"). Except as specifically set forth in Exhibit "F-
2", Buyer hereby approves the matters disclosed on the
Commitment and the Survey (such approved matters being herein
called the "Approved Title Matters"). Approval by Buyer of
any additional exceptions to title or survey matters disclosed
after the date hereof shall be a condition precedent to
Buyer's obligation to purchase the Property (and to obtain the
other rights contemplated herein). Unless Buyer gives written
notice that it approves any such additional exceptions to
title or survey matters, stating the exceptions so
disapproved, on or before the sooner to occur of 10 days after
receipt of written notice thereof or the Closing Date, Buyer
shall be deemed to have disapproved said exceptions. If, for
any reason, on or before the Closing Date, Seller does not
cause any matters listed on Exhibit "F-2" or any additional
exceptions to title or survey matters which Buyer disapproves
(to the extent Buyer is permitted hereunder to so disapprove)
either to be removed or to obtain a title endorsement (if
available) reasonably satisfactory to Buyer insuring over such
disapproved matter on or before the Closing Date at no cost or
expense to Buyer (Seller having the right but not the
obligation to do so), the obligation of Seller to sell, and
Buyer to buy, the Property as herein provided shall terminate
(and Seller and Buyer shall have no further obligations in
connection herewith, other than with respect to those matters
which survive termination hereunder). Buyer shall have the
option to waive the condition precedent set forth in this
Paragraph 5A(1) by notice to Seller. In the event of such
waiver, such condition shall be deemed satisfied.
Notwithstanding the foregoing, Seller shall be obligated to
remove (or cause the Title Company to omit) any of the
following exceptions: (x) any deed of trust or mortgage
against the Property securing financing obtained by Seller;
(y) any mechanic's or materialmen's liens based on work
performed by or on behalf of Seller, and (z) any tax or
judgment liens against Seller (the foregoing obligations being
without regard to amounts). Seller shall be entitled to
adjourn the Closing for a period not to exceed thirty (30)
days in order to eliminate title exceptions disapproved by
Buyer. If Seller fails to remove an exception which it is
obligated to remove hereunder and which may be satisfied by
the payment of a liquidated sum, Buyer may utilize a portion
of the Closing Payment to satisfy the same. In addition, if
the Commitment disclose judgments, bankruptcies, mortgages,
liens or other returns against other persons having names the
same or as similar to that of the Seller, Seller shall deliver
to Buyer and Title Company at Closing a certificate stating
that such judgments, mortgages, bankruptcies, liens or other
returns are not against Seller. Seller also shall deliver
appropriate certificates respecting mechanic's liens and bills
paid by Seller and such additional certificates and
documentary evidence reasonably required by the Title Company
to eliminate standard exceptions appearing in the Commitment
that Buyer is not required to accept (provided the same do not
impose material costs, liabilities or obligations upon Seller
not otherwise contemplated herein). If Seller is unable after
reasonable good faith effort, or is not required to, eliminate
a title exceptions or otherwise comply with the requirements
set forth herein, Seller shall so notify Buyer, and Buyer as
its sole and exclusive remedy, may terminate this Agreement by
notice given to Seller, in which event, the Escrow Deposit
shall be returned to Buyer and neither party shall have any
rights or obligations to the other under this Agreement,
except with respect to those obligations that survive a
termination of this Agreement.
(2) Title Policy. It shall be a condition
precedent to Buyer's obligation to consummate the transactions
contemplated herein that on the Closing Date, the Title
Company shall issue (or irrevocably commit to issue) an ALTA
owner's title insurance policy (the "Title Policy") in the
standard form issued in the District of Columbia, in the face
amount of the Purchase Price, which policy shows title to the
Land to be vested of record in Buyer, and the following to be
the only exceptions to title ("Permitted Exceptions"):
(a) Real estate taxes and assessments not
yet due and payable;
(b) The printed exceptions which appear
in the appropriate standard form policy of title insurance
issued by Title Company in the District of Columbia; and
(c) The Approved Title Matters and such
additional exceptions to title as may be approved by Buyer
pursuant to the provisions of subparagraph A(1) above.
B. Completed Due Diligence Reviews. Buyer has
performed, completed and approved all of Buyer's due diligence
examinations, reviews and inspections of all matters
pertaining to the transactions contemplated herein, including
all leases, service contracts, survey and title matters, and
all physical, environmental, engineering, and compliance
matters and conditions respecting the Property and the
transactions contemplated herein. Buyer hereby agrees to
indemnify, protect, defend and hold Seller and its direct and
indirect (through tiered ownership) partners, trustees,
beneficiaries, shareholders, officers, directors, employees,
members, managers, advisors and other agents and their
respective partners, trustees, beneficiaries, employees,
officers, directors and shareholders (collectively, the
"Indemnified Parties") harmless from and against any and all
liabilities, demands, actions, causes of action, suits,
losses, costs, damages, claims and expenses (including,
without limitation, actual attorneys' fees, court costs and
litigation expenses) made, brought, sought or incurred by any
of the Indemnified Parties for personal injury or property
damage or for any mechanic's liens directly or indirectly
arising out of, caused (in whole or in part) by or in
connection with the access granted by Seller under or in
connection with this Agreement to Buyer, its employees,
consultants, contractors or other agents. Buyer and its
agents and consultants have kept in effect commercial general
liability insurance insuring Seller, JMB Realty Corporation
and Heitman Capital Management Corporation as additional
insureds, with limits of not less than $3,000,000.00 for
personal injury, including property damage, bodily injury and
death, and with a waiver of subrogation (and have or
concurrently herewith shall deliver to Seller certificates of
insurance evidencing such coverage, and further evidencing
that such coverage may only be terminated or modified upon not
less than thirty (30) days prior written notice to Seller).
