<PAGE>
Securities Exchange Act of 1934 -- Form 8-KA
- -------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Date of Report (date of earliest event reported):
November 22, 1996
-------------------------------------------------------------
CBL & ASSOCIATES PROPERTIES, INC.
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-12494 62-1545718
------------- ----------------- --------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
One Park Place, 6148 Lee Highway, Chattanooga, Tennessee 37421
- ----------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(423) 855-0001
- ----------------------------------------------------------------
<PAGE>
CBL & ASSOCIATES PROPERTIES, INC.
ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF ST. CLAIR SQUARE-FAIRVIEW HEIGHTS, ILLINOIS
On November 22, 1996, St. Clair Square Limited Partnership (the
"St. Clair Square Limited Partnership"), a majority-owned
subsidiary of CBL & Associates Properties, Inc. (The "Registrant")
acquired St. Clair Mall, a regional shopping mall located near St. Louis,
Missouri, containing approximately 1,044,599 square feet of total
gross leaseable area ("GLA) including 315,656 of mall store GLA
from The Prudential Insurance Company of America ("Prudential")
pursuant to a Purchase and Sales Agreement between Prudential
and St. Clair Square Limited Partnership (the "Purchase Agreement").
The assets acquired included, among other things, real property,
the buildings, improvements, and fixtures located theron,
certain lease interests, personal property and rights related thereto.
The aggregate purchase price, including closing costs, was
approximately $86.6 million and was determined in good faith arms
length negotiations between Registrant and Prudential, an unrelated
third party. In negotiating the purchase price the Registrant
considered, among other facts, the mall's historical and projected
cash flow, the nature and term of existing leases, the current
operating costs, the physical condition of the property, and the
terms and conditions of available financing. There were no
independent appraisals obtained by the Registrant. The purchase
price consisted of $86.6 million in cash. The cash consideration
was paid from proceeds from the Registrant's lines of credit and
proceeds from a promissory note in the amount of $66 million which
St. Clair Limited Partnership placed with Wells Fargo Bank N.A..
The Registrant intends to continue operating the mall as currently
operated and leasing space therein to national and local retailers.
The description contained herein of the transaction described above
does not purport to be complete and is qualified in its entirety by
reference to the Purchase and Sale Agreement, which is filed as an
exhibit to this document.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Report of Independent Public Accountants F-1
Statements of excess revenues over specific
expenses for the nine months ended
September 30, 1995 and 1996(Unaudited) and
for the year ended December 31, 1995 F-2
Notes to Financial Statements F-3
B) PRO FORMA FINANCIAL INFORMATION OF REGISTRANT
Consolidated statement of operations for
the nine months ended September 30, 1996 F-4
Consolidated statement of operations for
the year ended December 31, 1995 F-5
Consolidated balance sheet as of
September 30, 1996 F-6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
of CBL & Associates Properties, Inc.
We have audited the accompanying statement of excess revenues
over specific operating expenses of St. Clair Square for the year ended
December 31, 1995. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the statement of
excess revenues over specific operating expenses is free of material mis-
statement. An audit includes examining, on a test basis, evidence sup-
porting the amounts and disclosures in the statement. An audit also in-
cludes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of com-
plying with the rules and regulations of the Securities and Exchange Com-
mission and excludes certain material expenses that would not be comparable
to those resulting from the proposed future operations of the Property
described in Note 2 and is not intended to be a complete presentation of
the Property's revenues and expenses.
In our opinion, the statement referred to above presents fairly,
in all material respects, the excess revenues over specific operating ex-
penses (exclusive of expenses described in Note 2) of St. Clair Square for
the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
Arthur Andersen, LLP
Chattanooga, Tennessee
December 12, 1996
_______________________________________________________________________________
ST. CLAIR SQUARE
STATEMENTS OF EXCESS REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1995 AND 1996 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
Nine Nine
Year Ended Months Ended Months Ended
December 31, September 30, September 30,
1995 1995 1996
____________ _____________ _____________
(unaudited) (unaudited)
<S> <C> <C> <C>
Revenues:
Rental revenues
Minimum $ 6,593 $ 4,873 $ 5,123
Percentage 664 505 432
Tenant reimbursements 2,749 2,014 2,446
Other property revenues 513 311 279
__________ _________ _________
Total revenues $ 10,519 $ 7,703 $ 8,280
Specific operating expenses (Note 2):
Property operating 914 689 661
Real estate taxes 919 656 797
Maintenance and repairs 1,249 888 1,008
__________ _________ _________
Excess revenues over specific
operating expenses $ 7,437 $ 5,470 $ 5,814
========== ========= =========
</TABLE>
F-2
____________________________________________________________________________
ST. CLAIR SQUARE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. DESCRIPTION OF PROPERTY
On November 22, 1996, St. Clair Square Limited Partnership, a majority-
owned subsidiary of CBL & Associates Properties, Inc., acquired St. Clair
Square (the "Property"), a regional shopping mall located near St. Louis,
Missouri, containing approximately 1,044,600 square feet of total gross
leasable area.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying statements of excess revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not com-
parable to the operations of the Property after acquisition, such as
depreciation and management fees.
Revenue Recognition
Rental revenue attributable to operating leases is recognized on a
straight-line basis over the initial term of the related leases. Certain
tenants are required to pay additional rent if sales volume exceeds
specified amounts. The Property recognizes this additional rent as
revenue when such amounts become determinable.
Tenant Reimbursements
The Property receives reimbursements from tenants for certain costs as
provided in the lease agreements. These costs consist of real estate
taxes, common area maintenance and other recoverable costs. Tenant
reimbursements are recognized as revenue in the period the costs are
incurred.
F-3
___________________________________________________________________________
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statements of operations are presented
as if the acquisition of St. Clair Square had taken place as of the beginning
of each period presented. In management's opinion, all adjustments necessary
to present fairly the effects of the acquisition have been made.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of what the actual results of operations of CBL &
Associates Properties, Inc. (the "Company") would have been assuming the
Company had acquired St. Clair Square as of the beginning of each period
presented, nor do they purport to represent the results of operations for
future periods.
CBL & ASSOCIATES PROPERTIES, INC
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited And Amounts in Thousands, Except Per Share Amounts)
<TABLE>
CBL St. Clair Pro Forma Pro Forma
Historical Square Adjustments Consolidated
_____________ ___________ _____________ ______________
<S> <C> <C> <C> <C>
REVENUES:
Rentals:
Minimum $ 67,875 $ 5,123 $ - $ 72,998
Percentage 1,865 432 - 2,297
Other 689 - - 689
Tenant reimbursements 31,555 2,446 - 34,001
Management leasing fees 1,845 - - 1,845
Development fees 7 - - 7
Interest and other 3,004 279 - 3,283
__________ _________ __________ _________
Total revenues 106,840 8,280 - 115,120
__________ _________ __________ _________
EXPENSES:
Property operating 17,424 661 - 18,085
Depreciation and
amortization 18,582 - 1,886(A) 20,468
Real estate taxes 8,258 797 - 9,055
Maintenance and repairs 6,498 1,008 - 7,506
General and
administrative 6,208 - - 6,208
Interest 23,250 - 4,729(B) 27,979
Other 450 - - 450
__________ _________ __________ _________
Total expenses 80,670 2,466 6,615 89,751
__________ _________ __________ _________
INCOME FROM OPERATIONS 26,170 5,814 (6,615) 25,369
GAIN ON SALES OF
REAL ESTATE ASSETS 8,890 - - 8,890
EQUITY IN EARNINGS OF UN-
UNCONSOLIDATED AFFILIATES 709 - - 709
MINORITY INTEREST IN EARNINGS:
Operating partnership (10,971) - 248(C) (10,723)
Shopping Center
properties (385) - - (385)
__________ _________ ___________ __________
INCOME BEFORE EXTRA-
ORDINARY ITEM $ 24,413 $ 5,814 $(6,367) $ 23,860
EXTRAORDINARY LOSS ON
EARLY EXTINGUISHMENT
OF DEBT - - - -
__________ _________ __________ __________
Net income $ 24,413 $ 5,814 $(6,367) $ 23,860
========== ========= ========== ==========
EARNINGS PER COMMON SHARE DATA:
Income before extra-
ordinary item $ 1.17 $ 1.14
Extraordinary loss on
early extinguishment
of debt - -
___________ __________
Net income $ 1.17 $ 1.14
=========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 20,873 20,873
=========== ==========
</TABLE>
(A) Reflects depreciation expense on the St. Clair Square acquisition com-
puted on the straight-line method over the estimated useful life of
30 years.
(B) Reflects interest expense associated with the $66,000 mortgage note
payable and the $20,139 of borrowings under the Company's line of
credit agreement, both at LIBOR plus 1.5% (7.32%), in connection with
the acquisition of St. Clair Square.
(C) Reflects the minority interests' share of the income from operations
of St. Clair Square and the pro forma adjustments.
F-4
______________________________________________________________________________
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited And Amounts In Thousands, Except Per Share Amounts)
CBL St. Clair Pro Forma Pro Forma
Historical Square Adjustments Consolidated
_____________ ___________ _____________ ______________
<TABLE>
<S> <C> <C> <C> <C>
REVENUES:
Rentals:
Minimum $ 82,319 $ 6,593 $ - $ 88,912
Percentage 2,811 664 - 3,475
Other 1,507 - - 1,507
Tenant reimbursements 38,370 2,749 - 41,119
Management leasing fees 2,235 - - 2,235
Development fees 271 - - 271
Interest and other 4,689 513 - 5,202
__________ _________ __________ _________
Total revenues 132,202 10,519 - 142,721
__________ _________ __________ _________
EXPENSES:
Property operating 21,513 914 - 22,427
Depreciation and
amortization 23,407 - 2,515(A) 25,922
Real estate taxes 10,087 919 - 11,006
Maintenance and repairs 8,991 1,249 10,240
General and
administrative 8,049 - - 8,049
Interest 31,951 - 6,615(B) 38,566
Other 605 - - 605
__________ _________ __________ _________
Total expenses 104,603 3,082 9,130 116,815
__________ _________ __________ _________
INCOME FROM OPERATIONS 27,599 7,437 (9,130) 25,906
GAIN ON SALES OF
REAL ESTATE ASSETS 2,213 - - 2,213
EQUITY IN EARNINGS OF UN-
UNCONSOLIDATED AFFILIATES 1,450 - - 1,450
MINORITY INTEREST IN EARNINGS:
Operating partnership (10,527) - 588(C) ( 9,939)
Shopping Center
properties (386) - - (386)
__________ _________ ___________ __________
INCOME BEFORE EXTRA-
ORDINARY ITEM $ 20,349 $ 7,437 $(8,542) $ 19,244
EXTRAORDINARY LOSS
ON EARLY EXTINGUISHMENT
OF DEBT (326) - - (326)
__________ _________ __________ __________
Net income $ 20,023 $ 7,437 $(8,542) $ 18,918
========== ========= ========== ==========
EARNINGS PER COMMON SHARE DATA:
Income before extra-
ordinary item $ 1.14 $ 1.08
Extraordinary loss on
early extinguishment
of debt (0.02) (0.02)
____________ __________
Net income $ 1.12 $ 1.06
============ ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,827 17,827
=========== ==========
</TABLE>
(A) Reflects depreciation expense on the St. Clair Square acquisition com-
puted on the straight-line method over the estimated useful life of
30 years.
(B) Reflects interest expense associated with the $66,000 mortgage note
payable and the $20,139 of borrowings under the Company's line of
credit agreement, both at LIBOR plus 1.5% (7.68%), in connection with
the acquisition of St. Clair Square. If interest rates under the
mortgage note payable and line of credit agreement fluctuated 0.125%,
interest costs on the pro forma indebtedness would increase or
decrease by approximately $108,000 on an annualized basis.
(C) Reflects the minority interests' share of the income from operations
of St. Clair Square and the pro forma adjustments.
F-5
______________________________________________________________________________
PRO FORMA CONSOLIDATED BALANCE SHEET
The unaudited pro forma consolidated balance sheet is presented as if the
acquisition of St. Clair Square had occurred as of September 30, 1996.
The unaudited pro forma consolidated balance sheet is not necessarily
indicative of what the actual financial position would have been at
September 30, 1996 nor does it purport to represent the future financial
position of the Company.
