UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 5, 1998 (March 4, 1998)
The Price REIT, Inc.
(Exact name of registrant as specified in charter)
Maryland 1-13432 52-1746059
(State or Other Jurisdiction(Commission File(IRS Employer
of Incorporation) Number) Identification No.)
7979 Ivanhoe Avenue, Suite 524, La Jolla, California 92037
(Address of Principal Executive Offices) (Zip Code)
(619) 551-2320
(Registrant's Telephone Number, Including Area Code)
None
(Former name or former address, if changed since last report.)
Item 5. Other Events
Between March 4, 1998 and June 3, 1998, The Price REIT, Inc., a Maryland
corporation (the "Company"), acquired six properties for an aggregate purchase
price of $74,233,000. The properties are:
Marketplace at Rivergate ("Marketplace") located in Nashville, Tennessee was
acquired on March 4, 1998 from First Capital Institutional Real Estate, Ltd.-2.
Marketplace contains approximately 109,000 square feet of leasable area. The
center is currently 100% leased and is anchored by Marshalls, OfficeMax and Old
Country Buffet. The purchase price of this property was $8,128,000. The Company
financed this acquisition with borrowings of $4,000,000 under its line of credit
and the remainder from operating cash.
Vista Ridge Plaza ("Plaza") located in Lewisville, Texas was acquired on March
11, 1998 from Vista Ridge Plaza, Ltd. The property contains approximately
122,000 square feet of leasable area. Major tenants include Babies `R' Us and
HomePlace. The property is currently 100% occupied. The purchase price of this
property was $12,550,000. The Company financed this acquisition with borrowings
of $10,000,000 under its line of credit and the remainder from operating cash.
The Shops at Vista Ridge ("Shops") located in Lewisville, Texas was acquired on
March 11, 1998 from Vista Ridge Shops, Inc. The property contains approximately
75,000 square feet of leasable space, and is anchored by Talbot's Bally's and
Southwestern Bell Mobile. The property is currently 98% occupied. The purchase
price was $10,950,000. The Company financed this acquisition with borrowings of
$10,000,000 under its line of credit and the remainder from operating cash.
Plaza and Shops were purchased by Price/Baybrook, Ltd., a Texas limited
partnership, of which the Company is a 99% limited partner; the remaining 1% are
general partnership interest is owned by Price/Texas, Inc., a wholly-owned
subsidiary of the Company.
Franklin Towne Center ("Center") located in Franklin, New Jersey was acquired on
May 21, 1998 from Franklin Field Plaza Limited Partnership. Center is anchored
by Edwards Super Food Stores, Reynold's Department Store and Revco Drugstore.
The property is currently 100% occupied. Center was purchased by Price/Franklin,
LLC, a Delaware limited liability company ("Price/Franklin"), of which a wholly
owned subsidiary of the Company is the sole member. The purchase price of this
property was $19,100,000 subject to a $13,100,000 mortgage which was assumed by
Price/Franklin. The balance was financed with part of the proceeds from the
Company's sale of 65,000 shares of its Class A Floating Rate Cumulative
Preferred Stock (the "Preferred Stock").
Paseo Del Norte ("Paseo") located in Albuquerque, New Mexico was acquired on
June 3, 1998 from Paseo Del Norte Plaza Associates, Limited Partnership. Paseo
contains approximately 184,000 rentable square feet and is anchored by
Cellularone, Chronicle Books, Movies West, Home Town Buffet, Valley Furniture
and Western Warehouse. The property is currently 100% occupied. The purchase
price of this property was $17,755,000 subject to a $8,018,000 mortgage which
was assumed by the Company. The Company financed the balance with part of the
proceeds from its sale of 65,000 shares of Preferred Stock.
A portion of Sycamore Plaza ("Sycamore") located in Albuquerque, New Mexico was
acquired on June 3, 1998 from Sycamore Realty Company. Sycamore contains
approximately 252,000 square feet of retail space of which the Company acquired
38,000 rentable square feet. Sycamore's tenants include Wal-Mart (separately
owned), Smith's (separately owned), Blockbuster Video (separately owned), Baggin
Bagels, Converse, GNC, Sears, Supercuts and Serta Mattress. The Company's
portion of Sycamore is 100% leased. The purchase price of this property was
$5,750,000 subject to a $1,860,000 mortgage which was assumed by the Company.
The Company financed the balance with proceeds from its sale of 65,000 shares of
Preferred Stock.
Item 7. Financial Statements and Exhibits
(a) Financial Statement of Property Acquired
Vista Ridge Plaza
Report of Independent Auditors
Statement of Revenue Over Specific Operating Expenses
Notes to Statement of Revenue Over Specific Operating Expenses
(b) Financial Statement of Property Acquired
The Shops at Vista Ridge
Report of Independent Auditors
Statement of Revenue Over Specific Operating Expenses
Notes to Statement of Revenue Over Specific Operating Expenses
(c) Financial Statement of Property Acquired
Franklin Towne Center
Report of Independent Auditors
Statement of Revenue Over Specific Operating Expenses
Notes to Statement of Revenue Over Specific Operating Expenses
(d) Pro Forma Financial Information
The Price REIT, Inc.
Pro Forma Condensed Balance Sheet as of March 31, 1998
The Price REIT, Inc.
Pro Forma Condensed Statement of Income for the year ended December
31, 1997
The Price REIT, Inc.
Pro Forma Condensed Statement of Income for the three months ended
March 31, 1998
(e) Exhibits
The following exhibits are filed with this report on Form 8-K.
Exhibit No. Description
10.1 Real Estate Agreement, dated as of December 4, 1997,
by and between First Capital Institutional Real
Estate, Ltd.-2, a Florida limited partnership, and The
Price REIT, Inc. (Marketplace) (incorporated herein by
reference to Exhibit 10.52 to the Company's Annual
Report on Form 10-K for the year ended December 31,
1997)
10.2 Purchase and Sale Agreement and Escrow Instructions,
dated as of December 17, 1997, by and between Vista
Ridge Plaza, Ltd., a Texas limited partnership, Vista
Ridge Plaza II, Ltd., a Texas limited partnership, and
Vista Ridge Shops, Inc., a Texas corporation, The
Price/Baybrook, Ltd., a Texas limited partnership, and
Westar Title Company, as Escrow Holder (Vista Ridge
Plaza and The Shops at Vista Ridge) (incorporated
herein by reference to Exhibit 10.53 to the Company's
Annual Report on Form 10-K for the year ended December
31, 1997)
10.3 Purchase and Sale Agreement and Escrow Instructions,
dated as of November 24, 1997, by and between Franklin
Field Plaza Limited Partnership, a New Jersey limited
partnership ("Franklin Field Plaza"), The Price REIT,
Inc. and Eastern Title Agency, Inc. (Franklin Towne
Center)
10.3A Agreement to Revoke Termination of and Amend Purchase
and Sale Contract, dated as of April 14, 1998, between
Franklin Field Plaza and The Price REIT, Inc.
10.3B Assignment of Purchase and Sale Contract, dated as of
May 21, 1998, by The Price REIT, Inc. to
Price/Franklin, LLC, a Delaware limited liability
company.
10.4 Agreement of Sale and Purchase of Improved Real
Property, dated as of April 3, 1998, by and between
The Price REIT, Inc. and Paseo Del Norte Plaza
Associates Limited Partnership, a New Mexico limited
partnership (Paseo)
10.5 Agreement of Sale and Purchase of Improved Real
Property, dated as of April 3, 1998, by and between
The Price REIT, Inc. and Sycamore Realty Company,
Inc., a New Mexico corporation (Sycamore)
23.1 Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Form 8-K to be signed on its behalf by the
undersigned hereunto duly authorized.
The Price REIT, Inc.
(Registrant)
Date: June 5, 1998 By: /s/ George M. Jezek
--------------------
George M. Jezek
Executive Vice President,
Chief Financial Officer and Secretary
Exhibit Index
Exhibit No. Description
10.1 Real Estate Agreement, dated as of December 4, 1997, by
and between First Capital Institutional Real Estate, Ltd.-
2, a Florida limited partnership, and The Price REIT, Inc.
(Marketplace) (incorporated herein by reference to Exhibit
10.52 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997)
10.2 Purchase and Sale Agreement and Escrow Instructions, dated
as of December 17, 1997, by and between Vista Ridge Plaza,
Ltd., a Texas limited partnership, Vista Ridge Plaza II,
Ltd., a Texas limited partnership, and Vista Ridge Shops,
Inc., a Texas corporation, The Price/Baybrook, Ltd., a
Texas limited partnership, and Westar Title Company, as
Escrow Holder (Vista Ridge Plaza and The Shops at Vista
Ridge) (incorporated herein by reference to Exhibit 10.53
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1997)
10.3 Purchase and Sale Agreement and Escrow Instructions, dated
as of November 24, 1997, by and between Franklin Field
Plaza Limited Partnership, a New Jersey limited
partnership ("Franklin Field Plaza"), The Price REIT, Inc.
and Eastern Title Agency, Inc. (Franklin Towne Center)
10.3A Agreement to Revoke Termination of and Amend Purchase and
Sale Contract, dated as of April 14, 1998, between
Franklin Field Plaza and The Price REIT, Inc.
10.3B Assignment of Purchase and Sale Contract, dated as of May
21, 1998, by The Price REIT, Inc. to Price/Franklin, LLC,
a Delaware limited liability company.
10.4 Agreement of Sale and Purchase of Improved Real Property,
dated as of April 3, 1998, by and between The Price REIT,
Inc. and Paseo Del Norte Plaza Associates Limited
Partnership, a New Mexico limited partnership (Paseo)
10.5 Agreement of Sale and Purchase of Improved Real Property,
dated as of April 3, 1998, by and between The Price REIT,
Inc. and Sycamore Realty Company, Inc., a New Mexico
corporation (Sycamore)
23.1 Consent of Independent Auditors
Report of Independent Auditors
The Board of Directors and Stockholders
The Price REIT, Inc.
We have audited the accompanying statement of revenue over specific operating
expenses of the Vista Ridge Plaza (the "Plaza") for the period from April 1,
1997 (inception) through December 31, 1997. The statement is the responsibility
of the Plaza's manage-ment. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the basis of
accounting used and significant estimates made by manage-ment, as well as
evaluating the overall presentation of the statement. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement of revenue over specific operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of The Price
REIT, Inc. as described in Note 2, and is not intended to be a complete
presentation of the Plaza's revenue and expenses.
In our opinion, the statement of revenue over specific operating expenses
referred to above presents fairly, in all material respects, the revenue over
specific operating expenses of the Plaza, as described in Note 2, for the period
from April 1, 1997 (inception) through December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
San Diego, California
May 8, 1998
Vista Ridge Plaza
Statement of Revenue Over Specific Operating Expenses
(In Thousands)
Period from
April 1, 1997 Three Months Ended
(inception) March 31,
through
-------------------
December 31, 1997 1998 1997
---------------------------------------
(Unaudited)
Revenue
Rental income $1,071 $ 405 $ -
Specific Operating Expenses
Rental operations, maintenance
and management 81 36 -
Real estate taxes 93 31 -
---------------------------------------
174 67 -
---------------------------------------
Excess of Revenue over Specific
Operating Expenses $ 897 $ 338 $ -
=======================================
See accompanying notes.
Vista Ridge Plaza
Notes To Statement of Revenue Over
Specific Operating Expenses
Period from April 1, 1997 (Inception) through December 31, 1997
1. Acquisition and Significant Accounting Policies
Organization
The Price REIT, Inc. (the "Company") acquired the Vista Ridge Plaza (the
"Plaza") on March 11, 1998 from Vista Ridge Plaza, Ltd. ("Vista Ridge Plaza").
The Plaza is a 122,000 rentable square-foot shopping center located in
Lewisville, Texas which was completed and commenced operations on April 1, 1997.
Rental Income
Rental income is recorded on a straight-line basis over the lives of the tenant
leases.
Use of Estimates
The preparation of the Plaza's statement of revenue over specific operating
expenses requires management to make estimates and assumptions that affect the
reported amounts of revenue and specific operating expenses during the reporting
period. Due to uncertain-ties inherent in the estimation process, it is possible
that actual results could differ from these estimates.
2. Basis of Presentation
The statement of revenue over specific operating expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of The Price REIT, Inc. and is
not intended to be a complete presentation of the Plaza's revenue and expenses.
The statement of revenue over specific operating expenses excludes depreciation,
amortization and certain other expenses of the Plaza which are not comparable
with the future operations of the Plaza.
In the opinion of management, the unaudited financial information contains all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the statement of revenue over specific operating expenses
of the Plaza.
Property taxes have not been adjusted to reflect the estimated reassessed value
of the Plaza after acquisition by the Company.
The statement contains no provision for income taxes because the Company intends
to continue to qualify as a real estate investment trust ("REIT") under both
Federal and state statutes. A REIT is not taxed on income distributed to its
stockholders, and the Company plans to distribute substantially all of its
taxable income to its stockholders.
3. Rental Income
The Plaza is generally leased to tenants under noncancellable operating leases
with remaining terms ranging from five to 15 years. The leases generally contain
provisions for predetermined fixed increases in rent and require the tenants to
reimburse the owner for substantially all operating expenses of the property.
Future minimum rental income due under the terms of the operating leases is as
follows (in thousands):
1998 $1,113
1999 1,382
2000 1,391
2001 1,394
2002 1,220
Thereafter 9,009
The following tenants accounted for greater than 10% of total revenue in 1997
(in thousands):
Revenue
-------
HomePlace $ 352
Baby Superstore 248
On January 5, 1998, HomePlace filed for relief under Chapter 11 of the United
States Bankruptcy Code. The impact of this event on the operations of the Plaza
is not yet determinable. The purchase price of the Plaza included $1.8 million
which was deposited into escrow. The Company may be entitled to certain
disbursements of funds out of the escrow account up to a maximum of $1.8 million
plus accrued interest depending upon, among other things, whether HomePlace
assumes or rejects its lease.
4. Related Party Transaction
Rental operations, maintenance and management includes $30,000 of management
fees paid to an affiliate of Vista Ridge Plaza during the period from April 1,
1997 (inception) through December 31, 1997.
Report of Independent Auditors
The Board of Directors and Stockholders
The Price REIT, Inc.
We have audited the accompanying statement of revenue over specific operating
expenses of The Shops at Vista Ridge (the "Shops") for the year ended December
31, 1997. The statement is the responsibility of the Shops' management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the basis of
accounting used and significant estimates made by management, as well as
evaluating the overall presentation of the statement. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement of revenue over specific operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of The Price
REIT, Inc. as described in Note 2, and is not intended to be a complete
presentation of the Shops' revenue and expenses.
In our opinion, the statement of revenue over specific operating expenses
referred to above presents fairly, in all material respects, the revenue over
specific operating expenses of the Shops, as described in Note 2, for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
San Diego, California
May 8, 1998
The Shops at Vista Ridge
Statement of Revenue Over Specific Operating Expenses
(In Thousands)
Year Ended Three Months Ended
December 31, March 31,
--------------------
1997 1998 1997
--------------------------------------
(Unaudited)
Revenue
Rental income $1,195 $ 370 $ 236
Specific Operating Expenses
Rental operations, maintenance
and management 137 32 27
Real estate taxes 154 39 38
--------------------------------------
291 71 65
--------------------------------------
Excess of Revenue over Specific
Operating Expenses $ 904 $ 299 $ 171
======================================
See accompanying notes.
The Shops at Vista Ridge
Notes To Statement of Revenue Over
Specific Operating Expenses
Year ended December 31, 1997
1. Acquisition and Significant Accounting Policies
Organization
The Price REIT, Inc. (the "Company") acquired The Shops at Vista Ridge (the
"Shops") on March 11, 1998 from Vista Ridge Shops, Inc. ("Vista Ridge Shops").
The Shops is a 75,000 rentable square-foot shopping center built in 1996, and
located in Lewisville, Texas.
Rental Income
Rental income is recorded on a straight-line basis over the lives of the tenant
leases.
Use of Estimates
The preparation of the Shops' statement of revenue over specific operating
expenses requires management to make estimates and assumptions that affect the
reported amounts of revenue and specific operating expenses during the reporting
period. Due to uncertain-ties inherent in the estimation process, it is possible
that actual results could differ from these estimates.
2. Basis of Presentation
The statement of revenue over specific operating expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of The Price REIT, Inc. and is
not intended to be a complete presentation of the Shops' revenue and expenses.
The statement of revenue over specific operating expenses excludes depreciation,
amortization and certain other expenses of the Shops which are not comparable
with the future operations of the Shops.
In the opinion of management, the unaudited financial information contains all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the statement of revenue over specific operating expenses
of the Shops.
Property taxes have not been adjusted to reflect the estimated reassessed value
of the Shops after acquisition by the Company.
The statement contains no provision for income taxes because the Company intends
to continue to qualify as a real estate investment trust ("REIT") under both
Federal and state statutes. A REIT is not taxed on income distributed to its
stockholders, and the Company plans to distribute substantially all of its
taxable income to its stockholders.
3. Rental Income
The Shops is generally leased to tenants under noncancellable operating leases
with remaining terms ranging from four to 10 years. The leases generally contain
provisions for predetermined fixed increases in rent and require the tenants to
reimburse the owner for substantially all operating expenses of the property.
Future minimum rental income due under the terms of the operating leases is as
follows (in thousands):
1998 $ 977
1999 1,214
2000 1,231
2001 1,213
2002 837
Thereafter 2,485
The following tenants accounted for greater than 10% of total revenue in 1997
(in thousands):
Revenue
-------
Talbot's $ 216
S.W. Bell Mobile Systems 139
4. Related Party Transaction
Rental operations, maintenance and management includes $36,000 of management
fees paid to an affiliate of Vista Ridge Shops during the year ended December
31, 1997.
Report of Independent Auditors
The Board of Directors and Stockholders
The Price REIT, Inc.
We have audited the accompanying statement of revenue over specific operating
expenses of the Franklin Towne Center (the "Center") for the year ended December
31, 1997. The statement is the responsibility of the Center's management. Our
responsibility is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement. An audit also includes assessing the basis of
accounting used and significant estimates made by management, as well as
evaluating the overall presentation of the statement. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement of revenue over specific operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of The Price
REIT, Inc. as described in Note 2, and is not intended to be a complete
presentation of the Center's revenue and expenses.
In our opinion, the statement of revenue over specific operating expenses
referred to above presents fairly, in all material respects, the revenue over
specific operating expenses of the Center, as described in Note 2, for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
San Diego, California
May 5, 1998
Franklin Towne Center
Statement of Revenue Over Specific Operating Expenses
(In Thousands)
Year Ended Three Months Ended
December 31, March 31,
-------------------
1997 1998 1997
-------------------------------------
(Unaudited)
Revenue
Rental income $2,638 $ 660 $ 665
Specific Operating Expenses
Rental operations, maintenance
and management 302 54 65
Real estate taxes 333 84 83
-------------------------------------
635 138 148
Excess of Revenue over Specific
Operating Expenses $2,003 $ 522 $ 517
=====================================
See accompanying notes.
Franklin Towne Center
Notes To Statement of Revenue Over
Specific Operating Expenses
Year ended December 31, 1997
1. Acquisition and Significant Accounting Policies
Organization
The Price REIT, Inc. (the "Company") acquired the Franklin Towne Center (the
"Center") on May 21, 1998 from Franklin Field Plaza Limited Partnership
("Franklin"). The Center is a 138,000 rentable square-foot shopping center built
in 1990, and located in Franklin Park, New Jersey.
Rental Income
Rental income is recorded on a straight-line basis over the lives of the tenant
leases.
Use of Estimates
The preparation of the Center's statement of revenue over specific operating
expenses requires management to make estimates and assumptions that affect the
reported amounts of revenue and specific operating expenses during the reporting
period. Due to uncertainties inherent in the estimation process, it is possible
that actual results could differ from these estimates.
2. Basis of Presentation
The statement of revenue over specific operating expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of The Price REIT, Inc. and is
not intended to be a complete presentation of the Center's revenue and expenses.
The statement of revenue over specific operating expenses excludes depreciation,
amortization and certain other expenses of the Center which are not comparable
with the future operations of the Center.
In the opinion of management, the unaudited financial information contains all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the statement of revenue over specific operating expenses
of the Center.
Property taxes have not been adjusted to reflect the estimated reassessed value
of the Center after acquisition by the Company.
The statement contains no provision for income taxes because the Company intends
to continue to qualify as a real estate investment trust ("REIT") under both
Federal and state statutes. A REIT is not taxed on income distributed to its
stockholders, and the Company plans to distribute substantially all of its
taxable income to its stockholders.
3. Rental Income
The Center is generally leased to tenants under noncancellable operating leases
with remaining terms ranging from two to 13 years. The leases generally contain
provisions for predetermined fixed increases in rent and require the tenants to
reimburse the owner for substantially all operating expenses of the property.
Future minimum rental income due under the terms of the operating leases is as
follows (in thousands):
1998 $1,161
1999 1,876
2000 1,772
2001 1,210
2002 770
Thereafter 4,235
The following tenants accounted for greater than 10% of total revenue in 1997
(in thousands):
Revenue
-------
Edwards Super Food Stores $ 672
Lifestyle Fitness of Franklin 267
4. Related Party Transaction
Rental operations, maintenance and management includes $72,000 of management
fees paid to an affiliate of Franklin during the year ended December 31, 1997.
The Price REIT, Inc.
Pro Forma Condensed Balance Sheet
March 31, 1998
(Unaudited)
The following unaudited pro forma condensed balance sheet has been presented as
if the purchases of Vista Ridge Plaza, The Shops at Vista Ridge, Franklin Towne
Center and the 1998 Acquired Properties (collectively, the "Properties") and the
sale of $65,000,000 of Class A Floating Rate Cumulative Preferred Stock (the
"Preferred Stock") occurred on March 31, 1998. The 1998 Acquired Properties
consist of Marketplace at Rivergate, Paseo Del Norte and Sycamore Plaza. The
unaudited pro forma condensed balance sheet should be read in conjunction with
the condensed consolidated financial statements included in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998. In
management's opinion, all adjustments necessary to reflect the purchase of the
Centers and related significant transactions have been made. The unaudited pro
forma condensed balance sheet is not necessarily indicative of what the actual
financial position would have been at March 31, 1998, nor does it purport to
present the future financial position of the Company.
The Price REIT, Inc.
Pro Forma Condensed Balance Sheet
March 31, 1998
(Unaudited)
The The
Company Pro Forma Company
Historical Adjustments Pro Forma
---------------------------------------------
(In Thousands)
Assets
Rental property, net $617,657 $ 74,233 (b) $691,890
Other assets 52,813 (11,555)(a)(b) 41,258
---------------------------------------------
$670,470 $ 62,678 $733,148
=============================================
Liabilities and Stockholders' Equity
Liabilities $345,301 $(48,000)(a) $344,279
46,978 (b)
Stockholders' Equity 325,169 63,700 (a) 388,869
---------------------------------------------
$670,470 $ 62,678 $733,148
=============================================
See accompanying pro forma adjustments.
The Price REIT, Inc.
Pro Forma Adjustments to Condensed Balance Sheet
March 31, 1998
(Unaudited)
(a) Record the sale of Preferred Stock on May 18, 1998 and paydown of
$48,000,000 of the line of credit.
Gross proceeds $ 65,000,000
Cost of issuance (1,300,000)
-------------
Net proceeds $ 63,700,000
=============
(b) Record the acquisitions of the Properties from operating cash, draws from
the Company's unsecured line of credit and assumption of secured loans as
follows:
Paid from
---------------------------
Acquisition Line of Loan
Date Property Name Cost Cash Credit Assumed
------ ------------- ------------------------------------
1998 (In Thousands)
March 4 Marketplace at Rivergate $ 8,128 $ 4,128 $ 4,000 $ -
March 11 Vista Ridge Plaza 12,550 2,550 10,000 -
March 11 The Shops at Vista Ridge 10,950 950 10,000 -
May 21 Franklin Towne Center 19,100 6,000 - 13,100
June 3 Paseo Del Norte 17,755 9,737 - 8,018
June 3 Sycamore Plaza 5,750 3,890 - 1,860
------------------------------------
$74,233 $27,255 $24,000 $22,978
====================================
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1997
(Unaudited)
The following unaudited pro forma condensed statement of income for the year
ended December 31, 1997 has been presented as if: 1) the Vista Ridge Plaza was
acquired on April 1, 1997, the date it was completed and commenced operations;
2) The Shops at Vista Ridge, Franklin Towne Center and the 1998 Acquired
Properties were acquired on January 1, 1997; and 3) the sale of $65,000,000 of
Class A Floating Rate Cumulative Preferred Stock (the "Preferred Stock")
occurred on January 1, 1997. The 1998 Acquired Properties consist of the
Marketplace at Rivergate, Paseo Del Norte and Sycamore Plaza. The unaudited pro
forma condensed statement of income should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 1997. In
management's opinion, all adjustments necessary to reflect the above
acquisitions and related significant transactions have been made. The unaudited
pro forma condensed statement of income is not necessarily indicative of what
actual results of operations would have been had the acquisitions and related
transactions actually occurred as of January 1, 1997, nor does it purport to
represent the results of operations of the Company for future periods.
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1997
(Unaudited)
Pro Forma Adjustments
-----------------------------------------
The Vista The Shops Franklin
Company Ridge at Vista Towne
Historical Plaza Ridge Center
------------------------------------------------------
(In thousands, except per share amounts)
REVENUE
Rental Income $69,335 $ 1,071(a) $ 1,195(a) $ 2,638(a)
Other income 6,090 - - -
------------------------------------------------------
75,425 1,071 1,195 2,638
EXPENSES
Rental operations 13,561 144(b) 255(b) 563(b)
General and
Administrative 4,191 - - -
Depreciation 15,752 274(c) 319(c) 556(c)
Interest 15,667 518(d) 690(d) 1,032(e)
------------------------------------------------------
49,171 936 1,264 2,151
------------------------------------------------------
Net Income (loss) 26,254 $ 135 $ (69) $ 487
=========================================
Preferred stock
Dividend -
---------
Net income avail-
able for common
stockholders $26,254
=========
PER SHARE DATA
Net income per
share:
Basic $ 2.39
Diluted $ 2.36
Weighted average
number of shares
outstanding:
Basic 10,982
Diluted 11,113
OTHER DATA
Number of
properties at
end of period 37
Pro Forma Adjustments
---------------------------------------------
1998 The
Acquired Company
Properties Corporate Pro Forma(i)
---------------------------------------------
(In thousands, except per share amounts)
REVENUE
Rental Income $ 3,548(a) $ - $77,787
Other income - (578)(f) 5,512
---------------------------------------------
3,548 (578) 83,299
EXPENSES
Rental operations 628(b) - 15,151
General and
Administrative - - 4,191
Depreciation 921(c) - 17,822
Interest 1,023(d)(e) (3,312)(g) 15,618
---------------------------------------------
2,572 (3,312) 52,782
---------------------------------------------
Net Income (loss) $ 976 $ 2,734 30,517
============================
Preferred stock
Dividend 5,005(h) 5,005
---------
Net income avail-
able for common
stockholders $25,512
=========
PER SHARE DATA
Net income per
share:
Basic $ 2.32
Diluted $ 2.30
Weighted average
number of shares
outstanding:
Basic 10,982
Diluted 11,113
OTHER DATA
Number of
properties at
end of period 43
See accompanying pro forma adjustments.
The Price REIT, Inc.
Pro Forma Adjustments to Condensed Statement of Income
For the Year Ended December 31, 1997
(Unaudited)
(In Thousands)
(a) Record the rental income of the Vista Ridge Plaza, The Shops at Vista
Ridge, Franklin Towne Center and 1998 Acquired Properties (collectively,
the "Properties").
(b) Record the rental operating expenses of the Properties less property
management fees (as the Company self-manages its properties) as follows:
Vista The Shops at Franklin 1998 Acquired
Ridge Plaza Vista Ridge Towne Center Properties
------------------------------------------------------
Rental operations $ 174 $ 291 $ 635 $ 748
Less: management fees (30) (36) (72) (120)
------------------------------------------------------
$ 144 $ 255 $ 563 $ 628
======================================================
(c) Record the additional depreciation expense to be recognized for the
acquisition of the Properties under the straight-line method as follows:
The Shops
Vista Ridge Plaza At Vista Ridge
--------------------------------------------
Years Cost Deprec Cost Deprec
----------------------------------------------------
Land - $ 3,969 $ - $ 3,463 $ -
Land
Improvements 15 819 41 714 48
Buildings 25 7,762 233 6,773 271
--------------------------------------------
$12,550 $ 274 $10,950 $ 319
============================================
Franklin 1998 Acquired
Towne Center Properties
--------------------------------------------
Years Cost Deprec Cost Deprec
----------------------------------------------------
Land - $ 6,041 $ - $10,004 $ -
Land
Improvements 15 1,246 83 2,065 138
Buildings 25 11,813 473 19,564 783
--------------------------------------------
$19,100 $ 556 $31,633 $ 921
============================================
(d) Record the additional interest expense resulting from the acquisitions of
the Properties with the proceeds from the unsecured line of credit, using
the Company's weighted average interest rate on its unsecured line of
credit for the year ended December 31, 1997 of 6.9%.
(e) Record the additional interest expense resulting from the assumption of the
$13,100, $8,018 and $1,860 secured loans on Franklin Towne Center, Paseo
Del Norte and Sycamore Plaza, respectively. The interest rates on the loans
are 7.875%, 7.455% and 8.000%, respectively.
(f) Record the reduction of interest income resulting from the use of $11,555
of existing cash for the purchase of Marketplace at Rivergate, Vista Ridge
Plaza and The Shops at Vista Ridge, using the Company's average interest
rate on cash investments for the year ended December 31, 1997 of 5%.
(g) Record the reduction of interest expense resulting from the paydown of the
line of credit from the net proceeds of the sale of Preferred Stock, using
the Company's weighted average interest rate on its unsecured line of
credit for the year ended December 31, 1997 of 6.9%.
(h) Record the preferred stock dividend resulting from the issuance of $65,000
of Preferred Stock with a dividend rate of LIBOR plus 2.0% (7.7% for the
year ended December 31, 1997).
(i) The proforma results reflect a complete year for the Properties, except for
Vista Ridge Plaza, which was completed and commenced operations on April 1,
1997.
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Three Months Ended March 31, 1998
(Unaudited)
The following unaudited pro forma condensed statement of income for the three
months ended March 31, 1998 has been presented as if 1) the Vista Ridge Plaza,
The Shops at Vista Ridge, Franklin Towne Center and the 1998 Acquired Properties
were acquired on January 1, 1998 and 2) the sale of $65,000,000 of Class A
Floating Rate Cumulative Preferred Stock (the "Preferred Stock") occurred on
January 1, 1998. The 1998 Acquired Properties consist of Marketplace at
Rivergate, Paseo Del Norte and Sycamore Plaza. The unaudited pro forma condensed
statement of income should be read in conjunction with the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1998. In
management's opinion, all adjustments necessary to reflect the above
acquisitions and related significant transactions have been made. The unaudited
pro forma condensed statement of income is not necessarily indicative of what
actual results of operations would have been had the acquisitions and related
transactions actually occurred as of January 1, 1998, nor does it purport to
represent the results of operations of the Company for future periods.
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Three Months Ended March 31, 1998
(Unaudited)
Pro Forma Adjustments
-----------------------------------------
The Vista The Shops Franklin
Company Ridge at Vista Towne
Historical Plaza Ridge Center
------------------------------------------------------
(In thousands, except per share amounts)
REVENUE
Rental Income $22,649 $ 277(a) $ 251(a) $ 660(a)
Other income 656 - - -
------------------------------------------------------
23,305 277 251 660
EXPENSES
Rental operations 4,755 46(b) 54(b) 119(b)
General and
Administrative 1,314 - - -
Depreciation 4,961 77(c) 67(c) 139(c)
Interest 5,646 172(d) 172(d) 258(e)
------------------------------------------------------
16,676 295 293 516
------------------------------------------------------
Net Income (loss) 6,629 $ (18) $ (42) $ 144
=========================================
Preferred stock
Dividend -
---------
Net income avail-
able for common
stockholders $ 6,629
=========
PER SHARE DATA
Net income per
share:
Basic $ 0.57
Diluted $ 0.56
Weighted average
number of shares
outstanding:
Basic 11,706
Diluted 11,936
OTHER DATA
Number of
properties at
end of period 40
Pro Forma Adjustments
---------------------------------------------
1999 The
Acquired Company
Properties Corporate Pro Forma(i)
---------------------------------------------
(In thousands, except per share amounts)
REVENUE
Rental Income $ 850(a) $ - $24,687
Other income - (144)(f) 512
---------------------------------------------
850 (144) 25,199
EXPENSES
Rental operations 140(b) - 5,114
General and
Administrative - - 1,314
Depreciation 210(c) - 5,454
Interest 255(d)(e) (823)(g) 5,680
---------------------------------------------
605 (823) 17,562
---------------------------------------------
Net Income (loss) $ 245 $ 679 7,637
============================
Preferred stock
Dividend 1,268(h) 1,268
---------
Net income avail-
able for common
stockholders $ 6,369
=========
PER SHARE DATA
Net income per
share:
Basic $ 0.54
Diluted $ 0.53
Weighted average
number of shares
outstanding:
Basic 11,706
Diluted 11,936
OTHER DATA
Number of
properties at
end of period 43
See accompanying pro forma adjustments.
The Price REIT, Inc.
