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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) January 13, 1997
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DEVELOPERS DIVERSIFIED REALTY CORPORATION
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(Exact name of registrant as specified in its charter)
Ohio 1-11690 34-1723097
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(State or other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
34555 Chagrin Boulevard, Moreland Hills, Ohio 44022
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Registrant's telephone number, including area code (216) 247-4700
N/A
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(Former name or former address, if changed since last report)
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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This Current Report on Form 8-K is being filed for the purpose of filing the
attached Exhibits pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
Form 8-K
Exhibit No. Description
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<S> <C>
1.1 Distribution Agreement, dated August 19, 1996,
among the Company and the parties named therein.
2.1 Agreement of Purchase and Sale, dated
July 2, 1996, between the Company and Opus
Corporation for Maple Grove Crossing Shopping
Center.
2.2 Agreement of Purchase and Sale, dated
July 2, 1996, between the Company and Opus North
Corporation for Highland Grove Shopping Center.
2.3 Agreement of Purchase and Sale, dated
July 2, 1996, between the Company and Opus South
Corporation for Eastchase Market Shopping
Center.
2.4 Agreement of Purchase and Sale, dated
July 2, 1996, between the Company and Opus
Northwest, L.L.C. for Tanasbourne Town Center
Phase I Shopping Center.
2.5 Agreement of Purchase and Sale, dated
July 2, 1996, between the Company and Opus
Southwest Corporation for Arrowhead Crossing
Shopping Center.
3.1 Amendment to Amended and Restated Articles of
Incorporation.
3.2 Amendment to Code of Regulations of the Company.
4.1 Amendment, dated June 18, 1996, to the Credit
Agreement, dated as of May 1, 1995, among the
Company, the First National Bank of Chicago and
the First National Bank of Boston.
10.1 Developers Diversified Realty Corporation
Equity-Based Award Plan.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
Date January 13, 1997 /s/ William H. Schafer
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William H. Schafer
Vice President and Chief Financial Officer
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EXHIBIT 1.1
DEVELOPERS DIVERSIFIED REALTY CORPORATION
(an Ohio corporation)
Medium-Term Notes
Due 9 Months or More from Date of Issue
DISTRIBUTION AGREEMENT
August 19, 1996
DEAN WITTER REYNOLDS INC.
Two World Trade Center
New York, New York 10048
MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
CS FIRST BOSTON CORPORATION
55 East 52nd Street
New York, New York 10055
FIRST CHICAGO CAPITAL MARKETS, INC.
One First National Plaza
Chicago, Illinois 60670
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
LEHMAN BROTHERS
LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
SMITH BARNEY INC.
390 Greenwich Street
New York, New York 10013
Dear Sirs:
1. Introductory. Developers Diversified Realty Corporation,
an Ohio corporation (the "Company"), confirms its agreement with
Dean Witter Reynolds Inc., Morgan Stanley & Co. Incorporated, CS
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First Boston Corporation, First Chicago Capital Markets, Inc., Goldman, Sachs &
Co., Lehman Brothers, Lehman Brothers Inc. (including its affiliate Lehman
Government Securities Inc.) (each, an "Agent," and collectively, the "Agents")
and Smith Barney Inc. with respect to the issue and sale by the Company of its
debt securities denominated "Medium-Term Notes Due 9 Months or More from Date of
Issue" (the "Notes") . The Notes will be either Senior Notes (the "Senior
Notes") or Subordinated Notes (the "Subordinated Notes") . The Senior Notes will
be issued under an indenture dated as of May 1, 1994, as amended, supplemented
or modified from time to time (the "Senior Indenture"), between the Company and
National City Bank, as trustee (the "Senior Trustee"), and the Subordinated
Notes will be issued under an indenture dated as of May 1, 1994, as amended,
supplemented or modified from time to time (the "Subordinated Indenture"),
between the Company and The Chase Manhattan Bank (formerly Chemical Bank), as
trustee (the "Subordinated Trustee") . The term "Trustee" as used herein shall
refer to either the Senior Trustee or the Subordinated Trustee, as appropriate,
for Senior Notes or Subordinated Notes. The Senior Indenture and the
Subordinated Indenture, each as amended, supplemented or modified from time to
time, are each sometimes referred to as the "Indenture." Each series of Senior
Notes or Subordinated Notes may vary, as applicable, as to aggregate principal
amount, maturity date, interest rate or formula and timing of payments thereof,
redemption and/or repayment provisions, and any other variable terms which the
Senior Indenture or the Subordinated Indenture, as the case may be, contemplates
may be set forth in the Senior Notes and the Subordinated Notes as issued from
time to time. The Senior Notes or the Subordinated Notes may be offered either
together or separately. As used herein, "Notes" shall mean the Senior Notes or
the Subordinated Notes or any combination thereof.
As of the date hereof, the Company has authorized the issuance and sale
of up to U.S. $150,000,000 aggregate initial offering price (or its equivalent,
based upon the applicable exchange rate at the time of issuance, in such foreign
or composite currencies as the Company shall designate at the time of issuance)
of Notes to or through the Agents pursuant to the terms of this Agreement. It is
understood, however, that the Company may from time to time authorize the
issuance of additional Notes and that such additional Notes may be sold to or
through the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof. This Agreement
provides both for the sale of Notes by the Company to one or more Agents as
principal for resale to investors and other purchasers and for the sale of Notes
by the Company directly to investors (as may from time to time be agreed to by
the Company and the applicable Agent), in which case such Agent will act as an
agent of the Company in soliciting purchases of the Notes.
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As used herein, "you" and "your," unless the context otherwise
requires, shall mean the parties to whom this Agreement is addressed together
with the other parties, if any, identified in the Prospectus (as hereinafter
defined) as additional Agents with respect to the Notes.
2. Appointment as Agent. (a) Subject to the terms and conditions stated
herein and subject to the reservation by the Company of the right to sell Notes
directly on its own behalf, the Company hereby agrees that Notes will be sold
exclusively to or through the Agents. The Company agrees that it will not
appoint any other agents to act on its behalf, or to assist it, in the placement
of the Notes.
(b) The Company shall not sell or approve the solicitation of purchases
of Notes in excess of the amount which shall be authorized by the Company from
time to time or in excess of the aggregate initial offering price of Notes
registered pursuant to the Registration Statement. The Agents shall have no
responsibility for maintaining records with respect to the aggregate initial
offering price of Notes sold, or of otherwise monitoring the availability of
Notes for sale, under the Registration Statement.
(c) The Agents shall not have any obligation to purchase Notes from the
Company as principal, but one or more Agents may agree from time to time to
purchase Notes as principal for resale to investors and other purchasers
determined by such Agent or Agents. Any such purchase of Notes by an Agent as
principal shall be made in accordance with Section 4(a) hereof.
(d) If agreed upon by an Agent and the Company, such Agent, acting
solely as agent for the Company and not as principal, will solicit purchases of
the Notes. Such Agent will communicate to the Company, orally, each offer to
purchase Notes solicited by it on an agency basis, other than those offers
rejected by such Agent. Such Agent shall have the right, in its discretion
reasonably exercised, to reject any proposed purchase of Notes, as a whole or in
part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The Company may accept or reject any proposed purchase of
Notes, in whole or in part. Such Agent shall make reasonable efforts to assist
the Company in obtaining performance by each purchaser whose offer to purchase
Notes has been solicited by it and accepted by the Company. Such Agent shall not
have any liability to the Company in the event that any such purchase is not
consummated for any reason. If the Company shall default on its obligation to
deliver Notes to a purchaser whose offer it has accepted, the Company shall (i)
hold such Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company, and (ii) notwithstanding
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such default, pay to such Agent any commission to which it would otherwise be
entitled.
(e) The Company and the Agents agree that any Notes purchased by one or
more Agents as principal shall be purchased, and any Notes the placement of
which an Agent arranges as agent shall be placed by such Agent, in reliance on
the representations, warranties, covenants and agreements of the Company
contained herein and on the terms and conditions and in the manner provided
herein .
3. Representations and Warranties. (a) The Company represents and
warrants to you, as of the date hereof, as of the date of each acceptance by the
Company of an offer for the purchase of Notes (whether to one or more Agents as
principal or through an Agent as agent), as of the date of each delivery of
Notes (whether to one or more Agents as principal or through an Agent as agent)
(the date of each such delivery to one or more Agents as principal being
hereinafter referred to as a "Settlement Date"), and as of any time the
Registration Statement (as defined below) or the Prospectus (as defined below)
shall be amended or supplemented or there is filed with the Securities and
Exchange Commission (the "Commission") any document incorporated by reference
into the Prospectus (as defined below) (each of the times referenced above being
referred to herein as a "Representation Date"), that:
(i) Registration Statements on Form S-3 (Nos. 333-05565,
33-90182 and 33-94182) for the registration of the Notes, under the
Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Securities and Exchange Commission (the
"Commission") under the 1933 Act (the "1933 Act Regulations"), have
heretofore been delivered to you, have been prepared by the Company in
conformity with the requirements of the 1933 Act and the 1933 Act
Regulations and have been filed with the Commission under the 1933 Act.
One or more amendments to such registration, as may have been required
and copies of which have heretofore been delivered to you, have been so
prepared and filed prior to the execution of this Agreement. Each such
registration statement (as amended, if applicable) has been declared
effective by the Commission and each of the Senior Indenture and the
Subordinated Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "1939 Act"). Such registration statements
(and any further registration statements which may be filed by the
Company for the purpose of registering additional Notes and in
connection with which this Agreement is included or incorporated by
reference as an exhibit), on the one hand, and the prospectus
constituting a part thereof and any prospectus supplement and pricing
supplement relating
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to the offering of Notes, on the other hand, including all documents
incorporated therein by reference, as from time to time amended or
supplemented pursuant to the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 Act") or otherwise, are referred to herein
as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus shall be provided to the Agents
by the Company for use in connection with the offering of Notes,
whether or not such revised prospectus is required to be filed by the
Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term
"Prospectus" shall refer to such prospectus from and after the time it
is first provided to the Agents for such use. If the Company elects to
rely on Rule 434 under the 1933 Act Regulations, all references to the
Prospectus shall be deemed to include, without limitation, the form of
prospectus arid the term sheet, taken together, provided to the Agents
by the Company in reliance on Rule 434 under the 1933 Act (the "Rule
434 Prospectus") . If the Company files a registration statement to
register a portion of the Securities and relies on Rule 462(b) for such
registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement") , then any reference
to "Registration Statement" herein shall be deemed to be to the
registration statements referred to above (Nos. 333-05565, 33-94182 and
33-90182) and the Rule 462 Registration Statement, as each such
registration statement may be amended pursuant to the 1933 Act. All
references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of
like import) shall be deemed to mean and include all such financial
statements and schedules and other information which is or is deemed to
be incorporated by reference in the Registration Statement or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement or the
Prospectus shall be deemed to mean and include, without limitation, the
filing of any document under the 1934 Act which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
(ii) At the time the Registration Statement became effective,
and at each time thereafter at which an Annual Report on Form 10-K was
filed by the Company with the Commission, the Registration Statement
and the Prospectus conformed, and as of each applicable Representation
Date will conform, in all material respects to the requirements of the
1933 Act, the 1933 Act Regulations and the 1939 Act. At the time the
Registration Statement became effective and at each time thereafter at
which an Annual Report on Form 10-K was
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filed by the Company with the Commission, the Registration Statement
did not, and as of the applicable Representation Date, will not,
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as of the date
hereof does not, and as of each applicable Representation Date will
not, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing representations and warranties
shall not apply to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on
behalf of any Agent, specifically for use in the preparation thereof or
to that part of the Registration Statement which shall constitute the
Statement of Eligibility under the 1939 Act (Form T-1) (the "Statement
of Eligibility") of the Senior Trustee and the Subordinated Trustee
under the Senior Indenture and the Subordinated Indenture .
(iii) The documents incorporated or deemed to be incorporated
by reference in the Prospectus pursuant to Item 12 of Form S-3 under
the 1933 Act, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission under the 1934 Act (the "1934 Act Regulations"), and, when
read together with the other information in the Prospectus, at the time
the Registration Statement became effective and as of the applicable
Representation Date or during the period specified in Section 5(e), did
not and will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse change
in the condition, financial or otherwise, of the Company and its
subsidiaries considered as one enterprise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into by
the Company or its subsidiaries which are material with respect to the
Company and its subsidiaries considered as one enterprise other than
those in the ordinary course of
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business, and (C) except for regular quarterly dividends on the
Company's common shares, and regular dividends declared, paid or made
in accordance with the terms of any class or series of the Company's
preferred shares, there has been no dividend or distribution of any
kind declared, paid or made by the Company on any class of its capital
stock.
(v) The consolidated financial statements and supporting
schedules of the Company included in, or incorporated by reference
into, the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations for the
periods specified and the consolidated financial statements of
Developers Diversified Group ("DDG") included in, or incorporated by
reference into, the Registration Statement and the Prospectus present
fairly the results of its operations for the periods specified, except
as otherwise stated in the Registration Statement and the Prospectus,
said financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis;
and the sUpporting schedules included or incorporated by reference in
the Registration Statement and the Prospectus present fairly in all
material respects the information required to be stated therein. The
historical statements of revenues and certain operating expenses
included or incorporated by reference in the Registration Statement and
the Prospectus present fairly the revenues and those operating expenses
included in such statements for the periods specified in conformity
with generally accepted accounting principles; the pro forma condensed
consolidated financial statements included or incorporated by reference
in the Registration Statement and the Prospectus, if any, present
fairly the pro forma financial position of the Company and its
consolidated subsidiaries as at the dates indicated and the pro forma
results of their operations for the periods specified; and the pro
forma condensed consolidated financial statements have been derived
from information prepared in conformity with generally accepted
accounting principles applied on a consistent basis, the assumptions on
which such pro forma financial statements have been prepared are
reasonable and are set forth in the notes thereto, such pro forma
financial statements have been prepared, and the pro forma adjustments
set forth therein have been applied, in accordance with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations,
and such pro forma adjustments have been properly applied to the
historical amounts in the compilation of such statements.
(vi) Price Waterhouse LLP, who have expressed their opinion on
the audited financial statements and related
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schedules included in, or incorporated by reference into, the
Registration Statement, are independent public accountants within the
meaning of the 1933 Act and the applicable 1933 Act Regulations .
(vii) The Company has been duly organized and is validly
existing and in good standing as a corporation under the laws of the
State of Ohio, with power and authority (corporate and other) to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus; the Company
is in possession of and operating in compliance with all material
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders required for the conduct of its
business, all of which are valid and in full force and effect; and the
Company is duty qualified to do business and in good standing as a
foreign corporation in all other jurisdictions where its ownership or
leasing of properties or the conduct of its business requires such
qualification, except where failure to qualify and be in good standing
would not have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(viii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and to conduct its business and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(ix) The Indenture has been duly and validly authorized,
executed and delivered by the Company and constitutes the valid and
legally binding agreement of the Company, enforceable in accordance
with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equity
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law) .
(x) The Notes have been duly authorized by the Company for
issuance and sale pursuant to this Agreement and, when
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issued, authenticated and delivered pursuant to the provisions of the
Indenture against payment of the consideration therefor specified in
the Prospectus or agreed upon pursuant to the terms of this Agreement,
the Notes will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws relating to or affecting enforcement of creditors' rights
generally or by general equity principles (regardless or whether
enforcement is considered in a proceeding in equity or at law) ; the
Notes and the Indenture conform in all material respects to all
statements relating thereto contained in the Prospectus; and the Notes
will be entitled to the benefits provided by the Indenture.
(xi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Company, threatened against or affecting
the Company or its subsidiaries, which is required to be disclosed in
the Prospectus (other than as disclosed therein) , or which might
result in any material adverse change in the condition, financial or
otherwise, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, or might materially and
adversely affect the properties or assets thereof or which might
materially and adversely affect the consummation of this Agreement, or
the Indenture, or the transactions contemplated herein and therein; all
pending legal or governmental proceedings to which the Company or any
of its subsidiaries is a party or of which any of their respective
property is the subject which are not described in the Prospectus,
including routine litigation incidental to the business, are,
considered in the aggregate, not material; and there are no material
contracts or documents of the Company or its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the
1933 Act or by the 1933 Act Regulations which have not been so filed.
(xii) Neither the Company nor any of its subsidiaries is in
violation of its respective articles of incorporation or other
organizational document, or its Code of Regulations or bylaws, as the
case may be (the "Code of Regulations") , or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party
or by which it or its properties may be bound, where such defaults in
the aggregate would have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries
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considered as one enterprise; and the execution and delivery of this
Agreement and the Indenture, and the consummation of the transactions
contemplated herein and therein have been duly authorized by all
necessary corporate action and compliance by the Company with its
obligations hereunder and thereunder will not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its subsidiaries is a party or by which it
may be bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in
any violation of the provisions of the Articles of Incorporation or
Code of Regulations or, to the best of its knowledge, any law,
administrative regulation or administrative or court order or decree;
and no consent, approval, authorization or order of any court or
governmental authority or agency is required for the consummation by
the Company of the transactions contemplated by this Agreement or the
Indenture, except such as has been obtained or as may be required under
the 1933 Act, the 1934 Act, state securities or Blue Sky laws or real
estate syndication laws in connection with the purchase and
distribution of the Notes by the Agents.
(xiii) The Company has full right, power and authority to
enter into this Agreement, and this Agreement has been, and as of the
applicable Representation Date will have been duly authorized, executed
and delivered by the Company.
(xiv) With respect to its taxable years ended December 31,
1995 and its taxable years ending thereafter, the Company has operated
and will continue to operate so as to qualify as a Real Estate
Investment Trust ("REIT"), the Company qualified as a REIT for its
taxable years ended December 31, 1993 and December 31, 1994 and the
Company intends to file a form 1120REIT and be taxed as a REIT with
respect to its taxable year ended December 31, 1995.
(xv) Neither the Company nor any of its subsidiaries is
required to be registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
(xvi) Neither the Company nor any of its subsidiaries is
required to own or possess any trademarks, service marks, trade names
or copyrights in order to conduct the business now operated by them.
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(xvii) If applicable, the Notes have been approved for listing
on the New York Stock Exchange.
(xviii) (A) The Company or its subsidiaries have good and
marketable title or leasehold interest, as the case may be, to the
portfolio properties (the "Portfolio Properties") described in the
Prospectus (or documents incorporated by reference therein) as being
owned by the Company or its subsidiaries (except with respect to
properties described in the Prospectus or documents incorporated by
reference therein) as being held by the Company through joint ventures,
in each case free and clear of all liens, encumbrances, claims,
security interests and defects (collectively, the "Defects") , except
such as do not materially adversely affect the value of such property
or interests and do not materially interfere with the use made and
proposed to be made of such property or interests by the Company or
such subsidiaries, as the case may be; (B) the joint venture interest
in each property described in the Prospectus (or documents incorporated
by reference therein) as being held by the Company through a joint
venture, is owned, free and clear of all Defects except for such
Defects that will not have a material adverse effect on the business,
earnings or business prospects of the Company and its subsidiaries
considered as one enterprise; (C) all liens, charges, encumbrances,
claims, or restrictions on or affecting the properties and assets of
the Company or its subsidiaries which are required to be disclosed in
the Prospectus are disclosed therein; (D) none of the Company, its
subsidiaries or, to the best of the Company's knowledge, any lessee of
any of the Portfolio Properties is in default under any of the leases
governing the Portfolio Properties and the Company does not know of any
event which, but for the passage of time or the giving of notice, or
both, would constitute a default under any of such leases, except such
defaults that would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise; (E) no tenant under any of the leases pursuant to which
the Company or its subsidiaries leases any of the Portfolio Properties
has an option or right of first refusal to purchase the premises
demised under such lease (except for (i) Kmart Corporation, (ii) the
tenants at the Portfolio Property located in Solon, Ohio, (iii) as
otherwise described in the Prospectus (or documents incorporated by
reference therein) and (iv) such other options or rights of first
refusal that, if exercised, would not have a material adverse effect on
the condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise); (F) each of the Portfolio Properties
complies with all
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applicable codes and zoning laws and regulations, except for such
failures to comply which would not individually or in the aggregate
have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise; and
(C) the Company does not have knowledge of any pending or threatened
condemnation, zoning change, or other proceeding or action that will in
any manner affect the size of, use of, improvements on, construction
on, or access to the Portfolio Properties, except such proceedings or
actions that would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise.
(xix) The Company or its subsidiaries have title insurance on
each of the Portfolio Properties (except with respect to each property
described in the Prospectus (or documents incorporated by reference
therein) as held by the Company through a joint venture) in an amount
at least equal to the greater of (A) the cost of acquisition of such
Portfolio Property and (B) the cost of construction of the improvements
located on such Portfolio Property, except, in each case, where the
failure to maintain such title insurance would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; the joint venture owning
each property described in the Prospectus (or documents incorporated by
reference therein) as held by the Company through a joint venture has
title insurance on such property in an amount at least equal to the
greater of (A) the cost of acquisition of such Portfolio Property by
such joint venture and (B) the cost of construction of the improvements
located on such Portfolio Property, except, in each case, where the
failure to maintain such title insurance would not have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xx) The mortgages and deeds of trust encumbering the
Portfolio Properties are not convertible and neither the Company nor
any of its subsidiaries hold a participating interest therein and said
mortgages and deeds of trust are not cross-defaulted or
cross-collateralized to any property not owned by the Company or its
subsidiaries.
(xxi) The Company has no knowledge of (a) the unlawful
presence of any hazardous substances, hazardous materials, toxic
substances or waste materials (collectively, "Hazardous
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Materials") on any of the Portfolio Properties or of (b) any unlawful
spills, release, discharges or disposal of Hazardous Materials that
have occurred or are presently occurring from the Portfolio Properties
as a result of any construction on or operation and use of the
Portfolio Properties, which presence or occurrence would materially
adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise. In connection with the
construction on or operation and use of the Portfolio Properties, the
Company represents that, as of the date of this Agreement, the Company
has no knowledge of any material failure to comply with all applicable
local, state and federal environmental laws, regulations, ordinances
and administrative and judicial orders relating to the generation,
recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials that would have a material adverse effect on
the condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xxii) The Senior Notes are rated not less than Baa3 by
Moody's Investors Service, Inc. and EBB by Standard & Poor's
Corporation. The Subordinated Notes are rated not less than Bal by
Moody's Investors Service, Inc. and BBB- by Standard & Poor's
Corporation.
(b) Any certificate signed by any officer of the Company and delivered
to you or to counsel for the Agents shall be deemed a representation and
warranty by the Company, as the case may be, to each Agent participating in such
offering as to the matters covered thereby on the date of such certificate and,
unless subsequently amended or supplemented, at the applicable Representation
Date subsequent thereto.
4. Purchases as Principal; Solicitations as Agent. (a) Unless otherwise
agreed by an Agent and the Company, Notes shall be purchased by such Agent as
principal. Such purchases shall be made in accordance with terms agreed upon by
one or more Agents and the Company (which terms, unless otherwise agreed, shall,
to the extent applicable, include those terms specified in Exhibit A hereto and
be agreed upon orally, with written confirmation prepared by such Agent or
Agents and mailed to the Company) . An Agent's commitment to purchase Notes as
principal shall be deemed to have been made on the basis of the representations
and warranties of the Company herein contained and shall be subject to the terms
and conditions herein set forth. Unless the context otherwise requires,
references herein to "this Agreement" shall include the agreement of one or more
Agents to purchase Notes from the Company as principal. Each purchase of Notes,
unless otherwise agreed, shall
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<PAGE> 14
be at a discount from the principal amount of each such Note equivalent to the
applicable commission set forth in Schedule A hereto. The Agents may engage the
services of any other broker or dealer in connection with the resale of the
Notes purchased by them as principal and may allow any portion of the discount
received in connection with such purchases from the Company to such brokers and
dealers. At the time of each purchase of Notes by one or more Agents as
principal, such Agent or Agents shall specify the requirements for the stand-off
agreement, officers' certificate, comfort letter and opinions of counsel
pursuant to Sections 5 (k), 11(b), 11(c), and 11(d) hereof.
(b) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, when agreed
by the Company and an Agent, such Agent, as an agent of the Company, will use
its reasonable efforts to solicit offers to purchase the Notes upon the terms
and conditions set forth herein and in the Prospectus. The Agents are not
authorized to appoint sub-agents with respect to Notes sold through them as
agent. All Notes sold through an Agent as agent will be sold at 100% of their
principal amount unless otherwise agreed to by the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through an Agent, as agent, commencing at
any time for any period of time or permanently. As soon as practicable after
receipt of instructions from the Company, such Agent will suspend solicitation
of purchases from the Company until such time as the Company has advised such
Agent that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Senior Note sold by the Company as a result of a solicitation made by such Agent
as set forth in Schedule A hereto. The schedule of commissions payable in
connection with sales of Senior Notes will also apply to sales of Subordinated
Notes unless otherwise agreed to by the Company and the applicable Agent.
(c) The purchase price, interest rate or formula, maturity date and
other terms of the Notes (as applicable) specified in Exhibit A hereto shall be
agreed upon by the Company and the applicable Agent or Agents and specified in a
pricing supplement to the Prospectus (each, a "Pricing Supplement") to be
prepared in connection with each sale of Notes. Except as may be otherwise
specified in the applicable Pricing Supplement, the Notes will be issued in
denominations of U.S. $1,000 or any larger amount that is an integral multiple
of U.S. $1,000. Administrative procedures with respect to the sale of Notes
shall be agreed upon from time to time by the Company, the Agents and the
Trustees (the
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<PAGE> 15
"Procedures") . The Agents and the Company agree to perform, and the Company
agrees to cause the Trustees to agree to perform, their respective duties and
obligations specifically provided to be performed by them in the Procedures.
5. Covenants and Agreements of the Company. The Company covenants with
the Agents participating in the offering of Notes that:
(a) The Company will notify the Agents immediately, and confirm such
notice in writing, of (i) the effectiveness of any amendment to the Registration
Statement, (ii) the transmittal to the Commission for filing of any amendment or
supplement to the Prospectus or any document to be filed pursuant to the 1934
Act (other than any amendment, supplement or document relating solely to
securities other than the Notes), (iii) the receipt of any comments from the
Commission with respect to the Registration Statement or the Prospectus, (iv)
any request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectus or for additional information, (v)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
and (vi) any change in the rating assigned by any nationally recognized
statistical rating organization to any debt securities of the Company or the
public announcement by any nationally recognized statistical rating organization
that it has under surveillance or review, with possible negative implications,
its rating of any debt securities of the Company. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment .
(b) The Company will give the Agents advance notice of its intention to
file or prepare any additional registration statement with respect to the
registration of additional Notes, any amendment to the Registration Statement or
any amendment or supplement to the Prospectus (other than an amendment or
supplement providing solely for a change in the interest rate or formula
applicable to the Notes or a change relating solely to securities other than the
Notes), whether by the filing of documents pursuant to the 1934 Act or the 1933
Act or otherwise, and will furnish to the Agents copies of any such amendment or
supplement or other documents proposed to be filed or used a reasonable time in
advance of such proposed filing or use, as the case may be, and will not file
any such amendment or supplement or other documents in a form to which the
Agents or counsel for the Agents shall reasonably object.
(c) The Company will deliver to the Agent as many signed and conformed
copies of the Registration Statement (as originally
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<PAGE> 16
filed) and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated by reference in the
Prospectus) as the Agents reasonably request. The Company will furnish to the
Agents as many copies of the Prospectus (as amended or supplemented) as the
Agents reasonably request so long as the Agents are required to deliver a
Prospectus in connection with sales or solicitations of offers to purchase the
Notes.
(d) The Company will prepare, with respect to any Notes to be sold to
or through one or more Agents pursuant to this Agreement, a Pricing Supplement
with respect to such Notes in a form previously approved by the Agents and will
file such Pricing Supplement pursuant to Rule 424(b) under the 1933 Act not
later than the close of business of the Commission on the first business day
after the date on which such Pricing Supplement is first used.
(e) Except as otherwise provided in subsection (1) of this Section 5,
if at any time during the term of this Agreement any event shall occur or
condition exist as a result of which it is necessary, in the opinion of counsel
for the Agents or counsel for the Company, to amend or supplement the Prospectus
in order that the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time the Prospectus is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, to amend or supplement the
Registration Statement or the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company shall give
immediate notice, confirmed in writing, to the Agents to cease the solicitation
of offers to purchase the Notes in an Agent's capacity as agent and to cease
sales of any Notes an Agent may then own as principal, and the Company will
promptly amend the Registration Statement and the Prospectus, whether by filing
documents pursuant to the 1934 Act or the 1933 Act or otherwise, as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement y and Prospectus comply with such requirements .
(f) Except as otherwise provided in subsection (1) of this Section 5,
on or prior to the date on which there shall be released to the general public
interim financial statement information related to the Company with respect to
each of the first three quarters of any fiscal year or preliminary financial
statement information with respect to any fiscal year, the Company shall furnish
such information to the Agents, confirmed in writing, and shall cause the
Prospectus to be amended or supplemented to include or incorporate by reference
financial information with respect thereto and corresponding information for the
comparable period of
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<PAGE> 17
the preceding fiscal year, as well as such other information and explanations as
shall be necessary for an understanding thereof or as shall be required by the
1933 Act or the 1933 Act Regulations.
(g) Except as otherwise provided in subsection (1) of this Section 5,
on or prior to the date on which there shall be released to the general public
financial information included in or derived from the audited financial
statements of the Company for the preceding fiscal year, the Company shall
furnish such information to the Agents, confirmed in writing, and shall cause
the Registration Statement and the Prospectus to be amended, whether by the
filing of documents pursuant to the 1934 Act or the 1933 Act or otherwise, to
include or incorporate by reference such audited financial statements and the
report or reports, and consent or consents to such inclusion or incorporation by
reference, of the independent accountants with respect thereto, as well as such
other information and explanations as shall be necessary for an understanding of
such financial statements or as shall be required by the 1933 Act or the 1933
Act Regulations.
(h) The Company will make generally available to its security holders
as soon as practicable, but not later than 90 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering each twelve month period
beginning, in each case, not later than the first day of the Company's fiscal
quarter next following the "effective date" (as defined in such Rule 158) of the
Registration Statement with respect to each sale of Notes.
(i) The Company will endeavor, in cooperation with the Agents, to
qualify the Notes for offering and sale under the applicable securities laws and
real estate syndication laws of such states and other jurisdictions of the
United States as the Agents may designate, and will maintain such qualifications
in effect for as long as may be required for the distribution of the Notes;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Company will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Notes have been qualified as above provided. The Company will promptly
advise the Agents of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Notes for sale in any such state
or jurisdiction or the initiating or threatening of any proceeding for such
purpose.
(j) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act in connection with sales of the
Notes, will file all documents required to be filed with the Commission pursuant
to Sections 13,
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<PAGE> 18
14 or 15 of the 1934 Act within the time periods prescribed by the 1934 Act and
the 1934 Act Regulations.
(k) If specified by the applicable Agent or Agents in connection with a
purchase of Notes as principal, between the date of the agreement to purchase
such Notes and the Settlement Date with respect to such purchase, the Company
will not, without the prior written consent of such Agent or Agents, offer or
sell, grant any option for the sale of, or enter into any agreement to sell, any
debt securities of the Company (other than the Notes that are to be sold
pursuant to such agreement and commercial paper in the ordinary course of
business) .
(1) The Company shall not be required to comply with the provisions of
subsections (e), (f) or (g) of this Section 5 for any period during which (i)
the Agents have not agreed with the Company to solicit purchases of Notes in
accordance with Section 2(d) or have suspended such solicitation and (ii) no
Agent is holding any Notes purchased as principal pursuant hereto, until the
time the Agents have agreed with the Company to solicit such purchases of the
Notes or have resumed solicitation in accordance with Section 2 (d) or an Agent
shall subsequently purchase Notes from the Company as principal.
(m) The Company will use its best efforts to meet the requirements to
qualify as a REIT under the Internal Revenue Code of 1986, as amended (the
"Code") for the taxable year in which sales of the Notes are to occur, unless
otherwise specified in the Prospectus .
6. Payment of Expenses. The Company will pay, directly or by
reimbursement, all expenses incident to the performance of its obligations under
this Agreement, including (i) the preparation and filing of the Registration
Statement and all amendments thereto and the Prospectus and any amendments or
supplements thereto; (ii) the preparation, filing and reproduction of this
Agreement; (iii) the preparation, printing, issuance and delivery of the Notes,
including any fees and expenses relating to the use of Notes in book-entry form;
(iv) the fees and disbursements of the Company's accountants and counsel, of the
Trustee and its counsel, and of any calculation agent or exchange rate agent;
(v) the reasonable fees and disbursements of counsel to the Agents incurred in
connection with the establishment of the program relating to the Notes and
incurred from time to time in connection with the transactions contemplated
hereby; (vi) the qualification of the Notes under state securities laws in
accordance with the provisions of Section 5(i) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Agents in connection
therewith and in connection with the preparation of any Blue Sky or Legal
Investment Survey; (vii) the printing and delivery to the Agents in
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<PAGE> 19
quantities as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or supplements
thereto, and the delivery by the Agents of the Prospectus and any amendments or
supplements thereto in connection with solicitations or confirmations of sales
of the Notes; (viii) the preparation, reproduction and delivery to the Agents of
copies of the Indenture and all supplements and amendments thereto; (ix) any
fees charged by rating agencies for the rating of the Notes; (x) the fees and
expenses incurred in connection with any listing of Notes on a securities
exchange; (xi) the fees and expenses incurred with respect to any filing with
the National Association of Securities Dealers, Inc.; (xii) any advertising and
other out-of-pocket expenses of the Agents incurred with the approval of the
Company; and (xiii) the cost of providing any CUSIP or other identification
numbers for the Notes.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Agent, and each person, if any, who controls
any Agent within the meaning of Section 15 of the 1933 Act, against any losses,
claims, damages, liabilities or expenses (including the reasonable cost of
investigating and defending against any claims therefor and reasonable counsel
fees incurred in connection therewith) , joint or several, as incurred, which
may be based upon the 1933 Act, or any other statute or at common law, arising
out of any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment thereto) , or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a material fact
contained in the Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, unless any such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company by any Agent, directly or through you or any other Agent, specifically
for use in the preparation thereof; provided, however, that the Company shall
not be liable with respect to any claims made against any Agent or any such
controlling person under this subsection unless such Agent or controlling person
shall have notified the Company in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claim shall have been served upon such Agent or controlling person, but failure
to notify the Company of any such claim shall not relieve either of them from
any liability which they may have to such Agent or controlling person otherwise
than on account of the indemnity agreement contained in this paragraph. The
Company will be entitled to participate at its own expense in the defense, or,
if
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it so elects, to assume the defense of any suit brought to enforce any such
liability, and, if the Company elects to assume the defense, such defense shall
be conducted by counsel chosen by it. In the event the Company elects to assume
the defense of any such suit and retain such counsel, the Agent or Agents or
controlling person or persons, defendant or defendants in the suit, may retain
additional counsel but shall bear the fees and expenses of such counsel unless
(i) the Company shall have specifically authorized the retaining of such counsel
or (ii) the parties to such suit include such Agent or Agents or controlling
person or persons and the Company and such Agent or Agents or controlling person
or persons have been advised by counsel that one or more legal defenses may be
available to it or to them which may not be available to the Company, in which
case the Company shall not be entitled to assume the defense of such suit
notwithstanding their obligation to bear the fees and expenses of such counsel.
The Company shall not be liable to indemnify any person for any settlement of
any such claim effected without the Company's written consent. This indemnity
agreement will be in addition to any liability which the Company might otherwise
have.
(b) Each Agent severally agrees to indemnify and hold harmless the
Company, each of its directors, each of the Company's officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any losses, claims, damages,
liabilities or expenses (including the reasonable cost of investigating and
defending against any claims therefor and reasonable counsel fees incurred in
connection therewith) , joint or several, as incurred, which may be based upon
the 1933 Act, or any other statute or at common law, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto) or the omission or alleged
omission therefrom of a material fact required to be stated therein or necessary
to make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but only insofar as any such statement or omission was made in
reliance upon, and in conformity with, written information furnished to the
Company by such Agent, directly or through you or any other Agent, specifically
for use in the preparation thereof; provided, however, that an Agent shall not
be liable with respect to any claims made against the Company or any person
against whom the action is brought unless the Company or such person shall have
notified such Agent in writing within a reasonable time after the summons or
other first legal process giving information of the nature of the claim shall
have been
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served upon the Company or such person, but failure to notify such Agent of such
claim shall not relieve it from any liability which it may have to the Company
or such person otherwise than on account of its indemnity agreement contained in
this paragraph. Such Agent shall be entitled to participate at its own expense
in the defense, or, if it so elects, to assume the defense of any suit brought
to enforce any such liability, but, if such Agent elects to assume the defense,
such defense shall be conducted by counsel chosen by it. In the event that any
Agent elects to assume the defense of any such suit and retain such counsel, the
Company, said officer and directors and other Agent or Agents or controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, respectively, unless (i)
such Agent shall have specifically authorized the retaining of such counsel or
(ii) the parties to such suit include any indemnified party and such Agent, and
any such indemnified party has been advised by counsel that one or more legal
defenses may be available to it which may not be available to such Agent, in
which case such Agent shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the fees and expenses of such counsel.
The Agent against whom indemnity may be sought shall not be liable to indemnify
any person for any settlement of any such claim effected without such Agent's
consent. This indemnity agreement will be in addition to any liability which
such Agent might otherwise have.
(c) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (or actions in respect thereof) referred to herein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) , as incurred, in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agent on the other from the offering of the Notes. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party, as incurred, in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Agents on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Agents and the parties'
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<PAGE> 22
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Agents agree that it
would not be just and equitable if contribution were determined by pro rata
allocation (even if the Agents were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such claim. Notwithstanding the
provisions of this subsection (c), no Agent shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes
purchased by or through it and distributed to the public were offered to the
public exceeds the amount of any damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Agents' obligations to contribute are several in proportion to their respective
underwriting obligations and not joint.
8. Survival of Indemnities, Representation, Warranties, etc. The
respective indemnities, covenants, agreements, representations, warranties and
other statements of the Company, and the Agents, as set forth in this Agreement
or certificates of officers of the Company submitted pursuant hereto or thereto,
shall remain in full force and effect, regardless of any investigation made by
or on behalf of any Agent or the Company or any of their officers or directors
or any controlling person, and shall survive delivery of and payment for the
Notes.
9. Conditions of Agents' Obligations. The respective obligations of the
Agents to purchase Notes as agent of the Company, and the obligations of any
purchasers of the Notes sold through an Agent as agent, are subject to the
accuracy of the representations and warranties made herein by the Company, to
the accuracy of the statements of the Company's officers or directors in any
certificate furnished in connection therewith pursuant to the provisions hereof,
to the performance and observance by the Company of all of its covenants and
agreements herein contained and other provisions hereof to be satisfied in
connection therewith, and to the following additional conditions:
(a) On the date hereof, you shall have received from Price
Waterhouse LLP a letter, dated as of the date hereof and in form and
substance satisfactory to you, to the effect that:
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<PAGE> 23
(i) they are independent accountants with respect to the
Company and its subsidiaries and DDG within the meaning of the 1933 Act
and the 1933 Act Regulations; (ii) it is their opinion that the
consolidated financial statements and supporting schedules of the
Company and DDG included or incorporated by reference in the
Registration Statement and the Prospectus and covered by their opinions
therein comply in form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1934 Act, and the
related published rules and regulations; (iii) it is their opinion that
the financial statements of the properties acquired or proposed to be
acquired by the Company included in the Company's Forms 8-K dated May
8, 1995 and November 3, 1995, each of which is incorporated by
reference in the Company's Registration Statement and covered by their
opinions therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1934 Act
with respect to real estate operations acquired or to be acquired; (iv)
they have performed limited procedures, not constituting an audit,
including a reading of the latest available unaudited interim
consolidated financial statements of the Company and its subsidiaries,
a reading of the minute books of the Company and its subsidiaries,
inquiries of certain officials of the Company and its subsidiaries who
have responsibility for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, and on the
basis of such limited review and procedures nothing came to their
attention that caused them to believe that (A) the unaudited interim
consolidated financial statements and financial statement schedules, if
any, of the Company included or incorporated by reference in the
Registration Statement and the Prospectus do not comply as to form in
all material respects with the applicable accounting requirements of
the 1934 Act arid the related published rules and regulations
thereunder or that any material modification should be made to the
unaudited condensed interim financial statements included in or
incorporated by reference in the Registration Statement and the
Prospectus for them to be in conformity with generally accepted
accounting principles, (B) the unaudited pro forma condensed financial
statements included in the Company's aforementioned Forms 8-K, the
Company's Form 8 dated December 1, 1995 and the Company's Form 8-K
dated May 31, 1996 do not comply as to form in all material respects
with the applicable accounting requirements of Rule 11-02 of Regulation
S-X under the 1933 Act or that the pro forma adjustments have not been
properly applied
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to the historical amounts in the compilation of such statements, (C)
the information included or incorporated by reference in the
Registration Statement and the applicable Prospectus under the caption
"Selected Consolidated Financial Data" did not conform in all material
respects with the disclosure requirements of item 301 of Regulation
S-K, or (D) at a specified date not more than three days prior to the
date of such letter, there has been any change in the capital stock of
the Company or in the consolidated long term debt of the Company or any
decrease in the net assets of the Company, as compared with the amounts
shown in the most recent consolidated balance sheet included or
incorporated by reference in the Registration Statement and the
Prospectus or, during the period from the date of the most recent
consolidated statement of operations of the Company included or
incorporated by reference in the Registration Statement and the
Prospectus to a specified date not more than three days prior to the
date of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated revenues,
or decrease in consolidated net income or consolidated net income per
share of the Company, except in all instances for changes, increases or
decreases which the Registration Statement and the Prospectus disclose
have occurred or may occur; and (v) in addition to the audit referred
to in their opinions and the limited procedures referred to in clause
(iv) above, they have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information which are included or incorporated by reference
in the Registration Statement and the Prospectus and which are
specified by you, and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting,
financial and other records of the Company and its subsidiaries
identified in such letter.
(b) On the date hereof, you shall have received from Baker &
Hostetler, counsel for the Company, an opinion, dated as of the date hereof, to
the effect that:
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Ohio.
(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in
the Prospectus.
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(iii) The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which it owns real property
except where the failure to qualify and be in good standing would not
have a material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(iv) If the Company has one or more significant subsidiaries,
as defined in Rule 405 of the 1933 Act (each a "Significant
Subsidiary") , each Significant Subsidiary has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and
authority to own, lease and operate its properties and to conduct its
business, and is duly qualified to transact business and is in good
standing in each jurisdiction in which it owns real property, except
where the failure to so qualify and be in good standing would not have
a material adverse effect on the condition, financial or otherwise, or
the earnings, business affairs or business prospects of the Company and
its Subsidiaries considered as one enterprise.
(v) The Notes have been duly and validly authorized by all
necessary corporate action and, when executed, authenticated and
delivered pursuant to the provisions of this Agreement and the
Indenture against payment of the consideration therefor, the Notes will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture and enforceable in
accordance with their terms except as enforcement thereof may be
limited by bankruptcy, insolvency or other similar laws relating to or
affecting enforcement of creditors' rights generally or by general
equity principles (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except further as enforcement
thereof may be limited by (1) requirements that a claim with respect to
any Notes denominated other than in U.S. dollars (or a foreign currency
or composite currency judgment in respect of such claim) be converted
into U.S. dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law or (2) governmental authority to limit,
delay or prohibit the making of payments outside the United States.
(vi) This Agreement has been duly authorized, executed and
delivered by the Company.
25
<PAGE> 26
(vii) The Indenture has been duly and validly authorized,
executed and delivered by the Company and (assuming due authorization,
execution and delivery by the Trustee) constitutes the valid and
legally binding agreement of the Company, enforceable in accordance
with its terms except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general equity
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law) .
(viii) The Indenture has been duly qualified under the 1939
Act.
(ix) The Registration Statement is effective under the 1933
Act and, to the best of their knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
1933 Act or proceedings therefor initiated or threatened by the
Commission.
(x) The Registration Statement and the Prospectus, excluding
the documents incorporated by reference therein, as of their respective
effective or issue dates, comply as to form in all material respects
with the requirements for registration statements on Form S-3 under the
1933 Act and the 1933 Act Regulations; it being understood, however,
that no opinion need be rendered with respect to the financial
statements, schedules and other financial and statistical data included
or incorporated by reference in the Registration Statement or the
Prospectus or with respect to the Statement of Eligibility of the
Trustee. If applicable, the Rule 434 Prospectus conforms to the
requirements of Rule 434 of the 1933 Act Regulations in all material
respects.
(xi) Each document filed pursuant to the 1934 Act (other than
the financial statements, schedules and other financial and statistical
data included therein, as to which no opinion need be rendered) and
incorporated or deemed to be incorporated by reference in the
Prospectus complied when so filed as to form in all material respects
with the 1934 Act and the 1934 Act Regulations.
(xii) Nothing has come to such counsel's attention that would
lead it to believe that the Registration Statement or any amendment
thereto (excluding the financial statements and financial schedules
included or incorporated by reference therein, as to which such
26
<PAGE> 27
counsel need express no belief) , at the time it became effective or at
the time an Annual Report on Form 10-K was filed by the Company with
the Commission (whichever is later) , or at the date hereof (or, if
such opinion is being delivered in connection with the purchase of
Notes by one or more Agents as principal pursuant to Section 11(c)
hereof, at the date of any agreement by such Agent or Agents to
purchase Notes as principal) ' contained or contains an untrue
statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any amendment or
supplement thereto (excluding the financial statements and financial
schedules included or incorporated by reference therein, as to which
such counsel need express no belief), at the date hereof (or, if such
opinion is being delivered in connection with the purchase of Notes by
one or more Agents as principal pursuant to Section 11(c) hereof, at
the date of any agreement by such Agent or Agents to purchase Notes as
principal and at the Settlement Date with respect thereto, as the case
may be) , included or includes an untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which
they were made, not misleading.
(xiii) To the best of their knowledge, there are no legal or
governmental proceedings pending or threatened which are required to be
disclosed in the Prospectus, other than those disclosed therein, and,
to the best of their knowledge, all pending legal or governmental
proceedings to which the Company or its subsidiaries is a party or of
which any of the property of the Company or its subsidiaries is the
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material to the business of the
Company and its subsidiaries considered as one enterprise .
(xiv) To the best of their knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described
or referred to therein or filed as exhibits thereto, the descriptions
thereof or references thereto are correct in all material respects,
and, to the best of their knowledge, no default exists in the due
performance or
27
<PAGE> 28
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument so described, referred to or filed which
would have a material adverse effect on the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise.
(xv) No authorization, approval or consent of any court or
governmental authority or agency is required that has not been obtained
in connection with the consummation by the Company of the transactions
contemplated by this Agreement and the Indenture except such as may be
required under the 1933 Act, the 1934 Act, and state securities laws or
Blue Sky laws or real estate syndication laws; to the best of their
knowledge, the execution and delivery of this Agreement and the
consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and thereunder
will not (A) constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company or any of its subsidiaries is a party
or by which they may be bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, except where such
breach, default, creation or imposition would not have a material
adverse effect on the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, (B) nor will such action
result in violation of the provisions of the Articles of Incorporation
or Code of Regulations of the Company or subsidiaries or any applicable
law, administrative regulation or administrative or court order or
decree.
(xvi) Neither the Company nor any of its subsidiaries is
required to be registered under the 1940 Act.
(xvii) The information in the Prospectus, if applicable, under
the captions "Certain Anti-Takeover Provisions of Ohio Law," "Certain
Federal Income Tax Considerations" and "Federal Income Tax
Considerations," to the extent that it constitutes matters of law or
legal conclusions, has been reviewed by them and is correct in all
material respects.
28
<PAGE> 29
(xviii) The Company has qualified as a REIT for its taxable
years ended December 31, 1993 and December 31, 1994, and the Company is
organized and operates in a manner that will enable it to qualify to be
taxed as a REIT under the Code for the taxable year ended December 31,
1995 and thereafter provided the Company continues to meet the asset
composition, source of income, shareholder diversification,
distributions, record keeping, and other requirements of the Code which
are necessary for the Company to qualify as a REIT.
(c) On the date hereof, you shall have received from Brown &
Wood LLP, counsel for the Agents, their opinion or opinions dated as of the date
hereof with respect to the matters set forth in (i) , (v) to (x) , inclusive,
and (xii) of subsection (b) of this Section 9, and the Company shall have
furnished to such counsel such documents as they may request for the purpose of
enabling them to pass upon such matters.
In giving their opinion, Brown & Wood LLP may rely as to
matters involving the laws of the State of Ohio upon the opinion of Baker &
Hostetler. Baker & Hostetler and Brown & Wood LLP may rely (i) as to the
qualification of the Company or its subsidiaries to do business in any state or
jurisdiction, upon certificates of appropriate government officials, and (ii) as
to matters of fact, upon certificates and written statements of officers and
employees of and accountants for the Company or its subsidiaries.
(d) At the date hereof, the Agents shall have received a
certificate of the Chief Executive Officer and President and the Chief Financial
Officer of the Company, dated as of the date hereof, to the effect that (i)
since the respective dates as of which information is given in the Prospectus or
since the date of the applicable agreement by one or more Agents to purchase
Notes as principal, there has not been any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, (ii) the
representations and warranties of the Company contained in Section 3 hereof are
true and correct with the same force and effect as though expressly made at and
as of the date of such certificate and (iii) the Company has performed or
complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the date of such certificate. As used in
this Section 9(d), the term "Prospectus" means the Prospectus in the form first
provided to the applicable Agent or Agents for use in confirming sales of the
Notes.
29
<PAGE> 30
(e) On the date hereof and on each Settlement Date, counsel to
the Agents shall have been furnished with such documents and opinions
as such counsel may reasonably require for the purpose of enabling such
counsel to pass upon the issuance and sale of Notes as herein
contemplated and related proceedings, or in order to evidence the
accuracy and completeness of any of the representations and warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of Notes as herein contemplated shall be satisfactory in form and
substance to the Agents and to counsel to the Agents.
If any condition specified in this Section 9 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the applicable Agent or Agents by notice to the Company at any time and any
such termination shall be without liability of any party to any other party,
except that the covenant regarding provision of an earnings statement set forth
in Section 5(h) hereof, the provision concerning payment of expenses under
Section 6 hereof, the indemnity and contribution agreement set forth in Section
7 hereof, the provisions concerning the survival of indemnities,
representations, warranties, etc. of Section 8 hereof, the provision relating to
successors set forth in Section 14, and the provision relating to applicable law
set forth in Section 15 hereof shall remain in effect.
10. Delivery of and Payment for Notes Sold through an Agent. Delivery
of Notes sold through an Agent as agent shall be made by the Company to such
Agent for the account of any purchaser only against payment therefor in
immediately available funds. In the event that a purchaser shall fail either to
accept delivery of or to make payment for a Note on the date fixed for
settlement, such Agent shall promptly notify the Company and deliver such Note
to the Company and, if such Agent has theretofore paid the Company for such
Note, the Company will promptly return such funds to such Agent. If such failure
occurred for any reason other than default by such Agent in the performance of
its obligations hereunder, the Company will reimburse such Agent on an equitable
basis for its loss of the use of the funds for the period such funds were
credited to the Company's account.
11. Additional Covenants of the Company. The Company covenants and
agrees with the Agents that:
(a) Each acceptance by the Company of an offer for the purchase of
Notes (whether to one or more Agents as principal or through an Agent as agent),
and each delivery of Notes (whether to one or more Agents as principal or
through an Agent as agent), shall be deemed to be an affirmation that the
representations and
30
<PAGE> 31
warranties of the Company contained in this Agreement and in any certificate
theretofore delivered to the Agents in connection therewith pursuant hereto are
true and correct at the time of such acceptance or sale, as the case may be, and
an undertaking that such representations and warranties will be true and correct
at the time of delivery to such Agent or Agents or to the purchaser or its
agent, as the case may be, of the Note or Notes relating to such acceptance or
sale, as the case may be, as though made at and as of each such time (and it is
understood that such representations and warranties shall relate to the
Registration Statement and Prospectus as amended and supplemented to each such
time) .
(b) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rate or formula applicable to the
Notes or similar changes, and other than by an amendment or supplement which
relates excLusively to the issuance of securities other than the Notes) , (ii)
there is filed with the Commission any document incorporated by reference into
the Prospectus (other than any Current Report on Form 8-K relating exclusively
to the issuance of securities other than the Notes), (iii) (if required in
connection with the purchase of Notes by one or more Agents as principal) the
Company sells Notes to such Agent or Agents as principal or (iv) if the Company
issues and sells Notes in a form not previously certified to the Agents by the
Company, the Company shall furnish or cause to be furnished to the Agent(s)
forthwith a certificate dated the date of filing with the Commission of such
supplement or document, the date of effectiveness of such amendment, or the date
of such sale, as the case may be, in form satisfactory to the Agent (5) to the
effect that the statements contained in the certificate referred to in Section
9(d) hereof which were last furnished to the Agents are true and correct at the
time of such amendment, supplement, filing or sale, as the case may be, as
though made at and as of such time (except that such statements shall be deemed
to relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a certificate of the
same tenor as the certificate referred to in Section 9(d) hereof, modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such certificate.
(c) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented (other than by an amendment or supplement
providing solely for a change in the interest rate or formula applicable to the
Notes or similar changes or solely for the inclusion of additional financial
information, and other than by an amendment or supplement which relates
exclusively to the issuance of securities other than the Notes), (ii) there is
filed with the Commission any document incorporated
31
<PAGE> 32
by reference into the Prospectus (other than any Current Report on Form 8-K,
unless the Agents shall otherwise specify) , (iii) (if required in connection
with the purchase of Notes by one or more Agents as principal) the Company sells
Notes to such Agent or Agents as principal or (iv) if the Company issues and
sells Notes in a form not previously certified to the Agents by the Company, the
Company shall furnish or cause to be furnished forthwith to the Agent(s) and to
counsel to the Agents the written opinions of Baker & Hostetler, counsel to the
Company, dated the date of filing with the Commission of such supplement or
document, the date of effectiveness of such amendment, or the date of such sale,
as the case may be, in form and substance satisfactory to the Agent(s) , of the
same tenor as the opinion referred to in Section 9(b) hereof, but modified, as
necessary, to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such opinion or, in lieu of such
opinion, counsel last furnishing such opinion to the Agents shall furnish the
Agent(s) with a letter substantially to the effect that the Agent(s) may rely on
such last opinion to the same extent as though it was dated the date of such
letter authorizing reliance (except that statements in such last opinion shall
be deemed to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such letter authorizing reliance) ;
provided, however, that counsel need not render the opinion required under
Section 9(b) (xviii) upon the filing of any Quarterly Report on Form l0-Q which
does not include information relating to such tax matters, unless the Agents
shall otherwise specify.
(d) Each time that (i) the Registration Statement or the Prospectus
shall be amended or supplemented to include additional financial information
(other than by an amendment or supplement which relates exclusively to the
issuance of securities other than the Notes), (ii) there is filed with the
Commission any document incorporated by reference into the Prospectus which
contains additional financial information, or (iii) (if required in connection
with the purchase of Notes by one or more Agents as principal) the Company sells
Notes to such Agent or Agents as principal, the Company shall cause Price
Waterhouse LLP to furnish to the Agent(s) a letter, dated the date of
effectiveness of such amendment, supplement or document with the Commission, or
the date of such sale, as the case may be, in form satisfactory to the Agent(s),
of the same tenor as the portions of the letter referred to in clauses (i) and
(ii) of Section 9(a) hereof but modified to relate to the Registration Statement
and Prospectus as amended and supplemented to the date of such letter, and of
the same general tenor as the portions of the letter referred to in clauses (iv)
and (v) of said Section 9(a) with such changes as may be necessary to reflect
changes in the financial statements and other information derived from the
accounting records of the Company.
32
<PAGE> 33
12. Termination. (a) This Agreement (excluding any agreement hereunder
by one or more Agents to purchase Notes as principal) may be terminated for any
reason, at any time by either the Company or an Agent, as to itself, upon the
giving of 10 days' written notice of such termination to the other party hereto.
(b) The applicable Agent or Agents may terminate any agreement
hereunder by such Agent or Agents to purchase Notes as principal, immediately
upon notice to the Company, at any time prior to the Settlement Date relating
thereto (i) if there has been, since the date of such agreement or since the
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there shall have occurred any material
adverse change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis
the effect of which is such as to make it, in the judgment of such Agent or
Agents, impracticable to market the Notes or enforce contracts for the sale of
the Notes, or (iii) if trading in any securities of the Company has been
suspended by the Commission or a national securities exchange, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
shall have been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by either
of said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium shall have been declared by either Federal
or New York authorities or if a banking moratorium shall have been declared by
the relevant authorities in the country or countries of origin of any foreign
currency or currencies in which the Notes are denominated or payable, or (iv) if
the rating assigned by any nationally recognized statistical rating organization
to any debt securities of the Company as of the date of such agreement shall
have been lowered since that date or if any such rating organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any debt securities of the Company, or (v)
if there shall have come to the attention of such Agent or Agents any facts that
would cause them to believe that the Prospectus, at the time it was required to
be delivered to a purchaser of Notes, included an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the time of such
delivery, not misleading. As used in this Section 12(b), the term "Prospectus"
means the Prospectus in the form first provided to the applicable Agent or
Agents for use in confirming sales of the related Notes.
33
<PAGE> 34
(c) In the event of any such termination, neither party will have any
liability to the other party hereto, except that (i) the Agents shall be
entitled to any commission earned in accordance with the third paragraph of
Section 4(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it as principal with the intention of reselling them or
(b) an offer to purchase any of the Notes has been accepted by the Company but
the time of delivery to the purchaser or his agent of the Note or Notes relating
thereto has not occurred, the covenants set forth in Sections 5 and 11 hereof
shall remain in effect until such Notes are so resold or delivered, as the case
may be, and (iii) the covenant set forth in Section 5(h) hereof, the provisions
of Section 6 hereof, the indemnity and contribution agreements set forth in
Section 7 hereof, and the provisions of Sections 8, 14 and 15 hereof shall
remain in effect.
13. Notices. All communications hereunder shall be in writing and shall
be mailed, delivered or telecopied and confirmed, and any such notice shall be
effective when received at the address specified below:
If to the Company:
Developers Diversified Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Attention: Scott A. Wolstein
President and Chief Executive Officer
Telecopy No.: 216-247-0434
If to the Agents:
Dean Witter Reynolds Inc.
Two World Trade Center
65th Floor
New York, New York 10048
Attention: W. Blake Baird
Managing Director
Telecopy No.: 212-392-8719
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Manager - Continuously Offered Products
Telecopy No.: 212-761-0781
CS First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attention: Short and Medium Term Finance Department
34
<PAGE> 35
Telecopy No.: 212-318-1498
First Chicago Capital Markets, Inc.
One First National Plaza, Suite 0030
Chicago, Illinois 60670
Attention: Chief Credit Officer
Telecopy No.: 312-732-4172
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Credit Department - Medium-Term Notes
Telecopy No.: 212 363-7609
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center
12th Floor
New York, New York 10285-1200
Attention:
Telecopy No.: 212-528-1718
Smith Barney Inc.
390 Greenwich Street
4th Floor
New York, New York 10013
Attention: MTN Product Management/Origination
Mark R. Meyer
Telecopy No.: 212-723-8854
14. Successors. This Agreement shall inure to the benefit of and be
binding upon you and the Company and their respective successors and legal
representatives. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person other than the persons mentioned in the
preceding sentence any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person; except that the representations, warranties, covenants, agreements and
indemnities of the Company, contained in this Agreement shall also be for the
benefit of the person or persons, if any, who control any Agent within the
meaning of Section 15 of the 1933 Act, and the indemnities given by the several
Agents shall also be for the benefit of each director of the Company, each of
the Company's officers who has signed the Registration Statement and the person
or persons, if any, who control the Company within the meaning of Section 15 of
the 1933 Act.
35
<PAGE> 36
15. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed in said state. Specified tines of day refer to New York
City time.
16. Counterparts. This Agreement may be executed in one or more
counterparts, and if executed in more than one counterpart the executed
counterparts shall constitute a single instrument.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
DEVELOPERS DIVERSIFIED REALTY
CORPORATION
By: /s/ Scott A. Wolstein
--------------------------
Name: Scott A. Wolstein
Title: President and Chief
Executive Officer
36
<PAGE> 37
Accepted and delivered,
as of the date first above written:
DEAN WITTER REYNOLDS INC.
By: /s/ Paul J. Donahue Sr.
-------------------------
Name: Paul J. Donahue Sr.
Title: Sr. Vice President
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Jennifer A. Harris
-------------------------
Name: Jennifer A. Harris
Title: Vice President
CS FIRST BOSTON CORPORATION
By: /s/ Helena Willner
-------------------------
Name: Helena Willner
Title: Vice President
FIRST CHICAGO CAPITAL MARKETS, INC.
By: /s/ Evonne W. Taylor
-------------------------
Name: Evonne W. Taylor
Title: Vice President
GOLDMAN, SACHS & CO.
By: /s/ Goldman, Sachs & Co.
-------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By: /s/ Herbert H. McDade
-------------------------
Name: Herbert H. McDade
Title: Managing Director
37
<PAGE> 38
SMITH BARNEY INC.
By: /s/ Robert R. Holloman
-------------------------
Name: Robert R. Holloman
Title: Managing Director
38
<PAGE> 39
EXHIBIT A
The following terms, if applicable; shall be agreed to by one or more
Agents and the Company in connection with each sale of Notes:
Principal Amount: $_________
(or principal amount of foreign currency or composite
currency)
Senior or Subordinated Rank:
Interest Rate:
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate, if any:
Spread and/or Spread Multiplier, if any:
Interest Reset Date(s) :
Interest Payment Date(s) :
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date:
Fixed Interest Rate:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
If Repayable:
Optional Repayment Date(s):
Stated Maturity Date:
Purchase Price: %, plus accrued interest, if any,
from ______________________________________________
Settlement Date and Time:
Specified Currency:
Authorized Denominations:
Additional/Other Terms:
Also, in connection with the purchase of Notes by one or more Agents as
principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 11(b) of the
Distribution Agreement.
A-1
<PAGE> 40
Legal Opinions pursuant to Section 11(c) of the Distribution Agreement.
Comfort Letter pursuant to Section 11(d) of the Distribution Agreement.
Stand-off Agreement pursuant to Section 5(k) of the Distribution Agreement.
A-2
<PAGE> 41
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Senior Note equal to the principal amount of such Senior Note multiplied
by the appropriate percentage set forth below (the commission payable with
respect to sales of Senior Notes will also apply to sales of Subordinated Notes
unless otherwise agreed by the Company and the applicable Agent) :
PERCENT OF
PRINCIPAL
MATURITY RANGES AMOUNT
- --------------- ------
From 9 months to less than 1 year .................................... .125%
From 1 year to less than 18 months ................................... .150
From 18 months to less than 2 years .................................. .200
From 2 years to less than 3 years .................................... .250
From 3 years to less than 4 years .................................... .350
From 4 years to less than 5 years .................................... .450
From 5 years to less than 6 years .................................... .500
From 6 years to less than 7 years .................................... .550
From 7 years to less than 10 years ................................... .600
From 10 years to less than 15 years .................................. .625
From 15 years to less than 20 years .................................. .700
From 20 years to 30 years ............................................ .750
Greater than 30 years ................................................ *
- ------------------
* As agreed to by the Company and the applicable Agent at the time of sale.
<PAGE> 1
EXHIBIT 2.1
-----------------------------------
AGREEMENT OF PURCHASE AND SALE
MAPLE GROVE CROSSING SHOPPING CENTER
DEVELOPERS DIVERSIFIED REALTY CORPORATION
AND
OPUS CORPORATION
-----------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
1. RECITALS................................................................1
1.01 Definitions........................................................1
1.02 Land/Improvements..................................................1
1.03 Real Property......................................................1
2. AGREEMENT TO PURCHASE AND SELL..........................................1
2.01 Purchase/Sale......................................................1
3. PURCHASE PRICE AND MANNER OF PAYMENT....................................2
3.01 Purchase Price.....................................................2
3.02 Purchase Price Portions............................................2
4. ESCROW..................................................................3
4.01 Escrow Agent.......................................................3
4.02 Filings............................................................3
5. SITE ANALYSIS...........................................................3
5.01 Site Analysis Documents............................................3
5.02 Access.............................................................4
5.03 Site Analysis Period...............................................5
5.04 Cure of Unacceptable Conditions....................................5
6. SURVEY AND TITLE INSURANCE..............................................7
6.01 Survey.............................................................7
6.02 Title Commitment...................................................7
6.03 Purchaser's Objections; Seller's Cure..............................7
6.04 Title Policy.......................................................8
7. SELLER'S CLOSING DOCUMENTS AND ESCROW...................................8
7.01 Deed...............................................................9
7.02 Assignment of Leases...............................................9
7.03 Leases and Tenant Documents........................................9
7.04 Bill of Sale.......................................................9
7.05 Assignment of Contracts............................................9
7.06 Violations/Work Orders Affidavit...................................9
7.07 Keys..............................................................10
7.08 Plans and Specifications..........................................10
7.09 Title Insurance Affidavit.........................................10
7.10 FIRPTA Certificate/Withholding....................................10
7.11 Form 1099.........................................................10
7.12 Books and Records.................................................10
7.13 Letters to Tenants................................................10
7.14 Recording Requirements............................................10
7.15 Estoppel Certificates.............................................10
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7.16 Termination of Management and Seller Affiliated Contracts.........11
7.17 Permits/Guaranties................................................11
7.18 Closing Statements................................................11
7.19 Escrow Instructions...............................................11
7.20 Date Down Certificate.............................................11
7.21 Agreement Estoppel Certificate....................................12
7.22 Vacant Space Acknowledgment.......................................12
7.23 Other Documents...................................................12
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS..........................12
8.01 Assignment of Leases..............................................12
8.02 Assignment of Contracts...........................................12
8.03 Closing Statements................................................12
8.04 Escrow Instructions...............................................12
8.05 Recording Requirements............................................12
8.06 Date Down Certificate.............................................13
8.07 Vacant Space Acknowledgment.......................................13
8.08 Other Documents...................................................13
9. CONDUCT OF BUSINESS PRIOR TO CLOSING...................................13
9.01 Affirmative and Negative Covenants................................13
9.02 Payments..........................................................14
9.03 Lien Removal......................................................14
10. REPRESENTATIONS AND WARRANTIES.........................................15
10.01 Seller's Representations and Warranties..........................15
10.02 Purchaser's Representations and Warranties.......................19
10.03 Intentionally Deleted............................................20
10.04 Indemnification..................................................20
11. SHARED CLOSING COSTS AND OTHER EXPENSES................................21
11.01 Expenses.........................................................21
11.02 Shared Closing Costs.............................................21
12. CONDITIONS.............................................................22
12.01 Purchaser's Conditions...........................................22
12.02 Seller's Conditions..............................................22
12.03 Rights Upon Failure of a Condition...............................23
13. EARN-OUT...............................................................23
13.01 Defined Terms....................................................23
13.02 Closing Date Purchase Price Computation..........................26
13.03 Lease Assignment Reservation.....................................26
13.04 New Leases.......................................................26
13.05 Earn-Out Period..................................................28
13.06 Casualty During Earn-Out Period..................................28
13.07 Earn-Out Payments................................................29
13.08 Footage Payment..................................................29
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13.09 Intentionally Deleted............................................30
13.10 Seller's New Lease Obligations...................................30
13.11 Punchlist........................................................30
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS.................................31
14.01 Rents............................................................32
14.02 Arrears..........................................................32
14.03 Unknown Rents....................................................32
14.04 Utilities........................................................33
14.05 Contracts........................................................33
14.06 Taxes............................................................33
14.07 Assessment Installments..........................................34
14.08 Permits..........................................................34
14.09 Security Deposits/Tenant Inducements.............................34
14.10 Customary Items..................................................34
15. CLOSING................................................................34
15.01 Closing and Closing Date.........................................35
16. POSSESSION.............................................................35
16.01 Possession and Post Closing Work.................................35
17. RISK OF LOSS...........................................................35
17.01 Risk.............................................................35
17.02 Damage and Destruction...........................................36
17.03 Condemnation and Eminent Domain..................................36
18. DEFAULTS AND REMEDIES..................................................36
18.01 Seller's Defaults................................................36
18.02 Purchaser's Defaults.............................................37
18.03 Seller's Remedies................................................37
18.04 Pre-Closing Purchaser's Remedies.................................37
18.05 Post Closing Purchaser's Remedies................................38
19. CROSS DEFAULT OBLIGATION...............................................38
20. ASSIGNMENT.............................................................38
21. NOTICES................................................................38
22. ATTORNEYS' FEES AND DISBURSEMENTS......................................40
23. NO CONSEQUENTIAL DAMAGES...............................................40
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24. MISCELLANEOUS..........................................................40
24.01 Successors.......................................................40
24.02 Modifications/Waivers............................................40
24.03 Entire Agreement.................................................41
24.04 Counterparts.....................................................41
24.05 Captions.........................................................41
24.06 Gender/Singular/Plural...........................................41
24.07 Exhibits Incorporated............................................41
24.08 Governing Law....................................................41
24.09 Severability.....................................................41
24.10 Date for Performance.............................................41
24.11 Further Action...................................................41
24.12 Intentionally Deleted............................................42
24.13 Confidentiality..................................................42
24.14 Time of the Essence..............................................42
24.15 Construction.....................................................42
24.16 Interest.........................................................42
24.17 Warranty Work....................................................42
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<PAGE> 6
AGREEMENT OF PURCHASE AND SALE
MAPLE GROVE CROSSING SHOPPING CENTER
------------------------------------
This Agreement of Purchase and Sale (the "Agreement") is made
as of the 2nd day of July, 1996, by and between OPUS CORPORATION, a
Minnesota corporation ("Seller"), and DEVELOPERS DIVERSIFIED REALTY CORPORATION,
an Ohio corporation ("Purchaser"). Seller and Purchaser (singularly, a "Party,"
collectively, the "Parties") agree as follows:
1. RECITALS.
1.01 DEFINITIONS. The location of all defined terms used in this
Agreement are set forth in the Glossary of Terms that is attached hereto and
made a part hereof.
1.02 LAND/IMPROVEMENTS. Seller is the sole owner of fee simple title
to (i) certain land (the "Land") situated in the City of Minneapolis, State of
Minnesota, more particularly described on Schedule 1.02 attached hereto and made
a part hereof, as shown on the site plan attached hereto as Schedule 1.02(a)
(the "Site Plan"); and (ii) all the buildings, structures and improvements
(collectively, the "Improvements") situated on the Land; and
1.03 REAL PROPERTY. Seller desires to sell, and Purchaser desires to
purchase, the Land and Improvements owned by Seller, and all of Seller's right,
title and interest in and to all rights, privileges, options, leases, licenses,
concessions, hereditaments, appurtenances, easements and rights of way in any
manner belonging to or pertaining to the Land and the Improvements, including
without limitation, rights in and to any streets, alleys or other ways adjacent
to the Land, open or proposed, and the fixtures in or upon the Land and the
Improvements owned by Seller. The Land, the Improvements and all of the items
mentioned in this Paragraph 1.03 are hereinafter collectively referred to as the
"Real Property" and are commonly known as "Maple Grove Crossing Shopping
Center."
2. AGREEMENT TO PURCHASE AND SELL.
2.01 PURCHASE/SALE. Upon and subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell and Purchaser agrees to purchase
all of the following that is hereinafter collectively referred to as the
"Project":
(a) The Real Property;
(b) All tangible personal property (the "Personal
Property") owned by Seller that is now or hereafter located upon the Real
Property and used in connection with the ownership, operation, management, or
maintenance of the Real Property and that is set forth on Schedule 2.01(b)
attached hereto;
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(c) All intangible personal property (the "Intangible
Property") owned by Seller that is now or is hereafter located upon the Real
Property or is used in connection with the Real Property, including without
limitation, (i) all trade names, logos and telephone numbers, excluding those
tradenames or logos depicting or containing the name or trademark of Opus
Corporation or its affiliates and excluding telephone numbers not exclusively
used in connection with the Project; (ii) all Guaranties (as hereinafter
defined) given in connection with the construction or repair of the Improvements
or the purchase of any Personal Property to the extent any Guaranties remain
outstanding as of the Closing Date (as hereinafter defined) that are set forth
on Schedule 5.01(g) attached hereto; and (iii) to the extent transferable by
Seller, all of Seller's right, title and interest in certificates of occupancy
(or the local equivalent), permits, licenses, approvals and authorizations
(collectively, the "Permits") issued by any federal, state, county and municipal
governmental or quasi-governmental authority relating to the Real Property.
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.01 PURCHASE PRICE. The total sum (the "Purchase Price") to be paid
by Purchaser to Seller for the sale of the Project is the sum of the Closing
Payment and those Footage Payments and Earn-Out Payments, if any (as those terms
are hereinafter defined), computed, in part, in respect to the base rents set
forth in the Rent Roll attached hereto as Schedule 3.01, all as provided in
Section 13 hereof. The actual amount of the Purchase Price is subject to the
computations and elections provided in Section 13 hereof and subject to the
adjustments, if any, provided in Section 14 hereof. Portions of the Purchase
Price will be paid at various times as hereinafter provided.
3.02 PURCHASE PRICE PORTIONS. The Purchase Price shall be paid as
follows:
(a) Initial Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Initial Deposit"), which Purchaser deposited with Escrow
Agent (as hereinafter defined) simultaneous with the execution of this Agreement
by Purchaser and Seller.
(b) Second Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Second Deposit") which Purchaser shall deposit with Escrow
Agent on the expiration date of the Site Analysis Period (as hereinafter
defined), if Purchaser elects to proceed with this transaction, as more fully
provided in Paragraph 5.03 below (the Initial Deposit and the Second Deposit are
hereinafter collectively referred to as the "Deposit"). The term "Deposit" shall
be deemed to include all interest accruing on the Deposit during the term of
this Agreement.
(c) Closing Date Price. So much of the Purchase Price computed
in accordance with the provisions of Paragraph 13.02 hereof that is payable as
of the Closing Date, after giving credit for the Deposit and after making the
adjustments, if any, as provided in Section 14 hereof, shall be paid by wired
funds to the Escrow Agent for disbursement to Seller on the Closing Date by not
later than 2:00 P.M. Central Daylight Savings Time.
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<PAGE> 8
(d) Earn-Out Period Payments. As provided in Paragraph 13.07,
those Earn-Out Payments that are payable during, or in some instances, after the
Earn-Out Period (as hereinafter defined) shall be paid by wired funds to the
Escrow Agent for disbursement to Seller when required by the provisions of
Paragraph 13.07.
(e) Footage Payment. As provided in Paragraph 13.08, if a
Footage Payment (as hereinafter defined) is payable, it shall be paid by wired
funds to the Escrow Agent for disbursement to Seller when required pursuant to
Paragraph 13.08.
4. ESCROW.
4.01 ESCROW AGENT. The Parties hereby designate First American Title
Insurance Company as the escrow agent ("Escrow Agent" or "Title Company"). By
execution of this Agreement, Escrow Agent agrees to be bound by the terms and
conditions of this Agreement which relate to the Escrow Agent and its rights and
obligations hereunder.
4.02 FILINGS. The Parties hereby designate Escrow Agent to serve as
"Real Estate Broker," as defined in Section 6045 of the Internal Revenue Code,
as amended, for the purpose of making such reports and filing such returns as
shall be required thereunder from time to time.
5. SITE ANALYSIS.
5.01 SITE ANALYSIS DOCUMENTS. To the extent not heretofore delivered,
promptly after the execution of this Agreement, Seller agrees (i) to make
available for inspection at reasonable times by Purchaser and its agents any and
all documents, instruments, surveys, reports, plans, permits, approvals,
studies, reviews, analyses, contracts, agreements and other materials relating
to the acquisition, development, construction, ownership and operation of the
Project that are in Seller's possession or under its control, and (ii) to
deliver to Purchaser true and correct copies of the following documents (in
respect to clause (ii) collectively hereafter referred to as "Site Analysis
Documents"):
(a) "As-built" survey of the Project showing the location of all
Improvements thereon and any easements encumbering the Project.
(b) Soil, topographical, and other reports relating to the
Project, including the environmental reports set forth on Schedule 5.01(b)
("Environmental Reports") attached hereto.
(c) Operating statements and records sufficient to accurately
show all revenues, income, costs and expenses of operating and maintaining the
Project for the period on and after the opening of the Project for business.
(d) All written contracts for repair, maintenance, garbage
removal, concessions, vending, service contracts, and other services to be
performed with respect to the Project.
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<PAGE> 9
(e) All Leases (as hereinafter defined) and all written
licenses, concessions and tenancies with Tenants (as hereinafter defined)
occupying or having the right to occupy any portion of the Project, and Seller's
written statement of any oral leases, licenses, concessions and tenancies with
tenants, licensees, concessionaires or others occupying or having the right to
occupy or use any portion of the Project, if any.
(f) All architectural drawings, engineering studies, plans and
specifications relating to the original and current construction of the Project
(hereinafter collectively referred to as "Plans").
(g) All warranties and guaranties that remain outstanding as of
the Closing Date that have been given by Seller or any third party contractors,
subcontractors, vendors and suppliers relating to their performance, quality of
workmanship and quality of materials supplied in connection with the
construction, manufacture, development, installation and operation of the
Improvements, Personal Property and any and all fixtures, equipment and items of
personal property comprising all or any part of the Improvements located in or
used in connection with the Project (collectively hereinafter referred to as
"Guaranties"), all of which are set forth on Schedule 5.01(g) attached hereto.
5.02 ACCESS. Seller acknowledges that to enable Purchaser to proceed
with this transaction, Purchaser already has and, during the Site Analysis
Period (as hereinafter defined), may undertake or cause to have undertaken tests
and studies, including, but not limited to, marketing, engineering,
environmental, feasibility and soil that Purchaser, in its reasonable
discretion, deems necessary to determine the feasibility of its acquisition of
the Project (hereinafter collectively referred to as "Tests and Studies"). The
Tests and Studies conducted by or on behalf of Purchaser and the restoration of
the Project in respect thereto as hereinafter provided shall be done in such a
fashion so as to not disrupt the ordinary course of business of Seller or any of
the Tenants, New Tenants (as hereinafter defined) or Seller's contractors or
subcontractors.
Purchaser and its agents, contractors or employees shall have
the right to enter upon the Project for the purpose of performing its Tests and
Studies, provided said activities (i) shall not (y) in any way damage the
Project in such a fashion or to a degree that prevents its restoration by
Purchaser as hereafter provided substantially to the condition of the Project
that existed immediately prior thereto, or (z) void or make voidable any
Guaranties of portions thereof (but in any event subject to Seller's prior
consent that shall not be unreasonably withheld or delayed), and (ii) Seller or
its designated agents have the right to participate in (provided Seller and its
agents do not interfere with) such Tests and Studies. Purchaser shall give
Seller twenty-four (24) hour advance notice before Purchaser and its agents,
contractors or employees enter upon the Project. In the event this Agreement
fails to close for any reason, except for Seller's willful refusal to convey
(absent a material default hereunder by Purchaser) title to the Land as required
hereunder, or Seller's acknowledged or subsequently determined material default
hereunder ("Restoration Forgiveness"), Purchaser shall restore the Project to
substantially the same condition that existed immediately prior to such
surveying, inspecting and testing that were undertaken by or on behalf of
Purchaser prior to the date of this Agreement or during the
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<PAGE> 10
Site Analysis Period. Except in the instance of a Restoration Forgiveness,
Purchaser shall keep the Project free of all liens in connection with the Tests
and Studies and shall cause all such liens to be removed immediately upon its
being notified of same. Except in the instance of a Restoration Forgiveness,
Purchaser agrees to indemnify, defend and hold Seller harmless against any
liabilities, claims and damages, including, without limitation, any property
damage, personal injury or claim of lien against the Project resulting from the
activities permitted by this Paragraph 5.02 (including, without limitation,
reasonable attorneys' fees and expenses paid or incurred by Seller during
litigation, if any), which indemnity shall survive the Closing Date or the
expiration, cancellation or termination of this Agreement.
5.03 SITE ANALYSIS PERIOD. Purchaser shall have the Site Analysis
Period in which to conduct the Tests and Studies and to ascertain whether the
Project is acceptable to Purchaser. "Site Analysis Period" shall mean the period
expiring on June 17, 1996. If the Project is determined to be unacceptable to
Purchaser, for any reason whatsoever, in Purchaser's sole discretion, Purchaser
shall have the right to terminate this Agreement by giving written notice of
termination on or prior to the date of expiration of the Site Analysis Period,
in which event the Deposit shall be returned to Purchaser. In accordance with
the provisions of 11.02(b) hereof, Seller and Purchaser shall each pay 50% of
the Shared Closing Costs incurred as of the termination date, and neither Party
shall have any further rights or obligations hereunder, except those
specifically provided herein that survive the termination of this Agreement. A
failure to so notify Seller of Purchaser's election to terminate or proceed with
this Agreement as aforesaid prior to the expiration of the Site Analysis Period
shall be deemed as notice to Seller that Purchaser has elected to terminate this
Agreement as aforesaid.
5.04 CURE OF UNACCEPTABLE CONDITIONS. Any of the Tests and Studies of Purchaser
and/or its agents or representatives conducted during the Site Analysis Period
that discloses that there are (i) any defects or deficiencies of the Project in
respect to its compliance with any and all codes, ordinances, statutes, Permits,
approvals or licenses issued in respect to the Project or promulgated by any
federal, state, county or municipal governmental or quasi-governmental authority
which are required by such governmental or quasi-governmental authority to
correct; (ii) defects in the materials or workmanship of the Project from that
which is required to be in substantial compliance with the Plans, except that
portion thereof, if any, that relates to materials for, or workmanship of
improvements constructed or to be constructed on behalf of Tenants or New
Tenants that form a part of Post Closing Work (as hereinafter defined); or (iii)
a violation of Environmental Laws (as hereinafter defined) not disclosed on the
Environmental Reports that, in respect to clauses (i), (ii) and (iii), can be
corrected and cured for an estimated aggregate cost (in respect to the Project)
not to exceed One Hundred Thousand Dollars ($100,000.00), shall be collectively
hereinafter referred to as "Unacceptable Conditions." It is understood that
regardless of the cost, the Warranty Work obligations set forth in Paragraph
24.17 hereof, shall not be included as an Unacceptable Condition in respect to
the $100,000.00 limitation, and the cost of performing Warranty Work shall be in
addition to any cost for curing or correcting Unacceptable Conditions. In the
event Purchaser discovers what it deems to be Unacceptable Conditions as a
result of the Tests and Studies, Purchaser shall notify ("Condition Notice")
Seller, in writing, of the same promptly following Purchaser's discovery
thereof, but in no instance later than three (3) business days following the
expiration of the Site Analysis Period. Such Condition Notice shall
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<PAGE> 11
include a copy of those portions of the Tests and Studies disclosing such
Unacceptable Condition(s). Within ten (10) days following Seller's receipt of
the Condition Notice, if any, Seller shall advise ("Condition Response")
Purchaser, in writing, of Seller's good faith determination and estimate of (1)
those matters contained in the Condition Notice that do not qualify as
Unacceptable Conditions; (2) the time within which the remaining matters
contained in the Condition Notice will be cured or corrected; and (3) the
aggregate cost to Seller of curing and correcting such remaining matters. In the
event the Condition Response is unacceptable to Purchaser, Seller and Purchaser
shall promptly meet and confer, in good faith, to attempt to resolve the
unacceptable aspects to Purchaser of the differences between the Condition
Notice and the Condition Response or the time within which or the aggregate cost
for which Seller estimated in the Condition Response for curing or correcting as
aforesaid. In the event Seller and Purchaser are unable to resolve such
differences, Purchaser may elect to (a) terminate this Agreement, (b) proceed to
Closing in respect to Seller's obligations to cure or correct those matters set
forth in the Condition Response, modified, if at all, as a result of the
aforesaid conference between Purchaser and Seller (provided the estimated
aggregate cost of performing the same does not exceed $100,000.00 or such
greater amount Seller, in its sole discretion, has agreed to expend), or (c)
select those specific line items from the Condition Response that Purchaser
requires to have corrected (provided the estimated aggregate cost of performing
the same does not exceed $100,000.00). Purchaser, within ten (10) business days
after such conference, shall advise Seller, in writing, of Purchaser's election.
If the Condition Notice, Condition Response or the time periods specified above
for elections of Purchaser extend beyond the Closing Date, the Closing Date
shall be extended to the date five (5) business days subsequent to the date
Purchaser elects, if at all, to proceed with the Closing. In the event Purchaser
elects to terminate this Agreement, the Deposit shall be returned to Purchaser,
Purchaser and Seller shall each pay fifty percent (50%) of the Shared Closing
Costs incurred as of the termination date, and neither Party shall have any
further rights or obligations hereunder, except those specifically provided
herein that survive the termination of this Agreement. In the event Purchaser
elects to proceed to Closing pursuant to clause (b) above, the matters contained
in the Condition Response, modified, if at all, by Purchaser's and Seller's
conference and provided the estimated aggregate cost of curing or correcting the
same is One Hundred Thousand and no/100 ($100,000.00) or less (or such greater
amount Seller accepts as aforesaid) shall be deemed to be the Unacceptable
Conditions to which Seller is bound. In the event Purchaser elects to proceed to
Closing pursuant to clause (c) above, the specific line items selected by
Purchaser that are set forth in the Condition Response (provided the estimated
aggregate cost of curing or correcting the same is $100,000.00 or less) shall be
deemed to be the Unacceptable Conditions to which Seller is bound. Thereafter,
Seller shall undertake to cure or correct such Unacceptable Conditions, at its
sole cost and expense (regardless of the actual cost ultimately incurred by
Seller in respect thereto) within the time (subject to Force Majeure, as
hereinafter defined) set forth in the Condition Response. The obligation of
Seller to cure or correct such Unacceptable Conditions shall survive the
Closing. In the event (y) Seller fails to commence the cure of an Unacceptable
Condition(s) on or prior to the time specified in the Condition Response for the
cure thereof, or (z) Seller commences the cure of an Unacceptable Condition(s),
but fails to complete such cure prior to the time specified in the Condition
Response (subject to Force Majeure), Purchaser may off-set so much of any
Earn-Out Payment or Footage Payment subsequently payable by Purchaser hereunder
by the amount of the reasonable costs and
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<PAGE> 12
expenses incurred by Purchaser for undertaking and completing the uncured
Unacceptable Condition(s). The curing or correcting of any Unacceptable
Condition shall be done in accordance with the Plans. However, if such curing or
correcting requires a variance from the Plans, Seller shall not undertake such
variance without obtaining Purchaser's prior written consent, which consent
shall not be unreasonably withheld or delayed.
6. SURVEY AND TITLE INSURANCE.
6.01 SURVEY. Seller shall cause an "as-built" Survey (the "Survey")
of the Real Property to be updated during the Site Analysis Period. The Survey
shall be certified to Seller, Purchaser, and the Title Company. The Survey shall
satisfy all of the requirements set forth on Schedule 6.01 that is attached to
and made a part of the Exhibit Agreement (as hereinafter defined).
6.02 TITLE COMMITMENT. During the Site Analysis Period, to the extent
not theretofore delivered, Seller shall (i) cause the Title Company to issue and
deliver to Purchaser a title insurance commitment for an owner's extended
coverage policy of title insurance, in the amount of that portion of the
Purchase Price then estimated to be payable to Seller on the Closing Date,
committing the Title Company to insure Purchaser as the owner of fee simple
title to the Real Property and all easements appurtenant thereto (the
"Commitment"), and (ii) copies of each document described on Schedule B of the
Commitment.
6.03 PURCHASER'S OBJECTIONS; SELLER'S CURE. Other than those title
exceptions ("Permitted Exceptions") set forth in Schedule 6.03 attached hereto
and made a part hereof and exceptions caused by or claimed under or through
Seller that will be removed at Closing (as hereinafter defined) if (i) the
Commitment reveals any other matters or exceptions ("Title Defects"), or (ii)
the Survey reveals any defects which affect the marketability of the Real
Property or are deemed objectionable by Purchaser ("Survey Defects"), Purchaser
shall notify Seller, in writing, of the same within fifteen (15) days following
the date of delivery to Purchaser of the last of the Commitment and Survey
("Defects Notice"). In the event Purchaser fails to deliver a Defects Notice as
aforesaid, Seller shall advise Purchaser of such failure, in writing. If
Purchaser fails, within three (3) business days thereafter to deliver a Defects
Notice, it shall be deemed a notice to Seller that Purchaser has elected to
waive such defects, if any, and to proceed with the transaction contemplated
hereby, subject to the fulfillment of Seller's obligations hereunder. Except for
Title Defects or Survey Defects that are caused by or claimed under or through
Seller that can be removed or discharged by the payment of a sum of money
(including, without limitation, a Mortgage(s), as hereinafter defined), Seller
shall have no affirmative obligation to cure or correct any Title Defects or
Survey Defects, except as provided in Seller's Response (as hereinafter
defined). Within fifteen (15) days following Seller's receipt of a Defects
Notice, Seller, at its option, shall notify Purchaser of those Title Defects and
Survey Defects that Seller shall undertake to cure or correct ("Seller's
Response"). In the event Seller (a) elects in Seller's Response not to satisfy a
specified Title Defect or Survey Defect or (b) is unable, within sixty (60) days
after Purchaser's receipt of Seller's Response, to satisfy the Title Defect or
Survey Defect which Seller had elected in Seller's Response to so satisfy,
Purchaser may, at its option, (1) accept title to the Real Property subject to
the Title Defects and/or Survey
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<PAGE> 13
Defects raised by Purchaser in which event such Title Defects and Survey Defects
shall be deemed to be Permitted Exceptions, or (2) cancel this Agreement and
receive a full refund of the Deposit, whereupon Seller shall pay all Shared
Closing Costs and this Agreement shall be of no further force and effect, except
for those matters which are specifically set forth in this Agreement as
surviving the expiration or termination of this Agreement. If the Defects
Notice, Seller's Response or the time periods specified above for elections of
Purchaser extend beyond the time specified for the Closing Date, the Closing
Date shall be extended to the date five (5) business days subsequent to the date
Purchaser elects, if at all, to proceed with the Closing.
6.04 TITLE POLICY. It shall be a condition precedent to Purchaser's
obligation to consummate the transaction contemplated by this Agreement that the
Title Company can and will issue an ALTA Owner's Policy of Title Insurance (Form
B, Amended 1987, if available) (the "Title Policy") in the full amount of that
portion of the Purchase Price payable by Purchaser on the Closing Date as
provided in Paragraph 13.02 hereof, insuring Purchaser as the owner in fee
simple of the Project, and all appurtenant easements thereto, free and clear of
all liens and encumbrances, except for the Permitted Exceptions, and without
exception for rights or claims of parties in possession not shown by the public
records, encroachments, overlaps, boundary line disputes, or any other matter
disclosed by the Survey which Purchaser has not waived or approved or is deemed
to have approved pursuant to Paragraph 6.03 hereof, provided, however, that the
Title Policy may show the rights of the Tenants and New Tenants (as hereinafter
defined) under New Leases (as hereinafter defined) that are fully executed prior
to the Closing as parties in possession (or right to possession) as tenants
only. Purchaser shall attempt to cause the Title Company, as part of the Title
Policy, to issue the following endorsements in the form of those set forth in
Schedule 6.04 attached hereto ("Endorsements"): CC&R Endorsement (unless
easements appurtenant to the Project are additionally insured parcels on
Schedule A of the Title Policy), Comprehensive No. 1, Access, Survey, Plat Act
(to the extent the Land is subdivided), Contiguity (but only to the extent of
contiguous portions of the Land as depicted on Schedule 1.02 attached hereto),
Tax Parcel, Environmental, Encroachment, Mining Rights and Zoning 3.1 (with
parking). Any Survey or physical inspection requirements imposed as a condition
to the issuance of the Title Policy may be satisfied by Seller as a Shared
Closing Cost, except costs and expenses in respect to correcting Survey Defects
which shall be paid by Seller. Seller shall execute such affidavits and
certificates as the Title Company may require as a condition to the issuance of
the Title Policy, and a copy of each such affidavit or certificate shall be
delivered to Purchaser. In addition, as part of the Shared Closing Costs, Seller
shall cause (i) the Title Policy to be dated down to the date each Earn-Out
Payment (as hereinafter defined) is paid during or after the Earn-Out Period
showing no new exceptions, except the Permitted Exceptions, the subject or
previous New Leases, and exception caused, permitted or claimed by, through or
under Purchaser or its successors and assigns; and (ii) the amount of the Title
Policy's coverage to be increased to an amount that equals the subject Earn-Out
Payment.
7. SELLER'S CLOSING DOCUMENTS AND ESCROW.
At Closing, Seller shall execute and deliver the following
documents to Escrow Agent:
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7.01 DEED. A signed special warranty deed in the form and substance
(modified for the subject jurisdiction) attached to the Exhibit Agreement as
Schedule 7.01 (the "Deed") conveying to Purchaser, good, indefeasible and
insurable title to the Real Property and the Improvements, free and clear of all
liens and encumbrances of any type whatsoever, except for the Permitted
Exceptions. The Permitted Exceptions shall be specifically, and not
categorically, excepted from the warranty of title in the Deed.
7.02 ASSIGNMENT OF LEASES. An assignment (the "Lease Assignment") in
the form attached to the Exhibit Agreement as Schedule 7.02 of all (except in
respect to the Assignment Reservation as provided in Paragraphs 13.03, 14.01,
14.02 and 14.03 hereof) of the Seller's right, title and interest as lessor
under the leases, tenancies, occupancy agreements, rental agreements, options,
licenses and concessions, and all of the foregoing (hereinafter collectively
referred to as the "Leases") which are described on Schedule 7.02(a) attached
hereto, and all New Leases that are fully executed prior to the Closing,
together with all security deposits, cleaning deposits, key deposits and advance
rental payments (collectively, the "Security Deposits") made by the lessees,
tenants, occupants, optionees, licensees and concessionaires (collectively, the
"Tenants") and New Tenants under the Leases and subject New Leases.
7.03 LEASES AND TENANT DOCUMENTS. All original copies of the Leases
and New Leases that are fully executed prior to Closing, Tenant and the subject
New Tenant financial statements, their sales reports and other Tenant and the
subject New Tenant related documents, and to the extent, if any, that original
copies are not delivered, Seller shall deliver copies which shall be accompanied
by an affidavit sworn to by Seller confirming that the copies delivered are true
and complete copies of the originals.
7.04 BILL OF SALE. A bill of sale in the form attached to the Exhibit
Agreement as Schedule 7.04, transferring and conveying to Purchaser all of
Seller's right, title and interest to the Personal Property and the Intangible
Property.
7.05 ASSIGNMENT OF CONTRACTS. An assignment (the "Contract
Assignment") in the form attached to the Exhibit Agreement as Schedule 7.05, of
all of Seller's right, title and interest as the owner of the Project under the
service contracts and agreements, personal property leases and agreements
(collectively, the "Contracts") which are described on Schedule 7.05(a) attached
hereto and which have been approved by Purchaser as being those Contracts that
are assigned to Purchaser pursuant to the Contract Assignment.
7.06 VIOLATIONS/WORK ORDERS AFFIDAVIT. An affidavit, in form and
substance of Schedule 7.06 attached to the Exhibit Agreement, confirming that
Seller has complied with and discharged (or, to the extent Seller has not
complied with and discharged, an explanation of that which remains to be done to
cause compliance and discharge) (i) all notices, if any, that either Seller or
its management agent managing the Real Property received concerning any and all
uncured violations (the "Violations") of any law, statute, ordinance,
regulation, rule, requirement, order, judgment or decree enacted, adopted,
imposed, issued, entered or filed by any governmental authority (concerning or
affecting the Project or any part thereof), and (ii) all work
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orders concerning the Project or any part thereof, if any (the "Work Orders")
issued by any insurance carriers insuring a risk in respect to the Project.
7.07 KEYS. All keys to the Project.
7.08 PLANS AND SPECIFICATIONS. To the extent not delivered prior to
Closing Date as part of the Site Analysis Documents, all Plans.
7.09 TITLE INSURANCE AFFIDAVIT. Any affidavit required by the Title
Company to remove the standard printed exceptions from the Title Policy.
7.10 FIRPTA CERTIFICATE/WITHHOLDING. A certificate in the form and
substance attached to the Exhibit Agreement as Schedule 7.10 ("FIRPTA
Affidavit").
7.11 FORM 1099. Any information with respect to Seller in connection
with the conveyance of the [PHASE] Real Property by Seller to Purchaser required
by either (i) IRC Sec. 6045 or Treas. Regs. Sec. 1.6045, or (ii) Treas. Form
1099 or its instructions. If required thereby, the Escrow Agent shall timely (x)
prepare and file a Form 1099 in accordance with the provisions of Treas. Regs.
Sec. 1.6045, and (y) furnish the Parties with copies.
7.12 BOOKS AND RECORDS. Copies of all accounting books and records
relating to the operation and maintenance of the Project.
7.13 LETTERS TO TENANTS. Letters in the form and substance set forth
in Schedule 7.13 that is attached to the Exhibit Agreement (the "Tenant
Letters") addressed to the Tenants and New Tenants of New Leases executed prior
to Closing and signed by Seller, advising the Tenants of the sale of the Project
and the Purchaser's right to receive the Rents (as hereinafter defined) under
their respective Leases.
7.14 RECORDING REQUIREMENTS. All documents and affidavits required
of Seller to record the Deed.
7.15 ESTOPPEL CERTIFICATES. An estoppel certificate in the form and
substance set forth in Schedule 7.15 that is attached to the Exhibit Agreement
("Tenant Estoppel") showing no material exceptions that is executed (not more
than forty-five (45) days prior to the Closing Date or such earlier date
Purchaser reasonably accepts) by (i) all Tenants or New Tenants of Leases and
New Leases that are Qualified Leases (as hereinafter defined) on or prior to the
Closing Date that have demised to them space in the Project containing 7,500
square feet or more, and (ii) at least eighty percent (80%) (calculated on a
square foot basis) of all Tenants or New Tenants of Leases or New Leases that
are Qualified Leases on or prior to the Closing Date that have demised to them
space in the Project containing less than 7,500 square feet. To the extent
Seller is unable to deliver to Purchaser Tenant Estoppels from all or any of the
remaining Tenants or New Tenants in the Project under such Qualified Leases in
respect to premises containing less than 7,500 square feet or a Tenant Estoppel
in respect to a premises that is 7,500 square feet or less that contains a
material exception noted by the applicable Tenant or New Tenant, Seller shall
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be entitled to deliver to Purchaser Seller's estoppel certificate ("Seller's
Estoppel") in form and substance reasonably acceptable to Purchaser confirming
the terms and conditions of the Lease or subject New Lease for which a Tenant
Estoppel was not delivered to Purchaser or, if delivered, that contains a
material exception. Such Seller's Estoppel shall be deemed a representation and
warranty by Seller as to the terms and conditions of the subject Lease or New
Lease, and the Seller's Estoppel shall not be subject to the time limitation for
claims set forth in Paragraph 10.04(b) hereof. After the Closing, when and as
Purchaser receives a Tenant Estoppel (without material exception) for which
Seller delivered a Seller's Estoppel, the subject Seller's Estoppel shall be
released by Purchaser and returned to Seller and shall be deemed to be of no
further force and effect.
7.16 TERMINATION OF MANAGEMENT AND SELLER AFFILIATED CONTRACTS.
Notwithstanding any other provision of this Agreement, in respect to any
agreements or contracts that are not to be included as part of the Contract
Assignment, agreements ("Termination Agreements") signed by (i) the parties to
any management agreement for the Real Property, and (ii) the parties to all
other such agreements or contracts between the Seller or its predecessors in
interest and parties affiliated with or controlled by Seller or any of Seller's
principals, which Termination Agreements terminate such management agreement and
other such agreements and contracts as of the Closing Date, without any
liability or obligation on the part of the Purchaser or the Project.
7.17 PERMITS/GUARANTIES. Original or copies of Permits and originals
of the Guaranties which, in each instance, Seller agrees to keep in full force
and effect, and to comply with all of the terms and conditions thereof prior to
Closing.
7.18 CLOSING STATEMENTS. Closing Statements executed by Seller.
7.19 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably
satisfactory to Escrow Agent, in form and substance sufficient to carry out the
Closing.
7.20 DATE DOWN CERTIFICATE. A certificate of Seller (the "Seller Date
Down Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 7.20 certifying that Seller's representations and warranties set forth
in Paragraph 10.01 of this Agreement are true and correct as of the Closing Date
as modified by the Schedules that are attached hereto pursuant to Paragraph
10.01 hereof that are updated to the Closing Date. In the event any updated
Schedules disclose a material deviation from the prior applicable Schedule as
reasonably determined by Purchaser, Purchaser shall have three (3) business days
from the date Purchaser receives a copy of the Seller Date Down Certificate in
which to elect to terminate this Agreement or to proceed with the Closing in
accordance with the updated Schedules. In the event Purchaser fails to notify
Seller, in writing, of Purchaser's election to terminate this Agreement, it
shall act as notice to Seller that Purchaser has elected to terminate this
Agreement. In the event Purchaser elects to terminate this Agreement, the
Deposit shall be refunded to Purchaser, Purchaser and Seller shall each pay
fifty percent (50%) of the Shared Closing Costs, and this Agreement shall be of
no further force and effect, except in respect to those provisions specifically
provided herein as surviving the termination of this Agreement.
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7.21 AGREEMENT ESTOPPEL CERTIFICATE. An estoppel certificate in form
and substance attached hereto as Schedule 7.21 ("Agreement Estoppel") showing no
material exceptions that are executed by each party to those easement agreements
or other agreements or undertakings (including, but not limited to, development
agreements) affecting the Project on and after the Closing Date that require the
performance of obligations by the owner of the Project and the approval of such
performance by the other party to the same that are identified by Purchaser to
Seller, in writing, not less than fifteen (15) days prior to the Closing Date.
To the extent such Agreement Estoppel shows a material exception or the party to
such easement agreements or other agreements or undertakings identified by
Purchaser as aforesaid fails to deliver, an estoppel, Seller shall be entitled
to deliver its undertaking confirming, in form and substance reasonably
acceptable to Purchaser, the terms and conditions of the Agreement Estoppel to
the extent applicable in the form attached hereto as Schedule 7.21, and such
confirmation by Seller shall not be subject to the time limitation for claims
set forth in Paragraph 10.04(b) hereof. After the Closing, when and as Purchaser
receives an Agreement Estoppel for which Seller delivered its undertaking as
aforesaid, the subject undertaking shall be released by Purchaser and returned
to Seller and shall be deemed to be of no further force and effect.
7.22 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location
within the Project of any space that is Vacant Space as of the Closing.
7.23 ASSIGNMENT OF REA. An Assignment of Declaration in the form
attached hereto as Schedule 7.23 assigning to Purchaser Seller's rights under
the terms of the Reciprocal Easement Agreement that is a Permitted Encumbrance.
7.24 OTHER DOCUMENTS. Such other documents as may be reasonably
required to close the transaction contemplated by this Agreement.
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS.
At Closing, Purchaser shall execute and deliver the following to
Escrow Agent:
8.01 ASSIGNMENT OF LEASES. The Lease Assignment, acknowledging the
assumption by Purchaser of Seller's obligations under the Leases which accrue
after the Closing Date.
8.02 ASSIGNMENT OF CONTRACTS. The Contract Assignment, acknowledging
the assumption by Purchaser of Seller's obligations under the Contracts which
accrue after the Closing Date.
8.03 CLOSING STATEMENTS. Closing Statements executed by Purchaser.
8.04 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably
satisfactory to Escrow Agent, in form and substance sufficient to carry out the
Closing.
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8.05 RECORDING REQUIREMENTS. All documents and affidavits required of
Purchaser to record the Deed.
8.06 DATE DOWN CERTIFICATE. A certificate of Purchaser (the
"Purchaser Date Down Certificate") in form and substance attached to the Exhibit
Agreement as Schedule 8.06 certifying that Purchaser's representations and
warranties set forth in Paragraph 10.02 of this Agreement are true and correct
as of the Closing Date.
8.07 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location
within the Project of any space that is Vacant Space as of the Closing.
8.08 OTHER DOCUMENTS. Such other documents as may be reasonably
required to close the transaction contemplated by this Agreement.
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.
9.01 AFFIRMATIVE AND NEGATIVE COVENANTS. Until Closing, Seller shall
or cause to:
(i) Subject to Casualty or any Taking (as those terms are
hereinafter defined), maintain the Real Property and Personal Property in good
condition and repair and not commit or permit waste;
(ii) Carry on its business in respect to the Project in the same
manner as it has heretofore;
(iii) Keep in full force and effect all insurance coverage
required to be maintained by it pursuant to the Leases, applicable New Leases,
the Mortgages, the Permitted Exceptions, and any easement agreements or other
agreements or undertakings affecting the Project;
(iv) Perform all of its obligations under the Contracts, Leases,
applicable New Leases, Mortgages, Permitted Exceptions and any easement
agreements or other agreements or undertakings affecting the Project;
(v) Maintain and preserve its business organization intact;
(vi) Maintain and preserve its relations with the Tenants, New
Tenants under New Leases that are fully executed prior to the Closing, suppliers
and customers;
(vii) Except as provided in Paragraph 13.04 hereof, not
voluntarily terminate, amend, modify, extend, renew, waive or accept the
surrender of any Lease or New Lease or provision thereof, without Purchaser's
prior consent, which consent shall not be unreasonably withheld or delayed;
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(viii) Not voluntarily terminate, amend, modify, extend, renew,
waive or accept the cancellation of any Contract, Permitted Exception or any
easement agreements or other agreements or undertakings affecting the Project or
any provision of any of them, without the Purchaser's prior consent, which
consent shall not be unreasonably withheld or delayed;
(ix) Except as provided in Paragraph 13.04 hereof, not
voluntarily enter into, accept or consent to any new (a) lease, occupancy
agreement, subtenancy agreement, license agreement, concession agreement, (b)
contract or agreement, personal property lease or agreement, and/or (c) lien,
encumbrance, or security interest (including without limitation, mortgage, deed
of trust, security agreement, assignment of leases or rents, collectively,
"Mortgage") or other title exception or defect (including without limitation,
easement, restriction, dedication), which shall not be terminated on or before
Closing without the Purchaser's prior consent, which consent shall not be
unreasonably withheld or delayed;
(x) Not commence any action or proceeding or petition, apply for
or consent to any action or proceeding, the effect of which may be to change the
zoning of the Project or its assessed valuation (except for entering into New
Leases);
(xi) Not sell, assign or transfer the Project or any part hereof
(except in the instance of New Leases as provided in Paragraph 13.04 hereof),
including without limitation, the Intangible Property and the Personal Property;
provided, however, that Seller may remove Personal Property for the purpose of
promptly effecting necessary repairs or immediate replacement with Personal
Property of like character and equal or better quality;
(xii) Not demolish or materially alter the Improvements or any
part thereof or otherwise adversely affect the value of the Project, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed, except for (1) curing Unacceptable Conditions, Title Defects and Survey
Defects, (2) completing Punchlist Work (as defined and provided in Paragraph
13.11 hereof), (3) constructing tenant improvements for Leases, (4) performing
Seller's New Lease Obligations (as defined and provided in Paragraph 13.10
hereof), and (5) completing, in accordance with the Plans, any incomplete work.
(xiii) Except as provided in Paragraph 9.01(xii) above, not
materially alter the Land or any part thereof, including without limitation, by
mining, excavating, removing topsoil, timbering or changing the grade, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed.
9.02 PAYMENTS. As more fully set forth in Paragraph 16.01 hereof, (i)
Punchlist Work; (ii) curing Unacceptable Conditions; (iii) constructing tenant
improvements for Leases and New Leases; (iv) all other work to be performed and
all payments to be made by Seller pursuant to the provisions of the Leases, the
Contracts, the Permitted Exceptions, and any insurance policy maintained by
Seller providing coverage for the Project which pertain to obligations that
accrue prior to the Closing and; (v) Warranty Work shall be completely performed
and paid for when due (subject to the right to contest Liens as provided in
Paragraph 9.03 hereof) by Seller and the obligation thereof shall survive the
Closing.
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9.03 LIEN REMOVAL. Except for (i) taxes not yet due and payable as of
the Closing, (ii) installments of special assessments due and payable after the
Closing, and (iii) Liens (as hereinafter defined and provided) that are either
bonded or insured over in a form reasonably satisfactory to Purchaser, all other
liens and encumbrances of ascertainable amounts incurred by Seller or by, for or
on behalf of Seller, except the Permitted Exceptions, shall be removed from
record by Seller or Seller shall make arrangements satisfactory to the Title
Company for the removal of, or title insurance over (in form reasonably
satisfactory to Purchaser), such liens and encumbrances of record on the Closing
Date. Notwithstanding the foregoing, any liens or encumbrances attaching to the
title of the Real Property as a result of work performed on or material supplied
to the Project by Seller or on behalf of anyone claiming by, through or under
Seller (except Tenants and New Tenants under Qualified Leases, as hereinafter
defined) or as a result of Seller's failure to pay, when due, a Commission
(collectively, "Lien" or "Liens") may be contested by Seller as hereafter
provided. Within thirty (30) days after the recording of a Lien recorded or
filed after the Closing, Seller shall, at its election, either (i) bond over the
same, or (ii) cause the Title Company to insure over the same (in form and
substance reasonably satisfactory to Purchaser), in order, in the instances of
either clause (i) or (ii) above, to reasonably protect the Purchaser and the
Project (or any part thereof) from and against the subject Lien. Thereafter, in
the manner elected by Seller, Seller may contest such Lien provided that, within
thirty (30) days following the entry by a court of competent jurisdiction of a
final judgment or decree in favor of the claimant of such Lien, Seller shall pay
and satisfy such Lien and cause it to be released of record. In the event Seller
fails to pay and satisfy any Lien within thirty (30) days following the entry by
a court of competent jurisdiction of a final judgment or decree in favor of the
claimant of such Lien or fails to bond over or insure over a Lien as provided in
this Paragraph 9.03, Purchaser may offset so much of any Earn-Out Payment of
Footage Payment subsequently payable by Purchaser hereunder by the amount
incurred by Purchaser for effectuating the satisfaction and release of the
subject Lien.
10. REPRESENTATIONS AND WARRANTIES.
10.01 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Purchaser that:
(i) Seller is a Minnesota corporation duly created and validly
existing pursuant to the laws of the jurisdiction of its organization and is
duly qualified to do business in the jurisdiction in which the Project is
situated.
(ii) Seller is authorized and empowered to enter into this
Agreement and to perform all of its obligations under this Agreement without any
qualification whatsoever, and no consent or approval of any third party
(including, without limitation, any governmental or quasi-governmental
authority) is or was required by Seller to execute and deliver this Agreement or
consummate this transaction.
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(iii) Upon the signing and delivery of this Agreement, this
Agreement will be legally binding upon Seller in accordance with all of its
provisions, except as such provisions may be qualified or limited by bankruptcy,
creditor's rights and equitable principles.
(iv) The person signing this Agreement on behalf of Seller has
been duly authorized to sign and deliver this Agreement on behalf of Seller.
(v) To the best of its Knowledge (as hereinafter defined),
Seller has not committed any act or permitted any action to be taken which would
materially adversely affect its ability to fulfill all of its obligations under
this Agreement.
(vi) The execution and delivery of this Agreement, and the
performance of Seller's obligations under this Agreement, will not violate or
breach, or conflict with, the terms, covenants or provisions of any agreement,
contract, note, Mortgage, indenture or other document of any kind whatsoever to
which Seller is a party or to which the Project is subject.
(vii) Seller has received no written notice and Seller has no
Knowledge of any uncured Work Order, or unfulfilled requirements or
recommendations issued, imposed or made by any insurers concerning the Project
or any part thereof.
(viii) To the best of its Knowledge, (i) Seller is not in
default of any obligation of Seller under any Mortgage, and (ii) Seller and/or
the Project is in compliance with all terms and conditions of the Permitted
Exceptions, including any easement agreement or other agreement or undertaking
affecting the Project.
(ix) To the best of Seller's Knowledge, the Project was
constructed, and is presently being operated, occupied and used in substantial
accordance with all applicable federal, state and local laws, rules, regulations
and ordinances governing the construction, operation, occupation and use of the
Project, and no variances to any applicable federal, state or local law, rule,
regulation or ordinance were granted in connection with the construction of the
Project.
(x) To the best of Seller's Knowledge, there is (i) no pending
or contemplated Taking affecting the Project or any part thereof, or (ii) no
pending or contemplated public improvement in or about the Real Property which
may in any manner affect access to or from the Project or increase the taxes
assessed against the Project.
(xi) To the best of Seller's Knowledge, except for the Vacant
Space (as hereinafter defined), Seller is in receipt of all Permits required by
all governmental authorities for the construction currently being prosecuted at
the Project and the operation, occupation and use of the Project as a shopping
center; all Permits are in full force and effect; and all Permits issued to the
Project are described on Schedule 10.01(xi) attached hereto and made a part
hereof.
(xii) Neither Seller, nor, to the best of Seller's Knowledge
(except as disclosed in the Environmental Reports), any prior owner of the
Project has: (a) caused or permitted the generation, manufacture, refinement,
transportation, treatment, storage, handling, installation,
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removal, disposal, transfer, production or processing of Hazardous Substances
(as hereinafter defined) or other dangerous or toxic substances, or solid
wastes, except in strict compliance with all laws; (b) caused or permitted or
received any written notice or have any actual knowledge of the Release (as
hereinafter defined) or existence of any Hazardous Substances on or about the
Project or property surrounding the Project which might affect the Project; (c)
caused or permitted or received any written notice or have any actual knowledge
of any substances or conditions on or about the Project or on property
surrounding the Project which may support a claim or cause of action, whether by
any governmental authority or any other person, under any laws ("Environmental
Laws") in effect as of the date of this Agreement and all rules and regulations
promulgated thereunder, including, but not limited to: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Sections 9601 et seq. (the "Superfund Act"); the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6921 et seq.; the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 et seq.; the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. Section 136; the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1251 et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801 et seq.; the Federal Solid Waste Disposal Act, 42
U.S.C. Sections 6901 et seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et
seq.; or any other law. For the purposes of this Agreement the terms "Hazardous
Substances" and "Release" shall have the definitions used in the Superfund Act;
provided, however, that the definition of the term "Hazardous Substances" shall
also include (if not included within the definition contained in the Superfund
Act), petroleum and related by products, hydrocarbons, radon, asbestos, urea
formaldehyde and polychlorinated biphenyl compounds.
(xiii) Except for the Permitted Exceptions, Seller is the sole
owner of good, indefeasible and insurable fee simple title to the Land and the
Improvements, and Seller has not executed or entered into any other agreement to
purchase, sell, option, lease or otherwise dispose or alienate all or any
portion of the Project other than this Agreement, the Leases and New Leases.
(xiv) Subject to the right of Seller to contest Liens as
provided in Paragraph 9.03 hereof, all labor and services performed and material
furnished to the Project have been paid for or will be paid for in full by
Seller, and, to the best of Seller's Knowledge, there exists no valid basis for
which a Lien or similar lien can properly be claimed against the Project or any
part thereof.
(xv) As of the date hereof, Schedule 7.02(a) attached hereto is
a complete and correct list of all Leases, and the information disclosed on
Schedule 7.02(a) is accurate with respect to each of the Leases.
(xvi) Leasing commissions or fees that are payable in connection
with any leasing agreement or registration statement to which Seller is a party
or that Seller has accepted, in writing, that pertains to New Leases (that will
be paid by Seller as provided in Paragraph 13.11 hereof), and the Leases
described in Schedule 7.02(a), and commissions resulting from any other
agreement to which Seller is a party relating to the Project (collectively,
"Commissions") will be paid by Seller when due under the applicable leasing
agreement or registration statement.
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(xvii) Except as set forth on Schedule 10.01(xvii) attached
hereto, as of the date hereof, (1) none of the Tenants or New Tenants of Leases
and New Leases that are Qualified Leases as of Closing have been granted any
economic or financial concession or inducement (collectively, "Tenant
Inducement") that will not be paid in full by Seller when required in accordance
with the applicable provisions of the subject Leases and New Leases, and (2)
none of the subject Tenants or New Tenants have deposited Security Deposits with
Seller, except those disclosed on Schedule 7.02(a) attached hereto.
(xviii) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xviii) attached hereto, as of the date hereof, no Tenant or
New Tenant of Leases or New Leases that are Qualified Leases as of the Closing
has alleged an event of default on the part of Seller which is presently
outstanding, or that Seller has not fulfilled all of its obligations under the
subject Leases or New Leases which are conditions of the obligations of such
Tenants and New Tenants to pay the Rents, including without limitation, all
work, repairs and improvements required to be furnished by Seller pursuant to
such Leases and New Leases.
(xix) To the best of Seller's Knowledge, except as set forth on
Schedule 10.01(xix) attached hereto, as of the date hereof, (1) none of the
Tenants or New Tenants under Leases or New Leases that are Qualified Leases as
of the Closing are in default of any of their obligations under their respective
Leases and New Leases, and (2) no event has occurred which, with the giving of
notice, the passage of time, or both, would constitute an event of default by
such Tenant or New Tenant.
(xx) Except as set forth on Schedule 10.01(xx) attached hereto,
as of the date hereof, Seller has no notice and to the best of Seller's
Knowledge, no Tenant or New Tenant under a New Lease that is fully executed
prior to Closing has advised Seller, orally or in writing, that any Tenant or
any subject New Tenant intends to give up physical or legal possession of its
demised premises, including without limitation: assigning its lease; subletting
all or part of its demised premises; vacating its demised premises;
discontinuing the operation of its business at its demised premises;
surrendering possession of its demised premises; or terminating its Lease or
subject New Lease.
(xxi) There are no employees of Seller that are assigned to the
Project for which Purchaser shall have any obligations after the Closing.
(xxii) A description of all Guaranties relating to the
construction and equipment of the Project received by Seller that, by their
terms, are in effect on or after the Closing Date are true, correct and
complete, and all Guaranties issued with respect to the Project that, by their
terms, are in effect on or after the Closing Date are described on Schedule
5.01(g) attached hereto.
(xxiii) Seller has not dealt with any broker, finder or other
person in connection with this transaction, who is entitled to any Commission,
finder's fee or similar payment as a result of the acts of Seller or its agents,
except (1) as pertains to New Leases, and in such event,
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all Commissions in connection therewith shall be paid by Seller as provided in
Paragraph 13.11 hereof, and (2) as pertains to Commissions not yet due and
payable in respect to Leases which shall be paid by Seller when required in
respect to such Leases. Seller acknowledges that it has conversed with Eugene
Faigus and Chadwick & Saylor in connection with this transaction, but that
Seller has not agreed to be obligated to pay any fee or other compensation to
either or both of them.
(xxiv) Seller has no actual Knowledge that any of the written
information provided to Purchaser by Seller or on its behalf in connection with
this transaction (including without limitation, the warranties and
representations set forth in this Agreement), is inaccurate or incomplete or
contains any untrue statement of fact.
(xxv) To the best of Seller's Knowledge, copies of documents
furnished or to be furnished to Purchaser by Seller or on its behalf in
connection with this transaction are true and complete copies of the originals.
(xxvi) As of the Closing, Seller's net worth, determined in
accordance with generally accepted accounting principals consistently applied,
is greater than $5,000,000.00, exclusive of goodwill.
The term "Knowledge" when used in the context of "to the best of Seller's
Knowledge" (or any derivative form thereof) shall mean the actual (written or
oral), not imputed, knowledge of Keith Bednarowski, Dan F. Nicol, Anne E. Loff,
Oscar Healy (Seller's Project Co-Manager), Jeff Kemp (Seller's Project
Co-Manager) or Lisa Diehl (Seller's Property Manager).
10.02 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents
and warrants to Seller that:
(i) Purchaser is an Ohio corporation, duly organized and validly
existing pursuant to the law of the jurisdiction of its organization.
(ii) Purchaser is authorized and empowered to enter into this
Agreement and perform all of its obligations under this Agreement without any
qualification whatsoever.
(iii) No consent or approval of any third party (including
without limitation, any governmental or quasi-governmental authority) is or was
required by Purchaser to execute and deliver this Agreement or consummate this
transaction.
(iv) Upon the signing and delivery of this Agreement, it will be
legally binding upon Purchaser in accordance with all of its provisions, except
as such provisions may be qualified or limited by bankruptcy, creditor's rights
and equitable principles.
(v) The person signing this Agreement on behalf of Purchaser has
been duly authorized to sign and deliver this Agreement on behalf of Purchaser.
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(vi) To the best of Purchaser's Knowledge (as hereinafter
defined), Purchaser has not committed any act or permitted any action to be
taken which would materially adversely affect its ability to perform all of its
obligations under this Agreement.
(vii) The execution and delivery of this Agreement by Purchaser
and Purchaser's performance of it obligations under this Agreement shall not
conflict with any law, statute, ordinance, regulation, order, directive or
decree of any governmental or quasi-governmental authority or any contract,
other agreement or obligation to which Purchaser is a party or is otherwise
bound.
(viii) Except for Eugene Faigus and Chadwick & Saylor, neither
Purchaser nor its agents have dealt with any broker, finder or other person in
connection with this transaction who is entitled to any Commission or similar
payment as a result of the acts of Purchaser or its agents.
(ix) All copies of documents furnished or to be furnished to
Seller by Purchaser or on its behalf in connection with this transaction are
true and complete copies of the originals.
The term Purchaser's Knowledge, when used in the context of "to the best of
Purchaser's Knowledge" (or any derivative form thereof) shall mean the actual
(written or oral), not imputed, knowledge of Scott Wolstein, James A. Schoff or
Joan U. Allgood.
10.03 INTENTIONALLY DELETED.
10.04 INDEMNIFICATION.
(a) Except as limited by the provisions of Paragraph 23 hereof,
the Parties shall indemnify and hold each other harmless, from and against all
damages, costs, expenses, liabilities, penalties and fines, including without
limitation, attorneys fees, disbursements, expert witness fees, paralegal fees,
reporters fees, reproduction and printing costs, including any of the foregoing
which are incurred in connection with any appeal, and amounts paid in settlement
of claims (collectively, in respect to the foregoing inclusion, "Litigation
Expenses" ), paid or incurred by the other Party as a result of any
representation or warranty of the respective Party set forth in this Agreement
not being true and correct in all material respects when made. In addition, the
indemnity provisions of this Paragraph 10.04(a) on behalf of the Purchaser shall
pertain to any claims, demands, actions, causes of action, judgments or decrees
made against or entered against Seller in respect to any Commissions or other
compensation claimed or demanded by either Eugene Faigus or Chadwick & Saylor in
connection with the terms of this Agreement.
(b) Notwithstanding the foregoing, and except as provided in
Paragraph 24.17 hereof in respect to Warranty Work, Seller's and Purchaser's
right to seek or obtain indemnification, damages or other legal recourse against
the other Party hereto (or any successor thereto) with respect to a breach of
any warranty, representation or covenant made in this
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Agreement or in any documents, instruments or certificate executed and delivered
pursuant hereto shall terminate, and be of no further force or effect, unless
(i) by the date which is the last to occur of three hundred sixty five (365)
days after the termination of this Agreement and three hundred sixty five (365)
days after the expiration of the Earn-Out Period (as hereinafter defined), the
aggrieved Party shall have notified the other Party, in writing, that the
aggrieved Party deems that any such warranty, representation or covenant was
breached in a material respect when made (as updated or deemed updated) and
states therein, with reasonable particularity, the nature of the alleged breach
and the section or provision of the relevant document which was allegedly
breached and (ii) by the date which is the last to occur of three hundred ninety
(390) days after the termination of this Agreement and three hundred ninety
(390) days after the expiration of the Earn-Out Period, the aggrieved Party
files suit against the other Party seeking legal or equitable recourse as a
consequence of such breach. If the aggrieved Party timely notifies the other
Party as called for in the preceding clause (i) and timely files suit against
the other Party as called for in the preceding clause (ii), then the warranty,
representation or covenant at issue shall not terminate, but rather shall
continue until the dispute is settled between Seller and Purchaser or a final,
non-appealable judgment is issued by a court of competent jurisdiction with
respect thereto.
(c) Within ten (10) days after receipt by an indemnified Party
of written notice of any claim or the commencement of any action under this
Paragraph 10.04 by a third party, the indemnified Party shall, if a demand in
respect thereof is to be made against the indemnifying Party pursuant to this
Paragraph 10.04, notify the indemnifying Party in writing of the claim or the
commencement of the action, provided the failure to notify the indemnifying
Party shall not relieve the indemnifying Party from any liability which it may
have to the indemnified Party other than under this Paragraph 10.04. Each
indemnitor shall be entitled, at its cost and expense, to contest any such third
party claim or action by all appropriate legal proceedings, provided that the
indemnitor shall have first notified the indemnitee of the indemnitor's
intention to do so within ten (10) days after the indemnitor's receipt of such
notice from the indemnitee. If the indemnitee joins in any such contest, the
indemnitor shall have full authority to determine all action to be taken with
respect thereto. If, after such opportunity, the indemnitor elects not to
contest any such claim or action, the indemnitor shall be bound by the
resolution of such claim or action obtained by the indemnitee. If required by
the indemnitor, the indemnitee shall cooperate fully with the indemnitor and its
counsel in contesting any such claim or action or, if appropriate, in making any
counterclaim or cross-claim against the subject third party asserting the claim
or bringing the action, but the indemnitor will reimburse the indemnitee for any
out-of-pocket costs and expenses incurred by the indemnitee in so cooperating.
The indemnitor shall pay to the indemnitee, in cash, all amounts to which the
indemnitee may become entitled by reason of the provisions of this Agreement,
such payment to be made within thirty (30) days after such amounts are finally
determined either by mutual agreement or by judgment of a court of competent
jurisdiction.
11. SHARED CLOSING COSTS AND OTHER EXPENSES.
11.01 EXPENSES.
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(a) Seller shall pay any and all fees or costs required to be
paid by Seller to the holder of the Mortgages in connection with the sale of the
Project, including, but not limited to prepayment fees, lender's consent fees or
lender's counsel fees, if any.
(b) Purchaser shall pay the costs and expenses of all Test and
Studies including any environmental audit of the Project and any other
investigations of the Project undertaken by Purchaser and all costs and
expenses, if any, charged by a lender to Purchaser in connection with any
financing or joint venturing of this transaction.
(c) Each Party shall pay its own attorney's fees.
11.02 SHARED CLOSING COSTS.
(a) Except as set forth above in Paragraph 11.01, if Closing
occurs, Seller and Purchaser shall each pay fifty percent (50%) of all of the
cost of the Commitment, the Title Policy (including the Endorsements and the
dating down and increasing the amount of coverage thereof as provided in
Paragraph 6.04 hereof), updating the Survey, transferring all Permits and
Guaranties to Purchaser, all escrow fees, and all transfer, conveyance, revenue,
excise, documentary or other tax or stamps payable as a result of the sale of
the Project (collectively, the "Shared Closing Costs").
(b) Except as provided otherwise in this Agreement, if Closing
does not occur because of the failure of a condition to either Party's
obligation to close this transaction (other than a default by a Party), each
Party shall pay fifty percent (50%) of the Shared Closing Costs.
(c) If Closing does not occur because Seller is in default,
Seller shall pay all of the Shared Closing Costs.
(d) If Closing does not occur and Purchaser is in default,
Purchaser shall pay all Shared Closing Costs.
12. CONDITIONS.
12.01 PURCHASER'S CONDITIONS. Purchaser shall not be obligated to
close this transaction unless and until:
(a) Seller has delivered to the Escrow Agent the pre-closing and
closing documents described in Paragraphs 5, 6 and 7 of this Agreement;
(b) Title to the Project is delivered in accordance with the
provisions of this Agreement and the Title Company issues the Title Policy to
the Purchaser on the Closing Date, in the amount of that portion of the Purchase
Price computed as of the Closing Date in accordance with Paragraph 13.02 hereof,
insuring that indefeasible fee simple title to the Project
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is vested in Purchaser, free and clear of all liens and encumbrances, except for
the Permitted Exceptions;
(c) The Project is delivered in the physical condition provided
for in this Agreement, reasonable wear and tear excepted; and
(d) If Seller is in default in the performance of any of its
obligations under this Agreement and such default has not been cured prior to
Closing or any of the representations or warranties of Seller are untrue or
inaccurate in any material respect when made or on the Closing Date.
12.02 SELLER'S CONDITIONS. Seller shall not be obligated to close this
transaction unless and until:
(a) Purchaser has delivered to the Escrow Agent that portion of
the Purchase Price computed as of the Closing Date in accordance with Paragraph
13.02 hereof;
(b) Purchaser has delivered the closing documents described in
Paragraph 8 of this Agreement; and
(c) If Purchaser is in default in the performance of any of its
obligations under this Agreement and such default has not been cured by
Purchaser prior to Closing or any of the representations or warranties of
Purchaser is untrue or inaccurate in any material respect when made or on the
Closing Date.
12.03 RIGHTS UPON FAILURE OF A CONDITION. Except in the case of a
default by Seller under Paragraph 12.01(d) or by Purchaser under Paragraph
12.02(c), if a condition of Closing of either Party is not satisfied as of the
Closing Date, the Party whose condition is not satisfied at Closing shall have
the right to (i) waive such condition and proceed with Closing, (ii) extend the
Closing Date to permit additional time to cause the unsatisfied condition to be
satisfied, or (iii) terminate this Agreement and both Parties shall be released
of all rights and obligations hereunder, except as otherwise specifically
provided for herein. If the failure of the condition is a default, the rights of
the parties shall be governed by Section 18 hereof.
13. EARN-OUT.
13.01 DEFINED TERMS. In addition to the other terms defined elsewhere
in this Agreement, the following terms shall have the following meaning:
(i) "Carry" shall mean the amount of the proportionate share of
real estate taxes and operating expenses for the Project that are (or would have
been) allocable to the premises that are the subject of a Lease or New Lease
that becomes a Qualified Lease for the period commencing on the Closing Date and
ending on the date on which the Earn-Out Payment for such Qualified Lease is due
and payable hereunder, reduced by the portion, if any, of such proportionate
share for the subject period that is paid to Purchaser by the Tenant or New
Tenant
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of such Qualified Lease. To the extent payable but not paid by the subject
Tenant or New Tenant, the portion of Rent from the such Tenant or New Tenant
that applies to the period prior the date the subject Earn-Out Payment is due
and payable shall be deemed Arrears (as hereinafter defined).
(ii) "Closing Payment" shall mean that amount that is equal to
(a) the aggregate sum of those capitalized Net Cash Flows for those Leases set
forth on the Rent Roll attached hereto as Schedule 3.01 that are Qualified
Leases as of the Closing Date (which aggregated sum, as of the date hereof based
on the presumption of which Leases will be Qualified Leases as of the Closing,
is $22,109,686.00); plus (b) the amount by which the annual Base Rent set forth
in said Schedule 3.01 for those Leases that are Qualified Leases as of the
Closing Date increases as verified by the applicable Tenant Estoppel, which
increase shall be capitalized using a rate of ten and 34/100ths percent
(10.34%); minus (c) the amount by which the annual Base Rent set forth in said
Schedule 3.01 for those Leases that are Qualified Leases as of the Closing Date
decreases as verified by the applicable Tenant Estoppel, which decrease shall be
capitalized using a rate of ten and 34/100ths percent (10.34%); and plus or
minus (d) the adjustments provided in Section 14 hereof.
(iii) "Earn-Out Payment" shall mean the amount that is equal to
the Net Cash Flow from those Leases or New Leases that are Qualified Leases on
the date (other than the Closing Date) such Earn-Out Payment is due as provided
in this Section 13 capitalized using a rate of ten and 34/100ths percent
(10.34%), minus (1) the Carry, and minus (2) any unsatisfied right of offset
permitted Purchaser as provided in Paragraphs 5.04, 9.03 and 16.01 hereof that
was not previously credited to Purchaser.
(iv) "Force Majeure" shall mean delays resulting from (a) labor
disputes, (b) material or labor shortages, (c) Casualty, (d) acts of God or the
public enemy, (e) governmental embargo restrictions, (f) actions or inactions of
any governmental authority (including, but not limited to, the failure to timely
process or approve applications for the issuance or transfer of Permits,
licenses or approvals), (g) the adjustment of insurance claims resulting from
Casualty in excess of $1,000,000.00, (h) any other cause beyond the reasonable
control and reasonable anticipation of the applicable Party, but excluding
therefrom reasonable control resulting from monetary deficiency.
(v) "Net Cash Flow" shall mean, in respect to the applicable
Qualified Leases, an amount equal to the aggregate amount of the so-called "base
rent" (but not operating expenses, tax reimbursements, escalations based on a
consumer price index, or other similar Rent adjustments) payable for the full
calendar year on and after the date the subject Qualified Lease became a
Qualified Lease (without reduction for "free" Rent or Rent abatements), less any
non-reimbursable operating expenses and taxes for such calendar year. Purchaser
acknowledges that for those Leases set forth on Schedule 7.02(a) attached
hereto, there are no non-reimbursable operating expenses or taxes that shall be
a deduction in the determination of Net Cash Flow.
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(vi) "New Lease" shall mean any lease (other than the Leases)
that lets or demises space in the Project and that is entered into by (a) the
Seller subsequent to the date hereof, but prior to the Closing Date, or (b) by
Purchaser or its successor(s) subsequent to the Closing Date, but prior to the
expiration of the Earn-Out Period.
(vii) "New Tenant" shall mean the tenant or lessee under a New
Lease.
(viii) "Other Center" or "Other Centers" shall mean (a)
Arrowhead Crossing, located in Phoenix, Arizona, of which Opus Southwest
Corporation is the Other Seller; (b) Eastchase Market, located in Forth Worth,
Texas, of which Opus South Corporation is the Other Seller; (c) Highland Grove,
located in Highland, Indiana, of which Opus North Corporation is the Other
Seller; and (d) Tanasbourne Town Center (Phase I), located in Hillsboro, Oregon,
of which Bold, L.L.C. is the Other Seller.
(ix) "Other Sale Agreement" or "Other Sale Agreements" shall
mean, in respect to the Other Centers, those other four Agreements of Purchase
and Sale entered into, effective as of the date hereof, by and between Purchaser
hereunder, as the purchaser thereunder, and, in respect to each Other Sale
Agreement, one of the Other Sellers, as the seller thereunder.
(x) "Other Seller" or "Other Sellers" shall mean any one or more
of the following: Opus South Corporation, a Florida corporation; Opus Southwest
Corporation, a Minnesota corporation; Opus North Corporation, an Illinois
corporation; and Bold, L.L.C, a Delaware limited liability company.
(xi) "Qualified Lease" shall mean, on the Closing Date or on the
dates during or after the Earn-Out Period on which an Earn-Out Payment is
required to be paid hereunder, any Lease or New Lease that, pursuant to the
terms thereof:
(a) has been fully executed by either Seller or Purchaser (or
its successor), as lessor, and by the Tenant or New Tenant, as lessee;
(b) the Tenant or New Tenant (1) has taken possession of the
premises that is the subject of the Lease or New Lease; (2) has commenced paying
Rent thereunder, provided, however, if Seller pays to Purchaser the amount of
(y) any free Rent afforded such Tenant or New Tenant, or (z) the amount of Rent
that would have been payable by such Tenant or New Tenant, but for a fitting-up
or fixturing period afforded to such Tenant or New Tenant, then the provisions
of this clause (2) shall not apply (provided that in the instance of clauses (y)
and (z), Seller shall not be permitted to pay such Rent for a period greater
than three (3) months); (3) has not terminated its Lease or New Lease or been
terminated by the landlord thereof as a result of a default thereunder by such
Tenant and New Tenant; (4) in the instance of the Closing Date, if it occurs (i)
on or before the fifteenth (15th) of a month, the Rent payment obligations
thereunder are not delinquent for a period longer than the month preceding the
month in which the Closing Date occurred, or (ii) after the fifteenth (15th) of
a month, the Rent payment obligations thereunder are not delinquent for a period
longer than the month in
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which the Closing Date occurred; and (5) in the instance of an Earn-Out Payment
for the Earn-Out Period, the Rent payment obligations thereunder are not
delinquent for a period longer than the month in which the Earn-Out Payment is
due (in respect to clauses (4) and/or (5), for any Rent that is past due longer
than the period set forth therein, "Monetary Default");
(c) the Tenant or New Tenant, as of the date an Earn-Out Payment
is required to be paid hereunder in respect thereto, is not in voluntary or
involuntary proceedings filed by or against it under Section 365 of the U.S.
Bankruptcy Code ("Bankruptcy Proceeding"); and
(d) the Earn-Out Conditions (as hereinafter defined) therefor
have been satisfied.
(xii) "Vacant Space" shall mean space in the Project that is
rentable for commercial purposes and that is not the subject of a Lease, New
Lease or any other occupancy right as of the Closing Date. If a Lease, New Lease
or any other occupancy right that is fully executed prior to the expiration of
the First Segment (as hereinafter defined) is terminated prior to the expiration
of the First Segment (provided Purchaser consents, in its sole discretion, to
such termination), no Closing Payment or Earn-Out Payment has been paid in
respect to such terminated Lease, New Lease or any other occupancy right, and
the subject space is not the subject of a different Lease, New Lease or any
other occupancy right at the expiration of the First Segment, then such space
shall also be deemed to be "Vacant Space" at the expiration of the First
Segment.
13.02 CLOSING DATE PURCHASE PRICE COMPUTATION. On the Closing Date, as
part of the Purchase Price, Purchaser shall pay to Seller the Closing Payment
computed in accordance with the provisions of Paragraph 13.01(ii) hereof.
13.03 LEASE ASSIGNMENT RESERVATION. Notwithstanding any provisions to
the contrary contained in this Agreement, Seller shall be entitled to reserve
from the Lease Assignment ("Assignment Reservation") all of the remedies (but
excluding any eviction actions or summary depossess actions) of the landlord
under the subject Leases or New Leases (that are executed by Seller) that
pertain to (i) an event(s) that occurred prior to the Closing Date, but the
obligation of indemnity by or performance of the subject Tenant or New Tenant in
respect to such event does not arise until on or subsequent to the Closing Date;
(ii) the recovery of Rent that is either due and payable prior to the Closing
Date or due prior to the Closing Date, but not payable until thereafter,
including Unknown Rents (as hereinafter defined); and (iii) the recovery of any
base rent portion of Rent that is due under Leases or New Leases prior to the
date ("Reserved Base Rent Date") that is the first to occur of (y) the date on
which the Earn-Out Payment in respect thereto is paid (if any is required as
hereafter provided), and (z) the date ("Lease Reservation Date") that is five
(5) months subsequent to the date (subject to Force Majeure) that is set forth
in the subject Lease or New Lease for the commencement of the term thereof.
Because Purchaser is to be the payee of Rent under Leases and New Leases due on
and after the Closing Date, the Lease Assignment shall not specifically reserve
the Assignment
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Reservation provisions provided in clause (iii). However,
provided Purchaser is not required to make any out-of-pocket expenditures to
third parties and Purchaser applies all Rents received after the Closing first
to Rent then due under the applicable Leases and New Leases as provided in
Paragraph 14.02 hereof, Purchaser agrees to fully cooperate with Seller in
prosecuting against the applicable Tenant or New Tenants the rights reserved in
the Assignment Reservation, provided, further, however, that prior to the
commencement of any action or proceeding against such Tenant or New Tenant,
Seller notifies Purchaser of its intent to commence any such action or
proceeding and affords Purchaser a reasonable period of time to resolve the
matter with such Tenant or New Tenant before Seller commences any such action or
proceeding.
13.04 NEW LEASES. Except for New Leases presented to Purchaser by
Seller as hereafter provided, Purchaser and its successors, during the Earn-Out
Period, shall not enter into any lease, tenancy, occupancy agreement, rental
agreement, option, license or concession for space in the Project (collectively,
"Rental Undertaking"), without first obtaining Seller's prior written consent,
which consent shall not be unreasonably withheld or delayed. If Seller consents
as aforesaid to a Rental Undertaking, such approved Rental Undertaking shall be
deemed a New Lease. During the period commencing on the date hereof and ending
on the expiration of the Earn-Out Period, Seller shall have the exclusive right
to negotiate prospective New Leases, except in the instance of Rental
Undertakings to which Seller has consented as aforesaid. Purchaser agrees to
bind its successors, assigns and their successors and assigns to the provisions
of this Paragraph 13.04.
Seller shall keep Purchaser reasonably advised of the terms,
provisions and conditions of such prospective New Leases as well as the identity
of and the available financial information pertaining to the lessee ("Prospect")
of a proposed New Lease. Purchaser agrees to reasonably cooperate with and
advise Seller whether the credit worthiness of the Prospect is acceptable to
Purchaser and of those terms, provisions and conditions proposed for prospective
New Leases that Purchaser approves or disapproves. Purchaser agrees not to
unreasonably withhold or delay its consent and approval of the credit worthiness
of the Prospect or of such terms, provisions and conditions, provided the same
are reasonably consistent with the Leases and New Leases (or does not violate
any provision thereof) in respect to (i) rental rates and proposed Tenant
Inducements for comparable space within the Project for Prospects of comparable
net worth, (ii) duration of lease term, and (iii) exclusive uses proposed for
the Prospect.
Under the provisions of a New Lease, (i) for the period prior to
the Closing Date, Seller shall be the landlord thereof, and (ii) for the
Earn-Out Period, Purchaser shall be the landlord thereof and Seller shall be a
party thereto, as contractor, for the limited purpose of performing the New
Lease Obligations (as hereinafter defined).
When and as a final draft of a New Lease is prepared, Seller
shall deliver a true and complete copy thereof to Purchaser along with all
financial information pertaining to the Prospect that is in Seller's possession
or under its control that was not theretofore delivered to
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Purchaser. Purchaser shall advise Seller, in writing, within ten (10) business
days after Purchaser's receipt of the draft New Lease, whether Purchaser
approves or disapproves the same. If Purchaser notifies Seller as aforesaid of
Purchaser's disapproval of a draft New Lease ("Disapproved Lease"), such notice
shall set forth, in reasonable particularity, the reasons for Purchaser's
disapproval. If Purchaser fails to so notify Seller of whether the draft New
Lease is approved or disapproved as aforesaid, it shall act as notice to Seller
that Purchaser has approved the same. When a prospective New Lease has been
approved or is deemed to have been approved, (i) in the instance of prospective
New Leases to be executed prior to the Closing Date, Seller shall execute the
same as landlord thereunder, and (ii) in the instance of prospective New Leases
to be executed during the Earn-Out Period Seller shall promptly thereafter
deliver execution originals of the same to Purchaser that have been executed by
the subject Prospect, as the New Tenant, and by the Seller in respect to the New
Lease Obligations. Within five (5) business days following Purchaser's receipt
of execution originals as aforesaid in clause (ii), Purchaser shall execute and
return the same to Seller. If Purchaser fails to return, when required, said
originals executed by Purchaser as aforesaid, such New Lease ("Unsigned Lease")
shall automatically be deemed a New Lease that is fully executed during the
Earn-Out Segment (as hereinafter defined) in which Seller delivered it to
Purchaser for execution, and shall be deemed a Qualified Lease and the Earn-Out
Conditions in respect thereto satisfied on the sixth (6th) business day after it
was delivered to Purchaser, notwithstanding the provisions of Paragraph
13.01(xi) hereof. As a result, subject to the provisions of the next sentence,
Purchaser shall pay to Seller, on the twenty-fifth (25th) day of the month first
occurring thereafter, the Earn-Out Payment computed in respect to such Unsigned
Lease. However, in the event, after the date an Unsigned Lease became a
Qualified Lease as aforesaid and prior to the date the Prospect thereof
withdraws its signature thereto, Purchaser executes and returns to Seller such
Unsigned Lease, Seller agrees to be bound by and to perform the New Lease
Obligations for such Unsigned Lease.
In the event, at any time prior to the date that is three (3)
months subsequent to the expiration date of the Earn-Out Segment in which there
was a Disapproved Lease, Purchaser (or its successors or assigns) enters into
any Rental Undertaking with the Prospect of such Disapproved Lease, such Rental
Undertaking shall automatically, notwithstanding the provisions of Paragraph
13.01(xi) hereof, be deemed to be a Qualified Lease and Purchaser shall pay to
Seller, on the twenty-fifth (25th) day of the month first occurring after such
Rental Undertaking was signed by Purchaser, an amount equal to (a) the Earn-Out
Payment computed in respect to the provisions of such Rental Undertaking as a
Qualified Lease, minus (b) the Footage Payment, if any, that was previously paid
by Purchaser in respect to the portion of the Project that is the subject of
such Rental Undertaking, minus, (c) the costs incurred by Purchaser to unrelated
third parties for the construction and completion of tenant improvements and
broker's commissions for the subject Rental Undertaking, but in an amount, in
either instance, not greater than the cost of those tenant improvements and
Commissions provided in the Disapproved Lease, and minus (d) any unsatisfied
right of offset afforded Purchaser pursuant to Paragraphs 5.04, 9.03 and 16.01
hereof. The obligations of Purchaser under the provisions of this grammatical
paragraph shall survive the Closing and the later expiration of the Earn-Out
Period.
13.05 EARN-OUT PERIOD. The hereafter provided period of time
subsequent to the Closing Date shall be divided into two segments (respectively,
"First Segment," and "Second
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Segment," and generally, "Earn-Out Segment,"). Each Earn-Out Segment during
which Seller has elected, as hereafter provided, to extend the term of this
Agreement shall be for a period of five (5) months or for such longer period as
provided in Section 13.06 hereof. The First Segment shall commence on the day
after the Closing Date, and the Second Segment (if Seller elected or is deemed
to have elected to extend the Earn-Out Period shall commence on the day after
the expiration of the First Segment. Provided the Closing occurs, Seller hereby
elects to extend the term of this Agreement for the First Segment. Seller may
elect, in its sole discretion, to extend the term of this Agreement for the
Second Segment by delivering to Purchaser Seller's written notice of such
election ("Earn-Out Extension Notice") not less than thirty (30) days prior to
the expiration of the First Segment. If Seller fails to deliver, as aforesaid,
its Earn-Out Extension Notice, it shall act as notice to Purchaser that Seller
has elected not to extend the term of this Agreement for the Second Segment.
However, notwithstanding the preceding sentence, if one or more of the Other
Sellers elect(s), under the provisions of its respective Other Sale Agreement,
to extend for the Second Segment, Seller, regardless of its election hereunder,
shall be deemed to have elected to so extend this Agreement, except that an
election by the Other Seller under the terms of the Other Sale Agreement for
Tanasbourne Town Center (Phase I) to extend for the second segment thereunder
shall not be deemed an election of Seller hereunder to extend the Earn-Out
Period for the Second Segment, if the closing for such Other Center is after the
Closing. The aggregate of the Earn-Out Segments for which Seller has elected or
is deemed to have elected to extend the term hereof shall be referred to as the
"Earn-Out Period."
13.06 CASUALTY DURING EARN-OUT PERIOD. If, during the Earn-Out Period,
there is a Casualty to a Vacant Space, the Earn-Out Period and the applicable
Earn-Out Segment shall be tolled as to the damaged Vacant Space until such time
as Purchaser causes such damaged Vacant Space to be restored to a habitable
condition, exclusive of tenant's improvements. If, during the Earn-Out Period,
there is a Casualty to twenty five percent (25%) of the Square Footage of the
Improvements (exclusive of the Vacant Space), the Earn-Out Period and the
applicable Earn-Out Segment shall be tolled until such time as such damaged
Improvements are restored to a condition so that the Tenants or New Tenants
thereof are open and operating their respective businesses therein, except in
respect to those Tenants or New Tenants whose Leases or New Leases were
terminated as a result of the subject Casualty. Purchaser agrees to notify
Seller, in writing, of the occurrence of such a Casualty. Notwithstanding the
foregoing, in the event of such a Casualty, Seller shall deliver to Purchaser,
within ten (10) days following the date of Seller's receipt of Purchaser's
written notification, Seller's written notice ("Casualty Notice") of its good
faith determination that such Casualty is the proper basis for the tolling of
the applicable Earn-Out Segment. If Seller fails to deliver a Casualty Notice as
aforesaid, it shall act as notice to Purchaser that Seller is not claiming any
tolling of the applicable Earn-Out Segment in respect to such Casualty.
Regardless of a Casualty Notice, there will be no tolling of the Earn-Out Period
if Purchaser restores the applicable portion of the Improvements within thirty
(30) days following the date of such Casualty. However, if such restoration is
not completed within said thirty (30) days, the Earn-Out Period shall be tolled
commencing on the date of the Casualty and ending on the date provided in the
first two sentences of this Paragraph 13.06. During the Earn-Out Period, subject
to Force Majeure, Purchaser agrees to diligently undertake the restoration of
the applicable portion of the Improvements following a Casualty thereto.
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13.07 EARN-OUT PAYMENTS. In respect to Leases or New Leases that are
fully executed prior to the expiration of the Earn-Out Period, on the
twenty-fifth (25th) day of each calendar month after the Closing Date, provided
the subject Lease or New Lease is a Qualified Lease prior to the Lease
Reservation Date, Purchaser shall pay to Seller the Earn-Out Payment computed in
respect to those Leases and New Leases that became, for the first time,
Qualified Leases during the preceding month and for which no Earn-Out Payment
had been previously paid to Seller. In the event a New Lease is executed during
the First or Second Segment, but it does not become a Qualified Lease until
after the expiration of the Earn-Out Period, but prior to the Lease Reservation
Date, Purchaser, subject to the satisfaction of the Earn-Out Conditions, shall
pay to Seller at the time aforesaid, an amount equal to the Earn-Out Payment
computed in respect to such subsequent Qualified Lease. Any Earn-Out Payment
shall be subject to any unsatisfied right of offset as provided in Paragraphs
5.04, 9.03 and 16.01 hereof.
Notwithstanding the foregoing, the Earn-Out Payment or Closing
Payment in respect to a particular Qualified Lease (excluding those that are
Qualified Leases in respect to an Unsigned Lease or a Rental Undertaking with
the Prospect of a Disapproved Lease as provided in each instance in Paragraph
13.04 hereof) shall not be due and payable by Purchaser to Seller, unless and
until, Seller, prior to the Lease Reservation Date, has delivered or caused to
be delivered to Purchaser, in respect to the subject Qualified Lease, (i) a
fully executed original thereof; (ii) a certificate of occupancy from the
applicable governmental authority authorizing the uninterrupted occupancy by the
subject Tenant or New Tenant of the subject premises; (iii) the applicable
Tenant Estoppel containing no material exceptions or Seller's Estoppel, if in
accordance with the provisions of Paragraph 7.15 hereof; (iv) Schedule
10.01(xvii) from Seller in respect to the subject Lease or New Lease, updated to
the date the Earn-Out Payment is due, setting forth any unsatisfied Tenant
Inducement in respect thereto; (v) evidence, in form and content reasonably
satisfactory to Purchaser, that the portion of Tenant Inducements payable to the
subject Tenant or New Tenant has been paid by Seller; (vi) an original of the
insurance certificates required from the subject New Tenant under the Qualified
Lease; (vii) the date down and increased coverage endorsement for the Title
Policy required pursuant to the provisions of Paragraph 6.04 hereof, provided
Purchaser pays fifty percent (50%) of the Shared Closing Costs in respect
thereto; and (viii) copies of the "as-built" plans and specifications for the
tenant improvements for the subject Qualified Lease (collectively, in respect to
clauses (i) through (viii) above, "Earn-Out Conditions"). The Earn-Out Payment
obligations of this Paragraph 13.07 shall survive the Closing Date and the later
termination of this Agreement. If the Earn-Out Conditions are not satisfied for
the subject Lease or New Lease on or prior to the Lease Reservation Date
therefor, then Purchaser shall have no obligation to make any Earn-Out Payment
in respect thereto.
13.08 FOOTAGE PAYMENT. In the event Seller elects not to extend the
Earn-Out Period for the Second Segment, Purchaser shall pay to Seller, when
hereafter provided, an amount ("Footage Payment") equal to the Square Footage
(as hereinafter defined) of the Vacant Space existing at the expiration of the
First Segment, multiplied by (i) $55.00 for that portion of the Vacant Space
that is not greater than one hundred feet in depth as measured from the front
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exterior surface to the rear exterior surface, and (ii) $45.00 for that portion
of the Vacant Space that is greater than one hundred feet in depth measured as
aforesaid. If Seller elects or is deemed to have elected to extend the term of
the Earn-Out Period for the Second Segment, there will be no Footage Payment.
"Square Footage" shall mean the aggregate number of square feet of the Vacant
Space measured from the front exterior surface to the rear exterior surface and
from the middle of demising walls of such Vacant Space. Within forty-five (45)
days following the date Seller has elected or is deemed to have elected not to
extend the term of the Earn-Out Period for the Second Segment, Seller shall
deliver to Purchaser Seller's computation of the amount of the Footage Payment
("Footage Computation") which will set forth the identity of the Vacant Space,
the depth of the Vacant Space, and the amount of the Square Footage contained
therein. Unless Purchaser notifies Seller within ten (10) business days
following Purchaser's receipt of the Computation Notice that Purchaser disagrees
with the provisions thereof, Purchaser shall pay to Seller, within thirty (30)
days following Purchaser's receipt of the Computation Notice the amount of the
Footage Payment provided therein. If Purchaser does object to the Computation
Notice as aforesaid, Purchaser and Seller shall promptly confer, in good faith,
to resolve the disagreement. When the disagreement is resolved, within ten (10)
business days thereafter, Purchaser shall pay to Seller the resolved Footage
Payment. Any Footage Payment shall be subject to any unsatisfied right of offset
as provided in Paragraphs 5.04, 9.03 and 16.01 hereof.
13.09 INTENTIONALLY DELETED.
13.10 SELLER'S NEW LEASE OBLIGATIONS. Seller, at its sole cost and
expense, shall (i) apply for and obtain all permits and licenses necessary to
construct all tenant improvements required under New Leases; (ii) subject to
Force Majeure, construct and complete, when required under the provisions of New
Leases, all such tenant improvements; (iii) pay, when due, all Commissions in
respect to New Leases; (iv) provide and undertake the required New Lease
construction and warranty work ("Tenant Warranty"); and (v) provide the
builder's "all risk" and general liability insurance coverage required by the
subject New Lease in respect to such construction (collectively in respect to
clauses (i) through (v), "New Lease Obligations").
13.11 PUNCHLIST. The portion of the Purchase Price payable at Closing
as computed pursuant to the provisions of Paragraph 13.02 hereof and the amount
of each Earn-Out Payment due hereunder shall be reduced by an amount which shall
be held by Purchaser and disbursed as hereafter provided, which amount shall
equal one hundred and twenty five percent (125%) of the reasonably estimated
cost of completing all of the tenant improvements for work for Leases and New
Leases that are Qualified Leases as of the Closing Date and/or Earn-Out date.
The amount of the Footage Payment payable hereunder shall be reduced by an
amount which shall be held by Purchaser and disbursed as hereafter provided,
which amount shall equal one hundred twenty five percent (125%) of the
reasonably estimated cost of constructing and completing substantially to those
standards for the shell and core portion of those Improvements comprising the
Project that are each set forth on the Shell and Core List and Standard attached
hereto as Schedule 13.11 (collectively, in respect to the first and second
sentences of this Paragraph 13.11, "Punchlist Holdback"). The Punchlist Holdback
shall be compiled in a line item format in respect to major segments for
completing such incomplete items and shall set forth the reasonable cost of
completing each such line item. If Seller and Purchaser, within fifteen (15)
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days prior to the Closing Date, are unable to agree on the scope or amount of
each Punchlist Holdback line item, Seller and Purchaser shall appoint a third
party contractor to make such determination, and the scope and amount so
determined by the third party contractor shall be binding upon the Parties. When
the scope and amount of the Punchlist Holdback is determined as aforesaid, it
shall be attached to this Agreement, respectively, as Schedules 13.11(a)(1),
13.11(a)(2), etc. Thereafter, subject to Force Majeure, Seller, at its sole cost
and expense (regardless of the amount of the Punchlist Holdback), agrees to
diligently prosecute to completion ("Punchlist Work") all of the items on each
Schedule 13.11(a) attached hereto. The obligation of Seller to complete the
Punchlist Work is absolute and unconditional. Monthly, after the Closing Date,
when Punchlist Work pertaining to various line items on the Punchlist Holdback
is complete, Purchaser shall pay to Seller one hundred percent (100%) of that
portion of the Punchlist Holdback applicable to such completed Punchlist Work
(thereby retaining twenty-five percent (25%) thereof), provided Seller has
delivered to Purchaser a Form G704 in the form attached to the Exhibit Agreement
as Schedule 13.11(b), executed by Seller (or its contractor) setting forth that
the subject line item of Punchlist Work has been completed.
When all of the Punchlist Work has been completed and the Forms
G704 therefor have been delivered to the Purchaser, Purchaser shall pay to
Seller the remaining twenty-five percent (25%) of the Punchlist Holdback,
provided Seller has delivered to the Purchaser the following documents:
(a) Evidence that all payment in the manner required by the
applicable contract, agreement or undertaking is paid in full in respect to the
subject Punchlist Work;
(b) Lien waivers required by (and that are reasonably
satisfactory to) the Title Company from the Seller and its contractor and
subcontractors that are necessary to insure over Liens in respect to the
Punchlist Work; and
(c) In respect to the portion(s) of Punchlist Work for
incomplete tenant improvements under a Lease or New Lease, an acknowledgment
from the subject Tenant or New Tenant, in form and substance reasonably
acceptable to Purchaser, setting forth the applicable Tenant's or New Tenant's
acceptance of completion of the subject tenant improvements.
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS.
All of the items of income and expense mentioned in this Section
14 shall be apportioned or adjusted between Seller and Purchaser as of 12:01
A.M., local time of the Project, as of the Closing Date. Except as provided in
the instance of Unknown Rents as provided in Paragraph 14.03 hereof, all
apportionments and adjustments shall be made as of the Closing Date. To the
extent that the apportionments and adjustments, at the Closing, are based upon
any errors or omissions in the calculation or determination thereof, promptly
after notice of such errors or omissions, the Parties shall readjust or
reapportion and make the payment required as a result thereof.
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14.01 RENTS. The fixed and minimum rents and all additional rents,
escalation charges, common area maintenance charges, imposition charges, heating
and cooling charges, insurance charges, charges for utilities, percentage rent,
and all other rents, charges and commissions (collectively, the "Rents") payable
by the Tenants under the Leases and New Leases that are Qualified Leases as of
the Closing Date, to the extent collected by Seller on or prior to the Closing
Date and which represent payments of Rents applicable to a period of time
subsequent to the Closing Date. Notwithstanding the foregoing, Seller shall be
permitted the rights against Tenants and New Tenants as provided in the
Assignment Reservation set forth in Paragraph 13.03 hereof.
14.02 ARREARS. Any of the Rents that are due and payable by the
Tenants and New Tenants on or prior to the Closing Date, but which have not been
collected by the Seller on or prior to the Closing Date, or payment of which has
been deferred until after the Closing Date ("Arrears"), to the extent applicable
to any period of time on or prior to the Closing Date, and which are paid after
the Closing Date shall, subject to the terms below, be paid to Seller and be the
subject of the Assignment Reservation, and if the Arrears are received by
Purchaser, Purchaser shall pay the Arrears to Seller after collection by
Purchaser, provided, however, that if any Arrears exist on the Closing Date, all
Rents, received and collected by Purchaser after the Closing Date shall be
applied first to payment of all Rents due Purchaser and second to all Arrears
due Seller. Purchaser shall have no obligation to collect any Arrears or to
commence any action to enforce the obligation of Tenants to pay the Arrears, but
Purchaser agrees to cooperate with Seller in the collection of such Arrears, but
only as provided in Paragraph 13.03 hereof. In the event Purchaser elects to
commence any action or proceeding against any Tenant and as a result thereof
collects any Arrears which Purchaser is required to remit to Seller, Purchaser
shall be entitled to deduct and retain a portion of the amount collected which
is equal to the Pro Rata Share (as hereinafter defined) of the Litigation
Expenses incurred by Purchaser in connection with the collection of the Arrears.
Notwithstanding anything to the contrary, Seller, as a result of the Assignment
Reservation, shall have the right, after delivery of prior written notice to
Purchaser, to commence any action or proceeding, except a summary depossess or
any eviction actions, against any Tenant for Seller's portion of any Arrears.
14.03 UNKNOWN RENTS. Any Rents which have accrued but are not due and
payable on the Closing Date because the applicable Lease or New Lease year or
other fiscal period for which such Rents are to be computed has not yet expired
(including by way of example only, escalation charges and percentage rents) or
if it has expired but cannot for any other reason be calculated by the Parties
on the Closing Date ("Unknown Rents"), shall be apportioned promptly after (i)
the expiration of the applicable Lease or New Lease year or other fiscal period,
and (ii) the receipt and collection of the Unknown Rents. Purchaser shall make
reasonable efforts to ascertain the amount of the Unknown Rents (but, shall not
be obligated to commence any action or proceeding to collect Unknown Rents,
except that Purchaser shall reasonably cooperate with Seller in respect to the
Assignment Reservation as provided in Paragraph 13.03 hereof), and when the
amounts of the Unknown Rents are ascertained, received and collected by
Purchaser, Purchaser shall promptly pay to Seller a portion (the "Pro Rata
Share") of the Unknown Rents determined by multiplying the Unknown Rents
collected by a fraction, the numerator of which is the number of days in the
applicable Lease or New Lease year or other fiscal period up to but
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excluding the Closing Date and the denominator of which is the number of days in
the applicable Lease or New Lease year or other fiscal period, less any monies
Seller has previously received on account of the Unknown Rents and Seller's Pro
Rata Share of the Litigation Expenses incurred by Purchaser in the collection of
the Unknown Rents. In the event it is determined after Closing that the amount
of the Unknown Rents received by Seller exceeds the Seller's Pro Rata Share,
Seller shall promptly pay such excess to Purchaser upon demand. Notwithstanding
anything to the contrary, Seller shall have the right to commence any action or
proceeding, except a summary depossess or an eviction action, against any Tenant
for Seller's portion of any Unknown Rents.
14.04 UTILITIES. To the extent not payable by Tenants, the actual or
estimated charges for utilities accrued and payable by Seller prior to the
Closing Date, provided Purchaser is required by law or elects to assume Seller's
account. Deposits for utilities (the "Utility Deposits"), plus any interest on
the Utility Deposits to which Seller is or will be entitled, held by the
provider of the utilities and which are freely transferable to Purchaser, shall,
at the election of the Purchaser, be assigned by Seller to Purchaser and
Purchaser shall pay Seller the full amount thereof at Closing, in addition to
the applicable portion of the Purchase Price. Seller shall retain the right to
obtain a refund of any Utility Deposits which are not required to be assigned to
Purchaser and Purchaser will cooperate with Seller in obtaining any refund. With
respect to water, sewer, electric and gas charges, Seller shall make reasonable
efforts to obtain a reading of the meter or other consumption measuring device
as of the Closing Date. If the Seller is unable to obtain such a reading, Seller
shall furnish a reading as of a date not more than thirty (30) days prior to the
Closing Date and the unknown charges shall be apportioned on the basis of an
estimate computed by utilizing such reading and the most recent bill from the
utility provider, computed on an equal per diem basis.
14.05 CONTRACTS. Prepaid charges, payments and accrued charges under
the Contracts set forth in Schedule 7.05(a) attached hereto, to the extent not
paid by Tenants or New Tenants. However, if paid by Tenants or New Tenants,
Seller shall credit Purchaser with the amount thereof received by Seller from
such Tenants or New Tenants, to the extent not applied to the payment
obligations under the Contracts.
14.06 TAXES. All references to the year of real estate taxes shall
mean those real estate taxes that are due with respect to the stated year, but
are not assessed and payable until the succeeding year. Seller shall cause all
real estate taxes for 1995 and prior years to have been paid as of the Closing
Date. The 1996 real estate taxes for the Project shall be pro-rated as of the
Closing Date. Seller's pro-rata share of such real estate taxes shall equal the
portion of 1996 real estate taxes calculated based upon the number of days
elapsing from January 1, 1996 to, but not including, the Closing Date in
relation to 365 days in the year 1996. Purchaser shall be responsible for the
remaining portion of such real estate taxes, commencing with the Closing Date
and continuing through December 31, 1996. The Parties shall make the pro-ration
provided for herein for the 1996 real estate taxes on the basis of an agreed
upon estimate of $789,111.00, and shall thereafter make such adjustments
(increases or decreases) as may be necessary at such time as the tax statements
for the total real estate taxes for 1996
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become available. The Closing Payment shall be reduced by the amount of Seller's
pro-rata share of the 1996 real estate taxes.
The portion of the Rent under Leases and New Leases that
pertains to the obligations of Tenants and New Tenants to pay their respective
pro-rata share real estate taxes (or special assessments provided in Paragraph
14.07 hereof) shall be called "Real Estate Tax Rent." The portion of Real Estate
Tax Rent that pertains to the period prior to the Closing Date and which was
paid to Seller by those Tenants and New Tenants shall be retained by Seller. Any
Real Estate Tax Rent received by Seller prior to the Closing Date that pertains
to the period on or subsequent to the Closing Date shall be credited to
Purchaser at the Closing. Any Real Estate Tax Rent received by Purchaser after
the Closing that pertains to the period prior to the Closing Date shall be paid
by Purchaser to Seller. The Real Estate Tax Rent retained by Seller shall be
subject to adjustment (increases or decreases) at such time as Purchaser
reconciles the estimated payment of Real Estate Tax Rent with the amount of the
actual real estate taxes paid for 1996.
14.07 ASSESSMENT INSTALLMENTS. If, as of the Closing Date, the Project
is encumbered or otherwise affected by any assessment (whether or not a lien)
which becomes payable in installments, for the installment that is due and
payable in the year in which the Closing occurs, Seller shall credit Purchaser
with the pro-rata portion of such installment from January 1 of the year of the
Closing to the applicable Closing Date. Such pro-ration shall be made on the
basis that the number of days from January 1 of the year of the Closing to, but
excluding, the Closing Date bears to three hundred and sixty five (365) days.
The portion of Real Estate Tax Rent applicable to the installment of assessment
payable in the year of the Closing that pertains to the period prior to the
Closing and which was paid to Seller by Tenants or New Tenants shall be retained
by Seller. Any Real Estate Tax Rent applicable to such installment or assessment
that was received by Seller prior to the Closing Date that pertains to the
period on or subsequent to such Closing Date shall be credited to Purchaser at
the Closing. Any Real Estate Tax Rent applicable to such installment of
assessment received by Purchaser after the Closing Date that pertains to the
period prior to such Closing Date shall be paid by Purchaser to Seller.
14.08 PERMITS. The (i) Vault taxes and rents, if any, due and payable
in 1996 (to the extent not the obligation of Tenants or New Tenants to pay),
(ii) Permit fees to the extent transferable, and (iii) government inspection
fees shall be apportioned as of the Closing Date.
14.09 SECURITY DEPOSITS/TENANT INDUCEMENTS. Purchaser shall receive a
credit against the portion of the Purchase Price payable on the Closing Date in
an amount equal to the sum of (i) the Security Deposits, if any, which Seller is
holding pursuant to the Leases and New Leases and as set forth in Schedule
7.02(a) attached hereto, plus (ii) all costs, expenses and losses (including
without limitation, reductions in Rent) which will be incurred by Purchaser
after the Closing as a result of all Tenant Inducements given on or before the
Closing Date which are not paid in full as of Closing in respect to Qualified
Leases as of the Closing Date.
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14.10 CUSTOMARY ITEMS. Any other items of income and expense not
specifically mentioned in this Section 14 which are customarily apportioned in
real property transactions of the character contemplated by this Agreement.
15. CLOSING.
15.01 CLOSING AND CLOSING DATE. The closing of this transaction
("Closing") shall be held at the office of the Seller on June 27, 1996 (the
"Closing Date"), subject to extensions pursuant to Paragraphs 5.04, 6.03, 7.20,
and 12.03 hereof.
16. POSSESSION.
16.01 POSSESSION AND POST CLOSING WORK. Purchaser shall be entitled to
possession of the Project on the Closing Date, subject only to the Leases, New
Leases, Assignment Reservation and the Permitted Exceptions. Notwithstanding the
foregoing, subsequent to the Closing Date, Seller and Seller's agents,
contractors and subcontractors shall have access to such portions of the Project
necessary and convenient to commence and/or complete (i) the Punchlist Work;
(ii) Unacceptable Conditions; (iii) Seller's New Lease Obligations; (iv)
incomplete tenant improvement work under Leases; (v) Warranty Work; and (vi)
Tenant Inducements (collectively in respect to clauses (i) through (vi), "Post
Closing Work"). All Post Closing Work shall be done (a) at Seller's sole cost
and expense, (b) in a fashion to reasonably minimize, taking into account the
scope and nature of the Post Closing Work, the disruption to Tenants and New
Tenants and to the operation and management of the Project by Purchaser and
Purchaser's agents, (c) in compliance with Environmental Laws, and (d) in any
event, subject to Force Majeure, with diligence. The obligation of Seller to
complete the Post Closing Work and to pay Commissions and pay all financial
obligations of Seller hereunder is absolute and unconditional, and Seller agrees
to indemnify, defend and hold Purchaser and its successors and assigns and the
Project harmless (including Litigation Expenses) from and against any and all
(except as provided in Paragraph 23 hereof) loss, damage, claim, demand,
liability, Lien, action, cause of action, judgment or decree as a result of (A)
damage or destruction to property, including title to the Project, (B) personal
injury, or (C) loss of Rent resulting from the performance or non-performance of
the Post Closing Work by Seller (except that which is caused, in whole or in
part, by the negligence, willful misconduct or breach of contract by Purchaser
or its successors and assigns or their respective agents, employees, contractors
or subcontractors), and resulting from Seller's failure to pay Commissions or to
pay all financial obligations of Seller hereunder. In the event Seller fails to
perform the Post Closing Work, pay Commissions or pay all financial obligations
of Seller hereunder, Purchaser may deduct from the next succeeding Earn-Out
Payment payable hereunder after the event of Seller's failure as aforesaid, the
cost and expense incurred by Purchaser in completing such incomplete Post
Closing Work, paying such unpaid Commissions or paying all financial obligations
of Seller hereunder. During the performance of any Post Closing Work, Seller
shall maintain commercial public liability insurance in an amount and issued by
carriers that are reasonably satisfactory to Purchaser naming Purchaser and
those other persons or entities reasonably designated by Purchaser as additional
insureds.
17. RISK OF LOSS.
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17.01 RISK. Except as provided in Paragraphs 17.02 and 17.03, the risk
of loss or damage (the "Loss") to the Project by (i) condemnation, eminent
domain or similar actions or proceedings or threat thereof (collectively,
"Taking"), or (ii) fire or other casualty (collectively, a "Casualty") shall be
borne by Seller through the date and time that the applicable portion of the
Purchase Price payable on the Closing Date is paid to Seller and thereafter
shall be borne by Purchaser.
17.02 DAMAGE AND DESTRUCTION. In the event all or any portion of the
Project is materially damaged by any cause whatsoever prior to the Closing Date,
Seller shall so advise Purchaser and Purchaser shall have the right, at its sole
option, to either: (a) proceed with Closing with no reduction in the Purchase
Price, provided, however, Purchaser shall receive from Seller (i) all proceeds
of any casualty insurance maintained by Seller and payable with respect to such
damage, and (ii) an amount equal to the deductible on such casualty insurance;
or (b) terminate this Agreement by giving written notice of termination to
Seller within ten (10) business days of the date Purchaser is advised by Seller
of such damage, in which event the Deposit shall be refunded to Purchaser,
Seller and Purchaser shall each pay 50% of the Shared Closing Costs as of the
date this Agreement is terminated by Purchaser, and Seller and Purchaser shall
have no further rights or obligations under this Agreement, except those rights
and obligations specifically set forth herein as surviving such termination. The
Seller represents and warrants to Purchaser that the Improvements (except any
Tenant's or New Tenant's trade fixtures therein) are insured to the full
replacement value thereof with a deductible of not more than $5,000.00, which
insurance Seller agrees to keep in full force and effect until the Closing.
17.03 CONDEMNATION AND EMINENT DOMAIN. If, prior to the Closing Date,
the Project shall be subjected to a Taking, either total or partial, or if any
notice of intent of Taking or sale in lieu of Taking that materially affects the
Project is received by Seller or Purchaser, Purchaser shall have the right to
either: (a) proceed with Closing, in which event Purchaser shall be entitled to
participate in any such condemnation or eminent domain proceedings and, after
payment to Seller of the cash portion of the Purchase Price payable on the
Closing Date, to receive all of the proceeds of such Taking, or (b) terminate
this Agreement by giving written notice of termination to Seller, in which event
the Deposit shall be returned to Purchaser, Seller and Purchaser shall each pay
50% of the Shared Closing Costs, and Purchaser and Seller shall have no further
rights or obligations under this Agreement, except those rights and obligations
specifically set forth herein as surviving such termination. Seller and
Purchaser each agree to promptly forward to the other any notice of intent
received pertaining to a Taking of all or a portion of the Project.
18. DEFAULTS AND REMEDIES.
18.01 SELLER'S DEFAULTS. In respect to the remedies afforded Purchaser pursuant
to Paragraph 18.04 hereof, Seller shall be deemed to be in default under this
Agreement in the event (i) Seller fails, for any reason (other than a default by
Purchaser), to perform any of its material obligations under this Agreement that
arise on or prior to the Closing within the time limits and in the manner
provided for in this Agreement, (ii) any representation or warranty made by
Seller in this Agreement is untrue or inaccurate in a material respect when made
or as of the Closing
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<PAGE> 43
Date, (iii) any Other Seller under the applicable Other Sale Agreement fails,
for any reason (other than a default by Purchaser), to perform any of its
material obligations under the subject Other Sale Agreement that arise on or
prior to the Closing within the time limits and in the manner provided for in
such Other Sale Agreement, or (iv) any representation or warranty made by any
Other Seller in the applicable Other Sale Agreement is untrue or inaccurate in a
material respect when made or as of the Closing Date. Notwithstanding the
provisions of clauses (iii) and (iv) above, if Purchaser closes this
transaction, any default or any inaccurate representation or warranty by any
Other Seller under the terms of the applicable Other Sale Agreement shall be
deemed waived in respect to this Agreement and it shall not be construed as a
default by Seller hereunder. In respect to the remedies afforded Purchaser
pursuant to Paragraph 18.05 hereof, Seller shall be deemed to be in default
under this Agreement in the event Seller fails, for any reason (other than a
default by Purchaser), to perform any of its material obligations under this
Agreement that arise subsequent to the Closing within the time limits and in the
manner provided for in this Agreement or any representation or warranty made by
Seller in this Agreement is untrue or inaccurate in a material respect when made
or as of the Closing Date. If Closing does not occur and Seller is in default,
Seller shall pay all of the Shared Closing Costs.
18.02 PURCHASER'S DEFAULTS. Purchaser shall be deemed to be in default under
this Agreement in the event Purchaser fails, for any reason (other than a
default by Seller), to perform any of its material obligations under this
Agreement or any or all of the Other Sale Agreements within the time limits and
in the manner provided for, as applicable, in this Agreement and the Other Sale
Agreements, or any representation or warranty made by the Purchaser in this
Agreement or any or all of the Other Sale Agreements is untrue or inaccurate in
a material respect when made or as of the Closing Date. If Closing does not
occur and Purchaser is in default, Purchaser shall pay all of the Shared Closing
Costs.
18.03 SELLER'S REMEDIES. If Purchaser is in material default under this
Agreement of its obligation to close this transaction and Seller is not in
material default, the sole and exclusive remedy of Seller shall be to terminate
this Agreement by notice given to Purchaser and in such event Purchaser shall be
liable to Seller for liquidated damages in the amount equal to one percent (1%)
of $22,109,686.00 plus Litigation Expenses incurred by Seller in enforcing the
collection of such liquidated damages . The Parties recognize and agree that the
foregoing remedy for liquidated damages is a reasonable amount in the context of
this transaction in which the accurate measurement of damages is not feasible or
convenient. Notwithstanding the foregoing, if Purchaser (i) violates the
Recording Restriction (as hereinafter defined), (ii) fails to indemnify, defend
or hold Seller and the Project harmless in respect to Tests and Studies as
provided in Paragraph 5.02 hereof, or (iii) fails to bind its successors and
assigns as provided in Paragraph 13.04 hereof, Seller, in addition to the
aforesaid liquidated damages in respect to Purchaser's failure to close this
transaction, shall be entitled (subject to the limitations contained in
Paragraph 23 hereof) to recover from Purchaser monetary damages in the amount
actually suffered by Seller as a result of the events set forth in clauses (i),
(ii), or (iii). If Purchaser fails to pay, when due, the Earn-Out Payments
and/or Footage Payments required hereunder, Seller shall only be entitled to
recover from Purchaser such Earn-Out Payments or Footage Payments, plus interest
thereon as provided in Paragraph 24.16 hereof, plus Litigation Expenses.
38
<PAGE> 44
18.04 PRE-CLOSING PURCHASER'S REMEDIES. If Seller, in respect to its obligations
to close this transaction, is in material default under this Agreement on or
before the Closing Date and Purchaser is not in material default, Purchaser may,
as Purchaser's sole and exclusive remedies, elect to either (i) terminate this
Agreement, in which event the Deposit shall be refunded to Purchaser, and
neither Party shall have any further rights or obligations hereunder, except
those specifically provided herein as surviving such termination, or (ii) seek
and enforce the specific performance of Seller's obligations hereunder in which
event Purchaser shall also be permitted to recover Litigation Expenses that it
incurred as a result of such proceeding. Notwithstanding the foregoing, in no
instance shall Purchaser or anyone claiming by, through or under Purchaser (over
whom Purchaser has control) record or file in the public records in the
jurisdiction of the Project any memorandum or other indicia of Purchaser's
rights or Seller's obligations hereunder, except in the single instance of a
recording or filing that is concurrently done at the time of the filing of a
complaint by Purchaser, with a court of competent jurisdiction, for the relief
of specific performance of Seller's obligations hereunder, but then only after
Purchaser has given Seller three (3) business days written notice prior to such
recording or filing ("Recording Restriction").
18.05 POST CLOSING PURCHASER'S REMEDIES. If Seller is in material default under
this Agreement in respect to any of its obligations hereunder that arise
subsequent to the Closing Date, subject to the limitation provided in Paragraph
23 hereof, Purchaser may recover from Seller all out-of-pocket monetary damages
incurred by Purchaser that have not been satisfied by the offset permitted
Purchaser pursuant to Paragraphs 5.04, 9.03 and 16.01 hereof. In addition,
Purchaser shall be permitted to recover Litigation Expenses that it incurs as a
result of enforcing Purchaser's right to recover monetary damages as aforesaid.
19. CROSS DEFAULT OBLIGATION. If Purchaser is in material
default of any of its obligations under any or all of the Other Sale Agreements,
it shall be deemed a material default by Purchaser hereunder. However, if
Purchaser, in its sole discretion, elects to terminate any or all of the Other
Sale Agreements, it shall not preclude Purchaser from proceeding with the
provisions of this Agreement, provided, however, if Purchaser does proceed with
the provisions of this Agreement and the Other Sale Agreement for Tanasbourne
Town Center (Phase I) is one (or the only) of the Other Sale Agreements
Purchaser has elected to terminate, then the portion of the Closing Payment
provided in clauses (a), (b) and (c) of Paragraph 13.01(ii) hereof shall equal
the aggregate Net Cash Flow of those Leases and New Leases that are Qualified
Leases as of the Closing Date capitalized using a rate of ten and 34/100ths
percent (10.34).
20. ASSIGNMENT
Seller shall not assign or transfer any of its rights under
this Agreement without first obtaining Purchaser's prior written consent which
consent shall not be unreasonably withheld or delayed. Prior to the Closing,
Purchaser shall not assign any of its rights under this Agreement without first
obtaining Seller's prior written consent which consent shall not be
39
<PAGE> 45
unreasonably withheld or delayed. At or subsequent to the Closing, Purchaser may
assign its rights under this Agreement provided such assignee and Purchaser are
jointly and severally liable for the obligations of Purchaser hereunder and such
assignee assumes such obligations, in writing, in form and content reasonably
acceptable to Seller.
21. NOTICES.
Any notice, demand, request, approval, consent or other
communication (collectively, a "Notice") concerning this Agreement or the
Project or any matter arising in connection with this Agreement or the Project
shall be in writing. Seller hereby appoints Opus Properties, L.L.C., a Delaware
limited liability company ("Opus Properties"), as Seller's duly authorized and
empowered agent to give and receive any and all Notices required or permitted to
be given by Purchaser or Seller hereunder. Any Notice received by Opus
Properties under the terms of this Agreement shall be deemed received and
binding on Seller. Any Notice given by Opus Properties to Purchaser shall be
deemed a Notice given by and binding on Seller. All Notices shall be addressed
as follows:
If to Seller to: Opus Properties, L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Anne E. Loff
Telecopier: (612) 936-9808
with a copy to: Opus, U.S., L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Dan F. Nicol, Esq.
Telecopier: (612) 936-9808
with a copy to: O'Brien, O'Rourke & Hogan
135 South LaSalle Street
Suite 830
Chicago, Illinois 60603
ATTN: Frederic G. Hogan
Telecopier: (312) 372-8029
If to Purchaser to: DEVELOPERS DIVERSIFIED REALTY
CORPORATION
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
ATTN: James A. Schoff
Executive Vice President
Telecopier: (216) 247-5076
40
<PAGE> 46
with a copy to: Joan Allgood, Esq,
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Telecopier: (216) 247-5076
with copy to: Baker & Hostetler
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
ATTN: Albert T. Adams
Telecopier: (216) 696-0740
If to Escrow Agent to: First American Title Insurance Company
1150 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
ATTN: Rodney D. Ives
Telecopier: (612) 337-5249
Any Notice shall be given by either (i) personal delivery, in which event it
shall be deemed given on the date of delivery; (ii) certified mail return
receipt requested, in which event it shall be deemed given three (3) business
days after the date postmarked; or (iii) next or second business day delivery by
nationally recognized overnight courier, in which event it shall be deemed given
on the next or second (whichever is applicable) business day immediately
following receipt by the courier. Any Party may change any address for the
delivery of Notice to such Party, by giving Notice in accordance with the
provisions of this Paragraph 21.
22. ATTORNEYS' FEES AND DISBURSEMENTS.
In the event that any Party shall engage an attorney in
connection with any action or proceeding to enforce or construe this Agreement,
the prevailing Party in such action or proceeding shall be entitled to recover
its Litigation Expenses to the extent permitted by law. In the event different
Parties are the prevailing Parties on different issues, the Litigation Expenses
shall be apportioned in proportion to the value of the issues decided for and
against the Parties.
23. NO CONSEQUENTIAL DAMAGES.
Notwithstanding any term, provision or covenant contained in
this Agreement to the contrary, no Party hereto shall be entitled to recover
from the other Party consequential, exemplary or punitive damages, all such
damages are hereby expressly waived and released.
24. MISCELLANEOUS.
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<PAGE> 47
24.01 SUCCESSORS. The rights and obligations of the Parties under this Agreement
shall inure to the benefit of and be binding upon the Parties and all persons
who are permitted hereunder to succeed to their respective rights and
obligations.
24.02 MODIFICATIONS/WAIVERS. This Agreement cannot be changed nor can any
provision of this Agreement, or any right or remedy of any Party, be waived
orally. Changes and waivers can only be made in writing and the change or waiver
must be signed by the Party against whom the change or waiver is sought to be
enforced. Any waiver of any provision of this Agreement, or any right or remedy,
given on any one or more occasions shall not be deemed a waiver with respect to
any other occasion.
24.03 ENTIRE AGREEMENT. This Agreement is signed by the Parties as a final
expression of all of the terms, covenants and conditions of their agreement and
as a complete and exclusive statement of its terms, covenants and conditions.
24.04 COUNTERPARTS. This Agreement may be signed in one or more counterparts or
duplicate signature pages with the same force and effect as if all required
signatures were contained in a single original instrument.
24.05 CAPTIONS. The captions contained in this Agreement were inserted for the
convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the Parties.
24.06 GENDER/SINGULAR/PLURAL. Whenever masculine, feminine, neuter, singular,
plural, conjunctive or disjunctive terms are used in this Agreement, they shall
be construed to read in whatever form is appropriate to make this Agreement
applicable to all the Parties and all circumstances, except where the context of
this Agreement clearly dictates otherwise.
24.07 EXHIBITS INCORPORATED. The exhibits attached to this Agreement are hereby
incorporated by reference in their entirety with the same force and effect as if
they were set forth at length in this Agreement. Concurrently with the execution
of this Agreement, Seller, Purchaser and all of the Other Sellers entered into
that certain Exhibit Agreement ("Exhibit Agreement") pursuant to the terms of
which the exhibits attached thereto are certain of the schedules referenced in
this Agreement that are also common to all of the Other Sale Agreements.
Therefore, the exhibits attached to the Exhibit Agreement are hereby
incorporated by reference in their entirety in this Agreement with the same
force and effect as if they were set forth at length in this Agreement.
24.08 GOVERNING LAW. In the event of any dispute concerning or arising out of
this Agreement, the laws of the State in which the Project is located shall
govern and control the construction and enforcement of this Agreement.
24.09 SEVERABILITY. If one or more provisions of this Agreement or the
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and
42
<PAGE> 48
enforceability of the remaining provisions or any other application thereof
shall in no way be affected or impaired.
24.10 DATE FOR PERFORMANCE. If the date for performance of any act under this
Agreement falls on a Saturday, Sunday or federal holiday, the date for such
performance shall automatically be extended to the first succeeding business
which is not a federal holiday.
24.11 FURTHER ACTION. The Parties shall at any time, and from time to time on
and after the Closing Date, upon the request of the other Party, do, execute,
acknowledge and deliver all such further acts, deeds, assignments and other
instruments as may be reasonably required for the consummation of this
transaction and are reasonably acceptable in scope, form and content to the
Party whose act, signature, acknowledgment or delivery is requested.
24.12 INTENTIONALLY DELETED.
24.13 CONFIDENTIALITY. Without the prior written consent of Purchaser, neither
Seller nor any of Seller's representatives will disclose to any person any of
the terms, conditions or other facts with respect to this Agreement or the
Exhibit Agreement, including the status thereof, provided, that Seller or any of
Seller's representatives may make such disclosure if Seller has first received
the written opinion of counsel acceptable to Purchaser that such disclosure must
be made by Seller in order that Seller does not commit a violation of law.
Without the prior written consent of Seller, neither Purchaser nor any of
Purchaser's representatives will disclose to any person any of the terms,
conditions or other facts with respect to this Agreement or the Exhibit
Agreement, including the status thereof and any of the terms, provisions or
conditions of the Site Analysis Documents or of any of the Studies and Reports,
provided, that Purchaser or any of Purchaser's representatives may make such
disclosure if Purchaser has first received the written opinion of counsel
acceptable to Seller that such disclosure must be made by Purchaser in order
that Purchaser does not commit a violation of law. The obligation of Seller and
Purchaser pursuant to the provisions of this Paragraph 24.13 shall survive the
termination of this Agreement.
24.14 TIME OF THE ESSENCE. Time is of the essence in this transaction.
24.15 CONSTRUCTION. This Agreement shall not be construed more strictly against
one Party than against the other merely by virtue of the fact that it may have
been prepared by counsel for one of the Parties, it being recognized that both
Seller and Purchaser have contributed substantially and materially to the
preparation of this Agreement. The headings of various Section and Paragraphs in
this Agreement are for convenience only, and are not to be utilized in
construing the content or meaning of the substantive provisions hereof.
24.16 INTEREST. Any payment obligation of a Party hereto to the other Party
shall bear interest at the rate of two percent (2%) plus the corporate base rate
of interest from time to time charged by Citibank, N.A., commencing on the date
that is five (5) business days subsequent to the date such payment is due, until
paid.
43
<PAGE> 49
24.17 WARRANTY WORK. For the period ("Warranty Period") (i) that is provided in
each Lease or New Lease in respect to the applicable Tenant Warranty for tenant
improvements, and (ii) of one (1) year subsequent to the date each of the
Improvements (exclusive of tenant improvements that are the subject of the
applicable Tenant Warranty) is substantially complete in accordance with the
Plans, Seller agrees, at its sole cost and expense, to promptly (subject to
Force Majeure) correct any defects in the tenant improvements or other
Improvements due to (a) the failure thereof to substantially comply with the
plans for the subject tenant improvements or the Plans in respect to the rest of
the Improvements, or (b) faulty, improper or inferior materials or workmanship
(collectively, "Warranty Work"). If Warranty Work is the subject of a Lease or
New Lease, the provisions of such Lease or New Lease shall control in the
determination of the scope of the Warranty Work. If Warranty Work is not the
subject a Lease or New Lease, then the provisions of this Paragraph 24.17 shall
control in the determination of the scope of the Warranty Work. However,
Warranty Work shall not in any way include routine and appropriate maintenance
or Warranty Work directly resulting from (but only to the extent resulting from)
the failure to perform routine and appropriate maintenance of the tenant
improvements or other Improvements. Promptly during the Warranty Period (but in
any event prior to the expiration of the Warranty Period), Purchaser shall give
Seller written notice ("Warranty Notice") of any defect in the Project that
Purchaser, in good faith, determines to require Warranty Work. Except as
hereafter provided, Seller shall promptly undertake and complete, subject to
Force Majeure, the Warranty Work that is the subject of the Warranty Notice.
However, if Seller objects, in good faith, within ten (10) business days
following receipt of a Warranty Notice, it shall notify Purchaser, in writing of
the same. Thereafter, they shall promptly confer, in good faith, to resolve any
disagreement in respect to Warranty Work. If within fifteen (15) days after
conferring Purchaser and Seller are unable to agree on the scope of Warranty
Work that is not the subject of a Lease or New Lease, they shall appoint a third
party contractor to make such determination, and the scope so determined by the
third party contractor shall be binding on the Parties. When the Warranty Work
is agreed to by the Parties or determined by the third party contractor as
aforesaid, such Warranty Work shall be undertaken and completed as aforesaid.
The Warranty Work obligation hereunder shall only pertain to the Warranty Work
for which a Warranty Notice was delivered to Seller prior to the expiration of
the Warranty Period or that was delivered by a Tenant or a New Tenant in
accordance with the provisions of the Tenant Warranty, and in such event the
Warranty Work obligation of Seller in respect thereto shall not terminate at the
expiration of the Warranty Period or the Tenant Warranty, but rather shall
continue until such Warranty Work is completed by Seller.
<PAGE> 50
IN WITNESS WHEREOF, the Parties have signed this Agreement as
of the date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
DEVELOPERS DIVERSIFIED
OPUS CORPORATION REALTY CORPORATION
an Minnesota corporation an Ohio corporation
By: ???????????? By:
----------------------------- ------------------------------------
Its: President James A. Schoff
Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
41-0799215 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By: ?????????????????
-----------------------------
Its: Commercial Manager
<PAGE> 51
IN WITNESS WHEREOF, the Parties have signed this Agreement as
of the date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
DEVELOPERS DIVERSIFIED
OPUS CORPORATION REALTY CORPORATION
an Minnesota corporation an Ohio corporation
By: By: James A. Schoff
----------------------------- ------------------------------------
Its: James A. Schoff
Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
41-0799215 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By:
-----------------------------
Its:
-------------------------
<PAGE> 52
SCHEDULES ATTACHED TO THIS AGREEMENT OR
THE EXHIBIT AGREEMENT
1.02 Legal Description
1.02(a) Site Plan
2.01(b) Personal Property
3.01 Rent Roll
5.01(b) Environmental Reports
5.01(g) Guaranties
6.01 Survey Requirements and Certifications (attached to the
Exhibit
Agreement)
6.03 Permitted Exceptions
6.04 Endorsements
7.01 Deed (attached to the Exhibit Agreement)
7.02 Assignment of Leases (attached to the Exhibit Agreement)
7.02(a) Description of Leases and Security Deposits
7.04 Bill of Sale (attached to the Exhibit Agreement)
7.05 Assignment of Contracts (attached to the Exhibit Agreement)
7.05(a) Description of Contracts to be Assigned at Closing
7.06 Affidavit of Seller Concerning Violations/Work Orders
(attached to the
Exhibit Agreement)
7.10 FIRPTA Affidavit (attached to the Exhibit Agreement)
7.13 Tenant Letter (attached to the Exhibit Agreement)
7.15 Tenant Estoppel (attached to the Exhibit Agreement)
7.20 Seller Date Down Certificate (attached to the Exhibit
Agreement)
7.21 Agreement Estoppel
7.23 Assignment of Declaration
8.06 Purchaser Date Down Certificate (attached to the Exhibit
Agreement)
10.01(xi) Permits
<PAGE> 53
10.01(xvii) Tenant Inducements
10.01(xviii) Alleged Seller Defaults Under the Leases
10.01(xix) Tenant Defaults Under the Leases
10.01(xx) Tenant's Notice of Vacating, Assigning or Subletting
13.11 Shell and Core List and Standard
13.11(a)(1),etc. Punchlist Holdback
13.11(b) Form G704 Certificate of Completion (attached to the
Exhibit Agreement)
<PAGE> 1
EXHIBIT 2.2
-----------------------------------
AGREEMENT OF PURCHASE AND SALE
HIGHLAND GROVE SHOPPING CENTER
DEVELOPERS DIVERSIFIED REALTY CORPORATION
AND
OPUS NORTH CORPORATION
-----------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
PAGE
----
1. RECITALS.................................................................1
1.01 Definitions........................................................1
1.02 Land/Improvements..................................................1
1.03 Real Property......................................................1
2. AGREEMENT TO PURCHASE AND SELL...........................................1
2.01 Purchase/Sale......................................................2
3. PURCHASE PRICE AND MANNER OF PAYMENT.....................................2
3.01 Purchase Price.....................................................2
3.02 Purchase Price Portions............................................2
4. ESCROW...................................................................3
4.01 Escrow Agent.......................................................3
4.02 Filings............................................................3
5. SITE ANALYSIS............................................................3
5.01 Site Analysis Documents............................................3
5.02 Access.............................................................4
5.03 Site Analysis Period...............................................5
5.04 Cure of Unacceptable Conditions....................................6
6. SURVEY AND TITLE INSURANCE...............................................8
6.01 Survey.............................................................8
6.02 Title Commitment...................................................8
6.03 Purchaser's Objections; Seller's Cure..............................9
6.04 Title Policy.......................................................9
7. SELLER'S CLOSING DOCUMENTS AND ESCROW...................................10
7.01 Deed..............................................................10
7.02 Assignment of Leases..............................................10
7.03 Leases and Tenant Documents.......................................11
7.04 Bill of Sale......................................................11
7.05 Assignment of Contracts...........................................11
7.06 Violations/Work Orders Affidavit..................................11
7.07 Keys..............................................................11
7.08 Plans and Specifications..........................................11
7.09 Title Insurance Affidavit.........................................11
7.10 FIRPTA Certificate/Withholding....................................11
7.11 Form 1099.........................................................12
7.12 Books and Records.................................................12
7.13 Letters to Tenants................................................12
7.14 Recording Requirements............................................12
7.15 Estoppel Certificates.............................................12
TOC-1
<PAGE> 3
TABLE OF CONTENTS
-----------------
PAGE
----
7.16 Termination of Management and Seller Affiliated Contracts......12
7.17 Permits/Guaranties.............................................13
7.18 Closing Statements.............................................13
7.19 Escrow Instructions............................................13
7.20 Date Down Certificate..........................................13
7.21 Agreement Estoppel Certificate.................................13
7.22. Outlot and Phase II Covenant..................................14
7.23 Vacant Space Acknowledgment....................................14
7.24 Other Documents................................................14
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS........................14
8.01 Assignment of Leases...........................................14
8.02 Assignment of Contracts........................................14
8.03 Closing Statements.............................................14
8.04 Escrow Instructions............................................14
8.05 Recording Requirements.........................................14
8.06 Date Down Certificate..........................................14
8.07 Phase I Covenant...............................................15
8.08 OEA [REA] Approving Party......................................15
8.09 Vacant Space Acknowledgment....................................15
8.10 Other Documents................................................15
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.................................15
9.01 Affirmative and Negative Covenants.............................15
9.02 Payments.......................................................16
9.03 Lien Removal...................................................17
10. REPRESENTATIONS AND WARRANTIES.......................................17
10.01 Seller's Representations and Warranties.......................17
10.02 Purchaser's Representations and Warranties....................21
10.03 Intentionally Deleted.........................................22
10.04 Indemnification...............................................22
11. SHARED CLOSING COSTS AND OTHER EXPENSES..............................23
11.01 Expenses......................................................23
11.02 Shared Closing Costs..........................................24
12. CONDITIONS...........................................................24
12.01 Purchaser's Conditions........................................24
12.02 Seller's Conditions...........................................25
12.03 Rights Upon Failure of a Condition............................25
13. EARN-OUT.............................................................25
13.01 Defined Terms.................................................25
13.02 Closing Date Purchase Price Computation.......................28
13.03 Lease Assignment Reservation..................................28
13.04 New Leases....................................................28
13.05 Earn-Out Period...............................................30
TOC-2
<PAGE> 4
TABLE OF CONTENTS
PAGE
----
13.06 Casualty During Earn-Out Period...............................31
13.07 Earn-Out Payments.............................................31
13.08 Footage Payment...............................................32
13.09 Intentionally Deleted.........................................33
13.10 Seller's New Lease Obligations................................33
13.11 Punchlist.....................................................33
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS...............................34
14.01 Rents.........................................................34
14.02 Arrears.......................................................34
14.03 Unknown Rents.................................................35
14.04 Utilities.....................................................35
14.05 Contracts.....................................................36
14.06 Taxes.........................................................36
14.07 Assessment Installments.......................................37
14.08 Permits.......................................................37
14.09 Security Deposits/Tenant Inducements..........................37
14.10 Customary Items...............................................37
14.11 Apportionment Between Phases..................................37
15. CLOSING..............................................................37
15.01 Closing and Closing Date......................................38
16. POSSESSION...........................................................38
16.01 Possession and Post Closing Work..............................38
17. RISK OF LOSS.........................................................38
17.01 Risk..........................................................39
17.02 Damage and Destruction........................................39
17.03 Condemnation and Eminent Domain...............................40
18. DEFAULTS AND REMEDIES................................................40
18.01 Seller's Defaults.............................................40
18.02 Purchaser's Defaults..........................................40
18.03 Seller's Remedies.............................................41
18.04 Pre-Closing Purchaser's Remedies..............................41
18.05 Post Closing Purchaser's Remedies.............................41
19. CROSS PERFORMANCE OBLIGATION.........................................42
20. ASSIGNMENT...........................................................42
21. NOTICES..............................................................42
22. ATTORNEYS' FEES AND DISBURSEMENTS....................................44
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TABLE OF CONTENTS
PAGE
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23. NO CONSEQUENTIAL DAMAGES.............................................44
24. MISCELLANEOUS........................................................44
24.01 Successors....................................................44
24.02 Modifications/Waivers.........................................44
24.03 Entire Agreement..............................................44
24.04 Counterparts..................................................44
24.05 Captions......................................................44
24.06 Gender/Singular/Plural........................................45
24.07 Exhibits Incorporated.........................................45
24.08 Governing Law.................................................45
24.09 Severability..................................................45
24.10 Date for Performance..........................................45
24.11 Further Action................................................45
24.12 Intentionally Deleted.........................................45
24.13 Confidentiality...............................................45
24.14 Time of the Essence...........................................46
24.15 Construction..................................................46
24.16 Interest......................................................46
24.17 Warranty Work.................................................46
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AGREEMENT OF PURCHASE AND SALE
HIGHLAND GROVE SHOPPING CENTER
This Agreement of Purchase and Sale (the "Agreement") is made
as of the 2nd day of July, 1996, by and between OPUS NORTH CORPORATION,
an Illinois corporation (""Seller"), and DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation ("Purchaser"). Seller and Purchaser
(singularly, a "Party," collectively, the "Parties") agree as follows:
1. RECITALS.
1.01 DEFINITIONS. The location of all defined terms used in this
Agreement are set forth in the Glossary of Terms that is attached hereto and
made a part hereof.
1.02 LAND/IMPROVEMENTS. Seller is the sole owner of fee simple title
to (i) certain land (the "Land") situated in the City of Highland, State of
Indiana, more particularly described on Schedule 1.02 attached hereto and made a
part hereof which shall include all residual land and outlots, except Outlots 1,
7 and the "Borders" Outlot (collectively, "Outlots") as shown on the site plan
attached hereto as Schedule 1.02(a) (the "Site Plan"); and (ii) all the
buildings, structures and improvements (collectively, the "Improvements")
situated on the Land. The Land shall be conveyed as herein provided, in two
phases ("Phase I," "Phase II," and generally, "Phase" or "Phases"). Phase I and
Phase II are as shown on the Site Plan. The Outlots are hereby reserved unto
Seller from both Phases; and
1.03 REAL PROPERTY. Seller desires to sell, and Purchaser desires to
purchase, the Land and Improvements owned by Seller, and all of Seller's right,
title and interest in and to all rights, privileges, options, leases, licenses,
concessions, hereditaments, appurtenances, easements and rights of way in any
manner belonging to or pertaining to the Land and the Improvements, including
without limitation, rights in and to any streets, alleys or other ways adjacent
to the Land, open or proposed, and the fixtures in or upon the Land and the
Improvements owned by Seller. The Land, the Improvements and all of the items
mentioned in this Paragraph 1.03 are hereinafter collectively referred to as the
"Real Property" and are commonly known as "Highland Grove Shopping Center." The
Real Property shall be deemed divided as applicable to each Phase and unless
specifically noted to the contrary herein, "Real Property" shall mean, as the
context requires, the Real Property applicable to the subject Phase or the Land
as a whole, exclusive of the Outlots.
2. AGREEMENT TO PURCHASE AND SELL.
2.01 PURCHASE/SALE. Upon and subject to the terms and conditions set
forth in this Agreement, Seller agrees to sell and Purchaser agrees to purchase
all of the following that is hereinafter collectively referred to as the
"Project":
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(a) The Real Property;
(b) All tangible personal property (the "Personal Property")
owned by Seller that is now or hereafter located upon the Real Property and used
in connection with the ownership, operation, management, or maintenance of the
Real Property and that is set forth on Schedule 2.01(b) attached hereto;
(c) All intangible personal property (the "Intangible
Property") owned by Seller that is now or is hereafter located upon the Real
Property or is used in connection with the Real Property, including without
limitation, (i) all trade names, logos and telephone numbers, excluding those
tradenames or logos depicting or containing the name or trademark of Opus North
Corporation or its affiliates and excluding any telephone numbers not
exclusively used in connection with the Project; (ii) all Guaranties (as
hereinafter defined) given by Seller or any third party contractors,
subcontractors, vendors and suppliers relating to their performance, quality of
workmanship and quality of materials supplied in connection with the
construction or repair of the Improvements or the purchase of any Personal
Property to the extent any Guaranties remain outstanding as of the applicable
Closing Date (as hereinafter defined) that are set forth on Schedule 5.01(g)
attached hereto; and (iii) to the extent transferable by Seller, all of Seller's
right, title and interest in certificates of occupancy (or the local
equivalent), permits, licenses, approvals and authorizations (collectively, the
"Permits") issued by any federal, state, county and municipal governmental or
quasi-governmental authority relating to the Real Property.
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.01 PURCHASE PRICE. The total sum (the "Purchase Price") to be paid
by Purchaser to Seller for the sale of the Project is the sum of the Closing
Payments and those Footage Payments and Earn-Out Payments, if any (as those
terms are hereinafter defined), computed, in part, in respect to the base rents
set forth in the Rent Roll attached hereto as Schedule 3.01, all as provided in
Section 13 hereof. The actual amount of the Purchase Price is subject to the
computations and elections provided in Section 13 hereof and subject to the
adjustments, if any, provided in Section 14 hereof. Portions of the Purchase
Price will be paid at various times as hereinafter provided.
3.02 PURCHASE PRICE PORTIONS. The Purchase Price shall be paid as
follows:
(a) Lump Sum Payment.$35,000.00 ("Lump Sum Payment"), which
Purchaser shall pay on the Phase I Closing Date as part of the Closing Payment
as provided in Paragraph 13.02 hereof by wired funds to the Escrow Agent (as
hereinafter defined) for disbursement to Seller on the Phase I Closing Date by
not later than 2:00 P.M. Central Daylight Savings Time.
(b) Initial Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Initial Deposit"), which Purchaser deposited with Escrow
Agent simultaneous with the execution of this Agreement by Purchaser and Seller.
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(c) Second Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Second Deposit") which Purchaser shall deposit with Escrow
Agent on the expiration date of the Site Analysis Period (as hereinafter
defined), if Purchaser elects to proceed with this transaction, as more fully
provided in Paragraph 5.03 below (the Initial Deposit and the Second Deposit are
hereinafter collectively referred to as the "Deposit"). The term "Deposit" shall
be deemed to include all interest accruing on the Deposit during the term of
this Agreement.
(d) Closing Date Price. So much of the Purchase Price computed
in accordance with the provisions of Paragraph 13.02 hereof that is payable as
of the applicable Closing Date, after giving credit for the Deposit in respect
to the Phase I Closing Date (as hereinafter defined) and after making the
adjustments, if any, as provided in Section 14 hereof, shall be paid by wired
funds to the Escrow Agent for disbursement to Seller on the applicable Closing
Date by not later than 2:00 P.M. Central Daylight Savings Time in respect to
Phase I, and 2:00 P.M. Central Standard Time in respect to Phase II.
(e) Earn-Out Period Payments. As provided in Paragraph 13.07,
those Earn-Out Payments that are payable during, or in some instances, after the
Earn-Out Period (as hereinafter defined) shall be paid by wired funds to the
Escrow Agent for disbursement to Seller when required by the provisions of
Paragraph 13.07.
(f) Footage Payment. As provided in Paragraph 13.08, if a
Footage Payment (as hereinafter defined) is payable, it shall be paid by wired
funds to the Escrow Agent for disbursement to Seller when required pursuant to
Paragraph 13.08.
4. ESCROW.
4.01 ESCROW AGENT. The Parties hereby designate First American Title
Insurance Company as the escrow agent ("Escrow Agent" or "Title Company"). By
execution of this Agreement, Escrow Agent agrees to be bound by the terms and
conditions of this Agreement which relate to the Escrow Agent and its rights and
obligations hereunder.
4.02 FILINGS. The Parties hereby designate Escrow Agent to serve as
"Real Estate Broker," as defined in Section 6045 of the Internal Revenue Code,
as amended, for the purpose of making such reports and filing such returns as
shall be required thereunder from time to time.
5. SITE ANALYSIS.
5.01 SITE ANALYSIS DOCUMENTS. To the extent not heretofore delivered,
promptly after the execution of this Agreement, Seller agrees (i) to make
available for inspection at reasonable times by Purchaser and its agents any and
all documents, instruments, surveys, reports, plans, permits, approvals,
studies, reviews, analyses, contracts, agreements and other materials relating
to the acquisition, development, construction, ownership and operation of the
Project that are in Seller's possession or under its control, and (ii) to
deliver to Purchaser true and correct copies of the following documents (in
respect to clause (ii) collectively hereafter referred to as "Site Analysis
Documents"):
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(a) "As-built" survey of the Project showing the location of
all Improvements thereon and any easements encumbering the Project.
(b) Soil, topographical, and other reports relating to the
Project, including the environmental reports set forth on Schedule 5.01(b)
("Environmental Reports") attached hereto.
(c) Operating statements and records sufficient to accurately
show all revenues, income, costs and expenses of operating and maintaining the
Project for the period on and after the opening of the Project for business.
(d) All written contracts for repair, maintenance, garbage
removal, concessions, vending, service contracts, and other services to be
performed with respect to the Project.
(e) All Leases (as hereinafter defined) and all written
licenses, concessions and tenancies with Tenants (as hereinafter defined)
occupying or having the right to occupy any portion of the Project, and Seller's
written statement of any oral leases, licenses, concessions and tenancies with
tenants, licensees, concessionaires or others occupying or having the right to
occupy or use any portion of the Project, if any.
(f) All final, as-built architectural drawings, engineering
studies, plans and specifications relating to the original and current
construction of the Project (hereinafter collectively referred to as "Plans").
(g) All warranties and guaranties that remain outstanding as
of the applicable Closing Date that have been given by Seller or any third party
contractors, subcontractors, vendors and suppliers relating to their
performance, quality of workmanship and quality of materials supplied in
connection with the construction, manufacture, development, installation and
operation of the Improvements, Personal Property and any and all fixtures,
equipment and items of personal property comprising all or any part of the
Improvements located in or used in connection with the Project (collectively
hereinafter referred to as "Guaranties"), all of which are set forth on Schedule
5.01(g) attached hereto.
5.02 ACCESS. Seller acknowledges that to enable Purchaser to proceed
with this transaction, Purchaser already has and, during the Site Analysis
Period (as hereinafter defined), may undertake or cause to have undertaken
further tests and studies, including, but not limited to, marketing,
engineering, environmental, feasibility and soil that Purchaser, in its
reasonable discretion, deems necessary to determine the feasibility of its
acquisition of the Project (hereinafter collectively referred to as "Tests and
Studies"). The Tests and Studies conducted by or on behalf of Purchaser and the
restoration of the Project in respect thereto as hereinafter provided shall be
done in such a fashion so as to not disrupt the ordinary course of business of
Seller or any of the Tenants, New Tenants (as hereinafter defined) or Seller's
contractors or subcontractors.
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Purchaser and its agents, contractors or employees shall have
the right to enter upon the Project (both Phase I and II) for the purpose of
performing its Tests and Studies, provided (i) said activities shall not (y) in
any way damage the Project in such a fashion or to a degree that prevents its
restoration by Purchaser as hereafter provided substantially to the condition of
the Project that existed immediately prior thereto, or (z) void or make voidable
any Guaranties of portions thereof (but in any event subject to Seller's prior
consent that shall not be unreasonably withheld or delayed), and (ii) Seller or
its designated agents have the right to participate in (provided Seller and its
agents do not interfere with) such Tests and Studies. Purchaser shall give
Seller twenty-four (24) hour advance notice before Purchaser and its agents,
contractors or employees enter upon the Project. In the event this Agreement
fails to close for any reason, except for Seller's willful refusal to convey
(absent a material default hereunder by Purchaser) title to the Land as required
hereunder, or Seller's acknowledged or subsequently determined material default
hereunder ("Restoration Forgiveness"), Purchaser shall restore the Project to
substantially the same condition that existed immediately prior to such
surveying, inspecting and testing that were undertaken by or on behalf of
Purchaser prior to the date of this Agreement or during the Site Analysis
Period. Except in the instance of a Restoration Forgiveness, Purchaser shall
keep the Project free of all liens in connection with the Tests and Studies and
shall cause all such liens to be removed immediately upon its being notified of
same. Except in the instance of a Restoration Forgiveness, Purchaser agrees to
indemnify, defend and hold Seller harmless against any liabilities, claims and
damages, including, without limitation, any property damage, personal injury or
claim of lien against the Project resulting from the activities permitted by
this Paragraph 5.02 (including, without limitation, reasonable attorneys' fees
and expenses paid or incurred by Seller during litigation, if any), which
indemnity shall survive the Closing Date or the expiration, cancellation or
termination of this Agreement.
5.03 SITE ANALYSIS PERIOD. Purchaser shall have the Site Analysis
Period in which to conduct the Tests and Studies and to ascertain whether the
Project is acceptable to Purchaser. "Site Analysis Period" shall mean the period
expiring on June 17, 1996. The Site Analysis Period shall also include that
thirty (30) day period on and after the Phase II Notice Date (as hereinafter
defined) for those Tests and Studies on Phase II Purchaser chooses to conduct in
respect to those Improvements completed on Phase II after June 17, 1996. If the
Project is determined to be unacceptable to Purchaser, for any reason
whatsoever, in Purchaser's sole discretion, Purchaser shall have the right to
terminate this Agreement (in respect to all Phases, but not in respect to one
Phase and not the other) by giving written notice of termination on or prior to
June 17, 1996, in which event the Deposit shall be returned to Purchaser. In
accordance with the provisions of 11.02(b) hereof, Seller and Purchaser shall
each pay 50% of the Shared Closing Costs incurred as of the termination date,
and neither Party shall have any further rights or obligations hereunder, except
those specifically provided herein that survive the termination of this
Agreement. A failure to so notify Seller of Purchaser's election to terminate or
proceed with this Agreement as aforesaid prior to June 17, 1996, shall be deemed
as notice to Seller that Purchaser has elected to terminate this Agreement as
aforesaid. In addition, not less than forty-five (45) days (nor more than sixty
(60) days) prior to the Phase II Closing Date ("Phase II Notice Date"), Seller
shall advise Purchaser, in writing, of the date on which Seller anticipates the
Phase II Closing to occur as provided in Paragraph 15.01 hereof. For the period
of thirty (30) days on and subsequent to the Phase II Notice Date, Purchaser may
conduct those additional
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Tests and Studies on or in respect to Phase II pertaining to (i) any defects or
deficiencies of Phase II in respect to its compliance with any and all codes,
ordinances, statutes, Permits, approvals or licenses issued in respect to Phase
II or promulgated by any federal, state, county or municipal government or
quasi-governmental authority which are required by such governmental or
quasi-government authority to correct, (ii) any other defects in the materials
or workmanship of Phase II from that which is required to be in substantial
compliance with the Plans, except that portion thereof, if any, that relates to
materials for, or workmanship of improvements constructed or to be constructed
on behalf of Tenants or New Tenants that form a part of the Phase II Post
Closing Work (as hereinafter defined), (iii) violations of Environmental Laws
(as hereinafter defined), or (iv) conditions determined in good faith that are
existing on-site or off-site of Phase II (except on Phase I) that if not
corrected may, in the future, become violations of Environmental Laws in respect
to Phase II, which in the instance of clauses (i), (ii), (iii) and (iv) did not
exist as of June 17, 1996. If Purchaser, in its reasonable discretion,
determines in respect to clauses (i) through (iv) above that there does exist
defects, deficiencies, violations or the existence of conditions that are
unacceptable to Purchaser, Purchaser shall have the right to terminate this
Agreement in respect to Phase II by giving written notice of termination on or
prior to the expiration of said thirty (30) day period in which event Seller and
Purchaser shall each pay fifty percent (50%) of the Shared Closing Costs
incurred in respect to Phase II and neither party shall have any further rights
or obligations hereunder in respect to Phase II, except those specifically
provided herein that survive the termination of this Agreement. Except for
Restoration Forgiveness, Purchaser shall cause Phase II to be restored to
substantially the same condition that existed immediately prior to any Tests and
Studies performed by Purchaser subsequent to the Phase II Notice Date, which
obligation shall survive the termination of this Agreement.
5.04 CURE OF UNACCEPTABLE CONDITIONS. Any of the Tests and Studies of
Purchaser and/or its agents or representatives conducted during the Site
Analysis Period that discloses in respect to Phase I that there are (i) any
defects or deficiencies of Phase I in respect to its compliance with any and all
codes, ordinances, statutes, Permits, approvals or licenses issued in respect to
Phase I or promulgated by any federal, state, county or municipal governmental
or quasi-governmental authority which are required by such governmental or
quasi-governmental authority to correct; (ii) any defects in the materials or
workmanship of Phase I from that which is required to be in substantial
compliance with the Plans, except that portion thereof, if any, that relates to
materials for, or workmanship of improvements constructed or to be constructed
on behalf of Tenants or New Tenants that form a part of Post Closing Work (as
hereinafter defined); or (iii) a violation of Environmental Laws that, in
respect to clauses (i), (ii) and (iii), can be corrected and cured for an
estimated aggregate cost (in respect to Phase I) not to exceed One Hundred
Thousand Dollars ($100,000.00), shall be collectively hereinafter referred to as
"Unacceptable Conditions." In respect to Phase II, an Unacceptable Condition(s)
shall mean the same as defined in clauses (i), (ii) and (iii) above, but in
respect to Phase II, except that the estimated aggregate cost of correcting and
curing the same shall not exceed Fifty Thousand Dollars ($50,000.00) plus One
Hundred Thousand Dollars ($100,000.00) minus the estimated aggregate cost of
correcting and curing the Phase I Unacceptable Conditions agreed to by the
Parties or elected by Purchaser as hereafter provided ("Phase II Unacceptable
Condition Cost Limitation"). It is understood that regardless of the cost, the
Warranty Work obligations set forth in Paragraph 24.17 hereof shall not be
included as an Unacceptable Condition in respect to the
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$100,000.00 limitation for Phase I or in respect to the Phase II Unacceptable
Condition Cost Limitation, and the cost of performing Warranty Work shall be in
addition to any cost associated with either Phase in respect to any Unacceptable
Condition. In the event Purchaser discovers what it deems to be Unacceptable
Conditions as a result of the Tests and Studies, Purchaser shall notify
("Condition Notice") Seller, in writing, of the same promptly following
Purchaser's discovery thereof, but in no instance later than three (3) business
days following the expiration of the Site Analysis Period applicable to the
entire Project or just Phase II as provided in Paragraph 5.04 above. Such
Condition Notice shall include a copy of those portions of the Tests and Studies
disclosing such Unacceptable Condition(s). Within ten (10) days following
Seller's receipt of the Condition Notice, if any, Seller shall advise
("Condition Response") Purchaser, in writing, of Seller's good faith
determination and estimate of (1) those matters contained in the Condition
Notice that do not qualify as Unacceptable Conditions; (2) the time within which
the remaining matters contained in the Condition Notice will be cured or
corrected; and (3) the aggregate cost to Seller of curing and correcting such
remaining matters. In the event the Condition Response is unacceptable to
Purchaser, Seller and Purchaser shall promptly meet and confer, in good faith,
to attempt to resolve the unacceptable aspects to Purchaser of the differences
between the Condition Notice and the Condition Response or the time within which
or the aggregate cost for which Seller estimated in the Condition Response for
curing or correcting as aforesaid. In the event Seller and Purchaser are unable
to resolve such differences, Purchaser may elect to (a) terminate this Agreement
in respect to the applicable Phase (provided if Purchaser elects a termination
in respect to Phase I, it shall act as Purchaser's election to terminate in
respect to both Phases), (b) proceed to each of the Phase Closings in respect to
Seller's obligations to cure or correct those matters set forth in the Condition
Response, modified, if at all, as a result of the aforesaid conference between
Purchaser and Seller (provided the estimated aggregate cost of performing the
same does not exceed $100,000.00 in respect to Phase I, the Phase II
Unacceptable Condition Cost Limitation in respect to Phase II, or such greater
amount as Seller, in its sole discretion, has agreed to expend), or (c) proceed
to each of the Phase Closings and select those specific line items from the
Condition Response that Purchaser requires to have corrected (provided the
estimated aggregate cost of performing the same does not exceed $100,000.00 in
respect to Phase I or the Phase II Unacceptable Condition Cost Limitation in
respect to Phase II). Purchaser, within ten (10) business days after such
conference, shall advise Seller, in writing, of Purchaser's election. If the
Condition Notice, Condition Response or the time periods specified above for
elections of Purchaser extend beyond the time specified for the applicable
Closing Date, such Closing Date shall be extended to the date five (5) business
days subsequent to the date Purchaser elects, if at all, to proceed with the
applicable Closing. In the event Purchaser elects to terminate this Agreement in
respect to Phase I, the Deposit shall be returned to Purchaser, Purchaser and
Seller shall each pay fifty percent (50%) of the Shared Closing Costs incurred
as of the termination date, and neither Party shall have any further rights or
obligations hereunder, except those specifically provided herein that survive
the termination of this Agreement. In the event Purchaser elects to proceed to
the Phase I and Phase II Closings pursuant to clause (b) above, the matters
contained in the Condition Response, modified, if at all, by Purchaser's and
Seller's conference and provided the estimated aggregate cost of curing or
correcting the same is One Hundred Thousand and no/100 ($100,000.00) or less in
respect to Phase I or equal to or less than the Phase II Unacceptable Condition
Cost Limitation in respect to Phase II (or such greater amount Seller accepts as
aforesaid) shall be deemed to be the
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Unacceptable Conditions to which Seller is bound. In the event Purchaser elects
to proceed to the Phase I and Phase II Closing pursuant to clause (c) above, the
specific line items selected by Purchaser that are set forth in the Condition
Response (provided the estimated aggregate cost of curing or correcting the same
is in the amounts as aforesaid in respect to Phase I and Phase II) shall be
deemed to be the Unacceptable Conditions to which Seller is bound. Thereafter,
in respect to the applicable Phase, Seller shall undertake to cure or correct
such Unacceptable Conditions, at its sole cost and expense (regardless of the
actual cost ultimately incurred by Seller in respect thereto) within the time
(subject to Force Majeure, as hereinafter defined) set forth in the Condition
Response. The obligation of Seller to cure or correct such Unacceptable
Conditions shall survive the Closing. In the event (y) Seller fails to commence
the cure of an Unacceptable Condition(s) on or prior to the time specified in
the Condition Response for the completed cure thereof, or (z) Seller commences
the cure of an Unacceptable Condition(s), but fails to complete such cure prior
to the time specified in the Condition Response (subject to Force Majeure),
Purchaser may off-set so much of any Earn-Out Payment or Footage Payment
subsequently payable by Purchaser hereunder by the amount of the reasonable
costs and expenses incurred by Purchaser for undertaking and completing the
uncured Unacceptable Condition(s). The curing or correcting of any Unacceptable
Condition shall be done in accordance with the Plans. However, if such curing or
correcting requires a variance from the Plans, Seller shall not undertake such
variance without obtaining Purchaser's prior written consent, which consent
shall not be unreasonably withheld or delayed.
6. SURVEY AND TITLE INSURANCE.
6.01 SURVEY. Seller shall cause an "as-built" Survey (the "Survey")
of the Phase I and Phase II Real Property to be updated during the Site Analysis
Period applicable to each Phase. The Survey for each Phase shall be certified to
Seller, Purchaser, and the Title Company. The Survey for each Phase shall
satisfy all of the requirements set forth on Schedule 6.01 that is attached to
and made a part of the Exhibit Agreement (as hereinafter defined).
6.02 TITLE COMMITMENT. During the Site Analysis Period for each
Phase, to the extent not theretofore delivered, Seller shall (i) cause the Title
Company to issue and deliver to Purchaser a title insurance commitment for an
owner's extended coverage policy of title insurance for the applicable Phase, in
the amount of that portion of the Purchase Price applicable to the subject Phase
then estimated to be payable to Seller on the applicable Closing Date,
committing the Title Company to insure Purchaser as the owner of fee simple
title to the Phase I and Phase II Real Property, as applicable, and all
easements appurtenant thereto (the "Commitment"), and (ii) copies of each
document described on Schedule B of the applicable Commitment.
6.03 PURCHASER'S OBJECTIONS; SELLER'S CURE. Other than those title
exceptions ("Permitted Exceptions") applicable to Phase I and Phase II set forth
in Schedule 6.03 attached hereto and made a part hereof and exceptions caused by
or claimed under or through Seller that will be removed at the applicable Phase
Closing (as hereinafter defined) if (i) the Commitment reveals any other matters
or exceptions ("Title Defects"), or (ii) the Survey reveals any defects which
affect the marketability of the applicable Phase or are deemed objectionable by
Purchaser
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("Survey Defects"), Purchaser shall notify Seller, in writing, of the
same within fifteen (15) days following the date of delivery to Purchaser of the
last of the Commitment and Survey ("Defects Notice") for the subject Phase. In
the event Purchaser fails to deliver a Defects Notice as aforesaid, Seller shall
advise Purchaser of such failure, in writing. If Purchaser fails, within three
(3) business days thereafter to deliver a Defects Notice, it shall be deemed a
notice to Seller that Purchaser has elected to waive such defects, if any, and
to proceed with the transaction contemplated hereby, subject to the fulfillment
of Seller's obligations hereunder. Except for Title Defects or Survey Defects
that are caused by or claimed under or through Seller that can be removed or
discharged by the payment of a sum of money (including, without limitation, a
Mortgage(s), as hereinafter defined), Seller shall have no affirmative
obligation to cure or correct any Title Defects or Survey Defects, except as
provided in Seller's Response (as hereinafter defined). Within fifteen (15) days
following Seller's receipt of a Defects Notice, Seller, at its option, shall
notify Purchaser of those Title Defects and Survey Defects that Seller shall
undertake to cure or correct ("Seller's Response"). In the event Seller (a)
elects in Seller's Response not to satisfy a specified Title Defect or Survey
Defect or (b) is unable, within sixty (60) days after Purchaser's receipt of
Seller's Response, to satisfy the Title Defect or Survey Defect which Seller had
elected in Seller's Response to so satisfy, Purchaser may, at its option, (1)
accept title to the applicable Phase subject to the Title Defects and/or Survey
Defects raised by Purchaser in which event such Title Defects and Survey Defects
shall be deemed to be Permitted Exceptions for such Phase, or (2) cancel this
Agreement and receive a full refund of the Deposit (if the cancellation is in
respect to Phase I), whereupon Seller shall pay all Shared Closing Costs and
this Agreement shall be of no further force and effect, except for those matters
which are specifically set forth in this Agreement as surviving the expiration
or termination of this Agreement. If Purchaser elects to accept Title and/or
Survey Defects in respect to Phase I, it shall be deemed to have elected to
accept the same Title and/or Survey Defects in respect to Phase II, to the
extent the same affects Phase II. In the event Purchaser elects to terminate
this Agreement in respect to Phase I, it shall act as Purchaser's election to
terminate this Agreement in respect to Phase II. If the Defects Notice, Seller's
Response or the time periods specified above for elections of Purchaser extend
beyond the time specified for the applicable Closing Date, such Closing Date
shall be extended to the date five (5) business days subsequent to the date
Purchaser elects, if at all, to proceed with the applicable Closing.
6.04 TITLE POLICY. It shall be a condition precedent to Purchaser's
obligation to consummate the Phase transactions contemplated by this Agreement
that the Title Company can and will issue an ALTA Owner's Policy of Title
Insurance (Form B, Amended 1987, if available) (the "Title Policy") for each
Phase in the full amount of that portion of the Purchase Price payable by
Purchaser on each of the Closing Dates as provided in Paragraph 13.02 hereof,
insuring Purchaser as the owner in fee simple of the applicable Phase, and all
appurtenant easements thereto, free and clear of all liens and encumbrances,
except for the Permitted Exceptions, and without exception for rights or claims
of parties in possession not shown by the public records, encroachments,
overlaps, boundary line disputes, or any other matter disclosed by the Survey
which Purchaser has not waived or approved or is deemed to have approved
pursuant to Paragraph 6.03 hereof, provided, however, that the Title Policy may
show the rights of the Tenants and New Tenants (as hereinafter defined) under
New Leases (as hereinafter defined) that are fully executed prior to the
applicable Closing as parties in possession (or right to possession)
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as tenants only. Purchaser shall attempt to cause the Title Company, as part of
the Title Policy, to issue the following endorsements in the form of those set
forth in Schedule 6.04 attached hereto ("Endorsements"): CC&R Endorsement
(unless easements appurtenant to the applicable Phase are additionally insured
parcels on Schedule A of the applicable Title Policy), Comprehensive No. 1,
Access, Survey, Plat Act, Tax Parcel, Contiguity (in respect to the Phases and
the portions thereof, but only to the extent of contiguous portions of the Land
as depicted on Schedule 1.02 attached hereto), Environmental, Encroachment,
"single Lot" subdivision, and Zoning 3.1 (with parking). Any Survey or physical
inspection requirements imposed as a condition to the issuance of each Title
Policy may be satisfied by Seller as a Shared Closing Cost, except costs and
expenses in respect to correcting Survey Defects which shall be paid by Seller.
Seller shall execute such affidavits and certificates as the Title Company may
require as a condition to the issuance of each Title Policy, and a copy of each
such affidavit or certificate shall be delivered to Purchaser. In addition, as
part of the Shared Closing Costs, Seller shall cause (i) the applicable Title
Policy to be dated down to the date each Earn-Out Payment (as hereinafter
defined) is paid during or after the Earn-Out Period showing no new exceptions,
except the Permitted Exceptions, the subject or previous New Leases, and
exception caused, permitted or claimed by, through or under Purchaser or its
successors and assigns; and (ii) the amount of the Title Policy's coverage to be
increased to an amount that equals the subject Earn-Out Payment.
7. SELLER'S CLOSING DOCUMENTS AND ESCROW.
At each Phase Closing, Seller shall execute and deliver the
following documents to Escrow Agent:
7.01 DEED. A signed special warranty deed in the form and substance
(modified for the subject jurisdiction) attached to the Exhibit Agreement as
Schedule 7.01 (the "Deed") conveying to Purchaser, good, indefeasible and
insurable title to the applicable Phase and the Improvements thereon, free and
clear of all liens and encumbrances of any type whatsoever, except for the
Permitted Exceptions. The Permitted Exceptions shall be specifically, and not
categorically, excepted from the warranty of title in the Deed.
7.02 ASSIGNMENT OF LEASES. For the applicable Phase, an assignment
(the "Lease Assignment") in the form attached to the Exhibit Agreement as
Schedule 7.02 of all (except in respect to the Assignment Reservation as
provided in Paragraphs 13.03, 14.01, 14.02 and 14.03 hereof) of the Seller's
right, title and interest as lessor under the leases, tenancies, occupancy
agreements, rental agreements, options, licenses and concessions, and all of the
foregoing (hereinafter collectively referred to as the "Leases") which are
described on Schedule 7.02(a) attached hereto, and all New Leases that are fully
executed prior to the applicable Closing, together with all security deposits,
cleaning deposits, key deposits and advance rental payments (collectively, the
"Security Deposits") made by the lessees, tenants, occupants, optionees,
licensees and concessionaires (collectively, in respect to the applicable Phase,
the "Tenants") and New Tenants under the Leases and subject New Leases.
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7.03 LEASES AND TENANT DOCUMENTS. All original copies of the
applicable Phase Leases and New Leases that are fully executed prior to
applicable Closing, Tenant and the subject New Tenant financial statements,
their sales reports and other Tenant and the subject New Tenant related
documents, and to the extent, if any, that original copies are not delivered,
Seller shall deliver copies which shall be accompanied by an affidavit sworn to
by Seller confirming that the copies delivered are true and complete copies of
the originals.
7.04 BILL OF SALE. A bill of sale in the form attached to the Exhibit
Agreement as Schedule 7.04, transferring and conveying to Purchaser all of
Seller's right, title and interest to the applicable Phase Personal Property and
the Intangible Property.
7.05 ASSIGNMENT OF CONTRACTS. An assignment (the "Contract
Assignment") in the form attached to the Exhibit Agreement as Schedule 7.05, of
all of Seller's right, title and interest as the owner of the applicable Phase
under the service contracts and agreements, personal property leases and
agreements (collectively, the "Contracts") which are described on Schedule
7.05(a) attached hereto and which have been approved by Purchaser as being those
Contracts that are assigned to Purchaser pursuant to the Contract Assignment.
7.06 VIOLATIONS/WORK ORDERS AFFIDAVIT. An affidavit, in form and
substance of Schedule 7.06 attached to the Exhibit Agreement, confirming that
Seller has complied with and discharged (or, to the extent Seller has not
complied with and discharged, an explanation of that which remains to be done to
cause compliance and discharge) (i) all notices, if any, that either Seller or
its management agent managing the Real Property received concerning any and all
uncured violations (the "Violations") of any law, statute, ordinance,
regulation, rule, requirement, order, judgment or decree enacted, adopted,
imposed, issued, entered or filed by any governmental authority (concerning or
affecting the Project or any part thereof), and (ii) all work orders concerning
the Project or any part thereof, if any (the "Work Orders") issued by any
insurance carriers insuring a risk in respect to the Project.
7.07 KEYS. All keys to the applicable Phase.
7.08 PLANS AND SPECIFICATIONS. To the extent not delivered prior to
the Phase I Closing Date as part of the Site Analysis Documents, all Plans.
7.09 TITLE INSURANCE AFFIDAVIT. Any affidavit required by the Title
Company to remove the standard printed exceptions from the applicable Title
Policy.
7.10 FIRPTA CERTIFICATE/WITHHOLDING. A certificate in the form and
substance attached to the Exhibit Agreement as Schedule 7.10 ("FIRPTA
Affidavit").
7.11 FORM 1099. Any information with respect to Seller in connection
with the conveyance of the applicable Phase Real Property by Seller to Purchaser
required by either (i) IRC Sec. 6045 or Treas. Regs. Sec. 1.6045, or (ii) Treas.
Form 1099 or its instructions. If required thereby, the Escrow Agent shall
timely (x) prepare and file a Form 1099 in accordance with the provisions of
Treas. Regs. Sec. 1.6045, and (y) furnish the Parties with copies.
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7.12 BOOKS AND RECORDS. Copies of all accounting books and records
relating to the operation and maintenance of the applicable Phase.
7.13 LETTERS TO TENANTS. Letters in the form and substance set forth
in Schedule 7.13 that is attached to the Exhibit Agreement (the "Tenant
Letters") addressed to the applicable Phase Tenants and New Tenants of New
Leases executed prior to the applicable Closing and signed by Seller, advising
the Tenants and New Tenants of the sale of the applicable Phase and the
Purchaser's right to receive the Rents (as hereinafter defined) under their
respective Leases.
7.14 RECORDING REQUIREMENTS. All documents and affidavits required of
Seller to record the Deed.
7.15 ESTOPPEL CERTIFICATES. An estoppel certificate in the form and
substance set forth in Schedule 7.15 that is attached to the Exhibit Agreement
("Tenant Estoppel") showing no material exceptions that is executed (not more
than forty-five (45) days prior to the applicable Closing Date or such earlier
date Purchaser reasonably accepts) by (i) all Tenants or New Tenants of the
applicable Phase Leases and New Leases that are Qualified Leases (as hereinafter
defined) on or prior to the applicable Closing Date that have demised to them
space in the applicable Phase containing 7,500 square feet or more, and (ii) at
least eighty percent (80%) (calculated on a square foot basis) of all Tenants or
New Tenants of the applicable Phase Leases or New Leases that are Qualified
Leases on or prior to the applicable Closing Date that have demised to them
space in the applicable Phase containing less than 7,500 square feet. To the
extent Seller is unable to deliver to Purchaser Tenant Estoppels from all or any
of the remaining Tenants or New Tenants in the applicable Phase under such
Qualified Leases in respect to premises containing less than 7,500 square feet
or a Tenant Estoppel in respect to a premises that is 7,500 square feet or less
that contains a material exception noted by the applicable Tenant or New Tenant,
Seller shall be entitled to deliver to Purchaser Seller's estoppel certificate
("Seller's Estoppel") in form and substance reasonably acceptable to Purchaser
confirming the terms and conditions of the Lease or subject New Lease for which
a Tenant Estoppel was not delivered to Purchaser or, if delivered, that contains
a material exception. Such Seller's Estoppel shall be deemed a representation
and warranty by Seller as to the terms and conditions of the subject Lease or
New Lease, and the Seller's Estoppel shall not be subject to the time limitation
for claims set forth in Paragraph 10.04(b) hereof. After the applicable Closing,
when and as Purchaser receives a Tenant Estoppel (without material exception)
for which Seller delivered a Seller's Estoppel, the subject Seller's Estoppel
shall be released by Purchaser and returned to Seller and shall be deemed to be
of no further force and effect.
7.16 TERMINATION OF MANAGEMENT AND SELLER AFFILIATED CONTRACTS.
Notwithstanding any other provision of this Agreement, in respect to any
agreements or contracts that are not to be included as part of the Contract
Assignment, agreements ("Termination Agreements") signed by (i) the parties to
any management agreement for the applicable Phase, and (ii) the parties to all
other such agreements or contracts for the applicable Phase between the Seller
or its predecessors in interest and parties affiliated with or controlled by
Seller or any of Seller's principals, which Termination Agreements terminate
such management agreement and
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other such agreements and contracts as of the applicable Closing Date, without
any liability or obligation on the part of the Purchaser or the applicable
Phase.
7.17 PERMITS/GUARANTIES. Original or copies of applicable Phase
Permits and originals of the applicable Phase Guaranties which, in each
instance, Seller agrees to keep in full force and effect, and to comply with all
of the terms and conditions thereof prior to the applicable Closing.
7.18 CLOSING STATEMENTS. Closing Statements executed by Seller.
7.19 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably
satisfactory to Escrow Agent, in form and substance sufficient to carry out the
applicable Closing.
7.20 DATE DOWN CERTIFICATE. A certificate of Seller (the "Seller Date
Down Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 7.20 certifying that Seller's representations and warranties set forth
in Paragraph 10.01 of this Agreement are true and correct as of the applicable
Closing Date as modified by the Schedules that are attached hereto pursuant to
Paragraph 10.01 hereof that are updated to the applicable Closing Date. In the
event any updated Schedules disclose a material deviation from the prior
applicable Schedule as reasonably determined by Purchaser, Purchaser shall have
three (3) business days from the date Purchaser receives a copy of the Seller
Date Down Certificate in which to elect to terminate this Agreement or to
proceed with the applicable Closing in accordance with the updated Schedules. In
the event Purchaser fails to notify Seller, in writing, of Purchaser's election
to terminate this Agreement, it shall act as notice to Seller that Purchaser has
elected to terminate this Agreement in respect to the applicable and subsequent
Closing. In the event Purchaser elects to terminate this Agreement, the Deposit
shall be refunded to Purchaser (if in respect to Phase I), Purchaser and Seller
shall each pay fifty percent (50%) of the Shared Closing Costs, and this
Agreement shall be of no further force and effect, except in respect to those
provisions specifically provided herein as surviving the termination of this
Agreement. In the event Purchaser elects to terminate this Agreement as
aforesaid in respect to Phase I, it shall act as Purchaser's election to
terminate this Agreement in respect to Phase II as well.
7.21 AGREEMENT ESTOPPEL CERTIFICATE. An estoppel certificate in form
and substance attached hereto as Schedule 7.21 ("Agreement Estoppel") showing no
material exceptions that are executed by each party to those easement agreements
or other agreements or undertakings (including, but not limited to, development
agreements) affecting the Project on and after the Closing Date that require the
performance of obligations by the owner of the Project and the approval of such
performance by the other party to the same that are identified by Purchaser to
Seller, in writing, not less than fifteen (15) days prior to the applicable
Closing Date. To the extent such Agreement Estoppel shows a material exception
or the party to such easement agreements or other agreements or undertakings
identified by Purchaser as aforesaid fails to deliver an Agreement Estoppel,
Seller shall be entitled to deliver its undertaking confirming, in form and
content reasonably acceptable to Purchaser, the terms and conditions of the
Agreement Estoppel to the extent applicable in the form attached hereto as
Schedule 7.21, and such
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confirmation by Seller shall not be subject to the time limitation for claims
set forth in Paragraph 10.04(b) hereof. After the Closing, when and as Purchaser
receives an Agreement Estoppel for which Seller delivered its undertaking as
aforesaid, the subject undertaking shall be released by Purchaser and returned
to Seller and shall be deemed to be of no further force and effect.
7.22 OUTLOT AND PHASE II COVENANT. A declaration encumbering title to
the Outlots and Phase II in respect to the exclusion of uses thereon that
violate any of the exclusive uses permitted under Leases or New Leases for Phase
I as of the Phase I Closing Date, in form and content reasonably acceptable to
Seller and Purchaser.
7.23 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location
within the applicable Phase of any space that is Vacant Space as of the
applicable Closing.
7.24 ASSIGNMENT OF OEA. An Assignment of Declaration in the form
attached hereto as Schedule 7.24 assigning to Purchaser Seller's rights under
the terms of the Operation and Easement Agreement that is a Permitted
Encumbrance.
7.25 OTHER DOCUMENTS. Such other documents as may be reasonably
required to close the applicable Phase transaction contemplated by this
Agreement.
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS.
At each Phase Closing, Purchaser shall execute and deliver the
following to Escrow Agent:
8.01 ASSIGNMENT OF LEASES. The Lease Assignment, acknowledging the
assumption by Purchaser of Seller's obligations under the Leases which accrue
after the applicable Closing Date.
8.02 ASSIGNMENT OF CONTRACTS. The Contract Assignment, acknowledging
the assumption by Purchaser of Seller's obligations under the Contracts which
accrue after the applicable Closing Date.
8.03 CLOSING STATEMENTS. Closing Statements executed by Purchaser.
8.04 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably
satisfactory to Escrow Agent, in form and substance sufficient to carry out the
applicable Closing.
8.05 RECORDING REQUIREMENTS. All documents and affidavits required of
Purchaser to record the Deed.
8.06 DATE DOWN CERTIFICATE. A certificate of Purchaser (the
"Purchaser Date Down Certificate") in form and substance attached to the Exhibit
Agreement as Schedule 8.06 certifying that Purchaser's representations and
warranties set forth in Paragraph 10.02 of this Agreement are true and correct
as of the applicable Closing Date.
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8.07 PHASE I COVENANT. A declaration encumbering title to Phase I in
respect to exclusion of uses thereon that violate any of the exclusive uses
permitted under Leases or New Leases in Phase II and the Outlots as of the Phase
I Closing Date, in form and content reasonably acceptable to Seller and
Purchaser.
8.08 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location
within the applicable Phase of any space that is Vacant Space as of the
applicable Closing
8.09 OTHER DOCUMENTS. Such other documents as may be reasonably
required to close the applicable Phase transaction contemplated by this
Agreement.
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.
9.01 AFFIRMATIVE AND NEGATIVE COVENANTS. Until the applicable
Closing, in respect to the applicable Phase, Seller shall or cause to:
(i) Subject to Casualty or any Taking (as those terms are
hereinafter defined), maintain the applicable Phase and Phase Personal Property
in good condition and repair and not commit or permit waste;
(ii) Carry on its business in respect to the Project in the same
manner as it has heretofore;
(iii) Keep in full force and effect all insurance coverage
required to be maintained by it pursuant to the Leases, applicable New Leases,
the Mortgages, the Permitted Exceptions, and any easement agreements or other
agreements or undertakings affecting the Project;
(iv) Perform all of its obligations under the Contracts, Leases,
applicable New Leases, Mortgages, Permitted Exceptions and any easement
agreements or other agreements or undertakings affecting the Project;
(v) Maintain and preserve its business organization intact;
(vi) Maintain and preserve its relations with the Tenants, New
Tenants under New Leases that are fully executed prior to the Closing, suppliers
and customers;
(vii) Except as provided in Paragraph 13.04 hereof, not
voluntarily terminate, amend, modify, extend, renew, waive or accept the
surrender of any Lease or New Lease or provision thereof, without Purchaser's
prior consent, which consent shall not be unreasonably withheld or delayed;
(viii) Not voluntarily terminate, amend, modify, extend, renew,
waive or accept the cancellation of any Contract, Permitted Exception or any
easement agreements or other
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agreements or undertakings affecting the applicable Phase or any provision of
any of them, without the Purchaser's prior consent, which consent shall not be
unreasonably withheld or delayed;
(ix) Except as provided in Paragraph 13.04 hereof, not
voluntarily enter into, accept or consent to any new (a) lease, occupancy
agreement, subtenancy agreement, license agreement, concession agreement, (b)
contract or agreement, personal property lease or agreement, and/or (c) lien,
encumbrance, or security interest (including without limitation, mortgage, deed
of trust, security agreement, assignment of leases or rents, collectively,
"Mortgage") or other title exception or defect (including without limitation,
easement, restriction, dedication), which shall not be terminated on or before
the applicable Closing without the Purchaser's prior consent, which consent
shall not be unreasonably withheld or delayed;
(x) Not commence any action or proceeding or petition, apply for
or consent to any action or proceeding, the effect of which may be to change the
zoning of the Project or its assessed valuation (except for entering into New
Leases);
(xi) Not sell, assign or transfer the Project or any part hereof
(except in the instance of New Leases as provided in Paragraph 13.04 hereof),
including without limitation, the Intangible Property and the Personal Property;
provided, however, that Seller may remove applicable Phase Personal Property for
the purpose of promptly effecting necessary repairs or immediate replacement
with Personal Property of like character and equal or better quality;
(xii) Not demolish or materially alter the Improvements or any
part thereof or otherwise adversely affect the value of the Project, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed, except for (1) curing Unacceptable Conditions, Title Defects and Survey
Defects, (2) completing Punchlist Work (as defined and provided in Paragraph
13.11 hereof), (3) constructing tenant improvements for Leases, (4) performing
Seller's New Lease Obligations (as defined and provided in Paragraph 13.10
hereof), and (5) completing, in accordance with the Plans, any incomplete work.
(xiii) Except as provided in Paragraph 9.01(xii) above, not
materially alter the applicable Phase or any part thereof, including without
limitation, by mining, excavating, removing topsoil, timbering or changing the
grade, without Purchaser's prior consent, which consent shall not be
unreasonably withheld or delayed.
9.02 PAYMENTS. As more fully set forth in Paragraph 16.01 hereof, (i)
Punchlist Work; (ii) curing Unacceptable Conditions; (iii) constructing tenant
improvements for Leases and New Leases; (iv) all other work to be performed and
all payments to be made by Seller pursuant to the provisions of the Leases, the
Contracts, the Permitted Exceptions, and any insurance policy maintained by
Seller providing coverage for the Project which pertain to obligations that
accrue prior to the applicable Closing; and (v) Warranty Work shall be
completely performed and paid for when due (subject to the right to contest
Liens as provided in Paragraph 9.03 hereof) by Seller and the obligation thereof
shall survive the Closing.
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9.03 LIEN REMOVAL. Except for (i) taxes not yet due and payable as of
the applicable Closing, (ii) installments of special assessments due and payable
after the applicable Closing, and (iii) Liens (as hereinafter defined and
provided) that are either bonded or insured over in a form reasonably
satisfactory to Purchaser, all other liens and encumbrances of ascertainable
amounts incurred by Seller or by, for or on behalf of Seller, except the
Permitted Exceptions, shall be removed from the record by Seller or Seller shall
make arrangements satisfactory to the Title Company for the removal of, or title
insurance over (in form reasonably satisfactory to Purchaser), such liens and
encumbrances of record on the applicable Closing Date. Notwithstanding the
foregoing, any liens or encumbrances attaching to the title of the applicable
Phase as a result of work performed on or material supplied to the applicable
Phase by Seller or on behalf of anyone claiming by, through or under Seller
(except Tenants and New Tenants under Qualified Leases, as hereinafter defined)
or as a result of Seller's failure to pay, when due, a Commission (collectively,
"Lien" or "Liens") may be contested by Seller as hereafter provided. Within
thirty (30) days after the recording of a Lien that is recorded or filed after
the applicable Closing and that affects the closed Phase, Seller shall, at its
election, either (i) bond over the same, or (ii) cause the Title Company to
insure over the same (in form and substance reasonably satisfactory to
Purchaser), in order, in the instances of either clause (i) or (ii) above, to
reasonably protect the Purchaser and the applicable Phase (or any part thereof)
from and against the subject Lien. Thereafter, in the manner elected by Seller,
Seller may contest such Lien provided that, within thirty (30) days following
the entry by a court of competent jurisdiction of a final judgment or decree in
favor of the claimant of such Lien, Seller shall pay and satisfy such Lien and
cause it to be released of record. In the event Seller fails to pay and satisfy
any Lien within thirty (30) days following the entry by a court of competent
jurisdiction of a final judgment or decree in favor of the claimant of such Lien
or fails to bond over or insure over a Lien as provided in this Paragraph 9.03,
Purchaser may offset so much of any Earn-Out Payment or Footage Payment
subsequently payable by Purchaser hereunder by the amount incurred by Purchaser
for effectuating the satisfaction and release of the subject Lien.
10. REPRESENTATIONS AND WARRANTIES.
10.01 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to Purchaser that:
(i) Seller is an Illinois corporation duly created and validly
existing pursuant to the laws of the jurisdiction of its organization and is
duly qualified to do business in the jurisdiction in which the Project is
situated.
(ii) Seller is authorized and empowered to enter into this
Agreement and to perform all of its obligations under this Agreement without any
qualification whatsoever, and no consent or approval of any third party
(including without limitation, any governmental or quasi-governmental authority)
is or was required by Seller to execute and deliver this Agreement or consummate
this transaction.
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(iii) Upon the signing and delivery of this Agreement, this
Agreement will be legally binding upon Seller in accordance with all of its
provisions, except as such provisions may be qualified or limited by bankruptcy,
creditor's rights and equitable principles.
(iv) The person signing this Agreement on behalf of Seller has
been duly authorized to sign and deliver this Agreement on behalf of Seller.
(v) To the best of its Knowledge (as hereinafter defined),
Seller has not committed any act or permitted any action to be taken which would
materially adversely affect its ability to fulfill all of its obligations under
this Agreement.
(vi) The execution and delivery of this Agreement, and the
performance of Seller's obligations under this Agreement, will not violate or
breach, or conflict with, the terms, covenants or provisions of any agreement,
contract, note, Mortgage, indenture or other document of any kind whatsoever to
which Seller is a party or to which the Project is subject.
(vii) Seller has received no written notice and Seller has no
Knowledge of any uncured Work Order, or unfulfilled requirements or
recommendations issued, imposed or made by any insurers concerning the Project
or any part thereof.
(viii) To the best of its Knowledge, (i) Seller is not in
default of any obligation of Seller under any Mortgage, and (ii) Seller and/or
the Project is in compliance with all terms and conditions of the Permitted
Exceptions, including any easement agreement or other agreement or undertaking
affecting the Project.
(ix) To the best of Seller's Knowledge, the Project was
constructed, and is presently being operated, occupied and used in substantial
accordance with all applicable federal, state and local laws, rules, regulations
and ordinances governing the construction, operation, occupation and use of the
Project, and no variances to any applicable federal, state or local law, rule,
regulation or ordinance were granted in connection with the construction of the
Project.
(x) To the best of Seller's Knowledge, there is (i) no pending
or contemplated Taking affecting the Project or any part thereof, or (ii) no
pending or contemplated public improvement in or about the Real Property which
may in any manner affect access to or from the Project or increase the taxes
assessed against the Project.
(xi) To the best of Seller's Knowledge, except for the Vacant
Space (as hereinafter defined), Seller is in receipt of all Permits required by
all governmental authorities for the construction currently being prosecuted at
the Project and the operation, occupation and use of the Project as a shopping
center; all Permits are in full force and effect; and all Permits issued to the
Project are described in respect to each Phase on Schedule 10.01(xi) attached
hereto and made a part hereof.
(xii) Neither Seller, nor, to the best of Seller's Knowledge
(except as disclosed in the Environmental Reports), any prior owner of the
Project has: (a) caused or permitted the
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generation, manufacture, refinement, transportation, treatment, storage,
handling, installation, removal, disposal, transfer, production or processing of
Hazardous Substances (as hereinafter defined) or other dangerous or toxic
substances, or solid wastes, except in strict compliance with all laws; (b)
caused or permitted or received any written notice or have any actual knowledge
of the Release (as hereinafter defined) or existence of any Hazardous Substances
on or about the Project or property surrounding the Project which might affect
the Project; (c) caused or permitted or received any written notice or have any
actual knowledge of any substances or conditions on or about the Project or on
property surrounding the Project which may support a claim or cause of action,
whether by any governmental authority or any other person, under any laws
("Environmental Laws") in effect as of the date of this Agreement and all rules
and regulations promulgated thereunder, including, but not limited to: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sections 9601 et seq. (the "Superfund Act"); the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. Sections 6921 et seq.; the Toxic Substances
Control Act, 15 U.S.C. Sections 2601 et seq.; the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. Section 136; the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1251 et seq.; the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801 et seq.; the Federal Solid Waste Disposal Act, 42
U.S.C. Sections 6901 et seq.; the Clean Air Act, 42 U.S.C. Sections 7401 et
seq.; or any other law. For the purposes of this Agreement the terms "Hazardous
Substances" and "Release" shall have the definitions used in the Superfund Act;
provided, however, that the definition of the term "Hazardous Substances" shall
also include (if not included within the definition contained in the Superfund
Act), petroleum and related by products, hydrocarbons, radon, asbestos, urea
formaldehyde and polychlorinated biphenyl compounds.
(xiii) Except for the Permitted Exceptions, Seller is the sole
owner of good, indefeasible and insurable fee simple title to the Land and the
Improvements, and Seller has not executed or entered into any other agreement to
purchase, sell, option, lease or otherwise dispose or alienate all or any
portion of the Project other than this Agreement, the Leases and New Leases.
(xiv) Subject to the right of Seller to contest Liens as
provided in Paragraph 9.03 hereof, all labor and services performed and material
furnished to the Project have been paid for or will be paid for in full by
Seller, and, to the best of Seller's Knowledge, there exists no valid basis for
which a Lien or similar lien can properly be claimed against the Project or any
part thereof.
(xv) As of the date hereof, Schedule 7.02(a) attached hereto is
a complete and correct list of all Leases for each Phase, and the information
disclosed on Schedule 7.02(a) is accurate with respect to each of the Leases.
(xvi) Leasing commissions or fees that are payable in connection
with any leasing agreement or registration statement to which Seller is a party
or that Seller has accepted, in writing, that pertains to New Leases (that will
be paid by Seller as provided in Paragraph 13.11 hereof), and the Leases
described in Schedule 7.02(a), and commissions resulting from any
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other agreement to which Seller is a party relating to the Project
(collectively, "Commissions") will be paid by Seller when due under the
applicable leasing agreement or registration statement.
(xvii) Except as set forth on Schedule 10.01(xvii) attached
hereto, as of the date hereof, (1) none of the Tenants or New Tenants of Leases
and New Leases that are Qualified Leases as of the applicable Closing have been
granted any economic or financial concession or inducement (collectively,
"Tenant Inducement") that will not be paid in full by Seller when required in
accordance with the applicable provisions of the subject Leases and New Leases,
and (2) none of the subject Tenants or New Tenants have deposited Security
Deposits with Seller, except those disclosed on Schedule 7.02(a) attached
hereto.
(xviii) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xviii) attached hereto, as of the date hereof, no Tenant or
New Tenant of Leases or New Leases that are Qualified Leases as of the
applicable Closing has alleged an event of default on the part of Seller which
is presently outstanding, or that Seller has not fulfilled all of its
obligations under the subject Leases or New Leases which are conditions of the
obligations of such Tenants and New Tenants to pay the Rents, including without
limitation, all work, repairs and improvements required to be furnished by
Seller pursuant to such Leases and New Leases.
(xix) To the best of Seller's Knowledge, except as set forth on
Schedule 10.01(xix) attached hereto, as of the date hereof, (1) none of the
Tenants or New Tenants under Leases or New Leases that are Qualified Leases as
of the applicable Closing are in default of any of their obligations under their
respective Leases and New Leases, and (2) no event has occurred which, with the
giving of notice, the passage of time, or both, would constitute an event of
default by such Tenant or New Tenant.
(xx) Except as set forth on Schedule 10.01(xx) attached hereto,
as of the date hereof, Seller has no notice and to the best of Seller's
Knowledge, no Tenant or New Tenant under a New Lease that is fully executed
prior to applicable Closing has advised Seller, orally or in writing, that any
Tenant or any subject New Tenant intends to give up physical or legal possession
of its demised premises, including without limitation: assigning its lease;
subletting all or part of its demised premises; vacating its demised premises;
discontinuing the operation of its business at its demised premises;
surrendering possession of its demised premises; or terminating its Lease or
subject New Lease.
(xxi) There are no employees of Seller that are assigned to the
Project for which Purchaser shall have any obligations after the applicable
Closing.
(xxii) A description of all Guaranties relating to the
construction and equipment of the Project received by Seller that, by their
terms, are in effect on or after the applicable Closing Date are true, correct
and complete, and all Guaranties issued with respect to the Project that, by
their terms, are in effect on or after the applicable Closing Date are described
in respect to each Phase on Schedule 5.01(g) attached hereto.
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(xxiii) Seller has not dealt with any broker, finder or other
person in connection with this transaction, who is entitled to any Commission,
finder's fee or similar payment as a result of the acts of Seller or its agents,
except (1) as pertains to New Leases, and in such event, all Commissions in
connection therewith shall be paid by Seller as provided in Paragraph 13.11
hereof, and (2) as pertains to Commissions not yet due and payable in respect to
Leases which shall be paid by Seller when required in respect to such Leases.
Seller acknowledges that it has conversed with Eugene Faigus and Chadwick &
Saylor in connection with this transaction, but that Seller has not agreed to be
obligated to pay any fee or other compensation to either or both of them.
(xxiv) Seller has no actual Knowledge that any of the written
information provided to Purchaser by Seller or on its behalf in connection with
this transaction (including without limitation, the warranties and
representations set forth in this Agreement), is inaccurate or incomplete or
contains any untrue statement of fact.
(xxv) To the best of Seller's Knowledge, copies of documents
furnished or to be furnished to Purchaser by Seller or on its behalf in
connection with this transaction are true and complete copies of the originals.
(xxvi) As of the applicable Closing, Seller's net worth,
determined in accordance with generally accepted accounting principals
consistently applied, is greater than $5,000,000.00, exclusive of goodwill.
The term "Knowledge" when used in the context of "to the best of Seller's
Knowledge" (or any derivative form thereof) shall mean the actual (written or
oral), not imputed, knowledge of Keith Bednarowski, Dan F. Nicol, Anne E. Loff,
Joseph Grimes (Seller's Project Manager) or Marlies Hansen (Seller's Property
Manager).
10.02 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents
and warrants to Seller that:
(i) Purchaser is an Ohio corporation, duly organized and validly
existing pursuant to the law of the jurisdiction of its organization.
(ii) Purchaser is authorized and empowered to enter into this
Agreement and perform all of its obligations under this Agreement without any
qualification whatsoever.
(iii) No consent or approval of any third party (including
without limitation, any governmental or quasi-governmental authority) is or was
required by Purchaser to execute and deliver this Agreement or consummate this
transaction.
(iv) Upon the signing and delivery of this Agreement, it will be
legally binding upon Purchaser in accordance with all of its provisions, except
as such provisions may be qualified or limited by bankruptcy, creditor's rights
and equitable principles.
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(v) The person signing this Agreement on behalf of Purchaser has
been duly authorized to sign and deliver this Agreement on behalf of Purchaser.
(vi) To the best of Purchaser's Knowledge (as hereinafter
defined), Purchaser has not committed any act or permitted any action to be
taken which would materially adversely affect its ability to perform all of its
obligations under this Agreement.
(vii) The execution and delivery of this Agreement by Purchaser
and Purchaser's performance of it obligations under this Agreement shall not
conflict with any law, statute, ordinance, regulation, order, directive or
decree of any governmental or quasi-governmental authority or any contract,
other agreement or obligation to which Purchaser is a party or is otherwise
bound.
(viii) Except for Eugene Faigus and Chadwick & Saylor, neither
Purchaser nor its agents have dealt with any broker, finder or other person in
connection with this transaction who is entitled to any Commission or similar
payment as a result of the acts of Purchaser or its agents.
(ix) All copies of documents furnished or to be furnished to
Seller by Purchaser or on its behalf in connection with this transaction are
true and complete copies of the originals.
The term Purchaser's Knowledge, when used in the context of "to the best of
Purchaser's Knowledge" (or any derivative form thereof) shall mean the actual
(written or oral), not imputed, knowledge of Scott Wolstein, James A. Schoff or
Joan U. Allgood.
10.03 INTENTIONALLY DELETED.
10.04 INDEMNIFICATION.
(a) Except as limited by the provisions of Paragraph 23 hereof,
the Parties shall indemnify and hold each other harmless, from and against all
damages, costs, expenses, liabilities, penalties and fines, including without
limitation, attorneys fees, disbursements, expert witness fees, paralegal fees,
reporters fees, reproduction and printing costs, including any of the foregoing
which are incurred in connection with any appeal, and amounts paid in settlement
of claims (collectively, in respect to the foregoing inclusion, "Litigation
Expenses" ), paid or incurred by the other Party as a result of any
representation or warranty of the respective Party set forth in this Agreement
not being true and correct in all material respects when made. In addition, the
indemnity provisions of this Paragraph 10.04(a) on behalf of the Purchaser shall
pertain to any claims, demands, actions, causes of action, judgments or decrees
made against or entered against Seller in respect to any Commissions or other
compensation claimed or demanded by either Eugene Faigus or Chadwick & Saylor in
connection with the terms of this Agreement.
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(b) Notwithstanding the foregoing, and except as provided in
Paragraph 24.17 hereof in respect to Warranty Work, Seller's and Purchaser's
right to seek or obtain indemnification, damages or other legal recourse against
the other Party hereto (or any successor thereto) with respect to a breach of
any warranty, representation or covenant made in this Agreement or in any
documents, instruments or certificate executed and delivered pursuant hereto
shall terminate, and be of no further force or effect, unless (i) by the date
which is the last to occur of three hundred sixty five (365) days after the
termination of this Agreement and three hundred sixty five (365) days after the
expiration of the Earn-Out Period (as hereinafter defined), the aggrieved Party
shall have notified the other Party, in writing, that the aggrieved Party deems
that any such warranty, representation or covenant was breached in a material
respect when made (as updated or deemed updated) and states therein, with
reasonable particularity, the nature of the alleged breach and the section or
provision of the relevant document which was allegedly breached and (ii) by the
date which is the last to occur of three hundred ninety (390) days after the
termination of this Agreement and three hundred ninety (390) days after the
expiration of the Earn-Out Period, the aggrieved Party files suit against the
other Party seeking legal or equitable recourse as a consequence of such breach.
If the aggrieved Party timely notifies the other Party as called for in the
preceding clause (i) and timely files suit against the other Party as called for
in the preceding clause (ii), then the warranty, representation or covenant at
issue shall not terminate, but rather shall continue until the dispute is
settled between Seller and Purchaser or a final, non-appealable judgment is
issued by a court of competent jurisdiction with respect thereto.
(c) Within ten (10) days after receipt by an indemnified Party
of written notice of any claim or the commencement of any action under this
Paragraph 10.04 by a third party, the indemnified Party shall, if a demand in
respect thereof is to be made against the indemnifying Party pursuant to this
Paragraph 10.04, notify the indemnifying Party in writing of the claim or the
commencement of the action, provided the failure to notify the indemnifying
Party shall not relieve the indemnifying Party from any liability which it may
have to the indemnified Party other than under this Paragraph 10.04. Each
indemnitor shall be entitled, at its cost and expense, to contest any such third
party claim or action by all appropriate legal proceedings, provided that the
indemnitor shall have first notified the indemnitee of the indemnitor's
intention to do so within ten (10) days after the indemnitor's receipt of such
notice from the indemnitee. If the indemnitee joins in any such contest, the
indemnitor shall have full authority to determine all action to be taken with
respect thereto. If, after such opportunity, the indemnitor elects not to
contest any such claim or action, the indemnitor shall be bound by the
resolution of such claim or action obtained by the indemnitee. If required by
the indemnitor, the indemnitee shall cooperate fully with the indemnitor and its
counsel in contesting any such claim or action or, if appropriate, in making any
counterclaim or cross-claim against the subject third party asserting the claim
or bringing the action, but the indemnitor will reimburse the indemnitee for any
out-of-pocket costs and expenses incurred by the indemnitee in so cooperating.
The indemnitor shall pay to the indemnitee, in cash, all amounts to which the
indemnitee may become entitled by reason of the provisions of this Agreement,
such payment to be made within thirty (30) days after such amounts are finally
determined either by mutual agreement or by judgment of a court of competent
jurisdiction.
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11. SHARED CLOSING COSTS AND OTHER EXPENSES.
11.01 EXPENSES.
(a) Seller shall pay any and all fees or costs required to be
paid by Seller to the holder of the Mortgages in connection with the sale of the
Project, including, but not limited to prepayment fees, lender's consent fees or
lender's counsel fees, if any.
(b) Purchaser shall pay the costs and expenses of all Test and
Studies including any environmental audit of the Project and any other
investigations of the Project undertaken by Purchaser and all costs and
expenses, if any, charged by a lender to Purchaser in connection with any
financing or joint venturing of this transaction.
(c) Each Party shall pay its own attorney's fees.
11.02 SHARED CLOSING COSTS.
(a) Except as set forth above in Paragraph 11.01, if each
Closing occurs, Seller and Purchaser shall each pay fifty percent (50%) of all
of the cost of the applicable Phase Commitment, Title Policy (including the
Endorsements and the dating down and increasing the amount of coverage thereof
as provided in Paragraph 6.04 hereof), updating the Survey, transferring all
Permits and Guaranties to Purchaser, all escrow fees, and all transfer,
conveyance, revenue, excise, documentary or other tax or stamps, including
Indiana Gross Sales Tax, payable as a result of the sale of each Phase
(collectively, the "Shared Closing Costs").
(b) Except as provided otherwise in this Agreement, if each
Closing does not occur because of the failure of a condition to either Party's
obligation to close each Phase transaction (other than a default by a Party),
each Party shall pay fifty percent (50%) of the Shared Closing Costs.
(c) If each Closing does not occur because Seller is in default,
Seller shall pay all of the Shared Closing Costs for the applicable Phase.
(d) If each Closing does not occur and Purchaser is in default,
Purchaser shall pay all Shared Closing Costs for the applicable Phase.
12. CONDITIONS.
12.01 PURCHASER'S CONDITIONS. Purchaser shall not be obligated to
close a Phase transaction unless and until:
(a) Seller has delivered to the Escrow Agent the pre-closing and
closing documents described in Paragraphs 5, 6 and 7 of this Agreement;
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(b) Title to the applicable Phase is delivered in accordance
with the provisions of this Agreement and the Title Company issues the
applicable Phase Title Policy to the Purchaser on the applicable Closing Date,
in the amount of that portion of the Purchase Price computed as of the
applicable Closing Date in accordance with Paragraph 13.02 hereof, insuring that
indefeasible fee simple title to the applicable Phase is vested in Purchaser,
free and clear of all liens and encumbrances, except for the Permitted
Exceptions;
(c) The applicable Phase is delivered in the physical condition
provided for in this Agreement, reasonable wear and tear excepted; and
(d) If Seller is in default in the performance of any of its
obligations under this Agreement and such default has not been cured prior to
the applicable Closing or any of the representations or warranties of Seller are
untrue or inaccurate in any material respect when made or on the applicable
Closing Date.
12.02 SELLER'S CONDITIONS. Seller shall not be obligated to close a
Phase transaction unless and until:
(a) Purchaser has delivered to the Escrow Agent that portion of
the Purchase Price computed as of the applicable Closing Date in accordance with
Paragraph 13.02 hereof;
(b) Purchaser has delivered the closing documents described in
Paragraph 8 of this Agreement; and
(c) If Purchaser is in default in the performance of any of its
obligations under this Agreement and such default has not been cured by
Purchaser prior to the applicable Closing or any of the representations or
warranties of Purchaser is untrue or inaccurate in any material respect when
made or on the applicable Closing Date.
12.03 RIGHTS UPON FAILURE OF A CONDITION. Except in the case of a
default by Seller under Paragraph 12.01(d) or by Purchaser under Paragraph
12.02(c), if a condition of a Phase Closing of either Party is not satisfied as
of the applicable Closing Date, the Party whose condition is not satisfied at
such Closing shall have the right to (i) waive such condition and proceed with
the Phase Closing, (ii) extend the Phase Closing Date to permit additional time
to cause the unsatisfied condition to be satisfied, or (iii) terminate this
Agreement in respect to both Phases if the Phase I Closing has not already
occurred, or terminate the Phase II Closing, if the Phase I Closing has
occurred, and both Parties shall be released of all rights and obligations
hereunder in respect to the Phase that has not closed, except as otherwise
specifically provided for herein. If the failure of the condition is a default,
the rights of the parties shall be governed by Section 18 hereof.
13. EARN-OUT.
13.01 DEFINED TERMS. In addition to the other terms defined elsewhere
in this Agreement, the following terms shall have the following meaning:
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of Paragraphs 5.04 and 16.01 hereof.
(i) "Carry" shall mean the amount of the proportionate share of
real estate taxes and operating expenses for the applicable Phase that are (or
would have been) allocable to the premises that are the subject of a Lease or
New Lease that becomes a Qualified Lease for the period commencing on the
applicable Closing Date and ending on the date on which the Earn-Out Payment for
such Qualified Lease is due and payable hereunder, reduced by the portion, if
any, of such proportionate share for the subject period that is paid to
Purchaser by the Tenant or New Tenant of such Qualified Lease. To the extent
payable but not paid by the subject Tenant or New Tenant, the portion of Rent
from the such Tenant or New Tenant that applies to the period prior the date the
subject Earn-Out Payment is due and payable shall be deemed Arrears (as
hereinafter defined).
(ii) "Closing Payment" shall mean that amount (a) that is equal
to (y) for Phase I, the aggregate sum of those capitalized Net Cash Flows for
those Leases set forth on the Rent Roll attached hereto as Schedule 3.01 that
are Qualified Leases as of the Phase I Closing Date (which aggregated sum, as of
the date hereof based on the presumption of which Leases will be Qualified
Leases as of the Phase I Closing, is $13,301,810.00); plus or minus the amount
by which the annual Base Rent set forth in said Schedule 3.01 for those Leases
that are Qualified Leases as of the Phase I Closing Date increases or decreases
as verified by the applicable Tenant Estoppel, which increase or decrease shall
be capitalized using a rate of ten and 34/100ths percent (10.34%), and (z) for
Phase II, the aggregate sum of the Net Cash Flows for those Phase II Qualified
Leases as of the Phase II Closing Date that is capitalized using a rate of ten
and 34/100ths percent (10.34%); plus (b) in the instance of the Phase I Closing
only, the Lump Sum Payment; and plus or minus (c) the adjustments for the
applicable Phase that are provided in Section 14 hereof.
(iii) "Earn-Out Payment" shall mean the amount that is equal to
the Net Cash Flow from those Leases or New Leases that are Qualified Leases on
the date (other than any Closing Date) such Earn-Out Payment is due as provided
in this Section 13 capitalized using a rate of ten and 34/100ths percent
(10.34%), minus (1) the Carry, and minus (2) any unsatisfied right of offset
permitted Purchaser as provided in Paragraphs 5.04, 9.03, 14.06, 1407 and 16.01
hereof that was not previously credited to Purchaser.
(iv) "Force Majeure" shall mean delays resulting from (a) labor
disputes, (b) material or labor shortages, (c) Casualty, (d) acts of God or the
public enemy, (e) governmental embargo restrictions, (f) actions or inactions of
any governmental authority (including, but not limited to, the failure to timely
process or approve applications for the issuance or transfer of Permits,
licenses or approvals), (g) the adjustment of insurance claims resulting from
Casualty in excess of $1,000,000.00, (h) any other cause beyond the reasonable
control and reasonable anticipation of the applicable Party, but excluding
therefrom reasonable control resulting from monetary deficiency.
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(v) "Net Cash Flow" shall mean, in respect to the applicable
Qualified Leases, an amount equal to the aggregate amount of the so-called "base
rent" (but not operating expenses, tax reimbursements, escalations based on a
consumer price index, or other similar Rent adjustments) payable for the full
calendar year on and after the date the subject Qualified Lease became a
Qualified Lease (without reduction for "free" Rent or Rent abatements), less any
non-reimbursable operating expenses and taxes for such calendar year. Purchaser
acknowledges that for those Leases set forth on Schedule 7.02(a) attached
hereto, there are no non-reimbursable operating expenses or taxes that shall be
a deduction in the determination of Net Cash Flow.
(vi) "New Lease" shall mean any lease (other than the Leases)
that lets or demises space in the Project and that is entered into by (a) the
Seller subsequent to the date hereof, but prior to the applicable Closing Date,
or (b) by Purchaser or its successor(s) subsequent to the applicable Closing
Date, but prior to the expiration of the Earn-Out Period.
(vii) "New Tenant" shall mean the tenant or lessee under a New
Lease.
(viii) "Other Center" or "Other Centers" shall mean (a)
Arrowhead Crossing, located in Phoenix, Arizona, of which Opus Southwest
Corporation is the Other Seller; (b) Eastchase Market, located in Forth Worth,
Texas, of which Opus South Corporation is the Other Seller; (c) Maple Grove
Crossing, located in Minneapolis, Minnesota, of which Opus Corporation is the
Other Seller; and (d) Tanasbourne Town Center (Phase I), located in Hillsboro,
Oregon, of which Bold, L.L.C. is the Other Seller.
(ix) "Other Sale Agreement" or "Other Sale Agreements" shall
mean, in respect to the Other Centers, those other four Agreements of Purchase
and Sale entered into, effective as of the date hereof, by and between Purchaser
hereunder, as the purchaser thereunder, and, in respect to each Other Sale
Agreement, one of the Other Sellers, as the seller thereunder.
(x) "Other Seller" or "Other Sellers" shall mean any one or more
of the following: Opus South Corporation, a Florida corporation; Opus Southwest
Corporation, a Minnesota corporation; Opus Corporation, a Minnesota corporation;
and Bold, L.L.C, a Delaware limited liability company.
(xi) "Qualified Lease" shall mean, on the applicable Closing
Date or on the dates during or after the Earn-Out Period on which an Earn-Out
Payment is required to be paid hereunder, any Lease or New Lease that, pursuant
to the terms thereof:
(a) has been fully executed by either Seller or Purchaser
(or its successor), as lessor, and by the Tenant or New Tenant, as
lessee;
(b) the Tenant or New Tenant (1) has taken possession of
the premises that is the subject of the Lease or New Lease; (2) has
commenced paying Rent thereunder, provided, however, if Seller pays to
Purchaser the amount of (y) any free Rent afforded such Tenant or New
Tenant, or (z) the amount of Rent that would have been payable by such
Tenant or New Tenant, but for a fitting-up or fixturing period
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afforded to such Tenant or New Tenant, then the provisions of this
clause (2) shall not apply (provided that in the instance of clauses
(y) and (z), Seller shall not be permitted to pay such Rent for a
period greater than three (3) months); (3) has not terminated its
Lease or New Lease or been terminated by the landlord thereof as a
result of a default thereunder by such Tenant and New Tenant; (4) in
the instance of the applicable Closing Date, if it occurs (i) on or
before the fifteenth (15th) of a month, the Rent payment obligations
thereunder are not delinquent for a period longer than the month
preceding the month in which the applicable Closing Date occurred, or
(ii) after the fifteenth (15th) of a month, the Rent payment
obligations thereunder are not delinquent for a period longer than the
month in which the applicable Closing Date occurred; and (5) in the
instance of an Earn-Out Payment for the Earn-Out Period, the Rent
payment obligations thereunder are not delinquent for a period longer
than the month in which the Earn-Out Payment is due (in respect to
clauses (4) and/or (5), for any Rent that is past due longer than the
period set forth therein, "Monetary Default");
(c) the Tenant or New Tenant, as of the date an Earn-Out
Payment is required to be paid hereunder in respect thereto, is not in
voluntary or involuntary proceedings filed by or against it under
Section 365 of the U.S. Bankruptcy Code ("Bankruptcy Proceeding"); and
(d) the Earn-Out Conditions (as hereinafter defined)
therefor have been satisfied.
(xii) "Vacant Space" shall mean space in the Project that is
rentable for commercial purposes and that is not the subject of a Lease, New
Lease or any other occupancy right as of the Phase I Closing Date. If a Lease,
New Lease or any other occupancy right that is fully executed prior to the
expiration of the First Segment (as hereinafter defined) is terminated prior to
the expiration of the First Segment (provided Purchaser consents, in its sole
discretion, to such termination), no Closing Payment or Earn-Out Payment has
been paid in respect to such terminated Lease, New Lease or any other occupancy
right, and the subject space is not the subject of a different Lease, New Lease
or any other occupancy right at the expiration of the First Segment, then such
space shall also be deemed to be "Vacant Space" at the expiration of the First
Segment.
13.02 CLOSING DATE PURCHASE PRICE COMPUTATION. On the applicable Closing
Date, as part of the Purchase Price, Purchaser shall pay to Seller the
applicable Closing Payment computed in accordance with the provisions of
Paragraph 13.01(ii) hereof.
13.03 LEASE ASSIGNMENT RESERVATION. Notwithstanding any provisions to the
contrary contained in this Agreement, Seller shall be entitled to reserve from
the Lease Assignment ("Assignment Reservation") all of the remedies (but
excluding any eviction actions or summary depossess actions) of the landlord
under the subject Leases or New Leases (that are executed by Seller) that
pertain to (i) an event(s) that occurred prior to the applicable Closing Date,
but the obligation of indemnity by or performance of the subject Tenant or New
Tenant in respect to such event does not arise until on or subsequent to such
Closing Date; (ii) the recovery
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of Rent that is either due and payable prior to the applicable Closing Date or
due prior to the applicable Closing Date, but not payable until thereafter,
including Unknown Rents (as hereinafter defined); and (iii) the recovery of any
base rent portion of Rent that is due under Leases or New Leases prior to the
date ("Reserved Base Rent Date") that is the first to occur of (y) the date on
which the Earn-Out Payment in respect thereto is paid (if any is required as
hereafter provided), and (z) the date ("Lease Reservation Date") that is five
(5) months subsequent to the date (subject to Force Majeure) that is set forth
in the subject Lease or New Lease for the commencement of the term thereof.
Because Purchaser is to be the payee of Rent under Leases and New Leases due on
and after the Closing Date, the Lease Assignment shall not specifically reserve
the Assignment Reservation provisions provided in clause (iii). However,
provided Purchaser is not required to make any out-of-pocket expenditures to
third parties and Purchaser applies all Rents received after the applicable
Closing first to Rent then due under the applicable Leases and New Leases as
provided in Paragraph 14.02 hereof, Purchaser agrees to fully cooperate with
Seller in prosecuting against the applicable Tenant or New Tenants the rights
reserved in the Assignment Reservation, provided, further, however, that prior
to the commencement of any action or proceeding against such Tenant or New
Tenant, Seller notifies Purchaser of its intent to commence any such action or
proceeding and affords Purchaser a reasonable period of time to resolve the
matter with such Tenant or New Tenant before Seller commences any such action or
proceeding.
13.04 NEW LEASES. Except for New Leases presented to Purchaser by Seller as
hereafter provided, Purchaser and its successors, during the Earn-Out Period,
shall not enter into any lease, tenancy, occupancy agreement, rental agreement,
option, license or concession for space in the Project (collectively, "Rental
Undertaking"), without first obtaining Seller's prior written consent, which
consent shall not be unreasonably withheld or delayed. If Seller consents as
aforesaid to a Rental Undertaking, such approved Rental Undertaking shall be
deemed a New Lease. During the period commencing on the date hereof and ending
on the expiration of the Earn-Out Period, Seller shall have the exclusive right
to negotiate prospective New Leases, except in the instance of Rental
Undertakings to which Seller has consented as aforesaid. Purchaser agrees to
bind its successors, assigns and their successors and assigns to the provisions
of this Paragraph 13.04.
Seller shall keep Purchaser reasonably advised of the terms,
provisions and conditions of such prospective New Leases as well as the identity
of and the available financial information pertaining to the lessee ("Prospect")
of a proposed New Lease. Purchaser agrees to reasonably cooperate with and
advise Seller whether the credit worthiness of the Prospect is acceptable to
Purchaser and of those terms, provisions and conditions proposed for prospective
New Leases that Purchaser approves or disapproves. Purchaser agrees not to
unreasonably withhold or delay its consent and approval of the credit worthiness
of the Prospect or of such terms, provisions and conditions, provided the same
are reasonably consistent with the Leases and New Leases (or does not violate
any provision thereof) in respect to (i) rental rates and proposed Tenant
Inducements for comparable space within the Project for Prospects of comparable
net worth, (ii) duration of lease term, and (iii) exclusive uses proposed for
the Prospect..
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Under the provisions of a New Lease, (i) for the period prior
to the applicable Closing Date, Seller shall be the landlord thereof, and (ii)
for the Earn-Out Period in respect to the applicable Phase, Purchaser shall be
the landlord thereof and Seller shall be a party thereto, as contractor, for the
limited purpose of performing the New Lease Obligations (as hereinafter
defined).
When and as a final draft of a New Lease is prepared, Seller
shall deliver a true and complete copy thereof to Purchaser along with all
financial information pertaining to the Prospect that is in Seller's possession
or under its control that was not theretofore delivered to Purchaser. Purchaser
shall advise Seller, in writing, within ten (10) business days after Purchaser's
receipt of the draft New Lease, whether Purchaser approves or disapproves the
same. If Purchaser notifies Seller as aforesaid of Purchaser's disapproval of a
draft New Lease ("Disapproved Lease"), such notice shall set forth, in
reasonable particularity, the reasons for Purchaser's disapproval. If Purchaser
fails to so notify Seller of whether the draft New Lease is approved or
disapproved as aforesaid, it shall act as notice to Seller that Purchaser has
approved the same. When a prospective New Lease has been approved or is deemed
to have been approved, (i) in the instance of prospective New Leases to be
executed prior to the applicable Closing Date, Seller shall execute the same as
Landlord thereunder, and (ii) in the instance of prospective New Leases to be
executed during the Earn-Out Period for the applicable Phase, Seller shall
promptly thereafter deliver execution originals of the same to Purchaser that
have been executed by the subject Prospect, as the New Tenant, and by the Seller
in respect to the New Lease Obligations. Within five (5) business days following
Purchaser's receipt of execution originals as aforesaid in clause (ii),
Purchaser shall execute and return the same to Seller. If Purchaser fails to
return, when required, said originals executed by Purchaser as aforesaid, such
New Lease ("Unsigned Lease") shall automatically be deemed a New Lease that is
fully executed during the Earn-Out Segment (as hereinafter defined) in which
Seller delivered it to Purchaser for execution, and shall be deemed a Qualified
Lease and the Earn-Out Conditions in respect thereto satisfied on the sixth
(6th) business day after it was delivered to Purchaser, notwithstanding the
provisions of Paragraph 13.01(xi) hereof. As a result, subject to the provisions
of the next sentence, Purchaser shall pay to Seller, on the twenty-fifth (25th)
day of the month first occurring thereafter, the Earn-Out Payment computed in
respect to such Unsigned Lease. However, in the event, after the date an
Unsigned Lease became a Qualified Lease as aforesaid and prior to the date the
Prospect thereof withdraws its signature thereto, Purchaser executes and returns
to Seller such Unsigned Lease, Seller agrees to be bound by and to perform the
New Lease Obligations for such Unsigned Lease.
In the event, at any time prior to the date that is three (3)
months subsequent to the expiration date of the Earn-Out Segment in which there
was a Disapproved Lease, Purchaser (or its successors or assigns) enters into
any Rental Undertaking with the Prospect of such Disapproved Lease, such Rental
Undertaking shall automatically, notwithstanding the provisions of Paragraph
13.01(xi) hereof, be deemed to be a Qualified Lease, and Purchaser shall pay to
Seller, on the twenty-fifth (25th) day of the month first occurring after such
Rental Undertaking was signed by Purchaser, an amount equal to (a) the Earn-Out
Payment computed in respect to the provisions of such Rental Undertaking as a
Qualified Lease, minus (b) the Footage Payment,
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if any, that was previously paid by Purchaser in respect to the portion of the
Project that is the subject of such Rental Undertaking, minus, (c) the costs
incurred by Purchaser to unrelated third parties for the construction and
completion of tenant improvements and broker's commissions for the subject
Rental Undertaking, but in an amount, in either instance, not greater than the
cost of those tenant improvements and Commissions provided in the Disapproved
Lease, and minus (d) any unsatisfied right of offset afforded Purchaser pursuant
to Paragraphs 5.04, 9.03, 14.06, 14.07 and 16.01 hereof. The obligations of
Purchaser under the provisions of this grammatical paragraph shall survive the
applicable Closing and the later expiration of the Earn-Out Period.
13.05 EARN-OUT PERIOD. The hereafter provided period of time subsequent to
the Phase I Closing Date shall be divided into two segments (respectively,
"First Segment," and "Second Segment," and generally, "Earn-Out Segment,"). Each
Earn-Out Segment during which Seller has elected, as hereafter provided, to
extend the term of this Agreement shall be for a period of five (5) months or
for such longer period as provided in Section 13.06 hereof. The First Segment
shall commence on the day after the Phase I Closing Date, and the Second Segment
(if Seller elected or is deemed to have elected to extend the Earn-Out Period)
shall commence on the day after the expiration of the First Segment. Provided
the Phase I Closing occurs, Seller hereby elects to extend the term of this
Agreement for the First Segment. Seller may elect, in its sole discretion, to
extend the term of this Agreement for the Second Segment by delivering to
Purchaser Seller's written notice of such election ("Earn-Out Extension Notice")
not less than thirty (30) days prior to the expiration of the First Segment. If
Seller fails to deliver, as aforesaid, its Earn-Out Extension Notice, it shall
act as notice to Purchaser that Seller has elected not to extend the term of
this Agreement for the Second Segment, but such election or deemed election of
Seller shall not affect the obligations of the Parties in respect to the Phase
II Closing. However, notwithstanding the preceding sentence, if one or more of
the Other Sellers elect(s), under the provisions of its respective Other Sale
Agreement, to extend for the Second Segment, Seller, regardless of its election
hereunder, shall be deemed to have elected to so extend this Agreement, except
that an election by the Other Seller under the terms of the Other Sale Agreement
for Tanasbourne Town Center (Phase I) to extend for the second segment
thereunder shall not be deemed an election of Seller hereunder to extend the
Earn-Out Period for the Second Segment, if the closing for such Other Center is
after the Phase I Closing. The aggregate of the Earn-Out Segments for which
Seller has elected or is deemed to have elected to extend the term hereof shall
be referred to as the "Earn-Out Period." Any time remaining in the Earn-Out
Period on and after the Phase II Closing Date shall be applicable to Phase II as
well as Phase I, provided that the Earn-Out Period applicable to Phase II
(except as provided in Paragraph 17.02 below) shall not be longer than the Phase
I Earn-Out Period.
13.06 CASUALTY DURING EARN-OUT PERIOD. Except as hereafter provided, if,
during the Earn-Out Period, there is a Casualty to a Vacant Space, the Earn-Out
Period and the applicable Earn-Out Segment shall be tolled as to the damaged
Vacant Space until such time as Purchaser causes such damaged Vacant Space to be
restored to a habitable condition, exclusive of tenant's improvements. Except as
hereafter provided, if, during the Earn-Out Period, there is a Casualty to
twenty five percent (25%) of the Square Footage of the entire Project (as
opposed to a particular Phase) Improvements (exclusive of the Vacant Space), the
Earn-Out Period and the applicable Earn-Out Segment shall be tolled until such
time as such damaged Improvements are
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restored to a condition so that the Tenants or New Tenants thereof are open and
operating their respective businesses therein, except in respect to those
Tenants or New Tenants whose Leases or New Leases were terminated as a result of
the subject Casualty. Purchaser agrees to promptly notify Seller, in writing, of
the occurrence of such a Casualty. Notwithstanding the foregoing, in the event
of such a Casualty, Seller shall deliver to Purchaser, within ten (10) days
following the date of Seller's receipt of Purchaser's written notification,
Seller's written notice ("Casualty Notice") of its good faith determination that
such Casualty is the proper basis for the tolling of the applicable Earn-Out
Segment. If Seller fails to deliver a Casualty Notice as aforesaid, it shall act
as notice to Purchaser that Seller is not claiming any tolling of the applicable
Earn-Out Segment in respect to such Casualty. Regardless of a Casualty Notice,
there will be no tolling of the Earn-Out Period if Purchaser restores the
applicable portion of the Improvements in the Phase(s) that has been closed
within thirty (30) days following the date of such Casualty. However, if such
restoration is not completed within said thirty (30) days, the Earn-Out Period
shall be tolled commencing on the date of the Casualty and ending on the date
provided in the first two sentences of this Paragraph 13.06. During the Earn-Out
Period, following a Casualty, Purchaser agrees to diligently (subject to Force
Majeure) undertake the restoration of the applicable portion of the Improvements
in the Phase(s) that has then closed.
13.07 EARN-OUT PAYMENTS. In respect to Leases or New Leases that are fully
executed prior to the expiration of the Earn-Out Period, on the twenty-fifth
(25th) day of each calendar month after the Phase I Closing Date, provided the
subject Lease or New Lease is a Qualified Lease in respect to Phase I on and
after the Phase I Closing Date and a Qualified Lease in respect to Phase II on
and after the Phase II Closing Date, but prior to the Lease Reservation Date,
Purchaser shall pay to Seller the Earn-Out Payment computed in respect to those
Leases and New Leases that became, for the first time, Qualified Leases during
the preceding month and for which no Earn-Out Payment had been previously paid
to Seller. In the event a New Lease is executed during the First or Second
Segment, but it does not become a Qualified Lease until after the expiration of
the Earn-Out Period, but prior to the Lease Reservation Date, Purchaser, subject
to the satisfaction of the Earn-Out Conditions, shall pay to Seller at the time
aforesaid, an amount equal to the Earn-Out Payment computed in respect to such
subsequent Qualified Lease. Any Earn-Out Payment shall be subject to any
unsatisfied right of offset as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof.
Notwithstanding the foregoing, the Earn-Out Payment or Closing
Payment in respect to a particular Qualified Lease (excluding those that are
Qualified Leases in respect to an Unsigned Lease or a Rental Undertaking with
the Prospect of a Disapproved Lease as provided in each instance in Paragraph
13.04 hereof) shall not be due and payable by Purchaser to Seller, unless and
until, Seller, prior to the Lease Reservation Date, has delivered or caused to
be delivered to Purchaser, in respect to the subject Qualified Lease, (i) a
fully executed original thereof; (ii) a certificate of occupancy from the
applicable governmental authority authorizing the uninterrupted occupancy by the
subject Tenant or New Tenant of the subject premises; (iii) the applicable
Tenant Estoppel containing no material exceptions or Seller's Estoppel, if in
accordance with the provisions of Paragraph 7.15 hereof; (iv) Schedule
10.01(xvii) from Seller in respect to the subject Lease or New Lease, updated to
the date the Earn-Out Payment is due, setting forth any unsatisfied Tenant
Inducement in respect thereto; (v) evidence, in form and
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content reasonably satisfactory to Purchaser, that the portion of Tenant
Inducements payable to the subject Tenant or New Tenant has been paid by Seller;
(vi) an original of the insurance certificates required from the subject New
Tenant under the Qualified Lease; (vii) the date down and increased coverage
endorsement for the Title Policy required pursuant to the provisions of
Paragraph 6.04 hereof, provided Purchaser pays fifty percent (50%) of the Shared
Closing Costs in respect thereto; and (viii) copies of the "as-built" plans and
specifications for the tenant improvements for the subject Qualified Lease
(collectively, in respect to clauses (i) through (viii) above, "Earn-Out
Conditions"). The Earn-Out Payment obligations of this Paragraph 13.07 shall
survive each Closing Date and the later termination of this Agreement. If the
Earn-Out Conditions are not satisfied for the subject Lease or New Lease on or
prior to the Lease Reservation Date therefor, then Purchaser shall have no
obligation to make any Earn-Out Payment in respect thereto.
13.08 FOOTAGE PAYMENT. In the event Seller elects not to extend the Earn-Out
Period for the Second Segment, Purchaser shall pay to Seller, when hereafter
provided, an amount ("Footage Payment") equal to the Square Footage (as
hereinafter defined) of the Vacant Space existing at the expiration of the First
Segment, multiplied by (i) $55.00 for that portion of the Vacant Space that is
not greater than one hundred feet in depth as measured from the front exterior
surface to the rear exterior surface, and (ii) $45.00 for that portion of the
Vacant Space that is greater than one hundred feet in depth measured as
aforesaid. If Seller elects or is deemed to have elected to extend the term of
the Earn-Out Period for the Second Segment, there will be no Footage Payment.
"Square Footage" shall mean the aggregate number of square feet of the Vacant
Space measured from the front exterior surface to the rear exterior surface and
from the middle of demising walls of such Vacant Space. Within forty-five (45)
days following the date Seller has elected or is deemed to have elected not to
extend the term of the Earn-Out Period for the Second Segment, Seller shall
deliver to Purchaser Seller's computation of the amount of the Footage Payment
("Footage Computation") which will set forth the identity of the Vacant Space,
the depth of the Vacant Space, and the amount of the Square Footage contained
therein. Unless Purchaser notifies Seller within ten (10) business days
following Purchaser's receipt of the Computation Notice that Purchaser disagrees
with the provisions thereof, Purchaser shall pay to Seller, within thirty (30)
days following Purchaser's receipt of the Computation Notice the amount of the
Footage Payment provided therein. If Purchaser does object to the Computation
Notice as aforesaid, Purchaser and Seller shall promptly confer, in good faith,
to resolve the disagreement. When the disagreement is resolved, within ten (10)
business days thereafter, Purchaser shall pay to Seller the resolved Footage
Payment. Any Footage Payment shall be subject to any unsatisfied right of offset
as provided in Paragraphs 5.04, 9.03, 14.06, 14.07 and 16.01 hereof.
13.09 INTENTIONALLY DELETED.
13.10 SELLER'S NEW LEASE OBLIGATIONS. Seller, at its sole cost and expense,
shall (i) apply for and obtain all permits and licenses necessary to construct
all tenant improvements required under New Leases; (ii) subject to Force
Majeure, construct and complete, when required under the provisions of New
Leases, all such tenant improvements; (iii) pay, when due, all
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Commissions in respect to New Leases; (iv) provide and undertake the required
New Lease construction and warranty work ("Tenant Warranty"); and (v) provide
the builder's "all risk" and general liability insurance coverage required by
the subject New Lease in respect to such construction (collectively in respect
to clauses (i) through (v), "New Lease Obligations").
13.11 PUNCHLIST. The portion of the Purchase Price payable at each Closing
as computed pursuant to the provisions of Paragraph 13.02 hereof and the amount
of each Earn-Out Payment due hereunder shall be reduced by an amount which shall
be held by Purchaser and disbursed as hereafter provided, which amount shall
equal one hundred and twenty five percent (125%) of the reasonably estimated
cost of completing all of the tenant improvement work for Leases and New Leases
that are Qualified Leases in the applicable Phase as of the applicable Closing
Date and/or Earn-Out Payment date. The amount of the Footage Payment payable
hereunder shall be reduced by an amount which shall be held by Purchaser and
disbursed as hereafter provided, which amount shall equal one hundred twenty
five percent (125%) of the reasonably estimated cost of constructing and
completing substantially to those standards for the shell and core portions of
the Improvements for the subject Phase that are each set forth on the Shell and
Core List and Standard attached hereto as Schedule 13.11 (collectively, in
respect to the first and second sentences of this Paragraph 13.11, "Punchlist
Holdback"). The Punchlist Holdback shall be compiled in a line item format in
respect to major segments for completing such incomplete items and shall set
forth the reasonable cost of completing each such line item. If Seller and
Purchaser, within fifteen (15) days prior to the date the foregoing payments
hereunder are due, are unable to agree on the scope or amount of each applicable
Punchlist Holdback line item, Seller and Purchaser shall appoint a third party
contractor to make such determination, and the scope and amount so determined by
the third party contractor shall be binding upon the Parties. When the scope and
amount of the applicable Punchlist Holdback is determined as aforesaid, it shall
be attached to this Agreement, respectively, as Schedules 13.11(a)(1),
13.11(a)(2), etc. Thereafter, subject to Force Majeure, Seller, at its sole cost
and expense (regardless of the amount of the Punchlist Holdback), agrees to
diligently prosecute to completion ("Punchlist Work") all of the items on each
Schedule 13.11(a) attached hereto. The obligation of Seller to complete the
Punchlist Work is absolute and unconditional. Monthly, after each Punchlist
Holdback is established as aforesaid, when Punchlist Work pertaining to various
line items on the applicable Punchlist Holdback is complete, the Purchaser shall
pay to Seller one hundred percent (100%) of that portion of the applicable
Punchlist Holdback applicable to such completed Punchlist Work (thereby
retaining twenty-five percent (25%) thereof), provided Seller has delivered to
Purchaser a Form G704 in the form attached to the Exhibit Agreement as Schedule
13.11(b), executed by Seller (or its contractor) setting forth that the subject
line item of such Punchlist Work has been completed.
When all of the Punchlist Work in respect to the applicable Punchlist
Holdback has been completed in respect to the applicable Phase and the Forms
G704 therefor have been delivered to Purchaser, Purchaser shall pay to Seller
the remaining twenty-five percent (25%) of the subject Punchlist Holdback,
provided Seller has delivered to Purchaser the following documents:
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(a) Evidence that all payment in the manner required by the applicable
contract, agreement or undertaking is paid in full in respect to the subject
Phase Punchlist Work;
(b) Lien waivers required by (and that are reasonably satisfactory to)
the Title Company from the Seller and its contractor and subcontractors that are
necessary to insure over Liens in respect to the subject Punchlist Work; and
(c) In respect to the portion(s) of the subject Punchlist Work that
pertains to incomplete tenant improvements under a Lease or New Lease, an
acknowledgment from the subject Tenant or New Tenant, in form and substance
reasonably acceptable to Purchaser, setting forth the applicable Tenant's or New
Tenant's acceptance of completion of the subject tenant improvements.
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS.
All of the items of income and expense mentioned in this Section 14
shall be apportioned or adjusted between Seller and Purchaser as of 12:01 A.M.,
local time of the Project, as of the applicable Closing Date. Except as provided
in the instance of Unknown Rents as provided in Paragraph 14.03 hereof, all
apportionments and adjustments shall be made as of the applicable Closing Date.
To the extent that the apportionments and adjustments, at the applicable
Closing, are based upon any errors or omissions in the calculation or
determination thereof, promptly after notice of such errors or omissions, the
Parties shall readjust or reapportion and make the payment required as a result
thereof.
14.01 RENTS. The fixed and minimum rents and all additional rents,
escalation charges, common area maintenance charges, imposition charges, heating
and cooling charges, insurance charges, charges for utilities, percentage rent,
and all other rents, charges and commissions (collectively, the "Rents") payable
by the Tenants under the Leases and New Leases that are Qualified Leases for the
applicable Phase as of the applicable Closing Date, to the extent collected by
Seller on or prior to such Closing Date and which represent payments of Rents
applicable to a period of time subsequent to such Closing Date. Notwithstanding
the foregoing, Seller shall be permitted the rights against Tenants and New
Tenants as provided in the Assignment Reservation set forth in Paragraph 13.03
hereof.
14.02 ARREARS. Any of the Rents that are due and payable by the Tenants and
New Tenants of the applicable Phase on or prior to the applicable Closing Date,
but which have not been collected by the Seller on or prior to such Closing
Date, or payment of which has been deferred until after such Closing Date
("Arrears"), to the extent applicable to any period of time on or prior to the
Closing Date, and which are paid after such Closing Date shall, subject to the
terms below, be paid to Seller and be the subject of the Assignment Reservation,
and if the Arrears are received by Purchaser, Purchaser shall pay the Arrears to
Seller after collection by Purchaser, provided, however, that if any Arrears
exist on such Closing Date, all Rents, received and collected by Purchaser after
such Closing Date shall be applied first to payment of all Rents due Purchaser
and second to all Arrears due Seller. Purchaser shall have no obligation to
collect any Arrears or to commence any action to enforce the obligation of
Tenants to pay the Arrears,
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but Purchaser agrees to cooperate with Seller in the collection of such Arrears,
but only as provided in Paragraph 13.03 hereof. In the event Purchaser elects to
commence any action or proceeding against any Tenant and as a result thereof
collects any Arrears which Purchaser is required to remit to Seller, Purchaser
shall be entitled to deduct and retain a portion of the amount collected which
is equal to the Pro Rata Share (as hereinafter defined) of the Litigation
Expenses incurred by Purchaser in connection with the collection of the Arrears.
Notwithstanding anything to the contrary, Seller, as a result of the Assignment
Reservation, shall have the right, after delivery of prior written notice to
Purchaser, to commence any action or proceeding, except a summary depossess or
any eviction actions, against any Tenant for Seller's portion of any Arrears.
14.03 UNKNOWN RENTS. Any Rents which have accrued but are not due and
payable on the applicable Closing Date because the applicable Lease or New Lease
year or other fiscal period for the subject Phase for which such Rents are to be
computed has not yet expired (including by way of example only, escalation
charges and percentage rents) or if it has expired but cannot for any other
reason be calculated by the Parties on such Closing Date ("Unknown Rents"),
shall be apportioned promptly after (i) the expiration of the applicable Lease
or New Lease year or other fiscal period, and (ii) the receipt and collection of
the Unknown Rents. Purchaser shall make reasonable efforts to ascertain the
amount of the Unknown Rents (but, shall not be obligated to commence any action
or proceeding to collect Unknown Rents, except that Purchaser shall reasonably
cooperate with Seller in respect to the Assignment Reservation as provided in
Paragraph 13.03 hereof), and when the amounts of the Unknown Rents are
ascertained, received and collected by Purchaser, Purchaser shall promptly pay
to Seller a portion (the "Pro Rata Share") of the Unknown Rents determined by
multiplying the Unknown Rents collected by a fraction, the numerator of which is
the number of days in the applicable Lease or New Lease year or other fiscal
period up to but excluding the applicable Closing Date and the denominator of
which is the number of days in the applicable Lease or New Lease year or other
fiscal period, less any monies Seller has previously received on account of the
Unknown Rents and Seller's Pro Rata Share of the Litigation Expenses incurred by
Purchaser in the collection of the Unknown Rents. In the event it is determined
after the applicable Closing that the amount of the Unknown Rents received by
Seller exceeds the Seller's Pro Rata Share, Seller shall promptly pay such
excess to Purchaser upon demand. Notwithstanding anything to the contrary,
Seller shall have the right to commence any action or proceeding, except a
summary depossess or an eviction action, against any Tenant for Seller's portion
of any Unknown Rents.
14.04 UTILITIES. To the extent not payable by Tenants or New Tenants, the
actual or estimated charges for utilities accrued and payable by Seller prior to
the applicable Closing Date, provided Purchaser is required by law or elects to
assume Seller's account. Deposits for utilities (the "Utility Deposits"), plus
any interest on the Utility Deposits to which Seller is or will be entitled,
held by the provider of the utilities and which are freely transferable to
Purchaser, shall, at the election of the Purchaser, be assigned by Seller to
Purchaser and Purchaser shall pay Seller the full amount thereof at the
applicable Closing, in addition to the applicable portion of the Purchase Price.
Seller shall retain the right to obtain a refund of any Utility Deposits which
are not required to be assigned to Purchaser and Purchaser will cooperate with
Seller in obtaining any refund. With respect to water, sewer, electric and gas
charges, Seller shall make reasonable
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efforts to obtain a reading of the meter or other consumption measuring device
as of the applicable Closing Date. If the Seller is unable to obtain such a
reading, Seller shall furnish a reading as of a date not more than thirty (30)
days prior to the applicable Closing Date and the unknown charges shall be
apportioned on the basis of an estimate computed by utilizing such reading and
the most recent bill from the utility provider, computed on an equal per diem
basis.
14.05 CONTRACTS. Prepaid charges, payments and accrued charges under the
Contracts set forth in Schedule 7.05(a) attached hereto, to the extent not paid
by Tenants or New Tenants. However, if paid by Tenants or New Tenants, Seller
shall credit Purchaser with the amount thereof received by Seller from such
Tenants or New Tenants, to the extent not applied to the payment obligations
under the Contracts.
14.06 TAXES. All references to the year of real estate taxes shall mean
those real estate taxes that are due with respect to the stated year, but are
not assessed and payable until the succeeding year. Seller shall cause all real
estate taxes for 1994 and prior years for the Project to have been paid as of
the Phase I Closing Date. Seller shall be responsible for paying the 1995 real
estate taxes and, if possible, shall cause such real estate taxes to be paid as
of the Phase I Closing. If the statement for the 1995 real estate taxes is not
available on or before the Phase I Closing, the 1995 real estate taxes shall be
estimated to be $31,870.00, and the Parties shall thereafter make such
adjustments (increases or decreases) as may be necessary at such time as the
1995 real estate tax statement becomes available. Notwithstanding the foregoing,
at each Closing, to the extent there are Tenants or New Tenants that pay their
Real Estate Tax Rent (as hereinafter defined) on a lump sum basis, Seller shall
not be required to credit Purchaser with that portion of the pro-rata share of
the real estate taxes that are payable in the year of such Closing for the
period from January 1 to the date of the applicable Closing for which such lump
sum paying Tenants and New Tenants are responsible ("Lump Sum Non-Credit").
However, if any such Tenant or New Tenant fails to pay their respective lump sum
portion of Real Estate Tax Rent when due that is applicable to the period from
January 1 to the applicable Closing Date, Purchaser shall notify Seller of the
same, in writing, and Seller shall pay such unpaid amount within five (5)
business days and such amount so paid by Seller shall be deemed Arrears. In the
event Seller fails to pay such amount, Purchaser shall be permitted to offset
any Closing Payment, Footage Payment, Earn-Out Payment or other sum payable by
Purchaser to Seller hereunder that is thereafter due. To the extent there are
insufficient future payments due Seller from Purchaser against which to make
such offset, Purchaser shall have the remedy against Seller as provided in
Paragraph 18.05 hereof. The 1996 real estate taxes for the applicable Phase
shall be pro-rated as of the applicable Closing Date. Seller's pro-rata share of
1996 real estate taxes shall be calculated based upon the number of days
elapsing from January 1, 1996 to, but not including, the applicable Phase
Closing Date in relation to 365 days in the year 1996. Purchaser shall be
responsible for the remaining portion of such real estate taxes, commencing with
the applicable Closing Date and continuing through December 31 of the year of
the applicable Closing. In the event the statements for the 1996 real estate
taxes are not available as of the applicable Closing Date, the Parties shall
make the pro-ration provided for herein on the basis of an agreed upon estimate
of $288,700.00, and shall thereafter make such adjustments as may be necessary
at such time as the tax statements
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for the total real estate taxes for 1996 become available. The Closing Payment
for each Closing shall be reduced by the amount of the unpaid 1995 real estate
taxes (exclusive of the Lump Sum Non-Credit), plus Seller's pro-rata share of
the 1996 real estate taxes.
The portion of the Rent under Leases and New Leases that pertains to
the obligations of Tenants and New Tenants to pay their respective pro-rata
share real estate taxes (or special assessments provided in Paragraph 14.07
hereof) shall be called "Real Estate Tax Rent." Certain Tenants and New Tenants
pay their Real Estate Tax Rent in a lump sum(s) and others pay their Real Estate
Tax Rent on a monthly basis. The portion of Real Estate Tax Rent that pertains
to the period prior to the applicable Closing Date and which was paid to Seller
by those Tenants and New Tenants who pay the same on a monthly or lump sum basis
shall be retained by Seller. Any Real Estate Tax Rent received by Seller prior
to the applicable Closing Date that pertains to the period on or subsequent to
such Closing Date shall be credited to Purchaser at such Closing. Any Real
Estate Tax Rent received by Purchaser after the applicable Closing that pertains
to the period prior to such Closing Date (except that which is a Lump Sum
Non-Credit) shall, be paid by Purchaser to Seller. The Real Estate Tax Rent
retained by Seller shall be subject to adjustment (increases or decreases) at
such time as Purchaser reconciles the estimated payment of Real Estate Tax Rent
with the amount of the actual real estate taxes paid for 1996.
14.07 ASSESSMENT INSTALLMENTS. If, as of the applicable Closing Date, the
subject Phase is encumbered or otherwise affected by any assessment (whether or
not a lien) which becomes payable in installments, for the installment that is
due and payable in the year in which the applicable Closing occurs, Seller shall
credit Purchaser with the pro-rata portion of such installment from January 1 of
the year of such Closing to the applicable Closing Date, except for an amount
that would be equal to the Lump Sum Non-Credit. Such pro-ration shall be made on
the basis that the number of days from January 1 of the year of the applicable
Closing to, but excluding, the applicable Closing Date bears to three hundred
and sixty five (365) days. The portion of Real Estate Tax Rent applicable to the
installment of assessment payable in the year of the applicable Closing that
pertains to the period prior to the applicable Closing and which was paid to
Seller by Tenants or New Tenants shall be retained by Seller. Any Real Estate
Tax Rent applicable to such installment or assessment that was received by
Seller prior to the applicable Closing Date that pertains to the period on or
subsequent to such Closing Date shall be credited to Purchaser at such Closing.
Any Real Estate Tax Rent applicable to such installment of assessment received
by Purchaser after the applicable Closing Date that pertains to the period prior
to such Closing Date (except that which is a Lump Sum Non-Credit) shall be paid
by Purchaser to Seller. If any Tenant or New Tenant who pays their respective
Real Estate Tax Rent on a lump sum basis and for whom a Lump Sum Non-Credit was
provided, Seller shall remain responsible for Lump Sum Non-Credit as provided in
Paragraph 14.06.
14.08 PERMITS. The (i) Vault taxes and rents, if any, due and payable in 1996
(to the extent not the obligation of the applicable Tenants or New Tenants to
pay), (ii) Permit fees to
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the extent transferable, and (iii) government inspection fees shall be
apportioned as of the applicable Closing Date.
14.09 SECURITY DEPOSITS/TENANT INDUCEMENTS. Purchaser shall receive a credit
against the portion of the Purchase Price payable on the applicable Closing Date
in an amount equal to the sum of (i) the Security Deposits, if any, which Seller
is holding pursuant to the Leases and New Leases in the subject Phase and as set
forth in Schedule 7.02(a) attached hereto, plus (ii) all costs, expenses and
losses (including without limitation, reductions in Rent) which will be incurred
by Purchaser after the applicable Closing as a result of all Tenant Inducements
given on or before the applicable Closing Date which are not paid in full as of
such Closing in respect to Qualified Leases in the subject Phase as of the
applicable Closing Date.
14.10 CUSTOMARY ITEMS. Any other items of income and expense not
specifically mentioned in this Section 14 which are customarily apportioned in
real property transactions of the character contemplated by this Agreement.
14.11 APPORTIONMENT BETWEEN PHASES. For the purpose of determining the
pro-rations provided in this Section 14, on the Phase I Closing Date, Purchaser
and Seller shall attempt, in good faith, to the extent reasonably practicable,
to apportion between Phase I and Phase II in the proportion attributable to
Phase I and Phase II of the pro-rations provided in this Section 14.
15. CLOSING.
15.01 CLOSING AND CLOSING DATE. The closing of Phase I of this transaction
("Phase I Closing") shall be held at the office of Opus Properties on June 27,
1996 (the "Phase I Closing Date"), and the closing of Phase II of this
transaction ("Phase II Closing") shall be held at the office of Opus Properties
on the date ("Phase II Closing Date") that is the first to occur of November 1,
1996, and the date all of the Leases and New Leases for all of the rentable
portion of Phase II are Qualified Leases, subject, in each instance, to
extensions pursuant to Paragraphs 5.04, 6.03, 7.20, 12.03 and 17.02 hereof.
16. POSSESSION.
16.01 POSSESSION AND POST CLOSING WORK. Purchaser shall be entitled to
possession of the applicable Phase on the subject Closing Date, subject only to
such Phase's Leases, New Leases, Assignment Reservation and the Permitted
Exceptions. Notwithstanding the foregoing, subsequent to the applicable Closing
Date, Seller and Seller's agents, contractors and subcontractors shall have
access to such portions of the Project necessary and convenient to commence
and/or complete (i) the Punchlist Work; (ii) Unacceptable Conditions; (iii)
Seller's New Lease Obligations; (iv) incomplete tenant improvement work under
Leases; (v) Warranty Work; and (vi) Tenant Inducements (collectively in respect
to clauses (i) through (vi), "Post Closing Work"). All Post Closing Work shall
be done (a) at Seller's sole cost and expense, (b) in a fashion to reasonably
minimize, taking into account the scope and nature of the Post Closing Work, the
disruption to Tenants and New Tenants and to the operation and management of the
subject Phase(s) by Purchaser and Purchaser's agents, (c) in compliance with
Environmental
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Laws, and (d) in any event, subject to Force Majeure, with diligence. The
obligation of Seller to complete the Post Closing Work and to pay Commissions
and pay all financial obligations of Seller hereunder is absolute and
unconditional, and Seller agrees to indemnify, defend and hold Purchaser and its
successors and assigns and the Project harmless (including Litigation Expenses)
from and against any and all (except as provided in Paragraph 23 hereof) loss,
damage, claim, demand, liability, Lien, action, cause of action, judgment or
decree as a result of (A) damage or destruction to property, including title to
the Project, (B) personal injury, or (C) loss of Rent resulting from the
performance or non-performance of the Post Closing Work by Seller (except that
which is caused, in whole or in part, by the negligence, willful misconduct or
breach of contract by Purchaser or its successors and assigns or their
respective agents, employees, contractors or subcontractors), and resulting from
Seller's failure to pay Commissions or to pay all financial obligations of
Seller hereunder. In the event Seller fails to perform the Post Closing Work,
pay Commissions or pay all financial obligations of Seller hereunder, Purchaser
may deduct from the next succeeding Earn-Out Payment payable hereunder after the
event of Seller's failure as aforesaid, the cost and expense incurred by
Purchaser in completing such incomplete Post Closing Work, paying such unpaid
Commissions or paying all financial obligations of Seller hereunder. During the
performance of any Post Closing Work, Seller shall maintain commercial public
liability insurance in an amount and issued by carriers that is reasonably
satisfactory to Purchaser naming Purchaser and those other persons or entities
reasonably designated by Purchaser as additional insureds thereunder.
17. RISK OF LOSS.
17.01 RISK. Except as provided in Paragraphs 17.02 and 17.03, the risk of
loss or damage (the "Loss") to the subject Phase by (i) condemnation, eminent
domain or similar actions or proceedings or threat thereof (collectively,
"Taking"), or (ii) fire or other casualty (collectively, a "Casualty") shall be
borne by Seller through the date and time that the applicable portion of the
Purchase Price payable on the applicable Closing Date is paid to Seller and
thereafter shall be borne by Purchaser.
17.02 DAMAGE AND DESTRUCTION. In the event all or any portion of Phase I is
materially damaged by any cause whatsoever prior to the Phase I Closing Date,
Seller shall so advise Purchaser and Purchaser shall have the right, at its sole
option, to either: (a) proceed with the Phase I Closing with no reduction in the
Purchase Price, provided, however, Purchaser shall receive from Seller on the
Phase I Closing Date (i) all proceeds of any casualty insurance maintained by
Seller and payable with respect to such damage, and (ii) an amount equal to the
deductible on such casualty insurance which, in the instance of clauses (i) and
(ii), are applicable to Phase I; or (b) terminate this Agreement by giving
written notice of termination to Seller within ten (10) business days of the
date Purchaser is advised by Seller of such damage, in which event the Deposit
shall be refunded to Purchaser, Seller and Purchaser shall each pay 50% of the
Shared Closing Costs as of the date this Agreement is terminated by Purchaser,
and Seller and Purchaser shall have no further rights or obligations under this
Agreement, except those rights and obligations specifically set forth herein as
surviving such termination. The Seller represents and warrants to Purchaser that
the Improvements (except any Tenant's or New Tenant's trade fixtures therein)
for the entire Project are insured to the full replacement value
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thereof with a deductible of not more than $5,000.00, which insurance Seller
agrees to keep in full force and effect until the applicable Closing in respect
to that Phase(s) that has not yet closed.
In the event all or any portion of Phase II is materially damaged by
any cause whatsoever prior to the Phase II Closing Date, Seller shall so advise
Purchaser and Purchaser shall have the right, at its sole option, to either (1)
proceed with the Phase II Closing with no reduction in the Purchase Price,
provided, however, Purchaser shall receive from Seller (y) all proceeds of any
casualty insurance maintained by Seller and payable with respect to such damage,
and (z) an amount equal to the deductible on such casualty insurance which, in
the instance of clauses (y) and (z), are applicable to Phase II; or (2) permit
Seller the opportunity to restore the damage to Phase II as hereafter provided.
If Purchaser elects to permit Seller to restore as provided in clause (2) above,
Seller shall promptly undertake, with diligence (but subject to Force Majeure),
the restoration of Phase II and the Phase II Closing Date shall be postponed
until the earlier to occur of six (6) months subsequent to the date of the
Casualty to Phase II and the date Phase II is fully restored. In the event any
Lease or New Lease is terminated as a result of a Casualty to Phase II, on and
after the Phase II Closing Date (and commencing thereon), Seller shall be
permitted an Earn-Out Period applicable to Phase II for a period commencing on
the Phase II Closing Date that is the longer of five (5) months and the
unexpired Earn-Out Period that was elected or deemed elected by Seller in
respect to Phase I.
17.03 CONDEMNATION AND EMINENT DOMAIN. If, prior to the Phase I Closing
Date, the Project shall be subjected to a Taking, either total or partial, or if
any notice of intent of Taking or sale in lieu of Taking that materially affects
the Project is received by Seller or Purchaser, Purchaser shall have the right
to either: (a) proceed with Phase I Closing, in which event Purchaser shall be
entitled to participate in any such Taking proceedings that are applicable to
Phase I, and if applicable to Phase II, Purchaser shall be entitled to so
participate after the Phase II Closing, and, after payment to Seller of the cash
portion of the Purchase Price payable on the applicable Closing Date, to receive
all of the proceeds of such Taking that are applicable to Phase I, after the
Phase I Closing, and that are applicable to Phase II, after the Phase II
Closing, or (b) terminate this Agreement by giving written notice of termination
to Seller, in which event the Deposit shall be returned to Purchaser, Seller and
Purchaser shall each pay 50% of the Shared Closing Costs, and Purchaser and
Seller shall have no further rights or obligations under this Agreement, except
those rights and obligations specifically set forth herein as surviving such
termination. Seller and Purchaser each agree to promptly forward to the other
any notice of intent received pertaining to a Taking of all or a portion of the
Project.
18. DEFAULTS AND REMEDIES.
18.01 SELLER'S DEFAULTS. In respect to the remedies afforded Purchaser
pursuant to Paragraph 18.04 hereof, Seller shall be deemed to be in default
under this Agreement in the event (i) Seller fails, for any reason (other than a
default by Purchaser), to perform any of its material obligations under this
Agreement that arise on or prior to the Phase I Closing within the time limits
and in the manner provided for in this Agreement, (ii) any representation or
warranty by Seller in this Agreement is untrue or inaccurate in a material
respect when made or as of the
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Phase I Closing Date, (iii) any Other Seller under the applicable Other Sale
Agreement fails, for any reason (other than a default by Purchaser), to perform
any of its material obligations under the subject Other Sale Agreement that
arise on or prior to the Phase I Closing within the time limits and in the
manner provided for in such Other Sale Agreement, or (iv) any representation or
warranty made by any Other Seller in the applicable Other Sale Agreement is
untrue or inaccurate in a material respect when made or as of the Phase I
Closing Date. Notwithstanding the provisions of clauses (iii) and (iv) above, if
Purchaser closes this transaction, any default or any inaccurate representation
or warranty by any Other Seller under the terms of the applicable Other Sale
Agreement shall be deemed waived in respect to this Agreement and it shall not
be construed as a default by Seller hereunder. In respect to the remedies
afforded Purchaser pursuant to Paragraph 18.05 hereof, Seller shall be deemed to
be in default under this Agreement in the event Seller fails, for any reason
(other than a default by Purchaser), to perform any of its material obligations
under this Agreement that arise subsequent to the Phase I Closing (excluding the
obligations of Seller to close this transaction in respect to subsequent Phase
Closing, in which event the remedies afforded Purchaser pursuant to Paragraph
18.04 shall only apply) within the time limits and in the manner provided for in
this Agreement or any representation or warranty made by Seller in this
Agreement is untrue or inaccurate in a material respect when made or as of the
applicable Closing Date. If the applicable Closing does not occur and Seller is
in default, Seller shall pay all of the Shared Closing Costs.
18.02 PURCHASER'S DEFAULTS. Purchaser shall be deemed to be in default under
this Agreement in the event Purchaser fails, for any reason (other than a
default by Seller), to perform any of its material obligations under this
Agreement or any or all of the Other Sale Agreements within the time limits and
in the manner provided for, as applicable, in this Agreement and the Other Sale
Agreements, or any representation or warranty made by the Purchaser in this
Agreement or any or all of the Other Sale Agreements is untrue or inaccurate in
a material respect when made or as of the applicable Closing Date. If the
applicable Closing does not occur and Purchaser is in default, Purchaser shall
pay all of the Shared Closing Costs.
18.03 SELLER'S REMEDIES. If Purchaser is in material default under this
Agreement of its obligation to close each Phase and Seller is not in material
default, the sole and exclusive remedy of Seller shall be to terminate this
Agreement by notice given to Purchaser and in such event Purchaser shall be
liable to Seller for liquidated damages in respect to Phase I in the amount
equal to one percent (1%) of $13,301,810.00, and in respect to Phase II in the
amount equal to one percent (1%) of Phase II Closing Payment, plus, in either
instance, Litigation Expenses incurred by Seller in enforcing the collection of
such liquidated damages. The Parties recognize and agree that the foregoing
remedy for liquidated damages is a reasonable amount in the context of this
transaction in which the accurate measurement of damages is not feasible or
convenient. Notwithstanding the foregoing, if Purchaser (i) violates the
Recording Restriction (as hereinafter defined), (ii) fails to indemnify, defend
or hold Seller and the Project harmless in respect to Tests and Studies as
provided in Paragraph 5.02 hereof, or (iii) fails to bind its successors and
assigns as provided in Paragraph 13.04 hereof, Seller, in addition to the
aforesaid liquidated damages in respect to Purchaser's failure to close this
transaction, shall be entitled (subject to the limitations contained in
Paragraph 23 hereof) to recover from Purchaser monetary damages in the amount
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actually suffered by Seller as a result of the events set forth in clauses (i),
(ii), or (iii). If Purchaser fails to pay, when due, the Earn-Out Payments
and/or Footage Payments required hereunder, Seller shall only be entitled to
recover from Purchaser such Earn-Out Payments or Footage Payments, plus interest
thereon as provided in Paragraph 24.16 hereof, plus Litigation Expenses.
18.04 PRE-CLOSING PURCHASER'S REMEDIES. If Seller, in respect to its
obligations to close an applicable Phase, is in material default under this
Agreement on or before the applicable Closing Date and Purchaser is not in
material default, Purchaser may, as Purchaser's sole and exclusive remedies,
elect to either (i) terminate this Agreement, in which event the Deposit (but
only in respect to Phase I) shall be refunded to Purchaser, and neither Party
shall have any further rights or obligations hereunder, except those
specifically provided herein as surviving such termination, or (ii) seek and
enforce the specific performance of Seller's obligations hereunder in which
event Purchaser shall also be permitted to recover Litigation Expenses that it
incurred as a result of such proceeding. Notwithstanding the foregoing, in no
instance shall Purchaser or anyone claiming by, through or under Purchaser (over
whom Purchaser has control) record or file in the public records in the
jurisdiction of the Project any memorandum or other indicia of Purchaser's
rights or Seller's obligations hereunder, except in the single instance of a
recording or filing that is concurrently done at the time of the filing of a
complaint by Purchaser, with a court of competent jurisdiction, for the relief
of specific performance of Seller's obligations hereunder, but then only after
Purchaser has given Seller three (3) business days written notice prior to such
recording or filing ("Recording Restriction").
18.05 POST CLOSING PURCHASER'S REMEDIES. If Seller is in material default
under this Agreement in respect to any of its obligations hereunder pertaining
to an applicable Phase that arise subsequent to the applicable Closing Date,
subject to the limitation provided in Paragraph 23 hereof, Purchaser may recover
from Seller all out-of-pocket monetary damages incurred by Purchaser that have
not been satisfied by the offset permitted Purchaser pursuant to Paragraphs
5.04, 9.03, 14.06, 14.07 and 16.01 hereof. In addition, Purchaser shall be
permitted to recover Litigation Expenses that it incurs as a result of enforcing
Purchaser's right to recover monetary damages as aforesaid.
19. CROSS PERFORMANCE OBLIGATION. If Purchaser or its permitted
successors and assigns elects to terminate any of the Other Sale Agreements for
any reason other than a Casualty to or Taking in respect to any of the Other
Centers prior to the Phase I Closing Date, it shall act as an election of
Purchaser under this Agreement to concurrently terminate this Agreement and this
Agreement shall thereupon terminate, Purchaser and Seller shall each pay fifty
percent (50%) of the Shared Closing Costs, and neither Purchaser nor Seller
shall have any further rights or obligations hereunder, except those
specifically provided herein as surviving such termination. However, if the
Phase I Closing shall have occurred, the termination of any Other Sale
Agreements with respect to a subsequent phase under any such Other Sale
Agreement shall not result in the automatic termination of this Agreement in
respect to Phase II.
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20. ASSIGNMENT
Seller shall not assign or transfer any of its rights under this
Agreement without first obtaining Purchaser's prior written consent which
consent shall not be unreasonably withheld or delayed. Prior to the Phase I
Closing, Purchaser shall not assign any of its rights under this Agreement
without first obtaining Seller's prior written consent which consent shall not
be unreasonably withheld or delayed. At or subsequent to the Phase I Closing,
Purchaser may assign its rights under this Agreement provided such assignee and
Purchaser are jointly and severally liable for the obligations of Purchaser
hereunder and such assignee assumes such obligations, in writing, in form and
content reasonably acceptable to Seller.
21. NOTICES.
Any notice, demand, request, approval, consent or other communication
(collectively, a "Notice") concerning this Agreement or the Project or any
matter arising in connection with this Agreement or the Project shall be in
writing. Seller hereby appoints Opus Properties, L.L.C., a Delaware limited
liability company ("Opus Properties"), as Seller's duly authorized and empowered
agent to give and receive any and all Notices required or permitted to be given
by Purchaser or Seller hereunder. Any Notice received by Opus Properties under
the terms of this Agreement shall be deemed received and binding on Seller. Any
Notice given by Opus Properties to Purchaser shall be deemed a Notice given by
and binding on Seller. All Notices shall be addressed as follows:
If to Seller to: Opus Properties, L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Anne E. Loff
Telecopier: (612) 936-9808
with a copy to: Opus, U.S., L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Dan F. Nicol, Esq.
Telecopier: (612) 936-9808
with a copy to: O'Brien, O'Rourke & Hogan
135 South LaSalle Street
Suite 830
Chicago, Illinois 60603
ATTN: Frederic G. Hogan
Telecopier: (312) 372-8029
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If to Purchaser to: DEVELOPERS DIVERSIFIED REALTY
CORPORATION
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
ATTN: James A. Schoff
Executive Vice President
Telecopier: (216) 247-5076
with a copy to: Joan Allgood, Esq,
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Telecopier: (216) 247-5076
with a copy to: Baker & Hostetler
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
ATTN: Albert T. Adams
Telecopier: (216) 696-0740
If to Escrow Agent to: First American Title Insurance Company
1150 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
ATTN: Rodney D. Ives
Telecopier: (612) 337-5249
Any Notice shall be given by either (i) personal delivery, in which event it
shall be deemed given on the date of delivery; (ii) certified mail return
receipt requested, in which event it shall be deemed given three (3) business
days after the date postmarked; or (iii) next or second business day delivery by
nationally recognized overnight courier, in which event it shall be deemed given
on the next or second (whichever is applicable) business day immediately
following receipt by the courier. Any Party may change any address for the
delivery of Notice to such Party, by giving Notice in accordance with the
provisions of this Paragraph 21.
22. ATTORNEYS' FEES AND DISBURSEMENTS.
In the event that any Party shall engage an attorney in connection
with any action or proceeding to enforce or construe this Agreement, the
prevailing Party in such action or proceeding shall be entitled to recover its
Litigation Expenses to the extent permitted by law. In the event different
Parties are the prevailing Parties on different issues, the Litigation Expenses
shall be apportioned in proportion to the value of the issues decided for and
against the Parties.
23. NO CONSEQUENTIAL DAMAGES.
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Notwithstanding any term, provision or covenant contained in this
Agreement to the contrary, no Party hereto shall be entitled to recover from the
other Party consequential, exemplary or punitive damages, all such damages are
hereby expressly waived and released.
24. MISCELLANEOUS.
24.01 SUCCESSORS. The rights and obligations of the Parties under this
Agreement shall inure to the benefit of and be binding upon the Parties and all
persons who are permitted hereunder to succeed to their respective rights and
obligations.
24.02 MODIFICATIONS/WAIVERS. This Agreement cannot be changed nor can any
provision of this Agreement, or any right or remedy of any Party, be waived
orally. Changes and waivers can only be made in writing and the change or waiver
must be signed by the Party against whom the change or waiver is sought to be
enforced. Any waiver of any provision of this Agreement, or any right or remedy,
given on any one or more occasions shall not be deemed a waiver with respect to
any other occasion.
24.03 ENTIRE AGREEMENT. This Agreement is signed by the Parties as a final
expression of all of the terms, covenants and conditions of their agreement and
as a complete and exclusive statement of its terms, covenants and conditions.
24.04 COUNTERPARTS. This Agreement may be signed in one or more counterparts
or duplicate signature pages with the same force and effect as if all required
signatures were contained in a single original instrument.
24.05 CAPTIONS. The captions contained in this Agreement were inserted for
the convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the Parties.
24.06 GENDER/SINGULAR/PLURAL. Whenever masculine, feminine, neuter,
singular, plural, conjunctive or disjunctive terms are used in this Agreement,
they shall be construed to read in whatever form is appropriate to make this
Agreement applicable to all the Parties and all circumstances, except where the
context of this Agreement clearly dictates otherwise.
24.07 EXHIBITS INCORPORATED. The exhibits attached to this Agreement are
hereby incorporated by reference in their entirety with the same force and
effect as if they were set forth at length in this Agreement. Concurrently with
the execution of this Agreement, Seller, Purchaser and all of the Other Sellers
entered into that certain Exhibit Agreement ("Exhibit Agreement") pursuant to
the terms of which the exhibits attached thereto are certain of the schedules
referenced in this Agreement that are also common to all of the Other Sale
Agreements. Therefore, the exhibits attached to the Exhibit Agreement are hereby
incorporated by reference in their entirety in this Agreement with the same
force and effect as if they were set forth at length in this Agreement.
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24.08 GOVERNING LAW. In the event of any dispute concerning or arising out
of this Agreement, the laws of the State in which the Project is located shall
govern and control the construction and enforcement of this Agreement.
24.09 SEVERABILITY. If one or more provisions of this Agreement or the
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions or any
other application thereof shall in no way be affected or impaired.
24.10 DATE FOR PERFORMANCE. If the date for performance of any act under
this Agreement falls on a Saturday, Sunday or federal holiday, the date for such
performance shall automatically be extended to the first succeeding business
which is not a federal holiday.
24.11 FURTHER ACTION. The Parties shall at any time, and from time to time
on and after the Phase I Closing Date, upon the request of the other Party, do,
execute, acknowledge and deliver all such further acts, deeds, assignments and
other instruments as may be reasonably required for the consummation of this
transaction and are reasonably acceptable in scope, form and content to the
Party whose act, signature, acknowledgment or delivery is requested.
24.12 INTENTIONALLY DELETED.
24.13 CONFIDENTIALITY. Without the prior written consent of Purchaser,
neither Seller nor any of Seller's representatives will disclose to any person
any of the terms, conditions or other facts with respect to this Agreement or
the Exhibit Agreement, including the status thereof, provided, that Seller or
any of Seller's representatives may make such disclosure if Seller has first
received the written opinion of counsel acceptable to Purchaser that such
disclosure must be made by Seller in order that Seller does not commit a
violation of law. Without the prior written consent of Seller, neither Purchaser
nor any of Purchaser's representatives will disclose to any person any of the
terms, conditions or other facts with respect to this Agreement or the Exhibit
Agreement, including the status thereof and any of the terms, provisions or
conditions of the Site Analysis Documents or of any of the Studies and Reports,
provided, that Purchaser or any of Purchaser's representatives may make such
disclosure if Purchaser has first received the written opinion of counsel
acceptable to Seller that such disclosure must be made by Purchaser in order
that Purchaser does not commit a violation of law. The obligation of Seller and
Purchaser pursuant to the provisions of this Paragraph 24.13 shall survive the
termination of this Agreement.
24.14 TIME OF THE ESSENCE. Time is of the essence in this transaction.
24.15 CONSTRUCTION. This Agreement shall not be construed more strictly
against one Party than against the other merely by virtue of the fact that it
may have been prepared by counsel for one of the Parties, it being recognized
that both Seller and Purchaser have contributed substantially and materially to
the preparation of this Agreement. The headings of various Section and
Paragraphs in this Agreement are for convenience only, and are not to be
utilized in construing the content or meaning of the substantive provisions
hereof.
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24.16 INTEREST. Any payment obligation of a Party hereto to the other Party
shall bear interest at the rate of two percent (2%) plus the corporate base rate
of interest from time to time charged by Citibank, N.A., commencing on the date
that is five (5) business days subsequent to the date such payment is due, until
paid.
24.17 WARRANTY WORK. For the period ("Warranty Period") (i) that is provided
in each Lease or New Lease in respect to the applicable Tenant Warranty for
tenant improvements, and (ii) of one (1) year subsequent to the date each of the
Improvements (exclusive of tenant improvements that are the subject of the
applicable Tenant Warranty) is substantially complete in accordance with the
Plans, Seller agrees, at its sole cost and expense, to promptly (subject to
Force Majeure) correct any defects in the tenant improvements or other
Improvements due to (a) the failure thereof to substantially comply with the
plans for the subject tenant improvements or the Plans in respect to the rest of
the Improvements, or (b) faulty, improper or inferior materials or workmanship
(collectively, "Warranty Work"). If Warranty Work is the subject of a Lease or
New Lease, the provisions of such Lease or New Lease shall control in the
determination of the scope of the Warranty Work. If Warranty Work is not the
subject a Lease or New Lease, then the provisions of this Paragraph 24.17 shall
control in the determination of the scope of the Warranty Work. However,
Warranty Work shall not in any way include routine and appropriate maintenance
or Warranty Work directly resulting from (but only to the extent resulting from)
the failure to perform routine and appropriate maintenance of the tenant
improvements or other Improvements. Promptly during the Warranty Period (but in
any event prior to the expiration of the Warranty Period), Purchaser shall give
Seller written notice ("Warranty Notice") of any defect in the Project that
Purchaser, in good faith, determines to require Warranty Work. Except as
hereafter provided, Seller shall promptly undertake and complete, subject to
Force Majeure, the Warranty Work that is the subject of the Warranty Notice.
However, if Seller objects, in good faith, within ten (10) business days
following receipt of a Warranty Notice, it shall notify Purchaser, in writing of
the same. Thereafter, they shall promptly confer, in good faith, to resolve any
disagreement in respect to Warranty Work. If within fifteen (15) days after
conferring Purchaser and Seller are unable to agree on the scope of Warranty
Work that is not the subject of a Lease or New Lease, they shall appoint a third
party contractor to make such determination, and the scope so determined by the
third party contractor shall be binding on the Parties. When the Warranty Work
is agreed to by the Parties or determined by the third party contractor as
aforesaid, such Warranty Work shall be undertaken and completed as aforesaid.
The Warranty Work obligation hereunder shall only pertain to the Warranty Work
for which a Warranty Notice was delivered to Seller prior to the expiration of
the Warranty Period or that was delivered by a Tenant or a New Tenant in
accordance with the provisions of the Tenant Warranty, and in such event the
Warranty Work obligation of Seller in respect thereto shall not terminate at the
expiration of the Warranty Period or the Tenant Warranty, but rather shall
continue until such Warranty Work is completed by Seller.
48
<PAGE> 54
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the
date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
DEVELOPERS DIVERSIFIED
OPUS NORTH CORPORATION REALTY CORPORATION
an Illinois corporation an Ohio corporation
By: /s/ ????????????????? By:
------------------------------- ------------------------
Its: James A. Schoff
-------------------------- Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
06-1226096 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By: /s/ ??????????????????
--------------------------------
Its: COMMERCIAL MANAGER
----------------------------
<PAGE> 55
IN WITNESS WHEREOF, the Parties have signed this Agreement as of the
date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
DEVELOPERS DIVERSIFIED
OPUS NORTH CORPORATION REALTY CORPORATION
an Illinois corporation an Ohio corporation
By: By: /s/ JAMES A. SCHOFF
------------------------------- ------------------------
Its: James A. Schoff
-------------------------- Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
06-1226096 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By:
--------------------------------
Its:
----------------------------
<PAGE> 56
SCHEDULES ATTACHED TO THIS AGREEMENT OR
THE EXHIBIT AGREEMENT
---------------------------------------
1.02 Legal Description
1.02(a) Site Plan
2.01(b) Personal Property
3.01 Rent Roll
5.01(b) Environmental Reports
5.01(g) Guaranties
6.01 Survey Requirements and Certifications
(attached to the Exhibit Agreement)
6.03 Permitted Exceptions
6.04 Endorsements
7.01 Deed (attached to the Exhibit Agreement)
7.02 Assignment of Leases (attached to the Exhibit Agreement)
7.02(a) Description of Leases and Security Deposits
7.04 Bill of Sale (attached to the Exhibit Agreement)
7.05 Assignment of Contracts (attached to the Exhibit
Agreement)
7.05(a) Description of Contracts to be Assigned at Closing
7.06 Affidavit of Seller Concerning Violations/Work Orders
(attached to the Exhibit Agreement)
7.10 FIRPTA Affidavit (attached to the Exhibit Agreement)
7.13 Tenant Letter (attached to the Exhibit Agreement)
7.15 Tenant Estoppel (attached to the Exhibit Agreement)
7.20 Seller Date Down Certificate (attached to the Exhibit
Agreement)
7.21 Agreement Estoppel
7.24 Assignment Declaration
8.06 Purchaser Date Down Certificate (attached to the Exhibit
Agreement)
<PAGE> 57
10.01(xi) Permits
10.01(xvii) Tenant Inducements
10.01(xviii) Alleged Seller Defaults Under the Leases
10.01(xix) Tenant Defaults Under the Leases
10.01(xx) Tenant's Notice of Vacating, Assigning or Subletting
13.11 Shell and Core List and Standard
13.11(a)(1), etc. Punchlist Holdback(s)
13.11(b) Form G704 Certificate of Completion (attached to the
Exhibit Agreement)
<PAGE> 58
GLOSSARY OF TERMS
-----------------
Term Where Defined
- ---- -------------
Agreement 1st Paragraph
Agreement Estoppel 7.21
Arrears 14.02
Assignment Reservation 13.03
Bankruptcy Proceeding 13.01(xi)(c)
Carry 13.01(i)
Casualty 17.01
Casualty Notice 13.06
Closing 15.01
Closing Date(s) 15.01
Closing Payment 13.01(ii)
Commissions 10.01(xvi)
Condition Notice 5.04
Condition Response 5.04
Commitment 6.02
Contract Assignment 7.05
Deed 7.01
Defects Notice 6.03
Deposit 3.02(c)
Disapproved Lease 13.04
Earn-Out Conditions 13.07
Earn-Out Extension Notice 13.05
Earn-Out Payment 13.01(iii)
Earn-Out Period 13.05
Earn-Out Segment 13.05
Endorsements 6.04
Environmental Laws 10.01(xii)
Environmental Reports 5.01(b)
Escrow Agent 4.01
Exhibit Agreement 24.07
FIRPTA Affidavit 7.10
First Segment 13.05
Footage Computation 13.08
Footage Payment 13.08
Force Majeure 13.01(iv)
Guaranties 5.01(g)
Hazardous Substances 10.01(xii)
Improvements 1.02
Initial Deposit 3.02(b)
Intangible Property 2.01(c)
i
<PAGE> 59
GLOSSARY OF TERMS
-----------------
Term Where Defined
- ---- -------------
Knowledge 10.01
Land 1.02
Lease Assignment 7.02
Lease Reservation Date 13.03
Leases 7.02
Lien(s) 9.03
Litigation Expenses 10.04(a)
Loss 17.01
Lump Sum Payment 3.02(a)
Lump Sum Non-Credit 14.06
Monetary Default 13.01(xi)(b)
Mortgage 10.01(ix)
Net Cash Flow 13.01(v)
New Lease 13.01(vi)
New Lease Obligations 13.10
New Tenant 13.01(vii)
Notice 21
Opus Properties 21
Other Center(s) 13.01(viii)
Other Sale Agreement(s) 13.01(ix)
Other Seller(s) 13.01(x)
Outlots 1.02
Party(ies) 1st Paragraph
Permits 2.01(c)
Permitted Exceptions 6.03
Personal Property 2.01(b)
Phase I 1.02
Phase I Closing 15.01
Phase I Closing Date 15.01
Phase I Holdback 13.11
Phase II 1.02
Phase II Closing 15.01
Phase II Closing Date 15.01
Phase II Holdback 13.11
Phase II Notice Date 5.03
Phase II Unacceptable Condition Cost Limitation 5.04
Phase(s) 1.02
Plans 5.01(f)
Post Closing Work 16.01
Pro Rata Share 14.03
Project 2.01
ii
<PAGE> 60
GLOSSARY OF TERMS
-----------------
Term Where Defined
- ---- -------------
Prospect 13.04
Punchlist Holdback 13.11
Punchlist Work 13.11
Purchase Price 3.01
Purchaser 1st Paragraph
Purchaser Date Down Certificate 8.06
Purchaser's Knowledge 10.02
Qualified Lease 13.01(xi)
Real Estate Broker 4.02
Real Estate Tax Rent 14.06
Real Property 1.03
Recording Restriction 18.04
Release 10.01(xii)
Rental Undertaking 13.04
Rents 14.01
Reserved Base Rent Date 13.03
Restoration Forgiveness 5.02
Second Deposit 3.02(c)
Second Segment 13.05
Security Deposits 7.02
Seller 1st Paragraph
Seller Date Down Certificate 7.20
Seller's Estoppel 7.15
Seller's Response 6.03
Shared Closing Costs 11.02(a)
Site Analysis Documents 5.01
Site Analysis Period 5.03
Square Footage 13.08
Superfund Act 10.01(xii)
Survey 6.01
Survey Defects 6.03
Taking 17.01
Tenant Estoppel 7.15
Tenant Inducement 10.01(xvii)
Tenant Letters 7.13
Tenant Warranty 13.10
Tenants 7.02
Termination Agreements 7.16
Tests and Studies 5.02
Title Company 4.01
Title Defects 6.03
iii
<PAGE> 61
GLOSSARY OF TERMS
-----------------
Term Where Defined
- ---- -------------
Title Policy 6.04
Unacceptable Conditions 5.04
Unknown Rents 14.03
Unassigned Lease 13.04
Utility Deposits 14.04
Vacant Space 13.01(xii)
Violations 7.06
Warranty Notice 24.17
Warranty Period 24.17
Warranty Work 24.17
Work Orders 7.06
<PAGE> 1
EXHIBIT 2.3
-----------------------------------
AGREEMENT OF PURCHASE AND SALE
EASTCHASE MARKET SHOPPING CENTER
DEVELOPERS DIVERSIFIED REALTY CORPORATION
AND
OPUS SOUTH CORPORATION
-----------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
1. RECITALS-------------------------------------------------------------1
1.01 Definitions-----------------------------------------------------1
1.02 Land/Improvements-----------------------------------------------1
1.03 Real Property---------------------------------------------------1
2. AGREEMENT TO PURCHASE AND SELL---------------------------------------1
2.01 Intentionally Deleted-------------------------------------------1
2.02 Purchase/Sale---------------------------------------------------2
3. PURCHASE PRICE AND MANNER OF PAYMENT---------------------------------2
3.01 Purchase Price--------------------------------------------------2
3.02 Purchase Price Portions-----------------------------------------2
4. ESCROW---------------------------------------------------------------3
4.01 Escrow Agent----------------------------------------------------3
4.02 Filings---------------------------------------------------------3
5. SITE ANALYSIS--------------------------------------------------------3
5.01 Site Analysis Documents-----------------------------------------3
5.02 Access----------------------------------------------------------4
5.03 Site Analysis Period--------------------------------------------5
5.04 Cure of Unacceptable Conditions---------------------------------6
6. SURVEY AND TITLE INSURANCE-------------------------------------------8
6.01 Survey----------------------------------------------------------8
6.02 Title Commitment------------------------------------------------8
6.03 Purchaser's Objections; Seller's Cure---------------------------8
6.04 Title Policy----------------------------------------------------9
7. SELLER'S CLOSING DOCUMENTS AND ESCROW-------------------------------10
7.01 Deed-----------------------------------------------------------10
7.02 Assignment of Leases-------------------------------------------10
7.03 Leases and Tenant Documents------------------------------------11
7.04 Bill of Sale---------------------------------------------------11
7.05 Assignment of Contracts----------------------------------------11
7.06 Violations/Work Orders Affidavit-------------------------------11
7.07 Keys-----------------------------------------------------------11
7.08 Plans and Specifications---------------------------------------11
7.09 Title Insurance Affidavit--------------------------------------11
7.10 FIRPTA Certificate/Withholding---------------------------------11
7.11 Form 1099------------------------------------------------------11
7.12 Books and Records----------------------------------------------12
7.13 Letters to Tenants---------------------------------------------12
7.14 Recording Requirements-----------------------------------------12
TOC-1
<PAGE> 3
TABLE OF CONTENTS
PAGE
----
7.15 Estoppel Certificates------------------------------------------12
7.16 Termination of Management and Seller Affiliated Contracts------12
7.17 Permits/Guaranties---------------------------------------------13
7.18 Closing Statements---------------------------------------------13
7.19 Escrow Instructions--------------------------------------------13
7.20 Date Down Certificate------------------------------------------13
7.21 Agreement Estoppel Certificate---------------------------------13
7.22 Pad and Phase II Covenant--------------------------------------14
7.23 Vacant Space Acknowledgment------------------------------------14
7.24 Allocable Share Agreement.-------------------------------------14
7.25 Other Documents------------------------------------------------14
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS-----------------------14
8.01 Assignment of Leases-------------------------------------------14
8.02 Assignment of Contracts----------------------------------------14
8.03 Closing Statements---------------------------------------------14
8.04 Escrow Instructions--------------------------------------------14
8.05 Recording Requirements-----------------------------------------14
8.06 Date Down Certificate------------------------------------------15
8.07 Phase I and II Covenant----------------------------------------15
8.08 Allocable Share Agreement--------------------------------------15
8.09 Vacant Space Acknowledgment------------------------------------15
8.10 Other Documents------------------------------------------------15
9. CONDUCT OF BUSINESS PRIOR TO CLOSING--------------------------------15
9.01 Affirmative and Negative Covenants-----------------------------15
9.02 Payments-------------------------------------------------------16
9.03 Lien Removal---------------------------------------------------17
10. REPRESENTATIONS AND WARRANTIES--------------------------------------17
10.01 Seller's Representations and Warranties-----------------------17
10.02 Purchaser's Representations and Warranties--------------------21
10.03 Survival Agreement--------------------------------------------22
10.04 Indemnification-----------------------------------------------22
11. SHARED CLOSING COSTS AND OTHER EXPENSES-----------------------------23
11.01 Expenses------------------------------------------------------23
11.02 Shared Closing Costs------------------------------------------24
12. CONDITIONS----------------------------------------------------------24
12.01 Purchaser's Conditions----------------------------------------24
12.02 Seller's Conditions-------------------------------------------25
12.03 Rights Upon Failure of a Condition----------------------------25
13. EARN-OUT------------------------------------------------------------25
13.01 Defined Terms-------------------------------------------------25
13.02 Closing Date Purchase Price Computation-----------------------28
13.03 Lease Assignment Reservation----------------------------------28
TOC-2
<PAGE> 4
TABLE OF CONTENTS
PAGE
----
13.04 New Leases----------------------------------------------------28
13.05 Earn-Out Period-----------------------------------------------30
13.06 Casualty During Earn-Out Period-------------------------------31
13.07 Earn-Out Payments---------------------------------------------31
13.08 Footage Payment-----------------------------------------------32
13.09 Intentionally Deleted-----------------------------------------33
13.10 Seller's New Lease Obligations--------------------------------33
13.11 Punchlist-----------------------------------------------------33
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS------------------------------34
14.01 Rents---------------------------------------------------------34
14.02 Arrears-------------------------------------------------------34
14.03 Unknown Rents-------------------------------------------------35
14.04 Utilities-----------------------------------------------------36
14.05 Contracts-----------------------------------------------------36
14.06 Taxes---------------------------------------------------------36
14.07 Assessment Installments---------------------------------------37
14.08 Permits-------------------------------------------------------37
14.09 Security Deposits/Tenant Inducements--------------------------37
14.10 Customary Items-----------------------------------------------37
14.11 Apportionment Between Phases----------------------------------37
15. CLOSING-------------------------------------------------------------37
15.01 Closing and Closing Date--------------------------------------38
16. POSSESSION----------------------------------------------------------38
16.01 Possession and Post Closing Work------------------------------38
17. RISK OF LOSS--------------------------------------------------------38
17.01 Risk----------------------------------------------------------39
17.02 Damage and Destruction----------------------------------------39
17.03 Condemnation and Eminent Domain-------------------------------39
18. DEFAULTS AND REMEDIES-----------------------------------------------40
18.01 Seller's Defaults---------------------------------------------40
18.02 Purchaser's Defaults------------------------------------------40
18.03 Seller's Remedies---------------------------------------------40
18.04 Pre-Closing Purchaser's Remedies------------------------------41
18.05 Post Closing Purchaser's Remedies-----------------------------41
19. CROSS PERFORMANCE OBLIGATION----------------------------------------42
20. ASSIGNMENT----------------------------------------------------------42
21. NOTICES-------------------------------------------------------------42
TOC-3
<PAGE> 5
TABLE OF CONTENTS
PAGE
----
22. ATTORNEYS' FEES AND DISBURSEMENTS-----------------------------------44
23. NO CONSEQUENTIAL DAMAGES--------------------------------------------44
24. MISCELLANEOUS-------------------------------------------------------44
24.01 Successors----------------------------------------------------44
24.02 Modifications/Waivers-----------------------------------------44
24.03 Entire Agreement----------------------------------------------44
24.04 Counterparts--------------------------------------------------44
24.05 Captions------------------------------------------------------44
24.06 Gender/Singular/Plural----------------------------------------44
24.07 Exhibits Incorporated-----------------------------------------45
24.08 Governing Law-------------------------------------------------45
24.09 Severability--------------------------------------------------45
24.10 Date for Performance------------------------------------------45
24.11 Further Action------------------------------------------------45
24.12 Survival------------------------------------------------------45
24.13 Confidentiality-----------------------------------------------45
24.14 Time of the Essence-------------------------------------------46
24.15 Construction--------------------------------------------------46
24.16 Interest------------------------------------------------------46
24.17 Warranty Work-------------------------------------------------46
<PAGE> 6
AGREEMENT OF PURCHASE AND SALE
EASTCHASE MARKET SHOPPING CENTER
This Agreement of Purchase and Sale (the "Agreement") is
made as of the 2nd day of July, 1996, by and between OPUS SOUTH CORPORATION, a
Florida corporation ("Seller"), and DEVELOPERS DIVERSIFIED REALTY CORPORATION,
an Ohio corporation ("Purchaser"). Seller and Purchaser (singularly, a "Party,"
collectively, the "Parties") agree as follows:
1. RECITALS.
1.01 DEFINITIONS. The location of all defined terms used in this Agreement are
set forth in the Glossary of Terms that is attached hereto and made a part
hereof.
1.02 LAND/IMPROVEMENTS. Seller is the sole owner of fee simple title to (i)
certain land (the "Land") situated in the City of Fort Worth, State of Texas,
more particularly described on Schedule 1.02 attached hereto and made a part
hereof which shall include all residual land and outlots, except Pads 1 and 3
(collectively, "Pads") as shown on the site plan attached hereto as Schedule
1.02(a) (the "Site Plan"); and (ii) all the buildings, structures and
improvements (collectively, the "Improvements") situated on the Land. The Land
shall be conveyed as herein provided, in two phases ("Phase I," "Phase II," and
generally, "Phase" or "Phases"). The Phases are as shown on the Site Plan. Pads
1 and 3 are hereby reserved unto Seller from all Phases; and
1.03 REAL PROPERTY. Seller desires to sell, and Purchaser desires to purchase,
the Land and Improvements owned by Seller, and all of Seller's right, title and
interest in and to all rights, privileges, options, leases, licenses,
concessions, hereditaments, appurtenances, easements and rights of way in any
manner belonging to or pertaining to the Land and the Improvements, including
without limitation, rights in and to any streets, alleys or other ways adjacent
to the Land, open or proposed, and the fixtures in or upon the Land and the
Improvements owned by Seller. The Land, the Improvements and all of the items
mentioned in this Paragraph 1.03 are hereinafter collectively referred to as the
"Real Property" and are commonly known as "Eastchase Market Shopping Center."
The Real Property shall be deemed divided as applicable to each Phase and unless
specifically noted to the contrary herein, "Real Property" shall mean, as the
context requires, the Real Property applicable to the subject Phase or the Land
as a whole, exclusive of the Pads; and
2. AGREEMENT TO PURCHASE AND SELL.
2.01 INTENTIONALLY DELETED.
2.02 PURCHASE/SALE. Upon and subject to the terms and conditions set forth in
this Agreement, Seller agrees to sell and Purchaser agrees to purchase all of
the following that is hereinafter collectively referred to as the "Project":
1
<PAGE> 7
(a) The Real Property;
(b) All tangible personal property (the "Personal Property")
owned by Seller that is now or hereafter located upon the Real Property and used
in connection with the ownership, operation, management, or maintenance of the
Real Property and that is set forth on Schedule 2.02(b) attached hereto;
(c) All intangible personal property (the "Intangible
Property") owned by Seller that is now or is hereafter located upon the Real
Property or is used in connection with the Real Property, including without
limitation, (i) all trade names, logos and telephone numbers, excluding those
tradenames or logos depicting or containing the name or trademark of Opus South
Corporation or its affiliates and excluding telephone numbers not exclusively
used in connection with the Project; (ii) all Guaranties (as hereinafter
defined) given by Seller or any third party contractors, subcontractors, vendors
and suppliers relating to their performance, quality of workmanship and quality
of materials supplied in connection with the construction or repair of the
Improvements or the purchase or any Personal Property to the extent any
Guaranties remain outstanding as of the applicable Closing Date (as hereinafter
defined) that are set forth on Schedule 5.01(g) attached hereto, and (iii) to
the extent transferable by Seller, all of Seller's right, title and interest in
certificates of occupancy (or the local equivalent), permits, licenses,
approvals and authorizations (collectively, the "Permits") issued by any
federal, state, county and municipal governmental or quasi-governmental
authority relating to the Real Property.
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.01 PURCHASE PRICE. The total sum (the "Purchase Price") to be paid by
Purchaser to Seller for the sale of the Project is the sum of the Closing
Payments and those Footage Payments and Earn-Out Payments, if any (as those
terms are hereinafter defined), computed, in part, in respect to the base rents
set forth in the Rent Roll attached hereto as Schedule 3.01, all as provided in
Section 13 hereof. The actual amount of the Purchase Price is subject to the
computations and elections provided in Section 13 hereof and subject to the
adjustments, if any, provided in Section 14 hereof. Portions of the Purchase
Price will be paid at various times as hereinafter provided.
3.02 PURCHASE PRICE PORTIONS. The Purchase Price shall be paid as follows:
(a) Initial Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Initial Deposit"), which Purchaser deposited with Escrow
Agent (as hereinafter defined) simultaneous with the execution of this Agreement
by Purchaser and Seller.
(b) Second Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Second Deposit") which Purchaser shall deposit with Escrow
Agent on the expiration date of the Site Analysis Period (as hereinafter
defined), if Purchaser elects to proceed with this
2
<PAGE> 8
transaction, as more fully provided in Paragraph 5.03 below (the Initial Deposit
and the Second Deposit are hereinafter collectively referred to as the
"Deposit"). The term "Deposit" shall be deemed to include all interest accruing
on the Deposit during the term of this Agreement.
(c) Closing Date Price. So much of the Purchase Price computed
in accordance with the provisions of Paragraph 13.02 hereof that is payable as
of the applicable Closing Date, after giving credit for the Deposit in respect
to the Phase I Closing Date (as hereinafter defined) and after making the
adjustments, if any, as provided in Section 14 hereof, shall be paid by wired
funds to the Escrow Agent for disbursement to Seller on the applicable Closing
Date by not later than 2:00 P.M. Central Daylight Savings Time in respect to
Phase I, and 2:00 P.M. Central Standard Time in respect to Phase II.
(d) Earn-Out Period Payments. As provided in Paragraph 13.07,
those Earn-Out Payments that are payable during, or in some instances, after the
Earn-Out Period (as hereinafter defined) shall be paid by wired funds to the
Escrow Agent for disbursement to Seller when required by the provisions of
Paragraph 13.07.
(e) Footage Payment. As provided in Paragraph 13.08, if a
Footage Payment (as hereinafter defined) is payable, it shall be paid by wired
funds to the Escrow Agent for disbursement to Seller when required pursuant to
Paragraph 13.08.
4. ESCROW.
4.01 ESCROW AGENT. The Parties hereby designate First American Title Insurance
Company as the escrow agent ("Escrow Agent" or "Title Company"). By execution of
this Agreement, Escrow Agent agrees to be bound by the terms and conditions of
this Agreement which relate to the Escrow Agent and its rights and obligations
hereunder.
4.02 FILINGS. The Parties hereby designate Escrow Agent to serve as "Real Estate
Broker," as defined in Section 6045 of the Internal Revenue Code, as amended,
for the purpose of making such reports and filing such returns as shall be
required thereunder from time to time.
5. SITE ANALYSIS.
5.01 SITE ANALYSIS DOCUMENTS. To the extent not heretofore delivered, promptly
after the execution of this Agreement, Seller agrees (i) to make available for
inspection at reasonable times by Purchaser and its agents any and all
documents, instruments, surveys, reports, plans, permits, approvals, studies,
reviews, analyses, contracts, agreements and other materials relating to the
acquisition, development, construction, ownership and operation of the Project
that are in Seller's possession or under its control, and (ii) to deliver to
Purchaser true and correct copies of the following documents (in respect to
clause (ii) collectively hereafter referred to as "Site Analysis Documents"):
(a) "As-built" survey of the Project showing the location of
all Improvements thereon and any easements encumbering the Project.
3
<PAGE> 9
(b) Soil, topographical, and other reports relating to the
Project, including the environmental reports set forth on Schedule 5.01(b)
("Environmental Reports") attached hereto.
(c) Operating statements and records sufficient to accurately
show all revenues, income, costs and expenses of operating and maintaining the
Project for the period on and after the opening of the Project for business.
(d) All written contracts for repair, maintenance, garbage
removal, concessions, vending, service contracts, and other services to be
performed with respect to the Project.
(e) All Leases (as hereinafter defined) and all written
licenses, concessions and tenancies with Tenants (as hereinafter defined)
occupying or having the right to occupy any portion of the Project, and Seller's
written statement of any oral leases, licenses, concessions and tenancies with
tenants, licensees, concessionaires or others occupying or having the right to
occupy or use any portion of the Project, if any.
(f) All final, as-built architectural drawings, engineering
studies, plans and specifications relating to the original and current
construction of the Project (hereinafter collectively referred to as "Plans").
(g) All warranties and guaranties that remain outstanding as
of the applicable Closing Date that have been given by Seller or any third party
contractors, subcontractors, vendors and suppliers relating to their
performance, quality of workmanship and quality of materials supplied in
connection with the construction, manufacture, development, installation and
operation of the Improvements, Personal Property and any and all fixtures,
equipment and items of personal property comprising all or any part of the
Improvements located in or used in connection with the Project (collectively
hereinafter referred to as "Guaranties"), all of which are set forth on Schedule
5.01(g) attached hereto.
5.02 ACCESS. Seller acknowledges that to enable Purchaser to proceed with this
transaction, Purchaser already has had and, during the Site Analysis Period (as
hereinafter defined), may require further access to the Project to undertake or
cause to have undertaken further tests and studies, including, but not limited
to, marketing, engineering, environmental, feasibility and soil that Purchaser,
in its reasonable discretion, deems necessary to determine the feasibility of
its acquisition of the Project (hereinafter collectively referred to as "Tests
and Studies"). The Tests and Studies conducted by or on behalf of Purchaser and
the restoration of the Project in respect thereto as hereinafter provided shall
be done in such a fashion so as to not disrupt the ordinary course of business
of Seller or any of the Tenants, New Tenants (as hereinafter defined) or
Seller's contractors or subcontractors.
Purchaser and its agents, contractors or employees shall have
the right to enter upon the Project (both Phase I and Phase II) for the purpose
of performing its Tests and Studies, provided said activities (i) shall not (y)
in any way damage the Project in such a fashion or to a
4
<PAGE> 10
degree that prevents its restoration by Purchaser as hereafter provided
substantially to the condition of the Project that existed immediately prior
thereto, or (z) void or make voidable any Guaranties of portions thereof (but in
any event subject to Seller's prior consent that shall not be unreasonably
withheld or delayed), and (ii) Seller or its designated agents have the right to
participate in (provided Seller and its agents do not interfere with) such Tests
and Studies. Purchaser shall give Seller twenty-four (24) hour advance notice
before Purchaser and its agents, contractors or employees enter upon the
Project. In the event this Agreement fails to close for any reason, except for
Seller's willful refusal to convey (absent a material default hereunder by
Purchaser) title to the Land as required hereunder, or Seller's acknowledged or
subsequently determined material default hereunder ("Restoration Forgiveness"),
Purchaser shall restore the Project to substantially the same condition that
existed immediately prior to such surveying, inspecting and testing that were
undertaken by or on behalf of Purchaser prior to the date of this Agreement or
during the Site Analysis Period. Except in the instance of a Restoration
Forgiveness, Purchaser shall keep the Project free of all liens in connection
with the Tests and Studies and shall cause all such liens to be removed
immediately upon its being notified of same. Except in the instance of a
Restoration Forgiveness, Purchaser agrees to indemnify, defend and hold Seller
harmless against any liabilities, claims and damages, including, without
limitation, any property damage, personal injury or claim of lien against the
Project resulting from the activities permitted by this Paragraph 5.02
(including, without limitation, reasonable attorneys' fees and expenses paid or
incurred by Seller during litigation, if any), which indemnity shall survive the
Closing Date or the expiration, cancellation or termination of this Agreement.
5.03 SITE ANALYSIS PERIOD. Purchaser shall have the Site Analysis Period in
which to conduct the Tests and Studies and to ascertain whether the Project is
acceptable to Purchaser. "Site Analysis Period" shall mean the period expiring
on June 17, 1996. The Site Analysis Period shall also include that thirty (30)
day period on and after the Phase II Notice Date (as hereinafter defined) for
those Tests and Studies on Phase II Purchaser chooses to conduct in respect to
those Improvements completed on Phase II after June 17, 1996. If the Project is
determined to be unacceptable to Purchaser, for any reason whatsoever, in
Purchaser's sole discretion, Purchaser shall have the right to terminate this
Agreement (in respect to all Phases, but not in respect to one Phase and not the
other) by giving written notice of termination on or prior to June 17, 1996, in
which event the Deposit shall be returned to Purchaser. In accordance with the
provisions of 11.02(b) hereof, Seller and Purchaser shall each pay 50% of the
Shared Closing Costs incurred as of the termination date, and neither Party
shall have any further rights or obligations hereunder, except those
specifically provided herein that survive the termination of this Agreement. A
failure to so notify Seller of Purchaser's election to terminate or proceed with
this Agreement as aforesaid prior to June 17, 1996, shall be deemed as notice to
Seller that Purchaser has elected to terminate this Agreement as aforesaid. In
addition, not less than forty-five (45) days (nor more than sixty (60) days)
prior to the date on which Seller reasonably believes the Phase II Closing Date
will occur (if at all), Seller shall advise Purchaser, in writing ("Phase II
Notice Date"), of the date on which Seller anticipates the Phase II Closing to
occur as provided in Paragraph 15.01 hereof. For the period of thirty (30) days
on and subsequent to the Phase II Notice Date, Purchaser may conduct those
additional Tests and Studies on or in respect to Phase II pertaining to (i) any
defects or deficiencies of Phase II in respect to its compliance with any and
all codes, ordinances, statutes, Permits, approvals or licenses issued in
respect to
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Phase II or promulgated by any federal, state, county or municipal government or
quasi-governmental authority which are required by such governmental or
quasi-government authority to correct, (ii) any other defects in the materials
or workmanship of Phase II from that which is required to be in substantial
compliance with the Plans, except that portion thereof, if any, that relates to
materials for, or workmanship of improvements constructed or to be constructed
on behalf of Tenants or New Tenants that form a part of the Phase II Post
Closing Work (as that term is hereinafter defined), (iii) violations of
Environmental Laws (as hereinafter defined), or (iv) conditions determined in
good faith that are existing on-site or off-site of Phase II (except on Phase I)
that if not corrected may, in the future, become violations of Environmental
Laws in respect to Phase II which in the instance of clauses (i), (ii), (iii)
and (iv) did not exist as of June 17, 1996. If Purchaser, in its reasonable
discretion, determines in respect to clauses (i) through (iv) above that there
does exist defects, deficiencies, violations or the existence of conditions that
are unacceptable to Purchaser, Purchaser shall have the right to terminate this
Agreement in respect to Phase II by giving written notice of termination on or
prior to the expiration of said thirty (30) day period in which event Seller and
Purchaser shall each pay fifty percent (50%) of the Share Closing Costs incurred
in respect to Phase II, and neither party shall have any further rights or
obligations hereunder in respect to Phase II, except those specifically provided
herein that survive the termination of this Agreement. Except for Restoration
Forgiveness, Purchaser shall cause Phase II to be restored to substantially the
same condition that existed immediately prior to any Tests and Studies performed
by Purchaser subsequent to the Phase II Notice Date, which obligation shall
survive the termination of this Agreement.
5.04 CURE OF UNACCEPTABLE CONDITIONS. Any of the Tests and Studies of Purchaser
and/or its agents or representatives conducted during the Site Analysis Period
that discloses in respect to Phase I that there are (i) any defects or
deficiencies of Phase I in respect to its compliance with any and all codes,
ordinances, statutes, Permits, approvals or licenses issued in respect to
Phase I or promulgated by any federal, state, county or municipal governmental
or quasi-governmental authority which are required by such governmental or
quasi-governmental authority to correct; (ii) any defects in the materials or
workmanship of the Project from that which is required to be in substantial
compliance with the Plans, except that portion thereof, if any, that relates to
materials for, or workmanship of improvements constructed or to be constructed
on behalf of Tenants or New Tenants that form a part of Post Closing Work (as
hereinafter defined); or (iii) a violation of Environmental Laws, in respect to
clauses (i), (ii) and (iii), can be corrected and cured for an estimated
aggregate cost (in respect to Phase I) not to exceed One Hundred Thousand
Dollars ($100,000.00), shall be collectively hereinafter referred to as
"Unacceptable Conditions." In respect to Phase II, an Unacceptable Condition(s)
shall mean the same as defined in clauses (i), (ii) and (iii) above in respect
to Phase I, except, in the instance of Phase II, the estimated aggregate cost of
correcting and curing the same shall not exceed Fifty Thousand Dollars ($50,000)
plus One Hundred Thousand Dollars ($100,000) minus the estimated aggregate cost
of correcting and curing the Phase I Unacceptable Conditions agreed to by the
Parties or elected by Purchaser as hereafter provided ("Phase II Unacceptable
Condition Limitation"). It is understood that regardless of the cost, the
Warranty Work obligations set forth in Paragraph 24.17 hereof shall not be
included as an Unacceptable Condition in respect to the estimated $100,000.00
limitation for Phase I or the Phase II Unacceptable Conditions Cost Limitation,
and the cost of performing Warranty Work shall be in addition to any cost
associated
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with either Phase in respect to any Unacceptable Condition. In the event
Purchaser discovers what it deems to be Unacceptable Conditions as a result of
the Tests and Studies, Purchaser shall notify ("Condition Notice") Seller, in
writing, of the same promptly following Purchaser's discovery thereof, but in no
instance later than three (3) business days following the expiration of the Site
Analysis Period applicable to the entire Project or just Phase II as provided in
Paragraph 5.04 above. Such Condition Notice shall include a copy of those
portions of the Tests and Studies disclosing such Unacceptable Condition(s).
Within ten (10) days following Seller's receipt of the Condition Notice, if any,
Seller shall advise ("Condition Response") Purchaser, in writing, of Seller's
good faith determination and estimate of (1) those matters contained in the
Condition Notice that do not qualify as Unacceptable Conditions; (2) the time
within which the remaining matters contained in the Condition Notice will be
cured or corrected; and (3) the aggregate cost to Seller of curing and
correcting such remaining matters. In the event the Condition Response is
unacceptable to Purchaser, Seller and Purchaser shall promptly meet and confer,
in good faith, to attempt to resolve the unacceptable aspects to Purchaser of
the differences between the Condition Notice and the Condition Response or the
time within which or the aggregate cost for which Seller estimated in the
Condition Response for curing or correcting as aforesaid. In the event Seller
and Purchaser are unable to resolve such differences, Purchaser may elect to (a)
terminate this Agreement in respect to the applicable Phase (provided, if
Purchaser elects a termination in respect to Phase I, it shall act as
Purchaser's election to terminate in respect to all Phases), (b) proceed to each
of the Phase Closings in respect to Seller's obligations to cure or correct
those matters set forth in the Condition Response, modified, if at all, as a
result of the aforesaid conference between Purchaser and Seller (provided the
estimated aggregate cost of performing the same does not exceed $100,000.00 in
respect to Phase I, the Phase II Unacceptable Condition Cost Limitation in
respect to Phase II, or such greater amount Seller, in its sole discretion, has
agreed to expend), or (c) proceed to each of the Phase Closings and select those
specific line items from the Condition Response that Purchaser requires to have
corrected (provided the estimated aggregate cost of performing the same does not
exceed $100,000.00 in respect to Phase I, and the Phase II Unacceptable
Condition Cost Limitation in respect to Phase II). Purchaser, within ten (10)
business days after such conference, shall advise Seller, in writing, of
Purchaser's election. If the Condition Notice, Condition Response or the time
periods specified above for elections of Purchaser extend beyond the applicable
Closing Date, such Closing Date shall be extended to the date five (5) business
days subsequent to the date Purchaser elects, if at all, to proceed with the
applicable Closing. In the event Purchaser elects to terminate this Agreement,
in respect to Phase I, the Deposit shall be returned to Purchaser, Purchaser and
Seller shall each pay fifty percent (50%) of the Shared Closing Costs incurred
as of the termination date, and neither Party shall have any further rights or
obligations hereunder, except those specifically provided herein that survive
the termination of this Agreement. In the event Purchaser elects to proceed to
each of the Phase Closings pursuant to clause (b) above, the matters contained
in the Condition Response, modified, if at all, by Purchaser's and Seller's
conference and provided the estimated aggregate cost of curing or correcting the
same is One Hundred Thousand Dollars ($100,000.00) or less in respect to Phase
I, or equal to or less than the Phase II Unacceptable Condition Cost Limitation
in respect to Phase II, (or such greater amount Seller accepts as aforesaid)
shall be deemed to be the Unacceptable Conditions to which Seller is bound. In
the event Purchaser elects to proceed to each of the Phase Closings pursuant to
clause (c) above, the specific line items selected by
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Purchaser that are set forth in the Condition Response (provided the estimated
aggregate cost of curing or correcting the same is in the amounts as aforesaid
in respect to Phase I and Phase II) shall be deemed to be the Unacceptable
Conditions to which Seller is bound. Thereafter, in respect to the applicable
Phase, Seller shall undertake to cure or correct such Unacceptable Conditions,
at its sole cost and expense (regardless of the actual cost ultimately incurred
by Seller in respect thereto) within the time (subject to Force Majeure, as
hereinafter defined) set forth in the Condition Response. The obligation of
Seller to cure or correct such Unacceptable Conditions shall survive the
Closing. In the event (y) Seller fails to commence the cure of an Unacceptable
Condition(s) on or prior to the time specified in the Condition Response for the
completed cure thereof, or (z) Seller commences the cure of an Unacceptable
Condition(s), but fails to complete such cure prior to the time specified in the
Condition Response (subject to Force Majeure), Purchaser may off-set so much of
any Earn-Out Payment or Footage Payment subsequently payable by Purchaser
hereunder by the amount of the reasonable costs and expenses incurred by
Purchaser for undertaking and completing the uncured Unacceptable Condition(s).
The curing or correcting of any Unacceptable Condition shall be done in
accordance with the Plans. However, if such curing or correcting requires a
variance from the Plans, Seller shall not undertake such variance without
obtaining Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed.
6. SURVEY AND TITLE INSURANCE.
6.01 SURVEY. Seller shall cause an "as-built" Survey (the "Survey") of the Phase
I and Phase II Real Property to be updated during the applicable Site Analysis
Period. The Survey for each Phase shall be certified to Seller, Purchaser, and
the Title Company. The Survey for each Phase shall satisfy all of the
requirements set forth on Schedule 6.01 that is attached to and made a part of
the Exhibit Agreement (as hereinafter defined).
6.02 TITLE COMMITMENT. During the Site Analysis Period for each Phase, to the
extent not theretofore delivered, Seller shall (i) cause the Title Company to
issue and deliver to Purchaser a title insurance commitment for the applicable
Phase for an owner's extended coverage policy of title insurance, in the amount
of that portion of the Purchase Price applicable to the subject Phase then
estimated to be payable to Seller on the applicable Closing Date, committing the
Title Company to insure Purchaser as the owner of fee simple title to all of the
Phase Real Property, as applicable, and all easements appurtenant thereto (the
"Commitment"), and (ii) copies of each document described on Schedule B of the
Commitment.
6.03 PURCHASER'S OBJECTIONS; SELLER'S CURE. Other than those title exceptions
("Permitted Exceptions") applicable to Phase I and Phase II set forth in
Schedule 6.03 attached hereto and made a part hereof, which shall include the
Allocable Share Agreement set forth in Paragraph 7.24 and 8.08 hereof, and
exceptions caused by or claimed under or through Seller that will be removed at
the applicable Phase Closing (as hereinafter defined) if (i) the Commitment
reveals any other matters or exceptions ("Title Defects"), or (ii) the Survey
reveals any defects which affect the marketability of the applicable Phase or
are deemed objectionable by Purchaser ("Survey Defects"), Purchaser shall notify
Seller, in writing, of the same within fifteen (15) days following the date of
delivery to Purchaser of the last of the Commitment and Survey ("Defects
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Notice") for the subject Phase. In the event Purchaser fails to deliver a
Defects Notice as aforesaid, Seller shall advise Purchaser of such failure, in
writing. If Purchaser fails, within three (3) business days thereafter to
deliver a Defects Notice, it shall be deemed a notice to Seller that Purchaser
has elected to waive such defects, if any, and to proceed with the transaction
contemplated hereby, subject to the fulfillment of Seller's obligations
hereunder. Except for Title Defects or Survey Defects that are caused by or
claimed under or through Seller that can be removed or discharged by the payment
of a sum of money (including, without limitation, a Mortgage(s), as hereinafter
defined), Seller shall have no affirmative obligation to cure or correct any
Title Defects or Survey Defects, except as provided in Seller's Response (as
hereinafter defined). Within fifteen (15) days following Seller's receipt of a
Defects Notice, Seller, at its option, shall notify Purchaser of those Title
Defects and Survey Defects that Seller shall undertake to cure or correct
("Seller's Response"). In the event Seller (a) elects in Seller's Response not
to satisfy a specified Title Defect or Survey Defect or (b) is unable, within
sixty (60) days after Purchaser's receipt of Seller's Response, to satisfy the
Title Defect or Survey Defect which Seller had elected in Seller's Response to
so satisfy, Purchaser may, at its option, (1) accept title to the applicable
Phase subject to the Title Defects and/or Survey Defects raised by Purchaser in
which event such Title Defects and Survey Defects shall be deemed to be
Permitted Exceptions for such Phase, or (2) cancel this Agreement and receive a
full refund of the Deposit (if the cancellations is in respect to Phase I),
whereupon Seller shall pay all Shared Closing Costs and this Agreement shall be
of no further force and effect, except for those matters which are specifically
set forth in this Agreement as surviving the expiration or termination of this
Agreement. If Purchaser elects to accept Title and/or Survey Defects in respect
to Phase I, it shall be deemed to have elected to accept the same Title and/or
Survey Defects in respect to Phase II, to the extent the same affect Phase II.
In the event Purchaser elects to terminate this Agreement in respect to Phase I,
it shall act as Purchaser's election to terminate this Agreement in respect to
Phase II. If the Defects Notice, Seller's Response or the time periods specified
above for elections of Purchaser extend beyond the time specified for the
applicable Closing Date, such Closing Date shall be extended to the date five
(5) business days subsequent to the date Purchaser elects, if at all, to proceed
with the applicable Closing.
6.04 TITLE POLICY. It shall be a condition precedent to Purchaser's obligation
to consummate the Phase transactions contemplated by this Agreement that the
Title Company can and will issue an Owner's Policy of Title Insurance in the
standard form available in the State of Texas (the "Title Policy") for each
Phase in the full amount of that portion of the Purchase Price payable by
Purchaser on each of the Closing Dates as provided in Paragraph 13.02 hereof,
insuring Purchaser as the owner in fee simple of the applicable Phase, and all
appurtenant easements thereto, free and clear of all liens and encumbrances,
except for the Permitted Exceptions, and without exception for rights or claims
of parties in possession not shown by the public records, encroachments,
overlaps, boundary line disputes, or any other matter disclosed by the Survey
which Purchaser has not waived or approved or is deemed to have approved
pursuant to Paragraph 6.03 hereof, provided, however, that the Title Policy may
show the rights of the Tenants and New Tenants (as hereinafter defined) under
New Leases that are fully executed prior to the applicable Closing as parties in
possession (or right to possession) as tenants only. Purchaser shall attempt to
cause the Title Company, as part of the Title Policy, to issue the
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following endorsements in the form of those set forth in Schedule 6.04 attached
hereto ("Endorsements"): CC&R Endorsement, if available (unless easements
appurtenant to the applicable Phase are additionally insured parcels on Schedule
A of the Title Policy), Survey and Encroachment. Any Survey or physical
inspection requirements imposed as a condition to the issuance of each Title
Policy may be satisfied by Seller as a Shared Closing Cost, except costs and
expenses in respect to correcting Survey Defects which shall be paid by Seller.
Seller shall execute such affidavits and certificates as the Title Company may
require as a condition to the issuance of each Title Policy, and a copy of each
such affidavit or certificate shall be delivered to Purchaser. In addition, as
part of the Shared Closing Costs, Seller shall cause (i) the applicable Title
Policy to be dated down to the date each Earn-Out Payment (as hereinafter
defined) is paid during or after the Earn-Out Period showing no new exceptions,
except the Permitted Exceptions, the subject or previous New Leases, and
exception caused, permitted or claimed by, through or under Purchaser or its
successors and assigns; and (ii) the amount of the Title Policy's coverage to be
increased to an amount that equals the subject Earn-Out Payment.
7. SELLER'S CLOSING DOCUMENTS AND ESCROW.
At each Phase Closing, Seller shall execute and deliver the
following documents to Escrow Agent:
7.01 DEED. A signed special warranty deed in the form and substance (modified
for the subject jurisdiction) attached to the Exhibit Agreement as Schedule 7.01
(the "Deed") conveying to Purchaser, good, indefeasible and insurable title to
the applicable Phase and the Improvements thereon, free and clear of all liens
and encumbrances of any type whatsoever, except for the Permitted Exceptions.
The Permitted Exceptions shall be specifically, and not categorically, excepted
from the warranty of title in the Deed.
7.02 ASSIGNMENT OF LEASES. For the applicable Phase, an assignment (the "Lease
Assignment") in the form attached to the Exhibit Agreement as Schedule 7.02 of
all (except in respect to the Assignment Reservation as provided in Paragraphs
13.03, 14.01, 14.02 and 14.03 hereof) of the Seller's right, title and interest
as lessor under the leases, tenancies, occupancy agreements, rental agreements,
options, licenses and concessions, and all of the foregoing (hereinafter
collectively referred to as the "Leases") which are described on Schedule
7.02(a) attached hereto, and all New Leases that are fully executed prior to the
applicable Closing, together with all security deposits, cleaning deposits, key
deposits and advance rental payments (collectively, the "Security Deposits")
made by the lessees, tenants, occupants, optionees, licensees and
concessionaires (collectively, in respect to the applicable Phase, the
"Tenants") and New Tenants under the Leases and subject New Leases.
7.03 LEASES AND TENANT DOCUMENTS. All original copies of the applicable Phase
Leases and New Leases that are fully executed prior to applicable Closing,
Tenant and the subject New Tenant financial statements, their sales reports and
other Tenant and the subject New Tenant related documents, and to the extent, if
any, that original copies are not delivered,
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Seller shall deliver copies which shall be accompanied by an affidavit sworn to
by Seller confirming that the copies delivered are true and complete copies of
the originals.
7.04 BILL OF SALE. A bill of sale in the form attached to the Exhibit Agreement
as Schedule 7.04, transferring and conveying to Purchaser all of Seller's right,
title and interest to the applicable Phase Personal Property and the Intangible
Property.
7.05 ASSIGNMENT OF CONTRACTS. An assignment (the "Contract Assignment") in the
form attached to the Exhibit Agreement as Schedule 7.05, of all of Seller's
right, title and interest as the owner of the applicable Phase under the service
contracts and agreements, personal property leases and agreements (collectively,
the "Contracts") which are described on Schedule 7.05(a) attached hereto and
which have been approved by Purchaser as being those Contracts that are assigned
to Purchaser pursuant to the Contract Assignment.
7.06 VIOLATIONS/WORK ORDERS AFFIDAVIT. An affidavit, in form and substance of
Schedule 7.06 attached to the Exhibit Agreement, confirming that Seller has
complied with and discharged (or, to the extent Seller has not complied with and
discharged, an explanation of that which remains to be done to cause compliance
and discharge) (i) all notices, if any, that either Seller or its management
agent managing the Real Property received concerning any and all uncured
violations (the "Violations") of any law, statute, ordinance, regulation, rule,
requirement, order, judgment or decree enacted, adopted, imposed, issued,
entered or filed by any governmental authority (concerning or affecting the
Project or any part thereof), and (ii) all work orders concerning the Project or
any part thereof, if any (the "Work Orders") issued by any insurance carriers
insuring a risk in respect to the Project.
7.07 KEYS. All keys to the applicable Phase.
7.08 PLANS AND SPECIFICATIONS. To the extent not delivered prior to the Phase I
or Phase II Closing Date as part of the Site Analysis Documents, all Plans.
7.09 TITLE INSURANCE AFFIDAVIT. Any affidavit required by the Title Company to
remove the standard printed exceptions from the applicable Title Policy.
7.10 FIRPTA CERTIFICATE/WITHHOLDING. A certificate in the form and substance
attached to the Exhibit Agreement as Schedule 7.10 ("FIRPTA Affidavit").
7.11 FORM 1099. Any information with respect to Seller in connection with the
conveyance of the applicable Phase Real Property by Seller to Purchaser required
by either (i) IRC Sec. 6045 or Treas. Regs. Sec. 1.6045, or (ii) Treas. Form
1099 or its instructions. If required thereby, the Escrow Agent shall timely (x)
prepare and file a Form 1099 in accordance with the provisions of Treas. Regs.
Sec. 1.6045, and (y) furnish the Parties with copies.
7.12 BOOKS AND RECORDS. Copies of all accounting books and records relating to
the operation and maintenance of the applicable Phase.
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7.13 LETTERS TO TENANTS. Letters in the form and substance set forth in Schedule
7.13 that is attached to the Exhibit Agreement (the "Tenant Letters") addressed
to the applicable Phase Tenants and New Tenants of New Leases executed prior to
the applicable Closing and signed by Seller, advising the Tenants and New
Tenants of the sale of the applicable Phase and the Purchaser's right to receive
the Rents (as hereinafter defined) under their respective Leases.
7.14 RECORDING REQUIREMENTS. All documents and affidavits required of Seller to
record the Deed.
7.15 ESTOPPEL CERTIFICATES. An estoppel certificate in the form and substance
set forth in Schedule 7.15 that is attached to the Exhibit Agreement ("Tenant
Estoppel") showing no material exceptions that is executed (not more than
forty-five (45) days prior to the applicable Closing Date or such earlier date
Purchaser reasonably accepts) by (i) all Tenants or New Tenants of the
applicable Phase Leases and New Leases that are Qualified Leases on or prior to
the applicable Closing Date that have demised to them space in the applicable
Phase containing 7,500 square feet or more, and (ii) at least eighty percent
(80%) (calculated on a square foot basis) of all Tenants or New Tenants of the
applicable Phase Leases or New Leases that are Qualified Leases on or prior to
the applicable Closing Date that have demised to them space in the applicable
Phase containing less than 7,500 square feet. To the extent Seller is unable to
deliver to Purchaser Tenant Estoppels from all or any of the remaining Tenants
or New Tenants in the applicable Phase under such Qualified Leases in respect to
premises containing less than 7,500 square feet or a Tenant Estoppel in respect
to a premises that is 7,500 square feet or less that contains a material
exception noted by the applicable Tenant or New Tenant, Seller shall be entitled
to deliver to Purchaser Seller's estoppel certificate ("Seller's Estoppel") in
form and substance reasonably acceptable to Purchaser confirming the terms and
conditions of the Lease or subject New Lease for which a Tenant Estoppel was not
delivered to Purchaser or, if delivered, that contains a material exception.
Such Seller's Estoppel shall be deemed a representation and warranty by Seller
as to the terms and conditions of the subject Lease or New Lease, and the
Seller's Estoppel shall not be subject to the time limitation for claims set
forth in Paragraph 10.04(b) hereof. After the applicable Closing, when and as
Purchaser receives a Tenant Estoppel (without material exception) for which
Seller delivered a Seller's Estoppel, the subject Seller's Estoppel shall be
released by Purchaser and returned to Seller and shall be deemed to be of no
further force and effect.
7.16 TERMINATION OF MANAGEMENT AND SELLER AFFILIATED CONTRACTS. Notwithstanding
any other provision of this Agreement, in respect to any agreements or contracts
that are not to be included as part of the Contract Assignment, agreements
("Termination Agreements") signed by (i) the parties to any management agreement
for the applicable Phase, and (ii) the parties to all other such agreements or
contracts for the applicable Phase between the Seller or its predecessors in
interest and parties affiliated with or controlled by Seller or any of Seller's
principals, which Termination Agreements terminate such management agreement and
other such agreements and contracts as of the applicable Closing Date, without
any liability or obligation on the part of the Purchaser or the applicable
Phase.
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7.17 PERMITS/GUARANTIES. Original or copies of applicable Phase Permits and
originals of the applicable Phase Guaranties which, in each instance, Seller
agrees to keep in full force and effect, and to comply with all of the terms and
conditions thereof prior to the applicable Closing.
7.18 CLOSING STATEMENTS. Closing Statements executed by Seller.
7.19 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably satisfactory to
Escrow Agent, in form and substance sufficient to carry out the applicable
Closing.
7.20 DATE DOWN CERTIFICATE. A certificate of Seller (the "Seller Date Down
Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 7.20 certifying that Seller's representations and warranties set forth
in Paragraph 10.01 of this Agreement are true and correct as of the applicable
Closing Date as modified by the Schedules that are attached hereto pursuant to
Paragraph 10.01 hereof that are updated to the applicable Closing Date. In the
event any updated Schedules disclose a material deviation from the prior
applicable Schedule as reasonably determined by Purchaser, Purchaser shall have
three (3) business days from the Date Purchaser receives a copy of the Seller
Date Down Certificate in which to elect to terminate this Agreement or to
proceed with the Closing in accordance with the updated Schedules. In the event
Purchaser fails to notify Seller, in writing, of Purchaser's election to
terminate this Agreement, it shall act as notice to Seller that Purchaser has
elected to terminate this Agreement in respect to the applicable and subsequent
Closing. In the event Purchaser elects to terminate this Agreement, the Deposit
shall be refunded to Purchaser (in respect to Phase I only), Purchaser and
Seller shall each pay fifty percent (50%) of the Shared Closing Costs, and this
Agreement shall be of no further force and effect, except in respect to those
provisions specifically provided herein as surviving the termination of this
Agreement. In the event Purchaser elects to terminate this Agreement as
aforesaid in respect to Phase I, it shall act as Purchaser's election to
terminate this Agreement in respect to Phase II.
7.21 AGREEMENT ESTOPPEL CERTIFICATE. An estoppel certificate in form and
substance attached hereto as Schedule 7.21 ("Agreement Estoppel") showing no
material exceptions that are executed by each party to those easement agreements
or other agreements or undertakings (including, but not limited to, development
agreements) affecting the Project on and after the Closing Date that require the
performance of obligations by the owner of the Project and the approval of such
performance by the other party to the same that are identified by Purchaser to
Seller, in writing, not less than fifteen (15) days prior to the applicable
Closing Date. To the extent such Agreement Estoppel shows a material exception
or the party to such easement agreements or other agreements or undertakings
identified by Purchaser as aforesaid fails to deliver an Agreement Estoppel,
Seller shall be entitled to deliver its undertaking confirming, in form and
content reasonably acceptable to Purchaser, the terms and conditions of the
Agreement Estoppel to the extent applicable in the form attached hereto as
Schedule 7.21, and such confirmation by Seller shall not be subject to the time
limitation for claims set forth in Paragraph 10.04(b) hereof. After the Closing,
when and as Purchaser receives an Agreement Estoppel for which Seller delivered
its undertaking as aforesaid, the subject undertaking shall be
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released by Purchaser and returned to Seller and shall be deemed to be of no
further force and effect.
7.22 PAD AND PHASE II COVENANT.A declaration encumbering title to the Pads and
Phase II in respect to the exclusion of uses thereon that violate any of the
exclusive uses permitted under Leases or New Leases for Phase I as of the Phase
I Closing Date, in form and content reasonably acceptable to Seller and
Purchaser.
VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the
location within the applicable Phase of any space that is Vacant Space as of the
applicable Closing.
7.24 ALLOCABLE SHARE AGREEMENT. The agreement by the Parties in the form
attached hereto as Schedule 7.24 that sets forth the approvals of the Parties
under the terms of the Operation and Easement Agreement that is a Permitted
Encumbrance.
7.25 ASSIGNMENT OF DECLARATION. An Assignment of Declaration in the form
attached hereto as Schedule 7.25 assigning to Purchaser Seller's rights under
the terms of the Operation and Easement Agreement that is a Permitted
Encumbrance.
7.26 OTHER DOCUMENTS. Such other documents as may be reasonably required to
close the applicable Phase transaction contemplated by this Agreement.
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS.
At each Phase Closing, Purchaser shall execute and deliver the
following to Escrow Agent:
8.01 ASSIGNMENT OF LEASES. The Lease Assignment, acknowledging the assumption by
Purchaser of Seller's obligations under the Leases which accrue after the
applicable Closing Date.
8.02 ASSIGNMENT OF CONTRACTS. The Contract Assignment, acknowledging the
assumption by Purchaser of Seller's obligations under the Contracts which accrue
after the applicable Closing Date.
8.03 CLOSING STATEMENTS. Closing Statements executed by Purchaser.
8.04 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably satisfactory to
Escrow Agent, in form and substance sufficient to carry out the applicable
Closing.
8.05 RECORDING REQUIREMENTS. All documents and affidavits required of Purchaser
to record the Deed.
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8.06 DATE DOWN CERTIFICATE. A certificate of Purchaser (the "Purchaser Date Down
Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 8.06 certifying that Purchaser's representations and warranties set
forth in Paragraph 10.02 of this Agreement are true and correct as of the
applicable Closing Date.
8.07 PHASE I COVENANT. At the Phase I Closing, a declaration encumbering title
to Phase I in respect to the exclusion of uses thereon that violate any of the
exclusive uses permitted under Leases or New Leases in Phase II or the Pads, in
form and content reasonably acceptable to Seller and Purchaser.
8.08 ALLOCABLE SHARE AGREEMENT. The agreement by the Parties in the form
attached hereto as Schedule 7.24 that sets forth the approvals of the Parties
under the terms of the Operation and Easement Agreement that is a Permitted
Encumbrance.
8.09 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location within the
applicable Phase of that space that is Vacant Space as of the applicable Closing
8.10 SIGN EASEMENT AGREEMENT. The Sign Easement Agreement in the form attached
hereto as Schedule 8.10.
8.11 OTHER DOCUMENTS. Such other documents as may be reasonably required to
close the applicable Phase transaction contemplated by this Agreement.
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.
9.01 AFFIRMATIVE AND NEGATIVE COVENANTS. Until the applicable Closing, in
respect to the applicable Phase, Seller shall or cause to:
(i) Subject to Casualty or any Taking (as those terms are
hereinafter defined), maintain the applicable Phase and Phase Personal Property
in good condition and repair and not commit or permit waste;
(ii) Carry on its business in respect to the Project in the
same manner as it has heretofore;
(iii) Keep in full force and effect all insurance coverage
required to be maintained by it pursuant to the Leases, applicable New Leases,
the Mortgages, the Permitted Exceptions, and any easement agreements or other
agreements or undertakings affecting the Project;
(iv) Perform all of its obligations under the Contracts,
Leases, applicable New Leases, Mortgages, Permitted Exceptions and any easement
agreements or other agreements or undertakings affecting the Project;
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(v) Maintain and preserve its business organization intact;
(vi) Maintain and preserve its relations with the Tenants, New
Tenants under New Leases that are fully executed prior to the Closing, suppliers
and customers;
(vii) Except as provided in Paragraph 13.04 hereof, not
voluntarily terminate, amend, modify, extend, renew, waive or accept the
surrender of any Lease or New Lease or provision thereof, without Purchaser's
prior consent, which consent shall not be unreasonably withheld or delayed;
(viii) Not voluntarily terminate, amend, modify, extend,
renew, waive or accept the cancellation of any Contract, Permitted Exception or
any easement agreements or other agreements or undertakings affecting the
applicable Phase or any provision of any of them, without the Purchaser's prior
consent, which consent shall not be unreasonably withheld or delayed;
(ix) Except as provided in Paragraph 13.04 hereof, not
voluntarily enter into, accept or consent to any new (a) lease, occupancy
agreement, subtenancy agreement, license agreement, concession agreement, (b)
contract or agreement, personal property lease or agreement, and/or (c) lien,
encumbrance, or security interest (including without limitation, mortgage, deed
of trust, security agreement, assignment of leases or rents, collectively,
"Mortgage") or other title exception or defect (including without limitation,
easement, restriction, dedication), which shall not be terminated on or before
the applicable Closing without the Purchaser's prior consent, which consent
shall not be unreasonably withheld or delayed;
(x) Not commence any action or proceeding or petition, apply
for or consent to any action or proceeding, the effect of which may be to change
the zoning of the Project or its assessed valuation (except for entering into
New Leases);
(xi) Not sell, assign or transfer the Project or any part
hereof (except in the instance of New Leases as provided in Paragraph 13.04
hereof), including without limitation, the Intangible Property and the Personal
Property; provided, however, that Seller may remove applicable Phase Personal
Property for the purpose of promptly effecting necessary repairs or immediate
replacement with Personal Property of like character and equal or better
quality;
(xii) Not demolish or materially alter the Improvements or any
part thereof or otherwise adversely affect the value of the Project, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed, except for (1) curing Unacceptable Conditions, Title Defects and Survey
Defects, (2) completing Punchlist Work (as defined and provided in Paragraph
13.11 hereof), (3) constructing tenant improvements for Leases, (4) performing
Seller's New Lease Obligations (as defined and provided in Paragraph 13.10
hereof), and (5) completing, in accordance with the Plans, any incomplete work.
(xiii) Except as provided in Paragraph 9.01(xii) above, not
materially alter the applicable Phase or any part thereof, including without
limitation, by mining, excavating,
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removing topsoil, timbering or changing the grade, without Purchaser's prior
consent, which consent shall not be unreasonably withheld or delayed.
9.02 PAYMENTS. As more fully set forth in Paragraph 16.01 hereof, (i) Punchlist
Work; (ii) curing Unacceptable Conditions; (iii) constructing tenant
improvements for Leases and New Leases; (iv) all other work to be performed and
all payments to be made by Seller pursuant to the provisions of the Leases, the
Contracts, the Permitted Exceptions, and any insurance policy maintained by
Seller providing coverage for the Project which pertain to obligations that
accrue prior to the applicable Closing; and (v) Warranty Work shall be
completely performed and paid for when due (subject to the right to contest
Liens as provided and defined in Paragraph 9.03 hereof) by Seller and the
obligation thereof shall survive the Closing.
9.03 LIEN REMOVAL. Except for (i) taxes not yet due and payable as of the
applicable Closing, (ii) installments of special assessments due and payable
after the applicable Closing, and (iii) Liens that are either bonded or insured
over in a form reasonably satisfactory to Purchaser, all other liens and
encumbrances of ascertainable amounts incurred by Seller or by, for or on behalf
of Seller, except the Permitted Exceptions, shall be removed from the record by
Seller or Seller shall make arrangements satisfactory to the Title Company for
the removal of, or title insurance over (in form reasonably satisfactory to
Purchaser), such liens and encumbrances of record on the applicable Closing
Date. Notwithstanding the foregoing, any liens or encumbrances attaching to the
title of the applicable Phase as a result of work performed on or material
supplied to the applicable Phase by Seller or on behalf of anyone claiming by,
through or under Seller (except Tenants and New Tenants under Qualified Leases,
as hereinafter defined) or as a result of Seller's failure to pay, when due, a
Commission (collectively, "Lien" or "Liens") may be contested by Seller as
hereafter provided. Within thirty (30) days after the recording of a Lien that
is recorded or filed after the applicable Closing and that affects the closed
Phase, Seller shall, at its election, either (i) bond over the same, or (ii)
cause the Title Company to insure over the same (in form and substance
reasonably satisfactory to Purchaser), in order, in the instances of either
clause (i) or (ii) above, to reasonably protect the Purchaser and the applicable
Phase (or any part thereof) from and against the subject Lien. Thereafter, in
the manner elected by Seller, Seller may contest such Lien provided that, within
thirty (30) days following the entry by a court of competent jurisdiction of a
final judgment or decree in favor of the claimant of such Lien, Seller shall pay
and satisfy such Lien and cause it to be released of record. In the event Seller
fails to pay and satisfy any Lien within thirty (30) days following the entry by
a court of competent jurisdiction of a final judgment or decree in favor of the
claimant of such Lien or fails to bond over or insure over a Lien as provided in
this Paragraph 9.03, Purchaser may offset so much of any Earn-Out Payment or
Footage Payment subsequently payable by Purchaser hereunder by the amount
incurred by Purchaser for effectuating the satisfaction and release of the
subject Lien.
10. REPRESENTATIONS AND WARRANTIES.
10.01 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and warrants to
Purchaser that:
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(i) Seller is a Florida corporation duly created and validly
existing pursuant to the laws of the jurisdiction of its organization and is
duly qualified to do business in the jurisdiction in which the Project is
situated.
(ii) Seller is authorized and empowered to enter into this
Agreement and to perform all of its obligations under this Agreement without any
qualification whatsoever, and no consent or approval of any third party
(including, without limitation, any governmental or quasi-governmental
authority) is or was required by Seller to execute and deliver this Agreement or
consummate this transaction.
(iii) Upon the signing and delivery of this Agreement, this
Agreement will be legally binding upon Seller in accordance with all of its
provisions, except as such provisions may be qualified or limited by bankruptcy,
creditor's rights and equitable principles.
(iv) The person signing this Agreement on behalf of Seller has
been duly authorized to sign and deliver this Agreement on behalf of Seller.
(v) To the best of its Knowledge (as hereinafter defined),
Seller has not committed any act or permitted any action to be taken which would
materially adversely affect its ability to fulfill all of its obligations under
this Agreement.
(vi) The execution and delivery of this Agreement, and the
performance of Seller's obligations under this Agreement, will not violate or
breach, or conflict with, the terms, covenants or provisions of any agreement,
contract, note, Mortgage, indenture or other document of any kind whatsoever to
which Seller is a party or to which the Project is subject.
(vii) Seller has received no written notice and Seller has no
Knowledge of any uncured Work Order, or unfulfilled requirements or
recommendations issued, imposed or made by any insurers concerning the Project
or any part thereof.
(viii) To the best of its Knowledge, (i) Seller is not in
default of any obligation of Seller under any Mortgage, and (ii) Seller and/or
the Project is in compliance with all terms and conditions of the Permitted
Exceptions, including any easement agreement or other agreement or undertaking
affecting the Project.
(ix) To the best of Seller's Knowledge, the Project was
constructed, and is presently being operated, occupied and used in substantial
accordance with all applicable federal, state and local laws, rules, regulations
and ordinances governing the construction, operation, occupation and use of the
Project, and no variances to any applicable federal, state or local law, rule,
regulation or ordinance were granted in connection with the construction of the
Project.
(x) To the best of Seller's Knowledge, there is (i) no pending
or contemplated Taking affecting the Project or any part thereof, or (ii) no
pending or contemplated public
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improvement in or about the Real Property which may in any manner affect access
to or from the Project or increase the taxes assessed against the Project.
(xi) To the best of Seller's Knowledge, except for the Vacant
Space (as hereinafter defined), Seller is in receipt of all Permits required by
all governmental authorities for the construction currently being prosecuted at
the Project and the operation, occupation and use of the Project as a shopping
center; all Permits are in full force and effect; and all Permits issued to the
Project are described in respect to each Phase on Schedule 10.01(xi) attached
hereto and made a part hereof.
(xii) Neither Seller, nor, to the best of Seller's Knowledge
(except as disclosed in the Environmental Reports), any prior owner of the
Project has: (a) caused or permitted the generation, manufacture, refinement,
transportation, treatment, storage, handling, installation, removal, disposal,
transfer, production or processing of Hazardous Substances (as hereinafter
defined) or other dangerous or toxic substances, or solid wastes, except in
strict compliance with all laws; (b) caused or permitted or received any written
notice or have any actual knowledge of the Release (as hereinafter defined) or
existence of any Hazardous Substances on or about the Project or property
surrounding the Project which might affect the Project; (c) caused or permitted
or received any written notice or have any actual knowledge of any substances or
conditions on or about the Project or on property surrounding the Project which
may support a claim or cause of action, whether by any governmental authority or
any other person, under any laws ("Environmental Laws") in effect as of the date
of this Agreement and all rules and regulations promulgated thereunder,
including, but not limited to: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq. (the
"Superfund Act"); the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6921 et seq.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et
seq.; the Federal Solid Waste Disposal Act, 42 U.S.C. Sections 6901 et seq.; the
Clean Air Act, 42 U.S.C. Sections 7401 et seq.; or any other law. For the
purposes of this Agreement the terms "Hazardous Substances" and "Release" shall
have the definitions used in the Superfund Act; provided, however, that the
definition of the term "Hazardous Substances" shall also include (if not
included within the definition contained in the Superfund Act), petroleum and
related by products, hydrocarbons, radon, asbestos, urea formaldehyde and
polychlorinated biphenyl compounds.
(xiii) Except for the Permitted Exceptions, Seller is the sole
owner of good, indefeasible and insurable fee simple title to the Land and the
Improvements, and Seller has not executed or entered into any other agreement to
purchase, sell, option, lease or otherwise dispose or alienate all or any
portion of the Project other than this Agreement, the Leases and New Leases.
(xiv) Subject to the right of Seller to contest Liens as
provided in Paragraph 9.03 hereof, all labor and services performed and material
furnished to the Project have been paid for or will be paid for in full by
Seller, and, to the best of Seller's Knowledge, there exists no
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valid basis for which a Lien or similar lien can properly be claimed against the
Project or any part thereof.
(xv) As of the date hereof, Schedule 7.02(a) attached hereto
is a complete and correct list of all Leases for each Phase, and the information
disclosed on Schedule 7.02(a) is accurate with respect to each of the Leases.
(xvi) Leasing commissions or fees that are payable in
connection with any leasing agreement or registration statement to which Seller
is a party or that Seller has accepted, in writing, that pertains to New Leases
(that will be paid by Seller as provided in Paragraph 13.11 hereof), and the
Leases described in Schedule 7.02(a), and commissions resulting from any other
agreement to which Seller is a party relating to the Project (collectively,
"Commissions") will be paid by Seller when due under the applicable leasing
agreement or registration statement.
(xvii) Except as set forth on Schedule 10.01(xvii) attached
hereto, as of the date hereof, (1) none of the Tenants or New Tenants of Leases
and New Leases that are Qualified Leases as of the applicable Closing have been
granted any economic or financial concession or inducement (collectively,
"Tenant Inducement") that will not be paid in full by Seller when due in
accordance with the applicable provisions of the subject Leases and New Leases,
and (2) none of the subject Tenants or New Tenants have deposited Security
Deposits with Seller, except those disclosed on Schedule 7.02(a) attached
hereto.
(xviii) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xviii) attached hereto, as of the date hereof, no Tenant or
New Tenant of Leases or New Leases that are Qualified Leases as of the
applicable Closing has alleged an event of default on the part of Seller which
is presently outstanding, or that Seller has not fulfilled all of its
obligations under the subject Leases or New Leases which are conditions of the
obligations of such Tenants and New Tenants to pay the Rents, including without
limitation, all work, repairs and improvements required to be furnished by
Seller pursuant to such Leases and New Leases.
(xix) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xix) attached hereto, as of the date hereof, (1) none of the
Tenants or New Tenants under Leases or New Leases that are Qualified Leases as
of the applicable Closing are in default of any of their obligations under their
respective Leases and New Leases, and (2) no event has occurred which, with the
giving of notice, the passage of time, or both, would constitute an event of
default by such Tenant or New Tenant.
(xx) Except as set forth on Schedule 10.01(xx) attached
hereto, as of the date hereof, Seller has no notice and to the best of Seller's
Knowledge, no Tenant or New Tenant under a New Lease that is fully executed
prior to applicable Closing has advised Seller, orally or in writing, that any
Tenant or any subject New Tenant intends to give up physical or legal possession
of its demised premises, including without limitation: assigning its lease;
subletting all or part of its demised premises; vacating its demised premises;
discontinuing the operation of its business at its demised premises;
surrendering possession of its demised premises; or terminating its Lease or
subject New Lease.
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(xxi) There are no employees of Seller that are assigned to
the Project for which Purchaser shall have any obligations after the applicable
Closing.
(xxii) A description of all Guaranties relating to the
construction and equipment of the Project received by Seller that, by their
terms, are in effect on or after the applicable Closing Date are true, correct
and complete, and all Guaranties issued with respect to the Project that, by
their terms, are in effect on or after the applicable Closing Date are described
in respect to each Phase on Schedule 5.01(g) attached hereto.
(xxiii) Seller has not dealt with any broker, finder or other
person in connection with this transaction, who is entitled to any Commission,
finder's fee or similar payment as a result of the acts of Seller or its agents,
except (1) as pertains to New Leases, and in such event, all Commissions in
connection therewith shall be paid by Seller as provided in Paragraph 13.11
hereof, and (2) as pertains to Commissions not yet due and payable in respect to
Leases which shall be paid by Seller when required in respect to such Leases.
Seller acknowledges that it has conversed with Eugene Faigus and Chadwick &
Saylor in connection with this transaction, but that Seller has not agreed to be
obligated to pay any fee or other compensation to either or both of them.
(xxiv) Seller has no actual Knowledge that any of the written
information provided to Purchaser by Seller or on its behalf in connection with
this transaction (including without limitation, the warranties and
representations set forth in this Agreement), is inaccurate or incomplete or
contains any untrue statement of fact.
(xxv) To the best of Seller's Knowledge, copies of documents
furnished or to be furnished to Purchaser by Seller or on its behalf in
connection with this transaction are true and complete copies of the originals.
(xxvi) As of the applicable Closing, Seller's net worth,
determined in accordance with generally accepted accounting principals
consistently applied, is greater than $5,000,000.00, exclusive of goodwill.
The term "Knowledge" when used in the context of "to the best of Seller's
Knowledge" (or any derivative form thereof) shall mean the actual (written or
oral), not imputed, knowledge of Keith Bednarowski, Dan F. Nicol, Anne E. Loff,
Robert Dakovich (Seller's Project Manager) or Lamar Lawson (Seller's Development
Manager).
10.02 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents and
warrants to Seller that:
(i) Purchaser is an Ohio corporation, duly organized and
validly existing pursuant to the law of the jurisdiction of its organization.
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(ii) Purchaser is authorized and empowered to enter into this
Agreement and perform all of its obligations under this Agreement without any
qualification whatsoever.
(iii) No consent or approval of any third party (including
without limitation, any governmental or quasi-governmental authority) is or was
required by Purchaser to execute and deliver this Agreement or consummate this
transaction.
(iv) Upon the signing and delivery of this Agreement, it will
be legally binding upon Purchaser in accordance with all of its provisions,
except as such provisions may be qualified or limited by bankruptcy, creditor's
rights and equitable principles.
(v) The person signing this Agreement on behalf of Purchaser
has been duly authorized to sign and deliver this Agreement on behalf of
Purchaser.
(vi) To the best of Purchaser's Knowledge (as hereinafter
defined), Purchaser has not committed any act or permitted any action to be
taken which would materially adversely affect its ability to perform all of its
obligations under this Agreement.
(vii) The execution and delivery of this Agreement by
Purchaser and Purchaser's performance of it obligations under this Agreement
shall not conflict with any law, statute, ordinance, regulation, order,
directive or decree of any governmental or quasi-governmental authority or any
contract, other agreement or obligation to which Purchaser is a party or is
otherwise bound.
(viii) Except for Eugene Faigus and Chadwick & Saylor, neither
Purchaser nor its agents have dealt with any broker, finder or other person in
connection with this transaction who is entitled to any Commission or similar
payment as a result of the acts of Purchaser or its agents.
(ix) All copies of documents furnished or to be furnished to
Seller by Purchaser or on its behalf in connection with this transaction are
true and complete copies of the originals.
The term Purchaser's Knowledge, when used in the context of "to the best of
Purchaser's Knowledge" (or any derivative form thereof) shall mean the actual
(written or oral), not imputed, knowledge of Scott Wolstein, James A. Schoff or
Joan U. Allgood.
10.03 Intentionally Deleted
10.04 INDEMNIFICATION.
(a) Except as limited by the provisions of Paragraph 23
hereof, the Parties shall indemnify and hold each other harmless, from and
against all damages, costs, expenses, liabilities, penalties and fines,
including without limitation, attorneys fees, disbursements, expert witness
fees, paralegal fees, reporters fees, reproduction and printing costs, including
any of the
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foregoing which are incurred in connection with any appeal, and amounts paid in
settlement of claims (collectively, in respect to the foregoing inclusion,
"Litigation Expenses" ), paid or incurred by the other Party as a result of any
representation or warranty of the respective Party set forth in this Agreement
not being true and correct in all material respects when made. In addition, the
indemnity provisions of this Paragraph 10.04(a) on behalf of the Purchaser shall
pertain to any claims, demands, actions, causes of action, judgments or decrees
made against or entered against Seller in respect to any Commissions or other
compensation claimed or demanded by either Eugene Faigus or Chadwick & Saylor in
connection with the terms of this Agreement.
(b) Notwithstanding the foregoing, and except as provided in
Paragraph 24.17 hereof in respect to Warranty Work, Seller's and Purchaser's
right to seek or obtain indemnification, damages or other legal recourse against
the other Party hereto (or any successor thereto) with respect to a breach of
any warranty, representation or covenant made in this Agreement or in any
documents, instruments or certificate executed and delivered pursuant hereto
shall terminate, and be of no further force or effect, unless (i) by the date
which is the last to occur of three hundred sixty five (365) days after the
termination of this Agreement and three hundred sixty five (365) days after the
expiration of the Earn-Out Period (as hereinafter defined), the aggrieved Party
shall have notified the other Party, in writing, that the aggrieved Party deems
that any such warranty, representation or covenant was breached in a material
respect when made (as updated or deemed updated) and states therein, with
reasonable particularity, the nature of the alleged breach and the section or
provision of the relevant document which was allegedly breached and (ii) by the
date which is the last to occur of three hundred ninety (390) days after the
termination of this Agreement and three hundred ninety (390) days after the
expiration of the Earn-Out Period, the aggrieved Party files suit against the
other Party seeking legal or equitable recourse as a consequence of such breach.
If the aggrieved Party timely notifies the other Party as called for in the
preceding clause (i) and timely files suit against the other Party as called for
in the preceding clause (ii), then the warranty, representation or covenant at
issue shall not terminate, but rather shall continue until the dispute is
settled between Seller and Purchaser or a final, non-appealable judgment is
issued by a court of competent jurisdiction with respect thereto.
(c) Within ten (10) days after receipt by an indemnified Party
of written notice of any claim or the commencement of any action under this
Paragraph 10.04 by a third party, the indemnified Party shall, if a demand in
respect thereof is to be made against the indemnifying Party pursuant to this
Paragraph 10.04, notify the indemnifying Party in writing of the claim or the
commencement of the action, provided the failure to notify the indemnifying
Party shall not relieve the indemnifying Party from any liability which it may
have to the indemnified Party other than under this Paragraph 10.04. Each
indemnitor shall be entitled, at its cost and expense, to contest any such third
party claim or action by all appropriate legal proceedings, provided that the
indemnitor shall have first notified the indemnitee of the indemnitor's
intention to do so within ten (10) days after the indemnitor's receipt of such
notice from the indemnitee. If the indemnitee joins in any such contest, the
indemnitor shall have full authority to determine all action to be taken with
respect thereto. If, after such opportunity, the indemnitor elects not to
contest any such claim or
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action, the indemnitor shall be bound by the resolution of such claim or action
obtained by the indemnitee. If required by the indemnitor, the indemnitee shall
cooperate fully with the indemnitor and its counsel in contesting any such claim
or action or, if appropriate, in making any counterclaim or cross-claim against
the subject third party asserting the claim or bringing the action, but the
indemnitor will reimburse the indemnitee for any out-of-pocket costs and
expenses incurred by the indemnitee in so cooperating. The indemnitor shall pay
to the indemnitee, in cash, all amounts to which the indemnitee may become
entitled by reason of the provisions of this Agreement, such payment to be made
within thirty (30) days after such amounts are finally determined either by
mutual agreement or by judgment of a court of competent jurisdiction.
11. SHARED CLOSING COSTS AND OTHER EXPENSES.
11.01 EXPENSES.
(a) Seller shall pay any and all fees or costs required to be
paid by Seller to the holder of the Mortgages in connection with the sale of the
Project, including, but not limited to prepayment fees, lender's consent fees or
lender's counsel fees, if any.
(b) Purchaser shall pay the costs and expenses of all Test and
Studies including any environmental audit of the Project and any other
investigations of the Project undertaken by Purchaser and all costs and
expenses, if any, charged by a lender to Purchaser in connection with any
financing or joint venturing of this transaction.
(c) Each Party shall pay its own attorney's fees.
11.02 SHARED CLOSING COSTS.
(a) Except as set forth above in Paragraph 11.01, if each
Closing occurs, Seller and Purchaser shall each pay fifty percent (50%) of all
of the cost of the applicable Phase Commitment, Title Policy (including the
Endorsements and the dating down and increasing the amount of coverage thereof
as provided in Paragraph 6.04 hereof), updating the Survey, transferring all
Permits and Guaranties to Purchaser, all escrow fees, and all transfer,
conveyance, revenue, excise, documentary or other tax or stamps payable as a
result of the sale of each Phase (collectively, the "Shared Closing Costs").
(b) Except as provided otherwise in this Agreement, if each
Closing does not occur because of the failure of a condition to either Party's
obligation to close each Phase transaction (other than a default by a Party),
each Party shall pay fifty percent (50%) of the Shared Closing Costs.
(c) If each Closing does not occur because Seller is in
default, Seller shall pay all of the Shared Closing Costs for the applicable
Phase.
(d) If each Closing does not occur and Purchaser is in
default, Purchaser shall pay all Shared Closing Costs for the applicable Phase.
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12. CONDITIONS.
12.01 PURCHASER'S CONDITIONS. Purchaser shall not be obligated to close a Phase
transaction unless and until:
(a) Seller has delivered to the Escrow Agent the pre-closing
and closing documents described in Paragraphs 5, 6 and 7 of this Agreement;
(b) Title to the applicable Phase is delivered in accordance
with the provisions of this Agreement and the Title Company issues the
applicable Phase Title Policy to the Purchaser on the applicable Closing Date,
in the amount of that portion of the Purchase Price computed as of the
applicable Closing Date in accordance with Paragraph 13.02 hereof, insuring that
indefeasible fee simple title to the applicable Phase is vested in Purchaser,
free and clear of all liens and encumbrances, except for the Permitted
Exceptions;
(c) The applicable Phase is delivered in the physical
condition provided for in this Agreement, reasonable wear and tear excepted; and
(d) If Seller is in default in the performance of any of its
obligations under this Agreement and such default has not been cured prior to
the applicable Closing or any of the representations or warranties of Seller are
untrue or inaccurate in any material respect when made or on the applicable
Closing Date.
12.02 SELLER'S CONDITIONS. Seller shall not be obligated to close a Phase
transaction unless and until:
(a) Purchaser has delivered to the Escrow Agent that portion
of the Purchase Price computed as of the applicable Closing Date in accordance
with Paragraph 13.02 hereof;
(b) Purchaser has delivered the closing documents described in
Paragraph 8 of this Agreement; and
(c) If Purchaser is in default in the performance of any of
its obligations under this Agreement and such default has not been cured by
Purchaser prior to the applicable Closing or any of the representations or
warranties of Purchaser is untrue or inaccurate in any material respect when
made or on the applicable Closing Date.
12.03 RIGHTS UPON FAILURE OF A CONDITION. Except in the case of a default by
Seller under Paragraph 12.01(d) or by Purchaser under Paragraph 12.02(c), if a
condition of a Phase Closing of either Party is not satisfied as of the
applicable Closing Date, the Party whose condition is not satisfied at such
Closing shall have the right to (i) waive such condition and proceed with the
Phase Closing, (ii) extend the Phase Closing Date to permit additional time to
cause the unsatisfied condition to be satisfied, or (iii) terminate this
Agreement in respect to all Phases if the Phase I Closing has not already
occurred, or terminate the Phase II Closing, if the
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Phase I Closing has occurred and both Parties shall be released of all rights
and obligations hereunder in respect to the Phase that has not yet closed,
except as otherwise specifically provided for herein. If the failure of the
condition is a default, the rights of the parties shall be governed by Section
18 hereof.
13. EARN-OUT.
13.01 DEFINED TERMS. In addition to the other terms defined elsewhere in this
Agreement, the following terms shall have the following meaning:
(i) "Carry" shall mean the amount of the proportionate share
of real estate taxes and operating expenses for Phase I that is (or would have
been) allocable to the premises that are the subject of a Lease or New Lease
that becomes a Qualified Lease for the period commencing on the Phase I Closing
Date and ending on the date on which (but not including) the Earn-Out Payment
for such Qualified Lease is due and payable hereunder, reduced by the portion,
if any, of such proportionate share for the subject period that is paid to
Purchaser by the Tenant or New Tenant of such Qualified Lease. To the extent
payable but not paid by the subject Tenant or New Tenant, the portion of Rent
from the such Tenant or New Tenant that applies to the period prior the date the
subject Earn-Out Payment is due and payable shall be deemed Arrears (as
hereinafter defined).
(ii) "Closing Payment" shall mean that amount (a) that is
equal to (y) for Phase I, the aggregate sum of those capitalized Net Cash Flows
for those Leases set forth on the Rent Roll attached hereto as Schedule 3.01
that are Qualified Leases as of the Phase I Closing Date (which aggregated sum,
as of the date hereof based on the presumption of which Leases will be Qualified
Leases as of the Phase I Closing, is $11,588,297.00), plus or minus the amount
by which the annual Base Rent set forth in said Schedule 3.01 for those Leases
that are Qualified Leases as of the Phase I Closing Date increases or decreases
as verified by the applicable Tenant Estoppel, which increase or decrease shall
be capitalized using a rate of ten and 34/100ths percent (10.34%), and (z) for
Phase II, the aggregate sum of the Net Cash Flows for those Phase II Qualified
Leases as of the Phase II Closing Date that is capitalized using a rate of ten
and 34/100ths percent (10.34%); and plus or minus (b) the adjustments for the
applicable Phase that are provided in Section 14 hereof.
(iii) "Earn-Out Payment" shall mean the amount that is equal
to the Net Cash Flow from those Leases or New Leases that are Qualified Leases
on the date (other than any Closing Date) such Earn-Out Payment is due as
provided in this Section 13 capitalized using a rate of ten and 34/100ths
percent (10.34%), minus (1) the Carry, and minus (2) any unsatisfied right of
offset permitted Purchaser as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof that was not previously credited to Purchaser.
(iv) "Force Majeure" shall mean delays resulting from (a)
labor disputes, (b) material or labor shortages, (c) Casualty, (d) acts of God
or the public enemy, (e) governmental embargo restrictions, (f) actions or
inactions of any governmental authority (including, but not
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limited to, the failure to timely process or approve applications for the
issuance or transfer of Permits, licenses or approvals), (g) the adjustment of
insurance claims resulting from Casualty in excess of $1,000,000.00, (h) any
other cause beyond the reasonable control and reasonable anticipation of the
applicable Party, but excluding therefrom reasonable control resulting from
monetary deficiency.
(v) "Net Cash Flow" shall mean, in respect to the applicable
Qualified Leases, an amount equal to the aggregate amount of the so-called "base
rent" (but not operating expenses, tax reimbursements, escalations based on a
consumer price index, or other similar Rent adjustments) payable for the full
calendar year on and after the date the subject Qualified Lease became a
Qualified Lease (without reduction for "free" Rent or Rent abatements), less any
non-reimbursable operating expenses and taxes for such calendar year. Purchaser
acknowledges that for those Leases set forth on Schedule 7.02(a) attached
hereto, there are no non-reimbursable operating expenses or taxes that shall be
a deduction in the determination of Net Cash Flow.
(vi) "New Lease" shall mean any lease (other than the Leases)
that lets or demises space in the Project and that is entered into by (a) the
Seller subsequent to the date hereof, but prior to the Phase I Closing Date, or
(b) by Purchaser or its successor(s) subsequent to the Phase I Closing Date, but
prior to the expiration of the Earn-Out Period.
(vii) "New Tenant" shall mean the tenant or lessee under a New
Lease.
(viii) "Other Center" or "Other Centers" shall mean (a)
Arrowhead Crossing, located in Phoenix, Arizona, of which Opus Southwest
Corporation is the Other Seller; (b) Highland Grove, located in Highland,
Indiana, of which Opus Corporation is the Other Seller; (c) Maple Grove
Crossing, located in Minneapolis, Minnesota, of which Opus Corporation is the
Other Seller; and (d) Tanasbourne Town Center (Phase I), located in Hillsboro,
Oregon, of which Bold, L.L.C. is the Other Seller.
(ix) "Other Sale Agreement" or "Other Sale Agreements" shall
mean, in respect to the Other Centers, those other four Agreements of Purchase
and Sale entered into, effective as of the date hereof, by and between Purchaser
hereunder, as the purchaser thereunder, and, in respect to each Other Sale
Agreement, one of the Other Sellers, as the seller thereunder.
(x) "Other Seller" or "Other Sellers" shall mean any one or
more of the following: Opus North Corporation, an Illinois corporation; Opus
Southwest Corporation, a Minnesota corporation; Opus Corporation, a Minnesota
corporation; and Bold, L.L.C., a Delaware limited liability company.
(xi) "Qualified Lease" shall mean, on the applicable Closing
Date or on the dates during or after the Earn-Out Period for Phase I on which an
Earn-Out Payment is required to be paid hereunder, any Lease or New Lease that,
pursuant to the terms thereof:
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(a) has been fully executed by either Seller
or Purchaser (or its successor), as lessor, and by the Tenant
or New Tenant, as lessee;
(b) the Tenant or New Tenant (1) has taken
possession of the premises that is the subject of the Lease or
New Lease; (2) has commenced paying Rent thereunder, provided,
however, if Seller pays to Purchaser the amount of (y) any
free Rent afforded such Tenant or New Tenant, or (z) the
amount of Rent that would have been payable by such Tenant or
New Tenant, but for a fitting-up or fixturing period afforded
to such Tenant or New Tenant, then the provisions of this
clause (2) shall not apply (provided that in the instance of
clauses (y) and (z), Seller shall not be permitted to pay such
Rent for a period greater than three (3) months); (3) has not
terminated its Lease or New Lease or been terminated by the
landlord thereof as a result of a default thereunder by such
Tenant and New Tenant; (4) in the instance of the applicable
Closing Date, if it occurs (i) on or before the fifteenth
(15th) of a month, the Rent payment obligations thereunder are
not delinquent for a period longer than the month preceding
the month in which the applicable Closing Date occurred, or
(ii) after the fifteenth (15th) of a month, the Rent payment
obligations thereunder are not delinquent for a period longer
than the month in which the applicable Closing Date occurred;
and (5) in the instance of an Earn-Out Payment for the
Earn-Out Period, the Rent payment obligations thereunder are
not delinquent for a period longer than the month in which the
Earn-Out Payment is due (in respect to clauses (4) and/or (5),
for any Rent that is past due longer than the period set forth
therein, "Monetary Default");
(c) the Tenant or New Tenant, as of the date
an Earn-Out Payment is required to be paid hereunder in
respect thereto, is not in voluntary or involuntary
proceedings filed by or against it under Section 365 of the
U.S. Bankruptcy Code ("Bankruptcy Proceeding"); and
(d) the Earn-Out Conditions (as hereinafter
defined) therefor have been satisfied.
(xii) "Vacant Space" shall mean space in the Project that is
rentable for commercial purposes and that is not the subject of a Lease, New
Lease or any other occupancy right as of the Phase I Closing Date. If a Lease,
New Lease or any other occupancy right that is fully executed prior to the
expiration of the First Segment (as hereinafter defined) is terminated prior to
the expiration of the First Segment (provided Purchaser consents, in its sole
discretion, to such termination), no Closing Payment or Earn-Out Payment has
been paid in respect to such terminated Lease, New Lease or any other occupancy
right, and the subject space is not the subject of a different Lease, New Lease
or any other occupancy right at the expiration of the First Segment, then such
space shall also be deemed to be "Vacant Space" at the expiration of the First
Segment.
13.02 CLOSING DATE PURCHASE PRICE COMPUTATION. On the applicable Closing Date,
as part of the Purchase Price, Purchaser shall pay to Seller the applicable
Closing Payment computed in accordance with the provisions of Paragraph
13.01(ii) hereof.
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13.03 LEASE ASSIGNMENT RESERVATION. Notwithstanding any provisions to the
contrary contained in this Agreement, Seller shall be entitled to reserve from
the Lease Assignment ("Assignment Reservation") all of the remedies (but
excluding any eviction actions or summary depossess actions) of the landlord
under the subject Leases or New Leases (that are executed by Seller) that
pertain to (i) an event(s) that occurred prior to the applicable Closing Date,
but the obligation of indemnity by or performance of the subject Tenant or New
Tenant in respect to such event does not arise until on or subsequent to such
Closing Date; (ii) the recovery of Rent that is either due and payable prior to
the applicable Closing Date or due prior to the applicable Closing Date, but not
payable until thereafter, including Unknown Rents (as hereinafter defined); and
(iii) the recovery of any base rent portion of Rent that is due under Leases or
New Leases prior to the date ("Reserved Base Rent Date") that is the first to
occur of (y) the date on which the Earn-Out Payment in respect thereto is paid
(if any is required as hereafter provided), and (z) the date ("Lease Reservation
Date") that is five (5) months subsequent to the date (subject to Force Majeure)
that is set forth in the subject Lease or New Lease for the commencement of the
term thereof. Because Purchaser is to be the payee of Rent under Leases and New
Leases due on and after the Closing Date, the Lease Assignment shall not
specifically reserve the Assignment Reservation provisions provided in clause
(iii). However, provided Purchaser is not required to make any out-of-pocket
expenditures to third parties and Purchaser applies all Rents received after the
applicable Closing first to Rent then due under the applicable Leases and New
Leases as provided in Paragraph 14.02 hereof, Purchaser agrees to fully
cooperate with Seller in prosecuting against the applicable Tenant or New
Tenants the rights reserved in the Assignment Reservation, provided, further,
however, that prior to the commencement of any action or proceeding against such
Tenant or New Tenant, Seller notifies Purchaser of its intent to commence any
such action or proceeding and affords Purchaser a reasonable period of time to
resolve the matter with such Tenant or New Tenant before Seller commences any
such action or proceeding. .
13.04 NEW LEASES. Except for New Leases presented to Purchaser by Seller as
hereafter provided, Purchaser and its successors, during the Earn-Out Period,
shall not enter into any lease, tenancy, occupancy agreement, rental agreement,
option, license or concession for space in the Project (collectively, "Rental
Undertaking"), without first obtaining Seller's prior written consent, which
consent shall not be unreasonably withheld or delayed. If Seller consents as
aforesaid to a Rental Undertaking, such approved Rental Undertaking shall be
deemed a New Lease. During the period commencing on the date hereof and ending
on the expiration of the Earn-Out Period, Seller shall have the exclusive right
to negotiate prospective New Leases, except in the instance of Rental
Undertakings to which Seller has consented as aforesaid. Purchaser agrees to
bind its successors, assigns and their successors and assigns to the provisions
of this Paragraph 13.04.
Seller shall keep Purchaser reasonably advised of the terms,
provisions and conditions of such prospective New Leases as well as the identity
of and the available financial information pertaining to the lessee ("Prospect")
of a proposed New Lease. Purchaser agrees to
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reasonably cooperate with and advise Seller whether the credit worthiness of the
Prospect is acceptable to Purchaser and of those terms, provisions and
conditions proposed for prospective New Leases that Purchaser approves or
disapproves. Purchaser agrees not to unreasonably withhold or delay its consent
and approval of the credit worthiness of the Prospect or of such terms,
provisions and conditions, provided the same are reasonably consistent with the
Leases and New Leases (or does not violate any provision thereof) in respect to
(i) rental rates and proposed Tenant Inducements for comparable space within the
Project for Prospects of comparable net worth, (ii) duration of lease term, and
(iii) exclusive uses proposed for the Prospect.
Under the provisions of a New Lease, (i) for the period prior
to the applicable Closing Date, Seller shall be the landlord thereof, and (ii)
for the Earn-Out Period in respect to Phase I, Purchaser shall be the landlord
thereof and Seller shall be a party thereto, as contractor, for the limited
purpose of performing the New Lease Obligations (as hereinafter defined).
When and as a final draft of a New Lease is prepared, Seller
shall deliver a true and complete copy thereof to Purchaser along with all
financial information pertaining to the Prospect that is in Seller's possession
or under its control that was not theretofore delivered to Purchaser. Purchaser
shall advise Seller, in writing, within ten (10) business days after Purchaser's
receipt of the draft New Lease, whether Purchaser approves or disapproves the
same. If Purchaser notifies Seller as aforesaid of Purchaser's disapproval of a
draft New Lease ("Disapproved Lease"), such notice shall set forth, in
reasonable particularity, the reasons for Purchaser's disapproval. If Purchaser
fails to so notify Seller of whether the draft New Lease is approved or
disapproved as aforesaid, it shall act as notice to Seller that Purchaser has
approved the same. When a prospective New Lease has been approved or is deemed
to have been approved, (i) in the instance of prospective New Leases to be
executed prior to the applicable Closing Date, Seller shall execute the same as
Landlord thereunder, and (ii) in the instance of prospective New Leases to be
executed during the Earn-Out Period for Phase I, Seller shall promptly
thereafter deliver execution originals of the same to Purchaser that have been
executed by the subject Prospect, as the New Tenant, and by the Seller in
respect to the New Lease Obligations. Within five (5) business days following
Purchaser's receipt of execution originals as aforesaid in clause (ii),
Purchaser shall execute and return the same to Seller. If Purchaser fails to
return, when required, said originals executed by Purchaser as aforesaid, such
New Lease ("Unsigned Lease") shall automatically be deemed a New Lease that is
fully executed during the Earn-Out Segment (as hereinafter defined) in which
Seller delivered it to Purchaser for execution, and shall be deemed a Qualified
Lease and the Earn-Out Conditions in respect thereto satisfied on the sixth
(6th) business day after it was delivered to Purchaser, notwithstanding the
provisions of Paragraph 13.01(xi) hereof. As a result, subject to the provisions
of the next sentence, Purchaser shall pay to Seller, on the twenty-fifth (25th)
day of the month first occurring thereafter, the Earn-Out Payment computed in
respect to such Unsigned Lease. However, in the event, after the date an
Unsigned Lease became a Qualified Lease as aforesaid and prior to the date the
Prospect thereof withdraws its signature thereto, Purchaser executes and returns
to Seller such Unsigned Lease, Seller agrees to be bound by and to perform the
New Lease Obligations for such Unsigned Lease.
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In the event, at any time prior to the date that is three (3)
months subsequent to the expiration date of the Earn-Out Segment in which there
was a Disapproved Lease, Purchaser (or its successors or assigns) enters into
any Rental Undertaking with the Prospect of such Disapproved Lease, such Rental
Undertaking shall automatically, notwithstanding the provisions of Paragraph
13.01(xi) hereof, be deemed to be a Qualified Lease and Purchaser shall pay to
Seller, on the twenty-fifth (25th) day of the month first occurring after such
Rental Undertaking was signed by Purchaser, an amount equal to (a) the Earn-Out
Payment computed in respect to the provisions of such Rental Undertaking as a
Qualified Lease, minus (b) the Footage Payment, if any, that was previously paid
by Purchaser in respect to the portion of the Project that is the subject of
such Rental Undertaking, minus (c) the costs incurred by Purchaser to unrelated
third parties for the construction and completion of tenant improvements and
broker's commissions for the subject Rental Undertaking, but in an amount, in
either instance, not greater than the cost of those tenant improvements and
Commissions provided in the Disapproved Lease, and minus (d) any unsatisfied
right of offset afforded Purchaser pursuant to Paragraphs 5.04, 9.03, 14.06,
14.07 and 16.01 hereof. The obligations of Purchaser under the provisions of
this grammatical paragraph shall survive the applicable Closing and the later
expiration of the Earn-Out Period.
13.05 EARN-OUT PERIOD. The hereafter provided period of time subsequent to the
Phase I Closing Date shall be divided into two segments (respectively, "First
Segment," and "Second Segment," and generally, "Earn-Out Segment,"). Each
Earn-Out Segment during which Seller has elected, as hereafter provided, to
extend the term of this Agreement for Phase I shall be for a period of five (5)
months or for such longer period as provided in Section 13.06 hereof. The First
Segment for Phase I shall commence on the day after the Phase I Closing Date,
and the Second Segment for Phase I (if Seller elected or is deemed to have
elected to extend the Earn-Out Period) shall commence on the day after the
expiration of the First Segment for Phase I. Provided the Phase I Closing
occurs, Seller hereby elects to extend the term of this Agreement for the Phase
I First Segment. Seller may elect, in its sole discretion, to extend the term of
this Agreement for the Second Segment for Phase I by delivering to Purchaser
Seller's written notice of such election ("Earn-Out Extension Notice") not less
than thirty (30) days prior to the expiration of the Phase I First Segment. If
Seller fails to deliver, as aforesaid, its Earn-Out Extension Notice, it shall
act as notice to Purchaser that Seller has elected not to extend the term of
this Agreement for the Phase I Second Segment, but such election or deemed
election of Seller in respect to Phase I shall not affect the obligations of the
Parties in respect to the Phase II Closing. However, notwithstanding the
preceding sentence, if one or more of the Other Sellers elect(s), under the
provisions of its respective Other Sale Agreement, to extend for the Second
Segment, Seller, regardless of its election hereunder, shall be deemed to have
elected to so extend this Agreement for the Second Segment for Phase I, except
that an election by the Other Seller under the terms of the Other Sale Agreement
for Tanasbourne Town Center (Phase I) to extend for the second segment
thereunder shall not be deemed an election of Seller hereunder to extend the
Earn-Out Period for the Second Segment of Phase I, if the closing for such Other
Center is after the Phase I Closing. The aggregate of the Earn-Out Segments for
which Seller has elected or is deemed to have elected to extend the term hereof
for Phase I shall be referred to as the "Earn-Out Period." The Parties
acknowledge that, notwithstanding any
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provision or interpretation of any provision contained in this Agreement, there
will be no Earn-Out Period or Earn-Out Payments in respect thereto for Phase II.
Therefore, any reference to Earn-Out Period shall only mean the Earn-Out Period
applicable to Phase I.
13.06 CASUALTY DURING EARN-OUT PERIOD. If, during the Earn-Out Period for Phase
I, there is a Casualty to a Vacant Space in Phase I, the Earn-Out Period and the
applicable Earn-Out Segment shall be tolled as to the damaged Vacant Space until
such time as Purchaser causes such damaged Vacant Space to be restored to a
habitable condition, exclusive of tenant's improvements. Except as hereafter
provided, if, during the Earn-Out Period for Phase I, there is a Casualty to
twenty five percent (25%) of the Square Footage of the entire Project (as
opposed to a particular Phase) Improvements (exclusive of the Vacant Space), the
Earn-Out Period and the applicable Earn-Out Segment shall be tolled until such
time as such damaged Improvements are restored to a condition so that the
Tenants or New Tenants thereof are open and operating their respective
businesses therein, except in respect to those Tenants or New Tenants whose
Leases or New Leases were terminated as a result of the subject Casualty.
Purchaser agrees to promptly notify Seller, in writing, of the occurrence of
such a Casualty. Notwithstanding the foregoing, in the event of such a Casualty,
Seller shall deliver to Purchaser, within ten (10) days following the date of
Seller's receipt of Purchaser's written notification, Seller's written notice
("Casualty Notice") of its good faith determination that such Casualty is the
proper basis for the tolling of the applicable Earn-Out Segment. If Seller fails
to deliver a Casualty Notice as aforesaid, it shall act as notice to Purchaser
that Seller is not claiming any tolling of the applicable Earn-Out Segment in
respect to such Casualty. Regardless of a Casualty Notice, there will be no
tolling of the Earn-Out Period if Purchaser restores the applicable portion of
the Improvements in the Phase(s) that has been closed within thirty (30) days
following the date of such Casualty. However, if such restoration is not
completed within said thirty (30) days, the Earn-Out Period shall be tolled
commencing on the date of the Casualty and ending on the date provided in the
first two sentences of this Paragraph 13.06. During the Earn-Out Period,
following a Casualty, Purchaser agrees to diligently (subject to Force Majeure)
undertake the restoration of the applicable portion of the Improvements in the
Phase(s) that has then closed.
13.07 EARN-OUT PAYMENTS. In respect to Leases or New Leases that are fully
executed prior to the expiration of the Earn-Out Period, on the twenty-fifth
(25th) day of each calendar month after the Phase I Closing Date, provided the
subject Lease or New Lease is a Qualified Lease prior to the Lease Reservation
Date in respect to Phase I on and after the Phase I Closing Date, Purchaser
shall pay to Seller the Earn-Out Payment computed in respect to those Leases and
New Leases that became, for the first time, Qualified Leases during the
preceding month and for which no Earn-Out Payment had been previously paid to
Seller. In the event a New Lease is executed during the Phase I First or Second
Segment, but it does not become a Qualified Lease until after the expiration of
the Earn-Out Period, but prior to the Lease Reservation Date, Purchaser, subject
to the satisfaction of the Earn-Out Conditions, shall pay to Seller at the time
aforesaid, an amount equal to the Earn-Out Payment computed in respect to such
subsequent Qualified Lease. Any Earn-Out Payment shall be subject to any
unsatisfied right of offset as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof.
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Notwithstanding the foregoing, the Earn-Out Payment or Closing
Payment in respect to a particular Qualified Lease (excluding those that are
Qualified Leases in respect to an Unsigned Lease or a Rental Undertaking with
the Prospect of a Disapproved Lease as provided in each instance in Paragraph
13.04 hereof) shall not be due and payable by Purchaser to Seller, unless and
until, Seller, prior to the Lease Reservation Date, has delivered or caused to
be delivered to Purchaser, in respect to the subject Qualified Lease, (i) a
fully executed original thereof; (ii) a certificate of occupancy from the
applicable governmental authority authorizing the uninterrupted occupancy by the
subject Tenant or New Tenant of the subject premises; (iii) the applicable
Tenant Estoppel containing no material exceptions or Seller's Estoppel, if in
accordance with the provisions of Paragraph 7.15 hereof; (iv) Schedule
10.01(xvii) from Seller in respect to the subject Lease or New Lease, updated to
the date the Earn-Out Payment is due, setting forth any unsatisfied Tenant
Inducement in respect thereto; (v) evidence, in form and content reasonably
satisfactory to Purchaser, that the portion of Tenant Inducements payable to the
subject Tenant or New Tenant has been paid by Seller; (vi) an original of the
insurance certificates required from the subject New Tenant under the Qualified
Lease; (vii) the date down and increased coverage endorsement for the Title
Policy required pursuant to the provisions of Paragraph 6.04 hereof, provided
Purchaser pays fifty percent (50%) of the Shared Closing Costs in respect
thereto; and (viii) copies of the "as-built" plans and specifications for the
tenant improvements for the subject Qualified Lease (collectively, in respect to
clauses (i) through (viii) above, "Earn-Out Conditions"). The Earn-Out Payment
obligations of this Paragraph 13.07 shall survive each Closing Date and the
later termination of this Agreement. If the Earn-Out Conditions are not
satisfied for the subject Lease or New Lease on or prior to the Lease
Reservation Date therefor, then Purchaser shall have no obligation to make any
Earn-Out Payment in respect thereto.
13.08 FOOTAGE PAYMENT. In the event Seller elects not to extend the Earn-Out
Period for the Second Segment, Purchaser shall pay to Seller, when hereafter
provided, an amount ("Footage Payment") equal to the Square Footage (as
hereinafter defined) of the Vacant Space in Phase I existing at the expiration
of the First Segment, multiplied by (i) $55.00 for that portion of the Vacant
Space that is not greater than one hundred feet in depth as measured from the
front exterior surface to the rear exterior surface, and (ii) $45.00 for that
portion of the Vacant Space that is greater than one hundred feet in depth
measured as aforesaid. If Seller elects or is deemed to have elected to extend
the term of the Earn-Out Period for the Second Segment, there will be no Footage
Payment. "Square Footage" shall mean the aggregate number of square feet of the
Vacant Space measured from the front exterior surface to the rear exterior
surface and from the middle of demising walls of such Vacant Space. Within
forty-five (45) days following the date Seller has elected or is deemed to have
elected not to extend the term of the Earn-Out Period for the Second Segment,
Seller shall deliver to Purchaser Seller's computation of the amount of the
Footage Payment ("Footage Computation") which will set forth the identity of the
Vacant Space, the depth of the Vacant Space, and the amount of the Square
Footage contained therein. Unless Purchaser notifies Seller within ten (10)
business days following Purchaser's receipt of the Computation Notice that
Purchaser disagrees with the provisions thereof, Purchaser shall pay to Seller,
within thirty (30) days following Purchaser's receipt of the Computation Notice
the amount of the Footage Payment provided therein. If Purchaser does object to
the Computation
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Notice as aforesaid, Purchaser and Seller shall promptly confer, in good faith,
to resolve the disagreement. When the disagreement is resolved, within ten (10)
business days thereafter, Purchaser shall pay to Seller the resolved Footage
Payment. Any Footage Payment shall be subject to any unsatisfied right of offset
as provided in Paragraphs 5.04, 9.03, 14.06, 14.07 and 16.01 hereof.
13.09 INTENTIONALLY DELETED.
13.10 SELLER'S NEW LEASE OBLIGATIONS. Seller, at its sole cost and expense,
shall (i) apply for and obtain all permits and licenses necessary to construct
all tenant improvements required under New Leases; (ii) subject to Force
Majeure, construct and complete, when required under the provisions of New
Leases, all such tenant improvements; (iii) pay, when due, all Commissions in
respect to New Leases; (iv) provide and undertake the required New Lease
construction and warranty work ("Tenant Warranty"); and (v) provide the
builder's "all risk" and general liability insurance coverage required by the
subject New Lease in respect to such construction (collectively in respect to
clauses (i) through (v), "New Lease Obligations").
13.11 PUNCHLIST. The portion of the Purchase Price payable at each Closing as
computed pursuant to the provisions of Paragraph 13.02 hereof and the amount of
each Earn-Out Payment due hereunder shall be reduced by an amount which shall be
held by Purchaser and disbursed as hereafter provided, which amount shall equal
one hundred and twenty five percent (125%) of the reasonably estimated cost of
completing all of the tenant improvements work for Leases and New Leases that
are Qualified Leases in the applicable Phase as of the applicable Closing Date
and/or Phase I Earn-Out Payment date. The amount of the Footage Payment payable
hereunder shall be reduced by an amount which shall be held by Purchaser and
disbursed as hereafter provided, which amount shall equal one hundred twenty
five percent (125%) of the reasonably estimated cost of constructing and
completing substantially to those standards for the shell and core portions of
the Improvements for Phase I that are set forth on the Shell and Core List and
Standard attached hereto as Schedule 13.11 (collectively, in respect to the
first and second sentences of this Paragraph 13.11, "Punchlist Holdback"). The
Punchlist Holdback shall be compiled in a line item format in respect to major
segments for completing such incomplete items and shall set forth the reasonable
cost of completing each such line item. If Seller and Purchaser, within fifteen
(15) days prior to the date the foregoing payments hereunder are due, are unable
to agree on the scope or amount of each applicable Punchlist Holdback line item,
Seller and Purchaser shall appoint a third party contractor to make such
determination, and the scope and amount so determined by the third party
contractor shall be binding upon the Parties. When the scope and amount of the
applicable Punchlist Holdback is determined as aforesaid, it shall be attached
to this Agreement, respectively, as Schedules 13.11(a)(1), 13.11(a)(2) etc.
Thereafter, subject to Force Majeure, Seller, at its sole cost and expense
(regardless of the amount of the Punchlist Holdback), agrees to diligently
prosecute to completion ("Punchlist Work") all of the items on each 13.11(a)(3)
attached hereto. The obligation of Seller to complete the Punchlist Work is
absolute and unconditional. Monthly, after the Punchlist Holdback is established
as aforesaid, when Punchlist Work pertaining to various line items on the
applicable Punchlist Holdback is complete, Purchaser shall pay to Seller one
hundred percent (100%) of that portion of the applicable Punchlist Holdback
applicable to such completed Punchlist Work
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(thereby retaining twenty-five percent (25%) thereof), provided Seller has
delivered to the Purchaser a Form G704 in the form attached to the Exhibit
Agreement as Schedule 13.11(b), executed by Seller (or its contractor) setting
forth that the subject line item of such Punchlist Work has been completed.
When all of the Punchlist Work in respect to the applicable
Punchlist Holdback has been completed in respect to the applicable Phase and the
Forms G704 therefor have been delivered to Purchaser, Purchaser shall pay to
Seller the remaining twenty-five percent (25%) of the subject Punchlist
Holdback, provided Seller has delivered to Purchaser the following documents:
(a) Evidence that all payment in the manner required by the
applicable contract, agreement or undertaking is paid in full in respect to the
subject Phase Punchlist Work;
(b) Lien waivers required by (and that are reasonably
satisfactory to) the Title Company from the Seller and its contractor and
subcontractors that are necessary to insure over Liens in respect to the subject
Punchlist Work; and
(c) In respect to the portion(s) of the subject Punchlist Work
that pertains to incomplete tenant improvements under a Lease or New Lease, an
acknowledgment from the subject Tenant or New Tenant, in form and substance
reasonably acceptable to Purchaser, setting forth the applicable Tenant's or New
Tenant's acceptance of completion of the subject tenant improvements.
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS.
All of the items of income and expense mentioned in this
Section 14 shall be apportioned or adjusted between Seller and Purchaser as of
12:01 A.M., local time of the Project, as of the applicable Closing Date. Except
as provided in the instance of Unknown Rents as provided in Paragraph 14.03
hereof, all apportionments and adjustments shall be made as of the applicable
Closing Date. To the extent that the apportionments and adjustments, at the
applicable Closing, are based upon any errors or omissions in the calculation or
determination thereof, promptly after notice of such errors or omissions, the
Parties shall readjust or reapportion and make the payment required as a result
thereof.
14.01 RENTS. The fixed and minimum rents and all additional rents, escalation
charges, common area maintenance charges, imposition charges, heating and
cooling charges, insurance charges, charges for utilities, percentage rent, and
all other rents, charges and commissions (collectively, the "Rents") payable by
the Tenants under the Leases and New Leases that are Qualified Leases for the
applicable Phase as of the applicable Closing Date, to the extent collected by
Seller on or prior to such Closing Date and which represent payments of Rents
applicable to a period of time subsequent to such Closing Date. Notwithstanding
the foregoing, Seller shall be permitted the rights against Tenants and New
Tenants as provided in the Assignment Reservation set forth in Paragraph 13.03
hereof.
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14.02 ARREARS. Any of the Rents that are due and payable by the Tenants and New
Tenants of the applicable Phase on or prior to the applicable Closing Date, but
which have not been collected by the Seller on or prior to such Closing Date, or
payment of which has been deferred until after such Closing Date ("Arrears"), to
the extent applicable to any period of time on or prior to the Closing Date, and
which are paid after such Closing Date shall, subject to the terms below, be
paid to Seller and be the subject of the Assignment Reservation, and if the
Arrears are received by Purchaser, Purchaser shall pay the Arrears to Seller
after collection by Purchaser, provided, however, that if any Arrears exist on
such Closing Date, all Rents, received and collected by Purchaser after such
Closing Date shall be applied first to payment of all Rents due Purchaser and
second to all Arrears due Seller. Purchaser shall have no obligation to collect
any Arrears or to commence any action to enforce the obligation of Tenants to
pay the Arrears, but Purchaser agrees to cooperate with Seller in the collection
of such Arrears, but only as provided in Paragraph 13.03 hereof. In the event
Purchaser elects to commence any action or proceeding against any Tenant and as
a result thereof collects any Arrears which Purchaser is required to remit to
Seller, Purchaser shall be entitled to deduct and retain a portion of the amount
collected which is equal to the Pro Rata Share (as hereinafter defined) of the
Litigation Expenses incurred by Purchaser in connection with the collection of
the Arrears. Notwithstanding anything to the contrary, Seller, as a result of
the Assignment Reservation, shall have the right, after delivery of prior
written notice to Purchaser, to commence any action or proceeding, except a
summary depossess or any eviction actions, against any Tenant for Seller's
portion of any Arrears.
14.03 UNKNOWN RENTS. Any Rents which have accrued but are not due and payable on
the applicable Closing Date because the applicable Lease or New Lease year or
other fiscal period for the subject Phase for which such Rents are to be
computed has not yet expired (including by way of example only, escalation
charges and percentage rents) or if it has expired but cannot for any other
reason be calculated by the Parties on such Closing Date ("Unknown Rents"),
shall be apportioned promptly after (i) the expiration of the applicable Lease
or New Lease year or other fiscal period, and (ii) the receipt and collection of
the Unknown Rents. Purchaser shall make reasonable efforts to ascertain the
amount of the Unknown Rents (but, shall not be obligated to commence any action
or proceeding to collect Unknown Rents, except that Purchaser shall reasonably
cooperate with Seller in respect to the Assignment Reservation as provided in
Paragraph 13.03 hereof), and when the amounts of the Unknown Rents are
ascertained, received and collected by Purchaser, Purchaser shall promptly pay
to Seller a portion (the "Pro Rata Share") of the Unknown Rents determined by
multiplying the Unknown Rents collected by a fraction, the numerator of which is
the number of days in the applicable Lease or New Lease year or other fiscal
period up to but excluding the applicable Closing Date and the denominator of
which is the number of days in the applicable Lease or New Lease year or other
fiscal period, less any monies Seller has previously received on account of the
Unknown Rents and Seller's Pro Rata Share of the Litigation Expenses incurred by
Purchaser in the collection of the Unknown Rents. In the event it is determined
after the applicable Closing that the amount of the Unknown Rents received by
Seller exceeds the Seller's Pro Rata Share, Seller shall promptly pay such
excess to Purchaser upon demand. Notwithstanding anything to the contrary,
Seller shall have the right to commence any action or proceeding, except a
summary depossess or an eviction action, against any Tenant for Seller's portion
of any Unknown Rents.
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14.04 UTILITIES. To the extent not payable by Tenants or New Tenants, the actual
or estimated charges for utilities accrued and payable by Seller prior to the
applicable Closing Date, provided Purchaser is required by law or elects to
assume Seller's account. Deposits for utilities (the "Utility Deposits"), plus
any interest on the Utility Deposits to which Seller is or will be entitled,
held by the provider of the utilities and which are freely transferable to
Purchaser, shall, at the election of the Purchaser, be assigned by Seller to
Purchaser and Purchaser shall pay Seller the full amount thereof at the
applicable Closing, in addition to the applicable portion of the Purchase Price.
Seller shall retain the right to obtain a refund of any Utility Deposits which
are not required to be assigned to Purchaser and Purchaser will cooperate with
Seller in obtaining any refund. With respect to water, sewer, electric and gas
charges, Seller shall make reasonable efforts to obtain a reading of the meter
or other consumption measuring device as of the applicable Closing Date. If the
Seller is unable to obtain such a reading, Seller shall furnish a reading as of
a date not more than thirty (30) days prior to the applicable Closing Date and
the unknown charges shall be apportioned on the basis of an estimate computed by
utilizing such reading and the most recent bill from the utility provider,
computed on an equal per diem basis.
14.05 CONTRACTS. Prepaid charges, payments and accrued charges under the
Contracts set forth in Schedule 7.05(a) attached hereto, to the extent not paid
by Tenants or New Tenants. However, if paid by Tenants or New Tenants, Seller
shall credit Purchaser with the amount thereof received by Seller from such
Tenants or New Tenants, to the extent not applied to the payment obligations
under the Contracts.
14.06 TAXES. Seller shall cause all real estate taxes for 1995 and prior years
to have been paid as of the Phase I Closing Date, and all real estate taxes for
the years prior to the year in which the Phase II Closing occurs to have been
paid as of the Phase II Closing Date. The real estate taxes for calendar year in
which the applicable Closing Date occurs for the applicable Phase shall be
pro-rated as of such Closing Date. Seller's pro-rata share of such real estate
taxes shall be calculated based upon the number of days elapsing from January 1,
of the subject year to, but not including, the subject Closing Date in relation
to 365 days in such year. Purchaser shall be responsible for the remaining
portion of such real estate taxes, commencing with the applicable Closing Date
and continuing through December 31, of the subject year. Notwithstanding the
foregoing, at each Closing, to the extent there are Tenants or New Tenants that
pay their Real Estate Tax Rent (as hereinafter defined) on a lump sum basis,
Seller shall not be required to credit Purchaser with that portion of the
pro-rata share of the real estate taxes for the year in which the applicable
Closing occurs for the period from January 1 to the date of the applicable
Closing for which such lump sum paying Tenants and New Tenants are responsible
("Lump Sum Non-Credit"). However, if any such Tenant or New Tenant fails to pay
their respective lump sum portion of Real Estate Tax Rent when due that is
applicable to the period from January 1 to the applicable Closing Date,
Purchaser shall notify Seller of the same, in writing, and Seller shall pay such
unpaid amount within five (5) business days and such amount so paid by Seller
shall be deemed Arrears. In the event Seller fails to pay such amount, Purchaser
shall be permitted to offset any Closing Payment, Footage Payment, Earn-Out
Payment or other sum payable by Purchaser to Seller hereunder that is
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thereafter due. To the extent there are insufficient future payments due Seller
from Purchaser against which to make such offset, Purchaser shall have the
remedy against Seller as provided in Paragraph 18.05 hereof. In the event the
statement for the total real estate taxes for the year in which the subject
Closing occurs is not available as of such Closing Date, the Parties shall make
the pro-ration provided for herein on the basis of the estimated budget for 1996
prepared by Seller's Property Manager for the Project for purposes of collecting
Real Estate Tax Rent for Tenants or New Tenants occupying space in the Project,
and shall thereafter make such adjustments as may be necessary at such time as
the tax statement for real estate taxes for the year in which the applicable
Closing occurs becomes available. The Closing Payment for each Closing shall be
reduced by the amount of Seller's pro-rata share of the real estate taxes for
the year of the applicable Closing, exclusive of the Lump Sum Non-Credit,
provided, however, that Seller shall be entitled to a reduction in such pro-rata
share in an amount equal to any portion of such year's real estate taxes paid by
Seller on or before such Closing Date.
The portion of the Rent under Leases and New Leases that pertains to
the obligations of Tenants and New Tenants to pay their respective pro-rata
share of real estate taxes (or special assessments provided in Paragraph 14.07
hereof) shall be called "Real Estate Tax Rent." Certain Tenants and New Tenants
pay their Real Estate Tax Rent in a lump sum(s) and others pay their Real Estate
Tax Rent on a monthly basis. The portion of Real Estate Tax Rent that pertains
to the period prior to the applicable Closing Date and which was paid to Seller
by those Tenants and New Tenants who pay the same on a monthly or lump sum basis
shall be retained by Seller. Any Real Estate Tax Rent retained by Seller prior
to the applicable Closing Date that pertains to the period on or subsequent to
such Closing Date shall be credited to Purchaser at such Closing. Any Real
Estate Tax Rent received by Purchaser after the applicable Closing that pertains
to the period prior to such Closing Date (except that which is a Lump Sum
Non-Credit) shall be paid to Seller by Purchaser. The Real Estate Tax Rent
retained by Seller shall be subject to adjustment (increases or decreases) at
such time as Purchaser reconciles the estimated payment of Real Estate Tax Rent
with the amount of the actual real estate taxes paid for 1996.
14.07 ASSESSMENT INSTALLMENTS. If, as of the applicable Closing Date, the
subject Phase is encumbered or otherwise affected by any assessment (whether or
not a lien) which becomes payable in installments, for the installment that is
due in payable in the year in which the applicable Closing occurs, Seller shall
credit Purchaser with the pro-rata portion of such installment from January 1 of
the year of such Closing to the applicable Closing Date, except for an amount
that would be equal to the Lump Sum Non-Credit. Such pro-ration shall be made on
the basis that the number of days from January 1 of the year of the applicable
Closing to, but excluding, the applicable Closing Date bears to three hundred
and sixty five (365) days. The portion of Real Estate Tax Rent applicable to the
installment of assessment payable in the year of the applicable Closing that
pertains to the period prior to the applicable Closing and which was paid to
Seller by Tenants or New Tenants shall be retained by Seller. Any Real Estate
Tax Rent applicable to such installment or assessment that was received by
Seller prior to the applicable Closing Date that pertains to the period on or
subsequent to such
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Closing Date shall be credited to Purchaser at such Closing. Any Real Estate Tax
applicable to such installment of assessment received by Purchaser after the
applicable Closing Date that pertains to the period prior to such Closing Date
(except that which is a Lump Sum Non-Credit) shall be paid by Purchaser to
Seller. If any Tenant or New Tenant who pays their respective Real Estate Tax
Rent on a lump sum basis and for whom a Lump Sum Non-Credit was provided, Seller
shall remain responsible for Lump Sum Non-Credit as provided in Paragraph 14.06.
14.08 PERMITS. The (i) Vault taxes and rents, if any, due and payable in the
calendar year in which the applicable Closing Date occurs (to the extent not the
obligation of the applicable Tenants or New Tenants to pay), (ii) Permit fees to
the extent transferable, and (iii) government inspection fees shall be
apportioned as of the applicable Closing Date.
14.09 SECURITY DEPOSITS/TENANT INDUCEMENTS. Purchaser shall receive a credit
against the portion of the Purchase Price payable on the applicable Closing Date
in an amount equal to the sum of (i) the Security Deposits, if any, which Seller
is holding pursuant to the Leases and New Leases in the subject Phase and as set
forth in Schedule 7.02(a) attached hereto, plus (ii) all costs, expenses and
losses (including without limitation, reductions in Rent) which will be incurred
by Purchaser after the applicable Closing as a result of all Tenant Inducements
given on or before the applicable Closing Date which are not paid in full as of
such Closing in respect to Qualified Leases in the subject Phase as of the
applicable Closing Date.
14.10 CUSTOMARY ITEMS. Any other items of income and expense not specifically
mentioned in this Section 14 which are customarily apportioned in real property
transactions of the character contemplated by this Agreement.
14.11 APPORTIONMENT BETWEEN PHASES. For the purpose of determining the
pro-rations provided in this Section 14, on each Phase Closing Date, Purchaser
and Seller shall attempt, in good faith, to the extent reasonably practicable,
to apportion among the Phases in the proportion attributable to such Phases of
the pro-rations provided in this Section 14.
15. CLOSING.
15.01 CLOSING AND CLOSING DATE. The closing of Phase I of this transaction
("Phase I Closing") shall be held at the office of Opus Properties on June 27,
1996 (the "Phase I Closing Date").
The closing of Phase II of this transaction ("Phase II Closing") shall
also be held at the office of Opus Properties. Provided the UA Lease and
Childcare Lease are each Qualified Leases (as those terms are hereinafter
defined) on or before December 15, 1997 ("Qualification Date"), subject to the
Extension Election (as hereinafter defined), the Phase II Closing shall occur on
the date ("Phase II Closing Date") that is fifteen (15) days subsequent to the
date the UA Lease and Childcare Lease both become Qualified Leases. Seller shall
deliver written notice to Purchaser not less than fifteen (15) days nor more
than thirty (30) days prior to the date on which Seller,
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in good faith, reasonably believes both the UA Lease and Childcare Lease will
become Qualified Leases. However, if Seller reasonably believes the UA Lease or
the Childcare Lease will not become a Qualified Lease before January 1, 1998,
Seller, on or before December 1, 1997, shall advise Purchaser of the same, in
writing ("Qualification Notice"). The Qualification Notice shall set forth with
reasonable particularity the reasons why Seller believes the UA Lease or
Childcare Lease, as the case may be, will not become a Qualified Lease by the
December 15, 1997. Within ten (10) business days subsequent to the date
Purchaser receives the Qualification Notice, Purchaser shall advise Seller, in
writing, of whether Purchaser elects (i) to terminate those aspects of this
Agreement pertaining to Phase II, including, but not limited to Purchaser's
right to buy and Seller's obligation to sell Phase II, or (ii) to extend, in
Purchaser's sole discretion, the Qualification Date to June 15, 1998 ("Extension
Election"). If Purchaser fails to notify Seller, in writing, of whether
Purchaser chose to terminate as aforesaid or chose the Extension Election, it
shall act as notice to Seller that Purchaser chose the Extension Election.
However, if the UA Lease and Childcare Lease are not both Qualified Leases on or
before the Qualification Date (December 15, 1997 or June 15, 1998, as applicable
as a result of the Extension Election), the Agreement shall automatically
terminate in respect to Phase II as aforesaid, Purchaser and Seller shall each
pay 50% of the Shared Closing Costs applicable to Phase II, and this Agreement
in respect to Phase II shall be of no further force and effect. As of the date
hereof, Phase II is the subject of two Leases. One is between Seller and United
Artists ("UA Lease"), and the other is between Seller and Childcare ("Childcare
Lease"). For the purposes of this Agreement the UA Lease or the Childcare Lease
shall mean the leases set forth, respectively, in the preceding sentence or any
replacement New Lease therefor that has been approved by Purchaser in accordance
with the provisions of Paragraph 13.04 hereof.
Each of the Phase Closing Dates are subject to extensions pursuant to
Paragraphs 5.04, 6.03, 7.20, 12.03 and 17.02 hereof.
16. POSSESSION.
16.01 POSSESSION AND POST CLOSING WORK. Purchaser shall be entitled to
possession of the applicable Phase on the subject Closing Date, subject only to
such Phase's Leases, New Leases, Assignment Reservation and the Permitted
Exceptions. Notwithstanding the foregoing, subsequent to the applicable Closing
Date, Seller and Seller's agents, contractors and subcontractors shall have
access to such portions of the Project necessary and convenient to commence
and/or complete (i) the Punchlist Work; (ii) Unacceptable Conditions; (iii)
Seller's New Lease Obligations; (iv) incomplete tenant improvement work under
Leases; (v) Warranty Work; and (vi) Tenant Inducements (collectively in respect
to clauses (i) through (vi), "Post Closing Work"). All Post Closing Work shall
be done (a) at Seller's sole cost and expense, (b) in a fashion to reasonably
minimize, taking into account the scope and nature of the Post Closing Work, the
disruption to Tenants and New Tenants and to the operation and management of the
subject Phase(s) by Purchaser and Purchaser's agents, (c) in compliance with
Environmental Laws, and (d) in any event, subject to Force Majeure, with
diligence. The obligation of Seller to complete the Post Closing Work and to pay
Commissions and pay all financial obligations of
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Seller hereunder is absolute and unconditional, and Seller agrees to indemnify,
defend and hold Purchaser and its successors and assigns and the Project
harmless (including Litigation Expenses) from and against any and all (except as
provided in Paragraph 23 hereof) loss, damage, claim, demand, liability, Lien,
action, cause of action, judgment or decree as a result of (A) damage or
destruction to property, including title to the Project, (B) personal injury, or
(C) loss of Rent resulting from the performance or non-performance of the Post
Closing Work by Seller (except that which is caused, in whole or in part, by the
negligence, willful misconduct or breach of contract by Purchaser or its
successors and assigns or their respective agents, employees, contractors or
subcontractors), and resulting from Seller's failure to pay Commissions or to
pay all financial obligations of Seller hereunder. In the event Seller fails to
perform the Post Closing Work, pay Commissions or pay all financial obligations
of Seller hereunder, Purchaser may deduct from the next succeeding Earn-Out
Payment payable hereunder after the event of Seller's failure as aforesaid, the
cost and expense incurred by Purchaser in completing such incomplete Post
Closing Work, paying such unpaid Commissions or paying all financial obligations
of Seller hereunder. During the performance of any Post Closing Work, Seller
shall maintain commercial public liability insurance in an amount and issued by
carriers that are reasonably satisfactory to Purchaser naming Purchaser and
those other persons or entities reasonably designated by Purchaser as additional
insureds thereunder.
17. RISK OF LOSS.
17.01 RISK. Except as provided in Paragraphs 17.02 and 17.03, the risk of loss
or damage (the "Loss") to the subject Phase by (i) condemnation, eminent domain
or similar actions or proceedings or threat thereof (collectively, "Taking"), or
(ii) fire or other casualty (collectively, a "Casualty") shall be borne by
Seller through the date and time that the applicable portion of the Purchase
Price payable on the applicable Closing Date is paid to Seller and thereafter
shall be borne by Purchaser.
17.02 DAMAGE AND DESTRUCTION. In the event all or any portion of Phase I is
materially damaged by any cause whatsoever prior to the Phase I Closing Date,
Seller shall so advise Purchaser and Purchaser shall have the right, at its sole
option, to either: (a) proceed with the Phase I Closing with no reduction in the
Purchase Price, provided, however, Purchaser shall receive from Seller on the
Phase I Closing Date (i) all proceeds of any casualty insurance maintained by
Seller and payable with respect to such damage, and (ii) an amount equal to the
deductible on such casualty insurance which, in the instance of clauses (i) and
(ii), are applicable to Phase I; or (b) terminate this Agreement by giving
written notice of termination to Seller within ten (10) business days of the
date Purchaser is advised by Seller of such damage, in which event the Deposit
shall be refunded to Purchaser, Seller and Purchaser shall each pay 50% of the
Shared Closing Costs as of the date this Agreement is terminated by Purchaser,
and Seller and Purchaser shall have no further rights or obligations under this
Agreement, except those rights and obligations specifically set forth herein as
surviving such termination. The Seller represents and warrants to Purchaser that
the Improvements (except any Tenant's or New Tenant's trade fixtures therein)
for the entire Project are insured to the full replacement value thereof with a
deductible of not more than $5,000.00, which insurance Seller agrees to keep in
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full force and effect until the applicable Closing in respect to that Phase(s)
that has not yet closed.
In the event all or any portion of Phase II is materially damaged by
any cause whatsoever prior to the Phase II Closing Date, Seller shall so advise
Purchaser and Purchaser shall have the right, at its sole option, to either (1)
proceed with the Phase II Closing with no reduction in the Purchaser Price,
provided, however, Purchaser shall receive from Seller (y) all proceeds of any
casualty insurance maintained by Seller and payable with respect to such damage,
and (z) an amount equal to the deductible for such casualty insurance which, in
the instance of clauses (y) and (z), are applicable to Phase II; or (2) permit
Seller the opportunity to restore the damage to Phase II as hereafter provided.
If Purchaser elects to permit Seller to restore as provided in clause (2) above,
Seller shall promptly undertake, with diligence (but subject to Force Majeure),
the restoration of Phase II and the Phase II Closing Date shall be postponed
until the date that is the earlier to occur of six (6) months subsequent to the
date of the Casualty to Phase II and the date Phase II is fully restored.
17.03 CONDEMNATION AND EMINENT DOMAIN. If, prior to the Phase I Closing Date,
the Project shall be subjected to a Taking, either total or partial, or if any
notice of intent of Taking or sale in lieu of Taking that materially affects the
Project is received by Seller or Purchaser, Purchaser shall have the right to
either: (a) proceed with Phase I Closing, in which event Purchaser shall be
entitled to participate in any such Taking proceedings that are applicable to
Phase I, and if applicable to Phase II, Purchaser shall be entitled to so
participate after the Phase II Closing, and, after payment to Seller of the cash
portion of the Purchase Price payable on the applicable Closing Date, to receive
all of the proceeds of such Taking that are applicable to Phase I, after the
Phase I Closing, and that are applicable to Phase II, after the Phase II
Closing, or (b) terminate this Agreement by giving written notice of termination
to Seller, in which event the Deposit shall be returned to Purchaser, Seller and
Purchaser shall each pay 50% of the Shared Closing Costs, and Purchaser and
Seller shall have no further rights or obligations under this Agreement, except
those rights and obligations specifically set forth herein as surviving such
termination. Seller and Purchaser each agree to promptly forward to the other
any notice of intent received pertaining to a Taking of all or a portion of the
Project.
18. DEFAULTS AND REMEDIES.
18.01 SELLER'S DEFAULTS. In respect to the remedies afforded Purchaser pursuant
to Paragraph 18.04 hereof, Seller shall be deemed to be in default under this
Agreement in the event (i) Seller fails, for any reason (other than a default by
Purchaser), to perform any of its material obligations under this Agreement that
arise on or prior to the Phase I Closing within the time limits and in the
manner provided for in this Agreement, (ii) any representation or warranty made
by Seller in this Agreement is untrue or inaccurate in a material respect when
made or as of the Phase I Closing Date, (iii) any Other Seller under the
applicable Other Sale Agreement fails, for any reason (other than a default by
Purchaser), to perform any of its material obligations under the subject Other
Sale Agreement that arise on or prior to the Phase I Closing within the time
limits and in the manner provided for in such Other Sale Agreement, or (iv) any
representation or warranty made by any Other Seller in the applicable Other Sale
Agreement is untrue or
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inaccurate in a material respect when made or as of the Phase I Closing Date.
Notwithstanding the provisions of clauses (iii) and (iv) above, if Purchaser
closes the Phase I portion of this transaction, any default or any inaccurate
representation or warranty by any Other Seller under the terms of the applicable
Other Sale Agreement shall be deemed waived in respect to this Agreement and it
shall not be construed as a default by Seller hereunder. In respect to the
remedies afforded Purchaser pursuant to Paragraph 18.05 hereof, Seller shall be
deemed to be in default under this Agreement in the event Seller fails, for any
reason (other than a default by Purchaser), to perform any of its material
obligations under this Agreement that arise subsequent to the Phase I Closing
(excluding the obligations of Seller to close this transaction in respect to
subsequent Phase Closing, in which event the remedies afforded Purchaser
pursuant to Paragraph 18.04 shall only apply) within the time limits and in the
manner provided for in this Agreement or any representation or warranty made by
Seller in this Agreement is untrue or inaccurate in a material respect when made
or as of the applicable Closing Date. If the applicable Closing does not occur
and Seller is in default, Seller shall pay all of the Shared Closing Costs.
18.02 PURCHASER'S DEFAULTS. Purchaser shall be deemed to be in default under
this Agreement in the event Purchaser fails, for any reason (other than a
default by Seller), to perform any of its material obligations under this
Agreement or any or all of the Other Sale Agreements within the time limits and
in the manner provided for, as applicable, in this Agreement and the Other Sale
Agreements, or any representation or warranty made by the Purchaser in this
Agreement or any or all of the Other Sale Agreements is untrue or inaccurate in
a material respect when made or as of the applicable Closing Date. If the
applicable Closing does not occur and Purchaser is in default, Purchaser shall
pay all of the Shared Closing Costs.
18.03 SELLER'S REMEDIES. If Purchaser is in material default under this
Agreement of its obligation to close each Phase and Seller is not in material
default, the sole and exclusive remedy of Seller shall be to terminate this
Agreement by notice given to Purchaser and in such event Purchaser shall be
liable to Seller for liquidated damages in respect to Phase I in the amount
equal to one percent (1%) of $11,588,297.00, and in respect to Phase II the
amount equal to one percent (1%) of Phase II Closing Payment, plus, in each
instance, Litigation Expenses incurred by Seller in enforcing the collection of
such liquidated damages. The Parties recognize and agree that the foregoing
remedy for liquidated damages is a reasonable amount in the context of this
transaction in which the accurate measurement of damages is not feasible or
convenient. Notwithstanding the foregoing, if Purchaser (i) violates the
Recording Restriction (as hereinafter defined), (ii) fails to indemnify, defend
or hold Seller and the Project harmless in respect to Tests and Studies as
provided in Paragraph 5.02 hereof, or (iii) fails to bind its successors and
assigns as provided in Paragraph 13.04 hereof, Seller, in addition to the
aforesaid liquidated damages in respect to Purchaser's failure to close this
transaction, shall be entitled (subject to the limitations contained in
Paragraph 23 hereof) to recover from Purchaser monetary damages in the amount
actually suffered by Seller as a result of the events set forth in clauses (i),
(ii), or (iii). If Purchaser fails to pay, when due, the Earn-Out Payments
and/or Footage Payments required hereunder, Seller shall only be entitled to
recover from Purchaser such Earn-Out Payments or Footage Payments, plus interest
thereon as provided in Paragraph 24.16 hereof, plus Litigation Expenses.
43
<PAGE> 49
18.04 PRE-CLOSING PURCHASER'S REMEDIES. If Seller in respect to its obligations
to close an applicable Phase, is in material default under this Agreement on or
before the applicable Closing Date and Purchaser is not in material default,
Purchaser may, as Purchaser's sole and exclusive remedies, elect to either (i)
terminate this Agreement, in which event the Deposit (but only in respect to
Phase I) shall be refunded to Purchaser, and neither Party shall have any
further rights or obligations hereunder, except those specifically provided
herein as surviving such termination, or (ii) seek and enforce the specific
performance of Seller's obligations hereunder in which event Purchaser shall
also be permitted to recover Litigation Expenses that it incurred as a result of
such proceeding. Notwithstanding the foregoing, in no instance shall Purchaser
or anyone claiming by, through or under Purchaser (over whom Purchaser has
control) record or file in the public records in the jurisdiction of the Project
any memorandum or other indicia of Purchaser's rights or Seller's obligations
hereunder, except in the single instance of a recording or filing that is
concurrently done at the time of the filing of a complaint by Purchaser, with a
court of competent jurisdiction, for the relief of specific performance of
Seller's obligations hereunder, but then only after Purchaser has given Seller
three (3) business days written notice prior to such recording or filing
("Recording Restriction").
18.05 POST CLOSING PURCHASER'S REMEDIES. If Seller is in material default under
this Agreement in respect to any of its obligations hereunder pertaining to an
applicable Phase that arise on or subsequent to the applicable Closing Date,
subject to the limitation provided in Paragraph 23 hereof, Purchaser may recover
from Seller all out-of-pocket monetary damages incurred by Purchaser that have
not been satisfied by the offset permitted Purchaser pursuant to Paragraphs
5.04, 9.03, 14.06, 14.07 and 16.01 hereof. In addition, Purchaser shall be
permitted to recover Litigation Expenses that it incurs as a result of enforcing
Purchaser's right to recover monetary damages as aforesaid.
19. CROSS PERFORMANCE OBLIGATION. If Purchaser or its
permitted successors and assigns elects to terminate any of the Other Sale
Agreements for any reason other than a Casualty to or Taking in respect to any
of the Other Centers prior to the Phase I Closing Date, it shall act as an
election of Purchaser under this Agreement to concurrently terminate this
Agreement and this Agreement shall thereupon terminate, Purchaser and Seller
shall each pay fifty percent (50%) of the Shared Closing Costs, and neither
Purchaser nor Seller shall have any further rights or obligations hereunder,
except those specifically provided herein as surviving such termination.
However, if the Phase I Closing shall have occurred, the termination of any
Other Sale Agreements with respect to a subsequent phase under any such Other
Sale Agreement shall not result in the automatic termination of this Agreement
in respect to Phase II.
20. ASSIGNMENT
Seller shall not assign or transfer any of its rights under
this Agreement without first obtaining Purchaser's prior written consent which
consent shall not be unreasonably
44
<PAGE> 50
withheld or delayed. Prior to the Phase I Closing, Purchaser shall not assign
any of its rights under this Agreement without first obtaining Seller's prior
written consent which consent shall not be unreasonably withheld or delayed. At
or subsequent to the Phase I Closing, Purchaser may assign its rights under this
Agreement provided such assignee and Purchaser are jointly and severally liable
for the obligations of Purchaser hereunder and such assignee assumes such
obligations, in writing, in form and content reasonably acceptable to Seller.
21. NOTICES.
Any notice, demand, request, approval, consent or other
communication (collectively, a "Notice") concerning this Agreement or the
Project or any matter arising in connection with this Agreement or the Project
shall be in writing. Seller hereby appoints Opus Properties, L.L.C., a Delaware
limited liability company ("Opus Properties") as Seller's duly authorized and
empowered agent to give and receive any and all Notices required or permitted to
be given by Purchaser or Seller hereunder. Any Notice received by Opus
Properties under the terms of this Agreement shall be deemed received and
binding on Seller. Any Notice given by Opus Properties to Purchaser shall be
deemed a Notice given by and binding on Seller. All Notices shall be addressed
as follows:
If to Seller to: Opus Properties, L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN.: Anne E. Loff
Telecopier: (612) 936-9808
with a copy to: Opus, U.S., L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN.: Dan F. Nicol, Esq.
Telecopier: (612) 936-9808
with a copy to: O'Brien, O'Rourke & Hogan
135 South LaSalle Street
Suite 830
Chicago, Illinois 60603
ATTN.: Frederic G. Hogan
Telecopier: (312) 372-8029
If to Purchaser to: DEVELOPERS DIVERSIFIED REALTY
CORPORATION
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
ATTN.: James A. Schoff
45
<PAGE> 51
Executive Vice President
Telecopier: (216) 247-5076
with a copy to: Joan Allgood, Esq,
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Telecopier: (216) 247-5076
with copy to: Baker & Hostetler
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
ATTN.: Albert T. Adams
Telecopier: (216) 696-0740
If to Escrow Agent to: First American Title Insurance Company
1150 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
ATTN: Rodney D. Ives
Telecopier: (612) 337-5249
Any Notice shall be given by either (i) personal delivery, in which event it
shall be deemed given on the date of delivery; (ii) certified mail return
receipt requested, in which event it shall be deemed given three (3) business
days after the date postmarked; or (iii) next or second business day delivery by
nationally recognized overnight courier, in which event it shall be deemed given
on the next or second (whichever is applicable) business day immediately
following receipt by the courier. Any Party may change any address for the
delivery of Notice to such Party, by giving Notice in accordance with the
provisions of this Paragraph 21.
22. ATTORNEYS' FEES AND DISBURSEMENTS.
In the event that any Party shall engage an attorney in
connection with any action or proceeding to enforce or construe this Agreement,
the prevailing Party in such action or proceeding shall be entitled to recover
its Litigation Expenses to the extent permitted by law. In the event different
Parties are the prevailing Parties on different issues, the Litigation Expenses
shall be apportioned in proportion to the value of the issues decided for and
against the Parties.
23. NO CONSEQUENTIAL DAMAGES.
Notwithstanding any term, provision or covenant contained in
this Agreement to the contrary, no Party hereto shall be entitled to recover
from the other Party consequential, exemplary or punitive damages, all such
damages are hereby expressly waived and released.
46
<PAGE> 52
24. MISCELLANEOUS.
24.01 SUCCESSORS. The rights and obligations of the Parties under this Agreement
shall inure to the benefit of and be binding upon the Parties and all persons
who are permitted hereunder to succeed to their respective rights and
obligations.
24.02 MODIFICATIONS/WAIVERS. This Agreement cannot be changed nor can any
provision of this Agreement, or any right or remedy of any Party, be waived
orally. Changes and waivers can only be made in writing and the change or waiver
must be signed by the Party against whom the change or waiver is sought to be
enforced. Any waiver of any provision of this Agreement, or any right or remedy,
given on any one or more occasions shall not be deemed a waiver with respect to
any other occasion.
24.03 ENTIRE AGREEMENT. This Agreement is signed by the Parties as a final
expression of all of the terms, covenants and conditions of their agreement and
as a complete and exclusive statement of its terms, covenants and conditions.
24.04 COUNTERPARTS. This Agreement may be signed in one or more counterparts or
duplicate signature pages with the same force and effect as if all required
signatures were contained in a single original instrument.
24.05 CAPTIONS. The captions contained in this Agreement were inserted for the
convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the Parties.
24.06 GENDER/SINGULAR/PLURAL. Whenever masculine, feminine, neuter, singular,
plural, conjunctive or disjunctive terms are used in this Agreement, they shall
be construed to read in whatever form is appropriate to make this Agreement
applicable to all the Parties and all circumstances, except where the context of
this Agreement clearly dictates otherwise.
24.07 EXHIBITS INCORPORATED. The exhibits attached to this Agreement are hereby
incorporated by reference in their entirety with the same force and effect as if
they were set forth at length in this Agreement. Concurrently with the execution
of this Agreement, Seller, Purchaser and all of the Other Sellers entered into
that certain Exhibit Agreement ("Exhibit Agreement") pursuant to the terms of
which the exhibits attached thereto are certain of the schedules referenced in
this Agreement that are also common to all of the Other Sale Agreements.
Therefore, the exhibits attached to the Exhibit Agreement are hereby
incorporated by reference in their entirety in this Agreement with the same
force and effect as if they were set forth at length in this Agreement.
24.08 GOVERNING LAW. In the event of any dispute concerning or arising out of
this Agreement, the laws of the State in which the Project is located shall
govern and control the construction and enforcement of this Agreement.
47
<PAGE> 53
24.09 SEVERABILITY. If one or more provisions of this Agreement or the
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions or any
other application thereof shall in no way be affected or impaired.
24.10 DATE FOR PERFORMANCE. If the date for performance of any act under this
Agreement falls on a Saturday, Sunday or federal holiday, the date for such
performance shall automatically be extended to the first succeeding business
which is not a federal holiday.
24.11 FURTHER ACTION. The Parties shall at any time, and from time to time on
and after the Phase I Closing Date, upon the request of the other Party, do,
execute, acknowledge and deliver all such further acts, deeds, assignments and
other instruments as may be reasonably required for the consummation of this
transaction and are reasonably acceptable in scope, form and content to the
Party whose act, signature, acknowledgment or delivery is requested.
24.12 Intentionally Deleted.
24.13 CONFIDENTIALITY. Without the prior written consent of Purchaser, neither
Seller nor any of Seller's representatives will disclose to any person any of
the terms, conditions or other facts with respect to this Agreement or the
Exhibit Agreement, including the status thereof, provided, that Seller or any of
Seller's representatives may make such disclosure if Seller has first received
the written opinion of counsel acceptable to Purchaser that such disclosure must
be made by Seller in order that Seller does not commit a violation of law.
Without the prior written consent of Seller, neither Purchaser nor any of
Purchaser's representatives will disclose to any person any of the terms,
conditions or other facts with respect to this Agreement or the Exhibit
Agreement, including the status thereof and any of the terms, provisions or
conditions of the Site Analysis Documents or of any of the Studies and Reports,
provided, that Purchaser or any of Purchaser's representatives may make such
disclosure if Purchaser has first received the written opinion of counsel
acceptable to Seller that such disclosure must be made by Purchaser in order
that Purchaser does not commit a violation of law. The obligation of Seller and
Purchaser pursuant to the provisions of this Paragraph 24.13 shall survive the
termination of this Agreement.
24.14 TIME OF THE ESSENCE. Time is of the essence in this transaction.
24.15 CONSTRUCTION. This Agreement shall not be construed more strictly against
one Party than against the other merely by virtue of the fact that it may have
been prepared by counsel for one of the Parties, it being recognized that both
Seller and Purchaser have contributed substantially and materially to the
preparation of this Agreement. The headings of various Section and Paragraphs in
this Agreement are for convenience only, and are not to be utilized in
construing the content or meaning of the substantive provisions hereof.
24.16 INTEREST. Any payment obligation of a Party hereto to the other Party
shall bear interest at the rate of two percent (2%) plus the corporate base rate
of interest from time to time
48
<PAGE> 54
charged by Citibank, N.A., commencing on the date that is five (5) business days
subsequent to the date such payment is due, until paid.
24.17 WARRANTY WORK. For the period ("Warranty Period") (i) that is provided in
each Lease or New Lease in respect to the applicable Tenant Warranty for tenant
improvements, and (ii) of one (1) year subsequent to the date each of the
Improvements (exclusive of tenant improvements that are the subject of the
applicable Tenant Warranty) is substantially complete in accordance with the
Plans, Seller agrees, at its sole cost and expense, to promptly (subject to
Force Majeure) correct any defects in the tenant improvements or other
Improvements due to (a) the failure thereof to substantially comply with the
plans for the subject tenant improvements or the Plans in respect to the rest of
the Improvements, or (b) faulty, improper or inferior materials or workmanship
(collectively, "Warranty Work"). If Warranty Work is the subject of a Lease or
New Lease, the provisions of such Lease or New Lease shall control in the
determination of the scope of the Warranty Work. If Warranty Work is not the
subject a Lease or New Lease, then the provisions of this Paragraph 24.17 shall
control in the determination of the scope of the Warranty Work. However,
Warranty Work shall not in any way include routine and appropriate maintenance
or Warranty Work directly resulting from (but only to the extent resulting from)
the failure to perform routine and appropriate maintenance of the tenant
improvements or other Improvements. Promptly during the Warranty Period (but in
any event prior to the expiration of the Warranty Period), Purchaser shall give
Seller written notice ("Warranty Notice") of any defect in the Project that
Purchaser, in good faith, determines to require Warranty Work. Except as
hereafter provided, Seller shall promptly undertake and complete, subject to
Force Majeure, the Warranty Work that is the subject of the Warranty Notice.
However, if Seller objects, in good faith, within ten (10) business days
following receipt of a Warranty Notice, it shall notify Purchaser, in writing of
the same. Thereafter, they shall promptly confer, in good faith, to resolve any
disagreement in respect to Warranty Work. If within fifteen (15) days after
conferring Purchaser and Seller are unable to agree on the scope of Warranty
Work that is not the subject of a Lease or New Lease, they shall appoint a third
party contractor to make such determination, and the scope so determined by the
third party contractor shall be binding on the Parties. When the Warranty Work
is agreed to by the Parties or determined by the third party contractor as
aforesaid, such Warranty Work shall be undertaken and completed as aforesaid.
The Warranty Work obligation hereunder shall only pertain to the Warranty Work
for which a Warranty Notice was delivered to Seller prior to the expiration of
the Warranty Period or that was delivered by a Tenant or a New Tenant in
accordance with the provisions of the Tenant Warranty, and in such event the
Warranty Work obligation of Seller in respect thereto shall not terminate at the
expiration of the Warranty Period or the Tenant Warranty, but rather shall
continue until such Warranty Work is completed by Seller.
49
<PAGE> 55
IN WITNESS WHEREOF, the Parties have signed this Agreement as
of the date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
DEVELOPERS DIVERSIFIED
OPUS SOUTH CORPORATION REALTY CORPORATION
a Florida corporation an Ohio corporation
By: NEIL RAUENNORST By:
--------------------------- --------------------------------
Its: President & CEO James A. Schoff
Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
58-1454928 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By: [SIG]
-----------------------------
Its: Commercial Manager
<PAGE> 56
IN WITNESS WHEREOF, the Parties have signed this Agreement as
of the date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
DEVELOPERS DIVERSIFIED
OPUS SOUTH CORPORATION REALTY CORPORATION
a Florida corporation an Ohio corporation
By: By: JAMES A. SCHOFF
--------------------------- --------------------------------
Its: President & CEO James A. Schoff
Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
58-1454928 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By:
-----------------------------
Its:
------------------------
<PAGE> 57
SCHEDULES ATTACHED TO THIS AGREEMENT OR
THE EXHIBIT AGREEMENT
1.02 Legal Description of Land
1.02(a) Site Plan
2.02(b) Personal Property
3.01 Rent Roll
5.01(b) Environmental Reports
5.01(g) Guaranties
6.01 Survey Requirements and Certifications (attached to the Exhibit
Agreement)
6.03 Permitted Exceptions
6.04 Endorsements
7.01 Deed (attached to the Exhibit Agreement)
7.02 Assignment of Leases (attached to the Exhibit Agreement)
7.02(a) Description of Leases and Security Deposits
7.04 Bill of Sale (attached to the Exhibit Agreement)
7.05 Assignment of Contracts (attached to the Exhibit Agreement)
7.05(a) Description of Contracts to be Assigned at Closing
7.06 Affidavit of Seller Concerning Violations/Work Orders (attached
to the Exhibit Agreement)
7.10 FIRPTA Affidavit (attached to the Exhibit Agreement)
7.13 Tenant Letter (attached to the Exhibit Agreement)
7.15 Tenant Estoppel (attached to the Exhibit Agreement)
7.20 Seller Date Down Certificate (attached to the Exhibit Agreement)
7.21 Agreement Estoppel
7.22 Declaration of Excluded Uses
7.24 Agreement Re Allocable Share
7.25 Assignment of Declaration
<PAGE> 58
8.06 Purchaser Date Down Certificate (attached to the Exhibit
Agreement)
8.10 Sign Easement Agreement
10.01(xi) Permits
10.01(xvii) Tenant Inducements
10.01(xviii) Alleged Seller Defaults Under the Leases
10.01(xix) Tenant Defaults Under the Leases
10.01(xx) Tenant's Notice of Vacating, Assigning or Subletting
13.11 Shell and Core List and Standard
13.11(a)(1), Punchlist Holdback(s)
etc.
13.11(b) Form G704 Certificate of Completion (attached to the Exhibit
Agreement)
<PAGE> 59
GLOSSARY OF TERMS
Term Where Defined
- ---- -------------
Agreement 1st Paragraph
Agreement Estoppel 7.21
Arrears 14.02
Assignment Reservation 13.03
Bankruptcy Proceeding 13.01(xi)(c)
Carry 13.01(i)
Casualty 17.01
Casualty Notice 13.06
Childcare Lease 15.01
Closing 15.01
Closing Date(s) 15.01
Closing Payment 13.01(ii)
Commissions 10.01(xvi)
Condition Notice 5.04
Condition Response 5.04
Commitment 6.02
Contract Assignment 7.05
Deed 7.01
Defects Notice 6.03
Deposit 3.02(b)
Disapproved Lease 13.04
Earn-Out Conditions 13.07
Earn-Out Extension Notice 13.05
Earn-Out Payment 13.01(iii)
Earn-Out Period 13.05
Earn-Out Segment 13.05
Endorsements 6.04
Environmental Laws 10.01(xii)
Environmental Reports 5.01(b)
Escrow Agent 4.01
Exhibit Agreement 24.07
Extension Election 15.01
FIRPTA Affidavit 7.10
First Segment 13.05
Footage Computation 13.08
Footage Payment 13.08
Force Majeure 13.01(iv)
Guaranties 5.01(g)
Hazardous Substances 10.01(xii)
Improvements 1.02
Initial Deposit 3.02(a)
i
<PAGE> 60
GLOSSARY OF TERMS
Term Where Defined
- ---- -------------
Intangible Property 2.02(c)
Knowledge 10.01
Land 1.02
Lease Assignment 7.02
Lease Reservation Date 13.03
Leases 7.02
Lien(s) 9.03
Litigation Expenses 10.04(a)
Loss 17.01
Lump Sum Non-Credit 14.06
Monetary Default 13.01(xi)(b)
Mortgage 10.01(ix)
Net Cash Flow 13.01(v)
New Lease 13.01(vi)
New Lease Obligations 13.10
New Tenant 13.01(vii)
Notice 21
Opus Properties 21
Other Center(s) 13.01(viii)
Other Sale Agreement(s) 13.01(ix)
Other Seller(s) 13.01(x)
Pads 1.02
Party(ies) 1st Paragraph
Permits 2.02(c)
Permitted Exceptions 6.03
Personal Property 2.02(b)
Phase I 1.02
Phase I Closing 15.01
Phase I Closing Date 15.01
Phase I Holdback 13.11
Phase II 1.02
Phase II Closing 15.01
Phase II Closing Date 15.01
Phase II Holdback 13.11
Phase II Notice Date 5.03
Phase II Unacceptable Condition Cost Limitation 5.04
Plans 5.01(f)
Phase(s) 1.02
Post Closing Work 16.01
Pro Rata Share 14.03
ii
<PAGE> 61
GLOSSARY OF TERMS
Term Where Defined
- ---- -------------
Project 2.01
Prospect 13.04
Punchlist Holdback 13.11
Punchlist Work 13.11
Purchase Price 3.01
Purchaser 1st Paragraph
Purchaser Date Down Certificate 8.06
Purchaser's Knowledge 10.02
Qualification Date 15.01
Qualification Notice 15.01
Qualified Lease 13.01(xi)
Real Estate Broker 4.02
Real Estate Tax Rent 14.06
Real Property 1.03
Recording Restriction 18.04
Release 10.01(xii)
Rental Undertaking 13.04
Rents 14.01
Reserved Base Rent Date 13.03
Restoration Forgiveness 5.02
Second Deposit 3.02(b)
Second Segment 13.05
Security Deposits 7.02
Seller 1st Paragraph
Seller Date Down Certificate 7.20
Seller's Estoppel 7.15
Seller's Response 6.03
Shared Closing Costs 11.02(a)
Site Analysis Documents 5.01
Site Analysis Period 5.03
Square Footage 13.08
Superfund Act 10.01(xii)
Survey 6.01
Survey Defects 6.03
Taking 17.01
Tenant Estoppel 7.15
Tenant Inducement 10.01(xvii)
iii
<PAGE> 62
GLOSSARY OF TERMS
Term Where Defined
- ---- -------------
Tenant Letters 7.13
Tenant Warranty 13.10
Tenants 7.02
Termination Agreements 7.16
Tests and Studies 5.02
Title Company 4.01
Title Defects 6.03
Title Policy 6.04
UA Lease 15.01
Unacceptable Conditions 5.04
Unknown Rents 14.03
Unassigned Lease 13.04
Utility Deposits 14.04
Vacant Space 13.01(xii)
Violations 7.06
Warranty Notice 24.17
Warranty Period 24.17
Warranty Work 24.17
Work Orders 7.06
iv
<PAGE> 1
EXHIBIT 2.4
AGREEMENT OF PURCHASE AND SALE
TANASBOURNE TOWN CENTER PHASE I SHOPPING CENTER
DEVELOPERS DIVERSIFIED REALTY CORPORATION
AND
BOLD, L.L.C.
AND
OPUS NORTHWEST, L.L.C.
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
1. RECITALS ....................................................................................................1
1.01 Definitions.............................................................................................1
1.02 Land/Improvements.......................................................................................1
1.03 Real Property...........................................................................................1
1.04 Contractor..............................................................................................1
2. AGREEMENT TO PURCHASE AND SELL ..............................................................................1
2.01 Purchase/Sale...........................................................................................2
3. PURCHASE PRICE AND MANNER OF PAYMENT ........................................................................2
3.01 Purchase Price..........................................................................................2
3.02 Purchase Price Portions.................................................................................2
4. ESCROW....... ...............................................................................................3
4.01 Escrow Agent............................................................................................3
4.02 Filings.................................................................................................3
5. SITE ANALYSIS ...............................................................................................4
5.01 Site Analysis Documents.................................................................................4
5.02 Access..................................................................................................5
5.03 Site Analysis Period....................................................................................5
5.04 Cure of Unacceptable Conditions.........................................................................6
6. SURVEY AND TITLE INSURANCE ..................................................................................7
6.01 Survey..................................................................................................7
6.02 Title Commitment........................................................................................8
6.03 Purchaser's Objections; Seller's Cure...................................................................8
6.04 Title Policy............................................................................................9
7. SELLER'S CLOSING DOCUMENTS AND ESCROW .......................................................................9
7.01 Deed....................................................................................................9
7.02 Assignment of Leases...................................................................................10
7.03 Leases and Tenant Documents............................................................................10
7.04 Bill of Sale...........................................................................................10
7.05 Assignment of Contracts................................................................................10
7.06 Violations/Work Orders Affidavit.......................................................................10
7.07 Keys...................................................................................................10
7.08 Plans and Specifications...............................................................................11
7.09 Title Insurance Affidavit..............................................................................11
7.10 FIRPTA Certificate/Withholding.........................................................................11
7.11 Form 1099..............................................................................................11
7.12 Books and Records......................................................................................11
7.13 Letters to Tenants.....................................................................................11
7.14 Recording Requirements.................................................................................11
</TABLE>
TOC-1
<PAGE> 3
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
7.15 Estoppel Certificates..................................................................................11
7.16 Termination of Management and Seller Affiliated Contracts..............................................12
7.17 Permits/Guaranties.....................................................................................12
7.18 Closing Statements.....................................................................................12
7.19 Escrow Instructions....................................................................................12
7.20 Date Down Certificate..................................................................................12
7.21 Agreement Estoppel Certificate.........................................................................13
7.22 Reserved Lots Covenant.................................................................................13
7.23 Vacant Space Acknowledgment............................................................................13
7.24 Best Products Subdivision..............................................................................13
7.25 Allocable Share Agreement..............................................................................13
7.26 Assignment of Declaration..............................................................................13
7.27 Other Documents........................................................................................13
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS ..............................................................13
8.01 Assignment of Leases...................................................................................14
8.02 Assignment of Contracts................................................................................13
8.03 Closing Statements.....................................................................................13
8.04 Escrow Instructions....................................................................................14
8.05 Recording Requirements.................................................................................14
8.06 Date Down Certificate..................................................................................14
8.07 Project Covenant.......................................................................................14
8.08 Allocable Share Agreement..............................................................................14
8.09 Best Products Subdivision..............................................................................14
8.10 Vacant Space Acknowledgment............................................................................14
8.11 Other Documents........................................................................................14
9. CONDUCT OF BUSINESS PRIOR TO CLOSING .......................................................................14
9.01 Affirmative and Negative Covenants.....................................................................14
9.02 Payments...............................................................................................16
9.03 Lien Removal...........................................................................................16
10. REPRESENTATIONS AND WARRANTIES .............................................................................17
10.01 Seller's Representations and Warranties...............................................................17
10.02 Purchaser's Representations and Warranties............................................................21
10.03 Intentionally Deleted.................................................................................22
10.04 Indemnification.......................................................................................22
11. SHARED CLOSING COSTS AND OTHER EXPENSES ....................................................................23
11.01 Expenses..............................................................................................23
11.02 Shared Closing Costs..................................................................................23
12. CONDITIONS... ..............................................................................................24
12.01 Purchaser's Conditions................................................................................24
12.02 Seller's Conditions...................................................................................24
12.03 Rights Upon Failure of a Condition....................................................................25
13. EARN-OUT..... ..............................................................................................25
13.01 Defined Terms.........................................................................................25
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13.02 Closing Date Purchase Price Computation...............................................................28
13.03 Lease Assignment Reservation..........................................................................28
13.04 New Leases............................................................................................28
13.05 Earn-Out Period.......................................................................................30
13.06 Casualty During Earn-Out Period.......................................................................31
13.07 Earn-Out Payments.....................................................................................31
13.08 Footage Payment.......................................................................................32
13.09 Intentionally Deleted.................................................................................33
13.10 Seller's New Lease Obligations........................................................................33
13.11 Punchlist.............................................................................................33
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS .....................................................................34
14.01 Rents.................................................................................................34
14.02 Arrears...............................................................................................35
14.03 Unknown Rents.........................................................................................35
14.04 Utilities.............................................................................................36
14.05 Contracts.............................................................................................36
14.06 Taxes.................................................................................................36
14.07 Assessment Installments...............................................................................37
14.08 Permits...............................................................................................38
14.09 Security Deposits/Tenant Inducements..................................................................38
14.10 Customary Items.......................................................................................38
15. CLOSING.....................................................................................................38
15.01 Closing Contingency and Closing Date..................................................................38
16. POSSESSION... ..............................................................................................38
16.01 Possession and Post Closing Work......................................................................38
17. RISK OF LOSS ...............................................................................................39
17.01 Risk..................................................................................................39
17.02 Damage and Destruction................................................................................39
17.03 Condemnation and Eminent Domain.......................................................................40
18. DEFAULTS AND REMEDIES ......................................................................................40
18.01 Seller's/Contractor's Defaults........................................................................40
18.02 Purchaser's Defaults..................................................................................41
18.03 Seller's Remedies.....................................................................................41
18.04 Purchaser's Remedies..................................................................................41
18.05 Post Closing Purchaser's Remedies.....................................................................42
19. CROSS DEFAULT OBLIGATION....................................................................................42
20. ASSIGNMENT..................................................................................................42
21. NOTICES.....................................................................................................43
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22. ATTORNEYS' FEES AND DISBURSEMENTS...........................................................................44
23. NO CONSEQUENTIAL DAMAGES....................................................................................45
24. MISCELLANEOUS ..............................................................................................45
24.01 Successors............................................................................................45
24.02 Modifications/Waivers.................................................................................45
24.03 Entire Agreement......................................................................................45
24.04 Counterparts..........................................................................................45
24.05 Captions..............................................................................................45
24.06 Gender/Singular/Plural................................................................................45
24.07 Exhibits Incorporated.................................................................................45
24.08 Governing Law.........................................................................................46
24.09 Severability..........................................................................................46
24.10 Date for Performance..................................................................................46
24.11 Further Action........................................................................................46
24.12 Intentionally Deleted.................................................................................46
24.13 Confidentiality.......................................................................................46
24.14 Time of the Essence...................................................................................46
24.15 Construction..........................................................................................46
24.16 Interest..............................................................................................47
24.17 Warranty Work.........................................................................................47
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<PAGE> 6
AGREEMENT OF PURCHASE AND SALE
TANASBOURNE TOWN CENTER PHASE I SHOPPING CENTER
This Agreement of Purchase and Sale (the "Agreement") is made as of the
2nd day of July, 1996, by and between BOLD, L.L.C., a Delaware limited liability
company ("Seller"); OPUS NORTHWEST, L.L.C., a Delaware limited liability company
("Contractor"); and DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio
corporation ("Purchaser"). Seller and Purchaser (singularly, a "Party,"
collectively, the "Parties") agree as follows:
1. RECITALS.
1.01 DEFINITIONS. The location of all defined terms used in this Agreement are
set forth in the Glossary of Terms that is attached hereto and made a part
hereof.
1.02 LAND/IMPROVEMENTS. Seller is the sole owner of fee simple title to (i)
certain land (the "Land") situated in the City of Hillsboro, State of Oregon,
more particularly described on Schedule 1.02 attached hereto and made a part
hereof which shall include all residual land and outlots, except the Best
Products and Hollywood Video pad (collectively, "Best Products Pad") and Outlots
7 and 8 (collectively, "Reserved Lots"), as shown on the site plan attached
hereto as Schedule 1.02(a) (the "Site Plan"); and (ii) all the buildings,
structures and improvements (collectively, the "Improvements") situated on the
Land. The Reserved Lots are not included in the Land and are reserved unto
Seller; and
1.03 REAL PROPERTY. Seller desires to sell, and Purchaser desires to purchase,
the Land and Improvements owned by Seller, and all of Seller's right, title and
interest in and to all rights, privileges, options, leases, licenses,
concessions, hereditaments, appurtenances, easements and rights of way in any
manner belonging to or pertaining to the Land and the Improvements, including
without limitation, rights in and to any streets, alleys or other ways adjacent
to the Land, open or proposed, and the fixtures in or upon the Land and the
Improvements owned by Seller. The Land, the Improvements and all of the items
mentioned in this Paragraph 1.03 are hereinafter collectively referred to as the
"Real Property" and are commonly known as "Tanasbourne Town Center (Phase I)
Shopping Center"; and
1.04 CONTRACTOR. Contractor was the prior owner of the Real Property. Contractor
sold the Real Property to Seller and pursuant thereto undertook, for the benefit
of Seller, certain obligations with respect to the development of the Real
Property. As a result, in fulfillment of the performance of said obligations to
Seller, Contractor is a party to this Agreement for (i) the performance of those
obligations for the benefit of Purchaser specifically set forth in Sections
5.04, 10.04, 13.10, 13.11, 16.01 and 24.17 hereof, and (ii) the making of those
representations and warranties specifically set forth in Paragraph 10.01(viii),
(ix), (xi), (xii), (xiv), (xxii) and (xxvi).
2. AGREEMENT TO PURCHASE AND SELL.
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2.01 PURCHASE/SALE. Upon and subject to the terms and conditions set forth in
this Agreement, Seller agrees to sell and Purchaser agrees to purchase all of
the following that is hereinafter collectively referred to as the "Project":
(a) The Real Property;
(b) All tangible personal property (the "Personal Property") owned by
Seller that is now or hereafter located upon the Real Property and used in
connection with the ownership, operation, management, or maintenance of the Real
Property and that is set forth on Schedule 2.01(b) attached hereto;
(c) All intangible personal property (the "Intangible Property") owned
by Seller that is now or is hereafter located upon the Real Property or is used
in connection with the Real Property, including without limitation, (i) all
trade names, logos and telephone numbers, excluding those tradenames or logos
depicting or containing the name or trademark of Bold, L.L.C. or its affiliates
(including any Opus company) and excluding telephone numbers not exclusively
used in connection with the Project; (ii) all Guaranties (as hereinafter
defined) given by Seller or any third party contractors (including Contractor),
subcontractors, vendors and suppliers relating to their performance, quality of
workmanship and quality of materials supplied in connection with the
construction or repair of the Improvements or the purchase of any Personal
Property to the extent any Guaranties remain outstanding as of the Closing Date
(as hereinafter defined) that are set forth on Schedule 5.01(g) attached hereto,
and (iii) to the extent transferable by Seller, all of Seller's right, title and
interest in certificates of occupancy (or the local equivalent), permits,
licenses, approvals and authorizations (collectively, the "Permits") issued by
any federal, state, county and municipal governmental or quasi-governmental
authority relating to the Real Property.
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.01 PURCHASE PRICE. The total sum (the "Purchase Price") to be paid by
Purchaser to Seller for the sale of the Project is the sum of the Closing
Payment and those Footage Payments and Earn-Out Payments, if any (as those terms
are hereinafter defined), computed, in part, in respect to the base rents set
forth in the Rent Roll attached hereto as Schedule 3.01, all as provided in
Section 13 hereof. The actual amount of the Purchase Price is subject to the
computations and elections provided in Section 13 hereof and subject to the
adjustments, if any, provided in Section 14 hereof. Portions of the Purchase
Price will be paid at various times as hereinafter provided.
3.02 PURCHASE PRICE PORTIONS. The Purchase Price shall be paid as follows:
(a) Lump Sum Payment. $1,080,123.00 ("Lump Sum Payment"),
which Purchaser shall deposit with Seller on the closing date, if it
occurs, under the terms of that certain Other Sale Agreement for Maple
Grove Crossing, by and between Purchaser, as
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<PAGE> 8
purchaser thereunder, and Opus Corporation, as the Other Seller ("Maple
Grove Agreement"). The Lump Sum Payment, for and in consideration of
Seller entering into this Agreement, permitting Purchaser to perform
Tests and Studies (as hereinafter defined) and, among other
consideration, taking the Project off of the market during the Site
Analysis Period (as hereinafter defined), shall be retained and deemed
earned by Seller on the first to occur of the termination of this
Agreement for any reason whatsoever (including a default by Seller),
and the Closing Date.
(b) Initial Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Initial Deposit"), which Purchaser deposited with Escrow
Agent simultaneous with the execution of this Agreement by Purchaser and Seller.
(c) Second Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Second Deposit") which Purchaser shall deposit with Escrow
Agent (as hereinafter defined) on the expiration date of the Site Analysis
Period, if Purchaser elects to proceed with this transaction, as more fully
provided in Paragraph 5.03 below (the Initial Deposit and the Second Deposit are
hereinafter collectively referred to as the "Deposit"). The term "Deposit" shall
be deemed to include all interest accruing on the Deposit during the term of
this Agreement.
(d) Closing Date Price. So much of the Purchase Price computed
in accordance with the provisions of Paragraph 13.02 hereof that is payable as
of the Closing Date, after giving credit for the Lump Sum Payment, Deposit and
after making the adjustments, if any, as provided in Section 14 hereof, shall be
paid by wired funds to the Escrow Agent for disbursement to Seller on the
Closing Date by not later than 2:00 P.M. Central Daylight Savings Time.
(e) Earn-Out Period Payments. As provided in Paragraph 13.07,
those Earn-Out Payments that are payable during, or in some instances, after the
Earn-Out Period (as hereinafter defined) shall be paid by wired funds to the
Escrow Agent for disbursement to Seller when required by the provisions of
Paragraph 13.07.
(f) Footage Payment. As provided in Paragraph 13.08, if a
Footage Payment (as hereinafter defined) is payable, it shall be paid by wired
funds to the Escrow Agent for disbursement to Seller when required pursuant to
Paragraph 13.08.
4. ESCROW.
4.01 ESCROW AGENT. The Parties hereby designate First American Title Insurance
Company as the escrow agent ("Escrow Agent" or "Title Company"). By execution of
this Agreement, Escrow Agent agrees to be bound by the terms and conditions of
this Agreement which relate to the Escrow Agent and its rights and obligations
hereunder.
4.02 FILINGS. The Parties hereby designate Escrow Agent to serve as "Real Estate
Broker," as defined in Section 6045 of the Internal Revenue Code, as amended,
for the purpose of making such reports and filing such returns as shall be
required thereunder from time to time.
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5. SITE ANALYSIS.
5.01 SITE ANALYSIS DOCUMENTS. To the extent not heretofore delivered, promptly
after the execution of this Agreement, Seller agrees (i) to make available for
inspection at reasonable times by Purchaser and its agents any and all
documents, instruments, surveys, reports, plans, permits, approvals, studies,
reviews, analyses, contracts, agreements and other materials relating to the
acquisition, development, construction, ownership and operation of the Project
that are in Seller's possession or under its control, and (ii) to deliver to
Purchaser true and correct copies of the following documents (in respect to
clause (ii) collectively hereafter referred to as "Site Analysis Documents"):
(a) "As-built" survey of the Project showing the location of
all Improvements thereon and any easements encumbering the Project.
(b) Soil, topographical, and other reports relating to the
Project, including the environmental reports set forth on Schedule 5.01(b)
("Environmental Reports") attached hereto.
(c) Operating statements and records sufficient to accurately
show all revenues, income, costs and expenses of operating and maintaining the
Project for the period on and after the opening of the Project for business.
(d) All written contracts for repair, maintenance, garbage
removal, concessions, vending, service contracts, and other services to be
performed with respect to the Project.
(e) All Leases (as hereinafter defined) and all written
licenses, concessions and tenancies with Tenants (as hereinafter defined)
occupying or having the right to occupy any portion of the Project, and Seller's
written statement of any oral leases, licenses, concessions and tenancies with
tenants, licensees, concessionaires or others occupying or having the right to
occupy or use any portion of the Project, if any.
(f) All architectural drawings, engineering studies, plans and
specifications relating to the original and current construction of the Project
(hereinafter collectively referred to as "Plans").
(g) All warranties and guaranties that remain outstanding as
of the Closing Date that have been given by Seller or any third party
contractors, subcontractors, vendors and suppliers relating to their
performance, quality of workmanship and quality of materials supplied in
connection with the construction, manufacture, development, installation and
operation of the Improvements, Personal Property and any and all fixtures,
equipment and items of personal property comprising all or any part of the
Improvements located in or used in connection with the Project (collectively
hereinafter referred to as "Guaranties"), all of which are set forth on Schedule
5.01(g) attached hereto.
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<PAGE> 10
5.02 ACCESS. Seller acknowledges that to enable Purchaser to proceed with this
transaction, Purchaser already has and, during the Site Analysis Period (as
hereinafter defined) may undertake or cause to have undertaken tests and
studies, including, but not limited to, marketing, engineering, environmental,
feasibility and soil that Purchaser, in its reasonable discretion, deems
necessary to determine the feasibility of its acquisition of the Project
(hereinafter collectively referred to as "Tests and Studies"). The Tests and
Studies conducted by or on behalf of Purchaser and the restoration of the
Project in respect thereto as hereinafter provided shall be done in such a
fashion so as to not disrupt the ordinary course of business of Seller or any of
the Tenants, New Tenants (as hereinafter defined) or Seller's contractors or
subcontractors, including the Contractor.
Purchaser and its agents, contractors or employees shall have
the right to enter upon the Project for the purpose of performing its Tests and
Studies, provided said activities (i) shall not (y) in any way damage the
Project in such a fashion or to a degree that prevents its restoration by
Purchaser as hereafter provided substantially to the condition of the Project
that existed immediately prior thereto, or (z) void or make voidable any
Guaranties of portions thereof (but in any event subject to Seller's prior
consent that shall not be unreasonably withheld or delayed), and (ii) Seller or
its designated agents have the right to participate in (provided Seller and its
agents do not interfere with) such Tests and Studies. Purchaser shall give
Seller twenty-four (24) hour advance notice before Purchaser and its agents,
contractors or employees enter upon the Project. In the event this Agreement
fails to close for any reason, except for Seller's willful refusal to convey
(absent a material default hereunder by Purchaser) title to the Land as required
hereunder, or Seller acknowledges or it is subsequently determined that Seller
is in material default hereunder ("Restoration Forgiveness"), Purchaser shall
restore the Project to substantially the same condition that existed immediately
prior to such surveying, inspecting and testing that was undertaken by or on
behalf of Purchaser prior to the date of this Agreement or during the Site
Analysis Period. Except in the instance of a Restoration Forgiveness, Purchaser
shall keep the Project free of all liens in connection with the Tests and
Studies and shall cause all such liens to be removed immediately upon its being
notified of same. Except in the instance of a Restoration Forgiveness, Purchaser
agrees to indemnify, defend and hold Seller harmless against any liabilities,
claims and damages, including, without limitation, any property damage, personal
injury or claim of lien against the Project resulting from the activities
permitted by this Paragraph 5.02 (including, without limitation, reasonable
attorneys' fees and expenses paid or incurred by Seller during litigation, if
any), which indemnity shall survive the Closing Date or the expiration,
cancellation or termination of this Agreement.
5.03 SITE ANALYSIS PERIOD. Purchaser shall have the Site Analysis Period in
which to conduct the Tests and Studies and to ascertain whether the Project is
acceptable to Purchaser. "Site Analysis Period" shall mean the period expiring
on June 17, 1996. If the Project is determined to be unacceptable to Purchaser,
for any reason whatsoever, in Purchaser's sole discretion, Purchaser shall have
the right to terminate this Agreement by giving written notice of termination on
or prior to the date of expiration of the Site Analysis Period, in which event
the Deposit shall be returned to Purchaser and the Lump Sum Payment shall be
retained and deemed earned by Seller. In accordance with the provisions of
11.02(b) hereof, Seller and Purchaser shall each pay 50% of the Shared Closing
Costs incurred as of the termination date, and neither
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<PAGE> 11
of the Parties nor Contractor shall have any further rights or obligations
hereunder, except those specifically provided herein that survive the
termination of this Agreement. A failure to so notify Seller of Purchaser's
election to terminate or proceed with this Agreement as aforesaid prior to the
expiration of the Site Analysis Period shall be deemed as notice to Seller that
Purchaser has elected to terminate this Agreement as aforesaid.
5.04 CURE OF UNACCEPTABLE CONDITIONS. Any of the Tests and Studies of Purchaser
and/or its agents or representatives conducted during the Site Analysis Period
that discloses that there are (i) any defects or deficiencies of the Project in
respect to its compliance with any and all codes, ordinances, statutes, Permits,
approvals or licenses issued in respect to the Project or promulgated by any
federal, state, county or municipal governmental or quasi-governmental authority
which are required by such governmental or quasi-governmental authority to
correct; (ii) defects in the materials or workmanship of the Project from that
which is required to be in substantial compliance with the Plans, except that
portion thereof, if any, that relates to materials for, or workmanship of
improvements constructed or to be constructed on behalf of Tenants or New
Tenants that form a part of Post Closing Work (as hereinafter defined); or (iii)
a violation of Environmental Laws (as hereinafter defined) not disclosed on the
Environmental Reports that, in respect to clauses (i), (ii) and (iii), can be
corrected and cured for an estimated aggregate cost (in respect to the Project)
not to exceed One Hundred Thousand Dollars ($100,000.00), shall be collectively
hereinafter referred to as "Unacceptable Conditions." It is understood that
regardless of the cost, the Warranty Work obligations set forth in Paragraph
24.17 hereof shall not be included as an Unacceptable Condition in respect to
the $100,000.00 limitation and the cost of performing Warranty Work shall be in
addition to any cost for curing or correcting Unacceptable Conditions. In the
event Purchaser discovers what it deems to be Unacceptable Conditions as a
result of the Tests and Studies, Purchaser shall notify ("Condition Notice")
Seller and Contractor, in writing, of the same promptly following Purchaser's
discovery thereof, but in no instance later than three (3) business days
following the expiration of the Site Analysis Period. Such Condition Notice
shall include a copy of those portions of the Tests and Studies disclosing such
Unacceptable Condition(s). Within ten (10) days following Seller's receipt of
the Condition Notice, if any, Seller and Contractor shall advise ("Condition
Response") Purchaser, in writing, of Seller's and Contractor's good faith
determination and estimate of (1) those matters contained in the Condition
Notice that do not qualify as Unacceptable Conditions; (2) the time within which
the remaining matters contained in the Condition Notice will be cured or
corrected; and (3) the aggregate cost to Seller and Contractor of curing and
correcting such remaining matters. In the event the Condition Response is
unacceptable to Purchaser, Seller, Contractor and Purchaser shall promptly meet
and confer, in good faith, to attempt to resolve the unacceptable aspects to
Purchaser of the differences between the Condition Notice and the Condition
Response or the time within which or the aggregate cost for which Seller and
Contractor estimated in the Condition Response for curing or correcting as
aforesaid. In the event Seller, Contractor and Purchaser are unable to resolve
such differences, Purchaser may elect to (a) terminate this Agreement, (b)
proceed to Closing in respect to Seller's and Contractor's obligations to cure
or correct those matters set forth in the Condition Response, modified, if at
all, as a result of the aforesaid conference between Purchaser, Seller and
Contractor (provided the estimated aggregate cost of performing the same does
not exceed $100,000.00 or such greater amount Seller and Contractor in their
sole discretion, have agreed to expend), or (c) select those
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<PAGE> 12
specific line items from the Condition Response that Purchaser requires to have
corrected (provided the estimated aggregate cost of performing the same does not
exceed $100,000.00). Purchaser, within ten (10) business days after such
conference, shall advise Seller and Contractor, in writing, of Purchaser's
election. If the Condition Notice, Condition Response or the time periods
specified above for elections of Purchaser extend beyond the Closing Date, the
Closing Date shall be extended to the date five (5) business days subsequent to
the date Purchaser elects, if at all, to proceed with the Closing. In the event
Purchaser elects to terminate this Agreement, the Deposit shall be returned to
Purchaser, the Lump Sum Payment shall be retained and deemed earned by Seller,
Purchaser and Seller shall each pay fifty percent (50%) of the Shared Closing
Costs incurred as of the termination date, and neither of the Parties nor
Contractor shall have any further rights or obligations hereunder, except those
specifically provided herein that survive the termination of this Agreement. In
the event Purchaser elects to proceed to Closing pursuant to clause (b) above,
the matters contained in the Condition Response, modified, if at all, by
Purchaser's, Seller's and Contractor's conference and provided the estimated
aggregate cost of curing or correcting the same is One Hundred Thousand and
no/100 ($100,000.00) or less (or such greater amount Seller and Contractor
accept as aforesaid) shall be deemed to be the Unacceptable Conditions to which
Seller and Contractor are bound. In the event Purchaser elects to proceed to
Closing pursuant to clause (c) above, the specific line items selected by
Purchaser that are set forth in the Condition Response (provided the estimated
aggregate cost of curing or correcting the same is $100,000.00 or less) shall be
deemed to be the Unacceptable Conditions to which Seller and Contractor are
bound. Thereafter, Contractor on behalf of Seller and for the benefit of
Purchaser shall undertake to cure or correct such Unacceptable Conditions, at
its sole cost and expense (regardless of the actual cost ultimately incurred by
Contractor in respect thereto) within the time (subject to Force Majeure, as
hereinafter defined) set forth in the Condition Response. The obligation of
Contractor to cure or correct such Unacceptable Conditions shall survive the
Closing. In the event (y) Contractor fails to commence the cure of an
Unacceptable Condition(s) on or prior to the time specified in the Condition
Response for the cure thereof, or (z) Contractor commences the cure of an
Unacceptable Condition(s), but fails to complete such cure prior to the time
specified in the Condition Response (subject to Force Majeure), Purchaser may
off-set so much of any Earn-Out Payment or Footage Payment subsequently payable
by Purchaser hereunder by the amount of the reasonable costs and expenses
incurred by Purchaser for undertaking and completing the uncured Unacceptable
Condition(s). The curing or correcting of any Unacceptable Condition shall be
done in accordance with the Plans. However, if such curing or correcting
requires a variance from the Plans, Seller shall not undertake such variance
without obtaining Purchaser's prior written consent, which consent shall not be
unreasonably withheld or delayed.
6. SURVEY AND TITLE INSURANCE.
6.01 SURVEY. Seller shall cause an "as-built" Survey (the "Survey") of the Real
Property to be updated during the Site Analysis Period. The Survey shall be
certified to Seller, Purchaser, and the Title Company. The Survey shall satisfy
all of the requirements set forth on
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<PAGE> 13
Schedule 6.01 that is attached to and made a part of the Exhibit Agreement (as
hereinafter defined).
6.02 TITLE COMMITMENT. During the Site Analysis Period, to the extent not
theretofore delivered, Seller shall (i) cause the Title Company to issue and
deliver to Purchaser a title insurance commitment for an owner's extended
coverage policy of title insurance, in the amount of that portion of the
Purchase Price then estimated to be payable to Seller on the Closing Date,
committing the Title Company to insure Purchaser as the owner of fee simple
title to the Real Property and all easements appurtenant thereto (the
"Commitment"), and (ii) copies of each document described on Schedule B of the
Commitment.
6.03 PURCHASER'S OBJECTIONS; SELLER'S CURE. Other than those title exceptions
("Permitted Exceptions") set forth in Schedule 6.03 attached hereto and made a
part hereof, which shall include the plat of subdivision, party-wall agreement
and Allocable Share Agreement set forth in Paragraphs 7.24, 7.25, 8.08 and 8.09
hereof, and exceptions caused by or claimed under or through Seller that will be
removed at Closing (as hereinafter defined) if (i) the Commitment reveals any
other matters or exceptions ("Title Defects"), or (ii) the Survey reveals any
defects which affect the marketability of the Real Property or are deemed
objectionable by Purchaser ("Survey Defects"), Purchaser shall notify Seller, in
writing, of the same within fifteen (15) days following the date of delivery to
Purchaser of the last of the Commitment and Survey ("Defects Notice"). In the
event Purchaser fails to deliver a Defects Notice as aforesaid, Seller shall
advise Purchaser of such failure, in writing. If Purchaser fails, within three
(3) business days thereafter to deliver a Defects Notice, it shall be deemed a
notice to Seller that Purchaser has elected to waive such defects, if any, and
to proceed with the transaction contemplated hereby, subject to the fulfillment
of Seller's obligations hereunder. Except for Title Defects or Survey Defects
that are caused by or claimed under or through Seller that can be removed or
discharged by the payment of a sum of money (including, without limitation, a
Mortgage(s), as hereafter defined), Seller shall have no affirmative obligation
to cure or correct any Title Defects or Survey Defects, except as provided in
Seller's Response (as hereinafter defined). Within fifteen (15) days following
Seller's receipt of a Defects Notice, Seller, at its option, shall notify
Purchaser of those Title Defects and Survey Defects that Seller shall undertake
to cure or correct ("Seller's Response"). In the event Seller (a) elects in
Seller's Response not to satisfy a specified Title Defect or Survey Defect or
(b) is unable, within sixty (60) days after Purchaser's receipt of Seller's
Response, to satisfy the Title Defect or Survey Defect which Seller had elected
in Seller's Response to so satisfy, Purchaser may, at its option, (1) accept
title to the Real Property subject to the Title Defects and/or Survey Defects
raised by Purchaser in which event such Title Defects and Survey Defects shall
be deemed to be Permitted Exceptions, or (2) cancel this Agreement and receive a
full refund of the Deposit, whereupon Seller shall pay all Shared Closing Costs,
the Lump Sum Payment shall be retained and deemed earned by Seller, and this
Agreement shall be of no further force and effect, except for those matters
which are specifically set forth in this Agreement as surviving the expiration
or termination of this Agreement. If the Defects Notice, Seller's Response or
the time periods specified above for elections of Purchaser extend beyond the
time specified for the Closing Date, the Closing Date shall be extended to the
date five (5) business days subsequent to the date Purchaser elects, if at all,
to proceed with the Closing.
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6.04 TITLE POLICY. It shall be a condition precedent to Purchaser's obligation
to consummate the transaction contemplated by this Agreement that the Title
Company can and will issue an ALTA Owner's Policy of Title Insurance (Form B,
Amended 1987 or such other Owner's Policy that is the custom of the Title
Company to issue in the State or Oregon, provided such Owner's Policy contains a
waiver of creditors' rights) (the "Title Policy") in the full amount of that
portion of the Purchase Price payable by Purchaser on the Closing Date as
provided in Paragraph 13.02 hereof, insuring Purchaser as the owner in fee
simple of the Project, and all appurtenant easements thereto, free and clear of
all liens and encumbrances, except for the Permitted Exceptions, and without
exception for rights or claims of parties in possession not shown by the public
records, encroachments, overlaps, boundary line disputes, or any other matter
disclosed by the Survey which Purchaser has not waived or approved or is deemed
to have approved pursuant to Paragraph 6.03 hereof, provided, however, that the
Title Policy may show the rights of the Tenants and New Tenants (as hereinafter
defined) under New Leases (as hereinafter defined) that are fully executed prior
to the Closing as parties in possession (or right to possession) as tenants
only. Purchaser shall attempt to cause the Title Company, as part of the Title
Policy, to issue the following endorsements in the form of those set forth in
Schedule 6.04 attached hereto ("Endorsements"): CC&R Endorsement (unless
easements appurtenant to the Project are additionally insured parcels on
Schedule A of the Title Policy, Access, Survey, Contiguity (but only to the
extent of contiguous portions of the Land as depicted on Schedule 1.02 attached
hereto), Encroachment, and Zoning 3.1 (with parking). Any Survey or physical
inspection requirements imposed as a condition to the issuance of the Title
Policy may be satisfied by Seller as a Shared Closing Cost, except costs and
expenses in respect to correcting Survey Defects which shall be paid by Seller.
Seller shall execute such affidavits and certificates as the Title Company may
require as a condition to the issuance of the Title Policy, and a copy of each
such affidavit or certificate shall be delivered to Purchaser. In addition, as
part of the Shared Closing Costs, Seller shall cause (i) the Title Policy to be
dated down (or reissued) to the date each Earn-Out Payment (as hereinafter
defined) is paid during or after the Earn-Out Period showing no new exceptions,
except the Permitted Exceptions, the subject or previous New Leases, and
exception caused, permitted or claimed by, through or under Purchaser or its
successors and assigns; and (ii) the amount of the Title Policy's coverage to be
increased to an amount that equals the subject Earn-Out Payment.
7. SELLER'S CLOSING DOCUMENTS AND ESCROW.
At Closing, Seller shall execute and deliver the following
documents to Escrow Agent:
7.01 DEED. A signed bargain and sale deed in the form and substance (modified
for the subject jurisdiction) attached to the Exhibit Agreement as Schedule 7.01
(the "Deed") conveying to Purchaser, good, indefeasible and insurable title to
the Real Property and the Improvements, free and clear of all liens and
encumbrances of any type whatsoever, except for the Permitted
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Exceptions. The Permitted Exceptions shall be specifically, and not
categorically, excepted from the warranty of title in the Deed.
7.02 ASSIGNMENT OF LEASES. An assignment (the "Lease Assignment") in the form
attached to the Exhibit Agreement as Schedule 7.02 of all (except in respect to
the Assignment Reservation as provided in Paragraphs 13.03, 14.01, 14.02 and
14.03 hereof) of the Seller's right, title and interest as lessor under the
leases, tenancies, occupancy agreements, rental agreements, options, licenses
and concessions, and all of the foregoing (hereinafter collectively referred to
as the "Leases") which are described on Schedule 7.02(a) attached hereto, and
all New Leases that are fully executed prior to the Closing, together with all
security deposits, cleaning deposits, key deposits and advance rental payments
(collectively, the "Security Deposits") made by the lessees, tenants, occupants,
optionees, licensees and concessionaires (collectively, the "Tenants") and New
Tenants under the Leases and subject New Leases.
7.03 LEASES AND TENANT DOCUMENTS. All original copies of the Leases and New
Leases that are fully executed prior to Closing, Tenant and the subject New
Tenant financial statements, their sales reports and other Tenant and the
subject New Tenant related documents, and to the extent, if any, that original
copies are not delivered, Seller shall deliver copies which shall be accompanied
by an affidavit sworn to by Seller confirming that the copies delivered are true
and complete copies of the originals.
7.04 BILL OF SALE. A bill of sale in the form attached to the Exhibit Agreement
as Schedule 7.04, transferring and conveying to Purchaser all of Seller's right,
title and interest to the Personal Property and the Intangible Property.
7.05 ASSIGNMENT OF CONTRACTS. An assignment (the "Contract Assignment") in the
form attached to the Exhibit Agreement as Schedule 7.05, of all of Seller's
right, title and interest as the owner of the Project under the service
contracts and agreements, personal property leases and agreements (collectively,
the "Contracts") which are described on Schedule 7.05(a) attached hereto and
which have been approved by Purchaser as being those Contracts that are assigned
to Purchaser pursuant to the Contract Assignment.
7.06 VIOLATIONS/WORK ORDERS AFFIDAVIT. An affidavit, in form and substance of
Schedule 7.06 attached to the Exhibit Agreement, confirming that Seller has
complied with and discharged (or, to the extent Seller has not complied with and
discharged, an explanation of that which remains to be done to cause compliance
and discharge) (i) all notices, if any, that either Seller or its management
agent managing the Real Property received concerning any and all uncured
violations (the "Violations") of any law, statute, ordinance, regulation, rule,
requirement, order, judgment or decree enacted, adopted, imposed, issued,
entered or filed by any governmental authority (concerning or affecting the
Project or any part thereof), and (ii) all work orders concerning the Project or
any part thereof, if any (the "Work Orders") issued by any insurance carriers
insuring a risk in respect to the Project.
7.07 KEYS. All keys to the Project.
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7.08 PLANS AND SPECIFICATIONS. To the extent not delivered prior to Closing Date
as part of the Site Analysis Documents, all Plans.
7.09 TITLE INSURANCE AFFIDAVIT. Any affidavit required by the Title Company to
remove the standard printed exceptions from the Title Policy.
7.10 FIRPTA CERTIFICATE/WITHHOLDING. A certificate in the form and substance
attached to the Exhibit Agreement as Schedule 7.10 ("FIRPTA Affidavit").
7.11 FORM 1099. Any information with respect to Seller in connection with the
conveyance of the Real Property by Seller to Purchaser required by either (i)
IRC Sec. 6045 or Treas. Regs. Sec. 1.6045, or (ii) Treas. Form 1099 or its
instructions. If required thereby, the Escrow Agent shall timely (x) prepare and
file a Form 1099 in accordance with the provisions of Treas. Regs. Sec. 1.6045,
and (y) furnish the Parties with copies.
7.12 BOOKS AND RECORDS. Copies of all accounting books and records relating to
the operation and maintenance of the Project.
7.13 LETTERS TO TENANTS. Letters in the form and substance set forth in Schedule
7.13 that is attached to the Exhibit Agreement (the "Tenant Letters") addressed
to the Tenants and New Tenants of New Leases executed prior to Closing and
signed by Seller, advising the Tenants of the sale of the Project and the
Purchaser's right to receive the Rents (as hereinafter defined) under their
respective Leases.
7.14 RECORDING REQUIREMENTS. All documents and affidavits required of Seller to
record the Deed.
7.15 ESTOPPEL CERTIFICATES. An estoppel certificate in the form and substance
set forth in Schedule 7.15 that is attached to the Exhibit Agreement ("Tenant
Estoppel") showing no material exceptions that is executed (not more than
forty-five (45) days prior to the Closing Date or such earlier date Purchaser
reasonably accepts, except in the instance of Haggen, as hereinafter defined,
whose Tenant Estoppel shall not be dated more than thirty (30) days prior to the
Closing Date) by (i) all Tenants or New Tenants of Leases and New Leases that
are Qualified Leases (as hereinafter defined) on or prior to the Closing Date
that have demised to them space in the Project containing 7,500 square feet or
more, and (ii) at least eighty percent (80%) (calculated on a square foot basis)
of all Tenants or New Tenants of Leases or New Leases that are Qualified Leases
on or prior to the Closing Date that have demised to them space in the Project
containing less than 7,500 square feet. To the extent Seller is unable to
deliver to Purchaser Tenant Estoppels from all or any of the remaining Tenants
or New Tenants in the Project under such Qualified Leases in respect to premises
containing less than 7,500 square feet or a Tenant Estoppel in respect to a
premises that is 7,500 square feet or less that contains a material exception
noted by the applicable Tenant or New Tenant, Seller shall be entitled to
deliver to Purchaser Seller's estoppel certificate ("Seller's Estoppel"), in
form and substance reasonably acceptable to Purchaser, confirming the terms and
conditions of the Lease or subject New Lease for which a Tenant Estoppel was not
delivered to Purchaser or, if delivered, that contains a
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material exception. Such Seller's Estoppel shall be deemed a representation and
warranty by Seller as to the terms and conditions of the subject Lease or New
Lease, and the Seller's Estoppel shall not be subject to the time limitation for
claims set forth in Paragraph 10.04(b) hereof. After the Closing, when and as
Purchaser receives a Tenant Estoppel (without material exception) for which
Seller delivered a Seller's Estoppel, the subject Seller's Estoppel shall be
released by Purchaser and returned to Seller and shall be deemed to be of no
further force and effect.
7.16 TERMINATION OF MANAGEMENT AND SELLER AFFILIATED CONTRACTS. Notwithstanding
any other provision of this Agreement, in respect to any agreements or contracts
that are not to be included as part of the Contract Assignment, agreements
("Termination Agreements") signed by (i) the parties to any management agreement
for the Real Property, and (ii) the parties to all other such agreements or
contracts between the Seller or its predecessors in interest and parties
affiliated with or controlled by Seller or any of Seller's principals, which
Termination Agreements terminate such management agreement and other such
agreements and contracts as of the Closing Date, without any liability or
obligation on the part of the Purchaser or the Project.
7.17 PERMITS/GUARANTIES. Original or copies of Permits and originals of the
Guaranties which, in each instance, Seller agrees to keep in full force and
effect, and to comply with all of the terms and conditions thereof prior to
Closing.
7.18 CLOSING STATEMENTS. Closing Statements executed by Seller.
7.19 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably satisfactory to
Escrow Agent, in form and substance sufficient to carry out the Closing.
7.20 DATE DOWN CERTIFICATE. A certificate of Seller (the "Seller Date Down
Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 7.20 certifying that Seller's representations and warranties set forth
in Paragraph 10.01 of this Agreement are true and correct as of the Closing Date
as modified by the Schedules that are attached hereto pursuant to Paragraph
10.01 hereof updated to the Closing Date. In the event any updated Schedules
disclose a material deviation from the prior applicable Schedule as reasonably
determined by Purchaser, Purchaser shall have three (3) business days from the
date Purchaser receives a copy of the Seller Date Down Certificate in which to
elect to terminate this Agreement or to proceed with the Closing. In the event
Purchaser fails to notify Seller, in writing, of Purchaser's election to
terminate this Agreement, it shall act as notice to Seller that Purchaser has
elected to terminate this Agreement. In the event Purchaser elects to terminate
this Agreement, the Deposit shall be refunded to Purchaser, the Lump Sum Payment
shall be retained and deemed earned by Seller, Purchaser and Seller shall each
pay fifty percent (50%) of the Shared Closing Costs, and this Agreement shall be
of no further force and effect, except in respect to those provisions
specifically provided herein as surviving the termination of this Agreement.
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7.21 AGREEMENT ESTOPPEL CERTIFICATE. An estoppel certificate in form and
substance attached hereto as Schedule 7.21 ("Agreement Estoppel") showing no
material exceptions that are executed by each party to those easement agreements
or other agreements or undertakings (including, but not limited to, development
agreements) affecting the Project on and after the Closing Date that require the
performance of obligations by the owner of the Project and the approval of such
performance by the other party to the same that are identified by Purchaser to
Seller, in writing, not less than fifteen (15) days prior to the Closing Date.
To the extent such Agreement Estoppel shows a material exception or the party to
such easement agreements or other agreements or undertakings identified by
Purchaser as aforesaid fails to deliver an Agreement Estoppel, Seller shall be
entitled to deliver its undertaking confirming, in form and substance reasonably
acceptable to Purchaser, the terms and conditions of the Agreement Estoppel to
the extent applicable in the form attached hereto as Schedule 7.21, and such
confirmation by Seller shall not be subject to the time limitation for claims
set forth in Paragraph 10.04(b) hereof. After the Closing, when and as Purchaser
receives an Agreement Estoppel for which Seller delivered its undertaking as
aforesaid, the subject undertaking shall be released by Purchaser and returned
to Seller and shall be deemed to be of no further force and effect.
7.22 RESERVED LOTS COVENANT A declaration encumbering title to the Reserved Lots
in respect to the exclusion of uses thereon that violate any of the exclusive
uses permitted under Leases or New Leases for the Project as of the Closing
Date, in form and content reasonably acceptable to Seller and Purchaser.
7.23 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location within the
Project of any space that is Vacant Space as of the Closing.
7.24 BEST PRODUCTS SUBDIVISION. To the extent not executed by Seller prior to
the Closing Date, a plat of subdivision subdividing the Best Products Pad from
the rest of the Project. The plat of subdivision shall be in form and content
reasonably acceptable to Purchaser and Seller.
7.25 ALLOCABLE SHARE AGREEMENT. The Allocable Share Agreement in the form
attached hereto as Schedule 7.25.
7.26 ASSIGNMENT OF DECLARATION. An Assignment of Declaration in the form
attached hereto as Schedule 7.26 assigning to Purchaser Seller's rights under
the terms of the Reciprocal Easement Agreement that is a Permitted Encumbrance.
7.27 OTHER DOCUMENTS. Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS.
At Closing, Purchaser shall execute and deliver the following
to Escrow Agent:
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8.01 ASSIGNMENT OF LEASES. The Lease Assignment, acknowledging the assumption by
Purchaser of Seller's obligations under the Leases which accrue after the
Closing Date.
8.02 ASSIGNMENT OF CONTRACTS. The Contract Assignment, acknowledging the
assumption by Purchaser of Seller's obligations under the Contracts which accrue
after the Closing Date.
8.03 CLOSING STATEMENTS. Closing Statements executed by Purchaser.
8.04 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably satisfactory to
Escrow Agent, in form and substance sufficient to carry out the Closing.
8.05 RECORDING REQUIREMENTS. All documents and affidavits required of Purchaser
to record the Deed.
8.06 DATE DOWN CERTIFICATE. A certificate of Purchaser (the "Purchaser Date Down
Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 8.06 certifying that Purchaser's representations and warranties set
forth in Paragraph 10.02 of this Agreement are true and correct as of the
Closing Date.
8.07 PROJECT COVENANT. A declaration encumbering title to the Project in respect
to exclusion of uses thereon that violate any of the exclusive uses permitted
under that certain lease pursuant to which Best Products is the tenant on the
Best Products Pad.
8.08 ALLOCABLE SHARE AGREEMENT. The Allocable Share Agreement in the form
attached hereto as Schedule 7.25.
8.09 BEST PRODUCTS SUBDIVISION. To the extent not executed by Seller prior to
the Closing Date, a plat of subdivision subdividing the Best Products Pad from
the rest of the Project. The plat of subdivision shall be in form and content
reasonably acceptable to Purchaser and Seller.
8.10 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location within the
Project of any space that is Vacant Space as of the Closing.
8.11 OTHER DOCUMENTS. Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.
9.01 AFFIRMATIVE AND NEGATIVE COVENANTS. Until Closing, Seller shall or cause
to:
(i) Subject to Casualty or any Taking (as those terms are
hereinafter defined), maintain the Real Property and Personal Property in good
condition and repair and not commit or permit waste;
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(ii) Carry on its business in respect to the Project in the
same manner as it has heretofore;
(iii) Keep in full force and effect all insurance coverage
required to be maintained by it pursuant to the Leases, applicable New Leases,
the Mortgages, the Permitted Exceptions, and any easement agreements or other
agreements or undertakings affecting the Project;
(iv) Perform all of its obligations under the Contracts,
Leases, applicable New Leases, Mortgages, Permitted Exceptions and any easement
agreements or other agreements or undertakings affecting the Project;
(v) Maintain and preserve its business organization intact;
(vi) Maintain and preserve its relations with the Tenants, New
Tenants under New Leases that are fully executed prior to the Closing, suppliers
and customers;
(vii) Except as provided in Paragraph 13.04 hereof, not
voluntarily terminate, amend, modify, extend, renew, waive or accept the
surrender of any Lease or New Lease or provision thereof, without Purchaser's
prior consent, which consent shall not be unreasonably withheld or delayed;
(viii) Not voluntarily terminate, amend, modify, extend,
renew, waive or accept the cancellation of any Contract, Permitted Exception or
any easement agreements or other agreements or undertakings affecting the
Project or any provision of any of them, without the Purchaser's prior consent,
which consent shall not be unreasonably withheld or delayed;
(ix) Except as provided in Paragraph 13.04 hereof, not
voluntarily enter into, accept or consent to any new (a) lease, occupancy
agreement, subtenancy agreement, license agreement, concession agreement, (b)
contract or agreement, personal property lease or agreement, and/or (c) lien,
encumbrance, or security interest (including without limitation, mortgage, deed
of trust, security agreement, assignment of leases or rents, collectively,
"Mortgage") or other title exception or defect (including without limitation,
easement, restriction, dedication), which shall not be terminated on or before
Closing without the Purchaser's prior consent, which consent shall not be
unreasonably withheld or delayed;
(x) Not commence any action or proceeding or petition, apply
for or consent to any action or proceeding, the effect of which may be to change
the zoning of the Project or its assessed valuation (except for entering into
New Leases);
(xi) Not sell, assign or transfer the Project or any part
hereof (except in the instance of New Leases as provided in Paragraph 13.04
hereof), including without limitation, the Intangible Property and the Personal
Property; provided, however, that Seller may remove
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Personal Property for the purpose of promptly effecting necessary repairs or
immediate replacement with Personal Property of like character and equal or
better quality;
(xii) Not demolish or materially alter the Improvements or any
part thereof or otherwise adversely affect the value of the Project, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed, except for (1) curing Unacceptable Conditions, Title Defects and Survey
Defects, (2) completing Punchlist Work (as defined and provided in Paragraph
13.11 hereof), (3) constructing tenant improvements for Leases, (4) performing
Seller's New Lease Obligations (as defined and provided in Paragraph 13.10
hereof), and (5) completing, in accordance with the Plans, any incomplete work.
(xiii) Except as provided in Paragraph 9.01(xii) above, not
materially alter the Land or any part thereof, including without limitation, by
mining, excavating, removing topsoil, timbering or changing the grade, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed.
9.02 PAYMENTS. As more fully set forth in Paragraph 16.01 hereof, (i) Punchlist
Work; (ii) curing Unacceptable Conditions; (iii) constructing tenant
improvements for Leases and New Leases; (iv) all other work to be performed and
all payments to be made by Seller pursuant to the provisions of the Leases, the
Contracts, the Permitted Exceptions, and any insurance policy maintained by
Seller providing coverage for the Project which pertain to obligations that
accrue prior to the Closing; and (v) Warranty Work shall be completely performed
and paid for when due (subject to the right to contest Liens as provided in
Paragraph 9.3 hereof) by Seller and the obligation thereof shall survive the
Closing.
9.03 LIEN REMOVAL. Except for (i) taxes not yet due and payable as of the
Closing, (ii) installments of special assessments due and payable after the
Closing, and (iii) Liens (as hereinafter defined and provided) that are either
bonded or insured over in a form reasonably satisfactory to Purchaser, all other
liens and encumbrances of ascertainable amounts incurred by Seller or by, for or
on behalf of Seller, except the Permitted Exceptions, shall be removed from the
record by Seller or Seller shall make arrangements satisfactory to the Title
Company for the removal of, or title insurance over (in form reasonably
satisfactory to Purchaser), such liens and encumbrances of record on the Closing
Date. Notwithstanding the foregoing, any liens or encumbrances attaching to the
title of the Real Property as a result of work performed on or material supplied
to the Project by Seller or on behalf of anyone claiming by, through or under
Seller (except Tenants and New Tenants under Qualified Leases, as hereinafter
defined) or as a result of Seller's failure to pay, when due, a Commission
(collectively, "Lien" or "Liens") may be contested by Seller as hereafter
provided. Within thirty (30) days after the recording of a Lien that is recorded
or filed after the Closing, Seller shall, at its election, either (i) bond over
the same, or (ii) cause the Title Company to insure over the same (in form and
substance reasonably satisfactory to Purchaser), in order, in the instances of
either clause (i) or (ii) above, to reasonably protect the Purchaser and the
Project (or any part thereof) from and against the subject Lien. Thereafter, in
the manner elected by Seller, Seller may contest such Lien provided that, within
thirty (30) days following the entry by a court of competent jurisdiction of a
final judgment or decree in favor of the claimant of such Lien, Seller shall pay
and satisfy such Lien and cause it to
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be released of record. In the event Seller fails to pay and satisfy any Lien
within thirty (30) days following the entry by a court of competent jurisdiction
of a final judgment or decree in favor of the claimant of such Lien or fails to
bond over or insure over a Lien as provided in this Paragraph 9.03, Purchaser
may offset so much of any Earn-Out Payment or Footage Payment subsequently
payable by Purchaser hereunder by the amount incurred by Purchaser for
effectuating the satisfaction and release of the subject Lien.
10. REPRESENTATIONS AND WARRANTIES.
10.01 SELLER'S REPRESENTATIONS AND WARRANTIES. Contractor represents and
warrants to Purchaser in respect to sub-paragraphs (viii), (ix), (xi), (xii),
(xiv), (xxii), and (xxvi) in this Paragraph 10.01, and Seller represents and
warrants to Purchaser in respect to all of the sub-paragraphs in this Paragraph
10.01, except sub-paragraph (xxvi), that:
(i) Seller is a Delaware limited liability company duly
created and validly existing pursuant to the laws of the jurisdiction of its
organization and is duly qualified to do business in the jurisdiction in which
the Project is situated.
(ii) Seller is authorized and empowered to enter into this
Agreement and to perform all of its obligations under this Agreement without any
qualification whatsoever, and no consent or approval of any third party
(including, without limitation, any governmental or quasi-governmental
authority) is or was required by Seller to execute and deliver this Agreement or
consummate this transaction.
(iii) Upon the signing and delivery of this Agreement, this
Agreement will be legally binding upon Seller in accordance with all of its
provisions, except as such provisions may be qualified or limited by bankruptcy,
creditor's rights and equitable principles.
(iv) The person signing this Agreement on behalf of Seller has
been duly authorized to sign and deliver this Agreement on behalf of Seller.
(v) To the best of its Knowledge (as hereinafter defined),
Seller has not committed any act or permitted any action to be taken which would
materially adversely affect its ability to fulfill all of its obligations under
this Agreement.
(vi) The execution and delivery of this Agreement, and the
performance of Seller's obligations under this Agreement, will not violate or
breach, or conflict with, the terms, covenants or provisions of any agreement,
contract, note, Mortgage, indenture or other document of any kind whatsoever to
which Seller is a party or to which the Project is subject.
(vii) Seller has received no written notice and Seller has no
Knowledge of any uncured Work Order, or unfulfilled requirements or
recommendations issued, imposed or made by any insurers concerning the Project
or any part thereof.
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(viii) To the best of its Knowledge, (i) Seller is not in
default of any obligation of Seller under any Mortgage, and (ii) Seller and/or
the Project is in compliance with all terms and conditions of the Permitted
Exceptions, including any easement agreement or other agreement or undertaking
affecting the Project.
(ix) To the best of Seller's Knowledge, the Project was
constructed, and is presently being operated, occupied and used in substantial
accordance with all applicable federal, state and local laws, rules, regulations
and ordinances governing the construction, operation, occupation and use of the
Project, and no variances to any applicable federal, state or local law, rule,
regulation or ordinance were granted in connection with the construction of the
Project.
(x) To the best of Seller's Knowledge, there is (i) no pending
or contemplated Taking affecting the Project or any part thereof, or (ii) no
pending or contemplated public improvement in or about the Real Property which
may in any manner affect access to or from the Project or increase the taxes
assessed against the Project.
(xi) To the best of Seller's Knowledge, except for the Vacant
Space (as hereinafter defined), Seller is in receipt of all Permits required by
all governmental authorities for the construction currently being prosecuted at
the Project and the operation, occupation and use of the Project as a shopping
center; all Permits are in full force and effect; and all Permits issued to the
Project are described on Schedule 10.01(xi) attached hereto and made a part
hereof.
(xii) Neither Seller, nor, to the best of Seller's Knowledge
(except as disclosed in the Environmental Reports), any prior owner of the
Project has: (a) caused or permitted the generation, manufacture, refinement,
transportation, treatment, storage, handling, installation, removal, disposal,
transfer, production or processing of Hazardous Substances (as hereinafter
defined) or other dangerous or toxic substances, or solid wastes, except in
strict compliance with all laws; (b) caused or permitted or received any written
notice or have any actual knowledge of the Release (as hereinafter defined) or
existence of any Hazardous Substances on or about the Project or property
surrounding the Project which might affect the Project; (c) caused or permitted
or received any written notice or have any actual knowledge of any substances or
conditions on or about the Project or on property surrounding the Project which
may support a claim or cause of action, whether by any governmental authority or
any other person, under any laws ("Environmental Laws") in effect as of the date
of this Agreement and all rules and regulations promulgated thereunder,
including, but not limited to: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq. (the
"Superfund Act"); the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6921 et seq.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et
seq.; the Federal Solid Waste Disposal Act, 42 U.S.C. Sections 6901 et seq.; the
Clean Air Act, 42 U.S.C. Sections 7401 et seq.; or any other law. For the
purposes of this Agreement the terms "Hazardous Substances" and "Release" shall
have the definitions used in the Superfund Act; provided, however, that the
definition of the term
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"Hazardous Substances" shall also include (if not included within the definition
contained in the Superfund Act), petroleum and related by products,
hydrocarbons, radon, asbestos, urea formaldehyde and polychlorinated biphenyl
compounds.
(xiii) Except for the Permitted Exceptions, Seller is the sole
owner of good, indefeasible and insurable fee simple title to the Land and the
Improvements, and Seller has not executed or entered into any other agreement to
purchase, sell, option, lease or otherwise dispose or alienate all or any
portion of the Project other than this Agreement, the Leases and New Leases.
(xiv) Subject to the right of Seller to contest Liens as
provided in Paragraph 9.03 hereof, all labor and services performed and material
furnished to the Project have been paid for or will be paid for in full by
Seller, and, to the best of Seller's Knowledge, there exists no valid basis for
which a Lien or similar lien can properly be claimed against the Project or any
part thereof.
(xv) As of the date hereof, Schedule 7.02(a) attached hereto
is a complete and correct list of all Leases, and the information disclosed on
Schedule 7.02(a) is accurate with respect to each of the Leases.
(xvi) Leasing commissions or fees that are payable in
connection with any leasing agreement or registration statement to which Seller
is a party or that Seller has accepted, in writing, that pertains to New Leases
(that will be paid by Seller as provided in Paragraph 13.11 hereof), and the
Leases described in Schedule 7.02(a), and commissions resulting from any other
agreement to which Seller is a party relating to the Project (collectively,
"Commissions") will be paid by Seller when due under the applicable leasing
agreement or registration statement.
(xvii) Except as set forth on Schedule 10.01(xvii) attached
hereto, as of the date hereof, (1) none of the Tenants or New Tenants of Leases
and New Leases that are Qualified Leases as of Closing have been granted any
economic or financial concession or inducement (collectively, "Tenant
Inducement") that will not be paid in full by Seller when required in accordance
with the applicable provisions of the subject Lease and New Lease, and (2) none
of the subject Tenants or New Tenants have deposited Security Deposits with
Seller, except those disclosed on Schedule 7.02(a) attached hereto.
(xviii) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xviii) attached hereto, as of the date hereof, no Tenant or
New Tenant of Leases or New Leases that are Qualified Leases as of the Closing
has alleged an event of default on the part of Seller which is presently
outstanding, or that Seller has not fulfilled all of its obligations under the
subject Leases or New Leases which are conditions of the obligations of such
Tenants and New Tenants to pay the Rents, including without limitation, all
work, repairs and improvements required to be furnished by Seller pursuant to
such Leases and New Leases.
(xix) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xix) attached hereto, as of the date hereof, (1) none of the
Tenants or New Tenants under
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Leases or New Leases that are Qualified Leases as of the Closing are in default
of any of their obligations under their respective Leases and New Leases, and
(2) no event has occurred which, with the giving of notice, the passage of time,
or both, would constitute an event of default by such Tenant or New Tenant.
(xx) Except as set forth on Schedule 10.01(xx) attached
hereto, as of the date hereof, Seller has no notice and to the best of Seller's
Knowledge, no Tenant or New Tenant under a New Lease that is fully executed
prior to Closing has advised Seller, orally or in writing, that any Tenant or
any subject New Tenant intends to give up physical or legal possession of its
demised premises, including without limitation: assigning its lease; subletting
all or part of its demised premises; vacating its demised premises;
discontinuing the operation of its business at its demised premises;
surrendering possession of its demised premises; or terminating its Lease or
subject New Lease.
(xxi) There are no employees of Seller that are assigned to
the Project for which Purchaser shall have any obligations after the Closing.
(xxii) A description of all Guaranties relating to the
construction and equipment of the Project received by Seller that, by their
terms, are in effect on or after the Closing Date are true, correct and
complete, and all Guaranties issued with respect to the Project that, by their
terms, are in effect on or after the Closing Date are described on Schedule
5.01(g) attached hereto.
(xxiii) Seller has not dealt with any broker, finder or other
person in connection with this transaction, who is entitled to any Commission,
finder's fee or similar payment as a result of the acts of Seller or its agents,
except (1) as pertains to New Leases, and in such event, all Commissions in
connection therewith shall be paid by Seller as provided in Paragraph 13.11
hereof, and (2) as pertains to Commissions not yet due and payable in respect to
Leases which shall be paid by Seller when required in respect to such Leases.
Seller acknowledges that it has conversed with Eugene Faigus and Chadwick &
Saylor in connection with this transaction, but that Seller has not agreed to be
obligated to pay any fee or other compensation to either or both of them.
(xxiv) Seller has no actual Knowledge that any of the written
information provided to Purchaser by Seller or on its behalf in connection with
this transaction (including without limitation, the warranties and
representations set forth in this Agreement), is inaccurate or incomplete or
contains any untrue statement of fact.
(xxv) To the best of Seller's Knowledge, copies of documents
furnished or to be furnished to Purchaser by Seller or on its behalf in
connection with this transaction are true and complete copies of the originals.
(xxvi) As of the Closing, Contractor's net worth, determined
in accordance with generally accepted accounting principals consistently
applied, is greater than $5,000,000.00, exclusive of goodwill.
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The term "Knowledge" when used in the context of "to the best of Seller's
Knowledge" (or any derivative form thereof) shall mean the actual (written or
oral), not imputed, knowledge of Keith Bednarowski, Dan F. Nicol, Anne E. Loff,
Harry DeMar (Seller's Project Manager) or Jim Hamm (Seller's Development
Manager).
10.02 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents and
warrants to Seller that:
(i) Purchaser is an Ohio corporation, duly organized and
validly existing pursuant to the law of the jurisdiction of its organization.
(ii) Purchaser is authorized and empowered to enter into this
Agreement and perform all of its obligations under this Agreement without any
qualification whatsoever.
(iii) No consent or approval of any third party (including
without limitation, any governmental or quasi-governmental authority) is or was
required by Purchaser to execute and deliver this Agreement or consummate this
transaction.
(iv) Upon the signing and delivery of this Agreement, it will
be legally binding upon Purchaser in accordance with all of its provisions,
except as such provisions may be qualified or limited by bankruptcy, creditor's
rights and equitable principles.
(v) The person signing this Agreement on behalf of Purchaser
has been duly authorized to sign and deliver this Agreement on behalf of
Purchaser.
(vi) To the best of Purchaser's Knowledge (as hereinafter
defined), Purchaser has not committed any act or permitted any action to be
taken which would materially adversely affect its ability to perform all of its
obligations under this Agreement.
(vii) The execution and delivery of this Agreement by
Purchaser and Purchaser's performance of it obligations under this Agreement
shall not conflict with any law, statute, ordinance, regulation, order,
directive or decree of any governmental or quasi-governmental authority or any
contract, other agreement or obligation to which Purchaser is a party or is
otherwise bound.
(viii) Except for Eugene Faigus and Chadwick & Saylor, neither
Purchaser nor its agents have dealt with any broker, finder or other person in
connection with this transaction who is entitled to any Commission or similar
payment as a result of the acts of Purchaser or its agents.
(ix) All copies of documents furnished or to be furnished to
Seller by Purchaser or on its behalf in connection with this transaction are
true and complete copies of the originals.
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The term Purchaser's Knowledge, when used in the context of "to the best of
Purchaser's Knowledge" (or any derivative form thereof) shall mean the actual
(written or oral), not imputed, knowledge of Scott Wolstein, James A. Schoff or
Joan U. Allgood.
10.03 INTENTIONALLY DELETED
10.04 INDEMNIFICATION.
(a) Except as limited by the provisions of Paragraph 23
hereof, the Parties shall indemnify and hold each other harmless, from and
against all damages, costs, expenses, liabilities, penalties and fines,
including without limitation, attorneys fees, disbursements, expert witness
fees, paralegal fees, reporters fees, reproduction and printing costs, including
any of the foregoing which are incurred in connection with any appeal, and
amounts paid in settlement of claims (collectively, in respect to the foregoing
inclusion, "Litigation Expenses" ), paid or incurred by the other Party as a
result of any representation or warranty of the respective Party set forth in
this Agreement not being true and correct in all material respects when made. In
addition, the indemnity provisions of this Paragraph 10.04(a) on behalf of the
Purchaser shall pertain to any claims, demands, actions, causes of action,
judgments or decrees made against or entered against Seller in respect to any
Commissions or other compensation claimed or demanded by either Eugene Faigus or
Chadwick & Saylor in connection with the terms of this Agreement.
(b) Notwithstanding the foregoing, and except as provided in
Paragraph 24.17 hereof in respect to Warranty Work, Seller's and Purchaser's
right to seek or obtain indemnification, damages or other legal recourse against
the other Party hereto (or any successor thereto), or, in the instance of
Purchaser, against Contractor with respect to a breach of any warranty,
representation or covenant made in this Agreement or in any documents,
instruments or certificate executed and delivered pursuant hereto shall
terminate, and be of no further force or effect, unless (i) by the date which is
the last to occur of three hundred sixty five (365) days after the termination
of this Agreement and three hundred sixty five (365) days after the expiration
of the Earn-Out Period (as hereinafter defined), the aggrieved Party shall have
notified the other Party (or Contractor, in the instance of Purchaser), in
writing, that the aggrieved Party deems that any such warranty, representation
or covenant was breached in a material respect when made (as undated or deemed
updated) and states therein, with reasonable particularity, the nature of the
alleged breach and the section or provision of the relevant document which was
allegedly breached and (ii) by the date which is the last to occur of three
hundred ninety (390) days after the termination of this Agreement and three
hundred ninety (390) days after the expiration of the Earn-Out Period, the
aggrieved Party files suit against the other Party (or Contractor, in the
instance of Purchaser) seeking legal or equitable recourse as a consequence of
such breach. If the aggrieved Party timely notifies the other Party (or
Contractor, in the instance of Purchaser) as called for in the preceding clause
(i) and timely files suit against the other Party (or Contractor, in the
instance of Purchaser) as called for in the preceding clause (ii), then the
warranty, representation or covenant at issue shall not terminate, but rather
shall continue until the dispute is settled between Seller and Purchaser (or
Purchaser and Contractor) or a final, non-appealable judgment is issued by a
court of competent jurisdiction with respect thereto.
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(c) Within ten (10) days after receipt by an indemnified Party
of written notice of any claim or the commencement of any action under this
Paragraph 10.04 by a third party, the indemnified Party shall, if a demand in
respect thereof is to be made against the indemnifying Party (or Contractor)
pursuant to this Paragraph 10.04, notify the indemnifying Party (or Contractor)
in writing of the claim or the commencement of the action, provided the failure
to notify the indemnifying Party (or Contractor) shall not relieve the
indemnifying Party (or Contractor) from any liability which it may have to the
indemnified Party other than under this Paragraph 10.04. Each indemnitor shall
be entitled, at its cost and expense, to contest any such third party claim or
action by all appropriate legal proceedings, provided that the indemnitor shall
have first notified the indemnitee of the indemnitor's intention to do so within
ten (10) days after the indemnitor's receipt of such notice from the indemnitee.
If the indemnitee joins in any such contest, the indemnitor shall have full
authority to determine all action to be taken with respect thereto. If, after
such opportunity, the indemnitor elects not to contest any such claim or action,
the indemnitor shall be bound by the resolution of such claim or action obtained
by the indemnitee. If required by the indemnitor, the indemnitee shall cooperate
fully with the indemnitor and its counsel in contesting any such claim or action
or, if appropriate, in making any counterclaim or cross-claim against the
subject third party asserting the claim or bringing the action, but the
indemnitor will reimburse the indemnitee for any out-of-pocket costs and
expenses incurred by the indemnitee in so cooperating. The indemnitor shall pay
to the indemnitee, in cash, all amounts to which the indemnitee may become
entitled by reason of the provisions of this Agreement, such payment to be made
within thirty (30) days after such amounts are finally determined either by
mutual agreement or by judgment of a court of competent jurisdiction.
11. SHARED CLOSING COSTS AND OTHER EXPENSES.
11.01 EXPENSES.
(a) Seller shall pay any and all fees or costs required to be
paid by Seller to the holder of the Mortgages in connection with the sale of the
Project, including, but not limited to prepayment fees, lender's consent fees or
lender's counsel fees, if any.
(b) Purchaser shall pay the costs and expenses of all Test and
Studies including any environmental audit of the Project and any other
investigations of the Project undertaken by Purchaser and all costs and
expenses, if any, charged by a lender to Purchaser in connection with any
financing or joint venturing of this transaction.
(c) Each Party and Contractor shall pay its own attorney's
fees.
11.02 SHARED CLOSING COSTS.
(a) Except as set forth above in Paragraph 11.01, if Closing
occurs, Seller and Purchaser shall each pay fifty percent (50%) of all of the
cost of the Commitment, the Title Policy (including the Endorsements and the
reissuing or dating down and increasing the amount
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of coverage thereof as provided in Paragraph 6.04 hereof), updating the Survey,
transferring all Permits and Guaranties to Purchaser, all escrow fees, and all
transfer, conveyance, revenue, excise, documentary or other tax or stamps
payable as a result of the sale of the Project (collectively, the "Shared
Closing Costs").
(b) Except as provided otherwise in this Agreement, if Closing
does not occur because of the failure of a condition to either Party's or
Contractor's obligation to close this transaction (other than a default by a
Party or Contractor), Seller and Purchaser shall each pay fifty percent (50%) of
the Shared Closing Costs.
(c) If Closing does not occur because Seller or Contractor is
in default, Seller shall pay all of the Shared Closing Costs.
(d) If Closing does not occur and Purchaser is in default,
Purchaser shall pay all Shared Closing Costs.
12. CONDITIONS.
12.01 PURCHASER'S CONDITIONS. Purchaser shall not be obligated to close this
transaction unless and until:
(a) Seller has delivered to the Escrow Agent the pre-closing
and closing documents described in Paragraphs 5, 6 and 7 of this Agreement;
(b) Title to the Project is delivered in accordance with the
provisions of this Agreement and the Title Company issues the Title Policy to
the Purchaser on the Closing Date, in the amount of that portion of the Purchase
Price computed as of the Closing Date in accordance with Paragraph 13.02 hereof,
insuring that indefeasible fee simple title to the Project is vested in
Purchaser, free and clear of all liens and encumbrances, except for the
Permitted Exceptions;
(c) The Project is delivered in the physical condition
provided for in this Agreement, reasonable wear and tear excepted; and
(d) If Seller or Contractor is in default in the performance
of any of its obligations under this Agreement and such default has not been
cured prior to Closing or any of the representations or warranties of Seller are
untrue or inaccurate in any material respect when made or on the Closing Date.
12.02 SELLER'S CONDITIONS. Seller shall not be obligated to close this
transaction unless and until:
(a) Purchaser has delivered to the Escrow Agent that portion
of the Purchase Price computed as of the Closing Date in accordance with
Paragraph 13.02 hereof;
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(b) Purchaser has delivered the closing documents described in
Paragraph 8 of this Agreement; and
(c) If Purchaser is in default in the performance of any of
its obligations under this Agreement and such default has not been cured by
Purchaser prior to Closing or any of the representations or warranties of
Purchaser is untrue or inaccurate in any material respect when made or on the
Closing Date.
12.03 RIGHTS UPON FAILURE OF A CONDITION. Except in the case of a default by
Seller or Contractor under Paragraph 12.01(d) or by Purchaser under Paragraph
12.02(c), if a condition of Closing of either Party or Contractor is not
satisfied as of the Closing Date, the Party whose condition is not satisfied at
Closing shall have the right to (i) waive such condition and proceed with
Closing, (ii) extend the Closing Date to permit additional time to cause the
unsatisfied condition to be satisfied, or (iii) terminate this Agreement and
both Parties and Contractor shall be released of all rights and obligations
hereunder, except as otherwise specifically provided for herein. If the failure
of the condition is a default, the rights of the parties shall be governed by
Section 18 hereof.
13. EARN-OUT.
13.01 DEFINED TERMS. In addition to the other terms defined elsewhere in this
Agreement, the following terms shall have the following meaning:
(i) "Carry" shall mean the amount of the proportionate share
of real estate taxes and operating expenses for the Project that are (or would
have been) allocable to the premises that are the subject of a Lease or New
Lease that becomes a Qualified Lease for the period commencing on the Closing
Date and ending on the date on which the Earn-Out Payment for such Qualified
Lease is due and payable hereunder, reduced by the portion, if any, of such
proportionate share for the subject period that is paid to Purchaser by the
Tenant or New Tenant of such Qualified Lease. To the extent payable but not paid
by the subject Tenant or New Tenant, the portion of Rent from the such Tenant or
New Tenant that applies to the period prior the date the subject Earn-Out
Payment is due and payable shall be deemed Arrears (as hereinafter defined).
(ii) "Closing Payment" shall mean that amount that is equal to
(a) the aggregate sum of those capitalized Net Cash Flows for those Leases set
forth on the Rent Roll attached hereto as Schedule 3.01 that are Qualified
Leases as of the Closing Date (which aggregated sum, as of the date hereof based
on the presumption of which Leases will be Qualified Leases as of the Closing,
is $22,878,566.00); plus (b) the amount by which the annual Base Rent set forth
in said Schedule 3.01 for those Leases that are Qualified Leases as of the
Closing Date increases as verified by the applicable Tenant Estoppel, which
increase shall be capitalized using a rate of ten and 34/100ths percent
(10.34%); minus (c) the amount by which the annual Base Rent set forth in said
Schedule 3.01 for those Leases that are Qualified Leases as
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of the Closing Date decreases as verified by the applicable Tenant Estoppel,
which decrease shall be capitalized using a rate of ten and 34/100ths percent
(10.34%); and plus or minus (d) the adjustments provided in Section 14 hereof.
(iii) "Earn-Out Payment" shall mean the amount that is equal
to the Net Cash Flow from those Leases or New Leases that are Qualified Leases
on the date (other than the Closing Date) such Earn-Out Payment is due as
provided in this Section 13 capitalized using a rate of ten and 34/100ths
percent (10.34%), minus (1) the Carry, and minus (2) any unsatisfied right of
offset permitted Purchaser as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof that was not previously credited to Purchaser.
(iv) "Force Majeure" shall mean delays resulting from (a)
labor disputes, (b) material or labor shortages, (c) Casualty (as hereinafter
defined), (d) acts of God or the public enemy, (e) governmental embargo
restrictions, (f) actions or inactions of any governmental authority (including,
but not limited to, the failure to timely process or approve applications for
the issuance or transfer of Permits, licenses or approvals), (g) the adjustment
of insurance claims resulting from Casualty in excess of $1,000,000.00, (h) any
other cause beyond the reasonable control and reasonable anticipation of the
applicable Party, but excluding therefrom reasonable control resulting from
monetary deficiency.
(v) "Net Cash Flow" shall mean, in respect to the applicable
Qualified Leases, an amount equal to the aggregate amount of the so-called "base
rent" (but not operating expenses, tax reimbursements, escalations based on a
consumer price index, or other similar Rent adjustments) payable for the full
calendar year on and after the date the subject Qualified Lease became a
Qualified Lease (without reduction for "free" Rent or Rent abatements), less any
non-reimbursable operating expenses and taxes for such calendar year. Purchaser
acknowledges that for those Leases set forth on Schedule 7.02(a) attached
hereto, there are no non-reimbursable operating expenses or taxes that shall be
a deduction in the determination of Net Cash Flow.
(vi) "New Lease" shall mean any lease (other than the Leases)
that lets or demises space in the Project and that is entered into by (a) the
Seller subsequent to the date hereof, but prior to the Closing Date, or (b) by
Purchaser or its successor(s) subsequent to the Closing Date, but prior to the
expiration of the Earn-Out Period.
(viii) "New Tenant" shall mean the tenant or lessee under a
New Lease.
(viii) "Other Center" or "Other Centers" shall mean (a) Maple
Grove Crossing, located in Minneapolis, Minnesota, of which Opus Corporation is
the Other Seller; (b) Eastchase Market, located in Forth Worth, Texas, of which
Opus South Corporation is the Other Seller; (c) Highland Grove, located in
Highland, Indiana, of which Opus North Corporation is the Other Seller; and (d)
Arrowhead Crossing, located in Phoenix, Arizona, of which Opus Southwest
Corporation is the Other Seller.
(ix) "Other Sale Agreement" or "Other Sale Agreements" shall
mean, in respect to the Other Centers, those other four Agreements of Purchase
and Sale entered into,
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effective as of the date hereof, by and between Purchaser hereunder, as the
purchaser thereunder, and, in respect to each Other Sale Agreement, one of the
Other Sellers, as the seller thereunder.
(x) "Other Seller" or "Other Sellers" shall mean any one or
more of the following: Opus South Corporation, a Florida corporation; Opus
Southwest Corporation, a Minnesota corporation; Opus North Corporation, an
Illinois corporation; and Opus Corporation, a Minnesota corporation..
(xi) "Qualified Lease" shall mean, on the Closing Date or on
the dates during or after the Earn-Out Period on which an Earn-Out Payment is
required to be paid hereunder, any Lease or New Lease that, pursuant to the
terms thereof:
(a) has been fully executed by either Seller or
Purchaser (or its successor), as lessor, and by the Tenant or New
Tenant, as lessee;
(b) the Tenant or New Tenant (1) has taken possession
of the premises that is the subject of the Lease or New Lease; (2) has
commenced paying Rent thereunder, provided, however, if Seller pays to
Purchaser the amount of (y) any free Rent afforded such Tenant or New
Tenant, or (z) the amount of Rent that would have been payable by such
Tenant or New Tenant, but for a fitting-up or fixturing period afforded
to such Tenant or New Tenant, then the provisions of this clause (2)
shall not apply (provided that in the instance of clauses (y) and (z),
Seller shall not be permitted to pay such Rent for a period greater
than three (3) months); (3) has not terminated its Lease or New Lease
or been terminated by the landlord thereof as a result of a default
thereunder by such Tenant and New Tenant; (4) in the instance of the
Closing Date, if it occurs (i) on or before the fifteenth (15th) of a
month, the Rent payment obligations thereunder are not delinquent for a
period longer than the month preceding the month in which the Closing
Date occurred, or (ii) after the fifteenth (15th) of a month, the Rent
payment obligations thereunder are not delinquent for a period longer
than the month in which the Closing Date occurred; and (5) in the
instance of an Earn-Out Payment for the Earn-Out Period, the Rent
payment obligations thereunder are not delinquent for a period longer
than the month in which the Earn-Out Payment is due (in respect to
clauses (4) and/or (5), for any Rent that is past due longer than the
period set forth therein, "Monetary Default");
(c) the Tenant or New Tenant, as of the date an
Earn-Out Payment is required to be paid hereunder in respect thereto,
is not in voluntary or involuntary proceedings filed by or against it
under Section 365 of the U.S. Bankruptcy Code ("Bankruptcy
Proceeding"); and
(d) the Earn-Out Conditions (as hereinafter defined)
therefor have been satisfied.
(xii) "Vacant Space" shall mean space in the Project that is
rentable for commercial purposes and that is not the subject of a Lease, New
Lease or any other occupancy
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right as of the Closing Date. If a Lease, New Lease or any other occupancy right
that is fully executed prior to the expiration of the First Segment (as
hereinafter defined) is terminated prior to the expiration of the First Segment
(provided Purchaser consents, in its sole discretion, to such termination), no
Closing Payment or Earn-Out Payment has been paid in respect to such terminated
Lease, New Lease or any other occupancy right, and the subject space is not the
subject of a different Lease, New Lease or any other occupancy right at the
expiration of the First Segment, then such space shall also be deemed to be
"Vacant Space" at the expiration of the First Segment.
13.02 CLOSING DATE PURCHASE PRICE COMPUTATION. On the Closing Date, as part of
the Purchase Price, Purchaser shall pay to Seller the Closing Payment computed
in accordance with the provisions of Paragraph 13.01(ii) hereof and Seller shall
retain and be deemed to have earned the Lump Sum Payment.
13.03 LEASE ASSIGNMENT RESERVATION. Notwithstanding any provisions to the
contrary contained in this Agreement, Seller shall be entitled to reserve from
the Lease Assignment ("Assignment Reservation") all of the remedies (but
excluding any eviction actions or summary depossess actions) of the landlord
under the subject Leases or New Leases (that are executed by Seller) that
pertain to (i) an event(s) that occurred prior to the Closing Date, but the
obligation of indemnity by or performance of the subject Tenant or New Tenant in
respect to such event does not arise until on or subsequent to the Closing Date;
(ii) the recovery of Rent that is either due and payable prior to the Closing
Date or due prior to the Closing Date, but not payable until thereafter,
including Unknown Rents (as hereinafter defined); and (iii) the recovery of any
base rent portion of Rent that is due under Leases or New Leases prior to the
date ("Reserved Base Rent Date") that is the first to occur of (y) the date on
which the Earn-Out Payment in respect thereto is paid (if any is required as
hereafter provided), and (z) the date ("Lease Reservation Date") that is five
(5) months subsequent to the date (subject to Force Majeure) that is set forth
in the subject Lease or New Lease for the commencement of the term thereof.
Because Purchaser is to be the payee of Rent under Leases and New Leases due on
and after the Closing Date, the Lease Assignment shall not specifically reserve
the Assignment Reservation provisions provided in clause (iii), provided
Purchaser is not required to make any out-of-pocket expenditures to third
parties and Purchaser applies all Rents received after the Closing first to Rent
then due under the applicable Leases and New Leases as provided in Paragraph
14.02 hereof, Purchaser agrees to fully cooperate with Seller in prosecuting
against the applicable Tenant or New Tenants the rights reserved in the
Assignment Reservation, provided, further, however, that prior to the
commencement of any action or proceeding against such Tenant or New Tenant,
Seller notifies Purchaser of its intent to commence any such action or
proceeding and affords Purchaser a reasonable period of time to resolve the
matter with such Tenant or New Tenant before Seller commences any such action or
proceeding.
.
13.04 NEW LEASES. Except for New Leases presented to Purchaser by Seller as
hereafter provided, Purchaser and its successors, during the Earn-Out Period,
shall not enter into
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any lease, tenancy, occupancy agreement, rental agreement, option, license or
concession for space in the Project (collectively, "Rental Undertaking"),
without first obtaining Seller's prior written consent, which consent shall not
be unreasonably withheld or delayed. If Seller consents as aforesaid to a Rental
Undertaking, such approved Rental Undertaking shall be deemed a New Lease.
During the period commencing on the date hereof and ending on the expiration of
the Earn-Out Period, Seller shall have the exclusive right to negotiate
prospective New Leases, except in the instance of Rental Undertakings to which
Seller has consented as aforesaid. Purchaser agrees to bind its successors,
assigns and their successors and assigns to the provisions of this Paragraph
13.04.
Seller shall keep Purchaser reasonably advised of the terms,
provisions and conditions of such prospective New Leases as well as the identity
of and the available financial information pertaining to the lessee ("Prospect")
of a proposed New Lease. Purchaser agrees to reasonably cooperate with and
advise Seller whether the credit worthiness of the Prospect is acceptable to
Purchaser and of those terms, provisions and conditions proposed for prospective
New Leases that Purchaser approves or disapproves. Purchaser agrees not to
unreasonably withhold or delay its consent and approval of the credit worthiness
of the Prospect or of such terms, provisions and conditions, provided the same
are reasonably consistent with the Leases and New Leases (or does not violate
any provision thereof) in respect to (i) rental rates and proposed Tenant
Inducements for comparable space within the Project for Prospects of comparable
net worth, (ii) duration of lease term, and (iii) exclusive uses proposed for
the Prospect.
Under the provisions of a New Lease, (i) for the period prior
to the Closing Date, Seller shall be the landlord thereof, and (ii) for the
Earn-Out Period, Purchaser shall be the landlord thereof and Seller shall be a
party thereto, as contractor, for the limited purpose of performing the New
Lease Obligations (as hereinafter defined).
When and as a final draft of a New Lease is prepared, Seller
shall deliver a true and complete copy thereof to Purchaser along with all
financial information pertaining to the Prospect that is in Seller's possession
or under its control that was not theretofore delivered to Purchaser. Purchaser
shall advise Seller, in writing, within ten (10) business days after Purchaser's
receipt of the draft New Lease, whether Purchaser approves or disapproves the
same. If Purchaser notifies Seller as aforesaid of Purchaser's disapproval of a
draft New Lease ("Disapproved Lease"), such notice shall set forth, in
reasonable particularity, the reasons for Purchaser's disapproval. If Purchaser
fails to so notify Seller of whether the draft New Lease is approved or
disapproved as aforesaid, it shall act as notice to Seller that Purchaser has
approved the same. When a prospective New Lease has been approved or is deemed
to have been approved, (i) in the instance of prospective New Leases to be
executed prior to the Closing, Seller shall execute the same as landlord
thereunder, and (ii) in the instance of prospective New Leases to be executed
during the Earn-Out Period, Seller shall promptly thereafter deliver execution
originals of the same to Purchaser that have been executed by the subject
Prospect, as the New Tenant, and by the Seller and/or Contractor in respect to
the New Lease Obligations. Within five (5) business days following Purchaser's
receipt of execution originals as aforesaid in
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clause (ii), Purchaser shall execute and return the same to Seller. If Purchaser
fails to return, when required, said originals executed by Purchaser as
aforesaid, such New Lease ("Unsigned Lease") shall automatically be deemed a New
Lease that is fully executed during the Earn-Out Segment (as hereinafter
defined) in which Seller delivered it to Purchaser for execution, and shall be
deemed a Qualified Lease and the Earn-Out Conditions in respect thereto
satisfied on the sixth (6th) business day after it was delivered to Purchaser,
notwithstanding the provisions of Paragraph 13.01(xi) hereof. As a result,
subject to the provisions of the next sentence, Purchaser shall pay to Seller,
on the twenty-fifth (25th) day of the month first occurring thereafter, the
Earn-Out Payment computed in respect to such Unsigned Lease. However, in the
event, after the date an Unsigned Lease became a Qualified Lease as aforesaid
and prior to the date the Prospect thereof withdraws its signature thereto,
Purchaser executes and returns to Seller such Unsigned Lease, Seller agrees to
be bound by and to perform the New Lease Obligations for such Unsigned Lease.
In the event, at any time prior to the date that is three (3)
months subsequent to the expiration date of the Earn-Out Segment in which there
was a Disapproved Lease, Purchaser (or its successors or assigns) enters into
any Rental Undertaking with the Prospect of such Disapproved Lease, such Rental
Undertaking shall automatically, notwithstanding the provisions of Paragraph
13.01(xi) hereof, be deemed to be a Qualified Lease, and Purchaser shall pay to
Seller, on the twenty-fifth (25th) day of the month first occurring after such
Rental Undertaking was signed by Purchaser, an amount equal to (a) the Earn-Out
Payment computed in respect to the provisions of such Rental Undertaking as a
Qualified Lease, minus (b) the Footage Payment, if any, that was previously paid
by Purchaser in respect to the portion of the Project that is the subject of
such Rental Undertaking, minus (c) the costs incurred by Purchaser to unrelated
third parties for the construction and completion of tenant improvements and
broker's commissions for the subject Rental Undertaking, but in an amount, in
either instance, not greater than the cost of those tenant improvements and
Commissions provided in the Disapproved Lease, and minus (d) any unsatisfied
right of offset afforded Purchaser pursuant to Paragraphs 5.04, 9.03, 14.06,
14.07 and 16.01 hereof. The obligations of Purchaser under the provisions of
this grammatical paragraph shall survive the Closing and the later expiration of
the Earn-Out Period.
13.05 EARN-OUT PERIOD. The hereafter provided period of time subsequent to the
Closing Date shall be divided into two segments (respectively, "First Segment,"
and "Second Segment," and generally, "Earn-Out Segment,"). Each Earn-Out Segment
during which Seller has elected, as hereafter provided, to extend the term of
this Agreement shall be for a period of five (5) months or for such longer
period as provided in Section 13.06 hereof. The First Segment shall commence on
the day after the Closing Date, and the Second Segment (if Seller elected or is
deemed to have elected to extend the Earn-Out Period) shall commence on the day
after the expiration of the First Segment. Provided the Closing occurs, Seller
hereby elects to extend the term of this Agreement for the First Segment. Seller
may elect, in its sole discretion, to extend the term of this Agreement for the
Second Segment by delivering to Purchaser Seller's written notice of such
election ("Earn-Out Extension Notice") not less than thirty (30) days prior to
the expiration of the First Segment. If Seller fails to deliver, as aforesaid,
its Earn-Out Extension Notice, it shall act as notice to Purchaser that Seller
has elected not to extend the term of this
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Agreement for the Second Segment. The aggregate of the Earn-Out Segments for
which Seller has elected to extend the term hereof shall be referred to as the
"Earn-Out Period."
13.06 CASUALTY DURING EARN-OUT PERIOD. If, during the Earn-Out Period, there is
a Casualty to a Vacant Space, the Earn-Out Period and the applicable Earn-Out
Segment shall be tolled as to the damaged Vacant Space until such time as
Purchaser causes such damaged Vacant Space to be restored to a habitable
condition, exclusive of tenant's improvements. If, during the Earn-Out Period,
there is a Casualty to twenty five percent (25%) or more of the Square Footage
of the Improvements (exclusive of the Vacant Space), the Earn-Out Period and the
applicable Earn-Out Segment shall be tolled until such time as such damaged
Improvements are restored to a condition so that the Tenants or New Tenants
thereof are open and operating their respective businesses therein, except in
respect to those Tenants or New Tenants whose Leases or New Leases were
terminated as a result of the subject Casualty. Purchaser agrees to promptly
notify Seller, in writing, of the occurrence of a Casualty. Notwithstanding the
foregoing, in the event of such a Casualty, Seller shall deliver to Purchaser,
within ten (10) days following the date of Seller's receipt of Purchaser's
written notification, Seller's written notice ("Casualty Notice") of its good
faith determination that such Casualty is the proper basis for the tolling of
the applicable Earn-Out Segment. If Seller fails to deliver a Casualty Notice as
aforesaid, it shall act as notice to Purchaser that Seller is not claiming any
tolling of the applicable Earn-Out Segment in respect to such Casualty.
Regardless of a Casualty Notice, there will be no tolling of the Earn-Out Period
if Purchaser restores the applicable portion of the Improvements within thirty
(30) days following the date of such Casualty. However, if such restoration is
not completed within said thirty (30) days, the Earn-Out Period shall be tolled
commencing on the date of the Casualty and ending on the date provided in the
first two sentences of this Paragraph 13.06. During the Earn-Out Period, subject
to Force Majeure, Purchaser agrees to diligently undertake the restoration of
the applicable portion of the Improvements following a Casualty thereto.
13.07 EARN-OUT PAYMENTS. In respect to Leases or New Leases that are fully
executed prior to the expiration of the Earn-Out Period, on the twenty-fifth
(25th) day of each calendar month after the Closing Date, provided the subject
Lease or New Lease is a Qualified Lease prior to the Lease Reservation Date,
Purchaser shall pay to Seller the Earn-Out Payment computed in respect to those
Leases and New Leases that became, for the first time, Qualified Leases during
the preceding month and for which no Earn-Out Payment had been previously paid
to Seller. In the event a New Lease is executed during the First or Second
Segment, but it does not become a Qualified Lease until after the expiration of
the Earn-Out Period, but prior to the Lease Reservation Date, Purchaser, subject
to the satisfaction of the Earn-Out Conditions, shall pay to Seller at the time
aforesaid, an amount equal to the Earn-Out Payment computed in respect to such
subsequent Qualified Lease. Any Earn-Out Payment shall be subject to any
unsatisfied right of offset as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof.
Notwithstanding the foregoing, the Earn-Out Payment or Closing
Payment in respect to a particular Qualified Lease (excluding those that are
Qualified Leases in respect to an Unsigned Lease or a Rental Undertaking with
the Prospect of a Disapproved Lease as provided
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in each instance in Paragraph 13.04 hereof) shall not be due and payable by
Purchaser to Seller, unless and until, Seller, prior to the Lease Reservation
Date, has delivered or caused to be delivered to Purchaser, in respect to the
subject Qualified Lease, (i) a fully executed original thereof; (ii) a
certificate of occupancy from the applicable governmental authority authorizing
the uninterrupted occupancy by the subject Tenant or New Tenant of the subject
premises; (iii) the applicable Tenant Estoppel containing no material exceptions
or Seller's Estoppel, if in accordance with the provisions of Paragraph 7.15
hereof; (iv) Schedule 10.01(xvii) from Seller in respect to the subject Lease
or New Lease, updated to the date the Earn-Out Payment is due, setting forth any
unsatisfied Tenant Inducement in respect thereto; (v) evidence, in form and
content reasonably satisfactory to Purchaser, that the portion of Tenant
Inducements payable to the subject Tenant or New Tenant has been paid by Seller;
(vi) an original of the insurance certificates required from the subject New
Tenant under the Qualified Lease; (vii) the date down and increased coverage
endorsement for the Title Policy required pursuant to the provisions of
Paragraph 6.04 hereof, provided Purchaser pays fifty percent (50%) of the Shared
Closing Costs in respect thereto; and (viii) copies of the "as-built" plans and
specifications for the tenant improvements for the subject Qualified Lease
(collectively, in respect to clauses (i) through (viii) above, "Earn-Out
Conditions"). The Earn-Out Payment obligations of this Paragraph 13.07 shall
survive the Closing Date and the later termination of this Agreement. If the
Earn-Out Conditions are not satisfied for the subject Lease or New Lease on or
prior to the Lease Reservation Date therefor, then Purchaser shall have no
obligation to make any Earn-Out Payment in respect thereto.
13.08 FOOTAGE PAYMENT. In the event Seller elects not to extend the Earn-Out
Period for the Second Segment, Purchaser shall pay to Seller, when hereafter
provided, an amount ("Footage Payment") equal to the Square Footage (as
hereinafter defined) of the Vacant Space existing at the expiration of the First
Segment, multiplied by (i) $55.00 for that portion of the Vacant Space that is
not greater than one hundred feet in depth as measured from the front exterior
surface to the rear exterior surface, and (ii) $45.00 for that portion of the
Vacant Space that is greater than one hundred feet in depth measured as
aforesaid. If Seller elects or is deemed to have elected to extend the term of
the Earn-Out Period for the Second Segment, there will be no Footage Payment.
"Square Footage" shall mean the aggregate number of square feet of the Vacant
Space measured from the front exterior surface to the rear exterior surface and
from the middle of demising walls of such Vacant Space. Within forty-five (45)
days following the date Seller has elected or is deemed to have elected not to
extend the term of the Earn-Out Period for the Second Segment, Seller shall
deliver to Purchaser Seller's computation of the amount of the Footage Payment
("Footage Computation") which will set forth the identity of the Vacant Space,
the depth of the Vacant Space, and the amount of the Square Footage contained
therein. Unless Purchaser notifies Seller within ten (10) business days
following Purchaser's receipt of the Computation Notice that Purchaser disagrees
with the provisions thereof, Purchaser shall pay to Seller, within thirty (30)
days following Purchaser's receipt of the Computation Notice the amount of the
Footage Payment provided therein. If Purchaser does object to the Computation
Notice as aforesaid, Purchaser and Seller shall promptly confer, in good faith,
to resolve the disagreement. When the disagreement is resolved, within ten (10)
business days thereafter, Purchaser shall pay to Seller the resolved Footage
Payment. Any Footage Payment shall be
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subject to any unsatisfied right of offset as provided in Paragraphs 5.04, 9.03,
14.06, 14.07 and 16.01 hereof.
13.09 INTENTIONALLY DELETED
13.10 SELLER'S NEW LEASE OBLIGATIONS. Seller and Contractor, jointly and
severally, at their sole cost and expense, shall (i) apply for and obtain all
permits and licenses necessary to construct all tenant improvements required
under New Leases; (ii) subject to Force Majeure, construct and complete, when
required under the provisions of New Leases, all such tenant improvements; (iii)
pay, when due, all Commissions in respect to New Leases; (iv) provide and
undertake the required New Lease construction and warranty work ("Tenant
Warranty"); and (v) provide the builder's "all risk" and general liability
insurance coverage required by the subject New Lease in respect to such
construction (collectively in respect to clauses (i) through (v), "New Lease
Obligations").
13.11 PUNCHLIST. The portion of the Purchase Price payable at Closing as
computed pursuant to the provisions of Paragraph 13.02 hereof and the amount of
each Earn-Out Payment due hereunder shall be reduced by an amount which shall be
held by Purchaser and disbursed as hereafter provided, which amount shall equal
one hundred and twenty five percent (125%) of the reasonably estimated cost of
(i) completing all of the tenant improvements for work for Leases and New Leases
that are Qualified Leases as of the Closing Date, and/or Earn-Out date. The
amount of the Footage Payment payable hereunder shall be reduced by an amount
which shall be held by Purchaser and disbursed as hereafter provided, which
amount shall equal one hundred twenty-five percent (125%) of the reasonably
estimated cost of constructing and completing substantially to those standards
for the shell and core portion of those Improvements comprising the Project that
are each set forth on the Shell and Core List and Standard attached hereto as
Schedule 13.11 (collectively, in respect to the first and second sentences of
this Paragraph 13.11, "Punchlist Holdback"). The Punchlist Holdback shall be
compiled in a line item format in respect to major segments for completing such
incomplete items and shall set forth the reasonable cost of completing each such
line item. If Seller, Contractor and Purchaser, within fifteen (15) days prior
to the Closing Date, are unable to agree on the scope or amount of each
Punchlist Holdback line item, Seller, Contractor and Purchaser shall appoint a
third party contractor to make such determination, and the scope and amount so
determined by the third party contractor shall be binding upon the Parties and
Contractor. When the scope and amount of the Punchlist Holdback is determined as
aforesaid, it shall be attached to this Agreement, respectively, as Schedule
13.11(a)(1), 13.11(a)(2), etc. Thereafter, subject to Force Majeure, Seller and
Contractor, jointly and severally, at their sole cost and expense (regardless of
the amount of the Punchlist Holdback), agrees to diligently prosecute to
completion ("Punchlist Work") all of the items on each Schedule 13.11(a)
attached hereto. The obligation of Seller and Contractor to complete the
Punchlist Work is absolute and unconditional. Monthly, after the Closing Date,
when Punchlist Work pertaining to various line items on the Punchlist Holdback
is complete, Purchaser shall pay to Seller one hundred percent (100%) of that
portion of the Punchlist Holdback applicable to such completed Punchlist Work
(thereby retaining twenty-five percent (25%) thereof), provided Contractor has
delivered to
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Purchaser a Form G704 in the form attached to the Exhibit Agreement as Schedule
13.11(b), executed by Contractor setting forth that the subject line item of
Punchlist Work has been completed.
When all of the Punchlist Work has been completed and the
Forms G704 therefor have been delivered to Purchaser, Purchaser shall pay to
Seller the remaining twenty-five percent (25%) of the Punchlist Holdback,
provided Seller has delivered to Purchaser the following documents:
(a) Evidence that all payment in the manner required by the
applicable contract, agreement or undertaking is paid in full in respect to the
subject Punchlist Work;
(b) Lien waivers required by (and that are reasonably
satisfactory to) the Title Company from the Seller, Contractor and their
contractor and subcontractors that are necessary to insure over Liens in respect
to the Punchlist Work; and
(c) In respect to the portion(s) of Punchlist Work for
incomplete tenant improvements under a Lease or New Lease, an acknowledgment
from the subject Tenant or New Tenant, in form and substance reasonably
acceptable to Purchaser, setting forth the applicable Tenant's or New Tenant's
acceptance of completion of the subject tenant improvements.
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS.
All of the items of income and expense mentioned in this
Section 14 shall be apportioned or adjusted between Seller and Purchaser as of
12:01 A.M., local time of the Project, as of the Closing Date. Except as
provided in the instance of Unknown Rents as provided in Paragraph 14.03 hereof,
all apportionments and adjustments shall be made as of the Closing Date. To the
extent that the apportionments and adjustments, at the Closing, are based upon
any errors or omissions in the calculation or determination thereof, promptly
after notice of such errors or omissions, the Parties shall readjust or
reapportion and make the payment required as a result thereof.
14.01 RENTS. The fixed and minimum rents and all additional rents, escalation
charges, common area maintenance charges, imposition charges, heating and
cooling charges, insurance charges, charges for utilities, percentage rent, and
all other rents, charges and commissions (collectively, the "Rents") payable by
the Tenants under the Leases and New Leases that are Qualified Leases as of the
Closing Date, to the extent collected by Seller on or prior to the Closing Date
and which represent payments of Rents applicable to a period of time subsequent
to the Closing Date. Notwithstanding the foregoing, Seller shall be permitted
the rights against Tenants and New Tenants as provided in the Assignment
Reservation set forth in Paragraph 13.03 hereof.
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14.02 ARREARS. Any of the Rents that are due and payable by the Tenants and New
Tenants on or prior to the Closing Date, but which have not been collected by
the Seller on or prior to the Closing Date, or payment of which has been
deferred until after the Closing Date ("Arrears"), to the extent applicable to
any period of time on or prior to the Closing Date, and which are paid after the
Closing Date shall, subject to the terms below, be paid to Seller and be the
subject of the Assignment Reservation, and if the Arrears are received by
Purchaser, Purchaser shall pay the Arrears to Seller after collection by
Purchaser, provided, however, that if any Arrears exist on the Closing Date, all
Rents, received and collected by Purchaser after the Closing Date shall be
applied first to payment of all Rents due Purchaser and second to all Arrears
due Seller. Purchaser shall have no obligation to collect any Arrears or to
commence any action to enforce the obligation of Tenants to pay the Arrears, but
Purchaser agrees to cooperate with Seller in the collection of such Arrears, but
only as provided in Paragraph 13.03 hereof. In the event Purchaser elects to
commence any action or proceeding against any Tenant and as a result thereof
collects any Arrears which Purchaser is required to remit to Seller, Purchaser
shall be entitled to deduct and retain a portion of the amount collected which
is equal to the Pro Rata Share (as hereinafter defined) of the Litigation
Expenses incurred by Purchaser in connection with the collection of the Arrears.
Notwithstanding anything to the contrary, Seller, as a result of the Assignment
Reservation, shall have the right, after delivery of prior written notice to
Purchaser, to commence any action or proceeding, except a summary depossess or
any eviction actions, against any Tenant for Seller's portion of any Arrears.
14.03 UNKNOWN RENTS. Any Rents which have accrued but are not due and payable on
the Closing Date because the applicable Lease or New Lease year or other fiscal
period for which such Rents are to be computed has not yet expired (including by
way of example only, escalation charges and percentage rents) or if it has
expired but cannot for any other reason be calculated by the Parties on the
Closing Date ("Unknown Rents"), shall be apportioned promptly after (i) the
expiration of the applicable Lease or New Lease year or other fiscal period, and
(ii) the receipt and collection of the Unknown Rents. Purchaser shall make
reasonable efforts to ascertain the amount of the Unknown Rents (but, shall not
be obligated to commence any action or proceeding to collect Unknown Rents,
except that Purchaser shall reasonably cooperate with Seller in respect to the
Assignment Reservation as provided in Paragraph 13.03 hereof), and when the
amounts of the Unknown Rents are ascertained, received and collected by
Purchaser, Purchaser shall promptly pay to Seller a portion (the "Pro Rata
Share") of the Unknown Rents determined by multiplying the Unknown Rents
collected by a fraction, the numerator of which is the number of days in the
applicable Lease or New Lease year or other fiscal period up to but excluding
the Closing Date and the denominator of which is the number of days in the
applicable Lease or New Lease year or other fiscal period, less any monies
Seller has previously received on account of the Unknown Rents and Seller's Pro
Rata Share of the Litigation Expenses incurred by Purchaser in the collection of
the Unknown Rents. In the event it is determined after Closing that the amount
of the Unknown Rents received by Seller exceeds the Seller's Pro Rata Share,
Seller shall promptly pay such excess to Purchaser upon demand. Notwithstanding
anything to the contrary, Seller shall have the right to commence any action or
proceeding, except a summary depossess or an eviction action, against any Tenant
for Seller's portion of any Unknown Rents.
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14.04 UTILITIES. To the extent not payable by Tenants or New Tenants, the actual
or estimated charges for utilities accrued and payable by Seller prior to the
Closing Date, provided Purchaser is required by law or elects to assume Seller's
account. Deposits for utilities (the "Utility Deposits"), plus any interest on
the Utility Deposits to which Seller is or will be entitled, held by the
provider of the utilities and which are freely transferable to Purchaser, shall,
at the election of the Purchaser, be assigned by Seller to Purchaser and
Purchaser shall pay Seller the full amount thereof at Closing, in addition to
the applicable portion of the Purchase Price. Seller shall retain the right to
obtain a refund of any Utility Deposits which are not required to be assigned to
Purchaser and Purchaser will cooperate with Seller in obtaining any refund. With
respect to water, sewer, electric and gas charges, Seller shall make reasonable
efforts to obtain a reading of the meter or other consumption measuring device
as of the Closing Date. If the Seller is unable to obtain such a reading, Seller
shall furnish a reading as of a date not more than thirty (30) days prior to the
Closing Date and the unknown charges shall be apportioned on the basis of an
estimate computed by utilizing such reading and the most recent bill from the
utility provider, computed on an equal per diem basis.
14.05 CONTRACTS. Prepaid charges, payments and accrued charges under the
Contracts set forth in Schedule 7.05(a) attached hereto to the extent no paid by
Tenants or New Tenants. However, if paid by Tenants or New Tenants, Seller shall
credit Purchaser with the amount thereof received by Seller from such Tenants or
New Tenants, to the extent not applied to the payment obligations under the
Contracts.
14.06 TAXES. Real estate taxes are assessed, due and payable in the same fiscal
year which commences on July 1 of each year and ends on June 30 of the
succeeding year. Seller shall cause all real estate taxes for fiscal year
preceding the fiscal year in which the Closing occurs and prior fiscal years to
have been paid as of the Closing Date. The estate taxes for the Project for the
fiscal year in which the Closing occurs shall be pro-rated as of the Closing
Date. Seller's pro-rata share of such real estate taxes shall be calculated
based upon the number of days elapsing from July 1, to, but not including, the
Closing Date in relation to 365 days in such fiscal year. Purchaser shall be
responsible for the remaining portion of such real estate taxes, commencing with
the Closing Date and continuing through June 30. If the Closing Date occurs on
or before June 30, Purchaser shall pay to Seller Purchaser's pro-rata share of
real estate taxes for the fiscal year in which the Closing occurs, if any real
estate taxes for such fiscal year have then been paid by Seller and if the
portion so paid by Seller relates to Purchaser's pro-rata share. If the Closing
Date occurs on or after July 1, Seller shall credit to Purchaser Seller's
pro-rata share of real estate taxes for the fiscal year in which the Closing
occurs, minus any portion thereof theretofore paid by Seller. Notwithstanding
the foregoing, to the extent there are Tenants or New Tenants that pay their
Real Estate Tax Rent (as hereinafter defined) on a lump sum basis, Seller shall
not be required to credit Seller with that portion of the pro-rata share of the
fiscal year real estate taxes in which the Closing occurs for the period from
July 1 to the Closing Date for which such lump sum paying Tenants and New
Tenants are responsible ("Lump Sum Non-Credit"). However, if any such Tenant or
New Tenant fails to pay their respective lump sum portion of Real Estate Tax
Rent when due that is applicable to a Lump Sum Non-Credit, Purchaser shall
notify Seller of the same, in writing,
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and Seller shall pay such unpaid amount within five (5) business days and such
amount so paid by Seller shall be deemed Arrears. In the event Seller fails to
pay such amount, Purchaser shall be permitted to offset any Footage Payment,
Earn-Out Payment or other sum payable by Purchaser to Seller hereunder that is
thereafter due. To the extent there are insufficient future payments due Seller
from Purchaser against which to make such offset, Purchaser shall have the
remedy against Seller as provided in Paragraph 18.05 hereof. The Parties shall
make the pro-ration provided for herein on the basis of the most recently
available tax statement, and shall thereafter make such adjustments as may be
necessary at such time as the tax statement becomes available for the total real
estate taxes for fiscal year in which the Closing.
The portion of the Rent under Leases and New Leases that pertains to
the obligations of Tenants and New Tenants to pay their respective pro-rata
share of real estate taxes (or special assessments provided in Paragraph 14.07
hereof) shall be called "Real Estate Tax Rent." The portion of Real Estate Tax
Rent that pertains to the period prior to the Closing Date and which was paid to
Seller by those Tenants and New Tenants shall be retained by Seller. Any Real
Estate Tax Rent received by Seller prior to the Closing Date that pertains to
the period on or subsequent to the Closing Date shall be credited to Purchaser
at the Closing. Any Real Estate Tax Rent received by Purchaser after the Closing
that pertains to the period prior to the Closing Date shall be paid by Purchaser
to Seller. The Real Estate Tax Rent retained by Seller shall be subject to
adjustment (increases or decreases) at such time as Purchaser reconciles the
estimated payment of Real Estate Tax Rent with the amount of the actual real
estate taxes paid for the fiscal year in which the Closing occurs.
14.07 ASSESSMENT INSTALLMENTS. If, as of the Closing Date, the Project is
encumbered or otherwise affected by any assessment (whether or not a lien) which
becomes payable in installments, for the installment that is due and payable in
the fiscal year in which the Closing occurs, Seller shall credit Purchaser with
the pro-rata portion of such installment from July 1 of the fiscal year in which
the Closing occurs to the Closing Date, except for an amount that would be equal
to the Lump Sum Non-Credit. Such pro-ration shall be made on the basis that the
number of days from July 1 of the fiscal year in which Closing occurs to, but
excluding, the Closing Date bears to three hundred and sixty five (365) days.
The portion of Real Estate Tax Rent applicable to the installment of assessment
payable in the fiscal year in which the Closing occurs that pertains to the
period prior to the Closing and which was paid to Seller by Tenants or New
Tenants shall be retained by Seller. Any Real Estate Tax Rent applicable to such
installment or assessment that was received by Seller prior to the Closing Date
that pertains to the period on or subsequent to the Closing Date shall be
credited to Purchaser at the Closing. Any Real Estate Tax Rent applicable to
such installment of assessment received by Purchaser after the Closing Date that
pertains to the period prior to the Closing Date (except that which is a Lump
Sum Non-Credit) shall be paid by Purchaser to Seller. If any Tenant or New
Tenant who pays their respective Real Estate Tax Rent on a lump sum basis and
for whom a Lump Sum Non-Credit was provided, Seller shall remain responsible for
the Lump Sum Non-Credit as provided in Paragraph 14.06.
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14.08 PERMITS. The (i) Vault taxes and rents, if any, due and payable in 1996
(to the extent not the obligation of Tenants or New Tenants to pay), (ii) Permit
fees to the extent transferable, and (iii) government inspection fees shall be
apportioned as of the Closing Date.
14.09 SECURITY DEPOSITS/TENANT INDUCEMENTS. Purchaser shall receive a credit
against the portion of the Purchase Price payable on the Closing Date in an
amount equal to the sum of (i) the Security Deposits, if any, which Seller is
holding pursuant to the Leases and New Leases and as set forth in Schedule
7.02(a) attached hereto, plus (ii) all costs, expenses and losses (including
without limitation, reductions in Rent) which will be incurred by Purchaser
after the Closing as a result of all Tenant Inducements given on or before the
Closing Date which are not paid in full as of Closing in respect to Qualified
Leases as of the Closing Date.
14.10 CUSTOMARY ITEMS. Any other items of income and expense not specifically
mentioned in this Section 14 which are customarily apportioned in real property
transactions of the character contemplated by this Agreement.
15. CLOSING.
15.01 CLOSING CONTINGENCY AND CLOSING DATE. This Agreement is contingent
("Haggen Contingency") on Haggen, Inc. ("Haggen"), a Tenant under its Lease
("Haggen Lease"), (i) being open for business in its premises on or before
December 31, 1996 ("Outside Date"), and (ii) the Haggen Lease being a Qualified
Lease on or before the Outside Date. If the Haggen Contingency is satisfied
prior to the Outside Date, promptly thereafter, Seller shall advise Purchaser,
in writing, of the same, and the closing of this transaction ("Closing") shall
be held at the office of Opus Properties on the date ("Closing Date") that is
ten (10) business days subsequent to the date Purchaser receives Seller's
written notification that the Haggen Contingency has been satisfied.
Notwithstanding the foregoing, the Closing Date may be extended as provided in
Paragraphs 5.04, 6.03, 7.20 and 12.03. However, if the Haggen Contingency is not
satisfied prior to the Outside Date, this Agreement shall automatically
terminate, the Deposit shall be returned to Purchaser, the Lump Sum Payment
shall be retained and deemed earned by Seller, Purchaser and Seller shall each
pay 50% of the Shared Closing Costs incurred as of the termination date, and
neither Party shall have any further rights or obligations hereunder, except
those specifically provided herein that survive the termination of this
Agreement.
16. POSSESSION.
16.01 POSSESSION AND POST CLOSING WORK. Purchaser shall be entitled to
possession on the Closing Date, subject only to the Leases, New Leases,
Assignment Reservation and the Permitted Exceptions. Notwithstanding the
foregoing, subsequent to the Closing Date, Seller and Seller's agents,
contractors and subcontractors (including the Contractor) shall have access to
such portions of the Project necessary and convenient to commence and/or
complete (i) the Punchlist Work; (ii) Unacceptable Conditions; (iii) Seller's
New Lease Obligations; (iv) incomplete tenant improvement work under Leases; (v)
Warranty Work; and (vi) Tenant Inducements (collectively in respect to clauses
(i) through (vi), "Post Closing Work"). All Post
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Closing Work shall be done by Seller and Contractor, jointly and severally, (a)
at Seller's and Contractor's sole cost and expense, (b) in a fashion to
reasonably minimize, taking into account the scope and nature of the Post
Closing Work, the disruption to Tenants and New Tenants and to the operation and
management of the Project by Purchaser and Purchaser's agents, (c) in compliance
with Environmental Laws, and (d) in any event, subject to Force Majeure, with
diligence. The obligation of Seller and Contractor to complete the Post Closing
Work and of Seller to pay Commissions and pay all financial obligations of
Seller hereunder is absolute and unconditional, and Seller and Contractor,
jointly and severally, agree to indemnify, defend and hold Purchaser and its
successors and assigns and the Project harmless (including Litigation Expenses)
from and against any and all (except as provided in Paragraph 23 hereof) loss,
damage, claim, demand, liability, Lien, action, cause of action, judgment or
decree as a result of (A) damage or destruction to property, including title to
the Project, (B) personal injury, or (C) loss of Rent resulting from the
performance or non-performance of the Post Closing Work by Seller and Contractor
(except that which is caused, in whole or in part, by the negligence, willful
misconduct or breach of contract by Purchaser or its successors and assigns or
their respective agents, employees, contractors or subcontractors), and
resulting from Seller's failure to pay Commissions or to pay all financial
obligations of Seller hereunder. In the event Seller or Contractor fails to
perform the Post Closing Work, pay Commissions or pay all financial obligations
of Seller hereunder, Purchaser may deduct from the next succeeding Earn-Out
Payment payable hereunder after the event of Seller's failure as aforesaid, the
cost and expense incurred by Purchaser in completing such incomplete Post
Closing Work, paying such unpaid Commissions or paying all financial obligations
of Seller hereunder. During the performance of any Post Closing Work, Seller
shall maintain or cause Contractor to maintain commercial public liability
insurance in an amount and issued by carriers that are reasonably satisfactory
to Purchaser naming Purchaser and those other persons or entities reasonably
designated by Purchaser as additional insureds.
17. RISK OF LOSS.
17.01 RISK. Except as provided in Paragraphs 17.02 and 17.03, the risk of loss
or damage (the "Loss") to the Project by (i) condemnation, eminent domain or
similar actions or proceedings or threat thereof (collectively, "Taking"), or
(ii) fire or other casualty (collectively, a "Casualty") shall be borne by
Seller through the date and time that the applicable portion of the Purchase
Price payable on the Closing Date is paid to Seller and thereafter shall be
borne by Purchaser.
17.02 DAMAGE AND DESTRUCTION. In the event all or any portion of the Project is
materially damaged by any cause whatsoever prior to the Closing Date, Seller
shall so advise Purchaser and Purchaser shall have the right, at its sole
option, to either: (a) proceed with Closing with no reduction in the Purchase
Price, provided, however, Purchaser shall receive from Seller (i) all proceeds
of any casualty insurance maintained by Seller and payable with respect to such
damage, and (ii) an amount equal to the deductible on such casualty insurance;
or (b) terminate this Agreement by giving written notice of termination to
Seller within ten (10) business days of
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the date Purchaser is advised by Seller of such damage, in which event the
Deposit shall be refunded to Purchaser, the Lump Sum Payment shall be retained
and deemed earned by Seller, Seller and Purchaser shall each pay 50% of the
Shared Closing Costs as of the date this Agreement is terminated by Purchaser,
and Seller and Purchaser shall have no further rights or obligations under this
Agreement, except those rights and obligations specifically set forth herein as
surviving such termination. The Seller represents and warrants to Purchaser that
the Improvements (except any Tenant's or New Tenant's trade fixtures therein)
are insured to the full replacement value thereof with a deductible of not more
than $5,000.00, which insurance Seller agrees to keep in full force and effect
until the Closing.
17.03 CONDEMNATION AND EMINENT DOMAIN. If, prior to the Closing Date, the
Project shall be subjected to a Taking, either total or partial, or if any
notice of intent of Taking or sale in lieu of Taking that materially affects the
Project is received by Seller or Purchaser, Purchaser shall have the right to
either: (a) proceed with Closing, in which event Purchaser shall be entitled to
participate in any such condemnation or eminent domain proceedings and, after
payment to Seller of the cash portion of the Purchase Price payable on the
Closing Date, to receive all of the proceeds of such Taking, or (b) terminate
this Agreement by giving written notice of termination to Seller, in which event
the Deposit shall be returned to Purchaser, the Lump Sum Payment shall be
retained and deemed earned by Seller, Seller and Purchaser shall each pay 50% of
the Shared Closing Costs, and Purchaser and Seller shall have no further rights
or obligations under this Agreement, except those rights and obligations
specifically set forth herein as surviving such termination. Seller and
Purchaser each agree to promptly forward to the other any notice of intent
received pertaining to a Taking of all or a portion of the Project.
18. DEFAULTS AND REMEDIES.
18.01 SELLER'S/CONTRACTOR'S DEFAULTS.
(A) Seller's Defaults. In respect to the remedies afforded
Purchaser pursuant to Paragraph 18.04 hereof, Seller shall be deemed to be in
default under this Agreement in the event (i) Seller or Contractor fail, for any
reason (other than a default by Purchaser), to perform any of their material
obligations under this Agreement that arise on or prior to the Closing within
the time limits and in the manner provided for in this Agreement, (ii) any
representation or warranty made by Seller in this Agreement is untrue or
inaccurate in a material respect when made or as of the Closing Date, (iii) any
of the Other Sellers under the Other Sale Agreements fails, for any reason
(other than a default by Purchaser thereunder), to perform any of its material
obligations under the subject Other Sale Agreement that arise on or prior to the
closing for such Other Sale Agreement within the time limits and in the manner
provided for in such Other Sale Agreement, or (iv) any representation or
warranty made by any such Other Seller in the applicable Other Sale Agreement is
untrue or inaccurate in a material respect when made or as of the closing date
for such Other Sale Agreement. Notwithstanding the provisions of clauses (iii)
and (iv) above, if Purchaser closes this transaction, any default or any
inaccurate representation or warranty by any Other Seller under the terms of the
applicable Other Sale Agreement shall be deemed waived in respect to this
Agreement and it shall not be construed
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as a default by Seller hereunder. In respect to the remedies afforded Purchaser
pursuant to Paragraph 18.05 hereof, Seller shall be deemed to be in default
under this Agreement in the event Seller or Contractor fails, for any reason
(other than a default by Purchaser hereunder), to perform any of their material
obligations under this Agreement that arise subsequent to the Closing within the
time limits and in the manner provided for in this Agreement or any
representation or warranty made by Seller or Contractor in this Agreement is
untrue or inaccurate in a material respect when made or as of the Closing Date.
If Closing does not occur and Seller is in default, Seller shall pay all of the
Shared Closing Costs.
(B) Contractor's Default. Contractor shall be deemed to be in
default under this Agreement in the event Contractor fails, for any reason
(other than a default by Purchaser hereunder), to perform any of its material
obligations under this Agreement within the time limits and in the manner
provided for in this Agreement.
18.02 PURCHASER'S DEFAULTS. Purchaser shall be deemed to be in default under
this Agreement in the event Purchaser fails, for any reason (other than a
default by Seller or Contractor), to perform any of its material obligations
under this Agreement or any or all of the Other Sale Agreements within the time
limits and in the manner provided for, as applicable, in this Agreement and the
Other Sale Agreements, or any representation or warranty made by the Purchaser
in this Agreement or any or all of the Other Sale Agreements is untrue or
inaccurate in a material respect when made or as of the Closing Date. If Closing
does not occur and Purchaser is in default, Purchaser shall pay all of the
Shared Closing Costs.
18.03 SELLER'S REMEDIES. If Purchaser is in material default under this
Agreement of its obligation to close this transaction and Seller and Contractor
are not in material default, the sole and exclusive remedy of Seller shall be to
terminate this Agreement by notice given to Purchaser and in such event
Purchaser shall be liable to Seller for liquidated damages in the amount equal
to one percent (1%) of $22,878,566.00 plus Litigation Expenses incurred by
Seller in enforcing the collection of such liquidated damages. The Parties
recognize and agree that the foregoing remedy for liquidated damages is a
reasonable amount in the context of this transaction in which the accurate
measurement of damages is not feasible or convenient. Notwithstanding the
foregoing, if Purchaser (i) violates the Recording Restriction (as hereinafter
defined), (ii) fails to indemnify, defend or hold Seller and the Project
harmless in respect to Tests and Studies as provided in Paragraph 5.02 hereof,
or (iii) fails to bind its successors and assigns as provided in Paragraph 13.04
hereof, Seller, in addition to the aforesaid liquidated damages in respect to
Purchaser's failure to close this transaction, shall be entitled (subject to the
limitations contained in Paragraph 23 hereof) to recover from Purchaser monetary
damages in the amount actually suffered by Seller as a result of the events set
forth in clauses (i), (ii), or (iii). If Purchaser fails to pay, when due, the
Earn-Out Payments and/or Footage Payments required hereunder, Seller shall only
be entitled to recover from Purchaser such Earn-Out Payments or Footage
Payments, plus interest thereon as provided in Paragraph 24.16 hereof, plus
Litigation Expenses.
18.04 PRE-CLOSING PURCHASER'S REMEDIES. If Seller, in respect to its obligations
to close this transaction, is in material default under this Agreement on or
before the Closing Date
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and Purchaser is not in material default, Purchaser may, as Purchaser's sole and
exclusive remedies, elect to either (i) terminate this Agreement, in which event
the Deposit shall be refunded to Purchaser, the Lump Sum Payment shall be
retained and deemed earned by Seller, and neither Party shall have any further
rights or obligations hereunder, except those specifically provided herein as
surviving such termination, or (ii) seek and enforce the specific performance of
Seller's obligations hereunder in which event Purchaser shall also be permitted
to recover Litigation Expenses that it incurred as a result of such proceeding.
Notwithstanding the foregoing, in no instance shall Purchaser or anyone claiming
by, through or under Purchaser (over whom Purchaser has control) record or file
in the public records in the jurisdiction of the Project any memorandum or other
indicia of Purchaser's rights or Seller's obligations hereunder, except in the
single instance of a recording or filing that is concurrently done at the time
of the filing of a complaint by Purchaser, with a court of competent
jurisdiction, for the relief of specific performance of Seller's obligations
hereunder, but then only after Purchaser has given Seller three (3) business
days written notice prior to such recording or filing ("Recording Restriction").
18.05 POST CLOSING PURCHASER'S REMEDIES. If either Seller or Contractor is in
material default under this Agreement in respect to any of their respective
obligations hereunder that arise subsequent to the Closing Date, subject to the
limitation provided in Paragraph 23 hereof, Purchaser may recover from Seller or
Contractor all out-of-pocket monetary damages incurred by Purchaser that have
not been satisfied by the offset permitted Purchaser pursuant to Paragraphs
5.04, 9.03, 14.06, 14.07 and 16.01 hereof. In addition, Purchaser shall be
permitted to recover Litigation Expenses that it incurs as a result of enforcing
Purchaser's right to recover monetary damages as aforesaid. Notwithstanding the
foregoing, it is understood and agreed that Contractor shall not be liable to
Purchaser for any default by Seller of its obligations hereunder. Accordingly,
Purchaser shall not be permitted to recover any monetary damages from or enforce
any other rights against Contractor as a result of any default by Seller
hereunder.
19. CROSS PERFORMANCE OBLIGATION. If Purchaser or its
permitted successors and assigns elects to terminate any of the Other Sale
Agreements for any reason other than Casualty to or Taking in respect to any of
the Other Centers, it shall act as an election of Purchaser under this Agreement
to concurrently terminate this Agreement, and this Agreement thereupon shall
terminate, Purchaser and Seller shall each pay fifty percent (50%) of the Shared
Closing Costs, and neither Purchaser and Seller shall have any further rights or
obligations hereunder, except those specifically provided herein as surviving
such termination.
20. ASSIGNMENT
Seller shall not assign or transfer any of its rights under
this Agreement without first obtaining Purchaser's prior written consent which
consent shall not be unreasonably withheld or delayed. Prior to the Closing,
Purchaser shall not assign any of its rights under this Agreement without first
obtaining Seller's prior written consent which consent shall not be unreasonably
withheld or delayed. At or subsequent to the Closing, Purchaser may assign its
rights under this Agreement provided such assignee and Purchaser are jointly and
severally liable
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for the obligations of Purchaser hereunder and such assignee assumes such
obligations, in writing, in form and content reasonably acceptable to Seller.
21. NOTICES. Any notice, demand, request, approval, consent or
other communication (collectively, a "Notice") concerning this Agreement or the
Project or any matter arising in connection with this Agreement or the Project
shall be in writing. Seller and Contractor hereby appoints Opus Properties,
L.L.C., a Delaware limited liability company ("Opus Properties"), as Seller's
and Contractor's duly authorized and empowered agent to give and receive any and
all Notices required or permitted to be given by Purchaser, Seller, or
Contractor hereunder. Any Notice received by Opus Properties under the terms of
this Agreement shall be deemed received and binding on Seller and Contractor.
Any Notice given by Opus Properties to Purchaser shall be deemed a Notice given
by and binding on Seller and Contractor. All Notices shall be addressed as
follows:
If to Seller and/or Contractor to: Opus Properties, L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Anne E. Loff
Telecopier: (612) 936-9808
with a copy to: Opus, U.S., L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Dan F. Nicol, Esq.
Telecopier: (612) 936-9808
with a copy to: O'Brien, O'Rourke & Hogan
135 South LaSalle Street
Suite 830
Chicago, Illinois 60603
ATTN: Frederic G. Hogan
Telecopier: (312) 372-8029
with a copy to: Tousley Brain
700 Fifth Avenue
Seattle, Washington 98104
ATTN: Russell F. Tousley
Telecopier: (206) 682-2992
If to Purchaser to: DEVELOPERS DIVERSIFIED REALTY
CORPORATION
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
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ATTN: James A. Schoff
Executive Vice President
Telecopier: (216) 247-5076
with a copy to: Joan Allgood, Esq,
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Telecopier: (216) 247-5076
with copy to: Banker & Hostetler
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
ATTN: Albert T. Adams
Telecopier: (216) 696-0740
If to Escrow Agent to: First American Title Insurance Company
1150 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
ATTN: Rodney D. Ives
Telecopier: (612) 337-5249
Any Notice shall be given by either (i) personal delivery, in which event it
shall be deemed given on the date of delivery; (ii) certified mail return
receipt requested, in which event it shall be deemed given three (3) business
days after the date postmarked; or (iii) next or second business day delivery by
nationally recognized overnight courier, in which event it shall be deemed given
on the next or second (whichever is applicable) business day immediately
following receipt by the courier. Any Party and Contractor may change any
address for the delivery of Notice to such Party or Contractor, by giving Notice
in accordance with the provisions of this Paragraph 21.
22. ATTORNEYS' FEES AND DISBURSEMENTS.
In the event that any Party or Contractor shall engage an
attorney in connection with any action or proceeding to enforce or construe this
Agreement, the prevailing Party or Contractor in such action or proceeding shall
be entitled to recover its Litigation Expenses to the extent permitted by law.
In the event different Parties or Contractor are the prevailing parties on
different issues, the Litigation Expenses shall be apportioned in proportion to
the value of the issues decided for and against the Parties and Contractor.
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23. NO CONSEQUENTIAL DAMAGES.
Notwithstanding any term, provision or covenant contained in
this Agreement to the contrary, no Party hereto shall be entitled to recover
from the other Party or Contractor consequential, exemplary or punitive damages,
all such damages are hereby expressly waived and released.
24. MISCELLANEOUS.
24.01 SUCCESSORS. The rights and obligations of the Parties and Contractor under
this Agreement shall inure to the benefit of and be binding upon the Parties and
Contractor and all persons who are permitted hereunder to succeed to their
respective rights and obligations.
24.02 MODIFICATIONS/WAIVERS. This Agreement cannot be changed nor can any
provision of this Agreement, or any right or remedy of any Party or Contractor,
be waived orally. Changes and waivers can only be made in writing and the change
or waiver must be signed by the Party or Contractor against whom the change or
waiver is sought to be enforced. Any waiver of any provision of this Agreement,
or any right or remedy, given on any one or more occasions shall not be deemed a
waiver with respect to any other occasion.
24.03 ENTIRE AGREEMENT. This Agreement is signed by the Parties and Contractor
as a final expression of all of the terms, covenants and conditions of their
agreement and as a complete and exclusive statement of its terms, covenants and
conditions.
24.04 COUNTERPARTS. This Agreement may be signed in one or more counterparts or
duplicate signature pages with the same force and effect as if all required
signatures were contained in a single original instrument.
24.05 CAPTIONS. The captions contained in this Agreement were inserted for the
convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the Parties and
Contractor.
24.06 GENDER/SINGULAR/PLURAL. Whenever masculine, feminine, neuter, singular,
plural, conjunctive or disjunctive terms are used in this Agreement, they shall
be construed to read in whatever form is appropriate to make this Agreement
applicable to all the Parties and Contractor and all circumstances, except where
the context of this Agreement clearly dictates otherwise.
24.07 EXHIBITS INCORPORATED. The exhibits attached to this Agreement are hereby
incorporated by reference in their entirety with the same force and effect as if
they were set forth at length in this Agreement. Concurrently with the execution
of this Agreement, Seller, Purchaser and all of the Other Sellers entered into
that certain Exhibit Agreement ("Exhibit Agreement") pursuant to the terms of
which the exhibits attached thereto are certain of the schedules referenced in
this Agreement that are also common to all of the Other Sale Agreements.
Therefore, the exhibits attached to the Exhibit Agreement are hereby
incorporated
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by reference in their entirety in this Agreement with the same force and effect
as if they were set forth at length in this Agreement.
24.08 GOVERNING LAW. In the event of any dispute concerning or arising out of
this Agreement, the laws of the State in which the Project is located shall
govern and control the construction and enforcement of this Agreement.
24.09 SEVERABILITY. If one or more provisions of this Agreement or the
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions or any
other application thereof shall in no way be affected or impaired.
24.10 DATE FOR PERFORMANCE. If the date for performance of any act under this
Agreement falls on a Saturday, Sunday or federal holiday, the date for such
performance shall automatically be extended to the first succeeding business
which is not a federal holiday.
24.11 FURTHER ACTION. The Parties and Contractor shall at any time, and from
time to time on and after the Closing Date, upon the request of the other Party
or Contractor, do, execute, acknowledge and deliver all such further acts,
deeds, assignments and other instruments as may be reasonably required for the
consummation of this transaction and are reasonably acceptable in scope, form
and content to the Party or Contractor whose act, signature, acknowledgment or
delivery is requested.
24.12 INTENTIONALLY DELETED
24.13 CONFIDENTIALITY. Without the prior written consent of Purchaser, neither
Seller nor any of Seller's representatives will disclose to any person any of
the terms, conditions or other facts with respect to this Agreement or the
Exhibit Agreement, including the status thereof, provided, that Seller or any of
Seller's representatives may make such disclosure if Seller has first received
the written opinion of counsel acceptable to Purchaser that such disclosure must
be made by Seller in order that Seller does not commit a violation of law.
Without the prior written consent of Seller, neither Purchaser nor any of
Purchaser's representatives will disclose to any person any of the terms,
conditions or other facts with respect to this Agreement or the Exhibit
Agreement, including the status thereof and any of the terms, provisions or
conditions of the Site Analysis Documents or of any of the Studies and Reports,
provided, that Purchaser or any of Purchaser's representatives may make such
disclosure if Purchaser has first received the written opinion of counsel
acceptable to Seller that such disclosure must be made by Purchaser in order
that Purchaser does not commit a violation of law. The obligation of Seller and
Purchaser pursuant to the provisions of this Paragraph 24.13 shall survive the
termination of this Agreement.
24.14 TIME OF THE ESSENCE. Time is of the essence in this transaction.
24.15 CONSTRUCTION. This Agreement shall not be construed more strictly against
one Party than against the other merely by virtue of the fact that it may have
been prepared by
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counsel for one of the Parties, it being recognized that both Seller and
Purchaser have contributed substantially and materially to the preparation of
this Agreement. The headings of various Section and Paragraphs in this Agreement
are for convenience only, and are not to be utilized in construing the content
or meaning of the substantive provisions hereof.
24.16 INTEREST. Any payment obligation of a Party hereto or Contractor to the
other Party (or Purchaser, in the instance of Contractor) shall bear interest at
the rate of two percent (2%) plus the corporate base rate of interest from time
to time charged by Citibank, N.A., commencing on the date that is five (5)
business days subsequent to the date such payment is due, until paid.
24.17 WARRANTY WORK. For the period ("Warranty Period") (i) that is provided in
each Lease or New Lease in respect to the applicable Tenant Warranty for tenant
improvements, and (ii) of one (1) year subsequent to the date each of the
Improvements (exclusive of tenant improvements that are the subject of the
applicable Tenant Warranty) is substantially complete in accordance with the
Plans, Seller and Contractor, jointly and severally, agree, at their sole cost
and expense, to promptly (subject to Force Majeure) correct any defects in the
tenant improvements or other Improvements due to (a) the failure thereof to
substantially comply with the plans for the subject tenant improvements or the
Plans in respect to the rest of the Improvements, or (b) faulty, improper or
inferior materials or workmanship (collectively, "Warranty Work"). If Warranty
Work is the subject of a Lease or New Lease, the provisions of such Lease or New
Lease shall control in the determination of the scope of the Warranty Work. If
Warranty Work is not the subject of a Lease or New Lease, then the provisions of
this Paragraph 24.17 shall control in the determination of the scope of the
Warranty Work. The Warranty Work shall not in any way include routine and
appropriate maintenance or Warranty Work directly resulting from (but only to
the extent resulting from) the failure to perform routine and appropriate
maintenance of the tenant improvements or other Improvements. Promptly during
the Warranty Period (but in any event prior to the expiration of the Warranty
Period), Purchaser shall give Seller and Contractor written notice ("Warranty
Notice") of any defect in the Project that Purchaser, in good faith, determines
to require Warranty Work. Except as hereafter provided, Seller or Contractor
shall promptly undertake and complete, subject to Force Majeure, the Warranty
Work that is the subject of the Warranty Notice. However, if Seller and
Contractor both (but not one or the other) object, in good faith, within ten
(10) business days following receipt of a Warranty Notice, Seller shall notify
Purchaser, in writing of the same. Thereafter, they shall promptly confer, in
good faith, to resolve any disagreement in respect to Warranty Work. If within
fifteen (15) days after conferring Purchaser, Seller and Contractor are unable
to agree on the scope of Warranty Work that is not the subject of a Lease or New
Lease, they shall appoint a third party contractor to make such determination,
and the scope so determined by the third party contractor shall be binding on
the Parties. When the Warranty Work is agreed to by the Parties or determined by
the third party contractor as aforesaid, such Warranty Work shall be undertaken
and completed as aforesaid. The Warranty Work obligation hereunder shall only
pertain to the Warranty Work for which a Warranty Notice was delivered to Seller
and Contractor prior to the expiration of the Warranty Period or that was
delivered by a Tenant or a New Tenant in accordance with the provisions of the
Tenant Warranty, and in such event the Warranty Work obligation of Seller in
respect thereto
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shall not terminate at the expiration of the Warranty Period or the Tenant
Warranty, but rather shall continue until such Warranty Work is completed by
Seller.
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IN WITNESS WHEREOF, the Parties and Contractor have signed
this Agreement as of the date set forth in the first paragraph of this
Agreement.
SELLER: PURCHASER:
BOLD, L.L.C., DEVELOPERS DIVERSIFIED
a Delaware limited liability company REALTY CORPORATION,
an Ohio corporation
By: /s/ [Signature Illegible] By: /s/ James A. Schoff
-------------------------------- ---------------------------------
Its: Vice President James A. Schoff
--------------------------- Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
41-1811424 34-1723097
CONTRACTOR:
OPUS NORTHWEST, L.L.C.,
a Delaware limited liability company
By: /s/ [Signature Illegible]
--------------------------------
Its: Authorized Signatory
---------------------------
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By: /s/ [Signature Illegible]
--------------------------------
Its: Commercial Manager
----------------------------
<PAGE> 55
SCHEDULES ATTACHED TO THIS AGREEMENT OR
THE EXHIBIT AGREEMENT
1.02 Legal Description
1.02(a) Site Plan
2.01(b) Personal Property
3.01 Rent Roll
5.01(b) Environmental Reports
5.01(g) Guaranties
6.01 Survey Requirements and Certifications
(attached to the Exhibit Agreement)
6.03 Permitted Exceptions
6.04 Endorsements
7.01 Deed (attached to the Exhibit Agreement)
7.02 Assignment of Leases (attached to the
Exhibit Agreement)
7.02(a) Description of Leases and Security Deposits
7.04 Bill of Sale (attached to the Exhibit
Agreement)
7.05 Assignment of Contracts (attached to the
Exhibit Agreement)
7.05(a) Description of Contracts to be Assigned at
Closing
7.06 Affidavit of Seller Concerning
Violations/Work Orders (attached to the
Exhibit Agreement)
7.10 FIRPTA Affidavit (attached to the Exhibit
Agreement)
7.13 Tenant Letter (attached to the Exhibit
Agreement)
7.15 Tenant Estoppel (attached to the Exhibit
Agreement)
7.20 Seller Date Down Certificate (attached to
the Exhibit Agreement)
7.21 Agreement Estoppel
7.25 Allocable Share Agreement
7.26 Assignment of Declaration
8.06 Purchaser Date Down Certificate (attached to
the Exhibit Agreement)
<PAGE> 56
10.01(xi) Permits
10.01(xvii) Tenant Inducements
10.01(xviii) Alleged Seller Defaults Under the Leases
10.01(xix) Tenant Defaults Under the Leases
10.01(xx) Tenant's Notice of Vacating, Assigning or
Subletting
13.11 Shell and Core List and Standard
13.11(a)(1),etc. Punchlist Holdback
13.11(b) Form G704 Certificate of Completion
(attached to the Exhibit Agreement)
<PAGE> 57
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Agreement 1st Paragraph
Agreement Estoppel 7.21
Arrears 14.02
Assignment Reservation 13.03
Bankruptcy Proceeding 13.01(ix)(c)
Best Products Pad 1.02
Carry 13.01(i)
Casualty 17.01
Casualty Notice 13.06
Closing 15.01
Closing Date 15.01
Closing Payment 13.01(ii)
Commissions 10.01(xvi)
Condition Notice 5.04
Condition Response 5.04
Commitment 6.02
Contract Assignment 7.05
Contractor 1st Paragraph
Deed 7.01
Defects Notice 6.03
Deposit 3.02(c)
Disapproved Lease 13.04
Earn-Out Conditions 13.07
Earn-Out Extension Notice 13.05
Earn-Out Payment 13.01(iii)
Earn-Out Period 13.05
Earn-Out Segment 13.05
Endorsements 6.04
Environmental Laws 10.01(xii)
Environmental Reports 5.01(b)
Escrow Agent 4.01
Exhibit Agreement 24.07
FIRPTA Affidavit 7.10
First Segment 13.05
Footage Computation 13.08
</TABLE>
i
<PAGE> 58
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Footage Payment 13.08
Force Majeure 13.01(iv)
Guaranties 5.01(g)
Haggen 15.01
Haggen Contingency 15.01
Haggen Lease 15.01
Hazardous Substances 10.01(xii)
Improvements 1.02
Initial Deposit 3.02(b)
Intangible Property 2.01(c)
Knowledge 10.01
Land 1.02
Lease Assignment 7.02
Lease Reservation Date 13.03
Leases 7.02
Lien(s) 9.03
Litigation Expenses 10.04(a)
Loss 17.01
Lump Sum Payment 3.02(a)
Lump Sum Non-Credit 14.07
Maple Grove Agreement 3.02(a)
Monetary Default 13.01(xi)(b)
Mortgage 10.01(ix)
Net Cash Flow 13.01(v)
New Lease 13.01(vi)
New Lease Obligations 13.10
New Tenant 13.01(vii)
Notice 21
Opus Properties 21
Other Center(s) 13.01(viii)
Other Sale Agreement(s) 13.01(ix)
Other Seller(s) 13.01(x)
Outside Date 15.01
Party(ies) 1st Paragraph
Permits 2.01(c)
Permitted Exceptions 6.03
Personal Property 2.01(b)
Plans 5.01(f)
Post Closing Work 16.01
Pro-Rata Share 14.03
Project 2.01
</TABLE>
ii
<PAGE> 59
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Prospect 13.04
Punchlist Holdback 13.11
Punchlist Work 13.11
Purchase Price 3.01
Purchaser 1st Paragraph
Purchaser Date Down Certificate 8.06
Purchaser's Knowledge 10.02
Qualified Lease 13.01(xi)
Real Estate Broker 4.02
Real Estate Tax Rent 14.06
Real Property 1.03
Recording Restriction 18.04
Release 10.01(xii)
Rental Undertaking 13.04
Rents 14.01
Reserved Base Rent Date 13.03
Reserved Lots 1.02
Restoration Forgiveness 5.02
Second Deposit 3.02(c)
Second Segment 13.05
Security Deposits 7.02
Seller 1st Paragraph
Seller Date Down Certificate 7.20
Seller's Estoppel 7.15
Seller's Response 6.03
Shared Closing Costs 11.02(a)
Site Analysis Documents 5.01
Site Analysis Period 5.03
Square Footage 13.08
Superfund Act 10.01(xii)
Survey 6.01
Survey Defects 6.03
Taking 17.01
Tenant Estoppel 7.15
Tenant Inducement 10.01(xvii)
Tenant Letters 7.13
Tenant Warranty 13.10
Tenants 7.02
Termination Agreements 7.16
Tests and Studies 5.02
</TABLE>
iii
<PAGE> 60
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Title Company 4.01
Title Defects 6.03
Title Policy 6.04
Unacceptable Conditions 5.04
Unknown Rents 14.03
Unassigned Lease 13.04
Utility Deposits 14.04
Vacant Space 13.01(xii)
Violations 7.06
Warranty Notice 24.17
Warranty Period 24.17
Warranty Work 24.17
Work Orders 7.06
</TABLE>
iv
<PAGE> 1
EXHIBIT 2.5
-----------------------------------
AGREEMENT OF PURCHASE AND SALE
ARROWHEAD CROSSING SHOPPING CENTER
DEVELOPERS DIVERSIFIED REALTY CORPORATION
AND
OPUS SOUTHWEST CORPORATION
-----------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. RECITALS.......................................................... 1
1.01 Definitions.................................................. 1
1.02 Land/Improvements............................................ 1
1.03 Real Property................................................ 1
2. AGREEMENT TO PURCHASE AND SELL.................................... 1
2.01 Purchase/Sale................................................ 1
3. PURCHASE PRICE AND MANNER OF PAYMENT.............................. 2
3.01 Purchase Price............................................... 2
3.02 Purchase Price Portions...................................... 2
4. ESCROW............................................................ 3
4.01 Escrow Agent................................................. 3
4.02 Filings...................................................... 3
5. SITE ANALYSIS..................................................... 3
5.01 Site Analysis Documents...................................... 3
5.02 Access....................................................... 4
5.03 Site Analysis Period......................................... 5
5.04 Cure of Unacceptable Conditions.............................. 5
6. SURVEY AND TITLE INSURANCE........................................ 7
6.01 Survey....................................................... 7
6.02 Title Commitment............................................. 7
6.03 Purchaser's Objections; Seller's Cure........................ 7
6.04 Title Policy................................................. 8
7. SELLER'S CLOSING DOCUMENTS AND ESCROW............................. 8
7.01 Deed......................................................... 9
7.02 Assignment of Leases......................................... 9
7.03 Leases and Tenant Documents.................................. 9
7.04 Bill of Sale................................................. 9
7.05 Assignment of Contracts...................................... 9
7.06 Violations/Work Orders Affidavit............................. 9
7.07 Keys......................................................... 10
7.08 Plans and Specifications..................................... 10
7.09 Title Insurance Affidavit.................................... 10
7.10 FIRPTA Certificate/Withholding............................... 10
7.11 Form 1099.................................................... 10
7.12 Books and Records............................................ 10
7.13 Letters to Tenants........................................... 10
7.14 Recording Requirements....................................... 10
7.15 Estoppel Certificates........................................ 10
</TABLE>
TOC-1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
7.16 Termination of Management and Seller Affiliated Contracts.... 11
7.17 Permits/Guaranties........................................... 11
7.18 Closing Statements........................................... 11
7.19 Escrow Instructions.......................................... 11
7.20 Date Down Certificate........................................ 11
7.21 Agreement Estoppel Certificate............................... 12
7.22 Vacant Space Acknowledgment.................................. 12
7.23 Assignment of REA............................................ 12
7.24 Other Documents.............................................. 12
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS..................... 12
8.01 Assignment of Leases......................................... 12
8.02 Assignment of Contracts...................................... 12
8.03 Closing Statements........................................... 12
8.04 Escrow Instructions.......................................... 12
8.05 Recording Requirements....................................... 13
8.06 Date Down Certificate........................................ 13
8.07 Vacant Space Acknowledgment.................................. 13
8.08 Other Documents.............................................. 13
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.............................. 13
9.01 Affirmative and Negative Covenants........................... 13
9.02 Payments..................................................... 14
9.03 Lien Removal................................................. 15
10. REPRESENTATIONS AND WARRANTIES.................................... 15
10.01 Seller's Representations and Warranties..................... 15
10.02 Purchaser's Representations and Warranties.................. 19
10.03 Intentionally Deleted....................................... 20
10.04 Indemnification............................................. 20
11. SHARED CLOSING COSTS AND OTHER EXPENSES........................... 22
11.01 Expenses.................................................... 22
11.02 Shared Closing Costs........................................ 22
12. CONDITIONS........................................................ 22
12.01 Purchaser's Conditions...................................... 22
12.02 Seller's Conditions......................................... 23
12.03 Rights Upon Failure of a Condition.......................... 23
13. EARN-OUT.......................................................... 23
13.01 Defined Terms............................................... 23
13.02 Closing Date Purchase Price Computation..................... 26
13.03 Lease Assignment Reservation................................ 26
13.04 New Leases.................................................. 27
13.05 Earn-Out Period............................................. 29
13.06 Casualty During Earn-Out Period............................. 29
13.07 Earn-Out Payments........................................... 30
13.08 Footage Payment............................................. 31
</TABLE>
TOC-2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
13.09 Intentionally Deleted....................................... 31
13.10 Seller's New Lease Obligations.............................. 31
13.11 Punchlist................................................... 31
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS............................ 32
14.01 Rents....................................................... 33
14.02 Arrears..................................................... 33
14.03 Unknown Rents............................................... 33
14.04 Utilities................................................... 34
14.05 Contracts................................................... 34
14.06 Taxes....................................................... 34
14.07 Assessment Installments..................................... 35
14.08 Permits..................................................... 36
14.09 Security Deposits/Tenant Inducements........................ 36
14.10 Customary Items............................................. 36
15. CLOSING........................................................... 36
15.01 Closing and Closing Date.................................... 36
16. POSSESSION........................................................ 36
16.01 Possession and Post Closing Work............................ 36
17. RISK OF LOSS...................................................... 37
17.01 Risk........................................................ 37
17.02 Damage and Destruction...................................... 37
17.03 Condemnation and Eminent Domain............................. 38
18. DEFAULTS AND REMEDIES............................................. 38
18.01 Seller's Defaults........................................... 38
18.02 Purchaser's Defaults........................................ 39
18.03 Seller's Remedies........................................... 39
18.04 Pre-Closing Purchaser's Remedies............................ 39
18.05. Post Closing Purchaser's Remedies.......................... 40
19. CROSS DEFAULT OBLIGATION.......................................... 40
20. ASSIGNMENT........................................................ 40
21. NOTICES........................................................... 40
22. ATTORNEYS' FEES AND DISBURSEMENTS................................. 42
23. NO CONSEQUENTIAL DAMAGES.......................................... 42
</TABLE>
TOC-3
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
24. MISCELLANEOUS.....................................................42
24.01 Successors..................................................42
24.02 Modifications/Waivers.......................................42
24.03 Entire Agreement............................................42
24.04 Counterparts................................................42
24.05 Captions....................................................43
24.06 Gender/Singular/Plural......................................43
24.07 Exhibits Incorporated.......................................43
24.08 Governing Law...............................................43
24.09 Severability................................................43
24.10 Date for Performance........................................43
24.11 Further Action..............................................43
24.12 Intentionally Deleted.......................................43
24.13 Confidentiality.............................................43
24.14 Time of the Essence.........................................44
24.15 Construction................................................44
24.16 Interest....................................................44
24.17 Warranty Work...............................................44
</TABLE>
TOC-4
<PAGE> 6
AGREEMENT OF PURCHASE AND SALE
ARROWHEAD CROSSING SHOPPING CENTER
This Agreement of Purchase and Sale (the "Agreement") is made
as of the 2nd day of July, 1996, by and between OPUS SOUTHWEST CORPORATION, a
Minnesota corporation ("Seller"), and DEVELOPERS DIVERSIFIED REALTY CORPORATION,
an Ohio corporation ("Purchaser"). Seller and Purchaser (singularly, a "Party,"
collectively, the "Parties") agree as follows:
1. RECITALS.
1.01 DEFINITIONS. The location of all defined terms used in this Agreement are
set forth in the Glossary of Terms that is attached hereto and made a part
hereof.
1.02 LAND/IMPROVEMENTS. Seller is the sole owner of fee simple title to (i)
certain land (the "Land") situated in the City of Phoenix, State of Arizona,
more particularly described on Schedule 1.02 attached hereto and made a part
hereof, as shown on the site plan attached hereto as Schedule 1.02(a) (the "Site
Plan"); and (ii) all the buildings, structures and improvements (collectively,
the "Improvements") situated on the Land; and
1.03 REAL PROPERTY. Seller desires to sell, and Purchaser desires to purchase,
the Land and Improvements owned by Seller, and all of Seller's right, title and
interest in and to all rights, privileges, options, leases, licenses,
concessions, hereditaments, appurtenances, easements and rights of way in any
manner belonging to or pertaining to the Land and the Improvements, including
without limitation, rights in and to any streets, alleys or other ways adjacent
to the Land, open or proposed, and the fixtures in or upon the Land and the
Improvements owned by Seller. The Land, the Improvements and all of the items
mentioned in this Paragraph 1.03 are hereinafter collectively referred to as the
"Real Property" and are commonly known as "Arrowhead Shopping Center."
2. AGREEMENT TO PURCHASE AND SELL.
2.01 PURCHASE/SALE. Upon and subject to the terms and conditions set forth in
this Agreement, Seller agrees to sell and Purchaser agrees to purchase all of
the following that is hereinafter collectively referred to as the "Project":
(a) The Real Property;
(b) All tangible personal property (the "Personal Property")
owned by Seller that is now or hereafter located upon the Real Property and used
in connection with the ownership, operation, management, or maintenance of the
Real Property and that is set forth on Schedule 2.01(b) attached hereto;
<PAGE> 7
(c) All intangible personal property (the "Intangible
Property") owned by Seller that is now or is hereafter located upon the Real
Property or is used in connection with the Real Property, including without
limitation, (i) all trade names, logos and telephone numbers, excluding those
tradenames or logos depicting or containing the name or trademark of Opus
Southwest Construction Corporation or its affiliates and excluding telephone
numbers not exclusively used in connection with the Project; (ii) all Guaranties
(as hereinafter defined) given in connection with the construction or repair of
the Improvements or the purchase of any Personal Property to the extent any
Guaranties remain outstanding as of the Closing Date (as hereinafter defined)
that are set forth on Schedule 5.01(g) attached hereto; and (iii) to the extent
transferable by Seller, all of Seller's right, title and interest in
certificates of occupancy (or the local equivalent), permits, licenses,
approvals and authorizations (collectively, the "Permits") issued by any
federal, state, county and municipal governmental or quasi-governmental
authority relating to the Real Property.
3. PURCHASE PRICE AND MANNER OF PAYMENT.
3.01 PURCHASE PRICE. The total sum (the "Purchase Price") to be paid by
Purchaser to Seller for the sale of the Project is the sum of the Closing
Payment and those Footage Payments and Earn-Out Payments, if any (as those terms
are hereinafter defined), computed, in part, in respect to the base rents set
forth in the Rent Roll attached hereto as Schedule 3.01, all as provided in
Section 13 hereof. The actual amount of the Purchase Price is subject to the
computations and elections provided in Section 13 hereof and subject to the
adjustments, if any, provided in Section 14 hereof. Portions of the Purchase
Price will be paid at various times as hereinafter provided.
3.02 PURCHASE PRICE PORTIONS. The Purchase Price shall be paid as follows:
(a) Initial Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Initial Deposit"), which Purchaser deposited with Escrow
Agent (as hereinafter defined) simultaneous with the execution of this Agreement
by Purchaser and Seller.
(b) Second Deposit. Twenty-Five Thousand and 00/100 Dollars
($25,000.00) (the "Second Deposit") which Purchaser shall deposit with Escrow
Agent on the expiration date of the Site Analysis Period (as hereinafter
defined), if Purchaser elects to proceed with this transaction, as more fully
provided in Paragraph 5.03 below (the Initial Deposit and the Second Deposit are
hereinafter collectively referred to as the "Deposit"). The term "Deposit" shall
be deemed to include all interest accruing on the Deposit during the term of
this Agreement.
(c) Closing Date Price. So much of the Purchase Price computed
in accordance with the provisions of Paragraph 13.02 hereof that is payable as
of the Closing Date, after giving credit for the Deposit and after making the
adjustments, if any, as provided in Section 14 hereof, shall be paid by wired
funds to the Escrow Agent for disbursement on the Closing Date by not later than
2:00 P.M. Central Daylight Savings Time.
2
<PAGE> 8
(d) Earn-Out Period Payments. As provided in Paragraph 13.07,
those Earn-Out Payments that are payable during, or in some instances, after the
Earn-Out Period (as hereinafter defined) shall be paid by wired funds to the
Escrow Agent for disbursement to Seller when required by the provisions of
Paragraph 13.07.
(e) Footage Payment. As provided in Paragraph 13.08, if a
Footage Payment (as hereinafter defined) is payable, it shall be paid by wired
funds to the Escrow Agent for disbursement to Seller when required pursuant to
Paragraph 13.08.
4. ESCROW.
4.01 ESCROW AGENT. The Parties hereby designate First American Title Insurance
Company as the escrow agent ("Escrow Agent" or "Title Company"). By execution of
this Agreement, Escrow Agent agrees to be bound by the terms and conditions of
this Agreement which relate to the Escrow Agent and its rights and obligations
hereunder.
4.02 FILINGS. The Parties hereby designate Escrow Agent to serve as "Real Estate
Broker," as defined in Section 6045 of the Internal Revenue Code, as amended,
for the purpose of making such reports and filing such returns as shall be
required thereunder from time to time.
5. SITE ANALYSIS.
5.01 SITE ANALYSIS DOCUMENTS. To the extent not heretofore delivered, promptly
after the execution of this Agreement, Seller agrees (i) to make available for
inspection at reasonable times by Purchaser and its agents any and all
documents, instruments, surveys, reports, plans, permits, approvals, studies,
reviews, analyses, contracts, agreements and other materials relating to the
acquisition, development, construction, ownership and operation of the Project
that are in Seller's possession or under its control, and (ii) to deliver to
Purchaser true and correct copies of the following documents (in respect to
clause (ii) collectively hereafter referred to as "Site Analysis Documents"):
(a) "As-built" survey of the Project showing the location of
all Improvements thereon and any easements encumbering the Project.
(b) Soil, topographical, and other reports relating to the
Project, including the environmental reports set forth on Schedule 5.01(b)
("Environmental Reports") attached hereto.
(c) Operating statements and records sufficient to accurately
show all revenues, income, costs and expenses of operating and maintaining the
Project for the period on and after the opening of the Project for business.
(d) All written contracts for repair, maintenance, garbage
removal, concessions, vending, service contracts, and other services to be
performed with respect to the Project.
3
<PAGE> 9
(e) All Leases (as hereinafter defined) and all written
licenses, concessions and tenancies with Tenants (as hereinafter defined)
occupying or having the right to occupy any portion of the Project, and Seller's
written statement of any oral leases, licenses, concessions and tenancies with
tenants, licensees, concessionaires or others occupying or having the right to
occupy or use any portion of the Project, if any.
(f) All architectural drawings, engineering studies, plans and
specifications relating to the original and current construction of the Project
(hereinafter collectively referred to as "Plans").
(g) All warranties and guaranties that remain outstanding as
of the Closing Date that have been given by Seller or any third party
contractors, subcontractors, vendors and suppliers relating to their
performance, quality of workmanship and quality of materials supplied in
connection with the construction, manufacture, development, installation and
operation of the Improvements, Personal Property and any and all fixtures,
equipment and items of personal property comprising all or any part of the
Improvements located in or used in connection with the Project (collectively
hereinafter referred to as "Guaranties"), all of which are set forth on Schedule
5.01(g) attached hereto.
5.02 ACCESS. Seller acknowledges that to enable Purchaser to proceed with this
transaction, Purchaser already has and, during the Site Analysis Period (as
hereinafter defined), may undertake or cause to have undertaken tests and
studies, including, but not limited to, marketing, engineering, environmental,
feasibility and soil that Purchaser, in its reasonable discretion, deems
necessary to determine the feasibility of its acquisition of the Project
(hereinafter collectively referred to as "Tests and Studies"). The Tests and
Studies conducted by or on behalf of Purchaser and the restoration of the
Project in respect thereto as hereinafter provided shall be done in such a
fashion so as to not disrupt the ordinary course of business of Seller or any of
the Tenants, New Tenants (as hereinafter defined) or Seller's contractors or
subcontractors.
Purchaser and its agents, contractors or employees shall have
the right to enter upon the Project for the purpose of performing its Tests and
Studies, provided said activities (i) shall not (y) in any way damage the
Project in such a fashion or to a degree that prevents its restoration by
Purchaser as hereafter provided substantially to the condition of the Project
that existed immediately prior thereto, or (z) void or make voidable any
Guaranties of portions thereof (but in any event subject to Seller's prior
consent that shall not be unreasonably withheld or delayed), and (ii) Seller or
its designated agents have the right to participate in (provided Seller and its
agents do not interfere with) such Tests and Studies. Purchaser shall give
Seller twenty-four (24) hour advance notice before Purchaser and its agents,
contractors or employees enter upon the Project. In the event this Agreement
fails to close for any reason, except for Seller's willful refusal to convey
(absent a material default hereunder by Purchaser) title to the Land as required
hereunder, or Seller acknowledges or it is subsequently determined that Seller
is in material default hereunder ("Restoration Forgiveness"), Purchaser shall
restore the Project to substantially the same condition that existed immediately
prior to such surveying, inspecting and testing that were undertaken by or on
behalf of Purchaser prior to the date of this Agreement or
4
<PAGE> 10
during the Site Analysis Period. Except in the instance of a Restoration
Forgiveness, Purchaser shall keep the Project free of all liens in connection
with the Tests and Studies and shall cause all such liens to be removed
immediately upon its being notified of same. Except in the instance of a
Restoration Forgiveness, Purchaser agrees to indemnify, defend and hold Seller
harmless against any liabilities, claims and damages, including, without
limitation, any property damage, personal injury or claim of lien against the
Project resulting from the activities permitted by this Paragraph 5.02
(including, without limitation, reasonable attorneys' fees and expenses paid or
incurred by Seller during litigation, if any), which indemnity shall survive the
Closing Date or the expiration, cancellation or termination of this Agreement.
5.03 SITE ANALYSIS PERIOD. Purchaser shall have the Site Analysis Period in
which to conduct the Tests and Studies and to ascertain whether the Project is
acceptable to Purchaser. "Site Analysis Period" shall mean the period expiring
on June 17, 1996. If the Project is determined to be unacceptable to Purchaser,
for any reason whatsoever, in Purchaser's sole discretion, Purchaser shall have
the right to terminate this Agreement by giving written notice of termination on
or prior to the date of expiration of the Site Analysis Period, in which event
the Deposit shall be returned to Purchaser. In accordance with the provisions of
11.02(b) hereof, Seller and Purchaser shall each pay 50% of the Shared Closing
Costs incurred as of the termination date, and neither Party shall have any
further rights or obligations hereunder, except those specifically provided
herein that survive the termination of this Agreement. A failure to so notify
Seller of Purchaser's election to terminate or proceed with this Agreement as
aforesaid prior to the expiration of the Site Analysis Period shall be deemed as
notice to Seller that Purchaser has elected to terminate this Agreement as
aforesaid.
5.04 CURE OF UNACCEPTABLE CONDITIONS. Any of the Tests and Studies of Purchaser
and/or its agents or representatives conducted during the Site Analysis Period
that discloses that there are (i) any defects or deficiencies of the Project in
respect to its compliance with any and all codes, ordinances, statutes, Permits,
approvals or licenses issued in respect to the Project or promulgated by any
federal, state, county or municipal governmental or quasi-governmental authority
which are required by such governmental or quasi-governmental authority to
correct; (ii) defects in the materials or workmanship of the Project from that
which is required to be in substantial compliance with the Plans, except that
portion thereof, if any, that relates to materials for, or workmanship of
improvements constructed or to be constructed on behalf of Tenants or New
Tenants that form a part of Post Closing Work (as hereinafter defined); or (iii)
a violation of Environmental Laws (as hereinafter defined) not disclosed on the
Environmental Reports that, in respect to clauses (i), (ii) and (iii), can be
corrected and cured for an estimated aggregate cost (in respect to the Project)
not to exceed One Hundred Thousand Dollars ($100,000.00), shall be collectively
hereinafter referred to as "Unacceptable Conditions." It is understood that
regardless of the cost, the Warranty Work obligations set forth in Paragraph
24.17 hereof, shall not be included as an Unacceptable Condition in respect to
the $100,000.00 limitation and the cost of performing Warranty Work shall be in
addition to any cost for curing or correcting Unacceptable Conditions. In the
event Purchaser discovers what it deems to be Unacceptable Conditions as a
result of the Tests and Studies, Purchaser shall notify ("Condition Notice")
Seller, in writing, of the same promptly following Purchaser's discovery
thereof, but in no instance later than three (3) business days following the
expiration of the Site Analysis Period. Such Condition Notice shall
5
<PAGE> 11
include a copy of those portions of the Tests and Studies disclosing such
Unacceptable Condition(s). Within ten (10) days following Seller's receipt of
the Condition Notice, if any, Seller shall advise ("Condition Response")
Purchaser, in writing, of Seller's good faith determination and estimate of (1)
those matters contained in the Condition Notice that do not qualify as
Unacceptable Conditions; (2) the time within which the remaining matters
contained in the Condition Notice will be cured or corrected; and (3) the
aggregate cost to Seller of curing and correcting such remaining matters. In the
event the Condition Response is unacceptable to Purchaser, Seller and Purchaser
shall promptly meet and confer, in good faith, to attempt to resolve the
unacceptable aspects to Purchaser of the differences between the Condition
Notice and the Condition Response or the time within which or the aggregate cost
for which Seller estimated in the Condition Response for curing or correcting as
aforesaid. In the event Seller and Purchaser are unable to resolve such
differences, Purchaser may elect to (a) terminate this Agreement, (b) proceed to
Closing in respect to Seller's obligations to cure or correct those matters set
forth in the Condition Response, modified, if at all, as a result of the
aforesaid conference between Purchaser and Seller (provided the estimated
aggregate cost of performing the same does not exceed $100,000.00 or such
greater amount Seller, in its sole discretion, has agreed to expend), or (c)
select those specific line items from the Condition Response that Purchaser
requires to have corrected (provided the estimated aggregate cost of performing
the same does not exceed $100,000.00). Purchaser, within ten (10) business days
after such conference, shall advise Seller, in writing, of Purchaser's election.
If the Condition Notice, Condition Response or the time periods specified above
for elections of Purchaser extend beyond the Closing Date, the Closing Date
shall be extended to the date five (5) business days subsequent to the date
Purchaser elects, if at all, to proceed with the Closing. In the event Purchaser
elects to terminate this Agreement, the Deposit shall be returned to Purchaser,
Purchaser and Seller shall each pay fifty percent (50%) of the Shared Closing
Costs incurred as of the termination date, and neither Party shall have any
further rights or obligations hereunder, except those specifically provided
herein that survive the termination of this Agreement. In the event Purchaser
elects to proceed to Closing pursuant to clause (b) above, the matters contained
in the Condition Response, modified, if at all, by Purchaser's and Seller's
conference and provided the estimated aggregate cost of curing or correcting the
same is One Hundred Thousand and no/100 ($100,000.00) or less (or such greater
amount Seller accepts as aforesaid) shall be deemed to be the Unacceptable
Conditions to which Seller is bound. In the event Purchaser elects to proceed to
Closing pursuant to clause (c) above, the specific line items selected by
Purchaser that are set forth in the Condition Response (provided the estimated
aggregate cost of curing or correcting the same is $100,000.00 or less) shall be
deemed to be the Unacceptable Conditions to which Seller is bound. Thereafter,
Seller shall undertake to cure or correct such Unacceptable Conditions, at its
sole cost and expense (regardless of the actual cost ultimately incurred by
Seller in respect thereto) within the time (subject to Force Majeure, as
hereinafter defined) set forth in the Condition Response. The obligation of
Seller to cure or correct such Unacceptable Conditions shall survive the
Closing. In the event (y) Seller fails to commence the cure of an Unacceptable
Condition(s) on or prior to the time specified in the Condition Response for the
cure thereof, or (z) Seller commences the cure of an Unacceptable Condition(s),
but fails to complete such cure prior to the time specified in the Condition
Response (subject to Force Majeure), Purchaser may off-set so much of any
Earn-Out Payment or Footage Payment subsequently payable by Purchaser hereunder
by the amount of the reasonable costs and
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expenses incurred by Purchaser for undertaking and completing the uncured
Unacceptable Condition(s). The curing or correcting of any Unacceptable
Condition shall be done in accordance with the Plans. However, if such curing or
correcting requires a variance from the Plans, Seller shall not undertake such
variance without obtaining Purchaser's prior written consent, which consent
shall not be unreasonably withheld or delayed.
6. SURVEY AND TITLE INSURANCE.
6.01 SURVEY. Seller shall cause an "as-built" Survey (the "Survey") of the Real
Property to be updated during the Site Analysis Period. The Survey shall be
certified to Seller, Purchaser, and the Title Company. The Survey shall satisfy
all of the requirements set forth on Schedule 6.01 that is attached to and made
a part of the Exhibit Agreement (as hereinafter defined).
6.02 TITLE COMMITMENT. During the Site Analysis Period, to the extent not
theretofore delivered, Seller shall (i) cause the Title Company to issue and
deliver to Purchaser a title insurance commitment for an owner's extended
coverage policy of title insurance, in the amount of that portion of the
Purchase Price then estimated to be payable to Seller on the Closing Date,
committing the Title Company to insure Purchaser as the owner of fee simple
title to the Real Property and all easements appurtenant thereto (the
"Commitment"), and (ii) copies of each document described on Schedule B of the
Commitment.
6.03 PURCHASER'S OBJECTIONS; SELLER'S CURE. Other than those title exceptions
("Permitted Exceptions") set forth in Schedule 6.03 attached hereto and made a
part hereof and exceptions caused by or claimed under or through Seller that
will be removed at Closing (as hereinafter defined) if (i) the Commitment
reveals any other matters or exceptions ("Title Defects"), or (ii) the Survey
reveals any defects which affect the marketability of the Real Property or are
deemed objectionable by Purchaser ("Survey Defects"), Purchaser shall notify
Seller, in writing, of the same within fifteen (15) days following the date of
delivery to Purchaser of the last of the Commitment and Survey ("Defects
Notice"). In the event Purchaser fails to deliver a Defects Notice as aforesaid
Seller shall advise Purchaser of such failure, in writing. If Purchaser fails,
within three (3) business days thereafter to deliver a Defects Notice, it shall
be deemed a notice to Seller that Purchaser has elected to waive such defects,
if any, and to proceed with the transaction contemplated hereby, subject to the
fulfillment of Seller's obligations hereunder. Except for Title Defects or
Survey Defects that are caused by or claimed under or through Seller that can be
removed or discharged by the payment of a sum of money (including, without
limitation, a Mortgage(s), as hereafter defined), Seller shall have no
affirmative obligation to cure or correct any Title Defects or Survey Defects,
except as provided in Seller's Response (as hereinafter defined). Within fifteen
(15) days following Seller's receipt of a Defects Notice, Seller, at its option,
shall notify Purchaser of those Title Defects and Survey Defects that Seller
shall undertake to cure or correct ("Seller's Response"). In the event Seller
(a) elects in Seller's Response not to satisfy a specified Title Defect or
Survey Defect or (b) is unable, within sixty (60) days after Purchaser's receipt
of Seller's Response, to satisfy the Title Defect or Survey Defect which Seller
had elected in Seller's Response to so satisfy, Purchaser may, at its option,
(1) accept title to the Real Property subject to the Title Defects and/or Survey
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Defects raised by Purchaser in which event such Title Defects and Survey Defects
shall be deemed to be Permitted Exceptions, or (2) cancel this Agreement and
receive a full refund of the Deposit, whereupon Seller shall pay all Shared
Closing Costs and this Agreement shall be of no further force and effect, except
for those matters which are specifically set forth in this Agreement as
surviving the expiration or termination of this Agreement. If the Defects
Notice, Seller's Response or the time periods specified above for elections of
Purchaser extend beyond the time specified for the Closing Date, the Closing
Date shall be extended to the date five (5) business days subsequent to the date
Purchaser elects, if at all, to proceed with the Closing.
6.04 TITLE POLICY. It shall be a condition precedent to Purchaser's obligation
to consummate the transaction contemplated by this Agreement that the Title
Company can and will issue an ALTA Owner's Policy of Title Insurance (Form B,
Amended 1987, if available) (the "Title Policy") in the full amount of that
portion of the Purchase Price payable by Purchaser on the Closing Date as
provided in Paragraph 13.02 hereof, insuring Purchaser as the owner in fee
simple of the Project, and all appurtenant easements thereto, free and clear of
all liens and encumbrances, except for the Permitted Exceptions, and without
exception for rights or claims of parties in possession not shown by the public
records, encroachments, overlaps, boundary line disputes, or any other matter
disclosed by the Survey which Purchaser has not waived or approved or is deemed
to have approved pursuant to Paragraph 6.03 hereof, provided, however, that the
Title Policy may show the rights of the Tenants and New Tenants (as hereinafter
defined) under New Leases (as hereinafter defined) that are fully executed prior
to the Closing as parties in possession (or right to possession) as tenants
only. Purchaser shall attempt to cause the Title Company, as part of the Title
Policy, to issue the following endorsements in the form of those set forth in
Schedule 6.04 attached hereto ("Endorsements"): CC&R Endorsement (unless
easements appurtenant to the Project are additionally insured parcels on
Schedule A of the Title Policy), Comprehensive No. 1, Access, Survey, Contiguity
(but only to the extent of contiguous portions of the Land as depicted on
Schedule 1.02 attached hereto), Tax Parcel, Environmental, Encroachment Mineral
Rights and Zoning 3.1 (with parking). Any Survey or physical inspection
requirements imposed as a condition to the issuance of the Title Policy may be
satisfied by Seller as a Shared Closing Cost, except costs and expenses in
respect to correcting Survey Defects which shall be paid by Seller. Seller shall
execute such affidavits and certificates as the Title Company may require as a
condition to the issuance of the Title Policy, and a copy of each such affidavit
or certificate shall be delivered to Purchaser. In addition, as part of the
Shared Closing Costs, Seller shall cause (i) the Title Policy to be dated down
to the date each Earn-Out Payment (as hereinafter defined) is paid during or
after the Earn-Out Period showing no new exceptions, except the Permitted
Exceptions, the subject or previous New Leases, and exception caused, permitted
or claimed by, through or under Purchaser or its successors and assigns; and
(ii) the amount of the Title Policy's coverage to be increased to an amount that
equals the subject Earn-Out Payment.
7. SELLER'S CLOSING DOCUMENTS AND ESCROW.
At Closing, Seller shall execute and deliver the following
documents to Escrow Agent:
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7.01 DEED. A signed special warranty deed in the form and substance (modified
for the subject jurisdiction) attached to the Exhibit Agreement as Schedule 7.01
(the "Deed") conveying to Purchaser, good, indefeasible and insurable title to
the Real Property and the Improvements, free and clear of all liens and
encumbrances of any type whatsoever, except for the Permitted Exceptions. The
Permitted Exceptions shall be specifically, and not categorically, excepted from
the warranty of title in the Deed.
7.02 ASSIGNMENT OF LEASES. An assignment (the "Lease Assignment") in the form
attached to the Exhibit Agreement as Schedule 7.02 of all (except in respect to
the Assignment Reservation as provided in Paragraphs 13.03, 14.01, 14.02 and
14.03 hereof) of the Seller's right, title and interest as lessor under the
leases, tenancies, occupancy agreements, rental agreements, options, licenses
and concessions, and all of the foregoing (hereinafter collectively referred to
as the "Leases") which are described on Schedule 7.02(a) attached hereto, and
all New Leases that are fully executed prior to the Closing, together with all
security deposits, cleaning deposits, key deposits and advance rental payments
(collectively, the "Security Deposits") made by the lessees, tenants, occupants,
optionees, licensees and concessionaires (collectively, the "Tenants") and New
Tenants under the Leases and subject New Leases.
7.03 LEASES AND TENANT DOCUMENTS. All original copies of the Leases and New
Leases that are fully executed prior to Closing, Tenant and the subject New
Tenant financial statements, their sales reports and other Tenant and the
subject New Tenant related documents, and to the extent, if any, that original
copies are not delivered, Seller shall deliver copies which shall be accompanied
by an affidavit sworn to by Seller confirming that the copies delivered are true
and complete copies of the originals.
7.04 BILL OF SALE. A bill of sale in the form attached to the Exhibit Agreement
as Schedule 7.04, transferring and conveying to Purchaser all of Seller's right,
title and interest to the Personal Property and the Intangible Property.
7.05 ASSIGNMENT OF CONTRACTS. An assignment (the "Contract Assignment") in the
form attached to the Exhibit Agreement as Schedule 7.05, of all of Seller's
right, title and interest as the owner of the Project under the service
contracts and agreements, personal property leases and agreements (collectively,
the "Contracts") which are described on Schedule 7.05(a) attached hereto and
which have been approved by Purchaser as being those Contracts that are assigned
to Purchaser pursuant to the Contract Assignment.
7.06 VIOLATIONS/WORK ORDERS AFFIDAVIT. An affidavit, in form and substance of
Schedule 7.06 attached to the Exhibit Agreement, confirming that Seller has
complied with and discharged (or, to the extent Seller has not complied with and
discharged, an explanation of that which remains to be done to cause compliance
and discharge) (i) all notices, if any, that either Seller or its management
agent managing the Real Property received concerning any and all uncured
violations (the "Violations") of any law, statute, ordinance, regulation, rule,
requirement, order, judgment or decree enacted, adopted, imposed, issued,
entered or filed by any governmental authority (concerning or affecting the
Project or any part thereof), and (ii) all work
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orders concerning the Project or any part thereof, if any (the "Work Orders")
issued by any insurance carriers insuring a risk in respect to the Project.
7.07 KEYS. All keys to the Project.
7.08 PLANS AND SPECIFICATIONS. To the extent not delivered prior to Closing Date
as part of the Site Analysis Documents, all Plans.
7.09 TITLE INSURANCE AFFIDAVIT. Any affidavit required by the Title Company to
remove the standard printed exceptions from the Title Policy.
7.10 FIRPTA CERTIFICATE/WITHHOLDING. A certificate in the form and substance
attached to the Exhibit Agreement as Schedule 7.10 ("FIRPTA Affidavit").
7.11 FORM 1099. Any information with respect to Seller in connection with the
conveyance of the Real Property by Seller to Purchaser required by either (i)
IRC Sec. 6045 or Treas. Regs. Sec. 1.6045, or (ii) Treas. Form 1099 or its
instructions. If required thereby, the Escrow Agent shall timely (x) prepare and
file a Form 1099 in accordance with the provisions of Treas. Regs. Sec. 1.6045,
and (y) furnish the Parties with copies.
7.12 BOOKS AND RECORDS. Copies of all accounting books and records relating to
the operation and maintenance of the Project.
7.13 LETTERS TO TENANTS. Letters in the form and substance set forth in Schedule
7.13 that is attached to the Exhibit Agreement (the "Tenant Letters") addressed
to the Tenants and New Tenants of New Leases executed prior to Closing and
signed by Seller, advising the Tenants of the sale of the Project and the
Purchaser's right to receive the Rents (as hereinafter defined) under their
respective Leases.
7.14 RECORDING REQUIREMENTS. All documents and affidavits required of Seller to
record the Deed.
7.15 ESTOPPEL CERTIFICATES. An estoppel certificate in the form and substance
set forth in Schedule 7.15 that is attached to the Exhibit Agreement ("Tenant
Estoppel") showing no material exceptions that is executed (not more than
forty-five (45) days prior to the Closing Date or such earlier date Purchaser
reasonably accepts) by (i) all Tenants or New Tenants of Leases and New Leases
that are Qualified Leases (as hereinafter defined) on or prior to the Closing
Date that have demised to them space in the Project containing 7,500 square feet
or more, and (ii) at least eighty percent (80%) (calculated on a square foot
basis) of all Tenants or New Tenants of Leases or New Leases that are Qualified
Leases on or prior to the Closing Date that have demised to them space in the
Project containing less than 7,500 square feet. To the extent Seller is unable
to deliver to Purchaser Tenant Estoppels from all or any of the remaining
Tenants or New Tenants in the Project under such Qualified Leases in respect to
premises containing less than 7,500 square feet or a Tenant Estoppel in respect
to a premises that is 7,500 square feet or less that contains a material
exception noted by the applicable Tenant or New Tenant, Seller shall
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be entitled to deliver to Purchaser Seller's estoppel certificate ("Seller's
Estoppel") in form and substance reasonably acceptable to Purchaser confirming
the terms and conditions of the Lease or subject New Lease for which a Tenant
Estoppel was not delivered to Purchaser or, if delivered, that contains a
material exception. Such Seller's Estoppel shall be deemed a representation and
warranty by Seller as to the terms and conditions of the subject Lease or New
Lease, and the Seller's Estoppel shall not be subject to the time limitation for
claims set forth in Paragraph 10.04(b) hereof. After the Closing, when and as
Purchaser receives a Tenant Estoppel (without material exception) for which
Seller delivered a Seller's Estoppel, the subject Seller's Estoppel shall be
released by Purchaser and returned to Seller and shall be deemed to be of no
further force and effect.
7.16 TERMINATION OF MANAGEMENT AND SELLER AFFILIATED CONTRACTS. Notwithstanding
any other provision of this Agreement, in respect to any agreements or contracts
that are not to be included as part of the Contract Assignment, agreements
("Termination Agreements") signed by (i) the parties to any management agreement
for the Real Property, and (ii) the parties to all other such agreements or
contracts between the Seller or its predecessors in interest and parties
affiliated with or controlled by Seller or any of Seller's principals, which
Termination Agreements terminate such management agreement and other such
agreements and contracts as of the Closing Date, without any liability or
obligation on the part of the Purchaser or the Project.
7.17 PERMITS/GUARANTIES. Original or copies of Permits and originals of the
Guaranties which, in each instance, Seller agrees to keep in full force and
effect, and to comply with all of the terms and conditions thereof prior to
Closing.
7.18 CLOSING STATEMENTS. Closing Statements executed by Seller.
7.19 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably satisfactory to
Escrow Agent, in form and substance sufficient to carry out the Closing.
7.20 DATE DOWN CERTIFICATE. A certificate of Seller (the "Seller Date Down
Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 7.20 certifying that Seller's representations and warranties set forth
in Paragraph 10.01 of this Agreement are true and correct as of the Closing Date
as modified by the Schedules that are attached hereto pursuant to Paragraph
10.01 hereof that are updated to the Closing Date. In the event any updated
Schedules disclose a material deviation from the prior applicable Schedule as
reasonably determined by Purchaser, Purchaser shall have three (3) business days
from the date Purchaser receives a copy of the Seller Date Down Certificate in
which to elect to terminate this Agreement or to proceed with the Closing in
accordance with the updated Schedules. In the event Purchaser fails to notify
Seller, in writing, of Purchaser's election to terminate this Agreement, it
shall act as notice to Seller that Purchaser has elected to terminate this
Agreement. In the event Purchaser elects to terminate this Agreement, the
Deposit shall be refunded to Purchaser, Purchaser and Seller shall each pay
fifty percent (50%) of the Shared Closing Costs, and this Agreement shall be of
no further force and effect, except in respect to those provisions specifically
provided herein as surviving the termination of this Agreement.
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7.21 AGREEMENT ESTOPPEL CERTIFICATE. An estoppel certificate in form and
substance attached hereto as Schedule 7.21 ("Agreement Estoppel") showing no
material exceptions that are executed by each party to those easement agreements
or other agreements or undertakings (including, but not limited to, development
agreements) affecting the Project on and after the Closing Date that require the
performance of obligations by the owner of the Project and the approval of such
performance by the other party to the same that are identified by Purchaser to
Seller, in writing, not less than fifteen (15) days prior to the Closing Date.
To the extent such Agreement Estoppel shows a material exception or the party to
such easement agreements or other agreements or undertakings identified by
Purchaser as aforesaid fails to deliver an Agreement Estoppel, Seller shall be
entitled to deliver its undertaking confirming, in form and substance reasonably
acceptable to Purchaser, the terms and conditions of the Agreement Estoppel to
the extent applicable in the form attached hereto as Schedule 7.21, and such
confirmation by Seller shall not be subject to the time limitation for claims
set forth in Paragraph 10.04(b) hereof. After the Closing, when and as Purchaser
receives an Agreement Estoppel for which Seller delivered its undertaking as
aforesaid, the subject undertaking shall be released by Purchaser and returned
to Seller and shall be deemed to be of no further force and effect.
7.22 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location within the
Project of any space that is Vacant Space as of the Closing.
7.23 ASSIGNMENT OF REA. An Assignment of Declaration in the form attached hereto
as Schedule 7.23 assigning to Purchaser Seller's rights under the terms of the
Reciprocal Easement Agreement that is a Permitted Encumbrance.
7.24 OTHER DOCUMENTS. Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
8. PURCHASER'S PRE-CLOSING AND CLOSING DOCUMENTS.
At Closing, Purchaser shall execute and deliver the following
to Escrow Agent:
8.01 ASSIGNMENT OF LEASES. The Lease Assignment, acknowledging the assumption by
Purchaser of Seller's obligations under the Leases which accrue after the
Closing Date.
8.02 ASSIGNMENT OF CONTRACTS. The Contract Assignment, acknowledging the
assumption by Purchaser of Seller's obligations under the Contracts which accrue
after the Closing Date.
8.03 CLOSING STATEMENTS. Closing Statements executed by Purchaser.
8.04 ESCROW INSTRUCTIONS. Signed escrow instructions, reasonably satisfactory to
Escrow Agent, in form and substance sufficient to carry out the Closing.
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8.05 RECORDING REQUIREMENTS. All documents and affidavits required of Purchaser
to record the Deed.
8.06 DATE DOWN CERTIFICATE. A certificate of Purchaser (the "Purchaser Date Down
Certificate") in form and substance attached to the Exhibit Agreement as
Schedule 8.06 certifying that Purchaser's representations and warranties set
forth in Paragraph 10.02 of this Agreement are true and correct as of the
Closing Date.
8.07 VACANT SPACE ACKNOWLEDGMENT. The acknowledgment of the location within the
Project of any space that is Vacant Space as of the Closing.
8.08 OTHER DOCUMENTS. Such other documents as may be reasonably required to
close the transaction contemplated by this Agreement.
9. CONDUCT OF BUSINESS PRIOR TO CLOSING.
9.01 AFFIRMATIVE AND NEGATIVE COVENANTS. Until Closing, Seller shall or cause
to:
(i) Subject to Casualty or any Taking (as those terms are
hereinafter defined), maintain the Real Property and Personal Property in good
condition and repair and not commit or permit waste;
(ii) Carry on its business in respect to the Project in the
same manner as it has heretofore;
(iii) Keep in full force and effect all insurance coverage
required to be maintained by it pursuant to the Leases, applicable New Leases,
the Mortgages, the Permitted Exceptions, and any easement agreements or other
agreements or undertakings affecting the Project;
(iv) Perform all of its obligations under the Contracts,
Leases, applicable New Leases, Mortgages, Permitted Exceptions and any easement
agreements or other agreements or undertakings affecting the Project;
(v) Maintain and preserve its business organization intact;
(vi) Maintain and preserve its relations with the Tenants, New
Tenants under New Leases that are fully executed prior to the Closing, suppliers
and customers;
(vii) Except as provided in Paragraph 13.04 hereof, not
voluntarily terminate, amend, modify, extend, renew, waive or accept the
surrender of any Lease or New Lease or provision thereof, without Purchaser's
prior consent, which consent shall not be unreasonably withheld or delayed;
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(viii) Not voluntarily terminate, amend, modify, extend,
renew, waive or accept the cancellation of any Contract, Permitted Exception or
any easement agreements or other agreements or undertakings affecting the
Project or any provision of any of them, without the Purchaser's prior consent,
which consent shall not be unreasonably withheld or delayed;
(ix) Except as provided in Paragraph 13.04 hereof, not
voluntarily enter into, accept or consent to any new (a) lease, occupancy
agreement, subtenancy agreement, license agreement, concession agreement, (b)
contract or agreement, personal property lease or agreement, and/or (c) lien,
encumbrance, or security interest (including without limitation, mortgage, deed
of trust, security agreement, assignment of leases or rents, collectively,
"Mortgage") or other title exception or defect (including without limitation,
easement, restriction, dedication), which shall not be terminated on or before
Closing without the Purchaser's prior consent, which consent shall not be
unreasonably withheld or delayed;
(x) Not commence any action or proceeding or petition, apply
for or consent to any action or proceeding, the effect of which may be to change
the zoning of the Project or its assessed valuation (except for entering into
New Leases);
(xi) Not sell, assign or transfer the Project or any part
hereof (except in the instance of New Leases as provided in Paragraph 13.04
hereof), including without limitation, the Intangible Property and the Personal
Property; provided, however, that Seller may remove Personal Property for the
purpose of promptly effecting necessary repairs or immediate replacement with
Personal Property of like character and equal or better quality;
(xii) Not demolish or materially alter the Improvements or any
part thereof or otherwise adversely affect the value of the Project, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed, except for (1) curing Unacceptable Conditions, Title Defects and Survey
Defects, (2) completing Punchlist Work (as defined and provided in Paragraph
13.11 hereof), (3) constructing tenant improvements for Leases, (4) performing
Seller's New Lease Obligations (as defined and provided in Paragraph 13.10
hereof), and (5) completing, in accordance with the Plans, any incomplete work.
(xiii) Except as provided in Paragraph 9.01(xii) above, not
materially alter the Land or any part thereof, including without limitation, by
mining, excavating, removing topsoil, timbering or changing the grade, without
Purchaser's prior consent, which consent shall not be unreasonably withheld or
delayed.
9.02 PAYMENTS. As more fully set forth in Paragraph 16.01 hereof, (i) Punchlist
Work; (ii) curing Unacceptable Conditions; (ii) constructing tenant improvements
for Leases and New Leases; (iv) all other work to be performed and all payments
to be made by Seller pursuant to the provisions of the Leases, the Contracts,
the Permitted Exceptions, and any insurance policy maintained by Seller
providing coverage for the Project which pertain to obligations that accrue
prior to the Closing; and (v) Warranty Work shall be completely performed and
paid for when due (subject to the right to contest Liens as provided in
Paragraph 9.03 hereof) by Seller and the obligation thereof shall survive the
Closing.
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9.03 LIEN REMOVAL. Except for (i) taxes not yet due and payable as of the
Closing, (ii) installments of special assessments due and payable after the
Closing, and (iii) Liens (as hereinafter defined and provided) that are either
bonded or insured over in a form reasonably satisfactory to Purchaser, all other
liens and encumbrances of ascertainable amounts incurred by Seller or by, for or
on behalf of Seller, except the Permitted Exceptions, shall be removed from the
record by Seller or Seller shall make arrangements satisfactory to the Title
Company for the removal of, or title insurance over (in form reasonably
satisfactory to Purchaser), such liens and encumbrances of record on the Closing
Date. Notwithstanding the foregoing, any liens or encumbrances attaching to the
title of the Real Property as a result of work performed on or material supplied
to the Project by Seller or on behalf of anyone claiming by, through or under
Seller (except Tenants and New Tenants under Qualified Leases, as hereinafter
defined) or as a result of Seller's failure to pay, when due, a Commission
(collectively, "Lien" or "Liens") may be contested by Seller as hereafter
provided. Within thirty (30) days after the recording of a Lien that is recorded
or filed after the Closing, Seller shall, at its election, either (i) bond over
the same, or (ii) cause the Title Company to insure over the same (in form and
substance reasonably satisfactory to Purchaser), in order, in the instances of
either clause (i) or (ii) above, to reasonably protect the Purchaser and the
Project (or any part thereof) from and against the subject Lien. Thereafter, in
the manner elected by Seller, Seller may contest such Lien provided that, within
thirty (30) days following the entry by a court of competent jurisdiction of a
final judgment or decree in favor of the claimant of such Lien, Seller shall pay
and satisfy such Lien and cause it to be released of record. In the event Seller
fails to pay and satisfy any Lien within thirty (30) days following the entry by
a court of competent jurisdiction of a final judgment or decree in favor of the
claimant of such Lien or fails to bond over or insure over a Lien as provided in
this Paragraph 9.03, Purchaser may offset so much of any Earn-Out Payment of
Footage Payment subsequently payable by Purchaser hereunder by the amount
incurred by Purchaser for effectuating the satisfaction and release of the
subject Lien.
10. REPRESENTATIONS AND WARRANTIES.
10.01 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents and warrants
to Purchaser that:
(i) Seller is a Minnesota corporation duly created and validly
existing pursuant to the laws of the jurisdiction of its organization and is
duly qualified to do business in the jurisdiction in which the Project is
situated.
(ii) Seller is authorized and empowered to enter into this
Agreement and to perform all of its obligations under this Agreement without any
qualification whatsoever, and no consent or approval of any third party
(including, without limitation, any governmental or quasi-governmental
authority) is or was required by Seller to execute and deliver this Agreement or
consummate this transaction.
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(iii) Upon the signing and delivery of this Agreement, this
Agreement will be legally binding upon Seller in accordance with all of its
provisions, except as such provisions may be qualified or limited by bankruptcy,
creditor's rights and equitable principles.
(iv) The person signing this Agreement on behalf of Seller has
been duly authorized to sign and deliver this Agreement on behalf of Seller.
(v) To the best of its Knowledge (as hereinafter defined),
Seller has not committed any act or permitted any action to be taken which would
materially adversely affect its ability to fulfill all of its obligations under
this Agreement.
(vi) The execution and delivery of this Agreement, and the
performance of Seller's obligations under this Agreement, will not violate or
breach, or conflict with, the terms, covenants or provisions of any agreement,
contract, note, Mortgage, indenture or other document of any kind whatsoever to
which Seller is a party or to which the Project is subject.
(vii) Seller has received no written notice and Seller has no
Knowledge of any uncured Work Order, or unfulfilled requirements or
recommendations issued, imposed or made by any insurers concerning the Project
or any part thereof.
(viii) To the best of its Knowledge, (i) Seller is not in
default of any obligation of Seller under any Mortgage, and (ii) Seller and/or
the Project is in compliance with all terms and conditions of the Permitted
Exceptions, including any easement agreement or other agreement or undertaking
affecting the Project.
(ix) To the best of Seller's Knowledge, the Project was
constructed, and is presently being operated, occupied and used in substantial
accordance with all applicable federal, state and local laws, rules, regulations
and ordinances governing the construction, operation, occupation and use of the
Project, and no variances to any applicable federal, state or local law, rule,
regulation or ordinance were granted in connection with the construction of the
Project.
(x) To the best of Seller's Knowledge, there is (i) no pending
or contemplated Taking affecting the Project or any part thereof, or (ii) no
pending or contemplated public improvement in or about the Real Property which
may in any manner affect access to or from the Project or increase the taxes
assessed against the Project, except in the instance of contemplated special
assessments, (y) a special assessment has been proposed in connection with
improvements to the Skunk River, and (z) there is an agreement with the City of
Peoria, Arizona, to include certain water and sewer tap-in fees as a part of a
contemplated special assessment.
(xi) To the best of Seller's Knowledge, except for the Vacant
Space (as hereinafter defined), Seller is in receipt of all Permits required by
all governmental authorities for the construction currently being prosecuted at
the Project and the operation, occupation and use of the Project as a shopping
center; all Permits are in full force and effect; and all Permits issued to the
Project are described on Schedule 10.01(xi) attached hereto and made a part
hereof.
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(xii) Neither Seller, nor, to the best of Seller's Knowledge
(except as disclosed in the Environmental Reports), any prior owner of the
Project has: (a) caused or permitted the generation, manufacture, refinement,
transportation, treatment, storage, handling, installation, removal, disposal,
transfer, production or processing of Hazardous Substances (as hereinafter
defined) or other dangerous or toxic substances, or solid wastes, except in
strict compliance with all laws; (b) caused or permitted or received any written
notice or have any actual knowledge of the Release (as hereinafter defined) or
existence of any Hazardous Substances on or about the Project or property
surrounding the Project which might affect the Project; (c) caused or permitted
or received any written notice or have any actual knowledge of any substances or
conditions on or about the Project or on property surrounding the Project which
may support a claim or cause of action, whether by any governmental authority or
any other person, under any laws ("Environmental Laws") in effect as of the date
of this Agreement and all rules and regulations promulgated thereunder,
including, but not limited to: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq. (the
"Superfund Act"); the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
Sections 6921 et seq.; the Toxic Substances Control Act, 15 U.S.C. Sections 2601
et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et
seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et
seq.; the Federal Solid Waste Disposal Act, 42 U.S.C. Sections 6901 et seq.; the
Clean Air Act, 42 U.S.C. Sections 7401 et seq.; or any other law. For the
purposes of this Agreement the terms "Hazardous Substances" and "Release" shall
have the definitions used in the Superfund Act; provided, however, that the
definition of the term "Hazardous Substances" shall also include (if not
included within the definition contained in the Superfund Act), petroleum and
related by products, hydrocarbons, radon, asbestos, urea formaldehyde and
polychlorinated biphenyl compounds.
(xiii) Except for the Permitted Exceptions, Seller is the sole
owner of good, indefeasible and insurable fee simple title to the Land and the
Improvements, and Seller has not executed or entered into any other agreement to
purchase, sell, option, lease or otherwise dispose or alienate all or any
portion of the Project other than this Agreement, the Leases and New Leases.
(xiv) Subject to the right of Seller to contest Liens as
provided in Paragraph 9.03 hereof, all labor and services performed and material
furnished to the Project have been paid for or will be paid for in full by
Seller, and, to the best of Seller's Knowledge, there exists no valid basis for
which a Lien or similar lien can properly be claimed against the Project or any
part thereof.
(xv) As of the date hereof, Schedule 7.02(a) attached hereto
is a complete and correct list of all Leases, and the information disclosed on
Schedule 7.02(a) is accurate with respect to each of the Leases.
(xvi) Leasing commissions or fees that are payable in
connection with any leasing agreement or registration statement to which Seller
is a party or that Seller has accepted, in writing, that pertains to New Leases
(that will be paid by Seller as provided in Paragraph
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13.11 hereof), and the Leases described in Schedule 7.02(a), and commissions
resulting from any other agreement to which Seller is a party relating to the
Project (collectively, "Commissions") will be paid by Seller when due under the
applicable leasing agreement or registration statement.
(xvii) Except as set forth on Schedule 10.01(xvii) attached
hereto, as of the date hereof, (1) none of the Tenants or New Tenants of Leases
and New Leases that are Qualified Leases as of Closing have been granted any
economic or financial concession or inducement (collectively, "Tenant
Inducement") that will not be paid in full by Seller when required in accordance
with the applicable provisions of the subject Leases and New Leases, and (2)
none of the subject Tenants or New Tenants have deposited Security Deposits with
Seller, except those disclosed on Schedule 7.02(a) attached hereto.
(xviii) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xviii) attached hereto, as of the date hereof, no Tenant or
New Tenant of Leases or New Leases that are Qualified Leases as of the Closing
has alleged an event of default on the part of Seller which is presently
outstanding, or that Seller has not fulfilled all of its obligations under the
subject Leases or New Leases which are conditions of the obligations of such
Tenants and New Tenants to pay the Rents, including without limitation, all
work, repairs and improvements required to be furnished by Seller pursuant to
such Leases and New Leases.
(xix) To the best of Seller's Knowledge, except as set forth
on Schedule 10.01(xix) attached hereto, as of the date hereof, (1) none of the
Tenants or New Tenants under Leases or New Leases that are Qualified Leases as
of the Closing are in default of any of their obligations under their respective
Leases and New Leases, and (2) no event has occurred which, with the giving of
notice, the passage of time, or both, would constitute an event of default by
such Tenant or New Tenant.
(xx) Except as set forth on Schedule 10.01(xx) attached
hereto, as of the date hereof, Seller has no notice and to the best of Seller's
Knowledge, no Tenant or New Tenant under a New Lease that is fully executed
prior to Closing has advised Seller, orally or in writing, that any Tenant or
any subject New Tenant intends to give up physical or legal possession of its
demised premises, including without limitation: assigning its lease; subletting
all or part of its demised premises; vacating its demised premises;
discontinuing the operation of its business at its demised premises;
surrendering possession of its demised premises; or terminating its Lease or
subject New Lease.
(xxi) There are no employees of Seller that are assigned to
the Project for which Purchaser shall have any obligations after the Closing.
(xxii) A description of all Guaranties relating to the
construction and equipment of the Project received by Seller that, by their
terms, are in effect on or after the Closing Date are true, correct and
complete, and all Guaranties issued with respect to the Project that, by their
terms, are in effect on or after the Closing Date are described on Schedule
5.01(g) attached hereto.
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(xxiii) Seller has not dealt with any broker, finder or other
person in connection with this transaction, who is entitled to any Commission,
finder's fee or similar payment as a result of the acts of Seller or its agents,
except (1) as pertains to New Leases, and in such event, all Commissions in
connection therewith shall be paid by Seller as provided in Paragraph 13.11
hereof, and (2) as pertains to Commissions not yet due and payable in respect to
Leases which shall be paid by Seller when required in respect to such Leases.
Seller acknowledges that it has conversed with Eugene Faigus and Chadwick &
Saylor in connection with this transaction, but that Seller has not agreed to be
obligated to pay any fee or other compensation to either or both of them.
(xxiv) Seller has no actual Knowledge that any of the written
information provided to Purchaser by Seller or on its behalf in connection with
this transaction (including without limitation, the warranties and
representations set forth in this Agreement), is inaccurate or incomplete or
contains any untrue statement of fact.
(xxv) To the best of Seller's Knowledge, copies of documents
furnished or to be furnished to Purchaser by Seller or on its behalf in
connection with this transaction are true and complete copies of the originals.
(xxvi) As of the Closing, Seller's net worth, determined in
accordance with generally accepted accounting principals consistently applied,
is greater than $5,000,000.00, exclusive of goodwill.
The term "Knowledge" when used in the context of "to the best of Seller's
Knowledge" (or any derivative form thereof) shall mean the actual (written or
oral), not imputed, knowledge of Keith Bednarowski, Dan F. Nicol, Anne E. Loff,
James Erwin (Seller's Project Manager) or Lisa Grace (Seller's Property
Manager).
10.02 PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents and
warrants to Seller that:
(i) Purchaser is an Ohio corporation, duly organized and
validly existing pursuant to the law of the jurisdiction of its organization.
(ii) Purchaser is authorized and empowered to enter into this
Agreement and perform all of its obligations under this Agreement without any
qualification whatsoever.
(iii) No consent or approval of any third party (including
without limitation, any governmental or quasi-governmental authority) is or was
required by Purchaser to execute and deliver this Agreement or consummate this
transaction.
(iv) Upon the signing and delivery of this Agreement, it will
be legally binding upon Purchaser in accordance with all of its provisions,
except as such provisions may be qualified or limited by bankruptcy, creditor's
rights and equitable principles.
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(v) The person signing this Agreement on behalf of Purchaser
has been duly authorized to sign and deliver this Agreement on behalf of
Purchaser.
(vi) To the best of Purchaser's Knowledge (as hereinafter
defined) Purchaser has not committed any act or permitted any action to be taken
which would materially adversely affect its ability to perform all of its
obligations under this Agreement.
(vii) The execution and delivery of this Agreement by
Purchaser and Purchaser's performance of it obligations under this Agreement
shall not conflict with any law, statute, ordinance, regulation, order,
directive or decree of any governmental or quasi-governmental authority or any
contract, other agreement or obligation to which Purchaser is a party or is
otherwise bound.
(viii) Except for Eugene Faigus and Chadwick & Saylor, neither
Purchaser nor its agents have dealt with any broker, finder or other person in
connection with this transaction who is entitled to any Commission or similar
payment as a result of the acts of Purchaser or its agents.
(ix) All copies of documents furnished or to be furnished to
Seller by Purchaser or on its behalf in connection with this transaction are
true and complete copies of the originals.
The term Purchaser's Knowledge, when used in the context of "to the best of
Purchaser's Knowledge" (or any derivative form thereof) shall mean the actual
(written or oral), not imputed, knowledge of Scott Wolstein, James A. Schoff or
Joan U. Allgood.
10.03 INTENTIONALLY DELETED.
10.04 INDEMNIFICATION.
(a) Except as limited by the provisions of Paragraph 23
hereof, the Parties shall indemnify and hold each other harmless, from and
against all damages, costs, expenses, liabilities, penalties and fines,
including without limitation, attorneys fees, disbursements, expert witness
fees, paralegal fees, reporters fees, reproduction and printing costs, including
any of the foregoing which are incurred in connection with any appeal, and
amounts paid in settlement of claims (collectively, in respect to the foregoing
inclusion, "Litigation Expenses" ), paid or incurred by the other Party as a
result of any representation or warranty of the respective Party set forth in
this Agreement not being true and correct in all material respects when made. In
addition, the indemnity provisions of this Paragraph 10.04(a) on behalf of the
Purchaser shall pertain to any claims, demands, actions, causes of action,
judgments or decrees made against or entered against Seller in respect to any
Commissions or other compensation claimed or demanded by either Eugene Faigus or
Chadwick & Saylor in connection with the terms of this Agreement.
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(b) Notwithstanding the foregoing, and except as provided in
Paragraph 24.17 hereof in respect to Warranty Work, Seller's and Purchaser's
right to seek or obtain indemnification, damages or other legal recourse against
the other Party hereto (or any successor thereto) with respect to a breach of
any warranty, representation or covenant made in this Agreement or in any
documents, instruments or certificate executed and delivered pursuant hereto
shall terminate, and be of no further force or effect, unless (i) by the date
which is the last to occur of three hundred sixty five (365) days after the
termination of this Agreement and three hundred sixty five (365) days after the
expiration of the Earn-Out Period (as hereinafter defined), the aggrieved Party
shall have notified the other Party, in writing, that the aggrieved Party deems
that any such warranty, representation or covenant was breached in a material
respect when made (as updated or deemed updated) and states therein, with
reasonable particularity, the nature of the alleged breach and the section or
provision of the relevant document which was allegedly breached and (ii) by the
date which is the last to occur of three hundred ninety (390) days after the
termination of this Agreement and three hundred ninety (390) days after the
expiration of the Earn-Out Period, the aggrieved Party files suit against the
other Party seeking legal or equitable recourse as a consequence of such breach.
If the aggrieved Party timely notifies the other Party as called for in the
preceding clause (i) and timely files suit against the other Party as called for
in the preceding clause (ii), then the warranty, representation or covenant at
issue shall not terminate, but rather shall continue until the dispute is
settled between Seller and Purchaser or a final, non-appealable judgment is
issued by a court of competent jurisdiction with respect thereto.
(c) Within ten (10) days after receipt by an indemnified Party
of written notice of any claim or the commencement of any action under this
Paragraph 10.04 by a third party, the indemnified Party shall, if a demand in
respect thereof is to be made against the indemnifying Party pursuant to this
Paragraph 10.04, notify the indemnifying Party in writing of the claim or the
commencement of the action, provided the failure to notify the indemnifying
Party shall not relieve the indemnifying Party from any liability which it may
have to the indemnified Party other than under this Paragraph 10.04. Each
indemnitor shall be entitled, at its cost and expense, to contest any such third
party claim or action by all appropriate legal proceedings, provided that the
indemnitor shall have first notified the indemnitee of the indemnitor's
intention to do so within ten (10) days after the indemnitor's receipt of such
notice from the indemnitee. If the indemnitee joins in any such contest, the
indemnitor shall have full authority to determine all action to be taken with
respect thereto. If, after such opportunity, the indemnitor elects not to
contest any such claim or action, the indemnitor shall be bound by the
resolution of such claim or action obtained by the indemnitee. If required by
the indemnitor, the indemnitee shall cooperate fully with the indemnitor and its
counsel in contesting any such claim or action or, if appropriate, in making any
counterclaim or cross-claim against the subject third party asserting the claim
or bringing the action, but the indemnitor will reimburse the indemnitee for any
out-of-pocket costs and expenses incurred by the indemnitee in so cooperating.
The indemnitor shall pay to the indemnitee, in cash, all amounts to which the
indemnitee may become entitled by reason of the provisions of this Agreement,
such payment to be made within thirty (30) days after such amounts are finally
determined either by mutual agreement or by judgment of a court of competent
jurisdiction.
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11. SHARED CLOSING COSTS AND OTHER EXPENSES.
11.01 EXPENSES.
(a) Seller shall pay any and all fees or costs required to be
paid by Seller to the holder of the Mortgages in connection with the sale of the
Project, including, but not limited to prepayment fees, lender's consent fees or
lender's counsel fees, if any.
(b) Purchaser shall pay the costs and expenses of all Test and
Studies including any environmental audit of the Project and any other
investigations of the Project undertaken by Purchaser and all costs and
expenses, if any, charged by a lender to Purchaser in connection with any
financing or joint venturing of this transaction.
(c) Each Party shall pay its own attorney's fees.
11.02 SHARED CLOSING COSTS.
(a) Except as set forth above in Paragraph 11.01, if Closing
occurs, Seller and Purchaser shall each pay fifty percent (50%) of all of the
cost of the Commitment, the Title Policy (including the Endorsements and the
dating down and increasing the amount of coverage thereof as provided in
Paragraph 6.04 hereof), updating the Survey, transferring all Permits and
Guaranties to Purchaser, all escrow fees, and all transfer, conveyance, revenue,
excise, documentary or other tax or stamps payable as a result of the sale of
the Project (collectively, the "Shared Closing Costs").
(b) Except as provided otherwise in this Agreement, if Closing
does not occur because of the failure of a condition to either Party's
obligation to close this transaction (other than a default by a Party), each
Party shall pay fifty percent (50%) of the Shared Closing Costs.
(c) If Closing does not occur because Seller is in default,
Seller shall pay all of the Shared Closing Costs.
(d) If Closing does not occur and Purchaser is in default,
Purchaser shall pay all Shared Closing Costs.
12. CONDITIONS.
12.01 PURCHASER'S CONDITIONS. Purchaser shall not be obligated to close this
transaction unless and until:
(a) Seller has delivered to the Escrow Agent the pre-closing
and closing documents described in Paragraphs 5, 6 and 7 of this Agreement;
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(b) Title to the Project is delivered in accordance with the
provisions of this Agreement and the Title Company issues the Title Policy to
the Purchaser on the Closing Date, in the amount of that portion of the Purchase
Price computed as of the Closing Date in accordance with Paragraph 13.02 hereof,
insuring that indefeasible fee simple title to the Project is vested in
Purchaser, free and clear of all liens and encumbrances, except for the
Permitted Exceptions;
(c) The Project is delivered in the physical condition
provided for in this Agreement, reasonable wear and tear excepted; and
(d) If Seller is in default in the performance of any of its
obligations under this Agreement and such default has not been cured prior to
Closing or any of the representations or warranties of Seller are untrue or
inaccurate in any material respect when made or on the Closing Date.
12.02 SELLER'S CONDITIONS. Seller shall not be obligated to close this
transaction unless and until:
(a) Purchaser has delivered to the Escrow Agent that portion
of the Purchase Price computed as of the Closing Date in accordance with
Paragraph 13.02 hereof;
(b) Purchaser has delivered the closing documents described in
Paragraph 8 of this Agreement; and
(c) If Purchaser is in default in the performance of any of
its obligations under this Agreement and such default has not been cured by
Purchaser prior to Closing or any of the representations or warranties of
Purchaser is untrue or inaccurate in any material respect when made or on the
Closing Date.
12.03 RIGHTS UPON FAILURE OF A CONDITION. Except in the case of a default by
Seller under Paragraph 12.01(d) or by Purchaser under Paragraph 12.02(c), if a
condition of Closing of either Party is not satisfied as of the Closing Date,
the Party whose condition is not satisfied at Closing shall have the right to
(i) waive such condition and proceed with Closing, (ii) extend the Closing Date
to permit additional time to cause the unsatisfied condition to be satisfied, or
(iii) terminate this Agreement and both Parties shall be released of all rights
and obligations hereunder, except as otherwise specifically provided for herein.
If the failure of the condition is a default, the rights of the parties shall be
governed by Section 18 hereof.
13. EARN-OUT.
13.01 DEFINED TERMS. In addition to the other terms defined elsewhere in this
Agreement, the following terms shall have the following meaning:
(i) "Carry" shall mean the amount of the proportionate share
of real estate taxes and operating expenses for the Project that are (or would
have been) allocable to the
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premises that are the subject of a Lease or New Lease that becomes a Qualified
Lease for the period commencing on the Closing Date and ending on the date on
which the Earn-Out Payment for such Qualified Lease is due and payable
hereunder, reduced by the portion, if any, of such proportionate share for the
subject period that is paid to Purchaser by the Tenant or New Tenant of such
Qualified Lease. To the extent payable but not paid by the subject Tenant or New
Tenant, the portion of Rent from the such Tenant or New Tenant that applies to
the period prior the date the subject Earn-Out Payment is due and payable shall
be deemed Arrears (as hereinafter defined).
(ii) "Closing Payment" shall mean that amount that is equal to
(a) the aggregate sum of those capitalized Net Cash Flows for those Leases set
forth on the Rent Roll attached hereto as Schedule 3.01 that are Qualified
Leases as of the Closing Date (which aggregated sum, as of the date hereof based
on the presumption of which Leases will be Qualified Leases as of the Closing,
is $32,055,754.00); plus (b) the amount by which the annual Base Rent set forth
in said Schedule 3.01 for those Leases that are Qualified Leases as of the
Closing Date increases as verified by the applicable Tenant Estoppel, which
increase shall be capitalized using a rate of ten and 34/100ths percent
(10.34%); minus (c) the amount by which the annual Base Rent set forth in said
Schedule 3.01 for those Leases that are Qualified Leases as of the Closing Date
decreases as verified by the applicable Tenant Estoppel, which decrease shall be
capitalized using a rate of ten and 34/100ths percent (10.34%); and plus or
minus (d) the adjustments provided in Section 14 hereof.
(iii) "Earn-Out Payment" shall mean the amount that is equal
to the Net Cash Flow from those Leases or New Leases that are Qualified Leases
on the date (other than the Closing Date) such Earn-Out Payment is due as
provided in this Section 13 capitalized using a rate of ten and 34/100ths
percent (10.34%), minus (1) the Carry, and minus (2) any unsatisfied right of
offset permitted Purchaser as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof that was not previously credited to Purchaser.
(iv) "Force Majeure" shall mean delays resulting from (a)
labor disputes, (b) material or labor shortages, (c) Casualty, (d) acts of God
or the public enemy, (e) governmental embargo restrictions, (f) actions or
inactions of any governmental authority (including, but not limited to, the
failure to timely process or approve applications for the issuance or transfer
of Permits, licenses or approvals), (g) the adjustment of insurance claims
resulting from Casualty in excess of $1,000,000.00, (h) any other cause beyond
the reasonable control and reasonable anticipation of the applicable Party, but
excluding therefrom reasonable control resulting from monetary deficiency.
(v) "Net Cash Flow" shall mean, in respect to the applicable
Qualified Leases, an amount equal to the aggregate amount of the so-called "base
rent" (but not operating expenses, tax reimbursements, escalations based on a
consumer price index, or other similar Rent adjustments) payable for the full
calendar year on and after the date the subject Qualified Lease became a
Qualified Lease (without reduction for "free" Rent or Rent abatements), less any
non-reimbursable operating expenses and taxes for such calendar year. Purchaser
acknowledges that
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for those Leases set forth on Schedule 7.02(a) attached hereto, there are no
non-reimbursable operating expenses or taxes that shall be a deduction in the
determination of Net Cash Flow.
(vi) "New Lease" shall mean any lease (other than the Leases)
that lets or demises space in the Project and that is entered into by (a) the
Seller subsequent to the date hereof, but prior to the Closing Date, or (b) by
Purchaser or its successor(s) subsequent to the Closing Date, but prior to the
expiration of the Earn-Out Period.
(vii) "New Tenant" shall mean the tenant or lessee under a New
Lease.
(viii) "Other Center" or "Other Centers" shall mean (a) Maple
Grove Crossing, located in Minneapolis, Minnesota, of which Opus Corporation is
the Other Seller; (b) Eastchase Market, located in Forth Worth, Texas, of which
Opus South Corporation is the Other Seller; (c) Highland Grove, located in
Highland, Indiana, of which Opus North Corporation is the Other Seller; and (d)
Tanasbourne Town Center (Phase I), located in Hillsboro, Oregon, of which Bold,
L.L.C. is the Other Seller.
(ix) "Other Sale Agreement" or "Other Sale Agreements" shall
mean, in respect to the Other Centers, those other four Agreements of Purchase
and Sale entered into, effective as of the date hereof, by and between Purchaser
hereunder, as the purchaser thereunder, and, in respect to each Other Sale
Agreement, one of the Other Sellers, as the seller thereunder.
(x) "Other Seller" or "Other Sellers" shall mean any one or
more of the following: Opus South Corporation, a Florida corporation; Opus North
Corporation, an Illinois corporation; Opus Corporation, a Minnesota corporation;
and Bold, L.L.C, a Delaware limited liability company.
(xi) "Qualified Lease" shall mean, on the Closing Date or on
the dates during or after the Earn-Out Period on which an Earn-Out Payment is
required to be paid hereunder, any Lease or New Lease that, pursuant to the
terms thereof:
(a) has been fully executed by either Seller or
Purchaser (or its successor), as lessor, and by the Tenant or New
Tenant, as lessee;
(b) the Tenant or New Tenant (1) has taken possession
of the premises that is the subject of the Lease or New Lease; (2) has
commenced paying Rent thereunder, provided, however, if Seller pays to
Purchaser the amount of (y) any free Rent afforded such Tenant or New
Tenant, or (z) the amount of Rent that would have been payable by such
Tenant or New Tenant, but for a fitting-up or fixturing period afforded
to such Tenant or New Tenant, then the provisions of this clause (2)
shall not apply (provided that in the instance of clauses (y) and (z),
Seller shall not be permitted to pay such Rent for a period greater
than three (3) months); (3) has not terminated its Lease or New Lease
or been terminated by the landlord thereof as a result of a default
thereunder by such Tenant and New Tenant; (4) in the instance of the
Closing Date, if it occurs (i) on or before the fifteenth (15th) of a
month, the Rent payment obligations
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thereunder are not delinquent for a period longer than the month
preceding the month in which the Closing Date occurred, or (ii) after
the fifteenth (15th) of a month, the Rent payment obligations
thereunder are not delinquent for a period longer than the month in
which the Closing Date occurred; and (5) in the instance of an Earn-Out
Payment for the Earn-Out Period, the Rent payment obligations
thereunder are not delinquent for a period longer than the month in
which the Earn-Out Payment is due (in respect to clauses (4) and/or
(5), for any Rent that is past due longer than the period set forth
therein, "Monetary Default");
(c) the Tenant or New Tenant, as of the date an
Earn-Out Payment is required to be paid hereunder in respect thereto,
is not in voluntary or involuntary proceedings filed by or against it
under Section 365 of the U.S. Bankruptcy Code ("Bankruptcy
Proceeding"); and
(d) the Earn-Out Conditions (as hereinafter defined)
therefor have been satisfied.
(xii) "Vacant Space" shall mean space in the Project that is
rentable for commercial purposes and that is not the subject of a Lease, New
Lease or any other occupancy right as of the Closing Date. If a Lease, New Lease
or any other occupancy right that is fully executed prior to the expiration of
the First Segment (as hereinafter defined) is terminated prior to the expiration
of the First Segment (provided Purchaser consents, in its sole discretion, to
such termination), no Closing Payment or Earn-Out Payment has been paid in
respect to such terminated Lease, New Lease or any other occupancy right, and
the subject space is not the subject of a different Lease, New Lease or any
other occupancy right at the expiration of the First Segment, then such space
shall also be deemed to be "Vacant Space" at the expiration of the First
Segment.
13.02 CLOSING DATE PURCHASE PRICE COMPUTATION. On the Closing Date, as part of
the Purchase Price, Purchaser shall pay to Seller the Closing Payment computed
in accordance with the provisions of Paragraph 13.01(ii) hereof.
13.03 LEASE ASSIGNMENT RESERVATION. Notwithstanding any provisions to the
contrary contained in this Agreement, Seller shall be entitled to reserve from
the Lease Assignment ("Assignment Reservation") all of the remedies (but
excluding any eviction actions or summary depossess actions) of the landlord
under the subject Leases or New Leases (that are executed by Seller) that
pertain to (i) an event(s) that occurred prior to the Closing Date, but the
obligation of indemnity by or performance of the subject Tenant or New Tenant in
respect to such event does not arise until on or subsequent to the Closing Date;
(ii) the recovery of Rent that is either due and payable prior to the Closing
Date or due prior to the Closing Date, but not payable until thereafter,
including Unknown Rents (as hereinafter defined); and (iii) the recovery of any
base rent portion of Rent that is due under Leases or New Leases prior to the
date ("Reserved Base Rent Date") that is the first to occur of (y) the date on
which the Earn-Out Payment in respect thereto is paid (if any is required as
hereafter provided), and (z) the date ("Lease Reservation Date") that is five
(5) months subsequent to the date (subject to Force
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Majeure) that is set forth in the subject Lease or New Lease for the
commencement of the term thereof. Because Purchaser is to be the payee of Rent
under Leases and New Leases due on and after the Closing Date, the Lease
Assignment shall not specifically reserve the Assignment Reservation provisions
provided in clause (iii). However, provided Purchaser is not required to make
any out-of-pocket expenditures to third parties and Purchaser applies all Rents
received after the Closing first to Rent then due under the applicable Leases
and New Leases as provided in Paragraph 14.02 hereof, Purchaser agrees to fully
cooperate with Seller in prosecuting against the applicable Tenant or New
Tenants the rights reserved in the Assignment Reservation, provided, further,
however, that prior to the commencement of any action or proceeding against such
Tenant or New Tenant, Seller notifies Purchaser of its intent to commence any
such action or proceeding and affords Purchaser a reasonable period of time to
resolve the matter with such Tenant or New Tenant before Seller commences any
such action or proceeding.
13.04 NEW LEASES. Except for New Leases presented to Purchaser by Seller as
hereafter provided, Purchaser and its successors, during the Earn-Out Period,
shall not enter into any lease, tenancy, occupancy agreement, rental agreement,
option, license or concession for space in the Project (collectively, "Rental
Undertaking"), without first obtaining Seller's prior written consent, which
consent shall not be unreasonably withheld or delayed. If Seller consents as
aforesaid to a Rental Undertaking, such approved Rental Undertaking shall be
deemed a New Lease. During the period commencing on the date hereof and ending
on the expiration of the Earn-Out Period, Seller shall have the exclusive right
to negotiate prospective New Leases, except in the instance of Rental
Undertakings to which Seller has consented as aforesaid. Purchaser agrees to
bind its successors, assigns and their successors and assigns to the provisions
of this Paragraph 13.04.
Seller shall keep Purchaser reasonably advised of the terms,
provisions and conditions of such prospective New Leases as well as the identity
of and the available financial information pertaining to the lessee ("Prospect")
of a proposed New Lease. Purchaser agrees to reasonably cooperate with and
advise Seller whether the credit worthiness of the Prospect is acceptable to
Purchase and of those terms, provisions and conditions proposed for prospective
New Leases that Purchaser approves or disapproves. Purchaser agrees not to
unreasonably withhold or delay its consent and approval of the credit worthiness
of the Prospect or of such terms, provisions and conditions, provided the same
are reasonably consistent with the Leases and New Leases (or does not violate
any provision thereof) in respect to (i) rental rates and proposed Tenant
Inducements for comparable space within the Project for Prospects of comparable
net worth, (ii) duration of lease term, and (iii) exclusive uses proposed for
the Prospect.
Under the provisions of a New Lease, (i) for the period prior
to the Closing Date, Seller shall be the landlord thereof, and (ii) for the
Earn-Out Period, Purchaser shall be the landlord thereof and Seller shall be a
party thereto, as contractor, for the limited purpose of performing the New
Lease Obligations (as hereinafter defined).
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When and as a final draft of a New Lease is prepared, Seller
shall deliver a true and complete copy thereof to Purchaser along with all
financial information pertaining to the Prospect that is in Seller's possession
or under its control that was not theretofore delivered to Purchaser. Purchaser
shall advise Seller, in writing, within ten (10) business days after Purchaser's
receipt of the draft New Lease, whether Purchaser approves or disapproves the
same. If Purchaser notifies Seller as aforesaid of Purchaser's disapproval of a
draft New Lease ("Disapproved Lease"), such notice shall set forth, in
reasonable particularity, the reasons for Purchaser's disapproval. If Purchaser
fails to so notify Seller of whether the draft New Lease is approved or
disapproved as aforesaid, it shall act as notice to Seller that Purchaser has
approved the same. When a prospective New Lease has been approved or is deemed
to have been approved, (i) in the instance of prospective New Leases to be
executed prior to the Closing, Seller shall execute the same as landlord
thereunder, and (ii) in the instance of prospective New Leases to be executed
during the Earn-Out Period, Seller shall promptly thereafter deliver execution
originals of the same to Purchaser that have been executed by the subject
Prospect, as the New Tenant, and by the Seller in respect to the New Lease
Obligations. Within five (5) business days following Purchaser's receipt of
execution originals as aforesaid in clause (ii), Purchaser shall execute and
return the same to Seller. If Purchaser fails to return, when required, said
originals executed by Purchaser as aforesaid, such New Lease ("Unsigned Lease")
shall automatically be deemed a New Lease that is fully executed during the
Earn-Out Segment (as hereinafter defined) in which Seller delivered it to
Purchaser for execution, and shall be deemed a Qualified Lease and the Earn-Out
Conditions in respect thereto satisfied on the sixth (6th) business day after it
was delivered to Purchaser, notwithstanding the provisions of Paragraph
13.01(xi) hereof. As a result, subject to the provisions of the next sentence,
Purchaser shall pay to Seller, on the twenty-fifth (25th) day of the month first
occurring thereafter, the Earn-Out Payment computed in respect to such Unsigned
Lease. However, in the event, after the date an Unsigned Lease became a
Qualified Lease as aforesaid and prior to the date the Prospect thereof
withdraws its signature thereto, Purchaser executes and returns to Seller such
Unsigned Lease, Seller agrees to be bound by and to perform the New Lease
Obligations for such Unsigned Lease.
In the event, at any time prior to the date that is three (3)
months subsequent to the expiration date of the Earn-Out Segment in which there
was a Disapproved Lease, Purchaser (or its successors or assigns) enters into
any Rental Undertaking with the Prospect of such Disapproved Lease, such Rental
Undertaking shall automatically, notwithstanding the provisions of Paragraph
13.01(xi) hereof, be deemed to be a Qualified Lease, and Purchaser shall pay to
Seller, on the twenty-fifth (25th) day of the month first occurring after such
Rental Undertaking was signed by Purchaser, an amount equal to (a) the Earn-Out
Payment computed in respect to the provisions of such Rental Undertaking as a
Qualified Lease, minus (b) the Footage Payment, if any, that was previously paid
by Purchaser in respect to the portion of the Project that is the subject of
such Rental Undertaking, minus, (c) the costs incurred by Purchaser to unrelated
third parties for the construction and completion of tenant improvements and
broker's commissions for the subject Rental Undertaking, but in an amount, in
either instance, not greater than the cost of those tenant improvements and
Commissions provided in the Disapproved Lease, and minus
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(d) any unsatisfied right of offset afforded Purchaser pursuant to Paragraphs
5.04, 9.03, 14.06, 14.07 and 16.01 hereof. The obligations of Purchaser under
the provisions of this grammatical paragraph shall survive the Closing and the
later expiration of the Earn-Out Period.
13.05 EARN-OUT PERIOD. The hereafter provided period of time subsequent to the
Closing Date shall be divided into two segments (respectively, "First Segment,"
and "Second Segment," and generally, "Earn-Out Segment,"). Each Earn-Out Segment
during which Seller has elected, as hereafter provided, to extend the term of
this Agreement shall be for a period of five (5) months or for such longer
period as provided in Section 13.06 hereof. The First Segment shall commence on
the day after the Closing Date, and the Second Segment (if Seller elected or is
deemed to have elected to extend the Earn-Out Period) shall commence on the day
after the expiration of the First Segment. Provided the Closing occurs, Seller
hereby elects to extend the term of this Agreement for the First Segment. Seller
may elect, in its sole discretion, to extend the term of this Agreement for the
Second Segment by delivering to Purchaser Seller's written notice of such
election ("Earn-Out Extension Notice") not less than thirty (30) days prior to
the expiration of the First Segment. If Seller fails to deliver, as aforesaid,
its Earn-Out Extension Notice, it shall act as notice to Purchaser that Seller
has elected not to extend the term of this Agreement for the Second Segment.
However, notwithstanding the preceding sentence, if one or more of the Other
Sellers elect(s), under the provisions of its respective Other Sale Agreement,
to extend for the Second Segment, Seller, regardless of its election hereunder,
shall be deemed to have elected to so extend this Agreement, except that an
election by the Other Seller under the terms of the Other Sale Agreement for
Tanasbourne Town Center (Phase I) to extend for the second segment thereunder
shall not be deemed an election of Seller hereunder to extend the Earn-Out
Period for the Second Segment, if the closing for such Other Center is after the
Closing. The aggregate of the Earn-Out Segments for which Seller has elected or
is deemed to have elected to extend the term hereof shall be referred to as the
"Earn-Out Period."
13.06 CASUALTY DURING EARN-OUT PERIOD. If, during the Earn-Out Period, there is
a Casualty to a Vacant Space, the Earn-Out Period and the applicable Earn-Out
Segment shall be tolled as to the damaged Vacant Space until such time as
Purchaser causes such damaged Vacant Space to be restored to a habitable
condition, exclusive of tenant's improvements. If, during the Earn-Out Period,
there is a Casualty to twenty five percent (25%) or more of the Square Footage
of the Improvements (exclusive of the Vacant Space), the Earn-Out Period and the
applicable Earn-Out Segment shall be tolled until such time as such damaged
Improvements are restored to a condition so that the Tenants or New Tenants
thereof are open and operating their respective businesses therein, except in
respect to those Tenants or New Tenants whose Leases or New Leases were
terminated as a result of the subject Casualty. Purchaser agrees to promptly
notify Seller, in writing, of the occurrence of such a Casualty. Notwithstanding
the foregoing, in the event of such a Casualty, Seller shall deliver to
Purchaser, within ten (10) days following the date of Seller's receipt of
Purchaser's written notification, Seller's written notice ("Casualty Notice") of
its good faith determination that such Casualty is the proper basis for the
tolling of the applicable Earn-Out Segment. If Seller fails to deliver a
Casualty Notice as aforesaid, it shall act as notice to Purchaser that Seller is
not claiming any tolling of the applicable Earn-Out Segment in respect to such
Casualty. Regardless of a Casualty Notice, there will be no tolling of the
Earn-Out Period if Purchaser restores the applicable portion of the Improvements
within thirty (30)
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days following the date of such Casualty. However, if such restoration is not
completed within said thirty (30) days, the Earn-Out Period shall be tolled
commencing on the date of the Casualty and ending on the date provided in the
first two sentences of this Paragraph 13.06. During the Earn-Out Period, subject
to Force Majeure, Purchaser agrees to diligently undertake the restoration of
the applicable portion of the Improvements following a Casualty thereto.
13.07 EARN-OUT PAYMENTS. In respect to Leases or New Leases that are fully
executed prior to the expiration of the Earn-Out Period, on the twenty-fifth
(25th) day of each calendar month after the Closing Date, provided the subject
Lease or New Lease is a Qualified Lease prior to the Lease Reservation Date,
Purchaser shall pay to Seller the Earn-Out Payment computed in respect to those
Leases and New Leases that became, for the first time, Qualified Leases during
the preceding month and for which no Earn-Out Payment had been previously paid
to Seller. In the event a New Lease is executed during the First or Second
Segment, but it does not become a Qualified Lease until after the expiration of
the Earn-Out Period, but prior to the Lease Reservation Date, Purchaser, subject
to the satisfaction of the Earn-Out Conditions, shall pay to Seller at the time
aforesaid, an amount equal to the Earn-Out Payment computed in respect to such
subsequent Qualified Lease. Any Earn-Out Payment shall be subject to any
unsatisfied right of offset as provided in Paragraphs 5.04, 9.03, 14.06, 14.07
and 16.01 hereof.
Notwithstanding the foregoing, the Earn-Out Payment or Closing
Payment in respect to a particular Qualified Lease (excluding those that are
Qualified Leases in respect to an Unsigned Lease or a Rental Undertaking with
the Prospect of a Disapproved Lease as provided in each instance in Paragraph
13.04 hereof) shall not be due and payable by Purchaser to Seller, unless and
until, Seller, prior to the Lease Reservation Date, has delivered or caused to
be delivered to Purchaser, in respect to the subject Qualified Lease, (i) a
fully executed original thereof; (ii) a certificate of occupancy from the
applicable governmental authority authorizing the uninterrupted occupancy by the
subject Tenant or New Tenant of the subject premises; (iii) the applicable
Tenant Estoppel containing no material exceptions or Seller's Estoppel, if in
accordance with the provisions of Paragraph 7.15 hereof; (iv) Schedule
10.01(xvii) from Seller in respect to the subject Lease or New Lease, updated to
the date the Earn-Out Payment is due, setting forth any unsatisfied Tenant
Inducement in respect thereto; (v) evidence, in form and content reasonably
satisfactory to Purchaser, that the portion of Tenant Inducements payable to the
subject Tenant or New Tenant has been paid by Seller; (vi) an original of the
insurance certificates required from the subject New Tenant under the Qualified
Lease; (vii) the date down and increased coverage endorsement for the Title
Policy required pursuant to the provisions of Paragraph 6.04 hereof, provided
Purchaser pays fifty percent (50%) of the Shared Closing Costs in respect
thereto; and (viii) copies of the "as-built" plans and specifications for the
tenant improvements for the subject Qualified Lease (collectively, in respect to
clauses (i) through (viii) above, "Earn-Out Conditions"). The Earn-Out Payment
obligations of this Paragraph 13.07 shall survive the Closing Date and the later
termination of this Agreement. If the Earn-Out Conditions are not satisfied for
the subject Lease or New Lease on or prior to the Lease Reservation Date
therefor, then Purchaser shall have no obligation to make any Earn-Out Payment
in respect thereto.
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13.08 FOOTAGE PAYMENT. In the event Seller elects not to extend the Earn-Out
Period for the Second Segment, Purchaser shall pay to Seller, when hereafter
provided, an amount ("Footage Payment") equal to the Square Footage (as
hereinafter defined) of the Vacant Space existing at the expiration of the First
Segment, multiplied by (i) $55.00 for that portion of the Vacant Space that is
not greater than one hundred feet in depth as measured from the front exterior
surface to the rear exterior surface, and (ii) $45.00 for that portion of the
Vacant Space that is greater than one hundred feet in depth measured as
aforesaid. If Seller elects or is deemed to have elected to extend the term of
the Earn-Out Period for the Second Segment, there will be no Footage Payment.
"Square Footage" shall mean the aggregate number of square feet of the Vacant
Space measured from the front exterior surface to the rear exterior surface and
from the middle of demising walls of such Vacant Space. Within forty-five (45)
days following the date Seller has elected or is deemed to have elected not to
extend the term of the Earn-Out Period for the Second Segment, Seller shall
deliver to Purchaser Seller's computation of the amount of the Footage Payment
("Footage Computation") which will set forth the identity of the Vacant Space,
the depth of the Vacant Space, and the amount of the Square Footage contained
therein. Unless Purchaser notifies Seller within ten (10) business days
following Purchaser's receipt of the Computation Notice that Purchaser disagrees
with the provisions thereof, Purchaser shall pay to Seller, within thirty (30)
days following Purchaser's receipt of the Computation Notice the amount of the
Footage Payment provided therein. If Purchaser does object to the Computation
Notice as aforesaid, Purchaser and Seller shall promptly confer, in good faith,
to resolve the disagreement. When the disagreement is resolved, within ten (10)
business days thereafter, Purchaser shall pay to Seller the resolved Footage
Payment. Any Footage Payment shall be subject to any unsatisfied right of offset
as provided in Paragraphs 5.04, 9.03, 14.06, 14.07 and 16.01 hereof.
13.09 INTENTIONALLY DELETED.
13.10 SELLER'S NEW LEASE OBLIGATIONS. Seller, at its sole cost and expense,
shall (i) apply for and obtain all permits and licenses necessary to construct
all tenant improvements required under New Leases; (ii) subject to Force
Majeure, construct and complete, when required under the provisions of New
Leases, all such tenant improvements; (iii) pay, when due, all Commissions in
respect to New Leases; (iv) provide and undertake the required New Lease
construction and warranty work ("Tenant Warranty"); and (v) provide the
builder's "all risk" and general liability insurance coverage required by the
subject New Lease in respect to such construction (collectively in respect to
clauses (i) through (v), "New Lease Obligations").
13.11 PUNCHLIST. The portion of the Purchase Price payable at Closing as
computed pursuant to the provisions of Paragraph 13.02 hereof and the amount of
each Earn-Out Payment due hereunder shall be reduced by an amount which shall be
held by Purchaser and disbursed as hereafter provided, which amount shall equal
one hundred and twenty five percent (125%) of the reasonably estimated cost of
completing all of the tenant improvements for work for Leases and New Leases
that are Qualified Leases as of the Closing Date and/or Earn-Out date. The
amount of the Footage Payment payable hereunder shall be reduced by an amount
which shall be held by Purchaser and disbursed as hereafter provided, which
amount shall equal one hundred twenty
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five percent (125%) of the reasonably estimated cost of constructing and
completing substantially to those standards for the shell and core portion of
those Improvements comprising the Project that are each set forth on the Shell
and Core List and Standard attached hereto as Schedule 13.11 (collectively, in
respect to the first and second sentences of this Paragraph 13.11, "Punchlist
Holdback"). The Punchlist Holdback shall be compiled in a line item format in
respect to major segments for completing such incomplete items and shall set
forth the reasonable cost of completing each such line item. If Seller and
Purchaser, within fifteen (15) days prior to the Closing Date, are unable to
agree on the scope or amount of each Punchlist Holdback line item, Seller and
Purchaser shall appoint a third party contractor to make such determination, and
the scope and amount so determined by the third party contractor shall be
binding upon the Parties. When the scope and amount of the Punchlist Holdback is
determined as aforesaid, it shall be attached to this Agreement, respectively,
as Schedules 13.11(a)(1), 13.11(a)(2), etc. Thereafter, subject to Force
Majeure, Seller, at its sole cost and expense (regardless of the amount of the
Punchlist Holdback), agrees to diligently prosecute to completion ("Punchlist
Work") all of the items on each Schedule 13.11(a) attached hereto. The
obligation of Seller to complete the Punchlist Work is absolute and
unconditional. Monthly, after the Closing Date, when Punchlist Work pertaining
to various line items on the Punchlist Holdback is complete, Purchaser shall pay
to Seller one hundred percent (100%) of that portion of the Punchlist Holdback
applicable to such completed Punchlist Work (thereby retaining twenty-five
percent (25%) thereof), provided Seller has delivered to Purchaser a Form G704
in the form attached to the Exhibit Agreement as Schedule 13.11(b), executed by
Seller (or its contractor) setting forth that the subject line item of Punchlist
Work has been completed.
When all of the Punchlist Work has been completed and the
Forms G704 therefor have been delivered to the Purchaser, Purchaser shall pay to
Seller the remaining twenty-five percent (25%) of the Punchlist Holdback,
provided Seller has delivered to the Purchaser the following documents:
(a) Evidence that all payment in the manner required by the applicable
contract, agreement or undertaking is paid in full in respect to the subject
Punchlist Work;
(b) Lien waivers required by (and that are reasonably satisfactory to)
the Title Company from the Seller and its contractor and subcontractors that are
necessary to insure over Liens in respect to the Punchlist Work; and
(c) In respect to the portion(s) of Punchlist Work for incomplete
tenant improvements under a Lease or New Lease, an acknowledgment from the
subject Tenant or New Tenant, in form and substance reasonably acceptable to
Purchaser, setting forth the applicable Tenant's or New Tenant's acceptance of
completion of the subject tenant improvements.
14. CLOSING ADJUSTMENTS AND APPORTIONMENTS.
All of the items of income and expense mentioned in this
Section 14 shall be apportioned or adjusted between Seller and Purchaser as of
12:01 A.M., local time of the Project, as of the Closing Date. Except as
provided in the instance of Unknown Rents as provided in
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Paragraph 14.03 hereof, all apportionments and adjustments shall be made as of
the Closing Date. To the extent that the apportionments and adjustments, at the
Closing, are based upon any errors or omissions in the calculation or
determination thereof, promptly after notice of such errors or omissions, the
Parties shall readjust or reapportion and make the payment required as a result
thereof.
14.01 RENTS. The fixed and minimum rents and all additional rents, escalation
charges, common area maintenance charges, imposition charges, heating and
cooling charges, insurance charges, charges for utilities, percentage rent, and
all other rents, charges and commissions (collectively, the "Rents") payable by
the Tenants under the Leases and New Leases that are Qualified Leases as of the
Closing Date, to the extent collected by Seller on or prior to the Closing Date
and which represent payments of Rents applicable to a period of time subsequent
to the Closing Date. Notwithstanding the foregoing, Seller shall be permitted
the rights against Tenants and New Tenants as provided in the Assignment
Reservation set forth in Paragraph 13.03 hereof.
14.02 ARREARS. Any of the Rents that are due and payable by the Tenants and New
Tenants on or prior to the Closing Date, but which have not been collected by
the Seller on or prior to the Closing Date, or payment of which has been
deferred until after the Closing Date ("Arrears"), to the extent applicable to
any period of time on or prior to the Closing Date, and which are paid after the
Closing Date shall, subject to the terms below, be paid to Seller and be the
subject of the Assignment Reservation, and if the Arrears are received by
Purchaser, Purchaser shall pay the Arrears to Seller after collection by
Purchaser, provided, however, that if any Arrears exist on the Closing Date, all
Rents, received and collected by Purchaser after the Closing Date shall be
applied first to payment of all Rents due Purchaser and second to all Arrears
due Seller. Purchaser shall have no obligation to collect any Arrears or to
commence any action to enforce the obligation of Tenants to pay the Arrears, but
Purchaser agrees to cooperate with Seller in the collection of such Arrears, but
only as provided in Paragraph 13.03 hereof. In the event Purchaser elects to
commence any action or proceeding against any Tenant and as a result thereof
collects any Arrears which Purchaser is required to remit to Seller, Purchaser
shall be entitled to deduct and retain a portion of the amount collected which
is equal to the Pro Rata Share (as hereinafter defined) of the Litigation
Expenses incurred by Purchaser in connection with the collection of the Arrears.
Notwithstanding anything to the contrary, Seller, as a result of the Assignment
Reservation, shall have the right, after delivery of prior written notice to
Purchaser, to commence any action or proceeding, except a summary depossess or
any eviction actions, against any Tenant for Seller's portion of any Arrears.
14.03 UNKNOWN RENTS. Any Rents which have accrued but are not due and payable on
the Closing Date because the applicable Lease or New Lease year or other fiscal
period for which such Rents are to be computed has not yet expired (including by
way of example only, escalation charges and percentage rents) or if it has
expired but cannot for any other reason be calculated by the Parties on the
Closing Date ("Unknown Rents"), shall be apportioned promptly after (i) the
expiration of the applicable Lease or New Lease year or other fiscal period, and
(ii) the receipt and collection of the Unknown Rents. Purchaser shall make
reasonable efforts to ascertain the amount of the Unknown Rents (but, shall not
be obligated to commence any action
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or proceeding to collect Unknown Rents, except that Purchaser shall reasonably
cooperate with Seller in respect to the Assignment Reservation as provided in
Paragraph 13.03 hereof), and when the amounts of the Unknown Rents are
ascertained, received and collected by Purchaser, Purchaser shall promptly pay
to Seller a portion (the "Pro Rata Share") of the Unknown Rents determined by
multiplying the Unknown Rents collected by a fraction, the numerator of which is
the number of days in the applicable Lease or New Lease year or other fiscal
period up to but excluding the Closing Date and the denominator of which is the
number of days in the applicable Lease or New Lease year or other fiscal period,
less any monies Seller has previously received on account of the Unknown Rents
and Seller's Pro Rata Share of the Litigation Expenses incurred by Purchaser in
the collection of the Unknown Rents. In the event it is determined after Closing
that the amount of the Unknown Rents received by Seller exceeds the Seller's Pro
Rata Share, Seller shall promptly pay such excess to Purchaser upon demand.
Notwithstanding anything to the contrary, Seller shall have the right to
commence any action or proceeding, except a summary depossess or an eviction
action, against any Tenant for Seller's portion of any Unknown Rents.
14.04 UTILITIES. To the extent not payable by Tenants or New Tenants, the actual
or estimated charges for utilities accrued and payable by Seller prior to the
Closing Date, provided Purchaser is required by law or elects to assume Seller's
account. Deposits for utilities (the "Utility Deposits"), plus any interest on
the Utility Deposits to which Seller is or will be entitled, held by the
provider of the utilities and which are freely transferable to Purchaser, shall,
at the election of the Purchaser, be assigned by Seller to Purchaser and
Purchaser shall pay Seller the full amount thereof at Closing, in addition to
the applicable portion of the Purchase Price. Seller shall retain the right to
obtain a refund of any Utility Deposits which are not required to be assigned to
Purchaser and Purchaser will cooperate with Seller in obtaining any refund. With
respect to water, sewer, electric and gas charges, Seller shall make reasonable
efforts to obtain a reading of the meter or other consumption measuring device
as of the Closing Date. If the Seller is unable to obtain such a reading, Seller
shall furnish a reading as of a date not more than thirty (30) days prior to the
Closing Date and the unknown charges shall be apportioned on the basis of an
estimate computed by utilizing such reading and the most recent bill from the
utility provider, computed on an equal per diem basis.
14.05 CONTRACTS. Prepaid charges, payments and accrued charges under the
Contracts set forth in Schedule 7.05(a) attached hereto, to the extent not paid
by Tenants or New Tenants. However, if paid by Tenants or New Tenants, Seller
shall credit Purchaser with the amount thereof received by Seller from such
Tenants or New Tenants, to the extent not applied to the payment obligations
under the Contracts.
14.06 TAXES. Seller shall cause all real estate taxes for 1995 and prior years
to have been paid as of the Closing Date. The 1996 real estate taxes for the
Project shall be pro-rated as of the Closing Date. Seller's pro-rata share of
such real estate taxes shall be calculated based upon the number of days
elapsing from January 1, 1996 to, but not including, the Closing Date in
relation to 365 days in the year 1996. Purchaser shall be responsible for the
remaining portion of such real estate taxes, commencing with the Closing Date
and continuing through December 31, 1996. In the event the statement for the
total 1996 real estate taxes is
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not available as of the Closing Date, the Parties shall make the pro-ration
provided for herein on the basis of the estimated budget for 1996 prepared by
Seller's Property Manager for the Project for purposes of establishing Real
Estate Tax Rent (as hereinafter defined) for Tenants and New Tenants occupying
space in the Project, and shall thereafter make such adjustments as may be
necessary at such time as the tax statement for the total real estate taxes for
1996 becomes available. The Closing Payment shall be reduced by the amount of
Seller's pro-rata share of the 1996 real estate taxes; provided, however, that
Seller shall be entitled to a reduction in such pro-rata share in an amount
equal to any portion of the 1996 real estate taxes paid by Seller on or before
Closing Date. Notwithstanding the foregoing, at the Closing, to the extent there
are Tenants or New Tenants that pay their Real Estate Tax Rent on a lump sum
basis, Seller shall not be required to credit Purchaser with that portion of the
pro-rata share of 1996 real estate taxes for the period from January 1 to the
Closing Date for which such lump sum paying Tenants and New Tenants are
responsible ("Lump Sum Non-Credit"). However, if any such Tenant or New Tenant
fails to pay their respective lump sum portion of Real Estate Tax Rent when due
that is applicable to the period from January 1, 1996, to the Closing Date,
Purchaser shall notify Seller of the same, in writing, and Seller shall pay such
unpaid amount within five (5) business days and such amount so paid by Seller
shall be deemed Arrears. In the event Seller fails to pay such amount, Purchaser
shall be permitted to offset any Footage Payment, Earn-Out Payment or other sum
payable by Purchaser to Seller hereunder that is thereafter due. To the extent
there are insufficient future payments due Seller from Purchaser against which
to make such offset, Purchaser shall have the remedy against Seller as provided
in Paragraph 18.05 hereof.
The portion of the Rent under Leases and New Leases that pertains to
the obligations of Tenants and New Tenants to pay their respective pro-rata
share of real estate taxes (or special assessments provided in Paragraph 14.07
hereof) shall be called "Real Estate Tax Rent." Certain Tenants and New Tenants
pay their Real Estate Tax Rent in a lump sum(s) and others pay their Real Estate
Tax Rent on a monthly basis. The portion of Real Estate Tax Rent that pertains
to the period prior to the Closing Date and which was paid to Seller by those
Tenants and New Tenants who pay the same on a monthly or lump sum basis shall be
retained by Seller. Any Real Estate Tax Rent received by Seller prior to the
Closing Date that pertains to the period on or subsequent to the Closing Date
shall be credited to Purchaser at the Closing. Any Real Estate Tax Rent received
by Purchaser after the Closing that pertains to the period prior to the Closing
Date (except that which is a Lump Sum Non-Credit) shall be paid by Purchaser to
Seller. The Real Estate Tax Rent retained by Seller shall be subject to
adjustment (increases or decreases) at such time as Purchaser reconciles the
estimated payment of Real Estate Tax Rent with the amount of the actual real
estate taxes paid for 1996.
14.07 ASSESSMENT INSTALLMENTS. If, as of the Closing Date, the Project is
encumbered or otherwise affected by any assessment (whether or not a lien) which
becomes payable in installments, for the installment that is due in payable in
1996, Seller shall credit Purchaser with the pro-rata portion of such
installment from January 1, 1996 to the Closing Date, except for an amount that
would be equal to the Lump Sum Non-Credit. Such pro-
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ration shall be made on the basis that the number of days from January 1,1996
to, but excluding, the Closing Date bears to three hundred and sixty five (365)
days. The portion of Real Estate Tax Rent applicable to the installment of
assessment payable in 1996 that pertains to the period prior to the Closing Date
and which was paid to Seller by Tenants or New Tenants shall be retained by
Seller. Any Real Estate Tax Rent applicable to such installment or assessment
that was received by Seller prior to the Closing Date that pertains to the
period on or subsequent to the Closing Date shall be credited to Purchaser at
such Closing. Any Real Estate Tax applicable to such installment of assessment
received by Purchaser after the Closing Date that pertains to the period prior
to the Closing Date (except that which is a Lump Sum Non-Credit) shall be paid
by Purchaser to Seller. If any Tenant or New Tenant who pays their respective
Real Estate Tax Rent on a lump sum basis and for whom a Lump Sum Non-Credit was
provided, Seller shall remain responsible for the Lump Sum Non-Credit as
provided in Paragraph 14.06.
14.08 PERMITS. The (i) Vault taxes and rents, if any, due and payable in 1996
(to the extent not the obligation of Tenants or New Tenants to pay), (ii) Permit
fees to the extent transferable, and (iii) government inspection fees shall be
apportioned as of the Closing Date.
14.09 SECURITY DEPOSITS/TENANT INDUCEMENTS. Purchaser shall receive a credit
against the portion of the Purchase Price payable on the Closing Date in an
amount equal to the sum of (i) the Security Deposits, if any, which Seller is
holding pursuant to the Leases and New Leases and as set forth in Schedule
7.02(a) attached hereto, plus (ii) all costs, expenses and losses (including
without limitation, reductions in Rent) which will be incurred by Purchaser
after the Closing as a result of all Tenant Inducements given on or before the
Closing Date which are not paid in full as of Closing in respect to Qualified
Leases as of the Closing Date.
14.10 CUSTOMARY ITEMS. Any other items of income and expense not specifically
mentioned in this Section 14 which are customarily apportioned in real property
transactions of the character contemplated by this Agreement.
15. CLOSING.
15.01 CLOSING AND CLOSING DATE. The closing of this transaction ("Closing")
shall be held at the office of the Opus Properties on June 27, 1996 (the
"Closing Date"), subject to extensions pursuant to Paragraphs 5.04, 6.03, 7.20,
and 12.03.
16. POSSESSION.
16.01 POSSESSION AND POST CLOSING WORK. Purchaser shall be entitled to
possession on the Closing Date, subject only to the Leases, New Leases,
Assignment Reservation and the Permitted Exceptions. Notwithstanding the
foregoing, subsequent to the Closing Date, Seller and Seller's agents,
contractors and subcontractors shall have access to such portions of the Project
necessary and convenient to commence and/or complete (i) the Punchlist Work;
(ii) Unacceptable Conditions; (iii) Seller's New Lease Obligations; (iv)
incomplete tenant improvement work under Leases; (v) Warranty Work; and (vi)
Tenant Inducements (collectively
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in respect to clauses (i) through (vi), "Post Closing Work"). All Post Closing
Work shall be done (a) at Seller's sole cost and expense, (b) in a fashion to
reasonably minimize, taking into account the scope and nature of the Post
Closing Work, the disruption to Tenants and New Tenants and to the operation and
management of the Project by Purchaser and Purchaser's agents, (c) in compliance
with Environmental Laws, and (d) in any event, subject to Force Majeure, with
diligence. The obligation of Seller to complete the Post Closing Work and to pay
Commissions and pay all financial obligations of Seller hereunder is absolute
and unconditional, and Seller agrees to indemnify, defend and hold Purchaser and
its successors and assigns and the Project harmless (including Litigation
Expenses) from and against any and all (except as provided in Paragraph 23
hereof) loss, damage, claim, demand, liability, Lien, action, cause of action,
judgment or decree as a result of (A) damage or destruction to property,
including title to the Project, (B) personal injury, or (C) loss of Rent
resulting from the performance or non-performance of the Post Closing Work by
Seller (except that which is caused, in whole or in part, by the negligence,
willful misconduct or breach of contract by Purchaser or its successors and
assigns or their respective agents, employees, contractors or subcontractors),
and resulting from Seller's failure to pay Commissions or to pay all financial
obligations of Seller hereunder. In the event Seller fails to perform the Post
Closing Work, pay Commissions or pay all financial obligations of Seller
hereunder, Purchaser may deduct from the next succeeding Earn-Out Payment
payable hereunder after the event of Seller's failure as aforesaid, the cost and
expense incurred by Purchaser in completing such incomplete Post Closing Work,
paying such unpaid Commissions or paying all financial obligations of Seller
hereunder. During the performance of any Post Closing Work, Seller shall
maintain commercial public liability insurance in an amount and issued by
carriers that are reasonably satisfactory to Purchaser naming Purchaser and
those other persons or entities reasonably designated by Purchaser as additional
insureds.
17. RISK OF LOSS.
17.01 RISK. Except as provided in Paragraphs 17.02 and 17.03, the risk of loss
or damage (the "Loss") to the Project by (i) condemnation, eminent domain or
similar actions or proceedings or threat thereof (collectively, "Taking"), or
(ii) fire or other casualty (collectively, a "Casualty") shall be borne by
Seller through the date and time that the applicable portion of the Purchase
Price payable on the Closing Date is paid to Seller and thereafter shall be
borne by Purchaser.
17.02 DAMAGE AND DESTRUCTION. In the event all or any portion of the Project is
materially damaged by any cause whatsoever prior to the Closing Date, Seller
shall so advise Purchaser and Purchaser shall have the right, at its sole
option, to either: (a) proceed with Closing with no reduction in the Purchase
Price, provided, however, Purchaser shall receive from Seller (i) all proceeds
of any casualty insurance maintained by Seller and payable with respect to such
damage, and (ii) an amount equal to the deductible on such casualty insurance;
or (b) terminate this Agreement by giving written notice of termination to
Seller within ten (10) business days of the date Purchaser is advised by Seller
of such damage, in which event the Deposit shall be refunded to Purchaser,
Seller and Purchaser shall each pay 50% of the Shared Closing Costs as of the
date this Agreement is terminated by Purchaser, and Seller and Purchaser shall
have no further rights or obligations under this Agreement, except those rights
and obligations
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specifically set forth herein as surviving such termination. The Seller
represents and warrants to Purchaser that the Improvements (except any Tenant's
or New Tenant's trade fixtures therein) are insured to the full replacement
value thereof with a deductible of not more than $5,000.00, which insurance
Seller agrees to keep in full force and effect until the Closing.
17.03 CONDEMNATION AND EMINENT DOMAIN. If, prior to the Closing Date, the
Project shall be subjected to a Taking, either total or partial, or if any
notice of intent of Taking or sale in lieu of Taking that materially affects the
Project is received by Seller or Purchaser, Purchaser shall have the right to
either: (a) proceed with Closing, in which event Purchaser shall be entitled to
participate in any such condemnation or eminent domain proceedings and, after
payment to Seller of the cash portion of the Purchase Price payable on the
Closing Date, to receive all of the proceeds of such Taking, or (b) terminate
this Agreement by giving written notice of termination to Seller, in which event
the Deposit shall be returned to Purchaser, Seller and Purchaser shall each pay
50% of the Shared Closing Costs, and Purchaser and Seller shall have no further
rights or obligations under this Agreement, except those rights and obligations
specifically set forth herein as surviving such termination. Seller and
Purchaser each agree to promptly forward to the other any notice of intent
received pertaining to a Taking of all or a portion of the Project.
18. DEFAULTS AND REMEDIES.
18.01 SELLER'S DEFAULTS. In respect to the remedies afforded Purchaser pursuant
to Paragraph 18.04 hereof, Seller shall be deemed to be in default under this
Agreement in the event (i) Seller fails, for any reason (other than a default by
Purchaser), to perform any of its material obligations under this Agreement that
arise on or prior to the Closing within the time limits and in the manner
provided for in this Agreement, (ii) any representation or warranty made by
Seller in this Agreement is untrue or inaccurate in a material respect when made
or as of the Closing Date, (iii) any Other Seller under the applicable Other
Sale Agreement fails, for any reason (other than a default by Purchaser), to
perform any of its material obligations under the subject Other Sale Agreement
that arise on or prior to the Closing within the time limits and in the manner
provided for in such Other Sale Agreement, or (iv) any representation or
warranty made by any Other Seller in the applicable Other Sale Agreement is
untrue or inaccurate in a material respect when made or as of the Closing Date.
Notwithstanding the provisions of clauses (iii) and (iv) above, if Purchaser
closes this transaction, any default or any inaccurate representation or
warranty by any Other Seller under the terms of the applicable Other Sale
Agreement shall be deemed waived in respect to this Agreement and it shall not
be construed as a default by Seller hereunder. In respect to the remedies
afforded Purchaser pursuant to Paragraph 18.05 hereof, Seller shall be deemed to
be in default under this Agreement in the event Seller fails, for any reason
(other than a default by Purchaser), to perform any of its material obligations
under this Agreement that arise subsequent to the Closing within the time limits
and in the manner provided for in this Agreement or any representation or
warranty made by Seller in this Agreement is untrue or inaccurate in a material
respect when made or as of the Closing Date. If Closing does not occur and
Seller is in default, Seller shall pay all of the Shared Closing Costs.
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18.02 PURCHASER'S DEFAULTS. Purchaser shall be deemed to be in default under
this Agreement in the event Purchaser fails, for any reason (other than a
default by Seller), to perform any of its material obligations under this
Agreement or any or all of the Other Sale Agreements within the time limits and
in the manner provided for, as applicable, in this Agreement and the Other Sale
Agreements, or any representation or warranty made by the Purchaser in this
Agreement or any or all of the Other Sale Agreements is untrue or inaccurate in
a material respect when made or as of the Closing Date. If Closing does not
occur and Purchaser is in default, Purchaser shall pay all of the Shared Closing
Costs.
18.03 SELLER'S REMEDIES. If Purchaser is in material default under this
Agreement of its obligation to close this transaction and Seller is not in
material default, the sole and exclusive remedy of Seller shall be to terminate
this Agreement by notice given to Purchaser and in such event Purchaser shall be
liable to Seller for liquidated damages in the amount equal to one percent (1%)
of $32,055,754.00 plus Litigation Expenses incurred by Seller in enforcing the
collection of such liquidated damages . The Parties recognize and agree that the
foregoing remedy for liquidated damages is a reasonable amount in the context of
this transaction in which the accurate measurement of damages is not feasible or
convenient. Notwithstanding the foregoing, if Purchaser (i) violates the
Recording Restriction (as hereinafter defined), (ii) fails to indemnify, defend
or hold Seller and the Project harmless in respect to Tests and Studies as
provided in Paragraph 5.02 hereof, or (iii) fails to bind its successors and
assigns as provided in Paragraph 13.04 hereof, Seller, in addition to the
aforesaid liquidated damages in respect to Purchaser's failure to close this
transaction, shall be entitled (subject to the limitations contained in
Paragraph 23 hereof) to recover from Purchaser monetary damages in the amount
actually suffered by Seller as a result of the events set forth in clauses (i),
(ii), or (iii). If Purchaser fails to pay, when due, the Earn-Out Payments
and/or Footage Payments required hereunder, Seller shall only be entitled to
recover from Purchaser such Earn-Out Payments or Footage Payments, plus interest
thereon as provided in Paragraph 24.16 hereof, plus Litigation Expenses.
18.04 PRE-CLOSING PURCHASER'S REMEDIES. If Seller, in respect to its obligations
to close this transaction, is in material default under this Agreement on or
before the Closing Date and Purchaser is not in material default, Purchaser may,
as Purchaser's sole and exclusive remedies, elect to either (i) terminate this
Agreement, in which event the Deposit shall be refunded to Purchaser, and
neither Party shall have any further rights or obligations hereunder, except
those specifically provided herein as surviving such termination, or (ii) seek
and enforce the specific performance of Seller's obligations hereunder in which
event Purchaser shall also be permitted to recover Litigation Expenses that it
incurred as a result of such proceeding. Notwithstanding the foregoing, in no
instance shall Purchaser or anyone claiming by, through or under Purchaser (over
whom Purchaser has control) record or file in the public records in the
jurisdiction of the Project any memorandum or other indicia of Purchaser's
rights or Seller's obligations hereunder, except in the single instance of a
recording or filing that is concurrently done at the time of the filing of a
complaint by Purchaser, with a court of competent jurisdiction, for the relief
of specific performance of Seller's obligations hereunder, but then only after
Purchaser has given Seller three (3) business days written notice prior to such
recording or filing ("Recording Restriction").
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18.05 POST CLOSING PURCHASER'S REMEDIES. If Seller is in material default under
this Agreement in respect to any of its obligations hereunder that arise
subsequent to the Closing Date, subject to the limitation provided in Paragraph
23 hereof, Purchaser may recover from Seller all out-of-pocket monetary damages
incurred by Purchaser that have not been satisfied by the offset permitted
Purchaser pursuant to Paragraphs 5.04, 9.03, 14.06, 14.07 and 16.01 hereof. In
addition, Purchaser shall be permitted to recover Litigation Expenses that it
incurs as a result of enforcing Purchaser's right to recover monetary damages as
aforesaid.
19. CROSS DEFAULT OBLIGATION. If Purchaser or its permitted
successors and assigns elects to terminate any of the Other Sale Agreements for
any reason other than Casualty to or Taking in respect to any of the Other
Centers, it shall act as an election of Purchaser under this Agreement to
concurrently terminate this Agreement, and this Agreement thereupon shall
terminate, Purchaser and Seller shall each pay fifty percent (50%) of the Shared
Closing Costs, and neither Purchaser and Seller shall have any further rights or
obligations hereunder, except those specifically provided herein as surviving
such termination.
20. ASSIGNMENT
Seller shall not assign or transfer any of its rights under
this Agreement without first obtaining Purchaser's prior written consent which
consent shall not be unreasonably withheld or delayed. Prior to the Closing,
Purchaser shall not assign any of its rights under this Agreement without first
obtaining Seller's prior written consent which consent shall not be unreasonably
withheld or delayed. At or subsequent to the Closing, Purchaser may assign its
rights under this Agreement provided such assignee and Purchaser are jointly and
severally liable for the obligations of Purchaser hereunder and such assignee
assumes such obligations, in writing, in form and content reasonably acceptable
to Seller.
21. NOTICES.
Any notice, demand, request, approval, consent or other
communication (collectively, a "Notice") concerning this Agreement or the
Project or any matter arising in connection with this Agreement or the Project
shall be in writing. Seller hereby appoints Opus Properties, L.L.C., a Delaware
limited liability company ("Opus Properties") as Seller's duly authorized and
empowered agent to give and receive any and all Notices required or permitted to
be given by Purchaser or Seller hereunder. Any Notice received by Opus
Properties under the terms of this Agreement shall be deemed received and
binding on Seller. Any Notice given by Opus Properties to Purchaser shall be
deemed a Notice given by and binding on Seller. All Notices shall be addressed
as follows:
<TABLE>
<S> <C>
If to Seller to: Opus Properties, L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Anne E. Loff
</TABLE>
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<TABLE>
<S> <C>
Telecopier: (612) 936-9808
with a copy to: Opus, U.S., L.L.C.
700 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
ATTN: Dan F. Nicol, Esq.
Telecopier: (612) 936-9808
with a copy to: O'Brien, O'Rourke & Hogan
135 South LaSalle Street
Suite 830
Chicago, Illinois 60603
ATTN: Frederic G. Hogan
Telecopier: (312) 372-8029
If to Purchaser to: DEVELOPERS DIVERSIFIED REALTY
CORPORATION
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
ATTN: James A. Schoff
Executive Vice President
Telecopier: (216) 247-5076
with a copy to: Joan Allgood, Esq,
Developers Diversified Realty Corporation
34555 Chagrin Boulevard
Moreland Hills, Ohio 44022
Telecopier: (216) 247-5076
with copy to: Baker & Hostetler
3200 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114
ATTN: Albert T. Adams
Telecopier: (216) 696-0740
If to Escrow Agent to: First American Title Insurance Company
1150 Metropolitan Centre
333 South 7th Street
Minneapolis, Minnesota 55402
ATTN: Rodney D. Ives
Telecopier: (612) 337-5249
</TABLE>
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Any Notice shall be given by either (i) personal delivery, in which event it
shall be deemed given on the date of delivery; (ii) certified mail return
receipt requested, in which event it shall be deemed given three (3) business
days after the date postmarked; or (iii) next or second business day delivery by
nationally recognized overnight courier, in which event it shall be deemed given
on the next or second (whichever is applicable) business day immediately
following receipt by the courier. Any Party may change any address for the
delivery of Notice to such Party, by giving Notice in accordance with the
provisions of this Paragraph 21.
22. ATTORNEYS' FEES AND DISBURSEMENTS.
In the event that any Party shall engage an attorney in
connection with any action or proceeding to enforce or construe this Agreement,
the prevailing Party in such action or proceeding shall be entitled to recover
its Litigation Expenses to the extent permitted by law. In the event different
Parties are the prevailing Parties on different issues, the Litigation Expenses
shall be apportioned in proportion to the value of the issues decided for and
against the Parties.
23. NO CONSEQUENTIAL DAMAGES.
Notwithstanding any term, provision or covenant contained in
this Agreement to the contrary, no Party hereto shall be entitled to recover
from the other Party consequential, exemplary or punitive damages, all such
damages are hereby expressly waived and released.
24. MISCELLANEOUS.
24.01 SUCCESSORS. The rights and obligations of the Parties under this Agreement
shall inure to the benefit of and be binding upon the Parties and all persons
who are permitted hereunder to succeed to their respective rights and
obligations.
24.02 MODIFICATIONS/WAIVERS. This Agreement cannot be changed nor can any
provision of this Agreement, or any right or remedy of any Party, be waived
orally. Changes and waivers can only be made in writing and the change or waiver
must be signed by the Party against whom the change or waiver is sought to be
enforced. Any waiver of any provision of this Agreement, or any right or remedy,
given on any one or more occasions shall not be deemed a waiver with respect to
any other occasion.
24.03 ENTIRE AGREEMENT. This Agreement is signed by the Parties as a final
expression of all of the terms, covenants and conditions of their agreement and
as a complete and exclusive statement of its terms, covenants and conditions.
24.04 COUNTERPARTS. This Agreement may be signed in one or more counterparts or
duplicate signature pages with the same force and effect as if all required
signatures were contained in a single original instrument.
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24.05 CAPTIONS. The captions contained in this Agreement were inserted for the
convenience of reference only. They do not in any manner define, limit or
describe the provisions of this Agreement or the intentions of the Parties.
24.06 GENDER/SINGULAR/PLURAL. Whenever masculine, feminine, neuter, singular,
plural, conjunctive or disjunctive terms are used in this Agreement, they shall
be construed to read in whatever form is appropriate to make this Agreement
applicable to all the Parties and all circumstances, except where the context of
this Agreement clearly dictates otherwise.
24.07 EXHIBITS INCORPORATED. The exhibits attached to this Agreement are hereby
incorporated by reference in their entirety with the same force and effect as if
they were set forth at length in this Agreement. Concurrently with the execution
of this Agreement, Seller, Purchaser and all of the Other Sellers entered into
that certain Exhibit Agreement ("Exhibit Agreement") pursuant to the terms of
which the exhibits attached thereto are certain of the schedules referenced in
this Agreement that are also common to all of the Other Sale Agreements.
Therefore, the exhibits attached to the Exhibit Agreement are hereby
incorporated by reference in their entirety in this Agreement with the same
force and effect as if they were set forth at length in this Agreement.
24.08 GOVERNING LAW. In the event of any dispute concerning or arising out of
this Agreement, the laws of the State in which the Project is located shall
govern and control the construction and enforcement of this Agreement.
24.09 SEVERABILITY. If one or more provisions of this Agreement or the
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions or any
other application thereof shall in no way be affected or impaired.
24.10 DATE FOR PERFORMANCE. If the date for performance of any act under this
Agreement falls on a Saturday, Sunday or federal holiday, the date for such
performance shall automatically be extended to the first succeeding business
which is not a federal holiday.
24.11 FURTHER ACTION. The Parties shall at any time, and from time to time on
and after the Closing Date, upon the request of the other Party, do, execute,
acknowledge and deliver all such further acts, deeds, assignments and other
instruments as may be reasonably required for the consummation of this
transaction and are reasonably acceptable in scope, form and content to the
Party whose act, signature, acknowledgment or delivery is requested.
24.12 INTENTIONALLY DELETED.
24.13 CONFIDENTIALITY. Without the prior written consent of Purchaser, neither
Seller nor any of Seller's representatives will disclose to any person any of
the terms, conditions or other facts with respect to this Agreement or the
Exhibit Agreement, including the status thereof, provided, that Seller or any of
Seller's representatives may make such disclosure if Seller has first received
the written opinion of counsel acceptable to Purchaser that such disclosure must
be
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made by Seller in order that Seller does not commit a violation of law. Without
the prior written consent of Seller, neither Purchaser nor any of Purchaser's
representatives will disclose to any person any of the terms, conditions or
other facts with respect to this Agreement or the Exhibit Agreement, including
the status thereof and any of the terms, provisions or conditions of the Site
Analysis Documents or of any of the Studies and Reports, provided, that
Purchaser or any of Purchaser's representatives may make such disclosure if
Purchaser has first received the written opinion of counsel acceptable to Seller
that such disclosure must be made by Purchaser in order that Purchaser does not
commit a violation of law. The obligation of Seller and Purchaser pursuant to
the provisions of this Paragraph 24.13 shall survive the termination of this
Agreement.
24.14 TIME OF THE ESSENCE. Time is of the essence in this transaction.
24.15 CONSTRUCTION. This Agreement shall not be construed more strictly against
one Party than against the other merely by virtue of the fact that it may have
been prepared by counsel for one of the Parties, it being recognized that both
Seller and Purchaser have contributed substantially and materially to the
preparation of this Agreement. The headings of various Section and Paragraphs in
this Agreement are for convenience only, and are not to be utilized in
construing the content or meaning of the substantive provisions hereof.
24.16 INTEREST. Any payment obligation of a Party hereto to the other Party
shall bear interest at the rate of two percent (2%) plus the corporate base rate
of interest from time to time charged by Citibank, N.A., commencing on the date
that is five (5) business days subsequent to the date such payment is due, until
paid.
24.17 WARRANTY WORK. For the period ("Warranty Period") (i) that is provided in
each Lease or New Lease in respect to the applicable Tenant Warranty for tenant
improvements, and (ii) of one (1) year subsequent to the date each of the
Improvements (exclusive of tenant improvements that are the subject of the
applicable Tenant Warranty) is substantially complete in accordance with the
Plans, Seller agrees, at its sole cost and expense, to promptly (subject to
Force Majeure) correct any defects in the tenant improvements or other
Improvements due to (a) the failure thereof to substantially comply with the
plans for the subject tenant improvements or the Plans in respect to the rest of
the Improvements, or (b) faulty, improper or inferior materials or workmanship
(collectively, "Warranty Work"). If Warranty Work is the subject of a Lease or
New Lease, the provisions of such Lease or New Lease shall control in the
determination of the scope of the Warranty Work. If Warranty Work is not the
subject a Lease or New Lease, then the provisions of this Paragraph 24.17 shall
control in the determination of the scope of the Warranty Work. However,
Warranty Work shall not in any way include routine and appropriate maintenance
or Warranty Work directly resulting from (but only to the extent resulting from)
the failure to perform routine and appropriate maintenance of the tenant
improvements or other Improvements. Promptly during the Warranty Period (but in
any event prior to the expiration of the Warranty Period), Purchaser shall give
Seller written notice ("Warranty Notice") of any defect in the Project that
Purchaser, in good faith, determines to require Warranty Work. Except as
hereafter provided, Seller shall promptly undertake and complete, subject to
Force Majeure, the Warranty Work that is the subject of the Warranty Notice.
However, if Seller objects, in good faith, within
44
<PAGE> 50
ten (10) business days following receipt of a Warranty Notice, it shall notify
Purchaser, in writing of the same. Thereafter, they shall promptly confer, in
good faith, to resolve any disagreement in respect to Warranty Work. If within
fifteen (15) days after conferring Purchaser and Seller are unable to agree on
the scope of Warranty Work that is not the subject of a Lease or New Lease, they
shall appoint a third party contractor to make such determination, and the scope
so determined by the third party contractor shall be binding on the Parties.
When the Warranty Work is agreed to by the Parties or determined by the third
party contractor as aforesaid, such Warranty Work shall be undertaken and
completed as aforesaid. The Warranty Work obligation hereunder shall only
pertain to the Warranty Work for which a Warranty Notice was delivered to Seller
prior to the expiration of the Warranty Period or that was delivered by a Tenant
or a New Tenant in accordance with the provisions of the Tenant Warranty, and in
such event the Warranty Work obligation of Seller in respect thereto shall not
terminate at the expiration of the Warranty Period or the Tenant Warranty, but
rather shall continue until such Warranty Work is completed by Seller.
45
<PAGE> 51
IN WITNESS WHEREOF, the Parties have signed this Agreement as
of the date set forth in the first paragraph of this Agreement.
SELLER: PURCHASER:
OPUS SOUTHWEST CORPORATION, DEVELOPERS DIVERSIFIED
a Minnesota corporation REALTY CORPORATION,
an Ohio corporation
By: /s/ [Signature Illegible] By: /s/ James A. Schoff
------------------------------ ------------------------------
Its: President James A. Schoff
-------------------------- -------------------------
Executive Vice President
Seller's Federal Taxpayer Purchaser's Federal Taxpayer
Identification No.: Identification No.:
41-0855917 34-1723097
For purposes only of acting as the Escrow Agent as provided in this Agreement,
First American Title Insurance Company
By: /s/ [Signature Illegible]
------------------------------------
Its: Commercial Manager
--------------------------------
<PAGE> 52
SCHEDULES ATTACHED TO THIS AGREEMENT OR
THE EXHIBIT AGREEMENT
<TABLE>
<S> <C>
1.02 Legal Description
1.02(a) Site Plan
2.01(b) Personal Property
3.01 Rent Roll
5.01(b) Environmental Reports
5.01(g) Guaranties
6.01 Survey Requirements and Certifications (attached to the Exhibit
Agreement)
6.03 Permitted Exceptions
6.04 Endorsements
7.01 Deed (attached to the Exhibit Agreement)
7.02 Assignment of Leases (attached to the Exhibit Agreement)
7.02(a) Description of Leases and Security Deposits
7.04 Bill of Sale (attached to the Exhibit Agreement)
7.05 Assignment of Contracts (attached to the Exhibit Agreement)
7.05(a) Description of Contracts to be Assigned at Closing
7.06 Affidavit of Seller Concerning Violations/Work Orders (attached to the
Exhibit Agreement)
7.10 FIRPTA Affidavit (attached to the Exhibit Agreement)
7.13 Tenant Letter (attached to the Exhibit Agreement)
7.15 Tenant Estoppel (attached to the Exhibit Agreement)
7.20 Seller Date Down Certificate (attached to the Exhibit Agreement)
7.21 Agreement Estoppel
7.23 Assignment of Declaration
8.06 Purchaser Date Down Certificate (attached to the Exhibit Agreement)
10.01(xi) Permits
</TABLE>
<PAGE> 53
<TABLE>
<S> <C>
10.01(xvii) Tenant Inducements
10.01(xviii) Alleged Seller Defaults Under the Leases
10.01(xix) Tenant Defaults Under the Leases
10.01(xx) Tenant's Notice of Vacating, Assigning or Subletting
13.11 Shell and Core List and Standard
13.11(a)(1), etc. Punchlist Holdback
13.11(b) Form G704 Certificate of Completion (attached to the Exhibit
Agreement)
</TABLE>
<PAGE> 54
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Agreement 1st Paragraph
Agreement Estoppel 7.21
Arrears 14.02
Assignment Reservation 13.03
Bankruptcy Proceeding 13.01(xi)(c)
Carry 13.01(i)
Casualty 17.01
Casualty Notice 13.06
Closing 15.01
Closing Date 15.01
Closing Payment 13.01(ii)
Commissions 10.01(xvi)
Condition Notice 5.04
Condition Response 5.04
Commitment 6.02
Contract Assignment 7.05
Deed 7.01
Defects Notice 6.03
Deposit 3.02(b)
Disapproved Lease 13.04
Earn-Out Conditions 13.07
Earn-Out Extension Notice 13.05
Earn-Out Payment 13.01(iii)
Earn-Out Period 13.05
Earn-Out Segment 13.05
Endorsements 6.04
Environmental Laws 10.01(xii)
Environmental Reports 5.01(b)
Escrow Agent 4.01
Exhibit Agreement 24.07
FIRPTA Affidavit 7.10
First Segment 13.05
Footage Computation 13.08
Footage Payment 13.08
Force Majeure 13.01(iv)
Guaranties 5.01(g)
Hazardous Substances 10.01(xii)
Improvements 1.02
Initial Deposit 3.02(a)
Intangible Property 2.01(c)
</TABLE>
i
<PAGE> 55
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Knowledge 10.01
Land 1.02
Lease Assignment 7.02
Lease Reservation Date 13.03
Leases 7.02
Lien(s) 9.03
Litigation Expenses 10.04(a)
Loss 17.01
Lump Sum Non-Credit 14.06
Monetary Default 13.01(xi)(b)
Mortgage 10.01(ix)
Net Cash Flow 13.01(v)
New Lease 13.01(vi)
New Lease Obligations 13.10
New Tenant 13.01(vii)
Notice 21
Opus Properties 21
Other Center(s) 13.01(viii)
Other Sale Agreement(s) 13.01(ix)
Other Seller(s) 13.01(x)
Party(ies) 1st Paragraph
Permits 2.01(c)
Permitted Exceptions 6.03
Personal Property 2.01(b)
Plans 5.01(f)
Post Closing Work 16.01
Pro Rata Share 14.03
Project 2.01
Prospect 13.04
Punchlist Holdback 13.11
Punchlist Work 13.11
Purchase Price 3.01
Purchaser 1st Paragraph
Purchaser Date Down Certificate 8.06
Purchaser's Knowledge 10.02
Qualified Lease 13.01(xi)
Real Estate Broker 4.02
Real Estate Tax Rent 14.06
Real Property 1.03
Recording Restriction 18.04
Release 10.01(xii)
</TABLE>
ii
<PAGE> 56
GLOSSARY OF TERMS
<TABLE>
<CAPTION>
Term Where Defined
- ---- -------------
<S> <C>
Rental Undertaking 13.04
Rents 14.01
Reserved Base Rent Date 13.03
Restoration Forgiveness 5.02
Second Deposit 3.02(b)
Second Segment 13.05
Security Deposits 7.02
Seller 1st Paragraph
Seller Date Down Certificate 7.20
Seller's Estoppel 7.15
Seller's Response 6.03
Shared Closing Costs 11.02(a)
Site Analysis Documents 5.01
Site Analysis Period 5.03
Square Footage 13.08
Superfund Act 10.01(xii)
Survey 6.01
Survey Defects 6.03
Taking 17.01
Tenant Estoppel 7.15
Tenant Inducement 10.01(xvii)
Tenant Letters 7.13
Tenant Warranty 13.10
Tenants 7.02
Termination Agreements 7.16
Tests and Studies 5.02
Title Company 4.01
Title Defects 6.03
Title Policy 6.04
Unacceptable Conditions 5.04
Unknown Rents 14.03
Unassigned Lease 13.04
Utility Deposits 14.04
Vacant Space 13.01(xii)
Violations 7.06
Warranty Notice 24.17
Warranty Period 24.17
Warranty Work 24.17
Work Orders 7.06
</TABLE>
iii
<PAGE> 1
Exhibit 3.1
RESOLVED, that Article FOURTH of the Company's Amended and Restated
Articles of Incorporation be, and the same hereby is, deleted in its entirety
and there is substituted therefor the following:
FOURTH: The authorized number of shares of the Corporation is 59,000,000,
consisting of 50,000,000 Common Shares, without par value (hereinafter called
"Common Shares"), 1,500,000 Class A Cumulative Preferred Shares, without par
value (hereinafter called "Class A Shares"), 1,500,000 Class B Cumulative
Preferred Shares, without par value (hereinafter called "Class B Shares"),
1,500,000 Class C Cumulative Preferred Shares, without par value (hereinafter
called "Class C Shares"), 1,500,000 Class D Cumulative Preferred Shares, without
par value (hereinafter called "Class D Shares"), 1,500,000 Class E Cumulative
Preferred Shares, without par value (hereinafter called "Class E Shares"), and
1,500,000 Noncumulative Preferred Shares, without par value (hereinafter called
"Noncumulative Shares").
DIVISION A
I. The Class A Cumulative Preferred Shares. The Class A Shares shall have
the following express terms:
Section 1. Series. The Class A Shares may be issued from time to time in
one or more series. All Class A Shares shall be of equal rank and shall be
identical, except in respect of the matters that may be fixed by the Board of
Directors as hereinafter provided, and each share of a series shall be identical
with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class A Shares shall rank on a
parity with the Class B Shares, the Class C Shares, the Class D Shares, the
Class E Shares and the Noncumulative Shares and shall be identical to all Class
B Shares, Class C Shares, Class D Shares, Class E Shares and Noncumulative
Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1
and (2) only dividends on Class A Shares, Class B Shares, Class C Shares, Class
D Shares and Class E Shares shall be cumulative as set forth herein. Subject to
the provisions of Sections 2 through 5, both inclusive, and Item VII of this
Division, which provisions shall apply to all Class A Shares, the Board of
Directors hereby is authorized to cause such shares to be issued in one or more
series and, with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
(b) The authorized number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of
the series) increase or decrease from time to time before or after the
issuance thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series, including the means by
which such rates may be established;
(d) The date or dates from which dividends shall accrue and be
cumulative and the dates on which and the period or periods for which
dividends, if declared, shall be payable, including the means by which such
dates and periods may be established;
(e) The redemption rights and price or prices, if any, for shares of
the series;
(f) The terms and amount of the sinking fund, if any, for the purchase
or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into Common
Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any adjustments thereof and all other terms and
conditions upon which such conversion may be made; and
A-1
<PAGE> 2
(i) Restrictions (in addition to those set forth in Subsection 5(d) or
5(e) of this Item I) on the issuance of shares of the same series or of any
other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended and Restated Articles of Incorporation, as amended, fixing, with
respect to each such series, the matters described in clauses (a) through (i),
inclusive, of this Section and is authorized to take such actions with respect
thereto as may be required by law in order to effect such amendments.
Section 2. Dividends.
(a) The holders of Class A Shares of each series, in preference to the
holders of Common Shares and of any other class of shares ranking junior to
the Class A Shares, shall be entitled to receive out of any funds legally
available therefor, and when and as declared by the Board of Directors,
dividends in cash at the rate or rates for such series fixed in accordance
with the provisions of Section 1 above and no more, payable on the dates
fixed for such series. Such dividends shall accrue and be cumulative, in
the case of shares of each particular series, from and after the date or
dates fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class A Shares for any dividend
period unless at the same time (i) a like proportionate dividend for the
dividend periods terminating on the same or any earlier date, ratably in
proportion to the respective annual dividend rates fixed therefor, shall
have been paid upon or declared or set apart for all Class A Shares of all
series then issued and outstanding and entitled to receive such dividend
and (ii) the dividends payable for the dividend periods terminating on the
same or any earlier date (but, with respect to Noncumulative Shares, only
with respect to the then current dividend period), ratably in proportion to
the respective dividend rates fixed therefor, shall have been paid upon or
declared or set apart for all Class B Shares, Class C Shares, Class D
Shares, Class E Shares and Noncumulative Shares then issued and outstanding
and entitled to receive such dividends.
(b) So long as any Class A Shares shall be outstanding no dividend,
except a dividend payable in Common Shares or other shares ranking junior
to the Class A Shares, shall be paid or declared or any distribution be
made, except as aforesaid, in respect of the Common Shares or any other
shares ranking junior to the Class A Shares, nor shall any Common Shares or
any other shares ranking junior to the Class A Shares be purchased, retired
or otherwise acquired by the Corporation, except out of the proceeds of the
sale of Common Shares or other shares of the Corporation ranking junior to
the Class A Shares received by the Corporation subsequent to the date of
first issuance of Class A Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Class E Shares including the
full dividends for all current dividend periods, shall have been
declared and paid or a sum sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for the then
current dividend period shall have been declared and paid or a sum
sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the redemption of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares of any series from any sinking fund
provided for shares of such series in accordance with the provisions of
Section 1 of this Item I.
(c) The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption retirement or other
acquisition of, Common Shares or any other shares ranking on a parity with
or junior to the Class A Shares shall be inapplicable to (i) any payments
in lieu of issuance of fractional shares thereof, whether upon any merger,
conversion, stock dividend or otherwise, (ii) the conversion of Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares into Common Shares, or (iii) the exercise by the
Corporation of its rights pursuant to Item VIII(d) of this Division A,
Section 4(d) of Division B or any similar Section hereafter contained in
these Amended and Restated Articles of Incorporation, as amended, with
respect to any other class or series of capital stock hereafter created or
authorized.
A-2
<PAGE> 3
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code), any
portion (the "Capital Gains Amount") of the dividends paid or made
available for the year to holders of all classes of stock (the "Total
Dividends"), then, to the extent permissible under the Code and to the
extent it does not cause any dividends to fail to qualify for the dividends
paid deduction under Section 561 of the Code, the portion of the Capital
Gains Amount that shall be allocable to holders of the Class A Shares shall
be the amount that the total dividends paid or made available to the
holders of the Class A Shares for the year bears to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the Corporation:
(1) May, from time to time at the option of the Board of Directors,
redeem all or any part of any redeemable series of Class A Shares at the
time outstanding at the applicable redemption price for such series
fixed in accordance with the provisions of Section 1 of this Item I; and
(2) Shall, from time to time, make such redemptions of each series
of Class A Shares as may be required to fulfill the requirements of any
sinking fund provided for shares of such series at the applicable
sinking fund redemption price fixed in accordance with the provisions of
Section 1 of this Item I; and shall in each case pay all accrued and
unpaid dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed, postage
prepaid, to the holders of record of the Class A Shares to be redeemed at
their respective addresses then appearing on the books of the Corporation,
not less than 30 days nor more than 60 days prior to the date fixed for
such redemption, or such other time prior thereto as the Board of Directors
shall fix for any series pursuant to Section 1 of this Item I prior to the
issuance thereof. At any time after notice as provided above has been
deposited in the mail, the Corporation may deposit the aggregate redemption
price of Class A Shares to be redeemed, together with accrued and unpaid
dividends thereon to the redemption date, with any bank or trust company in
Cleveland, Ohio, or New York, New York, having capital and surplus of not
less than $100,000,000, named in such notice and direct that there be paid
to the respective holders of the Class A Shares so to be redeemed amounts
equal to the redemption price of the Class A Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender of
the share certificate or certificates held by such holders; and upon the
deposit of such notice in the mail and the making of such deposit of money
with such bank or trust company, such holders shall cease to be
shareholders with respect to such shares; and from and after the time such
notice shall have been so deposited and such deposit of money shall have
been so made, such holders shall have no rights or claim against the
Corporation with respect to such shares, except only the right to receive
such money from such bank or trust company without interest or to exercise
before the redemption date any unexpired privileges of conversion. In the
event less than all of the outstanding Class A Shares are to be redeemed,
the Corporation shall select by lot the shares so to be redeemed in such
manner as shall be prescribed by the Board of Directors.
(2) If the holders of Class A Shares which have been called for
redemption shall not within six years after such deposit claim the
amount deposited for the redemption thereof, any such bank or trust
company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company and the Corporation
shall be relieved of all responsibility in respect thereof and to such
holders.
(c) Any Class A Shares which are (1) redeemed by the Corporation
pursuant to the provisions of this Section, (2) purchased and delivered in
satisfaction of any sinking fund requirements provided for shares of such
series, (3) converted in accordance with the express terms thereof, or (4)
otherwise acquired by the Corporation, shall resume the status of
authorized but unissued Class A Shares without serial designation.
(d) Except in connection with the exercise of the Corporation's rights
pursuant to Section (d) of Item VIII of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other
class or
A-3
<PAGE> 4
series of capital stock hereafter created or authorized, the Corporation
may not purchase or redeem (for sinking fund purposes or otherwise) less
than all of the Class A Shares then outstanding except in accordance with a
stock purchase offer made to all holders of record of Class A Shares,
unless all dividends on all Class A Shares then outstanding for all
previous and current dividend periods shall have been declared and paid or
funds therefor set apart and all accrued sinking fund obligations
applicable thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Class A Shares of any series shall be entitled to receive in full out of
the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any
other shares ranking junior to the Class A Shares, the amounts fixed with
respect to shares of such series in accordance with Section 1 of this Item
I, plus an amount equal to all dividends accrued and unpaid thereon to the
date of payment of the amount due pursuant to such liquidation, dissolution
or winding up of the affairs of the Corporation. In the event the net
assets of the Corporation legally available therefor are insufficient to
permit the payment upon all outstanding Class A Shares, Class B Shares,
Class C Shares, Class D Shares, Class E Shares and Noncumulative Shares of
the full preferential amount to which they are respectively entitled, then
such net assets shall be distributed ratably upon all outstanding Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares in proportion to the full preferential amount to which
each such share is entitled.
(2) After payment to the holders of Class A Shares of the full
preferential amounts as aforesaid, the holders of Class A Shares, as
such, shall have no right or claim to any of the remaining assets of the
Corporation.
(b) The merger or consolidation of the Corporation into or with any
other Corporation, the merger of any other Corporation into it, or the
sale, lease or conveyance of all or substantially all the assets of the
Corporation, shall not be deemed to be a dissolution, liquidation or
winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class A Shares shall have no voting rights, except
as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in default in
the payment of dividends on any series of Class A Shares at the time
outstanding, whether or not earned or declared, for a number of consecutive
dividend payment periods which in the aggregate contain at least 540 days,
all holders of such Class A Shares, voting separately as a class, together
with all Class B Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares upon which like voting rights have been conferred and
are exercisable under the circumstances described in Subsection 5(c), shall
be entitled to elect, as herein provided, a total of two members of the
Board of Directors of the Corporation; provided, however, that the holders
of such Class A Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors at
which the holders of not less than 50% of such Class A Shares are present
in person or by proxy; and provided further, that the special class voting
rights provided for in this paragraph when the same shall have become
vested shall remain so vested until all accrued and unpaid dividends on
such Class A Shares then outstanding shall have been paid or declared and a
sum sufficient for the payment thereof set aside for payment, whereupon the
holders of such Class A Shares shall be divested of their special class
voting rights in respect of subsequent elections of directors, subject to
the revesting of such special class voting rights in the event above
specified in this paragraph.
(2) In the event of default entitling holders of Class A Shares to
elect two directors as specified in paragraph (1) of this Subsection, a
special meeting of such holders for the purpose of electing such
directors shall be called by the Secretary of the Corporation upon
written request of, or may be
A-4
<PAGE> 5
called by, the holders of record of at least 10% of the Class A Shares
upon which such default in the payment of dividends exists and notice
thereof shall be given in the same manner as that required for the
annual meeting of shareholders; provided, however, that the Corporation
shall not be required to call such special meeting if the annual meeting
of shareholders shall be called to be held within 90 days after the date
of receipt of the foregoing written request from the holders of Class A
Shares. At any meeting at which such holders of Class A Shares shall be
entitled to elect directors, holders of 50% of such Class A Shares,
present in person or by proxy, shall be sufficient to constitute a
quorum, and the vote of the holders of a majority of such shares so
present at any such meeting at which there shall be such a quorum shall
be sufficient to elect the members of the Board of Directors which such
holders of Class A Shares are entitled to elect as herein provided.
Notwithstanding any provision of these Amended and Restated Articles of
Incorporation, as amended, or the Code of Regulations of the Corporation
or any action taken by the holders of any class of shares fixing the
number of directors of the Corporation, the two directors who may be
elected by such holders of Class A Shares pursuant to this Subsection
shall serve in addition to any other directors then in office or
proposed to be elected otherwise than pursuant to this Subsection.
Nothing in this Subsection shall prevent any change otherwise permitted
in the total number of or classifications of directors of the
Corporation or require the resignation of any director elected otherwise
than pursuant to this Subsection. Notwithstanding any classification of
the other directors of the Corporation, the two directors elected by
such holders of Class A Shares shall be elected annually for terms
expiring at the next succeeding annual meeting of shareholders.
(3) Upon any divesting of the special class voting rights of the
holders of the Class A Shares in respect of elections of directors as
provided in this Subsection, the terms of office of all directors then
in office elected by such holders shall terminate immediately thereupon.
If the office of any director elected by such holders voting as a class
becomes vacant by reason of death, resignation, removal from office or
otherwise, the remaining director elected by such holders voting as a
class may elect a successor who shall hold office for the unexpired term
in respect of which such vacancy occurred.
(c) If at any time when the holders of Class A Shares are entitled to
elect directors pursuant to the foregoing provisions of this Section the
holders of any Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares are entitled to elect directors pursuant
hereto by reason of any default in the payment of dividends thereon, then
the voting rights of the Class A Shares, the Class B Shares, the Class C
Shares, the Class D Shares, the Class E Shares and the Noncumulative Shares
then entitled to vote shall be combined (with each class of shares having a
number of votes proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of Class A Shares and of all
such other shares then entitled so to vote, voting as a class, shall elect
such directors. If the holders of any such other shares have elected such
directors prior to the happening of the default or event permitting the
holders of Class A Shares to elect directors, or prior to a written request
for the holding of a special meeting being received by the Secretary of the
Corporation as required above, then a new election shall be held with all
such other shares and the Class A Shares voting together as a single class
for such directors, resulting in the termination of the term of such
previously elected directors upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds of the
Class A Shares at the time outstanding, voting separately as a class, given
in person or by proxy either in writing or at a meeting called for the
purpose, shall be necessary to effect either of the following:
(1) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Amended and
Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially
the preferences or voting or other rights of the holders of Class A
Shares which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as
to authorize, create or change the authorized or outstanding number of
Class A Shares or of any shares ranking on a parity with or junior to
the Class A Shares nor the amendment of the provisions of the Code of
Regulations so as to
A-5
<PAGE> 6
change the number or classification of directors of the Corporation
shall be deemed to affect adversely and materially preferences or voting
or other rights of the holders of Class A Shares; or
(2) The authorization, creation or increase in the authorized
number of any shares, or any security convertible into shares, in either
case ranking prior to such series of Class A Shares.
(e) In the event, and only to the extent, that (1) Class A Shares are
issued in more than one series and (2) Ohio law permits the holders of a
series of a class of capital stock to vote separately as a class, the
affirmative vote of the holders of at least two-thirds of each series of
Class A Shares at the time outstanding, voting separately as a class, given
in person or by proxy either in writing or at a meeting called for the
purpose of voting on such matters, shall be required for any amendment,
alteration or repeal, whether by merger, consolidation or otherwise, of any
of the provisions of these Amended and Restated Articles of Incorporation,
as amended, or of the Code of Regulations of the Corporation which affects
adversely and materially the preferences or voting or other rights of the
holders of such series which are set forth in these Amended and Restated
Articles of Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of Incorporation, as
amended, so as to authorize, create or change the authorized or outstanding
number of Class A Shares or of any shares ranking on a parity with or
junior to the Class A Shares nor the Amendment of the provisions of the
Code of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect adversely and
materially the preferences or voting or other rights of the holders of such
series.
Section 6. 9 1/2% Class A Cumulative Redeemable Preferred Shares. Of the
1,500,000 authorized Class A Shares, 460,000 shares are designated as a series
entitled "9 1/2% Class A Cumulative Redeemable Preferred Shares" (hereinafter
called "9 1/2% Class A Preferred Shares"). The 9 1/2% Class A Preferred Shares
shall have the express terms set forth in this Item I as being applicable to all
Class A Shares as a class and, in addition, the following express terms
applicable to all 9 1/2% Class A Preferred Shares as a series of Class A Shares:
(a) The annual dividend rate of the 9 1/2% Class A Preferred Shares
shall be 9 1/2% of the liquidation preference of $250.00 per share.
(b) Dividends on the 9 1/2% Class A Preferred Shares shall be payable,
if declared, quarterly on or about the 15th day of March, June, September,
and December each year, the first quarterly dividend being payable, if
declared, on December 15, 1995. The dividends payable for each full
quarterly dividend period on each 9 1/2% Class A Preferred Shares shall be
$5.94.
Dividends for the initial dividend period on the 9 1/2% Class A
Preferred Shares, or for any period shorter or longer than a full dividend
period on the 9 1/2% Class A Preferred Shares, shall be computed on the
basis of a 360-day year consisting of twelve 30-day months. The aggregate
dividend payable quarterly to each holder of 9 1/2% Class A Preferred
Shares shall be rounded to the nearest one one-hundredth of one cent with
$.00005 being rounded upward. Each dividend shall be payable to the holders
of record on such record date, no less than 10 nor more than 30 days
preceding the payment date thereof, as shall be fixed from time to time by
the Corporation's Board of Directors.
(c) Dividends on 9 1/2% Class A Preferred Shares shall be cumulative
as follows:
(1) With respect to shares included in the initial issue of 9 1/2%
Class A Preferred Shares and shares issued any time thereafter up to and
including the record date for the payment of the first dividend on the
initial issue of 9 1/2% Class A Preferred Shares, dividends shall be
cumulative from the date of the initial issue of 9 1/2% Class A
Preferred Shares; and
(2) With respect to shares issued any time after the aforesaid
record date, dividends shall be cumulative from the dividend payment
date next preceding the date of issue of such shares, except that if
such shares are issued during the period commencing the day after the
record date for the payment of a dividend on 9 1/2% Class A Preferred
Shares and ending on the payment date of that dividend, dividends with
respect to such shares shall be cumulative from that dividend payment
date.
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(d) Except as required to preserve the Corporation's status as a real
estate investment trust under the Internal Revenue Code of 1986, as
amended, the 9 1/2% Class A Preferred Shares may not be redeemed prior to
November 15, 2000. At any time or from time to time on and after November
15, 2000 the Corporation, at its option upon not less than thirty (30) nor
more than sixty (60) days' written notice, may redeem all or any part of
the 9 1/2% Class A Preferred Shares at a redemption price of $250.00 per
share plus, in each case, an amount equal to all dividends accrued and
unpaid thereon to the redemption date, without interest. The redemption
price (other than the portion thereof consisting of accrued and unpaid
dividends) is payable solely out of the sale proceeds of other capital
shares of the Corporation, which may include any equity securities
(including common shares and preferred shares), shares, interests,
participation or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for
equity securities), or options to purchase any of the foregoing.
(e) The amount payable per 9 1/2% Class A Preferred Share in the event
of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation shall be $250.00, plus an amount equal to
all dividends accrued and unpaid thereon to the date of payment.
(f) All dividend payments made on the 9 1/2% Class A Preferred Shares,
at any time during which the Corporation is in default in the payment of
dividends on such 9 1/2% Class A Preferred Shares for any dividend period,
shall, for the purposes of Section 5(b)(1) of this Item I, be deemed to be
made in respect of the earliest dividend period with respect to which the
Corporation is in default.
II. The Class B Cumulative Preferred Shares. The Class B Cumulative
Preferred Shares shall have the following express terms:
Section 1. Series. The Class B Shares may be issued from time to time in
one or more series. All Class B Shares shall be of equal rank and shall be
identical, except in respect of the matters that may be fixed by the Board of
Directors as hereinafter provided, and each share of a series shall be identical
with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class B Shares shall rank on a
parity with the Class A Shares, the Class C Shares, the Class D Shares, the
Class E Shares and the Noncumulative Shares and shall be identical to all Class
A Shares, Class C Shares, Class D Shares, Class E Shares and Noncumulative
Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1
and (2) only dividends on the Class A Shares, the Class B Shares, the Class C
Shares, the Class D Shares and the Class E Shares are cumulative as set forth
herein. Subject to the provisions of Sections 2 through 5, both inclusive, and
Item VII of this Division, which provisions shall apply to all Class B Shares,
the Board of Directors hereby is authorized to cause such shares to be issued in
one or more series and with respect to each such series to determine and fix
prior to the issuance thereof (and thereafter, to the extent provided in clause
(b) of this Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
(b) The authorized number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of
the series) increase or decrease from time to time before or after the
issuance thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series, including the means by
which such rates may be established;
(d) The date or dates from which dividends shall accrue and be
cumulative and the dates on which and the period or periods for which
dividends, if declared, shall be payable, including the means by which such
dates and periods may be established;
(e) The redemption rights and price or prices, if any, for shares of
the series;
(f) The terms and amount of the sinking fund, if any, for the purchase
or redemption of shares of the series;
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(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into Common
Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any adjustments thereof and all other terms and
conditions upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in Subsection 5(d) or
5(e) of this Item II) on the issuance of shares of the same series or of
any other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended and Restated Articles of Incorporation, as amended, fixing, with
respect to each such series, the matters described in clauses (a) through (i),
both inclusive, of this Section and is authorized to take such actions with
respect thereto as may be required by law in order to effect such amendments.
Section 2. Dividends.
(a) The holders of Class B Shares of each series, in preference to the
holders of Common Shares and of any other class of shares ranking junior to
the Class B Shares, shall be entitled to receive out of any funds legally
available therefor, and when and as declared by the Board of Directors,
dividends in cash at the rate or rates for such series fixed in accordance
with the provisions of Section 1 above and no more, payable on the dates
fixed for such series. Such dividends shall accrue and be cumulative, in
the case of shares of each particular series, from and after the date or
dates fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class B Shares for any dividend
period unless at the same time (i) a like proportionate dividend for the
dividend periods terminating on the same or any earlier date, ratably in
proportion to the respective annual dividend rates fixed therefor, shall
have been paid upon or declared or set apart for all Class B Shares of all
series then issued and outstanding and entitled to receive such dividend
and (ii) the dividends payable for the dividend periods terminating on the
same or any earlier date (but, with respect to the Noncumulative Shares,
only with respect to the then current dividend period), ratably in
proportion to the respective dividend rates fixed therefor, shall have been
paid upon or declared or set apart for all Class A Shares, Class C Shares,
Class D Shares, Class E Shares and Noncumulative Shares then issued and
outstanding and entitled to receive such dividends.
(b) So long as any Class B Shares shall be outstanding no dividend,
except a dividend payable in Common Shares or other shares ranking junior
to the Class B Shares, shall be paid or declared or any distribution be
made, except as aforesaid, in respect of the Common Shares or any other
shares ranking junior to the Class B Shares, nor shall any Common Shares or
any other shares ranking junior to the Class B Shares be purchased, retired
or otherwise acquired by the Corporation, except out of the proceeds of the
sale of Common Shares or other shares of the Corporation ranking junior to
the Class B Shares received by the Corporation subsequent to the date of
first issuance of Class B Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Class E Shares including the
full dividends for all current dividend periods, shall have been
declared and paid or a sum sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for the then
current dividend period shall have been declared and paid or a sum
sufficient for payment thereof set apart; and
(3) There shall be no arrearages with respect to the redemption of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares of any series from any sinking fund
provided for shares of such series in accordance with the provisions of
Section 1 of this Item II.
(c) The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption, retirement or other
acquisition of, Common Shares or any other shares ranking on a parity with
or junior to the Class B Shares shall be inapplicable to (i) any payments
in lieu of issuance
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of fractional shares thereof, whether upon any merger, conversion, stock
dividend or otherwise, (ii) the conversion of Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares or Noncumulative
Shares into Common Shares or (iii) the exercise by the Corporation of its
rights pursuant to Item VIII(d) of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other
class or series of capital stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code), any
portion (the "Capital Gains Amount") of the dividends paid or made
available for the year to holders of all classes of stock (the "Total
Dividends"), then, to the extent permissible under the Code and to the
extent that it does not cause any dividends to fail to qualify for the
dividends paid deduction under Section 561 of the Code, the portion of the
Capital Gains Amount that shall be allocable to holders of the Class B
Shares shall be the amount that the total dividends paid or made available
to the holders of the Class B Shares for the year bears to the Total
Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the Corporation:
(1) May, from time to time at the option of the Board of Directors,
redeem all or any part of any redeemable series of Class B Shares at the
time outstanding at the applicable redemption price for such series
fixed in accordance with the provisions of Section 1 of this Item II;
and
(2) Shall, from time to time, make such redemptions of each series
of Class B Shares as may be required to fulfill the requirements of any
sinking fund provided for shares of such series at the applicable
sinking fund redemption price fixed in accordance with the provisions of
Section 1 of this Item II; and shall in each case pay all accrued and
unpaid dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed, postage
prepaid, to the holders of record of the Class B Shares to be redeemed at
their respective addresses then appearing on the books of the Corporation,
not less than 30 days nor more than 60 days prior to the date fixed for
such redemption, or such other time prior thereto as the Board of Directors
shall fix for any series pursuant to Section 1 of this Item II prior to the
issuance thereof. At any time after notice as provided above has been
deposited in the mail, the Corporation may deposit the aggregate redemption
price of Class B Shares to be redeemed, together with accrued and unpaid
dividends thereon to the redemption date, with any bank or trust company in
Cleveland, Ohio, or New York, New York, having capital and surplus of not
less than $100,000,000, named in such notice and direct that there be paid
to the respective holders of the Class B Shares so to be redeemed amounts
equal to the redemption price of the Class B Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender of
the share certificate or certificates held by such holders; and upon the
deposit of such notice in the mail and the making of such deposit of money
with such bank or trust company, such holders shall cease to be
shareholders with respect to such shares; and from and after the time such
notice shall have been so deposited and such deposit of money shall have
been so made, such holders shall have no rights or claim against the
Corporation with respect to such shares, except only the right to receive
such money from such bank or trust company without interest or to exercise
before the redemption date any unexpired privileges of conversion. In the
event less than all of the outstanding Class B Shares are to be redeemed,
the Corporation shall select by lot the shares so to be redeemed in such
manner as shall be prescribed by the Board of Directors.
(2) If the holders of Class B Shares which have been called for
redemption shall not within six years after such deposit claim the
amount deposited for the redemption thereof, any such bank or trust
company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company and the Corporation
shall be relieved of all responsibility in respect thereof and to such
holders.
(c) Any Class B Shares which are (1) redeemed by the Corporation
pursuant to the provisions of this Section, (2) purchased and delivered in
satisfaction of any sinking fund requirements provided for
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shares of such series, (3) converted in accordance with the express terms
thereof, or (4) otherwise acquired by the Corporation, shall resume the
status of authorized but unissued Class B Shares without serial
designation.
(d) Except in connection with the exercise of the Corporation's rights
pursuant to Section (d) of Item VIII of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other
class or series of capital stock hereafter created or authorized, the
Corporation may not purchase or redeem (for sinking fund purposes or
otherwise) less than all of the Class B Shares then outstanding except in
accordance with a stock purchase offer made to all holders of record of
Class B Shares, unless all dividends on all Class B Shares then outstanding
for all previous and current dividend periods shall have been declared and
paid or funds therefor set apart and all accrued sinking fund obligations
applicable thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Class B Shares of any series shall be entitled to receive in full out of
the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any
other shares ranking junior to the Class B Shares, the amounts fixed with
respect to shares of such series in accordance with Section 1 of this Item
II, plus an amount equal to all dividends accrued and unpaid thereon to the
date of payment of the amount due pursuant to such liquidation, dissolution
or winding up of the affairs of the Corporation. In the event the net
assets of the Corporation legally available therefor are insufficient to
permit the payment upon all outstanding Class A Shares, Class B Shares,
Class C Shares, Class D Shares, Class E Shares and Noncumulative Shares of
the full preferential amount to which they are respectively entitled, then
such net assets shall be distributed ratably upon all outstanding Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares in proportion to the full preferential amount to which
each such share is entitled.
(2) After payment to the holders of Class B Shares of the full
preferential amounts as aforesaid, the holders of Class B Shares, as
such, shall have no right or claim to any of the remaining assets of the
Corporation.
(b) The merger or consolidation of the Corporation into or with any
other Corporation, the merger of any other corporation into it, or the
sale, lease or conveyance of all or substantially all the assets of the
Corporation, shall not be deemed to be a dissolution, liquidation or
winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Class B Shares shall have no voting rights, except
as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in default in
the payment of dividends on any series of Class B Shares at the time
outstanding, whether or not earned or declared, for a number of consecutive
dividend payment periods which in the aggregate contain at least 540 days,
all holders of Class B Shares, voting separately as a class, together with
all Class A Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares upon which like voting rights have been conferred and
are exercisable under the circumstances described in Subsection 5(c), shall
be entitled to elect, as herein provided, a total of two members of the
Board of Directors of the Corporation; provided, however, that the holders
of such Class B Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors at
which the holders of not less than 50% of such Class B Shares are present
in person or by proxy; and provided further, that the special class voting
rights provided for in this paragraph when the same shall have become
vested shall remain so vested until all accrued and unpaid dividends on
such Class B Shares then outstanding shall have been paid or declared and a
sum sufficient therefor set aside for payment, whereupon the holders of
such Class B Shares shall
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be divested of their special class voting rights in respect of subsequent
elections of directors, subject to the revesting of such special class
voting rights in the event above specified in this paragraph.
(2) In the event of default entitling holders of Class B Shares to
elect two directors as specified in paragraph (1) of this Subsection, a
special meeting of such holders for the purpose of electing such
directors shall be called by the Secretary of the Corporation upon
written request of, or may be called by, the holders of record of at
least 10% of the Class B Shares upon which such default in the payment
of dividends exists and notice thereof shall be given in the same manner
as that required for the annual meeting of shareholders; provided,
however, that the Corporation shall not be required to call such special
meeting if the annual meeting of shareholders shall be called to be held
within 90 days after the date of receipt of the foregoing written
request from the holders of Class B Shares. At any meeting at which such
holders of Class B Shares shall be entitled to elect directors, holders
of 50% of such Class B Shares, present in person or by proxy, shall be
sufficient to constitute a quorum, and the vote of the holders of a
majority of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the members of the
Board of Directors which such holders of Class B Shares are entitled to
elect as herein provided. Notwithstanding any provision of these Amended
and Restated Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the holders of any
class of shares fixing the number of directors of the Corporation, the
two directors who may be elected by such holders of Class B Shares
pursuant to this Subsection shall serve in addition to any other
directors then in office or proposed to be elected otherwise than
pursuant to this Subsection. Nothing in this Subsection shall prevent
any change otherwise permitted in the total number of or classifications
of directors of the Corporation nor require the resignation of any
director elected otherwise than pursuant to this Subsection.
Notwithstanding any classification of the other directors of the
Corporation, the two directors elected by such holders of Class B Shares
shall be elected annually for terms expiring at the next succeeding
annual meeting of shareholders.
(3) Upon any divesting of the special class voting rights of the
holders of the Class B Shares in respect of elections of directors as
provided in this Subsection, the terms of office of all directors then
in office elected by such holders shall terminate immediately thereupon.
If the office of any director elected by such holders voting as a class
becomes vacant by reason of death, resignation, removal from office or
otherwise, the remaining director elected by such holders voting as a
class may elect a successor who shall hold office for the unexpired term
in respect of which such vacancy occurred.
(c) If at any time when the holders of Class B Shares are entitled to
elect directors pursuant to the foregoing provisions of this Section the
holders of any Class A Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares are entitled to elect directors pursuant
hereto by reason of any default in the payment of dividends thereon, then
the voting rights of the Class A Shares, the Class B Shares, the Class C
Shares, the Class D Shares, the Class E Shares and the Noncumulative Shares
then entitled to vote shall be combined (with class of shares having a
number of votes proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of Class B Shares and of all
such other shares then entitled so to vote, voting as a class, shall elect
such directors. If the holders of any such other shares have elected such
directors prior to the happening of the default or event permitting the
holders of Class B Shares to elect directors, or prior to a written request
for the holding of a special meeting being received by the Secretary of the
Corporation as required above, then a new election shall be held with all
such other shares and the Class B Shares voting together as a single class
for such directors, resulting in the termination of the term of such
previously elected directors upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds of the
Class B Shares at the time outstanding, voting separately as a class, given
in person or by proxy either in writing or at a meeting called for the
purpose, shall be necessary to effect either of the following:
(1) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Amended and
Restated Articles of Incorporation, as amended, or of the
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Code of Regulations of the Corporation which affects adversely and
materially the preferences or voting or other rights of the holders of
Class B Shares which are set forth in these Amended and Restated
Articles of Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of Incorporation, as
amended, so as to authorize, create or change the authorized or
outstanding number of Class B Shares or of any shares ranking on a
parity with or junior to the Class B Shares nor the amendment of the
provisions of the Code of Regulations so as to change the number or
classification of directors of the Corporation shall be deemed to affect
adversely and materially preferences or voting or other rights of the
holders of Class B Shares; or
(2) The authorization, creation or increase in the authorized
number of any shares, or any security convertible into shares, in either
case ranking prior to such Class B Shares.
(e) In the event, and only to the extent, that (1) Class B Shares are
issued in more than one series and (2) Ohio law permits the holders of a
series of a class of capital stock to vote separately as a class, the
affirmative vote of the holders of at least two-thirds of each series of
Class B Shares at the time outstanding, voting separately as a class, given
in person or by proxy either in writing or at a meeting called for the
purpose of voting on such matters, shall be required for any amendment,
alteration or repeal, whether by merger, consolidation or otherwise, of any
of the provisions of these Amended and Restated Articles of Incorporation,
as amended, or of the Code of Regulations of the Corporation which affects
adversely and materially the preferences or voting or other rights of the
holders of such series which are set forth in these Amended and Restated
Articles of Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of Incorporation, as
amended, so as to authorize, create or change the authorized or outstanding
number of Class B Shares or of any shares remaining on a parity with or
junior to the Class B Shares nor the amendment of the provisions of the
Code of Regulations so as to change the number of classification of
directors of the Corporation shall be deemed to affect adversely and
materially preferences or voting or other rights of the holders of such
series.
Section 6. 9.44% Class B Cumulative Redeemable Preferred Shares. Of the
1,500,000 authorized Class B Shares, 177,500 shares are designated as a series
entitled "9.44% Class B Cumulative Redeemable Preferred Shares" (hereinafter
called "9.44% Class B Preferred Shares"). The 9.44% Class B Preferred Shares
shall have the express terms set forth in this Item II as being applicable to
all Class B Shares as a class and, in addition, the following express terms
applicable to all 9.44% Class B Preferred Shares as a series of Class B Shares:
(a) The annual dividend rate of the 9.44% Class B Preferred Shares
shall be 9.44% of the liquidation preference of $250.00 per share.
(b) Dividends on the 9.44% Class B Preferred Shares shall be payable,
if declared, quarterly on or about the 15th day of March, June, September,
and December each year, the first quarterly dividend being payable, if
declared, on March 15, 1996. The dividends payable for each full quarterly
dividend period on each 9.44% Class B Preferred Shares shall be $5.90.
Dividends for the initial dividend period on the 9.44% Class B
Preferred Shares, or for any period shorter or longer than a full dividend
period on the 9.44% Class B Preferred Shares, shall be computed on the
basis of a 360-day year consisting of twelve 30-day months. The aggregate
dividend payable quarterly to each holder of 9.44% Class B Preferred Shares
shall be rounded to the nearest one one-hundredth of one cent with $.00005
being rounded upward. Each dividend shall be payable to the holders of
record on such record date, no less than 10 nor more than 30 days preceding
the payment date thereof, as shall be fixed from time to time by the
Corporation's Board of Directors.
(c) Dividends on 9.44% Class B Preferred Shares shall be cumulative as
follows:
(1) With respect to shares included in the initial issue of 9.44%
Class B Preferred Shares and shares issued any time thereafter up to and
including the record date for the payment of the first dividend on the
initial issue of 9.44% Class B Preferred Shares, dividends shall be
cumulative from the date of the initial issue of 9.44% Class B Preferred
Shares; and
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(2) With respect to shares issued any time after the aforesaid
record date, dividends shall be cumulative from the dividend payment
date next preceding the date of issue of such shares, except that if
such shares are issued during the period commencing the day after the
record date for the payment of a dividend on 9.44% Class B Preferred
Shares and ending on the payment date of that dividend, dividends with
respect to such shares shall be cumulative from that dividend payment
date.
(d) Except as required to preserve the Corporation's status as a real
estate investment trust under the Internal Revenue Code of 1986, as
amended, the 9.44% Class B Preferred Shares may not be redeemed prior to
December 26, 2000. At any time or from time to time on and after December
26, 2000 the Corporation, at its option upon not less than thirty (30) nor
more than sixty (60) days' written notice, may redeem all or any part of
the 9.44% Class B Preferred Shares at a redemption price of $250.00 per
share plus, in each case, an amount equal to all dividends accrued and
unpaid thereon to the redemption date, without interest. The redemption
price (other than the portion thereof consisting of accrued and unpaid
dividends) is payable solely out of the sale proceeds of other capital
shares of the Corporation, which may include any equity securities
(including common shares and preferred shares), shares, interests,
participation or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for
equity securities), or options to purchase any of the foregoing.
(e) The amount payable per 9.44% Class B Preferred Share in the event
of any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation shall be $250.00, plus an amount equal to
all dividends accrued and unpaid thereon to the date of payment.
(f) All dividend payments made on the 9.44% Class B Preferred Shares,
at any time during which the Corporation is in default in the payment of
dividends on such 9.44% Class B Preferred Shares for any dividend period,
shall, for the purposes of Section 5(b)(1) of this Item II, be deemed to be
made in respect of the earliest dividend period with respect to which the
Corporation is in default.
III. The Class C Cumulative Preferred Shares. The Class C Shares shall have
the following express terms:
Section 1. Series. The Class C Shares may be issued from time to time in
one or more series. All Class C Shares shall be of equal rank and shall be
identical, except in respect of the matters that may be fixed by the Board of
Directors as hereinafter provided, and each share of a series shall be identical
with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class C Shares shall rank on a
parity with the Class A Shares, the Class B Shares, the Class D Shares, the
Class E Shares and the Noncumulative Shares and shall be identical to all Class
A Shares, Class B Shares, Class D Shares, Class E Shares and Noncumulative
Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1
and (2) only dividends on Class A Shares, Class B Shares, Class C Shares, Class
D Shares and Class E Shares shall be cumulative as set forth herein. Subject to
the provisions of Sections 2 through 5, both inclusive, and Item VII of this
Division, which provisions shall apply to all Class C Shares, the Board of
Directors hereby is authorized to cause such shares to be issued in one or more
series and, with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
(b) The authorized number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of
the series) increase or decrease from time to time before or after the
issuance thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series, including the means by
which such rates may be established;
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(d) The date or dates from which dividends shall accrue and be
cumulative and the dates on which and the period or periods for which
dividends, if declared, shall be payable, including the means by which such
dates and periods may be established;
(e) The redemption rights and price or prices, if any, for shares of
the series;
(f) The terms and amount of the sinking fund, if any, for the purchase
or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into Common
Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any adjustments thereof and all other terms and
conditions upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in Subsection 5(d) or
5(e) of this Item III) on the issuance of shares of the same series or of
any other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended and Restated Articles of Incorporation, as amended, fixing, with
respect to each such series, the matters described in clauses (a) through (i),
inclusive, of this Section and is authorized to take such actions with respect
thereto as may be required by law in order to effect such amendments.
Section 2. Dividends.
(a) The holders of Class C Shares of each series, in preference to the
holders of Common Shares and of any other class of shares ranking junior to
the Class C Shares, shall be entitled to receive out of any funds legally
available therefor, and when and as declared by the Board of Directors,
dividends in cash at the rate or rates for such series fixed in accordance
with the provisions of Section 1 above and no more, payable on the dates
fixed for such series. Such dividends shall accrue and be cumulative, in
the case of shares of each particular series, from and after the date or
dates fixed with respect to such series. No dividends shall be paid upon or
declared or set apart for any series of the Class C Shares for any dividend
period unless at the same time (i) a like proportionate dividend for the
dividend periods terminating on the same or any earlier date, ratably in
proportion to the respective annual dividend rates fixed therefor, shall
have been paid upon or declared or set apart for all Class C Shares of all
series then issued and outstanding and entitled to receive such dividend
and (ii) the dividends payable for the dividend periods terminating on the
same or any earlier date (but, with respect to Noncumulative Shares, only
with respect to the then current dividend period), ratably in proportion to
the respective dividend rates fixed therefor, shall have been paid upon or
declared or set apart for all Class A Shares, Class B Shares, Class D
Shares, Class E Shares and Noncumulative Shares then issued and outstanding
and entitled to receive such dividends.
(b) So long as any Class C Shares shall be outstanding no dividend,
except a dividend payable in Common Shares or other shares ranking junior
to the Class C Shares, shall be paid or declared or any distribution be
made, except as aforesaid, in respect of the Common Shares or any other
shares ranking junior to the Class C Shares, nor shall any Common Shares or
any other shares ranking junior to the Class C Shares be purchased, retired
or otherwise acquired by the Corporation, except out of the proceeds of the
sale of Common Shares or other shares of the Corporation ranking junior to
the Class C Shares received by the Corporation subsequent to the date of
first issuance of Class C Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A Shares, Class
B Shares, Class C Shares, Class D Shares and Class E Shares including
the full dividends for all current dividend periods, shall have been
declared and paid or a sum sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for the then
current dividend period shall have been declared and paid or a sum
sufficient for payment therefor set apart; and
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(3) There shall be no arrearages with respect to the redemption of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares of any series from any sinking fund
provided for shares of such series in accordance with the provisions of
Section 1 of this Item III.
(c) The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption retirement or other
acquisition of, Common Shares or any other shares ranking on a parity with
or junior to the Class C Shares shall be inapplicable to (i) any payments
in lieu of issuance of fractional shares thereof, whether upon any merger,
conversion, stock dividend or otherwise, (ii) the conversion of Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares into Common Shares, or (iii) the exercise by the
Corporation of its rights pursuant to Item VIII(d) of this Division A,
Section 4(d) of Division B or any similar Section hereafter contained in
these Amended and Restated Articles of Incorporation, as amended, with
respect to any other class or series of capital stock hereafter created or
authorized.
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code), any
portion (the "Capital Gains Amount") of the dividends paid or made
available for the year to holders of all classes of stock (the "Total
Dividends"), then, to the extent permissible under the Code and to the
extent it does not cause any dividends to fail to qualify for the dividends
paid deduction under Section 561 of the Code, the portion of the Capital
Gains Amount that shall be allocable to holders of the Class C Shares shall
be the amount that the total dividends paid or made available to the
holders of the Class C Shares for the year bears to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the Corporation:
(1) May, from time to time at the option of the Board of Directors,
redeem all or any part of any redeemable series of Class C Shares at the
time outstanding at the applicable redemption price for such series fixed
in accordance with the provisions of Section 1 of this Item III; and
(2) Shall, from time to time, make such redemptions of each series of
Class C Shares as may be required to fulfill the requirements of any
sinking fund provided for shares of such series at the applicable sinking
fund redemption price fixed in accordance with the provisions of Section 1
of this Item III; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed, postage prepaid,
to the holders of record of the Class C Shares to be redeemed at their
respective addresses then appearing on the books of the Corporation, not less
than 30 days nor more than 60 days prior to the date fixed for such redemption,
or such other time prior thereto as the Board of Directors shall fix for any
series pursuant to Section 1 of this Item III prior to the issuance thereof. At
any time after notice as provided above has been deposited in the mail, the
Corporation may deposit the aggregate redemption price of Class C Shares to be
redeemed, together with accrued and unpaid dividends thereon to the redemption
date, with any bank or trust company in Cleveland, Ohio, or New York, New York,
having capital and surplus of not less than $100,000,000, named in such notice
and direct that there be paid to the respective holders of the Class C Shares so
to be redeemed amounts equal to the redemption price of the Class C Shares so to
be redeemed, together with such accrued and unpaid dividends thereon, on
surrender of the share certificate or certificates held by such holders; and
upon the deposit of such notice in the mail and the making of such deposit of
money with such bank or trust company, such holders shall cease to be
shareholders with respect to such shares; and from and after the time such
notice shall have been so deposited and such deposit of money shall have been so
made, such holders shall have no rights or claim against the Corporation with
respect to such shares, except only the right to receive such money from such
bank or trust company without interest or to exercise before the redemption date
any unexpired privileges of conversion. In the event less than all of the
outstanding Class C Shares are to be redeemed, the Corporation shall select by
lot the shares so to be redeemed in such manner as shall be prescribed by the
Board of Directors.
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(2) If the holders of Class C Shares which have been called for
redemption shall not within six years after such deposit claim the amount
deposited for the redemption thereof, any such bank or trust company shall,
upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall be relieved
of all responsibility in respect thereof and to such holders.
(c) Any Class C Shares which are (1) redeemed by the Corporation pursuant
to the provisions of this Section, (2) purchased and delivered in satisfaction
of any sinking fund requirements provided for shares of such series, (3)
converted in accordance with the express terms thereof, or (4) otherwise
acquired by the Corporation, shall resume the status of authorized but unissued
Class C Shares without serial designation.
(d) Except in connection with the exercise of the Corporation's rights
pursuant to Section (d) of Item VIII of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other class
or series of capital stock hereafter created or authorized, the Corporation may
not purchase or redeem (for sinking fund purposes or otherwise) less than all of
the Class C Shares then outstanding except in accordance with a stock purchase
offer made to all holders of record of Class C Shares, unless all dividends on
all Class C Shares then outstanding for all previous and current dividend
periods shall have been declared and paid or funds therefor set apart and all
accrued sinking fund obligations applicable thereto shall have been complied
with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Class C Shares of any series shall be entitled to receive in full out of the
assets of the Corporation, including its capital, before any amount shall be
paid or distributed among the holders of the Common Shares or any other shares
ranking junior to the Class C Shares, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Item III, plus an amount
equal to all dividends accrued and unpaid thereon to the date of payment of the
amount due pursuant to such liquidation, dissolution or winding up of the
affairs of the Corporation. In the event the net assets of the Corporation
legally available therefor are insufficient to permit the payment upon all
outstanding Class A Shares, Class B Shares, Class C Shares, Class D Shares,
Class E Shares and Noncumulative Shares of the full preferential amount to which
they are respectively entitled, then such net assets shall be distributed
ratably upon all outstanding Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares and Noncumulative Shares in proportion to the
full preferential amount to which each such share is entitled.
(2) After payment to the holders of Class C Shares of the full
preferential amounts as aforesaid, the holders of Class C Shares, as such,
shall have no right or claim to any of the remaining assets of the
Corporation.
(b) The merger or consolidation of the Corporation into or with any other
Corporation, the merger of any other Corporation into it, or the sale, lease or
conveyance of all or substantially all the assets of the Corporation, shall not
be deemed to be a dissolution, liquidation or winding up for the purposes of
this Section.
Section 5. Voting.
(a) The holders of Class C Shares shall have no voting rights, except as
provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in default in the
payment of dividends on any series of Class C Shares at the time outstanding,
whether or not earned or declared, for a number of consecutive dividend payment
periods which in the aggregate contain at least 540 days, all holders of such
Class C Shares, voting separately as a class, together with all Class A Shares,
Class B Shares, Class D Shares, Class E Shares and Noncumulative Shares upon
which like voting rights have been conferred and are exercisable under the
circumstances described in Subsection 5(c), shall be entitled to elect, as
herein provided, a total of two members of the Board of Directors of the
Corporation; provided, however, that the holders of such Class C Shares shall
not exercise such special class voting rights except at meetings of such
shareholders for the
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election of directors at which the holders of not less than 50% of such Class C
Shares are present in person or by proxy; and provided further, that the special
class voting rights provided for in this paragraph when the same shall have
become vested shall remain so vested until all accrued and unpaid dividends on
such Class C Shares then outstanding shall have been paid or declared and a sum
sufficient for the payment thereof set aside for payment, whereupon the holders
of such Class C Shares shall be divested of their special class voting rights in
respect of subsequent elections of directors, subject to the revesting of such
special class voting rights in the event above specified in this paragraph. All
dividend payments made on the Class C Shares, at any time during which the
Corporation is in default in the payment of dividends on such Class C Shares for
any dividend period, shall be deemed to be made in respect of the earliest
dividend period with respect to which the Corporation is in default.
(2) In the event of default entitling holders of Class C Shares to
elect two directors as specified in paragraph (1) of this Subsection, a
special meeting of such holders for the purpose of electing such directors
shall be called by the Secretary of the Corporation upon written request
of, or may be called by, the holders of record of at least 10% of the Class
C Shares upon which such default in the payment of dividends exists and
notice thereof shall be given in the same manner as that required for the
annual meeting of shareholders; provided, however, that the Corporation
shall not be required to call such special meeting if the annual meeting of
shareholders shall be called to be held within 90 days after the date of
receipt of the foregoing written request from the holders of Class C
Shares. At any meeting at which such holders of Class C Shares shall be
entitled to elect directors, holders of 50% of such Class C Shares, present
in person or by proxy, shall be sufficient to constitute a quorum, and the
vote of the holders of a majority of such shares so present at any such
meeting at which there shall be such a quorum shall be sufficient to elect
the members of the Board of Directors which such holders of Class C Shares
are entitled to elect as herein provided. Notwithstanding any provision of
these Amended and Restated Articles of Incorporation, as amended, or the
Code of Regulations of the Corporation or any action taken by the holders
of any class of shares fixing the number of directors of the Corporation,
the two directors who may be elected by such holders of Class C Shares
pursuant to this Subsection shall serve in addition to any other directors
then in office or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any change otherwise
permitted in the total number of or classifications of directors of the
Corporation or require the resignation of any director elected otherwise
than pursuant to this Subsection. Notwithstanding any classification of the
other directors of the Corporation, the two directors elected by such
holders of Class C Shares shall be elected annually for
terms expiring at the next succeeding annual meeting of shareholders.
(3) Upon any divesting of the special class voting rights of the
holders of the Class C Shares in respect of elections of directors as
provided in this Subsection, the terms of office of all directors then in
office elected by such holders shall terminate immediately thereupon. If
the office of any director elected by such holders voting as a class
becomes vacant by reason of death, resignation, removal from office or
otherwise, the remaining director elected by such holders voting as a class
may elect a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred.
(c) If at any time when the holders of Class C Shares are entitled to elect
directors pursuant to the foregoing provisions of this Section the holders of
any Class A Shares, Class B Shares, Class D Shares, Class E Shares or
Noncumulative Shares are entitled to elect directors pursuant hereto by reason
of any default in the payment of dividends thereon, then the voting rights of
the Class A Shares, the Class B Shares, the Class C Shares, the Class D Shares,
the Class E Shares and the Noncumulative Shares then entitled to vote shall be
combined (with each class of shares having a number of votes proportional to the
aggregate liquidation preference of its outstanding shares). In such case, the
holders of Class C Shares and of all such other shares then entitled so to vote,
voting as a class, shall elect such directors. If the holders of any such other
shares have elected such directors prior to the happening of the default or
event permitting the holders of Class C Shares to elect directors, or prior to a
written request for the holding of a special meeting being received by the
Secretary of the Corporation as required above, then a new election shall be
held with all such other shares and the Class C Shares voting together as a
single class for such directors, resulting in the termination of the term of
such previously elected directors upon the election of such new directors.
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(d) The affirmative vote of the holders of at least two-thirds of the Class
C Shares at the time outstanding, voting separately as a class, given in person
or by proxy either in writing or at a meeting called for the purpose, shall be
necessary to effect either of the following:
(1) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Amended and
Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of Class C Shares
which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as to
authorize, create or change the authorized or outstanding number of Class C
Shares or of any shares ranking on a parity with or junior to the Class C
Shares nor the amendment of the provisions of the Code of Regulations so as
to change the number or classification of directors of the Corporation
shall be deemed to affect adversely and materially preferences or voting or
other rights of the holders of Class C Shares; or
(2) The authorization, creation or increase in the authorized number
of any shares, or any security convertible into shares, in either case
ranking prior to such series of Class C Shares.
(e) In the event, and only to the extent, that (1) Class C Shares are
issued in more than one series and (2) Ohio law permits the holders of a series
of a class of capital stock to vote separately as a class, the affirmative vote
of the holders of at least two-thirds of each series of Class C Shares at the
time outstanding, voting separately as a class, given in person or by proxy
either in writing or at a meeting called for the purpose of voting on such
matters, shall be required for any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of these Amended
and Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of such series which are
set forth in these Amended and Restated Articles of Incorporation, as amended;
provided, however, neither the amendment of these Amended and Restated Articles
of Incorporation, as amended, so as to authorize, create or change the
authorized or outstanding number of Class C Shares or of any shares ranking on a
parity with or junior to the Class C Shares nor the Amendment of the provisions
of the Code of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect adversely and materially
the preferences or voting or other rights of the holders of such series.
IV. The Class D Cumulative Preferred Shares. The Class D Shares shall have the
following express terms:
Section 1. Series. The Class D Shares may be issued from time to time in
one or more series. All Class D Shares shall be of equal rank and shall be
identical, except in respect of the matters that may be fixed by the Board of
Directors as hereinafter provided, and each share of a series shall be identical
with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class D Shares shall rank on a
parity with the Class A Shares, the Class B Shares, the Class C Shares, the
Class E Shares and the Noncumulative Shares and shall be identical to all Class
A Shares, Class B Shares, Class C Shares, Class E Shares and Noncumulative
Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1
and (2) only dividends on Class A Shares, Class B Shares, Class C Shares, Class
D Shares and Class E Shares shall be cumulative as set forth herein. Subject to
the provisions of Sections 2 through 5, both inclusive, and Item VII of this
Division, which provisions shall apply to all Class D Shares, the Board of
Directors hereby is authorized to cause such shares to be issued in one or more
series and, with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
(b) The authorized number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of
the series) increase or decrease from time to time before or after the
issuance thereof (but not below the number of shares thereof then
outstanding);
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(c) The dividend rate or rates of the series, including the means by
which such rates may be established;
(d) The date or dates from which dividends shall accrue and be
cumulative and the dates on which and the period or periods for which
dividends, if declared, shall be payable, including the means by which such
dates and periods may be established;
(e) The redemption rights and price or prices, if any, for shares of
the series;
(f) The terms and amount of the sinking fund, if any, for the purchase
or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into Common
Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any adjustments thereof and all other terms and
conditions upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in Subsection 5(d) or
5(e) of this Item IV) on the issuance of shares of the same series or of
any other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended and Restated Articles of Incorporation, as amended, fixing, with
respect to each such series, the matters described in clauses (a) through (i),
inclusive, of this Section and is authorized to take such actions with respect
thereto as may be required by law in order to effect such amendments.
Section 2. Dividends.
(a) The holders of Class D Shares of each series, in preference to the
holders of Common Shares and of any other class of shares ranking junior to the
Class D Shares, shall be entitled to receive out of any funds legally available
therefor, and when and as declared by the Board of Directors, dividends in cash
at the rate or rates for such series fixed in accordance with the provisions of
Section 1 above and no more, payable on the dates fixed for such series. Such
dividends shall accrue and be cumulative, in the case of shares of each
particular series, from and after the date or dates fixed with respect to such
series. No dividends shall be paid upon or declared or set apart for any series
of the Class D Shares for any dividend period unless at the same time (i) a like
proportionate dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend rates
fixed therefor, shall have been paid upon or declared or set apart for all Class
D Shares of all series then issued and outstanding and entitled to receive such
dividend and (ii) the dividends payable for the dividend periods terminating on
the same or any earlier date (but, with respect to Noncumulative Shares, only
with respect to the then current dividend period), ratably in proportion to the
respective dividend rates fixed therefor, shall have been paid upon or declared
or set apart for all Class A Shares, Class B Shares, Class C Shares, Class E
Shares and Noncumulative Shares then issued and outstanding and entitled to
receive such dividends.
(b) So long as any Class D Shares shall be outstanding no dividend, except
a dividend payable in Common Shares or other shares ranking junior to the Class
D Shares, shall be paid or declared or any distribution be made, except as
aforesaid, in respect of the Common Shares or any other shares ranking junior to
the Class D Shares, nor shall any Common Shares or any other shares ranking
junior to the Class D Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or other
shares of the Corporation ranking junior to the Class D Shares received by the
Corporation subsequent to the date of first issuance of Class D Shares of any
series, unless:
(1) All accrued and unpaid dividends on Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Class E Shares, including the
full dividends for all current dividend periods, shall have been declared
and paid or a sum sufficient for payment thereof set apart;
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(2) All unpaid dividends on Noncumulative Shares for the then current
dividend period shall have been declared and paid or a sum sufficient for
payment therefor set apart; and
(3) There shall be no arrearages with respect to the redemption of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares of any series from any sinking fund provided
for shares of such series in accordance with the provisions of Section 1 of
this Item IV.
(c) The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption retirement or other acquisition
of, Common Shares or any other shares ranking on a parity with or junior to the
Class D Shares shall be inapplicable to (i) any payments in lieu of issuance of
fractional shares thereof, whether upon any merger, conversion, stock dividend
or otherwise, (ii) the conversion of Class A Shares, Class B Shares, Class C
Shares, Class D Shares, Class E Shares or Noncumulative Shares into Common
Shares, or (iii) the exercise by the Corporation of its rights pursuant to Item
VIII(d) of this Division A, Section 4(d) of Division B or any similar Section
hereafter contained in these Amended and Restated Articles of Incorporation, as
amended, with respect to any other class or series of capital stock hereafter
created or authorized.
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code), any portion
(the "Capital Gains Amount") of the dividends paid or made available for the
year to holders of all classes of stock (the "Total Dividends"), then, to the
extent permissible under the Code and to the extent it does not cause any
dividends to fail to qualify for the dividends paid deduction under Section 561
of the Code, the portion of the Capital Gains Amount that shall be allocable to
holders of the Class D Shares shall be the amount that the total dividends paid
or made available to the holders of the Class D Shares for the year bears to the
Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the Corporation:
(1) May, from time to time at the option of the Board of Directors,
redeem all or any part of any redeemable series of Class D Shares at the
time outstanding at the applicable redemption price for such series fixed
in accordance with the provisions of Section 1 of this Item IV; and
(2) Shall, from time to time, make such redemptions of each series of
Class D Shares as may be required to fulfill the requirements of any
sinking fund provided for shares of such series at the applicable sinking
fund redemption price fixed in accordance with the provisions of Section 1
of this Item IV; and shall in each case pay all accrued and unpaid
dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed, postage prepaid,
to the holders of record of the Class D Shares to be redeemed at their
respective addresses then appearing on the books of the Corporation, not less
than 30 days nor more than 60 days prior to the date fixed for such redemption,
or such other time prior thereto as the Board of Directors shall fix for any
series pursuant to Section 1 of this Item IV prior to the issuance thereof. At
any time after notice as provided above has been deposited in the mail, the
Corporation may deposit the aggregate redemption price of Class D Shares to be
redeemed, together with accrued and unpaid dividends thereon to the redemption
date, with any bank or trust company in Cleveland, Ohio, or New York, New York,
having capital and surplus of not less than $100,000,000, named in such notice
and direct that there be paid to the respective holders of the Class D Shares so
to be redeemed amounts equal to the redemption price of the Class D Shares so to
be redeemed, together with such accrued and unpaid dividends thereon, on
surrender of the share certificate or certificates held by such holders; and
upon the deposit of such notice in the mail and the making of such deposit of
money with such bank or trust company, such holders shall cease to be
shareholders with respect to such shares; and from and after the time such
notice shall have been so deposited and such deposit of money shall have been so
made, such holders shall have no rights or claim against the Corporation with
respect to such shares, except only the right to receive such money from such
bank or trust company without interest or to exercise before the redemption date
any unexpired privileges of conversion. In the event less than all of the
outstanding Class D Shares are to be
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redeemed, the Corporation shall select by lot the shares so to be redeemed in
such manner as shall be prescribed by the Board of Directors.
(2) If the holders of Class D Shares which have been called for
redemption shall not within six years after such deposit claim the amount
deposited for the redemption thereof, any such bank or trust company shall,
upon demand, pay over to the Corporation such unclaimed amounts and
thereupon such bank or trust company and the Corporation shall be relieved
of all responsibility in respect thereof and to such holders.
(c) Any Class D Shares which are (1) redeemed by the Corporation pursuant
to the provisions of this Section, (2) purchased and delivered in satisfaction
of any sinking fund requirements provided for shares of such series, (3)
converted in accordance with the express terms thereof, or (4) otherwise
acquired by the Corporation, shall resume the status of authorized but unissued
Class D Shares without serial designation.
(d) Except in connection with the exercise of the Corporation's rights
pursuant to Section (d) of Item VIII of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other class
or series of capital stock hereafter created or authorized, the Corporation may
not purchase or redeem (for sinking fund purposes or otherwise) less than all of
the Class D Shares then outstanding except in accordance with a stock purchase
offer made to all holders of record of Class D Shares, unless all dividends on
all Class D Shares then outstanding for all previous and current dividend
periods shall have been declared and paid or funds therefor set apart and all
accrued sinking fund obligations applicable thereto shall have been complied
with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Class D Shares of any series shall be entitled to receive in full out of the
assets of the Corporation, including its capital, before any amount shall be
paid or distributed among the holders of the Common Shares or any other shares
ranking junior to the Class D Shares, the amounts fixed with respect to shares
of such series in accordance with Section 1 of this Item IV, plus an amount
equal to all dividends accrued and unpaid thereon to the date of payment of the
amount due pursuant to such liquidation, dissolution or winding up of the
affairs of the Corporation. In the event the net assets of the Corporation
legally available therefor are insufficient to permit the payment upon all
outstanding Class A Shares, Class B Shares, Class C Shares, Class D Shares,
Class E Shares and Noncumulative Shares of the full preferential amount to which
they are respectively entitled, then such net assets shall be distributed
ratably upon all outstanding Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares and Noncumulative Shares in proportion to the
full preferential amount to which each such share is entitled.
(2) After payment to the holders of Class D Shares of the full
preferential amounts as aforesaid, the holders of Class D Shares, as such,
shall have no right or claim to any of the remaining assets of the
Corporation.
(b) The merger or consolidation of the Corporation into or with any other
Corporation, the merger of any other Corporation into it, or the sale, lease or
conveyance of all or substantially all the assets of the Corporation, shall not
be deemed to be a dissolution, liquidation or winding up for the purposes of
this Section.
Section 5. Voting.
(a) The holders of Class D Shares shall have no voting rights, except as
provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in default in the
payment of dividends on any series of Class D Shares at the time outstanding,
whether or not earned or declared, for a number of consecutive dividend payment
periods which in the aggregate contain at least 540 days, all holders of such
Class D Shares, voting separately as a class, together with all Class A Shares,
Class B Shares, Class C Shares, Class E Shares and Noncumulative Shares upon
which like voting rights have been conferred and are exercisable under the
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circumstances described in Subsection 5(c), shall be entitled to elect, as
herein provided, a total of two members of the Board of Directors of the
Corporation; provided, however, that the holders of such Class D Shares shall
not exercise such special class voting rights except at meetings of such
shareholders for the election of directors at which the holders of not less than
50% of such Class D Shares are present in person or by proxy; and provided
further, that the special class voting rights provided for in this paragraph
when the same shall have become vested shall remain so vested until all accrued
and unpaid dividends on such Class D Shares then outstanding shall have been
paid or declared and a sum sufficient for the payment thereof set aside for
payment, whereupon the holders of such Class D Shares shall be divested of their
special class voting rights in respect of subsequent elections of directors,
subject to the revesting of such special class voting rights in the event above
specified in this paragraph. All dividend payments made on the Class D Shares,
at any time during which the Corporation is in default in the payment of
dividends on such Class D Shares for any dividend period, shall be deemed to be
made in respect of the earliest dividend period with respect to which the
Corporation is in default.
(2) In the event of default entitling holders of Class D Shares to
elect two directors as specified in paragraph (1) of this Subsection, a
special meeting of such holders for the purpose of electing such directors
shall be called by the Secretary of the Corporation upon written request
of, or may be called by, the holders of record of at least 10% of the Class
D Shares upon which such default in the payment of dividends exists and
notice thereof shall be given in the same manner as that required for the
annual meeting of shareholders; provided, however, that the Corporation
shall not be required to call such special meeting if the annual meeting of
shareholders shall be called to be held within 90 days after the date of
receipt of the foregoing written request from the holders of Class D
Shares. At any meeting at which such holders of Class D Shares shall be
entitled to elect directors, holders of 50% of such Class D Shares, present
in person or by proxy, shall be sufficient to constitute a quorum, and the
vote of the holders of a majority of such shares so present at any such
meeting at which there shall be such a quorum shall be sufficient to elect
the members of the Board of Directors which such holders of Class D Shares
are entitled to elect as herein provided. Notwithstanding any provision of
these Amended and Restated Articles of Incorporation, as amended, or the
Code of Regulations of the Corporation or any action taken by the holders
of any class of shares fixing the number of directors of the Corporation,
the two directors who may be elected by such holders of Class D Shares
pursuant to this Subsection shall serve in addition to any other directors
then in office or proposed to be elected otherwise than pursuant to this
Subsection. Nothing in this Subsection shall prevent any change otherwise
permitted in the total number of or classifications of directors of the
Corporation or require the resignation of any director elected otherwise
than pursuant to this Subsection. Notwithstanding any classification of the
other directors of the Corporation, the two directors elected by such
holders of Class D Shares shall be elected annually for terms expiring at
the next succeeding annual meeting of shareholders.
(3) Upon any divesting of the special class voting rights of the
holders of the Class D Shares in respect of elections of directors as
provided in this Subsection, the terms of office of all directors then in
office elected by such holders shall terminate immediately thereupon. If
the office of any director elected by such holders voting as a class
becomes vacant by reason of death, resignation, removal from office or
otherwise, the remaining director elected by such holders voting as a class
may elect a successor who shall hold office for the unexpired term in
respect of which such vacancy occurred.
(c) If at any time when the holders of Class D Shares are entitled to elect
directors pursuant to the foregoing provisions of this Section the holders of
any Class A Shares, Class B Shares, Class C Shares, Class E Shares or
Noncumulative Shares are entitled to elect directors pursuant hereto by reason
of any default in the payment of dividends thereon, then the voting rights of
the Class A Shares, the Class B Shares, the Class C Shares, the Class D Shares,
the Class E Shares and the Noncumulative Shares then entitled to vote shall be
combined (with each class of shares having a number of votes proportional to the
aggregate liquidation preference of its outstanding shares). In such case, the
holders of Class D Shares and of all such other shares then entitled so to vote,
voting as a class, shall elect such directors. If the holders of any such other
shares have elected such directors prior to the happening of the default or
event permitting the holders of Class D Shares to elect directors, or prior to a
written request for the holding of a special meeting being received by the
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Secretary of the Corporation as required above, then a new election shall be
held with all such other shares and the Class D Shares voting together as a
single class for such directors, resulting in the termination of the term of
such previously elected directors upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds of the Class
D Shares at the time outstanding, voting separately as a class, given in person
or by proxy either in writing or at a meeting called for the purpose, shall be
necessary to effect either of the following:
(1) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Amended and
Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of Class D Shares
which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as to
authorize, create or change the authorized or outstanding number of Class D
Shares or of any shares ranking on a parity with or junior to the Class D
Shares nor the amendment of the provisions of the Code of Regulations so as
to change the number or classification of directors of the Corporation
shall be deemed to affect adversely and materially preferences or voting or
other rights of the holders of Class D Shares; or
(2) The authorization, creation or increase in the authorized number
of any shares, or any security convertible into shares, in either case
ranking prior to such series of Class D Shares.
(e) In the event, and only to the extent, that (1) Class D Shares are
issued in more than one series and (2) Ohio law permits the holders of a series
of a class of capital stock to vote separately as a class, the affirmative vote
of the holders of at least two-thirds of each series of Class D Shares at the
time outstanding, voting separately as a class, given in person or by proxy
either in writing or at a meeting called for the purpose of voting on such
matters, shall be required for any amendment, alteration or repeal, whether by
merger, consolidation or otherwise, of any of the provisions of these Amended
and Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of such series which are
set forth in these Amended and Restated Articles of Incorporation, as amended;
provided, however, neither the amendment of these Amended and Restated Articles
of Incorporation, as amended, so as to authorize, create or change the
authorized or outstanding number of Class D Shares or of any shares ranking on a
parity with or junior to the Class D Shares nor the Amendment of the provisions
of the Code of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect adversely and materially
the preferences or voting or other rights of the holders of such series.
V. The Class E Cumulative Preferred Shares. The Class E Shares shall have the
following express terms:
Section 1. Series. The Class E Shares may be issued from time to time in
one or more series. All Class E Shares shall be of equal rank and shall be
identical, except in respect of the matters that may be fixed by the Board of
Directors as hereinafter provided, and each share of a series shall be identical
with all other shares of such series, except as to the dates from which
dividends shall accrue and be cumulative. All Class E Shares shall rank on a
parity with the Class A Shares, the Class B Shares, the Class C Shares, the
Class D Shares and the Noncumulative Shares and shall be identical to all Class
A Shares, Class B Shares, Class C Shares, Class D Shares and Noncumulative
Shares except (1) in respect of the matters that may be fixed by the Board of
Directors as provided in clauses (a) through (i), inclusive, of this Section 1
and (2) only dividends on Class A Shares, Class B Shares, Class C Shares, Class
D Shares and Class E Shares shall be cumulative as set forth herein. Subject to
the provisions of Sections 2 through 5, both inclusive, and Item VII of this
Division, which provisions shall apply to all Class E Shares, the Board of
Directors hereby is authorized to cause such shares to be issued in one or more
series and, with respect to each such series to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
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(b) The authorized number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of
the series) increase or decrease from time to time before or after the
issuance thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series, including the means by
which such rates may be established;
(d) The date or dates from which dividends shall accrue and be
cumulative and the dates on which and the period or periods for which
dividends, if declared, shall be payable, including the means by which such
dates and periods may be established;
(e) The redemption rights and price or prices, if any, for shares of
the series;
(f) The terms and amount of the sinking fund, if any, for the purchase
or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into Common
Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any adjustments thereof and all other terms and
conditions upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in Subsection 5(d) or
5(e) of this Item V) on the issuance of shares of the same series or of any
other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended and Restated Articles of Incorporation, as amended, fixing, with
respect to each such series, the matters described in clauses (a) through (i),
inclusive, of this Section and is authorized to take such actions with respect
thereto as may be required by law in order to effect such amendments.
Section 2. Dividends.
(a) The holders of Class E Shares of each series, in preference to the
holders of Common Shares and of any other class of shares ranking junior to the
Class E Shares, shall be entitled to receive out of any funds legally available
therefor, and when and as declared by the Board of Directors, dividends in cash
at the rate or rates for such series fixed in accordance with the provisions of
Section 1 above and no more, payable on the dates fixed for such series. Such
dividends shall accrue and be cumulative, in the case of shares of each
particular series, from and after the date or dates fixed with respect to such
series. No dividends shall be paid upon or declared or set apart for any series
of the Class E Shares for any dividend period unless at the same time (i) a like
proportionate dividend for the dividend periods terminating on the same or any
earlier date, ratably in proportion to the respective annual dividend rates
fixed therefor, shall have been paid upon or declared or set apart for all Class
E Shares of all series then issued and outstanding and entitled to receive such
dividend and (ii) the dividends payable for the dividend periods terminating on
the same or any earlier date (but, with respect to Noncumulative Shares, only
with respect to the then current dividend period), ratably in proportion to the
respective dividend rates fixed therefor, shall have been paid upon or declared
or set apart for all Class A Shares, Class B Shares, Class C Shares, Class D
Shares and Noncumulative Shares then issued and outstanding and entitled to
receive such dividends.
(b) So long as any Class E Shares shall be outstanding no dividend, except
a dividend payable in Common Shares or other shares ranking junior to the Class
E Shares, shall be paid or declared or any distribution be made, except as
aforesaid, in respect of the Common Shares or any other shares ranking junior to
the Class E Shares, nor shall any Common Shares or any other shares ranking
junior to the Class E Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or other
shares of the Corporation ranking junior to the Class E Shares received by the
Corporation subsequent to the date of first issuance of Class E Shares of any
series, unless:
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(1) All accrued and unpaid dividends on Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Class E Shares, including the
full dividends for all current dividend periods, shall have been
declared and paid or a sum sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for the then
current dividend period shall have been declared and paid or a sum
sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the redemption of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares of any series from any sinking fund
provided for shares of such series in accordance with the provisions of
Section 1 of this Item V.
(c) The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption retirement or other
acquisition of, Common Shares or any other shares ranking on a parity with
or junior to the Class E Shares shall be inapplicable to (i) any payments
in lieu of issuance of fractional shares thereof, whether upon any merger,
conversion, stock dividend or otherwise, (ii) the conversion of Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares into Common Shares, or (iii) the exercise by the
Corporation of its rights pursuant to Item VIII(d) of this Division A,
Section 4(d) of Division B or any similar Section hereafter contained in
these Amended and Restated Articles of Incorporation, as amended, with
respect to any other class or series of capital stock hereafter created or
authorized.
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code), any
portion (the "Capital Gains Amount") of the dividends paid or made
available for the year to holders of all classes of stock (the "Total
Dividends"), then, to the extent permissible under the Code and to the
extent it does not cause any dividends to fail to qualify for the dividends
paid deduction under Section 561 of the Code, the portion of the Capital
Gains Amount that shall be allocable to holders of the Class E Shares shall
be the amount that the total dividends paid or made available to the
holders of the Class E Shares for the year bears to the Total Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the Corporation:
(1) May, from time to time at the option of the Board of Directors,
redeem all or any part of any redeemable series of Class E Shares at the
time outstanding at the applicable redemption price for such series
fixed in accordance with the provisions of Section 1 of this Item V; and
(2) Shall, from time to time, make such redemptions of each series
of Class E Shares as may be required to fulfill the requirements of any
sinking fund provided for shares of such series at the applicable
sinking fund redemption price fixed in accordance with the provisions of
Section 1 of this Item V; and shall in each case pay all accrued and
unpaid dividends to the redemption date.
(b) (1) Notice of every such redemption shall be mailed, postage
prepaid, to the holders of record of the Class E Shares to be redeemed at
their respective addresses then appearing on the books of the Corporation,
not less than 30 days nor more than 60 days prior to the date fixed for
such redemption, or such other time prior thereto as the Board of Directors
shall fix for any series pursuant to Section 1 of this Item V prior to the
issuance thereof. At any time after notice as provided above has been
deposited in the mail, the Corporation may deposit the aggregate redemption
price of Class E Shares to be redeemed, together with accrued and unpaid
dividends thereon to the redemption date, with any bank or trust company in
Cleveland, Ohio, or New York, New York, having capital and surplus of not
less than $100,000,000, named in such notice and direct that there be paid
to the respective holders of the Class E Shares so to be redeemed amounts
equal to the redemption price of the Class E Shares so to be redeemed,
together with such accrued and unpaid dividends thereon, on surrender of
the share certificate or certificates held by such holders; and upon the
deposit of such notice in the mail and the making of such deposit of money
with such bank or trust company, such holders shall cease to be
shareholders with respect to such shares; and from and after the time such
notice shall have been so deposited and such
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deposit of money shall have been so made, such holders shall have no rights
or claim against the Corporation with respect to such shares, except only
the right to receive such money from such bank or trust company without
interest or to exercise before the redemption date any unexpired privileges
of conversion. In the event less than all of the outstanding Class E Shares
are to be redeemed, the Corporation shall select by lot the shares so to be
redeemed in such manner as shall be prescribed by the Board of Directors.
(2) If the holders of Class E Shares which have been called for
redemption shall not within six years after such deposit claim the
amount deposited for the redemption thereof, any such bank or trust
company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company and the Corporation
shall be relieved of all responsibility in respect thereof and to such
holders.
(c) Any Class E Shares which are (1) redeemed by the Corporation
pursuant to the provisions of this Section, (2) purchased and delivered in
satisfaction of any sinking fund requirements provided for shares of such
series, (3) converted in accordance with the express terms thereof, or (4)
otherwise acquired by the Corporation, shall resume the status of
authorized but unissued Class E Shares without serial designation.
(d) Except in connection with the exercise of the Corporation's rights
pursuant to Section (d) of Item VIII of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other
class or series of capital stock hereafter created or authorized, the
Corporation may not purchase or redeem (for sinking fund purposes or
otherwise) less than all of the Class E Shares then outstanding except in
accordance with a stock purchase offer made to all holders of record of
Class E Shares, unless all dividends on all Class E Shares then outstanding
for all previous and current dividend periods shall have been declared and
paid or funds therefor set apart and all accrued sinking fund obligations
applicable thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Class E Shares of any series shall be entitled to receive in full out of
the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any
other shares ranking junior to the Class E Shares, the amounts fixed with
respect to shares of such series in accordance with Section 1 of this Item
V, plus an amount equal to all dividends accrued and unpaid thereon to the
date of payment of the amount due pursuant to such liquidation, dissolution
or winding up of the affairs of the Corporation. In the event the net
assets of the Corporation legally available therefor are insufficient to
permit the payment upon all outstanding Class A Shares, Class B Shares,
Class C Shares, Class D Shares, Class E Shares and Noncumulative Shares of
the full preferential amount to which they are respectively entitled, then
such net assets shall be distributed ratably upon all outstanding Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares and
Noncumulative Shares in proportion to the full preferential amount to which
each such share is entitled.
(2) After payment to the holders of Class E Shares of the full
preferential amounts as aforesaid, the holders of Class E Shares, as
such, shall have no right or claim to any of the remaining assets of the
Corporation.
(b) The merger or consolidation of the Corporation into or with any
other Corporation, the merger of any other Corporation into it, or the
sale, lease or conveyance of all or substantially all the assets of the
Corporation, shall not be deemed to be a dissolution, liquidation or
winding up for the purposes of this Section.
Section 5. Voting.
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(a) The holders of Class E Shares shall have no voting rights, except
as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall be in default in
the payment of dividends on any series of Class E Shares at the time
outstanding, whether or not earned or declared, for a number of consecutive
dividend payment periods which in the aggregate contain at least 540 days,
all holders of such Class E Shares, voting separately as a class, together
with all Class A Shares, Class B Shares, Class C Shares, Class D Shares and
Noncumulative Shares upon which like voting rights have been conferred and
are exercisable under the circumstances described in Subsection 5(c), shall
be entitled to elect, as herein provided, a total of two members of the
Board of Directors of the Corporation; provided, however, that the holders
of such Class E Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors at
which the holders of not less than 50% of such Class E Shares are present
in person or by proxy; and provided further, that the special class voting
rights provided for in this paragraph when the same shall have become
vested shall remain so vested until all accrued and unpaid dividends on
such Class E Shares then outstanding shall have been paid or declared and a
sum sufficient for the payment thereof set aside for payment, whereupon the
holders of such Class E Shares shall be divested of their special class
voting rights in respect of subsequent elections of directors, subject to
the revesting of such special class voting rights in the event above
specified in this paragraph. All dividend payments made on the Class E
Shares, at any time during which the Corporation is in default in the
payment of dividends on such Class E Shares for any dividend period, shall
be deemed to be made in respect of the earliest dividend period with
respect to which the Corporation is in default.
(2) In the event of default entitling holders of Class E Shares to
elect two directors as specified in paragraph (1) of this Subsection, a
special meeting of such holders for the purpose of electing such
directors shall be called by the Secretary of the Corporation upon
written request of, or may be called by, the holders of record of at
least 10% of the Class E Shares upon which such default in the payment
of dividends exists and notice thereof shall be given in the same manner
as that required for the annual meeting of shareholders; provided,
however, that the Corporation shall not be required to call such special
meeting if the annual meeting of shareholders shall be called to be held
within 90 days after the date of receipt of the foregoing written
request from the holders of Class E Shares. At any meeting at which such
holders of Class E Shares shall be entitled to elect directors, holders
of 50% of such Class E Shares, present in person or by proxy, shall be
sufficient to constitute a quorum, and the vote of the holders of a
majority of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the members of the
Board of Directors which such holders of Class E Shares are entitled to
elect as herein provided. Notwithstanding any provision of these Amended
and Restated Articles of Incorporation, as amended, or the Code of
Regulations of the Corporation or any action taken by the holders of any
class of shares fixing the number of directors of the Corporation, the
two directors who may be elected by such holders of Class E Shares
pursuant to this Subsection shall serve in addition to any other
directors then in office or proposed to be elected otherwise than
pursuant to this Subsection. Nothing in this Subsection shall prevent
any change otherwise permitted in the total number of or classifications
of directors of the Corporation or require the resignation of any
director elected otherwise than pursuant to this Subsection.
Notwithstanding any classification of the other directors of the
Corporation, the two directors elected by such holders of Class E Shares
shall be elected annually for terms expiring at the next succeeding
annual meeting of shareholders.
(3) Upon any divesting of the special class voting rights of the
holders of the Class E Shares in respect of elections of directors as
provided in this Subsection, the terms of office of all directors then
in office elected by such holders shall terminate immediately thereupon.
If the office of any director elected by such holders voting as a class
becomes vacant by reason of death, resignation, removal from office or
otherwise, the remaining director elected by such holders voting as a
class may elect a successor who shall hold office for the unexpired term
in respect of which such vacancy occurred.
(c) If at any time when the holders of Class E Shares are entitled to
elect directors pursuant to the foregoing provisions of this Section the
holders of any Class A Shares, Class B Shares, Class C Shares,
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Class D Shares or Noncumulative Shares are entitled to elect directors
pursuant hereto by reason of any default in the payment of dividends
thereon, then the voting rights of the Class A Shares, the Class B Shares,
the Class C Shares, the Class D Shares, the Class E Shares and the
Noncumulative Shares then entitled to vote shall be combined (with each
class of shares having a number of votes proportional to the aggregate
liquidation preference of its outstanding shares). In such case, the
holders of Class E Shares and of all such other shares then entitled so to
vote, voting as a class, shall elect such directors. If the holders of any
such other shares have elected such directors prior to the happening of the
default or event permitting the holders of Class E Shares to elect
directors, or prior to a written request for the holding of a special
meeting being received by the Secretary of the Corporation as required
above, then a new election shall be held with all such other shares and the
Class E Shares voting together as a single class for such directors,
resulting in the termination of the term of such previously elected
directors upon the election of such new directors.
(d) The affirmative vote of the holders of at least two-thirds of the
Class E Shares at the time outstanding, voting separately as a class, given
in person or by proxy either in writing or at a meeting called for the
purpose, shall be necessary to effect either of the following:
(1) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Amended and
Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially
the preferences or voting or other rights of the holders of Class E
Shares which are set forth in these Amended and Restated Articles of
Incorporation, as amended; provided, however, neither the amendment of
these Amended and Restated Articles of Incorporation, as amended, so as
to authorize, create or change the authorized or outstanding number of
Class E Shares or of any shares ranking on a parity with or junior to
the Class E Shares nor the amendment of the provisions of the Code of
Regulations so as to change the number or classification of directors of
the Corporation shall be deemed to affect adversely and materially
preferences or voting or other rights of the holders of Class E Shares;
or
(2) The authorization, creation or increase in the authorized
number of any shares, or any security convertible into shares, in either
case ranking prior to such series of Class E Shares.
(e) In the event, and only to the extent, that (1) Class E Shares are
issued in more than one series and (2) Ohio law permits the holders of a
series of a class of capital stock to vote separately as a class, the
affirmative vote of the holders of at least two-thirds of each series of
Class E Shares at the time outstanding, voting separately as a class, given
in person or by proxy either in writing or at a meeting called for the
purpose of voting on such matters, shall be required for any amendment,
alteration or repeal, whether by merger, consolidation or otherwise, of any
of the provisions of these Amended and Restated Articles of Incorporation,
as amended, or of the Code of Regulations of the Corporation which affects
adversely and materially the preferences or voting or other rights of the
holders of such series which are set forth in these Amended and Restated
Articles of Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of Incorporation, as
amended, so as to authorize, create or change the authorized or outstanding
number of Class E Shares or of any shares ranking on a parity with or
junior to the Class E Shares nor the Amendment of the provisions of the
Code of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect adversely and
materially the preferences or voting or other rights of the holders of such
series.
VI. The Noncumulative Preferred Shares. The Noncumulative Preferred Shares
shall have the following express terms:
Section 1. Series. The Noncumulative Shares may be issued from time to time
in one or more series. All Noncumulative Shares shall be of equal rank and shall
be identical, except in respect of the matters that may be fixed by the Board of
Directors as hereinafter provided, and each share of a series shall be identical
with all other shares of such series, except as to the dates on which and the
periods for which dividends may be payable. All Noncumulative Shares shall rank
on a parity with the Class A Shares, the Class B Shares, the Class C Shares, the
Class D Shares and the Class E Shares, and shall be identical to all Class A
Shares, Class
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B Shares, Class C Shares, Class D Shares and Class E Shares, except (1) in
respect of the matters that may be fixed by the Board of Directors as provided
in clauses (a) through (i), inclusive, of this Section 1 and (2) only dividends
on the Noncumulative Shares are noncumulative as set forth herein. Subject to
the provisions of Sections 2 through 5, inclusive, and Item VII of this
Division, which provisions shall apply to all Noncumulative Shares, the Board of
Directors hereby is authorized to cause such shares to be issued in one or more
series, and with respect to each such series, to determine and fix prior to the
issuance thereof (and thereafter, to the extent provided in clause (b) of this
Section) the following:
(a) The designation of the series, which may be by distinguishing
number, letter or title;
(b) The authorized number of shares of the series, which number the
Board of Directors may (except where otherwise provided in the creation of
the series) increase or decrease from time to time before or after the
issuance thereof (but not below the number of shares thereof then
outstanding);
(c) The dividend rate or rates of the series, including the means by
which such rates may be established;
(d) The dates on which and the period or periods for which dividends,
if declared, shall be payable, including the means by which such dates and
periods may be established;
(e) The redemption rights and price or prices, if any, for shares of
the series;
(f) The terms and amount of the sinking fund, if any, for the purchase
or redemption of shares of the series;
(g) The amounts payable on shares of the series in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
(h) Whether the shares of the series shall be convertible into Common
Shares or shares of any other class and, if so, the conversion rate or
rates or price or prices, any adjustments thereof and all other terms and
conditions upon which such conversion may be made; and
(i) Restrictions (in addition to those set forth in Subsection 5(d) or
5(e) of this Item VI) on the issuance of shares of the same series or of
any other class or series.
The Board of Directors is authorized to adopt from time to time amendments
to the Amended and Restated Articles of Incorporation, as amended, fixing, with
respect to each such series, the matters described in clauses (a) through (i),
both inclusive, of this Section and is authorized to take such actions with
respect thereto as may be required by law in order to effect such amendments.
Section 2. Dividends.
(a) The holders of Noncumulative Shares of each series, in preference
to the holders of Common Shares and of any other class of shares ranking
junior to the Noncumulative Shares, shall be entitled to receive out of any
funds legally available therefor, if, when and as declared by the Board of
Directors, dividends in cash at the rate or rates for such series fixed in
accordance with the provisions of Section 1 above and no more, payable on
the dates fixed for such series. Such dividends shall accrue, in the case
of shares of each particular series, from and after the date or dates fixed
with respect to such series; provided, however, that if the Board of
Directors fails to declare a dividend payable on a dividend payment date on
any Noncumulative Shares, the holders of the Noncumulative Shares shall
have no right to receive a dividend in respect of the dividend period
ending on such dividend payment date, and the Corporation shall have no
obligation to pay the dividend accrued for such period, whether or not
dividends on such Noncumulative Shares are declared payable on any future
dividend payment date. No dividends shall be paid upon or declared or set
apart for any series of the Noncumulative Shares for any dividend period
unless at the same time (i) a like proportionate dividend for the then
current dividend period, ratably in proportion to the respective annual
dividend rates fixed therefor, shall have been paid upon or declared or set
apart for all Noncumulative Shares of all series then issued and
outstanding and entitled to receive such dividend and (ii) the dividends
payable for the dividend periods terminating on the same or any earlier
date, ratably in proportion to the respective dividend rates fixed
therefor, shall
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have been paid upon or declared or set apart for all Class A Shares, Class
B Shares, Class C Shares, Class D Shares and Class E Shares then issued and
outstanding and entitled to receive such dividends.
(b) So long as any Noncumulative Shares shall be outstanding no
dividend, except a dividend payable in Common Shares or other shares
ranking junior to the Noncumulative Shares, shall be paid or declared or
any distribution be made, except as aforesaid, in respect of the Common
Shares or any other shares ranking junior to the Noncumulative Shares, nor
shall any Common Shares or any other shares ranking junior to the
Noncumulative Shares be purchased, retired or otherwise acquired by the
Corporation, except out of the proceeds of the sale of Common Shares or
other shares of the Corporation ranking junior to the Noncumulative Shares
received by the Corporation subsequent to the date of first issuance of
Noncumulative Shares of any series, unless:
(1) All accrued and unpaid dividends on Class A Shares, Class B
Shares, Class C Shares, Class D Shares and Class E Shares including the
full dividends for all current dividend periods, shall have been
declared and paid or a sum sufficient for payment thereof set apart;
(2) All unpaid dividends on Noncumulative Shares for the then
current dividend period shall have been declared and paid or a sum
sufficient for payment therefor set apart; and
(3) There shall be no arrearages with respect to the redemption of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares of any series from any sinking fund
provided for shares of such series in accordance with the provisions of
Section 1 of this Item VI.
(c) The foregoing restrictions on the payment of dividends or other
distributions on, or on the purchase, redemption retirement or other
acquisition of, Common Shares or any other shares ranking on a parity with
or junior to the Noncumulative Shares shall be inapplicable to (i) any
payments in lieu of issuance of fractional shares thereof, whether upon any
merger, conversion, stock dividend or otherwise, (ii) the conversion of
Class A Shares, Class B Shares, Class C Shares, Class D Shares, Class E
Shares or Noncumulative Shares into Common Shares or (iii) the exercise by
the Corporation of its rights pursuant to Item VIII(d) of this Division A,
Section 4(d) of Division B or any similar Section hereafter contained in
these Amended and Restated Articles of Incorporation with respect to any
other class or series of capital stock hereafter created or authorized.
(d) If, for any taxable year, the Corporation elects to designate as
"capital gain dividends" (as defined in Section 857 of the Code), any
portion (the "Capital Gains Amount") of the dividends paid or made
available for the year to holders of all classes of stock (the "Total
Dividends"), then, to the extent permissible under the Code and to the
extent it does not cause any dividends to fail to qualify for the dividends
paid deduction under Section 561 of the Code, the portion of the Capital
Gains Amount that shall be allocable to holders of the Noncumulative Shares
shall be the amount that the total dividends paid or made available to the
holders of the Noncumulative Shares for the year bears to the Total
Dividends.
Section 3. Redemption.
(a) Subject to the express terms of each series, the Corporation:
(1) May, from time to time at the option of the Board of Directors,
redeem all or any part of any redeemable series of Noncumulative Shares
at the time outstanding at the applicable redemption price for such
series fixed in accordance with the provisions of Section 1 of this Item
VI; and
(2) Shall, from time to time, make such redemptions of each series
of Noncumulative Shares as may be required to fulfill the requirements
of any sinking fund provided for shares of such series at the applicable
sinking fund redemption price fixed in accordance with the provisions of
Section 1 of this Item VI; and shall, in each case, pay all unpaid
dividends for the then current dividend period to the redemption date.
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(b) (1) Notice of every such redemption shall be mailed, postage
prepaid, to the holders of record of the Noncumulative Shares to be
redeemed at their respective addresses then appearing on the books of the
Corporation, not less than 30 days nor more than 60 days prior to the date
fixed for such redemption, or such other time prior thereto as the Board of
Directors shall fix for any series pursuant to Section 1 of this Item VI
prior to the issuance thereof. At any time after notice as provided above
has been deposited in the mail, the Corporation may deposit the aggregate
redemption price of Noncumulative Shares to be redeemed, together with
accrued and unpaid dividends thereon for the then current dividend period
to the redemption date, with any bank or trust company in Cleveland, Ohio,
or New York, New York, having capital and surplus of not less than
$100,000,000, named in such notice and direct that there be paid to the
respective holders of the Noncumulative Shares so to be redeemed amounts
equal to the redemption price of the Noncumulative Shares so to be redeemed
together with such accrued and unpaid dividends thereon for the then
current dividend period, on surrender of the share certificate or
certificates held by such holders; and upon the deposit of such notice in
the mail and the making of such deposit of money with such bank or trust
company, such holders shall cease to be shareholders with respect to such
shares; and from and after the time such notice shall have been so
deposited and such deposit of money shall have been so made, such holders
shall have no rights or claim against the Corporation with respect to such
shares, except only the right to receive such money from such bank or trust
company without interest or to exercise before the redemption date any
unexpired privileges of conversion. In the event less than all of the
outstanding Noncumulative Shares are to be redeemed, the Corporation shall
select by lot the shares so to be redeemed in such manner as shall be
prescribed by the Board of Directors.
(2) If the holders of Noncumulative Shares which have been called
for redemption shall not within six years after such deposit claim the
amount deposited for the redemption thereof, any such bank or trust
company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company and the Corporation
shall be relieved of all responsibility in respect thereof and to such
holders.
(c) Any Noncumulative Shares which are (1) redeemed by the Corporation
pursuant to the provisions of this Section, (2) purchased and delivered in
satisfaction of any sinking fund requirements provided for shares of such
series, (3) converted in accordance with the express terms thereof, or (4)
otherwise acquired by the Corporation, shall resume the status of
authorized but unissued Noncumulative Shares without serial designation.
(d) Except in connection with the exercise of the Corporation's rights
pursuant to Section (d) of Item VIII of this Division A, Section 4(d) of
Division B or any similar Section hereafter contained in these Amended and
Restated Articles of Incorporation, as amended, with respect to any other
class or series of capital stock hereafter created or authorized, the
Corporation may not purchase or redeem (for sinking fund purposes or
otherwise) of less than all of the Noncumulative Shares then outstanding
except in accordance with a stock purchase offer made to all holders of
record of Noncumulative Shares, unless all dividends on all Noncumulative
Shares then outstanding for the then current dividend period shall have
been declared and paid or funds therefor set apart and all accrued sinking
fund obligations applicable thereto shall have been complied with.
Section 4. Liquidation.
(a) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of
Noncumulative Shares of any series shall be entitled to receive in full out
of the assets of the Corporation, including its capital, before any amount
shall be paid or distributed among the holders of the Common Shares or any
other shares ranking junior to the Noncumulative Shares, the amounts fixed
with respect to shares of such series in accordance with Section 1 of this
Item VI, plus an amount equal to all dividends accrued and unpaid thereon
for the then current dividend period to the date of payment of the amount
due pursuant to such liquidation, dissolution or winding up of the affairs
of the Corporation. In the event the net assets of the Corporation legally
available therefor are insufficient to permit the payment upon all
outstanding Class A Shares, Class B Shares, Class C Shares, Class D Shares,
Class E Shares and Noncumulative Shares of the full
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preferential amount to which they are respectively entitled, then such net
assets shall be distributed ratably upon all outstanding Noncumulative
Shares in proportion to the full preferential amount to which each such
share is entitled.
(2) After payment to the holders of Noncumulative Shares of the
full preferential amounts as aforesaid, the holders of Noncumulative
Shares, as such, shall have no right or claim to any of the remaining
assets of the Corporation.
(b) The merger or consolidation of the Corporation into or with any
other Corporation, the merger of any other Corporation into it, or the
sale, lease or conveyance of all or substantially all the assets of the
Corporation, shall not be deemed to be a dissolution, liquidation or
winding up for the purposes of this Section.
Section 5. Voting.
(a) The holders of Noncumulative Shares shall have no voting rights,
except as provided in this Section or required by law.
(b) (1) If, and so often as, the Corporation shall not have fully
paid, or shall not have declared and set aside a sum sufficient for the
payment of, dividends on any series of Noncumulative Shares at the time
outstanding, for a number of consecutive dividend payment periods which in
the aggregate contain at least 540 days, the holders of such Noncumulative
Shares, voting separately as a class, together with all Class A Shares,
Class B Shares, Class C Shares, Class D Shares and Class E Shares upon
which like voting rights have been conferred and are exercisable, shall be
entitled to elect, as herein provided, two members of the Board of
Directors of the Corporation; provided, however, that the holders of such
Noncumulative Shares shall not exercise such special class voting rights
except at meetings of such shareholders for the election of directors at
which the holders of not less than 50% of such Noncumulative Shares are
present in person or by proxy; and provided further, that the special class
voting rights provided for in this paragraph when the same shall have
become vested shall remain so vested until the Corporation shall have fully
paid, or shall have set aside a sum sufficient for the payment of,
dividends on such Noncumulative Shares then outstanding for a number of
consecutive dividend payment periods which in the aggregate contain at
least 360 days, whereupon the holders of such Noncumulative Shares shall be
divested of their special class voting rights in respect of subsequent
elections of directors, subject to the revesting of such special class
voting rights in the event above specified in this paragraph.
(2) In the event of default entitling holders of Noncumulative
Shares to elect two directors as specified in paragraph (1) of this
Subsection, a special meeting of such holders for the purpose of
electing such directors shall be called by the Secretary of the
Corporation upon written request of, or may be called by, the holders of
record of at least 10% of the Noncumulative Shares upon which such
default in the payment of dividends exists and notice thereof shall be
given in the same manner as that required for the annual meeting of
shareholders; provided, however, that the Corporation shall not be
required to call such special meeting if the annual meeting of
shareholders shall be called to be held within 90 days after the date of
receipt of the foregoing written request from the holders of
Noncumulative Shares. At any meeting at which such holders of
Noncumulative Shares shall be entitled to elect directors, holders of
50% of such Noncumulative Shares, present in person or by proxy, shall
be sufficient to constitute a quorum, and the vote of the holders of a
majority of such shares so present at any such meeting at which there
shall be such a quorum shall be sufficient to elect the members of the
Board of Directors which such holders of Noncumulative Shares are
entitled to elect as herein provided. Notwithstanding any provision of
these Amended and Restated Articles of Incorporation, as amended, or the
Code of Regulations of the Corporation or any action taken by the
holders of any class of shares fixing the number of directors of the
Corporation, the two directors who may be elected by such holders of
Noncumulative Shares pursuant to this Subsection shall serve in addition
to any other directors then in office or proposed to be elected
otherwise than pursuant to this Subsection. Nothing in this Subsection
shall prevent any change otherwise permitted in the total number of or
classifications of directors of the Corporation nor require the
resignation of any director elected otherwise than pursuant to this
Subsection. Notwithstanding any
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classification of the other directors of the Corporation, the two
directors elected by such holders of Noncumulative Shares shall be
elected annually for terms expiring at the next succeeding annual
meeting of shareholders.
(3) Upon any divesting of the special class voting rights of the
holders of the Noncumulative Shares in respect of elections of directors
as provided in this Subsection, the terms of office of all directors
then in office elected by such holders shall terminate immediately
thereupon. If the office of any director elected by such holders voting
as a class becomes vacant by reason of death, resignation, removal from
office or otherwise, the remaining director elected by such holders
voting as a class may elect a successor who shall hold office for the
unexpired term in respect of which such vacancy occurred.
(c) If at any time when the holders of Noncumulative Shares are
entitled to elect directors pursuant to the foregoing provisions of this
Section the holders of any Class A Shares, Class B Shares, Class C Shares,
Class D Shares and Class E Shares, are entitled to elect directors pursuant
hereto by reason of any default in the payment of dividends thereon, then
the voting rights of the Class A Shares, the Class B Shares, the Class C
Shares, the Class D Shares, the Class E Shares and Noncumulative Shares
then entitled to vote shall be combined (with class of shares having a
number of votes proportional to the aggregate liquidation preference of its
outstanding shares). In such case, the holders of Noncumulative Shares and
of all such other shares then entitled so to vote, voting as a class, shall
elect such directors. If the holders of any such other shares have elected
such directors prior to the happening of the default or event permitting
the holders of Noncumulative Shares to elect directors, or prior to a
written request for the holding of a special meeting being received by the
Secretary of the Corporation as required above, then a new election shall
be held with all such other shares and the Noncumulative Shares voting
together as a single class for such directors, resulting in the termination
of the term of such previously elected directors upon the election of such
new directors.
(d) The affirmative vote of the holders of at least two-thirds of the
Noncumulative Shares at the time outstanding, voting separately as a class,
given in person or by proxy either in writing or at a meeting called for
the purpose, shall be necessary to effect either of the following:
(1) Any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of the Amended and
Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially
the preferences or voting or other rights of the holders of
Noncumulative Shares which are set forth in these Amended and Restated
Articles of Incorporation, as amended; provided, however, neither the
amendment of these Amended and Restated Articles of Incorporation, as
amended, so as to authorize, create or change the authorized or
outstanding number of Noncumulative Shares or of any shares ranking on a
parity with or junior to the Noncumulative Shares nor the amendment of
the provisions of the Code of Regulations so as to change the number or
classification of directors of the Corporation shall be deemed to affect
adversely and materially preferences or voting or other rights of the
holders of Noncumulative Shares; or
(2) The authorization, creation or increase in the authorized
number of any shares, or any security convertible into shares, in either
case ranking prior to such Noncumulative Shares.
(e) In the event, and only to the extent, that (1) Noncumulative
Shares are issued in more than one series and (2) Ohio law permits the
holders of a series of a class of capital stock to vote separately as a
class, the affirmative vote of the holders of at least two-thirds of each
series of the Noncumulative Shares at the time outstanding, voting
separately as a class, given in person or by proxy either in writing or at
a meeting called for the purpose of voting on such matters, shall be
required for any amendment, alteration or repeal, whether by merger,
consolidation or otherwise, of any of the provisions of these Amended and
Restated Articles of Incorporation, as amended, or of the Code of
Regulations of the Corporation which affects adversely and materially the
preferences or voting or other rights of the holders of such series which
are set forth in these Amended and Restated Articles of Incorporation, as
amended; provided, however, neither the amendment of these Amended and
Restated Articles of Incorporation, as amended,
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so as to authorize, create or change the authorized or outstanding number
of Noncumulative Shares or of any shares remaining on a parity with or
junior to the Noncumulative Shares nor the amendment of the provisions of
the Code of Regulations so as to change the number or classification of
directors of the Corporation shall be deemed to affect adversely and
materially preferences or voting or other rights of the holder of such
series.
VII. Definitions. For the purposes of this Division:
(a) Whenever reference is made to shares "ranking prior to" Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares, such reference shall mean and include all shares of
the Corporation in respect of which the rights of the holders thereof as to
the payment of dividends or as to distributions in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation are given preference over the rights of the holders of Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares, as the case may be;
(b) Whenever reference is made to shares "on a parity with" Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares, such reference shall mean and include all shares of
the Corporation in respect of which the rights of the holders thereof as to
the payment of dividends or as to distributions in the event of a voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation rank equally (except as to the amounts fixed therefor) with the
rights of the holders of Class A Shares, Class B Shares, Class C Shares,
Class D Shares, Class E Shares or Noncumulative Shares, as the case may be;
and
(c) Whenever reference is made to shares "ranking junior to" Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares, such reference shall mean and include all shares of
the Corporation other than those defined under Subsections (a) and (b) of
this Section as shares "ranking prior to" or "on a parity with" Class A
Shares, Class B Shares, Class C Shares, Class D Shares, Class E Shares or
Noncumulative Shares, as the case may be.
VIII. Restrictions on Transfer to Preserve Tax Benefit; Shares Subject to
Redemption.
(a) Definitions. For the purposes of this Item VIII of this Division A
of this Article FOURTH, the following terms shall have the following
meanings:
"Beneficial Ownership" shall mean ownership of Preferred Shares by a
Person who would be treated as an owner of such Preferred Shares either
directly or constructively through the application of Section 544 of the
Code, as modified by Section 856(h) of the Code. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have the
correlative meanings.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Constructive Ownership" shall mean ownership of Preferred Shares by a
Person who would be treated as an owner of such Preferred Shares either
directly or constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"Excess Preferred Shares" shall mean any Preferred Shares (i) acquired
or proposed to be acquired by any Person pursuant to a Transfer to the
extent that, if effective, such Transfer would result in the transferee
either Beneficially Owning Preferred Shares or Constructively Owning
Preferred Shares in excess of the Ownership Limit, or (ii) which are the
subject of a Transfer that, if effective, which would result in the
Corporation being "closely held" within the meaning of Section 856(h) of
the Code.
"Market Price" shall mean, with respect to any series of any class of
Preferred Shares, the last reported sales price of such series reported on
the New York Stock Exchange on the trading day immediately preceding the
relevant date or, if shares of such series are not then traded on the New
York Stock Exchange, the last reported sales price of shares of such series
on the trading day immediately preceding the relevant date as reported on
any exchange or quotation system over which the shares of
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such series may be traded, or if shares of such series are not then traded
over any exchange or quotation system, then the market price of shares of
such series on the relevant date as determined in good faith by the Board
of Directors of the Corporation.
"Ownership Limit" shall mean, with respect to each series of each
class of Preferred Shares, 9.8% of the outstanding shares of such series.
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code, an
association, a private foundation within the meaning of Section 509(a) of
the Code, a joint stock company, other entity or a group as that term is
used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; provided, however, that a "Person" does not mean an
underwriter which participates in a public offering of Preferred Shares,
for a period of 35 days following the purchase by such underwriter of such
Preferred Shares.
"Preferred Shares" shall mean, collectively, Class A Shares, Class B
Shares, Class C Shares, Class D Shares, Class E Shares and Noncumulative
Shares.
"REIT" shall mean a Real Estate Investment Trust under Section 856 of
the Code.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Preferred Shares (including, without limitation, (i)
the granting of any option or entering into any agreement for the sale,
transfer or other disposition of Preferred Shares or (ii) the sale,
transfer, assignment or other disposition of any securities or rights
convertible into or exchangeable for Preferred Shares), whether voluntary
or involuntary, whether of record or beneficially and whether by operation
of law or otherwise.
(b) Restrictions on Transfers.
(i) Except as provided in Section (i) of this Item VIII of this
Division A of this Article FOURTH, no Person shall Beneficially Own or
Constructively Own shares of any series of any class of Preferred Shares
in excess of the Ownership Limit applicable to such series.
(ii) Except as provided in Section (i) of this Item VIII of this
Division A of this Article FOURTH, any Transfer that, if effective,
would result in any Person Beneficially Owning shares of any series of
any class of Preferred Shares in excess of the Ownership Limit
applicable to such series shall be void ab initio as to the Transfer of
such Preferred Shares which would be otherwise Beneficially Owned by
such Person in excess of such Ownership Limit, and the intended
transferee shall acquire no rights in such Preferred Shares.
(iii) Except as provided in Section (i) of this Item VIII of this
Division A of this Article FOURTH, any Transfer that, if effective,
would result in any Person Constructively Owning shares of any series of
any class of Preferred Shares in excess of the Ownership Limit
applicable to such series shall be void ab initio as to the Transfer of
such Preferred Shares which would be otherwise Constructively Owned by
such Person in excess of such amount, and the intended transferee shall
acquire no rights in such Preferred Shares.
(iv) Notwithstanding any other provisions contained in this Item
VIII, any Transfer (whether or not such Transfer is the result of a
transaction entered into through the facilities of the New York Stock
Exchange) or other event that, if effective, would result in the
Corporation being "closely held" within the meaning of Section 856(h) of
the Code, or would otherwise result in the Corporation failing to
qualify as a REIT (including, but not limited to, a Transfer or other
event that would result in the Corporation owning (directly or
Constructively) an interest in a tenant that is described in Section
856(d)(2)(B) of the Code if the income derived by the Corporation from
such tenant would cause the Corporation to fail to satisfy any of the
gross income requirement of Section 856(c) of the Code) shall be void ab
initio as to the Transfer of the Preferred Shares or other event which
would cause the Corporation to be "closely held" within the meaning of
Section 856(h) of the Code or would otherwise result in the Corporation
failing to qualify as a REIT; and the intended
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transferee or owner or Constructive or Beneficial Owner shall acquire or
retain no rights in such Preferred Shares.
(v) For purposes of construing the foregoing provisions, any
attempt to transfer Preferred Shares in violation of the Ownership Limit
applicable to the series of the class of such Preferred Shares (as such
Ownership Limit may be modified by the Board of Directors pursuant to
Section (h) of Item VIII) shall be construed as causing such Preferred
Shares to be transferred by operation of law to the Corporation as
trustee of a trust for the exclusive benefit of the person or persons to
whom such Preferred Shares can ultimately be transferred without
violating the Ownership Limit and any Excess Preferred Shares while held
in such trust shall not have any voting rights, shall not be considered
for purposes of any shareholder vote or for determining a quorum for
such a vote, and shall not be entitled to any dividends or other
distributions.
(c) Remedies for Breach. If the Board of Directors or its designees
shall at any time determine in good faith that a Transfer has taken place
in violation of Section (b) of Item VIII of this Division A of this Article
FOURTH or that a Person intends to acquire or has attempted to acquire
beneficial ownership (determined without reference to any rules of
attribution), Beneficial Ownership or Constructive Ownership of any
Preferred Shares of the Corporation in violation of Section (b) of Item
VIII of this Division A of this Article FOURTH, or that any such Transfer,
intended or attempted acquisition or acquisition would jeopardize the
status of the Corporation as a REIT under the Code, the Board of Directors
or its designees shall take such actions as it deems advisable to refuse to
give effect or to prevent such Transfer, including, but not limited to,
refusing to give effect to such Transfer on the books of the Corporation or
instituting proceedings to enjoin such Transfer and, in addition,
exercising its rights under Section (d) of Item VIII of this Division A of
Article FOURTH.
(d) Purchase Right in Excess Preferred Shares. Beginning on the date
of the occurrence of a Transfer which, if consummated, in the good faith
judgment of the Board of Directors of the Corporation, could result in
Excess Preferred Shares the Excess Preferred Shares, subject to such
transfer shall be deemed to have been offered for sale to the Corporation,
or its designee, at a price per share equal to the lesser of (i) the price
per share in the transaction that created such Excess Preferred Shares (or,
in the case of a devise or gift, the Market Price at the time of such
devise or gift) and (ii) the Market Price on the date the Corporation, or
its designee, accepts such offer. The Corporation shall have the right to
accept such offer for a period of 90 days after the later of (i) the date
of such Transfer and (ii) if the Corporation does not receive a notice of
such Transfer pursuant to Section (e) of Item VIII of this Division A of
this Article FOURTH, the date the Board of Directors determines in good
faith that such Transfer has occurred. Prompt payment of the purchase price
shall be made in such reasonable manner as may be determined by the
Corporation. From and after the date fixed for purchase by the Corporation,
and so long as payment of the purchase price for the Excess Preferred
Shares to be so purchased shall have been made or duly provided for, the
holder of any Excess Preferred Shares so called for purchase shall cease to
be entitled to dividends, distributions, voting rights and other benefits
with respect to such Excess Preferred Shares, excepting only the right to
payment of the purchase price fixed as aforesaid. Any dividend or
distribution paid to a proposed transferee of Excess Preferred Shares prior
to the discovery by the Corporation that the Excess Preferred Shares have
been transferred in violation of Section (b) of Item VIII of this Division
A of this Article FOURTH shall be repaid to the Corporation upon demand. If
the foregoing provisions are determined to be void or invalid by virtue of
any legal decision, statute, rule or regulation, then the intended
transferee of such Excess Preferred Shares shall be deemed, at the option
of the Corporation, to have acted as agent on behalf of the Corporation in
acquiring such Excess Preferred Shares and to hold such Excess Preferred
Shares on behalf of the Corporation.
(e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire Preferred Shares or other securities in violation of
subparagraph (b) of this Item VIII, or any Person who owns or will own
Excess Preferred Shares as a result of an event under subparagraph (b) of
this Item VIII, shall immediately give written notice to the Corporation of
such event and shall provide to the Corporation such other information as
the Corporation may request in order to determine the effect, if any, of
such Transfer or attempted Transfer or other event on the Corporation's
status as a REIT.
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(f) Owners Required to Provide Information. From and after the date of
the Initial Public Offering:
(i) every Beneficial Owner of more than 5.0% (or such other
percentage, between 0.5% and 5.0%, as provided in the regulations
promulgated pursuant to the Code) of the outstanding Preferred Shares of
the Corporation shall, within 30 days after January 1 of each year, give
written notice to the Corporation stating the name and address of such
Beneficial Owner, the number of shares Beneficially Owned, and
description of how such shares are held. Each such Beneficial Owner
shall provide to the Corporation such additional information as the
Corporation may request in order to determine the effect, if any, of
such Beneficial Ownership on the Corporation's status as a REIT.
(ii) each Person who is a Beneficial Owner or Constructive Owner of
Preferred Shares and each Person (including the shareholder of record)
who is holding Preferred Shares for a Beneficial Owner or Constructive
Owner shall provide to the Corporation such information that the
Corporation may request, in good faith, in order to determine the
Corporation's status as a REIT.
(g) Remedies Not Limited. Nothing contained in this Division A of this
Article FOURTH shall limit the authority of the Board of Directors to take
such other action as it deems necessary or advisable to protect the
Corporation and the interests of its shareholders by preservation of the
Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application of any
of the provisions of Item VIII of this Division A of this Article FOURTH,
including any definition contained in Section (a) of Item VIII, the Board
of Directors shall have the power to determine the application of the
provisions of this Item VIII with respect to any situation based on the
facts known to it.
(i) Exceptions.
(i) Subject to Section (b)(iv) of this Item VIII of this Division
A, the Board of Directors may exempt a Person from the Ownership Limit
applicable to a series of a class of Preferred Shares if such Person is
not an individual (other than pension plans described in Section
856(h)(3)) for purposes of Section 542(a)(2) of the Code if the Board of
Directors obtains such representations and undertakings from such Person
as are reasonably necessary to ascertain that no individual's Beneficial
Ownership of such Preferred Shares will violate the Ownership Limit, and
agrees that any violation or attempted violation will result in such
Preferred Shares in excess of the Ownership Limit being subject to
repurchase by the Corporation as set forth in Section (d) of Item VIII
of this Division A of this Article FOURTH.
(ii) The Board of Directors may exempt a Person from the limitation
on such Person Constructively Owning Preferred Shares in excess of the
Ownership Limit applicable to a series of a class of such Preferred
Shares if such Person does not own and represents that it will not own,
directly or constructively (by virtue of the application of Section 318
of the Code, as modified by Section 856(d)(5) of the Code), more than a
9.8% interest (as set forth in Section 856(d)(2)(B)) in a tenant of any
real property owned or leased by the Corporation, if the Board of
Directors obtains such representations and undertakings from such Person
as are reasonably necessary to ascertain this fact and agrees that any
violation or attempted violation will result in such Preferred Shares in
excess of the Ownership Limit being deemed to be Excess Preferred Shares
and subject to repurchase by the Corporation as set forth in Section (d)
of Item VIII of this Division A of this Article FOURTH.
IX. Legend. Each certificate for Preferred Shares shall bear the following
legend:
"The Preferred Shares represented by this certificate are subject to
restrictions on transfer for the purpose of the corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. Subject to certain provisions of the Corporation's Articles of
Incorporation, no Person may Beneficially Own or Constructively Own shares of
any series of any class of Preferred Shares in excess of 9.8% of the outstanding
Preferred Shares of such series. Any Person who attempts to Beneficially Own or
Constructively Own shares of any series of any class of Preferred Shares in
excess of the above limitations must immediately notify the Corporation. All
capitalized terms in this legend have the meanings
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defined in the Corporation's Articles of Incorporation, a copy of which,
including the restrictions on transfer, will be sent without charge to each
shareholder who so requests. If the restrictions on transfer are violated,
certain of the Preferred Shares represented hereby may be subject to repurchase
by the Corporation on the terms and conditions set forth in the Corporation's
Articles of Incorporation.
DIVISION B
Subject to the terms of the Class A Cumulative Preferred Shares, the Class
B Cumulative Preferred Shares, the Class C Cumulative Preferred Shares, the
Class D Cumulative Preferred Shares, the Class E Cumulative Preferred Shares and
the Noncumulative Preferred Shares, the Common Shares shall have the following
express terms:
Section 1. Dividend Rights. The holders of Common Shares shall be entitled
to receive, when, as and if declared by the Board of Directors of the
Corporation, out of the assets of the Corporation which are by law available
therefor, dividends or distributions payable in cash, in property or in
securities of the Corporation.
Section 2. Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of, or any distribution of
the assets of, the Corporation, each holder of Common Shares shall be entitled
to receive, ratably with each other holder of Common Shares, that portion of the
assets of the Corporation available for distribution to its shareholders as the
number of Common Shares held by such holder bears to the total number of Common
Shares then outstanding.
Section 3. Voting Rights. The holders of Common Shares shall be entitled to
vote on all matters (for which holders of Common Shares shall be entitled to
vote thereon) at all meetings of the shareholders of the Corporation, and shall
be entitled to one vote for each Common Share entitled to vote at such meeting.
Section 4. Restrictions on Transfer to Preserve Tax Benefit; Common Shares
Subject to Redemption.
(a) Definitions. For the purposes of this Section 4 of this Division B
of this Article FOURTH, the following terms shall have the following
meanings:
"Beneficial Ownership" shall mean ownership of Common Shares by a
Person who would be treated as an owner of such Common Shares either
directly or constructively through the application of Section 544 of the
Code, as modified by Section 856(h)(1)(B) of the Code. The terms
"Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have
the correlative meanings.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Constructive Ownership" shall mean ownership of Common Shares by a
Person who would be treated as an owner of such Common Shares either
directly or Constructively through the application of Section 318 of the
Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive
Owner," "Constructively Owns" and "Constructively Owned" shall have the
correlative meanings.
"Excess Shares" shall mean any Common Shares (i) acquired or proposed
to be acquired by any Person (other than an Existing Holder) pursuant to a
Transfer to the extent that, if effective, such Transfer would result in
the transferee either (A) Beneficially Owning Common Shares in excess of
the Ownership Limit or (B) Constructively Owning Common Shares in excess of
the Related Party Limit, (ii) acquired or proposed to be acquired by an
Existing Holder pursuant to a Transfer to the extent that, if effective,
such Transfer would result in such Existing Holder Beneficially Owning
Common Shares in excess of the Existing Holder Limit for such Existing
Holder, or (iii) which are the subject of a Transfer that, if effective,
which would result in (A) the Common Shares being owned by fewer than 100
Persons (determined without reference to any rules of attribution), or (B)
the Corporation being "closely held" within the meaning of Section 856(h)
of the Code.
"Existing Holder" shall mean (i) Bert L. Wolstein, (ii) Scott A.
Wolstein, (iii) James A. Schoff, and (iv) any Person to whom an Existing
Holder Transfers Beneficial Ownership of Common Shares causing such
transferee to Beneficially Own Common Shares in excess of the Ownership
Limit.
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<PAGE> 39
"Existing Holder Limit" (i) for any Existing Holder who is an Existing
Holder by virtue of clause (i), (ii) or (iii) of the definition thereof,
shall mean, initially, the percentage of the outstanding Common Shares
Beneficially Owned by such Existing Holder upon the consummation of the
Initial Public Offering, and after any adjustment pursuant to Section
(4)(i) of this Division B of this Article FOURTH, shall mean such
percentage of the outstanding Common Shares as so adjusted; and (ii) for
any Existing Holder who becomes an Existing Holder by virtue of clause (iv)
of the definition thereof, shall mean, initially, the percentage of the
outstanding Common Shares Beneficially Owned by such Existing Holder at the
time that such Existing Holder becomes an Existing Holder, and after any
adjustment pursuant to Section 4(i) of this Division B of this Article
FOURTH, shall mean such percentage of the outstanding Common Shares as so
adjusted. From and after the date of the Initial Public Offering, the
secretary of the Corporation shall maintain and, upon request, make
available to each Existing Holder, a schedule which sets forth the then
current Existing Holder Limits for each Existing Holder.
"Initial Public Offering" means the sale of Common Shares pursuant to
the Corporation's first effective registration statement for such Common
Shares filed under the Securities Act of 1933, as amended.
"Market Price" shall mean the last reported sales price of Common
Shares reported on the New York Stock Exchange on the trading day
immediately preceding the relevant date or, if the Common Shares are not
then traded on the New York Stock Exchange, the last reported sales price
of the Common Shares on the trading day immediately preceding the relevant
date as reported on any exchange or quotation system over which the Common
Shares may be traded, or if the Common Shares are not then traded over any
exchange or quotation system, then the market price of the Common Shares on
the relevant date as determined in good faith by the Board of Directors of
the Corporation.
"Ownership Limit" shall mean 5.0% of the outstanding Common Shares of
the Corporation.
"Person" shall mean an individual, corporation, partnership, estate,
trust (including a trust qualified under Section 401(a) or 501(c)(17) of
the Code), a portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code, an
association, a private foundation within the meaning of Section 509(a) of
the Code, a joint stock company, other entity or a group as that term is
used for purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended; provided, however, that a "Person" does not mean an
underwriter which participates in a public offering of the Common Shares,
for a period of 35 days following the purchase by such underwriter of the
Common Shares.
"REIT" shall mean a Real Estate Investment Trust under Section 856 of
the Code.
"Related Party Limit" shall mean 9.8% of the outstanding Common Shares
of the Corporation.
"Transfer" shall mean any sale, transfer, gift, assignment, devise or
other disposition of Common Shares (including, without limitation, (i) the
granting of any option or entering into any agreement for the sale,
transfer or other disposition of Common Shares or (ii) the sale, transfer,
assignment or other disposition of any securities or rights convertible
into or exchangeable for Common Shares), whether voluntary or involuntary,
whether of record or beneficially and whether by operation of law or
otherwise.
(b) Restrictions on Transfers.
(i) Except as provided in Section 4(i) of this Division B of this
Article FOURTH, from and after the date of the Initial Public Offering,
no Person (other than an Existing Holder) shall Beneficially Own Common
Shares in excess of the Ownership Limit and no Existing Holder shall
Beneficially Own Common Shares in excess of the Existing Holder Limit
for such Existing Holder.
(ii) Except as provided in Section 4(i) of this Division B of this
Article FOURTH, from and after the date of the Initial Public Offering,
any Transfer that, if effective, would result in any Person (other than
an Existing Holder) Beneficially Owning Common Shares in excess of the
Ownership Limit shall be void ab initio as to the Transfer of such
Common Shares which would be otherwise
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Beneficially Owned by such Person in excess of the Ownership Limit, and
the intended transferee shall acquire no rights in such Common Shares.
(iii) Except as provided in Section 4(i) of this Division B of this
Article FOURTH, from and after the date of the Initial Public Offering,
any Transfer that, if effective, would result in any Existing Holder
Beneficially Owning Common Shares in excess of the applicable Existing
Holder Limit shall be void ab initio as to the Transfer of such Common
Shares which would be otherwise Beneficially Owned by such Existing
Holder in excess of the applicable Existing Holder Limit, and such
Existing Holder shall acquire no rights in such Common Shares.
(iv) Except as provided in Section 4(i) of this Division B of this
Article FOURTH, from and after the date of the Initial Public Offering,
any Transfer that, if effective, would result in any Person
Constructively Owning Common Shares in excess of the Related Party Limit
shall be void ab initio as to the Transfer of such Common Shares which
would be otherwise Constructively Owned by such Person in excess of such
amount, and the intended transferee shall acquire no rights in such
Common Shares.
(v) Except as provided in Section 4(i) of this Division B of this
Article FOURTH, from and after the date of the Initial Public Offering,
any Transfer that, if effective, would result in the Common Shares being
beneficially owned by less than 100 Persons (determined without
reference to any rules of attribution) shall be void ab initio as to the
Transfer of such Common Shares which would be otherwise beneficially
owned by the transferee, and the intended transferee shall acquire no
rights in such Common Shares.
(vi) From and after the date of the Initial Public Offering, any
Transfer that, if effective, would result in the Corporation being
"closely held" within the meaning of Section 856(h) of the Code shall be
void ab initio as to the Transfer of the Common Shares which would cause
the Corporation to be "closely held" within the meaning of Section
856(h) of the Code, and the intended transferee shall acquire no rights
in such Common Shares.
(c) Remedies for Breach. If the Board of Directors or its designees
shall at any time determine in good faith that a Transfer has taken place
in violation of Section 4(b) of this Division B of this Article FOURTH or
that a Person intends to acquire or has attempted to acquire beneficial
ownership (determined without reference to any rules of attribution),
Beneficial Ownership or Constructive Ownership of any Common Shares of the
Corporation in violation of Section 4(b) of this Division B of this Article
FOURTH, or that any such Transfer, intended or attempted acquisition or
acquisition would jeopardize the status of the Corporation as a REIT under
the Code, the Board of Directors or its designees shall take such actions
as it deems advisable to refuse to give effect or to prevent such Transfer,
including, but not limited to, refusing to give effect to such Transfer on
the books of the Corporation or instituting proceedings to enjoin such
Transfer and, in addition, exercising its rights under Section 4(d) of this
Division B of this Article FOURTH.
(d) Purchase Right in Excess Shares. Beginning on the date of the
occurrence of a Transfer which, if consummated, in the good faith judgment
of the Board of Directors of the Corporation, could result in Excess
Shares, such Excess Shares shall be deemed to have been offered for sale to
the Corporation, or its designee, at a price per share equal to the lesser
of (i) the price per share in the transaction that created such Excess
Shares (or, in the case of a devise or gift, the Market Price at the time
of such devise or gift) and (ii) the Market Price on the date the
Corporation, or its designee, accepts such offer. The Corporation shall
have the right to accept such offer for a period of ninety days after the
later of (i) the date of such Transfer and (ii) if the Corporation does not
receive a notice of such Transfer pursuant to Section 4(e) of this Division
B of this Article FOURTH, the date the Board of Directors determines in
good faith that such Transfer has occurred. Prompt payment of the purchase
price shall be made in such reasonable manner as may be determined by the
Corporation. From and after the date fixed for purchase by the Corporation,
and so long as payment of the purchase price for the Excess Shares to be so
purchased shall have been made or duly provided for, the holder of any
Excess Shares so called for purchase shall cease to be entitled to
dividends, distributions, voting rights and other benefits with respect
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to such Excess Shares, excepting only the right to payment of the purchase
price fixed as aforesaid. Any dividend or distribution paid to a proposed
transferee of Excess Shares prior to the discovery by the Corporation that
the Excess Shares have been transferred in violation of Section 4(b) of
this Division B of this Article FOURTH shall be repaid to the Corporation
upon demand. If the foregoing provisions are determined to be void or
invalid by virtue of any legal decision, statute, rule or regulation, then
the intended transferee of such Excess Shares shall be deemed, at the
option of the Corporation, to have acted as agent on behalf of the
Corporation in acquiring such Excess Shares and to hold such Excess Shares
on behalf of the Corporation.
(e) Notice of Restricted Transfer. Any Person who acquires or intends
to acquire shares in violation of Section 4(b) of this Division B of this
Article FOURTH or any Person who is a transferee of Excess Shares shall
immediately give written notice to the Corporation of such event and shall
provide to the Corporation such other information as the Corporation may
request in order to determine the effect, if any, of such Transfer or
intended Transfer on the Corporation's status as a REIT.
(f) Owners Required to Provide Information. From and after the date of
the Initial Public Offering:
(i) every Beneficial Owner of more than 5.0% (or such other
percentage, between 0.5% and 5.0%, as provided in the regulations
promulgated pursuant to the Code) of the outstanding Common Shares of
the Corporation shall, within 30 days after January 1 of each year, give
written notice to the Corporation stating the name and address of such
Beneficial Owner, the number of shares Beneficially Owned, and
description of how such shares are held. Each such Beneficial Owner
shall provide to the Corporation such additional information as the
Corporation may request in order to determine the effect, if any, of
such Beneficial Ownership on the Corporation's status as a REIT.
(ii) each Person who is a Beneficial Owner or Constructive Owner of
Common Shares and each Person (including the shareholder of record) who
is holding Common Shares for a Beneficial Owner or Constructive Owner
shall provide to the Corporation such information that the Corporation
may request, in good faith, in order to determine the Corporation's
status as a REIT.
(g) Remedies Not Limited. Nothing contained in this Division B of
this Article FOURTH shall limit the authority of the Board of Directors to
take such other action as it deems necessary or advisable to protect the
Corporation and the interests of its shareholders by preservation of the
Corporation's status as a REIT.
(h) Ambiguity. In the case of an ambiguity in the application of any
of the provisions of Section 4 of this Division B of this Article FOURTH,
including any definition contained in Section 4(a), the Board of Directors
shall have the power to determine the application of the provisions of this
Section 4 with respect to any situation based on the facts known to it.
(i) Modification of Existing Holder Limits. Subject to the provisions
of Section 4(k) of this Division B, the Existing Holder Limits may be
modified as follows:
(i) Subject to the limitations provided in Section 4(k), any
Existing Holder may Transfer Common Shares to a Person who is already an
Existing Holder up to the number of Common Shares Beneficially Owned by
such transferor Existing Holder in excess of the Ownership Limit. Any
such Transfer will decrease the Existing Holder Limit for such
transferor Existing Holder and increase the Existing Holder Limit for
such transferee Existing Holder by the percentage of the outstanding
Common Shares so Transferred. The transferor Existing Holder shall give
the Board of Directors of the Corporation prior written notice of any
such Transfer.
(ii) Any grant of a stock option pursuant to a stock option plan
approved by the shareholders of the Corporation shall increase the
Existing Holder Limit for the affected Existing Holder to the maximum
extent possible under Section 4(k) to permit the Beneficial Ownership of
the Common Shares issuable upon the exercise of such stock option.
(iii) The Board of Directors may reduce the Existing Holder Limit
for any Existing Holder, with the written consent of such Existing
Holder, after any Transfer permitted in this Section 4 by
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such Existing Holder to a Person other than an Existing Holder or after
the lapse (without exercise) of a stock option described in Section
4(i)(ii).
(iv) Any Common Shares issued to an Existing Holder pursuant to a
dividend reinvestment plan adopted by the Corporation shall increase the
Existing Holder Limit for the Existing Holder to the maximum extent
possible under Section 4(k) to permit the Beneficial Ownership of such
Common Shares.
(j) Modification of Ownership Limit. Subject to the limitations
provided in Section 4(k) of this Division B, the Board of Directors may
from time to time increase the Ownership Limit.
(k) Limitations on Modifications. Notwithstanding any other provision
of this Division B of this Article FOURTH:
(i) Neither the Ownership Limit nor any Existing Holder Limit may
be increased (nor may any additional Existing Holder Limit be created)
if, after giving effect to such increase (or creation), five Beneficial
Owners of Common Shares (including all of the then Existing Holders)
could Beneficially Own, in the aggregate, more than 49.6% of the
outstanding Common Shares.
(ii) Prior to the modification of any Existing Holder Limit or
Ownership Limit pursuant to Section 4(i) or Section 4(j) of this
Division B of this Article FOURTH, the Board of Directors of the
Corporation may require such opinions of counsel, affidavits,
undertakings or agreements as it may deem necessary or advisable in
order to determine or ensure the Corporation's status as a REIT.
(iii) No Existing Holder Limit shall be reduced to a percentage
which is less than the Ownership Limit.
(iv) The Ownership Limit may not be increased to a percentage
which is greater than 9.8%.
(v) The Related Party Limit may not be increased to a percentage
which is greater than 9.8%.
(l) Exceptions.
(i) The Board of Directors, with a ruling from the Internal
Revenue Service or an opinion of counsel, may exempt a Person from the
Ownership Limits or the Existing Holder Limits, as the case may be, if
such Person is not an individual for purposes of Section 542(a)(2) of
the Code and the Board of Directors obtains such representations and
undertakings from such Person as are reasonably necessary to ascertain
that no individual's Beneficial Ownership of such Common Shares will
violate the Ownership Limit or the applicable Existing Holder Limit, as
the case may be, and agrees that any violation or attempted violation
will result in such Common Shares in excess of 5.0% of the outstanding
Common Shares being deemed to be Excess Shares and subject to repurchase
by the Corporation as set forth in Section 4(d) of this Division B of
this Article FOURTH.
(ii) The Board of Directors, with a ruling from the Internal
Revenue Service or an opinion of counsel, may exempt a Person from the
limitation on such Person Constructively Owning Common Shares in excess
of the Related Party Limit if such Person does not own and represents
that it will not own, directly or constructively (by virtue of the
application of Section 318 of the Code, as modified by Section 856(d)(5)
of the Code), more than a 9.9% interest (as set forth in Section
856(d)(2)(B) in a tenant of any real property owned or leased by the
Corporation, and the Corporation obtains such representations and
undertakings from such Person as are reasonably necessary to ascertain
this fact and agrees that any violation or attempted violation will
result in such Common Shares in excess of 9.8% being deemed to be Excess
Shares and subject to repurchase by the Corporation as set forth in
Section 4(d) of this Division B of this Article FOURTH.
Section 5. Legend. Each certificate for Common Shares shall bear the
following legend:
"The Common Shares represented by this certificate are subject to
restrictions on transfer for the purpose of the Corporation's maintenance of its
status as a Real Estate Investment Trust under the Internal Revenue Code of
1986, as amended. Subject to certain provisions of the Corporation's Articles of
Incorporation, no
A-42
<PAGE> 43
Person may Beneficially Own Common Shares in excess of 5.0% of the outstanding
Common Shares of the Corporation (unless such Person is an Existing Holder) and
no Person (other than an Existing Holder who Constructively Owns in excess of
9.8% of the Common Shares immediately following the consummation of the Initial
Public Offering) may Constructively Own Common Shares in excess of 9.8% of the
outstanding Common Shares of the Corporation. Any Person who attempts to
Beneficially Own or Constructively Own Common Shares in excess of the above
limitations must immediately notify the Corporation. All capitalized items in
this legend have the meanings defined in the Corporation's Articles of
Incorporation, a copy of which, including the restrictions on transfer, will be
sent without charge to each shareholder who so requests. If the restrictions on
transfer are violated, certain of the Common Shares represented may be subject
to repurchase by the Corporation on the terms and conditions set forth in the
Corporation's Articles of Incorporation."
A-43
<PAGE> 1
Exhibit 3.2
RESOLVED, that Section 1 of Article II of the Company's Code of Regulations
be, and the same hereby is, deleted in its entirety and there is substituted
therefor the following:
Section 1. Number of Directors. Until changed in accordance with the
provisions of this section, the number of directors of the Corporation,
none of whom need be shareholders, shall be seven (7). The number of
directors may be fixed or changed, but in no case shall the number be fewer
than three (3) or more than fifteen (15), at any annual meeting or at any
special meeting called for that purpose by the affirmative vote of the
holders of shares entitling them to exercise a majority of the voting power
of the Corporation on such proposal. Notwithstanding the foregoing, the
aggregate number of members of the Board of Directors shall automatically
increase by the number of directors elected pursuant to Section 5(b) of
Item I, Section 5(b) of Item II, Section 5(b) of Item III, Section 5(b) of
Item IV, Section 5(b) of Item V, and/or Section 5(b) of Item VI of Division
A of Article FOURTH of the Amended and Restated Articles of Incorporation
of the Corporation, as amended, such directors to be elected and hold
office in accordance with such provisions of the Amended and Restated
Articles of Incorporation of the Corporation, as amended, notwithstanding
any other provision of this Code of Regulations.
B-1
<PAGE> 1
Exhibit 4.1
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT dated as of June 18, 1996 is among
Developers Diversified Realty Corporation, a corporation organized under the
laws of the State of Ohio (the "Borrower"), The First National Bank of Chicago,
a national banking association, and The First National Bank of Boston, a
national banking association (collectively, the "Arrangers"), the several
banks, financial institutions and other entities from time to time parties to
this Agreement (collectively, with the Arrangers, the "Lenders"), and The First
National Bank of Chicago, not individually, but as "Administrative Agent".
R E C I T A L S
A. Borrower, the lenders and the Administrative Agent have entered into a
Credit Agreement dated as of May 1, 1995 (the "Credit Agreement").
B. Borrower has requested that the Lenders agree to extend the term of the
Credit Agreement for one additional year, amend the interest rates thereunder
and make certain other modifications to the Credit Agreement and the Lenders
are willing to agree to such modifications on the terms and conditions
described herein.
C. One of the Lenders, as a result of its merger with another Lender, desires
to withdraw from the Credit Agreement and have its Commitment reallocated to
two of the remaining Lenders and Borrower and Administrative Agent are prepared
to consent to such action.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties agree as follows:
1. Article I of the Credit Agreement entitled "Definitions" is hereby amended
by amending the following definitions to read as follows:
"Consolidated Debt Service" means, for any period, (a) Consolidated Interest
Expense for such period plus (b) the aggregate amount of scheduled principal
payments of Indebtedness (excluding optional prepayments and scheduled
principal payments in respect of any Indebtedness which is not amortized
through equal periodic installments of principal and interest over the term of
such Indebtedness) required to be made during such period by the Borrower or
any of its consolidated Subsidiaries plus (c) a percentage of all such
scheduled principal payments required to be made during such period by any
Investment Affiliate on Indebtedness taken into account in calculating
Consolidated Interest Expense, equal to the greater of (x) the percentage of
the principal amount of such Indebtedness for which the Borrower or any
consolidated Subsidiary is liable and (y) the percentage ownership interest in
<PAGE> 2
such Investment Affiliate held by the Borrower and any consolidated
Subsidiaries, in the aggregate, without duplication.
"Consolidated Interest Expense" means, for any period, the sum of (a) the
amount of interest expense of the Borrower and its Subsidiaries for such period
on the aggregate principal amount of their Indebtedness, determined on a
consolidated basis in accordance with GAAP plus (b) a percentage of any accrued
or paid interest incurred on any Indebtedness of any Investment Affiliate,
whether recourse or non-recourse, equal to the percentage ownership interest in
such Investment Affiliate held by the Borrower and any consolidated
Subsidiaries, in the aggregate, provided that no expense shall be included more
than once in such calculation even if it falls within more than one of the
foregoing categories.
"Consolidated Outstanding Indebtedness" means, as of any date of
determination, the sum of (a) all Indebtedness of the Borrower and its
Subsidiaries outstanding at such date, determined on a consolidated basis in
accordance with GAAP, plus (b) a percentage of the Indebtedness of each
Investment Affiliate equal to the percentage ownership interest in such
Investment Affiliate held by the Borrower and any consolidated Subsidiaries, in
the aggregate, without duplication.
"Consolidated Secured Indebtedness", means, as of any date of determination,
the sum of (a) the aggregate principal amount of all Indebtedness of the
Borrower and its Subsidiaries outstanding at such date secured by any Lien on
the Property of Borrower or its Subsidiaries, without regard to recourse, plus
(b) the excess, if any, over $5,000,000, of the sum of (x) the aggregate
principal amount of all Senior Unsecured Indebtedness of the Subsidiaries of
the Borrower which have not furnished Subsidiary Guaranties, determined on a
consolidated basis in accordance with GAAP and (y) a percentage of the
aggregate principal amount of all Senior Unsecured Indebtedness of each
Investment Affiliate equal to the greater of (x) the percentage of such Senior
Unsecured Indebtedness for which the Borrower or any consolidated Subsidiary is
liable and (z) the percentage ownership interest in such Investment Affiliate
held by the Borrower and any consolidated Subsidiaries, in the aggregate,
without duplication.
"Facility Termination Date" means April 30, 1999.
"Investment Affiliate", means any Person in which the Borrower or any
consolidated Subsidiary, directly or indirectly, has an ownership interest,
whose financial results are not consolidated under GAAP with the financial
results of the Borrower on the consolidated financial statements of the
Borrower.
2. Section 2.4 of the Credit Agreement is hereby amended by deleting the
table contained therein and replacing it with the following:
-2-
<PAGE> 3
<TABLE>
<CAPTION>
LIBOR/CD ABR
Applicable Applicable
S&P Rating Moody's Rating Margin Margin
---------- -------------- ---------- ----------
<S> <C> <C> <C>
A- or higher A3 or higher 0.95% 0.00%
BBB+ Baa1 1.10% 0.00%
BBB- or BBB+ Baa3 or Baa2 1.25% 0.00%
Less than BBB- Less than Baa3 1.85% 0.60%
</TABLE>
3. Section 2.5 of the Credit Agreement is hereby amended by
deleting the first sentence thereof and replacing it with the following:
"The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee (the "Commitment Fee") calculated at
the rate of 0.25% per annum on the daily unborrowed portion of such Lender's
Commitment (which is equal to the daily difference between such Lender's then
outstanding Commitment and the then outstanding Loans owed to such Lender) from
the Closing Date to and including the Facility Termination Date, payable
quarterly in arrears on the last day of each calendar quarter hereafter
beginning June 30, 1995 and on the Facility Termination Date."
4. Section 6.21 of the Credit Agreement is hereby amended by
deleting clause (ii) thereof and replacing it with the following:
"(ii) Consolidated Secured Indebtedness to exceed
thirty-five percent (35%) of Consolidated Market Value;"
5. As of the effective date of this Amendment NBD Bank shall
cease to be a Lender under the Credit Agreement and NBD Bank's Commitment of
$13,000,000 shall be allocated $3,000,000 to The First National Bank of Chicago
and $10,000,000 to Bank of America Illinois, resulting in the Commitments of
the Lenders being as shown on the signature pages hereto. The Notes held by
The First National Bank of Chicago and Bank of America Illinois shall be
amended and restated as of the effective date of this Amendment to reflect such
increases as shown on Exhibits A-1 and A-2 attached hereto. All Advances by NBD
Bank which are outstanding on the effective date hereof shall be repaid by a
special Advance in such amount to be made solely by The First National Bank of
Chicago and Bank of America Illinois in proportion to their respective
increases in their Commitments on such date. All accrued interest and fees due
to NBD Bank under the Credit Agreement for the period prior to the effective
date hereof shall be paid to NBD Bank by the Borrower when due.
6. In consideration for their agreement to this Amendment, the
Borrower shall pay on the date hereof to each of the Lenders an
-3-
<PAGE> 4
upfront fee equal to one-tenth of one percent (0.10%) of their respective
Commitments on the effective date hereof.
7. This Amendment may be executed in counterparts and shall be
effective when each of the parties hereto have executed and delivered to the
Administrative Agent or its counsel one of such counterparts.
8. Except as expressly modified by this Amendment, the Credit
Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative
Agent have executed this Amendment as of the date first above written.
DEVELOPERS DIVERSIFIED REALTY CORPORATION
By:
-----------------------------
Its:
----------------------------
COMMITMENT: THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Administrative Agent
$26,000,000
By:
-----------------------------
Its:
----------------------------
COMMITMENT: THE FIRST NATIONAL BANK OF BOSTON
$23,000,000
By:
-----------------------------
Its:
----------------------------
COMMITMENT: BANK OF AMERICA ILLINOIS
$20,000,000
By:
-----------------------------
Its:
----------------------------
-4-
<PAGE> 5
COMMITMENT: BHF-BANK AKTIENGESELLSCHAFT, NEW
YORK BRANCH
$16,000,000
By:
-----------------------------
Its:
----------------------------
By:
-----------------------------
Its:
----------------------------
COMMITMENT: DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH
$16,000,000
By:
-----------------------------
Its:
----------------------------
By:
-----------------------------
Its:
----------------------------
COMMITMENT: FLEET NATIONAL BANK
$16,000,000
By:
-----------------------------
Its:
----------------------------
COMMITMENT: NIPPON CREDIT BANK, LTD.
$13,000,000
By:
-----------------------------
Its:
----------------------------
COMMITMENT: COMERICA BANK
$10,000,000
By:
-----------------------------
Its:
----------------------------
COMMITMENT: SIGNET BANK
$10,000,000
By:
-----------------------------
Its:
----------------------------
-5-
<PAGE> 6
COMMITMENT: NBD BANK
Zero By:
-----------------------------
Its:
----------------------------
The undersigned, Developers Diversified Finance Corporation and
Developers Diversified of Alabama, Inc., hereby consent to the foregoing
amendment and agree that their respective Guaranties dated as of May 1, 1995
shall continue in full force and effect.
DEVELOPERS DIVERSIFIED FINANCE
CORPORATION
By:
-----------------------------
Its:
----------------------------
DEVELOPERS DIVERSIFIED OF ALABAMA,
INC.
By:
-----------------------------
Its:
----------------------------
-6-
<PAGE> 7
EXHIBIT A-1
AMENDED AND RESTATED NOTE
(FIRST CHICAGO)
AMENDED AND RESTATED NOTE
$26,000,000.00 June 18, 1996
Developers Diversified Realty Corporation, a corporation organized
under the laws of the State of Ohio (the "Borrower"), promises to pay to the
order of THE FIRST NATIONAL BANK OF CHICAGO (the "Lender") the lesser of the
principal sum of Twenty-Six Million Dollars or the aggregate unpaid principal
amount of all Loans made by the Lender to the Borrower pursuant to Article II
of the Credit Agreement (as the same may be amended or modified, the
"Agreement") hereinafter referred to, in immediately available funds at the
main office of The First National Bank of Chicago in Chicago, Illinois, as
Agent, together with interest on the unpaid principal amount hereof at the
rates and on the dates set forth in the Agreement. The Borrower shall pay
remaining unpaid principal of and accrued and unpaid interest on the Loans in
full on the Facility Termination Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement, dated as of May 1, 1995, as amended by a
First Amendment to Credit Agreement dated as of June 18, 1996 among the
Borrower, The First National Bank of Chicago, individually and as an Arranger
and the Agent, The First National Bank of Boston, individually and as an
Arranger, and the other lenders named therein, to which Agreement, as it may be
amended from time to time, reference is hereby made for a statement of the
terms and conditions governing this Note, including the terms and conditions
under which this Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with
the meanings attributed to them in the Agreement.
This Note amends and restates in its entirety the Note dated May 1,
1995 in the maximum principal sum of $23,000,000 executed by the Borrower in
favor of the Lender.
If there is a Default under the Agreement or any other Loan Document
and Agent exercises the remedies provided under the
-7-
<PAGE> 8
Agreement and/or any of the Loan Documents for the Lenders, then in addition to
all amounts recoverable by the Agent and the Lenders under such documents,
Agent and the Lenders shall be entitled to receive reasonable attorneys fees
and expenses incurred by Agent and the Lenders in connection with the exercise
of such remedies.
Borrower and all endorsers severally waive presentment, protest and
demand, notice of protest, demand and of dishonor and nonpayment of this Note,
and any and all lack of diligence or delays in collection or enforcement of
this Note, and expressly agree that this Note, or any payment hereunder, may be
extended from time to time, and expressly consent to the release of any party
liable for the obligation secured by this Note, the release of any of the
security for this Note, the acceptance of any other security therefor, or any
other indulgence or forbearance whatsoever, all without notice to any party and
without affecting the liability of the Borrower and any endorsers hereof.
This Note shall be governed and construed under the internal laws of
the State of Illinois.
BORROWER AND LENDER, BY ITS ACCEPTANCE HEREOF, EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHT UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING
FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS NOTE AND AGREE THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A
JURY.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
-8-
<PAGE> 9
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF DEVELOPERS DIVERSIFIED REALTY CORPORATION,
DATED JUNE 18, 1996
<TABLE>
<CAPTION>
Maturity
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
- ---- --------- ----------- ---------- -------
<S> <C> <C> <C> <C>
</TABLE>
-9-
<PAGE> 10
EXHIBIT A-2
AMENDED AND RESTATED NOTE
(BANK OF AMERICA)
AMENDED AND RESTATED NOTE
$20,000,000.00 June 18, 1996
Developers Diversified Realty Corporation, a corporation organized
under the laws of the State of Ohio (the "Borrower"), promises to pay to the
order of BANK OF AMERICA ILLINOIS (the "Lender") the lesser of the principal
sum of Twenty Million Dollars or the aggregate unpaid principal amount of all
Loans made by the Lender to the Borrower pursuant to Article II of the Credit
Agreement (as the same may be amended or modified, the "Agreement") hereinafter
referred to, in immediately available funds at the main office of The First
National Bank of Chicago in Chicago, Illinois, as Agent, together with interest
on the unpaid principal amount hereof at the rates and on the dates set forth
in the Agreement. The Borrower shall pay remaining unpaid principal of and
accrued and unpaid interest on the Loans in full on the Facility Termination
Date.
The Lender shall, and is hereby authorized to, record on the schedule
attached hereto, or to otherwise record in accordance with its usual practice,
the date and amount of each Loan and the date and amount of each principal
payment hereunder.
This Note is one of the Notes issued pursuant to, and is entitled to
the benefits of, the Credit Agreement, dated as of May 1, 1995, as amended by a
First Amendment to Credit Agreement dated as of June 18, 1996 among the
Borrower, The First National Bank of Chicago, individually and as an Arranger
and the Agent, The First National Bank of Boston, individually and as an
Arranger, and the other lenders named therein, to which Agreement, as it may
be amended from time to time, reference is hereby made for a statement of the
terms and conditions governing this Note, including the terms and conditions
under which this Note may be prepaid or its maturity date accelerated.
Capitalized terms used herein and not otherwise defined herein are used with
the meanings attributed to them in the Agreement.
This Note amends and restates in its entirety the Note dated May 1,
1995 in the maximum principal sum of $10,000,000 executed by the Borrower in
favor of the Lender.
If there is a Default under the Agreement or any other Loan Document
and Agent exercises the remedies provided under the
-10-
<PAGE> 11
Agreement and/or any of the Loan Documents for the Lenders, then in addition to
all amounts recoverable by the Agent and the Lenders under such documents,
Agent and the Lenders shall be entitled to receive reasonable attorneys fees
and expenses incurred by Agent and the Lenders in connection with the exercise
of such remedies.
Borrower and all endorsers severally waive presentment, protest and
demand, notice of protest, demand and of dishonor and nonpayment of this Note,
and any and all lack of diligence or delays in collection or enforcement of
this Note, and expressly agree that this Note, or any payment hereunder, may be
extended from time to time, and expressly consent to the release of any party
liable for the obligation secured by this Note, the release of any of the
security for this Note, the acceptance of any other security therefor, or any
other indulgence or forbearance whatsoever, all without notice to any party and
without affecting the liability of the Borrower and any endorsers hereof.
This Note shall be governed and construed under the internal laws of
the State of Illinois.
BORROWER AND LENDER, BY ITS ACCEPTANCE HEREOF, EACH HEREBY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHT UNDER THIS NOTE OR ANY OTHER LOAN DOCUMENT OR RELATING THERETO OR ARISING
FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS NOTE AND AGREE THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A
JURY.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
By:
------------------------------------
Print Name:
----------------------------
Title:
---------------------------------
-11-
<PAGE> 12
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL
TO
NOTE OF DEVELOPERS DIVERSIFIED REALTY CORPORATION,
DATED JUNE 18, 1996
<TABLE>
<CAPTION>
Maturity
Principal Maturity Principal
Amount of of Interest Amount Unpaid
Date Loan Period Paid Balance
- ---- --------- ----------- ---------- -------
<S> <C> <C> <C> <C>
</TABLE>
-12-
<PAGE> 1
Exhibit 10.1
DEVELOPERS DIVERSIFIED REALTY CORPORATION
EQUITY-BASED AWARD PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Developers Diversified Realty Corporation
Equity-Based Award Plan (the "Plan") is to enable Developers Diversified Realty
Corporation (the "Company") to attract, retain and reward key employees of the
Company and strengthen the mutuality of interests between those key employees
and the Company's shareholders by offering the key employees equity or
equity-based incentives.
For purposes of the Plan, the following terms are defined as
follows:
(a) "Affiliate" means any entity (other than the Company
and any Subsidiary) that is designated by the Board as a participating
employer under the Plan.
(b) "Award" means any award of Stock Options, Share
Appreciation Rights, Restricted Shares, Deferred Shares, Share
Purchase Rights or Other Share-Based Awards under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" has the meaning set forth in
Section 11(b).
(e) "Change in Control Price" has the meaning set forth
in Section 11(d).
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(g) "Committee" means the Executive Compensation
Committee of the Board of the Company.
(h) "Company" means Developers Diversified Realty
Corporation, an Ohio corporation, or any successor corporation.
(i) "Deferred Shares" means an Award of the right to
receive Shares at the end of a specified deferral period granted
pursuant to Section 8.
(j) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.
<PAGE> 2
(k) "Disinterested Person" has the meaning set forth in
Rule 16b-3(c)(2)(i) as promulgated by the Securities and Exchange
Commission under the Exchange Act, or any successor definition adopted
by the Securities and Exchange Commission.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means, as of any date, the mean
between the highest and lowest quoted selling price, regular way, of
the Shares on that date on the New York Stock Exchange or, if no such
sale of the Shares occurs on the New York Stock Exchange (or, if the
Shares no longer trade on the New York Stock Exchange, any other
national exchange) on that date, then that mean price on the next
preceding day on which the Shares were traded. If the Shares are no
longer traded on any national exchange, then the Fair Market Value of
the Shares as of any date is the value determined for that date by the
Committee in good faith.
(n) "Incentive Stock Option" means any Stock Option
intended to be and designated as, and that otherwise qualifies as, an
"Incentive Stock Option" within the meaning of Section 422 of the Code
or any successor section thereto.
(o) "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
(p) "Other Share-Based Awards" means an Award granted
pursuant to Section 10 that is valued, in whole or in part, by
reference to, or is otherwise based on, Shares.
(q) "Outside Director" has the meaning set forth in
Section 162(m) of the Code and the regulations promulgated thereunder.
(r) "Plan" means the Developers Diversified Realty
Corporation Equity-Based Award Plan, as amended from time to time.
(s) "Potential Change in Control" has the meaning set
forth in Section 11(c).
(t) "Restricted Shares" means an Award of Shares that is
granted pursuant to Section 7 and is subject to restrictions.
-2-
<PAGE> 3
(u) "Section 16 Participant" means a participant under
the Plan who is subject to Section 16 of the Exchange Act.
(v) "Share Appreciation Right" means an Award of a right
to receive an amount from the Company that is granted pursuant to
Section 6.
(w) "Shares" means the Common Shares, without par value,
of the Company.
(x) "Stock Option" or "Option" means any option to
purchase Shares (including Restricted Shares and Deferred Shares, if
the Committee so determines) that is granted pursuant to Section 5.
(y) "Share Purchase Right" means an Award of the right to
purchase Shares that is granted pursuant to Section 9.
(z) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in that chain.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee. The
Committee shall consist of not less than three directors of the Company, all of
whom shall be Disinterested Persons and Outside Directors. Those directors
shall be appointed by the Board and shall serve as the Committee at the
pleasure of the Board. The functions of the Committee specified in the Plan
shall be exercised by the Board if and to the extent that no Committee exists
that has the authority to so administer the Plan.
The Committee shall have full power to interpret and
administer the Plan and full authority to select the individuals to whom Awards
will be granted and to determine the type and amount of any Award to be granted
to each participant, the consideration, if any, to be paid for any Award, the
timing of each Award, the terms and conditions of any Award granted under the
Plan and the terms and conditions of the related agreements that will be
entered into with participants. As to the selection of and grant of Awards to
participants who are not Section 16 Participants, the Committee may delegate
its responsibilities to members of the Company's management in any manner
consistent with applicable law.
-3-
<PAGE> 4
The Committee shall have the authority to adopt, alter and
repeal such rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto);
to direct employees of the Company or other advisors to prepare such materials
or perform such analyses as the Committee deems necessary or appropriate; and
otherwise to supervise the administration of the Plan.
Any interpretation or administration of the Plan by the
Committee, and all actions and determinations of the Committee, shall be final,
binding and conclusive on the Company, its shareholders, Subsidiaries,
Affiliates, all participants in the Plan, their respective legal
representatives, successors and assigns, and all persons claiming under or
through any of them. No member of the Board or of the Committee shall incur
any liability for any action taken or omitted, or any determination made, in
good faith in connection with the Plan.
SECTION 3. SHARES SUBJECT TO THE PLAN.
(a) Aggregate Shares Subject to the Plan. Subject to
adjustment as provided in Section 3(c), the total number of Shares
reserved and available for Awards under the Plan is 600,000. Any
Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
(b) Forfeiture or Termination of Awards of Shares. If
any Shares subject to any Award granted hereunder are forfeited or an
Award otherwise terminates or expires without the issuance of Shares,
the Shares subject to that Award shall again be available for
distribution in connection with future Awards under the Plan as set
forth in Section 3(a), unless the participant who had been awarded
those forfeited Shares or the expired or terminated Award has
theretofore received dividends or other benefits of ownership with
respect to those Shares. For purposes hereof, a participant shall not
be deemed to have received a benefit of ownership with respect to
those Shares by the exercise of voting rights, or by the accumulation
of dividends that are not realized because of the forfeiture of those
Shares or the expiration or termination of the related Award without
issuance of those Shares.
(c) Adjustment. In the event of any merger,
reorganization, consolidation, recapitalization, share dividend, share
split, combination of shares or other change in corporate structure of
the Company affecting the Shares, such substitution or adjustment
shall be made in the aggregate number of Shares reserved for issuance
under the Plan, in the number and option price of Shares subject to
outstanding options granted under the Plan in the number and purchase
and purchase price of Shares subject to outstanding Share Purchase
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Rights granted under the Plan, in the number of Share Appreciation
Rights granted under the Plan and in the number of Shares subject to
Restricted Share Awards, Deferred Share Awards and any other
outstanding Awards granted under the Plan as may be approved by the
Committee, in its sole discretion, but the number of Shares subject to
any Award shall always be a whole number. Any fractional Shares shall
be eliminated.
(d) Annual Award Limit. No participant may be granted
Stock Options or other Awards under the Plan with respect to an
aggregate of more than 100,000 Shares (subject to adjustment as
provided in Section 3(c) hereof) during any calendar year.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company, and of its
Subsidiaries and Affiliates, if any, who are responsible for or contribute to
the management, growth or profitability of the business of the Company (or of
its Subsidiaries or Affiliates, if any), are eligible to be granted Awards
under the Plan.
SECTION 5. STOCK OPTIONS.
(a) Grant. Stock Options may be granted alone, in
addition to or in tandem with other Awards granted under the Plan or
cash awards made outside the Plan. The Committee shall determine the
individuals to whom, and the time or times at which, grants of Stock
Options will be made, the number of Shares purchasable under each
Stock Option and the other terms and conditions of the Stock Options
in addition to those set forth in Sections 5(b) and 5(c). Any Stock
Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be of two types which
shall be indicated on their face: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options. Subject to Section 5(c), the Committee
shall have the authority to grant to any participant Incentive Stock
Options, Non-Qualified Stock Options or both types of Stock Options.
(b) Terms and Conditions. Options granted under the Plan
shall be evidenced by an agreement ("Option Agreements"), shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(1) Option Price. The option price per share of
Shares purchasable under a Non-Qualified Stock Option or
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an Incentive Stock Option shall be determined by the Committee
at the time of grant and shall be not less than 100% of the
Fair Market Value of the Shares at the date of grant (or, with
respect to an Incentive Stock Option, 110% of the Fair Market
Value of the Shares at the date of grant in the case of a
participant who at the date of grant owns Shares possessing
more than ten percent of the total combined voting power of all
classes of stock of the Company or its parent or Subsidiary
corporations (as determined under Sections 424(d), (e) and (f)
of the Code)).
(2) Option Term. The term of each Stock Option
shall be determined by the Committee and may not exceed ten
years from the date the Option is granted (or, with respect to
an Incentive Stock Option, five years in the case of a
participant who at the date of grant owns Shares possessing
more than ten percent of the total combined voting power of
all classes of stock of the Company or its parent or
Subsidiary corporations (as determined under Sections 424(d),
(e) and (f) of the Code)).
(3) Exercise. Stock Options shall be exercisable
at such time or times and shall be subject to such terms and
conditions as shall be determined by the Committee at or after
grant; but, except as provided in Section 5(b)(6) and Section
11, unless otherwise determined by the Committee at or after
grant, no Stock Option shall be exercisable prior to six
months and one day following the date of grant. If any Stock
Option is exercisable only in installments or only after
specified exercise dates, the Committee may waive, in whole or
in part, such installment exercise provisions, and may
accelerate any exercise date or dates, at any time at or after
grant based on such factors as the Committee shall determine,
in its sole discretion.
(4) Method of Exercise. Subject to any
installment exercise provisions that apply with respect to any
Stock Option, and the six month and one day holding period set
forth in Section 5(b)(3), that Stock Option may be exercised
in whole or in part, at any time during the Option period, by
the holder thereof giving to the Company written notice of
exercise specifying the number of Shares to be purchased.
That notice shall be accompanied by payment in full
of the Option price of the Shares for which the Option is
exercised, in cash or Shares or by check or such other
instrument as the Committee may accept. The value of each
such Share surrendered or withheld shall be 100% of
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the Fair Market Value of the Shares on the date the option is
exercised.
No Shares shall be issued on an exercise of an Option
until full payment has been made. A participant shall not
have rights to dividends or any other rights of a shareholder
with respect to any Shares subject to an Option unless and
until the participant has given written notice of exercise,
has paid in full for those Shares, has given, if requested,
the representation described in Section 11(a), and those
Shares have been issued to him.
(5) Non-Transferability of Options. No Stock
Option shall be transferable by any participant other than by
will or by the laws of descent and distribution, and all Stock
Options shall be exercisable, during the participant's
lifetime, only by the participant or, subject to Sections
5(b)(3) and 5(c), by the participant's authorized legal
representative if the participant is unable to exercise an
Option as a result of the participant's Disability.
(6) Termination by Death. Subject to Section
5(c), if any participant's employment with the Company or any
Subsidiary or Affiliate terminates by reason of death, any
Stock Option held by that participant may thereafter be
exercised, to the extent that Option was exercisable at the
time of death or would have become exercisable within one year
from the time of death had the participant continued to
fulfill all conditions of the Option during that period (or on
such accelerated basis as the Committee may determine at or
after grant), by the estate of the participant (acting through
its fiduciary), for a period of one year (or such other period
as the Committee may specify at or after grant) from the date
of that death. The balance of the Stock Option shall be
forfeited.
(7) Termination by Reason of Disability. Subject
to Sections 5(b)(3) and 5(c), if a participant's employment
with the Company or any Subsidiary or Affiliate terminates by
reason of Disability, any Stock Option held by that
participant may thereafter be exercised, to the extent that
Option was exercisable at the time of termination or would
have become exercisable within one year from the time of
termination had the participant continued to fulfill all
conditions of the Option during that period (or on such
accelerated basis as the Committee may determine at or after
grant), by the participant or by the participant's duly
authorized legal representative if the participant is unable
to exercise the Option as a result of the participant's
Disability, for a period of one year (or such other period as
the
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Committee may specify at or after grant) from the date of such
termination of employment, but in no event may any such Option
be exercised prior to six months and one day from the date of
grant; and if the participant dies within that one-year period
(or such other period as the Committee shall specify at or
after grant), any unexercised Stock Option held by that
participant shall thereafter be exercisable by the estate of
the participant (acting through its fiduciary) to the same
extent to which it was exercisable at the time of death, for a
period of one year from the date of that termination of
employment. The balance of the Stock Option shall be
forfeited.
(8) Other Termination. Unless otherwise
determined by the Committee at or after the time of granting
any Stock Option, if a participant's employment with the
Company or any Subsidiary or Affiliate terminates for any
reason other than death or Disability, all Stock Options held
by that participant shall terminate 90 days after the date
employment terminates.
(c) Incentive Stock Options. Notwithstanding Sections
5(b)(6) and (7), an Incentive Stock Option shall be exercisable by (i)
a participant's authorized legal representative (if the participant is
unable to exercise the Incentive Stock Option as a result of the
participant's Disability) only if, and to the extent, permitted by
Section 422 of the Code and (ii) by the participant's estate, in the
case of death, or authorized legal representative, in the case of
Disability, no later than 10 years from the date the Incentive Stock
Option was granted (in addition to any other restrictions or
limitations that may apply). Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be exercised,
so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the participants affected, to disqualify any
Incentive Stock Option under that Section 422 or any successor Section
thereto.
(d) Buyout Provisions. The Committee may at any time buy
out for a payment in cash, Shares, Deferred Shares or Restricted
Shares an Option previously granted, based on such terms and
conditions as the Committee shall establish and agree upon with the
participant, but no such transaction involving a Section 16
Participant shall be structured or effected in a manner that would
result in any liability on the part of the participant under Section
16(b) of the Exchange Act or the rules and regulations promulgated
thereunder.
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SECTION 6. SHARE APPRECIATION RIGHTS.
(a) Grant. Share Appreciation Rights may be granted in
connection with all or any part of an Option, either concurrently with
the grant of the Option or, if the Option is a Non-Qualified Stock
Option, by an amendment to the Option at any time thereafter during
the term of the Option. Share Appreciation Rights may be exercised in
whole or in part at such times under such conditions as may be
specified by the Committee in the participant's Option Agreement.
(b) Terms and Conditions. The following terms and
conditions will apply to all Share Appreciation Rights that are
granted in connection with Options:
(1) Rights. Share Appreciation Rights shall
entitle the participant, upon exercise of all or any part of
the Share Appreciation Rights, to surrender to the Company
unexercised that portion of the underlying Option relating to
the same number of Shares as is covered by the Share
Appreciation Rights (or the portion of the Share Appreciation
Rights so exercised) and to receive in exchange from the
Company an amount equal to the excess of (x) the Fair Market
Value, on the date of exercise, of the Shares covered by the
surrendered portion of the underlying Option over (y) the
exercise price of the Shares covered by the surrendered
portion of the underlying Option. The Committee may limit the
amount that the participant will be entitled to receive upon
exercise of the Share Appreciation Right.
(2) Surrender of Option. Upon the exercise of
the Share Appreciation Right and surrender of the related
portion of the underlying Option, the Option, to the extent
surrendered, will not thereafter be exercisable. The
underlying Option may provide that such Share Appreciation
Rights will be payable solely in cash. The terms of the
underlying Option shall provide a method by which an
alternative fair market value of the Shares on the date of
exercise shall be calculated based on one of the following:
(x) the closing price of the Shares on the national exchange
on which they are then traded on the business day immediately
preceding the day of exercise; (y) the highest closing price
of the Shares on the national exchange on which they have been
traded, during the 90 days immediately preceding the Change in
Control; or (z) the greater of (x) and (y).
(3) Exercise. In addition to any further
conditions upon exercise that may be imposed by the Committee,
the Share Appreciation Rights shall be exercisable only to the
extent that the related Option is exercisable, except that in
no event will a Share
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Appreciation Right held by a Section 16 Participant be
exercisable within the first six months after it is awarded
even though the related Option is or becomes exercisable, and
each Share Appreciation Right will expire no later than the
date on which the related Option expires. A Share Appreciation
Right may only be exercised at a time when the Fair Market
Value of the Shares covered by the Share Appreciation Right
exceeds the exercise price of the Shares covered by the
underlying Option. No Share Appreciation Right held by a
Section 16 Participant shall be exercisable by its terms within
the first six months after it is granted, and a Section 16
Participant may only exercise a Share Appreciation Right during
a period beginning on the third business day and ending on the
twelfth business day following the release for publication of
quarterly or annual summary statements of the Company's sales
and earnings.
(4) Method of Exercise. Share Appreciation
Rights may be exercised by the participant's giving written
notice of the exercise to the Company, stating the number of
Share Appreciation Rights the participant has elected to
exercise and surrendering the portion of the underlying Option
relating to the same number of Shares as the number of Share
Appreciation Rights elected to be exercised.
(5) Payment. The manner in which the Company's
obligation arising upon the exercise of the Share Appreciation
Right will be paid will be determined by the Committee and
shall be set forth in the participant's Option Agreement. The
Committee may provide for payment in Shares or cash, or a
fixed combination of Shares or cash, or the Committee may
reserve the right to determine the manner of payment at the
time the Share Appreciation Right is exercised. Shares issued
upon the exercise of a Share Appreciation Right will be valued
at their Fair Market Value on the date of exercise.
SECTION 7. RESTRICTED SHARES.
(a) Grant. Restricted Shares may be issued alone, in
addition to or in tandem with other Awards under the Plan or cash
awards made outside of the Plan. The Committee shall determine the
individuals to whom, and the time or times at which, grants of
Restricted Shares will be made, the number of Restricted Shares to be
awarded to each participant, the price (if any) to be paid by the
participant (subject to Section 7(b)), the date or dates upon which
Restricted Share Awards will vest and the period or periods within
which those Restricted Share Awards may be subject to forfeiture, and
the
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other terms and conditions of those Awards in addition to those set
forth in Section 7(b).
The Committee may condition the grant of Restricted
Shares upon the attainment of specified performance goals or such
other factors as the Committee may determine in its sole discretion.
(b) Terms and Conditions. Restricted Shares awarded
under the Plan shall be subject to the following terms and conditions
and such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable. A
participant who receives a Restricted Share Award shall not have any
rights with respect to that Award, unless and until the participant
has executed an agreement evidencing the Award in the form approved
from time to time by the Committee and has delivered a fully executed
copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of that Award.
(1) The purchase price (if any) for Restricted
Shares shall be determined by the Committee at the time of
grant.
(2) Awards of Restricted Shares must be accepted
by executing a Restricted Share Award agreement and paying the
price (if any) that is required under Section 7(b)(1).
(3) Each participant receiving a Restricted Share
Award shall be issued a stock certificate in respect of those
Restricted Shares. The certificate shall be registered in the
name of the participant, and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable
to the Award.
(4) The Committee shall require that the stock
certificates evidencing the Restricted Shares be held in
custody by the Company until the restrictions thereon shall
have lapsed, and that, as a condition of any Restricted Shares
Award, the participant shall have delivered to the Company a
stock power, endorsed in blank, relating to the Shares covered
by that Award.
(5) Subject to the provisions of this Plan and
the Restricted Share Award agreement, during a period set by
the Committee commencing with the date of any Award (the
"Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge, assign or otherwise encumber the
Restricted Shares covered by that Award. The Restriction
Period shall not be less than three years in duration
("Minimum Restriction Period") unless otherwise determined by
the Committee at the time of grant. Subject to these
limitations and the Minimum Restriction Period
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requirement, the Committee, in its sole discretion, may provide
for the lapse of restrictions in installments and may
accelerate or waive restrictions, in whole or in part, based on
service, performance or such other factors and criteria as the
Committee may determine in its sole discretion.
(6) Except as provided in this Section 7(b)(6),
Section 7(b)(5) and Section 7(b)(7), the participant shall
have, with respect to the Restricted Shares awarded, all of
the rights of a shareholder of the Company, including the
right to vote the Shares, and the right to receive any
dividends. The Committee, in its sole discretion, as
determined at the time of Award, may permit or require the
payment of cash dividends to be deferred and subject to
forfeiture and, if the Committee so determines, reinvested,
subject to Section 11(f), in additional Restricted Shares to
the extent Shares are available under Section 3, or otherwise
reinvested. Unless the Committee or Board determines
otherwise, Share dividends issued with respect to Restricted
Shares shall be treated as additional Restricted Shares that
are subject to the same restrictions and other terms and
conditions that apply to the Shares with respect to which such
dividends are issued.
(7) No Restricted Shares shall be transferable by
a participant other than by will or by the laws of descent and
distribution.
(8) If a participant's employment with the
Company or any Subsidiary or Affiliate terminates by reason of
death, any Restricted Shares held by that participant shall
thereafter vest and any restriction shall lapse to the extent
such Restricted Shares would have become vested or no longer
subject to restriction within one year from the time of death
had the participant continued to fulfill all of the conditions
of the Restricted Share Award during that period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Restricted Shares shall be
forfeited.
(9) If a participant's employment with the
Company or any Subsidiary or Affiliate terminates by reason of
Disability, any Restricted Shares held by that participant
shall thereafter vest and any restriction shall lapse to the
extent such Restricted Shares would have become vested or no
longer subject to restriction within one year from the time of
termination had the participant continued to fulfill all of
the conditions of the Restricted Share Award during that
period (or on such accelerated basis as the Committee may
determine at or after grant), subject in all cases to the
Minimum.
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Restriction Period requirement. The balance of the
Restricted Shares shall be forfeited.
(10) Unless otherwise determined by the Committee
at or after the time of granting any Restricted Shares, if a
participant's employment with the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, the Restricted Shares held by that participant
that are unvested or subject to restriction at the time of
termination shall thereupon be forfeited.
(c) Minimum Value. In order to better ensure that Award
payments actually reflect the performance of the Company and service
of the participant, the Committee may provide, in its sole discretion,
for a tandem performance-based or other award designed to guarantee a
minimum value, payable in cash or Shares, to the recipient of a
Restricted Share Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the
Committee.
SECTION 8. DEFERRED SHARES.
(a) Grant. Deferred Shares may be awarded alone, in
addition to or in tandem with other Awards granted under the Plan or
cash awards made outside of the Plan. The Committee shall determine
the individuals to whom, and the time or times at which, Deferred
Shares shall be awarded, the number of Deferred Shares to be awarded
to any participant, the duration of the period (the "Deferral Period")
during which, and the conditions under which, receipt of the Shares
will be deferred, and the other terms and conditions of the Award in
addition to those set forth in Section 8(b).
The Committee may condition the grant of Deferred Shares upon
the attainment of specified performance goals or such other factors as
the Committee shall determine, in its sole discretion.
(b) Terms and Conditions. Deferred Share Awards shall be
subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable:
(1) The purchase price for Deferred Shares shall
be determined at the time of grant by the Committee. Subject
to the provisions of the Plan and the Award agreement referred
to in Section 8(b)(9), Deferred Share Awards may not be sold,
assigned, transferred, pledged or otherwise encumbered during
the Deferral Period. At the expiration of the Deferral Period
(or the Elective Deferral Period
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referred to in Section 8(b)(8), where applicable), stock
certificates shall be delivered to the participant, or his
legal representative, for the Shares covered by the Deferred
Share Award. The Deferral Period applicable to any Deferred
Share Award shall not be less than six months and one day
("Minimum Deferral Period").
(2) Unless otherwise determined by the Committee
at grant, amounts equal to any dividends declared during the
Deferral Period with respect to the number of Shares covered
by a Deferred Share Award will be paid to the participant
currently, or deferred and deemed to be reinvested in
additional Deferred Shares, or otherwise reinvested, all as
determined at or after the time of the Award by the Committee,
in its sole discretion.
(3) No Deferred Shares shall be transferable by a
participant other than by will or by the laws of descent and
distribution.
(4) If a participant's employment by the Company
or any Subsidiary or Affiliate terminates by reason of death,
any Deferred Shares held by such participant shall thereafter
vest or any restriction lapse, to the extent such Deferred
Shares would have become vested or no longer subject to
restriction within one year from the time of death had the
participant continued to fulfill all of the conditions of the
Deferred Share Award during such period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Deferred Shares shall be
forfeited.
(5) If a participant's employment by the Company
or any Subsidiary or Affiliate terminates by reason of
Disability, any Deferred Shares held by such participant shall
thereafter vest or any restriction lapse, to the extent such
Deferred Shares would have become vested or no longer subject
to restriction within one year from the time of termination
had the participant continued to fulfill all of the conditions
of the Deferred Shares Award during such period (or on such
accelerated basis as the Committee may determine at or after
grant), subject in all cases to the Minimum Deferral Period
requirement. The balance of the Deferred Shares shall be
forfeited.
(6) Unless otherwise determined by the Committee
at or after the time of granting any Deferred Share Award, if
a participant's employment by the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, all Deferred Shares held by such participant which
are unvested or subject to restriction shall thereupon be
forfeited.
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(7) Based on service, performance or such other
factors or criteria as the Committee may determine, the
Committee may, at or after grant, accelerate the vesting of
all or any part of any Deferred Share Award or waive a portion
of the Deferral Period for all or any part of such Award,
subject in all cases to the Minimum Deferral Period
requirement.
(8) A participant may elect to further defer
receipt of a Deferred Share Award (or an installment of an
Award) for a specified period or until a specified event (the
"Elective Deferral Period"), subject in each case to the
Committee's approval and the terms of this Section 8 and such
other terms as are determined by the Committee, all in its
sole discretion. Subject to any exceptions approved by the
Committee, such election must be made at least 12 months prior
to completion of the Deferral Period for such Deferred Share
Award (or such installment).
(9) Each such Award shall be confirmed by, and
subject to the terms of, a Deferred Share Award agreement
evidencing the Award in the form approved from time to time by
the Committee.
(c) Minimum Value Provisions. In order to better ensure
that Award payments actually reflect the performance of the Company
and service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other Award designed to
guarantee a minimum value, payable in cash or Shares to the recipient
of a Deferred Share Award, subject to such performance, future
service, deferral and other terms and conditions as may be specified
by the Committee.
SECTION 9. SHARE PURCHASE RIGHTS.
(a) Grant. Share Purchase Rights may be granted alone,
in addition to or in tandem with other Awards granted under the Plan
or cash awards made outside the Plan. The Committee shall determine
the individuals to whom, and the time or times at which, grants of
Share Purchase Rights will be made, the number of Shares which may be
purchased pursuant to the Share Purchase Rights, and the other terms
and conditions of the Share Purchase Rights in addition to those set
forth in Section 9(b). The Shares subject to the Share Purchase
Rights may be purchased, as determined by the Committee at the time of
grant:
(1) at the Fair Market Value of such Shares on the
date of grant; or
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(2) at 85% of the Fair Market Value of such
Shares on the date of grant if the grant of Share Purchase
Rights is made in lieu of cash compensation.
Subject to Section 9(b) hereof, the Committee may also impose
such deferral, forfeiture or other terms and conditions as it shall
determine, in its sole discretion, on such Share Purchase Rights or
the exercise thereof.
Each Share Purchase Right Award shall be confirmed by, and be
subject to the terms of, a Share Purchase Rights Agreement which shall
be in form approved by the Committee.
(b) Terms and Conditions. Share Purchase Rights may
contain such additional terms and conditions not inconsistent with the
terms of the Plan as the Committee shall deem desirable, and shall
generally be exercisable for such period as shall be determined by the
Committee. However, Share Purchase Rights granted to Section 16
Participants shall not become exercisable earlier than six months and
one day after the grant date. Share Purchase Rights shall not be
transferable by a participant other than by will or by the laws of
descent and distribution.
SECTION 10. OTHER SHARE-BASED AWARDS.
(a) Grant. Other Awards of Shares and other Awards that
are valued, in whole or in part, by reference to, or are otherwise
based on, Shares, including, without limitation, performance shares,
convertible preferred shares, convertible debentures, exchangeable
securities and Share Awards or options valued by reference to Book
Value or Subsidiary performance, may be granted alone, in addition to
or in tandem with other Awards granted under the Plan or cash awards
made outside of the Plan.
At the time the Shares or Other Share-Based Awards are
granted, the Committee shall determine the individuals to whom and the
time or times at which such Shares or Other Share-Based Awards shall
be awarded, the number of Shares to be used in computing an Award or
which are to be awarded pursuant to such Awards, the consideration, if
any, to be paid for such Shares or Other Share-Based Awards, and all
other terms and conditions of the Awards in addition to those set
forth in Section 10(b).
The provisions of Other Share-Based Awards need not be the
same with respect to each participant.
(b) Terms and Conditions. Other Share-Based Awards shall
be subject to the following terms and conditions and shall contain
such additional terms and conditions, not
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inconsistent with the terms of the Plan, as the Committee shall deem
desirable:
(1) Subject to the provisions of this Plan and
the Award agreement referred to in Section 10(b)(5) below,
Shares awarded or subject to Awards made under this Section 10
may not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Shares are issued,
or, if later, the date on which any applicable restriction,
performance, holding or deferral period or requirement is
satisfied or lapses. All Shares or Other Share-Based Awards
granted under this Section 10 shall be subject to a minimum
holding period (including any applicable restriction,
performance and/or deferral periods) of six months and one day
("Minimum Holding Period").
(2) Subject to the provisions of this Plan and
the Award agreement and unless otherwise determined by the
Committee at the time of grant, the recipient of an Other
Share-Based Award shall be entitled to receive, currently or
on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of Shares
covered by the Award, as determined at the time of the Award
by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have
been reinvested in additional Shares or otherwise reinvested.
(3) Subject to the Minimum Holding Period, any
Other Share-Based Award and any Shares covered by any such
Award shall vest or be forfeited to the extent, at the times
and subject to the conditions, if any, provided in the Award
agreement, as determined by the Committee, in its sole
discretion.
(4) In the event of the participant's Disability
or death, or in cases of special circumstances, the Committee
may, in its sole discretion, waive, in whole or in part, any
or all of the remaining limitations imposed hereunder or under
any related Award agreement (if any) with respect to any part
or all of any Award under this Section 10, provided that the
Minimum Holding Period requirement may not be waived, except
in case of a participant's death.
(5) Each Award shall be confirmed by, and subject
to the terms of, an agreement or other instrument evidencing
the Award in the form approved from time to time by the
Committee, the Company and the participant.
(6) Shares (including securities convertible into
Shares) issued on a bonus basis under this Section 10
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shall be issued for no cash consideration. Shares (including
securities convertible into Shares) purchased pursuant to a
purchase right awarded under this Section 10 shall bear a price
of at least 85% of the Fair Market Value of the Shares on the
date of grant. The purchase price of such Shares, and of any
Other Share-Based Award granted hereunder, or the formula by
which such price is to be determined, shall be fixed by the
Committee at the time of grant.
(7) In the event that any "derivative security",
as defined in Rule 16a-1(c) (or any successor thereto)
promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, is awarded pursuant to this
Section 10 to any Section 16 Participant, such derivative
security shall not be transferrable other than by will or by
the laws of descent and distribution.
SECTION 11. CHANGE IN CONTROL PROVISION.
(a) Impact of Event. In the event of: (1) a "Change in
Control" as defined in Section 11(b) or (2) a "Potential Change in
Control" as defined in Section 11(c), the following acceleration and
valuation provisions shall apply:
(1) Any Stock Options awarded under the Plan not
previously exercisable and vested shall become fully
exercisable and vested;
(2) Any Share Appreciation Rights shall become
immediately exercisable;
(3) The restrictions applicable to any Restricted
Share Awards, Deferred Shares, Share Purchase Rights and Other
Share-Based Awards shall lapse and such Shares and Awards
shall be deemed fully vested; and
(4) The value of all outstanding Awards, in each
case to the extent vested, shall, unless otherwise determined
by the Committee in its sole discretion at or after grant but
prior to any Change in Control or Potential Change in Control,
be cashed out on the basis of the "Change in Control Price" as
defined in Section 11(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred;
but the provisions of Sections 11(a)(l) through (3) shall not apply
with respect to Awards granted to any Section 16 Participant which
have been held by such participant for less than six months and one
day as of the date that such Change in
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Control or Potential Change in Control is determined to have occurred.
(b) Definition of Change in Control. For purposes of
Section 11(a), a "Change in Control" means the occurrence of any of
the following: (i) the Board or shareholders of the Company approve a
consolidation or merger in which the Company is not the surviving
corporation, the sale of substantially all of the assets of the
Company, or the liquidation or dissolution of the Company; (ii) any
person or other entity (other than the Company or a Subsidiary or any
Company employee benefit plan (including any trustee of any such plan
acting in its capacity as trustee)) purchases any Shares (or
securities convertible into Shares) pursuant to a tender or exchange
offer without the prior consent of the Board of Directors, or becomes
the beneficial owner of securities of the Company representing 20% or
more of the voting power of the Company's outstanding securities; or
(iii) during any two-year period, individuals who at the beginning of
such period constitute the entire Board of Directors cease to
constitute a majority of the Board of Directors, unless the election
or the nomination for election of each new director is approved by at
least two-thirds of the directors then still in office who were
directors at the beginning of that period.
(c) Definition of Potential Change in Control. For
purposes of Section 11(a), a "Potential Change in Control" means the
happening of any one of the following:
(1) The approval by the shareholders of the
Company of an agreement by the Company, the consummation of
which would result in a Change in Control of the Company as
defined in Section 11(b); or
(2) The acquisition of beneficial ownership,
directly or indirectly, by any entity, person or group (other
than the Company or a Subsidiary or any Company employee
benefit plan (including any trustee of any such plan acting in
its capacity as trustee)) of securities of the Company
representing 5% or more of the combined voting power of the
Company's outstanding securities and the adoption by the Board
of a resolution to the effect that a Potential Change in
Control of the Company has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this
Section 11, "Change in Control Price", means the highest price per
share paid in any transaction reported on the New York Stock Exchange
Composite Index (or, if the Shares are not then traded on the New York
Stock Exchange, the highest price paid as reported for any national
exchange on which the Shares are then traded) or paid or offered in
any bona fide transaction related to a Change in Control or Potential
Change in Control
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of the Company, at any time during the 60-day period immediately
preceding the occurrence of the Change in Control (or, when
applicable, the occurrence of the Potential Change in Control event),
in each case as determined by the Committee.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may at any time, in its sole discretion, amend,
alter or discontinue the Plan, but no such amendment, alteration or
discontinuation shall be made that would impair the rights of a participant
under an Award theretofore granted, without the participant's consent. The
Company shall submit to the shareholders of the Company for their approval any
amendments to the Plan which is required by Section 16 of the Exchange Act or
the rules and regulations thereunder, or Section 162(m) of the Code, to be
approved by the shareholders.
The Committee may at any time, in its sole discretion, amend
the terms of any Award, but no such amendment shall be made that would impair
the rights of a participant under an Award theretofore granted, without the
participant's consent; nor shall any such amendment be made that would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 Participant holding the Award without the participant's
consent.
Subject to the above provisions, the Board shall have all
necessary authority to amend the Plan to take into account changes in
applicable securities and tax laws and accounting rules, as well as other
developments.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payment not yet made
to a participant by the Company, nothing contained herein shall give that
participant any rights that are greater than those of a general creditor of the
Company.
SECTION 14. GENERAL PROVISIONS.
(a) The Committee may require each participant acquiring
Shares pursuant to an Award under the Plan to represent to and agree
with the Company in writing that the participant is acquiring the
Shares without a view to distribution thereof. The certificates for
any such Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
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All Shares or other securities delivered under the Plan shall
be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock
exchange upon which the Shares are then listed, and any applicable
federal or state securities laws, and the Committee may cause a legend
or legends to be put on any certificate for any such Shares to make
appropriate reference to those restrictions.
(b) Nothing contained in this Plan shall prevent the
Board from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable only in
specific cases.
(c) Neither the adoption of the Plan, nor its operation,
nor any document describing, implementing or referring to the Plan, or
any part thereof, shall confer upon any participant under the Plan any
right to continue in the employ, or as a director, of the Company or
any Subsidiary or Affiliate, or shall in any way affect the right and
power of the Company or any Subsidiary or Affiliate to terminate the
employment, or service as a director, of any participant under the
Plan at any time with or without assigning a reason therefor, to the
same extent as the Company or any Subsidiary or Affiliate might have
done if the Plan had not been adopted.
(d) For purposes of this Plan, a transfer of a
participant between the Company and any Subsidiary or Affiliate shall
not be deemed a termination of employment.
(e) No later than the date as of which an amount first
becomes includable in the gross income of the participant for federal
income tax purposes with respect to any Award under the Plan, the
participant shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any federal,
state or local taxes or other items of any kind required by law to be
withheld with respect to that amount. Subject to the following
sentence, unless otherwise determined by the Committee, withholding
obligations may be settled with Shares, including unrestricted Shares
previously owned by the participant or Shares that are part of the
Award that gives rise to the withholding requirement. Notwithstanding
the foregoing, any election by a Section 16 Participant to settle any
tax withholding obligation with Shares that are part of an Award shall
be subject to approval by the Committee, in its sole discretion. The
obligations of the Company under the Plan shall be conditional on
those payment or arrangements and the Company and its Subsidiaries and
Affiliates shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise payable
to the participant.
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(f) The actual or deemed reinvestment of dividends or
dividend equivalents in additional Restricted Shares (or in Deferred
Shares or other types of Awards) at the time of any dividend payment
shall only be permissible if sufficient Shares are available under
Section 3 for reinvestment (taking into account then outstanding Stock
Options).
(g) The Plan, all Awards made and actions taken
thereunder and any agreements relating thereto shall be governed by
and construed in accordance with the laws of the State of Ohio.
(h) All agreements entered into with participants pursuant
to the Plan shall be subject to the Plan.
(i) The provisions of Awards need not be the same with
respect to each participant.
SECTION 15. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board on March 5, 1996 and is
subject to approval by the holders of the Company's outstanding Shares, in
accordance with applicable law.
SECTION 16. TERM OF PLAN.
No Award shall be granted pursuant to the Plan on or after
April 30, 2006, but Awards granted prior to that date may extend beyond that
date.
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