CBL & ASSOCIATES PROPERTIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited And Dollars In Thousands, Except Per Share Amounts)
<TABLE>
Pro Forma
CBL Acquisition Company
Historical Adjustments Pro Forma
__________ ___________ ___________
ASSETS (A)
_______________________________________
<S> <C> <C> <C>
REAL ESTATE ASSETS:
Land $ 99,793 $ 11,036 $110,829
Buildings and improvements 732,518 75,436 807,954
__________ __________ __________
832,311 86,472 918,783
Less Accumulated depreciation (107,901) - (107,901)
__________ __________ __________
724,410 86,472 810,882
Developments in progress 107,923 - 107,923
__________ __________ __________
Net Investment in real estate assets 832,333 86,472 918,805
CASH AND CASH EQUIVALENTS 12,694 - 12,694
RECEIVABLES:
Tenant, net of allowance for doubtful
accounts of $450 11,013 - 11,013
Other 1,147 - 1,147
MORTGAGE NOTES RECEIVABLE 42,893 - 42,893
OTHER ASSETS 6,877 - 6,877
__________ __________ __________
$906,957 $ 86,472 $993,429
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
__________________________________________
MORTGAGE AND OTHER NOTES PAYABLE $474,351 $ 86,139 $560,490
ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES 26,012 333 26,345
_________ _________ __________
Total Liabilities 500,363 86,472 586,835
_________ _________ __________
COMMITMENTS AND CONTINGENCIES
DISTRIBUTIONS AND LOSSES IN EXCESS OF
INVESTMENT IN UNCONSOLIDATED
AFFILIATES 9,159 - 9,159
_________ _________ __________
MINORITY INTEREST 117,775 - 117,775
_________ _________ __________
SHAREHOLDER'S EQUITY:
Preferred stock, $0.01 par value,
5,000,000 shares authorized, none issued
Common stock, $0.01 par value, 95,000,000
shares authorized, 20,895,717 shares issued
and outstanding at September 30, 1996
209 - 209
Excess stock, $0.01 par value,
100,000,000 shares authorized, none issued
- - -
Additional paid-in capital 292,877 - 292,877
Accumulated deficit (13,269) - (13,269)
Deferred compensation (157) - (157)
_________ __________ __________
Total shareholders' equity 279,660 - 279,660
_________ __________ __________
$906,957 $ 86,472 $993,429
======= ========== ==========
</TABLE>
(A) Reflects the acquisition of St. Clair Square through the issuance of a
$66,000 mortgage note payable, borrowings of $20,139 under the Company's
line of credit agreement, and the assumption of certain liabilities.
F-6
_____________________________________________________________________________
EXHIBITS
2.1Purchase and Sale Agreement dated
October 4, 1996 between The Prudential
corporation and St. Clair Square Limited
Partnership, an Illinois limited partnerhsip.
23 Consent of Arthur Andersen LLP
<PAGE>
SIGNATURE
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.
CBL & ASSOCIATES PROPERTIES, INC.
John N. Foy
-----------------------------
John N. Foy
Executive Vice President,
Chief Financial Officer and
Secretary
(Authorized Officer of the
Registrant,
Principal Financial Officer and
Principal Accounting Officer)
Date: January 15, 1996
<PAGE>
EXHIBITS INDEX
Exhibit:
2.1 Purchase and Sale Agreement dated October 4,
1996 between The Prudential Insurance Company of
America a New Jersey corporation and St. Clair
Square Limited Partnership, an Illinois limited
partnership.
23 Consent of Arthur Andersen LLP
<PAGE>
<PAGE>
PURCHASE AND SALE AGREEMENT
by and between
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation
and
ST. CLAIR SQUARE LIMITED PARTNERSHIP,
an Illinois limited partnership
Property Name: St. Clair Square
Location: Fairview Heights, Illinois
Date: October 4, 1996<PAGE>
TABLE OF CONTENTS
ARTICLE PAGE
1 SALE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . 1
1.1 Real Property . . . . . . . . . . . . . . . . . . . . 1
1.2 Personal Property . . . . . . . . . . . . . . . . . . 1
1.3 Other Property Rights . . . . . . . . . . . . . . . . 2
2 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Deposit Money . . . . . . . . . . . . . . . . . . . . 2
2.2 Cash at Closing . . . . . . . . . . . . . . . . . . . 3
3 TITLE MATTERS. . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Title to Real Property. . . . . . . . . . . . . . . . 3
3.2 Title Defects . . . . . . . . . . . . . . . . . . . . 3
3.2.1 Certain Exceptions to Title . . . . . . . . 3
3.2.2 Discharge of Title Objections . . . . . . . 4
3.3 Title Insurance . . . . . . . . . . . . . . . . . . . 5
4 BUYER'S DUE DILIGENCE/CONDITION OF THE PROPERTY. . . . . . 5
5 ADJUSTMENTS AND PRORATIONS . . . . . . . . . . . . . . . . 5
5.1 Real Estate Taxes . . . . . . . . . . . . . . . . . . 5
5.2 Fixed, Minimum and Base Rents . . . . . . . . . . . . 6
5.3 Overage Rents . . . . . . . . . . . . . . . . . . . . 6
5.4 Common Area Maintenance Charges, Central Plant
Charges and Similar Expenses. . . . . . . . . . . . . 7
5.5 Prepaid Rents and Security Deposits . . . . . . . . . 8
5.6 Contracts . . . . . . . . . . . . . . . . . . . . . . 8
5.7 Ground Lease Rentals. . . . . . . . . . . . . . . . . 8
5.8 Merchant Association Dues . . . . . . . . . . . . . . 8
5.9 Apportionment Credit. . . . . . . . . . . . . . . . . 8
5.10 Closing Costs . . . . . . . . . . . . . . . . . . . . 8
5.11 Delayed Adjustment. . . . . . . . . . . . . . . . . . 9
5.12 Collections and Application of Payments after
Closing . . . . . . . . . . . . . . . . . . . . . . . 9
5.13 Survival. . . . . . . . . . . . . . . . . . . . . . . 9
6 CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.1 Closing Date. . . . . . . . . . . . . . . . . . . . . 10
6.2 Title Transfer and Payment of Purchase Price. . . . . 10
6.3 Seller's Closing Deliveries.. . . . . . . . . . . . . 10
6.4 Buyer Closing Deliveries. . . . . . . . . . . . . . . 12
6.5 Delivery of Deed. . . . . . . . . . . . . . . . . . . 13
6.6 Property Document Escrow. . . . . . . . . . . . . . . 13
7 CONDITIONS TO CLOSING. . . . . . . . . . . . . . . . . . . 14
7.1 Seller's Obligations. . . . . . . . . . . . . . . . . 14
7.2 Buyer's Obligations . . . . . . . . . . . . . . . . . 14
ARTICLE PAGE
7.3 Waiver of Failure of Conditions Precedent . . . . . . 15
8 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 15
8.1 Buyer's Representations . . . . . . . . . . . . . . . 15
8.1.1 Buyer's Authorization . . . . . . . . . . . 15
8.2 Seller's Representations. . . . . . . . . . . . . . . 16
8.2.1 Seller's Authorization. . . . . . . . . . . 16
8.2.6 Other Seller's Representations. . . . . . . 17
8.3 General Provisions. . . . . . . . . . . . . . . . . . 17
8.3.1 No Representation As to Leases. . . . . . . 18
8.3.2 Definition of "Seller's Knowledge". . . . . 18
8.3.3 Seller's Representations Deemed Modified. . 18
8.3.4 Notice of Breach; Seller's Right to Cure. . 18
8.3.5 Survival; Limitation on Seller's
Liability. . . . . . . . . . . . . . . . . . . . 19
9 COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Buyer's Covenants . . . . . . . . . . . . . . . . . . 20
9.1.1 Confidentiality . . . . . . . . . . . . . . 20
9.1.2 Buyer's Indemnity; Delivery of Reports. . . 20
9.1.3 Limit on Government Contacts. . . . . . . . 21
9.2 Seller's Covenants. . . . . . . . . . . . . . . . . . 21
9.2.1 Service Contracts . . . . . . . . . . . . . 21
9.2.2 Maintenance of Property . . . . . . . . . . 21
9.2.3 Access to Property. . . . . . . . . . . . . 22
9.3 Mutual Covenants. . . . . . . . . . . . . . . . . . . 22
9.3.1 Publicity . . . . . . . . . . . . . . . . . 22
9.3.2 Broker. . . . . . . . . . . . . . . . . . . 22
9.3.3 Tax Refunds and Credits . . . . . . . . . . 23
9.3.4 Survival. . . . . . . . . . . . . . . . . . 23
10 FAILURE OF CONDITIONS. . . . . . . . . . . . . . . . . . . 23
10.1 To Seller's Obligations . . . . . . . . . . . . . . . 23
10.2 To Buyer's Obligations. . . . . . . . . . . . . . . . 24
11 CONDEMNATION/CASUALTY. . . . . . . . . . . . . . . . . . . 24
11.1 Condemnation. . . . . . . . . . . . . . . . . . . . . 24
11.1.1 Right to Terminate . . . . . . . . . . . . . 24
11.1.2 Assignment of Proceeds . . . . . . . . . . . 24
11.2 Destruction or Damage . . . . . . . . . . . . . . . . 25
11.3 Insurance . . . . . . . . . . . . . . . . . . . . . . 25
11.4 Effect of Termination . . . . . . . . . . . . . . . . 25
11.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . 25
12 ESTOPPELS. . . . . . . . . . . . . . . . . . . . . . . . . 26
12.1 Estoppels . . . . . . . . . . . . . . . . . . . . . . 26
12.1.1 Ground Lease Estoppel Letter. . . . . . . . 26
ARTICLE PAGE
12.1.2 Ground Lease Estoppel Letter. . . . . . . . 26
12.1.3 REA Estoppel Letters. . . . . . . . . . . . 26
12.1.4 Missing Estoppels . . . . . . . . . . . . . 27
13 LEASING MATTERS. . . . . . . . . . . . . . . . . . . . . . 27
13.1 New Leases. . . . . . . . . . . . . . . . . . . . . . 27
13.2 Lease Expenses. . . . . . . . . . . . . . . . . . . . 27
13.3 Other Lease Activity. . . . . . . . . . . . . . . . . 28
13.4 Lease Enforcement . . . . . . . . . . . . . . . . . . 29
13.5 Lease Termination Prior to Closing. . . . . . . . . . 29
14 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 29
14.1 Buyer's Assignment. . . . . . . . . . . . . . . . . . 29
14.2 Designation Agreement . . . . . . . . . . . . . . . . 29
14.3 Survival/Merger . . . . . . . . . . . . . . . . . . . 30
14.4 Integration; Waiver . . . . . . . . . . . . . . . . . 30
14.5 Governing Law . . . . . . . . . . . . . . . . . . . . 30
14.6 Captions Not Binding; Schedules and Exhibits. . . . . 30
14.7 Binding Effect. . . . . . . . . . . . . . . . . . . . 31
14.8 Severability. . . . . . . . . . . . . . . . . . . . . 31
14.9 Notices . . . . . . . . . . . . . . . . . . . . . . . 31
14.10 Counterparts . . . . . . . . . . . . . . . . . . 32
14.11 No Recordation . . . . . . . . . . . . . . . . . 32
14.12 Additional Agreements; Further Assurances. . . . 32
14.13 Construction . . . . . . . . . . . . . . . . . . 32
14.14 ERISA. . . . . . . . . . . . . . . . . . . . . . 33
14.15 Business Day . . . . . . . . . . . . . . . . . . 33
14.16 Seller's Maximum Aggregate Liability . . . . . . 33
EXHIBITS
Exhibit A - Legal Description
Exhibit B - List of Contracts And Leasing Commissions Due
Exhibit C - Form of Assignment of Ground Lease
Exhibit D - Title Report
Exhibit E - Personal Property
Exhibit F - Form of Buyer's As-Is Certificate And Agreement
Exhibit G - Form of Special Warranty Deed
Exhibit H - Form of Bill of Sale
Exhibit I - Form of Assignment of Leases
Exhibit J - List of Tenants
Exhibit K - Form of Assignment of Contracts
Exhibit L-1 - List of Anchor Tenants
Exhibit L-2 - Form of Tenant Estoppel Letter
Exhibit L-3 - Form of Seller's Estoppel Certificate
Exhibit M - Form of Notice to Tenants
Exhibit N - Form of Seller's FIRPTA Affidavit
Exhibit O - Form of Buyer's ERISA Representation
Exhibit P - Litigation Notices, Contract Defaults,
Governmental Violations And Lease Defaults
Exhibit Q - Permitted Exceptions
Exhibit R - Form of Irrevocable Letter of Credit
Exhibit S - Prospective Leases
Exhibit T - Form of Ground Lease Estoppel<PAGE>
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made this
4th day of October, 1996, by and between THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, a New Jersey corporation ("Seller"), and ST.
CLAIR SQUARE LIMITED PARTNERSHIP, an Illinois limited partnership
("Buyer").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements set
forth herein the parties hereto do hereby agree as follows:
ARTICLE 1
SALE OF PROPERTY
Seller agrees to sell, transfer and assign and Buyer agrees to
purchase, accept and assume, subject to the terms and conditions
stated herein, all of Seller's right, title and interest in and to
the following (herein collectively called the "Property"):
1.1 REAL PROPERTY. Fee simple estate in that certain parcel
of real estate located in Fairview Heights, Illinois and legally
described as Parcel 1 in EXHIBIT A attached hereto and incorporated
herein by this reference (the "Fee Estate") and that certain
leasehold estate (the "Leasehold Estate") granted by that certain
ground lease (the "Ground Lease") described in Parcel 2 in
EXHIBIT A demising certain premises (the "Ground Lease Premises")
described in the exception from Parcel 1 in EXHIBIT A, together
with all buildings, improvements and fixtures located on the Fee
Estate or the Ground Lease Premises and all rights, privileges and
appurtenances pertaining thereto including all of Seller's right,
title and interest in and to all rights-of-way, open or proposed
streets, alleys, easements (including all reciprocal easement
agreements), strips or gores of land adjacent thereto (herein
collectively called the "Real Property"); and
1.2 PERSONAL PROPERTY. All tangible personal property owned
by Seller (excluding any computer or computer equipment and
software owned by Seller or Seller's property manager), located on
the Real Property, and used in the ownership, operation and
maintenance of the Real Property and all nonconfidential books,
records and files (excluding appraisals, budgets, Seller's
strategic plans for the Property, internal analyses, marketing
information regarding the sale of the Property, submissions
relating to Seller's obtaining of corporate authorization, attorney
and accountant work product, or other information in the possession
or control of Seller or Seller's property manager which Seller
deems proprietary (collectively, "Proprietary Materials")) relating
to the Real Property (herein collectively called the "Personal
Property"); and
1.3 OTHER PROPERTY RIGHTS. (a) Seller's interest as landlord
in all leases encumbering the Real Property on the Closing Date (as
defined in Section 6.1); (b) if and to the extent assignable by
Seller, (i) all service, supply, maintenance, utility and
commission agreements, all equipment leases entered into in
connection with the maintenance and operation of the Property, and
all contracts, subcontracts and agreements relating to the
construction of any unfinished tenant improvements, including,
without limitation, the agreements described in EXHIBIT B attached
hereto and incorporated herein by this reference, and (ii) Seller's
interest in all licenses, permits and other written authorizations
necessary for the use, operation or ownership of the Real Property
or Personal Property; and (c) all rights of Seller (if any) to the
name "St. Clair Square", to the extent such rights are assignable
(it being acknowledged by Buyer that Seller does not have exclusive
rights to use such name and that Seller has not registered the same
in any manner) (the rights and interests of Seller described in
clauses (a) through (c) hereinabove being herein collectively
called the "Other Property Rights").