Buyer certifies to Seller that Buyer did not make any
intrusive physical testing (environmental, structural or
otherwise) at the Property (such as soil borings, water
samplings or the like) without Seller's express written
consent (provided the foregoing shall not prohibit Buyer from
obtaining a standard Phase I environmental survey). In the
event of termination of this Agreement, Buyer shall promptly
return or destroy all documents and other materials furnished
by or on behalf of Seller hereunder and, if requested by
Seller in writing, Buyer shall deliver copies of any third
party reports prepared by or on behalf of Buyer (excluding
reports prepared by Buyer's counsel). Prior to Closing, Buyer
shall keep all information or data received or discovered in
connection with any of the inspections, reviews or
examinations strictly confidential and will not disclose such
information or data to any third party without Seller's prior
written consent; provided, however, Buyer may disclose such
information and data to its respective affiliates, investors,
lenders, employees, agents, attorneys or consultants or as
required by law on the condition that such persons maintain
the confidentiality thereof in accordance with the terms of
this Agreement. The indemnification provisions of this
Agreement shall survive the Closing or earlier termination
hereof and the confidentiality provisions of this Agreement
shall survive the termination of this Agreement if the Closing
does not occur hereunder.
C. Tenant Estoppel Certificates. Buyer
acknowledges that Buyer has received, and approved the
estoppel certificates attached as Exhibit "H" hereto and made
a part hereof (and that no further estoppel certificates, or
updates of the same, are required as a condition to Closing or
otherwise hereunder).
D. Performance by Seller. The performance and
observance, in all material respects, by Seller of all
covenants and agreements of this Agreement to be performed or
observed by Seller prior to or on the Closing Date shall be a
condition precedent to Buyer's obligation to purchase the
Property; provided however, unless this Agreement has
previously terminated, if Seller tenders full performance on
the Closing Date, and has otherwise cured all existing
defaults, if any, Buyer shall not refuse to perform its
obligations hereunder on the basis of a prior breach by Seller
hereunder. In addition, in the event that on the Closing
Date, there shall have occurred any material adverse changes
in the representations or warranties of Seller contained in
paragraph 8A below which are not otherwise permitted or
contemplated by the terms of this Agreement, then Buyer shall
have the right to terminate this Agreement. Buyer shall have
the option to waive the condition precedent set forth in this
Paragraph 5D by written notice to Seller. In the event of
such waiver, such condition shall be deemed satisfied.
E. Performance by Buyer. The performance and
observance, in all material respects, by Buyer of all
covenants and agreements of this Agreement to be performed or
observed by it prior to or on the Closing Date shall be a
condition precedent to Seller's obligation to sell the
Property; provided however, unless this Agreement has
previously terminated, if Buyer tenders full performance on
the Closing Date, and has otherwise cured all existing
defaults, if any, Seller shall not refuse to perform its
obligations hereunder on the basis of a prior breach by Buyer
hereunder. In addition, in the event that on the Closing Date
there shall have occurred any material adverse changes in the
representations or warranties of Buyer contained in paragraph
8B below which are not permitted or contemplated by the terms
of this Agreement, then Seller shall have the right to
terminate this Agreement. Seller shall have the option to
waive the condition precedent set forth in this Paragraph 5E
by written notice to Buyer. In the event of such waiver, such
condition shall be deemed satisfied.
F. Storage Tank Closure. The receipt, on or
before the Closing Date, from the District of Columbia
Environmental Regulating Agency, Underground Storage Tank
Administrator, of a closure letter reasonably satisfactory to
Buyer respecting a previously removed storage tank at the
Property shall be a condition precedent to the Buyer's
obligation to purchase the Property. Buyer shall have the
option to waive the condition precedent in this Paragraph 5F
by written notice to Seller. In the event of such waiver,
such condition shall be deemed satisfied.
6. Closing Procedure. The closing ("Closing") of the
transactions provided herein shall be consummated at a closing
conference ("Closing Conference"), which shall be held on the
Closing Date at the Title Company's offices at 222 North
LaSalle Street, Suite 3600, Chicago, Illinois; provided,
however, if Seller and Buyer shall agree, the Closing may
occur through appropriate escrow arrangements as more
particularly set forth below. As used herein, "Closing Date"
means March 15, 1999, or such earlier date as may be agreed
upon by Buyer and Seller (or such extended date as may be
agreed upon by the parties or as applicable pursuant to the
terms of this Agreement).
A. Delivery to Parties. At the Closing
Conference, the following items shall be delivered:
(1) Seller Deliveries. Seller shall deliver,
or cause to be delivered, to Buyer the following:
(a) A duly executed and acknowledged
special warranty deed ("Deed") in the form of Exhibit "J"
attached hereto and made a part hereof;
(b) A duly executed and acknowledged bill
of sale ("Bill of Sale") with respect to the Personal
Property, an assignment and assumption agreement ("Lease
Assignment and Assumption Agreement") with respect to the
Leases, and refundable security deposits, and a general
assignment and assumption agreement ("General Assignment and
Assumption Agreement") with respect to the Service Agreements,
Equipment Leases and "Brokerage Agreements" (as hereinafter
defined), and any other contracts and other rights to be
transferred hereunder, in the forms of Exhibits "K-1", "K-2"
and "K-3", respectively, attached hereto and made a part
hereof;
(c) Duly executed and acknowledged
certificates regarding the "non-foreign" status of Seller;
(d) Written notices ("Notices of
Closing") of the transfer and conveyances hereunder to
vendors, tenants and other parties as may be reasonably
required by (and in form reasonably acceptable to) Seller and
Buyer;
(e) A certificate of Seller ("Seller
Closing Certificate") updating the representations and
warranties contained in paragraph 8A hereof to the Closing
Date and noting any changes thereto;
(f) Evidence reasonably satisfactory to
Buyer and Title Company respecting the due organization of
Seller and the due authorization and execution of this
Agreement and the documents required to be delivered hereunder
by Seller, as appropriate;
(g) To the extent not previously
delivered to Buyer, Seller shall either deliver at Closing or
cause to be retained at the Property all third party
environmental, engineering and physical inspection reports and
building, engineering and architectural plans, certificates of
occupancy, licenses, permits, plans and specifications, third
party guaranties or warranties respecting construction,
installation or maintenance of the Property, originals of all
Leases (and all written correspondence with third parties
respecting same), contracts, and other agreements to be
assigned hereunder, including Service Agreements, keys tagged
for identification, and operating and billing records
maintained at the Property, all to the extent the same are in
Seller's possession; and
(h) Such additional documents (including
transfer tax declarations and the like) as may be reasonably
required by Buyer or Title Company in order to consummate the
transactions hereunder (provided the same do not materially
increase the costs to, or liability or obligations of, Seller
in a manner not otherwise provided for herein).
