SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 4, 1997
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
33-73988 38-3097317
(Commission File Number) (I.R.S. Employer Identification Number)
200 East Long Lake Road, Suite 300, P.O. Box 200, Bloomfield Hills, Michigan
48303-0200
(Address of Principal Executive Offices) (Zip Code)
(248) 258-6800
(Registrant's Telephone Number, Including Area Code)
None
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. Acquisition.
On September 4, 1997, The Taubman Realty Group Limited Partnership (TRG)
completed the acquisition of Regency Square shopping center. Taubman Centers,
Inc. (TCO) is the managing general partner of TRG. The Center was acquired from
a subsidiary of The Prudential Insurance Company of America (the Seller) for
approximately $123.9 million in cash. The Seller is unaffiliated with TRG and
TCO and the transaction was negotiated at arm's length. In negotiating the
purchase price, TRG considered, among other factors, the Center's historical and
anticipated cash flows, the nature and terms of the leases, the physical
condition of the property, expansion possibilities, and market conditions. TRG
borrowed under its existing commercial paper facility and an existing revolving
credit facility with Union Bank of Switzerland (New York Branch) to fund the
purchase price.
Regency Square is an 823 thousand square foot regional shopping center located
in Richmond, Virginia. The Center is anchored by Hecht's, JCPenney, and Sears.
The Center opened in 1975 and was renovated in 1987.
Item 7. Financial Statements and Exhibits.
The following financial statements and pro forma information are being supplied
as supplementary information to this filing on Form 8-K.
a-b Financial Statements and Pro Forma Information.
Independent Auditors' Report.
Regency Square, Historical Summary of Revenues and Direct Operating
Expenses for the Year Ended December 31, 1996.
The Taubman Realty Group Limited Partnership, Pro Forma Condensed
Consolidated Balance Sheet, June 30, 1997 (unaudited).
The Taubman Realty Group Limited Partnership, Pro Forma Condensed
Consolidated Statement of Operations, Year Ended December 31, 1996
(unaudited).
The Taubman Realty Group Limited Partnership, Pro Forma Condensed
Consolidated Statement of Operations, Six Months Ended June 30, 1997
(unaudited).
The Taubman Realty Group Limited Partnership, Statement of Estimated
Taxable Operating Results of Regency Square and Estimated Cash to be
Made Available by Operations of Regency Square for a Twelve Month
Period Ended June 30, 1997 (unaudited).
2
<PAGE>
- ------------------------------------------------------------------------------
Regency Square
Historical Summary of Revenues and Direct
Operating Expenses for
the Year Ended December 31, 1996, and
Independent Auditors' Report
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
Partners
The Taubman Realty Group Limited Partnership
Bloomfield Hills, Michigan
We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses of Regency Square (the "Historical Summary"), for the year
ended December 31, 1996. This Historical Summary is the responsibility of
Regency Square's management. Our responsibility is to express an opinion on the
Historical Summary 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 Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in a Form 8-K of The Taubman Realty Group Limited Partnership) as
described in Note 1 to the Historical Summary and is not intended to be a
complete presentation of Regency Square's revenues and expenses.
In our opinion, such Historical Summary presents fairly, in all material
respects, the revenues and direct operating expenses described in Note 1 to the
Historical Summary of Regency Square for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Detroit, Michigan
July 31, 1997
4
<PAGE>
REGENCY SQUARE
HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
REVENUES:
Minimum rents $ 6,883,568
Percentage rents 1,352,919
Recoveries from tenants 4,485,625
Other 496,983
-----------
$13,219,095
DIRECT OPERATING EXPENSES:
Recoverable from tenants $ 3,841,585
Other 326,559
-----------
$ 4,168,144
-----------
EXCESS OF REVENUES OVER DIRECT
OPERATING EXPENSES $ 9,050,951
===========
See notes to historical summary.
5
<PAGE>
REGENCY SQUARE
NOTES TO HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING
EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - Regency Square is a regional shopping center located in Richmond,
Virginia, which was owned by a subsidiary of The Prudential Insurance Company
of America. Shopping center space is generally leased to specialty retail
tenants under short and intermediate term leases which are accounted for as
operating leases. Leases typically provide for guaranteed minimum rent,
percentage rent, and other charges to cover certain operating costs.
Basis of presentation - The accompanying historical summary of revenues and
direct operating expenses has been prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission for
inclusion in a current report on Form 8-K of The Taubman Realty Group Limited
Partnership (TRG). The accompanying historical summary is not representative
of the actual operations of the shopping center for the period presented
since material expenses which may not be comparable to the proposed future
operation of Regency Square by TRG have been excluded. Expenses excluded
consist of interest and depreciation and amortization.
Revenue recognition - Minimum rents are recognized on an accrual basis as
earned, which does not materially differ from a straight-line method.
Percentage rents are recognized on an accrual basis as earned. Expense
recoveries, which include an administrative fee, are recognized as revenue in
the period applicable costs are chargeable to tenants.
6
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1997
(unaudited)
(in thousands)
This unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as
if TRG's acquisition of the Regency Square shopping center (Regency) had
occurred on June 30, 1997. In management's opinion, all adjustments necessary to
reflect the effect of this transaction have been made. This unaudited Pro Forma
Condensed Consolidated Balance Sheet is not necessarily indicative of what the
actual financial position would have been at June 30, 1997, nor does it purport
to represent the future financial position of TRG.
Adjustments
for
Acquisition Pro
Historical of Regency(A) Forma
---------- -------------- ----------
Assets:
Properties, net $ 932,218 $ 124,580 $1,056,798
Other assets 66,008 66,008
---------- --------- ----------
$ 998,226 $ 124,580 $1,122,806
========== ========= ==========
Liabilities:
Debt $1,050,507 $ 123,880 $1,174,387
Capital lease obligation 49,642 49,642
Accounts payable and
other liabilities 85,227 700 85,927
Distributions in excess of
net income of unconsolidated
Joint Ventures 123,097 123,097
---------- --------- ----------
$1,308,473 $ 124,580 $1,433,053
Accumulated deficiency in assets (310,247) (310,247)
---------- --------- ----------
$ 998,226 $ 124,580 $1,122,806
========== ========= ==========
Allocation of accumulated
deficiency in assets:
General Partners $ (240,274) $ (240,274)
Limited Partners (69,973) (69,973)
---------- ----------
$ (310,247) $ (310,247)
========== ==========
(A) Represents TRG's acquisition of Regency for approximately $123.9 million.
Transaction costs were approximately $0.7 million. The purchase price was
allocated primarily to land, buildings and site improvements. TRG borrowed
under its existing commercial paper facility and an existing revolving
credit facility to fund the acquisition.
7
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 1996
(unaudited)
(in thousands, except unit data)
This unaudited Pro Forma Condensed Statement of Operations is presented as if
(i) TRG's acquisition of the Regency Square shopping center, (ii) TRG's
acquisition of interests in Paseo Nuevo, Fairlane Town Center and La Cumbre
shopping centers, and (iii) TRG's issuances of units of partnership interest and
use of the proceeds to pay down floating rate debt, had occurred as of January
1, 1996. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made. This unaudited Pro Forma Condensed
Statement of Operations is not necessarily indicative of what actual results of
operations would have been had these transactions occurred on January 1, 1996,
nor does it purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
Adjustments Adjustments
for for
Acquisition Pro Other Pro
Historical of Regency(A) Forma Transactions Forma
---------- ------------- ----- ------------ -----
<S> <C> <C> <C> <C> <C>
Revenues $262,729 $ 13,219 $275,948 $ 22,833(B) $298,781
-------- -------- -------- -------- --------
Operating Costs:
Recoverable expenses $ 72,093 $ 3,842 $ 75,935 $ 7,661(B) $ 83,596
Other operating 26,518 327 26,845 3,281(B) 30,126
Management, leasing and
development services 4,212 4,212 4,212
General and administrative 21,803 21,803 21,803
Interest 70,454 8,141 78,595 (966)(B),(C) 77,629
Depreciation and
amortization 35,770 3,044 38,814 3,527(B) 42,341
-------- -------- -------- -------- --------
$230,850 $ 15,354 $246,204 $ 13,503 $259,707
-------- -------- -------- -------- --------
Income before equity in
income of unconsolidated
Joint Ventures and before
extraordinary items $ 31,879 $ (2,135) $ 29,744 $ 9,330 $ 39,074
Equity in income before
extraordinary items of
unconsolidated Joint
Ventures 52,215 52,215 (1,029)(B) 51,186
-------- -------- -------- -------- --------
Income before
extraordinary items $ 84,094 $ (2,135) $ 81,959 $ 8,301 $ 90,260
======== ======== ======== ======== ========
Allocation of income
before extraordinary items:
General Partners $ 65,913 $ 64,239 $ 69,901
Limited Partners 18,181 17,720 20,359
-------- -------- --------
$ 84,094 $ 81,959 $ 90,260
======== ======== ========
Earnings per Unit of
Partnership Interest:
Income before
extraordinary items $ 1,290 $ 1,259 $ 1,289
======== ======== ========
Weighted Average Number
of Units of Partnershsip
Interest Outstanding 65,109 65,109 4,890(B),(C) 69,999
======== ======== ======== ========
</TABLE>
See the accompanying Notes and Significant Assumptions
8
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
NOTES AND SIGNIFICANT ASSUMPTIONS
Year Ended December 31, 1996
(A) Acquisition of Regency Square
- ---------------------------------
In September 1997, TRG acquired Regency Square shopping center for approximately
$123.9 million. Transaction costs were approximately $0.7 million. TRG borrowed
under its existing commercial paper facility and an existing revolving credit
facility to fund the acquisition (average rate of 6.4% in 1996). The purchase
price was allocated primarily to land and to buildings and site improvements,
which will be depreciated over 40 years and 15 years, respectively. Pro forma
revenues and expenses other than interest and depreciation represent the
historical amounts of Regency Square.
(B) Acquisition of Interests in Centers
- ---------------------------------------
In June 1996, TRG acquired the Paseo Nuevo shopping center, located in Santa
Barbara, California, for $37 million. TRG used unsecured debt (average rate of
7.4% in 1996) to fund the acquisition. The Center is owned subject to two
participating ground leases with remaining terms of approximately 70 years. TRG
also assumed a $2.0 million note receivable due from the lessor of one of the
ground leases. The note accrues interest at an annual rate of 10%. The purchase
price was allocated primarily to the buildings and site improvements, which are
being depreciated over 40 years and 15 years, respectively. Pro forma revenues
and expenses other than interest, depreciation and management fee expense are
based on unaudited information provided by the seller of the property.
In July 1996, TRG completed transactions that resulted in the acquisition of the
75% interest in Fairlane Town Center (Fairlane), previously held by a joint
venture partner. In connection with the transactions, TRG issued to the joint
venture partner 3,096 units of partnership interest, exchangeable for
approximately 6.1 million shares of Taubman Centers, Inc. (TCO) common stock,
which had a closing price of $10.75 per share on the day prior to the issuance
date. TCO is the managing general partner of TRG. TRG also assumed mortgage debt
of $26 million, representing the former joint venture partner's beneficial
interest in the $34.6 million mortgage encumbering the property. TRG used
unsecured debt (average rate of 7.4% in 1996) to fund the repayment of the 9.73%
mortgage and the prepayment penalty of approximately $1.2 million. The
acquisition, which resulted in TRG owning 100% of Fairlane, was accounted for at
fair value. Prior to the acquisition date, TRG's interest in Fairlane was
accounted for under the equity method. The purchase price was allocated
primarily to land and to buildings and site improvements, which are being
depreciated over 40 years and 15 years, respectively. Pro forma revenues and
expenses, other than interest and depreciation and amortization, represent the
historical amounts of Fairlane.