ARTICLE 2
PURCHASE PRICE
The total purchase price to be paid by Buyer for the purchase
of the Property is the sum of EIGHTY-SIX MILLION FIVE HUNDRED
THOUSAND AND NO/100 DOLLARS ($86,500,000.00) in immediately
available funds (the "Purchase Price"). The Purchase Price shall
be paid in the following manner:
2.1 DEPOSIT MONEY. Upon expiration of the Due Diligence
Period (as defined below), Buyer shall deposit the sum of One
Million AND NO/100 DOLLARS ($1,000,000.00) in immediately available
funds as a deposit (the "Deposit") with Chicago Title and Trust
Company whose mailing address is 171 North Clark Street, Chicago,
Illinois 60601, Attention: , as escrow
agent ("Escrow Agent"). The Deposit shall be non-refundable except
as herein provided. Any interest earned on the Deposit shall be
considered a part of the Deposit. Except as expressly otherwise
set forth herein, the Deposit shall be applied against the Purchase
Price on the Closing Date. The Deposit may be satisfied in whole
or in part by delivery of a Letter of Credit (as defined below), in
which event, to the extent that a Letter of Credit is utilized, no
interest shall accrue or be paid, and the Letter of Credit shall be
held by Seller. From and after the delivery of a Letter of Credit,
all references to the Deposit shall be deemed to mean a Letter of
Credit to the extent applicable. As used herein, the term "Letter
of Credit" shall mean an irrevocable letter of credit issued in
favor of Seller, by First Tennessee Bank, or such other bank
acceptable to Seller and in the form attached hereto as EXHIBIT R.
The expiry date of the Letter of Credit shall not be before
December 31, 1996. A Letter of Credit may be drawn upon by Seller,
by a whole or partial draw to the extent necessary to cure default
of Buyer under this Agreement. Notwithstanding anything to the
contrary contained herein, in the event of any draw on the Letter
of Credit, the proceeds of the draw shall be deposited with Escrow
Agent pursuant to strict joint order escrow between Buyer, Seller
and Escrow Agent to be held and distributed as is required for the
Deposit under this Agreement.
2.2 CASH AT CLOSING. On the Closing Date, Buyer shall pay to
Seller an amount equal to the difference between (a) the Purchase
Price, and (b) the amount of the Deposit as of the Closing Date
(the "Balance"), subject to the prorations and adjustments set
forth in Article 5 or as otherwise provided under this Agreement,
plus any other amounts required to be paid by Buyer at Closing, in
immediately available funds by wire transfer as more particularly
set forth in Section 6.2. If the Deposit is provided in the form
of a Letter of Credit, on the Closing Date, Buyer shall pay to
Seller the Purchase Price, subject to the prorations and
adjustments provided in the immediately preceding sentence, and
Seller shall return the Letter of Credit to Buyer.
ARTICLE 3
TITLE MATTERS
3.1 TITLE TO REAL PROPERTY. Seller has previously delivered
to Buyer (a) Chicago Title Insurance Company's (the "Title
Company") commitment to issue an Owner's Policy of Title Insurance
with respect to the Property (the "Title Report") identified as
Title Insurance Commitment File No. 0184979, with an effective date
of April 23, 1996, a copy of which is attached hereto as EXHIBIT D
and incorporated herein by this reference, (b) copies of all
recorded documents referred to on Schedule B of the Title Report as
exceptions to coverage (the "Title Documents"), and (c) a certified
boundary survey of the Property dated September 3, 1996, prepared
by Stock & Associates Land Surveying, Inc. (the "Survey"). Except
as provided in Section 3.2, Seller shall convey and Buyer shall
accept title to the Property, subject only to such exceptions as
Seller and Buyer shall agree upon during the Due Diligence Period
(as defined below) (the "Permitted Exceptions"). When Seller and
Buyer have agreed upon the Permitted Exceptions, a list thereof
shall be attached hereto as EXHIBIT Q. Notwithstanding anything to
the contrary contained herein, the Permitted Exceptions shall not
include liens securing any financing obtained by Seller ("Financing
Liens"), and Seller shall be required to clear any and all
Financing Liens from title on or before the Closing.
3.2 TITLE DEFECTS.
3.2.1 CERTAIN EXCEPTIONS TO TITLE. Buyer shall have
the right to object in writing to any title matters that are
not Permitted Exceptions and that adversely affect Buyer's
title to the Real Property which may appear on supplemental
title reports or updates to the Title Report or Survey issued
at the request of Buyer after Seller and Buyer have agreed in
writing upon the Permitted Exceptions (herein collectively
called the "Other Liens") within ten (10) business days after
the receipt thereof by Buyer. Unless Buyer shall timely
object to such Other Liens, all such Other Liens and any
matters which do not adversely affect Buyer's title to the
Real Property which are set forth in any such supplemental
reports or updates shall be deemed to constitute additional
Permitted Exceptions. Any exceptions which are timely
objected to by Buyer shall be herein collectively called the
"Title Objections." Seller may elect (but, except for
Financing Liens and as provided in this Section 3.2.1, shall
not be obligated) to remove, or cause to be removed at its
expense, any Title Objections, and shall be entitled to a
reasonable adjournment of the Closing (not to exceed thirty
(30) days) for the purpose of such removal, which removal will
be deemed effected by the issuance of title insurance
eliminating or insuring against the effect of the Title
Objections. Seller shall notify Buyer in writing within five
(5) days after receipt of Buyer's notice of Title Objections
whether Seller elects to remove the same. Notwithstanding the
foregoing, with respect to Title Objections of a definite or
ascertainable amount (other than Financing Liens, which Seller
shall remove), Seller agrees that it will spend an aggregate
amount not to exceed $50,000 to remove such Title Objections.
If Seller is unable to remove or endorse over any Title
Objections prior to the Closing, or if Seller elects not to
remove one or more Title Objections and the aggregate cost of
removal is not ascertainable or exceeds $50,000, Buyer may
elect to either (a) terminate this Agreement, in which event
the Deposit shall be paid to Buyer and, thereafter, the
parties shall have no further rights or obligations hereunder
except for obligations which expressly survive the termination
of this Agreement, or (b) waive such Title Objections, in
which event such Title Objections shall be deemed "Permitted
Exceptions" and the Closing shall occur as herein provided
with a reduction of or credit against the Purchase Price not
to exceed $50,000 (if and to the extent that the cost of
removing the Title Objections can be ascertained).
3.2.2 DISCHARGE OF TITLE OBJECTIONS. If on the
Closing Date there are any Title Objections which Seller has
elected to pay and discharge, Seller may use any portion of
the Balance to satisfy the same, provided Seller shall deliver
to Buyer at the Closing instruments in recordable form and
sufficient to satisfy such Title Objections of record,
together with the cost of recording or filing such
instruments, or provided that Seller shall cause the Title
Company to insure over the same, without any additional cost
to Buyer, whether such insurance is made available in
consideration of payment, bonding, indemnity of Seller or
otherwise.
3.2.3 FURTHER ENCUMBRANCES. Except as expressly
permitted in this Agreement or otherwise consented to by
Buyer, from and after the date hereof through the Closing
Date, Seller shall not create any liens or easements
encumbering the Property or any part thereof. If Seller
defaults on its obligations under this Section 3.2.3 and fails
to cure such default as provided in Section 3.2.1, Buyer may,
as its sole remedy (except with respect to Financing Liens),
terminate this Agreement and be paid by Seller the actual
out-of-pocket costs incurred by Buyer in connection with the
transaction contemplated by this Agreement not to exceed
$100,000, in addition to recovery of the Deposit.
3.3 TITLE INSURANCE. At Closing, the Title Company shall
issue to Buyer, at Seller's sole cost and expense, an ALTA Form B
(1970) Owner's Form of title insurance policy with extended
coverage (the "Owner's Title Policy"), in the amount of the
Purchase Price, insuring that title to the Real Property is vested
in Buyer subject only to the Permitted Exceptions. Buyer shall be
entitled to request that the Title Company provide, at Buyer's sole
cost and expense, such endorsements (or amendments) to the Owner's
Title Policy as Buyer may reasonably require, provided that (a)
such endorsements (or amendments) shall be at no cost or additional
liability to Seller, (b) Buyer's obligations under this Agreement
shall not be conditioned upon Buyer's ability to obtain such
endorsements and, if Buyer is unable to obtain such endorsements,
Buyer shall nevertheless be obligated to proceed to close the
transaction contemplated by this Agreement (the "Transaction")
without reduction of or set off against the Purchase Price, and (c)
the Closing shall not be delayed as a result of Buyer's request.
ARTICLE 4
BUYER'S DUE DILIGENCE/CONDITION OF THE PROPERTY
Buyer acknowledges that commencing prior to the execution of
this Agreement and continuing for a period which will expire on the
date which is forty-five (45) days after the date hereof (the "Due
Diligence Period"), Buyer has conducted, and shall continue to
conduct, its examinations, inspections, testing, studies and/or
investigations (herein collectively called the "Due Diligence") of
the Property and information regarding the Property. If Buyer is
not satisfied with the results of its Due Diligence, Buyer may
terminate this Agreement by written notice to Seller given in
accordance with the provisions of Section 14.9 hereof on or before
the last day of the Due Diligence Period, and, in the event of such
termination, neither Seller nor Buyer shall have any liability
hereunder except for those obligations which expressly survive the
termination of this Agreement and Buyer shall be entitled to the
return of the Deposit. In the event Buyer fails to notify Seller
in writing whether or not Buyer has elected to terminate this
Agreement on or before the last day of the Due Diligence Period,
Buyer shall be deemed to have terminated this Agreement in
accordance with this Article 4. At Closing and as a material
inducement for Seller to consummate the Transaction, Buyer will
deliver a certification in the form of EXHIBIT F attached hereto
and incorporated herein by this reference.
ARTICLE 5
ADJUSTMENTS AND PRORATIONS
The following adjustments and prorations shall be made at Closing:
5.1 REAL ESTATE TAXES. Real estate taxes shall be prorated
on a cash basis for the calendar year in which the Closing occurs,
regardless of the year for which such taxes are assessed. Such
proration shall be calculated based upon the actual number of days
in such calendar year, with Seller being responsible for that
portion of such calendar year occurring prior to midnight of the
day prior to the Closing Date and Buyer being responsible for that
portion of such calendar year occurring after midnight of the day
prior to the Closing Date. If the real estate tax rate and
assessment has not been set for such taxes payable in the calendar
year in which the Closing occurs, then the proration of such taxes
shall be based upon the rate and assessments for the preceding
calendar year, and such proration shall be adjusted between Seller
and Buyer upon presentation of written evidence that the actual
taxes paid for the calendar year in which the Closing occurs differ
from the amounts used at Closing and in accordance with the
provisions of Section 5.10. Seller shall pay all installments of
special assessments due and payable prior to the Closing Date and
Buyer shall pay all installments of special assessments due and
payable on and after the Closing Date; provided, however, that
Seller shall not be responsible for any installments of special
assessments which have not been confirmed or which relate to
projects that have not been completed on the date hereof.
Notwithstanding the foregoing terms of this Section, Seller shall
have no obligation to pay (and Buyer shall not receive a credit at
Closing for) any real estate taxes or special assessments to the
extent that Buyer is entitled after Closing to reimbursement of
taxes and assessments, or the recovery of any increase in taxes and
assessments, from the tenants under the Leases, regardless of
whether Buyer actually collects such reimbursement or increased
taxes and assessments from such tenants, it being understood and
agreed by Buyer and Seller that the burden of collecting such
reimbursements shall be solely on Buyer. There shall be no
proration of real estate taxes other than those payable in the
calendar year in which the Closing occurs.
5.2 FIXED, MINIMUM AND BASE RENTS. Subject to Section 5.11
below, Seller shall be entitled to fixed, minimum and base rents
which are due or past due or not yet due but accrued under the
terms of the Leases, prorated to midnight of the day prior to the
Closing Date, regardless of when such payments are actually made.
Notwithstanding the foregoing, for the purpose of making
apportionments at Closing, Buyer and Seller shall not prorated
Delinquent Amounts (as defined below).
