EXHIBIT 2.1
PURCHASE AND SALE AGREEMENT
between
PREIT ASSOCIATES, L.P., et al.,
collectively, Sellers
and
MPM ACQUISITION CORP.,
Purchaser
Dated as of March 3, 2003
TABLE OF CONTENTS
1. Sale.......................................................................1
2. Purchase Price.............................................................2
3. Apportionments.............................................................4
4. Purchaser's Inspections and Closing Date...................................7
5. Title......................................................................7
6. Representations and Warranties.............................................9
7. Employees.................................................................18
8. Conditions Precedent to Closing...........................................20
9. Deliveries by Sellers at Closing..........................................25
10. Deliveries by Purchaser at Closing........................................27
11. Operation of the Properties prior to the Closing Date.....................28
12. As Is; Release............................................................31
13. Broker....................................................................33
14. Casualty; Condemnation....................................................33
15. Remedies..................................................................35
16. Purchaser's Access to the Property........................................36
17. Indemnity.................................................................38
18. Escrow....................................................................39
19. Assignment................................................................42
20. Access to Records; Tax Matters............................................43
21. Notices...................................................................43
22. Confidential Information and Confidentiality..............................45
23. Miscellaneous.............................................................48
Exhibits
A - List of Owners, Properties, Sale Prices, Outstanding Mortgage Obligations
B - Legal Descriptions of Parcels
C - Form of Lease Assumption
D - Form of Bill of Sale
E - Form of Contract and License Assignment
F - Form Partnership Assignment
G - Form of FIRPTA Affidavit
H - Terms of Employment Offer to Raymond Trost
Schedules
1(a)(i) Personal Property
1(b) Excluded Personal Property
1(e) Tax Basis of Personal Property
6(a)(i)(E) Financial Statements
6(a)(i)(F) Rent Rolls and Delinquency Reports
6(a)(i)(H)(1) Loan Documents
6(a)(i)(H)(2) Agreements Governing Joint Ventures
6(a)(i)(H)(3) Management Agreements for Joint Venture Properties
6(a)(i)(I) Service Contracts
6(a)(i)(J) Union Contracts
6(a)(i)(K) Actions and Investigations
6(a)(i)(L) Condemnation Actions
6(a)(i)(M) Violation of Governmental Regulations or Private Encumbrances
6(a)(i)(O) Tax Appeals
6(a)(i)(T) Property Insurance Coverages
6(a)(i)(W) Joint Venture Balance Sheets
7(a) Employees, Dates of Employment, Job Titles, Base Compensation
11(f) Capital Expenditure Programs
18(c) Responsibilities of Payment of Closing Costs
DEFINED TERMS
The following capitalized terms are defined in the respective Section
of the Agreement identified below:
"Access Agreement" - as such term is defined in Section 22(a).
"Additional Deposit" - as such term is defined in Section 2(b).
"Agreement" - as such term is defined in the caption.
"Allocated Reimbursement Amount" - as such term is defined in Section
6(a)(iv).
"Approved Institution" - as such term is defined in Section 18(g).
"Approved Investment" - as such term is defined in Section 18(g)(i).
"Bill of Sale" - as such term is defined in Section 9(a)(iii).
"Bonds" - as such term is defined in Section 8(a)(iii).
"Bond Documents" - as such term is defined in Section 8(a)(iii).
"Building(s)" - as such terms are defined in the Background.
"Closing" - as such term is defined in Section 4(d).
"Closing Date" - as such term is defined in Section 4(d).
"Commitment" - as that term is defined in Section 5(b).
"Confidential Information" - as such term is defined in Section 22(a).
"Contract and License Assignment" - as such term is defined in Section
9(a)(iv).
"Contracts" - as such term is defined in Section 9(a)(iv)(B).
"Deed" - as such term is defined in Section 9(a)(i).
"Deposit" - as such term is defined in Section 2(b).
"Designated Employee" - as such term is defined in Section 6(a)(iii).
"Disclosing Party" - as such term is defined in Section 22(a).
"Escrow" - as such term is defined in Section 18(a).
"Employee" - as such term is defined in Section 7(a).
"Hazardous Material" - as such term is defined in Section 12(f).
"Hired Employee" - as such term is defined in Section 7(a).
"Improvements" - as such term is defined in the Background.
"Initial Deposit" - as such term is defined in Section 2(a).
"Inspections" - as such term is defined in Section 4(a)(i).
"Joint Ventures" - as such term is defined in the Background.
"JV Interest" - as such term is defined in the Background.
"Known Contamination" as such term is defined in Section 17(a)(ii).
"Laws" - as such term is defined in Section 16(ii).
"Lease Assumption" - as such term is defined in Section 9(a)(ii).
"Leases" - as such term is defined in Section 1(a)(vi).
"Liens" - as such term is defined in Section 5(c).
"Mortgagee" - as such term is defined in Section 8(a)(ii).
"Net Operating Income" - as such term is defined in Section 2(f).
"New Lease" - as such term is defined in Section 11(a).
"Non-Disclosure Agreement" - as such term is defined in Section 22(a).
"Notice of Objection" - as such term is defined in Section 18(e)(i).
"Parcel(s)" - as such terms are defined in the Background.
"Partnership Assignment" - as such term is defined in Section 9(b).
"Permits" - as such term is defined in Section 1(a)(vii).
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"Permitted Exceptions" - as such term is defined in Section 5(b).
"Personal Property" - as such term is defined in Section 1(a)(iv).
"Plans" - as such term is defined in Section 1(a)(x).
"PREIT" - as such term is defined in Section 8(a)(i).
"Property" and "Properties" - as such terms are defined in the
Background.
"Property Information" - as such term is defined in Section 12(b).
"Proposed Transaction" - as such term is defined in Section 22(d).
"Purchase Price" - as such term is defined in Section 2.
"Purchaser" - as such term is defined in the caption.
"Purchaser's Documents" - as such term is defined in Section
6(b)(i)(B).
"Purchaser's Representatives" - as such term is defined in Section
12(b).
"Recipient" - as such term is defined in Section 22(a).
"Seller" and "Sellers" - as such terms are defined in the caption.
"Seller's Documents" - as such term is defined in Section 6(a)(i)(B).
"Seller's knowledge" - as such term is defined in Section 6(a)(iii).
"Sellers' Representatives" - as such term is defined in Section 17(a).
"Service Contracts" - as such term is defined in Section 1(a)(viii).
"Surviving Obligations" - as such term is defined in Section 6(a)(iv).
"Title Company" - as such term is defined in Section 9(a).
"2002 NOI Statement" - as such term is defined in Section 6(a)(i)(E).
"Unacceptable Encumbrances" - as such term is defined in Section 5(c).
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PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of March 3,
2003 by and between the entities listed in Exhibit A as "Owners," each having an
office at PREIT Services, LLC, The Bellevue, Third Floor, 200 South Broad
Street, Philadelphia, PA 19102 (each, a "Seller" and collectively, "Sellers"),
and MPM Acquisition Corp., a Pennsylvania corporation, having an office at 160
Clubhouse Road, King of Prussia, PA 19406 ("Purchaser").
BACKGROUND
The Sellers listed in the "Wholly Owned" portion of Exhibit A own fee
simple title to fifteen (15) separate apartment complexes (each of such
apartment complexes being referred to herein as, a "Building," and collectively,
the "Buildings") listed on Exhibit A. Each Building is located on the real
property more particularly described on Exhibit B (each, a "Parcel" and
collectively, the "Parcels"). The improvements (inclusive of the Building)
constructed on each Parcel are referred to herein collectively as the
"Improvements," and all Improvements, collectively, as the "Improvements." Each
Parcel, together with the Improvements located thereon and the items listed in
Section 1(a)(iii)-(xi) shall be referred to herein individually as a "Property,"
and collectively as the "Properties."
The Sellers listed in the "Joint Venture" portion of Exhibit A own a
fifty percent (50%) partnership interest (each, a "JV Interest") in four (4)
separate partnerships (the "Joint Ventures") which own an additional four (4)
apartment complexes. The terms "Building," "Parcel," "Improvements" and
"Properties" used herein sometimes also refer to the Properties owned by the
Joint Ventures. Without limiting the generality of the foregoing, the term
"Properties" when used in Section 6 also refers to properties owned by the Joint
Ventures.
Purchaser has agreed to purchase the Properties and JV Interests in
their physical "AS-IS, WHERE-IS, WITH ALL FAULTS" condition and acknowledges
that, except as expressly set forth in this Agreement, Sellers have made no
representations or warranties to Purchaser regarding the Properties, the
operation thereof or the Joint Ventures.
NOW, THEREFORE, in consideration of ten ($10.00) dollars and the mutual
covenants and agreements hereinafter set forth, and intending to be legally
bound, the parties agree as follows:
1. Sale.
(a) Each Seller of a Property listed in the "Wholly Owned"
section of Exhibit A agrees to sell and convey to Purchaser, and Purchaser
agrees to purchase from such Seller, at the price, upon the terms and subject to
the conditions set forth in this Agreement, such Seller's (i) Parcel(s)
(including the additional parcel of land in Omaha, Nebraska); (ii) Improvements;
(iii) easements, rights of way, reservations, covenants, restrictions,
privileges, appurtenances, and other estates and rights pertaining to such
Parcels and Improvements; (iv) right, title and interest in and to all
equipment, furnishings, fixtures, inventory and other tangible personal property
owned by such Seller located on and used in connection with the operation of
such Parcel(s) and Improvements as an apartment complex, including such items as
are listed in Schedule 1(a)(i), but excluding the items of personal property
described in Section 1(b) (collectively, the "Personal Property"); (v) right,
title and interest, if any, in and to any strips and gores, alleys adjoining the
Parcel(s), and the land lying in the bed of any street, road or avenue, opened
or proposed, in front of or adjoining the Parcel(s) to the center line thereof;
(vi) interest as landlord in all leases encumbering such Property(ies)
(collectively, the "Leases") on the Closing Date; (vii) all service, supply,
maintenance, utility and commission agreements, and equipment leases with
respect to such Property(ies) listed in Schedule 6(a)(i)(I) or entered into
after the date hereof in accordance with the terms of this Agreement
(collectively, the "Service Contracts"), to the extent assignable; (viii) all
licenses, permits, certificates, approvals, authorizations, variances and other
written authorizations from any governmental or quasi-governmental authorities
having jurisdiction necessary or desirable for the use, operation or ownership
of such Property(ies) and in Seller's possession or control (collectively, the
"Permits"), to the extent assignable; (ix) right, title and interest in any
telephone exchanges, if any, to the extent assignable; (x) right, title and
interest in surveys, plans and specifications in Seller's possession and control
for such Improvements (collectively, the "Plans"), to the extent assignable; and
(xi) all rights (if any) to the name(s) listed in the column labeled "Name of
Property" in Exhibit A, to the extent such rights are assignable (it being
acknowledged by Purchaser that Sellers have no exclusive rights to use any such
name and that Sellers have not registered the same in any manner).
(b) Specifically excluded from each Property and this sale are all
items of personal property described in Schedule 1(b), if any.
(c) Each Seller listed in the "Joint Venture" column of Exhibit A
agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from
such Seller, at the applicable Purchase Price, upon the terms and subject to the
conditions set forth in this Agreement, such Seller's JV Interest in the Joint
Venture owning such Property.
2. Purchase Price. The purchase price to be paid by Purchaser to each
Seller for a Property or JV Interest, as applicable, is listed in the column
labeled "Purchase Price" in Exhibit A (the "Purchase Price)." The applicable
Purchase Price shall not be payable to the extent a Property or JV Interest is
deleted from Exhibit A in accordance with the provisions of Sections 5(d),
6(a)(iii), 8(a), 8(d), 14 or 15(a). The Purchase Prices shall be payable as
follows:
(a) Five Million Dollars ($5,000,000.00) (the "Initial Deposit"),
simultaneously with the execution and delivery of this Agreement, and as a
condition precedent to the effectiveness of this Agreement, by a bank wire
transfer of immediately available funds to an account designated by Title
Company. The Initial Deposit shall be held and disbursed by Title Company in
accordance with the terms of this Agreement, and shall be non-refundable except
as expressly provided in this Agreement.
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(b) Within two (2) business days after receipt of notice by
Purchaser from Sellers that the condition specified in Section 8(a)(i) has been
satisfied, Purchaser shall deposit with the Title Company, by a bank wire
transfer of immediately available funds, the additional sum of Ten Million
Dollars ($10,000,000.00) (the "Additional Deposit"). Such Additional Deposit
shall be deposited in the account containing the Initial Deposit. The Initial
Deposit and the Additional Deposit and all interest earned thereon shall
hereinafter collectively be referred to as the "Deposit." The Deposit shall be
non-refundable except as expressly provided in this Agreement and shall be held
and delivered by Title Company in accordance with the provisions of Section 18.
Except as expressly otherwise set forth in this Agreement, the Deposit shall be
applied against the Purchase Prices on the Closing Date. It is understood that
if Purchaser is permitted to terminate this Agreement with respect to all of the
Properties and JV Interests, the Deposit shall be returned to Purchaser.
(c) At Closing, Purchaser will assume the debt on each Property
outstanding as of the Closing Date, or take title to a JV Interest in a Property
subject to such debt, and such debt will reduce the Purchase Price for each
Wholly-Owned Property on a dollar for dollar basis, and for each JV Interest by
50% of the outstanding debt (it being understood and agreed that the outstanding
debt amounts shown on Exhibit A next to the JV Properties reflect one-half of
the debt outstanding as of the date specified). On the Closing Date, Exhibit A
shall be updated to reflect the outstanding debt as of the Closing Date and the
equity remaining in each Property. The amounts on Exhibit A related to the Joint
Ventures when updated will also be net of the JV Partner's interest. If
Purchaser pays off a mortgage loan at Closing, Purchaser shall be given credit
therefor as if Purchaser had assumed the loan at Closing.
(d) The balance of the Purchase Price, by bank wire transfer of
immediately available funds to Title Company's account on or before the Closing
Date, subject to the prorations and adjustments set forth in subsection (f)
below, Section 3 or as otherwise provided under this Agreement, plus any other
amounts required to be paid by Purchaser to any Seller at Closing, and less any
amounts to be paid by any Seller to Purchaser at Closing.
(e) At Closing, the Purchase Price for each Property shall be
allocated between Personal Property and real property as follows. The portion of
the Purchase Price allocated to the Personal Property shall be the tax basis for
such Personal Property listed on Sellers' books. The remainder of the Purchase
Price for such Property shall be allocated to the Parcel, Building and
Improvements. The current tax basis listed on Sellers' books for the Personal
Property is listed on Schedule 1(e), which Schedule shall be updated at Closing.
(f) In the event the aggregate Net Operating Income shown on the
revised financial statement for the Properties for the twelve (12) months ending
December 31, 2002 provided pursuant to Section 6(a)(i)(E) is less than the
aggregate Net Operating Income shown in the third column captioned "NOI" on the
projected financial statement for the Properties for such period captioned "2002
Multifamily Portfolio Roll-Up, 11 month Actual and December Forecast" attached
hereto as a part of Schedule 6(a)(i)(E) by more than 1%, the aggregate Purchase
Price shall be reduced, based on a capitalization rate of 7.95%. In that
circumstance, Exhibit A shall be updated to reflect the allocation of the new
Purchase Prices amongst the Properties and JV Interests. As used herein, "Net
Operating Income" shall mean the Net Operating Income for Properties listed in
the "Wholly Owned" column of Exhibit A, as shown on PREIT's "Blue Book Income
Statements" as of December 31, 2002, shall be determined on a modified accrual
basis in accordance with PREIT's standard accounting policies and practices,
copies of the capitalization policies of which have been made available to
Purchaser, and shall equal gross potential apartment rental income, less vacancy
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and allowances, less employee's quarters discounts, less model units and other
adjustments, plus net commercial rents, plus other income, less property
maintenance expenses, less administrative expenses, less insurance expense, less
real estate and miscellaneous taxes, less bad debt expenses and less other
expenses. In addition, the results for the Regency Apartments shall be stated as
if PREIT wholly owned such apartment complex for the entire year, and will
include the third party management fee for the ten (10) month period during
which PREIT jointly owned such Property. Net Operating Income with respect to a
Property which is owned by a Joint Venture consists of the same component
entries except that it includes a management fee expense, is calculated in
accordance with the accounting policies and practices adopted by such Joint
Venture, and has been adjusted to reflect Sellers' percentage interest in such
Joint Venture.
(g) At Closing, Purchaser shall have the right to reallocate the
Purchase Prices among the Properties and JV Interests purchased by Purchaser.
3. Apportionments. At Closing, the following apportionments shall be
made with respect to each Property as of 11:59 p.m. on the day immediately
preceding the Closing Date:
(a) Mortgage Debt. Interest on each mortgage loan will be
apportioned in accordance with the method by which interest is calculated under
the related mortgage loan, e.g. if interest is payable on the related mortgage
loan on the basis of twelve 30 day months, it shall be apportioned between
Purchaser and Sellers on such basis, and if interest is calculated on a 365/360
day basis, it shall be apportioned between Purchaser and Sellers on that basis.
Any deposits, escrows or reserves required to be maintained by the Mortgagee
under any mortgage loan shall be assigned to Purchaser at Closing and shall be
credited to the related Seller.
(b) Real Estate and Personal Property Taxes. Real estate and
personal property taxes shall be prorated for the calendar year or fiscal year,
as the case may be, for which such taxes are assessed; provided, however, that
in jurisdictions where such taxes are paid in arrears and the custom is to
apportion them only upon payment thereof, then real estate and personal property
taxes shall be apportioned based on such custom. Such proration shall be
calculated based upon the actual number of days in such calendar year or fiscal
year, as the case may be, with the Seller of such Property or JV Interest being
responsible for that portion of such calendar or fiscal year occurring prior to
midnight of the day prior to the Closing Date and Purchaser being responsible
for that portion of such calendar or fiscal year occurring on and after the
Closing Date. All prorations shall be based upon the actual tax assessed. If the
real estate and/or personal property tax rate and assessments have not been set
for the calendar or fiscal year in which the Closing occurs, then the proration
of such taxes shall be based upon the rate and assessments for the preceding
calendar or fiscal year, and such proration shall be adjusted between the Seller
of such Property or JV Interest and Purchaser upon presentation of written
evidence that the actual taxes paid for the calendar or fiscal year in which the
Closing occurs differ from the amounts used at Closing in accordance with the
provisions of Section 3(g). Each Seller shall pay all installments of special
assessments due and payable prior to the Closing Date and Purchaser shall pay
all installments of special assessments due and payable on and after the Closing
Date; provided, however, that no Seller shall be responsible for any
installments of special assessments which have not been finally assessed (even
if Sellers shall have received notice that such an assessment is contemplated)
or which relate to projects that have not been completed on the Closing Date.