In December 1996, TRG acquired La Cumbre Plaza in Santa Barbara, California for
$22.25 million in cash. TRG used proceeds from an equity offering (Note C) to
fund the acquisition. The Center is subject to four ground leases (three of
which are participating). The leases expire in 2028. The purchase price was
allocated to buildings and site improvements, which are being depreciated over
40 years and 15 years, respectively. Pro forma revenues and expenses other than
interest, depreciation, and management fee are based on unaudited information
provided by the seller of the property.
9
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
NOTES AND SIGNIFICANT ASSUMPTIONS
Year Ended December 31, 1996 - (Continued)
(C) Issuances of Units of Partnership Interest
- ----------------------------------------------
In December 1996, TRG issued 3,048 units of partnership interest to TCO for the
$75 million proceeds from TCO's December 1996 equity offering of 5.97 million
shares of common stock. Also in December 1996, TCO exchanged 652 thousand shares
of common stock for 333 TRG units of partnership interest newly issued under
TRG's incentive option plan. TRG used the net proceeds totaling $82.3 million
from the issuance of units to pay down short term floating rate debt (average
rate of 7.0%) and to acquire La Cumbre Plaza.
10
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1997
(unaudited)
(in thousands, except unit data)
This unaudited Pro Forma Condensed Consolidated Statement of Operations is
presented as if TRG's acquisition of Regency Square shopping center had occurred
on January 1, 1996. In management's opinion, all adjustments necessary to
reflect the effect of this transaction have been made. This unaudited Pro Forma
Condensed Consolidated Statement of Operations is not necessarily indicative of
what actual results of operations would have been had these transactions been
completed as of January 1, 1996, nor does it purport to represent the results of
operations for future periods.
Adjustments
for
Acquisition Pro
Historical of Regency(A) Forma
---------- -------------- ----------
Revenues $145,242 $ 6,453 $151,695
-------- -------- --------
Operating Costs:
Recoverable expenses $ 39,291 $ 1,750 $ 41,041
Other operating 18,238 192 18,430
Management, leasing and
development services 1,928 1,928
General and administrative 12,070 12,070
Interest 34,614 3,981 38,595
Depreciation and amortization 20,334 1,880 22,214
-------- -------- --------
$126,475 $ 7,803 $134,278
-------- -------- --------
Income before equity in income
of unconsolidated Joint Ventures
and before extraordinary items $ 18,767 $ (1,350) $ 17,417
Equity in income before extra-
ordinary items of unconsolidated
Joint Ventures 26,987 26,987
-------- -------- --------
Income before extraordinary items $ 45,754 $ (1,350) $ 44,404
======== ======== ========
Allocation of income before
extraordinary items:
General Partners $ 35,434 $ 34,388
Limited Partners 10,320 10,016
-------- --------
$ 45,754 $ 44,404
======== ========
Earnings per Unit of Partnership
Interest:
Income before extraordinary
items $ 654 $ 634
======== ========
Weighted Average Number of
Units of Partnership Interests
Outstanding 69,999 69,999
======== ========
See the accompanying Notes and Significant Assumptions
11
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
NOTES AND SIGNIFICANT ASSUMPTIONS
Six Months Ended June 30, 1997
(A) Acquisition of Regency Square
- ---------------------------------
In September 1997, TRG acquired Regency Square shopping center for approximately
$123.9 million. Transaction costs were approximately $0.7 million. TRG borrowed
under its existing commercial paper facility and an existing revolving credit
facility to fund the acquisition (average rate of 6.4% for the six months ended
June 30, 1997). The purchase price was allocated primarily to land and to
buildings and site improvements, which will be depreciated over 40 years and 15
years, respectively. Pro forma revenues and expenses other than interest and
depreciation are based on unaudited information provided by the seller of the
property.
12
<PAGE>
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
STATEMENT OF ESTIMATED TAXABLE OPERATING
RESULTS OF REGENCY SQUARE AND ESTIMATED CASH TO BE MADE
AVAILABLE BY OPERATIONS OF REGENCY SQUARE
For a twelve-month period ended June 30, 1997
(unaudited)
(in thousands)
Revenues $ 13,064
--------
Operating Costs:
Recoverable expenses $ 3,671
Other operating 356
Interest 8,113
Depreciation and amortization 3,993
--------
$ 16,133
--------
Estimated taxable operating loss $ (3,069)
Add back depreciation and amortization 3,993
--------
Estimated cash to be made available by operations $ 924
========
Note:
This statement of estimated taxable operating results and estimated cash to be
made available from operations is an estimate of operating results of Regency
Square for a period of twelve months and does not purport to reflect actual
results for any period.
13
<PAGE>
c. Exhibits.
Exhibit Number Description
-------------- -----------
2 (a) Purchase and Sale Agreement By and
Between One Federal Street Joint
Venture and The Taubman Realty Group
Limited Partnership, dated July 16,
1997 (Purchase and Sale Agreement)
(without exhibits or schedules, which
will be supplementally provided to
the Securities and Exchange Commission
upon its request).
2 (b) First Amendment to Purchase and Sale
Agreement, dated August 15, 1997
(without exhibits or schedules, which
will be supplementally provided to the
Securities and Exchange Commission
upon its request).
23 Consent of Deloitte & Touche LLP.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
THE TAUBMAN REALTY GROUP
LIMITED PARTNERSHIP
Date: September 10, 1997 By: /s/ Lisa A. Payne
----------------------------
Lisa A. Payne
Executive Vice President and
Chief Financial Officer
15
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2 (a) Purchase and Sale Agreement By and
Between One Federal Street Joint
Venture and The Taubman Realty Group
Limited Partnership, dated July 16,
1997 (Purchase and Sale Agreement)
(without exhibits or schedules, which
will be supplementally provided to
the Securities and Exchange Commission
upon its request).
2 (b) First Amendment to Purchase and Sale
Agreement, dated August 15, 1997
(without exhibits or schedules, which
will be supplementally provided to the
Securities and Exchange Commission
upon its request).
23 Consent of Deloitte & Touche LLP.
16
PURCHASE AND SALE AGREEMENT
by and between
ONE FEDERAL STREET JOINT VENTURE,
a Massachusetts general partnership
and
THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP
a Delaware limited partnership
Property Name: Regency Square
Location: Richmond, Virginia
Date: July 16, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - SALE OF PROPERTY......................................... 1
1.1 Real Property............................................ 1
1.2 Personal Property........................................ 1
1.3 Other Property Rights.................................... 1
ARTICLE 2 - PURCHASE PRICE........................................... 2
2.1 Deposit Money............................................ 2
2.2 Cash at Closing.......................................... 3
ARTICLE 3 - TITLE MATTERS............................................ 3
3.1 Title to Real Property................................... 3
3.2 Title Defects............................................ 4
3.2.1 Certain Exceptions to Title........................ 4
3.2.2 Discharge of Title Objections...................... 5
3.3 Title Insurance; Survey.................................. 5
ARTICLE 4 - BUYER'S DUE DILIGENCE/CONDITION OF THE PROPERTY.......... 5
ARTICLE 5 - ADJUSTMENTS AND PRORATIONS............................... 6
5.1 Lease Rentals and Expenses............................... 6
5.1.1 Rents.............................................. 6
5.1.2 Lease Expenses..................................... 7
5.1.3 Overage Rents...................................... 7
5.1.4 Common Area Maintenance, Central Plant and Similar
Charges............................................ 8
5.2 Real Estate and Personal Property Taxes.................. 9
5.3 Other Property Operating Expenses........................ 9
5.4 Closing Costs............................................ 9
5.5 Cash Security Deposits................................... 10
5.6 Apportionment Credit..................................... 10
5.7 Delayed Adjustment....................................... 10
ARTICLE 6 - CLOSING.................................................. 10
6.1 Closing Date............................................. 10
6.2 Title Transfer and Payment of Purchase Price............. 11
6.3 Seller's Closing Deliveries.............................. 11
6.4 Buyer Closing Deliveries................................. 15
6.5 Delivery of Deed......................................... 15
i
<PAGE>
ARTICLE 7 - CONDITIONS TO CLOSING.................................... 15
7.1 Seller's Obligations..................................... 16
7.2 Buyer's Obligations...................................... 16
7.3 Waiver of Failure of Conditions Precedent................ 17
ARTICLE 8 - REPRESENTATIONS AND WARRANTIES........................... 17
8.1 Buyer's Representations.................................. 17
8.1.1 Buyer's Authorization.............................. 17
8.2 Seller's Representations................................. 17
8.2.1 Seller's Authorization............................. 17
8.2.2 Other Seller's Representations..................... 18
8.3 General Provisions....................................... 20
8.3.1 Definition of "Seller's Knowledge"................. 20
8.3.2 Seller's Representations Deemed Modified........... 20
8.3.3 Notice of Breach; Seller's Right to Cure........... 21
8.3.4 Survival; Limitation on Seller's Liability......... 22
ARTICLE 9 - COVENANTS................................................ 22
9.1 Buyer's Covenants........................................ 22
9.1.1 Confidentiality.................................... 22
9.1.2 Approvals not a Condition to Buyer's Performance... 23
9.1.3 Buyer's Indemnity; Delivery of Reports............. 23
9.1.4 Limit on Government Contacts....................... 24
9.1.5 Buyer's Indemnification of Seller.................. 24
9.2 Seller's Covenants....................................... 25
9.2.1 Service Contracts.................................. 25
9.2.2 Maintenance of Property............................ 25
9.2.3 Access to Property................................. 25
9.2.4 Additional Covenants............................... 26
9.2.5 Marketing.......................................... 26
9.2.6 Seller's Indemnification of Buyer.................. 26
9.3 Mutual Covenants......................................... 27
9.3.1 Publicity.......................................... 27
9.3.2 Investment Banker.................................. 27
9.3.3 Tax Contests; Tax Refunds and Credits.............. 27
9.3.4 Survival........................................... 28
ARTICLE 10 - FAILURE OF CONDITIONS................................... 28
10.1 To Seller's Obligations.................................. 28
10.2 To Buyer's Obligations................................... 29
ii
<PAGE>
ARTICLE 11 - CONDEMNATION/CASUALTY................................... 29
11.1 Condemnation............................................. 29
11.1.1 Right to Terminate................................ 29
11.1.2 Assignment of Proceeds............................ 29
11.2 Destruction or Damage.................................... 30
11.3 Insurance................................................ 30
11.4 Effect of Termination.................................... 30
11.5 Waiver................................................... 31
ARTICLE 12 - ESCROW.................................................. 31
ARTICLE 13 - LEASING MATTERS......................................... 32
13.1 New Leases............................................... 32
13.2 Lease Expenses........................................... 33
13.3 Other Lease Activity..................................... 34
13.4 Lease Enforcement........................................ 34
13.5 Lease Termination Prior to Closing....................... 34
13.6 Prospective Leases....................................... 35
ARTICLE 14 - MISCELLANEOUS........................................... 35
14.1 Buyer's Assignment....................................... 35
14.2 Designation Agreement.................................... 35
14.3 Survival/Merger.......................................... 36
14.4 Integration; Waiver...................................... 36
14.5 Governing Law............................................ 36
14.6 Captions Not Binding; Schedules and Exhibits............. 36
14.7 Binding Effect........................................... 36
14.8 Severability............................................. 36
14.9 Notices.................................................. 37
14.10 Counterparts............................................. 38
14.11 No Recordation........................................... 38
14.12 Additional Agreements; Further Assurances................ 38
14.13 Construction............................................. 38
14.14 ERISA.................................................... 38
14.15 Business Day............................................. 39
14.16 Seller's Maximum Aggregate Liability..................... 39
14.17 Like-Kind Exchange....................................... 39
iii
<PAGE>
EXHIBITS
Exhibit A - Legal Description
Exhibit B - List of Contracts and Leasing Commissions Due
Exhibit C - Title Report
Exhibit D - List of REA Parties
Exhibit E - Form of Irrevocable Letter of Credit
Exhibit F - Reserved
Exhibit G - Form of Buyer's As-Is Certificate and Agreement
Exhibit H - Form of Special Warranty Deed
Exhibit I - Form of Bill of Sale
Exhibit J - Form of Assignment of Leases
Exhibit K-1 - List of Leases
Exhibit K-2 - List of Prospective Tenants
Exhibit L - Form of Assignment of Contracts
Exhibit M-1 - List of Major Tenants
Exhibit M-2 - Form of Tenant Estoppel Letter
Exhibit M-3 - Form of Seller's Estoppel Certificate
Exhibit M-4 - Form of REA Estoppel Certificate
Exhibit N - Form of Notice to Tenants