Pro Forma Adjustments to Condensed Statement of Income
For the Three Months Ended March 31, 1998
(Unaudited)
(In Thousands)
(a) Record the rental income less amount included in the Company historical of
the Vista Ridge Plaza, The Shops at Vista Ridge, Franklin Towne Center and
1998 Acquired Properties (collectively, the "Properties").
(b) Record the rental operating expenses of the Properties less property
management fees (as the Company self-manages its properties) net of amount
included in the Company historical as follows:
Vista The Shops at Franklin 1998 Acquired
Ridge Plaza Vista Ridge Towne Center Properties
------------------------------------------------------
Rental operations $ 55 $ 63 $ 138 $ 172
Less: management fees (9) (9) (19) (32)
------------------------------------------------------
$ 46 $ 54 $ 119 $ 140
======================================================
(c) Record the additional depreciation expense to be recognized for the
acquisition of the Properties under the straight-line method as follows:
The Shops
Vista Ridge Plaza At Vista Ridge
--------------------------------------------
Years Cost Deprec Cost Deprec
----------------------------------------------------
Land - $ 3,969 $ - $ 3,463 $ -
Land
Improvements 15 819 14 714 12
Buildings 25 7,762 78 6,773 68
--------------------------------------------
$12,550 $ 92 $10,950 $ 80
============= =============
Less amount included in
the Company historical (15) (13)
-------- --------
$ 77 $ 67
======== ========
Franklin 1998 Acquired
Towne Center Properties
--------------------------------------------
Years Cost Deprec Cost Deprec
----------------------------------------------------
Land - $ 6,041 $ - $10,004 $ -
Land
Improvements 15 1,246 21 2,065 34
Buildings 25 11,813 118 19,564 196
--------------------------------------------
$19,100 $ 139 $31,633 $ 230
============= =============
Less amount included in
the Company historical ( - ) (20)
-------- --------
$ 139 $ 210
======== ========
(d) Record the additional interest expense resulting from the acquisitions of
the Properties with the proceeds from the unsecured line of credit, using
the Company's weighted average interest rate on its unsecured line of
credit for the three months ended March 31, 1998 of 6.86%.
(e) Record the additional interest expense resulting from the assumption of the
$13,100, $8,018 and $1,860 secured loans on Franklin Towne Center, Paseo
Del Norte and Sycamore Plaza, respectively. The interest rates on the loans
are 7.875%, 7.455% and 8.000%, respectively.
(f) Record the reduction of interest income resulting from the use of $11,555
of existing cash for the purchase of Marketplace at Rivergate, Vista Ridge
Plaza and The Shops at Vista Ridge, using the Company's average interest
rate on cash investments for the three months ended March 31, 1998 of 5%.
(g) Record the reduction of interest expense resulting from the paydown of the
line of credit from the net proceeds of the sale of Preferred Stock, using
the Company's weighted average interest rate on its unsecured line of
credit for the three months ended March 31, 1998 of 6.86%.
(h) Record the preferred stock dividend resulting from the issuance of $65,000
of Preferred Stock with a dividend rate of LIBOR plus 2.0% (7.8% for the
three months ended March 31, 1998).
================================================================================
The Price REIT, Inc.
145 South Fairfax Avenue
Los Angeles, CA 90036
February 17, 1998
Franklin Field Plaza Limited Partnership
225 Highway 35, P.O. Box 500
Red Bank, New Jersey 07701
Attn: J. Robert Clements
Burton J. Jaffe, Esq.
Frizell Clarkson & Jaffe
450 Main Street
Metuchen, New Jersey 08840-0474
Eastern Title Agency, Inc.
One Industrial Way West, Bldg. D
Eatontown, New Jersey 07724-0338
Attn: Michael Kehoe
Re: Franklin Towne Center
Dear Gentlemen:
Reference is made to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of November 24, 1997 By and Between Franklin Field Plaza
Limited Partnership, as Seller, and The Price REIT, Inc., as Buyer, and Eastern
Title Agency, Inc., as Escrow Holder, as amended (the "Agreement"). Capitalized
terms not otherwise defined herein shall have the meanings given to them in the
Agreement.
The Seller previously has notified the Buyer that Reynolds Brothers, Inc.
("Reynolds") elected to terminate its Lease (the "Reynolds Lease") at the
Property. The rent payments and other obligations of Reynolds to the landlord
under the Reynolds Lease was a material inducement to the Buyer's execution of
the Agreement. Pursuant to Section 4.12 of the Agreement, if the Buyer does not
notify the Seller that it has no objections to (among other things) the physical
or financial state of the Property on or before February 18, 1998, the Agreement
is deemed terminated. The Buyer desires to close the transactions contemplated
by the Agreement, but only subject to the terms and conditions set forth in this
letter agreement.
1. Reynolds Rescission; Amendment to Reynolds Lease. Prior to the
Closing, Seller shall deliver to the Buyer evidence satisfactory to Buyer in
Buyer's sole and absolute discretion that Reynolds has (a) rescinded the
termination of the Reynolds Lease, (b) waived all of its rights to terminate the
Reynolds Lease through the remainder of the lease term, and (c) provided the
landlord with any other assurances reasonably requested by Buyer of Reynolds'
affirmation of its obligations under the Reynolds Lease. Delivery of such
evidence to the Buyer shall be deemed to be an additional condition precedent to
Buyer's obligation to close as described in Article IV.A. of the Agreement. If
such evidence is not delivered to the Buyer prior to the scheduled Closing, then
(i) this letter shall be deemed to be Buyer's objection to the state of the
Property delivered to the Seller prior to the expiration of the Review Period,
(ii) Buyer shall have no obligation to close the sale of the Property, (iii) the
Agreement shall be deemed terminated prior to the expiration of the Review
Period, and (iv) the Earnest Money Deposit and all interest earned thereon shall
be returned to the Buyer within five (5) days after Buyer's notice to the Escrow
Holder of the failure of the foregoing condition precedent to the Closing.
2. Extension of the Review Period. The Buyer's Review Period defined in
Section 4.12 of the Agreement is hereby extended up to and including February
26, 1998.
3. The Closing Date. Notwithstanding any provision of the Agreement to
the contrary, including without limitation Section 5.2 of the Agreement, the
Closing Date shall be extended to a date to be agreed upon by the parties
subsequent to the execution of this letter agreement. In accordance with
Section 5.2(b) of the Agreement, Escrow Holder is hereby notified to retain all
items deposited with Escrow Holder by Buyer or Seller until further instructed
in writing by Buyer and Seller.
4. Non Impairment. Except as expressly provided herein, nothing in this
letter agreement shall alter or affect any provision, condition, requirement,
representation, warranty or covenant contained in the Agreement.
5. Effective Date. This letter agreement shall be effective as of
February 17, 1998.
6. Execution in Counterpart. This letter agreement may be executed in any
number of counterparts, each of which when executed and delivered will be deemed
to be an original and all of which, taken together, will be deemed to be one and
the same instrument
Very Truly Yours,
THE PRICE REIT, INC.,
a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Its: Sr. Exec. V.P.
AGREED TO:
SELLER:
FRANKLIN FIELD PLAZA LIMITED
PARTNERSHIP, a New Jersey
limited partnership
By: K. Hovnanian Properties
of Franklin, Inc.
Its: General Partner
By: /J. ROBERT CLEMENTS/
--------------------
J. Robert Clements
Its: President
CONSENT OF ESCROW COMPANY
The undersigned Escrow Company agrees to accept the foregoing
amendment to the Agreement, and be bound by the Agreement, as amended, in the
performance of its duties as Escrow Holder.
EASTERN TITLE AGENCY, INC.
By: /JIM TRACY/
--------------------
Escrow Officer
The Price REIT, Inc.
145 South Fairfax Avenue
Los Angeles, CA 90036
January 28, 1998
Franklin Field Plaza Limited Partnership
225 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
Attn: J. Robert Clements
Burton J. Jaffe, Esq.
Frizell Clarkson & Jaffe
450 Main Street
Metuchen, New Jersey 08840-0474
Eastern Title Agency, Inc.
One Industrial Way West, Bldg. D
Eatontown, New Jersey 07724-0338
Attn: Michael Kehoe
Re: Franklin Towne Center
Dear Gentlemen:
Reference is made to that certain Purchase and Sale Agreement and Escrow
Instructions dated as of November 24, 1997 By and Between Franklin Field Plaza
Limited Partnership, as Seller, and The Price REIT, Inc., as Buyer, and Eastern
Title Agency, Inc., as Escrow Holder (the "Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings given to them in the Agreement.
1. Extension of the Review Period. The Buyer's Review Period defined in
Section 4.12 of the Agreement is hereby extended up to and including February
18, 1998.
2. The Closing Date. Notwithstanding any provision of the Agreement to
the contrary, including without limitation Section 5.2 of the Agreement, the
Closing Date shall be extended to a date to be agreed upon by the parties
subsequent to the execution of this letter agreement. In accordance with
Section 5.2(b) of the Agreement, Escrow Holder is hereby notified to retain all
items deposited with Escrow Holder by Buyer or Seller until further instructed
in writing by Buyer and Seller.
3. Non Impairment. Except as expressly provided herein, nothing in this
letter agreement shall alter or affect any provision, condition, requirement,
representation, warranty or covenant contained in the Agreement.
4. Effective Date. This letter agreement shall be effective as of January
23, 1998.
5. Execution in Counterpart. This letter agreement may be executed in any
number of counterparts, each of which when executed and delivered will be deemed
to be an original and all of which, taken together, will be deemed to be one and
the same instrument
Very Truly Yours,
THE PRICE REIT, INC.,
a Maryland corporation
By: /LAWRENCE K. KRONENBERG/
------------------------
Its: Executive V.P. - Finance
AGREED TO:
SELLER:
FRANKLIN FIELD PLAZA LIMITED
PARTNERSHIP, a New Jersey
limited partnership
By: K. Hovnanian Properties of
Franklin, Inc. Its: General Partner
By: /J. ROBERT CLEMENTS/
--------------------
J. Robert Clements
Its: President
CONSENT OF ESCROW COMPANY
The undersigned Escrow Company agrees to accept the foregoing amendment to
the Agreement, and be bound by the Agreement, as amended, in the performance of
its duties as Escrow Holder.
EASTERN TITLE AGENCY, INC.
By: /JIM TRACY/
------------------
Escrow Officer
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
By and Between
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP
a New Jersey limited partnership,
as Seller
THE PRICE REIT, INC.
a Maryland corporation,
as Buyer
and
EASTERN TITLE AGENCY, INC.
as Escrow Holder
November 24, 1997
Article I PROPERTY 1
1.1 Land 1
1.2 Appurtenances 1
1.3 Improvements 2
1.4 Leases and Rents 2
1.5 Personal Property 2
1.6 Intangible Property 2
ARTICLE II PURCHASE PRICE; MEMORANDUM OF AGREEMENT 3
2.1 Purchase Price 3
2.2 Payment of Purchase Price 3
2.3 Earnest Money Deposit 3
2.4 Investment of Deposit 3
2.5 Deposit as Liquidated Damages 3
ARTICLE III TITLE TO PROPERTY 5
3.1 Title 5
3.2 Other Conveyance Documents 5
ARTICLE IV CONDITIONS TO CLOSING 5
A. Buyer's Conditions to Closing 5
4.1 Non-Foreign Status of Seller 5
4.2 Review and Approval of Title and Survey 6
4.3 Review and Approval of Other Matters 6
4.4 First Mortgage Loan Documents 7
4.5 Service and Other Contracts 8
4.6 Physical Characteristics of the Property 8
4.7 Governmental Permits, Approvals and
Regulations 9
4.8 Representations and Warranties 9
4.9 Impairment of Property 9
4.10 Approval 9
4.11 Objections to Title or Survey 9
4.12 Objections to Property or Other Matters 10
4.13 Tenant Matters 11
4.14 Delivery of Documents 11
B. Seller's Conditions to Closing 11
4.15 Delivery of Documents and Purchase Price 11
4.16 Assumption of Existing Loan 11
ARTICLE V CLOSING, RECORDING AND TERMINATION 12
5.1 Deposit with Escrow Holder and Escrow
Instructions 12
5.2 Closing 12
5.3 Delivery by Seller 12
5.4 Delivery By Buyer 14
5.5 Other Instruments 14
5.6 Prorations 15
5.7 Costs and Expenses 17
5.8 Closing and Recordation 17
5.9 Termination of Agreement 17
ARTICLE VI REPRESENTATIONS, WARRANTIES AND
COVENANTS OF SELLER 18
6.1 Authority 18
6.2 Title 18
6.3 The Leases 18
6.4 No Litigation or Adverse Events 19
6.5 Compliance With Laws 19
6.6 No Defaults in Other Agreements 19
6.7 Eminent Domain 19
6.8 Licenses, Permits, CO's, Zoning, etc. 19
6.9 Taxes and Assessments 20
6.10 Environment 20
6.11 Physical Condition 21
6.12 Employees 22
6.13 Mechanic's Liens 22
6.14 Operating Statements 22
6.15 Disclosure 22
6.16 No Leases of Property or Assets 22
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF
BUYER 23
7.1 Representations and Warranties of Buyer 23
ARTICLE VIII POSSESSION, DESTRUCTION AND
CONDEMNATION 23
8.1 Possession 23
8.2 Loss, Destruction and Condemnation 23
ARTICLE IX MAINTENANCE AND OPERATION OF THE
PROPERTY 25
9.1 Maintenance 25
9.2 Leases and Other Agreements 25
9.3 Encumbrances 26
9.4 Consents and Notices 26
9.5 Audit Cooperation 26
ARTICLE X MISCELLANEOUS 27
10.1 Notices 27
10.2 Brokers and Finders 28
10.3 Successors and Assigns 28
10.4 Amendments 28
10.5 Continuation and Survival of Indemnities,
Representations, Warranties and Post-Closing
Obligations 28
10.6 Interpretation 28
10.7 Governing Law 29
10.8 Merger of Prior Agreements 29
10.9 Attorneys' Fees 29
10.10 Notice of Termination 29
10.11 Specific Performance; Damages 29
10.12 Relationship 30
10.13 Counterparts 30
10.14 Recordation 30
10.15 Time of the Essence 30
DEFINITIONS
The following is a list of defined terms used herein and the sections
in which such terms are defined.
Term Section
- ---- ------------
Agreement Introduction
Approved Contracts 4.5
Appurtenances 1.2
Assignment of Intangible Property,
Warranties and Guarantees 1.6
Assignment of Leases and Rents 1.4
Bill of Sale 1.5
Buyer Introduction
Buyer Approval 4.9
Closing 5.2
Closing Date 5.2
Code 4.1
Contracts 4.5
Deed 1.1
Earnest Money Deposit 2.3
Escrow Holder Introduction
Existing Loan 4.3(k)
Improvements 1.3
Intangible Property 1.6
Land 1.1
Leases 1.4
Major Lease 4.9
Non-Foreign Certificate 4.1
Personal Property 1.5
Permitted Exceptions 4.11
Phase I Report 4.6
Property 1.6
Purchase Price 2.1
Real Property 1.6
Rent Roll Schedule G
Rents 1.4
Review Period 4.12
Seller Introduction
Survey 4.2(c)
Title Company 3.1
Title Policy 3.1
Title Report 4.2(a)
Update Certificate 5.3(k)
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS ("Agreement")
is made and entered into as of November 24, 1997, by and between FRANKLIN FIELD
PLAZA LIMITED PARTNERSHIP, a New Jersey limited partnership, ("Seller"), THE
PRICE REIT, INC., a Maryland corporation ("Buyer"), and EASTERN TITLE AGENCY,
INC. ("Escrow Holder"), with reference to the following facts:
A. Seller is the owner of the Property, as hereinafter defined.
B. Buyer desires to purchase from Seller and Seller desires to sell
to Buyer the Property, all on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual
agreements herein set forth, and other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Seller and Buyer, and where
appropriate Escrow Holder, agree as follows:
ARTICLE I
PROPERTY
Seller hereby agrees to sell and convey to Buyer, and Buyer hereby
agrees to purchase from Seller, subject to the terms and conditions set forth
herein, the following:
1.1 Land. That certain real property (the "Land") described in
Schedule A hereto, all of which shall be conveyed to Buyer pursuant to a bargain
and sale deed with covenant as to grantor's acts in the form of Schedule B
hereto (the "Deed");
1.2 Appurtenances. All rights, privileges and easements appurtenant
to and for the benefit of the Land, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances on and under the Land, as well as all
development rights, air rights, water, water rights and water stock relating to
the Land and any other easements, rights-of-way or appurtenances owned by Seller
and used in connection with the beneficial operation, use and enjoyment of the
Land, together with all rights of Seller in and to streets, sidewalks, alleys,
driveways, parking areas and areas adjacent thereto or used in connection
therewith, and all rights of Seller in any land lying in the bed of any existing
or proposed street adjacent to the Land (all of which are collectively referred
to as the "Appurtenances");
1.3 Improvements. All improvements and fixtures owned by Seller
located or to be located on the Land, including, without limitation, all
buildings and structures presently located on the Land or to be located thereon
on the Closing Date, all apparatus, equipment and appliances owned by Seller
presently located on the Land and used in connection with the operation or
occupancy thereof, such as heating and air conditioning systems and facilities
used to provide any utility services, parking services, refrigeration,
ventilation, garbage disposal, recreation or other services thereto (excluding
any of the foregoing which are owned by tenants) (all of which are collectively
referred to as the "Improvements");
1.4 Leases and Rents. All leases, occupancy agreements and other
similar agreements to which Seller is a party or by which it is bound, together
with all modifications, extensions and renewals thereof, any security deposits
of tenants or occupants pursuant to such leases or occupancy agreements (to the
extent that they have not been applied by Seller under such leases or occupancy
agreements; provided, however, that Seller shall not apply any such security
deposits after the date of the execution of this Agreement), and any guarantees
of any of the foregoing with respect to or demising any part of the Land,
Appurtenances or Improvements (the "Leases"), all income, receipts, funds and
revenues of any kind whatsoever payable under the Leases or otherwise with
respect to all or any portion of the Land, Appurtenances or Improvements (the
"Rents"), all of which Leases and Rents shall be transferred and assigned to
Buyer pursuant to an instrument in the form of Schedule C hereto (the
"Assignment and Assumption of Leases and Rents");
1.5 Personal Property. All tangible personal property owned by
Seller located or to be located on, or situated or to be situated in and used in
connection with, the Land and/or the Improvements ("Personal Property"), and all
of which Personal Property shall be transferred and assigned to Buyer pursuant
to an instrument in the form of Schedule D hereto (the "Bill of Sale");
1.6 Intangible Property. All of the interest of Seller in (i) any
intangible personal property which relates to and is reasonably required for the
operation and functioning of the Land, Improvements or Personal Property
generally, and (ii) any and all warranties, guarantees, permits, contracts and
other rights owned by Seller relating to the ownership, operation or functioning
of all or any part of the Property, as defined below (including without
limitation all third party guarantees and warranties, express or implied, in
connection with the construction of the Improvements) (all of which are
collectively referred to as the "Intangible Property"), and all of which shall
be assigned to Buyer (to the extent assignable and which assignment shall be
without recourse to Seller) pursuant to one or more (as determined by Buyer)
assignments in the form of Schedule E hereto (the "Assignment and Assumption of
Contracts, Intangible Property, Warranties and Guarantees"); and the
Authorization to Transfer the Retail Alcoholic Beverage License held in the name
of Franklin Park Wine and Liquors, Inc., as licensee (the "Authorization");
All of the items described in Sections 1.1, 1.2, 1.3, 1.4, 1.5 and 1.6
above are hereinafter collectively referred to as the "Property." The items
described in Sections 1.1, 1.2, and 1.3 above are hereinafter referred to
collectively as the "Real Property."
ARTICLE II
PURCHASE PRICE; MEMORANDUM OF AGREEMENT
2.1 Purchase Price. The purchase price for the Property shall be
Nineteen Million and Fifty Thousand Dollars ($19,050,000.00) (the "Purchase
Price"). The Purchase Price shall be allocated among Land, Improvements and
Personal Property as Buyer shall reasonably determine.
2.2 Payment of Purchase Price. The Purchase Price shall be paid by
Buyer into the escrow for this Agreement to be maintained by Escrow Holder
("Escrow") at the Closing by wire transfer of immediately available funds in
accordance with wiring instructions to be provided by Escrow Holder; provided,
however, that Buyer shall adjust the funds to be wired pursuant to this
Section 2.2 for the following: (i) the amount of credits due to Buyer, or
debits due from Buyer (as the case may be) for prorations hereunder, (ii) the
amount of the Earnest Money Deposit (hereinafter defined) plus earnings thereon,
and (iii) the principal balance of, and all accrued and unpaid interest on, the
Existing Loan (as defined below) as of the Closing.
2.3 Earnest Money Deposit. Concurrently to the delivery of two (2)
fully executed originals of this Agreement with Escrow Holder, Buyer shall
deposit with Escrow Holder the sum of One Hundred Thousand Dollars ($100,000.00)
(the "Earnest Money Deposit") in the form of a check or wire transfer. The
Earnest Money Deposit shall become nonrefundable after the end of the Review
Period, unless this Agreement terminates other than due to a default of Buyer
hereunder.
2.4 Investment of Deposit. Escrow Holder shall place the Earnest
Money Deposit in an interest-bearing account with a bank or savings association
located in New Jersey, the deposits of which are federally insured, as Buyer may
select. All interest on the Earnest Money Deposit shall accrue for the benefit
of Buyer until the Closing. Notwithstanding the foregoing, however, in the
event of any default by Buyer hereunder, all interest earned on such account
shall accrue to the benefit of Seller. Seller shall not be responsible for, nor
bear the risk of loss of, the Earnest Money Deposit, and shall not be
responsible for the rate of return thereon.
2.5 Deposit As Liquidated Damages. IF THE SALE OF THE PROPERTY AS
CONTEMPLATED HEREUNDER IS NOT CONSUMMATED SOLELY BECAUSE OF A DEFAULT UNDER THIS
AGREEMENT ON THE PART OF BUYER, ESCROW HOLDER SHALL PROMPTLY PAY OVER TO SELLER
THE EARNEST MONEY DEPOSIT, IF ANY, TOGETHER WITH THE INTEREST EARNED THEREON,
THEN BEING HELD BY ESCROW HOLDER, AND SELLER SHALL BE ENTITLED TO RETAIN THE
EARNEST MONEY DEPOSIT AS LIQUIDATED DAMAGES. THE PARTIES ACKNOWLEDGE THAT
SELLER'S ACTUAL DAMAGES IN THE EVENT OF A DEFAULT BY BUYER WOULD BE EXTREMELY
DIFFICULT OR IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR SIGNATURES
BELOW, THE PARTIES EXPRESSLY AGREE AND ACKNOWLEDGE THAT THE EARNEST MONEY
DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE
ESTIMATE OF SELLER'S DAMAGES. THEREFORE, IF, AFTER SATISFACTION OR WAIVER OF
ALL CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS UNDER THIS AGREEMENT, BUYER
BREACHES THIS AGREEMENT AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY AS
PROVIDED HEREIN, SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF
THE EARNEST MONEY DEPOSIT TOGETHER WITH THE INTEREST EARNED THEREON. ON RECEIPT
AND RETENTION BY SELLER OF THE EARNEST MONEY DEPOSIT TOGETHER WITH THE INTEREST
EARNED THEREON, THIS AGREEMENT SHALL TERMINATE AND BUYER SHALL HAVE NO FURTHER
OBLIGATIONS OR LIABILITY HEREUNDER, OTHER THAN PURSUANT TO THE INDEMNITY FROM
BUYER TO SELLER CONTAINED IN SECTION 4.6 HEREOF. THE PARTIES FURTHER
ACKNOWLEDGE THAT THE EARNEST MONEY DEPOSIT TOGETHER WITH THE INTEREST EARNED
THEREON HAS BEEN AGREED UPON AS SELLER'S EXCLUSIVE REMEDY AGAINST BUYER IN THE
EVENT OF A DEFAULT ON THE PART OF BUYER.
Seller:
FRANKLIN FIELD PLAZA LIMITED
PARTNERSHIP, a New Jersey limited
partnership
Dated: November 24, 1997
By: K. Hovnanian Properties of
Franklin, Inc., a New Jersey
corporation, its general partner
By: /J. ROBERT CLEMENTS/
--------------------
J. Robert Clements
Its: President
Buyer:
THE PRICE REIT, INC.
Dated: November 24, 1997
By: /JERALD FRIEDMAN/
-----------------
Its: Executive Vice President
ARTICLE III
TITLE TO PROPERTY
3.1 Title. At the Closing, Seller, or Seller's assignee as
contemplated by Section 10.16 hereof, shall convey to Buyer marketable and
insurable (at regular rates) fee simple title to the Property pursuant to the
Deed and subject to Permitted Exceptions. In furtherance thereof, Seller shall
cause Eastern Title Agency, Inc. (the "Title Company") to issue an ALTA Owner's
Policy of Title Insurance (Form B, Rev. 10/84), together with such endorsements
thereto as Buyer may request, provided that the cost of such endorsements shall
be paid for by Buyer (the "Title Policy") in the full amount of the Purchase
Price, insuring fee simple title to the Real Property in Buyer, subject only to
(i) the lien of real property taxes for the then applicable fiscal year, to the
extent not yet due and payable, (ii) the lien of supplemental taxes imposed by
reason of transfer on or after the Closing, (iii) the lien securing the Existing
Loan, and (iv) the Permitted Exceptions.
3.2 Other Conveyance Documents. At the Closing, Seller shall (i)
assign the Leases and Rents to Buyer pursuant to the Assignment and Assumption
of Leases and Rents; (ii) transfer title to the Personal Property to Buyer
pursuant to the Bill of Sale which shall be without warranty of any kind
whatsoever except as to title, and (iii) transfer and assign to Buyer all of
Seller's rights in and to the Intangible Property pursuant to the Assignment and
Assumption of Contracts, Intangible Property (to the extent assignable and which
assignment shall be without recourse to Seller), Warranties and Guarantees; such
title and rights to be free of any liens, encumbrances or interests of third
parties other than the Permitted Exceptions.
ARTICLE IV
CONDITIONS TO CLOSING
A. Buyer's Conditions to Closing.
The complete satisfaction as of the expiration of the Review Period
(or such other date as may be specified herein) with respect to those matters
described in Sections 4.2, 4.3, and 4.5 - 4.7 hereof, and as of the Closing Date
with respect to the balance of the following conditions, is a condition
precedent to Buyer's obligation to purchase the Property:
4.1 Non-Foreign Status of Seller. Seller's execution and delivery to
Buyer, on the Closing Date, of Seller's certificate in the form attached hereto
as Schedule F (the "Non-Foreign Certificate") stating, under penalty of perjury,
that (a) Seller is not a "foreign person" for the purposes of Section 1445 of
the Internal Revenue Code of 1986, as amended (the "Code"), and that withholding
of tax will not be required thereunder, and (b) withholding is not required
under the provisions of any state laws in connection with the contemplated
transfer of the Property by Seller to Buyer.
4.2 Review and Approval of Title and Survey. There shall be no
exceptions to title to the Property other than the Permitted Exceptions. In
connection with Buyer's review of title and related matters, Seller shall as
soon as practicable, but in no event later than ten (10) days after the date of
this Agreement, cause Escrow Holder to deliver to Buyer the following:
(a) a current extended coverage commitment (ALTA Form 1970,
as amended 10/84) for title insurance for the Property issued by
the Title Company (the "Title Report"), accompanied by legible
record copies of all of the documents referred to in the Title
Report;
(b) copies of all existing or proposed easements,
covenants, restrictions, agreements or other documents which
affect the ownership of or title to the Property and which are
not disclosed by the Title Report for the Property, if any; and
(c) a current ALTA survey of the Property, certified to
Buyer (the "Survey").
4.3 Review and Approval of Other Matters. In connection with
Buyer's review of other matters, Seller shall deliver to Buyer, within ten
(10) days after the date two fully executed originals of this Agreement are
delivered to Escrow Holder as provided in Section 2.3 hereof, true,
complete and correct copies of the following items, to the extent in
Seller's or Seller's manager's possession:
(a) Copies of all soils and hazardous materials reports,
termite reports, engineering studies, topographical maps,
appraisals and other reports, studies, maps and analyses with
respect to the Property;
(b) Copies of subdivision maps and condominium plans;
(c) Copies of all permits and licenses relating to the
Property;
(d) Copies of all documents and certificates from
appropriate governmental authorities relating to the zoning,
building and platting status of the Property;
(e) A description of existing and proposed local
improvements affecting the Property, including assessment levels;
(f) Copies of all service contracts relating to the
Property;
(g) Copies of the real property and personal property tax
bills for the Property for the previous three (3) years;
(h) Copies of all tenant leases and proposed tenant leases
on the Property;
(i) Copies of all plans and construction drawings for all
buildings to be constructed on the Property;
(k) A copy of all loan documents entered into by Seller in
connection with the first mortgage encumbering the Property (the
"Existing Loan"); and
(l) Copies of all insurance policies maintained by Seller
with respect to the Property within the last three (3) years.
Buyer agrees to maintain in confidence all items delivered to it
pursuant to this Section 4.3 until Closing (subject to any
disclosure obligations Buyer may have under applicable law).
4.4 First Mortgage Loan Documents. (i) Buyer shall have
reviewed and approved the loan documents with respect to the Existing Loan,
(ii) Buyer shall have agreed to the terms of assumption required by the
holder of the Existing Loan, (iii) the holder of the Existing Loan shall
have agreed in writing (in form and substance reasonably acceptable to
Buyer) to Buyer's assumption of all obligations under the loan documents
with respect to the Existing Loan arising on or after the Closing; (iv) the
holder of the Existing Loan shall have confirmed in writing the principal
balance thereof, which shall not exceed $13,047,000, and shall have
confirmed (in form and substance reasonably acceptable to Buyer) that as of
closing there is no default under the Existing Loan or event, condition,
circumstance or omission that with the giving of notice or the passage of
time would become such a default, and (v) Seller shall pay for all costs
incurred in connection with Buyer's assumption of the Existing Loan as set
forth in Paragraph 5.7 hereof. Buyer shall have fourteen (14) days after
the receipt of all of the foregoing to object thereto, and if Buyer fails
to notify Seller of any objection thereto on or prior to the end of such
fourteen (14) day period, Buyer shall be deemed to have approved the loan
documents with respect to the Existing Loan, and the terms and conditions
of Buyer's assumption of the Existing Loan. In the event that Buyer
objects to any of the foregoing within such fourteen (14) day period,
Seller shall have ten (10) days after receipt of Buyer's objections to
advise Buyer and Escrow Holder, in writing, as to whether Seller shall cure
said objections prior to the Closing (and should Seller fail to advise
Buyer of Seller's objection within such 10-day period, Seller shall be
deemed to have elected to refuse to cure said objections). In the event
Seller elects not to cure such objections, or elects to cure such
objections and fails or refuses to cure said objections, then this
Agreement, and all right and obligations of Buyer and Seller hereunder,
shall terminate, except as set forth in Sections 4.6, 5.2(b) and 10.5
hereof, and within five (5) days after Buyer has provided notice to Escrow
Holder of such termination, Escrow Holder shall deliver to Buyer the
Earnest Money Deposit, together with interest thereon.
4.5 Service, Other Contracts, Correspondence and Bills. Buyer's
review and approval, in its sole and absolute discretion, of all CAM, utility
contracts, water and sewer service contracts, service contracts, warranties,
permits, soils reports, and other contracts, or documents of any nature relating
to the Property or any portion thereof (the "Contracts"; those Contracts which
Buyer approves in writing prior to the end of the Review Period (and prior to
the Closing Date in the case of contracts not entered into or delivered to the
Buyer until after the expiration of the Review Period) shall be referred to as
the "Approved Contracts"); provided that Buyer's only remedy if it disapproves
any Contract(s) shall be to compel the Seller to terminate such disapproved
Contract(s) on or prior to the Closing, which Seller hereby agrees to do at its
sole cost and expense if so requested by Buyer. Buyer shall have also received
all utility bills and originals (or copies if originals are unavailable) of all
correspondence between Seller (or Seller's property manager during the
applicable period) and parties to the Contracts for the two years prior to the
Closing Date to the extent the items are in Seller's possession or control after
a reasonably diligent search.
4.6 Physical Characteristics of the Property. Buyer's review and
approval, in its sole and absolute discretion, of (a)an environmental assessment
(which shall, without limiting the scope of the report, contain an assessment of
asbestos and radon affecting the Property) by an environmental consultant of
Buyer's choice and at Buyer's cost (the "Phase I Report"), and (b) the results
of Buyer's physical inspection and testing of the Property, or any portion
thereof (which testing shall be conducted at Buyer's expense, and may include,
but shall not be limited to, testing for the presence of asbestos, PCBs, as
defined below, and other Hazardous Materials, as defined below, including
without limitation the performance of core sampling, drilling and other
intrusive testing), of the structural, mechanical, electrical and other physical
or environmental characteristics of the Property, including any tenant
improvements or other construction installed or to be installed as of the
Closing Date. Seller shall allow Buyer reasonable access to the Property to
perform any physical inspection thereof which Buyer reasonably deems
appropriate; provided that: (i) Buyer shall provide Seller with reasonable
advance notice prior to any such physical inspection, and provided further that
Seller shall have the right to accompany (or have an agent of Seller accompany)
Buyer during such physical inspection; (ii) Buyer shall not unreasonably disturb
any tenant of the Property during any such physical inspection, (iii) if Buyer
elects to conduct such a physical inspection, Buyer shall, at Buyer's sole
expense, obtain a policy of general liability insurance with respect to the
Property, naming Seller as an additional insured, which policy shall provide
coverage for any damage to the Property caused by Seller's inspection, and (iv)
in the event Buyer elects to conduct any intrusive testing, Buyer shall restore
the Property to the condition in which it existed prior to such testing to the
extent Buyer's testing damaged or caused any change in the condition of the
Property.
