<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
JUNE 19, 1997
-------------
GENERAL GROWTH PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-11656 42-1283895
(STATE OR OTHER (COMMISSION FILE (I.R.S. EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION
INCORPORATION) NUMBER)
55 WEST MONROE - SUITE 3100, CHICAGO, ILLINOIS 60603
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (312) 551-5000
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
ITEM 5. OTHER EVENTS.
On June 19, 1997, GGP Limited Partnership, a Delaware limited
partnership (the "Partnership") of which General Growth Properties, Inc. (the
"Company") is the general partner and the owner of an approximately 62.5%
interest, acquired in a negotiated transaction Southlake Mall, located in
Morrow (Atlanta), Georgia, from CA Southlake Investors, Ltd., a Georgia limited
partnership, and Metropolitan Life Insurance Company. The consideration
consisted of approximately $10.4 million in cash, 353,537 redeemable units of
limited partnership interest in the Partnership and the assumption of
approximately $45.1 million of mortgage debt. The acquisition of Southlake
Mall, when taken together with the other unrelated acquisitions of real
property made by the Partnership and the Company during 1997 and briefly
described below, is deemed to constitute the acquisition of a significant
amount of assets under rules and regulations promulgated by the Securities and
Exchange Commission and therefore is required to be reported on this Current
Report on Form 8-K.
On June 11, 1997, Town East Mall, L.P., a Delaware limited partnership
of which the Partnership and a wholly-owned subsidiary of the Company are the
sole partners, acquired in a negotiated transaction a 50% interest in Town East
Mall, located in Mesquite (Dallas), Texas, from Atlantic Freeholds II, a Nevada
general partnership. The purchase price consisted of approximately $27.5
million in cash and the assumption of approximately $27.9 million of mortgage
indebtedness and approximately $1.1 million of net current liabilities. During
the 1 1/2 years prior to the acquisition, General Growth Management, Inc., a
corporation related to the Company, served as the manager of Town East Mall.
On May 1, 1997, Century Plaza, L.L.C., a Delaware limited liability
company of which the Partnership and a wholly-owned subsidiary of the Company
are the sole members, acquired in a negotiated transaction Century Plaza,
located in Birmingham, Alabama, from Century Plaza Company, an Alabama general
partnership. The purchase price was approximately $31.8 million
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in cash. During the 2 months prior to the acquisition, the Company served as
the leasing agent for Century Plaza.
On March 31, 1997, Champaign Market Place L.L.C., a Delaware limited
liability company of which the Partnership and a wholly-owned subsidiary of the
Company are the sole members, acquired in a negotiated transaction Market Place
Mall and the Market Place Convenience Center, located in Champaign, Illinois,
from Champaign Venture, an Illinois general partnership. The purchase price
was approximately $69.1 million in cash.
The cash portion of the purchase price for Southlake Mall and Town
East Mall and the entire purchase price for Century Plaza, Market Place Mall
and the Market Place Convenience Center was borrowed under two separate credit
facilities made available to the Company by Goldman Sachs Mortgage Company.
The purchase price in each of these transactions was subject to
certain prorations and adjustments and is exclusive of closing and other costs
incurred in connection with the acquisitions. It is currently contemplated
that the acquired properties will continue to be used by the Company as
shopping malls.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a), (b) The requisite financial information will be filed
under cover of Form 8-K/A as soon as practicable, and in any event not later
than 60 days after the date by which this Form 8-K is required to be filed.
(c) See Exhibit Index attached hereto and incorporated
herein by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
-----------------------------
Its: Executive Vice President
and Chief Financial Officer
Date: July 2, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NAME* PAGE
NUMBER ---- NUMBER
------ ------
<S> <C> <C>
2.1 Sale and Contribution Agreement dated June 19, 1997, between CA
Southlake Investors, Ltd., a Georgia limited partnership, and GGP
Limited Partnership, a Delaware limited partnership.
2.2 Contribution Agreement dated June 10, 1997, among Atlantic Freeholds
II, a Nevada general partnership, Town East Mall, L.P., a Delaware
limited partnership, and Town East Mall Partnership, a Texas general
partnership.
2.3 Purchase and Sale Agreement dated as of March 22, 1997, between
Century Plaza Company, an Alabama general partnership, and Century
Plaza L.L.C., a Delaware limited liability company.
2.4 Real Estate Purchase Agreement dated March 12, 1997, between
Champaign Venture, an Illinois general partnership, and Champaign
Market Place L.L.C., a Delaware limited liability company.
4.1 Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership, General Growth
Properties, Inc., a Delaware corporation, and CA Southlake Investors,
Ltd., a Georgia limited partnership.
</TABLE>
* In accordance with Rule 601(b)(2) of Regulation S-K, the exhibits to these
agreements and the related disclosure schedules have not been filed. The
Company agrees to furnish supplementally a copy of any such omitted exhibit or
disclosure schedule to the Securities and Exchange Commission upon request.
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EXHIBIT 2.1
SALE AND CONTRIBUTION AGREEMENT
AMONG
CA SOUTHLAKE INVESTORS, LTD.
a Georgia Limited Partnership,
and
GGP LIMITED PARTNERSHIP
a Delaware limited partnership
June 19, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definitions
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE II
Contribution and Sale; Consideration
2.1 Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.4 Matters Relating to Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.5 Termination of Existing Management Agreement and Release of Property Management Liens . . . . . . . . 15
2.6 Admission to Partnership; Redemption Rights; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.7 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.8 Tenant Allowances and Leasing Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.9 Matters Relating to Promotional Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.10 Distribution of Excluded Personalty; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE III
Closing
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Contributor Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Partnership Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV
Prorations and Adjustments
4.1 Items to Be Prorated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 Installment Payment of Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Adjustable Tenant Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Advertising and Promotional Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Fixed and Other Tenant Charge Arrearages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Sales Based Tenant Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.7 Application of Rent Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.8 Security and Utility Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.9 Collection of Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.10 Settlement of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE V
Title Insurance and Survey
5.1 Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.3 Title and Survey Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.4 Title Insurance Premiums and Survey Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
Representations and Warranties
6.1 Partnership Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Contributor's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII
Access and Certain Rights of Early Termination
7.1 Due Diligence and Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.2 [Intentionally Deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.3 Environmental Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE VIII
Conditions to Closing
8.1 Conditions to Contributor's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.2 Conditions to Partnership's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE IX
Condemnation and Destruction
9.1 Casualty or Condemnation in General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
9.2 Adjustment of Claims and Condemnation Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE X
Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . 46
10.1 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.2 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.3 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.4 [Intentionally Deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.5 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.6 Transfer and Other Taxes; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.7 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.8 Record Retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.10 Assistance Following Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.12 Restrictions on Certain Dispositions of Real Property . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
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<TABLE>
<S> <C> <C> <C>
10.13 Debt Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.14 Delivery of Certain Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.15 Record Owners of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.16 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE XI
Miscellaneous
11.1 Survival; Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.7 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.8 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.11 Headings; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.12 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.14 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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SALE AND CONTRIBUTION AGREEMENT
Sale and Contribution Agreement, dated June 19, 1997, among CA
Southlake Investors, Ltd., a Georgia limited partnership ("Contributor"), and
GGP Limited Partnership, a Delaware limited partnership (the "Partnership").
R E C I T A L S
WHEREAS, Contributor and Metropolitan Life Insurance Company ("Met
Life") are partners of Southlake Retail Venture, a Georgia general partnership
(the "Existing Venture");
WHEREAS, the Existing Venture is the owner of a regional shopping
center located in Atlanta, Georgia and commonly known as Southlake Mall (the
"Mall");
WHEREAS, pursuant to Section 7.2 of that certain Joint Venture
Agreement of the Existing Venture dated September 15, 1982, between Met Life
and Contributor, as amended by that certain Agreement Respecting Termination of
Southlake Land Venture and Amendment of Southlake Retail Venture dated August
4, 1994 and that certain Option Agreement dated February 25, 1997 (the
"Existing Venture Agreement"), Contributor has elected to purchase the
partnership interest in the Existing Venture of Met Life; and
WHEREAS, Contributor desires to contribute to the capital of, the
Partnership all of its partnership interest in the Partnership and its right to
acquire the partnership interest in the Existing Venture of Met Life, and the
Partnership desires to acquire such partnership interest and such right.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"Additional Exceptions" shall have the meaning set forth in Section
5.3.
"Adjustable Tenant Charges" shall mean common or mall area maintenance
(exterior and interior) charges, real estate taxes and assessments, property
insurance charges and HVAC charges to the extent denominated as such in the
Leases and the Reciprocal Easement Agreement.
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"Affiliates" shall mean, with respect to the Partnership, any Person
controlling, controlled by or under common control with the General Partner or
the Partnership and, with respect to Contributor or the Existing Venture, James
B. Carson, Jr., James W. Bealle, Daniel B. Rather, William A. Mitchell, Jr.,
members of any of their families or the family of Frank Carter, deceased, or
any Person controlled by or under common control with any of such Persons.
"Agreement" shall mean this Sale and Contribution Agreement, as
amended or modified from time to time hereafter in accordance with the terms
hereof.
"Anchor" shall mean each Person identified in Schedule 1.1(a).
"Annual Financial Statements" shall have the meaning set forth in
Section 6.2(m).
"Applicable Closing Fiscal Period" shall mean, with respect to any
item which is prorated under Article IV, the calendar year (or other fiscal
period for which such item is determined or assessed) during which the Closing
Date occurs.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
"Books and Records" shall mean all records, books of account and
papers of Contributor and/or the Existing Venture relating to the construction,
ownership and operation of the Property, whether on paper or electronic media,
including without limitation architect's drawings, blue prints and as-built
plans, maintenance logs, instruction books, licenses and permits, employee
manuals, records and correspondence relating to insurance claims, copies of
guarantees and warranties, financial statements, operating budgets, structural,
mechanical, geotechnical and other engineering studies, soil test reports,
environmental (including without limitation underground storage tank) reports,
feasibility studies, appraisals, ADA surveys or reports, marketing studies,
lease summaries and originals and/or copies of the Leases, the Reciprocal
Easement Agreement and the Contracts and correspondence related thereto.
"Buy-Sell Rights" shall have the meaning set forth in Section 2.1.
"Buy-Sell Transaction" shall mean the purchase of the Met Life
Interest pursuant to the Buy-Sell Rights.
"Cap Amount" shall mean $10,043.585.
"Casualty" shall mean any damage to or destruction of the Property or
any portion thereof caused by fire or other casualty, whether or not insured.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
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"Closing Documents" shall mean the Contributor Closing Documents and
Partnership Closing Documents, collectively.
"Closing Price" shall have the meaning set forth in the Partnership
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, $.10 par value per share,
of the General Partner.
"Consultant" shall have the meaning set forth in Section 7.3.
"Contract Party Consents" shall have the meaning set forth in Section
10.5.
"Contracts" shall mean the service, maintenance and other contracts
and concessions that are currently in effect with respect to the Mall
respecting the use, maintenance, development, sale or operation thereof or any
portion thereof (but excluding this Agreement, the Leases, the Permitted
Exceptions and the Reciprocal Easement Agreement) which are listed on Schedule
6.2(q), together with any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in accordance with the provisions
of this Agreement.
"Contributor Interest" shall mean the entire Partnership Interest of
Contributor in the Existing Venture, together with all rights and powers of
Contributor as a general partner of the Existing Venture and all right, title
and interest of Contributor in and to the Existing Venture Property, both real
and personal.
"Contributor's Liabilities" shall have the meaning set forth in
Section 2.3.
"Environmental Laws" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, guidelines, orders and decrees
regulating, relating to or imposing liability or standards concerning or in
connection with Hazardous Materials, underground or above-ground storage tanks
or the protection of human health or the environment, as any of the same may be
amended from time to time, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et. seq., as amended by the Superfund Amendments and
Reauthorization Act or any equivalent state or local laws or ordinances; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et
seq., as amended by the Hazardous and Solid Waste Amendments of 1984, or any
equivalent state or local laws or ordinances; the Federal Insecticide,
Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. Section 136 et. seq. or any
equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.); the Emergency Planning
and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. Section 11001 et. seq. or
any equivalent state or local laws or ordinances; the Toxic Substance Control
Act ("TSCA"), 15 U.S.C. Section 2601 et. seq. or any equivalent
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state or local laws or ordinances; the Atomic Energy Act, 42 U.S.C. Section
2011 et. seq., or any equivalent state or local laws or ordinances; the Clean
Water Act (the "Clean Water Act"), 33 U.S.C. Section 1251 et. seq. or any
equivalent state or local laws or ordinances; the Clean Air Act (the "Clean Air
Act"), 42 U.S.C. Section 7401 et seq. or any equivalent state or local laws or
ordinances; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq. or any equivalent state or local laws or ordinances.
"Environmental Report" shall have the meaning set forth in Section
7.3.
"Estoppels" shall mean the estoppel certificates to be obtained
pursuant to Section 10.7.
"Excluded Parcels" shall mean those certain parcels of land legally
described in Exhibit A and the improvements thereon owned by certain of the
Anchors or other Persons other than the Existing Venture.
"Excluded Personalty" shall mean the personal items belonging to
employees of Existing Manager and, except as otherwise provided herein
(including without limitation Section 9.1(b) and Article IV), the cash, cash
accounts and receivables of the Existing Venture.
"Existing Indebtedness" shall mean the loans listed on Schedule
6.2(aa).
"Existing Indebtedness Documents" shall have the meaning set forth in
Schedule 6.2(aa).
"Existing Indebtedness Consent Documents" shall have the meaning set
forth in Section 2.4.
"Existing Lender" shall mean the holder or holders of the Existing
Indebtedness as specified on Schedule 6.2(aa).
"Existing Manager" shall mean Carter & Associates, L.L.C.
"Existing Venture Agreement" shall have the meaning set forth in the
recitals.
"Financial Statements" shall have the meaning set forth in Section
6.2(m).
"Fifth Anniversary Date" shall have the meaning set forth in Section
10.12.
"Fixed and Other Tenant Charges" shall mean Rent other than Adjustable
Tenant Charges, Sales Based Tenant Charges and Advertising and Promotional
Contributions.
"Fixed and Other Tenant Charge Arrearages" shall mean Fixed and Other
Tenant Charges due and payable prior to but unpaid as of the Closing Date.
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"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified
Public Accountants from time to time.
"General Partner" shall mean General Growth Properties, Inc., a
Delaware corporation and the general partner of the Partnership.
"GGMI" shall mean General Growth Management, Inc., a Delaware
corporation.
"Gross Asset Value" shall mean $67,000,000.
"Hazardous Materials" shall mean any substance, material, waste, gas
or particulate matter which (a) is now, or at any future time may be, regulated
by the United States Government, the State of Georgia, any other state with
jurisdiction, or any local governmental authority, (b) the exposure to, or
manufacture, possession, presence, use, generation, storage, transportation,
treatment, release, disposal, abatement, cleanup, removal, remediation or
handling of is prohibited, controlled or regulated by any Environmental Law, or
(c) requires investigation or remediation under any Environmental Law or common
law, or (d) is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous, or (e) causes or threatens to
cause a nuisance upon the Property or to adjacent properties or poses or
threatens to pose a hazard to the health or safety of persons on or about the
Property, or (f) could or does cause Seller or Buyer to be liable for trespass.
Such term includes, without limitation, any material or substance which is (1)
now or at any future time defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste" or any like or similar term under any applicable Environmental Law; (2)
oil and petroleum products; (3) asbestos or asbestos-containing material as
defined in the regulations of the Occupational Safety and Health Administration
at 29 C.F.R. Section 1910.1001; (4) polychlorinated biphenyls; (5) radioactive
material; (6) now or at any future time designated as a "toxic pollutant" or a
"hazardous substance" pursuant to Sections 307 or 311 of the Clean Water Act;
(7) now or at any future time defined as a "hazardous waste" pursuant to
Section 1004 of RCRA; (8) now or at any future time defined as a "hazardous
substance" pursuant to Section 101 of CERCLA; (9) now or at any future time
designated as a "hazardous chemical" substance or mixture pursuant to TSCA;
(10) now or at any future time designated as an "extremely hazardous" substance
under Section 302 of EPCRA; (11) now or at any future time designated as a
"priority pollutant" or "hazardous air pollutant" pursuant to the Clean Air
Act; (12) now or at any future time designated as a hazardous chemical under
the Occupational Safety and Health Act; (13) radon gas or other radioactive
source material, including special nuclear material, and byproduct materials
regulated under the Atomic Energy Act, 42 U.S.C. Section 2011 et. seq.; (14)
now or at any future time subject to regulation under FIFRA; (15) natural gas,
natural gas liquids, liquefied natural gas, and synthetic gas usable for fuel;
or (16) infectious wastes or materials and pathogenic bacteria or other
pathogenic microbial agents.
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"Improvements" shall mean all buildings, structures (surface and
subsurface), and other improvements located on the Land, including any fixtures
as shall constitute real property under applicable provisions of law.
"Indemnified Partnership Persons" shall have the meaning set forth in
Section 10.1(a).
"Inspection Period Expiration Date" shall have the meaning set forth
in Section 7.2.
"Intellectual Property" shall have the meaning set forth in Section
6.2(o).
"Interests" shall mean the Contributor Interest and the Met Life
Interest, collectively.
"Land" shall mean those certain parcels of real estate described on
Exhibit B.
"Leases" shall mean those leases, tenancies, concessions, licenses and
occupancy agreements currently in effect affecting or relating to the Mall
which are listed on Schedule 6.2(j), together with any additions thereto,
modifications thereof or substitutions therefor hereafter entered into in
accordance with the provisions of this Agreement.
"Liens" shall mean mortgages, deeds of trust, liens, pledges, security
interests, options, rights of first refusal, charges, claims, restrictions and
other encumbrances of any nature whatsoever.
"Loss" shall have the meaning set forth in Section 10.1(a).
"Mall" shall have the meaning set forth in the recitals.
"Memorandum" shall mean that certain Private Placement Memorandum
dated May 22, 1997 relating to the issuance of Units pursuant hereto, among
other things.
"Met Life Interest" shall mean the entire Partnership Interest of Met
Life in the Existing Venture, together with all rights and powers of Met Life
as a general partner of the Existing Venture and all right, title and interest
of Met Life in and to the Existing Venture Property, both real and personal.
"Missing Parties" shall have the meaning set forth in Section 8.2(c).
"Net Asset Value" shall mean the excess of (a) the Gross Asset Value
over (b) the outstanding principal amount of Existing Indebtedness (not
including any interest or prepayment penalties) on the Closing Date.
"Net Operating Cash Flow" shall have the meaning set forth in the
Partnership Agreement.
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"New Venture" shall mean the Existing Venture as reconstituted by the
Partnership and its designee following the acquisition of the Interests by them
and the withdrawal of Contributor and Met Life as partners of the Existing
Venture.
"Other Deposits" shall have the meaning set forth in Section 4.8.
"Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of the Partnership dated as of July 27, 1993, as amended
by that certain First Amendment thereto dated May 23, 1995, that certain Second
Amendment thereto dated June 13, 1995, that certain Third Amendment thereto
dated as of May 21, 1996, that certain Fourth Amendment thereto dated as of
August 30, 1996, that certain Fifth Amendment thereto dated as of October 4,
1996, that certain Sixth Amendment thereto dated as of November 27, 1996, that
certain Seventh Amendment thereto dated December 6, 1996 and as the same may be
further amended hereafter.
"Party" shall mean a party to the Reciprocal Easement Agreement or a
Contract (or the successor or assignee thereof) or a Tenant under a Lease, in
each case other than the Existing Venture or any predecessor in title with
respect to the Property.
"Permitted Exceptions" shall mean the following:
(a) those title exceptions, defects and other matters
that are shown on Exhibit C;
(b) the terms, covenants and conditions of the
Reciprocal Easement Agreement;
(c) provided that there is no violation thereof, zoning,
subdivision, environmental, municipal building and all other laws,
rules, regulations, ordinances, codes, restrictions or legal
requirements applicable to the ownership, use, occupancy or
development of, or the right to maintain or operate (including the
construction of improvements on), the Real Property and any other
lawful action of any duly constituted public authority or other body
having or exercising jurisdiction over the Real Property presently
existing;
(d) the state of facts shown on the Survey;
(e) Liens for unpaid real property taxes and
assessments, water rates and charges, sewer taxes and rents and other
governmental charges which are not yet due and payable;
(f) all Leases or such of them as shall be in effect on
the Closing Date, and the rights of the Tenants thereunder;
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(g) mechanics' liens, lis pendens and notices of
commencement of action against the Existing Venture in respect of the
Real Property (or which affect the interest of the Existing Venture in
the Real Property) provided that the same do not exceed $25,000 in the
aggregate and provided further that the Title Company shall provide
affirmative insurance with respect thereto insuring the Partnership
from loss with respect thereto in form and substance acceptable to the
Partnership in its sole discretion; and
(h) all other Liens and title exceptions the Partnership
may accept under Section 5.2.
No agreement to take title to the Real Property subject to Permitted Exceptions
shall be deemed a waiver of any representation or warranty of Contributor set
forth in Section 6.2 or the rights of the Partnership contained in Section 5.2,
it being understood and agreed that the Partnership's agreements regarding
Permitted Exceptions assume the truth and accuracy of all such representations
and warranties.
"Person" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity
of any type.
"Personalty" shall mean all right, title and interest of the Existing
Venture or the Existing Manager in and to the personal property, both tangible
and intangible, located in or upon or used in connection with the operation and
maintenance of the Mall, including without limitation fixtures; machinery;
equipment; building supplies and materials; consumables; inventories; names,
logos, trademarks, trade names and copyrights; all assignable licenses, permits
and certificates of occupancy; all assignable guarantees or warranties
(including performance bonds obtained by, or for the benefit of, the Existing
Venture pertaining to the ownership, construction or development of the Real
Property or any part thereof); the Intellectual Property; the Books and
Records; computer and peripheral equipment and computer software; advertising
materials and telephone exchange numbers. Without limiting the foregoing,
"Personalty" shall include the computer and peripheral equipment located at the
Mall and the property listed on Schedule 1.1(b) but shall not include the
rights of the Existing Venture in or under the Leases, Reciprocal Easement
Agreement, Contracts or Excluded Personalty.
"Pledge Agreement" shall have the meaning set forth in Section 2.7.
"Prohibited Disposition" shall have the meaning set forth in Section
10.12.
"Promotional Association" shall have the meaning set forth in Section
6.2(ah).
"Promotional Association Waiver" shall have the meaning set forth in
Section 2.9.
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"Property" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights of the Existing Venture under all Leases and (d) the rights and
interests of the Existing Venture under, in and to the Contracts to the extent
assignable.
"Real Property" shall mean the Land and the Improvements, together
with all of the estate, right, title and interest of the Existing Venture
therein, and in and to (a) any land lying in the beds of any streets, roads or
avenues, open or proposed, public or private, in front of or adjoining the Land
to the center lines thereof, and in and to any awards to be made in lieu
thereof and in and to any unpaid awards for damage to the foregoing by reason
of the change of grade of any such streets, roads or avenues; and (b) all
easements, rights, licenses, privileges, rights-of-way, strips and gores,
hereditaments and such other real property rights and interests appurtenant to
the foregoing (including, without limitation, all rights of the Existing
Venture under the Reciprocal Easement Agreement).
"Reciprocal Easement Agreement" shall have the meaning set forth in
Section 6.2(j).
"Recourse Liabilities" shall have the meaning set forth in Section
2.4.
"Regulations" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"Rents" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and other taxes, and other amounts payable by the
Parties under the Leases and the Reciprocal Easement Agreement.
"Sales Based Tenant Charges" shall mean Rent consisting of overage or
percentage rent.
"Security Deposits" shall have the meaning set forth in Section 4.8.
"Share Price" shall mean the average of the Closing Price for the
twenty (20) Trading Days preceding the third Trading Day prior to the Closing
Date.
"Substantial Casualty" or "Substantial Taking" shall mean, a Casualty
or Taking, as the case may be, where:
(a) the condemnation award, or the proceeds payable
under the applicable policy or policies of casualty insurance
maintained by the Existing Venture are insufficient by more than
$100,000 to fully repair the damage caused by such Casualty or Taking,
unless Contributor shall (at its sole option and without any
obligation to do so) grant to the Partnership a credit equal to such
deficiency; or
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(b) an Anchor shall, by reason of such Casualty or
Taking, either terminate its Lease or its obligations under the
Reciprocal Easement Agreement, or cease operating at the Mall (other
than temporarily due to such damage and destruction, remodeling,
renovation or any similar cause), or cease operating at the Mall under
the name under which it was operating immediately prior to such Taking
or Casualty or have the right to do any of the foregoing (unless such
right shall have expired or been waived) or the same shall occur with
regard to Tenants occupying more than 100,000 leasable square feet at
the Property in the aggregate; or
(c) the estimated time for repair or restoration shall
exceed three (3) months; or
(d) in the case of a Taking, a Taking with respect to
such portion of the Real Property as, when so taken would, in the
reasonable opinion of the Partnership, leave remaining a balance of
the Real Property, which, due either to the area taken or the location
of the part taken would not, under applicable zoning laws, building
regulations and economic conditions then prevailing or otherwise,
readily accommodate a new or restructured building or buildings of a
type and size generally similar to the building or buildings existing
on the date hereof, or would result in inadequate parking or lack of
reasonable access to public roads.
"Survey" shall mean have the meaning set forth in Section 5.2.
"Taking" shall mean a taking of all or any portion of the Real
Property in condemnation or by exercise of the power of eminent domain or by an
agreement in lieu thereof.
"Tax Appeal" shall have the meaning set forth in Section 6.2(t).
"Tenants" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"Tenant Services" shall mean all services supplied by or on behalf of
the Existing Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"Termination of Property Management Documents" shall have the meaning
set forth in Section 2.5.
"Title Commitment" shall have the meaning set forth in Section 5.1.
"Title Company" shall mean Near North National Title Corporation as
issuing agent for First American Title Insurance Company or as escrow agent, as
the case may be.
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"Title Policy" shall have the meaning set forth in Section 8.2(e).
"Trading Day" shall mean a day on which the New York Stock Exchange is
open for business.
"Transactions" shall mean the transactions contemplated by this
Agreement (including without limitation the conveyance of the Met Life Interest
to the Partnership or its designees and any conveyance by Contributor and/or
Met Life of the Property to the Existing Venture or the New Venture).
"Units" shall mean units of limited partnership interest in the
Partnership.
1.2 References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection or article
hereof.
ARTICLE II
Contribution and Sale; Consideration
2.1 Contribution and Sale. Upon the terms and subject to the
conditions contained herein, at the Closing, Contributor shall contribute to
the capital of, the Partnership, and the Partnership shall acquire, the
Contributor Interest and all right, title and interest of Contributor under
Section 7 of the Existing Venture Agreement (the "Buy-Sell Rights"), free and
clear of all Liens (except for the Liens created by the Existing Indebtedness
Documents). Concurrently herewith, Contributor has delivered to the
Partnership a consent of Met Life to the assignment of the Buy-Sell Rights by
Contributor to the Partnership pursuant hereto.
2.2 Consideration.
(a) In exchange for the contribution of the Contributor
Interest and the Buy-Sell Rights and in addition to the assumption of
liabilities and adjustments as hereinafter provided (including without
limitation adjustment in accordance with Article IV), at the Closing,
the Partnership shall (i) issue to Contributor the number of Units
equal to the quotient of (A) the excess of the Net Asset Value over
$10,389,938 divided by (B) the Share Price and (ii) pay to Met Life in
immediately available funds the sum of $10,389,938. In the event that
the acquisition of the Interests is recharacterized as an acquisition
of the Property, then the Parties agree that the value of the
underlying items of Property shall be determined as set forth on
Schedule 2.2.
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(b) Contributor shall not, and shall cause their
Affiliates not to, buy or sell (including without limitation short
sell) any shares of Common Stock during the twenty-five (25) Trading
Days prior to the Closing whether in the open market or in a
negotiated transaction.
(c) Notwithstanding anything contained herein to the
contrary, fractional Units shall not be issued hereunder; instead, the
number of Units to be issued hereunder shall be the number of Units
issuable pursuant to the other provisions of this Agreement rounded up
to the nearest whole Unit.
(d) [Intentionally Deleted]
2.3 Assumption of Liabilities.
(a) At Closing, the Partnership shall cause the New
Venture to assume (i) the obligations of the Existing Venture under
the Existing Indebtedness Documents, as modified pursuant hereto
(including the obligation to repay the principal owing thereunder and
accrued and unpaid interest thereon but excluding liabilities and
obligations that arise out of any facts or circumstances that exist or
existed on or prior to the Closing Date and that constitute a breach
of a representation, warranty or covenant contained in such Existing
Indebtedness Documents or otherwise require the indemnification of or
other payment [other than regularly scheduled payments of principal
and interest] to the Existing Lender) (and the Partnership also shall
assume the liabilities to be assumed by the New Venture pursuant to
this clause (i) to the extent that they are Recourse Liabilities),
(ii) the liabilities and obligations of the Existing Venture arising
from and after the Closing Date under or in respect of the Leases, the
Reciprocal Easement Agreement and the assignable Contracts (with such
liabilities being limited to the same extent, if any, as the liability
of the Existing Venture is limited thereunder) but only to the extent
that such liabilities and obligations do not arise out of any event,
circumstance, action, failure to act or occurrence of any sort or type
which occurred, existed or was taken prior to the Closing Date, and
(iii) other liabilities and obligations herein described to the extent
the Partnership has received proration credit therefor. All of the
obligations to be assumed by the New Venture pursuant to this Section
2.3(a) are herein referred to as the "Assumed Liabilities".
(b) Except as provided in Section 2.3(a), Contributor
shall remain responsible for the Specified Contributor's Liabilities
(as defined below) and any other liability or obligation of the
Existing Venture, Contributor or any Affiliated predecessor of any of
them (collectively, the "Contributor Parties") accruing, or arising
out of events, circumstances, actions, failures to act or occurrences
of any sort or type occurring, prior to the Closing (collectively, the
Contributor's Liabilities"). Notwithstanding the foregoing but
subject to the last sentence of this Section 2.3(b), (x) the
Contributor's Liabilities shall not include any liability to the
extent specifically addressed by a representation or warranty
contained in
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<PAGE> 17
Section 6.2 unless such liability constitutes a Specified
Contributor's Liability and (y) the Contributor's Liabilities shall
not include the cost of repair, remediation or correction of any
physical defect in the Property or its systems or any environmental
matter or Hazardous Substances affecting the Real Property (but do
include damages, fines or other amounts owing to Parties, governmental
authorities or others on account thereof as provided in clauses (iii)
and (iv) below), and the parties hereto acknowledge that the
Partnership has conducted inspections of the Property and the
Improvements and the Partnership assumes responsibility for any such
repair, remediation or correction.
The following are herein referred to as "Specified
Contributor's Liabilities": (i) any liability arising from contracts
or agreements to which any Contributor Party is a party or is bound
(other than the Leases, the Contracts, the Existing Indebtedness
Documents and the Existing Venture Agreement) except to the extent
that the Partnership accepts the benefits thereunder or such liability
is caused by the Partnership's actions, (ii) any tort liability
arising from any accident, injury, event, circumstance, action or
omission occurring during the time the Property was owned by any
Contributor Party, whether or not asserted before or after the
Closing, (iii) any liability to a Party or the Existing Lender for
breach of, or other payment obligation under, a Lease, Reciprocal
Easement Agreement, Contract or Existing Indebtedness Document
(including, without limitation, any claimed overcharge of Adjustable
Tenant Charges or any Rent abatement, tenant fit-out allowance or
other Tenant concession or inducement) that occurred, was due or
accrued during the time the Property was owned by any Contributor
Party, whether or not asserted before or after the Closing, (iv) any
fine, penalty or the like that is imposed or assessed by a
governmental authority for the period during which the Property was
owned by any Contributor Party, whether or not imposed or assessed
before or after the Closing (but not the cost of repair, remediation
or correction of any physical defects in the Property or its systems
or any environmental matter or Hazardous Substances affecting the Real
Property), (v) all federal, state and local taxes of any Contributor
Party of whatever kind and nature relating to the period prior to
Closing or the consummation of the Transactions (other than real
estate taxes and assessments on real property to the extent the
Partnership has received a credit under Article IV), (vi) liabilities
relating to any employees (current or former), employee benefit plans
or collective bargaining agreements of the Existing Venture or the
Existing Manager, including, without limitation, severance pay and
accrued vacation pay obligations and other liabilities of the Existing
Venture, the Existing Manager or others relating to the termination of
such employees as the result of the consummation of the Transactions
(but not the termination by the New Venture or any Affiliate thereof
of any such employees who are employed by the New Venture or such
Affiliate following Closing), (vii) any expenses incurred by any
Contributor Party in connection with the operation of the Property
prior to the Closing (except as otherwise provided in Article IV),
whether or not the bill, statement or invoice therefor is received
before or after Closing, (viii) any costs or liabilities incurred by
the Existing Venture or Contributor in connection with the
Transactions or the consummation thereof or otherwise imposed on
Contributor hereunder, (ix) any liabilities or obligations relating to
property or activities of the Existing Venture other than the Property
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<PAGE> 18
or the operation thereof and (x) liabilities under the Existing
Venture Agreement (including without limitation the Buy-Sell Rights)
or other liabilities of Contributor to Met Life other than the
obligation to make the payment referred to in clause (iii) of Section
2.2(a) in accordance with the terms of this Agreement
Nothing contained in this 2.3(b) shall impair the rights of
the Partnership for a breach of any representation or warranty
contained herein or in the Contributor Closing Documents.
2.4 Matters Relating to Existing Indebtedness. Contributor
shall use reasonable best efforts (including, without limitation, the payment
of the transfer fees and other fees and costs imposed or required to be paid by
the Existing Lender, such as the attorneys' fees of Existing Lender) to obtain,
at or prior to Closing and at no cost to the Partnership or the New Venture,
(i) the unconditional consent of the Existing Lender to the consummation of the
Transactions and to the conversion of the New Venture to a limited liability
company or limited partnership and (ii) a confirmation by the Existing Lender
that it shall have no recourse to the Partnership, the General Partner or other
Affiliates of the Partnership or the assets of any of them or the assets of the
New Venture other than the Property except that the Existing Lender may have
recourse to the Partnership and the other assets of the New Venture in those
instances where the Existing Lender has recourse (without giving effect to the
Transactions) to Met Life and the partners of Contributor in their capacities
as general partners of the Existing Venture or Contributor, as the case may be,
or otherwise (the liabilities for which such recourse against Met Life and the
partners of Contributor exists, the "Recourse Liabilities"). The documents
referred to in this Section are hereinafter referred to as the "Existing
Indebtedness Consent Documents."
2.5 Termination of Existing Management Agreement and Release of
Property Management Liens. On or prior to the Closing, Contributor shall cause
the Existing Management Agreement to be terminated and obtain from the Existing
Manager a release of Liens against the Property with respect to the property
management services performed by the Existing Manager in respect of the
Property through the Closing Date. The document effecting such termination and
release is hereinafter referred to as the "Termination of Property Management
Documents".
2.6 Admission to Partnership; Redemption Rights; Etc.
(a) At the Closing, the General Partner and Contributor shall
execute and deliver an amendment to the Partnership Agreement substantially in
the form of Exhibit E (the "Amendment to Partnership Agreement"), pursuant to
which the Partnership issues to Contributor the number of Units to be issued to
it in accordance with this Agreement and Contributor is admitted as a limited
partner of the Partnership and agrees to be bound by the terms of the
Partnership Agreement, as amended by the Amendment to Partnership Agreement.
(b) At the Closing, the General Partner and Contributor shall execute
and deliver a Redemption Rights Agreement substantially in the form of Exhibit
F (the "Redemption Rights
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<PAGE> 19
Agreement"), pursuant to which Contributor is granted the right to require the
Partnership to redeem its Units from time to time as provided therein.
(c) Contributor acknowledges that the Partnership intends to
distribute prior to Closing the Net Operating Cash Flow for the portion of the
calendar quarter during which the Closing occurs through the day prior to the
Closing Date and that, if such distribution is not made for any reason and the
Closing occurs, Contributor will be entitled to receive as a distribution only
a pro rata portion of the Net Operating Cash Flow which is distributed for such
quarter (and no previous quarters) based on the number of Units issued to it
pursuant hereto relative to the total number of issued and outstanding Units
and the number of days in such quarter from and following the Closing Date
relative to the total number of days in such quarter.
2.7 Pledge Agreement. At the Closing, Contributor shall
execute and deliver to the Partnership a Pledge Agreement substantially in the
form of Exhibit G (the "Pledge Agreement").
2.8 Tenant Allowances and Leasing Commissions. Contributor
shall pay the cost of the tenant allowances and leasing commissions that are
owing or become owing under Leases entered into on or prior to February 20,
1997, and, with respect to such amounts that have not been paid in full or
otherwise satisfied prior to the Closing Date, Contributor shall pay the same
to the Partnership in cash at Closing. From and after and subject to the
occurrence of Closing, the Partnership shall cause the New Venture to pay the
cost of tenant allowances (but not leasing commissions) that are owing or
become owing under Leases entered into following February 20, 1997 (provided
the Partnership shall have approved in writing the terms of such Leases
pursuant to Section 11.2 or otherwise) and, with respect to such amounts that
have been paid prior to the Closing Date, Contributor shall be entitled to a
credit at Closing therefor.
2.9 Matters Relating to Promotional Association. At Closing,
Contributor shall deliver to the Partnership a written waiver in form
reasonably satisfactory to the Partnership (the "Promotional Association
Waiver") pursuant to which Contributor, the Existing Venture and their
respective Affiliates fully and forever waive and release any and all claims,
obligations, liabilities and indebtedness arising from any dealings between the
Promotional Association and any of them on or before the Closing Date.
2.10 Distribution of Excluded Personalty; Etc. On or prior to
Closing, Contributor shall cause the Existing Manager to convey to the Existing
Venture any Personalty to the extent owned by it.
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ARTICLE III
Closing
3.1 Closing. The closing of the Transactions (the "Closing")
shall take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle
Street, Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the
earlier of (a) the Closing of the Buy-Sell Transaction and (b) June 20, 1997
(the "Closing Date").
3.2 Contributor Closing Documents. At or prior to the Closing,
Contributor shall deliver, or cause to be delivered, to the Partnership
(through an escrow with the Title Company) the following documents
(collectively, the "Contributor Closing Documents"), duly executed by
Contributor and the other parties thereto (other than the General Partner and
the Partnership) and in form and substance reasonably acceptable to the
Partnership and to Contributor unless the form thereof is attached hereto:
(a) Assignments of the Interests pursuant to which
Contributor and Met Life convey the Interests to the Partnership
and/or one or more of its designees and Contributor and Met Life
withdraw from the Existing Venture (and, in the case of the assignment
of the Met Life Interest, containing representations and warranties as
to the matters set forth in the consent referred to in the last
sentence of Section 2.1(a);
(b) The Termination of Property Management Documents.
(c) Searches conducted by an independent firm reasonably
satisfactory to the Partnership showing any Uniform Commercial Code,
judgment, bankruptcy, pending suit or tax lien filings against
Contributor, Met Life and/or the Existing Venture in the jurisdictions
designated by the Partnership no later than twenty (20) days prior to
the Closing Date but in any event in the state and county or counties
in which the Mall and the principal offices of the Existing Venture,
Contributor and Met Life are located, which searches shall be dated
not more than ten days prior to the Closing Date.
(d) The instruments, documents or certificates as are
customarily required by the Title Company to be executed by the seller
of a property as a condition to the issuance of a title insurance
policy and endorsements as described in the Title Commitment.
(e) An affidavit of each of Contributor and Met Life
stating its U.S. taxpayer identification number and that it is a
"United States person", as defined by Sections 1445(f)(3) and 7701(b)
of the Code.
(f) The Estoppels.
(g) A written certificate executed on behalf of
Contributor and addressed to the Partnership to the effect that all of
the representations and warranties of Contributor
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<PAGE> 21
herein contained in Section 6.2 are true and correct in all material
respects as of the Closing Date (as supplemented in accordance with
Section 10.3) with the same force and effect as though remade and
repeated in full on and as of the Closing Date (except for actions
taken in accordance with or as contemplated by this Agreement and
except for matters approved in writing or consented to in writing by
the Partnership) or stating the specific respects, if any, in which
any of the representations and warranties is untrue.
(h) Written notices to the Parties to the Reciprocal
Easement Agreement, the Leases and the Contracts and other Owners of
Excluded Parcels advising them of the consummation of the Transactions
and advising them of the address to which Rent or other payments and
notices are to be sent.
(i) Such documents and instruments as shall be
reasonably required to substitute the New Venture for the Existing
Venture as the plaintiff in legal actions contemplated by Section 4.9.
(j) [Intentionally Deleted]
(k) A copy of the certificate of limited partnership of
Contributor, as amended, certified by the Georgia Secretary of State
or the Counties of Clayton and Fulton, as the case may be to the
extent available, as of a date not more than 30 days prior to the
Closing Date and a copy of the partnership agreement of Contributor
and any amendments thereto, together with a certification by the
general partners of such partnership that the attached copies of the
partnership agreement of such partnership, as amended, and the
certificate of limited partnership of such partnership, as amended are
true, accurate and complete and have not been further amended,
revised, restated, cancelled or rescinded up to and including the
Closing Date.
(l) Such certificates as the Partnership may reasonably
request as to the authorization on the part of Contributor of the
execution, delivery and performance of this Agreement and the
authority of the Persons executing and delivering this Agreement and
the Contributor Closing Documents on behalf of Contributor.
(m) An opinion or opinions of counsel for Contributor
dated as of the Closing Date, in form and substance reasonably
acceptable to the Partnership.
(n) All Books and Records.
(o) Keys and combinations to locked compartments within
the Mall.
(p) an updated rent roll containing the items described
in Section 6.2(i) as of the Closing Date or a date not more than 10
days prior thereto.
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(q) The schedules referred to in Section 4.3 and 4.6.
(r) The Contract Party Consents.
(s) The Pledge Agreement.
(t) The Amendment to Partnership Agreement.
(u) The Redemption Rights Agreement.
(v) The Existing Indebtedness Consent Documents.
(w) a special warranty deed and other instruments of
conveyance pursuant to which Contributor and Met Life convey to the
Existing Venture all of their right, title and interest, if any, in
and to the Property.
(x) Such other documents, instruments or agreements which
Contributor is required to deliver to the Partnership pursuant to the
other provisions of this Agreement or which the Partnership reasonably
may deem necessary or desirable in order to consummate the
Transactions or to vest or better vest in the New Venture title to the
Property; provided, however, that any such other documents,
instruments or agreements which the Partnership reasonably deems
necessary or desirable shall not impose upon Contributor any
obligation or liability other than an obligation or liability
expressly imposed upon Contributor pursuant to the terms of this
Agreement or pursuant to the terms of the other Contributor Closing
Documents specified in this Section 3.2.
Notwithstanding any provision to the contrary set forth elsewhere in
this Agreement, if after the use of reasonable best efforts Contributor is
unable to deliver to the Partnership at Closing the Contract Party Consents,
the Estoppels, or the consent of the Existing Lender pursuant to Section 2.4,
the Partnership shall have the option, as the Partnership's sole and exclusive
right and remedy either (a) to terminate this Agreement by giving written
notice of such termination to Contributor on or before the Closing or (b) to
complete Closing without the delivery of such item or items and waive the
requirement for the delivery of such item or items. If the Partnership shall
terminate this Agreement pursuant to the provisions of this paragraph, this
Agreement shall be null and void and no party shall have any further rights or
obligations under this Agreement (other than any right or obligation that
expressly survives the termination of this Agreement).
3.3 Partnership Closing Documents. At or prior to the Closing,
the Partnership shall deliver to Contributor (through an escrow with the Title
Company) the following documents (herein referred to collectively as the
"Partnership Closing Documents"), duly executed by an authorized officer of the
General Partner and the other parties thereto (other than Contributor or Met
Life) and in form and substance reasonably acceptable to Contributor and the
Partnership unless the form thereof is attached hereto:
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(a) An agreement or agreements pursuant to which the New
Venture assumes the Assumed Liabilities.
(b) A duly executed and acknowledged secretary's
certificate, certifying that the Board of Directors of the General
Partner or committee thereof has duly adopted resolutions authorizing
the consummation of the Transactions and certifying the authority of
the officers of the General Partner executing and delivering this
Agreement and the Partnership Closing Documents in their capacities as
officers of the General Partner.
(c) A certificate issued by the Secretary of State of
Delaware dated not earlier than ten days prior to the Closing Date
certifying the good standing of the Partnership as of the date of such
certificate.
(d) Copies of the certificate of limited partnership of
the Partnership and certificate of incorporation of the General
Partner and any amendments thereto, certified by the Secretary of
State of the State of Delaware as of a date not more than 30 days
prior to the Closing Date, together with a certificate of the
secretary of the General Partner to the effect that such certificate
of limited partnership and certificate of incorporation, as amended,
have not been further amended, revised, restated, cancelled or
rescinded up to and including the Closing Date and that the attached
copies of the partnership agreement of the Partnership and by-laws of
the General Partner, in each case as amended, are true, accurate and
complete and have not been further amended, revised, restated,
cancelled or rescinded up to and including the Closing Date.
(e) An opinion of counsel for the Partnership dated as
of the Closing Date, in form and substance reasonably satisfactory to
Contributor (provided that any opinion as to the enforceability of the
Agreement or any Partnership Closing Documents shall be based on the
assumption that the enforceability of such document is governed by the
laws of the State of Illinois without regard to its conflicts of law
rules).
(f) A written certificate addressed to Contributor to
the effect that all of the representations and warranties of the
Partnership contained in Section 6.1 are true and correct in all
material respects on and as of the Closing Date (as supplemented in
accordance with Section 10.3) with the same force and effect as though
remade and repeated in full on and as of the Closing Date (except for
actions taken in accordance with or as contemplated by this Agreement
and except for matters approved in writing or consented to in writing
by Contributor) or stating the specific respects, if any, in which any
of the representations and warranties is untrue. Such certificate
also shall state that the Partnership has no knowledge that any of
Contributor's representations and warranties set forth in Section 6.2
hereof are not true and correct in all material respects or stating
the specific respects, if any, in which the Partnership knows that any
of such representations and warranties are untrue in any material
respect. After the Closing, the Partnership shall be
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estopped from asserting a claim for breach of any of Contributor's
representations and warranties of which the Partnership had actual
knowledge prior to Closing. For purposes hereof, the knowledge of the
Partnership shall mean the current, actual knowledge of Matthew
Bucksbaum, Joel Bayer, Stanley Saddoris and Mark London without any
duty or obligation to conduct any investigation or review of any files
or records.
(g) The Amendment to Partnership Agreement.
(h) The Pledge Agreement.
(i) The Redemption Rights Agreement.
(j) Such other documents, instruments or agreements
which the Partnership may be required to deliver to Contributor
pursuant to the other provisions of this Agreement or which
Contributor reasonably may deem necessary or desirable to consummate
the Transactions; provided, however, that any such other document,
instrument or agreement which Contributor reasonably deems necessary
or desirable shall not impose upon the Partnership any obligation or
liability other than an obligation or liability expressly imposed upon
the Partnership pursuant to the terms of this Agreement or pursuant to
the terms of the other Partnership Closing Documents specified in this
Section 3.3.
ARTICLE IV
Prorations and Adjustments
4.1 Items to Be Prorated. Subject to the other provisions of
this Article and this Agreement, the following items in respect of the Property
or the business of the Existing Venture shall be apportioned or adjusted on a
per diem basis (employing the actual number of calendar days in the period
involved and a 365-day year and assuming Contributor owned all of the Interests
prior to the Closing) between Contributor and the Partnership at the Closing as
of 11:59 p.m., Eastern Standard Time, on the day immediately preceding the
Closing Date and the net amount thereof shall be settled as hereinafter
provided:
(a) real property taxes and assessments (or installments
thereof) based on the most recent tax bills except those required to
be paid directly to the entity imposing the same by those Tenants who
are current in all of their Lease payment obligations on the Closing
Date;
(b) water rents and charges, if any, except those
required to be paid directly to the entity imposing the same by
Tenants who are current in all of their Lease payment obligations on
the Closing Date;
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(c) sewer taxes and rents, if any, except those required
to be paid directly to the entity imposing the same by Tenants who are
current in all of their Lease payment obligations on the Closing Date;
(d) actually accrued interest, if any, required to be
paid to a Party on Security Deposits;
(e) amounts, if any, payable by or owed to the Existing
Venture under the Reciprocal Easement Agreement;
(f) annual permit, license and inspection fees, if any,
on the basis of the fiscal year for which levied, if the rights with
respect thereto continue for the benefit of the New Venture following
the Closing;
(g) fuel oil and liquid propane gas, if any, at the cost
or costs per gallon or cubic foot most recently charged with respect
to the Mall, based on the supplier's measurements thereof, plus sales
taxes thereon;
(h) amounts paid or payable by the Existing Venture to
the Promotional Association;
(i) Rents (subject to the other provisions of this
Article IV);
(j) amounts paid or payable by the Existing Venture
under the Contracts to the extent the same constitute Assumed
Liabilities;
(k) interest on the Existing Indebtedness; and
(l) all other items customarily apportioned in
connection with the sale of properties that are similar to the
Property and similarly located.
Contributor shall cooperate with the Partnership in any transfer of
electricity, gas, water and other utility services if deemed necessary by the
Partnership.
4.2 Installment Payment of Assessments. In furtherance of
Section 4.1(a), if any real property assessment affects the Mall at the Closing
Date and such real property assessment is payable in installments (whether at
the election of the Existing Venture or one or more of its general partners or
otherwise), the installment relating to, or payable over, the Applicable
Closing Fiscal Period shall be apportioned between Contributor and the
Partnership as of 11:59 p.m. Eastern Standard Time, on the day immediately
preceding the Closing Date, and the remaining installments shall be the
obligation of the New Venture. The parties acknowledge that Existing Lender is
holding certain funds in escrow for 1995 and 1996 taxes on the Mall, pending
resolution of the Tax Appeal. If these funds are not applied to 1995 and 1996
taxes, the parties agree that such
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funds shall be remitted to the New Venture and that the New Venture shall pay
such funds (net of any reasonable attorneys' fees and other costs incurred by
the New Venture following Closing in prosecuting the Tax Appeal) to Contributor
to the extent that such funds are returned by Existing Lender to the
Partnership or the New Venture and are not required to be refunded to Tenants
and other Parties pursuant to the Leases and the Reciprocal Easement Agreement.
4.3 Adjustable Tenant Charges.
(a) Notwithstanding anything to the contrary contained
herein, no adjustments or apportionments shall be made with respect to
the expense items listed in Section 4.1 hereof (other than real estate
taxes and assessments, as to which adjustment shall be made as set
forth in Section 4.1) for the Applicable Closing Fiscal Period or any
prior fiscal period to the extent such expense items are payable or
reimbursable from funds collected as Adjustable Tenant Charges.
Contributor shall be responsible for the payment of all such expenses
incurred by the Existing Venture prior to Closing (including without
limitation real estate taxes and assessments for which Contributor has
received credit under Section 4.1), and the Partnership shall cause
the New Venture to pay or otherwise satisfy all such expenses incurred
by it following Closing (including without limitation real estate
taxes and assessments for which the Partnership has received credit
under Section 4.1).
(b) From and after the Closing, the New Venture shall
have the right to receive and retain any amounts required to be paid
as Adjustable Tenant Charges by Tenants which were due and payable on
or before, but remain unpaid on, the Closing Date, and there shall be
no adjustment at Closing with respect thereto. At the Closing,
Contributor shall deliver to the Partnership a true and correct
statement setting forth in reasonable detail and certifying the amount
of Adjustable Tenant Charges collected and expenditures for such items
of expense (and any credits for real estate taxes) made by the
Existing Venture for the portion of the Applicable Closing Fiscal
Period through the Closing Date and for any prior fiscal period.
(c) The Partnership shall cause the New Venture to remit
to Contributor any amounts collected by it after the Closing Date
which relate to Adjustable Tenant Charges payable with respect to any
fiscal period ending prior to the Applicable Closing Fiscal Period.
Within 180 days following the end of the Applicable Closing Fiscal
Period and from time to time thereafter as amounts are received by the
New Venture from Parties, the aggregate amount of Adjustable Tenant
Charges, if any, collected by the New Venture, on the one hand, and
Contributor and the Existing Venture, on the other hand, with respect
to the Applicable Closing Fiscal Period shall be apportioned and
adjusted such that the total amount of such Adjustable Tenant Charges
received by the New Venture, on the one hand, and Contributor and the
Existing Venture, on the other hand, shall be in the same proportion
as the amount of the expense items to which such Adjustable Tenant
Charges relate which each of the New Venture, on the one hand, and
Contributor and the Existing Venture, on the other hand, have borne
(including without limitation real estate taxes or assessments
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for which either party has received credit under Section 4.1), and, to
the extent that either shall have received a greater amount of
Adjustable Tenant Charges, such party or parties shall promptly pay
such excess to the other.
4.4 Advertising and Promotional Contributions. Whenever Fixed
and Other Tenant Charge Arrearages are collected, as contemplated by Section
4.5, the amount remitted to Contributor in accordance with the provisions of
Sections 4.5 and 4.7 shall be reduced or Contributor shall make a payment to
the New Venture from the amount collected by Contributor to the extent the
landlord is obligated under Leases to, or by custom has in the past, made
contributions or other payments to the Promotional Association as Fixed and
Other Tenant Charge Arrearages are collected, and such withheld or remitted
amounts shall be paid to the Promotional Association.
4.5 Fixed and Other Tenant Charge Arrearages. Subject to the
provisions of Section 4.7(c), Fixed and Other Tenant Charge Arrearages (which,
for purposes of this Section 4.5, shall include, without limitation, any real
estate taxes or special assessments or other amounts otherwise required to be
paid by a Party directly to the taxing authority but actually paid by
Contributor or the Existing Venture to the taxing authority with respect to the
amount of the taxes or special assessments actually paid), if and when
collected, shall be paid to the New Venture as to Fixed and Other Tenant Charge
Arrearages which relate to periods from and after the Closing Date, and to
Contributor with respect to all other Fixed and Other Tenant Charge Arrearages.
4.6 Sales Based Tenant Charges. Sales Based Tenant Charges
which are payable with respect to any period prior to the Closing Date or which
have been accrued prior to the Closing Date shall not be apportioned as of the
Closing Date. In lieu thereof, such amounts shall be apportioned, after the
Closing Date and after final determination thereof, so that the amount thereof
to which Contributor shall be entitled shall be the entire amount thereof with
respect to any fiscal period ending prior to the Closing Date, and, for the
Applicable Closing Fiscal Period, an amount which bears the same ratio to the
total Sales Based Tenant Charges for the Applicable Closing Fiscal Period as
the number of days in the Applicable Closing Fiscal Period which have elapsed
prior to the Closing Date bears to the total number of days in the Applicable
Closing Fiscal Period. At the Closing, Contributor shall deliver to the
Partnership a true and correct statement setting forth in reasonable detail and
certifying the amount of Sales Based Tenant Charges collected for the portion
of the Applicable Closing Fiscal Period through the Closing Date.
4.7 Application of Rent Receipts. Notwithstanding anything to
the contrary contained herein, in determining the adjustments and
apportionments pursuant to Sections 4.3, 4.4, 4.5 and 4.6, any payment of Rent
shall be applied to the payment of the item or items of Rent designated by the
Party making such payment or to which such payment otherwise relates in the
reasonable judgment of the Partnership.
4.8 Security and Utility Deposits. At the Closing, Contributor
shall furnish the Partnership with a schedule setting forth and certifying, as
of the Closing Date, the unapplied and
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unreturned portion of any security deposits which have been deposited with the
Existing Venture or its agents (or with any predecessor-in-interest to the
Existing Venture or any such agent) by any Tenants through the Closing Date
(the "Security Deposits") and the amount of any deposits on account with any
utility company servicing the Mall or Existing Lender that will continue for
the benefit of the New Venture following Closing ("Other Deposits"), and
Contributor shall credit to the Partnership at Closing the amount of the
Security Deposits, together with all interest, if any, accrued thereon and
required to be paid to Tenants or actually paid in accordance with past
practices) to Tenants. Contributor shall receive a credit at Closing for the
amount of the Other Deposits.
4.9 Collection of Rents.
(a) The Partnership shall cause the New Venture to use
reasonable best efforts to collect the Fixed and Other Tenant Charge
Arrearages, Adjustable Tenant Charges, Sales Based Tenant Charges and
other Rents which are payable with respect to the Applicable Closing
Fiscal Period and any prior fiscal period, but the Partnership shall
not be required to cause the New Venture to retain a collection
agency, commence litigation or file proofs of claim or commence an
adversary proceeding in a bankruptcy case, or terminate Leases or the
Reciprocal Easement Agreement in connection with such collection
efforts. The Partnership shall not permit the New Venture to waive or
settle any claims for any such amounts in whole or in part to the
extent such amounts, if collected, would be payable to Contributor
hereunder other than in accordance with the policies of the
Partnership from time to time as to Rent delinquencies generally.
Collection costs shall be charged against amounts collected and
charged to the parties hereto in the proportion in which each is
entitled to the proceeds of such collection. The Partnership shall
provide to Contributor semi-annual reports after Closing with respect
to the collection by the New Venture after Closing of any such amounts
which are payable with respect to the Applicable Closing Fiscal Period
and any prior fiscal year.
(b) Contributor shall have the right to seek collection
of any Fixed and Other Tenant Charge Arrearages owed to it hereunder
(if collected) and not collected by or on behalf of it within six
months following the Closing Date; provided, however, that in seeking
to collect any such Fixed and Other Tenant Charge Arrearages,
Contributor shall not be entitled to terminate any Lease or the
Reciprocal Easement Agreement or otherwise seek any remedy other than
a money judgment against the delinquent Party. Neither the
Partnership nor the New Venture shall be required to join in any such
actions or proceedings commenced by Contributor unless the provisions
of any law, rule or regulation at the time in effect shall require
that such actions or proceedings be brought by and/or in the name of
the New Venture, in which event the Partnership shall cause the New
Venture to join and cooperate in such actions or proceedings or permit
the same to be brought by Contributor in the New Venture's name but
Contributor shall pay all costs and expenses relating thereto,
including without limitation the New Venture's reasonable legal fees
in reviewing pleadings and other materials filed in connection with
such litigation.