Exhibit O - Form of Seller's FIRPTA Affidavit
Exhibit P - Form of Buyer's ERISA Representation
Exhibit Q - Litigation Notices, Contract Defaults and Governmental
Violations and Lease Defaults
iv
<PAGE>
INDEX OF DEFINED TERMS
----------------------
Defined Term Article/Section
- ------------ ---------------
Agent ........................................................14.2
Agreement ....................................................Recitals
Anchor Tenants ......................................................6.3(e)
Assignment of Contracts.................................................6.3(d)
Assignment of Leases....................................................6.3(c)
Balance .........................................................2.2
Buyer ....................................................Recitals
Buyer's knowledge........................................................8.3.2
Buyer's Representatives..................................................8.3.2
Charges .......................................................5.1.4
Closing .........................................................6.1
Closing Date .........................................................6.1
Contracts ......................................................6.3(d)
Deed ......................................................6.3(a)
Deposit .........................................................2.1
Designated Employee......................................................8.3.1
Due Diligence ...........................................................4
Due Diligence Period.........................................................4
Election Notice ........................................................11.2
ERISA ......................................................6.4(e)
Escrow Agent .........................................................2.1
Escrow Deposits ..........................................................12
Hazardous Material.......................................................9.1.4
Investment Banker .......................................................9.1.3
Lease Expenses ........................................................13.2
Leases ......................................................6.3(c)
Letter of Credit .........................................................2.1
Major Tenants ......................................................6.3(e)
Mandatory Cure Amount....................................................3.2.1
New Lease .....................................................13.2(b)
Other Liens .......................................................3.2.1
Other Property Rights......................................................1.3
Other Tenants ......................................................6.3(e)
Owner's Title Policy.......................................................3.3
Permitted Exceptions................................................3.1, 3.2.1
Personal Property .........................................................1.2
Property ....................................................Recitals
v
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Article/Section
---------------
Property Documents......................................................6.3(j)
Proprietary Materials......................................................1.2
Purchase Price...............................................................2
REA's...................................................................6.3(o)
REA Parties.............................................................6.3(o)
Real Property..............................................................1.1
Release..................................................................9.3.1
Reporting Person.......................................................14.2(a)
Reporting Requirements....................................................14.2
Seller................................................................Recitals
Seller's knowledge.......................................................8.3.1
Seller's Liens...........................................................3.2.1
Seller Parties...........................................................9.1.3
Survey.....................................................................3.1
Title Company..............................................................3.1
Title Objections.........................................................3.2.1
Title Report...............................................................3.1
Transaction................................................................3.3
vi
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PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made as of this 16th day
of July, 1997, by and between ONE FEDERAL STREET JOINT VENTURE, a Massachusetts
general partnership ("Seller"), and THE TAUBMAN REALTY GROUP LIMITED
PARTNERSHIP, a Delaware 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, 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. That certain parcel of real estate located in
Richmond, Virginia, and legally described in Exhibit A attached
hereto and incorporated herein by this reference, together with all
buildings, improvements and fixtures located thereon 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, 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 (provided that during the Due Diligence Period, at Buyer's
request, the parties shall mutually approve a schedule of tangible
personal property owned by Seller to be expressly included in the
Personal Property transferred at Closing) and all 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, licenses and occupancy agreements encumbering the Real
Property on the Closing Date (as defined in Section 6.1) including,
without limitation, those existing leases described on Exhibit K-1;
and (b) if and to the extent assignment is not prohibited by their
terms, (i) all service, supply, maintenance, utility and commission
<PAGE>
agreements, all equipment leases, and all contracts, subcontracts
and agreements relating to the construction of any unfinished tenant
improvements described in Exhibit B attached hereto and incorporated
herein by this reference, and (ii) all rights of Seller under REA's
(as hereinafter defined), licenses, permits, certificates of
occupancy, consents, variances, waivers, approvals, and other
written authorizations with respect to the Real Property or Personal
Property; and (c) all rights of Seller (if any) to the name "Regency
Square", to the extent such rights are assignable without expense to
Seller (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) and any other tradenames, trademarks,
service marks and logos with respect to the Property, and (d) all
rights of Seller in all tenant lists, telephone exchange numbers,
internet addresses, business licenses, advertising and promotional
materials; environmental, engineering, soil, boundary, topographical
and traffic studies, reports, and surveys; plans, specifications and
drawings; development rights; warranties, guaranties,
representations and covenants; and all other rights of Seller
relating exclusively to the Real Property or Personal Property
(except for the property excluded under Section 1.2 above) (the
rights and interests of Seller described in clauses (a) through (d)
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 ONE HUNDRED TWENTY-FOUR MILLION AND NO/100 DOLLARS ($124,000,000) in
immediately available funds (the "Purchase Price"). The Purchase Price shall be
paid in the following manner:
2.1 Deposit Money. Upon the expiration of the Due Diligence Period,
Buyer shall deposit the sum of FIVE MILLION AND NO/100 DOLLARS
($5,000,000) in immediately available funds as a deposit (the
"Deposit") with First American Title Insurance Company, whose
mailing address is 30 North LaSalle Street, Suite 310, Chicago,
Illinois 60602, Attention: Mary Lou Kennedy, as escrow agent
("Escrow Agent"). The Deposit shall be non-refundable except as
herein provided and shall be held and delivered by Escrow Agent in
accordance with the provisions of Article 12. 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 unconditional
and irrevocable sight draft Letter of Credit issued in favor of
Seller by Union Bank of Switzerland (New York Branch) or other bank
acceptable to Seller and in the form of Exhibit E
2
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hereto. The expiry date of the Letter of Credit shall be no earlier
than thirty (30)days following the Closing Date, except that the
Letter of Credit may be drawn at any time within ten (10) days prior
to its expiry date unless theretofore renewed. 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 by this Agreement to be paid by Buyer to
Seller 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. Except as provided in Section 3.2, Seller
shall convey and Buyer shall accept fee simple title to the Real
Property, subject to (i) applicable zoning and building ordinances
and governmental land use regulations, (ii) such exceptions to title
as are listed on Schedule B of the title insurance commitment issued
by First American Title Insurance Company (the "Title Company"), as
No. 971038, a copy of which is attached hereto as Exhibit E and
incorporated herein by this reference (the "Title Report"), (iii)
such state of facts as are disclosed in a survey of the Property
prepared in accordance with the Minimum Requirements for ALTA/ACSM
Land Title Surveys in effect on the date hereof, to be obtained by
Buyer during the Due Diligence Period (said survey, as so updated,
being herein called the "Survey"), (iv) such state of facts as would
be disclosed by a physical inspection of the Property, (v) the lien
of real estate taxes not yet due and payable, (vi) any exceptions
caused by Buyer, its agents, representatives or employees, (vii)
such other exceptions as the Title Company shall commit to insure
over, without any additional cost to Buyer, whether such insurance
is made available in consideration of payment, bonding, indemnity of
Seller or otherwise, provided such insurance over is satisfactory to
Buyer in its reasonable discretion, (viii) the Leases (as defined in
Subsection 6.3(c)), and (ix) as to Parcel One of the Real Property
only, the leasehold interest constituting Estate Two thereof (the
foregoing exceptions described in clauses (i) through (viii) being
herein collectively called the "Permitted Exceptions").
3
<PAGE>
3.2 Title Defects.
--------------
3.2.1 Certain Exceptions to Title. Notwithstanding the provisions
of Section 3.1, Buyer shall have the right to object in
writing to any title matters that materially adversely
affect title to the Real Property which appear on the Title
Report or on the Survey (herein collectively called the
"Other Liens"), provided that Buyer shall use diligent
efforts to identify and timely notify Seller of any Other
Liens as soon as possible, but in no event later than the
expiration of the Due Diligence Period. Unless Buyer shall
object to such Other Liens prior to expiration of the Due
Diligence Period, or within five (5) days after Buyer's
receipt of any subsequent update to the Title Report
reflecting Other Liens, all such Other Liens and any matters
which do not materially adversely affect Buyer's title to
the Real Property which are set forth in any such 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 shall be required to remove or cause to
be removed at its expense any Title Objections only to the
extent that (i) any Title Objections may be removed or
satisfied by the payment of a liquidated sum of money, and
the cost of removing the same shall not exceed Five Thousand
Dollars ($5,000.00) in the aggregate (the "Mandatory Cure
Amount"), or (ii) such Title Objection relates to a
mortgage, deed of trust, security agreement, judgment
against Seller, or mechanics or construction lien created by
or through Seller or any agent of Seller, regardless of the
amount thereof (collectively, "Seller's Liens"). In
addition, Seller may elect (but shall not be obligated) to
remove, or cause to be removed at its expense, any other
Title Objections. If Seller either is required to or elects
to remove or cause to be removed any Title Objections,
Seller 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, provided that said
insurance must be satisfactory to Buyer in its reasonable
discretion. 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. If Seller is
unable to remove or endorse over any Title Objections prior
to the Closing, or if removal is voluntary and Seller elects
not to remove one or more Title Objections, Buyer may elect
to either (i) 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 (ii) waive such Title Objections and
receive a credit against the Balance in the amount necessary
to clear any Seller's Liens or any other Title Objections
which may be removed or satisfied by the payment of a
liquidated sum of money (but not to exceed the
4
<PAGE>
Mandatory Cure Amount except with respect to Seller's
Liens), in which event such Title Objections shall be deemed
"Permitted Exceptions" and the Closing shall occur as herein
provided without any reduction of or credit against the
Purchase Price.
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, so long as such
insurance over is satisfactory to Buyer in its reasonable
discretion.
3.3 Title Insurance; Survey. At Closing, as a condition precedent to
Buyer's obligation to close, the Title Company shall issue to Buyer,
at Buyer's sole cost and expense, an ALTA Owner's Form of title
insurance policy in the form that is customary in the State of
Virginia with extended coverage, owner's comprehensive, zoning, tax
parcel, survey accuracy, contiguity, and access endorsements and
other endorsements customary in Virginia as may be arranged by Buyer
during the Due Diligence Period (the "Owner's Title Policy"), in the
amount of the Purchase Price, insuring that fee simple title to the
Real Property and the developer's and mall owner's interest in the
REA's 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 additional endorsements (or
amendments) to the Owner's Title Policy as Buyer may reasonably
require, provided that (a) such additional 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 additional
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.