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(c) Rents. All collected rents and other payments from tenants under
the Leases shall be prorated between the Seller of such Property or JV Interest
and Purchaser as of 11:59 p.m. on the day prior to the Closing Date. Each Seller
shall be entitled to all rents, charges, and other revenue of any kind
attributable to any period under its Leases to but not including the Closing
Date. Purchaser shall be entitled to all rents, charges and other revenue of any
kind attributable to any period under the Leases on and after the Closing Date.
Rents and expense escalations or other reimbursements due landlord under the
Leases not collected as of the Closing Date shall not be prorated at the time of
Closing, but for a period of ninety (90) days after the Closing Date Purchaser
shall make a good faith effort to collect, or cause the applicable Joint Venture
to collect, the same on the applicable Seller's behalf and to tender each Seller
any amounts collected upon receipt (which obligation shall survive the Closing
and not be merged in the Deeds); provided, however, that all rents, escalations
and other reimbursements due landlord under the Leases collected by Purchaser or
the applicable Joint Venture on or after the Closing Date shall first be applied
to all amounts due under the Leases at the time of collection (i.e., current
rents and sums due Purchaser or the applicable Joint Venture as the current
owner and landlord) with the balance (if any) payable to Sellers, to be applied
in reverse chronological order of the date on which same became due. Such
collection efforts by Purchaser or the applicable Joint Venture shall exclude
(unless Purchaser or the applicable Joint Venture elects in its sole discretion)
enforcement in courts of law or equity or threats of such enforcement. Purchaser
shall receive a credit against the Purchase Price for pre-paid rentals held by
any Seller covering the period post-Closing.
(d) Other Property Operating Expenses and Receipts. Operating
expenses customarily adjusted between buyers and sellers in similar transactions
and receipts for each Property shall be prorated as of 11:59 p.m. of the day
prior to the Closing Date. Each Seller shall pay all utility charges and such
other operating expenses attributable to its Property (such as amounts due under
the Service Contracts) to, but not including the Closing Date, and Purchaser
shall pay all utility charges and such other operating expenses attributable to
the Property on or after the Closing Date. Each Seller shall use diligent
efforts to obtain final utility readings on the Closing Date. Each Seller shall
be entitled to all revenue for its Property from sources other than the Leases
(such as laundry room vending contracts) to, but not including the Closing Date,
and Purchaser shall be entitled to all such revenue attributable for the
Property on or after the Closing Date. To the extent that the amount of actual
utility consumption, other operating expenses or revenues are not determined
prior to the Closing Date, a proration shall be made at Closing based on the
last available reading, in the case of utility consumption, or on the last bill
or receipt, and post-Closing adjustments between Purchaser and Sellers shall be
made within twenty (20) days of the date that actual figures for such
pre-Closing period are determined, which obligation shall survive the Closing
and shall not be merged in the Deeds. Sellers shall not assign to Purchaser any
deposits which Sellers have with any of the utility services or companies
servicing the Properties. Purchaser shall arrange with such services and
companies to have accounts opened in Purchaser's name beginning at 12:01 a.m. on
the Closing Date.
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(e) Cash Security Deposits. At Closing, each Seller shall account to
Purchaser for, and give Purchaser a credit against the Purchase Price for its
respective Property in the aggregate amount of, the unapplied cash security
deposits then held by such Seller under the Leases for such Property and any
interest required by law or the applicable lease, whichever is greater, to be
accrued thereon. At Closing, Purchaser shall assume liability for, and indemnify
and hold each Seller harmless from and against claims relating to, all unapplied
cash security deposits so credited. From and after Closing, Sellers shall assume
liability for, and indemnify and hold Purchaser harmless from and against claims
relating to, any unapplied cash security deposits not so credited and any other
claims with respect to security deposits arising out of acts or omissions
occurring before Closing. The obligations of the parties pursuant to this
Section 3(e) shall survive Closing and shall not be merged in the Deeds for a
period of two (2) years.
(f) Apportionment Credit. In the event the apportionments to be made
at the Closing result in a credit balance (i) to Purchaser, such sum shall be
paid at the Closing by giving Purchaser a credit against the Purchase Prices in
the amount of such credit balance, or (ii) to any Seller, Purchaser shall pay
the amount thereof to such Seller at the Closing by wire transfer of immediately
available funds to the Title Company as provided in Section 18.
(g) Delayed Adjustment. If at any time following the Closing Date,
any adjustment under any subsection of this Section 3 shall prove to be
incorrect (whether as a result in an error in calculation or a lack of complete
and accurate information as of the Closing), the party in whose favor the error
was made shall promptly pay to the other party the sum necessary to correct such
error upon receipt of proof of such error, provided that such proof is delivered
to the party from whom payment is requested within ninety (90) days after the
Closing Date for all adjustments other than of adjustments of taxes. With
respect to taxes, proof must be delivered to the party from whom payment is
requested within one (1) year after the Closing Date. The provisions of this
Section 3(g) shall survive the Closing and shall not be merged in the Deeds.
(h) Adjustments in Joint Ventures. Adjustments in the sale of JV
Interests shall be net of the Joint Venture partner's interest, shall not
include security deposits (which will continue to be held by the Joint Ventures)
and shall include credits to each Seller for such Seller's allocable share of
bank balances held by the Joint Venture, except to the extent such bank balances
include items, such as current rents, that are adjusted between the parties in
accordance with this Agreement, utility and other deposits posted by such Joint
Venture, and any reserves held by the Mortgagee for such Property. Such
adjustment in the sale of JV Interests shall also include a credit to Purchaser
for an allocable portion of any liabilities of the Joint Venture (except any
mortgage debt shown on Exhibit A) that are not otherwise subject to adjustment
between the parties pursuant to this Agreement.
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(i) Mortgagee Costs. Purchaser shall pay all assumption fees imposed
by any Mortgagee pursuant to the applicable loan documents or otherwise for
assumption of the debt on any Property or for processing and issuing such
Mortgagee's consent to the sale of a JV Interest, provided no assumption fee for
any Property or with respect to the sale of a JV Interest shall exceed 1% of the
principal balance outstanding under the applicable loan documents. Purchaser
shall pay all costs and expenses imposed by any such Mortgagee, including
processing fees and Mortgagee's legal fees, relating to any such consent or
assumption, including a simple amendment to a Mortgage of the nature referred to
in Section 8(a)(ii) and a release of such Seller, PREIT or an affiliate thereof
of liability under any guaranty or indemnification agreement executed by such
Seller, PREIT or an affiliate thereof, up to an aggregate of $100,000 for all
Properties and JV Interests and Purchaser and Sellers shall each pay one-half of
any such costs and expenses in excess of $100,000. Notwithstanding anything
herein to the contrary, Sellers shall not be required to share in the payment of
any prepayment or yield maintenance premiums or costs related to an amendment to
any Mortgage except for the items referred to in Section 8(a)(ii) hereof.
(j) Purchaser's Investigations. Purchaser shall pay for Purchaser's
Investigations and any other due diligence performed by Purchaser with respect
to the Properties.
(k) Attorneys' Fees. Purchaser and Sellers shall each be responsible
for paying their own attorneys', consultants' and other professionals' fees in
connection with this transaction.
4. Purchaser's Inspections and Closing Date.
(a) Purchaser's Inspections. Purchaser acknowledges and agrees that
it has obtained appraisals and reports on the value and the environmental,
physical and other condition of the Properties (such reports, collectively, the
"Inspections") and waives the right to make further investigation with respect
to the Properties, subject to the access rights of Purchaser under Section 16.
(b) Intentionally Omitted.
(c) Intentionally Omitted.
(d) Closing. The delivery of the Deeds and the consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Drinker Biddle & Reath LLP, One Logan Square, 18th & Cherry
Streets, Philadelphia, Pennsylvania 19107-3496, at 10:00 A.M. on May 1, 2003;
provided that either party may (one time each) postpone the date for Closing
upon not less than 10 days' prior notice, provided the date to which Closing is
postponed shall be no later than July 31, 2003 (such date, as it may be so
postponed, the "Closing Date").
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5. Title.
(a) It shall be a condition to Purchaser's obligation to close on
any Property listed in the "Wholly Owned" portion of Exhibit A (which may be
waived in whole or in part by Purchaser), that title to such Property shall be
good and marketable, insurable by Fidelity National Title Insurance Company (the
"Title Company") at the regular rates in the amount of the Purchase Price
allocated to such Property, insuring that fee simple title thereto is vested in
Purchaser subject only to the Permitted Exceptions (defined below), and that
Purchaser shall be able to obtain, at Purchaser's sole cost and expense, but at
the filed rates or rates otherwise customarily charged therefor, usual and
customary endorsements. It shall be a condition to Purchaser's obligation to
close on any JV Interest listed in the "Joint Venture" portion of Exhibit A
(which may be waived in whole or in part by Purchaser) that title to the
Property owned by such Joint Venture shall be good and marketable, that fee
simple title thereto is vested in the Joint Venture listed on Exhibit A subject
only to the Permitted Exceptions, and that the Title Company shall agree to
issue at the filed rates, or rates otherwise customarily charged therefor, a
non-imputation endorsement to the existing title policy for such Property.
(b) Purchaser shall obtain from the Title Company a title commitment
(the "Commitment") with respect to each Property not later than March 24, 2003.
Unless Purchaser shall object to any title exception (which is not a Permitted
Exception) by a letter to Sellers with a copy to Sellers' counsel setting forth
Purchaser's objections to the exceptions to title listed on Schedule B-II to a
Commitment on or before March 24, 2003, Purchaser shall be deemed to have
consented to all exceptions to title on Schedule B-II to each Commitment. Seller
shall convey and Purchaser shall accept title to each Property and JV Interest
subject to (i) rights of tenants in possession as tenants only, as shown on the
rent roll described in Section 6(a)(i)(F), (ii) applicable zoning and building
ordinances and land use regulations, (iii) such state of facts as would be
disclosed by a visual inspection of each Property, (iv) the Title Company's
standard preprinted survey exception (subject to any objection to a survey by
Purchaser pursuant to Section 5(c) below), (v) the lien of taxes not yet due and
payable, subject to proration as provided above, (vi) any exceptions caused by
Purchaser, its agents, representatives or employees, (vii) the mortgages listed
in Exhibit A, (viii) easements, agreements and other restrictions of record as
of the date hereof, provided the same do not adversely affect the use and
operation of the Property as a multifamily apartment complex or the ability of
Purchaser or the Joint Venture to finance the same, and (ix) any other exception
to title as are listed in Schedule B-II to any Commitment (unless objected to by
Purchaser as provided above) (the foregoing exceptions described in subsections
(i) - (ix) being herein collectively called the "Permitted Exceptions").
(c) Purchaser may obtain surveys (each, a "Survey" and collectively,
the "Surveys") for the Properties, and to the extent Purchaser has any objection
to any items shown on a Survey which item was not shown on a survey previously
delivered (in hard copy form) by Sellers to Purchaser, Purchaser shall deliver
the same and a letter setting forth Purchaser's objections to Sellers. Unless
Purchasers shall make any such objection on or before March 24, 2003, Purchaser
shall be deemed to have consented to all items shown on the Surveys. Sellers
shall convey and Purchaser shall accept title to each Property or JV Interest,
as applicable, subject to all items shown on the Surveys, except those items
objected to as provided in the preceding sentence. Notwithstanding the
foregoing, Purchaser may not object to any item shown on a Survey if such item
is a Permitted Exception unless the survey reflects that a building violates
applicable zoning or land use regulations at the time the building was
constructed, such as a set back requirement, and no variance or special
exception permitting the same was obtained.
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(d) Any title or survey exceptions which are timely objected to by
Purchaser shall be herein collectively called the "Unacceptable Encumbrances."
Sellers may elect (but shall not be obligated) to cure, at their expense, any
Unacceptable Encumbrances. Sellers shall notify Purchaser in writing within five
(5) business days after receipt of Purchaser's notice of Unacceptable
Encumbrances whether Sellers elect to cure the same. Sellers shall be deemed to
have elected not to cure the applicable item if Sellers do not so notify
Purchaser of such election within such five (5) business day period. If Sellers
are unable, or elect not to cure any Unacceptable Encumbrances, Purchaser may
elect, as its sole and exclusive remedy, either (i) to terminate this Agreement
with respect to such Property or JV Interest by notice to Sellers (with Closing
to occur on all other JV Interests and Properties), or (ii) to take such title
as Sellers can convey without abatement of or credit against the Purchase
Prices. Notwithstanding the foregoing, except as specified in subsections (e) -
(f) below, each Seller agrees to (or with respect to JV Interests, Sellers will
cause the Joint Venture to) satisfy mortgages (other than those listed in
Exhibit A), real estate taxes, water and sewer charges, assessments, judgments
against such Seller or the applicable Joint Venture or other liens
(collectively, the "Liens") secured by or affecting its or the applicable Joint
Venture's Property which can be satisfied by payment of liquidated sums in an
aggregate amount not to exceed the Purchase Price allocated to such Property or
JV Interest, or bond (with a bond and from a surety reasonably satisfactory to
the Title Company) against the same, and shall deliver to Purchaser or the Title
Company, at Closing, instruments in recordable form and sufficient to satisfy
such Liens or other encumbrances of record, together with the cost of recording
or filing said instruments, or a bond therefor.
(e) Any franchise or corporate tax open, levied or imposed against
any Seller or other owners in the chain of title that may be a Lien on the
Closing Date, shall not be an objection to title if the Title Company omits same
from the title policy issued pursuant to the Commitment or excepts same but
insures Purchaser against collection thereof out of the Property.
(f) If a search of title discloses judgments, bankruptcies or other
returns against other persons or entities having names the same as or similar to
that of any Seller, such Seller will deliver to Purchaser and the Title Company
an affidavit stating that such judgments, bankruptcies or other returns are not
against Seller, whereupon, provided the Title Company omits such returns as
exceptions to title or provides affirmative coverage with respect thereto, such
returns shall not be deemed an objection to title.
(g) To the extent that any Properties or JV Interests are deleted
pursuant to Section 5(d), Sellers shall reimburse Purchaser for its reasonable
out-of-pocket costs and expenses (excluding legal fees and expenses) incurred in
connection with its proposed acquisition of such Property or JV Interest up to a
maximum of $25,000 for each such Property or JV Interest.
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6. Representations and Warranties.
(a) (i) Sellers represent and warrant to Purchaser as follows:
A. Each Seller is duly formed and validly existing under the
laws of the state of its formation and qualified to conduct business under the
laws of the state in which its Property is located.
B. Each Seller has the full legal right, power and authority to
execute and deliver this Agreement and all documents now or hereafter to be
executed by such Seller pursuant to this Agreement (collectively, the "Seller's
Documents"), to consummate the transaction contemplated hereby, and to perform
its obligations hereunder and under Seller's Documents.
C. This Agreement and Seller's Documents have been duly
authorized by all requisite action on the part of Sellers, and are the valid and
legally binding obligations of Sellers, enforceable in accordance with their
respective terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance and similar laws
affecting the enforcement of contractual obligations.
D. Except for the prohibitions against transfer or rights of
first refusal set forth in the partnership agreements of the Joint Ventures,
this Agreement and Seller's Documents do not and will not contravene any
provisions of the articles of incorporation, trust agreement, bylaws,
partnership agreement or operating agreement of any Seller or Joint Venture, or
any judgment, order, decree, writ or injunction issued against any Seller or
Joint Venture, or any provision of any Laws applicable to any Seller or Joint
Venture, except, in each case, where consents thereto have been obtained. Except
as specified above, the consummation of the transactions contemplated hereby
will not result in a breach or constitute a default or event of default by any
Seller or Joint Venture under any agreement to which any Seller or Joint Venture
or any of its assets are subject or bound, except where consents thereto have
been obtained, and will not result in a violation of any Laws applicable to any
Seller or Joint Venture.
E. Attached hereto as Schedule 6(a)(i)(E) are true and correct
copies of the following financial schedules previously delivered by Sellers to
Purchaser: "Blue Book Income Statement as of December 31, 2001 for each
Property" (the "2001 Financial Statements") and "2002 Multifamily Portfolio
Roll-Up, 11 Months Actual and December Forecast," "Management Costs Allocated to
Properties, 11 Months Actual and December Forecast" and "Comparison of
Annualized November Max Rents and Forecasted Max Rents for 2002, from Monthly
NOI Comparison Report - 11 Month 2002 Actuals and Forecast for December"
(collectively, the "2002 Financial Statements"). The 2001 Financial Statements
and the 2002 Financial Statements are collectively referred to herein as the
"Financial Statements." The 2002 Financial Statements were prepared from PREIT's
"Blue Book Income Statements" for September 30, 2002, with monthly reports for
October and November 2002, and a forecast for December 2002, except that the
results for the Regency Apartments in 2002 are stated as if PREIT wholly owned
such apartment complex for the entire year, and include the third party
management fee for the ten (10) month period during which PREIT jointly owned
such Property. The Financial Statements were prepared in accordance with PREIT's
standard accounting policies and practices, copies of the capitalization
policies of which have been made available to Purchaser, consistently applied
throughout the periods involved, except as set forth above with respect to the
Regency Apartments and the Financial Statements fairly present the results of
operations and the information they purport to present for the periods involved.
Upon final preparation, and in any event before April 1, 2003, Sellers will
deliver to Purchaser a statement of Net Operating Income for the twelve (12)
months ending December 31, 2002, which shall be prepared from PREIT's "Blue Book
Income Statements" for December 31, 2002, with the results for the Regency
Apartments adjusted as aforesaid, in accordance with PREIT's standard accounting
policies and practices, consistently applied throughout 2001 and 2002, except as
aforesaid, and which will fairly present the results of operations for the
periods involved (the "2002 NOI Statement").