(2) Buyer Deliveries. Buyer shall deliver, or
cause to be delivered, to Seller the following:
(a) The Closing Payment by wire transfer
of immediately available federal funds pursuant to
instructions to be provided by Seller on or before the Closing
Date;
(b) A duly executed and acknowledged
Lease Assignment and Assumption Agreement and General
Assignment and Assumption Agreement;
(c) Duly executed Notices of Closing;
(d) A certificate of Buyer ("Buyer
Closing Certificate") updating the representations and
warranties contained in paragraph 8B hereof to the Closing
Date and noting any changes thereto;
(e) Evidence reasonably satisfactory to
Seller and Title Company respecting the due organization of
Buyer and the due authorization and execution of this
Agreement and the documents required to be delivered
hereunder; and
(f) Such additional documents (including
transfer tax declarations and the like) as may be reasonably
required by Seller or Title Company in or to consummate the
transactions hereunder (provided the same do not materially
increase the costs to, or liability or obligations of, Buyer
in a manner not otherwise provided for herein).
B. New York Style or Escrow Closing.
(1) New York Style Closing. Subject to
the provisions set forth below, it is contemplated that the
transactions hereunder shall be closed by means of a so-called
"New York Style Closing", with concurrent delivery of the
conveyancing and other closing documents hereunder, delivery
of the Owner's Policy (or a "marked up" commitment therefor),
and payment of the Closing Payment (and Escrow Deposit) to
Seller. The parties agree that the disbursement of the
Closing Payment (and Escrow Deposit) shall not be conditioned
upon the recording of the Deed but rather upon the issuance of
(or commitment to issue) the Owner's Policy by the Title
Company. Each party agrees to deliver such documents and
undertakings as may be reasonably required in order to
effectuate such closing in the manner contemplated in this
Agreement.
(2) Escrow Closing. Notwithstanding the
foregoing, Seller and Buyer may elect to cause the Closing to
occur through an escrow ("Escrow") with Title Company. Such
deliveries shall be made pursuant to closing procedure
instructions ("Closing Instructions") to be executed among
Buyer, Seller and Title Company in form reasonably acceptable
to such parties in order to effectuate the intent hereof. The
conditions of Closing shall include the Title Company's
receipt of the documents provided for herein, the Closing
Payment and a notice from each of Buyer and Seller authorizing
Title Company to close the transactions as contemplated herein
(each of Buyer and Seller being obligated to deliver such
authorization notice on or before the Closing Date as soon as
the conditions to such party's Closing obligations shall have
been satisfied).
C. Closing Costs. Seller shall pay at Closing
(i) the title insurance premium for the Title Policy, and (ii)
the costs to update the Survey. Buyer shall pay at Closing
(i) the costs of all endorsements to the Title Policy,
together with the cost of any other title insurance coverage
(such as reinsurance or lender's insurance policies), and
(ii) all fees, costs or expenses incurred by Buyer in
connection with Buyer's due diligence reviews hereunder.
Seller and Buyer shall each pay one-half of any documentary
stamp taxes or other transfer taxes applicable to the Deed and
one-half of the closing escrow fees. Each of Seller and Buyer
shall pay its own attorneys' fees and its respective share of
prorations as hereinafter provided. Notwithstanding the
foregoing, in the event the sale contemplated hereby does not
close on the Closing Date, then each party shall pay all costs
incurred by it.
D. Prorations.
(1) Items to be Prorated. The following shall
be prorated between Seller and Buyer as of the Closing Date:
(a) Real property taxes and general and
special assessments upon the Property shall be adjusted on an
accrual basis and prorated, as of the Closing Date on the
basis of the fiscal year for such taxes and assessments (the
"Tax Year"). If the Closing shall occur before the real
property tax rate for the Tax Year is fixed, the apportionment
of taxes shall be made on the basis of a good faith estimate
of Seller and Buyer. After the real property taxes are
finally fixed for the Tax Year in which the Closing occurs,
Buyer and Seller shall make a recalculation of the
apportionment of such taxes, and Buyer or Seller, as the case
may be, shall make an appropriate payment to the other based
on such recalculation. To the extent that either the Seller
or Buyer shall obtain any real estate tax abatement with
respect to the Property which is applicable to the year in
which the Closing occurs, the amount of the net proceeds of
such tax abatement shall be prorated through the Closing Date
if, as and when such proceeds are paid or applied (and if
applied, Buyer shall promptly after notice of such application
remit to Seller its share) by the applicable governmental
authority (it being understood that to the extent any tenant
shall be entitled to any portion of such tax abatement, that
such portion shall be turned over to Buyer to remit to such
tenant and shall be deducted from any tax abatement proceeds
in connection with calculating the net proceeds thereto).
Buyer shall have no rights to any tax abatements for periods
prior to the year in which the Closing occurs (Seller
retaining all rights thereto). In no event shall Seller be
charged with or be responsible for any increase in the taxes
on the Property resulting from the sale of the Property or
from any improvements made or leases entered into on or after
the Closing Date. If any assessments on the Property are
payable in installments, then the installment for the current
period shall be prorated (with Buyer assuming the obligation
to pay any installments due after the Closing Date).
(b) All fixed and additional rentals
(including escalation rentals, percentage rent and "pass
throughs") under the Leases, refundable security deposits
(together with interest on such deposits to the extent
required by law or by the terms of the applicable Leases) and
other tenant charges. Seller shall deliver or provide a
credit in an amount equal to all prepaid rentals for periods
after the Closing Date and all refundable security deposits
(to the extent the foregoing are held by Seller and are not
applied or forfeited prior to the Closing Date) to Buyer on
the Closing Date. Rents which are unpaid as of the Closing
Date shall not be prorated on the Closing Date. Buyer shall
include such delinquencies in its normal billing and shall
diligently pursue the collection thereof in good faith after
the Closing Date (but Buyer shall not be required to litigate
or declare a default in any Lease). To the extent Buyer
receives rents on or after the Closing Date, such payments
(net of any reasonable out-of-pocket third party collection
costs actually incurred by Buyer) shall be applied first
toward then current rent owed to Buyer in connection with the
applicable Lease for which such payments are received, and any
excess monies received shall be applied toward the payment of
any delinquent rents, with Seller's share thereof being
promptly delivered to Seller. Buyer may not waive any
delinquent rents nor modify a Lease so as to reduce or
otherwise affect amounts owed thereunder for any period in
which Seller is entitled to receive a share of charges or
amounts without first obtaining Seller's written consent.