Buyer shall be required to pay all costs incurred in connection with
the Survey and any update or modification of the Survey requested by
Buyer.
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 August 15, 1997 (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 in Buyer's sole discretion with the results of its
5
<PAGE>
Due Diligence, Buyer may terminate this Agreement by not timely delivering the
Deposit, in which case this Agreement shall automatically terminate, and neither
Seller nor Buyer shall have any liability hereunder except for those obligations
which expressly survive the termination of this Agreement. At Closing and as a
material inducement for Seller to consummate the Transaction, Buyer will deliver
a certification in the form of Exhibit G 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 Lease Rentals and Expenses.
---------------------------
5.1.1 Rents. All collected rents and other payments from tenants
under the leases shall be prorated between Seller and Buyer
as of the day prior to the Closing Date in accordance with
the proration principles set forth in this Article 5. As
used herein, the term "Revenue" shall include base rent,
minimum rent, fixed rent, percentage rent, additional rent,
expense reimbursements, operating cost pass-throughs,
utility charges, common area maintenance charges,
administrative charges, reimbursements for property taxes
and assessments, insurance charges and any other sums or
charges payable to Seller under the Leases and the REA's.
Seller shall be entitled to all Revenue attributable to any
period under the Leases and REA's to but not including the
Closing Date. Buyer shall be entitled to all Revenue
attributable to any period under the Leases and REA's on and
after the Closing Date. Revenue due to Seller and not
collected as of the Closing Date shall not be prorated at
the time of Closing, but Buyer shall make a good faith
effort for one year after Closing to collect the same on
Seller's behalf and to tender the same to Seller upon
receipt (which obligation of Buyer shall survive the Closing
and not be merged therein); provided, however, that all
Revenue collected by Buyer on or after the Closing Date
shall first be applied to all amounts due under the Leases
or REA's as the case may be, at the time of collection
(i.e., current rents and sums due Buyer as the current owner
and landlord) with the balance (if any) payable to Seller,
but only to the extent of amounts delinquent and actually
due Seller and after deducting Buyer's reasonable collection
expense. Buyer shall have the exclusive right and obligation
to collect the sums due Seller under the Leases for six (6)
months following Closing, but Seller hereby retains its
rights to pursue any tenant under any lease which has been
terminated and under which the tenant has vacated its
premises prior to Closing, or any other lease from and after
the date that is six (6) months after Closing for sums due
Seller for periods attributable to Seller's ownership of the
Property; provided, however, that Seller shall not be
permitted to commence or pursue any legal proceedings
against any tenant seeking eviction of such tenant or the
termination of the
6
<PAGE>
underlying lease. Seller's rights under the immediately
preceding sentence shall survive the Closing and not be
merged therein. Buyer shall receive a credit against the
Purchase Price for pre-paid Revenue covering the period on
and after Closing.
5.1.2 Lease Expenses. At Closing, Buyer shall reimburse Seller for
the Lease Expenses (as defined in Section 13.2) to the
extent required by the terms of Section 13.2.
5.1.3 Overage Rents. The following proration principles shall
apply to the proration of overage rents, which shall include
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 relevant
fiscal years under the respective Leases. Overage rents
shall be separately prorated under each Lease on the basis
of the fiscal year set forth in such 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 between Seller and Buyer based upon the
number of days in that month occurring prior to the Closing
Date, and the party receiving the interim payment shall
remit to or credit, as the case may be, the other party its
proportionate share for such month. 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. Upon final determination of overage rents collected
from a tenant for the fiscal year under its 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 for such fiscal
year by a 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 and
work sheets, to the extent received from the tenant,
indicating the sales and percentage rent figures for each
tenant for all relevant periods. Within fifteen (15) days
after final determination and collection of overage rents
collected from any tenant for the fiscal year 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
7
<PAGE>
belong entirely to Seller, and Buyer shall remit to Seller
all payments 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 amount shall immediately
pay to the other party its allocable share.
5.1.4 Common Area Maintenance, Central Plant and Similar Charges.
To the extent tenants under Leases pay monthly estimates of
common area maintenance, central plant, utility and similar
charges (collectively, "Charges") with an adjustment at the
end of each fiscal year for which Charges are payable, such
Charges shall be prorated in accordance with this Section
5.1.4, if and to the extent such fiscal year ends on or
after the Closing Date. 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 or credit, as the case may be, 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 5.7 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 (consisting of the sum of estimated payments
plus or minus year-end adjustments) by a fraction (the
numerator of which is Seller's actual third-party
out-of-pocket costs of providing common area maintenance
services prior to the Closing Date, and the denominator of
which is the cost of providing such services for the entire
fiscal year. 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 shall be determined so that all
adjustments can be made at the same time. If, on the basis
of charges for common area maintenance services actually
incurred by Seller 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
such excess to Buyer within fifteen (15) days after notice
from Buyer of the excess owed Buyer. If, on the basis of the
foregoing amounts, Seller has retained less than its
allocable share, Buyer shall remit such
8
<PAGE>
amount to Seller within fifteen (15) days after notice from
Seller of the amount owed Seller.
5.2 Real Estate and Personal Property Taxes. Real estate and personal
property 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 or accrued. 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 and/or personal property tax rate
and assessments have not been set for such calendar year, 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 for the calendar year in which the
Closing occurs differ from the amounts used at Closing and in
accordance with the provisions of Section 5.7. Seller shall pay all
special assessments prior to 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 commenced on the date hereof.
5.3 Other Property Operating Expenses. Operating expenses for the
Property shall be prorated as of midnight of the day prior to the
Closing Date. Seller shall pay or cause to be paid all utility
charges and other operating expenses attributable to the Property
to, but not including the Closing Date (except for those utility
charges and operating expenses payable by tenants in accordance with
the Leases) and Buyer shall pay or cause to be paid all utility
charges and other operating expenses attributable to the Property on
or after the Closing Date. To the extent that the amount of actual
consumption of any utility services is not determined prior to the
Closing Date, a proration shall be made at Closing based on the last
available reading and postclosing adjustments between Buyer and
Seller shall be made within twenty (20) days of the date that actual
consumption for such pre-closing period is determined, which
obligation shall survive the Closing and not be merged therein.
Seller shall not assign to Buyer any deposits which Seller has with
any of the utility services or companies servicing the Property.
Immediately after Closing, Buyer shall arrange with such services
and companies to have accounts opened in Buyer's name beginning as
of 12:01 a.m. on the Closing Date.
5.4 Closing Costs. Except as expressly provided in Section 3.2, Buyer
shall pay all premiums and charges of the Title Company for the
Owner's Title Policy (including endorsements) to be issued pursuant
to the Title Report, the cost of the Survey and any revisions or
updates thereto obtained by Buyer, all recording and filing charges
in connection with the instrument by which Seller conveys the
Property, all escrow or closing charges, all transfer taxes and
similar charges, if
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<PAGE>
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 any other costs
not allocated to Buyer above which are applicable to the transfer of
the Property to Buyer and are customarily paid by the seller
pursuant to local practice. Except as otherwise agreed by the
parties, each party shall pay its own attorneys. The obligations of
the parties to pay applicable escrow or closing charges shall
survive the termination of this Agreement.
5.5 Cash Security Deposits. At Closing, Seller shall give Buyer a credit
against the Balance in the aggregate amount of the security deposits
which remain the obligation of the landlord or Buyer after Closing
then held by Seller under the Leases and any interest thereon less,
any administrative or similar charges to which Seller may be
entitled under applicable law.
5.6 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.
5.7 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 of 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
March 31, 1998. The provisions of this Section 5.7 shall survive
the Closing and not to 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 the date (the "Closing Date") selected by Buyer and acceptable to
Seller but in no event later than September 30, 1997 (subject to
Seller's right to extend as provided herein). Seller and Buyer shall
use good faith, reasonable efforts to schedule the Closing for a
date on or before September 1, 1997. Closing will be by a so-called
"New York style" closing. The Closing shall take place at 10:00 a.m.
Central Time in the offices of Seller's attorneys and Buyer and
Seller shall conduct a "pre-closing"
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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 Real Property to
Buyer by special warranty deed upon confirmation of receipt of the
Purchase Price by either Seller or 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 Seller no
later than 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 Bank of New York.
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. Collectively, deeds consisting of (i) a special
warranty deed in the form of Exhibit H attached hereto and
incorporated herein by this reference with respect to
Parcels Two and Three of the Real Property, and (ii) a
trustee's deed and trustee's deed or assignment of leasehold
in form sufficient to permit issuance of the Owner's Title
Policy with respect to Parcel One of the Real Property,
conveying to Buyer all of Seller's right, title and interest
in and to the Real Property, subject only to the Permitted
Exceptions ("Deed"). The trustee's deeds shall contain a
special warranty of title (as defined in Section 55-69 of
the Code of Virginia) by Seller and The Prudential Insurance
Company of America which covers the entire period of time of
Seller's ownership of legal or beneficial title to the
Property.
(b) Bill of Sale. A bill of sale in the form of Exhibit I
attached hereto and incorporated herein by this reference
conveying all of Seller's right, title and interest in and
to the Personal Property and containing a special warranty
of title as above provided.
(c) Assignment of Tenant Leases. An assignment and assumption of
tenant leases, in the form of Exhibit J attached hereto and
incorporated herein by this reference ("Assignment of
Leases") transferring all of Seller's interest in the tenant
space leases and any amendments, guarantees and other
documents relating thereto identified in Exhibit K-1
attached hereto and incorporated herein by this reference
(as updated at Closing) (herein collectively called the
"Leases"), together with all security
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deposited by the tenants thereunder which are the
obligations of landlord or the Buyer after Closing.
(d) 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 L 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 equipment leases and any lease
commission agreements in effect at the Property on the
Closing Date, all uncanceled service contracts encumbering
the Property on the Closing Date, 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.
(e) Tenant Estoppel Letters. Executed estoppel letters, without
material exceptions, qualifications or modifications, from
(a) each of those tenants identified on Exhibit M-1 attached
hereto and incorporated herein by this reference as "Anchor
Tenants" and "10,000 SF + Tenants" (collectively, the "Major
Tenants"), and (b) other tenants collectively occupying no
less than seventy-five percent (75%) of the area leased
under the Leases (excluding the area leased under the Leases
with the Major Tenants) (the "Other Tenants"). All of such
estoppel letters shall be dated no earlier than the date of
this Agreement. Seller shall request from tenants estoppel
letters in the form approved by Buyer and set forth in
Exhibit M-2 attached hereto and incorporated herein, but it
is expressly understood that notwithstanding the contents of
Exhibit M-2, the requirements of this paragraph will be
satisfied by any estoppel letter substantially in the form
which such Major Tenant or Other Tenant is required to
provide pursuant to the terms of such Major Tenant's or
Other Tenant's Lease. In the event Seller cannot for any
reason obtain a tenant estoppel letter from a 10,000 SF +
Tenant, Seller shall deliver to Buyer a Seller's (landlord)
estoppel letter in the form of Exhibit M-3 attached hereto
and incorporated herein by this reference. Seller's
liability under Seller's estoppel letters shall expire and
be of no further force or effect with respect to any claims
first made after the expiration of one (1) year following
the Closing Date; provided, however, that if Seller shall
obtain a consistent estoppel certificate addressed to Buyer
from any such tenant after delivery of such Seller's
estoppel letter with respect to such tenant, Seller's
(landlord) estoppel letter shall, as of the date of such
tenant's estoppel letter, be without
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further force or effect. Seller shall deliver to Buyer
copies of all estoppel letters (and all written responses to
any such requested estoppel letter) promptly upon receipt
thereof by Seller (regardless of whether received before or
after Closing and whether needed to satisfy the 75% and
other requirements above). Seller shall use its best efforts
(without having to file a lawsuit) to obtain estoppel
letters from all tenants as soon as possible after the date
hereof. For purposes hereof, an exception, qualification or
modification in an estoppel letter shall be deemed
"material" only if: (i) Buyer is not "deemed to know" the
matter described by such exception, qualification or
modification prior to the end of the Due Diligence Period;
or (ii) such exception, qualification or modification (a)
disputes the enforceability of the Lease, (b) asserts a
default or breach by the landlord under the Lease, or (c)
asserts a term or condition not contained in the copy of the
Lease delivered to Buyer, which condition materially and
adversely affects the economic terms of the Lease.
