<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
/ /TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 0-17683
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
- --------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 94-3069380
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(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
1341 West Robinhood, Suite B-9, Stockton, CA 95207
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (209) 478-0140
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
------------------- ----------------------
Securities registered pursuant to Section 12(g) of the Act:
Depository Units of Limited Partnership Interests
-------------------------------------------------
(Title of class)
Indicate by check CK whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirement for the past 90 days. Yes _CK_ No__
Indicate by check CK if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ CK ]
<PAGE>
TABLE OF CONTENTS
Part I
Item 1. Business 3
Item 2. Properties 5
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Part II
Item 5. Market for the Partnership's Depository Units of Limited
Partnership Interest and Related Security Holder Matters 8
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 13
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 28
Part III
Item 10. Directors and Executive Officers of the Registrant 29
Item 11. Executive Compensation 32
Item 12. Security Ownership of Certain Beneficial Owners and
Management 32
Item 13. Certain Relationships and Related Transactions 33
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 35
2
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PART I
Item 1. Business
The Registrant, Prudential-Bache/A.G. Spanos Realty Partners L.P., I (the
"Partnership"), is a limited partnership formed on June 3, 1988 under
Delaware law. The business of the Partnership is managed and controlled
by its general partners (the "General Partners"), A.G. Spanos Realty
Partners, L.P. (the "Spanos General Partner") and Prudential-Bache
Properties, Inc. (the "Bache General Partner"). The primary purpose of
the Partnership is to acquire from affiliates of the Spanos General
Partner, invest in, hold, manage, sell, dispose of, and otherwise act with
respect to eight properties on which multi-family residential developments
have been constructed (the "Properties").
In June 1998, a majority in interest of the limited partners approved a
proposal to sell the remaining Properties at a public auction and then
distribute the sale proceeds in liquidation of the Partnership. The
proposed auction and liquidation are part of an overall settlement of
certain litigation which had been pending in the United States District
Court for the Southern District of New York under the caption In re
Prudential Securities Incorporated Limited Partnerships Litigation (MDL
Docket 1005). In July 1998, the settlement, including the auction and
liquidation, was approved by the court. In February and March 1999, the
Partnership entered into contracts to sell the Properties to three
different buyers. However, no assurance can be given that the sales will
take place as provided in the contracts. See note F to the financial
statements at Item 8.
The Properties are subject to competition from similar apartment
properties located in close proximity, including properties owned by
affiliates of the Spanos General Partner. The Properties compete for a
variety of tenant groups, including young professionals, retail, service
and trade employees, students and retirees. Competition for tenants is
principally on the basis of location, physical condition, amenities, and
rental rates. The location and condition of the Properties is considered
to be good to above-average. The Properties feature fairly typical
amenity packages, including swimming pools, tennis courts, fitness
facilities, microwave ovens and guarded entrances, and are generally able
to compete adequately with other projects in their respective markets.
3
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Many areas, including Phoenix, Denver, Las Vegas, Sparks and Atlanta have
seen construction of new apartment properties increase since 1992. This
has led to the emergence of market segmentation between 1980's vintage
properties (such as the Partnership's) and the newer generation of
apartment properties completed recently. The newer properties have a
competitive advantage not only because they are new, but because many are
designed with larger unit sizes, have floor plans and finishes similar to
those found in single family homes, and feature more extensive amenities
than do the properties built in the 1980's. To date, these newer
properties generally command higher rents and have competed with each
other for tenants able to pay premium rents, leaving the 1980's vintage
properties to compete with each other for the next tier of apartment
renters. There is a risk, however, that if overbuilding in the upper
segment of the market results in lower rents, the new properties with more
extensive amenities could be highly competitive with the 1980's vintage
apartment product.
Within the greater housing market, the apartment sector competes with
single-family homes. Thus, apartment demand can be affected by the
affordability of owner-occupied housing, which can increase and decrease
with changes in mortgage interest rates.
The Partnership does not segregate revenues or assets by geographic
regions. The Properties that accounted for more than 15% of revenue
during any of the past three years are Rancho del Sol (16% to 17%), Harbor
Pointe (18% to 19%), Regency Square (15%) and Bernardo Crest (16%). No
single tenant accounted for 10% or more of the revenue for any of the
three years ended December 31, 1998. The Partnership is engaged in only
one reportable segment, which is real estate investment; therefore,
presentation of industry segment information is not applicable. The
General Partners believe the Properties are adequately insured. For more
information regarding the Properties, see Item 2, Properties. For more
information regarding the Partnership's operations, see Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
The Partnership has no employees. The officers and employees of the
Spanos General Partner and the Bache General Partner, and their
affiliates, perform services for the Partnership pursuant to the
Partnership Agreement.
The Partnership resumed paying Distributions in 1996. Distributions had
been suspended beginning with the third quarter of 1992. See Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, for a discussion of the factors affecting Distributions.
4
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Item 2. Properties
<TABLE>
<CAPTION>
The Partnership owned the eight Properties described below at March 1, 1999:
<S> <C> <C> <C>
Purchase
Location Date Mortgage Holder
Silver Springs Apartments: Tempe, Arizona 11/18/88 MDS Loan Services (2)
a 198-unit midrise apartment complex (suburb of Phoenix)
located on approximately 9.28 acres.
Rancho del Sol Apartments: Las Vegas, Nevada 12/30/88 Great Western Bank (3)
a 376-unit garden apartment complex
located on approximately 16 acres.
Sandpebble Village Apartments: Sparks, Nevada 12/30/88 Wells Fargo Realty
a 236-unit garden apartment complex
located on approximately 11.5 acres.
Regency Square Apartments: Chamblee, Georgia 01/31/89 Mellon Mortgage (2)
a 276-unit garden apartment complex (suburb of Atlanta) (successor to American
located on approximately 9.2 acres. Savings Bank)
Cameron Creek Apartments: Tempe, Arizona 03/31/89 Great Western Bank (3)
a 211-unit garden apartment complex (suburb of Phoenix)
located on approximately 8.7 acres.
Harbor Pointe Apartments: Dunwoody, Georgia 06/30/89 Great Western Bank (3)
a 366-unit garden apartment complex (suburb of Atlanta)
located on approximately 45.9 acres.
Bernardo Crest Apartments: San Diego, California 12/01/89 Great Western Bank (3)
a 216-unit garden apartment complex
located on approximately 16.6 acres.
Pointe West Apartments: Aurora, Colorado 09/30/89 Great Western Bank (4)
a 138-unit garden apartment complex (suburb of Denver)
located on approximately 5.27 acres.
</TABLE>
5
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Item 2. Properties (continued)
<TABLE>
<CAPTION>
Average Annual Occupancy Average Annual Revenue Per Apt. Unit (5) 1998 Realty Tax Data
1998 1997 1996 1995 1994 1998 1997 1996 1995 1994 Amount Rate
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Silver Springs 95.7% 93.8% 94.1% 95.1% 95.2% $7,281 $6,924 $7,029 $6,832 $6,183 $ 86,525 1.0527%
Rancho del Sol 92.1% 93.7% 94.9% 93.6% 95.7% $6,823 $7,112 $7,099 $6,921 $6,850 $160,370 0.9849%
Sandpebble Village 92.4% 95.3% 97.4% 95.8% 96.0% $7,085 $7,505 $7,519 $7,142 $6,875 $114,987 1.1665%
Regency Square 93.4% 92.3% 94.4% 96.2% 94.8% $8,496 $8,408 $8,582 $8,219 $7,452 $202,160 1.5060%
Cameron Creek 91.2% 94.5% 92.8% 93.0% 94.4% $7,610 $7,826 $7,544 $7,187 $6,816 $110,838 1.3047%
Harbor Pointe 95.7% 93.5% 92.1% 94.5% 97.2% $8,284 $8,065 $7,951 $7,828 $7,433 $234,953 1.5780%
Bernardo Crest 97.5% 96.4% 95.2% 94.4% 91.5% $11,604 $10,617 $10,215 $9,736 $9,167 $182,546 1.0220%
Pointe West 94.9% 95.4% 93.9% 95.7% 94.7% $7,195 $6,968 $6,514 $6,348 $5,903 $ 59,047 0.8644%
(1) The Partnership has a 100% fee simple ownership interest in each Property subject
to a first mortgage lien in favor of the indicated holder. Each mortgage is secured
only by the Property to which it relates and is without recourse to either of
the General Partners or the Partnership. (See Note C to the Financial Statements.)
(2) Loan may be prepaid without charge.
(3) Loan may be prepaid upon payment of a 2% prepayment charge. The lender may waive
the prepayment charge for principal prepayments during the calendar year which
do not exceed 20% of the original loan balance and for prepayments made within
90 days of a notice of installment adjustment. The lender will also waive
the prepayment charge so long as A.G. Spanos Construction, Inc. or any entity owned and
controlled (with "control" defined as a 50% beneficial interest) by A.G. Spanos Construction
or by Alex G. Spanos remains liable on the loan.
(4) Loan may be prepaid upon payment of a 2% prepayment charge. The lender may waive
the prepayment charge for principal prepayments during the calendar year which do not exceed 20% of the
original loan balance and for prepayments made within 90 days of a notice of installment adjustment.
The lender will also waive the prepayment charge so long as A.G. Spanos Construction, Inc. or any entity
owned and controlled by A.G. Spanos Construction or by Alex G. Spanos remains liable on the loan.
(5) Average annual revenue per apartment unit is determined by dividing total
operating revenues for the Property by the number of apartment units.
</TABLE>
6
<PAGE>
Item 3. Legal Proceedings
This information is incorporated by reference to Note E to the financial
statements in Item 8, Financial Statements and Supplementary Data.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Unitholders during the fourth
quarter of the fiscal year covered by this report through the solicitation
of proxies or otherwise.
7
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PART II
Item 5. Market for Partnership's Depository Units of Limited Partnership
Interest and Related Security Holder Matters
The Partnership had three limited partners as of March 4, 1999: AGS
Depository Corp. (the "Assignor Limited Partner"), a wholly owned
subsidiary of AGS Financial Corporation, and two affiliates of the Spanos
General Partner which are holders of Subordinated Limited Partnership
Interests ("Subordinated Interests"). The Assignor Limited Partner has
transferred and assigned to the Unitholders all of the Assignor Limited
Partner's rights and interest in and to the assigned Limited Partnership
Interests, except for record ownership and the right to vote directly on
matters submitted to the Limited Partners and Unitholders for a vote.
There were 4,723 Unitholders as of March 4, 1999.
A significant secondary market for the Units has not developed, and it is
not expected that one will develop in the future. There are also certain
restrictions set forth in the Partnership Agreement limiting the ability
of a Unitholder to transfer Units. Consequently, Unitholders may not be
able to liquidate their investments in the event of an emergency or any
other reason.
The Partnership resumed paying Distributions to the Unitholders in 1996.
Distributions had been suspended beginning with the third quarter of 1992.
Distributions were paid approximately 45 days after the end of the
specified quarter as follows:
Quarter Ended Distribution
March 31, 1997 $1.22
June 30, 1997 $1.22
September 30, 1997 $1.22
December 31, 1997 $1.22
March 31, 1998 $1.22
June 30, 1998 $1.22
September 30, 1998 $1.22
December 31, 1998 $1.22
All of the distributions paid to Unitholders for 1997 and 1998 represents
a return of capital on a generally accepted accounting principle ("GAAP")
basis. The return of capital on a GAAP basis is calculated as Unitholder
distributions less net income, if any, allocated to Unitholders.
8
<PAGE>
There are no material legal restrictions on the Partnership's present or
future ability to make distributions in accordance with the provisions of
the Partnership Agreement. As a result of the Properties being under
contracts for sale, future distributions will be dependent upon the timing
of the closings of the sales and the ultimate liquidation of the
Partnership.
9
<PAGE>
Item 6. Selected Financial Data (a)
<TABLE>
<CAPTION>
For the year ended December 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Total revenues $16,297,357 $16,124,230 $15,930,615 $15,362,108 $14,499,788
Interest expense $5,019,008 $5,082,298 $5,176,971 $6,014,655 $6,381,294
Net loss ($224,275) ($53,509) ($402,122) ($1,752,058) ($2,713,210)
Net loss per Unit ($0.69) ($0.17) ($1.24) ($5.42) ($8.39)
Net loss per Subordinated
Interest -- -- -- -- --
Cash distributions per Unit (b) $4.88 $4.88 $4.88 -- --
Cash distributions per
Subordinated Interest -- -- -- -- --
Total assets $76,296,301 $79,257,157 $82,001,149 $84,563,942 $87,946,202
Mortgage loans payable $62,949,730 $64,183,994 $65,322,170 $66,361,897 $67,215,017
(a) The above selected financial data should be read in conjunction with the financial
statements and the related notes (see Item 8).
(b) Cash distributions were paid from operating cash flow. The cash distributions
did not result in taxable income to the Unitholders. Each Unitholder's taxable income or loss
from the Partnership is equal to his allocable share of the taxable income or loss of the
Partnership, without regard to the cash generated or distributed by the Partnership.
</TABLE>
10
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Capital Resources and Liquidity
The Partnership had cash of $4,160,000 at December 31, 1998. There are no
proposed programs for renovation, improvement or development of the
Properties other than maintenance and repairs (including major repairs) in
the ordinary course which will be paid from operations, and the
Partnership's liquidity position is considered satisfactory.
In June 1998, a majority in interest of the limited partners approved a
proposal to sell the Properties at a public auction and then distribute
the sale proceeds in liquidation of the Partnership. The proposed auction
and liquidation are part of an overall settlement of certain litigation
which had been pending in the United States District Court for the
Southern District of New York under the caption In re Prudential
Securities Incorporated Limited Partnerships Litigation (MDL Docket 1005).
In July 1998, the settlement, including the auction and liquidation, was
approved by the court. In February and March 1999, the Partnership
entered into contracts to sell the Properties to three separate buyers.
Based on the contract sales price, the Partnership is expected to make
liquidating distributions of approximately $100 per Unit in 1999,
consisting of initial distributions of the majority of the proceeds as
soon as practicable after the closings and the remainder by year end.
However, no assurance can be given that the sales will take place as
provided in the contracts.
The Partnership's operating activities provided cash of $2,811,000 in
1998, of which $1,234,000 was applied to scheduled principal amortization
on the Partnership's mortgage debt and $1,578,000 was paid in cash
distributions. Scheduled principal amortization increased in 1997 and
1998, reflecting the fact that the principal portion of the monthly
mortgage payments increases over time.
The Partnership's long term debt, which consists of eight real estate
mortgages with respect to the Properties, was $62,950,000 at December 31,
1998. This debt requires monthly installments of principal and interest
of $519,000. The Properties are currently generating aggregate revenue to
cover operating expenses and monthly debt service. Five of the mortgages
are fully self-amortizing. The Sandpebble mortgage requires a balloon
payment of approximately $5,474,000 on June 1, 1999. The other two
require balloon payments of $5,030,000 in 2000 and $7,732,000 in 2001.
The General Partners anticipate that the balloon payments will be
satisfied from the proceeds of the pending sale. If not, the Partnership
would be required to refinance them when the balloon payments become due
subject to then existing conditions in the real estate and mortgage
financing markets or to sell the properties
11
<PAGE>
under terms which may not be the most favorable to the Partnership. If
the Partnership were unable to complete sales or refinancings, then the
lenders could institute foreclosure proceedings against the Properties.
Results of Operations
1998 Compared to 1997. Rental revenue was $16,161,000 in 1998, up 1% from
1997. Revenue increased at five properties (Silver Springs, Regency
Square, Harbor Pointe, Bernardo Crest and Pointe West) reflecting
increases in both occupancy and effective rental rates. Revenue was down
4.1% at Rancho del Sol, 5.6% at Sandpebble Village and 2.8% at Cameron
Creek, principally because of lower occupancy. Overall, the weighted
average occupancy of the Apartment Projects was 94% in 1998 compared to
94.2% in 1997.
Operating costs were generally stable from 1997 to 1998. Property
operating expenses were $5,788,000 in 1998 compared to $5,736,000 for
1997. Major repairs (i.e., exterior painting, asphalt work and other
expensive repairs that do not recur on an annual basis) declined to
$243,000 in 1998 compared to $265,000 for 1997. Furnished unit expense
was up $32,000 compared to 1997, reflecting more furnished unit rentals in
1998. Operating expenses excluding major repairs and furnished unit
expense increased $71,000 or approximately 1.3% over 1997. Property taxes
increased $32,000 or 2.9%. Interest expense declined $63,000, reflecting
lower outstanding principal on the mortgage loans.
1997 Compared to 1996. Rental revenue was $15,995,000 in 1997, an
increase of 1.2% from 1996. Revenue increased at four properties (Cameron
Creek, Harbor Pointe, Bernardo Crest and Pointe West) reflecting increases
in both occupancy and effective rental rates. Revenue was down 1.5% at
Silver Springs and 2% at Regency Square, principally because of lower
occupancy. Revenue at Rancho del Sol and Sandpebble was generally
unchanged from 1996. Overall, the weighted average occupancy of the
Apartment Projects was 94.2% in 1997 compared to 94.3% in 1996.
Property operating expenses were $5,736,000 in 1997 compared to $5,716,000
for 1996. Major repairs (i.e., exterior painting, asphalt work and other
expensive repairs that do not recur on an annual basis) declined to
$265,000 in 1997 compared to $541,000 for 1996. Furnished unit expense
was down $45,000 compared to 1996, reflecting fewer furnished unit rentals
in 1997. Operating expenses excluding major repairs and furnished unit
expense increased $341,000 or approximately 6.8% over 1996. Expense
categories showing the greatest increases were maintenance, up $128,000 or
7.8% reflecting the generally higher costs of operating an aging property
portfolio; on-site salaries, up $78,000 or 6%, reflecting higher personnel
costs; and advertising, up $75,000 or 22%. Property taxes increased
$76,000 primarily because of an increase at Harbor Pointe which had a
lower assessment in 1996. Property
12
<PAGE>
management fees, which are 3% of property revenue, increased with the
increase in revenue. Interest expense declined $95,000, reflecting lower
outstanding principal on the mortgage loans. Depreciation expense
declined $180,000 because certain personal property assets became fully
depreciated in 1996.
Year 2000.
Given the pending property sale and liquidation, the General Partners have
undertaken only a limited review of how the Partnership's operations may
be affected by the Year 2000 problem. Assuming the liquidation begins in
April or May 1999 as planned, the Partnership is not expected to incur any
significant year 2000 compliance costs. If the sale does not occur, the
Partnership would be faced with the possibility of continuing to operate
after year end, and the General Partners would have to complete a more
thorough year 2000 review.
The currently expected worst case scenarios involve malfunctions in
computer systems and/or in mechanical operations, such as HVAC systems,
elevators and electronic entry systems. The Partnership has converted the
on-site resident management software at some of the Properties to a year
2000 compliant version, and could readily convert the others if the need
arises. The Spanos General Partner believes that problems with mechanical
systems could be temporarily corrected manually, and repaired permanently
in a reasonable period of time.
Should the sale not occur, the General Partners would also have to develop
contingency plans to deal with possible year 2000 disruptions. Such plans
would likely include preparing hard copies of all significant reports at
the end of 1999; developing manual procedures for any period of disruption
of services or communication; and inventorying larger than usual supplies
in case replacements are required as a result of any year 2000 casualty.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Market risk disclosures are not being presented due to immateriality.
13
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Item 8. Financial Statements and Supplementary Data Page
Independent Auditors' Report 15
Balance sheets at December 31, 1998 and 1997 16
Statements of operations for the years ended
December 31, 1998, 1997 and 1996 17
Statements of changes in partners' equity (deficit)
for the years ended December 31, 1998, 1997 and 1996 18
Statements of cash flows for the years ended
December 31, 1998, 1997 and 1996 19
Notes to financial statements 20-27
Schedule to financial statements 42
14
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INDEPENDENT AUDITORS' REPORT
General and Limited Partners
Prudential-Bache/A.G. Spanos
Realty Partners, L.P., I:
We have audited the accompanying balance sheets of Prudential-Bache/A.G.
Spanos Realty Partners L.P., I (a limited partnership) (the "Partnership")
as of December 31, 1998 and 1997, and the related statements of
operations, changes in partners' equity (deficit) and cash flows for each
of the three years in the period ended December 31, 1998. Our audits also
included the financial statement schedule of the Partnership listed at
Item 14(a)(2). These financial statements and financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Prudential-Bache/A.G. Spanos Realty
Partners L.P., I as of December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period
ended December 31, 1998 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
As discussed in Note F to the financial statements, in February and March
1999, the Partnership entered into agreements to sell all the Properties.
No assurance can be given that the sales will take place as provided in
the agreements.
/s/ Deloitte & Touche LLP
San Francisco, California
March 12, 1999
15
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Property, net $71,583,977 $74,608,817
Cash and cash equivalents 4,160,132 4,161,323
Other assets (net of accumulated amortization
of $1,318,000 and $1,297,372, respectively) 552,192 487,017
---------- ----------
$76,296,301 $79,257,157
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities:
Mortgage loans payable $62,949,730 $64,183,994
Accounts payable 683,274 602,925
Accounts payable, affiliate 204,608 203,930
Distributions payable 394,418 394,418
Accrued interest 421,267 433,615
Unearned rent and tenant deposits 576,171 569,495
---------- ----------
65,229,468 66,388,377
---------- ----------
Partners' equity (deficit):
Limited partners' equity (316,828 units
authorized and outstanding) 3,564,811 5,330,720
Subordinated limited partners' equity (46,364 units
authorized and outstanding) 8,878,175 8,878,175
General partners' deficit (1,376,153) (1,340,115)
---------- ----------
11,066,833 12,868,780
---------- ----------
$76,296,301 $79,257,157
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
16
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Rental $16,160,792 $15,994,514 $15,811,247
Interest 136,565 129,716 119,368
---------- ---------- ----------
16,297,357 16,124,230 15,930,615
---------- ---------- ----------
Expenses:
Property operating expenses 5,787,545 5,736,362 5,716,463
Property taxes 1,142,033 1,109,706 1,033,812
Property management fees to affiliates 484,657 479,863 474,158
General and administrative expense 100,573 104,890 94,903
Proxy costs 316,544 -0- -0-
Interest expense 5,019,008 5,082,298 5,176,971
Management fees to General Partners 646,432 639,780 632,450
Depreciation 3,024,840 3,024,840 3,203,980
---------- ---------- ----------
16,521,632 16,177,739 16,332,737
---------- ---------- ----------
Net loss $ (224,275) $ (53,509) $ (402,122)
---------- ---------- ----------
---------- ---------- ----------
Net loss allocated to General Partners $ (4,486) $ (1,070) $ (8,042)
---------- ---------- ----------
---------- ---------- ----------
Net loss allocated to Limited Partners $ (219,789) $ (52,439) $ (394,080)
---------- ---------- ----------
---------- ---------- ----------
Net loss allocated to Subordinated Limited
Partners $ -0- $ -0- $ -0-
---------- ---------- ----------
---------- ---------- ----------
Net loss per unit of limited partnership
interest $ (0.69) $ (0.17) $ (1.24)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to financial statements.
17
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Subordinated
Limited Limited General
Total Partners Partners Partners
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Partners' equity
(deficit)-
December 31, 1995 $16,479,763 $ 8,869,479 $ 8,878,175 $(1,267,891)
Net loss (402,122) (394,080) -0- (8,042)
Distributions (1,577,680) (1,546,120) -0- (31,560)
---------- ---------- ---------- ----------
Partners' equity
(deficit)-
December 31, 1996 14,499,961 6,929,279 8,878,175 (1,307,493)
Net loss (53,509) (52,439) -0- (1,070)
Distributions (1,577,672) (1,546,120) -0- (31,552)
---------- ---------- ---------- ----------
Partners' equity
(deficit)-
December 31, 1997 12,868,780 5,330,720 8,878,175 (1,340,115)
Net loss (224,275) (219,789) -0- (4,486)
Distributions (1,577,672) (1,546,120) -0- (31,552)
---------- ---------- ---------- ----------
Partners' equity
(deficit)-
December 31, 1998 $11,066,833 $ 3,564,811 $ 8,878,175 $(1,376,153)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See notes to financial statements.
18
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (224,275) $ (53,509) $ (402,122)
---------- ---------- ----------
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 3,024,840 3,024,840 3,203,980
Amortization of loan fees included in
interest expense 20,628 20,628 20,628
(Increase) decrease in other assets (85,803) (86,955) 22,312
Increase (decrease) in accounts payable 80,349 (161) 31,800
Increase in accounts payable, affiliate 678 3,541 2,777
Increase (decrease) in accrued interest (12,348) 5,575 (6,578)
Increase in unearned rent and tenant deposits 6,676 16,410 34,319
---------- ---------- ----------
Total adjustments 3,035,020 2,983,878 3,309,238
---------- ---------- ----------
Net cash provided by operating activities 2,810,745 2,930,369 2,907,116
---------- ---------- ----------
Cash flows from financing activities:
Mortgage loan principal amortization (1,234,264) (1,138,176) (1,039,727)
Distributions to partners (1,577,672) (1,577,672) (1,183,262)
---------- ---------- ----------
Net cash used in financing activities (2,811,936) (2,715,848) (2,222,989)
---------- ---------- ----------
Net increase (decrease) in cash and
cash equivalents (1,191) 214,521 684,127
Cash and cash equivalents, beginning of year 4,161,323 3,946,802 3,262,675
---------- ---------- ----------
Cash and cash equivalents, end of year $ 4,160,132 $ 4,161,323 $ 3,946,802
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See notes to financial statements.
19
<PAGE>
PRUDENTIAL-BACHE/A. G. SPANOS
REALTY PARTNERS L.P., I
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1998, 1997 and 1996
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Prudential-Bache/A.G. Spanos Realty Partners L.P., I (the "Partnership")
is a Delaware limited partnership organized for the purpose of acquiring
and operating eight specified apartment properties (the "Properties").
The General Partners of the Partnership are Prudential-Bache Properties,
Inc. (the "Bache General Partner") and A.G. Spanos Realty Partners, L.P.,
(the "Spanos General Partner").
The Partnership sold 316,828 depository units of limited partnership
interest ("Units") between October 1988 and December 1989 for aggregate
capital contributions (net of certain volume selling commission discounts)
of $79,194,827. The Partnership has also issued non-voting Subordinated
Limited Partnership Interests ("Subordinated Interests") to affiliates of
the Spanos General Partner in consideration for capital contributions and
payments under a cash flow guaranty.
In June 1998, a majority in interest of the limited partners approved a
proposal to sell the Properties at a public auction and then distribute
the sale proceeds in liquidation of the Partnership. The proposed auction
and liquidation are part of an overall settlement of the Multidistrict
Litigation described in Note E below. In July 1998, the settlement,
including the auction and liquidation, was approved by the court
overseeing the litigation. In February and March 1999, the Partnership
entered into contracts to sell the Properties to three buyers. See Note F
below.
Financial Statement Preparation
The Partnership has a fiscal year ending December 31. The books and
records of the Partnership are maintained on the accrual basis of
accounting in accordance with generally accepted accounting principles.
Accounting Estimates
In preparing the financial statements, management makes estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities (see Note E) at the date
of the financial statements and the reported amounts of revenues and
expenses from the reporting period. Actual results could differ from
those estimates.
20
<PAGE>
Cash Equivalents
Cash equivalents consist of money market funds containing money market
instruments with an original maturity date of 90 days or less whose cost
approximates market value.
Property
Property, which includes land, buildings and equipment, is carried at the
lower of depreciated cost or estimated fair value. Depreciated cost was
reduced by certain payments received under the cash flow guaranty (see
Note D). Depreciation on buildings and equipment is recorded on a
straight-line basis over their estimated useful lives, which range from 7
to 27.5 years.
Income Taxes
No provision has been made for federal or state income taxes (or benefits)
since such items are the responsibility of the partners. A reconciliation
of the net loss in the financial statements to the net taxable income
(loss) is set forth below:
1998 1997 1996
Net loss per financial statements $(224,275) $(53,509) $ (402,122)
Financial statement depreciation
in excess of tax depreciation 124,141 124,558 175,997
Unearned rent and non refundable
deposits recognized as income for
tax purposes when received (13,648) 6,145 148
Proxy costs capitalized for tax
purposes 316,544 -0- -0-
---------- ---------- ----------
Net taxable income (loss) $202,762 $77,194 $ (225,977)
---------- ---------- ----------
---------- ---------- ----------
The book and tax bases of partners' equity differ by the cumulative effect
of the book to tax income adjustments.
Allocations and Distributions
Pursuant to the Partnership Agreement, operating income, losses and cash
distributions are generally allocated 98% to the Unitholders and 2% to the
General Partners. Taxable income and losses are allocated in the same
manner. Cash distributions resulting from refinancings and non-
terminating sales of the Properties are generally allocable as follows:
First, 98% to the limited partners and 2% to the General Partners until
21
<PAGE>
(i) the aggregate of all such distributions equals the limited partners'
aggregate capital contributions and (ii) the aggregate of all other cash
distributions (including operating cash distributions, but excluding
distributions in repayment of capital contributions) equals the limited
partners' 10% per annum cumulative noncompounded return on their adjusted
capital contributions (the "First Level Sale or Refinance Distributions").
Thereafter, cash distributions resulting from a sale or refinancing are
generally allocable 85% to the Unitholders and 15% to the General Partners
(the "Second Level Sale or Refinance Distributions"). Income from
non-terminating sales of the Properties is generally allocable in the same
manner as cash distributions resulting from such sales, after taking into
account the depreciation expense with respect to the Properties sold.
The sale of all the Properties as approved by the limited partners
constitutes a terminating sale under the Partnership Agreement. The
Partnership Agreement provides that net income from a terminating sale is
allocated first to the general and limited partners to the extent of their
negative capital account balances, then 98% to the limited partners and 2%
to the General Partners until their capital account balances equal their
Adjusted Contributions (i.e., their original capital contribution of $250
per unit less any prior distributions of cash from sale or refinancings or
from working capital reserves), and then in varying percentages to the
limited and general partners. The capital account balances of the
Subordinated Limited Partners currently equal their Adjusted
Contributions. There is not expected to be sufficient net income to
restore the Unitholders' capital account balances to the level of their
Adjusted Contributions. The Partnership Agreement provides that
liquidating cash distributions are to be paid to the partners in
accordance with their positive capital account balances after allocating
the net income from the terminating transaction.
The Subordinated Interests entitle the holders to receive First Level Sale
or Refinance Distributions and liquidating distributions in accordance
with their positive capital account balances (with corresponding
allocations of income on sales), but no allocations of operating income,
losses or cash distributions and no allocations of Second Level Sale or
Refinance Distributions.
Cash distributions to the partners are recorded in the periods to which
they relate for financial reporting purposes. The Partnership paid fourth
quarter cash distributions of $394,418 in February 1999 and 1998. These
distributions were accrued at December 31, 1998 and 1997.
Revenue Recognition
Rental income is accrued as rents are due.
22
<PAGE>
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial instruments," requires the determination of fair
value for certain of the Partnership's assets and liabilities. The
following methods and assumptions were used to estimate the fair value of
those financial instruments included in the following categories:
Cash and Cash Equivalents - The carrying amount approximates fair value
based on the liquidity of the assets.
Mortgage Loans Payable (see Note C) - The carrying value approximates fair
value based on interest rates available to the Partnership on debt
instruments with similar terms.
Comprehensive Income The Partnership adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income,"
during 1998. SFAS No. 130 requires that all items that are required to be
recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the
same prominence as other financial statements. During the three year
period ended December 31, 1998, the Partnership had no items of other
comprehensive loss except for net loss. Accordingly, comprehensive loss
equals net loss for 1998, 1997 and 1996.
NOTE B - PROPERTY
Property is comprised of the following at December 31, 1998 and 1997:
1998 1997
Apartment buildings $ 83,030,825 $ 83,030,825
Equipment 4,369,974 4,369,974
Land 18,053,226 18,053,226
----------- -----------
105,454,025 105,454,025
Less: Accumulated depreciation (33,870,048) (30,845,208)
----------- -----------
$ 71,583,977 $ 74,608,817
----------- -----------
----------- -----------
The Partnership leases apartments under lease agreements with terms
ranging from one to twelve months.
In February and March 1999, the Partnership entered into contracts to sell
the Properties to three buyers. See Note F below.
23
<PAGE>
NOTE C - MORTGAGE LOANS PAYABLE
The mortgage loans payable are collateralized by first deeds of trust on
the respective Properties and security interests in the equipment
contained therein. Detailed information regarding the mortgage loans is
set forth below.