5.3 OVERAGE RENTS. Overage rents to be prorated hereunder
shall include, but not be limited to, percentage rents, consumer
price index escalation payments and other similar rental payments
in excess of fixed, minimum and base rents under the Leases,
whether finally determined before or after the expiration of the
fiscal years under various Leases. Overage rents shall be
separately prorated under each Lease on the basis of the fiscal
year set forth in each Lease for the payment of overage rents. All
interim overage rent payments made before the Closing Date shall be
retained by Seller until year-end adjustment and determination of
Seller's allocable share thereof, except that interim payments
received by either party for the month in which the Closing Date
occurs shall be prorated as between Seller and Buyer based upon the
number of days in that month occurring before the Closing Date, and
the party receiving the interim payment shall remit to (if received
on or after the Closing Date) or credit (if received before the
Closing Date) the other party its proportionate share. All amounts
received by Buyer on or after the Closing Date as interim payments
of overage rents shall be retained by Buyer until year-end
adjustment and determination of Seller's allocable share thereof,
except to the extent provided in Section 5.11 below. Upon final
determination of overage rents collected from a tenant under its
Lease for the fiscal year under that Lease in which the Closing
Date occurs, Seller and Buyer shall adjust between themselves
amounts collected for such fiscal year on account of overage rents,
and Seller's allocable share of such overage rents shall be equal
to an amount determined by multiplying total overage rents
collected by the fraction whose numerator is the number of days in
such fiscal year before the Closing Date, and whose denominator is
the total number of days in such fiscal year. Buyer shall furnish
Seller with financial statements indicating the sales and overage
(percentage) rent figures for each tenant for all relevant periods.
Within fifteen (15) days after final determination of overage rents
collected by a tenant under its Lease for the fiscal year under
that Lease in which the Closing Date occurs, Buyer shall remit to
Seller its allocable share, less interim payments previously
retained by Seller, if any. If Seller has retained amounts in
excess of its allocable share, Seller, within fifteen (15) days
after notice from Buyer of the excess owed Buyer, remit such excess
to Buyer. Any overage rents with respect to Leases terminated
before the Closing Date shall belong entirely to Seller, and Buyer
shall remit to Seller all payments made to Buyer after the Closing
Date on account of such overage rents. Any overage rents with
respect to Leases commencing on or after the Closing Date shall
belong entirely to Buyer. If any overage rents are collected
subsequent to the year-end reconciliation between Buyer and Seller
which are allocable to the year in which Closing occurs, the party
collecting such amounts shall immediately remit to the other party
its allocable share.
5.4 COMMON AREA MAINTENANCE CHARGES, CENTRAL PLANT CHARGES
AND SIMILAR EXPENSES. To the extent tenants under Leases pay
monthly estimates of common area maintenance charges, central plant
charges, utility charges and similar expenses or other periodic
charges (collectively, "Charges") with an adjustment at the end of
each fiscal year applicable to Charges, they shall be prorated in
accordance with this Section 5.4. Until the adjustment described
in this Section is made, all amounts received by Seller as interim
payments of Charges before the Closing Date shall be retained by
Seller, except that all interim payments received by either party
for the month in which the Closing Date occurs shall be prorated as
between Seller and Buyer based upon the number of days in that
month occurring before the Closing Date and the party receiving the
interim payment shall remit to (if received on or after the Closing
Date) or credit (if received before the Closing Date) the other
party its proportionate share. All amounts received by Buyer as
interim payments of Charges on or after the Closing Date shall be
retained by Buyer until year-end adjustment and determination of
Seller's allocable share thereof except to the extent provided in
Section 5.11 below. Within sixty (60) days after the conclusion of
the common area fiscal year, Seller's allocable share of actual
Charges for Leases in effect as of the Closing Date shall be
determined by multiplying the total payments due from tenants for
such fiscal year (the sum of estimated payments plus or minus
year-end adjustments) by a fraction, the numerator of which is
Seller's actual cost of providing common area maintenance services
prior to the Closing Date (within that portion of the fiscal year
prior to Closing Date in which the Lease is in effect), and the
denominator of which is the cost of providing such services for the
entire fiscal year (or that portion of the fiscal year in which the
Lease is in effect). If any Lease provides for the adjustment of
Charges on the basis of a period other than the common area fiscal
year, a reasonable method of calculating the adjustment for that
tenant will be determined so that all adjustments can be made at
the same time. If, on the basis of amounts actually incurred and
the estimated payments received by Seller prior to the Closing
Date, Seller has retained amounts in excess of its allocable share,
it shall remit, within fifteen (15) days after notice from Buyer of
the excess owed Buyer, such excess to Buyer. If, on the basis of
the foregoing amounts, Seller has retained less than its allocable
share, Buyer shall remit, within fifteen (15) days after notice
from Seller of the amount owed Seller, such amount to Seller.
5.5 PREPAID RENTS AND SECURITY DEPOSITS. All prepaid rents
(including any prepaid real estate tax payments) and security and
other deposits of all tenants under Leases not theretofore applied,
with interest thereon to the extent any interest is required to be
paid to such tenants, shall be delivered by Seller to Buyer on the
Closing Date, or Seller may elect to give Buyer a credit against
the Purchase Price in the amount of such prepaid rent or deposits.
5.6 CONTRACTS. To the extent not included in Charges, Buyer
shall be entitled to a credit against the Purchase Price for sums
that are due (or accrued) and unpaid as of the Closing Date under
any contracts listed on EXHIBIT B, and Seller shall be entitled to
a credit to the extent that sums have been paid under any such
contracts for services to be performed or goods to be delivered
after the Closing Date.
5.7 GROUND LEASE RENTALS. All rents due under the Ground
Lease shall be prorated between Seller and Buyer as of midnight of
the day prior to the Closing Date. Seller shall be liable for all
such rents attributable to the period prior to the Closing Date.
Buyer shall be liable for all such rents attributable to the period
after the Closing Date.
5.8 MERCHANT ASSOCIATION DUES. Buyer shall be entitled to a
credit against the Purchase Price for merchant association dues
that are due (or accrued) and unpaid as of the Closing Date, and
Seller shall be entitled to a credit to the extent that such dues
have been prepaid.
5.9 APPORTIONMENT CREDIT. In the event the apportionments to
be made at the Closing result in a credit balance (i) to Buyer,
such sum shall be paid (at Seller's option) at the Closing by
giving Buyer a credit against the Balance in the amount of such
credit balance, or (ii) to Seller, Buyer shall pay the amount
thereof to Seller at the Closing by wire transfer of immediately
available funds to the account or accounts to be designated by
Seller for the payment of the Balance.
5.10 CLOSING COSTS. Buyer shall pay all premiums and charges
of the Title Company for endorsements to the Owner's Title Policy
ordered by Buyer, all recording and filing charges in connection
with the instrument by which Seller conveys the Property, one-half
(1/2) of all escrow or closing charges and transfer taxes and
similar charges, if any, applicable to the transfer of the Property
to Buyer, all costs of Buyer's Due Diligence and any other costs
customarily paid by the buyer pursuant to local practice. Seller
shall pay all premiums and charges of the Title Company for the
Owner's Title Policy (excluding charges for endorsements requested
by Buyer) to be issued pursuant to the title report, the cost of
the Survey, one-half (1/2) of all escrow or closing charges and
transfer taxes and similar charges, if any, applicable to the
transfer of the Property to Buyer, and any other costs customarily
paid by the seller pursuant to local practice. Except as otherwise
agreed by the parties, each party shall pay its own attorneys.
5.11 DELAYED ADJUSTMENT. If at any time following the Closing
Date, the amount of an item listed in any section of this Article
5 shall prove to be incorrect (whether as a result in an error in
calculation or a lack of complete and accurate information as of
the Closing), the party in whose favor the error was made shall
promptly pay to the other party the sum necessary to correct such
error upon receipt of proof of such error, provided that such proof
is delivered to the party from whom payment is requested on or
before eighteen (18) months after Closing.
5.12 COLLECTIONS AND APPLICATION OF PAYMENTS AFTER CLOSING.
With respect to all rents, rents shall be deemed received by a
party if received by such party's property manager. After the
Closing Date, Buyer shall bill tenants for all amounts due under
Leases, including amounts accruing prior to the Closing Date, and
make a good faith effort to collect such amounts, provided that
Buyer shall not be required to incur costs or commence litigation
to collect same. Buyer shall prepare and send to tenants all
financial statements and data required by Leases, and Seller shall
cooperate and assist Buyer in preparing same as may be reasonably
required and requested by Buyer. Any amounts due and owing Seller
before the Closing Date by tenants under the Leases which are
unpaid on the Closing Date are herein called "Delinquent Amounts."
Notwithstanding the foregoing or any direction from tenants to the
contrary, rental and other payments received by Buyer or Seller
from tenants shall be first applied toward the actual out-of-pocket
costs of collection paid by Buyer, then toward the payment of rent
and other charges owed to Buyer (without reduction for any portion
thereof payable to the managing agent), and any excess monies
received shall be applied toward the payment of Delinquent Amounts.
Buyer may not waive any Delinquent Amounts nor modify a Lease so as
to reduce amounts or charges owed under Leases for any period in
which Seller is entitled to receive a share of charges or amounts,
without first obtaining Seller's written consent. Seller shall
have and reserves the right to pursue any remedy against any tenant
owing Delinquent Amounts, provided that Seller shall in no event
institute any proceeding to evict or dispossess a tenant from the
Real Property. Buyer may, by written notice to Seller restrict
Seller from collecting such Delinquent Amounts, but only if Buyer
first pays Seller such Delinquent Amounts in exchange for Seller's
assignment to Buyer of all of Seller's rights and causes of action
with respect thereto.
5.13 SURVIVAL. The provisions of this Article 5 shall survive
the Closing and not be merged therein.
ARTICLE 6
CLOSING
Buyer and Seller hereby agree that the Transaction shall be
consummated as follows:
6.1 CLOSING DATE. Subject to Seller's right to extend the
Closing as provided in this Agreement, the Transaction shall close
("Closing") on November 22, 1996 (the "Closing Date"). Closing
may, at Seller's election, be either by a so-called "New York
style" closing or through escrow. The Closing shall take place at
10:00 a.m. Central Time in the offices of Seller's attorneys, or at
Buyer's lender's attorneys, upon Buyer's request, and Buyer and
Seller shall conduct a "pre-closing" on the last business day prior
to the Closing Date with title transfer and payment of the Purchase
Price to be completed on the Closing Date as set forth in Section
6.2. Time is of the essence with respect to the Closing Date.
6.2 TITLE TRANSFER AND PAYMENT OF PURCHASE PRICE. Provided
all conditions precedent to Seller's obligations hereunder have
been satisfied, Seller agrees to convey title to the Property to
Buyer upon confirmation of receipt of the Purchase Price by the
Escrow Agent as set forth below. Provided all conditions precedent
to Buyer's obligations hereunder have been satisfied, Buyer agrees
to deliver the payment specified in Section 2.2 by timely
delivering the same to the Escrow Agent no later than 1:00 p.m.
Central Time on the Closing Date and unconditionally directing the
Escrow Agent to deposit the same in Seller's designated account by
2:00 p.m. Central Time on the Closing Date. For each full or
partial day after the Closing Date that Seller has not received in
its account the payment specified in Section 2.2, Buyer shall pay
to Seller one (1) day's interest on the unpaid funds at the rate
per annum equal to the "prime" lending rate of interest then in
effect as announced by The First National Bank of Chicago.
Notwithstanding the foregoing, Seller shall have the right to
terminate this Agreement at any time if such payment is not
received by 2:00 p.m. Central Time on the Closing Date.
6.3 SELLER'S CLOSING DELIVERIES. At the Closing, Seller
shall deliver or cause to be delivered to Buyer or the Escrow Agent
the following:
(a) DEED. A special warranty deed in the form of
EXHIBIT G attached hereto and incorporated herein by this
reference, conveying to Buyer all of Seller's right, title and
interest in and to the Fee Estate, subject only to the
Permitted Exceptions ("Deed").
(b) ASSIGNMENT OF GROUND LEASE. An assignment and
assumption of ground lease, in the form of EXHIBIT C attached
hereto and incorporated herein by this reference (the
"Assignment of Ground Lease") transferring all of Sellers
right, title and interest in and to the Leasehold Estate.
(c) BILL OF SALE. A bill of sale in the form of EXHIBIT
H attached hereto and incorporated herein by this reference
conveying all of Seller's right, title and interest in and to
the Personal Property.
(d) ASSIGNMENT OF TENANT LEASES. An assignment and
assumption of tenant leases, in the form of EXHIBIT I attached
hereto and incorporated herein by this reference ("Assignment
of Leases") transferring all of Seller's interest in the
tenant space leases for the tenants identified on EXHIBIT J
attached hereto and incorporated herein by this reference (as
updated at Closing) and any amendments, guarantees and other
documents relating thereto (herein collectively called the
"Leases"), together with all assignable non-cash security
deposits deposited by the tenants thereunder and not applied
by Seller in accordance with the terms of the Leases.
(e) ASSIGNMENT OF EQUIPMENT LEASES, COMMISSION
AGREEMENTS AND SERVICE CONTRACTS. An assignment and
assumption of equipment leases, commission agreements, service
contracts, warranties and guaranties and the Other Property
Rights (to the extent the same are not transferred by the
Deed, Bill of Sale or Assignment of Leases) in the form of
EXHIBIT K attached hereto and incorporated herein by this
reference ("Assignment of Contracts"), transferring, to the
extent assignable, without liability or expense to Seller, all
of Seller's interest in the agreements listed on EXHIBIT B
hereto (not including the management agreement), all
warranties and guaranties which remain in effect on the
Closing Date and any Other Property Rights not otherwise
transferred to Buyer (all of the foregoing being herein
collectively called the "Contracts"). Seller shall not assign
any existing management agreement or any contracts or policies
of insurance for the Property. Seller shall terminate the
existing management agreement on or before the Closing Date
and satisfy all obligations to the manager, except the
commissions described on EXHIBIT B or any expenses
constituting Lease Expenses for which Buyer is liable pursuant
to Article 13 hereof, which commissions Buyer agrees to pay as
and when due.