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(c) Notwithstanding anything to the contrary contained
herein, the Partnership shall have the right at any time on or after
the Closing, and whether or not the joinder of the New Venture shall
be required as a matter of law, to cause the New Venture join in, or
to be substituted for Contributor or the Existing Venture in, any
proceedings for the eviction of Tenants and/or the collection of Rent
which may have been instituted by Contributor or the Existing Venture
either prior to or after the Closing, if the Tenant in question is
still in possession of the premises covered by its Lease and if, in
connection therewith, the Partnership intends to cause the New Venture
to seek eviction of such Tenant, cancellation of the Lease or
repossession of the premises. If the New Venture joins in, or is
substituted for Contributor or the Existing Venture as plaintiff in
any such litigation, the Partnership shall, thereafter, cause the New
Venture to assume sole liability for all costs and expenses of such
litigation, including legal fees and expenses, as may thereafter be
incurred (except as provided below) and shall thereafter control all
aspects of such proceedings, except that the Partnership shall not
permit the New Venture to waive, reduce or otherwise compromise any
claims for Rent relating to any period prior to the Closing Date other
than in accordance with the policies of the Partnership from time to
time as to Rent deficiencies generally. Contributor in any event may,
at its option, continue to participate in such litigation. In any
event, Contributor shall reimburse the New Venture for a pro rata
portion of its out-of-pocket costs and expenses of such collection in
proportion to, but in no event in an amount greater than, the amount,
if any, actually received by Contributor after Closing as a result of
such proceedings; provided, however, Contributor shall be entitled to
a credit for legal fees and expenses incurred by the Existing Venture
prior to the intervention by the New Venture in connection with the
proceedings previously instituted by the Existing Venture in
connection with such collection efforts.
4.10 Settlement of Adjustments.
(a) Contributor and the Partnership acknowledge that it
may be difficult to calculate, as of the day immediately preceding the
Closing Date, certain of the adjustments, apportionments and payments
to be made pursuant to this Article IV. Accordingly, Contributor and
the Partnership hereby agree that any adjustments, apportionments and
payments otherwise required to be made as of the Closing Date may to
the extent necessary or desirable be estimated by the Partnership and
Contributor based on the most recent available data, and, additional
adjustments, apportionments and payments shall be made to adjust for
any differences between the actual apportionment or adjustment and the
amount thereof estimated on the Closing Date. Any errors or omissions
in computing apportionments at the Closing shall be corrected promptly
after their discovery.
(b) Except as otherwise provided herein, net prorations
and adjustments made pursuant to this Article IV on the Closing Date
and determined as provided in subsection (a) above shall be settled in
cash. From time to time after the Closing as further adjustments
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are made as herein provided, settlement thereon between Contributor
and the Partnership shall be made in cash.
(c) The Partnership, upon reasonable advance notice,
shall provide Contributor with access to the books and records of the
New Venture, including back-up calculations and information, relating
to the calculation of the adjustments required to be made pursuant to
this Article IV.
(d) Any Rents that are payable to Contributor hereunder
shall be paid from time to time following the Closing as determined by
the Partnership.
(e) Notwithstanding anything to the contrary contained
herein, a final adjustment shall be made with respect to the amounts
owing under this Article IV as of September 30, 1998, and the amounts
owing settled in cash no later than 10 days thereafter. No further
adjustments or payments shall be required to be made under this
Article IV thereafter (except with respect to legal proceedings for or
bankruptcy claims in respect of the collection of Rent which are
pending on such date or legal proceedings or bankruptcy claims brought
by Contributor under Section 4.9(b)).
ARTICLE V
Title Insurance and Survey
5.1 Title Commitment. The Title Company has delivered to the
Partnership, a commitment of the Title Company (the "Title Commitment") to
issue, at Closing, its ALTA Form B Owners Title Insurance Policy in its current
form as to the Real Property in the aggregate amount of the Gross Asset Value
with coverage against matters relating to federal bankruptcy, state insolvency
or similar creditors' rights laws and with the following special endorsements:
(a) Full extended coverage over all general exceptions;
(b) Location endorsement insuring the accuracy of the
Survey for the Real Property;
(c) An endorsement insuring legal access to the Real
Property from each of the streets bordering thereon, and insuring that
all such streets are dedicated public streets;
(d) An endorsement insuring against loss of title to the
Real Property or the inability of the owner thereof to maintain the
improvements now located thereon by reason of a violation of a
covenant, condition or restriction of record affecting such property;
(e) Utility facility endorsement;
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(f) Zoning endorsement (ALTA 3.1) (with parking);
(g) Tax parcel endorsement;
(h) Contiguity endorsement;
(i) Non-imputation endorsement insuring the New Venture
against any denial of coverage in the event of loss
or damage insured under the terms of the Title
Policy by virtue of a defect, lien, encumbrance,
adverse claim or other matter not known to the Title
Company and not known to the Partnership which were
not shown by the public records but were known to
Contributor and/or Met Life prior to Closing; and
(j) "Fairway" endorsement.
The Partnership also may require the issuance at the Closing of such
additional endorsements as it deems appropriate, but the issuance thereof shall
not be a condition to the Partnership's obligations hereunder.
The Title Commitment requires the Title Company to reinsure portions
of the risk covered by its title insurance policies with reinsurance companies
which have been approved by the Partnership under reinsurance agreements which
have been approved by the Partnership.
5.2 Survey.
(a) Contributor shall cause a survey for the Real
Property, dated not earlier than 90 days prior to the Closing Date, to
be prepared by a licensed or registered professional surveyor in the
jurisdiction in which such property is located and delivered to the
Partnership not later than March 24, 1997 (such survey, the "Survey").
The Survey shall be an Urban ALTA/ACSM Land Title Survey made in
compliance with and meeting the accuracy standards under the "Minimum
Standard Detail Requirements for ALTA/ACSM Land Surveys" jointly
established by the American Land Title Association and American
Congress on Surveying and Mapping then in effect; shall contain Table
A Optional Survey Responsibilities and Specifications 1, 2, 3, 4, 6,
7(a), 7(b)(1), 7(c), 8, 9, 10, 11 and 13; shall show the boundaries of
the Land; shall disclose whether or not the Land comprises a single
parcel of land with no strips, gores or gaps within its boundaries;
shall disclose any encroachments of any Improvements located primarily
on the Land onto adjoining premises or public ways (and whether or not
a valid easement for the benefit of such property exists and is in
place with respect to each such encroachment) or onto or over setback
or building or side yard lines located on the Land or of improvements
located primarily on adjoining premises onto any portion of the Land
(and whether or not a valid easement for the benefit of the adjoining
premises shall exist and be in place with respect to each such
encroachment); shall locate all easements created by recorded
instruments (to the
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extent plottable) or visible on the Land and shall disclose any
encroachment by any of the Improvements located thereon, or any other
structures located on the Land, in violation of any such easements;
shall contain a legal description of the Land; shall show the location
of any adjacent public streets, disclosing access, if any, to the Land
therefrom; shall show the configuration and number of parking spaces
on the Land; shall show the area of the Land; shall indicate whether
the Land is located in an area designated by HUD as having special
flood risks and shall contain a certificate of the surveyor attesting
to the accuracy of the Survey and its conformity to the requirements
of the aforesaid Minimum Standard Detail Requirements, which
certificate shall be directed to the Partnership, the New Venture and
the Title Company.
5.3 Title and Survey Defects. If on the Closing Date there are
additional exceptions to title other than Permitted Exceptions (the "Additional
Exceptions"), Contributor shall, with respect to Additional Exceptions that
resulted from the acts or omissions of Contributor or the Existing Venture, (a)
cause any such exceptions which are monetary liens of a fixed and ascertainable
amount that may be removed and/or bonded solely by the payment of money,
including without limitation, judgment and mechanics' liens, to be removed at
or prior to the Closing and shall deposit with the Title Company releases or
other appropriate instruments, in recordable form, sufficient to cause the
removal of such items from the title; and (b) use commercially reasonable
efforts to cause all other such title exceptions to be so released and removed
from title and waived from the Title Commitment, or insured over at its sole
cost by the Title Company by an endorsement reasonably satisfactory to the
Partnership. Nothing contained herein shall limit the rights of the
Partnership in respect of a breach by Contributor of Section 10.2. If, despite
compliance by Contributor with the provisions of this Section 5.3, title is not
insurable at Closing as required by Section 5.1 and this Section 5.3 (i.e. the
Additional Exceptions have not been removed or insured over), then the
Partnership may, as its sole remedy, (i) accept title subject to all Liens and
other title exceptions (without any abatement or reduction of the consideration
hereunder) or (ii) terminate this Agreement by giving written notice of such
termination to Contributor. In the event that this Agreement is terminated,
this Agreement shall be null and void and the parties shall be released from
all further rights and obligations under this Agreement (other than any right
or obligation that expressly survives the termination of this Agreement).
5.4 Title Insurance Premiums and Survey Costs. Except as
otherwise set forth herein (including without limitation the provisions of
Section 5.3), each of the Partnership and Contributor shall pay one-half of up
to $42,000 of premiums and other charges in connection with the issuance of the
owner's title policies and endorsements complying with the requirements of
Section 5.1 and the Survey, and the Partnership shall pay the remainder of such
costs.
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ARTICLE VI
Representations and Warranties
6.1 Partnership Representations and Warranties. The
Partnership represents and warrants to Contributor as follows:
(a) The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware with full right, power and authority to execute,
deliver and perform this Agreement.
(b) The execution, delivery and performance by the
Partnership of this Agreement have been duly and validly authorized by
all requisite action on the part of the Partnership. This Agreement
has been, and the Partnership Closing Documents to which the
Partnership is a party will be, duly executed and delivered by the
Partnership. This Agreement constitutes, and when so executed and
delivered such Partnership Closing Documents will constitute, the
legal, valid and binding obligations of the Partnership, enforceable
against it in accordance with their terms.
(c) None of the execution, delivery or performance of
this Agreement or the Partnership Closing Documents by the Partnership
does or will, with or without the giving of notice, lapse of time or
both, violate, conflict with, constitute a default or result in a loss
of rights under or require the approval or waiver of or filing with
any Person (including without limitation any governmental body, agency
or instrumentality) under (i) the organizational documents of the
Partnership or any material agreement, instrument or other document to
which the Partnership is a party or by which the Partnership is bound
or (ii) any judgment, decree, order, statute, injunction, rule,
regulation or the like of a governmental unit applicable to the
Partnership.
(d) No broker, finder, investment banker or other Person
is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of the Partnership.
6.2 Contributor's Representations and Warranties. Contributor
represents and warrants to the Partnership as follows:
(a) Contributor is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of
Georgia with full power and authority to execute, deliver and perform
this Agreement.
(b) The execution, delivery and performance of this
Agreement by Contributor have been duly and validly authorized by all
necessary action on the part of Contributor. This Agreement has been,
and the Contributor Closing Documents delivered by Contributor will
be, duly executed and delivered by Contributor. This Agreement
constitutes, and when
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so executed and delivered the Contributor Closing Documents will
constitute, the legal, valid and binding obligations of Contributor,
enforceable against Contributor in accordance with their terms.
(c) Subject to the occurrence of the closing of the
Buy-Sell Transaction and obtaining the consent of the Existing Lender
in accordance with Section 2.4, none of the execution, delivery or
performance of this Agreement by Contributor or the consummation of
the Transactions does or will, with or without the giving of notice,
lapse of time or both, violate, conflict with, constitute a default,
result in a loss of rights, acceleration of payments due or creation
of any Lien upon the property of Contributor or the Existing Venture
or require the approval or waiver of or filing with any Person
(including without limitation any governmental body, agency or
instrumentality) under (i) the organizational documents of
Contributor, the Existing Venture or, to the actual knowledge of
Contributor, any general partner of Contributor or any agreement,
instrument or other document to which Contributor, the Existing
Venture or, to the actual knowledge of Contributor, any general
partner of Contributor is a party or by which it is bound or (ii) any
judgment, decree, order, statute, injunction, rule, regulation or the
like of a governmental unit applicable to any of Contributor, the
Existing Venture or, to the actual knowledge of Contributor, any
general partner of Contributor.
(d) The Existing Venture is a general partnership duly
formed and validly existing under the laws of the State of Georgia
with full power and authority to own the Property and conduct the
business now being conducted by it. The Interests constitute all of
the equity interests in the Existing Venture and no Person (other than
the Partnership) has any option or other right to acquire any Interest
or portion thereof, any other equity interest in the Existing Venture
or any security or instrument convertible into any such equity
interest. Contributor owns the Contributor Interest (constituting a
50% partnership interest in the Existing Venture), and, at Closing,
the Partnership and/or its designee will own the Interests (including
without limitation the Met Life Interest), free and clear of all Liens
other than the Lien created pursuant to the Existing Indebtedness
Documents and Liens created by, through or under the Partnership. The
Existing Venture has no subsidiaries or equity interests in other
Persons.
(e) The Existing Venture has good and marketable title
to the Property, free and clear of all Liens other than the Permitted
Exceptions and, at Closing, the New Venture will have good and
marketable title to the Property free and clear of all Liens other
than the Permitted Exceptions and Liens created by, under or through
the New Venture. The Property comprises all of the assets and
property necessary to operate the Mall as now operated.
(f) Schedule 6.2(f) contains a list of all permits and
licenses currently maintained with respect to the Property and, to
Contributor's knowledge, they are all of the licenses and permits
which are required for the present use of the Property. Neither
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Contributor nor the Existing Venture has received any notice of
violation from any federal, state or municipal entity that has not
been cured or otherwise resolved to the satisfaction of such
governmental entity.
(g) Except as may be shown on the Environmental Report
and to Contributor's knowledge, neither the Existing Venture nor, any
other Person has caused or permitted any Hazardous Material to be
maintained, disposed of, stored, released or generated on, under or at
the Property or any part thereof or any real property adjacent thereto
except for the storage and use of substances commonly present at or
used in the operation and maintenance of shopping centers in
quantities commonly present at shopping centers and in compliance with
all applicable laws, including without limitation Environmental Laws.
Contributor has no knowledge of any lack of compliance by the Existing
Venture or any occupant of the Property with the Environmental Laws
pertaining to the Property or the operation thereof. Neither
Contributor nor the Existing Venture has received any notice from any
governmental unit or other Person (including without limitation any
consultant or engineer engaged by the Existing Venture or other
Person) that it or the Real Property or any occupant thereof is not in
compliance with any Environmental Law, that the Real Property or any
portion thereof has been used as a storage or disposal site for
Hazardous Materials (other than the storage of substances commonly
present at or used in the operation and maintenance of shopping
centers in quantities commonly present at shopping centers and in
compliance with applicable laws) or that it has any liability with
respect thereto, and there are no administrative, regulatory or
judicial proceedings pending or, to the knowledge of Contributor,
threatened with respect thereto pursuant to, or alleging any violation
of, or liability under any Environmental Law. Except for the
underground propane tank used in connection with the emergency
generator, to Contributor's knowledge, no underground or above-ground
storage tanks are located on or under the Real Property and there is
no facility located on or at the Real Property that is subject to the
reporting requirements of Section 312 of the Federal Emergency
Planning and Community Right to Know Act of 1986 and the federal
regulations promulgated thereunder (42 U.S.C. Section 11022).
(h) [Intentionally Deleted]
(i) Schedule 6.2(i) contains a rent roll for the Mall as
of June 10, 1997 showing identification of each rentable space in the
Mall by space number, whether leased or not, and for each such space,
the name of the Tenant, the commencement and expiration dates of the
current term of the Lease, the square footage of such space, the
minimum or fixed annual rent payable, the percentage sales rate and
sales breakpoint therefor, the unapplied amount of any security or
other deposit held, all delinquencies in Rent, all outstanding rent
abatements, tenant fit-out allowances and other tenant concessions or
inducements, all renewal options and "kick-out" clauses. All
information therein is materially accurate as of its date. No Tenant
has paid any rent in advance except for the current month.
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<PAGE> 36
(j) Schedule 6.2(j)-1 contains a complete and correct
list of all existing Leases and modifications thereof and supplements
thereto (including without limitation side letters) regardless of
whether the terms thereof have commenced, setting forth with respect
to each (i) the date thereof and of each modification thereof and
supplement thereto and (ii) the names of the parties thereto
(including the name of the current assignee, if any, but only if and
to the extent Contributor has actual notice of any such assignment).
The documents listed on Schedule 6.2(j)-2 constitute a complete and
correct list of the reciprocal easement agreements relating to the
Real Property and modifications thereof and supplements thereto
(including without limitation side letters) (the "Reciprocal Easement
Agreement") setting forth with respect to each (i) the date thereof
and of each modification thereof and supplement thereto and (ii) the
names of the parties thereto. True and complete copies of the
Reciprocal Easement Agreement and Leases, including each written
modification thereof and supplement thereto and all material
correspondence between the Existing Venture and the Parties thereto
have heretofore been furnished to the Partnership for inspection. The
Reciprocal Easement Agreement and each Lease constitutes the entire
agreement between the parties thereto and there are no oral promises
or agreements amending or modifying the same.
(k) There are no leases or other rights of occupancy or
use relating to the Real Property other than the Leases and the
Reciprocal Easement Agreement and other rights of persons arising
under instruments or agreements which comprise Permitted Exceptions
and/or the Contracts, except subleases, concessions or license
agreements which may have been entered into by Tenants or by
subtenants of Tenants. Each of the Leases and the Reciprocal Easement
Agreement is valid and subsisting and in full force and effect, and
Contributor has received no notice of the termination of any easement
granted therein.
(l) (i) No Party to the Reciprocal Easement
Agreement or any Lease has made any written claim to Contributor (A)
that the Existing Venture has defaulted in any extent in performing
any of its obligations under the Reciprocal Easement Agreement or such
Lease which has not heretofore been cured, (B) that any condition
exists which with the passage of time would constitute any such
default, or (C) that such Party is entitled to any reduction in,
refund of, or counterclaim or offset against, or is otherwise
disputing, any Rents or other charges paid, payable or to become
payable by such Party, to cancel the Reciprocal Easement Agreement or
such Lease or to be relieved of its operating covenants thereunder.
(ii) Contributor has received no written notice of
and have no actual knowledge of any material default under the
Reciprocal Easement Agreement or any Lease on the part of the Party or
Parties thereto, except for delinquencies in the payment of Rents
disclosed on the rent roll described in Section 6.2(i). The Existing
Venture is not in default (without giving effect to any applicable
notice and cure rights) in any respect with respect to any Lease or
the Reciprocal Easement Agreement.
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(iii) There are no unsatisfied rent abatements or
other tenant concessions or inducements, including, without
limitation, lease assumptions or buy-outs, applicable to any of the
Leases or any rights to extend or renew any of the Leases except as
set forth in the rent roll referred to in Section 6.2(i).
(iv) No Party to any Lease or the Reciprocal
Easement Agreement has any rights, options or rights of first refusal
of any kind which are currently in effect, to purchase or to otherwise
acquire the Real Property or any part thereof or interest therein
other than the rights of such Tenant (as tenants only) under its Lease
or such Party to the Reciprocal Easement Agreement under the
Reciprocal Easement Agreement (with respect to easements only).
(m) Contributor has furnished the Partnership with the
audited financial statements of the Existing Venture (consisting of
balance sheets and income statements) as of, and for the calendar
years ended, December 31, 1995 and December 31, 1996 (the "Financial
Statements"). The Financial Statements are consistent with the books
and records and accounts of the Existing Venture and fairly present
the financial condition and results of the Existing Venture as of the
dates thereof and for the periods referred to therein, and the
Financial Statements have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout the
periods indicated. Since December 31, 1996, the Existing Venture has
conducted its business in the ordinary course consistent with past
practice and there have been no material adverse changes in the
financial condition of the business, and Contributor has no knowledge
of any circumstance or event which, insofar as be reasonably foreseen,
is likely to result in any such material adverse change.
(n) The Existing Venture has no liabilities (absolute,
accrued, contingent or otherwise) except liabilities reflected or
reserved against in the Financial Statements (including the notes
thereto), liabilities incurred in accordance with Section 10.2 and
liabilities arising in the ordinary course of business and consistent
with past practice which are not material, in the aggregate, to the
Existing Venture.
(o) Schedule 6.2(o) lists the patents, trademarks
(including registrations thereof), and trade names which are used by
the Existing Venture in connection with the operation of the Mall (the
"Intellectual Property"). To Contributor's knowledge, (i) the conduct
of the business of the Existing Venture and the use of the
Intellectual Property do not infringe upon the patents, trademarks,
copyrights or other intellectual property rights of any third party
and (ii) no third parties are currently infringing upon the patents,
copyrights, trademarks or other intellectual property rights of the
Existing Venture. Neither Contributor nor the Existing Venture has
granted to any Person or Persons the right to use the Intellectual
Property or any portion thereof.
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<PAGE> 38
(p) Neither Contributor nor Existing Manager is a party
to or is bound by any collective bargaining or union agreements with
respect to the Mall. Neither Contributor nor the Existing Venture has
encountered any labor union organizing activity or experienced any
actual or threatened employee strikes, work-stoppages, slow-downs or
lockouts. The Existing Venture has no employees and does not maintain
or sponsor any employee benefit plan, including, without limitation,
any plans subject to the Employer Retirement Income Security Act of
1974, as amended.
(q) Schedule 6.2(q) contains a true and complete list of
all Contracts with respect to the Mall, including all modifications
thereof and supplements thereto (including without limitation side
letters). To the best of Contributor's actual knowledge, there has
been no default (without giving effect to any notice and cure rights)
by the Existing Venture or any Party under any Contract which has not
heretofore been cured. Neither Contributor nor the Existing Venture
has received notice of any claim by a Party of any such default, which
has not heretofore been cured. A true and complete copy of each
Contract, including any amendments or supplements thereto, has been
delivered or made available to the Partnership. Such documents
constitute the entire agreement between the Parties thereto and there
are no oral promises or agreements amending, modifying or
supplementing the same.
(r) Except for the existing study of the addition of
collector distribution lanes to Interstate 75 and the addition of an
interchange west of the Real Property, Contributor has received no
written notice of any (and, to the best of Contributor's actual
knowledge, there is no) pending or threatened condemnation proceeding
or other proceeding or action in the nature of eminent domain with
respect to all or any part of the Real Property or any property owned
by a Party to the Reciprocal Easement Agreement which is the subject
of the Reciprocal Easement Agreement.
(s) The Real Property is an independent unit which does
not now rely on any facilities (other than facilities covered by
Permitted Exceptions [including, without limitation, the Reciprocal
Easement Agreement] or facilities of municipalities or public utility
and water companies) located on any property not included in the Real
Property to fulfill any municipal or governmental requirement or for
the furnishing to the Real Property of any essential building systems
or utilities, including but not limited to, water, electrical,
plumbing, mechanical and heating, ventilating and air conditioning
systems, drainage facilities, catch basins and retention ponds, sewage
treatment facilities and the like, unless recorded easements or other
rights are in effect for the benefit of the Real Property (which run
with the land) for the continued use and benefit thereof. Except as
may be covered by the Permitted Exceptions (including, without
limitation, the Reciprocal Easement Agreement) and, to the best of
Contributor's knowledge, no building or other improvement not included
in any part of the Real Property relies on any part of the Real
Property to fulfill any governmental or municipal requirement or to
provide facilities to such building or improvement for any essential
building systems or utilities, including, without limitation,
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electrical, plumbing, mechanical, sewage treatment or heating,
ventilating and air conditioning facilities or services.
(t) Copies of current real estate tax bills with respect
to the Real Property, other than tax bills sent to Tenants who have
the obligation to pay such taxes to the collecting authority, have
been delivered to the Partnership. No portion of the Real Property
comprises part of a tax parcel which includes property other than
property comprising all or a portion of the Real Property. Except for
a pending ad valorem tax appeal (the "Tax Appeal"), there is no
application or proceeding pending with respect to a reduction or an
increase of such taxes. Contributor has no knowledge of any special
tax or assessment to be levied against the Real Property or any change
in the tax assessment of the Real Property.
(u) Neither Contributor nor, to Contributor's actual
knowledge, the Existing Venture has received notice that there is,
and, to Contributor's actual knowledge, there does not now exist, any
violation of any restriction, condition or agreement contained in any
easement, restrictive covenant or any similar instrument or agreement
affecting the Real Property or any portion thereof.
(v) To the knowledge of Contributor, the Property has
been operated in compliance with all laws, statutes, rules,
regulations, and ordinances, neither Contributor nor the Existing
Venture has received any notice from any governmental authority having
jurisdiction over the Real Property or the Mall or from any other
Person (including without limitation a consultant or engineer or any
insurance company or Board of Fire Underwriters) (A) of any violation
of any law, ordinance, order or regulation (including without
limitation the ADA) relating to the Mall which has not heretofore been
corrected or remedied or (B) requiring any alterations, improvements
or changes at the Mall or any portion thereof which have not been
completed. To Contributor's knowledge, the Existing Venture has no
obligation to any governmental authority for the performance of any
capital improvements or other work to be performed in or about the
Real Property or donations of monies or land (other than general real
property taxes) which has not been completely performed and paid for.
(w) Except for the Tax Appeal and as provided in
Schedule 6.2(w), there is no litigation, including any arbitration,
investigation or other proceeding by or before any court, arbitrator
or governmental or regulatory official, body or authority which is
pending or, to Contributor's knowledge, threatened against Contributor
or the Existing Venture relating to the Mall or the Transactions and
there are no unsatisfied arbitration awards or judicial orders against
any of them. To Contributor's knowledge and except for the Tax
Appeal, there is no litigation, including any arbitration,
investigation or proceeding by or before any court, arbitrator or
governmental or regulatory official, body or authority which is
pending or threatened against Met Life relating to the Mall or the
Transactions and there are no unsatisfied arbitration awards or
judicial orders against Met Life relating to the same.
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Copies of all pleadings and other documents with respect to the
litigation described on Schedule 6.2(w) have been furnished to the
Partnership and are true, accurate and complete in all respects.
(x) Schedule 6.2(x) contains a true and accurate list of
all policies of insurance relating to the Mall, which policies are and
will be kept in full force to and including the Closing Date. All
premiums for such insurance have been paid in full. Neither
Contributor nor the Existing Venture has received (and Contributor has
no knowledge of) any notice or request from any insurance company or
Board of Fire Underwriters (or organization exercising functions
similar thereto) cancelling or threatening to cancel any of said
policies or denying or disputing coverage thereunder.
(y) Except as set forth in Schedule 6.2(y) and to the
knowledge of Contributor, none of the Tenants or Anchors is the
subject of any bankruptcy, reorganization, insolvency or similar
proceedings or has ceased or reduced or intends to cease or reduce
operations at the Mall other than temporarily due to casualty,
remodeling, renovation or similar cause.
(z) Contributor has no knowledge of any material
structural or other material physical defects in the Improvements or
any component or system of the Improvements. The Partnership
acknowledges that the Improvements are over twenty years old and that,
in the normal and ordinary course of business, certain repairs and
replacements of Improvements and systems may be required.
(aa) Schedule 6.2(aa) accurately sets forth (i) a list of
all instruments, agreements and other documents relating to the
Existing Indebtedness and all modifications or amendments thereof and
supplements thereto (including without limitation guaranties,
indemnity agreements and side letters) (the "Existing Indebtedness
Documents"), (ii) the date of the Existing Indebtedness Documents and
of each modification or amendment thereof and supplement thereto,
(iii) the name of the holders of the Existing Indebtedness as of the
date hereof, (iv) the unpaid balances thereof as of the date hereof,
(v) the security therefor as of the date hereof and (vi) the amount of
any deposits or escrows held or established in connection therewith.
The Existing Indebtedness Documents are in full force and effect,
neither Contributor nor the Existing Venture has received any notice
of default under any Existing Indebtedness Document, and, to the
knowledge of Contributor, no default on the part of the Existing
Venture or any other Party thereto exists thereunder (without regard
to notice and cure provisions). A true and complete copy of the
Existing Indebtedness Documents, including each written modification
thereof and supplement thereto, have heretofore been furnished to the
Partnership. Such documents constitute the entire agreement between
the Existing Venture and each Party thereto, and there are no oral
promises or agreements amending or modifying the same.
(bb) Contributor is aware that the Units to be issued to
it hereunder shall not be registered under the 1933 Act or under the
securities laws of any state or other jurisdiction;
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that the Partnership shall not have any obligation to register the
same in connection with the offering, sale or issuance thereof to them
pursuant hereto or at any time thereafter; that the Units are subject
to restrictions on transfer contained in the Partnership Agreement and
the Pledge Agreement and herein and, in any event, cannot be sold
unless they are subsequently registered under the 1933 Act or an
exemption from such registration is available; and that the
Partnership, in issuing its Units in accordance with the provisions
hereof, is relying upon the representations and warranties of
Contributor contained herein.
(cc) Contributor has received a copy of, has been advised
to read, and has read the Memorandum, including its exhibits, has
become familiar with the Memorandum's terms and provisions, and has
been advised to consult, and has consulted, with independent tax
counsel regarding the tax consequences of the Transactions.
(dd) Contributor has been provided with such other
information regarding the Partnership as it has requested and has had
an opportunity to meet with and ask questions of representatives of
the Partnership.
(ee) Contributor is an "accredited investor" within the
meaning of Regulation D under the 1933 Act and has knowledge and
experience in financial and business matters such that it is capable
of evaluating the merits and risks of receiving and owning the Units
to be issued to it pursuant hereto, and each such Person is able to
bear the economic risk of such ownership.
(ff) The Units to be acquired by Contributor pursuant to
this Agreement are being acquired by Contributor for their own
account, for investment purposes only and not with a view to, and with
no present intention of, selling or distributing the same (other than
a distribution of such Units to the partners of Contributor or the
partners, if any, of such partners).
(gg) No broker, finder, investment banker or other Person
is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on
behalf of Contributor except for Lazard Freres L.L.C., whose fee will
be paid solely by Contributor.
(hh) Except as set forth on Schedule 6.2(ah), the
Existing Venture is not under obligation to make contributions or
otherwise provide assistance to any promotional association or
promotional fund and has not customarily in the past made or provided
any such contributions or assistance. The promotional association
established with respect to the Property (the "Promotional
Association") is an independent association established by and on
behalf of the Tenants, the Existing Venture having no ownership,
fiduciary or monetary interest of any kind therein. The Existing
Venture has remitted to the Promotional Association any amounts
received by it from Tenants and other Parties that constitute
contributions to the Promotional Association.
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(ii) To Contributor's knowledge, Contributor has
delivered to the Partnership true and complete copies of all
environmental reports (including without limitation asbestos surveys),
engineering reports, ADA surveys and other material reports or studies
relating to the Mall or the Property that were prepared at the request
of or otherwise are in the possession of the Existing Venture,
Contributor or any Affiliate of Contributor.
(jj) Except as indicated on Schedule 6.2(aj), neither
Contributor nor any one or more of its general partners directly or
indirectly owns or leases any land within a one mile radius of the
Property.
(kk) The Existing Venture Agreement is in full force and
effect, there has been no default by Contributor under the Existing
Venture Agreement, Contributor has received no notice of default
thereunder, the Existing Venture Agreement contains the entire
agreement between Contributor and Met Life and there are no oral
promises or agreements amending or modifying the same.
With regard to this Section 6.2, the "actual knowledge", "best of
actual knowledge" or "knowledge" of Contributor shall be expressly limited to
the actual knowledge of Mr. James B. Carson, Jr., Mr. James W. Bealle, Mr.
Daniel B. Rather, Mr. William A. Mitchell, Jr., James P. Erickson and Mr.
Harold M. Grumann, Jr., without any duty or obligation on any of them to
conduct any investigation or to review any files or records of the Existing
Venture or Contributor. The receipt of "notice" shall mean the receipt of
actual written notice.
ARTICLE VII
Access and Certain Rights of Early Termination
7.1 Due Diligence and Access.
(a) From the date hereof until the Closing, Contributor
shall cause the Existing Venture to give the Partnership and its
representatives and consultants, during normal business hours, upon
reasonable notice and in a manner that does not unreasonably interfere
with the operation of the Existing Venture's business, access to and
the right to inspect the Mall and the Property (including without
limitation for purposes of conducting environmental testing). From
the date hereof until Closing and upon request by the Partnership,
Contributor promptly shall provide the Partnership with other material
information and data with respect to the Mall and the Property which
is in the possession of Contributor or the Existing Venture, including
without limitation copies of Leases, the Reciprocal Easement Agreement
and the Contracts and such financial and other information as the
Partnership reasonably requests with respect thereto. The Partnership
may contact Parties as the Partnership deems appropriate in connection
with its due diligence examination.
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(b) From the date hereof until the Closing, the
Partnership shall provide to Contributor such public information and
data with respect to the Partnership and the General Partner which is
in the Partnership's possession and which Contributor may request.
(c) The Partnership hereby indemnifies and agrees to
defend and hold harmless the Existing Venture, its successors and
assigns and their respective partners, officers, directors, employees
and agents from and against any Loss proximately caused by the
exercise by the Partnership of its rights of access and inspection
pursuant to the provisions of this Section 7.1. The indemnification
obligations of the Partnership under this Section 7.1(c) shall survive
the termination of this Agreement.
7.2 [Intentionally Deleted]
7.3 Environmental Report. The Partnership, at its sole cost
and expense, may (a) cause an environmental consultant of its choice (the
"Consultant") to conduct a Phase I environmental audit and asbestos survey of
the Real Property (and any additional testing recommended by the Consultant)
and deliver a report thereof (the "Environmental Report") to the Partnership.
ARTICLE VIII
Conditions to Closing
8.1 Conditions to Contributor's Obligations. Contributor's
obligation to close is subject to satisfaction of each of the following
conditions (any of which may be waived by Contributor in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all
of the covenants and agreements to be complied with or performed by
the Partnership under this Agreement on or before the Closing shall
have been complied with or performed in all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties made by the Partnership in this
Agreement (without regard to any supplementation in accordance with
Sections 3.3(f) or 10.3) shall be true and complete in all material
respects on and as of the Closing Date (without regard to events or
developments permitted hereunder or as to which Contributor has
otherwise consented in writing).
(c) No Other Termination. No termination of this
Agreement by Contributor or the Partnership shall have occurred
pursuant to any other provision hereof.
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(d) No Litigation. At Closing, there is no litigation,
including any arbitration, investigation or other proceeding, pending
by or before any court, arbitrator or governmental or regulatory
official, body or authority or any decree, order or injunction issued
by any such court, arbitrator or governmental or regulatory official,
body or authority and remaining in effect which does or is likely to
prevent or hinder the timely consummation of the Closing by the
Partnership.
(e) Closing of Buy-Sell Transaction. The closing of the
Buy-Sell Transaction has occurred or is concurrently occurring or has
not occurred other than by reason of the default of Met Life.
8.2 Conditions to Partnership's Obligations. The Partnership's
obligation to close is subject to satisfaction of each of the following
conditions (any of which may be waived by the Partnership in its sole
discretion):
(a) Compliance with Agreement. On the Closing Date, all
of the covenants and agreements to be complied with or performed by
Contributor under this Agreement on or before the Closing shall have
been complied with or performed in all material respects.
(b) Accuracy of Representation and Warranties. The
representations and warranties made by Contributor in this Agreement
(without regard to any supplementation in accordance with Sections
3.2(g) or 10.3) shall be true and complete in all material respects on
and as of the Closing Date (without regard to events or developments
permitted hereunder or as to which the Partnership has otherwise
consented in writing).
(c) Estoppels Obtained. Contributor shall have obtained
Estoppels from all Anchors and at least 80% of Tenants.
(d) Consents Obtained. The Contract Party Consents and
the consent of the Existing Lender pursuant to Section 2.4 shall have
been obtained.
(e) Issuance of Title Policy. The Title Company shall
have issued, or be irrevocably committed to issue, with respect to the
Real Property its owners' title insurance policy pursuant to the Title
Commitment as herein contemplated subject only to the Permitted
Exceptions with respect thereto (the "Title Policy").
(f) No Other Termination. No termination of this
Agreement by the Partnership or Contributor shall have occurred
pursuant to any other provision hereof.
(g) No Litigation. At Closing, there is no litigation,
including any arbitration, investigation or other proceeding, pending
by or before any court, arbitrator or governmental or regulatory
official, body or authority or any decree, order or injunction issued
by any such court, arbitrator or governmental or regulatory official,
body or authority
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and remaining in effect which does or is likely to prevent or hinder
the timely consummation of the Closing by Contributor or materially
adversely affect the Mall or the operation thereof.
(h) Closing of Buy-Sell Transaction. The closing of the
Buy-Sell Transaction has occurred or is concurrently occurring.
Nothing contained in this Article VIII shall relieve any party hereto
of responsibility for the breach by such party of a representation, warranty or
covenant of such party contained in this Agreement.
ARTICLE IX
Condemnation and Destruction
9.1 Casualty or Condemnation in General.
(a) If prior to the Closing Date the Property shall be
the subject of a Taking or Casualty, Contributor shall promptly inform
the Partnership of same.
(b) If prior to the Closing Date the Property shall be
the subject of a Substantial Taking or a Substantial Casualty, the
Partnership may by written notice delivered to Contributor on or
before the Closing Date, elect as its sole remedy on account thereof,
either (i) to terminate this Agreement, and the rights of the parties
hereto, in which event this Agreement (other than any right or
obligation that expressly survives the termination of this Agreement)
shall terminate as of the date of delivery of such notice; or (ii) to
continue this Agreement in effect, in which event (A) the New Venture
shall be entitled to receive and retain any and all insurance
proceeds, whether collected before or after Closing (and Contributor
shall pay in cash to the New Venture all deductibles owing in respect
thereof), or condemnation awards with respect thereto (less, in each
such case, (i) reasonable costs of collection thereof (other than the
cost of deductibles), and (ii) amounts, if any, applied by the
Existing Venture prior to Closing to preservation, repair or
restoration), and (B) Contributor shall cooperate in all reasonable
respects with the New Venture at the New Venture's sole cost and
expense, in connection with the collection thereof, to the extent not
collected at the Closing.
(c) If prior to the Closing Date, the Property or any
portion thereof is (i) the subject of a Taking (other than a
Substantial Taking) or (ii) the subject of a Casualty (other than a
Substantial Casualty), this Agreement shall nevertheless remain in
full force and effect with no abatement of the consideration to be
delivered to Contributor on account thereof and the Transactions shall
be consummated as provided herein. In such event, any insurance
proceeds or condemnation awards shall be applied and paid in the same
manner and subject to the same provisions set forth above as are
applicable in a case of a
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Substantial Casualty or a Substantial Taking as to which the
Partnership has elected nevertheless to continue this Agreement in
effect.
9.2 Adjustment of Claims and Condemnation Proceedings. If a
Taking or Casualty shall occur, Contributor shall cause the Existing Venture to
initiate or cause to be initiated all actions required to adjust, compromise
and collect the awards payable by the condemning authority or the proceeds
payable under the applicable policy or policies of casualty insurance.
Contributor shall cause the Existing Venture to permit the Partnership to
participate with the Existing Venture, at Contributor's option, in the
initiation of all such actions and, in any event, Contributor shall cause the
Existing Venture to consult with, and keep the Partnership advised of, the
Existing Venture's progress in connection therewith. Contributor shall not
permit the Existing Venture to agree to any settlement of the awards or
insurance proceeds payable in connection with any such Taking or Casualty (or
enter into any agreement in lieu of a Taking) without the Partnership's
approval, which approval shall not be unreasonably withheld or delayed.
ARTICLE X
Additional Covenants
10.1 Indemnification.
(a) Indemnification by Contributor. From and after the
Closing, Contributor shall indemnify, defend and hold harmless the
Partnership and the New Venture, their successors and assigns and
their members, shareholders, partners, directors, officers, employees
and agents (the "Indemnified Partnership Persons") from and against
any claim, action, demand, loss, cost, expense, liability, penalty or
damages, including, without limitation, reasonable attorneys' fees and
expenses (a "Loss"), incurred or suffered by any Indemnified
Partnership Person that results from or arises out of (i) the breach
or inaccuracy of any representation or warranty made by Contributor in
this Agreement or the Contributor Closing Documents, (ii) the breach
or non-fulfillment by Contributor of any of the covenants or
agreements of Contributor under this Agreement or Contributor Closing
Documents (other than the indemnity obligations set forth in clauses
(i) and (iii) of this Section 10.1(a)), or (iii) the Contributor's
Liabilities.
(b) Indemnification by Partnership. From and after the
Closing, the Partnership shall indemnify, defend and hold harmless
Contributor, its successors and assigns and their respective partners,
shareholders, directors, officers, employees and agents (the
"Indemnified Contributor Persons") from and against any Loss incurred
or suffered by any Indemnified Contributor Person that results from or
arises out of (i) the breach or inaccuracy of any representation or
warranty made by the Partnership in this Agreement or the Partnership
Closing Documents, (ii) the breach or non-fulfillment by the
Partnership of any of the covenants or agreements of the Partnership
under this Agreement or the Partnership Closing Documents, or (iii)
the Assumed Liabilities.
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(c) Joint Cooperation. Upon obtaining knowledge of the
institution of any action or proceeding or other event which could
give rise to a claim for indemnity hereunder, the Person seeking
indemnification shall promptly give written notice thereof to the
party from whom indemnification may be sought. If such claim or demand
relates to a claim or demand asserted by a third party, the
indemnifying party shall have the right, at its expense, to employ
counsel to defend such claim or demand and the indemnified Person
shall have the right, but not the obligation, to participate in the
defense of any such claim or demand at its own cost; provided,
however, that counsel to be utilized in defense of the matter by the
indemnifying party shall be reasonably approved by the indemnified
Person, and provided further that the indemnifying party shall not
assume the defense for matters as to which there is a conflict of
interest or separate and inconsistent defenses, in which case the
indemnified Person will utilize counsel reasonably approved by the
indemnifying party and the indemnifying party will reimburse the
indemnified Person for any legal and other expenses reasonably
incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action. The indemnified Person
will not settle any claim or demand for which indemnity is sought
hereunder without the indemnifying party's written consent (which
consent shall not be unreasonably withheld or delayed), and the
indemnifying party may settle such claim or demand with the written
consent of the indemnified Person, which consent may not be
unreasonably withheld or delayed so long as the indemnified Person
receives an unconditional release. The indemnified Person shall make
available to the indemnifying party all records and other materials
reasonably required by it in contesting a claim or demand asserted by
a third party against the indemnified Person and shall cooperate in
the defense thereof.
(d) Liability Limits. The indemnification obligations
of Contributor under clause (i) or, to the extent that they do not
relate to the failure to pay money under Article IV, clause (ii) of
Section 10.1(a) shall not exceed in the aggregate the Cap Amount. The
indemnity obligations of Contributor hereunder shall not apply towards
the Cap Amount and Contributor shall not be liable to the Partnership
under this Section 10.1 to the extent that the Partnership is
compensated for the same liability or loss from insurance proceeds
actually received. Further, the indemnity obligations of Contributor
hereunder shall not apply toward the Cap Amount or be subject to the
limitations contained in this paragraph to the extent that they also
arise under clause (iii) or relate to the failure to pay money under
Article IV.
10.2 Conduct of Business Pending Closing. From the date hereof
until the Closing, Contributor shall cause the Existing Venture to (a) use
reasonable best efforts to maintain, for the benefit of the New Venture
following the Closing, the goodwill of Tenants, prospective tenants, vendors
and other parties having business relations with the Existing Venture; (b) pay
its debts (or in good faith contest the same) and perform its obligations as
they become due; (c) maintain the Mall in good condition and repair, as such
condition shall be altered by reason of Casualty, Taking and/or normal wear and
tear; (d) without the express written consent of the Partnership, not (i) enter
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into any new or additional Lease, or extend, renew or modify, consent to any
assignment of or sublease or other matter in respect of, or waive any material
right under any Lease, other than renewals or extensions resulting from the
exercise by a Tenant of a currently existing renewal or extension option, (ii)
cancel or terminate any Lease or take any action to enforce any Lease which
would have the effect of cancelling or terminating the same, (iii) enter into a
new reciprocal easement or similar agreement or amend or modify, consent to the
assignment or any other matter in respect of or waive any material right under
the Reciprocal Easement Agreement, (iv) make any alterations to the Mall or
enter into any new contracts or extend or renew or cancel any Contract relating
to capital expenditures, (v) enter into any other new contracts or extend,
renew or cancel, consent to the assignment or any other matter in respect of or
waive any material right under any other Contract, except in the ordinary and
usual course and business and in accordance with past practices and policies
(provided any such new extended or renewed contracts must be terminable without
penalty or payment on not more than 30 days' notice), (vi) sell, transfer,
exchange, further encumber or grant interests (including easements) in the
Property or any part thereof (vii) extend, modify or amend any of Existing
Indebtedness Documents or borrow additional funds thereunder, (viii) permit the
Existing Venture to have employees and (ix) otherwise take any action which
could or would render inaccurate any of the representations or warranties made
by Contributor in this Agreement; and (e) otherwise operate the Mall in the
ordinary course consistent with current practice. From the date hereof until
the Closing or the termination of this Agreement, Contributor shall not sell,
transfer, exchange, encumber or grant any interest in its Interest or the
Buy-Sell Rights or any part thereof, permit the sale, transfer, exchange,
further encumbrance or grant of any interest in the Property, or engage in
negotiations or discussions with, or otherwise solicit or assist, any third
party relating to the acquisition by such third party of the Property or any
equity interest in the Existing Venture. Contributor shall cause the Existing
Venture to make an election under Section 754 of the Code in the information
return filed by the Existing Venture for its final tax year.
10.3 Supplemental Disclosure. From the date hereof through
Closing, Contributor and the Partnership shall have the continuing obligation
to promptly supplement or amend the Schedules with respect to the
representations and warranties made by it to reflect any matter hereafter
arising or discovered which, if existing or known at the date hereof, would
have been required to be set forth herein or described thereon (but no such
supplementation shall relieve either party from liability for any breach of its
representations and warranties as of the date made). Without limiting the
foregoing, if any Leases or Contracts, or amendments thereto, are hereafter
entered into, Contributor shall give the Partnership prompt written notice
thereof and the appropriate exhibits or schedules hereto shall be updated and
amended accordingly.
10.4 [Intentionally Deleted]
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<PAGE> 49
10.5 Cooperation. Contributor shall use reasonable best efforts
to obtain a consent of the Parties to the Contracts marked with a "1" on
Schedule 6.2(q) (the "Contract Party Consents") and to cause the consummation
of the Buy-Sell Transaction. The Partnership shall cooperate with Contributor
in seeking to obtain all approvals, consents and estoppels of third parties
required by this Agreement (but shall not be obligated to pay money or grant
concessions therefor), including any Contract Party Consents, and shall furnish
to Contributor or to any Party such information as to the Partnership, its
capabilities, its experience in the ownership and management of real property
and as to such other matters as Contributor or any Party shall reasonably
request in connection therewith. Contributor and the Partnership shall
cooperate with one another in connection with the issuance of the Title Policy
pursuant hereto.
10.6 Transfer and Other Taxes; Etc. Contributor shall pay the
real property transfer taxes, mortgage taxes, documentary transfer stamps and
other taxes, fees or charges, if any, imposed by the state, county or
municipality in which the Mall is located as the result of the Transactions.
Contributor shall pay all recording fees and charges and any personal property
sales or use taxes in connection with the consummation of the Transactions.
Each of Contributor, on the one hand, and the Partnership, on the other hand,
shall pay one-half of the costs of any escrow established in connection with
the Closing of the Transactions. Each of Contributor, on the one hand, and the
Partnership, on the other hand, shall pay the legal costs incurred by it in
connection with the Transactions.
10.7 Estoppel Certificates. Contributor shall request, and
shall use reasonable best efforts to obtain from each Party to the Reciprocal
Easement Agreement and each Tenant or other Party under a Lease estoppel
certificates, dated not more than 90 days prior to the Closing Date, in form
reasonably acceptable to the Partnership, and an estoppel certificate, dated
not more than 90 days prior to the Closing Date, from the Existing Lender in
form reasonably satisfactory to the Partnership; provided, however, that if the
Reciprocal Easement Agreement or any Lease shall, by its terms, prescribe the
form or content of an estoppel certificate, Contributor only shall be required
to attempt to obtain estoppel certificates from the Party thereto in the form
prescribed by the relevant document and containing only such information as is
required to be delivered thereunder.
10.8 Record Retention. After the Closing, the Partnership shall
cause the New Venture to provide Contributor with reasonable access to the
Books and Records and, at Contributor's cost, copies of all or any portion
thereof. The Partnership either shall cause the New Venture to retain the
Books and Records until the fifth anniversary of the date hereof or notify
Contributor of its desire to dispose of the Books and Records or any portion
thereof and turn the Books and Records or such portion thereof over to
Contributor if Contributor so requests.
10.9 Publicity. In no event shall Contributor, on the one hand,
or the Partnership, on the other hand, issue any press release or otherwise
disclose any non-public information regarding this Agreement or the
Transactions (including without limitation any information contained therein)
unless the other party or parties have consented thereto in writing and to the
form and substance of
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any such statement or disclosure (and Contributor and the Partnership agree not
unreasonably to withhold or delay such consent); provided, however, that
nothing herein shall be deemed to limit or impair in any way any party's
ability to disclose the details of or information concerning this Agreement,
the Transactions or the Property to such party's attorneys, accountants or
other advisors or to the extent such party reasonably deems necessary or
desirable pursuant to any court or governmental order or applicable securities
or other laws or regulations or financial reporting requirements, to obtain the
Contract Party Consents, the consent of the Existing Lender, Estoppels or
financing for the acquisition of the Interests and to assess the Property in
connection with the Partnership's due diligence examination (including without
limitation contacting Tenants and other Parties). Further, either party may
disclose any information regarding this Agreement or the Transactions to its
direct or indirect constituent partners or shareholders, as the case may be
(and to counsel for such constituent partners and shareholders) and as
otherwise necessary to comply with the terms of this Agreement. Any disclosure
by a party's advisors or direct or indirect constituent partners or
shareholders or their advisors shall be deemed a breach hereof by such party.
If for any reason the Transaction is not consummated, the Partnership promptly
shall return to Contributor all originals and copies of documents, reports and
financial and other information relating to the Property and to Contributor
which Contributor has furnished to the Partnership. The obligations of
Contributor and the Partnership under this Section 10.9 shall survive the
termination hereof, however caused.
10.10 Assistance Following Closing. From and after the Closing,
Contributor, at the Partnership's sole cost and expense, shall provide
reasonable assistance to the Partnership in connection with the preparation of
financial statements and bills and the adjustment of losses and claims and the
enforcement or settlement of any such claims. Without limiting the foregoing
and upon the request of the Partnership from time to time, Contributor shall
(a) subject to applicable law and contractual requirements, cause the lease and
property management databases relating to the Mall to be loaded onto the
computer systems of the Partnership or its designee or provide disks containing
such databases and (b) provide signed representation letters with respect to
revenues and expenses relating to the Mall if required under GAAS to enable the
Partnership's certified public accountants to render an opinion on the
financial statements of the Partnership or the New Venture.
10.11 Further Assurances. Each of Contributor and the
Partnership agree, at any time and from time to time after the Closing, to
execute, acknowledge where appropriate and deliver such further instruments and
other documents (and to bear its own costs and expenses incidental thereto) and
to take such other actions as the other of them may reasonably request in order
to carry out the intents and purposes of this Agreement; provided, however,
that neither of Contributor nor the Partnership shall be obligated, pursuant to
this Section 10.11 to incur any expense of a material nature and/or to incur
any material obligations in addition to those set forth in or contemplated by
this Agreement and/or the Closing Documents.
10.12 Restrictions on Certain Dispositions of Real Property.
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(a) Without the written consent of Contributor and as
long as the Units have not been acquired by the General Partner
pursuant to an exercise of the rights under the Redemption Rights
Agreement, the Partnership shall not, and shall cause the New Venture
not to, voluntarily sell or otherwise dispose of all or substantially
all of the Real Property prior to the fifth anniversary of the Closing
Date (the "Fifth Anniversary Date").
(b) The provisions of Section 10.12(a) shall not apply
to (i) transactions, such as like-kind exchanges, which would not
result in the recognition of income or gain to Contributor for federal
income tax purposes by reason of the application of Section 704(c) or
Section 737 of the Code (but, in the event of any disposition
permitted by the preceding clause, the disposition of any carryover
basis real property or other successor real property shall be subject
to the provisions of this Section 10.12), (ii) the mortgage or the
granting of security interests in the Real Property provided the same
is not a sale or exchange of all or substantially all of the Real
Property for federal income tax purposes (and the conveyance of such
property in connection with foreclosure of any such mortgage or
security interest or by deed in lieu thereof), (iii) the sale,
exchange or other disposition of all or substantially all of the
properties of the Partnership and its subsidiaries, including all or
part of the Real Property, (iv) the grant of easements or
rights-of-way, (v) the sale to any occupant or prospective occupant of
the portion of the Real Property occupied or proposed to be occupied
by it (including parking area and other surrounding area), (vi) the
lease of the Real Property or portions thereof provided the same is
not a sale or exchange for federal income tax purposes or (vii) the
exercise of all other rights of an owner with respect to the Real
Property provided the same is not a sale or exchange for federal
income tax purposes. In addition, the provisions of Section 10.12(a)
shall not apply to the sale, conveyance or disposition of the Real
Property when, in the reasonable judgment of the Partnership, dire,
immediate circumstances exist which require the disposition of the
Real Property. If the Partnership shall have obtained an opinion of
counsel with respect to the determination of whether a particular
transaction will result in income or gain for federal income tax
purposes by Contributor or is treated as a sale or exchange of all or
substantially all of the Real Property for federal income tax purposes
(although the Partnership shall not be required to do so), the
determination set forth in such opinion shall be deemed conclusive for
purposes of this Agreement. Any transaction prohibited pursuant to
the provisions of Section 10.12(a) and (b) is hereinafter referred to
as a "Prohibited Disposition".
10.13 Debt Allocation. Until the Fifth Anniversary Date, nonrecourse
debt from the Operating Partnership will be allocated to Contributor to ensure
that no deemed distribution of liabilities will occur which are in excess of
the Contributor's tax basis in its Units and, to the extent that there is
insufficient nonrecourse debt allocable to Contributor, the Partnership will
arrange guaranties by Contributor with one or more of its lenders. From and
after the Fifth Anniversary Date and in the event that nonrecourse debt
allocable to Contributor is not sufficient to ensure that no deemed
distribution of liabilities will occur which are in excess of the Contributor's
tax basis in its Units, the Partnership will cooperate in allowing Contributor
to guaranty Operating Partnership indebtedness (provided that no such
guaranties shall have a detrimental effect on the Partnership or
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the other partners of the Partnership). Any debt guaranties will be released
as Contributor exercises its redemption rights under the Redemption Rights
Agreement. Any such guaranties shall enable Contributor to increase its or
their "economic risk of loss" (within the meaning of Section 1.752-2 of the
Treasury Regulations) with respect to liabilities of the Partnership but
minimize the real economic risk of such guarantees to Contributor to the extent
practicable (by, for example, guarantying the "bottom" portion).
10.14 Delivery of Certain Information. The Partnership shall
transmit to Contributor (a) all periodic reports or statements furnished to the
public shareholders of the General Partner simultaneously with the transmission
thereof to such public shareholders, (b) promptly following written request by
Contributor or its successors or assigns, copies of all amendments to the
Partnership Agreement and (c) promptly following written request by Contributor
or its successors or assigns (but no more frequently than once each calendar
year), a list of the names and addresses of all partners of the Partnership.
10.15 Record Owners of Units. The Units issued pursuant hereto
may not be sold, conveyed, pledged or otherwise transferred until the first
anniversary of the Closing Date (except for transfers to the existing partners
of Contributor and/or the existing partners, if any, of such partners). There
may be no more than seventeen record owners of all of the Units issued pursuant
hereto at any time hereafter to the extent that such Units are then owned
directly or indirectly by the individuals who are the beneficial owners of
Contributor on the date hereof or members of the families thereof.
10.16 Employees.
(a) Following Closing, either the Partnership or GGMI may, in
its discretion, employ any or all Property employees (who Contributor shall
cause to be terminated prior to Closing) on such terms as it deems advisable
(but the Operations Manager, Marketing Director and administrative staff at the
Property will be offered the opportunity to be hired for a 90-day trial period,
commencing immediately following the Closing, pursuant to GGMI's customary form
of employment contract for that purpose).
(b) For purposes of eligibility to participate in GGMI employee
benefit plans, the Partnership shall cause GGMI to treat the Property employees
hired on a permanent basis as having been employed by GGMI since the date of
their employment by Seller or the Existing Manager.
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ARTICLE XI
Miscellaneous
11.1 Survival; Etc. Notwithstanding anything to the contrary
contained herein, the representations and warranties of Contributor and the
Partnership contained in Article VI or in the Closing Documents and the
indemnities set forth in clause (i) of each of Section 10.1 (a) and (b), shall
survive Closing only for a period of eighteen (18) months after the Closing
Date except as to Losses of which written notice has been given prior to the
expiration of such eighteen (18) month period in accordance with Section 11.2
and the other provisions of this Agreement. Except as set forth in the
immediately preceding sentence, the covenants of Contributor and the
Partnership set forth herein shall survive Closing indefinitely.
11.2 Notices. Notices must be in writing and sent to the party
to whom or to which such notice is being sent, by certified or registered mail,
return receipt requested, commercial overnight delivery service or facsimile,
or delivered by hand with receipt acknowledged in writing, as follows:
(a) To Partnership:
55 West Monroe Street, Suite 3100
Chicago, Illinois 60603
Attention: Matthew Bucksbaum
Facsimile No.: 312-551-5123
with a copy thereof to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
Facsimile No.: 312-269-1747
(b) To Contributor:
1275 Peachtree Street N.E.
Atlanta, Georgia 30367-1801
Facsimile No.: 404-888-4347
Attention: James P. Erickson
with a copy to:
King & Spalding
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<PAGE> 54
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: David Coker
Facsimile No.: 404-572-5148
Except as otherwise set forth herein, all notices (a) shall be deemed given
when received or receipt is refused or, if sent by facsimile, upon receipt of
confirmed answerback and (b) may be given either by a party or by such party's
attorneys. The cost of delivery shall be borne by the party delivering the
notice.
11.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single document when at least one counterpart has
been executed and delivered by each party hereto.
11.4 Amendments. Except as otherwise provided herein, this
Agreement may not be changed, modified, supplemented or terminated, except by
an instrument executed by the parties hereto without the need for the consent
of any third party beneficiary hereof.