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F. The rent roll and delinquency reports attached hereto as
Schedule 6(a)(i)(F) are accurate, complete and correct in all material respects
as of the date thereof. Except as is required to be adjusted at Closing in
accordance with the terms of this Agreement, no Seller or Joint Venture has
received or will receive any advance payment of rent (other than for the current
month) on account of any Leases, and there are no written or material oral
leases or tenancies or other occupancy arrangements of any kind or nature
whatsoever affecting the Properties, other than as shown on the rent roll
identified on Schedule 6(a)(i)(F), as the same may have changed in the ordinary
course of business in accordance with Section 11, and on the Closing Date, there
will be no written or oral leases, tenancies or occupancy agreements of any kind
or nature whatsoever affecting any Property other than as shown on the most
recent rent roll delivered pursuant to the last sentence of this subsection F,
as the same may have changed in the ordinary course of business in accordance
with Section 11. No commissions to any broker or leasing agent are due or will
become due on account of any Lease executed prior to the Closing Date except
where the commission thereon is not yet due and payable. At Closing, Sellers
shall deliver to Purchaser a schedule of unpaid commissions, all of which shall
have been incurred in the ordinary course pursuant to Section 11, and shall not
yet be due and payable, certified as true and correct to the knowledge of
Sellers. Sellers, Cambridge and, to the Sellers' knowledge, the other Joint
Ventures have complied with all Laws relating to Security Deposits. At Closing,
Sellers will provide Purchaser with an updated rent roll and delinquency report
as of a date not more than 20 days prior to the Closing Date for Cambridge and
the Wholly Owned Properties which will reflect only changes in the ordinary
course pursuant to Section 11 and the most recently available rent rolls and
delinquency reports from the other Joint Ventures, in each case certified as
true and correct to the knowledge of Sellers.
G. The Leases, Permits and other documents made available for
Purchaser's review in Seller's or the Joint Ventures' property management
offices or delivered to Purchaser are true, correct and complete in all material
respects.
H. Schedules 6(a)(i)(H)(1), 6(a)(i)(H)(2) and 6(a)(i)(H)(3)
list, respectively, all material loan documents pertaining to the Properties,
including the Bond Documents, agreements governing the Joint Ventures, and
management agreements for the Joint Venture Properties, and the copies of those
documents provided to Purchaser are true, correct and complete in all material
respects.
-11-
I. Schedule 6(a)(i)(I) lists all material Service Contracts, and
other contracts affecting any Seller's Property, including Cambridge, which will
be binding upon Purchaser after the Closing, and the copies of these documents
provided to Purchaser are true, correct and complete in all material respects.
To Sellers' knowledge, each of such contracts is in full force and effect and,
to Sellers' knowledge, no default exists thereunder. At Closing Sellers shall
provide Purchaser with an updated list of Service Contracts and other contracts
for its Property prepared as of a date not more than 20 days prior to the
Closing Date and will reflect only changes in the ordinary course pursuant to
Section 11 certified as true and correct to the knowledge of Sellers. All of
such Service Contracts and other contracts shown on such update that were not
shown on the original Schedule 6(a)(i)(I) shall have been entered into in
accordance with Section 11. The Sellers of JV Interests shall use commercially
reasonable efforts to exercise their rights under applicable joint venture
agreements to cause the Joint Ventures, other than Cambridge, to comply, and
Sellers shall cause Cambridge to comply, with the foregoing provision.
J. Except as set forth in Section 7, there are no employees of
any Seller or any affiliate of any Seller and no employee benefit plans for
which Purchaser will be responsible on or after the Closing Date, and there are
no union contracts with employees working at any Property except as set forth in
Schedule 6(a)(i)(J). Sellers are in compliance with all such plans and contracts
in all material respects.
K. There are no pending actions, suits, proceedings or
investigations to which any Seller or any Joint Venture is a party before any
court or other governmental authority with respect to any Property or JV
Interest which may have a material adverse impact on the transactions
contemplated hereby or on any Property or JV Interest except as set forth on
Schedule 6(a)(i)(K), and Seller has no knowledge of any of the same being
threatened against any Seller or Joint Venture.
L. There are no pending condemnation proceedings affecting all
or any portion of any Property and no Seller has received any written notice
from any condemning authority threatening a condemnation proceeding that would
affect all or any portion of its Property or that of any Joint Venture, except
as set forth in Schedule 6(a)(i)(L).
M. No Seller has received written notice from any governmental
authority with respect to a violation of any Law at a Property which has not
been cured except as set forth in Schedule 6(a)(i)(M). Except as set forth in
Schedule 6(a)(i)(M), no Seller has received written notice of any pending or (to
Sellers' knowledge) threatened judicial or administrative action by adjacent
landowners or other persons or with respect to any easements or other recorded
instruments encumbering any Property.
-12-
N. No Seller has received any summons, citation, directive,
notice of violation, letter, or other related communication from the United
States Environmental Protection Agency or State Department of Environmental
Protection or other governmental body responsible for administering or enforcing
environmental laws relating to any Joint Venture, Seller or Property. There are
no pending requests for information or inquiries from any governmental authority
or any investigations, actions, suits, claims, or proceedings relating to
Hazardous Materials in or on any Property. During the time period of each
Seller's ownership of a Property or JV Interest, to Sellers' knowledge (which
knowledge shall, solely for the purposes of this subsection (N), be based on the
assumption that the Designated Employees have no specialized knowledge about
Hazardous Materials and their proper production, deposit, generation,
transportation, storage, treatment, or disposal under applicable Law) and except
as disclosed in any environmental report provided to or obtained by Purchaser
relating to a Property, no Property has been used for the production, deposit,
generation, transportation, storage, treatment, or disposal of any Hazardous
Materials contrary to applicable Laws, and no Hazardous Materials were stored at
or disposed of on, in, or at any Property contrary to applicable Laws.
O. No Seller or Joint Venture has instituted any tax appeals
except as set forth in Schedule 6(a)(i)(O).
P. The amount set forth in the column labeled "O/S Debt" in
Exhibit A is the principal amount outstanding as of the date specified in
Exhibit A, and no material default or event which, with the passage of time, or
the giving of notice, or both, could become a material default, has occurred
under any document evidencing or securing debt owed to a Mortgagee, including
the Bonds, other than defaults that were waived by the Mortgagee or the Bond
trustee or cured within the applicable cure period. The Sellers of each Property
subject to Bonds are in compliance with all provisions of the Bond Documents
concerning set-aside requirements applicable to low and moderate income tenants.
Q. Except pursuant to the refusal provisions in the Joint
Venture partnership agreements, no Seller has entered into any other agreement
to sell its Property or its JV Interest, as applicable, other than this
Agreement.
R. Each Seller has good title to the Personal Property listed in
Schedule 1(a)(i) associated with its Property, free and clear of all liens,
pledges, claims and other encumbrances, except the Permitted Exceptions.
S. No Seller or Joint Venture has (1) commenced a voluntary
case, or had entered against it a petition, for relief under any federal
bankruptcy act or any similar petition, order or decree under any federal or
state law or statute relative to bankruptcy, insolvency or other relief for
debtors, (2) caused, suffered or consented to the appointment of a receiver,
buyer, administrator, conservator, liquidator, or similar official in any
federal, state, or foreign judicial or non-judicial proceeding, to hold,
administer and/or liquidate all or substantially all of its assets, or (3) made
an assignment for the benefit of creditors.
T. Schedule 6(a)(i)(T) summarizes the relevant provisions of the
insurance policies carried by Sellers and, where known, the Joint Ventures on
the Properties. Such policies are in full force and effect.
-13-
U. Each Seller of a JV Interest has good and marketable title to
its JV Interest, free and clear of all liens, pledges, claims and other
encumbrances.
V. Schedules 6(a)(i)(F), 6(a)(I)(H)(1), 6(a)(i)(H)(2),
6(a)(i)(H)(3), and 6(a)(i)(I), list all material contractual obligations of the
Joint Ventures that will be binding upon such Joint Ventures following Closing,
except for Service Contracts entered into in the ordinary course of business in
accordance with Section 11 between the date hereof and the Closing Date.
W. The balance sheets of the Joint Ventures listed in Schedule
6(a)(i)(W) are true, correct and complete in all material respects as of the
respective dates thereof.
X. As of the Closing Date, each Joint Venture shall have filed
all federal, state, county and local income, franchise, sales, use and other tax
returns and reports (all of which were accurate, true and complete in all
material respects) relating to such Joint Venture and its business that are
required by all taxing authorities having jurisdiction to have been filed on or
before the Closing Date and shall have paid all taxes shown to be due thereon,
and adequate provision shall have been made by each Joint Venture for any other
taxes payable by such Joint Venture, whether or not then assessed, and all
interest and penalties thereon, arising out of transactions entered into or
state of facts existing prior the Closing Date. The Joint Ventures have always
been and are treated as partnerships for federal, state and local tax purposes.
No Joint Venture has filed an election to be treated as a corporation for any
tax purpose.
Y. No Seller has received any written notice of any special
assessment to be levied against any Property.
Z. No Seller is a foreign person as defined in Section 1445 of
the Internal Revenue Code of 1986, as amended.
AA. To Sellers' knowledge, and except as may have been disclosed
on environmental reports given to or obtained by Purchaser, there are no
underground storage tanks containing (or previously, containing) any petroleum
or other hazardous or toxic waste or substances on or under any Property.
BB. Each Joint Venture is a general or limited partnership
validly existing and in good standing under the laws of the state of its
formation. Each joint venture or partnership agreement (sometimes referred to
herein as the "joint venture agreements"), as the same may have been amended to
the date hereof, delivered to Purchaser is true, complete and correct and
correctly reflects the ownership interest of the partners in the Joint Ventures.
No parties other than those described in such joint venture agreements have any
ownership rights or rights to acquire such ownership rights in the Joint
Ventures. No other documents govern the internal affairs of any of the Joint
Ventures except those joint venture agreements delivered to Purchaser and none
of such joint venture agreements have been further amended, modified, superseded
or rescinded, and all such joint venture agreements are in full force and
effect. There shall have been no amendments to any joint venture agreement
between the date hereof and the date of Closing, other than as approved by
Purchaser, in its sole discretion.
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CC. None of the Joint Ventures has any liability (and there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any liability), except for (i) liabilities set forth on the face of the
financial statements described in Schedule 6(a)(i)(W) (rather than in any notes
thereto) and (ii) liabilities which have arisen after the date of the balance
sheets set forth in Schedule 6(a)(i)(W) in the ordinary course of business (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law). As of the Closing Date, there shall be no additional
liabilities other than those shown in Schedule 6(a)(i)(W) and those referred to
in clause (ii) of this Section 6(a)(i)(CC), and there shall not have occurred
any material occurrence, event, incident, action, failure to act, or transaction
outside the ordinary course of business involving any of the Joint Ventures.
(ii) As used in this Agreement, the words "Seller's knowledge" or
words of similar import shall be deemed to mean, and shall be limited to, the
actual (as distinguished from implied, imputed or constructive) knowledge of
Raymond Trost and Jeffrey A. Linn (the "Designated Employees"), without any duty
of inquiry or investigation, and shall not be construed to refer to the
knowledge of any other officer, agent or employee of Sellers or any affiliates
thereof. Sellers represent and warrant that the Designated Employees are the
employees who are primarily responsible for the Properties and who possess
relevant knowledge pertaining to the Properties and the representations and
warranties contained herein. There shall be no personal liability on the part of
the Designated Employees arising out of any representations or warranties made
herein.
(iii) If, at or prior to the Closing, Purchaser shall become
actually aware (as opposed to implied, constructive or imputed awareness) that
any representation or warranty herein made by Sellers is untrue, inaccurate or
incorrect in any material respect and Purchaser nevertheless proceeds to closing
on the applicable Property or JV Interest, Purchaser shall be deemed to have
waived the same. If, at or prior to the Closing, Sellers obtain knowledge that a
representation or warranty herein made by Sellers is untrue, inaccurate or
incorrect in any material respect, Sellers shall give written notice to
Purchaser thereof promptly upon becoming aware thereof. If any such
representation or warranty is either (1) immaterial or (2) material but not
materially untrue, inaccurate or incorrect, and is not cured or corrected by
Sellers on or before the Closing Date, Purchaser shall nevertheless be deemed
to, and shall, waive such misrepresentation or breach of warranty and shall
consummate the transactions contemplated hereby without any reduction of or
credit against the Purchase Price. If any such representation or warranty is
both (1) material and (2) materially untrue, inaccurate or incorrect, and is not
cured or corrected by Sellers on or before the Closing Date, then Purchaser, as
its sole remedy for any and all such materially untrue, inaccurate or incorrect
material representations or warranties, shall elect either (x) to waive such
misrepresentations or breaches of warranties and consummate the transactions
contemplated hereby without any reduction of or credit against the Purchase
Price, or (y) to terminate this Agreement as to the Property or JV Interest
which was the subject of such materially untrue, inaccurate or incorrect
representation or warranty by notice given to Sellers on the Closing Date, in
which event this Agreement shall be terminated as to such Property or JV
Interest and neither party shall have any further rights, obligations or
liabilities hereunder with respect to such Property or JV Interest (but Closing
shall occur with respect to all other Properties and JV Interests), except for
those obligations that are expressly stated to survive the termination of this
Agreement (the "Surviving Obligations"), and except that Purchaser shall be
entitled to a return of the Deposit if this Agreement is terminated as to all
Properties and JV Interests. Notwithstanding anything contained in this Section
6(c)(iii) to the contrary, Purchaser acknowledges that the Purchase Prices are
based on the 2002 Financial Statements as updated by the 2002 NOI Statement, and
-15-
if the untrue, inaccurate or incorrect representation or warranty concerns the
Net Operating Income of the Properties as set forth on the 2002 Financial
Statements or the 2002 NOI Statement, such representation and warranty shall be
considered with respect to the portfolio as a whole, and not as to any specific
Property, it shall be deemed to be material if it would cause the Net Operating
Income on the 2002 NOI Statement to be overstated by more than $25,000 for the
portfolio as a whole, and Purchaser's sole remedy therefor is that the Purchase
Prices shall be reduced by the amount of such overstatement capitalized at a
rate of 7.95%, and the parties shall promptly execute and deliver an appropriate
amendment to this Agreement, which shall include, without limitation, an
appropriate reallocation of the Purchase Prices in Exhibit A. Purchaser
acknowledges and agrees that (x) at or prior to the Closing, Purchaser's rights
and remedies in the event any of Sellers' representations or warranties made in
this Agreement are untrue, inaccurate or incorrect shall be only as provided in
this Section 6(a)(iii), and (y) if the Closing does not occur, Purchaser hereby
expressly waives, relinquishes and releases all other rights or remedies
available to it at law, in equity or otherwise (including, without limitation,
the right to seek damages from Sellers) as a result of any of Sellers'
representations or warranties made in this Agreement being untrue, inaccurate or
incorrect. In the event Sellers do not cure or correct an untrue, inaccurate or
incorrect representation which by the terms of this Section 6(a)(iii) permits
Purchaser to terminate this Agreement as to a specific Property or JV Interest,
Sellers shall reimburse Purchaser's reasonable out-of-pocket costs and expenses
(excluding legal fees and expenses) incurred in connection with its proposed
acquisition of such Property or JV Interest up to a maximum of $25,000 for each
such Property or JV Interest. The amount of the reimbursement of out-of-pocket
costs and expenses from Sellers to Purchaser upon the termination of this
Agreement as to a Property or a JV Interest is hereinafter referred to as the
"Allocated Reimbursement Amount."
(iv) In the event the Closing occurs:
A. Notwithstanding anything contained in Section 6(a)(iii) or
elsewhere in this Agreement to the contrary, Purchaser 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 any Seller for damages that
Purchaser may incur, or to rescind this Agreement and the transactions
contemplated hereby, as the result of any of Sellers' representations or
warranties being untrue, inaccurate or incorrect if (1) Purchaser actually knew
(as opposed to implied, constructive or imputed knowledge) that such
representation or warranty was untrue, inaccurate or incorrect at the time of
the Closing and Purchaser nevertheless closes title hereunder, or (2)
Purchaser's damages that result from all of such representation(s) or
warranty(ies) of Sellers made in this Agreement that are untrue, inaccurate or
incorrect are less than Five Hundred Thousand Dollars ($500,000) in the
aggregate. In the event any Property or JV Interest is deleted from Exhibit A
between the date hereof and the Closing Date in accordance with the terms of
this Agreement, the $500,000 threshold shall be adjusted by subtracting from
$500,000 the following: $500,000 multiplied by a fraction, the numerator of
which is the number of apartment units in the Property, or the Property related
to the applicable JV Interest, that was terminated, and the denominator of which
is 7,244. Upon request, either party shall execute an amendment to this
Agreement reflecting this adjustment.
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B. Notwithstanding anything contained herein to the contrary, if
the Closing shall have occurred and to the extent Purchaser shall not have
waived, relinquished and released all rights or remedies available to it at law,
in equity or otherwise as provided hereunder, the aggregate liability of Sellers
arising pursuant to or in connection with the representations, warranties,
covenants and other obligations (whether express or implied) of Sellers in this
Agreement and/or the Seller's Documents (including, without limitation, the
Deeds, the Contract and License Assignment and Bill of Sale) shall not exceed
Fifteen Million Dollars ($15,000,000) in the aggregate. In the event any
Property or JV Interest is deleted from Exhibit A between the date hereof and
the Closing Date in accordance with the terms of this Agreement, the $15,000,000
cap shall be adjusted by subtracting from $15,000,000 the following: $15,000,000
multiplied by a fraction, the numerator of which is the number of apartment
units in the Property, or the Property related to the applicable JV Interest,
which was terminated, and the denominator of which is 7,244. Upon request,
either party shall execute an amendment to this Agreement reflecting this
adjustment.
The provisions of this Section 6(a)(iv) shall survive the Closing
and shall not be merged in the Deeds.