With respect to delinquent rents and any other amounts or
other rights of any kind respecting tenants who are no longer
tenants of the Property as of the Closing Date, Seller shall
retain all rights relating thereto. Escalation rents and
"pass throughs" shall be reprorated between Seller and Buyer
at the time of final calculation and collection from tenants
of such amounts for 1999 apportioned not on a per diem basis
but on the basis of the relative share of actual expenses in
question incurred by Seller and Buyer during the calendar year
in question; provided, however, such escalation rents and
"pass throughs" shall be prorated on an estimated basis
utilizing final amounts calculated for 1998 as the basis for
such estimated prorations. Seller shall provide Buyer with
such information as may be necessary and reasonably available
to finalize calculation of such escalation and "pass through"
amounts for Seller's period of ownership (i.e., 1998 and 1999,
if applicable) and Buyer shall promptly bill and diligently
pursue collection thereof in good faith after the Closing
Date.
(c) If the Closing shall occur before the
actual amount of utilities, water or sewer meter charges or
other operating expenses with respect to the Property for the
month in which the Closing occurs are determined, the
apportionment of such utilities, water or sewer meter charges
or other operating expenses shall be upon the basis of a
reasonable estimate by Seller and Buyer of such utilities,
water or sewer meter charges or other operating expenses for
such month. Subsequent to the Closing, when the actual amount
of such utilities, water or sewer meter charges or other
operating expenses with respect to the Property for the month
in which the Closing occurs are determined, the parties agree
to adjust the proration of such utilities, water or sewer
meter charges or other operating expenses and, if necessary,
to refund or repay such sums as shall be necessary to effect
such adjustment.
(d) Other operating expenses (including
under any Service Agreements assigned hereunder). Subject to
the adjustments and credits provided for herein, Seller shall
pay either at Closing, or in its normal course of business
thereafter, any bills or invoices incurred as a result of work
performed by or for Seller prior to Closing.
(2) Calculation. The prorations and payments
shall be made on the basis of a written statement submitted to
Buyer by Seller prior to Closing and approved by Buyer. In
the event any prorations or apportionments made under this
subparagraph D shall prove to be incorrect for any reason,
then any party shall be entitled to an adjustment to correct
the same provided written notice of such inaccuracy and
request for correction is given within six months after the
Closing Date. Any item which cannot be finally prorated
because of the unavailability of information shall be
tentatively prorated on the basis of the best data then
available and reprorated when the information is available,
but not later than six months after the Closing Date. Any
amounts which one party hereto may owe to the other party in
connection with the prorations hereunder shall be paid within
five (5) business days after the end of each month in which
such party receives the applicable amount or is otherwise
determined to owe such amounts pursuant to the terms hereof.
7. Condemnation or Destruction of Property. Seller
shall promptly give notice to Buyer in the event that, after
the date hereof but prior to the Closing Date, either any
portion of the Property is taken pursuant to eminent domain
proceedings or any of the improvements on the Property are
damaged or destroyed by any casualty. Seller shall have no
obligation to repair or replace any such damage or
destruction. Seller shall, upon consummation of the
transaction herein provided, assign to Buyer all claims of
Seller respecting any condemnation or casualty insurance
coverage, as applicable, and all condemnation proceeds or
proceeds from any such casualty insurance received by Seller
on account of any casualty (the damage from which shall not
have been repaired by Seller prior to the Closing Date), as
applicable (together with any deductible which may be payable
under Seller's insurance policy with respect to any applicable
casualty); provided, however, that Seller shall retain any
proceeds received (and the right to receive any proceeds) of
rental income insurance or a temporary taking award that are
attributable to a period prior to the Closing Date. In the
event the condemnation award or the cost of repair of damage
to the Property on account of a casualty prior to Closing, as
applicable, shall exceed $500,000, Buyer may, at its option,
terminate this Agreement by notice to Seller, given on or
before the Closing Date; provided, however, Buyer shall have
not less than five (5) business days after it receives notice
of any condemnation or casualty to examine the Property to
determine the extent of the damage (and the Closing Date shall
be extended, if necessary, to permit such 5-day review).
8. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of
Seller.
(1) General Disclaimer. Except as
specifically set forth in Paragraphs 8A(2) or 10A below, the
sale of the Property hereunder is and will be made on an "as
is" basis, without representations and warranties of any kind
or nature, express, implied or otherwise, including, but not
limited to, any representation or warranty concerning title to
the Property, the physical condition of the Property
(including, but not limited to, the condition of the soil or
the Improvements), the environmental condition of the Property
(including, but not limited to, the presence or absence of
hazardous substances on or respecting the Property), the
compliance of the Property with applicable laws and
regulations (including, but not limited to, zoning and
building codes or the status of development or use rights
respecting the Property), the financial condition of the
Property or any other representation or warranty respecting
any income, expenses, charges, liens or encumbrances, rights
or claims on, affecting or pertaining to the Property or any
part thereof. Except as to matters specifically set forth in
Paragraphs 8A(2) or 10 below, Buyer will acquire the Property
solely on the basis of its own physical and financial
examinations, reviews and inspections and the title insurance
protection afforded by the Title Policy. Without limitation
thereon, Buyer hereby waives any and all rights of
contribution or other rights or remedies against Seller under
the Comprehensive Environmental Response Compensation and
Liability Act or any other applicable environmental laws,
rules or regulations.
(2) Limited Representations and Warranties of
Seller. Subject to the provisions of Paragraph 8A(1) above,
Seller hereby represents and warrants to Buyer that, except as
set forth in Exhibit "L" attached hereto and made a part
hereof.