24
<PAGE>
<TABLE>
<CAPTION>
Final Monthly Principal Estimated
Property Pledged Obligation Obligation Interest Maturity Principal and Due During Balloon
as Collateral at 12/31/98 at 12/31/97 Rate Date Interest 1999 Payment
---------- ---------- -------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Silver Springs Village
Tempe, Arizona $ 5,285,417 $ 5,398,434 7.132 12/01/00 $ 41,485 $ 125,163 $5,030,000
Rancho del Sol
Las Vegas, Nevada 10,918,311 11,129,984 8.11% 10/01/19 92,172 229,494 N/A
Sandpebble Village
Sparks, Nevada 5,394,791 5,527,992 8.28% 06/01/99 48,828 5,394,791 5,474,000
Regency Square
Chamblee, Georgia 8,052,190 8,191,919 8.00% 02/01/01 61,269 103,233 7,712,000
Cameron Creek
Tempe, Arizona 6,314,131 6,426,800 8.11% 10/01/19 52,480 122,155 N/A
Harbor Pointe
Dunwoody, Georgia 12,692,781 12,930,605 7.75% 10/01/19 102,635 256,925 N/A
Pointe West
Aurora, Colorado 2,981,867 3,063,205 7.61% 03/01/16 25,971 87,749 N/A
Bernardo Crest
San Diego, California 11,310,242 11,515,055 8.12% 08/01/19 94,221 222,066 N/A
----------- ----------- -------- -----------
$62,949,730 $64,183,994 $519,061 $6,541,576
----------- ----------- -------- -----------
----------- ----------- -------- -----------
</TABLE>
Interest paid in 1998, 1997 and 1996 was $5,010,728, $5,056,095 and $5,162,921,
respectively.
25
<PAGE>
Aggregate maturities of mortgage loans payable for each of the five years
ending December 31, 2003 and thereafter are as follows:
1999 $ 6,541,576
2000 6,262,350
2001 8,807,983
2002 1,165,320
2003 1,261,599
Thereafter 38,910,902
----------
$62,949,730
----------
----------
NOTE D - RELATED PARTY TRANSACTIONS
The Partnership acquired the Properties from affiliates of the Spanos
General Partner (the "Sellers"). Under the terms of the acquisitions, the
Sellers guaranteed that if the Properties as a group did not meet certain
annual net cash flow levels between their acquisition dates and June 30,
1992, then the Sellers would make up any deficiency by periodic cash
payments ("Support Payments") to the Partnership. The first $4,500,000 of
Support Payments were non-refundable, and the Partnership accounted for
them as a reduction of the purchase price of the Properties. The
Partnership issued Subordinated Interests in exchange for Support Payments
in excess of that amount; however, the Subordinated Interests were
cancelable by the Partnership to the extent that the aggregate net cash
flow from any of the Properties (treated individually and not
collectively) was negative during the guaranty period. The cancellations
were also accounted for as a reduction of the purchase price of the
Properties.
Support Payments of $11,083,798 accrued to the Partnership based upon the
operating results of the Properties from inception of the Partnership
through the conclusion of the guaranty. The Partnership issued 26,335
Subordinated Interests (at $250 each) to a Seller in exchange for
$6,583,798 of Support Payments in excess of the $4,500,000 non-refundable
amount. The Silver Springs property had aggregate negative net cash flow
of $537,220; accordingly, the Partnership canceled 2,149 Subordinated
Interests.
An affiliate of the Spanos General Partner manages the Apartment Projects.
Property management fees totaled $484,657, $479,863, and $474,158 in 1998,
1997 and 1996, respectively. Under the management agreements, the
affiliate employs property managers and other on-site personnel, and the
Partnership bears the expense for their compensation (including employment
taxes and fringe benefits). That expense was approximately $1,422,000,
$1,379,000 and $1,301,000 in 1998, 1997 and 1996, respectively. Accruals
of $40,848 and $41,966 for property management fees and $137,544 and
$121,813 for salary expense reimbursements were outstanding at
December 31, 1998 and 1997, respectively.
26
<PAGE>
Under the Partnership Agreement, the Spanos General Partner is entitled to
a supervisory management fee and the Bache General Partner is entitled to
a special distribution. The fee and distribution are each equal to two
percent of the revenues from the Properties. The special distribution is
reduced to the extent of reimbursements to the Bache General Partner for
certain expenses incurred in the administration of the Partnership.
Amounts accrued during the past three years were as follows.
1998 1997 1996
Supervisory management fee $323,216 $319,890 $316,225
Special distribution 267,688 264,362 260,697
Administrative expense reimbursements 55,528 55,528 55,528
------- ------- -------
$646,432 $639,780 $632,450
------- ------- -------
------- ------- -------
Accruals of $163,760 and $161,964 for management fees payable to the
General Partners were outstanding at December 31, 1998 and 1997,
respectively.
The General Partners' capital account deficit for financial accounting
purposes exceeds the amount the General Partners would be obligated to
restore if the Partnership were to dissolve.
In May 1998, the Spanos General Partner initiated a consent solicitation
for the limited partners to consider the proposal to auction the
Properties and then distribute the sale proceeds in liquidation of the
Partnership. The Spanos General Partner agreed to pay the costs of the
consent solicitation subject to reimbursement by the Partnership if a
majority in interest of the limited partners approved the proposal. In
June 1998, the Partnership received consent from the requisite number of
limited partners. In July 1998, the Partnership reimbursed the Spanos
General Partner for $190,143 of solicitation costs. The settlement
required an affiliate of the Spanos General Partner to open the auction
with a minimum bid for the Properties of $22,440,000 in excess of the
outstanding mortgage debt.
Prudential Securities Incorporated ("PSI"), an affiliate of the Bache
General Partner, owned 4,663 Units at December 31, 1998.
27
<PAGE>
NOTE E - CONTINGENCIES
In May 1997, the Spanos General Partner and certain of its affiliates
entered into a Stipulation of Settlement with legal counsel representing
the plaintiff class in a number of actions ("Multidistrict Litigation")
pending before a single judge of the United States District Court for the
Southern District of New York. The settlement contemplated, among other
things, the sale of all of the Properties at public auction and the
subsequent liquidation and dissolution of the Partnership. The settlement
agreement was preliminarily approved by the Court in August 1997. In June
1998, a majority in interest of the Unitholders approved the auction sale
and liquidation of the Partnership. In July 1998, the Court entered an
order and final judgment approving the settlement, auction and
liquidation. There can be no assurance that the conditions to
implementation of the settlement will be satisfied.
In April 1994, a multiparty petition entitled Schreiber et al. v.
Prudential Securities, Inc., et al. (Cause No. 94-17696) was filed in the
189th Judicial District Court of Harris County, Texas, purportedly on
behalf of investors in the Partnership against the Partnership, the
General Partners, PSI, The Prudential Insurance Company of America and a
number of other defendants. The Petition alleged common law fraud, fraud
in the inducement and negligent misrepresentation in connection with the
offering of limited partnership interests and negligence, breach of
fiduciary duty, civil conspiracy, and violations of the federal Securities
Act of 1933 (sections 11 and 12) and of the Texas Securities and Deceptive
Trade Practices statutes. The suit sought, among other things,
compensatory and punitive damages, costs and attorney's fees. Most of the
plaintiffs released their claims against the defendants in exchange for
monetary payments by PSI at no cost to the Partnership. In February 1999,
the court entered an order dismissing all remaining claims.
NOTE F - SUBSEQUENT EVENT
In February and March 1999, the Partnership entered into agreements to
sell all the Properties to three separate buyers for an aggregate sales
price of $110,943,921. The agreements provide for a closing as soon as
practicable but in no event later than April 25, 1999, or such later date
on or before June 1, 1999 as may be required by the Partnership in order
to prepay the mortgage loans. No assurance can be given that the sales
will take place as provided in the agreements.
28
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
Not applicable.
29
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership does not have directors or executive officers. The
Partnership is managed by the General Partners, which have formed, and may
continue to form, other real estate investment entities with investment
policies similar to those of the Partnership and which may compete with
the Partnership for management services. The Spanos General Partner is a
California limited partnership whose general partners are AGS Financial
Corporation and A.G. Spanos Realty Capital, Inc. AGS Financial
Corporation is the managing general partner of the Spanos General Partner.
The directors and executive officers of AGS Financial Corporation and the
Bache General Partner who perform services for the Partnership are listed
below, together with a brief description of their experience. All have
indefinite terms.
AGS Financial Corporation is owned by Dean A. Spanos, Barry L. Ruhl,
Michael A. Spanos, Dea Spanos and a Spanos family trust. Dean A. Spanos,
Michael A. Spanos and Dea Spanos are children of Alex G. Spanos, Chairman
of the Board of AGS Financial Corporation. Barry L. Ruhl is a son-in-law
of Alex G. Spanos. There are no other family relationships among the
directors and executive officers of AGS Financial Corporation or the Bache
General Partner.
The General Partners and their directors and executive officers, and any
persons holding more than ten percent of the Partnership's Units are
required to report their initial ownership of such units and any
subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such executive officers, directors and
greater than ten percent Unitholders are required by Securities and
Exchange Commission regulations to furnish the Partnership with copies of
all Forms 3, 4 and 5 they file. All of these filing requirements were
satisfied on a timely basis. In making the disclosures, the Partnership
has relied solely on written representations of the General Partners'
directors and executive officers and greater than ten percent Unitholders
or copies of the reports that they have filed with the Securities and
Exchange Commission during and with respect to its most recent fiscal
year.
30
<PAGE>
AGS FINANCIAL CORPORATION
Name Position
Alex G. Spanos Chairman of the Board
Dean A. Spanos Vice Chairman and Director
Barry L. Ruhl Director
Michael A. Spanos Director
Arthur J. Cole President and Director
Jeremiah T. Murphy Executive Vice President and
Chief Financial Officer
ALEX G. SPANOS, age 75, has been Chairman of the Board of AGS Financial
Corporation since its founding in 1981. In addition, he serves as
Chairman of the Board or President of each of the other Spanos companies
and owns a controlling interest in the San Diego Chargers, a professional
football team. Mr. Spanos founded the combined Spanos organizations in
the early 1960's and has been the driving force behind the development of
approximately 50,000 apartments and over 3 million square feet of office
space. Mr. Spanos maintains close contact with the key executives of each
of his companies and lends his judgment and experience to all major land
acquisitions, development and property financing decisions, and the
investment activities of AGS Financial Corporation. Mr. Spanos attended
the University of the Pacific.
DEAN A. SPANOS, age 48, has been Vice Chairman and a Director of AGS
Financial Corporation since its founding in 1981. He is the chief
operating officer of the property development and management companies
within the Spanos organization, responsible for land acquisitions,
financing construction and property sales. Mr. Spanos holds a bachelor's
degree in business administration from the University of the Pacific.
MICHAEL A. SPANOS, age 39, has served as a Director of AGS Financial
Corporation since its founding in 1981. He is Executive Vice President of
A.G. Spanos Construction, Inc. He holds a bachelor's degree from the
University of the Pacific.
BARRY L. RUHL, age 47, has been a Director of AGS Financial Corporation
since its founding in 1981. He is Executive Vice President of A.G. Spanos
Construction, Inc. He holds a D.D.S. from the University of the Pacific
Dental School.
31
<PAGE>
ARTHUR J. COLE, age 44, has served as President of AGS Financial
Corporation since August 1990 and as a director since 1986. He joined AGS
Financial Corporation in 1983. He holds a bachelor's degree from Golden
Gate University.
JEREMIAH T. MURPHY, age 54, has served as an Executive Vice President of
AGS Financial Corporation and is the Chief Financial Officer for all the
A.G. Spanos Companies. He has been employed by the Spanos companies since
1983. Prior to joining the Spanos companies he was a partner with the
accounting firm, Bowman & Company, which he joined in 1970. Mr. Murphy is
a Certified Public Accountant and a graduate of Bernard Baruch College.
PRUDENTIAL-BACHE PROPERTIES, INC.
Name Position
Brian J. Martin President, Chief Executive
Officer, Director and Chairman
of the Board of Directors
Barbara J. Brooks Vice President - Finance and
Chief Financial Officer
Eugene D. Burak Vice President
Chester A. Piskorowski Senior Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
BRIAN J. MARTIN, age 48, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of the Bache General
Partner. He is a Senior Vice President of Prudential Securities
Incorporated ("PSI"), an affiliate of the Bache General Partner. Mr.
Martin also serves in various capacities for other affiliated companies.
Mr. Martin joined PSI in 1980. Mr. Martin is a member of the Pennsylvania
Bar.
BARBARA J. BROOKS, age 50, is the Vice President-Finance and Chief
Financial Officer of the Bache General Partner. She is a Senior Vice
President of PSI. Ms. Brooks also serves in various capacities for other
affiliated companies. She has held several positions within PSI since
1983. Ms. Brooks is a certified public accountant.
32
<PAGE>
EUGENE D. BURAK, age 53, is a Vice President of the Bache General Partner.
He is a Senior Vice President of PSI and serves in various capacities for
other affiliated companies. Prior to joining PSI in September 1995, he was
a management consultant for three years and was with Equitable Capital
Management Corporation from March 1990 to May 1992. Mr. Burak is a
certified public accountant.
CHESTER A. PISKOROWSKI, age 55, is a Senior Vice President of the Bache
General Partner. He is a Senior Vice President of PSI and is the Senior
Manager of the Specialty Finance Asset Management area. Mr. Piskorowski
has held several positions within PSI since April 1972. Mr. Piskorowski is
a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 56, is a Director of the Bache General Partner. He
is a Senior Vice President of PSI. Mr. Giordano also serves in various
capacities for other affiliated companies. He has been with PSI since July
1967.
NATHALIE P. MAIO, age 48, is a Director of the Bache General Partner. She
is a Senior Vice President and Deputy General Counsel of PSI and
supervises nonlitigation legal work for PSI. She joined PSI's Law
Department in 1983; presently, she also serves in various capacities for
other affiliated companies.
Item 11. Executive Compensation
The Partnership is not required to and did not pay remuneration to the
officers and directors of the General Partners. Certain officers and
directors of the General Partners receive compensation from the General
Partners and/or their affiliates (but not from the Partnership) for
services performed for various affiliated entities, which may include
services performed for the Partnership; however, the General Partners
believe that any compensation attributable to services performed for the
Partnership is immaterial. See Item 13, "Certain Relationships and
Related Transactions," for a discussion of compensation and fees to which
the General Partners and their affiliates are entitled.
Item 12. Security Ownership of Certain Beneficial Owners and Management
No Unitholder is known by the Partnership to own beneficially more than 5%
of the outstanding Units. The percentage of outstanding Units held by all
directors and officers of the General Partners is less than 1%.
33
<PAGE>
The Partnership has issued 48,513 Subordinated Interests (of which 46,364
remain outstanding at March 1, 1999) to affiliates of the Spanos General
Partner, all of which Subordinated Interests are beneficially owned by
members of the Spanos family, certain of whom are directors and officers
of the general partners of the Spanos General Partner.
As of March 1, 1999, the individual directors and the directors and
officers, as a group, of AGS Financial Corporation and A.G. Spanos Realty
Capital, Inc., the general partners of the Spanos General Partner,
beneficially owned shares of the common stock of AGS Financial Corporation
and A.G. Spanos Realty Capital, Inc. as follows:
AGS Financial A.G. Spanos
Corporation Realty, Inc.
Name Shares % of Class Shares % of Class
Alex G. Spanos -0- -0- 20 100%
Dean A. Spanos 1,000 10%
Barry L. Ruhl 1,000 10%
Michael A. Spanos 1,000 10%
All directors and officers
as a group (8 persons) 9,000(1) 90% 20 100%
(1) These amounts include shares beneficially owned by virtue of certain
beneficial interests in a Spanos family trust which owns 6,000 shares
(60%) of the shares of AGS Financial Corporation.
Item 13. Certain Relationships and Related Transactions
The General Partners and their affiliates are permitted to engage in
transactions with the Partnership as described in the Partnership
Agreement.
The General Partners and certain affiliates thereof have, during the
Partnership's year ended December 31, 1998, earned or received
compensation or payments for services from the Partnership as follows:
34
<PAGE>
Capacity in Form of Cash
Recipient Which Served Compensation Compensation
Spanos General General Partner Supervisory $323,216
Partner Management Fee(1)
Bache General General Partner Special 267,688
Partner Distribution(2)
A.G. Spanos Property Manager Property 484,657
Management Inc. Management Fees(3)
General Partners General Partners Cash from Operations(4) 31,552
Bache General General Partner Expense 55,528
Partner Reimbursements
(1) Supervisory Property Management Fee for supervising the management of the
Properties equal to 2% of gross receipts from the Properties.
(2) Special Distribution for services in managing and administering the
Partnership equal to 2% of gross receipts from the Properties, reduced to the
extent of reimbursements, if any, for certain expenses incurred in the
administration of the Partnership.
(3) Property Management Fees for property management services equal to 3% of
gross receipts from the Properties.
(4) Cash from Operations equal to 2% of Adjusted Cash from Operations remaining
after payment of the Special Distribution.
35
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements:
See Index to Financial Statements and Schedule on page 14.
(2)Financial Statement Schedule:
III. Real Estate and Accumulated Depreciation, page 42.
All other schedules have been omitted because they are
inapplicable or not required, or the information is included in
the financial statements or notes thereto.
Exhibits
4(a) Certificate of Limited Partnership of Registrant as
filed with the Secretary of State of Delaware,
incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11, File No. 33-22613,
filed with the Securities and Exchange Commission on
October 14, 1988.
4(b) Amendment to Certificate of Limited Partnership of
Registrant as filed with the Secretary of State of
Delaware, incorporated by reference to Exhibit 4(b) to
Amendment No. 1 to Registration Statement on Form S-11,
File No. 33-22613, filed with the Securities and
Exchange Commission on October 14, 1988.
4(c) Amended and Restated Agreement of Limited Partnership of
Registrant, incorporated by reference to Exhibit 4(c) to
Amendment No. 1 to Registration Statement on Form S-11,
File No. 33-22613, filed with the Securities and
Exchange Commission on October 14, 1988.
4(d) Amendments No. 1 through 7 dated November 21, and
December 30, 1988 and January 31, February 28, March 31,
April 28, and May 31, 1989 to the Amended and Restated
Agreement of Limited Partnership of Registrant,
incorporated by reference to Exhibit 4(d) to
Post-Effective Amendment No. 1 to Registration Statement
on Form S-11, File No. 33-22613, filed with the
Securities and Exchange Commission on June 30, 1989.
36
<PAGE>
4(e) Amendments No. 8 through 14 dated June 30, August 11
and 31, September 29, October 31, and December 1 and 22,
1989 to the Amended and Restated Agreement of Limited
Partnership of Registrant, incorporated by reference to
Exhibit 4(e) to Annual Report on Form 10-K, File No.
0-17683, filed with the Securities and Exchange
Commission on March 28, 1991.
4(f) Amendment No. 15 dated August 12, 1998, to the
Amended and Restated Agreement of Limited Partnership
of Registrant, incorporated by reference to Exhibit 4(f)
of the Quarterly Report on Form 10-Q dated September 30,
1998, File No. 0-17683.
10(a) Agreement for Purchase and Sale of Real Property dated
February 24, 1999 by and among the Partnership as Seller
and General Services Corporation as Buyer (filed
herewith).
10(b) Agreement for Purchase and Sale of Real Property dated
March 3, 1999 by and among the Partnership as Seller and
SGD Investments, Inc. as Buyer (filed herewith).
10(c) Agreement for Purchase and Sale of Real Property dated
March 11, 1999 by and among the Partnership and A.G.
Spanos Construction, Inc. as Sellers and WXI/SPN Real
Estate Limited Partnership as Buyer (filed herewith).
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the last quarter of
the period covered by this Report. On March 11 and 19, 1999, the
Partnership filed reports on Form 8-K dated February 24 and
March 11, 1999, to report that the Partnership had entered into
contracts to sell the Properties.
37
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I (Registrant)
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/Brian J. Martin Date: March 29, 1999
---------------------------------------
Brian J. Martin
Chairman of the Board of Directors and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities (with respect to the General Partners) and
on the dates indicated.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/Brian J. Martin Date: March 29, 1999
---------------------------------------
Brian J. Martin
Chairman of the Board of Directors and Director
(Principal Executive Officer)
By: /s/Barbara J. Brooks Date: March 29, 1999
---------------------------------------
Barbara J. Brooks
Vice President-Finance and Chief Financial Officer
(Principal Financial Officer)
By: /s/Nathalie P. Maio Date: March 29, 1999
---------------------------------------
Nathalie P. Maio
Director
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I (Registrant)
By: A.G. Spanos Realty Partners, L.P.
General Partner
By: AGS Financial Corporation, a general partner
By: /s/Arthur J. Cole Date: March 29, 1999
-------------------------------
Arthur J. Cole
President
(Principal Accounting Officer)
By: A.G. Spanos Realty Capital, Inc., a general partner
By: /s/Arthur J. Cole Date: March 29, 1999
-------------------------------
Arthur J. Cole
Vice President
AGS DEPOSITORY CORP. (Registrant as to the issuance of Depository
Receipts with respect to the Assigned Limited Partnership Interests)
By: /s/Arthur J. Cole Date: March 29, 1999
-------------------------------
Arthur J. Cole
Vice President
39
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities (with respect to the General Partners) and
on the dates indicated.
By: A.G. Spanos Realty Partners, L.P.
General Partner
By: AGS Financial Corporation, a general partner
By: /s/Alex G. Spanos Date: March 29, 1999
----------------------------------
Alex G. Spanos
Chairman of the Board of Directors
By: /s/Dean A. Spanos Date: March 29, 1999
----------------------------------
Dean A. Spanos
Vice Chairman and Director
By: /s/Michael A. Spanos Date: March 29, 1999
----------------------------------
Michael A. Spanos
Director
By: /s/Barry L. Ruhl Date: March 29, 1999
----------------------------------
Barry L. Ruhl
Director
By: /s/Arthur J. Cole Date: March 29, 1999
----------------------------------
Arthur J. Cole
President and Director
(Principal Executive Officer)
By: /s/Jeremiah T. Murphy Date: March 29, 1999
----------------------------------
Jeremiah T. Murphy
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
40
<PAGE>
SIGNATURES
By: A.G. Spanos Realty Capital, Inc., a general partner
By: /s/Alex G. Spanos Date: March 29, 1999
----------------------------------
Alex G. Spanos
President and Director (Principal Executive Officer)
By: /s/Dean A. Spanos Date: March 29, 1999
----------------------------------
Dean A. Spanos
Executive Vice President and Director
By: /s/Michael A. Spanos Date: March 29, 1999
----------------------------------
Michael A. Spanos
Executive Vice President and Director
By: /s/Barry L. Ruhl Date: March 29, 1999
----------------------------------
Barry L. Ruhl
Executive Vice President and Director
By: /s/Jeremiah T. Murphy Date: March 29, 1999
----------------------------------
Jeremiah T. Murphy
Vice President (Principal Financial and Accounting Officer)
AGS Depository Corp.
By: /s/Alex G. Spanos Date: March 29, 1999
----------------------------------
Alex G. Spanos
Director, President and Chief Financial Officer
(Principal Executive, Financial and Accounting Officer)
By: /s/Dean A. Spanos Date: March 29, 1999
----------------------------------
Dean A. Spanos
Director
By: /s/Jeremiah T. Murphy Date: March 29, 1999
----------------------------------
Jeremiah T. Murphy
Director
41
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
(A LIMITED PARTNERSHIP)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1998
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F Column G
Costs Capitalized Gross Amount at which Carried at
Initial Cost to Subsequent to Close of Period
Partnership Acquisition Notes 2, 3 and 4
Accumulated
Bldgs & Carrying Buildings & Total Depr. Date of Date
Description (Note 1) Land Equip Imps Cost Land Equipment Note 2 (Note 4) Construction Acquired
- ------------------- ---- ------ ----- ---- ---- --------- ------ ------ ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Silver Springs Village $1,842,000 $ 6,977,200 -0- -0- $ 1,417,226 $ 6,380,215 $ 7,797,441 $ 2,648,077 1985 11/18/88
Tempe, Arizona
Rancho del Sol 3,019,000 17,919,645 -0- -0- 2,358,000 18,007,683 20,365,683 7,144,263 1988 12/30/88
Las Vegas, Nevada
Sandpebble Village 1,409,000 8,615,000 -0- -0- 1,055,000 8,418,056 9,473,056 3,346,995 1983 12/30/88
Sparks, Nevada
Regency Square 2,623,000 12,776,000 -0- -0- 2,115,000 12,730,384 14,845,384 5,017,561 1988 01/31/89
Chamblee, Georgia
Cameron Creek 1,950,000 8,270,400 -0- -0- 1,601,000 8,195,184 9,796,184 3,183,807 1988 03/31/89
Tempe, Arizona
Harbor Pointe 3,845,000 16,896,000 -0- -0- 3,147,000 16,777,942 19,924,942 6,371,489 1988 06/30/89
Dunwoody, Georgia
Bernardo Crest 6,337,000 12,901,000 -0- -0- 5,670,000 12,808,626 18,478,626 4,641,513 1988 12/04/89
San Diego, California
Pointe West 885,000 4,226,000 -0- -0- 690,000 4,082,709 4,772,709 1,516,343 1985 09/29/89
Aurora, Colorado
---------- ---------- ------ ------ ------------- ---------- ---------- ----------
$21,910,000 $88,581,245 -0- -0- $18,053,226 $87,400,799 $105,454,025 $33,870,048
---------- ---------- ------ ------ ------------- ---------- ---------- ----------
---------- ---------- ------ ------ ------------- ---------- ---------- ----------
</TABLE>
See notes.
42
<PAGE>
PRUDENTIAL-BACHE/A.G. SPANOS REALTY PARTNERS L.P., I
( A Limited Partnership)
NOTES TO SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
Note 1 - See description of mortgage notes payable in note C of the Notes
to Financial Statements. Depreciable property is depreciated over
useful lives of 7 to 27.5 years.
Note 2 - The aggregate cost of real estate for federal income tax
purposes is $105,454,025.
Note 3 - The Partnership acquired the Properties from affiliates of the
Spanos General Partner. The amount of affiliate profit included in the
amounts in column E is approximately $14,004,000.
Note 4 - Reconciliation of 1998 1997 1996
accumulated depreciation:
$30,845,208 $27,820,368 $24,616,388
Balance at beginning of period
Additions during period: 3,024,840 3,024,840 3,203,980
Depreciation ---------- ---------- ----------
$33,870,048 $30,845,208 $27,820,368
---------- ---------- ----------
---------- ---------- ----------
43
AGREEMENT
FOR PURCHASE AND SALE
OF REAL PROPERTY
THIS AGREEMENT is entered as of the 24th day of
February, 1999, by and between the seller or sellers identified
on Schedule 1 attached hereto (herein collectively called
"Seller"), and General Services Corporation, a Virginia
corporation (herein called "Buyer") with offices located at 2922
Hathaway Road, Richmond, Virginia 23225.
R E C I T A L S
A. Seller owns one or more certain parcels of land
(collectively, the "Real Property") each located in the City and
State set forth on Schedule 1, attached hereto, as each such Real
Property is more particularly described on Exhibit A, attached
hereto, together with all of the improvements (the
"Improvements") and any fixtures (the "Fixtures") presently
existing and located thereon and therein, and the personalty used
exclusively in connection with the management and operation of
the foregoing as more particularly described on Exhibit B,
attached hereto (the "Personalty") (hereinafter said Real
Property, Improvements, Fixtures and Personalty are collectively
called the "Property").
B. Buyer has participated in an auction (the
"Auction") to purchase said Property and Buyer, being the
selected bidder, has agreed to purchase such Property on the
terms and conditions set forth herein.
C. Pursuant to the terms and conditions of said
Auction and in connection with being selected as the successful
bidder thereat, Buyer has agreed to execute this Agreement.
D. The parties have agreed to the purchase and sale
of the Property as set forth below.
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants and agreement contained herein, and other good
and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Seller and Buyer hereby mutually
agree that this transaction shall be consummated upon the
following terms, conditions and agreements:
1. PURCHASE PRICE. The aggregate purchase price for
the Property is Fifty Four Million Four Hundred Five Thousand and
00/100 Dollars ($54,405,000.00) (the "Purchase Price"). Buyer
<PAGE>
acknowledges and agrees that the Purchase Price shall be in all
respects net of any and all (i) assumption and other fees and all
costs and expenses required to be paid ("Assumption Fees") in
order for the Buyer to assume the mortgage encumbering each
Property, as more particularly referenced on Exhibit C attached
hereto (each a "Mortgage"), in accordance with the terms hereof,
and (ii) prepayment fees, premiums, penalties or similar charges,
expenses, costs and sums (other than outstanding principal and
accrued and unpaid interest) required to be paid to holder of any
Mortgage pursuant to the related loan documents in order to fully
satisfy such Mortgage ("Prepayment Fees"), all as set forth on a
payoff demand submitted by the holder of such Mortgage and
approved by the Seller (which approval shall not be unreasonably
withheld or delayed), provided Seller has given all appropriate
and timely notices necessary for the holder of such Mortgage to
accept such prepayments at the time of the Closing (as
hereinafter defined). In the event that a Mortgage is not being
assumed by Buyer in accordance with the provisions hereof, the
Buyer shall pay the Prepayment Fees, provided, however, that
Buyer shall be entitled to a credit against the Purchase Price in
the amount of any portion of the two percent (2%) prepayment
premiums under the Loans secured by Rancho Del Sol and Harbor
Pointe which are not waived by the holder of such Loans. In the
event that a Mortgage is assumed by Buyer in accordance with the
provisions hereof, the Buyer shall pay the Assumption Fees. The
portion of the Purchase Price which is allocated to each Property
(each, an "Allocated Purchase Price") is set forth on Schedule 2,
attached hereto. Subject to the prorations and adjustments
hereinafter defined, Seller and the Buyer mutually agree that the
Allocated Purchase Price for each Property shall be further
allocated among Personalty and the remaining Property in
accordance with the allocation set forth on Schedule 2
(collectively, the "Tax Allocations"), which Tax Allocations have
been made in accordance with Section 1060 of the Internal Revenue
Code of 1986 (as amended) and the Treasury Regulations
promulgated thereunder (the Allocated Purchase Prices and the Tax
Allocations hereinafter called, the "Allocations"). Each of the
Seller and Buyer shall: (i) be bound by the Allocations for
purposes of determining any taxes; (ii) prepare and file any tax
returns on a basis consistent with the Allocations; (iii) take no
position inconsistent with the Allocations on any applicable tax
return, in any proceeding before any taxing authority or
otherwise; and (iv) be bound by the Allocations in all other
public filings and reports, including but not limited to any
transfer tax declarations. In the event that the mutually agreed
upon Allocations are disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other
party hereto of the dispute.
<PAGE>
The Purchase Price shall be payable by Buyer to Seller
as follows:
1.1. EARNEST MONEY. In connection with the Auction,
Buyer has delivered to the Title Insurer (as hereinafter
defined), acting as escrow agent (the "Escrow Agent") the sum of
Two Million Seven Hundred Twenty Thousand Two Hundred Fifty and
00/100 Dollars ($2,720,250.00) (such sum, together with any
interest earned thereon, the "Earnest Money") representing five
percent (5%) of the Purchase Price of Fifty Four Million Four
Hundred Five Thousand and 00/100 Dollars ($54,405,000.00). From
and after the date the Earnest Money is delivered by Buyer, the
Escrow Agent shall hold the Earnest Money in accordance with the
Escrow Agreement attached hereto as Exhibit D (the "Escrow
Agreement") in an interest-bearing account for the benefit of
Buyer pending disposition as hereinafter set forth. The amount
of Earnest Money allocated to each Property is set forth on
Schedule 2 attached hereto (the "Allocated Earnest Money").
1.2. ASSUMPTION OF EXISTING MORTGAGE LOANS. Provided
that the Seller receives, at Buyer's expense,(i) the written
consent of the holder of such Mortgage to the assumption of such
Mortgage by Buyer not less than five days prior to the Closing,
and (ii) the Seller Release, the Spanos Release, if applicable,
and the Spanos Mortgage Release, if applicable (each as defined
herein), and copies of any assumption documentation required by
the holder of the Mortgage, at Closing, there shall be credited
against the Purchase Price at Closing an amount equal to the
outstanding principal balance of the loan secured by such
Mortgage (the "Loan"), together with all accrued unpaid interest
thereon as of the Closing Date, and all late charges owing under
the Loan, as evidenced by a payoff demand submitted by such
lender and approved by Seller (which approval shall not be
unreasonably delayed or withheld). In no event shall the Buyer's
ability to obtain a lender's consent to a release required
hereunder, or to an assumption of a Mortgage, be a condition to
Buyer's obligations hereunder.