Buyer agrees to indemnify, defend and hold Seller harmless from any
and all loss, liability, damage, claims, costs or expenses, including attorney's
fees, if any, arising or resulting from: (x) any physical damage to the Property
caused by Buyer or its agents during any physical inspection and (y) any claim
made against Seller by any tenant or any third party alleging any physical
injury caused by Buyer or its agents or alleging breach of a lease caused by
Buyer or its agent during such inspection. Notwithstanding the foregoing, in no
event shall Buyer indemnify Seller for any loss, liability, damage, claims,
costs or expenses arising or resulting from the gross negligence or willful
misconduct of Seller or its agents. The provisions of this indemnity shall
survive the closing or termination of this Agreement.
4.7 Governmental Permits, Approvals and Regulations. Buyer shall
have confirmed that all governmental permits and approvals with respect to the
Property relating to the construction, operation, use or occupancy of the
Property or any portion thereof, are in full force and effect.
4.8 Representations and Warranties. All of Seller's representations
and warranties contained herein or made in writing by Seller shall have been
true and correct in all material respects when made and shall be true and
correct as of the Closing Date, as though made at, and as of, the Closing Date,
and Seller shall have executed and delivered all documents and complied with all
of Seller's covenants and agreements contained in or made pursuant to this
Agreement.
4.9 Impairment of Property. No material adverse change shall have
occurred in the condition or ownership of the Property or any part thereof from
and after the conclusion of the Review Period. As of the Closing no part of the
Property, or any interest of Seller therein, shall be encumbered by any lien,
pledge, security interest, financing or due and unpaid charge, tax or other
imposition (other than Permitted Exceptions and items which will be removed on
or prior to the Closing Date), or damaged and not repaired to Buyer's
satisfaction or taken in condemnation or other like proceeding and no such
proceeding shall be pending or threatened, except as otherwise provided in
Section 8.2 hereof. There shall have occurred no material adverse change in the
financial condition of any tenant under any of the Leases demising 7,500 square
feet or more of the Improvements (each, a "Major Lease"), and there shall be no
default, or event that with the giving of notice or the passage of time or both
would constitute a default, under any Major Lease.
4.10 Approval of Buyer's Board of Directors. This Agreement and the
transactions contemplated hereby shall have been approved by Buyer's board of
directors (the "Buyer Approval") within forty (40) business days after the date
of this Agreement.
4.11 Objections to Title or Survey. Buyer shall have until twenty
(20) business days from the later to occur of (i) delivery of the Title Report
and (ii) delivery of the Survey, to notify Escrow Holder and Seller in writing
of Buyer's disapproval of the condition of title. Buyer shall give Seller and
Escrow Holder written notice outlining in detail any title items objected to and
specifying Buyer's desired cure. Seller shall have ten (10) business days after
receipt of Buyer's notice to advise Buyer and Escrow Holder, in writing, as to
whether Seller shall cure said objections prior to the Closing (and should
Seller fail to advise Buyer of Seller's objection within such 10-day period,
Seller shall be deemed to have elected to refuse to cure said objections). In
the event Seller elects not to cure such objections, or elects to cure such
objections and fails or refuses to cure said objections, Buyer shall have the
option, which must be exercised within 10 business days of Buyer's receipt of
Seller's response or deemed response, or Closing (whichever is earlier), (a) to
waive Buyer's objections and purchase the Property as otherwise contemplated in
this Agreement, notwithstanding such objections, in which event the subject
matter of such waived objections shall be included within Permitted Exceptions,
and Seller shall convey the Property to Buyer, subject to the Permitted
Exceptions, or (b) to terminate this Agreement by written notice to Seller and
Escrow Holder, whereupon any and all right and obligations of Buyer and Seller
hereunder shall terminate, except as set forth in Sections 4.6, 5.2(b) and 10.5
hereof, and within five (5) days after Buyer has provided notice to Escrow
Holder, Escrow Holder shall deliver to Buyer the Earnest Money Deposit, together
with interest thereon. All exceptions to title to, and/or encumbrances against,
the Property shown on the Title Report or Survey but not objected to by Buyer,
and those items referred to in items (i), (ii) and (iii) of the second sentence
of Section 3.1 hereof, shall be deemed "Permitted Exceptions"; provided,
however, that Seller covenants to remove all monetary encumbrances (other than
those with respect to the liens referred to in items (i), (ii) and (iii) of the
second sentence of Section 3.1 hereof) affecting the Property or any portion
thereof prior to Closing, and Seller further agrees that no monetary
encumbrances other than the liens referred to in items (i), (ii) and (iii) of
the second sentence of Section 3.1 hereof shall be Permitted Exceptions.
4.12 Objections to Property or Other Matters. To the extent there is
a change in any of the matters described in this Article IV.A, or any such
matters first become available or are supplemented after the date hereof, Seller
shall immediately inform Buyer of such change in circumstances and deliver any
such new or supplemental information to Buyer. Buyer shall have until forty
(40) business days after the date of this Agreement (the "Review Period"), to
notify Seller of any objections Buyer has to the physical or financial state of
the Property, to the Phase I environmental report, to any contracts or leases
relating to the Property, to any item delivered (or not delivered) by Seller to
Buyer, or to any other matter covered by this Article IV.A other than Title or
Survey; provided that Buyer shall have until the Closing Date to approve the
items specified in Sections 4.1, 4.9 and 4.13 hereof. If Buyer shall object as
provided herein (and if Buyer does not give notice to Seller of its objections
prior to the end of the Review Period, Buyer shall be conclusively deemed to
have objected), then this Agreement shall terminate and any and all right and
obligations of Buyer and Seller hereunder shall terminate, except as set forth
in Sections 4.6, 5.2(b) and 10.5 hereof, and within five (5) days after Buyer
provides notice of such termination to Escrow Holder, Escrow Holder shall pay to
Buyer the Earnest Money Deposit, together with interest thereon.
4.13 Tenant Matters. Buyer shall have received and approved written
estoppel statements, in substantially the form as that attached hereto as
Schedule I or other form to which Buyer may reasonably agree, from each of the
tenants under the Major Leases, each "national credit" tenant (as identified as
such on the Rent Roll), and tenants holding leases upon not less than eighty-
five percent (85%) of the remaining gross leasable area in the Property. Each
such estoppel statement shall be in form and substance reasonably acceptable to
Buyer. Buyer shall have five (5) business days after the date of Buyer's
receipt from the respective tenant of the last such tenant estoppel to notify
Seller of any objection Buyer may have regarding such estoppels, and in the
event Buyer fails to so notify Seller, Buyer shall be deemed to have disapproved
the satisfaction of the condition set forth in this Section 4.13.
4.14 Tenant Correspondence. Buyer shall have received originals (or
copies if originals are unavailable) of all correspondence between Seller (or
Seller's property manager during the applicable period) and all tenants of the
Property for the two years prior to the Closing Date to the extent the items are
in Seller's possession or control after a reasonably diligent search.
4.15 Delivery of Documents. The due and timely delivery by Seller of
executed documents required by this Agreement, including without limitation all
of the documents and items specified in Section 5.3 below.
The foregoing conditions contained in this Article IV.A (except to the
extent otherwise provided in Article IV.B hereof) are intended solely for the
benefit of, and may be waived by, Buyer.
B. Seller's Conditions to Closing.
The following conditions are conditions precedent to Seller's
obligation to sell the Property:
4.16 Delivery of Documents and Purchase Price. Buyer's due and timely
execution and delivery of all documents and items to be executed and delivered
by Buyer (including without limitation the Purchase Price) pursuant to this
Agreement, including without limitation all of the documents and items specified
in Section 5.4 below.
4.17. Assumption of Existing Loan. Buyer shall have executed and
delivered to Escrow Holder all documents required for Buyer to assume all of
Seller's obligations under the Existing Loan arising from and after the Closing
Date.
The foregoing conditions contained in this Article IV.B are intended
solely for the benefit of Seller (except to the extent otherwise provided in
Article IV.A hereof).
ARTICLE V
CLOSING, RECORDING AND TERMINATION
5.1 Deposit with Escrow Holder and Escrow Instructions. Promptly
after execution of this Agreement, the parties hereto shall deliver two (2)
fully executed originals of this Agreement to the Escrow Holder and this
instrument shall serve as the escrow instructions to the Escrow Holder for
consummation of the purchase and sale contemplated hereby. Seller and Buyer
agree to execute such additional and supplementary escrow instructions as may be
appropriate to enable the Escrow Holder to comply with the terms of this
Agreement; provided, however, that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall control.
5.2 Closing. (a) The Closing Date shall occur no later than January
30, 1998, or such other date as Buyer and Seller may mutually agree in writing.
Except as otherwise expressly provided herein, such date may not be extended
without the written approval of both Seller and Buyer. The Closing and the
Closing Date shall not have occurred until the Purchase Price shall have been
paid by Buyer to Escrow Holder as provided herein. The "Closing" shall be
deemed to have occurred on the date that all of the events specified in
Section 5.8 of this Agreement shall have occurred. The "Closing Date" shall be
the date on which the Closing occurs.
(b) In the event the Closing does not occur on or before January
30, 1998, the Escrow Holder shall, unless it is notified by Buyer to the
contrary within five (5) business days after such date, return to the depositor
thereof all items which may have been deposited with Escrow Holder hereunder.
Any such return shall not, however, relieve either party hereto of any liability
it may have for its wrongful failure to close. Buyer shall, within ten (10)
business days after the termination of this Agreement in accordance with the
terms hereof, return to Seller all documents and materials delivered to Buyer
hereunder by or on behalf of Seller.
5.3 Delivery by Seller. At the Closing, Seller shall deposit with
the Escrow Holder, for the benefit of Buyer, or deliver directly to Buyer the
following:
(a) The Deed and the Assignment and Assumption of Leases
and Rents, each duly executed and acknowledged by Seller, in
recordable form, and ready for recordation in the official
records of the jurisdiction in which the Land is located (the
"Official Records");
(b) An assumption of the Existing Loan, in form and
substance acceptable to Buyer, duly executed and acknowledged by
the holder of the Existing Loan, in recordable form, and ready
for recordation in the Official Records;
(c) The Bill of Sale duly executed by Seller;
(d) A certificate from the office of the Secretary of
State, State of New Jersey, dated within thirty (30) days of the
Closing Date, listing, as of the date of such certificate, all
filings against Seller in said offices under the Commercial Code
of New Jersey which would be a lien on any of the Personal
Property (other than such filings, if any, (i) as are being
released at the time of the Closing or (ii) which have been
approved in writing by Buyer) or (iii) which evidence liens
securing the Existing Loan), together with fully executed
termination statements with respect to such filings;
(e) originals or copies of any warranties and guaranties
received by Seller and to be assigned to Buyer, from any
contractors, subcontractors, suppliers or materialmen in
connection with any construction, repairs or alterations of the
Improvements or any tenant improvements;
(f) The Assignment and Assumption of Contracts, Intangible
Property, Warranties and Guarantees, duly executed by Seller and
acknowledged, assigning all of Seller's interest in the
Intangible Property (except that the only Contracts that shall be
assigned are the Approved Contracts);
(g) Originals or copies of all certificates of occupancy,
licenses and permits for the Improvements;
(h) All existing as-built plans and specifications for the
Improvements in the possession of Seller or its manager;
(i) A closing statement prepared by Escrow Holder in form
and content consistent with this Agreement and otherwise
reasonably satisfactory to Buyer and Seller;
(j) The Non-Foreign Certificate, duly executed by Seller;
(k) A certificate duly executed by Seller and dated as of
the Closing Date confirming the truth, accuracy and completeness
of each of the Seller's representations and warranties set forth
in Article VI below and noting with specificity any changes or
exceptions thereto based upon events or circumstances intervening
after the execution hereof (the "Update Certificate");
(l) Seller's closing certificate, certifying as to the
satisfaction of all of the conditions precedent to Seller's
obligations hereunder (except delivery of the Purchase Price and
except to the extent waived in writing by Buyer), addressed to
Buyer;
(m) Complete originals of the Leases with respect to the
Property (except if the originals are missing, copies certified
by Seller to be true, complete and correct) and copies of all
records, books of account, ledgers, statements and other business
records relating to the ownership and operation of the Property
and/or the administration of the Leases, in whatever mode
maintained, including information contained on computer disks;
and
(n) An original of the Authorization described in Section
1.6 hereof and any instrument of conveyance necessary to assign
all of Seller's right, title and interest under the Authorization
to Buyer.
Buyer may waive compliance on Seller's part under any of the foregoing
items by an instrument in writing.
5.4 Delivery By Buyer. Buyer shall execute and deliver to Escrow
Holder, for the benefit of Seller, or directly to Seller the following:
(a) Buyer's closing certificate, certifying as to the
satisfaction of all of the conditions precedent to Buyer's
obligations hereunder, addressed to Seller.
(b) Buyer's executed counterpart of the Assignment and
Assumption of Leases and Rents, and Assignment and Assumption of
Contracts, Intangible Property, Warranties and Guarantees.
(c) Buyer's executed counterpart of an assumption of the
Existing Loan, acknowledged by Buyer in recordable form, and
ready for recordation in the Official Records;
After Buyer's or Escrow Holder's receipt of all of the items specified
in Section 5.3 hereof, after the complete satisfaction of all of the conditions
precedent to Buyer's obligations hereunder, and after the expiration of the
Review Period, Buyer shall deliver the Purchase Price to Escrow Holder as
provided in Section 2.2 above.
5.5 Other Instruments. Seller and Buyer shall each deposit such
other instruments as are reasonably required by Escrow Holder or otherwise
required to close the escrow and consummate the purchase of the Property in
accordance with the terms hereof.
5.6 Prorations. At Closing, the parties shall prorate (with Buyer
being deemed to be the owner of the Property for the date of the Closing) as of
the date on which the Closing occurs, on the basis of the actual number of days
in the subject month, the following with respect to the Property:
(a) Rents. All rents and other receipts payable for the
month in which the Closing occurs shall be prorated as of the
Closing. If any tenant under a Lease is delinquent in such
month, Seller shall pay to Buyer the pro-rated amount of the
scheduled monthly rent under such Lease. Buyer shall use
reasonable efforts after the Closing to collect delinquent rents
for the period up to the Closing; provided, however, that all
collections shall be applied first to periods commencing after
the Closing, and then to periods prior to the Closing. Percentage
Rents (if any) shall be prorated by Buyer when received by Buyer,
based on twelve thirty (30) day months.
(b) Common Area Maintenance Charges. All reimbursable
expenses shall be reconciled at Closing, such that if Seller has
collected sums in excess of its reimbursable expenses under the
Leases, Seller shall pay such excess to Buyer. In the event that
such reconciliation shows that Seller has collected less than its
incurred reimbursable expenses under the Leases, Buyer shall
remit the excess to Seller not later than the expiration of three
months after the conclusion of the twelve-month period then in
progress with respect to the budgeting of such expenses under the
Leases.
(c) Taxes. Unless such items are subject to proration
under subparagraph (b) above, real estate taxes, recurring
assessments, and personal property taxes, if any, on all or any
portion of the Property, based on the regular and supplemental
tax bills for the calendar year in which the Closing occurs (or,
if such tax bill has not been issued as of the date of Closing
the regular and supplemental tax bill for the calendar year
preceding that in which the Closing occurs, with such increase
thereto as Buyer reasonably estimates will occur) shall be
prorated as of the Closing. If any supplemental real estate
taxes are levied for any period preceding the Closing, the
parties will, immediately after the Closing or the issuance of
the supplemental real estate tax bill (whichever last occurs),
prorate between themselves, in cash, without interest and to the
date of the Closing Date, the supplemental real estate taxes
shown by such bill.
(d) Utilities. Unless such items are subject to proration
under subparagraph (b) above, all utilities, including gas,
water, sewer, electricity, telephone and other utilities supplied
to the Property shall be read as of the Closing Date. Seller
shall pay, prior to the Closing Date, all such amounts for which
a bill has been received or for which payment is otherwise due
prior to the Closing Date, and Buyer shall be credited, and
Seller shall be debited, with an amount equal to all utility
charges for the period from the date such bills were issued or
such payments were due until the Closing Date.
(e) Service Contracts. Amounts payable under Approved
Contracts shall be prorated on an accrual basis. Seller shall
pay, prior to the Closing Date, all such amounts for which a bill
has been received or for which payment is otherwise due prior to
the Closing Date, and Buyer shall be credited, and Seller shall
be debited, with an amount equal to all amounts accrued under the
Approved Contracts from the date such bills were issued or such
payments were due until the Closing Date. Seller shall deliver
to Escrow, for the benefit of Buyer, evidence of the cancellation
or termination of all Contracts other than Approved Contracts,
and Seller shall be responsible for all such cancellation costs.
(f) Improvement Lien Assessments. All improvement lien
assessments shall be paid in full by Seller at Closing.
(g) Existing Loan Reserve Account Funds. On the Closing
Date, funds may be on deposit in certain reserve accounts
established in connection with the Existing Loan (each a "Reserve
Account"), including, without limitation, a repair reserve
account and a replacement reserve account. Seller shall be
credited with the amount of any funds on deposit in any such
Reserve Account to the extent any such Reserve Account is
transferred to Buyer at Closing.
(h) Other Items. All other proratable items, including
without limitation licenses and permits being assumed by Buyer
(if any; provided that in no event shall Buyer assume any
indemnification obligations of Seller) and other income from, and
expenses associated with, the Property shall be prorated between
Buyer and Seller as of the Closing.
Buyer and Seller's obligation to prorate shall survive the Closing for a period
of one (1) year (unless within such time Buyer or Seller makes a claim against
the other party to this Agreement with respect to such obligation to prorate, in
which case such obligation shall survive without limitation), and Buyer and
Seller shall use good faith efforts to conclude prorations with respect to
percentage Rent and common area maintenance charges as soon as practicable after
the determination of the amounts thereof. Nothing in the Assignment and
Assumption of Leases and Rents shall be construed to amend, modify or diminish
in any way the provisions of this Section 5.6.
5.7 Costs and Expenses. Seller shall bear and pay the cost of the
Survey and the premium for the Title Policy (exclusive of endorsements thereto).
Seller shall pay any and all assumption, documentation and legal fees of the
holder of the Existing Loan with respect to the Existing Loan, all legal fees
and costs incurred by Seller, the cost of any recordation fees and documentary
or other transfer taxes applicable with respect to the sale of the Real
Property, all sales tax, if any, applicable with respect to the sale of the
Personal Property and/or the Intangible Property, one-half of the Escrow
Holder's fees and charges, and other fees and charges which are typically borne
by sellers in Somerset County, New Jersey. Buyer shall pay for its out-of-
pocket expenses, all due diligence, all legal fees and costs incurred by Buyer
in connection herewith, one-half of the Escrow Holder's fees and charges, and
other fees and charges which are typically borne by buyers in Somerset County,
New Jersey.
5.8 Closing and Recordation. Provided that Escrow Holder has
received all of the items required to be delivered pursuant to this Article V
(or a waiver from the party for whose benefit such item is being delivered) and
that it has not received prior written notice from Buyer that Buyer has elected
to terminate its rights and obligations hereunder pursuant to Article IV,
Article VIII and/or Section 5.9, and provided that Buyer has either received
the Title Policy or the irrevocable commitment of Title Company to provide it
with the Title Policy immediately after recordation of the Deed, Escrow Holder
is authorized and instructed (a) with respect to the Property, to cause the
Title Company to record the documents delivered to the Escrow Holder in
accordance with recording instructions set forth in a letter to be delivered to
Escrow Holder and Title Company by Buyer (or if no such letter is received prior
to the Closing, in accordance with customary practice), (b) to deliver those
other documents and instruments delivered into Escrow to the party for whose
benefit such documents or instruments were made and (c) to deliver the Purchase
Price, as adjusted pursuant to Section 5.6 hereof.
5.9 Termination of Agreement.
(a) Failure of Buyer's Conditions. If any one or more of the
conditions to Buyer's obligations, as set forth in Article IV.A, Section 5.3 or
elsewhere in this Agreement, is not either fully performed, satisfied or waived
in writing (or deemed waived as provided herein) on or before the Closing Date
or such earlier date as provided elsewhere herein, then Buyer may elect, by
written notice as provided in Section 10.10 hereof, to terminate this Agreement,
in which case neither party shall have any further obligation to the other
(except as set forth in Sections 4.6, 5.2(b) and 10.5 hereof). Nothing in this
paragraph shall be construed to limit any of Buyer's rights or remedies at law
or equity in the event of a default by Seller.
(b) Failure of Seller's Conditions. If any one or more of the
conditions to Seller's obligations, as set forth in Article IV.B, Section 5.4 or
elsewhere in this Agreement, is not either fully performed, satisfied or waived
in writing (or deemed waived as provided herein) on or before the Closing Date
or such earlier date as provided elsewhere herein, then Seller may elect, by
written notice as provided in Section 10.10 hereof, to terminate this Agreement
and neither party shall have any further obligation to the other (except as set
forth in Sections 4.6, 2.5 [if Buyer shall be in default of this Agreement],
5.2(b) and 10.5 hereof).
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
As an inducement to Buyer to enter into this Agreement and the
consummation of the transaction contemplated hereby, Seller hereby represents
and warrants to and agrees with Buyer both as of the date hereof and again as of
the Closing Date, and as of all dates and times in between (except as
specifically provided to the contrary herein), as set forth below. As used
herein and elsewhere in this Agreement, the term "Seller's actual knowledge"
shall mean the actual knowledge of each of J. Robert Clements and Robert Poyner,
without any duty of investigation of any kind. Seller represents and warrants
that the foregoing persons are the persons employed by Seller or its manager
with day-to-day managerial or supervisorial authority over the Property.
6.1 Authority. Seller is duly organized and validly existing under
the laws of the jurisdiction of its organization, is duly qualified to conduct
business and own real property in the State of New Jersey, and has all requisite
power to own all of its properties and assets and to carry on its business as
presently conducted. The execution, delivery and performance of this Agreement
and all other agreements contemplated hereby has been duly and validly
authorized by all necessary action of Seller and the Agreement and all other
agreements contemplated thereby are and will be valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights and general principles of equity.
6.2 Title. Seller holds fee simple title to the Property, and to
Seller's actual knowledge, such fee simple title is free and clear of all liens,
encumbrances, security interests, charges, adverse claims and other exceptions
to title, except for the Leases, Contracts, matters of record, matters disclosed
by the Survey and the Permitted Exceptions. Nothing in the Deed shall be
construed to amend, modify or diminish the effectiveness or survival of the
foregoing representation.
6.3 The Leases. A list of the current Leases is set forth in the
rent roll attached hereto as Schedule G (the "Rent Roll"). The economic
information contained in the Rent Roll is accurate and consistent with Seller's
records (as they relate to the Property), which records have been maintained by
Seller in accordance with good property management standards. The noneconomic
information contained in the Rent Roll is accurate and consistent in all
material respects with Seller's records (as they relate to the Property), which
records have been maintained by Seller in accordance with good property
management standards. Except for the Leases set forth in the Rent Roll, there
are no other leases, licenses or other agreements affecting the occupancy of the
Property. With respect to each Lease: (i) the Lease is in full force and
effect, and constitutes the valid and binding legal obligation of Seller and the
respective tenant, enforceable against each of them in accordance with its
terms; (ii) there are no understandings, oral or written, between the parties to
the Lease which in any manner vary the obligations or rights of either party;
(iii) except as indicated on the Rent Roll, there is no default by Seller under
the Lease and to Seller's knowledge, by the tenant under the Lease; and (iv) no
rent or additional rent under the Lease has been paid for more than thirty (30)
days in advance of its due date.
6.4 No Litigation or Adverse Events. Seller has received no written
notice of, and to Seller's actual knowledge, there are no, pending or threatened
investigations, actions, suits, proceedings or claims against or affecting
Seller or the Property, at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, agency, or
instrumentality, domestic or foreign.
6.5 Compliance with Laws. To Seller's actual knowledge, Seller is in
compliance in all material respects with all applicable laws, ordinances, rules
and regulations (including without limitation those relating to zoning and the
Americans With Disabilities Act) applicable to the ownership or operation of the
Property. Seller has not received from any insurance company or Board of Fire
Underwriters any notice, which remains uncured, of any defect or inadequacy in
connection with the Property or its operation.
6.6 No Defaults in Other Agreements. To Seller's actual knowledge,
neither Seller nor any other party is in material default under any Contract
affecting the Property, and no event exists which, with the passage of time or
the giving of notice or both, will become a material default thereunder on the
part of the Seller or any other party thereto. To Seller's actual knowledge,
Seller is in compliance in all material respects with the terms and provisions
of the covenants, conditions, restrictions, rights-of-way or easements affecting
the Property.
6.7 Eminent Domain. To Seller's actual knowledge, there is no
existing or proposed or threatened eminent domain or similar proceeding, or
private purchase in lieu of such a proceeding which would affect the Property in
any material way.
6.8 Licenses, Permits, CO's, Zoning, etc. To Seller's actual
knowledge, all permits, certificates of occupancy, business licenses and all
other notices, licenses, permits, certificates and authority required as of the
date hereof and as of the Closing Date in connection with the use or occupancy
of the Property have been obtained and are in full force and effect and in good
standing.
6.9 Taxes and Assessments. All real property taxes, and all Seller's
personal property taxes, relating to the Property, excepting those for the
current tax year which are not yet overdue (i.e., which are still payable
without interest or penalty), have been paid in full. To Seller's actual
knowledge, there is no (i) proposed increase in the assessed valuation of the
Property, or (ii) existing or proposed assessment that has or may become a lien
on the Property.
6.10 Environment. (i) Seller has not engaged in any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials (whether legal or illegal, accidental or
intentional) on, under, in or about the Property, or transported any Hazardous
Materials to, from or across the Property, except in all cases in material
compliance with Environmental Requirements and only in the course of legitimate
business operations at the Property (which shall not include any business
primarily or substantially devoted to the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
Hazardous Materials); (ii) to Seller's actual knowledge, no tenant, occupant or
user of the Property, nor any other person, has engaged in or permitted any
operations or activities upon, or any use or occupancy of the Property, or any
portion thereof, for the purpose of or in any material way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials (whether legal or
illegal, accidental or intentional) on, under, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in material compliance with Environmental Requirements and only in the
course of legitimate business operations at the Property (which shall not
include any business primarily or substantially devoted to the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of Hazardous Materials); (iii) to Seller's actual knowledge,
no Hazardous Materials are presently constructed, deposited, stored, or
otherwise located on, under, in or about the Property except in all cases in
material compliance with Environmental Requirements and only in the course of
legitimate business operations at the Property (which shall not include any
business primarily or substantially devoted to the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of Hazardous Materials); (iv) to Seller's actual knowledge, no
Hazardous Materials have migrated from the Property upon or beneath other
properties; and (v) to Seller's actual knowledge, no Hazardous Materials have
migrated or threaten to migrate from other properties upon, about or beneath the
Property.
As used herein:
"Environmental Requirements" shall mean all applicable present
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises and similar items, of
all governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of "Hazardous Materials," chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees or the public.
"Hazardous Materials" shall mean (i) any flammable, explosive or
radioactive materials, hazardous wastes, toxic substances or related materials
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C., Section 2601
et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et seq.; and in the regulations adopted and publications promulgated
pursuant to said laws; (ii) those substances listed in the United States
Department of Transportation Table (49 C.F.R. 172.101 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 C.F.R. Part 302 and amendments thereto); (iii) those substances
defined as "hazardous wastes," "hazardous substances" or "toxic substances" in
any similar federal, state or local laws or in the regulations adopted and
publications promulgated pursuant to any of the foregoing laws or which
otherwise are regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the State
of New Jersey or any political subdivision thereof, (iv) any pollutant or
contaminant or hazardous, dangerous or toxic chemicals, materials, or substances
within the meaning of any other applicable federal, state, or local law,
regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material, all
as amended; (v) petroleum or any by-products thereof; (vi) any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. Sections 2011 et seq., as amended, and in the regulations
adopted and publications promulgated pursuant to said law; (vii) asbestos in any
form or condition; and (viii) polychlorinated biphenyls.
6.11 Physical Condition. Except as disclosed in writing by Seller to
Buyer on or prior to the date hereof, to Seller's actual knowledge: (i) there
are no material structural defects in the Improvements located on or at the
Property; (ii) the Improvements and Personal Property (including without
limitation plumbing equipment, HVAC, electric wiring and fixtures, gas
distribution system, water and sewage systems, security systems and swimming
pool and spa systems) are in good working order and condition, except for
defects or required repairs that are not material.
6.12 Employees. Seller has no employees.
6.13 Mechanic's Liens. All bills and claims for labor performed and
materials furnished to or for the benefit of the Property currently due and
contracted for by Seller or its manager have been paid in full, and there are no
mechanic's or materialmen's liens (whether or not perfected) on or affecting the
Property as a result of labor performed or materials furnished and contracted
for by the Partnership or its manager.
6.14 Operating Statements. To Seller's actual knowledge, the
financial statements delivered by Seller to Buyer fairly present the profit or
loss from the management and operation of the Property for the periods covered
thereby and, in all material respects, accurately reflect all rents and other
gross receipts, and all amounts paid by Seller for electricity, water, sewer,
other utility services, insurance, fuel, maintenance and repairs (whether
capitalized or expensed), real estate taxes, payroll and payroll taxes and all
other operating and other expenses associated with the Property.
6.15 Disclosure. Except as disclosed on Schedule H attached hereto,
no representation or warranty of Seller in this Agreement, or any information,
statement or certificate furnished or to be furnished by Seller or at Seller's
direction pursuant to this Agreement or in connection with the transactions
contemplated hereby, contains or shall contain any materially untrue statement
of a material fact or omits or shall omit to state a material fact necessary to
make the statements contained therein not misleading. To Seller's knowledge,
there is no material misstatement or omission in the copies of contracts,
agreements and other documents delivered by Seller in connection with the
transactions contemplated hereby.
6.16 No Leases of Property or Assets. No material portion of the
Personal Property or fixtures with respect to the Property (other than fixtures
owned or installed by tenants) is leased by the Seller as lessee.
6.17 Other Documents. To Seller's actual knowledge, the
correspondence and other documents required to be delivered to Buyer and
described in Sections 4.5 and 4.14 hereof are true, accurate and complete
originals or copies, as applicable of such correspondence and other documents.
The representations and warranties set forth in this Article VI shall
survive the execution and delivery of this Agreement, the delivery of the Deed
and transfer of title to the Property to Buyer, until the date that is six
months after the Closing Date; provided however, that in the event Buyer makes a
written claim against Seller with respect to any representation or warranty
prior to the date which is six months after the Closing Date, than such
representation or warranty shall survive without limitation as to such written
claim.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER
7.1 Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows: Buyer is a corporation duly organized under
the laws of the State of Maryland; subject to receipt of the Buyer Approval,
this Agreement and all documents executed by Buyer which are to be delivered to
Seller at the Closing are and as of the Closing Date will be duly authorized,
executed and delivered by Buyer, and are and as of the Closing Date will be
legal, valid and binding obligations of Buyer, and do not and as of the Closing
Date will not violate any provisions of any agreement or judicial order to which
Buyer is a party or to which it is subject.
ARTICLE VIII
POSSESSION, DESTRUCTION AND CONDEMNATION
8.1 Possession. Possession of the Property shall be delivered to
Buyer on the Closing Date, subject to the Leases described on the Rent Roll or
otherwise approved by Seller. Without limiting any other provisions of this
Agreement, Seller shall afford authorized representatives of Buyer reasonable
access to the Property for the purposes of determining Seller's compliance
herewith (provided that Seller or Seller's agent shall be allowed to accompany
Buyer in any visit to the Property Buyer may make for the purposes of
determining such compliance); however, in no event shall such right give rise to
any obligation of Buyer to determine compliance or noncompliance.
8.2 Loss, Destruction and Condemnation.
(a) Definition of Material Damage. For the purposes of this
Section 8.2, damage to the Property is material if (i) the actual cost of
repairing or replacing the damaged portions of the Improvements on the Property
exceeds $500,000.00, or (ii) if it would take longer than seventy-five (75) days
to perform such repair or replacement using reasonably diligent efforts, or
(iii) if any lessee has the right to abate any rent under its lease as a result
of such damage and there is not full rental interruption coverage with respect
thereto available to Buyer through and after the Closing Date until the
estimated date of reconstruction, or (iv) if any lessee or group of lessees
leasing 4,000 square feet or more in the aggregate (as set forth on the Rent
Roll) has a right to terminate its lease (or leases) as a result of such damage
and does not irrevocably waive such right prior to Closing in a form reasonably
acceptable to Buyer.
(b) Effect of Non-Material Damage to Improvements. If prior to
the Closing the Improvements on the Property are damaged by casualty and such
damage is not material, (i) this Agreement may not be terminated by reason of
such casualty (provided that this does not waive Buyer's other termination
rights under this Agreement) and (ii) Seller will, at Buyer's option, either (a)
cause the damaged portion of the Improvements to be repaired at Seller's sole
cost and expense or (b) reduce the Purchase Price by an amount equal to the
actual, reasonable and necessary cost of repairing or replacing the damaged
portions of the Improvements. Seller will notify Buyer within three (3) days of
Seller's receipt of knowledge of any casualty which occurs in between the date
of this Agreement and the Closing Date.
(c) Effect of Material Damage to Improvements. If prior to the
Closing the Improvements are damaged by casualty and such damage is material,
Seller shall notify Buyer in writing of such casualty as soon as practicable.
Within ten (10) days after the occurrence of such casualty, Seller will commence
restoration of the damaged Improvements, and shall complete such restoration in
compliance with all laws and the representations and warranties set forth herein
and shall restore such Improvements to their condition prior to the occurrence
of the casualty promptly (but in no event more than seventy-five (75) days
thereafter), and the Closing Date shall be extended (but in no event by more
than seventy-five (75) days) until such damaged Improvements are complete. If
Seller does not commence or complete such restoration within such time period,
then Buyer may elect within the next thirty (30) days pursuant to a writing
delivered to Seller and Escrow Holder to (i) continue this Agreement, in which
case Seller shall assign to Buyer at the Closing any insurance proceeds to which
Seller is entitled with respect to such damage (in which event the Purchase
Price shall be reduced by the amount of any deductible with respect thereto); or
(ii) terminate this Agreement, in which case Buyer shall have no further rights
and obligations to the Seller under this Agreement, but Buyer shall retain its
rights and remedies against Seller. Buyer's failure to have elected any of
these options within the time allotted therefor shall be deemed to be an
election of option (ii).