11.5 Waiver. Each party shall have the right, exercisable in
its sole and absolute discretion, but under no circumstances shall be
obligated, to waive or defer compliance by any other party with its obligations
hereunder or to waive satisfaction of any conditions contained herein for its
benefit. No waiver by any party of a breach of any covenant or a failure to
satisfy any condition shall be deemed a waiver of any other or subsequent
breach or failure to satisfy any other condition. All waivers of any term,
breach or condition hereof must be in writing.
11.6 Successors and Assigns. Subject to the provisions of
Section 11.10, the terms, covenants, agreements, conditions, representations
and warranties contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
11.7 Third Party Beneficiaries. The provisions of this
Agreement are made for the benefit of the parties hereto (and the Indemnified
Partnership Persons and the Indemnified Contributor Persons with respect to
Section 10.1, but none of such Persons that are not parties hereto or
successors and assigns of such parties hereto shall have any right to approve
any amendment, addition or waiver hereto or hereof), and their respective
successors in interest and assigns and are not intended for, and may not be
enforced by, any other person or entity.
11.8 Partial Invalidity. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
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11.9 Governing Law. This Agreement has been made pursuant to and
shall be governed by the laws of the State of Georgia (without regard to
conflicts of law rules).
11.10 Assignment. This Agreement may not be assigned or delegated by
any party without the written consent of the other party except that the
Partnership may assign this Agreement to an Affiliate of the Partnership, it
being acknowledged and agreed by the Partnership that no such assignment shall
relieve the Partnership of its obligations under this Agreement.
11.11 Headings; Exhibits. The headings of the various Articles and
Sections of this Agreement have been inserted solely for purposes of
convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
11.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include
the plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
11.13 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior written or oral understandings and/or agreement among them
with respect thereto.
11.14 Costs of Enforcement. In the event that any action is brought
by any party or parties to this Agreement or any Closing Document against any
other party or parties to enforce rights under this Agreement or any Closing
Document, the prevailing party's or parties' costs in such action, including
reasonable attorneys' fees, shall be paid by the other party or parties. Any
amounts owing hereunder or thereunder which are not paid when due shall bear
interest at the per annum rate equal to the prime rate of Bank of America
Illinois, N.A. (or any successor), as the same may change from time to time,
plus four percent.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
CONTRIBUTOR:
CA SOUTHLAKE INVESTORS, LTD.,
a Georgia Limited Partnership
By: /s/ James B. Carson, Jr.
-------------------------------------
James B. Carson, Jr., general partner
By: /s/ James W. Bealle
-------------------------------------
James W. Bealle, general partner
By: /s/ Daniel B. Rather
-------------------------------------
Daniel B. Rather, general partner
By:/s/ William A. Mitchell, Jr.
-----------------------------------------
William A. Mitchell, Jr., general partner
PARTNERSHIP:
GGP LIMITED PARTNERSHIP, a
Delaware limited partnership
By: GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation, its
general partner
By:/s/ Joel Bayer
---------------------------------
Its: Vice President
-----------------------------
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The disclosure schedules and exhibits, including legal descriptions, permitted
title exceptions and forms of certain closing documents, have been omitted from
this filing in accordance with Item 601 of Regulation S-K. Copies of such
omitted schedules and exhibits will be furnished supplementally to the
Securities and Exchange Commission upon request.
<PAGE> 1
EXHIBIT 2.2
----------------------------------------------------------------------
TOWN EAST MALL
CONTRIBUTION AGREEMENT
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Seller: Atlantic Freeholds II,
a Nevada general partnership
and
TEM: Town East Mall, L.P.,
a Delaware limited partnership
Buyer: Town East Mall Partnership,
a Texas general partnership
June 10, 1997
<PAGE> 2
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TOWN EAST MALL
CONTRIBUTION AGREEMENT
----------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recital of Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1. CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2. ESCROW AND CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3. CONDITIONS AND INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5. ADDITIONAL OBLIGATIONS OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6. OPERATION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7. TITLE AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9. BROKERAGE COMMISSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11. CONDEMNATION AND DESTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12. DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
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<PAGE> 3
TABLE OF EXHIBITS
<TABLE>
<CAPTION>
Page First
Mentioned
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<S> <C> <C> <C>
Exhibit A - Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Exhibit B - (Intentionally Omitted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ?
Exhibit C - Rent Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exhibit D - Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Exhibit E - Service Contracts and Third Party Contracts . . . . . . . . . . . . . . . . . . . . . . 3
Exhibit F - Special Warranty Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exhibit G - Assignment and Assumption of REA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exhibit H - Bill of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Exhibit I - Assignment and Assumption of Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exhibit J - Security Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exhibit K - Assignment and Assumption of Service Contracts 8
Exhibit L - Assignment of Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exhibit M - Partnership Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exhibit N - Management Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exhibit O - FIRPTA Certificate 8
Exhibit P - Permitted Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit Q - Title Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exhibit R - Pending Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Exhibit S - Schedule of Reports and Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Exhibit T - Schedules of Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit U - Environmental Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit V - Asbestos Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Exhibit W - Pending Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Exhibit X - Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exhibit Y - Opinion TEM's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Exhibit Z - Mortgage Estoppel and Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Exhibit AA - Pending Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
ii
<PAGE> 4
TOWN EAST MALL
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is made by and among
ATLANTIC FREEHOLDS II, a Nevada general partnership ("Seller") and TOWN EAST
MALL, L.P., a Delaware limited partnership ("TEM") and TOWN EAST MALL
PARTNERSHIP, a Texas general partnership ("Buyer").
Recital of Fact
I. The Mall
Town East Mall (the "Mall") is a fully-enclosed, two-level regional
shopping center containing a total of approximately 1,248,080 square feet of
improvements. The Mall is located on approximately 99 acres of land and is
located in Mesquite, Texas. A portion of the Mall and the real property on
which it is located are owned by four anchor retail stores commonly known as
"Sears", "J.C. Penney", "Foley's" and "Dillard's" (jointly, the "Anchors", and
individually, an "Anchor"), who severally own a total of approximately 790,925
square feet of gross leasable area of the Mall and various parking lots on
approximately 64.9 acres. Seller is the owner of the remaining portion of the
Mall commonly known as the Mall Stores and Cinema (as hereinafter defined --
the "Improvements") composed of approximately 435,168 square feet of gross
leasable area and a parking lot area, which collectively are located on
approximately 34.5 acres of land, which is more particularly described on
Exhibit "A" attached hereto and incorporated herein by reference (such real
property together with all easements, rights, licenses, privileges
rights-of-way, mineral rights and royalties, hereditaments and any other real
property rights and interests appurtenant thereto, are hereinafter collectively
referred to as the "Real Property").
II. Encumbrances
The Real Property is encumbered by a first deed of trust ("First Deed
of Trust") executed by Homart Development Co. ("Homart") to Ben N. Boren,
Trustee, dated December 8, 1971 and recorded in the Deed of Trust Records,
Dallas County, Texas to secure the payment of a promissory note (the "First
Note") dated
<PAGE> 5
December 8, 1971 in the original principal amount of Fifteen Million Dollars
($15,000,000) payable to Connecticut General Life Insurance Company
("Mortgagee"); to further secure the First Note, Homart executed a Deed of
Trust and Mortgage dated September 23, 1982 to Trustee (the "Additional Deed of
Trust") and the First Deed of Trust was merged into and consolidated with the
Additional Deed of Trust by Consolidation and Modification Agreement by and
between Mortgagee and Homart dated September 23, 1982; the First Deed of Trust
was further modified by Modification of Deed of Trust by and between Mortgagee
and Atlantic Freeholds II dated March 28, 1987; and was further modified by
Agreement Supplementing Deed of Trust by and between Atlantic Freeholds II and
Mortgagee dated June 1, 1992.
The Real Property is encumbered by a second deed of trust ("Second
Deed of Trust") executed by Atlantic Freeholds II to Robert J. See, Jr.,
Trustee, dated March 28, 1987 and recorded in the Deed of Trust Records, Dallas
County, Texas to secure the payment of a promissory note (the "Second Note")
dated March 28, 1987 in the original principal amount of Fifty-Six Million
Dollars ($56,000,000) payable to Mortgagee, as modified by Agreement
Supplementing Deed of Trust by and between Atlantic Freeholds II and Mortgagee
dated June 1, 1992.
III. Reciprocal Easement Agreement
The Mall and the parking areas owned by the Anchors and the Seller are
governed by that certain Construction, Operation and Reciprocal Easement
Agreement (the "REA") for the Mall dated January 11, 1971 and amended on
September 23, 1982 by that certain First Amendment to Reciprocal Easement
Agreement and by that certain Second Amendment to Construction, Operation, and
Reciprocal Easement Agreement dated June 1, 1992.
IV. Management
The Mall is managed by General Growth Management, Inc., an affiliate
of TEM ("Manager"). Prior to the management of the Mall by Manager, the mall
was managed by Homart Development Company ("Homart"). TEM acquired
substantially all of the regional mall business of Homart, including Homart's
management operations in the Mall, in 1995 and continued the employment of
certain key personnel of Homart in the management of the Mall
2
<PAGE> 6
through its affiliate, the Manager. Accordingly, TEM through the current
management of the Mall by its affiliate and through the knowledge and
experience of its current employees is thoroughly familiar with the leasing,
operations and condition of the Mall and its improvements.
V. The Partnership
Seller and TEM are partners in Buyer under the terms of that certain
Partnership Agreement dated June 10, 1997 (the "Partnership Agreement"),
pursuant to which Buyer has been created as a general partnership under the
provisions of the Texas Uniform Partnership Act. Pursuant to the terms of this
Agreement, Seller and TEM intend to contribute to the capital of Buyer the
assets described in this Agreement.
VI. Property to be Transferred
The property to be conveyed hereunder includes all of Seller's right,
title and interest in:
A. The Real Property
B. All buildings, structures, fixtures, facilities,
installations, machinery, equipment and other improvements situated on the Real
Property (the "Improvements") and all easements, rights, titles and interests
appurtenant thereto;
C. All retail leases, license agreements and possession
agreements affecting the Real Property and Improvements together with any
additions, modifications or amendments thereof entered into in accordance with
the provisions of this Agreement (the "Leases"), which Leases are more
particularly described on Exhibit "C" attached hereto and incorporated herein
by reference (the "Rent Schedule");
D. All equipment, furniture and fixtures and other personal
property used in conjunction with the operation of the Real Property and
Improvements (other than equipment, furniture and fixtures owned by Tenants
under the Leases, the Anchors or the property manager, General Growth
Management, Inc.) including the items described on Exhibit "D" attached hereto
and incorporated herein by reference (the "Personal Property"),
3
<PAGE> 7
subject to depletions, replacements or additions thereto in the ordinary course
of business of the Real Property and Improvements and any lease interest
therein;
E. The third party contracts or agreements pertaining to the Real
Property or Improvements, such as service or utility contracts, which are more
particularly described on Exhibit "E" attached hereto and incorporated herein
by reference (the "Service Contracts").
F. The interest of Seller in all intangible personal property
owned by Seller and used in the operation of the Real Property and the
Improvements, including (i) warranties, guaranties, indemnities and claims,
(ii) licenses, permits, or similar documents, (iii) telephone exchanges, trade
names, marks and other identifying material, including without limitation all
right, title and interest (if any) of Seller in and to the name "Town East
Mall," (iv) plans, drawings, specifications, surveys, engineering reports, and
other technical descriptions, (v) all records, books of account and papers of
Seller relating to the construction, ownership and operation of the Property,
including without limitation, architect's drawings, blue prints and as-built
plans, maintenance logs, copies of warranties and guaranties, licenses and
permits, instruction books, employee manuals, records and correspondence
relating to insurance claims, financial statements, operating budgets, paper
and electronic media copies of data and other information relating to the
Property available from personal computers, structural, mechanical,
geotechnical or other engineering studies, soil test reports, environmental
reports, underground storage tank reports, feasibility studies, appraisals, ADA
surveys or reports, OSHA asbestos surveys, marketing studies, mall documents
and compilations, lease summaries and originals and/or copies of Leases, the
REA and the Contracts and correspondence related thereto (collectively the
"Books and Records"), all of which together are sometimes hereinafter referred
to as the "Intangible Assets".
G. All right, title and interest of Seller under the REA
(Seller's "REA Interest").
Seller's right, title and interest in the Real Property, the
Improvements, the Leases, the Personal Property, the Service
4
<PAGE> 8
Contracts, the Intangible Assets and Seller's REA Interest are hereinafter
collectively referred to as the "Property". The effective date of this
Agreement (the "Effective Date") shall be the date the second of Buyer or
Seller executes this Agreement and delivers the fully-executed Agreement to the
other party.
Seller desires to contribute and transfer the Property to the capital
of Buyer and TEM shall contribute to the capital of Buyer the amount of the
Contribution Price, as adjusted pursuant to the terms of this Agreement and
Buyer shall accept such contributions upon the terms and conditions hereinafter
set forth.
NOW, THEREFORE, Seller, TEM and Buyer hereby agree as follows:
1. CONTRIBUTION.
1.1 The Property. Seller shall contribute the Property to
the capital of Buyer and Buyer shall acquire and accept the Property from
Seller upon the terms and conditions hereinafter set forth.
1.2 Contribution Price.
(a) TEM shall contribute to the capital of Buyer
an amount (" Contribution Price") which shall be Fifty-Six Million Five Hundred
Thousand Dollars ($56,500,000), which amount is equal to one-half (1/2) of the
value of the Property.
(b) Allocation of Contribution Price. The Contribution Price is allocated
as follows:
<TABLE>
<S> <C>
Real Property $ 6,283,645
Improvements $50,068,606
Personal Property $ 147,749
-----------
TOTAL: $56,500,000
</TABLE>
The Buyer and Seller agree (i) to jointly complete and separately file Form
8594 with their respective federal income tax return for the tax year in which
the Close of Escrow (as hereinafter
5
<PAGE> 9
defined) occurs consistent with the above schedule, (ii) that Buyer shall make
an IRC Section 754 election with respect to the Property and (iii) that no
party will take a position on any return, information statement or writing
relating to any tax, before any governmental agency charged with the collection
of any such tax or in any judicial proceeding that is in any manner
inconsistent with the terms of such allocation, without the written consent of
the other party which consent shall not be unreasonably withheld or delayed.
1.3 Payment of Contribution Price. The Contribution Price as
set forth in Section 1.2 shall be paid as follows:
(a) On the Effective Date, TEM shall deliver an
initial deposit to Escrow Holder (as hereinafter defined) in escrow (as
hereinafter defined, the "Escrow") in the sum of Five Hundred Sixty-Five
Thousand Dollars ($565,000). After satisfaction or waiver of the conditions to
TEM's obligations listed in Section 3.1, TEM shall deliver to Escrow Holder an
additional deposit of One Million One Hundred Thirty Thousand Dollars
($1,130,000). The initial deposit, the additional deposit and all interest
accrued thereon are hereinafter referred to as the "Deposit". The Deposit
shall be paid into an interest-bearing account, which interest shall accrue for
the benefit of TEM up to and including the close of escrow (as hereinafter
defined, the "Close of Escrow") and on the Close of Escrow, the Deposit plus
interest accrued thereon shall be credited against the Contribution Price. If
this Agreement is terminated by TEM in accordance with its terms, TEM shall be
entitled to the return of the Deposit plus interest accrued thereon.
IF TEM DEFAULTS FOR ANY REASON WHATSOEVER IN THE PERFORMANCE
OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND SUCH DEFAULT IS NOT CURED WITHIN
TEN (10) DAYS AFTER WRITTEN NOTICE THEREOF FROM SELLER TO TEM, AND SELLER IS
NOT IN DEFAULT, SELLER SHALL HAVE THE RIGHT TO RETAIN THE DEPOSIT PLUS ANY
INTEREST EARNED THEREON AS SELLER'S DAMAGES FOR TEM'S DEFAULT. TEM AND SELLER
AGREE THAT THEY HAVE MADE GOOD FAITH REASONABLE EFFORTS TO DETERMINE WHAT
SELLER'S DAMAGES WOULD BE IN THE EVENT OF A DEFAULT BY TEM. SELLER AND TEM HAVE
BEEN UNABLE TO ARRIVE AT ANY MEANINGFUL FORMULA OR MEASURE OF DAMAGES FOR TEM'S
DEFAULT AND HAVE THEREFORE AGREED THAT SUCH DAMAGES WOULD BE EXTREMELY DIFFICULT
AND IMPRACTICAL TO DETERMINE IN THE EVENT OF TEM'S
6
<PAGE> 10
DEFAULT. THE DEPOSIT SHALL BE LIQUIDATED DAMAGES AND SHALL BE SELLER'S SOLE
RIGHT TO DAMAGES AND SELLER WAIVES ALL RIGHT TO SPECIFIC PERFORMANCE,
CONSEQUENTIAL DAMAGES, PUNITIVE DAMAGES OR ANY OTHER REMEDY.
BY INITIALING OR SIGNING WHERE INDICATED BELOW, THE PARTIES
SPECIFICALLY APPROVE THIS LIQUIDATED DAMAGES PROVISION.
SELLER: _________________ TEM: _________________
If Seller defaults for any reason whatsoever in the performance of its
obligations under this Agreement and such default is not cured within ten (10)
days after written notice thereof from TEM to Seller, and TEM is not in
default, then at TEM's sole and exclusive option either (i) upon notice to
Escrow Holder the Deposit shall be immediately returned to TEM and thereupon
this Agreement shall terminate and this Agreement shall be of no further force
or effect, or (ii) TEM shall have the right to pursue an action for specific
performance of the terms of this Agreement.
(b) Buyer shall take title to the Property
subject to the First Deed of Trust and the Second Deed of Trust and TEM shall
receive a credit against the Contribution Price for one-half (1/2) of the
outstanding principal balance plus accrued but unpaid interest on the First
Note and the Second Note as of the Close of Escrow.
(c) The balance of the Contribution Price, plus
or minus prorations, shall be deposited together with TEM's portion of the
closing costs and reimbursements required hereunder, in immediately available
funds to a bank account designated by Escrow Holder on or before the Close of
Escrow and shall be paid toward the Contribution Price at the Close of Escrow.
2. ESCROW AND CLOSING.
2.1 Escrow. The closing of the contribution of the Property
shall take place at the offices of Chicago Title Insurance Company ("Escrow
Holder"), 388 Market Street, San Francisco, California 94111, Attention: Rita
Abbey, (415) 788-0871.
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<PAGE> 11
2.2 Closing. The closing of the Escrow (the "Closing" or the
"Close of Escrow") shall occur on June 11, 1997 (the "Closing Date") or such
other date as the parties shall mutually agree.
2.3 The Close of Escrow shall be in accordance with the
following terms, conditions and restrictions:
(a) Escrow Authorization and Commitment of
Parties. A fully-executed copy of this Agreement shall be deposited with
Escrow Holder as escrow instructions within ten (10) days of the date hereof.
Amended and/or additional instructions ("Additional Escrow Instructions") not
inconsistent with the terms and conditions of this Agreement may be received
into Escrow from TEM and Seller. Escrow Holder is hereby authorized and
instructed to deliver the documents and moneys to be deposited into Escrow as
hereinafter provided, with the terms and conditions contained herein to apply
to the Escrow. Seller, TEM and Buyer shall, prior to Close of Escrow, execute
any and all documents and perform any and all acts reasonably necessary or
appropriate to close the transactions pursuant to the terms of this Agreement.
(b) Documents to be Deposited with Escrow Holder
by Seller. On or before the Close of Escrow, Seller shall deposit into Escrow
for delivery to Buyer upon the close hereof (the "Seller Closing Documents"):
(i) An executed special warranty deed
(the "Deed") in the form attached hereto as Exhibit "F" conveying the Real
Property and Improvements to Buyer subject only to the Permitted Exceptions;
(ii) An instrument of assignment (the
"Assignment and Assumption of REA") in the form attached hereto as Exhibit "G"
assigning to Buyer Seller's right, title and interest in and to the REA;
(iii) An executed bill of sale (the "Bill
of Sale") in the form attached hereto as Exhibit "H" conveying the Personal
Property to Buyer;
8
<PAGE> 12
(iv) An executed instrument of assignment
and assumption in the forms attached hereto as Exhibit "I" (the "Assignment and
Assumption of Leases") assigning to Buyer Seller's right, title and interest in
and to:
(1) Any Lease with respect to any
tenancy or occupancy in the Property in force as of the Close of Escrow, and
any personal guaranty or guaranties of any such Lease.
(2) The security deposits or
cleaning deposit, key deposit, advance rentals, or similar items paid to or for
the benefit of Seller by any tenant of the Property as are more particularly
described on Exhibit "J" attached hereto (the "Security Deposits").
(v) An instrument of assignment covering
all Service Contracts (the "Assignment and Assumption of Service Contracts") in
the form attached hereto as Exhibit "K";
(vi) Executed assignment or assignments
assigning to Buyer the Intangible Assets, if any, in the form attached hereto
as Exhibit "L";
(vii) An executed counterpart of the
Partnership Agreement (the "Partnership Agreement") in the form attached hereto
as Exhibit "M";
(viii) Executed Management Agreement (the
"Management Agreement") in the form attached hereto as Exhibit "N".
(ix) A FIRPTA Certificate, in the form
attached hereto as Exhibit "O", duly executed and acknowledged.
(x) Closing Statements duly executed by
Seller.
(xi) An updated, revised litigation
schedule.
(xii) Evidence of the authority of Seller
to execute, and perform under the terms of, this Agreement.
9
<PAGE> 13
(xiii) Evidence of authority of each
general partner of Seller to execute, and perform on behalf of Seller, this
Agreement.
(xiv) The Mortgagee Estoppel (as
hereinafter defined).
(xv) A written certificate executed on
behalf of Seller and addressed to TEM and Buyer to the effect that all of the
representations and warranties of Seller herein contained in Section 7.1 are
true and correct in all material respects as of the Closing Date with the same
force and effect as though remade and repeated in full on and as of the Closing
Date or stating the specific respects, if any, in which any of the
representations and warranties is untrue.
(xvi) Certificate issued by the Nevada
Secretary of State, dated not more than ten (10) days prior to the Closing
Date, certifying the good standing of the respective general partners of
Seller.
(xvii) Copies of the Articles of
Organization of each of the general partners of Seller and any amendments
thereto, certified by the Secretary of State of their respective states of
incorporation, as of a date not more than ten (10) days prior to the Closing
Date, together with a certificate of an officer of such general partner to the
effect that the Articles of Organization thereof, as certified by the Secretary
of State aforesaid, have not been further amended, revised, restated, cancelled
or rescinded up to and including the Closing Date.
(xviii) An opinion or opinions of counsel
for Seller dated as of the Closing Date, in the form of Exhibit "X" attached
hereto and otherwise in form and substance reasonably acceptable to TEM.
(xix) An updated Rent Roll showing amounts
payable as of the Closing Date or a date not more than five (5) days prior
thereto.
(xx) The instruments, documents or
certificates as are customarily required by the Title Company to be executed or
provided by Seller as a condition to the issuance
10
<PAGE> 14
of the Title Policy at the Closing pursuant to the Title Commitment, including,
without limitation, owner's affidavits, mechanics' lien affidavits, personal
undertakings and ALTA Statements.
(xxi) All additional documents,
instruments, amendments or supplements as in the reasonable opinion of TEM's
and Seller's counsels and their respective representatives are necessary for
the proper consummation of the transactions contemplated by this Agreement.
The original Leases, or copies, if originals are unavailable, of all Licenses
and Permits, the plans and specifications for the Improvements, to the extent
available, the Books and Records and all keys and entrance cards in Seller's
possession to all locks on the Property, tagged for identification, shall
remain at the Property in the offices of the Property staff.
(c) Documents to be Deposited with Escrow Holder
by Buyer. On or before the Close of Escrow, Buyer shall deposit the following
into Escrow.
(i) an executed counterpart of the
Assignment and Assumption of REA.
(ii) an executed counterpart of the
Assignment and Assumption of Leases.
(iii) an executed counterpart of the
Assignment and Assumption of Services Contracts.
(iv) Evidence of the authority of Buyer
to execute and perform this Agreement.
(v) A Closing Statement duly executed by
Buyer.
(vi) An executed counterpart of the
Partnership Agreement.
(vii) An executed counterpart of the
Management Agreement.
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<PAGE> 15
(viii) A certificate issued by the
Secretary of State of Delaware, dated not more than ten (10) days prior to the
Closing Date, certifying the good standing of TEM.
(ix) A copy of the Agreement of Limited
Partnership of TEM and any amendments thereto, certified by an officer of the
general partner of TEM to the effect that the Agreement of Limited Partnership
thereof has not been further amended, revised, restated, cancelled or rescinded
up to and including the Closing Date.
(x) An opinion or opinions of counsel
for TEM dated as of the Closing Date, in the form of Exhibit "Y" attached
hereto and otherwise in form and substance reasonably acceptable to Seller.
(xi) All additional documents,
instruments, amendments or supplements as in the reasonable opinion of Seller's
and TEM's counsel and their respective representatives are necessary for the
proper consummation of the transactions contemplated by this Agreement.
(d) Sums to be Deposited with Escrow Holder by
TEM. On or before the Close of Escrow, TEM shall deposit with Escrow Holder
the sums as provided in Section 1.3, together with all additional documents,
instruments, amendments or supplements as in the reasonable opinion of TEM's
and Seller's counsels and their respective representatives are necessary for
the proper consummation of the transactions contemplated by this Agreement.
(e) Title Insurance. Title Company shall furnish
to Buyer a Texas Land Title Association owners policy of title insurance
(together with reinsurance and direct access agreements reasonably acceptable
to Buyer) (the "Title Policy") in the amount of the Purchase Price from the
Title Company, insuring fee title to the Property vested in Buyer as of the
Close of Escrow, subject only to the permitted exceptions listed on Exhibit "P"
attached hereto and incorporated herein by reference (the "Permitted
Exceptions") and the standard printed exceptions and other common exceptions
generally included in Schedule B of Title Binders endorsed as provided in the
following paragraph and with the standard survey exception deleted except for
"shortages in
12
<PAGE> 16
area". The cost of the Title Commitment, Title Policy and all search charges
shall be borne equally by TEM and Seller.
Attached hereto as Exhibit "Q" is the Title Commitment issued
by the Title Company showing the state of title of the Property. Buyer shall
have no obligation to accept or approve any exceptions on the Title Commitment
except to the extent mentioned above. If after Buyer's approval of the Title
Commitment any additional items except the Permitted Exceptions are shown in
the Title Policy to be provided to Buyer hereunder and Seller fails to remove
the same or cause the Title Company to insure over such item by endorsement
approved by TEM prior to the Close of Escrow, TEM shall have the right to
either (x) complete the transactions hereunder and accept the effect of the
additional items; provided, however, that TEM shall thereupon have the right to
deduct from the Contribution Price the amount of any such additional item which
is a monetary lien of a fixed and ascertainable amount not in excess of Five
Hundred Thousand Dollars ($500,000); or (y) terminate the Escrow as TEM's and
Buyer's sole and exclusive remedy prior to the Close of Escrow and the Deposit
and all interest earned thereon shall be returned to TEM in full. Seller shall
remove or insure over any monetary liens which show as an exception to the
Title Commitment and not approved above. Seller shall execute and deliver such
affidavits as may reasonably be required by the Title Company, including an
affidavit to enable the Title Company to limit any exception in policies for
"rights of Tenants or rights of parties in possession" to the "occupancy rights
of Tenants as Tenants only under the space leases with no right or option to
purchase the Property or any portion thereof" listed in the current schedule to
be delivered by Seller to Buyer at the Close of Escrow as provided herein. At
least ten (10) business days prior to the date of the Close of Escrow, the
Title Company shall furnish Buyer with a pro forma of each Title Policy
(including all of the co-insurance, reinsurance and direct access agreements
which constitute part thereof) substantially as the Title Company is prepared
(subject to events occurring after the date and time of such pro forma and
prior to Close of Escrow) to bind itself to issue as the Title Policy.
(f) Survey. Within ten (10) days after the
Effective Date, Seller, at Seller's expense, shall deliver to TEM an update of
the ALTA Survey of the Mall prepared by Robert G.
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Wood of Raymond L. Goodson Jr., Inc. (Job No. 4757) dated September 16, 1986
and most recently updated November 12, 1996 (the "Survey"), certified to the
Title Company, Seller, TEM and Buyer. The Survey shall be updated to a date on
or after May 1, 1997, to accuracy standards under the "Minimum Standard Detail
Requirements for ALTA/ACSM Land Surveys" jointly established by the American
Land Title Association and American Congress on Surveying and Mapping currently
in effect and containing Table A Optional Survey Responsibilities and
Specifications 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c), 8, 9, 10, 11 and 13. If the
updated Survey discloses any additional items except the Permitted Exceptions
and Seller fails to remove the same prior to the Close of Escrow, TEM shall
have the right to either (x) complete the transactions hereunder and accept the
effect of the additional items; or (y) terminate the Escrow as TEM's and
Buyer's sole and exclusive remedy prior to the Close of Escrow and the Deposit
and all interest earned thereon shall be returned to TEM in full.
(g) Duties of Escrow Holder. On the Close of
Escrow, Escrow Holder shall (1) cause the Deed, and the Assignment and
Assumption of REA, and the Assignment and Assumption of Leases (as to those
Leases that are recorded only) to be recorded in the Office of the County
Recorder of Dallas County, Texas, (2) deliver to Buyer the Title Policy, (3)
deliver to Seller the cash proceeds in accordance with the Closing Statement,
and (4) forward to Buyer and Seller, in duplicate, an accounting of all funds
received and disbursed and copies of all executed and recorded or filed
documents deposited into Escrow, with such recording and filing dated endorsed
thereon.
(h) Prorations - General. All rentals, revenues
and other income of the Property, if any, and all utilities, real estate taxes,
maintenance charges and other regular operating expenses of the Property, if
any, shall be paid or shall be prorated between Seller and the Buyer in
accordance with the provisions set forth in Sections 2.3(h) through (q)
inclusive. For purposes of the prorations and adjustments to be made, the
Buyer shall be deemed to own the Property and therefore shall be entitled to
any revenues and responsible for any expenses for the entire day upon which the
Closing occurs. Any apportionments and prorations which are not expressly
provided for below shall be made in accordance with the customary practice in
the metropolitan Dallas, Texas area. Seller and Buyer shall cause
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their accountants to prepare the schedules of adjustments (the "Closing
Statement") prior to the Proration Date. Any net adjustment in favor of the
Buyer shall be paid in the form of a credit to the Purchase Price. Any net
adjustment in favor of the Seller shall be paid in cash or cash equivalent by
Buyer to Seller at Closing. A copy of the Closing Statement agreed upon by
Seller and Buyer shall be executed by both Seller and Buyer and delivered to
the Title Company at the Closing. All Rentals received by Seller or any of its
affiliates or its general partners related to any period after the Proration
Date shall be immediately paid to Buyer. The parties shall make an interim
closing adjustment (the "Interim Closing Adjustment") on July 31, 1997 and a
final closing adjustment (the "Final Closing Adjustment") on July 31, 1998.
The Interim Closing Adjustment and the Final Closing Adjustment are jointly
referred to as the "Closing Adjustments".
(i) Prorations - Rentals. Rentals shall be
prorated upon the Closing in accordance with the following provisions.
(i) Minimum Rent. Subject to Subsection
2.3(g)(iv) below with respect to Delinquent Rentals, Minimum Rent shall be
prorated between Seller and Buyer as of the Proration Date on an accrual basis
based on the actual number of days in the month during which the Closing
occurs. Seller shall be entitled to all Minimum Rent which accrues up to and
including the Proration Date and Buyer shall be entitled to all Minimum Rent
which accrues after the Proration Date.
(ii) Additional Rental. Subject to
Subsection 2.3(i)(iv) below with respect to Delinquent Rentals, and Section
2.3(m) with respect to the Closing Adjustments, estimated monthly or quarterly
payments made by Tenants of the Property, or parties to the REA, in advance
based upon projected Additional Rentals shall be prorated between Seller and
Buyer as of the Proration Date on an accrual basis based on the actual number
of days in the month during which the Closing occurs. Seller shall be entitled
to all Additional Rent which accrues up to and including the Proration Date and
Buyer shall be entitled to all Additional Rent which accrues after the
Proration Date.
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(iii) Percentage Rent. Percentage Rent
(if any) payable by a Tenant under each Lease shall be separately prorated as
of the Proration Date between Seller and Buyer in the manner provided in this
Subsection 2.3(g)(iii). Such proration shall be made on a Lease-by-Lease basis
and shall be based upon the fiscal year set forth in each Lease for the
determination of Percentage Rent. The actual fiscal year for Percentage Rent
during which the Closing occurs is hereinafter referred to as the "Applicable
Percentage Rent Fiscal Year". To the extent a Tenant makes monthly or
quarterly interim payments on account of Percentage Rent, the Seller shall
initially retain all such interim payments of Percentage Rent received by the
Seller up to and including the Proration Date until a Closing Adjustment occurs
and Buyer shall initially retain all such interim payments of Percentage Rent
received by Buyer after the Proration Date until a Closing Adjustment occurs.
At each Closing Adjustment, the Seller and Buyer shall prorate the total annual
Percentage Rent due from a Tenant for such Tenant's Applicable Percentage Rent
Fiscal Year as follows: (a) Seller shall be entitled to the portion of the
Percentage Rent payable by each Tenant equal to the product obtained by
multiplying the total annual Percentage Rent paid by each such Tenant by a
fraction, the numerator of which is the number of days in the Applicable
Percentage Rent Fiscal Year up to and including the Proration Date and the
denominator of which is the number of days in the Applicable Percentage Rent
Fiscal Year; and (b) the Buyer shall be entitled to the portion of the
Percentage Rent payable by each Tenant equal to the product obtained by
multiplying the total annual Percentage Rent paid by each such Tenant by a
fraction, the numerator of which is the number of days in the Applicable
Percentage Rent Fiscal Year after the Proration Date and the denominator of
which is the number of days in the Applicable Percentage Rent Fiscal Year.
(iv) Delinquent Rental. As used herein,
"Delinquent Rentals" means Rentals which are due and payable by a Tenant on or
prior to the Proration Date but which have not been paid by the Proration Date.
Delinquent Rentals shall be prorated between Seller and Buyer as of the
Proration Date, but not until they are actually collected by Buyer. Buyer
shall have the right after the Closing to collect Delinquent Rentals relating
to the period prior to the Proration Date, but shall not be obligated to do so.
Upon the Final Closing Adjustment, any Delinquent Rentals
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which have not as yet been paid shall be assigned to Seller. After the Closing
and continuing through and after the Final Closing Adjustment, without the
express written consent of Buyer, the Seller shall not take, nor cause Buyer to
take, any action against a Tenant owing Delinquent Rentals which would affect
such Tenant's right to occupy its leased premises. Rentals collected by Buyer
after the Closing, shall be applied in the following order of priority: (a)
first, to the particular rental obligation, if any, for which the Tenant
designates the payment has been made (e.g., by a notation on the Tenant's check
or in an accompanying cover letter or if the payment is made in response to an
invoice submitted to the Tenant); and (b) secondly, against the Tenant's Rental
obligations in reverse chronological order in which they accrue. All
Delinquent Rentals received by Buyer or any of its affiliates after the
Proration Date shall be immediately applied in accordance with the above and
any amount owing to Seller shall be immediately paid upon application, less the
amount of any management fee or compensation paid or due to Manager with
respect to such Delinquent Rentals; however, in no event later than thirty (30)
days after collection.
(A) Seller shall have the right to commence
litigation against the Tenants owing Delinquent Rents (the "Delinquent
Tenants") to collect the Delinquent Rentals, which pursuant to the
above, the Seller is entitled to as and when collected. Seller may
proceed with counsel of its own choosing, and at its own expense, to
collect any such Delinquent Rentals due by the Delinquent Tenants
which are allocable to Seller, provided that Seller shall not seek (i)
termination of any Lease; (ii) eviction of any Delinquent Tenant; nor
(iii) to levy against the Delinquent Tenant's interests in the Lease,
all without the prior written consent of Buyer.
(B) In the event a Delinquent Tenant
owes Delinquent Rental which is properly allocable to both Seller and
Buyer, Seller and Buyer shall cooperate in collecting such Delinquent
Rental. If Seller desires to commence litigation as to Delinquent
Rentals properly allocable to it, but Buyer does not so desire to
commence litigation, then Seller may commence litigation as set forth
in (A) above. If both parties
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desire to commence litigation, Buyer shall institute such litigation
on its behalf and Seller's share of any recovery of the Delinquent
Rentals from such litigation, after the payment of all expenses in
connection therewith, shall be apportioned between Buyer and Seller in
accordance with this Subsection 2.3(i)(iv).
(j) Proration - Taxes and Assessments. All
non-delinquent real estate and personal property taxes on the Property not
otherwise reimbursed by Tenants under their Leases or by a party to the REA
shall be prorated between the Seller and Buyer on an accrual basis, based upon
the actual current tax bill for the tax year in which the Closing occurs. If
the most recent tax bill received by Seller as of the Proration Date is not the
actual current tax bill, then the Seller and Buyer shall re-prorate the real
estate and personal property taxes at the Final Closing Adjustment if the
actual current tax bill is then available. All amounts payable for real estate
and personal property taxes accruing up to and including the Proration Date
shall be the obligation of the Seller and all amounts payable for real estate
and personal property taxes accruing after the Proration Date shall be the
obligation of Buyer. If, after the Proration Date, any additional or
supplemental real estate and personal property taxes are assessed against the
Property by reason of back assessments, corrections to previous tax bills or
other events occurring up to and including the Proration Date, the Seller and
Buyer shall re-prorate the real estate and personal property taxes at the Final
Closing Adjustment to provide the appropriate credit. Any delinquent real
estate and personal property taxes on the Property shall be paid by Seller at
the Closing.
(k) Proration - Operating Expenses, Interest and
Insurance Premiums. All costs, expenses, charges and fees for sewer, water,
electricity, heat and air-conditioning service and other utilities, common area
maintenance charges, insurance premiums, rental and privilege taxes, business
occupation taxes, promotional expenses, the Roof Repair Fund, periodic charges
payable under Service Contracts which are assigned to Buyer, periodic fees
payable under transferable Licenses and Permits for the operation (as opposed
to the construction) of the Property, periodic charges under the REA, any
payroll, employee benefits,
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employee related taxes or other labor costs paid by Seller (if assumed by Buyer
directly or indirectly) and any other costs incurred in the ordinary course of
business for the management and operation of the Property, the interest on the
First Note and the Second Note (based on a 30 day month and a 360 day year) and
insurance premiums shall be prorated between Seller and Buyer on an accrual
basis, based on the actual number of days in the month during which the Closing
occurs. The Seller shall be responsible for all such expenses that are
attributable to the period up to and including the Proration Date and Buyer
shall be responsible for all such expenses which are attributable to the period
after the Proration Date. To the extent commercially reasonably and
practicable, Seller shall obtain billings and meter readings as of the day up
to and including the Proration Date to aid in such prorations. If billings or
meter readings as of the day up to and including the Proration Date are
obtained, adjustments of any costs, expenses, charges or fees shown thereon
shall be made in accordance with such billings or meter readings.
(l) Proration - Security Deposits and Other
Tenant Credits. At the Closing, Buyer shall be credited with and the Seller
shall be charged with an amount equal to the sum of (i) the Security Deposits
(and any interest due to Tenants thereon, if any) being held by Seller or any
other person under the Leases as designated on the Rent Schedule, plus (ii) the
amount of any other credits due Tenants. Upon the Closing, the Seller shall be
entitled to retain the Security Deposits or other such credits due Tenants, for
which Buyer has been credited and Seller has been charged pursuant to this
Subsection 2.3(l).
(m) Adjustment Dates. On July 31, 1997, Seller
and Buyer shall make an interim adjustment (the "Interim Closing Adjustment")
and no later than July 31, 1998, Seller and Buyer shall make a final adjustment
(the "Final Closing Adjustment") to the prorations, each pursuant to this
Subsection 2.3(m). The Interim Closing Adjustment and the Final Closing
Adjustment shall be made as set forth below in this Subsection 2.3(m).
(i) General. Payment of Delinquent
Rentals collected by Buyer after the Proration Date which have not been
adjusted at the Interim Closing Adjustment and which are attributable to the
period up to and including the Proration Date, shall be made by Buyer to Seller
when and as collected and
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as soon as practicable following receipt. All other adjustments or prorations
which could not be determined at the Closing or the Interim Closing Adjustment
due to the lack of actual statements, bills or invoices for the current period,
the year-end adjustment of Additional Rentals, the unavailability of final
sales figures or amounts for Percentage Rent or for any other reason shall be
made at the Final Closing Adjustment. Any net adjustment determined at each
respective Adjustment Date in favor of Buyer shall be paid in cash or cash
equivalent by the Seller to Buyer no later than twenty (20) days after the
respective Adjustment Date. Any net adjustment in favor of the Seller shall be
paid in cash or cash equivalent by Buyer to the Seller no later than twenty
(20) days after the respective Adjustment Date.
(ii) Additional Rental Adjustment. The
actual amount of Additional Rentals paid by each Tenant of the Property for the
annual period in which the Proration Date occurs (as distinguished from the
estimated amounts prorated as of the Proration Date pursuant to Subsection
2.3(i)(ii) above) shall be separately prorated between the Seller and Buyer as
of the Proration Date based on the actual number of days in the annual period
during which the Proration Date occurs. Buyer shall pay to Seller an amount
(if any) equal to the excess of (1) the product obtained by multiplying (A) the
total amount of Additional Rentals paid by the Tenant to Seller and the Buyer
for the annual period during which the Proration Date occurs, by (B) a
fraction, the numerator of which is the number of days in the annual period up
to and including the Proration Date and the denominator of which is the total
number of days in the annual period over (2) the sum of (X) the total amount of
the monthly or quarterly payments of estimated Additional Rentals actually
collected by Seller from the Tenant for the months or quarters preceding the
month or quarter during which the Proration Date occurs, (Y) a pro-rated
portion of the monthly or quarterly estimated Additional Rentals paid by the
Tenant for the month or quarter during which the Proration Date occurs (i.e.,
the amount of the adjustment pursuant to Section 2.3(i)(ii) above) and (Z) the
entire amount of the monthly or quarterly estimated Additional Rentals which
constitutes Delinquent Rentals and which is collected by the Buyer from the
Tenant after the Proration Date and paid over to Seller by the Buyer pursuant
to Subsection 2.3(i)(iv) above. If, for any Tenant, the Additional Rent
received by Seller, up to and including the Proration Date,
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exceeds the product obtained above, the Seller shall pay the excess to Buyer.
If the total sum of all advance payments of projected Additional Rentals
exceeds the Additional Rentals actually due from the Tenant for the annual
period in which the Proration Date occurs, Buyer shall remit or credit the
Tenant with such excess.
(iii) Percentage Rent Adjustment. To the
extent the sum of all interim payments on account of Percentage Rent collected
by the Seller from each Tenant for the Applicable Percentage Rent Fiscal Year
exceeds the amount of Percentage Rent to which Seller is entitled with respect
to such Tenant pursuant to Subsection 2.3(i)(iii), the Seller shall pay such
excess to Buyer. To the extent the sum of all interim payments on the account
of Percentage Rent collected by Buyer from each Tenant for the Applicable
Percentage Rent Fiscal Year exceeds the amount of Percentage Rent to which
Buyer is entitled with respect to such Tenant, then Buyer shall pay such excess
to the Seller. Any such adjustment of interim payments received and actual
Percentage Rent payable shall be made on a Lease-by-Lease basis (as opposed to
aggregating all interim payments received by the Seller from all Tenants and
offsetting the same against the entire amount of Percentage Rent payable by all
Tenants). If the total sum of the interim payments on account of Percentage
Rent collected by the Seller plus the interim payments on account of Percentage
Rent collected by Buyer exceeds the Percentage Rent actually due from the
Tenant, Buyer shall remit or credit Tenant with such excess and the Seller and
Buyer shall make any necessary adjustment between them in accordance with the
preceding provisions of this Subsection 2.3(m)(iii).
(iv) No Further Adjustments. On the
Final Adjustment Date, final prorations shall be made and, to the extent
necessary, Buyer and Seller shall estimate items for which final sums are not
available. Except for: (a) additional or supplemental real estate taxes, real
estate tax credits or rebates, or other adjustments to real estate taxes due to
back assessments, corrections to previous tax bills or real estate tax appeals
or contests, and (b) any Additional Rentals or any Percentage Rent which may be
contested by Tenants or cannot be computed by the Final Adjustment Date, the
Final Closing Adjustment shall be conclusive and binding upon the Seller and
Buyer.
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(n) Leasing Commissions and Tenant Improvements.
Any and all leasing commissions due and tenant improvements with respect to
Leases in existence on the date hereof including the Pending Leases (as
hereinafter defined in Exhibit "R") shall be paid in full and discharged by
Seller. Any and all leasing commissions and tenant improvements with respect
to Leases executed after the date hereof in accordance with the consent
provisions described below, except for the Pending Leases shall be paid in full
and discharged by Buyer.
(o) Roof Repair Fund (herein so called). All
roof repair fund payments accruing after the Close of Escrow shall be for the
benefit of Buyer, and Seller hereby waives any rights or claims to any roof
repair funds or monies for all sums paid after the Closing Date and not
specifically related to an invoice sent to a Tenant for a period to the Closing
Date.
(p) Payment of Expenses. Except as otherwise
specifically provided in this Agreement, Seller and Buyer shall each pay all of
their own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including all related accounting, legal and
appraisal fees.
(q) Continuing Effect. Notwithstanding any
provisions of this Agreement to the contrary, the agreements made by Seller and
Buyer pursuant to Subsections 2.3(h) through (p) (inclusive) shall survive the
Closing.
(r) Recordation; Escrow Fees. The cost of the
municipal transfer taxes, if any, state and county transfer taxes required to
be affixed to the deeds required herein, recording fees and escrow fees of
Escrow Holder shall be divided and paid equally by Buyer and Seller.
2.4 Escrow Holder Authorized to Complete. If necessary,
Escrow Holder is hereby authorized to insert the date of the Close of Escrow as
the execution date of the deeds and is further authorized to insert the date of
the Close of Escrow and to fill in blank spaces in any and all documents and
instructions delivered to it so long as it is done in conformance with this
Agreement.
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3. CONDITIONS AND INSPECTION.
3.1 Conditions to TEM's and Buyer's Obligations. TEM shall
have until 5:00 p.m. (Central Daylight Time) June 9, 1997 (the "Approval Time")
to review and approve the "due diligence" matters set forth in Subsection
3.1(d). Buyer has reviewed and approved the matters set forth in Subsection
3.1(a), (b) and (c). If any of the Property or the "due diligence" matters are
not approved by TEM by the Approval Time, or if any of the conditions set forth
in Subsections 3.1(d), (e), (f) and (g) are not satisfied by the respective
dates set forth therein (each such date being called an "End Date"), then TEM
may elect to terminate this Agreement and receive the return of the Deposit and
all interest earned thereon. TEM's election to terminate this Agreement
pursuant to this Section 3.1 shall be effective if, on or before the Approval
Time or the End Date, whichever is applicable, TEM has delivered to Seller and
Escrow Holder TEM's notice of termination. Upon receipt by Escrow Holder of
TEM's notice of termination pursuant to Section 3.1, Escrow Holder shall
immediately return the Deposit and all interest earned thereon to TEM and this
Agreement shall be deemed terminated. If TEM fails to notify Seller of its
election to terminate this Agreement in accordance with this Section 3.1, then
this Agreement shall remain in full force and effect.
(a) Seller (i) has made available to TEM all
plans and specifications for the Property in Seller's possession or under
Seller's control, together with all soils, geological and environmental reports
and governmental reports in Seller's possession or under Seller's control in
connection with the construction of improvements on the Property, and (ii)
permitted TEM to examine the conditions of the Property, including but not
limited to its soils and any environmental, structural, electrical, mechanical,
roof, HVAC and other elements relating to the Real Property and the
Improvements. TEM shall provide Seller with copies of all reports prepared by
parties other than TEM in connection with TEM's examination of the Property.
TEM shall give Seller, or Seller's manager or agent, designated by Seller for
this purpose, at least twenty-four (24) hours' notice in advance of any
intended inspection or entry. TEM shall comply with all laws and governmental
regulations applicable to such inspection or entry. TEM shall indemnify,
defend with counsel reasonably acceptable to Seller, and hold Seller, its
directors,
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officers, employees, agents, representatives, attorneys and consultants
harmless from and against any and all losses, costs, damages, liabilities and
expenses (including reasonable attorneys' fees and costs of suit), arising out
of acts or activities of TEM or TEM's agents or consultants on or about the
Property; provided TEM shall only be responsible for actual, out-of-pocket
losses, costs, damages, liabilities and expenses. TEM shall not remove
flooring, make excavations or test borings, disturb any plants, trees or
shrubs, or engage in any other activities destructive of the Property without
Seller's consent, which consent shall not be unreasonably withheld or delayed.
Any damage to the Property made by TEM or any persons acting for or on behalf
of TEM shall be repaired promptly, replacing or restoring any vegetation that
is damaged and generally putting the Property and all points of entry by the
inspectors in substantially the same condition as before the inspection or
entry.
(b) TEM, through its affiliate, the Manager, has
copies of all Leases and amendments thereto relating to any portion of the
Property, and Seller shall immediately deliver to TEM copies of any Leases or
any subleases in Seller's possession, and any pending leases.
(c) After acceptance of this Agreement, TEM (or
its authorized employees and agents) shall have the right to examine all of
Seller's books and records pertaining to the Property including without
limitation the following documents:
(i) Copies of all certificates of
occupancy, licenses, permits, authorizations, and approvals required by law and
issued by all governmental authorities having jurisdiction and copies of all
certificates issued by the local board of fire underwriters (or other body
exercising similar functions);
(ii) Copies of all certificates of
existing insurance policies in force affecting the Property or any portion
thereof and a synopsis of the existing policies (TEM shall have the right to
review the existing policies at Seller's office);
(iii) The original of each bill for
current real estate and personal property taxes and for the two most recent
prior years, a current statement of assessed valuation,
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water charges and other utilities, together with proof of payment thereof;
(iv) All records and files relating to
the Property including those records and files relating to the ownership,
management, operation and maintenance of the Property;
(v) The current operating budget for the
Property with applicable documentary support and operating statements for the
years 1994, 1995 and 1996;
(vi) The financial records of tenant
sales and tenant sales reports for 1994, 1995, 1996 and year to date 1997; and
(vii) Tenant expense recapture calculation
worksheets and resulting billing for 1995, 1996 and projected 1997.
(d) TEM shall have the right to disapprove the
updated Survey described in Section 2.3(f) if it reflects any material change
from the Survey.
(e) Seller shall perform, observe and comply with
all the covenants, agreements, and conditions required by this Agreement to be
performed, and observed, and complied with by, prior to or as of Close of
Escrow.
(f) The Title Company shall issue the Title
Policy as of Close of Escrow.
(g) As of the Close of Escrow, Seller shall not
have made a general assignment for the benefit of creditors, nor have admitted
in writing its inability to pay its debts as they become due, nor have filed a
petition in bankruptcy or been adjudicated a bankrupt or insolvent or have
filed a petition seeking any reorganization, arrangement, composition,
readjustment liquidation, dissolution or similar relief under any present or
future statute, law or regulation, nor have filed any answer admitting or
failing to reasonably contest the material allegations of a petition filed
against it in any such proceeding or seek or consent to or acquiesce in the
appointment of any
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trustee, receiver or liquidator of Seller for any material part of Seller's
property.
3.2 Conditions to Seller's Obligations. Seller's obligations
to close Escrow and complete the transaction contemplated herein is subject to
TEM's performance, observance and compliance with all the covenants,
agreements, and conditions required by this Agreement to be performed, and
observed, and complied with by, prior to or as of Close of Escrow.
3.3 Upon termination of this Agreement pursuant to Section
3.1 hereof, TEM shall return any and all documents, studies and other items
received from Seller in TEM's possession, under control of, or reasonably
available without additional cost to, TEM and Seller shall thereafter maintain
the confidentiality of all such information relating to the Property and Seller
as provided in Section 14.12 hereof.
4. CONDITIONS TO CLOSING.
4.1 Conditions to Closing. In addition to the conditions
set forth in Section 3.1 above, the Closing and TEM's obligation to pay the
Contribution Price and complete the transaction contemplated by this Agreement
are subject to satisfaction of the following conditions, no later than the
respective dates specified below in this Section 4.1, and the obligations of
the parties with respect to such conditions are as follows:
(a) Moratorium. At the Closing Date, there shall
be no statute, law, judicial or administrative decision, proceeding, ordinance
or regulation pending, or proposed and known to Seller, to be imposed by the
Authorities or any public or private utility having jurisdiction over the
Property which would prevent or materially and adversely impair the operation
or use of the Property in the manner it is currently operated or used.
(b) Representations, Warranties and Covenants of
Seller. Seller shall have materially performed each and every agreement to be
performed by Seller hereunder and TEM shall have approved, pursuant to the
Seller's Certificate (hereinafter
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defined), any material changes in the truth and accuracy of Seller's warranties
and representations.
(c) No Material Changes. As of the Closing,
there shall have been no material adverse changes in the physical or financial
condition of the Property. For purposes of this Subsection 4.1(c), a "material
adverse change in the physical or financial condition of the Property" shall
mean (i) the closing of operations by an Anchor of more than twenty-five
percent of its store in the Mall or (ii) a change in the physical condition of
the Property other than by condemnation or casualty which will result in
$2,500,000 of loss of value to the Property or (iii) $250,000 of loss of
annualized income of the Property.
(d) Seller's Deliveries. On or before the
Closing Date, Seller shall have delivered or caused to be delivered the items
described herein to be delivered by Seller.
(e) Title and Title Insurance. At the Closing
Date, the Title Company shall have issued or shall have unconditionally
committed to issue the Title Policy to Buyer as provided herein.
(f) Hart-Scott-Rodino Antitrust Improvements Act
of 1976. On the Closing Date, the transaction shall be in compliance with that
law commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
(g) Estoppels Obtained. The Mortgagee Estoppel
shall have been obtained and delivered to TEM.
4.2 Conditions Precedent to Seller's Obligations. The
Closing and Seller's obligation to transfer the Property to Buyer and
consummate the transaction contemplated by this Agreement are subject to the
satisfaction of the following conditions, no later than the respective dates
specified below in this Section 4.2, and the obligations of the parties with
respect to such conditions are as follows:
(a) Buyer's and TEM's Deliveries. On or before
the Closing Date, Buyer and TEM shall have delivered the items described herein
to be delivered by Buyer and TEM, respectively.
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(b) Contribution Price. On or before the Closing
Date, TEM shall have deposited into Escrow, for disbursement as provided
herein, the Contribution Price in accordance with Section 1.3 of this
Agreement.
(c) Representations, Warranties and Covenants of
Buyer and TEM. Buyer and TEM shall have materially performed each and every
agreement to be performed by Buyer and TEM hereunder and each and every one of
Buyer's and TEM's representations, warranties and covenants set forth in this
Agreement shall be true and correct in all material respects as of the Closing
Date.
(d) Hart-Scott-Rodino Antitrust Improvements Act
of 1976. On the Closing Date, the transaction shall be in compliance with that
law commonly known as the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
5. ADDITIONAL OBLIGATIONS OF PARTIES.
5.1 Security Deposits. Subject to the provisions of Section
2.3(l), Seller shall, at the Close of Escrow, prorate and turn over to Buyer a
current list of all tenants and security deposits, as well as all security
deposited by any tenant where not prohibited by terms of the tenant's Lease and
all of the original Leases under Seller's possession or control; and in
connection with the receipt thereof, Buyer will hold and apply the security
deposits for the purposes set out in such tenant's Lease and indemnify Seller
against any liability in connection therewith.
5.2 Notices to Tenants, Parties to REA and Service
Contractors. Immediately after the Close of Escrow, Seller and Buyer shall
give written notices (i) to the Parties to the REA advising them of the change
of ownership and directing them to pay all charges under the REA as directed by
Buyer; (ii) to the Tenants advising them of the change of ownership and
directing them to pay Rent and other charges under their respective Leases as
directed by Buyer; and (iii) to each Party to each of the Service Contracts
advising of the transfer and assignment of Seller's interest in the Contracts
to Buyer and directing that future inquiries be made directly to Buyer.
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5.3 Foreign Investors. If Seller fails to deliver the FIRPTA
Certificate (as provided in Section 2.3(b)(ix)), to Buyer and TEM prior to or
at the Close of Escrow, then the transaction shall be completed at the Close of
Escrow, but TEM shall withhold ten percent (10%) of the "amount realized" (as
set forth in the Regulations) by Seller and transmit to the appropriate
Internal Revenue Service Center, all in accordance with said Section 1445 and
the Regulations pursuant thereto. If Seller provides TEM with such executed
certificate or notice prior to or at the Close of Escrow, then no such
withholding shall occur.
5.4 Mortgagee Estoppel Certificate. On or before the
Closing Date, Seller shall furnish to TEM and Buyer, an estoppel certificate
and consent to transfer completed by Mortgagee, on the form attached hereto and
incorporated herein as Exhibit "Z" (the "Mortgagee Estoppel"). Seller shall
use its best efforts to obtain and deliver the Mortgagee Estoppel. If Seller
has not obtained the Mortgagee Estoppel from Mortgagee within the time period
set forth herein, TEM shall have the right, at TEM's sole option, to terminate
this Agreement by written notice to Seller, and thereupon this Agreement shall
immediately terminate and be of no further force or effect and the Deposit
together with all interest accrued thereon shall be immediately returned to
TEM.
6. OPERATION OF PROPERTY.
6.1 Access to and Information Concerning the Property and
Consulting. Seller shall, between the date hereof and the Close of Escrow,
allow TEM, its agents and attorneys access to the Property for purposes of
inspecting the same or any part thereof at any time as they shall reasonably
request, and furnish to TEM, its agents and attorneys any and all information
in Seller's control regarding the Property and its operation that TEM, its
agents and attorneys shall reasonably request from time to time.
6.2 Leasing of the Property. Prior to the Close of Escrow,
Seller shall not terminate, amend or extend existing Leases, except with
respect to the pending leases (the "Pending Leases") a schedule of which is
attached hereto as Exhibit "R" in accordance with terms approved by TEM, or
enter into new leases or lease extensions without the approval of TEM.
Approval or disapproval shall be given within five (5) business days of TEM's
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receipt of a proposal from Seller. A failure of TEM to respond within such
five (5) Business Day period shall be deemed approval. To the extent approved
by TEM, Seller agrees to promptly deliver to TEM true and complete copies of
any lease amendments, lease extensions, lease termination agreements and new
leases when fully executed. Seller shall at Seller's sole expense, satisfy in
full all lease commissions, tenant allowances or monetary concessions and
complete all alterations or other work required to be performed by Seller under
the Leases (as shown on the Rent Schedule) or the Pending Leases.
6.3 Possession. Buyer shall have the non-exclusive right to
possession of the Property as of the Close of Escrow.
6.4 Conduct of Business Pending Closing. From the date
hereof until the Closing, Seller shall (a) use reasonable best efforts to
maintain, for the benefit of TEM and Buyer following the Closing, the goodwill
of Tenants, prospective tenants, vendors and other parties having business
relations with Seller; (b) pay its debts (or in good faith contest the same)
and perform its obligations as they become due; (c) maintain the Property in
the same manner and condition that exists on the date hereof, as such condition
shall be altered by reason of casualty, taking and/or normal wear and tear; (d)
without the express written consent of TEM, not (i) enter into a new reciprocal
easement or similar agreement or amend or modify, consent to the assignment of
or waive any material right under the REA, (ii) make any alterations to the
Property or enter into any new contracts or extend or renew or cancel any
Service Contract relating to capital expenditures, (iii) enter into any other
new contracts or extend, renew or cancel, consent to the assignment of or waive
any material right under any other Service Contract, except for contracts
executed in the ordinary and usual course and business and in accordance with
past practices and policies which can be terminated without penalty or payment
upon not more than thirty (30) days prior notice, (iv) sell, transfer,
exchange, further encumber or grant interests (including easements) in the
Property or any part thereof or engage in negotiations or discussions with, or
otherwise solicit or assist, any third party relating to the acquisition by
such third party of the Property or the equity interests in Seller, and (v)
otherwise take any action which could or would render inaccurate any of the
representations or warranties made by Seller in this
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Agreement; and (e) otherwise operate the Property in the ordinary course
consistent with current practice.
6.5 Assistance Following Closing. From and after the
Closing, Seller shall provide reasonable assistance to TEM and Buyer in
connection with the preparation of financial statements and bills and the
adjustment of losses and claims and the enforcement or settlement of any such
claims. Without limiting the foregoing, Seller shall, upon the request of TEM
from time to time, provide signed representation letters with respect to
revenues and expenses of Seller if required under generally accepted accounting
practices to enable TEM's or Buyer's accountants to render an opinion on TEM's
or Buyer's financial statements.
7. TITLE AND WARRANTIES.
7.1 Seller's Representations and Warranties. Seller
hereby represents, warrants and covenants to TEM and Buyer as follows:
(a) Seller has full power and authority to enter
into and perform this Agreement in accordance with its terms; Seller is a
general partnership duly organized, validly existing and in good standing under
the laws of the State of Nevada, and to the best of Seller's knowledge, it has
made all filings and recordings necessary to exist, operate and do business
under all presently applicable Governmental Regulations and has the full and
unrestricted power and authority, to own, operate and lease its properties, to
carry on its business as currently conducted and to execute and deliver this
Agreement and any other instruments to be delivered pursuant hereto, and to
perform all of its obligations under this Agreement and any other instruments
to be delivered pursuant hereto.
(b) To the best of Seller's knowledge and belief,
there are currently no defaults or any acts or events which, with the passage
of time or giving of notice or both, could become defaults under the First
Note, or the Second Note.
(c) Except as otherwise disclosed on the Schedule
of Reports and Studies attached hereto as Exhibit "S", Seller has no knowledge
of any notice, order or directive of any Authorities
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that any work of repair, maintenance, or improvement be performed on the
Property.
(d) Except as otherwise disclosed on the
Schedules of Regulatory Compliance attached hereto as Exhibit "T" ("Regulatory
Compliance") or on Exhibit "S", Seller has received no notice from any
Authorities, any board of fire underwriters, improvement association, or
architectural committee relating to defects in the improvements on the
Property, relating to noncompliance with any applicable building code, laws,
regulations or restrictions applicable to the Property that has not been
corrected, or relating to any threat of impending condemnation.
(e) Seller has received no notice from any
Authorities of any pending or contemplated condemnation or change of zoning
affecting the Property.
(f) To the best of Seller's knowledge, the Rent
Schedule provided is a complete and correct list of all leases, tenancies, and
other rights of occupancy or use for any portion of the Property in effect on
the date of this Agreement and all of the tenant leases are the result of bona
fide arm's-length negotiations between the parties.
(g) Except for the completion of tenant
improvements under Leases which Seller is obligated to complete and for
budgeted repair and maintenance for the Property, from and after the Effective
Date, Seller will not authorize the Manager to (i) perform any grading or
excavation, construction, or removal of any improvements, or make any other
change or improvement upon or about the Property; (ii) create or incur, or
suffer to exist, any mortgage, lien, pledge, or other encumbrances in any way
affecting the Property without TEM's written approval; and (iii) commit any
waste or nuisance upon the Property. Seller will, maintain and keep the
Property in neat condition and will observe all laws, ordinances, regulations,
and restrictions affecting the Property and its use, until the Close of Escrow.
(h) Except as otherwise disclosed on the
Environmental Disclosures attached hereto as Exhibit "U", and the Asbestos
Surveys and Reports a listing of which is attached
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hereto as Exhibit "V", (i) to the best of Seller's knowledge, Seller has fully
complied with the Federal Resources Conservation and Recovery Act ("RCRA"), the
Federal Comprehensive Environmental Response Compensation and Liability Act
("CERCLA"), as amended by the Superfund Amendments and Reauthorization Act of
1986 ("SARA"), the Federal Insecticide, Fungicide, and Rodenticide Act
("FIFRA"), 7 U.S.C. Section 136 et. seq.; the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.); the Toxic Substance
Control Act ("TSCA"), 15 U.S.C. Section 2601 et. seq.; the Atomic Energy Act,
42 U.S.C. Section 2011 et. seq.; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. Section 1251 et. seq.; and the Clean Air Act (the "Clean Air Act"),
42 U.S.C. Section 7401 et seq. and all comparable federal and/or state laws,
implementing federal and/or state regulations and local ordinances (hereafter
"Applicable Environmental Laws") and (ii) to the best of Seller's knowledge and
belief, the Property does not contain contaminants, toxic or hazardous
substances or materials within the meaning of the Applicable Environmental
Laws. Seller hereby discloses and Buyer acknowledges that some components of
the Improvements contain asbestos material. Seller has not received any
written notice from any governmental unit or other person that (i) it or the
Property is not in compliance with any Applicable Environmental Laws, (ii)
there are administrative, regulatory or judicial proceedings pending or
alleging any violation of any Applicable Environmental Laws, or (iii) there is
liability or claims under any applicable Environmental Laws. Except as set
forth on Exhibit "U", Seller has not installed any underground or above ground
storage tanks on, under or about the Property and, to Seller's knowledge, no
such tanks are located on, under or about the Property.
(i) Except as disclosed on the schedule of
pending litigation attached hereto as Exhibit "W" ("Pending Litigation"),
Seller has received no written notice of any threatened litigation and to the
best of Seller's knowledge, there is no litigation pending not covered by
public liability insurance that might adversely affect the value or the use or
operation of the Property for its intended purpose or the ability of Seller to
perform its obligations under this Agreement. Seller shall notify TEM promptly
of any such litigation of which Seller becomes aware.
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(j) Seller is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
(k) Seller has not filed or been the subject of
any filing of a petition under the Federal Bankruptcy Law or any federal or
state insolvency laws or laws for composition of indebtedness or for the
reorganization of debtors.
(l) The execution, delivery and performance of
this Agreement by Seller have been duly and validly authorized by all necessary
action on the part of Seller and Seller's general partners. This Agreement has
been, and the Seller Closing Documents will be, duly executed and delivered by
Seller. This Agreement constitutes, and when so executed and delivered the
Seller Closing Documents will constitute, the legal, valid and binding
obligations of Seller, enforceable against Seller in accordance with their
respective terms.
(m) None of the execution, delivery or
performance of this Agreement by Seller does or will, with or without the
giving of notice, lapse of time or both, violate, conflict with, constitute a
default, result in a loss of rights, acceleration of payments due or creation
of any Lien upon the Property or require the approval or waiver of or filing
with any person or entity (including without limitation any Authorities) under
(i) the organizational documents of Seller or its general partners or, any
agreement, instrument or other document to which Seller or its general partners
is a party or by which it is bound or (ii) any judgment, decree, order,
statute, injunction, rule, regulation or the like of any Authorities applicable
to Seller or its general partners.
(n) The REA constitutes the only reciprocal
easement agreements or operating agreements encumbering the Property. A true
and complete copy of the REA has heretofore been furnished to Buyer, together
with each written modification thereof and supplement thereto. Seller has not
made any oral promises or agreements amending or modifying the REA with any REA
Party.
(i) The REA is valid and in full force
and effect. As of the Closing Date, no interest in the REA will be assigned to
any party other than Buyer, or otherwise pledged or encumbered in any way.
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(ii) None of the parties to the REA has
made any written claim which has been received by Seller (A) that Seller has
defaulted in performing any of its obligations under the REA which has not
heretofore been cured, (B) that any condition exists which with the passage of
time or giving of notice, or both, would constitute any such default, (C) that
such REA party is entitled to any reduction in, refund of, or counterclaim or
offset against, or is otherwise disputing, any Additional Rent or other charges
paid, payable or to become payable by such REA party, (D) that such REA party
is entitled to cancel its REA or to be relieved of its operating covenants
thereunder, or (E) that there is a violation of any of the covenants,
conditions or restrictions contained in such REA.
(o) To the best of Seller's knowledge, Exhibit
"E" which was prepared by the Manager contains a true and complete list of all
Service Contracts, including all modifications thereof. There has been no
material default (without giving effect to any notice and cure rights) by
Seller under any Service Contract or any written claim received by Seller of
any such default by any party thereto, which has not heretofore been cured
except as set forth on Exhibit "E". A true and complete copy of each Service
Contract, together with any amendments or supplements thereto, has been
delivered or made available to TEM by Manager.
(p) To the best of Seller's knowledge, Exhibit
"T" contains a list of all permits and licenses currently maintained by Seller
with respect to the Property. Seller has not received any written notice of
violation from any Authorities that has not been cured or otherwise resolved to
the satisfaction of such Authority. To Seller's knowledge, the permits and
licenses listed on Exhibit "T" are all of the licenses and permits which are
required for the present use of the Property.
(q) The term "knowledge", when used in this
Agreement, shall mean only such information as has actually been communicated
to, or learned by, the employees or officers of the entity to whose actual
knowledge reference is made (without imputing to those employees or officers,
or to that entity, the knowledge of any other person or entity). In
furtherance to the sale of the Property, Seller obtained and is familiar with
the
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due diligence materials, including the studies and reports referenced therein,
described in Exhibits "O" and "P".
(r) The representations and warranties set forth
in this Article shall be continuing and shall be true and correct on and as of
the date of Close of Escrow with the same force and effect as if made at that
time, and all such representations and warranties shall survive the Close of
Escrow for one (1) year. If, prior to the Closing, Seller becomes aware of any
fact or circumstance that would materially change a representation or warranty
of Seller in this Agreement, then Seller shall promptly give written notice of
such changed fact or circumstance to TEM. If, prior to Closing, upon Seller's
notice or otherwise, TEM becomes aware of: any material failure of any
condition to the obligations of TEM to close the transactions contemplated in
this Agreement; the untruth or inaccuracy of, or facts or circumstances which
would change materially, any representation or warranty of Seller in this
Agreement; or the failure of Seller to comply with any provision of this
Agreement; then TEM shall have the sole option of: (i) waiving such condition,
breach of warranty, or breach, and proceeding to Close the transactions
contemplated in this Agreement; (ii) subject to Seller's agreement and
concurrence agreeing with Seller to adjust the terms of this Agreement to
compensate TEM for such change; or (iii) terminating this Agreement and
receiving the return of the Deposit as TEM's sole remedy prior to Closing.
7.2 TEM's Warranties. TEM hereby represents, warrants
and covenants to Seller as follows:
(a) TEM is a limited partnership validly existing
and in good standing under the laws of the State of Delaware with full right,
power and authority to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance by
TEM of this Agreement have been duly and validly authorized by all requisite
action on the part of TEM. This Agreement has been duly executed and delivered
by TEM. This Agreement constitutes the legal, valid and binding obligations of
TEM, enforceable against it in accordance with its terms.
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(c) None of the execution, delivery or
performance of this Agreement by TEM does or will, with or without the giving
of notice, lapse of time or both, violate, conflict with, constitute a default
or result in a loss of rights under or require the approval or waiver of or
filing with any person (including without limitation any governmental body,
agency or instrumentality) under (i) the limited partnership agreement of TEM
or any material agreement, instrument or other document to which TEM is a party
or by which TEM is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
TEM.
7.3 Buyer's Warranties. Buyer hereby represents, warrants
and covenants as follows:
(a) Buyer is a general partnership duly
organized, validly existing and in good standing under the law of the State of
Texas, and to the best of Buyer's knowledge, has made all filings and
recordings necessary to exist, operate and do business under all presently
applicable Governmental Regulations and has the full and unrestricted power and
authority, corporate or otherwise, to own, operate and lease its properties, to
carry on its business as currently conducted and to execute and deliver this
Agreement and any other instruments to be delivered pursuant hereto, and to
perform all of its obligations under this Agreement and any other instruments
to be delivered pursuant hereto.
(b) The execution, delivery and performance by
Buyer of this Agreement and all other instruments required to be delivered
pursuant hereto, the fulfillment of and compliance with the respective terms
and provisions hereof and thereof, and the due consummation of the transaction
contemplated hereby, have been duly and validly authorized by all necessary
partnership action (all of which actions are in full force and effect), and do
not: (1) require any consent or approval of any partner, lender, shareholder,
creditor, investor, judicial or administrative body, Authority or other party
which has not already been obtained; or (2) conflict with, or result in any
breach of, or constitute a default under, any presently applicable Governmental
Regulation, bond, note, or other evidence of indebtedness, or under any
contract, indenture, mortgage, deed of trust, loan, lease, partnership
agreement, articles of
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incorporation, bylaws, shareholder agreement or any other agreement or
instrument to which Buyer is a party or by which Buyer or any of Buyer's
properties may be bound or affected.
(c) Buyer's representations and warranties
contained herein are and will be true and correct as of the Close of Escrow.
8. ASSIGNMENT.
8.1 No Other Assignment. Neither Buyer, TEM nor Seller shall
assign all or any part of this Agreement or any of their rights or obligations
hereunder, or any interest herein, whether by operation of law or otherwise,
without the prior written consent of Seller, TEM or Buyer, as applicable, and
any such assignment contrary to the terms hereof shall be null and void and of
no force or effect. Except as the other party may otherwise agree in writing,
in no event shall any assignment by TEM, Buyer or Seller of all or any part of
this Agreement or any of their rights or obligations under this Agreement,
whether before or after the Closing, release TEM, Buyer or Seller, as the case
may be, from any of their respective liabilities or obligations hereunder.
9. BROKERAGE COMMISSIONS.
9.1 Mutual Representations. Each party represents to the
other that no brokers except Morgan Stanley Realty have been involved in this
transaction. Seller shall pay any commissions owed to Morgan Stanley Realty.
It is agreed that if any claims for brokerage commissions or finder's fees or
like payment arise out of or in connection with the transaction provided
herein, and in the event any claim is made, all such claims shall be handled
and paid by the party whose actions or alleged commitment form the basis of
such claim. It is further agreed that each party whose actions or alleged
commitment form the basis of a claim agrees to indemnify and hold harmless the
other party from and against any and all claims or demands with respect to the
brokerage fees or agent's commissions or other compensation asserted by any
person, firm, or corporation in connection with this Agreement or the
transactions contemplated hereby.
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10. NOTICES.
Any notices given under this Agreement shall be in writing and
shall be served either personally or delivered by first class or express U.S.
mail with postage prepaid, return receipt requested pursuant to registered or
certified mail, or by nationally recognized overnight commercial courier
service with charges prepaid. Notices may also effectively be given by
transmittal over electronic transmitting devices if the party to whom the
notice is being sent has a receiving device in its office, and provided a
complete copy of the notice shall also be served either personally or in the
same manner as required for a mailed notice. Notices shall be deemed received
at the earlier of actual receipt or one (1) day following deposit in U.S. mail
with postage prepaid or with a nationally recognized overnight commercial
courier service with charges prepaid. Notices shall be directed as follows:
If to Seller: Atlantic Freeholds II
c/o Grosvenor International
California Limited
100 Pine Street, Suite 3200
San Francisco, California 94111
Attention: William J. Abelmann
Fax No: (415) 434-2742
Telephone No: (415) 434-0175
Copy to: Greene Radovsky Maloney & Share LLP
Four Embarcadero Center, Suite 4000
San Francisco, California 94111
Attention: Graham Maloney
Fax No: (415) 777-4961
Telephone No: (415) 981-1400
If to TEM: Town East Mall, L.P.
c/o General Growth Properties, Inc.
55 West Monroe, Suite 3100
Chicago, Illinois 60603-5060
Attention: Joel Bayer
Fax No: (312) 551-5475
Telephone No: (312) 551-5015
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Copy to: Neal Gerber & Eisenberg
Two North La Salle, Suite 2200
Chicago, Illinois 60602
Attention: Reuben C. Warshawsky
Fax No: (312) 269-1747
Telephone No: (312) 269-8412
If to Escrow Chicago Title Insurance Company
Holder: 388 Market Street
San Francisco, California 94111
Attention: Rita Abbey
Fax No.: (415) 434-2176
Telephone No: (415) 291-5153
11. CONDEMNATION AND DESTRUCTION.
11.1 Eminent Domain or Taking. If, prior to the Close of
Escrow, any portion of the Property is taken or if the access to the Project is
reduced or restricted, by eminent domain or otherwise (or is the subject of a
pending, threatened or contemplated taking which has not been consummated), TEM
shall have the option, in TEM's sole and absolute discretion, to terminate this
Agreement upon written notice to Seller given not later than ten (10) business
days after TEM is notified of such taking (and if necessary, the Closing Date
shall be extended by the number of days necessary to provide TEM such ten (10)
Business Day period). If TEM elects to terminate this Agreement, neither party
shall have any further rights or obligations hereunder, except the payment of
title and escrow cancellation costs, which shall be borne equally by Seller and
TEM. If TEM does not elect to terminate this Agreement, all awards for the
taking by eminent domain which accrue to Seller shall be paid to TEM and the
parties shall proceed to the Closing pursuant to the terms hereof, without
modification of the terms or Contribution Price of this Agreement, provided
that TEM shall accept the Property "AS IS" and "WITH ALL FAULTS" insofar only
as such condemnation is concerned, and all of Seller's covenants,
representations and warranties hereunder shall be deemed modified accordingly.
Unless or until this Agreement is terminated, Seller shall not take any action
with respect to any eminent domain proceeding without the prior written consent
of TEM which consent shall not be unreasonably withheld or delayed.
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11.2 Fire or Casualty. Prior to the Closing, and
notwithstanding the pendency of this Agreement, the entire risk of loss or
damage by fire or other casualty shall be borne as set forth in this Section
11.2. If, prior to the Closing, any part of the Property is damaged or
destroyed by earthquake, flood, landslide, fire or other casualty, Seller shall
immediately notify TEM of such fact. If such damage or destruction is
"material", either TEM or Seller shall have the option to terminate this
Agreement upon written notice to the other party given not later than thirty
(30) days after receipt of Seller's notice of such damage or destruction (and,
if necessary, the Closing Date shall be extended by the number of days
necessary to provide Buyer such thirty (30) day period). For purposes hereof,
"material" shall be deemed to be any uninsured damage or destruction to the
Property in excess of Two Hundred Fifty Thousand Dollars ($250,000.00), and any
insured damage or destruction to the Property where the cost of repair or
replacement is estimated to be Five Hundred Thousand Dollars ($500,000.00) or
more. If either TEM or Seller elects to terminate this Agreement, neither
party shall have any further rights or obligations hereunder except the payment
of title and escrow cancellation charges which shall be borne equally by TEM
and Seller. If neither TEM or Seller elects to terminate this Agreement, or if
the damage or destruction is not material, this Agreement shall not terminate
but Seller shall be entitled to the proceeds of any insurance maintained by or
on behalf of Seller and Seller shall repair or restore the damage or
destruction to the same condition as existed prior to the casualty as soon as
reasonably practical but in no event more than 60 days after the casualty, and
upon the completion of such repair or restoration the parties shall proceed to
the Closing pursuant to the terms hereof without any adjustment of the Purchase
Price.
12. DEFINED TERMS.
12.1 Definitions. The following terms shall have the
respective meanings assigned to them:
(a) Additional Rental - means such sums and
charges payable by the Tenant's pursuant to the Leases (other than Minimum Rent
and Percentage Rent) including without limitation, expense reimbursement;
operating cost pass-throughs; utility charges; common area maintenance charges;
charges payable
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under the REA; administrative charges, real estate and privilege taxes; Roof
Repair Fund and insurance cost reimbursements.
(b) Affiliate - means with respect to any
specific entity or natural person, any firm, corporation, partnership,
association, trust or other entity which is controlled by, under the common
control of or subject to the control of such specific entity or natural person.
For purposes hereof, the term "control" shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any such entity, or the power to veto major policy decisions of any
such entity, whether through the ownership of voting securities, by contract or
otherwise.
(c) Authorities - means all federal, state,
county and local governmental and quasi-governmental bodies, boards,
commissions, agencies and courts having jurisdiction over the Property
including, without limitation, the City of Mesquite, the County of Dallas, and
the State of Texas.
(d) Business Day - means the days (other than
Saturday or Sunday) on which federally insured national banking associations
are required to be open for business in Dallas County, Texas.
(e) Improvements - mean, in addition to its
definition in the Recital of Facts, all buildings, fixtures, structures,
streets, roadways, sidewalks, walkways, parking areas, storm drainage
facilities, utility systems (including sanitary sewer, natural gas, domestic
and fire protection water, electrical, telephone and cable television systems)
and any other facilities or improvements situated on the Real Property or
constructed as part of the Improvements. The term "Improvements" also means
all rights, titles and interests appurtenant to the Real Property, including
rights and obligations under any REA and rights to all streets, alleys,
easements and rights of way, in, on, across, in front of and abutting or
adjoining the Real Property.
(f) Leases - means all leases, licenses, guaranty
agreements, rental agreements or occupancy agreements and all amendments,
modifications and supplements thereto, executed by either (i) unilaterally by
Seller; or (ii) Seller and Tenant; or
42
<PAGE> 46
(iii) a third party guarantor of a Lease, relative to occupying space within
the Improvements (together with all rents, issues and profits thereunder).
(g) Minimum Rent - means all base rent, minimum
rent or basic rent payable in fixed installments for stated periods by Tenants
under the Leases.
(h) Official Records - means the Real Property
Records of Dallas County, Texas.
(i) Percentage Rent - means rentals which are
expressed as a fixed percentage or percentages of the gross receipts or gross
sales in excess of the stated "break point" of the Tenants under the Leases.
(j) Permitted Encumbrances - means and shall
include (i) the Permitted Exceptions; and (ii) matters affecting the Property
set forth in the Title Commitment and approved, or deemed approved, by Buyer
pursuant to Section 2.3(f).
(k) Personal Property - means, in addition to its
definitions in the Recitals of Fact, all fixtures, food court furniture and
fixtures, equipment, appliances, carpet, drapes, maintenance equipment and
tools, all other machinery, landscaping, planting and foliage and furniture and
personal property of every kind or character owned by the Seller and located in
or on or used in connection with the Real Property or the Improvements or
operations thereon, including the personal property described on the Personal
Property Inventory. The term "Personal Property" shall be deemed to exclude
all property owned by the Tenants and by the Anchors.
(l) Personal Property Inventory - means the list
attached as Exhibit "D".
(m) Proration Date - means 11:59 p.m. on the date
preceding the Closing Date, such that Buyer is deemed to have owned the
Property the entire day upon which the Closing occurs.
(n) REA - shall have the meaning set forth
otherwise herein and shall also include all other agreements between the
"Developer" or "Operator" thereunder and any Anchor
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<PAGE> 47
pertaining thereto, such other agreements to include, but not be limited to,
those listed on Exhibit "B".
(o) Real Property - means, in addition to the
definition in the Recital of Facts, the real property described in Exhibit "A"
together with all and singular the rights pertaining to such real property,
including, without limitation, any right, title and interest of Seller, if any,
in and to all adjacent streets, roads, alleys, underground tunnels, easements,
licenses, and rights-of-way, whether such property is owned or claimed by deed,
limitations, or otherwise, and whether such real property is located inside or
outside the metes and bounds description contained in Exhibit "A", located
within the Survey.
(p) Rentals - means, collectively, all Minimum
Rent, Additional Rentals, Percentage Rent and other sums and charges payable by
the Tenants under the Lease. Rentals shall not include Security Deposits
unless and until such Security Deposits are forfeited.
(q) Security Deposits - means all security
deposits, Rentals prepaid for a period which is more than thirty (30) days in
advance, access card or key deposits, cleaning fees and other deposits (plus
any interest accrued thereon) paid by Tenants to Seller pursuant to the Leases.
(r) Title Company:
Chicago Title Insurance Company
388 Market Street
San Francisco, CA 94111
(s) Title Underwriters - cumulatively the
following title insurance underwriters with their indicated amounts of title
insurance coverages:
44
<PAGE> 48
UNDERWRITER AMOUNT OF COVERAGE
Chicago Title Insurance Company $_____________ (primary
liability)
_______ Title Insurance Company $_____________ (reinsurance)
_______ Title Insurance Company $_____________ (reinsurance)
_______ Title Insurance Company $_____________ (reinsurance)
12.2 Use of Defined Terms. The definitions set forth in
Section 12.1 are intended to supplement and be consistent with the defined
terms set forth in the Recitals of Fact and in the other Sections hereof, but
in the event of any conflict between defined terms in the Recitals of Fact or
the other Sections and the definitions in Section 12.1, the definitions in
Section 12.1 shall prevail. Any defined terms used in the plural shall refer
to all members of the relevant class and any defined terms used in the singular
shall refer to any number of members of the relevant class. Any reference to
this Agreement or any Exhibits hereto and any other instruments, documents and
agreements shall include this Agreement, Exhibits and other instruments,
documents and agreements as originally executed or existing and as the same may
from time to time be supplemented, modified or amended.
12.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required by this Agreement to be submitted shall, unless
otherwise expressly stated, be prepared in conformity with generally accepted
accounting principles, applied on a consistent basis.
13. MISCELLANEOUS.
13.1 Additional Actions and Documents. Each of the parties
hereto hereby covenants to take or cause to be taken such further actions, to
execute, deliver, and file or cause to be executed, delivered, and filed such
further documents and instruments, and to obtain such consents, as may be
necessary or as may be reasonably required in order to effectuate fully the
45
<PAGE> 49
purposes, terms, and conditions of this Agreement, whether before, at, or after
the Closing.
13.2 Limitations on Benefits. It is the explicit intention
of the parties hereto that no person or entity other than the parties hereto
and their permitted successors and assigns is or shall be entitled to bring any
action to enforce any provision of this Agreement against any of the parties
hereto, and the covenants, undertakings and agreements set forth in this
Agreement shall be solely for the benefit of, and shall be enforceable only by,
the parties hereto or their respective successors and assigns as permitted
hereunder.
13.3 Cumulative Remedies. Prior to or following the Closing,
each and every one of the rights, benefits and remedies provided to TEM or
Buyer by this Agreement, or any instrument or documents executed pursuant to
this Agreement, are cumulative, and shall not be exclusive of any other of said
rights, remedies and benefits allowed by law or equity to TEM or Buyer
including the right to bring an action for specific performance. From and
after the Closing, each and every of the rights, benefits and remedies provided
to Seller by this Agreement, or any other documents or agreements delivered at,
or in connection with, the Closing shall be cumulative and shall not be
exclusive of any other of said rights, remedies and benefits allowed under this
Agreement or such other documents or agreements; provided, however, it being
expressly agreed that Seller's sole remedy in the event of a breach of this
Agreement by TEM or Buyer shall be to receive the Deposit as liquidated damages
and not as a penalty.
13.4 Pronouns; Time. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or entity may require. If any period or
time set forth in this Agreement ends or occurs on a day which is not a
Business Day, then such period or time shall instead end on the next
immediately following Business Day.
13.5 Exhibits. The Exhibits and Schedules enumerated herein
are attached hereto. When attached to this Agreement, the Exhibits and
Schedules are hereby made a part of this Agreement as fully as if set forth in
the text hereof.
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<PAGE> 50
13.6 Headings. The title and headings of the various
Sections hereof are intended solely for means of reference and are not intended
for any purpose whatsoever to modify, explain or place any construction on any
of the provisions of this Agreement.
13.7 Invalidity. If any of the provisions of this Agreement
or the application thereof to any persons or circumstances shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement by the
application of such provision or provisions to persons or circumstances other
than those as to whom or which it is held invalid or unenforceable shall not be
effected thereby, and every provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
13.8 Attorneys' Fees. In the event of any litigation between
the parties hereto to enforce any of the provisions of this Agreement or any
right of either party hereto, the unsuccessful party to such litigation agrees
to pay the successful party all costs and expenses, including reasonable
attorneys' fees, incurred hereby by the successful party, all of which may be
included in and as part of the judgment rendered in such litigations.
13.9 Entire Agreement. The terms of this Agreement are
intended by the parties as a final expression of their agreement with respect
to such terms as are included in this Agreement and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement constitutes the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial proceedings, if any, involving this Agreement. No provision of this
Agreement may be amended or added to except by an agreement in writing signed
by the parties hereto or their respective successors in interest. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas.
13.10 Successors. All the terms, covenants and conditions
hereof shall be binding upon and inure to the benefit of the heirs, executors,
administrators, successors and assigns of the parties hereto.
47
<PAGE> 51
13.11 Counterparts. This Agreement may be executed in
several counterparts each of which shall be an original, but all of such
counterparts shall constitute one such Agreement.
13.12 Confidentiality. Until Closing, TEM and its partners,
attorneys, agents, employees and consultants will treat the information
disclosed to it by Seller and marked as confidential information, giving it the
same care as TEM's own confidential information, and make no use of any such
confidential information not independently known to TEM except in connection
with the transactions contemplated hereby. In the event of any termination of
this Agreement in accordance with its terms, TEM shall promptly return copies
of all such confidential information to Seller. In addition, the parties shall
agree to any press release to be issued regarding this transaction, and except
as required by applicable law, neither party shall issue any such release or
make any statement to the media without the other party's consent, which shall
not be unreasonably withheld.
13.13 Force Majeure. The time for performance of either
TEM's Buyer's or Seller's obligations hereunder shall be extended for a period
equal to any delays in the performance of that party's obligations caused by
acts of God, labor disputes, strikes, weather conditions, riots, storms, delays
or unavailability of supplies, breach by the Seller's contractor or
subcontractors, or any other causes beyond Buyer's or Seller's reasonable
control, as the case may be (collectively, "Force Majeure Events"); provided,
however, lack of funds or willful acts of a party shall not constitute a Force
Majeure Event hereunder. Further, it shall be a condition to any extension of
the time for a party's performance hereunder that such party notify the other
party within five (5) Business Days following the occurrence of the Force
Majeure Event. In the event any such delays shall cause or are reasonably
likely to cause the Closing Date to extend six (6) months beyond December 31,
1997, then either party shall have the right to terminate this Agreement.
13.14 Time of the Essence. Time is of the essence in this
Agreement.
13.15 Indemnification by Seller. From and after the Closing,
Seller shall indemnify, defend and hold harmless Buyer, TEM and their
respective Affiliates, members, partners,
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<PAGE> 52
employees, representatives and agents, and their respective successors and
assigns (collectively, the "INDEMNIFIED BUYER PERSONS") from and against any
and all claims, actions, suits, demands, losses, damages, liabilities,
obligations, judgments, settlements, awards, penalties, costs or expenses,
including, without limitation, reasonable attorneys' fees and expenses
("Losses") incurred or suffered by any Indemnified Buyer Person that results
from, relates to or arises out of (a) claims (excluding, however, claims that
are actually known to TEM or the key employees of Manager (as hereinafter
defined - "Key Employees") prior to the Close of Escrow) made by any Tenant or
Anchor under the Leases, any Party to the REA under the REA, or by any Party
under those Contracts assigned to Buyer, that relate to any actions or events
first occurring, or obligations first accruing, prior to the Closing Date, (b)
any event, occurrence or accident at any time prior to the Closing Date
relating to the Property excluding events, occurrences or accidents not
covered by insurance and actually known to TEM or the Key Employees of Manager,
or (c) the Pending Claims as are more particularly described on Exhibit AA
attached hereto. The Key Employees are John Millar, Doug Wilson, Armand
Mastropietro, Ron Cornwell or Betty Burton. As used in this Section 13.15,
"actually known to TEM or the Key Employees of Manager" shall mean actual
knowledge of TEM or the Key Employees of Manager, but only with respect to
information acquired by TEM or the Key Employees after December 22, 1995. This
Section 13.15 shall survive the Close of Escrow. Claims against Seller or the
Property arising from CAM charges, Rentals, any construction contract or
service agreement or operations expenses shall be borne by Seller regardless of
any knowledge of TEM or the Key Employees.
13.16 Breach of Contract. Notwithstanding anything to the
contrary contained in this Agreement, in the event of any breach or inaccuracy
of any representation or warranty made by Seller in this Agreement or in the
Seller Closing Documents, or in the event of any breach or non-fulfillment by
Seller of any of the covenants or agreements of Seller contained in this
Agreement or the Seller Closing Documents, Buyer or TEM shall have the right,
in addition to any other rights or remedies provided in this Agreement, to
bring an action for breach of contract and for damages against Seller.
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<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date set forth below and is effective as of the latter.
SELLER:
ATLANTIC FREEHOLDS II,
a Nevada general partnership
By: GROSVENOR INTERNATIONAL
(ATLANTIC FREEHOLDS) LIMITED,
a Nevada corporation,
its general partner
By: /s/ William J. Abelmann
----------------------------
Its: Director
By: /s/ David Olson
----------------------------
Its: Senior Vice President
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<PAGE> 54
BUYER:
TOWN EAST MALL PARTNERSHIP, a Texas
general partnership
By: TOWN EAST MALL, L.P., a Delaware limited partnership,
its general partner
By: TOWN EAST MALL, INC.,
a Delaware corporation,
its general partner
By: /s/ Joel Bayer
----------------------------
Name: Joel Bayer
----------------------
Title: Vice President
---------------------
By: ATLANTIC FREEHOLDS II, a Nevada
general partnership,
its general partner
By: GROSVENOR INTERNATIONAL
(ATLANTIC FREEHOLDS) LIMITED,
a Nevada corporation,
its general partner
By: /s/ William J. Abelmann
----------------------------
Name: William J. Abelmann
----------------------
Title: Director
---------------------
By: /s/ David Olson
----------------------------
Name: David Olson
----------------------
Title: Senior Vice President
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<PAGE> 55
TEM:
TOWN EAST MALL L.P., a Delaware
limited partnership
By: Town East Mall, Inc., a
Delaware corporation, its
general partner
By: /s/ Joel Bayer
------------------------------
Name: Joel Bayer
------------------------
Title: Vice President
-----------------------
52
<PAGE> 1
EXHIBIT 2.3
PURCHASE AND SALE AGREEMENT
BETWEEN
Century Plaza Company
an Alabama general partnership
and
Century Plaza L.L.C.,
a Delaware limited liability company
March 22, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Definitions
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II Sale and Purchase
2.1 Purchase and Sale Contract . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.2 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III Title Insurance and Survey
3.1 Delivery of Title Commitment, Lien Searches and Survey . . . . . . . . . . . . 11
3.2 Title Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Purchaser's Options Upon Failure to Cure . . . . . . . . . . . . . . . . . . . 12
3.4 Reinsurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Defects After Inspection Period . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV Access
4.1 Inspection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Inspection of the Property . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.3 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.5 Deleted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V Costs and Expenses
5.1 Title and Survey Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Escrow Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Other Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI Closing
6.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Seller Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 Purchaser Closing Documents . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Joint Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII Prorations and Adjustments
7.1 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Items to be Prorated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 Installment Payment of Assessments . . . . . . . . . . . . . . . . . . . . . . 20
7.4 Rent Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.5 Proration of Adjustable Tenant Charges . . . . . . . . . . . . . . . . . . . . 22
7.6 Proration of Sales Based Tenant Charges . . . . . . . . . . . . . . . . . . . 22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
7.7 Application of Rent Receipts . . . . . . . . . . . . . . . . . . . . . 22
7.8 Security and Utility Deposits . . . . . . . . . . . . . . . . . . . . 23
7.9 Collection of Rents . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.11 The Indemnification Buffer Does Not Apply . . . . . . . . . . . . . . 24
ARTICLE VIII Representations and Warranties
8.1 Seller's Representations and Warranties . . . . . . . . . . . . . . . 24
8.2 Purchaser Representations and Warranties . . . . . . . . . . . . . . . 31
ARTICLE IX Conditions to Closing
9.1 Conditions to Seller's Obligations . . . . . . . . . . . . . . . . . . 32
9.2 Conditions to Purchaser's Obligations . . . . . . . . . . . . . . . . 32
ARTICLE X Additional Covenants
10.1 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . 33
10.2 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Estoppel Certificates . . . . . . . . . . . . . . . . . . . . . . . . 34
10.4 Contract Party Consents . . . . . . . . . . . . . . . . . . . . . . . 35
10.5 Employment and Labor Matters . . . . . . . . . . . . . . . . . . . . . 35
10.6 Record Retention . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.8 Assistance Following Closing . . . . . . . . . . . . . . . . . . . . . 35
10.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10 Transfers to Seller . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XI Indemnification
11.1 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Indemnification by Purchaser . . . . . . . . . . . . . . . . . . . . . 36
11.3 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . 37
11.4 Indemnification Procedure; Other Claims . . . . . . . . . . . . . . . 38
11.5 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.6 Indemnification Buffer . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XII Condemnation and Destruction
12.1 Casualty or Condemnation in General . . . . . . . . . . . . . . . . . 38
12.2 Adjustment of Claims and Condemnation Proceedings . . . . . . . . . . 39
ARTICLE XIII Miscellaneous
13.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.6 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 41
13.7 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
13.8 Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.11 Headings; Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.12 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.14 Costs of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.15 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE XIV Earnest Money
14.1 Earnest Money Returned in Full to Purchaser . . . . . . . . . . . . . . . . . 42
14.2 Earnest Money Paid Over in Full to Seller . . . . . . . . . . . . . . . . . . 42
ARTICLE XV Tax Free Exchange
15.1 1031 Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
-iii-
<PAGE> 5
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT is dated as of March 22, 1997, by
and between CENTURY PLAZA COMPANY, an Alabama general partnership ("Seller"),
having a mailing address of 241 Century Plaza, Birmingham, Alabama 35210, and
CENTURY PLAZA L.L.C., a Delaware limited liability company ("Purchaser"),
having a mailing address of 55 West Monroe Street, Suite 3100, Chicago,
Illinois 60603.
R E C I T A L S
WHEREAS, Seller is the owner of the that certain shopping center
known as Century Plaza located in the City of Birmingham, County of Jefferson,
State of Alabama; and
WHEREAS, Seller desires to sell to Purchaser substantially all of its
property, both real and personal, which is related to such mall, and Purchaser
desires to purchase such property, upon the terms and subject to the conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following
terms shall have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act of 1990, as
amended.
"ADJUSTABLE TENANT CHARGES" shall mean common or mall area maintenance
(exterior and interior) charges, real estate taxes and assessments, property
insurance charges, water and sewer charges, and HVAC charges to the extent
denominated as such in the Leases and the DOA.
"ADVERTISING AND PROMOTIONAL CONTRIBUTIONS" shall mean any and all
dues, fees, or charges payable by Tenants pursuant to their leases to any
merchants association or media or advertising fund.
"AFFILIATE" shall mean a Person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is under common
control with the Person specified.
"AGREEMENT" shall mean this Purchase and Sale Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
<PAGE> 6
"APPLICABLE CLOSING FISCAL PERIOD" shall mean, with respect to any
item which is prorated under Article VII, the calendar year (or other fiscal
period for which such item is determined or assessed) during which the Closing
Date occurs.
"ASSIGNED RECEIVABLE" shall have the meaning set forth in Section
7.4(a).
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.3(a).
"BARBER GROUND LEASE" shall mean that certain Lease Agreement dated
September 27, 1972 between Julia W. Barber and George W. Barber, Jr., as
Trustees of the George W. Barber, Jr. Trust No. 4 U/T/A dated January 2, 1952,
as Lessor, and George W. Barber, Jr., as Lessee.
"BARBER PARCEL" shall mean that certain parcel of real estate
leased to Seller pursuant to the Barber Ground Lease.
"BOOKS AND RECORDS" shall mean all records, books of account and
papers of Seller which pertain to the construction, ownership and operations of
the Property, including without limitation, architect's drawings, blue prints
and as-built plans, maintenance logs, copies of warranties and guaranties,
licenses and permits, instruction books, employee manuals, records and
correspondence relating to insurance claims, copies of guarantees and
warranties, financial statements, operating budgets, paper and electronic media
copies of data and other information relating to the Property available from
personal computers including copies of all accounting records (in both paper
and electronic data, ASCII comma delimited format) required to properly compute
the prorations described in this Agreement, structural, mechanical,
geotechnical or other engineering studies, soil test reports, environmental
reports, feasibility studies, appraisals, ADA surveys or reports, OSHA asbestos
surveys, marketing studies, mall documents and compilations, lease summaries
and originals and/or copies of Leases, the DOA and the Contracts and
correspondence related thereto.
"CASUALTY" shall mean any damage to or destruction of the Property or
any portion thereof caused by fire or other casualty, whether or not insured.
"CLOSED RECEIVABLES" shall have the meaning set forth in Section
7.4(a).
"CLOSING" shall have the meaning set forth in Section 6.1.
"CLOSING DATE" shall have the meaning set forth in Section 6.1.
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and
Purchaser Closing Documents, collectively.
"CLOSING ESCROW AGREEMENT" shall mean the escrow agreement for deposit
of the Closing Documents by and among Seller, Buyer and Escrow Agent, in the
form of EXHIBIT C attached hereto.
"COLLECTION RECEIVABLES" shall have the meaning set forth in Section
7.4(d).
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"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONTRACT PARTY CONSENTS" shall have the meaning set forth in Section
10.4.
"CONTRACTS" shall mean the service, maintenance and other contracts
and concessions that are currently in effect and to which Seller is a party
respecting the use, maintenance, development, sale or operation of the Property
or any portion thereof (but excluding this Agreement, the Leases, and the
Permitted Exceptions) which are listed on SCHEDULE 8.1(h), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception
to title, or the lack of any coverage or endorsement referred to in the
definition of "Title Policy" hereinafter set forth which Purchaser will require
and which was not included in the Title Commitment, that in Purchaser's sole
opinion adversely affects the title to or use of the Property.
"DISAPPROVAL NOTICE" shall have the meaning set forth in Section 3.2.
"DOA" shall mean that certain Development and Operating Agreement
dated November 20, 1972 between George W. Barber, Jr., individually, George W.
Barber, Jr., Trustee and Julia W. Barber, Trustee under Instrument of Trust
dated January 2, 1952 and known as "George W. Barber, Jr., Trust #4", the
predecessor-in-interest to Seller and Sears.
"EARNEST MONEY" shall have the meaning set forth in Section 2.2(a).
"EARNEST MONEY ESCROW" shall have the meaning set forth in Section
2.2(a).
"ESCROW AGENT" shall mean Land Title Company, 600 20th Street North,
Birmingham, Alabama 35203, approved attorney or approved special counsel for
Chicago Title Insurance Company.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, guidelines, orders and decrees
regulating, relating to or imposing liability or standards concerning or in
connection with Hazardous Materials, Underground Storage Tanks or the
protection of human health or the environment, as any of the same may be
amended from time to time, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
Section 9601 et. seq., as amended by the Superfund Amendments and
Reauthorization Act or any equivalent state or local laws or ordinances; the
Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et
seq., as amended by the Hazardous and Solid Waste Amendments of 1984, or any
equivalent state or local laws or ordinances; the Federal Insecticide,
Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. Section 136 et. seq. or any
equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.); the Emergency Planning
and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. Section 11001 et. seq. or
any equivalent state or local laws or ordinances; the Toxic Substance Control
Act ("TSCA"), 15 U.S.C. Section 2601 et. seq. or any equivalent state or local
laws or ordinances; the Atomic
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Energy Act, 42 U.S.C. Section 2011 et. seq., or any equivalent state or local
laws or ordinances; the Clean Water Act (the "Clean Water Act"), 33 U.S.C.
Section 1251 et. seq. or any equivalent state or local laws or ordinances; the
Clean Air Act (the "Clean Air Act"), 42 U.S.C. Section 7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq. or any equivalent state or local laws
or ordinances.
"ESTOPPELS" shall mean the estoppel certificates to be obtained
pursuant to Section 10.3.
"EXECUTION DATE" shall mean the date of this Agreement, which shall be
the date that this Agreement, duly executed by Seller, is received and
counter-executed by Purchaser.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
4.3.
"FIXED AND OTHER TENANT CHARGES" shall mean Rents other than
Adjustable Tenant Charges, Sales Based Tenant Charges and Advertising and
Promotional Contributions.
"FIXED AND OTHER TENANT CHARGE ARREARAGES" shall mean Fixed and Other
Tenant Charges due and payable prior to but unpaid as of the Closing Date.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified
Public Accountants from time to time.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas
or particulate matter which, as of the Closing Date (i) is classified as a
"hazardous substance" under CERCLA, or otherwise regulated by the United States
Government, the State of Alabama or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental Law, or (iii) requires investigation or remediation under any
Environmental Law or common law, or (iv) deleted (v) deleted (vi) deleted.
Such term includes, without limitation, any material or substance which is, as
of the Closing Date (1) defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous
waste" or any like or similar term under any applicable Environmental Law; (2)
oil and petroleum products; (3) asbestos or asbestos-containing material as
defined in the regulations of the Occupational Safety and Health Administration
at 29 C.F.R. Section 1910.1001; (4) polychlorinated biphenyls; (5) radioactive
material; (6) designated as a "toxic pollutant" or a "hazardous substance"
pursuant to Sections 307 or 311 of the Clean Water Act; (7) defined as a
"hazardous waste" pursuant to Section 1004 of RCRA; (8) defined as a "hazardous
substance" pursuant to Section 101 of CERCLA; (9) designated as a "hazardous
chemical" substance or mixture pursuant to TSCA; (10) designated as an
"extremely hazardous" substance under Section 302 of EPCRA; (11) designated as
a "priority pollutant" or "hazardous air pollutant" pursuant to the Clean Air
Act; (12) designated as a hazardous chemical under the Occupational Safety and
Health Act; (13) radon gas or other radioactive source material, including
special nuclear material, and byproduct materials regulated under the Atomic
Energy Act, 42 U.S.C. Section 2011 et. seq.; (14) subject to regulation under
FIFRA; (15) natural gas, natural gas liquids, liquefied natural gas, and
synthetic gas usable for fuel; or (16) infectious wastes or materials and
pathogenic bacteria or other pathogenic microbial agents.
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"IMPROVEMENTS" shall mean improvements, structures, fixtures,
facilities, installations, machinery and equipment, in, on, over or under the
Land, including but not limited to the foundations and footings therefor,
elevators, plumbing, air conditioning, heating, ventilating, mechanical,
electrical and utility systems (except to the extent owned by a utility
company), signs and light fixtures (except to the extent of trade fixtures and
other items of personalty and equipment owned by tenants under the Leases),
doors, windows, fences, parking lots, walks and walkways and each and every
other type of physical improvement to the extent owned, in whole or in part, by
Seller, located at, on or affixed to the Land, to the full extent such items
constitute or are or can or may be construed as realty under the laws of the
State of Alabama.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 11.3.
"INDEMNIFIED PURCHASER PERSONS" shall have the meaning set forth in
Section 11.1.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 11.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 11.3.
"INSPECTION PERIOD" shall have the meaning set forth in Section 4.1
hereof.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LEASES" shall mean those leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which Seller or any of its
predecessors in title is a party affecting or relating to the Property which
are listed on SCHEDULE 8.1(f), together with any additions thereto,
modifications thereof or substitutions therefor hereafter entered into in
accordance with the provisions of this Agreement.
"LIENS" shall mean any liens, security interests, judgments or charges
that encumber any part of the Land, the Improvements, or the Personal Property
owned by Seller, including, but not limited to, mortgages, deeds of trust,
mechanics, materialmen, judicial, tax or governmental liens, pledges, options,
rights of first offer or first refusal or other similar items.
"LIEN SEARCHES" shall mean a search report by an independent search
firm acceptable to Purchaser of the Secretary of State records, county recorder
records, local court records (federal, state, county and municipal) and such
other official public records with respect to the Property that would disclose
the presence of any Liens, bankruptcy proceedings, lis pendens or other matters
affecting the Property or Seller.
"LITIGATION RECEIVABLES" shall have the meaning set forth in Section
7.4(a).
"LOSSES" shall mean with respect to any obligation to indemnify
Seller, the Indemnified Seller Persons, Purchaser or the Indemnified Purchaser
Persons, any and all claims, actions, suits, demands, losses, damages,
liabilities, obligations, judgments, settlements, awards, penalties, costs or
expenses, including, without limitation, reasonable attorneys' fees and
expenses.
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"MISSING TENANTS" shall have the meaning set forth in Section 10.3.
"PARTY" shall mean a party to the DOA or a Contract (or the successor
or assignee thereof) or a party to a Lease (or the successor or assignee
thereof), in each case other than Seller.
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT D attached hereto and made a part hereof.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity
of any type.
"PERSONALTY" shall mean all of the personal property, both tangible
and intangible, owned by Seller and located in or upon or used in connection
with the operation and maintenance of the Property, including without
limitation fixtures; machinery; equipment; building supplies and materials;
consumables; inventories; names, logos, trademarks, trade names and copyrights;
all assignable licenses, permits and certificates of occupancy; all assignable
guarantees or warranties (including performance bonds obtained by, or for the
benefit of, Seller, pertaining to the ownership, construction or development of
the Real Property or any part thereof); the Books and Records; computer and
peripheral equipment; computer software and data contained in hard drives and
on diskette; advertising materials; and telephone exchange numbers. Without
limiting the foregoing, "Personalty" shall include the property listed on
SCHEDULE 1.1-2. Personalty shall not include: (i) personal items belonging to
Tenants or to employees of Seller; (ii) the rights of Seller in and to the
Leases, the Contracts and the cash and the cash accounts of Seller (including
any cash or cash accounts constituting the Security Deposits); (iii) any items
specifically set forth on SCHEDULE 1.1-2 as excluded from Personalty; or (iv)
the computer software products known as Novell and CenterSoft, together with
that certain Gateway PS-90 computer, Serial #3396235, on which the
aforementioned software is loaded (provided that a copy of the data prepared
using such software, in ASCII comma delimited format, shall be included in
Personalty).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in Section
8.1(k).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of Seller or any of Seller's predecessors-in-interest
in, to and under all Leases, (d) the rights and interests of Seller or any of
Seller's predecessors-in-interest in, to and under the DOA, and (e) the rights
and interests of Seller in, to and under the Contracts to the extent
assignable.
"PURCHASER CLOSING DOCUMENTS" shall have the meaning set forth in
Section 6.3.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2.
"REAL PROPERTY" shall mean the Land and the Improvements, together
with all of the estate, right, title and interest of Seller therein, and in and
to (a) any land lying in the beds of any streets, roads or avenues, open or
proposed, public or private, in front of or adjoining the Land to the center
lines thereof, and in and to any awards to be made in lieu thereof and in and
to any unpaid awards for damage to the foregoing by reason of the change of
grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and
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such other real property rights and interests appurtenant to the foregoing,
including, without limitation, all rights of Seller under the DOA.
"RECONCILIATIONS" shall have the meaning set forth in Section 7.5.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"RECEIVABLES LIST" shall have the meaning set forth in Section 7.4(a).
"RENT ROLL" shall have the meaning set forth in Section 8.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and other taxes, and other amounts payable by any Party
under the Leases and the DOA.
"SALES BASED TENANT CHARGES" shall mean Rents consisting of overage or
percentage rent.
"SEARS" shall mean Sears, Roebuck and Company.
"SECURITY DEPOSITS" shall have the meaning set forth in Section 7.8.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
6.2.
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SUBSTANTIAL CASUALTY" or "SUBSTANTIAL TAKING" shall mean a Casualty
or Taking, as the case may be, where:
(a) the condemnation award, or the proceeds payable under
the applicable policy or policies of casualty insurance maintained by
Seller, are insufficient by more than $100,000 to fully repair the
damage caused by such Casualty or Taking, unless Seller shall (at its
sole option and without any obligation to do so) grant to Purchaser a
credit equal to such deficiency; or
(b) an Anchor or Sears shall, by reason of such Casualty
or Taking, either terminate its Lease or its obligations under the
DOA, or cease operating at the Property (other than temporarily due to
such damage and destruction, remodeling, renovation or any similar
cause), or cease operating at the Property under the name under which
it was operating immediately prior to such Taking or Casualty (as
permitted by the provisions of such Lease or DOA) or have the right to
do any of the foregoing (unless such right shall have expired or been
waived); or
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(c) the estimated time for repair or restoration shall
exceed three (3) months; or
(d) in the case of a Taking, a taking with respect to
such portion of the Real Property as, when so taken would, in the
reasonable opinion of Purchaser, leave remaining a balance of the Real
Property, which, due either to the area taken or the location of the
part taken would not, under applicable zoning laws, building
regulations and economic conditions then prevailing or otherwise,
readily accommodate a new or restructured building or buildings of a
type and size generally similar to the building or buildings existing
on the date hereof, or would result in inadequate parking or lack of
reasonable access to public roads.
"SURVEY" shall mean an Urban ALTA/ACSM Land Title Survey of the
Property which shall: be made by a surveyor licensed or registered in the State
where the Real Property is located; be made in compliance with and meeting the
accuracy standards under the "Minimum Standard Detail Requirements for
ALTA/ACSM Land Surveys" jointly established by the American Land Title
Association and American Congress on Surveying and Mapping then in effect and
containing Table A Optional Survey Responsibilities and Specifications 1, 2,
3, 4, 6, 7(a), 7(b)(1), 8, 9, 10, and 11; show the boundaries of each of the
Land parcels; disclose whether or not the Land comprises a single parcel of
land with no strips, gores or gaps within its boundaries; disclose any
encroachments of any Improvements located primarily on the Land onto adjoining
premises and public ways (and whether or not a valid easement for the benefit
of the Real Property exists and is in place with respect to each such
encroachment) or onto or over setback or building lines located on the Real
Property or of improvements located primarily on adjoining premises onto any
portion of the Land (and whether or not a valid easement for the benefit of the
adjoining premises shall exist and be in place with respect to each such
encroachment); locate all easements created by recorded instruments (to the
extent plottable) or visible on the Real Property and disclose any encroachment
by any of the Improvements, or any other structures located on the Land, in
violation of any such easements; contain a legal description of the Land; show
the location of any adjacent public streets, disclosing access, if any, to the
Land therefrom; show building line(s) and side yard line(s), if any; show the
configuration and number of parking spaces on the Land; show the area of the
Land; state whether the Land is located in an area designated by HUD as having
special flood risks; show significant observations visible on the surface to
the naked eye which are not otherwise disclosed; show the location and height
of the highest point of each structure located on the Real Property; and
contain a certificate of the surveyor attesting to the accuracy of the Survey
and its conformity to the requirements of the aforesaid Minimum Standard Detail
Requirements, which certificate shall be directed to Seller, Purchaser and the
Title Company, and to such other persons having an interest in the Property
which Purchaser may designate.
"SURVIVAL TERMINATION DATE" shall have the meaning set forth in
Section 13.1.
"TAKING" shall mean a taking of all or any portion of the Real
Property in condemnation or by exercise of the power of eminent domain or by an
agreement in lieu thereof.
"TENANT ESTOPPEL" shall have the meaning set forth in Section 10.3.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
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"THIRD PARTY CLAIM" shall have the meaning set forth in Section 11.3.
"TITLE COMMITMENT" shall mean a commitment for title insurance issued
by the Title Company to Purchaser providing for the issuance at the Closing to
Purchaser of the Title Policy, which commitment must disclose Seller as the
owner of fee simple interest in the Real Property and shall disclose and shall
have attached to it (or there shall be delivered by Seller to Purchaser) copies
of all documents underlying all exceptions to title and all encumbrances on and
other matters of record affecting the Real Property, and which commitment shall
include forms of all endorsements to be a part of the Title Policy.
"TITLE COMPANY" shall mean Chicago Title Insurance Company.
"TITLE POLICY" shall mean an ALTA Form B-1970 Owner's Policy of Title
Insurance issued by Title Company, dated the date and time of Closing and with
policy coverage in the amount of the Purchase Price, insuring Purchaser as
owner of good, marketable and indefeasible fee title to the Property, subject
only to the Permitted Exceptions, and affirmatively insuring as a part of
Schedule A to such Title Policy Purchaser's rights under the DOA or other
appurtenant easements that benefit the Real Property and containing the
following endorsements: an extended coverage endorsement over the general
exceptions contained in the policy, an endorsement insuring against loss of
title to the Property or the inability of the owner of the Property to maintain
the Improvements now located on the Property by reason of a violation of a
covenant, condition or restriction of record affecting the Property, a location
endorsement insuring the accuracy of the Survey, an endorsement insuring legal
access to the Property from each of the streets bordering on the Property, and
insuring that all such streets are dedicated public streets, a contiguity
endorsement, a zoning 3.1 endorsement including coverage over parking, and a
tax parcel endorsement.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UNDERGROUND STORAGE TANKS" shall mean Underground Storage Tanks as
defined in Section 9001 of RCRA and as used herein, such term shall also
include (i) any farm or residential tank of 1,100 gallons or less capacity used
for storing motor fuel for noncommercial purposes, (ii) any tank used for
storing heating oil for consumption on the premises where stored, (iii) any
septic tank and (iv) any pipes connected to any of the items described in
clauses (i) through (iii).
"UPDATED RECEIVABLES" shall have the meaning set forth in Section
7.4(a).
1.2 References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection or article
hereof.
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ARTICLE II
Sale and Purchase
2.1 Purchase and Sale Contract. Upon the terms and subject to the
conditions contained herein, at the Closing, Seller shall sell, assign,
transfer and convey to Purchaser, and Purchaser shall purchase from Seller, all
of Seller's right, title and interest in and to the Property, free and clear of
all Liens other than the Permitted Exceptions.
2.2 Purchase Price. The purchase price for the Property (the
"PURCHASE PRICE") shall be Thirty Two Million Dollars ($32,000,000) payable as
follows:
(a) On the date upon which both parties have received a
fully-executed counterpart of this Agreement and the escrow agreement referred
to below, Purchaser shall deposit with the Escrow Agent the sum of Two Hundred
Fifty Thousand and No/100 Dollars ($250,000.00) (the "EARNEST MONEY") to be
held as an earnest money deposit pursuant to the escrow agreement in the form
of EXHIBIT B attached hereto and made a part hereof (the "EARNEST MONEY
ESCROW"). All funds deposited in the Earnest Money Escrow shall be invested
in interest- bearing or money-market accounts. Upon and subject to the
occurrence of the Closing, all funds on deposit in the Earnest Money Escrow
shall be transferred to Seller, such amount to be applied in partial payment of
the Cash Payment. The parties shall issue instructions to the Escrow Agent to
effectuate the provisions of this Section 2.2(a). The provisions of this
Section 2.2(a) shall survive the termination of this Agreement, however caused.
(b) The balance of the Purchase Price, less the aggregate
amount of the Earnest Money, plus or minus applicable prorations described
below, shall be deposited by Purchaser in escrow under the terms of the
Closing Escrow Agreement in immediate, same-day federal funds (all or any part
of which may be the proceeds of a loan) wired for credit into such account as
Escrow Agent may designate on the Closing Date.
(c) The Purchase Price shall, for purposes of the Code,
be allocated as set forth on Schedule 2.2(a).
2.3 Assumption of Liabilities.
(a) At the Closing, Purchaser shall assume (i) the
liabilities and obligations of Seller arising from and after the Closing Date
under or in respect of the Leases (including any obligation to refund any
Security Deposits), the DOA and the assignable Contracts (with the liability
of Purchaser being limited to the same extent, if any, as Seller's liability is
limited thereunder) but only to the extent such liabilities and obligations do
not arise out of any transaction, event, circumstance, action, failure to act
or occurrence of any sort or type which occurred, existed or was taken prior to
the Closing Date and (ii) other liabilities and obligations herein described to
the extent Purchaser has received proration credit therefor. All of the
obligations to be assumed by Purchaser pursuant to this Section 2.3(a) are
hereinafter referred to as the "ASSUMED LIABILITIES".
(b) Except as otherwise herein expressly provided,
Purchaser is not assuming and shall not by virtue of the consummation of the
Transactions be deemed to have assumed any
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liabilities or obligations of Seller, whether or not the same relate to the
Property or were incurred in connection with the ownership, use, management or
operation thereof by Seller or by its agents (collectively, "SELLER'S
LIABILITIES"). Without limiting the foregoing, Seller's Liabilities shall
include all federal, state and local taxes of whatever kind and nature (other
than real estate taxes and assessments on real property for which Purchaser
has received credit under Article VII), liabilities relating to any employees,
employee benefit plans or collective bargaining agreements of Seller, including
without limitation severance pay obligations, and liabilities or expenses
relating to the claims disclosed on Schedule 8.1(w).
ARTICLE III
Title Insurance and Survey
3.1 Delivery of Title Commitment, Lien Searches and Survey.
Within ten (10) days after the Execution Date, Seller, at Seller's sole cost
and expense, shall cause the Title Company to deliver the Title Commitment to
Purchaser. Within ten (10) days after the Execution Date, Seller, at Seller's
sole cost and expense, shall deliver the Lien Searches to Purchaser. Within
fifteen (15) days after the Execution Date, Seller, at Seller's sole cost and
expense shall deliver the Survey to Purchaser.
3.2 Title Defects. If the Title Commitment, the Lien Searches or
the Survey, or any update of the Title Commitment, the Lien Searches or the
Survey, at any time discloses exceptions to title or any Defects other than
Permitted Exceptions, Purchaser shall so notify Seller in writing (a
"DISAPPROVAL NOTICE") on or before the end of the Inspection Period. Unless
Purchaser sends such a Disapproval Notice within such time period, Purchaser
shall be deemed to have approved the Title Commitment, Lien Searches, and
Survey. With respect to any Defects noted in a Disapproval Notice, Seller
shall (a) cause any such Defects which are monetary liens of a fixed or
ascertainable amount that may be removed by the payment of money, including,
without limitation, judgment and mechanics' liens, to either be: (i) bonded and
insured over, or (ii)removed at or prior to the Closing, and (b) notify
Purchaser in writing within ten (10) days after receipt of the Disapproval
Notice whether Seller will cause all or any of such other Defects to be removed
or cured at or prior to Closing, and Seller shall be deemed to have elected to
remove or cure all other Defects by Closing if Seller does not notify Purchaser
to the contrary in writing within such ten (10) day period. If Seller elects
not to remove or cure all Defects, Purchaser may elect, in its sole discretion,
(i) subject to satisfaction of the other conditions to Closing, to close the
purchase of the Property, taking a deduction from the Purchase Price in the
amount necessary to cure the monetary liens of a fixed or ascertainable amount
that may be removed by the payment of money which Seller has not bonded and
insured over, and to take title subject to the other Defects noted in the
Disapproval Notice that Seller elects not to remove or cure, or (ii) to
terminate this Agreement, in which event the Earnest Money and all interest
accrued thereon shall be immediately returned to Purchaser. If Seller elects
to cure or remove any Defect, then Seller thereafter shall be obligated to do
so as long as this Agreement is in effect. Seller shall have thirty (30) days
to remove or cure any Defect that it has elected to remove or cure (or deemed
to have elected to remove or cure). The Closing Date shall be extended as
necessary to permit the parties to exercise their respective rights and
obligations pursuant to this Section 3.2.
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3.3 Purchaser's Options Upon Failure to Cure. If any Defect that
Seller has elected to remove or cure (or deemed to have elected to remove or
cure) has not been removed at least five (5) days prior to Closing (as may be
extended pursuant to Section 3.2 hereof), or provision for its removal or cure
by Closing has not been made to Purchaser's satisfaction, Purchaser may elect,
in its sole discretion: (a) subject to satisfaction of the other conditions to
Closing, to close the purchase of the Property, and take title subject to any
Defects that have not been cured or removed at or before Closing and to deduct
from the Purchase Price the amount of any definite or ascertainable lien
constituting a Defect (provided that such election shall not release Seller
from its obligation to cure or remove Defects after the Closing, which
obligation shall survive the Closing); or (b) to terminate this Agreement, in
which event the Earnest Money and all interest accrued thereon shall be
immediately returned to Purchaser.
3.4 Reinsurance. Seller shall cause the Title Company to agree to
reinsure portions of the risk covered by its title insurance policies with
reinsurance companies reasonably satisfactory to Purchaser under standard
reinsurance agreements providing, at a minimum, for direct access and
enforcement of rights by the insured party to and against the reinsurer.
3.5 Defects After Inspection Period. If any updated Title
Commitment or Survey discloses any Defect after the Inspection Period,
Purchaser shall promptly deliver a Disapproval Notice to Seller and the rights
and obligations of Seller and Purchaser shall be governed by Sections 3.2 and
3.3.
ARTICLE IV
Access
4.1 Inspection Period.
(a) Purchaser shall have twenty (20) days from the
Execution Date (the "INSPECTION PERIOD") to inspect the Property, conduct
Purchaser's due diligence and review of the Property, the Financial Statements
and the Books and Records, and to perform such tests, surveys, engineering
studies, analyses, inspections and examinations as Purchaser, in Purchaser's
sole and absolute discretion determines to be necessary.
(b) Notwithstanding anything to the contrary contained in
this Agreement, the Inspection Period shall be extended, day- for-day, for each
day that passes after the tenth (10th) day after the Execution Date in which
Purchaser has not received the Financial Statements, the Survey, the Title
Commitment or a copy of any matter of record reflected in the Title Commitment
or access to the Books and Records.
4.2 Inspection of the Property.
(a) From and after the Execution Date, Seller shall give
Purchaser and its representatives and consultants access to and the right to
inspect, test, survey and analyze the Property (including without limitation
for purposes of conducting environmental testing). From and after the
Execution Date until Closing and upon request by Purchaser, Seller timely shall
provide
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Purchaser with access to the Books and Records and such other material
information and data with respect to the Property which is in Seller's
possession, including without limitation copies of Leases, the DOA and the
Contracts and such financial and other information as Purchaser reasonably
requests. Subject to the provisions of Section 10.7 hereof, Purchaser may
contact Parties as Purchaser deems appropriate in connection with its due
diligence examination.
(b) Purchaser shall indemnify, defend and hold Seller
harmless, from and against any Loss proximately caused by the exercise by
Purchaser of its rights of access and inspection pursuant to the provisions of
this Section 4.1. The indemnification obligations of Purchaser under this
Section 4.2(b) shall survive the Closing or termination of this Agreement.
4.3 Financial Statements. Within ten (10) days following the
Execution Date, Seller, at Seller's sole cost and expense, shall furnish
Purchaser with unaudited annual financial statements for the Property
consisting of an accrual profit and loss statement of actual results of
operations and a balance sheet for the years ended December 31, 1992, 1993,
1994, 1995 and 1996 and the budgets for calendar years 1996 and 1997 (the
"FINANCIAL STATEMENTS"). The Financial Statements shall be accompanied by a
management representation letter signed by the Chief Financial Officer of
Barber Dairies, Inc., an Alabama corporation, representing that the Financial
Statements are correct.
4.4 Books and Records. Within ten (10) days following the
Execution Date, Seller, at Seller's sole cost and expense, shall deliver to
Purchaser, or make available to Purchaser at Seller's office located on the
Land, the Books and Records.
4.5 Deleted.
4.6 Termination.
(a) If Purchaser, in its sole and absolute discretion,
determines that the results of its due diligence examination, including without
limitation the results of any legal, factual, physical or other inquiry or
investigation as to the physical condition, the suitability for intended use,
the redevelopment potential, the value, or the income or sales or financing
proceeds to be derived from the ownership, use, operation or disposition of the
Property or any other matter related to the Property (other than with regard to
title or survey matters) , are not satisfactory in any respect, Purchaser may
terminate this Agreement upon written notice given to Seller on or before the
expiration of the Inspection Period. In the event of termination of this
Agreement pursuant to the terms of this Section, the Earnest Money and all
interest accrued thereon shall be immediately returned to Purchaser. The
parties hereto acknowledge that Purchaser may expend material sums of money in
reliance on Seller's obligations under this Agreement in connection with
negotiating and executing this Agreement and conducting inspections and
investigations pursuant to this Article IV, that Purchaser would not have
entered into this Agreement without the availability of the termination right
contained herein and that, accordingly, adequate consideration exists for
Seller's obligations hereunder before the expiration of the Inspection Period.
In the event of such termination, this Agreement shall be null and void and all
parties shall be released from all further rights and obligations under this
Agreement (other than any right or obligation that expressly survives the
termination of this Agreement). Notwithstanding anything to the contrary
contained herein, as of the date hereof, Purchaser shall not be deemed to have
approved any documents, materials or other
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information which have been furnished to Purchaser or its representatives prior
to the date hereof or which are listed, described, set forth or referred to on
the Schedules hereof. Purchaser may determine in its sole and absolute
discretion the scope and nature of its due diligence examination.
(b) The foregoing to the contrary notwithstanding, in the
event Purchaser terminates this Agreement because of a title or survey matter
which Seller has cured, or has agreed to cure in a timely manner in accordance
with the provisions of Article III of this Agreement, such termination shall be
treated as a default of Purchaser, and the Earnest Money shall be delivered to
Seller as liquidated damages in accordance with the provisions of Section 14.2.
ARTICLE V
Costs and Expenses
5.1 Title and Survey Costs. Title and Survey costs shall be paid
as follows:
(a) Seller shall pay the cost of obtaining the Title
Commitment and the Title Policy and the cost of recording any documents
required to terminate the Ground Lease and release, cure or remove Defects;
(b) Seller shall pay the cost of obtaining the Survey;
(c) Purchaser shall pay the cost of recording the deed or
deeds conveying the land to Purchaser and any other documents, including
without limitation the recording privilege tax payable with respect to the deed
or deeds pursuant to ALA. CODE Section 40-22-1, which are in the amount of
$0.50 per $500 or fraction thereof of value conveyed by said deed or deeds and
the filing fees payable with respect to said deed or deeds pursuant to ALA.
CODE Section 12-19-90.
(d) Except with respect to those costs set forth in
Section 5.1(c) hereinabove, Seller shall be solely responsible for the payment
of any real property transfer taxes, gains taxes levied or imposed upon Seller
or the Property as a result of the transfers to Purchaser, sales taxes levied
or imposed upon Seller or the Property as a result of the transfers to
Purchaser, and other taxes, fees or charges imposed in connection with the
conveyance of the Property or any portion thereof;
(e) Purchaser shall pay all filing fees and charges and
any personal property sales taxes in connection with the transfer of the
Personalty to Purchaser; and
(f) Seller shall pay the costs of the Lien Search.
5.2 Escrow Costs. The cost of the escrow created pursuant to the
Earnest Money Escrow and the cost of the escrow created pursuant to the Closing
Escrow Agreement, including, without limitation, any "New York Style" escrow
fees, shall be divided equally between Seller and Purchaser.
5.3 Other Costs. Seller shall pay any and all costs or expenses
in connection with the termination of any Contracts to be terminated in
accordance with the terms of this Agreement.
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Purchaser and Seller shall each pay their respective legal fees incurred in
connection with the drafting and negotiation of this Agreement and the Closing
of the Transactions.
ARTICLE VI
Closing
6.1 Closing. The closing of the Transactions (the "CLOSING")
shall take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle
Street, Chicago, Illinois 60602, in accordance with the terms of the Closing
Escrow Agreement, and shall occur at a time and date mutually agreed to by the
parties (the "CLOSING DATE"), provided, however, that anything in this
Agreement to the contrary notwithstanding, in no event shall the Closing Date
occur after May 30, 1997 unless an amendment to this Agreement shall be entered
into by the parties to this Agreement, which Amendment shall set forth a new
final date for the Closing. It is understood that Seller may send a
representative to Chicago to attend the Closing and Purchaser agrees to use
reasonable efforts to provide Seller in advance with any documents which must
be executed by Seller.
6.2 Seller Closing Documents. On or prior to the Closing Date,
Seller shall deliver, or cause to be delivered, to Purchaser (either directly
or under the terms of the Closing Escrow Agreement) the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than Purchaser) and in form and substance
reasonably acceptable to Purchaser and to Seller unless the form thereof is
attached hereto:
(a) Statutory Warranty Deed or deeds in proper statutory
form for recording, so as to convey the entire fee simple estate of Seller in
the Land and Improvements and all other items of Real Property to Purchaser.
(b) Assignment or assignments of all of Seller's right,
title and interest under the Leases, all of which, to the extent the same
relate to Leases or memoranda thereof which have been recorded in appropriate
land records, shall be in form suitable for recording.
(c) Assignment of all of Seller's right, title and
interest in the DOA with respect to the Property in form suitable for
recording.
(d) Assignment of all of Seller's right, title and
interest in and to the Contracts, to the extent assignable.
(e) Bills of Sale sufficient to transfer to Purchaser all
of Seller's right, title and interest in and to the Personalty, it being
understood that such Bills of Sale shall contain the following language:
No representation or warranty, express or implied, is made regarding
the physical condition or quality of any of the structures, fixtures,
facilities, installations, machinery or equipment, in, on, over or
under the real property conveyed herewith, or any property
constituting a part of the Personalty, except for the warranty that
Seller is the sole owner of such Personalty, free and clear of all
liens and
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encumbrances, except as otherwise specifically set forth. SELLER MAKES
NO WARRANTY OF MERCHANTABILITY, or quality or condition as to any such
property or any item thereof, or as to the workmanship thereof or the
absence of any defects therein, it being the express intention of
Seller and Purchaser that the structures, fixtures, facilities,
installations, machinery or equipment, in, on, over orunder the real
property conveyed herewith are being conveyed to Purchaser in their
present condition and state of repair, "AS IS" and " WHERE IS", with
all faults.
(f) An affidavit of Seller stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(g) The Estoppels, or so many of the Estoppels as are
required to satisfy the conditions of Section 10.3, provided Seller delivers at
Closing a Tenant Estoppel executed by Seller for each Missing Tenant.
(h) An updated Rent Roll in accordance with Section
8.1(e).
(i) Such certificates as Purchaser may reasonably request
as to the authorization on the part of Seller of the execution, delivery and
performance of this Agreement and the authority of the Persons executing and
delivering this Agreement and the Seller Closing Documents on behalf of Seller.
(j) A written certificate executed on behalf of Seller
and addressed to Purchaser to the effect that all of the representations and
warranties of Seller herein contained in Section 8.1 are true and correct in
all material respects as of the Closing Date (as supplemented in accordance
with Section 10.2) with the same force and effect as though remade and repeated
in full on and as of the Closing Date or stating the specific respects, if any,
in which any of the representations and warranties is untrue.
(k) Written notices (i) to the Tenants advising them of
the change of ownership and directing them to pay Rents and other charges under
their respective Leases as directed by Purchaser; (ii) to Sears under the DOA,
advising it of the change of ownership and directing Sears to pay all Rents
and other charges under the DOA to Purchaser; and (iii) to each Party to each
of the Contracts advising of the transfer and assignment of Seller's interest
in the Contracts to Purchaser and directing that future inquiries be made
directly to Purchaser.
(l) A termination of the Barber Lease in recordable form.
(m) A copy of the partnership agreement of Seller,
together with a certificate of a general partner of Seller, to the effect that
the attached copy of the partnership agreement of Seller and amendments thereto
is true, accurate and complete.
(n) Copies of the Articles of Organization of Barber
Dairies, Inc., one of the general partners of Seller, and any amendments
thereto, certified by the Alabama Secretary of State as of a date not more than
ten (10) days prior to the Closing Date, together with a certificate of an
officer of such general partner to the effect that the Articles of Organization
thereof, as certified by
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the Secretary of State aforesaid, have not been further amended, revised,
restated, canceled or rescinded up to and including the Closing Date and that
the attached copy of the by-laws thereof and amendments thereto is true,
accurate and complete.
(o) Certificate issued by the Alabama Secretary of State,
dated not more than ten (10) days prior to the Closing Date, certifying the
good standing of Barber Dairies, Inc.
(p) An opinion or opinions of counsel for Seller dated as
of the Closing Date, in the form of EXHIBIT E attached hereto and otherwise in
form and substance reasonably acceptable to Purchaser.
(q) Original, or copies certified by Seller as true and
correct, of the Leases and the DOA, together with all Books and Records; it is
understood by the parties that Seller shall deliver the original Leases and
Contracts and all other Books and Records located at Seller's office located on
the Land, but that otherwise Seller's obligation to deliver the Books and
Records may be satisfied by the delivery of copies certified by Seller as true
and correct in any case where Seller is required to retain originals.
(r) Keys and combinations to locked compartments within
the Property.
(s) Schedule of Fixed and Other Tenant Charge Arrearages
payable as of the Closing Date or a date not more than ten (10) days prior
thereto by each Party which schedule shall set forth separately and certify the
items of Rents with respect to which each such Party is in arrears, the amount
of each item and the period of such arrearage.
(t) The Contract Party Consents.
(u) Updated Lien Searches dated not more than ten days
prior to the Closing Date.
(v) The instruments, documents or certificates as
required by the Title Company to be executed or provided by Seller as a
condition to the issuance of the Title Policy at the Closing pursuant to the
Title Commitment.
(w) Any instruments, documents or certificates required
to be executed by Seller with respect to any state, county or local transfer
taxes applicable to the conveyance of the Property pursuant to this Agreement.
(x) Such other documents, instruments or agreements which
Seller is required to deliver to Purchaser pursuant to the other provisions of
this Agreement.
Notwithstanding any provision to the contrary set forth elsewhere in
this Agreement, if after the use of commercially reasonable efforts to do so
Seller is unable to deliver to Purchaser at Closing the Contract Party
Consents, or the Estoppels (or so many of the Estoppels as are required to
satisfy the conditions of Section 10.3 together with the required number of
Tenant Estoppels executed by Seller for the Missing Tenants, in each case with
the Estoppels or Seller's Estoppels unmodified from the form approved by
Purchaser pursuant to Section 10.3, or if modified, as approved by
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Purchaser in Purchaser's sole discretion), Purchaser shall have the option, as
Purchaser's sole and exclusive right and remedy either (i) to terminate this
Agreement by giving written notice of such termination to Seller on or before
the Closing or (ii) to complete Closing without the delivery of such item or
items, and in the event Purchaser completes the Closing without the delivery of
such item or items, Purchaser shall be deemed to have waived the requirement
for the delivery of such item or items unless both parties agree, in writing,
to continue seeking delivery of such missing item or items. If Purchaser shall
terminate this Agreement pursuant to the provisions of this Section, this
Agreement shall be null and void and no party shall have any further rights or
obligations under this Agreement (other than any right or obligation that
expressly survives the termination of this Agreement), and the Earnest Money
and all interest accrued thereon shall immediately be returned to Purchaser.
6.3 Purchaser Closing Documents. On or prior to the Closing Date,
Purchaser shall deliver to Seller (either directly or under the terms of the
Closing Escrow Agreement) the following documents (herein referred to
collectively as the "PURCHASER CLOSING DOCUMENTS"), duly executed by an
authorized officer on behalf of Purchaser and the other parties thereto (other
than Seller) and in form and substance reasonably acceptable to Seller and to
Purchaser unless the form thereof is attached hereto:
(a) An agreement or agreements, in recordable form, to the
extent the same relates to recorded instruments, pursuant to which Purchaser
assumes the Assumed Liabilities.
(b) A duly executed and acknowledged Certificate,
certifying that the members of Purchaser have authorized the consummation of
the Transactions.
(c) A certificate issued by the Secretary of State of
Delaware dated not earlier than ten (10) days prior to the Closing Date
certifying the good standing of Purchaser as of the date of such certificate.
(d) deleted.
(e) A written certificate addressed to Seller to the
effect that all of the representations and warranties of Purchaser contained in
Section 8.2 are true and correct in all material respects on and as of the
Closing Date (as supplemented in accordance with Section 10.2) with the same
force and effect as though remade and repeated in full on and as of the Closing
Date (except for actions taken in accordance with or as contemplated by this
Agreement and except for matters approved in writing or consented to in writing
by Seller) or stating the specific respects, if any, in which any of the
representations and warranties is untrue.
(f) Any instruments, documents or certificates required
to be executed by Purchaser with respect to any state, county or local transfer
taxes applicable to the conveyance of the Property pursuant to this Agreement.
(g) Such other documents, instruments or agreements which
Purchaser may be required to deliver to Seller pursuant to the other provisions
of this Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however,
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that any such other document, instrument or agreement which Seller reasonably
deems necessary or desirable shall not impose upon Purchaser any obligation or
liability other than an obligation or liability expressly imposed upon
Purchaser pursuant to the terms of this Agreement or pursuant to the terms of
the other Purchaser Closing Documents specified in this Section 6.3.
6.4 Joint Deliveries. Seller and Purchaser shall jointly execute
and deliver a Closing Statement with respect to the Transactions.
ARTICLE VII
Prorations and Adjustments
7.1 Prorations. Subject to the other provisions of this Article,
the items pertaining to the Property that are identified in Sections 7.1, 7.2,
and 7.3 of this Article shall be prorated between the parties on a per diem
basis (employing the actual number of calendar days in the period involved and
a 365-day year) so that credits and charges with respect to such items for all
days preceding the Closing Date shall be allocated to Seller, and credits and
charges with respect to such items for all days including and after the Closing
Date shall be allocated to Purchaser. All expenses of the Property authorized
or instigated by Seller or Seller's employees or agents for a period prior to
the Closing Date shall be paid by Seller, regardless of when the bill,
statement or invoice for such expense is received, and all expenses of the
Property relating to a period after the Closing Date shall be paid by
Purchaser. This provision of Article VII shall survive the Closing.
7.2 Items to be Prorated. The following items shall be prorated
between Purchaser and Seller as of 11:59 pm on the day immediately preceding
the Closing Date:
(a) real property taxes and assessments (or installments
thereof) based on the most recent tax bills except those required to be paid
directly to the entity imposing the same by those Tenants who are current in
all of their Lease payment obligations on the Closing Date;
(b) water rents and charges, if any, except those
required to be paid directly to the entity imposing the same by Tenants (who
are current in all of their Lease payment obligations on the Closing Date);
(c) sewer taxes and rents, if any, except those required
to be paid directly to the entity imposing the same by Tenants (who are current
in all of their Lease payment obligations on the Closing Date);
(d) actually accrued interest, if any, required to be
paid to a Party on Security Deposits;
(e) deleted;
(f) annual permit, license and inspection fees, if any,
on the basis of the fiscal year for which levied, if the rights with respect
thereto continue for the benefit of Purchaser following the Closing;
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(g) fuel oil and liquid propane gas, if any, at the cost
per gallon or cubic foot most recently charged to Seller with respect to the
Property, based on the supplier's measurements thereof, plus sales taxes
thereon;
(h) deposits, if any, on account with any utility company
servicing the Property;
(i) deposits on account with any municipality having
jurisdiction over the Property (other than deposits which are in the nature of
security for the performance of work);
(j) amounts paid or payable by or to Seller to or from
merchants associations and other tenant associations for promotional funds and
other similar contributions or payments;
(k) Rents;
(l) amounts paid or payable by Seller under the Contracts
to be assumed by Purchaser;
(m) deleted; and
(n) all other items customarily apportioned in connection
with the sale of similar properties similarly located.
Seller shall cooperate with Purchaser in the transfer of electricity,
gas, water and other utility services from Seller's name to the name of
Purchaser as of the Closing Date.
7.3 Installment Payment of Assessments. In furtherance of Section
7.2, if any real property assessment affects the Property at the Closing and
such real property assessment is payable in installments (whether at the
election of Seller or otherwise), the installment relating to, or payable over,
the Applicable Closing Fiscal Period shall be apportioned between Seller and
Purchaser as of the Closing Date, and the remaining installments shall be the
obligation of Purchaser.
7.4 Rent Receivables.
(a) Attached hereto as Schedule 7.4(a) is a list of all
outstanding billed receivables for the Property (the "Receivables List"),
including, without limitation, Rents, Sales Based Tenant Charges, and
Adjustable Tenant Charges, itemized by: (i) the party from whom the receivable
is due; (ii) the total amount due from such party; (iii) the category and
amount due making up the aggregate due; (iv) the period for which the amount is
due; (v) the amount of any credits due to the party which may offset the total
amount owed; and (vi) the total amount of prepetition amounts due from Tenants
which are involved in bankruptcy proceedings. The Receivables List shall
specify those parties that continue to be Tenants in the Property with stores
currently open, but against whom Seller or Seller's agent has commenced
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litigation, and those Tenants which are involved in bankruptcy proceedings
(amounts due from such parties, other than prepetition amounts due from Tenants
which are involved in bankruptcy proceedings, are hereinafter referred to as
"Litigation Receivables"). The Receivables List shall also specify those
parties that were Tenants in the Property which have now closed, and against
whom Seller or Seller's agent has commenced litigation or which are in
bankruptcy proceedings (all amounts due from such Tenants, together with
prepetition amounts due from Tenants which are involved in bankruptcy
proceedings, are hereinafter referred to as "Closed Receivables"). Not less
than five (5) days prior to the Closing Date, Seller shall deliver to Purchaser
an update of the Receivables List current to a date that is not more than 7
days prior to the Closing Date (the "Updated Receivables List"). Except for
Closed Receivables, which receivables shall be treated in accordance with the
provisions of Section 7.4(e), Seller shall assign to Purchaser at the Closing
all receivables noted on the Updated Receivables List. The receivables
assigned to Purchaser at Closing are hereinafter referred to individually as an
"Assigned Receivable" and collectively as the "Assigned Receivables."
(b) Seller shall receive a credit at Closing with respect
to all Assigned Receivables (other than the Collection Receivables as defined
in Section 7.4(d)), which credit shall be determined as follows:
(i) If the Assigned Receivable is due from an Anchor or
from Sears (regardless the age of such receivable) or is less than 60
days past due, the credit shall be equal to 100% of such Assigned
Receivable;
(ii) If the Assigned Receivable is 60 days or more past
due, but less than 90 days past due, the credit shall be equal to 50%
of such Assigned Receivable;
(iii) If the Assigned Receivable is 90 days or more past
due, but less than 120 days past due, the credit shall be equal to 25%
of such Assigned Receivable;
(iv) If the Assigned Receivable is 120 days or more past
due, the credit shall be zero;
(v) Seller shall receive no credit at Closing with
respect to the Collection Receivables as defined in Section 7.4(d).
(c) With the exception of Litigation Receivables and
those specific other receivables listed in subsection 7.4(d), the proration for
Assigned Receivables described herein shall be final, and any and all amounts
collected by Purchaser with respect to Assigned Receivables shall be
Purchaser's property regardless of the amount collected or received by
Purchaser.
(d) With respect to Litigation Receivables and with
respect to the receivable amounts from Camelot, Music Land and Stuart's (the
foregoing receivable amounts together with the Litigation Receivables are
hereinafter sometimes collectively referred to as the "Collection
Receivables"), after the Closing Date Purchaser shall use reasonable efforts to
collect Collection Receivables, and all amounts collected therefor (adjusted
for attorneys' fees in accordance with Section 7.9) shall be applied in
accordance with the provisions of Section 7.7. Seller shall not have any right
to make, nor to attempt to make, any collection efforts with respect to
Collection Receivables.
(e) Seller shall retain and shall have the right to
collect for its own account all Closed Receivables and there shall be no
proration or credit with respect to Closed Receivables.
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7.5 Proration of Adjustable Tenant Charges. Proration of any
unbilled amounts required to be paid by Tenants as Adjustable Tenant Charges
for the Applicable Closing Fiscal Period, which are due to be billed in the
Applicable Closing Fiscal Period, shall be prorated based upon actual
reconciliation billing amounts for the most recently completed fiscal period
prior to the Applicable Closing Fiscal Period, in the manner shown on the
examples of this proration set forth on Schedule 7.5. At the Closing, Seller
shall assign to Purchaser any amounts required to be paid by Tenants as
Adjustable Tenant Charges for 1996 and 1997 which have accrued on or before,
but remain unbilled on, the Closing Date, including, without limitation,
adjustment amounts which are billed with regard to the Applicable Closing
Fiscal Period, and Seller shall receive a credit for such amounts, in the
manner shown on the examples of this adjustment set forth on Schedule 7.5. The
proration for Adjustable Tenant Charges described herein shall be final, and
any and all amounts collected by Purchaser with respect to Adjustable Tenant
Charges shall be Purchaser's property regardless of the amount collected or
received by Purchaser. The foregoing to the contrary notwithstanding, with
respect to Tenants who are more than sixty days delinquent in the payment of
Fixed and Other Tenant Charges in an amount equal to or exceeding one month's
such charges as shown on the Updated Receivables List, or who have amounts
itemized as Litigation Receivables on the Updated Receivables List as being
more than sixty (60) days delinquent in payment of amounts exceeding the amount
of one month's Fixed and Other Tenant Charges, the credit for the amount of any
Adjustable Tenant Charges due from such Tenants shall be discounted in the
manner set forth in Section 7.4(b)(i) through 7.4(b)(iv).
7.6 Proration of Sales Based Tenant Charges. Sales Based Tenant
Charges which are payable with respect to any period prior to the Closing Date
or which have been accrued prior to the Closing Date shall be apportioned as of
the Closing Date on a dollar for dollar basis using the applicable fiscal
period as set forth in each particular Lease, with Seller entitled to a credit
for the period prior to the Closing Date and Purchaser entitled to a credit for
the period after the Closing Date. After the Closing Date, as and when actual
amounts for Sales Based Tenant Charges are paid by Tenants, but not more
frequently than one time each month, such amounts shall be reprorated so that
the amount thereof under each of the Leases to which Seller shall be entitled,
as finally determined, shall be the entire amount thereof with respect to any
fiscal period ending prior to the Closing Date, and, for the Applicable Closing
Fiscal Period, an amount which bears the same ratio to the total Sales Based
Tenant Charges as the number of days in the Applicable Closing Fiscal Period
which have elapsed prior to the Closing Date bears to the total number of days
in the Applicable Closing Fiscal Period. Examples of this proration are set
forth on Schedule 7.6.
7.7 Application of Rent Receipts. Notwithstanding anything to the
contrary contained herein, in determining the adjustments and apportionments
pursuant to Sections 7.4 and 7.6, the following shall apply:
(a) Any amounts collected by Purchaser as Collection
Receivables, which are not designated to a particular time period by the party
making such payment, or which are not otherwise clearly related to a particular
time period in the good faith judgment of Purchaser, shall be deemed to have
been paid by the Party, first, on account of amounts then due Purchaser for
periods after the Applicable Closing Fiscal Period, next, on account of amounts
then due for the Applicable Closing
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Fiscal Period and, next, on account of amounts then due for all fiscal years
prior to the Applicable Closing Fiscal Period.
(b) deleted.
(c) Notwithstanding anything to the contrary contained in
this Section 7.7: (i) a payment of Rents shall be applied to the payment of the
item or items of Rents designated by the party making such payment or to which
such payment otherwise clearly relates in the good faith judgment of Purchaser;
and (ii) any amounts collected in connection with the bankruptcy proceeding of
a Tenant which are pre- petition rents relating to a period prior to the
Closing Date shall be paid to Seller.
7.8 Security and Utility Deposits. At the Closing, Seller shall
furnish Purchaser with a schedule setting forth and certifying, as of the
Closing Date, the unapplied and unreturned portion of any security deposits
which have been deposited with Seller or its agents (or with any predecessor in
interest to Seller with respect to the Property or such predecessor's agents)
by any existing Tenants (the "SECURITY DEPOSITS") ($26,487.83 as of February
18, 1997) and the amount of any deposits on account with any utility company
servicing the Property that will continue for the benefit of Purchaser
following Closing ("UTILITY DEPOSITS") (currently $0), and Purchaser shall
receive a credit against the Purchase Price payable at Closing in the amount of
the Security Deposits, together with all interest, if any, accrued thereon and
required to be paid to Tenants. Purchaser shall reimburse Seller at Closing
for the amount of the Utility Deposits.
7.9 Collection of Rents.
(a) Purchaser shall use reasonable efforts to collect the
Collection Receivables and the Sales Based Tenant Charges which are payable
with respect to the Applicable Closing Fiscal Period and any prior fiscal
period, but Purchaser shall not be required to retain a collection agency,
commence litigation or commence an adversary proceeding in a bankruptcy case,
or terminate Leases or the DOA in connection with such collection efforts.
Reasonable attorneys' fees incurred for outside counsel in connection with such
collection efforts shall be charged to the parties hereto in the proportion in
which each is entitled to the proceeds of any such collection.
(b) Seller shall have the right to seek collection of any
Closed Receivables; provided, however, that in seeking to collect any such
Closed Receivables, Seller shall not be entitled to terminate any Lease or
either of the DOA or otherwise seek any remedy which could materially affect or
impact the Property or the ownership or operation thereof other than a money
judgment against the delinquent Party. Purchaser shall not be required to join
in any such actions or proceedings commenced by Seller unless the provisions of
any law, rule or regulation at the time in effect shall require that such
actions or proceedings be brought by and/or in the name of Purchaser, in which
event Purchaser shall join and cooperate in such actions or proceedings, at the
request of Seller, or permit the same to be brought by Seller in Purchaser's
name but Seller shall pay all costs and expenses relating thereto, including
without limitation reasonable attorneys' fees incurred for outside counsel in
reviewing pleadings and other materials filed in connection with such
litigation.
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(c) Notwithstanding anything to the contrary contained
herein, Purchaser shall have the right at any time on or after the Closing, and
whether or not its joinder shall be required as a matter of law, to join in, or
to be substituted for Seller in, any proceedings for the eviction of Tenants
and/or the collection of Rent which may have been instituted by Seller either
prior to or after the Closing, if the Tenant in question is still in possession
of the premises covered by its Lease and if, in connection therewith, Purchaser
intends to seek eviction of such Tenant, cancellation of the Lease or
repossession of the premises. If Purchaser joins in, or is substituted for
Seller as plaintiff in any such litigation, Purchaser shall, thereafter, assume
sole liability for all costs and expenses of such litigation, including legal
fees and expenses, as may thereafter be incurred (except as provided below) and
shall thereafter control all aspects of such proceedings, except that Purchaser
shall not be entitled to waive, reduce or otherwise compromise any claims for
Rent relating to any period prior to Closing other than in accordance with the
policies of Purchaser from time to time as to Rent deficiencies generally.
Seller in any event may, at its option, continue to participate in such
litigation. In any event, Seller shall reimburse Purchaser for a pro rata
portion of its reasonable attorneys' fees incurred for outside counsel in
connection with such collection efforts in proportion to, but in no event in an
amount greater than, the amount, if any, actually received by Seller after
Closing as a result of such proceedings; provided, however, Seller shall be
entitled to a credit for legal fees and expenses incurred by Seller prior to
the intervention by Purchaser in connection with the proceedings previously
instituted by Seller in connection with such collection efforts.
7.10 Insurance. The fire, hazard and other insurance policies
relating to the Property shall be canceled by Seller as of the Closing Date and
shall not, under any circumstances, be assigned to Purchaser. All unearned
premiums for fire and any additional hazard insurance premium or other
insurance policy premiums with respect to the Property shall be retained by
Seller.
7.11 The Indemnification Buffer Does Not Apply. The parties agree
with respect to the ongoing adjustments and amounts due to be paid by or to
either party pursuant to this Article VII, the Indemnification Buffer of
Section 11.6 does not apply.
ARTICLE VIII
Representations and Warranties
8.1 Seller's Representations and Warranties. Seller represents
and warrants to Purchaser as follows:
(a) Seller is a general partnership under the laws of the
State of Alabama with full power and authority to execute, deliver and perform
this Agreement.
(b) The execution, delivery and performance of this
Agreement by Seller have been duly and validly authorized by all necessary
action on the part of Seller. This Agreement has been, and the Seller Closing
Documents will be, duly executed and delivered by Seller. This Agreement
constitutes, and when so executed and delivered the Seller Closing Documents
will constitute, the legal, valid and binding obligations of Seller,
enforceable against Seller in accordance with their respective terms.
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(c) None of the execution, delivery or performance of
this Agreement by Seller does or will, with or without the giving of notice,
lapse of time or both, violate, conflict with, constitute a default, result in
a loss of rights, acceleration of payments due or creation of any Lien upon the
Property or require the approval or waiver of or filing with any Person
(including without limitation any governmental body, agency or instrumentality)
under (i) the organizational documents of Seller or Barber Dairies, Inc. or,
except with respect to the terms of the mortgage indebtedness of Seller (which
mortgage indebtedness will be re-paid in full at Closing), any agreement,
instrument or other document to which Seller or any general partner of Seller
is a party or by which it is bound or (ii) any judgment, decree, order,
statute, injunction, rule, regulation or the like of a governmental unit
applicable to Seller or any general partner of Seller.
(d) Seller has or will obtain good and marketable title
to the Property free and clear of Liens other than the Permitted Exceptions and
those Liens to be released at Closing and, upon execution and delivery of the
Seller Closing Documents, Purchaser will have good and marketable title to the
Property free and clear of Liens other than the Permitted Exceptions and Liens
created by, under or through Purchaser.
(e) Schedule 8.1(e) is a rent roll of the Property (the
"RENT ROLL") as of February 18, 1997 showing the identification of each
rentable space in the Property, whether leased or not, and for each such space,
the name of the Tenant, the expiration date of the current term of the Lease,
the minimum or fixed monthly rent payable, the unapplied amount of any security
deposit held, all delinquencies in Rents, and all outstanding rent abatements.
[In addition, and without making a representation or warranty with respect
thereto, Seller is providing to Purchaser, as part of Schedule 8.1(e), reports
generated in the normal course of Seller's business which contain statements
concerning tenant allowances or other tenant concessions, renewal options, and
kickout clauses, but it is Purchaser's responsibility to satisfy itself as to
the accuracy of such reports by examination of the Estoppels or the Leases.]
Seller shall deliver an updated Rent Roll to Purchaser fifteen (15) days prior
to the Closing Date. All information therein is accurate as of its date.
Except as set forth to the contrary on Schedule 8.1(e), no Tenant has paid any
rent in advance except for the current month.
(f) Schedule 8.1(f) contains a complete and correct list
of all existing Leases and modifications thereof and supplements thereto
regardless of whether the terms thereof have commenced, setting forth with
respect to each (i) the date thereof and of each modification thereof and
supplement thereto and (ii) the names of the Parties thereto (including the
name of the current assignee, if any, but only if and to the extent Seller has
actual notice of any such assignment). A true and complete copy of each Lease,
together with each written modification thereof and supplement thereto, has
heretofore been furnished to Purchaser for inspection, or, in the event Seller
is not in possession of a true and complete copy of such Lease, it is so stated
on Schedule 8.1(f). Each such Lease constitutes the entire agreement between
Seller and each Party thereto, and neither Seller nor any predecessor in title
has made any oral promises or agreements amending or modifying the same.
(i) There are no leases executed by Seller or its
predecessors in title or other rights of occupancy or use granted by
Seller or its predecessors in title of any portion of the Property
other than the Leases. Each of the Leases is valid and subsisting and
in full force and effect, and no Rents or other payments or deposits
are held by Seller or Seller's agent, except the security deposits
described on the Rent Roll and Rents prepaid for the current
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month. As of the Closing Date, no Rents due under, or any other
interest in, any of the Leases will be assigned to any party other
than Purchaser, or otherwise pledged or encumbered in any way.
(ii) Except as set forth on Schedule 8.1(f), no Tenant has
made any written claim which has been received by Seller or, to
Seller's knowledge, has any other claim, whether or not in writing (A)
that Seller has defaulted in performing any of its obligations under
any of the Leases which has not heretofore been cured, (B) that any
condition exists which with the passage of time or giving of notice,
or both, would constitute any such default, (C) that such Tenant is
entitled to any reduction in, refund of, or counterclaim or offset
against, or is otherwise disputing, any Rents or other charges paid,
payable or to become payable by such Tenant, or (D) that such Tenant
is entitled to cancel its Lease or to be relieved of its operating
covenants thereunder; provided, however, that this representation does
not address whether any Tenant, pursuant to the express provisions of
a lease which has been delivered to Purchaser, may be at some future
time: (i) entitled to any reduction in, refund of, or counterclaim or
offset against any Rents or other charges paid, payable or to become
payable by such Tenant; or (ii) entitled to cancel its Lease or to be
relieved of its operating covenants thereunder.
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on the Rent Roll, no material default exists
under any of the Leases on the part of the Tenant thereto. Seller is
not in default under the Leases.
(iv) There are no rent abatements or other tenant
concessions or inducements, including, without limitation, lease
assumptions or buy-outs, applicable to any of the Leases or any rights
to extend or renew any of such Leases except as set forth in the
Leases. There are no options or rights to renew, extend or terminate
the Leases, except as set forth in the Leases. Neither Seller nor any
predecessor in title has granted any rights, options or rights of
first refusal of any kind to any Tenant, which are currently in
effect, to purchase or to otherwise acquire the Property or any part
thereof or interest therein except as set forth in the Sears Lease.
All of the improvements to be constructed by the landlord under each
of the Leases, or as required under any collateral agreement, plans or
specifications related to the Leases, have been fully completed and
paid for.
(v) There are no leases encumbering the Barber Parcel
other than the Barber Ground Lease.
(g) There are no reciprocal easement agreements or
operating agreements encumbering the Property other than the DOA. A true and
complete copy of the DOA, to the extent same is in possession of Seller, has
heretofore been furnished to Buyer, together with each written modification
thereof and supplement thereto. The DOA constitutes the entire agreement
between Seller and each party thereto, and neither Seller nor any predecessor
in title has made any oral promises or agreements amending or modifying the
same.
(i) The DOA is valid and in full force and effect, and no
Rents or other payments or deposits are held by Seller or Seller's
agent, except the Rents prepaid for the current
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month. As of the Closing Date, no Rents due under, or any other
interest in, the DOA will be assigned to any party other than
Purchaser, or otherwise pledged or encumbered in any way.
(ii) Except as set forth on Schedule 8.1(g), Sears has not
made any written claim which has been received by Seller nor, to
Seller's knowledge, has any other claim, whether or not in writing (A)
that Seller has defaulted in performing any of its obligations under
the DOA which has not heretofore been cured, (B) that any condition
exists which with the passage of time or giving of notice, or both,
would constitute any such default, (C) that Sears is entitled to any
reduction in, refund of, or counterclaim or offset against, or is
otherwise disputing, any Rents or other charges paid, payable or to
become payable by Sears, (D) that Sears is entitled to cancel the DOA
or to be relieved of its operating covenants thereunder, or (E) that
there is a violation of any of the covenants, conditions or
restrictions contained in the DOA; provided, however, that this
representation does not address whether Sears, pursuant to the express
provisions of the DOA, may be at some future time: (i) entitled to any
reduction in, refund of, or counterclaim or offset against any Rents
or other charges paid, payable or to become payable by Sears; or (ii)
entitled to cancel the DOA or to be relieved of its operating
covenants thereunder .
(iii) No material default exists under the DOA on the part
of the Sears. Seller is not in default under the DOA.
(iv) There are no rent abatements or other concessions or
inducements, including, without limitation, lease assumptions or
buy-outs, applicable to the DOA or any rights to extend or renew the
DOA except as set forth in the DOA. There are no options or rights to
renew, extend or terminate the DOA, except as set forth in the DOA.
Neither Seller nor any predecessor in title has granted any rights,
options or rights of first refusal of any kind to Sears, which are
currently in effect, to purchase or to otherwise acquire the Property
or any part thereof or interest therein, except as set forth in the
DOA or in the Leases. All of the improvements to be constructed by
the developer or owner under the DOA, have been fully completed and
paid for.
(h) Schedule 8.1(h) contains a true and complete list of
all Contracts, including all modifications thereof. To Seller's knowledge,
there have been no material defaults by any Party to a Contract which have not
heretofore been cured. There has been no material default (without giving
effect to any notice and cure rights) by Seller under any Contract or any claim
received by Seller of any such default by any party thereto, which has not
heretofore been cured except as set forth on Schedule 8.1(h). A true and
complete copy of each Contract, together with any amendments or supplements
thereto, has been delivered or made available to Purchaser. Such documents
constitute the entire agreement between Seller and each Party to the Contracts
and neither Seller nor Seller's predecessor in title have entered into any oral
promises or agreements amending or modifying the same.
(i) Schedule 8.1(i) contains a list of all permits and
licenses currently maintained with respect to the Property. Seller has not
received any notice of violation from any federal, state or municipal entity
that has not been cured or otherwise resolved to the satisfaction of such
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governmental entity, except as set forth on Schedule 8.1(i). To Seller's
knowledge, the permits and licenses listed on Schedule 8.1(i) are all of the
licenses and permits which are required for the present use of the Property.
(j) Neither Seller (nor Seller's predecessor in title,
nor any of Seller's general partners) nor, to Seller's knowledge, any other
Person has caused or permitted (knowingly, as to Seller or its predecessor in
title) any Hazardous Material to be maintained, disposed of, stored, released
or generated on, under or at the Property or any part thereof or any real
property adjacent thereto except for the storage and use of substances commonly
present at or used in the operation and maintenance of shopping centers in
quantities commonly present at shopping centers and in compliance with
applicable laws, including, without limitation, Environmental Laws. To
Seller's knowledge, Seller is in compliance with, and has heretofore complied
with, all Environmental Laws with respect to the Property and, to Seller's
knowledge, all other occupants of the Property are and have been in compliance
with the Environmental Laws, except as set forth on Schedule 8.1(j). Neither
Seller nor any predecessor in title has received any notice from any
governmental unit or other person that it or the Property is not in compliance
with any Environmental Law or that it has any liability with respect thereto
and there are no administrative, regulatory or judicial proceedings pending or,
to the knowledge of Seller, threatened with respect to the Property pursuant
to, or alleging any violation of, or liability under any Environmental Law,
except as set forth on Schedule 8.1(j). Except as set forth on Schedule
8.1(j), neither Seller nor any predecessor in title has installed any
underground or above ground storage tanks on, under or about the Property and,
to Seller's knowledge, no such tanks are located on, under or about the
Property. To Seller's knowledge, there is no facility located on or at the
Property that is subject to the reporting requirements of Section 312 of the
Federal Emergency Planning and Community Right to Know Act of 1986 and the
federal regulations promulgated thereunder (42 U.S.C. Section 11022).
(k) Except as set forth in the Leases or in the By-laws
of Century Plaza Merchants Association, Inc. attached hereto as Schedule
8.1(k), neither Seller nor any predecessor in title is under obligation to make
contributions or otherwise provide assistance to any promotional association or
promotional fund or has customarily in the past made or provided any such
contributions or assistance. The promotional association established with
respect to the Property (the "Promotional Association") is an independent
association established by and on behalf of the Tenants. Seller has remitted
to the Promotional Association any amounts received by it from Tenants and
other Parties that constitute contributions to the Promotional Association.
(l) Except as provided in Schedule 8.1(l), there is no
litigation, including any arbitration, investigation or other proceeding by or
before any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Seller's knowledge, threatened against Seller
or any of Seller's general partners relating to the Property or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against Seller or any of Seller's general partners and, to Seller's knowledge,
there is no basis for any such arbitration, investigation or other proceeding.
Copies of all pleadings and other documents furnished or made available by
Seller to Purchaser with respect to the litigation described on Schedule 8.1(l)
are true, accurate and complete in all respects.
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(m) No condemnation proceeding or other proceeding or
action in the nature of eminent domain is pending with respect to all or any
part of the Property and, to Seller's knowledge, no Taking is threatened with
respect to all or any part of the Property.
(n) The Property is an independent unit which does not
now rely on any facilities (other than facilities covered by Permitted
Exceptions or facilities of municipalities or public utility and water
companies and other than parking areas which the Property makes use of under
the DOA) located on any property not included in the Property to fulfill any
municipal or governmental requirement or for the furnishing to the Property of
any essential building systems or utilities, including but not limited to,
water, electrical, plumbing, mechanical and heating, ventilating and air
conditioning systems, drainage facilities, catch basins and retention ponds,
sewage treatment facilities and the like, unless recorded easements or other
rights are in effect for the benefit of the Property for the continued use and
benefit thereof. Except as may be covered by the Permitted Exceptions
(including, without limitation, the DOA), no building or other improvement not
included in any part of the Property relies on any part of the Property to
fulfill any governmental or municipal requirement or to provide facilities to
such building or improvement for any essential building systems or utilities,
including, without limitation, electrical, plumbing, mechanical, sewage
treatment or heating, ventilating and air conditioning facilities or services.
(o) Copies of current real estate tax bills with respect
to the Property, other than tax bills sent to Tenants who have the obligation
to pay such taxes to the collecting authority, have been delivered or made
available to Purchaser. Except as set forth on Schedule 8.1(o), no portion of
the Property comprises part of a tax parcel which includes property other than
property comprising all or a portion of the Property. No application or
proceeding is pending with respect to a reduction or an increase of such taxes.
There are no tax refund proceedings relating to the Property which are
currently pending. Seller has not been notified of any special tax or
assessment to be levied against the Property or any change in the tax
assessment of the Property.
(p) Neither Seller nor any of Seller's general partners
have received notice that there is, and to Seller's knowledge there does not
now exist, any violation of any restriction, condition or agreement contained
in any easement, restrictive covenant or any similar instrument or agreement
affecting the Property or any portion thereof.
(q) Except as set forth on Schedule 8.1(q), neither
Seller nor any of its general partners have received (i) any written notice
from any governmental authority having jurisdiction over the Property of, and
to Seller's knowledge there does not exist, (A) any violation of any law,
ordinance, order or regulation (including the Americans with Disabilities Act)
affecting the Property, or any portion thereof, which has not heretofore been
complied with or (B) any other obligation to any such governmental authority
for the performance of any capital improvements or other work to be performed
by Seller in or about the Property or donations of monies or land (other than
general real property taxes) which has not been completely performed and paid
for; or (ii) any written notice from any insurance company, insurance rating
organization or Board of Fire Underwriters requiring any alterations,
improvements or changes at the Property, or any portion thereof, which has not
heretofore been complied with.
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(r) No approval, consent, waiver, filing, registration or
qualification with any third party, including, but not limited to, any
governmental bodies, agencies or instrumentalities is required to be made,
obtained or given for the execution, delivery and performance of this Agreement
or any of the Seller Closing Documents by Seller.
(s) Schedule 8.1(s) contains a true and accurate list of
all Seller's policies of insurance with respect to the Property, which policies
are and will be kept in full force to and including the Closing Date. All
premiums for such insurance have been paid in full. To Seller's knowledge,
Seller has not performed, permitted or suffered any act or omission which would
cause the insurance coverage provided in said policies to be reduced, canceled,
denied or disputed and Seller has not received (and has no knowledge of) any
notice or request from any insurance company or Board of Fire Underwriters (or
organization exercising functions similar thereto) canceling or threatening to
cancel any of said policies or denying or disputing coverage thereunder.
(t) Except as set forth in Schedule 8.1(t), to Seller's
knowledge, none of the Tenants now occupying any of the Property or having a
current Lease affecting the Property is the subject of any bankruptcy,
reorganization, insolvency or similar proceedings or has ceased or reduced or
intends to cease or reduce operations at the Property (other than temporarily
due to casualty, remodeling, renovation or similar cause).
(u) Except as set forth in Schedule 8.1(u), to Seller's
knowledge, there are no material structural or other material physical defects
in the Improvements or any component or system of the Improvements. Seller is
aware of certain settling of the Building as set forth on Schedule 8.1(u).
(v) The Financial Statements are consistent with the
books and records and accounts of Seller and fairly present the financial
condition and results of operations of Seller as of the dates thereof and for
the periods referred to therein, and, except for the absence of footnotes and
subject to normal year-end accruals, the Financial Statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods indicated. Since December 31,
1996, Seller has conducted its business in the ordinary course consistent with
past practice and there have been no material adverse changes in the financial
condition of such business.
(w) There are no collective bargaining or union
agreements with respect to the employees at the Property. Except for Seller's
401(k) profit sharing plan, neither Seller nor any predecessor in title
maintains or sponsors any employee benefit plan, including, without limitation,
any plans subject to the Employer Retirement Income Security Act of 1974, as
amended. There are no pending claims or, to Seller's knowledge, any threatened
claim against Seller or any predecessor in title to the Real Property by any
employee whose employment related to the Property. Seller has fewer than one
hundred (100) employees.
(x) To Seller's knowledge, the conduct of Seller's
business does not infringe upon the patents, trademarks, copyrights or other
intellectual property rights of any third party, and, to Seller's knowledge, no
third parties are currently infringing upon the patents, copyrights, trademarks
or other intellectual property rights of Seller. Without limiting the
generality of the foregoing,
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neither Seller nor any predecessor in title has granted to any person a license
or other right to use the name "Century Plaza Mall".
(y) No broker, finder, investment banker or other person
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller or
its general partners.
(z) To Seller's knowledge, there is no bulk sales notice
required in connection with the transfer of the Property to Purchaser.
(aa) All of the documents and Books and Records that have
been delivered or made available to Purchaser by or on behalf of Seller, are
true, correct and complete copies of what they purport to be and have not been
modified or amended, except as specifically noted therein. All information set
forth in the exhibits and schedules to this Agreement is true, correct and
complete in all material respects and not misleading. Seller does not have any
actual knowledge of any significant adverse fact or condition relating to the
Property, which has not been specifically disclosed in writing by Seller to
Purchaser.
(bb) There are no valid gift certificates outstanding
which have been issued by Seller.
8.2 Purchaser Representations and Warranties. Purchaser
represents and warrants to Seller as follows:
(a) Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware with full right, power and authority to execute, deliver and perform
this Agreement.
(b) The execution, delivery and performance by Purchaser
of this Agreement have been duly and validly authorized by all requisite action
on the part of Purchaser. This Agreement has been, and the Purchaser Closing
Documents will be, duly executed and delivered by Purchaser. This Agreement
constitutes, and when so executed and delivered the Purchaser Closing Documents
will constitute, the legal, valid and binding obligations of Purchaser,
enforceable against it in accordance with their terms.
(c) None of the execution, delivery or performance of
this Agreement or the Purchaser Closing Documents by Purchaser does or will,
with or without the giving of notice, lapse of time or both, violate, conflict
with, constitute a default or result in a loss of rights under or require the
approval or waiver of or filing with any Person (including without limitation
any governmental body, agency or instrumentality) under (i) the organizational
documents of Purchaser or any material agreement, instrument or other document
to which Purchaser is a party or by which Purchaser is bound or (ii) any
judgment, decree, order, statute, injunction, rule, regulation or the like of a
governmental unit applicable to Purchaser.
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(d) No broker, finder, investment banker or other person
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of
Purchaser.
ARTICLE IX
Conditions to Closing
9.1 Conditions to Seller's Obligations. Seller's obligation to
close is subject to satisfaction of each of the following conditions (any of
which may be waived by Seller in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all
of the covenants and agreements to be complied with or performed by Purchaser
under this Agreement on or before the Closing shall have been complied with or
performed in all material respects.
(b) Accuracy of Representations and Warranties. The
representations and warranties made by Purchaser in this Agreement shall be
true and complete in all material respects on and as of the Closing Date
(without regard to supplementation in accordance with Section 10.2 and other
than with respect to events or developments permitted hereunder or as to which
Seller has otherwise consented in writing).
(c) No Other Termination. No termination of this
Agreement by Seller or Purchaser shall have occurred pursuant to any other
provision hereof.
(d) No Litigation. At Closing, there is no litigation,
including any arbitration, investigation or other proceeding, pending by or
before any court, arbitrator or governmental or regulatory official, body or
authority nor any decree, order or injunction issued by any such court,
arbitrator or governmental or regulatory official, body or authority and
remaining in effect which does or is likely to prevent or hinder the timely
consummation of the Closing or materially and adversely affect the Property.
9.2 Conditions to Purchaser's Obligations. Purchaser's obligation
to close is subject to satisfaction of each of the following conditions (any of
which may be waived by Purchaser in its sole discretion):
(a) Compliance with Agreement. On the Closing Date, all
of the covenants and agreements to be complied with or performed by Seller
under this Agreement on or before the Closing shall have been complied with or
performed in all material respects.
(b) Accuracy of Representation and Warranties. The
representations and warranties made by Seller in this Agreement shall be true
and complete in all material respects on and as of the Closing Date (without
regard to supplementation in accordance with Section 10.2 and other than with
respect to events or developments permitted hereunder or as to which Purchaser
has otherwise consented in writing).
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(c) Estoppels Obtained. The unmodified Estoppels (or so
many of the unmodified Estoppels as are required to satisfy the conditions of
Section 10.3, provided Seller delivers at Closing a Tenant Estoppel executed by
Seller for each Missing Tenant) shall have been obtained in accordance with
Section 10.3.
(d) Contract Party Consents Obtained. The Contract Party
Consents shall have been obtained.
(e) Issuance of Title Policy. The Title Company shall
have issued, or be irrevocably committed to issue, the Title Policy.
(f) No Other Termination. No termination of this
Agreement by Purchaser or Seller shall have occurred pursuant to any other
provision hereof.
(g) No Litigation. At Closing, there is no litigation,
including any arbitration, investigation or other proceeding, pending by or
before any court, arbitrator or governmental or regulatory official, body or
authority nor any decree, order or injunction issued by any such court,
arbitrator or governmental or regulatory official, body or authority and
remaining in effect which does or is likely to prevent or hinder the timely
consummation of the Closing or materially adversely affect the Property or the
business of Seller.
(h) Barber Ground Lease. On or before the Closing Date
or at the Closing, the Barber Ground Lease and all rights of the parties
thereunder shall be terminated.
ARTICLE X
Additional Covenants
10.1 Conduct of Business Pending Closing. From the date hereof
until the Closing, Seller shall (a) use commercially reasonable efforts to
maintain, for the benefit of Purchaser following the Closing, the goodwill of
Tenants, prospective tenants, vendors and other parties having business
relations with Seller; (b) pay its debts (or in good faith contest the same)
and perform its obligations as they become due; (c) maintain the Property in
the same manner and condition that exists on the date hereof, as such condition
shall be altered by reason of Casualty, Taking and/or normal wear and tear,
including, without limitation, preparation of all necessary statements and
billings for Rents, Adjustable Tenant Charges and Sales Based Tenant Charges
for which Seller would normally prepare in the ordinary course of its business
prior to the Closing Date; (d) not, without the express written consent of
Purchaser, which shall not be withheld unreasonably, (it being agreed that it
shall be unreasonable for Purchaser to withhold its consent to any transaction
recommended by General Growth Management, Inc.) (i) enter into any new or
additional Lease, or extend, renew or modify, consent to any assignment of or
sublease in respect of, or waive any material right under any Lease, other than
renewals or extensions resulting from the exercise by a Tenant of a currently
existing renewal or extension option, (ii) cancel or terminate any Lease or
take any action to enforce any Lease which would have the effect of canceling
or terminating the same, (iii) enter into a new reciprocal easement or similar
agreement or amend or modify, consent to the assignment of or waive any
material right under the DOA, (iv) make any material alterations to the
Property (other than are
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necessary and consistent with prudent management of the Property) or enter into
any new contracts or extend or renew or cancel any Contract relating to
capital expenditures, (v) enter into any other material new contracts or
extend, renew or cancel, consent to the assignment of or waive any material
right under any other Contract, except for contracts executed in the ordinary
and usual course and business and in accordance with past practices and
policies which can be terminated without penalty or payment upon not more than
thirty (30) days prior notice, (vi) except as permitted under (i) above sell,
transfer, exchange, further encumber or grant interests (including easements)
in the Property or any part thereof or engage in negotiations or discussions
with, or otherwise solicit or assist, any third party relating to the
acquisition by such third party of the Property or the equity interests in
Seller, and (vii) otherwise take any action which could or would render
inaccurate any of the representations or warranties made by Seller in this
Agreement; and (e) otherwise operate the Property in the ordinary course
consistent with current practice.
10.2 Supplemental Disclosure. From the date hereof through
Closing, each of Seller and Purchaser shall have the continuing obligation to
timely supplement or amend the Schedules with respect to the representations
and warranties made by it to reflect any matter hereafter arising or discovered
which, if existing or known at the date hereof, would have been required to be
set forth herein or described thereon. Without limiting the foregoing, if any
Leases or Contracts, or amendments thereto, are hereafter entered into in
accordance with the terms of this Agreement, Seller shall give Purchaser
adequate and timely written notice thereof and the appropriate exhibits or
schedules hereto shall be updated and amended accordingly.
10.3 Estoppel Certificates. Within five (5) days after the
Execution Date, Seller shall deliver to Purchaser, an estoppel certificate
prepared for execution by each Anchor, by Sears (with respect to the DOA) and
by the Tenants other than the Anchors, on the form attached hereto and
incorporated herein as EXHIBIT F-2 for Tenants, or a form reasonably equivalent
thereto (a "TENANT ESTOPPEL") (the Tenant Estoppels are hereinafter
collectively referred to as the "ESTOPPELS"), or in the form as provided in
such Tenant's Lease. On or before the date that is ten (10) days prior to the
expiration of the Inspection Period, Purchaser shall notify Seller in writing
with respect to any objections Purchaser may have to the Estoppels. Unless
Purchaser sends such a disapproval notice within such time period, Purchaser
shall be deemed to have approved the form of the Estoppels. On or before the
date that is ten (10) days prior to the Closing Date, Seller shall furnish to
Purchaser, the Estoppels completed by each Anchor, by Sears (with respect to
the DOA) and by not less than ninety percent (90%) of the Tenants other than
the Anchors, on the form approved by Purchaser as hereinabove provided. If
Seller has not obtained an unmodified Tenant Estoppel from all Tenants but has
obtained an unmodified Tenant Estoppel from Sears and all Anchors and eighty
percent (80%) of all other Tenants (the Tenants from whom Tenant Estoppels have
not been obtained being herein called the "MISSING TENANTS"), Seller in its own
capacity shall have the right, at Seller's sole option, to satisfy the
condition of this Section 10.3 with respect to the Tenant Estoppel from each
Missing Tenant by executing and delivering to Purchaser at Closing a Tenant
Estoppel for such Missing Tenant in the form approved by Purchaser (with
appropriate changes to such form to reflect that Seller and not such Missing
Tenant is signing such Tenant Estoppel), which Tenant Estoppel will be released
upon delivery of a Tenant Estoppel from such Missing Tenant. Each Tenant
Estoppel or Seller's Estoppel for a missing Tenant shall be on the form
approved by Purchaser (or with appropriate changes to such form to reflect that
Seller and not such Missing Tenant is signing
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such Tenant Estoppel), and if there are modifications thereto, may be rejected
in Purchaser's sole discretion.
10.4 Contract Party Consents. Seller shall obtain from each of the
Parties to the Contracts listed on Schedule 8.1(h) a consent to the transfer or
assignment of such Contract from Seller to Purchaser (the "CONTRACT PARTY
CONSENTS").
10.5 Employment and Labor Matters. Seller shall comply with all
requirements of applicable laws and regulations in connection with Seller's
employees, and Seller shall pay or cause to be paid to such employees all
wages, payments and benefits due or to become due to such employees with regard
to the time such employees are employed by Seller.
10.6 Record Retention. After the Closing, Purchaser shall provide
Seller with reasonable access to the Books and Records and, at Seller's cost,
copies of all or any portion thereof. Purchaser either shall retain the Books
and Records at an office located in Birmingham, Alabama until the seventh
anniversary of the date hereof or notify Seller of its desire to dispose of the
Books and Records and turn them over to Seller if Seller so requests.
10.7 Publicity. In no event shall either Seller or Purchaser issue
any press release or otherwise disclose any non-public information regarding
this Agreement or the Transactions unless the other party has consented thereto
in writing (and Seller and Purchaser agree not unreasonably to withhold or
delay such consent) and to the form and substance of any such statement or
disclosure; provided, however, that nothing herein shall be deemed to limit or
impair in any way any party's ability to disclose the details of or information
concerning this Agreement, the Transactions or the Property to such party's
employees, attorneys, accountants or other advisors or to the extent such party
reasonably deems necessary or desirable pursuant to any court or governmental
order or applicable securities laws or regulations financial reporting
requirements, to obtain the Contract Party Consents, Estoppels or financing for
the acquisition of the Property and to assess the Property in connection with
Purchaser's due diligence examination (including without limitation contacting
Tenants and other Parties). Further, either party may disclose any information
regarding this Agreement or the Transactions to its direct or indirect
constituent partners, members or shareholders, as the case may be (and to
counsel for such constituent partners, members and shareholders) and as
otherwise necessary to comply with the terms of this Agreement. If for any
reason this Transaction is not consummated, Purchaser will timely return to
Seller all originals and copies of documents, reports and financial and other
information relating to the Property and to Seller which Seller has furnished
to Purchaser. The obligations of Seller and Purchaser under this Section 10.7
shall survive the termination hereof, however caused.
10.8 Assistance Following Closing. From and after the Closing,
Seller shall provide reasonable assistance to Purchaser in connection with the
preparation of financial statements and bills and the adjustment of losses and
claims and the enforcement or settlement of any such claims. Without limiting
the foregoing, Seller shall, upon the request of Purchaser from time to time,
provide signed representation letters with respect to revenues and expenses of
Seller if required under GAAS to enable Purchaser's accountants to render an
opinion on Purchaser's financial statements. Purchaser shall reimburse Seller
for its reasonable and actual out of pocket expenses incurred in complying with
this provision.
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10.9 Further Assurances. Each of Seller and Purchaser agree, at
any time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller
nor Purchaser shall be obligated, pursuant to this Section 10.9 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
10.10 Transfers to Seller. On or before the Closing Date, Seller
shall cause all Leases, Contracts, and the DOA to be transferred and assigned
to Seller so that Seller can properly assign the Leases, Contracts, and the
DOA in accordance with the terms of this Agreement.
ARTICLE XI
Indemnification
11.1 Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend and hold harmless Purchaser and its shareholders,
directors, officers, members, partners, employees, representatives and agents,
and their respective successors and assigns (collectively, the "INDEMNIFIED
PURCHASER PERSONS") from and against any Losses incurred or suffered by any
Indemnified Purchaser Person that results from, relates to or arises out of (a)
the breach or inaccuracy of any representation or warranty made by Seller in
this Agreement or the Seller Closing Documents, (b) the breach or
non-fulfillment by Seller of any of the covenants or agreements of Seller under
this Agreement or the Seller Closing Documents, (c) claims made by any Tenant
or Anchor under the Leases, any Party to the DOA under the DOA, or by any Party
under those Contracts assigned to Purchaser, that relate to any actions or
events first occurring, or obligations first accruing, prior to the Closing
Date, (d) any event, occurrence or accident at any time prior to the Closing
Date relating to the Property, or (e) Seller's Liabilities.
11.2 Indemnification by Purchaser. From and after the Closing,
Purchaser shall indemnify, defend and hold harmless Seller and its
shareholders, directors, officers, members, partners employees and agents, and
their respective successors and assigns (collectively the "INDEMNIFIED SELLER
PERSONS") from and against any Losses incurred or suffered by any Indemnified
Seller Person that results from, relates to or arises out of (a) the breach or
inaccuracy of any representation or warranty made by Purchaser in this
Agreement or the Purchaser Closing Documents, (b) the breach or non-fulfillment
by Purchaser of any of the covenants or agreements of Purchaser under this
Agreement or the Purchaser Closing Documents, (c) claims made by any Tenant or
Anchor under the Leases, any Party to the DOA under the DOA, or by any Party
under those Contracts assigned to Purchaser, that relate to any actions or
events first occurring, or obligations first accruing, on or after the Closing
Date, (d) any event, occurrence or accident at any time on or after the Closing
Date relating to the Property, or (e) the Assumed Liabilities.
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11.3 Indemnification Procedure.
(a) The indemnified party (the "INDEMNIFIED PARTY")
shall give the indemnifying party (the "INDEMNIFYING PARTY") adequate
and timely notice of any Losses incurred (or likely to be incurred) by the
Indemnified Party with respect to any claim or assertion of claims by a third
party ("THIRD PARTY CLAIM") for which indemnification is available hereunder
and the Indemnifying Party may (i) prior to the commencement of any proceedings
in connection with such Losses, undertake the negotiation of any resolution of
the dispute relating to such Losses, including without limitation any
settlement or release, or (ii) undertake the defense of any proceeding
(including any alternative dispute resolution proceeding) regarding such Losses
by selecting legal counsel who shall be reasonably acceptable to the
Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken
the Indemnified Party's defense of a Third Party Claim with legal counsel
reasonably acceptable to the Indemnified Party, and shall have so notified the
Indemnified Party, the Indemnified Party shall be entitled to participate at
its own expense in the aforesaid negotiation or defense of any claim relating
to such Losses (subject to reimbursement to the limited extent provided in
Section 11.3(d)), but such negotiations or defense shall be controlled by
counsel to the Indemnifying Party.
(c) The Indemnifying Party shall not be liable for
payments relating to the resolution of any dispute or any settlement of any
litigation or proceeding effected without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. The
Indemnifying Party shall not, without the Indemnified Party's written consent,
resolve any dispute or settle or compromise any claim regarding Losses from a
Third Party Claim or consent to entry of any judgment which would impose an
injunction or other equitable relief upon the Indemnified Party or which does
not include as an unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Party from all liability in respect of any such
Losses.
(d) In the event the Indemnifying Party fails to timely
undertake negotiation of any dispute or defend, contest or otherwise protect
against any claim or suit with respect to a Third Party Claim, and to so notify
the Indemnified Party, the Indemnified Party may, but will not be obligated to,
defend, contest or otherwise protect against the same, and make any compromise
or settlement thereof and recover the entire costs thereof from the
Indemnifying Party, including reasonable attorneys' and experts' fees,
disbursements and all amounts paid as a result of such claim or suit or the
compromise or settlement thereof; provided, however, that if the Indemnifying
Party later undertakes negotiation of any dispute and the defense of such
matter in accordance with and subject to the above terms of this Section 11.3
after the Indemnified Party has undertaken to defend, contest or otherwise
protect against such claim, the Indemnified Party shall not be entitled to
recover from the Indemnifying Party for its costs incurred thereafter other
than the reasonable costs of completing investigations which were begun prior
to the time the Indemnifying Party undertook negotiation of such dispute and
the defense of such matter. The Indemnified Party shall cooperate and provide
such assistance as the Indemnifying Party may reasonably request in connection
with the negotiation of any dispute and the defense of the matter subject to
indemnification and the Indemnifying Party shall reimburse the Indemnified
Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
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11.4 Indemnification Procedure; Other Claims. The Indemnifying
Party shall, promptly upon written notice and demand given by the Indemnified
Party, pay and reimburse the Indemnified Party for the amount of any
uncontested Loss paid or incurred by the Indemnified Party with respect to any
other claims for indemnification arising under Sections 11.1 or 11.2 hereunder
and which are not covered by Section 11.3 above with respect to Third Party
Claims.
11.5 Notice. Each party agrees to give the other party adequate
and timely notice of any Losses (or possible Losses) asserted against it which
might be Losses for which indemnity could be sought against the other party,
but the failure to give such notice shall not release the Indemnifying Party of
its obligations under Sections 11.3 and 11.4 hereof, except to the extent of
the actual harm suffered by the Indemnifying Party as a result of the
Indemnified Party's failure to give adequate and timely notice.
11.6 Indemnification Buffer. Notwithstanding anything to the
contrary contained in this Article XI, no indemnification hereunder shall be
available to the Indemnified Party against the Indemnifying Party until the
cumulative amount of any Loss exceeds One Hundred Thousand Dollars ($100,000)
(the "Threshold"); provided, that in such instance, the Indemnifying Party
shall be responsible to the Indemnified Party for the total amount of such
damages relating to such claims without regard to the Threshold, and provided,
further, that in the event such a claim is made, the other party may assert
claims for any Loss suffered by it which are less than the Threshold to offset
such claims made by the party originally seeking indemnification.
Indemnification available to an Indemnified Party as a result of the breach by
the Indemnifying Party of the provisions or covenants contained in Article VII
hereof shall not be subject to the Threshold and the provisions of this Article
11.6.
ARTICLE XII
Condemnation and Destruction
12.1 Casualty or Condemnation in General.
(a) If prior to the Closing Date the Property shall be
the subject of a Taking or Casualty, Seller shall timely inform Purchaser of
same.
(b) If prior to the Closing Date the Property shall be
the subject of a Substantial Taking or a Substantial Casualty, Purchaser may by
written notice delivered to Seller on or before the Closing Date, elect as its
sole remedy on account thereof, either (i) to terminate this Agreement, and the
rights of the parties hereto, in which event this Agreement (other than any
right or obligation that expressly survives the termination of this Agreement)
shall terminate as of the date of delivery of such notice and the Earnest Money
and all interest accrued thereon shall be immediately delivered to Purchaser;
or (ii) to continue this Agreement in effect, in which event Seller (A) shall
transfer and assign to Purchaser, at the Closing, its full right, title and
interest in and to any insurance proceeds (and shall pay in cash to Purchaser
all deductibles owing in respect thereof) or condemnation awards with respect
thereto, and shall cooperate in all reasonable respects with Purchaser, at
Purchaser's sole cost and expense, in connection with the collection thereof,
to the extent not collected at the Closing, and (B) to the extent any insurance
proceeds or condemnation awards shall have been received by
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Seller prior to the Closing, remit to Purchaser the full amount thereof so
collected, less, in each such case, (i) reasonable costs of collection thereof
(other than the cost of deductibles), and (ii) amounts, if any, applied by
Seller prior to Closing to the preservation, repair or restoration of the
Property.
(c) If prior to the Closing Date, the Property, or any
portion thereof, is (i) the subject of a Taking (other than a Substantial
Taking) or (ii) the subject of a Casualty (other than a Substantial Casualty),
this Agreement shall nevertheless remain in full force and effect with no
abatement of the Purchase Price to be delivered to Seller on account thereof
and Purchaser shall nevertheless acquire the Property or remaining balance
thereof pursuant to the provisions hereof. In such event, any insurance
proceeds or condemnation awards shall be applied and paid in the same manner
and subject to the same provisions set forth above as are applicable in a case
of a Substantial Casualty or a Substantial Taking as to which Purchaser has
elected nevertheless to continue this Agreement in effect.
12.2 Adjustment of Claims and Condemnation Proceedings. If a
Taking or Casualty shall occur, Seller shall initiate all actions required to
adjust, compromise and collect the awards payable by the condemning authority
or the proceeds payable under the applicable policy or policies of casualty
insurance. Purchaser shall have the right (but not the obligation) to
participate with Seller in the initiation of all such actions and, in any
event, Seller shall consult with, and keep Purchaser advised of, Seller's
progress in connection therewith. Seller shall not agree to any settlement of
the awards or insurance proceeds payable in connection with any such Taking or
Casualty (or enter into any agreement in lieu of a Taking) without Purchaser's
approval, which approval shall not be unreasonably withheld or delayed.
ARTICLE XIII
Miscellaneous
13.1 Survival. The representations, warranties and agreements of
Seller and of Purchaser set forth herein and in the Closing Documents or an
Estoppel for a Missing Tenant shall survive Closing indefinitely.
Notwithstanding the foregoing, the representations and warranties contained
herein or the Closing Documents (other than in the Estoppels for a Missing
Tenant), including the indemnities to the extent that they relate thereto,
shall survive Closing only for a period of two (2) years after the Closing Date
except as to Losses of which written notice has been given prior to the
expiration of such two (2) year period in accordance with the provisions of
this Agreement (the later of the expiration of such two (2) year period and the
date of resolution of all claims relating to such Losses, the "SURVIVAL
TERMINATION DATE"). Seller's general partners shall maintain a Net Worth of at
least $10,000,000 until the Survival Termination Date.
13.2 Notices. Notices must be in writing and sent to the party to
whom or to which such notice is being sent, by (a) certified or registered
mail, postage prepaid and return receipt requested, (b) commercial overnight
courier service, or (c) delivered by hand with receipt acknowledged in writing,
as follows:
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To Purchaser:
CENTURY PLAZA LLC
55 West Monroe Street, Suite 3100
Chicago, Illinois 60603
Attention: Joel Bayer
with a copy thereof to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Reuben C. Warshawsky
To Seller:
Century Management & Development Co.
36 Barber Court
Birmingham, Alabama 35209
Attention: B. Austin Cunningham and James N. Hicks
with a copy to:
W. Benjamin Johnson
Burr & Forman LLP
420 North 20th Street
3100 SouthTrust Tower
Birmingham, Alabama 35203
All notices (i) shall be deemed given when received or, if mailed as described
above with appropriate postage, after 5 business days and (ii) may be given
either by a party or by such party's attorneys. The cost of delivery shall be
borne by the party delivering the notice.
13.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed
and delivered by each party hereto.
13.4 Amendments. Except as otherwise provided herein, this
Agreement may not be changed, modified, supplemented or terminated, except by
an instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
13.5 Waiver. Each party shall have the right exercisable in its
sole and absolute discretion, but under no circumstances shall be obligated, to
waive or defer compliance by any other party with its obligations hereunder or
to waive satisfaction of any conditions contained herein for its benefit. No
waiver by any party of a breach of any covenant or a failure to satisfy any
condition shall be
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deemed a waiver of any other or subsequent breach or failure to satisfy any
other condition. All waivers of any term, breach or condition hereof must be
in writing.
13.6 Successors and Assigns. Subject to the provisions of Section
13.10, the terms, covenants, agreements, conditions, representations and
warranties contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
13.7 Third Party Beneficiaries. The provisions of this Agreement
are made for the benefit of the parties hereto (and the Indemnified Purchaser
Persons and the Indemnified Seller Persons with respect to Sections 11.1 and
11.2), and their respective successors in interest and assigns and are not
intended for, and may not be enforced by, any other person or entity.
13.8 Partial Invalidity. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
13.9 Governing Law. This Agreement has been made pursuant to and
shall be governed by the laws of the State of Alabama (without regard to
conflicts of law rules).
13.10 Assignment. This Agreement may not be assigned or delegated
by any party without the written consent of the other except that Purchaser may
assign this Agreement to an Affiliate of Purchaser, it being acknowledged and
agreed by Purchaser that no such assignment shall relieve Purchaser of its
obligations under this Agreement.
13.11 Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
13.12 Gender and Number. Words of any gender shall include the
other gender and the neuter. Whenever the singular is used, the same shall
include the plural wherever appropriate, and whenever the plural is used, the
same also shall include the singular where appropriate.
13.13 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior written or oral understandings and/or agreement among them
with respect thereto.
13.14 Costs of Enforcement. In the event that any action is brought
by any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs
in such action, including reasonable attorneys' fees, shall be paid by the
other party or parties. Any amounts owing hereunder which are not paid when
due shall bear interest at the per annum rate equal to the prime rate of Bank
of America Illinois, N.A. (or any successor), as the same may change from time
to time, plus four percent.
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13.15 Time of the Essence. Time is of the essence with regard to
each provision of this Agreement. If the final date of any period provided for
herein for the performance of an obligation or for the taking of any action
falls on a Saturday, Sunday or banking holiday, then the time of that period
shall be deemed extended to the next day which is not a Sunday, Saturday or
banking holiday. Each and every day described herein shall be deemed to end at
5:00 p.m. Central Standard Time.
ARTICLE XIV
Earnest Money
14.1 Earnest Money Returned in Full to Purchaser. In the event that
the Closing shall not occur or this Agreement is terminated because of:
(i) the default of Seller;
(ii) the material inaccuracy or breach of any representation
or warranty of Seller;
(iii) the exercise by Purchaser of a termination right
pursuant to Section 3.2, 3.3, 4.6, 6.2, or 12.1 hereunder; or
(iv) the failure of either party to have been satisfied as to
any condition set forth in Article IX (other than a failure of
Purchaser to comply with or perform any of its covenants and
agreements in any material respect, or as the result of the
default of Purchaser or the material inaccuracy or breach of
any representation of warranty of Purchaser);
then, in any of such events, the full amount of the Earnest Money, together
with all interest thereon, shall be refunded to Purchaser. In the event of
such termination, this Agreement shall be null and void and all parties shall
be released from all further rights and obligations under this Agreement (other
than any right or obligation that expressly survives the termination of this
Agreement).
14.2 Earnest Money Paid Over in Full to Seller. In the event that
the Closing shall not occur or this Agreement is terminated because of any
default by Purchaser, which default is not cured within ten (10) days after
written notice thereof from Seller to Purchaser, the Earnest Money shall be
delivered to Seller as liquidated damages as Seller's sole and exclusive remedy
for any such default or breach hereunder and in lieu of any other consideration
for the exercise of such termination right, as the case may be, and all
interest thereon shall be paid to Seller. In the event of such termination,
this Agreement shall be null and void and all parties shall be released from
all further rights and obligations under this Agreement (other than any right
or obligation that expressly survives the termination of this Agreement).
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ARTICLE XV
Tax Free Exchange
15.1 1031 Exchange. Purchaser agrees to cooperate with Seller in
effecting a Section 1031 deferred like kind exchange (the "Exchange"). In
connection with the Exchange, Seller may assign its rights, but not its
obligations, under this Agreement to an intermediary (the "Intermediary") in
order to effect the Exchange, but Seller shall transfer the Property directly
to Purchaser. Purchaser shall, upon written request of Seller, pay all or any
portion of the Purchase Price to the Intermediary designated or appointed by
Seller to receive such proceeds. No such transaction shall affect the full and
timely performance by Seller of each and every one of the representations,
warranties, indemnities, obligations and undertakings of Seller pursuant to
this Agreement, and Seller shall remain the primary obligor with respect to
these representations, warranties, indemnities, obligations and undertakings,
and, in the event of breach, Purchaser may proceed directly against Seller
without the need to join Intermediary as a party to any action against Seller.
Seller shall bear all expenses related to such tax deferred exchange.
43
<PAGE> 48
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER:
CENTURY PLAZA COMPANY,
an Alabama general partnership
By: BARBER DAIRIES, INC., an Alabama
corporation, a general partner
By: /s/ George W. Barber, Jr.
-----------------------------------
Name: George W. Barber, Jr.
---------------------------------
Title: Chairman
---------------------------------
By: /s/ George W. Barber, Jr.
---------------------------------------
George W. Barber, Jr. a general partner
PURCHASER:
CENTURY PLAZA L.L.C.,
a Delaware limited liability company
By: CENTURY PLAZA, INC.
a Delaware corporation,
a member
By: /s/ Joel Bayer
----------------------------
Name: Joel Bayer
--------------------------
Title: Vice President
-------------------------
By: GGP LIMITED PARTNERSHIP,
a Delaware limited partnership,
a member
By: GENERAL GROWTH
PROPERTIES, INC.
a Delaware corporation,
its general partner
By: /s/ Joel Bayer
----------------------
Name: Joel Bayer
--------------------
Title: Vice President
--------------------
44
<PAGE> 49
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Form of Earnest Money Escrow Agreement
Exhibit C Form of Closing Escrow Agreement
Exhibit D Permitted Exceptions
Exhibit E Form of Seller's Counsel Opinion Letter
Exhibit F-1 Deleted
Exhibit F-2 Form of Estoppel Letter for Tenants
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 2.2(a) Allocation of the Purchase Price
Schedule 7.4(a) Receivables List
Schedule 7.5. Proration and Adjustment Examples for Adjustable Tenant
Charges
Schedule 7.6 Proration Examples for Sales Based Tenant Charges
Schedule 8.1(e) Rent Roll
Schedule 8.1(f) Leases
Schedule 8.1(g) Claims under DOA
Schedule 8.1(h) Contracts
Schedule 8.1(i) Permits and Licenses
Schedule 8.1(j) Location of Underground Storage Tanks
Schedule 8.1(k) By-laws of Century Plaza Merchants Association, Inc.
(with Articles and Amendments
Schedule 8.1(l) Pending or Threatened litigation
Schedule 8.1(o) Property included in other tax parcel
Schedule 8.1(q) Matters concerning certain regulations
Schedule 8.1(s) Insurance Policies
Schedule 8.1(t) Bankruptcy Proceedings and Other Matters Affecting Parties
Schedule 8.1(u) Matters concerning certain building settling
Schedule 8.1(w) Liabilities relating to employees, etc.
45
<PAGE> 1
EXHIBIT 2.4
REAL ESTATE PURCHASE AGREEMENT
BETWEEN
CHAMPAIGN VENTURE, an Illinois general partnership,
a general partnership comprised of
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY,
a Wisconsin corporation,
and
CHAMPAIGN INVESTORS,
an Illinois general partnership,
SELLER
AND
CHAMPAIGN MARKET PLACE L.L.C.,
a Delaware limited liability company,
BUYER
<PAGE> 2
REAL ESTATE PURCHASE AGREEMENT
Table of Contents
Page
----
1. Agreement ........................................................ 1
2. Recital .......................................................... 1
3. Basic Terms ...................................................... 1
4. The Transaction .................................................. 14
4.1 Purchase and Sale ........................................ 14
4.2 Escrow ................................................... 14
4.3 Purchase Price ........................................... 15
4.3.1 Earnest Money ..................................... 15
4.3.2 Retention and Disbursement of Earnest Money ....... 15
4.3.3 Cash at Closing ................................... 15
5. Title ............................................................ 15
5.1 Title Insurance Commitment ............................... 16
5.1.1 Cure of Objectionable Items ....................... 17
5.2 Subsequent Matters Affecting Title ....................... 17
5.3 Survey ................................................... 17
5.4 Lien Search .............................................. 18
6. Condition of the Property ........................................ 18
6.1 Inspection of Property ................................... 18
6.2 Certain Environmental Matters ............................ 18
6.2.1 Buyer's Environmental Investigation................ 18
6.2.2 Seller's Environmental Reports .................... 19
6.2.3 Waiver of Responsible Property Transfer Act
Time Periods ...................................... 19
6.3 Entry Onto Property ...................................... 19
6.4 Termination/ Approval .................................... 20
6.4.1 Buyer's Approval Notice/Right to Terminate ........ 20
6.4.2 Seller's Right to Termination ..................... 21
6.5 Estoppel Certificates .................................... 21
6.6 Representations and Warranties of Seller ................. 22
6.6.1 Rent Roll ......................................... 23
6.6.2 Tenant Leases ..................................... 23
6.6.3 Reciprocal Easement Agreements .................... 24
6.6.4 Contracts ......................................... 25
6.6.5 Environmental ..................................... 25
6.6.6 Permits and Licenses .............................. 25
6.6.7 Promotional Association ........................... 26
6.6.8 No Litigation ..................................... 26
6.6.9 No Condemnation ................................... 26
6.6.10 No Consents Necessary ............................. 26
6.6.11 Real Estate Taxes ................................. 26
6.6.12 No Violation of Laws .............................. 26
6.6.13 Authority ......................................... 26
6.6.14 Tenant Bankruptcy ................................. 27
6.6.15 Employees ......................................... 27
6.6.16 Trademarks ........................................ 27
1
<PAGE> 3
6.6.17 Books and Records and Other Information ........... 27
6.6.18 Seller's Representatives .......................... 27
6.6.19 Response of On-Site Manager........................ 27
6.6.20 Unredeemed Gift Certificate List .................. 27
6.7 Seller's Knowledge Defined ............................... 28
6.8 Sale "As Is"; No Other Representations and Warranties
by Seller ................................................ 28
6.9 Survival of Representations and Warranties of Seller ..... 28
6.10 Seller Indemnity ......................................... 28
6.11 Representations and Warranties of Buyer .................. 30
6.12 Buyer Indemnity .......................................... 30
6.13 Management of the Property ............................... 32
6.14 Leasing .................................................. 32
6.15 Contracts ................................................ 33
6.16 Bulk Sales ............................................... 33
6.17 Seller's Deliveries ...................................... 33
7. Closing .......................................................... 34
7.1 Buyer's Conditions Precedent to Closing .................. 34
7.2 Seller's Conditions Precedent to Closing ................. 35
7.3 Deposits in Escrow ....................................... 35
7.3.1 Seller's Deposits .................................. 36
7.3.2 Buyer's Deposits ................................... 36
7.3.3 Other Deposits ..................................... 37
7.3.4 1099S .............................................. 37
7.4 Costs .................................................... 37
7.5 Prorations ............................................... 37
7.5.1 Items to be Prorated ............................... 37
7.5.2 Installment Payment of Assessments ................. 40
7.5.3 Adjustable Tenant Charges .......................... 40
7.5.4 Sales Based Tenant Charges ......................... 42
7.5.5 Security and Utility Deposits ...................... 42
7.5.6 Application of Rent Receipts ....................... 43
7.5.7 Security and Utility Deposits ...................... 44
7.5.8 Collection of Rents ................................ 44
7.5.9 Rental/Cash Flow Enhancement ....................... 45
7.6 Insurance ................................................ 45
7.7 Close of Escrow .......................................... 45
7.8 Possession ............................................... 47
7.9 Recorded Instruments ..................................... 47
7.10 Tenant and REA Party Notice(s) .......................... 47
8. Casualty ......................................................... 47
8.1 Notice of Casualty ....................................... 47
8.2 Non-Substantial Casualty ................................. 47
8.3 Substantial Casualty ..................................... 48
9. Condemnation ..................................................... 48
9.1 Notice of Condemnation ................................... 48
9.2 Non-Substantial Taking ................................... 48
9.3 Substantial Taking ....................................... 48
10. Notices .......................................................... 49
11. Successors and Assigns ........................................... 49
2
<PAGE> 4
12. Brokers........................................................... 49
13. Covenant Not To Record ........................................... 50
14. Default .......................................................... 50
14.1 Default by Buyer ......................................... 50
14.2 Default by Seller ........................................ 50
15. Non-Default Termination .......................................... 50
16. Miscellaneous 51
16.1 Survival of Representations, Covenants, and Obligations .. 51
16.2 Attorneys' Fees .......................................... 51
16.3 Publicity ................................................ 51
16.4 Captions ................................................. 51
16.5 Waiver ................................................... 51
16.6 Time ..................................................... 51
16.7 Controlling Law .......................................... 52
16.8 Severability ............................................. 52
16.9 Construction ............................................. 52
16.10 Finance Committee Approval ............................... 52
16.11 Execution ................................................ 52
16.12 Amendments ............................................... 52
16.13 No Third Party Benefits .................................. 52
16.14 Termination .............................................. 52
16.15 Entire Agreement ......................................... 52
16.16 Exhibits ................................................. 53
16.17 Schedules ................................................ 53
3
<PAGE> 5
REAL ESTATE PURCHASE AGREEMENT
1. Agreement.
This Real Estate Purchase Agreement ("Agreement") is made and entered into
as of the Date of Agreement between Seller and Buyer.
2. Recital.
Buyer desires to purchase from Seller and Seller desires to sell to Buyer
all of Seller's interest in the Property.
3. Basic Terms.
As used herein, the following Basic Terms are hereby defined to mean:
Adjustable Tenant Charges. Common or mall area maintenance
(exterior and interior) charges, real estate
taxes and assessments, property and liability
insurance charges and HVAC charges as well as
charges for scavenger, water and sewer
services recoverable from a Tenant or REA
Parties pursuant to the terms of the Tenant
Leases and/or the REAs.
Agreement. This Real Estate Purchase and Sale
Agreement, as amended or modified from
time to time in accordance with the terms
hereof.
Anchor Tenant(s). Carson Pirie Scott & Co., as successor
in interest to P.A. Bergner and Company;
J. C. Penney Company, Inc.; and Sears,
Roebuck and Co.
Applicable Closing With respect to any item which
Fiscal Period. is prorated under Section 7.5, the
calendar year (or other fiscal period for
which such item is determined or assessed)
during which the Closing Date occurs.
Approval Date. Twenty (20) days after the Date of Agreement.
Approval Notice. As defined in Section 6.4.1
Approved Commissions. As defined in Section 6.14
Approved New Leases. As defined in Section 6.14
Beneficiary. Champaign Venture, an Illinois general
partnership comprised of The
Northwestern Mutual Life Insurance Company, a
Wisconsin corporation, and Champaign
Investors, an Illinois general partnership,
with Champaign Venture being the sole
beneficial owner of five land trusts holding
legal title to the Property in the name of
Trustee, which land trusts (the "Trusts") are
as follows:
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<PAGE> 6
Trust No. 45013 as to Mall*
Trust No. 100214 as to Parcel to Southwest of
Mall
Trust No. 100213 as to Convenience Center*
Trust No. 100216 as to Outlots
Trust No. 100212 as to Theater Site*
*holds leases
Books and Records. The following items relating to the Property
which are in the possession or control of
Seller or the management agent of Seller for the
Property: (i) copies of the audited income and
expense operating statements for the Property for
the calendar years 1994 and 1995, the unaudited
income and expense operating statements for the
Property for the calendar year 1996 and year to
date 1997 and the operating expense budgets for
the calendar years 1996 and 1997; (ii) Tenant
Leases, along with the standard form lease; (iii)
the most recent real property tax assessment and
tax bills with respect to the Property; (iv)
utility bills which have been the obligation of
Seller for the preceding twelve (12) months; (v)
all available warranties and guarantees, if any;
(vi) available licenses and permits, if any;
(vii) all vendor service contracts which Seller
is proposing to assign, including any and all
amendments thereto; (viii) available soils
reports, if any; (ix) maintenance reports; (x)
REAs and (xi) any correspondence with tenant(s)
and with the REA Parties modifying or
interpreting the provisions of the Tenant Leases
and REA's.
Broker. CB Commercial Real Estate Group, Inc.
180 N. Stetson Avenue
Suite 2300
Chicago, IL 60601
Attn: Michael L. Richwine
Buyer. Champaign Market Place L.L.C.,
a Delaware limited liability company.
Buyer Indemnitees. Buyer and its shareholders, directors,
officers, partners, members, managers, employees,
agents and representatives, and their respective
permitted successors and assigns.
Buyer Closing Documents. As defined in Section 7.3.2.
Buyer's Closing Instructions. As defined in Section 4.2.
Buyer's Address for Notice. Champaign Market Place L.L.C.
c/o GGP Management, Inc.
55 West Monroe
Suite 3100
Chicago, IL 60603-5060
Attn: Mr. Joel Bayer
Phone No: (312) 551-5015
Fax No: (312) 551-5475
2
<PAGE> 7
with a copy to: General Growth Properties, Inc.
55 West Monroe
Suite 3100
Chicago, IL 60603-5060
Attn: Mr. David Hirsch
Phone No: (312) 551-5163
Fax No: (312) 551-5475
with a copy to: Neal, Gerber & Eisenberg
Two N. LaSalle Street
21st Floor
Chicago, IL 60602
Attn: Reuben C. Warshawsky
Phone No: (312) 269-8412
Fax No: (312) 269-1747
Buyer's Election. As defined in Section 5.1.
Buyer's Environmental
Report. As defined in Section 6.2.1.
Casualty. Any damage to or destruction of the Property
or any portion thereof caused by fire or other
casualty, whether or not insured.
CI. Champaign Investors, an Illinois general
partnership, which is a general partner in
Beneficiary.
Closing. The consummation of the purchase, sale and
related transactions contemplated by this
Agreement in accordance with its terms.
Closing Date. Thirty (30) days after the Date of Agreement,
subject to extension in accordance with the terms
of this Agreement. If the Closing Date does
get so extended, as soon as the exact Closing
Date is ascertainable, Buyer and Seller each
agrees, at the request of the other, to
acknowledge the exact Closing Date in writing.
Closing Documents. The Seller Closing Documents and Buyer
Closing Documents, collectively.
Contracts. The service, maintenance and other
contracts and concessions that are currently in
effect and to which Seller is a party with
respect to the use, maintenance, development,
sale or operation of the Property or any portion
thereof (but excluding this Agreement, Seller's
management and operating agreement for the
Property, the Tenant Leases, the Permitted
Exceptions, the REAs, and any insurance policies)
which are listed on Schedule 6.6.4, together with
any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in
accordance with the provisions of this Agreement.
Date of Agreement. March 12, 1997.
3
<PAGE> 8
Deeds. As defined in Section 7.3.1.
Demanding Party. As defined in Section 4.3.2.
Earnest Money. Five Hundred Thousand Dollars ($500,000.00).
Environmental Laws. All federal, state and local statutes,
ordinances, codes, rules, regulations, orders and
decrees regulating, relating to or imposing
liability or standards concerning or in connection
with Hazardous Materials, Underground Storage Tanks
or the protection of human health or the
environment, as any of the same may be amended from
time to time, including but not limited to, the
Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. '9601 et.
seq., as amended by the Superfund Amendments and
Reauthorization Act or any equivalent state or
local laws or ordinances; the Federal Insecticide,
Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C.
'136 et. seq. or any equivalent state or local laws
or ordinances; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. '6901 et seq. or
any equivalent state or local laws or ordinances;
the Emergency Planning and Community Right-to-Know
Act ("EPCRA"), 42 U.S.C. '11001 et. seq. or any
equivalent state or local laws or ordinances; the
Toxic Substance Control Act ("TSCA"), 15 U.S.C.
'2601 et. seq. or any equivalent state or local
laws or ordinances; the Atomic Energy Act, 42
U.S.C. '2011 et. seq., or any equivalent state or
local laws or ordinances; the Clean Water Act (the
"Clean Water Act"), 33 U.S.C. '1251 et. seq. or any
equivalent state or local laws or ordinances; the
Clean Air Act (the "Clean Air Act"), 42 U.S.C.
'7401 et seq. or any equivalent state or local laws
or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. '651 et seq. or any equivalent state
or local laws or ordinances.
Escrowholder. Chicago Title Insurance Company
171 N. Clark Street
Chicago, IL 60601
Attn: Diane Nelson
Estoppels. As defined in Section 6.5.
Fixed and Other
Tenant Charges. Rent other than Adjustable Tenant Charges,
Sales Based Tenant Charges and Advertising and
Promotional Contributions.
Fixed and Other Tenant
Charge Arrearages. Fixed and Other Tenant Charges due and
payable prior to but unpaid as of the Closing Date.
Future Environmental
Report. As defined in Section 6.4.2.
Hazardous Materials. Any substance, material, waste, gas or
particulate matter which (i) is now regulated by
the United States Government, the State of
Illinois, any other state with jurisdiction, or any
local
4
<PAGE> 9
governmental authority under any Environmental Law,
or (ii) the exposure to, or manufacture,
possession, presence, use generation, storage,
transportation, treatment, release, disposal,
abatement, cleanup, removal, remediation or
handling of is prohibited, controlled or regulated
by any Environmental Law, or (iii) requires
investigation or remediation under any
Environmental Law. Such term includes, without
limitation, any material or substance which is (1)
now defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste" or
any like or similar term under any applicable
Environmental Law; (2) oil and petroleum products;
(3) asbestos or asbestos-containing material as
defined in the regulations of the Occupational
Safety and Health Administration at 29 C.F.R.
'1910.1001; (4) polychlorinated biphenyls; (5)
radioactive material; (6) now designated as a
"toxic pollutant" or a "hazardous substance"
pursuant to Sections 307 or 311 of the Clean Water
Act; (7) now defined as a "hazardous waste"
pursuant to Section 1004 of RCRA; (8) now defined
as a "hazardous substance" pursuant to Section 101
of CERCLA; (9) now designated as a "hazardous
chemical" substance or mixture pursuant to TSCA;
(10) now designated as an "extremely hazardous"
substance under Section 302 of EPCRA; (11) now
designated as a "priority pollutant" or "hazardous
air pollutant" pursuant to the Clean Air Act; (12)
now designated as a hazardous chemical under the
Occupational Safety and Health Act; (13) radon gas
or other radioactive source material, including
special nuclear material, and by-product materials
regulated under the Atomic Energy Act, 42 U.S.C.
'2011 et. seq.; (14) now subject to regulation
under FIFRA; (15) natural gas, natural gas liquids,
liquefied natural gas, and synthetic gas usable for
fuel; or (16) infectious wastes or materials and
pathogenic bacteria or other pathogenic microbial
agents.
Improvements. All improvements, structures, fixtures,
facilities, installations, machinery and equipment,
in, on, over or under the Land which constitute
realty under the laws of the State of Illinois
which are not owned by Tenants, REA Parties or
other persons or entities having the legal right to
have such improvements on the Property, including
but not limited to the foundations and footings
therefor, elevators, plumbing, air conditioning,
heating, ventilating, mechanical, electrical and
utility systems (except to the extent owned by a
utility company), signs and light fixtures (except
to the extent of trade fixtures and equipment owned
by tenants under Tenant Leases), doors, windows,
fences, parking lots, walks and walkways and each
and every other type of physical improvement to the
extent owned, in whole or in part, by Seller,
located at, on or affixed to the Land, to the full
extent such items constitute realty under the laws
of the State of Illinois.
Inspection Period. As defined in Section 6.1.
Intangible Property. Seller's rights, if any, in any of the
following, to the extent they relate to the
ownership, construction or operation of the
Property: the name "Market Place Shopping Center";
all assignable licenses, permits and certificates
of occupancy; all assignable
5
<PAGE> 10
guarantees or warranties and advertising materials.
Kohl's REA. Reciprocal Construction, Operation and
Easement Agreement dated July 25, 1983, between
Kohl's Department Stores and LaSalle National Bank,
as Trustee under three Trust Agreements, the first
dated November 16, 1978 and known as Trust Number
100213, the second dated November 16, 1978 and
known as Trust Number 100215 and the third dated
November 17, 1978 and known as Trust Number 100216,
thereinafter collectively called "LaSalle National
Bank", not individually, but as Trustee under a
Trust Agreement dated November 15, 1982, and known
as Trust Number 105619, as amended from time to
time.
Land. The real estate located at 2000 N. Neil
Street, Champaign, Illinois 61820, consisting of
the five (5) parcels of land which, subject to the
provisions of Section 5.3, 5.2 and 5.1 hereof, are
described in the attached Exhibit "A" together
with all easements, covenants, agreements, rights,
privileges, tenements, hereditaments and
appurtenances thereunto belonging or appertaining.
Liens Any liens and/or security interests
that encumber any part of the Land, the
Improvements, or the Personal Property owned by
Seller, including, but not limited to, mortgages,
deeds of trust, mechanics, materialmen, judicial,
tax (other than real property tax) or governmental
liens, pledges, options (other than options in
Tenant Leases which are not options to purchase),
rights of first offer or first refusal or other
similar items.
Lien Searches. A search of the Secretary of State records,
county recorder records, local court records
(federal, state, county and municipal) and such
other official public records with respect to the
Property that would disclose the presence of any
Liens, bankruptcy proceedings, lis pendens or
other matters which would affect the title to the
Property to be acquired by Buyer.
Losses. With respect to any obligation to indemnify
Seller, the Seller Indemnitees, Buyer or the Buyer
Indemnities, any and all claims, actions, suits,
demands, losses, damages, liabilities,
obligations, judgments, settlements, awards,
penalties, costs or expenses, including, without
limitation, reasonable attorneys' fees and
expenses.
Material Casualty or
Material Taking. A Casualty or Taking, as the case may be, where:
(a) the condemnation award, or the
proceeds payable under the applicable
policy or policies of casualty insurance
maintained by Seller, are insufficient by
more than $250,000 to fully repair the
damage caused by such Casualty or Taking,
unless Seller shall (at its sole option and
without any obligation to do so) grant to
Buyer a credit equal to such deficiency; or
6
<PAGE> 11
(b) an Anchor Tenant or REA Party
shall, by reason of such Casualty or
Taking and pursuant a right granted under
the express terms of its Tenant Lease or REA,
either terminate its Tenant Lease, or its
obligations under the REAs, or cease
operating at the Property due to a casualty
or taking (other than temporarily due to such
damage and destruction, remodeling,
renovation or any similar cause) or have a
right to do any of the foregoing unless such
right shall have expired or been waived; or
(c) in the case of a Taking, a taking
with respect to such portion of the Land as,
when so taken would, in the reasonable
opinion of Buyer, leave remaining a balance
of the Land, which, due either to the area
taken or the location of the part taken would
not, under applicable zoning laws, building
regulations and economic conditions then
prevailing or otherwise, reasonably
accommodate a new or restructured building or
buildings of a type and size generally
similar to the building or buildings existing
on the date hereof, or would result in
inadequate parking or lack of reasonable
access to public roads.
Missing Estoppel Tenants. As defined in Section 6.5.
NML. The Northwestern Mutual Life Insurance
Company, a Wisconsin corporation, which is a
general partner in Beneficiary.
Notice of Demand. As defined in Section 4.3.2.
Objectionable Items. Any lien, claim, charge, security interest,
encumbrance, restriction, covenant, easement,
right, encroachment or other exception or
objection to title to the Property objection to
which has been timely made by Buyer to Seller in
accordance with Section 5.1, 5.2 or 5.3 hereof.
Other 2500 sq ft+ Tenants. As defined in Section 6.5.
Other Party. As defined in Section 4.3.2.
Party. A party to the REAs or a Contract (or the
successor or assignee thereof) or a Tenant under a
Tenant Lease, in each case other than Seller.
Personal Property. The Tangible Personal Property and the
Intangible Property.
Permitted Exception. As defined in Section 5.1.
Property. Collectively: (a) the Land, (b) the
Improvements; (c) the Tangible Personal Property;
(d) the Tenant Leases; (e) the REAs; (f) the
Contracts to be assigned to Buyer in
7
<PAGE> 12
accordance with the terms of this Agreement; and
(g) the Intangible Property.
Purchase Price. Seventy Million Dollars ($70,000,000).
REA Estoppel. As defined in Section 6.5.
REA Parties. Kohl's Department Store Company and Venture
Stores, Inc.
REAs. Collectively, the Kohl's REA and the Venture REA.
Rent Roll. As defined in Section 6.6.1.
Rents. Fixed, minimum, additional, percentage and
overage rents, common area maintenance charges,
advertising and promotional fees, insurance
charges, rubbish removal charges, sprinkler
charges, shoppers aid charges, water charges,
utility charges, HVAC charges, amounts payable
with respect to real estate and other taxes, and
other amounts payable by any Tenant under the
Tenant Leases and REA Parties under the REAs.
Sales Based Tenant
Charges. Rent consisting of percentage rent.
Security Deposits. As defined in Section 7.5.5.
Seller. Beneficiary and Trustee, collectively.
Seller Closing Documents. As defined in Section 7.3.1.
Seller's Closing As defined in Section 4.2
Instructions.
Seller Indemnitees. Trustee, Beneficiary and Beneficiary's
partners and their partners, shareholders,
directors, officers, employees, agents and
representatives, and their respective successors
and assigns.
Seller Representatives.
(re: Representations and
Warranties of Seller) Champaign Investors' Representatives:
Jay Heyman
Marty Levy
Northwestern's Representative:
Gary Schirmers
Seller's Address for Notice. Rudnick & Wolfe
203 N. LaSalle Street
Suite 1500
Chicago, IL 60601
Attn: Howard Kane, Esq.
Phone No: (312) 368-2128
Fax No: (312) 236-75165
8
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The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
Attn: Don O'Dell
Phone No: (414) 299-7038
Fax No: (414) 299-1557
with a copy to: The Northwestern Mutual Life Insurance Company
10 South Wacker Drive
Suite 3400
Chicago, IL 60606
Attn: Gary Schirmers
Phone No: (312) 559-0700
Fax No: (312) 559-0198
Seller's Election. As defined in Section 5.1.
Seller's Knowledge. As defined in Section 6.7.
Seller's Review Date. As defined in Section 6.4.2.
Survey. The survey entitled "Market Place Shopping
Center ALTA Survey" prepared by HDC Engineering,
Inc. dated 11/18/96, Revised 12/5/96, and Revised
01/20/97, a copy of which has been delivered to
and received by Buyer prior to the date hereof.
Taking. A taking of all or any portion of the Land in
condemnation or by exercise of the power of
eminent domain or by an agreement in lieu thereof.
Tangible Personal Property. All rights of Seller to any tangible personal
property owned by Seller and located in or upon
and used in connection with the operation and
maintenance of the Property, including without
limitation the Books and Records; fixtures;
machinery; equipment; building supplies and
materials; consumables and inventories, but in no
event including software, personal items belonging
to employees, the rights of Seller in and to the
Tenant Leases, the Contracts and the cash and the
cash accounts of Seller (including any cash or
cash accounts constituting the Security Deposits).
Tenant Estoppel. As defined in Section 6.5.
Tenant Leases. Those leases, tenancies, concessions, licenses
and occupancy agreements currently in effect on
the Date of Agreement and to which Seller or any
of its predecessors in title is a party affecting
or relating to the Property which are listed on
Schedule 6.6.1, together with any amendments,
modifications, or new leases entered into by
Seller after the Date of Agreement pursuant to the
Section hereof entitled "Leasing".
Tenant(s). Tenants, concessionaires, licensees and/or
occupants under the Tenant Leases.
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Title Commitment. The following title Commitments issued by
Chicago Title Insurance Company, of which Buyer
has received copies prior to the date
hereof:
Number Date
--------- ------------
00 98 060 December 9, 1996
01 00 684 December 9, 1996
01 00 685 December 9, 1996
01 00 592 December 9, 1996
01 00 734 December 9, 1996
01 00 625 December 9, 1996
01 00 664 December 9, 1996
Title Insurer. Escrowholder.
Title Policy. An ALTA Form B-1970 Owner's Policy of Title
Insurance issued by Title Insurer, dated the date
and time of Closing and with policy coverage in
the amount of the Purchase Price, insuring Buyer
as owner of fee title to the Property, subject
only to the Permitted Exceptions, and
affirmatively insuring as a part of Schedule A to
such Title Policy Buyer's rights under the REAs or
other appurtenant easements that benefit the
Property and containing the following
endorsements: an extended coverage endorsement
over the general exceptions contained in the
policy, an endorsement insuring against loss of
title to the Property or the inability of the
owner of the Property to maintain the improvements
now located on the Property by reason of a
violation of a covenant, condition or restriction
of record affecting the Property, a location
endorsement insuring the accuracy of the Survey,
an endorsement insuring legal access to the
Property from each of the streets bordering on the
Property, and insuring that all such streets are
dedicated public streets, a contiguity
endorsement, a zoning 3.1 endorsement including
coverage over parking, a tax parcel endorsement, a
utility facility endorsement and such other
endorsements requested by Buyer.
Transferable Warranties and As defined in Section 7.3.1.
Assignment.
Trustee. LaSalle National Trust N.A. as successor
trustee to LaSalle National Bank under the
following trust agreements:
Trust Number Agreement Date
------------ -----------------
45013 December 15, 1972
100214 November 16, 1978
100213 November 16, 1978
100216 November 17, 1978
100212 November 16, 1978
Underground Storage
Tanks. Underground Storage Tanks as defined in
Section 9001 of RCRA and as used herein, such term
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<PAGE> 15
shall also include (i) any farm or residential
tank of 1,100 gallons or less capacity used for
storing motor fuel for noncommercial purposes,
(ii) any tank used for storing heating oil for
consumption on the premises where stored, (iii)
any septic tank and (iv) any pipes connected to
any of the items described in clauses (i) through
(iii).
Utility Deposits. As defined in Section 7.5.5.
Venture REA. Easement and Covenant Agreement dated April 23,
1984, between Venture Stores, Inc., as successor
in interest to The May Department Stores Company,
and LaSalle National Bank, as Trustee under two
Trust Agreements, the first dated December 15,
1972 and known as Trust Number 45013 and the
second dated November 16, 1978 and known as Trust
Number 100214, as amended from time to time.
4. The Transaction.
4.1 Purchase and Sale. Subject to the provisions of this Agreement,
Seller shall, on or before the Closing Date, sell all of Seller's right, title
and interest in the Property to Buyer and Buyer shall purchase the Property
from Seller, in accordance with and subject to the terms of this Agreement.
4.2 Escrow. In order to effect the conveyance contemplated by this
Agreement, the parties hereto agree to open an escrow with Title Insurer as
Escrowholder. This Agreement, together with Buyer and Seller's separate
closing instructions (not inconsistent with the terms hereof) shall constitute
escrow instructions (referred to herein respectively as "Buyer's Closing
Instructions" and "Seller's Closing Instructions").
4.3 Purchase Price. Subject to the provisions of this Agreement, Buyer
agrees to pay the Purchase Price for the Property to Seller as follows:
4.3.1 Earnest Money. No later than two (2) business days after
delivery to Buyer of this Agreement executed by Seller, Buyer and Seller shall
deliver a copy of the executed original of this Agreement to Escrowholder, and
Buyer shall deposit with Escrowholder the Earnest Money in accordance with the
terms hereof, and Buyer shall cause Escrowholder to notify Seller, no later
than two (2) business days after Escrowholder's receipt thereof, that
Escrowholder has received the Earnest Money in cash or other immediately
payable funds, and is holding same in accordance with the terms of this
Agreement. Failure of Buyer to timely deposit the Earnest Money with
Escrowholder shall constitute a material default by Buyer hereunder.
4.3.2 Retention and Disbursement of Earnest Money. In accordance
with the terms of this Agreement, the Earnest Money shall be either: (i)
applied against the Purchase Price, (ii) refunded to Buyer, or (iii) paid to
and retained by Seller. The Earnest Money shall be held in an interest bearing
account at a federally insured bank in the name of Escrowholder. The
Escrowholder shall not disburse any of the Earnest Money except: (a) by
application of same against the Purchase Price at Closing (as defined in the
Section hereof entitled "Closing"), (b) in accordance with written instructions
executed by both Buyer and Seller, or (c) in accordance with the following
procedure:
If Buyer or Seller, by notice to the Escrowholder, makes demand upon the
Escrowholder for the Earnest Money (the "Demanding Party"), the
Escrowholder shall, at the expense of the Demanding Party, give notice of
such demand (the "Notice of Demand") to the other party (the "Other
Party"). If the Escrowholder does not receive notice from the Other Party
contesting such disbursement of the Earnest Money within five (5) business
days from the date on which the Notice of Demand was given,
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<PAGE> 16
the Escrowholder shall disburse the Earnest Money to the Demanding Party.
In the event that the Escrowholder does receive notice from the Other Party
contesting such disbursement of the Earnest Money within five (5) business
days from the date on which the Notice of Demand was given, the
Escrowholder shall thereafter disburse the Earnest Money only in accordance
with written instructions executed by both Buyer and Seller, or in
accordance with a final, non-appealable court order.
4.3.3 Cash at Closing. Buyer shall pay to Seller the Purchase Price in
cash or other immediately payable funds, less the Earnest Money then
held by Escrowholder, plus or minus prorations and adjustments shown on the
closing statement executed by Buyer and Seller.
5. Title.
5.1 Title Insurance Commitment. Buyer acknowledges receipt of the Title
Commitment, the cost of which is to be paid in accordance with the Section
hereof entitled "Costs". Buyer shall have until the Approval Date to examine
the Title Commitment and to notify Seller in writing of any Objectionable
Items. All matters affecting title to the Property as of the date of the Title
Commitment, except those specifically and timely objected to by Buyer in
accordance with this Section and Sections 5.2 and 5.3 shall be deemed approved
by Buyer and shall be deemed to be "Permitted Exceptions". If Buyer timely
notifies Seller of any Objectionable Items, Seller may, but shall not be
obligated to, cure or remove same; provided, however, that Seller shall cure
any monetary lien(s) for borrowed money in definite amount(s) which were
created by Seller (the "Curable Borrowed Money Liens") and, further, Seller
shall cure or provide a credit to Buyer for any mechanic lien(s) created by
Seller and/or other lien(s) in a definite or ascertainable amount not to
exceed $250,000.00 in the aggregate (together, with the Curable Borrowed Money
Liens, herein referred to as the "Curable Mechanics and Other Liens"). If
Seller does cure or remove all such Objectionable Items, Buyer shall be
obligated to proceed with Closing. Such Objectionable Items shall be deemed
removed or cured if Buyer obtains, at Closing, the Title Policy in favor of
Buyer as the grantee of Seller's interest in the Property with such
Objectionable Items having been removed as exceptions or insured over by Title
Insurer by endorsements approved by Buyer in writing. Seller shall notify
Buyer, within ten (10) business days after Seller's receipt of Buyer's notice
of Objectionable Items, as to which Objectionable Items Seller is willing or
able to cure or remove ("Seller's Election"); and if no such notice is given
within such time period, Seller shall be deemed to have elected not to cure any
of the Objectionable Items. If Seller is unwilling or unable to cure some or
all of the Objectionable Items, Buyer shall, as its sole and exclusive remedy
in such event, make an election in writing ("Buyer's Election"), within five
(5) business days after receipt by Buyer of Seller's Election (or five (5)
business days after the expiration of the time period for Seller to make
Seller's Election if Seller fails to send notice of Seller's Election) either:
(a) to accept title to the Property subject to the Objectionable Items
which Seller is unwilling or unable to cure, in which event the
obligations of the parties hereunder shall not be affected by reason
of such Objectionable Items (except only that Buyer shall receive a credit
for any uncured Curable Mechanics and Other Liens); or
(b) to terminate this Agreement in accordance with the Section hereof
entitled "Non-Default Termination".
If Seller has not received Buyer's Election within such five (5) business day
period, Buyer shall be deemed conclusively to have elected to accept title to
the Property in accordance with Subsection (a) above.
Anything to the contrary herein notwithstanding, under no circumstances shall
Seller be obligated to give the Title Insurer any certificate, affidavit or
other undertaking of any sort which might result in potential liability to
Seller in excess of the liability undertaken by Seller in delivering the
Affidavit of Title; provided, however, that this requirement does not alter the
condition to closing that Buyer receives the Title Policy, all in accordance
with the terms of this Agreement.
5.1.1 Cure of Objectionable Items. If any Objectionable Items that Seller
has elected to cure
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<PAGE> 17
or remove are not cured or removed on or before the Closing, Buyer shall have
the right to elect either:
(a) to close the purchase of the Property subject to the Objectionable
Items which Seller has failed to cure in which event the obligations of
the parties hereunder shall not be affected by reason of such
Objectionable Items (except only that Buyer shall receive a credit for any
uncured Curable Mechanics and Other Liens); or
(b) to terminate this Agreement in accordance with the Section hereof
entitled "Non-Default Termination".
If Seller does cure or remove all such Objectionable Items on or before the
Closing Date, Buyer shall be obligated to proceed with Closing. Such
Objectionable Items shall be deemed cured or removed if Title Insurer issues a
revised Commitment to issue at Closing, and at Closing issues, the Title Policy
with such Objectionable Items having been removed as exceptions or insured over
by Title Insurer pursuant to an endorsement reasonably acceptable to Buyer.
5.2 Subsequent Matters Affecting Title. If, for any reason whatsoever,
any updated title commitment or any updated Survey reflects, as exceptions, any
items other than Permitted Exceptions, such items shall be deemed
"Objectionable Items", and then:
(a) the Closing shall be postponed to the first business day which is at
least fifteen (15) days after the date previously set for Closing; and
(b) the rights and obligations of Buyer and Seller with regard to such
Objectionable Items shall be as set forth in Section 5.1.
5.3 Survey. Buyer acknowledges that Buyer and Title Insurer have received
the Survey, the cost of which is to be paid in accordance with the Section
hereof entitled "Costs". Buyer may, at its sole cost and expense, obtain
modifications to the Survey, but shall not be entitled to an extension or delay
of the Approval Date or the Closing Date because of modifications to the Survey
requested by Buyer. If as a result of reviewing the Survey, Buyer determines
there are Objectionable Items, such items shall, if and only if Buyer shall
give written notice thereof to Seller on or before the Approval Date, be deemed
"Objectionable Items" and, if Buyer shall so give notice to Seller, then the
rights and obligations of Buyer and Seller with regard to such Objectionable
Items shall be as set forth in Section 5.1.
5.4 Lien Search. Buyer may, at Buyer's sole cost and expense, on or
before the Approval Date, perform any Lien Searches which are not performed by
the Title Insurer in connection with the issuance of the Title Policy. If as a
result of reviewing the Lien Searches, Buyer determines there are Objectionable
Items, such items shall, if and only if Buyer shall give written notice thereof
to Seller on or before the Approval Date, be deemed "Objectionable Items" and,
if Buyer shall so give notice to Seller, then the rights and obligations of
Buyer and Seller with regard to such Objectionable Items shall be as set forth
in the Section hereof entitled "Title Insurance Commitment".
6. Condition of the Property.
6.1 Inspection of Property. Subject to the provisions of the Sections
hereof entitled "Entry Onto Property", "Buyer Indemnity" and "Buyer's
Environmental Investigation", from the Date of Agreement through the Approval
Date (the "Inspection Period"), Buyer shall have the right to conduct, at its
own expense, an inspection of the Property to do the following:
(a) determine zoning, development, redevelopment and financial aspects of
the Property, enter upon the Property for purposes of examining its
terrain, access thereto and physical condition, conducting studies, doing
engineering work, conducting site analyses and making any test or
inspection Buyer may deem necessary related to the Property. During the
Inspection Period Seller
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<PAGE> 18
will provide Buyer and its representatives with reasonable access to the
Property subject to the provisions of the Section hereof entitled "Entry
Onto Property". Buyer's inspection rights shall be subject to the rights
of the Tenant(s), including without limitation, rights of quiet enjoyment,
and Buyer agrees that it will not unreasonably interfere with any
tenant(s), contractors on the Property, or Seller's operation of the
Property.
(b) As of the Date of Agreement, Seller shall make available to Buyer and
Buyer shall have access to the Books and Records.
6.2 Certain Environmental Matters.
6.2.1 Buyer's Environmental Investigation. Subject to the provisions
of the Section hereof entitled "Entry Onto Property", during the Inspection
Period, Buyer, at its option, may conduct, at Buyer's cost, such independent
investigation and inspection of the Property as Buyer shall deem necessary to
ascertain the environmental condition of the Property. Buyer agrees that it
will not undertake, without Seller's prior written consent, which shall not be
unreasonably withheld, any "phase II investigation" or any invasive drilling,
or any test, sampling or other action that will materially damage the physical
condition or appearance of any portion of the Property, and Buyer agrees not to
disturb any asbestos which may be on the Property. Any report on the
environmental condition of the Property delivered to Buyer by Buyer's
environmental consultant is hereinafter referred to as "Buyer's Environmental
Report". Buyer shall immediately deliver to Seller a copy of any Buyer's
Environmental Report. BUYER HAS BEEN EXPRESSLY ADVISED BY SELLER TO CONDUCT AN
INDEPENDENT INVESTIGATION AND INSPECTION OF THE PROPERTY (subject to the
provisions hereof), UTILIZING EXPERTS AS BUYER DEEMS NECESSARY.
6.2.2 Seller's Environmental Reports. Buyer may examine the
environmental reports in Seller's possession which have been prepared regarding
the Property as well as any information relative to USTs which may be located
on the Property, all as listed on Exhibit "D" hereto and incorporated herein,
copies of which reports have been previously furnished to Buyer. Except as set
forth in the representations and warranties sections hereof, Seller shall have
no responsibility or liability with respect to the results or any inaccuracies
in any environmental report(s), and except as otherwise expressly provided in
the section of this Agreement entitled "Seller's Representations and
Warranties", Seller makes no representations or warranties whatsoever regarding
(i) the completeness of any environmental report(s), (ii) the truth or accuracy
of any environmental report(s) or (iii) the existence or nonexistence of any
hazardous or toxic wastes or materials in, on or about the Property. Further,
Seller is not assigning any environmental report(s) to Buyer, nor granting
Buyer any rights with respect to any environmental firm(s) producing any
environmental report(s).
6.2.3 Waiver of Responsible Property Transfer Act Time Periods.
Buyer and Seller acknowledge that the transaction contemplated hereunder may be
subject to the provisions of the Illinois Responsible Property Transfer Act of
1988, as amended ("RPTA"). Buyer and Seller further acknowledge that they are
aware that the purpose and intent of RPTA is to ensure that the parties to the
transaction contemplated hereunder are made aware of the existing environmental
liabilities associated with the ownership of the Property, as well as the past
use and environmental status of the Property. Buyer and Seller hereby waive
the thirty (30) day RPTA disclosure document delivery period and agree that the
disclosure document will be prepared by Seller and will be provided to Buyer by
Seller no later than five (5) days prior to the Approval Date; provided,
however, that the foregoing waiver shall not be deemed to be a waiver of any
and all rights and remedies of Buyer pursuant to RPTA. The individuals
executing this Agreement on behalf of Buyer and Seller have placed his/her
initials in the space below to indicate he/she has read the provisions of this
section, and that the entity on whose behalf he/she is acting has agreed to
such provision.
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Buyer's Initials Seller's Initials
_______________ _________________
_______________ _________________
6.3 Entry Onto Property. Buyer, its contractors and/or agents, may not
enter onto the Property prior to the Approval Date without the prior
authorization of Seller. Seller shall use good faith efforts to respond to
Buyer's requests for authorization to enter onto the Property within
twenty-four hours. Buyer may only enter onto the Property in the company of
Seller or its agents, and Seller shall cooperate with Buyer in good faith to
make arrangements for Seller, or its agents, to accompany Buyer if Buyer elects
to enter upon the Property. Prior to any entry onto the Property, Buyer shall
furnish to Seller, at Buyer's expense, satisfactory certificates of insurance
listing Seller as an additional insured with respect to insurance coverages and
limits as reasonably requested by Seller. Buyer and its agents shall observe
all appropriate safety precautions in conducting Buyer's inspection of the
Property and shall be responsible for performing and causing its contractors
and/or agents to perform, all work, in such a manner so as not to cause any
damage to the Property, injury to any person or to the environment, or
unreasonable interference with any ongoing operations at the Property. Buyer
agrees to promptly repair any damage to the Property directly or indirectly
caused by any acts of Buyer, its contractors and/or agents. Buyer shall
restore the Property to substantially the condition that existed prior to the
entry, except for damage caused by the negligence of Seller and Seller's
employees, agents and representatives. Buyer shall indemnify, defend and hold
Seller and Seller's Indemnitees harmless from and against any losses, damages,
expenses, liabilities, claims, demands and causes of action (together with any
reasonable legal fees, engineering and other professional or expert fees and
other actual and direct out of pocket expense incurred by Seller in connection
therewith), resulting directly or indirectly from, or in connection with, any
inspection of or other entry upon the Property (including any investigation of
the Property necessary for completion of Buyer's Environmental Report and any
entry onto the Property with the authorization of Seller) by Buyer, or its
agents, employees, contractors or other representatives, including, without
limitation, any losses, damages, expenses, liabilities, claims, demands and
causes of action resulting, or alleged to be resulting, from injury or death of
persons, or damage to the Property or any other property, or mechanic's or
construction liens and encumbrances placed against the Property in connection
with Buyer's inspection thereof. This Section shall survive Closing or
termination of this Agreement.
6.4 Termination/ Approval.
6.4.1 Buyer's Approval Notice/Right to Terminate. On or before the
expiration of the Inspection Period, as may be extended pursuant to the terms
of this Agreement, Buyer shall deliver to Seller and Escrowholder a written
notice ("Approval Notice") to the effect that Buyer has approved the condition
of the Property and the On-Site Manager's Report (as defined below) and chooses
to proceed under the terms of the Agreement. Buyer shall also specify in the
Approval Notice those Contracts which Buyer elects to have assigned to it, and
the failure of Buyer to so specify shall be deemed to be an election by Buyer
to have all Contracts assigned to it and assume all Contracts (except Seller's
contract with the management company for the Property). If Buyer does not
timely send an Approval Notice, Buyer will be conclusively deemed to have
terminated the Agreement, in which event this Agreement shall terminate in
accordance with the Section hereof entitled "Non-Default Termination" and Buyer
shall return to Seller all materials provided to it by Seller pursuant to the
Sections hereof entitled "Inspection of Property" and "Seller's Environmental
Report(s)" and will not retain any copies, extracts, or other reproductions, in
whole or in part. Anything to the contrary notwithstanding, Buyer agrees that
from and after the Date of Agreement, Buyer may terminate this Agreement
pursuant to this Section only as a result of its disapproval of the On-Site
Manager's Report, the status of the work to be assumed by Buyer for the Market
Place Third Subdivision and the Market Place No. 2 Subdivision (both as
described in Schedule 6.12 hereof) and/or the work to be assumed by Buyer under
the Participation Agreement for Roadway Improvements (as described in Schedule
6.12 hereof). Seller also acknowledges that that the rights of Buyer to
terminate this Agreement have not yet terminated as to Article 5, with regard
to survey and title review, and Section 6.5 with regard to estoppel
certificates.
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6.4.2 Seller's Right to Termination. If Buyer's Environmental Report or
any environmental report prepared by Seller after the Date of Agreement (a
"Future Environmental Report") discloses any existing environmental condition
affecting the Property which was not disclosed in the environmental reports
listed on Exhibit "D", then if Seller in its sole discretion, is not satisfied
with Buyer's Environmental Report or any Future Environmental Report, Seller
shall have the right to terminate this Agreement, in accordance with the
Section hereof entitled "Non-Default Termination", by giving Buyer notice of
termination on or before the date which is ten (10) days after the later of
Seller's receipt of Buyer's Environmental Report or of any Future Environmental
Report (the "Seller's Review Date"). If Seller receives Buyer's Environmental
Report, or any Future Environmental Report less than ten (10) days before the
Closing Date, then the Closing shall occur one (1) business day after Seller's
Review Date, or such other date to which Buyer and Seller may mutually agree
upon. If Buyer shall not timely receive notice of termination from Seller,
Seller shall have no further right to terminate this Agreement with respect to
matters set forth in this Section.
6.5 Estoppel Certificates. On or before the date that is five (5) days
prior to the Closing Date, Seller shall use commercially reasonable efforts to
furnish to Buyer, an estoppel certificate completed by each Anchor Tenant and
each REA Party and by not less than ninety percent (90%) of the other Tenants
(by number of Tenants) leasing at least 2500 square feet of gross leaseable
area (the "Other 2500 sq ft+ Tenants"), on the form attached hereto and
incorporated herein as Exhibit "E-1" for Tenants and/or Anchor Tenants (a
"Tenant Estoppel") and on the form attached hereto and incorporated herein as
Exhibit "E-2" for REA Parties (an "REA Estoppel") (the Tenant Estoppels and the
REA Estoppels are hereinafter collectively referred to as the "Estoppels"), or
in the form as provided in such Tenant's Lease and/or as provided in the REA;
provided, however, that if a form of estoppel certificate is specified in the
lease for any Tenant, then that form of estoppel certificate shall be used for
that Tenant. If Seller has not obtained a Tenant Estoppel from all Tenants
and REA Parties but has obtained a Tenant Estoppel from all Anchor Tenants and
80% of all Other 2500 sq ft+ Tenants and REA Parties (the Tenants from whom
Tenant Estoppels have not been obtained being herein called the "Missing
Estoppel Tenants"), Seller in its own capacity shall satisfy the condition of
this Section 6.5 with respect to the Tenant Estoppel from such Missing Estoppel
Tenants selected by Buyer (such that Buyer thereby receives an estoppel
certificate completed by the tenant or by Seller on behalf of the tenant, for
not less than ninety percent (90%) of the Other 2500 sq ft+ Tenants) by
executing and delivering to Buyer at Closing a factually accurate Tenant
Estoppel for such Missing Estoppel Tenant in the form attached hereto and
incorporated herein as Exhibit E-3; any Tenant Estoppel provided by Seller will
be released upon delivery of a Tenant Estoppel from such Missing Estoppel
Tenant; as Buyer's sole recourse with respect to any material inaccuracy in any
Tenant Estoppel provided by Seller, Buyer shall be entitled to pursue the
indemnity of Seller under Section 6.10, subject to and limited by the terms
thereof, as if the information in the Tenant Estoppel provided by Seller was a
representation and warranty of Seller hereunder. In the event Seller is unable
to obtain Tenant Estoppel from all Anchor Tenants and 80% of all Other 2500 sq
ft+ Tenants and REA Parties, or in the event of any "Aggregate Material
Monetary Variation" or "Material Non-Monetary Variation" in the Tenant
Estoppels, Buyer shall as its sole and exclusive options under such
circumstances, elect either:
(a) to close the purchase of the Property without the Tenant Estoppels, and
without reduction of the Purchase Price, but with a Tenant Estoppel signed
by Seller for Missing Estoppel Tenants for the Seller's Estoppel
Certificates to be selected by Buyer up to 90% (by number of Tenants) of
the Other 2500 sq ft+ Tenants; or
(b) to terminate this Agreement in accordance with the Section hereof
entitled "Non-Default Termination".
Seller shall deliver to Buyer copies of Tenant Estoppels promptly upon receipt
thereof from Tenants. Buyer shall have five days after receipt of a Tenant
Estoppel to notify Seller of any Material Variation set forth therein; if Buyer
has not given notice within such five day period, Buyer shall be conclusively
deemed to have approved the Tenant Estoppel. Seller and Buyer shall confer on
all Material Monetary Variations and Material Non-Monetary Variations. Seller
shall pay on or before Closing any claims not in dispute, in Seller's sole
judgment. Unless there is an "Aggregate Material Monetary Variation" or
"Material Non-Monetary Variation"
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in the Tenant Estoppels, the rights and obligations Buyer and Seller under this
Agreement shall not be affected by variations in Tenant Estoppels.
An "Aggregate Material Monetary Variation" means Material Monetary Variations
in Tenant Estoppels that aggregate more than $50,000, where a "Material
Monetary Variation" means any monetary claim in a Tenant Estoppel which varies
materially from information disclosed in the Rent Roll or otherwise provided in
writing to Buyer by Seller, whether in the nature of an offset or defense
to payment of rent or any Fixed and Other Tenant Charges or a claim for
payment, reimbursement or other compensation. A "Material Non-Monetary
Variation" means any claim, defense or notice in a Tenant Estoppel of a
non-monetary nature that would interfere with or inhibit the continued
operation of the store.
6.6 Representations and Warranties of Seller. Subject to the limitations
set forth in the Sections hereof entitled "No Other Representations and
Warranties by Seller" and "Seller Indemnity", Beneficiary hereby represents and
warrants to Buyer and Trustee hereby represents to Buyer the following:
6.6.1 Rent Roll. Schedule 6.6.1 is a rent roll of the Property (the
"Rent Roll") as of the date marked thereon, true and complete as of its date to
Seller's Knowledge, showing the identification of each rentable space in the
Property, whether leased or not, and for each such space, the name of the
Tenant, the unapplied amount of any security deposit held, and all
delinquencies in Rent. Rent which is due, but not received, for the month in
which the Closing Date occurs shall not be considered delinquent for the
purposes of this Section 6.6.1. Seller shall deliver a updated Rent Roll to
Buyer, also true and complete as of its date to Seller's Knowledge, within
fifteen (15) days prior to the Closing Date. Except as set forth to the
contrary on Schedule 6.6.1, no Tenant has paid any rent in advance except for
the current month.
6.6.2 Tenant Leases. Schedule 6.6.2 contains a list of what are,
to the Seller's Knowledge, all existing Tenant Leases and modifications thereof
and supplements thereto regardless of whether the terms thereof have commenced,
setting forth with respect to each what is, to the Seller's Knowledge, the date
thereof and of each modification thereof and supplement thereto and the names
of the Tenants thereto (including the name of the current assignee, if any, but
only if and to the extent Seller has actual notice of any such assignment). To
the Seller's Knowledge, all Tenant Leases, together with each written
modification thereof and supplement thereto, have heretofore been made
available to Buyer for inspection.
To the Seller's Knowledge, except as set forth on Schedule 6.6.2 and in the
lease documents delivered and/or made available to Buyer:
(a) Each such Tenant Lease constitutes the entire agreement between Seller
and each Tenant thereto. There are no leases executed by Seller or other
rights of occupancy or use granted by Seller of any portion of the Property
other than the Tenant Leases. No Rents or other payments or deposits are
held by Seller or Seller's agent, except the security deposits described on
the Rent Roll and Rents prepaid for the current month. As of the Closing
Date, no Rents due under, or any other interest in, any of the Tenant
Leases will be assigned to any party other than Buyer, or otherwise pledged
or encumbered in any way.
(b) No Tenant has made any written claim which has been received by Seller
or, to Seller's Knowledge, has any other claim, whether or not in writing
(i) that Seller has defaulted in performing any of its obligations under
any of the Tenant Leases which has not heretofore been cured, (ii) that any
condition exists which with the passage of time or giving of notice, or
both, would constitute any such default, (iii) that such Tenant is entitled
to any reduction in, refund of, or counterclaim or offset against, or is
otherwise disputing, any Rents or other charges paid, payable or to become
payable by such Tenant, or (iv) that such Tenant is entitled to cancel its
Tenant Lease or to be relieved of its operating covenants thereunder.
(c) With the exception of delinquencies in the payment of Rents which are
set forth on the Rent
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Roll, no material default exists under any of the Tenant Leases on the part
of the Tenant thereto. Seller is not in default under the Tenant Leases.
(d) There are no rent abatements or other tenant concessions or
inducements, including, without limitation, lease assumptions or buy-outs,
applicable to any of the Tenant Leases or any rights to extend or renew any
of such Tenant Leases. There are no options or rights to renew, extend or
terminate the Tenant Leases. Seller has not granted any rights, options or
rights of first refusal of any kind to any Tenant, which are currently in
effect, to purchase or to otherwise acquire the Property or any part
thereof or interest therein. All of the improvements to be constructed by
the landlord under each of the Tenant Leases, or as required under any
collateral agreement, plans or specifications related to the Tenant Leases,
have been fully completed and paid for.
6.6.3 6Reciprocal Easement Agreements. Copies of what to the Seller's
Knowledge are all of the REAs have heretofore been furnished or made available
to Buyer, together with what to Seller's Knowledge are all written
modifications thereof and supplements thereto.
To the Seller's Knowledge, except as set forth on Schedule 6.6.3 and in the
REA's:
(a) Each such REA constitutes the entire agreement between Seller and each
REA Party thereto, and Seller has made no oral promises or agreements
amending or modifying the same. No payments or deposits are held by Seller
or Seller's agent, except as have been prepaid for the current month. As
of the Closing Date, no payments due under, or any other interest in, any
of the REAs will be assigned to any party other than Buyer, or otherwise
pledged or encumbered in any way.
(b) Neither of the REA Parties has made any written claim which has been
received by Seller or, to Seller's Knowledge, has any other claim, whether
or not in writing (i) that Seller has defaulted in performing any of its
obligations under any of the REAs which has not heretofore been cured,
(ii)Ethat any condition exists which with the passage of time or giving of
notice, or both, would constitute any such default, (iii) that such REA
Party is entitled to any reduction in, refund of, or counterclaim or offset
against, or is otherwise disputing, any Rents or other charges paid,
payable or to become payable by such REA Party, (iv) that such REA Party is
entitled to cancel its REA or to be relieved of its operating covenants
thereunder, or (v) that there is a violation of any of the covenants,
conditions or restrictions contained in such REA.
(c) With the exception of delinquencies in the payment of Rents which are
set forth on Schedule 6.6.3, no material default exists under any of the
REAs on the part of the REA Parties thereto. Seller is not in default
under the REAs.
(d) There are no rent abatements or other concessions or inducements,
including, without limitation, lease assumptions or buy-outs, applicable to
any of the REAs or any rights to extend or renew any of such REAs except as
set forth in Schedule 6.6.3. There are no options or rights to renew,
extend or terminate the REAs, except as set forth in Schedule 6.6.3.
Seller has not granted any rights, options or rights of first refusal of
any kind to either of the REA Parties, which are currently in effect, to
purchase or to otherwise acquire the Property or any part thereof or
interest therein. All of the improvements to be constructed by the
developer or owner under each of the REAs, or as required under any
collateral agreement, plans or specifications related to the REAs, have
been fully completed and paid for.
6.6.4 Contracts. To the Seller's Knowledge: (a) Schedule 6.6.4 contains a
list of all Contracts, including all modifications thereof, (b) Seller is not
in default under the terms of any Contract, and there is no material default by
any other party to a Contract which has not heretofore been cured. A copy of
what is to Seller's Knowledge all Contracts, together with what is to Seller's
Knowledge all amendments or supplements thereto, has been delivered or made
available to Buyer. To the Seller's Knowledge, such documents constitute the
entire agreement between Seller and each party to the Contracts and Seller.
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6.6.5 Environmental. Except as set forth in Schedule 6.6.5 and in the
Seller environmental reports listed in Exhibit D to this Agreement, to the
Seller's Knowledge there is no current, uncured (i.e., not cured in compliance
with Environmental Law) material violation of Environmental Law by Seller or by
any agent or contractor of Seller, it being expressly understood that Seller is
making no representation or warranty regarding the violation of any law by any
Tenant or by any other person or entity. Seller has received no notice from
any governmental unit or other person that it or the Property is not in
compliance with any Environmental Law or that it has any liability with respect
thereto and there are no administrative, regulatory or judicial proceedings
pending with respect to the Property pursuant to, or alleging any violation of,
or liability under any Environmental Law. Except as set forth in the
environmental reports regarding the Property as listed on Exhibit "D" hereto or
as otherwise listed on Exhibit "D" hereto, neither Seller nor, to the Seller's
Knowledge, any Tenant or REA Party has installed any underground or above
ground storage tanks on, under or about the Property. To the Seller's
Knowledge, there is no untrue or inaccurate statement contained in any of the
environment report(s).
6.6.6 Permits and Licenses. Schedule 6.6.6 contains a list of what are,
to the Seller's Knowledge, all permits and licenses currently maintained with
respect to the Property. Seller has not received any notice of violation from
any federal, state or municipal entity that has not been cured or otherwise
resolved to the satisfaction of such governmental entity. To Seller's
Knowledge, the permits and licenses listed on Schedule 6.6.6 are all of the
licenses and permits which are required for the present use of the Property.
6.6.7 Promotional Association. Except as set forth in the Tenant
Leases and the REAs, to Seller's Knowledge, Seller is under no other
obligation to make contributions or otherwise provide assistance to any
promotional association, tenant association, advertising fund or promotional
fund.
6.6.8 No Litigation. Except as set forth in Schedule 6.6.8, Seller
has not been served or otherwise received written notice of any litigation
which is currently pending, including any arbitration, investigation or other
proceeding by or before any court, arbitrator or governmental or regulatory
official, body or authority which is pending or, to Seller's Knowledge,
threatened, against Seller which would affect the Property, this transaction or
Buyer's ownership, management, leasing or operation of the Property after
Closing.
6.6.9 No Condemnation. Except as set forth in Schedule 6.6.9, Seller has
not been served or otherwise received written notice of any condemnation
proceeding or other proceeding or action in the nature of eminent domain which
is pending with respect to all or any part of the Property, or with respect to
any property owned by an REA Party which is the subject of either of the REAs.
6.6.10 No Third Party Consents Necessary. No approval, consent, waiver,
filing, registration or qualification with any third party, including, but not
limited to, any governmental bodies, agencies or instrumentalities is required
to be made, obtained or given for the execution, delivery and performance of
this Agreement or any of the Seller Closing Documents by Seller.
6.6.11 Real Estate Taxes. Copies of current real estate tax bills
received by Seller with respect to the Property, other than tax bills sent to
Tenants or REA Parties who have the obligation to pay such taxes to the
collecting authority, have been delivered or made available to Buyer. No
application or proceeding instituted by or on behalf of Seller is pending with
respect to a reduction or an increase of such taxes or any assessed valuation
for the Property. There are no tax refund proceedings instituted by or on
behalf of Seller relating to the Property which are currently pending. Seller
has received no notice of any special tax or assessment to be levied against
the Property after the date of the most recent tax bills received by Buyer or
any proposed change in the tax assessment of the Property affecting the
Property subsequent to the most recent tax bills received by Buyer.
6.6.12 No Violation of Laws. Except as otherwise disclosed herein
(including the Schedules and Exhibits attached hereto), Seller has not received
any written notice from any governmental authority having jurisdiction over the
Property of any material violation of any law, ordinance, order or regulation
which
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would affect the Property, this transaction or Buyer's ownership, management,
leasing or operation of the Property after Closing.
6.6.13 Authority. Except as set forth in Section 16.10 hereof, Seller has
the full legal power, authority and right to execute and deliver, and to
perform their obligations under this Agreement, and Buyer's performance
hereunder and the transactions contemplated hereby have been duly authorized by
all requisite action on the part of Seller and no remaining action is required
to make this Agreement binding on Seller.
6.6.14 Tenant Bankruptcy. Except as set forth in Schedule 6.6.14,
to Seller's Knowledge, none of the Tenants now occupying any of the Property or
having a Tenant Lease and no REA Party is the subject of any bankruptcy,
reorganization, insolvency or similar proceedings or has ceased or reduced or
intends to cease or reduce operations at the Property (other than temporarily
due to casualty, remodeling, renovation or similar cause).
6.6.15 Employees. Neither the Beneficiary nor the Trust has any
employees working at the Property.
6.6.16 Trademarks. Seller makes no representation or warranties
concerning any patents, trademarks, copyrights or other intellectual property
rights. Seller shall quitclaim its rights in the Intangible Property as they
relate to the operation of the Property in Champaign, Illinois.
6.6.17 Books and Records and Other Information. The Books and Records
and the Rent Roll furnished or made available to Buyer in connection with or
pursuant to this AgreementEare complete to Seller's Knowledge, and constitute
the Books and Records prepared by or on behalf of Seller, in good faith, in
connection with Seller's actual operation of the Property. Except as otherwise
expressly provided for in this Agreement, Seller makes no other representations
or warranties of any kind to Buyer as to the accuracy or completeness of the
content of any documents or other information delivered to Purchaser pursuant
to this Agreement. If and to the extent Seller reasonably requires such Books
and Records or other related information at some future time, whether for an
audit or other similar purpose, Buyer agrees to cooperate with Seller, at the
reasonable cost and expense of Seller, in making the same available to Seller
or its agents.
6.6.18 Seller's Representatives. Seller's Representatives are the
individuals most likely to have knowledge regarding the design, construction,
condition, management, leasing and operation of the Property.
6.6.19 Response of On-Site Manager. At Buyer's request, Seller has
provided or will provide a copy of the Agreement and the representations and
warranties set forth in this Section 6.6 to Larry Davis (the "On-Site Manager")
for his review. Seller has provided or will provide Buyer prior to the
Approval Date with the complete written response by the On-Site Manager (the
"On-Site Manager's Report").
6.6.20 Unredeemed Gift Certificate List. To Seller's Knowledge, the
Unredeemed Gift Certificate List is or will be true and correct as of the date
of its issuance,
6.7 Seller's Knowledge Defined. Whenever the terms "Seller's Knowledge,"
"Seller's best knowledge" or terms of similar import are used in this
Agreement, they shall meanEthe actual knowledge of Seller's Representatives,
without making any investigation except only as expressly set forth in Section
6.6.19; provided, however, Seller makes no representations or warranties
regarding the accuracy, and otherwise shall have no liability or other
responsibility for the response by the On-Site Manager.
6.8 Sale "As Is"; No Other Representations and Warranties by Seller.
Except as expressly set forth in the Section hereof entitled "Representations
and Warranties of Seller", and the representations expressly set forth in any
documents executed by Seller and to be delivered to Buyer at the Closing,
Seller makes no other, and specifically negates and disclaims any other
representations, warranties, promises,
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covenants, agreements or guarantees of any kind or character whatsoever,
whether express or implied, oral or written, past, present or future, of, as
to, concerning, with respect to or regarding title to the Property, the
physical condition of the Property and any Personal Property, the compliance of
the Property with applicable government regulations, including, without
limitation, the Americans with Disabilities Act, or the past or future
operating results of the Property.
6.9 Survival of Representations and Warranties of Seller. All
representations and warranties of Seller set forth in this Agreement or in any
document to be executed by Seller and delivered to Buyer at the Closing,
including the indemnities to the extent that they relate thereto, shall survive
Closing for a period of eighteen (18) months after the Closing Date only,
except as to specific existing matters as to which written notice has been
given in accordance with Section 6.10 of this Agreement. Buyer's sole and
exclusive remedy with regard to the representations and warranties of Seller
shall be to pursue the Seller Indemnity as expressly set forth and limited in
Section 6.10. All representations and warranties of Seller set forth in this
Agreement shall be remade by the Seller as of the Closing Date per the Seller's
Certificate of Reaffirmation of Representations and Warranties, all in the form
attached hereto as Exhibit "K".
6.10 Seller Indemnity. Seller hereby gives Buyer the following
indemnities, effective as of the Date of Closing, which, subject to the
limitations set forth herein, shall be the sole and exclusive obligations of
Seller from and after Closing with respect to the Property:
(a) Seller shall indemnify, defend and hold Buyer and the other Buyer
Indemnitees harmless from and against any Losses imposed upon, incurred or
suffered by Buyer or any of the Buyer Indemnitees that results from,
relates to or arises out of: (i) the breach or inaccuracy of any
representation or warranty made by Seller in Section 6.6 of this Agreement
or in the Seller Closing Documents; (ii) the breach or default by Seller of
any of the covenants, agreements or obligations of Seller which expressly
survive Closing under the terms of this Agreement; (iii) claims made by
any third party that relate to any goods or services contracted for or
agreed to by Seller or Seller's officers, directors, partners, employees,
agents or representatives, except for the work assumed by Buyer pursuant to
Section 6.12; and (iv) any tort, negligent act or omission, occurrence or
accident occurring at any time prior to the Closing Date relating to the
Property, provided, however, that such agreement by Seller to so indemnify,
defend and hold Buyer harmless:
(1) shall be inapplicable to any claims, suits, actions, damages,
costs, charges and expenses attributable to any breach or inaccuracy
of any representation or warranty made by Seller in Section 6.6 of
this Agreement or in the Seller Closing Documents if and to the extent
Buyer has actual knowledge on or before the Closing (including,
without limitation, any information disclosed on Estoppel
Certificates); and
(2) shall be null and void except to the extent that Seller has
received notice from Buyer within eighteen (18) months of the Closing
Date referring to this Section and specifying the amount, nature and
facts underlying any claim being made by Buyer under this indemnity by
Seller.
(b) As between Seller and Buyer only (with no third party beneficiary
rights conferred whatsoever), Seller shall indemnify, defend and hold Buyer
and the other Buyer Indemnitees harmless from and against any Losses
imposed upon, incurred or suffered by Buyer or any of the Buyer Indemnitees
that results from, relates to or arises out of (i) the "Charge of
Discrimination" filed by Leland Willmore, Administrator and Representative
of the Estate of Ricky D. Willmore, deceased, and on behalf of Ricky D.
Willmore, against "Market Place Shopping Center" with the State of Illinois
Department of Human Rights (Charge Number 1994SF050921B941033), and (ii)
the case filed by Georgia Jones against "Market Place Mall" with the City
of Champaign Human Relations Commission & Community Relations Division of
Violations of the Human Rights Ordinance (Case Number CC-96-544PA). Seller
believes it has no responsibility for either matter and reserves all rights
against all parties other than Buyer and Buyer's Indemnitees, including,
without limitation against the On-Site
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Manager and the parties making the claim and charge.
Except with respect to Seller's indemnification obligations set forth in
Section 6.10(a), Buyer waives all other claims, damages, losses, causes of
action and all other expenses and liabilities relating to the Property
(including claims, damages, losses, causes of action and all other expenses and
liabilities relating to the presence of Hazardous Materials and Environmental
Law), whether relating to any period of time either before or after Closing;
provided, however, Buyer shall retain the right, whether under the common law
or under applicable statutes, laws, rules or regulations, to seek contribution
from Seller for payment or reimbursement of the costs and expenses, including,
without limitation, consultant's fees, the costs of any surveys or inspections,
attorneys' fees and costs and administrative penalties and fines, of any clean
up, remediation, abatement or removal of any Hazardous Materials located on or
affecting the Property as of the Closing Date which Buyer is required to
undertake pursuant to any Environmental Law or by the order of any governmental
authority having jurisdiction over the Property or Buyer, and nothing contained
in this Agreement shall be deemed to be or shall constitute a waiver by Buyer
of, or a limitation upon, any such right of contribution against Seller.
Notwithstanding anything to the contrary contained in this Agreement, other
than expressly provided in Section 6.12 hereof, Buyer is not, and shall not be
deemed to be, assuming any liabilities, obligations or responsibilities of
Seller to any other party with respect to any claims under Environmental Laws
or the existence or release of any Hazardous Materials at, on or under the
Property prior to the Closing Date. The provisions of this Section shall
survive Closing, subject to limitations set forth herein.
6.11 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller that:
(a) Buyer, and the individuals signing this Agreement on behalf of Buyer,
have the full legal power, authority and right to execute and deliver, and
to perform their obligations under this Agreement, and Buyer's performance
hereunder and the transactions contemplated hereby have been duly
authorized by all requisite action on the part of Buyer and no remaining
action is required to make this Agreement binding on Buyer. The
provisions of this Section shall survive Closing.
(b) Having been given the opportunity to inspect the Property, except as
to the representations and warranties of Seller expressly set forth in
this Agreement, Buyer is relying, and will rely, solely on its own
investigations of the title to, and physical condition of, the Property
and the operating history and future potential of the Property as it deems
appropriate and, to the maximum extent permitted by law, except as to the
representations and warranties of Seller expressly set forth in this
Agreement, Buyer acknowledges and agrees that the Buyer is buying the
Property on an "AS IS" and "WHERE IS" condition and basis, with all
faults. Except for the representations and warranties of Seller expressly
set forth in this Agreement, Buyer is not relying on any statement or
information made or given, directly or indirectly, orally or in writing,
express or implied, by the Seller or its agents as to the physical and
economic nature and/or condition of the Property but, rather, is and will
be relying on independent evaluations by its own personnel or consultants
to make a determination as to the physical and economic nature, condition
and prospects of the Property.
6.12 Buyer Indemnity. Buyer hereby gives Seller the following
indemnities, which, subject to the limitations set forth herein, shall be the
sole and exclusive obligations of Buyer from and after Closing with respect to
the Property:
Buyer shall indemnify, defend and hold Seller and the other Seller
Indemnitees harmless from and against any Losses imposed upon, incurred or
suffered by any of the Seller Indemnitees that results from, relates to or
arises out of: (a) the breach or inaccuracy of any representation or
warranty made by Buyer in Section 6.11 of this Agreement or in the Buyer
Closing Documents; (b) the breach or default by Buyer of any of the
covenants, agreements or obligations of Buyer which expressly survive
Closing under the terms of this Agreement; (c) claims made by any Tenants
under the Tenant Leases, REA Parties under the REAs, or by any party under
those Contracts assigned to Buyer, that relate to any actions or events
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first occurring, or obligations first accruing, on or after the Closing
Date; and (d) claims made by any third party that relate to any goods or
services contracted for or agreed to by Buyer or Buyer's officers,
directors, partners, employees, agents or representatives, and (e) any
tort, negligent act or omission, occurrence or accident occurring at any
time on or after the Closing Date relating to the Property, provided,
however, that such agreement by Buyer to so indemnify, defend and hold
Seller harmless shall be null and void except to the extent that Buyer has
received notice from Seller within eighteen (18) months of the Closing
Date referring to this Section and specifying the amount, nature and facts
underlying any claim being made by Seller under this indemnity by Buyer.
Buyer hereby agrees to assume all liability and responsibility for the
performance of the work described on Schedule 6.12 hereto. Buyer shall
indemnify, defend and hold Seller and the other Seller Indemnitees
harmless from and against any Losses imposed upon, incurred or suffered by
any of the Seller Indemnitees that results from, relates to or arises out
of the non-performance of such work, or any claim made under any letter of
credit posted by Seller with respect to such work.
Buyer hereby agrees to assume all liability and responsibility for the two
remaining underground storage tanks described in the environmental reports
listed in Exhibit D to this Agreement. Buyer shall indemnify, defend and
hold Seller and the other Seller Indemnitees harmless from and against any
Losses imposed upon, incurred or suffered by Seller or any of the Seller
Indemnitees that results from or relates to such underground storage
tanks, including any requirement, claim or demand relating to further
remediation efforts with regard to such underground storage tanks,
provided, however, that the agreement by Buyer to assume responsibility
and liability, and to indemnify and defend Seller and the other Seller
Indemnitiees shall not apply to any third party claims for Losses (other
than any requirement, claim, cost or demand relating to remediation)
caused by such underground storage tanks if and to the extent that the
claim relates to Losses (other any than requirement, claim, cost or demand
relating to remediation) occurring during the period prior to the Closing
Date.
The provisions of this Section shall survive Closing, subject to limitations
set forth herein.
6.13 Management of the Property. From the Date of Agreement until the
Closing Date, Seller shall manage and maintain the Property, ordinary wear and
tear accepted, in substantially the same manner
that Seller has maintained the Property prior to the Date of Agreement,
including, without limitation, (a) complying with all Tenant Leases, the REAs,
the Contracts and any other agreements binding upon Seller or the Property, (b)
maintaining all licenses and permits in full force and effect, (c) repair,
replace and maintain the Property consistent with Seller's past practice, (d)
promptly notify Buyer in writing of any extraordinary repair or improvement
required to maintain the Property in such condition, (e) not make any material
alterations or additions to the Property without the prior written consent of
Buyer, and (f) not remove any Tangible Personal Property from the Property
without Buyer's prior written consent, unless such Tangible Personal Property
is replaced with new Tangible Personal Property of similar or better quality
and utility. Seller shall prepare or cause to be prepared all calculations and
Tenant billings for annual adjustment items for 1996. If Seller fails to so
maintain the Property, Buyer's sole and exclusive remedies under such
circumstances shall be either:
(a) to accept the Property "AS IS", in which event the obligations of the
parties hereunder shall not be affected by reason of such matters and the
sale contemplated hereunder shall be consummated without reduction of the
Purchase Price; or,
(b) to terminate this Agreement in accordance with the provisions of the
Section hereof entitled "Non-Default Termination" by giving notice to
Seller no later than five (5) business days prior to Closing (Buyer
acknowledging that management of the Property for five (5) business days
will not be material to Buyer's decision to close, absent a Casualty on the
Property).
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If Seller shall not timely receive Buyer's election to terminate this
Agreement, Buyer shall be deemed conclusively to have elected to proceed to
close in accordance with Subsection (a) above.
6.14 Leasing. From and after the Date of Agreement until the Closing
Date, Seller shall have the right to lease the Property in accordance with the
provisions of this Section. Prior to execution of any lease, Seller shall send
a copy of the proposed lease (which shall include the name of the proposed
tenant and the proposed economic terms) to Buyer for Buyer's approval, together
with a statement of the amount of the brokerage commission and the estimated
amount of the tenant improvements and tenant allowances and concessions, if
any, which will be due with respect to such lease, which approval Buyer shall
not unreasonably withhold or delay. If Seller shall not receive notice of
objection from Buyer on or before 5 p.m. five (5) business days following
Buyer's receipt of a proposed lease accompanied by the required statement from
Seller, Buyer shall be conclusively deemed to have approved the proposed lease
and the amount of the brokerage commission set forth in Seller's notice (all
leases approved or deemed approved by Buyer after the Date of Agreement in
accordance with the provisions of this Section are referred to herein as
"Approved New Leases", and all commissions approved or deemed approved by Buyer
after the Date of Agreement in accordance with the provisions of this Section
are referred to herein as "Approved Commissions"). Because the benefits of
Approved New Leases shall primarily accrue to the benefit of Buyer, Buyer
hereby agrees to reimburse Seller at Closing for all amounts specifically
described in the statement delivered by Seller to Buyer and thereafter expended
by Seller under the terms of the Approved New Leases for the construction of
tenant improvements, together with any Approved Commissions paid by Seller
pursuant to the terms of the Approved New Leases entered into on or after the
Date of Agreement through the Closing Date. In addition, Buyer hereby assumes
all unpaid obligations of the landlord that are required by the express written
terms of the Approved New Leases (and all unpaid Approved Commissions due with
respect to such Approved New Leases), including, without limitation, all unpaid
obligations required by the express written terms of the Approved New Leases
for tenant improvements and other tenant concessions, Buyer agreeing to assume
all tenant improvement construction contracts approved by Buyer in writing, for
work required by the express written terms of the Approved New Leases which is
in progress as of the Closing Date. This provision shall survive the Closing.
6.15 Contracts. With respect to those contracts or service agreements
which Buyer has elected not to have assigned to it, as indicated in the
Approval Notice, Seller shall terminate such contract or service agreement
effective as of the Closing Date, if permissible under such contract or service
agreement and shall pay any and all costs and expenses in connection with such
termination. If and to the extent that any such contract or service agreement
is not terminable until a date after the Closing, notwithstanding Seller's
delivery of the appropriate termination notice, then Seller shall assign, and
Buyer shall assume, such contract or service agreement at the Closing, and
Buyer shall be responsible therefor from the Closing Date until the effective
date of the termination, provided, however, that Seller shall pay to Buyer at
the Closing the amount of any termination fee. Seller shall deliver the
applicable notices of termination as soon as practicable following the Approval
Date, but shall have no obligation to deliver such notices on or prior to the
Approval Date. Except with Buyer's prior written consent, Seller shall not
enter into any contract or agreement that will be an obligation affecting Buyer
or the Property subsequent to the Closing Date.
6.16 Bulk Sales. On or prior to the Closing Date, Seller or its
representative hereby agrees to complete the Illinois Department of Revenue
Form NUC-542-A "Notice of Sale or Purchase of Business Assets," a copy of
which is shown on Schedule 6.16 hereto, and submit the same to the proper
governmental authority. Further, in the event said governmental authority does
not issue a "Stop Notice" or similar notice prior to the Closing Date, Seller
agrees to issue a statement to Buyer that no withholding is due, and further,
agrees to indemnify Buyer for any such withholding that may be due or become
due as a result of the transaction contemplated by this Agreement.
6.17 Seller's Deliveries. If and to the extent available at the Property,
Seller shall provide and/or make available to Buyer copies of the following
items after the Date of Agreement and will deliver to Buyer on the Closing
Date:
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architect's drawings; blue prints; as-built plans; structural, mechanical
geotechnical or other engineering studies; ADA surveys; market surveys
performed on or after January 1, 1990; lease summaries; statements,
accounts and records (including payroll records) related to common area
maintenance, taxes, or insurance charges or other costs billed or to be
billed to Tenants; maintenance records and service logs on and for
equipment; and instruction manuals for equipment;
provided, however, if and to the extent Seller reasonably requires such items
of information at some future time, whether for an audit or other similar
purpose, Buyer agrees to cooperate with Seller, at the reasonable cost and
expense of Seller, in making the same available to Seller or its agents.
Except as set forth in the representations and warranties sections hereof,
Seller shall have no responsibility or liability with respect to any
inaccuracies in any of the above listed information provided to Buyer, and
except as otherwise expressly provided for in this Agreement, Seller makes no
representations or warranties whatsoever regarding (i) the completeness of any
such information or (ii) the truth or accuracy of any such information.
Further, Seller is not assigning any report(s) or study(ies) to Buyer, nor
granting Buyer any rights with respect to any firm(s) producing any such
report(s) or study(ies).
7. Closing.
7.1 Buyer's Conditions Precedent to Closing. The obligations of Buyer
with regard to Closing under this Agreement are, at its option, subject to the
fulfillment of each and all of the following conditions prior to or at the
Closing:
(a) Seller shall have performed and complied with all the agreements,
covenants and conditions required in this Agreement to be performed and
complied with by Seller prior to Closing;
(b) Title Insurer has issued the Title Policy, signed Buyer's mark-up of a
copy of a proposed or pro-forma Title Policy or otherwise similarly agreed
in writing that it will in fact issue the Title Policy required hereunder;
(c) The representations and warranties of Seller contained herein shall be
true and correct in all material respects as of the Closing Date;
(d) The Tenant Estoppels have been obtained in accordance with Section 6.5
of this Agreement;
(e) No termination of the Agreement by Buyer or Seller shall have occurred
pursuant to any other provision of this Agreement; and
(f) As of the Closing Date there is no litigation, including any
arbitration, investigation or other proceeding, pending by or before any
court, arbitrator or governmental or regulatory official, body or
authority nor any decree, order or injunction issued by any such court,
arbitrator or governmental or regulatory official, body or authority and
remaining in effect which does or is likely to prevent or hinder the
timely consummation of the Closing or materially adversely affect the
Property or the operation of the Property by Buyer.
7.2 Seller's Conditions Precedent to Closing. The obligations of Seller
with regard to Closing under this Agreement are, at Seller's option, subject to
the fulfillment of each and all of the following conditions prior to or at the
Closing:
(a) Buyer shall have performed and complied with all the agreements,
covenants and conditions required in this Agreement to be performed and
complied with by Buyer prior to Closing;
(b) The representations and warranties of Buyer contained herein shall
be true and correct in all material respects of the Closing Date;
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(c) No termination of the Agreement by Buyer or Seller shall have occurred
pursuant to any other provision of this Agreement; and
(d) As of the Closing Date there is no litigation, including any
arbitration, investigation or other proceeding, pending by or before any
court, arbitrator or governmental or regulatory official, body or
authority nor any decree, order or injunction issued by any such court,
arbitrator or governmental or regulatory official, body or authority and
remaining in effect which does or is likely to prevent or hinder the
timely consummation of the Closing.
7.3 Deposits in Escrow. On or before the Closing Date, the Seller Closing
Documents and the Buyer Closing Documents shall be deposited with Escrowholder
and the Closing shall take place in accordance with the terms hereof.
7.3.1 Seller's Deposits. Seller shall deposit, or cause Trustee to
deposit with Escrowholder the following documents, each executed by persons or
entities duly authorized to execute same on behalf of Seller or Trustee
(collectively the "Seller Closing Documents"):
(a) Recordable Trustee's Deeds from Trustee, conveying the Land and the
Improvements to Buyer subject only to the Permitted Exceptions, in the
form attached hereto as Exhibit "F" (the "Deeds");
(b) "FIRPTA" Affidavit for Beneficiary, NML and CI in the form attached
hereto and incorporated herein as Exhibit "H-1", "H-2" and "H-3";
(c) Certificates of Authorization for Beneficiary, NML and CI in the forms
attached hereto and incorporated herein as Exhibit "I-1", "I-2" and "I-3";
(d) Bill of Sale in the form attached hereto and incorporated herein as
Exhibit "J" transferring to Buyer all of Seller's interest in the Tangible
Personal Property, and transferring to Buyer all of Seller's rights in the
Intangible Property as they relate to the operation of the Property in
Champaign, Illinois;
(e) Seller's Certificate of Reaffirmation of Representations in the form
attached hereto and incorporated herein as Exhibit "K";
(f) All transferable guarantees and warranties pertaining to the Property
which are in the possession of Seller, together with a quitclaim
assignment thereof to Buyer (the "Transferable Warranties and
Assignment");
(g) Updated Rent Roll in accordance with Section 6.6.1 of this Agreement;
(h) Seller's Closing Instructions; and
(i) An Affidavit of Title in the form attached as Exhibit "G" hereto.
7.3.2 Buyer's Deposits. Buyer shall deliver into escrow the following
(collectively the "Buyer Closing Documents"):
(a) the Purchase Price, less the Earnest Money then held by Escrowholder,
plus costs to be paid by Buyer pursuant to the terms of this Agreement,
and plus or minus prorations and adjustments shown on the closing
statement executed by Buyer and Seller;
(b) Buyer's Certificate of Reaffirmation of Representations in the form
attached hereto and incorporated herein as Exhibit "L"; and
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(c) Buyer's Closing Instructions.
7.3.3 Other Deposits. Buyer, Seller or Trustee, at the direction of
Seller, shall deposit with Escrowholder the following documents, each executed
by persons or entities duly authorized to execute same on behalf of each party:
(a) Closing Statement prepared by Buyer and Seller shall be deposited with
Escrowholder after the same has been executed by Buyer and Seller;
(b) Assignment and Assumption of Tenant Leases (and security deposits not
heretofore applied) in the form attached hereto and incorporated herein as
Exhibit "M"; assigning to Buyer all of Seller's right, title and interest
in the Tenant Leases;
(c) Assignment and Assumption of REAs in the form attached hereto and
incorporated herein as Exhibit "N"; assigning to Buyer all of Seller's
right, title and interest in the REAs;
(d) Assignment and Assumption of Contracts in the form attached hereto and
incorporated herein as Exhibit "O", pursuant to which Seller shall assign
to Buyer all of the contracts which Seller has agreed to assign to Buyer,
if any and pursuant to which Buyer shall assume such contracts. Said
assignment shall specifically exclude any management agreement on the
Property; and
(e) Any documentation required to be executed by Buyer and Seller with
respect to any state, county, or local transfer taxes applicable to the
conveyance of the Property pursuant to this Agreement.
7.3.4 1099S. Title Insurer shall be responsible for preparing and
delivering a proper Form 1099S;
7.4 Costs. Seller shall pay the cost of issuance of the Title Policy and
the cost of all endorsements arranged by Seller to cure Objectionable Items.
Seller shall pay to the Broker the broker's commission, and if applicable,
Broker shall pay to any co-broker the commission or fee agreed to between
Broker and co-broker. Buyer and Seller shall each pay one-half of the
Escrowholder's charge for the escrow, if any. Seller shall pay the cost of
realty transfer or stamp taxes, and all recording fees for the Deeds and any
items to be recorded in order to release any Objectionable Item. Seller shall
pay any and all costs or expenses in connection with the termination of any
Contracts to be terminated in accordance with the terms of this Agreement.
Seller shall pay the cost of the Survey, but Buyer shall pay for changes or
modifications it requires to the Survey. Buyer shall pay the cost of recording
any mortgage or other loan documents. Buyer and Seller shall each pay its own
legal fees incurred in connection with the drafting and negotiating of this
Agreement and the Closing of the transaction contemplated herein.
7.5 Prorations. Subject to the other provisions of this Section, the items
pertaining to the Property that are identified in this Section shall be
prorated between the parties on a per diem basis (employing the actual number
of calendar days in the period involved and a 365-day year) so that credits and
charges with respect to such items for all days preceding the Closing Date
shall be allocated to Seller, and credits and charges with respect to such
items for all days including and after the Closing Date shall be allocated to
Buyer. All expenses of the Property incurred prior to the Closing Date shall
be paid by Seller, regardless of when the bill, statement or invoice for such
expense is received, and all expenses of the Property incurred on or after the
Closing Date shall be paid by Buyer. This Section 7.5 shall survive the
Closing.
7.5.1 Items to be Prorated. The following items shall be prorated between
Buyer and Seller as of the Closing Date:
(a) Rents for the month (or other rental period under each Tenant Lease or
REA) in which the Closing Date occurs shall be prorated as of the Closing
Date.
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(b) General real estate taxes and assessments and other similar charges
which are a lien on the Property, but not yet due and payable as of the
Closing Date, shall be prorated as herein provided. For the general real
estate taxes, Buyer shall receive a credit equal to:
(i) the amount of general real estate taxes that were billed and for
which payment was due in 1996 for Market Place Shopping Center
multiplied by the percentage of unoccupied leasable area in Market
Place Shopping Center as of February 1, 1997, plus
(ii) the amount of general real estate taxes that were billed and for
which payment was due in 1996 for Market Place Convenience Center
multiplied by the percentage of unoccupied leasable area in Market
Place Convenience Center as of February 1, 1997, plus
(iii) the amount of general real estate taxes that were billed and for
which payment was due in 1996 for the vacant development parcels, plus
(iv) an amount calculated (A) by adding together the amount of general
real estate taxes that were billed and for which payment was due in
1996 for Market Place Shopping Center, plus the amount of general real
estate taxes that were billed and for which payment was due in 1996
for Market Place Convenience Center, plus the amount of general real
estate taxes that were billed and for which payment was due in 1996
for the vacant development parcels, and (B) multiplying the sum so
obtained by a fraction, the numerator of which is the number of
calendar days in 1997 elapsing prior to the Closing Date, and the
denominator of which is 365.
It is the intent of the parties that the aggregate amount of general
real estate taxes for the Property that were billed and for which
payment was due in 1996 equals the amount determined as set forth in
7.5(b)(iv)(A).
(c) Utility charges except those required to be paid directly to the
entity imposing the same by Tenants (who are current in all of their
Tenant Lease payment obligations on the Closing Date), including, without
limitation, fuel oil, liquid propane gas, electricity, telephone and water
and sewer, if any, shall be prorated at the cost most recently charged to
Seller with respect to the Property, based on the supplier's measurements
thereof, plus sales taxes thereon. Seller and Buyer shall use their
commercially reasonable efforts to cause all utility meters to be read as
of the Closing Date and Seller shall be responsible to pay all such
utility bills and expenses for periods prior to the Closing Date. Buyer
and Seller shall cooperate in the transfer of electricity, gas, water and
other utility services from Seller's name to the name of Buyer as of the
Closing Date.
(d) Buyer shall receive a credit for amounts owed by Seller under the
REAs and Buyer shall assume the obligation to pay such amounts after the
Closing to the extent of the credit received. Amounts owed to Seller
under the REAs which are 60 days or less past due shall be credited to
Seller, and amounts which are more than 60 days past due shall be treated
under Section 7.5.3(b).
(e) Seller shall receive a credit for the prorated portion of any
prepaid permit, license and inspection fees, if any, on the basis of the
fiscal year or other period for which levied, if the rights with respect
thereto continue for the benefit of Buyer following the Closing. Buyer
shall receive a credit for the prorated portion of any permit, license and
inspection fees, which were to have been paid prior to the Closing Date on
the basis of the fiscal year or other period for which levied, if the
rights with respect thereto continue for the benefit of Buyer following
the Closing.
(f) Seller shall receive a credit for any deposits on account with any
municipality having jurisdiction over the Property, including deposits
which are in the nature of security for the performance of work; Seller
shall assign its rights with such deposits to Buyer at Closing.
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(g) Seller shall receive a credit for the prorated portion of any prepaid
amounts paid by Seller under the Contracts to be assumed by Buyer for
goods and services relating to the period on or after Closing. Buyer
shall receive a credit for the prorated portion of any amounts payable
under the Contracts to be assumed by Buyer for goods and services relating
to the period prior to Closing,
(h) Buyer shall receive a credit for any amounts owed by Seller to
merchants, Tenants, REA Parties and other associations for promotional
funds and other similar contributions or payments. Buyer shall receive
a credit at Closing for any unexpended funds held by Seller for any such
merchants and other associations. Seller shall receive a credit for
amounts, if any, owed to Seller by any merchants and other associations,
with any amounts that are past due for more than 60 days to be treated in
accordance with the provisions of Section 7.5.3(b).
(j) On the Closing Date, Seller hereby agrees to deliver to Buyer the
following:
(i) assignment of any and all rights of Seller in and to the gift
certificate account (the "Gift Certificate Account") known as Account
No. 3100096 at Bank Champaign, N.A. (the "Banking Institution")
together with a cash deposit by Seller in an amount equal to the
difference, if any, between the amount of the Unredeemed Gift
Certificates (as defined below) and the amount in the Gift Certificate
Account;
(ii) new signature cards for the Gift Certificate Account or such
other documentation as may be reasonably required by the Banking
Institution in order to accomplish the transfer of the Gift
Certificate Account; and
(iii) list (the "Unredeemed Gift Certificate List) of gift
certificates (the "Unredeemed Gift Certificates") issued by Seller
before the Closing Date (but not more than 3 days before the Closing
Date) which remain unredeemed as of the Closing Date, with such
Unredeemed Gift Certificate List to be itemized by gift certificate
number and dollar amount.
On and after the Closing Date, Buyer agrees to redeem the Unredeemed Gift
Certificates accepted by the Tenants and, further agrees to cooperate in
processing the Unredeemed Gift Certificates through the Gift Certificate
Account for reimbursement to the Tenants.
(k) All other items customarily apportioned in connection with the sale of
similar properties similarly located, shall be Prorated in accordance with
the intent of the parties as described in this Section 7.5.1.
7.5.2 Installment Payments of Assessments. In furtherance of Section
7.5.1, if any real property assessment affects the Property at the Closing and
such real property assessment is payable in installments (whether at the
election of Seller or otherwise), the installment relating to, or payable over,
the Applicable Closing Fiscal Period shall be apportioned between Seller and
Buyer as of the Closing Date, and the remaining installments shall be the
obligation of Buyer, except that installments which are due, payable and
outstanding on the Closing Date shall be paid by Seller on the Closing Date.
7.5.3 Proration of Receivables.
(a) Attached hereto as Schedule 7.5.3 is a list, prepared to Seller's
Knowledge, of all outstanding receivables for the Property (the
"Receivables List"), including Rent, Sales Based Tenant Charges, and
Adjustable Tenant Charges for 1997, but excluding Adjustable Tenant
Charges for 1996, which shall be treated in accordance with Section 7.5.4
hereof, itemized by the party from whom the receivable is due, the total
amount due from such party, the category and amount due making up the
aggregate due, the period for which the amount is due, and any credits due
to the party which may offset the total amount owed. The Receivables List
shall specify those parties that continue to be Tenants in the Property
with stores currently open (amounts due from such parties are hereinafter
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referred to as "Routine Receivables", except that amounts due from
Tenants with stores currently open but against whom Seller or Seller's
agent has commenced litigation or which are in bankruptcy proceedings are
hereinafter referred to as "Litigation Receivables"). The Receivables List
shall also specify those parties that were Tenants in the Property which
have now closed, and against whom Seller or Seller's agent has commenced
litigation or which are in bankruptcy proceedings (amounts due from such
parties are hereinafter referred to as "Closed Receivables"). Not less
than five (5) days prior to the Closing Date, Seller shall deliver to Buyer
an update to Seller's Knowledge of the Receivables List current to a date
that is not more than 7 days prior to the Closing Date (the "Updated
Receivables List" ). Except for Closed Receivables, which receivables shall
be treated in accordance with the provisions of Section 7.5.3(e), Seller
shall assign to Buyer at the Closing all receivables noted on the Updated
Receivables List. The receivables assigned to Buyer at Closing, are
hereinafter referred to individually as an "Assigned Receivable" and
collectively as the "Assigned Receivables,"
(b) Seller shall receive a credit at Closing with respect to
all receivables assigned to Buyer, which credit shall be determined as
follows:
(i) If the most delinquent Fixed Minimum Rent for any Tenant is
60 days or less past due, the credit for all Assigned Receivables for
that Tenant shall be equal to 100% of such Assigned Receivable, plus;
(ii) If the most delinquent Fixed Minimum Rent for any Tenant
is more than 60 days past due, but 90 days or less past due, the
credit for all Assigned Receivables for that Tenant shall be equal to
50% of such Assigned Receivable, plus;
(iii) If the most delinquent Fixed Minimum Rent for any Tenant
is more than 90 days past due, but 120 days or less past due, the
credit for all Assigned Receivables for that Tenant shall be equal to
25% of such Assigned Receivable, and;
(iv) If the most delinquent Fixed Minimum Rent for any Tenant
is more than 120 days past due, the credit for all Assigned
Receivables for that Tenant shall be zero;
provided, however, notwithstanding the foregoing, that Seller shall
receive a credit equal to 100% of any Assigned Receivables (no matter how
many days past due) for a Tenant if and to the extent that Buyer receives a
credit for monies owed by Seller to such Tenant for overpayment of 1996
Adjustable Tenant Charges.
(c) With the exception of Litigation Receivables, the proration
for Assigned Receivables described herein shall be final, and any and
all amounts collected by Buyer with respect to Assigned Receivables shall
be Buyer's property regardless of the amount collected or received by
Buyer.
(d) With respect to Litigation Receivables, after the Closing Date
Buyer shall use reasonable efforts to collect Litigation Receivables,
and all amount collected therefor (less reasonable costs of collection)
shall be applied first to current amounts due with any excess paid to
Seller up to amount of the Litigation Receivable assigned to Buyer less the
amount of the credit received by Seller, if any, at Closing. Seller shall
not have any right to make, nor to attempt to make, any collection efforts
with respect to Litigation Receivables.
(e) Seller shall retain and shall have the right to collect for its
own account all Closed Receivables and there shall be no proration or
credit with respect to Closed Receivables.
7.5.4 Proration for Reconciliation of Adjustable Tenant Charges.
(a) Proration for reconciliation of amounts overpaid or underpaid by
Tenants as Adjustable Tenant Charges for 1996 shall be prorated based
upon Adjustable Tenant Charges for
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each Tenant and the corresponding actual 1996 operating expenses. At the
Closing, Seller shall assign to Buyer any net amounts required to be paid
by Tenants as Adjustable Tenant Charges for 1996 which were due and payable
on or before, but remain unpaid on, the Closing Date and Seller shall
receive a credit for such net amounts provided, however, that with respect
to Tenants that are listed on the Updated Receivables List as being,
delinquent in payment of Fixed Minimum Rent for more than 60 days, the
credit for the net amount of any Adjustable Tenant Charges due from such
Tenant shall be discounted by the percentage set forth in Section 7.5.3(b)
corresponding to the most delinquent period for which Fixed Minimum Rent is
unpaid for that Tenant. The proration for Adjustable Tenant Charges
described herein shall be final, and any and all amounts collected by Buyer
with respect to Adjustable Tenant Charges shall be Buyer's property
regardless of the amount collected or received by Buyer.
(b) Buyer shall receive a credit at Closing for the net amount of
Adjustable Tenant Charges payable by Seller as of the Closing Date.
(c) There shall be no proration or credit for reconciliation of
Adjustable Tenant Charges for 1997.
7.5.5 Proration of Sales Based Tenant Charges.
(a) Buyer and Seller shall estimate any unpaid amounts due Seller
from Tenants as Sales Based Tenant Charges for Tenant's most recent
sales years ending prior to the Closing Date. Such estimate shall be based
upon the actual reported sales for such year, if available, or shall be
estimated using actual reported sales from the most recent sales year
reported plus a reasonable estimate of the Tenant's sales for the balance
(or all, as the case may be) of such year based upon the percentage change
in the Tenant's sales over the most recent 12 month period for which actual
sales information is available, and in each case the estimate shall be
approved by Seller and Buyer. At the Closing, Seller shall assign to Buyer
any amounts required to be paid by Tenants as Sales Based Tenant Charges
for each Tenant's most recent sales years ending prior to the Closing Date
which were due and payable on or before, but remain unpaid on, the Closing
Date, and Seller shall receive a credit for such amounts; provided,
however. that with respect to Tenants that are listed on the Updated
Receivables List as being delinquent in payment of Fixed Minimum Rent for
more than 60 days, the credit for the amount of any Sales Based Tenant
Charges due from such Tenant shall be discounted by the percentage set
forth in Section 7.5.3(b) corresponding to the most delinquent period for
which Fixed Minimum Rent is unpaid from that Tenant. The proration for
Sales Based Tenant Charges described herein shall be final, and any and all
amounts collected by Buyer with respect to Sales Based Tenant Charges shall
be Buyer's property regardless of the amount collected or received by
Buyer.
(b) The amounts estimated to be paid by Tenants as Sales Based
Tenant Charges for Tenants sales years in which the Closing Date
occurs, shall be prorated based upon the amount of credit determined in
Section 7.5.5(a) above. At the Closing, Seller shall assign to Buyer any
amounts required to be paid by Tenants as Sales Based Tenant Charges for
Tenants sales years in which the Closing Date occurs, and Seller shall
receive a credit equal to (i) the number of days in the sales year which
have elapsed prior to the Closing Date divided by 365, multiplied by (ii)
the amount of the Sales Based Tenant Charges for Tenant's most recent sales
years ending prior to the Closing Date, discounted by the percentage set
forth in Section 7.5.3(b) corresponding to the most delinquent period for
which Fixed Minimum Rent is unpaid from that Tenant. The proration for
Sales Based Tenant Charges described herein shall be final, and any and all
amounts collected by Buyer with respect to Sales Based Tenant Charges shall
be Buyer's property regardless of the amount collected or received by
Buyer.
7.5.6 Application of Rent Receipts. Notwithstanding anything to
the contrary contained herein, in determining the adjustments and
apportionments pursuant to Sections 7.5.3, 7.5.4 and 7.5.5, the
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following shall apply:
(a) If Buyer shall receive any Fixed and Other Tenant Charges after the
Closing Date from a Party who is delinquent as of the Closing Date in the
payment of Fixed and Other Tenant Charges payable under its Tenant Lease
or either of the REAs, as the case may be, such Fixed and Other Tenant
Charges shall be deemed to have been paid by the Party, first, on account
of amounts owing to Buyer, next, on account of Fixed and Other Tenant
Charge Arrearages due to Seller (after reduction for amounts collected
pursuant to Section 7.5.8(b)), and the balance remaining thereafter shall
be retained by Buyer.
(b) Notwithstanding Section 7.5.6(a): (i) a payment of Rent shall be
applied to the payment of the item or items of Rent designated by the
party making such payment or to which such payment otherwise clearly
relates in the good faith judgment of Buyer, and (ii) any amounts
collected in connection with the bankruptcy proceeding of a Tenant which
are pre-petition rents relating to a period prior to the Closing Date
shall be paid to Seller.
7.5.7 Security and Utility Deposits. As provided in Section 6.6.1 hereof,
the Rent Roll and updated Rent Roll shall set forth the amount of the unapplied
and unreturned portion of any security deposits which have been deposited with
Seller or its agents (or with any predecessor in interest to Seller with
respect to the Property or such predecessor's agents) by any existing Tenants
(the "Security Deposits"). Seller shall also deliver to Buyer at Closing a
list, true and complete to Seller's Knowledge, of the amount of any deposits
on account with any utility company servicing the Property that will continue
for the benefit of Buyer following Closing ("Utility Deposits") (currently $0),
and Buyer shall receive a credit against the Purchase Price payable at Closing
in the amount of the Security Deposits, together with all interest, if any,
accrued therein and required to be paid to Tenants. Buyer shall reimburse
Seller at Closing for the amount of the Utility Deposits,
7.5.8 Collection of Rents.
(a) Buyer shall use reasonable efforts to collect the Fixed and Other
Tenant Charge Arrearages, Adjustable Tenant Charges, Sales Based Tenant
Charges and other Rents which are payable with respect to the Applicable
Closing Fiscal Period and any prior fiscal period, but Buyer shall not be
required to retain a collection agency, commence litigation or file proofs
of claim or commence an adversary proceeding in a bankruptcy case, or
terminate Tenant Leases or the REAs in connection with such collection
efforts. Collection costs shall be charged against amounts collected.
(b) Seller shall have the right to seek collection of any Closed
Receivables. Buyer shall join in any actions or proceedings commenced by
Seller if and only if the provisions of any law, rule or regulation at the
time in effect shall require that such actions or proceedings be brought
by and/or in the name of Buyer, in which event Buyer shall join and
cooperate in such actions or proceedings or permit the same to be brought
by Seller in Buyer's name but Seller shall pay all costs and expenses
relating thereto, including without limitation Buyer's reasonable legal
fees in reviewing pleadings and other materials filed in connection with
such litigation.
(c) Notwithstanding anything to the contrary contained herein, Buyer shall
have the right at any time on or after the Closing, and whether or not its
joinder shall be required as a matter of law, to join in, or to be
substituted for Seller in, any proceedings for the eviction of Tenants
and/or the collection of Rent which may have been instituted by Seller
either prior to or after the Closing, if the Tenant in question is still
in possession of the premises covered by its Tenant Lease and if, in
connection therewith, Buyer intends to seek eviction of such Tenant,
cancellation of the Tenant Lease or repossession of the premises. If
Buyer joins in, or is substituted for Seller as plaintiff in any such
litigation, Buyer shall, thereafter assume sole liability for all costs
and expenses of such litigation, including legal fees and expenses, as may
thereafter be incurred (except as provided below) and shall thereafter
control all aspects of such proceedings, except that Buyer shall not be
entitled to waive, reduce or otherwise compromise any claims for Rent
relating to any period prior to Closing
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other than in accordance with the policies of Buyer from time to time as
to Rent delinquencies generally. Seller in any event may, at its option,
continue to participate in such litigation. In any event, Seller shall
reimburse Buyer for a pro rata portion of its costs and expenses of such
collection in proportion to, but in no event in an amount greater than,
the amount, if any, actually received by Seller after Closing as a result
of such proceedings; provided, however, Seller shall be entitled to a
credit for legal fees and expenses incurred by Seller prior to the
intervention by Buyer in connection with the proceedings previously
instituted by Seller in connection with such collection efforts.
7.5.9 Rental/Cash Flow Enhancement Credit. In light of certain projected
rental/cash flow deficiencies with respect to the Property which Buyer has
identified for calendar year 1997, as a material inducement to Buyer to proceed
with the purchase of the Property, a closing adjustment shall be made between
Buyer and Seller so that Buyer shall receive a credit at the Closing against
the Purchase Price in an amount equal to $135,000.00 as a rental/cash flow
enhancement credit for calendar year 1997.
7.6 Insurance. The fire, hazard and other insurance policies relating to
the Property shall be canceled by Seller as of the Closing Date and shall not,
under any circumstances, be assigned to Buyer. All unearned premiums for fire
and any additional hazard insurance premium or other insurance policy premiums
with respect to the Property shall be retained by Seller.
7.7 Close of Escrow. On the Closing Date, upon satisfaction of the
Sections hereof entitled "Buyer's Conditions Precedent to Closing" and
"Seller's Conditions Precedent to Closing", the Closing shall occur at the
offices of the Title Insurer or such other place as mutually agreed upon by the
parties hereto. Disbursement of the Purchase Price and delivery of the Closing
Documents shall occur in accordance with the terms hereof with Escrowholder
immediately:
(a) Title Policy. Delivering to Buyer the signed Title Policy. See
Section 7.1(b).
(b) Wire Transfer. Wire transferring the Purchase Price (including the
Earnest Money held by Escrowholder, but less the Broker's commission, and
the amount of costs paid by Seller at Closing, and plus or minus the
amount of any prorations pursuant to the terms hereof, all as set forth on
the closing statement signed by Seller) to Seller as indicated in Seller's
closing instructions.
Provided, however, that if, in the opinion of the Escrowholder, such wire
transfer cannot be accomplished so that the Seller will receive the wire
transfer on or before 1:00 p.m. Central Time on the date otherwise set for
Closing, at the sole discretion of Seller, said Closing shall be delayed
one (1) business day with appropriate adjustments to the prorations, but
without releasing Buyer or Seller from their obligations hereunder.
(c) Recordation. Recording the Deeds;
(d) Delivery of Other Escrowed Documents.
(i) Joint Delivery. Delivering to each of Buyer and Seller at least
one executed counterpart of each of the (a) Assignment and Assumption
of Tenant Leases, (b) Assignment and Assumption of Contracts and Other
Obligations, (c) Assignment and Assumption of REA's, (d) copies of
transfer declarations and (e) the closing statement;
(ii) Delivery to Buyer. Delivering to Buyer the (a) Bill of Sale,
(b)EFIRPTA affidavits, (c) Certificates of Authorization, (d) Seller's
Certificate of Reaffirmation of Representations, (e) a counterpart of
Buyer's Closing Instructions executed by the Title Company, (f) the
Affidavit of Title, (g) the Transferable Warranties and Assignment,
and (h) the Updated Rent Roll.
(iii) Delivery to Seller. Delivering to Seller (a) Buyer's
Certificate of Reaffirmation of Representations, (b) a counterpart of
Seller's Closing Instructions executed by the Title
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<PAGE> 38
Company.
(e) Broker's Commission. Delivering to Broker the broker's commission for
services rendered to Seller, as reflected on the closing statement
executed by Seller and Buyer. In the event there is a co-broker, Broker
shall be responsible for delivering to any co-broker the commission agreed
to between Broker and co-broker and neither Buyer nor Seller shall have
any responsibility for payment of any commission or fee to any co-broker.
7.8 Possession. As of the Closing Date, possession of the Property,
subject to the rights and interests of Tenants in possession pursuant to
the Tenant Leases, along with such of the following items as shall be in
the possession of Seller, shall be delivered to Buyer:
(a) Tenant Lease(s). The original of each Tenant Lease and any amendments
thereto, or a copy of each Tenant Lease and any amendments thereto
certified by Seller, if not previously delivered to Buyer.
(b) REAs. The original of each of the REAs and any amendments thereto, or
a copy of each of the REAs and any amendments thereto certified by Seller,
if not previously delivered to Buyer.
(c) Contracts. The originals of all Contracts that have been assigned to
and assumed by Buyer.
(d) Keys. Any keys to any door or lock on the Property in the
possession of Seller.
(e) Licenses and Permits. All original licenses or permits or certified
copies thereof issued by governmental authorities having jurisdiction over
the Property which Seller has in its possession and which are transferable.
(f) Books and Records. All Books and Records if not previously delivered
to Buyer.
7.9 Recorded Instruments. As soon after the Closing as possible,
Escrowholder shall deliver to Buyer the original recorded Deeds and the
recorded Assignment and Assumption of REAs, and shall deliver to Seller a copy
of the recorded Deeds, with recordation information noted thereon.
7.10 Tenant and REA Party Notice(s). On or before the Closing Date,
Seller agrees to sign or cause its management agent to sign, and Buyer agrees
to sign, notices to the tenants of the Property and
notices to the REA Parties, informing them that the Property has been sold by
Seller to Buyer. Immediately following the Closing, Buyer shall deliver such
notices to all of the Tenants and the REA Parties.
8. Casualty.
8.1 Notice of Casualty. If prior to the Closing Date any non-trivial
Casualty shall occur, Seller shall promptly notify Buyer in writing.
8.2 Non-Substantial Casualty. In the event of any Casualty to the
Property prior to the Closing Date which is not a Substantial Casualty, the
Closing shall occur just as if such loss or damage had not occurred, and Seller
shall transfer and assign to Buyer all of Seller's right, title and interest in
and to any insurance proceeds payable in connection with such Casualty and
shall deliver to Buyer at the Closing any and all proceeds paid to Seller by
Seller's insurer with respect to such Casualty. Seller shall have "all risk"
replacement value insurance coverage in place on the Property at all times
prior to the Closing. At Closing, Seller shall give Buyer a credit on the
Purchase Price in the amount of any deductible.
8.3 Substantial Casualty. In the event of any Substantial Casualty to the
Property prior to the Closing Date, at Buyer's sole option, either:
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<PAGE> 39
(a) This Agreement shall terminate in accordance with the Section hereof
entitled "Non Default Termination" if Buyer shall so notify Seller within
five (5) days after Buyer's receipt of Seller's notice of the Casualty; or
(b) If Buyer shall not have timely notified Seller of its election to
terminate this Agreement in accordance with Subsection (a) above or if
Buyer elects to proceed with the Closing, the Closing shall occur just as
if such loss or damage had not occurred, without reduction in the Purchase
Price, and Seller shall transfer and assign to Buyer all of Seller's
right, title and interest in and to any insurance proceeds payable in
connection with such Casualty and shall pay to Buyer any and all proceeds
paid to Seller by Seller's insurer with respect to such Casualty. At
Closing, Seller shall give Buyer a credit on the Purchase Price equal to
the amount of the deductible on all insurance policies. Seller shall
cooperate with Buyer in connection with the collection of any insurance
proceeds.
9. Condemnation.
9.1 Notice of Condemnation. If prior to the Closing Date any Taking shall
occur or be threatened in writing by a governmental agency with authority to do
so, Seller shall promptly notify Seller in writing.
9.2 Non-Substantial Taking. In the event of any Taking of all or a part
of the Property prior to the Closing which is not a Substantial Taking, the
Closing shall be consummated just as if such loss or damage had not occurred,
and Seller shall assign to Buyer all of Seller's interest in any condemnation
actions and proceeds.
9.3 Substantial Taking. In the event of any Substantial Taking of all or
a part of the Property prior to the Closing at Buyer's sole option, either:
(a) This Agreement shall terminate in accordance with the Section hereof
entitled "Non Default Termination" if Buyer shall so notify Seller within
thirty (30) days after Buyer's receipt of Seller's notice of the Taking;
or
(b) If Buyer shall not have timely notified Seller of its election to
terminate this Agreement in accordance with Subsection (a) above or if
Buyer elects to proceed with the Closing, the Closing shall be consummated
just as if such loss or damage had not occurred, without reduction in the
Purchase Price, and Seller shall assign to Buyer all of Seller's interest
in any condemnation actions and proceeds.
10. Notices. All notices which are required or permitted hereunder must
be in writing addressed to the party to whom notice is intended to be given at
the addresses set forth in the Basic Terms, or to such other address as either
party may, from time to time, designate by written notice given to the other
party; provided, however, that no party may require notice to be given to more
than three (3) addresses, and shall be deemed to have been given, delivered or
made, as the case may be, (a) when delivered by personal delivery; (b) three
(3) business days after having been deposited in the United States mail,
certified or registered, return receipt requested, sufficient postage affixed
and prepaid, properly addressed; or (c) one (1) business day after having been
deposited with a nationally recognized overnight courier service (such as, by
way of example but not limitation, UPS, U.S. Express Mail, or Federal
Express), addressed to the party to whom notice is intended to be given at the
address set forth in the Basic Terms, or to such other address as either party
may from time to time designate by written notice given to the other party;
provided, however that no party may require notice be given to more than 3
addresses.
11. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto; provided, however,
that Buyer shall not transfer, sell, or assign all or any portion of Buyer's
rights under this Agreement. Notwithstanding anything to the contrary contained
in this Section,
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<PAGE> 40
Buyer may assign its rights under this Agreement without Seller's consent or
approval to an affiliate or other related entity of Buyer provided that such
entity controls or is under common control with Buyer or that Buyer has at
least a forty-nine percent (49%) ownership interest in said entity. Buyer
shall provide Seller with the name of the entity at least ten (10) days prior
to the Closing Date. No assignment shall relieve Buyer of any liability
hereunder.
12. Brokers.
Buyer and Seller represent to each other that they have dealt with no
broker or other person except the Broker, in connection with the sale of the
Property in any manner which might give rise to any claim for commission,
except only that Seller agrees to be responsible for payment of the fees of
Broker. It is agreed that if any claims for brokerage commissions or fees are
ever made against Seller or Buyer in connection with this transaction, all such
claims shall be handled and paid by the party whose actions or alleged
commitments form the basis of such claim. The party against whom the claim for
such fees is made shall indemnify and hold the other party harmless against and
in respect of any claim for brokerage or finder's fees or other like payment
based in any way upon agreements, arrangements, or understandings made or
claimed to have been made by Buyer or Seller with any third person.
13. Covenant Not To Record.
Buyer will not record this Agreement or any memorandum or other evidence
thereof. Any such recording shall constitute a material default hereunder on
the part of Buyer.
14. Default.
It is agreed by both Seller and Buyer that the remedies for default are
provided for in the following Sections and shall constitute the sole and
exclusive remedies of the aggrieved party in the event of default by the other
party.
14.1 Default by Buyer. In the event of default by Buyer under the terms
of this Agreement which default is not cured within ten (10) days after written
notice thereof from Seller to Buyer, Seller's sole and exclusive remedy, except
as set forth further in this Section, is to retain all Earnest Money (including
all interest thereon) as liquidated damages, in which event, except as
expressly provided for herein, this Agreement shall become null and void and
both parties shall thereupon be released of all further liability hereunder.
Such amount is agreed upon by and between Seller and Buyer as liquidated
damages acknowledging the difficulty and inconvenience of ascertaining and
measuring actual damages, and the uncertainty thereof; provided that nothing
herein contained shall limit the right of Seller to seek damages from Buyer
solely due to any slander of title by Buyer after the termination of this
Agreement other than due to Seller's default.
14.2 Default by Seller. In the event of default by Seller under the terms
of this Agreement which default is not cured within ten (10) days after written
notice thereof from Buyer to Seller, Buyer's sole and exclusive remedy, except
as set forth further in this Section, is to elect either: (a) to terminate this
Agreement and receive reimbursement of the Earnest Money (including all
interest thereon); or (b) to file, within thirty (30) days of the Closing Date,
an action for specific performance of Seller's express obligations hereunder.
Escrowholder shall not be obligated to return the Earnest Money (including all
interest thereon) to Buyer unless Buyer gives Seller and Escrowholder written
notice terminating all of Buyer's interest in the Property and this Agreement;
provided, however, that failure of Buyer to give Seller such notice shall not
be construed to expand Buyer's rights or remedies in any manner.
15. Non-Default Termination.
In the event of any termination of this Agreement (except only a
termination of this Agreement to which the Section hereof entitled "Default" is
applicable), the following provisions shall apply:
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<PAGE> 41
(a) All Obligations Terminate. Except for those obligations which
expressly survive termination of this Agreement, neither Buyer nor Seller
shall have any further obligations hereunder after termination of this
Agreement.
(b) Return of Earnest Money. Upon satisfaction of all of Buyer's monetary
obligations with respect to mechanics liens against the Property under
Section 6.3 of this Agreement, if any, the Earnest Money plus accrued
interest shall be returned to Buyer upon Seller's and Escrowholder's
receipt of written notice from Buyer terminating this Agreement, expressly
acknowledging the termination of all of Buyer's interest in the Property
and this Agreement; provided, however, that failure of Buyer to give
Seller such notice shall not be construed to limit or expand Buyer's
rights or remedies in any manner.
16. Miscellaneous.
16.1 Survival of Representations, Covenants, and Obligations. Except as
otherwise expressly provided herein, no representations, covenants, or
obligations contained herein made by Seller or Buyer shall survive Closing or
termination of this Agreement.
16.2 Attorneys' Fees. In the event of any litigation between the parties
hereto concerning the terms hereof, the losing party shall pay the reasonable
attorneys' fees and costs incurred by the prevailing party in connection with
such litigation, including appeals.
16.3 Publicity. Buyer agrees that it shall treat this transaction strictly
confidentially prior to Closing provided, however, that (i) Buyer may discuss
the transaction with its attorneys, advisors, members, shareholders,
representatives and agents, (ii) Buyer may make any disclosures required under
applicable laws or under any applicable securities regulations, and (iii) Buyer
may disclose any information that is already public or is disclosed by any
other party who is not a representative or agent of Buyer. Without limiting
the foregoing, prior to Closing, Buyer will make no public announcement of the
transactions contemplated herein, and will not directly or indirectly contact
the Property's vendors or contractors until after Closing occurs. Neither party
will publicly advertise or announce the facts of the sale of the Property or
the terms of this Agreement, except by mutual written consent, until after the
Closing Date, except as may be required under applicable laws and regulations.
16.4 Captions. The Section headings or captions appearing in this
Agreement are for convenience only, are not a part of this Agreement, and are
not to be considered in interpreting this Agreement.
16.5 Waiver. No waiver by any party of any breach hereunder shall be
deemed a waiver of any other or subsequent breach.
16.6 Time. Time is of the essence with regard to each provision of this
Agreement. If the final date of any period provided for herein for the
performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of that period shall be
deemed extended to the next day which is not a Sunday, Saturday or banking
holiday. Each and every day described herein shall be deemed to end at 5:00
p.m. Central Standard Time.
16.7 Controlling Law. This Agreement shall be construed in accordance
with the laws of the State of Illinois.
16.8 Severability. In the event that any one or more of the provisions of
this Agreement shall be determined to be void or unenforceable by a court of
competent jurisdiction or by law, such determination will not render this
Agreement invalid or unenforceable, and the remaining provisions hereof shall
remain in full force and effect.
16.9 Construction. Buyer and Seller agree that each party and its counsel
(if applicable) have
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<PAGE> 42
reviewed, and if necessary, revised this Agreement, and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, exhibits or schedules hereto.
16.10 Finance Committee Approval. Within twelve (12) days following the
Date of Agreement, Buyer, NML and CI shall obtain the appropriate authorization
from its finance committee or other authority to perform this Agreement, to
proceed to close the transaction contemplated hereby, and to execute and
deliver all documents to be executed by Seller and Buyer pursuant hereto. Any
parties' failure to obtain appropriate authorization will terminate this
Agreement in accordance with the Section hereof entitled "Non-Default
Termination", provided written notice of such failure to obtain appropriate
authorization is delivered to Buyer or Seller as the case may be, within such
twelve (12) day period.
16.11 Execution. This Agreement may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed an
original, but such counterparts together shall constitute but one agreement.
16.12 Amendments. This Agreement may be amended only by a written
instrument executed by Buyer and Seller.
16.13 No Third Party Benefits. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns, and no third party is intended to or shall have any rights hereunder.
16.116.14 Termination. This Agreement shall be automatically null and
void if not executed by both Buyer or Seller, prior to 5:00 p.m. on March 14,
1997.
16.15 Entire Agreement. This written Agreement constitutes the entire and
complete agreement between the parties relating to the transactions
contemplated hereby and all prior or contemporaneous agreements,
understandings, representations, warranties and statements, oral or written,
are merged herein.
16.16 Exhibits. The following Exhibits are attached hereto and made a
part hereof:
Exhibit A - Legal Description of the Land
Exhibit B - Intentionally Deleted
Exhibit C - Intentionally Deleted
Exhibit D - Seller's Existing Environmental Reports & UST Information
Exhibit E-1 - Tenant Estoppel Certificate
Anchor Estoppel Certificate
Exhibit E-2 - REA Estoppel Certificate
Exhibit E-3 - Seller's Estoppel Certificate
Exhibit F - Trustee's Deed Form
Exhibit G - Affidavit of Title
Exhibit H-1 - Beneficiary's "FIRPTA Affidavit"
Exhibit H-2 - NML's "FIRPTA Affidavit"
Exhibit H-3 - CI's "FIRPTA Affidavit"
Exhibit I-1 - Beneficiary's Certificate of Authorization
Exhibit I-2 - NML's Certificate of Authorization
Exhibit I-3 - CI's Certificate of Authorization
Exhibit J - Bill of Sale
Exhibit K - Seller's Certificate of Reaffirmation of Representations
Exhibit L - Buyer's Certificate of Reaffirmation of Representations
Exhibit M - Assignment and Assumption of Leases
Exhibit N - Assignment and Assumption of REAs
Exhibit O - Assignment and Assumption of Contracts
38
<PAGE> 43
16.17 Schedules. The following Schedules are attached hereto and made a
part hereof:
Schedule 6.6.1. Schedule/Rent Roll
Schedule 6.6.2. Schedule/Tenant Leases
Schedule 6.6.3. Schedule/REA Warranty Exceptions
Schedule 6.6.4. Schedule/Contracts
Schedule 6.6.5. Schedule/Environmental Law Violations
Schedule 6.6.6 Schedule/Permits and Licenses
Schedule 6.6.7. Schedule/Promotional Association Contributions
Schedule 6.6.8. Schedule/Litigation
Schedule 6.6.9. Schedule/Condemnation
Schedule 6.6.14. Schedule/Tenant Bankruptcies
Schedule 6.12 Schedule/Work Performed or to be Performed on Property
and to be Indemnified by Buyer
Schedule 6.16 Schedule/Bulk Sales/Notice of Sale or Purchase of
Business Assets
39
<PAGE> 44
IN WITNESS WHEREOF, this Agreement has been executed as of the Date of
Agreement, as herein defined in the Section entitled "Basic Terms".
SELLER: BUYER:
CHAMPAIGN VENTURE, CHAMPAIGN MARKET
an Illinois general partnership PLACE, L.L.C., a Delaware
limited liability company
By: THE NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY, By:CHAMPAIGN MARKET
a Wisconsin corporation PLACE, INC.
a Delaware corporation,
By: /s/ Donald L. O'Dell a member
-------------------------
Name: Donald L. O'Dell
-----------------------
Title: Vice President By: /s/ Joel Bayer
---------------------- -----------------------
Name: Joel Bayer
-----------------------
Title: Vice President
--------------------
By: CHAMPAIGN INVESTORS, By: GGP LIMITED PARTNERSHIP
an Illinois general partnership a Delaware limited partnership
a member
By: /s/ Howard Landau
-------------------------
Name: Howard Landau By: GENERAL GROWTH
----------------------- PROPERTIES, INC
Title: Authorized Partner a Delaware corporation,
---------------------- its general partner
By: /s/ Joel Bayer
------------------
Name: Joel Bayer
------------------
Title: Vice President
---------------
40
<PAGE> 45
General Growth Properties, Inc. ("Guarantor") hereby guarantees the
performance by CHAMPAIGN MARKET PLACE L.L.C. of its obligations to Seller under
the terms of this Agreement. Guarantor hereby waives absolutely and irrevocably
any right of subrogation to Seller's claims against CHAMPAIGN MARKET PLACE
L.L.C. Seller may deal with CHAMPAIGN MARKET PLACE L.L.C. in any manner
without limiting or lessening the liability of Guarantor. This is a guarantee
of payment and not of collection. Guarantor hereby waives the right to require
Seller to proceed against CHAMPAIGN MARKET PLACE L.L.C. or any other party.
Guarantor agrees to pay reasonable attorneys' fees and all other costs and
expenses which may be incurred in the enforcement of this guarantee. This
guarantee shall terminate and be of no further force or effect as to any claim
as to which written notice is not made, specifying in reasonable detail the
claimed breach, on or before the date that is eighteen (18) months after the
Closing Date (as defined in the Agreement).
General Growth Properties, Inc.
By: /s/ Joel Bayer
-------------------------
Name: Joel Bayer
-----------------------
Title: Vice President
----------------------
41
<PAGE> 1
EXHIBIT 4.1
REDEMPTION RIGHTS AGREEMENT
Redemption Rights Agreement, dated June 19, 1997, among GGP Limited
Partnership, a Delaware limited partnership (the "Partnership"), General Growth
Properties, Inc., a Delaware corporation (the "General Partner"), and CA
Southlake Investors, Ltd., a Georgia limited partnership (collectively,
"Contributing Partner").
R E C I T A L S
WHEREAS, concurrently herewith, Contributing Partner is being admitted as a
limited partner of the Partnership, the general partner of which is the General
Partner;
WHEREAS, shares of common stock, $.10 par value per share, of the General
Partner (the "Common Stock") are listed on the New York Stock Exchange; and
WHEREAS, the parties desire to set forth herein the terms and conditions upon
which the Contributing Partner may cause the Partnership to redeem its limited
partnership units in the Partnership.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Acts" shall mean the Securities Act and the Exchange Act, collectively.
"Affiliates" shall mean "affiliates" as defined pursuant to the Securities
Act.
"Business Day" shall mean any day upon which commercial banks are open for
business in Chicago, Illinois.
"Cash Purchase Price" shall mean, with respect to any redeemed or purchased
Units, an amount of cash equal to the value of the Share Purchase Price
(computed as of the Computation Date and equal to the Current Per Share Market
Price on such Computation Date multiplied by the number of Shares) that would
be payable with respect to such Units assuming the Share Purchase Price were
paid in full satisfaction of the Purchase Price of such Units. In the event
that the Share Purchase Price includes securities other than Shares, then the
value of such other
<PAGE> 2
securities shall be determined by the General Partner acting in good faith on
the basis of the closing prices of securities if listed on a nationally
recognized exchange and otherwise on the basis of such quotations and other
information as the General Partner considers, in its reasonable judgment,
appropriate.
"Certificate of Incorporation" shall mean the Certificate of Incorporation of
the General Partner, as the same may be amended from time to time.
"Closing Price" shall have the meaning set forth in the Partnership
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor code.
"Common Stock" shall have the meaning set forth in the recitals.
"Computation Date" shall mean the date on which the applicable Notice is
received by the Partnership or, if such date is not a Business Day, the first
Business Day thereafter.
"Conversion Factor" shall mean 100%, provided that such factor shall be
adjusted in accordance with Section 6(a).
"Contribution Agreement" shall mean that certain Sale and Contribution
Agreement dated the date hereof, between the Partnership and Contributing
Partner, as the same have been and may hereafter be amended from time to time,
pursuant to which this Agreement is being executed.
"Current Per Share Market Price" shall have the meaning set forth in the
Partnership Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
any successor statute.
"Exchange Act Reporting Company" shall mean any corporation or other entity
which is subject to the reporting requirements of the Exchange Act.
"Expiration Date" shall mean the earlier of (a) April 16, 2023 (b) the date
upon which all Units have been redeemed or purchased in accordance with the
terms hereof.
2
<PAGE> 3
"Liens" shall have the meaning set forth in the Contribution Agreement.
"Major Transaction Event" shall mean, with respect to the General Partner,
(a) a reclassification, capital reorganization or other similar change
regarding or affecting outstanding Shares (other than a change addressed in
Section 6(a)); (b) a merger or consolidation of the General Partner with one or
more other corporations or entities, other than a merger pursuant to which the
General Partner is the surviving corporation and the outstanding Shares are not
affected, (c) a sale, lease or exchange of all or substantially all of the
General Partner's assets or (d) the liquidation, dissolution or winding up of
the General Partner.
"Notice" shall have the meaning set forth in Section 3.2.
"Other REIT" shall mean GGP/Homart, Inc. and any other REIT in which the
General Partner holds a direct or indirect equity interest and of which
Contributing Partner is notified in writing.
"Partnership Agreement" shall mean that certain Amended and Restated
Agreement of Limited Partnership of the Partnership, dated July 27, 1993, as
amended by that certain First Amendment thereto dated May 23, 1995, that
certain Second Amendment thereto dated June 13, 1995, that certain Third
Amendment thereto dated May 21, 1996, that certain Fourth Amendment thereto
dated August 30, 1996, that certain Fifth Amendment thereto dated as of October
4, 1996, that certain Sixth Amendment thereto dated as of November 27, 1996 and
that certain Seventh Amendment thereto dated December 6, 1996 and as the same
may be further amended through the date of this Agreement.
"Person" shall mean any natural person, corporation, partnership, limited
liability company, trust or other entity.
"Pledge Agreement" shall mean that certain Pledge Agreement of even date
herewith, between the Partnership and Contributing Partner.
"Purchase Price" shall mean the Cash Purchase Price or the Share Purchase
Price, or a combination thereof.
3
<PAGE> 4
"Purchase Right" shall have the meaning set forth in Section 7.1.
"Redemption Rights" shall have the meaning set forth in Section 2.
"REIT" shall mean real estate investment trust as such term is defined under
the Code.
"REIT Requirements" shall have the meaning set forth in the Partnership
Agreement, as the same may change from time to time.
"Registration Expenses" shall mean all expenses incident to the General
Partner's performance of or compliance with the registration requirements set
forth in this Agreement, including without limitation (a) the fees,
disbursements and expenses of the General Partner's counsel and accountants,
including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance, in connection with the
registration of Shares issuable upon the exercise of the Redemption Rights; (b)
all expenses in connection with the preparation and printing of the
registration statement or statements, any preliminary prospectus or final
prospectus, any other offering document and amendments and supplements thereto;
(c) the cost of printing or producing any blue sky or legal investment
memoranda or other documents in connection with the offering, sale or delivery
of such Shares; (d) all expenses in connection with the qualification of such
Shares under state securities laws; (e) the fees and expenses incurred in
connection with the listing of such Shares on each securities exchange on which
securities of the same class are then listed and (f) all SEC, stock exchange
and National Association of Securities Dealers, Inc. registration and filing
fees. Notwithstanding the foregoing, Registration Expenses shall not include
(and the General Partner will pay) any costs incurred by the Partnership or the
General Partner in preparing any document that is incorporated by reference in
a registration statement, or any professional fee or other expenses, that would
have been incurred apart from the obligation of the General Partner hereunder
to file a Registration Statement.
"Retailer Interest" shall have the meaning set forth in Section 7.5.
"SEC" shall mean the Securities and Exchange Commission.
4
<PAGE> 5
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor statute.
"Share Purchase Price" shall mean, with respect to the exercise of any
Redemption Rights and subject to the provisions of Section 6(c), a number of
Shares equal to the product of (a) the number of Units being redeemed or
purchased multiplied by (b) the Conversion Factor; provided, however, that, in
the event the General Partner, after the date of this Agreement, issues to all
holders of Shares rights, options, warrants or convertible or exchangeable
securities entitling the stockholders to subscribe for or purchase Shares
(other than rights referred to in Section 6(b)) or any other securities or
property, then the Share Purchase Price also shall include such rights,
options, warrants or convertible or exchangeable securities that a holder of
that number of Shares would have been entitled to receive.
"Shares" shall mean shares of the Common Stock.
"Units" shall mean the limited partnership units in the Partnership issued to
Contributing Partner pursuant to the Contribution Agreement.
"Unitholder" shall mean the Person who at the time in question holds one or
more Units in accordance with the Partnership Agreement, as the same may be
amended from time to time.
2. Grant of Redemption Rights.
(a) Upon the terms and subject to the conditions contained herein, the
Partnership does hereby grant to Contributing Partner, and Contributing Partner
does hereby accept, the right, but without obligation on the part of
Contributing Partner, to require the Partnership to redeem from time to time
part or all of their Units for the Cash Purchase Price ("Redemption Rights").
(b) Notwithstanding the provisions of Section 2(a), the General Partner
may, in its sole and absolute discretion, assume the obligation of the
Partnership with respect to and satisfy Contributing Partner's exercise of a
Redemption Right by paying to Contributing Partner, at the General Partner's
election (which may be exercised in the General Partner's sole discretion),
either the Cash Purchase Price or the Share Purchase Price (or a combination
thereof) with respect to the Units for which
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Contributing Partner exercised its Redemption Rights. If the General Partner
assumes such obligations with respect to the exercise by Contributing Partner
of a Redemption Right as to certain Units and makes the required payment within
the required period of time, then the Partnership shall have no obligation to
pay any amount to Contributing Partner with respect to the exercise of a
Redemption Right for such Units, and any Units purchased shall be owned by the
General Partner for all purposes.
(c) If the General Partner shall assume the obligations of the
Partnership with respect to and satisfy a Redemption Right, the Partnership,
the Contributing Partner and the General Partner each shall treat the
transaction between the General Partner and Contributing Partner as a sale of
Contributing Partner's Units (or a portion thereof) to the General Partner for
federal income tax purposes.
(d) Upon the redemption or purchase of part or all of Contributing
Partner's Units and the payment of the Purchase Price with respect thereto,
such Person shall be deemed withdrawn as a Partner in the Partnership to the
extent of the Units redeemed or purchased and shall have no further rights or
obligations under this Agreement with respect to such redeemed or purchased
Units; provided, however, that Contributing Partner's rights under this
Agreement with regard to any other Units will continue in full force and
effect.
(e) No fractional Shares shall be issued hereunder. In lieu of
fractional Shares, the General Partner shall pay cash based on the Current Per
Share Market Price on the relevant Computation Date.
3. Exercise of Redemption Rights.
3.1 Time for Exercise of Redemption Rights. Contributing Partner may
exercise its Redemption Rights in whole or in part and at any time and from
time to time on or after the first anniversary of the date hereof but prior to
the Expiration Date; provided, however, that the Redemption Rights may not be
exercised at any one time by Contributing Partner with respect to less than
1,000 Units (or all the Units then owned by Contributing Partner if
Contributing Partner owns less than 1,000 Units) or in the event that such
exercise of Redemption Rights (and the assignment of Units or delivery of
either the Cash Purchase Price or the Share Purchase Price with respect
thereto)
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violates the terms of the Partnership Agreement or applicable law. Once given,
a Notice shall be irrevocable subject to the payment of the Purchase Price for
the Units specified therein in accordance with the terms hereof.
3.2 Method of Exercise. The Redemption Rights shall be exercised by
written notice (the "Notice") to the Partnership in the form of Exhibit A
specifying the number of Units to be redeemed and the name or names (with
address) in which any Shares issuable upon such exercise shall be registered if
different than the Contributing Partner.
3.3 Closing. Subject to the provisions of Section 4.1(d), the closing of
the redemption or purchase and sale pursuant to an exercise of the Redemption
Rights shall occur within 30 days following the giving of the Notice.
Contributing Partner shall execute such documents as the General Partner may
reasonably require in connection with the closing of the redemption or purchase
and sale pursuant thereto.
3.4 Payment of Cash or Issuance of Shares. At the closing of the
redemption or purchase and sale of Units pursuant to an exercise of Redemption
Rights, the Partnership shall deliver to Contributing Partner the Cash Purchase
Price by check or, in the event that the General Partner has assumed the
obligations of the Partnership with respect to such exercise of Redemption
Rights, the General Partner shall deliver to the Partnership, at the election
of the General Partner, which may be exercised in the General Partner's sole
discretion, either (a) the Cash Purchase Price by check or (b) certificates
representing the Shares and any other securities constituting the Share
Purchase Price, together with cash in lieu of the issuance of any fraction of a
Share as provided in Section 2(e), or a combination thereof.
4. Matters Relating to Shares.
4.1 Registration.
(a) The General Partner shall (i) prepare, file and use reasonable
efforts to cause to become effective on or before the ninetieth day following
the first anniversary of the date hereof a registration statement, which may be
on Form S-3, under the Securities Act relating to the Shares to be issued upon
exercise of the Redemption Rights assuming full satisfaction of the Redemption
Rights by delivery of Shares and (ii) prepare and file
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with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act.
(b) The General Partner shall pay all Registration Expenses incurred
prior to the sixth anniversary of the date hereof with respect to filing and
keeping effective the registration statement through such date, and the
Unitholders (other than the Unitholders that have given a notice pursuant to
Section 4.1(c)) shall reimburse the General Partner for Registration Expenses
(or a pro rata portion of the Registration Expenses based on the number of
Shares issuable to such Unitholders upon full exercise of the Redemption Rights
of such Unitholders relative to the total number of Shares issuable pursuant to
such registration statement) which are incurred after the sixth anniversary of
the date hereof in respect of maintaining effective (but not the initial filing
and causing to become effective of) such registration statement. The
reimbursement of such expenses by the Unitholders shall be paid upon demand.
(c) Notwithstanding anything to the contrary contained herein, the
General Partner shall have no obligation to keep any registration statement
filed pursuant to this Section 4.1 effective after the Expiration Date or if
the status of the General Partner (or its successor) as an Exchange Act
Reporting Company is terminated or all of the Unitholders notify the General
Partner in writing that the General Partner no longer need keep such
registration statement effective.
4.2 Reservation of Shares. At all times while the Redemption Rights are
outstanding, the General Partner shall reserve for issuance such number of
Shares as may be necessary to enable the General Partner to issue Shares in
full satisfaction of all Redemption Rights which are from time to time
outstanding (assuming no limitations as to the ownership of such Shares under
the Certificate of Incorporation which relate to compliance with the REIT
Requirements and that the General Partner elected to pay the Share Purchase
Price with respect to all such Redemption Rights).
4.3 Fully Paid and Non-Assessable. All Shares which may be issued upon
exercise of the Redemption Rights shall be duly and validly issued and fully
paid and non-assessable.
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5. Transfer and Other Taxes. In the event that any state or local
property transfer or other tax is payable as the result of or in connection
with any exercise of the Redemption Rights by Contributing Partner, Contributor
Partner shall pay such tax, and no Shares shall be issued pursuant hereto until
such Contributor Partner has paid to the General Partner or the Partnership, as
the case may be, the amount of such tax or has provided evidence, in form
reasonably satisfactory to the General Partner or the Partnership, as the case
may be, as to the payment thereof.
6. Anti-Dilution and Adjustment Provisions.
(a) The Conversion Factor shall be adjusted in the event that the
General Partner (i) declares or pays a dividend on its outstanding Shares in
Shares or makes a distribution to all holders of its outstanding Shares in
Shares, (ii) subdivides its outstanding Shares, or (iii) combines its
outstanding Shares into a smaller number of Shares. The Conversion Factor
shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of Shares issued and outstanding on the
record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time) and the denominator of which shall be
the actual number of Shares (determined without the above assumption) issued
and outstanding on the record date for such dividend, distribution, subdivision
or combination. Any adjustment to the Conversion Factor shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) If at any time the General Partner grants to its stockholders any
right to subscribe pro rata for additional securities of the General Partner,
whether Common Stock or other classifications, or for any other securities or
interests that Contributing Partner would have been entitled to subscribe for
if, immediately prior to such grant, Contributing Partner had exercised its
Redemption Rights and received the Share Purchase Price in payment thereof, in
lieu of any adjustment under any other subsection of this Section 6 or other
provision of this Agreement, then the General Partner also shall grant to
Contributing Partner the same subscription rights that Contributing Partner
would be entitled to if Contributing Partner
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had exercised its Redemption Rights in full and received the Share Purchase
Price in satisfaction thereof prior to such grant.
(c) Upon the occurrence of a Major Transaction Event where at least
one-half of the value (as determined in good faith by the General Partner) of
the consideration received by the stockholders of the General Partner in
connection with such Major Transaction Event is in the form of securities in a
successor entity, the General Partner shall cause effective provision to be
made so that, upon exercise of the Redemption Rights and payment of the
Purchase Price at any time following such Major Transaction Event by means of
the Share Purchase Price, Unitholders shall have the right to acquire, in lieu
of the Shares which would have been surrendered therefor, the kind and amount
of shares of stock and other securities and property (and the provisions
contained in Section 4.1 shall apply anew to the extent that such securities
are of a class of securities of the General Partner or its successor that are
registered under the Exchange Act) and interests as would be issued or payable
with respect to or in exchange for the number of Shares constituting the Share
Purchase Price as if such Redemption Rights had been exercised and the General
Partner had satisfied the Redemption Rights by delivery of the Share Purchase
Price immediately before such Major Transaction Event.
(d) In the event of any other Major Transaction Event, each
Unitholder shall be entitled to exercise the Redemption Rights in full prior to
the consummation of such Major Transaction Event, and, with respect to any
Shares acquired upon exercise thereof, shall be entitled to all of the rights
of the other holders of Shares with respect to any distribution by the General
Partner (or the other party to such Major Transaction Event) in connection with
such Major Transaction Event. If not exercised within forty-five days after
written notice from the General Partner of such Major Transaction Event or such
shorter period between the date of such notice and the effective date of such
Major Transaction Event, the Redemption Rights shall terminate at the
expiration of such period, but the Redemption Rights shall be revived if such
Major Transaction Event is not consummated.
(e) The Partnership shall give written notice of any Major
Transaction Event promptly after such Major Transaction is announced to the
public.
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(f) The provisions of this Section 6 shall apply to successive events
that may occur from time to time but only shall apply to a particular event if
it occurs prior to the exercise in full of the Redemption Rights or the
liquidation of the Partnership. Nothing contained herein shall prevent or
otherwise limit the liquidation of the Partnership pursuant to the Partnership
Agreement, as amended from time to time.
(g) Whenever the Conversion Factor is adjusted as herein provided,
the General Partner shall compute the adjusted Conversion Factor in accordance
with Section 6 and shall prepare a certificate signed by the chief financial
officer of the General Partner setting forth the adjusted Conversion Factor and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed at the offices of the General
Partner.
7. Purchase Right.
7.1 Purchase Right. In the event that the General Partner in good
faith determines at any time that the continued ownership of Units by the
holder of such Units would cause amounts which would otherwise be characterized
as "rents from real property" (within the meaning of Section 856(d)(1) of the
Code) to fail to be so characterized as the result of the ownership or deemed
ownership of any Retailer Interest, the holder of such Units shall dispose of
such Retailer Interest within five Business Days of written notice from the
Partnership. In the absence of such a disposition, the General Partner shall
have the right, but not the obligation (the "Purchase Right"), to purchase all
of the Units then held by such holder upon the terms and subject to the
conditions contained in this Section 7.
7.2 Method of Exercise. The Purchase Right shall be exercised by
written notice to the holder of the Units to be purchased specifying that the
General Partner has elected to purchase such Units pursuant to Section 7 of
this Agreement.
7.3 Purchase Price. The purchase price for such Units shall be the
Cash Purchase Price with respect to such Units.
7.4 Closing. The closing of any purchase and sale pursuant to this
Section 7 shall occur at the time specified in the notice described in Section
7.2 but in no event later than 30 days after the giving of such notice. At the
closing, the General Partner
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shall deliver to the selling Unitholder the Cash Purchase Price in immediately
available funds, and the selling Unitholder shall deliver to the General
Partner an instrument of transfer in form sufficient to transfer the Units to
be transferred, free and clear of all Liens, and containing the representations
and warranties set forth in Exhibit A.
7.5 Notice of Certain Events. Contributing Partner promptly shall
provide to the Partnership a written statement describing the acquisition by
it or its partners or Affiliates of any equity interest in a retailer or other
person or entity which is or could be a potential tenant of the Partnership or
of any Other REIT (a "Retailer Interest"), and Contributing Partner represents
and warrants that neither Contributing Partner nor any of its partners or
Affiliates currently owns any such Retailer Interest.
8. Miscellaneous Provisions.
8.1 Notices. All notices or other communications given pursuant to
this Agreement shall be sent to the party to whom or to which such notice is
being sent, by certified or registered mail, return receipt requested,
commercial overnight delivery service, facsimile or delivered by hand with
receipt acknowledged in writing. All notices (a) shall be deemed given when
received or, if mailed as described above, after 5 Business Days or, if sent by
facsimile, upon receipt of confirmed answerback and (b) may be given either by
a party or by such party's attorneys. For purposes of this Section 8.1, the
addresses of the parties shall be, in the case of the Partnership and the
General Partner, 55 West Monroe Street, Suite 3100, Chicago, Illinois 60603,
facsimile number (312) 551-5475, Attention: Matthew Bucksbaum and Bernard
Freibaum, and, in the case of Contributing Partner, as set forth on the records
of the Partnership. The address of any party may be changed by a notice in
writing given in accordance with the provisions hereof.
8.2 Assignment. The rights of Contributing Partner hereunder
(including the Redemption Rights) shall automatically devolve upon any Person
to the extent that such Person holds Units, and becomes a substituted partner
with respect to such Units, in accordance with the Partnership Agreement, as
amended from time to time, and delivers to the Partnership a written
instrument, in form reasonably satisfactory to the Partnership, pursuant to
which such Person agrees to be bound by the terms
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hereof (but the rights of Contributing Partner hereunder are not otherwise
assignable). Subject to the provisions of Section 6, the General Partner may
assign this Agreement without the consent of Contributing Partner, provided
that no such assignment shall relieve the General Partner of its obligations
under this Agreement.
8.3 Binding Effect. This Agreement shall be binding upon, and inure
to the benefit of, the parties and their successors and permitted assigns.
8.4 Governing Law. This Agreement shall be governed by the laws of
the State of Delaware (without regard to its conflicts of law principles).
8.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall constitute one
document.
8.6 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior written or oral understandings and/or agreements among
them with respect thereto.
8.7 Pronouns; Headings; Etc. As used herein, all pronouns shall
include the masculine, feminine and neuter, and all terms shall include the
singular and plural thereof wherever the context and facts require such
construction. The headings herein are inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof. Any
references in this Agreement to a "Section" or "Exhibit" shall refer to a
Section or Exhibit of this Agreement unless otherwise specified.
8.8 Survival. The representations, warranties and covenants
contained herein or made pursuant hereto shall survive the execution and
delivery of this Agreement and the issuance of Shares pursuant hereto.
8.9 Further Assurances. Each of the parties shall hereafter execute
and deliver such other instruments and documents and do such further acts and
things as may be required or useful to carry out the purposes of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
CONTRIBUTING PARTNER:
CA SOUTHLAKE INVESTORS, LTD., a
Georgia limited partnership
By: /s/ Daniel Rather
-----------------------------
Its General Partner
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PARTNERSHIP:
GGP LIMITED PARTNERSHIP,
a Delaware limited partnership
By: General Growth Properties, Inc.
a Delaware corporation
By: /s/ Joel Bayer
-----------------------
Its Vice President
--------------------
GENERAL PARTNER:
General Growth Properties, Inc.
a Delaware corporation
By: /s/ Joel Bayer
---------------------------
Its Vice President
-----------------------