(v) The representations and warranties of each Seller set forth in
this Agreement shall be true, accurate and correct in all material respects upon
the execution of this Agreement and shall be deemed to be repeated on and as of
the Closing Date, it being understood that rent rolls, delinquency reports and
financial statements (including the items delivered pursuant to Section
6(a)(i)(E)) bearing a specific date are accurate as of such date only. The
representations and warranties of Sellers set forth in this Agreement shall
remain operative and shall survive for a period of 180 days following the
Closing Date, and shall not be merged therein for such period, and no action or
claim based thereon shall be commenced after such period unless the factual
basis of the claim or cause of action asserted in the action was first
identified with reasonable clarity in a written notice delivered to Sellers not
later than 180 days following the Closing Date. Notwithstanding the foregoing,
(x) the representations and warranties of Sellers that relate to a JV Interest,
a Joint Venture and/or a Property owned by a Joint Venture shall remain
operative and shall survive for a period of two (2) years following the Closing
Date, and shall not be merged therein for such period, and no action or claim
based thereon shall be commenced after such period unless the factual basis of
the claim or cause of action asserted in the action was first identified with
reasonable clarity in a written notice delivered to such Seller not later than
two (2) years following the Closing Date and (y) the representations and
warranties set forth in Section 6(a)(i)(X) shall survive for the applicable
statute of limitation for claims made by taxing authorities, but not more than
six (6) years.
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(b) (i) Purchaser represents and warrants to Sellers as follows:
A. Purchaser is a duly formed and validly existing
corporation under the laws of the Commonwealth of Pennsylvania.
B. Purchaser has the full legal right, power, authority and
financial ability to execute and deliver this Agreement and all documents now or
hereafter to be executed by it pursuant to this Agreement (collectively, the
"Purchaser's Documents"), to consummate the transactions contemplated hereby,
and to perform its obligations hereunder and under Purchaser's Documents.
C. This Agreement and Purchaser's Documents have been duly
authorized by all requisite corporate action on the part of Purchaser, and are
the valid and legally binding obligations of Purchaser, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer, fraudulent
conveyance and similar laws effecting the enforcement of contractual
obligations.
D. This Agreement and Purchaser's Documents do not and will
not contravene any provision of the articles and bylaws of Purchaser, any
judgment, order, decree, writ or injunction issued against Purchaser, or any
provision of any Laws applicable to Purchaser. The consummation of the
transactions contemplated hereby will not result in a breach or constitute a
default or event of default by Purchaser under any agreement to which Purchaser
or any of its assets are subject or bound and will not result in a violation of
any Laws applicable to Purchaser.
E. Purchaser has no knowledge as of the date hereof of
pending actions, suits, proceedings or investigations to which Purchaser is a
party before any court or other governmental authority which is likely to have
material adverse impact on the transactions contemplated hereby.
(ii) The representations and warranties of Purchaser set forth
in Section 6(b)(i) and elsewhere in this Agreement shall be true, accurate and
correct in all material respects upon the execution of this Agreement, shall be
deemed to be repeated on and as of the Closing Date (except as they relate only
to an earlier date) and shall survive the Closing for a period of 180 days and
shall not be merged therein for such period, and no action or claim based
thereon shall be commenced after such period unless the factual basis of the
claim or cause of action asserted in the action was first identified with
reasonable clarity in a written notice delivered to Purchaser not later than 180
days after the Closing.
7. Employees.
(a) As used in this Section 7, "Employee" shall mean an employee of
any Seller or an affiliate of any Seller whose principal duties involve working
at one of the Properties and/or the administration of Sellers' apartment
portfolio. All Employees and their respective dates of employment, job titles
and base compensation are set forth on Schedule 7(a) hereto. "Hired Employee"
shall mean each Employee who accepts Purchaser's offer of employment.
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(b) On the Closing Date, each Seller or an affiliate of such Seller
shall terminate the employment of each of the Employees, and Purchaser shall
offer employment to each such Employee on an at-will basis and in accordance
with Purchaser's customary employment practices, policies and procedures. As to
Raymond Trost, Purchaser shall offer him an employment contract consistent with
the terms set forth in Exhibit H hereto. Notwithstanding the foregoing, nothing
in this Agreement shall be deemed to require Purchaser to cause to be continued
any Hired Employee's employment for a definite period, except pursuant to the
provisions of any employment contract entered into by Purchaser or as otherwise
provided by Section 7(c).
(c) Purchaser shall not, for a period of 90 days following the
Closing Date, effect any reductions in force among the Hired Employees other
than reductions as a result of attrition, flexible staffing for seasonal or
occupancy adjustments, or terminations for cause. After 90 days, Purchaser may
effect reductions in force and/or adjustments in compensation and/or benefits
without restriction.
(d) Purchaser shall provide each Hired Employee with compensation
and benefits reasonably comparable to his or her compensation and benefits from
Sellers as of the Closing Date; provided, however, benefits pursuant to plans
need be no greater than benefits provided by Purchaser to its own employees or
to employees of an affiliate of Purchaser similarly situated. In particular,
Purchaser shall maintain the rental concessions offered to Hired Employees in
the Properties. Purchaser shall cause its health and disability insurance plans
to waive any eligibility periods and pre-existing condition limitations for the
Hired Employees and their eligible dependents provided such waivers are allowed
by Law and the terms of Purchaser's health and disability insurance plans, and
may be made without cost to Purchaser. Purchaser shall allow direct rollovers of
all accounts of Hired Employees in any qualified employee benefit plan
maintained by Sellers which has received a favorable IRS determination letter,
but only to the extent such rollovers are allowed by Law and the terms of
Sellers' and Purchaser's benefit plans, and may be made without cost to
Purchaser. Purchaser shall honor the seniority (based, as of the Closing Date,
on the time then worked by each Hired Employee during the then-most recent
continuous full-time period of employment at his or her then-current employment
location) for purposes of eligibility to participate in and vesting and payment
of benefits under (but not for purposes of determining the amount of any benefit
under) any employee benefit plan maintained by Purchaser, to the extent the same
may be done without cost to Purchaser, and is allowed by Law and the terms of
such plan.
(e) Sellers shall be solely responsible for, and Purchaser shall
have no liability with respect to: (i) all obligations to employees or former
employees of Sellers or their affiliates who were not Employees on the Closing
Date; (ii) all obligations to Employees accruing before the Closing Date; (iii)
all employee retirement, health, welfare or benefit plans and similar programs
of Sellers or their affiliates, whether or not relating to the apartment
portfolio; and (iv) all obligations with respect to unemployment compensation
and workers' compensation from claims arising out of the claimant's employment
by any Seller or its affiliates.
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(f) To the extent required by Law or any contractual obligations, on
and after the Closing Date, Sellers shall comply in all respects with the group
health plan continuation coverage requirements of COBRA with respect to any
Employee of Sellers or any affiliates who does not become a Hired Employee.
(g) Except as set forth in Section 7(c), nothing contained in this
Section 7 shall limit Purchaser's management prerogatives with respect to the
Hired Employees, or create a right of continued employment for any Hired
Employee or create any right of action by any Hired Employee, any group of Hired
Employees or any other third party, either jointly or severally, and no Employee
shall be a third party beneficiary of this Agreement or have any rights against
Purchaser.
(h) Purchaser acknowledges the existence of the union contract
listed on Schedule 6(a)(i)(J) and agrees to adopt such contract and succeed to
the interest of Kenwood Gardens thereunder.
(i) Sellers' obligations under this Section 7 shall survive Closing
and shall not be merged in the Deeds.
8. Conditions Precedent to Closing.
(a) It shall be a condition to each of Sellers' and Purchaser's
obligations under this Agreement to proceed to Closing on any Property or JV
Interest that each of the following is satisfied:
(i) The Board of Trustees of Pennsylvania Real Estate Investment
Trust ("PREIT") shall have approved the transactions contemplated by this
Agreement. Sellers will advise Purchaser in writing of the Board's decision on
or before March 7, 2003.
(ii) (A) to the extent required by the loan documents, the
holder of each existing mortgage or deed of trust on a Property including the
Bond trustee (each, a "Mortgagee") and with respect to the Bonds, all other
necessary parties, shall have consented in writing to the purchase of such
Property or JV Interest by Purchaser under and subject to the existing mortgage
or deed of trust and other loan documents, including the Bond Documents, without
modification, and shall have delivered a consent agreement in form and substance
reasonably satisfactory to Purchaser, which shall, among other things (unless
such estoppel is waived by Purchaser), confirm the representations and
warranties of Sellers in this Agreement with respect to such loans as of the
Closing Date, such estoppel to be delivered whether or not required by the loan
documents. For the purposes of this Section 8(a)(ii), a consent shall also
include the matters referred to in clause (y) in the next following sentence
unless waived by Purchaser. Sellers agree to request such Mortgagee to (x)
extend any rights to transfer the applicable Property or JV Interest for the
benefit of Purchaser, (y) to grant Purchaser the right to replace the manager of
each Property with an affiliate of Morgan Properties, Ltd., and (z) to agree
that notwithstanding anything to the contrary contained in the loan documents,
without lender consent and without triggering a due on sale requirement or a
default, either partner of the new borrower or any nominee under its control may
acquire the Property or JV Interest, as applicable (or the beneficial interests
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in such Property or JV Interest) pursuant to the buy-sell provisions contained
in the new borrower's joint venture agreement, but Closing shall not be
conditioned on any such Mortgagee agreeing to the request set forth in clause
(z) of this sentence. Purchaser agrees to pay any assumption fees (x) called for
under the applicable loan documents or (y) required by a Mortgagee as a
condition to its consent where the loan document does not permit a sale of the
related Property or JV Interest subject to such mortgage; provided, however,
Purchaser shall not in either case be required to pay any assumption fees which
exceed 1% of the outstanding principal balance of the loan, or in the case of
subpart (y) of this Section 8(a)(ii), be required to pay any costs that are
unreasonable and/or not customarily paid by purchasers; and (B) each Mortgagee
shall have delivered to each Seller and/or to PREIT a release of any guaranty or
indemnification agreements executed by such Seller, PREIT or an affiliate
thereof with respect to the related loan if required pursuant to the existing
loan documents provided that if the same is not delivered, such condition shall
be satisfied if Purchaser, in its sole discretion, delivers on indemnity for
liability under such documents accruing after Closing. Seller and Purchaser
agree to cooperate to obtain such consents and releases, subject to the
allocation of costs set forth in Section 3(i).
(B) Notwithstanding anything to the contrary contained in
Section 8(a)(ii)(A), Purchaser may arrange for the prepayment and/or defeasance
of some or all of the loans on wholly-owned Properties described in Exhibit A at
or after Closing. Purchaser shall bear all prepayment premiums and other costs
in connection with any such prepayment or defeasance; provided, however, that
Sellers shall cooperate, at no out-of-pocket cost to Sellers, as reasonably
requested by Purchaser with Purchaser's efforts to arrange for such prepayment
and/or defeasance. All tax benefits arising from such prepayment and/or
defeasance shall accrue to Purchaser. Within twenty (20) days following the
execution of this Agreement, Purchaser shall notify Sellers in writing of the
Properties, if any, on which Purchaser desires to prepay or defease the loan, in
which case, the condition set forth in Section 8(a)(ii)(A) shall be deemed
waived as to each such Property. The failure by Purchaser to give any such
notice shall be deemed an election by Purchaser not to prepay or defease any
such loan.
(iii) Purchaser shall have obtained with respect to the bonds
(the "Bonds") which are issued with respect to the Emerald Point Property and
the Shenandoah Village Apartments Property:
A. (a) the items described in Section 8(a)(ii) (including,
without limitation, approval of any substitute credit enhancement) and (b) if
required by the documents evidencing and securing the Bonds (the "Bond
Documents"), a rating agency confirmation that the transaction will not cause a
reduction in the ratings of the Bonds (collectively, the "Consent"); and
B. if required by the Bond Documents, an opinion of bond
counsel acceptable to each Bond issuer ("Bond Counsel") to be delivered at
Closing to the effect that the purchase of the Property by Purchaser, the
assumption of the Bonds and Seller's obligations under the Bond Documents and
the substitution of any alternate security or credit and/or liquidity
enhancements in accordance with the Bond Documents will not (1) cause the Bonds
to be viewed as having been "refinanced" within the meaning of Treasury
Regulations Section 1.150-1(d)(2)(v), (2) adversely affect the tax-exempt status
of the interest payable on the Bonds for federal income tax purposes, or (3)
give rise to any right to accelerate the maturity of the Bonds.
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C. Purchaser shall use its commercial good faith efforts to
obtain, if required by the Bond Documents, the Bond Counsel's opinion and shall
notify Sellers in writing of the progress of its attempts to obtain the same,
and shall pay any reasonable and customary fees in connection therewith. Sellers
shall, at no out-of-pocket cost or expense to them, reasonably cooperate with
Purchaser in obtaining the Bond Counsel's opinion if required by the Bond
Documents.
(iv) With respect to the JV Interests, any remaining partner in
such Joint Venture having consent rights under the relevant partnership
documents shall have granted in writing such consent and/or any necessary waiver
to the transfer of the JV Interest and substitution of Purchaser or its designee
as a partner. In addition, Sellers shall have requested all remaining partners
in each Joint Venture to amend the partnership documents of such Joint Venture
to ensure, to the satisfaction of Purchaser, that (1) the partnership documents
contain provisions complying with the requirements of Section 514(c)(9)(E) of
the Internal Revenue Code of 1986, as amended, (2) the Joint Venture will not
incur or be subject to indebtedness and will not hold or acquire assets subject
to indebtedness except to the extent that such indebtedness is not treated as
"acquisition indebtedness" solely by reason of Section 514(c)(9) of the Internal
Revenue Code of 1986, as amended, and (3) the Joint Venture will not otherwise
recognize "unrelated business taxable income" or "unrelated debt-financed
income" within the meaning of Section 512 or 514 of the Internal Revenue Code of
1986, as amended. Sellers and Purchaser shall cooperate in good faith to obtain
such amendments, consents and waivers. Sellers shall keep Purchaser informed as
to the progress of obtaining the amendments, consents and waivers and shall
permit Purchaser to be involved in a reasonable manner in the process. This
cooperation shall include, without limitation, promptly sending Purchaser copies
of relevant correspondence and keeping Purchaser advised of material telephone
conversations. Sellers shall make all requests from joint venture partners in a
diligent manner consistent with the applicable joint venture agreements.
Notwithstanding anything to the contrary in this Section 8(a)(iv), the amendment
of the joint venture agreements referred to above shall not be a condition to
Closing on any JV Interest.
If the condition set forth in Section 8(a)(i) is not satisfied on or
before March 7, 2003, the Deposit shall be returned to Purchaser and thereafter
neither Sellers nor Purchaser shall have any further rights, liabilities or
obligations hereunder except for the Surviving Obligations and as provided in
the next sentence. Upon any termination of this Agreement pursuant to this
paragraph, Purchaser shall deliver to each Seller copies of all Inspections with
respect to such Seller's Property, assign to each Seller all of Purchaser's
right, title and interest in such Inspections, to the extent assignable, and
Sellers shall pay Purchaser the sum of $250,000. The provisions of this
paragraph shall survive the termination of this Agreement.
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If the conditions set forth in Sections 8(a)(ii), (iii) or (iv)
above are not satisfied with respect to any Property or JV Interest on or before
the Closing Date and such condition is not waived by both parties, Exhibit A
shall be revised to delete reference to such Property, and such Property or JV
Interest shall not be included in the sale and purchase contemplated hereby, but
Closing shall continue with respect to all other Properties and JV Interests.
Thereafter, neither party shall have any further rights, obligations or
liabilities hereunder with respect to such Property or JV Interest, except for
the Surviving Obligations. If Purchaser is unable to obtain the Consent or, if
required by the Bond Documents, the Bond Counsel's opinion on or before the
Closing Date with respect to any Property subject to Bonds, and such condition
is not waived by both parties, Exhibit A shall be revised to delete the
reference to such Property, and such Property shall not be included in the sale
and purchase contemplated hereby, but Closing shall continue with respect to all
other Properties and JV Interests. Thereafter, neither party shall have any
further rights, obligations or liabilities hereunder with respect to such
deleted Properties, except for the Surviving Obligations. Notwithstanding the
foregoing, Purchaser or Sellers may, at the option of either party, adjourn
Closing on the Properties that are subject to the Bonds (with closing to occur
on all other JV Interests and Properties when required under this Agreement) up
to 90 days in order to obtain the Bond Counsel's opinions and Consents. In such
event, the Closing Date for the purposes of this Agreement as to the
Property(ies) for which Closing is so delayed shall be deemed to be such delayed
date and the Deposit shall be allocated among the Properties and JV Interests
which close and the Properties for which there is a delayed Closing Date in
proportion to the Purchase Prices of such Properties.
Purchaser acknowledges and agrees that its obligation to perform
under this Agreement is not contingent upon Purchaser's ability to obtain any
(A) governmental or quasi-governmental approval of changes or modifications in
use, zoning or subdivision, (B) modification of any existing land use
restriction, (C) site plan approval or building permit, (D) consents to
assignments of any Service Contracts, management agreements or other agreements
which Purchaser desires, or (E) financing.
(b) Purchaser's obligation under this Agreement to purchase any
Property or JV Interest is subject to the fulfillment of each of the following
conditions, subject, however to the provisions of Section 8(d):
(i) The representations and warranties of Sellers contained
herein shall be materially true, accurate and correct as of the Closing Date, it
being understood that rent rolls, delinquency reports and financial statements,
including the items delivered pursuant to Section 6(a)(i)(E), bearing a specific
date are accurate as of such date only;
(ii) Sellers shall have delivered all the documents and other
items required by Section 9, and shall have performed in all material respects
all other covenants, undertakings and obligations, and complied in all material
respects with all conditions required by this Agreement to be performed or
complied with by the Sellers at or prior to the Closing.
(iii) Title to the Properties and JV Interests shall be as
required under this Agreement.