(d) Definition of Material Taking. For the purposes of this
Section 8.2, a taking or threatened taking by eminent domain or similar
proceedings shall be deemed material if (i) the value of that portion of the
Property to be so taken exceeds $100,000.00, (ii) Buyer determines that the
Property so affected is materially and adversely affected by such taking or
threatened taking, (iii) any lessee has the right to abate any rent under its
lease as a result of such taking or threatened taking, or (iv) any lessee or
group of lessees leasing 2,500 square feet or more in the aggregate (as set
forth on the Rent Roll) has a right to terminate its lease (or leases) as a
result of such taking or threatened taking and does not irrevocably waive such
right prior to Closing in a form reasonably acceptable to Buyer.
(e) Effect of Non-Material Taking. If prior to the Closing
there is a taking or threatened taking of a portion of the Property which is not
material, (i) this Agreement may not be terminated and (ii) Seller will assign
to Buyer at the Closing all of Seller's rights in and to any condemnation award
with respect to such non-material taking, and there will be no reduction in the
Purchase Price. Seller will deliver written notice to Escrow Holder and Buyer
within three (3) days after Seller receives notice of or otherwise becomes aware
of any taking or threatened taking affecting the Property.
(f) Effect of Material Taking. If prior to the Closing there is
a taking or threatened taking of a material portion of the Property or all of
it, Seller shall notify Buyer in writing of such taking or threatened taking,
and within ten (10) days after Buyer's receipt of such notice, Seller and Buyer
shall endeavor to agree upon whether the Property shall be purchased by Buyer,
and any reduction in the Purchase Price, and any assignment of any condemnation
award with respect to such taking. If within such ten (10) day period Buyer and
Seller have not reached a mutually acceptable agreement as to those matters,
Buyer within thirty (30) days thereafter may elect in writing to (i) continue
this Agreement subject to the taking or threatened taking with an assignment of
all of Seller's rights to condemnation awards, severance damages, payments-in-
lieu thereof or the like; or (ii) terminate this Agreement, in which case Buyer
and Seller shall have no further rights or obligations to one another under this
Agreement. Buyer's failure to have elected any of these options within the time
period allotted therefor shall be deemed to be an election of option (ii).
ARTICLE IX
MAINTENANCE AND OPERATION OF THE PROPERTY; COVENANTS
9.1 Maintenance. In addition to Seller's other obligations
hereunder, Seller shall, upon and after the date of this Agreement and to and
including the Closing Date, at Seller's sole cost and expense, maintain the
Property in the ordinary course of business consistent with past practice, pay
all taxes, assessments, fines, penalties, charges and other operating expenses,
and shall make all repairs, maintenance and replacements of the Improvements and
any Personal Property and otherwise operate the Property in its ordinary and
customary manner, and otherwise in the same manner as before the making of this
Agreement, the same as though Seller were retaining the Property. Seller shall
not make any alterations to the Property without first receiving Buyer's prior
written consent thereto.
9.2 Leases and Other Agreements. Seller shall not, on or after the
date of this Agreement and on or prior to the Closing Date, enter into any Lease
pertaining to the Property except pursuant to the terms and conditions set forth
in this Section 9.2. At any time prior to the Closing Date, in the event that
Seller intends to enter into a lease with respect to any portion of the
Property, Seller shall deliver to Buyer a complete copy of the proposed lease,
financial information as to the proposed lessee (with credit reports), and
copies of all brokerage agreements (or a detailed list of all brokerage
obligations) with respect to such lease. Buyer shall review and approve or
disapprove of such lease within ten (10) days after the receipt of all of the
foregoing materials. If all such materials are delivered to Buyer on or prior
to ten (10) days prior to conclusion of the Review Period, and if (a) such lease
(and any brokerage commissions with respect thereto) was negotiated by Seller in
good faith and is on market terms, (b) the proposed lessee is creditworthy as
determined by Buyer in its reasonable judgment, (c) the proposed use of the
premises under such Lease is compatible with the other uses in the Property and
is not inconsistent with the general leasing policies of Buyer, as determined by
Buyer in its reasonable judgment, and (d) the terms and conditions of such Lease
and any brokerage commissions payable with respect thereto are otherwise
acceptable to Buyer in its reasonable discretion, then Buyer shall approve such
lease and if and when the Closing occurs, Buyer shall assume all obligations
under such lease to pay for or construct tenant improvements and shall assume
and pay, as and when due, all brokerage commissions with respect to such lease
which commissions were disclosed to and approved by Buyer. In the event that
Buyer does not affirmatively approve in writing such lease within such ten (10)
day period, then Buyer shall be deemed to have disapproved such lease and as
long as this Agreement remains effective Seller shall not enter into such lease.
Seller's sole remedy with respect to any such disapproval shall be to terminate
this Agreement, by written notice to Buyer not later than five (5) days later
the expiration of such ten (10) day period, in which case the Earnest Money
Deposit, with all interest thereon, shall be refunded to Buyer and this
Agreement, and each party's obligations hereunder, shall terminate (except for
Buyer's obligations under Section 4.6 hereof, which shall survive such
termination). Notwithstanding the foregoing, after the conclusion of the Review
Period, in no event shall Seller enter into any lease with respect to the
Property without Buyer's prior written consent, which may be granted or withheld
in Buyer's sole and absolute discretion. After the date hereof, without Buyer's
prior written consent (which will not be unreasonably withheld) in no event
shall Seller enter into any agreement or contract with respect to the Property
(other than a lease, which shall be governed by the foregoing provisions) which
is not terminable on thirty (30) days' prior notice (without premium or
penalty).
9.3 Encumbrances. Seller shall not, in between the date of this
Agreement and the Closing Date, mortgage, encumber or suffer to be encumbered
all or any portion of the Property, which encumbrances would survive the Closing
Date, without the prior written consent of Buyer.
9.4 Consents and Notices. Seller and Buyer shall cooperate with each
other and exercise commercially reasonable efforts to obtain as of the Closing
Date, all consents from, and provide all notices to, any third party and any
governmental or regulatory authority which are required pursuant to any Contract
or any applicable laws as a condition to or in connection with the execution,
delivery or performance of this Agreement or other documents and instruments
contemplated thereby.
9.5 Audit Cooperation. Seller hereby agrees to cooperate with Buyer
in producing audited financial statements for the Property for such periods as
may be requested by Buyer. Such cooperation shall include, without limitation,
the execution and delivery by Seller to Buyer's auditors of such confirmations
and letters as such auditors may reasonably require. This section does not
impose on Seller an obligation to provide audited financial statements for the
Property to Buyer.
ARTICLE X
MISCELLANEOUS
10.1 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and personally delivered or sent by United States
mail, registered or certified mail, postage prepaid, return receipt requested,
or sent by Federal Express or similar nationally recognized overnight courier
service, and addressed as follows, and shall be deemed to have been given upon
the date of delivery (or refusal to accept delivery) at the address specified
below as indicated on the return receipt or air bill:
If to Seller: Franklin Field Plaza Limited Partnership
c/o K. Hovnanian Properties of
Franklin, Inc.
225 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
Attn: J. Robert Clements
Fax No.: (908) 741-5207
with a copy to: Frizell Clarkson & Jaffe
450 Main Street
P.O. Box 474
Metuchen, New Jersey 08840-0474
Attn: Burton J. Jaffe, Esq.
Fax No.: (732) 494-2987
If to Buyer: The PRICE REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, CA 90036
Attn.: Joseph Kornwasser
Fax No.: (213) 937-8175
with a copy to: Gibson, Dunn & Crutcher
333 South Grand Avenue
Los Angeles, California 90071
Attn: William R. Lindsay, Esq.
Fax No.: (213) 229-7520
If to Escrow Holder: Eastern Title Agency, Inc.
One Industrial Way West, Bldg. D
Eatontown, New Jersey 07724-0338
Attn: Michael Kehoe
Fax No.: (908) 389-9023
or such other address as either party may from time to time specify in writing
to the other in the manner aforesaid.
10.2 Brokers and Finders. Buyer and Seller each hereby represents and
warrants that no broker was involved in this Agreement or the transactions
contemplated hereby except for Triumph Realty, whose commissions are to be paid
by Buyer. In the event of a claim for a broker's fee, finder's fee, commission
or other similar compensation in connection herewith other than as set forth
above, (i) Buyer, if such claim is based upon any agreement alleged to have been
made by Buyer, hereby agrees to indemnify, defend, protect and hold Seller for
any liability, loss, cost, damage or expense (including reasonable attorneys'
and paralegals' fees and costs) which Seller may sustain or incur by reason of
such claim and (ii) Seller, if such claim is based upon any agreement alleged to
have been made by Seller, hereby agrees to indemnify, defend, protect and hold
Buyer harmless against any and all liability, loss, cost, damage or expense
(including reasonable attorneys' and paralegals' fees and costs) which Buyer may
sustain or incur by reason of such claim. The provisions of this Section 10.2
shall survive the Closing or earlier termination of this Agreement.
10.3 Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns, except that each respective party's interest under this Agreement
may not be assigned, encumbered or otherwise transferred whether voluntarily,
involuntarily, by operation of law or otherwise, without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
conditioned or delayed. There shall be no third party beneficiaries to this
Agreement.
10.4 Amendments. This Agreement may be amended or modified only by a
written instrument executed by the party asserted to be bound thereby.
10.5 Continuation and Survival of Indemnities, Representations,
Warranties and Post-Closing Obligations. Except as provided in the last
paragraph of Article VI of this Agreement, all indemnities, representations and
warranties by, and all of the post-closing obligations, if any, of, the
respective parties contained herein or made in writing pursuant to this
Agreement or any other instrument delivered by Seller pursuant hereto are
intended to and shall remain true and correct and binding as of the time of
Closing and shall survive the execution and delivery of this Agreement, the
delivery of the Deed and transfer of title to Buyer.
10.6 Interpretation. Whenever used herein, the term "including" shall
be deemed to be followed by the words "without limitation." Words used in the
singular number shall include the plural, and vice-versa, and any gender shall
be deemed to include each other gender. The captions and headings of the
Articles and Sections of this Agreement are for convenience of reference only,
and shall not be deemed to define or limit the provisions hereof.
10.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey without regard to
principles of conflicts of law.
10.8 Merger of Prior Agreements. This Agreement (including the
exhibits hereto) constitutes the entire agreement between the parties with
respect to the purchase and sale of the Property specifically described herein
and supersedes all prior and contemporaneous (whether oral or written)
agreements and understandings between the parties hereto relating to the
specific subject matter hereof. Buyer acknowledges that Seller has made no
representations, is unwilling to make any representations and has held out no
inducements to Buyer, other than those herein expressed, and Seller is not and
shall not be liable or bound in any manner by any express or implied warranties,
guarantees, promises, statements, representations or information pertaining to
the Property, its physical condition, the income, expense and operation thereof
or to what use the Property can be applied, other than those herein expressed.
10.9 Attorneys' Fees. In the event of any action or proceeding at
law or in equity between Buyer and Seller (including an action or proceeding
between Buyer and the trustee or debtor in possession while Seller is a debtor
in a proceeding under the Bankruptcy Code (Title 11 of the United States Code)
or any successor statute to such Code) to enforce or interpret any provision of
this Agreement or to protect or establish any right or remedy of either Buyer or
Seller hereunder, the unsuccessful party to such action or proceeding shall pay
to the prevailing party all costs and expenses, including without limitation
reasonable attorneys' and paralegals' fees and expenses (including without
limitation fees, costs and expenses of experts and consultants), incurred in
such action or proceeding and in any appeal in connection therewith by such
prevailing party, together with all costs of enforcement and/or collection of
any judgment or other relief. If such prevailing party shall recover judgment in
any such action, proceeding or appeal, such costs, expenses and attorneys' and
paralegals' and others' fees shall be included in and as a part of such
judgment.
10.10 Notice of Termination. If either Buyer or Seller elects to
terminate this Agreement, it will submit to Escrow Holder and the other party
hereto a notice of termination in duplicate. If Escrow Holder receives a notice
of termination, it is instructed to mail and fax one copy to the other such
party within one (1) business day. If Escrow Holder has not received a written
objection from the other party within five (5) business days after mailing and
faxing the copy, Escrow Holder is to (i) comply with the instructions contained
in the notice of termination, (ii) pay cancellation charges out of any funds on
deposit in this Escrow, (iii) return the Earnest Money Deposit (and interest
thereon) to the party hereunder entitled to receive same, and (iv) cancel this
Agreement.
10.11 Specific Performance; Damages. In the event of any breach or
default in or of this Agreement or any of the warranties, terms or provisions
hereof by Seller, Buyer shall have the right to demand specific performance of
this Agreement. Buyer and Seller hereby agree that in the event Seller has
breached this Agreement by fraud, misrepresentation or by breach of a covenant
contained herein, Buyer's right to damages shall be limited to Buyer's actual
out-of-pocket costs up to One Hundred Thousand Dollars ($100,000.00) (exclusive
of attorneys fees and costs incurred in any action to enforce Buyer's rights
under this Agreement), and Buyer hereby waives any right or claim to
consequential (as opposed to actual), or loss of bargain, damages.
10.12 Relationship. It is not intended by this Agreement to, and
nothing contained in this Agreement shall, create any partnership, joint
venture, financing arrangement or other agreement between Buyer and Seller. No
term or provision of this Agreement is intended to be, or shall be, for the
benefit of any person, firm, organization or corporation not a party hereto, and
no such other person, firm, organization or corporation shall have any right or
cause of action hereunder.
10.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
10.14 Recordation. Buyer shall not record this Agreement.
10.15 Time of the Essence. Time is of the essence in this Agreement
and with respect to all of its terms.
10.16 Transfer to Qualified Intermediary. The parties agree that all
of the rights and obligations of Seller and/or the Buyer under this Agreement
may be assigned by Seller and/or the Buyer prior to the Closing to, in either or
both cases, a "qualified intermediary" for purposes of enabling Seller and/or
Buyer to qualify the exchange of the Property for other property as a tax-free
exchange under Section 1031 of the Internal Revenue Code; provided, however,
that such transfer shall not relieve either of Seller or Buyer of any of the
obligations of Buyer and Seller under this Agreement. Each of Buyer and Seller
agrees to cooperate in connection with any proposed exchange of the Property;
provided, however, (i) the acquisition and exchange of the Property for
designated exchange property shall not impose upon Buyer or Seller any
additional financial obligations; (ii) each party shall indemnify the other
party and hold the other party harmless from any and all liabilities, claims,
losses or actions which Buyer and/or Seller incurs or to which Buyer and/or
Seller may be exposed as a result of Buyer's and/or Seller's participation in
either or both of the contemplated exchanges; (iii) Buyer shall not be required
to take title to any property other than the Property; and (iv) such exchange
shall not in any way delay the Closing as contemplated hereby.
[Signatures appear on the following page]
IN WITNESS WHEREOF, Seller, Buyer, and Escrow Holder have executed this
Agreement as of the date first above written.
BUYER: THE PRICE REIT, INC.,
a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Its: Sr. Executive V.P.
SELLER: FRANKLIN FIELD PLAZA LIMITED
PARTNERSHIP, a New Jersey
limited partnership
By: K. Hovnanian Properties
of Franklin, Inc.
Its: General Partner
By: /J. ROBERT CLEMENTS/
--------------------
J. Robert Clements
Its: President
CONSENT OF ESCROW COMPANY
The undersigned Escrow Company agrees to (i) accept the foregoing
Agreement, (ii) be Escrow Holder under the Agreement, and (iii) be bound by the
Agreement in the performance of its duties as Escrow Holder; however, the
undersigned will have no obligations, liability or responsibility under (a) this
consent or otherwise, unless and until the Agreement, fully signed by the
parties, has been delivered to the undersigned, or (b) any amendment to the
Agreement unless and until the amendment is accepted by the undersigned in
writing.
Dated: November 26, 1997
EASTERN TITLE AGENCY, INC.
By: /JIM TRACY/
--------------------
Escrow Officer
INDEX TO SCHEDULES
Schedule A The Land
Schedule B Form of Deed
Schedule C Form of Assignment and Assumption of Leases and Rents
Schedule D Form of Bill of Sale
Schedule E Form of Assignment and Assumption of Contracts,
Intangible Property, Warranties and Guarantees
Schedule F Form of Non-Foreign Certificate
Schedule G Rent Roll
Schedule H Update Certificate
Schedule I Form of Tenant Estoppel
SCHEDULE A
THE LAND
SCHEDULE B
[INSERT N.J. DEED BY SELLER'S COUNSEL]
EXHIBIT A TO DEED
LEGAL DESCRIPTION OF PROPERTY
EXHIBIT B TO DEED
SCHEDULE C
ASSIGNMENT AND ASSUMPTION OF LEASES AND RENTS
[FORM SUBJECT TO MODIFICATION BY LOCAL COUNSEL]
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Gibson, Dunn & Crutcher LLC
333 South Grand Avenue
Los Angeles, California 90071
Attention: William R. Lindsay
ASSIGNMENT AND ASSUMPTION OF LEASES AND RENTS
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New Jersey limited
partnership (Assignor"), hereby assigns, sets over, transfers and delegates to
THE PRICE REIT, INC., a Maryland corporation ("Assignee"), free and clear of any
and all adverse claims, all of the landlord's right, title, interest, claim and
estate in and to all leases, occupancy agreements and similar agreements,
together with all modifications, extensions and renewals thereof, all security
therefor, and all guaranties of any of the foregoing (collectively, the
"Leases") which demise all or any part of, or interest in, the real property
more particularly described on Exhibit A attached hereto and incorporated herein
(the "Land"), together with all income, receipts, funds and revenues of any kind
whatsoever payable under the Leases or otherwise with respect to the Land,
whether heretofore accrued or hereafter arising.
Assignee hereby assumes all of Assignor's obligations under or with respect
to the Leases described on Exhibit B attached hereto, which obligations arise
out of and relate to the period commencing on the date hereof. Assignor hereby
agrees to indemnify, defend, protect and hold Assignee harmless from and against
any and all loss, claim, obligation, cost or expense (including without
limitation reasonable attorneys' fees) relating to or in connection with any
obligations of the landlord under the Leases, which obligations arise out of or
relate to the period prior to the date hereof. Assignee hereby agrees to
indemnify, defend, protect and hold Assignor harmless from and against any and
all loss, claim, obligation, cost or expense (including without limitation
reasonable attorneys' fees) relating to or in connection with any obligations of
the landlord under the Leases, which obligations arise out of or relate to the
period commencing on or after the date hereof.
If any litigation between Assignor and Assignee arises out of the
obligations of the parties under this Assignment or concerning the meaning or
interpretation of any provision contained herein, the losing party shall pay the
prevailing party's costs and expenses of such litigation including, without
limitation, reasonable attorneys' fees. Any such attorneys' fees and other
expenses incurred by either party in enforcing a judgment in its favor under
this Assignment shall be recoverable separately from and in addition to any
other amount included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Assignment and to
survive and not be merged into any such judgment.
This Assignment may be executed and delivered in any number of
counterparts, each of which so executed and delivered shall be deemed to be an
original and all of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Agreement
effective as of this ______ day of _______________, 199_.
ASSIGNOR:
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New
Jersey limited partnership
By:__________________________
Its:___________________________
ASSIGNEE:
THE PRICE REIT, INC., a Maryland corporation
By:
Its:
EXHIBIT "A" TO ASSIGNMENT AND ASSUMPTION OF LEASES AND RENTS
LEGAL DESCRIPTION OF PROPERTY
EXHIBIT "B" TO ASSIGNMENT AND ASSUMPTION OF LEASES AND RENTS
ASSUMED LEASES
SCHEDULE D
BILL OF SALE
For valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New Jersey limited
partnership ("Seller"), hereby transfers, conveys and assigns to THE PRICE REIT,
INC., a Maryland corporation ("Purchaser"), and its successors and assigns
forever, free and clear of any and all adverse claims, any and all tangible
personal property owned by Seller and located on or about and used in connection
with the real property more particularly described on Exhibit A attached hereto
and made a part hereof (the "Property") or any improvements thereon, including
but not limited to fixtures, furnishings, furniture, tools machinery and/or
equipment, operational instructions and/or specifications, surveys, drawings,
business records and the personal property listed on any schedule attached
hereto, but specifically excluding therefrom any such personal property owned by
any tenant of the Property or any business record containing proprietary or
confidential information that is not related to the management, ownership or
operation of the Property.
If any litigation between Seller and Purchaser arises out of the
obligations of the parties under this Bill of Sale or concerning the meaning or
interpretation of any provision contained herein, the losing party shall pay the
prevailing party's costs and expenses of such litigation including, without
limitation, reasonable attorneys' fees. Any such attorneys' fees and other
expenses incurred by either party in enforcing a judgment in its favor under
this Bill of Sale shall be recoverable separately from and in addition to any
other amount included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Bill of Sale and to
survive and not be merged into any such judgment.
IN WITNESS WHEREOF, Seller has caused this instrument to be executed and
delivered as of this ______ day of __________, 199_.
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New
Jersey limited partnership
By:_____________________________
Its:_____________________________
By:
Name:
Title:
EXHIBIT "A" TO BILL OF SALE
DESCRIPTION OF PROPERTY
SCHEDULE E
ASSIGNMENT AND ASSUMPTION OF CONTRACTS, INTANGIBLE PROPERTY, WARRANTIES AND
GUARANTEES
THIS ASSIGNMENT AND ASSUMPTION OF CONTRACTS, INTANGIBLE PROPERTY,
WARRANTIES AND GUARANTIES (this "Assignment") is made as of the ___ day of
____________, 1997, by FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New Jersey
limited partnership ("Assignor"), in favor of THE PRICE REIT, INC., a Maryland
corporation ("Assignee").
RECITALS;
Pursuant to that certain Agreement of Purchase and Sale dated as of
__________, 1997 by and between Assignor and Assignee (the "Agreement"),
Assignee has this day acquired from Assignor certain interests in land,
buildings and improvements more particularly described on Exhibit A attached
hereto and made a part hereof (the "Property"). Capitalized terms not otherwise
defined herein shall have the meanings given them in the Agreement.
In consideration of the acquisition of the Property by Assignee and other
good and valuable consideration, the mutual receipt and legal sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
Assignor hereby assigns, transfers and delegates to Assignee to the extent
assignable and without recourse to Assignor all of Assignor's right, title and
interest in and to the following (collectively, the "Assigned Property"), free
and clear of any and all adverse claims: (i) any and all intangible personal
property owned by Seller which is appurtenant to or used by Seller in connection
with the Real Property or the Improvements or Personal Property with respect
thereto; (ii) any and all Contracts with respect to the Real Property; (iii) any
and all other property, rights in or to property, general intangibles and
contractual rights which Seller may have which are necessary in connection with,
or otherwise affect or relate directly to, the acquisition, development,
improvement, holding, use, operation, maintenance, leasing or sale of the Real
Property or the Improvements or Personal Property with respect thereto,
including, but not limited to, any and all plans, specifications, subdivision
maps and filings with respect thereto, applications, entitlements, Licenses and
Entitlements, subdivision or other bonds, engineering or soil reports, surveys,
maps, inspection reports, management reports, marketing reports, marketing
displays and brochures, all contract rights, warranties from contractors,
architects, engineers and material and labor suppliers whether written or
implied, all books and records, all claims, choses in action, judgments,
remedies, damages and causes of action, all leases, easements, licenses and
rights of way, occupancy or use agreements and all other documents affecting or
relating to the Real Property or the Improvements or Personal Property with
respect thereto; and (iv) any and all other general intangibles, warranties,
guarantees, permits, maps, surveys, entitlements and other intangible rights of
any type or nature relating to any or all of the Real Property, or the
Improvements or Personal Property with respect thereto.
If any litigation between Assignor and Assignee arises out of the
obligations of the parties under this Assignment or concerning the meaning or
interpretation of any provision contained herein, the losing party shall pay the
prevailing party's costs and expenses of such litigation including, without
limitation, reasonable attorneys, fees. Any such attorneys' fees and other
expenses incurred by either party in enforcing a judgment in its favor under
this Assignment shall be recoverable separately from and in addition to any
other amount included in such judgment, and such attorneys' fees obligation is
intended to be severable from the other provisions of this Assignment and to
survive and not be merged into any such judgment.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
effective as of the date set forth below.
Executed as of the date first above written.
ASSIGNOR:
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New Jersey
limited partnership
By: ___________________________
Its: ___________________________
:
ASSIGNEE:
THE PRICE REIT, INC., a Maryland corporation
By:
Title:
EXHIBIT "A" TO ASSIGNMENT OF CONTRACTS, INTANGIBLE PROPERTY, WARRANTIES AND
GUARANTEES
LEGAL DESCRIPTION OF PROPERTY
SCHEDULE F
CERTIFICATION OF NON-FOREIGN STATUS
(Foreign Investment in Real Property Tax Act)
Internal Revenue Code Section 1445 provides that a transferee of a
United States real property interest must withhold tax if the transferor is a
foreign person. To inform THE PRICE REIT, INC. ("Transferee") that withholding
of tax is not required upon the disposition of a United States real property
interest by the undersigned ("Transferor"), Transferor hereby certifies and
declares as follows:
1. Transferor's U.S. tax identification/social security number
is:_______________________________;
2. Transferor's principal office address is 225 Highway 35, P.O. Box
500, Red Bank, New Jersey, 07701.
3. Transferor is not a foreign person (foreign corporation, foreign
partnership, foreign trust, foreign estate or non-resident alien), as defined in
the Internal Revenue Code and Income Tax Regulations.
Transferor acknowledges that this certification may be disclosed by
Transferee to the Internal Revenue Service and that any false statement
contained in this certification may be punished by fine or imprisonment or both.
Transferor understands that Transferee is relying on this
certification to determine whether withholding is required by Transferee
pursuant to Internal Revenue Code Section 1445.
Under penalties of perjury, the undersigned signatory declares that:
I have examined this certification, to the best of my knowledge and belief it is
true and complete, and I am duly authorized to execute this certification on
behalf of Transferor.
Dated: , 199_
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New
Jersey limited partnership
By:_____________________________
Its:_____________________________
SCHEDULE G
RENT ROLL
SCHEDULE H
UPDATE CERTIFICATE
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New Jersey limited partnership
("Seller"), hereby certifies that each of the representations and warranties set
forth in Article XI of that certain Purchase and Sale Agreement and Escrow
Instructions dated ________________, 1997, between Seller and The Price Reit,
Inc., a Maryland corporation ("Buyer"), are true, accurate and complete in all
material respects as of the date hereof as if made on the date hereof, and there
have been no changes or exceptions thereto, other than as follows:
[INSERT ANY CHANGES OR EXCEPTIONS TO REPS AND WARRANTIES]
SCHEDULE I
TENANT ESTOPPEL CERTIFICATE
THIS TENANT ESTOPPEL CERTIFICATE ("Certificate"), dated as of
_____________, 199_, is executed by ________________________ ("Tenant") in favor
of THE PRICE REIT, INC. ("Buyer").
R E C I T A L S
A. Buyer and FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP, a New Jersey
limited partnership ("Landlord") have entered into that certain Agreement of
Purchase and Sale, dated as of ___________, 1997 (the "Purchase Agreement"),
whereby Buyer has agreed to purchase, among other things, the improved real
property described on Exhibit A attached to the Purchase Agreement (the
"Property").
B. Tenant and Landlord have entered into that certain Lease Agreement,
dated as of ________________ (together with all amendments, modifications,
supplements, guarantees and restatements thereof, the "Lease"), for a portion of
the Property.
C. Pursuant to the Lease, Tenant has agreed that upon the request of
Landlord, Tenant would execute and deliver an estoppel certificate certifying
the status of the Lease.
D. In connection with the Purchase Agreement, Landlord has requested that
Tenant execute this Certificate.
NOW, THEREFORE, Tenant certifies, warrants, and represents to Buyer as
follows:
AGREEMENT
Section 1. Lease.
Attached hereto as Exhibit "A" is a true, correct, and complete copy of the
Lease, including the following amendments, modifications, supplements,
guarantees and restatements thereof, which together represent all of the
amendments, modifications, supplements. guarantees and restatements thereof:
(If none, please state "None.")
Section 2. Leased Premises.
Pursuant to the Lease, Tenant leases those certain Premises (the "Leased
Premises") consisting of approximately _________________________________
(___________________________) rentable square feet within the Property, as more
particularly described in the Lease. In addition, pursuant to the terms of the
Lease, Tenant has the [non-exclusive] right to use [___________ parking
spaces/the parking area] located on the Property during the term of the Lease.
[Cross-out the preceding sentence or portions thereof if inapplicable.]
Section 3. Full Force of Lease.
The Lease is in full force and effect, has not been terminated, and is
enforceable in accordance with its terms.
Section 4. Complete Agreement
The Lease constitutes the complete agreement between Landlord and Tenant
for the Leased Premises and the Property.
Section 5. Acceptance of Leased Premises.
Tenant has accepted and is currently occupying the Leased Premises.
Section 6. Lease Term.
The term of the Lease commenced on _____________________ and ends on
_______________________, subject to the following options to extend:
(If none, please state "None.")
Section 7. Purchase Rights.
Tenant has no option, right of first refusal, right of first offer, or
other right to purchase all or any portion of the Leased Premises or all or any
portion of the Property, except as follows:
(If none, please state "None.")
Section 8. Rights of Tenant.
Except as expressly stated in this Certificate, Tenant:
(a) has no right to renew or extend the term of the Lease;
(b) has no option or other right to purchase all or any part of the Leased
Premises or all or any part of the Property;
(c) has no right, title, or interest in the Leased Premises, other than as
Tenant under the Lease.
Section 9. Rent.
(a) The rent under the Lease is current, and Tenant is not in default in
the performance of any of its obligations under the Lease.
(b) Tenant is currently paying base rent under the Lease in the amount of
________________________ Dollars ($_________) per month. Tenant has not
received and is not, presently, entitled to any abatement, refunds, rebates,
concessions or forgiveness of rent or other charges, free rent, partial rent, or
credits, offsets or reductions in rent, except as follows:
(If none, please state "None.")
(c) Tenant's estimated share of operating expenses, common area charges,
insurance, real estate taxes and administrative and over-head expenses is
___________ percent (______%) and is currently being paid at the rate of
____________________________________ Dollars ($__________) per month, payable to
______________________________________________.
(d) There are no existing defenses or offsets against rent due or to
become due under the terms of the Lease, and there presently is no default or
other wrongful act or omission by Landlord under the Lease or otherwise in
connection with Tenant's occupancy of the Leased Premises, except as
follows:______________________________________________________
(If none, please state "None.")
Section 10. Security Deposit.
The amount of Tenant's security deposit held by Landlord under the Lease is
_________________________________ Dollars ($_____________).
Section 11. Prepaid Rent.
The amount of prepaid rent, separate from the security deposit, is
__________________________________ Dollars ($_____________), covering the period
from ________ to ________.
Section 12. Insurance.
All insurance, if any, required to be maintained by Tenant under the Lease
is presently in effect.
Section 13. Pending Actions.
There are no actions, whether voluntary or otherwise, pending against the
Tenant (or any guarantor of the Tenant's obligations under the Lease) pursuant
to the bankruptcy or insolvency laws of the United States or any state thereof.
Section 14. Landlord's Obligations
As of the date of this Certificate, Landlord has performed all obligations
required of Landlord pursuant to the Lease and no offsets, counterclaims, or
defenses of Tenant under the Lease exist against Landlord. As of the date of
this Certificate, no events have occurred that, with the passage of time or the
giving of notice, would constitute a basis for offsets, counterclaims, or
defenses against the Landlord, except as follows:
(If none, please state "None.")
(If none, please state "None.")
Section 15. Assignments by Landlord.
Tenant has received no notice of any assignment, hypothecation or pledge of
the Lease or rentals under the Lease by Landlord.
Section 16. Assignments by Tenant.
Tenant has not sublet or assigned the Leased Premises or the Lease or any
portion thereof to any sublessee or assignee. No one except Tenant and its
employees will occupy the Leased Premises except as permitted under the Lease.
The address for notices to be sent to Tenant is as set forth in the Lease.
Section 17. Environmental Matters.
The operation and use of the Leased Premises does not involve the
generation, treatment, storage, disposal or release into the environment of any
hazardous materials, regulated materials and/or solid waste, except those used
in the ordinary course of operating a retail store or restaurant (if so
permitted by the Lease) or otherwise used in accordance with all applicable
laws.
Section 18. Notification by Tenant.
From the date of this Certificate and continuing through Buyer's
acquisition of title to the Property, Tenant agrees to immediately notify Buyer,
in writing, at the following address, on the occurrence of any event or the
discovery of any fact that would make any representation contained in this
Certificate inaccurate:
The PRICE REIT, Inc.
145 South Fairfax Avenue
Fourth Floor
Los Angeles, CA 90036
Attn.: Joseph Kornwasser
Fax No.: (213) 937-8175
Tenant makes this Certificate with the knowledge that it will be relied
upon by Buyer in agreeing to purchase the Property. In the event that Buyer
acquires the Property, nothing in this Section 18 shall limit Tenant's
obligations under the Lease.
Tenant his executed this Certificate as of the date first written above by
the person named below, who is duly authorized to do so.