(a) Rent Roll. Attached as Exhibit "C"
and made a part hereof is a true, complete and accurate list,
as of the date thereof, of all Leases (and all modifications
and amendments thereto) respecting the Property. Seller has
provided complete copies of all Leases to Buyer for its
review. In addition, the other information set forth in
Exhibit "C" is, to Seller's knowledge, true and correct (such
representation and warranty as to the list of receivables
being made effective as of the date specified on such list).
To Seller's knowledge, the Leases are in full force and
effect. To Seller's knowledge, Seller has not received any
written notice of a material default under any of such Leases
that remains uncured. Seller has satisfied all tenant
improvement and brokerage obligations under the Leases that
were to be performed or paid for prior to the date hereof
relating to the Property. All brokerage agreements
("Brokerage Agreements") providing for the payment of
commissions or fees which will be payable after Closing (and
are to be assumed by Buyer) are listed in Exhibit "M" attached
hereto. Notwithstanding anything to the contrary contained
herein, Seller shall have no obligation or liability to Buyer
with respect to any of the foregoing matters which shall be
confirmed as correct in any Tenant Estoppel Certificate which
may be delivered hereunder.
(b) Litigation. There is no pending
action, litigation, condemnation or other proceeding against
the Property or against Seller with respect to the Property.
(c) Compliance. Seller has not received
any written notice from any governmental authority having
jurisdiction over the Property.
(d) Service Agreements. Seller has not
entered into any service agreements or contracts ("Service
Agreements") or other agreements (other than as set forth in
this Agreement) relating to the Property which will be in
force on the Closing Date, except as described in Exhibit "D"
attached hereto.
(e) Due Authority. This Agreement and all
agreements, instruments and documents herein provided to be
executed or to be caused to be executed by Seller are and on
the Closing Date will be duly authorized, executed and
delivered by and are binding upon Seller. Seller is a
corporation, duly organized and validly existing under the
laws of the State of Delaware, and is duly authorized and
qualified to do all things required of it under this
Agreement. Seller has the capacity and authority to enter
into this Agreement and consummate the transactions herein
provided.
(f) No Employees. Seller does not have,
and as of Closing will not have, any employees in connection
with its operation of the Property (all such persons so
employed at the Property being employees of Seller's third
party property management company) and Seller has not entered
into any employment agreements in connection with the
Property.
(g) Personal Property. Seller owns the
Listed Personal Property included in this sale free and clear
of any liens and encumbrances, except for the Permitted
Exceptions.
(h) No Bankruptcy. Seller has not
(i) made a general assignment for the benefit of creditors,
(ii) filed any voluntary petition in bankruptcy or suffered
the filing of an involuntary petition by its creditors,
(iii) suffered the appointment of a receiver to take
possession of all or substantially all of its assets,
(iv) suffered the attachment, or other judicial seizure of
all, or substantially all, of its assets, (v) admitted in
writing its inability to pay its debts as they come due, or
(vi) made an offer of settlement, extension or compromise to
its creditors generally.
(i) No Options. Except as may be set
forth in the Tenant Leases or Permitted Exceptions, Seller has
not granted any third party option or other right to purchase
the Property. Except for the related matters specified in the
Ernst & Young Estoppel Certificate attached as Exhibit "H"
hereto, Seller has not received any written response from
Ernst & Young to that certain notice letter given by "Broker"
(as hereinafter defined) in connection with Section 14.01 of
the Ernst & Young Lease, a copy of which notice letter is
attached hereto as Exhibit "I".
(j) Definition of Knowledge. As used
herein, the phrase "to Seller's knowledge" means only the
present actual knowledge of Howard Edelman of "Heitman" and
Glenn Emig of "JMB" (as hereinafter defined), and Tim Burns,
the asset manager currently overseeing the investment of
Seller in the Property, after having Seller's third party
property manager and leasing agent review the representations
and warranties contained herein, but otherwise without any
duty to investigate and with any imputed or constructive
knowledge being excluded.
B. Representations and Warranties of Buyer. Buyer
hereby represents and warrants to Seller that this Agreement
and all agreements, instruments and documents herein provided
to be executed or to be caused to be executed by Buyer are and
on the Closing Date will be duly authorized, executed and
delivered by and are binding upon Buyer; Buyer is a limited
liability company, duly organized, validly existing and in
good standing under the laws of the State of Delaware, and is
duly authorized and qualified to do all things required of it
under this Agreement; and Buyer has the capacity and authority
to enter into this Agreement and consummate the transactions
herein provided.
C. Interim Covenants of Seller. Until the Closing
Date or the sooner termination of this Agreement:
(1) Seller shall maintain the Property in the
same manner as prior hereto pursuant to its normal course of
business (such maintenance obligations not including
extraordinary capital expenditures or expenditures not
incurred in such normal course of business), subject to
reasonable wear and tear and further subject to destruction by
casualty or other events beyond the control of Seller.
(2) Seller shall not enter into any additional
service contracts or other similar agreements without the
prior consent of Buyer, except those deemed reasonably
necessary by Seller, are at "market" rates and are cancelable
on 30 days' notice. In addition, Seller shall not enter into
any new leases or material modifications of Leases thereafter
without the consent of Buyer. Any approval or consent
required to be obtained from Buyer hereunder shall not be
unreasonably withheld or duly delayed. Any approval as
aforesaid shall constitute Buyer's agreement to pay or
reimburse Seller on the Closing Date for all tenant
improvement costs, leasing commissions and legal fees incurred
by Seller under or in connection with the applicable Lease.
(3) Seller shall maintain its existing
insurance (or substantially equivalent coverage) through
Closing.
(4) Seller shall, effective as of the Closing
Date, at Seller's cost and expense, terminate any management
agreement entered into by Seller with respect to the Property
(and shall give Buyer such evidence of termination thereof as
Buyer shall reasonably require).