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(c) Sellers' obligation under this Agreement to sell their
Properties and JV Interests to Purchaser are subject to the fulfillment of each
of the following conditions, subject, however to the provisions of Section 8(d):
(i) the representations and warranties of Purchaser contained
herein shall be materially true, accurate and correct as of the Closing Date
except to the extent they relate only to an earlier date;
(ii) Purchaser shall have delivered the Purchase Prices and
other funds required hereunder and all the documents to be executed by Purchaser
set forth in Section 10, and shall have performed in all material respects all
other covenants, undertakings and obligations, and complied in all material
respects with all conditions required by this Agreement to be performed or
complied with by Purchaser at or prior to the Closing;
(iii) on or prior to Closing Date, (A) Purchaser shall not have
applied for or consented to the appointment of a receiver, trustee or liquidator
for itself or any of its assets unless the same shall have been discharged prior
to the Closing Date, and no such receiver, liquidator or trustee shall have
otherwise been appointed, unless same shall have been discharged prior to the
Closing Date; (B) Purchaser shall not have admitted in writing an inability to
pay its debts as they mature; (C) Purchaser shall not have made a general
assignment for the benefit of creditors; (D) Purchaser shall not have been
adjudicated a bankrupt or insolvent, or had a petition for reorganization
granted with respect to Purchaser; and (E) Purchaser shall not have filed a
voluntary petition seeking reorganization or an arrangement with creditors or
taken advantage of any bankruptcy, reorganization, insolvency, readjustment or
debt, dissolution or liquidation law or statute, or filed an answer admitting
the material allegations of a petition filed against it in any proceedings under
any such law, or had any petition filed against it in any proceeding under any
of the foregoing laws unless the same shall have been dismissed, cancelled or
terminated prior to the Closing Date.
(d) In the event that any condition contained in Section 8(b) or (c)
is not satisfied, the party entitled to the satisfaction of such condition as a
condition to its obligation to close title hereunder shall have as its sole
remedy hereunder the right to elect to (i) waive such unsatisfied condition,
whereupon title shall close as provided in this Agreement without abatement of
the Purchase Prices, except to the extent of monetary liens of an ascertainable
amount in the case of failure to satisfy Section 8(b)(iii) or (ii) terminate
this Agreement with respect to the applicable Property(ies) or JV Interest(s)
pursuant to Sections 15(a), (b) or (c) hereof; provided that in the case of a
breach of a representation or warranty by Sellers described in Section 6(a)(iii)
hereof, Purchaser shall proceed pursuant to such Section 6(a)(iii) hereof.
Nothing herein shall preclude Purchaser from exercising its rights under the
last sentence of Section 15(a) or, in the event closing on either Property
subject to the Bonds is delayed pursuant to Section 8(a), the second to last
sentence of Section 15(b). If Closing occurs, Purchaser and Sellers shall be
conclusively deemed to have waived the benefit of any remaining unfulfilled
conditions set forth in Sections 8(b) or (c), respectively.
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9. Deliveries by Sellers at Closing.
(a) At the Closing, each Seller (except for Sellers of JV Interests)
shall execute, acknowledge and/or deliver, as applicable, the following to
Purchaser or the title company selected by Purchaser to insure the Properties
(the "Title Company") with respect to such Property:
(i) A deed sufficient under the law of the state in which the
Property is located to convey title to the Property to Purchaser with special
warranty covenants (or the equivalent) (each, a "Deed").
(ii) An assignment and assumption of the Leases for such
Property, including all unapplied cash security deposits accounted for by such
Seller (each, a "Lease Assumption"), substantially in the form of Exhibit C
(with such revisions as are necessary to have such Lease Assumption comply with
the law of the state in which such Property is located) assigning Seller's
interest in such Leases.
(iii) A bill of sale in the form of Exhibit D (the "Bill of
Sale"), conveying, transferring and selling to Purchaser all right, title and
interest of such Seller in and to all Personal Property with respect to the
Property.
(iv) An Assignment and Assumption of Contracts, Licenses and
Intangibles, in the form of Exhibit E (the "Contract and License Assignment"),
assigning without warranty or representation beyond any made in this Agreement
all of such Seller's right, title and interest, if any, in and to (A) all of the
assignable Permits, (B) all assignable Service Contracts (collectively, the
"Contracts") and all other items included in the sale not otherwise transferred
pursuant to the other documents delivered at Closing. Sellers shall not assign
any existing management agreements or any contracts or policies of insurance for
the Property.
(v) (A) the original (or, if not in the possession or control of
Sellers or the current managers of the Properties, copies) of the existing
certificate or certificates of occupancy for each Property; (B) all original
(or, if not in the possession or control of Sellers or the current managers of
the Properties copies of) Permits issued for or with respect to each Property
and all Leases, tenant files, plans and specifications and other items included
in the sale. To the extent that the items listed in this subsection (v) are
located at the Properties or in the offices of Sellers' building managers, such
documents shall be made available to Purchaser at such locations and shall not
be required to be delivered at Closing.
(vi) For each Property, a memo to the tenants under the Leases
and vendors under any Service Contracts notifying them of the sale of the
Property to Purchaser and advising that all future payments of rent and other
payments due under the Leases and any invoices or billings under the Service
Contracts are to be sent to Purchaser at the address of Purchaser specified in
Section 21 (or another address specified by Purchaser at least 10 days prior to
Closing).
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(vii) Any updated Schedules and documents Sellers are required
to provide pursuant to Section 6(a), including, without limitation, a schedule
of unpaid commissions which are not yet due and payable.
(viii) Copies of terminations of the management agreements for
all Properties listed in the "Wholly Owned" section of Exhibit A, and of the
management agreement for Cambridge Hall Apartments, unless Purchaser is
permitted and chooses to assume such agreement.
(ix) A certificate of each Seller re-certifying the
representations and warranties set forth in this Agreement as of the Closing
Date.
(x) Certificates required by law dated no earlier than twenty
(20) days prior to the Closing Date to be delivered by a seller of real
property, including a certification statement from the City of Philadelphia (as
to 2031 Locust Street).
(xi) To the extent requiring execution by a Seller and not
imposing liabilities on such Seller other than as are customary in similar
transactions, such consents and other documents required for the assumption by
Purchaser of the loan documents, including the Bond Documents.
(xii) A balance sheet for each Joint Venture as of the Closing
Date, in the form of the balance sheets previously delivered to Purchaser,
certified as being true, correct and complete to the knowledge of Sellers.
Sellers furthermore agree to request from each commercial tenant
under a Lease, and from each Joint Venture, an estoppel certificate in form
reasonably requested by Purchaser, but receipt of such estoppel certificate
shall not be a condition of Closing.
(b) At the Closing, each Seller of a JV Interest shall execute,
acknowledge and/or deliver, as applicable, to Purchaser or the Title Company an
assignment of the JV Interest in form attached hereto as Exhibit F (the
"Partnership Assignment").
(c) At the Closing, each Seller shall execute, acknowledge and/or
deliver, as applicable, the following to Purchaser or the Title Company:
(i) A "FIRPTA" affidavit sworn to by such Seller in the form of
Exhibit G. Purchaser acknowledges and agrees that upon Seller's delivery of such
affidavit, Purchaser shall not withhold any portion of the Purchase Price
pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended.
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(ii) Copies of the resolution of PREIT (and of the general
partner of a Seller to the extent it is not, directly or indirectly, PREIT) and
of any other constituent members or general partners of any Seller if reasonably
required by Purchaser authorizing the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated by this
Agreement certified as true and correct by an authorized representative of PREIT
(and such other general partners and members, if applicable) as of the date of
Closing; (ii) a good standing or incumbency certificate issued by the state(s)
in which the Seller and to the extent applicable, such other general partners
and members, are organized and the state in which the Property is located, if
different, each dated within thirty (30) days of the Closing Date; (iii) an
incumbency certificate executed by an authorized representative of PREIT (and to
the extent applicable, such other general partners and members) with respect to
those officers of such Seller (or such other general partners or members to the
extent applicable) executing any documents or instruments in connection with the
transactions contemplated herein. If requested by Purchaser at least 10 days
prior to Closing, copies certified by PREIT of the organizational documents of
each Seller and, to the extent applicable, its constituent general partners and
members.
(iii) Duly completed and signed real estate transfer tax returns
if required by the governmental authorities in the state in which such Seller's
Property is located.
(iv) Title affidavits in customary form as to the wholly-owned
Properties and such other documents as the Title Company may reasonably request.
(v) All other documents such Seller is required to deliver
pursuant to the provisions of this Agreement or that Purchaser reasonably
requests in order to effectuate the conveyance of the Properties and JV
Interests; provided, that such documents requested by Purchaser do not impose
any additional obligations on such Seller.
10. Deliveries by Purchaser at Closing.
(a) At the Closing, Purchaser shall execute, acknowledge and/or
deliver, as applicable, the following to each Seller (except any Seller of a JV
Interest) for such Seller's Property:
(i) The Lease Assumption, assuming all of such Seller's
obligations and liabilities under the relevant Leases including unapplied cash
security deposits accounted for by such Seller.
(ii) The Contract, License and Intangible Assignment, assuming
all of such Seller's right, title and interest, if any, in and to the Contracts
and other items described thereon for such Seller's Property.
(b) At the Closing, Purchaser shall execute, acknowledge and/or
deliver the Partnership Assignment to each Seller of a JV Interest.
(c) At the Closing, Purchaser shall execute, acknowledge and/or
deliver, as applicable, the following to each Seller:
(i) The Purchase Prices, subject to apportionments, credits and
adjustments as provided in this Agreement.
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(ii) (A) copies of the certificate of incorporation and bylaws
of Purchaser and of the resolution of the board of directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement, certified as
true and correct by the Secretary or Assistant Secretary of Purchaser; (B) a
good standing certificate issued by the state of incorporation of Purchaser,
dated within thirty (30) days of the Closing Date; and (C) an incumbency
certificate executed by the Secretary or Assistant Secretary of Purchaser with
respect to those officers of Purchaser executing any documents or instruments in
connection with the transactions contemplated herein.
(iii) If applicable, duly completed and signed real estate
transfer tax returns.
(iv) Assumptions of the mortgage loans being assumed, including
such non-recourse carve-out, environmental and other indemnity agreements and
guarantees required by the Mortgagee of the Property, pursuant to, and to the
extent required by, the existing loan documents, including the Bond Documents,
in form and substance reasonably satisfactory to Purchaser (Purchaser hereby
agreeing that it will not object to any such agreement if it is in the same form
as previously executed by a Seller), it being understood that such indemnities
will not be provided by any individual, or by any entity not affiliated with
Purchaser and that Purchaser shall not be required to provide any personal
guaranties or credit enhancements with respect to the sums borrowed.
(v) All other documents Purchaser is required to deliver
pursuant to the provisions of this Agreement.
11. Operation of the Properties prior to the Closing Date. Between the
date hereof and the Closing Date, Sellers shall continue, cause Cambridge to
continue (and shall, to the extent possible, cause the other Joint Ventures to
continue) to operate and maintain their respective Properties in the ordinary
and normal course of business. Such operation and maintenance shall include,
without limitation:
(a) Sellers shall continue to lease apartment units in the ordinary
course of business until the Closing Date, at the rates and with such
concessions as the market in the particular location shall require; provided,
however, that no Seller shall provide any new tenant more than one (1) month's
free rent or any other concession without the consent of Purchaser, which shall
not be unreasonably withheld, conditioned or delayed (any such lease, a "New
Lease"). In the event Purchaser does not respond to any Seller's request to
review the terms of a New Lease within three (3) business days following
submission, Purchaser shall be deemed to have approved of such terms. The
Sellers of JV Interests shall use commercially reasonable efforts to exercise
their rights under the applicable joint venture agreements to cause the Joint
Ventures, other than Cambridge, to comply, and Sellers shall cause Cambridge to
comply, with the foregoing provision.
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(b) Prior to the Closing Date, Sellers shall enforce the rights and
remedies of the landlord under the Leases and New Leases, by summary proceedings
or otherwise, in the ordinary course of business, and, to the extent permitted
by law and the applicable lease, apply all or any portion of any security
deposits then held by Sellers toward any loss or damage incurred by Sellers by
reason of any defaults by tenants. The Sellers of JV Interests shall use
commercially reasonable efforts to exercise their rights under the applicable
joint venture agreements to cause the Joint Ventures, other than Cambridge, to
comply, and Sellers shall cause Cambridge to comply, with the foregoing
provision.
(c) The termination of any Lease or New Lease or the removal of any
tenant by reason of a default by such tenant (by summary proceedings or
otherwise), in the ordinary course of business, prior to the Closing Date shall
not affect the obligations of Purchaser under this Agreement in any manner or
entitle Purchaser to a reduction in, or credit or allowance against, the
Purchase Price or give rise to any other claim on the part of Purchaser.
(d) Sellers, in the ordinary course of business, may cancel, modify,
extend, renew or permit the expiration of Service Contracts or enter into any
new Service Contract without Purchaser's prior consent, provided that any such
Service Contract that is entered into, extended, renewed or modified may be
terminated at any time on not more than thirty (30) days' prior notice by
Sellers or their successors, without the payment of a penalty or other payment.
No other contracts that will be binding on Purchaser may be entered into without
Purchaser's consent, and notwithstanding the foregoing, in no case shall any
Service Contract that provides for an upfront payment of money to a Seller be
entered into without Purchaser's consent. The Sellers of JV Interests shall use
commercially reasonable efforts to exercise their rights under the applicable
joint venture agreements to cause the Joint Ventures, other than Cambridge, to
comply, and Sellers shall cause Cambridge to comply, with the foregoing
provision.
(e) Sellers shall maintain the Properties in compliance with all
Laws and in their present condition, reasonable wear and tear and damage by
condemnation or casualty excepted, including correction of code violations,
pursuant to Sellers' standard operating procedures for each Property. If Sellers
receive a notice of a code violation prior to Closing, Sellers will correct the
same prior to Closing or escrow a reasonable amount with the Title Company at
Closing to cover the cost of such correction. The Sellers of JV Interests shall
use commercially reasonable efforts to exercise their rights under the
applicable joint venture agreements to cause the Joint Ventures, other than
Cambridge, to comply, and Sellers shall cause Cambridge to comply, with the
foregoing provision.
(f) Sellers shall continue their existing capital expenditure
programs in accordance with Schedule 11(f) for each Property; provided, however,
that Seller shall not be required to perform the $250,000 window replacement
program at Camp Hill Apartments.
(g) Sellers shall continue to make vacant units ready for leasing,
in accordance with Sellers' standard operating procedures for each Property, it
being understood that such standard operating procedures do not necessarily
require all vacant units to be ready for leasing on the Closing Date. The
Sellers of JV Interests shall use commercially reasonable efforts to exercise
their rights under the applicable joint venture agreements to cause the Joint
Ventures, other than Cambridge, to comply, and Sellers shall cause Cambridge to
comply, with the foregoing provision.
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(h) With respect to the tax year in which the Closing occurs and all
prior tax years, Sellers and the Joint Ventures are hereby authorized to
continue and control the progress of, and to make all decisions with respect to,
any proceeding or proceedings, whether or not now pending, for the reduction of
the assessed valuation of the Properties, and, in their sole discretion, to try
or settle the same, but shall not commence any new proceedings without
Purchaser's consent, which consent shall not be unreasonably withheld,
conditioned or delayed. All net tax refunds and credits attributable to any tax
year prior to the tax year in which the Closing occurs shall belong to and be
the property of Sellers or the Joint Ventures, as applicable. All net tax
refunds and credits attributable to any tax year subsequent to the tax year in
which the Closing occurs shall belong to and be the property of Purchaser, or
the applicable Joint Venture. All net tax refunds and credits attributable to
the tax year in which the Closing occurs shall be 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 be apportioned between Purchaser and the
applicable Seller in proportion to the number of days in such tax year that each
party owned the Property or JV Interest (with title to the Property or JV
Interest being deemed to have passed as of 11:59 p.m. on the day preceding the
Closing Date) and the apportionment with respect to a JV Interest being one half
(1/2) of such apportioned recovery. Purchaser agrees to reasonably cooperate
(without, however, the obligation to incur any costs) with Sellers in connection
with the prosecution of any such proceedings and to take all reasonable steps
(without, however, the obligation to incur any costs), whether before or after
the Closing Date, as may be reasonably necessary to carry out the intention of
the foregoing, including, without limitation, the delivery to Sellers, upon
demand, of any relevant books and records, including receipted tax bills and
cancelled checks used in payment of such taxes, the execution of any and all
consents or other documents, and the undertaking of any act reasonably necessary
for the collection of such refund by Sellers. The provisions of this Section
11(h) shall survive the Closing and shall not be merged in the Deeds.
(i) Neither Sellers nor the Joint Ventures shall further encumber
any Property or JV Interest, or, without Purchaser's consent, amend any
documents evidencing or securing the loans described on Exhibit A.
(j) Sellers shall maintain and cause the Joint Ventures to maintain
the property insurance coverages currently in effect for the Properties through
the Closing Date, which information is listed on Schedule 6(a)(i)(T).
(k) Sellers shall not amend or terminate any of the joint venture
agreements.
Prior to Closing, Sellers shall provide Purchaser with monthly
reports on each Property, in form previously provided to Purchaser.
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12. As Is; Release.
(a) Purchaser acknowledges and agrees that each Property that is
sold shall be sold, and Purchaser shall accept possession of each Property on
the Closing Date "AS IS - WHERE IS, WITH ALL FAULTS," with no right of setoff or
reduction in any Purchase Price except as expressly provided in the Agreement,
and Purchaser shall assume the risk that adverse physical, environmental,
economic or legal conditions may not have been revealed by Purchaser's
investigations, subject to the representations and warranties made by Sellers in
this Agreement or Sellers' Documents. Except as expressly set forth in Section
6(a)(i) or elsewhere in this Agreement or Sellers' Documents, neither Sellers
nor Sellers' Representatives have or shall be deemed to have made any
representations or warranties, express or implied, regarding the Properties or
any matters affecting the Properties, including without limitation the physical
condition of the Properties, title to or boundaries of the Properties, pest
control, soil conditions, the presence or absence, location or scope of any
Hazardous Materials in, at, or under the Properties, compliance with building,
health, safety, land use or zoning Laws, other engineering characteristics,
traffic patterns and all other information pertaining to the Properties.
Purchaser moreover acknowledges (i) that Purchaser is a sophisticated buyer,
knowledgeable and experienced in the financial and business risks attendant to
an investment in real property and capable of evaluating the merits and risks of
entering into this Agreement and purchasing the Properties, (ii) that Purchaser
has entered into this Agreement with the intention of making and relying upon
its own (or its experts') investigation of the physical, environmental, economic
and legal condition of the Properties, and (iii) that Purchaser is not relying
upon any representation or warranty concerning the Properties made by Sellers or
Sellers' Representatives other than as expressly set forth in Section 6(a)(i) or
elsewhere in this Agreement or Sellers' Documents. Sellers shall not have any
liability of any kind or nature for any subsequently discovered defects in the
Properties, whether such defects were latent or patent.