TENANT
____________________________________
By:_______________________________
Name:
Its:
AGREEMENT TO REVOKE TERMINATION OF AND AMEND
PURCHASE AND SALE CONTRACT
This Agreement to Revoke Termination of and Amend Purchase and Sale
Contract (this "Agreement") is entered into as of April 14, 1998 between
Franklin Field Plaza Limited Partnership ("Seller") and The Price REIT, Inc.,
its successors and assigns ("Buyer") and Eastern Title Agency, Inc. ("Escrow
Holder"), with reference to the following facts:
RECITALS
A. Buyer and Seller have entered into the following agreements: (a) that
certain Purchase and Sale Agreement and Escrow Instructions dated as of November
24, 1997 By and Between Franklin Field Plaza Limited Partnership, as Seller, and
The Price REIT, Inc., as Buyer, and Eastern Title Agency, Inc., as Escrow Holder
(the "Original Agreement"); (b) that certain letter agreement by and between
Seller, Buyer and Escrow Holder dated January 28, 1998 and effective as of
January 23, 1998; and (c) that certain letter agreement by and between Seller,
Buyer and Escrow Holder dated and effective as of February 17, 1998
(collectively, the Original Agreement and foregoing letter agreements are
referred to herein as the "Sale Agreement"). Pursuant to the Sale Agreement,
Buyer deposited the sum of $100,000 with Escrow Holder (the "Earnest Money
Deposit").
B. The Sale Agreement was terminated by its own terms on or about
February 26, 1998 (the "Termination Date"). Pursuant to the terms of the Sale
Agreement, as of the Termination Date, Escrow Holder is required to pay to Buyer
the Earnest Money Deposit and any interest earned thereon within five (5) days
after Buyer delivers written notice of the termination of the Sale Agreement to
Escrow Holder. As of the date hereof, the Earnest Money Deposit, and any
interest earned thereon, is being held by Escrow Holder.
C. The parties have agreed to revoke the termination of the Sale
Agreement and to amend certain terms thereof.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
herein set forth, and other valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Buyer and Seller, and where appropriate, Escrow
Holder, agree as follows:
1. Revocation of Termination. The termination of the Sale Agreement is
hereby revoked.
2. Sale Agreement in Effect. The Sale Agreement, including, without
limitation, all of Buyer's conditions to closing, is in full force and effect,
except as the Sale Agreement may be amended hereby.
3. Amendments to the Sale Agreement. The Sale Agreement is amended as
follows:
(a) Review Period. The Buyer's review period with respect to title
and survey as described in Section 4.11 of the Sale Agreement shall be deemed to
have expired at 5:00 p.m. Los Angeles time on April 6, 1998 ("Revised Title
Review Period"). Buyer's "Review Period" as defined in Section 4.12 of the Sale
Agreement with respect to the physical and financial state of the Property shall
be deemed to expire at 5:00 p.m. Los Angeles time on April 17, 1998 ("Revised
Review Period").
(b) Additional Condition to Closing. In addition to all of Buyer's
conditions to Closing as set forth in Article IV. A of the Sale Agreement, the
following shall be additional conditions precedent to Buyer's obligation to
purchase the Property:
(i) the consent by LaSalle National Bank, as Trustee for Chase
Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates Series
1996-1 and Lennar Partners, Inc., a Delaware corporation, as special servicer,
(collectively, "Lender") to Buyer's assumption of the Existing Loan on terms and
conditions approved by Buyer in Buyer's sole and absolute discretion;
(ii) the approval by Lender of the form and substance of all
documents, instruments, financial statements, certificates, opinions and other
writings (the "Assumption Documents") or actions required to be executed and
delivered or performed by Buyer in connection with the assumption by Buyer of
the Existing Loan, all of which shall be subject to the approval of Buyer in
Buyer's sole and absolute discretion; and
(iii) the execution, in each case duly authorized, by Lender,
Buyer and, where applicable, Seller of all Assumption Documents in form and
substance satisfactory to Buyer in Buyer's sole and absolute discretion and the
delivery of such executed Assumption Documents to Escrow Holder.
(iv) the execution by Seller and delivery to Buyer of a
certificate in form and substance satisfactory to Buyer with respect to any
estoppel certificates previously delivered to Seller.
4. Closing Date. Notwithstanding any provision of the Sale Agreement to
the contrary, including without limitation Section 5.2 of the Sale Agreement,
the Closing Date shall be extended to a date to be agreed upon by the parties
subsequent to the execution of this Agreement. In accordance with Section
5.2(b) of the Sale Agreement, Escrow Holder is hereby notified to retain all
items deposited with Escrow Holder by Buyer or Seller until further instructed
in writing by Buyer and Seller.
5. Non Impairment. Except as expressly provided herein, nothing in this
Agreement shall alter or affect any provision, condition, requirement,
representation, warranty or covenant contained in the Agreement. Buyer shall
have the right to terminate the Sale Agreement, as revised hereby, pursuant to
any provision in the Sale Agreement which confers such right, including, without
limitation any provision of Section 8.2 of the Sale Agreement, or in the event
of any default by Seller under the Sale Agreement.
6. Representations and Warranties. Seller represents and warrants to
Buyer that all of Seller's representations and warranties made by Buyer in the
Sale Agreement are true and correct in all material respects as if made on the
date hereof except as follows:
(a) as used in the Sale Agreement, the term "Seller's actual
knowledge" shall exclude the actual knowledge of Robert Poyner as of any date
after the date of the Original Agreement.
(b) Buyer and Seller agree that the current list of Leases as
described in Section 6.3 of the Sale Agreement, is hereby amended to (i)
incorporate the terms of that certain Second Addendum to Lease Agreement by and
between Seller and Reynolds Brothers, Inc. dated as of February 18, 1998, and
(ii) acknowledge the filing by Lauriat's, Inc. on February 27, 1998 of a chapter
11 petition for reorganization under 11 U.S.C. 101 et seq. in the United
States Bankruptcy Court for the District of Massachusetts.
7. No Waiver. Seller and Escrow Holder acknowledge and agree that no
failure on the part of Buyer to exercise any right or remedy of Buyer shall
waive, or shall be deemed to waive, Buyer's rights under the Sale Agreement,
including, without limitation, Buyer's right to require Escrow Holder to pay to
Buyer as of the Termination Date the Earnest Money Deposit and all interest
earned thereon.
8. Defined Terms. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Sale Agreement.
9. Effective Date. This Agreement shall be effective and enforceable as
between the parties on the date it is signed by each of Buyer, Seller and Escrow
Holder.
10. Execution in Counterpart. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered will be deemed
to be an original and all of which, taken together, will be deemed to be one and
the same instrument.
BUYER:
THE PRICE REIT, INC.,
a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Its: Senior Executive Vice President
SELLER:
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP,
a New Jersey limited partnership
By: K. Hovnanian Properties
of Franklin, Inc.
Its: General Partner
By: /J. ROBERT CLEMENTS/
--------------------
J. Robert Clements
Its: President
CONSENT OF ESCROW COMPANY
- -------------------------
The undersigned Escrow Company agrees to accept the foregoing Agreement, and be
bound by the Sale Agreement, as amended, in the performance of its duties as
Escrow Holder.
EASTERN TITLE AGENCY, INC.
By: /JIM TRACY/
-----------
Escrow Officer
ASSIGNMENT OF PURCHASE AND SALE CONTRACT
This Assignment of Purchase and Sale Contract (this "Assignment") is made
as of May 21, 1998 by The Price REIT, Inc., a Maryland corporation ("Assignor"),
to Price/Franklin, LLC, a Delaware limited liability company ("Assignee"), with
the consent of and for the benefit of Franklin Field Plaza Limited Partnership,
a New Jersey limited partnership ("Seller"), and with reference to the following
facts:
RECITALS
A. Assignor, Seller and Eastern Title Agency, Inc. have entered into the
following agreements: (a) that certain Purchase and Sale Agreement and Escrow
Instructions dated as of November 24, 1997 By and Between Franklin Field Plaza
Limited Partnership, as Seller, and The Price REIT, Inc., as Buyer, and Eastern
Title Agency, Inc., as Escrow Holder (the "Original Agreement"); (b) that
certain letter agreement by and between Seller, Assignor and Escrow Holder dated
January 28, 1998 and effective as of January 23, 1998; (c) that certain letter
agreement by and between Seller, Assignor and Escrow Holder dated and effective
as of February 17, 1998, and (d) that certain the Agreement to Revoke
Termination of and Amend Purchase and Sale Contract between Assignor, Seller and
Escrow Holder dated as of April 14, 1998 (the "Agreement to Revoke
Termination,", and, collectively, with the Original Agreement and the foregoing
letter agreements, the "Sale Agreement").
B. The Sale Agreement provides that Assignor shall assume certain
obligations of Seller relating to a loan (the "Mortgage Loan") made by Chemical
Bank, a New York banking corporation ("Original Lender"), to Seller in the
original principal amount of $13,200,000.00, which Mortgage Loan was assigned
and transferred by Original Lender to LaSalle National Bank, as Trustee for
Chase Mortgage Securities Corp. Commercial Mortgage Pass-Through Certificates
Series 1996-1 ("Lender"). It is a requirement of the Mortgage Loan documents
that the borrower under the Mortgage Loan documents be a single purpose entity,
as more particularly described in that certain Mortgage and Security Agreement
dated as of January 31, 1996 by and between Seller, as borrower, and Original
Lender, as lender. Assignor believes that Lender may not deem Assignor to be a
single purpose entity as defined in the Mortgage Loan.
C. Assignee is a single purpose entity as required by the Mortgage Loan
documents and Assignor intends to assign the Sale Agreement to Assignee to
comply with the requirements of the Mortgage Loan documents. The Sale Agreement
requires that Seller consent in writing to any assignment by Assignor of the
Sale Agreement.
D. Seller has advised Assignor that Seller consents to the assignment of
the Sale Agreement to Assignee, subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
herein set forth, and other valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Assignor, Assignee, Seller and, where
appropriate, Escrow Holder, agree as follows:
1. Assignment of Sale Agreement; Assumption of Obligations. Subject to
the terms and conditions of this Assignment, Assignor hereby fully assigns,
grants, sells, transfers, conveys and delivers unto Assignee, as a present,
absolute and unconditional assignment, all of Assignor's right, title and
interest in and to the Sale Agreement together with all the rights, privileges
and appurtenances now or hereafter in any way belonging or pertaining thereto.
Assignee hereby accepts the assignment hereunder and assumes all of Assignor's
obligations under the Sale Agreement. Assignee agrees to perform, or cause to
be performed, all of the obligations of Assignor under the Sale Agreement.
2. Consent of Seller. By its execution of this Assignment, Seller hereby
consents to the assignment by Assignor hereunder to Assignee and to all of the
terms and conditions of this Assignment.
3. Release of Assignor. Effective as of the Closing of the sale of the
Property, Seller hereby fully, finally, unconditionally and forever releases,
quit claims and discharges Assignor and its affiliates, attorneys, assigns,
agents, representatives, and any or all of them, from any and all claims,
liabilities, demands, debts, accounts, obligations, actions and causes of
action, known or unknown, at law or in equity, that Seller may have or claim to
have arising from, arising out of or in any way related to the Sale Agreement.
Effective as of the Closing of the sale of the Property, Assignor shall have no
further obligations to Seller or Escrow Holder under the Sale Agreement.
Notwithstanding the foregoing release, Assignee shall not be released from any
of Assignee's obligations under the Sale Agreement to Seller.
4. Representations and Warranties of Seller. Seller represents and
warrants to Assignor and Assignee that the Sale Agreement is in full force and
effect, and all of Seller's representations and warranties made by Seller in the
Sale Agreement are true and correct in all material respects as if made on the
date hereof, except as the same may have been previously modified in a writing
executed by Seller and delivered to Assignor or Assignee and except as set forth
on Exhibit A attached hereto and incorporated herein by this reference. Seller
represents and warrants to Assignor and Assignee that Seller has not assigned
any of its rights under the Sale Agreement.
5. Representations and Warranties of Assignor. Assignor represents and
warrants to Seller that the Sale Agreement is in full force and effect and that
all of the representations and warranties of Assignor in the Sale Agreement are
true and correct in all material respects as if made on the date hereof.
Assignor represents and warrants to Seller that Assignor has not previously
assigned any of its rights under the Sale Agreement.
6. Non-Impairment. Except as expressly provided herein, nothing in this
Assignment shall alter or affect any provision, condition, requirement,
representation, warranty or covenant contained in the Sale Agreement.
7. Defined Terms. Capitalized terms not otherwise defined herein shall
have the meanings given to them in the Sale Agreement.
8. Effective Date. This Assignment shall be effective and enforceable as
between the parties on the date it is signed by each of Assignor, Assignee,
Seller and Escrow Holder.
9. Execution in Counterpart. This Assignment may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original and all of which, taken together, shall be deemed to be
one and the same instrument.
Assignor, Assignee, Seller and Escrow Holder have executed this Assignment
as of the date first written above.
ASSIGNOR:
THE PRICE REIT, INC.,
a Maryland corporation
By: /JERALD FRIEDMAN/
-----------------
Its: Senior Executive V.P.
SELLER:
FRANKLIN FIELD PLAZA LIMITED PARTNERSHIP,
a New Jersey limited partnership
By: K. Hovnanian Properties of
Franklin, Inc.
Its: General Partner
By: /J. ROBERT CLEMENTS/
--------------------
J. Robert Clements
Its: President
ASSIGNEE:
Price/Franklin, LLC, a Delaware limited
liability company
By: Price/Franklin Property, Inc.,
a Delaware corporation
Its: Member
By: /JERALD FRIEDMAN/
-----------------
Its: Vice President
CONSENT OF ESCROW COMPANY
- -------------------------
The undersigned Escrow Company agrees to accept the terms of the
foregoing Assignment, and be bound by the Sale Agreement, as assigned, in the
performance of its duties as Escrow Holder.
EASTERN TITLE AGENCY, INC.
By: /JIM TRACY/
------------------
Escrow Officer
EXHIBIT A
Modifications to Representations and Warranties
1. Section 6.3 of the Sale Agreement and Exhibit G attached to the Sale
Agreement are amended to include the following lease amendments:
A. Agreement to Lease between Franklin Field Plaza Limited Partnership
and A&R Splash, Inc., t/a Splash For Hair Franklin Park dated May 13, 1998.
B. First Amendment Agreement to Lease between Franklin Field Plaza
Limited Partnership and Penn Encore, Inc. dated May 14, 1998.
================================================================================
AGREEMENT OF SALE AND PURCHASE
OF IMPROVED REAL PROPERTY
THIS AGREEMENT made as of the 3rd day of April, 1998 by and between Paseo
Del Norte Plaza Associates, Limited Partnership (a New Mexico limited
partnership, hereinafter sometimes referred to as "Paseo Del Norte" or as
"Seller"), with a principal place of business at 330 Garfield Street, Suite 200,
Santa Fe, New Mexico 87501 and The Price Reit, Inc., a Maryland corporation,
with a principal place of business at 145 South Fairfax Avenue, Los Angeles,
California (hereinafter referred to as the "Purchaser").
WITNESSETH:
WHEREAS, Paseo Del Norte is the owner of:
a. Land. That certain real property (the "Land") described in Exhibit A
hereto;
b. Appurtenances. All rights, privileges and easements appurtenant to
and for the benefit of the Land, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances on and under the Land, as well as all
development rights, air rights, water, water rights and water stock relating to
the Land and any other easements, rights-of-way or appurtenances owned by Seller
and used in connection with the beneficial operation, use and enjoyment of the
Land, the Leases, the Rents, the Improvements, the Intangible Property, or any
other appurtenance, together with all rights of Seller in and to streets,
sidewalks, alleys, driveways, parking areas and areas adjacent thereto or used
in connection therewith, and all rights of Seller in any land lying in the bed
of any existing or proposed street adjacent to the Land (all of which are
collectively referred to as the "Appurtenances");
c. Improvements. All improvements and fixtures located or to be located
on the Land, including, without limitation, all buildings and structures
presently located on the Land or to be located thereon on the Closing Date, all
apparatus, equipment and appliances presently located on the Land and used in
connection with the operation or occupancy thereof, such as heating and air
conditioning systems and facilities used to provide any utility services,
parking services, refrigeration, ventilation, garbage disposal, recreation or
other services thereto, and all landscaping and leasehold improvements of
tenants, if any, which become the property of the owner of the Land (all of
which are collectively referred to as the "Improvements");
d. Leases and Rents. All leases, occupancy agreements and other similar
agreements to which Seller is a party or by which it is bound, together with all
modifications, extensions and renewals thereof, and any guarantees of any of the
foregoing with respect to or demising any part of the Land, Appurtenances or
Improvements (the "Leases"), all income, receipts, funds and revenues of any
kind whatsoever payable under the Leases or otherwise with respect to all or any
portion of the Land, Appurtenances or Improvements (the "Rents");
e. Personal Property. All tangible personal property located or to be
located on, or situated or to be situated in and used in connection with, the
Land and/or the Improvements ("Personal Property");
f. Intangible Property. All of the interest of Seller in (i) any
tangible personal property which relates to and is reasonable required for the
operation and functioning of the Land, Improvements or Personal Property
generally, and (ii) any and all warranties, guarantees, permits, contracts and
other rights owned by Seller relating to the ownership, operation or functioning
of all or any part of the Property, as defined below (including without
limitation all third party guarantees and warranties, express or implied, in
connection with the construction of the Improvements) and all of Seller's right,
title and interest, if any, in and to the name "Paseo del Norte" (all of the
foregoing are collectively referred to as the "Intangible Property").
All of the items described in Sections a, b, c, d, e and f above are
hereinafter collectively referred to as the "Property". The items described in
Sections a, b, and c above are hereinafter referred to collectively as the "Real
Property".
WHEREAS, the Seller desires to sell the Property to the Purchaser on the
terms and conditions hereinafter set forth; and
WHEREAS, the Purchaser desires to purchase the Property from the Seller and
accept the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the covenants, terms and conditions
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller and the Purchaser hereby
agree as follows:
1. Purchase and Sale. The Seller agrees to convey to the Purchaser, and
the Purchaser agrees to purchase from the Seller the Property for the purchase
price of SEVENTEEN MILLION SEVEN HUNDRED FIFTY-FIVE THOUSAND DOLLARS AND
NO/100ths ($17,755,000) (hereinafter referred to as the "Purchase Price") The
Purchase Price will be paid as hereinafter more particularly set forth. This
sale includes all right, title and interest, if any, of the Seller, in and to
the Land, Appurtenances, Improvements, Rents, Leases, Personal Property and
Intangible Property.
2. Permitted Exceptions. The Real Property will be sold and conveyed to
the Purchaser and accepted by the Purchaser subject to the exceptions to title
and other matters set forth herein and in Exhibit B attached hereto, in each
case as approved or otherwise waived by Purchaser pursuant to Paragraph 5 hereof
(hereinafter called the "Permitted Exceptions").
3. Purchase Price. The Purchase Price shall be paid by the Purchaser as
follows:
(a) ONE HUNDRED THOUSAND AND NO/100ths DOLLARS ($100,000) in good funds,
certified or cashier's check, upon mutual execution of this Agreement, shall be
deposited by Purchaser with Rio Grande Title Insurance Company as escrow agent
("Escrow Agent") as an initial deposit to be held in escrow by Escrow Agent
pursuant to the provisions of Paragraph 3(e) hereof and as otherwise provided in
agreement (the "Escrow Agreement") attached hereto (this amount hereinafter
described as the "Initial Deposit").
(b) Purchaser shall deposit TWENTY-FIVE THOUSAND AND NO/100ths DOLLARS
($25,000) in good funds, certified or cashier's check, within two business days
of the expiration of the Review Period (as hereinafter defined), with the Escrow
Agent, as an additional deposit to be held in escrow by Escrow Agent pursuant to
the provisions of Paragraph 3(e) hereof and as otherwise provided in the Escrow
Agreement (this amount, the "Additional Deposit" and together with the "Initial
Deposit," hereinafter described collectively as the "Deposit")
(c) Purchaser shall be deemed to have paid to Seller an amount equal to
the outstanding principal balance of the Existing Loan, hereinafter defined,
together with all accrued and unpaid interest thereon as of the Closing Date,
and all late charges, penalties or other charges owing under the Existing Loan,
upon Purchaser's execution and delivery of an assumption of the Existing Loan on
the Closing Date as contemplated hereby.
(d) Purchaser shall pay to Seller, through the escrow maintained by Escrow
Agent pursuant hereto, on the Closing Date, immediately available funds in an
amount equal to the Purchase Price, less (i) the Initial Deposit, (ii)
Additional Deposit, and (iii) the outstanding principal balance of the Existing
Loan together with all accrued and unpaid interest thereon, and all late
charges, penalties or other charges owing under the Existing Loan, as of the
Closing Date.
(e) The parties agree that the Initial Deposit made by the Purchaser
pursuant to Paragraph 3(a) above, and the Additional Deposit made by Purchaser
pursuant to Paragraph 3(b) above, shall be held in escrow by Escrow Agent in an
interest bearing account, approved by Purchaser (the "Escrow Account"), and the
interest earned thereon shall become part of the Deposit. Upon the disposition
of the Deposit under this subparagraph, or as otherwise provided in this
Agreement or the Escrow Agreement, the Seller and the Purchaser agree that the
Escrow Agent shall thereupon be relieved of any further responsibility with
respect to the Deposit. The Seller and the Purchaser acknowledge and agree that
the Escrow Agent shall have absolutely no liability in connection with the
Deposit except upon breach of this Agreement or the Escrow Agreement or for
gross negligence or willful misconduct or misappropriation.
4. Delivery of Documents.
(a) Seller shall deliver to Purchaser a copy of its most recent survey of
the Property (the "Existing Survey") and a commitment to issue an extended
coverage ALTA 1970 owner's title insurance policy relating to the Property (the
"Commitment"), or the New Mexico equivalent thereof, issued by Rio Grande Title
Insurance Company as agent for Chicago Title Insurance Company and accompanied
by copies of all documents and instruments referred to in the Commitment and
copies of all existing or proposed easements, covenants, restrictions,
agreements or other documents which affect the ownership of title to the
Property and which are not disclosed by the Commitment for the Property, if any
( the "Exceptions").
(b) Seller shall promptly make available for Purchaser's review the
following documents, but only to the extent that the following are in Seller's
possession or control or in the possession or control of Seller's Manager or
affiliates:
(i) Operating statements for the years 1996, 1997 and the current
year;
(ii) Phase I Environmental Report; and if performed, a Phase II
Environmental Report;
(iii)Certificates of Occupancy;
(iv) Building Plans;
(v) Copies of service contracts and agreements relating to the
Property (the "Service Contracts");
(vi) Tax statements for 1996, 1997, and to the extent available, 1998;
(vii)Copies of all soils and hazardous materials reports, termite
reports, engineering studies, topographical maps, appraisals and other
reports, studies, maps and analyses with respect to the Property;
(viii)Copies of subdivision maps and condominium plans;
(ix) Copies of all documents and certificates from appropriate
governmental authorities relating to the zoning, building and platting
status of the Property;
(x) A description of existing and proposed local improvements
affecting the Property, including assessment levels;
(xi) Copies of all correspondence with all governmental entities with
respect to the Property;
(xii)A copy of all property tax statements and assessed value notices,
all approvals, permits and licenses from each governmental authority having
jurisdiction over the Property as are necessary to permit full use and
occupancy of the Property;
(xiii)Copies of all tenant leases, amendments, and proposed tenant
leases on the Property and all correspondence with tenants, billings, and
common area maintenance charge reconciliation;
(xiv)Copies of all plans and construction drawings for all buildings
to be constructed on the Property;
(xv) A copy of all loan documents entered into by Seller in connection
with the first mortgage encumbering the Property (the "Existing Loan"); and
(xvi)Tenant estoppels dated not more than sixty (60) days prior to the
Closing Date (which shall be delivered not later than five (5) days prior
to the Closing Date) in the form attached hereto as Exhibit C and otherwise
reasonably satisfactory to Purchaser.
Seller shall also deliver to Purchaser such documents, instruments,
agreements, reports, records, studies or other materials or information relating
to the Property in the possession of Seller or Seller's manager as Purchaser may
reasonably request.
(c) If this Agreement is terminated for any reason prior to completion of
the transaction contemplated herein, Purchaser shall return to Seller all items
delivered to Purchaser by Seller pursuant to Sections 4(a) and 4(b) hereof.
(d) Promptly after receiving Purchaser's reasonable requirements therefor,
Seller shall cause the Existing Survey to be updated, at its own cost and
expense, to reflect the exceptions set forth in the Commitment and any
additional matters that would be revealed by an accurate current survey of the
Real Property. Such updated survey (the "Survey) shall be certified to
Purchaser and shall be delivered to Purchaser not less than fifteen (15) days
prior to the conclusion of the Review Period.
5. Title. Purchaser shall be entitled to object to any exceptions
contained in the Commitment or the Survey in its sole discretion by a written
notice of objections delivered to Seller no later than the expiration of the
Review Period, as hereinafter defined. If Purchaser fails to deliver to Seller
a notice of objections on or before expiration of the Review Period, then
Purchaser shall be deemed to have waived any objection to any matters appearing
in the Commitment and Survey, and thereafter all such exceptions shall be deemed
to be Permitted Exceptions. Seller shall have ten (10) days from the receipt of
Purchaser's notice of objections either to procure the issuance of an
endorsement to the Commitment in form and substance acceptable to Purchaser, all
at Seller's sole cost and expense, removing such exceptions or to provide
affirmative title insurance protection for such exceptions satisfactory to
Purchaser in Purchaser's sole discretion, provided that Seller shall have no
obligation to undertake to cure any objection or spend money with the title
company or any 3rd party to cure same unless such objection is to an exception
for a monetary obligation of Seller other than the Existing Loan, in which case,
Seller shall cure same. If Seller fails to notify Purchaser within two (2) days
of receipt of said Purchaser's notice that Seller will either provide for the
removal of such exceptions or obtain affirmative title insurance protection for
such exceptions satisfactory to Purchaser in Purchaser's sole discretion within
such ten (10)-day period, then this Agreement shall be terminated whereupon the
Initial Deposit, and if applicable, the Additional Deposit, and all interest
thereon shall be returned to Purchaser, and the parties shall be released from
all further obligations under this Agreement. If Purchaser waives in writing
its objections to any matters described in the notice of objections, such
matters shall be deemed to be Permitted Exceptions.
6. Review Period.
(a) Purchaser shall have until 5:00 PM Mountain Time on the date thirty
(30) days after the date hereof (the "Review Period") to make an evaluation of
the Property. If Purchaser elects in the exercise of its sole discretion to
proceed with the purchase of the Property, Purchaser shall deliver written
notice to Seller on or prior to the conclusion of the Review Period, of its
intention to proceed with the purchase of the Property in accordance with the
Agreement whereupon, Purchaser shall be deemed to have waived its right to
terminate this Agreement in accordance with this Paragraph 6, and shall
immediately deliver to the Escrow Agent the Additional Deposit. In the event
that Purchaser fails to deliver such written notice on or prior to the
conclusion of the Review Period, then this Agreement shall thereupon be
terminated whereupon the Initial Deposit and all interest thereon shall be
returned to Purchaser, and the parties shall be released from all further
obligations under this Agreement.
(b) At reasonable times and upon reasonable notice to Seller within the
Review Period, Purchaser and its employees, agents and licensees shall have the
right to inspect Seller's books and records with respect to the Property and to
enter the Property for purposes of conducting soils, environmental and similar
tests and of inspecting the Property and its components thereof. Purchaser may,
at its option, retain engineers or other consultants for the purposes of
performing or assisting in such tests and inspections. If Purchaser in its sole
discretion is satisfied with the condition of the Property, then Purchaser may
proceed with this transaction by written notice to Seller on or prior to
conclusion of the Review Period of its intention to purchase the Property in
accordance with the terms hereof. If such written notice is not delivered to
Seller on or prior to the expiration of the Review Period, then, the Initial
Deposit and all interest thereon shall be returned to Purchaser, and the parties
shall be released from all further obligations under this Agreement. Seller
agrees to cooperate reasonably with any such investigations, inspections, or
tests (so long as such cooperation is at no expense to Seller), which
cooperation shall include providing such notices to the tenants of the Property
as are required by law or to permit Purchaser and its employees and agents to
inspect the Property and interview tenants, provided that a representative of
Seller shall have the right to be present during any interview. (Seller shall
provide such representative upon written notice to Purchaser given not less than
one business day prior to the proposed interview date). Purchaser shall repair
and restore the Property or any part or component thereof damaged by any
inspection or test conducted by or at the direction of Purchaser, and shall
indemnify, protect, defend and hold Seller harmless from any loss, cost, damage,
expense or liability (including reasonable attorneys' fees) arising out of
property damage or injury to persons occurring during investigations or tests
conducted by or at the direction of Purchaser under this Section 6(b).
7. Closing.
(a) The closing of the purchase and sale of the Property shall take place
at the offices of the Escrow Agent, or at such other place as the parties may
hereafter agree in writing no later than fifteen (15) days after the expiration
of the Review Period or at such earlier date as may be agreed to in writing by
Seller and Purchaser (herein called the "Closing Date").
(b) On the Closing Date, Seller shall deliver to Purchaser the following,
duly executed and acknowledged if required:
(i) A Special Warranty Deed conveying to Purchaser fee simple title
to the Property free and clear of all matters created by, through or under
Seller, and subject in any event to the Permitted Exceptions (the "Deed")
in the form attached as Exhibit D;
(ii) A Bill of Sale conveying all of Seller's right, title, and
interest in and to the Personal Property in the form attached as Exhibit E;
(iii)An Assignment and Assumption of the Leases, Contracts and
Intangibles assigning all of Seller's right, title and interest in and to
all assignable Service Contracts (to the extent Purchaser desires to accept
the assignment thereof), intangible property, if any, and the Leases, in
the form attached hereto as Exhibit F (the "Assignment of Leases"),
together with notices in the form required by law, and reasonably
acceptable to Purchaser, executed by Seller, to the tenants under the
Leases notifying them of the change in ownership of the Property;
(iv) A settlement statement to be prepared by Escrow Agent;
(v) An affidavit of Seller under the penalty of perjury stating
Seller's United States taxpayer identification number and that Seller is
not a foreign person as defined in Internal Revenue Code Section 1445;
(vi) Tenant estoppel certificates in form reasonably acceptable to
Purchaser from tenants occupying not less than eighty-five (85%) percent of
the rentable square footage of the Property including estoppel certificates
from each of the anchor tenants listed with an asterisk on Exhibit G. If
Seller is unable to procure estoppel certificates from such anchor tenants
and otherwise totalling eighty-five (85%) percent of the rentable square
footage of the Property, Purchaser may terminate this Agreement. Seller
furnish Purchaser with an estoppel certificate covering any such Lease(s)
for which an estoppel certificate has not been obtained from the tenant(s)
certifying as to the matters set forth in the form of tenant estoppel
certificate attached hereto as Exhibit "C" which Seller certificate may be
accepted by Purchaser, in its sole discretion. Upon subsequent delivery to
Purchaser of any missing tenant estoppel certificate in the form required
herein within no adverse disclosure therein, Seller's estoppel certificate
shall be null and void and Purchaser shall cancel Seller's estoppel
certificate executed in lieu thereof and return such canceled Seller's
estoppel certificate to Seller.
(vii)All documents reasonably required by the title insurance company
issuing the Policy to complete the Closing, including but not limited to
those documents required by the title insurance company from Seller for the
issuance of an ALTA Extended Coverage Policy of Title Insurance. In
addition, Seller shall provide UCC searches showing that there are no UCC
filings in the name of Seller or Seller's general partner or otherwise
affecting Seller's interest in the Property or, if there are such filings,
Seller covenants and agrees the same shall be removed at or prior to the
Closing.
(viii)All keys and entrance cards used on any part of the Property in
Seller's possession or control; and
(ix) All original leases, amendments thereto and tenant correspondence
files and Service Contracts.
(x) Originals or copies of any warranties and guaranties received by
Seller and to be assigned to Purchaser, from any contractors,
subcontractors, suppliers or materialmen in connection with any
construction, repairs or alterations of the Improvements or any tenant
improvements;
(xi) Originals or copies of all certificates of occupancy, licenses
and permits for the Improvements;
(xii)All existing as-built plans and specifications for the
Improvements in the possession of Seller or its manager;
(xiii)Complete originals of the Leases with respect to the Property
and copies of all records, books of account, ledgers, statements and other
business records relating to the ownership and operation of the Property
and/or the administration of the Leases, in whatever mode maintained,
including information contained on computer disks.
(c) Purchaser may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
(d) On the Closing Date, Purchaser shall deliver to Escrow Agent the
following, duly executed and acknowledged if required:
The balance of the Purchase Price, in accordance with the terms set forth in
Paragraph 3 above, adjusted to reflect any prorations pursuant to Paragraph 9;
The Assignment of Leases;
An assumption agreement with respect to Seller's obligations under and with
respect to the Existing Loan in form and substance reasonably acceptable to
Purchaser; and
A settlement statement to be prepared by Escrow Agent
(e) Provided that Escrow Agent has received all of the items required to
be delivered pursuant to this Agreement (or a waiver from the party for whose
benefit such item is being delivered) and that it has not received prior written
notice from Purchaser that Purchaser has elected to terminate its rights and
obligations hereunder, and provided that Purchaser has received the Commitment
subject only to the Permitted Exceptions and conditioned solely upon recordation
of the Deed, Escrow Agent is authorized and instructed (i) with respect to the
Property, to record the documents delivered to the Escrow Agent in accordance
with recording instructions set forth in a letter to be delivered to Escrow
Holder by Purchaser (or if no such letter is received prior to the closing, in
accordance with customary practice), (ii) to deliver those other documents and
instruments delivered into Escrow to the party for whose benefit such documents
or instruments were made and (iii) to deliver the Purchase Price, as adjusted
pursuant to Section 9 hereof, upon receiving confirmation of recording.
8. Expenses. Seller shall pay all documentary, stamp or other transfer
taxes relating to the real, personal or intangible property. Seller shall pay
the premium for a standard Title Insurance Policy and the Survey. Purchaser
shall pay for the extra premium for extended coverage under such title policy.