9. DISPOSITION OF DEPOSIT. IF THE TRANSACTION HEREIN
PROVIDED SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT
UNDER THIS AGREEMENT OR THE FAILURE OF SATISFACTION OF THE
CONDITIONS DESCRIBED IN PARAGRAPH 5 HEREOF WHICH ARE FOR
BUYER'S BENEFIT OR THE TERMINATION OF THIS AGREEMENT IN
ACCORDANCE WITH PARAGRAPH 7 HEREOF, THEN THE ESCROW DEPOSIT
SHALL BE RETURNED TO BUYER, AND NEITHER PARTY SHALL HAVE ANY
FURTHER OBLIGATION OR LIABILITY TO THE OTHER; PROVIDED,
HOWEVER, IF THE TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE
SOLELY BY REASON OF SELLER'S DEFAULT, AND BUYER SHALL HAVE
FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND SHALL BE READY,
WILLING AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO
SPECIFICALLY ENFORCE THIS AGREEMENT (BUT NO OTHER ACTION, FOR
DAMAGES OR OTHERWISE, SHALL BE PERMITTED). IN THE EVENT THE
TRANSACTION HEREIN PROVIDED SHALL NOT CLOSE BY REASON OF
BUYER'S DEFAULT UNDER THIS AGREEMENT, THEN THE ESCROW DEPOSIT
SHALL BE DELIVERED TO SELLER AS FULL COMPENSATION AND
LIQUIDATED DAMAGES UNDER AND IN CONNECTION WITH THIS
AGREEMENT. IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL
CLOSE, THE ESCROW DEPOSIT SHALL BE APPLIED AS A PARTIAL
PAYMENT OF THE PURCHASE PRICE. IN CONNECTION WITH THE
FOREGOING, THE PARTIES RECOGNIZE THAT SELLER WILL INCUR
EXPENSE IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY
THIS AGREEMENT AND THAT THE PROPERTY WILL BE REMOVED FROM THE
MARKET; FURTHER, THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER
CAUSED BY THE BREACH BY BUYER UNDER THIS AGREEMENT AND THE
FAILURE OF THE CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY
THIS AGREEMENT OR THE AMOUNT OF COMPENSATION SELLER SHOULD
RECEIVE AS A RESULT OF BUYER'S BREACH OR DEFAULT. IN THE
EVENT THE SALE OF THE PROPERTY SHALL NOT BE CONSUMMATED ON
ACCOUNT OF BUYER'S DEFAULT, THEN THE RETENTION OF THE ESCROW
DEPOSIT SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS
AGREEMENT BY REASON OF SUCH DEFAULT, SUBJECT TO THE PROVISIONS
OF PARAGRAPH 10I HEREOF.
TK GAC
_________________ ________________
Seller's Initials Buyer's Initials
10. Miscellaneous.
A. Brokers.
(1) Except as provided in subparagraph (2)
below, Seller represents and warrants to Buyer, and Buyer
represents and warrants to Seller, that no broker or finder
has been engaged by it, respectively, in connection with any
of the transactions contemplated by this Agreement or to its
knowledge is in any way connected with any of such
transactions. In the event of a claim for broker's or
finder's fee or commissions in connection herewith, then
Seller shall indemnify and defend Buyer from the same if it
shall be based upon any statement or agreement alleged to have
been made by Seller, and Buyer shall indemnify and defend
Seller from the same if it shall be based upon any statement
or agreement alleged to have been made by Buyer. The
indemnification obligations under this Paragraph 10A(1) shall
survive the closing of the transactions hereunder or the
earlier termination of this Agreement.
(2) If and only if the sale contemplated
herein closes, Seller agrees to pay a brokerage commission to
Hamptons International (the "Broker") pursuant to a separate
written agreement (and Seller shall indemnify and defend Buyer
from any fees or commissions to, or claims by, Broker in
connection therewith).
B. Limitation of Liability; Survival.
(1) Re Seller.
(a) Notwithstanding anything to the
contrary contained herein, if the closing of the transactions
hereunder shall have occurred (and Buyer shall not have
waived, relinquished or released any applicable rights in
further limitation), the aggregate liability of Seller
arising pursuant to or in connection with the
representations, warranties, indemnifications, covenants or
other obligations (whether express or implied) of Seller
under this Agreement (or any document executed or delivered
in connection herewith) or otherwise in connection with the
Property shall be limited to actual damages and shall in no
event exceed $1,000,000 in the aggregate.
(b) No direct or indirect (through tiered
ownership) advisor, trustee, director, officer, employee,
beneficiary, shareholder, participant, partner, member,
representative or agent of or in Seller (including, but not
limited to, Heitman Capital Management LLC ["Heitman"] and JMB
Realty Corporation ["JMB"]) shall have any personal liability,
directly or indirectly, under or in connection with this
Agreement or any agreement made or entered into under or
pursuant to the provisions of this Agreement, or any amendment
or amendments to any of the foregoing made at any time or
times, heretofore or hereafter, and Buyer and its successors
and assigns and, without limitation, all other persons and
entities, shall look solely to Seller's assets for the payment
of any claim or for any performance, and Buyer, on behalf of
itself and its successors and assigns, hereby waives any and
all such personal liability.
(c) Seller or its successor-in-interest
shall retain cash reserves of at least $1,000,000 at the time
of the Closing hereunder and during the "Survival Period" (as
hereinafter defined) shall only utilize the same for the
payment of Seller's liabilities to Buyer arising pursuant to
or in connection with a breach or alleged breach of any of the
representations, warranties, indemnifications, covenants or
other obligations (whether express or implied) of Seller under
this Agreement or any document executed or delivered in
connection herewith, (collectively, the "Specified
Liabilities"). If Seller or its successor-in-interest shall
utilize such reserves so retained by Seller hereunder during
the Survival Period for non-Specified Liabilities, nothing
contained herein shall limit Buyer's remedies with respect to
the amount by which Seller's reserves were reduced below
$1,000,000 as a result of payment of such non-Specified
Liabilities (not to exceed $1,000,000 in the aggregate).
(d) Seller acknowledges that, at Closing,
Seller shall cause Heitman and JMB to deliver to Buyer a
letter in the form of Exhibit "N" attached hereto and made a
part hereof confirming certain of the matters set forth in
this Paragraph 10B(1).
(2) Re Buyer.