(b) Purchaser acknowledges that Sellers have afforded the
opportunity for Purchaser to make investigations, examinations and inspections
of the Properties and information and documents in the possession or control of
Sellers relating to the Properties, the operation thereof or the sale thereof
(including without limitation financial data and records and the Contracts)
(collectively, the "Property Information"). Purchaser acknowledges and agrees
that, with the exception of the documents or other matters Seller has
represented and warranted as being true, accurate, correct and/or complete in
this Agreement, (i) the Property Information delivered or made available to
Purchaser or its directors, officers, employees, affiliates, partners, brokers,
agents or other representatives, including, without limitation, attorneys,
accountants, contractors, subcontractors, consultants, engineers and financial
advisors, including, without limitation, their contractors, engineers,
attorneys, accountants, consultants, brokers or advisors (collectively,
"Purchaser's Representatives") by Sellers or Sellers' Representatives may have
been prepared by third parties and may not be the work product of Sellers and/or
Sellers' Representatives; (ii) neither Sellers nor any of Sellers'
Representatives has made any independent investigation or verification of, or
has any knowledge of, the accuracy or completeness of, the Property Information;
(iii) the Property Information delivered or made available to Purchaser and
Purchaser's Representatives is furnished to each of them at the request, and for
the convenience of, Purchaser; (iv) Purchaser is relying solely on its own
investigations, examinations and inspections of the Properties and those of
Purchaser's Representatives and is not relying in any way on the Property
Information furnished by Sellers or any of Sellers' Representatives; (v) Sellers
expressly disclaim any representations or warranties with respect to the
accuracy or completeness of the Property Information, except as specified in
Section 6(a) or elsewhere in this Agreement, and Purchaser releases Sellers and
Sellers' Representatives from any and all liability with respect thereto except
as provided elsewhere in this Agreement; and (vi) any further distribution of
the Property Information is subject to Section 22.
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(c) Purchaser or anyone claiming by, through or under Purchaser
hereby fully and irrevocably releases Sellers and Sellers' Representatives from
any and all claims that it may now have or hereafter acquire against Sellers or
Sellers' Representatives for any cost, loss, liability, damage, expense, action
or cause of action, whether foreseen or unforeseen, arising from or related to
any structural, engineering or environmental condition at the Properties,
including without limitation the presence or absence, location or scope of any
Hazardous Materials in, at, or under the Properties (whether patent, latent or
otherwise) as of the Closing Date, except for claims against Sellers based upon
any obligations, indemnities and liabilities of Sellers expressly provided in
this Agreement. Purchaser further acknowledges and agrees that this release
shall be given full force and effect according to each of its expressed terms
and provisions, including but not limited to those relating to unknown and
suspected claims, damages and causes of action. As a material covenant and
condition of this Agreement, Purchaser agrees that in the event of any
structural, engineering or environmental defects, errors or omissions, including
without limitation the presence or absence, location or scope of any Hazardous
Materials in, at, or under the Properties, or any other conditions affecting the
Properties as of the Closing Date, Purchaser shall not look to Sellers for any
redress or relief, except for claims against Sellers based upon any obligations,
indemnities and liabilities of Sellers expressly provided in this Agreement.
(d) Purchaser acknowledges and agrees that the provisions of this
Section 12 were a material factor in each Seller's acceptance of the Purchase
Price for its Property and, while Sellers have provided the Property Information
and cooperated with Purchaser, Sellers are unwilling to sell their Property
unless Sellers and Sellers' Representatives are expressly released as set forth
in Section 12(c).
(e) Purchaser's failure, for any reason whatsoever, to elect to
terminate this Agreement pursuant to Section 4(b) shall be deemed an
acknowledgment by Purchaser that Purchaser has inspected the Property, is
thoroughly acquainted with and accepts its condition, and has reviewed, to the
extent necessary in its discretion, all the Property Information, subject to the
express representations and warranties contained in this Agreement and Seller's
Documents. It is understood that Purchaser shall not be deemed to have audited
any Leases or other records. Sellers shall not be liable or bound in any manner
by any oral or written "setups" or information pertaining to the Property
furnished by Sellers or Sellers' Representatives.
(f) 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,
polychlorinated biphenyls, flammable explosives, oil, petroleum or any refined
petroleum product.
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(g) The provisions of this Section 12 shall survive the Closing (and
shall not be merged in the Deeds) or earlier termination of this Agreement.
13. Broker.
Purchaser and Sellers represent and warrant to each other that there
is no broker with whom they have dealt in connection with the sale and purchase
of the Properties and JV Interests and the transactions described herein.
Purchaser and Sellers agree to indemnify, defend and hold the other harmless
from and against any and all claims, causes of action, losses, costs, expenses,
damages or liabilities, including reasonable attorneys' fees and disbursements,
which the other may sustain, incur or be exposed to, by reason of any claim or
claims by any broker, finder or other person, for fees, commissions or other
compensation arising out of the transactions contemplated in this Agreement if
such claim or claims are based in whole or in part on dealings or agreements
with the indemnifying party. The obligations and representations and warranties
contained in this Section 13 shall survive the Closing (and shall not be merged
in the Deeds) or earlier termination of this Agreement.
14. Casualty; Condemnation.
(a) Damage or Destruction: If a "material" part (as hereinafter
defined) of any Property is damaged or destroyed by fire or other casualty,
Sellers shall promptly notify Purchaser of such fact and, except as hereinafter
provided, Purchaser shall have the option to have the Property removed from
Exhibit A (and the sale shall occur without such Property) upon notice to
Sellers given not later than ten (10) days after receipt of Sellers' notice. If
this Agreement is so terminated with respect to such Property or the applicable
JV Interest, the provisions of Section 14(d) shall apply. If there is damage to
or destruction of an "immaterial" part ("immaterial" is herein deemed to be any
damage or destruction which is not "material," as such term is hereinafter
defined) of any Property, Purchaser shall close title on such Property or JV
Interest as provided in this Agreement and, at the Closing, the Seller of such
Property shall, unless such Seller has repaired such damage or destruction prior
to the Closing, (i) cause the net proceeds (if any) of any insurance less the
amount of all costs incurred in connection with the repair of such damage or
destruction to be paid to Purchaser (or, in the case of a Joint Venture
Property, assign to Purchaser all of Seller's right, title and interest in and
to such insurance proceeds), (ii) assign and transfer to Purchaser all right,
title and interest (or, in the case of a Joint Venture Property all of Seller's
right, title and interest) in and to any uncollected insurance proceeds (if any)
by reason of such which such Seller may be entitled to receive from such damage
or destruction, and (iii) grant Purchaser a credit against the Purchase Price
allocated to such Property or JV Interest in the amount of any deductible under
the insurance policy for the applicable Property and/or any amount of insurance
not in place that would have been assigned to Purchaser under this Section 14
had Sellers complied with Section 11(j) hereof (or, in the case of a Joint
Venture Property, 1/2 of such amount). A "material" part of the Property shall
mean (i) that ten percent (10%) of the apartment units at the Property have been
destroyed or suffered material casualty damage; or (ii) the cost to repair or
replace such damaged or destroyed apartment units will exceed ten percent (10%)
of the Purchase Price allocated to such Property (or 5% of a JV Interest), as
reasonably as estimated by Sellers; or (iii) the Mortgagee of such Property
shall require that insurance proceeds for such damage or destruction be used to
pay down the mortgage debt, unless the Seller of such Property or JV Interest
agrees to grant Purchaser a credit against the Purchase Price allocated to such
Property or JV Interest in the amount of such insurance proceeds.
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(b) Condemnation: If, prior to the Closing Date, all or any
"significant" portion (as hereinafter defined) of any Property is taken by
eminent domain or condemnation (or is the subject of a pending taking which has
not been consummated), Sellers shall promptly notify Purchaser of such fact and
the Purchaser shall have the option to terminate this Agreement with respect to
such Property or the applicable JV Interest upon notice to Sellers given not
later than ten (10) days after receipt of Sellers' notice. If this Agreement is
so terminated with respect to such Property or the applicable JV Interest, the
provisions of Section 14(d) shall apply. If Purchaser does not elect to
terminate this Agreement with respect to such Property or the applicable JV
Interest, or if an "insignificant" portion ("insignificant" is herein deemed to
be any taking which is not "significant", as such term is herein defined) of the
Property is taken by eminent domain or condemnation, at the Closing the Seller
of such Property or JV Interest shall cause the award or proceeds to be assigned
to Purchaser (or to the Joint Venture, in the case of a Joint Venture Property)
and Purchaser (or the Joint Venture, in the case of a Joint Venture Property)
shall be entitled to receive and keep all awards or other proceeds for such
taking by eminent domain or condemnation. A "significant" portion of the
Property means (i) any portion of a Building, (ii) a portion of the parking
areas if the taking thereof reduces the remaining available number of parking
spaces below the minimum legally required, (iii) a driveway on the Property if
such driveway is the predominant means of ingress thereto or egress therefrom
and there is not reasonable alternate access, or (iv) any other portion of the
Property, the taking of which would have a material adverse effect in the
operations of the Property.
(c) Notwithstanding anything contained in Sections 14(a) and (b) to
the contrary, if this Agreement is not terminated as provided in Sections 14(a)
or (b) and the insurance, eminent domain or condemnation proceeds payable with
respect to the Property as a result of any casualty or taking exceeds the
Purchase Price for such Property, the obligation of the Seller of such Property
to pay over to Purchaser those proceeds paid to such Seller prior to the Closing
shall be limited to the amount of the Purchase Price, and that Seller shall be
entitled to retain the remainder of such proceeds. To the extent that payment of
all or any portion of such proceeds does not occur prior to the Closing, the
parties agree that such Seller (except the Seller of a JV Interest) shall be
entitled to that portion of the proceeds in excess of the Purchase Price, which
agreement shall survive the Closing and shall not be merged in the Deeds.
(d) If Purchaser elects to terminate this Agreement with respect to
a Property pursuant to Sections 14(a) or (b), Exhibit A shall be revised to
delete reference to such Property, and such Property or JV Interest shall not be
included in the sale and purchase contemplated hereby, but Closing shall
continue with respect to all other Properties and JV Interests. Thereafter,
neither party shall have any further rights, obligations or liabilities
hereunder with respect to such Property or JV Interest, except for the Surviving
Obligations.
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15. Remedies.
(a) If any Seller is in material default of its obligations under
this Agreement with respect to one or more Properties or JV Interests, except
with respect to a misrepresentation related to a financial statement which is
dealt with in Section 6(a)(iii) above, then Purchaser, as its sole remedy for
such default (except for its remedy with regard to failure of title described in
Section 8(d)), may terminate this Agreement with respect to the applicable
Property(ies) and/or JV Interest(s) affected, by notice to Sellers. Thereafter,
Sellers shall promptly pay to Purchaser the Allocated Reimbursement Amount with
respect to such Propert(ies) or JV Interest(s), Exhibit A shall be revised to
delete reference to such Property(ies) or JV Interest(s), and such Property(ies)
or JV Interest(s) shall not be included in the sale and purchase contemplated
hereby, but Closing shall continue with respect to all other Properties and JV
Interests. This payment obligation (and other payment obligations of Sellers
upon the termination of this Agreement) shall survive any termination of this
Agreement. Alternatively, Purchaser may bring an action for specific performance
with respect to the applicable JV Interest(s) and/or Property(ies) as a result
of Sellers' failure to perform an obligation required to be performed by Sellers
hereunder; provided, that Purchaser commences such action within 60 days after
the occurrence of such default; and provided further, Purchaser may not bring an
action for specific performance if Sellers willfully refuse to close on all
Properties and JV Interests (or willfully act or refuse to act in contravention
of this Agreement and thereby prevent Closing from occurring on all Properties
and JV Interests) as provided in Section 15(b) hereunder.
(b) Notwithstanding anything to the contrary contained in the
Agreement, if Closing on the Properties and JV Interests does not occur because
of Sellers' willful refusal to close not otherwise excused under this Agreement,
or willful act or omission in contravention of this Agreement that prevents
Closing from occurring, then Purchaser, as its sole remedy hereunder, shall be
entitled to terminate this Agreement by written notice to Sellers, whereupon the
Deposit shall be shall be returned to Purchaser, and Purchaser shall be entitled
to payment upon demand from Sellers of damages in the amount of $15,000,000, as
liquidated and agreed upon damages for all losses, damages and expenses suffered
or incurred by Purchaser, it being agreed that Purchaser's losses, damages and
expenses are impractical or extremely difficult to ascertain and that the
$15,000,000 amount represents a reasonable estimate of the damages, losses and
expenses that Purchaser will sustain in the event Closing fails to occur by
reason of Sellers' willful refusal to close on the Properties and JV Interests
hereunder, or willful act or omission in contravention of this Agreement that
prevents Closing from occurring, and thereafter neither party shall have any
rights, obligations or liabilities hereunder. Such payment is intended to
constitute liquidated damages, and shall not be deemed to constitute a
forfeiture or penalty. Sellers agree that if Closing is adjourned on one or both
of the Properties that are subject to Bonds as provided in Section 8(a), but
Closing occurs on some or all of the other Properties and JV Interests, Sellers
shall have no further rights under this Section 15(b), and Purchaser may seek
specific performance, as provided in Section 15(a), for Sellers' refusal to
close on the Properties subject to Bonds for which there was an adjourned
Closing. The provisions of this Section 15(b) shall survive a termination of
this Agreement pursuant to this Section 15(b).
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(c) If the Closing fails to occur by reason of Purchaser's material
failure or material refusal to perform its obligations hereunder, then Sellers
may terminate this Agreement by notice to Purchaser. If Sellers elect to
terminate this Agreement, then this Agreement shall be terminated and Sellers
may retain the Deposit in proportion to their share of the total Purchase Price,
as liquidated and agreed upon damages for all loss, damage and expenses suffered
by Sellers, it being agreed that Sellers' damages are impractical or extremely
difficult to ascertain and that the amount of the Deposit, as so allocated,
represents a reasonable estimate of the damages that Sellers will sustain in the
event the Closing fails to occur by reason of Purchaser's material failure or
material refusal to perform its obligations hereunder, and neither party shall
have any further rights, obligations or liabilities hereunder, except for the
Surviving Obligations. Nothing contained herein shall limit or restrict Sellers'
ability to pursue any rights or remedies they may have against Purchaser with
respect to the Surviving Obligations. Such retention of the Deposit is intended
to constitute liquidated damages, and shall not be deemed to constitute a
forfeiture or penalty. Except as set forth in this Section 15(c) and in Section
22(f), Sellers hereby expressly waive, relinquish and release any other right or
remedy available to them at law, in equity or otherwise by reason of Purchaser's
default hereunder or Purchaser's failure or refusal to perform its obligations
hereunder.
16. Purchaser's Access to the Property.
At all times this Agreement remains in effect, Purchaser and
Purchaser's Representatives shall have the right to enter upon the Properties
(exclusive of individual apartment units unless permitted under the applicable
Lease or consented to by the tenant thereunder), for the purpose of conducting
the Inspections and any other investigations provided (a) Purchaser shall give
Sellers not less than two (2) business days' prior notice before each such
entry, (b) the notice shall include sufficient information to permit Sellers to
review the scope of the proposed Inspections or other investigations and the
names of the companies or firms performing such Inspections or other
investigations, and (c) neither Purchaser nor Purchaser's Representatives shall
permit any invasive studies, and the Inspections and other investigations shall
in no way disturb any soil or groundwater without the prior written consent of
the Seller of such Property or JV Interest, which consent may be withheld in
such Seller's sole discretion. Any entry upon the Properties and all Inspections
and other investigations shall be during normal business hours and at the sole
risk and expense of Purchaser and Purchaser's Representatives, and shall not
unreasonably interfere with the activities on or about the Properties of
Sellers, their employees, tenants or invitees. Purchaser and Purchaser's
Representative shall, with respect to each Property investigated:
(i) promptly repair any damage to the Property resulting from
any such Inspections or other investigations and replace, refill and regrade any
holes made in, or excavations of, any portion of the Property used for such
Inspections or other investigations so that the Property shall be in the same
condition in all material respects that it existed in prior to such Inspections
or other investigations;
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(ii) fully comply with all applicable laws, rules, ordinances,
codes, regulations orders or requirements of applicable governmental authorities
(collectively, the "Laws") applicable to the Inspections and other
investigations and all other activities undertaken in connection therewith;
(iii) permit Sellers to have a representative present during all
Inspections or other investigations undertaken hereunder;
(iv) take such actions and implement all protections reasonably
necessary to ensure that all actions taken in connection with the Inspections
and other investigations, and the equipment, materials, and substances
generated, used or brought onto the Property pose no threat to the safety or
health of persons or the environment, and cause no damage to the Property or
other property of Sellers or other persons;
(v) maintain or cause to be maintained, at Purchaser's expense,
a policy of commercial general liability insurance, with a broad form
contractual liability endorsement covering Purchaser's indemnification
obligations contained in Section 17(a), and with a combined single limit of not
less than $2,000,000 per occurrence for bodily injury and property damage,
automobile liability coverage including owned and hired vehicles with a combined
single limit of $2,000,000 per occurrence for bodily injury and property damage,
and an excess umbrella liability policy for bodily injury and property damage in
the amount of $5,000,000, insuring Purchaser and the Seller of such Property, as
an additional insured, against any injuries or damages to persons or property
that may result from or are related to (A) Purchaser's and/or Purchaser's
Representatives' entry upon the Property, (B) any Inspections or other
activities conducted thereon, and (C) any and all other activities undertaken by
Purchaser and/or Purchaser's Representatives, all of which insurance shall be on
an "occurrence form" and otherwise in such forms and with an insurance company
reasonably acceptable to Sellers and deliver a certificate of such insurance
policy to Sellers prior to the first entry on the Property;
(vi) not allow the Inspections or any other activities
undertaken by Purchaser or Purchaser's Representatives to result in any liens,
judgments or other encumbrances being filed or recorded against the Property,
and Purchaser shall, at its sole cost and expense, promptly discharge of record
any such liens or encumbrances that are so filed or recorded (including, without
limitation, liens for services, labor or materials furnished); and
(vii) indemnify and hold the Seller of such Property, such
Seller's Representatives and the Property harmless from and against any and all
claims, demands, causes of action, losses, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements), suffered or incurred by such Seller and arising out of or in
connection with (A) Purchaser's and/or Purchaser's Representatives' entry upon
the Property, (B) any Inspections or other activities conducted thereon by
Purchaser or Purchaser's Representatives, (C) any liens or encumbrances filed or
recorded against the Property as a consequence of the Inspections or any and all
other activities undertaken by Purchaser or Purchaser's Representatives, and/or
(D) any and all other activities undertaken by Purchaser or Purchaser's
Representatives with respect to the Property, except to the extent any of the
foregoing is caused by the negligence or willful misconduct of an indemnified
party.