(f) NOTICE TO TENANTS. A single form letter in the form
of EXHIBIT M attached hereto and incorporated herein by this
reference to each tenant under the Leases, duplicate copies of
which would be sent notifying it of the sale of the Property
to Buyer and advising it that all future payments of rent and
other payments due under the Leases are to be made to Buyer at
an address designated by Buyer.
(g) NON-FOREIGN STATUS AFFIDAVIT. A non-foreign status
affidavit in the form of EXHIBIT N attached hereto and
incorporated herein by this reference, as required by Section
1445 of the Internal Revenue Code.
(h) EVIDENCE OF AUTHORITY. A certificate of an
Assistant Secretary of Seller with respect to the authority to
act on behalf of Seller of the individual executing on behalf
of Seller all documents contemplated by this Agreement.
(i) SELLER'S CERTIFICATE. The certificate of Seller
certifying to the matters set forth in Section 8.2.
(j) PROPERTY DOCUMENTS. (i) To the extent in the
possession of Seller or the current manager of the Property,
(A) the original (or, if unavailable, a copy) of the existing
certificate or certificates of occupancy for the Property, and
(B) all original (or, if unavailable, copies of) certificates,
licenses, permits, authorizations and approvals issued for or
with respect to the Property by governmental and quasi-governmental
authorities having jurisdiction; and (ii) all books and records
(other than Proprietary Materials) located at the Property, the
Parsippany, New Jersey office of Seller or at the office of
Seller's building manager relating to the Property and the
ownership and operation thereof (the items described in clauses
(i) and (ii) being herein collectively called the "Property
Documents").
(k) OTHER DOCUMENTS. Such other documents as may be
reasonably required by the Title Company or as may be agreed
upon by Seller and Buyer to consummate the Transaction.
(l) LETTERS OF CREDIT AS TENANT SECURITY DEPOSITS. With
respect to any security deposits which are letters of credit,
Seller shall, if the same are assignable, (i) deliver to Buyer
at the Closing such letters of credit, (ii) execute and
deliver such other instruments as the issuers of such letters
of credit shall reasonably require, and (iii) cooperate with
Buyer to change the named beneficiary under such letters of
credit to Buyer so long as Seller does not incur any
additional liability or expense in connection therewith.
(m) KEYS AND ORIGINAL DOCUMENTS. Keys to all locks on
the Real Property (in Seller's or Seller's building manager's
possession) and originals or, if originals are not available,
copies, of the Leases and Contracts (unless canceled as set
forth herein) encumbering the Property on the Closing Date.
(n) TRANSFER TAXES. If applicable, duly completed and
signed real estate transfer tax returns.
(o) ASSIGNMENT OF REA. An Assignment of REA in form
acceptable to Seller and Buyer transferring all of Seller's
right, title and interest in and to all reciprocal easement
agreements encumbering or appurtenant to the Real Property.
(p) DEPOSIT. If the Deposit is in the form of a Letter
of Credit, the original Letter of Credit for return to Buyer
upon consummation of the Closing.
6.4 BUYER CLOSING DELIVERIES. At the Closing, Buyer shall
deliver or cause to be delivered to Seller or the Escrow Agent the
following:
(a) BALANCE. The Balance, as adjusted for
apportionments and other adjustments required under this
Agreement, plus any other amounts required to be paid by Buyer
at Closing.
(b) ASSIGNMENT OF GROUND LEASE. The Assignment of
Ground Lease executed and acknowledged by Buyer.
(c) ASSIGNMENT OF LEASES. The Assignment of Leases
executed and acknowledged by Buyer.
(d) ASSIGNMENT OF EQUIPMENT LEASES, COMMISSION
AGREEMENTS AND SERVICE CONTRACTS. The Assignment of Contracts
executed and acknowledged by Buyer.
(e) BUYER'S CERTIFICATES. The certificate of Buyer
required under Article 4 hereof and a certificate of Buyer
certifying as to the matters set forth in Section 8.1.
(f) BUYER'S ERISA CERTIFICATE. The certificate of Buyer
substantially in the form of EXHIBIT O attached hereto and
incorporated herein by this reference and any other
certificate or other information reasonably required by Seller
to satisfy Seller that the Transaction does not constitute a
non-exempt prohibited transaction under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
and that the Transaction complies with ERISA in all respects.
(g) EVIDENCE OF AUTHORITY. Documentation to establish
to Seller's reasonable satisfaction the due authorization of
Buyer's acquisition of the Property and Buyer's delivery of
the documents required to be delivered by Buyer pursuant to
this Agreement (including, but not limited to, the
organizational documents of Buyer, as they may have been
amended from time to time, resolutions of Buyer and incumbency
certificates of Buyer).
(h) OTHER DOCUMENTS. Such other documents as may be
reasonably required by the Title Company or may be agreed upon
by Seller and Buyer to consummate the Transaction.
(i) TRANSFER TAXES. If applicable, duly completed and
signed real estate transfer tax returns.
6.5 DELIVERY OF DEED. Effective upon delivery of the Deed,
actual and exclusive possession (subject only to the Permitted
Exceptions) and risk of loss to the Property shall pass from Seller
to Buyer.
6.6 PROPERTY DOCUMENT ESCROW. Buyer agrees, at Buyer's
expense and in coordination with Seller to make a copy of all of
the Property Documents. At Closing, Buyer and Seller shall deposit
said copies of the Property Documents in sealed cartons with an
escrowee mutually acceptable to Buyer and Seller pursuant to an
escrow agreement in form and substance reasonably acceptable to
Buyer, Seller and such escrowee. Such escrow agreement shall
provide that, unless otherwise directed by a court of competent
jurisdiction, the escrowee shall hold such sealed cartons of copies
of Property Documents in escrow and may only unseal and open said
cartons upon the joint written instructions, and in the physical
presence, of Buyer and Seller.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 SELLER'S OBLIGATIONS. Seller's obligation to close the
Transaction is conditioned on all of the following, any or all of
which may be waived by Seller by an express written waiver, at its
sole option:
(a) CORPORATE APPROVAL. The unconditional approval of
the Transaction by Seller's corporate officers, Seller's
investment management committee and its Law Department each in
their sole discretion on or before October 15, 1996 (failure
of Seller to notify Buyer in writing on or before October 15,
1996 that it has obtained such approval shall be deemed
disapproval, in which case this Agreement shall automatically
terminate, and the Deposit shall be immediately returned to
Buyer);
(b) REPRESENTATIONS TRUE. All representations and
warranties made by Buyer in this Agreement shall be true and
correct in all material respects on and as of the Closing
Date, as if made on and as of such date; and
(c) BUYER'S DELIVERIES COMPLETE. Buyer shall have
delivered the funds required hereunder and all of the
documents to be executed by Buyer set forth in Section 6.4 and
shall have performed all other covenants, undertakings and
obligations, and complied with all conditions required by this
Agreement, to be performed or complied with by Buyer at or
prior to the Closing.
7.2 BUYER'S OBLIGATIONS. Buyer's obligation to close the
Transaction is conditioned on all of the following, any or all of
which may be expressly waived by Buyer in writing, at its sole
option:
(a) REPRESENTATIONS TRUE. Subject to the provisions of
Section 8.3, all representations and warranties made by Seller
in this Agreement, as the same may be amended as provided in
Section 8.3, shall be true and correct in all material
respects on and as of the Closing Date, as if made on and as
of such date;
(b) TITLE CONDITIONS SATISFIED. At the time of the
Closing, title to the Property shall be as provided in Article
3 of this Agreement;
(c) TENANT BANKRUPTCY. No bankruptcy proceedings shall
have initiated between the end of the Due Diligence Period and
the Closing Date with respect to any Anchor Tenant; and
(d) SELLER'S DELIVERIES COMPLETE. Seller shall have
delivered all of the documents and other items required
pursuant to Section 6.3 and shall have performed all other
covenants, undertakings and obligations, and complied with all
conditions required by this Agreement, to be performed or
complied with by Seller at or prior to the Closing.
7.3 WAIVER OF FAILURE OF CONDITIONS PRECEDENT. At any time
or times on or before the date specified for the satisfaction of
any condition, Buyer or Seller may elect in writing to waive the
benefit of any such condition set forth in Section 7.1 or Section
7.2, respectively. By closing the Transaction, Buyer and Seller
shall be conclusively deemed to have waived the benefit of any
remaining unfulfilled conditions set forth in Section 7.1 and
Section 7.2. In the event any of the conditions set forth in
Sections 7.1 or 7.2 are neither waived nor fulfilled, Buyer or
Seller (as appropriate) may terminate their obligations to perform
at the Closing and otherwise under this Agreement in accordance
with the provisions of Article 10.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 BUYER'S REPRESENTATIONS. Buyer represents and warrants
to, and covenants with, Seller as follows:
8.1.1 BUYER'S AUTHORIZATION. Buyer is duly organized
(or formed), validly existing and in good standing under the
laws of its State of organization and the State in which the
Property is located, and is authorized to consummate the
Transaction and fulfill all of its obligations hereunder and
under all documents contemplated hereunder to be executed by
Buyer, and has all necessary power to execute and deliver this
Agreement and all documents contemplated hereunder to be
executed by Buyer, and to perform all of its obligations
hereunder and thereunder. This Agreement and all documents
contemplated hereunder to be executed by Buyer have been duly
authorized by all requisite partnership and corporate action
on the part of Buyer and are the valid and legally binding
obligation of Buyer, enforceable in accordance with their
respective terms. Neither the execution and delivery of this
Agreement and all documents contemplated hereunder to be
executed by Buyer, nor the performance of the obligations of
Buyer hereunder or thereunder will result in the violation of
any law or any provision of the organizational documents of
Buyer or will conflict with any order or decree of any court
or governmental instrumentality of any nature by which Buyer
is bound.
8.2 SELLER'S REPRESENTATIONS. Seller represents and warrants
to Buyer as follows:
8.2.1 SELLER'S AUTHORIZATION. Seller is (a) duly
organized (or formed), validly existing and in good standing
under the laws of its State of organization and the State in
which the Property is located, (b) except as described in
Section 7.1(a) hereof, is authorized to consummate the
Transaction and fulfill all of its obligations hereunder and
under all documents contemplated hereunder to be executed by
Seller, and (c) has all necessary power to execute and deliver
this Agreement and all documents contemplated hereunder to be
executed by Seller and to perform its obligations hereunder
and thereunder. Except as described in Section 7.1(a) hereof,
this Agreement and all documents contemplated hereunder to be
executed by Seller have been duly authorized by all requisite
corporate action on the part of Seller and are the valid and
legally binding obligation of Seller enforceable in accordance
with their respective terms. Neither the execution and
delivery of this Agreement and all documents contemplated
hereunder to be executed by Seller nor the performance of the
obligations of Seller hereunder or thereunder will result in
the violation of any law or any provision of the articles of
incorporation and by-laws of Seller or will conflict with any
order or decree of any court or governmental instrumentality
of any nature by which Seller is bound.
8.2.2 TITLE TO PERSONAL PROPERTY. Seller owns good
and marketable title to the Personal Property described on
EXHIBIT E attached hereto free and clear of all liens, claims,
charges, exceptions or encumbrances other than the Permitted
Exceptions, to the extent applicable thereto.
8.2.3 PROPERTY FILES. Except for the removal by
Seller of Proprietary Materials, the Property Documents are
the files kept in the ordinary course of business to manage
the Property and to prepare reports to Seller's client with
respect to the Property, and Seller has not removed any
documents, agreements, correspondence or other information
from the Property Documents with the intent of concealing
information from Buyer.
8.2.4 EMPLOYEES. Seller has no employees at the
Property. To Seller's knowledge, the employees working in the
management office at the Property are employees of the
property manager.
8.2.5 OPERATING STATEMENTS. The operating statements
for the Property for calendar years 1993, 1994 and 1995
delivered by Seller to Buyer accurately reflect the revenue
received and expenses paid with respect to the Property for
the periods covered thereby.
8.2.6 OTHER SELLER'S REPRESENTATIONS. To Seller's
knowledge (as such term is hereinafter defined):
(a) Except as listed in EXHIBIT P attached hereto
and incorporated herein by this reference,
Seller has not received any written notice of
pending or threatened litigation against
Seller (including any condemnation) which
would, if determined adversely to Seller,
adversely affect the Property.
(b) Seller has not entered into any service,
supply, maintenance or utility contracts
affecting the Property which will be binding
upon Buyer after the Closing other than the
Contracts listed in EXHIBIT B attached hereto.
(c) Seller has not received any written notice of
default under the terms of any of the
Contracts except as listed in EXHIBIT P
attached hereto.
(d) As of the date of this Agreement, the only
tenants of the Property are the tenants listed
in EXHIBIT J attached hereto and incorporated
herein by this reference. Except as listed on
EXHIBIT P, Seller has not received from or
delivered to any tenant of the Property a
notice of default under the terms of its
lease, which default has not been cured.
(e) Except as listed in EXHIBIT P attached hereto,
Seller has not received any written notice
from any governmental authority of any
violation of any zoning, building, fire, or
health code, statute, ordinance, rule or
regulation applicable to the Property.