(a) Notwithstanding anything to the
contrary contained herein, if the closing of the transactions
hereunder shall have occurred (and Seller shall not have
waived, relinquished or released any applicable rights in
further limitation), the aggregate liability of Buyer arising
pursuant to or in connection with the representations,
warranties, indemnifications, covenants or other obligations
(whether express or implied) of Buyer under this Agreement (or
any document executed or delivered in connection herewith) or
otherwise in connection with the Property shall be limited to
actual damages and shall in no event exceed $1,000,000 in the
aggregate.
(b) No constituent partner in or agent of
Buyer, nor any advisor, trustee, director, officer, employee,
beneficiary, shareholder, participant, representative or agent
of any corporation or trust that is or becomes a constituent
partner in Buyer shall have any personal liability, directly
or indirectly, under or in connection with this Agreement or
any agreement made or entered into under or pursuant to the
provisions of this Agreement, or any amendment or amendments
to any of the foregoing made at any time or times, heretofore
or hereafter, and Seller and its successors and assigns and,
without limitation, all other persons and entities, shall look
solely to Buyer's assets for the payment of any claim or for
any performance, and Seller, on behalf of itself and its
successors and assigns, hereby waives any and all such
personal liability.
(3) Survival. Any cause of action of a
party for a breach or default by the other party with respect
to any representations, warranties, indemnifications,
covenants or other obligations (whether express or implied)
under this Agreement or any of the documents delivered at
Closing (or any other document executed or delivered in
connection with any of the foregoing) shall survive until
December 10, 1999 (the "Survival Period"), at which time all
such representations, warranties, indemnifications, covenants
and obligations (and any cause of action resulting from a
breach or default thereof not then in litigation) shall
terminate. Notwithstanding the foregoing, if Buyer shall have
actual knowledge as of the Closing Date that any of the
representations or warranties of Seller contained herein are
false or inaccurate or that Seller is in breach or default of
any of its covenants or obligations under this Agreement, and
Buyer nonetheless closes the transactions hereunder and
acquires the Property, then Seller shall have no liability or
obligation respecting such false or inaccurate representations
or warranties or other breach or default (and any cause of
action resulting therefrom shall terminate upon such closing
hereunder). As used herein, actual knowledge of Buyer means
George Carras. The parties hereto agree that no knowledge of
Seller shall be imputed to John Schreiber, George Carras or
Buyer hereunder by virtue of his limited monetary investment
in Seller, and both parties waive any conflicts or claims
hereunder arising therefrom.
C. Entire Agreement. This Agreement contains the
entire agreement between the parties respecting the matters
herein set forth and supersedes all prior agreements between
the parties hereto respecting such matters. This Agreement
may not be modified or amended except by written agreement
signed by both parties.
D. Time of the Essence. Time is of the essence of
this Agreement; provided, however, the parties acknowledge
that, if reasonably necessary to effectuate the transactions
contemplated, the Closing Date may be extended but in any
event not for more than ten (10) business days (unless
otherwise specifically provided for in this Agreement).
E. Interpretation. Paragraph headings shall not
be used in construing this Agreement. Each party acknowledges
that such party and its counsel, after negotiation and
consultation, have reviewed and revised this Agreement. As
such, the terms of this Agreement shall be fairly construed
and the usual rule of construction, to the effect that any
ambiguities herein should be resolved against the drafting
party, shall not be employed in the interpretation of this
Agreement or any amendments, modifications or exhibits hereto
or thereto.
F. Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the
District of Columbia.
G. Successors and Assigns. Buyer may not assign
or transfer its rights or obligations under this Agreement
without the prior written consent of Seller (in which event
such transferee shall assume in writing all of the
transferor's obligations hereunder, but such transferor shall
not be released from its obligations hereunder); provided,
however, Buyer may assign its interest in this Agreement to a
limited liability company or to a limited partnership in which
Buyer is the managing member or managing general partner and
has not less than a 51% interest in capital and profits in
such limited partnership. No consent given by Seller to any
transfer or assignment of Buyer's rights or obligations
hereunder shall be construed as a consent to any other
transfer or assignment of Buyer's rights or obligations
hereunder. No transfer or assignment in violation of the
provisions hereof shall be valid or enforceable. Subject to
the foregoing, this Agreement and the terms and provisions
hereof shall inure to the benefit of and be binding upon the
successors and assigns of the parties.
H. Notices. Any notice which a party is required
or may desire to give the other shall be in writing and shall
be sent by personal delivery (including via facsimile
transmission, provided that any notice delivered by facsimile
shall also thereafter be sent by mail or overnight delivery
service as hereinafter set forth) either by United States
registered or certified mail, return receipt requested,
postage prepaid, or by Federal Express or similar generally
recognized overnight carrier regularly providing proof of
delivery), addressed as follows (subject to the right of a
party to designate a different address for itself by notice
similarly given):
To Buyer:
BRE/Connecticut L.L.C.
c/o Blackstone Realty Advisors
345 Park Avenue
New York, New York 10154
Attention: Mr. George A. Carras
and Mr. Gary M. Sumers
Facsimile: (212) 754-8730
Telephone: (212) 833-9595
With Copy To:
Weil, Gotshal & Manges, LLP
767 Fifth Avenue
New York, New York 10153-0119
Attention: Alan J. Pomerantz, Esq.
Facsimile: (212) 310-8007
Telephone: (212) 310-8402
To Seller:
c/o Heitman Capital Management LLC
180 North LaSalle Street, Suite 3600
Chicago, Illinois 60601
Attention: Mr. Howard J. Edelman
Facsimile: (312) 541-6738
Telephone: (312) 855-6547
With Copy To:
c/o JMB Realty Corporation
900 North Michigan Avenue
12th Floor
Chicago, Illinois 60611
Attention: Mr. Glenn Emig
Facsimile: (312)915-2350
Telephone: (312)915-2310
And To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (GML)
Facsimile: (310) 201-8922
Telephone: (310) 201-8900
To Escrow Holder:
First American Title Insurance Company
228 East 45th Street
New York, New York 10017
Attention: Mr. John Tonelli
Facsimile: (212) 922-0881
Telephone: (212) 850-0635
Any notice so given by mail or overnight delivery service
shall be deemed to have been given as of the date of delivery
(whether accepted or refused) established by U.S. Post Office
return receipt or the overnight carrier's proof of delivery,
as the case may be. Any such notice not so given shall be
deemed given upon receipt of the same by the party to whom the
same is to be given. Notices may be given by legal counsel
for a party.