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All obligations of Purchaser to a "Seller" or "Sellers" in this
Section 16 shall be deemed to run to the Joint Venture in the case of any Joint
Venture Property. The provisions of this Section 16 shall survive the Closing
(and shall not be merged in the Deeds) or earlier termination of this Agreement.
17. Indemnity.
(a) Purchaser's Indemnity. Purchaser hereby agrees to indemnify,
defend and hold Sellers and Sellers' employees, representatives, agents, any
partner, officer, director, employee, trustee, shareholder, principal, parent,
subsidiary, affiliate or agent of Sellers (collectively, "Sellers'
Representatives") harmless from and against all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) asserted against or
incurred by Sellers or Sellers' Representatives in connection with or arising
out of (i) any breach by Purchaser of the Contracts assigned to Purchaser which
occurs after the Closing, (ii) damage to property and injuries to third parties
on the Property occurring after the Closing, and (iii) liability under any
guaranty or indemnification executed by any Seller, PREIT or affiliate thereof
under a loan listed in Exhibit A arising and accruing from and after the Closing
Date to the extent the loan is assumed by Purchasers and the Mortgagee does not
release such person or entity from the guaranty or indemnity. Purchaser's
obligations under this Section 17(a) shall survive the Closing, and shall not be
merged in the Deeds.
(b) Sellers' Indemnity. Sellers hereby agree to indemnify, defend
and hold harmless Purchaser and its successors and assigns and their respective
employees, representatives, agents, partners, officers, directors, trustees,
shareholders, principals, parents, subsidiaries and affiliates (collectively,
"Purchaser's Representatives") from and against all claims, demands, causes of
action, losses, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys fees and disbursements) asserted against or
incurred by any of them in connection with or arising out of (i) any breach by
Sellers of any of their representations and warranties contained in this
Agreement, subject to the threshold and cap set forth in Section 6(a) hereof;
(ii) any breach by any Seller of any Contract assigned to Purchaser, which
breach occurred prior to Closing, subject to the threshold and cap set forth in
Section 6(a) hereof; (iii) any damage to property or injuries to third parties
on any Property occurring prior to Closing; (iv) any obligations under any "bulk
sale" or similar statute, including without limitation, 69 P.S. ss. 529, 72 P.S.
ss. 1403(a), 72 P.S. ss. 7270 and 72 P.S. ss. 7321.1 and those tax statutes
described in Section 5(e); (v) any claim by any Employee of any Seller or any
affiliates thereof who does not become a Hired Employee and/or any claim
accruing before Closing by any Employee of any Seller or any affiliates thereof
who becomes a Hired Employee; (vi) any breach by any Seller of its obligations
under a joint venture agreement and (vii) any actions or proceedings listed in
Schedule 6(a)(i)(K) hereto as the same shall be updated as of the Closing Date.
The provisions of this Section 17(b) shall survive Closing, and shall not be
merged in the Deeds.
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18. Escrow.
Title Company shall hold the Deposit and Purchaser's and each Seller's
Documents in escrow, dispose of the Deposit, pro rate expenses and deliver
Purchaser's and each Seller's Documents only in accordance with the following
provisions:
(a) Prior to the full execution of this Agreement, Purchaser and
Sellers opened an escrow (the "Escrow") with the Title Company, by delivering to
Title Company the Initial Deposit. Within two (2) days after the full execution
of this Agreement, the parties shall deliver to Title Company a fully executed
copy of this Agreement. The purchase and sale of the Properties and JV Interests
shall be completed through the Escrow, at the location specified in Section
4(d). This Agreement shall constitute joint escrow instructions to Title Company
in connection with the Escrow. Purchaser and Sellers hereby agree to execute
such additional instructions not inconsistent with this Agreement as may be
reasonably required by Title Company.
(b) At the Closing, the Title Company shall do the following with
respect to each Property:
(i) Cause each Deed to be recorded;
(ii) Disburse all funds deposited with Title Company by
Purchaser in payment of the Purchase Price for such Property or JV Interest as
follows:
A. Deduct the amount of items chargeable to the account of
the applicable Seller pursuant to this Agreement, as set forth on a settlement
statement executed by Purchaser and the applicable Seller; and
B. The remaining balance of the funds deposited by Purchaser
in the Escrow in payment of the Purchase Price for such Property shall be
disbursed to the applicable Seller pursuant to its demand;
(iii) Deliver to the applicable Seller original counterparts of
the Partnership Assignment, Lease Assumption, Contract and License Assignment,
copies of all assumptions of mortgage loans and any other documents required to
be executed by any Mortgagee to the extent permitted under this Agreement in
relation to such assumption and any other documents executed by Purchaser.
(iv) Deliver or cause to be delivered to Purchaser a marked up
copy of the Commitment for such Property, photostat copy of the Deed for such
Property, an original counterpart of the Partnership Assignment, Lease
Assumption, Bill of Sale, Contract and License Assignment, an original FIRPTA
Affidavit executed by the applicable Seller for such Property, and any other
documents executed by Sellers.
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(c) All costs and expenses in connection with the transaction
contemplated by this Agreement (including documentary taxes, transfer taxes,
stamp taxes, recording taxes and fees, title search fees, and title insurance
premiums, but specifically excluding legal, consulting and other professional
fees or costs, which each party shall bear individually, or the costs of
Inspections or any loan assumption fees Purchaser has agreed to pay pursuant to
this Agreement, which Purchaser shall bear) shall be apportioned between
Purchaser and each Seller in accordance with Schedule 18(c). This Section 18(c)
shall survive the Closing (and shall not be merged in the Deeds) or earlier
termination of this Agreement.
(d) Title Company shall deliver the Deposit to Sellers or Purchaser,
as the case may be, as follows:
(i) to Sellers, upon completion of the Closing, to be applied
against the Purchase Prices of the Properties and JV Interests as PREIT shall
direct; or
(ii) to PREIT, after receipt of PREIT's demand in which PREIT
certifies either that (A) Purchaser has materially defaulted under this
Agreement, or (B) this Agreement has been otherwise terminated or cancelled, and
Sellers are thereby entitled to receive the Deposit; but, except as set forth
below with respect to the Additional Deposit, Title Company shall not honor
PREIT's demand until more than ten (10) days after Title Company has given a
copy of such demand to Purchaser in accordance with Section 18(e)(i), nor
thereafter if Title Company receives a Notice of Objection from Purchaser within
such ten (10) day period; provided, however, Purchaser shall not have the right
to give a Notice of Objection if the default is Purchaser's failure to make the
Additional Deposit as provided in Section 2(b), and the Title Company shall
honor PREIT's demand immediately in such event; or
(iii) to Purchaser, after receipt of Purchaser's demand in which
Purchaser certifies either that (A) Sellers have materially defaulted under this
Agreement, or (B) this Agreement has been otherwise terminated or cancelled, and
Purchaser is thereby entitled to receive the Deposit; but Title Company shall
not honor Purchaser's demand until more than ten (10) days after Title Company
has given a copy of Purchaser's demand to PREIT in accordance with Section
18(e)(i), nor thereafter if Title Company receives a Notice of Objection from
PREIT within such ten (10) day period.
Upon such delivery of the Deposit, Title Company shall be relieved
of all liability hereunder and with respect to the Deposit. Title Company shall
deliver the Deposit by a bank wire transfer of immediately available funds to an
account designated by the party entitled to the Deposit.
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(e) (i) Upon receipt of a written demand from PREIT or Purchaser
under Section 18(d)(ii) or (iii), Title Company shall send a copy of such demand
to the other party. Within ten (10) days after the date of receiving same, but
not thereafter, the other party may object to delivery of the Deposit to the
party making such demand by giving a notice of objection (a "Notice of
Objection") to Title Company. After receiving a Notice of Objection, Title
Company shall send a copy of such Notice of Objection to the party who made the
demand; and thereafter, in its sole and absolute discretion, Title Company may
elect either (A) to continue to hold the Deposit until Title Company receives a
written agreement of Purchaser and PREIT directing the disbursement of the
Deposit, in which event Title Company shall disburse the Deposit in accordance
with such agreement; and/or (B) to take any and all actions as Title Company
deems necessary or desirable, in its reasonable discretion, to discharge and
terminate its duties under this Agreement, including without limitation
depositing the Deposit into any court of competent jurisdiction and bringing any
action of interpleader or any other proceeding; and/or (C) in the event of any
litigation between Sellers and Purchaser, to deposit the Deposit with the clerk
of the court in which such litigation is pending.
(ii) If Title Company is uncertain for any reason whatsoever as
to its duties or rights hereunder (and whether or not Title Company has received
any written demand under Section 18(d)(ii) or (iii), or Notice of Objection
under Section 18(e)(i)), notwithstanding anything to the contrary herein, Title
Company may hold and apply the Deposit pursuant to Section 18(e)(i)(A), (B) or
(C) and may decline to take any other action whatsoever. In the event the
Deposit is deposited in a court by Title Company pursuant to Section 18(e)(i)(B)
or (C), Title Company shall be entitled to rely upon the decision of such court.
In the event of any dispute whatsoever among the parties with respect to
disposition of the Deposit, Purchaser and PREIT shall pay the reasonable
attorney's fees and costs incurred by Title Company (which said parties shall
share equally) for any litigation in which Title Company is named as, or
becomes, a party.
(f) Notwithstanding anything to the contrary in this Agreement,
within one (1) business day after the date of this Agreement, and within one (1)
business day after receipt of the Additional Deposit, Title Company shall place
the Deposit in an Approved Investment. The interest, if any, which accrues on
such Approved Investment shall be deemed part of the Deposit; and Title Company
shall dispose of such interest as and with the Deposit pursuant to this
Agreement. Title Company may not commingle the Deposit with any other funds held
by Title Company. Title Company may convert the Deposit from the Approved
Investment into cash or a non-interest-bearing demand account at an Approved
Institution as follows:
(i) at any time within seven (7) days prior to the Closing Date;
or
(ii) if the Closing Date is accelerated or extended, at any time
within seven (7) days prior to the accelerated or extended Closing Date
(provided, however, that PREIT and Purchaser shall give Title Company timely
notice of any such acceleration or extension and that Title Company may hold the
Deposit in cash or a non-interest-bearing deposit account if PREIT and Purchaser
do not give Title Company timely notice of any such adjournment).
(g) As used herein, the term "Approved Investment" means (i) any
interest-bearing demand account or money market fund in a federally insured bank
branch located in the City of Philadelphia, or in a money market mutual fund
with assets in excess of One Billion Dollars invested in obligations issued or
guaranteed by the United States of America, or in any other institution
otherwise approved by both PREIT and Purchaser (collectively, an "Approved
Institution"), or (ii) any other investment approved by both PREIT and
Purchaser. The rate of interest or yield need not be the maximum available and
deposits, withdrawals, purchases, reinvestment of any matured investment and
sales shall be made in the sole discretion of Title Company, which shall have no
liability whatsoever therefor. Discounts earned shall be deemed interest for the
purpose hereof.
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(h) Any Notice of Objection, demand or other notice or communication
which may or must be sent, given or made under this Agreement to or by Title
Company shall be sent in accordance with the provisions of Section 21.
(i) Simultaneously with their execution and delivery of this
Agreement, Purchaser and Sellers shall furnish Title Company with their Federal
Taxpayer Identification Numbers so that Title Company may file appropriate
income tax information returns with respect to any interest in the Deposit or
other income from the Approved Investment. The party ultimately entitled to any
accrued interest in the Deposit shall be the party responsible for the payment
of any tax due thereon.
(j) Any amendment of this Agreement which could alter or otherwise
affect Title Company's obligations hereunder will not be effective against or
binding upon Title Company without Title Company's prior consent, which consent
may be withheld in Title Company's sole and absolute discretion.
(k) The provisions of this Section 18 shall survive the Closing (and
shall not be merged in the Deeds) or earlier termination of this Agreement.
19. Assignment
(a) This Agreement may be not assigned by Purchaser except in strict
accordance with this Section 19, and any assignment or attempted assignment by
Purchaser in violation of this Section 19 shall constitute a default by
Purchaser hereunder and shall be null and void. Purchaser shall be entitled to
assign its rights and obligations with respect to any Property or JV Interest to
any entity or entities consisting of Purchaser and/or any entity which is
controlled by, controls, or is under common control of or with Purchaser and/or
an equity investment partner, or in which Mitchell Morgan has a direct or
indirect ownership interest and directly or indirectly exercises management or
co-management control, and such assignee shall succeed to the rights and
obligations of Purchaser under this Agreement with respect to such Property or
JV Interest. No such assignment shall relieve Purchaser from its obligations
hereunder.
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(b) Sellers intend to consummate the transaction hereunder as a
"like-kind exchange" under Section 1031 of the Internal Revenue Code of 1986, as
amended, and Purchaser agrees to cooperate with Sellers, but at no expense to
Purchaser. In furtherance thereof, Sellers shall have the right to assign all or
any part of the benefits of this Agreement, but not Sellers' obligations
hereunder, to a "qualified intermediary," as defined in Treasury Regulation
Section 1.1031(k)-1(g)(4). In the event a partner in a Joint Venture agrees to
sell its interest therein to Purchaser and Purchaser agrees to buy the same,
Sellers shall have the right to acquire such interest from the partner for the
price which Purchaser has agreed to pay and to sell fee simple title to the
related Property to Purchaser hereunder as a part of the like-kind exchange
transaction, in which case Exhibit A shall be amended to reflect such Property
as a "Wholly Owned" Property and the Purchase Prices shall be amended
accordingly. Sellers shall indemnify, defend and hold harmless Purchaser from
and against any losses, claims, demands, costs, damages and expenses actually
suffered by or asserted against Purchaser as a result of its compliance with
this Section 19(b), which obligation shall survive Closing and not be merged in
the Deeds. The provisions of this Section 19(b) shall not be a condition to
Sellers' obligation to close on any Property or JV Interest hereunder.
20. Access to Records; Tax Matters.
(a) For a period of five (5) years subsequent to the Closing Date,
Sellers and Sellers' Representatives shall be entitled to access during business
hours to all documents, books and records given to Purchaser by Sellers for tax
and audit purposes, regulatory compliance, and cooperation with governmental
investigations upon reasonable prior notice, and shall have the right, at the
requesting party's sole cost and expense, to make copies of such documents,
books and records. Purchaser and Purchaser's Representatives shall have the same
rights for the same period of time with respect to documents, books and records
of Sellers that Purchaser reasonably believes will be useful for the continuing
operation of the Properties.
(b) After Closing, Purchaser shall cooperate with the Sellers of the
JV Interests and the Sellers of the JV Interests will cooperate with Purchaser
fully as and to the extent reasonably requested in connection with the filing of
tax returns. Within fifteen (15) days after written request from a party, the
other party shall deliver its partnership tax return and any other related
standard tax filing in its possession or control to the requesting party, which
returns and filings shall be subject to Section 22. The provisions of this
Section 20(b) shall survive the Closing and shall not be merged therein.
21. Notices.
(a) All notices, elections, consents, approvals, demands,
objections, requests or other communications which Sellers, Purchaser or Title
Company may be required or desire to give pursuant to, under or by virtue of
this Agreement must be in writing and sent by (i) first class U.S. certified or
registered mail, return receipt requested, with postage prepaid, or (ii) express
mail or courier (for next business day delivery), or (iii) facsimile, with hard
copy sent either the same or the next business day pursuant to subsections (i)
or (ii) above addressed or sent as follows:
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If to Seller:
c/o PREIT Services, LLC
The Bellevue, Third Floor
200 South Broad Street
Philadelphia, PA 19102
Attn: Jeffrey A. Linn
Facsimile No.: (215) 564-0240
with a copy to:
PREIT Services, LLC
The Bellevue, Third Floor
200 South Broad Street
Philadelphia, PA 19102
Attention: Bruce Goldman, Esquire
Facsimile No.: (215) 546-7311
and a copy to:
Clifford H. Swain, Esquire
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996
Facsimile No.: (215) 988-2757
If to Purchaser:
MPM Acquisition Corp.
c/o Morgan Properties, Ltd.
160 Clubhouse Road
King of Prussia, PA 19406
Attn: Howard I. Grossman, Esquire
Facsimile No.: (610) 265-5889
with a copy to:
Alan S. Ritterband, Esquire
Ballard Spahr Andrews & Ingersoll LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103-7599
Facsimile No.: (215) 864-9897
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If to Title Company:
Fidelity National Title Insurance Company
1500 Walnut Street, Suite 400
Philadelphia, PA 19102
Attn: M. Gordon Daniels, Esq.
Facsimile No.: (215) 732-6726
(b) Sellers, Purchaser or Title Company may designate another
addressee or change their address for notices and other communications hereunder
by a notice given to the other parties in the manner provided in this Section
21. A notice or other communication sent in compliance with the provisions of
this Section 21 shall be deemed given and received on (i) the third (3rd) day
following the date it is deposited in the U.S. mail, or (ii) the first business
day following the date it is delivered to an express mail provider or courier,
or (iii) the day it is delivered if sent by facsimile before 5:00 p.m. local
time on a business day and the required hard copy is also sent as provided
herein.