Purchaser shall pay for the cost of a new Phase I Environmental Study (if
desired). Escrow costs charged by the Escrow Agent shall be shared equally by
Seller and Purchaser. All other closing costs shall be allocated between
Purchaser and Seller by Escrow Agent in accordance with practice and custom for
commercial real estate closings in Albuquerque, New Mexico. The Purchaser shall
pay the fees of the Purchaser's attorney, and any other closing expenses
incurred by the Purchaser, but not including, however, the real estate brokerage
commission payable to the Broker (as hereinafter defined) upon the closing of
title, which shall be paid by the Seller as provided in Paragraph 13 hereof.
The Seller shall pay the fees of the Seller's attorney, and any other closing
expenses incurred by the Seller, and the costs and expenses required to be paid
by Seller as provided in Paragraph 16 hereof.
9. Closing Prorations. The following items shall be prorated and adjusted
between the Seller and the Purchaser as of midnight on the day preceding the
Closing Date:
(a) Rents. All rents and other receipts actually received in the month in
which the Closing occurs shall be prorated as of the Closing. Purchaser shall
use reasonable efforts after the Closing to collect delinquent rents for the
period up to the Closing, provided, however, that all collections shall be
applied first to periods commencing after the Closing, and then to periods prior
to the Closing. Percentage Rents (if any) shall be prorated by Purchaser when
received by Purchaser, based on twelve thirty (30) day months.
(b) Common Area Maintenance Charges. All reimbursable expenses (other
than items described under the next succeeding paragraph) shall be reconciled at
Closing, such that if Seller has collected sums in excess of its reimbursable
expenses under the Leases, Seller shall pay such excess to Purchaser. In the
event that such reconciliation shows that Seller has collected less than its
incurred reimbursable expenses under the Leases, Purchaser shall remit the
shortfall to Seller, when and to the extent actually collected from tenants
(with such collections applied first to amounts due to Purchaser, and then to
Seller) not later than the expiration of three months after the conclusion of
the twelve-month period then in progress with respect to the budgeting of such
expenses under the Leases.
(c) Taxes. Real estate taxes, recurring assessments, and personal
property taxes, if any, on all or any portion of the Property, based on the
regular and supplemental tax bills for the calendar year in which the Closing
occurs (or, if such tax bill has not been issued as of the date of Closing the
regular and supplemental tax bill for the calendar year preceding that in which
the Closing occurs) shall be prorated as of the Closing. If any supplemental
real estate taxes are levied for any period preceding the Closing, the parties
will, immediately after the closing or the issuance of the supplemental real
estate tax bill (whichever last occurs), prorate between themselves, in cash,
without interest and to the date of the Closing Date, the supplemental real
estate taxes shown by such bill.
(d) Utilities. Unless such items are subject to proration under
subparagraph (b) above, all utilities, including gas, water, sewer, electricity,
telephone and other utilities supplied to the Property shall be read as of the
Closing Date. Seller shall pay, prior to the Closing Date, all such amounts for
which a bill has been received or for which service was rendered prior to the
Closing Date.
(e) Service Contracts. Amounts payable under Service Contracts which are
not being terminated shall be prorated on an accrual basis. Seller shall pay,
prior to the Closing Date, all such amounts for which a bill has been received
or for which service was rendered prior to the Closing Date. Seller shall
deliver to Escrow, for the benefit of Purchaser, evidence of the cancellation or
termination of all Service Contracts other than those to be assumed by Purchaser
in its discretion, and Seller shall be responsible for all such cancellation
costs.
(f) Improvement Lien Assessments. All improvement lien assessments shall
be paid in full by Seller at Closing.
(i) Other Items. All other proratable items, including without
limitation licenses and permits being assumed by Purchaser (if any;
provided that in no event shall Purchaser assume any indemnification
obligations of Seller) and other income from, and expenses associated with,
the Property shall be prorated between Purchaser and Seller as of the
Closing
(ii) All outstanding tenant finish and improvement costs, architect
fees, space planning and design fees, leasing commission costs and all
other tenant concessions, costs, expenses and legal fees (collectively,
"Lease Expenses") paid or incurred in connection with Leases or amendments
thereof executed prior to the date hereof shall be the responsibility of
Seller. Any Lease Expenses paid or incurred in connection with Leases or
amendments thereof executed on or after the date hereof in accordance with
Paragraph 15.6 hereof, including third party referral fees with respect to
Leases or other rental agreements (including, without limitation options,
renewals and extensions) and legal fees directly related to such leasing
payable by Purchaser pursuant to Paragraph 15.6 hereof, shall be the
responsibility of Purchaser. Seller shall receive a credit at Closing for
any such Lease Expenses for which Purchaser is responsible and which have
been paid by Seller prior to the Closing Date. Notwithstanding the
foregoing, Purchaser shall be solely responsible for the payment of all
Lease Expenses payable in connection with any options, renewals,
extensions, or otherwise, accruing or arising under Leases and amendments
thereof (whether executed before or after the Closing Date) after the
Closing Date provided that such Lease Expenses have been disclosed either,
in the written Lease delivered by Seller to Purchaser, by Seller in this
Agreement, or otherwise approved in writing by Purchaser.
Purchaser and Seller's obligation to prorate shall survive the Closing for
a period of one (1) year (unless within such time Purchaser or Seller makes a
claim against the other party to this Agreement with respect to such obligation
to prorate, in which case such obligation shall survive without limitation), and
Purchaser and Seller shall use good faith efforts to conclude prorations with
respect to percentage rent and common area maintenance charges as soon as
practicable after the determination of the amounts thereof. Notwithstanding the
foregoing, in the event that any of the tenants at the Property challenge any
expense pass-throughs or reimbursable expense reconciliations with respect to
any period prior to the Closing, Seller hereby agrees that it shall be solely
responsible to repay to such tenant any overpayments by such tenant, and shall
repay such overpayments (and any other amounts owing by the landlord under the
relevant lease and relating to such overpayment, including without limitation
audit costs and interest, if applicable) to such tenant within ten (10) days
after the determination of the amount thereof. Seller hereby indemnifies
Purchaser from and against any and all loss, costs and expense incurred by
Purchaser as a result of any such overpayments by tenants. Seller's obligations
under the immediately preceding two sentences shall survive the Closing without
limitation. Nothing in the Assignment of Leases shall be construed to amend,
modify or diminish in any way the provisions of this Section 9.
At Closing, Seller shall deliver to Purchaser, all contracts, Leases and
leasing correspondence, receipts for deposits, and unpaid bills which pertain to
the Property, together with all advertising materials, booklets, and keys, if
any, used in the operation of the Property other than those items delivered to
Purchaser on or before the Closing as provided for herein. Except as expressly
set forth herein, Seller makes no representations regarding the existence or
adequacy of such documents or items for use in management or operation of the
Property. The foregoing shall not include the separate books, records,
correspondence and other documentation of Seller located at its offices except
to the extent they relate to the Property.
The net amount of all prorations and adjustments shall be credited or
debited, as the case may be, against the Purchase Price payable at the Closing
pursuant to Paragraph 3 above.. The Purchaser hereby acknowledges that it has
no right, title or interest in or to any refunds which may hereafter be payable
to the Seller, or the tenants, in respect of real estate taxes, water or sewer
charges or other assessments which accrued and related to the period prior to
the Closing Date. To the extent that such refunds are paid to Seller and are
due to tenants, Seller does hereby covenant and agree that it shall, upon
receipt thereof, reimburse tenants for their applicable share of such refunds.
10. Payment of Liens. If, on or before the Closing Date, there be any
other liens or encumbrances which the Seller is obligated to pay and discharge,
the Seller may use any portion of the Purchase Price to satisfy the same. The
existence of any such taxes or other liens and encumbrances shall not be deemed
objections to title if the Seller shall take such steps as shall be necessary to
cause the title company insuring the title of the Property in favor of the
Purchaser (herein called the "Title Company") to omit same or to insure against
collection of same out of the Property.
11. Representations by Seller. All understandings and agreements
heretofore had between the parties hereto are merged in this Agreement, which
alone fully and completely expresses their agreement. The Purchaser is entering
into this Agreement not relying upon any statement or representation not
embodied in this Agreement made by any person. Prior to the expiration of the
Review Period, the Purchaser will have had an opportunity to inspect the
Property. Neither the Seller nor any persons purporting to act for the Seller
has made or now makes any representations or warranties as to the physical
condition, income, expense, operation or any other matter of thing affecting or
relating to the Property, except as herein specifically set forth. The Seller
is not liable or bound in any manner by any financial statements or written
agreements or statements, or representations which have been made, or any real
estate brokers' "set-ups" or information pertaining to the Property furnished,
by any real estate broker, agent or employee, servant or other persons. Except
as otherwise provided herein, but without in any way limiting the generality of
the foregoing, the Purchaser further acknowledges and agrees that in entering
into this Agreement and purchasing the Property:
(i) the Seller and has not made, will not and does not make any
warranties or representations, whether express or implied, with respect to
the Property, the value, profitability or marketability thereof; and
(ii) the Seller has not and will not make any warranties with respect
to the Property, whether express or implied, of merchantability,
habitability or fitness for a particular use; and
Notwithstanding the foregoing provisions of this paragraph 11, the Seller
does hereby make the following representations to the Purchaser effective as of
date of this Agreement and again as of the Closing Date which Purchaser is
entitled to rely upon:
As used herein and elsewhere in this Agreement, the term "Seller's actual
knowledge" shall mean the actual knowledge of each of Ms. Laura Cordova and
Linda Guiterrez, without any duty of investigation of any kind. Seller
represents and warrants that the foregoing persons are the only persons employed
by Seller or its manager with day-to-day managerial or supervisorial authority
over the Property.
11.1 Authority. Seller is duly organized and validly existing under the
laws of the jurisdiction of its organization, is duly qualified to conduct
business and own real property in the State of New Mexico, and has all requisite
power to own all of its properties and assets and to carry on its business as
presently conducted. The execution, delivery and performance of this Agreement
and all other agreements contemplated hereby has been duly and validly
authorized by all necessary action of Seller and the Agreement and all other
agreements contemplated thereby are and will be valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights and general principles of equity.
11.2 Title Seller holds fee simple title to the Property, and to Seller's
actual knowledge, such fee simple title is free and clear of all liens,
encumbrances, security interests, charges, adverse claims and other exceptions
to title, except for the Leases, Service Contracts, Existing Loan matters of
record, matters disclosed by the Survey and the Permitted Exceptions. Nothing
in the Deed shall be construed to amend, modify or diminish the effectiveness or
survival of the foregoing representation.
11.3 The Leases. A list of the current Leases is set forth in the rent
roll attached hereto as Schedule G (the "Rent Roll"). The economic information
contained in the Rent Roll is accurate and consistent with Seller's records (as
they relate to the Property), which records have been maintained by Seller in
accordance with good property management standards. The noneconomic information
contained in the Rent Roll is accurate and consistent in all material respects
with Seller's records (as they relate to the Property), which records have been
maintained by Seller in accordance with good property management standards.
True, complete and correct copies of the Leases and all amendments and
modifications thereto have been delivered to Purchaser. Except for the Leases
set forth in the Rent Roll, there are no other leases, licenses or other
agreements affecting the occupancy of the Property. With respect to each Lease:
(i) the Lease is in full force and effect, and constitutes the valid and binding
legal obligation of Seller and the respective tenant, enforceable against each
of them in accordance with its terms; (ii) there are no understandings, oral or
written, between the parties to the Lease which in any manner vary the
obligations or rights of either party as set forth in the Lease (and all
amendments thereto delivered to Purchaser); (iii) except as indicated on the
Rent Roll, there is no default by Seller under the Lease, there is no default by
the tenant under the Lease with respect to payment of base rent and reimbursable
expenses and to Seller's knowledge, there is no other default by the tenant
under the Lease, and (iv) no rent or additional rent under the lease has been
paid for more than thirty (30) days in advance of its due date.
11.4 No Litigation or Adverse Events. Seller has received no written
notice of, and to Seller's actual knowledge, there are no pending or threatened
investigations, actions, suits, proceedings or claims against or affecting
Seller or the Property, at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, agency, or
instrumentality, domestic or foreign.
11.5 Compliance with Laws. To the best of Seller's knowledge, Seller is in
compliance in all material respects with all applicable laws, ordinances, rules
and regulations (including without limitation those relating to zoning and the
Americans With Disabilities Act) applicable to the ownership or operation of the
Property. Seller has not received from any insurance company or board of fire
underwriters any notice, which remains uncured, of any defect or inadequacy in
connection with the Property or its operation.
11.6 No Defaults in Other Agreements. To Seller's actual knowledge,
neither Seller nor any other party is in material default under any Service
Contract affecting the Property, and no event exists which, with the passage of
time or the giving of notice or both, will become a material default thereunder
on the part of the Seller or any other party thereto. To Seller's knowledge,
Seller is in compliance in all material respects with the terms and provisions
of the covenants, conditions, restrictions, rights-of-way or easements affecting
the Property.
11.7 Eminent Domain. To Seller's actual knowledge, there is no existing or
proposed or threatened eminent domain or similar proceeding, or private purchase
in lieu of such a proceeding which would affect the Property in any material
way.
11.8 Licenses, Permits, CO's, Zoning, etc. To Seller's actual knowledge,
all permits, certificates of occupancy, business licenses and all other notices,
licenses, permits, certificates and authority required as of the date hereof and
as of the Closing Date in connection with the use or occupancy of the Property
have been obtained and are in full force and effect and in good standing.
11.9 Taxes and Assessments. All real property taxes, and all Seller's
personal property taxes, relating to the Property, excepting those for the
current tax year which are not yet overdue (i.e., which are still payable
without interest or penalty), have been paid in full.
11.10 Environment. (i) Seller has not engaged in any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials (whether legal or illegal, accidental or
intentional) on, under, in or about the Property, or transported any Hazardous
Materials to, from or across the Property, except in all cases in material
compliance with Environmental Requirements and only in the course of legitimate
business operations at the Property (which shall not include any business
primarily or substantially devoted to the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
Hazardous Materials); (ii) to Seller's actual knowledge, no tenant, occupant or
user of the Property, nor any other person, has engaged in or permitted any
operations or activities upon, or any use or occupancy of the Property, or any
portion thereof, for the purpose of or in any material way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials (whether legal or
illegal, accidental or intentional) on, under, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in material compliance with Environmental Requirements and only in the
course of legitimate business operations at the Property (which shall not
include any business primarily or substantially devoted to the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of Hazardous Materials); (iii) to Seller's actual knowledge,
no Hazardous Materials are presently constructed, deposited, stored, or
otherwise located on, under, in or about the Property except in all cases in
material compliance with Environmental Requirements and only in the course of
legitimate business operations at the Property (which shall not include any
business primarily or substantially devoted to the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of Hazardous Materials); (iv) to Seller's actual knowledge, no
Hazardous Materials have migrated from the Property upon or beneath other
properties; and (v) to Seller's actual knowledge, no hazardous Materials have
migrated or threaten to migrate from other properties upon, about or beneath the
Property.
As used herein:
"Environmental Requirements" shall mean all applicable present statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items, of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of "Hazardous Materials," chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees or the public.
"Hazardous Materials" shall mean (i) any flammable, explosive or
radioactive materials, hazardous wastes, toxic substances or related materials
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et seq.; and in the regulations adopted and publications promulgated
pursuant to said laws; (ii) those substances listed in the United States
Department of Transportation Table (49 C.F.R. 172.101 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 C.F.R. Part 302 and amendments thereto); (iii) those substances
defined as "hazardous wastes," "hazardous substances" or "toxic substances" in
any similar federal, state or local laws or in the regulations adopted and
publications promulgated pursuant to any of the foregoing laws or which
otherwise are regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the State
of New Mexico or any political subdivision thereof, (iv) any pollutant or
contaminant or hazardous, dangerous or toxic chemicals, materials, or substances
within the meaning of any other applicable federal, state, or local law,
regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material, all
as amended; (v) petroleum or any by-products thereof; (vi) any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. Sections 2011 et seq., as amended, and in the regulations
adopted and publications promulgated pursuant to said law; (vii) asbestos in any
form or condition; and (viii) polychlorinated biphenyls.
11.11 Physical Condition. To Seller's actual knowledge, there is no
structural defect in the Improvements which would cost in excess of $10,000 to
repair.
11.12 Employees. Seller has no employees.
11.13 Mechanic's Liens. All bills and claims for labor performed and
materials furnished to or for the benefit of the Property currently due and
contracted for by Seller or its manager have been paid in full, and there are no
mechanic's or materialmen's liens (whether or not perfected) on or affecting the
Property as a result of labor performed or materials furnished and contracted
for by the Seller or its manager.
11.14 Operating Statements. To Seller's actual knowledge, the
financial statements delivered by Seller to Purchaser fairly present the profit
or loss from the management and operation of the Property for the periods
covered thereby and, in all material respects, accurately reflect all rents and
other gross receipts, and all amounts paid by Seller for electricity, water,
sewer, other utility services, insurance, fuel, maintenance and repairs (whether
capitalized or expensed), real estate taxes, payroll and payroll taxes and all
other operating and other expenses associated with the Property.
11.15 Disclosure. No representation or warranty of Seller in this
Agreement, or any information, statement or certificate furnished or to be
furnished by Seller or at Seller's direction pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains or shall contain
any materially untrue statement of a material fact or omits or shall omit to
state a material fact necessary to make the statements contained therein not
misleading. To Seller's knowledge, there is no material misstatement or
omission in the copies of contracts, agreements and other documents delivered by
Seller in connection with the transactions contemplated hereby.
11.16 No Leases of Property or Assets. No material portion of the
Personal Property or fixtures with respect to the Property (other than fixtures
owned or installed by tenants) is leased by the Seller as lessee.
11.17 Contracts, Commissions. Seller has delivered to Purchaser true,
complete and correct copies of all Service Contracts. Except as set forth on
Exhibit H, there are no brokerage commissions payable upon the renewal,
extension or exercise of any option under any of the leases.
The representations and warranties set forth in this Section 11 shall
survive the execution and delivery of this Agreement, the delivery of the Deed
and transfer of title to the Property, until the date that is one year after the
Closing Date; provided however, that in the event Purchaser makes a written
claim against Seller with respect to any representation or warranty prior to the
date which is one year after the closing date, then such representation or
warranty shall survive without limitation as to such written claim.
Notwithstanding anything contained in this Agreement to the contrary, all
of the representations, warranties and certifications (the "Representations")
which are made by Seller and set forth herein or in any of the documents or
instruments required to be delivered by Seller hereunder, shall be subject to
the following conditions and limitations: (i) there shall be no liability on the
part of Seller, after the Closing, for breaches of representations of which
Purchaser had actual knowledge prior to the Closing; and (ii) in the event that,
after the date hereof and prior to the time of Closing, during the course of
Purchaser's inspections, studies, tests and investigations conducted pursuant to
Section 6 hereof, or through other sources, Purchaser gains actual knowledge of
a fact or circumstance which, by its nature, indicates that a Representation was
or has become untrue or inaccurate, and such fact or circumstance was not
intentionally withheld from Purchaser by Seller with the intent to defraud
Purchaser, then Purchaser shall have the right to (a) declare this Agreement
terminated, in which event the Deposit and all interest thereon shall be
returned to Purchaser, or (b) in the alternative commence an action for specific
performance of this Agreement by Seller, or (c) commence an action for actual
damages against Seller, which damages shall be limited to One Hundred Thousand
Dollars and no/100ths ($100,000) except in the case of an intentional breach of
this Agreement by Seller. As used in this paragraph, "actual knowledge" or
words of similar import with respect to Purchaser shall mean the actual
knowledge of Jerald Friedman, Larry Kronenberg or Daniel Slattery.
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED
IN THIS AGREEMENT, AND EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
SELLER MAKES NO REPRESENTATION, CERTIFICATION OR WARRANTY OF ANY KIND, INCLUDING
ANY REPRESENTATION, CERTIFICATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
CONDITIONS OR STATE OF REPAIR OF THE REAL ESTATE, PERSONAL PROPERTY, OR ANY
PORTION THEREOF, OR OF VISIBLE OR HIDDEN DEFECTS IN MATERIAL, WORKMANSHIP OR
CAPACITY OF THE REAL ESTATE, PERSONAL PROPERTY, OR ANY PORTION THEREOF, AND
THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AS TO THE REAL ESTATE, PERSONAL PROPERTY, OR ANY PORTION THEREOF EXCEPT
AS EXPRESSLY PROVIDED IN THIS AGREEMENT. EXCEPT AS PROVIDED IN THIS AGREEMENT,
DELIVERY OF THE REAL PROPERTY AND PERSONAL PROPERTY AT CLOSING WILL BE "AS IS,
WHERE IS" AND WITH ALL FAULTS, AND, EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT, SELLER HAS DISCLAIMED ANY EXPRESS OR IMPLIED WARRANTIES WITH RESPECT
TO THE MERCHANTABILITY PHYSICAL CONDITION OR FITNESS FOR PARTICULAR USE OR
PURPOSE OF THE REAL ESTATE AND PERSONAL PROPERTY.
12. Limitation of Seller's Liability.
If the Seller shall be unable to convey good and indefeasible title subject
to and in accordance with this Agreement, or fails to deliver such title in
accordance with the terms and conditions of this Agreement, or any of the
Seller's representations made herein shall prove to be false in any material
respect, the Purchaser shall have the right to: (a) declare this Agreement
terminated, in which event the Deposit and all interest thereon shall be
returned to Purchaser and this Agreement, and the parties obligations hereunder,
shall be terminated and shall have no force or effect, (b) commence an action
for specific performance of this Agreement against Seller or (c) commence an
action for actual damages against Seller, which damages shall be limited to One
Hundred Thousand and no/100ths Dollars ($100,000), except in the case of an
intentional breach of this Agreement by Seller. The Seller shall not be
required to bring any action or proceedings or otherwise incur any expenses to
render title to the Property indefeasible except as required by Paragraph 5
hereof. The Purchaser may, nevertheless, accept such title as the Seller may be
able to convey, without a reduction of the Purchase Price or credit or allowance
against the same and without further liability on the part of Seller, except in
the case of an intentional breach of this Agreement by Seller.
13. Brokerage. The Purchaser represents that no broker, licensed or
otherwise, brought the Property to the attention of the Purchaser or had any
communication with the Purchaser in regard to same except Jones Lang Wooten
("Broker"). If any claim is made for brokerage commissions as a result of the
acts of the Purchaser (other than a claim from Broker), the Purchaser hereby
agrees to indemnify the Seller against, and to defend and hold the Seller
harmless from any and all claims for brokerage commissions by other than Broker
and for any legal fees and expenses incurred in defending such claims. The
Purchaser agrees that the foregoing representation and indemnity shall survive
the delivery of the Deed without limitation and shall inure to the benefit of
the Seller and to the Seller's successors and assigns. The Seller represents
that no broker, licensed or otherwise, has been retained by Seller except
Broker. The Seller agrees to pay any and all commissions due to the Broker. If
any claim is made for brokerage commissions by Broker or as a result of the acts
of the Seller, the Seller hereby agrees to indemnify the Purchaser against, and
to defend and hold the Purchaser harmless from any and all claims for brokerage
commissions and for any legal fees and expenses incurred in defending such
claims. The Seller agrees that the foregoing representation and indemnity shall
survive the delivery of the Deed without limitation and shall inure to the
benefit of the Purchaser and to the Purchaser's successors and assigns.
14. Liquidated Damages. If this transaction is not consummated by reason
of a default by Purchaser hereunder, then Seller shall retain the Deposit and
all interest thereon as full compensation for its damages and as it sole remedy,
except that Seller shall be entitled to exercise any rights or remedies it may
have by virtue of any indemnity created or granted herein. If this transaction
is not consummated by reason of a default by Seller hereunder, Purchaser shall
have the right to: (a) declare this Agreement terminated, in which event the
Deposit and all interest thereon shall be returned to Purchaser, (b) commence an
action for specific performance of this Agreement against Seller or (c) commence
an action for actual damages against Seller, which damages shall be limited to
One Hundred Thousand Dollars and no/100ths ($100,000) except in the case of an
intentional breach of this Agreement by the Seller.
15. Pre-Closing Management and Operation. From the execution of this
Agreement through the Closing:
15.1 Maintenance. In addition to Seller's other obligations hereunder,
Seller shall, upon and after the date of this Agreement and to and including the
Closing Date, at Seller's sole cost and expense, maintain the Property in the
ordinary course of business consistent with past practice, pay all taxes,
assessments, fines, penalties, charges and other operating expenses, and shall
make all repairs, maintenance and replacements of the Improvements and any
Personal Property and otherwise operate the Property in its ordinary and
customary manner, and otherwise in the same manner as before the making of this
Agreement, the same as though Seller were retaining the Property. Seller shall
not make any alterations to the Property without first receiving Purchaser's
prior written consent thereto.
15.2 Agreements. After the date hereof, without Purchaser's prior written
consent (which will not be unreasonably withheld) in no event shall Seller enter
into any agreement or contract with respect to the Property (other than a lease,
which shall be governed by the relevant other provisions of this Agreement)
which is not terminable on thirty (30) days' prior notice (without premium or
penalty).
15.3 Encumbrances. Seller shall not, in between the date of this Agreement
and the Closing Date, mortgage, encumber or suffer to be encumbered all or any
portion of the Property, which encumbrances would survive the Closing Date,
without the prior written consent of Purchaser.
15.4 Consents and Notices. Seller and Purchaser shall cooperate with each
other and exercise commercially reasonable efforts to obtain as of the Closing
Date, all consents from, and provide all notices to, any third party and any
governmental or regulatory authority which are required pursuant to any Contract
or any applicable laws as a condition to or in connection with the execution,
delivery or performance of this Agreement or other documents and instruments
contemplated thereby.
15.5 Audit Cooperation. Seller hereby agrees to cooperate with Purchaser
at no cost or expense in producing audited financial statements for the Property
for such periods as may be requested by Purchaser. Such cooperation shall
include, without limitation, the execution and delivery by Seller to Purchaser's
auditors of such confirmations and letters as such auditors may reasonably
require.
15.6 Leases. To the extent that any new leasing proposals are given
serious consideration by Seller, Seller agrees to provide Purchaser with
information in its possession and with regular updates regarding such proposals,
including without limitation a list of all Leasing Expenses incurred in
connection therewith. After the date hereof, provided the Agreement has not
been terminated, the Purchaser shall have the right to review and approve any
additional leasing. The parties agree that if the Purchaser has approved any
new lease(s) and said lease(s) is/are fully executed after the date hereof and
prior to Closing, that: (i) Purchaser agrees to be bound as landlord subsequent
to Closing; (ii) Purchaser shall pay to Seller at Closing all Leasing Expenses
incurred in connection therewith, so long as such Leasing Expenses were
disclosed to Purchaser prior to Purchaser's approval of such Lease, and any sums
expended by Seller and disclosed to Purchaser prior to Purchaser's approval of
such lease for tenant improvements and (iii) Purchaser shall assume
responsibility to complete all landlord's obligations after Closing set forth in
such Lease.
16. Existing Mortgage. Without limiting the generality of any other
provision of this Agreement:
(a) the Seller discloses to the Purchaser that, as more particularly set
forth in the loan documents heretofore delivered to Purchaser (the "Loan
Documents"), the Property is subject to a mortgage and related security
documents securing the Existing Loan from AIG Life Insurance Company to Seller,
(with a current outstanding principal balance of approximately $8,052,311.25)
which Loan Documents provide, among other things that: (i) the Seller's interest
in the Property may not be sold, transferred or assigned without the prior
written consent of the holder of the Existing Loan (the "Paseo Del Norte
Mortgagee"); (ii) the Seller has a one-time right to transfer its interest in
the Property subject to "Transfer Closing Conditions" (as defined in the Loan
Documents); and (iii) the Loan may be prepaid, in whole, but not in part,
subject to the payment of a prepayment premium ("Prepayment Premium Amount")
described in the Loan Documents.
(b) It shall be a condition to Closing, running in favor of Purchaser
and Seller, that any and all conditions in the Loan Documents, or otherwise
imposed by the Paseo Del Norte Mortgagee, to assumption of the Existing Loan
including, without limitation, execution of assumption agreements, be satisfied.
Seller hereby agrees to pay (i) any and all assumption fees; (ii) all costs and
expenses incurred by the Paseo Del Norte Mortgagee in connection with such
assumption (including without limitation all escrow fees, attorneys fees and
title insurance premiums), and (iii) if the Paseo Del Norte Mortgagee requires
that Purchaser purchase the Property through a so-called bankruptcy remote
entity, up to $10,000 in attorneys fees, costs and expenses incurred by
Purchaser in connection therewith.
(c) Seller shall provide to Purchaser on or before the expiration of
the Review Period a written consent (the "Paseo Del Norte Mortgagee Consent")
which shall be the written approval of the Paseo Del Norte Mortgagee to Seller's
sale of the Property to Purchaser, and Purchaser's assumption of the Existing
Loan, which approval shall be addressed to Seller and Purchaser, shall specify
the amount of any assumption fees and/or any other conditions to such approval
and assumption, and shall specify that on closing of such sale and satisfaction
of such conditions, Paseo Del Norte, its general partner and Edward M. Gilbert,
Fred Kolber and Ed Berman (collectively, the "Liable Parties") shall be relieved
and released from any and all obligations and liabilities under or with respect
to the Loan Documents from and after the Closing Date. Purchaser will cooperate
with Seller and the Paseo Del Note Mortgagee and use reasonable efforts during
the Review Period to obtain the consent of the Paseo Del Norte Mortgagee to the
sale of the Property to Purchaser and assumption of the Existing Loan. Seller
will cooperate with Purchaser and the Paseo Del Norte Mortgagee and will
coordinate with Purchaser any communications with the Paseo Del Norte Mortgagee
so that Purchaser shall have the opportunity to approve all written
communications with the Paseo Del Norte Mortgagee and be present at all
meetings. Seller understands and acknowledges that Purchaser shall have no
obligation to purchase the Property unless and until Purchaser shall have
received a written instrument executed by the Paseo Del Norte Mortgagee, in form
and substance reasonably acceptable to Purchaser, affirming the outstanding
principal balance and unpaid fees and expenses under the Existing Loan,
affirming that there are no defaults under or with respect to the Existing Loan,
approving the assumption of the Existing Loan by Purchaser, affirming that no
action by Seller or the Liable Parties on or after the Closing Date could cause
a default under the Existing Loan, and approving of Seller's pending merger with
Kimco Realty Co.
17. Notices. Notices, requests and other communications under this
Agreement shall be in writing and shall be deemed to have been given upon (i)
hand delivery, (ii) receipt by mail, postage prepaid, return receipt requested
(as evidenced by an executed return receipt), or refusal of delivery thereof,
(iii) upon receipt from any reliable overnight courtier service, or (iv) upon
electronic confirmation of receipt of facsimile transmission addressed as
follows:
If to the Purchaser: The Price Reit, Inc.
145 South Fairfax Ave.
4th Floor
Los Angeles, CA 90036
Attn: Jerald Friedman
Phone: (213) 937-8200
Fax: (213) 937-8175
With a Copy to: Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, CA 90071
Attn: William R. Lindsay
Phone: (213) 229-7000
Fax: (213) 229-7520
If to Seller: Paseo Del Norte Plaza Associates, Limited
Partnership
c/o BGK Properties, Inc.
330 Garfield Street, Suite 200
Santa Fe, NM 87501
Att: Edward M. Gilbert
Phone: (505) 982-2184
Fax: (505) 982-2515
or at such other address of which the Seller or the Purchaser shall have
given notice to the other as herein provided.
18. Casualty or Condemnation. If, prior to the Closing, all or any
material portion of the Property shall be destroyed or damaged, or if, prior to
the Closing, any portion of the Property shall be subjected to a threat of
condemnation, or shall become the subject of any proceedings, judicial,
administrative, or otherwise, with respect to a taking by eminent domain or
condemnation, Seller shall promptly notify Purchaser thereof, and Purchaser, at
its option, may, within fifteen (15) days after receipt of such notice thereof,
cancel this Agreement by written notice, in which event the parties hereto shall
be relieved and released of and from any further duties, obligations, rights, or
liabilities hereunder, and the Deposit and all interest thereon shall be
returned to Purchaser. If the Closing Date is within the aforesaid fifteen (15)
day period, then the Closing shall be extended to the next business day
following the end of said fifteen (15) day period. If under such circumstances
Purchaser elects to complete the transactions contemplated in this Agreement, or
if less than a material portion of the Property is destroyed or damaged, this
Agreement shall remain in full force and effect, and the purchase contemplated
herein, less any portion of the Property destroyed or damaged or taken by
eminent domain or condemnation, shall be consummated with no further adjustment
or modification, and at the Closing, Seller shall assign, transfer, and set over
to Purchaser all the right, title, and interest of Seller in and to any
insurance proceeds resulting from any casualty or any awards that have been or
may thereafter be made for any taking or condemnation, and Purchaser shall
receive a credit at the Closing in the amount of any proceeds received in
accordance with this Section 18 and in the amount of any deductible provided for
in Seller's insurance policy.
A "material portion" of the Property shall be deemed taken or subject to a
casualty if (i) the cost to repair or replace such portion exceeds $100,000,
(ii) Purchaser determines that the Property so affected is materially and
adversely affected by such taking or threatened taking, (iii) any lessee has the
right to abate any rent under its lease as a result of such taking or threatened
taking, or (iv) any lessee or group of lessees leasing 2,500 square feet or more
in the aggregate (as set forth on the Rent Roll) has a right to terminate its
lease (or leases) as a result of such taking or threatened taking and does not
irrevocably waive such right prior to Closing in a form reasonably acceptable to
Purchaser.