(f) Notice to Tenants. A single form letter in the form of
Exhibit N 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 O 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 and
Seller's authorization to consummate the Transaction.
(i) Seller's Certificate. The certificate of Seller updating and
certifying to the matters set forth in Section 8.2.
(j) Property Documents. (i) To the extent in the possession or
control of or reasonably available to 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, records and files (other than Proprietary
Materials) located at the Property or at the office of
Seller's building manager relating to the Property and the
ownership and operation thereof and all other items
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constituting the other Property Rights (excluding the
Contracts and Leases) (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 (including the Title Company's
form of owner's and mechanic's lien affidavit and a gap
indemnity) 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, (i) if the same are assignable, deliver to Buyer at
the Closing such letters of credit and execute and deliver
such other instruments as the issuers of such letters of
credit shall reasonably require to assign such letters of
credit to Buyer, or (ii) cooperate with Buyer to change the
named beneficiary under such letters of credit to Buyer or
to obtain reissuance of such letters of credit to Buyer, so
long as Seller does not incur any material additional
liability or expense in connection therewith.
(m) Keys and Original Documents. Keys and entry cards 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) REA Estoppel Letters. Executed estoppel letters from each
party to the reciprocal easement agreements encumbering the
Real Property (the "REA's") which parties are identified on
Exhibit D attached hereto and incorporated herein by this
reference (the "REA Parties"). Said estoppel letters shall
be substantially in the form of Exhibit M-4 (the "REA
Estoppel"). All such estoppel letters shall be dated no
earlier than the date of this Agreement and shall be
substantially in the form which such REA Party is required
to provide pursuant to the terms of said reciprocal easement
agreement or, if no form is specified, in the REA Estoppel.
Seller shall deliver to Buyer copies of all estoppel letters
(and written responses to any estoppel letter request)
promptly upon receipt thereof by Seller.
(p) Additional Documents. (1) Notice letter to REA Parties in
form substantially the same as Exhibit N hereto; (2)
Assignment of REA Documents in the form of Exhibit J-1
hereto; (3) Investment Banker's release regarding payment of
its fee; (4) Closing Statement with respect
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to the prorations pursuant to Article 5; and (5) evidence of
termination of management agreement and release by property
manager.
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 by the terms of this Agreement to be
paid by Buyer at Closing.
(b) Assignment of Leases. The Assignment of Leases executed and
acknowledged by Buyer.
(c) Assignment of Equipment Leases, Commission Agreements and
Service Contracts. The Assignment of Contracts executed and
acknowledged by Buyer.
(d) 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.
(e) Buyer's ERISA Certificate. The certificate of Buyer
substantially in the form of Exhibit P attached hereto and
incorporated herein by this reference as to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA").
(f) 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.
(g) 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.
(h) 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.
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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 the Finance Committee of Seller's Board of
Directors, in its sole discretion, to be obtained on or
before August 13, 1997;
(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;
(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) Partnership Approval. The unconditional approval of the
Transaction by the Partnership Committee of Buyer, in its
sole discretion, to be obtained on or before August 8, 1997;
(b) 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;
(c) Title Conditions Satisfied. At the time of the Closing,
title to the Property shall be as provided in Article 3 of
this Agreement and the Owner's Title Policy shall be
delivered to Buyer; 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, and all other conditions to Buyer's
obligations hereunder shall have been satisfied at or prior
to the Closing.
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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.l 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 or Section 7.2,
respectively, except for any breach of any representation or
warranty or any default or other breach hereunder other than a
breach of a representation or warranty which is deemed waived or
modified pursuant to Section 8.3 hereof. In the event any of the
conditions set forth in Sections 7.l 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
at Closing, Buyer will have 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 at
Closing will have been duly authorized by all requisite
partnership action on the part of Buyer and will be 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 agreement of partnership 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, and
covenants with, Buyer as follows:
8.2.1 Seller's Authorization. Each of Seller and The Prudential
Insurance Company of America ("Prudential") (a) 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, (b) subject to obtaining the
approval described in Subsection 7.1(a), is authorized
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to consummate the Transaction and fulfill all of its
obligations hereunder and under all documents contemplated
hereunder to be executed by Seller (or Prudential, as the
case may be), and (c) has all necessary power to execute and
deliver this Agreement and all documents contemplated
hereunder to be executed by such party and to perform all of
its obligations hereunder and thereunder. Subject to
obtaining the approval described in Subsection 7.1(a), this
Agreement and all documents contemplated hereunder to be
executed by Seller and Prudential have been duly authorized
by all requisite partnership or corporate action on the part
of Seller and Prudential and are the valid and legally
binding obligation of Seller and Prudential, as the case may
be, 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
and Prudential nor the performance of the obligations of
Seller and Prudential hereunder or thereunder will result in
the violation of any Law or any provision of the agreement
of partnership or articles of incorporation and by-laws of
Seller or Prudential or will conflict with any order or
decree of any court or governmental instrumentality of any
nature by which Seller or Prudential is bound. Subject to
obtaining the approval described in Section 7.1(a), Seller
and Prudential have all third party consents and approvals
necessary to consummate the Transaction.
8.2.2 Other Seller's Representations.
(a) Except as listed in Exhibit Q attached hereto and
incorporated herein by this reference, Seller has not
received any written notice of litigation or
administrative proceedings pending or threatened in
writing against Seller or the Property (including
eminent domain or similar proceedings) which would, if
determined adversely to Seller, adversely affect the
Property, and to Seller's knowledge (as said term is
hereinafter defined) there are no eminent domain or
similar proceedings pending or threatened in writing
against the Property.
(b) There are no service, supply, maintenance or utility
contracts affecting the Property and imposing material
obligations on Seller or 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 which remains
uncured except as listed in Exhibit Q attached hereto.
(d) The only tenants of the Property are the tenants under
the Leases listed in Exhibit K-1 attached hereto and
incorporated herein by
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this reference, as modified by any modifications listed
on Exhibit K-1, and there are no other Leases (or
modifications thereto) which are not reflected in
Exhibit K-1.
(e) Except as listed in Exhibit Q attached hereto, Seller
has not received any written notice from any
governmental authority of any violation of any zoning,
building, fire, environmental or health code, statute,
ordinance, rule or regulation applicable to the Property
which remains uncured, and to Seller's knowledge, (i) no
such violations of any material nature are in existence,
and (ii) Seller has all material licenses and permits
necessary for operation of the Property as the same is
presently operated and such licenses and permits have
not, to Seller's knowledge, been revoked.
(f) Seller shall direct the current manager of the Property,
Faison Associates, to give or otherwise make available
to Buyer, its attorneys, agents and/or representatives
all non-proprietary books, records, and other writings
in such manager's possession related in any material way
to the use, ownership or operation of the Property,
excluding the Proprietary Materials, and shall work with
said manager to provide a smooth and orderly transition
of management of the Property to Buyer at and subject to
Closing.
(g) Except as set forth in Exhibit B attached hereto, there
are no leasing commissions or fees due in connection
with any lease or occupancy agreement affecting the
Property that have not been paid in full prior to the
date hereof.
(h) Except as set forth on Exhibit Q attached hereto and
except for defaults cured on or before the date hereof,
Seller has neither (i) received any written notice from
any tenant of the Property or REA Party asserting or
alleging that Seller is in default under such tenant's
Lease or the relevant REA, as the case may be, nor (ii)
sent to any tenant of the Property or REA Party any
written notice alleging or asserting that such tenant or
REA Party is in default under such tenant's Lease or
such REA, as the case may be.
(i) Seller owns the Personal Property, the Leases (and the
interest of landlord thereunder) and the Property
owner's and developer's rights under the REA's free and
clear of all charges, exceptions, liens and encumbrances
except the Permitted Exceptions to the extent applicable
thereto.
(j) Seller has no employees at the Property, and to Seller's
knowledge, the employees engaged in property management
at the
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Property are employees of the management company employed
by Seller to manage the Property.
(k) To Seller's knowledge, except for any Proprietary
Materials removed therefrom as contemplated by this
Agreement, the Property Documents, including any
operating statements recording revenues and expenses
included therein, are the files used in the ordinary
course of business for management of the Property and to
prepare reports with respect to the Property, and Seller
has not removed any documents, agreements,
correspondence or other information from the Property
Documents (except for any Proprietary Materials) with
the intent of concealing information from Buyer. Seller
shall direct its property manager to make all such
Property Documents in its possession available to Buyer.
(l) Except as set forth in the Leases and Permitted
Exceptions, there are no outstanding contracts to
purchase, options to purchase, rights of first refusal
to purchase or other preferential rights to purchase the
Property which would be binding on Buyer or the Property
following Closing.
(m) Except as included in the Leases and Permitted
Exceptions, there are no REA's or modifications of or
supplements to REA's which would be binding on Buyer or
the Real Property following Closing.
8.3 General Provisions.
-------------------
8.3.1 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 Steve Vittorio
(the "Designated Employee") 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 Employee 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 Employee; provided that with
respect to such matters the Designated Employee has made
inquiry of the management company currently engaged by
Seller to manage the Property. There shall be no personal
liability on the part of the Designated Employee arising out
of any representations or warranties made herein.
8.3.2 Seller's Representations Deemed Modified. To the extent that
Buyer knows or is deemed to know prior to the expiration of
the Due
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Diligence Period that Seller's representations and
warranties in Section 8.2.2 hereof 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
Section 8.3.2 and Section 8.3.3, "Buyer" shall include
Buyer, its affiliates, and the employees of Buyer and all
such affiliates, and 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 Leases, the files regarding the Leases
included in the Property Documents, the REA's, any
environmental reports included in the Property Documents,
any estoppel certificate executed by any tenant of the
Property or REA Party and delivered to Buyer prior to
expiration of the Due Diligence Period, or any studies,
tests, reports, or analyses prepared by or for Buyer or
otherwise obtained by Buyer contains information which is
inconsistent with such representation or warranty.
8.3.3 Notice of Breach; Seller's Right to Cure. If after the
expiration of the Due Diligence Period but prior to the
Closing, Buyer obtains actual knowledge that any of the
representations or warranties made in Section 8.2.2 by
Seller are untrue, inaccurate or incorrect in any material
respect, Buyer may, at Buyer's sole option (but failing
which Seller shall have no liability therefor) give Seller
written notice thereof within five (5) business days of
obtaining such knowledge (but, in any event, prior to the
Closing). If at or prior to the Closing, Seller or Seller's
Designated Employee obtains 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 or before 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.