22. Confidential Information and Confidentiality.
(a) As used in this Agreement, the term "Confidential Information"
shall mean all confidential, secret or proprietary information of the Disclosing
Party disclosed to or learned by Recipient in connection with this Agreement,
the Non-Disclosure Agreement dated December 18, 2002 between Purchaser and PREIT
(as amended, the "Non-Disclosure Agreement") and the Access Agreement dated as
of January 22, 2003 between Purchaser and PREIT Services, LLC (the "Access
Agreement"), regardless of whether such information is specifically designated
as confidential. Such Confidential Information may include, without limitation,
engineering reports, environmental reports, tax receipts, technical data,
financial information, business plans, marketing plans and other information
relating to the Properties (inclusive of Purchaser's Inspections and the
Property Information) and any analyses, compilations, data, studies, reports or
other information or documents prepared or obtained by the Recipient containing
or based, in whole or in part, on the information or documents described in this
Section 22(a). "Confidential Information" shall not include information which
(i) is now, or hereafter becomes, through no act or failure to act on the part
of Recipient, generally known or available to the public; (ii) is rightfully
known by Recipient at the time of receiving such information; (iii) is hereafter
rightfully furnished to Recipient by a third party without any breach of any
confidentiality obligation to Disclosing party; or (iv) is independently
developed by Recipient without any breach of this Agreement. The party
disclosing Confidential Information is referred to as "Disclosing Party," and
the party receiving Confidential Information as "Recipient."
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(b) Purchaser agrees that, prior to the Closing, no Confidential
Information will be used by Purchaser or Purchaser's Representatives, directly
or indirectly, for any purpose other than evaluating the Properties. Moreover,
Purchaser agrees that, prior to the Closing, the Confidential Information will
be transmitted only to Purchaser's Representatives who need to know the
Confidential Information for the purpose of evaluating the Properties. If,
pursuant to any agreement between Seller and any third party any Confidential
Information is subject to a confidentiality agreement with that third party,
Purchaser agrees that delivery of that Confidential Information shall be subject
to receipt from Purchaser of a written confidentiality agreement required by
that agreement with such third party and Purchaser further agrees that
transmission and use of any such Confidential Information shall be subject to
the requirements of both that separate confidentiality agreement and this
Section 22. Except in connection with the preparation of a so-called "Phase I"
environmental report with respect to the Properties, and for standard
"zoning/permitting letters," Purchaser shall not contact any governmental
official or representative regarding the condition of the Properties without the
applicable Seller's prior written consent thereto. In addition, if such Seller's
consent is obtained by Purchaser, such 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 Purchaser has any such contact with any governmental
official or representative.
(c) Recipient shall use the same care and discretion, but in no
event less than reasonable care and discretion, to prevent disclosure,
publication, or dissemination of the Confidential Information as it employs with
similar information of its own. Disclosure of the Confidential Information may
be made only to "authorized representatives" of Recipient who have a specific
need to know such Confidential Information, and have obligated themselves to
hold such Confidential Information in trust and confidence or otherwise to
comply with the terms of this Agreement. The term "authorized representatives"
includes (i) partners, officers, directors, employees, accountants, attorneys,
investment banks, agents and representatives of any such advisors and (ii)
equity investors and lenders, provided that the Recipient must provide the
Disclosing Party with the names of such investors and lenders at least one
business day prior to the disclosure of Confidential Information and withhold
Confidential Information from those equity investors and lenders for whom the
Disclosing Party makes good faith, reasonable objection to such disclosure.
(d) Neither Purchaser nor Sellers nor their authorized
representatives will use any of the Confidential Information for any reason or
purpose other than the evaluation of the transaction contemplated hereby (the
"Proposed Transaction") for the purpose of determining whether it desires to
consummate such transaction.
(e) Without the prior written consent of the other party, neither
Purchaser nor Sellers nor any of their authorized representatives will confirm
to any person other than those authorized by this Agreement either the fact that
discussions or negotiations are taking place concerning the Proposed Transaction
or any of the terms, conditions or other facts concerning the Proposed
Transaction.
(f) If Purchaser or Sellers become legally obligated to disclose any
Confidential Information, each will give the non-disclosing party prompt and
timely notice of such fact so that such party may obtain a protective order or
other appropriate remedy concerning any such disclosure or waive compliance with
the provisions of this Section 22. The Disclosing Party will cooperate fully
with the non-disclosing party in connection with its efforts to obtain a
protective order or other appropriate remedy. In the event the non-disclosing
party is unable to obtain a protective order or other appropriate remedy with
respect to the Confidential Information, the Disclosing Party shall have
nevertheless used its best efforts to have the Confidential Information so
required to be disclosed treated confidentially.
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(g) Notwithstanding anything in the foregoing to the contrary,
Sellers shall have the right to make any disclosure (including public
announcements) which Sellers reasonably believe (following consultation with its
counsel) is required by law or applicable rules of any securities exchange.
Purchaser also recognizes that PREIT is currently involved in three material
transactions not directly related to the Proposed Transaction (the "Other
Transactions"), and PREIT has disclosed the terms of the Proposed Transaction to
certain of the parties directly involved with those Other Transactions.
(h) Purchaser acknowledges that it is aware, and shall advise its
employees, officers, consultants and agents who receive Confidential Information
and are informed as to the matters which are subject to this Agreement, that the
securities laws of the United States prohibit any person who has received
Confidential Information from purchasing or selling securities of PREIT or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities.
(i) Each party acknowledges and agrees that in the event of any
breach of this Section 22 by it, including, without limitation, the actual or
threatened disclosure of Confidential Information without the express prior
written consent of Disclosing Party, Disclosing Party will suffer irreparable
harm and injury and no remedy at law will afford it adequate protection against,
or appropriate compensation for, such injury. Accordingly, Purchaser and each
Seller agrees that in any such event Disclosing Party shall be entitled to
specific performance of Recipient's obligations under this Section 22, as well
as such further injunctive relief as may be granted by a court of competent
jurisdiction. Such remedy shall not be deemed to be the exclusive remedy for
breach of this Section 22 but shall be in addition to all other remedies at law
or in equity. Without limiting anything in the foregoing to the contrary,
Purchaser and Sellers shall each indemnify and hold the other party and the
other party's Representatives, harmless from and against any and all claims,
demands, causes of action, losses, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
suffered or incurred by the other party and any of the other party's
Representatives and arising out of or in connection with a breach by such party
or such party's Representatives of the provisions of this Section 22.
(j) In the event this Agreement is terminated, Purchaser and
Purchaser's Representatives shall promptly deliver to each Seller all originals
and copies of the Property Information referred to in Section 22(e) with respect
to such Seller's Property, and assign to each Seller all of Purchaser's right,
title and interest in such Inspections, to the extent assignable. In the event
this Agreement is terminated for failure of the condition set forth in Section
8(a)(i), the provisions of that Section shall control. Confidential Information
disclosed prior to the effective date of termination shall remain subject to the
terms and conditions of this Section 22 for a period of two (2) years after
termination.
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(k) The provisions of this Section 22 shall survive Closing (and
shall not be merged in the Deeds) or earlier termination of this Agreement.
23. Miscellaneous.
(a) Until the Closing Date or earlier termination of this Agreement,
Sellers shall notify Purchaser promptly after obtaining knowledge of any
violation of any Law or any litigation threatened or commenced which might
materially affect any of the Properties or Joint Ventures.
(b) This Agreement shall not be altered, amended, changed, waived,
terminated or otherwise modified in any respect or particular, and no consent or
approval required pursuant to this Agreement shall be effective, unless the same
shall be in writing and signed by or on behalf of the party to be charged.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties and to their respective heirs, executors, administrators,
successors and permitted assigns.
(d) All prior statements, understandings, representations and
agreements between the parties with respect to the purchase and sale of the
Properties, oral or written, are superseded by and merged in this Agreement,
which alone fully and completely expresses the agreement between them in
connection with this transaction and which is entered into after full
investigation, neither party relying upon any statement, understanding,
representation or agreement made by the other not embodied in this Agreement.
This Agreement shall be given a fair and reasonable construction in accordance
with the intentions of the parties. 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.
(e) Purchaser agrees not to sue or otherwise seek to enforce any
personal obligation against any past, present or future trustee, shareholder,
officer or employee of PREIT with respect to any matters arising out of or in
connection with this Agreement or the transactions contemplated hereby. The
provisions of this Section 23(e) shall survive the Closing (and shall not be
merged in the Deeds) or earlier termination of this Agreement.
(f) Purchaser and Sellers mutually agree that, wherever this
Agreement provides that Purchaser or Sellers must send or give any notice, make
an election or take some other action within a specific time period or at a
specific time in order to exercise a right or remedy they may have hereunder,
time shall be of the essence with respect to the taking of such action, and
either party's failure to take such action within the applicable time period or
at such specific time shall be deemed to be an irrevocable waiver by such party
of such right or remedy.
(g) No failure or delay of either party in the exercise of any right
or remedy given to such party hereunder or the waiver by any party of any
condition hereunder for its benefit (unless the time specified herein for
exercise of such right or remedy has expired) shall constitute a waiver of any
other or further right or remedy nor shall any single or partial exercise of any
right or remedy preclude other or further exercise thereof or any other right or
remedy. No waiver by either party of any breach hereunder or failure or refusal
by the other party to comply with its obligations shall be deemed a waiver of
any other or subsequent breach, failure or refusal to so comply.
-48-
(h) Neither this Agreement nor any memorandum thereof shall be
recorded and any attempted recordation hereof shall be void and shall constitute
a default hereunder. Purchaser agrees to indemnify Sellers against all costs,
expenses and damages, including without limitation reasonable attorneys' fees
and disbursements, incurred by Sellers by reason of the filing by Purchaser of
this Agreement or any memorandum thereof. Notwithstanding anything to the
contrary contained in this Agreement, the filing with or submission to any court
of this Agreement in connection with any litigation shall not be a default
hereunder.
(i) Delivery of this Agreement shall not be deemed an offer and
neither Sellers nor Purchaser shall have any rights or obligations hereunder
unless and until all parties have signed and delivered an original of this
Agreement. This Agreement may be executed in one or more counterparts, each of
which so executed and delivered shall be deemed an original, but all of which
taken together shall constitute but one and the same instrument. A facsimile of
a signature will have the same legal effect as an originally drawn signature.
(j) Each of the Exhibits and Schedules referred to herein and
attached hereto is incorporated herein by this reference.
(k) The caption headings in this Agreement are for convenience only
and are not intended to be a part of this Agreement and shall not be construed
to modify, explain or alter any of the terms, covenants or conditions herein
contained.
(l) This Agreement shall be interpreted and enforced in accordance
with the laws of the Commonwealth of Pennsylvania without reference to
principles of conflicts of laws.
(m) If any provision of this Agreement shall be unenforceable or
invalid, the same shall not affect the remaining provisions of this Agreement
and to this end the provisions of this Agreement are intended to be and shall be
severable. Notwithstanding the foregoing sentence, if (i) any provision of this
Agreement is finally determined by a court of competent jurisdiction to be
unenforceable or invalid in whole or in part, (ii) the opportunity for all
appeals of such determination have expired, and (iii) such unenforceability or
invalidity alters the substance of this Agreement (taken as a whole) so as to
deny either party, in a material way, the realization of the intended benefit of
its bargain, such party may terminate this Agreement within thirty (30) days
after the final determination by notice to the other. If such party so elects to
terminate this Agreement, then this Agreement shall be terminated and neither
party shall have any further rights, obligations or liabilities hereunder,
except for the Surviving Obligations, and except that Purchaser shall be
entitled to a return of the Deposit.
-49-
(n) SELLERS AND PURCHASER HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING IN TORT
OR CONTRACT) BROUGHT BY THEM AGAINST THE OTHER(S) ON ANY MATTER ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR ANY OTHER DOCUMENT EXECUTED AND
DELIVERED BY A PARTY IN CONNECTION HEREWITH (INCLUDING ANY ACTION TO RESCIND OR
CANCEL THIS AGREEMENT OR ALLEGING THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE).
(o) Sellers and Purchaser hereby waive tender of the Deeds and of
the Purchase Prices.
(p) All obligations, stipulations, authorizations, waivers,
releases, undertakings, indemnities and representations and warranties of
Sellers under this Agreement and Seller's Documents are joint and several.
[The remainder of this page is left intentionally blank]
-50-
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
PURCHASER
MPM ACQUISITION CORP, a Pennsylvania
corporation
By: /ss/ Mitchell Morgan
---------------------
Name: Mitchell Morgan
Title: President
Date: 2/26/03
SELLERS:
PENNSYLVANIA REAL ESTATE
INVESTMENT TRUST
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
PREIT ASSOCIATES, L.P.
By: Pennsylvania Real Estate Investment Trust,
its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
GP STONES LIMITED PARTNERSHIP
By: PR Cobblestones LLC
By: PREIT Associates, L.P.,
its sole member
By: Pennsylvania Real Estate
Investment Trust, its
general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
EAGLES NEST ASSOCIATES
By: PR Berfla LLC, a general partner
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
By: PR Eagles Nest LP
By: PR Berfla LLC, its general partner
By: PREIT Associates, L.P., its sole
member
By: Pennsylvania Real Estate
Investment Trust, its general
partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
NEW REGENCY HILLTOP ASSOCIATES,
L.P.
By: PR NEW REGENCY VA, LLC
By: PREIT Associates, L.P., its Managing Member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
FOX RUN DEL ASSOCIATES
By: PR Fox Run Del, LLC, a general partner
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
By: PR Berdel LLC, a general partner
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
REGENCY ASSOCIATES
By: PR Regency Associates LLC, a general
partner
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
PR SHENANDOAH LIMITED
PARTNERSHIP
By: West Palm, Inc. its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
THE WOODS ASSOCIATES
By: PR Woods LLC, its general partner
By: PREIT Associates, L.P., its member
By: Pennsylvania Real Estate
Investment Trust, its general
partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
PR COUNTRYWOOD LLC
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
PR WILL-O-HILL, L.P.
By: PR Will-O-Hill LLC, its general partner
By: PREIT Associates, L.P., its sole
Member
By: Pennsylvania Real Estate
Investment Trust, its general
Partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
PR FOX RUN LIMITED PARTNERSHIP
By: PR Fox Run Trust, its general partner
By: /ss/ Jonathan B. Weller
-----------------------
Name: Jonathan B. Weller
Title: President
JOINDER BY TITLE COMPANY
Title Company joins this Agreement solely for the purpose of agreeing to the
provisions of Section 18:
FIDELITY NATIONAL TITLE
INSURANCE COMPANY
By: /ss/ M. Gordon Daniels
----------------------
Name: M. Gordon Daniels
Title: Vice President
Date: February 26, 2003
EXHIBIT A
- ------------------------------------------------------------------------------------------------------------------------------------
Purchase O/S Debt @
Name of Property Owner Location Price 12/02 Equity
- ------------------------------------------------------------------------------------------------------------------------------------
Wholly Owned
- ------------------------------------------------------------------------------------------------------------------------------------
1 2031 Locust Street PREIT Associates LP 2031 Locust Street,
Philadelphia, Philadelphia
County, PA 11,820,596 5,708,186 6,112,410
- ------------------------------------------------------------------------------------------------------------------------------------
2 Boca Palms Apartments PREIT Associates LP, Boca Raton, FL 21,681,514
33,934,196 12,252,682
- ------------------------------------------------------------------------------------------------------------------------------------
3 Camp Hill Plaza Apartments PREIT Camp Hill,
Cumberland County, PA 17,736,463 12,724,736 5,011,727
- ------------------------------------------------------------------------------------------------------------------------------------
4 Cobblestone Apartments GP Stones Limited Pompano Beach, FL
Partnership 25,418,989 13,287,122 12,131,867
- ------------------------------------------------------------------------------------------------------------------------------------
5 Eagle's Nest Apartments Eagles Nest Associates Coral Springs, FL
18,955,568 14,726,608 4,228,960
- ------------------------------------------------------------------------------------------------------------------------------------
6 Emerald Point New Regency Hilltop Virginia Beach, VA
Associates, L.P. 47,110,006 15,151,879 31,958,127
- ------------------------------------------------------------------------------------------------------------------------------------
7 Fox Run Apartments, DE Fox Run Del Associates Bear, DE
30,324,705 13,565,148 16,759,557
- ------------------------------------------------------------------------------------------------------------------------------------
8 Hidden Lakes Apartments PREIT Associates LP Dayton, Montgomery
County, OH 17,602,021 10,265,142 7,336,879
- ------------------------------------------------------------------------------------------------------------------------------------
9 Kenwood Gardens PREIT Associates LP Toledo, Montgomery County,
OH 16,404,204 6,955,353 9,448,851
- ------------------------------------------------------------------------------------------------------------------------------------
10 Lakewood Hills Apartments PREIT Harrisburg
Dauphin County, PA 36,981,605 17,987,982 18,993,623
- ------------------------------------------------------------------------------------------------------------------------------------
11 Marylander Apartments PREIT Associates LP Baltimore, Baltimore County,
MD 29,672,926 11,800,116 17,872,810
- ------------------------------------------------------------------------------------------------------------------------------------
12 Palms of Pembroke PREIT Pembroke Pines, FL
29,518,115 15,925,359 13,592,756
- ------------------------------------------------------------------------------------------------------------------------------------
13 Regency Lakeside Apartments Regency Associates Omaha, NE
34,287,157 19,059,017 15,228,140
- ------------------------------------------------------------------------------------------------------------------------------------
14 Shenandoah Village Apartments PR Shenandoah Limited West Palm Beach, FL
Partnership 16,765,184 7,815,000 8,950,184
- ------------------------------------------------------------------------------------------------------------------------------------
15 The Woods The Woods Associates Ambler, PA 28,614,310 6,320,514(1) 22,293,796
====================================================================================================================================
Total Wholly Owned 395,146,046 192,973,676 202,172,369
-----------------------------------------
Joint Ventures (#'s are net of JV Partners Interest)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Cambridge Hall Apartments PREIT Associates LP West Chester, PA
(50%) 6,722,600 2,542,500 4,180,100
- ------------------------------------------------------------------------------------------------------------------------------------
2 Countrywood Apartments PR Countrywood LLC 12101 N. Dale Mabry Hwy.,
(.5%) Tampa, FL
PREIT Associates LP
(49.5%) 9,141,859 7,379,355 1,762,504
- ------------------------------------------------------------------------------------------------------------------------------------
3 Fox Run Apartments, PA PR Fox Run LP (50%) Warminster, PA
5,330,686 2,684,221 2,646,465
- ------------------------------------------------------------------------------------------------------------------------------------
4 Will-O-Hill Apartments PR Will-O-Hill LP Reading, PA
(50%) 3,658,810 807,705 2,851,105
====================================================================================================================================
Total Joint Venture 24,853,954 13,413,781 11,440,174
---------------------------------------
Portfolio Total 420,000,000 206,387,457 213,612,543
- --------
(1) The mortgage loan on The Woods was repaid in January 2003.