1.3. PREPAYMENT AND ASSUMPTION FEES. The Prepayment
Fees and the Assumption Fees, as applicable, shall be deposited
with Escrow Agent on or before the Closing Date (as hereinafter
defined), by wire transfer of immediately available funds to
Escrow Agent's account pursuant to Escrow Agent's instructions.
1.4. BALANCE OF PURCHASE PRICE. The balance of the
Purchase Price shall be deposited with Escrow Agent on or before
the Closing Date (as hereinafter defined), by wire transfer of
immediately available funds to Escrow Agent's account pursuant to
Escrow Agent's instructions.
<PAGE>
2. INSPECTION, REMEDIES AND CONTINGENCIES.
2.1. BUYER INSPECTION. Buyer acknowledges and
represents that as of the date of execution of this Agreement,
Buyer has had the opportunity to review any engineering reports
made available to potential bidders at the Auction during a due
diligence period prior to the Auction, and has been given the
opportunity to make a full and complete inspection of the
Property, at Buyer's expense, including, but not limited to,
inspection by construction experts, engineers and architects
acceptable to Buyer, examining both obvious and latent conditions
of the Property. Accordingly, Buyer will have made its
investment decision to enter into this Agreement based
exclusively upon its own investigations or inspections with
respect to the Property and has not relied, and will not have
relied upon any express or implied, written or oral,
representation of Seller or Seller's general partners
(collectively, the "Selling Entity") or any of the Selling
Entity's employees, agents, representatives, broker and
attorneys, counsel for the respective plaintiffs in the
litigation captioned In re: Prudential Securities Incorporated
Limited Partnerships Litigation ("Litigation") in the United
States District Court in the Southern District of New York, MDL
Docket No. 1005, M-21-67 (MP), or any affiliates of any of them,
hereinafter designated collectively as the "Protected Group", in
entering into this Agreement. Buyer acknowledges that Seller has
cooperated with Buyer in all requests for inspection or testing
to date, and Seller agrees to continue that cooperation as
provided in Section 2.4.
2.2. ENVIRONMENTAL ASSESSMENT. Buyer acknowledges and
represents that as of the date of execution of this Agreement
Buyer has had the opportunity to review any Phase I and Phase II
environmental reports made available to potential bidders at the
Auction during a due diligence period prior to the Auction, and,
at its expense, to conduct an environmental assessment of the
Property including but not limited to hazardous substances or
waste such as asbestos, chemicals, sewage (raw or treated),
pesticides, petroleum, including crude oil or any fraction
thereof, and any substance identified in any Federal, State, or
other governmental legislation or ordinance. Buyer agrees to
accept the Property "AS IS", including the existence of any
hazardous substance or waste.
2.3. BUYER'S REMEDY. Buyer acknowledges that Seller
has made no representations or warranties whatsoever regarding
the accuracy or completeness of the reports referenced in this
Section 2. Buyer agrees that Buyer has no legal or equitable
<PAGE>
remedy or recourse against Seller and the Protected Group, with
respect to any inaccuracies or errors contained in any such
report or arising out of any Property defect, or other adverse
condition of the Property, whether known or unknown to or
concealed or unconcealed by them or any of them.
2.4. BUYER'S FURTHER INSPECTION RIGHTS. Seller agrees
to make the Property available to the Buyer and its agents,
employees, lender and other representatives or inspectors for
additional inspections and testing prior to the Closing Date (as
hereinafter defined) all of which shall be conducted at Buyer's
sole cost and expense. Such investigation shall include, among
other things, inspection of the Property, the review of the
Leases, books and records relating to the Property and its
operation and condition, provided, however, that in no event
shall facts or information which may be discovered by Buyer in so
conducting any investigations, inspections or testing, (i) be the
basis of any claim by Buyer against Seller, or any right of Buyer
to terminate this Agreement or to request an adjustment to the
Purchase Price or a cure by Seller of any condition or matter
discovered by any such additional investigation, testing or
inspection or (ii) otherwise affect or excuse any of Buyer's
covenants, agreements and obligations under this Agreement.
Buyer agrees to promptly repair and restore the Properties to the
condition existing prior to any inspection or testing at the sole
cost of Buyer and to Seller's reasonable satisfaction. Buyer
also agrees not to interfere with any tenants at the Properties
during any inspections or testing. Buyer hereby reaffirms its
obligation to indemnify Seller and the Protected Group pursuant
to the provisions of Section 8.1 hereinafter as a result of the
foregoing right of inspection.
3. CLOSING.
3.1. CLOSING. This transaction shall be closed
("Closing") at the offices of Skadden, Arps, Slate, Meagher &
Flom, LLP 919 Third Avenue, New York, New York 10022 or such
other place in New York, New York as the parties shall agree as
soon as is practicable after the full execution of this Agreement
but not later than forty-five (45) days therefrom (the "Closing
Deadline"). The date on which the Closing occurs is herein
called the "Closing Date". The Closing for all of the Properties
shall occur simultaneously unless otherwise provided hereunder.
3.2. SELLER'S CLOSING DELIVERABLES. At or prior to
Closing, Seller shall deliver or cause to be delivered to Escrow
Agent, the following items for delivery or recordation upon close
of escrow with respect to each Property:
<PAGE>
(a) Quitclaim deed (the "Deed") duly executed and
acknowledged by Seller, conveying fee simple title to the
Real Property to Buyer, or if a quitclaim deed is not a
valid means of conveyance in a particular jurisdiction, a
deed without covenants;
(b) A bill of sale (the "Bill of Sale") duly executed
by Seller, transferring to Buyer all of the Seller's right,
title and interest in and to the Personalty and any other
personal property owned by Seller which remains on the
Property after the Closing;
(c) Non-recourse assignment of all fully executed
occupancy leases, if applicable, pertaining to the Property
(the "Leases"), duly executed and acknowledged by Seller,
assigning to Buyer the Seller's interest therein, with Buyer
expressly assuming all obligations as landlord under such
leases from and after the Closing Date;
(d) non-recourse assignment, to the extent assignable,
of Seller's rights under the service or maintenance
contracts set forth on Schedule 4 attached hereto
(collectively the "Service Contracts");
(e) non-recourse assignment, to the extent possible,
of any licenses, permits and unexpired warranties, if any,
pertaining to the Property;
(f) certificates and resolutions demonstrating the
authority of the persons executing the documents at the
Closing and reasonably acceptable to counsel to the Buyer;
(g) a rent roll, if applicable, certified as accurate
by the Seller, which shall be current as of two business
days prior to the Closing and which shall also state the
amounts of all tenant security deposits required to be held
by Seller under the terms of the Leases which have not been
applied by Seller in accordance with the terms of such
Leases (and accrued interest owed to tenants thereunder, if
applicable);
(h) originals of all written occupancy leases, if
applicable and to the extent available and, if not
available, photocopies of the balance, for the Property.
All such leases shall be deemed delivered if they are on
premises at the Property as of the Closing Date.; and
(i) a non-foreign status affidavit, 1099 report
filing, recording affidavit (to the extent required),
<PAGE>
owner's affidavit in the form attached hereto as Exhibit F,
and such other certificates, affidavits and agreements in
form reasonably acceptable to Seller which are either
customarily and normally required in similar transactions in
the state in which the Property is located or are
specifically and reasonably required by the Title Insurer
(as hereinafter defined).
3.3. BUYER'S CLOSING DELIVERABLES At or prior to
Closing, Buyer shall deliver or cause to be delivered to Escrow
Agent, the following items for delivery or recordation upon close
of escrow:
(a) assumption of the Leases and the Service Contracts
with respect to each Property;
(b) certificates and resolutions demonstrating the
authority of the persons executing the documents at the
Closing and reasonably acceptable to counsel to the Seller;
(c) if a Mortgage is not satisfied at Closing, the
Seller Release, the Spanos Release, if applicable, and the
Spanos Mortgage Release, if applicable;
(d) the Prepayment Fees and the Assumption Fees, as
applicable, by wire transfer; and
(e) balance of the Purchase Price by wire transfer,
subject to the adjustments, prorations and credits described
in this Agreement.
3.4. CONTRACTS NOT BEING ASSIGNED. Seller shall not
assign to Buyer and shall cancel as of the close of escrow:
(a) the property management contract for each Property
set forth on Schedule 3, attached hereto; and
(b) any insurance policies, including but not limited
to hazard insurance policies, then in force affecting any
Property.
Buyer acknowledges that the management contracts shall
terminate automatically on the Closing Date in accordance with
that certain side letter agreement dated October 13, 1998, a copy
of which is attached hereto as Exhibit E and agrees that Seller
has no obligation to deliver any further termination agreement or
notice at Closing.
3.5. PRORATIONS. The following shall be apportioned on
<PAGE>
a per diem basis as of 12:01 a.m. of the Closing Date
("Adjustment Date") and adjusted between the parties on the basis
of the number of days in the month of the Closing with respect to
each Property:
(a) Real estate and other taxes, assessments and
charges, and other municipal and State charges, license and
permit fees, water and sewer rents and charges, if any, on
the basis of the fiscal period for which assessed or
charged;
(b) Water, electric, gas, steam and other utility
charges for service furnished to the Property;
(c) Fuel, if any, and all taxes thereon, on the basis
of a reading taken as close as possible to the Adjustment
Date;
(d) Base rents and any other rental payments (the
"Rents") paid under the terms of the Leases for the month of
Closing (but all prepaid rents for months thereafter shall
be credited to Buyer at Closing);
(e) Any amounts paid or payable under any Service
Contracts being assigned to Buyer, provided, however, that
the "up front" payment received by Seller pursuant to the
cable television contract affecting one or more of the
Properties shall be prorated by giving Buyer a $25,000
credit against the Purchase Price in the aggregate;
(f) All costs associated with telephone directory
listings and any other prepaid advertising; and
(g) Any other customary adjustments made in connection
with the sale of similar type buildings.
All tenant security deposits required to be held under
the Leases and accrued interest owed to tenants thereunder, if
applicable, as shown on the certified rent roll and which have
not been applied in accordance with the terms of the Leases,
shall be credited to Buyer at Closing.
There will be no proration of insurance costs at
Closing. Except as may be otherwise provided herein, all other
expenses which are attributable to the period prior to the
Closing Date shall be the obligation of Seller and those which
are attributable to the period from and after the Closing Date
shall be the obligation of Buyer.
<PAGE>
3.6. APPORTIONMENT FORMULA. For purposes of the
foregoing apportionments and adjustments, the following
procedures shall govern with respect to each Property:
(a) Any apportionment of income and expense items
shall be apportioned to the Seller based upon the formula
(the "Apportionment Formula") wherein the numerator is the
number of days in such month that the Property was owned by
the Seller and the denominator is the total number of days
in that month.
(b) If the Closing Date shall occur before the real
estate tax rate is fixed, the apportionment of such taxes
shall be made using the real estate taxes for the
immediately preceding year, with a reapportionment as soon
as the new tax rate and valuation can be ascertained.
(c) If there are water meters on the Property, Seller
shall furnish meter readings to a date not more than thirty
days prior to the Adjustment Date; and the unfixed meter
charges for the intervening time to the Adjustment Date
shall be apportioned based upon estimates using such prior
meter readings, unless final readings therefor as of the
Closing shall have been obtained, in which case such final
readings shall be used for the apportionment. As soon as
the expenses for the period shall be known, Seller and Buyer
shall recalculate the adjustment with the result that Seller
shall pay for those expenses attributable to the period
prior to the Closing Date and Buyer shall pay for those
expenses attributable to the period commencing with the
Closing Date.
(d) The apportionment of utility charges shall be made
upon the basis of charges shown on the latest available
bills for such utilities, unless final meter readings
therefor as of the Closing shall have been obtained, in
which case such final readings shall be used for the
apportionment. The charges shown on such available bills
for periods prior to the Adjustment Date shall be paid by
Seller, and for the period from the date of each such last
available utility bill to the Adjustment Date an
apportionment shall be made based upon estimates using such
last available bill. As soon as the expenses for the period
shall be known, Seller and Buyer shall recalculate the
adjustment with the result that Seller shall pay for those
expenses attributable to the period prior to the Closing
Date and Buyer shall pay for those expenses attributable to
the period commencing with the Closing Date.
<PAGE>
(e) All taxes, water and sewer charges and assessments
for public improvements which are liens upon a Property as
of the Closing Date, will be allowed to Buyer as a credit
against the Allocated Purchase Price for such Property,
subject to apportionment as herein provided, and the
existence of any such lien shall not constitute an objection
to title.
(f) If Buyer collects any non-delinquent Rents after
the Closing Date which are attributable in whole or in part
to the month in which the Closing Date occurs, the Buyer
shall promptly pay to Seller Seller's pro rata share of such
Rents.
(g) If any tenant is delinquent in the payment of
Rents on the Closing Date, Rents received from such tenant
after the Closing Date shall be applied in the following
order of priority: (a) first to the then current month's
rent and to any other sums due Buyer; and (b) then to
delinquent rentals with respect to the period before
Closing. If Rents or any portion thereof received by Seller
or Buyer after the Closing Date are payable to the other
party by reason of this allocation, the appropriate sum
shall be promptly paid to the other party.
Buyer and Seller agree that the provisions of Sections
3.5 and 3.6 shall survive the Closing for a period of ninety (90)
days after the Closing Date ("Adjustment Period"), during which
period Buyer and Seller shall agree on a reconciliation of the
prorations described herein. If the parties cannot agree on a
reconciliation within such ninety (90) day period then such
matter shall be submitted to arbitration in accordance with the
terms of Section 10 below.
3.7. COSTS. The fees of the Escrow Agent, transfer
taxes, recording fees, standard title insurance premiums for
owner's title policies and all other closing and recording costs
shall be borne equally by Seller and Buyer. Each party shall pay
its own professional fees including but not limited to attorneys'
and accountants' fees, and Buyer shall pay for (i) the cost of
any endorsements or affirmative coverage in connection with the
issuance of title policies, and (ii) any further updates or
modifications to the Surveys requested by Buyer or Buyer's
lender.
3.8. CONDITIONS TO SELLER'S AND BUYER'S OBLIGATION TO
CLOSE. The obligations of Seller and Buyer to close under this
Agreement as to a particular Property are subject to the
fulfillment, prior to or at Closing, of the following:
<PAGE>
that there shall not be in effect any statute, regulation,
order, decree or judgment of any governmental entity having
jurisdiction which renders illegal or enjoins or prevents in
any material respect the sale of such Property to Buyer.
In no event shall the failure of this condition as to a
particular Property be a condition to Buyer's or Seller's
obligations hereunder with respect to another Property.
3.9. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The
obligations of Seller to close under this Agreement are subject
to the fulfillment, prior to or at Closing, of each of the
following (all or any of which may be waived in writing by
Seller):
(a) The representations and warranties of Buyer shall
have been true and correct in all material respects when
made and shall be true and correct in all material respects
as of the Closing Date, as if made at and as of such date
except as otherwise expressly provided herein.
(b) On and as of the Closing Date, Buyer shall have
performed and complied with, in all material respects, all
agreements and covenants required by this Agreement to be
performed or complied with prior to or on the Closing Date.
(c) If a Mortgage is not satisfied at Closing, the
Seller shall have received a duly executed release in form
and substance acceptable to the Seller, pursuant to which
Buyer and the holder of the Mortgage as of the Closing Date
shall release the Seller from any and all obligations and
liabilities under such Mortgage and any other documents
evidencing or securing the underlying loan, whether arising
before, on or after the Closing Date (the "Seller Release").
(d) If a Mortgage is not satisfied at Closing, (i) the
affiliate of Seller which guaranteed the loan evidencing
such Mortgage (the "Spanos Guarantor"), if any, shall have
received a duly executed release in form and substance
acceptable to such affiliate, pursuant to which Buyer and
the holder of the Mortgage as of the Closing Date shall
release the guarantor from any and all obligations and
liabilities under such guaranty, whether arising before, on
or after the Closing Date (the "Spanos Release"), and (ii)
the Seller shall have received a duly executed release in
form and substance acceptable to the Seller, pursuant to
which the Spanos Guarantor shall release of record the
mortgage granted to such Spanos Guarantor, if any, as listed
<PAGE>
on Exhibit C attached hereto (the "Spanos Mortgage
Release").
3.10. CONDITIONS TO BUYER'S OBLIGATION TO CLOSE.
The obligations of Buyer to close under this Agreement are
subject to the fulfillment, prior to or at Closing, of each of
the following (all or any of which may be waived in writing by
Buyer):
(a) that the representations and warranties of Seller,
as set forth in Section 7.3 herein, shall have been true and
correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date,
as if made at and as of such date except as otherwise
expressly provided herein.
(b) that on and as of the Closing Date, Seller shall
have performed and complied with, in all material respects,
all agreements and covenants required by this Agreement to
be performed or complied with prior to or on the Closing
Date including, without limitation, the execution and
delivery of all of the Seller's closing deliveries under
Section 3.2 of this Agreement.
(c) that on the Closing Date, the Title Insurer
(hereinafter defined) shall be unconditionally obligated and
prepared, subject to the payment of the applicable title
insurance premium and other related charges, to issue to
Buyer an owner's title insurance policy for each Property in
compliance with the Title Commitments (hereafter defined),
subject only to the Permitted Exceptions (as hereinafter
defined) and matters granted by Buyer.
4. POSSESSION AND RISK OF LOSS PRIOR TO CLOSING.
4.1. CASUALTY. In the event of physical damage to a
Property or destruction thereof due to a casualty (a "Casualty"),
affecting all or any part of a Property, without fault of Buyer,
prior to the Closing Date, Seller and Buyer agree as follows with
respect to such damage or destruction, specifically exclusive of
non-physical losses such as business losses incidental thereto:
(a) If, prior to the Closing Date, a Property is
damaged due to a Casualty and the cost of repairing such
damage, as is determined by an independent engineer and
appraiser selected by Seller (the "Repair Cost") is less
than One Million and 00/100 Dollars ($1,000,000.00), then
Seller and Buyer shall proceed to close the sale of all of
the Property without any abatement of the Purchase Price,
<PAGE>
provided however that Seller shall, at Seller's election,
either: (i) repair the Casualty to such Property prior to
Closing at Seller's expense or (ii) assign to Buyer at
Closing, without recourse or warranty of any nature
whatsoever, all of Seller's right, title and interest in and
to any casualty insurance policies covering such Casualty
with respect to the Property (an "Assignment of Proceeds"),
provided Buyer receives a copy of such policies (which must
be in form and substance sufficient for Buyer to be made
whole for such Casualty, except for the amount of the
deductible), and a letter from the insurer confirming that
such policies are valid and in full force and effect,
without offsets or defenses of the insurer, and Seller shall
pay to Buyer all payments theretofore made by such insurers
as a result of such loss after deducting therefrom the costs
of collection thereof, and the amount of any deductible and
any other sums that may be necessary to supplement payments
received, or to be received, from the insurer to make the
Buyer whole from such Casualty. Seller agrees to maintain
sufficient casualty insurance policies to cover any Casualty
(subject to its customary deductible). Notwithstanding
anything herein to the contrary, Seller shall not have the
right to adjourn the Closing Date to repair any such
Casualty unless Buyer consents thereto.
(b) If, prior to the Closing Date, any Property is
damaged due to a Casualty and the Repair Cost equals or
exceeds One Million and 00/100 Dollars ($1,000,000.00), then
Seller shall be deemed to have elected clause (ii) in
subparagraph (a) above but, notwithstanding such election,
Buyer may elect (if such Casualty exceeds 10% of the
Purchase Price or Allocated Purchase Price, as applicable)
to terminate this Agreement in its entirety, upon which
termination, provided that Buyer is not in default
hereunder, Buyer's Earnest Money shall be returned to Buyer.
(c) If more than one Property is to be acquired
pursuant to this Agreement and the Repair Cost as to a
particular Property equals or exceeds One Million and 00/100
Dollars ($1,000,000.00) or 10% of the Purchase Price,
whichever is greater, such damaged Property may, at Buyer's
election, be removed from this Agreement and this Agreement
terminated as to such Property, upon written notice from
Buyer to Seller. In the event of such a termination,
provided that Buyer is not in default hereunder, Buyer's
Allocated Earnest Money as to such Property shall be
returned to Buyer at Closing.
<PAGE>
4.2. CONDEMNATION. If, prior to the Closing Date, all
or any portion of the Property is condemned or taken by eminent
domain, then this Agreement shall nevertheless remain in full
force and effect without any abatement of the Purchase Price. In
such event, Seller shall convey the Property to Buyer at the
Closing in its then condition, and Buyer shall be entitled to
receive all net or condemnation awards otherwise payable to
Seller as a result of such loss or damage and, in full
satisfaction of any claims by Buyer against Seller, Seller shall
assign to Buyer at Closing, without recourse or warranty of any
nature whatsoever, all of Seller's right, title and interest in
and to any claims Seller may have to any condemnation awards, as
well as all rights or pending claims of Seller with respect to
such condemnation or taking of the Property, and Seller shall pay
to Buyer all payments theretofore made by such condemning
authorities as a result of such loss after deducting therefrom
the costs of collection thereof.
5. TITLE.
5.1. PRELIMINARY TITLE REPORT, COMMITMENT AND SURVEY.
Seller has provided or otherwise made available to Buyer with
respect to each Property: a copy of a preliminary title report
or a commitment for an ALTA (or the equivalent in the applicable
jurisdiction) policy of Owner's title insurance (each a "Title
Commitment", collectively, the "Title Commitments") issued by
First American Title Insurance Company or a comparable national
title insurance company selected by Seller (the "Title Insurer")
and a copy of the current survey(s) prepared by licensed public
land surveyors according to ALTA standards (each a "Survey",
collectively, the "Surveys"). Buyer has agreed to accept each
Property subject to any and all exceptions to title insurance
coverage contained on the related Title Commitment, including,
but not limited to any exceptions to coverage based upon matters
shown on the related Survey, (collectively, the "Initial
Exceptions"). However, Initial Exceptions shall not include, and
Seller agrees to satisfy, as an additional condition to Buyer's
obligation to close under Section 3.10 above, all of the Schedule
B, Part II (or Section 2) General Exceptions of the Title
Commitments (except for real estate taxes not yet due and
payable, tenants in possession under unrecorded leases, matters
that are shown or would be shown on a current plat of survey,
adverse claim created by artificial means of accretion, rights of
upper and lower riparian owners, laws, ordinances or regulations
relating to occupancy, use or enjoyment, eminent domain or police
powers, matters created, suffered, assumed or agreed to by Buyer
and any other General Exceptions which the Title Insurer is not
permitted to remove under applicable law or which are not
customarily removed by the Title Insurer upon delivery of the
<PAGE>
owner's affidavit attached hereto as Exhibit F). Upon Closing,
each said Title Commitment shall show fee simple title to the
related Property as vested in Seller subject to (i) all of the
Initial Exceptions previously shown in such Title Commitment at
time of execution of this Agreement (excluding Mortgages, which
are addressed in clause (iii) below, (ii) any New Title
Exceptions (defined herein) which are not identified as Title
Defects by Buyer in accordance with the provisions hereof, (iii)
if a Mortgage is assumed by Buyer in accordance with the
provisions hereof, the Mortgage and any related loan
documentation appearing of record, including, but not limited to
assignments of leases and rents and uniform commercial code
financing statements identified on Exhibit C attached hereto, and
(iv) any Title Defects which are waived in writing by Buyer
(clauses (i), (ii), (iii) and (iv) collectively, the "Permitted
Exceptions").
If prior to the time of Closing, said Title Commitments
are updated to include any new exceptions which were not
previously shown therein, including, but not limited to, any new
exceptions based upon Survey updates, Buyer shall deliver to
Seller within 10 business days of its receipt of said updated
Title Commitments and Surveys written notice setting forth its
objections to any new matter encumbering any Property (each a
"New Title Exception") which, taken alone or collectively,
materially impairs such Property's current use or value (each a
"Title Defect"). Seller shall have the option to: (i) cure any
Title Defect prior to Closing (unless such Title Defect was
created or granted pursuant to one or more instruments executed
by Seller ("Voluntary Liens"), in which event Seller shall pay
the same at or before Closing) or (ii) terminate this Agreement
in its entirety, upon which termination, provided that Buyer is
not in default hereunder, Buyer's Earnest Money shall be returned
to Buyer together with Buyer's Reimbursable Expenses (as
hereinafter defined). Notwithstanding anything herein to the
contrary, Seller shall have the right to postpone the Closing
Date for such reasonable period as shall be necessary to cure any
Title Defect (other than Voluntary Liens), not to exceed thirty
(30) days. If more than one Property is to be acquired pursuant
to this Agreement and Seller elects, as permitted above, not to
cure a Title Defect with respect to a Property, such Property may
be removed from this Agreement and this Agreement terminated as
to such Property. In the event of such a termination, provided
that Buyer is not in default hereunder, Buyer's Allocated Earnest
Money as to such Property shall be returned to Buyer at Closing,
together with Buyer's Reimbursable Expenses allocable to such
Property. If Seller elects to terminate this Agreement in its
entirety or with respect to a particular Property due to a Title
Defect as permitted under this paragraph, then Buyer shall have
<PAGE>
the option to waive such Title Defect and accept the Property
subject to the applicable Title Defect provided however that
Buyer exercises such option in writing within ten (10) business
days of Seller's notice of said election.
5.2. PERMITTED EXCEPTIONS. Buyer agrees to accept each
Property subject to the Permitted Exceptions. Notwithstanding
anything herein to the contrary, in no event or circumstances
shall a Title Defect include any title exception or matter
encumbering the Real Property (other than Voluntary Liens) the
cost of which to cure is less than or equal to Fifty Thousand and
00/100 Dollars ($50,000.00), provided however that should the
cost to cure the New Title Exceptions with respect to a
particular Property, in the aggregate ("Aggregate Curative
Cost"), be greater than Fifty Thousand and 00/100 Dollars
($50,000.00) then: Buyer may send a written notice setting forth
its objections to such exceptions or matters pursuant to the same
notice requirements provided in Section 5.1 above and if Seller
elects to cure such New Title Exceptions pursuant to Section 5.1
(i) above, Seller shall be obligated to cure only such New Title
Exceptions such that the resulting Aggregate Curative Cost for
the uncured New Title Exceptions objected to by Buyer will be an
amount less than or equal to Fifty Thousand and 00/100 Dollars
($50,000.00). Notwithstanding the foregoing, Seller shall not be
obligated, under any circumstances, to cure any exception or
matter encumbering the Property except Voluntary Liens.
5.3. RESOLUTION OF TITLE ISSUES. Buyer and Seller
shall make reasonable efforts to agree as to the existence of any
Title Defect. If the Seller and Buyer do not agree on the
foregoing within fifteen (15) days after Seller's receipt of
Buyer's notice described in Section 5.1 above, then the Parties
shall submit the matter to binding arbitration in accordance with
the terms of Section 10 below.
5.4. TITLE INSURANCE POLICY. Seller's obligations to
deliver title to the Property shall be satisfied by the issuance
of a standard coverage owner's title insurance policy with
respect to each Property issued by the Title Insurer, insuring
Buyer in the amount of the Allocated Purchase Price for such
Property and showing the Property to be subject only to the
Permitted Exceptions.
6. BROKER. Each of the parties warrants to the other
that no broker, salesman or agent has been engaged or used in
connection with this transaction. To the fullest extent
permitted by law, each party agrees to indemnify the other party
against any and all loss, claims, liability, and expense,
including reasonable attorneys' fees, arising out of any claim
<PAGE>
for commission or fee incurred or allegedly incurred by the
indemnifying party.
The provisions of this Section 6 shall survive the
Closing.
7. SELLER'S DISCLAIMERS; REPRESENTATIONS,
COVENANTS AND WARRANTIES.
7.1. PROPERTY SOLD "AS IS" WITHOUT WARRANTY. Buyer
agrees and acknowledges that Buyer is purchasing the Property "AS
IS", in its existing condition and subject to its present
defects, in reliance on Buyer's own investigation and that no
representations or warranties of any kind whatsoever, written or
oral, express or implied, have been made by Seller or the
Protected Group, including without limitation representations
relating to zoning, site and physical conditions, toxic and
hazardous materials or waste, soils content, or any matter
affecting the ability of the Buyer to use the Property or the
suitability of the Property to Buyer's purposes. Buyer further
acknowledges and agrees that as of the Closing Date, Buyer shall
have investigated, inspected, and made itself aware of all zoning
regulations, other governmental requirements, site and physical
conditions, the existence or nonexistence of toxic or hazardous
materials or waste, soil conditions, and other matters affecting
the use and condition of the Property.
Additionally and specifically, Seller makes no
representation whatsoever, express or implied: (a) that the
Property is in good or any other condition; (b) that the
buildings and other Improvements, if any, were built or are
currently in compliance with plans and/or specifications; (c)
that the buildings and other Improvements, if any, were built in
accordance with either good or acceptable construction and/or
engineering practices; (d) that the buildings and other
Improvements, if any, were built or are currently in compliance
with applicable zoning or building code requirements including,
but not limited to applicable safety codes or laws and the
Americans with Disabilities Act or any State or local law
concerning disabled persons; (e) that the Property is free of
major or minor, latent or patent defects; (f) that the Property
has no hazards; (g) that the Property complies with Federal,
State or local laws or any other standards regarding toxic,
hazardous or unhealthful materials; (h) that the Property
complies with Federal, State and local environmental laws; (i) as
to the existence of soil instability, past soil repairs, soil
additions or conditions of soil fill, or susceptibility to
landslides; and (j) as to any other matter affecting the
stability or integrity of the land or any buildings or
<PAGE>
improvements situated on or part of the Property.
Without limiting the generality of the foregoing, Buyer
agrees to purchase the Property subject to any and all notices of
violations of law or municipal ordinances, orders or requirements
whatsoever noted in or issued by any federal, state, municipal or
other governmental department, agency or bureau having
jurisdiction over the Property (collectively, "Violations"), or
any lien, fine or penalty imposed in connection with any of the
foregoing, or any condition or state of repair imposed in
connection with any of the foregoing, or any condition or state
of repair or disrepair or other matter or thing, whether or not
noted, which, if noted, would result in a Violation being placed
on the Property. Seller shall have no duty to remove or comply
with or repair any such Violations, liens or other conditions and
Buyer shall accept the Property subject to all such Violations
and liens, the existence of any conditions at the Property which
would give rise to such Violations or liens, if any, and any
governmental claims arising from the existence of such Violations
and lien, in each case without any abatement of or credit against
the Purchase Price.
7.2. SELLER UNDER NO DUTY TO DISCLOSE CONDITION. Buyer
acknowledges and agrees that Seller and the Protected Group shall
have no duty to disclose to Buyer any information known to them,
or any of them, concerning the condition of the Property, defects
in the Property, failure of the Property to comply with plans,
specifications, building codes, life safety codes, safety laws,
hazardous materials, environmental laws or any other laws or
codes or construction standards affecting the Property. If any
duty to disclose exists, Buyer expressly waives that duty as to
all of the above-referenced persons and entities. Without
limiting the foregoing if any information is disclosed to Buyer,
Seller makes no representation or warranties whatsoever with
respect to the accuracy or completeness of any information
provided to Buyer. Buyer has conducted its own independent
investigation.
7.3. SELLER'S REPRESENTATIONS. Seller represents,
covenants and warrants to the Buyer that:
(a) Seller has good, valid and insurable title to the
Real Property together with the Improvements subject only to
the Permitted Exceptions.
(b) All those matters represented by Buyer to Seller
in subparagraph 7.4(a), (b), (c), (d) and (g) are likewise
represented by Seller to Buyer and, as modified to reflect
the change from Buyer to Seller, are incorporated herein by
<PAGE>
this reference.