19. Seller's Affidavit. If a search of the title to the Properties
discloses judgments, bankruptcies, or other returns against other persons having
names the same as or similar to that of the Seller, the Seller will, on request,
deliver to the Purchaser or to the Title Company, an affidavit showing that such
judgments, bankruptcies, or other returns are not against the Seller. In
addition, Seller shall, on request, deliver to the Purchaser or to the Title
Company, an ERISA representation and affidavit to facilitate the closing of the
transaction and issuance of an ALTA extended Title Policy.
20. Possession. Possession of the Property shall be delivered to
Purchaser on the Closing Date pursuant to the terms of this Agreement, subject
to the Permitted Exceptions, the Leases disclosed on the Rent Roll, and all
written leases theretofore disclosed to Purchaser and approved by Purchaser
during the Review Period or otherwise executed by Seller with Purchaser's
consent.
21. Purchaser's Authority. The Purchaser does hereby represent and
warrant for itself and its assigns that (i) subject to receiving approval of
Purchaser's Board of Directors, the Purchaser has the full right and power to
enter into this Agreement and to observe, fulfill and perform its obligations
hereunder, and (ii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein and compliance with the
terms and conditions of this Agreement, do not and will not conflict with or
result in a breach of any judgment, order or decree of any governmental body or
court, domestic or foreign, having jurisdiction over the Purchaser or its
assigns, and do not and will not conflict with any other agreement entered into
by the Purchaser or its assigns.
22. Assignment. Purchaser may assign all or any portion of its rights
under this Agreement to any person or entity with the prior written consent of
Seller which content shall not be unreasonably withheld. If such assignment is
to an affiliate or successor by merger, then no consent to such assignment shall
be required.
23. Survival. Any representation and warranties made herein by the Seller
shall survive the Closing Date as set forth in Section 11 hereof. Covenants
shall survive the Closing Date and delivery of the Deed without limitation.
Proration obligations shall survive as set forth elsewhere in this Agreement.
24. Binding Effect. This Agreement may not be changed or terminated
orally. This Agreement applies to and binds and inures to the benefit of the
heirs, executors, administrators, successors and assigns of the respective
parties.
25. Construction. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Mexico.
26. Counterpart Originals. This Agreement may be executed in any number
of counterpart duplicate originals all of which will be deemed to constitute but
one document.
27. Time of Essence. Time is of the essence in connection with all
dates and time periods specified in this Agreement.
28. Confidentiality. Purchaser and Seller shall keep all of the terms
and conditions of this Agreement confidential except for disclosure to such
partners, investors, attorneys, accountants, consultants and lenders with a bona
fide need to know. Seller acknowledges and agrees that Purchaser is a publicly
traded corporation and, accordingly, is required to make certain public
disclosures from time to time. Accordingly, Purchaser may make such disclosures
as may be required under applicable securities laws, or as may be recommended by
Purchaser's securities counsel from time to time, or as required by judicial
process.
29. Submission. Submission of this Agreement by Seller or Seller's agent,
or their respective agents or representatives, to Purchaser for examination
and/or execution shall not in any manner bind Seller and no obligations on
Seller shall arise under this Agreement unless and until this Agreement is fully
signed and delivered by Seller and Purchaser. Submission of this Agreement by
Purchaser or Purchaser's agent, or their respective agents or representatives,
to Seller for examination and/or execution shall not in any manner bind
Purchaser and no obligations on Purchaser shall arise under this Agreement
unless and until this Agreement is fully signed and delivered by Purchaser and
Seller.
30. No Recording. Seller and Purchaser agree that neither this Agreement
nor any memorandum thereof shall be recorded.
31. No Personal Liability of Officers or Directors of General Partner of
Seller or of Purchaser. Purchaser and Seller respectively acknowledge that this
Agreement is entered into by a limited partnership as Seller and a Maryland
corporation as Purchaser and each party agrees that no individual officer or
director or representative of Seller or Purchaser or its partners shall have any
personal liability under this Agreement or any document executed in connection
with the transactions contemplated by this Agreement.
32. No Third Party Rights. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
33. Attorneys' Fees. If any litigation is initiated or defended by any
party to the Agreement against the other party to this Agreement relating to
this Agreement or the subject matter hereof, the party prevailing in such
litigation shall be entitled to recover, in addition to all damages allowed and
other relief, all reasonable attorneys' fees, court costs and other litigation
costs incurred in connection therewith.
34. Condition Precedent to Purchaser's Obligation to Close. Purchaser's
obligation to close this transaction is subject to:
(i) Board of Director Approval. Approval of this transaction by
Purchaser's Board of Directors prior to the expiration of the Review
Period.
(ii) Representations and Warranties. All of Sellers' representations
and warranties contained herein or made in writing by Seller shall have
been true and correct when made and shall be true and correct as of the
Closing Date, as though made at, and as of, the Closing Date, and Seller
shall have executed and delivered all documents and complied with all of
Seller's covenants and agreements contained in or made pursuant to this
Agreement.
(iii)Impairment of Property. No material adverse change shall have
occurred in the condition or ownership of the Property or any part thereof
from and after the conclusion of the Review Period. As of the Closing no
part of the Property, or any interest of Seller therein, shall be
encumbered by any lien, pledge, security interest, financing or due and
unpaid charge, tax or other imposition (other than the Existing Loan,
Permitted Exceptions and items which will be removed on or prior to the
Closing Date). There shall have occurred no material adverse change in the
financial condition of any tenant under any of the Leases demising 4,000
square feet or more of the Improvements (each, a "Major Lease"), and there
shall be no default, or event that with the giving of notice or the passage
of time or both would constitute a default, under any Major Lease.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser
and the Seller hereto on the day and year set forth below opposite their
respective signatures.
Date: The Seller:
Paseo Del Norte Plaza Associates,
Limited Partnership
By: BGK Properties, Inc.
General Partner
By: /EDWARD M. GILBERT/
-------------------
Its: President
The Purchaser:
The Price Reit, Inc.
By: /JERALD FRIEDMAN/
-----------------
Its: Sr. Executive V.P.
================================================================================
AGREEMENT OF SALE AND PURCHASE
OF IMPROVED REAL PROPERTY
THIS AGREEMENT made as of the 3rd day of April, 1998 by and between
Sycamore Realty Company, Inc. (a New Mexico limited partnership, hereinafter
sometimes referred to as "Sycamore" or as "Seller"), with a principal place of
business at 330 Garfield Street, Suite 200, Santa Fe, New Mexico 87501 and The
Price Reit, Inc., a Maryland corporation, with a principal place of business at
145 South Fairfax Avenue, Los Angeles, California (hereinafter referred to as
the "Purchaser").
WITNESSETH:
WHEREAS, Sycamore is the owner of:
a. Land. That certain real property (the "Land") described in Exhibit A
hereto;
b. Appurtenances. All rights, privileges and easements appurtenant to
and for the benefit of the Land, including, without limitation, all minerals,
oil, gas and other hydrocarbon substances on and under the Land, as well as all
development rights, air rights, water, water rights and water stock relating to
the Land and any other easements, rights-of-way or appurtenances owned by Seller
and used in connection with the beneficial operation, use and enjoyment of the
Land, the Leases, the Rents, the Improvements, the Intangible Property, or any
other appurtenance, together with all rights of Seller in and to streets,
sidewalks, alleys, driveways, parking areas and areas adjacent thereto or used
in connection therewith, and all rights of Seller in any land lying in the bed
of any existing or proposed street adjacent to the Land (all of which are
collectively referred to as the "Appurtenances");
c. Improvements. All improvements and fixtures located or to be located
on the Land, including, without limitation, all buildings and structures
presently located on the Land or to be located thereon on the Closing Date, all
apparatus, equipment and appliances presently located on the Land and used in
connection with the operation or occupancy thereof, such as heating and air
conditioning systems and facilities used to provide any utility services,
parking services, refrigeration, ventilation, garbage disposal, recreation or
other services thereto, and all landscaping and leasehold improvements of
tenants, if any, which become the property of the owner of the Land (all of
which are collectively referred to as the "Improvements");
d. Leases and Rents. All leases, occupancy agreements and other similar
agreements to which Seller is a party or by which it is bound, together with all
modifications, extensions and renewals thereof, and any guarantees of any of the
foregoing with respect to or demising any part of the Land, Appurtenances or
Improvements (the "Leases"), all income, receipts, funds and revenues of any
kind whatsoever payable under the Leases or otherwise with respect to all or any
portion of the Land, Appurtenances or Improvements (the "Rents");
e. Personal Property. All tangible personal property located or to be
located on, or situated or to be situated in and used in connection with, the
Land and/or the Improvements ("Personal Property");
f. Intangible Property. All of the interest of Seller in (i) any
tangible personal property which relates to and is reasonable required for the
operation and functioning of the Land, Improvements or Personal Property
generally, and (ii) any and all warranties, guarantees, permits, contracts and
other rights owned by Seller relating to the ownership, operation or functioning
of all or any part of the Property, as defined below (including without
limitation all third party guarantees and warranties, express or implied, in
connection with the construction of the Improvements) and all of Seller's right,
title and interest, if any, in and to the name "Sycamore Plaza" (all of the
foregoing are collectively referred to as the "Intangible Property").
All of the items described in Sections a, b, c, d, e and f above are
hereinafter collectively referred to as the "Property". The items described in
Sections a, b, and c above are hereinafter referred to collectively as the "Real
Property".
WHEREAS, the Seller desires to sell the Property to the Purchaser on the
terms and conditions hereinafter set forth; and
WHEREAS, the Purchaser desires to purchase the Property from the Seller and
accept the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the covenants, terms and conditions
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Seller and the Purchaser hereby
agree as follows:
1. Purchase and Sale. The Seller agrees to convey to the Purchaser, and
the Purchaser agrees to purchase from the Seller the Property for the purchase
price of FIVE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS AND NO/100ths
($5,750,000) (hereinafter referred to as the "Purchase Price") The Purchase
Price will be paid as hereinafter more particularly set forth. This sale
includes all right, title and interest, if any, of the Seller, in and to the
Land, Appurtenances, Improvements, Rents, Leases, Personal Property and
Intangible Property.
2. Permitted Exceptions. The Real Property will be sold and conveyed to
the Purchaser and accepted by the Purchaser subject to the exceptions to title
and other matters set forth herein and in Exhibit B attached hereto, in each
case as approved or otherwise waived by Purchaser pursuant to Paragraph 5 hereof
(hereinafter called the "Permitted Exceptions").
3. Purchase Price. The Purchase Price shall be paid by the Purchaser as
follows:
(a) FIFTY THOUSAND AND NO/100ths DOLLARS ($50,000) in good funds,
certified or cashier's check, upon mutual execution of this Agreement, shall be
deposited by Purchaser with Rio Grande Title Insurance Company as escrow agent
("Escrow Agent") as an initial deposit to be held in escrow by Escrow Agent
pursuant to the provisions of Paragraph 3(e) hereof and as otherwise provided in
the escrow agreement (the "Escrow Agreement") attached hereto (this amount
hereinafter described as the "Initial Deposit").
(b) Purchaser shall deposit TWENTY-FIVE THOUSAND AND NO/100ths DOLLARS
($25,000) in good funds, certified or cashier's check, within two business days
of the expiration of the Review Period (as hereinafter defined), with the Escrow
Agent, as an additional deposit to be held in escrow by Escrow Agent pursuant to
the provisions of Paragraph 3(e) hereof and as otherwise provided in the Escrow
Agreement (this amount, the "Additional Deposit" and together with the "Initial
Deposit," hereinafter described collectively as the "Deposit")
(c) Purchaser shall be deemed to have paid to Seller an amount equal to
the outstanding principal balance of the Existing Loan, hereinafter defined,
together with all accrued and unpaid interest thereon as of the Closing Date,
and all late charges, penalties or other charges owing under the Existing Loan,
upon Purchaser's execution and delivery of an assumption of the Existing Loan on
the Closing Date as contemplated hereby.
(d) Purchaser shall pay to Seller, through the escrow maintained by Escrow
Agent pursuant hereto, on the Closing Date, immediately available funds in an
amount equal to the Purchase Price, less (i) the Initial Deposit, (ii)
Additional Deposit, and (iii) the outstanding principal balance of the Existing
Loan together with all accrued and unpaid interest thereon, and all late
charges, penalties or other charges owing under the Existing Loan, as of the
Closing Date.
(e) The parties agree that the Initial Deposit made by the Purchaser
pursuant to Paragraph 3(a) above, and the Additional Deposit made by Purchaser
pursuant to Paragraph 3(b) above, shall be held in escrow by Escrow Agent in an
interest bearing account, approved by Purchaser (the "Escrow Account"), and the
interest earned thereon shall become part of the Deposit. Upon the disposition
of the Deposit under this subparagraph, or as otherwise provided in this
Agreement or the Escrow Agreement, the Seller and the Purchaser agree that the
Escrow Agent shall thereupon be relieved of any further responsibility with
respect to the Deposit. The Seller and the Purchaser acknowledge and agree that
the Escrow Agent shall have absolutely no liability in connection with the
Deposit except upon breach of this Agreement or the Escrow Agreement or for
gross negligence or willful misconduct or misappropriation.
4. Delivery of Documents.
(a) Seller shall deliver to Purchaser a copy of its most recent survey of
the Property (the "Existing Survey") and a commitment to issue an extended
coverage ALTA 1970 owner's title insurance policy relating to the Property (the
"Commitment"), or the New Mexico equivalent thereof, issued by Rio Grande Title
Insurance Company as agent for Chicago Title Insurance Company and accompanied
by copies of all documents and instruments referred to in the Commitment and
copies of all existing or proposed easements, covenants, restrictions,
agreements or other documents which affect the ownership of title to the
Property and which are not disclosed by the Commitment for the Property, if any
( the "Exceptions").
(b) Seller shall promptly make available for Purchaser's review the
following documents, but only to the extent that the following are in Seller's
possession or control or in the possession or control of Seller's Manager or
affiliates:
(i) Operating statements for the years 1996, 1997 and the current
year;
(ii) Phase I Environmental Report; and if performed, a Phase II
Environmental Report;
(iii)Certificates of Occupancy;
(iv) Building Plans;
(v) Copies of service contracts and agreements relating to the
Property (the "Service Contracts");
(vi) Tax statements for 1996, 1997, and to the extent available, 1998;
(vii)Copies of all soils and hazardous materials reports, termite
reports, engineering studies, topographical maps, appraisals and other
reports, studies, maps and analyses with respect to the Property;
(viii)Copies of subdivision maps and condominium plans;
(ix) Copies of all documents and certificates from appropriate
governmental authorities relating to the zoning, building and platting
status of the Property;
(x) A description of existing and proposed local improvements
affecting the Property, including assessment levels;
(xi) Copies of all correspondence with all governmental entities with
respect to the Property;
(xii)A copy of all property tax statements and assessed value notices,
all approvals, permits and licenses from each governmental authority having
jurisdiction over the Property as are necessary to permit full use and
occupancy of the Property;
(xiii)Copies of all tenant leases, amendments, and proposed tenant
leases on the Property and all correspondence with tenants, billings, and
common area maintenance charge reconciliation;
(xiv)Copies of all plans and construction drawings for all buildings
to be constructed on the Property;
(xv) A copy of all loan documents entered into by Seller in connection
with the first mortgage encumbering the Property (the "Existing Loan"); and
(xvi)Tenant estoppels dated not more than sixty (60) days prior to the
Closing Date (which shall be delivered not later than five (5) days prior
to the Closing Date) in the form attached hereto as Exhibit C and otherwise
reasonably satisfactory to Purchaser.
Seller shall also deliver to Purchaser such documents, instruments,
agreements, reports, records, studies or other materials or information relating
to the Property in the possession of Seller or Seller's manager as Purchaser may
reasonably request.
(c) If this Agreement is terminated for any reason prior to completion of
the transaction contemplated herein, Purchaser shall return to Seller all items
delivered to Purchaser by Seller pursuant to Sections 4(a) and 4(b) hereof.
(d) Promptly after receiving Purchaser's reasonable requirements therefor,
Seller shall cause the Existing Survey to be updated, at its own cost and
expense, to reflect the exceptions set forth in the Commitment and any
additional matters that would be revealed by an accurate current survey of the
Real Property. Such updated survey (the "Survey) shall be certified to
Purchaser and shall be delivered to Purchaser not less than fifteen (15) days
prior to the conclusion of the Review Period.
5. Title. Purchaser shall be entitled to object to any exceptions
contained in the Commitment or the Survey in its sole discretion by a written
notice of objections delivered to Seller no later than the expiration of the
Review Period, as hereinafter defined. If Purchaser fails to deliver to Seller
a notice of objections on or before expiration of the Review Period, then
Purchaser shall be deemed to have waived any objection to any matters appearing
in the Commitment and Survey, and thereafter all such exceptions shall be deemed
to be Permitted Exceptions. Seller shall have ten (10) days from the receipt of
Purchaser's notice of objections either to procure the issuance of an
endorsement to the Commitment in form and substance acceptable to Purchaser, all
at Seller's sole cost and expense, removing such exceptions or to provide
affirmative title insurance protection for such exceptions satisfactory to
Purchaser in Purchaser's sole discretion, provided that Seller shall have no
obligation to undertake to cure any objection or spend money with the title
company or any 3rd party to cure same unless such objection is to an exception
for a monetary obligation of Seller other than the Existing Loan, in which case,
Seller shall cure same. If Seller fails to notify Purchaser within two (2) days
of receipt of said Purchaser's notice that Seller will either provide for the
removal of such exceptions or obtain affirmative title insurance protection for
such exceptions satisfactory to Purchaser in Purchaser's sole discretion within
such ten (10)-day period, then this Agreement shall be terminated whereupon the
Initial Deposit, and if applicable, the Additional Deposit, and all interest
thereon shall be returned to Purchaser, and the parties shall be released from
all further obligations under this Agreement. If Purchaser waives in writing
its objections to any matters described in the notice of objections, such
matters shall be deemed to be Permitted Exceptions.
6. Review Period.
(a) Purchaser shall have until 5:00 PM Mountain Time on the date thirty
(30) days after the date hereof (the "Review Period") to make an evaluation of
the Property. If Purchaser elects in the exercise of its sole discretion to
proceed with the purchase of the Property, Purchaser shall deliver written
notice to Seller on or prior to the conclusion of the Review Period, of its
intention to proceed with the purchase of the Property in accordance with the
Agreement whereupon, Purchaser shall be deemed to have waived its right to
terminate this Agreement in accordance with this Paragraph 6, and shall
immediately deliver to the Escrow Agent the Additional Deposit. In the event
that Purchaser fails to deliver such written notice on or prior to the
conclusion of the Review Period, then this Agreement shall thereupon be
terminated whereupon the Initial Deposit and all interest thereon shall be
returned to Purchaser, and the parties shall be released from all further
obligations under this Agreement.
(b) At reasonable times and upon reasonable notice to Seller within the
Review Period, Purchaser and its employees, agents and licensees shall have the
right to inspect Seller's books and records with respect to the Property and to
enter the Property for purposes of conducting soils, environmental and similar
tests and of inspecting the Property and its components thereof. Purchaser may,
at its option, retain engineers or other consultants for the purposes of
performing or assisting in such tests and inspections. If Purchaser in its sole
discretion is satisfied with the condition of the Property, then Purchaser may
proceed with this transaction by written notice to Seller on or prior to
conclusion of the Review Period of its intention to purchase the Property in
accordance with the terms hereof. If such written notice is not delivered to
Seller on or prior to the expiration of the Review Period, then, the Initial
Deposit and all interest thereon shall be returned to Purchaser, and the parties
shall be released from all further obligations under this Agreement. Seller
agrees to cooperate reasonably with any such investigations, inspections, or
tests (so long as such cooperation is at no expense to Seller), which
cooperation shall include providing such notices to the tenants of the Property
as are required by law or to permit Purchaser and its employees and agents to
inspect the Property and interview tenants, provided that a representative of
Seller shall have the right to be present during any interview. (Seller shall
provide such representative upon written notice to Purchaser given not less than
one business day prior to the proposed interview date). Purchaser shall repair
and restore the Property or any part or component thereof damaged by any
inspection or test conducted by or at the direction of Purchaser, and shall
indemnify, protect, defend and hold Seller harmless from any loss, cost, damage,
expense or liability (including reasonable attorneys' fees) arising out of
property damage or injury to persons occurring during investigations or tests
conducted by or at the direction of Purchaser under this Section 6(b).
7. Closing.
(a) The closing of the purchase and sale of the Property shall take place
at the offices of the Escrow Agent, or at such other place as the parties may
hereafter agree in writing no later than fifteen (15) days after the expiration
of the Review Period or at such earlier date as may be agreed to in writing by
Seller and Purchaser (herein called the "Closing Date").
(b) On the Closing Date, Seller shall deliver to Purchaser the following,
duly executed and acknowledged if required:
(i) A Special Warranty Deed conveying to Purchaser fee simple title
to the Property free and clear of all matters created by, through or under
Seller, and subject in any event to the Permitted Exceptions (the "Deed")
in the form attached as Exhibit D;
(ii) A Bill of Sale conveying all of Seller's right, title, and
interest in and to the Personal Property in the form attached as Exhibit E;
(iii)An Assignment and Assumption of the Leases, Contracts and
Intangibles assigning all of Seller's right, title and interest in and to
all assignable Service Contracts (to the extent Purchaser desires to accept
the assignment thereof), intangible property, if any, and the Leases, in
the form attached hereto as Exhibit F (the "Assignment of Leases"),
together with notices in the form required by law, and reasonably
acceptable to Purchaser, executed by Seller, to the tenants under the
Leases notifying them of the change in ownership of the Property;
(iv) A settlement statement to be prepared by Escrow Agent;
(v) An affidavit of Seller under the penalty of perjury stating
Seller's United States taxpayer identification number and that Seller is
not a foreign person as defined in Internal Revenue Code Section 1445;
(vi) Tenant estoppel certificates in form reasonably acceptable to
Purchaser from tenants occupying not less than eighty-five (85%) percent of
the rentable square footage of the Property including estoppel certificates
from each of the anchor tenants listed with an asterisk on Exhibit G. If
Seller is unable to procure estoppel certificates from such anchor tenants
and otherwise totalling eighty-five (85%) percent of the rentable square
footage of the Property, Purchaser may terminate this Agreement. Seller
furnish Purchaser with an estoppel certificate covering any such Lease(s)
for which an estoppel certificate has not been obtained from the tenant(s)
certifying as to the matters set forth in the form of tenant estoppel
certificate attached hereto as Exhibit "C" which Seller certificate may be
accepted by Purchaser, in its sole discretion. Upon subsequent delivery to
Purchaser of any missing tenant estoppel certificate in the form required
herein within no adverse disclosure therein, Seller's estoppel certificate
shall be null and void and Purchaser shall cancel Seller's estoppel
certificate executed in lieu thereof and return such canceled Seller's
estoppel certificate to Seller.
(vii)All documents reasonably required by the title insurance company
issuing the Policy to complete the Closing, including but not limited to
those documents required by the title insurance company from Seller for the
issuance of an ALTA Extended Coverage Policy of Title Insurance. In
addition, Seller shall provide UCC searches showing that there are no UCC
filings in the name of Seller or Seller's general partner or otherwise
affecting Seller's interest in the Property or, if there are such filings,
Seller covenants and agrees the same shall be removed at or prior to the
Closing.
(viii)All keys and entrance cards used on any part of the Property in
Seller's possession or control; and
(ix) All original leases, amendments thereto and tenant correspondence
files and Service Contracts.
(x) Originals or copies of any warranties and guaranties received by
Seller and to be assigned to Purchaser, from any contractors,
subcontractors, suppliers or materialmen in connection with any
construction, repairs or alterations of the Improvements or any tenant
improvements;
(xi) Originals or copies of all certificates of occupancy, licenses
and permits for the Improvements;
(xii)All existing as-built plans and specifications for the
Improvements in the possession of Seller or its manager;
(xiii) Complete originals of the Leases with respect to the Property
and copies of all records, books of account, ledgers, statements and other
business records relating to the ownership and operation of the Property
and/or the administration of the Leases, in whatever mode maintained,
including information contained on computer disks.
(c) Purchaser may waive compliance on Seller's part under any of the
foregoing items by an instrument in writing.
(d) On the Closing Date, Purchaser shall deliver to Escrow Agent the
following, duly executed and acknowledged if required:
The balance of the Purchase Price, in accordance with the terms set forth
in Paragraph 3 above, adjusted to reflect any prorations pursuant to Paragraph
9;
The Assignment of Leases;
An assumption agreement with respect to Seller's obligations under and with
respect to the Existing Loan in form and substance reasonably acceptable to
Purchaser; and
A settlement statement to be prepared by Escrow Agent
(e) Provided that Escrow Agent has received all of the items required to
be delivered pursuant to this Agreement (or a waiver from the party for whose
benefit such item is being delivered) and that it has not received prior written
notice from Purchaser that Purchaser has elected to terminate its rights and
obligations hereunder, and provided that Purchaser has received the Commitment
subject only to the Permitted Exceptions and conditioned solely upon recordation
of the Deed, Escrow Agent is authorized and instructed (i) with respect to the
Property, to record the documents delivered to the Escrow Agent in accordance
with recording instructions set forth in a letter to be delivered to Escrow
Holder by Purchaser (or if no such letter is received prior to the closing, in
accordance with customary practice), (ii) to deliver those other documents and
instruments delivered into Escrow to the party for whose benefit such documents
or instruments were made and (iii) to deliver the Purchase Price, as adjusted
pursuant to Section 9 hereof, upon receiving confirmation of recording.
8. Expenses. Seller shall pay all documentary, stamp or other transfer
taxes relating to the real, personal or intangible property. Seller shall pay
the premium for a standard Title Insurance Policy and the Survey. Purchaser
shall pay for the extra premium for extended coverage under such title policy.
Purchaser shall pay for the cost of a new Phase I Environmental Study (if
desired). Escrow costs charged by the Escrow Agent shall be shared equally by
Seller and Purchaser. All other closing costs shall be allocated between
Purchaser and Seller by Escrow Agent in accordance with practice and custom for
commercial real estate closings in Albuquerque, New Mexico. The Purchaser shall
pay the fees of the Purchaser's attorney, and any other closing expenses
incurred by the Purchaser, but not including, however, the real estate brokerage
commission payable to the Broker (as hereinafter defined) upon the closing of
title, which shall be paid by the Seller as provided in Paragraph 13 hereof.
The Seller shall pay the fees of the Seller's attorney, and any other closing
expenses incurred by the Seller, and the costs and expenses required to be paid
by Seller as provided in Paragraph 16 hereof.
9. Closing Prorations. The following items shall be prorated and adjusted
between the Seller and the Purchaser as of midnight on the day preceding the
Closing Date:
(a) Rents. All rents and other receipts actually received in the month in
which the Closing occurs shall be prorated as of the Closing. Purchaser shall
use reasonable efforts after the Closing to collect delinquent rents for the
period up to the Closing, provided, however, that all collections shall be
applied first to periods commencing after the Closing, and then to periods prior
to the Closing. Percentage Rents (if any) shall be prorated by Purchaser when
received by Purchaser, based on twelve thirty (30) day months.
(b) Common Area Maintenance Charges. All reimbursable expenses (other
than items described under the next succeeding paragraph) shall be reconciled at
Closing, such that if Seller has collected sums in excess of its reimbursable
expenses under the Leases, Seller shall pay such excess to Purchaser. In the
event that such reconciliation shows that Seller has collected less than its
incurred reimbursable expenses under the Leases, Purchaser shall remit the
shortfall to Seller, when and to the extent actually collected from tenants
(with such collections applied first to amounts due to Purchaser, and then to
Seller) not later than the expiration of three months after the conclusion of
the twelve-month period then in progress with respect to the budgeting of such
expenses under the Leases.
(c) Taxes. Real estate taxes, recurring assessments, and personal
property taxes, if any, on all or any portion of the Property, based on the
regular and supplemental tax bills for the calendar year in which the Closing
occurs (or, if such tax bill has not been issued as of the date of Closing the
regular and supplemental tax bill for the calendar year preceding that in which
the Closing occurs) shall be prorated as of the Closing. If any supplemental
real estate taxes are levied for any period preceding the Closing, the parties
will, immediately after the closing or the issuance of the supplemental real
estate tax bill (whichever last occurs), prorate between themselves, in cash,
without interest and to the date of the Closing Date, the supplemental real
estate taxes shown by such bill.
(d) Utilities. Unless such items are subject to proration under
subparagraph (b) above, all utilities, including gas, water, sewer, electricity,
telephone and other utilities supplied to the Property shall be read as of the
Closing Date. Seller shall pay, prior to the Closing Date, all such amounts for
which a bill has been received or for which service was rendered prior to the
Closing Date.
(e) Service Contracts. Amounts payable under Service Contracts which are
not being terminated shall be prorated on an accrual basis. Seller shall pay,
prior to the Closing Date, all such amounts for which a bill has been received
or for which service was rendered prior to the Closing Date. Seller shall
deliver to Escrow, for the benefit of Purchaser, evidence of the cancellation or
termination of all Service Contracts other than those to be assumed by Purchaser
in its discretion, and Seller shall be responsible for all such cancellation
costs.
(F) Improvement Lien Assessments. All improvement lien assessments shall
be paid in full by Seller at Closing.
(i) Other Items. All other proratable items, including without
limitation licenses and permits being assumed by Purchaser (if any;
provided that in no event shall Purchaser assume any indemnification
obligations of Seller) and other income from, and expenses associated with,
the Property shall be prorated between Purchaser and Seller as of the
Closing
(ii) All outstanding tenant finish and improvement costs, architect
fees, space planning and design fees, leasing commission costs and all
other tenant concessions, costs, expenses and legal fees (collectively,
"Lease Expenses") paid or incurred in connection with Leases or amendments
thereof executed prior to the date hereof shall be the responsibility of
Seller. Any Lease Expenses paid or incurred in connection with Leases or
amendments thereof executed on or after the date hereof in accordance with
Paragraph 15.6 hereof, including third party referral fees with respect to
Leases or other rental agreements (including, without limitation options,
renewals and extensions) and legal fees directly related to such leasing
payable by Purchaser pursuant to Paragraph 15.6 hereof, shall be the
responsibility of Purchaser. Seller shall receive a credit at Closing for
any such Lease Expenses for which Purchaser is responsible and which have
been paid by Seller prior to the Closing Date. Notwithstanding the
foregoing, Purchaser shall be solely responsible for the payment of all
Lease Expenses payable in connection with any options, renewals,
extensions, or otherwise, accruing or arising under Leases and amendments
thereof (whether executed before or after the Closing Date) after the
Closing Date provided that such Lease Expenses have been disclosed either,
in the written Lease delivered by Seller to Purchaser, by Seller in this
Agreement, or otherwise approved in writing by Purchaser.
Purchaser and Seller's obligation to prorate shall survive the Closing for
a period of one (1) year (unless within such time Purchaser or Seller makes a
claim against the other party to this Agreement with respect to such obligation
to prorate, in which case such obligation shall survive without limitation), and
Purchaser and Seller shall use good faith efforts to conclude prorations with
respect to percentage rent and common area maintenance charges as soon as
practicable after the determination of the amounts thereof. Notwithstanding the
foregoing, in the event that any of the tenants at the Property challenge any
expense pass-throughs or reimbursable expense reconciliations with respect to
any period prior to the Closing, Seller hereby agrees that it shall be solely
responsible to repay to such tenant any overpayments by such tenant, and shall
repay such overpayments (and any other amounts owing by the landlord under the
relevant lease and relating to such overpayment, including without limitation
audit costs and interest, if applicable) to such tenant within ten (10) days
after the determination of the amount thereof. Seller hereby indemnifies
Purchaser from and against any and all loss, costs and expense incurred by
Purchaser as a result of any such overpayments by tenants. Seller's obligations
under the immediately preceding two sentences shall survive the Closing without
limitation. Nothing in the Assignment of Leases shall be construed to amend,
modify or diminish in any way the provisions of this Section 9.
At Closing, Seller shall deliver to Purchaser, all contracts, Leases and
leasing correspondence, receipts for deposits, and unpaid bills which pertain to
the Property, together with all advertising materials, booklets, and keys, if
any, used in the operation of the Property other than those items delivered to
Purchaser on or before the Closing as provided for herein. Except as expressly
set forth herein, Seller makes no representations regarding the existence or
adequacy of such documents or items for use in management or operation of the
Property. The foregoing shall not include the separate books, records,
correspondence and other documentation of Seller located at its offices except
to the extent they relate to the Property.
The net amount of all prorations and adjustments shall be credited or
debited, as the case may be, against the Purchase Price payable at the Closing
pursuant to Paragraph 3 above.. The Purchaser hereby acknowledges that it has
no right, title or interest in or to any refunds which may hereafter be payable
to the Seller, or the tenants, in respect of real estate taxes, water or sewer
charges or other assessments which accrued and related to the period prior to
the Closing Date. To the extent that such refunds are paid to Seller and are
due to tenants, Seller does hereby covenant and agree that it shall, upon
receipt thereof, reimburse tenants for their applicable share of such refunds.
10. Payment of Liens. If, on or before the Closing Date, there be any
other liens or encumbrances which the Seller is obligated to pay and discharge,
the Seller may use any portion of the Purchase Price to satisfy the same. The
existence of any such taxes or other liens and encumbrances shall not be deemed
objections to title if the Seller shall take such steps as shall be necessary to
cause the title company insuring the title of the Property in favor of the
Purchaser (herein called the "Title Company") to omit same or to insure against
collection of same out of the Property.