If any such representation or warranty is untrue, inaccurate
or incorrect but is not, when taken with all other untrue,
inaccurate or incorrect
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representations or warranties, 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,
when taken with all other untrue, inaccurate or incorrect
representations or warranties, Buyer's aggregate damages,
losses or lost Revenue resulting from the untruth,
inaccuracy or incorrectness of any or all of the
representations or warranties are reasonably estimated by
Buyer to exceed $100,000.
8.3.4 Survival; Limitation on Seller's Liability. The
representations and warranties made by Seller in Section
8.2.2 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 expiration of one
(1) year after 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(e)) 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) Buyer knew or 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 all such untrue, inaccurate
or incorrect representations or warranties are reasonably
estimated by Buyer to aggregate less than $100,000.
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 use good faith commercially reasonable efforts to
cause its directors, officers and other personnel and
representatives to hold, in strict confidence, and not
disclose to any other person without the prior written
consent of Seller until the Closing
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shall have been consummated, any of the information in
respect of the Property 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 use good faith commercially
reasonable efforts to keep the terms of the Transaction
confidential through the Closing Date. Notwithstanding
anything to the contrary hereinabove set forth, Buyer may
disclose such information (i) on a need to know basis to its
employees or members of professional firms serving it, and
(ii) as any governmental agency or NYSE may require in order
to comply with applicable laws and/or regulations. The
provisions of this Subsection 9.1.1 shall terminate at the
Closing but shall survive termination of this Agreement.
9.1.2 Approvals not a Condition to Buyer's Performance. Buyer
acknowledges and agrees that its obligation to perform under
this Agreement is not contingent upon Buyer's ability to
obtain any (a) governmental or quasi-governmental approval
of changes or modifications in use or zoning, or (b)
modification of any existing land use restriction, or (c)
consents to assignments of any service contracts, management
agreements or other agreements which Buyer requests, or (d)
endorsements to the Owner's Title Policy (other than those
specified in Section 3.3).
9.1.3 Buyer's Indemnity; Delivery of Reports. Buyer hereby agrees
to indemnify, defend, and hold Seller, its counsel, Lazard
Freres & Co., L.L.C. ("Investment Banker"), its sales
agents, any partner, officer, director, employee, agent or
attorney of Seller, its counsel, Investment Banker or its
sales agents, and any other party related in any way to any
of the foregoing (all of which parties are herein
collectively called the "Seller Parties") and the Property
free and harmless from and against any and all costs, loss,
damages and expenses, of any kind or nature whatsoever
(including reasonable 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. If
this Agreement terminates for any reason prior to Closing,
Buyer shall deliver promptly to Seller
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copies of all third party reports commissioned by Buyer
evidencing the results of tests, studies or inspections of
the Property.
9.1.4 Limit on Government Contacts. Notwithstanding any provision
in this Agreement to the contrary, except in connection with
the preparation of a so-called "Phase I" or "Phase II" (if
any) environmental report with respect to the Property,
Buyer shall not contact any governmental official or
representative regarding Hazardous Materials (as hereinafter
defined) on or the environmental or physical condition of
the Property 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 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.
9.1.5 Buyer's Indemnification of Seller. Buyer hereby agrees to
indemnify, defend and hold Seller harmless from and against
all costs, expenses, liabilities, demands, claims and
damages (and any loss or expenses, including, without
limitation, interest, penalties, and reasonable attorneys'
fees and disbursements, asserted against, resulting from,
imposed upon or incurred by Seller as a result thereof) by
reason of or resulting from (a) any breach of any
representation or warranty contained in this Agreement or in
any document or instrument delivered pursuant hereto by
Buyer; (b) any breach by Buyer of or a default by Buyer of
or a default by Buyer under the terms and conditions of this
Agreement or any other document executed and delivered by
Buyer pursuant hereto; (c) any third-party claim relating to
the Property that arises, takes place, occurs or accrues
from and after the Closing Date; (d) any breach or alleged
breach of any of the Leases, the REA's or the Contracts by
Buyer with respect to any period on or after the Closing
Date; (e) any obligation owed by Buyer under or relating to
any of the Leases (including, without limitation, leasing
commissions or fees, excluding all of Seller's obligations
under Article 13), the REA's or the Contracts accruing
subsequent to the assignment thereof to Buyer; and (f) any
refunds due tenants with respect to periods from and after
the Closing Date for common area maintenance, real estate
tax or insurance
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charges. The provisions of this Section 9.1.5 shall survive
the Closing (and not be merged therein).
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 or enter into any service,
maintenance or similar contract unless such contract (as so
extended, renewed, replaced or modified) can be terminated
by the owner of the Property without penalty or payment 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 cause to
be managed and shall maintain and keep the Property in a
manner, condition and repair consistent with Seller's past
practices with respect to the Property and Seller shall not
make any new commitments with respect to any material
capital expenditure or construction with respect thereto
without Buyer's prior consent, which consent shall not be
unreasonably withheld or delayed; provided, however, that
Buyer hereby agrees that without limiting Buyer's rights
under Section 8.2.2(e) only, 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, which, with respect to both clauses
(i) and (ii), exist on the last day of the Due Diligence
Period. Between the date hereof and the Closing Date, Seller
will promptly advise Buyer 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 or other aspect of the
Property.
9.2.3 Access to Property. At any time prior to Closing, Seller
shall allow Buyer or Buyer's representatives access to the
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 in any
material respect; (b) Buyer shall not contact any tenant
with respect to the Property without Seller's prior written
consent, which consent shall not be unreasonably withheld;
(c) Seller or its designated representative shall have the
right to preapprove and be present during any physical
testing of the Property, which approval shall not be
unreasonably withheld; and (d) Buyer shall return the
Property to substantially the condition existing prior to
such tests and inspections. Prior to such time as Buyer or
any of Buyer's Representatives enter the Property, Buyer
shall obtain policies of general liability insurance which
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name Seller as an additional insured and which are with such
insurance companies, provide such coverages and carry such
limits 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.
9.2.4 Additional Covenants. Seller shall not modify or amend any
of the REA's without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed.
Seller shall not grant or consent to any new encumbrance,
easement, lien, restriction or other documents encumbering
title to the Property without the prior written consent of
Buyer, except as is expressly permitted under Article 13.
Seller shall not remove any of the Personal Property from
the Real Property, except for items that are replaced with
an item of equally suitable value, free and clear of any
lien or claim. Seller shall immediately notify Buyer of any
pending, or any written threat of, litigation, arbitration
or administrative hearing affecting the Property reasonably
promptly following receipt of written notice thereof by
Seller. Seller shall continue to maintain or cause to be
maintained its books and records substantially in accordance
with its past practices, pay all operating expenses, and
perform its obligations under all of the Leases, REA's and
Contracts in all material respects. The existing property
manager shall continue to manage the Property until closing.
9.2.5 Marketing. Seller agrees not to advertise, market or
otherwise offer all or substantially all of the Property as
being available for sale or lease and Seller agrees not to
negotiate or have any discussions with any person for sale
or lease of all or substantially all of the Property, other
than Buyer, unless and until this Agreement is terminated.
9.2.6 Seller's Indemnification of Buyer. Subject in all respects
to Section 14.16 hereof, Seller hereby agrees to indemnify,
defend, and hold Buyer harmless from and against all costs,
expenses, liabilities, demands, claims, and damages (and any
loss or expenses, including, without limitation, interest,
penalties and reasonable attorneys' fees and disbursements,
asserted against, resulting from, imposed upon, or incurred
by Buyer as a result thereof) by reason of or resulting from
(a) any breach of any representation or warranty contained
in this Agreement or in any document or instrument delivered
pursuant hereto by Seller; (b) any breach by Seller of or a
default by Seller under the terms and conditions of this
Agreement or any other document executed and delivered by
Seller pursuant hereto; (c) any third-party claim relating
to the Property that arises, takes place, occurs or accrues
prior to the Closing; (d) any breach or alleged breach of
any of the Leases, the REA's or the Contracts by Seller with
respect to any period prior to the Closing; (e) any
obligation owed by Seller under or relating to any
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of the Leases (including, without limitation, leasing
commissions or fees, excluding all of Buyer's obligations
under Article 13), the REA's or the Contracts accruing prior
to the assignment thereof to Buyer; and (f) any refunds due
tenants with respect to periods prior to the Closing Date
for common area maintenance, real estate tax or insurance
charges. The provisions of this Section 9.2.6 shall survive
the Closing (and not be merged therein).
9.3 Mutual Covenants.
-----------------
9.3.1 Publicity. Seller and Buyer each hereby covenant that (a)
prior to the Closing 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 by any
governmental authority or the NYSE (and in such event Buyer
shall provide to Seller in advance any proposed press
release or other disclosure and give Seller an opportunity
to comment thereon) or in the form heretofore reviewed and
expressly approved by Seller, and (b) after the Closing, the
initial Release related to the consumation of Transaction
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 Investment Banker. Seller and Buyer expressly acknowledge
that Investment Banker has acted as the exclusive investment
banker with respect to the Transaction and with respect to
this Agreement, and that Seller shall pay any fee due to
Investment Banker in accordance with the separate agreement
between Seller and Investment Banker. Seller and Buyer each
represents and warrants to the other that it has not dealt
with any 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 Contests; Tax Refunds and Credits. Seller shall have
the right to continue and control the progress of and to
make all decisions with respect to any contest of the real
estate taxes for the Property due and payable for 1996 and
all prior calendar years; provided, however, that no such
contest shall adversely affect future taxes or other
obligations of the Property or Buyer after Closing. Buyer
shall have the right to control the progress of and to make
all decisions with respect to any
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contest of the real estate taxes for the Property due and
payable for 1997 and any calendar year subsequent to the
calendar year in which the Closing occurs. All real estate
and personal property tax refunds and credits received after
Closing with respect to the Property for 1997 and prior
years shall be applied in the following order of priority:
first, to pay the costs and expenses (including reasonable
attorneys' fees and expenses) incurred in connection with
obtaining such tax refund or credit; second, to pay any
amounts due to any tenant of the Property or REA Party as a
result of such tax refund or credit to the extent required
pursuant to the terms of the Leases or law; and third, to 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 the Closing Date, (i) Buyer is in
default of any of its obligations hereunder, or (ii) any of Buyer's
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 obligations hereunder in a prompt
and timely manner, then Seller may elect to (a) terminate this
Agreement by written notice to Buyer; or (b) proceed to close the
Transaction. If this Agreement is so terminated, then Seller shall
be entitled to the Deposit as liquidated damages, and thereafter
neither party to this Agreement shall have any
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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, on the Closing Date, (i) Seller is in
default of any of its obligations hereunder, or (ii) any of Seller's
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 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, promptly 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 or written threat thereof which has not yet
been consummated), Seller shall notify Buyer in writing of
such fact (together with all information Seller has with
respect thereto) 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 the giving 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 to terminate
this Agreement. For purposes hereof, a "significant portion"
of the Property shall mean (i) any access to or parking
spaces at the Property, (ii) any gross leasable area of the
Property, (iii) if any Anchor Tenant has the right to
terminate its lease, and has not waived such right, or (iv)
such a portion as shall have a value, as reasonably
determined by Seller and Buyer, in excess of One Million
Dollars ($1,000,000). 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) Buyer does not elect 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
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result of such taking (less all costs and expenses,
including attorneys' fees and costs, incurred by Seller as
of the Closing Date in obtaining payment of such award or
proceeds) 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.
Seller shall not settle or compromise any such taking or
proceeding without Buyer's prior written consent, which
consent shall not be unreasonably withheld or delayed.