7.4. BUYER'S REPRESENTATIONS. In consideration of
Seller's entering into this Agreement and as an inducement to
Seller to sell the Property, Buyer makes the following covenants,
representations, and warranties, each of which is material and is
being relied upon by Seller, and each shall survive the Closing:
(a) Buyer's Authority. Buyer has the legal power,
right and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement;
(b) Buyer's Action. All requisite action (corporate,
partnership, trust or otherwise) has been taken by Buyer in
connection with entering into this Agreement and the
consummation of the transactions contemplated by this
Agreement;
(c) Individual Authority. The individual(s) executing
this Agreement on behalf of Buyer has the legal power,
right, and actual authority to bind Buyer to the terms and
conditions of this Agreement;
(d) Lender Authorization. Neither the execution and
delivery of this Agreement, nor the occurrence of the
obligations set forth in this Agreement, nor the
consummation of the transactions contemplated by this
Agreement, nor compliance with the terms of this Agreement
will conflict with or result in a breach of any of the
terms, conditions, or provisions of, or constitute a default
under, any bond, note or other evidence of indebtedness or
any contract, indenture, mortgage, deed of trust, loan,
agreement, lease or other agreement or instrument to which
Buyer is a party or by which any of Buyer's properties may
be bound, which, in the aggregate, would have a material
adverse effect on Buyer's ability to perform its obligations
hereunder;
(e) Adequate Funds. Buyer has adequate funds or
available credit resources to pay the Purchase Price at the
Closing Date as provided hereunder;
(f) Sophisticated Buyer. Buyer is an experienced and
sophisticated real property purchaser; and
(g) Representation by Counsel. Buyer has had the
opportunity to confer with counsel of Buyer's choice for a
complete explanation of the meaning and significance of each
provision of this Agreement.
<PAGE>
8. INDEMNIFICATION.
8.1. INDEMNIFICATION. To the fullest extent provided
by law, Buyer agrees to indemnify and hold Seller and the
Protected Group harmless from and against all claims, damages,
liabilities, obligations, costs, damages, injuries, losses and
expenses arising (i) out of the Buyer's inspection of the
Property prior to or as of the Closing Date, or (ii) after the
Closing Date as a result of the operation or management of the
Property. Buyer further agrees to defend, with counsel
reasonably satisfactory to Seller, Seller and the Protected Group
pertaining to the foregoing indemnification rights, and if Buyer
fails to do so, then Seller and the Protected Group may do so, at
Buyer's expense, with attorneys of Seller's choice and of the
Protected Group's choice.
The provisions of this Section 8.1 shall survive the
Closing Date or termination of this Agreement.
9. DEFAULT; TERMINATION; LIQUIDATED
DAMAGES AND OTHER REMEDIES.
9.1. IF BUYER FAILS TO COMPLY WITH ITS OBLIGATIONS
UNDER THIS AGREEMENT AND COMPLETE THE TRANSACTION CONTAINED IN
THIS AGREEMENT IN VIOLATION OF THE TERMS HEREOF, AND SUCH FAILURE
IS NOT CURED BY THE EARLIER OF (A) THE CLOSING DATE OR (B) THE
DATE WHICH IS TEN (10) DAYS AFTER NOTICE OF SUCH FAILURE FROM
SELLER TO BUYER, THE PARTIES AGREE THAT SELLER SHALL BE PAID OR
RETAIN A SUM EQUAL TO THE EARNEST MONEY DEPOSIT REQUIRED
HEREUNDER, AS LIQUIDATED AND AGREED UPON DAMAGES, AND AS ITS SOLE
REMEDY, WHEREUPON THIS AGREEMENT SHALL BE NULL AND VOID, AND
NEITHER SELLER NOR BUYER NOR ANY OF THEIR RESPECTIVE
REPRESENTATIVES SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS
HEREUNDER. ANY DAMAGE AMOUNT TO BE PAID PURSUANT TO THIS SECTION
9.1 IS PRESUMED TO BE THE AMOUNT OF DAMAGES SUSTAINED BY A
BREACH, AS IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX
THE ACTUAL AMOUNT OF DAMAGES. IN PLACING THEIR INITIALS AT THE
PLACES PROVIDED, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF
THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS MADE.
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS
BUYER'S OR AUTHORIZED REPRESENTATIVE
OF BUYER'S INITIALS
<PAGE>
9.2. IF SELLER FAILS TO COMPLY WITH ITS OBLIGATIONS
UNDER THIS AGREEMENT AND COMPLETE THE TRANSACTION CONTAINED IN
THIS AGREEMENT IN VIOLATION OF THE TERMS HEREOF, AND SUCH FAILURE
IS NOT CURED BY THE EARLIER OF (A) THE CLOSING DATE OR (B) THE
DATE WHICH IS TEN (10) DAYS AFTER NOTICE OF SUCH FAILURE FROM
BUYER TO SELLER, THEN AND IN SUCH EVENT BUYER, AS ITS SOLE REMEDY
THEREFOR MAY EITHER (1) TERMINATE THIS AGREEMENT UPON WRITTEN
NOTICE TO SELLER WHEREUPON SELLER SHALL INSTRUCT THE ESCROW AGENT
TO REFUND TO BUYER THE EARNEST MONEY DEPOSIT REQUIRED HEREUNDER,
PLUS THE ACTUAL AND REASONABLE OUT-OF-POCKET COSTS AND EXPENSES
INCURRED BY BUYER ON OR AFTER JANUARY 15, 1999 (INCLUDING, BUT
NOT LIMITED TO, REASONABLE ATTORNEY'S FEES), UP TO AN AGGREGATE
MAXIMUM OF ONE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($150,000.00) ("BUYER'S REIMBURSABLE EXPENSES"), AS LIQUIDATED
AND AGREED UPON DAMAGES, WHEREUPON THIS AGREEMENT SHALL BE NULL
AND VOID, AND NEITHER SELLER NOR BUYER NOR ANY OF THEIR
RESPECTIVE REPRESENTATIVES SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER AT LAW OR IN EQUITY FOR DAMAGES OR
OTHERWISE OR (2) BUYER MAY SUE FOR SPECIFIC PERFORMANCE OF
SELLER'S OBLIGATIONS HEREUNDER, WITHOUT ABATEMENT, CREDIT AGAINST
OR REDUCTION OF THE PURCHASE PRICE EXCEPT AS EXPRESSLY PROVIDED
FOR HEREIN. ANY DAMAGE AMOUNT TO BE PAID PURSUANT TO CLAUSE 1 OF
THIS SECTION 9.2 IS PRESUMED TO BE THE AMOUNT OF DAMAGES
SUSTAINED BY A BREACH, AS IT WOULD BE IMPRACTICAL OR EXTREMELY
DIFFICULT TO FIX THE ACTUAL AMOUNT OF DAMAGES. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, IN NO EVENT SHALL SELLER OR THE
PROTECTED GROUP HAVE ANY PERSONAL LIABILITY UNDER THIS AGREEMENT
WHATSOEVER AND BUYER SHALL UNDER NO CIRCUMSTANCES INITIATE ANY
ACTION IN COURT OR BY ARBITRATION AGAINST THE PROTECTED GROUP
(OTHER THAN SELLER). IN PLACING THEIR INITIALS AT THE PLACES
PROVIDED, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE
STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS MADE.
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS
BUYER'S OR AUTHORIZED REPRESENTATIVE
OF BUYER'S INITIALS
9.3. TERMINATION. Notwithstanding anything contained
herein, this Agreement may be terminated as follows:
(a) By Seller, if any reductions or adjustments to the
Purchase Price result in the Purchase Price being reduced to
an amount which is less than the purchase price that would
be produced by the final bid submitted by the Spanos
Defendants, as such term is defined in the Stipulation of
<PAGE>
Settlement with Spanos Defendants pertaining to the
Litigation (unless Buyer is willing to waive such reductions
or adjustments which cause the Purchase Price to be so
reduced, which the Parties agree Buyer has the right to do
within two (2) business days after advice from Seller that
such reductions or adjustments permit Seller the right to
terminate this Agreement);
(b) By Seller or Buyer in accordance with any rights
of termination expressly conferred under the terms of this
Agreement; and
(c) By Seller or Buyer as to all of the Properties, if
a court of competent jurisdiction or arbitrator issues a
binding and final order permanently preventing the sale of
any Property to Buyer.
In the event this Agreement is terminated in its
entirety or as to a particular Property pursuant to any of the
foregoing provisions, this Agreement shall thereupon become null
and void in its entirety or as to such Property, as applicable,
and neither Seller nor Buyer nor any of their respective
representatives shall have any further rights or obligations
hereunder, provided, however, that the Confidentiality Agreement
AND THE Indemnification Agreement (each as defined herein) shall
remain in full force and effect.
10. ARBITRATION.
10.1. ARBITRATION OF DISPUTES.
The parties agree that any controversy or claim arising
out of or related to this Agreement, whether claimed under the
law of tort or the law of contract or any other laws, shall be
submitted to the American Arbitration Association (the
"Association") (or any successor organization) for arbitration
and settlement. All arbitration shall be finally determined in
New York City and shall be governed in accordance with the Rules
for Commercial Arbitration of the Association (or any successor
thereto) and the judgment or the award rendered may be entered in
any court having jurisdiction provided that the judgment or award
is based upon the proper interpretation and application of New
York law. Each party shall pay 50% of the fees and expenses of
the Association. The Closing Date shall be adjourned pending
resolution of the matter in dispute. Upon resolution of such
dispute the parties shall take whatever action is required to be
taken pursuant to this Agreement or the final determination of an
arbitrator.
<PAGE>
10.2. LIMITATION ON DISCOVERY.
In a mutual effort to expedite the arbitration and
limit the cost of dispute resolutions, the parties agree that
there shall be no discovery, including no depositions,
interrogatories, requests for admissions, demands for production
or inspection of records, plans, reports, or documents of any
kind, except that if a party intends to call its own expert
witness or adduce expert testimony, then that party must notify
the other party of the name, address and all educational
background of that witness and provide a complete (complete means
no subsequent data, references or opinions may be added, referred
to or testified to) report describing all of such expert's
investigations, findings and conclusions not later than sixty
(60) days before arbitration. Each party shall, on written
demand, make its expert available for deposition not later than
twenty (20) days before the arbitration hearing. Failure to make
the expert available for deposition shall permanently preclude
the arbitrator(s) from considering the expert's testimony. The
deposition may not be admitted or used as a substitute for the
live testimony of the expert at the hearing under any
circumstances. The arbitrator(s) shall not have the power to
subpoena any documents, records, reports or writings of either
party.
11. CONDUCT OF BUSINESS. During the period from the
date hereof to the Closing Date, except (a) as Buyer shall
otherwise agree, (b) as necessary in connection with the
transactions contemplated herein, or (c) as otherwise permitted
under Article 4 hereof, Seller shall operate the Property in the
ordinary and usual course, consistent with past practice.
12. REASONABLE EFFORTS; PUBLIC ANNOUNCEMENTS. Each
party hereto will use all reasonable efforts to perform all acts
required to consummate the transactions contemplated hereby as
promptly as practicable. Such acts shall include, without
limitation, the provision of any information to and submission of
any filing with any governmental entity having jurisdiction. The
foregoing notwithstanding, except as may be required to comply
with the requirements of any applicable laws or of the court with
respect to the Litigation and the rules and regulations of each
stock exchange upon which the securities of one of the parties is
listed (including, but not limited to, the filing of a form 8-K
by Seller) and except communications by Seller to holders of
limited partnership interests in Seller (copies of which will be
made available to employees of the general partners of Seller or
their affiliates), no press release or similar public
announcement or communication shall, if prior to the Closing, be
made or caused to be made concerning the execution or performance
<PAGE>
of this Agreement, unless the parties shall have consulted in
advance with respect thereto. Buyer shall keep such information
confidential, subject to the terms and conditions of the
Confidentiality Agreement dated November 30, 1998, by and between
the parties (the "Confidentiality Agreement").
13. GENERAL PROVISIONS.
13.1. TIME. Time shall be of the essence of this
Agreement. If any expiration or deadline date falls on a
Saturday, Sunday or legal holiday, it shall be extended to the
next following business day.
13.2. EFFECT OF WAIVER OF PROVISION OR REMEDY. No
waiver by a party of any provision of this Agreement shall be
considered a waiver of any other provision or any subsequent
breach of the same or any other provision, including the time for
performance of any such provision. The exercise by a party of
any remedy provided in this Agreement or at law shall not prevent
the exercise by that party of any other remedy provided in this
Agreement or at law.
13.3. INTEGRATED ENTIRE AGREEMENT. This Agreement
and the attached exhibits, along with the Confidentiality
Agreement and the Escrow Agreement, constitute the entire
agreement between the parties relating to the sale of the
Property. Any prior agreements, promises, negotiations, or
representations not expressly set forth in this Agreement in
writing are of no force and effect and may not be relied upon for
any purpose whatsoever by any party to this Agreement. Any
amendment to this Agreement shall be of no force and effect
unless it is in writing and signed by Buyer and Seller. Any
statements or representations made by any person, whether or not
a party to the Agreement, whether or not an employee or other
representative of Seller or Buyer, shall not be relied upon by
either Seller or Buyer and shall not be of any force and effect
for any purpose whatsoever.
13.4. NO REPRESENTATION REGARDING LEGAL EFFECT OF
DOCUMENT. No representation, warranty, or recommendation is made
by Seller or the Protected Group, or their brokers, respective
agents, employees, or attorneys regarding the legal sufficiency,
legal effect, or tax consequences of this Agreement or the
transaction, and each signatory has had the opportunity to submit
this Agreement to its qualified legal and/or financial advisor
before signing it.
13.5. COUNTERPARTS. This Agreement and all
amendments and supplements to it may be executed in any number of
<PAGE>
counterparts, at different places and times, all of which taken
together shall constitute one and the same instrument, which
shall be deemed dated as of the day and year first above written.
Buyer and Seller shall each receive one duplicate original.
13.6. BINDING ON SUCCESSORS. This Agreement inures
to the benefit of, and is binding on, the parties and, without
affecting the limitations of paragraph 9, their respective heirs,
personal representatives, successors, and assigns.
13.7. INTERPRETATION. Titles and headings of
sections of this Agreement are for convenience of reference only
and shall not affect the construction of any provision of this
Agreement. All recitals set forth at the beginning of this
Agreement are, by this reference, fully incorporated into this
Agreement. All exhibits referred to in this Agreement are deemed
fully incorporated herein, whether or not actually attached. As
used herein: (a) the singular shall include the plural (and vice
versa) and the masculine or neuter gender shall include the
feminine gender (and vice versa) as the context may require; (b)
locative adverbs such as "herein", "hereto", and "hereunder"
shall refer to this Agreement in its entirety and not to any
specific section or paragraph; and (c) the terms "include",
"including", and similar terms shall be construed as though
followed immediately by the phrase "but not limited to". All
parties have jointly participated in the negotiation and drafting
of this Agreement, upon advice of their own independent counsel
or have had an opportunity to do so, and this Agreement shall be
construed fairly and equally as to all parties as if drafted
jointly by them. Except as otherwise expressly set forth herein,
none of the certifications, representations, warranties,
covenants and indemnifications contained in this Agreement or in
Seller's certification of any rent roll shall survive the Closing
Date.
13.8. ACKNOWLEDGEMENTS. Every fact acknowledged in
this Agreement is agreed to be a recital and to be conclusively
and irrefutably true. Buyer's acknowledgements made as of the
date of the execution of this Agreement are agreed, reaffirmed
and binding by virtue of Buyer's election to close this
transaction.
13.9. NOTICES. All elections, notices and demands
required or permitted hereunder shall be given in writing and
shall be delivered either by personal service or a national
overnight delivery service such as Federal Express. Facsimile
transmission is acceptable provided however that such
transmission shall be followed by next day delivery via one of
the foregoing means of delivery. Notices shall be addressed or
<PAGE>
transmitted as appears below for each party; provided, that if
any party gives notice of a change of name or address, notices to
the giver of that notice shall thereafter be given as set forth
in that notice. Notice shall be deemed delivered and effective
upon actual receipt at the following addresses or such other
addresses as the parties may notify each other by similar notice:
If to Seller, to:
Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street - 28th Floor
New York, New York 10292-0116
Attn.: Brian J. Martin
Facsimile No.: (212) 214-1422
With a copy to:
Skadden, Arps, Slate, Meagher & Flom, LLP
919 Third Avenue
New York, NY 10022
Attn.: Jay Sobel
Facsimile No.: (212) 735-2000
If to Buyer, to:
General Services Corporation
2922 Hathaway Road
P.O. Box 8984
Richmond, Virginia 23225
Attn.: Mr. Jonathan S. Perel
Facsimile No.: (804) 320-7107
With a copy to:
Charles R. Swartz, Esq.
McGuire, Woods, Battle & Boothe LLP
901 East Cary Street
Richmond, Virginia 23219
Facsimile No.: (804) 698-2187
13.10. PUNITIVE DAMAGES. Each party waives any
claims it may now have or may in the future have arising out of
this transaction for exemplary, punitive and/or penalty damages.
13.11. INSURANCE. Buyer shall be responsible for
obtaining casualty and liability insurance on the Property as of
the Closing Date.
<PAGE>
13.12. ASSIGNMENT. Buyer may not assign this
Agreement without Seller's prior written consent except to an
entity or entities directly or indirectly controlling, controlled
by or under common control with Buyer and in each of which Buyer,
its sole beneficial owner or trusts for the benefit of family
members and descendants of its sole beneficial owner directly or
indirectly own a greater than fifty percent (50%) interest.
Buyer shall provide Seller with a copy of any such assignment
with such additional information regarding the assignee as Seller
may reasonably request not less than ten (10) days prior to
Closing. The valid assignment of this Agreement shall not
relieve Buyer of liability under this Agreement.
13.13. TIME LIMITATION OF ACTIONS. Save and except
for Buyer's obligations to indemnify or hold Seller harmless, no
action or claim or demand for arbitration with respect to a
provision hereof which expressly survives the Closing shall be
brought by either party after the expiration of six (6) months
from the Closing Date. The purpose of this clause reflects the
desire of both Seller and Buyer to compel the settlement of all
surviving claims between them as soon as possible.
13.14. SEVERABILITY. In the event that any
provision of this Agreement, including the arbitration
provisions, is determined to be unlawful then that provision
shall be deemed stricken and the balance of the Agreement shall
be enforceable. If the stricken provision relates to the
arbitration procedure, then the stricken provision shall be
replaced by such provision as is statutorily required.
13.15. ATTORNEYS' FEES, COSTS AND PRE-JUDGMENT
INTEREST. Each party waives any right to claim attorneys' fees,
costs or pre-judgment interest in connection with any dispute or
award concerning this transaction, except as expressly provided
for herein.
13.16. GOVERNING LAW. This Agreement and the legal
relations between the parties shall be governed by and construed
in accordance with the substantive laws of the State of New York.
13.17. FURTHER ASSURANCES. Each of the parties
hereto shall, at the request of the other party, execute,
acknowledge and deliver any further instruments, and take such
further actions, as the requesting party may reasonably request,
to carry out effectively the intent of this Agreement.
13.18. LIKE-KIND EXCHANGE. In order to facilitate
a tax-free exchange by Buyer (the "Exchange"), Buyer may use a
Qualified Intermediary for this transaction as that term is used
<PAGE>
in Regulation 1.1031(k)-1(g)(4) under the Internal Revenue Code
of 1986, as amended (the "Code") and/or a Qualified Escrow
Account as that term is used in Regulation 1.1031(k)-1(g)(3)
under the Code. The Qualified Intermediary shall be nominated,
or the Qualified Escrow Account shall be selected, by Buyer, and
Buyer shall notify Seller of the nomination or selection no later
than ten (10) days prior to the Closing. Seller agrees
reasonably to cooperate with Buyer and any such Qualified
Intermediary, provided there is no adverse effect upon Seller.
Buyer shall pay all costs and expenses associated with such
Exchange, including, but not limited to, all fees and expenses
charged by the Qualified Intermediary and any out-of-pocket
third-party costs and expenses incurred by Seller as a result of
the use of a Qualified Intermediary or Qualified Escrow Account.
In addition, Buyer shall indemnify Seller and the Protected Group
from and against any and all liability arising out of such
Exchange and any of the actions taken pursuant to this Section
13.18. Seller makes no representation to Buyer regarding
qualification of the Exchange under Section 1031 of the Code and
shall not be liable to Buyer in any manner whatsoever if the
Exchange should not qualify for any reason under Section 1031 of
the Code and shall not be responsible for compliance with the
Code. In no event shall Buyer be entitled to extend the Closing
Date pursuant to the provisions of this Section. If Buyer is
unable, for any reason, to close under such Exchange
simultaneously with the Closing hereunder, Buyer shall proceed
with the Closing pursuant to the terms of this Agreement without
participating in an Exchange. Any assignment of the rights or
obligations of the Buyer hereunder shall not relieve, release or
absolve Buyer from its obligations under this Agreement. The
provisions of this Section 13.18 shall survive the Closing.
13.19. THIS AGREEMENT SHALL NOT BE BINDING AND
EFFECTIVE UNTIL EXECUTED BY BOTH BUYER AND SELLER.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the parties on
the date first above written.
BUYER:
GENERAL SERVICES CORPORATION
By: /s/ Jonathan S. Perel
-----------------------
SELLER(S):
PRUDENTIAL-BACHE/A.G. SPANOS
REALTY PARTNERS L.P., I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Brian J. Martin
--------------------------
By: A.G. Spanos Realty Partners, L.P., a
California limited partnership,
General Partner
By: AGS Financial Corporation,
General Partner
By: /s/ Arthur J. Cole
--------------------------
By: A.G. Spanos Realty Capital, Inc.,
General Partner
By: /s/ Arthur J. Cole
--------------------------
<PAGE>
SCHEDULE 1
PROPERTY NAMES AND LOCATIONS/SELLERS
PROPERTY NAME AND LOCATION SELLER(S)
Regency Square, Chamblee, GA Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
Harbor Pointe, Dunwoody, GA Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
Rancho del Sol, Las Vegas, NV Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
<PAGE>
SCHEDULE 2
PURCHASE PRICE AND EARNEST MONEY ALLOCATIONS/
TAX ALLOCATIONS
A. The following sets forth the Allocated Purchase Price and
the Allocated Earnest Money for each of the Properties:
Regency Square, Chamblee, GA
$14,358.000
$ 717,900
Harbor Pointe, Dunwoody, GA
$21,052,000
$1,052,600
Rancho del Sol, Las Vegas, NV
$18,995,000
$ 949,750
B. The following sets forth the portion of the Allocated
Purchase Price allocated to Personalty for all of the
Properties:
Regency Square, Chamblee, GA
$207,000
Harbor Pointe, Dunwoody, GA
$274,500
Rancho del Sol, Las Vegas, NV
$282,000
<PAGE>
SCHEDULE 3
PROPERTY MANAGEMENT CONTRACTS
Regency Square, Chamblee, GA
November 18, 1988
Harbor Pointe, Dunwoody, GA
November 18, 1988
Rancho del Sol, Las Vegas, NV
November 18, 1988
<PAGE>
SCHEDULE 4
SERVICE CONTRACTS
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
THIS AGREEMENT is entered as of the _____ day of March,
1999, by and between the seller or sellers identified on
Schedule 1 attached hereto (herein collectively called "Seller"),
and SGD INVESTMENTS, INC., a Nebraska corporation (herein called
"Buyer"), with offices located at 6336 Pershing Drive, Omaha, NE
68110.
R E C I T A L S
A. Seller owns one or more certain parcels of land
(collectively, the "Real Property") each located in the City and
State set forth on Schedule 1 attached hereto, as each such Real
Property is more particularly described on Exhibit A attached
hereto, together with all of the improvements (the
"Improvements") and any fixtures (the "Fixtures") presently
existing and located thereon and therein, and the personalty used
exclusively in connection with the management and operation of
the foregoing, as more particularly described on Exhibit B
attached hereto (the "Personalty") (hereinafter said Real
Property, Improvements, Fixtures and Personalty are collectively
called the "Property").
B. Buyer has participated in an auction (the
"Auction") to purchase said Property, and Buyer, being the
selected bidder, has agreed to purchase such Property on the
terms and conditions set forth herein.
C. Pursuant to the terms and conditions of said
Auction and in connection with being selected as the successful
bidder thereat, Buyer has agreed to execute this Agreement.
D. The parties have agreed to the purchase and sale
of the Property as set forth below.
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants and agreement contained herein, and other good
and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Seller and Buyer hereby mutually
agree that this transaction shall be consummated upon the
following terms, conditions and agreements:
1. Purchase Price. The aggregate purchase price for the
Property is Nine Million Six Hundred Thirty-Five Thousand Dollars
($9,635,000), less an amount equal to all Prepayment Fees (as
hereinafter defined), if any, paid or absorbed by Buyer relating
to the satisfaction of the Mortgage at Closing (the "Purchase
Price"). Except with respect to the reduction in an amount equal
<PAGE>
to the Prepayment Fees set forth in the preceding sentence, Buyer
acknowledges and agrees that the Purchase Price shall be in all
respects net of any and all (i) assumption and other fees and all
costs and expenses required to be paid ("Assumption Fees") in
order for the Buyer to assume the mortgage encumbering the
Property, as more particularly referenced on Exhibit C attached
hereto (each a "Mortgage"), in accordance with the terms hereof
in the event Buyer elects to assume the Mortgage, and (ii)
prepayment fees, premiums, penalties or similar charges,
expenses, costs and sums (other than outstanding principal and
accrued and unpaid interest) required to be paid to holder of any
Mortgage pursuant to the related loan documents in order to fully
satisfy such Mortgage ("Prepayment Fees"), all as set forth on a
payoff demand submitted by the holder of such Mortgage and
approved by the Seller. In the event that a Mortgage is not
being assumed by Buyer in accordance with the provisions hereof,
the Buyer shall pay the Prepayment Fees. In the event that a
Mortgage is assumed by Buyer in accordance with the provisions
hereof, the Buyer shall pay the Assumption Fees. Subject to the
prorations and adjustments hereinafter defined, Seller and the
Buyer mutually agree that the Purchase Price for the Property
shall be allocated among Personalty and the remaining Property in
accordance with the allocation set forth on Schedule 2
(collectively, the "Tax Allocations"), which Tax Allocations have
been made in accordance with Section 1060 of the Internal Revenue
Code of 1986 (as amended) and the Treasury Regulations
promulgated thereunder. Each of the Seller and Buyer shall:
(i) be bound by the Tax Allocations for purposes of determining
any taxes, (ii) prepare and file any tax returns on a basis
consistent with the Tax Allocations, (iii) take no position
inconsistent with the Tax Allocations on any applicable tax
return, in any proceeding before any taxing authority or
otherwise, and (iv) be bound by the Tax Allocations in all other
public filings and reports, including but not limited to any
transfer tax declarations. In the event that the mutually
agreed-upon Tax Allocations are disputed by any taxing authority,
the party receiving notice of the dispute shall promptly notify
the other party hereto of the dispute.
The Purchase Price shall be payable by Buyer to Seller
as follows:
1.1 Earnest Money. In connection with the Auction,
Buyer has delivered to Seller the sum of Nine Hundred Sixty-Three
Thousand Five Hundred Dollars ($963,500) (such sum, together with
any interest earned thereon, the "Earnest Money") representing
ten percent (10%) of the Purchase Price of Nine Million Six
Hundred Thirty-Five Thousand Dollars ($9,635,000) (prior to
reduction in the amount of Prepayment Fees, if any, paid or
<PAGE>
absorbed by Buyer) for deposit with the Title Insurer (as
hereinafter defined), acting as escrow agent (the "Escrow
Agent"). From and after the date the Earnest Money is delivered
by Buyer, the Escrow Agent shall hold the Earnest Money in
accordance with the Escrow Agreement attached hereto as Exhibit D
(the "Escrow Agreement") in an interest-bearing account for the
benefit of Buyer pending disposition as hereinafter set forth.
1.2 Assumption of Existing Mortgage Loans. It is
contemplated that Buyer will not elect to assume the Mortgage at
Closing. In the event Buyer elects to assume the Mortgage, and
provided that the Seller receives, at Buyer's expense, (i) the
written consent of the holder of such Mortgage to the assumption
of such Mortgage by Buyer not less than five days prior to the
Closing, and (ii) the Seller Release, the Spanos Release, if
applicable, and the Spanos Mortgage Release, if applicable (each
as defined herein), and copies of any assumption documentation
required by the holder of the Mortgage, at Closing, there shall
be credited against the Purchase Price at Closing an amount equal
to the outstanding principal balance of the loan secured by such
Mortgage (the "Loan"), together with all accrued unpaid interest
thereon as of the Closing Date, and all late charges owing under
the Loan, as evidenced by a payoff demand submitted by such
lender and approved by Seller. In no event shall the Buyer's
ability to obtain a lender's consent to a release required
hereunder, or to assume the Mortgage, be a condition to Buyer's
obligations hereunder.
1.3 Prepayment and Assumption Fees. The Prepayment
Fees and the Assumption Fees, as applicable, shall be deposited
with Escrow Agent on or before the Closing Date (as hereinafter
defined), by wire transfer of immediately available funds to
Escrow Agent's account pursuant to Escrow Agent's instructions.
1.4 Balance of Purchase Price. The balance of the
Purchase Price shall be deposited with Escrow Agent on or before
the Closing Date (as hereinafter defined), by wire transfer of
immediately available funds to Escrow Agent's account pursuant to
Escrow Agent's instructions. In the event Buyer does not assume
the Mortgage, the Prepayment Fees (if any), as well as all other
sums necessary to repay the Loan and satisfy the Mortgage, shall
be disbursed from the sale proceeds on the Closing Date.
2. Inspection, Remedies and Contingencies.
2.1 Buyer Inspection. Buyer acknowledges and
represents that as of the date of execution of this Agreement,
Buyer has had the opportunity to review any engineering reports
made available to potential bidders at the Auction during a due
<PAGE>
diligence period prior to the Auction, and has been given the
opportunity to make a full and complete inspection of the
Property, at Buyer's expense, including, but not limited to,
inspection by construction experts, engineers and architects
acceptable to Buyer, examining both obvious and latent conditions
of the Property. Accordingly, Buyer will have made its
investment decision to enter into this Agreement based
exclusively upon its own investigations or inspections with
respect to the Property and has not relied, and will not have
relied upon any express or implied, written or oral,
representation of Seller or Seller's general partners
(collectively, the "Selling Entity") or any of the Selling
Entity's employees, agents, representatives, broker and
attorneys, counsel for the respective plaintiffs in the
litigation captioned In re: Prudential Securities Incorporated
Limited Partnerships Litigation ("Litigation") in the United
States District Court in the Southern District of New York, MDL
Docket No. 1005, M-2167 (MP), or any affiliates of any of them,
hereinafter designated collectively as the "Protected Group," in
entering into this Agreement. Buyer acknowledges that Seller has
cooperated with Buyer in all requests for inspection or testing.
2.2 Environmental Assessment. Buyer acknowledges and
represents that as of the date of execution of this Agreement
Buyer has had the opportunity to review any Phase I and Phase II
environmental reports made available to potential bidders at the
Auction during a due diligence period prior to the Auction, and,
at its expense, to conduct an environmental assessment of the
Property including but not limited to hazardous substances or
waste such as asbestos, chemicals, sewage (raw or treated),
pesticides, petroleum, including crude oil or any fraction
thereof, and any substance identified in any Federal, State, or
other governmental legislation or ordinance. Buyer agrees to
accept all risks to the Property and costs of cure arising out of
the existence of any hazardous substance or waste.
2.3 Buyer's Remedy. Buyer acknowledges that Seller
has made no representations or warranties whatsoever regarding
the accuracy or completeness of the reports referenced in this
Section 2. Buyer agrees that Buyer has no legal or equitable
remedy or recourse against Seller and the Protected Group, with
respect to any inaccuracies or errors contained in any such
report or arising out of any Property defect, or other adverse
condition of the Property, whether known or unknown to or
concealed or unconcealed by them or any of them.
2.4 BUYER'S RENT ROLL REVIEW RIGHT. Seller agrees to
make copies of all of the leases reflected on the rent roll
delivered pursuant to Section 3.2(g) hereof available to the
<PAGE>
Buyer for the purpose of conducting a review thereof at the
Property during business hours prior to the Closing Date at
Buyer's sole cost and expense for the sole purpose of determining
the accuracy of the prorations contemplated under Sections 3.5
and 3.6 hereof, provided, however, that in no event shall facts
or information which may be discovered by Buyer in so conducting
such review, (i) be the basis of any claim by Buyer against
Seller, or any right of Buyer to terminate this Agreement or to
request an adjustment to the Purchase Price (other than pursuant
to a proration under Section 3.5 and 3.6 hereof) or a cure by
Seller of any matter discovered by any such review or (ii)
otherwise affect or excuse any of Buyer's covenants, agreements
and obligations under this Agreement.
3. Closing.
3.1 Closing. This transaction shall be closed
("Closing") at the offices of Skadden, Arps, Slate, Meagher &
Flom, LLP, 919 Third Avenue, New York, New York 10022, or such
other place in New York, New York as the parties shall agree as
soon as is practicable after the full execution of this Agreement
but not later than forty-five (45) days therefrom or such later
date (not to exceed thirty days thereafter) as may be reasonably
appropriate to permit payoff of the Mortgage without Prepayment
Fees if possible (the "Closing Deadline"). The date on which the
Closing occurs is herein called the "Closing Date."