11. Representations by Seller. All understandings and agreements
heretofore had between the parties hereto are merged in this Agreement, which
alone fully and completely expresses their agreement. The Purchaser is entering
into this Agreement not relying upon any statement or representation not
embodied in this Agreement made by any person. Prior to the expiration of the
Review Period, the Purchaser will have had an opportunity to inspect the
Property. Neither the Seller nor any persons purporting to act for the Seller
has made or now makes any representations or warranties as to the physical
condition, income, expense, operation or any other matter of thing affecting or
relating to the Property, except as herein specifically set forth. The Seller
is not liable or bound in any manner by any financial statements or written
agreements or statements, or representations which have been made, or any real
estate brokers' "set-ups" or information pertaining to the Property furnished,
by any real estate broker, agent or employee, servant or other persons. Except
as otherwise provided herein, but without in any way limiting the generality of
the foregoing, the Purchaser further acknowledges and agrees that in entering
into this Agreement and purchasing the Property:
(i) the Seller and has not made, will not and does not make any
warranties or representations, whether express or implied, with respect to
the Property, the value, profitability or marketability thereof; and
(ii) the Seller has not and will not make any warranties with respect
to the Property, whether express or implied, of merchantability,
habitability or fitness for a particular use; and
Notwithstanding the foregoing provisions of this paragraph 11, the Seller
does hereby make the following representations to the Purchaser effective as of
date of this Agreement and again as of the Closing Date which Purchaser is
entitled to rely upon:
As used herein and elsewhere in this Agreement, the term "Seller's actual
knowledge" shall mean the actual knowledge of each of Ms. Laura Cordova and
Linda Guiterrez, without any duty of investigation of any kind. Seller
represents and warrants that the foregoing persons are the only persons employed
by Seller or its manager with day-to-day managerial or supervisorial authority
over the Property.
11.1 Authority. Seller is duly organized and validly existing under the
laws of the jurisdiction of its organization, is duly qualified to conduct
business and own real property in the State of New Mexico, and has all requisite
power to own all of its properties and assets and to carry on its business as
presently conducted. The execution, delivery and performance of this Agreement
and all other agreements contemplated hereby has been duly and validly
authorized by all necessary action of Seller and the Agreement and all other
agreements contemplated thereby are and will be valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting generally
the enforcement of creditors' rights and general principles of equity.
11.2 Title Seller holds fee simple title to the Property, and to Seller's
actual knowledge, such fee simple title is free and clear of all liens,
encumbrances, security interests, charges, adverse claims and other exceptions
to title, except for the Leases, Service Contracts, Existing Loan matters of
record, matters disclosed by the Survey and the Permitted Exceptions. Nothing
in the Deed shall be construed to amend, modify or diminish the effectiveness or
survival of the foregoing representation.
11.3 The Leases. A list of the current Leases is set forth in the rent
roll attached hereto as Schedule G (the "Rent Roll"). The economic information
contained in the Rent Roll is accurate and consistent with Seller's records (as
they relate to the Property), which records have been maintained by Seller in
accordance with good property management standards. The noneconomic information
contained in the Rent Roll is accurate and consistent in all material respects
with Seller's records (as they relate to the Property), which records have been
maintained by Seller in accordance with good property management standards.
True, complete and correct copies of the Leases and all amendments and
modifications thereto have been delivered to Purchaser. Except for the Leases
set forth in the Rent Roll, there are no other leases, licenses or other
agreements affecting the occupancy of the Property. With respect to each Lease:
(i) the Lease is in full force and effect, and constitutes the valid and binding
legal obligation of Seller and the respective tenant, enforceable against each
of them in accordance with its terms; (ii) there are no understandings, oral or
written, between the parties to the Lease which in any manner vary the
obligations or rights of either party as set forth in the Lease (and all
amendments thereto delivered to Purchaser); (iii) except as indicated on the
Rent Roll, there is no default by Seller under the Lease, there is no default by
the tenant under the Lease with respect to payment of base rent and reimbursable
expenses and to Seller's knowledge, there is no other default by the tenant
under the Lease, and (iv) no rent or additional rent under the lease has been
paid for more than thirty (30) days in advance of its due date.
11.4 No Litigation or Adverse Events. Seller has received no written
notice of, and to Seller's actual knowledge, there are no pending or threatened
investigations, actions, suits, proceedings or claims against or affecting
Seller or the Property, at law or in equity or before or by any federal, state,
municipal or other governmental department, commission, board, agency, or
instrumentality, domestic or foreign.
11.5 Compliance with Laws. To the best of Seller's knowledge, Seller is in
compliance in all material respects with all applicable laws, ordinances, rules
and regulations (including without limitation those relating to zoning and the
Americans With Disabilities Act) applicable to the ownership or operation of the
Property. Seller has not received from any insurance company or board of fire
underwriters any notice, which remains uncured, of any defect or inadequacy in
connection with the Property or its operation.
11.6 No Defaults in Other Agreements. To Seller's actual knowledge,
neither Seller nor any other party is in material default under any Service
Contract affecting the Property, and no event exists which, with the passage of
time or the giving of notice or both, will become a material default thereunder
on the part of the Seller or any other party thereto. To Seller's knowledge,
Seller is in compliance in all material respects with the terms and provisions
of the covenants, conditions, restrictions, rights-of-way or easements affecting
the Property.
11.7 Eminent Domain. To Seller's actual knowledge, there is no existing or
proposed or threatened eminent domain or similar proceeding, or private purchase
in lieu of such a proceeding which would affect the Property in any material
way.
11.8 Licenses, Permits, CO's, Zoning, etc. To Seller's actual knowledge,
all permits, certificates of occupancy, business licenses and all other notices,
licenses, permits, certificates and authority required as of the date hereof and
as of the Closing Date in connection with the use or occupancy of the Property
have been obtained and are in full force and effect and in good standing.
11.9 Taxes and Assessments. All real property taxes, and all Seller's
personal property taxes, relating to the Property, excepting those for the
current tax year which are not yet overdue (i.e., which are still payable
without interest or penalty), have been paid in full.
11.10 Environment. (i) Seller has not engaged in any operations or
activities upon, or any use or occupancy of the Property, or any portion
thereof, for the purpose of or in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials (whether legal or illegal, accidental or
intentional) on, under, in or about the Property, or transported any Hazardous
Materials to, from or across the Property, except in all cases in material
compliance with Environmental Requirements and only in the course of legitimate
business operations at the Property (which shall not include any business
primarily or substantially devoted to the handling, manufacture, treatment,
storage, use, generation, release, discharge, refining, dumping or disposal of
Hazardous Materials); (ii) to Seller's actual knowledge, no tenant, occupant or
user of the Property, nor any other person, has engaged in or permitted any
operations or activities upon, or any use or occupancy of the Property, or any
portion thereof, for the purpose of or in any material way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials (whether legal or
illegal, accidental or intentional) on, under, in or about the Property, or
transported any Hazardous Materials to, from or across the Property, except in
all cases in material compliance with Environmental Requirements and only in the
course of legitimate business operations at the Property (which shall not
include any business primarily or substantially devoted to the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal of Hazardous Materials); (iii) to Seller's actual knowledge,
no Hazardous Materials are presently constructed, deposited, stored, or
otherwise located on, under, in or about the Property except in all cases in
material compliance with Environmental Requirements and only in the course of
legitimate business operations at the Property (which shall not include any
business primarily or substantially devoted to the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of Hazardous Materials); (iv) to Seller's actual knowledge, no
Hazardous Materials have migrated from the Property upon or beneath other
properties; and (v) to Seller's actual knowledge, no hazardous Materials have
migrated or threaten to migrate from other properties upon, about or beneath the
Property.
As used herein:
"Environmental Requirements" shall mean all applicable present statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
plans, authorizations, concessions, franchises and similar items, of all
governmental agencies, departments, commissions, boards, bureaus or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including, without limitation: (i) all requirements, including but
not limited to those pertaining to reporting, licensing, permitting,
investigation and remediation of emissions, discharges, releases or threatened
releases of "Hazardous Materials," chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials or wastes whether solid, liquid or
gaseous in nature, into the air, surface water, ground water or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of chemical substances, pollutants, contaminants
or hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and (ii) all requirements pertaining to the protection of the
health and safety of employees or the public.
"Hazardous Materials" shall mean (i) any flammable, explosive or
radioactive materials, hazardous wastes, toxic substances or related materials
including, without limitation, substances defined as "hazardous substances,"
"hazardous materials," "toxic substances" or "solid waste" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601
et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section
6901 et seq.; and in the regulations adopted and publications promulgated
pursuant to said laws; (ii) those substances listed in the United States
Department of Transportation Table (49 C.F.R. 172.101 and amendments thereto) or
by the Environmental Protection Agency (or any successor agency) as hazardous
substances (40 C.F.R. Part 302 and amendments thereto); (iii) those substances
defined as "hazardous wastes," "hazardous substances" or "toxic substances" in
any similar federal, state or local laws or in the regulations adopted and
publications promulgated pursuant to any of the foregoing laws or which
otherwise are regulated by any governmental authority, agency, department,
commission, board or instrumentality of the United States of America, the State
of New Mexico or any political subdivision thereof, (iv) any pollutant or
contaminant or hazardous, dangerous or toxic chemicals, materials, or substances
within the meaning of any other applicable federal, state, or local law,
regulation, ordinance, or requirement (including consent decrees and
administrative orders) relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material, all
as amended; (v) petroleum or any by-products thereof; (vi) any radioactive
material, including any source, special nuclear or by-product material as
defined at 42 U.S.C. Sections 2011 et seq., as amended, and in the regulations
adopted and publications promulgated pursuant to said law; (vii) asbestos in any
form or condition; and (viii) polychlorinated biphenyls.
11.11 Physical Condition. To Seller's actual knowledge, there is no
structural defect in the Improvements which would cost in excess of $10,000 to
repair.
11.12 Employees. Seller has no employees.
11.13 Mechanic's Liens. All bills and claims for labor performed and
materials furnished to or for the benefit of the Property currently due and
contracted for by Seller or its manager have been paid in full, and there are no
mechanic's or materialmen's liens (whether or not perfected) on or affecting the
Property as a result of labor performed or materials furnished and contracted
for by the Seller or its manager.
11.14 Operating Statements. To Seller's actual knowledge, the
financial statements delivered by Seller to Purchaser fairly present the profit
or loss from the management and operation of the Property for the periods
covered thereby and, in all material respects, accurately reflect all rents and
other gross receipts, and all amounts paid by Seller for electricity, water,
sewer, other utility services, insurance, fuel, maintenance and repairs (whether
capitalized or expensed), real estate taxes, payroll and payroll taxes and all
other operating and other expenses associated with the Property.
11.15 Disclosure. No representation or warranty of Seller in this
Agreement, or any information, statement or certificate furnished or to be
furnished by Seller or at Seller's direction pursuant to this Agreement or in
connection with the transactions contemplated hereby, contains or shall contain
any materially untrue statement of a material fact or omits or shall omit to
state a material fact necessary to make the statements contained therein not
misleading. To Seller's knowledge, there is no material misstatement or
omission in the copies of contracts, agreements and other documents delivered by
Seller in connection with the transactions contemplated hereby.
11.16 No Leases of Property or Assets. No material portion of the
Personal Property or fixtures with respect to the Property (other than fixtures
owned or installed by tenants) is leased by the Seller as lessee.
11.17 Contracts, Commissions. Seller has delivered to Purchaser true,
complete and correct copies of all Service Contracts. Except as set forth on
Exhibit H, there are no brokerage commissions payable upon the renewal,
extension or exercise of any option under any of the leases.
The representations and warranties set forth in this Section 11 shall
survive the execution and delivery of this Agreement, the delivery of the Deed
and transfer of title to the Property, until the date that is one year after the
Closing Date; provided however, that in the event Purchaser makes a written
claim against Seller with respect to any representation or warranty prior to the
date which is one year after the closing date, then such representation or
warranty shall survive without limitation as to such written claim.
Notwithstanding anything contained in this Agreement to the contrary, all
of the representations, warranties and certifications (the "Representations")
which are made by Seller and set forth herein or in any of the documents or
instruments required to be delivered by Seller hereunder, shall be subject to
the following conditions and limitations: (i) there shall be no liability on the
part of Seller, after the Closing, for breaches of representations of which
Purchaser had actual knowledge prior to the Closing; and (ii) in the event that,
after the date hereof and prior to the time of Closing, during the course of
Purchaser's inspections, studies, tests and investigations conducted pursuant to
Section 6 hereof, or through other sources, Purchaser gains actual knowledge of
a fact or circumstance which, by its nature, indicates that a Representation was
or has become untrue or inaccurate, and such fact or circumstance was not
intentionally withheld from Purchaser by Seller with the intent to defraud
Purchaser, then Purchaser shall have the right to (a) declare this Agreement
terminated, in which event the Deposit and all interest thereon shall be
returned to Purchaser, or (b) in the alternative commence an action for specific
performance of this Agreement by Seller, or (c) commence an action for actual
damages against Seller, which damages shall be limited to One Hundred Thousand
Dollars and no/100ths ($100,000) except in the case of an intentional breach of
this Agreement by Seller. As used in this paragraph, "actual knowledge" or
words of similar import with respect to Purchaser shall mean the actual
knowledge of Jerald Friedman, Larry Kronenberg or Daniel Slattery.
SUBJECT TO THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED
IN THIS AGREEMENT, AND EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
SELLER MAKES NO REPRESENTATION, CERTIFICATION OR WARRANTY OF ANY KIND, INCLUDING
ANY REPRESENTATION, CERTIFICATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
CONDITIONS OR STATE OF REPAIR OF THE REAL ESTATE, PERSONAL PROPERTY, OR ANY
PORTION THEREOF, OR OF VISIBLE OR HIDDEN DEFECTS IN MATERIAL, WORKMANSHIP OR
CAPACITY OF THE REAL ESTATE, PERSONAL PROPERTY, OR ANY PORTION THEREOF, AND
THERE ARE NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE AS TO THE REAL ESTATE, PERSONAL PROPERTY, OR ANY PORTION THEREOF EXCEPT
AS EXPRESSLY PROVIDED IN THIS AGREEMENT. EXCEPT AS PROVIDED IN THIS AGREEMENT,
DELIVERY OF THE REAL PROPERTY AND PERSONAL PROPERTY AT CLOSING WILL BE "AS IS,
WHERE IS" AND WITH ALL FAULTS, AND, EXCEPT AS EXPRESSLY STATED IN THIS
AGREEMENT, SELLER HAS DISCLAIMED ANY EXPRESS OR IMPLIED WARRANTIES WITH RESPECT
TO THE MERCHANTABILITY PHYSICAL CONDITION OR FITNESS FOR PARTICULAR USE OR
PURPOSE OF THE REAL ESTATE AND PERSONAL PROPERTY.
13. Limitation of Seller's Liability.
If the Seller shall be unable to convey good and indefeasible title subject
to and in accordance with this Agreement, or fails to deliver such title in
accordance with the terms and conditions of this Agreement, or any of the
Seller's representations made herein shall prove to be false in any material
respect, the Purchaser shall have the right to: (a) declare this Agreement
terminated, in which event the Deposit and all interest thereon shall be
returned to Purchaser and this Agreement, and the parties obligations hereunder,
shall be terminated and shall have no force or effect, (b) commence an action
for specific performance of this Agreement against Seller or (c) commence an
action for actual damages against Seller, which damages shall be limited to One
Hundred Thousand and no/100ths Dollars ($100,000), except in the case of an
intentional breach of this Agreement by Seller. The Seller shall not be
required to bring any action or proceedings or otherwise incur any expenses to
render title to the Property indefeasible except as required by Paragraph 5
hereof. The Purchaser may, nevertheless, accept such title as the Seller may be
able to convey, without a reduction of the Purchase Price or credit or allowance
against the same and without further liability on the part of Seller, except in
the case of an intentional breach of this Agreement by Seller.
13. Brokerage. The Purchaser represents that no broker, licensed or
otherwise, brought the Property to the attention of the Purchaser or had any
communication with the Purchaser in regard to same except Jones Lang Wooten
("Broker"). If any claim is made for brokerage commissions as a result of the
acts of the Purchaser (other than a claim from Broker), the Purchaser hereby
agrees to indemnify the Seller against, and to defend and hold the Seller
harmless from any and all claims for brokerage commissions by other than Broker
and for any legal fees and expenses incurred in defending such claims. The
Purchaser agrees that the foregoing representation and indemnity shall survive
the delivery of the Deed without limitation and shall inure to the benefit of
the Seller and to the Seller's successors and assigns. The Seller represents
that no broker, licensed or otherwise, has been retained by Seller except
Broker. The Seller agrees to pay any and all commissions due to the Broker. If
any claim is made for brokerage commissions by Broker or as a result of the acts
of the Seller, the Seller hereby agrees to indemnify the Purchaser against, and
to defend and hold the Purchaser harmless from any and all claims for brokerage
commissions and for any legal fees and expenses incurred in defending such
claims. The Seller agrees that the foregoing representation and indemnity shall
survive the delivery of the Deed without limitation and shall inure to the
benefit of the Purchaser and to the Purchaser's successors and assigns.
14. Liquidated Damages. If this transaction is not consummated by reason
of a default by Purchaser hereunder, then Seller shall retain the Deposit and
all interest thereon as full compensation for its damages and as it sole remedy,
except that Seller shall be entitled to exercise any rights or remedies it may
have by virtue of any indemnity created or granted herein. If this transaction
is not consummated by reason of a default by Seller hereunder, Purchaser shall
have the right to: (a) declare this Agreement terminated, in which event the
Deposit and all interest thereon shall be returned to Purchaser, (b) commence an
action for specific performance of this Agreement against Seller or (c) commence
an action for actual damages against Seller, which damages shall be limited to
One Hundred Thousand Dollars and no/100ths ($100,000) except in the case of an
intentional breach of this Agreement by the Seller.
15. Pre-Closing Management and Operation. From the execution of this
Agreement through the Closing:
15.1 Maintenance. In addition to Seller's other obligations hereunder,
Seller shall, upon and after the date of this Agreement and to and including the
Closing Date, at Seller's sole cost and expense, maintain the Property in the
ordinary course of business consistent with past practice, pay all taxes,
assessments, fines, penalties, charges and other operating expenses, and shall
make all repairs, maintenance and replacements of the Improvements and any
Personal Property and otherwise operate the Property in its ordinary and
customary manner, and otherwise in the same manner as before the making of this
Agreement, the same as though Seller were retaining the Property. Seller shall
not make any alterations to the Property without first receiving Purchaser's
prior written consent thereto.
15.2 Agreements. After the date hereof, without Purchaser's prior written
consent (which will not be unreasonably withheld) in no event shall Seller enter
into any agreement or contract with respect to the Property (other than a lease,
which shall be governed by the relevant other provisions of this Agreement)
which is not terminable on thirty (30) days' prior notice (without premium or
penalty).
15.3 Encumbrances. Seller shall not, in between the date of this Agreement
and the Closing Date, mortgage, encumber or suffer to be encumbered all or any
portion of the Property, which encumbrances would survive the Closing Date,
without the prior written consent of Purchaser.
15.4 Consents and Notices. Seller and Purchaser shall cooperate with each
other and exercise commercially reasonable efforts to obtain as of the Closing
Date, all consents from, and provide all notices to, any third party and any
governmental or regulatory authority which are required pursuant to any Contract
or any applicable laws as a condition to or in connection with the execution,
delivery or performance of this Agreement or other documents and instruments
contemplated thereby.
15.5 Audit Cooperation. Seller hereby agrees to cooperate with Purchaser
at no cost or expense in producing audited financial statements for the Property
for such periods as may be requested by Purchaser. Such cooperation shall
include, without limitation, the execution and delivery by Seller to Purchaser's
auditors of such confirmations and letters as such auditors may reasonably
require.
15.6 Leases. To the extent that any new leasing proposals are given
serious consideration by Seller, Seller agrees to provide Purchaser with
information in its possession and with regular updates regarding such proposals,
including without limitation a list of all Leasing Expenses incurred in
connection therewith. After the date hereof, provided the Agreement has not
been terminated, the Purchaser shall have the right to review and approve any
additional leasing. The parties agree that if the Purchaser has approved any
new lease(s) and said lease(s) is/are fully executed after the date hereof and
prior to Closing, that: (i) Purchaser agrees to be bound as landlord subsequent
to Closing; (ii) Purchaser shall pay to Seller at Closing all Leasing Expenses
incurred in connection therewith, so long as such Leasing Expenses were
disclosed to Purchaser prior to Purchaser's approval of such Lease, and any sums
expended by Seller and disclosed to Purchaser prior to Purchaser's approval of
such lease for tenant improvements and (iii) Purchaser shall assume
responsibility to complete all landlord's obligations after Closing set forth in
such Lease.
16. Existing Mortgage. Without limiting the generality of any other
provision of this Agreement:
(a) the Seller discloses to the Purchaser that, as more particularly set
forth in the loan documents heretofore delivered to Purchaser (the "Loan
Documents"), the Property is subject to a mortgage and related security
documents securing the Existing Loan from MetLife Capital Financial Corporation
to Seller, (with a current outstanding principal balance of approximately
$1,868,592.63) which Loan Documents provide, among other things that: (i) the
Seller's interest in the Property may not be sold, transferred or assigned
without the prior written consent of the holder of the Existing Loan (the
"Sycamore Mortgagee"); (ii) the Seller has a one-time right to transfer its
interest in the Property subject to "Transfer Closing Conditions" (as defined in
the Loan Documents); and (iii) the Loan may be prepaid, in whole, but not in
part, subject to the payment of a prepayment premium ("Prepayment Premium
Amount") described in the Loan Documents at any time after January 1, 2002.
(b) It shall be a condition to Closing, running in favor of Purchaser
and Seller, that any and all conditions in the Loan Documents, or otherwise
imposed by the Sycamore Mortgagee, to assumption of the Existing Loan including,
without limitation, execution of assumption agreements, be satisfied. Seller
hereby agrees to pay (i) any and all assumption fees; (ii) all costs and
expenses incurred by the Sycamore Mortgagee in connection with such assumption
(including without limitation all escrow fees, attorneys fees and title
insurance premiums), and (iii) if the Sycamore Mortgagee requires that Purchaser
purchase the Property through a so-called bankruptcy remote entity, up to
$10,000 in attorneys fees, costs and expenses incurred by Purchaser in
connection therewith.
(c) Seller shall provide to Purchaser on or before the expiration of the
Review Period a written consent (the "Sycamore Mortgagee Consent") which shall
be the written approval of the Sycamore Mortgagee to Seller's sale of the
Property to Purchaser, and Purchaser's assumption of the Existing Loan, which
approval shall be addressed to Seller and Purchaser, shall specify the amount of
any assumption fees and/or any other conditions to such approval and assumption,
and shall specify that on closing of such sale and satisfaction of such
conditions, Sycamore, its offices, directors, shareholders and Edward M.
Gilbert, Fred Kolber and Ed Berman (collectively, the "Liable Parties") shall be
relieved and released from any and all obligations and liabilities under or with
respect to the Loan Documents from and after the Closing Date. Purchaser will
cooperate with Seller and the Sycamore Mortgagee and use reasonable efforts
during the Review Period to obtain the consent of the Sycamore Mortgagee to the
sale of the Property to Purchaser and assumption of the Existing Loan. Seller
will cooperate with Purchaser and the Sycamore Mortgagee and will coordinate
with Purchaser any communications with the Sycamore Mortgagee so that Purchaser
shall have the opportunity to approve all written communications with the
Sycamore Mortgagee and be present at all meetings. Seller understands and
acknowledges that Purchaser shall have no obligation to purchase the Property
unless and until Purchaser shall have received a written instrument executed by
the Sycamore Mortgagee, in form and substance reasonably acceptable to
Purchaser, affirming the outstanding principal balance and unpaid fees and
expenses under the Existing Loan, affirming that there are no defaults under or
with respect to the Existing
Loan, approving the assumption of the Existing Loan by Purchaser, affirming
that no action by Seller or the Liable Parties on or after the Closing Date
could cause a default under the Existing Loan, and approving of Seller's pending
merger with Kimco Realty Co.
17. Notices. Notices, requests and other communications under this
Agreement shall be in writing and shall be deemed to have been given upon (i)
hand delivery, (ii) receipt by mail, postage prepaid, return receipt requested
(as evidenced by an executed return receipt), or refusal of delivery thereof,
(iii) upon receipt from any reliable overnight courtier service, or (iv) upon
electronic confirmation of receipt of facsimile transmission addressed as
follows:
If to the Purchaser: The Price Reit, Inc.
145 South Fairfax Ave.
4th Floor
Los Angeles, CA 90036
Attn: Jerald Friedman
Phone: (213) 937-8200
Fax: (213) 937-8175
With a Copy to: Gibson, Dunn & Crutcher LLP
333 S. Grand Avenue
Los Angeles, CA 90071
Attn: William R. Lindsay
Phone: (213) 229-7000
Fax: (213) 229-7520
If to Seller: Sycamore Realty Company, Inc.
c/o BGK Properties, Inc.
330 Garfield Street, Suite 200
Santa Fe, NM 87501
Att: Edward M. Gilbert
Phone: (505) 982-2184
Fax: (505) 982-2515
or at such other address of which the Seller or the Purchaser shall have
given notice to the other as herein provided.
18. Casualty or Condemnation. If, prior to the Closing, all or any
material portion of the Property shall be destroyed or damaged, or if, prior to
the Closing, any portion of the Property shall be subjected to a threat of
condemnation, or shall become the subject of any proceedings, judicial,
administrative, or otherwise, with respect to a taking by eminent domain or
condemnation, Seller shall promptly notify Purchaser thereof, and Purchaser, at
its option, may, within fifteen (15) days after receipt of such notice thereof,
cancel this Agreement by written notice, in which event the parties hereto shall
be relieved and released of and from any further duties, obligations, rights, or
liabilities hereunder, and the Deposit and all interest thereon shall be
returned to Purchaser. If the Closing Date is within the aforesaid fifteen (15)
day period, then the Closing shall be extended to the next business day
following the end of said fifteen (15) day period. If under such circumstances
Purchaser elects to complete the transactions contemplated in this Agreement, or
if less than a material portion of the Property is destroyed or damaged, this
Agreement shall remain in full force and effect, and the purchase contemplated
herein, less any portion of the Property destroyed or damaged or taken by
eminent domain or condemnation, shall be consummated with no further adjustment
or modification, and at the Closing, Seller shall assign, transfer, and set over
to Purchaser all the right, title, and interest of Seller in and to any
insurance proceeds resulting from any casualty or any awards that have been or
may thereafter be made for any taking or condemnation, and Purchaser shall
receive a credit at the Closing in the amount of any proceeds received in
accordance with this Section 18 and in the amount of any deductible provided for
in Seller's insurance policy.
A "material portion" of the Property shall be deemed taken or subject to a
casualty if (i) the cost to repair or replace such portion exceeds $100,000,
(ii) Purchaser determines that the Property so affected is materially and
adversely affected by such taking or threatened taking, (iii) any lessee has the
right to abate any rent under its lease as a result of such taking or threatened
taking, or (iv) any lessee or group of lessees leasing 2,500 square feet or more
in the aggregate (as set forth on the Rent Roll) has a right to terminate its
lease (or leases) as a result of such taking or threatened taking and does not
irrevocably waive such right prior to Closing in a form reasonably acceptable to
Purchaser.
19. Seller's Affidavit. If a search of the title to the Properties
discloses judgments, bankruptcies, or other returns against other persons having
names the same as or similar to that of the Seller, the Seller will, on request,
deliver to the Purchaser or to the Title Company, an affidavit showing that such
judgments, bankruptcies, or other returns are not against the Seller. In
addition, Seller shall, on request, deliver to the Purchaser or to the Title
Company, an ERISA representation and affidavit to facilitate the closing of the
transaction and issuance of an ALTA extended Title Policy.
20. Possession. Possession of the Property shall be delivered to
Purchaser on the Closing Date pursuant to the terms of this Agreement, subject
to the Permitted Exceptions, the Leases disclosed on the Rent Roll, and all
written leases theretofore disclosed to Purchaser and approved by Purchaser
during the Review Period or otherwise executed by Seller with Purchaser's
consent.
21. Purchaser's Authority. The Purchaser does hereby represent and
warrant for itself and its assigns that (i) subject to receiving approval of
Purchaser's Board of Directors, the Purchaser has the full right and power to
enter into this Agreement and to observe, fulfill and perform its obligations
hereunder, and (ii) the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein and compliance with the
terms and conditions of this Agreement, do not and will not conflict with or
result in a breach of any judgment, order or decree of any governmental body or
court, domestic or foreign, having jurisdiction over the Purchaser or its
assigns, and do not and will not conflict with any other agreement entered into
by the Purchaser or its assigns.
22. Assignment. Purchaser may assign all or any portion of its rights
under this Agreement to any person or entity with the prior written consent of
Seller which content shall not be unreasonably withheld. If such assignment is
to an affiliate or successor by merger, then no consent to such assignment shall
be required.
23. Survival. Any representation and warranties made herein by the Seller
shall survive the Closing Date as set forth in Section 11 hereof. Covenants
shall survive the Closing Date and delivery of the Deed without limitation.
Proration obligations shall survive as set forth elsewhere in this Agreement.
24. Binding Effect. This Agreement may not be changed or terminated
orally. This Agreement applies to and binds and inures to the benefit of the
heirs, executors, administrators, successors and assigns of the respective
parties.
25. Construction. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Mexico.
26. Counterpart Originals. This Agreement may be executed in any number
of counterpart duplicate originals all of which will be deemed to constitute but
one document.
27. Time of Essence. Time is of the essence in connection with all
dates and time periods specified in this Agreement.
28. Confidentiality. Purchaser and Seller shall keep all of the terms
and conditions of this Agreement confidential except for disclosure to such
partners, investors, attorneys, accountants, consultants and lenders with a bona
fide need to know. Seller acknowledges and agrees that Purchaser is a publicly
traded corporation and, accordingly, is required to make certain public
disclosures from time to time. Accordingly, Purchaser may make such disclosures
as may be required under applicable securities laws, or as may be recommended by
Purchaser's securities counsel from time to time, or as required by judicial
process.
29. Submission. Submission of this Agreement by Seller or Seller's agent,
or their respective agents or representatives, to Purchaser for examination
and/or execution shall not in any manner bind Seller and no obligations on
Seller shall arise under this Agreement unless and until this Agreement is fully
signed and delivered by Seller and Purchaser. Submission of this Agreement by
Purchaser or Purchaser's agent, or their respective agents or representatives,
to Seller for examination and/or execution shall not in any manner bind
Purchaser and no obligations on Purchaser shall arise under this Agreement
unless and until this Agreement is fully signed and delivered by Purchaser and
Seller.
30. No Recording. Seller and Purchaser agree that neither this Agreement
nor any memorandum thereof shall be recorded.
31. No Personal Liability of Officers or Directors of General Partner of
Seller or of Purchaser. Purchaser and Seller respectively acknowledge that this
Agreement is entered into by a New Mexico corporation as Seller and a Maryland
corporation as Purchaser and each party agrees that no individual officer or
director or representative of Seller or Purchaser or its partners shall have any
personal liability under this Agreement or any document executed in connection
with the transactions contemplated by this Agreement.
32. No Third Party Rights. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the parties hereto and their
respective successors and assigns, any rights or remedies under or by reason of
this Agreement.
33. Attorneys' Fees. If any litigation is initiated or defended by any
party to the Agreement against the other party to this Agreement relating to
this Agreement or the subject matter hereof, the party prevailing in such
litigation shall be entitled to recover, in addition to all damages allowed and
other relief, all reasonable attorneys' fees, court costs and other litigation
costs incurred in connection therewith.
34. Condition Precedent to Purchaser's Obligation to Close. Purchaser's
obligation to close this transaction is subject to:
(i) Board of Director Approval. Approval of this transaction by
Purchaser's Board of Directors prior to the expiration of the Review
Period.
(ii) Representations and Warranties. All of Sellers' representations
and warranties contained herein or made in writing by Seller shall have
been true and correct when made and shall be true and correct as of the
Closing Date, as though made at, and as of, the Closing Date, and Seller
shall have executed and delivered all documents and complied with all of
Seller's covenants and agreements contained in or made pursuant to this
Agreement.
(iii)Impairment of Property. No material adverse change shall have
occurred in the condition or ownership of the Property or any part thereof
from and after the conclusion of the Review Period. As of the Closing no
part of the Property, or any interest of Seller therein, shall be
encumbered by any lien, pledge, security interest, financing or due and
unpaid charge, tax or other imposition (other than the Existing Loan,
Permitted Exceptions and items which will be removed on or prior to the
Closing Date). There shall have occurred no material adverse change in the
financial condition of any tenant under any of the Leases demising 4,000
square feet or more of the Improvements (each, a "Major Lease"), and there
shall be no default, or event that with the giving of notice or the passage
of time or both would constitute a default, under any Major Lease.
IN WITNESS WHEREOF, this Agreement has been duly executed by the Purchaser
and the Seller hereto on the day and year set forth below opposite their
respective signatures.
Date: The Seller:
Sycamore Realty Company, Inc.
By: /EDWARD M. GILBERT/
-------------------
Its: President
The Purchaser:
The Price Reit, Inc.
By: /JERALD FRIEDMAN/
-----------------
Its: Sr. Executive V.P.
===============================================================================
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-3 No. 33-75547; Form S-8 No. 33-87812; Form S-3 No. 333-35185 and
related Prospectus) of The Price REIT, Inc. for the registration of 500,000
shares of its common stock; 600,000 shares of its common stock; and an
aggregate maximum total of $400,000,000 of debt securities, preferred stock,
common stock, and warrants for the purchase of its preferred stock or common
stock, respectively, and in the Registration Statement (Form S-4 No. 333-52667)
and related Joint Proxy Statement/Prospectus of Kimco Realty Corporation and
The Price REIT, Inc. of our reports dated May 8, 1998 with respect to the
statements of revenue over specific operating expenses of the Vista Ridge Plaza
and The Shops at Vista Ridge and our report dated May 5, 1998 with respect to
the statement of revenue over specific operating expenses of Franklin Towne
Center of The Price REIT, Inc. included in its Current Report on Form 8-K
dated June 5, 1998 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Diego, California
June 3, 1998