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 an insured casualty and (b)
would cost less than One Million Dollars ($1,000,000) to repair or
restore as reasonably determined by Seller and Buyer, 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 such cost to repair or restore. In the event the
Property is damaged or destroyed prior to the Closing Date and the
cost of repair (as determined as set forth above) would equal or
exceed One Million Dollars ($1,000,000), 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 to terminate this Agreement. In the event Buyer elects
to continue this Agreement as set forth above, this Agreement shall
remain in full force and effect, 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.
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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 - ESCROW
The Deposit and any other sums which the parties agree shall be held in escrow
(herein collectively called the "Escrow Deposits"), together with all interest
earned thereon, shall be held by the Escrow Agent, in trust, and disposed of
only in accordance with the following provisions:
(a) The Escrow Agent shall invest all cash Escrow Deposits in government
insured interest-bearing instruments satisfactory to both Buyer and
Seller, shall not commingle the Escrow Deposits with any funds of
the Escrow Agent or others, and shall promptly provide Buyer and
Seller with confirmation of the investments made.
(b) If the Closing occurs, and if the Escrow Deposit is in cash, the
Escrow Agent shall deliver the Escrow Deposits to, or upon the
instructions of, Seller on the Closing Date.
(c) If for any reason the Closing does not occur, the Escrow Agent shall
deliver the Escrow Deposits and all interest earned thereon to
Seller or Buyer only upon receipt of a written demand therefor from
such party, subject to the following provisions of this Subsection
12.1(c). If for any reason the Closing does not occur and either
party makes a written demand upon the Escrow Agent for payment of
the Escrow Deposits and the interest earned thereon, the Escrow
Agent shall give written notice to the other party of such demand
at the addresses set forth in Section 14.9. If the Escrow Agent does
not receive a written objection from the other party to the proposed
payment within ten (10) days after the giving of such notice, the
Escrow Agent is hereby authorized to make such payment. If the
Escrow Agent does receive such written objection within such period,
the Escrow Agent shall continue to hold such amount until otherwise
directed by written instructions signed by Seller and Buyer or a
final judgment of a court of competent jurisdiction.
(d) The parties acknowledge that the Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, that the
Escrow Agent shall not be deemed to be the agent of either of the
parties, and that the Escrow Agent shall not be liable to either of
the parties for any action or omission on its part taken or made in
good faith, and not in disregard of this Agreement, but shall be
liable for its negligent acts and for any loss, cost or expense
incurred by Seller or Buyer resulting from the Escrow Agent's
mistake of law respecting the Escrow Agent's scope or nature of its
duties. Seller and Buyer shall jointly and severally indemnify and
hold the Escrow Agent harmless from and against all costs, claims
and expenses, including reasonable attorneys' fees, incurred in
connection with
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the performance of the Escrow Agent's duties hereunder, except with
respect to actions or omissions taken or made by the Escrow Agent in
bad faith, in disregard of this Agreement or involving negligence on
the part of the Escrow Agent.
(e) Buyer shall pay any income taxes on any interest earned on the
Deposit if the Deposit is refunded to Buyer as applied against the
Purchase Price, and Seller shall pay all income taxes on any
interest earned on the Deposit if the Deposit is paid to Seller as
liquidated damages. Buyer represents and warrants to the Escrow
Agent that its taxpayer identification number is 38-3097317; and
Seller shall supply to the Escrow Agent its taxpayer identification
number promptly following the date hereof.
(f) The Escrow Agent has executed this Agreement in the place indicated
on the signature page hereof in order to confirm that the Escrow
Agent has received and shall hold the Escrow Deposits and the
interest earned thereon, in escrow, and shall disburse the Escrow
Deposits, and the interest earned thereon, pursuant to the
provisions of this Article 12.
(g) The escrow fee, if any, charged by the Escrow Agent shall be paid
by Buyer.
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 ten (10)
business days after receipt by Buyer of the information referred to
in the next sentence, enter into a new lease, license or occupancy
agreement for space in the Property (except any lease with a
prospective tenant and on the terms described on Exhibit K-2
attached hereto, herein collectively called "Prospective Tenants")
or renew or extend any Lease (except pursuant to the exercise by a
tenant of a renewal, extension or expansion option contained in such
tenant's Lease which does not require landlord approval). Seller
shall furnish Buyer with all information regarding any such proposed
action reasonably necessary to enable Buyer to make informed
decisions with respect to the advisability of the proposed action
(including without limitation a copy of the lease proposal and an
itemized list specifying all Lease Expenses, including the estimated
amount thereof, incurred or to be incurred in connection therewith).
If Buyer fails to object in writing to any such proposed action
within ten (10) business days after receipt of the aforementioned
information, Buyer shall be deemed to have approved the proposed
action. The foregoing notwithstanding, prior to expiration of the
Due Diligence Period, if Buyer rejects any such proposed action,
Seller shall nevertheless retain full right, power and authority to
execute all documents necessary to effect such action (in which
event Seller shall promptly advise Buyer of same), but Seller shall
also retain the obligation to pay Lease Expenses (as hereinafter
defined) arising solely as a result of such
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action. Seller shall promptly deliver to Buyer copies of all leases
entered into by Seller (or in the case of renewals or extensions,
received by Seller). After expiration of the Due Diligence Period,
Seller shall not enter into any lease or other instrument described
in this Section 13.1 without Buyer's prior written consent, which
consent may be withheld by Buyer in its sole and absolute
discretion.
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) any extensions, renewals or expansions under the Leases
exercisable and exercised by any tenant between June 30,
1997, and the Closing Date; and
(b) any lease for space at the Property entered into between
June 30, 1997, 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 June 30, 1997 (a "New Lease").
Notwithstanding the foregoing, in no event shall any of the
Prospective Leases be treated as New Leases hereunder. 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, as reflected in the lease or other documentation supplied
to Buyer prior to its consent to a New Lease, which are incurred for
repairs, improvements, equipment, painting, decorating, partitioning
and other items to satisfy the tenant's requirements with regard to
such leasing transaction, (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 term of any New Lease, and (v)
expenses, as reflected in the lease or other documentation supplied
to Buyer prior to its consent to a New Lease, which are 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). At the Closing,
Buyer shall assume Seller's obligations to pay, when due (whether on
a stated due date or accelerated) any Lease Expenses with respect to
New Leases unpaid as of the Closing, and Buyer hereby agrees to
indemnify and hold Seller harmless from and against any and all
claims for such
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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 retain the obligation to
pay all Lease Expenses with respect to Prospective Leases and shall
indemnify and hold Buyer harmless regarding same. Each party shall
make available to the other all records, bills, vouchers and other
data necessary to verify Lease Expenses and the payment thereof.
13.3 Other Lease Activity. Except with respect to Prospective Leases or
as provided in this Section 13.3, without the prior consent of
Buyer, which shall not be unreasonably withheld prior to expiration
of the Due Diligence Period but may be granted or withheld in
Buyer's sole discretion thereafter, (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 and (c) Seller
shall not remove any tenant under any Lease or New Lease, whether by
summary proceedings or otherwise, without Buyer's consent, not to be
unreasonably withheld. 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 ten (10) 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 ten (10)
business day period, Buyer shall be deemed to have approved such
action. If any Lease requires that the landlord's consent be given
under the applicable circumstances, 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; provided
that Seller shall not seek to terminate any Lease or evict any
tenant thereunder without Buyer's consent, not to be unreasonably
withheld or delayed.
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
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<PAGE>
proceedings or otherwise) prior to the Closing in strict accordance
with this Article 13 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.
13.6 Prospective Leases. If, as of the Closing Date, any Prospective
Lease has not been executed by both landlord and tenant, Seller
shall grant Buyer a credit at Closing in an amount equal to three
months' base rental for each such unexecuted Prospective Lease at
the rental rate applicable to such lease as set forth on Exhibit
K-2, which credit shall satisfy in full any and all obligations of
Seller to Buyer with respect to any such unexecuted Prospective
Lease.
ARTICLE 14 - MISCELLANEOUS
14.1 Buyer's Assignment. 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. Notwithstanding the foregoing, Buyer shall have the
right to assign its rights and delegate its duties hereunder without
Seller's consent so long as (i) the assignee is at least 51% owned
by Buyer and (ii) Buyer shall not be released from its obligations
hereunder and (iii) the assignee delivers to Seller the
certifications set forth in Section 14.14 hereof regarding ERISA.
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
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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 shall supply to Agent, under penalties of perjury,
Seller's correct taxpayer identification number promptly
following the date hereof.
(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; provided that none of
such provisions will survive the Closing for a period in excess of
one (1) year.
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 in which the Property is
located except to the extent its conflict of law principles would
direct the application of the law of a different state or forum.
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
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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 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:
c/o The Taubman Company
200 East Long Lake Road
Bloomfield Hills, Michigan 48304
Attention: Cordell A. Lietz
COPY TO:
Miro Weiner & Kramer
500 North Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48303
Attention: Chris Heaphy
IF TO SELLER:
c/o The Prudential Insurance Company of America
8 Campus Drive, 4th Floor
Arbor Circle South
Parsippany, New Jersey 07054
Attention: Steve Vittorio
COPY TO:
The Prudential Insurance Company of America
8 Campus Drive, 4th Floor
Arbor Circle South
Parsippany, New Jersey 07054
Attention: John L. Westney, Jr.
Division Counsel
37
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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 (except in the event Buyer
commences an action for specific performance of Seller's obligations
hereunder) 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 not
permitted hereunder.
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
material 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.
(a) Buyer hereby represents and warrants to Seller that, as of
the date hereof and as of the Closing Date:
(i) Buyer's rights under this Agreement do not, and upon its
acquisition by Buyer the Property shall not, constitute
"plan assets" within the meaning of 29 C.F.R. Section
2510.3-101, because one or more of the following
circumstances are true:
(x) Equity interests in Buyer are publicly offered
securities, within the meaning of C.F.R. Section
2510-.3-101(b)(2);
(y) Less than twenty-five percent (25%) of all equity
interests in Buyer are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section
2510.3-101(f)(2);
(z) Buyer qualifies as an "operating company,"
"venture capital operating company" or a "real
estate operating
38
<PAGE>
company" within the meaning of 29 C.F.R. Section
2510.3-101(c)(d) or (e).
(ii) Buyer is not a "governmental plan" within the meaning of
Section 3(32) of the Employee Retirement Income Security
Act of 1974 and the execution of this Agreement and the
purchase of the Property by Buyer is not subject to
state statutes regulating investments of and fiduciary
obligations with respect to governmental plans.
(b) Seller represents and warrants to Buyer, as of the date
hereof and as of the Closing Date:
(i) The source of funds from which Seller owns the Property
is Seller's "insurance company general account," as such
term is defined under Section V of the United States
Department of Labor's Prohibited Transaction Exemption
95-60 ("PTE 95-60").
(ii) Seller satisfies all of the applicable requirements of
Sections I and IV of PTE 95-60.
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
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 Three
Million Five Hundred Thousand Dollars ($3,500,000). The provisions
of this section shall survive the Closing and shall not be merged
therein for a period of one (1) year.
14.17 Like-Kind Exchange. Buyer agrees to cooperate reasonably with
Seller in effecting an exchange transaction which includes the
Property, pursuant to Section 1031 of the United States Internal
Revenue Code, provided that any such exchange transaction, and the
related documentation, shall: (a) be at the sole cost and expense
of Seller, (b) not require Buyer to execute any contract, make any
commitment, or incur any obligations, contingent or otherwise, to
any person or entity, (c) not cause Buyer to be liable or
potentially liable for any environmental conditions affecting
property other than the Property, (d) not delay the closing of the
Transaction, (e) not include Buyer's acquiring title to any
property other than
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the Property or otherwise becoming involved in a transaction with a
third party, and (f) not relieve or release Seller from any of its
obligations hereunder and not otherwise be contrary to or
inconsistent with the terms of this Agreement. Notwithstanding
anything to the contrary contained herein, Buyer is not to incur
any, and Seller shall reimburse, indemnify and hold Buyer harmless
from, any and all costs, expenses and liabilities incurred solely
from Buyer's accommodation of such tax deferred exchange,
including, without limitation, reasonable attorneys' fees, and any
title or escrow fees or expenses. The obligations of Buyer and
Seller under this section shall survive the Closing and shall not
be merged therein.
40
<PAGE>
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.
ONE FEDERAL STREET JOINT VENTURE
By: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, general partner
By:/s/ Steven G. Vittorio
--------------------------------------
Name: Steven G. Vittorio
----------------------------
Its: Vice President
-----------------------------
Date: July 22, 1997
----------------------------
THE TAUBMAN REALTY GROUP LIMITED
PARTNERSHIP
By:/s/ Cordell A. Lietz
--------------------------------------
Name: Cordell A. Lietz
--------------------------------
Its: Authorized Signatory
---------------------------------
Date: July 18, 1997
--------------------------------
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<PAGE>
The undersigned has executed this Agreement solely to confirm its agreement to
(i) hold the Escrow Deposits in escrow in accordance with the provisions hereof
and (ii) comply with the provisions of Article 12 and Section 14.2.
FIRST AMERICAN TITLE INSURANCE COMPANY
By:/s/ Marylou Kennedy
-----------------------------------------------
Name: Marylou Kennedy
-----------------------------------------
Its: Vice President and Senior National Counsel
------------------------------------------
Date: July 24, 1997
-----------------------------------------
42
FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Amendment") is
executed as of this 15th day of August, 1997, by and between ONE FEDERAL STREET
JOINT VENTURE, a Massachusetts general partnership ("Seller"), and THE TAUBMAN
REALTY GROUP LIMITED PARTNERSHIP, a Delaware limited partnership ("Buyer").
W I T N E S S E T H:
A. Seller and Buyer have entered into a Purchase and Sale Agreement dated
as of July 16, 1997 (the "Agreement"), providing for the purchase and sale of
property commonly known as Regency Square located in Richmond, Virginia. All
initially capitalized terms used but not defined in this Amendment shall have
the same definitions as in the Agreement.
B. Seller is the beneficial owner of the fee and leasehold interests
constituting Parcel One of the Real Property, title to which is held by land
trusts established with NationsBank, N.A. (the "Trustee"), consisting of (1) a
certain land trust created by Land Trust Agreement (Ground Landlord) dated as of
January 28, 1990, holding fee simple title to Parcel One of the Real Property
(the "Fee Trust"), and (2) a certain land trust created by Land Trust Agreement
(Ground Tenant) dated as of January 29, 1990, holding the lessee's interest
under a Ground Lease encumbering Parcel One of the Real Property (the "Ground
Lease") created by Deed of Lease between Home Beneficial Life Insurance Company
and Quioccasin Associates dated June 13, 1974 (the "Leasehold Trust").
C. Seller and Buyer desire to amend the Agreement in certain respects as
herein set forth, in order to (1) provide for transfer of Seller's interests in
the Real Property to Buyer at and subject to Closing by assignment of the
beneficial interest in the Fee Trust and the Leasehold Trust to Buyer, and (2)
address certain issues identified in Buyer's Due Diligence and otherwise confirm
Buyer's waiver of any right to terminate the Agreement pursuant to Article 4
thereof, and (3) confirm that the approvals to be obtained by Seller pursuant to
Section 7.1(a) of the Agreement and by Buyer pursuant to Section 7.2(a) of the
Agreement have been obtained.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties hereto do hereby agree to
amend the Agreement as follows:
I. Waiver of Termination Based on Buyer's Due Diligence. Buyer hereby
confirms that the Due Diligence Period has expired and that as of the date
hereof, Buyer has waived any right to terminate the Agreement under Article 4
thereof.
<PAGE>
II. Buyer and Seller Approvals. Seller hereby confirms that Seller has
received the approval to be obtained by Seller pursuant to Section 7.1(a) of the
Agreement and that accordingly, such condition has been satisfied. Buyer hereby
confirms that Buyer has received the approval to be obtained by Buyer pursuant
to Section 7.2(a) of the Agreement and that accordingly, such condition has been
satisfied.
III. Transfer by Assignment of Beneficial Interest. To provide for
transfer of Seller's interests in the Real Property to Buyer by assignment of
the beneficial interest in the Fee Trust and the Leasehold Trust, the parties
agree as follows:
1. Immediately prior to Closing, Seller shall transfer to the Fee
Trust all of Seller's right, title and interest in and to Parcel Two and
Parcel Three of the Real Property by special warranty deed containing
those warranties of title set forth in the deed in Exhibit H to the
Agreement, so that as of the Closing Date, fee simple title to Parcels
One, Two and Three of the Real Property will be held by the Fee Trust. At
Closing, in lieu of the deeds which would otherwise be required to be
delivered pursuant to Section 6.3 of the Agreement, Seller shall deliver
to Buyer assignments of the entire beneficial interest in each of the Fee
Trust and the Leasehold Trust, which assignments shall include Seller's
agreement to warrant and forever defend the beneficial interest in said
trusts for the benefit of Buyer, its legal representatives, successors and
assigns, against Seller and every person whomsoever lawfully claiming or
to claim the same or any part thereof, by, through or under Seller, but
not otherwise, subject to the Permitted Exceptions to the extent
applicable thereto, and Buyer will accept said assignments. All other
references in the Agreement to said deeds shall be modified accordingly to
refer to said assignments of beneficial interest.
2. Section 3.3 of the Agreement is hereby amended to provide that
the Owner's Title Policy to be issued at Closing will insure fee simple
title to the Real Property in the Fee Trust, rather than in Buyer as
heretofore provided.
3. Section 6.3 of the Agreement is hereby amended to add, as an
additional Closing delivery by Seller, a certificate of the Trustee with
respect to each of the Fee Trust and the Leasehold Trust substantially in
the form attached hereto as Schedule 1.
4. Buyer shall pay any and all costs and expenses arising in
connection with the actions provided for in this Amendment, including
without limitation any fees of the Trustee which would not have been
incurred absent this Amendment; provided that any accrued or prepaid
Trustee's fees shall be prorated between the parties at Closing. Buyer is
informed and believes that no transfer or transaction tax will be payable
as a result of either (a) the deed transferring Parcels Two and Three of
the Real Property to the Fee Trust, as provided in Section 1 above, or (b)
transfer of Seller's interest in the Real Property by assignment of
beneficial interest as herein provided. Accordingly, Buyer shall
indemnify, defend and hold Seller and its partners and their respective
officers,
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<PAGE>
directors, agents and employees harmless from and against any and all
loss, cost, damage and expense of every kind and nature (including without
limitation fines, penalties and attorneys' fees and expenses) suffered or
incurred by Seller, its partners and their respective officers, directors,
agents and employees as a result of any claim of violation of applicable
statutes or ordinances relating to the payment of transfer or transaction
taxes in connection with Closing of the transaction contemplated hereby in
accordance with the Agreement, as modified by this Amendment.
IV. Personal Property Inventory. Pursuant to Section 1.2 of the Agreement,
Seller and Buyer have mutually approved the schedule of tangible personal
property attached hereto as Schedule 2 for express inclusion in the Personal
Property to be transferred to Buyer at Closing.
V. Tenant Construction Reimbursements. The following tenants have noted in
their estoppel letters reimbursements claimed to be due from the landlord in
connection with construction of tenant improvements: (i) Ann Taylor, Inc. (Space
No. Q9 and Q18), and (ii) Kinney Shoe Corporation (Champs Sports). Seller shall
retain responsibility for satisfying such obligations to said tenants and shall
credit Buyer at Closing with any such amounts not theretofore reimbursed to such
tenants. Buyer hereby indemnifies and agrees to hold Seller harmless from any
and all loss, cost, damage or expense suffered or incurred by Seller arising
with respect to said reimbursements from and after the Closing Date.
VI. CAM Payment Disputes. Seller hereby acknowledges that its indemnity
obligation set forth in Section 9.2.6(f) of the Agreement shall include without
limitation any refunds which may become due the following tenants on account of
disputed common area maintenance charges with respect to periods prior to
Closing: Circuit City Express, Britches of Georgetowne, Britches Great Outdoors,
Hofheimer's, Hofheimer's Stride Rite, The Body Shop and The Gap; provided that
said indemnity obligation shall remain subject to the limitations on Seller's
liability set forth in Section 14.16 of the Agreement.
VII. Purchase Price Adjustment. To reflect the cost of certain repair
items identified by Buyer during its Due Diligence, Seller hereby grants Buyer a
credit of ONE HUNDRED TWENTY THOUSAND DOLLARS ($120,000) against the Purchase
Price, and accordingly, the Purchase Price is hereby reduced to ONE HUNDRED
TWENTY-THREE MILLION EIGHT HUNDRED EIGHTY THOUSAND DOLLARS ($123,880,000).
VIII. Parking Deck Repair. In its Due Diligence, Buyer has identified
diagonal shear cracks at the cantilevered end of the inverted tee beam in the
north parking deck at the Property. Seller shall attempt diligently and in good
faith to repair this area prior to Closing; provided that it is expressly
understood that Seller shall have no obligation to expend funds in excess of
$25,000 to accomplish any such repairs; and further provided that if Seller is
unable to complete such repairs on or before the Closing Date, after having made
a diligent, good faith attempt to
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<PAGE>
do so, then Seller shall have the option to extend the Closing Date for a period
not to exceed thirty (30) days to permit completion of such repairs.
IX. Title Requirements. Seller agrees at or prior to Closing to satisfy
(or otherwise dispose of to the satisfaction of the Title Company) requirements
(c), (e), (h), (i), (k), (m) and (n) in the Title Commitment update current as
of the date hereof and to discharge the Deed of Trust noted as Exception No. 28A
in said Title Commitment.
X. Ratification of Agreement. Except as expressly amended hereby, the
Agreement shall remain unchanged and in full force and effect, and the same, as
amended hereby, is hereby ratified and confirmed by the parties.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first written above.
ONE FEDERAL STREET JOINT VENTURE
By: THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, general
partner
By:/s/ Steven G. Vittorio
---------------------------
Name: Steven G. Vittorio
---------------------
Its: Vice President
----------------------
Date: August 15, 1997
---------------------
THE TAUBMAN REALTY GROUP LIMITED
PARTNERSHIP
By:/s/ Cordell A. Lietz
---------------------------
Name: Cordell A. Lietz
---------------------
Its: Senior Vice President
----------------------
Date: August 15, 1997
---------------------
4
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 2 to Form S-3
Registration Statement No. 33-90818 and in Form S-8 Registration Statement No.
33-80650 of The Taubman Realty Group Limited Partnership of our report dated
July 31, 1997, on the historical summary of revenues and direct operating
expenses of Regency Square for the year ended December 31, 1996 appearing in
this Current Report on Form 8-K of The Taubman Realty Group Limited Partnership
dated September 4, 1997.
Deloitte & Touche LLP
Detroit, Michigan
September 10, 1997