3.2 Seller's Closing Deliverables. At or prior to
Closing, Seller shall deliver or cause to be delivered to Escrow
Agent, the following items for delivery or recordation upon close
of escrow with respect to the Property:
(a) Quitclaim deed (the "Deed") duly executed and
acknowledged by Seller, conveying fee simple title to
the Real Property to Buyer, or if a quitclaim deed is
not a valid means of conveyance in a particular
jurisdiction, a deed without covenants (or, if the use
of such form of deed results in the Title Insurer
raising an exception to coverage, a form of deed
subject to the Permitted Exceptions that would be
insurable by the Title Insurer without such exception);
(b) A bill of sale (the "Bill of Sale") duly
executed by Seller, transferring to Buyer all of the
Seller's right, title and interest in and to the
Personalty;
(c) Nonrecourse assignment of all fully executed
<PAGE>
occupancy leases, if applicable, pertaining to the
Property (the "Leases"), duly executed and acknowledged
by Seller, assigning to Buyer the Seller's interest
therein, with Buyer expressly assuming all obligations
as landlord under such leases from and after the
Closing Date;
(d) Nonrecourse assignment, to the extent
assignable, of Seller's rights under any service or
maintenance contracts ("Service Contracts") pertaining
to the Property, including, but not limited to, waste
removal, guard and security firm contracts, if any;
(e) Nonrecourse assignment, to the extent
possible, of any licenses, permits and unexpired
warranties, if any, pertaining to the Property;
(f) Certificates and resolutions demonstrating
the authority of the persons executing the documents at
the Closing;
(g) A rent roll, certified as accurate by the
Seller, which shall be current as of four business days
prior to the Closing and which shall also state the
amounts of all tenant security deposits in the
possession of Seller; and
(h) Originals of all written occupancy leases, if
applicable and to the extent available, for the
Property. All such leases shall be deemed delivered if
they are on premises at the Property as of the Closing
Date.
3.3 Buyer's Closing Deliverables. At or prior to
Closing, Buyer shall deliver or cause to be delivered to Escrow
Agent, the following items for delivery or recordation upon close
of escrow:
(a) Assumption of the Leases and Service
Contracts with respect to the Property;
(b) Certificates and resolutions demonstrating
the authority of the persons executing the documents at
the Closing;
(c) If a Mortgage is not satisfied at Closing,
the Seller Release, the Spanos Release, if applicable,
and the Spanos Mortgage Release, if applicable;
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(d) The Prepayment Fees and the Assumption Fees,
as applicable, by wire transfer; and
(e) Balance of the Purchase Price by wire
transfer.
3.4 Contracts Not Being Assigned. Seller shall not
assign to Buyer and shall cancel as of the close of escrow:
(a) The property management contract for the
Property set forth on Schedule 3, attached hereto; and
(b) Any insurance policies, including but not
limited to hazard insurance policies, then in force
affecting the Property.
Buyer acknowledges that the management contracts shall
terminate automatically on the Closing Date in accordance with
that certain side letter agreement dated October 13, 1998, a copy
of which is attached hereto as Exhibit E, and agrees that Seller
has no obligation to deliver any further termination agreement or
notice at Closing.
3.5 Prorations. The following shall be apportioned on
a per diem basis as of 12:01 a.m. of the Closing Date
("Adjustment Date") and adjusted between the parties on the basis
of the number of days in the month of the Closing with respect to
the Property:
(a) Real estate and other taxes, assessments and
charges, and other municipal and State charges, license
and permit fees, water and sewer rents and charges, if
any, on the basis of the fiscal period for which
assessed or charged;
(b) Water, electric, gas, steam and other utility
charges for service furnished to the Property;
(c) Fuel, if any, and all taxes thereon, on the
basis of a reading taken as close as possible to the
Adjustment Date;
(d) Base rents and any other rental payments (the
"Rents") paid under the terms of the Leases for the
month of Closing or thereafter;
(e) Any amounts paid or payable under any Service
Contracts being assigned to Buyer;
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(f) All costs associated with telephone directory
listings and any other prepaid advertising;
(g) All tenant security deposits in Seller's
possession which have not been applied in accordance
with the terms of the Leases; and
(h) Any other customary adjustments made in
connection with the sale of similar type buildings.
There will be no proration of insurance costs at
Closing. Except as may be otherwise provided herein, all other
expenses, liabilities and claims which are attributable to the
period prior to the Closing Date shall be the obligation of
Seller and those which are attributable to the period from and
after the Closing Date shall be the obligation of Buyer.
3.6 Apportionment Formula. For purposes of the
foregoing apportionments and adjustments, the following
procedures shall govern with respect to the Property:
(a) Any apportionment of income and expense items
shall be apportioned to the Seller based upon the
formula (the "Apportionment Formula") wherein the
numerator is the number of days in such month that the
Property was owned by the Seller and the denominator is
the total number of days in that month.
(b) If the Closing Date shall occur before the
real estate tax rate is fixed, the apportionment of
such taxes shall be made using the real estate taxes
for the immediately preceding year, with a
reapportionment as soon as the new tax rate and
valuation can be ascertained.
(c) If there are water meters on the Property,
Seller shall furnish meter readings to a date not more
than thirty days prior to the Adjustment Date; and the
unfixed meter charges for the intervening time to the
Adjustment Date shall be apportioned based upon
estimates using such prior meter readings, unless final
readings therefor as of the Closing shall have been
obtained, in which case such final readings shall be
used for the apportionment. As soon as the expenses
for the period shall be known, Seller and Buyer shall
recalculate the adjustment with the result that Seller
shall pay for those expenses attributable to the period
prior to the Closing Date and Buyer shall pay for those
expenses attributable to the period commencing with the
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Closing Date.
(d) The apportionment of utility charges shall be
made upon the basis of charges shown on the latest
available bills for such utilities, unless final meter
readings therefor as of the Closing shall have been
obtained, in which case such final readings shall be
used for the apportionment. The charges shown on such
available bills for periods prior to the Adjustment
Date shall be paid by Seller, and for the period from
the date of each such last available utility bill to
the Adjustment Date an apportionment shall be made
based upon estimates using such last available bill.
As soon as the expenses for the period shall be known,
Seller and Buyer shall recalculate the adjustment with
the result that Seller shall pay for those expenses
attributable to the period prior to the Closing Date
and Buyer shall pay for those expenses attributable to
the period commencing with the Closing Date.
(e) All taxes, water and sewer charges and
assessments for public improvements which are liens
upon a Property as of the Closing Date, will be allowed
to Buyer as a credit against the Purchase Price for the
Property, subject to apportionment as herein provided,
and the existence of any such lien shall not constitute
an objection to title.
(f) If any tenants are required to pay Rents
which are collected by Buyer after the Closing Date and
which are attributable in whole or in part to any
period before the Closing Date, the Buyer shall
promptly pay to Seller the amount of such payment
attributable to periods during which Seller owned the
Property.
(g) If any tenant is in arrears in the payment of
Rents on the Closing Date, Rents received from such
tenant after the Closing Date shall be applied in the
following order of priority: (i) first to any months
preceding the month in which the Closing occurred,
(ii) then to the month in which the Closing occurred,
and (iii) then to any months following the month in
which the Closing occurred. If Rents or any portion
thereof received by Seller or Buyer after the Closing
Date are payable to the other party by reason of this
allocation, the appropriate sum shall be promptly paid
to the other party.
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Buyer and Seller agree that the provisions of Sections
3.5 and 3.6 shall survive the Closing for a period of ninety (90)
days after the Closing Date ("Adjustment Period"), during which
period Buyer and Seller shall agree on a reconciliation of the
prorations described herein. If the parties cannot agree on a
reconciliation within such ninety (90) day period then such
matter shall be submitted to arbitration in accordance with the
terms of Section 10 below.
3.7 Costs. The fees of the Escrow Agent, transfer
taxes, recording fees, standard title insurance premiums for
owner's title policies and all other closing and recording costs
shall be borne equally by Seller and Buyer. Each party shall pay
its own professional fees including but not limited to attorneys'
and accountants' fees, and Buyer shall pay for (i) the cost of
any endorsements or affirmative coverage in connection with the
issuance of title policies, and (ii) any further updates or
modifications to the Surveys requested by Buyer or Buyer's
lender.
3.8 Conditions to Seller's and Buyer's Obligation to
Close. The obligations of Seller and Buyer to close under this
Agreement are subject to the fulfillment, prior to or at Closing,
of the following:
that there shall not be in effect any statute,
regulation, order, decree or judgment of any
governmental entity having jurisdiction which renders
illegal or enjoins or prevents in any material respect
the sale of the Property to Buyer.
3.9 Conditions to Seller's Obligation to Close. The
obligations of Seller to close under this Agreement are subject
to the fulfillment, prior to or at Closing, of each of the
following (all or any of which may be waived in writing by
Seller):
(a) The representations and warranties of Buyer
shall have been true and correct in all material
respects when made and shall be true and correct in all
material respects as of the Closing Date, as if made at
and as of such date except as otherwise expressly
provided herein.
(b) On and as of the Closing Date, Buyer shall
have performed and complied with, in all material
respects, all agreements and covenants required by this
Agreement to be performed or complied with prior to or
on the Closing Date.
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(c) If a Mortgage is assumed by Buyer and
therefore not satisfied at Closing, the Seller shall
have received a duly executed release in form and
substance acceptable to the Seller, pursuant to which
Buyer and the holder of the Mortgage as of the Closing
Date shall release the Seller from any and all
obligations and liabilities under such Mortgage and any
other documents evidencing or securing the underlying
loan, whether arising before, on or after the Closing
Date (the "Seller Release").
(d) If a Mortgage is assumed by Buyer and
therefore not satisfied at Closing, (i) the affiliate
of Seller which guaranteed the loan evidencing such
Mortgage (the "Spanos Guarantor"), if any, shall have
received a duly executed release in form and substance
acceptable to such affiliate, pursuant to which Buyer
and the holder of the Mortgage as of the Closing Date
shall release the guarantor from any and all
obligations and liabilities under such guaranty,
whether arising before, on or after the Closing Date
(the "Spanos Release"), and (ii) the Seller shall have
received a duly executed release in form and substance
acceptable to the Seller, pursuant to which the Spanos
Guarantor shall release of record the mortgage granted
to such Spanos Guarantor, if any, as listed on
Exhibit C attached hereto (the "Spanos Mortgage
Release").
3.10 Conditions to Buyer's Obligation to Close. The
obligations of Buyer to close under this Agreement are subject to
the fulfillment, prior to or at Closing, of the following (all or
any of which may be waived in writing by Buyer):
(a) That the representations and warranties of
Seller, as set forth in Section 7.3 herein, shall have
been true and correct in all material respects when
made and shall be true and correct in all material
respects as of the Closing Date, as if made at and as
of such date except as otherwise expressly provided
herein.
(b) If the Mortgage is not to be assumed by
Buyer, that the Title Insurer shall be prepared,
subject to payment of the applicable title premium and
fees, to issue an owner's title insurance policy which
does not list the Mortgage (or any related assignment
of rents or UCC filings) as an exception to coverage.
<PAGE>
4. Possession and Risk of Loss Prior to Closing.
4.1 Casualty. In the event of physical damage to a
Property or destruction thereof due to a casualty (a "Casualty")
affecting all or any part of a Property, without fault of Buyer,
prior to the Closing Date, Seller and Buyer agree as follows with
respect to such damage or destruction, specifically exclusive of
nonphysical losses such as business losses incidental thereto:
(a) If, prior to the Closing Date, a Property is
damaged due to a Casualty and the cost of repairing
such damage, as is determined by an independent
engineer and appraiser selected by Seller (the "Repair
Cost"), is less than One Million and 00/100 Dollars
($1,000,000.00), then Seller and Buyer shall proceed to
close the sale of all of the Property without any
abatement (except as provided in subsection (ii) below)
of the Purchase Price; provided, however, that Seller
shall, at Seller's election, either: (i) reasonably
repair the Casualty to the Property prior to Closing at
Seller's expense, or (ii) assign to Buyer at Closing,
without recourse or warranty of any nature whatsoever,
all of Seller's right, title and interest in and to any
casualty insurance policies covering such Casualty with
respect to the Property, and Seller shall pay to Buyer
all payments theretofore made by such insurers as a
result of such loss after deducting therefrom the costs
of collection thereof (an "Assignment of Proceeds"),
and Buyer shall be entitled to a Purchase Price
reduction at Closing in an amount equal to any
deductible or co-payment applicable under such
policies.
(b) If, prior to the Closing Date, the Property
is damaged due to a Casualty and the Repair Cost equals
or exceeds One Million and 00/100 Dollars
($1,000,000.00), then Seller shall have the option to:
(i) reasonably repair the Casualty to the Property
prior to Closing, or (ii) terminate this Agreement,
upon which termination, provided that Buyer is not in
default hereunder, Buyer's Earnest Money shall be
returned to Buyer. Notwithstanding anything herein to
the contrary, Seller shall have the right to adjourn
the Closing Date for such reasonable period as shall be
necessary to repair any such Casualty.
(c) If Seller elects to terminate this Agreement
due to a Casualty as described in this Section 4.1,
<PAGE>
then Buyer shall have the option, to be exercised by
delivering written notice to Seller of such election
within ten days after Buyer's receipt of written notice
of Seller's election, to accept the Property together
with an Assignment of Proceeds with respect thereto.
4.2 Condemnation. If, prior to the Closing Date, all
or any portion of the Property is condemned or taken by eminent
domain, then this Agreement shall nevertheless remain in full
force and effect without any abatement of the Purchase Price. In
such event, Seller shall convey the Property to Buyer at the
Closing in its then condition, and Buyer shall be entitled to
receive all net or condemnation awards otherwise payable to
Seller as a result of such loss or damage and, in full
satisfaction of any claims by Buyer against Seller, Seller shall
assign to Buyer at Closing, without recourse or warranty of any
nature whatsoever, all of Seller's right, title and interest in
and to any claims Seller may have to any condemnation awards, as
well as all rights or pending claims of Seller with respect to
such condemnation or taking of the Property, and Seller shall pay
to Buyer all payments theretofore made by such condemning
authorities as a result of such loss after deducting therefrom
the costs of collection thereof.
5. Title.
5.1 Preliminary Title Report, Commitment and Survey.
Seller has provided or otherwise made available to Buyer with
respect to the Property: (a) a copy of a preliminary title
report or a commitment for an ALTA (or the equivalent in the
applicable jurisdiction) policy of Owner's title insurance (each
a "Title Commitment," collectively, the "Title Commitments")
issued by First American Title Insurance Company or a comparable
national title insurance company selected by Seller (the "Title
Insurer") and (b) a copy of the current survey(s) prepared by
licensed public land surveyors according to ALTA standards (each
a "Survey," collectively, the "Surveys") with respect to the
Property. Buyer has agreed to accept the Property subject to any
and all exceptions to title insurance coverage contained on the
related Title Commitment, including, but not limited to any
exceptions to coverage based upon matters shown on the related
Survey, other than exceptions relating to the Mortgage (and any
related assignment of rents and UCC filings) (collectively, the
"Initial Exceptions"). Upon Closing, each said Title Commitment
shall show fee simple title to the related Property as vested in
Seller, subject to (i) all of the Initial Exceptions previously
shown in such Title Commitment at time of execution of this
Agreement, (ii) any New Title Exceptions (defined herein) which
are not identified as Title Defects by Buyer in accordance with
<PAGE>
the provisions hereof, (iii) if a Mortgage is assumed by Buyer in
accordance with the provisions hereof, the Mortgage and any
related loan documentation appearing of record, including, but
not limited to assignments of leases and rents and uniform
commercial code financing statements identified on Exhibit C
attached hereto, and (iv) any Title Defects which are waived in
writing by Buyer (clauses (i), (ii), (iii) and (iv) collectively,
the "Permitted Exceptions").
If prior to the time of Closing, said Title Commitments
are updated to include any new exceptions which were not
previously shown therein, including, but not limited to, any new
exceptions based upon the Survey updates, Buyer shall deliver to
Seller within 10 business days of the delivery of said updated
Title Commitments written notice setting forth its objections to
any new matter affecting the Property (each a "New Title
Exception") which, taken alone or in the aggregate, materially
impairs the Property's current use or value (each a "Title
Defect"). Seller shall have the option to: (i) cure any Title
Defect prior to Closing, or (ii) terminate this Agreement in its
entirety, upon which termination, provided that Buyer is not in
default hereunder, Buyer's Earnest Money shall be returned to
Buyer. Notwithstanding anything herein to the contrary, Seller
shall have the right to postpone the Closing Date for such
reasonable period as shall be necessary to cure any Title Defect.
If Seller elects to terminate this Agreement due to a Title
Defect as described in this paragraph, then Buyer shall have the
option to waive such Title Defect and accept the Property subject
to the applicable Title Defect; provided, however, that Buyer
exercise such option in writing within ten (10) business days of
Seller's notice of said election.
5.2 Permitted Exceptions. Buyer agrees to accept the
Property subject to the Permitted Exceptions. Notwithstanding
anything herein to the contrary, in no event or circumstance
shall a Title Defect which arises after the Commitment Date of
the Title Commitment (other than a mortgage, lien or other
encumbrance which secures an obligation to pay indebtedness or
liability) include any title exception or matter encumbering the
Real Property the cost of which to cure is less than or equal to
ten percent (10%) of the Purchase Price for the Property;
provided, however, that should the cost to cure the New Title
Exceptions in the aggregate ("Aggregate Curative Cost"), be
greater than ten percent (10%) of the Purchase Price for the
Property then: (a) Buyer may send a written notice setting forth
its objections to such exceptions or matters pursuant to the same
notice requirements provided in Section 5.1 above, and (b) if
Seller elects to cure such New Title Exceptions pursuant to
Section 5.1(i) above, Seller shall be obligated to cure only such
<PAGE>
New Title Exceptions such that the resulting Aggregate Curative
Cost for the uncured New Title Exceptions objected to by Buyer
will be an amount less than or equal to ten percent (10%) of the
Purchase Price. Notwithstanding the foregoing, Seller shall not
be obligated, under any circumstances, to cure any exception or
matter encumbering the Property. Notwithstanding anything to the
contrary contained in this Agreement, in no event shall the
Mortgage (or any related assignment of rents or UCC filings) be
deemed to be a Permitted Exception unless Buyer elects to assume
the Mortgage.
5.3 Resolution of Title Issues. Buyer and Seller
shall make reasonable efforts to agree as to the existence of any
Title Defect. If the Seller and Buyer do not agree on the
foregoing within fifteen (15) days after Seller's receipt of
Buyer's notice described in Section 5.1 above, then the parties
shall submit the matter to binding arbitration in accordance with
the terms of Section 10 below.
5.4 Title Insurance Policy. Seller's obligations to
deliver title to the Property shall be satisfied by the issuance
of a standard coverage owner's title insurance policy with
respect to the Property issued by the Title Insurer, insuring
Buyer in the amount of the Purchase Price for the Property and
showing the Property to be subject to the Permitted Exceptions.
6. Broker. Each of the parties warrants to the other that
no broker, salesman or agent has been engaged or used in
connection with this transaction. To the fullest extent
permitted by law, each party agrees to indemnify the other party
against any and all loss, claims, liability, and expense,
including reasonable attorneys' fees, arising out of any claim
for commission or fee incurred or allegedly incurred by the
indemnifying party.
The provisions of this Section 6 shall survive the
Closing.
7. Seller's Disclaimers; Representations, Covenants and
Warranties.
7.1 Property Sold "As Is" Without Warranty. Buyer
agrees and acknowledges that Buyer is purchasing the Property "AS
IS," in its existing condition and subject to its present
defects, in reliance on Buyer's own investigation and that no
representations or warranties of any kind whatsoever, written or
oral, express or implied, have been made by Seller or the
Protected Group, including without limitation representations
relating to zoning, site and physical conditions, toxic and
<PAGE>
hazardous materials or waste, soils content, or any matter
affecting the ability of the Buyer to use the Property or the
suitability of the Property to Buyer's purposes. Buyer further
acknowledges and agrees that as of the Closing Date, Buyer shall
have investigated, inspected, and made itself aware of all zoning
regulations, other governmental requirements, site and physical
conditions, the existence or nonexistence of toxic or hazardous
materials or waste, soil conditions, and other matters affecting
the use and condition of the Property.
Additionally and specifically, Seller makes no
representation whatsoever, express or implied: (a) that the
Property is in good or any other condition, (b) that the
buildings and other Improvements, if any, were built or are
currently in compliance with plans and/or specifications,
(c) that the buildings and other Improvements, if any, were built
in accordance with either good or acceptable construction and/or
engineering practices, (d) that the buildings and other
Improvements, if any, were built or are currently in compliance
with applicable zoning or building code requirements including,
but not limited to applicable safety codes or laws and the
Americans with Disabilities Act or any State or local law
concerning disabled persons, (e) that the Property is free of
major or minor, latent or patent defects, (f) that the Property
has no hazards, (g) that the Property complies with Federal,
State or local laws or any other standards regarding toxic,
hazardous or unhealthful materials, (h) that the Property
complies with Federal, State and local environmental laws, (i) as
to the existence of soil instability, past soil repairs, soil
additions or conditions of soil fill, or susceptibility to
landslides, and (j) as to any other matter affecting the
stability or integrity of the land or any buildings or
improvements situated on or part of the Property.
Without limiting the generality of the foregoing, Buyer
agrees to purchase the Property subject to any and all notices of
violations of law or municipal ordinances, orders or requirements
whatsoever noted in or issued by any federal, state, municipal or
other governmental department, agency or bureau having
jurisdiction over the Property (collectively, "Violations"), or
any lien, fine or penalty imposed in connection with any of the
foregoing, or any condition or state of repair imposed in
connection with any of the foregoing, or any condition or state
of repair or disrepair or other matter or thing, whether or not
noted, which, if noted, would result in a Violation being placed
on the Property. Seller shall have no duty to remove or comply
with or repair any such Violations, liens or other conditions and
Buyer shall accept the Property subject to all such Violations
and liens, the existence of any conditions at the Property which
<PAGE>
would give rise to such Violations or liens, if any, and any
governmental claims arising from the existence of such Violations
and lien, in each case without any abatement of or credit against
the Purchase Price.
7.2 Seller Under No Duty to Disclose Condition. Buyer
acknowledges and agrees that Seller and the Protected Group shall
have no duty to disclose to Buyer any information known to them,
or any of them, concerning the condition of the Property, defects
in the Property, failure of the Property to comply with plans,
specifications, building codes, life safety codes, safety laws,
hazardous materials, environmental laws or any other laws or
codes or construction standards affecting the Property. If any
duty to disclose exists, Buyer expressly waives that duty as to
all of the above-referenced persons and entities. Without
limiting the foregoing if any information is disclosed to Buyer,
Seller makes no representation or warranties whatsoever with
respect to the accuracy or completeness of any information
provided to Buyer. Buyer has conducted its own independent
investigation.
7.3 Seller's Representations. Seller represents,
covenants and warrants to the Buyer that:
(a) Seller has good, valid and insurable title to
the Real Property together with the Improvements
subject to the Permitted Exceptions.
(b) Seller has legal power, right and authority
and has taken necessary requisite action to enter into
this Agreement and to consummate the transactions
contemplated by this Agreement. (The provisions of
this Section 7.3(b) shall survive the Closing Date.)
7.4 Buyer's Representations. In consideration of
Seller's entering into this Agreement and as an inducement to
Seller to sell the Property, Buyer makes the following covenants,
representations, and warranties, each of which is material and is
being relied upon by Seller, and each shall survive the Closing:
(a) Buyer's Authority. Buyer has the legal
power, right and authority to enter into this Agreement
and to consummate the transactions contemplated by this
Agreement;
(b) Buyer's Action. All requisite action
(corporate, partnership, trust or otherwise) has been
taken by Buyer in connection with entering into this
Agreement and the consummation of the transactions
<PAGE>
contemplated by this Agreement;
(c) Individual Authority. The individual(s)
executing this Agreement on behalf of Buyer has the
legal power, right, and actual authority to bind Buyer
to the terms and conditions of this Agreement;
(d) Lender Authorization. Neither the execution
and delivery of this Agreement, nor the occurrence of
the obligations set forth in this Agreement, nor the
consummation of the transactions contemplated by this
Agreement, nor compliance with the terms of this
Agreement will conflict with or result in a breach of
any of the terms, conditions, or provisions of, or
constitute a default under, any bond, note or other
evidence of indebtedness or any contract, indenture,
mortgage, deed of trust, loan, agreement, lease or
other agreement or instrument to which Buyer is a party
or by which any of Buyer's properties may be bound,
which, in the aggregate, would have a material adverse
effect on Buyer's ability to perform its obligations
hereunder;
(e) Adequate Funds. Buyer has adequate funds or
available credit resources to pay the Purchase Price at
the Closing Date as provided hereunder;
(f) Sophisticated Buyer. Buyer is an experienced
and sophisticated real property purchaser; and
(g) Representation by Counsel. Buyer has had the
opportunity to confer with counsel of Buyer's choice
for a complete explanation of the meaning and
significance of each provision of this Agreement.
8. Indemnification.
8.1 Indemnification. To the fullest extent provided
by law, Buyer agrees to indemnify and hold Seller and the
Protected Group harmless from and against all claims, damages,
liabilities, obligations, costs, damages, injuries, losses and
expenses arising (i) out of the Buyer's inspection of the
Property prior to or as of the Closing Date, or (ii) after the
Closing Date as a result of the condition, operation or
management of the Property attributable to Buyer's acts or
omissions. Buyer further agrees to pay for Seller's and the
Protected Group's costs of defense, including attorney fees and
expert fees, pertaining to the foregoing indemnification rights,
to be provided by attorneys (reasonably acceptable to Buyer) of
<PAGE>
Seller's choice and of the Protected Group's choice.
The provisions of this Section 8.1 shall survive the
Closing Date and any termination of this Agreement.
9. Default; Termination; Liquidated Damages and Other
Remedies.
9.1 IF BUYER FAILS TO COMPLY WITH ITS OBLIGATIONS
UNDER THIS AGREEMENT AND COMPLETE THE TRANSACTION CONTAINED IN
THIS AGREEMENT IN VIOLATION OF THE TERMS HEREOF, THE PARTIES
AGREE THAT SELLER SHALL: (A) BE PAID OR RETAIN A SUM EQUAL TO
THE EARNEST MONEY DEPOSIT REQUIRED HEREUNDER, AS LIQUIDATED AND
AGREED-UPON DAMAGES, WHEREUPON THIS AGREEMENT SHALL BE NULL AND
VOID AND NEITHER SELLER NOR BUYER NOR ANY OF THEIR RESPECTIVE
REPRESENTATIVES SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS
HEREUNDER, OR (B) PURSUE SUCH RIGHTS AND REMEDIES AS SELLER MAY
HAVE AT LAW OR IN EQUITY. ANY DAMAGE AMOUNT TO BE PAID PURSUANT
TO CLAUSE (A) OF THIS SECTION 9.1 IS PRESUMED TO BE THE AMOUNT OF
DAMAGES SUSTAINED BY A BREACH, AS IT WOULD BE IMPRACTICAL OR
EXTREMELY DIFFICULT TO FIX THE ACTUAL AMOUNT OF DAMAGES. IN
PLACING THEIR INITIALS AT THE PLACES PROVIDED, EACH PARTY
SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE
AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO
EXPLAINED THE CONSEQUENCES OF THIS DAMAGES PROVISION AT THE TIME
THIS AGREEMENT WAS MADE.
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS: _________
BUYER'S OR AUTHORIZED
REPRESENTATIVE OF BUYER'S INITIALS: _________
9.2 IF SELLER FAILS TO COMPLY WITH ITS OBLIGATIONS
UNDER THIS AGREEMENT AND COMPLETE THE TRANSACTION CONTAINED IN
THIS AGREEMENT IN VIOLATION OF THE TERMS HEREOF, THE PARTIES
AGREE THAT, AT BUYER'S ELECTION: (A) SELLER SHALL REFUND TO
BUYER THE EARNEST MONEY DEPOSIT REQUIRED HEREUNDER, PLUS THE SUM
OF $1,000, AS LIQUIDATED AND AGREED-UPON DAMAGES, WHEREUPON THIS
AGREEMENT SHALL BE NULL AND VOID AND NEITHER SELLER NOR BUYER NOR
ANY OF THEIR RESPECTIVE REPRESENTATIVES SHALL HAVE ANY FURTHER
RIGHTS OR OBLIGATIONS HEREUNDER, OR (B) BUYER MAY SUE FOR
SPECIFIC PERFORMANCE. ANY DAMAGE AMOUNT TO BE PAID PURSUANT TO
THIS SECTION 9.2 IS PRESUMED TO BE THE AMOUNT OF DAMAGES
SUSTAINED BY A BREACH, AS IT WOULD BE IMPRACTICAL OR EXTREMELY
DIFFICULT TO FIX THE ACTUAL AMOUNT OF DAMAGES. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, IN NO EVENT SHALL SELLER OR THE
PROTECTED GROUP HAVE ANY PERSONAL LIABILITY UNDER THIS AGREEMENT
WHATSOEVER AND BUYER SHALL UNDER NO CIRCUMSTANCES INITIATE ANY
<PAGE>
ACTION IN COURT OR BY ARBITRATION AGAINST THE PROTECTED GROUP
(OTHER THAN SELLER). IN PLACING THEIR INITIALS AT THE PLACES
PROVIDED, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE
STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS
DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS MADE.
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS: _________
BUYER'S OR AUTHORIZED
REPRESENTATIVE OF BUYER'S INITIALS: _________
9.3 Termination. Notwithstanding anything contained
herein, this Agreement may be terminated as follows:
(a) By Seller, if any reductions or adjustments
to the Purchase Price result in the Purchase Price
being reduced to an amount which is less than the
purchase price that would be produced by the final bid
submitted by the Spanos Defendants, as such term is
defined in the Stipulation of Settlement with Spanos
Defendants pertaining to the Litigation;
(b) By Seller or Buyer in accordance with any
rights of termination expressly conferred under the
terms of this Agreement; and
(c) By Seller or Buyer if a court of competent
jurisdiction or arbitrator issues a binding and final
order permanently preventing the sale of the Property
to Buyer.
In the event this Agreement is terminated pursuant to
any of the foregoing provisions, this Agreement shall thereupon
become null and void and neither Seller nor Buyer nor any of
their respective representatives shall have any further rights or
obligations hereunder; provided, however, that the
Confidentiality Agreement (as defined herein) shall remain in
full force and effect and the Earnest Money shall be refunded to
Buyer if Buyer is not in breach of this Agreement.
10. Arbitration.
10.1 Arbitration of Disputes. The parties agree that
any controversy or claim arising out of or related to this
Agreement, whether claimed under the law of tort or the law of
contract or any other laws, shall be submitted to the American
Arbitration Association (the "Association") (or any successor
<PAGE>
organization) for arbitration and settlement. All arbitration
shall be finally determined in New York City and shall be
governed in accordance with the Rules for Commercial Arbitration
of the Association (or any successor thereto), and the judgment
or the award rendered may be entered in any court having
jurisdiction, provided that the judgment or award is based upon
the proper interpretation and application of New York law. Each
party shall pay 50% of the fees and expenses of the Association.
The Closing Date shall be adjourned pending resolution of the
matter in dispute. Upon resolution of such dispute, the parties
shall take whatever action is required to be taken pursuant to
this Agreement or the final determination of an arbitrator.
10.2 Limitation on Discovery. In a mutual effort to
expedite the arbitration and limit the cost of dispute
resolutions, the parties agree that there shall be no discovery,
including no depositions, interrogatories, requests for
admissions, demands for production or inspection of records,
plans, reports, or documents of any kind, except that if a party
intends to call its own expert witness or adduce expert
testimony, then that party must notify the other party of the
name, address and all educational background of that witness and
provide a complete (complete means no subsequent data, references
or opinions may be added, referred to or testified to) report
describing all of such expert's investigations, findings and
conclusions not later than sixty (60) days before arbitration.
Each party shall, on written demand, make its expert available
for deposition not later than twenty (20) days before the
arbitration hearing. Failure to make the expert available for
deposition shall permanently preclude the arbitrator(s) from
considering the expert's testimony. The deposition may not be
admitted or used as a substitute for the live testimony of the
expert at the hearing under any circumstances. The arbitrator(s)
shall not have the power to subpoena any documents, records,
reports or writings of either party.
11. Conduct of Business. During the period from the date
hereof to the Closing Date, except (a) as Buyer shall otherwise
agree, (b) as necessary in connection with the transactions
contemplated herein, or (c) as otherwise permitted under Article
4 hereof, Seller shall operate the Property in the ordinary and
usual course, consistent with past practice.
12. Reasonable Efforts; Public Announcements. Each party
hereto will use all reasonable efforts to perform all acts
required to consummate the transactions contemplated hereby as
promptly as practicable. Such acts shall include, without
limitation, the provision of any information to and submission of
any filing with any governmental entity having jurisdiction. The
<PAGE>
foregoing notwithstanding, except as may be required to comply
with the requirements of any applicable laws or of the court with
respect to the Litigation and the rules and regulations of each
stock exchange upon which the securities of one of the parties is
listed (including, but not limited to, the filing of a form 8-K
by Seller) and except communications by Seller to holders of
limited partnership interests in Seller (copies of which will be
made available to employees of the general partners of Seller or
their affiliates), no press release or similar public
announcement or communication shall, if prior to the Closing, be
made or caused to be made concerning the execution or performance
of this Agreement, unless the parties shall have consulted in
advance with respect thereto. Buyer shall keep such information
confidential, subject to the terms and conditions of the
Confidentiality Agreement dated October 30, 1998, by and between
the parties (the "Confidentiality Agreement").
13. General Provisions.
13.1 Time. Time shall be of the essence of this
Agreement. If any expiration or deadline date falls on a
Saturday, Sunday or legal holiday, it shall be extended to the
next following business day.
13.2 Effect of Waiver of Provision or Remedy. No
waiver by a party of any provision of this Agreement shall be
considered a waiver of any other provision or any subsequent
breach of the same or any other provision, including the time for
performance of any such provision. The exercise by a party of
any remedy provided in this Agreement or at law shall not prevent
the exercise by that party of any other remedy provided in this
Agreement or at law.
13.3 Integrated Entire Agreement. This Agreement and
the attached exhibits, along with the Confidentiality Agreement
and the Escrow Agreement, constitute the entire agreement between
the parties relating to the sale of the Property. Any prior
agreements, promises, negotiations, or representations not
expressly set forth in this Agreement in writing are of no force
and effect and may not be relied upon for any purpose whatsoever
by any party to this Agreement. Any amendment to this Agreement
shall be of no force and effect unless it is in writing and
signed by Buyer and Seller. Any statements or representations
made by any person, whether or not a party to the Agreement or
not an employee or other representative of Seller or Buyer, shall
not be relied upon by either Seller or Buyer and shall not be of
any force and effect for any purpose whatsoever.
13.4 No Representation Regarding Legal Effect of
<PAGE>
Document. No representation, warranty, or recommendation is made
by Seller or the Protected Group, or their brokers, respective
agents, employees, or attorneys regarding the legal sufficiency,
legal effect, or tax consequences of this Agreement or the
transaction, and each signatory has had the opportunity to submit
this Agreement to its qualified legal and/or financial advisor
before signing it.
13.5 Counterparts. This Agreement and all amendments
and supplements to it may be executed in any number of
counterparts, at different places and times, all of which taken
together shall constitute one and the same instrument, which
shall be deemed dated as of the day and year first above written.
Buyer and Seller shall each receive one duplicate original.
13.6 Binding on Successors. This Agreement inures to
the benefit of, and is binding on, the parties and, without
affecting the limitations of paragraph 9, their respective heirs,
personal representatives, successors, and assigns.
13.7 Interpretation. Titles and headings of sections
of this Agreement are for convenience of reference only and shall
not affect the construction of any provision of this Agreement.
All recitals set forth at the beginning of this Agreement are, by
this reference, fully incorporated into this Agreement. All
exhibits referred to in this Agreement are deemed fully
incorporated herein, whether or not actually attached. As used
herein: (a) the singular shall include the plural (and vice
versa) and the masculine or neuter gender shall include the
feminine gender (and vice versa) as the context may require,
(b) locative adverbs such as "herein," "hereto" and "hereunder"
shall refer to this Agreement in its entirety and not to any
specific section or paragraph, and (c) the terms "include,"
"including" and similar terms shall be construed as though
followed immediately by the phrase "but not limited to." All
parties have jointly participated in the negotiation and drafting
of this Agreement, upon advice of their own independent counsel
or have had an opportunity to do so, and this Agreement shall be
construed fairly and equally as to all parties as if drafted
jointly by them. Except as otherwise expressly set forth herein,
none of the certifications, representations, warranties,
covenants and indemnifications contained in this Agreement or in
Seller's certification of any rent roll shall survive the Closing
Date.
13.8 Acknowledgments. Every fact acknowledged in this
Agreement is agreed to be a recital and to be conclusively and
irrefutably true. Buyer's acknowledgments made as of the date of
the execution of this Agreement are agreed, reaffirmed and
<PAGE>
binding by virtue of Buyer's election to close this transaction.
13.9 Notices. All elections, notices and demands
required or permitted hereunder shall be given in writing and
shall be delivered either by: personal service or a national
overnight delivery service such as Federal Express. Facsimile
transmission is acceptable; provided, however, that such
transmission shall be followed by next day delivery via one of
the foregoing means of delivery. Notices shall be addressed or
transmitted as appears below for each party, provided that if any
party gives notice of a change of name or address, notices to the
giver of that notice shall thereafter be given as set forth in
that notice. Notice shall be deemed delivered and effective upon
actual receipt at the following addresses or such other addresses
as the parties may notify each other by similar notice:
If to Seller, to:
Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street 28th Floor
New York, NY 10292-0116
Attn: Brian J. Martin
With a copy to:
Skadden, Arps, Slate, Meagher & Flom, LLP
919 Third Avenue
New York, NY 10022
Attn: Jay Sobel
Facsimile No.: (212) 735-2000
If to Buyer, to:
SGD Investments, Inc.
6336 Pershing Drive
Omaha, NE 68110
Attn: Jerry Banks
Facsimile No.: (402) 457-8579
With a copy to:
McGill, Gotsdiner, Workman & Lepp, P.C.
11404 West Dodge Road, Suite 500
Omaha, NE 68154-2576
Attn: Gary M. Gotsdiner
Facsimile No.: (402) 492-9222
13.10 Punitive Damages. Each party waives any
<PAGE>
claims it may now have or may in the future have arising out of
this transaction for exemplary, punitive and/or penalty damages.
13.11 Insurance. Buyer shall be responsible for
obtaining casualty and liability insurance on the Property as of
the Closing Date.
13.12 Assignment. Buyer may not assign this
Agreement without Seller's prior written consent except that
Buyer may assign this Agreement to an entity under common control
with Buyer, provided that Buyer provides Seller with a copy of
such assignment and any additional information with respect to
such assignee reasonably requested by Seller not less than ten
(10) days prior to the Closing Date. The valid assignment of
this Agreement shall not relieve Buyer of liability under this
Agreement.
13.13 Time Limitation of Actions. Save and except
for Buyer's obligations to indemnify or hold Seller harmless, no
action or claim or demand for arbitration with respect to a
provision hereof which expressly survives the Closing hereunder
shall be brought by either party after the expiration of six (6)
months from the Closing Date. The purpose of this clause
reflects the desire of both Seller and Buyer to compel the
settlement of all surviving claims between them as soon as
possible.
13.14 Severability. In the event that any
provision of this Agreement, including the arbitration
provisions, is determined to be unlawful then that provision
shall be deemed stricken and the balance of the Agreement shall
be enforceable. If the stricken provision relates to the
arbitration procedure, then the stricken provision shall be
replaced by such provision as is statutorily required.
13.15 Attorneys' Fees, Costs and Prejudgment
Interest. Each party waives any right to claim attorneys' fees,
costs or prejudgment interest in connection with any dispute or
award concerning this transaction, except as expressly provided
for herein.
13.16 Governing Law. This Agreement and the legal
relations between the parties shall be governed by and construed
in accordance with the substantive laws of the State of New York.
13.17 Further Assurances. Each of the parties
hereto shall, at the request of the other party, execute,
acknowledge and deliver any further instruments, and take such
further actions, as the requesting party may reasonably request,
<PAGE>
to carry out effectively the intent of this Agreement.
13.18 No Assumption of Liability. Buyer shall not
assume, agree to pay or otherwise become liable for any
liability, damage, obligation or expense of Seller relating to or
arising out of the Litigation or Seller's ownership or operation
of the Property, except only (i) the Mortgage Loans, if Buyer
elects to assume such liability under Article 1 hereof,
(ii) obligations from and after Closing arising under assigned
Service Contracts and occupancy leases, (iii) prorations pursuant
to Section 3.5, and (iv) as may be expressly provided in this
Agreement or any of the documents required to be delivered by
Buyer hereunder at the Closing.
13.19 THIS AGREEMENT SHALL NOT BE BINDING AND
EFFECTIVE UNTIL EXECUTED BY BOTH BUYER AND SELLER.
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the
parties on the date first above written.
BUYER:
SGD Investments, Inc.
By: /s/ Donald D. Bienhoff
---------------------------
SELLER(S):
PRUDENTIAL-BACHE/A.G. SPANOS
REALTY PARTNERS L.P., I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Brian J. Martin
--------------------------
By: A.G. Spanos Realty Partners, L.P., a
California limited partnership,
General Partner
By: AGS Financial Corporation,
General Partner
By: /s/ Arthur J. Cole
--------------------------
By: A.G. Spanos Realty Capital, Inc.,
General Partner
By: /s/ Arthur J. Cole
--------------------------
<PAGE>
Schedule 1
PROPERTY NAMES AND LOCATIONS/SELLERS
PROPERTY NAME AND LOCATION SELLER(S)
Silver Springs, Tempe, AZ Prudential-Bache/A.G. Spanos
Realty Partners L.P., I
<PAGE>
Schedule 2
PURCHASE PRICE AND EARNEST MONEY
ALLOCATIONS/TAX ALLOCATIONS
A. The following sets forth the Purchase Price and the Earnest Money
for the Property:
Silver Springs, Tempe, AZ
$9,635,000, less an
amount equal to
Prepayment Fees, if
any, paid or absorbed
by Buyer relating to
the Mortgage
$963,500
B. The following sets forth the portion of the Purchase Price allocated
to Personalty for the Property:
Silver Springs, Tempe, AZ
$148,500
<PAGE>
Schedule 3
PROPERTY MANAGEMENT CONTRACTS
Silver Springs, Tempe, AZ
November 18, 1988
Realty
AGREEMENT
FOR PURCHASE AND SALE
OF REAL PROPERTY
THIS AGREEMENT is entered as of the day of March,
1999, by and between the seller or sellers identified on Schedule
1 attached hereto (herein collectively called "Seller"), and
WXI/SPN Real Estate Limited Partnership, a Delaware limited
partnership (herein called "Buyer").
R E C I T A L S
A. Seller owns one or more certain parcels of land
(collectively, the "Real Property") each located in the City and
State set forth on Schedule 1, attached hereto, as each such Real
Property is more particularly described on Exhibit A, attached
hereto, together with all of the improvements (the
"Improvements") and any fixtures (the "Fixtures") presently
existing and located thereon and therein, and any personalty used
exclusively in connection with the management and operation of
the foregoing, including but not limited to the office equipment,
maintenance equipment and supplies with respect to each Real
Property described on Exhibit B attached hereto (the
"Personalty") (hereinafter said Real Property, Improvements,
Fixtures and Personalty are collectively called the "Property").
B. Buyer has participated in an auction (the
"Auction") to purchase said Property and Buyer, being the
selected bidder, has agreed to purchase such Property on the
terms and conditions set forth herein.
C. Pursuant to the terms and conditions of said
Auction and in connection with being selected as the successful
bidder thereat, Buyer has agreed to execute this Agreement.
D. The parties have agreed to the purchase and sale
of the Property as set forth below.
NOW, THEREFORE, in consideration of the foregoing, the
mutual covenants and agreement contained herein, and other good
and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Seller and Buyer hereby mutually
agree that this transaction shall be consummated upon the
following terms, conditions and agreements:
1. PURCHASE PRICE. The aggregate purchase price for
the Property is Forty Six Million Nine Hundred Three Thousand
<PAGE>
Nine Hundred Twenty One and 00/100 Dollars ($46,903,921.00) (the
"Purchase Price"). Buyer acknowledges and agrees that the
Purchase Price shall be in all respects net of any and all
prepayment fees, premiums, penalties or similar charges,
expenses, costs and sums (other than outstanding principal and
accrued and unpaid interest) required to be paid to the holder of
any loan (each a "Loan") secured by a mortgage and related
security agreements, liens and financing statements encumbering a
Property, as more particularly referenced on Exhibit C attached
hereto (each, collectively, a "Mortgage"), pursuant to the
related loan documents in order to fully satisfy such Mortgage
(collectively, the "Prepayment Fees"), all as set forth on a
payoff demand submitted by the holder of such Mortgage and
approved by the Seller. The Buyer shall pay the Prepayment Fees
at Closing in accordance with Section 1.2 below, provided,
however, that if the Prepayment Fees for a Property are greater
than the amount specified on Schedule 2 attached hereto, the
Purchase Price for such Property shall be reduced by an amount
equal to the excess of the actual Prepayment Fee for such
Property over the amount specified for such Property on Schedule
2. The portion of the Purchase Price which is allocated to each
Property (each, an "Allocated Purchase Price") is set forth on
Schedule 3, attached hereto. Subject to the prorations and
adjustments hereinafter defined, Seller and the Buyer mutually
agree that the Allocated Purchase Price for each Property shall
be further allocated among Personalty and the remaining Property
in accordance with the allocation set forth on Schedule 3
(collectively, the "Tax Allocations"), which Tax Allocations have
been made in accordance with Section 1060 of the Internal Revenue
Code of 1986 (as amended) and the Treasury Regulations
promulgated thereunder (the Allocated Purchase Prices and the Tax
Allocations hereinafter called, the "Allocations"). Each of the
Seller and Buyer shall: (i) be bound by the Allocations for
purposes of determining any taxes; (ii) prepare and file any tax
returns on a basis consistent with the Allocations; (iii) take no
position inconsistent with the Allocations on any applicable tax
return, in any proceeding before any taxing authority or
otherwise; and (iv) be bound by the Allocations in all other
public filings and reports, including but not limited to any
transfer tax declarations. In the event that the mutually agreed
upon Allocations are disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other
party hereto of the dispute. Notwithstanding the foregoing,
nothing herein shall impair Buyer's right to initiate proceedings
after the Closing in which the value of a Property is contested
by Buyer for real estate tax purposes (including ad valorem and
similar state and local taxes imposed based on the assessed value
of real property) in accordance with applicable law.
<PAGE>
The Purchase Price shall be payable by Buyer to Seller
as follows:
1.1. EARNEST MONEY. In connection with the Auction,
Buyer has delivered to the Title Insurer (as hereinafter
defined), acting as escrow agent (the "Escrow Agent") the sum of
Two Million Three Hundred Forty Five Thousand and 00/100 Dollars
($2,345,000.00) (such sum, together with any interest earned
thereon, the "Earnest Money"). From and after the date the
Earnest Money is delivered by Buyer, the Escrow Agent shall hold
the Earnest Money in accordance with the Escrow Agreement
attached hereto as Exhibit D (the "Escrow Agreement") in an
interest-bearing account for the benefit of Buyer pending
disposition as hereinafter set forth. The amount of Earnest
Money allocated to each Property is set forth on Schedule 3
attached hereto (the "Allocated Earnest Money").
1.2. PREPAYMENT FEES. The Prepayment Fees shall be
deposited with Escrow Agent on or before the Closing Date (as
hereinafter defined), by wire transfer of immediately available
funds to Escrow Agent's account pursuant to Escrow Agent's
instructions. The Prepayment Fees and the applicable portions of
the Purchase Price shall be applied by Escrow Agent at Closing
(as hereinafter defined) to pay off the Loans.
1.3. BALANCE OF PURCHASE PRICE. The balance of the
Purchase Price shall be deposited with Escrow Agent on or before
the Closing Date (as hereinafter defined), by wire transfer of
immediately available funds to Escrow Agent's account pursuant to
Escrow Agent's instructions.
2. INSPECTION, REMEDIES AND CONTINGENCIES.
2.1. BUYER INSPECTION. Buyer acknowledges and
represents that as of the date of execution of this Agreement,
Buyer has had the opportunity to review any engineering reports
made available to potential bidders at the Auction during a due
diligence period prior to the Auction, and has been given the
opportunity to make a full and complete inspection of the
Property, at Buyer's expense, including, but not limited to,
inspection by construction experts, engineers and architects
acceptable to Buyer, examining both obvious and latent conditions
of the Property. Accordingly, except for the representations,
warranties, covenants and agreements in this Agreement or in any
of the documents (the "Closing Documents") executed and delivered
by Seller to Buyer in connection with the Closing (as hereinafter
defined), Buyer will have made its investment decision to enter
into this Agreement based exclusively upon its own investigations
or inspections with respect to the Property and has not relied,
<PAGE>
and will not have relied upon any express or implied, written or
oral, representation of Seller or Seller's general partners
(collectively, the "Selling Entity") or any of the Selling
Entity's employees, agents, representatives, broker and
attorneys, counsel for the respective plaintiffs in the
litigation captioned In re: Prudential Securities Incorporated
Limited Partnerships Litigation ("Litigation") in the United
States District Court in the Southern District of New York, MDL
Docket No. 1005, M-21-67 (MP), or any affiliates of any of them,
hereinafter designated collectively as the "Protected Group", in
entering into this Agreement. Buyer acknowledges that Seller has
cooperated with Buyer in all requests for inspection or testing,
and Seller agrees to cooperate with Buyer's reasonable requests
for additional inspections and testing (to be conducted at
Buyer's sole cost and expense) prior to the Closing Date
(hereinafter defined), provided, however, that in no event shall
facts or information which may be discovered by Buyer in so
conducting any inspections or testing, (i) be the basis of any
claim by Buyer against Seller, or any right of Buyer to terminate
this Agreement or to request an adjustment to the Purchase Price
or a cure by Seller of any condition or matter discovered by any
such additional testing or inspection unless such inspections or
tests reveal breaches of representations, warranties, covenants
or agreements of Seller herein, in which case Buyer's remedies
shall be as provided herein or (ii) otherwise affect or excuse
any of Buyer's covenants, agreements and obligations under this
Agreement unless such inspections or tests reveal breaches of
representations, warranties, covenants or agreements of Seller
herein, in which case Buyer's remedies shall be as provided
herein. Buyer agrees to promptly repair and restore the
Properties to the condition existing prior to any inspection or
testing at the sole cost of Buyer and to Seller's reasonable
satisfaction. Buyer also agrees not to interfere with any
tenants at the Properties during any inspections or testing.
2.2. ENVIRONMENTAL ASSESSMENT. Buyer acknowledges and
represents that as of the date of execution of this Agreement
Buyer has had the opportunity to review any Phase I and Phase II
environmental reports made available to potential bidders at the
Auction during a due diligence period prior to the Auction, and,
at its expense, to conduct an environmental assessment of the
Property including but not limited to hazardous substances or
waste such as asbestos, chemicals, sewage (raw or treated),
pesticides, petroleum, including crude oil or any fraction
thereof, and any substance identified in any Federal, State, or
other governmental legislation or ordinance. Buyer agrees to
accept all risks to the Property and costs of cure arising out of
the existence of any hazardous substance or waste.
<PAGE>
2.3. BUYER'S REMEDY. Except as may be otherwise
expressly provided in this Agreement or in the Closing Documents,
Buyer acknowledges that Seller has made no representations or
warranties whatsoever regarding the accuracy or completeness of
the reports referenced in this Section 2. Except as may be
otherwise expressly provided in this Agreement or in the Closing
Documents, Buyer agrees that Buyer has no legal or equitable
remedy or recourse against Seller and the Protected Group, with
respect to any inaccuracies or errors contained in any such
report or arising out of any Property defect, or other adverse
condition of the Property, whether known or unknown to or
concealed or unconcealed by them or any of them.
2.4. ASSUMPTION OF LIABILITIES. Except as expressly
provided in this Agreement or in any Closing Documents, Buyer is
not assuming any of the debts, liabilities, taxes or obligations
of, or claims against, Seller of any kind or character, whether
direct or contingent and whether known or unknown. The only
transactions contemplated by this Agreement are the sale and
purchase of the Property.
3. CLOSING.
3.1. CLOSING. This transaction shall be closed (the
"Closing") at the offices of Skadden, Arps, Slate, Meagher &
Flom, LLP 919 Third Avenue, New York, New York 10022 at such time
or other place in New York, New York as the parties shall agree
as soon as is practicable after the full execution of this
Agreement but not later than forty-five (45) days therefrom or
such later date on or before June 1, 1999 as may be required by
Seller in order to prepay the Loans in accordance with the
prepayment provisions of the Mortgages and related promissory
notes (the "Closing Deadline"). The date on which the Closing
occurs is herein called the "Closing Date". The Closing for all
of the Properties shall occur simultaneously unless otherwise
provided hereunder.
3.2. SELLER'S CLOSING DELIVERABLES. At or prior to
Closing, Seller shall deliver or cause to be delivered to Escrow
Agent, the following items for delivery or recordation upon close
of escrow with respect to each Property:
(a) Quitclaim deed (the "Deed") duly executed and
acknowledged by Seller, conveying fee simple title to the
Real Property, the Improvements and the Fixtures to Buyer,
or if a quitclaim deed is not a valid means of conveyance in
a particular jurisdiction, a deed without covenants or, if
the use of such forms of deeds results in the Title Insurer
raising an exception that would not be customarily
<PAGE>
acceptable to an institutional investor, a form of deed
subject to the Permitted Exceptions that would be insurable
by the Title Insurer without such exception;
(b) bill of sale (the "Bill of Sale") duly executed by
Seller, transferring to Buyer all of the Seller's right,
title and interest in and to the Personalty;
(c) assignment of all occupancy leases, licenses and
other occupancy agreements then in effect, if applicable,
pertaining to the Property (the "Leases"), duly executed and
acknowledged by Seller, in a form reasonably acceptable to
Buyer and Seller, assigning to Buyer the Seller's interest
therein, with Buyer expressly assuming all obligations as
landlord under such leases arising from and after the
Closing Date and with Seller responsible for such
obligations for the period prior to the Closing Date;
(d) non-recourse assignment, to the extent assignable,
of Seller's rights under the service or maintenance
contracts described on Schedule 4 ("Service Contracts")
pertaining to the Property;
(e) non-recourse assignment, to the extent possible,
of any licenses, permits, trade names and unexpired
warranties, if any, pertaining to the Property;
(f) certificates and resolutions demonstrating the
authority of the persons executing the documents at the
Closing;
(g) a rent roll, certified as accurate by the Seller,
which shall be current as of two business days prior to the
Closing and which shall also state the amounts of all tenant
security deposits (and any interest thereon required to be
held under the Leases, if any) in the possession of Seller
or required to be held by Seller (collectively, the
"Security Deposits") and shall set forth all past due and
uncollected rent and additional rent owed by tenants and all
prepayments of rent;
(h) originals of all written occupancy leases and
Service Contracts, if applicable and to the extent
available, for the Property, and if originals are not
available, copies thereof. All such leases and Service
Contracts shall be deemed delivered if they are on premises
at the Property as of the Closing Date;
(i) a certificate duly executed by Seller certifying
<PAGE>
that all of the representations and warranties set forth in
Section 7.3 are true and correct in all material respects on
the Closing Date as if made at and as of Closing Date or the
extent to which any of such representations or warranties
are no longer true and correct ("Seller's Representation
Certificate"), which shall survive Closing for ninety (90)
days;
(j) a certification as to the Seller's non-foreign
status which complies with the provisions of Section
1445(b)(2) of the Internal Revenue Code of 1986, as amended,
any regulations promulgated thereunder, and any revenue
procedures or other officially published announcements of
the Internal Revenue Service or the U.S. Department of the
Treasury in connection therewith, duly executed by Seller;
(k) general ledgers with respect to the calendar years
ending December 31, 1997 and December 31, 1998;
(l) documents, affidavits and undertakings (including
a "Gap Undertaking" in the form set forth on Exhibit G
hereto) reasonably requested by the Title Insurer to issue,
effective as of the Closing Date, the policies of title
insurance contemplated by this Agreement without any
exception for matters (other than Permitted Exceptions)
arising after the Closing Date and prior to the date the
deeds of conveyance are recorded;
(m) a notice to tenants for each Property informing
such tenants as to the sale of such Property, signed by the
current manager of such Property or if required by Buyer,
jointly by such manager and Seller, in form reasonably
acceptable to Buyer and Seller; and
(n) such other documents as may be specifically
required by this Agreement or as may reasonably be required
by Buyer or the Title Insurer to carry out the terms and
intent of this Agreement.
On the Closing Date, and continuing for thirty (30)
days after the Closing, Seller shall make available for
photocopying by Buyer at Buyer's expense, during business hours
and subject to reasonable prior notice from Buyer, any existing
books, records, (including bookkeeping and accounting records)
and currently effective agreements which are located at the
regional offices of Seller's property manager and relate to the
Property. For each Property, at Closing Seller shall provide all
rent roll information in an ASCII format and shall transfer all
applicable data files and cooperate to facilitate an orderly
<PAGE>
transfer of computer files pertaining to each Property.
3.3. BUYER'S CLOSING DELIVERABLES At or prior to
Closing, Buyer shall deliver or cause to be delivered to Escrow
Agent, the following items for delivery or recordation upon close
of escrow:
(a) assumption of the Leases and Service Contracts
with respect to each Property to the extent of the
obligations arising on and after the Closing Date in form
reasonably acceptable to Buyer and Seller;
(b) certificates and resolutions demonstrating the
authority of the persons executing the documents at the
Closing;
(c) the Prepayment Fees by wire transfer;
(d) balance of the Purchase Price by wire transfer;
and
(e) such other documents as may be specifically
required by this Agreement or as may reasonably be required
by Seller or the Title Insurer to carry out the terms and
intent of this Agreement.
3.4. CONTRACTS NOT BEING ASSIGNED. Seller shall not
assign to Buyer and shall cancel as of the close of escrow:
(a) the property management contract for each Property
set forth on Schedule 5, attached hereto; and
(b) any insurance policies, including but not limited
to hazard insurance policies, then in force affecting any
Property.
Buyer acknowledges that the management contracts shall
terminate automatically on the Closing Date in accordance with
that certain side letter agreement dated October 13, 1998, a copy
of which is attached hereto as Exhibit E and agrees that Seller
has no obligation to deliver any further termination agreement or
notice at Closing (but the foregoing acknowledgment and agreement
shall not relieve Seller of its obligation under this Section 3.4
to terminate all property management agreements as of the Closing
Date, at no cost or expense to Buyer, if such agreements are not
terminable or have not been effectively terminated in accordance
with such letter).
3.5. PRORATIONS. The following shall be apportioned on
<PAGE>
a per diem basis as of 12:01 a.m. of the Closing Date
("Adjustment Date") and adjusted between the parties on the basis
of the number of days in the month of the Closing with respect to
each Property for items that are payable on a monthly basis and,
for items that are not paid on a monthly basis, such items shall
be adjusted on the basis of the number of days applicable to such
period, with Seller receiving a credit for all amounts prepaid by
Seller for any period from and after the Closing Date and Seller
charged with any unpaid charges for the period prior to the
Closing Date:
(a) Real estate and other taxes, assessments and
charges, and other municipal and State charges, license and
permit fees, water and sewer rents and charges, if any, on
the basis of the fiscal period for which assessed or
charged;
(b) Water, electric, gas, steam and other utility
charges for service furnished to the Property;
(c) Fuel, if any, and all taxes thereon, on the basis
of a reading taken as close as possible to the Adjustment
Date;
(d) Base rents and any other rental payments (the
"Rents") paid under the terms of the Leases for the month of
Closing or thereafter;
(e) Any amounts paid or payable under any Service
Contracts being assigned to Buyer;
(f) All costs associated with telephone directory
listings and any other prepaid advertising;
(g) Any other customary adjustments made in connection
with the sale of similar type buildings.
There will be no proration of insurance costs at
Closing. Except as may be otherwise provided herein, all other
expenses and liabilities which are attributable to the period
prior to the Closing Date shall be the obligation of Seller and
those which are attributable to the period from and after the
Closing Date shall be the obligation of Buyer. To the extent
there are items of prepaid income, Buyer shall receive a credit
attributable to the period from and after the Closing Date.
3.6. APPORTIONMENT FORMULA. For purposes of the
foregoing apportionments and adjustments, the following
procedures shall govern with respect to each Property:
<PAGE>
(a) Any apportionment of income and expense items
shall be apportioned to the Seller based upon the formula
(the "Apportionment Formula") wherein the numerator is the
number of days in such month that the Property was owned by
the Seller and the denominator is the total number of days
in that month for items that are payable on a monthly basis
and, for items that are not paid on a monthly basis, such
items shall be adjusted on the basis of the number of days
applicable to such period, with Seller receiving a credit
for all amounts prepaid by Seller for any period from and
after the Closing Date and Seller charged with any unpaid
charges for the period prior to the Closing Date. To the
extent there are items of prepaid income, Buyer shall
receive a credit attributable to the period from and after
the Closing Date. In addition, if there were "front-end
fees" paid to Seller under a Service Contract, the amount of
such fee shall be amortized over the term of such Service
Contract and the portion applicable to the period from and
after the Closing Date shall be a credit to Buyer.
(b) If the Closing Date shall occur before the real
estate tax rate is fixed, the apportionment of such taxes
shall be made using the real estate taxes for the
immediately preceding year, with a reapportionment in the
event the new tax rate and valuation can be ascertained
during the Adjustment Period (as hereinafter defined).
(c) If there are water meters on the Property, Seller
shall furnish meter readings to a date not more than thirty
days prior to the Adjustment Date; and the unfixed meter
charges for the intervening time to the Adjustment Date
shall be apportioned based upon estimates using such prior
meter readings, unless final readings therefor as of the
Closing shall have been obtained, in which case such final
readings shall be used for the apportionment. As soon as
the expenses for the period shall be known, Seller and Buyer
shall recalculate the adjustment with the result that Seller
shall pay for those expenses attributable to the period
prior to the Closing Date and Buyer shall pay for those
expenses attributable to the period commencing with the
Closing Date.
(d) The apportionment of utility charges shall be made
upon the basis of charges shown on the latest available
bills for such utilities, unless final meter readings
therefor as of the Closing shall have been obtained, in
which case such final readings shall be used for the
apportionment. The charges shown on such available bills
<PAGE>
for periods prior to the Adjustment Date shall be paid by
Seller, and for the period from the date of each such last
available utility bill to the Adjustment Date an
apportionment shall be made based upon estimates using such
last available bill. As soon as the expenses for the period
shall be known, Seller and Buyer shall recalculate the
adjustment with the result that Seller shall pay for those
expenses attributable to the period prior to the Closing
Date and Buyer shall pay for those expenses attributable to
the period commencing with the Closing Date.
(e) All taxes, water and sewer charges and assessments
for public improvements which are liens upon a Property as
of the Closing Date, will be allowed to Buyer as a credit
against the Allocated Purchase Price for such Property,
subject to apportionment as herein provided, and the
existence of any such lien shall not constitute an objection
to title.
(f) If Buyer collects any non-delinquent Rents after
the Closing which are applicable to the month in which the
Closing occurs, the Seller's pro rata share of such Rents
shall be paid to the Seller promptly upon receipt.
(g) If any tenant is delinquent in the payment of
Rents on the Closing Date, Rents received from such tenant
after the Closing Date shall be applied in the following
order of priority: (a) first to current rentals and any
other amounts currently owed to Buyer; and (b) then to
delinquent rentals with respect to the period before
Closing. If Rents or any portion thereof received by Seller
or Buyer after the Closing Date are payable to the other
party by reason of this allocation, the appropriate sum
shall be promptly paid to the other party
(h) All Security Deposits (required to be held by
Seller under the Leases which have not been applied by
Seller in accordance with the terms of the Leases) shall be
transferred and delivered to Buyer on the Closing Date or,
at Seller's option, credited against the Purchase Price.
Buyer and Seller agree that the provisions of Sections
3.5 and 3.6 shall survive the Closing for a period of ninety (90)
days after the Closing Date ("Adjustment Period"), during which
period Buyer and Seller shall agree on a reconciliation of the
prorations described herein. If the parties cannot agree on a
reconciliation within such ninety (90) day period then such
matter shall be submitted to arbitration in accordance with the
terms of Section 10 below.
<PAGE>
3.7. COSTS. The fees of the Escrow Agent, transfer
taxes, recording fees, standard title insurance premiums for
owner's title policies and all other closing and recording costs
shall be borne equally by Seller and Buyer. Each party shall pay
its own professional fees including but not limited to attorneys'
and accountants' fees, and Buyer shall pay for (i) the cost of
any endorsements or affirmative coverage in connection with the
issuance of title policies, and (ii) any further updates or
modifications to the Surveys requested by Buyer or Buyer's
lender.
3.8. CONDITIONS TO SELLER'S AND BUYER'S OBLIGATION TO
CLOSE. The obligations of Seller and Buyer to close under this
Agreement as to a particular Property are subject to the
fulfillment, prior to or at Closing, of the following:
that there shall not be in effect any statute, regulation,
order, decree or judgment of any governmental entity having
jurisdiction which renders illegal or enjoins or prevents
the sale of such Property to Buyer.
In no event shall the failure of this condition as to a
particular Property be a condition to Buyer's or Seller's
obligations hereunder with respect to another Property.
3.9. CONDITIONS TO SELLER'S OBLIGATION TO CLOSE. The
obligations of Seller to close under this Agreement are subject
to the fulfillment, prior to or at Closing, of each of the
following (all or either of which may be waived in writing by
Seller):
(a) The representations and warranties of Buyer herein
as set forth in Section 7.4 shall have been true and correct
in all material respects when made and shall be true and
correct in all material respects as of the Closing Date, as
if made at and as of such date except as otherwise expressly
provided herein.
(b) On and as of the Closing Date, Buyer shall have
performed and complied with, in all material respects, all
agreements and covenants required by this Agreement to be
performed or complied with prior to or on the Closing Date.
3.10. CONDITIONS TO BUYER'S OBLIGATION TO CLOSE.
The obligations of Buyer to close under this Agreement are
subject to the fulfillment, prior to or at Closing, of the
following (all or any of which may be waived in writing by
Buyer):
<PAGE>
(a) The representations and warranties of Seller, as
set forth in Section 7.3 herein, shall have been true and
correct in all material respects when made and shall be true
and correct in all material respects as of the Closing Date,
as if made at and as of such date except as otherwise
expressly provided herein.
(b) On and as of the Closing Date, Seller shall have
performed and complied with, in all material respects, all
agreements and covenants required by this Agreement to be
performed or complied with prior to or on the Closing Date.
(c) On the Closing Date, (i) the Title Insurer
(hereafter defined) shall be unconditionally obligated and
prepared, subject to the payment of the applicable title
insurance premium and other related charges, to issue to
Buyer an owner's title insurance policy for the Property in
compliance with the Title Commitments (hereafter defined),
free and clear of all mortgages (including all of the
Mortgages), liens, encumbrances, easements, leases,
conditions and other matters affecting title other than
matters created or granted by Buyer and the Permitted
Exceptions (hereafter defined), and (ii) the Seller shall
have delivered the Gap Undertaking to the Title Insurer.
(d) As of the Closing Date, Seller shall not have
commenced (within the meaning of any Bankruptcy Law) a
voluntary case, nor shall there have been commenced against
Seller an involuntary case, nor shall Seller have consented
to the appointment of a Custodian of it or for all or any
substantial part of its property, nor shall a court of
competent jurisdiction have entered an order or decree under
any Bankruptcy Law that is for relief against Seller in an
involuntary case or appointed a Custodian of Seller for all
or any substantial part of its property. The term
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
3.11. ESCROW FOR SURVIVING WARRANTIES AND
AGREEMENTS. On the Closing Date, the Seller shall deposit with
the Escrow Agent, pursuant to an escrow agreement in the form
attached hereto as Exhibit F executed by Buyer, Seller and the
Escrow Agent, an amount equal to Six Hundred Twelve Thousand Two
Hundred Thirty Seven and 00/100 Dollars ($612,237.00) (the "Post-Closing
Escrow") as security for the obligations of Seller
arising from a breach of a surviving representation, warranty,
<PAGE>
covenant or agreement of Seller under this Agreement. The Post-Closing
Escrow shall be reduced proportionally in the event that
a Closing does not occur hereunder with respect to a particular
Property based on the ratio that such Property bears to the
Purchase Price (prior to reduction as a result of the termination
of this Agreement as to such Property). The Buyer's right to
claim all or any portion of the Post-Closing Escrow shall
terminate ninety (90) days after the Closing, upon which
termination the balance of the Post-Closing Escrow (less any
amounts in dispute), if any, shall be returned to Seller.
4. POSSESSION AND RISK OF LOSS PRIOR TO CLOSING.
4.1. CASUALTY. In the event of physical damage to a
Property or destruction thereof due to a casualty (a "Casualty"),
affecting all or any part of a Property, without fault of Buyer,
prior to the Closing Date, Seller and Buyer agree as follows with
respect to such damage or destruction, specifically exclusive of
non-physical losses such as business losses incidental thereto:
(a) If, prior to the Closing Date, a Property is
damaged due to a Casualty and the cost of repairing such
damage, as is reasonably determined by an independent
engineer and appraiser selected by Seller (the "Repair
Cost") is less than One Million and 00/100 Dollars
($1,000,000.00), then Seller and Buyer shall proceed to
close the sale of all of the Property without any abatement
of the Purchase Price, provided however that Seller shall,
at Seller's election, either: (i) repair the Casualty to
such Property prior to Closing at Seller's expense or (ii)
assign to Buyer at Closing, without recourse or warranty of
any nature whatsoever, all of Seller's right, title and
interest in and to any casualty insurance policies covering
such Casualty with respect to the Property, and Seller shall
pay to Buyer the deductible plus any uninsured amounts plus
all payments theretofore made by such insurers as a result
of such loss after deducting therefrom the costs of
collection thereof (an "Assignment of Proceeds").
(b) If, prior to the Closing Date, any Property is
damaged due to a Casualty and the Repair Cost equals or
exceeds One Million and 00/100 Dollars ($1,000,000.00), then
Seller shall have the option to: (i) repair the Casualty to
such Property prior to Closing or (ii) terminate this
Agreement in its entirety, upon which termination, provided
that Buyer is not in default hereunder, Buyer's Earnest
Money shall be returned to Buyer. Notwithstanding anything
herein to the contrary, Seller shall have the right to
<PAGE>
adjourn the Closing Date as to such Property for such
reasonable period as shall be necessary to repair any such
Casualty, not to exceed one hundred eighty (180) days.
(c) If more than one Property is to be acquired
pursuant to this Agreement and the Repair Cost as to a
particular Property equals or exceeds One Million and 00/100
Dollars ($1,000,000.00) such damaged Property may, at
Seller's election, be removed from this Agreement and this
Agreement terminated as to such Property, upon written
notice from Seller to Buyer. In the event of such a
termination, provided that Buyer is not in default
hereunder, Buyer's Allocated Earnest Money as to such
Property shall be returned to Buyer at Closing. If Seller
elects to remove a Property from this Agreement and
terminate this Agreement as to such Property, or to
terminate this Agreement in its entirety due to a Casualty
as described in this Section 4.1, then Buyer shall have the
option, to be exercised by delivering written notice to
Seller of such election within ten days after Buyer's
receipt of written notice of Seller's election, to accept
all of the Property together with an Assignment of Proceeds
with respect to the affected Property.
4.2. CONDEMNATION. If, prior to the Closing Date, all
or any portion of the Property is condemned or taken by eminent
domain, then this Agreement shall nevertheless remain in full
force and effect without any abatement of the Purchase Price. In
such event, Seller shall convey the Property to Buyer at the
Closing in its then condition, and Buyer shall be entitled to
receive all net or condemnation awards otherwise payable to
Seller as a result of such loss or damage and, in full
satisfaction of any claims by Buyer against Seller, Seller shall
assign to Buyer at Closing, without recourse or warranty of any
nature whatsoever, all of Seller's right, title and interest in
and to any claims Seller may have to any condemnation awards, as
well as all rights or pending claims of Seller with respect to
such condemnation or taking of the Property, and Seller shall pay
to Buyer all payments theretofore made by such condemning
authorities as a result of such loss after deducting therefrom
the costs of collection thereof.
5. TITLE.
5.1. PRELIMINARY TITLE REPORT, COMMITMENT AND SURVEY.
Seller has provided or otherwise made available to Buyer with
respect to each Property: a copy of a preliminary title report
or a commitment for an ALTA (or the equivalent in the applicable
jurisdiction) policy of Owner's title insurance (each a "Title
<PAGE>
Commitment", collectively, the "Title Commitments") issued by
First American Title Insurance Company or a comparable national
title insurance company selected by Seller (the "Title Insurer")
and a copy of the current survey(s) prepared by licensed public
land surveyors according to ALTA standards (each a "Survey",
collectively, the "Surveys"). Buyer has agreed to accept each
Property subject to any and all exceptions to title insurance
coverage contained on the related Title Commitment, including,
but not limited to any exceptions to coverage based upon matters
shown on the related Survey, (collectively, the "Initial
Exceptions"). Upon Closing, each said Title Commitment shall
show fee simple title to the related Property as vested in Seller
subject to (i) all of the Initial Exceptions previously shown in
such Title Commitment at time of execution of this Agreement,
(ii) any New Title Exceptions (defined herein) which are not
identified as Title Defects by Buyer in accordance with the
provisions hereof, and (iii) any Title Defects which are waived
in writing by Buyer (clauses (i), (ii) and (iii) collectively,
the "Permitted Exceptions"). Notwithstanding the foregoing, the
Permitted Exceptions shall not include any of the Mortgages,
Voluntary Liens or mechanic's liens or the "standard" exceptions
except that (i) the standard exception for "parties in
possession" shall be a Permitted Exception if modified by the
Title Insurer to provide materially for "rights of tenants, as
tenants only, under unrecorded leases," and (ii) such standard
exceptions shall be Permitted Exceptions if the deletion is not
permitted under applicable law or will not be removed upon
delivery by the Seller of the Title Insurer's owner's affidavit
in the form attached hereto as Exhibit G and an ALTA survey
certified to the Title Insurer.
If after the date hereof and prior to the time of
Closing, Buyer receives written updates to said Title Commitments
to include any new exceptions which were not previously shown
therein, including, but not limited to, any new exceptions based
upon Survey updates, Buyer shall deliver to Seller within 10
business days of the delivery of said updated Title Commitments
written notice setting forth its objections to any new matter
encumbering any Property (each a "New Title Exception") which,
taken alone or in the aggregate with other New Title Exceptions
encumbering such Property, impairs such Property's current use or
value (each a "Title Defect"). Seller shall have the option to:
(i) cure any Title Defect prior to Closing or (ii) terminate this
Agreement in its entirety, upon which termination, provided that
Buyer is not in default hereunder, Buyer's Earnest Money shall be
returned to Buyer. Notwithstanding anything herein to the
contrary, Seller shall have the right to postpone the Closing
Date for such reasonable period as shall be necessary to cure any
Title Defect not to exceed sixty (60) days. If more than one
<PAGE>
Property is to be acquired pursuant to this Agreement and Seller
elects not to cure a Title Defect with respect to a Property,
such Property may be removed from this Agreement and this
Agreement terminated as to such Property. In the event of such a
termination, provided that Buyer is not in default hereunder,
Buyer's Allocated Earnest Money as to such Property shall be
returned to Buyer at Closing. If Seller elects to terminate this
Agreement in its entirety or with respect to a particular
Property due to a Title Defect as described in this paragraph,
then Buyer shall have the option to waive such Title Defect and
accept the Property subject to the applicable Title Defect
provided however that Buyer exercise such option in writing
within ten (10) business days of Seller's notice of said
election.
5.2. PERMITTED EXCEPTIONS. Subject to the terms and
conditions of this Agreement, Buyer agrees to accept each
Property subject to the Permitted Exceptions. Notwithstanding
anything herein to the contrary, in no event or circumstances
shall a Title Defect (except for liens and encumbrances created,
granted or assumed pursuant to one or more instruments executed
by Seller ("Voluntary Liens")) and mechanic's liens) include any
title exception or matter encumbering the Property the cost of
which to cure or reduction in value is, when aggregated with any
other Title Defect for such Property, less than or equal to Fifty
Thousand and 00/100 Dollars ($50,000.00), provided, however, that
should the cost to cure the New Title Exceptions (except for
Voluntary Liens and mechanic's liens) or reduction in value with
respect to a particular Property, in the aggregate ("Aggregate
Curative Cost"), be greater than Fifty Thousand and 00/100
Dollars ($50,000.00) then: Buyer may send a written notice
setting forth its objections to such exceptions or matters
pursuant to the same notice requirements provided in Section 5.1
above and if Seller elects to cure such New Title Exceptions
pursuant to Section 5.1 (i) above, Seller shall be obligated to
cure only such New Title Exceptions (except for Voluntary Liens
and mechanic's liens) such that the resulting Aggregate Curative
Cost for the uncured New Title Exceptions objected to by Buyer
with respect to a particular Property will be an amount less than
or equal to Fifty Thousand and 00/100 Dollars ($50,000.00). In
lieu of curing any New Title Exception, which Seller may elect to
eliminate under this Agreement, Seller may (subject to Buyer's
reasonable approval other than with respect to mechanics liens)
deposit with the Title Insurer such amount of money as may be
determined by the Title Insurer as being sufficient to induce the
Title Insurer, without the payment of any additional premium by
Buyer, to omit such New Title Exception from Buyer's title
insurance policy. Notwithstanding the foregoing, Seller shall
not be obligated, under any circumstances, to cure any exception
<PAGE>
or matter encumbering the Property other than Voluntary Liens or
mechanics liens.
5.3. RESOLUTION OF TITLE ISSUES. Buyer and Seller
shall make reasonable efforts to agree as to the existence of any
Title Defect. If the Seller and Buyer do not agree on the
foregoing within fifteen (15) days after Seller's receipt of
Buyer's notice described in Section 5.1 above, then the Parties
shall submit the matter to binding arbitration in accordance with
the terms of Section 10 below.
5.4. TITLE INSURANCE POLICY. Seller's obligations to
deliver title to the Property shall be satisfied by the issuance
of a extended coverage owner's title insurance policy with
respect to each Property issued by the Title Insurer, insuring
Buyer in the amount of the Allocated Purchase Price for such
Property and showing the Property to be subject to the Permitted
Exceptions.
6. BROKER. Each of the parties warrants to the other
that no broker, salesman or agent has been engaged or used in
connection with this transaction. To the fullest extent
permitted by law, each party agrees to indemnify the other party
against any and all loss, claims, liability, and expense,
including reasonable attorneys' fees, arising out of any claim
for commission or fee incurred or allegedly incurred by the
indemnifying party.
The provisions of this Section 6 shall survive the
Closing.
7. SELLER'S DISCLAIMERS; REPRESENTATIONS,
COVENANTS AND WARRANTIES.
7.1. PROPERTY SOLD "AS IS" WITHOUT WARRANTY. Except as
may be otherwise expressly provided in this Agreement or the
Closing Documents, Buyer agrees and acknowledges that Buyer is
purchasing the Property "AS IS", in its existing condition and
subject to its present defects, in reliance on Buyer's own
investigation and that no other representations or warranties of
any kind whatsoever, written or oral, express or implied, have
been made by Seller or the Protected Group, including without
limitation representations relating to zoning, site and physical
conditions, toxic and hazardous materials or waste, soils
content, or any matter affecting the ability of the Buyer to use
the Property or the suitability of the Property to Buyer's
purposes. Buyer further acknowledges and agrees that as of the
Closing Date, Buyer shall have investigated, inspected, and made
itself aware of all zoning regulations, other governmental
<PAGE>
requirements, site and physical conditions, the existence or
nonexistence of toxic or hazardous materials or waste, soil
conditions, and other matters affecting the use and condition of
the Property.
Additionally and specifically, except as may be
otherwise expressly provided in this Agreement or the Closing
Documents, Seller makes no representation whatsoever, express or
implied: (a) that the Property is in good or any other
condition; (b) that the buildings and other Improvements, if any,
were built or are currently in compliance with plans and/or
specifications; (c) that the buildings and other Improvements, if
any, were built in accordance with either good or acceptable
construction and/or engineering practices; (d) that the buildings
and other Improvements, if any, were built or are currently in
compliance with applicable zoning or building code requirements
including, but not limited to applicable safety codes or laws and
the Americans with Disabilities Act or any State or local law
concerning disabled persons; (e) that the Property is free of
major or minor, latent or patent defects; (f) that the Property
has no hazards; (g) that the Property complies with Federal,
State or local laws or any other standards regarding toxic,
hazardous or unhealthful materials; (h) that the Property
complies with Federal, State and local environmental laws; (i) as
to the existence of soil instability, past soil repairs, soil
additions or conditions of soil fill, or susceptibility to
landslides; and (j) as to any other matter affecting the
stability or integrity of the land or any buildings or
improvements situated on or part of the Property.
Without limiting the generality of the foregoing, Buyer
agrees to purchase the Property subject to any and all notices of
violations of law or municipal ordinances, orders or requirements
whatsoever noted in or issued by any federal, state, municipal or
other governmental department, agency or bureau having
jurisdiction over the Property (collectively, "Violations"), or
any lien, fine or penalty imposed in connection with any of the
foregoing, or any condition or state of repair imposed in
connection with any of the foregoing, or any condition or state
of repair or disrepair or other matter or thing, whether or not
noted, which, if noted, would result in a Violation being placed
on the Property. Seller shall have no duty to remove or comply
with or repair any such Violations, liens or other conditions and
Buyer shall accept the Property subject to all such Violations
and liens, the existence of any conditions at the Property which
would give rise to such Violations or liens, if any, and any
governmental claims arising from the existence of such Violations
and lien, in each case without any abatement of or credit against
the Purchase Price. Notwithstanding the foregoing, in connection
<PAGE>
with any Violations that are issued after the date of this
Agreement, but on or prior to the Closing Date, (i) any liens,
fines and/or penalties imposed on the Property after the date of
this Agreement, but on or prior to the Closing Date, by reason of
the existence of such Violations and (ii) any cure costs
associated with such Violations with respect to a particular
Property shall be addressed in the same fashion in which New
Title Exceptions are addressed hereunder, and Seller's and
Buyer's respective rights and obligations with respect thereto
shall be governed by the provisions of Sections 5.1 and 5.2
hereof. Notwithstanding anything contained herein to the
contrary, the provisions of this Section 7.1 requiring Buyer to
acquire title to the Property subject to a Violation arising from
the non-payment of an item which is to be apportioned hereunder
shall not abrogate the provisions of Sections 3.5 and 3.6
requiring the apportionment thereof or Seller's liability for a
breach of Section 7.3 or Section 11 of this Agreement.
7.2. SELLER UNDER NO DUTY TO DISCLOSE CONDITION.
Except as provided in Section 7.3 or Section 11, Buyer
acknowledges and agrees that Seller and the Protected Group shall
have no duty to disclose to Buyer any information known to them,
or any of them, concerning the condition of the Property, defects
in the Property, failure of the Property to comply with plans,
specifications, building codes, life safety codes, safety laws,
hazardous materials, environmental laws or any other laws or
codes or construction standards affecting the Property. If any
duty to disclose exists, Buyer expressly waives that duty as to
all of the above-referenced persons and entities. Without
limiting the foregoing if any information is disclosed to Buyer,
except as provided in this Agreement, Seller makes no
representation or warranties whatsoever with respect to the
accuracy or completeness of any information provided to Buyer.
Buyer has conducted its own independent investigation.
7.3. SELLER'S REPRESENTATIONS. Seller represents,
covenants and warrants to the Buyer as of the date hereof and the
Closing Date (each of which is being relied upon by Buyer and
each of which shall survive Closing for a period of ninety (90)
days) that:
(a) Organization and Authorization. Prudential-Bache/A.G.
Spanos Realty Partners L.P., I is a limited
partnership duly organized and validly existing under the
laws of the State of Delaware. The execution and delivery
of this Agreement and the transactions contemplated hereby
have been authorized by all requisite corporate and limited
partnership action of Seller and the general partners of
Seller.
<PAGE>
(b) No Conflicting Agreements. The execution and
delivery by Seller of, and the performance of and compliance
by Seller with, the terms and provisions of the this
Agreement do not (i) conflict with, or result in a breach
of, the terms, conditions or provisions of, or constitute a
default under, the organizational and governing documents or
any other agreement or instrument to which Seller is a party
or by which all or any part of the Property is bound, (ii)
violate any restriction, requirement, covenant or condition
to which all or any part of the Property is bound, (iii)
constitute a violation of any judgment, decree or order
applicable to Seller or specifically applicable to a
Property, or (iv) require the consent, waiver or approval of
any third party which has not been obtained by Seller which,
in the aggregate, would have an adverse effect on Seller's
ability to perform its obligations hereunder.
(c) Leases. As of the date(s) of the rent rolls
attached hereto as Schedule 6 (the "Rent Rolls"), there were
no written or oral leases, license agreements, occupancy
agreements or tenancies for any space in the Real Property
other than the leases set forth on the Rent Rolls. Seller
has delivered to Buyer a true, correct and complete copy of
the form of lease used for the Property and has delivered or
made available prior to the date of this Agreement, true,
correct and complete copies (including all amendments and
modifications) of each lease set forth on the Rent Rolls.
The listing of arrearages of rent payable by tenants set
forth on the Rent Rolls, as set forth in the delinquency
reports attached hereto as Schedule 6, were true and
accurate as of the date(s) of such delinquency reports.
Seller has the sole right to collect rent under each Lease
and such right has not been assigned, pledged, hypothecated
or otherwise encumbered, except for an assignment as
security for the payment of any Loan that Seller shall use a
portion of the Purchase Price to repay in full at or prior
to settlement hereunder.
(d) Service Contracts. To the actual knowledge of
Seller, all Service Contracts which will be assigned to
Buyer at Closing are set forth on Schedule 4, and a correct
copy of each Service Contract was made available to Buyer
prior to the date of this Agreement.
(e) Management and Leasing Agreements. On the Closing
Date, there will be no contracts or agreements in effect
with any party for the management or leasing of the Property
which will be binding upon Buyer.
<PAGE>
(f) Litigation. Except for the Litigation and the
matters set forth on Schedule 7, Seller has not received
written notice of any actions, suits or claims pending
against or affecting the Property or any part thereof. The
Seller has made available to Buyer a correct copy of the
Stipulation of Settlement with Spanos Defendants dated as of
May 12, 1997, and such stipulation is in full force and
effect and has not been modified in any way that would
affect the transactions contemplated by this Agreement. The
Seller has not received any notice that any such action,
suit or claim is threatened. Except as may relate to the
Litigation, the Seller is not operating under or subject to
any order, writ, injunction or decree that relates to the
Property or any part thereof.
(g) Environmental Reports. The environmental reports
referred to in Schedule 8 are all the material reports in
Seller's possession dealing with environmental matters
relating to the Property that were prepared during the past
five years. Except as disclosed in such reports, Seller has
not received from any governmental body having authority any
material written complaint, order, citation or violation
notice with regard to air emissions, water discharges, noise
emissions and hazardous or toxic materials or substances, if
any, or any other environmental matters affecting the
Property or any part thereof.
(h) FIRPTA. Seller is a "United States person" within
the meaning of Sections 1445(f)(3) and 7701(a)(30) of the
Internal Revenue Code of 1986, as amended.
(i) Personal Property. Seller has good title to all
the Personalty and the execution and delivery to Buyer of
the Bill of Sale required by Section 9(b)(ii) shall vest
good title to all of the Personalty in Buyer, free and clear
of liens, encumbrances and adverse claims (except for liens
that will be discharged as of the Closing Date).
(j) Operating Statements. The operating statements
for the Property delivered by Seller to Buyer prior to the
execution of this Agreement are not inconsistent with any
other cash basis operating statements for the Property for
the operating period to which they relate that have been
prepared by or for Seller.
(k) Engineering Reports. The reports referred to in
Schedule 9 attached hereto are all of the material reports
on the physical and structural condition of the Property
<PAGE>
prepared by a licensed engineering firm engaged by Seller
and in Seller's possession that were prepared during the
past five years.
(l) Title. Seller has good, valid and insurable title
to the Real Property together with the Improvements subject
to the Permitted Exceptions.
7.4. BUYER'S REPRESENTATIONS. In consideration of
Seller's entering into this Agreement and as an inducement to
Seller to sell the Property, Buyer makes the following covenants,
representations, and warranties, each of which is material and is
being relied upon by Seller, and each shall survive the Closing:
(a) Buyer's Authority. Buyer is a limited partnership
duly organized and validly existing and in good standing
under the laws of the State of Delaware. Buyer has the
legal power, right and authority to enter into this
Agreement and to consummate the transactions contemplated by
this Agreement;
(b) Buyer's Action. All requisite action (corporate,
partnership, trust or otherwise) has been taken by Buyer in
connection with entering into this Agreement and the
consummation of the transactions contemplated by this
Agreement;
(c) Individual Authority. The individual(s) executing
this Agreement on behalf of Buyer has the legal power,
right, and actual authority to bind Buyer to the terms and
conditions of this Agreement;
(d) Lender Authorization. Neither the execution and
delivery of this Agreement, nor the occurrence of the
obligations set forth in this Agreement, nor the
consummation of the transactions contemplated by this
Agreement, nor compliance with the terms of this Agreement
will (i) conflict with or result in a breach of any of the
terms, conditions, or provisions of, or constitute a default
under, the organizational and governing documents of Buyer,
any bond, note or other evidence of indebtedness or any
contract, indenture, mortgage, deed of trust, loan,
agreement, lease or other agreement or instrument to which
Buyer is a party or by which any of Buyer's properties may
be bound, (ii) constitute a violation of any judgment,
decree or order applicable to Buyer, or (iii) require the
consent, waiver of approval of any third party which has not
been obtained by Buyer, which, in the aggregate, would have
a material adverse effect on Buyer's ability to perform its
<PAGE>
obligations hereunder;
(e) Adequate Funds. Buyer has adequate funds or
available credit resources to pay the Purchase Price at the
Closing Date as provided hereunder;
(f) Sophisticated Buyer. Buyer is an experienced and
sophisticated real property purchaser; and
(g) Representation by Counsel. Buyer has had the
opportunity to confer with counsel of Buyer's choice for a
complete explanation of the meaning and significance of each
provision of this Agreement.
8. INDEMNIFICATION.
8.1. INDEMNIFICATION. To the fullest extent provided
by law, Buyer agrees to indemnify and hold Seller and the
Protected Group harmless from and against all claims, damages,
liabilities, obligations, costs, damages, injuries, losses and
expenses arising (i) out of the Buyer's inspection of the
Property prior to or as of the Closing Date, or (ii) after the
Closing Date as a result of the condition, operation or
management of the Property attributable to Buyer's acts or
omissions. Buyer further agrees to pay for Seller's and the
Protected Group's reasonable costs of defense, including
reasonable attorney fees and expert fees, pertaining to the
foregoing indemnification rights, to be provided by attorneys
reasonably acceptable to Seller and the Protected Group.
The provisions of this Section 8.1 shall survive the
Closing Date.
9. DEFAULT; TERMINATION; LIQUIDATED
DAMAGES AND OTHER REMEDIES.
9.1. IF BUYER FAILS TO COMPLY WITH ITS OBLIGATIONS
UNDER THIS AGREEMENT AND COMPLETE THE TRANSACTION CONTAINED IN
THIS AGREEMENT IN VIOLATION OF THE TERMS HEREOF, THE PARTIES
AGREE THAT SELLER SHALL BE PAID OR RETAIN A SUM EQUAL TO THE
EARNEST MONEY DEPOSIT REQUIRED HEREUNDER, AS LIQUIDATED AND
AGREED UPON DAMAGES AS ITS SOLE REMEDY, WHEREUPON THIS AGREEMENT
SHALL BE NULL AND VOID, AND NEITHER SELLER NOR BUYER NOR ANY OF
THEIR RESPECTIVE REPRESENTATIVES SHALL HAVE ANY FURTHER RIGHTS OR
OBLIGATIONS HEREUNDER. SUCH AMOUNT IS PRESUMED TO BE THE AMOUNT
OF DAMAGES SUSTAINED BY A BREACH, AS IT WOULD BE IMPRACTICAL OR
EXTREMELY DIFFICULT TO FIX THE ACTUAL AMOUNT OF DAMAGES. IN
PLACING THEIR INITIALS AT THE PLACES PROVIDED, EACH PARTY
SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE
<PAGE>
AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO
EXPLAINED THE CONSEQUENCES OF THIS DAMAGES PROVISION AT THE TIME
THIS AGREEMENT WAS MADE.
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS
BUYER'S OR AUTHORIZED REPRESENTATIVE
OF BUYER'S INITIALS
9.2. (a) IF PRIOR TO CLOSING, SELLER DEFAULTS IN ANY OF
THE COVENANTS, AGREEMENTS OR OBLIGATIONS TO BE PERFORMED BY
SELLER UNDER THIS AGREEMENT AT OR PRIOR TO CLOSING AND SUCH
DEFAULT IS NOT CURED BY THE EARLIER OF (A) THE CLOSING DATE OR
(B) THE DATE WHICH IS TEN (10) DAYS AFTER NOTICE OF SUCH DEFAULT
FROM BUYER TO SELLER, THEN, AND IN SUCH EVENT BUYER, AS ITS SOLE
REMEDY THEREFOR, MAY EITHER (1) TERMINATE THIS AGREEMENT BY
WRITTEN NOTICE TO SELLER, WHEREUPON SELLER SHALL REFUND TO BUYER
THE EARNEST MONEY DEPOSIT REQUIRED HEREUNDER, PLUS THE ACTUAL AND
REASONABLE OUT-OF-POCKET COSTS AND EXPENSES INCURRED BY BUYER ON
OR AFTER THE FINAL BID DATE (AS DEFINED HEREIN), UP TO AN
AGGREGATE MAXIMUM OF EIGHTY EIGHT THOUSAND EIGHT HUNDRED EIGHTY
EIGHT AND 00/100 DOLLARS ($88,888.00) ("BUYER'S REIMBURSABLE
EXPENSES"), AS LIQUIDATED AND AGREED UPON DAMAGES, WHEREUPON THIS
AGREEMENT SHALL BE NULL AND VOID, AND NEITHER SELLER NOR BUYER
NOR ANY OF THEIR RESPECTIVE REPRESENTATIVES SHALL HAVE ANY
FURTHER RIGHTS OR OBLIGATIONS HEREUNDER AT LAW OF IN EQUITY FOR
DAMAGES OR OTHERWISE, OR (2) SEEK SPECIFIC PERFORMANCE OF
SELLER'S OBLIGATIONS HEREUNDER, WITHOUT ABATEMENT, CREDIT AGAINST
OR REDUCTION OF THE PURCHASE PRICE.
(b) IF ON OR PRIOR TO THE CLOSING DATE, (I) BUYER
SHALL BECOME AWARE OF AN INACCURACY IN ANY REPRESENTATION OR
WARRANTY MADE BY SELLER PURSUANT TO SECTION 7.3 HEREOF (AS MADE
AS OF THE DATE HEREOF) WHICH HAS A MATERIAL ADVERSE EFFECT ON
BUYER OR (II) BUYER SHALL BECOME AWARE OF AN INACCURACY IN ANY
REPRESENTATION OR WARRANTY MADE BY SELLER PURSUANT TO SELLER'S
REPRESENTATION CERTIFICATE (AS MADE AS OF THE CLOSING DATE) WHICH
HAS A MATERIAL ADVERSE EFFECT ON BUYER, THEN, AND IN ANY OF SUCH
EVENTS, BUYER MAY TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO
SELLER, WHEREUPON SELLER SHALL RETURN TO BUYER THE EARNEST MONEY
AND BUYER'S REIMBURSABLE EXPENSES AS LIQUIDATED AND AGREED UPON
DAMAGES, WHEREUPON THIS AGREEMENT SHALL BE NULL AND VOID AND
NEITHER SELLER NOR BUYER NOR ANY OF THEIR RESPECTIVE
REPRESENTATIVES SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS
HEREUNDER AT LAW OR IN EQUITY FOR DAMAGES OR OTHERWISE.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, SELLER SHALL
HAVE THE RIGHT UPON NOTICE TO BUYER, TO SUSPEND SUCH TERMINATION
NOTICE AND TO ADJOURN THE CLOSING FOR SUCH REASONABLE PERIOD AS
<PAGE>
SHALL BE NECESSARY TO CURE SUCH INACCURACY TO BUYER'S REASONABLE
SATISFACTION, NOT TO EXCEED SIXTY (60) DAYS FROM THE DATE OF
BUYER'S TERMINATION NOTICE, UPON WHICH CURE BUYER'S TERMINATION
NOTICE SHALL BE DEEMED REVOKED. WITHOUT LIMITING THE GENERALITY
OF THIS SECTION, IN NO EVENT SHALL THE OCCURRENCE OF ANY OF THE
EVENTS OR CIRCUMSTANCES DESCRIBED IN THIS SECTION 9.2(b) GIVE
RISE TO ANY OBLIGATION OF SELLER TO CURE ANY INACCURACY IN ANY
REPRESENTATION OR WARRANTY OR OTHERWISE MAKE SELLER LIABLE FOR
DAMAGES ON ACCOUNT THEREOF. FOR PURPOSES OF THIS SECTION 9.2,
THE PHRASE "MATERIAL ADVERSE EFFECT ON BUYER" SHALL MEAN ONE OR
MORE INACCURACIES IN ANY OF THE REPRESENTATIONS OR WARRANTIES
MADE BY SELLER PURSUANT TO SECTION 7.3 HEREOF OR PURSUANT TO
SELLER'S REPRESENTATION CERTIFICATE WHERE BUYER CAN REASONABLY
DEMONSTRATE THAT THE LIABILITIES, LOSS, CURATIVE COST OR EXPENSE
WITH RESPECT TO A PARTICULAR PROPERTY RESULTING FROM SUCH
INACCURACIES AND FROM ANY NEW TITLE EXCEPTIONS ARE, IN THE
AGGREGATE, MORE THAN FIFTY THOUSAND AND 00/100 DOLLARS
($50,000.00). IN THE EVENT SELLER ELECTS TO CURE SUCH
INACCURACIES OR NEW TITLE EXCEPTIONS, SELLER SHALL BE OBLIGATED
TO CURE ONLY SUCH INACCURACIES AND NEW TITLE EXCEPTIONS SUCH THAT
THE RESULTING AGGREGATE LIABILITIES, LOSS, CURATIVE COST OR
EXPENSE WILL BE AN AMOUNT LESS THAN OR EQUAL TO FIFTY THOUSAND
AND 00/100 DOLLARS ($50,000.00). IF ANY SUCH INACCURACY IN ANY
REPRESENTATION OR WARRANTY UNDER SECTION 7.3 OR PURSUANT TO
SELLER'S REPRESENTATION CERTIFICATE SHALL NOT HAVE A MATERIAL
ADVERSE EFFECT ON BUYER, AS DETERMINED IN ACCORDANCE WITH THIS
SECTION, THEN BUYER SHALL NOT BE ENTITLED TO ANY RIGHT OR REMEDY
UNDER THIS AGREEMENT, AT LAW OR EQUITY, AS A RESULT OF SUCH
INACCURACY, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO TERMINATE
THIS AGREEMENT IF BUYER SHALL BECOME AWARE OF SUCH INACCURACY ON
OR BEFORE THE CLOSING.
(c) ANY DAMAGE AMOUNT TO BE PAID PURSUANT TO THIS
SECTION 9.2 IS PRESUMED TO BE THE AMOUNT OF DAMAGES SUSTAINED BY
A BREACH, AS IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO
FIX THE ACTUAL AMOUNT OF DAMAGES. NOTWITHSTANDING ANYTHING
CONTAINED HEREIN, IN NO EVENT SHALL SELLER (BEYOND ITS INTEREST
IN THE PROPERTY) OR THE PROTECTED GROUP HAVE ANY PERSONAL
LIABILITY UNDER THIS AGREEMENT WHATSOEVER AND BUYER SHALL UNDER
NO CIRCUMSTANCES INITIATE ANY ACTION IN COURT OR BY ARBITRATION
AGAINST THE PROTECTED GROUP UNLESS IT IS PROCEDURALLY REQUIRED BY
LAW TO NAME A MEMBER OF THE PROTECTED GROUP IN ORDER TO INITIATE
SUCH PROCEEDING, WHICH NAMING SHALL NOT ALTER THE ABOVE WAIVERS
AND LIMITATIONS.
(d) IF SELLER DISCLOSES TO BUYER IN WRITING OR BUYER
DISCLOSES TO SELLER IN WRITING PRIOR TO CLOSING, (I) A DEFAULT IN
ANY OF THE COVENANTS, AGREEMENTS OR OBLIGATIONS TO BE PERFORMED
BY SELLER UNDER THIS AGREEMENT, AND/OR (II) A MATERIAL INACCURACY
<PAGE>
IN ANY REPRESENTATION OR WARRANTY OF SELLER MADE IN THIS
AGREEMENT OR PURSUANT TO SELLER'S REPRESENTATION CERTIFICATE, AND
BUYER ELECTS TO PROCEED TO CLOSING, THEN UPON THE CONSUMMATION OF
THE CLOSING, BUYER SHALL BE DEEMED TO HAVE WAIVED ANY SUCH
DEFAULT AND/OR MATERIAL INACCURACY AND SHALL HAVE NO CLAIM
AGAINST SELLER ON ACCOUNT THEREOF. IN PLACING THEIR INITIALS AT
THE PLACES PROVIDED, EACH PARTY SPECIFICALLY CONFIRMS THE
ACCURACY OF THE STATEMENTS MADE IN THIS SECTION 9.2 AND THE FACT
THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE
CONSEQUENCES OF THESE DAMAGES PROVISIONS AT THE TIME THIS
AGREEMENT WAS MADE
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS
BUYER'S OR AUTHORIZED REPRESENTATIVE
OF BUYER'S INITIALS
9.3. TERMINATION. Notwithstanding anything contained
herein, this Agreement may be terminated as follows:
(a) By Seller, if any reductions or adjustments to the
Purchase Price result in the Purchase Price being reduced to
an amount which is less than the purchase price that would
be produced by the final bid submitted by the Spanos
Defendants, as such term is defined in the Stipulation of
Settlement with Spanos Defendants pertaining to the
Litigation;
(b) By Seller or Buyer in accordance with any rights
of termination expressly conferred under the terms of this
Agreement or if any of the applicable conditions precedent
have not been satisfied or waived by the party who is the
beneficiary of such conditions precedent; and
(c) By Seller or Buyer as to all of the Properties, if
a court of competent jurisdiction or arbitrator issues a
binding and final order permanently preventing the sale of
any Property to Buyer.
In the event this Agreement is terminated in its
entirety or as to a particular Property pursuant to any of the
foregoing provisions, this Agreement shall thereupon become null
and void in its entirety or as to such Property, as applicable,
and neither Seller nor Buyer nor any of their respective
representatives shall have any further rights or obligations
hereunder, provided, however, that the Confidentiality Agreement
and the Indemnification Agreement (each as defined herein) shall
remain in full force and effect. If this Agreement is terminated
<PAGE>
as to a particular Property pursuant to the foregoing provisions,
the Purchase Price shall be reduced by an amount equal to the
Allocated Purchase Price for such Property.
10. ARBITRATION.
10.1. ARBITRATION OF DISPUTES.
The parties agree that any controversy or claim arising
out of or related to this Agreement, whether claimed under the
law of tort or the law of contract or any other laws, shall be
submitted to the American Arbitration Association (the
"Association") (or any successor organization) for arbitration.
Notwithstanding the foregoing, the parties shall have the right
to file an action for injunctive relief with a court of competent
jurisdiction to preserve the status quo pending the final
resolution of such arbitration. All arbitration shall be finally
determined in New York City and shall be governed in accordance
with the Rules for Commercial Arbitration of the Association (or
any successor thereto) and the judgment or the award rendered may
be entered in any court having jurisdiction provided that the
judgment or award is based upon the proper interpretation and
application of New York law. Each party shall pay 50% of the
fees and expenses of the Association. If the matter in dispute
arises prior to the Closing Date, the Closing Date shall be
adjourned pending resolution of the matter in dispute. Upon
resolution of such dispute the parties shall take whatever action
is required to be taken pursuant to this Agreement or the final
determination of an arbitrator.
10.2. LIMITATION ON DISCOVERY. In a mutual effort
to expedite the arbitration and limit the cost of dispute
resolutions, the parties agree that there shall be limited
discovery as directed by the arbitrator, and if a party intends
to call its own expert witness or adduce expert testimony, then
that party must notify the other party of the name, address and
all educational background of that witness and provide a complete
(complete means no subsequent data, references or opinions may be
added, referred to or testified to) report describing all of such
expert's investigations, findings and conclusions not later than
sixty (60) days before arbitration. Each party shall, on written
demand, make its expert available for deposition not later than
twenty (20) days before the arbitration hearing. Failure to make
the expert available for deposition shall permanently preclude
the arbitrator(s) from considering the expert's testimony. The
deposition may not be admitted or used as a substitute for the
live testimony of the expert at the hearing under any
circumstances. The arbitrator(s) shall not have the power to
subpoena any documents, records, reports or writings of either
<PAGE>
party.
11. CONDUCT OF BUSINESS. During the period from
January 15, 1999 (the "Final Bid Date") to the Closing Date,
except (i) as Buyer shall otherwise agree, (ii) as necessary in
connection with the transactions contemplated herein, or (iii) as
otherwise permitted under Article 4 hereof, Seller shall operate
the Property in the ordinary and usual course, consistent with
past practice.
(a) Between Final Bid Date and the Closing Date,
Seller agrees that, without Buyer's written
consent in each case, it will not voluntarily
grant, create, assume or permit to be created any
mortgage, lien, encumbrance, easement, covenant,
condition, right-of-way or restriction upon the
Property or voluntarily take or permit any action
adversely affecting the title to the Property as
it exists on the date hereof.
(b) Between the date hereof and the Closing Date,
Seller agrees that, without Buyer's prior written
consent, it will not enter into any new leases
except in accordance with the leasing guidelines
and credit approval guidelines attached hereto as
Schedule 10.
(c) Between the Final Bid Date and the Closing Date,
the Seller will not remove any material Personalty
from the Property except in the ordinary course of
business and provided such Personalty is replaced
with items of the same or better quality.
(d) Seller will not return any security deposits held
or required to be held by Seller which have been
deposited by tenants with respect to Leases
terminating between the date hereof and the
Closing Date unless and until Seller has verified
that all equipment, fixtures and appliances
located in the subject apartment are in working
order and the apartment is otherwise in the
condition required for the return of such deposits
under such Leases.
The Provisions of this Section 11 shall survive the
Closing for a period of ninety (90) days.
12. REASONABLE EFFORTS; PUBLIC ANNOUNCEMENTS. Each
party hereto will use all reasonable efforts to perform all acts
<PAGE>
required to consummate the transactions contemplated hereby as
promptly as practicable. Such acts shall include, without
limitation, the provision of any information to and submission of
any filing with any governmental entity having jurisdiction. The
foregoing notwithstanding, except as may be required to comply
with the requirements of any applicable laws or regulations or of
the court with respect to the Litigation and the rules and
regulations of each stock exchange upon which the securities of
one of the parties is listed (including, but not limited to, the
filing of Form 8-K by Seller) and except communications by Seller
to holders of limited partnership interests in Seller (copies of
which will be made available to employees of the general partners
of Seller or their affiliates who, in the case of communications
which include the Purchase Price, shall be informed of Seller's
obligations under this Section 12), no press release or similar
public announcement or communication shall, if prior to the
Closing, be made or caused to be made concerning the execution or
performance of this Agreement, unless the parties shall have
consulted in advance with respect thereto. Subject to the
provisions of Section 13.8(b), Seller's obligations under the
previous sentence shall survive the Closing. In the event Buyer
elected to inspect the Property prior to the Auction, Buyer has
agreed to indemnify and hold Seller harmless with respect matters
relating to such inspections in accordance with a certain
Inspection Indemnification Agreement dated January 7, 1999,
executed by affiliates of Buyer (the "Indemnification
Agreement"). Buyer shall keep such information confidential,
subject to the terms and conditions of the Confidentiality
Agreement dated October 28, 1998, by affiliates of Buyer (the
"Confidentiality Agreement").
13. GENERAL PROVISIONS.
13.1. TIME. Time shall be of the essence of this
Agreement. If any expiration or deadline date falls on a
Saturday, Sunday or legal holiday, it shall be extended to the
next following business day.
13.2. EFFECT OF WAIVER OF PROVISION OR REMEDY. No
waiver by a party of any provision of this Agreement shall be
considered a waiver of any other provision or any subsequent
breach of the same or any other provision, including the time for
performance of any such provision. The exercise by a party of
any remedy provided in this Agreement or at law shall not prevent
the exercise by that party of any other remedy provided in this
Agreement or at law.
13.3. INTEGRATED ENTIRE AGREEMENT. This Agreement
and the attached exhibits, along with the Confidentiality
<PAGE>
Agreement, the Escrow Agreement and the Indemnification Agreement
constitute the entire agreement between the parties relating to
the sale of the Property. Any prior agreements, promises,
negotiations, or representations not expressly set forth in this
Agreement in writing are of no force and effect and may not be
relied upon for any purpose whatsoever by any party to this
Agreement. Any amendment to this Agreement shall be of no force
and effect unless it is in writing and signed by Buyer and
Seller. Any statements or representations made by any person,
whether or not a party to the Agreement, whether or not an
employee or other representative of Seller or Buyer, shall not be
relied upon by either Seller or Buyer and shall not be of any
force and effect for any purpose whatsoever, except for the
statements and representations in this Agreement.
13.4. NO REPRESENTATION REGARDING LEGAL EFFECT OF
DOCUMENT. No representation, warranty, or recommendation is made
by Seller or the Protected Group, or their brokers, respective
agents, employees, or attorneys regarding the legal sufficiency,
legal effect, or tax consequences of this Agreement or the
transaction, and each signatory has had the opportunity to submit
this Agreement to its qualified legal and/or financial advisor
before signing it.
13.5. COUNTERPARTS. This Agreement and all
amendments and supplements to it may be executed in any number of
counterparts, at different places and times, all of which taken
together shall constitute one and the same instrument, which
shall be deemed dated as of the day and year first above written.
Buyer and Seller shall each receive one duplicate original.
13.6. BINDING ON SUCCESSORS. This Agreement inures
to the benefit of, and is binding on, the parties and, without
affecting the limitations of paragraph 9, their respective heirs,
personal representatives, successors, and assigns.
13.7. INTERPRETATION. Titles and headings of
sections of this Agreement are for convenience of reference only
and shall not affect the construction of any provision of this
Agreement. All recitals set forth at the beginning of this
Agreement are, by this reference, fully incorporated into this
Agreement. All exhibits referred to in this Agreement are deemed
fully incorporated herein. As used herein: (a) the singular
shall include the plural (and vice versa) and the masculine or
neuter gender shall include the feminine gender (and vice versa)
as the context may require; (b) locative adverbs such as
"herein", "hereto", and "hereunder" shall refer to this Agreement
in its entirety and not to any specific section or paragraph; and
(c) the terms "include", "including", and similar terms shall be
<PAGE>
construed as though followed immediately by the phrase "but not
limited to". All parties have jointly participated in the
negotiation and drafting of this Agreement, upon advice of their
own independent counsel or have had an opportunity to do so, and
this Agreement shall be construed fairly and equally as to all
parties as if drafted jointly by them.
13.8. SURVIVAL. (a) Except as otherwise expressly
provided in this Agreement, no provision of this Agreement,
(i.e., no representation warranty, covenant, certification,
indemnification, agreement or other obligation set forth in any
provision of this Agreement, in Seller's Representation
Certificate or in Seller's certification of any rent rolls) shall
survive the Closing (and, accordingly, no claim arising out of
the same may be commenced after the Closing), and the delivery
and acceptance of the conveyance deed shall be deemed to be full
performance and discharge of each such representation,
certification, indemnification, warranty, covenant, agreement or
other obligation.
(b) WITH RESPECT TO (I) AN INACCURACY IN ANY REPRESENTATION
OR WARRANTY OF SELLER MADE PURSUANT TO SECTION 7.3 HEREOF (AS
MADE AS OF THE DATE HEREOF) OR AN INACCURACY IN ANY
REPRESENTATION OR WARRANTY OF SELLER MADE PURSUANT TO SELLER'S
REPRESENTATION CERTIFICATE (AS MADE AS OF THE CLOSING DATE)
WHICH, IN ANY CASE, HAS A MATERIAL ADVERSE EFFECT ON BUYER,
EXPRESSLY SURVIVES THE CLOSING PURSUANT TO THIS AGREEMENT AND IS
NOT WAIVED HEREUNDER OR (II) A DEFAULT IN ANY OF THE COVENANTS,
AGREEMENTS OR OBLIGATIONS TO BE PERFORMED BY SELLER UNDER THIS
AGREEMENT (OTHER THAN SECTIONS 3.4, 3.5, 3.6, 6 AND 12) WHICH
EXPRESSLY SURVIVES THE CLOSING AND IS NOT WAIVED HEREUNDER, BUYER
SHALL HAVE, AS ITS SOLE REMEDY THEREFOR, A CLAIM AGAINST SELLER
TO BE SATISFIED SOLELY FROM THE POST-CLOSING ESCROW ON ACCOUNT
THEREOF; PROVIDED THAT (1) ANY SUCH CLAIM NOT BROUGHT WITHIN
NINETY (90) DAYS AFTER THE CLOSING DATE SHALL BE DEEMED WAIVED,
(2) BUYER HEREBY WAIVES THE RIGHT TO COLLECT OR SEEK TO COLLECT
PUNITIVE DAMAGES, (3) IN NO EVENT SHALL SELLER'S AGGREGATE
LIABILITY FOR ANY SUCH CLAIM EXCEED THE AMOUNT OF FUNDS IN THE
POST-CLOSING ESCROW, AND BUYER HEREBY WAIVES THE RIGHT TO COLLECT
OR SEEK ANY AMOUNTS IN EXCESS OF THE AMOUNT OF THE POST-CLOSING
ESCROW, (4) IN NO EVENT SHALL SELLER BE RESPONSIBLE FOR THE FIRST
FIFTY THOUSAND AND 00/100 DOLLARS ($50,000.00) PER PROPERTY OF
LIABILITIES, LOSS, CURATIVE COST OR EXPENSE WITH RESPECT TO ANY
INACCURACIES (IN THE AGGREGATE) DESCRIBED IN CLAUSE (I) ABOVE AND
(5) IN THE EVENT THAT BUYER'S CLAIM IS DETERMINED TO EXCEED THE
AMOUNT OF THE POST-CLOSING ESCROW, BUYER AGREES TO ACCEPT THE
AMOUNT OF THE POST-CLOSING ESCROW AS LIQUIDATED AND AGREED UPON
DAMAGES, WHEREUPON NEITHER SELLER NOR ANY OF ITS REPRESENTATIVES
SHALL HAVE ANY FURTHER LIABILITIES OR OBLIGATIONS HEREUNDER AT
<PAGE>
LAW OF IN EQUITY FOR DAMAGES OR OTHERWISE OTHER THAN SURVIVING
OBLIGATIONS, IF ANY, UNDER SECTIONS 3.4, 3.5, 3.6, 6 AND 12
HEREOF. ANY DAMAGE AMOUNT TO BE PAID PURSUANT TO CLAUSE (5)
ABOVE IS PRESUMED TO BE THE AMOUNT OF DAMAGES SUSTAINED BY A
BREACH, AS IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX
THE ACTUAL AMOUNT OF DAMAGES. BUYER HEREBY WAIVES ALL REMEDIES
WITH RESPECT TO ANY DEFAULT BY SELLER OF ITS OBLIGATIONS UNDER
SECTION 12 HEREOF AND THE CONFIDENTIALITY AGREEMENT WHICH
EXPRESSLY SURVIVE THE CLOSING AND ARE NOT WAIVED HEREUNDER
(INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR MONETARY DAMAGES),
OTHER THAN PURSUIT OF A RESTRAINING ORDER OR INJUNCTIVE RELIEF TO
PREVENT SELLER'S VIOLATION OF SUCH PROVISION TO THE EXTENT
AVAILABLE TO BUYER UNDER APPLICABLE LAW. NOTWITHSTANDING
ANYTHING CONTAINED HEREIN, IN NO EVENT SHALL SELLER (BEYOND ITS
INTEREST IN THE PROPERTY) OR THE PROTECTED GROUP HAVE ANY
PERSONAL LIABILITY UNDER THIS AGREEMENT WHATSOEVER AND BUYER
SHALL UNDER NO CIRCUMSTANCES INITIATE ANY ACTION IN COURT OR BY
ARBITRATION AGAINST THE PROTECTED GROUP UNLESS IT IS
PROCEDURALLY REQUIRED BY LAW TO NAME A MEMBER OF THE PROTECTED
GROUP IN ORDER TO INITIATE SUCH PROCEEDING, WHICH NAMING SHALL
NOT ALTER THE ABOVE WAIVERS AND LIMITATIONS. IN PLACING THEIR
INITIALS AT THE PLACES PROVIDED, EACH PARTY SPECIFICALLY CONFIRMS
THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH
PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES
OF THIS DAMAGES PROVISION AT THE TIME THIS AGREEMENT WAS MADE.
AUTHORIZED REPRESENTATIVE
OF SELLER'S INITIALS
BUYER'S OR AUTHORIZED REPRESENTATIVE
OF BUYER'S INITIALS
(c) For purposes of this Section 13.8, the phrase "material
adverse effect on Buyer" shall mean one or more inaccuracies in
any of the representations or warranties made by Seller pursuant
to Section 7.3 hereof or pursuant to Seller's Representation
Certificate where Buyer can reasonably demonstrate that the
liabilities, loss, curative cost or expense with respect to a
particular Property resulting from such inaccuracies are more
than Fifty Thousand and 00/100 Dollars ($50,000.00). If any such
inaccuracies in any representation or warranty under Section 7.3
or pursuant to Seller's Representation Certificate shall not have
a material adverse effect on Buyer, as determined in accordance
with this Section 13.8 then Buyer shall not be entitled to any
right or remedy under this Agreement, at law or equity, as a
result of such inaccuracies.
(d) The provisions of this Section 13.8 shall survive
Closing or any termination of this Agreement.
<PAGE>
13.9. NOTICES. All elections, notices and demands
required or permitted hereunder shall be given in writing and
shall be delivered either by: personal service or a national
overnight delivery service such as Federal Express. Facsimile
transmission is acceptable provided however that such
transmission shall be followed by next day delivery via one of
the foregoing means of delivery. Notices shall be addressed or
transmitted as appears below for each party; provided, that if
any party gives notice of a change of name or address, notices to
the giver of that notice shall thereafter be given as set forth
in that notice. Notice shall be deemed delivered and effective
upon actual receipt at the following addresses or such other
addresses as the parties may notify each other by similar notice:
If to Seller, to:
Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street - 28th Floor
New York, New York 10292-0116
Attention: Brian J. Martin
Facsimile No.: (212) 214-1422
With a copy to:
Skadden, Arps, Slate, Meagher & Flom, LLP
919 Third Avenue
New York, NY 10022
Attention: Jay Sobel, Esq.
Facsimile No.: (212) 735-2000
If to Buyer, to:
c/o Whitehall Street Real Estate Limited Partnership XI
85 Broad Street
New York, New York 10004
Attention: Mr. Stuart M. Rothenberg
Facsimile No.: (212) 357-5505
With copies to:
Archon Group, L.P.
600 East Las Colinas Blvd.
Irving, Texas 75039
Attention: Mr. Ernest O. Perry III
Facsimile No.: (972) 830-7644
<PAGE>
and
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Mark M. Katz, Esq.
Facsimile No.: (202) 857-6395
13.10. PUNITIVE DAMAGES. Each party waives any
claims it may now have or may in the future have arising out of
this transaction for exemplary, punitive and/or penalty damages.
13.11. INSURANCE. Buyer shall be responsible for
obtaining casualty and liability insurance on the Property as of
the Closing Date.
13.12. ASSIGNMENT. Buyer may not assign this
Agreement without Seller's prior written consent except to an
entity controlling, controlled by or under common control with
Whitehall Street Real Estate Limited Partnership XI
("Whitehall"), in which Whitehall directly or indirectly holds
greater than fifty percent (50%) of the ownership interests (an
"Affiliate"). The valid assignment of this Agreement shall not
relieve Buyer of liability under this Agreement, unless to an
Affiliate which assumes all of Buyer's obligations hereunder.
Buyer shall deliver to Seller a copy of any such assignment
together with such additional information regarding the assignee
as Seller may reasonably request not less than ten (10) days
prior to Closing.
13.13. SEVERABILITY. In the event that any
provision of this Agreement, including the arbitration
provisions, is determined to be unlawful then that provision
shall be deemed stricken and the balance of the Agreement shall
be enforceable. If the stricken provision relates to the
arbitration procedure, then the stricken provision shall be
replaced by such provision as is statutorily required.
13.14. ATTORNEYS' FEES, COSTS AND PRE-JUDGMENT
INTEREST. Each party waives any right to claim attorneys' fees,
costs or pre-judgment interest in connection with any dispute or
award concerning this transaction, except as expressly provided
for herein.
13.15. GOVERNING LAW. This contract and the legal
relations between the parties shall be governed by and construed
in accordance with the substantive laws of the State of New York.
13.16. FURTHER ASSURANCES. Each of the parties
<PAGE>
hereto shall, at the request of the other party, execute,
acknowledge and deliver any further instruments, and take such
further actions, as the requesting party may reasonably request,
to carry out effectively the intent of this Agreement. The
provisions of this Section 13.16 shall survive the Closing.
13.17. SANDPEBBLE VILLAGE ZONING MATTERS.
Notwithstanding anything to the contrary contained herein, (a)
the obligation of Buyer to close under this Agreement with
respect to the Property known as Sandpebble Village, Sparks,
Nevada (the "Sandpebble Property") is subject, in addition to the
conditions set forth in Section 3.10 hereof, to the delivery by
Seller to Buyer, at Seller's sole cost and expense, prior to or
at Closing, of documentation providing valid evidence that the
appropriate municipal authority in Sparks, Nevada with
jurisdiction has (i) removed condition number three set forth in
the special use permit, case no. SP-81-82 dated December 29, 1982
(as amended or modified) under which the Sandpebble Property was
developed, and (ii) issued the appropriate variance and amendment
to special use permit, zoning change or other measure such that
the current number of residential units located on the Sandpebble
Property are permitted under the municipal density requirements
of Sparks, Nevada without further conditions or restrictions on-site or
off-site (collectively, the "Additional Sandpebble
Condition"), (b) the Additional Sandpebble Condition may be
waived in writing by the Buyer, (c) the Additional Sandpebble
Condition shall not be a condition to Buyer's obligation to close
under this Agreement with respect to any other Property, (d)
Seller may, but shall not be obligated to, adjourn the Closing
Date with respect to the Sandpebble Property for a period not
exceeding seventy-five (75) days in the event that the Additional
Sandpebble Condition shall not have been satisfied on or prior to
the scheduled Closing Date, (e) Seller shall have no obligation
to satisfy the Additional Sandpebble Condition, and the failure
of such condition to be satisfied shall in no event (x)
constitute a default by Seller or a breach of any of Seller's
representations or warranties, (y) be the basis of any claim by
Buyer against Seller, or any right of Buyer to terminate this
Agreement with respect to any Property other than the Sandpebble
Property or to request an adjustment to the Purchase Price (other
than a reduction in an amount equal to the Allocated Purchase
Price for such Property), or (z) otherwise affect or excuse any
of Buyer's covenants, agreements or obligations under this
Agreement, and (f) in the event that Seller has not satisfied the
Additional Sandpebble Condition on or prior to the Closing Date
(as the same may be adjourned by Seller as provided above), and
Buyer shall not have elected to waive such condition, Seller may,
at Seller's option, withdraw the Sandpebble Property from this
Agreement and terminate this Agreement as to such Property, upon
<PAGE>
which termination, provided that Buyer is not in default
hereunder, Seller shall instruct the Escrow Agent to return the
Allocated Earnest Money with respect to such Property to Buyer.
13.18. THIS AGREEMENT SHALL NOT BE BINDING AND
EFFECTIVE UNTIL EXECUTED BY BOTH BUYER AND SELLER.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed by the parties on
the date first above written.
BUYER:
WXI/SPN REAL ESTATE LIMITED PARTNERSHIP
By: WXI/SPN Gen-Par, L.L.C.,
General Partner
By: /s/ Alan Kava
----------------------
SELLER(S):
PRUDENTIAL-BACHE/A.G. SPANOS
REALTY PARTNERS L.P., I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Brian J. Martin
--------------------------
By: A.G. Spanos Realty Partners, L.P., a
California limited partnership,
General Partner
By: AGS Financial Corporation,
General Partner
By: /s/ Arthur J. Cole
--------------------------
By: A.G. Spanos Realty Capital, Inc.,
General Partner
By: /s/ Arthur J. Cole
--------------------------
<PAGE>
SCHEDULE 1
PROPERTY NAMES AND LOCATIONS/SELLERS
Cameron Creek, Tempe, AZ
Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
Bernardo Crest, San Diego, CA
Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
Pointe West, Aurora, CO
Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
Sandpebble Village, Sparks, NV
Prudential-Bache/A.G. Spanos Realty
Partners L.P., I
<PAGE>
SCHEDULE 2
PREPAYMENT FEES
Cameron Creek, Tempe, AZ
None
Bernardo Crest, San Diego, CA
None
Pointe West, Aurora, CO
None
Sandpebble Village, Sparks, NV
None
<PAGE>
SCHEDULE 3
PURCHASE PRICE AND EARNEST MONEY ALLOCATIONS/
TAX ALLOCATIONS
A. The following sets forth the Allocated Purchase Price and
the Allocated Earnest Money for each of the Properties:
Cameron Creek, Tempe, AZ
$10,512,306
$525,600
Bernardo Crest, San Diego, CA
$20,833,492
$ 1,041,600
Pointe West, Aurora, CO
$6,496,033
$324,750
Sandpebble Village, Sparks, NV
$9,062,091
$453,050
B. The following sets forth the portion of the Allocated
Purchase Price allocated to Personalty for all of the
Properties:
Cameron Creek, Tempe, AZ
$158,250
Bernardo Crest, San Diego, CA
$162,000
Pointe West, Aurora, CO
$103,500
Sandpebble Village, Sparks, NV
$177,000
<PAGE>
SCHEDULE 4
SERVICE CONTRACTS
<PAGE>
SCHEDULE 5
PROPERTY MANAGEMENT CONTRACTS
Cameron Creek, Tempe, AZ
November 18, 1988
Bernardo Crest, San Diego, CA
November 18, 1988
Pointe West, Aurora, CO
November 18, 1988
Sandpebble Village, Sparks, NV
November 18, 1988
<PAGE>
SCHEDULE 6
(RENT ROLLS/DELINQUENCY REPORTS/
SECURITY DEPOSIT REPORTS)
<PAGE>
SCHEDULE 7
LITIGATION
<PAGE>
SCHEDULE 8
ENVIRONMENTAL REPORTS
Bernardo Crest
San Diego CA
9/17/1997
Phase I Environmental Assessment
Cameron Creek (Arizona)
Tempe AZ
10/16/1997
Phase I Environmental Assessment
Pointe West
Aurora CO
9/9/1997
Phase I Environmental Assessment
Sandpebble Village
Sparks NV
10/2/1997
Phase I Environmental Assessment
<PAGE>
SCHEDULE 9
ENGINEERING REPORTS
Bernardo Crest
San Diego, CA
Property Condition Report
Eckland Consultants
9/17/1997
Seismic Report
Eckland Consultants
9/17/1997
Sandpebble Village
Sparks, NV
Property Condition Report
Eckland Consultants
9/16/1997
Cameron Creek
Tempe, AZ
Property Condition Report
Eckland Consultants
10/16/1997
Pointe West
Aurora, CO
Property Condition Report
Eckland Consultants
9/8/1997
<PAGE>
SCHEDULE 10
LEASING AND CREDIT APPROVAL GUIDELINES
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> The Schedule contains summary financial
information extracted from the financial
statements for Prudential-Bache/A.G. Spanos
Realty Partners L.P., I, and is qualified
entirely by reference to such financial
statements.
</LEGEND>
<RESTATED>
<CIK> 0000844159
<NAME> Prudential-Bache/A.G. Spanos Realty Partners L.P., I
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Dec-31-1998
<PERIOD-TYPE> 12-Mos
<CASH> 552192
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4712324
<PP&E> 105454025
<DEPRECIATION> 33870048
<TOTAL-ASSETS> 76296301
<CURRENT-LIABILITIES> 2279738
<BONDS> 62949730
0
0
<COMMON> 0
<OTHER-SE> 11066833
<TOTAL-LIABILITY-AND-EQUITY> 76296301
<SALES> 16160792
<TOTAL-REVENUES> 16297357
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 11502624
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5019008
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (224275)
<EPS-PRIMARY> (0.69)
<EPS-DILUTED> 0
</TABLE>