Notwithstanding the foregoing, however, Seller
shall not be required to disclose to Buyer
(and shall not be deemed to make any
representation or warranty with respect to)
any notices relating to the environmental
condition of the Property or Hazardous
Materials in, at, under or about the Property,
it being acknowledged and agreed to by both
Buyer and Seller that Buyer will investigate
and satisfy itself with regard to the
environmental condition of Property and the
presence or absence of Hazardous Materials
during its due diligence period.
8.3 GENERAL PROVISIONS.
8.3.1 NO REPRESENTATION AS TO LEASES. Seller does
not represent or warrant that any particular Lease or Leases
will be in force or effect on the Closing Date or that the
tenants will have performed their obligations thereunder.
8.3.2 DEFINITION OF "SELLER'S KNOWLEDGE". All
references in this Agreement to "Seller's Knowledge" or words
of similar import shall refer only to the actual knowledge of
Terry McHugh, Seller's asset manager for the Property for the
last year, and Peter Ruggiero (the "Designated Employees"),
and shall not be construed to refer to the knowledge of any
other officer, agent or employee of Seller or any affiliate
thereof or to impose or have imposed upon the Designated
Employees any duty to investigate the matters to which such
knowledge, or the absence thereof, pertains, including, but
not limited to, the contents of the files, documents and
materials made available to or disclosed to Buyer or the
contents of files maintained by the Designated Employees.
There shall be no personal liability on the part of the
Designated Employees arising out of any representations or
warranties made herein. Seller agrees that if Buyer
identifies a current employee of Seller other than the
Designated Employees who has knowledge of the Property, Seller
will upon written request from Buyer add such employee to the
list of Designated Employees.
8.3.3 SELLER'S REPRESENTATIONS DEEMED MODIFIED. To
the extent that Buyer knows or is deemed to know prior to the
expiration of the Due Diligence Period that Seller's
representations and warranties are inaccurate, untrue or
incorrect in any way, such representations and warranties
shall be deemed modified to reflect Buyer's knowledge or
deemed knowledge, as the case may be. For purposes of this
Agreement, Buyer shall be "deemed to know" that a
representation or warranty was untrue, inaccurate or incorrect
to the extent that this Agreement, the Property Documents
deposited in escrow pursuant to Section 6.6 hereof, any
estoppel certificate executed by any tenant of the Property
and delivered to Buyer, or any studies, tests, reports, or
analyses prepared by or for Buyer and delivered to Buyer prior
to the Closing.
8.3.4 NOTICE OF BREACH; SELLER'S RIGHT TO CURE. IF
AFTER THE EXPIRATION OF THE DUE DILIGENCE PERIOD BUT PRIOR TO
THE CLOSING, JOHN FOY or Steve Arnsdorff obtain actual
knowledge that any of the representations or warranties made
herein by Seller are untrue, inaccurate or incorrect in any
material respect, Buyer shall give Seller written notice
thereof within five (5) business days of obtaining such actual
knowledge (but, in any event, prior to the Closing). If at or
prior to the Closing, John Foy or Steve Arnsdorff obtain
actual knowledge that any of the representations or warranties
made herein by Seller are untrue, inaccurate or incorrect in
any material respect, Seller shall give Buyer written notice
thereof within five (5) business days of obtaining such
knowledge (but, in any event, prior to the Closing). In
either such event, Seller shall have the right to cure such
misrepresentation or breach and shall be entitled to a
reasonable adjournment of the Closing (not to exceed thirty
(30) days) for the purpose of such cure. If Seller is unable
to so cure any misrepresentation or breach, then Buyer, as its
sole remedy for any and all such materially untrue, inaccurate
or incorrect material representations or warranties, shall
elect either (a) to waive such misrepresentations or breaches
of warranties and consummate the Transaction without any
reduction of or credit against the Purchase Price, or (b) to
terminate this Agreement by written notice given to Seller on
the Closing Date, in which event this Agreement shall be
terminated, the Deposit shall be returned to Buyer and,
thereafter, neither party shall have any further rights or
obligations hereunder except as provided in any section hereof
that by its terms expressly provides that it survives any
termination of this Agreement; provided, however, that in the
event of any such termination of this Agreement due to an
intentional misrepresentation by Seller, Buyer shall be
entitled to recover from Seller its out-of-pocket costs
incurred in connection with the transaction contemplated by
this Agreement not to exceed $100,000.00. If any such
representation or warranty is untrue, inaccurate or incorrect
but is not untrue, inaccurate or incorrect in any material
respect, Buyer shall be deemed to waive such misrepresentation
or breach of warranty, and Buyer shall be required to
consummate the Transaction without any reduction of or credit
against the Purchase Price. The untruth, inaccuracy or
incorrectness of a representation or warranty shall be deemed
material only if Buyer's aggregate damages resulting from the
untruth, inaccuracy or incorrectness of any of the
representations or warranties are reasonably estimated by
Buyer to exceed $100,000.00.
8.3.5 SURVIVAL; LIMITATION ON SELLER'S LIABILITY.
The representations and warranties made by Seller in
Section 8.2 shall survive the Closing and not be merged
therein for a period of one (1) year and Seller shall only be
liable to Buyer hereunder for a breach of a representation and
warranty made herein or in any of the documents executed by
Seller at the Closing with respect to which a claim is made by
Buyer against Seller on or before the first anniversary of the
date of the Closing. Anything in this Agreement to the
contrary notwithstanding, the maximum aggregate liability of
Seller for Seller's breaches of representations and warranties
herein or in any documents executed by Seller at Closing
(including, but not limited to, any Seller estoppel letters
delivered pursuant to Section 6.3(g)) shall be limited as set
forth in Section 14.16 hereof. Notwithstanding the foregoing,
however, if the Closing occurs, Buyer hereby expressly waives,
relinquishes and releases any right or remedy available to it
at law, in equity or under this Agreement to make a claim
against Seller for damages that Buyer may incur, or to rescind
this Agreement and the Transaction, as the result of any of
Seller's representations or warranties being untrue,
inaccurate or incorrect if (a) John Foy or Steve Arnsdorff had
actual knowledge or Buyer is deemed to know that such
representation or warranty was untrue, inaccurate or incorrect
at the time of the Closing, or (b) Buyer's damages as a result
of such representations or warranties being untrue, inaccurate
or incorrect are reasonably estimated to aggregate less than
$100,000.00.
ARTICLE 9
COVENANTS
9.1 BUYER'S COVENANTS. Buyer hereby covenants as follows:
9.1.1 CONFIDENTIALITY. Buyer acknowledges that any
information furnished to Buyer with respect to the Property is
and has been so furnished on the condition that Buyer maintain
the confidentiality thereof. Accordingly, Buyer shall hold,
and shall cause its directors, officers, employees and
representatives to hold, in strict confidence, and not
disclose to any other person without the prior written consent
of Seller until the Closing shall have been consummated, any
of the information in respect of the Property (other than
information which is obtained or obtainable from other
sources) delivered to or for the benefit of Buyer whether by
agents, consultants, employees or representatives of Buyer or
by Seller or any of its agents, representatives or employees,
including, but not limited to, any information obtained by
Buyer or any of Buyer's Representatives in connection with any
studies, inspections, testings or analyses conducted by Buyer
as part of its Due Diligence. In the event the Closing does
not occur and this Agreement is terminated, Buyer shall
promptly return to Seller all copies of documents containing
any of such information without retaining any copy thereof or
extract therefrom. Seller agrees to keep the terms of the
transaction contemplated by this Agreement confidential
through the expiration of the Due Diligence Period.
Notwithstanding anything to the contrary hereinabove set
forth, Buyer or Seller may disclose such information (i) to
its officers and directors and any employees, agents,
consultants or members of professional firms serving it,
(ii) Buyer's prospective debt and/or equity lenders, their
respective employees, agents and consultants and (iii) as any
governmental agency may require in order to comply with
applicable laws or regulations (including securities laws
applicable to Buyer). The provisions of this Subsection 9.1.1
shall survive the Closing (and not be merged therein) or
earlier termination of this Agreement. Notwithstanding
anything to the contrary contained herein, Seller shall not be
entitled to terminate this Agreement due solely to a default
by Buyer under this Section.
9.1.2 BUYER'S INDEMNITY; DELIVERY OF REPORTS. Buyer
hereby agrees to conduct all of its due diligence and its
activities upon the Property in compliance with all laws.
Buyer hereby agrees to indemnify, defend, and hold Seller free
and harmless from and against any and all costs, loss, damages
and expenses, of any kind or nature whatsoever (including
attorneys fees and costs), arising out of or resulting from
the entry and/or the conduct of activities upon the Property
by Buyer, its agents, contractors and/or subcontractors in
connection with the inspections, examinations, testings and
investigations of the Property conducted at any time prior to
the Closing, which indemnity shall survive the Closing (and
not be merged therein) or any earlier termination of this
Agreement. The foregoing indemnity shall not protect Seller
from costs, liabilities, damages or expenses arising solely
from the discovery by Buyer of existing conditions at the
Property during Buyer's inspections. Buyer shall deliver
promptly to Seller copies of all third party reports (other
than those containing privileged or confidential information)
commissioned by Buyer evidencing the results of tests, studies
or inspections of the Property.
9.1.3 LIMIT ON GOVERNMENT CONTACTS. Notwithstanding
any provision in this Agreement to the contrary, in connection
with the preparation and review of so-called "Phase I" and
"Phase II" environmental reports with respect to the Property,
unless required by law, Buyer shall not contact any
governmental official or representative regarding Hazardous
Materials on or the environmental condition of the Property to
the extent not previously known to such governmental official
or representative without Seller's prior written consent
thereto, which consent shall not be unreasonably withheld. In
addition, if Seller's consent is obtained by Buyer, Seller
shall be entitled to receive at least five (5) days prior
written notice (which notice period shall be shortened to the
extent that less time remains in the Due Diligence Period) of
the intended contact and to have a representative present when
Buyer has any such contact with any governmental official or
representative. For purposes of this Agreement, the term
"Hazardous Material" shall mean any substance, chemical, waste
or material that is or becomes regulated by any federal, state
or local governmental authority because of its toxicity,
infectiousness, radioactivity, explosiveness, ignitability,
corrosiveness or reactivity, including, without limitation,
asbestos or any substance containing more than 0.1 percent
asbestos, the group of compounds known as polychlorinated
biphenyls, flammable explosives, oil, petroleum or any refined
petroleum product.
9.2 SELLER'S COVENANTS. Seller hereby covenants as follows:
9.2.1 SERVICE CONTRACTS. Without Buyer's prior
consent, which consent shall not be unreasonably withheld,
between the date hereof and the Closing Date Seller shall not
extend, renew, replace or modify any Contract except in the
ordinary course of business and on reasonable terms and unless
such contract (as so extended, renewed, replaced or modified)
can be terminated by the owner of the Property without penalty
on not more than thirty (30) days' notice.
9.2.2 MAINTENANCE OF PROPERTY. Except to the extent
Seller is relieved of such obligations by Article 11 hereof,
between the date hereof and the Closing Date Seller shall
maintain and keep the Property in a manner consistent with
Seller's past practices with respect to the Property;
provided, however, that Buyer hereby agrees that it shall
accept the Property subject to, and Seller shall have no
obligation to cure, (i) all violations of law or municipal
ordinances, orders or requirements and (ii) all physical
conditions which would give rise to violations existing,
which, with respect to both clauses (i) and (ii), exist the
last day of the Due Diligence Period or, with respect to
clause (i) only, which arise between the last day of the Due
Diligence Period and the Closing Date. Between the date
hereof and the Closing Date, Seller will promptly advise Buyer
in writing of any written notice Seller receives after the
date hereof from any governmental authority relating to the
violation of any law or ordinance regulating the condition or
use of the Property.
9.2.3 ACCESS TO PROPERTY. Between the date hereof
and the Closing, Seller shall allow Buyer or Buyer's
representatives access to the Property Documents and Property
upon reasonable prior notice at reasonable times provided
(a) such access does not interfere with the operation of the
Property or the rights of tenants; (b) Buyer shall deliver
notice to Seller at least two (2) days prior to any scheduled
interviews with tenants and shall invite Rockwood Realty
Associates, Inc. ("Broker") to observe said interviews, should
Broker elect to attend such scheduled interviews; (c) Seller
or its designated representative shall have the right to pre-
approve all intrusive physical testing and be present during
any physical testing of the Property; and (d) Buyer shall
return the Property to a condition which is as close as
possible to that existing prior to such tests. Prior to such
time as Buyer or any of Buyer's Representatives enter the
Property, Buyer shall obtain policies of general liability
insurance with limits of not less than $2,000,000 which name
Seller as an additional insured and which are with such
insurance companies, and provide such coverages as Seller
shall reasonably require. Promptly after Seller's request
therefor, Buyer shall provide Seller with certificates of
insurance evidencing that Buyer has obtained the
aforementioned policies of insurance.
9.3 MUTUAL COVENANTS.
9.3.1 PUBLICITY. Seller and Buyer each hereby
covenant that (a) prior to the Closing (unless and to the
extent required of Buyer earlier by law) neither Seller nor
Buyer shall issue any press release or public statement (a
"Release") with respect to the Transaction without the prior
consent of the other, except to the extent required by law or
regulation of any governmental authority or self-regulatory
organization (i.e., NYSE, NASD), and (b) after the Closing,
any Release issued by either Seller or Buyer shall be subject
to the review and approval of both parties (which approval
shall not be unreasonably withheld). If either Seller or
Buyer is required by law to issue a Release, such party shall,
at least two (2) business days prior to the issuance of the
same, deliver a copy of the proposed Release to the other
party for its review.
9.3.2 BROKER. Seller and Buyer expressly acknowledge
that Broker has acted as the exclusive broker with respect to
the Transaction and with respect to this Agreement, and that
Seller shall pay any brokerage commission due to Broker in
accordance with the separate agreement between Seller and
Broker. Seller and Buyer each represents and warrants to the
other that it has not dealt with any other broker in the
Transaction and each agrees to hold harmless the other and
indemnify the other from and against any and all damages,
costs or expenses (including, but not limited to, reasonable
attorneys' fees and disbursements) suffered by the indemnified
party as a result of acts of the indemnifying party that would
constitute a breach of its representation and warranty in this
section.
9.3.3 TAX REFUNDS AND CREDITS. All real estate and
personal property tax refunds and credits with respect to the
Property (net of costs of collection and any refunds due
tenants) shall be apportioned between Buyer and Seller as
follows:
(a) with respect to any refunds or credits
attributable to real estate and personal
property taxes due and payable in the calendar
year in which the Closing occurs (regardless
of the year for which such taxes are
assessed), such refunds and credits shall be
apportioned between Buyer and Seller in
proportion to the number of days in such
calendar year that each party owned the
Property (with title to the Property being
deemed to have passed as of 12:01 a.m. on the
Closing Date);
(b) with respect to any refunds or credits
attributable to real estate and personal
property taxes due and payable during any
period prior to the calendar year in which the
Closing occurs (regardless of the year for
which such taxes are assessed), Seller shall
be entitled to the entire refunds and credits;
and
(c) with respect to any refunds or credits
attributable to real estate and personal
property taxes due and payable during any
period after the calendar year in which the
Closing occurs (regardless of the year for
which such taxes are assessed), Buyer shall be
entitled to the entire refunds and credits.
9.3.4 SURVIVAL. The provisions of this Section 9.3
shall survive the Closing (and not be merged therein) or
earlier termination of this Agreement.
ARTICLE 10
FAILURE OF CONDITIONS
10.1 TO SELLER'S OBLIGATIONS. If, on or before the Closing
Date, (i) Buyer is in default of any of its material obligations
hereunder, or (ii) any of Buyer's material representations or
warranties are untrue in any material respect, or (iii) the Closing
otherwise fails to occur by reason of Buyer's failure or refusal to
perform its material obligations hereunder in a prompt and timely
manner, then Seller may elect to terminate this Agreement by
written notice to Buyer. Seller's sole remedy for Buyer's failure
to close shall be to draw on the Letter of Credit and retain the
Deposit as liquidated damages, and thereafter neither party to this
Agreement shall have any further rights or obligations hereunder
other than any arising under any section herein which expressly
provides that it survives the termination of this Agreement.
10.2 TO BUYER'S OBLIGATIONS. If, at the Closing, (i) Seller
is in default of any of its material obligations hereunder, or
(ii) any of Seller's material representations or warranties are
untrue in any material respect, or (iii) the Closing otherwise
fails to occur by reason of Seller's failure or refusal to perform
its material obligations hereunder in a prompt and timely manner,
Buyer shall have the right, to elect, as its sole and exclusive
remedy, to (a) terminate this Agreement by written notice to
Seller, immediately after which the Deposit shall be returned to
Buyer, or (b) waive the condition and proceed to close the
Transaction, or (c) seek specific performance of this Agreement by
Seller.
ARTICLE 11
CONDEMNATION/CASUALTY
11.1 CONDEMNATION.
11.1.1 RIGHT TO TERMINATE. If, prior to the Closing
Date, all or any significant portion (as hereinafter defined)
of the Property is taken by eminent domain (or is the subject
of a pending taking which has not yet been consummated),
Seller shall notify Buyer in writing of such fact promptly
after obtaining knowledge thereof, Buyer shall have the right
to terminate this Agreement by giving written notice to Seller
no later than ten (10) days after receipt of Seller's notice,
and the Closing Date shall be extended, if necessary, to
provide sufficient time for Buyer to make such election. The
failure by Buyer to so elect in writing to terminate this
Agreement within such ten (10) day period shall be deemed an
election not to terminate this Agreement. For purposes
hereof, a "significant portion" of the Property shall mean
such a portion as shall (i) have a value, as reasonably
determined by Seller, in excess of One Million Dollars
($1,000,000.00) or (ii) result in an Anchor Tenant terminating
its lease. If Buyer elects to terminate this Agreement as
aforesaid, the provisions of Section 11.4 shall apply.
11.1.2 ASSIGNMENT OF PROCEEDS. If (a) neither Seller
nor Buyer elects to terminate this Agreement as aforesaid if
all or any significant portion of the Property is taken, or if
(b) a portion of the Property not constituting a significant
portion of the Property is taken or becomes subject to a
pending taking, by eminent domain, there shall be no abatement
of the Purchase Price; provided, however, that, at the
Closing, Seller shall pay to Buyer the amount of any award for
or other proceeds on account of such taking which have been
actually paid to Seller prior to the Closing Date as a result
of such taking and, to the extent such award or proceeds have
not been paid, Seller shall assign to Buyer at the Closing
(without recourse to Seller) the rights of Seller to, and
Buyer shall be entitled to receive and retain, all awards for
the taking of the Property or such portion thereof.
11.2 DESTRUCTION OR DAMAGE. In the event any of the Property
is damaged or destroyed prior to the Closing Date, Seller shall
notify Buyer in writing of such fact promptly after obtaining
knowledge thereof. If any such damage or destruction (a) is a
fully insured casualty, (b) would cost less than One Million
Dollars ($1,000,000.00) to repair or restore, and (c) would not
result in the termination of the lease of any Anchor Tenant, then
this Agreement shall remain in full force and effect and Buyer
shall acquire the Property upon the terms and conditions set forth
herein. In such event, Buyer shall receive a credit against the
Purchase Price equal to the deductible amount applicable under
Seller's casualty policy, and Seller shall assign to Buyer all of
Seller's right, title and interest in and to all proceeds of insur-
ance on account of such damage or destruction. In the event the
Property is damaged or destroyed prior to the Closing Date and the
cost of repair would equal or exceed One Million Dollars
($1,000,000.00) or the casualty is an uninsured casualty or results
in the termination of the lease of an Anchor Tenant, then,
notwithstanding anything to the contrary set forth above in this
section, Buyer shall have the right, at its election, to terminate
this Agreement. Buyer shall have thirty (30) days after Seller
notifies Buyer that a casualty has occurred to make such election
by delivery to Seller of a written election notice (the "Election
Notice") and the Closing Date shall be extended, if necessary, to
provide sufficient time for Buyer to make such election. The
failure by Buyer to deliver the Election Notice within such thirty
(30) day period shall be deemed an election not to terminate this
Agreement. In the event Buyer elects not to terminate this
Agreement as set forth above, this Agreement shall remain in full
force and effect, Seller shall not settle or compromise any
insurance claims, Seller shall assign to Buyer all of Seller's
right, title and interest in and to any and all proceeds of
insurance on account of such damage or destruction, if any, and, if
the casualty was an insured casualty, Buyer shall receive a credit
against the Purchase Price equal to the deductible amount under
Seller's casualty insurance policy.
11.3 INSURANCE. Seller shall maintain the property insurance
coverage currently in effect for the Property through the Closing
Date.
11.4 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.1 or Section 11.2, Seller promptly shall
direct that the Deposit be refunded to Buyer. Upon such refund,
this Agreement shall terminate and neither party to this Agreement
shall have any further rights or obligations hereunder other than
any arising under any section herein which expressly provides that
it shall survive the termination of this Agreement.
11.5 WAIVER. The provisions of this Article 11 supersede the
provisions of any applicable statutory or decisional law with
respect to the subject matter of this Article 11.
ARTICLE 12
ESTOPPELS
12.1 ESTOPPELS. Seller shall exercise good faith diligent
efforts to obtain and deliver to Buyer as soon as possible, but no
later than two business days prior to the expiration of the Due
Diligence Period, the following estoppels:
12.1.1 GROUND LEASE ESTOPPEL LETTER. An executed
estoppel letter from the landlord under the Ground Lease
substantially in the form of EXHIBIT T attached hereto and
incorporated herein by reference.
12.1.2 TENANT ESTOPPEL LETTER. Executed estoppel
letters from (a) each of those tenants identified on EXHIBIT
L-1 attached hereto and incorporated herein by this reference
as "Anchor Tenants" (the "Anchor Tenants"), (b) each tenant
whose premises exceeds 4,000 rentable square feet ("Major
Tenants"), and (c) other tenants collectively occupying no
less than one hundred percent (100%) of the area leased under
the Leases (excluding the area leased under the Leases with
the Anchor Tenants and Major Tenants) (the "Other Tenants").
All of such estoppel letters shall be dated no earlier than
forty-five (45) days prior to the initially scheduled Closing
Date and shall be substantially in the form of EXHIBIT L-2
attached hereto and incorporated herein by this reference,
without exceptions or qualifications. In the event Seller
cannot for any reason obtain a tenant estoppel letter from a
tenant from whom an estoppel letter is required, Seller
(i) shall deliver to Buyer a Seller's estoppel letter in the
form of EXHIBIT L-3 attached hereto (the "Landlord's
Estoppel") with respect to up to five (5) Leases with Other
Tenants for which Seller has not obtained a tenant estoppel,
which Landlord's Estoppels Buyer shall accept in lieu of the
required tenant estoppels, (ii) shall certify to Buyer a true,
correct and complete copy of each Lease with a Major Tenant or
Other Tenant for whom an estoppel letter has not been
obtained, and (iii) may, at its option, deliver to Buyer a
Landlord's Estoppel for up to two (2) Leases with a Major
Tenant for which Seller has not obtained a tenant estoppel,
and for whom the aggregate premises leased does not exceed
15,000 square feet which Landlord's Estoppels Buyer shall
accept in lieu of the required tenant estoppels. Seller's
liability under all Landlord's Estoppels and certifications of
Leases shall expire and be of no further force or effect with
respect to any claims first made after the first anniversary
of the Closing Date; provided, however, that if Seller shall
obtain a consistent estoppel certificate from any tenant after
delivery of a Landlord's Estoppel or certification with
respect to such tenant, Landlord's Estoppel or certification
shall, as of the date of such tenant's estoppel letter, be
without further force or effect.
12.1.3 REA ESTOPPEL LETTERS. Executed estoppel
letters from each party to the reciprocal easement agreements
encumbering the Real Property in form reasonably acceptable to
Buyer dated no earlier than the date hereof. Buyer shall
provide Seller the form of such estoppel and a list of the
parties from whom it must be obtained within seven (7) days
after the date of this Agreement.
12.1.4 MISSING ESTOPPELS. Notwithstanding anything to
the contrary contained herein, Seller shall have no liability
for failure to deliver any estoppel letter required under
Sections 6.3(f), (g) or (h) (other than required Landlord
Estoppels), if Seller could not obtain such estoppel letter
after exercising good faith diligent efforts.
ARTICLE 13
LEASING MATTERS
13.1 NEW LEASES. After the date hereof, Seller shall not,
without Buyer's prior written consent in each instance, which
consent shall not be unreasonably withheld and shall be given or
denied, with the reasons for such denial specified in reasonable
detail, within five (5) business days after receipt by Buyer of the
information referred to in the next sentence, enter into a new
lease for space in the Property (except any of the prospective
leases (the "Prospective Leases" listed on Exhibit S attached
hereto) or renew or extend any Lease (except as described on
Exhibit S or pursuant to the exercise by a tenant of a renewal,
extension or expansion option contained in such tenant's Lease).
Without limiting the generality of the foregoing, Buyer shall be
deemed reasonable in withholding its consent if it in good faith
determines that the terms of such new lease are below market terms
therefor or if the proposed tenant, use or lease is inconsistent in
any materially adverse way with the leasing parameters previously
established with respect to the Property. Seller shall furnish
Buyer with all information regarding any proposed new leases,
renewals and extensions reasonably necessary to enable Buyer to
make informed decisions with respect to the advisability of the
proposed action (including, without limitation, copies of final
versions thereof). If Buyer fails to object in writing to any such
proposed new lease, renewal or extension, as the case may be,
within four (4) business days after receipt of the aforementioned
information, Seller may give Buyer a second notice. If Buyer fails
to object in writing within one (1) business day after receipt of
such second notice, Buyer shall be deemed to have approved the
proposed new lease, renewal or extension, as the case may be.
13.2 LEASE EXPENSES. At Closing, Buyer shall reimburse Seller
for any and all fees paid by Seller prior to Closing or costs and
expenses incurred by Seller prior to Closing (such fees, costs and
expenses being herein collectively called the "Lease Expenses"),
arising out of or in connection with:
(a) to the extent approved by Buyer pursuant to
Section 13.1 above, any lease for space at the Property
entered into between the date of the full execution of the
Letter of Interest and the Closing Date, or any extension,
renewal or expansion of a Lease where such Lease does not
provide for its extension, renewal or expansion, entered into
on or after the date of the full execution of the Letter of
Interest (a "New Lease"); and
(b) the proposed lease with Eddie Bauer.
Lease Expenses shall include, without limitation,
(i) brokerage commissions and fees to effect any such leasing
transaction (including commissions payable to the property
manager), (ii) expenses incurred for repairs, improvements,
equipment, painting, decorating, partitioning and other items to
satisfy the tenant's requirements with regard to such leasing
transaction (with respect to New Leases, to the extent such
expenses are reflected in the lease or in any documentation
provided to Buyer prior to its consent to a New Lease),
(iii) reasonable legal fees for services in connection with the
preparation of documents and other services rendered in connection
with the effectuation of the leasing transaction, (iv) if there are
any rent concessions covering any period that the tenant has the
right to be in possession of the demised space, the rents that
would have accrued during the period of such concession prior to
the Closing Date as if such concession were amortized over (A) with
respect to any extension or renewal, the term of such extension or
renewal, (B) with respect to any expansion, that portion of the
term remaining under the subject Lease after the date of any
expansion, or (C) with respect to any New Lease, the entire initial, the entire
term of any New Lease, and (v) expenses incurred for the purpose of
satisfying or terminating the obligations of a tenant under a New
Lease to the landlord under another lease (whether or not such
other lease covers space in the Property) (with respect to New
Leases, to the extent such expenses are reflected in the lease or
in any documentation provided to Buyer prior to its consent to a
New Lease). At the Closing, Buyer shall assume Seller's
obligations to pay, when due (whether on a stated due date or
accelerated) any Lease Expenses unpaid as of the Closing, and Buyer
hereby agrees to indemnify and hold Seller harmless from and
against any and all claims for such Lease Expenses which remain
unpaid for any reason at the time of Closing, which obligations of
Buyer shall survive the Closing and shall not be merged therein.
Seller shall itemize such unpaid Lease expenses for Buyer at
Closing. Each party shall make available to the other all records,
bills, vouchers and other data in such party's control verifying
Lease Expenses and the payment thereof.
13.3 OTHER LEASE ACTIVITY. Except as provided in this
Section 13.3 or described on Exhibit S hereto, without the prior
consent of Buyer, which shall not be unreasonably withheld (a) no
Lease shall be modified or amended except as provided in Section
13.1 with respect to extensions, renewals or expansions of Leases
and the execution of New Leases, (b) Seller shall not consent to
any assignment or sublease in connection with any Lease or New
Lease, (c) Seller shall not remove any tenant under any Lease or
New Lease, whether by summary proceedings or otherwise, except by
reason of a default of the tenant under the Lease or New Lease, and
(d) Seller shall not consent to any material alterations or waive
any of Seller's rights under any Lease or New Lease. In
furtherance of the foregoing, Seller shall deliver to Buyer a
written notice of each proposed action of the type described in
clauses (a) through (c) above which Seller has been asked or
proposes to take, stating, if applicable, whether Seller is willing
to consent to such action and setting forth the relevant
information therefor. Buyer shall notify Seller in writing whether
or not it approves such action within four (4) business days after
delivery to Buyer of Seller's notice containing the aforementioned
information. If Buyer notifies Seller that it disapproves such
action, Buyer's notice shall state with specificity the reasons for
such disapproval. If Buyer shall not give written notice of its
disapproval of such action within such four (4) business day
period, Seller may give Buyer a second notice. If Buyer fails to
object in writing within one (1) business day after receipt of such
second notice, Buyer shall be deemed to have approved such action.
If any Lease requires that the landlord's consent be given under
the applicable circumstances (or not be unreasonably withheld),
then Buyer shall be deemed ipso facto to have approved such action.
Subject to its reimbursement rights pursuant to Section 13.2,
Seller shall perform all of the obligations of the landlord under
the Leases and New Leases which under the terms of such Leases and
New Leases are required to be performed by the landlord prior to
the Closing Date.
13.4 LEASE ENFORCEMENT. Subject to the provisions of Section
13.3 above, prior to the Closing Date, Seller shall have the right,
but not the obligation (except to the extent that Seller's failure
to act shall constitute a waiver of such rights or remedies), to
enforce the rights and remedies of the landlord under any Lease or
New Lease, by summary proceedings or otherwise, and to apply all or
any portion of any security deposits then held by Seller toward any
loss or damage incurred by Seller by reason of any defaults by
tenants.
13.5 LEASE TERMINATION PRIOR TO CLOSING. The termination of
any Lease or New Lease or the removal of any tenant by reason of a
default by such tenant (by summary proceedings or otherwise) prior
to the Closing shall not affect the obligations of Buyer under this
Agreement in any manner or entitle Buyer to a reduction in, or
credit or allowance against, the Purchase Price or give rise to any
other claim on the part of Buyer against Seller.
ARTICLE 14
MISCELLANEOUS
14.1 BUYER'S ASSIGNMENT. Other than any assignment to an
affiliate of Buyer or CBL & Associates Properties, Inc. ("CBL"),
Buyer shall not assign this Agreement or its rights hereunder to
any individual or entity without the prior written consent of
Seller, which consent Seller may grant or withhold in its sole
discretion, and any such assignment shall be null and void. The
sale of stock in CBL shall not constitute a transfer of this
Agreement.
14.2 DESIGNATION AGREEMENT. Section 6045(e) of the United
States Internal Revenue Code and the regulations promulgated
thereunder (herein collectively called the "Reporting
Requirements") require an information return to be made to the
United States Internal Revenue Service, and a statement to be
furnished to Seller, in connection with the Transaction. Escrow
Agent ("Agent") is either (i) the person responsible for closing
the Transaction (as described in the Reporting Requirements) or
(ii) the disbursing title or escrow company that is most
significant in terms of gross proceeds disbursed in connection with
the Transaction (as described in the Reporting Requirements).
Accordingly:
(a) Agent is hereby designated as the "Reporting Person"
(as defined in the Reporting Requirements) for the
Transaction. Agent shall perform all duties that are required
by the Reporting Requirements to be performed by the Reporting
Person for the Transaction.
(b) Seller and Buyer shall furnish to Agent, in a timely
manner, any information requested by Agent and necessary for
Agent to perform its duties as Reporting Person for the
Transaction.
(c) Agent hereby requests Seller to furnish to Agent
Seller's correct taxpayer identification number. Seller
acknowledges that any failure by Seller to provide Agent with
Seller's correct taxpayer identification number may subject
Seller to civil or criminal penalties imposed by law.
Accordingly, Seller hereby certifies to Agent, under penalties
of perjury, that Seller's correct taxpayer identification
number is 22-1211670.
(d) Each of the parties hereto shall retain this
Agreement for a period of four (4) years following the
calendar year during which Closing occurs.
14.3 SURVIVAL/MERGER. Except for the provisions of this
Agreement which are explicitly stated to survive the Closing,
(a) none of the terms of this Agreement shall survive the Closing,
and (b) the delivery of the Deed and any other documents and
instruments by Seller and the acceptance thereof by Buyer shall
effect a merger, and be deemed the full performance and discharge
of every obligation on the part of Buyer and Seller to be performed
hereunder.
14.4 INTEGRATION; WAIVER. This Agreement, together with the
Schedules and Exhibits hereto, embodies and constitutes the entire
understanding between the parties with respect to the Transaction
and all prior agreements, understandings, representations and
statements, oral or written, are merged into this Agreement.
Neither this Agreement nor any provision hereof may be waived,
modified, amended, discharged or terminated except by an instrument
signed by the party against whom the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and
then only to the extent set forth in such instrument. No waiver by
either party hereto of any failure or refusal by the other party to
comply with its obligations hereunder shall be deemed a waiver of
any other or subsequent failure or refusal to so comply.
14.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Illinois.
14.6 CAPTIONS NOT BINDING; SCHEDULES AND EXHIBITS. The
captions in this Agreement are inserted for reference only and in
no way define, describe or limit the scope or intent of this
Agreement or of any of the provisions hereof. All Schedules and
Exhibits attached hereto shall be incorporated by reference as if
set out herein in full.
14.7 BINDING EFFECT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
14.8 SEVERABILITY. If any term or provision 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 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.
14.9 NOTICES. Any notice, request, demand, consent, approval
and other communications under this Agreement shall be in writing,
and shall be deemed duly given or made at the time and on the date
when personally delivered as shown on a receipt therefor (which
shall include delivery by a nationally recognized overnight
delivery service or by telecopy with confirmed receipt) or three
(3) business days after being mailed by prepaid registered or
certified mail, return receipt requested, to the address for each
party set forth below. Any party, by written notice to the other
in the manner herein provided, may designate an address different
from that set forth below.
IF TO BUYER:
St. Clair Square Limited Partnership
6148 Lee Highway, Suite 300
Chattanooga, Tennessee 37421
Attention: Steve Arnsdorff
Telecopy: (423) 490-8390
COPY TO:
Willkie Farr & Gallagher
One Citcorp Center
153 East 53rd Street
New York, New York 10022-4677
Attention: Eugene A. Pinover, Esq.
Telecopy: (212) 821-8111
IF TO SELLER:
The Prudential Insurance Company of America
8 Campus Drive, 4th Floor
Arbor Circle South
Parsippany, New Jersey 07054-4493
Attention: Peter Ruggiero
Telecopy: (201) 683-1790
COPY TO:
The Prudential Insurance Company of America
PAMG-RE Law Department
8 Campus Drive, 4th Floor
Arbor Circle South
Parsippany, New Jersey 07054-4493
Attention: Law Department
Telecopy: (201) 683-1788
14.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original and all of which
counterparts taken together shall constitute one and the same
agreement.
14.11 NO RECORDATION. Seller and Buyer each agrees that
neither this Agreement nor any memorandum or notice hereof shall be
recorded and Buyer agrees (a) not to file any notice of pendency or
other instrument (other than a judgment) against the Property or
any portion thereof in connection herewith and (b) to indemnify
Seller against all costs, expenses and damages, including, without
limitation, reasonable attorneys' fees and disbursements, incurred
by Seller by reason of the filing by Buyer of such notice of
pendency or other instrument.
14.12 ADDITIONAL AGREEMENTS; FURTHER ASSURANCES. Subject
to the terms and conditions herein provided, each of the parties
hereto shall execute and deliver such documents as the other party
shall reasonably request in order to consummate and make effective
the Transaction; provided, however, that the execution and delivery
of such documents by such party shall not result in any additional
liability or cost to such party.
14.13 CONSTRUCTION. The parties acknowledge that each
party and its counsel have reviewed and 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
amendment, Schedule or Exhibit hereto.
14.14 ERISA. In reliance upon that certain letter dated
October 9, 1996 by Seller to CBL & Associates Properties, to
satisfy compliance with ERISA, Buyer represents and warrants to
Seller that:
(a) Neither Buyer nor any of its affiliates (within the
meaning of Part V(c) of Prohibited Transaction Exemption 84-14
granted by the U.S. Department of Labor ("PTE 84-14") has, or
during the immediately preceding year has exercised, the
authority to appoint or terminate Seller as investment manager
of any assets of the employee benefit plans which hold more
than a 10% interest in PRISA II or to negotiate the terms of
any management agreement with PRISA II on behalf of any such
plan;
(b) The Transaction is not specifically excluded by Part
I(b) of PTE 84-14;
(c) Buyer is not a related party of Seller (as defined
in Part V(h) of PTE 84-14); and
(d) The terms of the Transaction have been negotiated
and determined at arm's length, as such terms would be
negotiated and determined by unrelated parties.
Buyer hereby agrees to execute such documents or provide
such information as Seller may reasonably require in
connection with the Transaction or to otherwise assure Seller
that: (i) this is not a prohibited Transaction under ERISA,
(ii) that the Transaction is otherwise in full compliance with
ERISA and (iii) that Seller is not in violation of ERISA by
compliance with this Agreement and by closing the Transaction.
Neither Seller nor Buyer shall be obligated to consummate the
Transaction unless and until the Transaction complies with
ERISA and Seller is satisfied that the Transaction complies in
all respects with ERISA. The obligations of Buyer under this
section shall survive the Closing and shall not be merged
therein.
14.15 BUSINESS DAY. As used herein, the term "business
day" shall mean any day other than a Saturday, Sunday, or any
Federal or State of Illinois holiday.
14.16 SELLER'S MAXIMUM AGGREGATE LIABILITY.
Notwithstanding any provision to the contrary contained in this
Agreement or any documents executed by Seller pursuant hereto or in
connection herewith, the maximum aggregate liability of Seller, and
the maximum aggregate amount which may be awarded to and collected
by Buyer, under this Agreement (including, without limitation, the
breach of any representations and warranties contained herein) and
any and all documents executed pursuant hereto or in connection
herewith (including, without limitation, any Seller's estoppel
letter provided in accordance with the terms of Section 6.3(e)
hereof), for which a claim is timely made by Buyer shall not exceed
Four Million Five Hundred Thousand Dollars ($4,500,000.00). The
provisions of this section shall survive the Closing and shall not
be merged therein.
IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be duly executed on its behalf on the day and year
first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: Peter L. Ruggiero
------------------------
Name: Peter L. Ruggiero
------------------------
Its: Vice President
------------------------
Date: 10/9/96
------------------------
ST. CLAIR SQUARE LIMITED
PARTNERSHIP, an Illinois
limited partnership
By: St. Clair Square GP,
Inc., an Illinois
corporation, its general
partner
By: John N. Foy
-------------------------
Name: John N. Foy
-------------------------
Its: Executive Vice President
10/10/96
Dated:-------------------------<PAGE>
___________________________________________________________________________
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report on the statement of excess revenues over specific operating
expenses of St. Clair Square for the year ended December 31, 1995 included
in this Form 8-K, into the Company's previously filed S-3 Registration
Statement File No. 33-92218.
ARTHUR ANDERSEN LLP
Chattanooga, Tennessee
January 13, 1997