I. Legal Costs. The parties hereto agree that
they shall pay directly any and all legal costs which they
have incurred on their own behalf in the preparation of this
Agreement, all deeds and other agreements pertaining to this
transaction and that such legal costs shall not be part of the
closing costs. In addition, if either Buyer or Seller brings
any suit or other proceeding with respect to the subject
matter or the enforcement of this Agreement, the prevailing
party (as determined by the court, agency or other authority
before which such suit or proceeding is commenced), in
addition to such other relief as may be awarded, shall be
entitled to recover reasonable attorneys' fees, expenses and
costs of investigation actually incurred. The foregoing
includes, but is not limited to, attorneys' fees, expenses and
costs of investigation (including, without limitation, those
incurred in appellate proceedings), costs incurred in
establishing the right to indemnification, or in any action or
participation in, or in connection with, any case or
proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code
(11 United States Code Sections 101 et seq.), or any successor
statutes.
J. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
document.
K. Further Assurances. Each party hereto will,
from time to time, execute and deliver to the other all such
other and further instruments and documents as such party may
reasonably request in order to effect the transactions
contemplated by this Agreement, including, but not limited to,
instruments or documents reasonably deemed necessary or
desirable by such party to effect and evidence the conveyance
of the Property in accordance with the terms of this Agreement
(provided the same do not impose material costs, obligations
or liabilities not otherwise contemplated by this Agreement).
THE SUBMISSION OF THIS AGREEMENT FOR EXAMINATION IS NOT
INTENDED TO NOR SHALL CONSTITUTE AN OFFER TO SELL, OR A
RESERVATION OF, OR OPTION OR PROPOSAL OF ANY KIND FOR THE
PURCHASE OF THE PROPERTY. IN NO EVENT SHALL ANY DRAFT OF THIS
AGREEMENT CREATE ANY OBLIGATION OR LIABILITY, IT BEING
UNDERSTOOD THAT THIS AGREEMENT SHALL BE EFFECTIVE AND BINDING
ONLY WHEN A COUNTERPART HEREOF HAS BEEN EXECUTED AND DELIVERED
BY EACH PARTY HERETO TO ESCROW HOLDER. ESCROW HOLDER SHALL
DATE THIS AGREEMENT WITH THE DATE ON WHICH ESCROW HOLDER SHALL
HAVE RECEIVED THIS AGREEMENT EXECUTED BY BOTH BUYER AND SELLER
(AND SUCH DATE SHALL BE THE "EFFECTIVE DATE" FOR PURPOSES
HEREOF).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Effective Date.
SELLER:
1225 INVESTMENT CORPORATION,
a Delaware corporation
By: Thomas P.Kelly
Name: THOMAS P. KELLY
Title:
BUYER:
BRE/CONNECTICUT L.L.C.,
a Delaware limited liability company
By: George A. Carras
Name: GEORGE A. CARRAS
Title:
March 4, 1999
BRE/CONNECTICUT L.L.C.
c/o Blackstone Realty Advisors
345 Park Avenue
New York, New York 10154
Attention: Mr. George A. Carras
Re: 1225 Connecticut Avenue
Washington D.C.
Ladies and Gentlemen:
Reference is made to that certain Purchase Agreement
(together with any amendments, the "Purchase Agreement") dated
as of February 10, 1999, between 1225 Investment Corporation
("Seller") and BRE/Connecticut L.L.C. ("Buyer), respecting the
purchase and sale of the above premises. Except as otherwise
set forth herein, all capitalized terms used in a defined manner
herein shall have the meanings set forth for such terms in the
Purchase Agreement.
In consideration of the premises, the mutual undertakings
of the parties and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:
1. REPRORATIONS OF ESCALATION RENTS AND "PASS THROUGHS.
Nothwithstanding anything to the contrary contained in the
Purchase Agreement, the final reproration of escalations rents
and "pass throughs" provided for in the last two sentences of
Paragraph 6(D)(1)b) shall be completed by Buyer and Seller in
good faith no later than December 10, 1999 (utilizing reasonable
assumptions, if appropriate).
2. EXTENSION OF CLOSING DATE. The Closing Date may be
extended by Buyer to March 29, 1999 upon the delivery to Seller
by Buyer of written notice of such extension not later than
March 11, 1999, and the concurrent delivery by Buyer to the
Title Company of $1,500,000 as an additional deposit (and
thereupon the term "Escrow Deposit" shall be deemed to include
such additional amount).
3. CLOSING DELIVERIES. On the Closing Date, Seller shall
deliver to Buyer an assignment of the W.P. Hickman Systems,
Inc., warranty for the West and North waterproofing repair
(precast joint seals), if the same remains in effect, and the W.
P. Hickman roof assembly guarantee, as well as originals (to the
extent in Seller's possession) of such warranty and guarantee
and evidence reasonably satisfactory to Buyer that proper notice
of the transfer of the Property was delivered by Seller to W.P.
Hickman
4. STORAGE TANK MATTERS. Buyer acknowledges that the
condition set forth in paragraph 5F of the Purchase Agreement is
hereby deemed satisfied.
Except as expressly modified in this letter agreement, the
Purchase Agreement is unmodified and remains in full force and
effect.
This letter agreement may be executed in any number of
identical counterparts. If so executed, then each of such
counterparts is deemed to be an original and all such
counterparts shall, collectively, constitute on a agreement.
The parties hereto agree that facsimile copies of signatures
shall be acceptable and shall be deemed original signatures
(provided, however, each party will send the other an executed
counterpart original if requested).
Very truly yours,
1225 INVESTMENT CORPORATION,
a Delaware corporation
By: Thomas P. Kelly
Name: THOMAS P. KELLY
Title: Vice President
AGREED TO AS OF THIS ____ DAY OF MARCH, 1999
BRE/CONNECTICUT L.L.C.,
a Delaware limited liability company
By: George A. Carras
Name: GEORGE A. CARRAS
TITLE:
