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): April 11, 1997
FAC REALTY, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Incorporation)
1-11998 56-1819372
(Commission File Number) (IRS Employer Identification No.)
11000 Regency Parkway 27511
Suite 300 (Zip Code)
Cary, North Carolina
(Address of principal executive offices)
(919) 462-8787
(Registrant's telephone number, including area code)
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Item 2: Acquisition or Disposition of Assets
On March 27, 1997, FAC Realty, Inc. ("FAC") consummated the
acquisition of five community centers in and around Raleigh, North Carolina,
from North Hills Properties, Inc. for a total purchase price of $32.3 million.
The acquisition of a 49.5% partnership interest in a sixth center is pending
approval by the partnership.
The North Hills acquisition includes approximately 606,000 square feet
of gross leasable area ("GLA") with an average occupancy of approximately 97%.
The following is a list of the centers:
<TABLE>
<CAPTION>
Current Key Tenants
N.C. Date Total Occupancy --------------- NOI at
Property Location Developed GLA % Anchor Other Major 12/31/96(1)
- -------- -------- --------- --- - ------ ----------- -----------
<S> <C>
Gateway Wilson 1992 91,266 100 K-Mart Winn-Dixie $ 501,275
lease executed;
construction to
begin spring
1997
Eastgate Raleigh 1966 54,375 100 Books- Kerr Drug 361,937
A-Million Subway
MacGregor Cary 1986 142,655 99 N/A Eckerd Drug 1,159,787
Village Spa Health Club
Northridge Raleigh 1980 165,215 92 Winn-Dixie Ace Hardware 1,205,575
Kerr Drug
Tower Raleigh 1976 152,157 96 Food Lion Shoe Show 597,283
------- --- Big Lots Kerr Drug ----------
Baskin Robbins
Grand Total 605,668 97 $3,825,857
======= === ==========
</TABLE>
1. Net operating income (NOI) is equal to revenue in excess of certain operating
expenses. Operating expenses are exclusive of any interest, depreciation,
amortization, general and administrative expenses.
Following the completion of the acquisition, FAC has 36 outlet centers
and 5 community centers. The acquisition was financed with approximately $30.5
million drawn by the Company's credit facility with Nomura Asset Capital
Corporation and the balance from available cash.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
It is impracticable to provide the required financial statements
at the time of the filing of this report. The required financial
statements will be filed as soon as practicable by amendment to
this form 8-K.
(b) Pro forma financial statements
See text at Item 7(a).
(c) Exhibits
2.1 Agreement of Purchase and Sale Among North Hills Properties,
Inc., Tower Properties Limited Partnership and FAC Realty,
Inc. dated March 27, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FAC REALTY, INC.
/s/ PATRICK M. MINIUTTI
------------------------------------
Patrick M. Miniutti
Executive Vice President and Chief
Financial Officer
Date: April 11, 1997
AGREEMENT OF PURCHASE AND SALE
AMONG
NORTH HILLS PROPERTIES, INC.,
TOWER PROPERTIES LIMITED PARTNERSHIP
AND
FAC REALTY, INC.
Eastgate Shopping Center,
North Ridge Shopping Center,
Tower Shopping Center,
MacGregor Village Shopping Center
and Gateway Shopping Center
North Carolina
March 27, 1997
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
1. Definitions ................................................................................................1
1.01.Agreement .............................................................................................1
1.02.Assignment ............................................................................................1
1.03.Center; Centers .......................................................................................1
1.04.Closing; Closing Date;Scheduled Closing Date...........................................................1
1.05.Code ..................................................................................................2
1.06.General Intangibles....................................................................................2
1.07.Good Faith Deposit.....................................................................................2
1.08.Governmental Authority.................................................................................2
1.09.Improvements...........................................................................................2
1.10.Land ..................................................................................................2
1.11.Leases ................................................................................................2
1.12.Legal Requirement .....................................................................................2
1.13.Operating Expenses ....................................................................................3
1.14.Purchase Price ........................................................................................3
1.15.Quality Oil; Quality Oil Lease.........................................................................3
1.16.Related Personalty ....................................................................................3
1.17.Survey; Surveys........................................................................................3
1.18.Title Company..........................................................................................3
1.19.Title Exception; Permitted Title Exceptions............................................................3
2. Agreement to Sell and Purchase..............................................................................4
3. Purchase Price..............................................................................................4
4. Good Faith Deposit......................................................................................... 4
5. Surveys................................................................................................... 4
6. Title Policies; UCC Certificates........................................................................... 4
7. General Warranties, Representations and Covenants of Sellers.............................................. 4
7.01. Organization...................................................................................... 4
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7.02. Due Authorization, Execution and
Delivery; Binding and Enforceable Agreement .......................................................5
7.03. Consummation of Transaction........................................................................5
7.04. Litigation and Default............................................................................ 5
7.05. Leases............................................................................................ 6
7.06. Operations Pending Closing....................................................................... 8
7.07. Foreign Person ................................................................................... 8
7.08 Seller's Severally Liable........................................................................ 8
7.09. Access........................................................................................... 8
7.10. Permits.......................................................................................... 8
7.11. Environmental Notices............................................................................ 8
7.12. Contracts........................................................................................ 8
8. General Warranties, Representations and Covenants of Purchaser............................................... 8
8.01. Organization of Purchaser......................................................................... 9
8.02. Due Authorization, Execution and Delivery; Binding
and Enforceable Agreement........................................................................ 9
8.03. Consummation of Transaction...................................................................... 9
8.04. Litigation and Default............................................................................ 9
8.05. Inspections....................................................................................... 9
8.06. Financial Capability............................................................................. 9
9. "AS IS, WHERE IS" Purchase................................................................................... 10
10. Conditions to Purchaser's Obligation to Close............................................................... 10
10.01. General......................................................................................... 10
10.02 Conditions Precedent ........................................................................... 10
10.03. Satisfaction.................................................................................... 12
10.04. Termination..................................................................................... 13
10.05. All Centers to be Purchased..................................................................... 13
11. Conditions to Sellers' Obligation to Close.................................................................. 13
11.01. General......................................................................................... 13
11.02. Conditions Precedent........................................................................... 14
11.03. Satisfaction................................................................................... 14
11.04. Termination..................................................................................... 14
12. Closing.................................................................................................... 15
12.01. General........................................................................................ 15
12.02. Actions to be Taken by Sellers................................................................. 15
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12.03. Actions to be Taken by Purchaser.............................................................. 17
12.04. Actions to be Taken by the Title Company....................................................... 17
12.05. Prorations..................................................................................... 17
12.06. Default........................................................................................ 18
12.07. Post-Closing Rent Collections.................................................................. 19
12.08. Sellers' Reserved Rights....................................................................... 20
12.09. Tenant Notification and Deposit Return......................................................... 20
13. Survival and Indemnification................................................................................ 21
13.01. Survival...................................................................................... 21
13.02. Indemnification............................................................................... 22
14. Miscellaneous............................................................................................ 22
14.01. Commissions.................................................................................... 22
14.02. Notices........................................................................................ 23
14.03. Time ........................................................................................... 24
14.04. Law Governing................................................................................... 24
14.05. Attorneys' Fees................................................................................. 24
14.06. Successors and Assigns.......................................................................... 24
14.07. Entire Agreement; Amendments;Waiver.............................................................. 24
14.08. Exhibits ........................................................................................ 25
14.09. Captions ........................................................................................ 25
14.10. Severability..................................................................................... 25
14.11. Publicity........................................................................................ 25
14.12. Confidentiality of Information.................................................................. 25
14.13. Further Assurances................................................................................26
14.14. Recordation .................................................................................... 26
14.15. Consent......................................................................................... 26
14.16. Companion Agreement............................................................................. 26
14.17. Winn-Dixie Store, Gateway Shopping Center....................................................... 27
14.18. Multiple Counterparts.............................................................................27
</TABLE>
EXHIBITS
Exhibit A - Property Descriptions
Exhibit B - Non-Exclusive Schedule of Related Personalty
Exhibit C - Tenant Rent Roll
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Exhibit D - List of Surveys
Exhibit E - Tenant Estoppel Certificate
Exhibit F - List of Tenants
Exhibit G - List of Contracts
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AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT OF PURCHASE AND SALE entered into on March 27, 1997
among NORTH HILLS PROPERTIES, INC., a North Carolina corporation, ("NHP"), TOWER
PROPERTIES LIMITED PARTNERSHIP, a North Carolina limited partnership, ("TPL")
(NHP and TPL being hereinafter referred to as a "Seller" and collectively as
"Sellers") and FAC REALTY, INC., a Delaware corporation, or its assignee
("Purchaser");
W I T N E S S E T H:
WHEREAS, NHP is the owner of Eastgate Shopping Center, North Ridge
Shopping Center, MacGregor Village Shopping Center and Gateway Shopping Center
and TPL is the owner of Tower Shopping Center, being retail strip shopping
centers located in Raleigh, Cary and Wilson, North Carolina; and
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, the strip centers, on the terms set forth in this
Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, Sellers and
Purchaser do hereby execute this Agreement to evidence all of the terms upon
which Sellers are willing to sell to Purchaser, and Purchaser is willing to
purchase from Sellers, the strip centers.
1. Definitions.
1.01. "Agreement" shall mean this Agreement of Purchase and
Sale together with any amendment hereto made in accordance with Section 14.07
hereof.
1.02. "Assignment" shall mean the Assignment and Assumption of
Leases and General Intangibles to be executed by Seller and Purchaser with
respect to each Center and delivered at the Closing, and otherwise complying
with the provisions of this Agreement.
1.03. "Center" shall mean each retail strip shopping center
identified as Eastgate Shopping Center, North Ridge Shopping Center and Tower
Shopping Center, in Raleigh, North Carolina; MacGregor Village Shopping Center
in Cary, North Carolina; and Gateway Shopping Center in Wilson, North Carolina.
A Center shall be comprised of the Land, Improvements, Leases, Related
Personalty and General Intangibles relating thereto. "Centers" shall mean all of
the said retail strip shopping centers.
1.04. "Closing" shall mean the occurrence of the events
described in Sections 12.02 through 12.05 hereof. "Closing Date" shall mean the
date the Closing occurs. "Scheduled Closing Date"
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shall mean March 27, 1997.
1.05. "Code" shall mean the United States Internal Revenue
Code of 1986, as amended.
1.06. "General Intangibles" shall mean, with respect to any
Center, all of Seller's assignable rights, titles and interests in and to (a)
all claims and unexpired warranties or guarantees relating to any structural or
mechanical component thereof (b) all licenses, permits and certificates relating
to the operation thereof, (c) originals or true and correct copies of all
maintenance, service, utility and supply contracts, and all operation,
management and maintenance records in Seller's possession and relating thereto,
(d) all architectural, engineering and mechanical plans, specifications and
drawings, site plans, site plan approvals, zoning permits, surveys, soil and
substrata studies, hazardous materials reports or studies and landscape plans in
Seller's possession and relating thereto and (e) the trade names "Eastgate
Shopping Center", "North Ridge Shopping Center", "Tower Shopping Center",
"MacGregor Village Shopping Center" and "Gateway Shopping Center". "General
Intangibles" shall not include any rights or claims, for reimbursement or
otherwise, arising prior to the Closing Date against any third party, including
a Governmental Authority or tenant, or under any insurance policy, indemnity
agreement or comparable undertaking.
1.07. "Good Faith Deposit" shall mean $950,000, to be
deposited by Purchaser with the Title Company pursuant to Section 4 hereof, plus
all interest earned thereon.
1.08. "Governmental Authority" shall mean, with respect to any
Center, any and all (a) governmental units (federal, state, county, district,
municipal, city or otherwise) and (b) courts, boards, agencies, commissions,
offices or authorities of any nature whatsoever having jurisdiction over the
Center.
1.09. "Improvements" shall mean, with respect to any Center,
all buildings and building systems, all utility systems, all lighting standards,
all paved or structured parking areas and all other structures and fixtures
constructed on or attached to the Land or to an Improvement.
1.10. "Land" shall mean, with respect to any Center, the land
identified with that Center and described on Exhibit "A" hereto together with
all of the Seller's rights, privileges and easements appurtenant thereto
including, without limitation, all mineral, oil, gas and other hydrocarbon
substances on or under the said land, and all development, air and water rights.
1.11. "Leases" shall mean, with respect to any Center, the
leases identified on Exhibit "C" hereto as applicable to that Center and any
other leases as may be executed prior to the Closing Date with respect thereto.
1.12. "Legal Requirement" shall mean (a) any and all statutes,
rules, regulations, directives, permits, certificates, ordinances, judicial
decisions, orders, injunctions or writs binding on a Seller or Purchaser (as the
case may be), (b) as to a Seller, Seller's formative documents and such other
documents, instruments or agreements (written or oral) by or to which Seller is
bound and (c) as to
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Purchaser, Purchaser's formative documents and such other documents, instruments
or agreements (written or oral) by or to which Purchaser is bound.
1.13. "Operating Expenses" shall mean, with respect to any
Center, all valid costs and expenses relating to the ownership, management,
maintenance and operation thereof and shall include, without limitation, the
following: (a) all ad valorem taxes, assessments and charges, (b) all insurance
premiums, (c) all utility charges, (d) all maintenance, repair and replacement
expenses, (e) all janitorial, custodial, cleaning, landscaping and landscape
maintenance, trash removal and pest control costs, (f) all security costs, (g)
the cost of all supplies and materials, (h) all fees and expenses payable under
any maintenance and service agreements and (i) all advertising and promotional
expenses.
1.14. "Purchase Price" shall mean $32,300,000 of which
$5,100,000 shall be allocated to Tower Shopping Center.
1.15. "Quality Oil" shall mean Quality Oil Company, L.L.C.,
the lessee of the Quality Oil Lease. "Quality Oil Lease" shall mean shall mean
that certain Lease dated June 22, 1966 between North Hills, Inc., as lessor, and
Shell Oil Company, as lessee, same having been assigned by one or more
assignments to Quality Oil.
1.16. "Related Personality" shall mean, with respect to any
Center, all furniture, fixtures, equipment, machinery, keys and other personal
property which is owned by Seller, situated at the Center and used solely in
connection with the management, maintenance, operation or service thereof,
including those items set forth on Exhibit "B" hereto. "Related Personality"
shall not include any vehicles, computers or peripherals or the originals of any
books or records maintained by Sellers.
1.17. "Survey" shall mean, with respect to any Center, the
"as built" survey of the Center identified on Exhibit "D" hereto. "Surveys"
shall mean all of said surveys.
1.18. "Title Company" shall mean shall mean Chicago Title
Insurance Company.
1.19. "Title Exception" shall mean, with respect to any
Center, any lien, mortgage, security interest, encumbrance, pledge, assignment,
claim, charge, lease (surface, space, mineral or otherwise), condition,
restriction, reservation, option, restrictive covenant, exception, easement
(temporary or permanent), right of way, encroachment, overlap or other
outstanding claim, right, title, interest, estate or equity of any nature
whatsoever. "Permitted Title Exceptions" shall mean, with respect to a Center,
the following Title Exceptions: (a) any utility easements, storm sewer
easements, sanitary sewer easements, access easements, setbacks, buffers, rights
of way and other states of fact reflected on the Survey of the Center or on any
updated or subsequent survey approved by Purchaser; (b) the Leases associated
with the Center; (c) any Title Exception which does not, individually or in the
aggregate with any other Title Exception, materially adversely affect the
utility of or the marketability of the title to the Center as a retail shopping
center; (d) any ad valorem or other taxes for the Center not due and payable by
the Closing Date; and (e) any other Title Exception which
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Purchaser shall accept, its sole option, including those which appear in the
owner's title policy which Purchaser accepts in connection with the Closing, or
which Purchaser may expressly approve in writing as a Permitted Title Exception
or otherwise waive pursuant to Sections 10.03 or 10.04 hereof.
2. Agreement to Sell and Purchase. Subject to the terms hereof, Sellers
hereby agree to sell to Purchaser, and Purchaser hereby agrees to purchase from
Sellers, good and indefeasible title to each Center free from all Title
Exceptions other than Permitted Title Exceptions.
3. Purchase Price. In consideration for the conveyance of the
Centers to Purchaser in accordance with the terms of this Agreement, Purchaser
hereby agrees to pay to Sellers the Purchase Price in immediately available
funds at the Closing.
4. Good Faith Deposit. Within two business days after the mutual
execution of this Agreement, and as a condition to the effectiveness hereof,
Purchaser shall deliver the Good Faith Deposit to the Title Company. The Good
Faith Deposit shall be held by the Title Company in an interest-bearing account
and applied as a credit against the Purchase Price, or delivered to Sellers as
liquidated damages for Purchaser's failure to consummate the purchase of the
Centers or returned to Purchaser, all in accordance with the provisions of this
Agreement. In its capacity as escrow agent for the purpose of holding the Good
Faith Deposit, the Title Company shall not be deemed to be the agent or bailee
of either party to the exclusion of the other, but rather shall be acting on
behalf of Sellers and Purchaser jointly.
5. Surveys. Sellers have heretofore delivered the Surveys to
Purchaser. Purchaser hereby acknowledges its receipt of the Surveys. Purchaser
shall have the right, at its expense, to have any or all of the Centers
resurveyed by a surveyor of its choice.
6. Title Policies: UCC Certificates. Purchaser shall have the
right, at its expense, to obtain from the Title Company or such other title
company as Purchaser may select a commitment and policy for title insurance and
Uniform Commercial Code certificates with respect to any or all of the Centers.
7. General Warranties. Representations and Covenants of Sellers.
Sellers hereby warrant and represent unto, and covenant with, Purchaser as
follows:
7.01. Organization. NHP is a corporation duly formed, validly
existing and in good standing under the laws of the State of North Carolina. NHP
has all requisite right, power and authority (corporate and governmental) to
own, lease and operate each of its Centers and to execute, deliver and perform
this Agreement. TPL is a limited partnership duly formed and validly existing
under the laws of the State of North Carolina. TPL has all requisite right,
power and authority (partnership and governmental) to own, lease and operate
Tower Shopping Center and to execute, deliver and perform this Agreement.
7.02. Due Authorization. Execution and Delivery:
Binding and Enforceable Agreement.
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This Agreement (a) has been duly authorized for execution, delivery and
performance by Sellers, (b) has been duly executed and delivered by Sellers and
(c) assuming the due authorization, execution and delivery hereof by Purchaser,
constitutes the valid and binding agreement of Sellers, enforceable against
Sellers in accordance with its terms.
7 03. Consummation of Transaction. Neither the
execution, delivery nor performance of this Agreement by Sellers will result in
a breach or violation of, or constitute a default under, any Legal Requirement.
7.04. Litigation and Default. (See * Below) There are no legal
proceedings pending against or, to the knowledge of either Seller, threatened
against either Seller which, if adversely determined, could prevent or impair
the ability of either Seller to perform this Agreement or that might adversely
affect the use or operation of the Centers or the value thereof. No Seller has
received any notice alleging it to be, or that with due notice or lapse of time
or both it will be, in breach or default of any Legal Requirement which could
adversely affect the Centers or the ability of Seller to perform this Agreement.
*Except for the complaint filed by Melbourne-Marsh, LLC in Civil File
97CVS03212, Wake County Clerk of Superior Court,
7.05. Leases. With respect to the Leases:
(a) true and correct copies of each Lease have been
delivered by Sellers to Purchaser;
(b) except as otherwise disclosed in writing to
Purchaser, each Lease is in full force and effect;
(c) the information set forth on Exhibit "C" hereto with
respect to each Lease is true and correct in all
material respects as of the dare of the exhibit;
(d) neither Seller has received notice alleging it to be
in default, in any presently outstanding material
respect, under any Lease;
(e) except as set forth on Exhibit "C" hereto or
otherwise disclosed in writing to Purchaser (i) no
leasing commissions are due and unpaid by a Seller,
(ii) neither Seller has received notice that any
tenant intends to close its operation in advance of
the termination date of its lease, or otherwise file
a bankruptcy, reorganization or other debtor relief
petition with respect to its operations, (iii) no
tenant has been granted any material economic or
financial concession or inducement by a Seller which
has not been paid in full and (iv) no person or party
is in possession of, or has a right to possession of,
any portion of a Center or any claim thereto; and
(f) the Leases and Lease files delivered or to be
delivered by Sellers to Purchaser contain or will
contain all relevant information in the Seller's
possession relating to the rights
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of any party to occupy any portion of the Centers.
7.06. Operations Pending Closing. From the date hereof
until the Closing Date (and, in the limited instance stated in Section 7.06(d),
after the Closing Date), Sellers shall:
(a) continue to operate and maintain the Centers in a
good state of repair and in accordance with good
business practices;
(b) neither cancel, accept the surrender of, amend or
renew any Leases, nor enter into any new leases or
other contracts with respect to any Center which
would extend beyond the Closing Date, without
obtaining the prior written consent of Purchaser in
each instance; provided, however, that neither the
foregoing nor any other provision of this Agreement
shall preclude a Seller from taking any of the
aforesaid action which (i) is in the ordinary course
of business or (ii) is necessary or reasonably
appropriate to maintain, preserve or protect a Center
but the Seller taking any such action shall give
prompt notice to Purchaser of the taking thereof; and
provided further, however, that a Seller shall be
entitled to enter into, extend or otherwise amend any
lease or other contract or commitment which a Seller,
reasonably and in good faith, shall determine to be
in the best interest of a Center and, if Purchaser
shall have failed or elected not to grant its consent
thereto, Purchaser's sole recourse shall be to
terminate this Agreement and receive a return of the
Good Faith Deposit;
(c) afford Purchaser and its representatives, agents and
contractors the continuing right to inspect (i) each
Center, at reasonable hours and at their sole risk
and expense, subject to the rights of Center tenants
as to their leased space, and (ii) any and all books,
records, lease files, contracts and other documents
or data in Sellers' possession pertaining to the
ownership, operation or condition of each Center;
(d) pay (i) all Operating Expenses as same become due for
the period up to the Closing Date, or which are
incurred prior to the Closing Date but are not due
until after the Closing Date, and (ii) all valid
bills rendered by contractors, laborers and
materialmen performing work upon or furnishing
materials to any Center at the request of a Seller
prior to the Closing Date even if such bills are not
rendered until after the Closing Date; provided,
however, that all commitments to install tenant
improvements which have been committed to by Seller
after the date hereof, whether same are to be
installed before or after the Closing Date, shall be
the responsibility of Purchaser; and
(e) other than as provided in Section 7.06(b), not
create, or enter into any contract to create, any
Title Exceptions, without the prior written consent
of Purchaser in each instance.
7.07. Foreign Person. Neither Seller is a
"foreign person" within the meaning of Section 1445 of the Code.
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7.08. Seller's Severally Liable. Notwithstanding anything to
the contrary contained in this Agreement or inferable from the term "Sellers",
(a) TPL has not made, and shall not be construed to have made, any warranty,
representation or covenant, or to have incurred any liability, either hereunder
or under any document executed in connection herewith with respect to NHP or to
any Center other than Tower Shopping Center and (b) NHP shall be liable for
warranties, representations or covenants made with respect to Tower Shopping
Center only derivatively, in its capacity as general partner of TPL. Purchaser
hereby agrees with TPL that, in any instance where Purchaser obtains a judgment
against TPL under or by virtue of this Agreement, the judgment shall first be
attempted to be satisfied out of the assets of TPL before the levy is had or
attempted against the assets of any partner of TPL. Nothing contained in the
preceding sentence is intended, or shall be construed, to waive the status of
the limited partners in TPL or to constitute an agreement by the limited
partners to subject their assets to any liabilities thereof.
7.09. Access. Neither Seller has received written
notice of any event which could result in the termination or reduction of the
current access to any Center from a publicly dedicated roadway.
7.10. Permits. Each Seller has received all
governmental licenses and permits required for the lawful ownership and
operation of the Center or Centers owned by it and has constructed all onsite
and offsite improvements required in connection therewith.
7.11. Environmental Notices. Except as disclosed
in writing to Purchaser, neither Seller has received written notice from any
Governmental Authority asserting that any Center is in violation of any Legal
Requirement relating to hazardous substances or petroleum products or is
otherwise contaminated with the same.
7.12. Contracts. Attached hereto as Exhibit "G" is
a true and correct list of all contracts forming a part of the General
Intangibles to be assumed by Purchaser at the Closing. No party to any such
contract is currently alleging that either Seller is in default thereof.
8. General Warranties. Representations and Covenants of
Purchaser. Purchaser hereby warrants and represents unto, and covenants with,
Sellers as follows:
8.01. Organization of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Purchaser has all requisite right, power and
authority to execute, deliver and perform this Agreement.
8.02. Due Authorization, Execution and Delivery; Binding and
Enforceable Agreement. This Agreement (a) has been duly authorized for
execution, delivery and performance by Purchaser, (b) has been duly executed and
delivered by Purchaser and (c) assuming the due authorization, execution and
delivery hereof by Sellers, constitutes the valid and binding agreement of
Purchaser, enforceable against Purchaser in accordance with its terms.
8.03. Consummation of Transaction. Neither the
execution, delivery nor performance of this
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Agreement by Purchaser will result in a breach or violation of, or constitute a
default under, any Legal Requirement.
8.04. Litigation and Default. There are no legal proceedings
pending against or, to the knowledge of Purchaser, threatened against Purchaser
which, if adversely determined, could prevent or impair Purchaser's ability to
perform this Agreement. Purchaser has not received any notice alleging it to be,
or that with due notice or lapse of time or both it will be, in breach or
default of any Legal Requirement which could adversely affect the ability of
Purchaser to perform this Agreement.
8.05. Inspections. Purchaser hereby agrees to defend,
indemnify and hold harmless Sellers from and against any and all claims, causes
of action, liens, damages, liabilities, costs and expenses (including reasonable
attorneys' fees, court costs and other costs of litigation) filed, asserted or
suffered by either Seller or any Center as a result of any inspection conducted
by Purchaser, or any of its representatives, agents or contractors, of any
Center. This Section 8.05 shall survive the Closing or the termination of this
Agreement, notwithstanding any provisions of this Agreement to the contrary.
8.06. Financial Capability. Purchaser has either received, or
has binding commitments for, all capital (both equity and debt) necessary to
enable Purchaser to pay the Purchase Price at the Closing and otherwise to
perform its obligations under this Agreement. The warranty and representation
contained in this Section 8.06 is a material inducement to Sellers' agreement to
enter into this Agreement.
9. "AS IS, WHERE IS" Purchase. In recognition of the facts that the
improvements which comprise the Centers are not new and require constant
attention with respect to proper maintenance and repair, and that Purchaser
conducted its due diligence and thoroughly inspected each Center prior to the
execution of this Agreement, including each Center's physical, environmental,
operational and financial aspects, and accepts them in their current condition,
it is expressly understood and agreed that Sellers have not made, and shall not
be deemed to have made, any warranties or representations (other than (i) as to
title and (ii) as expressly set forth in Section 7 hereof), expressed or
implied, or have any liability to Purchaser with respect to any aspect of any
Center or its condition, including specifically but without limitation as to (a)
its design, construction, maintenance, operation, profitability or marketability
or (b) the compliance of any Center with any Legal Requirement relating to
health, safety, zoning, environmental or persons with disabilities. Further, it
is expressly understood and agreed that, if Purchaser elects to purchase the
Centers, Purchaser will do so in each Center's "AS IS, WHERE IS" condition, and
that any warranty or representation, express or implied, including specifically
but without limitation, any WARRANTY OF MERCHANTABILITY and WARRANTY OF FITNESS
FOR ANY PARTICULAR PURPOSE are hereby expressly excluded and negated and that
Purchaser will, and does hereby, release and hold harmless Sellers from any
claim (whether statutory, common law or otherwise) relating to the design,
construction, condition, maintenance, operation, profitability, marketability or
compliance of each Center. The above provisions shall be inserted in each
certificate called for in Section 12.03(b) hereof.
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10. Conditions to Purchaser's Obligation to Close.
10.01. General. The obligation of Purchaser to close the
purchase of the Centers from Sellers (but not the obligation of Sellers to sell
the Centers to Purchaser) is, at Purchaser's election, subject to the
satisfaction, by the Scheduled Closing Date, of each of the conditions precedent
set forth in Section 10.02 hereof. Each such condition is intended solely to
benefit and protect Purchaser and, accordingly, full satisfaction or waiver
thereof may be insisted upon or effected solely by Purchaser. Sellers shall
render reasonable cooperation to Purchaser in causing each such condition
precedent to be satisfied but shall have no obligation to cause, or to use their
best efforts to cause, same to be satisfied or any liability to Purchaser if any
condition precedent is not satisfied.
10.02. Conditions Precedent. The conditions
precedent referred to in Section 10.01 hereof are as follows:
(a) Sellers' Warranties, Representations and Covenants. The
warranties and representations of Sellers set forth in Section 7 hereof
shall be true and correct, and the covenants of Sellers set forth in
Section 7 hereof shall have been performed, in all material respects.
If, on the Closing Date, Purchaser (which term, for purposes of this
Section 10.02(a), shall include the representatives, agents and
contractors of Purchaser which have conducted or participated in any
inspection of a Center) or an officer, director, member or partner
thereof, has knowledge that a warranty or representation made by either
Seller is false in any material respect, or that a covenant undertaken
by either Seller has not been performed in any material respect, and
Purchaser proceeds to close the transaction as herein provided,
Purchaser shall be deemed to have waived any postClosing claim for
breach of the warranty, representation or covenant known by Purchaser
on the Closing Date to have been breached or unperformed in any
material respect, but such waiver shall not extend to any other
warranty, representation or covenant undertaken by Sellers.
(b) Litigation. No litigation shall have been initiated or
threatened against a Seller or the Centers which, if successful, would,
in Purchaser's good faith judgement reasonably exercised, prevent or
impair the ability of (i) either Seller to perform this Agreement or
(ii) Purchaser to acquire and operate any of the Centers as a retail
shopping center subsequent to the Closing.
(c) Updated Surveys. If Purchaser shall have elected to obtain
updated surveys with respect to any Center, no survey shall reflect any
state of fact which (i) was not reflected on the Survey or disclosed in
Section 5 hereof, (ii) is not a Permitted Title Exception and (iii)
materially adversely affects the marketability of the title to, or the
present use of, the Center; provided, however, that if any survey does
reflect a state of fact as described in clauses (i), (ii) and (iii)
hereof, such state of fact shall not constitute the failure of a
condition precedent if, before 5:00 p.m. on the day preceding the
Scheduled Closing Date, Sellers cause the state of fact to be
eliminated or the state of fact becomes a Permitted Title Exception.
(d) Title Commitments: Uniform Commercial Code
Certificates. No title commitment or Uniform Commercial Code
certificate obtained by Purchaser for any Center shall reflect a Title
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Exception other than a Permitted Title Exception; provided, however,
that if any title commitment or certificate does reflect a Title
Exception other than a Permitted Title Exception, such Title Exception
shall not constitute the failure of a condition precedent if, before
5:00 p.m. on the day preceding the Scheduled Closing Date, Sellers
cause such Title Exception to be removed from the title commitment or
certificate or the Title Exception becomes a Permitted Title Exception.
(e) No Taking or Unrepaired Casualty. No confiscation,
seizure, condemnation or other taking or acquisition (whether of title
or of use, temporary or permanent) of all or any portion of any Center
which diminishes or would diminish the fair market value of the Center
by $25,000 or more by or under threat of eminent domain or other
proceeding by any Governmental Authority or quasiGovernmental Authority
shall have been threatened or occurred. No unrepaired or unrestored
destruction or damage of $25,000 or more shall have occurred to any
Center, it being recognized that all risk of loss with respect to any
Center prior to Closing shall be and remain with Seller. If, prior to
Closing, any confiscation, seizure, condemnation or other taking or
acquisition of any portion of a Center has occurred, or if any
unrepaired or unrestored destruction or damage to a Center has
occurred, and if, in either case, Purchaser proceeds to close the
transaction as contemplated by this Agreement, Seller shall (as
applicable) assign without recourse to Purchaser at the Closing
Seller's entitlement to any awards payable to it as a consequence of
any such acquisition, or assign to Purchaser Seller's entitlement to
any insurance proceeds payable with respect to the destruction or
damage and, in the latter case, Purchaser shall be given a credit
against the Purchase Price for the amount of any associated deductible.
(f) Tenant Estoppel Certificates. Purchaser shall have
received letters in substantially the form of Exhibit "E" hereto each
dated no earlier than 30 days prior to the Closing Date, executed by a
duly authorized representative of each tenant named on Exhibit "F"
hereto with respect to its Lease at the indicated Center; provided,
however, if after the exercise of reasonable efforts, one or more of
the required letters is not received by the requisite date, Purchaser
will accept in satisfaction thereof a certificate or certificates
containing the information required on Exhibit " executed by the
appropriate Seller.
(g) Updated Tenant Rent Roll. Sellers shall have delivered to
Purchaser a certificate, dated as of the date preceding the Scheduled
Closing Date, reflecting any changes in the information contained on
Exhibit "C" hereto or that no such changes have occurred; provided,
however, that if a certificate reflects that changes have occurred of a
materially adverse nature, Purchaser shall have the right to terminate
this Agreement as set forth in Section 10.04 hereof.
(h) Waiver of Right to Purchase. Purchaser shall have received
evidence, reasonably satisfactory to it and the Title Company, that
Quality Oil has failed to timely exercise, or has elected not to
exercise, its preferential right to purchase Eastgate Shopping Center
as set forth in Article 10 of the Quality Oil Lease.
10.03. Satisfaction. All matters pertaining to this Section
10 shall be subject to the approval of Purchaser and its counsel as to form and
substance. If Purchaser acquires the Centers, all
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conditions precedent set forth in Section 10.02 hereof shall be deemed
satisfied.
10.04. Termination. If any condition precedent set forth in Section
10.02 hereof has not been satisfied, and satisfaction thereof has not been
waived by Purchaser, Purchaser shall have the right to terminate this Agreement
by the giving of written notice of termination to Sellers by 5:00 p.m. on the
day preceding the Scheduled Closing Date. If a notice of termination is timely
given under this Section 10.04, this Agreement shall terminate, whereupon
neither party hereto shall have any further rights, duties, liabilities or
obligations hereunder (other than as set forth in Sections 8.05, 14.11 and 14.12
hereof), nor shall Purchaser have any rights, titles or interests (equitable or
other) in and to any Center. However, Purchaser shall be entitled to receive
promptly a return of the Good Faith Deposit. If Purchaser fails to give timely
notice of termination under this Section 10.04, it shall have waived its right
to terminate this Agreement for the reasons set forth in this Section, whereupon
the transaction shall be closed in accordance with Section 12 hereof.
10.05. All Centers to be Purchased. Notwithstanding anything to the
contrary contained in this Agreement, it is expressly understood and agreed that
Purchaser shall have the right and option only to purchase all (but not less
than all) of the Centers, or to terminate this Agreement as to all (but not less
than all) of the Centers, but that Purchaser shall not have the right or the
obligation to purchase only some of the Centers. Thus, for example, if all
conditions precedent set forth in Section 10.02 hereof are satisfied (or
satisfaction thereof is waived) with respect to all Centers other than one
Center, Purchaser shall only have the right to elect (provided that such
election is timely made pursuant to Section 10.04 hereof) to purchase all of the
Centers or to terminate this Agreement, but Purchaser shall not have the right
or obligation to purchase all of the Centers other than the Center as to which
all conditions precedent were not satisfied or waived.
11. Conditions to Sellers' Obligation to Close.
11.01. General. The obligation of Sellers to sell the Centers
to Purchaser (but not the obligation of Purchaser to purchase the Centers from
Sellers) is, at Sellers' election, subject to the satisfaction, by the Scheduled
Closing Date, of each of the conditions precedent set forth in Section 11.02
hereof. Each such condition is intended solely to benefit and protect Sellers
and, accordingly, full satisfaction or waiver thereof may be insisted upon or
effected solely by Sellers. Purchaser shall render reasonable cooperation to
Sellers in causing each such condition precedent to be satisfied but shall have
no obligation to cause, or to use its best efforts to cause, same to be
satisfied or any liability to Sellers if any condition precedent is not
satisfied.
11.02. Conditions Precedent. The conditions precedent
referred to in Section 11.01 hereof are as follows:
(a) Purchaser's Warranties, Representations and Covenants. The
warranties and representations of Purchaser set forth in Section 8 hereof shall
be true and correct, and the covenants of Purchaser set forth in Section 8
hereof shall be performed, in all material respects. If on the Closing Date, a
Seller, or an officer or director thereof, has knowledge that a warranty or
representation made by Purchaser
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is false, or that a covenant of Purchaser has not been performed, in any
material respect, and the Seller proceeds to close the transaction as herein
provided, the Seller shall be deemed to have waived any post-Closing claim for
breach of the warranty, representation or covenant known by it on the Closing
Date to have been breached in any material respect, but such waiver shall not
extend to any other warranty, representation or covenant undertaken by
Purchaser.
(b) Litigation. No litigation shall have been initiated or threatened
which, if successful, would prevent or impair the ability of a Seller or
Purchaser to perform this Agreement.
(c) Subdivision of North Ridge. The City of Raleigh shall have approved
the subdivision of the North Ridge Shopping Center from the related office
building and all documents, maps and other action necessary to finalize same
shall have been recorded and completed. All costs and expenses to implement the
foregoing shall be paid by, and any compensation or other sums payable by the
City of Raleigh in connection therewith shall be paid to, Seller.
(d) Waiver of Right to Purchase. Sellers shall have received evidence,
reasonably satisfactory to them and the Title Company, that Quality Oil has
failed to timely exercise, or has elected not to exercise, its preferential
right to purchase Eastgate Shopping Center as set forth in Article 10 of the
Quality Oil Lease.
11.03. Satisfaction. All matters pertaining to this Section 11 shall be
subject to the approval of Sellers and their counsel, as to form and substance.
If Sellers sell the Centers, all conditions precedent set forth in Section 11.02
hereof shall be deemed satisfied.
11.04. Termination. If any condition precedent set forth in Section
11.02 hereof has not been satisfied, and satisfaction thereof has not been
waived by Sellers, Sellers shall have the right to terminate this Agreement by
the giving of written notice of termination to Purchaser by 5:00 p.m. on the day
preceding the Scheduled Closing Date.
If a notice of termination is timely given under this Section 11.04, this
Agreement shall terminate, whereupon neither party hereto shall have any further
rights, duties, liabilities or obligations hereunder (other than as set forth in
Sections 8.05, 14.11 and 14.12 hereof), nor shall Purchaser have any rights,
titles or interests (equitable or other) in and to any Center. However, the Good
Faith Deposit shall be returned to Purchaser. If Sellers fail to give timely
notice of termination under this Section 11.04, they shall have waived their
right to terminate this Agreement for the reasons set forth in this Section,
whereupon the transaction shall be closed in accordance with Section 12 hereof.
12. Closing.
12.01. General. Provided that all of the terms, provisions and
conditions hereof to be satisfied at or prior to the Closing have been satisfied
(or the necessity for satisfying same has been waived
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by the party entitled to do so), the Closing shall take place at 10:00 a.m. on
the Scheduled Closing Date in the office of Messrs. Smith Helms Mulliss & Moore,
L.L.P., Attorneys-At-Law, 316 West Edenton Street, Raleigh, North Carolina,
unless a different date or place of Closing is agreed upon by the parties. A
closing agent of the Title Company shall be present at the Closing. At the
Closing, the events set forth in Sections 12.02, 12.03,12.04 and 12.05 hereof
shall occur, it being understood that the performance or tender of performance
of all matters set forth in such Sections shall be deemed concurrent conditions
and neither party shall be required to perform, or tender performance of, its
obligations hereunder, unless, coincident therewith, each other person for whom
performance is required in this Section 12 performs or tenders performance of
its actions as described below.
12.02. Actions to be Taken by Sellers.
(a) Title Transfer Documents. The appropriate Seller will
execute, have acknowledged and deliver to Purchaser one or more General Warranty
Deeds, Bills of Sale and Assignments in which it conveys, transfers, assigns and
sets over unto Purchaser good and indefeasible title to each Center owned by it
free and clear of all Title Exceptions other than Permitted Title Exceptions and
Purchaser, in the case of the Leases and General Intangibles associated
therewith, and the Winn-Dixie contracts referred to in Section 14.17 hereof,
assumes the obligations of Seller thereunder and agrees to defend, indemnify and
hold Seller harmless from all breaches or defaults thereof by the Purchaser
arising after the Closing Date.
(b) FIRPTA Certificate. Each Seller will execute, swear to and
deliver to Purchaser a certificate (i) stating its United States Taxpayer
Identification Number and (ii) stating that it is not a "foreign person" within
the meaning of Section 1445 of the Code, and otherwise complying with
ss.T1.1445-2T of the regulations promulgated under said Section 1445.
(c) Physical Possession. Sellers will deliver to Purchaser
physical possession of the Centers subject only to the Permitted Title
Exceptions. Included without limitation in the foregoing are the originals of
all Leases and Lease files and all Contracts forming a part of the General
Intangibles.
(d) Corporate and Partnership Resolutions. NHP will deliver to
Purchaser corporate resolutions certified to by its corporate secretary, and TPL
will deliver to Purchaser partnership resolutions certified to by its general
partner, reflecting the authorization of the appropriate party Seller to
execute, deliver and perform this Agreement and close the transaction in
accordance with the terms hereof.
(e) Notice to Tenants. Sellers and Purchaser will execute the
tenant notification letter more fully described in Section 12.09 hereof
(f) Inventory and List. Sellers will deliver to Purchaser a
list describing in reasonable
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detail (i) all Related Personalty which has a current replacement value of in
excess of $1,000.00 and (ii) all contracts forming a part of the General
Intangibles.
(g) Termination of Management Contracts. Sellers will
execute, and cause the other party thereto to execute, an agreement terminating,
as of the Closing Date, any management contracts applicable to the Centers.
(h) Other. Sellers will execute such other instruments, and
will take such other action, as are customarily executed and taken,
respectively, in North Carolina to effectuate the conveyance of property similar
to the Centers. This Section 12.02(h) shall not be construed to require a Seller
to execute any document, or to take any other action, which increases its
liability with respect to this Agreement or the Closing beyond that stated
elsewhere herein.
12.03. Actions to be Taken by Purchaser.
(a) Payment of the Purchase Price. Purchaser will cause the
Purchase Price, as adjusted for the Closing prorations and other matters called
for in Section 12.05 hereof, plus the reimbursement called for in Section 14.07
hereof to be wire transferred to the escrow account of the Title Company.
(b) Confirmatory Certificates. Purchaser will execute, have
acknowledged and deliver to Sellers certificates confirming that it has acquired
the Centers subject to the provisions of Section 9 hereof
(c) Other. Purchaser will execute each Assignment and such
other instruments, and will take such other action, as are customarily executed
and taken, respectively, in North Carolina to effectuate the purchase of
property similar to the Centers. This Section 12.03(c) shall not be construed to
require Purchaser to execute any document, or to take any other action, which
increases its liability with respect to this Agreement or the Closing beyond
that stated elsewhere herein.
12.04. Actions to be Taken by the Title Company.
(a) Disbursement of Proceeds. Immediately after recordation of
the Deeds, the Title Company will issue to each Seller its check for, or wire
transfer to an account designated by the Seller, the portion of the Purchase
Price and other sums to which each Seller is entitled pursuant to the terms of
this Agreement.
(b) Return of Good Faith Deposit. The Title Company will
return the Good Faith Deposit to Purchaser or, at Purchaser's direction, pay the
Deposit to Seller as a credit against the Purchase Price.
(c) Other Services. The Title Company will perform such other
acts as are customarily
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performed by closing agents to facilitate the sale and purchase of property
similar to the Centers.
12.05. Prorations. All Operating Expenses (other than
insurance cancellation fees, which shall be borne solely by Sellers) shall be
prorated between Sellers and Purchaser as of the Closing Date. Sellers shall be
charged with all such items which relate to the period up to the Closing Date
and Purchaser shall be charged with all such items which relate to the period
beginning with such date. With specific respect to real estate taxes and
assessments, same shall be pro rated on a per diem basis, based upon the number
of days in the current tax year prior to the Closing Date, which shall be
allocated to Sellers, and the number of days in the current tax year from and
after the Closing Date, which shall be allocated to Purchaser. For purposes of
the preceding sentence, the term "current tax year" shall mean the fiscal year
of the applicable taxing authority in which the Closing occurs. Seller shall pay
transfer taxes and all insurance cancellation fees and shall not back charge any
tenants for same. Purchaser shall pay recordation taxes, charges and fees, all
title examination and title policy premiums, charges and fees and all resurvey
fees. Purchaser shall also reimburse Sellers for the sums called for in Section
14.17 hereof. Subject to the provisions of Section 12.07 hereof, rentals which
have been paid or are payable with respect to the Centers for the period prior
to the Closing Date shall be the property of Sellers. All rentals and other
payments which have been paid or are payable with respect to the Centers for the
period from and after the Closing Date shall be the property of and (to the
extent already received by a Seller) paid over to Purchaser at the Closing. All
percentage rents payable by any tenant shall be deemed payable on an equal per
diem basis over the period for which the payment is made. A Seller's share of
percentage rentals not calculable by the Closing Date, but received by
Purchaser, or its successors, after the Closing Date shall be promptly paid to
the Seller, without demand, on a monthly basis. If tenants have paid
contributions for marketing expenses in excess of the Seller's actual expenses
for such tenants' Center, Purchaser shall receive a credit for the excess amount
at Closing. All tenant deposits may, to the extent permitted by local law, be
retained by Sellers and a credit in the aggregate amount thereof against the
Purchase Price given to Purchaser at the Closing. If the actual amount of any
item to be prorated pursuant to this Section 12.05 is not known at the Closing
Date, the prorations shall be made on the basis of the best evidence then
available and, thereafter, when the actual amounts are determinable, a cash
settlement shall be made between Sellers and Purchaser. All items charged to
Sellers pursuant to this Section 12.05 shall be further allocated between NHP
and TPL in accordance with the Centers or Center owned by each. All prorations,
adjustments and reimbursements shall be reflected on a detailed closing
statement mutually approved by Sellers and Purchaser. Sellers and Purchaser
agree that for purposes of the detailed closing statement, net operating income
(exclusive of percentage rent, property taxes and insurance) for March 1997 (the
month in which the Closing is scheduled to occur) is estimated to be $10,000 per
day. Accordingly, Purchaser will be credited for $10,000 per day for each day in
March after the Closing Date. By May 31,1997, Sellers will complete a final
accounting of the March 1997 net operating income (exclusive of percentage rent,
property taxes and insurance) and will prepare the final adjustment for the cash
settlement between Sellers and Purchaser.
12.06. Default. If all conditions precedent set forth in Section 10
hereof have been satisfied and Sellers fulfill or tender fulfillment of all of
their obligations under Section 12.02 hereof (or satisfaction and fulfillment
thereof have been waived by Purchaser) and Purchaser thereafter fails to
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close this transaction as hereinabove provided, then Sellers, as their sole and
exclusive remedy, shall have the right to terminate this Agreement by the giving
of written notice of termination to Purchaser and instruct the Title Company to
deliver the Good Faith Deposit to Sellers as full and liquidated damages for
Purchaser's breach of this Agreement. Upon Sellers' receipt of the Good Faith
Deposit (84% of which shall be retained by NHP and 16% of which shall be
retained by TPL), this Agreement and all of Sellers' and Purchaser's rights,
duties, obligations and liabilities created hereunder shall terminate (with the
exception of Sections 8.05, 14.11 and 14.12 hereof), Sellers hereby waiving any
rights they might otherwise have to sue for damages for specific performance.
Sellers and Purchaser hereby further agree that the Good Faith Deposit is a
reasonable estimate of the probable damages which would be suffered by Sellers
in the event of Purchaser's breach of this Agreement, which damages are not
calculable in advance with certainty but which include, without limitation, the
loss by Sellers of the opportunity to market and sell the Centers to other
purchasers, administrative and legal expenses and executive time. Therefore, the
delivery of the Good Faith Deposit to Sellers as liquidated damages is fair and
reasonable under the circumstances. If, however, all conditions precedent set
forth in Section 11 hereof have been satisfied and Purchaser fulfills or tenders
fulfillment of all of its obligations under Section 12.03 hereof (or
satisfaction and fulfillment thereof have been waived by Sellers) and Sellers
thereafter fail to close this transaction as hereinabove provided, then
Purchaser, as its sole and exclusive remedies, shall have the option of (a)
waiving such failure and closing on the basis tendered by Sellers, (b)
instructing the Title Company to return the Good Faith Deposit to Purchaser and,
upon Purchaser's receipt of same, terminating this Agreement and all of Sellers'
and Purchaser's rights, duties, obligations and liabilities created hereunder
(with the exception of Sections 8.05, 14.11 and 14.12 hereof) by the giving of a
written notice of termination to Sellers, or (c) suing Sellers for specific
performance of Sellers' obligations hereunder. Notwithstanding the foregoing or
any other provision of this Agreement, Sellers shall have no obligation to
remove, bond around or otherwise cure any Title Exception, and Sellers' failure
or election not to do so shall not give rise to a remedy under clause (c)
hereof. However, Seller' failure or election not to do so shall be deemed to be
a failure of a condition precedent whereupon Purchaser, as its sole and
exclusive remedies, shall have the option of availing itself under clause (a) or
(b) hereof. Sellers hereby agree to bear directly or reimburse Purchaser for,
and Purchaser hereby agrees to bear directly or reimburse Sellers for, all
costs, including reasonable attorney's fees, incurred by Purchaser or Sellers
(as the case may be) in obtaining the Good Faith Deposit from the Title Company
pursuant to this Section 12.06.
12.07. Post-Closing Rent Collections. Notwithstanding anything to the
contrary contained in Section 12.05 hereof, if (a) any rents payable under any
Leases are delinquent on the Closing Date and a Seller shall have delivered to
Purchaser, at the Closing, a list reflecting each delinquency and the tenant
owing the same and (b) subsequent to the Closing Date, a delinquent tenant
identified on the list pays to Purchaser any delinquent sums due for the period
prior to the Closing Date together with all rents then due from and after the
Closing Date, Purchaser will promptly remit over to the Seller the amount of the
delinquency so paid. Purchaser shall exert a good faith effort to collect listed
delinquent rents but such good faith efforts shall not include the necessity of
taking or threatening to take any legal action against, or taking or threatening
to take any other action with respect to the Lease of, any delinquent tenant.
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12.08. Sellers' Reserved Rights. Neither by virtue of their execution
of this Agreement nor any Assignment shall Sellers be deemed to have assigned to
Purchaser any rights under or in connection with any Lease or General Intangible
that relates to the pre-Closing period, including any claim which either Seller
may have against any tenant, guarantor of a tenant or any other third party for
delinquent rent, indemnity, reimbursement or otherwise. Rather, Sellers hereby
reserve the right to seek and obtain a judgment against a tenant, guarantor or
other third party with respect to any such claim and to obtain any relief in
connection therewith to which a court of competent jurisdiction determines a
Seller to be entitled; provided, however, that notwithstanding the foregoing,
(a) a Seller shall not assert its right to seek any relief against a current
tenant in a Center for rents which are delinquent under its Lease at that Center
unless (i) the tenant and the amount of the delinquency was reflected on the
list described in Section 12.07(a) hereof and (ii) within a reasonable time
after the Closing Date Purchaser has failed to exert a good faith effort to
collect such rents or, having exerted such efforts, has failed to collect the
same and (b) a Seller shall have no right or power to seek or obtain, and hereby
waives and relinquishes unto Purchaser any right or power the Seller might
otherwise have had to seek or obtain, any judgment, order or decree which
disturbs the tenancy of the delinquent tenant under the Lease in question. The
provisions of this Section 12.08 shall be incorporated into each Assignment.
12.09. Tenant Notification and Deposit Return. In connection with the
Closing, Sellers and Purchaser shall execute a letter addressed to tenants in
the Centers in which, inter alia, the parties acknowledge that (a) the Center or
Centers have been conveyed to Purchaser, (b) all further rent and other payments
under the tenant's Lease are to be made in such manner as Purchaser may direct
and (c) Purchaser has assumed the Lease and all of the obligations of the
landlord thereunder, including the responsibility to return to the tenant any
deposit that may be due the tenant, the exact dollar amount of which (if any)
shall be reflected in each letter. In this regard, Purchaser hereby agrees to
defend, indemnify and hold harmless each Seller from any liability to a tenant
arising as a result of Purchaser's wrongful refusal to return to the tenant any
deposit as provided for under the tenant's Lease.
13. Survival and Indemnification.
13.01. Survival. All warranties, representations and covenants
made by Seller or Purchaser in this Agreement, and in any document, instrument
or certificate executed and delivered pursuant hereto shall survive, and shall
not be merged or extinguished by, the Closing. However, Sellers' and Purchaser's
right to seek or obtain indemnification, damages or other legal recourse against
the other party hereto (or any successor thereto) with respect to a breach of
any warranty, representation or covenant (except as set forth in the last
sentence of this Section 13.01) made in this Agreement or in any document,
instrument or certificate executed and delivered pursuant hereto shall
terminate, and be of no further force or effect, unless (a) by the date which is
548 days after the Closing Date, the aggrieved party shall have notified the
other party hereto, in writing, that the aggrieved party deems that any such
warranty, representation or covenant was breached and states therein, with
reasonable particularity, the nature of the alleged breach and the section or
provision of the relevant document which was allegedly breached and (b) by the
date which is 638 days after the Closing Date, the aggrieved party files suit
against the other party hereto seeking recourse as a consequence of such
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breach. If the aggrieved party timely notifies the other party hereto as called
for in the preceding clause (a) and timely files suit against the other party
hereto as called for in the preceding clause (b), then the warranty,
representation or covenant at issue shall not terminate, but rather shall
continue until the dispute is settled between Sellers and Purchaser or a final,
non-appealable judgment is issued by a court of competent jurisdiction with
respect thereto. The provisions of this Section 13.01 conditioning the right of
an aggrieved party as set forth in clauses (a) and (b) hereof shall not apply to
a breach or alleged breach of (x) the warranty of title contained in any deed
delivered pursuant to Section 12.02(a) hereof or (xx) the indemnification
agreements set forth in Section 13.02 hereof.
13.02. Indemnification. Provided that the Closing occurs,
Sellers shall defend, indemnify and hold harmless Purchaser from and against any
causes of action, damages, losses, liabilities, costs and expenses, including
reasonable attorney's fees, sustained or suffered by Purchaser arising from a
claim asserted by a third party for breach of contract, personal injury or death
occurring on or about the Centers provided that same accrues prior to the
Closing Date (regardless of whether asserted subsequent to the Closing Date)
and, in the case of persona] injury or death, is due to the negligence or
willful misconduct of a Seller. There shall be excluded from the aforesaid,
however, any claim which arises or is alleged to arise out of any matter or
condition covered by Section 9 hereof. Similarly, Purchaser shall defend,
indemnify and hold harmless Sellers from and against any and all causes of
action, damages, losses, liabilities, costs and expenses including reasonable
attorney's fees, arising out of a claim asserted by a third party (a) for breach
of contract, personal injury or death arising out of any wrongful or negligent
act or omission by Purchaser, or its employees, agents or representatives,
committed on or about the Centers during its inspection thereof or (b) which
accrues on or after the Closing Date with respect to a Center or (c) is included
within the scope of Section 9 hereof. Within ten days after receipt by an
indemnified party of written notice of any claim or the commencement of any
action covered by this Section 13.02, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party pursuant to this
Section 13.02, notify the indemnifying party in writing of the claim or the
commencement of the action, provided that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to the
indemnified party other than under this Section 13.02. Each indemnitor shall be
entitled, as its cost and expense, to contest any such claim by all appropriate
legal proceedings, provided that (x) the indemnitor shall have first notified
the indemnitee of its intention to do so within ten days after its receipt of
such notice from the indemnitee and (xx) the indemnitor shall have posted a bond
or other security reasonably acceptable to the indemnitee covering the
liabilities of the indemnitee under the contested claim and all costs (including
but not limited to legal and accounting fees and disbursements, penalties and
interest) as may reasonably be anticipated to be incurred in connection
therewith. If the indemnitee joins in any such contest, the indemnitor shall
have full authority to determine all action to be taken with respect thereto.
If, after such opportunity, the indemnitor elects not to contest any such claim,
the indemnitor shall be bound by the resolution of such claim obtained by the
indemnitee. If requested by the indemnitor, the indemnitee shall cooperate fully
with the indemnitor and its counsel in contesting any such claim or, if
appropriate, in making any counterclaim or cross-complaint against the party
asserting the claim, but the indemnitor will reimburse the indemnitee for any
expenses incurred by it in so cooperating. The indemnitor shall pay to the
indemnitee all amounts to which the indemnitee may become entitled by reason of
the provisions of
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this Agreement, such payment to be made within five days after such amounts are
finally determined either by mutual agreement or by final, unappealable judgment
of a court of competent jurisdiction.
14. Miscellaneous.
14.01. Commissions. Sellers hereby agree to defend, indemnify
and hold harmless Purchaser from and against any and all claims by third parties
for brokerage, commission, finder's or other fees relative to this Agreement or
the sale of the Centers, and any attorneys' fees, court costs or other costs of
litigation arising therefrom, and alleged to be due by authorization of Sellers.
Included within the foregoing are any commissions as may be due CB Commercial
Real Estate Group, Inc. and/or Realty Capital International, Inc. Purchaser
hereby agrees to defend, indemnify and hold harmless Sellers from and against
any and all claims by third parties for brokerage, commission, finder's or other
fees relative to this Agreement or the sale of the Centers, and any attorneys'
fees, court costs or other costs of litigation arising therefrom, and alleged to
be due by authorization of Purchaser. Included within the foregoing are any
commissions as may be due Mega Realty Advisors.
14.02. Notices. All notices and other communications given
pursuant to this Agreement shall be in writing and shall either be mailed by
first class mail, postage prepaid, registered or certified with return receipt
requested, or delivered in person to the intended addressee, or sent by prepaid
telegram, telecopy or other "facsimile mail" followed by confirmatory letter or
sent by overnight delivery service with written confirmation of receipt. Notice
so mailed shall be effective upon the expiration of three business days after
its deposit. Notice given in any other manner shall be effective only if and
when received by the addressee. For purposes of notice, the address of the
parties shall be as follows:
If to NHP or TPL, to: North Hills Properties, Inc.
4224 Six Forks Road
Raleigh, North Carolina 27609
Attn: Mr. James A. Walker, President
Telefax No. (919) 787-1923
and
H. Arthur Sandman
7200 Stonehenge Drive
Suite 204
Raleigh, North Carolina 27613
Telefax No. (919) 676-4617
with a copy to: Gary S. Grossman
Attorney at Law
University State Bank Plaza
Suite 520
5615 Kirby Drive
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Houston, Texas 77005-2448
Telefax No. (713) 524-3817
If to Purchaser, to: FAC Realty, Inc.
11000 Regency Parkway
East Tower, Suite 300
Cary, North Carolina 27511
Attn: Mr. C. Cammack Morton, President
Telefax No. (919) 462-8799
with a copy to: Michaela M. Twomey, Esq.
1095 Old Cedar Road
McLean, Virginia 22102
Telefax No. (703) 506-9137
Each party shall have the right to change its address for notice hereunder to
any other location by the giving of 10 days' notice to the other party in the
manner set forth above.
14.03. Time. Time shall be of the essence in all things
pertaining to the performance of this Agreement. All times expressed in this
Agreement shall be local (North Carolina) time.
14.04. Law Governing. This Agreement, and the obligations of
the parties hereunder, shall be governed by and construed in accordance with the
laws of the State of North Carolina.
14.05. Attorneys' Fees. If any litigation is initiated or
defended by any party against the other party relating to this Agreement or the
subject matter hereof, the party prevailing in such litigation shall be entitled
to recover, in addition to all damages allowed and other relief, all reasonable
attorneys' fees, court costs and other litigation costs incurred in connection
therewith.
14.06. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective,
successors and assigns. This Agreement may he freely assigned by Seller or
Purchaser.
14.07. Entire Agreement: Amendments: Waiver. This Agreement
contains the entire agreement among the parties relating to the subject matter
hereof and all prior agreements relative hereto which are not contained herein
are terminated. This Agreement may not be amended orally but only by setting
same forth in a document duly executed by all parties. Any alleged amendment,
variation, modification or change herein which is not so documented shall not be
effective as to any party. However, provisions of this Agreement intended to
benefit only one party may be waived by that party by evidencing such waiver in
writing without the necessity of joinder by any other party hereto, and may be
deemed waived where expressly provided in this Agreement.
14.08. Exhibits. Each Exhibit attached hereto is hereby
incorporated herein for any and all
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purposes.
14.09. Captions. The section and subsection headings appearing
in this Agreement are for convenience of reference only and are not intended,
and shall not be construed, to limit or define the text or meaning of any
section or subsection hereof.
14.10. Severability. This Agreement is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules and regulations. If any provision of this
Agreement or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, but the extent of the
invalidity or unenforceability does not destroy the basis of the bargain as
expressed herein, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the greatest extent permitted by law.
14.11. Publicity. All notices to third parties, and all
publicity or releases, with respect to the transaction contemplated by this
Agreement shall be mutually approved by Sellers and Purchaser prior to release
or dissemination by any party hereto, or by any person retained by either party
hereto.
14.12. Confidentiality of Information. All information
obtained pursuant to this Agreement by any party from another party hereto shall
be and remain confidential, regardless of whether the Closing occurs, except for
(a) information which is required to be disclosed by applicable law, (b)
information the disclosure of which is reasonably required to enforce the rights
of either Seller or Purchaser under this Agreement or (c) information which
becomes a part of the public domain other than by a breach of this Section
14.12. If the Closing does not occur, for any reason, all such information,
including all records, leases, contracts, files, plans, reports and other
materials relating to the Centers (other than any materials generated by
Purchaser or its representatives), together with all test reports reflecting the
results of any tests conducted by or on behalf of Purchaser with respect to the
Centers, shall be delivered forthwith and without demand to Sellers.
14.13. Further Assurances. At any time or times after the date
hereof, Sellers and Purchaser shall execute, have acknowledged and deliver to
the other party any and all instruments, and take any and all other action, as
the other party may reasonably request to evidence or perfect the transfer of
the Centers or otherwise to effectuate the intents and purposes of this
Agreement.
14.14. Recordation. Purchaser hereby agrees with Sellers not
to file or record this Agreement in any public records prior to Closing unless
and until Purchaser initiates legal action against Sellers based upon Sellers'
alleged breach of their obligation to close the transaction in accordance with
the terms of this Agreement. Any breach of this Section 14.14 shall, at Seller's
written election, render this Agreement voidable ab initio.
14.15. Consent. Wherever Sellers' or Purchaser's consent or
approval is expressly required by any provision of this Agreement, such consent
or approval shall not be unreasonably withheld, conditioned or delayed.
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14.17. Winn-Dixie Store. Gateway Shopping Center. Purchaser
acknowledges its understanding that the lease agreement which has been signed
with Winn-Dixie at Gateway Shopping Center requires NHP to construct the
approximately 44,000 square foot store premises and certain related facilities
for Winn-Dixie. To meet the required timetable, work has been, and will continue
to be, undertaken in connection with the site work, the preparation of
architectural and engineering drawings and the actual construction. Prior to the
Closing, NHP will enter into all contracts and other arrangements which are
necessary or reasonably appropriate to cause or permit such work to be done and
will pay all expenses incurred in connection therewith. Purchaser shall have the
right to approve all such contracts; provided, however, that if Purchaser
refuses to approve a contract which has been approved by NHP and Winn-Dixie, NHP
shall nevertheless have the right to proceed with the contract in which case
Purchaser's sole recourse shall be to terminate this Agreement and receive a
return of the Good Faith Deposit. Purchaser will reimburse NHP' in immediately
available funds at the Closing for all sums expended by NHP or North Hills,
Inc., a North Carolina corporation and an affiliate of NHP, ("NHI") in
connection with the foregoing from January 1,1997 through the Closing Date. In
addition, Purchaser will expressly assume in the Assignment any and all of NHP's
or NHI's obligations under any contracts entered into in connection with the
foregoing, and indemnify NHP and NHI from any and all liabilities or causes of
action thereunder, which arise from and after the Closing Date. NHP will
endeavor to keep Purchaser generally advised as to the status of the work and
afford Purchaser the opportunity to have a representative present at any meeting
or meetings with
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Winn-Dixie or the contractor at which any major decisions are to be made.
14.18. Multiple Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be an original but all of which
shall constitute but one instrument.
EXECUTED on the date and year above first written.
ATTEST: NORTH HILLS PROPERTIES, INC.
By: By: /s/ James A. Walker
--------------------------- -----------------------------
Secretary James A. Walker, President
(Corporate Seal)
ATTEST: TOWER PROPERTIES LIMITED
PARTNERSHIP (SEAL)
By: North Hills Properties, Inc.,
general partner
By:
-----------------------------
Secretary
By: /s/ James A. Walker
----------------------------
(Corporate Seal) James A. Walker, President
By: /s/ H. Arthur Sandman (SEAL)
-------------------------------
H. Arthur Sandman,
general partner
TPL
(collectively SELLERS)
ATTEST: FAC REALTY, INC.
By: By: /s/ C. Cammack Morton
----------------------- ----------------------------
Secretary C. Cammack Morton, President
(Corporate Seal)
PURCHASER
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